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<PRE>[DOCID: f:h2497ih.txt]






107th CONGRESS
  1st Session
                                H. R. 2497

  To amend the Public Health Service Act and the Employee Retirement 
   Income Security Act of 1974 to establish certain requirements for 
                          managed care plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 12, 2001

Ms. Velazquez introduced the following bill; which was referred to the 
 Committee on Energy and Commerce, and in addition to the Committee on 
Education and the Workforce, 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 amend the Public Health Service Act and the Employee Retirement 
   Income Security Act of 1974 to establish certain requirements for 
                          managed care plans.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Managed Care Bill 
of Rights for Consumers Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Patient protection standards under the Public Health Service 
                            Act.
                 ``Part C--Patient Protection Standards

        ``Sec. 2770. Guarantee of medically necessary and appropriate 
                            treatment.
        ``Sec. 2771. Guaranteed adequate access to health care.
        ``Sec. 2772. Right to adequate physician network.
        ``Sec. 2773. Meaningful choice of providers.
        ``Sec. 2774. Guaranteed continuity of care.
        ``Sec. 2775. Right to specialty care.
        ``Sec. 2776. Required obstetric and gynecological care.
        ``Sec. 2777. Assuring equitable coverage of emergency services.
        ``Sec. 2778. Requirement for service to areas that include a 
                            medically underserved population.
        ``Sec. 2779. Right to language assistance.
        ``Sec. 2780. Prohibition on financial incentives to limit care.
        ``Sec. 2781. Prohibition on gag clauses.
        ``Sec. 2782. Right to appeal denial of care.
        ``Sec. 2783. External review.
        ``Sec. 2784. Nondiscrimination right.
        ``Sec. 2785. Protection of patient confidentiality.
        ``Sec. 2786. Establishment of Managed Care Consumer Advisory 
                            Commission.
        ``Sec. 2787. Requirements for prescription drug coverage; 
                            definitions.
        ``Sec. 2788. Notice; definitions; application of enforcement 
                            provisions.
Sec. 3. Patient protection standards under the Employee Retirement 
                            Income Security Act of 1974.
Sec. 4. Nonpreemption of State law respecting liability of group health 
                            plans.
Sec. 5. Effective date.

SEC. 2. PATIENT PROTECTION STANDARDS UNDER THE PUBLIC HEALTH SERVICE 
              ACT.

    (a) In General.--Title XXVII of the Public Health Service Act is 
amended--
            (1) by redesignating part C as part D; and
            (2) by inserting after part B the following new part:

                 ``Part C--Patient Protection Standards

``SEC. 2770. GUARANTEE OF MEDICALLY NECESSARY AND APPROPRIATE 
              TREATMENT.

    ``(a) In General.--A managed care plan may not impose limits on the 
delivery of services if such services are--
            ``(1) medically necessary and appropriate as determined by 
        the treating health professional, in consultation with the 
        enrollee; and
            ``(2) otherwise a covered benefit.
    ``(b) Second Opinion.--A managed care plan shall provide to an 
enrollee, upon request, a referral to a health care practitioner for a 
second opinion as to what constitutes medically necessary and 
appropriate treatment, and provide coverage for such opinion without 
regard to whether such health care practitioner has a contractual or 
other arrangement with the plan for the provision of such services to 
such enrollee.

``SEC. 2771. GUARANTEED ADEQUATE ACCESS TO HEALTH CARE.

    ``(a) Adequate Access.--A managed care plan shall provide adequate 
access to health care services.
    ``(b) Available Items and Services.--The Secretary shall ensure 
that items and services, including laboratory and specialist services, 
covered under the plan shall be available through providers that are 
reasonably geographically accessible to all enrollees of such plan.

``SEC. 2772. RIGHT TO ADEQUATE PHYSICIAN NETWORK.

