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                                 HOUSE AMENDED
        PRIOR PRINTER'S NO. 89                        PRINTER'S NO. 2082

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 91 Session of 1997


        INTRODUCED BY HOLL, JANUARY 21, 1997

        AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
           JUNE 9, 1998

                                     AN ACT

     1  Amending the act of June 5, 1968 (P.L.140, No.78), entitled "An   <--
     2     act regulating the writing, cancellation of or refusal to
     3     renew policies of automobile insurance; and imposing powers
     4     and duties on the Insurance Commissioner therefor," further
     5     providing for cancellation or refusal to renew and for review
     6     procedures and policy termination.
     7  AMENDING THE ACT OF MAY 17, 1921 (P.L.682, NO.284), ENTITLED "AN  <--
     8     ACT RELATING TO INSURANCE; AMENDING, REVISING, AND
     9     CONSOLIDATING THE LAW PROVIDING FOR THE INCORPORATION OF
    10     INSURANCE COMPANIES, AND THE REGULATION, SUPERVISION, AND
    11     PROTECTION OF HOME AND FOREIGN INSURANCE COMPANIES, LLOYDS
    12     ASSOCIATIONS, RECIPROCAL AND INTER-INSURANCE EXCHANGES, AND
    13     FIRE INSURANCE RATING BUREAUS, AND THE REGULATION AND
    14     SUPERVISION OF INSURANCE CARRIED BY SUCH COMPANIES,
    15     ASSOCIATIONS, AND EXCHANGES, INCLUDING INSURANCE CARRIED BY
    16     THE STATE WORKMEN'S INSURANCE FUND; PROVIDING PENALTIES; AND
    17     REPEALING EXISTING LAWS," PROVIDING FOR AUTOMOBILE INSURANCE
    18     ISSUANCE, RENEWAL, CANCELLATION AND REFUSAL; PROVIDING FOR
    19     QUALITY HEALTH CARE ACCOUNTABILITY AND PROTECTION, FOR
    20     RESPONSIBILITIES OF MANAGED CARE PLANS, FOR DISCLOSURE, FOR
    21     UTILIZATION REVIEW, FOR COMPLAINTS AND GRIEVANCES, FOR
    22     DEPARTMENTAL POWERS AND DUTIES AND FOR PENALTIES; PROVIDING
    23     FOR COMPREHENSIVE HEALTH CARE FOR UNINSURED CHILDREN; AND
    24     MAKING REPEALS.

    25     The General Assembly of the Commonwealth of Pennsylvania
    26  hereby enacts as follows:
    27     Section 1.  Section 5(1) of the act of June 5, 1968 (P.L.140,  <--


     1  No.78), entitled "An act regulating the writing, cancellation of
     2  or refusal to renew policies of automobile insurance; and
     3  imposing powers and duties on the Insurance Commissioner
     4  therefor," amended July 14, 1988 (P.L.546, No.97), is amended to
     5  read:
     6     Section 5.  No cancellation or refusal to renew by an insurer
     7  of a policy of automobile insurance shall be effective unless
     8  the insurer shall deliver or mail, to the named insured at the
     9  address shown in the policy a written notice of the cancellation
    10  or refusal to renew. Such notice shall:
    11     (1)  Be [approved as to form by the Insurance Commissioner
    12  prior to use] in a form acceptable to the Insurance
    13  Commissioner;
    14     * * *
    15     Section 2.  Sections 8 and 9 of the act, amended October 5,
    16  1978 (P.L.1060, No.248), are amended to read:
    17     Section 8.  (a)  Any insured may within [twenty] thirty days
    18  of the receipt by the insured of notice of cancellation or
    19  notice of intention not to renew, and of the receipt of the
    20  reason or reasons for the cancellation or refusal to renew as
    21  stated in the notice, request in writing to the Insurance
    22  Commissioner that [he] the commissioner review the action of the
    23  insurer in cancelling or refusing to renew the policy of such
    24  insured.
    25     (b)  Any applicant for a policy who is refused such policy by
    26  an insurer shall be given a written notice of refusal to write
    27  by the insurer. Such notice shall state the specific reason or
    28  reasons of the insurer for refusal to write a policy for the
    29  applicant. Within [twenty] thirty days of the receipt of such
    30  reasons, the applicant may request in writing to the Insurance
    19970S0091B2082                  - 2 -

     1  Commissioner that [he] the commissioner review the action of the
     2  insurer in refusing to write a policy for the applicant.
     3     Section 9.  (a)  On receipt of a request for review [or if as
     4  a result of investigation, the Insurance Commissioner has good
     5  cause to believe that an insurer is violating the act], the
     6  Insurance Commissioner [or his designated representative] shall
     7  notify the insurer [thereof and shall] that a review has been
     8  requested. The commissioner shall review the matter to determine
     9  whether the cancellation or refusal to renew or to write was in
    10  violation of this act, and shall within forty days of the
    11  receipt of such request either order the policy written or
    12  reinstated or uphold the cancellation or refusal to renew. [If
    13  either of the parties shall dispute the commissioner's findings,
    14  such party shall have the right to a formal hearing. In the
    15  event a hearing is requested, the commissioner shall immediately
    16  issue notice of said hearing which shall state the time and
    17  place for hearing which shall not be less than thirty days from
    18  the date of the notice.]
    19     (b)  [At the time and place fixed for the hearing in the
    20  notice, the parties shall have an opportunity to be heard and to
    21  show cause why an order should not be made by the commissioner
    22  to cease and desist from acts constituting a violation of this
    23  act.] After a review of a cancellation of or refusal to renew a
    24  policy, if the commissioner finds the insurer not to be in
    25  violation of this act, the policy shall remain in effect until
    26  the date referred to in clause (2) of section 5, or thirty days
    27  following the conclusion of the review provided for in
    28  subsection (a), whichever is later. Provided, however, for
    29  review of cancellations under clause (1) of section 4, the
    30  policy shall terminate as of the date provided in the notice
    19970S0091B2082                  - 3 -

     1  under clause (2) of section 5 unless the policy is reinstated.
     2  Nothing in this subsection shall be construed to prevent the
     3  insurer, at its discretion, from continuing coverage after the
     4  initial review period until such time as the commissioner has
     5  issued a final order.
     6     (c)  [Upon good cause shown, the commissioner shall permit
     7  any person to intervene, appear and be heard at the hearing, in
     8  person or by counsel.] After review of a cancellation of or
     9  refusal to renew a policy, if the commissioner finds the insurer
    10  to be in violation of this act, and the insurer requests a
    11  hearing pursuant to subsection (d), the policy shall remain in
    12  effect until such time as the commissioner has issued a final
    13  order.
    14     (d)  [The commissioner may administer oaths, examine and
    15  cross-examine witnesses, receive oral and documentary evidence
    16  and subpoena witnesses, compel their attendance and require the
    17  production of books, papers, records, or other documents which
    18  he deems relevant to the hearing. The commissioner shall cause a
    19  record to be kept of all evidence and all proceedings at the
    20  hearing.] If either of the parties shall dispute the
    21  commissioner's findings, that party shall have the right to a
    22  formal hearing. In the event a hearing is requested, the
    23  commissioner shall issue notice of the hearing, which shall
    24  state the time and place for the hearing which shall not be less
    25  than thirty days from the date of notice.
    26     (e)  [Following the hearing, the commissioner shall issue a
    27  written order resolving the factual issues presented at the
    28  hearing and stating what remedial action, if any, is required.
    29  The commissioner shall send a copy of the order to the persons
    30  participating in the hearing. In the case of a cancellation of
    19970S0091B2082                  - 4 -

     1  or refusal to renew a policy, said policy shall remain in effect
     2  until the conclusion of such review or the date referred to in
     3  clause (2) of section 5, whichever is later, except for review
     4  of cancellations under clause (1) of section 4 in which case the
     5  policy shall terminate as of the date provided in the notice
     6  under clause (2) of section 5 unless the cancellation or refusal
     7  to renew is upheld or the policy reinstated.] At the time and
     8  place fixed for the hearing in the notice, the parties shall
     9  have an opportunity to be heard.
    10     (f)  Upon good cause shown, the commissioner shall permit any
    11  person to intervene, appear and be heard at the hearing, in
    12  person or by counsel.
    13     (g)  The commissioner may administer oaths, examine and
    14  cross-examine witnesses, receive oral and documentary evidence
    15  and subpoena witnesses, compel their attendance and require the
    16  production of books, papers, records or other documents which he
    17  deems relevant to the hearing. The commissioner shall cause a
    18  record to be kept of all evidence and all proceedings at the
    19  hearings.
    20     (h)  The insurer shall bear the burden at the hearing to
    21  prove that the cancellation or refusal to renew complies with
    22  this act. However, if the insured requested the hearing, and
    23  fails to appear at the time and place for the hearing, the
    24  commissioner may consider a motion to dismiss and shall not be
    25  compelled to take evidence at the scheduled hearing. In addition
    26  to any remedy in subsection (i), the commissioner shall have the
    27  authority to order an insurer to cease and desist from acts
    28  constituting a violation of this act.
    29     (i)  Following the hearing, the commissioner shall issue a
    30  written order resolving the factual issues presented at the
    19970S0091B2082                  - 5 -

     1  hearing and stating what remedial action, if any, is required.
     2  If the commissioner finds that the cancellation or refusal to
     3  renew violates this act, then the remedial action ordered by the
     4  commissioner shall include at least one of the following:
     5     (1)  That the insurer reimburse the insured for any increase
     6  in the cost of insurance and any short-term cancellation fees
     7  which are incurred.
     8     (2)  That the insurer reinstate the original policy
     9  prospectively.
    10     (3)  That if an insurer has elected to continue coverage
    11  pursuant to subsection (b), the coverage shall remain in full
    12  force and effect under the terms of the policy.
    13  Reimbursement shall be in the amount incurred by the insured to
    14  secure replacement coverage during the pendency of the hearing
    15  process, which cost exceeds the cost which would have been
    16  incurred had the policy under review remained in effect. The
    17  reimbursement shall be based on the difference of the cost of
    18  the policies to the extent that the coverage and limits of the
    19  replacement coverage does not exceed the original coverage. The
    20  insured shall bear the burden to request reimbursement and prove
    21  any increase in the cost of insurance. In addition, if a
    22  prospective reinstatement of the original policy is ordered,
    23  then the reinstatement shall take effect on the next policy
    24  anniversary date, unless the insured requests that the
    25  reinstatement take effect at an earlier date.
    26     (j)  The commissioner shall send a copy of the order to the
    27  parties participating in the hearing.
    28     (k)  All of the actions which may be performed by the
    29  commissioner in this section may be performed by the
    30  commissioner's designated representative.
    19970S0091B2082                  - 6 -

     1     Section 3.  This act shall take effect in 60 days.
     2     SECTION 1.  THE ACT OF MAY 17, 1921 (P.L.682, NO.284), KNOWN   <--
     3  AS THE INSURANCE COMPANY LAW OF 1921, IS AMENDED BY ADDING
     4  ARTICLES TO READ:
     5                            ARTICLE XX.
     6              AUTOMOBILE INSURANCE ISSUANCE, RENEWAL,
     7                     CANCELLATION AND REFUSAL.
     8     SECTION 2001.  DEFINITIONS.--AS USED IN THIS ARTICLE THE
     9  FOLLOWING WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO
    10  THEM IN THIS SECTION:
    11     "COMMISSIONER."  THE INSURANCE COMMISSIONER OF THIS
    12  COMMONWEALTH.
    13     "INSURER."  AN INSURANCE COMPANY, ASSOCIATION OR EXCHANGE
    14  AUTHORIZED TO TRANSACT THE BUSINESS OF AUTOMOBILE INSURANCE IN
    15  THIS COMMONWEALTH.
    16     "NONPAYMENT OF PREMIUM."  FAILURE OF THE NAMED INSURED TO
    17  DISCHARGE WHEN DUE ANY OBLIGATION IN CONNECTION WITH THE PAYMENT
    18  OF PREMIUMS ON A POLICY OR ANY INSTALLMENT OF SUCH PREMIUM,
    19  WHETHER THE PREMIUM IS PAYABLE DIRECTLY TO THE INSURER OR ITS
    20  AGENT OR INDIRECTLY UNDER ANY PREMIUM FINANCE PLAN OR EXTENSION
    21  OR CREDIT.
    22     "POLICY OF AUTOMOBILE INSURANCE" OR "POLICY."  A POLICY
    23  DELIVERED OR ISSUED FOR DELIVERY IN THIS COMMONWEALTH INSURING A
    24  NATURAL PERSON AS NAMED INSURED OR ONE OR MORE RELATED
    25  INDIVIDUALS RESIDENT OF THE SAME HOUSEHOLD, AND UNDER WHICH THE
    26  INSURED VEHICLES THEREIN DESIGNATED ARE OF THE FOLLOWING TYPES
    27  ONLY:
    28     (I)  A MOTOR VEHICLE OF THE PRIVATE PASSENGER OR STATION
    29  WAGON TYPE THAT IS NOT USED AS A PUBLIC OR LIVERY CONVEYANCE FOR
    30  PASSENGERS AND IS NOT RENTED TO OTHERS; OR
    19970S0091B2082                  - 7 -

     1     (II)  ANY OTHER FOUR-WHEEL MOTOR VEHICLE WITH A GROSS WEIGHT
     2  NOT EXCEEDING NINE THOUSAND POUNDS WHICH IS NOT PRINCIPALLY USED
     3  IN THE OCCUPATION, PROFESSION OR BUSINESS OF THE INSURED OTHER
     4  THAN FARMING.
     5     "RENEWAL" OR "TO RENEW."  TO ISSUE AND DELIVER AT THE END OF
     6  AN INSURANCE POLICY PERIOD A POLICY WHICH SUPERSEDES A POLICY
     7  PREVIOUSLY ISSUED AND DELIVERED BY THE SAME INSURER AND WHICH
     8  PROVIDES TYPES AND LIMITS OF COVERAGE AT LEAST EQUAL TO THOSE
     9  CONTAINED IN THE POLICY BEING SUPERSEDED, OR TO ISSUE AND
    10  DELIVER A CERTIFICATE OR NOTICE EXTENDING THE TERM OF A POLICY
    11  BEYOND ITS POLICY PERIOD OR TERM WITH TYPES AND LIMITS OF
    12  COVERAGE AT LEAST EQUAL TO THOSE CONTAINED IN THE POLICY BEING
    13  EXTENDED: PROVIDED, HOWEVER, THAT ANY POLICY WITH A POLICY
    14  PERIOD OR TERM OF LESS THAN TWELVE (12) MONTHS OR ANY PERIOD
    15  WITH NO FIXED EXPIRATION DATE SHALL FOR THE PURPOSE OF THIS
    16  ARTICLE BE CONSIDERED AS IF WRITTEN FOR SUCCESSIVE POLICY
    17  PERIODS OR TERMS OF TWELVE (12) MONTHS.
    18     SECTION 2002.  APPLICABILITY.--(A)  THIS ARTICLE SHALL APPLY
    19  ONLY TO:
    20     (1)  THAT PORTION OF A POLICY OF AUTOMOBILE INSURANCE
    21  PROVIDING BODILY INJURY AND PROPERTY DAMAGE LIABILITY,
    22  COMPREHENSIVE AND COLLISION COVERAGES; AND
    23     (2)  TO THE POLICY'S PROVISIONS, IF ANY, RELATING TO MEDICAL
    24  PAYMENTS AND UNINSURED MOTORISTS COVERAGE.
    25     (B)  THIS ARTICLE SHALL NOT APPLY TO:
    26     (1)  ANY POLICY ISSUED UNDER AN AUTOMOBILE ASSIGNED RISK
    27  PLAN;
    28     (2)  ANY POLICY INSURING MORE THAN FOUR AUTOMOBILES; OR
    29     (3)  ANY POLICY COVERING GARAGE, AUTOMOBILE SALES AGENCY
    30  REPAIR SHOP, SERVICE STATION OR PUBLIC PARKING PLACE OPERATION
    19970S0091B2082                  - 8 -

     1  HAZARDS.
     2     (C)  NOTHING IN THIS ARTICLE SHALL APPLY:
     3     (1)  IF THE INSURER HAS MANIFESTED ITS WILLINGNESS TO RENEW
     4  BY ISSUING OR OFFERING TO ISSUE A RENEWAL POLICY, CERTIFICATE OR
     5  OTHER EVIDENCE OF RENEWAL, OR HAS MANIFESTED SUCH INTENTION BY
     6  ANY OTHER MEANS.
     7     (2)  IF THE NAMED INSURED HAS DEMONSTRATED BY SOME OVERT
     8  ACTION TO THE INSURER OR ITS AGENT THAT HE WISHES THE POLICY TO
     9  BE CANCELLED OR THAT HE DOES NOT WISH THE POLICY TO BE RENEWED.
    10     (3)  TO ANY POLICY OF AUTOMOBILE INSURANCE WHICH HAS BEEN IN
    11  EFFECT LESS THAN SIXTY (60) DAYS, UNLESS IT IS A RENEWAL POLICY,
    12  EXCEPT THAT NO INSURER SHALL DECLINE TO CONTINUE IN FORCE SUCH A
    13  POLICY OF AUTOMOBILE INSURANCE ON THE BASIS OF THE GROUNDS SET
    14  FORTH IN SECTION 2003(A) AND EXCEPT THAT IF AN INSURER CANCELS A
    15  POLICY OF AUTOMOBILE INSURANCE IN THE FIRST SIXTY (60) DAYS, THE
    16  INSURER SHALL SUPPLY THE INSURED WITH A WRITTEN STATEMENT OF THE
    17  REASON FOR CANCELLATION.
    18     SECTION 2003.  DISCRIMINATION PROHIBITED.--(A)  AN INSURER
    19  MAY NOT CANCEL OR REFUSE TO WRITE OR RENEW A POLICY OF
    20  AUTOMOBILE INSURANCE FOR ANY OF THE FOLLOWING REASONS:
    21     (1)  AGE.
    22     (2)  RESIDENCE OR OPERATION OF A MOTOR VEHICLE IN A SPECIFIC
    23  GEOGRAPHIC AREA.
    24     (3)  RACE.
    25     (4)  COLOR.
    26     (5)  CREED.
    27     (6)  NATIONAL ORIGIN.
    28     (7)  ANCESTRY.
    29     (8)  MARITAL STATUS.
    30     (9)  SEX.
    19970S0091B2082                  - 9 -

     1     (10)  LAWFUL OCCUPATION (INCLUDING MILITARY SERVICE).
     2     (11)  THE REFUSAL OF ANOTHER INSURER TO WRITE A POLICY, OR
     3  THE CANCELLATION OR REFUSAL TO RENEW AN EXISTING POLICY BY
     4  ANOTHER INSURER.
     5     (12)  ILLNESS OR PERMANENT OR TEMPORARY DISABILITY, WHERE THE
     6  INSURED CAN MEDICALLY DOCUMENT THAT SUCH ILLNESS OR DISABILITY
     7  WILL NOT IMPAIR HIS ABILITY TO OPERATE A MOTOR VEHICLE. FAILURE
     8  TO PROVIDE SUCH DOCUMENTATION SHALL BE PROPER REASON FOR THE
     9  INSURER TO AMEND THE POLICY OF THE NAMED INSURED TO EXCLUDE SUCH
    10  DISABLED INSURED FROM COVERAGE UNDER THE POLICY WHILE OPERATING
    11  A MOTOR VEHICLE AFTER THE EFFECTIVE DATE OF SUCH POLICY
    12  AMENDMENT, BUT SHALL NOT BE PROPER REASON TO CANCEL OR REFUSE TO
    13  WRITE OR RENEW THE POLICY. NOTHING IN THIS PROVISION SHALL BE
    14  CONSTRUED TO EFFECT SUCH EXCLUDED INDIVIDUAL'S ELIGIBILITY FOR
    15  COVERAGE UNDER THE NAMED INSURED'S POLICY FOR ANY INJURY
    16  SUSTAINED WHILE NOT OPERATING A MOTOR VEHICLE. ILLNESS, OR
    17  PERMANENT OR TEMPORARY DISABILITY, ON THE PART OF ANY INSURED
    18  SHALL NOT BE PROPER REASON FOR CANCELLING THE POLICY OF THE
    19  NAMED INSURED.
    20     (13)  ANY ACCIDENT WHICH OCCURRED UNDER THE FOLLOWING
    21  CIRCUMSTANCES:
    22     (I)  AUTOMOBILE LAWFULLY PARKED (IF THE PARKED VEHICLE ROLLS
    23  FROM THE PARKED POSITION, THEN ANY SUCH ACCIDENT IS CHARGED TO
    24  THE PERSON WHO PARKED THE AUTOMOBILE);
    25     (II)  THE APPLICANT, OWNER OR OTHER RESIDENT OPERATOR IS
    26  REIMBURSED BY, OR ON BEHALF OF, A PERSON WHO IS RESPONSIBLE FOR
    27  THE ACCIDENT OR HAS JUDGMENT AGAINST SUCH PERSON;
    28     (III)  AUTOMOBILE IS STRUCK IN THE REAR BY ANOTHER VEHICLE
    29  AND THE APPLICANT OR OTHER RESIDENT OPERATOR HAS NOT BEEN
    30  CONVICTED OF A MOVING TRAFFIC VIOLATION IN CONNECTION WITH THIS
    19970S0091B2082                 - 10 -

     1  ACCIDENT;
     2     (IV)  OPERATOR OF THE OTHER AUTOMOBILE INVOLVED IN THE
     3  ACCIDENT WAS CONVICTED OF A MOVING TRAFFIC VIOLATION AND THE
     4  APPLICANT OR RESIDENT OPERATOR WAS NOT CONVICTED OF A MOVING
     5  TRAFFIC VIOLATION IN CONNECTION WITH THE ACCIDENT;
     6     (V)  AUTOMOBILE OPERATED BY THE APPLICANT OR ANY RESIDENT
     7  OPERATOR IS STRUCK BY A "HIT-AND-RUN" VEHICLE, IF THE ACCIDENT
     8  IS REPORTED TO THE PROPER AUTHORITY WITHIN TWENTY-FOUR (24)
     9  HOURS BY THE APPLICANT OR RESIDENT OPERATOR;
    10     (VI)  ACCIDENT INVOLVING DAMAGE BY CONTACT WITH ANIMALS OR
    11  FOWL;
    12     (VII)  ACCIDENT INVOLVING PHYSICAL DAMAGE, LIMITED TO AND
    13  CAUSED BY FLYING GRAVEL, MISSILES, OR FALLING OBJECTS;
    14     (VIII)  ACCIDENT OCCURRING WHEN USING AUTOMOBILE IN RESPONSE
    15  TO ANY EMERGENCY IF THE OPERATOR OF THE AUTOMOBILE AT THE TIME
    16  OF THE ACCIDENT WAS A PAID OR VOLUNTEER MEMBER OF ANY POLICE OR
    17  FIRE DEPARTMENT, FIRST-AID SQUAD, OR ANY LAW ENFORCEMENT AGENCY.
    18  THIS EXCEPTION DOES NOT INCLUDE AN ACCIDENT OCCURRING AFTER THE
    19  AUTOMOBILE CEASES TO BE USED IN RESPONSE TO SUCH EMERGENCY; OR
    20     (IX)  ACCIDENTS WHICH OCCURRED MORE THAN THIRTY-SIX (36)
    21  MONTHS PRIOR TO THE LATER OF THE INCEPTION OF THE INSURANCE
    22  POLICY OR THE UPCOMING ANNIVERSARY DATE OF THE POLICY.
    23     (14)  ANY CLAIM UNDER THE COMPREHENSIVE PORTION OF THE POLICY
    24  UNLESS SUCH LOSS WAS INTENTIONALLY CAUSED BY THE INSURED.
    25     (B)  AN INSURER MAY NOT CANCEL OR REFUSE TO RENEW A POLICY OF
    26  AUTOMOBILE INSURANCE ON THE BASIS OF ONE ACCIDENT WITHIN THE
    27  THIRTY-SIX (36) MONTH PERIOD PRIOR TO THE UPCOMING ANNIVERSARY
    28  DATE OF THE POLICY.
    29     (C)  FOR A PERIOD TWELVE (12) MONTHS AFTER NOTICE OF
    30  TERMINATION GIVEN TO AN AGENT:
    19970S0091B2082                 - 11 -

