RS C.S.S.B. 383 75(R) BILL ANALYSIS INSURANCE C.S.S.B. 383 By: Cain (Smithee) 4-30-97 Committee Report (Substituted) BACKGROUND Currently, in Texas, insurers which sponsor preferred provider plans are regulated under Chapter 3 of the Insurance Code. However, the code does not provide adequate quality of care standards and consumer protections for these plans. This bill will provide for the regulation of preferred provider benefit plans offered by health insurance providers. PURPOSE As proposed C.S.S.B. 383 provides regulations for preferred provider benefit plans offered by health insurance plans. RULEMAKING AUTHORITY Rulemaking authority is granted to the commissioner of insurance in SECTION 1 (Article 3.703C(Sec. 3(k)), Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter G, Chapter 3, Insurance Code, by adding Article 3.70-3C, as follows: ARTICLE 3.70-3C. PREFERRED PROVIDER BENEFIT PLANS Sec. 1. DEFINITIONS. Defines "emergency care," "health care provider" or "provider," "health insurance policy," "hospital," "institutional provider," "insurer," "life threatening," "physician," "practitioner," "preferred provider," "prospective insured," "quality assessment," and "service area." Sec. 2. APPLICATION. Provides that this article applies to any preferred provider benefit plan in which an insurer provides, through its health insurance policy, for the payment of a level of coverage which is different from the basic level of coverage provided by the health insurance policy if the insured uses a preferred provider. Provides that this article does not apply to provisions for dental care benefits in any health insurance policy. Sec. 3. CONTRACTING REQUIREMENTS. (a) If a health insurance policy meets the requirements of this section, then the benefits that are different from the basic level of coverage is not unjust by Art. 3.42, Insurance Code, nor is it considered unfair discrimination, or a violation under this code. (b)A physician, practitioner, institutional provider or health care provider who is licensed to treat illnesses or injuries or to provide services that comply with the terms and conditions established for designation as a preferred provider may apply for and shall be given fair opportunity to be a preferred provider. (c) If an insurer withholds designation as a preferred provider, the insurer shall provide a reasonable review mechanism. A review panel shall be provided on request of the physician. If it makes a determination to the contrary of the review panel, the insurer will provide a written explanation of its determination. (d) The review panel will be composed of at least three individuals selected from a list of physicians contracting with the insurer. At least one member of the panel will be of the same specialty as the affected physician, if available. (e) The insurer shall provide a physician denied designation as a preferred provider written reasons for the denial. This does not prevent an insurer from rejecting the application of a physician based on the reason that the plan has enough qualified providers. (f) An insurer when sponsoring a preferred provider benefit plan in a geographic area shall notify local physicians and practitioners of its intent to introduce the plan and the opportunity to participate in the plan. The insurer shall provide this notice annually to doctors in the area so that they may have opportunity to apply. (g) An insurer that markets a preferred provider plan must contract with physicians and providers to ensure that all services and items contained in the package will be provided in a manner that ensures availability and accessability of care and facilities. (h) Each insured shall have the right to treatment and diagnostic techniques as described by a provider or physician that are included in the preferred provider benefit plan. (i) Each contract between an insurer and a physician or physicians group must provide for a mechanism for resolution of complaints initiated by an insured, physician, or physicians group. The contracts must provide for reasonable due process, and must provide for a review panel as in subsection (d). (j) Prior to terminating a contract with a physician, the insurer shall provide written reasons for the termination. The insurer will also provide for a review mechanism, if requested, within 60 days. (k) A recommendation of the review panel shall be provided to the affected physician. If the decision is contrary to the insurers decision, then the insurer shall provide written explanation for its determination. On request, an expedited review shall be made available. The review shall comply with rules established by the commissioner. (l) An insurer that relies on an economic profile when making determinations to admit or terminate physicians shall provide the economic profile, including written criteria, upon request of the physician or provider. (m) An insurer may not engage in quality assessment except through a panel of at least three physicians from a list of physicians contracting with the insurer. Physicians who contract in an applicable service area shall provide the insurer with the list. (n) A preferred provider contract may not require any health care provider, physician, or physicians group to execute hold-harmless clauses in order to shift liability. (o) A preferred provider contract must include a provision by which the physician or provider agrees that if the preferred provider is compensated on a discount fee basis, then the insured may be billed on a discount fee only. (p) An insurer may enter into an agreement with a preferred provider organization for the purposes of offering a network of preferred providers. If an insurer enters into an agreement with a preferred provider, it is the responsibility of the insurer to meet the requirement of this article, or to insure that those requirements are met. (q) An