Patient Protection During the 107th Congress: Side-by-Side Comparison of House and Senate Bills

Patient Protection During the 107th Congress: Side-by-Side Comparison of House and Senate Bills

Order Code RL30978
CRS Report for Congress
Received through the CRS Web
Patient Protection During the 107th Congress: Side-
by-Side Comparison of
House and Senate Bills
Updated August 10, 2001
Hinda Chaikind
Jean Hearne
Specialists in Social Legislation
Domestic Social Policy Division
Fran Larkins
Information Research Division
Angie Welborn
American Law Division
Congressional Research Service ˜ The Library of Congress

Patient Protection During the 107th Congress:
Side-by-Side Comparison of House and Senate Bills
Summary
This report compares the major provisions of the Senate- and House-passed patient
protection bills of the 107th Congress. S. 1052 and H.R. 2563 offer various approaches
to regulate employment-based health plans and insurance issuers relating to access to
providers, disclosure of plan information, grievances and appeals, confidentiality, and
health care lawsuit reform among other provisions.
On June 29, the Senate passed S. 1052, the “Bipartisan Patient Protection Act.” The
bill had originally been introduced in slightly modified forms by Senators McCain, Kennedy
and Edwards as S. 283 and later as S. 872. S. 1052 was amended on the Senate floor.
In the House, a similar bill was originally introduced by Representatives Ganske and
Dingell as H.R. 526 and a modified version, H.R. 2563 was introduced on July 19, to
incorporate many of the amendments included in the Senate passed bill. On August 2nd
the House passed H.R. 2563, adding two amendments on the floor before passage. The
most significant differences between the House- and Senate-passed bills are in the
provisions expanding patients’ legal remedies against their health plan providers when
medical care is unjustly denied and the denial results in harm. Other differences found in
the bills include provisions applying the protections to federal health programs, prohibiting
discrimination on the basis of genetic information, and encouraging health insurance
coverage expansions.
Each of the bills would apply to group health plans and health insurance issuers
offering health insurance coverage in both the group and individual markets for insurance.
Both bills define a process for allowing states that have already passed patient protections
at the state level to apply those laws in lieu of the federal laws although the House version
is more limited than the Senate version.
At the heart of the debate on patient protection are different approaches to increasing
access to legal remedies for persons denied access to medical care when the denial causes
substantial harm or death. Under current law, enrollees in employer-sponsored plans can
only sue their HMOs for benefits due under the Employee Retirement Income Security Act
(ERISA). State law causes of action, which include consequential and punitive damages,
are not available and ERISA does not provide for such damages. S. 1052 would expand
the damages allowed under federal claims for benefits that arise from contract disputes and
questions of coverage and would amend ERISA so that disputes at the state level over the
medical necessity of covered benefits are not pre-empted. H.R. 2563 would amend
ERISA to create a federal cause of action under certain conditions when a designated
decision maker failed to exercise ordinary care in making a determination on a claim. State
courts would have concurrent jurisdiction over claims under this new federal cause of
action, which means that state courts could hear those claims, the federal law would apply,
but the state courts’ procedural rules could be used to process those claims.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Side-by-Side Comparison of S. 1052 and H.R. 2563 . . . . . . . . . . . . . . . . . . . . . . . 4
Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Access to Obstetric and Gynecologic Care and Pediatric Care . . . . . . . . . . . . . 5
Access to Specialists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Emergency Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Continuity of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Prescription Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Clinical Trials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Choice of Plans and Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Breast Cancer Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Genetic Information and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Information Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Medical Communications (Gag Rule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Other Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Provider Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Protections for Patient Advocacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Appeals Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Initial Coverage Determinations and Utilization Review . . . . . . . . . . . . . . . . . . 17
Appeals Process — Internal Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Appeals Process — External Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Medical Necessity Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ERISA Preemption and Access to State Law . . . . . . . . . . . . . . . . . . . . . . . . . 25
Market Reform And Insurance Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Association Health Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Patient Protection During the 107th
Congress: Side-by-Side Comparison of
House and Senate Bills
Introduction
The 107th Congress has resumed the debate, begun almost five years ago, over bills
offering patients in managed care plans protection from certain practices that have
sometimes resulted in untimely or denied medical care. The current debate is centered on
two bills: S. 1052 as passed by the Senate on June 29, 2001 and H.R. 2563 as passed
by the House on August 2, 2001. S. 1052, the “Bipartisan Patient Protection Act,” was
first introduced in early February by a bipartisan group led by Senators McCain, Kennedy
and Edwards as S. 283 and then later as S. 872. The same group introduced a
companion bill (S. 284) which includes tax provisions intended to increase access to health
insurance. On the Senate floor, a number of amendments were appended to S. 1052
before passage. Representatives Ganske and Dingell introduced a House version of S.
283 in early February as H.R. 526. A modified version of H.R. 526 was introduced as
H.R. 2563 on July 19, 2001, which includes many of the Senate amendments as well as
tax provisions intended to increase access to health insurance similar to those found in S.
284.1 H.R. 2563 was further modified before passage to include two new amendments.
The two major amendments, and thus the major differences between the House- and
Senate-passed bills are found in the sections on liability and expansions of health insurance
coverage options (Association Health Plans and Medical Savings Accounts).
The two bills are largely alike in most of the other provisions. They both include
provisions assuring timely access to specialists, direct access to pediatric, obstetrical and
gynecological providers, emergency room services, clinical trials, and off-formulary drugs.
The bills would establish procedures as well as timelines for plans conducting initial review
of claims, and internal and external review of denied claims. Among other provisions
appearing in both bills are those prohibiting gag rules and requiring plans to provide
information on plan characteristics to enrollees.
President Bush developed principles for a bill that he would sign. Those principles
are outlined in the “Principles for a Bipartisan Patients’ Bill of Rights,” issued by the White
House, Office of the Press Secretary on February 7, 2001. The basic principles are: 1)
patient protections should be comprehensive, 2) patients should have a rapid medical
1This side-by side does not include a description of the tax provisions included in the patient
protection bills. For a discussion of tax provisions, see CRS IB98037, Tax Benefits for
Health Insurance: Current Legislation, by Bob Lyke.

