HR 4250 IH 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 Florida, Mr. METCALF, Mr. PETERSON of Pennsylvania, Mr. TIAHRT, Mr. BARTLETT of Maryland, Mr. BUNNING, Mrs. NORTHUP, Mr. HUTCHINSON, 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 referred 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 determined 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 Representatives 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 insurance 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 arrangements. 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 organizations. 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 accounts. 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 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. (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, OBSTETRIC AND GYNECOLOGICAL CARE, PEDIATRIC 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 contractual employment arrangement or other direct contractual arrangement is maintained by the professional 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 medical 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 professional's services is provided under the group health plan for the services of the professional. Such term includes a podiatrist, optometrist, chiropractor, psychologist, dentist, physician assistant, physical or occupational therapist and therapy assistant, speech-language pathologist, audiologist, registered or licensed practical nurse (including nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, and certified nurse-midwife), licensed certified social worker, registered respiratory therapist, 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 offering health insurance coverage in connection with the plan) provides for any benefits consisting of emergency medical care (as defined in section 503(b)(9)(I)), except for items or services specifically excluded-- `(A) the plan or issuer shall provide benefits, without requiring preauthorization, for appropriate emergency medical screening examinations (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 average 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 benefits for additional emergency medical services following an emergency medical screening examination (if determined necessary under subparagraph (A)) to the extent that a prudent emergency medical professional would determine such additional emergency services to be necessary to avoid the consequences described in section 503(b)(9)(I). `(2) UNIFORM COST-SHARING REQUIRED- Nothing in this subsection shall be construed as preventing a group health plan or issuer from imposing any form of cost-sharing applicable to any participant or beneficiary (including coinsurance, copayments, deductibles, and any other charges) in relation 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 emergency 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 Gynecological Care. `(1) IN GENERAL- In any case in which a group health plan (or a health insurance issuer offering 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 examinations), or `(ii) routine obstetric care (such as routine pregnancy-related services), provided by a participating physician who specializes in such care (or provides benefits consisting of payment for such care), and `(B) the plan requires or provides for designation 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 requirements 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 physician 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 relating 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 offering health insurance coverage in connection with the plan) provides benefits consisting of routine pediatric care provided by a participating physician who specializes in pediatrics (or consisting of payment for such care) and the plan requires or provides for designation by a participant or beneficiary of a participating primary care provider, the plan (or issuer) shall provide that such a participating physician 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 OPTIONS- 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 coverage option.'. (b) CONFORMING AMENDMENT- The table of contents 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 following 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 amendments 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 comply in good faith with such requirement. (c) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS- In the case of a group health plan maintained 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 Security 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 terminates (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 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 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 understanding among such Secretaries, that-- (1) regulations, rulings, and interpretations issued by such Secretaries relating to the same matter over which two or more such Secretaries have responsibility under the provisions of this subtitle, section 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 PROVIDERS- (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 offering 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 criteria 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 nonmedical providers, or (iv) compel a participant or beneficiary to undergo a medical examination or test as a condition of receiving health insurance coverage for treatment by a religious nonmedical provider, or (C) require such plans or issuers to exclude religious nonmedical providers because they do not provide medical or other data otherwise 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 nonmedical provider' means a provider who provides no medical care but who provides only religious nonmedical treatment or religious nonmedical nursing care. 