by the issuer, dictates that a non-formulary alter-
native is indicated.
‘‘(b) DRUG UTILIZATION PROGRAM.—A health insur-
ance issuer that provides health insurance coverage that
includes benefits for prescription drugs shall establish and
maintain a drug utilization program which—
‘‘(1) encourages appropriate use of prescription
drugs by enrollees and providers,
‘‘(2) monitors illnesses arising from improper
drug use or from adverse drug reactions or inter-
actions, and
‘‘(3) takes appropriate action to reduce the inci-
dence of improper drug use and adverse drug reac-
tions and interactions.’’.
TITLE II—CONTRACTING AND
TERMINATION RIGHTS
SEC. 201. NONDISCRIMINATION AGAINST PROVIDERS.
Part C of title XXVII of the Public Health Service
Act is amended by adding at the end the following:
‘‘SEC. 2777. NONDISCRIMINATION IN THE SELECTION OF
HEALTH PROFESSIONALS; EQUITABLE AC-
CESS TO NETWORKS.
‘‘(a) NONDISCRIMINATION IN SELECTION OF NET-
WORK HEALTH PROFESSIONALS.—A health insurance is-
suer offering network coverage shall not discriminate in
selecting the members of its health professional network
(or in establishing the terms and conditions for member-
ship in such network) on the basis of the race, national
origin, genetic makeup, gender, sexual orientation, age,
place or institution in which received health professional
education, or disability (other than a disability that im-
pairs the ability of an individual to provide health care
services or that may threaten the health of enrollees) of
the health professional.
‘‘(b) NONDISCRIMINATION IN ACCESS TO HEALTH
PLANS.—While nothing in this section shall be construed
as an ‘any willing provider’ requirement (as referred to
in section 2770(d)), a health insurance issuer shall not
discriminate in participation, reimbursement, or indem-
nification against a health professional, who is acting
within the scope of the health professional’s license or cer-
tification under applicable State law, solely on the basis
of such license or certification.’’.
SEC. 202. DEVELOPMENT OF PLAN POLICIES.
Such part is further amended by adding at the end
the following:
‘‘SEC. 2778. DEVELOPMENT OF PLAN POLICIES.
‘‘A health insurance issuer that offers network cov-
erage shall establish mechanisms to consider the rec-
ommendations, suggestions, and views of enrollees and
participating health professionals and providers regard-
ing—
‘‘(1) the medical policies of the issuer (including
policies relating to coverage of new technologies,
treatments, and procedures);
‘‘(2) the utilization review criteria and proce-
dures of the issuer;
‘‘(3) the quality and credentialing criteria of the
issuer; and
‘‘(4) the medical management procedures of the
issuer.’’.
SEC. 203. DUE PROCESS.
Such part is further amended by adding at the end
the following:
‘‘SEC. 2779. DUE PROCESS FOR HEALTH PROFESSIONALS
AND PROVIDERS.
