Pending Patient Protection Legislation A Comparative Analysis of Key by uav72690

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									   Pending Patient Protection Legislation:

  A Comparative Analysis of Key Provisions
of the House and Senate Versions of H.R. 2990



         Prepared for the Kaiser Family Foundation by:


                  Phyllis C. Borzi, J.D., M.A.
                      Research Professor
            Health Services Management and Policy

                              and

                     Sara Rosenbaum, J.D.
    Harold and Jane Hirsh Professor of Health Law and Policy

        Center for Health Services Research and Policy
          School of Public Health and Health Services
       The George Washington University Medical Center


                          March 2000
                                                                  TABLE OF CONTENTS

OVERVIEW OF LEGISLATIVE PROPOSALS FOR PATIENT PROTECTION ...........................................................................1


DETAILED COMPARISON OF KEY PROVISIONS OF HOUSE AND SENATE VERSIONS OF H.R. 2990 ...................5

       I.      APPLICABILITY OF PROVISIONS.................................................................................................................5

       II.     PATIENT PROTECTIONS ..................................................................................................................................5
               A. Point-of-Service (POS) Requirement.................................................................................................................5
               B. Choice of Medical Provider ...............................................................................................................................6
               C. Access to Emergency Care.................................................................................................................................6
               D. Access to Specialty Care ....................................................................................................................................6
               E. Access to Obstetrical and Gynecological Care ..................................................................................................7
               F. Access to Pediatric Care.....................................................................................................................................7
               G. Continuity of Care..............................................................................................................................................7
               H. Access to Prescription Drugs .............................................................................................................................8
               I. Clinical Trials.....................................................................................................................................................8
               J. Access to Information ........................................................................................................................................9
               K. Information About Providers .............................................................................................................................9
               L. Interference with Medical Communications (“Gag Clauses”)......................................................................... 10
               M. Discrimination Against Providers Based on Licensure.................................................................................... 10
               N. Physician Incentive Plans................................................................................................................................. 10
               O. Prompt Payment of Claims .............................................................................................................................. 10
               P. Protection for Patient Advocacy (“Whistleblower Provisions”)...................................................................... 10
               Q. Behavioral Health Services .............................................................................................................................. 11
               R. Minimum Hospital Stays for Mastectomies..................................................................................................... 11
               S. Genetic Information ......................................................................................................................................... 12
               T. Other Limitations and Exclusions .................................................................................................................... 12
               U. Effective Dates for Key Provisions.................................................................................................................. 13
           III.       BENEFIT CLAIMS AND APPEALS PROCEDURES .....................................................................................................14
                      A. Utilization Review............................................................................................................................................ 14
                      B. Internal Plan Appeals ....................................................................................................................................... 16
                      C. Independent External Review .......................................................................................................................... 18
                      D. Grievances........................................................................................................................................................ 24
                      E. Effective Date................................................................................................................................................... 24

           IV.        ERISA PREEMPTION AND PLAN LIABILITY...............................................................................................................25
                      A. Applicability of State Law Regarding Patient Protections............................................................................... 25
                      B. Plan Liability (ERISA Preemption of State Remedies) ................................................................................... 25

           V.         OTHER PROVISIONS ...................................................................................................................................................................27
                      A. Association Health Plans (AHPs) .................................................................................................................... 27
                      B. Church Plans .................................................................................................................................................... 28
                      C. HealthMarts...................................................................................................................................................... 28

           VI.        ENFORCEMENT .............................................................................................................................................................................30


DEFINITIONS AND ACRONYMS .......................................................................................................................................................................32
           OVERVIEW OF LEGISLATIVE PROPOSALS FOR PATIENT PROTECTION
Background

During the 1999 legislative year, both the U.S. House of Representatives and the U.S. Senate passed legislation addressing patient
protections under health care plans.1

The stage is now set for the Conference Committee to reconcile the bills in 2000, during the last year of the 106th Congress. Although
the bills take widely divergent approaches to many issues, several core themes have emerged. The purpose of this side-by-side
comparison is to assist policymakers and other interested parties by highlighting key similarities and differences between the bills in
four general areas: patient protections, benefit claims and appeals procedures, the effect on state laws resulting from enactment of new
Federal standards (“ERISA preemption”) and health plan accountability (including expanded patients’ rights to sue and remedies), and
other miscellaneous provisions (including those relating to HealthMarts and Association Health Plans).

The substantive areas of patient protection addressed by the bills are similar: for example, improving access to emergency room
treatment under a prudent layperson standard, assuring access to specialty care (including pediatric, obstretrical and gynecological
care), providing continuity of care for enrollees undergoing treatment when their treating providers are dropped from the health plan’s
network, precluding so-called “gag clauses,” and improving patient access to information.

In addition, both bills provide for a revamped internal plan review system for disputed benefit claims and a new right to independent
external review of plan decisions. Both the new internal and external review systems establish shorter time-frames for responding to
requests for preauthorization as well as special expedited procedures for responding to urgent treatment requests.

1
  On July 15, 1999, the Senate passed the Patients’ Bill of Rights Plus Act, S. 1344, as amended by the Lott/Nickles Amendment No. 1254. On October 6, 1999,
the House passed H.R. 2990, which incorporated both the provisions of the original H.R. 2990, the Quality Care for the Uninsured Act of 1999 (the Talent bill),
and H.R. 2723, the Bipartisan Consensus Managed Care Improvement Act of 1999 (the Norwood/Dingell bill). The Senate substituted the text of S. 1344 for the
House-passed bill on October 14, 1999 and subsequently appointed conferees. House conferees were appointed on November 3, 1999. Both bills are now
designated as H.R. 2990 and can be downloaded from Congress’ website: http://thomas.loc.gov. Finding the correct text can be somewhat confusing. The
House-passed bill is the H.R.2990.RDS version, and the Senate-passed bill is the H.R. 2990.EAS version. Another source of confusion is the fact that the House
combined two very different bills into a single piece of legislation. The Quality Care for the Uninsured Act of 1999 is called “Division A” of H.R. 2990, and the
Bipartisan Consensus Managed Care Improvement Act of 1999 is labeled “Division B.” As noted later in this document, the Senate version of the bill contains no
corresponding provisions to Division A of the House bill.




                                                                             1
Despite these similarities in subject matter, however, the details with respect to each subject need to be carefully examined, since they
vary considerably and could have fairly dramatic differences in effect.

In broad terms, the two most significant differences between the House and Senate versions of H.R. 2990 are the number of people
that would be covered by the reforms (and the corresponding laws that are amended to achieve that coverage) and the approach to the
question of expanded health plan liability.

Senate Bill

As a threshold coverage matter, the Senate version of H.R. 2990 is more limited in scope than the House version because most of its
protections apply only to the 48 million people in “self-insured” employer-sponsored group health plans subject to ERISA (the
Employee Retirement Income Security Act of 1974). According to its sponsors, the Senate bill focuses on these plans because they
are outside of the reach of state insurance regulation since benefits are not provided through state-regulated issuers. But by limiting its
scope to this narrow group of plans and ignoring fully insured ERISA plans, non-ERISA group health plans (including governmental
and church plans), and individual insurance arrangements, the Senate bill’s provisions only reach about a third of the number of
Americans protected by the House bill. In imposing new patient protections, the Senate bill amends Title I of ERISA, with some
conforming amendments to the Internal Revenue Code.

As previously noted, the patient protection provisions in the Senate bill generally apply only to non-fully insured group health plans
covered by the Employee Retirement Income Security Act of 1974 (ERISA). These plans are referred to in this document as “self-
insured ERISA plans.” A description of ERISA and its reach is provided in the section on “Definitions and Acronyms” at the end of
this document.

Through amendments to Title I of ERISA, the benefit claims and appeals procedures in the Senate bill apply to all ERISA group
health plans, both insured and self-insured.

Certain other provisions (such as the provisions regarding breast cancer treatment and genetic information and services) are applicable
to all group health plans (including insured and self-insured ERISA plans and non-ERISA plans such as governmental plans and
church plans) and to health insurance issuers offering coverage in connection with group health plans. Thus these provisions amend




                                                                   2
Title I of ERISA (with conforming amendments to the Internal Revenue Code) and the Public Health Service Act (to impose the
requirements directly on health insurance issuers).

In a few rare instances, the provisions of the Senate bill also apply to health insurance issuers in the individual marketplace (for
example, the mandates associated with breast cancer treatment are applicable to individual insurance contracts as well as to benefits
provided under group health plans).

To avoid confusing the reader, the scope of coverage is indicated on a provision-by-provision basis for the Senate bill in this
document.

House Bill

In contrast, the provisions in the House bill are generally applicable to all group health plans (including uninsured and self-insured
ERISA plans and non-ERISA plans such as governmental plans and church plans) and to health insurance issuers offering coverage in
connection with group health plans. The rules also apply to health insurance issuers offering individual coverage. Thus, the total
number of people protected by the House bill is approximately 161 million people. To apply the rules across the board to all entities
providing health insurance, the House bill is drafted as a series of freestanding requirements that are ultimately incorporated into Title
I of ERISA (with certain conforming amendments to the Internal Revenue Code) and the Public Health Service Act through a single
amendment to each law incorporating by reference all of the new protections, rather than a series of individual amendments to each
law.

In addition, the House bill amends Title I of ERISA to expand the current right to sue and the remedies available for participants in
ERISA-covered plans (both fully insured and self-insured) by permitting injured participants to recover damages under state personal
injury or wrongful death laws in certain circumstances after all applicable administrative appeals, both internal and external, have been
exhausted. Punitive damages would be available under state law only if the group health plan or health insurance issuer had not
complied with the decision of the external reviewer. The Senate bill does not provide for any expansions of the right to sue or
remedies available to injured participants.




                                                                  3
This side-by-side comparison includes both the applicable section number in each version of the bill and, in the case of the Senate bill,
the new ERISA section the bill would create.

In addition to the basic provisions regarding patient protections, benefit claims and appeals, and plan accountability that are contained
in both bills, each bill contains a substantial number of other miscellaneous provisions, often unique to each chamber, including a
series of tax provisions implemented through applicable amendments to the Internal Revenue Code.

Many of the tax provisions of H.R. 2990 were also included in H.R. 2488, the Taxpayer Refund and Relief Act of 1999 (the tax bill
that was vetoed by President Clinton in September, 1999). Some are also contained in H.R. 3081, the Wage and Employment Growth
Act of 1999, which was approved by the House Ways and Means Committee and cleared for House action on January 28, 2000.
Although keeping track of these provisions may be perplexing, it is not uncommon for proponents of controversial measures to use
alternative legislative vehicles to attempt to assure their enactment.

The tax provisions contained in H.R. 2990 are not discussed in this document, but a recent Kaiser Family Foundation publication
contains a side-by-side comparison of many of them (“Recent Tax Proposals To Increase Health Insurance Coverage,” prepared by
Randall Weiss and Mark Garay of Deloitte & Touche LLP, January 2000).

