Senate Bill No. 287
(By Senator Blatnik)
____________
[Introduced February 2, 1996; referred to the Committee
on Banking and Insurance; and then to the Committee on Finance
.]
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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 forty-
one, relating to the regulation of utilization review
entities; duties of insurance commissioner; certificate of
authority required; fees; denial and revocation of
certificate of authority; minimum requirements of
utilization review plan; protection of consumer privacy and
confidentiality; determinations made; adverse decisions and
preauthorizations; reconsideration of adverse decisions;
reporting requirements; criminal and civil penalties; and
reporting to governor and Legislature.
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 forty-one, to
read as follows:
ARTICLE 41. UTILIZATION REVIEW ACT.
§33-41-1. Legislative findings.
The Legislature finds that:
(a) Consumers of health care services in West Virginia are
at great risk of reduced accessibility due to escalating cost of
such services;
(b) A need exists for the examination of a cost-effective
means for delivery of services without compromising quality,
necessary treatment and confidentiality;
(c) Utilization review activities carried out by entities
certified in accordance with this article can foster these goals;
(d) This article serves to protect consumers, businesses and
providers by ensuring that utilization review entities are
qualified to perform utilization review activities and to make
informed decisions on the appropriateness of health care services
while maintaining confidentiality and fair business practices in accordance with state and federal laws.
§33-41-2. Scope.
The provisions of this article apply only to utilization
review activities of inpatient and outpatient health care
services, including behavioral health services.
§33-41-3. Definitions.
The following words when used in this article have the
meanings ascribed to them in this section, except in those
instances where the context clearly indicates a different
meaning:
(a) "Adverse decision" means a utilization review
determination made by a utilization review entity that a proposed
or delivered health care service:
(1) Is or was not necessary, appropriate, or efficient; and
(2) May result in noncoverage of this service.
There is no adverse decision if the utilization review entity and
the health provider on behalf of the consumer reach an agreement
on the proposed or delivered service.
(b) "Behavioral health service" means any medical,
palliative, remedial, social or similar service recommended by a
psychiatrist, physician or psychologist for the purposes of reducing mental disability and severity of impairment and
restoring a patient to his best possible functional level. These
services are designed for all individuals with conditions
associated with nontraumatic injury, mental illness, development
disabilities, substance abuse and drug dependency, or any
thereof.
(c) "Certificate" means a certificate of authority granted
by the commissioner to a utilization review entity under the
provisions of this article.
(d) "Commissioner" means the commissioner of insurance of
this state.
(e) "Concurrent review" means the review of an inpatient
stay after the approval of the admission and the initial length
of stay for the purpose of determining whether continuation of
the stay is medically necessary and planning for discharge.
(f) "Consumer" means a recipient of health care services.
(g) "Emergency services" means services provided in or by a
hospital emergency facility to evaluate and treat a medical
condition manifesting itself by symptoms of sufficient severity
that the absence of prompt medical attention could reasonably be
expected by a prudent lay person, who possesses an average knowledge of health and medicine, to result in placing the health
of the recipient of such services in serious jeopardy, serious
impairment to body function, serious dysfunction of any body
organ or part or the continuance of severe pain.
(h) "Health care provider" means any person, partnership,
corporation, facility or institution licensed or certified or
authorized by law to provide health care services in this state
to an individual during that individual's medical care, treatment
or confinement.
(i) "Health care service" means an act of diagnosis,
treatment, medical evaluation or advice or such other act as may
be permissible under the health care licensing statutes of this
state.
(j) "Provider" means a licensed facility or certified
individual providing health care services.
(k) "Utilization review" means a system for reviewing the
appropriate and efficient allocation of health care resources and
services given or proposed to be given to a consumer or group of
consumers. Utilization review may include, but is not limited
to, preauthorization, concurrent review and retrospective review.
(l) "Utilization review entity" means a person or entity performing utilization review activities under contract with,
acting on behalf of or directly employed by:
(1) Any resident or foreign corporation, partnership or
business licensed to do business in this state; or
(2) A third party that provides or administers health
benefits or services to citizens of this state, including:
(i) A health maintenance organization issued a certificate
of authority in accordance with article twenty-five-a of this
chapter that performs utilization review services for outside
entities;
(ii) A health insurer as defined in this chapter;
(iii) A nonprofit hospital service corporation, medical
service corporation, health service corporation or health care
corporation authorized to offer health care services in this
state in accordance with this chapter; or
(iv) Any nonresident or foreign utilization review entity
providing utilization review activities for persons located
within this state.
(k) "Utilization review plan" means a description of the
standards and practices governing utilization review activities
performed by a utilization review entity.
§33-41-4. Powers and duties of 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 shall, no later than one
hundred eighty days after the effective date of this section,
promulgate in accordance with the provisions of chapter twenty-
nine-a of this code such rules as are necessary to carry out the
provisions of this article.
(b) The commissioner may issue, deny, renew or refuse to
renew on an annual basis and revoke certificates of authority to
utilization review entities and to otherwise enforce the
provisions of this article. The commissioner shall include
within the rules promulgated pursuant to subsection (a) of this
section the procedures and requirements for such certificates of
authority.