‘‘(a) IN GENERAL.—A health insurance issuer with
respect to its offering of network coverage shall—
‘‘(1) allow all health professionals and providers
in its service area to apply to become a participating
health professional or provider during at least one
period in each calendar year;
‘‘(2) provide reasonable notice to such health
professionals and providers of the opportunity to
apply and of the period during which applications
are accepted;
‘‘(3) provide for review of each application by a
credentialing committee with appropriate representa-
tion of the category or type of health professional or
provider;
‘‘(4) select participating health professionals
and providers based on objective standards of qual-
ity developed with the suggestions and advice of pro-
fessional associations, health professionals, and pro-
viders;
‘‘(5) make such selection standards available
to—
‘‘(A) those applying to become a partici-
pating provider or health professional;
‘‘(B) health plan purchasers, and
‘‘(C) enrollees;
‘‘(6) when economic considerations are taken
into account in selecting participating health profes-
sionals and providers, use objective criteria that are
available to those applying to become a participating
provider or health professional and enrollees;
‘‘(7) adjust any economic profiling to take into
account patient characteristics (such as severity of
illness) that may result in atypical utilization of
services;
‘‘(8) make the results of such profiling available
to insurance purchasers, enrollees, and the health
professional or provider involved;
‘‘(9) notify any health professional or provider
being reviewed under the process referred to in para-
graph (3) of any information indicating that the
health professional or provider fails to meet the
standards of the issuer;
‘‘(10) offer a health professional or provider re-
ceiving notice pursuant to the requirement of para-
graph (9) with an opportunity to—
‘‘(A) review the information referred to in
such paragraph, and
‘‘(B) submit supplemental or corrected in-
formation;
‘‘(11) not include in its contracts with partici-
pating health professionals and providers a provision
permitting the issuer to terminate the contract
‘without cause’;
‘‘(12) provide a due process appeal that con-
forms to the process specified in section 412 of the
Health Care Quality Improvement Act of 1986 (42
U.S.C. 11112) for all determinations that are ad-
verse to a health professional or provider; and
‘‘(13) unless a health professional or provider
poses an imminent harm to enrollees or an adverse
action by a governmental agency effectively impairs
the ability to provide health care items and services,
provide—
‘‘(A) reasonable notice of any decision to
terminate a health professional or provider ‘for
cause’ (including an explanation of the reasons
for the determination),
‘‘(B) an opportunity to review and discuss
all of the information on which the determina-
tion is based, and
‘‘(C) an opportunity to enter into a correc-
tive action plan, before the determination be-
comes subject to appeal under the process re-
ferred to in paragraph (12).
‘‘(b) RULE OF CONSTRUCTION.—The requirements of
subsection (a) shall not be construed as preempting or su-
perseding any other reviews and appeals a health insur-
ance issuer is required by law to make available.’’.
SEC. 204. NON-PREEMPTION OF STATE LAW RESPECTING
LIABILITY OF GROUP HEALTH PLANS.
(a) IN GENERAL.—Section 514(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1144(b)) is amended by redesignating paragraph (9) as
paragraph (10) and inserting the following new para-
graph:
‘‘(9) Subsection (a) of this section shall not be
construed to preclude any State cause of action to
recover damages for personal injury or wrongful
death against any person that provides insurance or
administrative services to or for an employee welfare
benefit plan maintained to provide health care bene-
fits.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to causes of action arising on
or after the date of the enactment of this Act.
TITLE III—INFORMATION
REPORTING
SEC. 301. INFORMATION REPORTING.
Part C of title XXVII of the Public Health Service
Act is further amended by adding at the end the following:
‘‘SEC. 2780. INFORMATION REPORTING AND DISCLOSURE.
‘‘(a) IN GENERAL.—A health insurance issuer offer-
ing health insurance coverage shall provide enrollees and
prospective enrollees with information about—
‘‘(1) coverage provisions, benefits, and any ex-
clusions—
‘‘(A) by category of service,
‘‘(B) by category or type of health profes-
sional or provider, and
‘‘(C) if applicable, by specific service, in-
cluding experimental treatments;
‘‘(2) the percentage of the premium charged by
the issuer that is set aside for administration and
marketing of the issuer;
‘‘(3) the percentage of the premium charged by
the issuer that is expended directly for patient care;
‘‘(4) the number, mix, and distribution of par-
ticipating health professionals and providers;
‘‘(5) the ratio of enrollees to participating
health professionals and providers by category and
type of health professional and provider;
‘‘(6) the expenditures and utilization per en-
rollee by category and type of health professional
and provider;
‘‘(7) the financial obligations of the enrollee and
the 
issuer, 
including 
premiums, 
copayments,
deductibles, and established aggregate maximums on
out-of-pocket costs, for all items and services, includ-
ing—
‘‘(A) those furnished by health profes-
sionals and providers that are not participating
health professionals and providers, and
‘‘(B) those furnished to an enrollee who is
outside the service area of the coverage;
‘‘(8) utilization review requirements of the is-
suer (including prior authorization review, concur-
rent review, post-service review, post-payment re-
view, and any other procedures that may lead to de-
nial of coverage or payment for a service);
‘‘(9) financial arrangements and incentives that
may—
‘‘(A) limit the items and services furnished
to an enrollee,
‘‘(B) restrict referral or treatment options,
or
‘‘(C) negatively affect the fiduciary respon-
sibility of a health professional or provider to
an enrollee;
‘‘(10) other incentives for health professionals
and providers to deny or limit needed items or serv-
ices;
‘‘(11) quality indicators for the issuer and par-
ticipating health professionals and providers, includ-
ing performance measures such as appropriate refer-
rals and prevention of secondary complications fol-
lowing treatment;
‘‘(12) grievance procedures and appeals rights
under the coverage, and summary information about
the number and disposition of grievances and ap-
peals in the most recent period for which complete
and accurate information is available; and
‘‘(13) the percentage of utilization review deter-
minations made by the issuer that disagree with the
judgment of the treating health professional or pro-
vider and the percentage of such determinations that
are reversed on appeal.
