hb2486 intr

H. B. 2486

(By Mr. Speaker, Mr. Kiss, and Delegates Angotti,

Amores, Beane, Cann and R.M. Thompson)

[Introduced February 22, 2001; referred to the

Committee on Banking and Insurance then the Judiciary.]

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 ethics and fairness in insurance carrier business practices; establishing fair claim settlement practices and establishing procedures for independent review of denials of coverage and medical necessity.

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:

ARTICLE 43. ETHICS AND FAIRNESS IN CARRIER BUSINESS PRACTICES.

§33-43-1. Definitions.

As used in this section:

(1) "Carrier" means any person required to be licensed under this chapter which offers health, sickness or bodily injury insurance or operates a managed care health insurance plan subject to article twenty-five-a of this chapter or which provides or arranges for the provision of health care services, health plans, networks or provider panels which are subject to regulation as the business of insurance under this chapter: Provided, That "carrier" does not include:

(A) Credit accident and sickness insurance;

(B) Accident and sickness policies which provide benefits for loss of income due to disability;

(D) Hospital indemnity or other fixed indemnity insurance; and

(E) Life insurance (including endowment or annuity contracts), or contracts supplemental thereto, which contain only provisions relating to accident and sickness insurance that: (i) Provide additional benefits in cases of death by accidental means; or (ii) operate to safeguard the contracts against lapse, in the event that the insured shall become totally and permanently disabled as defined by the contract or supplemental contract.

(2) "Claim" means any bill, claim or proof of loss made by or on behalf of an enrollee or a provider to a carrier (or its intermediary, administrator or representative) with which the provider has a provider contract for payment for health care services under any health plan; however, a "claim" shall not include a request for payment of a capitation or a withhold.

(3) "Clean claim" means a claim: (i) That has no material defect or impropriety (including any lack of any reasonably required substantiation documentation) which substantially prevents timely payment from being made on the claim; or (ii) with respect to which a carrier has failed timely to notify the person submitting the claim of any such defect or impropriety in accordance with section two of this article.

(4) "Commissioner" means the insurance commissioner of West Virginia.

(5) "Health care services" means items or services furnished to any individual for the purpose of preventing, alleviating, curing, or healing human illness, injury or physical or mental disability.

(6) "Health plan" means any individual or group health care plan, subscription contract, evidence of coverage, certificate, health services plan, medical or hospital services plan, accident and sickness insurance policy or certificate, managed care health insurance plan, or other similar certificate, policy, contract or arrangement, and any endorsement or rider thereto, to cover all or a portion of the cost of persons receiving covered health care services, which is subject to state regulation pursuant to article twenty-five-a of this chapter and which is required to be offered, arranged or issued in the state by a carrier authorized under that article. Health plan does not mean: (i) Coverages issued pursuant to Title XVIII of the Social Security Act, 42 U.S.C. §1395 et seq. (Medicare), Title XIX of the Social Security Act, 42 U.S.C. §1396 et seq. or Title XX of the Social Security Act, 42 U.S.C. §1397 et seq. (Medicaid), 5 U.S.C. §8901 et seq. (federal employees), or 10 U.S.C. §1071 et seq. (CHAMPUS); article sixteen, chapter five of this code (PEIA); or (ii) accident only, credit or disability insurance, long-term care insurance, CHAMPUS supplement, Medicare supplement, or workers' compensation coverages.

(7) "Insured" means a person who is eligible for health insurance coverage or other health care services coverage from a carrier.

(8) "Provider contract" means any contract between a provider and a carrier (or a carrier's network, provider panel, intermediary or representative) relating to the provision of health care services.

(9) "Retroactive denial of a previously paid claim" or "retroactive denial of payment" means any attempt by a carrier retroactively to collect payments already made to a provider with respect to a claim by reducing other payments currently owed to the provider, by withholding or setting off against future payments, or in any other manner reducing or affecting the future claim payments to the provider, or to demand direct cash reimbursement from a provider of payment previously made to the provider.

