‘‘(3) MEDICAL PROFESSIONALS MUST REVIEW
INITIAL COVERAGE DECISIONS INVOLVING MEDICAL
APPROPRIATENESS
OR
NECESSITY
OR
INVESTIGA-
TIONAL ITEMS OR EXPERIMENTAL TREATMENT OR
TECHNOLOGY.—If an initial coverage decision under
paragraph (2)(A)(i) or (2)(B)(i) is based on a deter-
mination that provision of a particular item or serv-
ice is excluded from coverage under the terms of the
plan because the provision of such item or service
does not meet the plan’s requirements for medical
appropriateness or necessity or would constitute in-
vestigational items or experimental treatment or
technology, the review under paragraph (2)(A)(ii) or
(2)(B)(ii), to the extent that it relates to medical ap-
propriateness or necessity or to investigational items
or experimental treatment or technology, shall be
conducted by a physician or, if appropriate, another
medical professional, who is selected by the plan and
who did not make the initial denial.
‘‘(4) ELECTIVE EXTERNAL REVIEW BY INDE-
PENDENT MEDICAL EXPERT AND RECONSIDERATION
OF INITIAL REVIEW DECISION.—
‘‘(A) IN GENERAL.—In any case in which
a participant or beneficiary, who has received
an adverse coverage decision which is not re-
versed upon review conducted pursuant to para-
graph (1)(C) (including review under paragraph
(2)(A)(ii) or (2)(B)(ii)) and who has not com-
menced review of the coverage decision under
section 502, makes a request in writing, within
30 days after the date of such review decision,
for reconsideration of such review decision, the
requirements of subparagraphs (B), (C), (D)
and (E) shall apply in the case of such adverse
coverage decision, if the requirements of clause
(i), (ii), or (iii) are met.
‘‘(i) MEDICAL APPROPRIATENESS OR
INVESTIGATIONAL
ITEM
OR
EXPERI-
MENTAL TREATMENT OR TECHNOLOGY.—
The requirements of this clause are met if
such coverage decision is based on a deter-
mination that provision of a particular
item or service that would otherwise be
covered under the terms of the plan is ex-
cluded from coverage under the terms of
the plan because the provision of such item
or service—
‘‘(I) does not meet the plan’s re-
quirements for medical appropriate-
ness or necessity; or
‘‘(II) would constitute an inves-
tigational item or experimental treat-
ment or technology.
‘‘(ii) CATEGORICAL
EXCLUSION
OF
ITEM OR SERVICE REQUIRING EVALUATION
OF
MEDICAL
FACTS
OR
EVIDENCE.—The
requirements of this clause are met if—
‘‘(I) such coverage decision is
based on a determination that a par-
ticular item or service is not covered
under the terms of the plan because
provision of such item or service is
categorically excluded from coverage
under the terms of the plan, and
‘‘(II) an independent contract ex-
pert finds under subparagraph (C), in
advance of any review of the decision
under subparagraph (D), that such
determination primarily requires the
evaluation of medical facts or medical
evidence by a health professional.
‘‘(iii) SPECIFIC EXCLUSION OF ITEM
OR
SERVICE
REQUIRING
EVALUATION
OF
MEDICAL FACTS OR EVIDENCE.—The re-
quirements of this clause are met if—
‘‘(I) such coverage decision is
based on a determination that a par-
ticular item or service is not covered
under the terms of the plan because
provision of such item or service is
specifically excluded from coverage
under the terms of the plan, and
‘‘(II) an independent contract ex-
pert finds under subparagraph (C), in
advance of any review of the decision
under subparagraph (D), that such
determination primarily requires the
evaluation of medical facts or medical
evidence by a health professional.
‘‘(iv) MATTERS
SPECIFICALLY
NOT
SUBJECT TO REVIEW.—The requirements
of subparagraphs (B), (C), (D), and (E)
shall not apply in the case of any adverse
coverage decision if such decision is based
on—
‘‘(I) a determination of eligibility
for benefits,
‘‘(II) the application of explicit
plan limits on the number, cost, or
duration of any benefit, or
‘‘(III) a limitation on the amount
of any benefit payment or a require-
ment to make copayments under the
terms of the plan.
Review under this paragraph shall not be avail-
able for any coverage decision that has pre-
viously undergone review under this paragraph.
‘‘(B) LIMITS
ON
ALLOWABLE
ADVANCE
PAYMENTS.—The review under this paragraph
in connection with an adverse coverage decision
shall be available subject to any requirement of
the plan (unless waived by the plan for financial
or other reasons) for payment in advance to the
plan by the participant or beneficiary seeking
review of an amount not to exceed the greater
of (i) the lesser of $100 or 10 percent of the
cost of the medical care involved in the decision,
or (ii) $25, with such dollar amount subject to
compounded annual adjustments in the same
manner and to the same extent as apply under
section 215(i) of the Social Security Act, except
that, for any calendar year, such amount as so
adjusted shall be deemed, solely for such cal-
endar year, to be equal to such amount rounded
to the nearest $10. No such payment may be
required in the case of any participant or bene-
ficiary whose enrollment under the plan is paid
for, in whole or in part, under a State plan
under title XIX or XXI of the Social Security
Act. Any such advance payment shall be subject
to reimbursement if the recommendation of the
independent medical expert or experts under
subparagraph (D)(iii) is to reverse or modify
the coverage decision.
‘‘(C) REQUEST
TO
INDEPENDENT
CON-
TRACT
EXPERTS
FOR
DETERMINATION
OF
WHETHER
COVERAGE
DECISION
REQUIRED
EVALUATION
OF
MEDICAL
FACTS
OR
EVI-
DENCE.—
‘‘(i) IN GENERAL.—In the case of a
request for review made by a participant or
beneficiary as described in subparagraph
(A), if the requirements of clause (ii) or
(iii) of subparagraph (A) are met (and re-
view is not otherwise precluded under sub-
paragraph (A)(iv)), the terms of the plan
shall provide for a procedure for initial re-
view by an independent contract expert se-
lected by the plan under which the expert
will determine whether the coverage deci-
sion requires the evaluation of medical
facts or evidence by a health professional.
If the expert determines that the coverage
decision requires such evaluation, reconsid-
eration of such adverse decision shall pro-
ceed under this paragraph. If the expert
determines that the coverage decision does
not require such evaluation, the adverse
decision shall remain the final decision of
the plan.
‘‘(ii) INDEPENDENT
CONTRACT
EX-
PERTS.—For purposes of this subpara-
graph, the term ‘independent contract ex-
pert’ means a professional—
‘‘(I) who has appropriate creden-
tials and has attained recognized ex-
pertise in the applicable area of con-
tract interpretation;
‘‘(II) who was not involved in the
initial decision or any earlier review
thereof; and
‘‘(III) who is selected in accord-
ance with subparagraph (G)(i) and
meets the requirements of subpara-
graph (G)(ii).
‘‘(D) RECONSIDERATION
OF
INITIAL
RE-
VIEW DECISION.—
‘‘(i) IN GENERAL.—In the case of a
request for review made by a participant or
beneficiary as described in subparagraph
(A), if the requirements of subparagraph
(A)(i) are met or reconsideration proceeds
under this paragraph pursuant to subpara-
graph (C), the terms of the plan shall pro-
vide for a procedure for such reconsider-
ation in accordance with clause (ii).
‘‘(ii) PROCEDURE
FOR
RECONSIDER-
ATION.—The procedure required under
clause (i) shall include the following—
‘‘(I) One or more independent
medical experts will be selected in ac-
cordance with subparagraph (F) to re-
consider any coverage decision de-
scribed in subparagraph (A) to deter-
mine whether such decision was in ac-
cordance with the terms of the plan
and this title.
‘‘(II) The record for review (in-
cluding a specification of the terms of
the plan and other criteria serving as
the basis for the initial review deci-
sion) will be presented to such expert
or experts and maintained in a man-
ner which will ensure confidentiality
of such record.
‘‘(III) Such expert or experts will
reconsider the initial review decision
to determine whether such decision
was in accordance with the terms of
the plan and this title. Such reconsid-
eration shall include the initial deci-
sion of the plan, the medical condition
of the patient, and the recommenda-
tions of the treating physician. The
experts shall take into account in the
course of such reconsideration any
guidelines 
adopted 
by 
the 
plan
through a process involving medical
practitioners and peer-reviewed med-
ical literature identified as such under
criteria established by the Food and
Drug Administration.
‘‘(IV) Such expert or experts will
issue a written decision affirming,
modifying, or reversing the initial re-
view 
decision, 
setting 
forth 
the
grounds for the decision.
‘‘(E) TIME
LIMITS
FOR
RECONSIDER-
ATION.—Any review under this paragraph (in-
cluding any review under subparagraph (C))
shall be completed before the end of the recon-
sideration period (as defined in paragraph
(10)(L)) following the review filing date in con-
nection with such review. The decision under
this paragraph affirming, reversing, or modi-
fying the initial review decision of the plan shall
be the final decision of the plan. Failure to
issue a written decision before the end of the
reconsideration period in any reconsideration
requested under this paragraph shall be treated
as a final decision affirming the initial review
decision of the plan.
‘‘(F) INDEPENDENT MEDICAL EXPERTS.—
‘‘(i) IN
GENERAL.—For purposes of
this paragraph, the term ‘independent
medical expert’ means, in connection with
any coverage decision by a group health
plan, a professional—
‘‘(I) who is a physician or, if ap-
propriate, another medical profes-
sional;
‘‘(II) who has appropriate cre-
dentials and has attained recognized
expertise in the applicable medical
field;
‘‘(III) who was not involved in
the initial decision or any earlier re-
view thereof;
‘‘(IV) who has not history of dis-
ciplinary action or sanctions (includ-
ing, but not limited to, loss of staff
privileges or participation restriction)
taken or pending by any hospital,
health carrier, government, or regu-
latory body; and
‘‘(V) who is selected in accord-
ance with subparagraph (G)(i) and
meets the requirements of subpara-
graph (G)(ii).
‘‘(G) SELECTION OF EXPERTS.—
‘‘(i) IN
GENERAL.—An independent
contract expert or independent medical ex-
pert is selected in accordance with this
clause if—
‘‘(I) the expert is selected by an
intermediary which itself meets the re-
quirements of clause (ii), by means of
a method which ensures that the iden-
tity of the expert is not disclosed to
the plan, any health insurance issuer
offering health insurance coverage to
the aggrieved participant or bene-
ficiary in connection with the plan,
and the aggrieved participant or bene-
ficiary under the plan, and the identi-
ties of the plan, the issuer, and the
aggrieved participant or beneficiary
are not disclosed to the expert; or
‘‘(II) the expert is selected, by an
intermediary or otherwise, in a man-
ner that is, under regulations issued
pursuant to negotiated rulemaking,
sufficient to ensure the expert’s inde-
pendence, including selection by the
plan in cases where it is determined
that a suitable intermediary is not
reasonably available,
and the method of selection is devised to
reasonably ensure that the expert selected
meets the independence requirements of
clause (ii).
‘‘(ii) 
INDEPENDENCE
REQUIRE-
MENTS.—An independent contract expert
or independent medical expert or another
entity described in clause (i) meets the
independence requirements of this clause
if—
‘‘(I) the expert or entity is not
affiliated with any related party;
‘‘(II) any compensation received
by such expert or entity in connection
with the external review is reasonable
and not contingent on any decision
rendered by the expert or entity;
‘‘(III) under the terms of the
plan and any health insurance cov-
erage offered in connection with the
plan, the plan and the issuer (if any)
have no recourse against the expert or
entity in connection with the external
review; and
‘‘(IV) the expert or entity does
not otherwise have a conflict of inter-
est with a related party as determined
under any regulations which the Sec-
retary may prescribe.
‘‘(iii) RELATED
PARTY.—For pur-
poses of clause (i)(I), the term ‘related
party’ means—
‘‘(I) the plan or any health insur-
ance issuer offering health insurance
coverage in connection with the plan
(or any officer, director, or manage-
ment employee of such plan or issuer);
‘‘(II) the physician or other med-
ical care provider that provided the
medical care involved in the coverage
decision;
‘‘(III) the institution at which
the medical care involved in the cov-
erage decision is provided;
‘‘(IV) the manufacturer of any
drug or other item that was included
in the medical care involved in the
coverage decision; or
‘‘(V) any other party determined
under any regulations which the Sec-
retary may prescribe to have a sub-
stantial interest in the coverage deci-
sion.
