I
105TH CONGRESS
2D SESSION
H. R. 4250
To provide new patient protections under group health plans.
IN THE HOUSE OF REPRESENTATIVES
JULY 16, 1998
Mr. GINGRICH (for himself, Mr. HASTERT, Mr. ARCHER, Mr. BLILEY, Mr.
GOODLING, Mr. BILIRAKIS, Mr. FAWELL, Mr. NORWOOD, Mr. MCCRERY,
Mr. HOBSON, Mr. GOSS, Ms. PRYCE of Ohio, Mrs. KELLY, Mr. TALENT,
Ms. GRANGER, Mr. CHAMBLISS, Mr. GILCHREST, Mr. WELDON of Flor-
ida, Mr. METCALF, Mr. PETERSON of Pennsylvania, Mr. TIAHRT, Mr.
BARTLETT of Maryland, Mr. BUNNING, Mrs. NORTHUP, Mr. HUTCH-
INSON, Mr. GIBBONS, Mr. CHABOT, Mr. BOEHNER, Mr. GREENWOOD,
Mrs. FOWLER, Mr. SPENCE, Mr. DUNCAN, Mr. SKEEN, Mr. HERGER,
Mrs. CUBIN, Mr. DREIER, Mr. UPTON, Mr. COLLINS, Mr. SESSIONS, Mr.
FOLEY, Mr. GILLMOR, Mr. ENGLISH of Pennsylvania, Mr. REDMOND,
Mr. ROGERS, Mr. SMITH of Michigan, Mr. MICA, Mr. ADERHOLT, Mr.
LATHAM, Mr. FOX of Pennsylvania, Mr. MCKEON, Mr. GALLEGLY, Mr.
TAUZIN, Mr. NEY, Mr. HILLEARY, Mr. PAXON, Mr. BALLENGER, Mr.
KASICH, and Mr. REGULA) introduced the following bill; which was re-
ferred to the Committee on Commerce, and in addition to the Committees
on Education and the Workforce, Ways and Means, the Judiciary, and
Government Reform and Oversight, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To provide new patient protections under group health plans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—The Act may be cited as the
‘‘Patient Protection Act of 1998’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title and table of contents.
TITLE I—AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
Subtitle A—Patient Protections.
Sec. 1001. Patient access to unrestricted medical advice, emergency medical
care, obstetric and gynecological care, and pediatric care.
Sec. 1002. Effective date and related rules.
Subtitle B—Patient Access to Information
Sec. 1101. Patient access to information regarding plan coverage, managed
care procedures, health care providers, and quality of medical
care.
Sec. 1102. Effective date.
Subtitle C—New Procedures and Access to Courts for Grievances Arising
under Group Health Plans
Sec. 1201. Special rules for group health plans.
Sec. 1202. Effective date.
Subtitle D—Affordable Health Coverage for Employees of Small Businesses
Sec. 1301. Short title of subtitle.
Sec. 1302. Rules governing association health plans.
‘‘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
providing 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 insur-
ance coverage.
‘‘Sec. 811. State assessment authority.
‘‘Sec. 812. Special rules for church plans.
‘‘Sec. 813. Definitions and rules of construction.
Sec. 1303. Clarification of treatment of single employer arrangements.
Sec. 1304. Clarification of treatment of certain collectively bargained arrange-
ments.
Sec. 1305. Enforcement provisions relating to association health plans.
Sec. 1306. Cooperation between Federal and State authorities.
Sec. 1307. Effective date and transitional and other rules.
TITLE II—AMENDMENTS TO PUBLIC HEALTH SERVICE ACT
Subtitle A—Patient Protections and Point of Service Coverage Requirements
Sec. 2001. Patient access to unrestricted medical advice, emergency medical
care, obstetric and gynecological care, pediatric care.
Sec. 2002. Requiring health maintenance organizations to offer option of point-
of-service coverage.
Subtitle B—Patient Access to Information
Sec. 2101. Patient access to information regarding plan coverage, managed
care procedures, health care providers, and quality of medical
care.
Sec. 2102. Reporting on fraud and abuse enforcement activities.
Sec. 2103. Effective date.
Subtitle C—HealthMarts
Sec. 2201. Short title of subtitle.
Sec. 2202. Expansion of consumer choice through HealthMarts.
‘‘TITLE XXVIII—HEALTHMARTS
‘‘Sec. 2801. Definition of HealthMart.
‘‘Sec. 2802. Application of certain laws and requirements.
‘‘Sec. 2803. Administration.
‘‘Sec. 2804. Definitions.
SUBTITLE D—COMMUNITY HEALTH ORGANIZATIONS
Sec. 2301. Promotion of provision of insurance by community health organiza-
tions.
TITLE III—AMENDMENTS TO THE INTERNAL REVENUE CODE OF
1986
Subtitle A—Patient Protections
Sec. 3001. Patient access to unrestricted medical advice, emergency medical
care, obstetric and gynecological care, pediatric care.
Sec. 3002. Effective date and related rules.
Subtitle B—Patient Access to Information
Sec. 3101. Patient access to information regarding plan coverage, managed
care procedures, health care providers, and quality of medical
care.
Sec. 3102. Reporting on fraud and abuse enforcement activities.
Sec. 3103. Effective date.
Subtitle C—Medical Savings Accounts
Sec. 3201. Expansion of availability of medical savings accounts.
Sec. 3202. Exception from insurance limitation in case of medical savings ac-
counts.
TITLE IV—HEALTH CARE LAWSUIT REFORM
Subtitle A—General Provisions
Sec. 4001. Federal reform of health care liability actions.
Sec. 4002. Definitions.
Sec. 4003. Effective date.
Subtitle B—Uniform Standards for Health Care Liability Actions
Sec. 4011. Statute of limitations.
Sec. 4012. Calculation and payment of damages.
Sec. 4013. Alternative dispute resolution.
TITLE V—CONFIDENTIALITY OF HEALTH INFORMATION
Sec. 5001. Confidentiality of protected health information.
‘‘PART D—CONFIDENTIALITY OF PROTECTED HEALTH INFORMATION
‘‘Sec. 1181. Inspection and copying of protected health information.
‘‘Sec. 1182. Supplementation of protected health information.
‘‘Sec. 1183. Notice of confidentiality practices.
‘‘Sec. 1184. Establishment of safeguards.
‘‘Sec. 1185. Availability of protected health information for purposes of
health care operations.
‘‘Sec. 1186. Relationship to other laws.
‘‘Sec. 1187. Civil penalties.
‘‘Sec. 1188. Definitions.
Sec. 5002. Study and report on effect of State law on health-related research.
Sec. 5003. Study and report on State law on protected health information.
Sec. 5004. Protection for certain information developed to reduce mortality or
morbidity or for improving patient care and safety.
TITLE VI—MEDICAL SAVINGS ACCOUNTS FOR FEDERAL
EMPLOYEES
Sec. 6001. Medical savings accounts for Federal employees.
Sec. 6002. Effective date.
TITLE I—AMENDMENTS TO THE
EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974
Subtitle A—Patient Protections
SEC. 1001. PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE, EMERGENCY MEDICAL CARE, OB-
STETRIC AND GYNECOLOGICAL CARE, AND
PEDIATRIC CARE.
(a) IN GENERAL.—Subpart B of part 7 of subtitle
B of title I of the Employee Retirement Income Security
Act of 1974 is amended further by adding at the end the
following new sections:
‘‘SEC. 713. PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE, EMERGENCY MEDICAL CARE, OB-
STETRIC AND GYNECOLOGICAL CARE, PEDI-
ATRIC CARE.
