By: Duncan S.B. No. 1813
97S0739/1
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the creation of a system of independent review for
1-2 adverse medical determinations concerning insurance coverage.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter 1, Insurance Code, is amended by adding
1-5 Article 1.35E to read as follows:
1-6 Art. 1.35E. STANDARDS FOR INDEPENDENT REVIEW ORGANIZATIONS
1-7 (a) The commissioner shall:
1-8 (1) promulgate standards for the selection of
1-9 independent review organizations to perform the reviews described
1-10 in Section 6(c), Article 21.58A of this code;
1-11 (2) designate annually each organization that meets
1-12 the standards as an independent review organization; and
1-13 (3) assure that a sufficient number of such
1-14 organizations are so designated to permit the expeditious review of
1-15 all adverse determinations and to provide a reasonable choice for
1-16 entities that are required to contract with the organizations for
1-17 the review of the determinations.
1-18 (b) The standards required by Subsection (a)(1) of this
1-19 article shall be designed to assure:
1-20 (1) the independence of the organizations designated
1-21 under this article;
1-22 (2) the confidentiality of medical records transmitted
1-23 to such organizations for use in such reviews;
2-1 (3) the qualifications and independence of the health
2-2 care professionals making review determinations for the
2-3 organizations; and
2-4 (4) the fairness of the procedures of the
2-5 organizations for making the determinations.
2-6 (c) In order to be designated as an independent review
2-7 organization under this article, an organization shall submit to
2-8 the commissioner, on initial application and annually thereafter
2-9 and on any change occurring after the latest submission under this
2-10 subsection, the following information:
2-11 (1) in the case of a publicly held organization, the
2-12 names of all stockholders and owners of more than five percent of
2-13 any stock or options;
2-14 (2) the names of all holders of bonds or notes
2-15 exceeding $100,000;
2-16 (3) the names and type of business of all corporations
2-17 and organizations that the organization controls or is affiliated
2-18 with and the nature and extent of any ownership or control;
2-19 (4) the names and biographical sketches of all
2-20 directors, officers, and executives of the organization and a
2-21 description of any relationships such individuals may have with any
2-22 health benefit plan, health maintenance organization, insurer,
2-23 utilization review agent, nonprofit health corporation, payor,
2-24 health care provider, or group representing any such entities;
2-25 (5) the percentage of the organization's revenues that
3-1 is derived from the reviews; and
3-2 (6) a description of the areas of expertise of the
3-3 health care professionals making review determinations for the
3-4 organization.
3-5 (d) An independent review organization may not be a
3-6 subsidiary of, nor in any way be owned or controlled by, a payor, a
3-7 trade association of payors or providers, or a professional
3-8 association of physicians or other health professionals.
3-9 SECTION 2. Section 6, Article 21.58A, Insurance Code, is
3-10 amended to read as follows:
3-11 Sec. 6. APPEAL OF ADVERSE DETERMINATIONS OF UTILIZATION
3-12 REVIEW AGENTS. (a) A utilization review agent shall maintain and
3-13 make available a written description of procedures for appealing
3-14 adverse determinations [an appeal procedure of an adverse
3-15 determination].
3-16 (b) The procedures for appeals shall be reasonable and shall
3-17 include the following:
3-18 (1) a provision that an enrollee, a person acting on
3-19 behalf of the enrollee, or the enrollee's physician or health care
3-20 provider may appeal the adverse determination and shall be
3-21 provided, on request, a clear and concise statement of the clinical
3-22 basis for the adverse determination;
3-23 (2) a provision that, within five working days from
3-24 receipt of the appeal, the utilization review agent shall send the
3-25 appealing party a letter acknowledging the date of receipt of the
4-1 appeal and include a list of documents needed to be submitted by
4-2 the appealing party to the utilization review agent for the appeal;
4-3 (3) a provision that appeal decisions shall be made by
4-4 a physician, provided that, if the appeal is denied and within 10
4-5 working days the health care provider sets forth in writing good
4-6 cause for having a particular type of a specialty provider review
4-7 the case, the denial shall be reviewed by a health care provider in
4-8 the same or similar specialty as typically manages the medical
4-9 condition, procedure, or treatment under discussion for review of
4-10 the adverse determination;
4-11 (4) in addition to the written appeal, a method for an
4-12 expedited appeal procedure for emergency care denials and denials
4-13 of continued stays for hospitalized patients, which shall include a
4-14 health care provider who has not previously reviewed the case; such
4-15 appeal must be completed no later than one working day following
4-16 the day on which the appeal, including all information necessary to
4-17 complete the appeal, is made to the utilization review agent; and
4-18 (5) written notification to the appealing party of the
4-19 determination of the appeal, as soon as practical, but in no case
4-20 later than 30 days after receiving all the required documentation
4-21 of the appeal. If the appeal is denied, the written notification
4-22 shall include a clear and concise statement of the clinical basis
4-23 for the appeal's denial, [and] the specialty of the physician
4-24 making the denial, and notice of the appealing party's right to
4-25 seek review of such denial by an independent review organization
5-1 and procedures for seeking review.
