CSHB 211(FIN) AM: "An Act relating to regulation of managed care insurance plans; amending Rule 602, Alaska Rules of Appellate Procedure; and providing for an effective date."
00CS FOR HOUSE BILL NO. 211(FIN) am 01 "An Act relating to regulation of managed care insurance plans; amending Rule 02 602, 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 require the managed care 22 entity to recalculate the appropriate costs allowed and resubmit the appropriate deductible, 23 copayment, or premium to the director. This subsection does not apply to an enrollee who 24 is offered non-network coverage through another group health plan or through another 25 managed care entity in the group market. 26 (b) The amount of any additional premium charged by the managed care entity 27 for the additional cost of the creation and maintenance of the option described in (a) 28 of this section and the amount of any additional cost sharing imposed under this option 29 shall be paid by the enrollee unless it is paid by the employer through agreement with 30 the managed care entity. 31 (c) An enrollee may make a change to the health care coverage option
01 provided under this section only during a time period determined by the managed care 02 entity. The time period described in this subsection must occur at least annually and 03 last for at least 15 working days. 04 (d) If a managed care entity that offers a group managed care plan requires or 05 provides for a designation by an enrollee of a participating primary care provider, the 06 managed care entity shall permit the enrollee to designate any participating primary 07 care provider that is available to accept the enrollee. 08 (e) Except as provided in this subsection, a managed care entity that offers a 09 group managed care plan shall permit an enrollee to receive medically necessary or 10 appropriate specialty care, subject to appropriate referral procedures, from any qualified 11 participating health care provider that is available to accept the individual for medical 12 care. This subsection does not apply to specialty care if the managed care entity 13 clearly informs enrollees of the limitations on choice of participating health care 14 providers with respect to medical care. In this subsection, 15 (1) "appropriate referral procedures" means procedures for referring 16 patients to other health care providers as set out in the applicable member contract and 17 as described under (a) of this section; 18 (2) "specialty care" means care provided by a health care provider with 19 training and experience in treating a particular injury, illness, or condition. 20 (f) If a contract between a health care provider and a managed care entity is 21 terminated, a covered person may continue to be treated by that health care provider 22 as provided in this subsection. If a covered person is pregnant or being actively 23 treated by a provider on the date of the termination of the contract between that 24 provider and the managed care entity, the covered person may continue to receive 25 health care services from that provider as provided in this subsection, and the contract 26 between the managed care entity and the provider shall remain in force with respect 27 to the continuing treatment. The covered person shall be treated for the purposes of 28 benefit determination or claim payment as if the provider were still under contract with 29 the managed care entity. However, treatment is required to continue only while the 30 group managed care plan remains in effect and 31 (1) for the period that is the longest of the following:
01 (A) the end of the current plan year; 02 (B) up to 90 days after the termination date, if the event 03 triggering the right to continuing treatment is part of an ongoing course of 04 treatment; or 05 (C) through completion of postpartum care, if the covered 06 person is pregnant on the date of termination; or 07 (2) until the end of the medically necessary treatment for the condition, 08 disease, illness, or injury if the person has a terminal condition, disease, illness, or 09 injury; in this paragraph, "terminal" means a life expectancy of less than one year. 10 (g) The requirements of this section do not apply to health care services 11 covered by Medicaid. 12 Sec. 21.07.040. Confidentiality of managed care information. (a) Medical 13 and financial information in the possession of a managed care entity regarding an 14 applicant or a current or former person covered by a managed care plan is confidential 15 and is not subject to public disclosure. 16 (b) This section does not apply to medical information that is disclosed if 17 (1) the individual whose identity is disclosed gives written consent to 18 the disclosure; 19 (2) the information is disclosed for research 20 (A) that is subject to federal law and regulations protecting the 21 rights and welfare of research participants; or 22 (B) using health information that protects the confidentiality of 23 participants by coding or encryption of information that would otherwise 24 identify the patient; 25 (3) the information is disclosed for purposes of obtaining 26 reimbursement under health insurance; 27 (4) the information is disclosed at the written request of the covered 28 person; 29 (5) the disclosure is required by law. 30 Sec. 21.07.050. External health care appeals. (a) A managed care entity 31 offering group health insurance coverage shall provide for an external appeal process
