PRINTER'S NO. 1083
No. 977 Session of 1997
INTRODUCED BY VANCE, DRUCE, MICOZZIE, COLAFELLA, SAYLOR, WAUGH,
CURRY, COLAIZZO, YOUNGBLOOD, SEMMEL, SCHRODER, HENNESSEY,
TIGUE, ALLEN, GORDNER, NICKOL, KENNEY, MUNDY, E. Z. TAYLOR,
TRICH, HARHART, D. W. SNYDER, MANDERINO, RUBLEY, CARONE,
BUNT, ITKIN, TRUE, PESCI, STEELMAN, DeLUCA, CLYMER, CORNELL,
JOSEPHS, BOSCOLA, STURLA, BARD, OLASZ, MILLER, L. I. COHEN,
SATHER, GEORGE, O'BRIEN, FLEAGLE, BUXTON, STRITTMATTER,
MICHLOVIC, STERN, TULLI, HALUSKA, BROWNE, OLIVER, McGILL,
THOMAS, BEBKO-JONES, TRELLO, BELFANTI AND GRUPPO,
MARCH 19, 1997
REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES,
MARCH 19, 1997
AN ACT
1 Requiring certification of utilization review entities;
2 providing for appeal processes for providers, for the
3 disclosure of certain uniform information and for delivery of
4 health care in a cost-effective manner.
5 TABLE OF CONTENTS
6 Section 1. Short title.
7 Section 2. Purposes.
8 Section 3. Definitions.
9 Section 4. Certification of utilization review entity.
10 Section 5. Utilization review standards.
11 Section 6. Utilization review decisions and internal appeals.
12 Section 7. External utilization review appeals.
13 Section 8. Provider credentialing.
14 Section 9. Uniform disclosure.
1 Section 10. Penalties.
2 Section 11. Rulemaking.
3 Section 12. Severability.
4 Section 13. Repeals.
5 Section 14. Applicability.
6 Section 15. Effective date.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short title.
10 This act shall be known and may be cited as the Health Plan
11 Accountability Act.
12 Section 2. Purposes.
13 The purposes of this act are to:
14 (1) Promote the delivery of health care in a cost-
15 effective manner.
16 (2) Foster greater coordination among health care
17 providers, patients and payers.
18 (3) Promote patient access to quality health care in a
19 timely fashion.
20 (4) Safeguard patients by certifying the activities of
21 utilization review entities.
22 (5) Provide sufficient information to providers
23 regarding utilization review processes, criteria and the
24 procedures for appealing utilization review determinations.
25 (6) Establish an appeals process that may be used by
26 providers to appeal adverse utilization review determinations
27 by utilization review entities.
28 (7) Establish minimum provider credentialing standards
29 to be used by payers.
30 Section 3. Definitions.
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1 The following words and phrases when used in this act shall
2 have the meanings given to them in this section unless the
3 context clearly indicates otherwise:
4 "Accrediting body." A nationally recognized accrediting
5 agency.
6 "Active clinical practice." A health care practitioner who
7 practices clinical medicine on the average of not less than 20
8 hours per week.
9 "Clinical review criteria." The written screening
10 procedures, decision abstracts, clinical protocols and practice
11 guidelines used by a utilization review entity to evaluate the
12 necessity and appropriateness of health care services delivered
13 or proposed to be delivered.
14 "Commissioner." The Insurance Commissioner of the
15 Commonwealth.
16 "Covered individual." An enrollee or an eligible dependent
17 of an enrollee.
18 "Credentialing criteria." The standards used by a payer to
19 evaluate the qualifications of a health care practitioner or
20 health care facility to participate in the payer's provider
21 network.
22 "Department." The Department of Health of the Commonwealth.
23 "Enrollee." An individual who has contracted for or who
24 participates in coverage under:
25 (1) an insurance policy issued by a professional health
26 service corporation, hospital plan corporation or a health
27 and accident insurer;
28 (2) a contract issued by a health maintenance
29 organization or a preferred provider organization; or
30 (3) other benefit programs providing payment,
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1 reimbursement or indemnification for the costs of health care
2 for the covered individual.
3 "Health care facility." Any health care facility providing
4 clinically related health services, including, but not limited
5 to, a general or special hospital, including psychiatric
6 hospitals, rehabilitation hospitals, ambulatory surgical
7 facilities, long-term care nursing facilities, cancer treatment
8 centers using radiation therapy on an ambulatory basis and
9 inpatient drug and alcohol treatment facilities.
10 "Health care insurer." Any entity operating under any of the
11 laws listed in section 14.