     1     (1)  AN INSURER MAY NOT CANCEL OR REFUSE TO RENEW EXISTING
     2  POLICIES WRITTEN THROUGH THE TERMINATED AGENT BECAUSE OF SUCH
     3  TERMINATION EXCEPT AS PROVIDED IN PARAGRAPH (2).
     4     (2)  AN INSURER MAY CANCEL OR REFUSE TO RENEW ONLY SUCH
     5  POLICIES AS COULD HAVE BEEN CANCELLED OR NONRENEWED HAD THE
     6  AGENCY RELATIONSHIP CONTINUED.
     7     (3)  AN INSURER SHALL BE OBLIGATED TO PAY COMMISSIONS FOR
     8  SUCH POLICIES THAT ARE CONTINUED OR RENEWED THROUGH THE
     9  TERMINATED AGENT, EXCEPT WHERE:
    10     (I)  THE INSURER RETAINED OWNERSHIP OF THE EXPIRATIONS OF
    11  SUCH POLICIES; OR
    12     (II)  THE AGENT HAS MISAPPROPRIATED FUNDS OR PROPERTY OF THE
    13  INSURER OR HAS FAILED TO REMIT TO THE INSURER FUNDS DUE IT
    14  PROMPTLY UPON DEMAND OR HAS BEEN TERMINATED FOR INSOLVENCY,
    15  ABANDONMENT, GROSS AND WILFUL MISCONDUCT OR HAS HAD HIS LICENSE
    16  SUSPENDED OR REVOKED.
    17     (D)  SUBSEQUENT TO THE TWELVE (12) MONTH PERIOD AFTER NOTICE
    18  OF TERMINATION GIVEN TO AN AGENT, AN INSURER MAY NOT CANCEL OR
    19  REFUSE TO RENEW EXISTING POLICIES WRITTEN THROUGH THE TERMINATED
    20  AGENT WITHOUT OFFERING EACH SUCH INSURED COVERAGE ON A DIRECT
    21  BASIS OR OFFERING TO REFER THE INSURED TO ONE OR MORE NEW AGENTS
    22  IN THE EVENT THE TERMINATED AGENT COULD NOT FIND A SUITABLE
    23  INSURER ACCEPTABLE TO THE POLICYHOLDER FOR SUCH BUSINESS. THE
    24  OFFER NEED NOT BE MADE IF THE INSURER COULD HAVE CANCELLED OR
    25  NONRENEWED THE POLICY HAD THE AGENCY RELATIONSHIP CONTINUED. IF
    26  THE INSURER RETAINS OWNERSHIP OF THE EXPIRATIONS OF SUCH
    27  POLICIES, THE INSURER NEED NOT OFFER A NEW AGENT.
    28     (E)  AN INSURER MAY NOT CANCEL OR REFUSE TO RENEW A POLICY OF
    29  AUTOMOBILE INSURANCE FOR TWO OR FEWER MOVING VIOLATIONS IN ANY
    30  JURISDICTION OR JURISDICTIONS DURING A TWENTY-FOUR (24) MONTH
    19970S0091B2082                 - 12 -

     1  PERIOD WHEN THE OPERATOR'S RECORD INDICATES THAT THE NAMED
     2  INSURED PRESENTLY BEARS FIVE POINTS OR FEWER, UNLESS
     3     (1)  ALL FIVE POINTS WERE INCURRED FROM ONE VIOLATION.
     4     (2)  THE DRIVER'S LICENSE OR MOTOR VEHICLE REGISTRATION OF
     5  THE NAMED INSURED HAS BEEN SUSPENDED OR REVOKED.
     6     (3)  IF, HOWEVER, THE DRIVER'S LICENSE HAS BEEN SUSPENDED
     7  UNDER 75 PA.C.S. § 1533 (RELATING TO SUSPENSION OF OPERATING
     8  PRIVILEGE FOR FAILURE TO RESPOND TO CITATION) AND THE INSURED IS
     9  ABLE TO PRODUCE PROOF THAT HE OR SHE HAS RESPONDED TO ALL
    10  CITATIONS AND PAID ALL FINES AND PENALTIES IMPOSED UNDER THAT
    11  SECTION AND THAT HE OR SHE HAS DONE SO ON OR BEFORE THE
    12  TERMINATION DATE OF THE POLICY, THIS SUSPENSION SHALL NOT BE
    13  GROUNDS FOR CANCELLATION OR FOR REFUSAL TO RENEW.
    14     (F)  THE APPLICABILITY OF SUBSECTION (E) TO ONE, OTHER THAN
    15  THE NAMED INSURED, WHO EITHER IS A RESIDENT IN THE SAME
    16  HOUSEHOLD OR WHO CUSTOMARILY OPERATES AN AUTOMOBILE INSURED
    17  UNDER THE POLICY SHALL BE PROPER REASON FOR THE INSURER TO
    18  EXCLUDE THAT INDIVIDUAL FROM COVERAGE UNDER THE POLICY BUT NOT
    19  FOR CANCELLING THE POLICY.
    20     (G)  AS USED IN SUBSECTION (E), "POINTS" SHALL MEAN POINTS AS
    21  SET FORTH IN 75 PA.C.S. § 1501 (RELATING TO LICENSING OF
    22  DRIVERS).
    23     SECTION 2004.  VALID REASONS TO CANCEL POLICY.--AN INSURER
    24  MAY NOT CANCEL A POLICY EXCEPT FOR ONE OR MORE OF THE FOLLOWING
    25  SPECIFIED REASONS:
    26     (1)  NONPAYMENT OF PREMIUM.
    27     (2)  THE DRIVER'S LICENSE OR MOTOR VEHICLE REGISTRATION OF
    28  THE NAMED INSURED HAS BEEN UNDER SUSPENSION OR REVOCATION DURING
    29  THE POLICY PERIOD; THE APPLICABILITY OF THIS REASON TO ONE WHO
    30  EITHER IS A RESIDENT IN THE SAME HOUSEHOLD OR WHO CUSTOMARILY
    19970S0091B2082                 - 13 -

     1  OPERATES AN AUTOMOBILE INSURED UNDER THE POLICY SHALL BE PROPER
     2  REASON FOR THE INSURER THEREAFTER EXCLUDING SUCH INDIVIDUAL FROM
     3  COVERAGE UNDER THE POLICY, BUT NOT FOR CANCELLING THE POLICY.
     4     (3)  A DETERMINATION THAT THE INSURED HAS CONCEALED A
     5  MATERIAL FACT, OR HAS MADE A MATERIAL ALLEGATION CONTRARY TO
     6  FACT, OR HAS MADE A MISREPRESENTATION OF A MATERIAL FACT AND
     7  THAT SUCH CONCEALMENT, ALLEGATION OR MISREPRESENTATION WAS
     8  MATERIAL TO THE ACCEPTANCE OF THE RISK BY THE INSURER.
     9     SECTION 2005.  POLICY PREMIUM INCREASES.--(A)  AN INSURER MAY
    10  NOT INCREASE AN INDIVIDUAL INSURED'S PREMIUM OR ASSESS A PREMIUM
    11  SURCHARGE ON THE BASIS OF ANY MOVING TRAFFIC VIOLATION RECORDS,
    12  ANY REVOCATION OR SUSPENSION RECORDS, OR ANY ACCIDENT RECORDS,
    13  IF ANY OF THE FOLLOWING OCCURS:
    14     (1)  THE INSURED ESTABLISHES THAT THE RECORDS ARE ERRONEOUS
    15  OR INACCURATE.
    16     (2)  THE CITATION IS IMPOSED UNDER 75 PA.C.S. § 1533
    17  (RELATING TO SUSPENSION OF OPERATING PRIVILEGE FOR FAILURE TO
    18  RESPOND TO CITATION) AND THE INSURED IS ABLE TO PRODUCE PROOF
    19  THAT HE OR SHE HAS RESPONDED TO THE CITATION AND PAID THE FINES
    20  AND PENALTIES IMPOSED UNDER THAT SECTION. AN INCREASE OR
    21  SURCHARGE IMPOSED PRIOR TO THE DATE WHEN AN INSURED PROVIDES
    22  THIS PROOF SHALL TERMINATE AS OF THE DATE THE INSURED RESPONDED
    23  TO THE CITATION WHICH IS THE SUBJECT OF THE INCREASE OR
    24  SURCHARGE.
    25     (B)  AT THE TIME AN INCREASE OR SURCHARGE IS APPLIED, THE
    26  INSURER SHALL NOTIFY THE INSURED THAT THE INCREASE OR SURCHARGE
    27  WILL BE TERMINATED IF THE INSURED IS ABLE TO PROVIDE THE INSURER
    28  WITH PROOF THAT THE INSURED HAS RESPONDED TO ALL CITATIONS
    29  IMPOSED UNDER 75 PA.C.S. § 1533 AND PAID ANY FINES AND PENALTIES
    30  IMPOSED UNDER THAT SECTION.
    19970S0091B2082                 - 14 -

     1     (C)  ALL INSURERS SHALL PROVIDE TO INSUREDS A DETAILED
     2  STATEMENT OF THE COMPONENTS OF A PREMIUM AND SHALL SPECIFICALLY
     3  SHOW THE AMOUNT OF A SURCHARGE OR OTHER ADDITIONAL AMOUNT THAT
     4  IS CHARGED AS A RESULT OF A CLAIM HAVING BEEN MADE UNDER A
     5  POLICY OF INSURANCE OR AS A RESULT OF ANY OTHER FACTORS.
     6     SECTION 2006.  PROPER NOTIFICATION OF INTENTION TO CANCEL.--A
     7  CANCELLATION OR REFUSAL TO RENEW BY AN INSURER OF A POLICY OF
     8  AUTOMOBILE INSURANCE SHALL NOT BE EFFECTIVE UNLESS THE INSURER
     9  DELIVERS OR MAILS TO THE NAMED INSURED AT THE ADDRESS SHOWN IN
    10  THE POLICY A WRITTEN NOTICE OF THE CANCELLATION OR REFUSAL TO
    11  RENEW. THE NOTICE SHALL:
    12     (1)  BE IN A FORM ACCEPTABLE TO THE INSURANCE COMMISSIONER.
    13     (2)  STATE THE DATE, NOT LESS THAN SIXTY (60) DAYS AFTER THE
    14  DATE OF THE MAILING OR DELIVERY, ON WHICH CANCELLATION OR
    15  REFUSAL TO RENEW SHALL BECOME EFFECTIVE. WHEN THE POLICY IS
    16  BEING CANCELLED OR NOT RENEWED FOR THE REASONS SET FORTH IN
    17  SECTION 2004(1) AND (2), HOWEVER, THE EFFECTIVE DATE MAY BE
    18  FIFTEEN (15) DAYS FROM THE DATE OF MAILING OR DELIVERY.
    19     (3)  STATE THE SPECIFIC REASON OR REASONS OF THE INSURER FOR
    20  CANCELLATION OR REFUSAL TO RENEW.
    21     (4)  ADVISE THE INSURED OF HIS RIGHT TO REQUEST IN WRITING,
    22  WITHIN THIRTY (30) DAYS OF THE RECEIPT OF THE NOTICE OF
    23  CANCELLATION OR INTENTION NOT TO RENEW AND OF THE RECEIPT OF THE
    24  REASON OR REASONS FOR THE CANCELLATION OR REFUSAL TO RENEW AS
    25  STATED IN THE NOTICE OF CANCELLATION OR OF INTENTION NOT TO
    26  RENEW, THAT THE INSURANCE COMMISSIONER REVIEW THE ACTION OF THE
    27  INSURER.
    28     (5)  EITHER IN THE NOTICE OR IN AN ACCOMPANYING STATEMENT
    29  ADVISE THE INSURED OF HIS POSSIBLE ELIGIBILITY FOR INSURANCE
    30  THROUGH THE AUTOMOBILE ASSIGNED RISK PLAN.
    19970S0091B2082                 - 15 -

     1     (6)  ADVISE THE INSURED THAT HE MUST OBTAIN COMPULSORY
     2  AUTOMOBILE INSURANCE COVERAGE IF HE OPERATES OR REGISTERS A
     3  MOTOR VEHICLE IN THIS COMMONWEALTH, THAT THE INSURER IS
     4  NOTIFYING THE DEPARTMENT OF TRANSPORTATION THAT THE INSURANCE IS
     5  BEING CANCELLED OR NOT RENEWED, AND THAT THE INSURED MUST NOTIFY
     6  THE DEPARTMENT OF TRANSPORTATION THAT HE HAS REPLACED SAID
     7  COVERAGE.
     8     (7)  CLEARLY STATE THAT, WHEN COVERAGE IS TO BE TERMINATED
     9  DUE TO NONRESPONSE TO A CITATION IMPOSED UNDER 75 PA.C.S. § 1533
    10  (RELATING TO SUSPENSION OF OPERATING PRIVILEGE FOR FAILURE TO
    11  RESPOND TO CITATION) OR NONPAYMENT OF A FINE OR PENALTY IMPOSED
    12  UNDER THAT SECTION, COVERAGE SHALL NOT TERMINATE IF THE INSURED
    13  PROVIDES THE INSURER WITH PROOF THAT THE INSURED HAS RESPONDED
    14  TO ALL CITATIONS AND PAID ALL FINES AND PENALTIES AND THAT HE
    15  HAS DONE SO ON OR BEFORE THE TERMINATION DATE OF THE POLICY.
    16     SECTION 2007.  EXEMPTION FROM LIABILITY.--THERE SHALL BE NO
    17  LIABILITY ON THE PART OF AND NO CAUSE OF ACTION OF ANY NATURE
    18  SHALL ARISE AGAINST THE INSURANCE COMMISSIONER, ANY INSURER, THE
    19  AUTHORIZED REPRESENTATIVES, AGENTS AND EMPLOYES OF EITHER OR ANY
    20  FIRM, PERSON OR CORPORATION FURNISHING TO THE INSURER
    21  INFORMATION AS TO REASONS FOR CANCELLATION OR REFUSAL TO WRITE
    22  OR RENEW FOR ANY STATEMENT MADE BY ANY OF THEM IN COMPLYING WITH
    23  THIS ACT OR FOR THE PROVIDING OF INFORMATION PERTAINING THERETO.
    24  THE INSURER MUST FURNISH THE INSURED THE NOTIFICATION REQUIRED
    25  BY THE FEDERAL FAIR CREDIT REPORTING ACT, 15 U.S.C. § 1601 ET
    26  SEQ., WHEN SUCH CANCELLATIONS OR REFUSAL TO WRITE OR RENEW
    27  OCCUR.
    28     SECTION 2008.  REQUEST FOR REVIEW.--(A)  ANY INSURED MAY,
    29  WITHIN THIRTY (30) DAYS OF THE RECEIPT BY THE INSURED OF NOTICE
    30  OF CANCELLATION OR NOTICE OF INTENTION NOT TO RENEW AND OF THE
    19970S0091B2082                 - 16 -

     1  RECEIPT OF THE REASON OR REASONS FOR THE CANCELLATION OR REFUSAL
     2  TO RENEW AS STATED IN THE NOTICE, REQUEST IN WRITING TO THE
     3  INSURANCE COMMISSIONER THAT THE INSURANCE COMMISSIONER REVIEW
     4  THE ACTION OF THE INSURER IN CANCELLING OR REFUSING TO RENEW THE
     5  POLICY OF SUCH INSURED.
     6     (B)  ANY APPLICANT FOR A POLICY WHO IS REFUSED A POLICY BY AN
     7  INSURER SHALL BE GIVEN A WRITTEN NOTICE OF REFUSAL TO WRITE BY
     8  THE INSURER. THE NOTICE SHALL STATE THE SPECIFIC REASON OR
     9  REASONS OF THE INSURER FOR REFUSAL TO WRITE A POLICY FOR THE
    10  APPLICANT. WITHIN THIRTY (30) DAYS OF THE RECEIPT OF SUCH
    11  REASONS, THE APPLICANT MAY REQUEST IN WRITING TO THE INSURANCE
    12  COMMISSIONER THAT THE INSURANCE COMMISSIONER REVIEW THE ACTION
    13  OF THE INSURER IN REFUSING TO WRITE A POLICY FOR THE APPLICANT.
    14     SECTION 2009.  REVIEW PROCEDURE.--(A)  ON RECEIPT OF A
    15  REQUEST FOR REVIEW, THE INSURANCE COMMISSIONER SHALL NOTIFY THE
    16  INSURER THAT A REVIEW HAS BEEN REQUESTED. THE INSURANCE
    17  COMMISSIONER SHALL REVIEW THE MATTER TO DETERMINE WHETHER THE
    18  CANCELLATION OR REFUSAL TO RENEW OR TO WRITE WAS IN VIOLATION OF
    19  THIS ARTICLE AND SHALL, WITHIN FORTY (40) DAYS OF THE RECEIPT OF
    20  SUCH REQUEST, EITHER ORDER THE POLICY WRITTEN OR REINSTATED OR
    21  UPHOLD THE CANCELLATION OR REFUSAL TO RENEW.
    22     (B)  AFTER A REVIEW OF A CANCELLATION OF OR REFUSAL TO RENEW
    23  A POLICY, IF THE INSURANCE COMMISSIONER FINDS THE INSURER NOT TO
    24  BE IN VIOLATION OF THIS ARTICLE, THE POLICY SHALL REMAIN IN
    25  EFFECT UNTIL THE DATE REFERRED TO IN SECTION 2006(2), OR THIRTY
    26  (30) DAYS FOLLOWING THE CONCLUSION OF THE REVIEW PROVIDED FOR IN
    27  SUBSECTION (A), WHICHEVER IS LATER. PROVIDED, HOWEVER, FOR
    28  REVIEW OF CANCELLATIONS UNDER SECTION 2004(1), THE POLICY SHALL
    29  TERMINATE AS OF THE DATE PROVIDED IN THE NOTICE UNDER SECTION
    30  2006(2) UNLESS THE POLICY IS REINSTATED. NOTHING IN THIS
    19970S0091B2082                 - 17 -

     1  SUBSECTION SHALL BE CONSTRUED TO PREVENT THE INSURER, AT ITS
     2  DISCRETION, FROM CONTINUING COVERAGE AFTER THE INITIAL REVIEW
     3  PERIOD UNTIL SUCH TIME AS THE INSURANCE COMMISSIONER HAS ISSUED
     4  A FINAL ORDER.
     5     (C)  AFTER REVIEW OF A CANCELLATION OF OR REFUSAL TO RENEW A
     6  POLICY, IF THE INSURANCE COMMISSIONER FINDS THE INSURER TO BE IN
     7  VIOLATION OF THIS ARTICLE, AND THE INSURER REQUESTS A HEARING
     8  PURSUANT TO SUBSECTION (D), THE POLICY SHALL REMAIN IN EFFECT
     9  UNTIL SUCH TIME AS THE INSURANCE COMMISSIONER HAS ISSUED A FINAL
    10  ORDER.
    11     (D)  IF EITHER OF THE PARTIES SHALL DISPUTE THE INSURANCE
    12  COMMISSIONER'S FINDINGS, THAT PARTY SHALL HAVE THE RIGHT TO A
    13  FORMAL HEARING. IN THE EVENT A HEARING IS REQUESTED, THE
    14  INSURANCE COMMISSIONER SHALL ISSUE NOTICE OF THE HEARING, WHICH
    15  SHALL STATE THE TIME AND PLACE FOR THE HEARING WHICH SHALL NOT
    16  BE LESS THAN THIRTY (30) DAYS FROM THE DATE OF NOTICE.
    17     (E)  AT THE TIME AND PLACE FIXED FOR THE HEARING IN THE
    18  NOTICE, THE PARTIES SHALL HAVE AN OPPORTUNITY TO BE HEARD.
    19     (F)  UPON GOOD CAUSE SHOWN, THE INSURANCE COMMISSIONER SHALL
    20  PERMIT ANY PERSON TO INTERVENE, APPEAR AND BE HEARD AT THE
    21  HEARING, IN PERSON OR BY COUNSEL.
    22     (G)  THE INSURANCE COMMISSIONER MAY ADMINISTER OATHS, EXAMINE
    23  AND CROSS-EXAMINE WITNESSES, RECEIVE ORAL AND DOCUMENTARY
    24  EVIDENCE AND SUBPOENA WITNESSES, COMPEL THEIR ATTENDANCE AND
    25  REQUIRE THE PRODUCTION OF BOOKS, PAPERS, RECORDS OR OTHER
    26  DOCUMENTS WHICH HE DEEMS RELEVANT TO THE HEARING. THE INSURANCE
    27  COMMISSIONER SHALL CAUSE A RECORD TO BE KEPT OF ALL EVIDENCE AND
    28  ALL PROCEEDINGS AT THE HEARINGS.
    29     (H)  THE INSURER SHALL BEAR THE BURDEN AT THE HEARING TO
    30  PROVE THAT THE CANCELLATION OR REFUSAL TO RENEW COMPLIES WITH
    19970S0091B2082                 - 18 -

     1  THIS ARTICLE. HOWEVER, IF THE INSURED REQUESTED THE HEARING, AND
     2  FAILS TO APPEAR AT THE TIME AND PLACE FOR THE HEARING, THE
     3  INSURANCE COMMISSIONER MAY CONSIDER A MOTION TO DISMISS AND
     4  SHALL NOT BE COMPELLED TO TAKE EVIDENCE AT THE SCHEDULED
     5  HEARING. IN ADDITION TO ANY REMEDY IN SUBSECTION (I), THE
     6  INSURANCE COMMISSIONER SHALL HAVE THE AUTHORITY TO ORDER AN
     7  INSURER TO CEASE AND DESIST FROM ACTS CONSTITUTING A VIOLATION
     8  OF THIS ARTICLE.
     9     (I)  FOLLOWING THE HEARING, THE INSURANCE COMMISSIONER SHALL
    10  ISSUE A WRITTEN ORDER RESOLVING THE FACTUAL ISSUES PRESENTED AT
    11  THE HEARING AND STATING WHAT REMEDIAL ACTION, IF ANY, IS
    12  REQUIRED. IF THE INSURANCE COMMISSIONER FINDS THAT THE
    13  CANCELLATION OR REFUSAL TO RENEW VIOLATES THIS ARTICLE, THEN THE
    14  REMEDIAL ACTION ORDERED BY THE INSURANCE COMMISSIONER SHALL
    15  INCLUDE AT LEAST ONE OF THE FOLLOWING:
    16     (1)  THAT THE INSURER REIMBURSE THE INSURED FOR ANY INCREASE
    17  IN THE COST OF INSURANCE AND ANY SHORT-TERM CANCELLATION FEES
    18  WHICH ARE INCURRED.
    19     (2)  THAT THE INSURER REINSTATE THE ORIGINAL POLICY
    20  PROSPECTIVELY.
    21     (3)  THAT IF AN INSURER HAS ELECTED TO CONTINUE COVERAGE
    22  PURSUANT TO SUBSECTION (B), THE COVERAGE SHALL REMAIN IN FULL
    23  FORCE AND EFFECT UNDER THE TERMS OF THE POLICY. REIMBURSEMENT
    24  SHALL BE IN THE AMOUNT INCURRED BY THE INSURED TO SECURE
    25  REPLACEMENT COVERAGE DURING THE PENDENCY OF THE HEARING PROCESS,
    26  WHICH COST EXCEEDS THE COST WHICH WOULD HAVE BEEN INCURRED HAD
    27  THE POLICY UNDER REVIEW REMAINED IN EFFECT. THE REIMBURSEMENT
    28  SHALL BE BASED ON THE DIFFERENCE OF THE COST OF THE POLICIES TO
    29  THE EXTENT THAT THE COVERAGE AND LIMITS OF THE REPLACEMENT
    30  COVERAGE DOES NOT EXCEED THE ORIGINAL COVERAGE. THE INSURED
    19970S0091B2082                 - 19 -