CRS-2
review process for denials of care, and 3) federal remedies should be expanded to hold
health plans accountable. H..R. 2563, as amended before passage, reflects an agreement
reached between President Bush and Representative Norwood for expanding federal
remedies. The President has also indicated that he would veto S. 1052.
The reader may find the following definitions helpful. The “health” definitions are
based on terms used in the Health Insurance Portability and Accountability Act (HIPAA,
P.L. 104-191); many have been incorporated into the patient protection bills under
consideration here.
Health insurance coverage
Benefits consisting of medical care under any hospital or medical service policy or
certificate, hospital or medical service plan contract, or health maintenance
organization (HMO) contract offered by a health insurance issuer.
Health insurance issuer
An insurance company, insurance service, or insurance organization (including a
HMO) which is licensed to engage in the business of insurance in a state and which
is subject to state law which regulates insurance.
Group health plan
An employee welfare benefit plan to the extent that the plan provides medical care
to employees or their dependents directly or through insurance, reimbursement, or
otherwise.
Self-insured group health plan
A plan in which the employer takes some or all of the risk of paying for the plan’s
covered items and services. Many self-insured plans assume risk for some amount
of claims and then buy stop-loss coverage from a third party to cover losses over a
preset amount or percentage of claims.
Insured group health plans
A plan in which the employer pays the insurer a premium in exchange for the insurer
assuming the risk of the plan’s covered items and services.
Other definitions that may be useful:
Cause of Action
A specific legal claim for which a party seeks compensation.
Damages
For lawsuits, money awarded to one party, based on injury or loss caused by another
party.
Economic damages – damages intended to restore the injured party to the position
they were in prior to the injury. Typically includes medical expenses and lost wages.

CRS-3
Noneconomic damages – damages intended to cover injuries for which an exact
dollar amount cannot be calculated, such as pain and suffering and compensation for
a shortened life expectancy.
Punitive or exemplary damages – damages awarded over and above other
damages, intended to punish a losing party’s willful or malicious misconduct.

CRS-4
Side-by-Side Comparison of S. 1052 and H.R. 2563
S. 1052
Provisions
H.R. 2563
Bipartisan Patient Protection
Bipartisan Patient Protection Act
Act
Bill status
Introduced on June 14, 2001. Passed by the Senate on
Introduced on July 19, 2001. Passed by the House on
June 29, 2001.
August 2, 2001.
Scope
Applicability
Provisions
S. 1052
H.R. 2563
General
Group health plans and health insurance issuers offering
Similar to S. 1052 but does not apply to federal programs
both group health insurance coverage and individual
(although OPM indicates that just as HIPAA requirements
health insurance coverage.
apply to FEHBP, these protections would also apply to
FEHBP). Instead, expresses the sense of Congress that
Applies to state and local government sponsored plans,
the President should require, by Executive Order, that
federal programs, including FEHBP, Medicare, Medicaid,
federal officials with authority over each federal health
SCHIP, Tricare, Indian Health Service, and VA health care.
insurance program, to the extent feasible, take steps to
implement patient rights. Within 1 year after enactment of
this act, GAO shall submit a report to Congress on
statutory changes required to implement such rights.
Interaction with state patient protection laws
In states that provide certification to the Secretary that
Similar to S. 1052 except would not allow state laws
state laws substantially comply with protections created
defining and requiring internal and/or external review
under Title I (includes access to care, internal and external
processes to apply in lieu of the provisions in this bill.
review, access to information and protecting the doctor-
patient relationship), state laws would apply to insured
plans and state and local government plans instead of the
federal protections. “Substantially complies” with respect
to state law means that the state law has the same or
similar features as patient protections requirements and
has a similar effect.
In any case in which the federal law applies to insurers,
the application of state law s within the same subject

CRS-5
Provisions
S. 1052
H.R. 2563
matter are preempted.
Exceptions
The following provisions would not apply to fee-for-
Similar to S. 1052, but adds that rights under this act may
service coverage or limited scope plans: requirements
be waived if there is an agreement providing for arbitration
for consumer choice option, choice of health care
or participation in any other non-judicial procedure to
professional, access to emergency care, specialists,
resolve a dispute. The agreement must: 1) be entered into
OB/GYN and pediatric care, and continuity of care.
knowingly and voluntarily by the parties involved after
the dispute has arisen or, 2) be pursuant to the terms of a
The requirement for a consumer choice option does not
collective bargaining agreement. This exception does not
apply to individual health insurance plans.
permit the waiver of internal and external review
requirements.
Impact of patient protections
No more than 24 months after the effective date and for
Same as S. 1052.
each of 4 succeeding fiscal years, the Institute of
Medicine (IOM) will submit a report concerning the
impact of patients’ rights legislation on the number of
individuals without insurance.
If the Secretary of HHS determines that more than 1
million people lose their coverage as a result of the
legislation, then the act would be repealed.
Access
Access to Obstetric and Gynecologic Care and Pediatric Care
Provisions
S. 1052
H.R. 2563
Ob/Gyn care
Prohibits group health plans or issuers from requiring
Same as S. 1052.
authorization or referral from the primary health care
professional or otherwise for coverage of ob/gyn care
provided by a participating health car e professional,
including a physician who specializes in obstetrics and
gynecology. Requires that the ordering of other ob/gyn
care be treated as authorized by the primary care
professional. Does not preclude the plan or issuer from
requiring that the ob/gyn provider notify the primary care
health care professional, plan, or issuer of treatment
decisions.

CRS-6
Provisions
S. 1052
H.R. 2563
Pediatric care
Allows a participant to designate a physician who
Same as S. 1052.
specializes in pediatrics as a primary care provider for a
child of the participant.
Access to Specialists
Provisions
S. 1052
H.R. 2563
General
Requires plans or issuers to make or provide for timely
Same as S. 1052.
access to an available and accessible specialist with
adequate expertise (including pediatric expertise) for
persons with a condition or disease of sufficient
seriousness and complexity to require treatment by a
specialist. A “specialist” means a practitioner, facility or
center. If conditions merit the use of a non-participating
specialist, services must be provided at no addit ional cost
to the patient (beyond the costs for a participating
specialist).
Persons with an ongoing special condition (which is life-
threatening, degenerative, or disabling AND requires
specialized medical care over a prolonged period of time)
may have their care coordinated and provided by a
specialist for such a condition.
Referrals can be for an appropriate duration of time or
number of referrals, including standing referrals, where
appropriate.
A plan or issuer may require that care be pursuant to a
treatment plan developed by the specialist and approved
by the plan or issuer, in consultation with the designated
primary care provider or specialist, case manager, and the
individual.

