H.
B.
4535
(By Delegates Phillips, Vest, Fragale,
Petersen and L. White)
[Introduced February 21, 1994; referred to the
Select Committee on Health Care Policies then Finance.]
A BILL to amend chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article thirty-nine, relating to establishing a system of managed care and utilization review for the delivery of behavioral health services to consumers; making certain legislative findings; limiting the scope to behavioral health services; defining certain terms; creating the West Virginia managed care review board; providing that the board assist the insurance commissioner in developing rules relating to the operation, powers and duties of managed care companies; prohibiting a managed care company from conducting managed care activities in this state unless the commissioner has granted the managed care company a certificate of authority; authorizing the commissioner to promulgate necessary rules; giving the commissioner the authority to issue, deny, refuse to issue and revoke certificates of authority to managed care companies and to otherwise enforce the provisions of the article; providing that the commissioner shall deny a certificate of authority if the holder does not comply with performance assurances; providing for notice, hearings and review; requiring that a managed care company submit to the commissioner a managed care plan; providing that managed care companies make certain determinations regarding course of treatment; granting authority to grant adverse decisions; giving the office of consumer protection in the attorney general's office authority to intervene in certain actions; allowing the commissioner to establish reporting requirements in order to evaluate the effectiveness of managed care companies; providing criminal penalties for violations; and establishing a managed care fund in the state treasury.
Be it enacted by the Legislature of West Virginia:
That chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article thirty-nine, to read as follows:
ARTICLE 39. MANAGED CARE AND UTILIZATION REVIEW.
§
33-39-1. Legislative findings.
The Legislature finds that:
(a) Consumers of behavioral health services in West Virginia are at great risk of reduced accessibility due to escalating costs of such services;
(b) There exists a need for the examination of a cost effective means for delivery of services without compromising quality, necessary treatment and confidentiality;
(c) Managed care activities carried out by entities certified in accordance with this article can foster these goals;
(d) The provisions of this article serve to protect consumers, business and providers by ensuring that managed care entities are qualified to perform managed care activities and to make informed decisions on the appropriateness of medical care while maintaining client confidentiality and fair business practices in accordance with state and federal laws.
§
33-39-2. Scope.
The provisions of this article are limited to managed care activities of behavioral health services only and do not apply to any other health care services.
§
33-39-3. Definitions.
The following words when used in this article have meanings ascribed to them in this section, except in those instances where the context clearly indicates a different meaning:
(a) "Adverse decision" means:
(1) A utilization review determination made by a managed care company that a proposed or delivered behavioral health service:
(A) Is or was not necessary, appropriate or efficient; and
(B) May result in noncoverage of the service.
(2) There is no adverse decision if the managed care company and the behavioral health provider on behalf of the consumer reach an agreement on the proposed or delivered services.
(b) "Behavioral health services" means any medical or remedial services recommended by a physician or psychologist for the purpose of reducing physical or mental disability and restoration of a consumer to his or her best possible functional level. These services are designed for all individuals with conditions associated with mental illness, developmental disabilities and substance abuse and/or drug dependency.
(c) "Board" means the managed care review board created to develop rules regarding the development, implementation, licensing and oversight of persons authorized by this article to engage in managed care activities.
(d) "Certificate" means a certificate of authority granted by the commissioner to a managed care company.
(e) "Commissioner" means the insurance commissioner of West Virginia.
(f) "Consumer" means a recipient of behavioral health services or a person or entity that renders payment on behalf of a recipient of behavioral health services.
(g) "Managed care" means a system for reviewing the appropriate and efficient allocation of behavioral health resources and services given or proposed to be given to a consumer or group of consumers. Managed care may include, but is not limited to, preauthorization, utilization review and case management.