insurer shall comply with Article 21.55, Insurance Code, with respect to prompt payments of insureds. A preferred provider contract must include a provision for payment for covered services that are rendered not later than 45 days after the claim is filed, or within 60 days as specified by written agreement. Defines "covered services." (r) Defines "termination." Sec. 4. CONTINUITY OF CARE. (a)Requires the insurer to establish reasonable procedures for assuring a transition of insureds to physicians or health care providers and for continuity of treatment. Requires the insurers to provide, subject to Section 6(e) - (g) of this article, reasonable advance notice to the insured of the impending termination from the plan of a physician or health care provider who is currently treating the insured. Requires insurers, in the event of termination of a preferred provider's participation in the plan, to make available to the insured a current listing of preferred providers. (b)Sets forth contract requirements to ensure continuing treatment of the insured if a preferred provider's participation in the plan is terminated. (c)Defines "special circumstances." (d)Requires contracts between an insurer, physicians, and health care providers to include procedures for resolving disputes regarding the necessity for continued treatment by a physician or provider. (e)Provides that this section does not extend the obligation of the insurer to reimburse, at the preferred provider level of coverage, the terminated physician or health care provider or, if applicable, the insured for ongoing treatment of an insured after the 91st day after the effective date of the termination. Provides that, however, the obligation of the insurer to reimburse, the preferred provider level of coverage, the terminated physician or health care provider, or, if applicable, the insured who at the time of the termination is past the 24th week of pregnancy, extends through delivery of the child, immediate post-partum care, and the follow up checkup within the first six weeks of delivery; or is being treated for a life-threatening illness or condition extends through the completion of the treatment if the physician or health care provider agrees to the provisions. Sec. 5. EMERGENCY CARE PROVISIONS. Requires an insurer, if the insured cannot reasonably reach a preferred provider, to provide reimbursement for certain emergency care services at the preferred level of benefits until the insured can reasonably be expected to transfer to a preferred provider. Sec. 6. MANDATORY DISCLOSURE REQUIREMENTS. (a)Requires all health insurance policies, health benefit plan certificates, endorsements, amendments, applications, or riders to be written in plain language, be in a readable and understandable format, and comply with all applicable requirements relating to minimum readability requirements. (b) Requires the insurer, upon request, to provide to a current or prospective group contract holder or current or prospective insured on request an accurate written description of the terms and conditions of the policy to allow the current or prospective group contract holder or current or prospective insured to make comparisons and informed decision before selecting among health care plans. Sets forth requirements for the written description. (c) Requires a current list of preferred providers to be provided to all insureds no less than annually. (d) Prohibits any insurer, or agent or representative of an insurer, from causing or permitting the use or distribution of prospective insured information which is untrue or misleading. (e)Permits an insurer, if a physician or practitioner is terminated for reasons other than at the preferred provider's request, to give reasonable advance notice to an insured of the impending termination from the plan of a physician or provider who is currently treating the insured, provided the insurer has complied with the requirements of Sec. 3(j) of this article. (f)Requires a physician or provider, if the physician or provider voluntarily terminates the physician's or provider's relationship with an insurer, to provide reasonable notice to enrollees under the physician's or provider's care. Requires the insurer to provide assistance to the physician or provider in assuring that the notice requirements of this subdivision are met. (g)Authorizes an insurer, if a physician or practitioner is terminated for reasons related to imminent harm, to notify the enrollees immediately. Sec. 7. PROHIBITED PRACTICES. (a)Prohibits an insurer from engaging in any retaliatory action against an insured, including cancellation of or refusal to renew a policy, because the insured, or a person acting on behalf of the insured, has filed a complaint against the insurer or against a preferred provider or has appealed a decision of the insurer. (b) Prohibits an insurer from engaging in any retaliatory action against a physician or health care provider, including termination of or refusal to renew a contract, because the physician or provider has, on behalf of an insured, reasonably filed a complaint against the insurer or has appealed a decision of the insurer. (c) Prohibits an insurer, as a condition of a contract with a physician or health care provider or in any other manner, from prohibiting, attempting to prohibit, or discouraging a physician or provider from discussing with or communicating certain information or opinions. (d) Prohibits an insurer from penalizing, terminating or refusing to compensate for covered services a physician or provider for discussing or communicating with a current, prospective, or former patient, or a party designated by a patient, pursuant to this section. (e)Prohibits an insurer from requiring as a condition for coverage or for any other reason: the observation of a psychotherapy session, that a practitioner's process or progress