‘‘(a) PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE.—
‘‘(1) IN GENERAL.—In the case of any health
care professional acting within the lawful scope of
practice in the course of carrying out a contractual
employment arrangement or other direct contractual
arrangement between such professional and a group
health plan or a health insurance issuer offering
health insurance coverage in connection with a group
health plan, the plan or issuer with which such con-
tractual employment arrangement or other direct
contractual arrangement is maintained by the pro-
fessional may not impose on such professional under
such arrangement any prohibition with respect to
advice, provided to a participant or beneficiary
under the plan who is a patient, about the health
status of the participant or beneficiary or the medi-
cal care or treatment for the condition or disease of
the participant or beneficiary, regardless of whether
benefits for such care or treatment are provided
under the plan or health insurance coverage offered
in connection with the plan.
‘‘(2) HEALTH CARE PROFESSIONAL DEFINED.—
For purposes of this subsection, the term ‘health
care professional’ means a physician (as defined in
section 1861(r) of the Social Security Act) or other
health care professional if coverage for the profes-
sional’s services is provided under the group health
plan for the services of the professional. Such term
includes a podiatrist, optometrist, chiropractor, psy-
chologist, dentist, physician assistant, physical or oc-
cupational therapist and therapy assistant, speech–
language pathologist, audiologist, registered or li-
censed practical nurse (including nurse practitioner,
clinical nurse specialist, certified registered nurse
anesthetist, and certified nurse–midwife), licensed
certified social worker, registered respiratory thera-
pist, and certified respiratory therapy technician.
‘‘(b) PATIENT ACCESS
TO EMERGENCY MEDICAL
CARE.—
‘‘(1) IN
GENERAL.—To the extent that the
group health plan (or health insurance issuer offer-
ing health insurance coverage in connection with the
plan) provides for any benefits consisting of emer-
gency 
medical 
care 
(as 
defined 
in 
section
503(b)(9)(I)), except for items or services specifi-
cally excluded—
‘‘(A) the plan or issuer shall provide bene-
fits, without requiring preauthorization, for ap-
propriate emergency medical screening exami-
nations (within the capability of the emergency
facility, including ancillary services routinely
available to the emergency facility) to the extent
that a prudent layperson, who possesses an av-
erage knowledge of health and medicine, would
determine such examinations to be necessary in
order to determine whether emergency medical
care (as so defined) is required, and
‘‘(B) the plan or issuer shall provide bene-
fits for additional emergency medical services
following an emergency medical screening exam-
ination (if determined necessary under subpara-
graph (A)) to the extent that a prudent emer-
gency medical professional would determine
such additional emergency services to be nec-
essary to avoid the consequences described in
section 503(b)(9)(I).
‘‘(2) UNIFORM
COST-SHARING
REQUIRED.—
Nothing in this subsection shall be construed as pre-
venting a group health plan or issuer from imposing
any form of cost-sharing applicable to any partici-
pant or beneficiary (including coinsurance, copay-
ments, deductibles, and any other charges) in rela-
tion to benefits described in paragraph (1), if such
form of cost-sharing is uniformly applied under such
plan, with respect to similarly situated participants
and beneficiaries, to all benefits consisting of emer-
gency 
medical 
care 
(as 
defined 
in 
section
503(b)(9)(I)) provided to such similarly situated
participants and beneficiaries under the plan.
‘‘(c) PATIENT ACCESS TO OBSTETRIC AND GYNECO-
LOGICAL CARE.
‘‘(1) IN
GENERAL.—In any case in which a
group health plan (or a health insurance issuer of-
fering health insurance coverage in connection with
the plan)—
‘‘(A) provides benefits under the terms of
the plan consisting of—
‘‘(i) routine gynecological care (such
as preventive women’s health examina-
tions), or
‘‘(ii) routine obstetric care (such as
routine pregnancy-related services),
provided by a participating physician who spe-
cializes in such care (or provides benefits con-
sisting of payment for such care), and
‘‘(B) the plan requires or provides for des-
ignation by a participant or beneficiary of a
participating primary care provider,
if the primary care provider designated by such a
participant or beneficiary is not such a physician,
then the plan (or issuer) shall meet the requirements
of paragraph (2).
‘‘(2) REQUIREMENTS.—A group health plan (or
a health insurance issuer offering health insurance
coverage in connection with the plan) meets the re-
quirements of this paragraph, in connection with
benefits described in paragraph (1) consisting of
care described in clause (i) or (ii) of paragraph
(1)(A) (or consisting of payment therefor), if the
plan (or issuer)—
‘‘(A) does not require authorization or a
referral by the primary care provider in order
to obtain such benefits, and
‘‘(B) treats the ordering of other routine
care of the same type, by the participating phy-
sician providing the care described in clause (i)
or (ii) of paragraph (1)(A), as the authorization
of the primary care provider with respect to
such care.
‘‘(3) CONSTRUCTION.—Nothing in paragraph
(2)(B) shall waive any requirements of coverage re-
lating to medical necessity or appropriateness with
respect to coverage of gynecological or obstetric care
so ordered.
‘‘(d) PATIENT ACCESS TO PEDIATRIC CARE.—
‘‘(1) IN
GENERAL.—In any case in which a
group health plan (or a health insurance issuer of-
fering health insurance coverage in connection with
the plan) provides benefits consisting of routine pe-
diatric care provided by a participating physician
who specializes in pediatrics (or consisting of pay-
ment for such care) and the plan requires or pro-
vides for designation by a participant or beneficiary
of a participating primary care provider, the plan (or
issuer) shall provide that such a participating physi-
cian may be designated, if available, by a parent or
guardian of any beneficiary under the plan is who
under 18 years of age, as the primary care provider
with respect to any such benefits.
‘‘(2) CONSTRUCTION.—Nothing in paragraph
(1) shall waive any requirements of coverage relating
to medical necessity or appropriateness with respect
to coverage of pediatric care.
‘‘(e) TREATMENT
OF MULTIPLE COVERAGE OP-
TIONS.—In the case of a plan providing benefits under two
or more coverage options, the requirements of subsections
(c) and (d) shall apply separately with respect to each cov-
erage option.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act is amended by adding at
the end of the items relating to subpart B of part 7 of
subtitle B of title I of such Act the following new item:
‘‘Sec. 713. Patient access to unrestricted medical advice, emergency medical
care, obstetric and gynecological care, and pediatric care.’’.
SEC. 1002. EFFECTIVE DATE AND RELATED RULES.
(a) IN GENERAL.—The amendments made by this
subtitle shall apply with respect to plan years beginning
on or after January 1 of the second calendar year follow-
ing the date of the enactment of this Act, except that the
Secretary of Labor may issue regulations before such date
under such amendments. The Secretary shall first issue
regulations necessary to carry out the amendments made
by this section before the effective date thereof.
(b) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this subtitle, against a group health plan
or health insurance issuer with respect to a violation of
a requirement imposed by such amendments before the
date of issuance of regulations issued in connection with
such requirement, if the plan or issuer has sought to com-
ply in good faith with such requirement.
(c) SPECIAL RULE FOR COLLECTIVE BARGAINING
AGREEMENTS.—In the case of a group health plan main-
tained pursuant to one or more collective bargaining
agreements between employee representatives and one or
more employers ratified before the date of the enactment
of this Act, the provisions of subsections (b), (c), and (d)
of section 713 of the Employee Retirement Income Secu-
rity Act of 1974 (as added by this subtitle) shall not apply
with respect to plan years beginning before the later of—
(1) the date on which the last of the collective
bargaining agreements relating to the plan termi-
nates (determined without regard to any extension
thereof agreed to after the date of the enactment of
this Act), or
(2) January 1, 2001.
For purposes of this subsection, any plan amendment
made pursuant to a collective bargaining agreement relat-
ing to the plan which amends the plan solely to conform
to any requirement added by this subtitle shall not be
treated as a termination of such collective bargaining
agreement.
