H. B. 2011

(By Delegates Amores and Coleman)
[Introduced Janaury 13, 1999; referred to the
Committee on Government Organization 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 forty- three, relating to adoption of a Patient Protection Act; assuring fairness and choice to patients and providers under managed health care benefit plans; providing protection of consumer choice; requiring certification and review of managed care plans and utilization review programs; setting forth health care provider credentialing requirements; providing application of standards; requiring choice requirement for point-of-service plans; allowing charging of premiums and fees and their disclosure; requiring choice of health plans; and requiring proposal of rules.

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-three, to read as follows:
§33-43-1. Short title.

This article shall be known and may be cited as "The Patient Protection Act."
§33-43-2. Purpose.
The Legislature hereby finds and declares that:
(1)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; and
(2)This article requires the commissioner of the department of tax and revenue's division of insurance to establish standards for the certification of qualified managed care plans and qualified utilization review programs. These standards are necessary to ensure patient protection, to avoid discrimination against qualified health care providers, to establish safeguards for utilization review practices and to develop more and better coverage options for all eligible enrollees, including the option to enroll in a point-of-service plan. To enhance patients' choices of health care providers, this article mandates the availability of a point-of-service option for those enrollees who desire this coverage option.
§33-43-3. Definitions.
For purposes of this article:
(1)"Benefit payment schedule plan" means a health plan that:
(A) Provides coverage for all items and services included in the standard benefit package, which items and services are furnished by any lawful health care provider of the enrollee's choice, subject to state licensing requirements;
(B) 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; and
(C) Provides a benefit payment schedule that identifies covered services and the payment provided for each service covered by the plan. No copayments or coinsurance may be applied. The plan shall reimburse the payment for services to the enrollee unless the enrollee authorizes direct payment to the provider.
(2) "Commissioner" means the insurance commissioner of West Virginia.
(3) "Emergency services" means those health care services that are provided in a hospital emergency facility after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in:
(A) Placing the patient's health in serious jeopardy;
(B) Serious impairment to bodily functions; or
(C) Serious disfunction of any body organ or part.
(4) "Health care provider" means any person, organization or entity, including, but not limited to, hospitals, pharmacies, and laboratories or any other appropriately state-licensed or otherwise state-recognized provider of health care services or supplies.
(5) "Health care provided incentive plan" means any compensation arrangement between the plan and a health care provider that may directly or indirectly have the effect of reducing or limiting services provided with respect to an individual or individuals enrolled in the plan.
(6) "Health maintenance organization" means a public or private organization which provides, or otherwise makes available to enrollees, health care services that include, at a minimum, basic health care services.
(7) "Managed care contractor" means a person that:
(A)Establishes, operates or maintains a network of participating providers;
(B)Conducts or arranges for utilization review activities; or
(C)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.
(8) "Managed care entity" means a licensed insurance company, hospital or medical service plan, health maintenance organization, an employer or employee organization or a managed care contractor, as defined in this section, that operates a managed care plan.
(9) "Managed care plan" means a restrictive health care plan operated by a managed care entity, as defined in this section, 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: Provided, That for purposes of this article, a managed care plan does not include an integrated medical group contracting with a plan for the direct provision of services to plan enrollees.
(10) "Medical savings account" means a trust used for the payment of medical expenses which is created or organized for the exclusive benefit of an individual, his or her dependents covered under a group accident and sickness policy, and his or her beneficiaries, and as more fully defined in section fifteen, article sixteen, chapter thirty-three of this code.
(11) An "out-of-network" or "point-of-service" plan is a plan that:
(A) Provides additional coverage and access to care by nonnetwork providers to an eligible enrollee of a health plan which otherwise restricts access to and coverage for items and services that are provided by a health care provider who is not a member of the plan's provider network; or
(B) May cover any other services the enrollee seeks, whether the services are provided in or outside of the enrollee's plan.
(12) "Participating provider" means any health care provider as defined in this section that has entered into an agreement with a managed care entity to provide health care services or supplies to a patient enrolled in a managed care plan.
(13) "Preferred provider organization" means an alternative health care delivery system, created by contract between health care providers and third-parties such as employers or third-party administrators, under which the preferred provider organization agrees to provide health care services to a defined population of enrollees in return for payment based on a negotiated schedule of fixed fees. A preferred provider organization is distinguished from a health maintenance organization or similar organization in that:
(A) Preferred provider organization providers are paid on a fee-for-service basis while other systems pay by capitation or salary; and
(B) Preferred provider organization physicians are not at financial risk for services not provided while, with health maintenance organization's and similar organizations, the organization, as purchaser of the service, retains the risk of loss.
(14) "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 the 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.
(15) "Qualified managed care plan" means a managed care plan that the commissioner certifies, upon application by the plan, as meeting the requirements of this article.
(16) "Qualified utilization review program" means a utilization review program that the commissioner certifies, upon application by the program, as meeting the requirements of this article.
(17) "Specialty" means any medical specialty as recognized by the American board of medical specialties or the American osteopathic association.
(18) "Traditional insurance plan" includes those plans that offer the standard benefits package which pays for medical services on a fee-for-service basis using:
(A) A usual, customary or reasonable payment methodology; or (B) A resource based relative value schedule, and which is usually linked to an annual deductible or coinsurance payment on each allowed amount.
(19) "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.
§33-43-4. Protection of consumer choice.
Nothing in this article prohibits:
(1)An individual from purchasing any health care services with that individual's own funds, whether those services are covered within the individual's standard benefit package or from another health care provider or plan; or
(2)An employer from providing coverage for benefits in addition to the comprehensive benefit package.
§33-43-5. Certification and review of managed care plans and utilization review programs.