    ``(a) In General.--A managed care plan shall maintain an adequate 
number, mix, and distribution of health professionals and providers to 
ensure that covered items and services are available and accessible to 
each enrollee.
    ``(b) Adequate Distribution.--The Secretary shall determine the 
adequate number, mix, and distribution of health professionals and 
providers within the service area of the managed care plan, including--
            ``(1) the existence of a primary care provider network that 
        is sufficient to meet adult, pediatric, and primary obstetric 
        and gynecological needs of all enrollees;
            ``(2) the existence of a network of specialists of 
        sufficient number and diversity to meet the specialty needs of 
        all enrollees;
            ``(3) the access to quality health services from 
        institutional providers for all enrollees; and
            ``(4) the existence of at least one primary care physician 
        for every 1,500 enrollees.

``SEC. 2773. MEANINGFUL CHOICE OF PROVIDERS.

    ``(a) Minimum Number of Choices.--A managed care plan shall provide 
to enrollees a choice of at least 3 providers within each category of 
providers based on the health care needs of such enrollees, taking into 
account the age, gender, health, native language, acute or chronic 
diseases, and special needs of the enrollee. The enrollee may change 
the selection of provider at any time.
    ``(b) Access to Out-of-Network Provider.--A managed care plan shall 
cover services that are furnished by a physician or provider obtained 
by the enrollee without regard to whether such physician or provider 
has a contractual or other arrangement with the plan for the provision 
of such services to such enrollees. The plan may impose a reasonable 
deductible and reasonable copayment subject to a reasonable annual 
limit on total annual out-of-pocket expenses.

``SEC. 2774. GUARANTEED CONTINUITY OF CARE.

    ``If a contract between a managed care plan and a health care 
provider is terminated (other than by the plan for failure to meet 
applicable quality standards or for fraud) and an enrollee is 
undergoing a course of treatment from the provider at the time of such 
termination, the plan shall--
            ``(1) notify the enrollee of such termination; and
            ``(2) permit the enrollee to continue the course of 
        treatment with the provider during a transitional period as 
        determined by the Secretary.

``SEC. 2775. RIGHT TO SPECIALTY CARE.

    ``(a) Referral to Specialists.--
            ``(1) Choice of specialist.--A managed care plan shall 
        permit each enrollee to receive specialty care from any 
        qualified participating health care provider when such 
        treatment is medically or clinically necessary. The plan shall 
        make or provide for a referral to at least 3 specialists who 
        are available and accessible to provide treatment for such 
        condition or disease.
            ``(2) Cost of treatment by nonparticipating providers.--In 
        a case in which a plan refers an enrollee to a nonparticipating 
        specialist, the plan shall cover any services provi
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ded by such 
        specialist at the rate it covers comparable services provided 
        by participating providers.
    ``(b) Continuous Referrals.--A managed care plan shall have a 
procedure by which an enrollee who has a condition that requires 
ongoing care from a specialist may receive a continuous referral to 
such specialist for treatment of such condition, without additional 
authorization from the primary care physician.

``SEC. 2776. REQUIRED OBSTETRIC AND GYNECOLOGICAL CARE.

    ``(a) Obstetrician-Gynecologist as Primary Care Provider.--In a 
case in which a managed care plan provides for an enrollee to designate 
a participating primary care provider, a female enrollee may designate 
a physician who specializes in obstetrics and gynecology as primary 
care provider.
    ``(b) No Designation of Obstetrician-Gynecologist.--In a case in 
which an enrollee does not designate an obstetrician-gynecologist under 
subsection (a) as a primary care provider, the plan shall not require 
prior authorization by the enrollee's primary care provider for 
coverage of routine gynecological care and pregnancy-related services 
provided by a participating physician who specializes in obstetrics and 
gynecology.

``SEC. 2777. ASSURING EQUITABLE COVERAGE OF EMERGENCY SERVICE.