(h) "Managed care company" means a person or entity performing managed care and utilization review who is affiliated with, under contract with, acting on behalf of or directly employed by:
(1) Any resident or foreign corporation, partnership or business company licensed to do business in this state; or
(2) A third party that provides or administers behavioral health benefits or services to citizens of this state, including:
(A) A health maintenance organization issued a certificate of authority in accordance with article twenty-five-a of this chapter;
(B) A health insurer as defined in this chapter;
(C) A nonprofit hospital service corporation, medical service corporation, health service corporation or health care corporation authorized to offer behavioral health services in this state in accordance with this chapter; or
(D) Any insurer, benefits or compensation program which receives funds, in whole or in part, from state revenues, including workers' compensation, medicaid, public employees insurance and any other health services or benefits program administered by the West Virginia department of health and human resources; or
(3) Third party administrators as defined in this section;
(4) Any nonresident or foreign managed care company providing managed care activities for a minimum of one hundred individuals located within this state; or
(5) Any other organization, person or entity deemed proper and necessary by the commissioner.
(i) "Provider" means any agency, facility or individual providing behavioral health services as defined in this article.
(j) "Secretary" means the secretary of the department of health and human resources of West Virginia.
(k) "Third party administrator" means a person who directly or indirectly solicits or effects coverage of, underwrites, collects charges or premiums from, or adjusts or settles claims on residents of this state, or residents of another state from offices within this state, in connection with health insurance coverage, except any of the following:
(1) An employer on behalf of its employees of one or more subsidiaries or affiliated corporations of such employer;
(2) A union on behalf of its members;
(3) An agent or broker licensed to sell health insurance in this state, whose activities are limited exclusively to the sale of insurance;
(4) A person who adjusts or settles claims in the normal course of that person's practice or employment as an attorney at law and who does not collect charges or premiums in connection with health insurance coverage;
(5) An adjuster licensed by this state whose activities are limited to adjustments of claims;
(6) A person who acts solely as an administrator of one or more bona fide employee benefit plans established by an employer or an employee organization, or both, for which the insurance laws of this state are preempted pursuant to the Employee Income Security Act of 1974.
§
33-39-4. Managed care review board; reimbursement.
(a) There is hereby created the West Virginia managed care review board. The board shall consist of nine members appointed by the governor, by and with the advice of the Senate, and the commissioner, or his or her designee, who shall serve as an ex officio, nonvoting member. Of the members appointed by the governor, one member shall be a representative from the West Virginia behavioral health providers association, one member shall be a licensed psychiatrist, one member shall be a representative from the West Virginia hospital association, one member shall be a licensed psychologist, one member shall be a licensed registered nurse with experience in the care of behavioral health consumers, one member shall be a licensed social worker, one member shall be a representative from a managed care provider, and two members shall be lay persons who are also consumers of behavioral health care services. The two lay members shall be selected by the governor and the remaining members shall be selected by the governor from a list of five individual names submitted to the governor from each member's respective association. The respective associations shall submit the names of nominees to the governor within thirty days from the effective date of this article, and the governor shall make all appointments of the board within forty-five days from receipt of such nominations. Of the original board members appointed, the member who is a social worker shall serve for one year, the one member who is a registered nurse shall serve for two years, the member who is a licensed psychiatrist shall serve for three years, the member who is a representative of the West Virginia hospital association shall serve for four years and the representative from a managed care company shall serve for five years. The remaining members shall serve for six years. All subsequent appointments shall be for six years, except that in the case of a vacancy, the appointee shall be appointed for the remainder of the unexpired term. Any vacancy shall be filled by appointment of the governor, by and with the advice of the Senate, from the same group as was represented by the outgoing members. All members of the board, unless sooner removed, shall continue to serve until their respective terms expire and until their successors are appointed and have qualified.
(b) No member of the board nor any member of his or her immediate family may have, or have had, within the two years preceding his or her appointment under this article, any ownership interest in the provision of managed care services.
(c) The board shall meet once every quarter and each appointed citizen board member shall serve without compensation but shall be reimbursed for the cost of reasonable and necessary expenses actually incurred in the performance of his or her duties.
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33-39-5. Powers and duties of board.
