CSHB 211(JUD): "An Act relating to regulation of managed care insurance plans; amending Rule 602(b), Alaska Rules of Appellate Procedure; and providing for an effective date."
00CS FOR HOUSE BILL NO. 211(JUD) 01 "An Act relating to regulation of managed care insurance plans; amending Rule 02 602(b), Alaska Rules of Appellate Procedure; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new 05 section to read: 06 SHORT TITLE. Section 2 of this Act may be known as the Alaska Patients' Bill of 07 Rights. 08 * Sec. 2. AS 21 is amended by adding a new chapter to read: 09 Chapter 07. Regulation of Managed Care Insurance Plans. 10 Sec. 21.07.010. Patient and health care provider protection. (a) A contract 11 between a participating health care provider and a managed care entity that offers a 12 group managed care plan must contain a provision that 13 (1) provides for a reasonable mechanism to identify all health care 14 services to be provided by the managed care entity;
01 (2) clearly states or references an attachment that states the health care 02 provider's rate of compensation; 03 (3) clearly states all ways in which the contract between the health care 04 provider and managed care entity may be terminated; a provision that provides for 05 discretionary termination by either party must apply equitably to both parties; 06 (4) provides that, in the event of a dispute between the parties to the 07 contract, a fair, prompt, and mutual dispute resolution process must be used; at a 08 minimum, the process must provide 09 (A) for an initial meeting at which all parties are present or 10 represented by individuals with authority regarding the matters in dispute; the 11 meeting shall be held within 10 working days after the plan receives written 12 notice of the dispute or gives written notice to the provider, unless the parties 13 otherwise agree in writing to a different schedule; 14 (B) that if, within 30 days following the initial meeting, the 15 parties have not resolved the dispute, the dispute shall be submitted to 16 mediation directed by a mediator who is mutually agreeable to the parties and 17 who is not regularly under contract to or employed by either of the parties; 18 each party shall bear its proportionate share of the cost of mediation, including 19 the mediator fees; 20 (C) that if, after a period of 60 days following commencement 21 of mediation, the parties are unable to resolve the dispute, either party may 22 seek other relief allowed by law; 23 (D) that the parties shall agree to negotiate in good faith in the 24 initial meeting and in mediation; 25 (5) states that a health care provider may not be penalized or the health 26 care provider's contract terminated by the managed care entity because the health care 27 provider acts as an advocate for a covered person in seeking appropriate, medically 28 necessary health care services; 29 (6) protects the ability of a health care provider to communicate openly 30 with a covered person about all appropriate diagnostic testing and treatment options; 31 and
01 (7) defines words in a clear and concise manner. 02 (b) A contract between a participating health care provider and a managed care 03 entity that offers a group managed care plan may not contain a provision that 04 (1) has as its predominant purpose the creation of direct financial 05 incentives to the health care provider for withholding covered health care services that 06 are medically necessary; nothing in this paragraph shall be construed to prohibit a 07 contract between a participating health care provider and a managed care entity from 08 containing incentives for efficient management of the utilization and cost of covered 09 health care services; 10 (2) requires the provider to contract for all products that are currently 11 offered or that may be offered in the future by the managed care entity; and 12 (3) requires the health care provider to be compensated for health care 13 services performed at the same rate as the health care provider has contracted with 14 another managed care entity. 15 (c) A managed care entity may not enter into a contract with a health care 16 provider that requires the provider to indemnify or hold harmless the managed care 17 entity for the acts or conduct of the managed care entity. An indemnification or hold 18 harmless clause entered into in violation of this subsection is void. 19 Sec. 21.07.020. Required contract provisions for group managed care 20 plans. A group managed care plan must contain 21 (1) a provision that preauthorization for a covered medical procedure 22 on the basis of medical necessity may not be retroactively denied unless the 23 preauthorization is based on materially incomplete or inaccurate information provided 24 by or on behalf of the provider; 25 (2) a provision for emergency room services if any coverage is 26 provided for treatment of a medical emergency; 27 (3) a provision that covered health care services be reasonably available 28 in the community in which a covered person resides or that, if referrals are required 29 by the plan, adequate referrals outside the community be available if the health care 30 service is not available in the community; 31 (4) a provision that any utilization review decision