01 that meets the requirements of this section in the case of an externally appealable 02 decision for which a timely appeal is made in writing either by the managed care 03 entity or by the enrollee. 04 (b) A managed care entity may condition the use of an external appeal process 05 in the case of an externally appealable decision upon a final decision in an internal 06 appeal under AS 21.07.020, but only if the decision is made in a timely basis 07 consistent with the deadlines provided under this chapter. 08 (c) Except as provided in this subsection, the external appeal process shall be 09 conducted under a contract between the managed care entity and one or more external 10 appeal agencies that have qualified under AS 21.07.060. The managed care entity 11 shall provide 12 (1) that the selection process among external appeal agencies qualifying 13 under AS 21.07.060 does not create any incentives for external appeal agencies to 14 make a decision in a biased manner; 15 (2) for auditing a sample of decisions by external appeal agencies to 16 assure that decisions are not made in a biased manner; and 17 (3) that all costs of the process, except those incurred by the enrollee 18 or treating professional in support of the appeal, shall be paid by the managed care 19 entity and not by the enrollee. 20 (d) An external appeal process must include at least the following: 21 (1) a fair, de novo determination based on coverage provided by the 22 plan and by applying terms as defined by the plan; however, nothing in this paragraph 23 may be construed as providing for coverage of items and services for which benefits 24 are excluded under the plan or coverage; 25 (2) an external appeal agency shall determine whether the managed care 26 entity's decision is (A) in accordance with the medical needs of the patient involved, 27 as determined by the managed care entity, taking into account, as of the time of the 28 managed care entity's decision, the patient's medical needs and any relevant and 29 reliable evidence the agency obtains under (3) of this subsection, and (B) in 30 accordance with the scope of the covered benefits under the plan; if the agency 31 determines the decision complies with this paragraph, the agency shall affirm the
01 decision, and, to the extent that the agency determines the decision is not in 02 accordance with this paragraph, the agency shall reverse or modify the decision; 03 (3) the external appeal agency shall include among the evidence taken 04 into consideration 05 (A) the decision made by the managed care entity upon internal 06 appeal under AS 21.07.020 and any guidelines or standards used by the 07 managed care entity in reaching a decision; 08 (B) any personal health and medical information supplied with 09 respect to the individual whose denial of claim for benefits has been appealed; 10 (C) the opinion of the individual's treating physician or health 11 care provider; and 12 (D) the group managed care plan; 13 (4) the external appeal agency may also take into consideration the 14 following evidence: 15 (A) the results of studies that meet professionally recognized 16 standards of validity and replicability or that have been published in peer- 17 reviewed journals; 18 (B) the results of professional consensus conferences conducted 19 or financed in whole or in part by one or more government agencies; 20 (C) practice and treatment guidelines prepared or financed in 21 whole or in part by government agencies; 22 (D) government-issued coverage and treatment policies; 23 (E) generally accepted principles of professional medical 24 practice; 25 (F) to the extent that the agency determines it to be free of any 26 conflict of interest, the opinions of individuals who are qualified as experts in 27 one or more fields of health care that are directly related to the matters under 28 appeal; 29 (G) to the extent that the agency determines it to be free of any 30 conflict of interest, the results of peer reviews conducted by the managed care 31 entity involved;
01 (H) the community standard of care; and 02 (I) anomalous utilization patterns; 03 (5) an external appeal agency shall determine 04 (A) whether a denial of a claim for benefits is an externally 05 appealable decision; 06 (B) whether an externally appealable decision involves an 07 expedited appeal; and 08 (C) for purposes of initiating an external review, whether the 09 internal appeal process has been completed; 10 (6) a party to an externally appealable decision may submit evidence 11 related to the issues in dispute; 12 (7) the managed care entity involved shall provide the external appeal 13 agency with access to information and to provisions of the plan or health insurance 14 coverage relating to the matter of the externally appealable decision, as determined by 15 the external appeal agency; and 16 (8) a determination by the external appeal agency on the decision must 17 (A) be made orally or in writing and, if it is made orally, shall 18 be supplied to the parties in writing as soon as possible; 19 (B) be made in accordance with the medical exigencies of the 20 case involved, but in no event later than 21 working days after the appeal is 21 filed, or, in the case of an expedited appeal, 72 hours after the time of 22 requesting an external appeal of the managed care entity's decision; 23 (C) state, in layperson's language, the basis for the 24 determination, including, if relevant, any basis in the terms or conditions of the 25 plan or coverage; and 26 (D) inform the enrollee of the individual's rights, including any 27 time limits, to seek further review by the courts of the external appeal 28 determination. 29 (e) If the external appeal agency reverses or modifies the denial of a claim for 30 benefits, the managed care entity shall 31 (1) upon receipt of the determination, authorize benefits in accordance
