Senate RPC Legislative Notice:


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No. 11	June 25, 2001

S. 1052 -- The "Bipartisan Patient Protection Act" (McCain-Edwards-Kennedy)

Calendar No. 75
S. 1052 was introduced on June 14, 2001, and placed on the Senate Calendar on June 18. Because there was no committee referral, there is no committee report.

NOTEWORTHY

On Thursday, June 21, the Senate voted 98-0 to proceed to S. 1052, the "Bipartisan Patient Protection Act," sponsored by Senators McCain, Edwards, and Kennedy.

At press time there was no unanimous consent agreement governing time limits for consideration of or the offering of amendments to S. 1052.

Majority Leader Daschle has indicated his intention to keep the Senate in session until action on S. 1052 is completed. This may include staying in session through the July 4^th recess.

The Administration issued a 2 ½ page Statement of Administration Policy detailing its concerns with S. 1052. "The President strongly urges Congress to pass a strong patients' bill of rights this year that provides meaningful protections for patients, not a windfall for trial lawyers or a threat to Americans' ability to obtain and afford quality health care," says the SAP in part. The President "will veto the bill unless significant changes are made. . ." [Full text of the SAP can be found on pages 7-10 of this Notice.]

Two amendments to S. 1052 have thus far been disposed of. On Thursday, June 21, an amendment by Senators Hutchinson and Bond to accelerate full tax-deductibility of health insurance for the self-employed was defeated by a well-taken (52-45) constitutional point of order made by Finance Committee Chairman Baucus. On Friday, June 22, an amendment by Senator McCain expressed (89-1) the sense of the Senate that health plan enrollees should be able to appeal a health plan's decision not to cover participation in a clinical trial or its decision not to cover a visit to a medical specialist.

HIGHLIGHTS

S. 1052 would impose considerable costs on workers and employers, including making health insurance too expensive for anywhere from 1.3 million to 9.2 million more Americans. Already, some 44 million Americans are uninsured.

One of the ways it would do so is by creating broad causes of action against employers in federal and state courts. There would be no limit on damages, save a $5 million limit on punitive damages in federal court.

S. 1052 would encourage lawsuits by allowing enrollees to go straight to court without first having their complaint heard by medical reviewers.

S. 1052 would nullify thousands of health insurance laws and regulations that state legislators and governors have tailored to their own states' circumstances.

Cost of S. 1052

The Congressional Budget Office (CBO) has estimated that a previous and substantially equivalent iteration of S. 1052 (S. 872) would increase private health insurance premiums an average of 4.2 percent. Interestingly, CBO found S. 872 to be more costly than the last bill Senate Democrats brought to the floor (H.R. 2990 in the 106^th Congress).

Such an increase would come at a time when employers already are experiencing double-digit increases in the cost of employee health benefits.

According to the Employment Policy Foundation, S. 872 - and, by inference, S. 1052 - would cost the private sector $16 billion annually. CBO estimates indicate S. 1052 would result in $56 billion in lost wages over 10 years.

Data from CBO and the Kaiser Family Foundation indicate S. 1052 would cost a typical family with health coverage nearly $300 per year.

According to estimates from the independent Barents Group, S. 1052 could cause the average household to lose $143 in wages per year. Also, within four years the bill could eliminate as many as 134,000 jobs.

Many argue the greatest cost of increased health insurance regulation will be the increase in the number of uninsured Americans - people who can no longer afford health coverage due to the added cost of regulation. Currently, an estimated 44 million Americans lack health insurance. S. 1052 offers no remedy to those 44 million Americans, but rather significantly adds to their numbers.

Estimates of how many Americans would lose coverage due to S. 1052 vary. Data from the independent Lewin Group suggests 1.3 million Americans could lose coverage if the bill passes. Barents Group estimates yield a similar number. The White House estimates "at least" 4 million to 6 million additional uninsured as a result of S. 1052 [see "Administration Position" later in this Notice]. The Employment Policy Foundation estimates a previous iteration of S. 1052 - S. 872 - would cancel coverage for 9 million Americans.

Employer Liability

The McCain-Edwards-Kennedy bill would expose employers who voluntarily offer health benefits to liability in both state and federal courts. Page 145, line 3 of S. 1052 (as placed on the Calendar) reads: "a cause of action may arise against an employer".

The bill would expose employers to over 200 new causes of action under the Employee Retirement Income Security Act of 1974 (ERISA), the Consolidated Omnibus Reconciliation Act of 1985 (COBRA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and under S. 1052 itself.

Lawsuits over non-medically reviewable decisions would be heard in federal court. Neither a benefit denial nor demonstration of harm would be necessary to bring suit in federal court. Suit could be brought against a health plan (and an employer) for, among other things, notifying enrollees of a change in benefits 29 days before it takes effect, as opposed to the required 30 days. Employers would face unlimited economic and non-economic (pain and suffering) damages, plus up to $5 million in punitive damages.

Lawsuits over medically reviewable decisions would go to state court, where S. 1052 imposes no caps on damages whatsoever. (State caps on damages would not necessarily apply.)

Favoring Litigation Over Medical Review

S. 1052 would mandate the creation and structure of internal and external appeals processes for the purpose of allowing doctors to review coverage denials. Yet the bill would allow trial lawyers to skirt medical review and go straight to court for monetary damages.

Enrollees could skirt the external or even internal appeals processes and go straight to court for monetary damages simply by waiting 181 days from a coverage denial or claiming a benefit denial would cause "immediate and irreparable harm."

Also, no external review is required before contract disputes could go to federal court.

A Federal Take-Over of State Health Insurance Regulation

S. 1052 would mandate that health plans (1) allow enrollees direct access an OB/GYN, (2) include sufficient specialists in their provider networks or provide in-network coverage to out-of-network specialists, (3) cover what the treating physician considers a medically necessary hospital stay following breast cancer surgery, (4) cover patient participation in federally-funded clinical trials, (5) continue to provide coverage for up to 90 days to patients of doctors who leave the network, (6) cover emergency screening, stabilization, and (in certain cases) post-stabilization care in circumstances where a prudent layperson would believe the care necessary, (7) not restrict plan physicians' communications with patients, so long as the physicians are acting within the scope of practice, (8) provide in-formulary cost-sharing on non-formulary drugs when medically necessary, (9) not discriminate against providers based on their license or certification, (10) conform to Medicare's physician payment incentive rules, (11) pay claims according to Medicare standards, (12) not retaliate against enrollees who complain or appeal plan decisions, or against providers who report on the plan to the government, accreditation bodies, or the plan's management personnel, (13) provide enrollees with various plan information, and give 30 days' notice of any change in the plan (Internet disclosure does not qualify).

In addition, S. 1052 would require employers - including small employers - to offer at least one health plan that gives enrollees the option of choosing their own doctor out-of-network.

The above mandates would nullify thousands of health insurance laws and regulations that state legislators and governors have tailored to their own states' circumstances. This is because S. 1052 stacks the deck against state laws, using a mechanism the Senate has rejected in the past as too restrictive. If a state law regarding, for example, coverage of emergency care was not "substantially equivalent to" that provision in S. 1052, the state law would be preempted and the federal government would monitor industry compliance with that law.

The Herculean task of monitoring compliance with these mandates would fall to the Health Care Financing Administration (HCFA) - an agency that the General Accounting Office (GAO) reports has not been able to implement the much less complicated HIPAA. [See RPC paper, Patients' Bill of Rights: GAO Report on 4-Year Old HIPAA Suggests HCFA Couldn't Manage Kennedy-Dingell," May 19, 2000.]