(d) ASSURING COORDINATION.—The Secretary of
Labor, the Secretary of the Treasury, and the Secretary
of Health and Human Services shall ensure, through the
execution of an interagency memorandum of understand-
ing among such Secretaries, that—
(1) regulations, rulings, and interpretations
issued by such Secretaries relating to the same mat-
ter over which two or more such Secretaries have re-
sponsibility under the provisions of this subtitle, sec-
tion 2101, and subtitle A of title III (and the
amendments made thereby) are administered so as
to have the same effect at all times, and
(2) coordination of policies relating to enforcing
the same requirements through such Secretaries in
order to have a coordinated enforcement strategy
that avoids duplication of enforcement efforts and
assigns priorities in enforcement.
(e) TREATMENT OF RELIGIOUS NONMEDICAL PRO-
VIDERS.—
(1) IN GENERAL.—Nothing in this Act (or the
amendments made thereby) shall be construed to—
(A) restrict or limit the right of group
health plans, and of health insurance issuers of-
fering health insurance coverage in connection
with group health plans, to include as providers
religious nonmedical providers,
(B) require such plans or issuers to—
(i) utilize medically based eligibility
standards or criteria in deciding provider
status of religious nonmedical providers,
(ii) use medical professionals or cri-
teria to decide patient access to religious
nonmedical providers,
(iii) utilize medical professionals or
criteria in making decisions in internal or
external appeals from decisions denying or
limiting coverage for care by religious non-
medical providers, or
(iv) compel a participant or bene-
ficiary to undergo a medical examination
or test as a condition of receiving health
insurance coverage for treatment by a reli-
gious nonmedical provider, or
(C) require such plans or issuers to ex-
clude religious nonmedical providers because
they do not provide medical or other data other-
wise required, if such data is inconsistent with
the religious nonmedical treatment or nursing
care provided by the provider.
(2) RELIGIOUS NONMEDICAL PROVIDER.—For
purposes of this subsection, the term ‘‘religious non-
medical provider’’ means a provider who provides no
medical care but who provides only religious non-
medical treatment or religious nonmedical nursing
care.
Subtitle B—Patient Access to
Information
SEC. 1101. PATIENT ACCESS TO INFORMATION REGARDING
PLAN COVERAGE, MANAGED CARE PROCE-
DURES, 
HEALTH 
CARE 
PROVIDERS, 
AND
QUALITY OF MEDICAL CARE.
(a) IN GENERAL.—Part 1 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974 is
amended—
(1) by redesignating section 111 as section 112;
and
(2) by inserting after section 110 the following
new section:
‘‘DISCLOSURE BY GROUP HEALTH PLANS
‘‘SEC. 111. (a) DISCLOSURE REQUIREMENT.—
‘‘(1) GROUP
HEALTH
PLANS.—The adminis-
trator of each group health plan shall take such ac-
tions as are necessary to ensure that the summary
plan description of the plan required under section
102 (or each summary plan description in any case
in which different summary plan descriptions are ap-
propriate under part 1 for different options of cov-
erage) contains, among any information otherwise
required under this part, the information required
under subsections (b), (c), (d), and (e)(2)(A).
‘‘(2) 
HEALTH
INSURANCE
ISSUERS.—Each
health insurance issuer offering health insurance
coverage in connection with a group health plan
shall provide the administrator on a timely basis
with the information necessary to enable the admin-
istrator to comply with the requirements of para-
graph (1). To the extent that any such issuer pro-
vides on a timely basis to plan participants and
beneficiaries information otherwise required under
this part to be included in the summary plan de-
scription, the requirements of sections 101(a)(1) and
104(b) shall be deemed satisfied in the case of such
plan with respect to such information.
‘‘(b) PLAN BENEFITS.—The information required
under subsection (a) includes the following:
‘‘(1) COVERED ITEMS AND SERVICES.—
‘‘(A) CATEGORIZATION OF INCLUDED BEN-
EFITS.—A description of covered benefits, cat-
egorized by—
‘‘(i) types of items and services (in-
cluding any special disease management
program), and
‘‘(ii) types of health care professionals
providing such items and services.
‘‘(B) EMERGENCY MEDICAL CARE.—A de-
scription of the extent to which the plan covers
emergency medical care (including the extent to
which the plan provides for access to urgent
care centers), and any definitions provided
under the plan for the relevant plan terminol-
ogy referring to such care.
‘‘(C) PREVENTATIVE
SERVICES.—A de-
scription of the extent to which the plan pro-
vides benefits for preventative services.
‘‘(D) DRUG FORMULARIES.—A description
of the extent to which covered benefits are de-
termined by the use or application of a drug
formulary and a summary of the process for de-
termining what is included in such formulary.
‘‘(E) 
COBRA 
CONTINUATION
COV-
ERAGE.—A description of the benefits available
under the plan pursuant to part 6.
‘‘(2) LIMITATIONS, EXCLUSIONS, AND RESTRIC-
TIONS ON COVERED BENEFITS.—
‘‘(A) 
CATEGORIZATION
OF
EXCLUDED
BENEFITS.—A description of benefits specifi-
cally excluded from coverage, categorized by
types of items and services.
‘‘(B) 
UTILIZATION
REVIEW
AND
PREAUTHORIZATION REQUIREMENTS.—Whether
coverage for medical care is limited or excluded
on 
the 
basis 
of 
utilization 
review 
or
preauthorization requirements.
‘‘(C) LIFETIME, ANNUAL, OR OTHER PE-
RIOD LIMITATIONS.—A description of the cir-
cumstances under which, and the extent to
which, coverage is subject to lifetime, annual, or
other period limitations, categorized by types of
benefits.
‘‘(D) CUSTODIAL CARE.—A description of
the circumstances under which, and the extent
to which, the coverage of benefits for custodial
care is limited or excluded, and a statement of
the definition used by the plan for custodial
care.
‘‘(E) 
EXPERIMENTAL
TREATMENTS.—
Whether coverage for any medical care is lim-
ited or excluded because it constitutes experi-
mental treatment or technology, and any defini-
tions provided under the plan for the relevant
plan terminology referring to such limited or
excluded care.
‘‘(F) MEDICAL APPROPRIATENESS OR NE-
CESSITY.—Whether coverage for medical care
may be limited or excluded by reason of a fail-
ure to meet the plan’s requirements for medical
appropriateness or necessity, and any defini-
tions provided under the plan for the relevant
plan terminology referring to such limited or
excluded care.
‘‘(G) SECOND
OR
SUBSEQUENT
OPIN-
IONS.—A description of the circumstances
under which, and the extent to which, coverage
for second or subsequent opinions is limited or
excluded.
‘‘(H) SPECIALTY CARE.—A description of
the circumstances under which, and the extent
to which, coverage of benefits for specialty care
is conditioned on referral from a primary care
provider.
‘‘(I) CONTINUITY OF CARE.—A description
of the circumstances under which, and the ex-
tent to which, coverage of items and services
provided by any health care professional is lim-
ited or excluded by reason of the departure by
the professional from any defined set of provid-
ers.
‘‘(J) RESTRICTIONS
ON
COVERAGE
OF
EMERGENCY
SERVICES.—A description of the
circumstances under which, and the extent to
which, the plan, in covering emergency medical
care furnished to a participant or beneficiary of
the plan imposes any financial responsibility de-
scribed in subsection (c) on participants or
beneficiaries or limits or conditions benefits for
such care subject to any other term or condition
of such plan.
‘‘(c) 
PARTICIPANT’S
FINANCIAL
RESPONSIBIL-
ITIES.—The information required under subsection (a) in-
cludes an explanation of—
‘‘(1) a participant’s financial responsibility for
payment of premiums, coinsurance, copayments,
deductibles, and any other charges, and
‘‘(2) the circumstances under which, and the
extent to which, the participant’s financial respon-
sibility described in paragraph (1) may vary, includ-
ing any distinctions based on whether a health care
provider from whom covered benefits are obtained is
included in a defined set of providers.