CRS-7
Emergency Services
Provisions
S. 1052
H.R. 2563
General
Requires plans that cover emergency medical services to
Same as S. 1052.
cover “emergency services,” wit hout prior authorization
and without regard to network limitations, if a prudent
layperson could reasonably expect the absence of
immediate medical attention to result in serious jeopardy
to the individual’s health.
If a plan covers emergency ambulance service, then those
services must be provided subject to the same terms and
conditions as other emergency services.
Maintenance and post-stabilization care
Requires reimbursement for maintenance care and post-
Same as S. 1052.
stabilization care.
Definition
Defines “emergency services” as a medical screening
Same as S. 1052.
examination and ancillary services to evaluate an
emergency medical condition and such further medical
examination and treatment as required to stabilize the
patient.
Defines “emergency medical condition” as a medical
condition manifesting itself by acute symptoms of
sufficient severity (including severe pain), as determined
by a prudent layperson that could, without medical
attention, reasonably expect to place their health in
serious jeopardy or cause serious impairment or
dysfunction.
Compensation
Prohibits plans or issuers from charging patients more for
Same as S. 1052.
using a non-network provider than would have been
charged if the services were provided in-network.

CRS-8
Continuity of Care
Provisions
S. 1052
H.R. 2563
General
For enrollees who are undergoing a course of treatment
Same as S. 1052.
with a provider at the time of the provider’s contract or a
benefit termination, plans or issuers must continue to
cover treatment for: (1) pregnancy, (2) acute illness
requiring specialized medical treatment to avoid the
reasonable possibility of death or permanent harm, or ( 3)
chronic illness for ongoing special conditions (those that
are life-threatening, degenerative, or disabling AND
require special medical care over a prolonged period of
time).
Plans must notify individuals undergoing an active course
of treatment for a serious and complex condition when
their providers are to be terminated and allow beneficiaries
to elect to continue treatment with the terminated
provider.
Coverage must be continued for up to 90 days, in general,
except for enrollees who are pregnant at the time of
contract termination (coverage through the provision of
postpartum care), terminally ill (coverage for the remainder
of the individual’s life that is directly related to the illness
or its medical manifestations), receiving institutional or
inpatient care (until the earlier of the completion of
reasonable follow-up care after discharge, or 90 days), and
awaiting surgery (until the date of completion of the
surgery and post-surgical follow-up care, within 90 days
after surgery).
Plans may condition such continued coverage by the
provider agreeing to accept the payment rates and cost
sharing amounts established under the prior agreement
and adhering to the plans’ quality standards, policies and
procedures.

CRS-9
Prescription Drugs
Provisions
S. 1052
H.R. 2563
General
Requires plans and issuers that offer prescription drug
Same as S. 1052.
coverage and limit benefits to those included in a
formulary to provide exceptions from the formulary
limitation when a non-formulary alternative is medically
necessary and appropriate. Also requires the plan or
issuer to ensure participation of physicians and
pharmacis ts in the development of the formulary and to
disclose the use of the formulary to providers and
beneficiaries.
Requires that if non-formulary drug is provided, the cost-
sharing requirements are the same as they would be for
formulary drugs.
Also does not allow plan or issuer to deny coverage of
prescription drugs or medical devices on basis that their
use is investigational, as long as the use is included in the
labeling required under federal law.
Clinical Trials
Provisions
S. 1052
H.R. 2563
General
Prohibits plans and issuers from denying, limiting, or
Same as S. 1052.
imposing additional conditions on the participation in and
coverage of routine patient costs (but not including the
cost of the tests or measurements conducted primarily for
the purpose of the clinical trial involved) incurred through
participation in an approved and funded clinical trial for
“qualified individuals.”
Allows the plan or issuer to require the use of a
participating provider, if the provider is participating in
the trial and will accept the individual as a participant.
A qualified individual is a person:
(1) who has a life-threatening or serious illness for which
no standard treatment is effective;
(2) who is eligible to participate in an approved clinical
trial according to the trial protocol;

CRS-10
Provisions
S. 1052
H.R. 2563
(3) whose participation in the trial offers meaningful
potential for significant clinical benefits for the individual;
and
(4) a participating physician concludes, or the individual
establishes, that the individual’s participation in the trial
is appropriate (based on meeting conditions (1)-(3)).
Approved clinical trials are those approved and funded by
the National Ins titutes of Health (NIH), and/or a
cooperative group or center of the NIH, a peer reviewed
study or investigation of the Department of Veteran’s
Affairs or the Department of Defense, or those approved
by the Food and Drug Administration.
Choice of Plans and Providers
Provisions
S. 1052
H.R. 2563
Access to point-of-service (POS) option
Requires group health plans or health insurance issuers
Same as S. 1052.
(providing coverage in connection with a group health
plan) that offer a restricted provider network, to make a
non-network option available for enrollees to purchase
during an annual open enrollment period.
Does not require a non-network option if an individual is
given a choice of non- network coverage through another
group health plan or through another insurance issuer in
the group market.
Choice of providers
Requires group health plans and issuers to allow enrollees
Same as S. 1052.
to designate as their primary care provider any primary
care provider who participates in the plan and is available.
Pursuant to appropriate referral procedures, requires
group health plans and issuers to allow enrollees to
receive medically necessary sp ecialty care from any
participating specialty provider who is available. (Does
not pre-empt plans from imposing limitations on the
choice of participating health care providers for such
specialty care, as long as enrollees are clearly informed.)

CRS-11
Breast Cancer Treatment
Provisions
S. 1052
H.R. 2563
General
Requires plans or issuers to ensure inpatient coverage for
Same as S. 1052.
the surgical treatment of breast cancer (including a
mastectomy, lumpectomy, or lymph node dissections) for
a period of time as determined to be medically appropriate
by the attending physician, in consultation with the
patient. Prohibits the use of specified incentives to avoid
compliance with mandate.
A group health plan or issuer that provides coverage for
medical and surgical services in relation to the diagnosis
and treatment of cancer shall ensure that full coverage is
provided for secondary consultations by specialists in
appropriate medical fields to confirm or refute a diagnosis.
This must be provided outside of the network if the
attending physician certifies that necessary services for
the second opinion are not sufficiently available within
the plan.

