text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Managed Care Plan Accountability Act 
  of 1997''.
  
  SEC. 2. IMPROVEMENTS IN ERISA ENFORCEMENT WITH RESPECT TO MANAGED CARE 
                GROUP HEALTH PLANS.
  
      (a) Additional Remedies for Cost-Driven Violations of Plan Terms.--
              (1) In general.--Section 502(c) of the Employee Retirement 
          Income Security Act of 1974 (29 U.S.C. 1132(c)) is amended--
                      (A) by redesignating paragraph (6) as paragraph 
                  (7); and
                      (B) by inserting after paragraph (5) the following 
                  new paragraph:
      ``(6)(A) In any case in which a group health plan, or a health 
  insurance issuer offering health insurance coverage in connection with 
  such plan, provides benefits under such plan under managed care, and 
  such plan or issuer fails to provide any such benefit in accordance 
  with the terms of the plan or such coverage, insofar as such failure 
  occurs pursuant to a clinically or medically inappropriate decision or 
  determination resulting from--
              ``(i) the application of any cost containment technique,
              ``(ii) any utilization review directed at cost containment, 
          or
              ``(iii) any other medical care delivery policy decision 
          which restricts the ability of providers of medical care from 
          utilizing their full discretion for treatment of patients,
  each specified defendant shall be jointly and severally liable to any 
  participant or beneficiary aggrieved by such failure for actual damages 
  (including compensatory and consequential damages) proximately caused 
  by such failure, and may, in the court's discretion, be liable to such 
  participant or beneficiary for punitive damages.
      ``(B) For purposes of this paragraph--
              ``(i) a group health plan, or a health insurance issuer 
          offering health insurance coverage in connection with the plan, 
          provides benefits under `managed care' if the plan or the 
          issuer--
                      ``(I) provides or arranges for the provision of the 
                  benefits to participants and beneficiaries primarily 
                  through participating providers of medical care, or
                      ``(II) provides financial incentives (such as 
                  variable copayments and deductibles) to induce 
                  participants and beneficiaries to obtain the benefits 
                  primarily through participating providers of medical 
                  care,
          or both.
              ``(ii) The term `specified defendant' means, in connection 
          with any failure to provide any benefit, a person who is--
                      ``(I) the plan sponsor, or
                      ``(II) a health insurance issuer offering health 
                  insurance coverage in connection with the plan,
          insofar as an act or failure to act of such person constitutes 
          or contributes to the failure to so provide such benefit.
              ``(iii) The term `participating' means, with respect to a 
          provider of medical care in relation to a group health plan or 
          health insurance coverage offered in connection with a group 
          health plan, a provider that furnishes the items and services 
          comprising medical care to participants and beneficiaries under 
          the plan under an agreement with the plan or with a health 
          insurance issuer offering the coverage.
              ``(iv) The provisions of section 733 apply in the same 
          manner and to the same extent as they apply for purposes of 
          part 7.
      ``(C) Remedies under this paragraph are in addition to remedies 
  otherwise provided under this section.''.
              (2) Concurrent jurisdiction.--Section 502(e)(1) of such Act 
          (29 U.S.C. 1132(e)(1)) is amended--
                      (A) in the first sentence, by inserting ``and 
                  except for actions under subsection (a)(1)(A) of this 
                  section for the relief provided in subsection (c)(6) of 
                  this section,'' after ``this section,''; and
                      (B) in the last sentence, by inserting ``and under 
                  subsection (a)(1)(A) of this section for the relief 
                  provided in subsection (c)(6) of this section'' after 
                  ``this section''.
      (b) Indemnification for Liability of Providers Bound by Plan 
  Restrictions on Medical Communications.--Section 502 of such Act (29 
  U.S.C. 1132) is amended further by adding at the end the following new 
  subsection:
      ``(n)(1) In any case in which a group health plan, or a health 
  insurance issuer offering health insurance coverage in connection with 
  such plan, provides benefits under such plan under managed care, the 
  plan shall provide for full indemnification of any participating 
  provider of medical care for any liability incurred by such provider 
  for any failure to provide any such benefit in accordance with the 
  terms of the plan or such coverage, if such failure is the direct 
  result of a plan restriction on medical communications under the plan.
      ``(2) For purposes of this subsection--
              ``(A) the term `plan restriction on medical communications' 
          under a group health plan means a provision of the plan, or of 
          any health insurance coverage offered in connection with the 
          plan, which prohibits, restricts, or interferes with any 
          medical communication as part of--
                      ``(i) a written contract or agreement with a 
                  participating provider of medical care,
                      ``(ii) a written statement to a participating 
                  provider of medical care, or
                      ``(iii) an oral communication to a participating 
                  provider of medical care.
              ``(B) The term `medical communication'--
                      ``(i) means any communication made by the provider 
                  of medical care--
                              ``(I) regarding the mental or physical 
                          health care needs or treatment of a patient and 
                          the provisions, terms, or requirements of the 
                          group health plan or health insurance coverage 
                          or another plan or coverage relating to such 
                          needs or treatment, and
                              ``(II) between the provider and a current, 
                          former, or prospective patient (or the guardian 
                          or legal representative of a patient), between 
                          the provider and any employee or representative 
                          of the plan or issuer, or between the provider 
                          and any employee or representative of any State 
                          or Federal authority with responsibility for 
                          the licensing or oversight with respect to the 
                          plan or issuer; and
                      ``(ii) includes communications concerning--
                              ``(I) any tests, consultations, and 
                          treatment options,
                              ``(II) any risks or benefits associated 
                          with such tests, consultations, and options,
                              ``(III) variation among any providers of 
                          medical care and any institutions providing 
                          such services in experience, quality, or 
                          outcomes,
                              ``(IV) the basis or standard for the 
                          decision of a managed care group health plan, 
                          or a health insurance issuer offering health 
                          insurance coverage in connection with such a 
                          plan, to authorize or deny particular benefits 
                          consisting of medical care,
                              ``(V) the process used by the plan or 
                          issuer to determine whether to authorize or 
                          deny particular benefits consisting of medical 
                          care, and
                              ``(VI) any financial incentives or 
                          disincentives provided by the plan or issuer to 
                          a provider of medical care that are based on 
                          service utilization.
              ``(C) For purposes of this paragraph, the provisions of 
          subsection (c)(6)(B) apply in the same manner and to the same 
          extent as they apply for purposes of subsection (c)(6), and the 
          provisions of section 733 apply in the same manner and to the 
          same extent as they apply for purposes of part 7.''.
  
