[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 2196 Introduced in Senate (IS)]
103d CONGRESS
2d Session
S. 2196
To assure fairness and choice to patients and providers under managed
care health benefit plans, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 15 (legislative day, June 7), 1994
Mr. Wellstone (for himself and Mr. Burns) introduced the following
bill; which was read twice and referred to the Committee on Labor and
Human Resources
_______________________________________________________________________
A BILL
To assure fairness and choice to patients and providers under managed
care health benefit plans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Patient Protection Act of 1994''.
TITLE I--PROTECTION OF CONSUMER CHOICE
SEC. 2. PROTECTION OF CONSUMER CHOICE.
Nothing in this Act shall be construed as prohibiting--
(1) an individual from purchasing any health care services
with the individual's own funds, whether such services are
covered within any benefits package otherwise available to the
individual; and
(2) employers from providing coverage for benefits in
addition to any benefits package otherwise available to an
individual.
TITLE II--CERTIFICATION OF MANAGED CARE PLANS AND UTILIZATION REVIEW
PROGRAMS
SEC. 3. DEFINITIONS.
For purposes of this title:
(1) Qualified managed care plan.--The term ``qualified
managed care plan'' means a managed care plan that the
Secretary certifies, upon application by the program, as
meeting the requirements of section 4(b).
(2) Qualified utilization review program.--The term
``qualified utilization review program'' means a utilization
review program that the Secretary certifies, upon application
by the program, as meeting the requirements of section 4(c).
(3) Utilization review program.--The term ``utilization
review program'' means a system of reviewing the medical
necessity, appropriateness, or quality of health care services
and supplies provided under a health insurance plan or a
managed care plan using specified guidelines. Such a system may
include preadmission certification, the application of practice
guidelines, continued stay review, discharge planning,
preauthorization of medical procedures, and retrospective
review.
(4) Managed care plan.--
(A) In general.--The term ``managed care plan''
means a plan operated by a managed care entity (as
defined in subparagraph (B)), that provides for the
financing and delivery of health care services to
persons enrolled in such plan through--
(i) arrangements with selected providers to
furnish health care services;
(ii) explicit standards for the selection
of participating providers;
(iii) organizational arrangements for
ongoing quality assurance, utilization review
programs, and dispute resolution; and
(iv) financial incentives for persons
enrolled in the plan to use the participating
providers and procedures provided for by the
plan.
(B) Managed care entity.--The term ``managed care
entity'' includes a licensed insurance company,
hospital or medical service plan, health maintenance
organization, an employer or employee organization, or
a managed care contractor (as defined in subparagraph
(C)), that operates a managed care plan.
(C) Managed care contractor.--The term ``managed
care contractor'' means a person that--
(i) establishes, operates, or maintains a
network of participating providers;
(ii) conducts or arranges for utilization
review activities; and
(iii) contracts with an insurance company,
a hospital or medical service plan, an
employer, an employee organization, or any
other entity providing coverage for health care
services to operate a managed care plan.
(5) Participating provider.--The term ``participating
provider'' means a physician, hospital, pharmacy, laboratory,
or other appropriately authorized provider of health care
services or supplies, that has entered into an agreement with a
managed care entity to provide such services or supplies to a
patient enrolled in a managed care plan.
(6) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
SEC. 4. CERTIFICATION OF MANAGED CARE PLANS AND UTILIZATION REVIEW
PROGRAMS.
(a) In General.--
(1) Certification.--The Secretary shall establish a process
for certification of managed care plans meeting the
requirements of subsection (b) and utilization review programs
meeting the requirements of subsection (c).
(2) Review and recertification.--The Secretary shall
establish procedures for the periodic review and
recertification of qualified managed care plans and qualified
utilization review programs. Such procedures shall include
steps by which a health plan may remedy any deficiencies cited.
(3) Termination of certification.--If the Secretary
determines that a qualified managed care plan or qualified
utilization review program no longer substantially meets the
applicable requirements for certification, the Secretary shall
establish procedures for terminating the certification of the
plan or program for reasons including the failure of remedies
for deficiencies referred to in paragraph (2). Prior to the
date a termination becomes effective, the Secretary shall
provide the plan notice and opportunity for a hearing on the
proposed termination.
(4) Certification through alternative requirements.--
(A) Certain organizations recognized.--An eligible
organization (as defined in section 1876(b) of the
Social Security Act), shall be deemed to meet the
requirements of subsection (b) for certification as a
qualified managed care plan.