BACKGROUND

The federal government exempts employer-provided health benefits from taxable income, which allows workers to receive tax-free medical care provided they pay for it through health coverage chosen by their employer. Two important consequences of this tax policy have led to today's patients' rights debate.
First, the untaxed status of health benefits and the fact that most medical care is paid for by someone other than the patient (i.e. employers) led to over-consumption and rising medical inflation, which roared in the 1980s and early 1990s, and is once again on the rise. Second, employers looking for ways to control costs began to implement various restrictions on the provision of health benefits. These restrictions - known generically as "managed care" - have helped to control costs but have done so by limiting patient and physician discretion.
In the 105th Congress, both parties drafted legislation to address the public's concerns with managed care. Because the Democrat minority refused several offers to debate the issue on the floor, the 105th Congress adjourned without final action by the Senate.
In January 1999, members of the Republican Health Care Task Force, chaired by Senator Nickles, introduced "The Patients' Bill of Rights-Plus Act" (S. 300, referred to the Committee on Finance), while Senators Kennedy and Daschle introduced the "Patients' Bill of Rights Act" (S. 6). While the Kennedy bill was a litany of federal mandates - even on those health insurance products already regulated by state governments - and causes of action against employers, the Nickles bill took a more measured approach. It did not expand employer liability. It regulated only where states could not. But most importantly, it took steps to expand access and return to patients the control over their health care that the federal government had taken away.
In this vein, the Nickles bill would have expanded the medical savings account (MSA) pilot program enacted as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The federal tax code tells patients they can buy their medical care tax-free, but only if they turn control over to their employer and their health plan. MSAs give patients that tax benefit and thereby allow patients to once again control their own medical decisions. Patients with MSAs always choose their own doctor. With MSAs, there are no gatekeepers, no mandatory referrals, and no treatment denials.
At the same time, MSAs make coverage more affordable. The General Accounting Office reports that more than one-third of participants in the limited MSA pilot program were previously uninsured. The Nickles bill removed the limitations that have kept millions of Americans from buying MSAs.
While HIPAA made MSAs available to a select few, the Nickles bill would have made MSAs available to all Americans. The Nickles bill also would have allowed self-employed Americans to deduct the full cost of their health insurance premiums immediately. Under current law, they still must wait until 2003.
The Nickles bill passed the Senate 53-47 on July 15, 1999. Democrats later tried to derail the House-Senate conference on patients' rights legislation by offering the House-passed legislation (H.R. 2990) in the Senate. That was defeated in favor of the conference committee's work-in-progress (offered as an amendment by Senator Nickles), which passed 51-47 on June 29, 2000.
The Nickles amendment represented a true effort to compromise with the House. It created a new cause of action against health maintenance organizations (HMOs) - not employers - with unlimited economic damages and up to $350,000 in non-economic damages.
Another bill, the "Bipartisan Patients' Bill of Rights Act of 2001" (S. 889, sponsored by Senators Breaux, Frist and Jeffords), also represents an attempt at compromise, although on the issues of scope and liability, it goes farther than the Senate has been willing to go in the past. [See the side-by-side comparison of S. 889 and S. 1052, attached.]
In many ways, the McCain-Edwards-Kennedy bill (S. 1052) is worse than its predecessors. They share common threads, however. They expose employers to liability. They serve various health care interest groups seeking coverage of their own agenda items. And they all serve the Democrat goal of a government takeover of America's health care system [see RPC's "Democrats' Goal is Government-Run Health Care," 6/20/01].

S. 1052 would extend the federal government's power over parts of our health care system traditionally regulated by the states.

S. 1052 would build a standard benefits package which all Americans must buy if they want health coverage.

The estimated 1.3 to 9 million Americans who would lose their health insurance due to S. 1052 - along with the 44 million already uninsured - might find a government-run system more attractive.

An aide to Senator Kennedy once explained this strategy when a reporter raised concerns that HIPAA would increase costs and the uninsured:

"It may be that ultimately the effect of our bill is to lead the government to take further steps to increase coverage and control costs of health care. My boss still wants universal coverage with cost containment, so from his point of view, the foot in the door is a good thing." [Investor's Business Daily, April 28, 1996]

And if there were any doubt that he was talking about a government-controlled health care system, here is a quote from Senator Kennedy on the campaign trail in 1996:

"We're going to get this done, and we're going to keep coming back at it. If we have a big sweep for the Democrats in the House and the Senate, we'll get single-payer."

Because the "big sweep" Senator Kennedy spoke of went the way of the Clinton Health Plan, Democrats have relied on incremental steps toward a complete government takeover of the health care system. The McCain-Edwards-Kennedy bill is another step toward that goal.
The health of the American people is too important to be sacrificed to such a big-government vision. The Senate should instead focus giving patients greater access and control the only way the federal government can: by undoing the harmful tax treatment of health insurance with MSAs.

BILL PROVISIONS

For a detailed description of S. 1052's provisions, see the attached side-by-side analysis prepared by the staffs of Senators Frist, Breaux, and Jeffords of the "Bipartisan Patients' Bill of Rights Act of 2001" (S. 889, sponsored by Senators Breaux, Frist, and Jeffords), and S. 1052.

ADMINISTRATION POSITION

The Bush Administration's Statement of Administration Policy (SAP) on S. 1052 follows in its entirety:
June 21, 2001
(Senate)

S. 1052 - Bipartisan Patient Protection Act
(Sens. McCain (R) AZ, Kennedy (D) MA, Edwards (D) NC)
The President strongly supports passage of a patients' bill of rights this year and has been working with members of both parties since the first week of the Administration to forge a compromise. Congress has been divided on this issue for far too long at the expense of patients and their families. The President strongly urges Congress to pass a strong patients' bill of rights this year that provides meaningful protections for patients, not a windfall for trial lawyers or a threat to Americans' ability to obtain and afford quality health care. On February 7, 2001, the President transmitted to Congress his principles for a bipartisan patients' bill of rights and urged Congress to move quickly on this important issue.
The President's principles called for passage of a patients' bill of rights that ensures all Americans enjoy strong patient protections, including: access to emergency room and specialty care; direct access to obstetricians, gynecologists, and pediatricians; access to needed prescription drugs and approved clinical trials; access to health plan information; a prohibition of "gag clauses"; consumer choice provisions; and continuity of care protections. The President also recognizes, however, that many States have passed strong patient protection laws already, some of which have been in force for over a decade. To the extent possible, a Federal patients' bill of rights should give deference to these effective State laws.
The President's principles emphasized the importance of providing patients who have been denied medical care with the right to a fair, prompt, and independent medical review, which will ensure that disputes are resolved quickly and inexpensively and that patients receive the quality care they deserve.
The President stated that only after this independent review decision is rendered should we resort to the costlier, time-consuming remedy of litigation in Federal courts to ensure that health plans are held liable for wrongful decisions.
The President's principles also reminded Congress of the necessity of avoiding unnecessary and frivolous lawsuits, which will only serve to drive up costs and leave more individuals without insurance coverage. S. 1052 will significantly increase health insurance premiums and the number of uninsured. According to the Congressional Budget Office, health insurance premiums under S. 1052 as originally drafted would increase by over 4%. If the effects of litigation risk on the practice of medicine and of the reduced ability of health plans to negotiate lower rates were included, CBO's estimated cost impact could be much higher, by 4-5% or more. This is in addition to the estimated 10-12% premium increases employers are already facing in 2001. Further, leading economists have predicted that employers drop coverage for approximately 500,000 individuals when health care premiums increase by 1%. According to these estimates, S. 1052 could cause at least 4-6 million Americans to lose health coverage provided by their employers.
The President is encouraged by efforts in the Senate, like those of Senators Frist, Breaux, and Jeffords, to develop a common sense compromise that forges a middle ground on this issue and meets the President's principles.
While the President strongly supports a comprehensive and enforceable patients' bill of rights and has been working with members of both parties to enact legislation this year, he believes that S. 1052 would encourage costly and unnecessary litigation that would seriously jeopardize the ability of many Americans to afford health care coverage.
The President objects to the liability provisions of S. 1052. The President will veto the bill unless significant changes are made to address his major concerns. In particular, the serious flaws in S. 1052 include:

S. 1052 circumvents the independent medical review process in favor of litigation. The President believes that patients should be given care first -- litigation should be the last resort. Patients should exhaust the medical review process first, allowing doctors, not trial lawyers, to make decisions about medical care.

