Legislature(1999 - 2000)
10/22/1999 10:10 AM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 211 - MANAGED HEALTH CARE INSURANCE CHAIRMAN ROKEBERG announced the first order of business would be HOUSE BILL NO. 211, "An Act relating to liability for providing managed care services, to regulation of managed care insurance plans, and to patient rights and prohibited practices under health insurance; and providing for an effective date." CHAIRMAN ROKEBERG indicated that the proposed committee substitute (CS) for HB 211, version 1-LS0472\G, Ford, 10/21/99, could not be adopted as a work draft because there was not a quorum present, but that he still intended to work off of the proposed CS. He stated, "This is a draft that came about from ... further input from the AMA and Blue Cross." He pointed out that he wanted to go over the proposed CS for HB 211, keying off the changes that were made to the original bill. He mentioned that if there were further questions on a page-by-page basis, there was online support to help sort it out. He further stated that the drafting aspects were being driven, to a degree, by the activities in Washington, D.C. He asked if the bill before Congress was in a conference committee. Number 018 JIM JORDAN, Alaska State Medical Association, responded that HB 211 was not in conference committee. He stated that the Senate conferees were named a week prior, to the meeting and the House conferees were expected to be named any day. CHAIRMAN ROKEBERG indicated that his main concern is to make sure that HB 211 is more or less consistent with the federal law. He believes there is currently a good deal in the federal law that allows for the activity on the part of the state. Therefore, HB 211 is an enhancement to the federal statute and important for the State of Alaska to take up at this time. Number 038 JANET SEITZ, Legislative Aide to Representative Norman Rokeberg, Alaska State Legislature, highlighted the changes made to HB 211. She pointed out that the first change on page 1, line 5, which states, "The uncodified law of the State of Alaska" used to read "Alaska Patients Bill of Rights." She questioned whether it was merely a drafting change. MIKE FORD, Attorney, Legislative Legal and Research Services, Alaska State Legislature [drafter of the legislation], testified via teleconference. He stated: The legislature has enacted a law that requires us to highlight additions to the uncodified law in this way. So now every bill that you see that has an uncodified law provision will contain this language. Number 049 MS. SEITZ indicated new language on page 2, lines 6 and 7, states, "resulting from the failure to provide care or treatment covered by the health care plan." It is intended to cover a concern about the contract aspects of the agreement between the provider and the managed care entity. She said on page 2, line 10, the words, "or entity" were deleted after the words "health care plan." There is new language on page 2, line 11, where it states, "a labor organization, or other employer group if the employer, association, labor organization, or group does not make health care treatment decisions." CHAIRMAN ROKEBERG asked, "Is that the Anne Hays [International Brotherhood of Electrical Workers (IBEW)] clause?" He pointed out that the intention is to exempt from civil liability those organizations that might be assumed to be providers by acting as aggregators or consolidators of insurance. Number 064 MR. JORDAN said: It seems like we always try to play the game to make sure everyone gets identified in a section like this so that there aren't problems like Anne has pointed out. ... I'm wondering if perhaps maybe a different term could be used, such as "plan sponsor." Now, I know that term has a specific meaning in ERISA [Employee Retirement and Income Security Act], and I'm not going to pretend to know what that definition is right offhand, but maybe such a term may be used that would get around the problem not having inclusionary language. MR. FORD explained that he is in support of figuring out a way to cover all the people that they want to cover, and that maybe they should look at a term that would do that. CHAIRMAN ROKEBERG indicated the term "plan sponsor" could be used, although it would have to be defined. MR. FORD pointed out that some items in paragraph (2) could be taken out and substituted with a generic term, which could then be defined to include all the people. He was uncertain as to whether they would gain a lot if the generic term was only defined as certain groups, because then they are still adding or subtracting from that definition. Number 085 MR. JORDAN emphasized that the root of his inquiry was to point out that there may already be an all-inclusive definition in federal law that could be referred to. MR. FORD wondered if they were talking about groups that were not plan sponsors or just those people that sponsor plans. MR. JORDAN indicated the term "plan sponsor" has a very specific meaning when it comes to health and welfare plans, but that it can include such entities as an employer association. MR. FORD announced that he would be willing to do some research on the issue and get back to the committee. CHAIRMAN ROKEBERG emphasized that one of the issues they want