THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BARRAR, D. COSTA, GEIST, GEORGE, MUNDY, ROAE, SCHRODER, SWANGER AND TRUITT, MAY 11, 2011

REFERRED TO COMMITTEE ON INSURANCE, MAY 11, 2011  

AN ACT

Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," providing for retroactive denial of

reimbursement of payments to health care providers by

insurers.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of May 17, 1921 (P.L.682, No.284), known

as The Insurance Company Law of 1921, is amended by adding an

article to read:

ARTICLE VI-C

RETROACTIVE DENIAL OF REIMBURSEMENTS

Section 601-C.  Scope of article.

This article shall not apply to reimbursements made as part

of an annual contracted reconciliation of a risk-sharing

arrangement under an administrative service provider contract.

Section 602-C.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Code."  Any of the following codes:

(1)  The applicable Current Procedural Terminology (CPT)

code, as adopted by the American Medical Association.

(2)  If for dental service, the applicable code adopted

by the American Dental Association.

(3)  Another applicable code under an appropriate uniform

coding scheme used by an insurer in accordance with this

article.

"Coding guidelines."  Those standards or procedures used or

applied by a payor to determine the most accurate and

appropriate code or codes for payment by the payor for a service

or services.

"Fraud."  The intentional misrepresentation or concealment of

information in order to deceive or mislead.

"Health care provider."  A person, corporation, facility,

institution or other entity licensed, certified or approved by

the Commonwealth to provide health care or professional medical

services. The term includes, but is not limited to, a physician,

chiropractor, optometrist, professional nurse, certified nurse-

midwife, podiatrist, hospital, nursing home, ambulatory surgical

center or birth center.

"Insurer."  An entity subject to any of the following:

(1)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or 63 (relating to professional health services

plan corporations).

(2)  This act.

(3)  The act of December 29, 1972 (P.L.1701, No.364),

known as the Health Maintenance Organization Act.

"Medical assistance program."  The program established under

the act of June 13, 1967 (P.L.31, No.21), known as the Public

Welfare Code.

"Medicare."  The Federal program established under Title

XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 

et seq. or 1395 et seq.).

"Reimbursement."  Payments made to a health care provider by

an insurer on either a fee-for-service, capitated or premium

basis.

Section 603-C.  Retroactive denial of reimbursement.

(a)  General rule.--If an insurer retroactively denies

reimbursement to a health care provider, the insurer may only:

(1)  retroactively deny reimbursement for services

subject to coordination of benefits with another insurer, the

medical assistance program or the Medicare program during the

12-month period after the date that the insurer paid the

health care provider; and

(2)  except as provided in paragraph (1), retroactively

deny reimbursement during a 12-month period after the date

that the insurer paid the health care provider.

(b)  Written notice.--An insurer that retroactively denies

reimbursement to a health care provider under subsection (a)

shall provide the health care provider with a written statement

specifying the basis for the retroactive denial. If the

retroactive denial of reimbursement results from coordination of

benefits, the written statement shall provide the name and

address of the entity acknowledging responsibility for payment

of the denied claim.

Section 604-C.  Effect of noncompliance.

Except as provided in section 605-C, an insurer that does not

comply with the provisions of section 603-C may not

retroactively deny reimbursement or attempt in any manner to

retroactively collect reimbursement already paid to a health

care provider.

Section 605-C.  Fraudulent or improperly coded information.

(a)  Reasons for denial.--The provisions of section 603-B do

not apply if an insurer retroactively denies reimbursement to a

health care provider because:

(1)  the information submitted to the insurer was

fraudulent;

(2)  the information submitted to the insurer was

improperly coded and the insurer has provided to the health

care provider sufficient information regarding the coding

guidelines used by the insurer at least 30 days prior to the

date the services subject to the retroactive denial were

rendered; or

(3)  the claim submitted to the insurer was a duplicate

claim.

(b)  Improper coding.--Information submitted to the insurer

may be considered to be improperly coded under subsection (a)(2)

if the information submitted to the insurer by the health care

provider:

(1)  uses codes that do not conform with the coding

guidelines used by the carrier applicable as of the date the

service or services were rendered; or

(2)  does not otherwise conform with the contractual

obligations of the health care provider to the insurer

applicable as of the date the service or services were

rendered.

Section 606-C.  Coordination of benefits.

If an insurer retroactively denies reimbursement for services

as a result of coordination of benefits under provisions of

section 605-C(a), the health care provider shall have six months

from the date of the denial, unless an insurer permits a longer

time period, to submit a claim for reimbursement for the service

to the insurer, the medical assistance program or Medicare

program responsible for payment.

Section 2.  This act shall take effect in 60 days.