5-2 (c) A utilization review agent shall:
5-3 (1) contract with one or more independent review
5-4 organizations designated in accordance with Article 1.35E of this
5-5 code to review the agent's denials of appeals of adverse
5-6 determinations;
5-7 (2) permit any party whose appeal of an adverse
5-8 determination is denied by the agent to seek review of such
5-9 determination by an independent review organization if the amount
5-10 in controversy is $500 or more, the party has exhausted all
5-11 remedies available from the agent, and the enrollee's treating
5-12 physician certifies that the items and services for which review is
5-13 sought are medically necessary and an appropriate treatment option;
5-14 (3) provide to the appropriate independent review
5-15 organization within five working days of the agent's receipt of a
5-16 request for review:
5-17 (A) a copy of any medical records of the
5-18 enrollee that are relevant to such review;
5-19 (B) a copy of any documents used by the plan in
5-20 making the determination to be reviewed by the organization;
5-21 (C) a copy of the statement referred to in
5-22 Subsection (b)(5) of this section; and
5-23 (D) a copy of any documentation and written
5-24 information submitted to the plan in support of the appeal;
5-25 (4) include in the contract a requirement that the
6-1 organization will make a determination to affirm or reverse the
6-2 denial:
6-3 (A) within 30 days of receipt by the
6-4 organization of all information necessary to make the
6-5 determination; or
6-6 (B) in the case of denials of appeals for urgent
6-7 and emergency care and continued stays for hospitalized patients,
6-8 within a period of time that is appropriate under the
6-9 circumstances;
6-10 (5) comply with any determination of the organization
6-11 with respect to the medical necessity or appropriateness of health
6-12 care items and services for an enrollee consistent with the scope
6-13 of benefits under the policy or plan of the enrollee as specified
6-14 in the applicable evidence of coverage contract; and
6-15 (6) be responsible for the cost of the independent
6-16 review.
6-17 (d) A utilization review agent whose adverse determination
6-18 is reviewed by an independent review organization under Subsection
6-19 (c) of this section shall be held harmless for that determination
6-20 and shall not be liable for any cause of action arising from that
6-21 determination or from the determination of the independent review
6-22 organization.
6-23 SECTION 3. Section 2, Texas Health Maintenance Organization
6-24 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended to
6-25 read as follows:
7-1 Sec. 2. DEFINITIONS. For the purposes of this Act:
7-2 (a) "Adverse determination" means a determination by a health
7-3 maintenance organization that the health care services furnished or
7-4 proposed to be furnished to a patient are not medically necessary
7-5 or not appropriate in the allocation of health care resources.
7-6 (b) "Basic health care services" means health care services
7-7 which an enrolled population might reasonably require in order to
7-8 be maintained in good health, including, as a minimum, emergency
7-9 care, inpatient hospital and medical services, and outpatient
7-10 medical services.
7-11 (c) [(b)] "Board" means the Texas Board of Health.
7-12 (d) [(c)] "Commissioner" means the commissioner of
7-13 insurance.
7-14 (e) [(d)] "Enrollee" means an individual who is enrolled in
7-15 a health care plan, including covered dependents.
7-16 (f) [(e)] "Evidence of coverage" means any certificate,
7-17 agreement, or contract issued to an enrollee setting out the
7-18 coverage to which the enrollee is entitled.
7-19 (g) [(f)] "Group hospital service corporation" means a
7-20 nonprofit corporation organized and operating under Chapter 20 of
7-21 the Insurance Code.