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. (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 administrator of each group health plan shall take such actions 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 appropriate under part 1 for different options of coverage) 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 administrator to comply with the requirements of paragraph (1). To the extent that any such issuer provides on a timely basis to plan participants and beneficiaries information otherwise required under this part to be included in the summary plan description, 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 BENEFITS- A description of covered benefits, categorized by-- `(i) types of items and services (including any special disease management program), and `(ii) types of health care professionals providing such items and services. `(B) EMERGENCY MEDICAL CARE- A description 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 terminology referring to such care. `(C) PREVENTATIVE SERVICES- A description of the extent to which the plan provides benefits for preventative services. `(D) DRUG FORMULARIES- A description of the extent to which covered benefits are determined by the use or application of a drug formulary and a summary of the process for determining what is included in such formulary. `(E) COBRA CONTINUATION COVERAGE- A description of the benefits available under the plan pursuant to part 6. `(2) LIMITATIONS, EXCLUSIONS, AND RESTRICTIONS ON COVERED BENEFITS- `(A) CATEGORIZATION OF EXCLUDED BENEFITS- A description of benefits specifically 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 PERIOD LIMITATIONS- A description of the circumstances 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 limited or excluded because it constitutes experimental treatment or technology, and any definitions provided under the plan for the relevant plan terminology referring to such limited or excluded care. `(F) MEDICAL APPROPRIATENESS OR NECESSITY- Whether coverage for medical care may be limited or excluded by reason of a failure to meet the plan's requirements for medical appropriateness or necessity, and any definitions provided under the plan for the relevant plan terminology referring to such limited or excluded care. `(G) SECOND OR SUBSEQUENT OPINIONS- 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 extent to which, coverage of items and services provided by any health care professional is limited or excluded by reason of the departure by the professional from any defined set of providers. `(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 described 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 RESPONSIBILITIES- The information required under subsection (a) includes 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 responsibility described in paragraph (1) may vary, including 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 information required under subsection (a) includes a description 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 decisions, and `(2) the procedures and time frames applicable to each step of the processes referred to in subparagraphs (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 information required to be provided under section 104(b)(4), 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 participants and beneficiaries, in a generally recognized electronic format, the following information: `(i) the latest summary plan description, including the latest summary of material 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 regulation prescribe a maximum amount which will constitute a reasonable charge under the preceding sentence. `(B) ALTERNATIVE ACCESS- The requirements of this paragraph may be met by making such information generally available (rather than upon request) on the Internet or on a proprietary computer network in a format which is readily accessible to participants and beneficiaries. `(2) ADDITIONAL INFORMATION TO BE PROVIDED ON REQUEST- `(A) INCLUSION IN SUMMARY PLAN DESCRIPTION OF SUMMARY OF ADDITIONAL INFORMATION- 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 summary 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 provide 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 specialists. `(ii) CARE MANAGEMENT INFORMATION- A description of the circumstances under which, and the extent to which, the plan has special disease management programs or programs for persons with disabilities, indicating whether these programs are voluntary or mandatory and whether a significant benefit differential results from participation in such programs. `(iii) INCLUSION OF DRUGS AND BIOLOGICALS IN FORMULARIES- A statement of whether a specific drug or biological is included in a formulary used to determine benefits under the plan and a description of the procedures for considering requests for any patient-specific waivers. `(iv) PROCEDURES FOR DETERMINING EXCLUSIONS BASED ON MEDICAL NECESSITY OR EXPERIMENTAL TREATMENTS- Upon receipt by the participant or beneficiary of any notification of an adverse coverage decision based on a determination relating to medical necessity or an experimental treatment or technology, a description of the procedures and medically-based criteria used in such decision. `(v) PREAUTHORIZATION AND UTILIZATION REVIEW PROCEDURES- Upon receipt by the participant or beneficiary of any notification of an adverse coverage decision, 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 SERVICE PROVIDERS- A description of the accreditation 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 SATISFACTION- The latest information (if any) maintained by the plan, or by any health insurance issuer offering health insurance coverage in connection with the plan, relating to enrollee satisfaction. `(viii) QUALITY PERFORMANCE MEASURES- The latest information (if any) maintained by the plan, or by any health insurance issuer offering health insurance coverage in connection with the plan, relating to quality of performance of the delivery of medical care with respect to coverage 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 participant or beneficiary under a group health plan shall provide to the participant or beneficiary, on request, a description of his or her professional qualifications (including board certification status, licensing status, and accreditation status, if any), privileges, and experience and a general description by category (including salary, 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 connection 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 facility's corporate form or other organizational form and all forms of licensing and accreditation 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 effective 