‘‘(d) DISPUTE RESOLUTION PROCEDURES.—The in-
formation required under subsection (a) includes a de-
scription of the processes adopted by the plan pursuant
to section 503(b), including—
‘‘(1) descriptions thereof relating specifically
to—
‘‘(A) coverage decisions,
‘‘(B) internal review of coverage decisions,
and
‘‘(C) any external review of coverage deci-
sions, and
‘‘(2) the procedures and time frames applicable
to each step of the processes referred to in subpara-
graphs (A), (B), and (C) of paragraph (1).
‘‘(e) INFORMATION AVAILABLE ON REQUEST.—
‘‘(1) ACCESS TO PLAN BENEFIT INFORMATION
IN ELECTRONIC FORM.—
‘‘(A) IN GENERAL.—In addition to the in-
formation required to be provided under section
104(b)(4), a group health plan (and a health
insurance issuer offering health insurance cov-
erage in connection with a group health plan)
shall, upon written request (made not more fre-
quently than annually), make available to par-
ticipants and beneficiaries, in a generally recog-
nized electronic format, the following informa-
tion:
‘‘(i) the latest summary plan descrip-
tion, including the latest summary of ma-
terial modifications; and
‘‘(ii) the actual plan provisions setting
forth the benefits available under the plan
to the extent such information relates to the
coverage options under the plan available to the
participant or beneficiary. A reasonable charge
may be made to cover the cost of providing
such information in such generally recognized
electronic format. The Secretary may by regula-
tion prescribe a maximum amount which will
constitute a reasonable charge under the pre-
ceding sentence.
‘‘(B) ALTERNATIVE ACCESS.—The require-
ments of this paragraph may be met by making
such information generally available (rather
than upon request) on the Internet or on a pro-
prietary computer network in a format which is
readily accessible to participants and bene-
ficiaries.
‘‘(2) ADDITIONAL
INFORMATION
TO
BE
PRO-
VIDED ON REQUEST.—
‘‘(A) INCLUSION IN SUMMARY PLAN DE-
SCRIPTION
OF
SUMMARY
OF
ADDITIONAL
IN-
FORMATION.—The information required under
subsection (a) includes a summary description
of the types of information required by this
subsection to be made available to participants
and beneficiaries on request.
‘‘(B) 
INFORMATION
REQUIRED
FROM
PLANS AND ISSUERS ON REQUEST.—In addition
to information required to be included in sum-
mary plan descriptions under this subsection, a
group health plan (and a health insurance
issuer offering health insurance coverage in
connection with a group health plan) shall pro-
vide the following information to a participant
or beneficiary on request:
‘‘(i) NETWORK CHARACTERISTICS.—If
the plan (or issuer) utilizes a defined set of
providers under contract with the plan (or
issuer), a detailed list of the names of such
providers and their geographic location, set
forth separately with respect to primary
care providers and with respect to special-
ists.
‘‘(ii) CARE
MANAGEMENT
INFORMA-
TION.—A description of the circumstances
under which, and the extent to which, the
plan has special disease management pro-
grams or programs for persons with dis-
abilities, indicating whether these pro-
grams are voluntary or mandatory and
whether a significant benefit differential
results from participation in such pro-
grams.
‘‘(iii) INCLUSION
OF
DRUGS
AND
BIOLOGICALS IN FORMULARIES.—A state-
ment of whether a specific drug or biologi-
cal is included in a formulary used to de-
termine benefits under the plan and a de-
scription of the procedures for considering
requests for any patient-specific waivers.
‘‘(iv) PROCEDURES FOR DETERMINING
EXCLUSIONS BASED ON MEDICAL NECES-
SITY OR EXPERIMENTAL TREATMENTS.—
Upon receipt by the participant or bene-
ficiary of any notification of an adverse
coverage decision based on a determination
relating to medical necessity or an experi-
mental treatment or technology, a descrip-
tion of the procedures and medically-based
criteria used in such decision.
‘‘(v) PREAUTHORIZATION AND UTILI-
ZATION REVIEW PROCEDURES.—Upon re-
ceipt by the participant or beneficiary of
any notification of an adverse coverage de-
cision, a description of the basis on which
any preauthorization requirement or any
utilization review requirement has resulted
in such decision.
‘‘(vi) ACCREDITATION
STATUS
OF
HEALTH INSURANCE ISSUERS AND SERV-
ICE PROVIDERS.—A description of the ac-
creditation and licencing status (if any) of
each health insurance issuer offering
health insurance coverage in connection
with the plan and of any utilization review
organization utilized by the issuer or the
plan, together with the name and address
of the accrediting or licencing authority.
‘‘(vii) MEASURES OF ENROLLEE SAT-
ISFACTION.—The latest information (if
any) maintained by the plan, or by any
health insurance issuer offering health in-
surance coverage in connection with the
plan, relating to enrollee satisfaction.
‘‘(viii) QUALITY PERFORMANCE MEAS-
URES.—The latest information (if any)
maintained by the plan, or by any health
insurance issuer offering health insurance
coverage in connection with the plan, relat-
ing to quality of performance of the deliv-
ery of medical care with respect to cov-
erage options offered under the plan and
of health care professionals and facilities
providing medical care under the plan.
‘‘(C) 
INFORMATION
REQUIRED
FROM
HEALTH CARE PROFESSIONALS ON REQUEST.—
Any health care professional treating a partici-
pant or beneficiary under a group health plan
shall provide to the participant or beneficiary,
on request, a description of his or her profes-
sional qualifications (including board certifi-
cation status, licensing status, and accreditation
status, if any), privileges, and experience and a
general description by category (including sal-
ary, fee-for-service, capitation, and such other
categories as may be specified in regulations of
the Secretary) of the applicable method by
which such professional is compensated in con-
nection with the provision of such medical care.
‘‘(D) 
INFORMATION
REQUIRED
FROM
HEALTH CARE FACILITIES ON REQUEST.—Any
health care facility from which a participant or
beneficiary has sought treatment under a group
health plan shall provide to the participant or
beneficiary, on request, a description of the fa-
cility’s corporate form or other organizational
form and all forms of licensing and accredita-
tion status (if any) assigned to the facility by
standard-setting organizations.
‘‘(f) ACCESS TO INFORMATION RELEVANT TO THE
COVERAGE OPTIONS UNDER WHICH THE PARTICIPANT OR
BENEFICIARY IS ELIGIBLE TO ENROLL.—In addition to
information otherwise required to be made available under
this section, a group health plan (and a health insurance
issuer offering health insurance coverage in connection
with a group health plan) shall, upon written request
(made not more frequently than annually), make available
to a participant in connection with a period of enrollment
the summary plan description for any coverage option
under the plan under which the participant is eligible to
enroll and any information described in clauses (i), (ii),
(iii), (vi), (vii), and (viii) of subsection (e)(2)(B).
‘‘(g) ADVANCE NOTICE
OF CHANGES
IN DRUG
FORMULARIES.—Not later than 30 days before the effec-
tive of date of any exclusion of a specific drug or biological
from any drug formulary under the plan that is used in
the treatment of a chronic illness or disease, the plan shall
take such actions as are necessary to reasonably ensure
that plan participants are informed of such exclusion. The
requirements of this subsection may be satisfied—
‘‘(1) by inclusion of information in publications
broadly distributed by plan sponsors, employers, or
employee organizations,
‘‘(2) by electronic means of communication (in-
cluding the Internet or proprietary computer net-
works in a format which is readily accessible to par-
ticipants),
‘‘(3) by timely informing participants who,
under an ongoing program maintained under the
plan, have submitted their names for such notifica-
tion, or
‘‘(4) by any other reasonable means of timely
informing plan participants.
‘‘(h) DEFINITIONS.—For purposes of this section—
‘‘(1) GROUP HEALTH PLAN.—The term ‘group
health plan’ has the meaning provided such term
under section 503(b)(6).