(a) The commissioner shall establish a process for certification of managed care plans and utilization review programs. The commissioner shall also 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 effective date of this article.
(b)The commissioner shall terminate the certification of a previously qualified managed care plan or a qualified utilization review program if the commissioner determines that the 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 pursuant to the provisions of article five, chapter twenty-nine-a of this code.
(c)An eligible organization, as defined in Title 42 U.S.C. § 1395mm, meets the requirements of this article for certification as a qualified managed care plan.
(d)If the commissioner finds that a national accrediting body establishes or has established a requirement or requirements for accreditation of a managed care plan or utilization review program that is or are at least equivalent to the requirements of this article, the commissioner may consider the managed care plan or utilization review program thus accredited as meeting the certification requirements of this article.
§33-43-6. Certification requirements for managed care plans.

(a)The commissioner shall establish standards for the certification of qualified managed care plans that conduct business in this state, which standards shall incorporate the following requirements:
(1)Prospective enrollees in health insurance plans shall 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. This information shall be provided in a clear and concise format that explicitly details any limitations in choice of primary health care providers access to specialists and also describes the method of health care provider payment. Whenever the plan is described orally to enrollees, terms used shall be easily understood, truthful and objective. Further, all plans shall 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 shall be standardized so that customers can compare the attributes of different plans. All plans shall specifically include the following:
(A)Coverage provisions, benefits and any exclusions by category of service, provider or physician and, if applicable, by specific service;
(B)Any and all prior authorization or other review requirements including preauthorization review, concurrent review, postservice review, postpayment review and any procedures that may lead the patient to be denied coverage for or not be provided a particular service;
(C)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;
(D) Explanation of how plan determinations of whether a service or item is covered including policy regarding new and emerging technology;
(E)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;
(F)Medical benefit/loss ratios and an explanation that they reflect the percentage of premiums expended for health care services; and
(G)Enrollee satisfaction statistics, including percent reenrollment, reasons for leaving plan, and other similar data.
(2) Any limitations or conditions placed by a plan upon the frequency or duration of treatment for a particular diagnosis shall be applied equally to all types of participating providers.
(3)Plans shall 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 by establishing standards, such as physician/patient ratios, to insure an enrollee's reasonable access to primary care physicians, specialty care and needed services of other providers. This requirement may not be waived and shall be met in all geographical areas where the plan has enrollees, including rural areas.
(4)Plans shall meet financial reserve requirements established by the commissioner to insure proper payment for covered services. Stop-loss or reimbursement coverage shall be established to provide for planned failures even when a plan has met the reserve requirements.
(5)All plans shall establish a mechanism, with defined rights, under which participating providers 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.
(6)All plans are required to credential participating providers within the plan pursuant to the provisions of section seven of this article. All plans shall permit all physicians residing or practicing within the plan's geographic service area to apply for plan credentials and, at a minimum of one time per annum, shall notify physicians of the opportunity to apply for these credentials.
(7) To avoid discriminating against enrollees with expensive medical conditions, plans may not exclude a practitioner solely because his or her practice contains a substantial number of patients.
(8) Plans may not include terms or clauses in contracts with health care providers that permit the plan to terminate the contract "without cause."
(9) Plans may not prohibit or restrict any health care provider from disclosing to any subscriber, enrollee or member any medically appropriate health care information that the medical provider considers appropriate regarding the nature of treatment, risks or alternatives thereto, the availability of alternate therapies, consultation or test, the decision of any plan to authorize or deny the services or the process the plan of any person contracting with the plan uses, or proposed use, to authorize or deny health care service benefits. Any prohibition or restriction contained in a contract with a health care provider is contrary to public policy and is void and unenforceable.
(b) Each plan shall establish and demonstrate to the commissioner procedures to ensure that all applicable federal and state laws enacted to protect the confidentiality of provider and individual medical records are followed.
(c) Any plan that operates a health care provider incentive plan shall meet the following requirements:
(1) No specific payment may be made directly or indirectly under the plan to a health care provider group as an inducement to reduce or limit medically necessary services provided to an individual patient; and
(2) If the plan places a health care provider at financial risk for services not provided by the health care provider, the plan shall provide stop-loss protection for the health care provider that is adequate and appropriate, based on standards developed by the commissioner, that take into account the number of health care providers 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 health care provider.
§33-43-7. Health care provider credentialing.