    ``(a) In General.--A managed care plan shall cover emergency 
services furnished to an enrollee of the plan--
            ``(1) whether or not the provider furnishing the emergency 
        services has a contractual or other arrangement with the plan 
        for the provision of such services to such enrollee; and
            ``(2) without regard to prior authorization.
    ``(b) Emergency Services.--Emergency services shall include--
            ``(1) health care items and services furnished in the 
        emergency department of a hospital; and
            ``(2) ancillary services routinely available to such 
        department.
    ``(c) Emergency Medical Condition.--An emergency medical condition 
is a medical condition manifesting itself by acute symptoms of 
sufficient severity (including severe pain) such that a prudent 
layperson, who possesses an average knowledge of health and medicine, 
could reasonably expect the absence of immediate medical attention to 
result in--
            ``(1) placing the health of the individual (or, with 
        respect to a pregnant woman, the health of the woman or her 
        unborn child) in serious jeopardy;
            ``(2) serious impairment to bodily functions; or
            ``(3) serious dysfunction of any bodily organ or part.

``SEC. 2778. REQUIREMENT FOR SERVICE TO AREAS THAT INCLUDE A MEDICALLY 
              UNDERSERVED POPULATION.

    ``A managed care plan seeking to provide services in an area that 
includes a medically underserved population must submit a plan to the 
Secretary outlining a proposal for service that ensures access to 
quality care that is appropriate to the medically underserved 
population. The plan shall include the health needs of the medically 
underserved population with special consideration given to factors 
including age, gender, race, and potential chronic conditions.

``SEC. 2779. RIGHT TO LANGUAGE ASSISTANCE.

    ``In a case in which 2 percent of the enrollees of a managed care 
plan in a service area (as defined in section 2788(b)(9)) are members 
of a group that speaks English as a second language or requires special 
communication needs, the Secretary shall ensure that the managed care 
plan provides communication assistance and bilingual information, on a 
continuous basis, to such enrollees. The plan shall ensure that--
            ``(1) trained medical interpreters, whose primary 
        responsibility is to interpret, are present in all health care 
        settings; and
            ``(2) an adequate number of health professionals receive 
        training in cultural competency and communication skills 
        development as it relates to medical interviews.

``SEC. 2780. PROHIBITION ON FINANCIAL INCENTIVES TO LIMIT CARE.

    ``A managed care plan may not offer any financial incentives, 
directly or indirectly, to health professionals as an inducement to 
reduce or limit medically necessary services provided to an enrollee.

``SEC. 2781. PROHIBITION ON GAG CLAUSES.

    ``(a) In General.--The provisions of any contract or agreement, or 
the operation of any contract or agreement, between a managed care plan 
and a health professional shall not prohibit or restrict a health 
professional from engaging in medical communication with his or her 
patient.
    ``(b) Nullification.--Any contract provision or agreement described 
in subsection (a) shall be null and void.
    ``(c) Medical Communication Defined.--For purposes of this section, 
the term `medical communication' means a communication made by a health 
professional with a patient of the health professional (or the guardian 
or legal representative of the patient) with respect to--
            ``(1) the patient's health status, medical care, or legal 
        treatment options;
            ``(2) any utilization review requirements that may affect 
        treatment options for the patient; or
            ``(3) any financial incentives that may affect the 
        treatment of the patient.

``SEC. 2782. RIGHT TO APPEAL DENIAL OF CARE.

    ``(a) Establishment of System.--Not later than 90 days after the 
date of the enactment of the Managed Care Bill of Rights for Consumers 
Act of 2001, the Secretary, through the Health Care Financing 
Administration, shall establish and implement guidelines for grievance 
and appeals procedures regarding any aspect of a managed care plan's 
services, including complaints regarding quality of care, choice and 
accessibility of providers, network adequacy, and compliance with the 
requirements of this part.
    ``(b) No Reprisal for Exercise of Rights.--A managed care plan 
shall not take any action with respect to an enrollee or a health care 
provider that is intended to penalize the enrollee, a designee of the 
enrollee, or the health care provider for discussing or exercising any 
rights provided under this part (including the filing of a complaint or 
appeal pursuant to this section).