‘‘(b) REGULATIONS.—The Secretary, in collaboration
with the Secretary of Labor, shall issue regulations to es-
tablish—
‘‘(1) the styles and sizes of type to be used with
respect to the appearance of the publication of the
information required under subsection (a);
‘‘(2) standards for the publication of informa-
tion to ensure that such publication is—
‘‘(A) readily accessible, and
‘‘(B) in common language easily under-
stood,
by individuals with little or no connection to or un-
derstanding of the language employed by health pro-
fessionals and providers, health insurance issuers, or
other entities involved in the payment or delivery of
health care services, and
‘‘(3) the placement and positioning of informa-
tion in health plan marketing materials.’’.
SEC. 302. AUTOMATIC EXCLUSION FROM MEDICARE AND
MEDICAID FOR HEALTH PLANS THAT LIE
ABOUT QUALITY DATA.
Notwithstanding any other provision of law, in the
case of a Medicare+Choice organization, an eligible orga-
nization, health maintenance organizations, or other entity
that is receiving payment on a prepaid basis for items and
services provided under title XVIII or XIX of the Social
Security Act and that submits information relating to the
quality of such services provided that is material and false,
the Secretary of Health and Human Services shall take
such steps as may be necessary to assure the exclusion
of the entity from continuing to qualify for such payments
under such title and shall provide for the imposition of
any intermediate sanctions in lieu of such exclusion.
TITLE IV—PATIENT-PROVIDER
COMMUNICATION
SEC. 401. SHORT TITLE; FINDINGS.
(a) SHORT TITLE.—This title may be cited as the
‘‘Patient Right to Know Act’’.
(b) FINDINGS.—Congress finds the following:
(1) Patients need access to all relevant informa-
tion to make appropriate decisions about their
health care.
(2) Open medical communications between
health care providers and their patients is a key to
prevention and early diagnosis and treatment, as
well as to informed consent and quality, cost-effec-
tive care.
(3) Open medical communications are in the
best interests of patients.
(4) Open medical communications must meet
applicable legal and ethical standards of care.
(5) It is critical that health care providers con-
tinue to exercise their best medical, ethical, and
moral judgment in advising patients without inter-
ference from health plans.
(6) The offering and operation of health plans
affect commerce among the States.
(c) PURPOSE.—It is the purpose of this title to estab-
lish a Federal standard that protects medical communica-
tions between health care providers and patients.
SEC. 402. PROHIBITION OF INTERFERENCE WITH CERTAIN
MEDICAL COMMUNICATIONS.