Finally, to assist the reader, a section on “Definitions and Acronyms” is included at the end of the document.




                                                                  4
DETAILED COMPARISON OF KEY PROVISIONS OF HOUSE AND SENATE VERSIONS
                            OF H.R. 2990


                PROVISIONS                                   HOUSE BILL                                                SENATE BILL
I. APPLICABILITY OF PROVISIONS          Provisions apply to:                                          Except as specifically noted, provisions apply
                                        • all ERISA-covered group health plans (both insured          only to ERISA-covered group health plans
                                            and self-insured),                                        (other than fully insured plans). For purposes of
                                        • all group health plans maintained by state and local        this document, these plans are referred to as
                                            governments for their employees (Note: self-insured       “self-insured ERISA plans.”
                                            non-federal governmental plans cannot opt out of the
                                            new provisions as they can under HIPAA),
                                        • all health insurance issuers (e.g., insurers and
                                            HMOs) offering coverage in connection with group
                                            health plans, and
                                        • all issuers offering coverage in the individual
                                            marketplace


II. PATIENT PROTECTIONS
A. Point-of-Service (POS) Requirement   •   This rule is not applicable to fee-for-service coverage   •   Generally self-insured ERISA plans that
                                            offered by plans or issuers                                   cover specified benefits only through a
                                        •   If group coverage is provided only through a plan or          network of participating providers must
                                            issuer that requires enrollees to use network                 offer enrollees the option to purchase POS
                                            providers, enrollees must have the option to purchase         coverage for those benefits
                                            POS coverage                                              •   Plans are exempt from this requirement if:
                                        •   Enrollees exercising POS option must pay any                  (1) POS coverage is unavailable or
                                            additional premium cost (§1111)                               inaccessible, or (2) the group health plan is
                                                                                                          sponsored by a small employer (one with an
                                                                                                          average of at least 2 but not more than 50
                                                                                                          employees on business days during the
                                                                                                          preceding calendar year and who employs
                                                                                                          at least 2 employees on the first day of the
                                                                                                          plan year) (§101, new ERISA §722)




                                                               5
                PROVISIONS                             HOUSE BILL                                              SENATE BILL
B. Choice of Medical Provider   •   This rule is not applicable to fee-for-service coverage    No provision
                                    offered by plans or issuers
                                •   Plans and issuers must permit enrollees access to any
                                    available primary care provider (PCP)
                                •   Similarly, enrollees needing specialty care must be
                                    generally permitted to select any available specialist,
                                    unless enrollees have been informed of any plan
                                    selection restrictions in advance (§1112)
C. Access to Emergency Care     •   This rule is not applicable to fee-for-service coverage    Similar to House bill, except that:
                                    offered by plans or issuers                                • provision applies only to self-insured
                                •   Plans and issuers cannot require prior authorization           ERISA plans
                                    for emergency services (including medical screening,       • emergency medical services include both
                                    treatment and stabilization) in hospital emergency             inpatient and outpatient care (including
                                    room nor can they require that emergency services be           emergency ambulance services)
                                    provided by network providers                              • services limited to those needed to evaluate
                                •   If emergency services are received from non-network            or stabilize the patient
                                    providers, enrollees cannot be required to pay more        • nonparticipating providers must obtain
                                    than if they were provided by a network provider               preauthorization for stabilization services
                                •   “Emergency medical conditions” are those that                  but if the plan fails to respond to the
                                    manifest themselves by “acute symptoms of                      provider’s request within 1 hour, the plan is
                                    sufficient severity (including severe pain), such that a       liable for stabilization services
                                    prudent layperson who possesses an average                 • enrollees receiving emergency services
                                    knowledge of health and medicine could reasonably              from nonparticipating providers cannot be
                                    expect the absence of immediate medical attention to           billed more than if services were received
                                    result in placing the health of the individual, pregnant       from a participating provider (§101, new
                                    woman or unborn child in serious jeopardy, serious             ERISA §721)
                                    impairment to bodily functions, or serious
                                    dysfunction of any bodily part or organ” (§1113)
D. Access to Specialty Care     •   This rule is not applicable to fee-for-service coverage    •   Provision applies only to self-insured
                                    offered by plans or issuers                                    ERISA plans
                                •   Plans and issuers must provide appropriate referrals       •   Plans are required to provide timely access
                                    for specialty care, but may require that such                  to PCPs and specialists, as appropriate to
                                    treatment be pursuant to a treatment plan                      enrollee’s medical condition
                                •   Plans and issuers are not required to provide referrals    •   Access to these providers can be through
                                    to non-network specialists unless appropriate                  the network or out-of-network
                                    specialists are not available within the network           •   Plans may require coverage of particular
                                •   If referral is made to non-network specialist, enrollee        benefits pursuant to a treatment plan
                                    cannot be required to pay more than if the treatment           (similar to House bill)
                                    were provided by a network specialist                      •   Plans can require enrollee to obtain referrals
                                •   Plans and issuers must have a procedure to allow               for specialty care as long as authorization is


                                                       6
                 PROVISIONS                                              HOUSE BILL                                             SENATE BILL
                                                      specialists as gatekeepers for enrollees with “ongoing         for an adequate number of referrals (§101,
                                                      special conditions” and to allow for standing referrals        new ERISA §725)
                                                      to specialists for enrollees requiring ongoing care
                                                      (§1114)
E. Access to Obstetrical and Gynecological Care   •   Plans and issuers cannot require referrals from PCPs       •   Provision applies only to self-insured
                                                      for ob/gyn care (§1115)                                        ERISA plans
                                                  •   This rule is not applicable to fee-for-service coverage    • If the plan does not permit an ob/gyn to be a
                                                      offered by plans or issuers                                    PCP and requires referrals for specialty
                                                                                                                     care, referral is waived for a female enrollee
                                                                                                                     seeking medically necessary obstetrical
                                                                                                                     care, related follow-up obstetrical care or
                                                                                                                     routine gynecological care (including
                                                                                                                     preventive care) (§101, new ERISA §723)
F. Access to Pediatric Care                       •   Pediatricians must be allowed to serve as PCPs for         • Provision applies only to self-insured
                                                      children (§1116)                                               ERISA plans
                                                  •   This rule is not applicable to fee-for-service coverage    • If a child’s PCP is not a pediatrician, the
                                                      offered by plans or issuers                                    plan may not require a referral to obtain
                                                                                                                     coverage for routine pediatric care from a
                                                                                                                     pediatric specialist (§101, new ERISA
                                                                                                                     §724)
G. Continuity of Care                             •   This rule is not applicable to fee-for-service coverage    Similar to the House bill, except:
                                                      offered by plans or issuers                                • Provision only applies to self-insured
                                                  •   Plans and issuers who terminate the contract of an             ERISA plans
                                                      individual provider, or terminate the contract of a        • Provision only applies to 3 situations: (1)
                                                      health network through which the provider’s services           institutional care, including previously
                                                      were obtained by the enrollee, must permit enrollees           scheduled institutionalization (transition
                                                      undergoing treatment for ongoing special conditions            period runs to date of discharge); (2) 2nd
                                                      or pregnancy to continue coverage with those                   trimester of pregnancy (transition period
                                                      providers during a specified transitional period               runs through provision of post-partum care
                                                      (generally 90 days or through the post-partum period           directly related to delivery); and (3)
                                                      for pregnancy)                                                 terminal illness, as determined under
                                                  •   The provider must agree to continue to be reimbursed           Medicare’s hospice benefit (transition
                                                      as if the termination had not occurred and must                period runs for remainder of person’s life)
                                                      comply with quality assurance and other plan               • Requires a comprehensive study of the
                                                      requirements.                                                  costs, quality and coordination of coverage
                                                  •   Enrollees must be notified of the provider                     for patients at the end of life (§101, new
                                                      termination and advised of their right to transitional         ERISA §726)
                                                      coverage (§1117)
H. Access to Prescription Drugs                   •   If a plan or issuer uses a drug formulary, participating   Similar to House bill, except:
                                                      physicians and pharmacists must be involved in             • Provision only applies to self-insured

                                                                         7
                     PROVISIONS                          HOUSE BILL                                               SENATE BILL
                                      developing the formulary                                        ERISA plans
                                  •   Formulary restrictions must be communicated to              •   No requirement that formulary restrictions
                                      providers, disclosed to enrollees upon request, and             must be disclosed to providers or
                                      provide for exceptions for non-formulary medically              participants (§101, new ERISA §728)
                                      necessary alternatives (§1118)
I. Clinical Trials                •   Plans and issuers may not discriminate against              Similar to House bill, except:
                                      enrollees with life-threatening or serious illnesses for    • Provision applies only to self-insured
                                      which no standard treatment is effective who are                ERISA plans
                                      participating in approved clinical trials (i.e., approved   • Provision is limited to clinical trials for
                                      and funded by the National Institutes of Health                 cancer
                                      (NIH), a center or cooperative of the NIH, and              • Through a mandatory negotiated
                                      certain clinical trials of the Departments of Veterans          rulemaking process, the Secretary of HHS is
                                      Affairs and Defense)                                            required to develop standards for
                                  •   The plan or issuer must pay for routine medical costs           determining routine patient costs with target
                                      associated with such clinical trial (§1119)                     date of June 30, 2000 for publication of rule
                                                                                                  • The plan is protected if the issuer providing
                                                                                                      benefits fails to meet the requirements of
                                                                                                      this section and the plan sponsor did not
                                                                                                      cause the failure (§101, new ERISA §730)
                                                                                                  • Note: It is unclear what is intended by new
                                                                                                      ERISA §730(f). The requirement to cover
                                                                                                      routine medical costs associated with
                                                                                                      clinical trials for cancer applies only to self-
                                                                                                      insured ERISA plans. Thus relieving the
                                                                                                      group health plan of fiduciary liability for
                                                                                                      meeting the requirements of this section if
                                                                                                      the failure to comply was caused by the
                                                                                                      issuer and not the plan sponsor seems
                                                                                                      unnecessary, because the bill does not
                                                                                                      impose a requirement to cover routine
                                                                                                      medical costs for clinical trials on either an
                                                                                                      issuer or plan sponsor. Perhaps the
                                                                                                      provision is designed to protect plan
                                                                                                      sponsors of fully insured plans from
                                                                                                      potential liability under state laws, but that
                                                                                                      too seems unnecessary because state
                                                                                                      attempts to mandate directly that the ERISA
                                                                                                      plan comply with a state clinical trial
                                                                                                      payment rule would be preempted.
                                                                                                      However, the state could require the issuer