``SEC. 2783. EXTERNAL REVIEW.

    ``An external review process shall be available to enrollees after 
all internal appeal options have been exercised. The requirements for 
an external review process are as follows:
            ``(1) The process is established under State law and 
        provides for review of decisions made pursuant to section 2783 
        by an independent review organization certified by the State.
            ``(2) If the process provides that decisions in such 
        process are not binding on managed care plans, the process must 
        provide for public methods of disclosing frequency of 
        noncompliance with such decisions and for sanctioning plans 
        that consistently refuse to take appropriate actions in 
        response to such decisions.
            ``(3) Results of all such reviews under the process are 
        disclosed to the public, along with at least annual disclosure 
        of information on managed care plan compliance.
            ``(4) All decisions under the process shall be in writing 
        and shall be accompanied by an explanation of the basis for the 
        decision.
            ``(5) Direct costs of the process shall be borne by the 
        managed care plan, and not by the enrollee.
            ``(6) The managed care plan shall provide for publication 
        at least annually of information on the number of appeals and 
        decisions considered under the process.

``SEC. 2784. NONDISCRIMINATION RIGHT.

    ``A managed care plan may not discriminate (directly or through 
contractual arrangements) against an enrollee or a provider on the 
basis of race, national origin, gender, language, socioeconomic status, 
age, disability, health status, or anticipated need for health 
services.

``SEC. 2785. PROTECTION OF PATIENT CONFIDENTIALITY.

    ``A managed care plan shall establish policies and procedures to 
ensure th
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at all applicable laws that protect the confidentiality of an 
individual's medical information are followed.

``SEC. 2786. ESTABLISHMENT OF MANAGED CARE CONSUMER ADVISORY 
              COMMISSION.

    ``(a) Establishment.--The Secretary shall establish and appoint a 5 
member Managed Care Consumer Advisory Commission (in this section 
referred to as the `Commission').
    ``(b) Purpose.--The purpose of the Commission is to assist 
consumers in the following areas:
            ``(1) Accessing appropriate and high-quality health care 
        services.
            ``(2) Understanding and exercising their rights and 
        responsibilities as managed care plan enrollees.
            ``(3) Making an informed and appropriate choice of a 
        managed care plan.
    ``(c) Membership.--Members of the Commission shall--
            ``(1) be selected from nonpartisan labor, religious, human 
        service, or consumer organizations; and
            ``(2) demonstrate a commitment to representing consumers in 
        an equitable manner.
    ``(d) Duties.--
            ``(1) Analyze and collect information.--The Commission 
        shall collect and analyze information for the purpose of 
        identifying--
                    ``(A) recurring barriers to access to health care 
                for persons enrolled in managed care plans;
                    ``(B) patterns of national, regional, or local 
                access problems with special focus on underserved and 
                vulnerable populations and persons with chronic illness 
                and disabilities;
                    ``(C) quality of care problems; and
                    ``(D) the extent to which managed care plans comply 
                with Federal laws, regulations, and rules governing 
                their responsibilities and performance.
            ``(2) Promote solutions.--The Commission shall investigate, 
        identify, and promote solutions regarding managed care 
        practices, policies, laws, or regulations that adversely 
        affect, or fail to promote, informed access of individuals and 
        populations to high-quality health care.
            ``(3) Report.--Not later than January 1 of each year, the 
        Secretary, through the Commission, shall submit a report to 
        Congress which shall include--
                    ``(A) a description of the efforts of the 
                Commission; and
                    ``(B) findings and recommendations based on 
                problems identified to improve consumer and enrollee 
                rights and protections so as to facilitate access to 
                high-quality health care and improve health outcomes.

``SEC. 2787. REQUIREMENTS FOR PRESCRIPTION DRUG COVERAGE.