§33-43-2. Minimum fair business standards contract provisions required relating to processing and payment of health care services provider claims; commissioner's jurisdiction.

(a) Every provider contract entered into, amended, extended or renewed by a carrier on or after the first day of July, two thousand one, shall contain specific provisions which shall require the carrier to adhere to and comply with the following minimum fair business standards in the processing and payment of claims for health care services:

(1) A carrier shall pay any claim within forty days of receipt of the claim except where the obligation of the carrier to pay a claim is not reasonably clear due to the existence of a reasonable basis supported by specific information available for review by the person submitting the claim that:

(A) The claim is determined by the carrier not to be a clean claim due to a good faith determination or dispute regarding: (i) The manner in which the claim form was completed or submitted; (ii) the eligibility of a person for coverage; (iii) the responsibility of another carrier for all or part of the claim; (iv) the amount of the claim or the amount currently due under the claim; (v) the benefits covered; or (vi) the manner in which services were accessed or provided; or

(B) The claim was submitted fraudulently.

(2) Each carrier shall maintain a written or electronic record of the date of receipt of a claim. The person submitting the claim shall be entitled to inspect the record on request and to rely on that record or on any other admissible evidence as proof of the fact of receipt of the claim, including without limitation electronic or facsimile confirmation of receipt of a claim. If a carrier fails to maintain an electronic or written record of the date a claim is received, the claim shall be considered received three business days after the claim was submitted.

(3) A carrier shall, within thirty days after receipt of a claim, request electronically or in writing from the person submitting the claim any information and/or documentation that the carrier reasonably believes will be required to process and pay the claim or to determine if the claim is a clean claim. The carrier shall ask for all desired information in one request, and shall not request or require additional information at a later time other than to specifically identify a material failure to provide the information requested in the one request noted above. Upon receipt of the information requested under this subsection which the carrier reasonably believes will be required to process and pay the claim or to determine if the claim is a clean claim, a carrier shall make the payment of the claim in compliance with this section. No carrier may refuse to pay a claim for health care services rendered pursuant to a provider contract which are covered benefits if the carrier fails timely to notify the person submitting the claim of the matters identified above unless such failure was caused in material part by the person submitting the claims; however, nothing herein shall preclude such a carrier from imposing a retroactive denial of payment of such a claim if permitted by the provider contract unless such retroactive denial of payment of the claim would violate subdivision (7) of subsection (a) of this section. Nothing in this subsection shall require a carrier to pay a claim that is not a clean claim.

(4) Interest, at a rate of six percent, accruing after the forty-day period provided in subsection (1), subsection (a) of this section owing or accruing on a claim under any provider contract or under any applicable law, shall, if not sooner paid or required to be paid, be paid, without necessity of demand, at the time the claim is paid or within sixty days thereafter.

(5) (A) Every carrier shall establish and implement reasonable policies to permit any provider with which there is a provider contract: (i) To promptly confirm in advance during normal business hours by the provider's choice of facsimile transmission or free telephone contact, and by other electronic means if made available by the carrier, whether the health care services to be provided are medically necessary and a covered benefit; and (ii) to determine the carrier's requirements applicable to the provider (or to the type of health care services which the provider has contracted to deliver under the provider contract) for: (I) Precertification or authorization of coverage decisions; (II) retroactive reconsideration of a certification or authorization of coverage decision or retroactive denial of a previously paid claim; (III) provider-specific payment and reimbursement methodology, coding levels and methodology, downcoding, and bundling of claims; and (IV) other provider-specific, applicable claims processing and payment matters necessary to meet the terms and conditions of the provider contract, including determining whether a claim is a clean claim.

(B) Every carrier shall make available to the providers within ten business days of receipt of a request, copies of or reasonable electronic access to all the policies that are applicable to the particular provider or to particular health care services identified by the provider. In the event the provision of the entire policy would violate any applicable copyright law, the carrier may instead comply with this subsection by timely delivering to the provider a clear explanation of the policy as it applies to the provider and to any health care services identified by the provider.

