To amend the Employee Retirement Income Security Act of 1974, the Public Health Service Act, and the Internal Revenue Code of 1986 to require that group and individual health insurance coverage and group health plans provide for prompt payment for health benefits claims.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Benefits Claims Prompt 
Payment Act of 2002''.

SEC. 2. PROMPT PAYMENT OF CLAIMS.

    (a) Group Health Plans.--
            (1) Public health service act amendments.--Subpart 2 of 
        part A of title XXVII of the Public Health Service Act is 
        amended by adding at the end the following new section:

``SEC. 2707. PROMPT PAYMENT OF CLAIMS.

    ``(a) In General.--A group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, shall provide for prompt payment of claims submitted for 
health care services or supplies furnished to a participant, 
beneficiary, or enrollee with respect to benefits covered by the plan 
or issuer, in a manner that is no less protective than the provisions 
referred to in subsection (b).
    ``(b) Provisions.--The provisions referred to in this subsection 
are the provisions of section 1842(c)(2) of the Social Security Act (42 
U.S.C. 1395u(c)(2)), as modified as follows:
            ``(1) Alternative interest rate.--Instead of applying the 
        interest rate calculated under section 3902(a) of title 31, 
        United States Code, the interest rate shall be 1 percent of the 
        payment amount due plus, in the case of payments not made 
        within 25 days of the due date, an additional 1 percent 
        interest due for every month the payment is past due.
            ``(2) Coverage of 100 percent of claims.--The reference in 
        such section 1842(c)(2) to `not less than 95 percent of all 
        claims submitted under this part' shall be deemed to be a 
        reference to `100 percent of all claims submitted under the 
        plan or coverage involved'.
    ``(c) Permitting Additional Penalties.--State Insurance 
Commissioners may establish and impose monetary penalties or other 
penalties for failure by a group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, to comply with the provisions referred to in subsection 
(b).''.
            (2) ERISA amendments.--(A) Subpart B of part 7 of subtitle 
        B of title I of the Employee Retirement Income Security Act of 
        1974 is amended by adding at the end the following new section:

``SEC. 714. PROMPT PAYMENT OF CLAIMS.

    ``(a) In General.--A group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, shall provide for prompt payment of claims submitted for 
health care services or supplies furnished to a participant or 
beneficiary with respect to benefits covered by the plan or issuer, in 
a manner that is no less protective than the provisions referred to in 
subsection (b).
    ``(b) Provisions.--The provisions referred to in this subsection 
are the provisions of section 1842(c)(2) of the Social Security Act (42 
U.S.C. 1395u(c)(2)), as modified as follows:
            ``(1) Alternative interest rate.--Instead of applying the 
        interest rate calculated under section 3902(a) of title 31, 
        United States Code, the interest rate shall be 1 percent of the 
        payment amount due plus, in the case of payments not made 
        within 25 days of the due date, an additional 1 percent 
        interest due for every month the payment is past due.
            ``(2) Coverage of 100 percent of claims.--The reference in 
        such section 1842(c)(2) to `not less than 95 percent of all 
        claims submitted under this part' shall be deemed to be a 
        reference to `100 percent of all claims submitted under the 
        plan or coverage involved'.
    ``(c) Permitting Additional Penalties.--State Insurance 
Commissioners may establish and impose monetary penalties or other 
penalties for failure by a group health plan, and a health insurance 
issuer offering health insurance coverage in connection with a group 
health plan, to comply with the provisions referred to in subsection 
(b).''.
            (B) The table of contents in section 1 of such Act is 
        amended by inserting after the item relating to section 713 the 
        following new item:

``Sec. 714. Prompt payment of claims.''.
            (3) Internal revenue code amendments.--
                    (A) In general.--Subchapter B of chapter 100 of the 
                Internal Revenue Code of 1986 is amended--
                            (i) in the table of sections, by inserting 
                        after the item relating to section 9812 the 
                        following new item:

                              ``Sec. 9813. Prompt payment of claims.'';
                            and
                            (ii) by inserting after section 9812 the 
                        following:

``SEC. 9813. PROMPT PAYMENT OF CLAIMS.

    ``(a) A group health plan shall provide for prompt payment of 
claims submitted for health care services or supplies furnished to a 
participant or beneficiary with respect to benefits covered by the 
plan, in a manner that is no less protective than the provisions 
referred to in subsection (b).
    ``(b) Provisions.--The provisions referred to in this subsection 
are the provisions of section 1842(c)(2) of the Social Security Act (42 
U.S.C. 1395u(c)(2)), as modified as follows:
            ``(1) Alternative interest rate.--Instead of applying the 
        interest rate calculated under section 3902(a) of title 31, 
        United States Code, the interest rate shall be 1 percent of the 
        payment amount due plus, in the case of payments not made 
        within 25 days of the due date, an additional 1 percent 
        interest due for every month the payment is past due.
            ``(2) Coverage of 100 percent of claims.--The reference in 
        such section 1842(c)(2) to `not less than 95 percent of all 
        claims submitted under this part' shall be deemed to be a 
        reference to `100 percent of all claims submitted under the 
        plan involved'.
    ``(c) Permitting Additional Penalties.--State Insurance 
Commissioners may establish and impose monetary penalties or other 
penalties for failure by a group health plan to comply with the 
provisions referred to in subsection (b).''.
    (b) Individual Health Insurance.--Part B of title XXVII of the 
Public Health Service Act is amended by inserting after section 2752 
the following new section:

``SEC. 2753. PROMPT PAYMENT OF CLAIMS.

    ``The provisions of section 2707 shall apply to health insurance 
coverage offered by a health insurance issuer in the individual market 
in the same manner as they apply to health insurance coverage offered 
by a health insurance issuer in connection with a group health plan in 
the small or large group market.''.
    (c) Protection of States' Rights.--Any issue relating to prompt 
payment for health care services or supplies that is not governed by 
any provision of law as amended by this section shall be governed by 
otherwise applicable State or Federal law. This section (and the 
provisions amended by this section) does not preempt or supercede any 
law that imposes shorter time frames for payment, greater penalties for 
non-payment, and, in general, provides greater assurances that group 
health plans and health insurance issuers provide for prompt payment of 
claims submitted for health care services or supplies furnished to a 
participant, beneficiary, or enrollee with respect to benefits covered 
by the plan or issuer.
    (d) Effective Dates.--
            (1) Group health plans and group health insurance 
        coverage.--The amendments made by subsection (a) apply with 
        respect to group health plans for plan years beginning on or 
        after January 1, 2003.
            (2) Individual health insurance coverage.--The amendment 
        made by subsection (b) apply with respect to health insurance 
        coverage offered, sold, issued, renewed, in effect, or operated 
        in the individual market on or after such date.

Summary: Health Benefits Claims Prompt Payment Act of 2002 - Amends the Employee Retirement Income Security Act of 1974, the Internal Revenue Code, and the Public Health Service Act to require that group and individual health insurance coverage and group health plans provide for prompt payment for health benefits claims.