S. 1052 jeopardizes health care coverage for workers and their families by failing to avoid costly litigation. S. 1052 overturns more than 25 years of Federal law that provides uniformity and certainty for employers who voluntarily offer health care benefits for millions of Americans across the country. The liability provisions of S. 1052 would, for the first time, expose employers and unions to at least 50 different, inconsistent State-law standards. The result will inevitably be that employers and unions will be forced to pay for different benefits from State to State, even within a particular State, based on varying precedents set in State courts and leading to inconsistent standards of care for patients. Further, S. 1052 imposes no limitations on State court damages, and it is not clear whether existing State-law caps would apply to the broad, new causes of action in State courts that S. 1052 creates.

S. 1052 also would allow causes of action in Federal court for a violation of any duty under the plan, creating open-ended and unpredictable lawsuits against employers for administrative errors. These new Federal claims do not have any limitations on the amount of noneconomic damages, creating virtually unrestrained damage awards that are limited only by an excessive $5 million cap on punitive damages.
Moreover, S. 1052 would subject employers and unions to frequent litigation in State and Federal court under a vague "direct participation" standard, which would require employers and unions to defend themselves in court in virtually every case against allegations that they "directly participated" in a denial of benefits decision. Because such determinations are inherently fact-specific, any such allegation will force a costly and time-consuming court process and result in varying State interpretations of "direct participation," forcing employers to adhere to different standards in every State.

S. 1052 fails to provide a fair and comprehensive remedy to all patients. The President believes the new Federal law should establish a comprehensive set of rights and remedies for patients. S. 1052 instead encourages costly litigation by providing no effective limitations on frivolous class action suits and allows trial lawyers to go on fishing expeditions to seek remedies under other Federal statutes.

S. 1052 subjects physicians and all health care professionals to greater liability risk. S. 1052 would expand liability for physicians and all health care professionals in State courts well beyond traditional medical malpractice by permitting new, undefined causes of action in State courts for denials of medical benefits. This expanded litigation against physicians and all health professionals will create an opportunity to circumvent State medical malpractice caps that may not apply to these new causes of action.

Extraneous User Fee Provision. The Administration objects to inclusion in S. 1052 of an extraneous revenue-raising provision (section 502), which extends for multiple years Customs charges on transportation, passengers, and merchandise arriving in the country.

Pay-As-You-Go Scoring
S. 1052 would affect direct spending; therefore, it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990. OMB's preliminary scoring estimate of the bill is under development.

The following is a letter from President Bush's Domestic Policy Advisor Margaret LaMontagne to Senate Republican Leader Lott rebutting claims by the authors of S. 1052 that the bill mirrors Texas' Patients' Bill of Rights law [emphasis added by RPC]:

THE WHITE HOUSE
Washington, June 22, 2001
Dear Mr. Leader:
Thank you for your inquiry regarding the Texas Patients' Bill of Rights. Numerous questions have been raised about the substance of that legislation. I am happy for the opportunity to clear up any confusion. As you may know, I was a policy advisor to then Governor Bush during his tenure as Governor and currently serve as Assistant to the President for Domestic Policy. I would be delighted to provide any additional information that would be helpful to Congress during this important debate.
History of Texas Patients' Bill of Rights
As Governor, President Bush signed five patient protection bills and allowed a sixth to become law without his signature. Throughout the legislative debate, he strongly supported efforts to provide patients with comprehensive patient protections and access to a strong independent review procedure. Governor Bush focused on the goal of providing quality care to patients by ensuring timely and independent medical review of HMO decisions. He stressed that legislation should focus on protecting patients, not trial lawyers. And he emphasized that, while patients should be able to hold HMOs liable in court, liability provisions should be drawn narrowly to ensure that they do not cause large increases in premiums or raise the number of uninsured.
When, in 1995, the Texas Legislature sent Governor Bush a Patients' Bill of Rights that created loopholes and exempted a major HMO from its provisions, Governor Bush vetoed the legislation, stating that he would not sign a bill that favored special interests over patients. He then worked with the Texas Commissioner of Insurance to draft strong patient protection regulations that formed the model for the bills he signed into law the next biennial legislative session.
The Patients' Bill of Rights Governor Bush signed in Texas in 1997 has been widely regarded as among the strongest in the country. Patients in Texas now have comprehensive patient protections, and Texas independent review organizations have considered claims by roughly 1400 patients, approximately half of which have resulted in partial or complete reversals of the health plan's decision. Perhaps because of the success of the Texas legislation, some of the Congressional sponsors of legislation have insisted that their bills most closely resemble, and give the greatest deference to, the Texas Patients' Bill of Rights. In particular, some supporters of the bill offered by Senators McCain, Kennedy and Edwards have argued that their bill, S. 1052, would adopt, roughly, Texas law. We strongly disagree.
S. 1052 departs fundamentally from the model adopted in Texas. S. 1052 would threaten to preempt the strong patient protections adopted in states like Texas, would allow causes of action in state and federal court much broader than those authorized in Texas, and would threaten to upset the careful safeguards imposed by the Texas legislature regarding employer protections and caps on liability.
Preempting Texas Patient Protections
The bill sponsored by Senators McCain, Kennedy and Edwards, far from protecting good state laws like those in Texas, threatens to override them by imposing a preemption standard that gives virtually no deference to states. The bill does not allow states to apply their own strong patient protections even when the protections they offer are consistent with federal law. Rather, S. 1052 would require that each state requirement be "at least substantially equivalent to and as effective as" each federal requirement, without requiring the Department of Health and Human Services to give deference to the need for flexibility or the state's determination that its standards best protect its citizens. We believe that this provision in S. 1052 would give the federal government too much latitude to override state law and undo the good work of states like Texas.
Cause of Action
Another key difference between Texas law and S. 1052 relates to the breadth of the cause of action. The legislation enacted in Texas created a narrow cause of action against HMOs for any wrongful "health care treatment decision," defined by the Texas legislature as "a determination made when medical services are actually provided by the health care plan and a decision which affects the quality of the diagnosis, care, or treatment provided to the plan's insureds or enrollees." Tex. Civ. Prac. & Rem. Code §88.001. This language has been interpreted to apply only to claims alleging wrongful delivery of medical care, as opposed to decisions by an HMO regarding benefit determinations. As the United States Court of Appeals for the Fifth Circuit stated last year, the Texas liability provisions: "impose liability for a limited universe of events. The provisions do not encompass claims based on a managed care entity's denial of coverage for a medical service recommended by the treating physician: that dispute is one over coverage, specifically excluded by the Act. Rather, the Act would allow suit for claims that a treating physician was negligent in delivering medical services, and it imposes vicarious liability on managed care entities for that negligence." Corporate Health Inc., Inc. v. Tex. Dept. of Ins., 215 F.3d 526, 534 (5th Cir. 2000).
Unlike the narrow cause of action provided in Texas, S. 1052 allows expansive causes of action in both state and federal court. Under S. 1052, state courts would consider sweeping lawsuits related to denials of claims for benefits, while federal courts would hear cases related to violations of administrative duties under the plan. Neither cause of action is currently available in Texas state court. And, as drafted, both are excessively broad and would invite frequent and costly litigation.
Employer Protections
Another fundamental difference between Texas law and S. 1052 relates to the treatment of employers. When the Patients' Bill of Rights was debated in Texas, the legislature acted decisively to protect employers - and their employees - from costly litigation by prohibiting lawsuits against employers. The Texas statute clearly states: "This chapter does not create any liability on the part of an employer." Tex. Civ. Prac. & Rem. Code §88.002(e). This protection was considered essential, by the Texas legislature and by Governor Bush, to ensuring that the new liability provisions did not create an incentive for employers to drop health coverage altogether.
Conversely, S. 1052 invites frequent litigation against employers by subjecting them to liability under a vague "direct participation" standard. Under this standard, employers can be held liable for "the actual making of [a] decision or the actual exercise of control in making [a] decision." Because the question whether an employer "exercised control" in a decision is inherently fact-based, employers will be forced to defend at trial in virtually every case alleging a wrongful denial decision. Moreover, the interpretation of "direct participation" will differ in the various state courts, forcing employers to comply with different standards throughout the country.
This treatment of employers is a radical departure from the approach adopted in Texas and will create incentives for employers to drop employee health coverage entirely, further increasing the number of uninsured.
Additional Protections
Texas adopted numerous other protections to ensure that lawsuits benefit patients and not trial lawyers. For example, as Governor, President Bush signed legislation that limits punitive damages to the greater of $200,000 or two times economic damages plus non-economic damages of no more than $750,000. Tex. Civ Prac. and Remedies 41,007. S. 1052, conversely, allows for unlimited non-economic and punitive damages in state courts, imposes no limitation on non-economic damages in federal court, and limits punitive damages in federal court to the excessively high figure of $5 million. Further, it is not clear that the new state causes of action under S. 1052, which will no doubt include physicians in many cases, would be subject to the various state medical malpractice caps.
Finally, Texas law discourages patients from bringing frivolous claims by requiring that when a patient files suit he must submit either a written report by a medical expert that supports his case or must file a bond. Tex. Civ. Prac. & Rem. Code §88.002. S. 1052 has no procedural requirements to ensure that patients bring only medically meritorious claims to court. Indeed, that legislation would allow a patient to bring suit even if a panel of independent medical experts concludes that his claim is meritless.
Summary
Supporters of S. 1052 have made much of the fact that few lawsuits have been filed under the Texas Patients' Bill of Rights. We believe that this fact is attributable to the emphasis in Texas on quality of care and strong independent review, the careful drafting of the Texas liability provisions, the protections provided to employers, the exhaustion requirement, and the imposition of caps and other limitations to discourage frivolous suits. We strongly believe that the success in Texas will not be mirrored on the federal level unless substantial changes are made to the liability provisions of S. 1052.
We urge Congress to send a strong and effective Patients' Bill of Rights - one that meets the President's principles - to the President's desk.
Sincerely,
MARGARET LAMONTAGNE,
Assistant to the President for Domestic Policy