     1  SHALL BEAR THE BURDEN TO REQUEST REIMBURSEMENT AND PROVE ANY
     2  INCREASE IN THE COST OF INSURANCE. IN ADDITION, IF A PROSPECTIVE
     3  REINSTATEMENT OF THE ORIGINAL POLICY IS ORDERED, THEN THE
     4  REINSTATEMENT SHALL TAKE EFFECT ON THE NEXT POLICY ANNIVERSARY
     5  DATE, UNLESS THE INSURED REQUESTS THAT THE REINSTATEMENT TAKE
     6  EFFECT AT AN EARLIER DATE.
     7     (J)  THE INSURANCE COMMISSIONER SHALL SEND A COPY OF THE
     8  ORDER TO THE PARTIES PARTICIPATING IN THE HEARING.
     9     (K)  ALL OF THE ACTIONS WHICH MAY BE PERFORMED BY THE
    10  INSURANCE COMMISSIONER IN THIS SECTION MAY BE PERFORMED BY THE
    11  INSURANCE COMMISSIONER'S DESIGNATED REPRESENTATIVE.
    12     SECTION 2010.  REGULATIONS.--(A)  THE INSURANCE COMMISSIONER
    13  SHALL PROMULGATE RULES AND REGULATIONS NECESSARY FOR THE
    14  ADMINISTRATION OF THIS ARTICLE.
    15     (B)  THE INSURANCE COMMISSIONER MAY PROVIDE IN SUCH RULES AND
    16  REGULATIONS FOR THE ESTABLISHMENT OF A FILING FEE NOT EXCEEDING
    17  FIFTEEN DOLLARS ($15) TO ACCOMPANY THE REQUEST FOR REVIEW.
    18  SHOULD THE INSURANCE COMMISSIONER DECIDE THE APPEAL IN FAVOR OF
    19  THE INSURED, THE FILING FEE SHALL BE RETURNED IMMEDIATELY AND
    20  THE FEE SHALL BE PAID BY THE INSURER. NO PART OF THE REVIEW BY
    21  THE INSURANCE COMMISSIONER SHALL BE SUBJECT TO THE PROVISIONS OF
    22  2 PA.C.S. §§ 501 THROUGH 508 (RELATING TO PRACTICE AND PROCEDURE
    23  OF COMMONWEALTH AGENCIES).
    24     SECTION 2011.  APPEAL.--(A)  THE DECISION OF THE INSURANCE
    25  COMMISSIONER SHALL BE SUBJECT TO APPEAL IN ACCORDANCE WITH 2
    26  PA.C.S. §§ 701 THROUGH 704 (RELATING TO JUDICIAL REVIEW OF
    27  COMMONWEALTH AGENCY ACTION), BUT THE COURT HEARING AN APPEAL
    28  SHALL NOT DECLINE TO AFFIRM A DECISION ON THE GROUND THAT THE
    29  REQUIREMENTS OF 2 PA.C.S. §§ 501 THROUGH 508 WERE NOT FULFILLED.
    30     (B)  UPON A DETERMINATION THAT THIS ARTICLE HAS BEEN
    19970S0091B2082                 - 20 -

     1  VIOLATED, THE INSURANCE COMMISSIONER MAY ISSUE AN ORDER
     2  REQUIRING THE INSURER TO CEASE AND DESIST FROM ENGAGING IN SUCH
     3  VIOLATION.
     4     (C)  WHENEVER A VIOLATOR FAILS TO COMPLY WITH AN ORDER OF THE
     5  INSURANCE COMMISSIONER TO CEASE AND DESIST FROM ENGAGING IN SUCH
     6  VIOLATION, THE INSURANCE COMMISSIONER MAY CAUSE AN ACTION FOR
     7  INJUNCTION TO BE FILED IN COURT REGARDLESS OF WHETHER AN INSURER
     8  IS LICENSED BY THE INSURANCE COMMISSIONER.
     9     SECTION 2012.  INFORMATION AND REPORT.--EACH INSURER SHALL
    10  MAINTAIN RECORDS OF THE NUMBERS OF CANCELLATIONS AND REFUSALS TO
    11  WRITE OR RENEW POLICIES AND THE REASONS THEREFOR AND SHALL
    12  SUPPLY THIS INFORMATION TO THE INSURANCE COMMISSIONER UPON HIS
    13  REQUEST.
    14     SECTION 2013.  PENALTY.--ANY INDIVIDUAL OR INSURER WHO
    15  VIOLATES ANY OF THE PROVISIONS OF THIS ARTICLE MAY BE SENTENCED
    16  TO PAY A FINE NOT TO EXCEED FIVE THOUSAND DOLLARS ($5,000).
    17                            ARTICLE XXI.
    18         QUALITY HEALTH CARE ACCOUNTABILITY AND PROTECTION.
    19                    (A)  PRELIMINARY PROVISIONS
    20     SECTION 2101.  SCOPE.--THIS ARTICLE GOVERNS QUALITY HEALTH
    21  CARE ACCOUNTABILITY AND PROTECTION.
    22     SECTION 2102.  DEFINITIONS.--AS USED IN THIS ARTICLE THE
    23  FOLLOWING WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO
    24  THEM IN THIS SECTION:
    25     "ACTIVE CLINICAL PRACTICE."  THE PRACTICE OF CLINICAL
    26  MEDICINE BY A HEALTH CARE PROVIDER FOR AN AVERAGE OF NOT LESS
    27  THAN TWENTY (20) HOURS PER WEEK.
    28     "ANCILLARY SERVICE PLANS."  ANY INDIVIDUAL OR GROUP HEALTH
    29  INSURANCE PLAN, SUBSCRIBER CONTRACT OR CERTIFICATE THAT PROVIDES
    30  EXCLUSIVE COVERAGE FOR DENTAL SERVICES OR VISION SERVICES. THE
    19970S0091B2082                 - 21 -

     1  TERM ALSO INCLUDES MEDICARE SUPPLEMENT POLICIES SUBJECT TO
     2  SECTION 1882 OF THE SOCIAL SECURITY ACT (49 STAT. 620, 42 U.S.C.
     3  § 1395SS) AND THE CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE
     4  UNIFORMED SERVICES (CHAMPUS) SUPPLEMENT.
     5     "CLEAN CLAIM."  A CLAIM FOR PAYMENT FOR A HEALTH CARE SERVICE
     6  WHICH HAS NO DEFECT OR IMPROPRIETY. A DEFECT OR IMPROPRIETY
     7  SHALL INCLUDE LACK OF REQUIRED SUBSTANTIATING DOCUMENTATION OR A
     8  PARTICULAR CIRCUMSTANCE REQUIRING SPECIAL TREATMENT WHICH
     9  PREVENTS TIMELY PAYMENT FROM BEING MADE ON THE CLAIM. THE TERM
    10  SHALL NOT INCLUDE A CLAIM FROM A HEALTH CARE PROVIDER WHO IS
    11  UNDER INVESTIGATION FOR FRAUD OR ABUSE REGARDING THAT CLAIM.
    12     "COMPLAINT."  A DISPUTE OR OBJECTION REGARDING A
    13  PARTICIPATING HEALTH CARE PROVIDER OR THE COVERAGE, OPERATIONS
    14  OR MANAGEMENT POLICIES OF A MANAGED CARE PLAN, WHICH HAS NOT
    15  BEEN RESOLVED BY THE MANAGED CARE PLAN AND HAS BEEN FILED WITH
    16  THE PLAN OR WITH THE DEPARTMENT OF HEALTH OR THE INSURANCE
    17  DEPARTMENT OF THE COMMONWEALTH. THE TERM DOES NOT INCLUDE A
    18  GRIEVANCE.
    19     "CONCURRENT UTILIZATION REVIEW."  A REVIEW BY A UTILIZATION
    20  REVIEW ENTITY OF ALL REASONABLY NECESSARY SUPPORTING
    21  INFORMATION, WHICH OCCURS DURING AN ENROLLEE'S HOSPITAL STAY OR
    22  COURSE OF TREATMENT AND RESULTS IN A DECISION TO APPROVE OR DENY
    23  PAYMENT FOR THE HEALTH CARE SERVICE.
    24     "DEPARTMENT."  THE DEPARTMENT OF HEALTH OF THE COMMONWEALTH.
    25     "DRUG FORMULARY."  A LISTING OF MANAGED CARE PLAN PREFERRED
    26  THERAPEUTIC DRUGS.
    27     "EMERGENCY SERVICE."  ANY HEALTH CARE SERVICE PROVIDED TO AN
    28  ENROLLEE AFTER THE SUDDEN ONSET OF A MEDICAL CONDITION THAT
    29  MANIFESTS ITSELF BY ACUTE SYMPTOMS OF SUFFICIENT SEVERITY OR
    30  SEVERE PAIN, SUCH THAT A PRUDENT LAYPERSON, WHO POSSESSES AN
    19970S0091B2082                 - 22 -

     1  AVERAGE KNOWLEDGE OF HEALTH AND MEDICINE, COULD REASONABLY
     2  EXPECT THE ABSENCE OF IMMEDIATE MEDICAL ATTENTION TO RESULT IN:
     3     (1)  PLACING THE HEALTH OF THE ENROLLEE, OR, WITH RESPECT TO
     4  A PREGNANT WOMAN, THE HEALTH OF THE WOMAN OR HER UNBORN CHILD,
     5  IN SERIOUS JEOPARDY;
     6     (2)  SERIOUS IMPAIRMENT TO BODILY FUNCTIONS; OR
     7     (3)  SERIOUS DYSFUNCTION OF ANY BODILY ORGAN OR PART.
     8  EMERGENCY TRANSPORTATION AND RELATED EMERGENCY SERVICE PROVIDED
     9  BY A LICENSED AMBULANCE SERVICE SHALL CONSTITUTE AN EMERGENCY
    10  SERVICE.
    11     "ENROLLEE."  ANY POLICYHOLDER, SUBSCRIBER, COVERED PERSON OR
    12  OTHER INDIVIDUAL WHO IS ENTITLED TO RECEIVE HEALTH CARE SERVICES
    13  UNDER A MANAGED CARE PLAN.
    14     "GRIEVANCE."  AS PROVIDED IN SUBARTICLE (I), A REQUEST BY AN
    15  ENROLLEE OR A HEALTH CARE PROVIDER, WITH THE WRITTEN CONSENT OF
    16  THE ENROLLEE, TO HAVE A MANAGED CARE PLAN OR UTILIZATION REVIEW
    17  ENTITY RECONSIDER A DECISION SOLELY CONCERNING THE MEDICAL
    18  NECESSITY AND APPROPRIATENESS OF A HEALTH CARE SERVICE. IF THE
    19  MANAGED CARE PLAN IS UNABLE TO RESOLVE THE MATTER, A GRIEVANCE
    20  MAY BE FILED REGARDING THE DECISION THAT:
    21     (1)  DISAPPROVES FULL OR PARTIAL PAYMENT FOR A REQUESTED
    22  HEALTH CARE SERVICE;
    23     (2)  APPROVES THE PROVISION OF A REQUESTED HEALTH CARE
    24  SERVICE FOR A LESSER SCOPE OR DURATION THAN REQUESTED; OR
    25     (3)  DISAPPROVES PAYMENT FOR THE PROVISION OF A REQUESTED
    26  HEALTH CARE SERVICE BUT APPROVES PAYMENT FOR THE PROVISION OF AN
    27  ALTERNATIVE HEALTH CARE SERVICE.
    28  THE TERM DOES NOT INCLUDE A COMPLAINT.
    29     "HEALTH CARE PROVIDER."  A LICENSED HOSPITAL OR HEALTH CARE
    30  FACILITY, MEDICAL EQUIPMENT SUPPLIER OR PERSON WHO IS LICENSED,
    19970S0091B2082                 - 23 -

     1  CERTIFIED OR OTHERWISE REGULATED TO PROVIDE HEALTH CARE SERVICES
     2  UNDER THE LAWS OF THIS COMMONWEALTH, INCLUDING A PHYSICIAN,
     3  PODIATRIST, OPTOMETRIST, PSYCHOLOGIST, PHYSICAL THERAPIST,
     4  CERTIFIED NURSE PRACTITIONER, REGISTERED NURSE, NURSE MIDWIFE,
     5  PHYSICIAN'S ASSISTANT, CHIROPRACTOR, DENTIST, PHARMACIST OR AN
     6  INDIVIDUAL ACCREDITED OR CERTIFIED TO PROVIDE BEHAVIORAL HEALTH
     7  SERVICES.
     8     "HEALTH CARE SERVICE."  ANY COVERED TREATMENT, ADMISSION,
     9  PROCEDURE, MEDICAL SUPPLIES AND EQUIPMENT, OR OTHER SERVICES,
    10  INCLUDING BEHAVIORAL HEALTH, PRESCRIBED OR OTHERWISE PROVIDED OR
    11  PROPOSED TO BE PROVIDED BY A HEALTH CARE PROVIDER TO AN ENROLLEE
    12  UNDER A MANAGED CARE PLAN CONTRACT.
    13     "MANAGED CARE PLAN."  A HEALTH CARE PLAN THAT: USES A
    14  GATEKEEPER TO MANAGE THE UTILIZATION OF HEALTH CARE SERVICES;
    15  INTEGRATES THE FINANCING AND DELIVERY OF HEALTH CARE SERVICES TO
    16  ENROLLEES BY ARRANGEMENTS WITH HEALTH CARE PROVIDERS SELECTED TO
    17  PARTICIPATE ON THE BASIS OF SPECIFIC STANDARDS; AND PROVIDES
    18  FINANCIAL INCENTIVES FOR ENROLLEES TO USE THE PARTICIPATING
    19  HEALTH CARE PROVIDERS IN ACCORDANCE WITH PROCEDURES ESTABLISHED
    20  BY THE PLAN. A MANAGED CARE PLAN INCLUDES HEALTH CARE ARRANGED
    21  THROUGH AN ENTITY OPERATING UNDER ANY OF THE FOLLOWING:
    22     (1)  SECTION 630.
    23     (2)  THE ACT OF DECEMBER 29, 1972 (P.L.1701, NO.364), KNOWN
    24  AS THE "HEALTH MAINTENANCE ORGANIZATION ACT."
    25     (3)  THE ACT OF DECEMBER 14, 1992 (P.L.835, NO.134), KNOWN AS
    26  THE "FRATERNAL BENEFIT SOCIETIES CODE."
    27     (4)  40 PA.C.S. CH. 61 (RELATING TO HOSPITAL PLAN
    28  CORPORATIONS).
    29     (5)  40 PA.C.S. CH. 63 (RELATING TO PROFESSIONAL HEALTH
    30  SERVICES PLAN CORPORATIONS).
    19970S0091B2082                 - 24 -

     1  THE TERM INCLUDES AN ENTITY, INCLUDING A MUNICIPALITY, WHETHER
     2  LICENSED OR UNLICENSED, THAT CONTRACTS WITH OR FUNCTIONS AS A
     3  MANAGED CARE PLAN TO PROVIDE HEALTH CARE SERVICES TO ENROLLEES.
     4  THE TERM DOES NOT INCLUDE ANCILLARY SERVICE PLANS OR AN
     5  INDEMNITY ARRANGEMENT WHICH IS PRIMARILY FEE FOR SERVICE.
     6     "PLAN."   A MANAGED CARE PLAN.
     7     "PRIMARY CARE PROVIDER."  A HEALTH CARE PROVIDER WHO, WITHIN
     8  THE SCOPE OF THE PROVIDER'S PRACTICE: SUPERVISES, COORDINATES,
     9  PRESCRIBES OR OTHERWISE PROVIDES OR PROPOSES TO PROVIDE HEALTH
    10  CARE SERVICES TO AN ENROLLEE; INITIATES ENROLLEE REFERRAL FOR
    11  SPECIALIST CARE; AND MAINTAINS CONTINUITY OF ENROLLEE CARE.
    12     "PROSPECTIVE UTILIZATION REVIEW."  A REVIEW BY A UTILIZATION
    13  REVIEW ENTITY OF ALL REASONABLY NECESSARY SUPPORTING INFORMATION
    14  THAT OCCURS PRIOR TO THE DELIVERY OR PROVISION OF A HEALTH CARE
    15  SERVICE AND RESULTS IN A DECISION TO APPROVE OR DENY PAYMENT FOR
    16  THE HEALTH CARE SERVICE.
    17     "PROVIDER NETWORK."  THE HEALTH CARE PROVIDERS DESIGNATED BY
    18  A MANAGED CARE PLAN TO PROVIDE HEALTH CARE SERVICES.
    19     "REFERRAL."  A PRIOR AUTHORIZATION FROM A MANAGED CARE PLAN
    20  OR A PARTICIPATING HEALTH CARE PROVIDER THAT ALLOWS AN ENROLLEE
    21  TO HAVE ONE OR MORE APPOINTMENTS WITH A HEALTH CARE PROVIDER FOR
    22  A HEALTH CARE SERVICE.
    23     "RETROSPECTIVE UTILIZATION REVIEW."  A REVIEW BY A
    24  UTILIZATION REVIEW ENTITY OF ALL REASONABLY NECESSARY SUPPORTING
    25  INFORMATION, WHICH OCCURS FOLLOWING DELIVERY OR PROVISION OF A
    26  HEALTH CARE SERVICE AND RESULTS IN A DECISION TO APPROVE OR DENY
    27  PAYMENT FOR THE HEALTH CARE SERVICE.
    28     "SERVICE AREA."  THE GEOGRAPHIC AREA FOR WHICH THE MANAGED
    29  CARE PLAN IS LICENSED OR HAS BEEN ISSUED A CERTIFICATE OF
    30  AUTHORITY.
    19970S0091B2082                 - 25 -

     1     "SPECIALIST."  A HEALTH CARE PROVIDER WHOSE PRACTICE IS NOT
     2  LIMITED TO PRIMARY HEALTH CARE SERVICES AND WHO: HAS ADDITIONAL
     3  POSTGRADUATE OR SPECIALIZED TRAINING; HAS BOARD CERTIFICATION;
     4  OR PRACTICES IN A LICENSED SPECIALIZED AREA OF HEALTH CARE. THE
     5  TERM INCLUDES A HEALTH CARE PROVIDER WHO IS NOT CLASSIFIED BY A
     6  PLAN SOLELY AS A PRIMARY CARE PROVIDER.
     7     "UTILIZATION REVIEW."  A SYSTEM OF PROSPECTIVE, CONCURRENT OR
     8  RETROSPECTIVE UTILIZATION REVIEW PERFORMED BY A UTILIZATION
     9  REVIEW ENTITY OF THE MEDICAL NECESSITY AND APPROPRIATENESS OF
    10  HEALTH CARE SERVICES PRESCRIBED, PROVIDED OR PROPOSED TO BE
    11  PROVIDED TO AN ENROLLEE. THE TERM DOES NOT INCLUDE ANY OF THE
    12  FOLLOWING:
    13     (1)  REQUESTS FOR CLARIFICATION OF COVERAGE, ELIGIBILITY OR
    14  HEALTH CARE SERVICE VERIFICATION.
    15     (2)  A HEALTH CARE PROVIDER'S INTERNAL QUALITY ASSURANCE OR
    16  UTILIZATION REVIEW PROCESS UNLESS THE REVIEW RESULTS IN DENIAL
    17  OF PAYMENT FOR A HEALTH CARE SERVICE.
    18     "UTILIZATION REVIEW ENTITY."  ANY ENTITY CERTIFIED PURSUANT
    19  TO SUBARTICLE (H) THAT PERFORMS UTILIZATION REVIEW ON BEHALF OF
    20  A MANAGED CARE PLAN.
    21                (B)  MANAGED CARE PLAN REQUIREMENTS
    22     SECTION 2111.  RESPONSIBILITIES OF MANAGED CARE PLANS.--A
    23  MANAGED CARE PLAN SHALL DO ALL OF THE FOLLOWING:
    24     (1)  ASSURE AVAILABILITY AND ACCESSIBILITY OF ADEQUATE HEALTH
    25  CARE PROVIDERS IN A TIMELY MANNER, WHICH ENABLES ENROLLEES TO
    26  HAVE ACCESS TO QUALITY CARE AND CONTINUITY OF HEALTH CARE
    27  SERVICES.
    28     (2)  CONSULT WITH HEALTH CARE PROVIDERS IN ACTIVE CLINICAL
    29  PRACTICE REGARDING PROFESSIONAL QUALIFICATIONS AND NECESSARY
    30  SPECIALISTS TO BE INCLUDED IN THE PLAN.
    19970S0091B2082                 - 26 -

     1     (3)  ADOPT AND MAINTAIN A DEFINITION OF MEDICAL NECESSITY
     2  USED BY THE PLAN IN DETERMINING HEALTH CARE SERVICES.
     3     (4)  ENSURE THAT EMERGENCY SERVICES ARE PROVIDED TWENTY-FOUR
     4  (24) HOURS A DAY, SEVEN (7) DAYS A WEEK AND PROVIDE REASONABLE
     5  PAYMENT OR REIMBURSEMENT FOR EMERGENCY SERVICES.
     6     (5)  ADOPT AND MAINTAIN PROCEDURES BY WHICH AN ENROLLEE CAN
     7  OBTAIN HEALTH CARE SERVICES OUTSIDE THE PLAN'S SERVICE AREA.
     8     (6)  ADOPT AND MAINTAIN PROCEDURES BY WHICH AN ENROLLEE WITH
     9  A LIFE-THREATENING, DEGENERATIVE OR DISABLING DISEASE OR
    10  CONDITION SHALL, UPON REQUEST, RECEIVE AN EVALUATION, AND IF THE
    11  PLAN'S ESTABLISHED STANDARDS ARE MET, BE PERMITTED TO RECEIVE:
    12     (I)  A STANDING REFERRAL TO A SPECIALIST WITH CLINICAL
    13  EXPERTISE IN TREATING THE DISEASE OR CONDITION; OR
    14     (II)  THE DESIGNATION OF A SPECIALIST TO PROVIDE AND
    15  COORDINATE THE ENROLLEE'S PRIMARY AND SPECIALTY CARE.
    16     THE REFERRAL TO OR DESIGNATION OF A SPECIALIST SHALL BE
    17  PURSUANT TO A TREATMENT PLAN APPROVED BY THE MANAGED CARE PLAN,
    18  IN CONSULTATION WITH THE PRIMARY CARE PROVIDER, THE ENROLLEE,
    19  AND, AS APPROPRIATE, THE SPECIALIST. WHEN POSSIBLE, THE
    20  SPECIALIST MUST BE A HEALTH CARE PROVIDER PARTICIPATING IN THE
    21  PLAN.
    22     (7)  PROVIDE DIRECT ACCESS TO OBSTETRICAL AND GYNECOLOGICAL
    23  SERVICES BY PERMITTING AN ENROLLEE TO SELECT A HEALTH CARE
    24  PROVIDER PARTICIPATING IN THE PLAN TO OBTAIN MATERNITY AND
    25  GYNECOLOGICAL CARE, INCLUDING MEDICALLY NECESSARY AND
    26  APPROPRIATE FOLLOW-UP CARE AND REFERRALS FOR DIAGNOSTIC TESTING
    27  RELATED TO MATERNITY AND GYNECOLOGICAL CARE, WITHOUT PRIOR
    28  APPROVAL FROM A PRIMARY CARE PROVIDER. THE HEALTH CARE SERVICES
    29  SHALL BE WITHIN THE SCOPE OF PRACTICE OF THE SELECTED HEALTH
    30  CARE PROVIDER. THE SELECTED HEALTH CARE PROVIDER SHALL INFORM
    19970S0091B2082                 - 27 -