    ``(a) Requirement for Coverage of Medically Necessary and 
Appropriate Drugs.--In a case in which a managed care plan provides 
coverage for prescription drugs, such plan may not limit coverage if a 
treating health professional determines that such coverage is medically 
necessary and appropriate.
    ``(b) Requirement for Substituting Drugs.--
            ``(1) In general.--A determination as to whether or not a 
        drug prescribed to treat a medical condition may be substituted 
        with a different drug may only be made by a treating physician. 
        A managed care plan may not provide a standard for substituting 
        prescription drugs.
            ``(2) Generic drugs.--A generic drug may not be substituted 
        for a name brand drug unless it has the same chemical 
        composition as the name brand drug.
    ``(c) Limitation on Access.--A managed care plan that provides 
prescription drug coverage may not limit access to drugs covered solely 
on the basis of costs associated with providing coverage of such drugs.

``SEC. 2788. NOTICE; DEFINITIONS; APPLICATION OF ENFORCEMENT 
              PROVISIONS.

    ``(a) Notice.--A managed care plan under this part shall comply 
with the notice requirement under section 711(d) of the Employee 
Retirement Income Security Act of 1974 with respect to the requirements 
of this part as if such section applied to such plan and such plan were 
a group health plan.
    ``(b) Definitions.--For purposes of this part:
            ``(1) Enrollee.--The term `enrollee' means, with respect to 
        health insurance coverage offered by a managed care plan, an 
        individual enrolled with or otherwise covered under the plan to 
        receive such coverage and includes a participant or beneficiary 
        with respect to a group health plan.
            ``(2) Health professional.--The term `health professional' 
        means a physician or other health care practitioner licensed, 
        accredited, or certified to perform specified health services 
        consistent with law.
            ``(3) Managed care plan.--The term `managed care plan' 
        means a group health plan or health insurance coverage that 
        provides or arranges for the provision of health care items and 
        services to participants, beneficiaries, or enrollees primarily 
        through participating physicians and providers.
            ``(4) Network.--The term `network' means, with respect to a 
        managed care plan, the participating health professionals and 
        providers through which the plan provides health care items and 
        services to enrollees.
            ``(5) Network coverage.--The term `network coverage' means 
        coverage offered by a managed care plan that provides or 
        arranges for the provision of health care items and services to 
        enrollees through participating health professionals and 
        providers.
            ``(6) Participating.--The term `participating' means, with 
        respect to a health professional or provider, a health 
        professional or provider that provides health care items and 
        services to enrollees under network coverage under an agreement 
        with the managed care plan offering the coverage.
            ``(7) Prior authorization.--The term `prior authorization' 
        means the process of obtaining prior approval from a managed 
        care plan as to the necessity or appropriateness of receiving 
        medical or clinical services for treatment of a medical or 
        clinical condition.
            ``(8) Provider.--The term `provider' means a health 
        organization, health facility, or health agency that is 
        licensed, accredited, or certified to provide health care items 
        and services.
            ``(9) Service area.--The term `service area' means, with 
        respect to a managed care plan, the geographic area served by 
        the plan with respect to the coverage.
    ``(c) Enforcement.--For purposes of enforcing the provisions of 
this part under this title, the provisions of this part shall be 
treated as if they were part of subpart 2 of part A and as if they were 
part of subpart 2 of part B (relating to other requirements).''.
    (b) Conforming Amendments.--Title XXVII of the Public Health 
Service Act is further amended--
            (1) by redesignating the subpart 3 of part B relating to 
        other requirements as subpart 2; and
            (2) in sections 2723(a)(1) (42 U.S.C. 300gg-23(a)(1)) and 
        subsections (a) and (b)(1) of section 2762 (42 U.S.C. 300gg-
        62), by striking ``part C'' and inserting ``part D'' each place 
        it appears.

SEC. 3. PATIENT PROTECTION STANDARDS UNDER THE EMPLOYEE RETIREMENT 
              INCOME SECURITY ACT OF 1974.

    (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 by 
adding at the end the following new section:

``SEC. 714. PATIENT PROTECTION STANDARDS.

