00 SENATE BILL NO. 166 01 "An Act relating to regulation of managed care health insurance plans; and 02 providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. SHORT TITLE. This Act may be known as the "Managed Care Consumer 05 Protection Act." 06 * Sec. 2. PURPOSE AND INTENT. The purpose of this Act is to provide authority for 07 the state to ensure that enrollees receive quality health care services under a managed care 08 system. The intent of this Act is to ensure that 09 (1) enrollees have full and timely access to clinically and culturally appropriate 10 health care personnel and facilities; 11 (2) enrollees have adequate choice among health care providers who are 12 accessible and qualified; 13 (3) there is open communication between physicians and enrollees; 14 (4) enrollees have access to comprehensive pharmaceutical services; 01 (5) enrollees have access to information regarding limits on coverage of 02 experimental treatments; 03 (6) there is high quality of care within a managed care plan; 04 (7) medical decisions are made by the appropriate medical personnel; 05 (8) health care providers within a plan are practitioners in good standing; 06 (9) managed care plan data is available as appropriate; 07 (10) there is full public access to information regarding health care service 08 delivery within plans; 09 (11) the state has authority to oversee all managed care plans; 10 (12) there is a fair vehicle for resolving enrollee complaints in a managed care 11 system; and 12 (13) there is timely resolution of enrollee grievances and appeals. 13 * Sec. 3. AS 21 is amended by adding a new chapter to read: 14 Chapter 85. Regulation of Managed Care. 15  Sec. 21.85.010. Applicability and scope. This chapter applies to all managed 16 care entities operating within the state. 17  Sec. 21.85.020. Access to personnel and facilities. (a) A managed care plan 18 must 19  (1) include a sufficient number and type of primary care practitioners 20 and specialists throughout the service area to meet the needs of enrollees and to 21 provide a choice of health care providers; a managed care plan must offer 22  (A) an adequate number of accessible acute care hospital 23 services within a reasonable distance or travel time; 24  (B) an adequate number of accessible primary care practitioners 25 within a reasonable distance or travel time, including family practice and 26 general practice physicians, chiropractors, internists, obstetricians, 27 gynecologists, and pediatricians; 28  (C) an adequate number of accessible specialists and 29 subspecialists within a reasonable distance or travel time; when the type of 30 medical specialist needed for a specific condition is not represented on the 31 specialty panel, enrollees shall be given access to nonparticipating health care 01 providers; 02  (D) specialty medical services, including physical therapy, 03 occupational therapy, and rehabilitation services; and 04  (E) nonpanel specialists when an enrollee's unique medical 05 circumstances warrant it; 06  (2) provide for continuity of care with established primary care 07 practitioners when the health care provider's contract is terminated, including allowing 08 enrollees, at no additional out-of-pocket cost, to continue receiving services from a 09 primary care practitioner whose contract with the plan is terminated without cause; this 10 continuation of service requirement must be effective for 60 days after the enrollee 11 requests continued care; 12  (3) provide telephone access to the managed care plan for sufficient 13 time during business and evening hours to ensure enrollee access for routine care and 14 24-hour telephone access to either the plan or a participating health care provider for 15 emergency care or authorization for care; 16  (4) establish reasonable standards for waiting times to obtain 17 appointments, except as provided in this section for emergency services; standards 18 must include appointment scheduling guidelines based on the type of health care 19 service, including prenatal care appointments, well-child visits and immunizations, 20 routine physicals, follow-up appointments for chronic conditions, and urgent care; 21  (5) be required to cover and reimburse expenses for emergency care 22 obtained without prior authorization in situations where a prudent layperson could 23 reasonably believe the condition required immediate attention at the nearest facility; 24  (6) demonstrate that it has developed an access plan to meet the needs 25 of vulnerable and under-served populations; an access plan must provide culturally 26 appropriate services to the greatest extent possible; when a significant number of 27 enrollees in the plan speak a first language other than English, the plan must provide 28 access to personnel fluent in languages other than English, to the greatest extent 29 possible; an access plan must develop standards for continuity of care following 30 enrollment, including sufficient information on how to access care within the plan; 31  (7) hold harmless enrollees against claims from participating health care 01 providers in the managed care plan for payment of the cost of covered health services. 