(a) PROHIBITION.—
sure, review, or improve the quality and effective uti-
lization of health care services (if such utilization is
according to guidelines or protocols that are based
on clinical or scientific evidence and the professional
judgment of the provider) but only if the guidelines
or protocols under such utilization do not prohibit or
restrict medical communications between providers
and their patients; or
(2) to permit a health care provider to mis-
represent the scope of benefits covered under a
health plan or to otherwise require the plan to reim-
burse providers for benefits not covered under the
plan
(c) ENFORCEMENT.—
(1) STATE
AUTHORITY.—Except as otherwise
provided in this subsection, each State shall enforce
the provisions of this title with respect to health in-
surance issuers that issue, sell, renew, or offer
health plans in the State.
(2) ENFORCEMENT BY SECRETARY.—
(A) IN GENERAL.—Effective on January 1,
1998, if the Secretary, after consultation with
the chief executive officer of a State and the in-
surance commissioner or chief insurance regu-
latory official of the State, determines that the
State has failed to substantially enforce the re-
quirements of this title with respect to health
insurance issuers in the State, the Secretary
shall enforce the requirements of this title with
respect to such State.
(B) ENFORCEMENT THROUGH IMPOSITION
OF CIVIL MONEY PENALTY.—
(i) IN GENERAL.—With respect to a
State in which the Secretary is enforcing
the requirements of this title, an entity op-
erating a health plan in that State that
violates subsection (a) shall be subject to a
civil money penalty of up to $25,000 for
each such violation.
(ii) PROCEDURES.—For purposes of
imposing a civil money penalty under
clause (i), the provisions of subparagraphs
(C) through (G) of section 2722(b)(2) of
the Health Insurance Portability and Ac-
countability Act of 1996 (42 U.S.C.
300gg–22(b)(2)) shall apply except that
the provisions of clause (i) of subpara-
graph (C) of such section shall not apply.
(3) SELF-INSURED PLANS.—Effective on Janu-
ary 1, 1998, the Secretary of Labor shall enforce the
requirements of this section in the case of a health
plan not subject to State regulation by reason of sec-
tion 514(b) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1144(b)).
(4) RULE OF CONSTRUCTION.—Nothing in this
title shall be construed to affect or modify the provi-
sions of section 514 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1144).
(d) NO
PREEMPTION
OF
MORE
PROTECTIVE
LAWS.—A State may establish or enforce requirements
with respect to the protection of medical communications,
but only if such requirements are equal to or more protec-
tive of such communications than the requirements estab-
lished under this section.
SEC. 403. DEFINITIONS.
In this title:
(1) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means anyone licensed or cer-
tified under State law to provide health care services
who is operating within the scope of such license.
(2) HEALTH
INSURANCE
ISSUER.—The term
‘‘health insurance issuer’’ has the meaning given
such term in section 2791(b)(2) of the Public Health
Service Act (as added by the Health Insurance Port-
ability and Accountability Act of 1996).
(3) HEALTH PLAN.—The term ‘‘health plan’’
means a group health plan (as defined in section
2791(a) of the Public Health Service Act (as added
by the Health Insurance Portability and Account-
ability Act of 1996)) and any individual health in-
surance (as defined in section 2791(b)(5)) operated
by a health insurance issuer and includes any other
health care coverage provided through a private or
public entity. In the case of a health plan that is an
employee welfare benefit plan (as defined in section
3(1) of the Employee Retirement Income Security
Act of 1974), any third party administrator or other
person with responsibility for contracts with health
care providers under the plan shall be considered,
for purposes of enforcement under this section, to be
a health insurance issuer operating such health plan.
(4) MEDICAL COMMUNICATION.—
(A) IN
GENERAL.—The term ‘‘medical
communication’’ means any communication
made by a health care provider with a patient
of the health care provider (or the guardian or
legal representative of such patient) with re-
spect to—
(i) the patient’s health status, medical
care, or treatment options;
(ii) any utilization review require-
ments that may affect treatment options
for the patient; or
(iii) any financial incentives that may
affect the treatment of the patient.
(B) 
MISREPRESENTATION.—The 
term
‘‘medical communication’’ does not include a
communication by a health care provider with a
patient of the health care provider (or the
guardian or legal representative of such patient)
if the communication involves a knowing or will-
ful misrepresentation by such provider.