‘‘(iv) AFFILIATED.—For purposes of
clause (ii)(I), the term ‘affiliated’ means,
in connection with any entity, having a fa-
milial, financial, or professional relation-
ship with, or interest in, such entity.
‘‘(H) MISBEHAVIOR
BY
EXPERTS.—Any
action by the expert or experts in applying for
their selection under this paragraph or in the
course of carrying out their duties under this
paragraph which constitutes—
‘‘(i) fraud or intentional misrepresen-
tation by such expert or experts, or
‘‘(ii) demonstrates failure to adhere to
the standards for selection set forth in sub-
paragraph (G)(ii),
shall be treated as a failure to meet the require-
ments of this paragraph and therefore as a
cause of action which may be brought by a fidu-
ciary under section 502(a)(3).
‘‘(5) PERMITTED ALTERNATIVES TO REQUIRED
INTERNAL REVIEW.—
‘‘(A) IN
GENERAL.—In accordance with
such regulations (if any) as may be prescribed
by the Secretary for purposes of this paragraph,
in the case of any initial coverage decision for
benefits 
under 
paragraph 
(2)(A)(ii) 
or
(2)(B)(ii), a group health plan may provide an
alternative dispute resolution procedure meeting
the requirements of subparagraph (B) for use
in lieu of the procedures set forth under the
preceding provisions of this subsection relating
review of such decision. Such procedure may be
provided in one form for all participants and
beneficiaries or in a different form each group
of similarly situated participants and bene-
ficiaries.
‘‘(B) REQUIREMENTS.—An alternative dis-
pute resolution procedure meets the require-
ments of this subparagraph, in connection with
any initial coverage decision, if—
‘‘(i) such procedure is utilized solely—
‘‘(I) accordance with the applica-
ble terms of a bona fide collective bar-
gaining agreement pursuant to which
the plan (or the applicable portion
thereof governed by the agreement) is
established or maintained, or
‘‘(II) upon election by all parties
to such decision,
‘‘(ii) the procedure incorporates time
limits not exceeding the time limits other-
wise applicable under paragraphs (2)(A)(ii)
and (2)(B)(ii);
‘‘(iii) the procedure incorporates any
otherwise applicable requirement for review
by a physician under paragraph (3), unless
waived by the participant or beneficiary (in
a manner consistent with such regulations
as the Secretary may prescribe to ensure
equitable procedures); and
‘‘(iv) the means of resolution of dis-
pute allow for adequate presentation by
each party of scientific and medical evi-
dence supporting the position of such
party.
‘‘(C) WAIVERS.—In any case in which uti-
lization of the alternative dispute resolution
procedure is voluntarily elected by all parties in
connection with a coverage decision, the plan
may require or allow under such procedure (in
a manner consistent with such regulations as
the Secretary may prescribe to ensure equitable
procedures) any party to waive review of the
coverage decision under paragraph (3), to waive
further review of the coverage decision under
paragraph (4) or section 502, and to elect an
alternative means of external review (other than
review under paragraph (4)).
‘‘(6) PERMITTED ALTERNATIVES TO REQUIRED
EXTERNAL REVIEW.—A group health plan shall not
be treated as failing to meet the requirements of this
subsection in connection with review of coverage de-
cisions under paragraph (4) if the aggrieved partici-
pant or beneficiary elects to utilize a procedure in
connection with such review which is made generally
available under the plan (in a manner consistent
with such regulations as the Secretary may prescribe
to ensure equitable procedures) under which—
‘‘(A) the plan agrees in advance of the rec-
ommendations of the independent medical ex-
pert or experts under paragraph (4)(C)(iii) to
render a final decision in accordance with such
recommendations; and
‘‘(B) the participant or beneficiary waives
in advance any right to review of the final deci-
sion under section 502.
‘‘(7) REVIEW REQUIREMENTS.—In any review
of a decision issued under this subsection—
‘‘(A) the record below shall be maintained
for purposes of review in accordance with
standards which shall be prescribed in regula-
tions of the Secretary designed to facilitate
such review, and
‘‘(B) any decision upon review which modi-
fies or reverses a decision below shall specifi-
cally set forth a determination that the record
upon review is sufficient to rebut a presumption
in favor of the decision below.
‘‘(8) COMPLIANCE
WITH
FIDUCIARY
STAND-
ARDS.—The issuance of a decision under a plan
upon review in good faith compliance with the re-
quirements of this subsection shall not be treated as
a violation of part 4.
‘‘(9) GROUP
HEALTH
PLAN
DEFINED.—For
purposes of this section—
‘‘(A) IN
GENERAL.—The term ‘group
health plan’ shall have the meaning provided in
section 733(a).
‘‘(B) TREATMENT
OF
PARTNERSHIPS.—
The provisions of paragraphs (1), (2), and (3)
of section 732(d) shall apply.
‘‘(10) OTHER DEFINITIONS.—For purposes of
this subsection—
‘‘(A) 
REQUEST
FOR
BENEFIT
PAY-
MENTS.—The term ‘request for benefit pay-
ments’ means a request, for payment of benefits
by a group health plan for medical care, which
is made by, or (if expressly authorized) on be-
half of, a participant or beneficiary after such
medical care has been provided.
‘‘(B) REQUIRED DETERMINATION OF MED-
ICAL
NECESSITY.—The term ‘required deter-
mination of medical necessity’ means a deter-
mination required under a group health plan
solely that proposed medical care meets, under
the facts and circumstances at the time of the
determination, the plan’s requirements for med-
ical appropriateness or necessity (which may be
subject to exceptions under the plan for fraud
or misrepresentation), irrespective of whether
the proposed medical care otherwise meets
other terms and conditions of coverage, but
only if such determination does not constitute
an advance determination of coverage (as de-
fined in subparagraph (C)).
‘‘(C) ADVANCE DETERMINATION OF COV-
ERAGE.—The term ‘advance determination of
coverage’ means a determination under a group
health plan that proposed medical care meets,
under the facts and circumstances at the time
of the determination, the plan’s terms and con-
ditions of coverage (which may be subject to ex-
ceptions under the plan for fraud or misrepre-
sentation).
‘‘(D) REQUEST FOR ADVANCE DETERMINA-
TION OF COVERAGE.—The term ‘request for ad-
vance determination of coverage’ means a re-
quest for an advance determination of coverage
of medical care which is made by, or (if ex-
pressly authorized) on behalf of, a participant
or beneficiary before such medical care is pro-
vided.
‘‘(E) REQUEST FOR EXPEDITED ADVANCE
DETERMINATION OF COVERAGE.—The term ‘re-
quest for expedited advance determination of
coverage’ means a request for advance deter-
mination of coverage, in any case in which the
proposed medical care constitutes accelerated
need medical care.
‘‘(F) REQUEST
FOR
REQUIRED
DETER-
MINATION OF MEDICAL NECESSITY.—The term
‘request for required determination of medical
necessity’ means a request for a required deter-
mination of medical necessity for medical care
which is made by or on behalf of a participant
or beneficiary before the medical care is pro-
vided.
‘‘(G) REQUEST FOR EXPEDITED REQUIRED
DETERMINATION
OF
MEDICAL
NECESSITY.—
The term ‘request for expedited required deter-
mination of medical necessity’ means a request
for required determination of medical necessity
in any case in which the proposed medical care
constitutes accelerated need medical care.
‘‘(H) 
ACCELERATED
NEED
MEDICAL
CARE.—The term ‘accelerated need medical
care’ means medical care in any case in which
an appropriate physician has certified in writing
(or as otherwise provided in regulations of the
Secretary) that the participant or beneficiary is
stabilized and—
‘‘(i) that failure to immediately pro-
vide the care to the participant or bene-
ficiary could reasonably be expected to re-
sult in—
‘‘(I) placing the health of such
participant or beneficiary (or, with re-
spect to such a participant or bene-
ficiary who is a pregnant woman, the
health of the woman or her unborn
child) in serious jeopardy;
‘‘(II) serious impairment to bod-
ily functions; or
‘‘(III) serious dysfunction of any
bodily organ or part; or
‘‘(ii) that immediate provision of the
care is necessary because the participant
or beneficiary has made or is at serious
risk of making an attempt to harm himself
or herself or another individual.
‘‘(I) INITIAL DECISION PERIOD.—The term
‘initial decision period’ means a period of 30
days, or such longer period as may be pre-
scribed in regulations of the Secretary.
‘‘(J) INTERNAL
REVIEW
PERIOD.—The
term ‘internal review period’ means a period of
30 days, or such longer period as may be pre-
scribed in regulations of the Secretary.
‘‘(K) ACCELERATED NEED DECISION PE-
RIOD.—The term ‘accelerated need decision pe-
riod’ means a period of 5 days, or such longer
period as may be prescribed in regulations of
the Secretary.
‘‘(L) 
RECONSIDERATION
PERIOD.—The
term ‘reconsideration period’ means a period of
25 days, or such longer period as may be pre-
scribed in regulations of the Secretary, except
that—
‘‘(i) in the case of a decision involving
urgent medical care, such term means the
urgent decision period; and
‘‘(ii) in the case of a decision involving
accelerated need medical care, such term
means the accelerated need decision period.
‘‘(M) FILING
COMPLETION
DATE.—The
term ‘filing completion date’ means, in connec-
tion with a group health plan, the date as of
which the plan is in receipt of all information
reasonably required (in writing or in such other
reasonable form as may be specified by the
plan) to make an initial coverage decision.
‘‘(N) REVIEW
FILING
DATE.—The term
‘review filing date’ means, in connection with a
group health plan, the date as of which the ap-
propriate named fiduciary (or the independent
medical expert or experts in the case of a review
under paragraph (4)) is in receipt of all infor-
mation reasonably required (in writing or in
such other reasonable form as may be specified
by the plan) to make a decision to affirm, mod-
ify, or reverse a coverage decision.
‘‘(O) MEDICAL CARE.—The term ‘medical
care’ has the meaning provided such term by
section 733(a)(2).
‘‘(P) HEALTH
INSURANCE
COVERAGE.—
The term ‘health insurance coverage’ has the
meaning 
provided 
such 
term 
by 
section
733(b)(1).
‘‘(Q) HEALTH
INSURANCE
ISSUER.—The
term ‘health insurance issuer’ has the meaning
provided such term by section 733(b)(2).
‘‘(R) WRITTEN OR IN WRITING.—
‘‘(i) IN GENERAL.—A request or deci-
sion shall be deemed to be ‘written’ or ‘in
writing’ if such request or decision is pre-
sented in a generally recognized printable
or electronic format. The Secretary may by
regulation provide for presentation of in-
formation otherwise required to be in writ-
ten form in such other forms as may be
appropriate under the circumstances.
‘‘(ii) MEDICAL APPROPRIATENESS OR
INVESTIGATIONAL
ITEMS
OR
EXPERI-
MENTAL TREATMENT DETERMINATIONS.—
For purposes of this subparagraph, in the
case of a request for advance determina-
tion of coverage, a request for expedited
advance determination of coverage, a re-
quest for required determination of medical
necessity, or a request for expedited re-
quired determination of medical necessity,
if the decision on such request is conveyed
to the provider of medical care or to the
participant or beneficiary by means of tele-
phonic or other electronic communications,
such decision shall be treated as a written
decision.’’.
SEC. 602. CLARIFICATION OF ERISA PREEMPTION RULES.
(a) IN GENERAL.—Section 514 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1144)
is amended—
(1) by redesignating subsection (d) as sub-
section (e); and
(2) by inserting after subsection (c) the fol-
lowing new subsection:
‘‘(d) The procedures and remedies required or pro-
vided under sections 502 and 503 in connection with—
‘‘(1) review of claims for benefits under em-
ployee benefit plans and for review of decisions deny-
ing such claims (including review of coverage deci-
sions referred to in section 503(b) and decisions
upon review of such coverage decisions), and
‘‘(2) causes of action brought to recover plan
benefits, to enforce rights under the terms of the
plan or this title, or to clarify rights to future bene-
fits under the terms of the plan or this title,
are the exclusive procedures and remedies with respect to
any such review or cause of action and supersede any pro-
vision of State law providing for any such review or cause
of action.’’.
(b) 
CONFORMING
AMENDMENT.—Section
514(b)(2)(A) of such Act (42 U.S.C. 1144(b)(2)(A)) is
amended by inserting ‘‘or subsection (d)’’ after ‘‘subpara-
graph (B)’’.
SEC. 603. EFFECTIVE DATE.