12 "Health care practitioner." Any individual who is licensed,
13 certified or otherwise regulated to practice health care under
14 the laws of this Commonwealth, including, but not limited to, a
15 physician, a dentist, a podiatrist, an optometrist, a
16 psychologist, a physical therapist, a certified registered nurse
17 practitioner, a registered nurse, a nurse midwife, a physician's
18 assistant or a chiropractor.
19 "Integrated delivery system." A partnership, association,
20 affiliation, corporation or other legal entity which enters into
21 contractual, risk-sharing arrangements with health insurers to
22 provide or arrange for the provision of health care services and
23 assumes some responsibility for quality assurance, utilization
24 review, provider credentialing and related functions and which
25 assumes to some extent, through capitation reimbursement or
26 other risk-sharing arrangement, the financial risk for provision
27 of health care services to enrollees.
28 "Licensing authority." The licensing authority of the health
29 insurers listed in section 14.
30 "Payer." Any entity operating under any of the laws listed
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1 in section 14 as well as any other entity employing, affiliated
2 with or contracting with a utilization review entity or paying
3 for credentialing activities.
4 "Provider network." The health care practitioners and health
5 care facilities designated by a payer for enrollee use in
6 obtaining covered heath care services. This term shall not apply
7 to broad-based networks that are primarily fee-for-service,
8 indemnity arrangements with minimum participation requirements
9 and limited utilization review procedures.
10 "Provider of record." The physician, licensed practitioner
11 or health care facility identified to a utilization review
12 entity or insurer as having prescribed, proposed to provide or
13 provided health care services to a covered individual.
14 "Secretary." The Secretary of Health of the Commonwealth.
15 "Utilization review." A system for prospective, concurrent,
16 retrospective review or case management of the medical necessity
17 and appropriateness of health care services provided or proposed
18 to be provided to a covered individual. The term does not
19 include any of the following:
20 (1) requests for clarification of coverage, eligibility
21 or benefits verification;
22 (2) a health care facility's or a health care
23 practitioner's internal quality assurance or utilization
24 review process unless such review results in a denial of
25 payment, coverage or treatment; or
26 (3) refusal to contract with health care practitioners
27 or health care facilities.
28 "Utilization review determination." The rendering of a
29 decision based on utilization review that approves or denies
30 either of the following:
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1 (1) the necessity or appropriateness of the allocations
2 of health care resources to a covered individual; or
3 (2) the provision or proposed provision of covered
4 health care services to an enrollee.
5 "Utilization review entity." Any payer or any entity
6 performing utilization review while employed by, affiliated
7 with, under contract with or acting on behalf of any of the
8 following:
9 (1) an entity doing business in this Commonwealth;
10 (2) an integrated delivery system;
11 (3) a party that provides or administers health care
12 benefits to citizens of this Commonwealth, including a health
13 care insurer, self-insured plan, professional health service
14 corporation, hospital plan corporation, preferred provider
15 organization or health maintenance organization authorized to
16 offer health insurance policies or contracts to pay for the
17 delivery of health care services or treatment in this
18 Commonwealth; or
19 (4) the Commonwealth or any of its political
20 subdivisions or instrumentalities.
21 The term shall not include entities conducting internal
22 utilization review for health care facilities, home health
23 agencies, health maintenance organizations, preferred provider
24 organizations or other managed care entities, or private health
25 care professional offices, unless the performance of such
26 utilization review results in the denial of payment, coverage or
27 treatment.
28 Section 4. Certification of utilization review entity.
29 (a) Certification required.--A utilization review entity may
30 not conduct utilization review regarding services delivered or
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1 proposed to be delivered in this Commonwealth unless the entity
2 is certified by the department to perform such services or
3 unless the entity is an integrated delivery system whose
4 utilization review standards have already been approved by the
5 department and adopted for use by a certified utilization review
6 entity. A utilization review entity that has been operating in
7 this Commonwealth prior to the effective date of this act may
8 continue to conduct utilization review for not more than one
9 year after the effective date of this act pending an initial
10 certification determination by the department regarding that
11 entity. The department shall grant certification to any
12 utilization review entity that satisfies the utilization review
13 standards included in sections 5 and 6.
14 (b) Renewal.--Certification shall be renewed every three
15 years unless sooner revoked or suspended by the secretary.
16 (c) Accrediting bodies.--The department may rely on
17 nationally recognized accrediting bodies to the extent the
18 standards of the bodies are determined by the department to
19 substantially meet or exceed the criteria in section 5 and if
20 the entity agrees to the following:
21 (1) Direct the accrediting body to provide a copy of its
22 findings to the department.