01 (A) must be made within 72 hours after receiving the request 02 for preapproval for nonemergency situations; for emergency situations, 03 utilization review decisions for care following emergency services must be 04 made as soon as is practicable but in any event no later than 24 hours after 05 receiving the request for preapproval or for coverage determination; and 06 (B) to deny, reduce, or terminate a health care benefit or to 07 deny payment for a health care service because that service is not medically 08 necessary shall be made by an employee or agent of the managed care entity 09 who is a licensed health care provider; 10 (5) a provision that provides for an internal appeal mechanism for a 11 covered person who disagrees with a utilization review decision made by a managed 12 care entity; except as provided under (6) of this section, this appeal mechanism must 13 provide for a written decision 14 (A) from the managed care entity within 18 working days after 15 the date written notice of an appeal is received; and 16 (B) on the appeal by an employee or agent of the managed care 17 entity who holds the same professional license as the health care provider who 18 is treating the covered person; 19 (6) a provision that provides for an internal appeal mechanism for a 20 covered person who disagrees with a utilization review decision made by a managed 21 care entity in any case in which delay would, in the written opinion of the treating 22 provider, jeopardize the covered person's life or materially jeopardize the covered 23 person's health; the managed care entity shall 24 (A) decide an appeal described in this paragraph within 72 25 hours after receiving the appeal; and 26 (B) provide for a written decision on the appeal by an employee 27 or agent of the managed care entity who holds the same professional license 28 as the health care provider who is treating the covered person; 29 (7) a provision that discloses the existence of the right to an external 30 appeal of a utilization review decision made by a managed care entity; the external 31 appeal shall be as conducted in accordance with AS 21.07.050;
01 (8) a provision that discloses covered benefits, optional supplemental 02 benefits, and benefits relating to and restrictions on nonparticipating provider services; 03 (9) a provision that describes the preapproval requirements and whether 04 clinical trials or experimental or investigational treatment are covered; 05 (10) a provision describing a mechanism for assignment of benefits for 06 health care providers and payment of benefits; 07 (11) a provision describing availability of prescription medications or 08 a formulary guide, and whether medications not listed are excluded; if a formulary 09 guide is made available, the guide must be updated annually; and 10 (12) a provision describing available translation or interpreter services, 11 including audiotape or braille information. 12 Sec. 21.07.030. Choice of health care provider. (a) If a managed care entity 13 offers a group health plan that provides for coverage of health care services only if the 14 services are furnished through a network of health care providers that have entered into 15 a contract with the managed care entity, the managed care entity shall also offer a non- 16 network option to enrollees at initial enrollment, as provided under (c) of this section. The 17 non-network option may require that a covered person pay a higher deductible, copayment, 18 or premium for the plan if the higher deductible, copayment, or premium results from 19 increased costs caused by the use of a non-network provider. The managed care entity shall 20 provide an actuarial demonstration of the increased costs to the director at the director's 21 request. If the increased costs are not justified, the director shall determine the appropriate 22 costs allowed and determine the appropriate amount of higher deductible, copayment, or 23 premium. This subsection does not apply to an enrollee who is offered non-network coverage 24 through another group health plan or through another managed care entity in the group market. 25 (b) The amount of any additional premium charged by the managed care entity 26 for the additional cost of the creation and maintenance of the option described in (a) 27 of this section and the amount of any additional cost sharing imposed under this option 28 shall be paid by the enrollee unless it is paid by the employer through agreement with 29 the managed care entity. 30 (c) An enrollee may make a change to the health care coverage option 31 provided under this section only during a time period determined by the managed care