     1  THE ENROLLEE'S PRIMARY CARE PROVIDER OF ALL HEALTH CARE SERVICES
     2  PROVIDED.
     3     (8)  ADOPT AND MAINTAIN A COMPLAINT PROCESS AS SET FORTH IN
     4  SUBARTICLE (G).
     5     (9)  ADOPT AND MAINTAIN A GRIEVANCE PROCESS AS SET FORTH IN
     6  SUBARTICLE (I).
     7     (10)  ADOPT AND MAINTAIN CREDENTIALING STANDARDS FOR HEALTH
     8  CARE PROVIDERS AS SET FORTH IN SUBARTICLE (D).
     9     (11)  ENSURE THAT THERE ARE PARTICIPATING HEALTH CARE
    10  PROVIDERS THAT ARE PHYSICALLY ACCESSIBLE TO PEOPLE WITH
    11  DISABILITIES AND CAN COMMUNICATE WITH INDIVIDUALS WITH SENSORY
    12  DISABILITIES IN ACCORDANCE WITH TITLE III OF THE AMERICANS WITH
    13  DISABILITIES ACT OF 1990 (PUBLIC LAW 101-336, 42 U.S.C. § 12181
    14  ET SEQ.).
    15     (12)  PROVIDE A LIST OF HEALTH CARE PROVIDERS PARTICIPATING
    16  IN THE PLAN TO THE DEPARTMENT EVERY TWO (2) YEARS, OR AS MAY
    17  OTHERWISE BE REQUIRED BY THE DEPARTMENT. THE LIST SHALL INCLUDE
    18  THE EXTENT TO WHICH HEALTH CARE PROVIDERS IN THE PLAN ARE
    19  ACCEPTING NEW ENROLLEES.
    20     (13)  REPORT TO THE DEPARTMENT AND THE INSURANCE DEPARTMENT
    21  IN ACCORDANCE WITH THE REQUIREMENTS OF THIS ARTICLE. SUCH
    22  INFORMATION SHALL INCLUDE THE NUMBER, TYPE AND DISPOSITION OF
    23  ALL COMPLAINTS AND GRIEVANCES FILED WITH THE PLAN.
    24     SECTION 2112.  FINANCIAL INCENTIVES PROHIBITION.--NO MANAGED
    25  CARE PLAN SHALL USE ANY FINANCIAL INCENTIVE THAT COMPENSATES A
    26  HEALTH CARE PROVIDER FOR PROVIDING LESS THAN MEDICALLY NECESSARY
    27  AND APPROPRIATE CARE TO AN ENROLLEE. NOTHING IN THIS SECTION
    28  SHALL BE DEEMED TO PROHIBIT A MANAGED CARE PLAN FROM USING A
    29  CAPITATED PAYMENT ARRANGEMENT OR OTHER RISK-SHARING ARRANGEMENT.
    30     SECTION 2113.  MEDICAL GAG CLAUSE PROHIBITION.--(A)  NO
    19970S0091B2082                 - 28 -

     1  MANAGED CARE PLAN MAY PENALIZE OR RESTRICT A HEALTH CARE
     2  PROVIDER FROM DISCUSSING:
     3     (1)  THE PROCESS THAT THE PLAN OR ANY ENTITY CONTRACTING WITH
     4  THE PLAN USES OR PROPOSES TO USE TO DENY PAYMENT FOR A HEALTH
     5  CARE SERVICE;
     6     (2)  MEDICALLY NECESSARY AND APPROPRIATE CARE WITH OR ON
     7  BEHALF OF AN ENROLLEE, INCLUDING INFORMATION REGARDING THE
     8  NATURE OF TREATMENT; RISKS OF TREATMENT; ALTERNATIVE TREATMENTS;
     9  OR THE AVAILABILITY OF ALTERNATE THERAPIES, CONSULTATION OR
    10  TESTS; OR
    11     (3)  THE DECISION OF ANY MANAGED CARE PLAN TO DENY PAYMENT
    12  FOR A HEALTH CARE SERVICE.
    13     (B)  A PROVISION TO PROHIBIT OR RESTRICT DISCLOSURE OF
    14  MEDICALLY NECESSARY AND APPROPRIATE HEALTH CARE INFORMATION
    15  CONTAINED IN A CONTRACT WITH A HEALTH CARE PROVIDER IS CONTRARY
    16  TO PUBLIC POLICY AND SHALL BE VOID AND UNENFORCEABLE.
    17     (C)  NO MANAGED CARE PLAN SHALL TERMINATE THE EMPLOYMENT OF
    18  OR A CONTRACT WITH A HEALTH CARE PROVIDER FOR ANY OF THE
    19  FOLLOWING:
    20     (1)  ADVOCATING FOR MEDICALLY NECESSARY AND APPROPRIATE
    21  HEALTH CARE CONSISTENT WITH THE DEGREE OF LEARNING AND SKILL
    22  ORDINARILY POSSESSED BY A REPUTABLE HEALTH CARE PROVIDER
    23  PRACTICING ACCORDING TO THE APPLICABLE LEGAL STANDARD OF CARE.
    24     (2)  FILING A GRIEVANCE PURSUANT TO THE PROCEDURES SET FORTH
    25  IN THIS ARTICLE.
    26     (3)  PROTESTING A DECISION, POLICY OR PRACTICE THAT THE
    27  HEALTH CARE PROVIDER, CONSISTENT WITH THE DEGREE OF LEARNING AND
    28  SKILL ORDINARILY POSSESSED BY A REPUTABLE HEALTH CARE PROVIDER
    29  PRACTICING ACCORDING TO THE APPLICABLE LEGAL STANDARD OF CARE,
    30  REASONABLY BELIEVES INTERFERES WITH THE HEALTH CARE PROVIDER'S
    19970S0091B2082                 - 29 -

     1  ABILITY TO PROVIDE MEDICALLY NECESSARY AND APPROPRIATE HEALTH
     2  CARE.
     3     (D)  NOTHING IN THIS SECTION SHALL:
     4     (1)  PROHIBIT A MANAGED CARE PLAN FROM MAKING A DETERMINATION
     5  NOT TO PAY FOR A PARTICULAR MEDICAL TREATMENT, SUPPLY OR
     6  SERVICE, ENFORCING REASONABLE PEER REVIEW OR UTILIZATION REVIEW
     7  PROTOCOLS OR MAKING A DETERMINATION THAT A HEALTH CARE PROVIDER
     8  HAS OR HAS NOT COMPLIED WITH APPROPRIATE PROTOCOLS.
     9     (2)  BE CONSTRUED AS REQUIRING A MANAGED CARE PLAN TO
    10  PROVIDE, REIMBURSE FOR OR COVER COUNSELING, REFERRAL, OR OTHER
    11  HEALTH CARE SERVICES IF THE PLAN:
    12     (I)  OBJECTS TO THE PROVISION OF THAT SERVICE ON MORAL OR
    13  RELIGIOUS GROUNDS; AND
    14     (II)  MAKES AVAILABLE INFORMATION ON ITS POLICIES REGARDING
    15  SUCH HEALTH CARE SERVICES TO ENROLLEES AND PROSPECTIVE
    16  ENROLLEES.
    17                       (C)  MEDICAL SERVICES
    18     SECTION 2116.  EMERGENCY SERVICES.--IF AN ENROLLEE SEEKS
    19  EMERGENCY SERVICES AND THE EMERGENCY HEALTH CARE PROVIDER
    20  DETERMINES THAT EMERGENCY SERVICES ARE NECESSARY, THE EMERGENCY
    21  HEALTH CARE PROVIDER SHALL INITIATE NECESSARY INTERVENTION TO
    22  EVALUATE AND, IF NECESSARY, STABILIZE THE CONDITION OF THE
    23  ENROLLEE WITHOUT SEEKING OR RECEIVING AUTHORIZATION FROM THE
    24  MANAGED CARE PLAN. THE MANAGED CARE PLAN SHALL PAY ALL
    25  REASONABLY NECESSARY COSTS ASSOCIATED WITH THE EMERGENCY
    26  SERVICES PROVIDED DURING THE PERIOD OF THE EMERGENCY. WHEN
    27  PROCESSING A REIMBURSEMENT CLAIM FOR EMERGENCY SERVICES, A
    28  MANAGED CARE PLAN SHALL CONSIDER BOTH THE PRESENTING SYMPTOMS
    29  AND THE SERVICES PROVIDED. THE EMERGENCY HEALTH CARE PROVIDER
    30  SHALL NOTIFY THE ENROLLEE'S MANAGED CARE PLAN OF THE PROVISION
    19970S0091B2082                 - 30 -

     1  OF EMERGENCY SERVICES AND THE CONDITION OF THE ENROLLEE. IF AN
     2  ENROLLEE'S CONDITION HAS STABILIZED AND THE ENROLLEE CAN BE
     3  TRANSPORTED WITHOUT SUFFERING DETRIMENTAL CONSEQUENCES OR
     4  AGGRAVATING THE ENROLLEE'S CONDITION, THE ENROLLEE MAY BE
     5  RELOCATED TO ANOTHER FACILITY TO RECEIVE CONTINUED CARE AND
     6  TREATMENT AS NECESSARY.
     7     SECTION 2117.  CONTINUITY OF CARE.--(A)  EXCEPT AS PROVIDED
     8  UNDER SUBSECTION (B), IF A MANAGED CARE PLAN INITIATES
     9  TERMINATION OF ITS CONTRACT WITH A PARTICIPATING HEALTH CARE
    10  PROVIDER, AN ENROLLEE MAY CONTINUE AN ONGOING COURSE OF
    11  TREATMENT WITH THAT HEALTH CARE PROVIDER, AT THE ENROLLEE'S
    12  OPTION, FOR A TRANSITIONAL PERIOD OF UP TO SIXTY (60) DAYS FROM
    13  THE DATE THE ENROLLEE WAS NOTIFIED BY THE PLAN OF THE
    14  TERMINATION OR PENDING TERMINATION. THE MANAGED CARE PLAN, IN
    15  CONSULTATION WITH THE ENROLLEE AND THE HEALTH CARE PROVIDER, MAY
    16  EXTEND THE TRANSITIONAL PERIOD IF DETERMINED TO BE CLINICALLY
    17  APPROPRIATE. IN THE CASE OF AN ENROLLEE IN THE SECOND OR THIRD
    18  TRIMESTER OF PREGNANCY AT THE TIME OF NOTICE OF THE TERMINATION
    19  OR PENDING TERMINATION, THE TRANSITIONAL PERIOD SHALL EXTEND
    20  THROUGH POSTPARTUM CARE RELATED TO THE DELIVERY. ANY HEALTH CARE
    21  SERVICE PROVIDED UNDER THIS SECTION SHALL BE COVERED BY THE
    22  MANAGED CARE PLAN UNDER THE SAME TERMS AND CONDITIONS AS
    23  APPLICABLE FOR PARTICIPATING HEALTH CARE PROVIDERS.
    24     (B)  IF THE PLAN TERMINATES THE CONTRACT OF A PARTICIPATING
    25  HEALTH CARE PROVIDER FOR CAUSE, INCLUDING BREACH OF CONTRACT,
    26  FRAUD, CRIMINAL ACTIVITY OR POSING A DANGER TO AN ENROLLEE OR
    27  THE HEALTH, SAFETY OR WELFARE OF THE PUBLIC AS DETERMINED BY THE
    28  PLAN, THE PLAN SHALL NOT BE RESPONSIBLE FOR HEALTH CARE SERVICES
    29  PROVIDED TO THE ENROLLEE FOLLOWING THE DATE OF TERMINATION.
    30     (C)  IF THE PLAN TERMINATES THE CONTRACT OF A PARTICIPATING
    19970S0091B2082                 - 31 -

     1  PRIMARY CARE PROVIDER, THE PLAN SHALL NOTIFY EVERY ENROLLEE
     2  SERVED BY THAT PROVIDER OF THE PLAN'S TERMINATION OF ITS
     3  CONTRACT AND SHALL REQUEST THAT THE ENROLLEE SELECT ANOTHER
     4  PRIMARY CARE PROVIDER.
     5     (D)  A NEW ENROLLEE MAY CONTINUE AN ONGOING COURSE OF
     6  TREATMENT WITH A NONPARTICIPATING HEALTH CARE PROVIDER FOR A
     7  TRANSITIONAL PERIOD OF UP TO SIXTY (60) DAYS FROM THE EFFECTIVE
     8  DATE OF ENROLLMENT IN A MANAGED CARE PLAN. THE MANAGED CARE
     9  PLAN, IN CONSULTATION WITH THE ENROLLEE AND THE HEALTH CARE
    10  PROVIDER, MAY EXTEND THIS TRANSITIONAL PERIOD IF DETERMINED TO
    11  BE CLINICALLY APPROPRIATE. IN THE CASE OF A NEW ENROLLEE IN THE
    12  SECOND OR THIRD TRIMESTER OF PREGNANCY ON THE EFFECTIVE DATE OF
    13  ENROLLMENT, THE TRANSITIONAL PERIOD SHALL EXTEND THROUGH
    14  POSTPARTUM CARE RELATED TO THE DELIVERY. ANY HEALTH CARE SERVICE
    15  PROVIDED UNDER THIS SECTION SHALL BE COVERED BY THE MANAGED CARE
    16  PLAN UNDER THE SAME TERMS AND CONDITIONS AS APPLICABLE FOR
    17  PARTICIPATING HEALTH CARE PROVIDERS.
    18     (E)  A PLAN MAY REQUIRE A NONPARTICIPATING HEALTH CARE
    19  PROVIDER WHOSE HEALTH CARE SERVICES ARE COVERED UNDER THIS
    20  SECTION TO MEET THE SAME TERMS AND CONDITIONS AS A PARTICIPATING
    21  HEALTH CARE PROVIDER.
    22     (F)  NOTHING IN THIS SECTION SHALL REQUIRE A MANAGED CARE
    23  PLAN TO PROVIDE HEALTH CARE SERVICES THAT ARE NOT OTHERWISE
    24  COVERED UNDER THE TERMS AND CONDITIONS OF THE PLAN.
    25                    (D)  PROVIDER CREDENTIALING
    26     SECTION 2121.  PROCEDURES.--(A)  A MANAGED CARE PLAN SHALL
    27  ESTABLISH A CREDENTIALING PROCESS TO ENROLL QUALIFIED HEALTH
    28  CARE PROVIDERS AND CREATE AN ADEQUATE PROVIDER NETWORK. THE
    29  PROCESS SHALL BE APPROVED BY THE DEPARTMENT AND SHALL INCLUDE
    30  WRITTEN CRITERIA AND PROCEDURES FOR INITIAL ENROLLMENT, RENEWAL,
    19970S0091B2082                 - 32 -

     1  RESTRICTIONS AND TERMINATION OF CREDENTIALS FOR HEALTH CARE
     2  PROVIDERS.
     3     (B)  THE DEPARTMENT SHALL ESTABLISH CREDENTIALING STANDARDS
     4  FOR MANAGED CARE PLANS. THE DEPARTMENT MAY ADOPT NATIONALLY
     5  RECOGNIZED ACCREDITING STANDARDS TO ESTABLISH THE CREDENTIALING
     6  STANDARDS FOR MANAGED CARE PLANS.
     7     (C)  A MANAGED CARE PLAN SHALL SUBMIT A REPORT TO THE
     8  DEPARTMENT REGARDING ITS CREDENTIALING PROCESS AT LEAST EVERY
     9  TWO (2) YEARS OR AS MAY OTHERWISE BE REQUIRED BY THE DEPARTMENT.
    10     (D)  A MANAGED CARE PLAN SHALL DISCLOSE RELEVANT
    11  CREDENTIALING CRITERIA AND PROCEDURES TO HEALTH CARE PROVIDERS
    12  THAT APPLY TO PARTICIPATE OR THAT ARE PARTICIPATING IN THE
    13  PLAN'S PROVIDER NETWORK. A MANAGED CARE PLAN SHALL ALSO DISCLOSE
    14  RELEVANT CREDENTIALING CRITERIA AND PROCEDURES PURSUANT TO A
    15  COURT ORDER OR RULE. ANY INDIVIDUAL PROVIDING INFORMATION DURING
    16  THE CREDENTIALING PROCESS OF A MANAGED CARE PLAN SHALL HAVE THE
    17  PROTECTIONS SET FORTH IN THE ACT OF JULY 20, 1974 (P.L.564,
    18  NO.193), KNOWN AS THE "PEER REVIEW PROTECTION ACT."
    19     (E)  NO MANAGED CARE PLAN SHALL EXCLUDE OR TERMINATE A HEALTH
    20  CARE PROVIDER FROM PARTICIPATION IN THE PLAN DUE TO ANY OF THE
    21  FOLLOWING:
    22     (1)  THE HEALTH CARE PROVIDER ENGAGED IN ANY OF THE
    23  ACTIVITIES SET FORTH IN SECTION 2113(C).
    24     (2)  THE HEALTH CARE PROVIDER HAS A PRACTICE THAT INCLUDES A
    25  SUBSTANTIAL NUMBER OF PATIENTS WITH EXPENSIVE MEDICAL
    26  CONDITIONS.
    27     (3)  THE HEALTH CARE PROVIDER OBJECTS TO THE PROVISION OF OR
    28  REFUSES TO PROVIDE A HEALTH CARE SERVICE ON MORAL OR RELIGIOUS
    29  GROUNDS.
    30     (F)  IF A MANAGED CARE PLAN DENIES ENROLLMENT OR RENEWAL OF
    19970S0091B2082                 - 33 -

     1  CREDENTIALS TO A HEALTH CARE PROVIDER, THE MANAGED CARE PLAN
     2  SHALL PROVIDE THE HEALTH CARE PROVIDER WITH WRITTEN NOTICE OF
     3  THE DECISION. THE NOTICE SHALL INCLUDE A CLEAR RATIONALE FOR THE
     4  DECISION.
     5                        (E)  CONFIDENTIALITY
     6     SECTION 2131.  CONFIDENTIALITY.--(A)  A MANAGED CARE PLAN AND
     7  A UTILIZATION REVIEW ENTITY SHALL ADOPT AND MAINTAIN PROCEDURES
     8  TO ENSURE THAT ALL IDENTIFIABLE INFORMATION REGARDING ENROLLEE
     9  HEALTH, DIAGNOSIS AND TREATMENT IS ADEQUATELY PROTECTED AND
    10  REMAINS CONFIDENTIAL IN COMPLIANCE WITH ALL APPLICABLE FEDERAL
    11  AND STATE LAWS AND REGULATIONS AND PROFESSIONAL ETHICAL
    12  STANDARDS.
    13     (B)  TO THE EXTENT A MANAGED CARE PLAN MAINTAINS MEDICAL
    14  RECORDS, THE PLAN SHALL ADOPT AND MAINTAIN PROCEDURES TO ENSURE
    15  THAT ENROLLEES HAVE TIMELY ACCESS TO THEIR MEDICAL RECORDS,
    16  UNLESS PROHIBITED BY FEDERAL OR STATE LAW OR REGULATION.
    17     (C)  (1)  INFORMATION REGARDING AN ENROLLEE'S HEALTH OR
    18  TREATMENT SHALL BE AVAILABLE TO THE ENROLLEE, THE ENROLLEE'S
    19  DESIGNEE OR AS NECESSARY TO PREVENT DEATH OR SERIOUS INJURY.
    20     (2)  NOTHING IN THIS SECTION SHALL:
    21     (I)  PREVENT DISCLOSURE NECESSARY TO DETERMINE COVERAGE,
    22  REVIEW COMPLAINTS OR GRIEVANCES, CONDUCT UTILIZATION REVIEW OR
    23  FACILITATE PAYMENT OF A CLAIM.
    24     (II)  DENY THE DEPARTMENT, THE INSURANCE DEPARTMENT OR THE
    25  DEPARTMENT OF PUBLIC WELFARE ACCESS TO RECORDS FOR PURPOSES OF
    26  QUALITY ASSURANCE, INVESTIGATION OF COMPLAINTS OR GRIEVANCES,
    27  ENFORCEMENT OR OTHER ACTIVITIES RELATED TO COMPLIANCE WITH THIS
    28  ARTICLE AND OTHER LAWS OF THIS COMMONWEALTH. RECORDS SHALL BE
    29  ACCESSIBLE ONLY TO DEPARTMENT EMPLOYES OR AGENTS WITH DIRECT
    30  RESPONSIBILITIES UNDER THE PROVISIONS OF THIS SUBPARAGRAPH.
    19970S0091B2082                 - 34 -

     1     (III)  DENY ACCESS TO INFORMATION NECESSARY FOR A UTILIZATION
     2  REVIEW ENTITY TO CONDUCT A REVIEW UNDER THIS ARTICLE.
     3     (IV)  DENY ACCESS TO THE MANAGED CARE PLAN FOR INTERNAL
     4  QUALITY REVIEW, INCLUDING REVIEWS CONDUCTED AS PART OF THE
     5  PLAN'S QUALITY OVERSIGHT PROCESS. DURING SUCH REVIEWS, ENROLLEES
     6  SHALL REMAIN ANONYMOUS TO THE GREATEST EXTENT POSSIBLE.
     7     (V)  DENY ACCESS TO MANAGED CARE PLANS, HEALTH CARE PROVIDERS
     8  AND THEIR RESPECTIVE DESIGNEES, FOR THE PURPOSE OF PROVIDING
     9  PATIENT CARE MANAGEMENT, OUTCOMES IMPROVEMENT AND RESEARCH. FOR
    10  THIS PURPOSE, ENROLLEES SHALL PROVIDE CONSENT AND SHALL REMAIN
    11  ANONYMOUS TO THE GREATEST EXTENT POSSIBLE.
    12                   (F)  INFORMATION FOR ENROLLEES
    13     SECTION 2136.  REQUIRED DISCLOSURE.--(A)  A MANAGED CARE PLAN
    14  SHALL SUPPLY EACH ENROLLEE AND, UPON WRITTEN REQUEST, EACH
    15  PROSPECTIVE ENROLLEE OR HEALTH CARE PROVIDER, WITH THE FOLLOWING
    16  WRITTEN INFORMATION. SUCH INFORMATION SHALL BE EASILY
    17  UNDERSTANDABLE BY THE LAYPERSON AND SHALL INCLUDE, BUT NOT BE
    18  LIMITED TO:
    19     (1)  A DESCRIPTION OF COVERAGE, BENEFITS AND BENEFIT
    20  MAXIMUMS, INCLUDING BENEFIT LIMITATIONS AND EXCLUSIONS OF
    21  COVERAGE, HEALTH CARE SERVICES AND THE DEFINITION OF MEDICAL
    22  NECESSITY USED BY THE PLAN IN DETERMINING WHETHER THESE BENEFITS
    23  WILL BE COVERED. THE FOLLOWING STATEMENT SHALL BE INCLUDED IN
    24  ALL MARKETING MATERIALS IN BOLDFACE TYPE:
    25     THIS MANAGED CARE PLAN MAY NOT COVER ALL YOUR HEALTH CARE
    26     EXPENSES. READ YOUR CONTRACT CAREFULLY TO DETERMINE WHICH
    27     HEALTH CARE SERVICES ARE COVERED.
    28  THE NOTICE SHALL BE FOLLOWED BY A TELEPHONE NUMBER TO CONTACT
    29  THE PLAN.
    30     (2)  A DESCRIPTION OF ALL NECESSARY PRIOR AUTHORIZATIONS OR
    19970S0091B2082                 - 35 -

     1  OTHER REQUIREMENTS FOR NONEMERGENCY HEALTH CARE SERVICES.
     2     (3)  AN EXPLANATION OF AN ENROLLEE'S FINANCIAL RESPONSIBILITY
     3  FOR PAYMENT OF PREMIUMS, COINSURANCE, COPAYMENTS, DEDUCTIBLES
     4  AND OTHER CHARGES, ANNUAL LIMITS ON AN ENROLLEE'S FINANCIAL
     5  RESPONSIBILITY AND CAPS ON PAYMENTS FOR HEALTH CARE SERVICES
     6  PROVIDED UNDER THE PLAN.
     7     (4)  AN EXPLANATION OF AN ENROLLEE'S FINANCIAL RESPONSIBILITY
     8  FOR PAYMENT WHEN A HEALTH CARE SERVICE IS PROVIDED BY A
     9  NONPARTICIPATING HEALTH CARE PROVIDER, WHEN A HEALTH CARE
    10  SERVICE IS PROVIDED BY ANY HEALTH CARE PROVIDER WITHOUT REQUIRED
    11  AUTHORIZATION OR WHEN THE CARE RENDERED IS NOT COVERED BY THE
    12  PLAN.
    13     (5)  A DESCRIPTION OF HOW THE MANAGED CARE PLAN ADDRESSES THE
    14  NEEDS OF NON-ENGLISH-SPEAKING ENROLLEES.
    15     (6)  A NOTICE OF MAILING ADDRESSES AND TELEPHONE NUMBERS
    16  NECESSARY TO ENABLE AN ENROLLEE TO OBTAIN APPROVAL OR
    17  AUTHORIZATION OF A HEALTH CARE SERVICE OR OTHER INFORMATION
    18  REGARDING THE PLAN.
    19     (7)  A SUMMARY OF THE PLAN'S UTILIZATION REVIEW POLICIES AND
    20  PROCEDURES.
    21     (8)  A SUMMARY OF ALL COMPLAINT AND GRIEVANCE PROCEDURES USED
    22  TO RESOLVE DISPUTES BETWEEN THE MANAGED CARE PLAN AND AN
    23  ENROLLEE OR A HEALTH CARE PROVIDER, INCLUDING:
    24     (I)  THE PROCEDURE TO FILE A COMPLAINT OR GRIEVANCE AS SET
    25  FORTH IN THIS ARTICLE, INCLUDING A TOLL-FREE TELEPHONE NUMBER TO
    26  OBTAIN INFORMATION REGARDING THE FILING AND STATUS OF A
    27  COMPLAINT OR GRIEVANCE.
    28     (II)  THE RIGHT TO APPEAL A DECISION RELATING TO A COMPLAINT
    29  OR GRIEVANCE.
    30     (III)  THE ENROLLEE'S RIGHT TO DESIGNATE A REPRESENTATIVE TO
    19970S0091B2082                 - 36 -