23 (2) Permit the department to verify compliance with
24 standards not covered by the accrediting body.
25 (d) Fees.--The secretary is authorized to prescribe fees for
26 initial application and renewal of certification. The fees shall
27 not exceed the administrative costs of the certification
28 process.
29 (e) Procedures.--Licensed health insurers are required to
30 follow the standards and procedures contained in this act, but
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1 are not required to be separately certified as utilization
2 review entities by the department.
3 Section 5. Utilization review standards.
4 (a) Requirements.--Utilization review entities providing
5 services in this Commonwealth must satisfy all of the following
6 requirements:
7 (1) For the purpose of responding to inquiries
8 concerning the entity's utilization review determinations:
9 (i) provide toll-free telephone access at least 40
10 hours each week during normal business hours;
11 (ii) maintain a telephone call answering service or
12 recording system during hours other than normal business
13 hours; and
14 (iii) respond to each telephone call left with the
15 answering service or on the recording system within one
16 business day after the call is left with respect to the
17 review determination.
18 (2) Protect the confidentiality of individual medical
19 records:
20 (i) as required by all applicable Federal and State
21 laws and ensure that a covered individual's medical
22 records and other confidential medical information
23 obtained in the performance of utilization review are not
24 improperly disclosed or redisclosed;
25 (ii) by only requesting medical records and other
26 information which are reasonably necessary to make
27 utilization review determination for the care under
28 review; and
29 (iii) have mechanisms in place that allow a provider
30 to verify that an individual requesting information on
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1 behalf of the organization is a legitimate representative
2 of the organization.
3 (3) Unless required by law or court order, prevent third
4 parties from obtaining a covered individual's medical records
5 or confidential information obtained in the performance of
6 utilization review.
7 (4) Assure that personnel conducting utilization review
8 shall have current licenses that are in good standing and
9 without restrictions from a state health care professional
10 licensing agency in the United States.
11 (5) Within one business day after receiving a request
12 for an initial utilization review determination that includes
13 all information reasonably necessary to complete the
14 utilization review determination, notify the enrollee and the
15 provider of record of the utilization review determination by
16 mail or other means of communication.
17 (6) Include the following in the written notification of
18 a utilization review determination denying coverage for an
19 admission, service, procedure, medical supplies and equipment
20 or a request for approval of continuing treatment for the
21 condition involved in previously approved admissions,
22 services or procedures, medical supplies and equipment:
23 (i) the principal reasons for the determination if
24 the determination is based on medical necessity or the
25 appropriateness of the admission, service, procedure,
26 medical supplies and equipment, or extension of service;
27 and
28 (ii) the description of the appeal procedure,
29 including the name and telephone number of the person to
30 contact in regard to an appeal and the deadline for
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1 filing an appeal.
2 (7) Ensure that initial adverse utilization review
3 determination as to the necessity or appropriateness of an
4 admission, service, procedure or medical supplies and
5 equipment is made by a licensed physician or, if appropriate,
6 a psychologist.
7 (8) Ensure that on appeal all determinations not to
8 certify an admission, service, procedure, medical supplies
9 and equipment or extension of stay must be made by a licensed
10 physician or, if appropriate, a psychologist in the same or
11 similar general specialty as typically manages or recommends
12 treatment for the medical condition, procedure or treatment.
13 Further, no physician or psychologist who has been involved
14 in prior reviews of the case under appeal may participate as
15 the sole reviewer of a case under appeal.
16 (9) Provide a period of at least 24 hours following an
17 emergency admission, service, procedure or medical supplies
18 and equipment during which an enrollee or representative of
19 an enrollee may notify the health care insurer and request
20 approval or continuing treatment for the condition under
21 review in the admission, extension of stay, service,
22 procedure, medical supplies and equipment.
23 (10) Provide an appeals procedure satisfying the
24 requirements set forth in this act.
25 (11) Disclose utilization review criteria to providers
26 upon denial.
27 (b) Alternative practices.--Payers and providers may
28 establish alternative utilization review standards, practices
29 and procedures by contract that meet or exceed the requirements
30 in subsection (a) and that are approved by the department.
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1 Section 6. Utilization review decisions and internal appeals.
2 Payers that encourage or require enrollees to obtain all or
3 designated covered services through a provider network shall
4 conform to the following provisions:
5 (1) Notification of a prospective or concurrent
6 utilization review determination shall be communicated with
7 the provider of record within one business day of the receipt
8 of all information necessary to complete the review. For
9 retrospective determinations, notice shall be given within 15
10 days.
