Legislature(1999 - 2000)
10/22/1999 10:10 AM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
Anchorage, Alaska
October 22, 1999
10:10 a.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Tom Brice
Representative Sharon Cissna
MEMBERS ABSENT
Representative Andrew Halcro, Vice Chairman
Representative Jerry Sanders
Representative Lisa Murkowski
Representative John Harris
COMMITTEE CALENDAR
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."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 211
SHORT TITLE: MANAGED HEALTH CARE INSURANCE
Jrn-Date Jrn-Page Action
4/22/99 914 (H) READ THE FIRST TIME - REFERRAL(S)
4/22/99 914 (H) L&C, JUD, FIN
5/10/99 (H) L&C AT 3:15 PM CAPITOL 17
5/10/99 (H) HEARD AND HELD
5/10/99 (H) MINUTE(L&C)
10/22/99 (H) L&C AT 10:00 AM ANCHORAGE LIO
WITNESS REGISTER
JIM JORDAN
Alaska State Medical Association
4107 Laurel Street
Anchorage, Alaska 99508
POSITION STATEMENT: Testified on HB 211.
JANET SEITZ, Legislative Aide
for Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-4968
POSITION STATEMENT: Testified on HB 211.
MIKE FORD, Attorney
Legislative Legal and Research Services
Alaska State Legislature
130 Seward Street, Suite 409
Juneau, Alaska 99801
Telephone: (907) 465-2450
POSITION STATEMENT:
ANNE HAYS, IBEW
Local 1547
2702 Denali
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 211.
BILL MOORE
Premera Blue Cross
P.O. Box 327
Seattle, Washington 98111-0327
POSITION STATEMENT: Testified on HB 211.
SHARON MACKLIN, Lobbyist
315 5th Street, Number 8
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 211.
BOB LOHR, Director
Division of Insurance
Department of Community and Economic Development
P.O. Box 110805
Juneau, Alaska 99811
POSITION STATEMENT: Testified on HB 211.
ACTION NARRATIVE
TAPE 99-60, SIDE A
Number 001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 10:10 a.m. Members
present at the call to order were Representatives Rokeberg and
Brice. Representative Cissna arrived at 10:12 a.m.
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.]
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
11:33 a.m.
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