01 entity. The time period described in this subsection must occur at least annually. 02 (d) If a managed care entity that offers a group managed care plan requires or 03 provides for a designation by an enrollee of a participating primary care provider, the 04 managed care entity shall permit the enrollee to designate any participating primary 05 care provider that is available to accept the enrollee. 06 (e) Except as provided in this subsection, a managed care entity that offers a 07 group managed care plan shall permit an enrollee to receive medically necessary or 08 appropriate specialty care, subject to appropriate referral procedures, from any qualified 09 participating health care provider that is available to accept the individual for medical 10 care. This subsection does not apply to specialty care if the managed care entity 11 clearly informs enrollees of the limitations on choice of participating health care 12 providers with respect to medical care. In this subsection, 13 (1) "appropriate referral procedures" means procedures for referring 14 patients to other health care providers as set out in the applicable member contract and 15 as described under (a) of this section; 16 (2) "specialty care" means care provided by a health care provider with 17 training and experience in treating a particular injury, illness, or condition. 18 (f) If a contract between a health care provider and a managed care entity is 19 terminated, a covered person may continue to be treated by that health care provider 20 as provided in this subsection. If a covered person is pregnant or being actively 21 treated by a provider on the date of the termination of the contract between that 22 provider and the managed care entity, the covered person may continue to receive 23 health care services from that provider as provided in this subsection, and the contract 24 between the managed care entity and the provider shall remain in force with respect 25 to the continuing treatment. The covered person shall be treated for the purposes of 26 benefit determination or claim payment as if the provider were still under contract with 27 the managed care entity. However, treatment is required to continue only while the 28 group managed care plan remains in effect and 29 (1) for the period that is the longest of the following: 30 (A) the end of the current plan year; 31 (B) up to 90 days after the termination date, if the event
01 triggering the right to continuing treatment is part of an ongoing course of 02 treatment; or 03 (C) through completion of postpartum care, if the covered 04 person is in the second trimester of pregnancy on the date of termination; or 05 (2) until the end of the medically necessary treatment for the condition, 06 disease, illness, or injury if the person has a terminal condition, disease, illness, or 07 injury; in this paragraph, "terminal" means a life expectancy of less than one year. 08 (g) The requirements of this section do not apply to health care services 09 covered by Medicaid. 10 Sec. 21.07.040. Confidentiality of managed care information. (a) Medical 11 and financial information in the possession of a managed care entity regarding an 12 applicant or a current or former person covered by a managed care plan is confidential 13 and is not subject to public disclosure. 14 (b) This section does not apply to medical information that is disclosed if 15 (1) the individual whose identity is disclosed gives written consent to 16 the disclosure; 17 (2) the information is disclosed for research 18 (A) that is subject to federal law and regulations protecting the 19 rights and welfare of research participants; or 20 (B) using health information that protects the confidentiality of 21 participants by coding or encryption of information that would otherwise 22 identify the patient; 23 (3) the information is disclosed for purposes of obtaining 24 reimbursement under health insurance; 25 (4) the information is disclosed at the written request of the covered 26 person; 27 (5) the disclosure is required by law. 28 Sec. 21.07.050. External health care appeals. (a) A managed care entity 29 offering group health insurance coverage shall provide for an external appeal process 30 that meets the requirements of this section in the case of an externally appealable 31 decision for which a timely appeal is made in writing either by the managed care
01 entity or by the enrollee. 02 (b) A managed care entity may condition the use of an external appeal process 03 in the case of an externally appealable decision upon a final decision in an internal 04 appeal under AS 21.07.020, but only if the decision is made in a timely basis 05 consistent with the deadlines provided under this chapter. 06 (c) Except as provided in this subsection, the external appeal process shall be 07 conducted under a contract between the managed care entity and one or more external 08 appeal agencies that have qualified under AS 21.07.060. The managed care entity 09 shall provide 10 (1) that the selection process among external appeal agencies qualifying 11 under AS 21.07.060 does not create any incentives for external appeal agencies to 12 make a decision in a biased manner; 13 (2) for auditing a sample of decisions by external appeal agencies to 14 assure that decisions are not made in a biased manner; and 15 (3) that all costs of the process, except those incurred by the enrollee 16 or treating professional in support of the appeal, shall be paid by the managed care 17 entity and not by the enrollee. 