02  Sec. 21.85.030. Choice of health care provider. (a) An enrollee shall have 03 adequate choice among managed care plan health care providers who are qualified and 04 accessible. 05  (b) A managed care plan must 06  (1) permit enrollees to choose their own primary care practitioner from 07 a list of health care providers within the plan; this list shall be updated as health care 08 providers are added or removed and must include a sufficient 09  (A) number of primary care practitioners who are accepting new 10 enrollees; and 11  (B) mix of primary care practitioners that reflects a diversity 12 that is adequate to meet the needs of the enrolled population's varied 13 characteristics, including age, sex, race, and health status; 14  (2) develop a system to permit enrollees to use a medical specialist 15 primary care practitioner when the enrollee's medical conditions warrant it; this may 16 include enrollees suffering from chronic diseases as well as those with other special 17 needs; 18  (3) provide continuity of care and appropriate referral to specialists 19 within the plan when specialty care is warranted; enrollees shall have access to medical 20 specialists on a timely basis and shall be provided with a choice of specialists when 21 a referral is made; 22  (4) offer a point-of-service option; a point-of-service option may require 23 that the enrollee in the plan pay a reasonable portion of the costs of the out-of-plan 24 care, but the enrollee's portion may not exceed 20 percent of the cost of the out-of- 25 plan care; 26  (5) provide enrollees with access to a consultation for a second medical 27 opinion. 28  Sec. 21.85.040. Gag rules. (a) A managed care plan may not 29  (1) contract with a health care provider to limit the health care 30 provider's disclosure to an enrollee or on behalf of an enrollee of any information 31 relating to the enrollee's medical condition or treatment options; 01  (2) limit disclosure to the enrollee by an employee of the managed care 02 plan of any information relating to the enrollee's medical condition or treatment 03 options. 04  (b) A health care provider may not be penalized or the provider's contract with 05 the managed care plan terminated because the health care provider offers referrals or 06 discusses medically necessary or appropriate care with, or on behalf of, the enrollee. 07 A health care provider may discuss all treatment options and disclose other information 08 determined by the health care provider to be in the best interests of the enrollee. 09  (c) A health care provider may not be penalized for discussing financial 10 incentives and financial arrangements between the health care provider and the 11 managed care entity. 12  Sec. 21.85.050. Drugs and devices. (a) A managed care plan must 13  (1) provide coverage for all drugs and devices approved under federal 14 law whether that drug or device has been approved for the specific treatment or 15 condition so long as the primary care practitioner or other medical specialist treating 16 the enrollee determines the drug or device is medically necessary and appropriate for 17 the enrollee's condition; 18  (2) establish and operate a drug use review program that includes the 19 following: 20  (A) retrospective review of prescription drugs furnished to 21 enrollees; and 22  (B) education of physicians, enrollees, and pharmacists 23 regarding the appropriate use of prescription drugs; 24  (3) provide for a drug use review program with ongoing periodic 25 examination of data on outpatient prescription drugs to ensure quality therapeutic 26 outcomes for enrollees as follows: 27  (A) the program's primary emphasis must be to enhance quality 28 of care for enrollees by assuring appropriate drug therapy; 29  (B) the program must include the following: 30  (i) clinically relevant criteria and standards for drug 31 therapy; 01  (ii) nonproprietary criteria and standards, developed and 02 revised through an open, professional consensus process; and 03  (iii) interventions that focus on improving therapeutic 04 outcomes; 05  (C) confidentiality of the relationship between enrollees and 06 health care providers shall be protected at all times. 07  (b) The health care services plan must provide an educational outreach 08 program as part of the drug use review program. The outreach program shall be 09 directed to enrollees, pharmacists, and other health care providers and must emphasize 10 the appropriate use of prescription drugs. 11  (c) Prospective review of drug therapy may only deny services in cases of 12 enrollee ineligibility, coverage limitations, or fraud. 