(5) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
SEC. 404. EFFECTIVE DATE.
This title shall take effect on the date of enactment
of this Act, except that section 402(a)(3) shall take effect
180 days after such date of enactment.
TITLE V—UTILIZATION REVIEW
AND MANAGEMENT
SEC. 501. UTILIZATION REVIEW DUE PROCESS FOR EN-
ROLLEES.
Part C of title XXVII of the Public Health Service
Act, as previously inserted and amended, is further
amended by adding at the end the following new section:
‘‘SEC. 2781. DUE PROCESS FOR ENROLLEES.
‘‘(a) UTILIZATION REVIEW.—The utilization review
program of a health insurance issuer shall—
‘‘(1) be developed (including any screening cri-
teria used by such program) with the involvement of
participating health professionals and providers;
‘‘(2) to the extent consistent with the protection
of proprietary business information (as defined for
purposes of section 552 of title 5, United States
Code) release, upon request, to affected health pro-
fessionals, providers, and enrollees the screening cri-
teria, weighting elements, and computer algorithms
used in reviews and a description of the method by
which they were developed;
‘‘(3) uniformly apply review criteria that are
based on sound scientific principles and the most re-
cent medical evidence;
‘‘(4) use licensed, accredited, or certified health
professionals to make review determinations (and for
services requiring specialized training for their deliv-
ery, use a health professional who is qualified
through equivalent specialized training and experi-
ence);
‘‘(5) subject to reasonable safeguards, disclose
to health professionals and providers, upon request,
tion was based on false information knowingly sup-
plied by the person requesting the determination;
‘‘(11) provide timely access, as defined by the
applicable State authority, to utilization review per-
sonnel and, if such personnel are not available,
waives any prior authorization that would otherwise
be required;
‘‘(12) provide notice of an initial determination
on payment of a claim within 30 days after the date
the claim is submitted for such item or service, and
include in such notice an explanation of the reasons
for such determination and of the right to an imme-
diate appeal; and
‘‘(13) take into consideration guidelines estab-
lished by the medical societies relating to necessary
health care.
‘‘(b) RIGHT OF APPEAL.—
‘‘(1) IN GENERAL.—An enrollee in health insur-
ance coverage offered by a health insurance issuer,
and any provider acting on behalf of the enrollee
with the enrollee’s consent, may appeal any appeal-
able decision (as defined in paragraph (2)) under the
procedures described in the succeeding subsections
in this section and (to the extent applicable) sub-
section (a). Such enrollees and providers shall be
provided with a written explanation of the appeal
process upon the conclusion of each stage in the ap-
peal process.
‘‘(2) APPEALABLE DECISION DEFINED.—In this
section, the term ‘appealable decision’ means any of
the following:
‘‘(A) An adverse determination under a
utilization review program under subsection (a).
‘‘(B) A denial of patient choice of health
care professionals under section 2770.
‘‘(C) A denial of access to care under sec-
tion 2771.
‘‘(D) Denial of coverage of routine patient
costs in connection with an approved clinical
trial under section 2775.
‘‘(E) Denial of access to needed drugs
under section 2776(a)(3).
‘‘(F) Denial of payment for a benefit,
‘‘(c) INFORMAL INTERNAL APPEAL PROCESS (STAGE
1).—
‘‘(1) IN GENERAL.—Each issuer shall establish
and maintain an informal internal appeal process
(an appeal under such process in this section re-
ferred to as a ‘stage 1 appeal’) under which any en-
rollee or any provider acting on behalf of an enrollee
with the enrollee’s consent, who is dissatisfied with
any appealable decision has the opportunity to dis-
cuss and appeal that decision with the medical direc-
tor of the issuer or the health care professional who
made the decision.
‘‘(2) TIMING.—All appeals under this para-
graph shall be concluded as soon as possible in ac-
cordance with the medical exigencies of the cases,
and in no event later than 72 hours in the case of
appeals from decisions regarding urgent care and 5
days in the case of all other appeals.