(a) IN GENERAL.—The amendments made by this
title shall apply with respect to grievances arising in plan
years beginning on or after January 1 of the second cal-
endar year following 12 months after the date the Sec-
retary of Labor issues all regulations necessary to carry
out amendments made by this title.
(b) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this title, against a group health plan or
health insurance issuer with respect to a violation of a re-
quirement imposed by such amendments before the date
of issuance of final regulations issued in connection with
such requirement, if the plan or issuer has sought to com-
ply in good faith with such requirement.
(c) COLLECTIVE BARGAINING AGREEMENTS.—Any
plan amendment made pursuant to a collective bargaining
agreement relating to the plan which amends the plan
solely to conform to any requirement added by this title
shall not be treated as a termination of such collective bar-
gaining agreement.
TITLE VII—SMALL BUSINESS AC-
CESS AND CHOICE FOR EN-
TREPRENEURS
SEC. 
701. 
RULES 
GOVERNING 
ASSOCIATION 
HEALTH
PLANS.
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding after part 7 the following new part:
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH
PLANS
‘‘SEC. 801. ASSOCIATION HEALTH PLANS.
‘‘(a) IN GENERAL.—For purposes of this part, the
term ‘association health plan’ means a group health
plan—
‘‘(1) whose sponsor is (or is deemed under this
part to be) described in subsection (b); and
‘‘(2) under which at least one option of health
insurance coverage offered by a health insurance
issuer (which may include, among other options,
managed care options, point of service options, and
preferred provider options) is provided to partici-
pants and beneficiaries, unless, for any plan year,
such coverage remains unavailable to the plan de-
spite good faith efforts exercised by the plan to se-
cure such coverage.
‘‘(b) SPONSORSHIP.—The sponsor of a group health
plan is described in this subsection if such sponsor—
‘‘(1) is organized and maintained in good faith,
with a constitution and bylaws specifically stating its
purpose and providing for periodic meetings on at
least an annual basis, as a bona fide trade associa-
tion, a bona fide industry association (including a
rural electric cooperative association or a rural tele-
phone cooperative association), a bona fide profes-
sional association, or a bona fide chamber of com-
merce (or similar bona fide business association, in-
cluding a corporation or similar organization that
operates on a cooperative basis (within the meaning
of section 1381 of the Internal Revenue Code of
1986)), for substantial purposes other than that of
obtaining or providing medical care;
‘‘(2) is established as a permanent entity which
receives the active support of its members and col-
lects from its members on a periodic basis dues or
payments necessary to maintain eligibility for mem-
bership in the sponsor; and
‘‘(3) does not condition membership, such dues
or payments, or coverage under the plan on the
basis of health status-related factors with respect to
the employees of its members (or affiliated mem-
bers), or the dependents of such employees, and does
not condition such dues or payments on the basis of
group health plan participation.
Any sponsor consisting of an association of entities which
meet the requirements of paragraphs (1), (2), and (3)
shall be deemed to be a sponsor described in this sub-
section.
‘‘SEC. 
802. 
CERTIFICATION 
OF 
ASSOCIATION 
HEALTH
PLANS.
‘‘(a) IN GENERAL.—The applicable authority shall
prescribe by regulation, through negotiated rulemaking, a
procedure under which, subject to subsection (b), the ap-
plicable authority shall certify association health plans
which apply for certification as meeting the requirements
of this part.
‘‘(b) STANDARDS.—Under the procedure prescribed
pursuant to subsection (a), in the case of an association
health plan that provides at least one benefit option which
does not consist of health insurance coverage, the applica-
ble authority shall certify such plan as meeting the re-
quirements of this part only if the applicable authority is
satisfied that—
‘‘(1) such certification—
‘‘(A) is administratively feasible;
‘‘(B) is not adverse to the interests of the
individuals covered under the plan; and
‘‘(C) is protective of the rights and benefits
of the individuals covered under the plan; and
‘‘(2) the applicable requirements of this part
are met (or, upon the date on which the plan is to
commence operations, will be met) with respect to
the plan.
‘‘(c) REQUIREMENTS APPLICABLE
TO CERTIFIED
PLANS.—An association health plan with respect to which
certification under this part is in effect shall meet the ap-
plicable requirements of this part, effective on the date
of certification (or, if later, on the date on which the plan
is to commence operations).
‘‘(d) REQUIREMENTS
FOR
CONTINUED
CERTIFI-
CATION.—The applicable authority may provide by regula-
tion, through negotiated rulemaking, for continued certifi-
cation of association health plans under this part.
‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED
PLANS.—The applicable authority shall establish a class
certification procedure for association health plans under
which all benefits consist of health insurance coverage.
Under such procedure, the applicable authority shall pro-
vide for the granting of certification under this part to
the plans in each class of such association health plans
upon appropriate filing under such procedure in connec-
tion with plans in such class and payment of the pre-
scribed fee under section 807(a).
‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION
HEALTH PLANS.—An association health plan which offers
one or more benefit options which do not consist of health
insurance coverage may be certified under this part only
if such plan consists of any of the following:
‘‘(1) a plan which offered such coverage on the
date of the enactment of the Small Business Access
and Choice for Entrepreneurs Act of 1999,
‘‘(2) a plan under which the sponsor does not
restrict membership to one or more trades and busi-
nesses or industries and whose eligible participating
employers represent a broad cross-section of trades
and businesses or industries, or
‘‘(3) a plan whose eligible participating employ-
ers represent one or more trades or businesses, or
one or more industries, which have been indicated as
having average or above-average health insurance
risk or health claims experience by reason of State
rate filings, denials of coverage, proposed premium
rate levels, and other means demonstrated by such
plan in accordance with regulations which the Sec-
retary shall prescribe through negotiated rule-
making, including (but not limited to) the following:
agriculture; automobile dealerships; barbering and
cosmetology; child care; construction; dance, theat-
rical, and orchestra productions; disinfecting and
pest control; eating and drinking establishments;
fishing; hospitals; labor organizations; logging; man-
ufacturing (metals); mining; medical and dental
practices; medical laboratories; sanitary services;
transportation (local and freight); and warehousing.
‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND
BOARDS OF TRUSTEES.
‘‘(a) SPONSOR.—The requirements of this subsection
are met with respect to an association health plan if the
sponsor has met (or is deemed under this part to have
met) the requirements of section 801(b) for a continuous
period of not less than 3 years ending with the date of
the application for certification under this part.
‘‘(b) BOARD OF TRUSTEES.—The requirements of
this subsection are met with respect to an association
health plan if the following requirements are met:
‘‘(1) FISCAL CONTROL.—The plan is operated,
pursuant to a trust agreement, by a board of trust-
ees which has complete fiscal control over the plan
and which is responsible for all operations of the
plan.
‘‘(2) RULES
OF
OPERATION
AND
FINANCIAL
CONTROLS.—The board of trustees has in effect
rules of operation and financial controls, based on a
3-year plan of operation, adequate to carry out the
terms of the plan and to meet all requirements of
this title applicable to the plan.
‘‘(3) RULES
GOVERNING
RELATIONSHIP
TO
PARTICIPATING
EMPLOYERS
AND
TO
CONTRAC-
TORS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraphs (B) and (C), the members of the
board of trustees are individuals selected from
individuals who are the owners, officers, direc-
tors, or employees of the participating employ-
ers or who are partners in the participating em-
ployers and actively participate in the business.
‘‘(B) LIMITATION.—
‘‘(i) GENERAL RULE.—Except as pro-
vided in clauses (ii) and (iii), no such
member is an owner, officer, director, or
employee of, or partner in, a contract ad-
ministrator or other service provider to the
plan.
‘‘(ii) LIMITED EXCEPTION FOR PRO-
VIDERS OF SERVICES SOLELY ON BEHALF
OF THE SPONSOR.—Officers or employees
of a sponsor which is a service provider
(other than a contract administrator) to
the plan may be members of the board if
they constitute not more than 25 percent
of the membership of the board and they
do not provide services to the plan other
than on behalf of the sponsor.
‘‘(iii) TREATMENT OF PROVIDERS OF
MEDICAL CARE.—In the case of a sponsor
which is an association whose membership
consists primarily of providers of medical
care, clause (i) shall not apply in the case
of any service provider described in sub-
paragraph (A) who is a provider of medical
care under the plan.
‘‘(C) CERTAIN
PLANS
EXCLUDED.—Sub-
paragraph (A) shall not apply to an association
health plan which is in existence on the date of
the enactment of the Small Business Access
and Choice for Entrepreneurs Act of 1999.
‘‘(D) SOLE
AUTHORITY.—The board has
sole authority under the plan to approve appli-
cations for participation in the plan and to con-
tract with a service provider to administer the
day-to-day affairs of the plan.
‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In
the case of a group health plan which is established and
maintained by a franchiser for a franchise network con-
sisting of its franchisees—
‘‘(1) the requirements of subsection (a) and sec-
tion 801(a)(1) shall be deemed met if such require-
ments would otherwise be met if the franchiser were
deemed to be the sponsor referred to in section
801(b), such network were deemed to be an associa-
tion described in section 801(b), and each franchisee
were deemed to be a member (of the association and
the sponsor) referred to in section 801(b); and
‘‘(2) the requirements of section 804(a)(1) shall
be deemed met.
The Secretary may by regulation, through negotiated rule-
making, define for purposes of this subsection the terms
‘franchiser’, ‘franchise network’, and ’franchisee’.
‘‘(d) CERTAIN COLLECTIVELY BARGAINED PLANS.—
‘‘(1) IN
GENERAL.—In the case of a group
health plan described in paragraph (2)—
‘‘(A) the requirements of subsection (a)
and section 801(a)(1) shall be deemed met;
‘‘(B) the joint board of trustees shall be
deemed a board of trustees with respect to
which the requirements of subsection (b) are
met; and
‘‘(C) the requirements of section 804 shall
be deemed met.
‘‘(2) REQUIREMENTS.—A group health plan is
described in this paragraph if—
‘‘(A) the plan is a multiemployer plan; or
‘‘(B) the plan is in existence on April 1,
1997, and would be described in section
3(40)(A)(i) but solely for the failure to meet
the requirements of section 3(40)(C)(ii).
‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE-
MENTS.
‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The
requirements of this subsection are met with respect to
an association health plan if, under the terms of the
plan—
‘‘(1) each participating employer must be—
‘‘(A) a member of the sponsor,
‘‘(B) the sponsor, or
‘‘(C) an affiliated member of the sponsor
with respect to which the requirements of sub-
section (b) are met,
except that, in the case of a sponsor which is a pro-
fessional association or other individual-based asso-
ciation, if at least one of the officers, directors, or
employees of an employer, or at least one of the in-
dividuals who are partners in an employer and who
actively participates in the business, is a member or
such an affiliated member of the sponsor, partici-
pating employers may also include such employer;
and
‘‘(2) all individuals commencing coverage under
the plan after certification under this part must
be—
‘‘(A) active or retired owners (including
self-employed individuals), officers, directors, or
employees of, or partners in, participating em-
ployers; or
‘‘(B) the beneficiaries of individuals de-
scribed in subparagraph (A).
‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM-
PLOYEES.—In the case of an association health plan in
existence on the date of the enactment of the Small Busi-
ness Access and Choice for Entrepreneurs Act of 1999,
an affiliated member of the sponsor of the plan may be
offered coverage under the plan as a participating em-
ployer only if—
‘‘(1) the affiliated member was an affiliated
member on the date of certification under this part;
or
‘‘(2) during the 12-month period preceding the
date of the offering of such coverage, the affiliated
member has not maintained or contributed to a
group health plan with respect to any of its employ-
ees who would otherwise be eligible to participate in
such association health plan.
‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re-
quirements of this subsection are met with respect to an
association health plan if, under the terms of the plan,
no participating employer may provide health insurance
coverage in the individual market for any employee not
covered under the plan which is similar to the coverage
contemporaneously provided to employees of the employer
under the plan, if such exclusion of the employee from cov-
erage under the plan is based on a health status-related
factor with respect to the employee and such employee
would, but for such exclusion on such basis, be eligible
for coverage under the plan.
‘‘(d) PROHIBITION
OF DISCRIMINATION AGAINST
EMPLOYERS
AND EMPLOYEES ELIGIBLE TO PARTICI-
PATE.—The requirements of this subsection are met with
respect to an association health plan if—
‘‘(1) under the terms of the plan, all employers
meeting the preceding requirements of this section
are eligible to qualify as participating employers for
all geographically available coverage options, unless,
in the case of any such employer, participation or
contribution requirements of the type referred to in
section 2711 of the Public Health Service Act are
not met;
‘‘(2) upon request, any employer eligible to par-
ticipate is furnished information regarding all cov-
erage options available under the plan; and
‘‘(3) the applicable requirements of sections
701, 702, and 703 are met with respect to the plan.
‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN
DOCUMENTS, CONTRIBUTION RATES, AND
BENEFIT OPTIONS.
‘‘(a) IN GENERAL.—The requirements of this section
are met with respect to an association health plan if the
following requirements are met:
‘‘(1) 
CONTENTS
OF
GOVERNING
INSTRU-
MENTS.—The instruments governing the plan in-
clude a written instrument, meeting the require-
ments of an instrument required under section
402(a)(1), which—
‘‘(A) provides that the board of trustees
serves as the named fiduciary required for plans
under section 402(a)(1) and serves in the ca-
pacity of a plan administrator (referred to in
section 3(16)(A));
‘‘(B) provides that the sponsor of the plan
is to serve as plan sponsor (referred to in sec-
tion 3(16)(B)); and
‘‘(C) incorporates the requirements of sec-
tion 806.
‘‘(2) CONTRIBUTION
RATES
MUST
BE
NON-
DISCRIMINATORY.—
‘‘(A) The contribution rates for any par-
ticipating small employer do not vary on the
basis of the claims experience of such employer
and do not vary on the basis of the type of
business or industry in which such employer is
engaged.
‘‘(B) Nothing in this title or any other pro-
vision of law shall be construed to preclude an
association health plan, or a health insurance
issuer offering health insurance coverage in
connection with an association health plan,
from—
‘‘(i) setting contribution rates based
on the claims experience of the plan; or
‘‘(ii) varying contribution rates for
small employers in a State to the extent
that such rates could vary using the same
methodology employed in such State for
regulating premium rates in the small
group market with respect to health insur-
ance coverage offered in connection with
bona fide associations (within the meaning
of section 2791(d)(3) of the Public Health
Service Act),
subject to the requirements of section 702(b)
relating to contribution rates.
‘‘(3) FLOOR FOR NUMBER OF COVERED INDI-
VIDUALS
WITH
RESPECT
TO
CERTAIN
PLANS.—If
any benefit option under the plan does not consist
of health insurance coverage, the plan has as of the
beginning of the plan year not fewer than 1,000 par-
ticipants and beneficiaries.
‘‘(4) MARKETING REQUIREMENTS.—
‘‘(A) IN
GENERAL.—If a benefit option
which consists of health insurance coverage is
offered under the plan, State-licensed insurance
agents shall be used to distribute to small em-
ployers coverage which does not consist of
health insurance coverage in a manner com-
parable to the manner in which such agents are
used to distribute health insurance coverage.
‘‘(B) 
STATE-LICENSED
INSURANCE
AGENTS.—For purposes of subparagraph (A),
the term ‘State-licensed insurance agents’
means one or more agents who are licensed in
a State and are subject to the laws of such
State relating to licensure, qualification, test-
ing, examination, and continuing education of
persons authorized to offer, sell, or solicit
health insurance coverage in such State.
‘‘(5) 
REGULATORY
REQUIREMENTS.—Such
other requirements as the applicable authority deter-
mines are necessary to carry out the purposes of this
part, which shall be prescribed by the applicable au-
thority by regulation through negotiated rulemaking.
‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO
DESIGN BENEFIT OPTIONS.—Subject to section 514(d),
nothing in this part or any provision of State law (as de-
fined in section 514(c)(1)) shall be construed to preclude
an association health plan, or a health insurance issuer
offering health insurance coverage in connection with an
association health plan, from exercising its sole discretion
in selecting the specific items and services consisting of
medical care to be included as benefits under such plan
or coverage, except (subject to section 514) in the case
of any law to the extent that it (1) prohibits an exclusion
of a specific disease from such coverage, or (2) is not pre-
empted under section 731(a)(1) with respect to matters
governed by section 711 or 712.
‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS
FOR 
SOLVENCY 
FOR 
PLANS 
PROVIDING
HEALTH BENEFITS IN ADDITION TO HEALTH
INSURANCE COVERAGE.
‘‘(a) IN GENERAL.—The requirements of this section
are met with respect to an association health plan if—
‘‘(1) the benefits under the plan consist solely
of health insurance coverage; or
‘‘(2) if the plan provides any additional benefit
options which do not consist of health insurance cov-
erage, the plan—
‘‘(A) establishes and maintains reserves
with respect to such additional benefit options,
in amounts recommended by the qualified actu-
ary, consisting of—
‘‘(i) a reserve sufficient for unearned
contributions;
‘‘(ii) a reserve sufficient for benefit li-
abilities which have been incurred, which
have not been satisfied, and for which risk
of loss has not yet been transferred, and
for expected administrative costs with re-
spect to such benefit liabilities;
‘‘(iii) a reserve sufficient for any other
obligations of the plan; and
‘‘(iv) a reserve sufficient for a margin
of error and other fluctuations, taking into
account the specific circumstances of the
plan; and
‘‘(B) establishes and maintains aggregate
and specific excess /stop loss insurance and sol-
vency indemnification, with respect to such ad-
ditional benefit options for which risk of loss
has not yet been transferred, as follows:
‘‘(i) The plan shall secure aggregate
excess /stop loss insurance for the plan
with an attachment point which is not
greater than 125 percent of expected gross
annual claims. The applicable authority
may by regulation, through negotiated
rulemaking, provide for upward adjust-
ments in the amount of such percentage in
specified circumstances in which the plan
specifically provides for and maintains re-
serves in excess of the amounts required
under subparagraph (A).
‘‘(ii) The plan shall secure specific ex-
cess /stop loss insurance for the plan with
an attachment point which is at least equal
to an amount recommended by the plan’s
qualified actuary (but not more than
$175,000). The applicable authority may
by regulation, through negotiated rule-
making, provide for adjustments in the
amount of such insurance in specified cir-
cumstances in which the plan specifically
provides for and maintains reserves in ex-
cess of the amounts required under sub-
paragraph (A).
‘‘(iii) The plan shall secure indem-
nification insurance for any claims which
the plan is unable to satisfy by reason of
a plan termination.
Any regulations prescribed by the applicable authority
pursuant to clause (i) or (ii) of subparagraph (B) may
allow for such adjustments in the required levels of excess /
stop loss insurance as the qualified actuary may rec-
ommend, taking into account the specific circumstances
of the plan.
‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS
RESERVES.—In the case of any association health plan de-
scribed in subsection (a)(2), the requirements of this sub-
section are met if the plan establishes and maintains sur-
plus in an amount at least equal to—
‘‘(1) $500,000, or
‘‘(2) such greater amount (but not greater than
$2,000,000) as may be set forth in regulations pre-
scribed by the applicable authority through nego-
tiated rulemaking, based on the level of aggregate
and specific excess /stop loss insurance provided with
respect to such plan.
‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of
any association health plan described in subsection (a)(2),
the applicable authority may provide such additional re-
quirements relating to reserves and excess /stop loss insur-
ance as the applicable authority considers appropriate.
Such requirements may be provided by regulation, through
negotiated rulemaking, with respect to any such plan or
any class of such plans.
‘‘(d) ADJUSTMENTS FOR EXCESS /STOP LOSS INSUR-
ANCE.—The applicable authority may provide for adjust-
ments to the levels of reserves otherwise required under
subsections (a) and (b) with respect to any plan or class
of plans to take into account excess /stop loss insurance
provided with respect to such plan or plans.
‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The
applicable authority may permit an association health plan
described in subsection (a)(2) to substitute, for all or part
of the requirements of this section (except subsection
(a)(2)(B)(iii)), such security, guarantee, hold-harmless ar-
rangement, or other financial arrangement as the applica-
ble authority determines to be adequate to enable the plan
to fully meet all its financial obligations on a timely basis
and is otherwise no less protective of the interests of par-
ticipants and beneficiaries than the requirements for
which it is substituted. The applicable authority may take
into account, for purposes of this subsection, evidence pro-
vided by the plan or sponsor which demonstrates an as-
sumption of liability with respect to the plan. Such evi-
dence may be in the form of a contract of indemnification,
lien, bonding, insurance, letter of credit, recourse under
applicable terms of the plan in the form of assessments
of participating employers, security, or other financial ar-
rangement.
‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT
OF BENEFITS BY CERTAIN PLANS IN DISTRESS.—
‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO-
CIATION HEALTH PLAN FUND.—
‘‘(A) IN GENERAL.—In the case of an as-
sociation health plan described in subsection
(a)(2), the requirements of this subsection are
met if the plan makes payments into the Asso-
ciation Health Plan Fund under this subpara-
graph when they are due. Such payments shall
consist of annual payments in the amount of
$5,000, and, in addition to such annual pay-
ments, such supplemental payments as the Sec-
retary may determine to be necessary under
paragraph (2). Payments under this paragraph
are payable to the Fund at the time determined
by the Secretary. Initial payments are due in
advance of certification under this part. Pay-
ments shall continue to accrue until a plan’s as-
sets are distributed pursuant to a termination
procedure.
‘‘(B) PENALTIES FOR FAILURE TO MAKE
PAYMENTS.—If any payment is not made by a
plan when it is due, a late payment charge of
not more than 100 percent of the payment
which was not timely paid shall be payable by
the plan to the Fund.
‘‘(C) CONTINUED
DUTY
OF
THE
SEC-
RETARY.—The Secretary shall not cease to
carry out the provisions of paragraph (2) on ac-
count of the failure of a plan to pay any pay-
ment when due.
‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE
EXCESS /STOP LOSS INSURANCE COVERAGE AND IN-
DEMNIFICATION
INSURANCE
COVERAGE
FOR
CER-
TAIN PLANS.—In any case in which the applicable
authority determines that there is, or that there is
reason to believe that there will be: (A) a failure to
take necessary corrective actions under section
809(a) with respect to an association health plan de-
scribed in subsection (a)(2); or (B) a termination of
such a plan under section 809(b) or 810(b)(8) (and,
if the applicable authority is not the Secretary, cer-
tifies such determination to the Secretary), the Sec-
retary shall determine the amounts necessary to
make payments to an insurer (designated by the
Secretary) to maintain in force excess /stop loss in-
surance coverage or indemnification insurance cov-
erage for such plan, if the Secretary determines that
there is a reasonable expectation that, without such
payments, claims would not be satisfied by reason of
termination of such coverage. The Secretary shall, to
the extent provided in advance in appropriation
Acts, pay such amounts so determined to the insurer
designated by the Secretary.
‘‘(3) ASSOCIATION HEALTH PLAN FUND.—
‘‘(A) IN GENERAL.—There is established
on the books of the Treasury a fund to be
known as the ‘Association Health Plan Fund’.
The Fund shall be available for making pay-
ments pursuant to paragraph (2). The Fund
shall be credited with payments received pursu-
ant to paragraph (1)(A), penalties received pur-
suant to paragraph (1)(B); and earnings on in-
vestments of amounts of the Fund under sub-
paragraph (B).
‘‘(B) INVESTMENT.—Whenever the Sec-
retary determines that the moneys of the fund
are in excess of current needs, the Secretary
may request the investment of such amounts as
the Secretary determines advisable by the Sec-
retary of the Treasury in obligations issued or
guaranteed by the United States.
‘‘(g) EXCESS /STOP LOSS INSURANCE.—For pur-
poses of this section—
‘‘(1) AGGREGATE
EXCESS /STOP
LOSS
INSUR-
ANCE.—The term ‘aggregate excess /stop loss insur-
ance’ means, in connection with an association
health plan, a contract—
‘‘(A) under which an insurer (meeting such
minimum standards as the applicable authority may
prescribe by regulation through negotiated rule-
making) provides for payment to the plan with re-
spect to aggregate claims under the plan in excess
of an amount or amounts specified in such contract;
‘‘(B) which is guaranteed renewable; and
‘‘(C) which allows for payment of premiums by
any third party on behalf of the insured plan.
‘‘(2) SPECIFIC
EXCESS /STOP
LOSS
INSUR-
ANCE.—The term ‘specific excess /stop loss insur-
ance’ means, in connection with an association
health plan, a contract—
‘‘(A) under which an insurer (meeting such
minimum standards as the applicable authority
may prescribe by regulation through negotiated
rulemaking) provides for payment to the plan
with respect to claims under the plan in connec-
tion with a covered individual in excess of an
amount or amounts specified in such contract
in connection with such covered individual;
‘‘(B) which is guaranteed renewable; and
‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan.