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 (including the Internet or proprietary computer networks in a format which is readily accessible to participants), `(3) by timely informing participants who, under an ongoing program maintained under the plan, have submitted their names for such notification, 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 included under section 111(a)'. (2) The table of contents in section 1 of such Act is amended by striking the item relating to section 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 following 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 amendments 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 understanding among such Secretaries, that-- (1) regulations, rulings, and interpretations issued by such Secretaries relating to the same matter over which two or more such Secretaries have responsibility under the provisions of this subtitle, subtitle 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 Retirement 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 subsection: `(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 participant or beneficiary of any adverse coverage decision with respect to benefits of such participant 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 understood by the participant, `(B) provide such notice in writing also to any treating medical care provider of such participant 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 proceedings 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 coverage decisions for benefits and completing internal appeals- `(A) TIME LIMITS FOR DECIDING REQUESTS FOR BENEFIT PAYMENTS, REQUESTS FOR ADVANCE DETERMINATION OF COVERAGE, AND REQUESTS FOR REQUIRED DETERMINATION OF MEDICAL NECESSITY- Except as provided 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 before the end of the initial decision period under paragraph (9)(J) following the filing completion date. Failure to issue a coverage decision on such a request before the end of the period required under this clause shall be treated as an adverse coverage decision 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 coverage decision, setting forth the grounds for such decision, before the end of the internal review period following the review filing date. Such decision shall be treated as the final decision of the plan, subject to any applicable reconsideration 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, subject to any applicable reconsideration under paragraph (4). `(B) TIME LIMITS FOR MAKING COVERAGE DECISIONS RELATING TO URGENT AND EMERGENCY 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 expedited advance determination of coverage or for expedited required determination of medical necessity submitted, in such reasonable 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 medical care but not involving emergency medical care, or `(II) before the end of the emergency decision period under paragraph (9)(M), in cases involving emergency medical care, following the filing completion date. Failure to approve or deny such a request before the end of the applicable decision period shall be treated as a denial of the request 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 decision-- `(I) before the end of the urgent decision period under paragraph (9)(L), in cases involving urgent medical care but not involving emergency medical care, or `(II) before the end of the emergency decision period under paragraph (9)(M), in cases involving emergency medical care, following the review filing date. Such decision shall be treated as the final decision of the plan, subject to any applicable reconsideration under paragraph (4). Failure to issue before the end of the applicable decision period such a written decision requested under this clause shall be treated as a final decision affirming the initial coverage decision, subject to any applicable reconsideration under paragraph (4). `(3) PHYSICIANS MUST REVIEW INITIAL COVERAGE DECISIONS INVOLVING MEDICAL APPROPRIATENESS OR NECESSITY OR EXPERIMENTAL TREATMENT- If an initial coverage decision under paragraph (2)(A)(i) or (2)(B)(i) is based on a determination 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 does not meet the plan's requirements for medical appropriateness or necessity or would constitute experimental treatment or technology, the review under paragraph (2)(A)(ii) or (2)(B)(ii), to the extent that it relates to medical appropriateness or necessity 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 INDEPENDENT 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 timely 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 required under paragraph (1)(A)), and `(ii) in the case of any adverse coverage 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 determination 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 requirements for medical appropriateness or necessity, or `(II) would constitute experimental 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 compounded annual adjustments in the same manner and to the same extent as apply under section 215(i) of the Social Security Act, except that, for any calendar year, such amount as so adjusted shall be deemed, solely for such calendar 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 beneficiary 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 REVIEW DECISION- In any case in which a participant or beneficiary who has received an adverse decision of the plan upon initial review of the coverage decision and who has not commenced review of the initial coverage decision under section 502 makes a request in writing, within 30 days after the date of such review decision, for reconsideration of such review decision, the 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 accordance 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 report in writing to the plan their recommendation, based on the determination made under clause (i), as to whether such coverage decision should be affirmed, modified, or reversed, setting forth the grounds (including the clinical basis) for the recommendation, 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 recommendations reported to the plan pursuant to clause (iii), and setting forth the grounds for the decision. `(D) TIME LIMITS FOR RECONSIDERATION- Any review under this paragraph