18 (d) An external appeal process must include at least the following: 19 (1) a fair, de novo determination based on coverage provided by the 20 plan and by applying terms as defined by the plan; however, nothing in this paragraph 21 may be construed as providing for coverage of items and services for which benefits 22 are excluded under the plan or coverage; 23 (2) an external appeal agency shall determine whether the managed care 24 entity's decision is (A) in accordance with the medical needs of the patient involved, 25 as determined by the managed care entity, taking into account, as of the time of the 26 managed care entity's decision, the patient's medical needs and any relevant and 27 reliable evidence the agency obtains under (3) of this subsection, and (B) in 28 accordance with the scope of the covered benefits under the plan; if the agency 29 determines the decision complies with this paragraph, the agency shall affirm the 30 decision, and, to the extent that the agency determines the decision is not in 31 accordance with this paragraph, the agency shall reverse or modify the decision;
01 (3) the external appeal agency shall include among the evidence taken 02 into consideration 03 (A) the decision made by the managed care entity upon internal 04 appeal under AS 21.07.020 and any guidelines or standards used by the 05 managed care entity in reaching a decision; 06 (B) any personal health and medical information supplied with 07 respect to the individual whose denial of claim for benefits has been appealed; 08 (C) the opinion of the individual's treating physician or health 09 care provider; and 10 (D) the group managed care plan; 11 (4) the external appeal agency may also take into consideration the 12 following evidence: 13 (A) the results of studies that meet professionally recognized 14 standards of validity and replicability or that have been published in peer- 15 reviewed journals; 16 (B) the results of professional consensus conferences conducted 17 or financed in whole or in part by one or more government agencies; 18 (C) practice and treatment guidelines prepared or financed in 19 whole or in part by government agencies; 20 (D) government-issued coverage and treatment policies; 21 (E) generally accepted principles of professional medical 22 practice; 23 (F) to the extent that the agency determines it to be free of any 24 conflict of interest, the opinions of individuals who are qualified as experts in 25 one or more fields of health care that are directly related to the matters under 26 appeal; 27 (G) to the extent that the agency determines it to be free of any 28 conflict of interest, the results of peer reviews conducted by the managed care 29 entity involved; 30 (H) the community standard of care; and 31 (I) anomalous utilization patterns;
01 (5) an external appeal agency shall determine 02 (A) whether a denial of a claim for benefits is an externally 03 appealable decision; 04 (B) whether an externally appealable decision involves an 05 expedited appeal; and 06 (C) for purposes of initiating an external review, whether the 07 internal appeal process has been completed; 08 (6) a party to an externally appealable decision may submit evidence 09 related to the issues in dispute; 10 (7) the managed care entity involved shall provide the external appeal 11 agency with access to information and to provisions of the plan or health insurance 12 coverage relating to the matter of the externally appealable decision, as determined by 13 the external appeal agency; and 14 (8) a determination by the external appeal agency on the decision must 15 (A) be made orally or in writing and, if it is made orally, shall 16 be supplied to the parties in writing as soon as possible; 17 (B) be made in accordance with the medical exigencies of the 18 case involved, but in no event later than 21 working days after the appeal is 19 filed, or, in the case of an expedited appeal, 72 hours after the time of 20 requesting an external appeal of the managed care entity's decision; 21 (C) state, in layperson's language, the basis for the 22 determination, including, if relevant, any basis in the terms or conditions of the 23 plan or coverage; and 24 (D) inform the enrollee of the individual's rights, including any 25 time limits, to seek further review by the courts of the external appeal 26 determination. 27 (e) If the external appeal agency reverses or modifies the denial of a claim for 28 benefits, the managed care entity shall 29 (1) upon receipt of the determination, authorize benefits in accordance 30 with that determination; 31 (2) take action as may be necessary to provide benefits, including items