     1  PARTICIPATE IN THE COMPLAINT OR GRIEVANCE PROCESS AS SET FORTH
     2  IN THIS ARTICLE.
     3     (IV)  A NOTICE THAT ALL DISPUTES INVOLVING DENIAL OF PAYMENT
     4  FOR A HEALTH CARE SERVICE WILL BE MADE BY QUALIFIED PERSONNEL
     5  WITH EXPERIENCE IN THE SAME OR SIMILAR SCOPE OF PRACTICE AND
     6  THAT ALL NOTICES OF DECISIONS WILL INCLUDE INFORMATION REGARDING
     7  THE BASIS FOR THE DETERMINATION.
     8     (9)  A DESCRIPTION OF THE PROCEDURE FOR PROVIDING EMERGENCY
     9  SERVICES TWENTY-FOUR (24) HOURS A DAY. THE DESCRIPTION SHALL
    10  INCLUDE:
    11     (I)  A DEFINITION OF EMERGENCY SERVICES AS SET FORTH IN THIS
    12  ARTICLE.
    13     (II)  NOTICE THAT EMERGENCY SERVICES ARE NOT SUBJECT TO PRIOR
    14  APPROVAL.
    15     (III)  THE ENROLLEE'S FINANCIAL AND OTHER RESPONSIBILITIES
    16  REGARDING EMERGENCY SERVICES, INCLUDING THE RECEIPT OF THESE
    17  SERVICES OUTSIDE THE MANAGED CARE PLAN'S SERVICE AREA.
    18     (10)  A DESCRIPTION OF THE PROCEDURES FOR ENROLLEES TO SELECT
    19  A PARTICIPATING HEALTH CARE PROVIDER, INCLUDING HOW TO DETERMINE
    20  WHETHER A PARTICIPATING HEALTH CARE PROVIDER IS ACCEPTING NEW
    21  ENROLLEES.
    22     (11)  A DESCRIPTION OF THE PROCEDURES FOR CHANGING PRIMARY
    23  CARE PROVIDERS AND SPECIALISTS.
    24     (12)  A DESCRIPTION OF THE PROCEDURES BY WHICH AN ENROLLEE
    25  MAY OBTAIN A REFERRAL TO A HEALTH CARE PROVIDER OUTSIDE THE
    26  PROVIDER NETWORK WHEN THAT PROVIDER NETWORK DOES NOT INCLUDE A
    27  HEALTH CARE PROVIDER WITH APPROPRIATE TRAINING AND EXPERIENCE TO
    28  MEET THE HEALTH CARE SERVICE NEEDS OF AN ENROLLEE.
    29     (13)  A DESCRIPTION OF THE PROCEDURES THAT AN ENROLLEE WITH A
    30  LIFE-THREATENING, DEGENERATIVE OR DISABLING DISEASE OR CONDITION
    19970S0091B2082                 - 37 -

     1  SHALL FOLLOW AND SATISFY TO BE ELIGIBLE FOR:
     2     (I)  A STANDING REFERRAL TO A SPECIALIST WITH CLINICAL
     3  EXPERTISE IN TREATING THE DISEASE OR CONDITION; OR
     4     (II)  THE DESIGNATION OF A SPECIALIST TO PROVIDE AND
     5  COORDINATE THE ENROLLEE'S PRIMARY AND SPECIALTY CARE.
     6     (14)  A LIST BY SPECIALTY OF THE NAME, ADDRESS AND TELEPHONE
     7  NUMBER OF ALL PARTICIPATING HEALTH CARE PROVIDERS. THE LIST MAY
     8  BE A SEPARATE DOCUMENT AND SHALL BE UPDATED AT LEAST ANNUALLY.
     9     (15)  A LIST OF THE INFORMATION AVAILABLE TO ENROLLEES OR
    10  PROSPECTIVE ENROLLEES, UPON WRITTEN REQUEST, UNDER SUBSECTION
    11  (B).
    12     (B)  EACH MANAGED CARE PLAN SHALL, UPON WRITTEN REQUEST OF AN
    13  ENROLLEE OR PROSPECTIVE ENROLLEE, PROVIDE THE FOLLOWING WRITTEN
    14  INFORMATION:
    15     (1)  A LIST OF THE NAMES, BUSINESS ADDRESSES AND OFFICIAL
    16  POSITIONS OF THE MEMBERSHIP OF THE BOARD OF DIRECTORS OR
    17  OFFICERS OF THE MANAGED CARE PLAN.
    18     (2)  THE PROCEDURES ADOPTED TO PROTECT THE CONFIDENTIALITY OF
    19  MEDICAL RECORDS AND OTHER ENROLLEE INFORMATION.
    20     (3)  A DESCRIPTION OF THE CREDENTIALING PROCESS FOR HEALTH
    21  CARE PROVIDERS.
    22     (4)  A LIST OF THE PARTICIPATING HEALTH CARE PROVIDERS
    23  AFFILIATED WITH PARTICIPATING HOSPITALS.
    24     (5)  WHETHER A SPECIFICALLY IDENTIFIED DRUG IS INCLUDED OR
    25  EXCLUDED FROM COVERAGE.
    26     (6)  A DESCRIPTION OF THE PROCESS BY WHICH A HEALTH CARE
    27  PROVIDER CAN PRESCRIBE SPECIFIC DRUGS, DRUGS USED FOR AN OFF-
    28  LABEL PURPOSE, BIOLOGICALS AND MEDICATIONS NOT INCLUDED IN THE
    29  DRUG FORMULARY FOR PRESCRIPTION DRUGS OR BIOLOGICALS WHEN THE
    30  FORMULARY'S EQUIVALENT HAS BEEN INEFFECTIVE IN THE TREATMENT OF
    19970S0091B2082                 - 38 -

     1  THE ENROLLEE'S DISEASE OR IF THE DRUG CAUSES OR IS REASONABLY
     2  EXPECTED TO CAUSE ADVERSE OR HARMFUL REACTIONS TO THE ENROLLEE.
     3     (7)  A DESCRIPTION OF THE PROCEDURES FOLLOWED BY THE MANAGED
     4  CARE PLAN TO MAKE DECISIONS ABOUT THE EXPERIMENTAL NATURE OF
     5  INDIVIDUAL DRUGS, MEDICAL DEVICES OR TREATMENTS.
     6     (8)  A SUMMARY OF THE METHODOLOGIES USED BY THE MANAGED CARE
     7  PLAN TO REIMBURSE FOR HEALTH CARE SERVICES. NOTHING IN THIS
     8  PARAGRAPH SHALL BE CONSTRUED TO REQUIRE DISCLOSURE OF INDIVIDUAL
     9  CONTRACTS OR THE SPECIFIC DETAILS OF ANY FINANCIAL ARRANGEMENT
    10  BETWEEN A MANAGED CARE PLAN AND A HEALTH CARE PROVIDER.
    11     (9)  A DESCRIPTION OF THE PROCEDURES USED IN THE MANAGED CARE
    12  PLAN'S QUALITY ASSURANCE PROGRAM.
    13     (10)  OTHER INFORMATION AS MAY BE REQUIRED BY THE DEPARTMENT
    14  OR THE INSURANCE DEPARTMENT.
    15                          (G)  COMPLAINTS
    16     SECTION 2141.  INTERNAL COMPLAINT PROCESS.--(A)  A MANAGED
    17  CARE PLAN SHALL ESTABLISH AND MAINTAIN AN INTERNAL COMPLAINT
    18  PROCESS WITH TWO LEVELS OF REVIEW BY WHICH AN ENROLLEE SHALL BE
    19  ABLE TO FILE A COMPLAINT REGARDING A PARTICIPATING HEALTH CARE
    20  PROVIDER OR THE COVERAGE, OPERATIONS OR MANAGEMENT POLICIES OF
    21  THE MANAGED CARE PLAN.
    22     (B)  THE COMPLAINT PROCESS SHALL CONSIST OF AN INITIAL REVIEW
    23  TO INCLUDE ALL OF THE FOLLOWING:
    24     (1)  A REVIEW BY AN INITIAL REVIEW COMMITTEE CONSISTING OF
    25  ONE OR MORE EMPLOYES OF THE MANAGED CARE PLAN.
    26     (2)  THE ALLOWANCE OF A WRITTEN OR ORAL COMPLAINT.
    27     (3)  THE ALLOWANCE OF WRITTEN DATA OR OTHER INFORMATION.
    28     (4)  A REVIEW OR INVESTIGATION OF THE COMPLAINT, WHICH SHALL
    29  BE COMPLETED WITHIN THIRTY (30) DAYS OF RECEIPT OF THE
    30  COMPLAINT.
    19970S0091B2082                 - 39 -

     1     (5)  A WRITTEN NOTIFICATION TO THE ENROLLEE REGARDING THE
     2  DECISION OF THE INITIAL REVIEW COMMITTEE WITHIN FIVE (5)
     3  BUSINESS DAYS OF THE DECISION. NOTICE SHALL INCLUDE THE BASIS
     4  FOR THE DECISION AND THE PROCEDURE TO FILE A REQUEST FOR A
     5  SECOND LEVEL REVIEW OF THE DECISION OF THE INITIAL REVIEW
     6  COMMITTEE.
     7     (C)  THE COMPLAINT PROCESS SHALL INCLUDE A SECOND LEVEL
     8  REVIEW THAT INCLUDES ALL OF THE FOLLOWING:
     9     (1)  A REVIEW OF THE DECISION OF THE INITIAL REVIEW COMMITTEE
    10  BY A SECOND LEVEL REVIEW COMMITTEE CONSISTING OF THREE OR MORE
    11  INDIVIDUALS WHO DID NOT PARTICIPATE IN THE INITIAL REVIEW. AT
    12  LEAST ONE THIRD OF THE SECOND LEVEL REVIEW COMMITTEE SHALL NOT
    13  BE EMPLOYED BY THE MANAGED CARE PLAN.
    14     (2)  A WRITTEN NOTIFICATION TO THE ENROLLEE OF THE RIGHT TO
    15  APPEAR BEFORE THE SECOND LEVEL REVIEW COMMITTEE.
    16     (3)  A REQUIREMENT THAT THE SECOND LEVEL REVIEW BE COMPLETED
    17  WITHIN FORTY-FIVE (45) DAYS OF RECEIPT OF A REQUEST FOR SUCH
    18  REVIEW.
    19     (4)  A WRITTEN NOTIFICATION TO THE ENROLLEE REGARDING THE
    20  DECISION OF THE SECOND LEVEL REVIEW COMMITTEE WITHIN FIVE (5)
    21  BUSINESS DAYS OF THE DECISION. THE NOTICE SHALL INCLUDE THE
    22  BASIS FOR THE DECISION AND THE PROCEDURE FOR APPEALING THE
    23  DECISION TO THE DEPARTMENT OR THE INSURANCE DEPARTMENT.
    24     SECTION 2142.  APPEAL OF COMPLAINT.--(A)  AN ENROLLEE SHALL
    25  HAVE FIFTEEN (15) DAYS FROM RECEIPT OF THE NOTICE OF THE
    26  DECISION FROM THE SECOND LEVEL REVIEW COMMITTEE TO APPEAL THE
    27  DECISION TO THE DEPARTMENT OR THE INSURANCE DEPARTMENT, AS
    28  APPROPRIATE.
    29     (B)  ALL RECORDS FROM THE INITIAL REVIEW AND SECOND LEVEL
    30  REVIEW SHALL BE TRANSMITTED TO THE APPROPRIATE DEPARTMENT IN THE
    19970S0091B2082                 - 40 -

     1  MANNER PRESCRIBED. THE ENROLLEE, THE HEALTH CARE PROVIDER OR THE
     2  MANAGED CARE PLAN MAY SUBMIT ADDITIONAL MATERIALS RELATED TO THE
     3  COMPLAINT.
     4     (C)  THE ENROLLEE MAY BE REPRESENTED BY AN ATTORNEY OR OTHER
     5  INDIVIDUAL BEFORE THE APPROPRIATE DEPARTMENT.
     6     (D)  THE APPROPRIATE DEPARTMENT SHALL DETERMINE WHETHER A
     7  VIOLATION OF THIS ARTICLE HAS OCCURRED AND MAY IMPOSE ANY
     8  PENALTIES AUTHORIZED BY THIS ARTICLE.
     9     SECTION 2143.  COMPLAINT RESOLUTION.--NOTHING IN THIS
    10  SUBARTICLE SHALL PREVENT THE DEPARTMENT OR THE INSURANCE
    11  DEPARTMENT FROM COMMUNICATING WITH THE ENROLLEE, THE HEALTH CARE
    12  PROVIDER OR THE MANAGED CARE PLAN AS APPROPRIATE TO ASSIST IN
    13  THE RESOLUTION OF A COMPLAINT. SUCH COMMUNICATION MAY OCCUR AT
    14  ANY TIME DURING THE COMPLAINT PROCESS.
    15                      (H)  UTILIZATION REVIEW
    16     SECTION 2151.  CERTIFICATION.--(A)  A UTILIZATION REVIEW
    17  ENTITY MAY NOT REVIEW HEALTH CARE SERVICES DELIVERED OR PROPOSED
    18  TO BE DELIVERED IN THIS COMMONWEALTH UNLESS THE ENTITY IS
    19  CERTIFIED BY THE DEPARTMENT TO PERFORM UTILIZATION REVIEW. A
    20  UTILIZATION REVIEW ENTITY OPERATING IN THIS COMMONWEALTH ON OR
    21  BEFORE THE EFFECTIVE DATE OF THIS ARTICLE SHALL HAVE ONE YEAR
    22  FROM THE EFFECTIVE DATE OF THIS ARTICLE TO APPLY FOR
    23  CERTIFICATION.
    24     (B)  THE DEPARTMENT SHALL GRANT CERTIFICATION TO A
    25  UTILIZATION REVIEW ENTITY THAT MEETS THE REQUIREMENTS OF THIS
    26  SECTION. CERTIFICATION SHALL BE RENEWED EVERY THREE YEARS UNLESS
    27  OTHERWISE SUBJECT TO ADDITIONAL REVIEW, SUSPENSION OR REVOCATION
    28  BY THE DEPARTMENT.
    29     (C)  THE DEPARTMENT MAY ADOPT A NATIONALLY RECOGNIZED
    30  ACCREDITING BODY'S STANDARDS TO CERTIFY UTILIZATION REVIEW
    19970S0091B2082                 - 41 -

     1  ENTITIES TO THE EXTENT THE STANDARDS MEET OR EXCEED THE
     2  STANDARDS SET FORTH IN THIS ARTICLE.
     3     (D)  THE DEPARTMENT MAY PRESCRIBE APPLICATION AND RENEWAL
     4  FEES FOR CERTIFICATION. THE FEES SHALL REFLECT THE
     5  ADMINISTRATIVE COSTS OF CERTIFICATION AND SHALL BE DEPOSITED IN
     6  THE GENERAL FUND.
     7     (E)  A LICENSED INSURER OR A MANAGED CARE PLAN WITH A
     8  CERTIFICATE OF AUTHORITY SHALL COMPLY WITH THE STANDARDS AND
     9  PROCEDURES OF THIS SUBARTICLE, BUT SHALL NOT BE REQUIRED TO
    10  OBTAIN SEPARATE CERTIFICATION AS A UTILIZATION REVIEW ENTITY.
    11     SECTION 2152.  OPERATIONAL STANDARDS.--(A)  A UTILIZATION
    12  REVIEW ENTITY SHALL DO ALL OF THE FOLLOWING:
    13     (1)  RESPOND TO INQUIRIES RELATING TO UTILIZATION REVIEW
    14  DETERMINATIONS BY:
    15     (I)  PROVIDING TOLL-FREE TELEPHONE ACCESS AT LEAST FORTY (40)
    16  HOURS PER WEEK DURING NORMAL BUSINESS HOURS;
    17     (II)  MAINTAINING A TELEPHONE ANSWERING SERVICE OR RECORDING
    18  SYSTEM DURING NONBUSINESS HOURS; AND
    19     (III)  RESPONDING TO EACH TELEPHONE CALL RECEIVED BY THE
    20  ANSWERING SERVICE OR RECORDING SYSTEM REGARDING A UTILIZATION
    21  REVIEW DETERMINATION WITHIN ONE (1) BUSINESS DAY OF THE RECEIPT
    22  OF THE CALL.
    23     (2)  PROTECT THE CONFIDENTIALITY OF ENROLLEE MEDICAL RECORDS
    24  AS SET FORTH IN SECTION 2131.
    25     (3)  ENSURE THAT A HEALTH CARE PROVIDER IS ABLE TO VERIFY
    26  THAT AN INDIVIDUAL REQUESTING INFORMATION ON BEHALF OF THE
    27  MANAGED CARE PLAN IS A LEGITIMATE REPRESENTATIVE OF THE PLAN.
    28     (4)  CONDUCT UTILIZATION REVIEWS BASED ON THE MEDICAL
    29  NECESSITY AND APPROPRIATENESS OF THE HEALTH CARE SERVICE BEING
    30  REVIEWED AND PROVIDE NOTIFICATION WITHIN THE FOLLOWING TIME
    19970S0091B2082                 - 42 -

     1  FRAMES:
     2     (I)  A PROSPECTIVE UTILIZATION REVIEW DECISION SHALL BE
     3  COMMUNICATED WITHIN TWO (2) BUSINESS DAYS OF THE RECEIPT OF ALL
     4  SUPPORTING INFORMATION REASONABLY NECESSARY TO COMPLETE THE
     5  REVIEW.
     6     (II)  A CONCURRENT UTILIZATION REVIEW DECISION SHALL BE
     7  COMMUNICATED WITHIN ONE (1) BUSINESS DAY OF THE RECEIPT OF ALL
     8  SUPPORTING INFORMATION REASONABLY NECESSARY TO COMPLETE THE
     9  REVIEW.
    10     (III)  A RETROSPECTIVE UTILIZATION REVIEW DECISION SHALL BE
    11  COMMUNICATED WITHIN THIRTY (30) DAYS OF THE RECEIPT OF ALL
    12  SUPPORTING INFORMATION REASONABLY NECESSARY TO COMPLETE THE
    13  REVIEW.
    14     (5)  ENSURE THAT PERSONNEL CONDUCTING A UTILIZATION REVIEW
    15  HAVE CURRENT LICENSES IN GOOD STANDING OR OTHER REQUIRED
    16  CREDENTIALS, WITHOUT RESTRICTIONS, FROM THE APPROPRIATE AGENCY.
    17     (6)  PROVIDE ALL DECISIONS IN WRITING TO INCLUDE THE BASIS
    18  AND CLINICAL RATIONALE FOR THE DECISION.
    19     (7)  NOTIFY THE HEALTH CARE PROVIDER OF ADDITIONAL FACTS OR
    20  DOCUMENTS REQUIRED TO COMPLETE THE UTILIZATION REVIEW WITHIN
    21  FORTY-EIGHT (48) HOURS OF RECEIPT OF THE REQUEST FOR REVIEW.
    22     (8)  MAINTAIN A WRITTEN RECORD OF UTILIZATION REVIEW
    23  DECISIONS ADVERSE TO ENROLLEES FOR NOT LESS THAN THREE (3)
    24  YEARS, INCLUDING A DETAILED JUSTIFICATION AND ALL REQUIRED
    25  NOTIFICATIONS TO THE HEALTH CARE PROVIDER AND THE ENROLLEE.
    26     (B)  COMPENSATION TO ANY PERSON OR ENTITY PERFORMING
    27  UTILIZATION REVIEW MAY NOT CONTAIN INCENTIVES, DIRECT OR
    28  INDIRECT, FOR THE PERSON OR ENTITY TO APPROVE OR DENY PAYMENT
    29  FOR THE DELIVERY OF ANY HEALTH CARE SERVICE.
    30     (C)  UTILIZATION REVIEW THAT RESULTS IN A DENIAL OF PAYMENT
    19970S0091B2082                 - 43 -

     1  FOR A HEALTH CARE SERVICE SHALL BE MADE BY A LICENSED PHYSICIAN,
     2  EXCEPT AS PROVIDED IN SUBSECTION (D).
     3     (D)  A LICENSED PSYCHOLOGIST MAY PERFORM A UTILIZATION REVIEW
     4  FOR BEHAVIORAL HEALTH CARE SERVICES WITHIN THE PSYCHOLOGIST'S
     5  SCOPE OF PRACTICE IF THE PSYCHOLOGIST'S CLINICAL EXPERIENCE
     6  PROVIDES SUFFICIENT EXPERIENCE TO REVIEW THAT SPECIFIC
     7  BEHAVIORAL HEALTH CARE SERVICE. THE USE OF A LICENSED
     8  PSYCHOLOGIST TO PERFORM A UTILIZATION REVIEW OF A BEHAVIORAL
     9  HEALTH CARE SERVICE SHALL BE APPROVED BY THE DEPARTMENT AS PART
    10  OF THE CERTIFICATION PROCESS UNDER SECTION 2151. A LICENSED
    11  PSYCHOLOGIST SHALL NOT REVIEW THE DENIAL OF PAYMENT FOR A HEALTH
    12  CARE SERVICE INVOLVING INPATIENT CARE OR A PRESCRIPTION DRUG.
    13                          (I)  GRIEVANCES
    14     SECTION 2161.  INTERNAL GRIEVANCE PROCESS.--(A)  A MANAGED
    15  CARE PLAN SHALL ESTABLISH AND MAINTAIN AN INTERNAL GRIEVANCE
    16  PROCESS WITH TWO LEVELS OF REVIEW AND AN EXPEDITED INTERNAL
    17  GRIEVANCE PROCESS BY WHICH AN ENROLLEE OR A HEALTH CARE
    18  PROVIDER, WITH THE WRITTEN CONSENT OF THE ENROLLEE, SHALL BE
    19  ABLE TO FILE A WRITTEN GRIEVANCE REGARDING THE DENIAL OF PAYMENT
    20  FOR A HEALTH CARE SERVICE. AN ENROLLEE WHO CONSENTS TO THE
    21  FILING OF A GRIEVANCE BY A HEALTH CARE PROVIDER UNDER THIS
    22  SECTION MAY NOT FILE A SEPARATE GRIEVANCE.
    23     (B)  THE INTERNAL GRIEVANCE PROCESS SHALL CONSIST OF AN
    24  INITIAL REVIEW THAT INCLUDES ALL OF THE FOLLOWING:
    25     (1)  A REVIEW BY ONE OR MORE PERSONS SELECTED BY THE MANAGED
    26  CARE PLAN, WHO DID NOT PREVIOUSLY PARTICIPATE IN THE DECISION TO
    27  DENY PAYMENT FOR THE HEALTH CARE SERVICE.
    28     (2)  THE COMPLETION OF THE REVIEW WITHIN THIRTY (30) DAYS OF
    29  RECEIPT OF THE GRIEVANCE.
    30     (3)  A WRITTEN NOTIFICATION TO THE ENROLLEE AND HEALTH CARE
    19970S0091B2082                 - 44 -