shall be completed before the end of the reconsideration period (as defined in paragraph (9)(O)) following the review filing date in connection with such review. The decision under this paragraph affirming, reversing, or modifying the initial review decision of the plan shall be the final decision of the plan. Failure to issue a written decision before the end of the reconsideration period in any reconsideration requested under this paragraph shall be treated as a final decision affirming the initial review decision of the plan. `(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 appropriate, another medical professional, `(II) who has appropriate credentials and has attained recognized expertise in the applicable medical field, `(III) who was not involved in the initial decision or any earlier review thereof, and `(IV) who is selected in accordance with clause (ii) and meets the requirements of clause (iii). `(ii) SELECTION OF MEDICAL EXPERTS- An independent medical expert is selected in accordance with this clause if-- `(I) the expert is selected by an intermediary which itself meets the requirements of clause (iii), by means of a method which ensures that the identity of the expert is not disclosed to the plan, any health insurance issuer offering health insurance coverage to the aggrieved participant or beneficiary in connection with the plan, and the aggrieved participant or beneficiary under the plan, and the identities 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 standard-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 manner that is, under regulations issued pursuant to negotiated rulemaking, sufficient to ensure the expert's independence, and the method of selection is devised to reasonably ensure that the expert selected meets the independence requirements of clause (iii). `(iii) INDEPENDENCE REQUIREMENTS- 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 coverage 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 interest with a related party as determined under any regulations which the Secretary may prescribe. `(iv) RELATED PARTY- For purposes of clause (ii)(I), the term `related party' means-- `(I) the plan or any health insurance issuer offering health insurance coverage in connection with the plan (or any officer, director, or management employee of such plan or issuer), `(II) the physician or other medical care provider that provided the medical care involved in the coverage decision, `(III) the institution at which the medical care involved in the coverage 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 Secretary may prescribe to have a substantial interest in the coverage decision . `(v) AFFILIATED- For purposes of clause (iii)(I), the term `affiliated' means, in connection with any entity, having a familial, financial, or professional relationship with, or interest in, such entity. `(F) INAPPLICABILITY WITH RESPECT TO ITEMS AND SERVICES SPECIFICALLY EXCLUDED FROM COVERAGE- An adverse coverage decision 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 determination is found in such decision to be based solely on the fact that the item or service-- `(i) does not meet the plan's requirements for medical appropriateness or necessity, 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 requirements 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 regulations (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 resolution procedure which is available under the plan with respect to similarly situated participants and beneficiaries, 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 resolution procedure, `(ii) the time limits not exceeding the time limits otherwise applicable under paragraphs (2)(A)(ii) and (2)(B)(ii) are incorporated in such alternative dispute resolution procedure, `(iii) any applicable requirement for review by a physician under paragraph (3), unless waived by the participant or beneficiary (in a manner consistent with such regulations as the Secretary may prescribe to ensure equitable procedures), is incorporated in such alternative dispute resolution procedure, and `(iv) the plan meets the additional requirements 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 beneficiary 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 participant or beneficiary of scientific and medical evidence supporting the position of such participant 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 decisions under paragraph (4) if the aggrieved participant 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 recommendations of the independent medical expert 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 decision under section 502. `(7) SPECIAL RULE FOR ACCESS TO SPECIALTY CARE- In the case of a request for advance determination 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 respect to a condition, a physician who has a high level of expertise through appropriate training and experience (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 PAYMENTS- The term `request for benefit payments' 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 beneficiary after such medical care has been provided. `(B) REQUIRED DETERMINATION OF MEDICAL NECESSITY- The term `required determination of medical necessity' means a determination 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 medical 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 defined in subparagraph (C)). `(C) ADVANCE DETERMINATION OF COVERAGE- 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 conditions of coverage (which may be subject to exceptions under the plan for fraud or misrepresentation). `(D) REQUEST FOR ADVANCE DETERMINATION OF COVERAGE- The term `request for advance determination of coverage' means a request for an advance determination of coverage of medical care which is made by or on behalf of a participant or beneficiary before such medical care is provided. `(E) REQUEST FOR EXPEDITED ADVANCE DETERMINATION OF COVERAGE- The term `request for expedited advance determination of coverage' means a request for advance determination of coverage, in any case in which the proposed medical care constitutes urgent medical care or emergency medical care. `(F) REQUEST FOR REQUIRED DETERMINATION OF MEDICAL NECESSITY- The term `request for required determination of medical necessity' means a request for a required