to look out for is when an employer acts as an aggregator or his/her own general contractor; therefore, he/she can act like a third- party administrator, which is what the American Federation of Labor and Commerce of Industrial Organizations (AFL-CIO) is doing up here through the IBEW (International Brotherhood of Electrical Workers). Number 102 ANNE HAYS, Local 1547, International Brotherhood of Electrical Workers (IBEW), stated, "Each plan administrates their own participation. ... We've aggregated through a health payer cost containment task force." CHAIRMAN ROKEBERG wondered, "You go out and buy this contract as a group and then you administer... ?" MS. HAYS interjected, "We administer individually." CHAIRMAN ROKEBERG asked, "With yourself insured?" MS. HAYS responded, "Some are; some are not." Number 109 MS. SEITZ pointed out that on page 2, line 30, the word "and" was deleted because of the addition of subsection © on page 3, which reads, "prospective and current review of proposed medical treatment." She noted that the addition of subsection © was a suggestion from the previous director of the Division of Insurance. She further stated that on page 3, line 27, the word "working" was added. And at the end of line 28 and 29, on page 3, new language was added that reads, "unless the parties otherwise agree in writing to a different schedule." CHAIRMAN ROKEBERG wondered if the intention of the new language on page 3 was to be able to give extensions. MS. SEITZ responded, "That's correct." She added, "I think that was a concern expressed by Blue Cross. If some of their people were out of town, that needed to be there." CHAIRMAN ROKEBERG said he was thinking in terms of UR [Utilization Review]. If a specialist wasn't available, then one could do a peer review or something. MS. SEITZ next addressed page 4, line 21, where new language was added that read, "a person who is knowledgeable of state law and business practices." She noted that this is important so that the arbitrator would be familiar with Alaska law and business practices. She indicated subparagraph (B) on page 6 was deleted, which read: to deny, reduce, or terminate a health care benefit or to deny payment for a health care service because that service is not medically necessary shall be made by an employee or agent of the managed care entity who is a licensed health care provider trained in the specialty or subspecialty pertaining to the health care service involved and only after consultation with the covered person's treating health care provider. MS. SEITZ further stated that on page 6, line 14, the language "in- or out-of-network features" was deleted. She explained that Blue Cross had expressed concerns that it [the language] was broad and created an administrative problem. MS. SEITZ noted that the reference on line 16 to "the procedures for advance directives and organ donations" was deleted. She explained: It was felt that the insurance plan usually doesn't deal with that; that's usually the hospital entities that when you check in, they give you information on advance directives, like if you have a living will or a general power of attorney that supplies a disability. And on line 17 ... CHAIRMAN ROKEBERG interjected, saying there is the belief that the way [the language] was drafted created an unintentional mandate. MS. SEITZ said that is correct. She continued, pointing out that the term "clinical trial" was removed, because it was indicated that clinical trials would be covered under experimental or investigational treatment. CHAIRMAN ROKEBERG asked whether that was a controversial issue even in the federal bill. MR. JORDAN responded, "I'm not sure, because I don't know just what the full definition of clinical trials would be, so I can't comment on that." CHAIRMAN ROKEBERG asked whether the context was in relation to the prescription drugs. MR. JORDAN replied, "I think that's in context of what's going on with some of the proposals to change Medicare." CHAIRMAN ROKEBERG wondered, "Where is it in the new bill?" Number 191 MS. SEITZ responded that on page 6, line 17, of Version G, it has been deleted. It reads, "requirements, and the coverage for experimental or investigational treatment." She pointed out that in the previous version of HB 211, it read, "requirements, and the coverage for experimental, clinical trial, or investigational treatment." CHAIRMAN ROKEBERG asked if Mr. Jordan thought the wording "the coverage for experimental or investigational treatment" was redundant. MR. JORDAN explained that he is not sure of the full definition for the term "clinical trial." CHAIRMAN ROKEBERG wondered if it is a term for drugs. MR. JORDAN replied, "I just don't know." Number 207 MS. SEITZ pointed out that on page 6, line 21, the language "a list of specific drug formulas, including specific exclusions" has been deleted, and the phrase "a formulary guide" has been added. CHAIRMAN ROKEBERG asked Mr. Jordan what he thought of the change. MR. JORDAN replied that the one question he had while reading through the proposed CS was whether removal of the language "including specific exclusions" was appropriate, because one of the purposes is to know what is covered and what is not covered. CHAIRMAN ROKEBERG indicated he had recently received one [a formulary guide] in the mail from AETNA, and there seemed to be some pages missing. MS. SEITZ said that has happened to her, too. MR. JORDAN explained that he doesn't know where the suggestion came from to remove that particular clause. He indicated perhaps the theory is that if it's not in the formulary, then it's excluded. Number 227 BILL MOORE, Premera Blue Cross of Seattle, testified via teleconference. He indicated that the formulary guide he received [from AETNA] does contain exclusions. He believes that if the House Labor and Commerce Standing Committee wants to specify that exclusions be listed, they should do so. CHAIRMAN ROKEBERG pointed out that it would minimize disputes if that were the case. He asked Mr. Moore if Blue Cross/Blue Shield uses a formulary in Alaska. If so, does it exclude specific drugs? MR. MOORE indicated a formulary had been introduced in Washington, but he was not sure if a formulary had been introduced in Alaska. He said that he would find out and get back to the committee. MS. SEITZ pointed out: The concern that was expressed is that as new drugs come out, they'd have to republish the book and send us a new book. I don't know if there's a way to handle that, you know, as new drugs are developed, and if they exclude them or include them, and do we get a book a month or a book a year or a formulary guide ...? CHAIRMAN ROKEBERG responded, "There is a dynamic there." Number 249 MR. JORDAN explained that there is a formulary, then one must tell people what is in the formulary, which led him to believe that if there are changes in the formulary, then the insurer would have to republish it. If there is no formulary, then the insurer would not have to provide it. Perhaps there is some middle ground. CHAIRMAN ROKEBERG said the formulary he had received from AETNA indicated to the patient-client to take the formulary with him or her to the doctor so that the doctor could look at it. He reiterated that some pages referring to the exclusions were missing in the formulary pamphlet. MS. SEITZ pointed out that in Version G the bulk of the changes occurred from page 6, line 24, through page 14, line 2. She explained that Mr. Ford [the drafter] was asked to bring Version G into agreement with the House version that the U.S. Congress passed with regard to the choice of health care provider, confidentiality of information, and the external care repeal process, including setting a filing fee. She noted that the previous bill had each party bearing its own costs. CHAIRMAN ROKEBERG asked Mr. Ford for clarification. Number 290 MR. FORD explained that he had attempted to use the federal provisions as closely as he could, but of course there is always difficulty in taking parts of a different scheme and including them in an existing bill. He indicated that the committee had before it a choice-of-health-care-provider provision, patterned after the federal law. This provision requires a managed care entity to offer the option of non-network coverage, which is discussed on page 6, line 24, subsection (a) of Version G. MR. FORD said subsection (b) describes what happens if there is an additional premium charged; it is paid by the enroller unless it is paid by the employer through agreement with the managed care entity. Subsection (c) describes when an enrollee can change his/her coverage options. Subsection (d) explains that if a managed care entity which offers a group managed care plan requires or provides for a designation by an enrollee of a participating primary care provider, then the managed care entity has to allow the enrollee to designate any participating primary- care provider that is available to accept the enrollee. MR. FORD said subsection (e) deals with requiring the managed care entity that offers the plan to permit the enrollee to receive medically necessary or appropriate specialty care subject to appropriate referral procedures. However, the subsection doesn't apply to specialty care if [the managed care entity] clearly informs the enrollee of the limitations on choice with respect to medical care. Subsections (f) and (g) are provisions that were in HB 211. Subsection (f) is providing for notice when a health care provider is terminated by the entity for cause, and subsection (g) is simply an exclusion for health care services covered by Medicaid. Number 336 MR. JORDAN indicated certain definitions might need to be included. He referred to page 6, lines 29 through 31, of Version G, where it appears to say that the section would not apply to an enrollee if, in fact, there is other coverage available in the marketplace. CHAIRMAN ROKEBERG wondered what the term "group market" means. He indicated it was probably from the federal bill. MR. FORD clarified that it is from the federal law. He indicated that he did not know exactly how it worked, but it was requested, so he put it in Version G. Number 361 MR. JORDAN further stated that on page 7, lines 1 through 5, the language indicates that the additional cost involving administration or an increase in the cost-sharing will be paid by the enrollee. It does not require increases in a premium to be paid that may result from the difference in fee structure between a network physician and a non-network physician. That may, in fact, increase the cost because there is a choice where the patient is dealing with a non-network/non-contracted provider. CHAIRMAN ROKEBERG wondered if the assumption is that if a patient goes out of the network, the managed care entity would only pay the same rate in network or out of network. MR. JORDAN said, "Right, but there may also be other..." CHAIRMAN ROKEBERG interjected, "This provides a surcharge." MR. JORDAN continued, "... increases in frequency, for example, or for whatever reason. I'm just saying it doesn't allow it. If you want it this way, fine, but it doesn't -- it's missed that section." CHAIRMAN ROKEBERG said: In fairness to Mr. Ford, we gave him some instructions and ...