‘‘(2) MEDICAL CARE.—The term ‘medical care’
has the meaning provided such term under section
733(a)(2).
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The
term ‘health insurance coverage’ has the meaning
provided such term under section 733(b)(1).
‘‘(4) HEALTH INSURANCE ISSUER.—The term
‘health insurance issuer’ has the meaning provided
such term under section 733(b)(2).’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 102(b) of such Act (29 U.S.C.
1022(b)) is amended—
(A) by striking ‘‘section 733(a)(1)’’ each
place 
it 
appears 
and 
inserting 
‘‘section
503(b)(6)’’; and
(B) by inserting before the period at the
end the following: ‘‘; and, in the case of a
group health plan (as defined in section
111(h)(1)), the information required to be in-
cluded under section 111(a)’’.
(2) The table of contents in section 1 of such
Act is amended by striking the item relating to sec-
tion 111 and inserting the following new items:
‘‘Sec. 111. Disclosure by group health plans.
‘‘Sec. 112. Repeal and effective date.’’.
SEC. 1102. EFFECTIVE DATE AND RELATED RULES.
(a) IN GENERAL.—The amendments made by this
subtitle shall apply with respect to plan years beginning
on or after January 1 of the second calendar year follow-
ing the date of the enactment of this Act. The Secretary
shall first issue all regulations necessary to carry out the
amendments made by this subtitle before such date.
(b) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this subtitle, against a group health plan
or health insurance issuer with respect to a violation of
a requirement 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 comply in good faith with such requirement.
(c) ASSURING COORDINATION.—The Secretary of
Labor, the Secretary of Health and Human Services, and
the Secretary of the Treasury shall ensure, through the
execution of an interagency memorandum of understand-
ing among such Secretaries, that—
(1) regulations, rulings, and interpretations
issued by such Secretaries relating to the same mat-
ter over which two or more such Secretaries have re-
sponsibility under the provisions of this subtitle, sub-
title B of title II, and subtitle B of title III (and the
amendments made thereby) are administered so as
to have the same effect at all times, and
(2) coordination of policies relating to enforcing
the same requirements through such Secretaries in
order to have a coordinated enforcement strategy
that avoids duplication of enforcement efforts and
assigns priorities in enforcement.
Subtitle C—New Procedures and
Access to Courts for Grievances
Arising Under Group Health
Plans
SEC. 1201. SPECIAL RULES FOR GROUP HEALTH PLANS.
(a) IN GENERAL.—Section 503 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1133)
is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ after
‘‘SEC. 503.’’;
(2) by inserting ‘‘(other than a group health
plan)’’ after ‘‘employee benefit plan’’; and
(3) by adding at the end the following new sub-
section:
‘‘(b) SPECIAL RULES FOR GROUP HEALTH PLANS.—
‘‘(1) 
COVERAGE
DETERMINATIONS.—Every
group health plan shall—
‘‘(A) provide adequate notice in writing in
accordance with this subsection to any partici-
pant or beneficiary of any adverse coverage de-
cision with respect to benefits of such partici-
pant or beneficiary under the plan, setting forth
the specific reasons for such coverage decision
and any rights of review provided under the
plan, written in a manner calculated to be un-
derstood by the participant,
‘‘(B) provide such notice in writing also to
any treating medical care provider of such par-
ticipant or beneficiary, if such provider has
claimed reimbursement for any item or service
involved in such coverage decision, or if a claim
submitted by the provider initiated the proceed-
ings leading to such decision,
‘‘(C) afford a reasonable opportunity to
any participant or beneficiary who is in receipt
of the notice of such adverse coverage decision,
and who files a written request for review of the
initial coverage decision within 180 days after
receipt of the notice of the initial decision, for
a full and fair de novo review of the decision by
an appropriate named fiduciary who did not
make the initial decision, and
‘‘(D) meet the additional requirements of
this subsection.
‘‘(2) TIME LIMITS FOR MAKING INITIAL COV-
ERAGE DECISIONS FOR BENEFITS AND COMPLETING
INTERNAL APPEALS.—
‘‘(A) TIME
LIMITS
FOR
DECIDING
RE-
QUESTS
FOR
BENEFIT
PAYMENTS, REQUESTS
FOR ADVANCE DETERMINATION OF COVERAGE,
AND
REQUESTS
FOR
REQUIRED
DETERMINA-
TION OF MEDICAL NECESSITY.—Except as pro-
vided in subparagraph (B)—
‘‘(i) INITIAL DECISIONS.—If a request
for benefit payments, a request for advance
determination of coverage, or a request for
required determination of medical necessity
is submitted to a group health plan in such
reasonable form as may be required under
the plan, the plan shall issue in writing an
initial coverage decision on the request be-
fore the end of the initial decision period
under paragraph (9)(J) following the filing
completion date. Failure to issue a cov-
erage decision on such a request before the
end of the period required under this
clause shall be treated as an adverse cov-
erage decision for purposes of internal re-
view under clause (ii).
‘‘(ii) INTERNAL REVIEWS OF INITIAL
DENIALS.—Upon the written request of a
participant or beneficiary for review of an
initial adverse coverage decision under
clause (i), a review by an appropriate
named fiduciary (subject to paragraph (3))
of the initial coverage decision shall be
completed, including issuance by the plan
of a written decision affirming, reversing,
or modifying the initial coverage decision,
setting forth the grounds for such decision,
before the end of the internal review period
following the review filing date. Such deci-
sion shall be treated as the final decision
of the plan, subject to any applicable re-
consideration under paragraph (4). Failure
to issue before the end of such period such
a written decision requested under this
clause shall be treated as a final decision
affirming the initial coverage decision, sub-
ject to any applicable reconsideration
under paragraph (4).
‘‘(B) TIME LIMITS FOR MAKING COVERAGE
DECISIONS RELATING TO URGENT AND EMER-
GENCY MEDICAL CARE AND FOR COMPLETING
INTERNAL APPEALS.—
‘‘(i) INITIAL
DECISIONS.—A group
health plan shall issue in writing an initial
coverage decision on any request for expe-
dited advance determination of coverage or
for expedited required determination of
medical necessity submitted, in such rea-
sonable form as may be required under the
plan—
‘‘(I) before the end of the urgent
decision 
period 
under 
paragraph
(9)(L), in cases involving urgent med-
ical care but not involving emergency
medical care, or
‘‘(II) before the end of the emer-
gency decision period under para-
graph (9)(M), in cases involving emer-
gency medical care,
following the filing completion date. Fail-
ure to approve or deny such a request be-
fore the end of the applicable decision pe-
riod shall be treated as a denial of the re-
quest for purposes of internal review under
clause (ii).
‘‘(ii) INTERNAL REVIEWS OF INITIAL
DENIALS.—Upon the written request of a
participant or beneficiary for review of an
initial adverse coverage decision under
clause (i), a review by an appropriate
named fiduciary (subject to paragraph (3))
of the initial coverage decision shall be
completed, including issuance by the plan
of a written decision affirming, reversing,
or modifying the initial converge decision,
setting forth the grounds for the deci-
sion—
‘‘(I) before the end of the urgent
decision 
period 
under 
paragraph
(9)(L), in cases involving urgent med-
ical care but not involving emergency
medical care, or
‘‘(II) before the end of the emer-
gency decision period under para-
graph (9)(M), in cases involving emer-
gency medical care,
following the review filing date. Such deci-
sion shall be treated as the final decision
of the plan, subject to any applicable re-
consideration under paragraph (4). Failure
to issue before the end of the applicable
decision period such a written decision re-
quested under this clause shall be treated
as a final decision affirming the initial cov-
erage decision, subject to any applicable re-
consideration under paragraph (4).