11 (2) The utilization review entity shall maintain and
12 make available a written description of the appeal procedure
13 by which the provider of record may seek review of the
14 determination to deny an admission, service, procedure,
15 medical supplies and equipment or extension of stay.
16 (3) The internal appeals process shall be established by
17 the utilization review entity and must include a reasonable
18 time period of not less than 45 days following receipt of the
19 written notification of the adverse determination within
20 which an appeal must be filed to be considered.
21 (4) The utilization review entity shall render a
22 determination of appeals of adverse determinations no later
23 than 45 days from the date the appeal and all supporting
24 documentation is filed.
25 (5) The utilization review entity shall provide for an
26 expedited appeals process for emergency or life-threatening
27 situations. Adjudication of expedited appeals shall be
28 completed within 48 hours of the time the appeal is filed.
29 (6) Compensation to any person performing utilization
30 review activities shall not contain incentives, direct or
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1 indirect, for that person to approve or deny coverage for
2 admissions, services, procedures, medical supplies and
3 equipment or extension of stays.
4 (7) The utilization review entity shall maintain records
5 of written appeals and their resolution and shall provide
6 reports to their licensing authority or as requested by the
7 department.
8 (8) The department may, in response to a written
9 complaint by a provider, review the payer's adherence to the
10 requirements of this act.
11 Section 7. External utilization review appeals.
12 The utilization review plan of utilization review entities or
13 health care insurers must provide for independent external
14 adjudication in cases where the second level of appeal to
15 reverse an adverse determination is unsuccessful that adheres to
16 the following provisions:
17 (1) The provider of record may initiate the external
18 appeal within 60 days of the adverse determination by
19 submitting written notice to the utilization review entity or
20 health care insurer.
21 (2) The utilization review entity or health care insurer
22 and the provider of record shall each select one competent
23 arbitrator within 30 days from the date the appeal is
24 initiated. The two selected arbitrators shall then select a
25 competent third arbitrator. The arbitration shall take place
26 in the county in which the appealing party resides or
27 practices.
28 (3) At least one arbitrator shall be a licensed
29 physician or, if appropriate, a psychologist, in active
30 clinical practice in the same or similar specialty as
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1 typically manages or recommends treatment for the medical
2 condition under review. The remaining arbitrators shall also
3 be licensed health care practitioners.
4 (4) The arbitrators shall review the information
5 considered by the health care insurer in reaching its
6 decision and any written submissions of the provider of
7 record provided during the internal appeal process. The
8 decision to hold a hearing or otherwise take evidence shall
9 be within the sole discretion of a majority of the
10 arbitrators.
11 (5) The written decision of any two arbitrators shall be
12 issued no later than 30 days after receipt of all
13 documentation necessary to rule upon the appeal and shall be
14 binding upon each party.
15 (6) The arbitrators' fees and costs of the appeal shall
16 be paid by the nonprevailing party.
17 (7) Written contracts between health care insurers and
18 providers may provide for an alternative to the external
19 appeal process as long as that contract or process has been
20 approved by the department. In such cases, a provider may
21 appeal to a physician committee appointed by the governing
22 body of the utilization review entity or health care insurer.
23 No physician serving on the committee to review such appeals
24 may be an employee of the utilization review entity or health
25 care insurer. The provider of record may present information
26 supporting his or her position either in writing or by
27 appearing before the committee in person to do so. The
28 alternative appeals process must include time frames for
29 initiating appeals, receiving written information, holding
30 hearings and rendering final determinations. The committee's
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1 decision is the utilization review entity's health care
2 insurer's final determination. If the decision is unfavorable
3 to the provider of record or health care insurer, the
4 provider of record or health care insurer may seek additional
5 remedies in the appropriate court of jurisdiction, as a
6 matter of original jurisdiction pursuant to 42 Pa.C.S. § 761
7 (relating to original jurisdiction), to the extent such
8 remedies are provided by law.
9 Section 8. Provider credentialing.
10 Payers that encourage or require enrollees to obtain all or
11 designated covered services through a provider network shall
12 conform to the following provisions:
13 (1) Payers must ensure that there are sufficient health
14 care practitioners and health care facilities within a
15 provider network to provide enrollees with access to quality
16 patient care in a timely fashion.
17 (2) Payers shall consult with practicing physicians
18 regarding the professional qualifications, specialty and
19 geographic composition of the physician panel. The payer
20 shall report the composition of its provider network,
21 including the extent to which providers in the network are
22 accepting new enrollees from the insurer, to its licensing
23 authority every two years, or in response to significant
24 changes in the provider network, or as otherwise required by
25 the licensing authority.
