Bill Text: PA HB1538 | 2009-2010 | Regular Session | Introduced

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Bill Title: Relating to health care provider contracts with health insurers, and health insurer utilization review of diagnostic studies.

Spectrum: Moderate Partisan Bill (Democrat 10-3)

Status: (Introduced - Dead) 2009-05-26 - Referred to INSURANCE [HB1538 Detail]

Download: Pennsylvania-2009-HB1538-Introduced.html

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PRINTER'S NO. 1904
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1538 Session of2009
INTRODUCED BY LENTZ, DePASQUALE, BELFANTI, CALTAGIRONE, CREIGHTON, FRANKEL, GIBBONS, HORNAMAN, JOSEPHS, McILVAINE SMITH, MURT, J. TAYLOR AND YOUNGBLOOD, MAY 26, 2009
REFERRED TO COMMITTEE ON INSURANCE, MAY 26, 2009
AN ACT
Relating to health care provider contracts with health insurers,
and health insurer utilization review of diagnostic studies.
TABLE OF CONTENTS
Section 1. Short title.
Section 2. Declaration of policy.
Section 3. Definitions.
Section 4. Contract standards.
Section 5. Determination of eligibility and covered services.
Section 6. Mandated disclosure of contract information.
Section 7. Mandated reimbursement disclosures and requirements.
Section 8. Mandated disclosure of administrative policies and
procedures.
Section 9. Restrictions on all products clauses and open
practice requirements.
Section 10. Prohibition on silent preferred provider
organizations.
Section 11. Standardization of CPT coding nomenclature.
Section 12. Fair valuation of physician services.
Section 13. Utilization review of diagnostic studies.
Section 14. Dispute resolution.
Section 15. Health care provider claim submission.
Section 16. Miscellaneous.
Section 17. HIPAA compliance.
Section 18. Penalties.
Section 19. Severability.
Section 20. Rules and regulations.
Section 21. Repeals.
Section 22. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Fair Provider
Contracting Act.
Section 2. Declaration of policy.
The General Assembly finds and declares as follows:
(1) An equitable and understandable contracting
environment is essential to the financial stability of this
Commonwealth's managed care plans and health care providers
and ultimately to the well-being of patients and consumers.
(2) Changes in the last decade in this Commonwealth's
health care marketplace have resulted in a shifting balance
of power, leaving managed care plans with the leverage to
drive the contracting process.
(3) This act is intended to protect the health and
welfare of this Commonwealth's health care consumers by
ensuring that managed care plans enter into contracts with
physicians and other health care providers that are equitable
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and reasonable, provide both parties with clearly articulated
and well-defined terms and parameters and assure the long-
term financial viability of both the plans and providers.
(4) The General Assembly declares that this act is a
necessary and proper exercise of the authority of the
Commonwealth to protect the public health and to regulate the
business of insurance and the practice of medicine and other
health professions.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"CPT codes." Current Procedural Terminology codes
established by the American Medical Association or the Centers
for Medicare and Medicaid Services.
"Department." The Insurance Department of the Commonwealth.
"Fair market value." The most probable price at which a good
or service will exchange, expressed in terms of cash or
equivalent, in a free market assuming the following:
(1) knowledgeable and willing seller unencumbered by
undue pressure to sell and acting in his own best interest;
(2) knowledgeable and willing buyer unencumbered by
undue pressure to buy and acting in his own best interest;
and
(3) reasonable time for exposure in a free and open
market.
"Health care provider." A physician or other health care
professional who is licensed, certified or otherwise regulated
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by the Commonwealth to provide health care services to health
care consumers. The term may include physicians, podiatrists,
optometrists, psychologists, physical therapists, certified
nurse practitioners, registered nurses, nurse midwives,
physician assistants, chiropractors, dentists, pharmacists and
professionals who provide behavioral health services. The term
also includes:
(1) integrated delivery systems in the context of their
contractual relations with health insurers and network
administrators; and
(2) professional corporations, partnerships and other
entities that legally enter into provider contracts on behalf
of their health care professional shareholders, partners and
employees.
