PRINTER'S NO. 332
No. 327 Session of 2001
INTRODUCED BY TARTAGLIONE, MELLOW, EARLL, SCHWARTZ, HUGHES,
KUKOVICH, KITCHEN, KASUNIC, COSTA, BOSCOLA AND LOGAN,
FEBRUARY 6, 2001
REFERRED TO BANKING AND INSURANCE, FEBRUARY 6, 2001
AN ACT
1 Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
2 act relating to insurance; amending, revising, and
3 consolidating the law providing for the incorporation of
4 insurance companies, and the regulation, supervision, and
5 protection of home and foreign insurance companies, Lloyds
6 associations, reciprocal and inter-insurance exchanges, and
7 fire insurance rating bureaus, and the regulation and
8 supervision of insurance carried by such companies,
9 associations, and exchanges, including insurance carried by
10 the State Workmen's Insurance Fund; providing penalties; and
11 repealing existing laws," defining "insurer" for purposes of
12 quality health care accountability and protection; and
13 further providing for internal grievance process, for
14 external grievance process, for records and for departmental
15 powers and duties relating to quality health care
16 accountability and protection.
17 The General Assembly of the Commonwealth of Pennsylvania
18 hereby enacts as follows:
19 Section 1. Section 2102 of the act of May 17, 1921 (P.L.682,
20 No.284), known as The Insurance Company Law of 1921, added June
21 17, 1998 (P.L.464, No.68), is amended by adding a definition to
22 read:
23 Section 2102. Definitions.--As used in this article, the
24 following words and phrases shall have the meanings given to
1 them in this section:
2 * * *
3 "Insurer." Any individual, corporation, association,
4 partnership, reciprocal exchange, inter-insurer, Lloyds insurer
5 and any other legal entity engaged in the business of insurance,
6 including agents and brokers.
7 * * *
8 Section 2. Sections 2161, 2162, 2163 and 2181 of the act,
9 added June 17, 1998 (P.L.464, No.68), are amended to read:
10 Section 2161. Internal Grievance Process.--(a) [A] Each
11 managed care plan and insurer shall establish and maintain an
12 internal grievance process with two levels of review and an
13 expedited internal grievance process by which an enrollee,
14 insured or a health care provider, with the written consent of
15 the enrollee or insured, shall be able to file a written
16 grievance regarding the denial of payment for a health care
17 service. An enrollee or insured who consents to the filing of a
18 grievance by a health care provider under this section may not
19 file a separate grievance.
20 (b) The internal grievance process shall consist of an
21 initial review that includes all of the following:
22 (1) A review by one or more persons selected by the managed
23 care plan or insurer who did not previously participate in the
24 decision to deny payment for the health care service.
25 (2) The completion of the review within thirty (30) days of
26 receipt of the grievance.
27 (3) A written notification to the enrollee or insured and
28 health care provider regarding the decision within five (5)
29 business days of the decision. The notice shall include the
30 basis and clinical rationale for the decision and the procedure
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1 to file a request for a second level review of the decision.
2 (c) The grievance process shall include a second level
3 review that includes all of the following:
4 (1) A review of the decision issued pursuant to subsection
5 (b) by a second level review committee consisting of three or
6 more persons who did not previously participate in any decision
7 to deny payment for the health care service.
8 (2) A written notification to the enrollee, insured or the
9 health care provider of the right to appear before the second
10 level review committee.
11 (3) The completion of the second level review within forty-
12 five (45) days of receipt of a request for such review.
13 (4) A written notification to the enrollee or insured and
14 health care provider regarding the decision of the second level
15 review committee within five (5) business days of the decision.
16 The notice shall include the basis and clinical rationale for
17 the decision and the procedure for appealing the decision.
18 (d) Any initial review or second level review conducted
19 under this section shall include a licensed physician, or, where
20 appropriate, an approved licensed psychologist, in the same or
21 similar specialty that typically manages or consults on the
22 health care service.