                                                         8
                PROVISIONS                                          HOUSE BILL                                               SENATE BILL
                                                                                                                to comply
J. Access to Information                      •   On the effective date of the bill or at the time of an    •   Provisions apply to all ERISA-covered
                                                  enrollee’s initial coverage, if later, and at least           plans (both self-insured and insured) and
                                                  annually thereafter, plans and issuers must provide           issuers providing coverage in connection
                                                  enrollees information regarding a number of issues,           with these plans
                                                  such as the plan’s service area, covered benefits         •   Disclosure of specified information required
                                                  (including benefit limits and coverage exclusions),           not later than 12 months after date of
                                                  cost sharing (including liability for balance billing);       enactment and annually thereafter to (1)
                                                  access to non-network providers; right to select              each participant, (2) each beneficiary who
                                                  among network providers; POS options, referral                does not reside with the participant, and (3)
                                                  procedures, access to services for non-English-               upon request, individuals eligible for
                                                  speaking enrollees or others with special                     coverage under the plan
                                                  communication needs; out-of-area coverage;                •   Plan and issuer can agree that issuer
                                                  emergency coverage; prior authorization rules and             provides disclosure
                                                  grievance and appeals procedures                          •   Required information is similar but not
                                              • In addition, upon request of the enrollee, plans must           identical to House bill (§111)
                                                  provide information regarding certain issues,
                                                  including the plan’s utilization review procedures,
                                                  credentials of providers, a list of participating
                                                  providers, formulary restrictions and physician
                                                  compensation methods
                                              • Changes in this information must be provided to
                                                  enrollees within a reasonable period prior to or after
                                                  the change (§1121)
K. Information About Providers                No provision                                                  •   Secretary of HHS is required to contract
                                                                                                                with the Institute of Medicine to study
                                                                                                                issues relating to health professionals,
                                                                                                                including (1) the availability of data to
                                                                                                                patients, consumers, states, and
                                                                                                                professional societies concerning health
                                                                                                                professionals and their “competencies,” (2)
                                                                                                                legal and other barriers to sharing of
                                                                                                                information about health professionals, and
                                                                                                                (3) recommendations for disclosure of such
                                                                                                                information (§112)
                                                                                                            • Report must be forwarded to Congress by
                                                                                                                the Secretary not later than 18 months after
                                                                                                                date of enactment. (§112)
L. Interference with Medical Communications   •   Plans and issuers cannot prohibit or restrict providers   Similar to House bill, except provisions apply
   (“Gag Clauses”)                                from advising patients about medical treatment            only to self-insured ERISA plans (§101, new


                                                                      9
                PROVISIONS                                            HOUSE BILL                                             SENATE BILL
                                                   options (whether covered under the plan or not) for        ERISA §727)
                                                   their conditions or diseases
                                               • Contracts or agreements restricting or prohibiting
                                                   these medical communications are null and void
                                                   (§1131)
M. Discrimination Against Providers Based on   • Plans and issuers cannot exclude a provider from             Similar to House bill, except that provisions
   Licensure                                       their network of participating providers based solely      apply only to self-insured ERISA plans (§101,
                                                   on the scope of the provider’s license or certification.   new ERISA §730A)
                                               • However, plans can exclude providers if they are
                                                   unnecessary to meet the needs of enrollees or if they
                                                   fail to meet the plan’s quality and cost standards
                                               • This provision is explicitly described as not imposing
                                                   an “any willing provider” requirement on plans or
                                                   issuers (§1132)
N. Physician Incentive Plans                   • Plans and issuers are prohibited from operating              No provision
                                                   improper physician incentive plans (as defined in
                                                   subparagraph B of §1876(i)(8) of the SSA) (these are
                                                   arrangements under which physicians may be given
                                                   either positive or negative financial incentives to
                                                   limit medical services to a patient)
                                               • Capitation or provider discount arrangements do not
                                                   automatically violate this provision (§1133)
O. Prompt Payment of Claims                    Plans and issuers are required to pay claims promptly,         No provision
                                               consistent with the payment rules under Medicare (§1134)
P. Protection for Patient Advocacy             • Plans and issuers may not retaliate or discriminate          No provision
   (“Whistleblower Provisions”)                    against an enrollee or provider for filing or appealing
                                                   a claim or grievance
                                               • The plan or issuer may not retaliate or discriminate
                                                   against a health care professional for disclosing
                                                   information or initiating, cooperating or participating
                                                   in good faith in an investigation of health care quality
                                                   issues related to the plan or issuer (§1135)




                                                                      10
                PROVISIONS                                  HOUSE BILL                     SENATE BILL
Q. Behavioral Health Services                No provision                A self-insured ERISA plan may not: (1) prohibit
                                                                         or discourage an enrollee from self-paying for
                                                                         behavioral health services once the plan has
                                                                         denied coverage for such services; or (2)
                                                                         terminate a provider because the provider
                                                                         permits enrollees to self-pay for behavioral
                                                                         health services that are not covered by the plan,
                                                                         either because they are totally excluded or
                                                                         limited in scope (§101, new ERISA §729)
R. Minimum Hospital Stays for Mastectomies   No provision                • Provisions are applicable to all group health
                                                                              plans (including non-federal governmental
                                                                              plans) and all issuers providing coverage in
                                                                              group and individual markets
                                                                         • Plans and issuers covering medical and
                                                                              surgical benefits must defer to the attending
                                                                              physician (in consultation with the patient)
                                                                              in determining the length of medically
                                                                              necessary inpatient coverage for breast
                                                                              cancer (including a mastectomy, a
                                                                              lumpectomy or a lymph node dissection)
                                                                         • Written notice must be provided of this
                                                                              provision at the earlier of the following: (1)
                                                                              in the next mailing to enrollees made by the
                                                                              plan or issuer; (2) as part of any annual
                                                                              package of information sent to enrollees; (3)
                                                                              not later than January 1, 2000
                                                                         • Plans and issuers providing medical and
                                                                              surgical coverage for cancer must also
                                                                              cover in full secondary consultations by
                                                                              appropriate specialists (e.g., pathology,
                                                                              radiology and oncology), including access
                                                                              to out-of-network specialists if appropriate
                                                                              specialists are not participating providers
                                                                              (with no additional charge to the patient for
                                                                              using out-of-network specialists)
                                                                         • Plans and issuers cannot provide financial
                                                                              incentives to providers to limit coverage of
                                                                              these services (§201)



                                                            11
                PROVISIONS                                HOUSE BILL                                             SENATE BILL
S. Genetic Information                No provision                                              •   Provisions apply to all group health plans
                                                                                                    (including non-federal governmental plans)
                                                                                                    and to all issuers in the group and individual
                                                                                                    markets
                                                                                                • Plans and issuers are precluded from
                                                                                                    discriminating against enrollees
                                                                                                    (participants and family members) in
                                                                                                    enrollment or premiums based on genetic
                                                                                                    information or genetic services
                                                                                                • Plans and issuers are precluded from
                                                                                                    requesting or requiring predictive genetic
                                                                                                    information, except that they may request
                                                                                                    (but not require) such information if it is
                                                                                                    needed for diagnosis, treatment or payment
                                                                                                • Plans and issuers must notify enrollees of
                                                                                                    their confidentiality practices and describe
                                                                                                    their procedures to safeguard such
                                                                                                    information
                                                                                                • Secretary of HHS is required to develop a
                                                                                                    model notice on confidentiality practices
                                                                                                • Provisions relating to plans are effective for
                                                                                                    plan years beginning 1 year after date of
                                                                                                    enactment (§302).
T. Other Limitations and Exclusions   Limited scope dental and vision plans are covered under   No provision
                                      the bill (§1154)




                                                            12
                 PROVISIONS                                     HOUSE BILL                                             SENATE BILL
U. Effective Dates for Key Provisions   •   General effective date for group health plans:           •   Effective date for Title I (the Patients’ Bill
                                            • The amendments made by §§1201(a) (amending                  of Rights):
                                                 the Public Health Service Act to apply                   • The amendments made by Subtitle A of
                                                 provisions of the Act to non-ERISA group health               Title I are effective with respect to plan
                                                 plans and issuers offering coverage in                        years beginning on or after January 1 of
                                                 connection with such group health plans), §1301               the second calendar year following the
                                                 (amending Title I of ERISA to apply provisions                date of enactment of the Act
                                                 of the Act to ERISA group health plans and                    • The Secretary of Labor is required
                                                 issuers offering coverage in connection with                       to issue regulations necessary to
                                                 such group health plans), §1303 (amending                          carry out the amendments before
                                                 ERISA §502 to limit certain class actions) and                     the effective date of the Act
                                                 §1401 (amending the Internal Revenue Code to                  • No enforcement action may be
                                                 incorporate the provisions of the Act) and title                   taken against a group health plan
                                                 XI (grievances and appeals provisions) insofar as                  before regulations are issued if the
                                                 it relates to those sections) are effective with                   plan is in good faith compliance
                                                 respect to group health plans and health                           with statutory requirements (§103)
                                                 insurance coverage offered in connection with            • There is no specified effective date
                                                 group health plans for plan years beginning on or             (assume date of enactment) for Subtitle
                                                 after January 1, 2001 and must also apply to                  B of Title I (relating to the right to
                                                 portions of plan years occurring on or after that             information about plans and providers)
                                                 date                                                     • The amendments made by for Subtitle
                                        •   Special effective date for collectively bargained                  C of Title I (related to claims
                                            group health plans:                                                procedures and external review) are
                                            • If an agreement was ratified prior to the date of                effective with respect to plan years
                                                 enactment, the amendments will not apply to                   beginning on or after one year after the
                                                 plan years beginning before the later of: (1) the             date of enactment
                                                 date on which the last collective bargaining                  • The Secretary of Labor is required
                                                 agreement relating to the plan terminates, or (2)                  to issue regulations before the
                                                 the general effective date                                         effective date (§121(d))
                                        •   For individual health insurance coverage: the            • Effective date for Title II (Women’s Health
                                            amendments apply to individual health insurance               and Cancer Rights): None specified
                                            offered, sold, issued, renewed, in effect, or operated   • Effective date for Title III (Genetic
                                            on or after the general effective date above (§1501)          Information and Services):
                                        •   For expanded plan liability and remedies: the            Plan years beginning on or after one year after
                                            amendments to ERISA §514 made by §1302 of the            the date of enactment (§302(d)), and health
                                            bill are effective with respect to acts and omissions    insurance offered, sold, issued, renewed, in
                                            occurring on or after the date of enactment from         effect or operated after one year after the date of
                                            which a cause of action arises. In other words, the      enactment (§303(c))
                                            rules apply only prospectively (§1302)