"Health care services." Services for the prevention,
diagnosis or treatment of a health condition, including the
professional and technical component of professional services,
supplies, drugs and biologicals, diagnostic X-ray, laboratory
and other tests, preventive screening services and tests, e.g.,
pap smears and mammograms, X-ray, radium and radioactive isotope
therapy, surgical dressings, devices for the reduction of
fractures, durable medical equipment, braces, trusses,
artificial limbs and eyes, dialysis services, home health
services and hospital, ambulatory surgery and other facility
services.
"Health condition." An illness, injury, disease or symptom
of an illness, injury or disease.
"Health insurer." An entity that contracts or offers to
contract to provide, deliver, arrange for, pay for or reimburse
any of the costs of health care services in exchange for a
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premium, including an entity licensed under any of the
following:
(1) The act of May 17, 1921 (P.L.682, No.284), known as
The Insurance Company Law of 1921, including section 630,
relating to preferred provider organizations, and Article
XXIV, relating to fraternal benefit societies.
(2) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(3) 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations).
(4) 40 Pa.C.S. Ch. 63 (relating to professional health
services plan corporations).
"Integrated delivery system" or "IDS." A partnership,
association, corporation or other legal entity that:
(1) Enters into a contractual arrangement with a health
insurer or network administrator.
(2) Employs or has contracts with its participating
providers.
(3) Agrees under its arrangements with the health
insurer or network administrator to provide or arrange for
the provision of a defined set of health care services to
enrollees principally through its participating providers.
(4) Assumes some responsibility for disease management
programs, quality assurance, utilization review,
credentialing, provider relations or related functions.
"Medically necessary." Health care services that a prudent
physician would provide to a patient for the purpose of
preventing, diagnosing or treating a health condition in a
manner that is in accordance with generally accepted standards
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of medical practice and clinically appropriate in terms of type,
frequency, extent, site and duration.
"Network administrator." An entity that provides a network
of participating health care providers to a health insurer. The
term includes an integrated delivery system in the context of a
contractual relationship between the integrated delivery system
and its participating health care providers.
"Participating provider." A health care provider who enters
into a provider contract with a health insurer or network
administrator.
"Provider contract." An agreement between a health care
provider and a health care insurer or network administrator that
sets forth the terms and conditions under which the provider is
to deliver health care services to enrollees. The term includes
all attachments and appendices to the contract and other
documents that are referred to in the agreement that may affect
the provider's ability to make an informed decision and may
prompt the provider to seek additional information or
clarification before entering into the contract. The term does
not include employment contracts.
Section 4. Contract standards.
All managed care plan contracts shall adhere to the following
minimum standards to facilitate review by and negotiation with
health care providers:
(1) All managed care plan contracts shall be in plain
English and readily understandable to the average reasonable
physician or other health care provider.
(2) All managed care plan contracts shall explicitly
define the managed care plan's responsibilities to the health
care provider, the provider's responsibilities to the plan
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and their joint responsibilities to managed care plan
enrollees.
(3) All managed care plan contracts or their cover
materials shall clearly and conspicuously disclose to the
health care provider the names, telephone numbers, fax
numbers and e-mail addresses of managed care plan officials
who can supply the materials necessary to answer any
questions in order to make an informed decision about whether
to enter into the contract.
(4) Managed care plans shall not include in any contract
an indemnification clause that commits a participating
provider to indemnify the plan in the event of any liability
claim. All managed care plan contracts shall clearly state
that each party is fully responsible and liable for its own
actions.
(5) Managed care plans shall not compel health care
providers to enter into exclusive contracts that preclude a
provider from entering into agreements with other entities.