(a) Each managed care plan shall establish a credentialing process for all health care providers applying for participation in the plan. A credentialing process shall begin upon the receipt of the application of a physician for inclusion in the plan. Each application shall be reviewed by a credentialing committee, composition of which includes appropriate representation of each applicant's particular professional licensure.
(b) Credentialing shall be based upon objective standards of quality, developed in consultation with health care providers credentialed in the plan that include education, training, background, experience, professional disposition and demonstrated competence. The standards shall be made available to applicants and enrollees. When economic considerations are germane to a credentialing decision, objective criteria shall be used and shall be made available to applicants, participating health care providers and enrollees. Any economic profiling of health care providers shall be adjusted to recognize case mix, severity of illness, age of patients and other features of a health care provider's practice that may account for costs that are higher than or lower than expected. Profiles shall be made available to those so profiled.
(c) All decisions regarding physician credentialing by a plan shall be made in writing and made a part of the applicant's record. The applicant shall be provided a written statement of all reasons for denial of an application or nonrenewal of a contract.
(d) Applicants for credentialing shall be entitled to a due process appeal from all adverse decisions. The commissioner shall establish procedures for due process appeals from adverse credentialing decisions pursuant to the provisions of article five, chapter twenty-nine-a of this code.
(e) The same standards and procedures that a plan uses for approving an initial application for plan credentials shall also be used in those cases where the plan seeks to reduce or withdraw the credentials. Before a plan initiates a proceeding that may lead to the termination of a contract "for cause," the plan shall notify the physician in writing and provide an opportunity to discuss the reasons for the termination and an opportunity to propose, enter into, and complete a corrective action plan, except in cases where there is a threat of imminent harm to patient health or a state medical board or other governmental agency has taken some action that limits or restricts the physician's ability to lawfully practice medicine within the jurisdiction.
§33-43-8. Certification requirements for utilization review programs.