                                                              13
                PROVISIONS                        HOUSE BILL                                              SENATE BILL
III. BENEFIT CLAIMS AND
     APPEALS PROCEDURES
A. Utilization Review        •   Plans or issuers using utilization review (UR) must       •   Provisions apply to all ERISA-covered
                                 comply with these rules                                       group health plans (both insured and self-
                             •   Utilization review includes procedures to “…monitor           insured) and issuers (presumably only those
                                 or evaluate the use of coverage, clinical necessity,          providing coverage to ERISA plans, since
                                 appropriateness, efficacy, or efficiency of health care       the requirements are contained only in
                                 services, procedures or settings, and includes                ERISA)
                                 prospective review, concurrent review, second             •   Plans and issuers using UR must ensure that
                                 opinions, case management, discharge planning or              procedures are in place to make eligibility
                                 retrospective review”                                         and cost-sharing determinations, notify
                             •   UR programs must use written clinical review criteria         enrollees and treating providers of these
                                 developed with input from active clinicians and               determinations, and respond to requests for
                                 based on valid clinical evidence (including gender-           coverage determinations (§121, new ERISA
                                 specific and pediatric-specific criteria where                § 503(b)(1)(A))
                                 available and appropriate)                                •   Definition of UR similar to House bill
                             •   If service is pre-authorized, UR standards cannot be          (§121, new ERISA §503(g)(9))
                                 revised or modified during retrospective review for
                                 the patient undergoing the same course of treatment
                             •   UR must be conducted by qualified, independent
                                 personnel who are available by toll-free telephone
                                 during normal business hours; procedure must be in
                                 place to assure prompt response to calls received
                                 during other hours
                             •   If the UR program fails to meet the deadlines
                                 described below, the claim is treated as denied and
                                 the enrollee can appeal under §1102 (§1101)

                             Preauthorization:                                             Prior Authorization:
                             • Deadline for plan’s response to non-expedited               • Response to routine requests for prior
                                 preauthorization requests is 14 days after request            authorization for non-emergency services
                             • If additional information required, requester must be           must be made within 30 days of the request
                                 notified within 5 business days of request, and UR            (period may be extended if Secretary of
                                 program has 14 days after information is received to          Labor determines that circumstances are
                                 respond (but in no case longer than 28 days from date         beyond the control of plan or issuer)
                                 of initial request)                                       • Expedited determinations must be made in
                             • If use of the 14-day timeframe for preauthorization             accordance with the medical exigencies of
                                 requests would jeopardize the life or health of the           the case, but no later than 72 hours after
                                 enrollee, expedited consideration of the pre-                 request


                                                   14
PROVISIONS                        HOUSE BILL                                                SENATE BILL
                 authorization request is required within 72 hours of      •   Plan must maintain procedures for
                 the request                                                   expedited determination if plan or issuer
                                                                               determines, based on documentation
                                                                               provided by treating provider, that normal
                                                                               time for decision could seriously jeopardize
                                                                               life or health of patient
             Concurrent Review:
             • If ongoing care is to be terminated or reduced, the         Concurrent Review:
                enrollee and treating provider must be notified in         • Plan or issuer must have procedures to
                sufficient time to appeal under §1102 before the              certify or deny coverage for an extended
                termination or reduction takes place                          stay or additional services

             Retrospective Review:
             • If services have previously been provided, the UR           Retrospective Review:
                 program must make a coverage determination and            • Retrospective review must be made within
                 notify the enrollee and the treating provider within 30       30 working days of receipt of necessary
                 days of receiving all information reasonably                  information (§121, new ERISA §503(b)(2))
                 necessary to make a determination (but in no case
                 later than 60 days after the receipt of the claim for
                 benefits) (§1101)

             Notice of Denial:
             • Notice must be in writing, written in a manner              Notice of Denial:
                 calculated to be understood by enrollee                   • Notice must be in writing, written in a
             • Notice must contain reasons for denial (including the           manner calculated to be understood by the
                 clinical rationale), instructions on how to appeal,           average plan enrollee
                 statement that clinical review criteria relied on for     • Notice must include reasons for denial
                 denial is available upon request                              (including the clinical or scientific
             • Notice must also specify what additional information            evidence-based rationale used in making
                 must be provided or obtained to decide the appeal             determination), procedures for obtaining
                 (§1101(e))                                                    additional information concerning the
                                                                               determination, notification of right to appeal
                                                                               and instructions on how to do so (§121,
                                                                               new ERISA §503(c)(3)(E))




                                   15
                 PROVISIONS                                            HOUSE BILL                                                SENATE BILL
B. Internal Plan Appeals                         Consistent with the rest of the House bill, these provisions   •   Provisions apply only to ERISA-covered
                                                 apply to all ERISA-covered group health plans (both                group health plans (both insured and self-
                                                 insured and self-insured), non-ERISA group health plans,           insured) and issuers offering coverage in
                                                 and health insurance issuers in the group and individual           connection with ERISA plans
                                                 marketplaces                                                   • Note: although the requirements apply to
                                                                                                                    issuers, the penalties for failure to comply
                                                                                                                    apply only to plans; this could be a problem
                                                                                                                    for plan sponsors, since issuers typically
                                                                                                                    have their own internal appeals procedures
                                                                                                                    which may differ from these rules
1. Time limitation on right to appeal            An individual, provider or other person acting on behalf       Individual or treating professional (with the
                                                 of the individual (with consent if medically possible) has     consent of participant or beneficiary) may
                                                 a reasonable opportunity to appeal (period of not less than    appeal within 180 days of adverse coverage
                                                 180 days) (§1102(a)(1)(B))                                     decision (§121, new ERISA §503(d)(1)(B))
2. Claims eligible for internal appeal process   • Enrollee may appeal any “claim for benefits” that has        • Enrollee may appeal only “adverse
                                                      been denied (§1101(f)(1))                                     coverage determinations”(§121, new
                                                 • A “claim for benefits” includes “any request for                 ERISA §503(d))
                                                      coverage (including authorization of coverage), for       • “Coverage determinations” are
                                                      eligibility, or for payment in whole or in part, for an       determinations whether or not items or
                                                      item or service under a group health plan or health           services are covered or reimbursable under
                                                      insurance coverage”                                           the terms of the contract (§121, new ERISA
                                                 • A “denial” includes (1) a denial, (2) a failure to act           §503(g)(2))
                                                      on a timely basis, in whole or in part on a request for   • Enrollees may not appeal “grievances” (i.e.,
                                                      benefits (see description above in III.A. Utilization         “any complaint … that does not involve a
                                                      Review), and (3) a failure to provide benefits required       coverage determination”) (§121; new
                                                      to be provided under the law or the plan                      ERISA §503(c) and (g)(3))
                                                      (§1101(f)(1))                                             • For procedures regarding grievances, see
                                                                                                                    III.D. Grievances
3. Qualifications of reviewer                    The review must be conducted by an individual who:             • The review must be conducted by an
                                                 • Is a physician (if the case involves medical judgment)           individual with appropriate expertise who
                                                 • Is a specialist (if the case involves limited scope              was not directly involved in the initial
                                                     coverage (as defined under HIPAA)                              decision (§121, new ERISA §503(d)(5))
                                                 • Did not make the initial denial decision (§1102(b)(1))       • If the appeal involves a denial based on lack
                                                                                                                    of medical necessity, investigational or
                                                                                                                    experimental treatment, the review must be
                                                                                                                    conducted by a physician with appropriate
                                                                                                                    expertise who was not involved in the initial
                                                                                                                    determination (§121, new ERISA
                                                                                                                    §503(d)(6))



                                                                        16
                  PROVISIONS                                              HOUSE BILL                                             SENATE BILL
4. Timelines for plan’s internal appeals decision   •   General rule: decision must be made in accordance        •   Routine determinations: decision must be
                                                        with the medical exigencies of the case but no later         made within 30 working days of receipt of
                                                        than 14 days after the receipt of request for internal       the request for internal review (in
                                                        review (72 hours in expedited cases)                         accordance with the medical exigencies of
                                                    •   If additional information is necessary, requester must       the case, but no later than 72 hours after
                                                        be notified within 5 business days after receipt of          appeal received in expedited cases) (§121,
                                                        request                                                      new ERISA §503(d)(7))
                                                    •   If application of the normal timeframe would             •   Expedited appeals are available only if prior
                                                        seriously jeopardize the patient’s life, health or           approval of treatment is necessary under a
                                                        ability to regain maximum function or if the appeal          UR procedure (§121, new ERISA
                                                        involves reduction or termination of ongoing care, an        §503(d)(4))
                                                        expedited appeal is required (§1102(b)(2))               •   Procedures for an expedited determination
                                                    •   An expedited review can be requested orally or in            are described above under III.A. Utilization
                                                        writing. All necessary information (including the            Review (§121, new ERISA §503(d)(3))
                                                        plan’s or issuer’s decision) can be transmitted
                                                        between the plan, issuer and requester by telephone,
                                                        fax, etc. (§1102(c)(2))
                                                    •   UR Program deadlines are described above in III.A.
                                                        Utilization Review
5. Notice of results of plan’s internal appeal      •   Plan and issuer must provide adequate notice in          •   Written notice must be provided within 2
                                                        writing to individual whose claim for benefits is            working days of the decision (or within the
                                                        denied, setting forth the specific reasons for the           72-hour period for expedited
                                                        denial and the rights to further appeal or review            determinations). If an adverse coverage
                                                    •   Notice must be written in a manner calculated to be          decision, the notice must include the
                                                        understood by the individual (§1102(a)(1)(A))                reasons for the determination (including the
                                                    •   Additional notice provisions if the determination            clinical or scientific-evidence based
                                                        involves UR (see III.A. Utilization Review, described        rationale used in making the determination),
                                                        above)                                                       the procedures for obtaining additional
                                                                                                                     information about the determination, and a
                                                                                                                     statement describing the right to
                                                                                                                     independent external review and
                                                                                                                     instructions about how to initiate such a
                                                                                                                     review
                                                                                                                 •   Notice must be written in a manner
                                                                                                                     calculated to be understandable to the
                                                                                                                     average plan participant or beneficiary
                                                                                                                     (§121, new ERISA §503(d)(7))




