Patients' Bill of Rights

Establishes an expedited process for an appeal of a managed care
plan's decision.  Extends the time period to request an external
review of a managed care plan's final determination.  Establishes
standards for determining whether a health intervention is a
medical necessity.

THE SENATE                              S.B. NO.           2655
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1                              PART I
 2      SECTION 1.  The legislature, in section 12 of Act 137,
 3 Session Laws of Hawaii 1999, directed the Hawaii patient rights
 4 and responsibilities task force to develop proposed legislation
 5 addressing issues within the scope of the task force's
 6 responsibilities under Act 178, Session Laws of Hawaii 1998.
 7 This Act is submitted in response to the legislature's mandate. 
 8      SECTION 2.  Section 432E-1, Hawaii Revised Statutes, is
 9 amended by adding five new definitions to be appropriately
10 inserted and to read as follows:
11      ""Appointed representative" means a person who is expressly
12 permitted by the enrollee or who has the power under Hawaii law
13 to make health care decisions on behalf of the enrollee,
14 including a court-appointed legal guardian, a person who has a
15 durable power of attorney for health care, or a person who is
16 designated in a written advance directive.
17      "Expedited appeal" means a managed care plan's review of its
18 adverse determination related to pre-service medical coverage
19 decisions within seventy-two hours after receipt of the request

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 1 for review.  An enrollee may request an expedited appeal when the
 2 application of a forty-five day standard review timeframe may: 
 3      (1)  Seriously jeopardize the life or health of the
 4           enrollee;
 5      (2)  Seriously jeopardize the enrollee's ability to gain
 6           maximum functioning; or
 7      (3)  Subject the enrollee to severe pain that cannot be
 8           adequately managed without the care or treatment that
 9           is the subject of the expedited appeal.
10      "External review" means an administrative review of an
11 enrollee's request for external review of a managed care plan's
12 final internal determination under section 432E-6.
13      "Independent review organization" means an independent
14 entity that is unbiased and able to make independent decisions,
15 engages adequate numbers of practitioners with the appropriate
16 level and type of clinical knowledge and expertise, applies
17 evidence-based decisionmaking, demonstrates an effective process
18 to screen external reviews for eligibility, protects the
19 enrollee's identity from unnecessary disclosure, and has
20 effective systems in place to conduct a review.
21      "Medical necessity" means a health intervention as defined
22 in section 432E-  ."
23      SECTION 3.  Section 432E-5, Hawaii Revised Statutes, is

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 1 amended to read as follows:
 2      "432E-5 Complaints and appeals procedure for enrollees.
 3 (a)  A managed care plan with enrollees in this State shall
 4 establish and maintain a procedure to provide for the resolution
 5 of an enrollee's complaints and appeals.  The definition of
 6 medical necessity in section 432E-   shall apply in a managed
 7 care plan's complaints and appeals procedures.
 8      (b)  The managed care plan at all times shall make available
 9 its complaints and appeals procedures.  The complaints and
10 appeals procedures shall be reasonably understandable to the
11 average layperson and shall be provided in languages other than
12 English upon request.
13      (c)  A managed care plan shall decide any expedited appeal
14 as soon as possible after receipt of the complaint, taking into
15 account the medical exigencies of the case, but not later than
16 seventy-two hours after receipt of the request for review.  The
17 decision whether an enrollee's complaint is an expedited appeal
18 may be made by an individual acting on behalf of the plan and
19 applying the standard of a reasonable individual who is not a
20 trained health professional.  If a physician with knowledge of a
21 claimant's medical condition requests an expedited appeal on
22 behalf of an enrollee, the enrollee's complaint shall be treated
23 as an expedited appeal by the managed care plan.

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 1     [(c)] (d)  A managed care plan shall send notice of its final
 2 internal determination within forty-five days of the submission
 3 of the complaint to the enrollee, the enrollee's appointed
 4 representative, if applicable, the enrollee's treating provider,
 5 and the commissioner.  The notice shall include the following
 6 information regarding the enrollee's rights and procedures [under
 7 section 432E-6.]:
 8      (1)  The enrollee's right to request an external review;
 9      (2)  The sixty-day deadline for requesting the external
10           review;
11      (3)  Instructions on how to request an external review; and
12      (4)  Where to submit the request for an external review."
13      SECTION 4.  Section 432E-6, Hawaii Revised Statutes, is
14 amended to read as follows:
15      "432E-6 Appeals to the commissioner.(a)  After
16 exhausting all internal complaint and appeal procedures
17 available, an enrollee, or the enrollee's treating provider or
18 appointed representative, may [appeal an adverse decision] file a
19 request for external review of a managed care [plan] plan's final
20 internal determination to a three-member review panel appointed
21 by the commissioner composed of a representative from a [health]
22 managed care plan not involved in the complaint, a provider
23 licensed to practice and practicing medicine in Hawaii not