(B) Recognition of accreditation.--If the Secretary
finds that a State licensure program or a national
accreditation body establishes requirements for
accreditation of a managed care plan or utilization
review program that are at least equivalent to
requirements established under this section, the
Secretary may, to the extent appropriate, treat a
managed care plan or a utilization review program
accredited by such program or body as meeting the
applicable requirements of this section.
(b) Requirements for Certification of Managed Care Plans.--
(1) In general.--The Secretary shall establish Federal
standards for the certification of managed care plans,
including standards which require managed care plans to meet
the requirements described in paragraphs (2) through (6).
(2) Information on terms of plan.--Managed care plans shall
provide prospective enrollees information on the terms and
conditions of the plan so that the enrollees can make informed
decisions about accepting a certain system of health care
delivery. Easily understood, truthful, linguistically
appropriate and objective terms must be used in all oral and
written descriptions of a plan. Such descriptions shall be
consistent with standards developed for supplemental insurance
coverage under title XVIII of the Social Security Act.
Descriptions of plans under this paragraph must be standardized
so that customers can compare the attributes of the plans.
Specific items that must be included in a description of a plan
are--
(A) coverage provisions, benefits, and any
exclusions by category of service, provider, or
physician, and if applicable, any exclusions by
specific service;
(B) any and all prior authorization or other review
requirements including preauthorization review,
concurrent review, post-service review, post-payment
review and any procedures that may lead the patient to
be denied coverage for, or not be provided, a
particular service;
(C) financial arrangements or contractual
provisions with hospitals, utilization review
organizations, physicians, or any other provider of
health care services that would limit the services
offered, restrict referral or treatment options, or
negatively affect a physician's fiduciary
responsibility to patients, including financial
incentives not to provide medical or other services;
(D) an explanation of how plan limitations impact
enrollees, including information on enrollee financial
responsibility for payment for coinsurance or other
noncovered or out-of-plan services;
(E) the plan's loss ratios and an explanation that
they reflect the percentage of premiums expended for
health services; and
(F) enrollee satisfaction statistics, including
reenrollment statistics and a description of enrollees'
reasons for leaving the plan.
(3) Adequate access to physicians.--Managed care plans
shall be required to demonstrate that they have adequate access
to physicians and other providers so that all covered health
care services will be provided in a timely manner. This
requirement may not be waived and must be met in all areas
where the plan has enrollees, including rural areas.
(4) Financial reserves.--Managed care plans shall be
required to meet financial reserve requirements that are
established to assure proper payment for health care services
provided under the plan. The Secretary shall establish a
mechanism to provide adequately for indemnification of plan
failures even when a plan has met the reserve requirements.
(5) Provider input.--Managed care plans shall be required
to establish a mechanism under which physicians and other
providers participating in a plan have defined rights to
provide input into the plan's medical policy (including
coverage of new technology and procedures), utilization review
criteria and procedures, quality and credentialing criteria,
and medical management procedures.
(6) Credentials for physicians.--
(A) In general.--Managed care plans shall be
required to credential physicians furnishing health
care services under the plan. Any physicians within a
plan's geographic service area may apply for
credentials under the plan and at least once each year,
the plan shall notify such physicians of the
opportunity to apply for credentials.
(B) Credentialing process.--
(i) In general.--Each managed care plan
shall establish a credentialing process. Such
process shall begin upon application by a
physician to be included under the plan. Each
application by a physician shall be reviewed by
a credentialing committee with appropriate
representation of the applicant's medical
specialty.
(ii) Standards.--Credentialing under a plan
shall be based on objective standards of
quality with input from physicians credentialed
by the plan. Credentialing standards shall be
available to applicants and enrollees.
(iii) Economic considerations.--If economic
considerations, including practitioners'
patterns of expenditure per patient, are part
of a credentialing decision, objective criteria
must used in examining such considerations and
such criteria must be available to applicants,
participating physicians, and enrollees. Any
economic profiling of physicians must be
adjusted to recognize case mix, severity of
illness, age of patients and other features of
a physician's practice that may account for
higher or lower than expected costs. Economic
profiles must be made available to the
physicians profiled.
(iv) Graduate medical education.--If
graduate medical education is a consideration
in credentialing, equal recognition will be
given to training programs accredited by the
Accrediting Council on Graduate Medical
Education and by the American Osteopathic
Association.