(indisc. -- two people talking). I take it we'll try to develop some kind of a hybrid that is going to work that makes sense to all of us. Number 393 MR. JORDAN pointed out that on page 7, line 10, the reference to "primary care provider" may need to be defined. On page 7, line 15, the term "specialty care" may also need to be defined in conjunction with the definition of "primary care provider." He stated that there has been discussion as to who constitutes a "primary care provider." For example, would a "primary care provider" include an OB/GYN (physician specializing in obstetrics and gynecology)? He wondered if the term "appropriate referral procedures," also on line 15, page 7, needed to be defined or whether it is already defined in the federal law. Number 414 CHAIRMAN ROKEBERG stated: Well, Mr. Jordan, assuming you were familiar with the federal law and then what we had - you'd worked on previously - do you view these in conflict or that ... it just needs to be triaged and worked and fixed up? MR. JORDAN indicated Version G does need to be triaged and fixed up a little. Consideration should also be given to the circumstances that were included in the original bill having to do with those situations in which that contractual relationship between a treating physician is ended by the insurance company, so that there can be continued treatment of that patient by that particular health care provider. He explained the circumstances included in the original bill, one having to do with normal circumstances where the patient is not terminal and the provider for that treatment and the payment continues as the contract continues between the physician and the insurance company for six months. The other provision allowed for an extension to that agreement should there be a terminal illness involved. He pointed out that the reason for those provisions is to provide some continuity of care with the provider of choice. CHAIRMAN ROKEBERG indicated those provisions could be added back. Number 444 SHARON MACKLIN, Lobbyist, pointed out that subparagraph (b) on page 6 of the original bill, HB 211, which was deleted from Version G, refers to utilization review by a health care provider who is licensed and trained in the specialty or subspecialty of whatever is being reviewed. She wondered why it was deleted. MS. SEITZ said, "I have two notes here: huge cost-driver and already covered in some appeal processes." CHAIRMAN ROKEBERG added, "We still have a UR review and appeals situation here." Number 463 MS. MACKLIN said: This is not after the fact. ... This is at the time of a medical problem, or a problem. ... I represent several groups that are health care providers. What this allows the UR person to do is to have, for instance, a pediatrician reviewing a surgeon's recommendation or a gynecologist reviewing a chiropractor's recommendation. CHAIRMAN ROKEBERG interjected that it was not the committee's intent to do that and hopefully it is spoken to elsewhere. He indicated the committee was trying to modify the bill somewhat from its original version because of the potential of the cost- driver and the issue of having a specialist in rural Alaska. He noted that the committee was trying to match their appeal process to a practical and cost-effective one that still protects the patient. MR. FORD explained that Section 21.07.040 is the same as the prior provision in HB 211, so there is no change to that section. Section 21.07.050 relating to external health care appeals is a new provision in Version G. The external health care appeals provision in the original bill, HB 211, was taken out entirely and replaced with the new provision. He pointed out that they also added Section 21.07.060, relating to qualifications of external appeal agencies, and Section 21.07.070, relating to a limitation on liability of reviewers. He further stated: We'll start with 050, subsection (a), which requires managed care entities to provide an external appeal process. And one of the key points of this is this federal use of the term "externally appealable decision" ... for which a timely appeal is made. We do require the director of the Division of Insurance to adopt regulations to implement the section; that's subsection (a). Subsection (b) simply provides that the external appeal can be conditioned on a final decision in the internal review process, which is back in section 020. So we do make that requirement that there is a progression here, that you complete the internal review first and then, if you're unhappy, at that point you have the external appeal process available