notes be submitted to the insurer for review, deny benefits for psychotherapy on the grounds that the patient refuses medication based on the patient's religious beliefs or for a period beyond the contract limits related to outpatient visits. Sec. 8. AVAILABILITY OF PREFERRED PROVIDERS. (a)Requires any insurer offering a preferred provider benefit plan to ensure that both preferred provider benefits and basic level benefits are reasonably available to all insureds within a designated service area. (b)Requires, if services are not available through preferred providers within the service area, nonpreferred providers to be reimbursed at the same percentage level of reimbursement as the preferred providers would have been reimbursed had the insured been treated by them. Provides that this subsection does not require reimbursement at a preferred level or coverage solely because an insured resides out of the service area and chooses to receive services from providers other than preferred providers for the insured's own convenience. Sec. 9. RULEMAKING AUTHORITY. Requires the commissioner to adopt rules as necessary to implement the provisions of this article including rules prohibiting the use of financial incentives or payments to a physician or provider that act directly or indirectly as an inducement to limit medically necessary services and standards to ensure reasonable accessibility and availability of preferred provider and basic level benefits to Texas citizens. SECTION 2. Makes application of this Act prospective. SECTION 3. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE Amends SECTION 1, Section 1, Article 3.70-3C, Insurance Code, to reorder the definitions of "Health care provider" or "provider" and "Health insurance policy" alphabetically, and to redefine "practitioner." Practitioner is redefined to include occupational therapist, physical therapist, or advanced practice nurse. Makes additional nonsubstantive changes. Makes nonsubstantive changes to SECTION 1, Section 2, Article 3.70-3C, Insurance Code. Amends SECTION 1, Section 3, Article 3.70-3C, Insurance Code, to require a reasonable review mechanism upon denial of a preferred provider designation to physicians only. Deletes the requirement for such review mechanism for practitioners. Redefines the panel to be composed of at least three physicians contracting with the insurer, and deletes the references to practitioners. Deletes the requirement that provider contracts with practitioners must contain a mechanism for the resolution of complaints, including any review panel requirements. Deletes the requirement that written reasons for termination be given prior to termination of any preferred provider, and instead requires such notice only for physicians. Requires an insurer to make available a reasonable review mechanism, upon request, to a physician upon termination of the contract with a physician, but within a period not to exceed 60 days. Deletes the requirements for such a review mechanism for practitioners. Amends to add a requirement that an insurer comply with Article 21.55, Insurance Code, with respect to prompt payment of insureds. Adds a requirement that a preferred provider contract must contain a provision for payment to the physician or health care provider for covered services that are rendered to insureds under the contract not later than the 45th day after the date on which a claim for payment is received with the documentation necessary to process the claim, or the period specified by written agreement between the physician or health care provider and the insurer, but not to exceed 60 days. Adds definitions of "covered services" and "termination" for the purposes of this section. Makes additional nonsubstantive changes. Amends SECTION 1, Section 4, Article 3.70-3C, Insurance Code, to require insurers to provide such advance notice, subject to Sections 6(e) through (g). Amends to require an insurer to continue to reimburse a terminated physician or health care provider at the level of preferred provider coverage for a certain period, if at the time of termination the insured is being treated for a life-threatening illness or condition through the completion of the treatment if the physician or health care provider agrees to the provisions. Makes additional nonsubstantive changes. Makes nonsubstantive changes to SECTION 1, Section 5, Article 3.70-3C, Insurance Code. Amends SECTION 1, Section 6, Article 3.70-3C, Insurance Code, to permit the insurer to provide reasonable advance notice to an insured of the impending termination from the plan of a physician or provider who is currently treating the insured, provided the insurer has complied with the requirements adopted under Section 3(j). Makes additional nonsubstantive changes. Amends SECTION 1, Section 7, Article 3.70-3C, Insurance Code, to delete the prohibition related to the use of financial incentives or payments to a physician or provider that act directly or indirectly as an inducement to limit medically necessary care. Prohibits an insurer from requiring as a condition of coverage or for any other reason: the observation of a psychotherapy session, or that a practitioner's process or progress notes be submitted to an insurer for review, or deny benefits for psychotherapy on the grounds that the patient refuses medication: based on the patient's religious beliefs or for a period beyond the contract limits related to outpatient visits. Makes additional nonsubstantive changes. Makes nonsubstantive changes to SECTION 1, Section 8, Article 3.70-3C, Insurance Code. Amends SECTION 1, Section 9, Article 3.70-3C, Insurance Code, to include specific rulemaking authority of the commissioner related to prohibiting the use of financial incentives or payments to a physician or provider that act directly or indirectly as an inducement to limit medically necessary services.