COST

According to the Congressional Budget Office, an earlier version of S. 1052 - S. 872 - would (1) increase the cost of private health insurance premiums by 4.2 percent, and (2) cause a loss of nearly $7 billion in Social Security revenue over 10 years. (By increasing the price of employer-provided health benefits, S. 1052 would force employers and workers to shift compensation from taxable wages to untaxed health benefits.) These estimates indicate S. 1052 would cause a loss in wages of $56 billion over 10 years.
The independent Lewin Group estimates that every 1-percentage-point increase in health insurance premiums makes health insurance unaffordable for an additional 300,000 Americans. By this estimate, S. 1052 would make health insurance unaffordable for 1.3 million Americans. Estimates from the independent Barents Group suggest a similar increase in the number of uninsured. The Bush Administration cites figures that suggest S. 1052 could increase premiums as much as 9 percent and eliminate health insurance for as many as 6 million Americans [see "Administration Position," above]. According to the Employment Policy Foundation, S. 872 - and, by inference, S. 1052 - would deprive an additional 9.2 million Americans of health insurance, and would cost the private sector $16 billion annually.

OTHER VIEWS

The following statement was made on the Senate floor by Senator McCain in response to the President Bush's threat to veto S. 1052 absent significant modification [Congressional Record, June 22, 2001, S6627]:

Mr. McCAIN. Madam President, I intend to speak again shortly before the vote, but I would like to discuss the President's threat to veto the Patients' Bill of Rights, the letter that was sent over yesterday.
I am disappointed that the President issued a veto threat yesterday regarding our bipartisan bill protecting America's patients. However, I continue to pledge my cooperation in any sincere effort to reach fair compromises on the outstanding issues that still divide us. Negotiations continue. We will continue over the weekend, and into next week, in the continued hopes we can reach agreement.
I repeat, we are in agreement on the vast majority of issues. It would be a terrible shame for us to not be able to resolve those remaining differences.
But we cannot compromise on our resolve to return control of health care to medical professionals, and to hold insurers to the same standard of accountability to which doctors and nurses are held. That is all we are seeking and all that the American people expect from us, a fair and effective remedy to a grave national problem.
Following are some concerns that were raised in the veto threat regarding our bipartisan bill that do not accurately represent our legislation.
In the President's threatened veto message, he said that the legislation will only serve to drive up costs and leave more individuals without health insurance coverage.
The reality is, the year after Texas passed its liability protections, premiums actually decreased; and last year the number of people with insurance increased by over 200,000. In their annual report, the Census Bureau attributed a large portion of the increase in the number of insured Americans to the increase in employer-sponsored coverage.
As the Congressional Budget Office has stated:

'[A] reliable estimate of the coverage declines associated with a mandate can only be determined by analyzing the specific legislative proposal.'

No such analysis on the bill before the Senate has been produced.
In the Presidential statement, it said that our legislation circumvents the independent medical review process in favor of litigation.
The reality is, no patient and no physician wants to go to court just to seek the care they need or to avoid being harmed. Under our legislation, patients must exhaust internal and external appeals before going to court. That is why the legislation requires that all appeals be exhausted. The sole exception is when death or irreparable injury is incurred as a result of the denial. Even in that case, either party can request the appeals process continue and the results of the process be considered in court.
In the Presidential statement, it said this legislation overturns more than 25 years of Federal law, and in so doing, would not ensure that 'existing state law caps would apply to the broad, new causes of action in state courts.'
The reality is, the legislation corrects the unintended consequences of the 25-year-old loophole contained in ERISA, the Employee Retirement Income Security Act, which gives HMOs special legal protections - not enjoyed by any other industry - from legal recourse if they make medical decisions that result in injury or death. Our legislation merely accepts Chief Justice Rehnquist's recommendation adopting the policy of the Federal Judicial Conference that 'in any managed care legislation, the state courts be the primary forum for the resolution of personal injury claims arising from the denial of health care benefits, should Congress determine that such legal recourse is warranted.'
I hope my friends on this side of the aisle will pay attention to Chief Justice Rehnquist's words.
In so doing, this legislation simply returns to how this Nation has overseen disputes in the courts over the last 200 years and applied the same standards with which all other industries comply.
Finally, by deferring explicitly to State courts on medical decision disputes, this legislation specifically accepts tort reform and caps that States have adopted, all of which exceed any Federal tort reform currently in place.
The President's statement goes on to say this legislation would allow causes of action in Federal court for violation of any duty under the plan, creating open-ended and unpredictable lawsuits against employers for administrative errors.
In reality, there would be no open-ended, unpredictable lawsuits as a consequence of this legislation. Plans would be free of any liability if they followed their own plan rules and did not make decisions that explicitly caused injury or death. Moreover, if they follow the internal appeals process provided for in this legislation, it is extremely unlikely that any business or plan would be exposed to any liability risk at the Federal level.
The President's statement said that the legislation would subject employers and unions to frequent litigation in State and Federal court under a vague standard of direct participation. The reality is, this legislation related to direct participation is neither vague nor would it subject employers to frequent litigation in State and Federal court. The bill language specifically states that direct participation is defined as 'the actual working of [the] decision or the actual exercise of control in making [the] decision or in the [wrongful] conduct.'

