H. B. 2815

(By Delegates Amores and Fragale)

[Introduced February 24, 1995; referred to the

Committee on Health and Human Resources then

Government Organization.]

A BILL to amend chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article thirty-five, relating to adoption of a "Patient Protection Act," assuring fairness and choice to patients and providers under managed health care benefit plans; short title; purpose; definitions; certification of managed care plans and utilization review programs; choice requirements for point of service plans; choice of health plans for enrollment; and effective date.

Be it enacted by the Legislature of West Virginia:
That chapter sixteen 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-five, to read as follows:
§16-35-1. Short title.

This article shall be known and may be cited as "The Patient Protection Act."
§16-35-2. Purpose.
The Legislature hereby finds and declares that:
As this state's health care market becomes increasingly dominated by health plans that utilize various managed care techniques that include decisions regarding coverage and the appropriateness of health care, it is a vital state governmental interest to protect patients from unfair managed care practices;
(b)This legislation requires the department of tax and revenue division of insurance to establish standards for the certification of qualified managed care plans. Standards are required to ensure patient protection, to avoid discrimination against qualified physicians and providers, to establish utilization review safeguards and to develop coverage options for all patients, including the ability to enroll in a point of service plan. Patient choice of physicians and other providers would be enhanced through the availability of a point of service option for those who elect this added coverage option.
§16-35-3. Definitions.
(a)Qualified managed care plan. -- For purposes of this article, the term "qualified managed care plan" means a managed care plan that the commissioner certifies, upon application by the program, as meeting the requirements of this section.
(b)Qualified utilization review program. -- For purposes of this article, the term "qualified utilization review program" means a utilization review program that the commissioner certifies, upon application by the program, as meeting the requirements of this section.
(c)Utilization review program. -- For purposes of this article the term "utilization review program" means a system for reviewing the medical necessity, appropriateness or quality of health care services and supplies provided under a health insurance plan or a managed care plan using specified guidelines. Such a system may include preadmission certification, the application of practice guidelines, continued stay review, discharge planning, preauthorization of ambulatory procedures and retrospective review.
(d)Managed care plan. --
(1)In general. -- For purposes of this article the term "managed care plan" means a restrictive health care plan operated by a managed care entity as described in subsection (e) of this section, not including an integrated medical group contracting with a plan for the direct provision of services to plan enrollees, that provides for the financing and delivery of health care services to persons enrolled in such plan through:
(A)Arrangements with selected providers to furnish health care services;
(B)Explicit standards for the selection of participating providers;
(C)Organizational arrangements for ongoing quality assurance, utilization review programs and dispute resolution; and
(D)Financial incentives for persons enrolled in the plan to use the participating providers and procedures provided for by the plan.
(e)Managed care entity. -- For purposes of this article, a managed care entity includes a licensed insurance company, hospital or medical service plan, health maintenance organization, an employer or employee organization or a managed care contractor as described in subsection (f) of this section, that operates a managed care plan.
(f)Managed care contractor defined. -- For purposes of this article, a managed care contractor means a person that:
(1)Establishes, operates or maintains a network of participating providers;
(2)Conducts or arranges for utilization review activities; and
(3)Contracts with an insurance company, a hospital or medical service plan, an employer, an employee organization or any other entity providing coverage for health care services to operate a managed care plan.
(g)Participating provider. -- The term "participating provider" means a physician, hospital, pharmacy, laboratory or other appropriately state-licensed or otherwise state-recognized provider of health care services or supplies, that has entered into an agreement with a managed care entity to provide such services or supplies to a patient enrolled in a managed care plan.
§16-35-4. Protection of consumer choice.
(a)Nothing in this article shall be construed as prohibiting the following:
(1)An individual from purchasing any health care services with that individual's own funds, whether such services are covered within the individual's standard benefit package or from another health care provider or plan.
(2)Employers from providing coverage for benefits in addition to the comprehensive benefit package.
§16-35-5. Certification of managed care plans and utilization

review programs.