  SEC. 3. EXCISE TAX FOR COST-DRIVEN VIOLATIONS OF PLAN TERMS.
  
      (a) In General.--Chapter 100 of the Internal Revenue Code of 1986 
  is amended by adding at the end the following new subchapter:
  
    ``Subchapter B--Failure To Provide Health Benefits Due to Improper 
                   Cost-Driven Delivery Policy Decisions
  
                                ``Sec. 9811. Failure to provide health 
                                          benefits due to improper cost-
                                          driven delivery policy 
                                          decisions.
  
  ``SEC. 9811. FAILURE TO PROVIDE HEALTH BENEFITS DUE TO IMPROPER COST-
                DRIVEN DELIVERY POLICY DECISIONS.
  
      ``(a) General Rule.--In the case of a group health coverage to 
  which this section applies, there is a failure to meet the requirements 
  of this chapter if--
              ``(1) the provider of such coverage fails to provide any 
          benefit in accordance with the terms of the coverage, and
              ``(2) such failure occurs pursuant to a clinically or 
          medically inappropriate decision or determination resulting 
          from the application of--
                      ``(A) any cost containment technique,
                      ``(B) any utilization review directed at cost 
                  containment, or
                      ``(C) any other medical care delivery policy 
                  decision which restricts the ability of providers of 
                  medical care from utilizing their full discretion for 
                  treatment of patients.
      ``(b) Health Coverage Providers to Which Section Applies.--This 
  section shall apply to any group health coverage which is provided 
  under managed care.
      ``(c) Definitions.--For purposes of this section--
              ``(1) Group health coverage.--The term `group health 
          coverage' means--
                      ``(A) coverage under any group health plan, and
                      ``(B) health insurance coverage provided by a 
                  health insurance issuer.
              ``(2) Managed care.--Group health coverage is provided 
          under managed care if--
                      ``(A) such coverage is provided primarily through 
                  participating providers of medical care, or
                      ``(B) the provider of such coverage provides 
                  financial incentives (such as variable copayments and 
                  deductibles) to induce participants and beneficiaries 
                  to obtain the benefits primarily through participating 
                  providers of medical care,
          or both.
              ``(3) Provider.--The term `provider' means--
                      ``(A) the group health plan in the case of coverage 
                  described in paragraph (2)(A), and
                      ``(B) the health insurance issuer in the case of 
                  coverage described in paragraph (2)(B).
              ``(4) Other definitions.--The terms `group health plan', 
          `health insurance coverage', and `health insurance issuer' have 
          the respective meanings given such terms by section 9805.''.
      (b) Conforming Amendments.--
              (1) Subtitle K of such Code is amended by striking all that 
          precedes section 9801 and inserting the following:
  
                ``Subtitle K--Group Health Plan Requirements
  
                                ``Chapter 100. Group health plan 
                                          requirements.
  
               ``CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS
  
                                ``Subchapter A. Requirements relating to 
                                          portability, access, and 
                                          renewability.
                                ``Subchapter B. Failure to provide health 
                                          benefits due to improper cost-
                                          driven delivery policy 
                                          decisions.''
              (2) The table of subtitles for such Code is amended by 
          striking the item relating to subtitle K and inserting the 
          following new item:
  
                                ``Subtitle K. Group health plan 
                                          requirements.''
  
  SEC. 4. EFFECTIVE DATE.
  
      The amendments made by this Act shall apply with respect to plan 
  years beginning after on or after January 1, 1998.
target: Managed Care Plan Accountability Act of 1997 - Amends the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code (IRC) with respect to accountability for violations of requirements for managed care group health plans, especially failure to provide health benefits due to improper cost-driven delivery policy decisions. 
  Imposes joint and several liability for actual (including compensatory and consequential) damages, and, in the court's discretion, for punitive damages, on a group health plan, or a plan health insurance issuer, for failure to provide a benefit in accordance with plan terms, insofar as such failure occurs pursuant to a clinically or medically inappropriate decision or determination resulting from application of any cost containment technique, related utilization review, or any other medical care delivery policy decision which restricts the ability of medical care providers to use their full discretion for treatment of patients.  Provides for an action for damages in either a State or Federal court. 
  Requires managed care group health plans to provide for full indemnification of medical care providers bound by plan restrictions for any liability incurred for such a failure if it is the direct result of a plan restriction on medical communications. 
  Amends the IRC to establish an excise tax for such cost-driven violations of plan terms.
feat_title: Managed Care Plan Accountability Act of 1997