To amend the Employee Retirement Income Security Act of 1974, the Public Health Service Act, and the Internal Revenue Code of 1986 to require that group and individual health insurance coverage and group health plans provide for prompt payment for health benefits claims.

February 13, 2003

Mr. SANDLIN introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Education and the Workforce and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Employee Retirement Income Security Act of 1974, the Public Health Service Act, and the Internal Revenue Code of 1986 to require that group and individual health insurance coverage and group health plans provide for prompt payment for health benefits claims.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Health Benefits Claims Prompt Payment Act of 2003'.

SEC. 2. PROMPT PAYMENT OF CLAIMS.

(a) GROUP HEALTH PLANS-

(1) PUBLIC HEALTH SERVICE ACT AMENDMENTS- Subpart 2 of part A of title XXVII of the Public Health Service Act is amended by adding at the end the following new section:

`SEC. 2707. PROMPT PAYMENT OF CLAIMS.

`(a) IN GENERAL- A group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, shall provide for prompt payment of claims submitted for health care services or supplies furnished to a participant, beneficiary, or enrollee with respect to benefits covered by the plan or issuer, in a manner that is no less protective than the provisions referred to in subsection (b).

`(b) PROVISIONS- The provisions referred to in this subsection are the provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 1395u(c)(2)), as modified as follows:

`(1) ALTERNATIVE INTEREST RATE- Instead of applying the interest rate calculated under section 3902(a) of title 31, United States Code, the interest rate shall be 1 percent of the payment amount due plus, in the case of payments not made within 25 days of the due date, an additional 1 percent interest due for every month the payment is past due.

`(2) COVERAGE OF 100 PERCENT OF CLAIMS- The reference in such section 1842(c)(2) to `not less than 95 percent of all claims submitted under this part' shall be deemed to be a reference to `100 percent of all claims submitted under the plan or coverage involved'.

`(c) PERMITTING ADDITIONAL PENALTIES- State Insurance Commissioners may establish and impose monetary penalties or other penalties for failure by a group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, to comply with the provisions referred to in subsection (b).'.

(2) ERISA AMENDMENTS- (A) Subpart B of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new section:

`SEC. 714. PROMPT PAYMENT OF CLAIMS.

`(a) IN GENERAL- A group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, shall provide for prompt payment of claims submitted for health care services or supplies furnished to a participant or beneficiary with respect to benefits covered by the plan or issuer, in a manner that is no less protective than the provisions referred to in subsection (b).

`(b) PROVISIONS- The provisions referred to in this subsection are the provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 1395u(c)(2)), as modified as follows:

`(1) ALTERNATIVE INTEREST RATE- Instead of applying the interest rate calculated under section 3902(a) of title 31, United States Code, the interest rate shall be 1 percent of the payment amount due plus, in the case of payments not made within 25 days of the due date, an additional 1 percent interest due for every month the payment is past due.

`(2) COVERAGE OF 100 PERCENT OF CLAIMS- The reference in such section 1842(c)(2) to `not less than 95 percent of all claims submitted under this part' shall be deemed to be a reference to `100 percent of all claims submitted under the plan or coverage involved'.

`(c) PERMITTING ADDITIONAL PENALTIES- State Insurance Commissioners may establish and impose monetary penalties or other penalties for failure by a group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan,

to comply with the provisions referred to in subsection (b).'.

(B) The table of contents in section 1 of such Act is amended by inserting after the item relating to section 713 the following new item:

`Sec. 714. Prompt payment of claims.'.

(3) INTERNAL REVENUE CODE AMENDMENTS- Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is amended--

(i) in the table of sections, by inserting after the item relating to section 9812 the following new item:

`Sec. 9813. Prompt payment of claims.'; and

(ii) by inserting after section 9812 the following:

`SEC. 9813. PROMPT PAYMENT OF CLAIMS.

`A group health plan shall provide for prompt payment of claims submitted for health care services or supplies furnished to a participant or beneficiary with respect to benefits covered by the plan, in a manner that is no less protective than the provisions referred to in subsection (b).

`(b) PROVISIONS- The provisions referred to in this subsection are the provisions of section 1842(c)(2) of the Social Security Act (42 U.S.C. 1395u(c)(2)), as modified as follows:

`(1) ALTERNATIVE INTEREST RATE- Instead of applying the interest rate calculated under section 3902(a) of title 31, United States Code, the interest rate shall be 1 percent of the payment amount due plus, in the case of payments not made within 25 days of the due date, an additional 1 percent interest due for every month the payment is past due.

`(2) COVERAGE OF 100 PERCENT OF CLAIMS- The reference in such section 1842(c)(2) to `not less than 95 percent of all claims submitted under this part' shall be deemed to be a reference to `100 percent of all claims submitted under the plan involved'.

`(c) PERMITTING ADDITIONAL PENALTIES- State Insurance Commissioners may establish and impose monetary penalties or other penalties for failure by a group health plan to comply with the provisions referred to in subsection (b).'.

(b) INDIVIDUAL HEALTH INSURANCE- Part B of title XXVII of the Public Health Service Act is amended by inserting after section 2752 the following new section:

`SEC. 2753. PROMPT PAYMENT OF CLAIMS.

`The provisions of section 2707 shall apply to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as they apply to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the small or large group market.'.

(c) PROTECTION OF STATES' RIGHTS- Any issue relating to prompt payment for health care services or supplies that is not governed by any provision of law as amended by this section shall be governed by otherwise applicable State or Federal law. This section (and the provisions amended by this section) does not preempt or supersede any law that imposes shorter time frames for payment, greater penalties for non-payment, and, in general, provides greater assurances that group health plans and health insurance issuers provide for prompt payment of claims submitted for health care services or supplies furnished to a participant, beneficiary, or enrollee with respect to benefits covered by the plan or issuer.

(d) EFFECTIVE DATES-

(1) GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE COVERAGE- The amendments made by subsection (a) apply with respect to group health plans for plan years beginning on or after January 1, 2004.

(2) INDIVIDUAL HEALTH INSURANCE COVERAGE- The amendment made by subsection (b) apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after such date.

END