Report Title:

Insurance; External Review Procedure

Description:

Amends external review procedure in the patients' bill of rights and responsibilities act.

HOUSE OF REPRESENTATIVES

H.B. NO.

1064

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO INSURANCE.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. In HMAA v. Baldado, the Hawaii State Supreme Court recently struck down the external appeals process contained in section 432E-6, Hawaii Revised Statutes. As a result, patients with private-sector employer-sponsored health plans (e.g., Employee Retirement Income Security Act (ERISA) plans) who wish to contest the insurer's final internal determination denying benefit coverage are now limited to seeking either arbitration or judicial review. These formal processes are both expensive and time consuming. These factors may produce a chilling effect on the willingness of patients to challenge final internal determinations, even if they have a legitimate case.

The legislature finds that a new, non-judicial external appeals process should be established so that patients in this situation will have access to a quick, inexpensive alternative to a formal legal challenge.

The purpose of this Act is to establish a new, non-judicial external review process by which a patient with a private-sector employer-sponsored health plan may challenge the final decision of the patient's health care insurer.

SECTION 2. Chapter 432E, Hawaii Revised Statutes, is amended by adding five new sections to be appropriately designated and to read as follows:

"§432E-A External review procedure; medical necessity. (a) After exhausting all internal complaint and appeal procedures available on any adverse determination by a managed care plan that requires a medical necessity determination, an enrollee, or the enrollee's treating licensed health care provider or appointed representative, may file a request for an external review of the final internal determination by an independent review organization. The external review shall determine whether the adverse determination was consistent with the definition of medical necessity as defined in section 432E-1.4. A request for an external review to be conducted by an independent review organization shall be made in the following manner:

(1) The enrollee shall submit a request for external review to the commissioner within sixty days from the date of the final internal determination by the managed care plan;

(2) The commissioner shall retain the services of no less than three independent review organizations through a bidding process, and refer external review requests to one of the independent review organizations on a rotating basis;

(3) Within fourteen days after receipt of the request for external review, the insurance commissioner shall notify the managed care plan in writing of this request;

(4) Unless an expedited review is authorized pursuant to section 432E-6.5, within fourteen days of receipt of the written notice outlined in paragraph (3), a managed care plan or its designee utilization review organization shall provide to the independent review organization:

(A) All medical records and supporting documentation pertaining to the case;

(B) A summary description of the applicable issues including a statement of the managed care plan’s decision and the criteria the managed care plan used to make its decision; and

(C) The medical and clinical reasons for that decision.

The independent review organization shall maintain the confidentiality of medical records submitted to it in accordance with state and federal law, and shall maintain the confidentiality of proprietary information submitted by the managed care plan. Upon request, the managed care plan shall also provide the information required by this subsection to the enrollee, or the enrollee's treating licensed health care provider or appointed representative;

(5) The external review shall be conducted as soon as practicable, taking into consideration the medical exigencies of the case; provided that:

(A) The independent review organization’s decision shall be made no later than sixty days from the date of the initial request by the enrollee; and

(B) An external review conducted as an expedited appeal shall be determined in accordance with section 432E-6.5;

(6) The expert reviewer appointed by the independent review organization shall review the final internal determination to determine whether the managed care plan involved acted reasonably. The expert reviewer shall consider:

(A) The terms of the agreement of the enrollee's insurance policy, evidence of coverage, or similar document;

(B) Whether the medical director properly applied the medical necessity criteria in section 432E-1.4 in making the final internal determination;

(C) All relevant medical records;

(D) The clinical standards of the plan;

(E) The information provided;

(F) The attending physician's recommendations; and

(G) Generally accepted practice guidelines.

The independent review organization shall notify the enrollee, or the enrollee's treating licensed health care provider or appointed representative, of any additional information the expert reviewer requires within five business days after receipt of the information submitted by the managed care plan. The enrollee, or the enrollee's treating licensed health care provider or appointed representative, shall submit the additional information, or an explanation as to why the additional information cannot be submitted, within five business days of receipt of the request for additional information.

(b) The procedure set forth in this section shall not apply to claims or allegations of health provider malpractice, professional negligence, or other professional fault against participating providers.

(c) An external review decision made pursuant to this section regarding the medical necessity of the proposed service for the enrollee involved shall be binding on the enrollee, the enrollee’s appointed representative, the treating licensed health care provider, and the managed care plan, for purposes of the coverage to be provided to the enrollee by the managed care plan. If the expert reviewer determines that the managed care plan did not act reasonably in concluding the health care service was not medically necessary, and the managed care plan has asserted no other basis for denying coverage, the managed care plan shall pay for the health care service.