CRS-12
Genetic Information and Services
Provisions
S. 1052
H.R. 2563
Nondiscrimination based on predictive genetic
Prohibits health plans or health insurance issuers, in both
No provision.
information
group and individual markets, from: 1) establishing rules
for eligibility (including continued eligibility) for any
individual based on genetic information of that individual
or their dependent, 2) denying eligibility or adjusting
premium or contribution rates on the basis of predictive
genetic information for an individual or their family
member, and 3) requesting or requiring that an individual
or their family members provide predictive genetic
information.
Allows plans or issuers to request (but not require) that an
individual or their dependent disclose or authorize the
collection or disclosure of predictive genetic information
for diagnosis, treatment, or payment relating to health care
services provided for that person.
Requires plans to provide notice of confidentiality
safeguards when requesting such information, to post or
provide notice of confidentiality practices and to have
safeguards in place with respect to predictive genetic
information.
Would not supersede state laws that more completely
protect the privacy of an individual or family member with
respect to genetic information.

CRS-13
Disclosure
Information Disclosure
Provisions
S. 1052
H.R. 2563
Who provides information? How often? To whom?
Requires group health plans and health insurance issuers
Same as S. 1052.
to provide information in an accessible medium and
understandable format to participants and beneficiaries
(jointly for those residing together or separately for those
not residing together):
(1) at the time of initial enrollment and at least annually
thereafter; and
(2) 30 days before any material reduct ion in benefits or
information.
Recipients retain the ongoing right to receive disclosure
in printed form and the information may be provided
through the Internet only if the recipient has affirmatively
consented to the disclosure in this form and is capable of
accessing the information on the Internet at work or home,
and the plan administrator ensures the recipient is
receiving the information.
Information required to be disclosed
C
Benefits including any specific preventive services;
Same as S. 1052.
C
Any in-and out-of-network benefits;
C
Any specific exclusions or express limitation of
benefits in the case of denial of referral under
independent external appeals procedures;
C
Any other benefit limitations/exclusions; including
annual or lifetime limits, monetary limits or limits on
the number of visits, days, or services;
C
Any definition of medical necessity used in
coverage determinations;
C
Any cost-sharing, including for out-of-network
services received from nonparticipating providers or
without prior authorization or pre-certification;
maximum liability of participant, beneficiary, or
enrollee for out-of-pocket expense.
C
Service area and any out-of-area coverage;
C
Information relating to disenrollment;
C
Directory of participating providers with name,
address, and telephone numbers and how to inquire

CRS-14
Provisions
S. 1052
H.R. 2563
whether provider is currently accepting new
patients;
C
Requirements and procedures to be used by
participants, beneficiaries, and enrollees in
selecting, accessing or changing their primary care
provider and any right to select a pediatrician as a
primary care provider;
C
A n y r e q u i r e m e n t s a n d p r o c e d u r e s f o r
preauthorization of health services;
C
Process for determining experimental or
investigational coverage and circumstances under
which treatments are covered;
C
Requirements and procedures for accessing
specialty care and obtaining referrals to
participating and nonparticipating specialists; any
limitations on choice of professionals and right to
timely access to specialists if applicable;
C
Circumstances and conditions under which clinical
trials are covered and the right of “qualified
individuals” to obtain coverage for approved
clinical trials;
C
Any formulary limitations on prescription drugs;
provisions for obtaining on-and off-formulary
medications and any cost-sharing; any rights to
investigational prescription drugs;
C
Summary of rules, procedures, and right to obtain
emergency services under the prudent layperson
standard if applicable, and any educational
information the plan or issuer may provide
regarding appropriate use;
C
Plan or issuer’s rules and procedures pertaining to
claims and appeals; rights to claims and appeals
under this legislation and any additional rights
under ERISA or state law;
C
Any procedures for advance directives and organ
donation decisions;
C
Name, address, and telephone numbers of the plan
administrator and issuer to be used by particip ants,
beneficiaries, and enrollees seeking information or
authorization for services and treatment;

CRS-15
Provisions
S. 1052
H.R. 2563
C
Whether benefits are provided under a contract or
policy of insurance issued by an issuer, or directly
by the plan sponsor who bears the risk;
C
Summary of any translation or interpretation
services for non-English speakers and persons with
communication disabilities and how to access these
services;
C
Any public accreditation information or quality
indicators made available to participants,
beneficiaries, and enrollees by the plan or issuer;
C
Description of any applicable rights under this
legislation including the right to information as
specified in this section;
C
Name and address of designated decision makers
who have assumed liability under ERISA; and
C
Instructions for obtaining additional information
upon request.
Information to be disclosed upon request
C
S t a t e l i c e n s u r e s t a t u s a n d , i f a v a i l a b l e , t h e
Same as S. 1052.
education, training, specialty qualifications or
certifications of participating health care
professionals and facilities;
C
Summary description of methods for compensating
health care professionals and facilities;
C
Information about inclusion of specific prescription
medication in any formulary;
C
Information about utilization review activities; and
C
Aggregate information on the number and
outcomes of external medical reviews.
Civil penalties
No provision.
Same as S. 1052.

CRS-16
Medical Communications (Gag Rule)
Provisions
S. 1052
H.R. 2563
General
Requires that a plan or issuer not prohibit or restrict a
Same as S. 1052.
health care professional from advising a patient about
their health status or medical care or treatment for their
condition or disease, regardless of whether such
treatments are covered under the plan, if the professional
is acting within the lawful scope of practice.
Contract provisions or agreements restricting or
prohibiting medical communication would be considered
null and void.
Other Protections
Provider Provisions
Provisions
S. 1052
H.R. 2563
Provider incentive plans
Prohibits any provider incentive plans (as defined in the
Same as S. 1052, except refers to Medicare section –
Social Security Act under Medicare-1876(i)(8)) that may
1852(j)(4) relating to Medicare+Choice plans.
directly or indirectly have the effect of reducing or limiting
services provided.
Discrimination
Prohibits discrimination with respect to participation or
Same as S. 1052.
indemnification against any provider who is acting
according to license or certification under state law, on the
basis of such license or certification.
Does not require coverage of particular benefits or the
inclusion of every willing provider.
Allows plans to include only those providers that are
necessary to meet the needs of plan or issuer.