(c) The commissioner may also establish by rule reporting
requirements in order to carry out section thirteen of this
article.
(d) The commissioner shall promulgate rules to provide the
standards for the imposition of an administrative penalty under
section fourteen of this article.
§33-41-5. Certificate of authority.
(a) A utilization review entity may not conduct utilization
review activities in this state unless the commissioner has
granted the utilization review entity 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
issued under this article is not transferable.
(b) Any utilization review entity that is operating in the
state prior to the effective date of this article may continue to
conduct utilization review activities until the commissioner acts
upon its application submitted in accordance with this article:
Provided, That such utilization review entity files an
application and submits the appropriate fee within sixty days of
the effective date of the rules promulgated pursuant to section
four of this article.
(c) The commissioner may deny or revoke a certificate of
authority to any utilization review entity or other person who is
in violation of this article.
§ 33-41-6. Application for certificate; fees; designation.
(a) No person may engage in utilization review activities within this state unless such person first obtains a certificate
of authority from the commissioner.
(b) An applicant for a certificate shall submit to the
commissioner an application in the form and accompanied by any
supporting documentation required by the commissioner, which
application shall be signed and verified by the applicant.
(c) Every person making an application for a certificate in
accordance with this article shall, at the same time he submits
the application, submit to the commissioner an application fee in
an amount to be determined by rule promulgated by the
commissioner. All fees collected in accordance with this article
shall be deposited into the special revenue account created by
section thirteen, article three of this chapter, and shall be
expended by the commissioner in furtherance of this article or
for the operation of the department of insurance of this state.
Any balance in the fund at the end of any fiscal year shall
remain in the fund and shall not expire or revert.
§33-41-7. Denial; revocation.
(a) The commissioner shall deny a certificate of authority
to any applicant if, upon review of the application:
(1) The commissioner finds that the applicant does not:
(i) Have available the services of sufficient numbers of
registered physicians, psychologists, nurses, social workers or
similarly qualified persons to carry out its utilization review
activities; and
(ii) Meet any applicable rules the commissioner adopts under
this article relating to the qualifications of utilization review
entities or the performance of utilization review; or
(2) The commissioner finds that the applicant has not
provided assurance satisfactory to the commissioner that:
(i) The procedures and policies of the utilization review
entity will protect the confidentiality of medical records in
accordance with applicable state and federal laws; and
(ii) The utilization review entity will be accessible to
providers in accordance with section ten of this article.
(b) The commissioner shall investigate any complaint filed
with him by a provider that a utilization review entity is
violating this article or the rules promulgated by the
commissioner. 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 by the commissioner to be
transacting business in an unlawful manner.
§33-41-8. Utilization review plan.
At the time of the filing of the application and other
supporting documentation, the utilization review entity shall
submit to the commissioner the following:
(1) A utilization review plan that includes at least all of
the following:
(i) The specific criteria and standards to be used in
conducting utilization review activities for proposed or
delivered health care services. Such criteria and standards and
any revisions thereof shall be published and made available to
the commissioner. Any revisions to the criteria or standards
must be submitted to the commissioner for approval prior to
implementation;
(ii) The provisions by which consumers and providers may
seek reconsideration of adverse decisions by the utilization
review entity and the provisions by which consumers and providers
will be informed of such provisions;
(iii) Expedited procedures for reconsideration and appeal of
adverse decisions in emergency situations; and
(iv) A quality assurance program that meets or exceeds the
standards adopted by the national utilization review committee
and demonstrates to the commissioner that the utilization review
entity's activities do not arbitrarily deny services to enrolled
or eligible participants.
(2) The type, qualifications and credentials of the
personnel either employed by or under contract to the utilization
review entity to perform utilization review activities.
(3) The procedures and policies to ensure that a
representative of the utilization review entity is accessible by
a toll-free telephone number to consumers and providers for
twenty-four hours a day, seven days a week. The utilization
review entity may not deny any health care services rendered at
any time a representative is not accessible.
(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 utilization
review plan.
(6) A list of the providers and third party payers for which the utilization review entity is performing utilization review
services in this state.
(7) The policies and procedures to ensure that the
utilization review entity has a formal program for the
orientation and training of personnel either employed or under
contract to perform utilization review activities.
(8) A list of health providers involved in establishing the
specific criteria and standards to be used in conducting
utilization review activities.
(9) Certification by the utilization review entity that the
criteria and standards to be used in conducting utilization
review activities are:
(i) Objective;
(ii) Clinically valid;
(iii) Compatible with established principles of health care;
and
(iv) Flexible enough to allow deviations from norms when
justified on a case-by-case basis.
The information listed above is subject to the approval of
the commissioner, and the commissioner may request corrected or
additional information upon reviewing the information submitted. The commissioner shall consider the information submitted in
determining whether to issue or deny a certificate. The
commissioner shall make the information submitted pursuant to
this section available for public review. The utilization review
entity shall provide each provider listed as a recipient of its
services with a copy of its review standards, criteria and
procedures.
§33-41-9. Consumer privacy and confidentiality.