(6) Managed care contracts shall not exceed one year in
duration. Managed care plan contracts may renew automatically
only if the managed care plan notifies the participating
provider of the pending renewal 60 days prior to the renewal
date. A contract may renew automatically under the same terms
and conditions if a health care provider does not respond to
the managed care plan's reminder notice within the 60-day
period.
Section 5. Determination of eligibility and covered services.
(a) General rule.--All managed care plan providers shall
quickly and efficiently determine an enrollee's eligibility for
coverage and reimbursement of health care services by the plan.
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(b) Eligibility information systems.--Managed care plan
providers shall provide information systems that allow
participating providers to determine an enrollee's eligibility
for services that include either a toll-free hotline or a secure
Internet website.
(c) Erroneous statement of eligibility.--If a managed care
plan provider erroneously informs a participating provider that
a person is enrolled and eligible for services when in fact the
person is not, the managed care plan provider shall reimburse
the provider for all covered services rendered up to the time
that the plan notifies the provider and nonenrolled person of
the error. A managed care plan provider shall not bear any
financial responsibility for services that the participating
provider renders to the nonenrolled person after the date of
notification. The health care provider may bill the former
nonenrolled person for these services.
Section 6. Mandated disclosure of contract information.
(a) General rule.--A health insurer shall supply copies of
every appendix, attachment or other document referred to in a
provider contract to allow the health care provider to make an
informed decision whether to enter into the contract. Health
insurers shall send these materials with proposed contracts to
health care providers. In the event any materials are missing or
a health care provider requests supplementary information,
health insurers shall supply the materials within seven business
days of the request.
(b) Appendices.--Health insurers shall include in provider
contracts appendices that define:
(1) The health insurer's responsibilities under the act
of May 17, 1921 (P.L.682, No.284), known as The Insurance
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Company Law of 1921.
(2) Key terms and phrases in the contract.
(3) The diagnostic and therapeutic services that the
health insurer commonly prior authorizes.
(4) The prescription drug formularies commonly used by
the health insurer or its pharmacy benefit manager.
Section 7. Mandated reimbursement disclosures and requirements.
A health insurer shall disclose in provider contracts the
following information about potential reimbursements:
(1) For health care providers that commonly participate
with and are paid by Medicare, a table that contains the ten
most commonly submitted evaluation and management current
procedural terminology codes, if applicable, and the ten most
commonly submitted nonevaluation and management CPT codes,
showing the applicable Pennsylvania area Medicare's
reimbursement for that year and the health insurer's actual
reimbursement for those codes under the provider's contract,
to facilitate a direct comparison.
(2) Upon request, a health insurer shall disclose to a
health care provider its range of payments for the 100 CPT
codes most commonly submitted in the health care provider's
designated specialty of practice.
Section 8. Mandated disclosure of administrative policies and
procedures.
Within ten days of execution of a provider contract with a
health care provider, a health insurer shall make available all
of its administrative policy and procedure manuals, including:
(1) Coverage policies and technology assessments of
specific diagnostic or therapeutic services, drugs or
biologics, devices or medical supplies or equipment.
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(2) Mechanisms for resolving administrative or clinical
disputes and opportunities for participating in plan
governance by participating providers.
(3) Health care provider peer review, quality assurance
and credentialing programs. Provider contracts shall describe
the plan's policies and procedures as they relate to the
plan's relationship with its health care providers. Health
insurers shall make available to any health care provider
considering a contract copies of procedure or policy manuals
typically made available to participating providers.
Section 9. Restrictions on all products clauses and open
practice requirements.
(a) General rule.--A health insurer shall not compel a
participating provider to participate in all of its lines of
business nor penalize a participating provider for not
participating in all lines of business.
(b) Separation.--A health insurer shall differentiate
between its lines of business in provider contracts and give
participating providers the opportunity to affirmatively choose
or defer participation in any particular line without penalty.
(c) Identification.--Lines of business differ if the
contracting provider's rights and responsibilities are
materially different or if there is any other difference in the
features that would be material to the contracting provider when
determining whether to participate in the lines of business on a
line-by-line basis.