(d) Disclosure of an enrollee's protected health information shall be limited to disclosure for purposes relating to the external review.

(e) The managed care plan, at its discretion, may determine that additional information provided by the enrollee, or the enrollee's treating licensed health care provider or appointed representative justifies a reconsideration of the decision to deny coverage or reimbursement. Upon notice to the enrollee, or the enrollee's treating licensed health care provider or appointed representative, the commissioner and the independent review organization, a subsequent decision by the managed care plan to grant coverage or reimbursement based upon the reconsideration shall terminate the external review.

§432E-B External review procedure; liability. (a) Nothing in this section shall be construed to:

(1) Create any new private right or cause of action for or on behalf of any insured person; or

(2) Render the managed care plan liable for injuries or damages arising from any act or omission of the independent review organization or expert reviewer.

(b) Independent review organizations and expert reviewers assigned by an independent review organization to conduct an external review shall not be liable for injuries or damages arising from decisions made pursuant to this section. This provision shall not apply to any act or omission by an independent review organization or expert reviewer that is made in bad faith or that involves gross negligence.

§432E-C External review decision. The independent review organization shall issue a written decision on the appeal, stating whether the managed care plan acted reasonably in denying coverage for the service or treatment on grounds of medical necessity. The decision shall be sent or transmitted to the enrollee, or the enrollee's treating provider or appointed representative, and the managed care plan that is the subject of its decision within sixty days after acceptance of the appeal for external review and receipt of the documentation required by section 432E-   (a)(3).

§432E-D Certification of independent review organizations; minimum standards. (a) The department shall establish minimum standards for the certification of independent review organizations. An entity wishing to become certified with the department shall demonstrate:

(1) No conflicts of interest, in that it is not owned, a subsidiary of, or an affiliate of a managed care plan or utilization review organization;

(2) Ability to ensure the confidentiality of medical records and other enrollee information, and the proprietary information of a managed care plan; and

(3) Compliance with any national accreditation standards that pertain to an independent review organization; and

(4) That it is registered, domiciled, and does the majority of its business out-of-state.

(b) Professional trade associations of health care providers or their subsidiaries or affiliates shall not be eligible for certification as an independent review organization.

§432E-E Expert reviewer; qualifications; conflicts of interest. (a) A person assigned by an independent review organization as an expert reviewer shall be a physician and shall:

(1) Have expertise in the specific health condition of the enrollee whose appeal is under review and have knowledge regarding the recommended service or treatment through actual clinical experience;

(2) Hold a nonrestricted license to practice medicine in a state of the United States;

(3) Be currently certified by an American medical specialty board recognized by the American Osteopathic Association and the American Board of Medical Specialties in the areas appropriate to the subject of review; and

(4) Have no history of disciplinary action or sanctions related to quality of care, fraud, or other criminal activity.

(b) Neither the expert reviewer nor the independent review organization shall have any material, professional, familial or financial conflict of interest with:

(1) The managed care plan;

(2) Any officer, director, or management employee of the managed care plan;

(3) The physician, the physician’s medical group, or the independent practice association proposing the service or treatment;

(4) The institution at which the service or treatment would be provided;

(5) The development or manufacture of the principal drug, device, procedure or other therapy proposed for the insured person whose appeal is under review; or

(6) The enrollee, or the enrollee's treating provider or appointed representative who requested the external review.

(c) A potential expert reviewer shall disclose any information regarding a potential conflict of interest to all parties to the review."

SECTION 3. Section 432E-6.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) An enrollee may request that the following be conducted as an expedited appeal:

(1) The internal review under section 432E-5 of the enrollee's complaint; [or]

(2) The external review under section [432E-6] 432E-A of the managed care plan's final internal determination[.];

(3) In the event of expedited review pursuant to paragraph (2), the commissioner shall provide written notice to the plan of the request for review immediately upon the commissioner's receipt of the review; or

(4) Within forty-eight hours of the written notice outlined in paragraph (3), a managed care plan or its designee utilization review organization shall provide to the independent review organization all information outlined in subsection 432E-A(a)(4).

If a request for expedited appeal is approved by the managed care plan or the commissioner, the appropriate review shall be completed within seventy-two hours of receipt of the request for expedited appeal[.] unless the reviewer determines that additional information is necessary to perform the review. Any request for additional information shall be made within twenty-four hours of the reviewer's receipt of the request for external review, and shall allow the enrollee not less than forty-eight hours to provide the information. If additional information is requested, the review shall be completed not later than forty-eight hours after the earlier of the receipt of the additional information requested or the end of the period afforded the member to provide the additional information."