(6) Every carrier shall pay a claim if the carrier has previously authorized the health care service or has advised the provider or enrollee in advance of the provision of health care services that the health care services are medically necessary and a covered benefit, unless:

(A) The documentation for the claim provided by the person submitting the claim clearly fails to support the claim as originally authorized; or

(B) The carrier's refusal is because: (i) Another payor is responsible for the payment; (ii) the provider has already been paid for the health care services identified on the claim; (iii) the claim was submitted fraudulently or the authorization was based in whole or material part on erroneous information provided to the carrier by the provider, enrollee, or other person not related to the carrier; or (iv) the person receiving the health care services was not eligible to receive them on the date of service and the carrier did not know, and with the exercise of reasonable care could not have known, of the person's eligibility status.

(7) (A) Effective the first day of July, two thousand one, a carrier shall notify a provider at least thirty days in advance of any retroactive denial of a claim. No carrier may deny payment of a claim for services preauthorized but not yet paid, unless the reason for denial is provided in writing and either the claim is not a clean claim or the claim is fraudulent. No carrier may impose any retroactive denial of a previously paid claim for services which were preauthorized unless the carrier has provided the reason for the retroactive denial in writing and: (i) The original claim was submitted fraudulently; or (ii) the original claim payment was incorrect because the provider was already paid for the health care services identified on the claim or the health care services identified on the claim were not delivered by the provider.

(B) No carrier may impose any retroactive denial of a previously paid claim for services which were not preauthorized unless the carrier has provided the reason for the retroactive denial and: (i) The original claim was submitted fraudulently; (ii) the original claim payment was incorrect because the provider was already paid for the health care services identified on the claim or the health care services identified on the claim were not delivered by the provider; or (iii) the time which has elapsed since the date of the payment of the original challenged claim does not exceed the lesser of: (I) Twelve months; or (II) the number of days within which the carrier requires under its provider contract that a claim be submitted by the provider following the date on which a health care service is provided.

(8) No provider contract may fail to include or attach at the time it is presented to the provider for execution: (i) The fee schedule, reimbursement policy or statement as to the manner in which claims will be calculated and paid which is applicable to the provider or to the range of health care services reasonably expected to be delivered by that type of provider on a routine basis; and (ii) all material addenda, schedules and exhibits thereto and any policies (including those referred to in subdivision (5), subsection (a) of this section applicable to the provider or to the range of health care services reasonably expected to be delivered by that type of provider under the provider contract.)

(9) No amendment to any provider contract or to any addenda, schedule, exhibit or policy thereto (or new addenda, schedule, exhibit, or policy) applicable to the provider (or to the range of health care services reasonably expected to be delivered by that type of provider) is effective as to the provider, unless the provider has been provided with the applicable portion of the proposed amendment (or of the proposed new addenda, schedule, exhibit, or policy) and has failed to notify the carrier within twenty business days of receipt of the documentation of the provider's intention to terminate the provider contract at the earliest date thereafter permitted under the provider contract.

(10) In the event that the carrier's provision of a policy required to be provided under subdivision (8) or (9), subsection (a) of this section would violate any applicable copyright law, the carrier may instead comply with this section by providing a clear, written explanation of the policy as it applies to the provider.

(11) The carrier shall complete a credential check of any new provider and accept or reject the provider within two months following the submission of the provider's completed application. The carrier shall make available to providers a list of all information required to be included in the application. A provider who provides services during the two month period in which his or her credentials are being considered by the carrier, shall be paid for the services if the provider's application is approved. Interest at the rate of six percent shall be paid to the provider on any amount due the provider for services rendered while awaiting approval, and not paid within three months following the service.