to you. MR. JORDAN said it appears subsection (a) sets up an external appeal process not only for the patient/enrollee, but also for the managed care entity itself. He said it seemed a bit strange that a managed care entity which is making the decision that presumably is appealable would also have an appealable external review process. MR. FORD stated, "Well, again, this is based on the federal law, and I assume that maybe they would lose in the internal appeal process." MR. JORDAN asked, "How can they lose their own appeal process?" MR. FORD admitted that he did not know how it would happen, but said that is the way it works in the federal law. Number 563 MR. MOORE explained that in certain situations, it comes into play, particularly in situations involving experimental and investigational procedures when clearly a very specialized medical expertise is required for coming to the determination. He pointed out that some plans have chosen to actually bypass their own internal appeals process and to send the case directly to external review, where they get that special determination as to whether the "ENI" (ph) procedure is safe and efficacious for the person. He stated: We don't have a mandate for independent external review in any of the states where we do business, but my understanding is that where that does exist, frequently managed care plans will simply take the initiative to bypass their own process in favor of arriving at a (indisc.) decision for themselves and then the covered person. It's mutually helpful. CHAIRMAN ROKEBERG thanked Mr. Moore for his explanation. MR. FORD continued, "Subsection (c) is just a list of things the manage-care entity can do or shall do: one is condition the use of the external appeal process on the payment of a filing fee; we cap that at $25. We also have an exception in paragraph (2) for indigent enrollees. And then in paragraph (3), we require a refund if the recommendation on external appeal is to reverse or modify the denial of the claim for benefits. Subsection (d) requires the external appeal process to be conducted under contract between the managed care entity and one or more external appeal agencies that are qualified, and then we go on to describe what the director has to do in qualifying external appeal agencies. Paragraph (1) prohibits any incentives for making ... [ends midspeech because of tape change]. TAPE 99-60, SIDE B Number 001 MR. FORD continued: ... except those incurred by the enrollee or deemed professional in support of the appeal are paid by the managed care entity and not by the enrollee, with the exception of the filing fee. Subsection (e) sets off a number of provisions that have to be included in the process. Paragraph (1) talks about a fair, de novo determination based on coverage provided by the plan and applying the terms as defined by the plan. Paragraph (2) ..." CHAIRMAN ROKEBERG interjected: Wait a minute. What would constitute a de novo determination in this case, in your opinion, Mr. Jordan? Or do you have one? That seems to imply you have to start [from] scratch with an examination by another physician. Is that correct or am I wrong? You can't review the record? Number 010 MR. JORDAN explained that his reading of that was that the appeal agency has to look at this in light of all the information provided it, as if it is a new look. He doesn't think, from his quick reading of it, that it would necessarily require a re- examination of the patient. CHAIRMAN ROKEBERG asked Mr. Ford if he had an opinion on that. MR. FORD stated: Well, I think what it means to me is that they simply don't have to give weight to the internal appeal process or prior decision of the managed care entity. They can go ahead and make a decision based on their own determination. CHAIRMAN ROKEBERG asked, "So they could look at the record without re-examining until they reached a point where they thought they might want to re-examine, for example?" Number 019 MR. FORD responded, "Correct." He further stated: Moving on to page 9, paragraph (2), at the top here specifies that an external appeal agency determines whether the managed care entity's decision is in accordance with the medical needs of the patient involved, as determined by the managed care entity, and then taking into account, it outlines a number of factors that have to be considered - patient's medical needs, relevant reliable evidence - and if the agency determines the decision is in accordance with the patient's needs, they affirm the decision. And to the extent that they determine it's not in accordance, they reverse or modify the decision of the managed care entity. Paragraph (3) talks about how the external appeal agency considers but is not bound by language in the plan relating to the definition of the term "medical necessity," "medically necessary or appropriate," "experimental," "investigational," or similar terms. Paragraph (4) [is] ... basically about the evidence that has to be taken into consideration. Subparagraph (A), (B) and (C) set out those - that kind of evidence that the external appeal agency would review. Paragraph (5) is, again, things the external appeal agency may take into consideration but is not required to, and is not limited to ... results of studies that meet professional