‘‘(h) INDEMNIFICATION INSURANCE.—For purposes
of this section, the term ‘indemnification insurance’
means, in connection with an association health plan, a
contract—
‘‘(1) under which an insurer (meeting such min-
imum standards as the applicable authority may pre-
scribe through negotiated rulemaking) provides for
payment to the plan with respect to claims under the
plan which the plan is unable to satisfy by reason
of a termination pursuant to section 809(b) (relating
to mandatory termination);
‘‘(2) which is guaranteed renewable and
noncancellable for any reason (except as the applica-
ble authority may prescribe by regulation through
negotiated rulemaking); and
‘‘(3) which allows for payment of premiums by
any third party on behalf of the insured plan.
‘‘(i) RESERVES.—For purposes of this section, the
term ‘reserves’ means, in connection with an association
health plan, plan assets which meet the fiduciary stand-
ards under part 4 and such additional requirements re-
garding liquidity as the applicable authority may prescribe
through negotiated rulemaking.
‘‘(j) SOLVENCY STANDARDS WORKING GROUP.—
‘‘(1) IN GENERAL.—Within 90 days after the
date of the enactment of the Small Business Access
and Choice for Entrepreneurs Act of 1999, the ap-
plicable authority shall establish a Solvency Stand-
ards Working Group. In prescribing the initial regu-
lations under this section, the applicable authority
shall take into account the recommendations of such
Working Group.
‘‘(2) MEMBERSHIP.—The Working Group shall
consist of not more than 15 members appointed by
the applicable authority. The applicable authority
shall include among persons invited to membership
on the Working Group at least one of each of the
following:
‘‘(A) a representative of the National Asso-
ciation of Insurance Commissioners;
‘‘(B) a representative of the American
Academy of Actuaries;
‘‘(C) a representative of the State govern-
ments, or their interests;
‘‘(D) a representative of existing self-in-
sured arrangements, or their interests;
‘‘(E) a representative of associations of the
type referred to in section 801(b)(1), or their
interests; and
‘‘(F) a representative of multiemployer
plans that are group health plans, or their in-
terests.
‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE-
LATED REQUIREMENTS.
‘‘(a) FILING FEE.—Under the procedure prescribed
pursuant to section 802(a), an association health plan
shall pay to the applicable authority at the time of filing
an application for certification under this part a filing fee
in the amount of $5,000, which shall be available in the
case of the Secretary, to the extent provided in appropria-
tion Acts, for the sole purpose of administering the certifi-
cation procedures applicable with respect to association
health plans.
‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA-
TION FOR CERTIFICATION.—An application for certifi-
cation under this part meets the requirements of this sec-
tion only if it includes, in a manner and form which shall
be prescribed by the applicable authority through nego-
tiated rulemaking, at least the following information:
‘‘(1) IDENTIFYING INFORMATION.—The names
and addresses of—
‘‘(A) the sponsor; and
‘‘(B) the members of the board of trustees
of the plan.
‘‘(2) STATES IN WHICH PLAN INTENDS TO DO
BUSINESS.—The States in which participants and
beneficiaries under the plan are to be located and
the number of them expected to be located in each
such State.
‘‘(3) BONDING REQUIREMENTS.—Evidence pro-
vided by the board of trustees that the bonding re-
quirements of section 412 will be met as of the date
of the application or (if later) commencement of op-
erations.
‘‘(4) PLAN DOCUMENTS.—A copy of the docu-
ments governing the plan (including any bylaws and
trust agreements), the summary plan description,
and other material describing the benefits that will
be provided to participants and beneficiaries under
the plan.
‘‘(5) 
AGREEMENTS
WITH
SERVICE
PRO-
VIDERS.—A copy of any agreements between the
plan and contract administrators and other service
providers.
‘‘(6) FUNDING REPORT.—In the case of asso-
ciation health plans providing benefits options in ad-
dition to health insurance coverage, a report setting
forth information with respect to such additional
benefit options determined as of a date within the
120-day period ending with the date of the applica-
tion, including the following:
‘‘(A) RESERVES.—A statement, certified
by the board of trustees of the plan, and a
statement of actuarial opinion, signed by a
qualified actuary, that all applicable require-
ments of section 806 are or will be met in ac-
cordance with regulations which the applicable
authority shall prescribe through negotiated
rulemaking.
‘‘(B) 
ADEQUACY
OF
CONTRIBUTION
RATES.—A statement of actuarial opinion,
signed by a qualified actuary, which sets forth
a description of the extent to which contribution
rates are adequate to provide for the payment
of all obligations and the maintenance of re-
quired reserves under the plan for the 12-
month period beginning with such date within
such 120-day period, taking into account the
expected coverage and experience of the plan. If
the contribution rates are not fully adequate,
the statement of actuarial opinion shall indicate
the extent to which the rates are inadequate
and the changes needed to ensure adequacy.
‘‘(C) CURRENT AND PROJECTED VALUE OF
ASSETS AND LIABILITIES.—A statement of ac-
tuarial opinion signed by a qualified actuary,
which sets forth the current value of the assets
and liabilities accumulated under the plan and
a projection of the assets, liabilities, income,
and expenses of the plan for the 12-month pe-
riod referred to in subparagraph (B). The in-
come statement shall identify separately the
plan’s administrative expenses and claims.
‘‘(D) 
COSTS
OF
COVERAGE
TO
BE
CHARGED
AND
OTHER
EXPENSES.—A state-
ment of the costs of coverage to be charged, in-
cluding an itemization of amounts for adminis-
tration, reserves, and other expenses associated
with the operation of the plan.
‘‘(E) OTHER
INFORMATION.—Any other
information as may be determined by the appli-
cable authority, by regulation through nego-
tiated rulemaking, as necessary to carry out the
purposes of this part.
‘‘(c) FILING
NOTICE
OF
CERTIFICATION
WITH
STATES.—A certification granted under this part to an
association health plan shall not be effective unless written
notice of such certification is filed with the applicable
State authority of each State in which at least 25 percent
of the participants and beneficiaries under the plan are
located. For purposes of this subsection, an individual
shall be considered to be located in the State in which a
known address of such individual is located or in which
such individual is employed.
‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case
of any association health plan certified under this part,
descriptions of material changes in any information which
was required to be submitted with the application for the
certification under this part shall be filed in such form
and manner as shall be prescribed by the applicable au-
thority by regulation through negotiated rulemaking. The
applicable authority may require by regulation, through
negotiated rulemaking, prior notice of material changes
with respect to specified matters which might serve as the
basis for suspension or revocation of the certification.
‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS-
SOCIATION HEALTH PLANS.—An association health plan
certified under this part which provides benefit options in
addition to health insurance coverage for such plan year
shall meet the requirements of section 103 by filing an
annual report under such section which shall include infor-
100
mation described in subsection (b)(6) with respect to the
plan year and, notwithstanding section 104(a)(1)(A), shall
be filed with the applicable authority not later than 90
days after the close of the plan year (or on such later date
as may be prescribed by the applicable authority). The ap-
plicable authority may require by regulation through nego-
tiated rulemaking such interim reports as it considers ap-
propriate.
‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—The
board of trustees of each association health plan which
provides benefits options in addition to health insurance
coverage and which is applying for certification under this
part or is certified under this part shall engage, on behalf
of all participants and beneficiaries, a qualified actuary
who shall be responsible for the preparation of the mate-
rials comprising information necessary to be submitted by
a qualified actuary under this part. The qualified actuary
shall utilize such assumptions and techniques as are nec-
essary to enable such actuary to form an opinion as to
whether the contents of the matters reported under this
part—
‘‘(1) are in the aggregate reasonably related to
the experience of the plan and to reasonable expecta-
tions; and
101
‘‘(2) represent such actuary’s best estimate of
anticipated experience under the plan.
The opinion by the qualified actuary shall be made with
respect to, and shall be made a part of, the annual report.
‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER-
MINATION.
‘‘Except as provided in section 809(b), an association
health plan which is or has been certified under this part
may terminate (upon or at any time after cessation of ac-
cruals in benefit liabilities) only if the board of trustees—
‘‘(1) not less than 60 days before the proposed
termination date, provides to the participants and
beneficiaries a written notice of intent to terminate
stating that such termination is intended and the
proposed termination date;
‘‘(2) develops a plan for winding up the affairs
of the plan in connection with such termination in
a manner which will result in timely payment of all
benefits for which the plan is obligated; and
‘‘(3) submits such plan in writing to the appli-
cable authority.
Actions required under this section shall be taken in such
form and manner as may be prescribed by the applicable
authority by regulation through negotiated rulemaking.
102
‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI-
NATION.
‘‘(a) ACTIONS
TO
AVOID
DEPLETION
OF
RE-
SERVES.—An association health plan which is certified
under this part and which provides benefits other than
health insurance coverage shall continue to meet the re-
quirements of section 806, irrespective of whether such
certification continues in effect. The board of trustees of
such plan shall determine quarterly whether the require-
ments of section 806 are met. In any case in which the
board determines that there is reason to believe that there
is or will be a failure to meet such requirements, or the
applicable authority makes such a determination and so
notifies the board, the board shall immediately notify the
qualified actuary engaged by the plan, and such actuary
shall, not later than the end of the next following month,
make such recommendations to the board for corrective
action as the actuary determines necessary to ensure com-
pliance with section 806. Not later than 30 days after re-
ceiving from the actuary recommendations for corrective
actions, the board shall notify the applicable authority (in
such form and manner as the applicable authority may
prescribe by regulation through negotiated rulemaking) of
such recommendations of the actuary for corrective action,
together with a description of the actions (if any) that the
board has taken or plans to take in response to such rec-
103
ommendations. The board shall thereafter report to the
applicable authority, in such form and frequency as the
applicable authority may specify to the board, regarding
corrective action taken by the board until the requirements
of section 806 are met.
‘‘(b) MANDATORY TERMINATION.—In any case in
which—
‘‘(1) the applicable authority has been notified
under subsection (a) of a failure of an association
health plan which is or has been certified under this
part and is described in section 806(a)(2) to meet
the requirements of section 806 and has not been
notified by the board of trustees of the plan that
corrective action has restored compliance with such
requirements; and
‘‘(2) the applicable authority determines that
there is a reasonable expectation that the plan will
continue to fail to meet the requirements of section
806,
the board of trustees of the plan shall, at the direction
of the applicable authority, terminate the plan and, in the
course of the termination, take such actions as the appli-
cable authority may require, including satisfying any
claims referred to in section 806(a)(2)(B)(iii) and recov-
ering for the plan any liability under subsection
104
(a)(2)(B)(iii) or (e) of section 806, as necessary to ensure
that the affairs of the plan will be, to the maximum extent
possible, wound up in a manner which will result in timely
provision of all benefits for which the plan is obligated.
‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL-
VENT ASSOCIATION HEALTH PLANS PRO-
VIDING HEALTH BENEFITS IN ADDITION TO
HEALTH INSURANCE COVERAGE.
‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR
INSOLVENT PLANS.—Whenever the Secretary determines
that an association health plan which is or has been cer-
tified under this part and which is described in section
806(a)(2) will be unable to provide benefits when due or
is otherwise in a financially hazardous condition, as shall
be defined by the Secretary by regulation through nego-
tiated rulemaking, the Secretary shall, upon notice to the
plan, apply to the appropriate United States district court
for appointment of the Secretary as trustee to administer
the plan for the duration of the insolvency. The plan may
appear as a party and other interested persons may inter-
vene in the proceedings at the discretion of the court. The
court shall appoint such Secretary trustee if the court de-
termines that the trusteeship is necessary to protect the
interests of the participants and beneficiaries or providers
of medical care or to avoid any unreasonable deterioration
105
of the financial condition of the plan. The trusteeship of
such Secretary shall continue until the conditions de-
scribed in the first sentence of this subsection are rem-
edied or the plan is terminated.
‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon
appointment as trustee under subsection (a), shall have
the power—
‘‘(1) to do any act authorized by the plan, this
title, or other applicable provisions of law to be done
by the plan administrator or any trustee of the plan;
‘‘(2) to require the transfer of all (or any part)
of the assets and records of the plan to the Sec-
retary as trustee;
‘‘(3) to invest any assets of the plan which the
Secretary holds in accordance with the provisions of
the plan, regulations prescribed by the Secretary
through negotiated rulemaking, and applicable provi-
sions of law;
‘‘(4) to require the sponsor, the plan adminis-
trator, any participating employer, and any employee
organization representing plan participants to fur-
nish any information with respect to the plan which
the Secretary as trustee may reasonably need in
order to administer the plan;
106
‘‘(5) to collect for the plan any amounts due the
plan and to recover reasonable expenses of the trust-
eeship;
‘‘(6) to commence, prosecute, or defend on be-
half of the plan any suit or proceeding involving the
plan;
‘‘(7) to issue, publish, or file such notices, state-
ments, and reports as may be required by the Sec-
retary by regulation through negotiated rulemaking
or required by any order of the court;
‘‘(8) to terminate the plan (or provide for its
termination accordance with section 809(b)) and liq-
uidate the plan assets, to restore the plan to the re-
sponsibility of the sponsor, or to continue the trust-
eeship;
‘‘(9) to provide for the enrollment of plan par-
ticipants and beneficiaries under appropriate cov-
erage options; and
‘‘(10) to do such other acts as may be nec-
essary to comply with this title or any order of the
court and to protect the interests of plan partici-
pants and beneficiaries and providers of medical
care.
107
‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac-
ticable after the Secretary’s appointment as trustee, the
Secretary shall give notice of such appointment to—
‘‘(1) the sponsor and plan administrator;
‘‘(2) each participant;
‘‘(3) each participating employer; and
‘‘(4) if applicable, each employee organization
which, for purposes of collective bargaining, rep-
resents plan participants.
‘‘(d) ADDITIONAL DUTIES.—Except to the extent in-
consistent with the provisions of this title, or as may be
otherwise ordered by the court, the Secretary, upon ap-
pointment as trustee under this section, shall be subject
to the same duties as those of a trustee under section 704
of title 11, United States Code, and shall have the duties
of a fiduciary for purposes of this title.
‘‘(e) OTHER PROCEEDINGS.—An application by the
Secretary under this subsection may be filed notwith-
standing the pendency in the same or any other court of
any bankruptcy, mortgage foreclosure, or equity receiver-
ship proceeding, or any proceeding to reorganize, conserve,
or liquidate such plan or its property, or any proceeding
to enforce a lien against property of the plan.
‘‘(f) JURISDICTION OF COURT.—
108
‘‘(1) IN GENERAL.—Upon the filing of an appli-
cation for the appointment as trustee or the issuance
of a decree under this section, the court to which the
application is made shall have exclusive jurisdiction
of the plan involved and its property wherever lo-
cated with the powers, to the extent consistent with
the purposes of this section, of a court of the United
States having jurisdiction over cases under chapter
11 of title 11, United States Code. Pending an adju-
dication under this section such court shall stay, and
upon appointment by it of the Secretary as trustee,
such court shall continue the stay of, any pending
mortgage foreclosure, equity receivership, or other
proceeding to reorganize, conserve, or liquidate the
plan, the sponsor, or property of such plan or spon-
sor, and any other suit against any receiver, conser-
vator, or trustee of the plan, the sponsor, or prop-
erty of the plan or sponsor. Pending such adjudica-
tion and upon the appointment by it of the Sec-
retary as trustee, the court may stay any proceeding
to enforce a lien against property of the plan or the
sponsor or any other suit against the plan or the
sponsor.
‘‘(2) VENUE.—An action under this section
may be brought in the judicial district where the
109
sponsor or the plan administrator resides or does
business or where any asset of the plan is situated.
A district court in which such action is brought may
issue process with respect to such action in any
other judicial district.
‘‘(g) PERSONNEL.—In accordance with regulations
which shall be prescribed by the Secretary through nego-
tiated rulemaking, the Secretary shall appoint, retain, and
compensate accountants, actuaries, and other professional
service personnel as may be necessary in connection with
the Secretary’s service as trustee under this section.
‘‘SEC. 811. STATE ASSESSMENT AUTHORITY.
‘‘(a) IN GENERAL.—Notwithstanding section 514, a
State may impose by law a contribution tax on an associa-
tion health plan described in section 806(a)(2), if the plan
commenced operations in such State after the date of the
enactment of the Small Business Access and Choice for
Entrepreneurs Act of 1999.
‘‘(b) CONTRIBUTION TAX.—For purposes of this sec-
tion, the term ‘contribution tax’ imposed by a State on
an association health plan means any tax imposed by such
State if—
‘‘(1) such tax is computed by applying a rate to
the amount of premiums or contributions, with re-
spect to individuals covered under the plan who are
110
residents of such State, which are received by the
plan from participating employers located in such
State or from such individuals;
‘‘(2) the rate of such tax does not exceed the
rate of any tax imposed by such State on premiums
or contributions received by insurers or health main-
tenance organizations for health insurance coverage
offered in such State in connection with a group
health plan;
‘‘(3) such tax is otherwise nondiscriminatory;
and
‘‘(4) the amount of any such tax assessed on
the plan is reduced by the amount of any tax or as-
sessment otherwise imposed by the State on pre-
miums, contributions, or both received by insurers or
health maintenance organizations for health insur-
ance coverage, aggregate excess /stop loss insurance
(as defined in section 806(g)(1)), specific excess /
stop loss insurance (as defined in section 806(g)(2)),
other insurance related to the provision of medical
care under the plan, or any combination thereof pro-
vided by such insurers or health maintenance organi-
zations in such State in connection with such plan.
‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.
‘‘(a) DEFINITIONS.—For purposes of this part—
111
‘‘(1) GROUP HEALTH PLAN.—The term ‘group
health plan’ has the meaning provided in section
733(a)(1) (after applying subsection (b) of this sec-
tion).
‘‘(2) MEDICAL CARE.—The term ‘medical care’
has the meaning provided in section 733(a)(2).
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The
term ‘health insurance coverage’ has the meaning
provided in section 733(b)(1).
‘‘(4) HEALTH INSURANCE ISSUER.—The term
‘health insurance issuer’ has the meaning provided
in section 733(b)(2).
‘‘(5) APPLICABLE AUTHORITY.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘applicable author-
ity’ means, in connection with an association
health plan—
‘‘(i) the State recognized pursuant to
subsection (c) of section 506 as the State
to which authority has been delegated in
connection with such plan; or
‘‘(ii) if there if no State referred to in
clause (i), the Secretary.
‘‘(B) EXCEPTIONS.—
112
‘‘(i) 
JOINT
AUTHORITIES.—Where
such term appears in section 808(3), sec-
tion 807(e) (in the first instance), section
809(a) (in the second instance), section
809(a) (in the fourth instance), and sec-
tion 809(b)(1), such term means, in con-
nection with an association health plan, the
Secretary and the State referred to in sub-
paragraph (A)(i) (if any) in connection
with such plan.
‘‘(ii) REGULATORY
AUTHORITIES.—
Where such term appears in section 802(a)
(in the first instance), section 802(d), sec-
tion 
802(e), 
section 
803(d), 
section
805(a)(5), 
section 
806(a)(2), 
section
806(b), section 806(c), section 806(d),
paragraphs (1)(A) and (2)(A) of section
806(g), section 806(h), section 806(i), sec-
tion 806(j), section 807(a) (in the second
instance), section 807(b), section 807(d),
section 807(e) (in the second instance),
section 808 (in the matter after paragraph
(3)), and section 809(a) (in the third in-
stance), such term means, in connection
113
with an association health plan, the Sec-
retary.
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The
term ‘health status-related factor’ has the meaning
provided in section 733(d)(2).
‘‘(7) INDIVIDUAL MARKET.—
‘‘(A) IN GENERAL.—The term ‘individual
market’ means the market for health insurance
coverage offered to individuals other than in
connection with a group health plan.
‘‘(B) 
TREATMENT
OF
VERY
SMALL
GROUPS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), such term includes coverage offered in
connection with a group health plan that
has fewer than 2 participants as current
employees or participants described in sec-
tion 732(d)(3) on the first day of the plan
year.
‘‘(ii) STATE
EXCEPTION.—Clause (i)
shall not apply in the case of health insur-
ance coverage offered in a State if such
State regulates the coverage described in
such clause in the same manner and to the
same extent as coverage in the small group
114
market (as defined in section 2791(e)(5) of
the Public Health Service Act) is regulated
by such State.
‘‘(8) PARTICIPATING
EMPLOYER.—The term
‘participating employer’ means, in connection with
an association health plan, any employer, if any indi-
vidual who is an employee of such employer, a part-
ner in such employer, or a self-employed individual
who is such employer (or any dependent, as defined
under the terms of the plan, of such individual) is
or was covered under such plan in connection with
the status of such individual as such an employee,
partner, or self-employed individual in relation to the
plan.
‘‘(9) APPLICABLE
STATE
AUTHORITY.—The
term ‘applicable State authority’ means, with respect
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of
title XXVII of the Public Health Service Act for the
State involved with respect to such issuer.
‘‘(10) QUALIFIED ACTUARY.—The term ‘quali-
fied actuary’ means an individual who is a member
of the American Academy of Actuaries or meets
such reasonable standards and qualifications as the
115
Secretary may provide by regulation through nego-
tiated rulemaking.
‘‘(11) AFFILIATED MEMBER±±.—The term ‘af-
filiated member’ means, in connection with a
sponsor—
‘‘(A) a person who is otherwise eligible to
be a member of the sponsor but who elects an
affiliated status with the sponsor,
‘‘(B) in the case of a sponsor with mem-
bers which consist of associations, a person who
is a member of any such association and elects
an affiliated status with the sponsor, or
‘‘(C) in the case of an association health
plan in existence on the date of the enactment
of the Small Business Access and Choice for
Entrepreneurs Act of 1999, a person eligible to
be a member of the sponsor or one of its mem-
ber associations.
‘‘(12) LARGE EMPLOYER.—The term ‘large em-
ployer’ means, in connection with a group health
plan with respect to a plan year, an employer who
employed an average of at least 51 employees on
business days during the preceding calendar year
and who employs at least 2 employees on the first
day of the plan year.
116
‘‘(13) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, in connection with a group health
plan with respect to a plan year, an employer who
is not a large employer.
‘‘(b) RULES OF CONSTRUCTION.—
‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur-
poses of determining whether a plan, fund, or pro-
gram is an employee welfare benefit plan which is an
association health plan, and for purposes of applying
this title in connection with such plan, fund, or pro-
gram so determined to be such an employee welfare
benefit plan—
‘‘(A) in the case of a partnership, the term
‘employer’ (as defined in section (3)(5)) in-
cludes the partnership in relation to the part-
ners, and the term ‘employee’ (as defined in
section (3)(6)) includes any partner in relation
to the partnership; and
‘‘(B) in the case of a self-employed indi-
vidual, the term ‘employer’ (as defined in sec-
tion 3(5)) and the term ‘employee’ (as defined
in section 3(6)) shall include such individual.
‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED
AS EMPLOYEE WELFARE BENEFIT PLANS.—In the
case of any plan, fund, or program which was estab-
117
lished or is maintained for the purpose of providing
medical care (through the purchase of insurance or
otherwise) for employees (or their dependents) cov-
ered thereunder and which demonstrates to the Sec-
retary that all requirements for certification under
this part would be met with respect to such plan,
fund, or program if such plan, fund, or program
were a group health plan, such plan, fund, or pro-
gram shall be treated for purposes of this title as an
employee welfare benefit plan on and after the date
of such demonstration.’’.
(b) CONFORMING AMENDMENTS
TO PREEMPTION
RULES.—
(1) Section 514(b)(6) of such Act (29 U.S.C.
1144(b)(6)) is amended by adding at the end the
following new subparagraph:
‘‘(E) The preceding subparagraphs of this paragraph
do not apply with respect to any State law in the case
of an association health plan which is certified under part
8.’’.
(2) Section 514 of such Act (29 U.S.C. 1144)
is amended—
(A) in subsection (b)(4), by striking ‘‘Sub-
section (a)’’ and inserting ‘‘Subsections (a) and
(d)’’;
118
(B) in subsection (b)(5), by striking ‘‘sub-
section (a)’’ in subparagraph (A) and inserting
‘‘subsection (a) of this section and subsections
(a)(2)(B) and (b) of section 805’’, and by strik-
ing ‘‘subsection (a)’’ in subparagraph (B) and
inserting ‘‘subsection (a) of this section or sub-
section (a)(2)(B) or (b) of section 805’’;
(C) by redesignating subsection (d) as sub-
section (e); and
(D) by inserting after subsection (c) the
following new subsection:
‘‘(d)(1) Except as provided in subsection (b)(4), the
provisions of this title shall supersede any and all State
laws insofar as they may now or hereafter preclude, or
have the effect of precluding, a health insurance issuer
from offering health insurance coverage in connection with
an association health plan which is certified under part
8.