SECTION 4. Section 432E-6, Hawaii Revised Statutes, is repealed.

["§432E-6 External review procedure. (a) After exhausting all internal complaint and appeal procedures available, an enrollee, or the enrollee's treating provider or appointed representative, may file a request for external review of a managed care plan's final internal determination to a three-member review panel appointed by the commissioner composed of a representative from a managed care plan not involved in the complaint, a provider licensed to practice and practicing medicine in Hawaii not involved in the complaint, and the commissioner or the commissioner's designee in the following manner:

(1) The enrollee shall submit a request for external review to the commissioner within sixty days from the date of the final internal determination by the managed care plan;

(2) The commissioner may retain:

(A) Without regard to chapter 76, an independent medical expert trained in the field of medicine most appropriately related to the matter under review. Presentation of evidence for this purpose shall be exempt from section 91-9(g); and

(B) The services of an independent review organization from an approved list maintained by the commissioner;

(3) Within seven days after receipt of the request for external review, a managed care plan or its designee utilization review organization shall provide to the commissioner or the assigned independent review organization:

(A) Any documents or information used in making the final internal determination including the enrollee's medical records;

(B) Any documentation or written information submitted to the managed care plan in support of the enrollee's initial complaint; and

(C) A list of the names, addresses, and telephone numbers of each licensed health care provider who cared for the enrollee and who may have medical records relevant to the external review;

provided that where an expedited appeal is involved, the managed care plan or its designee utilization review organization shall provide the documents and information within forty-eight hours of receipt of the request for external review.

Failure by the managed care plan or its designee utilization review organization to provide the documents and information within the prescribed time periods shall not delay the conduct of the external review. Where the plan or its designee utilization review organization fails to provide the documents and information within the prescribed time periods, the commissioner may issue a decision to reverse the final internal determination, in whole or part, and shall promptly notify the independent review organization, the enrollee, the enrollee's appointed representative, if applicable, the enrollee's treating provider, and the managed care plan of the decision;

(4) Upon receipt of the request for external review and upon a showing of good cause, the commissioner shall appoint the members of the external review panel and shall conduct a review hearing pursuant to chapter 91. If the amount in controversy is less than $500, the commissioner may conduct a review hearing without appointing a review panel;

(5) The review hearing shall be conducted as soon as practicable, taking into consideration the medical exigencies of the case; provided that:

(A) The hearing shall be held no later than sixty days from the date of the request for the hearing; and

(B) An external review conducted as an expedited appeal shall be determined no later than seventy-two hours after receipt of the request for external review;

(6) After considering the enrollee's complaint, the managed care plan's response, and any affidavits filed by the parties, the commissioner may dismiss the request for external review if it is determined that the request is frivolous or without merit; and

(7) The review panel shall review every final internal determination to determine whether the managed care plan involved acted reasonably. The review panel and the commissioner or the commissioner's designee shall consider:

(A) The terms of the agreement of the enrollee's insurance policy, evidence of coverage, or similar document;

(B) Whether the medical director properly applied the medical necessity criteria in section 432E-1.4 in making the final internal determination;

(C) All relevant medical records;

(D) The clinical standards of the plan;

(E) The information provided;

(F) The attending physician's recommendations; and

(G) Generally accepted practice guidelines.

The commissioner, upon a majority vote of the panel, shall issue an order affirming, modifying, or reversing the decision within thirty days of the hearing.

(b) The procedure set forth in this section shall not apply to claims or allegations of health provider malpractice, professional negligence, or other professional fault against participating providers.

(c) No person shall serve on the review panel or in the independent review organization who, through a familial relationship within the second degree of consanguinity or affinity, or for other reasons, has a direct and substantial professional, financial, or personal interest in:

(1) The plan involved in the complaint, including an officer, director, or employee of the plan; or

(2) The treatment of the enrollee, including but not limited to the developer or manufacturer of the principal drug, device, procedure, or other therapy at issue.

(d) Members of the review panel shall be granted immunity from liability and damages relating to their duties under this section.

(e) An enrollee may be allowed, at the commissioner's discretion, an award of a reasonable sum for attorney's fees and reasonable costs incurred in connection with the external review under this section, unless the commissioner in an administrative proceeding determines that the appeal was unreasonable, fraudulent, excessive, or frivolous.

(f) Disclosure of an enrollee's protected health information shall be limited to disclosure for purposes relating to the external review."]

SECTION 5. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

INTRODUCED BY:

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