26 (3) A payer shall select the participating health care
27 practitioners and health care facilities for its provider
28 network through a formal credentialing process that includes
29 criteria and processes for initial selection, recredentialing
30 and termination. The payer shall report the credentialing
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1 criteria and processes to its licensing authority every two
2 years, or in response to significant changes in the criteria
3 and/or processes, or as otherwise required by the licensing
4 authority.
5 (4) A payer shall disclose to applicants and to
6 providers participating in its network all credentialing
7 criteria and processes used by the payer and approved by the
8 department or by a nationally recognized accrediting body.
9 The proceedings, deliberations and records of a payer with
10 respect to the credentialing of health care providers,
11 however, shall be held in confidence and shall not be subject
12 to discovery or entered into evidence in any civil action
13 against a payer to the same degree that such deliberations,
14 proceedings and records are protected under the act of July
15 20, 1974 (P.L.564, No.193), known as the Peer Review
16 Protection Act.
17 (5) A payer shall not discriminate against patients with
18 expensive medical conditions by excluding from its network
19 health care practitioners with practices that include a
20 substantial number of such patients and consistent with other
21 credentialing criteria.
22 (6) A payer shall not exclude a health care practitioner
23 or health care facility from its provider network because the
24 practitioner or facility has advocated on behalf of a patient
25 in a utilization appeal or another dispute with the plan over
26 the provision of medical care.
27 (7) In the event a payer renders an adverse
28 credentialing decision, the payer shall provide the affected
29 health care practitioner or health care facility with written
30 notice of the decision that includes a clear explanation of
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1 the basis for the decision.
2 Section 9. Uniform disclosure.
3 (a) Format.--The commissioner shall adopt a uniform format
4 for the disclosure of the terms and conditions of health
5 insurance plans.
6 (b) Contents.--The uniform format shall include, at a
7 minimum, the following provisions:
8 (1) The benefits and any and all exclusions.
9 (2) Any and all enrollee coinsurance, copayments and
10 deductibles.
11 (3) Any and all maximum benefit limitations.
12 (4) Any and all requirements or limitations regarding
13 the choice of provider.
14 (5) Disclosure of any and all physician incentive plans.
15 (6) Enrollee satisfaction statistics.
16 (c) Mandatory use.--Payers shall make the information
17 required by the commissioner available to purchasers and
18 potential enrollees in the format adopted by the commissioner.
19 (d) Understandable terms.--The information shall be written
20 in terms understandable to the general public.
21 Section 10. Penalties.
22 The department may impose a fine of up to but not more than
23 $10,000 for each violation of this act. In addition, the
24 department may deny, suspend, revoke or refuse to renew the
25 certification of a utilization review entity or health care
26 insurer that fails to satisfy the utilization review standards
27 set forth in section 5 or that otherwise violates the provisions
28 of this act. The utilization review entity or health care
29 insurer shall be entitled to notice and the right to a hearing
30 pursuant to 2 Pa.C.S. (relating to administrative law and
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1 procedure).
2 Section 11. Rulemaking.
3 The secretary and the commissioner are authorized to
4 promulgate regulations to implement this act.
5 Section 12. Severability.
6 The provisions of this act are severable. If any provision of
7 this act or its application to any person or circumstance is
8 held invalid, the invalidity shall not affect other provisions
9 or applications of this act which can be given effect without
10 the invalid provision or application.
11 Section 13. Repeals.
12 All acts and parts of acts are repealed insofar as they are
13 inconsistent with this act.
14 Section 14. Applicability.
15 This act shall apply to health care utilization review
16 entities or health care insurers operating under any one of the
17 following:
18 (1) Section 630 of the act of May 17, 1921 (P.L.682,
19 No.284), known as The Insurance Company Law of 1921.
20 (2) Act of December 29, 1972 (P.L.1701, No.364), known
21 as the Health Maintenance Organization Act.
22 (3) Act of May 18, 1976 (P.L.123, No.54), known as the
23 Individual Accident and Sickness Insurance Minimum Standards
24 Act.
25 (4) 40 Pa.C.S. Ch.61 (relating to hospital plan
26 corporations).
27 (5) 40 Pa.C.S. Ch.63 (relating to professional health
28 services plan corporations) except for section 6324 (relating
29 to rights of health service doctors).
30 (6) A fraternal benefit society charter.
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1 (7) Any successor laws.
2 Section 15. Effective date.
3 This act shall take effect in 120 days.
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