(a) The commissioner shall establish standards for the certification of qualified utilization review programs.
(b) All utilization review program plans shall have a medical director who is responsible for all clinical decisions by the plan and who shall provide assurances to the commissioner that the medical review or utilization practices used by the plan and the payors or reviewers with whom the plan contracts comply with the following requirements:
(1) Screening criteria, weighing elements and computer algorithms utilized in the review process and their method of development. The criteria shall be based on sound scientific principles and developed in consultation with practicing physicians and other affected health care providers. The criteria shall be released upon request to enrollees and participating health care providers;
(2) Any person who recommends denial of coverage or denial of payment, or who determines that, based on medical necessity standards, a service should not be provided, shall be of the same particular professional licensure as the practitioner who prescribed or provided the service;
(3) Each claimant or provider, upon assignment of a claimant, who has a claim denied as not medically necessary shall be provided with a written statement of reasons for the decision, which shall be clearly documented in the permanent case record, whether that record is automated or manual. This written determination letter shall include a general description of the reason the service was denied, an explanation of both the claimant's and the provider's appeal rights and instructions to appeal the determination to the plan's utilization review director, medical director, physician peer review committee or other appropriate person or entity as designated by the plan in conjunction with any other physician or provider group charged with oversight of the plan's utilization review program;
(4) Any individual who makes a determination or a recommendation that a certain service or site of service is medically unnecessary or inappropriate shall be a physician licensed to practice medicine in this state;
(5) A representative of the private review agent shall be reasonably accessible to patients, patients' families, and providers at least five days per week during normal business hours. Payment may not be denied for treatment rendered during a period when the review agent was not available;
(6) No private review agent may enter a hospital to interview a patient unless approved in advance by the patient's attending physician. The attending physician or a designee is entitled to attend the interview;
(7) No contract between a private review agent and a third party payor may contain a provision that incorporates an incentive for the reviewer to reduce the availability or affordability of health care services by making payment to the private review agent contingent in any way upon a reduction in the approval of health care services, reduction in length of stay, reduction of treatment or selection of the treatment setting;
(8) Utilization review of treatment for all illnesses is nondiscriminatory and without regard to whether an illness is classified as medical/physical or mental;
(9) Upon request and subject to reasonable safeguards and standards, physicians shall be provided the names and credentials of all individuals conducting medical necessity or appropriateness reviews;
(10) Prior authorization may not be required for treatment of an emergency medical condition, as defined in Title 42 U.S.C. § 1395dd, including medical screening exams and stabilizing treatment. Any requirement for prior authorization of medically necessary services arising from the screening exams or stabilizing treatment is considered approved unless the reviewing agent responds otherwise within two hours of receiving a required request for prior authorization. Requests by patients or physicians for prior authorization of any nonemergency service shall be answered within two business days. Qualified personnel shall be available for same-day telephone responses to inquiries about medical necessity, including certification of continued length of stay;
(11) In plans where prior authorization is a condition to coverage of a service, plans shall 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;
(12) When prior authorization for a service or other covered item is obtained, it is authorization for all purposes reasonably related to that service or covered item and the service is covered unless the prior authorization was obtained through fraud or the submission of false information; and
(13) Procedures shall be established for ensuring that all applicable federal and state laws designed to protect the confidentiality of provider and individual medical records are followed.
§33-43-9. Application of standards.

(a) All standards required by this article shall be established by the commissioner no later than twelve months after the effective date of this article.
(b) In developing standards required by this article, the commissioner shall:
(1) Review standards in use by national private accreditation organizations and the national association of insurance commissioners;
(2) Recognize, to the extent appropriate, differences in the organizational structure and operation of managed care plans; and
(3) Establish procedures for the timely consideration of applications for certification by managed care plans and utilization review programs.
(c) The commissioner shall periodically review the standards established under this article and may revise the standards from time to time to assure that they 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.
§33-43-10. Choice requirement for point of service plans; premiums; fees; disclosure.

(a) Each sponsor of a health benefit plan that restricts access to providers, including plans that are provided, offered or made available by voluntary health purchasing cooperatives, employers and self-insurers, shall offer to all eligible enrollees at the time of enrollment and at least for a continuous one-month period annually thereafter the opportunity to obtain coverage for out-of-network services through a point-of-service plan.
(b) A plan may charge an enrollee who chooses to obtain point-of-service coverage an alternative premium that takes into account the actuarial value of the coverage.
(c) A point-of-service plan may require payment of coinsurance for an out-of-network item or service with the applicable coinsurance percentage not being greater than the percentage of coinsurance payment provided for under the plan.
(d) All sponsors of point-of-service plans and participating provider in those plans are required to disclose their fees, applicable payment schedules, coinsurance requirements or any other financial requirements that affect patient payment levels.
§33-43-11. Choice of health plans for enrollment.
(a) Each sponsor of a health benefit plan, including voluntary health insurance purchasing cooperatives, employers and self-insurers, who offers, provides or makes available the benefit plan, shall provide to each eligible enrollee a choice of health plans among available plans.
(b) 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:
(1) A health maintenance organization or preferred provider organization;
(2) A traditional insurance plan;
(3) A benefit payment schedule plan; and
(4) Medical savings accounts.
§33-43-12. Proposal of rules.

The commissioner shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code as may be necessary to effectuate the requirements of this article.

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 propose 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.