7-22 (h) [(g)] "Health care" means prevention, maintenance,
7-23 rehabilitation, pharmaceutical, and chiropractic services provided
7-24 by qualified persons other than medical care.
7-25 (i) [(h)] "Health care plan" means any plan whereby any
8-1 person undertakes to provide, arrange for, pay for, or reimburse
8-2 any part of the cost of any health care services; provided,
8-3 however, a part of such plan consists of arranging for or the
8-4 provision of health care services, as distinguished from
8-5 indemnification against the cost of such service, on a prepaid
8-6 basis through insurance or otherwise.
8-7 (j) [(i)] "Health care services" means any services,
8-8 including the furnishing to any individual of pharmaceutical
8-9 services, medical, chiropractic, or dental care, or hospitalization
8-10 or incident to the furnishing of such services, care, or
8-11 hospitalization, as well as the furnishing to any person of any and
8-12 all other services for the purpose of preventing, alleviating,
8-13 curing, or healing human illness or injury or a single health care
8-14 service plan.
8-15 (k) [(j)] "Health maintenance organization" means any person
8-16 who arranges for or provides a health care plan or a single health
8-17 care service plan to enrollees on a prepaid basis.
8-18 (l) [(k)] "Medical care" means furnishing those services
8-19 defined as practicing medicine under Section 1.03(8), Medical
8-20 Practice Act (Article 4495b, Vernon's Texas Civil Statutes).
8-21 (m) [(l)] "Person" means any natural or artificial person,
8-22 including, but not limited to, individuals, partnerships,
8-23 associations, organizations, trusts, hospital districts, limited
8-24 liability companies, limited liability partnerships, or
8-25 corporations.
9-1 (n) [(m)] "Physician" means:
9-2 (1) an individual licensed to practice medicine in
9-3 this state;
9-4 (2) a professional association organized under the
9-5 Texas Professional Association Act (Article 1528f, Vernon's Texas
9-6 Civil Statutes) or a nonprofit health corporation certified under
9-7 Section 5.01, Medical Practice Act (Article 4495b, Vernon's Texas
9-8 Civil Statutes); or
9-9 (3) another person wholly owned by physicians.
9-10 (o) [(n)] "Provider" means:
9-11 (1) any person other than a physician, including a
9-12 licensed doctor of chiropractic, registered nurse, pharmacist,
9-13 optometrist, pharmacy, hospital, or other institution or
9-14 organization or person that is licensed or otherwise authorized to
9-15 provide a health care service in this state;
9-16 (2) a person who is wholly owned or controlled by a
9-17 provider or by a group of providers who are licensed to provide the
9-18 same health care service; or
9-19 (3) a person who is wholly owned or controlled by one
9-20 or more hospitals and physicians, including a physician-hospital
9-21 organization.
9-22 (p) [(o)] "Sponsoring organization" means a person who
9-23 guarantees the uncovered expenses of the health maintenance
9-24 organization and who is financially capable, as determined by the
9-25 commissioner, of meeting the obligations resulting from those
10-1 guarantees.
10-2 (q) [(p)] "Uncovered expenses" means the estimated
10-3 administrative expenses and the estimated cost of health care
10-4 services that are not guaranteed, insured, or assumed by a person
10-5 other than the health maintenance organization. Health care
10-6 services may be considered covered if the physician or provider
10-7 agrees in writing that enrollees shall in no way be liable,
10-8 assessable, or in any way subject to payment for services except as
10-9 described in the evidence of coverage issued to the enrollee under
10-10 Section 9 of this Act. The amount due on loans in the next
10-11 calendar year will be considered uncovered expenses unless
10-12 specifically subordinated to uncovered medical and health care
10-13 expenses or unless guaranteed by the sponsoring organization.
10-14 (r) [(q)] "Uncovered liabilities" means obligations
10-15 resulting from unpaid uncovered expenses, the outstanding
10-16 indebtedness of loans that are not specifically subordinated to
10-17 uncovered medical and health care expenses or guaranteed by the
10-18 sponsoring organization, and all other monetary obligations that
10-19 are not similarly subordinated or guaranteed.
10-20 (s) [(r)] "Single health care service" means a health care
10-21 service that an enrolled population may reasonably require in order
10-22 to be maintained in good health with respect to a particular health
10-23 care need for the purpose of preventing, alleviating, curing, or
10-24 healing human illness or injury of a single specified nature and
10-25 that is to be provided by one or more persons each of whom is
11-1 licensed by the state to provide that specific health care service.