01 with that determination; 02 (2) take action as may be necessary to provide benefits, including items 03 or services, in a timely manner consistent with the determination; and 04 (3) submit information to the external appeal agency documenting 05 compliance with the agency's determination. 06 (f) A decision of an external appeal agency is binding unless a person who is 07 aggrieved by a final decision of an external appeal agency appeals the decision to the 08 superior court. 09 (g) An appeal of a final decision of an external appeal agency must be filed 10 within six months after the date of the decision of the external appeal agency. 11 (h) In this section, "externally appealable decision" 12 (1) means 13 (A) a denial of a claim for benefits that is based in whole or in 14 part on a decision that the item or service is not medically necessary or 15 appropriate or is investigational or experimental, or in which the decision as to 16 whether a benefit is covered involves a medical judgment; or 17 (B) a denial that is based on a failure to meet an applicable 18 deadline for internal appeal under AS 21.07.020; 19 (2) does not include a decision based on specific exclusions or express 20 limitations on the amount, duration, or scope of coverage that do not involve medical 21 judgment, or a decision regarding whether an individual is a participant, beneficiary, 22 or enrollee under the plan or coverage. 23 Sec. 21.07.060. Qualifications of external appeal agencies. (a) An external 24 appeal agency qualifies to consider external appeals if, with respect to a group health 25 plan, the agency is certified by a qualified private standard-setting organization 26 approved by the director or by a health insurer operating in this state as meeting the 27 requirements imposed under (b) of this section. 28 (b) An external appeal agency is qualified to consider appeals of group health 29 plan health care decisions if the agency meets the following requirements: 30 (1) the agency meets the independence requirements of this section; 31 (2) the agency conducts external appeal activities through a panel of
01 two clinical peers, unless otherwise agreed to by both parties; and 02 (3) the agency has sufficient medical, legal, and other expertise and 03 sufficient staffing to conduct external appeal activities for the managed care entity on 04 a timely basis consistent with this chapter. 05 (c) A clinical peer or other entity meets the independence requirements of this 06 section if 07 (1) the peer or entity does not have a familial, financial, or professional 08 relationship with a related party; 09 (2) compensation received by a peer or entity in connection with the 10 external review is reasonable and not contingent on any decision rendered by the peer 11 or entity; 12 (3) the plan and the issuer have no recourse against the peer or entity 13 in connection with the external review; and 14 (4) the peer or entity does not otherwise have a conflict of interest with 15 a related party. 16 (d) In this section, "related party" means 17 (1) with respect to 18 (A) a group health plan or health insurance coverage offered in 19 connection with a plan, the plan or the insurer offering the coverage; or 20 (B) individual health insurance coverage, the insurer offering 21 the coverage, or any plan sponsor, fiduciary, officer, director, or management 22 employee of the plan or issuer; 23 (2) the health care professional that provided the health care involved 24 in the coverage decision; 25 (3) the institution at which the health care involved in the coverage 26 decision is provided; 27 (4) the manufacturer of any drug or other item that was included in the 28 health care involved in the coverage decision; 29 (5) the covered person; or 30 (6) any other party that, under the regulations that the director may 31 prescribe, is determined by the director to have a substantial interest in the coverage
01 decision. 02 Sec. 21.07.070. Limitation on liability of reviewers. An external appeal 03 agency qualifying under AS 21.07.060 and having a contract with a managed care 04 entity, and a person who is employed by the agency or who furnishes professional 05 services to the agency, may not be held by reason of the performance of any duty, 06 function, or activity required or authorized under this chapter to have violated any 07 criminal law, or to be civilly liable if due care was exercised in the performance of the 08 duty, function or activity and there was no actual malice or gross misconduct in the 09 performance of the duty, function, or activity. 10 Sec. 21.07.080. Religious nonmedical providers. This chapter may not be 11 construed to 12 (1) restrict or limit the right of a managed care entity to include health 13 care services provided by a religious nonmedical provider as health care services 14 covered by the managed care plan; 15 (2) require a managed care entity, when determining coverage for 16 health care services provided by a religious nonmedical provider, to 17 (A) apply medically based eligibility standards; 18 (B) use health care providers to determine access by a covered 19 person; 20 (C) use health care providers in making a decision on an 21 internal or external appeal; or 22 (D) require a covered person to be examined by a health care 23 provider as a condition of coverage; or 24 (3) require a managed care plan to exclude coverage for health care 25 services provided by a religious nonmedical provider because the religious nonmedical 26 provider is not providing medical or other data required from a health care provider 27 if the medical or other data is inconsistent with the religious nonmedical treatment or 28 nursing care being provided. 29 Sec. 21.07.090. Construction. This chapter may not be construed to supersede 30 or change the provisions of 29 U.S.C. 1001 - 1191 (Employee Retirement Income 31 Security Act of 1974) as those provisions apply to self-insured employers.