23 (e) Should the enrollee's life, health or ability to regain
24 maximum function be in jeopardy, an expedited internal grievance
25 process shall be available which shall include a requirement
26 that a decision with appropriate notification to the enrollee
27 and health care provider be made within forty-eight (48) hours
28 of the filing of the expedited grievance.
29 Section 2162. External Grievance Process.--(a) [A] Each
30 managed care plan and insurer shall establish and maintain an
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1 external grievance process by which an enrollee, insured or a
2 health care provider with the written consent of the enrollee or
3 insured may appeal the denial of a grievance following
4 completion of the internal grievance process. The external
5 grievance process shall be conducted by an independent
6 utilization review entity not directly affiliated with the
7 managed care plan.
8 (b) To conduct external grievances filed under this section:
9 (1) The department shall randomly assign a utilization
10 review entity on a rotational basis from the list maintained
11 under subsection (d) and notify the assigned utilization review
12 entity and the managed care plan or insurer within two (2)
13 business days of receiving the request. If the department fails
14 to select a utilization review entity under this subsection, the
15 managed care plan or insurer shall designate and notify a
16 certified utilization review entity to conduct the external
17 grievance.
18 (2) The managed care plan or insurer shall notify the
19 enrollee, insured or health care provider of the name, address
20 and telephone number of the utilization review entity assigned
21 under this subsection within two (2) business days.
22 (c) The external grievance process shall meet all of the
23 following requirements:
24 (1) Any external grievance shall be filed with the managed
25 care plan or insurer within fifteen (15) days of receipt of a
26 notice of denial resulting from the internal grievance process.
27 The filing of the external grievance shall include any material
28 justification and all reasonably necessary supporting
29 information. Within five (5) business days of the filing of an
30 external grievance, the managed care plan or insurer shall
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1 notify the enrollee or insured or the health care provider, the
2 utilization review entity that conducted the internal grievance
3 and the department that an external grievance has been filed.
4 (2) The utilization review entity that conducted the
5 internal grievance shall forward copies of all written
6 documentation regarding the denial, including the decision, all
7 reasonably necessary supporting information, a summary of
8 applicable issues and the basis and clinical rationale for the
9 decision, to the utilization review entity conducting the
10 external grievance within fifteen (15) days of receipt of notice
11 that the external grievance was filed. Any additional written
12 information may be submitted by the enrollee, insured or the
13 health care provider within fifteen (15) days of receipt of
14 notice that the external grievance was filed.
15 (3) The utilization review entity conducting the external
16 grievance shall review all information considered in reaching
17 any prior decisions to deny payment for the health care service
18 and any other written submission by the enrollee, insured or the
19 health care provider.
20 (4) An external grievance decision shall be made by:
21 (i) one or more licensed physicians or approved licensed
22 psychologists in active clinical practice or in the same or
23 similar specialty that typically manages or recommends treatment
24 for the health care service being reviewed; or
25 (ii) one or more physicians currently certified by a board
26 approved by the American Board of Medical Specialists or the
27 American Board of Osteopathic Specialties in the same or similar
28 specialty that typically manages or recommends treatment for the
29 health care service being reviewed.
30 (5) Within sixty (60) days of the filing of the external
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1 grievance, the utilization review entity conducting the external
2 grievance shall issue a written decision to the managed care
3 plan, [the] insurer, enrollee, insured and the health care
4 provider, including the basis and clinical rationale for the
5 decision. The standard of review shall be whether the health
6 care service denied by the internal grievance process was
7 medically necessary and appropriate under the terms of the plan.
8 With respect to an insurer, the standard of review shall be
9 whether the health care service denied by the internal grievance
10 process was covered under the terms of the insurance policy. The
11 external grievance decision shall be subject to appeal to a
12 court of competent jurisdiction within sixty (60) days of
13 receipt of notice of the external grievance decision. There
14 shall be a rebuttable presumption in favor of the decision of
15 the utilization review entity conducting the external grievance.