(b) Without limiting the foregoing, in the processing of any payment of claims for health care services rendered by providers under provider contracts and in performing under its provider contracts, every carrier subject to regulation by this article shall adhere to and comply with the minimum fair business standards required under subsection (a) of this section, and the commissioner shall have the jurisdiction to determine if a carrier has violated the standards set forth in subsection (a) of this section by failing to include the requisite provisions in its provider contracts and shall have jurisdiction to determine if the carrier has failed to implement the minimum fair business standards set out in subdivisions (1) and (2), subsection (a) of this section in the performance of its provider contracts.

(c) No carrier is in violation of this section if its failure to comply with this section is caused in material part by the person submitting the claim or if the carrier's compliance is rendered impossible due to matters beyond the carrier's reasonable control (such as an act of God, insurrection, strike, fire, or power outages) which are not caused in material part by the carrier.
§33-43-3. Damages, attorney fees and costs available to providers upon carrier's violation of article or breach of contract provisions.

Any provider who suffers loss as the result of a carrier's violation of any provision of this article or a carrier's breach of any provider contract provision required by this article is entitled to initiate an action to recover actual damages. If the trier of fact finds that the violation or breach resulted from a carrier's gross negligence or willful conduct, it may increase damages to an amount not exceeding three times the actual damages sustained. Notwithstanding any other provision of law to the contrary, in addition to any damages awarded, such provider also may be awarded reasonable attorney's fees and court costs. Each claim for payment which is paid or processed in violation of this article or with respect to which a violation of the provisions of this article exists shall constitute a separate violation. The commissioner shall not be deemed to be a "trier of fact" for purposes of this section.
§33-43-4. Providers invoking rights protected.

No carrier or its network, provider panel or intermediary may terminate or fail to renew the employment or other contractual relationship with a provider, or any provider contract, or otherwise penalize any provider, for invoking any of the provider's rights under this section or under the provider contract.
§33-43-5. External independent review.

(a) If a carrier denies a provider's or an insured's request for authorization for a covered service or payment of claim for a covered service, the insured or the provider may initiate an external independent review of the request only after the internal grievance procedures of the carrier have been exhausted, as is consistent with and required by section twelve, article twenty-five-a of this chapter.

(b) Within thirty days after the denied party receives written notice of denial of authorization for service or payment of claim and/or exhaustion of the carrier's internal grievance procedures, which ever is later in time, the party may initiate an external independent review by mailing to the commissioner a written request for an external independent review, including any material justification or documentation to support the member's request for the covered service or claim for a covered service.

(1) Choose one or more independent reviewers in the manner prescribed in subsections (h)and (i)of this section from the list established pursuant to section six of this article; and

(2) Mail a written acknowledgment of the request to the insured, the provider or intended provider if known and the carrier, including with the acknowledgment the name and address of reviewer or reviewers selected.

(d) Within ten business days after the carrier receives acknowledgment of the request for an independent review, the carrier shall provide to the insured, the provider and each reviewer selected copies of the terms of the carrier's policy with the insured, evidence of coverage or similar document and all relevant medical records and supporting documentation used to render the decision pertaining to the insured's case, a summary description of the applicable issues including a statement of the denial decision, the criteria used and the clinical reasons for that decision.

(e) Within ten business days after the provider receives acknowledgment of the request for an independent review, if the provider is not the requesting party, the provider shall provide to the carrier, the insured and any reviewer selected any medical records and other supporting documentation not previously submitted, including a description of issues sought to be considered. Within ten business days of receiving acknowledgment of the request the insured may submit to all parties and the reviewer or reviewers any additional relevant documentation not previously submitted.

(f) The independent reviewer or reviewers shall evaluate and analyze the case, shall make a decision within thirty days on whether the service or claim for the service is medically necessary or if the service or claim is or is not covered, and shall promptly present a written decision to the commissioner. Within three business days after receiving the notice of decision from the reviewer or reviewers, the commissioner shall issue the written decision of the independent reviewer(s) to all parties. The decision reached by the independent reviewer or reviewers and issued by the commissioner is a final administrative decision and is subject to judicial review pursuant to section fourteen, article two, chapter thirty-three of this code. The carrier shall provide any service or pay any claim determined by the independent reviewer or reviewers for the case under review to be medically necessary or a covered service, regardless of whether judicial review is sought.