This legislation specifically exempts businesses from liability of every type of action except specific actions that are the direct cause of harm to a patient.
We are having continuing negotiations to try to tighten further language to prevent employer liability.
Finally, the President's statement says this legislation subjects physicians and all health care professionals to greater liability risk. My only answer to that: Read the bill. Section 302(a)(1) states that physicians, other health care professionals, insurance agents, and health care record keepers have explicitly been exempted from any new liability exposure. In fact, by extending accountability provisions to HMOs, this legislation will actually serve to protect physicians and other health care professionals from unwarranted, unnecessary liability exposure.
Once again, the critics need to read the bill before inaccurate charges are made.
Madam President, there is either a misunderstanding or a failure to comprehend what this legislation is all about in the message that was sent over and the threatened veto. Again, I urge all of our friends and adversaries of this bill to continue to negotiate, to continue to resolve the issues that exist between us so that we can come to closure on this.
I repeat, we cannot sacrifice the principles upon which this legislation is based, but we certainly can discuss and perfect this legislation. That is something we want to continue to do. As we speak, there are groups who are discussing ways of improving the legislation. We are open to it.

POSSIBLE AMENDMENTS

Pending to S. 1052 at press time are a motion to commit S. 1052 to the Finance Committee (Senator Grassley) with instructions, and a Gramm (TX) amendment regarding exempting employers from lawsuits. By unanimous consent, on Tuesday, June 26 at 11:30 a.m., the Senate will vote first on the Grassley motion to commit, and then on the Gramm amendment, with no second-degree amendments in order prior to the votes. Pursuant to the same agreement, the Senate will act on a McCain amendment, and then Senator Gregg (or his designee) will be recognized to offer an amendment.

Comparison of Key Issues in 2000 Senate-Passed Amendment,
Frist-Breaux-Jeffords Bill, and McCain-Edwards-Kennedy

Sponsors SENATE-PASSED AMENDMENT FRIST-BREAUX-JEFFORDS McCAIN-EDWARDS-KENNEDY

Title (as passed by Senate on June 29, 2000)

Amendment No. 3694 to H.R. 4577
"Bipartisan Patients' Bill of

Rights Act of 2001," S. 889

(Introduced May 15, 2001)
"Bipartisan Patient Protection Act of 2001," S. 1052

(Introduced June 14, 2001)

CBO Score
2.0% - increase in private health premiums. 2.9%- increase in private health premiums. 4.2%- increase in private health premiums.

Scope Patient protections generally apply to 56 million Americans covered under self-insured group health plans, because this group is not currently protected by state patient protection laws. Retains and does not preempt current state authority to regulate fully-insured group and individual health plans.
Appeals provisions apply to all 131 million Americans in private employer-sponsored group health plans.

Does not apply to dental plans or other limited scope plans.
Applies to 170 million Americans.

State laws "consistent with" the new federal requirements would remain in place- no preemption.

Dental plans would also be required to offer point of service coverage.
Applies to up to 181 million Americans (includes self-insured non-federal governmental plans) .
State laws preempted, unless "substantially equivalent to" the federal law (and do not prevent the application of the Act's requirements).

All provisions (including point of service coverage) would apply to limited scope dental and vision plans.

Initial and Internal Appeals
Establishes timeframes for initial coverage determinations and internal appeals for routine, expedited, concurrent, and retrospective determinations.
SIMILAR
SIMILAR- Except time frames are shorter for initial coverage and internal appeals, because bill requires decisions within "days" as opposed to "business days." Notwithstanding time frames, also requires decisions to be made under more subjective "medical exigencies" standard.

External Appeals For medically reviewable decisions, requires plans to provide an independent external appeals process. Allows plans to require enrollee exhaust internal appeals process and give enrollee 60 business days to file request for review.
Plans must contract with and select independent reviewers under rules requiring unbiased selection.

Requires external reviewers determination be based on the medical condition of the patient, the valid, relevant scientific and clinical evidence, including peer reviewed medical literature or findings including expert consensus.

Reviewer may reverse or uphold plan decision.

"Safe Harbor" - Reviewer must adhere to plan's definitions of medical necessity, experimental/investigational or other equivalent terms- if they are synonymous with state statute/regulations or definitions used under Medicare, Medicaid, and FEHB - otherwise, not bound by the plans' definitions.
SIMILAR
SIMILAR

SIMILAR

SIMILAR

No "safe harbor"- Reviewer must consider, "but not be bound by" the plan's definition of "medically necessary and appropriate" or "experimental or investigational" or other equivalent terms that are used by the plan.
Enrollee given 180 days (not business days) to file request for review. Notwithstanding time frames, also requires decisions to be made under more subjective "medical exigencies" standard.

SIMILAR, but new language added prohibiting plans from selecting a reviewer, despite the requirement that plans contract with reviewers.

SIMILAR- except medical literature or findings include expert opinion.

Reviewer allowed to reverse, uphold, or modify plan decision.

No "safe harbor" for a plan that abided by contract terms - Reviewer must consider, "but not be bound by" the plan's definition of "medically necessary and appropriate" or "experimental or investigational" or other substantially equivalent terms.

Civil Enforcement of External Review Allows the Secretary to assess a penalty of $10,000 against a plan that fails to comply with any applicable timeframe in this section and may assess an additional $10,000 penalty against the plan, payable to the enrollee, if the plan ultimately fails to comply with the decision. SIMILAR SIMILAR, but includes civil penalties on plan (up to $1,000 per day) for failure to abide by review decision, additional $10,000 penalty payable to enrollee if plan fails to meet reviewer's timelines, and additional penalties for patterns or practice of repeated violations (not to exceed the lesser of 25% of the aggregate value of benefits not provided or $500,000).

Liability
Tort (Personal Injury) Causes of Action
Two new federal causes of action. Cases must be brought in federal court.

May sue in federal court when plan fails to comply with the external review. Ordinary care standard.

May sue in federal court for an injury that was caused by a delay in providing care when external reviewer reverses plan's internal review decision. Bad faith is the standard.
SIMILAR

SIMILAR

SIMILAR, except liability may start sooner with plan's initial decision and standard is ordinary care.
Two new broad causes of action - one federal and one state.
Federal: Sue in federal court for negligently making non-medically reviewable decisions or in the performance of any duty under the plan (e.g., violations of plan info. disclosures, financial incentives, etc.) - so no requirement of a benefit denial.

State: Sue in state court for negligently making medically reviewable decisions (i.e., any decision eligible for external review)

** CHANGE from S. 872- Attempts to avoid situation in which a defendant would be simultaneously defending himself in both federal and state courts based on same incident. Attempts to resolve this situation by stating that a medically reviewable decision would go to state court unless otherwise preempted. This simply reiterates another provision of the bill that says medically reviewable decisions go to state court. It does NOT address the problem of having a nonmedically reviewable decision go to federal court while a medically reviewable decision (arising from the same set of facts) would go to state court.

Liability

Civil Penalties for Harm Caused by Contract Denial (Non-medically reviewable decision)
None Creates civil penalty (up to $100,000) for contract denials if enrollee is denied a covered benefit that is not eligible for external medical review and enrollee is harmed. Creates federal cause of action with unlimited econ and non-econ damages, plus up to $5 million in punitives, for contract decisions. No requirement to try external review first.

Liability

Exhaustion
External review must be exhausted before going to court.

Silent on injunctive relief, because current law allows for injunctive relief.
External review must be exhausted before going to court. However, bill explicitly states that patient may sue in court for injunctive relief (i.e., the care), at any time if they can prove that exhausting the appeals process would cause irreparable harm. Specifies no damages without exhaustion. Exhaustion of appeals not required to obtain monetary damages where: 1) the individual merely alleges that irreparable harm might occur prior to completion of the external review; or 2) the injury is first known to the individual after the deadline for requesting a review.

** CHANGE from S. 872- eliminates word "allege" from exceptions to external review, but unclear as to standard of proof and as to who would make the decision that "irreparable harm" would occur by completing appeals process.

Liability
Caps
Economic damages are uncapped and noneconomic damages are capped at $350,000 and are indexed to inflation.