     1  PROVIDER REGARDING THE DECISION WITHIN FIVE (5) BUSINESS DAYS OF
     2  THE DECISION. THE NOTICE SHALL INCLUDE THE BASIS AND CLINICAL
     3  RATIONALE FOR THE DECISION AND THE PROCEDURE TO FILE A REQUEST
     4  FOR A SECOND LEVEL REVIEW OF THE DECISION.
     5     (C)  THE GRIEVANCE PROCESS SHALL INCLUDE A SECOND LEVEL
     6  REVIEW THAT INCLUDES ALL OF THE FOLLOWING:
     7     (1)  A REVIEW OF THE DECISION ISSUED PURSUANT TO SUBSECTION
     8  (B) BY A SECOND LEVEL REVIEW COMMITTEE CONSISTING OF THREE OR
     9  MORE PERSONS WHO DID NOT PREVIOUSLY PARTICIPATE IN ANY DECISION
    10  TO DENY PAYMENT FOR THE HEALTH CARE SERVICE.
    11     (2)  A WRITTEN NOTIFICATION TO THE ENROLLEE OR THE HEALTH
    12  CARE PROVIDER OF THE RIGHT TO APPEAR BEFORE THE SECOND LEVEL
    13  REVIEW COMMITTEE.
    14     (3)  THE COMPLETION OF THE SECOND LEVEL REVIEW WITHIN FORTY-
    15  FIVE (45) DAYS OF RECEIPT OF A REQUEST FOR SUCH REVIEW.
    16     (4)  A WRITTEN NOTIFICATION TO THE ENROLLEE AND HEALTH CARE
    17  PROVIDER REGARDING THE DECISION OF THE SECOND LEVEL REVIEW
    18  COMMITTEE WITHIN FIVE (5) BUSINESS DAYS OF THE DECISION. THE
    19  NOTICE SHALL INCLUDE THE BASIS AND CLINICAL RATIONALE FOR THE
    20  DECISION AND THE PROCEDURE FOR APPEALING THE DECISION.
    21     (D)  ANY INITIAL REVIEW OR SECOND LEVEL REVIEW CONDUCTED
    22  UNDER THIS SECTION SHALL INCLUDE A LICENSED PHYSICIAN, OR, WHERE
    23  APPROPRIATE, AN APPROVED LICENSED PSYCHOLOGIST, IN THE SAME OR
    24  SIMILAR SPECIALTY THAT TYPICALLY MANAGES OR CONSULTS ON THE
    25  HEALTH CARE SERVICE.
    26     (E)  SHOULD THE ENROLLEE'S LIFE, HEALTH OR ABILITY TO REGAIN
    27  MAXIMUM FUNCTION BE IN JEOPARDY, AN EXPEDITED INTERNAL GRIEVANCE
    28  PROCESS SHALL BE AVAILABLE, WHICH SHALL INCLUDE A REQUIREMENT
    29  THAT A DECISION, WITH APPROPRIATE NOTIFICATION TO THE ENROLLEE
    30  AND HEALTH CARE PROVIDER, BE MADE WITHIN FORTY-EIGHT (48) HOURS
    19970S0091B2082                 - 45 -

     1  OF THE FILING OF THE EXPEDITED GRIEVANCE.
     2     SECTION 2162.  EXTERNAL GRIEVANCE PROCESS.--(A)  A MANAGED
     3  CARE PLAN SHALL ESTABLISH AND MAINTAIN AN EXTERNAL GRIEVANCE
     4  PROCESS BY WHICH AN ENROLLEE OR A HEALTH CARE PROVIDER, WITH THE
     5  WRITTEN CONSENT OF THE ENROLLEE, MAY APPEAL THE DENIAL OF A
     6  GRIEVANCE FOLLOWING COMPLETION OF THE INTERNAL GRIEVANCE
     7  PROCESS. THE EXTERNAL GRIEVANCE PROCESS SHALL BE CONDUCTED BY AN
     8  INDEPENDENT UTILIZATION REVIEW ENTITY NOT DIRECTLY AFFILIATED
     9  WITH THE MANAGED CARE PLAN.
    10     (B)  TO CONDUCT EXTERNAL GRIEVANCES FILED UNDER THIS SECTION:
    11     (1)  THE DEPARTMENT SHALL RANDOMLY ASSIGN A UTILIZATION
    12  REVIEW ENTITY ON A ROTATIONAL BASIS FROM THE LIST MAINTAINED
    13  UNDER SUBSECTION (D) AND NOTIFY THE ASSIGNED UTILIZATION REVIEW
    14  ENTITY AND THE MANAGED CARE PLAN WITHIN TWO (2) BUSINESS DAYS OF
    15  RECEIVING THE REQUEST. IF THE DEPARTMENT FAILS TO SELECT A
    16  UTILIZATION REVIEW ENTITY UNDER THIS SUBSECTION, THE MANAGED
    17  CARE PLAN SHALL DESIGNATE AND NOTIFY A CERTIFIED UTILIZATION
    18  REVIEW ENTITY TO CONDUCT THE EXTERNAL GRIEVANCE.
    19     (2)  THE MANAGED CARE PLAN SHALL NOTIFY THE ENROLLEE OR
    20  HEALTH CARE PROVIDER OF THE NAME, ADDRESS AND TELEPHONE NUMBER
    21  OF THE UTILIZATION REVIEW ENTITY ASSIGNED UNDER THIS SUBSECTION
    22  WITH TWO (2) BUSINESS DAYS.
    23     (C)  THE EXTERNAL GRIEVANCE PROCESS SHALL MEET ALL OF THE
    24  FOLLOWING REQUIREMENTS:
    25     (1)  ANY EXTERNAL GRIEVANCE SHALL BE FILED WITH THE MANAGED
    26  CARE PLAN WITHIN FIFTEEN (15) DAYS OF RECEIPT OF A NOTICE OF
    27  DENIAL RESULTING FROM THE INTERNAL GRIEVANCE PROCESS. THE FILING
    28  OF THE EXTERNAL GRIEVANCE SHALL INCLUDE ANY MATERIAL
    29  JUSTIFICATION AND ALL REASONABLY NECESSARY SUPPORTING
    30  INFORMATION. WITHIN FIVE (5) BUSINESS DAYS OF THE FILING OF AN
    19970S0091B2082                 - 46 -

     1  EXTERNAL GRIEVANCE, THE MANAGED CARE PLAN SHALL NOTIFY THE
     2  ENROLLEE OR THE HEALTH CARE PROVIDER, THE UTILIZATION REVIEW
     3  ENTITY THAT CONDUCTED THE INTERNAL GRIEVANCE AND THE DEPARTMENT
     4  THAT AN EXTERNAL GRIEVANCE HAS BEEN FILED.
     5     (2)  THE UTILIZATION REVIEW ENTITY THAT CONDUCTED THE
     6  INTERNAL GRIEVANCE SHALL FORWARD COPIES OF ALL WRITTEN
     7  DOCUMENTATION REGARDING THE DENIAL, INCLUDING THE DECISION, ALL
     8  REASONABLY NECESSARY SUPPORTING INFORMATION, A SUMMARY OF
     9  APPLICABLE ISSUES, AND THE BASIS AND CLINICAL RATIONALE FOR THE
    10  DECISION, TO THE UTILIZATION REVIEW ENTITY CONDUCTING THE
    11  EXTERNAL GRIEVANCE WITHIN FIFTEEN (15) DAYS OF RECEIPT OF NOTICE
    12  THAT THE EXTERNAL GRIEVANCE WAS FILED. ANY ADDITIONAL WRITTEN
    13  INFORMATION MAY BE SUBMITTED BY THE ENROLLEE OR THE HEALTH CARE
    14  PROVIDER WITHIN FIFTEEN (15) DAYS OF RECEIPT OF NOTICE THAT THE
    15  EXTERNAL GRIEVANCE WAS FILED.
    16     (3)  THE UTILIZATION REVIEW ENTITY CONDUCTING THE EXTERNAL
    17  GRIEVANCE SHALL REVIEW ALL INFORMATION CONSIDERED IN REACHING
    18  ANY PRIOR DECISIONS TO DENY PAYMENT FOR THE HEALTH CARE SERVICE
    19  AND ANY OTHER WRITTEN SUBMISSION BY THE ENROLLEE OR THE HEALTH
    20  CARE PROVIDER.
    21     (4)  AN EXTERNAL GRIEVANCE DECISION SHALL BE MADE BY:
    22     (I)  ONE OR MORE LICENSED PHYSICIANS OR APPROVED LICENSED
    23  PSYCHOLOGISTS IN ACTIVE CLINICAL PRACTICE OR IN THE SAME OR
    24  SIMILAR SPECIALTY THAT TYPICALLY MANAGES OR RECOMMENDS TREATMENT
    25  FOR THE HEALTH CARE SERVICE BEING REVIEWED; OR
    26     (II)  ONE OR MORE PHYSICIANS CURRENTLY CERTIFIED BY A BOARD
    27  APPROVED BY THE AMERICAN BOARD OF MEDICAL SPECIALISTS OR THE
    28  AMERICAN BOARD OF OSTEOPATHIC SPECIALTIES, IN THE SAME OR
    29  SIMILAR SPECIALTY THAT TYPICALLY MANAGES OR RECOMMENDS TREATMENT
    30  FOR THE HEALTH CARE SERVICE BEING REVIEWED.
    19970S0091B2082                 - 47 -

     1     (5)  WITHIN SIXTY (60) DAYS OF THE FILING OF THE EXTERNAL
     2  GRIEVANCE, THE UTILIZATION REVIEW ENTITY CONDUCTING THE EXTERNAL
     3  GRIEVANCE SHALL ISSUE A WRITTEN DECISION TO THE MANAGED CARE
     4  PLAN, THE ENROLLEE AND THE HEALTH CARE PROVIDER, INCLUDING THE
     5  BASIS AND CLINICAL RATIONALE FOR THE DECISION. THE STANDARD OF
     6  REVIEW SHALL BE WHETHER THE HEALTH CARE SERVICE DENIED BY THE
     7  INTERNAL GRIEVANCE PROCESS WAS MEDICALLY NECESSARY AND
     8  APPROPRIATE UNDER THE TERMS OF THE PLAN. THE EXTERNAL GRIEVANCE
     9  DECISION SHALL BE SUBJECT TO APPEAL TO A COURT OF COMPETENT
    10  JURISDICTION WITHIN SIXTY (60) DAYS OF RECEIPT OF NOTICE OF THE
    11  EXTERNAL GRIEVANCE DECISION. THERE SHALL BE A REBUTTABLE
    12  PRESUMPTION IN FAVOR OF THE DECISION OF THE UTILIZATION REVIEW
    13  ENTITY CONDUCTING THE EXTERNAL GRIEVANCE.
    14     (6)  THE MANAGED CARE PLAN SHALL AUTHORIZE ANY HEALTH CARE
    15  SERVICE OR PAY A CLAIM DETERMINED TO BE MEDICALLY NECESSARY AND
    16  APPROPRIATE UNDER PARAGRAPH (5) PURSUANT TO SECTION 2166,
    17  WHETHER OR NOT AN APPEAL TO A COURT OF COMPETENT JURISDICTION
    18  HAS BEEN FILED.
    19     (7)  ALL FEES AND COSTS, RELATED TO AN EXTERNAL GRIEVANCE
    20  SHALL BE PAID BY THE NONPREVAILING PARTY, IF THE EXTERNAL
    21  GRIEVANCE WAS FILED BY THE HEALTH CARE PROVIDER. THE HEALTH CARE
    22  PROVIDER AND THE UTILIZATION REVIEW ENTITY OR MANAGED CARE PLAN
    23  SHALL EACH PLACE IN ESCROW AN AMOUNT EQUAL TO ONE-HALF OF THE
    24  ESTIMATED COSTS OF THE EXTERNAL GRIEVANCE PROCESS. IF THE
    25  EXTERNAL GRIEVANCE WAS FILED BY THE ENROLLEE, ALL FEES AND COSTS
    26  RELATED THERETO SHALL BE PAID BY THE MANAGED CARE PLAN. FOR
    27  PURPOSES OF THIS PARAGRAPH, FEES AND COSTS SHALL NOT INCLUDE
    28  ATTORNEY FEES.
    29     (D)  THE DEPARTMENT SHALL COMPILE AND MAINTAIN A LIST OF
    30  CERTIFIED UTILIZATION REVIEW ENTITIES THAT MEET THE REQUIREMENTS
    19970S0091B2082                 - 48 -

     1  OF THIS ARTICLE. THE DEPARTMENT MAY REMOVE A UTILIZATION REVIEW
     2  ENTITY FROM THE LIST IF SUCH AN ENTITY IS INCAPABLE OF
     3  PERFORMING ITS RESPONSIBILITIES IN A REASONABLE MANNER, CHARGES
     4  EXCESSIVE FEES OR VIOLATES THIS ARTICLE.
     5     (E)  A FEE MAY BE IMPOSED BY A MANAGED CARE PLAN FOR FILING
     6  AN EXTERNAL GRIEVANCE PURSUANT TO THIS ARTICLE WHICH SHALL NOT
     7  EXCEED TWENTY-FIVE ($25) DOLLARS.
     8     (F)  WRITTEN CONTRACTS BETWEEN MANAGED CARE PLANS AND HEALTH
     9  CARE PROVIDERS MAY PROVIDE AN ALTERNATIVE DISPUTE RESOLUTION
    10  SYSTEM TO THE EXTERNAL GRIEVANCE PROCESS SET FORTH IN THIS
    11  ARTICLE, IF THE DEPARTMENT APPROVES THE CONTRACT. THE
    12  ALTERNATIVE DISPUTE RESOLUTION SYSTEM SHALL BE IMPARTIAL,
    13  INCLUDE SPECIFIC TIME LIMITATIONS TO INITIATE APPEALS, RECEIVE
    14  WRITTEN INFORMATION, CONDUCT HEARINGS AND RENDER DECISIONS AND
    15  OTHERWISE SATISFY THE REQUIREMENTS OF SECTION 2162. A WRITTEN
    16  DECISION PURSUANT TO AN ALTERNATIVE DISPUTE RESOLUTION SYSTEM
    17  SHALL BE FINAL AND BINDING ON ALL PARTIES. AN ALTERNATIVE
    18  DISPUTE RESOLUTION SYSTEM SHALL NOT BE UTILIZED FOR ANY EXTERNAL
    19  GRIEVANCE FILED BY AN ENROLLEE.
    20     SECTION 2163.  RECORDS.--RECORDS REGARDING GRIEVANCES FILED
    21  UNDER THIS SUBARTICLE THAT RESULT IN DECISIONS ADVERSE TO
    22  ENROLLEES SHALL BE MAINTAINED BY THE PLAN FOR NOT LESS THAN
    23  THREE (3) YEARS. THESE RECORDS SHALL BE PROVIDED TO THE
    24  DEPARTMENT, IF REQUESTED, IN ACCORDANCE WITH SECTION
    25  2131(C)(2)(II).
    26                        (J)  PROMPT PAYMENT
    27     SECTION 2166.  PROMPT PAYMENT OF CLAIMS.--(A)  A LICENSED
    28  INSURER OR A MANAGED CARE PLAN SHALL PAY A CLEAN CLAIM SUBMITTED
    29  BY A HEALTH CARE PROVIDER WITHIN FORTY-FIVE (45) DAYS OF RECEIPT
    30  OF THE CLEAN CLAIM.
    19970S0091B2082                 - 49 -

     1     (B)  IF A LICENSED INSURER OR A MANAGED CARE PLAN FAILS TO
     2  REMIT THE PAYMENT AS PROVIDED UNDER SUBSECTION (A), INTEREST AT
     3  TEN PER CENTUM (10%) PER ANNUM SHALL BE ADDED TO THE AMOUNT OWED
     4  ON THE CLEAN CLAIM. INTEREST SHALL BE CALCULATED BEGINNING THE
     5  DAY AFTER THE REQUIRED PAYMENT DATE AND ENDING ON THE DATE THE
     6  CLAIM IS PAID. THE LICENSED INSURER OR MANAGED CARE PLAN SHALL
     7  NOT BE REQUIRED TO PAY ANY INTEREST CALCULATED TO BE LESS THAN
     8  TWO ($2) DOLLARS.
     9     (K)  HEALTH CARE PROVIDER AND MANAGED CARE PLAN PROTECTION
    10     SECTION 2171.  HEALTH CARE PROVIDER AND MANAGED CARE PLAN
    11  PROTECTION.--(A)  A MANAGED CARE PLAN SHALL NOT EXCLUDE,
    12  DISCRIMINATE AGAINST OR PENALIZE ANY HEALTH CARE PROVIDER FOR
    13  ITS REFUSAL TO ALLOW, PERFORM, PARTICIPATE IN OR REFER FOR
    14  HEALTH CARE SERVICES, WHEN THE REFUSAL OF THE HEALTH CARE
    15  PROVIDER IS BASED ON MORAL OR RELIGIOUS GROUNDS AND THAT
    16  PROVIDER MAKES ADEQUATE INFORMATION AVAILABLE TO ENROLLEES OR,
    17  IF APPLICABLE, PROSPECTIVE ENROLLEES.
    18     (B)  NO PUBLIC INSTITUTION, PUBLIC OFFICIAL OR PUBLIC AGENCY
    19  MAY TAKE DISCIPLINARY ACTION AGAINST, DENY LICENSURE OR
    20  CERTIFICATION OR PENALIZE ANY PERSON, ASSOCIATION OR CORPORATION
    21  ATTEMPTING TO ESTABLISH A PLAN, OR OPERATING, EXPANDING OR
    22  IMPROVING AN EXISTING PLAN, BECAUSE THE PERSON, ASSOCIATION OR
    23  CORPORATION REFUSES TO PROVIDE ANY PARTICULAR FORM OF HEALTH
    24  CARE SERVICES OR OTHER SERVICES OR SUPPLIES COVERED BY OTHER
    25  PLANS, WHEN THE REFUSAL IS BASED ON MORAL OR RELIGIOUS GROUNDS.
    26                          (L)  ENFORCEMENT
    27     SECTION 2181.  DEPARTMENTAL POWERS AND DUTIES.--(A)  THE
    28  DEPARTMENT SHALL REQUIRE THAT RECORDS AND DOCUMENTS SUBMITTED TO
    29  A MANAGED CARE PLAN OR UTILIZATION REVIEW ENTITY AS PART OF ANY
    30  COMPLAINT OR GRIEVANCE BE MADE AVAILABLE TO THE DEPARTMENT, UPON
    19970S0091B2082                 - 50 -

     1  REQUEST, FOR PURPOSES OF ENFORCEMENT OR COMPLIANCE WITH THIS
     2  ARTICLE.
     3     (B)  THE DEPARTMENT SHALL COMPILE DATA RECEIVED FROM A
     4  MANAGED CARE PLAN ON AN ANNUAL BASIS REGARDING THE NUMBER, TYPE
     5  AND DISPOSITION OF COMPLAINTS AND GRIEVANCES FILED WITH A
     6  MANAGED CARE PLAN UNDER THIS ARTICLE.
     7     (C)  THE DEPARTMENT SHALL ISSUE GUIDELINES IDENTIFYING THOSE
     8  PROVISIONS OF THIS ARTICLE THAT EXCEED OR ARE NOT INCLUDED IN
     9  THE "STANDARDS FOR THE ACCREDITATION OF MANAGED CARE
    10  ORGANIZATIONS" PUBLISHED BY THE NATIONAL COMMITTEE FOR QUALITY
    11  ASSURANCE. THESE GUIDELINES SHALL BE PUBLISHED IN THE
    12  PENNSYLVANIA BULLETIN AND UPDATED AS NECESSARY. COPIES OF THE
    13  GUIDELINES SHALL BE MADE AVAILABLE TO MANAGED CARE PLANS, HEALTH
    14  CARE PROVIDERS AND ENROLLEES, UPON REQUEST.
    15     (D)  THE DEPARTMENT AND THE INSURANCE DEPARTMENT SHALL ENSURE
    16  COMPLIANCE WITH THIS ARTICLE. THE APPROPRIATE DEPARTMENT SHALL
    17  INVESTIGATE POTENTIAL VIOLATIONS OF THE ARTICLE BASED UPON
    18  INFORMATION RECEIVED FROM ENROLLEES, HEALTH CARE PROVIDERS AND
    19  OTHER SOURCES IN ORDER TO ENSURE COMPLIANCE WITH THIS ARTICLE.
    20     (E)  THE DEPARTMENT AND THE INSURANCE DEPARTMENT SHALL
    21  PROMULGATE SUCH REGULATIONS AS MAY BE NECESSARY TO CARRY OUT THE
    22  PROVISIONS OF THIS ARTICLE.
    23     (F)  THE DEPARTMENT IN COOPERATION WITH THE INSURANCE
    24  DEPARTMENT SHALL SUBMIT AN ANNUAL REPORT TO THE GENERAL ASSEMBLY
    25  REGARDING THE IMPLEMENTATION, OPERATION AND ENFORCEMENT OF THIS
    26  ARTICLE.
    27     SECTION 2182.  PENALTIES AND SANCTIONS.--(A)  THE DEPARTMENT
    28  OR THE INSURANCE DEPARTMENT, AS APPROPRIATE, MAY IMPOSE A CIVIL
    29  PENALTY OF UP TO FIVE THOUSAND ($5,000) DOLLARS FOR A VIOLATION
    30  OF THIS ARTICLE.
    19970S0091B2082                 - 51 -

     1     (B)  A MANAGED CARE PLAN SHALL BE SUBJECT TO THE ACT OF JULY
     2  22, 1974 (P.L.589, NO.205), KNOWN AS THE "UNFAIR INSURANCE
     3  PRACTICES ACT."
     4     (C)  THE DEPARTMENT OR THE INSURANCE DEPARTMENT MAY MAINTAIN
     5  AN ACTION IN THE NAME OF THE COMMONWEALTH FOR AN INJUNCTION TO
     6  PROHIBIT ANY ACTIVITY WHICH VIOLATES THE PROVISIONS OF THIS
     7  ARTICLE.
     8     (D)  THE DEPARTMENT MAY ISSUE AN ORDER TEMPORARILY
     9  PROHIBITING A MANAGED CARE PLAN WHICH VIOLATES THIS ARTICLE FROM
    10  ENROLLING NEW MEMBERS.
    11     (E)  THE DEPARTMENT MAY REQUIRE A MANAGED CARE PLAN TO
    12  DEVELOP AND ADHERE TO A PLAN OF CORRECTION APPROVED BY THE
    13  DEPARTMENT. THE DEPARTMENT SHALL MONITOR COMPLIANCE WITH THE
    14  PLAN OF CORRECTION. THE PLAN OF CORRECTION SHALL BE AVAILABLE TO
    15  ENROLLEES OF THE MANAGED CARE PLAN, UPON REQUEST.
    16     (F)  IN NO EVENT SHALL THE DEPARTMENT AND THE INSURANCE
    17  DEPARTMENT IMPOSE A PENALTY FOR THE SAME VIOLATION.
    18     SECTION 2183.  ADMINISTRATIVE REVIEW.--THE PROVISIONS OF THIS
    19  ARTICLE SHALL BE SUBJECT TO 2 PA.C.S. CH. 5 SUBCH. A (RELATING
    20  TO PRACTICE AND PROCEDURE OF COMMONWEALTH AGENCIES).
    21                         (M)  MISCELLANEOUS
    22     SECTION 2191.  COMPLIANCE WITH NATIONAL ACCREDITING
    23  STANDARDS.--NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE
    24  TO THE CONTRARY, THE DEPARTMENT SHALL GIVE CONSIDERATION TO A
    25  MANAGED CARE PLAN'S DEMONSTRATED COMPLIANCE WITH THE STANDARDS
    26  AND REQUIREMENTS SET FORTH IN THE "STANDARDS FOR THE
    27  ACCREDITATION OF MANAGED CARE ORGANIZATIONS" PUBLISHED BY THE
    28  NATIONAL COMMITTEE FOR QUALITY ASSURANCE OR OTHER DEPARTMENT-
    29  APPROVED QUALITY REVIEW ORGANIZATIONS IN DETERMINING COMPLIANCE
    30  WITH THE SAME OR SIMILAR PROVISIONS OF THIS ARTICLE. THE MANAGED
    19970S0091B2082                 - 52 -