The board shall:
(a) Assist the commissioner in developing rules relating to the operation, powers and duties of managed care companies;
(b) Review such rules on an annual basis to assure that managed care companies are carrying out the goals consistent with this article. Upon review of such rules the board may advise the commissioner as to any changes it deems appropriate;
(c) Meet and confer with providers to assure that the goals of this article are being met; and
(d) Carry out any other powers and duties as prescribed for it by the commissioner.
Nothing in this section gives the board the authority to interfere with the discretion and judgment given to the commissioner. The purpose of the board is to assist and enhance the role of the commissioner in carrying out his or her mandate and by acting as a means of communication between managed care companies, providers, consumers and the commissioner.
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33-39-6. Certificate of authority.
(a) A managed care company may not conduct managed care activities in this state unless the commissioner has granted the managed care company a certificate of authority. The commissioner shall issue a certificate to an applicant that has met all the requirements stated herein and all applicable rules promulgated in accordance with this article. A certificate issue under this article is not transferable.
(b) Any person or entity performing managed care activities in this state prior to the effective date of this article has one year from such effective date to conform to the requirements of this article.
(c) The commissioner may refuse to issue a certificate of authority to any person or entity who is in violation of this section.
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33-39-7. Powers and duties of the insurance commissioner.
(a) In addition to all other duties and powers granted to the commissioner in accordance with this chapter and all other applicable state laws, the commissioner is hereby authorized, after consultation with the board, to promulgate such rules as are necessary to carry out the provisions of this article.
(b) The commissioner has the authority to issue, deny, refuse to issue and revoke certificates of authority to managed care companies and to otherwise enforce the provisions of this article.
(c) The commissioner may establish reporting requirements in order to carry out section sixteen of this article.
(d) The commissioner shall promulgate rules to provide the standards for the imposition of an administrative penalty under section seventeen of this article.
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33-39-8. Application for certificate; fees; designation.
No person or entity may engage in managed care activities within this state unless such person or entity first obtains a certificate of authority from the commissioner. A nonresident person or entity providing managed care activities for a minimum of one hundred persons located within the state is considered to be providing managed care services within the state and shall obtain a certificate of authority and otherwise adhere to the provisions of this article. An applicant for a certificate shall submit an application to the commissioner and pay to the commissioner the application fee established by rule in accordance with this article. The application shall be accompanied by any supporting documentation that the commissioner requires and must be signed and verified by the applicant. All fees collected in accordance with this article shall be designated to the insurance department for the execution of this article. The commissioner may waive such license fee in cases where hardship is substantiated.
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33-39-9. Denial; revocation.
(a)
Denial
. --
(1) The commissioner shall deny a certificate of authority to any applicant if, upon review of the application, the commissioner finds that the applicant proposing to conduct managed care activities does not:
(A) Have available the services of a sufficient number of registered nurses, medical records technicians or similarly qualified persons supported and supervised by appropriate physicians to carry out its managed care activities; and
(B) Meet any applicable rules the commissioner adopts under this article relating to the qualifications of managed care companies or the performance of managed care.
(2) The commissioner shall deny a certificate to any applicant who does not provide assurances satisfactory to the commissioner that:
(A) The procedures and policies of the managed care company will protect the confidentiality of medical records in accordance with applicable state and federal laws; and
(B) The managed care company will be accessible within this state to consumers and providers five working days a week during the hours of eight o'clock a.m. and eight o'clock p.m., eastern standard time, and that at least one telephone line is designated and made available on a twenty-four hour basis for emergency purposes.
(b)
Revocation
. -- The commissioner may revoke a certificate of authority if the holder does not comply with performance assurances under this section, violates any provision of this article, violates any rule adopted under any provision of this article or is otherwise found to be transacting business in an unlawful manner.
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33-39-10. Notice; hearings; review.
(a) Before denying or revoking a certificate of authority in accordance with the previous section, the commissioner shall provide the applicant or certificate holder with reasonable time to supply additional information demonstrating compliance with the requirements of this article and the opportunity to request a hearing.
(b) If an applicant or certificate holder disagrees with a finding or decision rendered by the commissioner, review of such finding or decision may be held in accordance with sections twelve, thirteen and fourteen of article two of this chapter.