recognized standards, professional consensus conferences, practice treatment guidelines, et cetera. It goes on down through page 10, line 13. ... In Paragraph (6), it specifies what the external appeal agency is required to determine: whether a denial for benefits is an externally appealable decision, whether the decision involves an expedited appeal, and, for purposes of initiating the review, whether the internal review process has been completed. Paragraph (7) talks about how a party may submit evidence relating to the issues in dispute. Paragraph (8) talks about the managed care entity being required to provide information to the external appeal agency so they can proceed on the appeal. Paragraph (9) specifies some framework for the actual decision. It could be orally or it could be in writing, and there are some time lines on lines 30 and 31 and on the next page that they are required to make their decision within. ... Subparagraph (C), they talk about they have to state the decision in lay person's language, including, if relevant, terms and conditions of the plan and coverage. Finally, they have to inform the enrollee of their rights, including limitation on rights to seek further review via external appeal determination. Subsection (F) talks about if the external appeal agency reverses or modifies, then what the managed care entity has to do in response to that decision. Subparagraph [Subsection] (g) specifies that a person has the right to seek judicial review. If they don't do that, then that decision would be binding on the parties. And then finally, in Subsection (h), it defines what an "externally appealable decision" is, because apparently not all decisions would be appealable. So, I'll stop there and see if we have any more questions. Number 066 BOB LOHR, Director, Division of Insurance, Department of Community and Economic Development, wondered if the reference to paragraph (4) on page 9, line 8, should also include paragraph (5), which discusses the optional items that the agency may consider. He pointed out that if the agency may consider those items listed on page 9 starting on line 26, then it seems like they should be included in the weighing of the evidence on line 8. MR. FORD said, "Well, that makes sense to me. You could actually take (4) out and just say, 'obtains under this section,' or you could reference (4) and (5). Yeah, that certainly wouldn't bother me." CHAIRMAN ROKEBERG said, "You're the drafter, Mike [Mr. Ford]." MR. FORD indicated he would just take out the reference to paragraph (4) and say, "the agency obtains under this section." MR. JORDAN referred to page 10, line 31, where the phrase "working days" was deleted from the original bill, HB 211, and "21 days" was inserted during the drafting of Version G. He wondered if "21 days" referred to working days or calender days. MR. FORD indicated that for consistency, that should be working days as well, if everyone agreed. Number 095 MS. SEITZ referred to page 11, subsection (g), starting on line 17. She indicated it does not appear to have a deadline for a filing of an appeal. MR. FORD explained: Well, there is a deadline in the court rules for appealing decisions of administrative agencies, and I assume that it also could be done by regulation by the director. There would need to be a deadline, for sure. CHAIRMAN ROKEBERG wondered if it was common to have a statutory deadline. MR. FORD stated: Well, typically, again, there is a rule in the court rules as far as the appeal of decisions of administrative agencies. In this case, we're appealing a decision of a managed care entity external appeal process. I would think it would probably be wise to put it in here somewhere, so there's no question about what someone's rights are. CHAIRMAN ROKEBERG asked Mr. Ford if he would make a recommendation later. MR. FORD said he could do that. CHAIRMAN ROKEBERG asked Mr. Ford to go ahead and discuss Section 21.07.060. Number 113 MR. FORD explained: 060 is simply how you become qualified as an external appeal agency and, again, this is mostly provisions from the federal law, and they set it up such that you qualify if you're certified by the director or a qualified private standard-setting organization approved by the director or by a health insurer operating in this state and you meet the requirements imposed under subsection (b). Subsection (b) lists (1) through (4) as the requirements that the agency is required to meet. Paragraph (1) talks about independence requirements. Paragraph (2) deals with your panel of review having at least three clinical peers. Paragraph (3) is your medical, legal and other expertise that you have on staff being sufficient to conduct the external appeal activity. And then paragraph (4) is simply a catch-all where the director could impose additional requirements in order to qualify. Subsection (c) talks about the standards the director has to develop, and paragraphs (1) through (5) simply talk about what those standards have to include: cases reviewed, summary of disposition, length of time that you take in making a determination and updating information under paragraph (4). And paragraph (5), again, is information necessary to ensure independence of the agency from the managed care entity. Subsection (d) talks about the director can provide a process for certification of qualified private standards-setting organizations, so I assume that the federal law anticipates use of the private standards- setting organizations to a large degree, although I can't say that for certain that appears to be what they're trying to do. Subsection (e) talks about the clinical peer or other entity meeting independence requirements if, and it sets out four paragraphs of qualification, which I assume if you meet these, then you do qualify as meeting the independence standard: not having a familial, financial, or professional relationship; not getting compensation dependent on the review; not having a recourse in connection with the review against the peer or entity; and then conflicts of interest are not apparent under regulations the director can or will prescribe. Subsection (f) goes into a definition of what a "related party" is. That term is, again, used under this section, and this is just a definition of what we mean by related party. I'll stop there. CHAIRMAN ROKEBERG asked if there were any questions. Number 154 MS. MACKLIN noted that the external appeals do require three clinical peers. She indicated that there is not a definition of "peers," but that it is probably referring to somebody in the same specialty category. She pointed out, "It is interesting that on internal appeals they don't require peers, but on external review, which is -- which I assume is in the federal legislation, correct?" MR. FORD replied, "That's correct." MS. MACKLIN continued, "But the internal appeals, that was not changed because of the federal legislation, right? Didn't Janet [Seitz] say it was a different reason that it was changed in here?" MS. SEITZ asked, "(Indisc.) deleted it?" MS. MACKLIN responded, "Yes." MS. SEITZ said, "No. That didn't have anything to do with the federal regulation. That was the cost-driver, I'm sorry." CHAIRMAN ROKEBERG wondered if there was a "clinical peer" or term of art that needs to be defined. He stressed that it is a critical issue in this area and one of controversy. MR. FORD said: I can't tell you that "clinical peer" has an accepted meaning. If there is any doubt, I would recommend defining it. It seems pretty clear to me. I thought "clinical peer" was fairly clear, but whenever there's uncertainty, a definition is attempt an effort to clear that up. Number 171 MR. JORDAN indicated a definition in existence may work. It is in the so-called tort reform bill, HB 58, which passed a few years ago. It is in a section having to do with "expert witnesses." CHAIRMAN ROKEBERG said it seems the UR agencies would be set up as independent business groups and selected by the managed care entity to perform that function. He asked if that is correct. MR. FORD replied: Well, I see it could work a number of ways, but as I view this, ya, they're looking at people who are willing to do this work and they're going to qualify under this language that we have to do that work. So, the managed care entity signs a contract with some other business to do the external appeal process. CHAIRMAN ROKEBERG said, "As opposed to setting up our own, like a state agency, if you will, to provide that function." MR. FORD responded, "Correct." REPRESENTATIVE BRICE wondered what the incentive is for the appeal agency to make a decision outside of what is in favor of the provider. CHAIRMAN ROKEBERG replied, "I imagine they are compensated on a contractual basis without any tie to - which is prohibited in the bill - to how they'd make a ruling." MR. FORD replied: There's always independence requirements in here, which are intended to separate the manage-care entity from the external appeal agency. So, those would have to be pretty strong to avoid that problem. CHAIRMAN ROKEBERG pointed out that from a structural standpoint it doesn't really differ from the original bill. It is just different language saying basically the same thing, but clearly it has to be looked at closely to make sure that is the case. Number 219 MR. LOHR stated that substantial requirements are included for the division to develop standards and to perform certification. If there is a provision that authorizes fees from these independent entities, it hasn't (indisc.) on it yet. He mentioned that if the intention is to have this self-financing, then [fees from the independent entities] may be something to consider. CHAIRMAN ROKEBERG agreed that a fee clause is necessary in order to minimize any damage from fiscal notes. Chairman Rokeberg said Ms. Macklin's point was well-taken, but he was concerned with the requirement for three clinical peers. He asked if all three of the medical peers have to be brain surgeons, for example, or how does that work? MR. JORDAN said that he believed the medical community's intent was not to have pediatrician review the work of a neurosurgeon. He agreed with Chairman Rokeberg's understanding that the medical peers would be doctors, not physician's assistants or nurses. MR. FORD continued with Section [21.07] .070, which is taken from the federal law. He explained that this section limits civil and criminal liability for the external appeal agency or a person employed by the agency who provides professional services. Those people cannot be held