01 or services, in a timely manner consistent with the determination; and 02 (3) submit information to the external appeal agency documenting 03 compliance with the agency's determination. 04 (f) A decision of an external appeal agency is binding unless a person who is 05 aggrieved by a final decision of an external appeal agency appeals the decision to the 06 superior court. 07 (g) An appeal of a final decision of an external appeal agency must be filed 08 within six months after the date of the decision of the external appeal agency. 09 (h) In this section, "externally appealable decision" 10 (1) means 11 (A) a denial of a claim for benefits that is based in whole or in 12 part on a decision that the item or service is not medically necessary or 13 appropriate or is investigational or experimental, or in which the decision as to 14 whether a benefit is covered involves a medical judgment; or 15 (B) a denial that is based on a failure to meet an applicable 16 deadline for internal appeal under AS 21.07.020; 17 (2) does not include a decision based on specific exclusions or express 18 limitations on the amount, duration, or scope of coverage that do not involve medical 19 judgment, or a decision regarding whether an individual is a participant, beneficiary, 20 or enrollee under the plan or coverage. 21 Sec. 21.07.060. Qualifications of external appeal agencies. (a) An external 22 appeal agency qualifies to consider external appeals if, with respect to a group health 23 plan, the agency is certified by a qualified private standard-setting organization 24 approved by the director or by a health insurer operating in this state as meeting the 25 requirements imposed under (b) of this section. 26 (b) An external appeal agency is qualified to consider appeals of group health 27 plan health care decisions if the agency meets the following requirements: 28 (1) the agency meets the independence requirements of this section; 29 (2) the agency conducts external appeal activities through a panel of 30 two clinical peers, unless otherwise agreed to by both parties; and 31 (3) the agency has sufficient medical, legal, and other expertise and
01 sufficient staffing to conduct external appeal activities for the managed care entity on 02 a timely basis consistent with this chapter. 03 (c) A clinical peer or other entity meets the independence requirements of this 04 section if 05 (1) the peer or entity does not have a familial, financial, or professional 06 relationship with a related party; 07 (2) compensation received by a peer or entity in connection with the 08 external review is reasonable and not contingent on any decision rendered by the peer 09 or entity; 10 (3) the plan and the issuer have no recourse against the peer or entity 11 in connection with the external review; and 12 (4) the peer or entity does not otherwise have a conflict of interest with 13 a related party. 14 (d) In this section, "related party" means 15 (1) with respect to 16 (A) a group health plan or health insurance coverage offered in 17 connection with a plan, the plan or the insurer offering the coverage; or 18 (B) individual health insurance coverage, the insurer offering 19 the coverage, or any plan sponsor, fiduciary, officer, director, or management 20 employee of the plan or issuer; 21 (2) the health care professional that provided the health care involved 22 in the coverage decision; 23 (3) the institution at which the health care involved in the coverage 24 decision is provided; 25 (4) the manufacturer of any drug or other item that was included in the 26 health care involved in the coverage decision; 27 (5) the covered person; or 28 (6) any other party that, under the regulations that the director may 29 prescribe, is determined by the director to have a substantial interest in the coverage 30 decision. 31 Sec. 21.07.070. Limitation on liability of reviewers. An external appeal
01 agency qualifying under AS 21.07.060 and having a contract with a managed care 02 entity, and a person who is employed by the agency or who furnishes professional 03 services to the agency, may not be held by reason of the performance of any duty, 04 function, or activity required or authorized under this chapter to have violated any 05 criminal law, or to be civilly liable if due care was exercised in the performance of the 06 duty, function or activity and there was no actual malice or gross misconduct in the 07 performance of the duty, function, or activity. 08 Sec. 21.07.080. Religious nonmedical providers. This chapter may not be 09 construed to 10 (1) restrict or limit the right of a managed care entity to include health 11 care services provided by a religious nonmedical provider as health care services 12 covered by the managed care plan; 13 (2) require a managed care entity, when determining coverage for 14 health care services provided by a religious nonmedical provider, to 15 (A) apply medically based eligibility standards; 16 (B) use health care providers to determine access by a covered 17 person; 18 (C) use health care providers in making a decision on an 19 internal or external appeal; or 20 (D) require a covered person to be examined by a health care 21 provider as a condition of coverage; or 22 (3) require a managed care plan to exclude coverage for health care 23 services provided by a religious nonmedical provider because the religious nonmedical 24 provider is not providing medical or other data required from a health care provider 25 if the medical or other data is inconsistent with the religious nonmedical treatment or 26 nursing care being provided. 27 Sec. 21.07.250. Definitions. In this chapter, 28 (1) "clinical peer" means a health care provider who is licensed to 29 provide the same or similar health care services and who is trained in the specialty or 30 subspecialty applicable to the health care services that are provided; 31 (2) "clinical trial" means treatment, research, study, or investigation