Silent on state court causes of action and on damages in state court.
Federal causes of action - Economic damages are uncapped and noneconomic damages are capped at $500,000 and are indexed to inflation. No punitives allowed.

Explicitly saves state authority in suits (including liability against a health plan) involving quality of care, treatment decisions, and practice of medicine.
Federal causes of action - Economic and noneconomic damages are uncapped. Punitive damages (labeled "civil assessments") are capped at $5 million.

State causes of action - Economic, noneconomic, and punitive damages are uncapped (to the extent provided by state law).

Liability

Employer Protections
Protects employers from frivolous lawsuits by enabling them to designate a party or parties (designated decision maker) who will have clear and exclusive authority to make determinations that give rise to a cause of action. The designated decision maker must demonstrate that they can fulfill their (financial) responsibilities and gives the Secretary the power to promulgate regulations to accomplish this. SIMILAR, except more thoroughly addresses designated decision maker qualifications. Also protects small employers by automatically designating insurer as designated decision-maker, unless employer specifically chooses to self-designate. Employers may be held liable, to the extent there is "direct participation" by the employer in a coverage decision. Direct participation broadly defined with several safe harbors for selecting the plan, conducting cost benefit analyses, and designing or modifying a plan. Employers would still have to raise these defenses in court.

Liability
Physician Protections
A physician cannot be liable unless he or she accepts designation in writing and meets the qualifications of a designated decisionmaker. No specific language to protect physicians where there is a failure to designate. Similar, but offers more protection to physicians by automatically designating the insurance issuer and by strengthening the financial qualification requirements of a designated decisionmaker. Also includes specific language to protect physicians where there is a failure to designate. Exposes physicians to new federal liability in their capacity as "agents" of health plans for non-medically reviewable decisions/duties of the plan. Could be simultaneously liable for breach of contract in federal court and for medical malpractice tort claims in state court.

** CHANGE from S. 872- Attempts to carve out the "treating physician" (and any person acting under that treating physician's direction) as well as the treating hospital from agent liability.

Liability

Class Action Suits
Attempts to eliminate RICO class action claims. SIMILAR - but more effectively eliminates RICO class action claims. Also clarifies definition of a "class" under ERISA. Eliminates certain ERISA class action claims, but places no limits on RICO class action claims.

OB/GYN Requires plans that cover OB/GYN care and that require the designation of a primary care provider (PCP) to provide direct access to a participating physician who specializes in OB/GYN care. Allows plans to require that an OB/GYN (not enrollee) seek authorization for services if the PCP would have been required to obtain such authorization. SIMILAR SIMILAR - but requires plans provide direct access to a health care professional who specializes in OB/GYN care. Silent on whether plan may conduct quality and utilization review procedures or require provider seek authorization that PCP would have been required to obtain.

Access to Specialists Requires timely coverage for access to appropriate specialists when such care is covered by the plan. If the plan determines that no participating specialist is available to provide necessary care. Plan is required to provide coverage for such care by a non-participating specialist at no additional cost to the enrollee beyond what the enrollee would pay for a participating specialist. Requires plans to allow enrollees with "ongoing special conditions" to receive a referral to a specialist and allow the specialist to authorize referrals, tests, etc. subject to a treatment plan. SIMILAR SIMILAR - but unclear as to who decides whether an out-of-network specialist is needed and has a broader definition of "ongoing special condition" (includes a "condition or disease that is potentially disabling, or congenital...") that triggers the right to access an out-of-network specialist.

Specifies that the mandate to provide access to an out-of-network specialist is triggered if an in-network specialist is "not available." Bill language is unclear as to whether that is a matter of distance needed to travel or other factors. In western states and rural areas, distance needed to travel could mean that few in-network specialists would be considered "available."

Breast Cancer Treatment Requires plans that provide medical and surgical benefits to provide coverage for an inpatient hospital stay "for a period of time as is determined by the attending physician, in consultation with the patient, to be medically necessary" following a mastectomy, lumpectomy, or lymph node dissection for the treatment of breast cancer. SIMILAR SIMILAR

Clinical Trials Requires plans to cover routine patient costs associated with participation in NIH, FDA, VA, or DOD-approved or funded cancer clinical trials. Uses negotiated rulemaking to determine routine patient costs. Requires coverage for all clinical trials (not just cancer clinical trials)- excluding clinical trials approved or funded by the FDA. Requires coverage of all clinical trials that are approved and funded by the NIH, FDA, VA, or DOD. Uses the Medicare rules regarding routine patient costs.

Continuity of Care Requires health plans to cover up to 90 days of care from a terminated provider (or terminated benefits) for enrollees undergoing a course of treatment from the provider for a "serious and complex condition," institutional care, pregnancy, or terminal illness. Extend coverage until post-partum if in 2^nd trimester of pregnancy or until end of life if terminally ill.
SIMILAR SIMILAR- but eliminates "medically determinable" from definition of "serious and complex" and broadens the definition to include an illness or condition that is "congenital or potentially disabling."

ER Care Requires health plans that provide coverage for emergency medical care (screening and stabilization) and emergency ambulance services to provide coverage without prior authorization based on a prudent layperson standard.
Requires plans to provide coverage for medically necessary and appropriate services related to the emergency medical condition after the patient is stabilized if: (1) the plan fails to respond to a request for coverage within 2 hours of being contacted; and (2) coverage for the services is available under the plan.
SIMILAR - Except plan must respond to request 1 hour after being contacted. SIMILAR - Except plan would be required to cover post-stabilization care without prior authorization by a nonparticipating provider until the plan arranges for transfer or discharge if: 1) plan fails to respond to request within 1 hour after being contacted, or 2) the plan could not be contacted.

Uses ambiguous Medicare definition of post-stabilization care.

Gag Rule Prohibits plans from "prohibiting or otherwise restricting" communications about health status, medical care, or treatment between health care professionals and their patients, as long as professionals are acting within the scope of practice. SIMILAR SIMILAR

Point of Service Requires plans that offer only a closed-panel plan to offer enrollees a coverage option with an out-of-network component. Does not apply to small employers (employing between 2 to 50 employees). Plan may charge additional premiums and cost-sharing. SIMILAR - Except small employer is defined as employing 2 to 25 employees. SIMILAR - Except no small employer exemption.

Prescription Drugs Requires plans that use a formulary to: (1) involve physicians and pharmacists in developing and reviewing the formulary and (2) in accordance with plan's quality assurance and utilization review standards, provide for exceptions to the formulary when a non-formulary alternative is medically necessary and appropriate. SIMILAR SIMILAR - Also requires same cost-sharing for non-formulary drugs and that plan disclose the formulary to providers.

Prohibits plans that cover drugs or medical devices from denying coverage on the basis that the use is investigational if the use is included in the drug's labeling or device's labeling.

Primary Care Provider No Provision No Provision Requires plans that require or provide for the designation of a primary care provider to permit enrollees to designate any participating primary care provider. Requires plan to allow enrollees to receive medically necessary and appropriate specialty care from any qualified participating health care professional, unless the plan clearly informs enrollees of limitations in choosing a specialist.

Provider

Participation/

Indemnification
Prohibits health plans from discriminating against providers with respect to participation or indemnification based solely on licensure or certification. SIMILAR SIMILAR

Provider Incentives No Provision Requires IOM to study the impact of provider incentives and whether/how such arrangements affect the quality of patient care and the ability of doctors to provide medically necessary and appropriate care. Authorizes ongoing research at AHRQ and up-front disclosure of physician compensation arrangements. Requires plans to adhere to Medicare/Medicaid physician incentive requirements.

Prompt Pay No Provision No Provision Requires plans to provide for prompt payment of claims consistent with Medicare standards.

Whistleblower No Provision No Provision Prohibits plans from "retaliating" against an enrollee or provider based on that person's use of a utilization review process or grievance and appeals process or because a health care professional: (1) discloses information to a regulatory agency, accreditation body, or management personnel of the plan; or (2) initiates, cooperates, or participates in an investigation by such an agency.