(a)Certification process. --
(1)Certification. -- The commissioner shall establish a process for certification of managed care plans meeting the requirements of subdivision (1), subsection (b) of this section, and of utilization review programs meeting the requirements of subdivision (2), subsection (b) of this section.
(2)Review and recertification. -- The commissioner shall establish procedures for the periodic review and recertification of qualified managed care plans and qualified utilization review programs. Periodic review and recertification shall include those managed care plans and utilization review programs which exist prior to the enactment of this legislation.
(3)Termination of certification. -- The commissioner shall terminate the certification of a previously qualified managed care plan or a qualified utilization review program if the commissioner determines that such plan or program no longer meets the applicable requirements for certification. Before effecting a termination, the commissioner shall provide the plan notice and opportunity for a hearing on the proposed termination.
(4)Certification through alternative requirements. --
(A)Certain organizations recognized. -- An eligible organization, as defined in section 1876(b) of the Social Security Act, shall be deemed to meet the requirements of subsection (b) of this section for certification as a qualified managed care plan.
(B)Recognition of accreditation. -- If the commissioner finds that a national accreditation body establishes a requirement or requirements for accreditation of a managed care plan or utilization review program that are at least equivalent to a requirement(s) established under subsection (b) of this section, the commissioner may, to the extent appropriate, treat a managed care plan or a utilization review program thus accredited as meeting the requirement(s) of subsection (b) of this section.
(b)Requirements for certification. --
(1)Managed care plans. -- The commissioner shall establish standards for the certification of qualified managed care plans that conduct business in this state, including standards whereby:
(A)Prospective enrollees in health insurance plans must be provided information as to the terms and conditions of the plan so that they can make informed decisions about accepting a certain system of health care delivery. Where the plan is described orally to enrollees, easily understood, truthful and objective terms must be used. All plans must provide written descriptions in a readable and understandable format, consistent with standards developed for supplemental insurance coverage under Title XVIII of the Social Security Act. This format must be standardized so that customers can compare the attributes of the plan. Specific items that must be included are:
(i)Coverage provisions, benefits and any exclusions by category of service, provider or physician and, if applicable, by specific service;
Any and all prior authorization or other review requirements including preauthorization review, concurrent review, postservice review, post payment review and any procedures that may lead the patient to be denied coverage for or not be provided a particular service;
Financial arrangements or contractual provisions with hospitals, review companies, physicians or any other provider of health care services that would limit the services offered, restrict referral or treatment options or negatively affect the physician's fiduciary responsibility to his or her patients, including, but not limited to, financial incentives not to provide medical or other services;
(iv)Explanation of how plan limitations impact enrollees, including information on enrollee financial responsibility for payment for coinsurance or other noncovered or out-of-plan services;
(v)Loss ratios; and
(vi)Enrollee satisfaction statistics (including percent reenrollment, reasons for leaving plan, etc.).
(B)Plans must demonstrate that they have adequate access to physicians and other providers, so that all covered health care services will be provided in a timely fashion. This requirement cannot be waived and must be met in all areas where the plan has enrollees, including rural areas.
(C)Plans must meet financial reserve requirements that are established to assure proper payment for covered services provided. An indemnity fund should be established to provide for plan failures even when a plan has met the reserve requirements.
(D)All plans shall be required to establish a mechanism, with defined rights, under which physicians participating in the plan provide input into the plan's medical policy, (including coverage of new technology and procedures), utilization review criteria and procedures, quality and credentialing criteria, and medical management procedures.
(E)All plans shall be required to credential physicians within the plan, and will allow all physicians within the plan's geographic service area to apply for such credentials. At least once per year, plans shall notify physicians of the opportunity to apply for credentials.
(i)Such a credentialing process shall begin upon application of a physician to the plan for inclusion.
(ii)Each application shall be reviewed by a credentialing committee with appropriate representation of the applicant's medical specialty.
(iii)Credentialing shall be based on objective standards of quality with input from physicians credentialed in the plan, and such standards shall be available to applicants and enrollees. When economic considerations are part of the decision, objective criteria must be used and must be available to applicants, participating physicians and enrollees. Any economic profiling of physicians must be adjusted to recognize case mix, severity of illness, age of patients and other features of a physician's practice that may account for higher than or lower than expected costs. Profiles must be made available to those so profiled. When graduate medical education is a consideration in credentialing, equal recognition will be given to training programs accredited by the accrediting council on graduate medical education and by the American osteopathic association.
(iv)To avoid discriminating against enrollees with expensive medical conditions, plans shall be prohibited from excluding practitioners with practices containing a substantial number of such patients.