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33-39-11. Managed care plan.
In conjunction with the application and other supporting documentation, the managed care company shall submit to the commissioner:
(1) A managed care plan that includes:
(A) The specific criteria and standards to be used in conducting managed care activities or proposed or delivered services;
(B) The provisions by which consumers and providers may seek reconsideration of adverse decisions by the managed care company and the provisions by which consumers and providers will be informed of such provisions;
(C) A quality assurance program which demonstrates to the commissioner that the managed care company's activities do not arbitrarily deny services to enrolled or eligible participants.
(2) The type, qualifications and credentials of the personnel either employed or under contract to perform managed care activities;
(3) The procedures and policies to ensure that a representative of the managed care company is accessible within this state to consumers and providers five days a week during the hours of eight o'clock a.m. and eight o'clock p.m., eastern standard time, and that a telephone line or telephone lines are designated and made available for emergency use on a twenty-four hour basis;
(4) The policies and procedures to ensure that all applicable state and federal laws to protect the confidentiality of individual medical records are followed;
(5) A copy of the materials designed to inform applicable consumers and providers of the requirements of the managed care plan;
(6) A list of the providers and third-party payors for which the managed care company is performing managed care services in this state;
(7) The policies and procedures to ensure that the managed care company has a formal program for the orientation and training of personnel either employed or under contract to perform managed care activities;
(8) A list of behavioral health providers involved in establishing the specific criteria and standards to be used in conducting managed care activities; and
(9) Certification by the managed care company that the criteria and standards to be used in conducting managed care activities are:
(A) Objective;
(B) Clinically valid;
(C) Compatible with established principles of behavioral health; and
(D) Flexible enough to allow deviations from norms when justified on a case by case basis.
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33-39-12. Determinations by managed care companies.
(a)
Nonemergency
courses
of
treatment.
-- Except as provided in subsection (b) of this section, a managed care company shall:
(1) Make all initial determinations on whether to authorize or certify a nonemergency course of treatment for a consumer within two working days of receipt of the information necessary to make the determination; and
(2) Promptly notify the attending provider and consumer of the determination.
(b)
Extended stays or additional behavioral health services.
--
A managed care company shall:
(1) Make all determinations on whether to authorize or certify an extended stay in a health care facility or additional behavioral health services within one working day of receipt of the information necessary to make the determination; and
(2) Promptly notify the attending provider of the determination.
(c)
Reconsideration.
-- If an initial determination is made by the managed care company not to authorize or certify a course of treatment, an extended stay in a health care facility, or additional behavioral health services and the attending provider believes the determination warrants an immediate reconsideration, the managed care company shall provide the attending provider an opportunity to seek a reconsideration of that determination by telephone on an expedited basis not to exceed twenty-four hours from the time the provider first sought the reconsideration.
(d)
Emergency
inpatient
admissions.
-- For emergency inpatient admissions, a managed care company may not render an adverse decision or deny coverage for medically necessary covered services solely because the hospital did not notify the managed care company of the emergency admission within twenty-four hours or other prescribed period of time after that admission or because the patient's medical condition prevented the hospital from determining:
(1) The patient's coverage status;
(2) The managed care company's emergency admission notification requirements.
(e) Managed care activities and utilization review shall not be used to deny or limit access of consumers to medically necessary emergency treatment.
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33-39-13. Adverse decisions and preauthorization.
(a)
Adverse decisions.
-- All adverse decisions shall be made by a physician or psychiatrist or by a panel of other appropriate behavioral health providers with at least one physician or psychiatrist selected by the managed care company who is:
(1)(A) Board certified or eligible in the same specialty as the treatment under review; or
(B) Actively practicing, or has demonstrated expertise in the specific area of behavioral health services or treatment under review; and
(2) Not compensated by the managed care company in a manner that provides a financial incentive directly or indirectly to deny or reduce coverage.
(b)
Preauthorized or approved courses of treatment.