(d) Required.--The following also shall be considered a
separate line of business:
(1) The provision of insurance or a network for workers'
compensation medical benefits.
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(2) The provision of insurance or a network for motor
vehicle medical benefits.
(3) The provision of a network for another insurer or
network administrator.
(4) The provision of a network for an exempt plan.
(e) Limitation.--Nothing in this section shall be construed
as prohibiting a health insurer or network from using a single
provider contract for multiple lines of business as long as the
provider has the right to opt in or out of each line of business
on a line-by-line basis.
(f) Number of patients.--A health care insurer shall not
prohibit a participating provider from limiting the number of
individuals covered by the insurer who are accepted as new
patients of the provider.
Section 10. Prohibition on silent preferred provider
organizations.
A health insurer shall explicitly identify in its provider
contracts on each network in which the health care provider is
agreeing to participate and the health insurer or other insurers
who are authorized to access the network. A health insurer shall
not agree or represent that a participating provider will
participate in the network of another health insurer, other
insurer or network administrator without the provider's explicit
written agreement.
Section 11. Standardization of CPT coding nomenclature.
(a) General rule.--A health insurer shall abide by the CPT
codes, modifiers and definitions as established by the American
Medical Association or the Centers for Medicare and Medicaid
Services. Health insurers shall not arbitrarily alter the CPT
code on a submitted claim or bundle multiple CPT codes into one
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code to reduce reimbursement.
(b) Denials.--In the event that a health insurer denies
reimbursement for a billed code on a basis other than that the
service or product was not medically necessary, the health
insurer shall not prohibit the physician or other provider who
rendered the service or product from billing the patient for the
service as if the service or product was a noncovered service.
Section 12. Fair valuation of physician services.
(a) Valuation.--A health insurer shall provide reimbursement
for physician services at fair market valuation.
(b) Contesting rates.--A physician shall have standing to
contest the adequacy of the reimbursement rates paid by a health
insurer for physician services if the rates apply to the
services of the physician or a competitor of the physician.
Section 13. Utilization review of diagnostic studies.
(a) General rule.--A health insurer shall not require any
prior authorization for a diagnostic imaging or other diagnostic
study unless:
(1) The proposed study falls outside clinical practice
guidelines that are nationally recognized or are adopted by
the insurer in consultation with physicians who are in active
clinical practice and experts in the field.
(2) The ordering physician does not meet specialized
training, education or skill qualifications for the ordered
studies that are nationally recognized or are adopted by the
insurer in consultation with physicians who are in active
clinical practice and experts in the field.
(3) There is a reasonable basis for imposing the prior
authorization requirement based upon an assessment of the
ordering physician's prior utilization record through a
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retrospective utilization review program adopted by the
insurer in consultation with physicians who are in active
clinical practice and experts in the field.
(4) The ordering physician does not agree to a
retrospective audit of the medical appropriateness of the
ordered study in accordance with a retrospective utilization
program adopted by the insurer in consultation with
physicians who are in active clinical practice and experts in
the field.
(b) Documentation.--A health insurer shall permit a
physician seeking to document the medical necessity of
diagnostic imaging or another study proposed or performed by the
physician to provide a written explanation and shall not require
the physician to speak personally with the insurer's review
personnel.
Section 14. Dispute resolution.
(a) Arbitration.--Managed care plan providers shall not
compel health care providers to accept arbitration as the sole
or primary means of dispute resolution between the parties. A
contract may provide for arbitration as an option for dispute
resolution available to the parties only when there is joint
consent and the contract describes all of the following:
(1) The circumstances in which arbitration is an option.
(2) The procedures to seek an arbitration.
(3) The process for selecting a certified arbitrator.
(4) How the parties would share the costs of the
arbitration.
