hb2486 sub

COMMITTEE SUBSTITUTE
FOR
H. B. 2486

(By Mr. Speaker, Mr. Kiss, and Delegates Angotti,
Amores, Beane, Cann and R. M. Thompson)

(Originating in the Committee on the Judiciary)

[April 2, 2001]

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, all relating to establishing claim settlement practices for insurers providing certain health insurance coverages; defining terms; establishing procedures and criteria for payment of claims by insurers; providing procedures to review and appeal claims; requiring interest paid for failure to pay certain claims; requiring certain information be provided to insurer and providers to verify claims; providing timely payment of certain claims; requiring notice of failure to pay claim; providing procedures for retroactive approval and denial of claims; establishing requirements for payment of certain providers; providing for insurer payment of provider legal costs upon failure to comply with this article; prohibiting penalizing a provider who invokes the rights under this article; authorizing legislative rulemaking authority to the insurance commissioner; and providing that the insurance commissioner may not adjudicate claims made pursuant to this article.

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, all to read as follows:

ARTICLE 43. ETHICS AND FAIRNESS IN INSURER BUSINESS PRACTICES.

§33-43-1. Definitions.

As used in this article:

(1) "Claim" means any bill, claim or proof of loss made by or on behalf of an enrollee or a provider to an insurer, 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.

(2) "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 an insurer has failed timely to notify the person submitting the claim of any such defect or impropriety in accordance with section two of this article.

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

(4) "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.

(5) "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, health maintenance organizations 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 an insurer authorized under that article 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. 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., or 10 U.S.C. §1071 et seq. (CHAMPUS); article sixteen, chapter five of this code; or (ii) accident only, credit or disability insurance, long-term care insurance, CHAMPUS supplement, Medicare supplement, or workers' compensation coverages.

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

(7) "Insurer" means any person required to be licensed under this chapter which offers or administers as a third party administrator 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 as defined in this section, networks or provider panels which are subject to regulation as the business of insurance under this chapter: Provided, That "insurer" 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;

(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;

(F) Property and Casualty insurance; and

(G) Motor vehicle insurance.

(8) "Provider contract" means any contract between a provider and an insurer, or an insurer'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 an insurer 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 an insurer on or after the first day of July, two thousand one, shall contain specific provisions which shall require the insurer to adhere to and comply with the following minimum fair business standards in the processing and payment of claims for health care services:

(1) An insurer shall pay any claim within forty days of receipt of the claim except where the obligation of the insurer 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 insurer 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 insurer 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;

(B) The claim was submitted fraudulently; or

(2) Each insurer 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 an insurer 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) An insurer 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 insurer reasonably believes will be required to process and pay the claim or to determine if the claim is a clean claim. The insurer 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 insurer reasonably believes will be required to process and pay the claim or to determine if the claim is a clean claim, an insurer shall make the payment of the claim in compliance with this section. No insurer may refuse to pay a claim for health care services rendered pursuant to a provider contract which are covered benefits if the insurer 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 an insurer 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 an insurer to pay a claim that is not a clean claim.

(4) Interest, at a rate of six percent per annum, accruing after the forty-day period provided in subdivision (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 insurer 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 insurer, whether the health care services to be provided are medically necessary and a covered benefit; and

(ii) to determine the insurer'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 insurer 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 insurer 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 insurer shall pay a clean claim if the insurer 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 insurer'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 insurer by the provider, enrollee, or other person not related to the insurer; or

(iv) the person receiving the health care services was not eligible to receive them on the date of service and the insurer 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
insurer shall notify a provider at least thirty days in advance of any retroactive denial of a claim. A provider to whom a previously paid claim has been denied by a health benefit plan in accordance with subsection (a) of this section shall, upon receipt of notice of retroactive denial by the plan, reimburse the health benefit plan for such payment within thirty calendar days of receipt of the notice. No insurer 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 or has a material misrepresentation. No insurer may impose any retroactive denial of a previously paid claim for services which were preauthorized unless the insurer 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 insurer may impose any retroactive denial of a previously paid claim for services which were not preauthorized unless the insurer has provided the reason for the retroactive denial and:

(i) The original claim was submitted fraudulently;

(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 insurer 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 insurer 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 insurer'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 insurer may instead comply with this section by providing a clear, written explanation of the policy as it applies to the provider.

(11) The insurer 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 insurer 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 insurer, 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 insurer 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 an insurer 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 insurer 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 insurer 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 insurer's compliance is rendered impossible due to matters beyond the insurer's reasonable control, such as an act of God, insurrection, strike, fire, or power outages, which are not caused in material part by the insurer.
§33-43-3. Damages, attorney fees and costs available to providers upon insurer's violation of article or breach of contract provisions.

Any provider who suffers loss as the result of an insurer's violation of any provision of this article or an insurer'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 an insurer'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 insurer 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 article or under the provider contract.
§33-43-5. 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.
§33-43-6. 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.