11-2 (t) [(s)] "Single health care service plan" means a plan
11-3 under which any person undertakes to provide, arrange for, pay for,
11-4 or reimburse any part of the cost of a single health care service,
11-5 provided, that a part of the plan consists of arranging for or the
11-6 provision of the single health care service, as distinguished from
11-7 an indemnification against the cost of that service, on a prepaid
11-8 basis through insurance or otherwise and that no part of that plan
11-9 consists of arranging for the provision of more than one health
11-10 care need of a single specified nature.
11-11 (u) [(t)] "Emergency care" means bona fide emergency
11-12 services provided after the sudden onset of a medical condition
11-13 manifesting itself by acute symptoms of sufficient severity,
11-14 including severe pain, such that the absence of immediate medical
11-15 attention could reasonably be expected to result in:
11-16 (1) placing the patient's health in serious jeopardy;
11-17 (2) serious impairment to bodily functions; or
11-18 (3) serious dysfunction of any bodily organ or part.
11-19 (v) [(u)] "Health maintenance organization delivery network"
11-20 means a health care delivery system in which a health maintenance
11-21 organization arranges for health care services directly or
11-22 indirectly through contracts and subcontracts with providers and
11-23 physicians.
11-24 SECTION 4. Subdivision (3), Subsection (a), Section 9, Texas
11-25 Health Maintenance Organization Act (Article 20A.09, Vernon's Texas
12-1 Insurance Code), is amended to read as follows:
12-2 (3) An evidence of coverage shall contain:
12-3 (A) no provisions or statements which are
12-4 unjust, unfair, inequitable, misleading, deceptive, which encourage
12-5 misrepresentation, or which are untrue, misleading, or deceptive as
12-6 defined in Section 14 of this Act; and
12-7 (B) a clear and complete statement, if a
12-8 contract, or a reasonably complete facsimile, if a certificate, of:
12-9 (i) the medical, health care services, or
12-10 single health care service and the issuance of other benefits, if
12-11 any, to which the enrollee is entitled under the health care plan
12-12 or single health care service plan;
12-13 (ii) any limitation on the services, kinds
12-14 of services, benefits, or kinds of benefits to be provided,
12-15 including any deductible or co-payment feature;
12-16 (iii) where and in what manner information
12-17 is available as to how services may be obtained; and
12-18 (iv) a clear and understandable
12-19 description of the health maintenance organization's methods for
12-20 resolving enrollee complaints, including the enrollee's right to
12-21 appeal denials of adverse determinations to an independent review
12-22 organization and the process for making an appeal. Any subsequent
12-23 changes may be evidenced in a separate document issued to the
12-24 enrollee.
12-25 SECTION 5. Section 12, Texas Health Maintenance Organization
13-1 Act (Article 20A.12, Vernon's Texas Insurance Code), is amended by
13-2 amending Subsection (b) and adding Subsection (c) to read as
13-3 follows:
13-4 (b) The commissioner [or board] may examine such complaint
13-5 system.
13-6 (c) The system required by Subsection (a) of this section
13-7 shall include procedures for appealing an adverse determination and
13-8 for seeking independent review of a denial of an appeal. The
13-9 provisions of Section 6, Article 21.58A, Insurance Code, relating
13-10 to independent review shall apply to a health maintenance
13-11 organization under this article in the same manner and to the same
13-12 extent as they apply to a utilization review agent under that
13-13 section, except that Section 6(d) of Article 21.58A of the
13-14 Insurance Code shall apply to an enrollee's treating physician and
13-15 the health maintenance organization.
13-16 SECTION 6. This Act takes effect on January 1, 1998, and
13-17 applies to adverse determinations occurring on or after such date.
13-18 An adverse determination occurring before the effective date of
13-19 this Act is governed by the law as it existed immediately before
13-20 the effective date of this Act, and that law is continued in effect
13-21 for that purpose.
13-22 SECTION 7. The importance of this legislation and the
13-23 crowded condition of the calendars in both houses create an
13-24 emergency and an imperative public necessity that the
13-25 constitutional rule requiring bills to be read on three several
14-1 days in each house be suspended, and this rule is hereby suspended.