determination of medical necessity for medical care which is made by or on behalf of a participant or beneficiary before the medical care is provided. `(G) REQUEST FOR EXPEDITED REQUIRED DETERMINATION OF MEDICAL NECESSITY- The term `request for expedited required determination 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 certified in writing (or as otherwise provided in regulations of the Secretary) that failure to provide 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 participant or beneficiary, or `(ii) the immediate, serious, and irreversible deterioration of the health of the participant or beneficiary which will significantly 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 physician has certified in writing (or as otherwise provided in regulations of the Secretary)-- `(i) that failure to immediately provide the care to the participant or beneficiary could reasonably be expected to result in-- `(I) placing the health of such participant or beneficiary (or, with respect to such a participant or beneficiary who is a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, `(II) serious impairment to bodily 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 prescribed 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 prescribed 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 prescribed 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 Secretary. `(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 prescribed 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 connection 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 appropriate named fiduciary (or the independent medical expert or experts in the case of a review under paragraph (4)) 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 a decision to affirm, modify, 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 decision shall be deemed to be `written' or `in writing' if such request or decision is presented in a generally recognized printable or electronic format. The Secretary may by regulation provide for presentation of information otherwise required to be in written form in such other forms as may be appropriate under the circumstances. `(ii) MEDICAL APPROPRIATENESS OR EXPERIMENTAL TREATMENT DETERMINATIONS- For purposes of this subparagraph, in the case of a request for advance determination of coverage, a request for expedited advance determination of coverage, a request for required determination of medical necessity, or a request for expedited required determination of medical necessity, if the decision on such request is conveyed to the provider of medical care or to the participant or beneficiary by means of telephonic or other electronic communications, 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 defined in section 503(b)(8)) is not timely provided to a participant or beneficiary pursuant to a final decision 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 discretion, 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 fiduciary and in violation of the terms of the plan or this title, has taken an action resulting in an adverse coverage decision 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 decision 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 defendant-- `(i) to cease and desist from the alleged action or failure to act, and `(ii) to pay to the plaintiff a reasonable attorney'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 section. `(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 violations 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 administrative remedies in accordance with paragraph (2)(A)(ii) or (2)(B)(ii) of section 503(b) otherwise necessary for an action 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 physician 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 beneficiary, a civil action may be brought by a participant or beneficiary to obtain appropriate equitable relief. Any determinations 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 Retirement Income Security Act of 1974 (as amended by this section) shall continue on and after the date of the enactment 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 subsection (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 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 amendments 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 bargaining agreement. Subtitle D--Affordable Health Coverage 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 Employee Retirement Income Security Act of 1974 is amended 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 participants and beneficiaries, unless, for any plan year, such coverage remains unavailable to the plan despite good faith efforts exercised by the plan to secure 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 industry association (including a rural electric cooperative association or a rural telephone cooperative association), a professional association, or a chamber of commerce (or similar business association, including a corporation or similar organization that operates on a cooperative basis (within the meaning of section 1381 of the Internal Revenue Code of 1986)), for substantial purposes other than that of obtaining or providing medical care, `(2) is established as a permanent entity which receives the active support of its members and collects from its members on a periodic basis dues or payments necessary to maintain eligibility for membership 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 members), 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 association 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 requirements of this part only if the applicable authority is satisfied that-- `(1) such certification-- `(A) is administratively feasible, `(B) is not adverse to the interests of the individuals covered under the plan, and `(C) is protective of the rights and benefits of the individuals covered under the plan, and `(2) the applicable requirements of this part are met (or, upon the date on which the plan is to commence operations, will be met) with respect to the plan. `(c) REQUIREMENTS APPLICABLE TO CERTIFIED PLANS- An association health plan with respect to which certification under this part is in effect shall meet the applicable 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 CERTIFICATION- The applicable