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                                     S.B. NO.           2655

 1 involved in the complaint, and the commissioner or the
 2 commissioner's designee in the following manner:
 3      (1)  The enrollee shall submit a request for external review
 4           to the commissioner within [thirty] sixty days from the
 5           date of the final internal determination by the managed
 6           care plan;
 7      (2)  The commissioner may retain, without regard to chapters
 8           76 and 77, an independent medical expert trained in the
 9           field of medicine most appropriately related to the
10           matter under review.  Presentation of evidence for this
11           purpose shall be exempt from section 91-9(g);
12      (3)  The commissioner may retain the services of an
13           independent review organization from an approved list
14           maintained by the commissioner;
15      (4)  Within seven days after receipt of the request for
16           external review, a managed care plan or its designee
17           utilization review organization shall provide to the
18           commissioner or the assigned independent review
19           organization any documents or information used in
20           making the final internal determination including the
21           enrollee's medical records, any documentation or
22           written information submitted to the managed care plan
23           in support of the enrollee's initial complaint, a list

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 1           of the names, addresses, and telephone numbers of each
 2           physician or health care provider who cared for the
 3           enrollee and who may have medical records relevant to
 4           the external review; provided that where an expedited
 5           review is involved, the managed care plan or its
 6           designee utilization review organization shall provide
 7           the documents and information within forty-eight hours
 8           of receipt of the request for external review.  Failure
 9           by the managed care plan or its designee utilization
10           review organization to provide the documents and
11           information within the prescribed time periods shall
12           not delay the conduct of the external review.  Where
13           the plan or its designee utilization review
14           organization fails to provide the documents and
15           information within the prescribed time periods, the
16           commissioner may issue a decision to reverse the final
17           internal determination, in whole or part, and shall
18           promptly notify the independent review organization,
19           the enrollee, the enrollee's appointed representative,
20           if applicable, the enrollee's treating provider, and
21           the managed care plan of the decision;
22     [(2)] (5)  Upon receipt of the request for external review
23           and upon a showing of good cause, the commissioner

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 1           shall appoint the members of the panel and shall
 2           conduct a review hearing pursuant to chapter 91.  If
 3           the amount in controversy is less than $500, the
 4           commissioner may conduct a review hearing without
 5           appointing a review panel;
 6     [(3)] (6)  The review hearing shall be conducted as soon as
 7           practicable, taking into consideration the medical
 8           exigencies of the case; provided that the hearing shall
 9           be held no later than sixty days from the date of the
10           request for the hearing; and provided further that any
11           request for external review of a final internal
12           determination on an expedited appeal shall be
13           determined no later than seventy-two hours after
14           receipt of the request for external review.  The
15           decision whether a request for external review is an
16           expedited appeal shall be made applying the standard of
17           a reasonable individual who is not a trained health
18           professional.  If a physician with knowledge of an
19           enrollee's medical condition requests an expedited
20           appeal on behalf of an enrollee, the request shall be
21           treated as such for purposes of this section;
22     [(4)  The commissioner may retain, without regard to chapters
23           76 and 77, an independent medical expert trained in the

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                                     S.B. NO.           2655

 1           field of medicine most appropriately related to the
 2           matter under review.  Presentation of evidence for this
 3           purpose shall be exempt from section 91-9(g);
 4      (5)] (7)  After considering the enrollee's complaint, the
 5           managed care plan's response, and any affidavits filed
 6           by the parties, the commissioner may dismiss the
 7           [appeal] request for external review if it is
 8           determined that the [appeal] request is frivolous or
 9           without merit; and
10     [(6)] (8)  The review panel shall review every [adverse]
11           final internal determination to determine whether or
12           not the managed care plan involved acted reasonably
13           [and with sound medical judgment].  The review panel
14           and the commissioner or the commissioner's designee
15           shall consider the terms of the agreement of the
16           enrollee's insurance policy, evidence of coverage, or
17           similar document, whether the medical director properly
18           applied the medical necessity criteria in section
19           432E-   in making the final internal determination, all
20           relevant medical records, clinical standards of the
21           plan, the information provided, the attending
22           physician's recommendations, and generally accepted
23           practice guidelines.