13  (d) A prescribing health care provider shall determine the appropriate drug 14 therapy for the enrollee. Substitutions may not be made without the direct approval 15 of the prescribing health care provider. 16  Sec. 21.85.060. Mental health and chemical dependency benefits. A 17 managed care plan that provides coverage for diagnosis or treatment of a mental 18 condition or a condition related to chemical dependency may not impose more 19 restrictive day or visit limits or higher cost-sharing requirements than imposed on other 20 health care services covered by the plan. 21  Sec. 21.85.070. Experimental health care services. (a) A managed care plan 22 that provides coverage for prescribed drugs or devices approved by the United States 23 Food and Drug Administration may not exclude coverage of an approved drug or 24 device on the basis that the approved drug or device has not been specifically approved 25 by the United States Food and Drug Administration for treatment of the disease or 26 condition for which it has been prescribed; however, the drug or device must be 27  (1) recognized for treatment of the specific disease or condition in the 28 American Medical Association Drug Evaluation, the American Hospital Association 29 Formulary Service Drug Information, or the United States Pharmacopeia Drug 30 Information; or 31  (2) recommended for use by article or editorial comment in a peer 01 reviewed medical or scientific journal. 02  (b) A managed care plan must provide coverage and reimbursement for care 03 that it considers investigational or experimental under the same terms as it would for 04 care that is not considered investigational or experimental if 05  (1) the treatment is for life-threatening, degenerative, or permanently 06 disabling conditions, or a condition associated with a complication of such a condition; 07  (2) the treatment is provided with therapeutic or palliative intent; 08  (3) the proposed treatment has been reviewed and approved by a 09 qualified institutional review board; 10  (4) the facility and personnel providing the treatment are qualified by 11 virtue of their experience and training; and 12  (5) there is no clearly superior, noninvestigational alternative to the 13 treatment. 14  (c) A managed care plan must cover the enrollee costs incurred in clinical 15 trials of experimental or investigational treatments to the extent that the costs would 16 be covered in noninvestigational treatments, providing that the following conditions are 17 satisfied: 18  (1) the treatment is being provided under a clinical trial approved by 19 one of the National Institutes of Health, a National Institute of Health cooperative 20 group or center, the United States Food and Drug Administration in the form of an 21 investigational new drug exemption, the federal Department of Veterans Affairs, or a 22 qualified nongovernmental research entity as identified in guidelines issued by 23 individual National Institutes of Health for center support grants; 24  (2) there is not a clearly superior, noninvestigational alternative to the 25 treatment; 26  (3) the available clinical or preclinical data provide a reasonable 27 expectation that the protocol treatment will be at least as effective as an available 28 noninvestigational alternative treatment; 29  (4) the treatment is for life-threatening, degenerative, or permanently 30 disabling conditions, or a condition associated with a complication of that condition; 31  (5) the treatment is provided with therapeutic or palliative intent; 01  (6) the proposed treatment has been reviewed and approved by a 02 qualified institutional review board; and 03  (7) the facility and personnel providing the treatment are qualified by 04 virtue of their experience and training. 05  Sec. 21.85.080. Quality assurance program. (a) A managed care plan 06  (1) shall develop comprehensive quality assurance standards adequate 07 to identify, evaluate, and remedy problems relating to access, continuity, and quality 08 of care; these standards must include 09  (A) an ongoing, written, internal quality assurance program; 10  (B) specific written guidelines for quality of care studies and 11 monitoring, including attention to vulnerable populations; 12  (C) performance and clinical outcomes-based criteria; 13  (D) a procedure for remedial action to correct quality problems, 14 including written procedures for taking appropriate corrective action; 15  (E) a plan for data gathering and assessment in compliance with 16 AS 21.85.090; and 17  (F) a peer review process. 