liable so long as they exercise due care in the performance of their duties and there is no actual malice or gross misconduct. MR. FORD turned to the definitions. He pointed out that the first change is in the definition of "group managed care plan." In that definition, a clause is deleted which specified that a group managed care plan does not include an integrated medical group. That deletion also triggered the deletion of the definition of an "integrated medical group." Under paragraph (6), the definition of "managed care," several provisions were deleted and some language was added. MR. FORD further informed the committee that the following language was deleted from paragraph (6): "health care benefits through an organized system of health care providers." On page 14, line 22, the language "to comply with utilization review guide lines" was inserted. The deleted language read: "views or creates financial incentives for the member to use health care provider (indisc.) or under contract with a managed care entity." Therefore, the current emphasis is on utilization review rather than the actual providers used by the entity. CHAIRMAN ROKEBERG asked if, in Mr. Ford's opinion, the definition of managed care would include a PPO-type insurance plan. Or is that covered under the definition of health insurance, paragraph (5)? Chairman Rokeberg explained that PPO-type plans may be underwritten by a health insurance provider that has closed panels. He asked if that would be a managed care entity. Number 269 MR. FORD answered yes, he believed so. He then turned to paragraph (8) on line 27 of page 14, "managed care entity." This definition had the following language added: "or a person who has a financial interest in health care services provided to an individual". MR. FORD continued with Section 4 of the bill, which adds new sections of law, Section 21.42.390. In this case, several provisions were actually removed from the prior HB 211. In subsection (a) of this section, the provision that prohibited health care insurers from including a provision in the contract that prohibits a covered person from obtaining health care services from the health care provider of the person's choice, including a specialist, was deleted. MR. FORD informed the committee that subsection (b) was deleted; it prohibited health care insurers from denying, reducing or terminating payments (indisc.) service not medically necessary, unless the decision was made by a licensed health care provider trained in that specialty. Because of that deletion, the former Section 5 of HB 211 - a repeal of a similar provision in the HMO law, 21.86 - was removed, and that repeal would remain in law under this version. MS. HAYS directed attention back to the definitions and paragraph (6). With regard to PPOs, she asked (indisc. - paper shuffling) self-insured would then be brought under the coverage if they were (indisc. - faint) with the PPO. CHAIRMAN ROKEBERG said, "You're self-insured, so you're ERISA. That's a good question, because as I understand it, there's a potential that state law could reach out into an area called quality of care." Number 312 MR. FORD commented that there are many complex questions in this area. However, some courts have used the ERISA exception or the savings clause for provisions relating to insurance in order to rule that ERISA does not protect those self-insured companies from certain "quality of care" insurance provisions. Mr. Ford said he hesitated to discuss this because it really requires a case-by-case analysis. He noted that ERISA has generated enormous amounts of litigation, and the playing field changes often. CHAIRMAN ROKEBERG asked if it is possible for a plaintiff or a defendant to "forum shop" to use either state or federal law if this comes up. In response to Mr. Ford, Chairman Rokeberg explained that by "forum shop," he meant one would approach whichever court he/she viewed as more favorable. MR. FORD pointed out that one would be limited with regard to jurisdictional problems. One could only go to federal court in certain instances. CHAIRMAN ROKEBERG said, "Well, I'm assuming the federal law would pass." MR. FORD replied, "Well, right. If the federal law did pass, the -- right." CHAIRMAN ROKEBERG announced his belief and intention that the state law would allow the legislature to set the policy and even invite people into the state court rather than the federal court. However, he said that he may have to reconsider that position. Number 364 MR. MOORE noted that in general, "we" support the efforts to make the legislation consistent with federal language. In response to Chairman Rokeberg's inquiry regarding possible information from Capitol Hill, Mr. Moore reiterated that the general opinion is that the conference [on the federal legislation] won't begin until after the first of the year. CHAIRMAN ROKEBERG indicated his reluctance to forward this legislation until Congress has concluded its action. Chairman Rokeberg thanked all the participants. He said he believed the bill was a long way from completion. Therefore, he requested that people provide him with recommended changes so as to potentially have another version before the committee. [HB 211 was held over.]
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