                                                                          17
                PROVISIONS                                       HOUSE BILL                                                SENATE BILL
C. Independent External Review             Consistent with the rest of the House bill, these provisions   Provisions apply only to ERISA-covered group
                                           apply to all ERISA-covered group health plans (both            health plans (both insured and self-insured) and
                                           insured and self-insured), non-ERISA group health plans,       issuers offering coverage in connection with
                                           and health insurance issuers in the group and individual       ERISA group health plans
                                           marketplaces
1. Right to external review                Plans and issuers must provide for an external review          ERISA group health plans and issuers offering
                                           process meeting requirements of §1103 when timely              coverage in connection with ERISA plans must
                                           appeal of “externally appealable decision” is requested        provide for an independent external review with
                                           (§1103(a)(1))                                                  respect to certain specified adverse coverage
                                                                                                          decisions (see below, III.C.3. Claims eligible for
                                                                                                          external review) (§121, new ERISA §503(e))
2. Exhaustion of plan’s internal appeals   The plan or issuer may require the enrollee to pursue a        Access to external review is not available unless
  procedure                                final decision under the plan’s internal review process        the enrollee has completed the plan’s internal
                                           before the enrollee can obtain external review                 review process (§121, new ERISA
                                           (§1103(a)(3))                                                  §503(e)(1)(A)(ii))
3. Claims eligible for external review     • An “externally appealable decision” is a denial of a         • Certain adverse coverage decisions are
                                                claim for benefits (1) based in whole or in part on a          appealable through external review
                                                decision that the item or service is not medically        • External review is available if the item or
                                                necessary or appropriate or is investigational or              service would be a covered benefit if
                                                experimental; or (2) in which the coverage decision            medically necessary or if the plan or issuer
                                                involves medical judgment                                      has failed to issue a coverage determination
                                           • Claims are also externally appealable if the plan or              under the plan’s internal review process
                                                issuer fails to meet an applicable deadline under the               and
                                                internal plan review requirements                                   (1) the amount of each item or service
                                           • Externally appealable decisions do not include: (1)                         meeting the above requirements
                                                specific exclusions or express limitations on the                        exceeds a significant financial
                                                amount, duration or scope of coverage that do not                        threshold (not specified in the bill),
                                                involve medical judgment, or (2) decisions whether                       or
                                                an individual is covered under the plan (§1103(a)(2))               (2) there is a significant risk of placing
                                                                                                                         the life or health of the patient in
                                                                                                                         jeopardy
                                                                                                          • External review is also available if the item
                                                                                                               or service would be a covered benefit if not
                                                                                                               experimental or investigational or if the
                                                                                                               plan or issuer has failed to issue a coverage
                                                                                                               determination under the plan’s internal
                                                                                                               review process
                                                                                                          • Note: External review is not available to
                                                                                                               challenge specific plan or contract
                                                                                                               exclusions or limitations on benefits even if


                                                                  18
                 PROVISIONS                                         HOUSE BILL                                              SENATE BILL
                                                                                                                 they involve medical judgment (§121, new
                                                                                                                 ERISA §503(e)(1)(A)(I))
4. Filing fee                                 •   Plan or issuer may require a filing fee of $25 from        No provision
                                                  non-indigent enrollees seeking external review
                                              • If the external reviewer recommends reversal or
                                                  modification of denial of benefits, the filling fee must
                                                  be refunded to the enrollee (§1103(a)(4))
                                              • Other costs must be borne by plan or issuer
                                                  (§1103(b)(1)(C))
5. Request for external review                The request must be “timely” (§1103(a)(1))                     The request must be filed within 30 working
                                                                                                             days after the receipt of a final determination
                                                                                                             under the plan’s internal review process (§121,
                                                                                                             new ERISA §503(e)(2))
6. Qualifications of external review entity   •   External review may be conducted only through a            • External review may be conducted only
                                                  “qualified external review entity”                             through a “qualified entity”
                                              •   The entity must: (1) be “independent,” (2) conduct         • These entities are:
                                                  reviews using panels of at least 3 clinical peers, (3)         • State-licensed independent external
                                                  have sufficient medical and legal expertise and                     review entity
                                                  sufficient staffing to conduct reviews in a timely             • State agency established to conduct
                                                  manner, and (4) meet any other requirements that the                external reviews
                                                  appropriate Secretary might impose                             • Entity under contract with the Federal
                                              •   To perform external review for group health plans,                  government to provide these services
                                                  the entity must be certified (and recertified) by the          • External review entity accredited by an
                                                  Secretary of Labor or by a private standard-setting                 accrediting body recognized by the
                                                  organization (if authorized by the Secretary)                       Secretary
                                              •   To perform external review for issuers, the entity             • Any other entity meeting criteria
                                                  must be certified (and recertified) by the applicable               established by the Secretary (§121, new
                                                  state authority, or, if no state certification process              ERISA §503(e)(3)(A)(ii)))
                                                  exists, by the Secretary of HHS
                                              •   An entity is “independent” if: (1) the clinical peer or
                                                  entity has no familial, financial or professional
                                                  relationship with any related party, (2) compensation
                                                  is reasonable and not contingent on any decision
                                                  rendered, (3) neither the plan nor issuer has any
                                                  recourse against the peer or entity for the review, and
                                                  (4) the peer or entity has no conflict of interest, as
                                                  determined by regulations
                                              •   “Related parties” include plan sponsors, fiduciaries,
                                                  officers, directors, or management employees of the
                                                  plan or issuer, treating provider, treating institution,


                                                                     19
                 PROVISIONS                                  HOUSE BILL                                              SENATE BILL
                                          drug or device manufacturer involved in the coverage
                                          decision, and any other party with a substantial
                                          interest in the coverage decision (as determined
                                          under regulations)
                                      • No entities or individual reviewers under contract to
                                          such entities are liable under civil or criminal law for
                                          carrying out their review duties, if due care was
                                          exercised and no actual malice or gross misconduct
                                          occurred (§1103(c))
7. Selection of review entity         Plan or issuer selects review entity under procedure           Within 5 working days of receipt of request for
                                      designed to assure decision will be unbiased                   external review, plan or issuer must select
                                      (§1103(b)(1)(B))                                               review entity and notify the enrollee of
                                                                                                     selection, giving name and address of review
                                                                                                     entity (§121, new ERISA §503(e)(2)(B))
8. Selection of individual reviewer   •   Qualified external review entity selects the panel of      • Within 30 days of its designation, (or earlier
                                          clinical peers to hear the appeal                               based on the medical exigencies of the
                                      •   Independence criteria described above in III.C.6.               case), the external appeals entity must
                                          Qualifications of external review entity also apply to          designate one or more reviewers
                                          individual reviews (“clinical peers”) (§1103, new          • Reviewers must be independent medical
                                          ERISA §503(c)(1)(B) and(3))                                     experts who:
                                                                                                          (1) are appropriately credentialed or
                                                                                                              licensed in a state to deliver health
                                                                                                              benefits
                                                                                                          (2) do not have any material, professional,
                                                                                                              familial or financial affiliation with the
                                                                                                              case, the enrollee involved, treating
                                                                                                              provider, institution where treatment
                                                                                                              would be rendered, or manufacturer of
                                                                                                              any drug, device, procedure, therapy
                                                                                                              proposed
                                                                                                          (3) have expertise in the diagnosis and
                                                                                                              treatment involved and, if possible, be a
                                                                                                              physician of the same specialty as the
                                                                                                              treating provider
                                                                                                          (4) receive only reasonable and customary
                                                                                                              compensation that is not contingent
                                                                                                              upon the decision from the plan or
                                                                                                              issuer for the independent review and
                                                                                                          (5) are not liable for decisions regarding
                                                                                                              medical determinations (unless they are


                                                             20
                 PROVISIONS                                           HOUSE BILL                                                SENATE BILL
                                                                                                                        arbitrary and capricious) (§121, new
                                                                                                                        ERISA §503(e)(3)(B))
9. Determination concerning availability of      A qualified external review entity determines whether the    Plan or issuer determines whether request for
   external review                               denial of a claim for benefits is an externally appealable   external review involves an adverse coverage
                                                 decision (§1103(b)(2)(E))                                    determination that meets the criteria for external
                                                                                                              review (§121, new ERISA §503(e)(1)(A))
10. Admissible evidence and standard of review   •   Process must provide for fair, de novo determination     • An independent external reviewer must:
                                                 •   External review entity must determine whether plan’s          • “make an independent determination
                                                     or issuer’s decision “is in accordance with the                    based on the valid, relevant, scientific
                                                     medical needs of the patient involved (as determined               and clinical evidence to determine the
                                                     by the entity) taking into account, as of the time of              medical necessity, appropriateness,
                                                     the determination, the patient’s medical condition                 experimental or investigational nature
                                                     and any relevant and reliable evidence …”                          of the proposed treatment” and
                                                 •   Entity shall “consider (but not be bound by)” the             • “take into consideration appropriate
                                                     plan’s definitions of medical necessity, experimental              and available information,” including:
                                                     or investigational treatment, etc.                                 • any evidence-based decision-
                                                 •   Evidence taken into consideration includes:                             making or clinical practice
                                                     • Plan’s internal review decision and any                               guidelines used by the plan or
                                                          guidelines or standards the plan used to make the                  issuer
                                                          decision                                                      • timely evidence or information
                                                     • Any personal medical information submitted                            submitted by any party
                                                          relating to the enrollee                                      • the patient’s medical record
                                                     • The opinion of the treating provider                             • expert consensus including both
                                                     • Other additional evidence if available including:                     generally accepted medical
                                                          • Valid and replicable studies or studies from                     practice and recognized best
                                                               peer-reviewed journals                                        practice
                                                          • Results from government-funded                              • medical literature as defined in
                                                               professional consensus conferences                            §556(5) of the FDA Act;
                                                          • Government-funded practice and treatment                    • various standard reference
                                                               guidelines                                                    compendia
                                                          • Government-issued coverage and treatment                    • findings, studies or research
                                                               policies                                                      conducted by or under the auspices
                                                          • Community standard of care and generally                         of the Federal government and
                                                               accepted principles of professional medical                   nationally recognized Federal
                                                               practice                                                      research institutes (§121, new
                                                          • Qualified expert opinions directly related to                    ERISA §503(e)(4))
                                                               the matters under appeal, if the entity
                                                               determines them free from conflict of
                                                               interest
                                                          • Peer reviews conducted by the plan or issuer


                                                                       21
                 PROVISIONS                                           HOUSE BILL                                              SENATE BILL
                                                             involved, if the entity determines them free
                                                             from conflict of interest (§1103(b)(2))
11. Submission of new evidence and access to   •   Each party may submit evidence                             •   Within 5 working days after plan or issuer
    information                                •   Plan or issuer is required to provide the external             provides notice, the plan, issuer, enrollee or
                                                   review entity with timely access to information                treating provider must forward all necessary
                                                   concerning the externally appealable decision                  information to external review entity
                                                   (§1103(b)(2)(F) and (G))                                   •   Plan or issuer must submit medical records,
                                                                                                                  any relevant review criteria, the clinical
                                                                                                                  rationale consistent with the terms and
                                                                                                                  conditions of the contract, etc. (§121, new
                                                                                                                  ERISA §503(e)(2)(B) and (C))
12. Timeframe for review                       •   Decision may be made orally or in writing; if oral,        •   Decision must be made in accordance with
                                                   written decision must follow as soon as possible               the medical exigencies of the case, but in no
                                               •   Decision must be made in accordance with medical               case later than 30 working days after the
                                                   exigencies of the case, but in no event later than 21          later of (1) the date the reviewer is
                                                   days after the request (for expedited appeals, no later        designated, or (2) the date on which all
                                                   than 72 hours after request) (§1103(b)(2)(H))                  information necessary to completing the
                                                                                                                  review is received
                                                                                                              •   If the completion of the review in a period
                                                                                                                  longer than 72 hours would seriously
                                                                                                                  jeopardize the life or health of the patient,
                                                                                                                  an expedited review must be conducted. An
                                                                                                                  expedited review must be concluded no
                                                                                                                  later than 72 hours after (1) the date the
                                                                                                                  reviewer is designated, or (2) the date on
                                                                                                                  which all information necessary to
                                                                                                                  completing the review is received (§121,
                                                                                                                  new ERISA §503(e)(5))
13. Effect of external review decision         •   The decision of the external review entity is binding      •   The decision of the external review entity is
                                                   on the plan or issuer (§1103(d))                               binding on the plan or issuer if the entity
                                               •   If the entity modifies or reverses the denial of a claim       complied with the procedures established
                                                   for benefits, the plan or issuer must authorize benefits       under the bill
                                                   in accordance with the decision as soon as it receives     •   If the reviewer determines that the enrollee
                                                   the entity’s determination                                     is entitled to benefits, the reviewer must
                                               •   The plan or issuer must also submit evidence to the            establish a timeframe, in accordance with
                                                   entity that it has complied with the decision                  the medical exigencies of the case, for the
                                                   (§1103(b)(2)(I))                                               plan or issuer to provide the coverage