     1  CARE PLAN, HOWEVER, SHALL REMAIN SUBJECT TO AND SHALL COMPLY
     2  WITH ANY OTHER PROVISIONS OF THIS ARTICLE THAT EXCEED OR ARE NOT
     3  INCLUDED IN THE STANDARDS OF THE NATIONAL COMMITTEE FOR QUALITY
     4  ASSURANCE OR OTHER DEPARTMENT-APPROVED QUALITY REVIEW
     5  ORGANIZATIONS.
     6     SECTION 2192.  EXCEPTIONS.--THIS ARTICLE SHALL NOT APPLY TO
     7  ANY OF THE FOLLOWING:
     8     (1)  THE ACT OF JUNE 2, 1915 (P.L.736, NO.338), KNOWN AS THE
     9  "WORKERS' COMPENSATION ACT."
    10     (2)  THE ACT OF JULY 1, 1937 (P.L.2532, NO.470), KNOWN AS THE
    11  "WORKERS' COMPENSATION SECURITY FUND ACT."
    12     (3)  PEER REVIEW, UTILIZATION REVIEW OR MENTAL OR PHYSICAL
    13  EXAMINATIONS PERFORMED UNDER 75 PA.C.S. CH. 17 (RELATING TO
    14  FINANCIAL RESPONSIBILITY).
    15     (4)  THE FEE-FOR-SERVICE PROGRAMS OPERATED BY THE DEPARTMENT
    16  OF PUBLIC WELFARE UNDER TITLE XIX OF THE SOCIAL SECURITY ACT (49
    17  STAT. 620, 42 U.S.C. § 1396 ET SEQ.).
    18     SECTION 2193.  PREEMPTION.--NOTHING IN THIS ARTICLE SHALL
    19  REGULATE OR AUTHORIZE REGULATION WHICH WOULD BE INEFFECTIVE BY
    20  REASON OF THE STATE LAW PREEMPTION PROVISIONS OF THE EMPLOYEE
    21  RETIREMENT INCOME SECURITY ACT OF 1974 (PUBLIC LAW 93-406, 88
    22  STAT. 829).
    23                           ARTICLE XXIII.
    24                      CHILDREN'S HEALTH CARE.
    25                      (A)  GENERAL PROVISIONS
    26     SECTION 2301.  SHORT TITLE.--THIS ARTICLE SHALL BE KNOWN AND
    27  MAY BE CITED AS THE "CHILDREN'S HEALTH CARE ACT."
    28     SECTION 2302.  LEGISLATIVE FINDINGS AND INTENT.--THE GENERAL
    29  ASSEMBLY FINDS AND DECLARES AS FOLLOWS:
    30     (1)  ALL CITIZENS OF THIS COMMONWEALTH SHOULD HAVE ACCESS TO
    19970S0091B2082                 - 53 -

     1  AFFORDABLE AND REASONABLY PRICED HEALTH CARE AND TO
     2  NONDISCRIMINATORY TREATMENT BY HEALTH INSURERS AND PROVIDERS.
     3     (2)  THE UNINSURED HEALTH CARE POPULATION OF THIS
     4  COMMONWEALTH IS ESTIMATED TO BE OVER ONE MILLION PERSONS, AND
     5  MANY THOUSANDS MORE LACK ADEQUATE INSURANCE COVERAGE. IT IS ALSO
     6  ESTIMATED THAT APPROXIMATELY TWO-THIRDS OF THE UNINSURED ARE
     7  EMPLOYED OR DEPENDENTS OF EMPLOYED PERSONS.
     8     (3)  OVER ONE-THIRD OF THE UNINSURED HEALTH CARE POPULATION
     9  ARE CHILDREN. UNINSURED CHILDREN ARE OF PARTICULAR CONCERN
    10  BECAUSE OF THEIR NEED FOR ONGOING PREVENTIVE AND PRIMARY CARE.
    11  MEASURES NOT TAKEN TO CARE FOR SUCH CHILDREN NOW WILL RESULT IN
    12  HIGHER HUMAN AND FINANCIAL COSTS LATER.
    13     (4)  UNINSURED CHILDREN LACK ACCESS TO TIMELY AND APPROPRIATE
    14  PRIMARY AND PREVENTIVE CARE. AS A RESULT, HEALTH CARE IS OFTEN
    15  DELAYED OR FOREGONE RESULTING IN INCREASED RISK OF DEVELOPING
    16  MORE SEVERE CONDITIONS WHICH, IN TURN, ARE MORE EXPENSIVE TO
    17  TREAT. THIS TENDENCY TO DELAY CARE AND TO SEEK AMBULATORY CARE
    18  IN HOSPITAL-BASED SETTINGS ALSO CAUSES INEFFICIENCIES IN THE
    19  HEALTH CARE SYSTEM.
    20     (5)  HEALTH CARE MARKETS HAVE BEEN DISTORTED THROUGH COST
    21  SHIFTS FOR THE UNCOMPENSATED HEALTH CARE COSTS OF UNINSURED
    22  CITIZENS OF THIS COMMONWEALTH WHICH HAS CAUSED DECREASED
    23  COMPETITIVE CAPACITY ON THE PART OF THOSE HEALTH CARE PROVIDERS
    24  WHO SERVE THE POOR AND INCREASED COSTS OF OTHER HEALTH CARE
    25  PAYORS.
    26     (6)  NO ONE SECTOR CAN ABSORB THE COST OF PROVIDING HEALTH
    27  CARE TO CITIZENS OF THIS COMMONWEALTH WHO CANNOT AFFORD HEALTH
    28  CARE ON THEIR OWN. THE COST IS TOO LARGE FOR THE PUBLIC SECTOR
    29  ALONE TO BEAR AND INSTEAD REQUIRES THE ESTABLISHMENT OF A PUBLIC
    30  AND PRIVATE PARTNERSHIP TO SHARE THE COSTS IN A MANNER
    19970S0091B2082                 - 54 -

     1  ECONOMICALLY FEASIBLE FOR ALL INTERESTS. THE MAGNITUDE OF THIS
     2  NEED ALSO REQUIRES THAT IT BE DONE ON A TIME-PHASED, COST-
     3  MANAGED AND PLANNED BASIS.
     4     (7)  ELIGIBLE CHILDREN IN THIS COMMONWEALTH SHOULD HAVE
     5  ACCESS TO COST-EFFECTIVE, COMPREHENSIVE PRIMARY HEALTH COVERAGE
     6  IF THEY ARE UNABLE TO AFFORD COVERAGE OR OBTAIN IT.
     7     (8)  CARE SHOULD BE PROVIDED IN APPROPRIATE SETTINGS BY
     8  EFFICIENT PROVIDERS, CONSISTENT WITH HIGH QUALITY CARE AND AT AN
     9  APPROPRIATE STAGE, SOON ENOUGH TO AVERT THE NEED FOR OVERLY
    10  EXPENSIVE TREATMENT.
    11     (9)  EQUITY SHOULD BE ASSURED AMONG HEALTH PROVIDERS AND
    12  PAYORS BY PROVIDING A MECHANISM FOR PROVIDERS, EMPLOYERS, THE
    13  PUBLIC SECTOR AND PATIENTS TO SHARE IN FINANCING INDIGENT
    14  CHILDREN'S HEALTH CARE.
    15     SECTION 2303.  DEFINITIONS.--AS USED IN THIS ARTICLE, THE
    16  FOLLOWING WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO
    17  THEM IN THIS SECTION:
    18     "CHILD."  A PERSON UNDER NINETEEN (19) YEARS OF AGE.
    19     "CHILDREN'S MEDICAL ASSISTANCE."  MEDICAL ASSISTANCE SERVICES
    20  TO CHILDREN AS REQUIRED UNDER TITLE XIV OF THE SOCIAL SECURITY
    21  ACT (49 STAT. 620, 42 U.S.C. § 301 ET SEQ.), INCLUDING EPSDT
    22  SERVICES.
    23     "CONTRACTOR."  AN ENTITY AWARDED A CONTRACT UNDER SUBARTICLE
    24  (B) TO PROVIDE HEALTH CARE SERVICES UNDER THIS ARTICLE. THE TERM
    25  INCLUDES AN ENTITY AND ITS SUBSIDIARY WHICH IS ESTABLISHED UNDER
    26  40 PA.C.S. CH. 61 (RELATING TO HOSPITAL PLAN CORPORATIONS) OR 63
    27  (RELATING TO PROFESSIONAL HEALTH SERVICES PLAN CORPORATIONS);
    28  THIS ACT; OR THE ACT OF DECEMBER 29, 1972 (P.L.1701, NO.364),
    29  KNOWN AS THE "HEALTH MAINTENANCE ORGANIZATION ACT."
    30     "COUNCIL."  THE CHILDREN'S HEALTH ADVISORY COUNCIL
    19970S0091B2082                 - 55 -

     1  ESTABLISHED IN SECTION 2311(I).
     2     "EPSDT."   EARLY AND PERIODIC SCREENING, DIAGNOSIS AND
     3  TREATMENT.
     4     "FUND."  THE CHILDREN'S HEALTH FUND FOR HEALTH CARE FOR
     5  INDIGENT CHILDREN ESTABLISHED BY SECTION 1296 OF THE ACT OF
     6  MARCH 4, 1971 (P.L.6, NO.2), KNOWN AS THE "TAX REFORM CODE OF
     7  1971."
     8     "GENETIC STATUS."  THE PRESENCE OF A PHYSICAL CONDITION IN AN
     9  INDIVIDUAL WHICH IS A RESULT OF AN INHERITED TRAIT.
    10     "GROUP."  A GROUP FOR WHICH A HEALTH INSURANCE POLICY IS
    11  WRITTEN IN THIS COMMONWEALTH.
    12     "HEALTH MAINTENANCE ORGANIZATION" OR "HMO."  AN ENTITY
    13  ORGANIZED AND REGULATED UNDER THE ACT OF DECEMBER 29, 1972
    14  (P.L.1701, NO.364), KNOWN AS THE "HEALTH MAINTENANCE
    15  ORGANIZATION ACT."
    16     "HEALTH SERVICE CORPORATION."  A PROFESSIONAL HEALTH SERVICE
    17  CORPORATION AS DEFINED IN 40 PA.C.S. § 6302 (RELATING TO
    18  DEFINITIONS).
    19     "HOSPITAL."  AN INSTITUTION HAVING AN ORGANIZED MEDICAL STAFF
    20  WHICH IS ENGAGED PRIMARILY IN PROVIDING TO INPATIENTS, BY OR
    21  UNDER THE SUPERVISION OF PHYSICIANS, DIAGNOSTIC AND THERAPEUTIC
    22  SERVICES FOR THE CARE OF INJURED, DISABLED, PREGNANT, DISEASED
    23  OR SICK OR MENTALLY ILL PERSONS. THE TERM INCLUDES FACILITIES
    24  FOR THE DIAGNOSIS AND TREATMENT OF DISORDERS WITHIN THE SCOPE OF
    25  SPECIFIC MEDICAL SPECIALTIES. THE TERM DOES NOT INCLUDE
    26  FACILITIES CARING EXCLUSIVELY FOR THE MENTALLY ILL.
    27     "HOSPITAL PLAN CORPORATION."  A HOSPITAL PLAN CORPORATION AS
    28  DEFINED IN 40 PA.C.S. § 6101 (RELATING TO DEFINITIONS).
    29     "INSURER."   ANY INSURANCE COMPANY, ASSOCIATION, RECIPROCAL,
    30  NONPROFIT HOSPITAL PLAN CORPORATION, NONPROFIT PROFESSIONAL
    19970S0091B2082                 - 56 -

     1  HEALTH SERVICE PLAN, HEALTH MAINTENANCE ORGANIZATION, FRATERNAL
     2  BENEFITS SOCIETY OR A RISK-BEARING PPO OR NONRISK-BEARING PPO
     3  NOT GOVERNED AND REGULATED UNDER THE EMPLOYEE RETIREMENT INCOME
     4  SECURITY ACT OF 1974 (PUBLIC LAW 93-406, 29 U.S.C. § 1001 ET
     5  SEQ.).
     6     "MAAC."  THE MEDICAL ASSISTANCE ADVISORY COMMITTEE.
     7     "MANAGED CARE ORGANIZATION."  HEALTH MAINTENANCE ORGANIZATION
     8  ORGANIZED AND REGULATED UNDER THE ACT OF DECEMBER 29, 1972
     9  (P.L.1701, NO.364), KNOWN AS THE "HEALTH MAINTENANCE
    10  ORGANIZATION ACT," OR A RISK-ASSUMING PREFERRED PROVIDER
    11  ORGANIZATION OR EXCLUSIVE PROVIDER ORGANIZATION, ORGANIZED AND
    12  REGULATED UNDER THIS ACT.
    13     "MCH."  MATERNAL AND CHILD HEALTH.
    14     "MEDICAID."  THE FEDERAL MEDICAL ASSISTANCE PROGRAM
    15  ESTABLISHED UNDER TITLE XIX OF THE SOCIAL SECURITY ACT (49 STAT.
    16  620, 42 U.S.C. § 1396 ET SEQ.).
    17     "MEDICAL ASSISTANCE."  THE STATE PROGRAM OF MEDICAL
    18  ASSISTANCE ESTABLISHED UNDER THE ACT OF JUNE 13, 1967 (P.L.31,
    19  NO.21), KNOWN AS THE "PUBLIC WELFARE CODE."
    20     "MID-LEVEL HEALTH PROFESSIONAL."  A PHYSICIAN ASSISTANT,
    21  CERTIFIED REGISTERED NURSE PRACTITIONER, NURSE PRACTITIONER OR A
    22  CERTIFIED NURSE MIDWIFE.
    23     "PARENT."  A NATURAL PARENT, STEPPARENT, ADOPTIVE PARENT,
    24  GUARDIAN OR CUSTODIAN OF A CHILD.
    25     "PPO."  A PREFERRED PROVIDER ORGANIZATION SUBJECT TO THE
    26  PROVISIONS OF SECTION 630.
    27     "PREEXISTING CONDITION."  A DISEASE OR PHYSICAL CONDITION FOR
    28  WHICH MEDICAL ADVICE OR TREATMENT HAS BEEN RECEIVED PRIOR TO THE
    29  EFFECTIVE DATE OF COVERAGE.
    30     "SUBGROUP."  AN EMPLOYER COVERED UNDER A CONTRACT ISSUED TO A
    19970S0091B2082                 - 57 -

     1  MULTIPLE EMPLOYER TRUST OR TO AN ASSOCIATION.
     2     "TERMINATE."  INCLUDES CANCELLATION, NONRENEWAL AND
     3  RESCISSION.
     4     "WAITING PERIOD."  A PERIOD OF TIME AFTER THE EFFECTIVE DATE
     5  OF ENROLLMENT DURING WHICH A HEALTH INSURANCE PLAN EXCLUDES
     6  COVERAGE FOR THE DIAGNOSIS OR TREATMENT OF ONE OR MORE MEDICAL
     7  CONDITIONS.
     8     "WIC."  THE FEDERAL SUPPLEMENTAL FOOD PROGRAM FOR WOMEN,
     9  INFANTS AND CHILDREN.
    10                 (B)  PRIMARY HEALTH CARE PROGRAMS
    11     SECTION 2311.  CHILDREN'S HEALTH CARE.--(A)  THE FUND SHALL
    12  BE DEDICATED EXCLUSIVELY FOR DISTRIBUTION BY THE INSURANCE
    13  DEPARTMENT THROUGH CONTRACTS IN ORDER TO PROVIDE FREE AND
    14  SUBSIDIZED HEALTH CARE SERVICES UNDER THIS SECTION AND TO
    15  DEVELOP AND IMPLEMENT OUTREACH ACTIVITIES REQUIRED UNDER SECTION
    16  2312.
    17     (B)  (1)  THE FUND SHALL BE USED TO FUND HEALTH CARE SERVICES
    18  FOR CHILDREN AS SPECIFIED IN THIS SECTION. THE INSURANCE
    19  DEPARTMENT SHALL ASSURE THAT THE PROGRAM IS IMPLEMENTED
    20  STATEWIDE. ALL CONTRACTS AWARDED UNDER THIS SECTION SHALL BE
    21  AWARDED THROUGH A COMPETITIVE PROCUREMENT PROCESS. THE INSURANCE
    22  DEPARTMENT SHALL USE ITS BEST EFFORTS TO ENSURE THAT ELIGIBLE
    23  CHILDREN ACROSS THIS COMMONWEALTH HAVE ACCESS TO HEALTH CARE
    24  SERVICES TO BE PROVIDED UNDER THIS ARTICLE.
    25     (2)  NO MORE THAN SEVEN AND ONE-HALF PER CENTUM (7 1/2%) OF
    26  THE AMOUNT OF THE CONTRACT MAY BE USED FOR ADMINISTRATIVE
    27  EXPENSES OF THE CONTRACTOR. IF, AFTER THE FIRST THREE (3) FULL
    28  YEARS OF OPERATION, ANY CONTRACTOR PRESENTS DOCUMENTED EVIDENCE
    29  THAT ADMINISTRATIVE EXPENSES ARE IN EXCESS OF SEVEN AND ONE-HALF
    30  PER CENTUM (7 1/2%) OF THE AMOUNT OF THE CONTRACT, THE INSURANCE
    19970S0091B2082                 - 58 -

     1  DEPARTMENT MAY MAKE AN ADDITIONAL ALLOTMENT OF FUNDS, NOT TO
     2  EXCEED TWO AND ONE-HALF PER CENTUM (2 1/2%) OF THE AMOUNT OF THE
     3  CONTRACT, FOR FUTURE ADMINISTRATIVE EXPENSES TO THE CONTRACTOR
     4  TO THE EXTENT THAT THE INSURANCE DEPARTMENT FINDS THE EXPENSES
     5  REASONABLE AND NECESSARY.
     6     (3)  NO LESS THAN SEVENTY PER CENTUM (70%) OF THE FUND SHALL
     7  BE USED TO PROVIDE THE HEALTH CARE SERVICES PROVIDED UNDER THIS
     8  ARTICLE FOR CHILDREN ELIGIBLE FOR FREE CARE UNDER SUBSECTION
     9  (D). WHEN THE INSURANCE DEPARTMENT DETERMINES THAT SEVENTY PER
    10  CENTUM (70%) OF THE FUND IS NOT NEEDED IN ORDER TO ACHIEVE
    11  MAXIMUM ENROLLMENT OF CHILDREN ELIGIBLE FOR FREE CARE AND
    12  PROMULGATES A FINAL FORM REGULATION, WITH PROPOSED RULEMAKING
    13  OMITTED, THIS PARAGRAPH SHALL EXPIRE.
    14     (4)  TO ENSURE THAT INPATIENT HOSPITAL CARE IS PROVIDED TO
    15  ELIGIBLE CHILDREN, EACH PRIMARY CARE PHYSICIAN PROVIDING PRIMARY
    16  CARE SERVICES SHALL MAKE NECESSARY ARRANGEMENTS FOR ADMISSION TO
    17  THE HOSPITAL AND FOR NECESSARY SPECIALTY CARE.
    18     (C)  (1)  ANY ORGANIZATION OR CORPORATION RECEIVING FUNDS
    19  FROM THE INSURANCE DEPARTMENT TO PROVIDE COVERAGE OF HEALTH CARE
    20  SERVICES SHALL ENROLL, TO THE EXTENT THAT FUNDS ARE AVAILABLE,
    21  ANY CHILD WHO MEETS ALL OF THE FOLLOWING:
    22     (I)  EXCEPT FOR NEWBORNS, HAS BEEN A RESIDENT OF THIS
    23  COMMONWEALTH FOR AT LEAST THIRTY (30) DAYS PRIOR TO ENROLLMENT.
    24     (II)  IS NOT COVERED BY A HEALTH INSURANCE PLAN, A SELF-
    25  INSURANCE PLAN OR A SELF-FUNDED PLAN OR IS NOT ELIGIBLE FOR OR
    26  COVERED BY MEDICAL ASSISTANCE.
    27     (III)  IS QUALIFIED BASED ON INCOME UNDER SUBSECTION (D) OR
    28  (E).
    29     (IV)  MEETS THE CITIZENSHIP REQUIREMENTS OF THE MEDICAID
    30  PROGRAM ADMINISTERED BY THE DEPARTMENT OF PUBLIC WELFARE.
    19970S0091B2082                 - 59 -

     1     (2)  ENROLLMENT MAY NOT BE DENIED ON THE BASIS OF A
     2  PREEXISTING CONDITION, NOR MAY DIAGNOSIS OR TREATMENT FOR THE
     3  CONDITION BE EXCLUDED BASED ON THE CONDITION'S PREEXISTENCE.
     4     (D)  THE PROVISION OF HEALTH CARE INSURANCE FOR ELIGIBLE
     5  CHILDREN SHALL BE FREE TO A CHILD UNDER NINETEEN (19) YEARS OF
     6  AGE WHOSE FAMILY INCOME IS NO GREATER THAN TWO HUNDRED PER
     7  CENTUM (200%) OF THE FEDERAL POVERTY LEVEL.
     8     (E)  (1)  THE PROVISION OF HEALTH CARE INSURANCE FOR AN
     9  ELIGIBLE CHILD WHO IS UNDER NINETEEN (19) YEARS OF AGE AND WHOSE
    10  FAMILY INCOME IS GREATER THAN TWO HUNDRED PER CENTUM (200%) OF
    11  THE FEDERAL POVERTY LEVEL BUT NO GREATER THAN TWO HUNDRED
    12  THIRTY-FIVE PER CENTUM (235%) OF THE FEDERAL POVERTY LEVEL MAY
    13  BE SUBSIDIZED BY THE FUND AT A RATE NOT TO EXCEED FIFTY PER
    14  CENTUM (50%).
    15     (2)  THE DIFFERENCE BETWEEN THE PURE PREMIUM OF THE MINIMUM
    16  BENEFIT PACKAGE IN SUBSECTION (L)(6) AND THE SUBSIDY PROVIDED
    17  UNDER THIS SUBSECTION SHALL BE THE AMOUNT PAID BY THE FAMILY OF
    18  THE ELIGIBLE CHILD PURCHASING THE MINIMUM BENEFIT PACKAGE.
    19     (F)  THE FAMILY OF AN ELIGIBLE CHILD WHOSE FAMILY INCOME
    20  MAKES THE CHILD ELIGIBLE FOR FREE OR SUBSIDIZED CARE BUT WHO
    21  CANNOT RECEIVE CARE DUE TO LACK OF FUNDS IN THE FUND MAY
    22  PURCHASE COVERAGE FOR THE CHILD AT COST.
    23     (G)  THE INSURANCE DEPARTMENT SHALL:
    24     (1)  ADMINISTER THE CHILDREN'S HEALTH CARE PROGRAM PURSUANT
    25  TO THIS ARTICLE.
    26     (2)  REVIEW ALL BIDS AND APPROVE AND EXECUTE ALL CONTRACTS
    27  FOR THE PURPOSE OF EXPANDING ACCESS TO HEALTH CARE SERVICES FOR
    28  ELIGIBLE CHILDREN AS PROVIDED FOR IN THIS SUBARTICLE.
    29     (3)  CONDUCT MONITORING AND OVERSIGHT OF CONTRACTS ENTERED
    30  INTO.
    19970S0091B2082                 - 60 -

     1     (4)  ISSUE AN ANNUAL REPORT TO THE GOVERNOR, THE GENERAL
     2  ASSEMBLY AND THE PUBLIC FOR EACH FISCAL YEAR OUTLINING PRIMARY
     3  HEALTH SERVICES FUNDED FOR THE YEAR, DETAILING THE OUTREACH AND
     4  ENROLLMENT EFFORTS, AND REPORTING BY COUNTY THE NUMBER OF
     5  CHILDREN RECEIVING HEALTH CARE SERVICES FROM THE FUND, THE
     6  PROJECTED NUMBER OF ELIGIBLE CHILDREN AND THE NUMBER OF ELIGIBLE
     7  CHILDREN ON WAITING LISTS FOR HEALTH CARE SERVICES.
     8     (5)  IN CONSULTATION WITH APPROPRIATE COMMONWEALTH AGENCIES,
     9  COORDINATE THE DEVELOPMENT AND SUPERVISION OF THE OUTREACH PLAN
    10  REQUIRED UNDER SECTION 2312.
    11     (6)  IN CONSULTATION WITH APPROPRIATE COMMONWEALTH AGENCIES,
    12  MONITOR, REVIEW AND EVALUATE THE ADEQUACY, ACCESSIBILITY AND
    13  AVAILABILITY OF SERVICES DELIVERED TO CHILDREN WHO ARE ENROLLED
    14  IN THE HEALTH INSURANCE PROGRAM ESTABLISHED UNDER THIS
    15  SUBARTICLE.
    16     (H)  THE INSURANCE DEPARTMENT MAY PROMULGATE REGULATIONS
    17  NECESSARY FOR THE IMPLEMENTATION AND ADMINISTRATION OF THIS
    18  SUBARTICLE.
    19     (I)  THE CHILDREN'S HEALTH ADVISORY COUNCIL IS ESTABLISHED
    20  WITHIN THE INSURANCE DEPARTMENT AS AN ADVISORY COUNCIL. THE
    21  FOLLOWING SHALL APPLY:
    22     (1)  THE COUNCIL SHALL CONSIST OF FOURTEEN VOTING MEMBERS.
    23  MEMBERS PROVIDED FOR IN SUBPARAGRAPHS (IV), (V), (VI), (VII),
    24  (VIII), (X) AND (XI) SHALL BE APPOINTED BY THE INSURANCE
    25  COMMISSIONER. THE COUNCIL SHALL BE GEOGRAPHICALLY BALANCED ON A
    26  STATEWIDE BASIS AND SHALL INCLUDE:
    27     (I)  THE SECRETARY OF HEALTH EX OFFICIO OR A DESIGNEE.
    28     (II)  THE INSURANCE COMMISSIONER EX OFFICIO OR A DESIGNEE.
    29     (III)  THE SECRETARY OF PUBLIC WELFARE EX OFFICIO OR A
    30  DESIGNEE.
    19970S0091B2082                 - 61 -