Burden on plan to prove that any adverse action it takes against a provider would have been taken in the absence of whistleblower activities.

Plan Information Requires plans to regularly provide information to enrollees regarding, such as, covered benefits; cost-sharing requirements; and preauthorization procedures. Plan must notify enrollees of any change in benefits or cost sharing before the effective date of the change. Plans must provide certain information upon request. SIMILAR - Except plans required to provide summary of provider compensation methods up front. SIMILAR content to be disclosed. However, requires plans to give 30 days advance notice of any change, regardless of how minor (e.g., a provider is added or deleted from the network). Does not permit Internet disclosure.

Prepared by the Staffs of Senators Frist, Breaux, and Jeffords (Updated June 15, 2001)

Top Publications Issue List Vote Analysis Main Page

Sponsors	SENATE-PASSED AMENDMENT	FRIST-BREAUX-JEFFORDS	McCAIN-EDWARDS-KENNEDY
Title	(as passed by Senate on June 29, 2000) Amendment No. 3694 to H.R. 4577	"Bipartisan Patients' Bill of Rights Act of 2001," S. 889 (Introduced May 15, 2001)	"Bipartisan Patient Protection Act of 2001," S. 1052 (Introduced June 14, 2001)
CBO Score	2.0% - increase in private health premiums.	2.9%- increase in private health premiums.	4.2%- increase in private health premiums.
Scope	Patient protections generally apply to 56 million Americans covered under self-insured group health plans, because this group is not currently protected by state patient protection laws. Retains and does not preempt current state authority to regulate fully-insured group and individual health plans. Appeals provisions apply to all 131 million Americans in private employer-sponsored group health plans. Does not apply to dental plans or other limited scope plans.	Applies to 170 million Americans. State laws "consistent with" the new federal requirements would remain in place- no preemption. Dental plans would also be required to offer point of service coverage.	Applies to up to 181 million Americans (includes self-insured non-federal governmental plans) . State laws preempted, unless "substantially equivalent to" the federal law (and do not prevent the application of the Act's requirements). All provisions (including point of service coverage) would apply to limited scope dental and vision plans.
Initial and Internal Appeals	Establishes timeframes for initial coverage determinations and internal appeals for routine, expedited, concurrent, and retrospective determinations.	SIMILAR	SIMILAR- Except time frames are shorter for initial coverage and internal appeals, because bill requires decisions within "days" as opposed to "business days." Notwithstanding time frames, also requires decisions to be made under more subjective "medical exigencies" standard.
External Appeals	For medically reviewable decisions, requires plans to provide an independent external appeals process. Allows plans to require enrollee exhaust internal appeals process and give enrollee 60 business days to file request for review. Plans must contract with and select independent reviewers under rules requiring unbiased selection. Requires external reviewers determination be based on the medical condition of the patient, the valid, relevant scientific and clinical evidence, including peer reviewed medical literature or findings including expert consensus. Reviewer may reverse or uphold plan decision. "Safe Harbor" - Reviewer must adhere to plan's definitions of medical necessity, experimental/investigational or other equivalent terms- if they are synonymous with state statute/regulations or definitions used under Medicare, Medicaid, and FEHB - otherwise, not bound by the plans' definitions.	SIMILAR SIMILAR SIMILAR SIMILAR No "safe harbor"- Reviewer must consider, "but not be bound by" the plan's definition of "medically necessary and appropriate" or "experimental or investigational" or other equivalent terms that are used by the plan.	Enrollee given 180 days (not business days) to file request for review. Notwithstanding time frames, also requires decisions to be made under more subjective "medical exigencies" standard. SIMILAR, but new language added prohibiting plans from selecting a reviewer, despite the requirement that plans contract with reviewers. SIMILAR- except medical literature or findings include expert opinion. Reviewer allowed to reverse, uphold, or modify plan decision. No "safe harbor" for a plan that abided by contract terms - Reviewer must consider, "but not be bound by" the plan's definition of "medically necessary and appropriate" or "experimental or investigational" or other substantially equivalent terms.
Civil Enforcement of External Review	Allows the Secretary to assess a penalty of $10,000 against a plan that fails to comply with any applicable timeframe in this section and may assess an additional $10,000 penalty against the plan, payable to the enrollee, if the plan ultimately fails to comply with the decision.	SIMILAR	SIMILAR, but includes civil penalties on plan (up to $1,000 per day) for failure to abide by review decision, additional $10,000 penalty payable to enrollee if plan fails to meet reviewer's timelines, and additional penalties for patterns or practice of repeated violations (not to exceed the lesser of 25% of the aggregate value of benefits not provided or $500,000).
Liability Tort (Personal Injury) Causes of Action	Two new federal causes of action. Cases must be brought in federal court. May sue in federal court when plan fails to comply with the external review. Ordinary care standard. May sue in federal court for an injury that was caused by a delay in providing care when external reviewer reverses plan's internal review decision. Bad faith is the standard.	SIMILAR SIMILAR SIMILAR, except liability may start sooner with plan's initial decision and standard is ordinary care.	Two new broad causes of action - one federal and one state. Federal: Sue in federal court for negligently making non-medically reviewable decisions or in the performance of any duty under the plan (e.g., violations of plan info. disclosures, financial incentives, etc.) - so no requirement of a benefit denial. State: Sue in state court for negligently making medically reviewable decisions (i.e., any decision eligible for external review) ** CHANGE from S. 872- Attempts to avoid situation in which a defendant would be simultaneously defending himself in both federal and state courts based on same incident. Attempts to resolve this situation by stating that a medically reviewable decision would go to state court unless otherwise preempted. This simply reiterates another provision of the bill that says medically reviewable decisions go to state court. It does NOT address the problem of having a nonmedically reviewable decision go to federal court while a medically reviewable decision (arising from the same set of facts) would go to state court.
Liability Civil Penalties for Harm Caused by Contract Denial (Non-medically reviewable decision)	None	Creates civil penalty (up to $100,000) for contract denials if enrollee is denied a covered benefit that is not eligible for external medical review and enrollee is harmed.	Creates federal cause of action with unlimited econ and non-econ damages, plus up to $5 million in punitives, for contract decisions. No requirement to try external review first.
Liability Exhaustion	External review must be exhausted before going to court. Silent on injunctive relief, because current law allows for injunctive relief.	External review must be exhausted before going to court. However, bill explicitly states that patient may sue in court for injunctive relief (i.e., the care), at any time if they can prove that exhausting the appeals process would cause irreparable harm. Specifies no damages without exhaustion.	Exhaustion of appeals not required to obtain monetary damages where: 1) the individual merely alleges that irreparable harm might occur prior to completion of the external review; or 2) the injury is first known to the individual after the deadline for requesting a review. CHANGE from S. 872**- eliminates word "allege" from exceptions to external review, but unclear as to standard of proof and as to who would make the decision that "irreparable harm" would occur by completing appeals process.
Liability Caps	Economic damages are uncapped and noneconomic damages are capped at $350,000 and are indexed to inflation. Silent on state court causes of action and on damages in state court.	Federal causes of action - Economic damages are uncapped and noneconomic damages are capped at $500,000 and are indexed to inflation. No punitives allowed. Explicitly saves state authority in suits (including liability against a health plan) involving quality of care, treatment decisions, and practice of medicine.	Federal causes of action - Economic and noneconomic damages are uncapped. Punitive damages (labeled "civil assessments") are capped at $5 million. State causes of action - Economic, noneconomic, and punitive damages are uncapped (to the extent provided by state law).
Liability Employer Protections	Protects employers from frivolous lawsuits by enabling them to designate a party or parties (designated decision maker) who will have clear and exclusive authority to make determinations that give rise to a cause of action. The designated decision maker must demonstrate that they can fulfill their (financial) responsibilities and gives the Secretary the power to promulgate regulations to accomplish this.	SIMILAR, except more thoroughly addresses designated decision maker qualifications. Also protects small employers by automatically designating insurer as designated decision-maker, unless employer specifically chooses to self-designate.	Employers may be held liable, to the extent there is "direct participation" by the employer in a coverage decision. Direct participation broadly defined with several safe harbors for selecting the plan, conducting cost benefit analyses, and designing or modifying a plan. Employers would still have to raise these defenses in court.