    ``(a) In General.--Subject to subsection (b), a group health plan 
(and a health insurance issuer offering group health insurance coverage 
in connection with such a plan) shall comply with the requirements of 
part C of title XXVII of the Public Health Service Act.
    ``(b) References in Application.--In ap
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plying subsection (a) under 
this part, any reference in such part C--
            ``(1) to a managed care plan and health insurance coverage 
        offered by such a plan is deemed to include a reference to a 
        group health plan and coverage under such plan, respectively; 
        and
            ``(2) to the Secretary is deemed a reference to the 
        Secretary of Labor.
    ``(c) Ensuring Coordination.--The Secretary of Health and Human 
Services and the Secretary of Labor shall ensure, through the execution 
of an interagency memorandum of understanding between such Secretaries, 
that--
            ``(1) regulations, rulings, and interpretations issued by 
        such Secretaries relating to the same matter over which such 
        Secretaries have responsibility under such part C and this 
        section 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.''.
    (b) Modification of Preemption Standards.--Section 731 of such Act 
(42 U.S.C. 1191) is amended--
            (1) in subsection (a)(1), by striking ``subsection (b)'' 
        and inserting ``subsections (b) and (c)'';
            (2) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (3) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Special Rules in Case of Patient Protection Requirements.--
Subject to subsection (a)(2), the provisions of section 714 and part C 
of title XXVII of the Public Health Service Act, and the provisions of 
this subpart insofar as it applies to section 714 or such part, shall 
not be construed to preempt any State law, or the enactment or 
implementation of such a State law, that provides protections for 
individuals that are equivalent to or stricter than the protections 
provided under such provisions.''.
    (c) Conforming Amendments.--(1) Section 732(a) of such Act (29 
U.S.C. 1185(a)) is amended by striking ``section 711'' and inserting 
``sections 711 and 714''.
    (2) The table of contents in section 1 of such Act is amended by 
inserting after the item relating to section 713 the following new 
item:

``Sec. 714. Patient protection standards.''.
    (3) Section 734 of such Act (29 U.S.C. 1187) is amended by 
inserting ``and section 714(c)'' after ``of 1996''.

SEC. 4. NONPREEMPTION OF STATE LAW RESPECTING LIABILITY OF MANAGED CARE 
              PLANS.

    (a) In General.--Section 514(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1144(b)) is amended by redesignating 
paragraph (9) as paragraph (10) and inserting the following new 
paragraph:
    ``(9) Subsection (a) of this section shall not be construed to 
preclude any State cause of action to recover damages for personal 
injury or wrongful death against any person that provides insurance or 
administrative services to or for a managed care plan. For purposes of 
this paragraph, the term `managed care plan' means a group health plan 
(within the meaning of sections 732(d) and 733(a)) that provides or 
arranges for the provision of health care items and services to 
participants or beneficiaries primarily through participating 
physicians and providers.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to causes of action arising on or after the date of the enactment 
of this Act.

SEC. 5. EFFECTIVE DATE.

    (a) In General.--Subject to subsection (b), the amendments made by 
sections 2 and 3 shall apply with respect to group health plans for 
plan years beginning on or after 90 days after the date of the 
enactment of this Act, and also shall apply to portions of plan years 
occurring on and after January 1, 2002. Such amendments shall apply to 
individual health insurance coverage on and after such date.
    (b) Special Rule for Plans Under Collective Bargaining 
Agreements.--In the case of a group health plan maintained pursuant to 
1 or more collective bargaining agreements between employee 
representatives and 1 or more employers ratified before the date of 
enactment of this Act, the amendments made by such sections shall not 
apply to plan years beginning before the later of--
            (1) the date on which the last collective bargaining 
        agreements relating to the plan terminates (determined without 
        regard to any extension thereof agreed to after the date of 
        enactment of this Act); or
            (2) January 1, 2002.
For purposes of paragraph (1), 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 an amendment made by 
this Act shall not be treated as a termination of such collective 
bargaining agreement.
                                 &lt;all&gt;

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