CRS-17
Provisions
S. 1052
H.R. 2563
Prompt payment of claims
Requires plans and issuers offering group health
Same as S. 1052.
insurance to provide for prompt payment of claims with
respect to covered benefits.
Protections for Patient Advocacy
Provisions
S. 1052
H.R. 2563
No retaliation
Protects enrollees, beneficiaries, participants and
Same as S. 1052.
providers from retaliation by a plan or issuer for using
appeals and grievance processes.
Quality advocacy
Prohibits a plan or issuer from retaliating against a
Same as S. 1052.
protected health care professional (licensed or certified
health care professional who is an employee or has a
contract with the plan or issuer) who acts in good faith to
participate in an investigation. Specifies requirements for
internal procedures and exceptions and defines terms.
Health Care Consumer Assistance Fund
The Secretary shall establish the Health Care Consumer
Same as S. 1052.
Assistance Fund to be used to award grants to eligible
states to carry out consumer assistance activities
designed to provide information, assistance, and referrals
to consumers of health insurance products.
Appeals Processes
Initial Coverage Determinations and Utilization Review
Provisions
S. 1052
H.R. 2563
Initial claims and utilization review
Requires plans and issuers to conduct utilization review
Same as S. 1052.
activities that:
1.
are consistent with written policies and procedures
using written clinical review criteria based on
clinical evidence and developed with input from a
range of appropriate health care professionals;

CRS-18
Provisions
S. 1052
H.R. 2563
2.
are
administered by qualified health care
professionals who are not compensated in a way
t hat would encourage denials of claims for benefits
nor have a conflict of interest;
3.
make utilization reviewers reasonably accessible via
toll free telephone; and
4.
are not more frequent than reasonably required to
determine whether services are medically necessary
and appropriate.
Definition
“Utilization review activities” are procedures used to
Same as S. 1052.
monitor or evaluate the use, coverage, clinical necessity,
appropriateness, efficacy, or efficiency of health care
services, procedures or settings. Utilization review
includes prospective, concurrent, and retrospective
review, as well as second opinions, case management and
discharge planning.
Prior authorization determination
Requires plans or issuers to make a determination as soon
Same as S. 1052.
as possible in accordance with the medical exigencies of
the case, or within 14 days after receiving necessary
information to make a determination, but in no case later
than 28 days after receiving the initial request for prior
authorization.
Expedited cases
(Cases where delay could seriously jeopardize the life or
Same as S. 1052.
health of the participant, beneficiary, or enrollee or such
an individual’s ability to regain maximum function.)
Requires plans or issuers to make a determination within
72 hours after the request for prior authorization is made.
Specifies that at any time during the process, a request
may be made to expedite the review.
Ongoing care
Requires plans or issuers to make a determination as soon
Same as S. 1052.
as possible with sufficient time prior to the termination or
reduction of care to allow for an appeal.
Previously provided services
A determination must be made within 30 days of receiving
Same as S. 1052.

CRS-19
Provisions
S. 1052
H.R. 2563
the information reasonably necessary to make a decision,
but in no case later than 60 days after the receipt of the
claim for benefits.
Appeals Process — Internal Review
Provisions
S. 1052
H.R. 2563
Requests for review
A participant, beneficiary, or enrollee has at least 180 days
Same as S. 1052.
to request and obtain review.
Decisions that may proceed to internal review
A p a r t i c i p a n t , beneficiary, or enrollee may request an
Same as S. 1052.
internal review if denied a claim. The failure of the plan or
issuer to issue a determination within the applicable
timelines shall be treated as a denial for the purposes of
proceeding to external review.
Who conducts review?
Review is conducted by
Similar to S. 1052, except does not include a specific
(1) an individual with appropriate expertise who was not
requirement for non-physician health care professionals.
involved in the initial determination, and
(2) a physician, with appropriate expertise (including, in
the case of a child, appropriate pediatric expertise) if the
appeal is based on the denial of a claim for a lack of
medical necessity and appropriateness, an experimental or
investigational treatment, or if the case requires evaluating
medical facts, or
(3) at least one non-physician health care professional for
a claim for benefits provided by a non-physician health
care professional.
Timing of review – generally
Review must be completed in accordance with the
Same as S. 1052.
medical exigencies of the case, or within 14 days after the
receipt of necessary information but not later than 28
days after the request for appeal.
Expedited cases
Review must be completed within 72 hours of receiving a
Same as S. 1052.
request for review, and specifies that at any time during
the process, a request may be made to expedite the review.

CRS-20
Provisions
S. 1052
H.R. 2563
Ongoing care
Review must be completed with sufficient time prior to
Same as S. 1052.
termination or reduction of services to allow for external
appeal before termination or reduction of services takes
effect.
Previously provided services
A determination must be made within 30 days of receiving
Same as S. 1052.
information that is reasonably necessary to make a
decision, but in no case later than 60 days after the
request for an appeal.
Interaction with state internal review laws
A l l o w s s u b s t a n t i a l l y similar state laws defining and
State law s defining and requiring internal review would be
requiring internal review to apply in lieu of provisions in
pre-empted by the internal review provisions in this bill.
this bill.

Appeals Process — External Review
Provisions
S. 1052
H.R. 2563
Requests for review
A request for an independent external review shall be filed
Same as S. 1052.
with the plan or issuer no later than 180 days after the
date on which the participant, beneficiary, or enrollee
receives notice of the denial under the internal review
procedures, waiver of internal review by the plan or issuer,
or notification that it has failed to make a timely decision.
A plan or issuer may require a filing fee of up to $25,
unless the individual certifies that he or she is indigent, or
plan or issuer waives internal review. The filing fee shall
be refunded if the recommendation of the external appeal
entity is to reverse or modify the denial of a claim for
benefits.
Criteria for external appeals
A denial for a claim for benefits is eligible for independent
Same as S. 1052.
medical review if the denial:
(1) is based on a decision that the item or service is not
medically necessary or appropriate or is investigational or
experimental; or