‘‘(2) Except as provided in paragraphs (4) and (5)
of subsection (b) of this section—
‘‘(A) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan certified under part 8 to a partici-
pating employer operating in such State, the provi-
sions of this title shall supersede any and all laws
119
of such State insofar as they may preclude a health
insurance issuer from offering health insurance cov-
erage of the same policy type to other employers op-
erating in the State which are eligible for coverage
under such association health plan, whether or not
such other employers are participating employers in
such plan.
‘‘(B) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan in a State and the filing, with the
applicable State authority, of the policy form in con-
nection with such policy type is approved by such
State authority, the provisions of this title shall su-
persede any and all laws of any other State in which
health insurance coverage of such type is offered, in-
sofar as they may preclude, upon the filing in the
same form and manner of such policy form with the
applicable State authority in such other State, the
approval of the filing in such other State.
‘‘(3) For additional provisions relating to association
health plans, see subsections (a)(2)(B) and (b) of section
805.
‘‘(4) For purposes of this subsection, the term ‘asso-
ciation health plan’ has the meaning provided in section
801(a), and the terms ‘health insurance coverage’, ‘par-
120
ticipating employer’, and ‘health insurance issuer’ have
the meanings provided such terms in section 811, respec-
tively.’’.
(3) Section 514(b)(6)(A) of such Act (29
U.S.C. 1144(b)(6)(A)) is amended—
(A) in clause (i)(II), by striking ‘‘and’’ at
the end;
(B) in clause (ii), by inserting ‘‘and which
does not provide medical care (within the mean-
ing of section 733(a)(2)),’’ after ‘‘arrange-
ment,’’, and by striking ‘‘title.’’ and inserting
‘‘title, and’’; and
(C) by adding at the end the following new
clause:
‘‘(iii) subject to subparagraph (E), in the case
of any other employee welfare benefit plan which is
a multiple employer welfare arrangement and which
provides medical care (within the meaning of section
733(a)(2)), any law of any State which regulates in-
surance may apply.’’.
(4) Section 514(e) of such Act (as redesignated
by paragraph (2)(C)) is amended—
(A) by striking ‘‘Nothing’’ and inserting
‘‘(1) Except as provided in paragraph (2), noth-
ing’’; and
121
(B) by adding at the end the following new
paragraph:
‘‘(2) Nothing in any other provision of law enacted
on or after the date of the enactment of the Small Busi-
ness Access and Choice for Entrepreneurs Act of 1999
shall be construed to alter, amend, modify, invalidate, im-
pair, or supersede any provision of this title, except by
specific cross-reference to the affected section.’’.
(c) PLAN SPONSOR.—Section 3(16)(B) of such Act
(29 U.S.C. 102(16)(B)) is amended by adding at the end
the following new sentence: ‘‘Such term also includes a
person serving as the sponsor of an association health plan
under part 8.’’.
(d) DISCLOSURE OF SOLVENCY PROTECTIONS RE-
LATED TO SELF-INSURED AND FULLY INSURED OPTIONS
UNDER ASSOCIATION HEALTH PLANS.—Section 102(b)
of such Act (29 U.S.C. 102(b)) is amended by adding at
the end the following: ‘‘An association health plan shall
include in its summary plan description, in connection
with each benefit option, a description of the form of sol-
vency or guarantee fund protection secured pursuant to
this Act or applicable State law, if any.’’.
(e) SAVINGS CLAUSE.—Section 731(c) of such Act is
amended by inserting ‘‘or part 8’’ after ‘‘this part’’.
122
(f) REPORT TO THE CONGRESS REGARDING CERTIFI-
CATION
OF
SELF-INSURED
ASSOCIATION
HEALTH
PLANS.—Not later than January 1, 2004, the Secretary
of Labor shall report to the Committee on Education and
the Workforce of the House of Representatives and the
Committee on Health, Education, Labor, and Pensions of
the Senate the effect association health plans have had,
if any, on reducing the number of uninsured individuals.
(g) CLERICAL AMENDMENT.—The table of contents
in section 1 of the Employee Retirement Income Security
Act of 1974 is amended by inserting after the item relat-
ing to section 734 the following new items:
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS
‘‘Sec. 801. Association health plans.
‘‘Sec. 802. Certification of association health plans.
‘‘Sec. 803. Requirements relating to sponsors and boards of trustees.
‘‘Sec. 804. Participation and coverage requirements.
‘‘Sec. 805. Other requirements relating to plan documents, contribution rates,
and benefit options.
‘‘Sec. 806. Maintenance of reserves and provisions for solvency for plans pro-
viding health benefits in addition to health insurance coverage.
‘‘Sec. 807. Requirements for application and related requirements.
‘‘Sec. 808. Notice requirements for voluntary termination.
‘‘Sec. 809. Corrective actions and mandatory termination.
‘‘Sec. 810. Trusteeship by the Secretary of insolvent association health plans
providing health benefits in addition to health insurance cov-
erage.
‘‘Sec. 811. State assessment authority.
‘‘Sec. 812. Definitions and rules of construction.’’.
SEC. 702. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is
amended—
124
cent of the aggregate number of all individuals who
are employees or former employees of participating
employers and who are covered under the arrange-
ment;’’.
SEC. 703. CLARIFICATION OF TREATMENT OF CERTAIN
COLLECTIVELY 
BARGAINED 
ARRANGE-
MENTS.
(a) IN GENERAL.—Section 3(40)(A)(i) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1002(40)(A)(i)) is amended to read as follows:
‘‘(i)(I) under or pursuant to one or more collec-
tive bargaining agreements which are reached pursu-
ant to collective bargaining described in section 8(d)
of the National Labor Relations Act (29 U.S.C.
158(d)) or paragraph Fourth of section 2 of the
Railway Labor Act (45 U.S.C. 152, paragraph
Fourth) or which are reached pursuant to labor-
management negotiations under similar provisions of
State public employee relations laws, and (II) in ac-
cordance with subparagraphs (C), (D), and (E);’’.
(b) LIMITATIONS.—Section 3(40) of such Act (29
U.S.C. 1002(40)) is amended by adding at the end the
following new subparagraphs:
‘‘(C) For purposes of subparagraph (A)(i)(II), a plan
or other arrangement shall be treated as established or
125
maintained in accordance with this subparagraph only if
the following requirements are met:
‘‘(i) The plan or other arrangement, and the
employee organization or any other entity sponsoring
the plan or other arrangement, do not—
‘‘(I) utilize the services of any licensed in-
surance agent or broker for soliciting or enroll-
ing employers or individuals as participating
employers or covered individuals under the plan
or other arrangement; or
‘‘(II) pay any type of compensation to a
person, other than a full time employee of the
employee organization (or a member of the or-
ganization to the extent provided in regulations
prescribed by the Secretary through negotiated
rulemaking), that is related either to the volume
or number of employers or individuals solicited
or enrolled as participating employers or cov-
ered individuals under the plan or other ar-
rangement, or to the dollar amount or size of
the contributions made by participating employ-
ers or covered individuals to the plan or other
arrangement;
except to the extent that the services used by the
plan, arrangement, organization, or other entity con-
126
sist solely of preparation of documents necessary for
compliance with the reporting and disclosure re-
quirements of part 1 or administrative, investment,
or consulting services unrelated to solicitation or en-
rollment of covered individuals.
‘‘(ii) As of the end of the preceding plan year,
the number of covered individuals under the plan or
other arrangement who are neither—
‘‘(I) employed within a bargaining unit
covered by any of the collective bargaining
agreements with a participating employer (nor
covered on the basis of an individual’s employ-
ment in such a bargaining unit); nor
‘‘(II) present employees (or former employ-
ees who were covered while employed) of the
sponsoring employee organization, of an em-
ployer who is or was a party to any of the col-
lective bargaining agreements, or of the plan or
other arrangement or a related plan or arrange-
ment (nor covered on the basis of such present
or former employment);
does not exceed 15 percent of the total number of
individuals who are covered under the plan or ar-
rangement and who are present or former employees
who are or were covered under the plan or arrange-
127
ment pursuant to a collective bargaining agreement
with a participating employer. The requirements of
the preceding provisions of this clause shall be treat-
ed as satisfied if, as of the end of the preceding plan
year, such covered individuals are comprised solely
of individuals who were covered individuals under
the plan or other arrangement as of the date of the
enactment of the Small Business Access and Choice
for Entrepreneurs Act of 1999 and, as of the end of
the preceding plan year, the number of such covered
individuals does not exceed 25 percent of the total
number of present and former employees enrolled
under the plan or other arrangement.
‘‘(iii) The employee organization or other entity
sponsoring the plan or other arrangement certifies
to the Secretary each year, in a form and manner
which shall be prescribed by the Secretary through
negotiated rulemaking that the plan or other ar-
rangement meets the requirements of clauses (i) and
(ii).
‘‘(D) For purposes of subparagraph (A)(i)(II), a plan
or arrangement shall be treated as established or main-
tained in accordance with this subparagraph only if—
128
‘‘(i) all of the benefits provided under the plan
or arrangement consist of health insurance coverage;
or
‘‘(ii)(I) the plan or arrangement is a multiem-
ployer plan; and
‘‘(II) the requirements of clause (B) of the pro-
viso to clause (5) of section 302(c) of the Labor
Management Relations Act, 1947 (29 U.S.C.
186(c)) are met with respect to such plan or other
arrangement.
‘‘(E) For purposes of subparagraph (A)(i)(II), a plan
or arrangement shall be treated as established or main-
tained in accordance with this subparagraph only if—
‘‘(i) the plan or arrangement is in effect as of
the date of the enactment of the Small Business Ac-
cess and Choice for Entrepreneurs Act of 1999; or
‘‘(ii) the employee organization or other entity
sponsoring the plan or arrangement—
‘‘(I) has been in existence for at least 3
years; or
‘‘(II) demonstrates to the satisfaction of
the Secretary that the requirements of subpara-
graphs (C) and (D) are met with respect to the
plan or other arrangement.’’.
129
(c) CONFORMING AMENDMENTS TO DEFINITIONS OF
PARTICIPANT AND BENEFICIARY.—Section 3(7) of such
Act (29 U.S.C. 1002(7)) is amended by adding at the end
the following new sentence: ‘‘Such term includes an indi-
vidual who is a covered individual described in paragraph
(40)(C)(ii).’’.
SEC. 704. ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS.
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL
MISREPRESENTATIONS.—Section 501 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1131)
is amended—
(1) by inserting ‘‘(a)’’ after ‘‘SEC. 501.’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) Any person who willfully falsely represents, to
any employee, any employee’s beneficiary, any employer,
the Secretary, or any State, a plan or other arrangement
established or maintained for the purpose of offering or
providing any benefit described in section 3(1) to employ-
ees or their beneficiaries as—
‘‘(1) being an association health plan which has
been certified under part 8;
‘‘(2) having been established or maintained
under or pursuant to one or more collective bar-
130
gaining agreements which are reached pursuant to
collective bargaining described in section 8(d) of the
National Labor Relations Act (29 U.S.C. 158(d)) or
paragraph Fourth of section 2 of the Railway Labor
Act (45 U.S.C. 152, paragraph Fourth) or which are
reached pursuant to labor-management negotiations
under similar provisions of State public employee re-
lations laws; or
‘‘(3) being a plan or arrangement with respect
to which the requirements of subparagraph (C), (D),
or (E) of section 3(40) are met;
shall, upon conviction, be imprisoned not more than 5
years, be fined under title 18, United States Code, or
both.’’.
(b) CEASE ACTIVITIES ORDERS.—Section 502 of
such Act (29 U.S.C. 1132) is amended by adding at the
end the following new subsection:
‘‘(n)(1) Subject to paragraph (2), upon application
by the Secretary showing the operation, promotion, or
marketing of an association health plan (or similar ar-
rangement providing benefits consisting of medical care
(as defined in section 733(a)(2))) that—
‘‘(A) is not certified under part 8, is subject
under section 514(b)(6) to the insurance laws of any
State in which the plan or arrangement offers or
131
provides benefits, and is not licensed, registered, or
otherwise approved under the insurance laws of such
State; or
‘‘(B) is an association health plan certified
under part 8 and is not operating in accordance with
the requirements under part 8 for such certification,
a district court of the United States shall enter an order
requiring that the plan or arrangement cease activities.