-- If a course of treatment has been preauthorized or approved for a consumer, a managed care company may not revise or modify the specific criteria or standards used in the managed care plan in order to make an adverse decision regarding the services delivered to that consumer.
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33-39-14. Reconsideration of adverse decisions.
(a) In the event a consumer or behavioral health provider seeks reconsideration of an adverse decision by a managed care company, the final determination of the adverse decision shall be made based on the professional judgment of a physician, or a panel of other appropriate behavioral health providers with at least one physician, selected by the managed care company who is:
(1)(A) Board certified or eligible in the same specialty as the treatment under review; or
(B) Actively practicing or has demonstrated expertise in the alcohol, drug abuse or mental health service or treatment under review; and
(2) Not compensated by the managed care company in a manner that provides a financial incentive directly or indirectly to deny or reduce coverage.
(b) Every final determination of reconsideration of an adverse decision by a managed care company shall be made in writing and shall reference the specific criteria and standards, including interpretive guidelines, upon which the denial or reduction in coverage is based.
(c) No managed care company may charge a fee to a consumer or behavioral health provider for an appeal of an adverse decision.
(d) No behavioral health provider may charge a fee for preparation of documents relating to review of an adverse decision except for reasonable copying charges to the extent permitted by state law.
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33-39-15. Commissioner review of adverse decisions.
The commissioner may review final determinations of adverse decisions upon a finding of good cause. If the commissioner determines that the adverse decision was made in contravention of acceptable managed care principles, the commissioner may reverse the decision of the managed care company and reinstate such action which was the original cause for review.
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33-39-16. Authority of office of consumer protection division
of the attorney general's office.
In addition to all other powers and duties granted to the office of consumer protection in the attorney general's office in accordance with state law, it is hereby authorized to institute, intervene in or otherwise participate in proceedings in state and federal courts, before administrative agencies, or before the insurance commissioner, as an advocate for the public interest and the interests of persons enrolled in or eligible for managed care programs.
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33-39-17. Reporting requirements.
The commissioner may establish reporting requirements in order to evaluate the effectiveness of managed care companies and to determine if the managed care programs are in compliance with the provisions of this section and applicable rules.
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33-39-18. Criminal penalties.
(a) Any person who violates any provision of this article or any rule adopted under the provisions of this article is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than one thousand dollars. Each day a criminal violation is continued constitutes a separate offense.
(b) In addition to the provisions of subsection (a) of this section, the commissioner may impose an administrative penalty of up to one thousand dollars for a violation of any provision of this article.
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33-39-19. Managed care fund.
There is hereby created in the state treasury a special revenue account, which shall be an interest bearing account, known as the managed care fund. All fees, penalties and interest collected in accordance with this article and all interest deposited into the fund and earned by reason of investment of fund money shall be used exclusively to carry out the purpose of this article.
NOTE: The purpose of this bill is to establish a system of managed care and utilization review for the delivery of behavioral health services to consumers. The bill is limited in scope to behavioral health services. Under the bill a managed care review board is established to assist the insurance commissioner in developing rules relating to the operation, powers and duties of managed care companies. The bill prohibits a managed care company from conducting managed care activities in this state unless the commissioner has granted the managed care company a certificate of authority.
The commissioner of insurance is given the authority to issue, deny, refuse to issue and revoke certificates of authority to managed care companies and to otherwise enforce the provisions of the article. The commissioner is authorized to revoke or deny a certificate of authority if the holder does not comply with performance assurances. Due process is afforded to aggrieved parties under the bill.
A managed care company is required to submit to the commissioner a managed care plan. Managed care companies are authorized to make determinations regarding course of treatment and other issues and they may make adverse decisions. The office of consumer protection in the Attorney General's office is authorized to intervene in certain actions. The bill also allows the commissioner to establish reporting requirements in order to evaluate the effectiveness of managed care companies. Criminal penalties are provided for violations and a special fund is established in the state treasury for use in carrying out the purposes of the article.
This article is new; therefore, strike-throughs and underscoring have been omitted.