01 Sec. 21.07.250. Definitions. In this chapter, 02 (1) "clinical peer" means a health care provider who is licensed to 03 provide the same or similar health care services and who is trained in the specialty or 04 subspecialty applicable to the health care services that are provided; 05 (2) "clinical trial" means treatment, research, study, or investigation 06 over a period of time of an injury, illness, or medical condition; 07 (3) "emergency room services" means health care services provided by 08 a hospital or other emergency facility after the sudden onset of a medical condition 09 that manifests itself by symptoms of sufficient severity, including severe pain, that the 10 absence of immediate medical attention would reasonably be expected by a prudent 11 person who possesses an average knowledge of health and medicine to result in 12 (A) the placing of the person's health in serious jeopardy; 13 (B) a serious impairment to bodily functions; or 14 (C) a serious dysfunction of a bodily organ or part; 15 (4) "group managed care plan" or "plan" means a group health 16 insurance plan operated by a managed care entity; 17 (5) "health care provider" means a person licensed in this state or 18 another state of the United States to provide health care services; 19 (6) "health care services" means treatment of an individual for an 20 injury, illness, or disability and includes preventative treatment of an injury or illness; 21 (7) "health insurance" has the meaning given in AS 21.12.050(a); 22 (8) "managed care" means a contract given to an individual, family, or 23 group of individuals under which a member is entitled to receive a defined set of 24 health care benefits in exchange for defined consideration and that requires the member 25 to comply with utilization review guide lines; "managed care" does not include 26 Medicaid coverage under 42 U.S.C. 1396 - 1396p (Social Security Act); 27 (9) "managed care contractor" means a contractor who establishes, 28 operates, or maintains a network of participating health care providers, conducts or 29 arranges for utilization review activities, and contracts with a managed care entity; 30 (10) "managed care entity" means an insurer, a hospital or medical 31 service corporation, a health maintenance organization, an employer or employee
01 health care organization, a managed care contractor that operates a group managed care 02 plan, or a person who has a financial interest in health care services provided to an 03 individual; 04 (11) "medical emergency" means the sudden onset of a medical 05 condition that manifests itself by symptoms of sufficient severity, including severe pain 06 that in the absence of immediate medical attention would reasonably be expected by 07 a prudent person who possesses an average knowledge of health and medicine to result 08 in 09 (A) the placing of the person's health in serious jeopardy; 10 (B) a serious impairment to bodily functions; or 11 (C) a serious dysfunction of any bodily organ or part; 12 (12) "participating health care provider" means a health care provider 13 who has entered into an agreement with a managed care entity to provide services or 14 supplies to a patient covered by a group managed care plan; 15 (13) "primary care provider" means a health care provider who provides 16 general health care services and does not specialize in treating a single injury, illness, 17 or condition or who provides obstetrical, gynecological, or pediatric health care 18 services; 19 (14) "provider" means a health care provider; 20 (15) "religious nonmedical provider" means a person who does not 21 provide medical care, but who provides only religious nonmedical treatment or nursing 22 care for an illness or injury; 23 (16) "utilization review" means a system of reviewing the medical 24 necessity, appropriateness, or quality of health care services and supplies provided 25 under a group managed care plan using specified guidelines, including preadmission 26 certification, the application of practice guidelines, continued stay review, discharge 27 planning, preauthorization of ambulatory procedures, and retrospective review; 28 (17) "working day" means a day of the week that is not a Saturday, 29 Sunday, or a holiday. 30 * Sec. 3. AS 21.36.125 is amended by adding a new paragraph to read: 31 (16) violate a provision contained in AS 21.07.
01 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section 02 to read: 03 INDIRECT COURT RULE AMENDMENT. AS 21.07.050(g), as enacted by sec. 2 04 of this Act, has the effect of amending Rule 602, Alaska Rules of Appellate Procedure, by 05 providing that an appeal from a decision of an external appeal agency must be filed within 06 six months of the decision of the external appeal agency. 07 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 CONDITIONAL EFFECT. AS 21.07.050(g), as enacted by sec. 2 of this Act, takes 10 effect only if sec. 4 of this Act receives the two-thirds majority vote of each house required 11 by art. IV, sec. 15, Constitution of the State of Alaska. 12 * Sec. 6. This Act takes effect July 1, 2001.