     1     (IV)  A REPRESENTATIVE WITH EXPERIENCE IN CHILDREN'S HEALTH
     2  FROM A SCHOOL OF PUBLIC HEALTH LOCATED IN THIS COMMONWEALTH.
     3     (V)  A PHYSICIAN WITH EXPERIENCE IN CHILDREN'S HEALTH
     4  APPOINTED FROM A LIST OF THREE QUALIFIED PERSONS RECOMMENDED BY
     5  THE PENNSYLVANIA MEDICAL SOCIETY.
     6     (VI)  A REPRESENTATIVE OF A CHILDREN'S HOSPITAL OR A HOSPITAL
     7  WITH A PEDIATRIC OUTPATIENT CLINIC APPOINTED FROM A LIST OF
     8  THREE PERSONS SUBMITTED BY THE HOSPITAL ASSOCIATION OF
     9  PENNSYLVANIA.
    10     (VII)  A PARENT OF A CHILD WHO RECEIVES PRIMARY HEALTH CARE
    11  COVERAGE FROM THE FUND.
    12     (VIII)  A MIDLEVEL PROFESSIONAL APPOINTED FROM LISTS OF NAMES
    13  RECOMMENDED BY STATEWIDE ASSOCIATIONS REPRESENTING MIDLEVEL
    14  HEALTH PROFESSIONALS.
    15     (IX)  A SENATOR APPOINTED BY THE PRESIDENT PRO TEMPORE OF THE
    16  SENATE, A SENATOR APPOINTED BY THE MINORITY LEADER OF THE
    17  SENATE, A REPRESENTATIVE APPOINTED BY THE SPEAKER OF THE HOUSE
    18  OF REPRESENTATIVES AND A REPRESENTATIVE APPOINTED BY THE
    19  MINORITY LEADER OF THE HOUSE OF REPRESENTATIVES.
    20     (X)  A REPRESENTATIVE FROM A PRIVATE NONPROFIT FOUNDATION.
    21     (XI)  A REPRESENTATIVE OF BUSINESS WHO IS NOT A CONTRACTOR OR
    22  PROVIDER OF PRIMARY HEALTH CARE INSURANCE UNDER THIS SUBARTICLE.
    23     (2)  IF ANY SPECIFIED ORGANIZATION SHOULD CEASE TO EXIST OR
    24  FAIL TO MAKE A RECOMMENDATION WITHIN NINETY (90) DAYS OF A
    25  REQUEST TO DO SO, THE COUNCIL SHALL SPECIFY A NEW EQUIVALENT
    26  ORGANIZATION TO FULFILL THE RESPONSIBILITIES OF THIS SECTION.
    27     (3)  THE INSURANCE COMMISSIONER SHALL CHAIR THE COUNCIL. THE
    28  MEMBERS OF THE COUNCIL SHALL ANNUALLY ELECT, BY A MAJORITY VOTE
    29  OF THE MEMBERS, A VICE CHAIRPERSON FROM AMONG THE MEMBERS OF THE
    30  COUNCIL.
    19970S0091B2082                 - 62 -

     1     (4)  THE PRESENCE OF EIGHT MEMBERS SHALL CONSTITUTE A QUORUM
     2  FOR THE TRANSACTING OF ANY BUSINESS. ANY ACT BY A MAJORITY OF
     3  THE MEMBERS PRESENT AT ANY MEETING AT WHICH THERE IS A QUORUM
     4  SHALL BE DEEMED TO BE THAT OF THE COUNCIL.
     5     (5)  ALL MEETINGS OF THE COUNCIL SHALL BE CONDUCTED PURSUANT
     6  TO THE ACT OF JULY 3, 1986 (P.L.388, NO.84), KNOWN AS THE
     7  "SUNSHINE ACT," UNLESS OTHERWISE PROVIDED IN THIS SECTION. THE
     8  COUNCIL SHALL MEET AT LEAST ANNUALLY AND MAY PROVIDE FOR SPECIAL
     9  MEETINGS AS IT DEEMS NECESSARY. MEETING DATES SHALL BE SET BY A
    10  MAJORITY VOTE OF MEMBERS OF THE COUNCIL OR BY CALL OF THE
    11  CHAIRPERSON UPON SEVEN (7) DAYS' NOTICE TO ALL MEMBERS. THE
    12  COUNCIL SHALL PUBLISH NOTICE OF ITS MEETINGS IN THE PENNSYLVANIA
    13  BULLETIN. NOTICE SHALL SPECIFY THE DATE, TIME AND PLACE OF THE
    14  MEETING AND SHALL STATE THAT THE COUNCIL'S MEETINGS ARE OPEN TO
    15  THE GENERAL PUBLIC. ALL ACTION TAKEN BY THE COUNCIL SHALL BE
    16  TAKEN IN OPEN PUBLIC SESSION AND SHALL NOT BE TAKEN EXCEPT UPON
    17  A MAJORITY VOTE OF THE MEMBERS PRESENT AT A MEETING AT WHICH A
    18  QUORUM IS PRESENT.
    19     (6)  THE MEMBERS OF THE COUNCIL SHALL NOT RECEIVE A SALARY OR
    20  PER DIEM ALLOWANCE FOR SERVING AS MEMBERS OF THE COUNCIL BUT
    21  SHALL BE REIMBURSED FOR ACTUAL AND NECESSARY EXPENSES INCURRED
    22  IN THE PERFORMANCE OF THEIR DUTIES.
    23     (7)  TERMS OF COUNCIL MEMBERS SHALL BE AS FOLLOWS:
    24     (I)  THE APPOINTED MEMBERS SHALL SERVE FOR A TERM OF THREE
    25  (3) YEARS AND SHALL CONTINUE TO SERVE THEREAFTER UNTIL THEIR
    26  SUCCESSORS ARE APPOINTED.
    27     (II)  AN APPOINTED MEMBER SHALL NOT BE ELIGIBLE TO SERVE MORE
    28  THAN TWO FULL CONSECUTIVE TERMS OF THREE (3) YEARS. VACANCIES
    29  SHALL BE FILLED IN THE SAME MANNER IN WHICH THEY WERE DESIGNATED
    30  WITHIN SIXTY (60) DAYS OF THE VACANCY.
    19970S0091B2082                 - 63 -

     1     (III)  AN APPOINTED MEMBER MAY BE REMOVED BY THE APPOINTING
     2  AUTHORITY FOR JUST CAUSE AND BY A VOTE OF AT LEAST SEVEN MEMBERS
     3  OF THE COUNCIL.
     4     (8)  THE COUNCIL SHALL REVIEW OUTREACH ACTIVITIES AND MAY
     5  MAKE RECOMMENDATIONS TO THE INSURANCE DEPARTMENT.
     6     (9)  THE COUNCIL SHALL REVIEW AND EVALUATE THE ACCESSIBILITY
     7  AND AVAILABILITY OF SERVICES DELIVERED TO CHILDREN ENROLLED IN
     8  THE PROGRAM.
     9     (J)  THE INSURANCE DEPARTMENT SHALL SOLICIT BIDS AND AWARD
    10  CONTRACTS THROUGH A COMPETITIVE PROCUREMENT PROCESS PURSUANT TO
    11  THE FOLLOWING:
    12     (1)  TO THE FULLEST EXTENT PRACTICABLE, CONTRACTS SHALL BE
    13  AWARDED TO ENTITIES THAT CONTRACT WITH PROVIDERS TO PROVIDE
    14  PRIMARY CARE SERVICES FOR ENROLLEES ON A COST-EFFECTIVE BASIS.
    15  THE INSURANCE DEPARTMENT SHALL REQUIRE CONTRACTORS TO USE
    16  APPROPRIATE COST-MANAGEMENT METHODS SO THAT THE FUND CAN BE USED
    17  TO PROVIDE THE BASIC PRIMARY BENEFIT SERVICES TO THE MAXIMUM
    18  NUMBER OF ELIGIBLE CHILDREN AND, WHENEVER POSSIBLE, TO PURSUE
    19  AND UTILIZE AVAILABLE PUBLIC AND PRIVATE FUNDS.
    20     (2)  TO THE FULLEST EXTENT PRACTICABLE, THE INSURANCE
    21  DEPARTMENT SHALL REQUIRE THAT ANY CONTRACTOR COMPLY WITH ALL
    22  PROCEDURES RELATING TO COORDINATION OF BENEFITS AS REQUIRED BY
    23  THE INSURANCE DEPARTMENT OR THE DEPARTMENT OF PUBLIC WELFARE.
    24     (3)  CONTRACTS MAY BE FOR A TERM OF UP TO THREE (3) YEARS.
    25     (K)  UPON RECEIPT OF A REQUEST FOR PROPOSAL FROM THE
    26  INSURANCE DEPARTMENT, EACH HEALTH PLAN CORPORATION OR ITS
    27  ENTITIES DOING BUSINESS IN THIS COMMONWEALTH SHALL SUBMIT A BID
    28  TO THE INSURANCE DEPARTMENT TO CARRY OUT THE PURPOSES OF THIS
    29  SECTION IN THE AREA SERVICED BY THE CORPORATION.
    30     (L)  A CONTRACTOR WITH WHOM THE INSURANCE DEPARTMENT ENTERS
    19970S0091B2082                 - 64 -

     1  INTO A CONTRACT SHALL DO THE FOLLOWING:
     2     (1)  ENSURE TO THE MAXIMUM EXTENT POSSIBLE THAT ELIGIBLE
     3  CHILDREN HAVE ACCESS TO PRIMARY HEALTH CARE PHYSICIANS AND NURSE
     4  PRACTITIONERS ON AN EQUITABLE STATEWIDE BASIS.
     5     (2)  CONTRACT WITH QUALIFIED, COST-EFFECTIVE PROVIDERS, WHICH
     6  MAY INCLUDE PRIMARY HEALTH CARE PHYSICIANS, NURSE PRACTITIONERS,
     7  CLINICS AND HEALTH MAINTENANCE ORGANIZATIONS, TO PROVIDE PRIMARY
     8  AND PREVENTIVE HEALTH CARE FOR ENROLLEES ON A BASIS BEST
     9  CALCULATED TO MANAGE THE COSTS OF THE SERVICES, INCLUDING, BUT
    10  NOT LIMITED TO, USING MANAGED HEALTH CARE TECHNIQUES AND OTHER
    11  APPROPRIATE MEDICAL COST-MANAGEMENT METHODS.
    12     (3)  ENSURE THAT THE FAMILY OF A CHILD WHO MAY BE ELIGIBLE
    13  FOR MEDICAL ASSISTANCE RECEIVES ASSISTANCE IN APPLYING FOR
    14  MEDICAL ASSISTANCE, INCLUDING, AT A MINIMUM, WRITTEN NOTICE OF
    15  THE TELEPHONE NUMBER AND ADDRESS OF THE COUNTY ASSISTANCE OFFICE
    16  WHERE THE FAMILY CAN APPLY FOR MEDICAL ASSISTANCE.
    17     (4)  MAINTAIN WAITING LISTS OF CHILDREN FINANCIALLY ELIGIBLE
    18  FOR BENEFITS WHO HAVE APPLIED FOR BENEFITS BUT WHO WERE NOT
    19  ENROLLED DUE TO LACK OF FUNDS.
    20     (5)  STRONGLY ENCOURAGE ALL PROVIDERS WHO PROVIDE PRIMARY
    21  CARE TO ELIGIBLE CHILDREN TO PARTICIPATE IN MEDICAL ASSISTANCE
    22  AS QUALIFIED EPSDT PROVIDERS AND TO CONTINUE TO PROVIDE CARE TO
    23  CHILDREN WHO BECOME INELIGIBLE FOR PAYMENT UNDER THE FUND BUT
    24  WHO QUALIFY FOR MEDICAL ASSISTANCE.
    25     (6)  PROVIDE THE FOLLOWING MINIMUM BENEFIT PACKAGE FOR
    26  ELIGIBLE CHILDREN:
    27     (I)  PREVENTIVE CARE. THIS SUBPARAGRAPH INCLUDES WELL-CHILD
    28  CARE VISITS IN ACCORDANCE WITH THE SCHEDULE ESTABLISHED BY THE
    29  AMERICAN ACADEMY OF PEDIATRICS AND THE SERVICES RELATED TO THOSE
    30  VISITS, INCLUDING, BUT NOT LIMITED TO, IMMUNIZATIONS, HEALTH
    19970S0091B2082                 - 65 -

     1  EDUCATION, TUBERCULOSIS TESTING AND DEVELOPMENTAL SCREENING IN
     2  ACCORDANCE WITH ROUTINE SCHEDULE OF WELL-CHILD VISITS. CARE
     3  SHALL ALSO INCLUDE A COMPREHENSIVE PHYSICAL EXAMINATION,
     4  INCLUDING X-RAYS IF NECESSARY, FOR ANY CHILD EXHIBITING SYMPTOMS
     5  OF POSSIBLE CHILD ABUSE.
     6     (II)  DIAGNOSIS AND TREATMENT OF ILLNESS OR INJURY, INCLUDING
     7  ALL MEDICALLY NECESSARY SERVICES RELATED TO THE DIAGNOSIS AND
     8  TREATMENT OF SICKNESS AND INJURY AND OTHER CONDITIONS PROVIDED
     9  ON AN AMBULATORY BASIS, SUCH AS LABORATORY TESTS, WOUND DRESSING
    10  AND CASTING TO IMMOBILIZE FRACTURES.
    11     (III)  INJECTIONS AND MEDICATIONS PROVIDED AT THE TIME OF THE
    12  OFFICE VISIT OR THERAPY; AND OUTPATIENT SURGERY PERFORMED IN THE
    13  OFFICE, A HOSPITAL OR FREESTANDING AMBULATORY SERVICE CENTER,
    14  INCLUDING ANESTHESIA PROVIDED IN CONJUNCTION WITH SUCH SERVICE
    15  OR DURING EMERGENCY MEDICAL SERVICE.
    16     (IV)  EMERGENCY ACCIDENT AND EMERGENCY MEDICAL CARE.
    17     (V)  PRESCRIPTION DRUGS.
    18     (VI)  EMERGENCY, PREVENTIVE AND ROUTINE DENTAL CARE. THIS
    19  SUBPARAGRAPH DOES NOT INCLUDE ORTHODONTIA OR COSMETIC SURGERY.
    20     (VII)  EMERGENCY, PREVENTIVE AND ROUTINE VISION CARE,
    21  INCLUDING THE COST OF CORRECTIVE LENSES AND FRAMES, NOT TO
    22  EXCEED TWO PRESCRIPTIONS PER YEAR.
    23     (VIII)  EMERGENCY, PREVENTIVE AND ROUTINE HEARING CARE.
    24     (IX)  INPATIENT HOSPITALIZATION UP TO NINETY (90) DAYS PER
    25  YEAR FOR ELIGIBLE CHILDREN.
    26     (7)  EACH CONTRACTOR SHALL PROVIDE AN INSURANCE
    27  IDENTIFICATION CARD TO EACH ELIGIBLE CHILD COVERED UNDER
    28  CONTRACTS EXECUTED UNDER THIS ARTICLE. THE CARD MUST NOT
    29  SPECIFICALLY IDENTIFY THE HOLDER AS LOW INCOME.
    30     (M)  THE INSURANCE DEPARTMENT MAY GRANT A WAIVER OF THE
    19970S0091B2082                 - 66 -

     1  MINIMUM BENEFIT PACKAGE OF SUBSECTION (L)(6) UPON DEMONSTRATION
     2  BY THE APPLICANT THAT IT IS PROVIDING HEALTH CARE SERVICES FOR
     3  ELIGIBLE CHILDREN THAT MEET THE PURPOSES AND INTENT OF THIS
     4  SECTION.
     5     (N)  AFTER THE FIRST YEAR OF OPERATION AND PERIODICALLY
     6  THEREAFTER, THE INSURANCE DEPARTMENT IN CONSULTATION WITH
     7  APPROPRIATE COMMONWEALTH AGENCIES, SHALL REVIEW ENROLLMENT
     8  PATTERNS FOR BOTH THE FREE INSURANCE PROGRAM AND THE SUBSIDIZED
     9  INSURANCE PROGRAM. THE INSURANCE DEPARTMENT SHALL CONSIDER THE
    10  RELATIONSHIP, IF ANY, AMONG ENROLLMENT, ENROLLMENT FEES, INCOME
    11  LEVELS AND FAMILY COMPOSITION. BASED ON THE RESULTS OF THIS
    12  STUDY AND THE AVAILABILITY OF FUNDS, THE INSURANCE DEPARTMENT IS
    13  AUTHORIZED TO ADJUST THE MAXIMUM INCOME CEILING FOR FREE
    14  INSURANCE AND THE MAXIMUM INCOME CEILING FOR SUBSIDIZED
    15  INSURANCE BY REGULATION. IN NO EVENT, HOWEVER, SHALL THE MAXIMUM
    16  INCOME CEILING FOR FREE INSURANCE BE RAISED ABOVE TWO HUNDRED
    17  PER CENTUM (200%) OF THE FEDERAL POVERTY LEVEL, NOR SHALL THE
    18  MAXIMUM INCOME CEILING FOR SUBSIDIZED INSURANCE BE RAISED ABOVE
    19  TWO HUNDRED THIRTY-FIVE PER CENTUM (235%) OF THE FEDERAL POVERTY
    20  LEVEL. CHANGES IN THE MAXIMUM INCOME CEILING SHALL BE
    21  PROMULGATED AS A FINAL-FORM REGULATION WITH PROPOSED RULEMAKING
    22  OMITTED IN ACCORDANCE WITH THE ACT OF JUNE 25, 1982 (P.L.633,
    23  NO.181), KNOWN AS THE "REGULATORY REVIEW ACT."
    24     SECTION 2312.  OUTREACH.--(A)  THE INSURANCE DEPARTMENT, IN
    25  CONSULTATION WITH APPROPRIATE COMMONWEALTH AGENCIES, SHALL
    26  COORDINATE THE DEVELOPMENT OF AN OUTREACH PLAN TO INFORM
    27  POTENTIAL CONTRACTORS, PROVIDERS AND ENROLLEES REGARDING
    28  ELIGIBILITY AND AVAILABLE BENEFITS. THE PLAN SHALL INCLUDE
    29  PROVISIONS FOR REACHING SPECIAL POPULATIONS, INCLUDING NONWHITE
    30  AND NON-ENGLISH-SPEAKING CHILDREN AND CHILDREN WITH
    19970S0091B2082                 - 67 -

     1  DISABILITIES; FOR REACHING DIFFERENT GEOGRAPHIC AREAS, INCLUDING
     2  RURAL AND INNER-CITY AREAS; AND FOR ASSURING THAT SPECIAL
     3  EFFORTS ARE COORDINATED WITHIN THE OVERALL OUTREACH ACTIVITIES
     4  THROUGHOUT THIS COMMONWEALTH.
     5     (B)  THE COUNCIL SHALL REVIEW THE OUTREACH ACTIVITIES AND
     6  RECOMMEND CHANGES AS IT DEEMS IN THE BEST INTERESTS OF THE
     7  CHILDREN TO BE SERVED.
     8     SECTION 2313.  PAYOR OF LAST RESORT; INSURANCE COVERAGE.--THE
     9  CONTRACTOR SHALL NOT PAY ANY CLAIM ON BEHALF OF AN ENROLLED
    10  CHILD UNLESS ALL OTHER FEDERAL, STATE, LOCAL OR PRIVATE
    11  RESOURCES AVAILABLE TO THE CHILD OR THE CHILD'S FAMILY ARE
    12  UTILIZED FIRST. THE INSURANCE DEPARTMENT, IN COOPERATION WITH
    13  THE DEPARTMENT OF PUBLIC WELFARE, SHALL DETERMINE THAT NO OTHER
    14  INSURANCE COVERAGE IS AVAILABLE TO THE CHILD THROUGH A CUSTODIAL
    15  OR NONCUSTODIAL PARENT ON AN EMPLOYMENT-RELATED OR OTHER GROUP
    16  BASIS. IF SUCH INSURANCE COVERAGE IS AVAILABLE, THE INSURANCE
    17  DEPARTMENT SHALL REEVALUATE THE CHILD'S ELIGIBILITY UNDER
    18  SECTION 2311.
    19                     (C) THROUGH (F) (RESERVED)
    20                   (G)  MISCELLANEOUS PROVISIONS
    21     SECTION 2361.  LIMITATION ON EXPENDITURE OF FUNDS.--IN NO
    22  CASE SHALL THE TOTAL AMOUNT OF ANNUAL CONTRACT AWARDS AUTHORIZED
    23  IN SUBARTICLE (B) EXCEED THE AMOUNT OF CIGARETTE TAX RECEIPTS
    24  ANNUALLY DEPOSITED INTO THE FUND PURSUANT TO SECTION 1296 OF THE
    25  ACT OF MARCH 4, 1971 (P.L.6, NO.2), KNOWN AS THE "TAX REFORM
    26  CODE OF 1971," AND ANY OTHER FEDERAL OR STATE FUNDS RECEIVED
    27  THROUGH THE FUND. THE PROVISION OF CHILDREN'S HEALTH CARE
    28  THROUGH THE FUND SHALL IN NO WAY CONSTITUTE AN ENTITLEMENT
    29  DERIVED FROM THE COMMONWEALTH OR A CLAIM ON ANY OTHER FUNDS OF
    30  THE COMMONWEALTH.
    19970S0091B2082                 - 68 -

     1     SECTION 2.  ALL ENTITIES RECEIVING GRANTS UNDER THE ACT OF
     2  DECEMBER 2, 1992 (P.L.741, NO.113), KNOWN AS THE CHILDREN'S
     3  HEALTH CARE ACT, ON THE EFFECTIVE DATE OF THIS SECTION SHALL
     4  CONTINUE TO RECEIVE FUNDS AND PROVIDE SERVICES AS REQUIRED UNDER
     5  THAT ACT UNTIL NOTICE IS RECEIVED FROM THE INSURANCE DEPARTMENT.
     6     SECTION 3.  THE FOLLOWING ACTS AND PARTS OF ACTS ARE
     7  REPEALED:
     8         ACT OF JUNE 5, 1968 (P.L.140, NO.78), ENTITLED "AN ACT
     9     REGULATING THE WRITING, CANCELLATION OF OR REFUSAL TO RENEW
    10     POLICIES OF AUTOMOBILE INSURANCE; AND IMPOSING POWERS AND
    11     DUTIES ON THE INSURANCE COMMISSIONER THEREFOR."
    12         SECTIONS 102, 701, 702, 703, 3101, 3102, 3103 AND 3105 OF
    13     THE ACT OF DECEMBER 2, 1992 (P.L.741, NO.113), KNOWN AS THE
    14     CHILDREN'S HEALTH CARE ACT.
    15     SECTION 4.  THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
    16         (1)  THE ADDITION OF ARTICLE XXI OF THE ACT SHALL TAKE
    17     EFFECT JANUARY 1, 1999.
    18         (2)  THE FOLLOWING PROVISIONS SHALL TAKE EFFECT IN 60
    19     DAYS:
    20             (I)  THE ADDITION OF ARTICLE XX OF THE ACT.
    21             (II)  SECTION 3(1) OF THIS ACT.
    22         (3)  THE REMAINDER OF THIS ACT SHALL TAKE EFFECT
    23     IMMEDIATELY.





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