(v)All decisions shall be made on the record, and the applicant shall be provided with all reasons used if the application is denied or the contract not renewed.
(vi)Plans shall not be allowed to include clauses in physician or other provider contracts that allow for the plan to terminate the contract "without cause."
(vii)There shall be a due process appeal from all adverse decisions. The commissioner shall require an approved due process appeal mechanism.
The same standards and procedures used for approving credentials shall also be used in those cases where the plan seeks to reduce or withdraw such credentials. Prior to initiation of a proceeding leading to termination of a contract "for cause," the physician shall be provided notice, an opportunity for discussion and an opportunity to enter into and complete a corrective action plan, except in cases where there is imminent harm to patient health or an action by a state medical board or other governmental agency that effectively impairs the physician's ability to practice medicine within the jurisdiction.
(F)Procedures shall be established to ensure that all applicable federal and state laws designed to protect the confidentiality of provider and individual medical records are followed.
(G)Any plan that operates a physician incentive plan must meet the following requirements:
(i)No specific payment is made directly or indirectly under the plan to a physician or physician group as an inducement to reduce or limit medically necessary services provided with respect to an individual patient;
(ii)If the plan places a physician or physician group at financial risk for services not provided by the physician or physician group, the plan provides stop-loss protection for the physician or group that is adequate and appropriate, based on standards developed by the commissioner, that take into account the number of physicians placed at such financial risk in the group or under the plan and the number of individuals enrolled with the organization who receive services from the physician or physician group.
(2)Qualified utilization review programs. -- The commissioner shall establish standards for the certification of qualified utilization review programs. All plans must have a medical director responsible for all clinical decisions by the plan and provide assurances that the medical review or utilization practices they use, and the medical review or utilization practices of payers or reviewers with whom they contract, comply with the following requirements:
(A)Screening criteria, weighing elements and computer algorithms utilized in the review process and their method of development must be released to physicians and the public;
(B)Such criteria must be based on sound scientific principles and developed in cooperation with practicing physicians and other affected health care providers;
(C)Any person who recommends denial of coverage or payment, or determines that a service should not be provided, based on medical necessity standards, must be of the same medical specialty (specialties as recognized by the American board of medical specialties or the American osteopathic association) as the practitioner who prescribed or provided the service;
(D)Each claimant or provider (upon assignment of a claimant) who has had a claim denied as not medically necessary must be provided an opportunity for a due process appeal to a medical consultant or peer review group of the same specialty;
(e) Any individual making a negative judgment or recommendation about the necessity or appropriateness of services or the site of service must be a physician licensed to practice medicine in this state;
(f) The requirement that a representative of the private review agent is reasonably accessible to patients, patient's family, and providers at least five days a week during normal business hours and that payment may not be denied for treatment rendered during a period when the review agent is not available;
(g) The requirement that no private review agent be permitted to enter a hospital to interview a patient unless approved in advance by the patient's attending physician and that the attending physician or a designee be entitled to attend the interview;
(h) The prohibition of a contract provision between the private review agent and a business entity or third-party payor in which payment to the private review agent includes an incentive or contingent fee arrangement based on the reduction of health care services, reduction of length of stay, reduction of treatment, or treatment setting selected;
(i) The requirement that there be nondiscriminatory utilization review of treatment of all illnesses, without regard to whether an illness is classified as medical/physical or mental;
(j) Upon request, physicians will be provided the names and credentials of all individuals conducting medical necessity or appropriateness review, subject to reasonable safeguards and standards;
(k) Prior authorization is not required for emergency care including a medical screening exam and stabilizing treatment as defined in Section 1867 of the Social Security Act. Any prior authorization requirement for medically necessary services arising from such screening exam or stabilizing treatment shall be deemed to be approved unless a required request is responded to within two hours. Other patient or physician requests for prior authorization of a nonemergency service must be answered within two business days, and qualified personnel must be available for same-day telephone responses to inquiries about medical necessity, including certification of continued length of stay;
(l) In plans where prior authorization is a condition to coverage of a service, plans must ensure that enrollees are required to sign medical information release consent forms upon enrollment for use where services requiring prior authorization are recommended or proposed by their physician;
(m) When prior approval for a service or other covered item is obtained, it shall be considered approval for all purposes related to that service or covered item, and the service shall be considered to be covered unless there was fraud or incorrect information provided at the time such prior approval was obtained;