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 1      The commissioner, upon a majority vote of the panel, shall
 2 issue an order affirming, modifying, or reversing the decision
 3 within thirty days of the hearing.
 4      (b)  The procedure set forth in this section shall not apply
 5 to claims or allegations of health provider malpractice,
 6 professional negligence, or other professional fault against
 7 participating providers.
 8      (c)  No person shall serve on the review panel or in the
 9 independent review organization who within the second degree of
10 consanguinity or affinity has a direct and substantial
11 professional, financial, or personal interest in the:
12      (1)  Plan involved in the complaint, including an officer,
13           director, or employee of the plan; or
14      (2)  Treatment of the enrollee, including but not limited to
15           the developer or manufacturer of the principal drug,
16           device, procedure, or other therapy at issue.
17     [(c)] (d)  Members of the review panel shall be granted
18 immunity from liability and damages relating to their duties
19 under this section.
20     [(d)] (e)  An enrollee may be allowed, at the commissioner's
21 discretion, an award of a reasonable sum for attorney's fees and
22 reasonable costs [of suit in an action brought against the
23 managed care plan.] incurred in connection with the external

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 1 review under this section, unless the commissioner upon
 2 administrative proceeding determines that the appeal was
 3 unreasonable, fraudulent, excessive, or frivolous.
 4      (f)  The disclosure of an enrollee's protected health
 5 information shall be limited to the purposes relating to the
 6 external review."
 7                              PART II
 8      SECTION 5.  In Senate Concurrent Resolution No. 152, S.D. 1,
 9 the 1999 legislature requested the Hawaii patient rights and
10 responsibilities task force to make a thorough study of the
11 issues relating to the use of the term "medical necessity" and
12 determine the most appropriate definition of "medical necessity",
13 or develop new terms to better resolve the issues examined.  The
14 purpose of this Act is to establish a statutory definition of the
15 term "medical necessity" to:  
16      (1)  Promote uniformity among the various health plans; and
17      (2)  Serve as the standard of review governing a health
18           plan's internal appeals process and the external
19           appeals process.
20      SECTION 6.  Chapter 432E, Hawaii Revised Statutes, is
21 amended by adding a new section to be appropriately designated
22 and to read as follows:
23      "432E-    Medical necessity.  (a)  For contractual

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                                     S.B. NO.           2655

 1 purposes, a health intervention shall be covered if it is an
 2 otherwise covered category of service, not specifically excluded,
 3 recommended by the treating physician, and determined by the
 4 health plan's medical director to be medically necessary as
 5 defined in subsection (b).  A health intervention may be
 6 medically indicated and not qualify as a covered benefit or meet
 7 the definition of medical necessity.  A managed care plan may
 8 choose to cover health interventions that do not meet the
 9 definition of medical necessity.
10      (b)  A health intervention is medically necessary if it is
11 recommended by the treating physician and approved by the health
12 plan's medical director or physician designee, and is:
13      (1)  For the purpose of treating a medical condition;
14      (2)  The most appropriate delivery or level of service,
15           considering potential benefits and harms to the
16           patient;
17      (3)  Known to be effective in improving health outcomes;
18           provided that effectiveness is determined first by
19           scientific evidence, and if no scientific evidence
20           exists, then by professional standards of care, and if
21           no professional standards of care exist or if they
22           exist but are outdated or contradictory, then by expert
23           opinion; and

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 1      (4)  Cost-effective for the medical condition being treated
 2           compared to alternative health interventions, including
 3           no intervention.  For purposes of this section, cost-
 4           effective shall not necessarily mean the lowest price.
 5      (c)  When the treating physician and the health plan's
 6 medical director or physician designee do not agree on whether a
 7 health intervention is medically necessary, a reviewing body,
 8 whether internal to the plan or external, shall give
 9 consideration to, but shall not be bound by, the recommendations
10 of the treating physician and the health plan's medical director
11 or physician designee.
12      (d)  For the purposes of this section, the following
13 definitions shall apply:
14      "Cost-effective" means a health intervention where the
15 benefits and harms relative to costs represent an economically
16 efficient use of resources for patients with the medical
17 condition being treated through the health intervention; provided
18 that the characteristics of the individual patient shall be
19 determinative when applying this criterion to an individual case.
20      "Effective" means a health intervention that may reasonably
21 be expected to produce the intended results and to have expected
22 benefits that outweigh potential harmful effects.
23      "Health intervention" means an item or service delivered or