authority may provide by regulation for continued certification of association health plans under this part, including requirements relating to commencement 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 provide 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 connection with plans in such class and payment of the prescribed 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 application for certification under this part, the requirements 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 trustees 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 CONTRACTORS- `(A) IN GENERAL- Except as provided in subparagraph (B), the members of the board of trustees are individuals selected from individuals 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 provided in clauses (ii) and (iii), no such member is an owner, officer, director, or employee of, or partner in, a contract administrator or other service provider to the plan. `(ii) LIMITED EXCEPTION FOR PROVIDERS 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 subparagraph (A) who is a provider of medical care under the plan. `(C) SOLE AUTHORITY- The board has sole authority to approve applications for participation in the plan and to contract with a service provider to administer the day-to-day affairs of the plan. `(c) TREATMENT OF FRANCHISE NETWORKS- In the case of a group health plan which is established and maintained by a franchiser for a franchise network consisting of its franchisees-- `(1) the requirements of subsection (a) and section 801(a)(1) shall be deemed met if such requirements 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 association 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 REQUIREMENTS. `(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 members 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 affiliated 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 employers, or `(B) the beneficiaries of individuals described in subparagraph (A). `(b) COVERAGE OF PREVIOUSLY UNINSURED EMPLOYEES- `(1) IN GENERAL- Subject to paragraph (2), the requirements of this subsection are met with respect to an association health plan if, under the terms of the plan, no affiliated member of the sponsor may be offered coverage under the plan as a participating employer, unless-- `(A) the affiliated member was an affiliated member on the date of certification under this part, or `(B) during the 12-month period preceding the date of the offering of such coverage, the affiliated member has not maintained or contributed to a group health plan with respect to any of its 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 requirements 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 coverage 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 PARTICIPATE- 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 participation or contribution requirements of the type referred to in section 2711 of the Public Health Service Act are not met with respect to the excluded employer, `(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 employers. `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 INSTRUMENTS- The instruments governing the plan include a written instrument, meeting the requirements 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 capacity 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 section 3(16)(B)), and `(C) incorporates the requirements of section 806. `(2) CONTRIBUTION RATES MUST BE NONDISCRIMINATORY- `(A) The contribution rates for any participating 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 provision 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 INDIVIDUALS 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 participants 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 employers coverage which does not consist of health insurance coverage in a manner comparable 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, testing, 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 coverage in connection with an association health plan, from exercising its sole discretion in selecting the specific items and services consisting of medical care to be included as benefits under such plan or coverage, except (subject to section 514) in the case of any law to the extent that it (1) prohibits an exclusion of a specific disease from such coverage, or (2) is not 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 coverage, the plan-- `(A) establishes and maintains reserves with respect to such additional benefit options, in amounts recommended by the qualified actuary, consisting of-- `(i) a reserve sufficient for unearned contributions, `(ii) a reserve sufficient for benefit liabilities 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 respect 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 solvency indemnification, with respect to such additional 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 specified circumstances in which the plan specifically provides for and maintains reserves in excess of the amounts required under subparagraph (A). `(ii) The plan shall secure specific excess/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 excess of the amounts required under subparagraph (A). `(iii) The plan shall secure indemnification 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 recommend, 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 authority 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 requirements relating to reserves and excess/stop loss insurance as the applicable authority considers appropriate. Such requirements may be provided, by regulation or otherwise, with respect to any such plan or any class of such plans. `(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSURANCE- The applicable authority may provide for adjustments 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 arrangement, or other financial arrangement as the applicable 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 participants and beneficiaries than the requirements for which it is substituted. The applicable authority may take into account, for purposes of this subsection, evidence provided by the plan or sponsor which demonstrates an assumption of liability with respect to the plan. Such evidence 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 arrangement. `(f) MEASURES