‘‘(2) Paragraph (1) shall not apply in the case of an
association health plan or other arrangement if the plan
or arrangement shows that—
‘‘(A) all benefits under it referred to in para-
graph (1) consist of health insurance coverage; and
‘‘(B) with respect to each State in which the
plan or arrangement offers or provides benefits, the
plan or arrangement is operating in accordance with
applicable State laws that are not superseded under
section 514.
‘‘(3) The court may grant such additional equitable
relief, including any relief available under this title, as it
deems necessary to protect the interests of the public and
of persons having claims for benefits against the plan.’’.
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.—
Section 503 of such Act (29 U.S.C. 1133) (as amended
132
by title I) is amended by adding at the end the following
new subsection:
‘‘(c) ASSOCIATION HEALTH PLANS.—The terms of
each association health plan which is or has been certified
under part 8 shall require the board of trustees or the
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims
filed under the plan.’’.
SEC. 705. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding
at the end the following new subsection:
‘‘(c) RESPONSIBILITY OF STATES WITH RESPECT TO
ASSOCIATION HEALTH PLANS.—
‘‘(1) AGREEMENTS
WITH
STATES.—A State
may enter into an agreement with the Secretary for
delegation to the State of some or all of—
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements
for certification under part 8;
‘‘(B) the Secretary’s authority to certify
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8; or
133
‘‘(C) any combination of the Secretary’s
authority authorized to be delegated under sub-
paragraphs (A) and (B).
‘‘(2) DELEGATIONS.—Any department, agency,
or instrumentality of a State to which authority is
delegated pursuant to an agreement entered into
under this paragraph may, if authorized under State
law and to the extent consistent with such agree-
ment, exercise the powers of the Secretary under
this title which relate to such authority.
‘‘(3) RECOGNITION
OF
PRIMARY
DOMICILE
STATE.—In entering into any agreement with a
State under subparagraph (A), the Secretary shall
ensure that, as a result of such agreement and all
other agreements entered into under subparagraph
(A), only one State will be recognized, with respect
to any particular association health plan, as the
State to which all authority has been delegated pur-
suant to such agreements in connection with such
plan. In carrying out this paragraph, the Secretary
shall take into account the places of residence of the
participants and beneficiaries under the plan and the
State in which the trust is maintained.’’.
134
SEC. 706. EFFECTIVE DATE AND TRANSITIONAL AND
OTHER RULES.
(a) EFFECTIVE DATE.—The amendments made by
sections 701, 704, and 705 shall take effect on January
1, 2001. The amendments made by sections 702 and 703
shall take effect on the date of the enactment of this Act.
The Secretary of Labor shall first issue all regulations
necessary to carry out the amendments made by this title
before January 1, 2001. Such regulations shall be issued
through negotiated rulemaking.
(b) EXCEPTION.—Section 801(a)(2) of the Employee
Retirement Income Security Act of 1974 (added by section
701) does not apply in connection with an association
health plan (certified under part 8 of subtitle B of title
I of such Act) existing on the date of the enactment of
this Act, if no benefits provided thereunder as of the date
of the enactment of this Act consist of health insurance
coverage (as defined in section 733(b)(1) of such Act).
(c) TREATMENT
OF CERTAIN EXISTING HEALTH
BENEFITS PROGRAMS.—
(1) IN GENERAL.—In any case in which, as of
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of
providing benefits consisting of medical care for the
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make
135
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and
such arrangement is licensed under the laws of one
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of
the Employee Retirement Income Security Act of
1974 (as amended by this Act)) by the arrangement
of an application for certification of the arrangement
under part 8 of subtitle B of title I of such Act—
(A) such arrangement shall be deemed to
be a group health plan for purposes of title I
of such Act;
(B) the requirements of sections 801(a)(1)
and 803(a)(1) of the Employee Retirement In-
come Security Act of 1974 shall be deemed met
with respect to such arrangement;
(C) the requirements of section 803(b) of
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors
which—
(i) is elected by the participating em-
ployers, with each employer having one
vote; and
136
(ii) has complete fiscal control over
the arrangement and which is responsible
for all operations of the arrangement;
(D) the requirements of section 804(a) of
such Act shall be deemed met with respect to
such arrangement; and
(E) the arrangement may be certified by
any applicable authority with respect to its op-
erations in any State only if it operates in such
State on the date of certification.
The provisions of this subsection shall cease to apply
with respect to any such arrangement at such time
after the date of the enactment of this Act as the
applicable requirements of this subsection are not
met with respect to such arrangement.
(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical
care’’, and ‘‘participating employer’’ shall have the
meanings provided in section 812 of the Employee
Retirement Income Security Act of 1974, except
that the reference in paragraph (7) of such section
to an ‘‘association health plan’’ shall be deemed a
reference to an arrangement referred to in this sub-
section.
137
TITLE VIII—HEALTH CARE AC-
CESS, AFFORDABILITY, AND
QUALITY COMMISSION
SEC. 801. ESTABLISHMENT OF COMMISSION.
Part 5 of the Employee Retirement Income Security
Act of 1974 is amended by adding at the end the following
new section:
‘‘SEC. 518. HEALTH CARE ACCESS, AFFORDABILITY AND
QUALITY COMMISSION.
‘‘(a) ESTABLISHMENT.—There is hereby established
a commission to be known as the Health Care Access, Af-
fordability, and Quality Commission (hereinafter in this
Act referred to as the ‘Commission’).
‘‘(b) DUTIES OF COMMISSION.—The duties of the
Commission shall be as follows:
‘‘(1) 
ESTABLISHMENT
OF
MODEL
GUIDE-
LINES.—Based on information gathered by appro-
priate Federal agencies, advisory groups, and other
appropriate sources for health care information,
studies, and data, the Commission shall establish
model guidelines in each of the following areas:
‘‘(A) Independent expert external review
programs.
‘‘(B) Consumer friendly information pro-
grams.
138
‘‘(C) Systems for measuring patient satis-
faction and patient outcomes.
‘‘(D) Systems to ensure the timely proc-
essing of claims.
‘‘(2) EVALUATION OF HEALTH BENEFITS MAN-
DATES.—At the request of the chairmen or ranking
minority members of the appropriate committees of
Congress, the Commission shall evaluate, taking into
consideration the overall cost effect, availability of
treatment, and the effect on the health of the gen-
eral population, existing and proposed benefit re-
quirements for group health plans.
‘‘(3) COMMENTS ON CERTAIN SECRETARIAL RE-
PORTS.—If the Secretary submits to Congress (or a
committee of Congress) a report that is required by
law and that relates to policies under this section,
the Secretary shall transmit a copy of the report to
the Commission. The Commission shall review the
report and, not later than 6 months after the date
of submittal of the Secretary’s report to Congress,
shall submit to the appropriate committees of Con-
gress written comments on such report. Such com-
ments may include such recommendations as the
Commission deems appropriate.
139
‘‘(4) AGENDA AND ADDITIONAL REVIEW.—The
Commission shall consult periodically with the chair-
men and ranking minority members of the appro-
priate committees of Congress regarding the Com-
mission’s agenda and progress toward achieving the
agenda. The Commission may conduct additional re-
views, and submit additional reports to the appro-
priate committees of Congress, from time to time on
such topics as may be requested by such chairmen
and members and as the Commission deems appro-
priate.
‘‘(5) AVAILABILITY
OF
REPORTS.—The Com-
mission shall transmit to the Secretary a copy of
each report submitted under this subsection and
shall make such reports available to the public.
‘‘(c) MEMBERSHIP.—
‘‘(1) NUMBER AND APPOINTMENT.—The Com-
mission shall be composed of 11 members appointed
by the Comptroller General.
‘‘(2) QUALIFICATIONS.—
‘‘(A) IN
GENERAL.—The membership of
the Commission shall include—
‘‘(i) physicians and other health pro-
fessionals;
140
‘‘(ii) representatives of employers, in-
cluding multiemployer plans;
‘‘(ii) representatives of insured em-
ployees;
‘‘(iv) third-party payers; and
‘‘(v) health services and health eco-
nomics researchers with expertise in out-
comes and effectiveness research and tech-
nology assessment.
‘‘(B) ETHICAL DISCLOSURE.—The Comp-
troller General shall establish a system for pub-
lic disclosure by members of the Commission of
financial and other potential conflicts of interest
relating to such members.
‘‘(3) TERMS.—
‘‘(A) IN GENERAL.—Each member shall be
appointed for a term of 3 years, except that the
Comptroller shall designate staggered terms for
the members first appointed.
‘‘(B) VACANCIES.—Any member appointed
to fill a vacancy occurring before the expiration
of the term for which the member’s predecessor
was appointed shall be appointed only for the
remainder of that term. A member may serve
after the expiration of that member’s term until
141
a successor has taken office. A vacancy in the
Commission shall be filled in the manner in
which the original appointment was made.
‘‘(4) BASIC PAY.—
‘‘(A) RATES OF PAY.—Except as provided
in subparagraph (B), members shall each be
paid at a rate equal to the rate of basic pay
payable for level IV of the Executive Schedule
for each day (including travel time) during
which they are engaged in the actual perform-
ance of duties vested in the Commission.
‘‘(B) PROHIBITION OF COMPENSATION OF
FEDERAL EMPLOYEES.—Members of the Com-
mission who are full-time officers or employees
of the United States (or Members of Congress)
may not receive additional pay, allowances, or
benefits by reason of their service on the Com-
mission.
‘‘(5) TRAVEL EXPENSES.—Each member shall
receive travel expenses, including per diem in lieu of
subsistence, in accordance with sections 5702 and
5703 of title 5, United States Code.
‘‘(6) CHAIRPERSON.—The Chairperson of the
Commission shall be designated by the Comptroller
142
at the time of the appointment. The term of office
of the Chairperson shall be 3 years.
‘‘(7) MEETINGS.—The Commission shall meet 4
times each year.
‘‘(d) DIRECTOR AND STAFF OF COMMISSION.—
‘‘(1) DIRECTOR.—The Commission shall have a
Director who shall be appointed by the Chairperson.
The Director shall be paid at a rate not to exceed
the maximum rate of basic pay payable for GS–13
of the General Schedule.
‘‘(2) STAFF.—The Director may appoint 2 ad-
ditional staff members.
‘‘(3) APPLICABILITY OF CERTAIN CIVIL SERV-
ICE LAWS.—The Director and staff of the Commis-
sion shall be appointed subject to the provisions of
title 5, United States Code, governing appointments
in the competitive service, and shall be paid in ac-
cordance with the provisions of chapter 51 and sub-
chapter III of chapter 53 of that title relating to
classification and General Schedule pay rates.
‘‘(e) POWERS OF COMMISSION.—
‘‘(1) HEARINGS AND SESSIONS.—The Commis-
sion may, for the purpose of carrying out this Act,
hold hearings, sit and act at times and places, take
testimony, and receive evidence as the Commission
144
‘‘(6) CONTRACT AUTHORITY.—The Commission
may contract with and compensate government and
private agencies or persons for services, without re-
gard to section 3709 of the Revised Statutes (41
U.S.C. 5).
‘‘(f) REPORTS.—Beginning December 31, 2000, and
each year thereafter, the Commission shall submit to the
Congress an annual report detailing the following informa-
tion:
‘‘(1) Access to care, affordability to employers
and employees, and quality of care under employer-
sponsored health plans and recommendations for im-
proving such access, affordability, and quality.
‘‘(2) Any issues the Commission deems appro-
priate or any issues (such as the appropriateness
and availability of particular medical treatment) that
the chairmen or ranking members of the appropriate
committees of Congress requested the Commission
to evaluate.
‘‘(g) DEFINITION OF APPROPRIATE COMMITTEES OF
CONGRESS.—For purposes of this section the term ‘appro-
priate committees of Congress’ means any committee in
the Senate or House of Representatives having jurisdiction
over the Employee Retirement Income Security Act of
1974.
145
‘‘(h) TERMINATION.—Section 14(a)(2)(B) of the
Federal Advisory Committee Act (5 U.S.C. App.; relating
to the termination of advisory committees) shall not apply
to the Commission.
‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated for fiscal years 2000
through 2004 such sums as may be necessary to carry
out this Act.’’.
SEC. 802. EFFECTIVE DATE.
This title shall be effective 6 months after the date
of the enactment of this Act.
Æ