01 over a period of time of an injury, illness, or medical condition; 02 (3) "emergency room services" means health care services provided by 03 a hospital or other emergency facility after the sudden onset of a medical condition 04 that manifests itself by symptoms of sufficient severity, including severe pain, that the 05 absence of immediate medical attention would reasonably be expected by a prudent 06 person who possesses an average knowledge of health and medicine to result in 07 (A) the placing of the person's health in serious jeopardy; 08 (B) a serious impairment to bodily functions; or 09 (C) a serious dysfunction of a bodily organ or part; 10 (4) "group managed care plan" or "plan" means a group health 11 insurance plan operated by a managed care entity; 12 (5) "health care provider" means a person licensed in this state or 13 another state of the United States to provide health care services; 14 (6) "health care services" means treatment of an individual for an 15 injury, illness, or disability and includes preventative treatment of an injury or illness; 16 (7) "health insurance" has the meaning given in AS 21.12.050(a); 17 (8) "managed care" means a contract given to an individual, family, or 18 group of individuals under which a member is entitled to receive a defined set of 19 health care benefits in exchange for defined consideration and that requires the member 20 to comply with utilization review guide lines; "managed care" does not include 21 Medicaid coverage under 42 U.S.C. 1396 - 1396p (Social Security Act); 22 (9) "managed care contractor" means a contractor who establishes, 23 operates, or maintains a network of participating health care providers, conducts or 24 arranges for utilization review activities, and contracts with a managed care entity; 25 (10) "managed care entity" means an insurer, a hospital or medical 26 service corporation, a health maintenance organization, an employer or employee 27 health care organization, a managed care contractor that operates a group managed care 28 plan, or a person who has a financial interest in health care services provided to an 29 individual; 30 (11) "medical emergency" means the sudden onset of a medical 31 condition that manifests itself by symptoms of sufficient severity, including severe pain
01 that in the absence of immediate medical attention would reasonably be expected by 02 a prudent person who possesses an average knowledge of health and medicine to result 03 in 04 (A) the placing of the person's health in serious jeopardy; 05 (B) a serious impairment to bodily functions; or 06 (C) a serious dysfunction of any bodily organ or part; 07 (12) "participating health care provider" means a health care provider 08 who has entered into an agreement with a managed care entity to provide services or 09 supplies to a patient covered by a group managed care plan; 10 (13) "primary care provider" means a health care provider who provides 11 general health care services and does not specialize in treating a single injury, illness, 12 or condition or who provides obstetrical, gynecological, or pediatric health care 13 services; 14 (14) "provider" means a health care provider; 15 (15) "religious nonmedical provider" means a person who does not 16 provide medical care, but who provides only religious nonmedical treatment or nursing 17 care for an illness or injury; 18 (16) "utilization review" means a system of reviewing the medical 19 necessity, appropriateness, or quality of health care services and supplies provided 20 under a group managed care plan using specified guidelines, including preadmission 21 certification, the application of practice guidelines, continued stay review, discharge 22 planning, preauthorization of ambulatory procedures, and retrospective review; 23 (17) "working day" means a day of the week that is not a Saturday, 24 Sunday, or a holiday. 25 * Sec. 3. AS 21.36.125 is amended by adding a new paragraph to read: 26 (16) violate a provision contained in AS 21.07. 27 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section 28 to read: 29 INDIRECT COURT RULE AMENDMENT. AS 21.07.050(g), as enacted by sec. 2 30 of this Act, has the effect of amending Rule 602(b), Alaska Rules of Appellate Procedure, by 31 providing that an appeal from a decision of an external appeal agency must be filed within
01 six months of the decision of the external appeal agency. 02 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section 03 to read: 04 CONDITIONAL EFFECT. AS 21.07.050(g), as enacted by sec. 2 of this Act, takes 05 effect only if sec. 4 of this Act receives the two-thirds majority vote of each house required 06 by art. IV, sec. 15, Constitution of the State of Alaska. 07 * Sec. 6. This Act takes effect July 1, 2001.