(v) Recording decisions.--A record shall be
maintained of all decisions made under the
credentialing process and each applicant shall
be provided with reasons for an application
being denied or a contract not being renewed.
(vi) Due process.--Prior to initiation of a
proceeding leading to termination of a
contract, the physician shall be provided
notice, an opportunity for discussion, and an
opportunity to enter into and complete a
corrective action plan, except in cases where
there is imminent harm to patient health or an
action by a State medical board or other
government agency that effectively impairs the
physician's ability to practice medicine.
(vii) Reducing or withdrawing
credentials.--The same standards and procedures
used for an application for credentials shall
also be used in those cases where the plan
seeks to reduce or withdraw such credentials.
(viii) Appeals.--There shall be allowed a
due process appeal from all adverse decisions
affecting practitioners with whom a plan has
contracted. The due process appeal mechanisms
shall be as set forth in the Health Care
Quality Improvement Act of 1986 (42 U.S.C.
11101-11152).
(C) Discrimination against enrollees.--Managed care
plans shall be prohibited from discriminating against
enrollees based on health status or anticipated need
for medical services likely to lead to high expenses by
excluding practitioners with practices containing a
substantial number of such patients.
(7) Confidentiality of records.--Managed care plans shall
be required to establish procedures to ensure that all
applicable Federal and State laws designed to protect the
confidentiality of provider and individual medical records are
followed.
(c) Requirements for Certification of Utilization Review
Programs.--
(1) In general.--The Secretary shall establish Federal
standards for the certification of utilization review programs,
including standards which require such programs to meet the
requirements described in paragraph (2).
(2) Requirements.--Plans must have a medical director
responsible for all clinical decisions by the plan and provide
assurances that the medical review or utilization practices
used by the plans, and the medical review or utilization
practices of payers or reviewers with whom the plans contract,
comply with the following requirements:
(A) Screening criteria used in the review process,
the methods by which they are applied, and their method
of development, must be released to physicians and the
public upon request.
(B) Such criteria and methods must be based on
sound scientific principles and developed in
cooperation with practicing physicians and other
affected health care providers.
(C) Any person who recommends denial of coverage or
payment, or determines that a service should not be
provided, based on medical necessity standards, must be
of the same medical branch (allopathic or osteopathic
medicine) and specialty (specialties as recognized by
the American Board of Medical Specialties or the
American Osteopathic Association) as the practitioner
who provided the service.
(D) Each claimant or provider (upon assignment of a
claim) who has had a claim denied as not medically
necessary must be provided an opportunity for a due
process appeal to a medical consultant or peer review
group that is independent of the entity that performed
the initial review.
(E) Any individual making a final, negative
judgment or recommendation about the necessity or
appropriateness of services or the site of service must
be a comparably qualified health care professional
licensed to practice in the jurisdiction from which the
claim arose.
(F) Upon request, physicians and other
professionals will be provided the names and
credentials of all individuals conducting medical
necessity or appropriateness review, subject to
reasonable safeguards and standards.
(G) Prior authorization shall not be required for
emergency care, and patient or physician requests for
prior authorization of a nonemergency service must be
answered within 24 hours and qualified personnel must
be available for same-day telephone responses to
inquiries about medical necessity, including
certification of continued length of stay. If review
personnel are not available, medical services provided
shall be considered approved.
(H) Plans must ensure that enrollees, in plans
where prior authorization is a condition for coverage
of a service, are offered the opportunity to sign
medical information release consent forms upon
enrollment for use where services requiring prior
authorization are recommended or proposed by their
physician.
(I) When prior approval for a service or other
covered item is obtained, the service shall be
considered to be covered unless there was fraud or
incorrect information provided at the time such prior
approval was obtained.
(J) Plans must establish procedures for ensuring
that all applicable Federal and State laws designed to
protect the confidentiality of provider and individual
medical records are followed.
(d) Considerations in Developing Standards.--In developing
standards under subsections (b) and (c), the Secretary shall--
(1) review standards in use by national private
accreditation organizations and State licensure programs;
(2) recognize, to the extent appropriate, differences in
the organizational structure and operation of managed care
plans; and
(3) establish procedures for the timely consideration of
applications for certification by managed care plans and
utilization review programs.