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 1 undertaken primarily to treat a medical condition or to maintain
 2 or restore functional ability.  A health intervention is defined
 3 not only by the intervention itself, but also by the medical
 4 condition and patient indications for which it is being applied.
 5 New interventions for which clinical trials have not been
 6 conducted and effectiveness has not been scientifically
 7 established shall be evaluated on the basis of professional
 8 standards of care or expert opinion.  For existing interventions,
 9 scientific evidence shall be considered first and to the greatest
10 extent possible, shall be the basis for determinations of medical
11 necessity.  If no scientific evidence is available, professional
12 standards of care shall be considered.  If professional standards
13 of care do not exist or are outdated or contradictory, decisions
14 about existing interventions shall be based on expert opinion.
15 Giving priority to scientific evidence shall not mean that
16 coverage of existing interventions shall be denied in the absence
17 of conclusive scientific evidence.  Existing interventions may
18 meet the definition of medical necessity in the absence of
19 scientific evidence if there is a strong conviction of
20 effectiveness and benefit expressed through up-to-date and
21 consistent professional standards of care, or in the absence of
22 such standards, convincing expert opinion.
23      "Health outcomes" means outcomes that affect health status

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 1 as measured by the length or quality of a patient's life,
 2 primarily as perceived by the patient. 
 3      "Medical condition" means a disease, illness, injury,
 4 genetic or congenital defect, pregnancy, or a biological or
 5 psychological condition that lies outside the range of normal,
 6 age-appropriate human variation.
 7      "Physician designee" means a physician or other health care
 8 practitioner designated to assist in the decisionmaking process
 9 who has training and credentials at least equal to the treating
10 physician.
11      "Scientific evidence" means controlled clinical trials that
12 either directly or indirectly demonstrate the effect of the
13 intervention on health outcomes.  If controlled clinical trials
14 are not available, observational studies that demonstrate a
15 causal relationship between the intervention and the health
16 outcomes may be used.  Partially controlled observational studies
17 and uncontrolled clinical series may be suggestive, but do not by
18 themselves demonstrate a causal relationship unless the magnitude
19 of the effect observed exceeds anything that could be explained
20 either by the natural history of the medical condition or
21 potential experimental biases.  Scientific evidence may be found
22 in the following and similar sources:
23      (1)  Peer-reviewed scientific studies published in or

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                                     S.B. NO.           2655

 1           accepted for publication by medical journals that meet
 2           nationally recognized requirements for scientific
 3           manuscripts and that submit most of their published
 4           articles for review by experts who are not part of the
 5           editorial staff;
 6      (2)  Peer-reviewed literature, biomedical compendia, and
 7           other medical literature that meet the criteria of the
 8           National Institute of Health's National Library of
 9           Medicine for indexing in Index Medicus, Excerpta
10           Medicus (EMBASE), Medline, and MEDLARS database Health
11           Services Technology Assessment Research (HSTAR);
12      (3)  Medical journals recognized by the Secretary of Health
13           and Human Services under section 1861(t)(2) of the
14           Social Security Act as amended;
15      (4)  Standard reference compendia including the American
16           Hospital Formulary Service-Drug Information, American
17           Medical Association Drug Evaluation, American Dental
18           Association Accepted Dental Therapeutics, and United
19           States Pharmacopoeia-Drug Information;
20      (5)  Findings, studies, or research conducted by or under
21           the auspices of federal agencies and nationally
22           recognized federal research institutes including but
23           not limited to the Federal Agency for Health Care

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                                     S.B. NO.           2655

 1           Policy and Research, National Institutes for Health,
 2           National Cancer Institute, National Academy of
 3           Sciences, Health Care Financing Administration,
 4           Congressional Office of Technology Assessment, and any
 5           national board recognized by the National Institutes of
 6           Health for the purpose of evaluating the medical value
 7           of health services; and
 8      (6)  Peer-reviewed abstracts accepted for presentation at
 9           major medical association meetings.
10      "Treat" means to prevent, diagnose, detect, provide medical
11 care, or palliate.
12      "Treating physician" means a physician who has personally
13 evaluated the patient."
14                             PART III
15      SECTION 7.  Statutory material to be repealed is bracketed.
16 New statutory material is underscored.
17      SECTION 8.  This Act shall take effect upon its approval.
19                       INTRODUCED BY:  ___________________________