Liability Physician Protections	A physician cannot be liable unless he or she accepts designation in writing and meets the qualifications of a designated decisionmaker. No specific language to protect physicians where there is a failure to designate.	Similar, but offers more protection to physicians by automatically designating the insurance issuer and by strengthening the financial qualification requirements of a designated decisionmaker. Also includes specific language to protect physicians where there is a failure to designate.	Exposes physicians to new federal liability in their capacity as "agents" of health plans for non-medically reviewable decisions/duties of the plan. Could be simultaneously liable for breach of contract in federal court and for medical malpractice tort claims in state court. ** CHANGE from S. 872- Attempts to carve out the "treating physician" (and any person acting under that treating physician's direction) as well as the treating hospital from agent liability.
Liability Class Action Suits	Attempts to eliminate RICO class action claims.	SIMILAR - but more effectively eliminates RICO class action claims. Also clarifies definition of a "class" under ERISA.	Eliminates certain ERISA class action claims, but places no limits on RICO class action claims.
OB/GYN	Requires plans that cover OB/GYN care and that require the designation of a primary care provider (PCP) to provide direct access to a participating physician who specializes in OB/GYN care. Allows plans to require that an OB/GYN (not enrollee) seek authorization for services if the PCP would have been required to obtain such authorization.	SIMILAR	SIMILAR - but requires plans provide direct access to a health care professional who specializes in OB/GYN care. Silent on whether plan may conduct quality and utilization review procedures or require provider seek authorization that PCP would have been required to obtain.
Access to Specialists	Requires timely coverage for access to appropriate specialists when such care is covered by the plan. If the plan determines that no participating specialist is available to provide necessary care. Plan is required to provide coverage for such care by a non-participating specialist at no additional cost to the enrollee beyond what the enrollee would pay for a participating specialist. Requires plans to allow enrollees with "ongoing special conditions" to receive a referral to a specialist and allow the specialist to authorize referrals, tests, etc. subject to a treatment plan.	SIMILAR	SIMILAR - but unclear as to who decides whether an out-of-network specialist is needed and has a broader definition of "ongoing special condition" (includes a "condition or disease that is potentially disabling, or congenital...") that triggers the right to access an out-of-network specialist. Specifies that the mandate to provide access to an out-of-network specialist is triggered if an in-network specialist is "not available." Bill language is unclear as to whether that is a matter of distance needed to travel or other factors. In western states and rural areas, distance needed to travel could mean that few in-network specialists would be considered "available."
Breast Cancer Treatment	Requires plans that provide medical and surgical benefits to provide coverage for an inpatient hospital stay "for a period of time as is determined by the attending physician, in consultation with the patient, to be medically necessary" following a mastectomy, lumpectomy, or lymph node dissection for the treatment of breast cancer.	SIMILAR	SIMILAR
Clinical Trials	Requires plans to cover routine patient costs associated with participation in NIH, FDA, VA, or DOD-approved or funded *cancer* clinical trials. Uses negotiated rulemaking to determine routine patient costs.	Requires coverage for all clinical trials (not just cancer clinical trials)- excluding clinical trials approved or funded by the FDA.	Requires coverage of all clinical trials that are approved and funded by the NIH, FDA, VA, or DOD. Uses the Medicare rules regarding routine patient costs.
Continuity of Care	Requires health plans to cover up to 90 days of care from a terminated provider (or terminated benefits) for enrollees undergoing a course of treatment from the provider for a "serious and complex condition," institutional care, pregnancy, or terminal illness. Extend coverage until post-partum if in 2^nd trimester of pregnancy or until end of life if terminally ill.	SIMILAR	SIMILAR- but eliminates "medically determinable" from definition of "serious and complex" and broadens the definition to include an illness or condition that is "congenital or potentially disabling."
ER Care	Requires health plans that provide coverage for emergency medical care (screening and stabilization) and emergency ambulance services to provide coverage without prior authorization based on a prudent layperson standard. Requires plans to provide coverage for medically necessary and appropriate services related to the emergency medical condition after the patient is stabilized if: (1) the plan fails to respond to a request for coverage within 2 hours of being contacted; and (2) coverage for the services is available under the plan.	SIMILAR - Except plan must respond to request 1 hour after being contacted.	SIMILAR - Except plan would be required to cover post-stabilization care without prior authorization by a nonparticipating provider until the plan arranges for transfer or discharge if: 1) plan fails to respond to request within 1 hour after being contacted, or 2) the plan could not be contacted. Uses ambiguous Medicare definition of post-stabilization care.
Gag Rule	Prohibits plans from "prohibiting or otherwise restricting" communications about health status, medical care, or treatment between health care professionals and their patients, as long as professionals are acting within the scope of practice.	SIMILAR	SIMILAR
Point of Service	Requires plans that offer only a closed-panel plan to offer enrollees a coverage option with an out-of-network component. Does not apply to small employers (employing between 2 to 50 employees). Plan may charge additional premiums and cost-sharing.	SIMILAR - Except small employer is defined as employing 2 to 25 employees.	SIMILAR - Except no small employer exemption.
Prescription Drugs	Requires plans that use a formulary to: (1) involve physicians and pharmacists in developing and reviewing the formulary and (2) in accordance with plan's quality assurance and utilization review standards, provide for exceptions to the formulary when a non-formulary alternative is medically necessary and appropriate.	SIMILAR	SIMILAR - Also requires same cost-sharing for non-formulary drugs and that plan disclose the formulary to providers. Prohibits plans that cover drugs or medical devices from denying coverage on the basis that the use is investigational if the use is included in the drug's labeling or device's labeling.
Primary Care Provider	No Provision	No Provision	Requires plans that require or provide for the designation of a primary care provider to permit enrollees to designate any participating primary care provider. Requires plan to allow enrollees to receive medically necessary and appropriate specialty care from any qualified participating health care professional, unless the plan clearly informs enrollees of limitations in choosing a specialist.
Provider Participation/ Indemnification	Prohibits health plans from discriminating against providers with respect to participation or indemnification based solely on licensure or certification.	SIMILAR	SIMILAR
Provider Incentives	No Provision	Requires IOM to study the impact of provider incentives and whether/how such arrangements affect the quality of patient care and the ability of doctors to provide medically necessary and appropriate care. Authorizes ongoing research at AHRQ and up-front disclosure of physician compensation arrangements.	Requires plans to adhere to Medicare/Medicaid physician incentive requirements.
Prompt Pay	No Provision	No Provision	Requires plans to provide for prompt payment of claims consistent with Medicare standards.
Whistleblower	No Provision	No Provision	Prohibits plans from "retaliating" against an enrollee or provider based on that person's use of a utilization review process or grievance and appeals process or because a health care professional: (1) discloses information to a regulatory agency, accreditation body, or management personnel of the plan; or (2) initiates, cooperates, or participates in an investigation by such an agency. Burden on plan to prove that any adverse action it takes against a provider would have been taken in the absence of whistleblower activities.
Plan Information	Requires plans to regularly provide information to enrollees regarding, such as, covered benefits; cost-sharing requirements; and preauthorization procedures. Plan must notify enrollees of any change in benefits or cost sharing before the effective date of the change. Plans must provide certain information upon request.	SIMILAR - Except plans required to provide summary of provider compensation methods up front.	SIMILAR content to be disclosed. However, requires plans to give 30 days advance notice of any change, regardless of how minor (e.g., a provider is added or deleted from the network). Does not permit Internet disclosure.