(e) Timetable for Establishment of Standards.--
(1) In general.--Not later than 12 months after the date of
the enactment of this Act standards shall first be established
under this section.
(2) Revision of standards.--The Secretary shall
periodically review the standards established under this
section, and may revise the standards from time to time to
assure that such standards continue to reflect appropriate
policies and practices for the cost-effective and medically
appropriate use of services within managed care plans and
utilization review programs.
TITLE III--CHOICE OF HEALTH PLANS FOR ENROLLMENT
SEC. 5. CHOICE OF HEALTH PLANS FOR ENROLLMENT.
(a) In General.--Each sponsor, including a self-insured sponsor, of
a health benefit plan, who offers, provides, or makes available such
plan must provide to each eligible enrollee a choice of health plans
among available plans.
(b) Offering of Plans.--Each sponsor referred to in subsection (a)
shall include among its health plan offerings at least one of each of
the following types of health benefit plans, where available:
(1) A managed care plan, including a health maintenance
organization or preferred provider organization.
(2) A traditional insurance plan (as defined in subsection
(c)(1)).
(3) A benefit payment schedule plan (as defined in
subsection (c)(2)), pursuant to the following activities of the
Secretary:
(A) Not later than 12 months after the date of the
enactment of this Act, the Secretary shall--
(i) conduct a study on the projected impact
of benefit payment schedule plans on enrollees
and on the Nation's health care costs; and
(ii) submit a report to Congress on the
results of such study.
(B) The Secretary shall promulgate regulations to--
(i) assure that benefit payment schedule
plans, if approved, are affordable for all
enrollees and contribute to health care cost
containment; and
(ii) remedy any other significant
deficiencies identified by the study described
in subparagraph (A).
(c) Definitions.--For purposes of this section:
(1) Traditional insurance plan.--The term ``traditional
insurance plan'' includes plans that offer a health benefits
package and that pay for medical services on a fee-for-service
basis using a usual, customary, or reasonable payment
methodology or a resource based relative value schedule,
usually linked to an annual deductible and/or coinsurance
payment on each allowed amount.
(2) Benefit payment schedule plan.--The term ``benefit
payment schedule plan'' means a health plan that--
(A) provides coverage for all items and services
included in a health benefits package that are
furnished by any health care provider licensed under
State law of the enrollee's choice;
(B) makes payment for the services of a provider on
a fee-for-service basis without regard to whether or
not there is a contractual arrangement between the plan
and the provider;
(C) provides a benefit payment schedule that
identifies covered services and the payment for each
service covered by the plan; and
(D) applies no copayments or coinsurance.
SEC. 6. CHOICE REQUIREMENTS FOR POINT-OF-SERVICE PLANS.
(a) In General.--Each sponsor, including a self-insured sponsor, of
a health benefit plan that restricts access to providers, shall offer
to all eligible enrollees the opportunity to obtain coverage for out-
of-network items or services through a point-of-service plan (as
defined under subsection (e)(1)), at the time of enrollment and at
least for a continuous one-month period annually thereafter.
(b) Coinsurance.--A point-of-service plan may require payment of
coinsurance for an out-of-network item or service, as follows:
(1) The applicable coinsurance percentage shall not be
greater than 20 percent of payment for items and services.
(2) The applicable coinsurance percentage may be applied
differentially with respect to out-of-network items and
services, subject to the requirements of paragraph (1).
(c) Payment Disclosure Requirement.--All sponsors of point-of-
service plans and physicians and other professionals participating in
such plans shall be required to disclose their fees, applicable payment
schedules, coinsurance requirements, or any other financial
requirements that affect patient payment levels.
(d) Poverty Exclusion.--Any enrollee, including enrolled
dependents, whose income does not exceed 200 percent of the established
Federal poverty guideline for the applicable year, shall be charged no
more than the amount allowed under applicable plan limits. Such amount
shall be considered payment in full.
(e) Definitions.--For purposes of this section:
(1) Point-of-service plan.--The term ``point-of-service
plan'' means a plan that offers services to enrollees through a
provider network (as defined in paragraph (2)) and also offers
additional services and/or access to care by network or non-
network providers.
(2) Provider network.--The term ``provider network'' means,
with respect to a health plan that restricts access, those
providers who have entered into a contract or agreement with
the plan under which such providers are obligated to provide
items and services under the plan to eligible individuals
enrolled in the plan, or have an agreement to provide services
on a fee-for-service basis.
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