(b) Informal dispute resolution.--A plan provider and a
health care provider may agree to an informal dispute resolution
system for the review and resolution of disputes between the
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health care provider and the plan. Disputes that may be handled
informally include denials based on procedural errors and
administrative denials involving the level or types of health
care service provided. The informal dispute resolution system
shall be set forth in the managed care plan contract and shall
be impartial, include specific and reasonable time frames in
which to initiate appeals, receive written information, conduct
hearings, render decisions and provide for final review and
determination of disputes. An alternative dispute resolution
system shall not be used for any external grievance filed by an
enrollee.
(c) Judicial review.--A provider contract shall not preclude
a participating provider from seeking judicial review of a
dispute with the health insurer.
Section 15. Health care provider claim submission.
(a) Claim form.--Managed care plan contracts shall require
health care providers to submit claims on the CMS Form 1500 or
its successor, as defined by the Centers for Medicare and
Medicaid Services. Managed care plans shall not require health
care providers to submit claims electronically unless the plan
offers the appropriate tools and infrastructure to facilitate
electronic claims submission.
(b) Erroneous payments.--Managed care plans shall not
withhold future reimbursement as a means to recoup payments
believed to have been made in error. Managed care plans shall
establish, disclose in contracts and include in provider
procedure or policy manuals the administrative process by which
the plan can challenge and seek to recover potentially erroneous
payments to the health care providers. Managed care plan
providers shall disclose their intent to challenge a potentially
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erroneous payment within 180 days of the date of the payment. A
managed care plan provider that seeks to recoup overpayments
made to a health care provider shall complete its administrative
procedures and allow the provider to complete available appeal
procedures within 90 days of the date it notifies the provider
of its intent to seek remuneration. For any amount in excess of
$10,000, a health insurer shall allow the provider to reimburse
the plan in installments over not more than three years.
(c) Underpayment.--In situations where the managed care plan
provider has identified provider medical record documentation
that substantiates a service was performed that should have been
legitimately reimbursed at a higher level if properly coded, the
managed care plan provider shall make payment to the provider
equivalent to the difference between what was originally paid
for the billed service and the amount that would have been paid
had the service been coded and billed accurately. Corrected
payments shall be made by the health insurer to the provider
within 90 days of discovery.
(d) Fraud.--Subsections (a) and (b) shall not apply where
the managed care plan provider reasonably suspects fraud,
illegality or other malfeasance regarding claims submitted and
payments made.
(e) Claim period.--Managed care plan providers shall not
compel health care providers to submit claims or encounter data
to the plan within not less than 180 days nor more than 360 days
from the date of service. The managed care plan provider and the
plan enrollee shall not bear any financial responsibility for
claims that a health care provider does not submit within the
claim period.
Section 16. Miscellaneous.
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(a) Compliance.--A health insurer remains responsible for
complying with the requirements of this act, regardless of
whether the insurer arranges for claims to be processed or paid
by another entity.
(b) Disclosures.--A network administrator shall make the
disclosures required of health insurers under sections 6, 7 and
8 for each health insurer who is able to access the network and
shall comply with all sections of this act as if it is a health
insurer.
Section 17. HIPAA compliance.
Managed care plan contracts shall delineate the obligations
of each party to comply with the terms of HIPAA. Contracts shall
state that the health insurer and the health care provider are
covered entities under the terms of HIPAA and shall comply with
HIPAA or any more restrictive privacy law of this Commonwealth.
Section 18. Penalties.
In addition to any other remedy available at law or in
equity, the department may assess an administrative penalty on
health insurers for a violation of this act. The penalty shall
not exceed $5,000 per violation.
Section 19. Rules and regulations.
The department may promulgate rules and regulations to
administer and enforce this act.
Section 20. Severability.
The provisions of this act are severable. If any provision of
this act or the application to any person or circumstance is
held invalid, the invalidity shall not affect other provisions
or applications of this act which can be given effect without
the invalid provision or application.
Section 21. Repeals.
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All acts and parts of acts are repealed insofar as they are
inconsistent with this act.
Section 22. Effective date.
This act shall take effect in 60 days.
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