(a) Each utilization review entity shall have written
procedures for assuring that consumer-specific information
obtained during the process of utilization review will be:
(1) Limited to the minimum amount of information that is
necessary to process the claim for the specific procedure in
question;
(2) Relevant and necessary for providing appropriate
utilization review services;
(3) Used only for the purposes of utilization review and
case management of the particular consumer; and
(4) Kept confidential in accordance with this article and
with all applicable state and federal laws.
§33-41-10. Determinations by utilization review entities.
(a) Nonemergency courses of treatment. Except as provided
in subsection (b) of this section, a utilization review entity
shall:
(1) Make all initial determinations on whether to authorize
or certify a nonemergency course of treatment for a consumer on
a timely basis, not later than one business day from receipt of
the information necessary to make the determination; and
(2) Promptly notify the attending physician, provider and
consumer of the determination.
(b) Extended stays or additional health care services. A
utilization review entity shall:
(1) Make all determinations on whether to authorize or
certify an extended stay in a health care facility or additional
health care services on a timely basis, not later than one
business day from receipt of the information necessary to make
the determination; and
(2) Promptly notify the attending physician, provider and
consumer of the determination.
(c) Reconsideration. If an initial determination is made by
the utilization review entity not to authorize or certify a
course of treatment, an extended stay in a health care facility, or additional health care services and the attending physician,
provider or consumer believes the determination warrants an
immediate reconsideration, the utilization review entity shall
provide the attending physician, provider or consumer an
opportunity to seek reconsideration of that determination by
telephone on an expedited basis, not to exceed twenty-four hours
from the time the physician, provider or consumer first sought
the reconsideration.
(d) Emergency inpatient admissions. For emergency inpatient
admissions, a utilization review entity may not render an adverse
decision or deny payment for emergency services solely because
the attending physician, provider or consumer did not notify the
utilization review entity 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 provider from determining:
(1) The patient's coverage status; or
(2) The utilization review entity's emergency admission
notification requirements.
(e) Access. Utilization review activities and utilization
review shall not be used to deny or limit consumers' access to medically necessary emergency treatment.
§33-41-11. Adverse decisions and preauthorizations.
(a) Adverse decisions. All adverse decisions shall be made
by a physician or by a panel of other appropriate health
providers with at least two physicians selected by the
utilization review entity who are:
(1)(i)Board certified in the same specialty as the treatment
under review; or
(ii) Actively practicing, or have demonstrated expertise, in
the specific area of health care services or treatment under
review; and
(2) Not compensated by the utilization review entity 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 utilization review entity may not revise or modify
the specific criteria or standards used in the utilization review
plan in order to make an adverse decision regarding the services
delivered to that consumer.
§33-41-12. Reconsideration of adverse decisions.
(a) In the event a consumer or provider seeks
reconsideration of an adverse decision by a utilization review
entity, the final determination of the adverse decision shall be
made based on the professional judgement of a physician, or a
panel of other appropriate health care providers with at least
two physicians selected by the utilization review entity who are
(1)(i) Board certified in the same specialty as the
treatment under review; or
(ii) Actively practicing, or have demonstrated expertise, in
the specific area of health care services or treatment under
review; and
(2) Not compensated by the utilization review entity 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 utilization review entity 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 utilization review entity may charge a fee to a
consumer or health provider for an appeal of an adverse decision.
(d) No health care 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.
§33-41-13. Reporting requirements.
The commissioner may establish reporting requirements in
order to evaluate the effectiveness of utilization review
entities and to determine if the utilization review entities and
the utilization review programs are in compliance with the
provisions of this article and applicable rules.
§33-41-14. Penalties.
(a) Criminal. An entity which violates any provision of
this article or any rule adopted hereunder is guilty of a
misdemeanor, and, upon conviction thereof, may be fined not more
than one thousand dollars. Each day a criminal violation is
continued shall be a separate offense.
(b) Civil. In addition to the provisions of subsection (a)
of this section, the commissioner may impose an administrative
penalty of up to five thousand dollars for a violation of any
provision of this article and may revoke the entity's certificate
of authority.
§33-41-14. Reporting to governor and Legislature.
Prior to the first day of each regular legislative session,
the commissioner shall submit a report to the governor and to the
Legislature regarding utilization review entities. Such report
shall include but not be limited to their conduct, licensure
status, consumer complaints and the response of reviewing
entities and cost effectiveness in relation to such conduct.
NOTE: The purpose of this bill is to require utilization
review entities to receive a certificate of authority from the
Insurance Commissioner; to require application fees to be
deposited into a nonexpiring account for the Insurance
Commissioner; to set forth the criteria upon which a certificate
of authority must be denied or revoked; to require utilization
review entities to prepare utilization review plans, including
utilization review criteria and procedures for reconsideration;
to require written procedures to assure confidentiality of
consumer-specific information; to set parameters for certain
utilization review decisions and for adverse decisions and
precertification; to provide criminal and civil penalties for
violation; and to require the Insurance Commissioner to implement
the article through the adoption of rules and to report annually
to the governor and Legislature.
This article is new; therefore, underscoring and strike-
throughs have been omitted.