CRS-21
Provisions
S. 1052
H.R. 2563
(2) requires a medical judgment to determine whether a
benefit is covered.
Use of external review may be conditioned on a final
decision in an internal appeal, if decision is made on a
timely basis within specified timelines.
External review is not available for denials involving: (1)
decisions that do not involve a medical judgment, (2) a
decision regarding whether or not the individual is
covered under the plan, (3) the application of cost-
sharing requirements for a denial of a claim for benefits, or
(4) the applied or specific exclusion or express limitation
on the amount, duration, or scope of coverage.
Referral to a Qualified External Review Entity
Once request is filed, the plan or issuer shall immediately
Same as S. 1052.
refer such request to a qualified external review entity.
Who selects reviewer?
The applicable authority (depending on the plan type, the
Same as S. 1052.
applicable authority is the state or the Departments of
Labor and Health and Human Services) will implement
procedures to assure that the selection process among
external appeal entities will not create incentives to make
biased decisions and will also audit a sample of claims.
Participants, beneficiaries, enrollees and plan may not
determine or influence the selection of the external appeal
entity.
For health insurance issuers offering health insurance
coverage in a state, the stat e may provide for external
review activities to be conducted by a qualified external
appeal entity that it designates or selects.
Qualifications of external appeal entities
“Qualified external review entities”: 1) must have sufficient
Same as S. 1052.
medical, legal, and other expertise and sufficient staffing;
2) may not be a plan or issuer, 3) may not be an affiliate,
subsidiary or trade association of plans, issuers or health

CRS-22
Provisions
S. 1052
H.R. 2563
care providers; 4) mus t conduct external review consistent
with requirements under the law; 5) must agree to provide
information in a timely manner; and 6) must meet other
requirements imposed by the appropriate Secretary .
Certification of entities or private standard-setting
Certification and recertification shall be made under a
Same as S. 1052.
organizations
process recognized or approved by the appropriate
Secretary, or by a qualified private standard-setting
organization.
The appropriate Secretary may only approve or recognize
those entities that follow review procedures specified in
the law, meet fiscal standards, maintain confidentiality
requirements, and meet standards for recertification.
Qualification of reviewers
Review is conducted by a qualified external review entity
Similar to S. 1052., except: 1) specifies that the external
that shall ensure that each independent medical reviewer
review panel shall consist of three individuals, and 2)
is a physician or health care professional who is
specifies that in the case involving a physician, each
appropriately credentialed or licensed in 1 or more states
member of the external review panel shall be a physician.
to deliver health care services; and typically treats the
condition, makes the diagnosis, or provides the type of
treatment under review.
In a case involving treatment, or the provision of items or
service by a physician, a reviewer shall be a practicing
physician of the same or similar specialty as a physician
who typically treats the condition, makes the diagnosis, or
provides the type of treatment under review.
In a case involving a health care professional (other than
a physician), a reviewer shall include at least one
practicing health care professional, of the same or similar
specialty as the health care professional who typically
treats the condition, makes the diagnosis, or provides the
type of treatment under review.
In the case of an external review relating to a c h i l d , a
reviewer shall have expertise in pediatrics.

CRS-23
Provisions
S. 1052
H.R. 2563
Independence requirements
Each independent medical reviewer shall:
Same as S. 1052.
(1) not be a related party, and
(2) not have a conflict of interest or a mat erial familial,
financial, or professional relationship with a related party.
Standard of review
The reviewer shall consider the following evidence:
Same as S. 1052.
(1) the medical condition of the beneficiary, including the
medical records;
(2) valid relevant scientific evidence and clinical evidence,
including peer-reviewed medical literature or findings and
expert consensus;
(3) the internal review decision and any evidence,
guidelines or rationale used to reach the decision;
(4) recommendation of treating health care professional
and evidence, guidelines, and rationale used in reaching
such recommendation;
(5) additional evidence or information submitted; and
(6) the plan or coverage document.
The reviewer shall consider, but is not bound by, any
language in the plan or coverage document relating to the
definitions of the terms medically necessary and
appropriate, or experimental and investigational, or related
terms.
The review process shall provide for a fair, de novo
determination.
Timing of review — generally
T h e i n d e p e n d e n t m e d i c a l reviewer shall make a
Same as S. 1052.
determinat ion on a denial of a claim for benefits that is
referred to the reviewer in accordance with the medical
exigencies of the case and as soon as possible, but in no
case later than 14 days after the date of receipt of
information necessary to complete the review if the review
involves a prior authorization of items or services and in

CRS-24
Provisions
S. 1052
H.R. 2563
no case later than 21 days after the date the request for
external review is received.
Expedited cases
A determination must be made within 72 hours after
Same as S. 1052.
receiving the request for external review and specifies
that at any time during the process, a request may be
made to expedite the review.
Ongoing care
Determinations must be completed within 24 hours after
Same as S. 1052.
receiving the request for external review and before the
end of the approved period of care.
Previously provided services
A determination must be made within 30 days of receiving
Same as S. 1052.
all of the information reasonably necessary to make a
decision, but in no case later than 60 days after the receipt
of the claim for benefits.

CRS-25
Provisions
S. 1052
H.R. 2563
Binding decisions
The decision of the external appeal entity is binding on
Same as S. 1052.
the plan and issuer involved in the determination.
Civil penalties/enforcement
A court of competent jurisdiction may order a civil penalty
Same as S. 1052.
of up to $1,000 a day from the date on which a
determination was transmitted to the plan or issuer, if the
determination is not followed.
In any case in which treatment was not commenced by the
plan in accordance with the determination of an
independent external reviewer, the Secretary shall assess
a civil penalty of $10,000 against the plan and the plan
shall pay such penalty to the participant, beneficiary, or
enrollee involved.
The court shall also issue an order requiring the person
responsible for authorizing the benefit to cease and desist
from failing to act in accordance with the determination.
This order shall also compel the payment of attorney’s
fees.
The appropriate Secretary may also assess a civil penalty
for any pattern or practice of repeated refusals to
authorize benefits after external review, or any pattern or
practice of repeated violations of the requirements of the
external review process. The penalty shall be payable
only upon proof of clear and convincing evidence of such
pattern or practice and shall not exceed the lesser of (1)
25% of the aggregate value of the benefits that have not
been provided or have been unlawfully delayed; or (2)
$500,000.
The appropriate Secretary may petition for the removal of
any person with the capacity to authorize benefits who
has engaged in such pattern or practice.