‘‘(3) PHYSICIANS MUST REVIEW INITIAL COV-
ERAGE
DECISIONS
INVOLVING
MEDICAL
APPRO-
PRIATENESS
OR
NECESSITY
OR
EXPERIMENTAL
TREATMENT.—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 ex-
perimental treatment or technology, the review
under paragraph (2)(A)(ii) or (2)(B)(ii), to the ex-
tent that it relates to medical appropriateness or ne-
cessity or to experimental treatment or technology,
shall be conducted by a physician who is selected to
serve as an appropriate named fiduciary under 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.—The requirements of
subparagraphs (B), (C) and (D) shall apply—
‘‘(i) in the case of any failure to time-
ly issue a coverage decision upon internal
review which is deemed to be an adverse
coverage 
decision 
under 
paragraph
(2)(A)(ii) or (2)(B)(ii) (thereby failing to
constitute a coverage decision for which
specific reasons have been set forth as re-
quired under paragraph (1)(A)), and
‘‘(ii) in the case of any adverse cov-
erage decision which is not reversed upon
a review conducted pursuant to paragraph
(1)(C) (including any review pursuant to
paragraph (2)(A)(ii) or (2)(B)(ii)), if such
coverage decision is based on a determina-
tion that provision of a particular item or
service is excluded 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 experi-
mental treatment or technology.
‘‘(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 each such dollar amount subject to com-
pounded annual adjustments in the same man-
ner and to the same extent as apply under sec-
tion 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 (C)(iii) is to reverse or modify
the coverage decision.
‘‘(C) RECONSIDERATION
OF
INITIAL
RE-
VIEW DECISION.—In any case in which a partic-
ipant or beneficiary who has received an ad-
verse decision of the plan upon initial review of
the coverage decision and who has not com-
menced review of the initial coverage decision
under section 502 makes a request in writing,
within 30 days after the date of such review de-
cision, for reconsideration of such review deci-
sion, the terms of the plan shall provide for a
procedure 
for 
such 
reconsideration 
under
which—
‘‘(i) one or more independent medical
experts will be selected in accordance with
subparagraph (E) to review the coverage
decision described in subparagraph (A) to
determine whether such decision was in ac-
cordance with the terms of the plan and
this title,
‘‘(ii) the record for review (including a
specification of the terms of the plan and
other criteria serving as the basis for the
initial review decision) will be presented to
such expert or experts and maintained in
a manner which will ensure confidentiality
of such record,
‘‘(iii) such expert or experts will re-
port in writing to the plan their rec-
ommendation, based on the determination
made under clause (i), as to whether such
coverage decision should be affirmed, modi-
fied, or reversed, setting forth the grounds
(including the clinical basis) for the rec-
ommendation, and
‘‘(iv) a physician who did not make
the initial review decision will reconsider
the initial review decision to determine
whether such decision was in accordance
with the terms of the plan and this title
and will issue a written decision affirming,
modifying, or reversing the initial review
decision, taking into account any rec-
ommendations reported to the plan pursu-
ant to clause (iii), and setting forth the
grounds for the decision.
‘‘(D) TIME
LIMITS
FOR
RECONSIDER-
ATION.—Any review under this paragraph shall
be completed before the end of the reconsider-
ation period (as defined in paragraph (9)(O))
following the review filing date in connection
with such review. The decision under this para-
graph affirming, reversing, or modifying the ini-
tial 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 deci-
sion affirming the initial review decision of the
plan.
‘‘(E) 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, and
‘‘(IV) who is selected in accord-
ance with clause (ii) and meets the re-
quirements of clause (iii).
‘‘(ii) SELECTION
OF
MEDICAL
EX-
PERTS.—An independent medical expert is
selected in accordance with this clause if—
‘‘(I) the expert is selected by an
intermediary which itself meets the re-
quirements of clause (iii), 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,
‘‘(II) the expert is selected, by an
appropriately credentialed panel of
physicians meeting the requirements
of clause (iii) established by a fully
accredited teaching hospital meeting
such requirements,
‘‘(III) the expert is selected by an
organization 
described 
in 
section
1152(1)(A) of the Social Security Act
which meets the requirements of
clause (iii),
‘‘(IV) the expert is selected by an
external review organization which
meets the requirements of clause (iii)
and is accredited by a private stand-
ard-setting organization meeting such
requirements and recognized as such
by the Secretary, or
‘‘(V) 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,
and the method of selection is devised to
reasonably ensure that the expert selected
meets the independence requirements of
clause (iii).
‘‘(iii) 
INDEPENDENCE
REQUIRE-
MENTS.—An independent medical expert
or another entity described in clause (ii)
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.
‘‘(iv) RELATED PARTY.—For purposes
of clause (ii)(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 medi-
cal 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 .
‘‘(v) AFFILIATED.—For purposes of
clause (iii)(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.
‘‘(F) INAPPLICABILITY WITH RESPECT TO
ITEMS AND SERVICES SPECIFICALLY EXCLUDED
FROM COVERAGE.—An adverse coverage deci-
sion based on a determination that an item or
service is excluded from coverage under the
terms of the plan shall not be subject to review
under this paragraph, unless such determina-
tion is found in such decision to be based solely
on the fact that the item or service—
‘‘(i) does not meet the plan’s require-
ments for medical appropriateness or ne-
cessity, or
‘‘(ii) would constitute experimental
treatment or technology (as defined under
the plan).
‘‘(5) PERMITTED ALTERNATIVES TO REQUIRED
INTERNAL REVIEW.—
‘‘(A) IN GENERAL.—A group health plan
shall not be treated as failing to meet the re-
quirements under paragraphs (2)(A)(ii) and
(2)(B)(ii) relating to review of initial coverage
decisions for benefits, if—
‘‘(i) in lieu of the procedures relating
to review under paragraphs (2)(A)(ii) and
(2)(B)(ii) and in accordance with such reg-
ulations (if any) as may be prescribed by
the Secretary—
‘‘(I) the aggrieved participant or
beneficiary elects in the request for
the review an alternative dispute reso-
lution procedure which is available
under the plan with respect to simi-
larly situated participants and bene-
ficiaries, or
‘‘(II) in the case of any such plan
or portion thereof which is established
and maintained pursuant to a bona
fide collective bargaining agreement,
the plan provides for a procedure by
which such disputes are resolved by
means of any alternative dispute reso-
lution procedure,
‘‘(ii) the time limits not exceeding the
time limits otherwise applicable under
paragraphs (2)(A)(ii) and (2)(B)(ii) are in-
corporated in such alternative dispute reso-
lution procedure,
‘‘(iii) any applicable requirement for
review by a physician under paragraph (3),
unless waived by the participant or bene-
ficiary (in a manner consistent with such
regulations as the Secretary may prescribe
to ensure equitable procedures), is incor-
porated in such alternative dispute resolu-
tion procedure, and
‘‘(iv) the plan meets the additional re-
quirements of subparagraph (B).
In any case in which a procedure described in
subclause (I) or (II) of clause (i) is utilized and
an alternative dispute resolution procedure is
voluntarily elected by the aggrieved participant
or beneficiary, the plan may require or allow (in
a manner consistent with such regulations as
the Secretary may prescribe to ensure equitable
procedures) the aggrieved participant or bene-
ficiary 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)).
‘‘(B) ADDITIONAL
REQUIREMENTS.—The
requirements of this subparagraph are met if
the means of resolution of dispute allow for
adequate presentation by the aggrieved partici-
pant or beneficiary of scientific and medical evi-
dence supporting the position of such partici-
pant or beneficiary.
‘‘(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) SPECIAL RULE FOR ACCESS TO SPECIALTY
CARE.— In the case of a request for advance deter-
mination of coverage consisting of a request by a
physician for a determination of coverage of the
services of a specialist with respect to any condition,
if coverage of the services of such specialist for such
condition is otherwise provided under the plan, the
initial coverage decision referred to in subparagraph
(A)(i) or (B)(i) of paragraph (2) shall be issued
within the specialty decision period. For purposes of
this paragraph, the term ‘specialist’ means, with re-
spect to a condition, a physician who has a high level
of expertise through appropriate training and experi-
ence (including, in the case of a child, appropriate
pediatric expertise) to treat the condition.