                                                                     22
                  PROVISIONS                                      HOUSE BILL                                                  SENATE BILL
14. Failure to comply with external review   No comparable provisions. But see the civil penalty            •    If plan or issuer fails to comply, enrollee
    decision                                 provisions described below in III.C.16. Enforcement                 can obtain services (consistent with
                                                                                                                 reviewer’s decision) from any provider,
                                                                                                                 regardless of whether the provider is a
                                                                                                                 participating provider
                                                                                                            • Plan or issuer must fully reimburse treating
                                                                                                                 provider and enrollee, provided that items
                                                                                                                 and services were covered under the plan
                                                                                                                 and delivered consistent with reviewer’s
                                                                                                                 decision
                                                                                                            • Provider and enrollee can sue to recover
                                                                                                                 amounts not reimbursed, plus legal costs or
                                                                                                                 expenses (including attorney’s fees) (§121,
                                                                                                                 new ERISA §503(e)(6))
                                                                                                            • See also the civil penalty described below in
                                                                                                                 III.C.16. Enforcement
15. Study of external review procedures      No provision                                                   • Not later than 2 years after date of
                                                                                                                 enactment, the GAO must study a
                                                                                                                 statistically appropriate sample of
                                                                                                                 completed independent reviews to assess
                                                                                                                 the process involved and basis for
                                                                                                                 decisionmaking
                                                                                                            • The study must be submitted to the
                                                                                                                 appropriate Congressional committees
16. Enforcement                              •   The person who causes the failure to comply with the       • The Secretary of Labor may assess a civil
                                                 external reviewer’s decision may be liable (in the              penalty against any plan of up to $10,000
                                                 discretion of the court) to the patient for a civil             for the plan’s failure or refusal to comply
                                                 penalty of up to $1000 a day from the date on which             with the applicable timelines or other
                                                 the determination was transmitted to the plan or                requirements for external review
                                                 issuer until the date the refusal is corrected             • If treatment was not commenced in
                                             •   As part of the civil action against the plan or issuer,         accordance with the external reviewer’s
                                                 the court may issue a cease and desist order against            decision, the Secretary must assess the civil
                                                 the plan or issuer and require the defendant to pay the         penalty against the plan and the plan must
                                                 prevailing plaintiff attorneys’ fees and costs                  pay the penalty to the enrollee involved
                                             •   In addition, the Secretary may impose a civil penalty           (§121(b), new ERISA §502(c)(8))
                                                 against such person for any pattern or practice of         Note: The substantive requirements for external
                                                 refusals to comply with the external reviewer’s            review are applicable to both plans and issuers
                                                 decision, or any other pattern or practice violations of   providing health care in connection with those
                                                 the requirement for external review                        plans. Yet the civil penalties are applicable only


                                                                   23
                PROVISIONS                         HOUSE BILL                                                 SENATE BILL
                             •   The civil penalty may not exceed the lesser of 25% of       to plans. In contrast, as described above in
                                 the aggregate value of benefits or $500,000, and the        III.C.14. Failure to comply with external
                                 pattern or practice must be proven by clear and             reviewer’s decision, whoever is responsible for
                                 convincing evidence (§1103(e))                              the failure to comply (the plan or the issuer) is
                                                                                             responsible for reimbursing the provider and the
                                                                                             patient who obtains the treatment ordered by the
                                                                                             external reviewer
D. Grievances                •   Plans and issuers must establish and maintain a             • Plans and issuers must have written
                                 system for the presentation and resolution of oral and           procedures for addressing grievances
                                 written grievances that meets the requirements in           • Determinations under the grievance
                                 §1104(b) of the bill                                             procedures are not appealable (§121, new
                             •   “Grievances” are any questions, complaints, or                   ERISA §503(c))
                                 concerns by enrollees which are not claims for
                                 benefits
                             •   Grievances can only be appealed under the grievance
                                 procedures and are not appealable as denied claims
                                 for benefits (§1104)
                             •   Grievance system must include written notification to
                                 individuals and providers of person responsible for
                                 resolution of grievances, documentation of
                                 grievances and their status for prior 3 years, and
                                 procedure for follow-up notification and action
                                 (§1104(b))
E. Effective Date            •   For group health plans, these provisions apply to plan      These provisions apply to plan years beginning
                                 years beginning on or after January 1, 2001 and also        on or after 1 year after the date of enactment.
                                 apply to portions of plan years occurring on or after       The Secretary of Labor is required to issue
                                 that date (the “general effective date”)                    regulations before the effective date (§121(d))
                             •   Group health plans maintained pursuant to collective
                                 bargaining agreements have a deferred effective date,
                                 i.e., plan years beginning after the later of the date on
                                 which the last collective bargaining agreement
                                 relating to the plan terminates or January 1, 2001
                                 (§1501)(a))
                             •   With respect to individual health insurance, the
                                 provisions apply to coverage offered, sold, issued,
                                 renewed, in effect, or operated in the individual
                                 insurance market on or after January 1, 2001
                                 (§1501(b))




                                                    24
                PROVISIONS                                             HOUSE BILL                                                SENATE BILL
IV. ERISA PREEMPTION AND PLAN
    LIABILITY
A. Applicability of State Law Regarding Patient   •   Nothing in the bill shall be construed to affect or        No specific provision; however, by applying
   Protections                                        modify ERISA’s preemption provision (§514) with            new patient protections only to self-insured
                                                      respect to group health plans (i.e., states cannot         ERISA plans, the Senate bill leaves (1) issuers
                                                      regulate any ERISA plan directly, but may regulate         subject to state law, and (2) issuers offering
                                                      health insurance issuers providing coverage in             coverage in connection with ERISA plans
                                                      connection with an ERISA-covered group health              exempt from these new ERISA patient
                                                      plan, thus indirectly affecting any ERISA plan that        protections. As under current law, however,
                                                      purchases coverage from an issuer)                         insured group health plans are subject to ERISA
                                                  •   States can continue to regulate issuers (even in           (as it exists prior to these amendments) and not
                                                      connection with group health plans) (§1152)                state law (although they may be subject to
                                                  •   Note: As under current law, ERISA-covered group            indirect state regulation because of the states’
                                                      health plans (both insured and self-insured) are           ability to regulate the contract or policy of
                                                      subject only to ERISA, and issuers offering coverage       insurance sold to ERISA plans)
                                                      in connection with group health plans are subject to
                                                      both state law and ERISA
B. Plan Liability (ERISA Preemption of State
    Remedies)
1. In general                                     •   State laws are not preempted if they allow a person to     No provision
                                                      recover damages resulting from personal injury or
                                                      wrongful death: (1) in connection with the provision
                                                      of insurance, administrative services or medical
                                                      services by or to a group health plan, or (2) that arise
                                                      from the arrangement to provide such services
                                                      (§1302(a), new ERISA §514(f)(1)(A))
2. Limitation on punitive damages                 •   If the state law described above provides for punitive     No provision
                                                      damages, these damages cannot be applied if the case
                                                      was subject to an external appeal and the plan or
                                                      issuer complied with the decision of the external
                                                      reviewer
                                                  •   However, the plan or issuer must have initiated the
                                                      external review before the lawsuit was filed, or
                                                      within 30 days after the lawsuit was filed
                                                  •   This limitation is not applicable if the only damages
                                                      available in a state for wrongful death are punitive or
                                                      exemplary damages (§1302(a), new ERISA
                                                      §514(f)(1)(B))
3. Exception for group health plans, employers    •   Generally, lawsuits under state personal injury or         No provision


                                                                        25
                 PROVISIONS                          HOUSE BILL                                              SENATE BILL
  and other plan sponsors         wrongful death laws cannot be brought against the
                                  group health plan, employer or other plan sponsor
                                  unless it exercised “discretionary authority” over the
                                  decision to deny the claim for benefits and the
                                  exercise of this authority resulted in the personal
                                  injury or wrongful death
                              •   Exercise of “discretionary authority” does not include
                                  the decision to (1) include or exclude any particular
                                  benefit from the plan, (2) provide extra-contractual
                                  benefits, or (3) not provide the benefit while internal
                                  and external review is conducted (§1302(a), new
                                  ERISA §514(f)(2))
4. Limitation on actions      •   Lawsuits involving the new patient protections              No provision
                                  cannot be brought as class actions under ERISA
                                  (although individuals can sue to enforce their rights)
                              •   In individual lawsuits to enforce the new patient
                                  protections, the relief available is limited, in part, to
                                  what is currently available under ERISA: providing
                                  the benefit to which the participant was entitled, plus
                                  attorneys’ fees and costs
                              •   However, the bill also takes away a typical remedy
                                  available to successful plaintiffs under current law
                                  when a court finds that the provisions of a group
                                  health plan or its practices are not consistent with the
                                  law. Under those circumstances, the court generally
                                  orders the plan to change its terms or practices.
                                  Under this provision of the House bill, however, the
                                  court could only order payment for the individual
                                  plaintiff, and apparently could not order the plan or
                                  issuer to take corrective action for the future. For
                                  instance, if the plan or issuer refused to implement
                                  the prudent layperson standard for emergency room
                                  care, each participant who was denied care in
                                  violation of this action would have to sue on an
                                  individual basis to recover payment.
                              •   Lawsuits brought by the Secretary of Labor under
                                  ERISA are not subject to the limitations described
                                  above (§1303, new ERISA §502(o))




                                                     26
                    PROVISIONS                               HOUSE BILL                                               SENATE BILL
5. Effective date                    The non-preemption of certain state laws described above          No provision
                                     applies to acts or omissions occurring on or after the date of
                                     enactment (§1302(b))