CRS-26
Provisions
S. 1052
H.R. 2563
Termination of review process
No provision.
Same as S. 1052.
Interaction with state external review laws
A l l o w s s u b s t a n t i a l l y similar state laws defining and
State laws defining and requiring external review would be
requiring external review to apply in lieu of provisions in
pre-empted by the internal review provisions in this bill.
this bill.
Study
Twelve months after the effective date of this act the
Same as S. 1052.
General Accounting Office shall submit a report to
Congress containing a summary of information provided
by external appeals entities, the number of denials upheld
and reversed, and the extent to which independent review
required coverage for benefits specifically excluded.
Medical Necessity Determinations
Provisions
S. 1052
H.R. 2563
General
External appeal entity shall consider, but is not bound by
Same as S. 1052.
any language in the plan or coverage document relating to
the definitions of the terms medical necessity, medically
necessary or appropriate, or experimental, investigational,
or related terms.
ERISA Preemption and Access to State Law
Provisions
S. 1052
H.R. 2563
Jurisdiction
Amends ERISA to allow state law causes of action and to
Amends ERISA to expand federal law causes of action.
expand federal law causes of action for denials of benefits,
Allows state courts to have concurrent jurisdiction over
depending on the claim. State law causes of action would
these claims, which means that state courts could hear
involve medically reviewable decisions and federal law
those claims, the federal law would apply, but the state
causes of action would involve denials of claims, not
courts’ procedural rules could be used to process those
based upon medically reviewable decisions.
claims.
Federal law claims
Amends ERISA to create a cause of action in a case in
Amends ERISA to create a cause of action in cases where
which a person who is a fiduciary of a group health plan,
a group health plan’s designated decision maker fails to
a health insurance issuer offering health insurance
exercise ordinary care
coverage in connection with the plan, or an agent of the

CRS-27
Provisions
S. 1052
H.R. 2563
plan, issuer, or plan sponsor, upon consideration of a
1) in making a determination denying the initial claim
claim for benefits of a participant or beneficiary or upon
for benefits,
review of a denial of such a claim, fails to exercise ordinary
care:
2) in making a determination denying the claim for
benefits during the internal review process, or
1) in making a decision regarding whether an item or
service is covered under the terms and conditions of the
3) in failing to authorize coverage in compliance with
plan or coverage,
the written determination of an independent medical

reviewer that reverses a determination denying the claim
2) regarding whether an individual is a participant or
for benefits,
beneficiary who is enrolled under the terms and
conditions of the plan or coverage, or
and the delay in receiving, or failure to receive, benefits
attributable to the failure to exercise ordinary care is the
3) as to the application of cost-sharing requirements or
proximate cause of personal injury to, or death of, the
the application of a specific exclusion or express limitation
participant or beneficiary.
on the amount, duration, or scope of coverage of items or
services under the terms and conditions of the plan or
coverage,
and such failure is a proximate cause of personal injury to,
or the death of, the participant or beneficiary. The cause
of action must not involve a medically reviewable
decision.
“Medically reviewable” decisions
Defines medically reviewable decisions are those related
Same as S. 1052.
to denials for an item or service that would be a covered
benefit under the terms and conditions of the plan but is
found to: (a) not be medically necessary and appropriate,
(b) be experimental or investigational, or (c) require an
evaluation of the medical facts by a health care
professional in the specific case involved to determine the
coverage and extent of coverage of the item or service or
condition.
Damages – federal law claims
Under the federal claim, the defendant shall be liable to the
The designated decision maker shall be liable to the
participant or beneficiary for economic and noneconomic
participant or beneficiary for economic and noneconomic
damages (but not exemplary or punitive damages) in
damages. Noneconomic damages may not exceed

CRS-28
Provisions
S. 1052
H.R. 2563
connection with such personal injury or deat h . I n
$1,500,000. Punitive damages not to exceed $1,500,000
addition, a civil assessment, in an amount not to exceed
may be awarded if the denial of a claim for benefits was
$5,000,000, payable to the claimant may be awarded in any
reversed by an independent medical reviewer and there
action if the claimant establishes by clear and convincing
has been a failure to authorize coverage in compliance
evidence that the alleged conduct carried out by the
with such determination.
defendant demonstrated bad faith and flagrant disregard
for the rights of the participant or beneficiary under the
plan and was a proximate cause of the personal injury or
death that is the subject of the claim.
State law claims
Permits causes of action under state law relating to benefit
Does not allow stat e law claims based on benefits denials.
determinations: a cause of action under state law by a
Nothing in this bill would affect causes of action under
p articipant or beneficiary under a group health plan to
state law related to delivery medical care.
recover damages resulting from personal injury or for
wrongful death against any person would not be
State courts would have concurrent jurisdiction over
preempted if such a cause of action arises by reason of a
claims under this new federal cause of action, which
medically reviewable decision. Nothing in this bill would
means that state courts could hear those claims, the
affect causes of action under state law related to the
federal law would apply, but the state courts’ procedural
p ractice of medicine or the provision of or the failur e t o
rules could be used to process those claims.
provide medical care.
Damages – state law claims
State law is superseded insofar as it provides any
For federal law claims heard in state courts, a state may
punitive, exemplary, or similar damages if, as of the time of
limit damages for noneconomic loss or punitive,
the personal injury or death, all of the requirements
exemplary, or similar damages to amounts less than the
relating to procedures for initial claims for benefits and
amounts permitted by the legislation.
prior authorization determinat ions, internal appeals of
claims denials, and independent external appeals were met.
However, state law is not superseded with respect to an
action for wrongful death if the applicable state law
provides for damages in such an action which are only
punitive or exemplary in nature, or where in any action the
plaintiff establishes by clear and convincing evidence that
conduct carried out by the defendant with willful or
wanton disregard for the rights or safety of others was the
proximate cause of the personal injury or wrongful death
that is the subject of the action.

CRS-29
Provisions
S. 1052
H.R. 2563
Liability of employers and plans sponsors
Does not authorize a cause of action against an employer
Provides for the appointment of a designated decision
or plan sponsor (or against an employee of such an
maker for liability purposes.
employer or sponsor acting within the scope of
employment) unless there was direct participation by the
employer or plan sponsor in the decision of the plan upon
consideration of a claim for benefits or upon review of a
denial of a claim for benefits, or there was direct
participation by the employer or plan sponsor in the
failure to exercise ordinary care.
In any case in which there is a designated decision maker,
all liability of such employer or plan sponsor would be
transferred to, and assumed by, the designated decision
maker.
Prohibits any federal cause of action against a group
health plan that is self-insured and self-administered by
either 1) an employer or 2) a multi-employer plan, for the
performance of, or the failure to perform, any non-
medically reviewable duty under the plan.