TO ENSURE CONTINUED PAYMENT OF BENEFITS BY CERTAIN PLANS IN DISTRESS- `(1) PAYMENTS BY CERTAIN PLANS TO ASSOCIATION HEALTH PLAN FUND- `(A) IN GENERAL- In the case of an association health plan described in subsection (a)(2), the requirements of this subsection are met if the plan makes payments into the Association Health Plan Fund under this subparagraph when they are due. Such payments shall consist of annual payments in the amount of $5,000, and, in addition to such annual payments, such supplemental payments as the Secretary 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. Payments shall continue to accrue until a plan's assets 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 SECRETARY- The Secretary shall not cease to carry out the provisions of paragraph (2) on account of the failure of a plan to pay any payment when due. `(2) PAYMENTS BY SECRETARY TO CONTINUE EXCESS STOP/LOSS INSURANCE COVERAGE AND INDEMNIFICATION INSURANCE COVERAGE FOR CERTAIN 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 described 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, certifies such determination to the Secretary), the Secretary shall determine the amounts necessary to make payments to an insurer (designated by the Secretary) to maintain in force excess/stop loss insurance coverage or indemnification insurance coverage 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 payments pursuant to paragraph (2). The Fund shall be credited with payments received pursuant to paragraph (1)(A), penalties received pursuant to paragraph (1)(B), and earnings on investments of amounts of the Fund under subparagraph (B). `(B) INVESTMENT- Whenever the Secretary 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 Secretary 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 INSURANCE- The term `aggregate excess/stop loss insurance' 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 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 INSURANCE- The term `specific excess/stop loss insurance' 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 individual in excess of an amount or amounts specified in such contract in connection with such covered individual, `(B) which is guaranteed renewable, and `(C) which allows for payment of premiums by any third party on behalf of the insured 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 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 which the plan is unable to satisfy by reason of a termination pursuant to section 809(b) (relating to mandatory termination), `(2) which is guaranteed renewable and noncancellable for any reason (except as may be provided 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 standards under part 4 and such additional requirements regarding liquidity as may be prescribed in regulations of the applicable authority. `(j) REGULATIONS PRESCRIBED UNDER NEGOTIATED RULEMAKING- The regulations under this section 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 negotiated rulemaking committee for purposes of such rulemaking, the applicable authority shall include among persons invited to membership on the committee at least one of each of the following: `(1) a representative of the National Association 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 arrangements, 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 RELATED 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 appropriation Acts, for the sole purpose of administering the certification procedures applicable with respect to association health plans. `(b) INFORMATION TO BE INCLUDED IN APPLICATION FOR CERTIFICATION- An application for certification under this part meets the requirements of this section only if it includes, in a manner and form prescribed in regulations of the applicable authority, at least the following information: `(1) IDENTIFYING INFORMATION- The names and addresses of-- `(A) the sponsor, and `(B) the members of the board of trustees of the plan. `(2) STATES IN WHICH PLAN INTENDS TO DO BUSINESS- The States in which participants and beneficiaries under the plan are to be located and the number of them expected to be located in each such State. `(3) BONDING REQUIREMENTS- Evidence provided by the board of trustees that the bonding requirements of section 412 will be met as of the date of the application or (if later) commencement of operations. `(4) PLAN DOCUMENTS- A copy of the documents 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 PROVIDERS- A copy of any agreements between the plan and contract administrators and other service providers. `(6) FUNDING REPORT- In the case of association health plans providing benefits options in addition 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 application, 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 requirements of section 806 are or will be met in accordance 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 required 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 actuarial opinion signed by a qualified actuary, which sets forth the current value of the assets and liabilities accumulated under the plan and a projection of the assets, liabilities, income, and expenses of the plan for the 12-month period referred to in subparagraph (B). The income statement shall identify separately the plan's administrative expenses and claims. `(D) COSTS OF COVERAGE TO BE CHARGED AND OTHER EXPENSES- A statement of the costs of coverage to be charged, including an itemization of amounts for administration, reserves, and other expenses associated with the operation of the plan. `(E) OTHER INFORMATION- Any other information which may be prescribed in regulations of the applicable authority as necessary to carry out the purposes of this part. `(c) FILING NOTICE OF CERTIFICATION WITH STATES- A certification granted under this part to an association health plan shall not be effective unless written notice of such certification is filed with the applicable State authority of each State in which at least 25 percent of the participants and beneficiaries under the plan are located. For purposes of this subsection, an individual shall be considered to be located in the State in which a known address of such individual is located or in which such individual is employed. `(d) NOTICE OF MATERIAL CHANGES- In the case of any association health plan