V. OTHER PROVISIONS
A. Association Health Plans (AHPs)   •   AHPs are group health plans whose sponsor is a bona           No provision
                                         fide trade, industry or professional association, a rural
                                         electric or rural telephone cooperative, or a bona fide
                                         chamber of commerce (or similar organization)
                                     •   The association must be established as a permanent
                                         membership organization for purposes other than
                                         obtaining medical care and cannot use health status-
                                         related factors as a basis for membership, dues or
                                         coverage (§301(a), new ERISA §801)
                                     •   AHPs must be certified by the Secretary of Labor (or by
                                         a state to which authority has been delegated by the
                                         Secretary) (§301(a), new ERISA §802)
                                     •   Certification requirements include rules regarding
                                         sponsors and boards of trustees, participation and
                                         coverage, plan documents, contribution rates, benefit
                                         options and reserves and solvency (§301, new ERISA
                                         Part 8)
                                     •   Once certified, AHPs are group health plans covered
                                         under ERISA and thus exempt from state law (e.g., state
                                         benefit mandates) under ERISA’s preemption
                                         provisions (§301(a), new ERISA §813(b))
                                     •   In addition, certain state insurance practices limiting the
                                         ability of issuers to offer specific policies to AHP plans
                                         are specifically preempted (new ERISA §514(d)(2))
                                     •   AHP’s appear to be exempt from the application of the
                                         amendments to ERISA authorizing state wrongful death
                                         actions contained elsewhere in the House bill (described
                                         above in IV.A. Applicability of State Law Regarding
                                         Patient Protections) (§813(b), new ERISA §514(e)(2))




                                                            27
                  PROVISIONS                           HOUSE BILL                                               SENATE BILL
B. Church Plans                •   Church plans can elect to be covered as ERISA group           No provision
                                   health plans under special rules contained in new §812
                                   of ERISA (although not subject to any other ERISA
                                   rules)
                               •   The effect of such an election is to exempt church plans
                                   from state insurance laws, including premium rate
                                   regulation and benefit mandates
                               •   Although the Secretary of Labor can enforce the church
                                   plan rules, civil actions can be brought only by the
                                   Secretary if the church plan fails to correct its violation
                                   within the applicable correction period
                               •   Since “the other provisions of part 5” (i.e., the
                                   provisions authorizing a private right of action for
                                   participants who have been denied a benefit under the
                                   plan or who allege a breach of fiduciary duty) apply to
                                   enforcement of new ERISA §812, presumably enrollees
                                   can also sue church plans to enforce the rules
                               •   Similar to AHPs, church plans appear to be exempt from
                                   the application of the amendments to ERISA
                                   authorizing state wrongful death actions contained
                                   elsewhere in the House bill (described above in IV.B.
                                   Plan Liability (ERISA Preemption of State Remedies))
                                   (§813(b), new ERISA §514(e)(2))
C. HealthMarts                 •   HealthMarts are non-profit organizations operated by          No provision
                                   boards of directors composed of small employers,
                                   employees of small employers, providers and entities
                                   that underwrite or administer health coverage
                               •   HealthMarts must make coverage available to small
                                   employers and their employees on a nondiscriminatory
                                   basis within a geographic area (including multistate
                                   areas)
                               •   Although they provide administrative services for
                                   purchasers, HealthMarts may not assume risk and must
                                   offer coverage through issuers
                               •   They are treated as group health plans under the Public
                                   Health Service Act and under the jurisdiction of the
                                   Secretary of HHS, although any health benefit coverage
                                   offered must be provided by issuers licensed under state
                                   law, meeting all applicable state consumer protection
                                   standards


                                                     28
PROVISIONS                          HOUSE BILL                              SENATE BILL
             •   Coverage provided through the HealthMarts is exempt
                 from certain state requirements, such as state mandated
                 benefits and limits on compensation arrangements, but
                 state laws regulating issuers (including licensure and
                 solvency), premium taxes, guaranty funds, high-risk
                 pools, fair marketing practices and adjustment of health
                 insurance rates are not preempted
             •   ERISA fiduciary and disclosure requirements apply to
                 HealthMarts, and they are treated as multiple employer
                 welfare arrangements (MEWAs) for purposes of
                 renewability protection for employers (§401, new PHSA
                 §§2801-2804)




                                  29
         PROVISIONS                           HOUSE BILL                                               SENATE BILL
VI. ENFORCEMENT       •   The bill generally uses the enforcement structure            •   Since many of the provisions of the Senate
                          established under HIPAA to enforce the new                       bill apply only to non-fully insured ERISA
                          requirements, since the House bill imposes these                 group health plans, the bill applies the new
                          requirements on all group health plans (including                requirements through amendments to part 7
                          insured and self-insured ERISA plans and non-ERISA               of ERISA. Therefore, the current
                          plans such as governmental plans and church plans),              enforcement provisions in part 5 of ERISA
                          health insurance issuers, and individual policies of             would apply to violations of these rules.
                          insurance. Under the HIPAA approach, parallel                    Conforming amendments to the IRC are
                          amendments to three Federal laws (ERISA, the PHSA,               also included.
                          and the IRC) are adopted, thus applying existing             •   As in the House bill, current enforcement
                          enforcement schemes to the new requirements.                     tools under ERISA include civil money
                      •   Under ERISA, the current enforcement provisions in               penalties imposed by the Secretary of
                          part 5 would apply to violations of these rules.                 Labor, private rights of action brought by
                          Applicable enforcement tools include civil money                 participants against non-fully insured
                          penalties imposed by the Secretary of Labor, a private           ERISA-covered group health plans or their
                          right of action under ERISA §502 for violations of the           plan sponsors, and lawsuits brought by the
                          statutory requirements and lawsuits brought by the               Secretary of Labor against those entities.
                          Secretary of Labor against group health plans and/or         •   As in the House bill and current law, the
                          their fiduciaries to enforce the rules (however, the             IRS would have the power to impose excise
                          Secretary is precluded from suing issuers). State laws           taxes on group health plans that violate the
                          relating to issuers are not preempted except to the extent       provisions of the bill.
                          that state requirements prevent the application of the
                          new requirements (§1152). However, the bill protects
                          group health plans from penalties for failure to comply
                          with the new benefit and certain other requirements if
                          the issuer (not the group health plan) was responsible for
                          the failure (§1301, new ERISA §714(b)).
                      •   Under the PHSA, the Secretary of HHS has the
                          authority to impose civil money penalties on issuers
                          (including HMOs), in addition to any other penalties
                          that might otherwise be applicable to issuers under state
                          law (see §1152).
                      •   Under the IRC, the Secretary of the Treasury may
                          impose excise taxes for violations of the new rules.
                      •   Special enforcement procedures are provided for
                          retaliation or discrimination against health care
                          professionals who advocate for patients in violation of
                          §1135(b)(1)(the “whistleblower” provisions). Protected
                          health care professionals may file a complaint with the
                          Secretary of Labor within 180 days of the alleged


                                            30
PROVISIONS                       HOUSE BILL                               SENATE BILL
             retaliation or discrimination, and the Secretary is
             required to investigate the incident and issue an order to
             prevent or remedy any act of retaliation or
             discrimination if a violation is found (§1301, new
             ERISA §714(c)).




                               31
                                            DEFINITIONS AND ACRONYMS
Civil penalty -- A civil penalty (or civil money penalty (“CMP”)) is an amount of money payable as a fine in a civil lawsuit. A civil
lawsuit is one involving a dispute between individuals or entities (as opposed to a criminal proceeding in which the state charges an
individual with a criminal violation of law). Civil lawsuits generally involve contractual disputes or torts (see below). If authorized by
statute, civil penalties may be imposed by a court or by an administrative agency, but unless a statute specifically states that the civil
penalty is payable to the injured individual (a rare occurrence), it usually is payable to the government. This is because civil penalties
are considered to be a form of punishment, rather than a type of compensation for injury.

Class action -- A class action is a type of lawsuit in which a group of similarly situated individuals bring a single lawsuit against a
defendant, rather that each one suing the defendant individually. Before a class action can be brought, a court must “certify” the class,
i.e., determine whether all the legal requirements are met. Most courts strictly apply the rules for class certification. In addition, if, at
any time during the legal action, the court determines that the class requirements are no longer being met, it will “decertify” the class
and force the plaintiffs to proceed individually.

Copayment or coinsurance -- A type of cost-sharing in which the enrollee pays either (1) a flat amount per service, or (2) a specified
percentage of the charge for the treatment or service, and the plan or issuer pays the remainder. For instance, a plan may require the
enrollee to pay $10 per office visit or 20% of the usual, reasonable and customary charge for the treatment or service.

ERISA -- The Employee Retirement Income Security Act of 1974 is a federal law governing employer-sponsored employee benefit
plans. Group health plans are a type of “employee welfare benefit plan” covered under ERISA. ERISA applies to all group health
plans established or maintained by employers, employee organizations (e.g., labor unions), or both, that provide medical benefits to
employees.
        Under ERISA, “employers” may include a single company (or a group of companies under common control) or an association
of employers. The only types of employers not subject to ERISA are governmental employers (federal, state, and local) and churches
or church-related entities (unless they have elected to be covered under ERISA). Church-related agencies include schools, hospitals,
nursing homes, etc., which have religious affiliations (e.g., Baylor Hospital or Georgetown University). Employers sponsoring ERISA
plans may be for-profit or not-for-profit entities, and their activities may be taxable or tax-exempt. ERISA covers all employers,
regardless of size.
        ERISA-covered plans may be fully insured (i.e., benefits are purchased from a health insurance issuer that is subject to state
law) or self-insured (i.e., claims are paid by the employer either directly from company assets or through a tax-exempt trust into which
employer and/or employee contributions have been placed). Section 514 of ERISA (the preemption clause) precludes states from
enforcing state laws that “relate to” ERISA-covered employee benefit plans. Therefore states may not directly regulate any ERISA-
covered plans (either insured or self-insured). Accordingly, self-insured ERISA plans are subject only to ERISA (which imposes


                                                                   32
requirements relating to reporting and disclosure, fiduciary standards, claims and grievances, civil enforcement, continuation of health
insurance coverage, and various other requirements). Fully insured plans are also subject only to ERISA, but may be indirectly
affected by state law since states have the power to regulate health insurance issuers and the products they sell to ERISA plans. So
state mandated benefit laws may not be directly applied to any ERISA plan (either insured or self-insured), but may apply indirectly to
fully insured ERISA plans because they apply to policies or contracts of insurance that ERISA plans purchase to deliver benefits to
their participants.