(g) After a decision is made pursuant to subsection (f) of this section, and a final decision is issued, the administrative process is completed and the commissioner's role is ended, except to transmit, when necessary, a record of the proceedings to a court.

(h) Pursuant to subsection (c) of this section, the commissioner shall choose one or more independent reviewers or organizations that represent independent reviewers who:

(1) Have no direct financial interest in or connection to the case;

(2) Are licensed as physicians or other health care professionals or out-of-state provider physicians or other health care professionals who are licensed in another state and who are not licensed in this state, who are board certified or board eligible by an American medical specialty board and who are in the same or similar scope of practice as a physician or other health care professional licensed pursuant to articles three, four, eight, fourteen, sixteen and twenty-one, chapter thirty of this code, or an out-of-state provider physician or other health care professional who is licensed in another state and who is not licensed in this state and who typically manages the medical condition, procedure or treatment under review; and

(3) Have not been informed of the specific identities of the insured or the insured's treating provider.

(i) If there is not an appropriate independent reviewer for a particular case on the list established by the director pursuant to section six of this article, the commissioner shall choose an independent reviewer not on the list.

(j) No person, other than the commissioner to enforce a specific decision made by an independent reviewer or reviewers pursuant to this section, may introduce into evidence for any purpose the decision of the commissioner to refer any matter to an independent review or any decision made by the independent reviewer or reviewers pursuant to this section.
§33-43-6. Independent reviewers.

(a) On or before the first day of July of each year, the commissioner shall compile and make available to the public a list of independent reviewers and organizations that represent independent reviewers from, but not limited to, lists provided by health care insurers and by any state and county health and medical professional associations that wish to submit a list to the commissioner. The commissioner may consult with other persons about the suitability of any independent reviewer or any potential independent reviewer. The commissioner shall annually review the list and add and remove names as appropriate.

(b) An out-of-state physician or other health care professional who is licensed in another state and who is not licensed in this state in a field substantially similar to the laws of this state applicable to physicians or other health care professional who are licensed under articles three, four, eight, fourteen, sixteen and twenty-one, chapter thirty of this code, and who are certified or board eligible by an American medical specialty board may serve as independent reviewer and that provider's analysis, assessment or decision as an independent reviewer does not constitute the practice of medicine or any other health care profession in this state.

(c) The insured's health care carrier shall be solely responsible for paying the fees of the independent reviewer who was selected to perform the review.

(d) The commissioner or any independent reviewer acting in good faith is not liable for the analysis, assessment or decision of any case reviewed pursuant to this article.

(e) The commissioner's decision to add any name to or remove any name from the list of independent reviewers pursuant to subsection (a) is not subject to administrative appeal or judicial review.
§33-43-7. Commissioner authorized to propose rules.

The commissioner is authorized to propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code, to implement the provisions of this article.
§33-43-8. Commissioner not to adjudicate individual controversies.

Except as specifically provided in this article the commissioner shall have no jurisdiction to adjudicate individual controversies arising out of this article.
§33-43-9. Report to Legislature.

The commissioner shall provide a report to the Legislature, addressed to the legislative librarian, by the tenth day of January each year, reporting the number of requests for external independent review received by the commissioner from insureds and carriers in the previous year. The report shall include the number of requests involving questions of coverage or medical necessity, and shall specify the number of requests referred for independent review and the results of those referrals.

NOTE: The purpose of this bill is to provide minimum fair business standards for claim settlement practices relating to the processing and payment of claims to health care providers by health, sickness or injury insurance carriers; health maintenance organizations; health plans and provider panels. The bill also provides for the Commissioner of Insurance to administer an independent review of denied requests for authorization for a covered service or for payment of claim for a covered service.

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