‘‘(8) 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.
‘‘(9) 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 on behalf of a participant or ben-
eficiary after such medical care has been pro-
vided.
‘‘(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 on behalf
of a participant or beneficiary before such medi-
cal care is provided.
‘‘(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 urgent medi-
cal care or emergency 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 urgent medical care or emergency
medical care.
‘‘(H) URGENT MEDICAL CARE.—The term
‘urgent medical care’ means medical care in any
case in which an appropriate physician has cer-
tified in writing (or as otherwise provided in
regulations of the Secretary) that failure to pro-
vide the participant or beneficiary with such
medical care within 45 days can reasonably be
expected to result in either—
‘‘(i) the imminent death of the partici-
pant or beneficiary, or
‘‘(ii) the immediate, serious, and irre-
versible deterioration of the health of the
participant or beneficiary which will sig-
nificantly increase the likelihood of death
of, or irreparable harm to, the participant
or beneficiary.
‘‘(I) EMERGENCY
MEDICAL
CARE.—The
term ‘emergency medical care’ means medical
care in any case in which an appropriate physi-
cian has certified in writing (or as otherwise
provided in regulations of the Secretary)—
‘‘(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.
‘‘(J) 
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.
‘‘(K) 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.
‘‘(L) URGENT
DECISION
PERIOD.—The
term ‘urgent decision period’ means a period of
10 days, or such longer period as may be pre-
scribed in regulations of the Secretary.
‘‘(M) EMERGENCY
DECISION
PERIOD.—
The term ‘emergency decision period’ means a
period of 72 hours, or such longer period as
may be prescribed in regulations of the Sec-
retary.
‘‘(N) SPECIALTY DECISION PERIOD.—The
term ‘specialty decision period’ means a period
of 72 hours, or such longer period as may be
prescribed in regulations of the Secretary.
‘‘(O) 
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
emergency medical care, such term means
the emergency decision period.
‘‘(P) 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.
‘‘(Q) 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.
‘‘(R) MEDICAL CARE.—The term ‘medical
care’ has the meaning provided such term by
section 733(a)(2).
‘‘(S) HEALTH
INSURANCE
COVERAGE.—
The term ‘health insurance coverage’ has the
meaning 
provided 
such 
term 
by 
section
733(b)(1).
‘‘(T) HEALTH
INSURANCE
ISSUER.—The
term ‘health insurance issuer’ has the meaning
provided such term by section 733(b)(2).
‘‘(U) 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
EXPERIMENTAL
TREATMENT
DETERMINA-
TIONS.—For purposes of this subpara-
graph, in the case of a request for advance
determination of coverage, a request for
expedited advance determination of cov-
erage, a request for required determination
of medical necessity, or a request for expe-
dited required determination of medical ne-
cessity, if the decision on such request is
conveyed to the provider of medical care or
to the participant or beneficiary by means
of telephonic or other electronic commu-
nications, such decision shall be treated as
a written decision.’’.
(b) CIVIL PENALTIES.—
(1) IN GENERAL.—Section 502(c) of such Act
(29 U.S.C. 1132(c)) is amended by redesignating
paragraphs (6) and (7) as paragraphs (7) and (8),
respectively, and by inserting after paragraph (5)
the following new paragraph:
‘‘(6)(A)(i) In any case in which—
‘‘(I) a benefit under a group health plan (as de-
fined in section 503(b)(8)) is not timely provided to
a participant or beneficiary pursuant to a final deci-
sion of the plan which was not in accordance with
the terms of the plan or this title, and
‘‘(II) such final decision of the plan is contrary
to 
a 
recommendation 
described 
in 
section
503(b)(4)(C)(iii),
any person acting in the capacity of a fiduciary of such
plan so as to cause such failure may, in the court’s discre-
tion, be liable to the aggrieved participant or beneficiary
for a civil penalty.
‘‘(ii) Such civil penalty shall be in the amount of up
to $250 a day from the date on which the recommendation
was made to the plan until the date the failure to provide
benefits is corrected, up to a total amount not to exceed
$100,000.
‘‘(B) In any action commenced under subsection (a)
by a participant or beneficiary with respect to a group
health plan (as defined in section 503(b)(8)) in which the
plaintiff alleges that a person, in the capacity of a fidu-
ciary and in violation of the terms of the plan or this title,
has taken an action resulting in an adverse coverage deci-
sion in violation of the terms of the plan, or has failed
to take an action for which such person is responsible
under the plan and which is necessary under the plan for
a favorable coverage decision, upon finding in favor of the
plaintiff, if such action was commenced after a final deci-
sion of the plan upon review which included a review under
section 503(b)(4) or such action was commenced under
subsection (b)(4) of this section, the court shall cause to
be served on the defendant an order requiring the defend-
ant—
‘‘(i) to cease and desist from the alleged action
or failure to act, and
‘‘(ii) to pay to the plaintiff a reasonable attor-
ney’s fee and other reasonable costs relating to the
prosecution of the action on the charges on which
the plaintiff prevails.
The remedies provided under this subparagraph shall be
in addition to remedies otherwise provided under this sec-
tion.
‘‘(C)(i) The Secretary may assess a civil penalty
against a person acting in the capacity of a fidicuary of
one or more group health plans (as defined in section
503(b)(8)) for—
‘‘(I) any pattern or practice of repeated adverse
coverage decisions in violation of the terms of the
plan or plans or this title, or
‘‘(II) any pattern or practice of repeated viola-
tions of the requirements of section 503 with respect
to such plan or plans.
Such penalty shall be payable only upon proof by clear
and convincing evidence of such pattern or practice.
‘‘(ii) Such penalty shall be in an amount not to exceed
the lesser of—
‘‘(I) 5 percent of the aggregate value of benefits
shown by the Secretary to have not been provided,
or unlawfully delayed in violation of section 503,
under such pattern or practice, or
‘‘(II) $100,000.
‘‘(iii) Any person acting in the capacity of a fiduciary
of a group health plan or plans who has engaged in any
such pattern or practice with respect to such plans, upon
the petition of the Secretary, may be removed by the court
from that position, and from any other involvement, with
respect to such plan or plans, and may be precluded from
returning to any such position or involvement for a period
determined by the court.’’.
(2) 
CONFORMING
AMENDMENT.—Section
502(a)(6) of such Act (29 U.S.C. 1132(a)(6)) is
amended by striking ‘‘(6)’’ and inserting ‘‘(7)’’.
(c) EXPEDITED COURT REVIEW.—Section 502 of
such Act (29 U.S.C. 1132) is amended—
(1) in subsection (a)(8), by striking ‘‘or’’ at the
end;
(2) in subsection (a)(9), by striking the period
and inserting ‘‘; or’’;
(3) by adding at the end of subsection (a) the
following new paragraph:
‘‘(10) by a participant or beneficiary for appropriate
relief under subsection (b)(4).’’.
(4) by adding at the end of subsection (b) the
following new paragraph:
‘‘(4) In any case in which exhaustion of administra-
tive remedies in accordance with paragraph (2)(A)(ii) or
(2)(B)(ii) of section 503(b) otherwise necessary for an ac-
tion for relief under paragraph (1)(B) or (3) of subsection
(a) has not been obtained and it is demonstrated to the
court by means of certification by an appropriate physi-
cian that such exhaustion is not reasonably attainable
under the facts and circumstances without undue risk of
irreparable harm to the health of the participant or bene-
ficiary, a civil action may be brought by a participant or
beneficiary to obtain appropriate equitable relief. Any de-
terminations 
made 
under 
paragraph 
(2)(A)(ii) 
or
(2)(B)(ii) of section 503(b) made while an action under
this paragraph is pending shall be given due consideration
by the court in any such action.’’.