CRS-30
Provisions
S. 1052
H.R. 2563
Exhaustion of internal and external review
A cause of action may not be brought in connection with
A cause of action may only be brought if a final
any denial of a claim for benefits of any individual until all
determination denying a claim for benefits has been
administrative processes have been exhausted.
referred for independent medical review and a written
determination by an independent medical reviewer has
A participant or beneficiary may seek injunctive relief prior
been issued with respect to such review, or the qualified
to the exhaustion of administrative remedies if it is
external review entity has determined that a referral to
demonstrated to the court that the exhaustion of such
an independent medical reviewer is not required.
remedies would cause irreparable harm to the health of the
participant or beneficiary.
A participant or beneficiary may seek injunctive relief
prior to the exhaustion of administrative remedies if it is
A state-law cause of action can be brought prior to the
demonstrated to the court, by a preponderance of the
exhaustion of administrative remedies if the external
evidence, that exhaustion of such remedies would cause
review entity fails to make a determination within the
irreparable harm to the health of the participant or
specified timeline.
beneficiary.
Limitations on class actions
For federal law claims, class action lawsuits may be
No class action lawsuits allowed for the new federal law
maintained only if the class is limited to the participants or
claims.
beneficiaries of a group health plan established by only
one plan sponsor.
Physician Liability
No treating physician or other treating health care
A treating physician who directly delivered the care,
professional of the participant or beneficiary, and no
treatment, or provided the patient service that is the
person acting under the direction of such a physician or
subject of a cause of action by a participant or
health care professional, shall be liable for the
beneficiary may not be designated as designated
performance of, or the failure to perform, any non-
decision maker for liability purposes.
medically reviewable duty of the plan, the plan sponsor,
or any health insurance issuer offering health insurance
coverage in connection with the plan.
Additionally, a treating physician who directly delivered
the care or treatment, or provided the patient service, that
is the subject of a cause of action by a participant or
beneficiary may not be designated as designated decision
maker for liability purposes.
Limitation on Attorneys’ Fees
The amount of an attorney’s contingency fee allowable
No provision.
shall not exceed 1/3 of the total amount of the plaintiff’s
recovery, not including the reimbursement of actual out-
of-pocket expenses of the attorney.a

CRS-31
Market Reform And Insurance Affordability
Association Health Plans
Provisions
S. 1052
H.R. 2563
Eligibility requirements
No provision.
Establishes that an association health plan (AHP) is a
group health plan offered by an association that has
been in existence for at least 3 years, operates for
substantial purposes other than that of providing
health insurance or coverage, and is operated by a
board of trustees with complete fiscal control and
responsibility for all operations. AHPs may include a
collectively bargained multi-employer plan or a group
health plan established and maintained by a franchiser
for its franchisees.
A church plan is also eligible to elect AHP status if it
complies with fiduciary, reporting, and actuarial
standards.

To be certified, a self-insured AHP must have at least
1,000 participants and beneficiaries. The self-insured
AHP must have also offered coverage on the date of
enactment or represent a broad cross-section of trades
or represent one or more trades (as listed in the bill) that
have average or above health insurance risk.
Participation and coverage
No provision.
Requires that all employers participating in the AHP be
members or affiliated members of the sponsor. All
individuals under the plan must be active or retired
employees, owners, officers, directors, partners, or their
beneficiaries. This applies to partnerships and self-
employed individuals. For plans which were in
existence on the date of enactment, no unaffiliated
employer may participate unless they were affiliated on
the date of certification or did not maintain or
contribute to a group health plan for the previous 12-
month period.

CRS-32
Provisions
S. 1052
H.R. 2563
Prohibits discrimination by requiring that all employers
who are association members be eligible for
participation, all geographically available coverage
options are made available upon request to eligible
employers, and eligible individuals not be excluded
from enrolling because of health status. Premium
contribution rates for any particular small employer
cannot be based on the health status or claims
experience of plan participants or beneficiaries or on the
type of business or industry in which the employer is
engaged.
Both health insurance coverage and any self-insured
benefit options must be distributed by state-licensed
health insurance agents.
Reserve requirements and provisions for solvency
No provision.
Reserves for AHPs which offer benefit options that are
not fully-insured must be sufficient for unearned
contributions, benefit liabilities, expected administrative
costs, any other obligations and a margin for error
recommended by the plan’s qualified actuary. AHPs
must also obtain aggregate and specific stop-loss
insurance; indemnification insurance for any claims the
plan is unable to satisfy if the plan is terminated; and
must also make annual payments to an Association
Health Plan Fund to guarantee that indemnification
insurance is always available. The plan must maintain
minimum surplus of at least $500,000 or an larger
amount as set for in regulations. If an AHP is unable to
provide benefits when due or is otherwise in a
financially hazardous condition, the Secretary of Labor
is required to act as a trustee to administer the plan for
the duration of the insolvency. A certified AHP may
terminate only if the trustees provide 60 days advance
written notice to participants and beneficiaries and
submit a plan for timely payment of all benefit
obligations. A Solvency Standards Working Group is
to be established within 90 days after enactment to

CRS-33
Provisions
S. 1052
H.R. 2563
recommend initial regulations. Establishes an
“Association Health Plan Fund”from which the
Secretary of Labor (or applicable authority) would make
(or authorize to the Secretary of Labor) payments to
ensure continues benefits on behalf of AHPs in
distress. Would be funded by annual payments made
by AHPs.
ERISA preemption
No provision.
Establishes that certified AHPs are exempt from state
benefit mandates, except that AHPs must comply with
any federal or state laws that require coverage of
specific diseases, maternal and newborn
hospitalization, and mental health. Clarifies that states
may regulate self-insured multiple employer welfare
arrangements providing medical care which do not elect
to meet the certification requirements for AHPs.
Enforcement
No provision.
Requires states to certify and enforce the provisions
applicable to AHPs; failing to enter into an agreement
to do so, the applicable authority is the Department of
Labor. Provides for criminal penalties for willful
misrepresentation as an exempt AHP or collectively
bargained status; provides for cease activity orders;
and establishes the responsibility of the board of
trustees for meeting required claims procedures.
The Secretary of Labor is required to report to
Congress no later than January 1, 2006 on the effect of
AHPs on reducing the number of uninsured
individuals.
a The limitations on attorneys’ fees shall not apply with respect to a cause of action brought under state law in a state that has a law or framework of laws with respect
to the amount of an attorney’s contingency fee that may be incurred for the representation of a participant or beneficiary who brings such a cause of action.