‘‘(3) FURTHER REVIEW.—If the appeal is not
resolved to the satisfaction of the enrollee at this
level by the deadline under paragraph (2), the issuer
shall provide the enrollee and provider (if any) with
a written explanation of the decision and the right
to proceed to a stage 2 appeal under subsection (d).
‘‘(d) FORMAL INTERNAL APPEAL PROCESS (STAGE
2).—
‘‘(1) IN GENERAL.—Each issuer shall establish
and maintain a formal internal appeal process (an
appeal under such process in this section referred to
as a ‘stage 2 appeal’) under which any enrollee or
provider acting on behalf of an enrollee with the en-
rollee’s consent, who is dissatisfied with the results
of a stage 1 appeal has the opportunity to appeal
the results before a panel that includes a physician
or other health care professional (or professionals)
selected by the issuer who have not been involved in
the appealable decision at issue in the appeal.
‘‘(2) AVAILABILITY OF CLINICAL PEERS.—The
panel under subparagraph (A) shall have available
either clinical peers who have not been involved in
the appealable decision at issue in the appeal or oth-
ers who are mutually agreed upon by the parties. If
requested by the enrollee or enrollee’s provider with
the enrollee’s consent, such a peer shall participate
in the panel’s review of the case. In this paragraph,
the term ‘clinical peer’ means, with respect to a re-
view, a physician or other health care professional
who holds a non-restricted license in a State and in
the same or similar specialty as typically manages
the medical condition, procedure, or treatment under
review.
‘‘(3) TIMELY ACKNOWLEDGMENT.—The issuer
shall acknowledge the enrollee or provider involved
of the receipt of a stage 2 appeals upon receipt of
the appeal.
‘‘(4) DEADLINE.—
‘‘(A) IN GENERAL.—The issuer shall con-
clude each stage 2 appeal as soon as possible
after the date of the receipt of the appeal in ac-
cordance with medical exigencies of the case in-
volved, but in no event later than 72 hours in
the case of appeals from decisions regarding ur-
gent care and (except as provided in subpara-
graph (B)) 20 business days in the case of all
other appeals.
‘‘(B) EXTENSION.—An issuer may extend
the deadline for an appeal that does not relate
to a decision regarding urgent or emergency
care up to an additional 20 business days where
it can demonstrate to the applicable State au-
thority reasonable cause for the delay beyond
its control and where it provides, within the
original deadline under subparagraph (A), a
written progress report and explanation for the
delay to such authority and to the enrollee and
provider involved.
‘‘(5) NOTICE.—If an issuer denies a stage 2 ap-
peal, the issuer shall provide the enrollee and pro-
vider involved with written notification of the denial
and the reasons therefore, together with a written
notification of rights to any further appeal.
‘‘(e) DIRECT USE OF FURTHER APPEALS.—In the
event that the issuer fails to comply with any of the dead-
lines for completion of appeals under this section or in
the event that the issuer for any reason expressly waives
its rights to an internal review of an appeal under sub-
section (c) or (d), the enrollee and provider involved shall
be relieved of any obligation to complete the appeal stage
involved and may, at the enrollee’s or provider’s option,
proceed directly to seek further appeal through any appli-
cable external appeals process.
‘‘(f) EXTERNAL APPEAL PROCESS IN CASE OF USE
OF EXPERIMENTAL TREATMENT TO SAVE LIFE OF PA-
TIENT.—
‘‘(1) IN GENERAL.—In the case of an enrollee
described in paragraph (2), the health insurance is-
suer shall provide for an external independent review
process respecting the issuer’s decision not to cover
the experimental therapy (described in paragraph
(2)(B)(ii)).
‘‘(2) ENROLLEE DESCRIBED.—An enrollee de-
scribed in this paragraph is an enrollee who meets
the following requirements:
‘‘(A) The enrollee has a terminal condition
that is highly likely to cause death within 2
years.