(n) Procedures for ensuring that all applicable federal and state laws designed to protect the confidentiality of provider and individual medical records are followed.
(3) Application of standards. --
(A) In general. -- Standards shall first be established under this subsection by not later than twelve months after the date of the enactment of this section. In developing standards under this subsection, the commissioner shall:
(i) Review standards in use by national private accreditation organizations and the national association of insurance commissioners;
(ii) Recognize, to the extent appropriate, differences in the organizational structure and operation of managed care plan; and
(iii) Establish procedures for the timely consideration of applications for certification by managed care plans and utilization review programs.
(B) Revision of standards. -- The commissioner shall periodically review the standards established under this subsection, and may revise the standards from time to time to assure that such standards continue to reflect appropriate policies and practices for the cost-effective and medically appropriate use of services within managed care plans and utilization review programs.
§16-35-6. Choice requirements for point of service plans.
(a) Choice requirements for point of service plans.
(1) Each sponsor of a health benefit plan that restricts access to providers, including such plans provided, offer, or made available by voluntary health purchasing cooperatives, employers and self-insurers, shall offer to all eligible enrollees the opportunity to obtain coverage for out-of-network services through a "point of service" plan, as defined by subdivision (2) of this section, at the time of enrollment and at least for a continuous one-month period annually thereafter;
(2) For purposes of this article, an "out-of-network" or "point of service" plan provides additional coverage and/or access to care by nonnetwork providers to an eligible enrollee of a health plan that restricts access to items and services provided by a health care provider who is not a member of the plan's provider network, as defined in subdivision (3) of this subsection, or, that may cover any other services the enrollee seeks, whether such services are provided in or outside of the enrollee's plan;
(3) A "provider network" means, with respect to a health plan that restricts access, those providers who have entered into a contract or agreement with the plan under which such providers are obligated to provide items and services in the standard benefits package to eligible individuals enrolled in the plan, or who have an agreement to provide services on a fee-for-service basis;
(4) Premiums. -- A plan may charge an enrollee who opts to obtain point of service coverage an alternative premium that takes into account the actuarial value of such coverage;
(5) Copayments. -- A point of service plan may require payment of coinsurance for an out-of-network item or service, as follows:
(A) The applicable coinsurance percentage shall not be greater than twenty percent of payment for items and services; and
(B) The applicable coinsurance percentage may be applied differentially with respect to out-of-network items and services, subject to the requirements of subparagraph (i).
(6) Payment disclosure requirement. -- All sponsors of point of service plans and physicians participating in such plans shall be required to disclose their fees, applicable payment schedules, coinsurance requirements or any other financial requirements that affect patient payment levels.
§16-35-7. Choice of health plans for enrollment.
(a) In general. -- Each sponsor of a health benefit plan who offers, provides or makes available such benefit plan, including voluntary health insurance purchasing cooperatives, employers and self-insurers, must provide to each eligible enrollee a choice of health plans among available plans.
(b) Offering of plans by voluntary health insurance purchasing cooperatives, employers and other sponsors. --
(1) In general. -- Each voluntary health insurance purchasing cooperative, employer or other sponsor shall include among its health plan offerings at least one of each of the following types of health benefit plans, where available:
(A) A health maintenance organization or preferred provider organization;
(B) A traditional insurance plan, as defined in subdivision (2) of this subsection;
(C) A benefit payment schedule plan, as defined in subdivision (3) of this subsection; and
(D) Medical savings accounts.
(2) Traditional insurance plan defined. -- For purposes of this article, the term "traditional insurance plan" is defined to include those plans that offer the standard benefits package that pay for medical services on a fee-for-service basis using a usual, customary or reasonable payment methodology or a resource based relative value schedule, usually linked to an annual deductible and/or coinsurance payment on each allowed amount.
(3) Benefit payment schedule plan defined. --
(A) In general. -- For purposes of this article, the term "benefit payment schedule plan" means a health plan that:
(i) Provides coverage for all items and services included in the standard benefit package that are furnished by any lawful health care provider of the enrollee's choice, within the scope of state licensure;
(ii) Makes payment for the services of a provider on a fee-for-service basis without regard to whether or not there is a contractual arrangement between the plan and the provider;
(iii) Provides a benefit payment schedule that identifies covered services and the payment for each service covered by the plan. No copayments or coinsurance shall be applied. The plan shall reimburse the enrollee the payment unless the individual authorizes direct payment to the provider.

NOTE: The purpose of this bill is to create a patient protection act for enrollees of managed health care plans.
It requires the insurance commissioner to promulgate rules that would establish certain standards to ensure patient protection, physician credentialing, utilization review safeguards and coverage options, including point-of-service plans.

This article is new; therefore, strike-throughs and underscoring have been omitted.