(d) STANDARD
OF
REVIEW
UNAFFECTED.—The
standard of review under section 502 of the Employee Re-
tirement Income Security Act of 1974 (as amended by this
section) shall continue on and after the date of the enact-
ment of this Act to be the standard of review which was
applicable under such section as of immediately before
such date.
(e) CONCURRENT JURISDICTION.—Section 502(e)(1)
of such Act (29 U.S.C. 1132(e)(1)) is amended—
(1) in the first sentence, by striking ‘‘under
subsection (a)(1)(B) of this section’’ and inserting
‘‘under subsection (a)(1)(A) for relief under sub-
section (c)(6), under subsection (a)(1)(B), and
under subsection (b)(4)’’; and
(2) in the last sentence, by striking ‘‘of actions
under paragraphs (1)(B) and (7) of subsection (a)
of this section’’ and inserting ‘‘of actions under
paragraph (1)(A) of subsection (a) for relief under
subsection (c)(6) and of actions under paragraphs
(1)(B) and (7) of subsection (a) and paragraph (4)
of subsection (b)’’.
SEC. 1202. EFFECTIVE DATE.
(a) IN GENERAL.—The amendments made by this
subtitle shall apply with respect to grievances arising in
plan years beginning on or after January 1 of the second
calendar year following the date of the enactment of this
Act. The Secretary shall first issue all regulations nec-
essary to carry out the amendments made by this subtitle
before such date.
(b) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this subtitle, against a group health plan
or health insurance issuer with respect to a violation of
a requirement 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 comply 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 subtitle
shall not be treated as a termination of such collective bar-
gaining agreement.
Subtitle D—Affordable Health Cov-
erage for Employees of Small
Businesses
SEC. 1301. SHORT TITLE OF SUBTITLE.
This subtitle may be cited as the ‘‘Small Business
Affordable Health Coverage Act of 1998’’.
SEC. 1302. 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 trade association, an in-
dustry association (including a rural electric cooper-
ative association or a rural telephone cooperative as-
sociation), a professional association, or a chamber
of commerce (or similar business association, includ-
ing a corporation or similar organization that oper-
ates 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) and (2) shall be
deemed to be a sponsor described in this subsection.
‘‘SEC. 
802. 
CERTIFICATION 
OF 
ASSOCIATION 
HEALTH
PLANS.
‘‘(a) IN GENERAL.—The applicable authority shall
prescribe by regulation a procedure under which, subject
to subsection (b), the applicable authority shall certify as-
sociation health plans which apply for certification as
meeting the requirements of this part.
‘‘(b) STANDARDS.—Under the procedure prescribed
pursuant to subsection (a), the applicable authority shall
certify an association health plan as meeting the require-
ments of this part only if the applicable authority is satis-
fied 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 for continued certification of association health plans
under this part, including requirements relating to com-
mencement of new benefit options by plans which do not
consist of health insurance coverage.
‘‘(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).
‘‘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—
‘‘(1) the sponsor (together with its immediate
predecessor, if any) has met (or is deemed under
this part to have met) for a continuous period of not
less than 3 years ending with the date of the appli-
cation for certification under this part, the require-
ments of paragraphs (1) and (2) of section 801(b),
and
‘‘(2) the sponsor meets (or is deemed under this
part to meet) the requirements of section 801(b)(3).
‘‘(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
subparagraph (B), the members of the board of
trustees are individuals selected from individ-
uals who are the owners, officers, directors, or
employees of the participating employers or who
are partners in the participating employers 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) SOLE
AUTHORITY.—The board has
sole authority to approve applications for par-
ticipation in the plan and to contract with a
service provider to administer the day-to-day af-
fairs 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.
‘‘(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) all participating employers must be mem-
bers or affiliated members of the sponsor, except
that, in the case of a sponsor which is a professional
association or other individual-based association, if
at least one of the officers, directors, or employees
of an employer, or at least one of the individuals
who are partners in an employer and who actively
participates in the business, is a member or affili-
ated member of the sponsor, participating 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.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the requirements of this subsection are met with re-
spect to an association health plan if, under the
terms of the plan, no affiliated member of the spon-
sor may be offered coverage under the plan as a par-
ticipating employer, unless—
‘‘(A) the affiliated member was an affili-
ated member on the date of certification under
this part, or
‘‘(B) during the 12-month period preced-
ing 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 employees who would otherwise be
eligible to participate in such association health
plan.
‘‘(2) LIMITATION.—The requirements of this
subsection shall apply only in the case of plans
which were in existence on the date of the enactment
of the Small Business Affordable Health Coverage
Act of 1998.
‘‘(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, no employer
meeting the preceding requirements of this section is
excluded as a participating employer, unless partici-
pation or contribution requirements of the type re-
ferred to in section 2711 of the Public Health Serv-
ice Act are not met with respect to the excluded em-
ployer,
‘‘(2) the applicable requirements of sections
701, 702, and 703 are met with respect to the plan,
and
‘‘(3) applicable benefit options under the plan
are actively marketed to all eligible participating em-
ployers.
‘‘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,
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 may
prescribe by regulation as necessary to carry out the
purposes of this part.
‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO
DESIGN BENEFIT OPTIONS.—Nothing in this part or any
provision of State law (as defined in section 514(c)(1))
shall be construed to preclude an association health plan,
or a health insurance issuer offering health insurance cov-
erage 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 preempted 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 provide for upward adjustments
in the amount of such percentage in speci-
fied circumstances in which the plan spe-
cifically 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
$200,000). The applicable authority may
by regulation provide for adjustments in
the amount of such insurance in specified
circumstances 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.—The requirements of this subsection are met
if the plan establishes and maintains surplus in an amount
at least equal to $2,000,000, reduced in accordance with
a scale, prescribed in regulations of the applicable author-
ity to an amount not less than $500,000, 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 or oth-
erwise, 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 purposes
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 may be prescribed in regula-
tions of the applicable authority) provides for pay-
ment to the plan with respect 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 may be prescribed in
regulations of the applicable authority) provides
for payment to the plan with respect to claims
under the plan in connection with a covered in-
dividual 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 may be prescribed in regulations
of the applicable authority) provides for payment to
the plan with respect to claims under the plan which
the plan is unable to satisfy by reason of a termi-
nation pursuant to section 809(b) (relating to man-
datory termination),
‘‘(2) which is guaranteed renewable and
noncancellable for any reason (except as may be pro-
vided in regulations of the applicable authority), 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 may be prescribed in regulations of
the applicable authority.
‘‘(j) REGULATIONS
PRESCRIBED
UNDER
NEGO-
TIATED RULEMAKING.—The regulations under this sec-
tion shall be prescribed under negotiated rulemaking in
accordance with subchapter III of chapter 5 of title 5,
United States Code, except that, in establishing the nego-
tiated rulemaking committee for purposes of such rule-
making, the applicable authority shall include among per-
sons invited to membership on the committee at least one
of each of the following:
‘‘(1) a representative of the National Associa-
tion of Insurance Commissioners,
‘‘(2) a representative of the American Academy
of Actuaries,
‘‘(3) a representative of the State governments,
or their interests,
‘‘(4) a representative of existing self-insured ar-
rangements, or their interests,
‘‘(5) a representative of associations of the type
referred to in section 801(b)(1), or their interests,
and
‘‘(6) a representative of multiemployer plans
that are group health plans, or their interests.
‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RELAT-
ED 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 prescribed
in regulations of the applicable authority, at least the fol-
lowing 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
PROVID-
ERS.—A copy of any agreements between the plan
and contract administrators and other service pro-
viders.
‘‘(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.
‘‘(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
123
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
(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 Patient Pro-
tection Act of 1998 shall be construed to alter, amend,
modify, invalidate, impair, 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