ERISA preemption -- Preemption is a legal doctrine under which a federal law may in whole or in part supercede or displace the right
of states to regulate in a particular area. Generally, the extent to which state law is supplanted depends on the specific statement of
Congressional intent to preempt stated in the federal law. As described above, ERISA’s §514 precludes states from enforcing state
laws that “relate to” ERISA plans. This is an extraordinarily broad preemption provision. In the more than a quarter-century since
ERISA’s enactment, the courts have struggled to define the parameters of ERISA’s preemptive effect. The current Supreme Court
view appears to be that unless the state law directly conflicts with ERISA, the state law is presumed to be valid if (1) the state law is
one of generally applicability (i.e., not specifically singling out ERISA plans), (2) the state law affects an area of traditional state
authority, (3) there is no evidence that Congress specifically decided to prevent state action in that area, and (4) the state law does not
interfere with the administration of an ERISA plan, bind a plan administrator to a particular choice, or impose a new remedy.

Fiduciary -- A fiduciary with respect to an ERISA group health plan is any person (either an individual or an entity) that exercises
discretion or control over the plan’s assets or administration. For example, a third-party administrator or an HMO may act as a claims
administrator in deciding whether claims for benefits under the plan should be paid or denied. To the extent that these entities have
discretion over an ERISA plan, they are fiduciaries. Whether a person is a fiduciary or not is decided by examining the actual facts
and circumstances surrounding the person’s behavior, since fiduciary status under ERISA is based on a functional analysis and not on
someone’s job title. Similarly, a contractual provision in an agreement between the group health plan and a service provider that states
that the service provider is not a fiduciary when it performs its functions under the contract, may not always shield the service provider
from ERISA fiduciary liability, if the person actually exercises discretion over plan administration in carrying out those contractual
functions.

Formulary -- A formulary is a list of prescription drugs that are covered under a plan’s prescription drug benefit. Most plans will
cover only drugs on the formulary; others may treat them as preferred drugs, requiring a higher copayment for non-formulary drugs.

Fully insured plans -- A fully insured plan is one in which health benefits are purchased from a health insurance issuer and, by paying
a premium or a capitation fee (i.e., a predetermined amount per participant which is payment in full for all covered services the
participant uses), the employer shifts the risk of paying claims to the issuer.



                                                                  33
Gag clauses or gag rules -- Gag clauses are restrictions on a provider’s ability to engage in certain types of patient/provider
discussions, such as those regarding proposed treatment options (particularly those options which may not be covered under the
patient’s health plan). Managed care entities indicate that these restrictions, if any, are directed toward precluding members of a plan’s
provider network from criticizing the plan.

GAO -- GAO stands for the General Accounting Office.

Gatekeeper -- A gatekeeper is a person or entity who is responsible for overseeing the medical care of an individual in a managed care
setting. Unlike traditional fee-for-service programs, under which an individual can self-refer to any provider or specialist, managed
care plans typically require an enrollee to seek prior authorization or a referral from a gatekeeper before certain services may be
obtained from the plan. Many plans use the enrollee’s primary care provider as the gatekeeper for diagnostic and treatment services.
Often, however, an enrollee must secure approval from a utilization review (UR) entity before access to hospitalization or expensive
treatment can be obtained.

Group health plan -- A group health plan is one in which a purchaser (generally an employer) buys or provides health care coverage
for members of the purchaser’s group (i.e., employees and their families). This is in contrast to individual health insurance policies that
are purchased directly by an individual. Insurance companies usually specialize in group or individual coverage, although some may
offer both. Group health plans include both fully insured and self-insured plans. Under the House version of the bill, group health
plans are defined broadly to include all employer-sponsored plans (i.e., ERISA plans (both fully insured and self-insured), as well as
non-ERISA plans (e.g., governmental plans and church plans)). Under the Senate version of the bill, the term “group health plan”
usually includes only self-insured ERISA plans.

HHS -- The U.S. Department of Health and Human Services administers the two big public health care programs: Medicare and
Medicaid. In addition, the Secretary of HHS has substantial responsibilities under the Public Health Service Act and the Health
Insurance Portability and Accountability Act of 1996 (HIPAA).

HIPAA -- The Health Insurance Portability and Accountability Act of 1996 (HIPAA) limited the extent to which group health plans
and issuers writing policies in either the group or individual marketplaces could impose preexisting condition limitations or exclusions.
In addition, the Act precluded group health plans and issuers providing coverage under group health plans from discriminating against
individuals on the basis of health-related factors. It also included provisions related to fraud and abuse, administrative simplification,
and electronic data use and transmission.

IRC or the Code -- IRC or “the Code” means the Internal Revenue Code.



                                                                  34
Issuers, or health insurance issuers -- Health insurance issuers are defined in the Health Insurance Portability and Accountability Act
of 1996 as insurance companies, insurance services, or insurance organizations (including health maintenance organizations) which are
licensed to engage in the business of insurance in a state and which are subject to state law regulating insurance (within the meaning of
ERISA section 514(b)(2)). Group health plans are not issuers.

MEWA -- A MEWA is a multiple employer welfare arrangement as defined in §3(40) of ERISA. Generally, MEWAs are sponsored
by associations of employers and may be fully insured or self-insured. Generally, a MEWA is a plan subject to ERISA. But even
MEWAs that are ERISA plans may be regulated by the states with respect to certain matters, such as solvency.

NIH -- NIH stands for the National Institutes of Health.

Non-ERISA group health plan -- A non-ERISA group health plan is one established or maintained for its employees by a
government (Federal, state or local), a church, or a church-affiliated agency (such as a hospital, educational institution, nursing home,
etc.).

Non-federal governmental plans -- Non-federal governmental plans are those sponsored by state or local governments for their own
employees. This is a term first used in HIPAA.

Nurse practitioner -- A nurse practitioner is a registered nurse with special advanced training who provides certain services (such as
primary care services) to patients under the direction of a physician. Most states require nurse practitioners meet state certification and
licensure requirements and have at least one year of advanced education.

PCP -- PCP stands for primary care provider or a primary care physician. A primary care provider is an individual who acts as a
gatekeeper for enrollees in a managed care plan. A PCP is generally a physician trained in family medicine or general practice, but a
PCP may also be a specially trained non-physician provider (such as a physician’s assistant or nurse practitioner). In some managed
care plans, children are permitted to use pediatricians as their PCP, and women can select an obstetrician/gynecologist as their PCP.
PHSA -- PHSA is the Public Health Service Act.

Physician incentive programs -- Physician incentive programs consist of direct or indirect, positive or negative economic incentives
for physicians to limit medical services to an enrollee. These take many forms, such as withholding a portion of the physician’s
compensation if the physician orders too many unnecessary tests. Generally these are tools used by the managed care plan to
encourage physicians to provide necessary, appropriate and efficient care, but if not properly structured and monitored may result in
the improper denial of care.



                                                                  35
Physician’s assistant -- A physician’s assistant is a trained, certified and licensed health care professional who performs certain tasks
(such as conducting a physical) under the direction of a physician.

Plan sponsor -- A plan sponsor is (1) the employer; if the group health plan is established or maintained by a single company or a
group of related companies; (2) an employee organization (e.g., labor union), if the group health plan covers the organization’s own
employees; or (3) a joint board of trustees, if the group health plan is established or maintained by two or more employers or an
association of employers (a multiple employer plan). The plan sponsor is also the joint board of trustees if the group health plan is
established or maintained by two or more employers and an employee organization under a collective bargaining agreement
(multiemployer plan).

POS -- A point-of-service option is a feature in a managed care plan that permits the enrollee to decide at the time he or she seeks
services whether to use a network provider or to go out of network to receive covered services. Some POS plans permit enrollees to
choose among a variety of health care delivery structures (such as an HMO, a PPO, or traditional indemnity coverage), with the degree
of cost-sharing the enrollee must assume varying based on the form of coverage selected for a particular service or treatment.

PPO -- A PPO (preferred provider organization) is a health care arrangement in which enrollees are given financial incentives (e.g.,
lower copayments or deductibles) if they chose to receive services from members of the plan’s provider network. Generally these
providers have agreed to a fixed fee schedule and are required to meet the health plan’s quality and UR guidelines.

Private right of action -- A private right of action refers to the ability of an individual to file a lawsuit in a court of competent
jurisdiction to enforce his or her rights under a statute. The right of an individual to sue depends on whether this right is granted under
the relevant law. Unless the law specifically authorizes a private right of action, individuals may not bring suit to enforce their rights.
For instance, ERISA §502 grants participants in employer-sponsored employee benefit plans (such as group health plans) the right to
sue to recover benefits due to them under the plan.

Punitive damages -- Punitive damages are money damages paid to an individual as compensation for an injury (or tort, see below).
Generally punitive damages are not required to bear a relationship to the economic harm the individual may have suffered, but are
rather imposed as a penalty or punishment on the wrongdoer for particularly bad conduct or for a pattern or practice of improper
behavior. Punitive damages are only available when they are authorized by statute. More than half the states permit punitive damages
for injuries caused by unfair insurance practices and improper benefit claims handling.

UR -- Utilization review is a process or procedure in which the medical appropriateness and effectiveness of a particular treatment or
service is reviewed with respect to a particular enrollee. UR can be prospective (i.e., requesting prior authorization of a covered
treatment or service), concurrent (e.g., occurring simultaneously with the provision of treatment or services, such as the evaluation


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performed when a patient is taken to the emergency room and stabilized), or retrospective (i.e., evaluating claims for payment after
treatment has been given or services are performed). Often group health plans contract with outside UR entities to provide these
services for their enrollees. Many states regulate UR entities through licensure statutes.

Remedies -- Remedies are what a successful plaintiff in a lawsuit can recover as damages for the injury he or she has suffered. For
example, under ERISA today, remedies are limited to contractual damages only. In other words, the successful plaintiff is entitled
only to the contractual benefit which, in a group health plan context, means only the benefit to which the plaintiff was entitled. If the
plaintiff no longer needs the benefit (for instance, because the plaintiff is dead or the window of opportunity to perform the necessary
treatment has closed), the plaintiff recovers nothing. ERISA does allow a court to award a successful plaintiff reasonable attorneys
fees and costs, but courts do so in about half the cases.

Right to sue -- This refers to the legal right of an individual to bring a lawsuit as an exercise of a private right of action (see above).

Self-insured plan -- A self-insured plan is one in which the employer retains the risk of paying health care claims. Claims are paid
directly by the employer either from the general assets of the company or through a tax-exempt trust into which employer and/or
employee contributions have been placed.

SSA -- The SSA is the Social Security Act. Both Medicare and Medicaid were enacted in 1965 as amendments to the Social Security
Act.

Statute -- A statute is a law.

Tort liability or tort remedies -- A tort is an injury. Tort liability or tort remedies involve compensation for injury. Some forms of
tort remedies are referred to as “make whole” remedies because they are intended to put the injured individual in the position that he or
she would have been had the injury not occurred. Every state imposes tort liability on individuals who deliberately or negligently
cause harm to others. In addition to any economic damages they may have suffered, individuals may also be compensated for pain and
suffering they may have experienced as a result of the injury. In more than half of the states, punitive damages (as discussed above)
may also be awarded.




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