18  (2) must have a process for selection of health care providers who will 19 be on the plan's participating practitioner list with written policies and procedures for 20 review and approval used by the plan; the plan must establish minimum professional 21 requirements and demonstrate that it has consulted with appropriately qualified health 22 care providers to establish the requirements; the plan's process must include 23 verification of the individual practitioner's license, history of suspension or revocation, 24 and liability claims history; 25  (3) must establish a formal, written, ongoing, process for the re- 26 evaluation of all participating physicians within a specified number of years after the initial 27 acceptance; re-evaluations must include updates of the previous review criteria and an 28 assessment of the performance pattern based on criteria, including enrollee clinical outcomes, 29 number of complaints, and malpractice actions; 30  (4) may not use a health care provider beyond or outside of the 31 provider's occupational license. 01  Sec. 21.85.090. Data systems and confidentiality. A managed care plan must 02  (1) provide information on a plan's structure, decision making process, 03 health care benefits and exclusions, cost and cost sharing requirements, list of 04 contracting health care providers, and grievance and appeal procedures to all potential 05 enrollees, all enrollees covered by the plan, and to the state oversight agency; 06  (2) collect and report annually to the director of the division of public 07 health specified data, including 08  (A) gross outpatient and hospital use data; 09  (B) enrollee clinical outcome data; 10  (C) the number and types of enrollee grievances or complaints 11 during the year, the status of decisions, and the average time required to reach 12 a decision; and 13  (D) the number, amount, and disposition of malpractice claims 14 resolved during the year by the managed care plan and any of its participating 15 health care providers; 16  (3) report all data specified under (1) and (2) of this section to the 17 director of the division of public health and shall make the data available to the public 18 on a timely basis; 19  (4) establish written policies and procedures for the handling of medical 20 records and enrollee communications to ensure enrollee confidentiality; 21  (5) ensure the confidentiality of specified enrollee information, 22 including prior medical history, medical record information, and claims information, 23 except when disclosure of this information is required by law; 24  (6) prohibit from being released an individual enrollee's record 25 information unless the release is authorized in writing by the enrollee. 26  Sec. 21.85.100. Clinical decision making. A managed care entity shall 27  (1) appoint a medical director who is a licensed physician in the state; 28 the medical director is responsible for treatment policies, protocols, quality assurance 29 activities, and use management decisions of the plan; 30  (2) inform enrollees of the financial arrangements between the managed 31 care plan and contracting health care providers if those arrangements include incentives 01 or bonuses for restriction of services. 02  Sec. 21.85.110. Oversight authority. (a) The director shall oversee managed 03 care entities and managed care plans operating within the state or contract with an 04 outside entity to perform the oversight required in this section. 05  (b) A managed entity or managed care plan may not operate in the state unless 06 authorized by the director. 07  (c) The director shall perform audits on an annual basis to review enrollee 08 clinical outcome data, enrollee service data, and operational and other financial data. 09  (d) The director may investigate complaints and grievances or appeals on 10 behalf of enrollees or health care providers. 11  (e) The director shall develop standards for compliance of plans regarding 12 mandated requirements and adopt regulations relating to types of penalties for 13 violations. 14  Sec. 21.85.120. Grievance procedures; reviews and appeals. (a) A 15 managed care plan shall provide written notification to enrollees, in a language the 16 enrollee understands, regarding the right to file a grievance. At a minimum, 17 notification shall be given 18  (1) prior to enrollment in the plan; and 19  (2) at the time care is denied or limited under the plan. 20  (b) At the time of a denial, the plan shall notify the enrollee of the right to file 21 a grievance. The notice shall be written and must include the reason for denial, the 22 name of the individual responsible for the decision, the criteria for determination, and 23 the enrollee's right to file a grievance. 24  (c) The grievance procedure must include 25  (1) identification of the reviewing body and an explanation of the 26 process of review; 27  (2) an initial investigation and review; 28  (3) notification within a reasonable amount of time of the outcome of 29 the grievance; and 30  (4) an appeal procedure. 