16 (6) The managed care plan shall authorize any health care
17 service or pay a claim determined to be medically necessary and
18 appropriate under paragraph (5) pursuant to section 2166 whether
19 or not an appeal to a court of competent jurisdiction has been
20 filed.
21 (6.1) The insurer shall pay a claim determined to be covered
22 under the terms of the insurance policy under paragraph (5)
23 pursuant to section 2166 whether or not an appeal to a court of
24 competent jurisdiction has been filed.
25 (7) All fees and costs related to an external grievance
26 shall be paid by the nonprevailing party if the external
27 grievance was filed by the health care provider. The health care
28 provider and the utilization review entity or managed care plan
29 or insurer shall each place in escrow an amount equal to one-
30 half of the estimated costs of the external grievance process.
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1 If the external grievance was filed by the enrollee or insured,
2 all fees and costs related thereto shall be paid by the managed
3 care plan or insurer. For purposes of this paragraph, fees and
4 costs shall not include attorney fees.
5 (d) The department shall compile and maintain a list of
6 certified utilization review entities that meet the requirements
7 of this article. The department may remove a utilization review
8 entity from the list if such an entity is incapable of
9 performing its responsibilities in a reasonable manner, charges
10 excessive fees or violates this article.
11 (e) A fee may be imposed by a managed care plan or insurer
12 for filing an external grievance pursuant to this article which
13 shall not exceed twenty-five ($25) dollars.
14 (f) Written contracts between managed care plans and health
15 care providers may provide an alternative dispute resolution
16 system to the external grievance process set forth in this
17 article if the department approves the contract. The alternative
18 dispute resolution system shall be impartial, include specific
19 time limitations to initiate appeals, receive written
20 information, conduct hearings and render decisions and otherwise
21 satisfy the requirements of this section. A written decision
22 pursuant to an alternative dispute resolution system shall be
23 final and binding on all parties. An alternative dispute
24 resolution system shall not be utilized for any external
25 grievance filed by an enrollee.
26 Section 2163. Records.--Records regarding grievances filed
27 under this subdivision that result in decisions adverse to
28 enrollees shall be maintained by the plan or insurer for not
29 less than three (3) years. These records shall be provided to
30 the department, if requested, in accordance with section
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1 2131(c)(2)(ii).
2 Section 2181. Departmental Powers and Duties.--(a) The
3 department shall require that records and documents submitted to
4 a managed care plan, insurer or utilization review entity as
5 part of any complaint or grievance be made available to the
6 department, upon request, for purposes of enforcement or
7 compliance with this article.
8 (b) The department shall compile data received from a
9 managed care plan or insurer on an annual basis regarding the
10 number, type and disposition of complaints and grievances filed
11 with a managed care plan or insurer under this article.
12 (c) The department shall issue guidelines identifying those
13 provisions of this article that exceed or are not included in
14 the "Standards for the Accreditation of Managed Care
15 Organizations" published by the National Committee for Quality
16 Assurance. These guidelines shall be published in the
17 Pennsylvania Bulletin and updated as necessary. Copies of the
18 guidelines shall be made available to managed care plans,
19 insurers, health care providers, insureds and enrollees upon
20 request.
21 (d) The department and the Insurance Department shall ensure
22 compliance with this article. The appropriate department shall
23 investigate potential violations of the article based upon
24 information received from insureds, enrollees, health care
25 providers and other sources in order to ensure compliance with
26 this article.
27 (e) The department and the Insurance Department shall
28 promulgate such regulations as may be necessary to carry out the
29 provisions of this article.
30 (f) The department in cooperation with the Insurance
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1 Department shall submit an annual report to the General Assembly
2 regarding the implementation, operation and enforcement of this
3 article.
4 Section 3. This act shall take effect in 60 days.
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