31  (d) The managed care plan must 01  (1) set reasonable time limits for each part of the review process, but 02 the review process may not extend beyond 30 days; 03  (2) provide for expedited review for cases involving an imminent, 04 emergent or serious threat to the health of the enrollee; the plan must require that the 05 enrollee be informed immediately of this right and provide the enrollee with a written 06 statement of the disposition or pending status of the grievance within 72 hours of the 07 commencement of the review process; 08  (3) report to the director the number of grievances and appeals received 09 by the plan within a specified time period, including, if applicable, the outcome or 10 current status of the grievance or appeal as well as the average time taken to resolve. 11  Sec. 21.85.250. Definitions. In this chapter, 12  (1) "appeal" means a formal process by which an enrollee whose care 13 has been reduced, denied, or terminated, or by which the enrollee finds the care 14 inappropriate, can contest an adverse grievance decision by the health care services 15 plan; 16  (2) "emergency" means a medical condition, the onset of which is 17 sudden and unexpected, that manifests itself by symptoms of sufficient severity that 18 a prudent layperson, who possesses an average knowledge of health and medicine, 19 could reasonably assume that the condition requires immediate medical treatment and 20 could expect that the absence of medical attention would result in serious impairment 21 to bodily functions or place the person's health in serious jeopardy; 22  (3) "enrollee" means an individual who is enrolled in a managed care 23 plan; 24  (4) "expedited review" means a review process that takes no more than 25 72 hours after the review is commenced; 26  (5) "experimental treatment" means treatment that, while not commonly 27 used for a particular condition or illness, is recognized for treatment of the particular 28 condition or illness, and there is no clearly superior, nonexperimental treatment 29 alternative available to the enrollee; 30  (6) "grievance" means a written complaint submitted by or on behalf 31 of the enrollee; 01  (7) "health care provider" means an acupuncturist licensed under 02 AS 08.06; an audiologist licensed under AS 08.11; a chiropractor licensed under 03 AS 08.20; a dental hygienist licensed under AS 08.32; a dentist licensed under 04 AS 08.36; a marital and family therapist licensed under AS 08.63; a direct-entry 05 midwife licensed under AS 08.65; a nurse licensed under AS 08.68; a dispensing 06 optician licensed under AS 08.71; a naturopath licensed under AS 08.45; an 07 optometrist licensed under AS 08.72; a pharmacist licensed under AS 08.80; a physical 08 therapist or occupational therapist licensed under AS 08.84; a physician assistant 09 certified under AS 08.64; a physician licensed under AS 08.64; a podiatrist licensed 10 under AS 08.64; a psychologist and a psychological associate licensed under AS 08.86; 11 a clinical social worker licensed under AS 08.95; an emergency medical technician 12 certified under AS 18.08.082; a mobile intensive care paramedic trained as required 13 under AS 18.08.082; a hospital as defined in AS 18.20.130, including a governmentally 14 owned or operated hospital; and an employee of a health care provider acting within 15 the course and scope of employment; 16  (8) "health care services" means services for the diagnosis, prevention, 17 or treatment of a health condition, illness, injury, or disease. 18  (9) "managed care entity" means any entity, including a licensed 19 insurance company, hospital or medical service plan, health maintenance organization, 20 limited health services organization, preferred provider organization, third-party 21 administrator, or any person or entity that establishes, operates, or maintains a network 22 of participating health care providers; 23  (10) "managed care plan" means a plan operated by a managed care 24 entity that provides for the financing and delivery of health care services to persons 25 enrolled in the plan with financial incentives for persons enrolled in the plan to use the 26 participating health care providers and procedures covered by the plan; 27  (11) "participating practitioner" means a health care provider who has 28 entered into an agreement with a managed care entity to provide health care services 29 to an enrollee in the managed care plan; 30  (12) "point-of-service option" means an option for the enrollee to 31 choose to receive service from a nonparticipating health care provider; 01  (13) "primary care practitioner" means a health care provider under 02 contract with the plan who has been designated by the plan to coordinate, supervise, 03 or provide ongoing care to the enrollee; 04  (14) "prudent layperson" is a person without specific medical training 05 for the illness or condition in question who acts as a reasonable person would under 06 similar circumstances; 07  (15) "quality assurance" means the ongoing evaluation of the quality 08 of health care provided to enrollees. 09 * Sec. 4. This Act takes effect July 1, 1997.