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First Substitute S.B. 69

Senator Leonard M. Blackham proposes to substitute the following bill:


             1     
MEDICAL CLAIMS AMENDMENTS

             2     
2001 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Leonard M. Blackham

             5      This act modifies the Insurance Code to establish a health care provider claims practice. The
             6      act establishes the duties of an insurer to timely pay providers and the duty of providers to
             7      respond to insurer request for information. The act provides for penalties for failure to
             8      timely pay a claim or failure to timely provide information on a claim. The act defines an
             9      unfair claim settlement practice. The act authorizes the Insurance Commissioner to audit
             10      compliance, impose sanctions, and adopt rules necessary to enforce the act. The act provides
             11      an effective date. h This act contains a coordination clause . h
             12      This act affects sections of Utah Code Annotated 1953 as follows:
             13      AMENDS:
             14          31A-26-301.5, as last amended by Chapter 198, Laws of Utah 2000
             15      ENACTS:
             16          31A-26-301.6, Utah Code Annotated 1953
             17      Be it enacted by the Legislature of the state of Utah:
             18          Section 1. Section 31A-26-301.5 is amended to read:
             19           31A-26-301.5. Health care claims practices.
             20          (1) Except as provided in Section 31A-8-407 , an insured retains ultimate responsibility for
             21      paying for health care services the insured receives. If a service is covered by one or more
             22      individual or group health insurance policies, all insurers covering the insured have the
             23      responsibility to pay valid health care claims in a timely manner according to the terms and limits
             24      specified in the policies.
             25          (2) (a) Except as provided in Section 31A-22-610.1 , a health care provider may bill and


             26      collect for any deductible, copayment, or uncovered service.
             27          (b) A health care provider may bill an insured for services covered by health insurance
             28      policies or may otherwise notify the insured of the expenses covered by the policies. However,
             29      a provider may not make any report to a credit bureau, use the services of a collection agency, or
             30      use methods other than routine billing or notification until the later of:
             31          [(i) 15 days after the date all insurance companies covering the insured have paid their
             32      portion of the claim covered by the policies;]
             33          [(ii) 60 days from the date all insurers covering the insured are billed for the covered
             34      service; or]
             35          (i) the expiration of the time afforded to an insurer under Section 31A-26-301.6 to
             36      determine its obligation to pay or deny the claim without penalty; or
             37          [(iii)] (ii) in the case of medicare beneficiaries or retirees 65 years of age or older, 60 days
             38      from the date medicare determines its liability for the claim.
             39          (c) Beginning October 31, 1992, all insurers covering the insured shall notify the insured
             40      of payment and the amount of payment made to the provider.
             41          (3) The commissioner shall make rules consistent with this chapter governing disclosure
             42      to the insured of customary charges by health care providers on the explanation of benefits as part
             43      of the claims payment process. These rules shall be limited to the form and content of the
             44      disclosures on the explanation of benefits, and shall include:
             45          (a) a requirement that the method of determination of any specifically referenced
             46      customary charges and the range of the customary charges be disclosed; and
             47          (b) a prohibition against an implication that the provider is charging excessively if the
             48      provider is:
             49          (i) a participating provider; and
             50          (ii) prohibited from balance billing.
             51          Section 2. Section 31A-26-301.6 is enacted to read:
             52          31A-26-301.6. Health care provider claims practices.
             53          (1) As used in this section:
             54          (a) "Articulable reason" may include a determination regarding:
             55          (i) eligibility for coverage;
             56          (ii) preexisting conditions;


             57          (iii) applicability of other public or private insurance;
             58          (iv) medical necessity; and
             59          (v) any other reason that would justify an extension of the time to investigate a claim.
             60          (b) "Health care provider" means a person licensed to provide health care under Title 26,
             61      Chapter 21, Health Care Facility Licensing and Inspection Act, or Title 58, Occupations and
             62      Professions.
             63          (c) "Insurer" means an admitted or authorized insurer, as defined in Section 31A-1-301 ,
             64      and includes:
             65          (i) a health maintenance organization; and
             66          (ii) a third-party administrator that is subject to this title h , PROVIDED THAT NOTHING IN
             66a      THIS SECTION MAY BE CONSTRUED AS REQUIRING A THIRD PARTY ADMINISTRATOR TO USE ITS
             66b      OWN FUNDS TO PAY CLAIMS THAT HAVE NOT BEEN FUNDED BY THE ENTITY FOR WHICH THE
             66c      THIRD PARTY ADMINISTRATOR IS PAYING CLAIMS h .
             67          (d) "Provider" means a health care provider to whom an insurer is obligated to pay directly
             68      in connection with a claim by virtue of:
             69          (i) an agreement between the insurer and the provider;
             70          (ii) a health insurance policy or contract of the insurer; or
             71          (iii) state or federal law.
             72          (2) An insurer shall timely pay every valid insurance claim submitted by a provider in
             73      accordance with this section.
             74          (3) (a) Within 30 days of receiving a written claim, an insurer shall do one of the
             75      following:
             76          (i) pay the claim unless Subsection (3)(a)(ii), (iii), (iv), or (v) applies;
             77          (ii) provide a written explanation if the claim is denied;
             78          (iii) specifically describe and request any additional information from the provider that is
             79      necessary to process the claim;
             80          (iv) inform the provider, pursuant to Subsection (4), of the 30-day extension of the
             81      insurer's investigation of the claim; or
             82          (v) request additional information and inform the provider of the 30-day extension if both
             83      Subsections (3)(a)(iii) and (iv) apply.
             84          (b) A provider shall respond to each request by an insurer for additional necessary
             85      information made under Subsection (3)(a)(iii) or (v) within 30 days of receipt of the request by
             86      providing the requested information that is in the possession of the provider, unless:
             87          (i) the provider has requested and received the permission of the insurer to extend the


             88      30-day period; or
             89          (ii) the provider explains to the insurer in writing that additional time, which may not
             90      exceed 30 days, is necessary to comply with the request for information.
             91          (c) Subsection (7) shall apply after an insurer has received the information requested.
             92          (4) The time to investigate a claim may be extended by the insurer for an additional
             93      30-days if:
             94          (a) the investigation of the claim cannot reasonably be completed within the initial 30-day
             95      period of Subsection (3)(a);
             96          (b) before the end of the 30-day period in Subsection (3)(a), the insurer informs the
             97      provider in writing of the reason for the payment delay, the nature of the investigation, the
             98      timelines for investigations established in this section, and the anticipated completion date.
             99          (5) Notwithstanding Subsection (4), the time to investigate a claim may be extended
             100      beyond the initial 30-day period and the extended 30-day period if:
             101          (a) due to matters beyond the control of the insurer, the investigation cannot reasonably
             102      be completed within 60 days as to some part or all of the claim;
             103          (b) before the end of the combined 60-day period, the insurer makes a written request to
             104      the commissioner for an extension, including the reason for the delay, the nature of the
             105      investigation, the anticipated completion date, and the amount of any partial payment of the claim
             106      made pursuant to Subsection (5)(d);
             107          (c) before the end of the combined 60-day period, the commissioner informs the insurer
             108      that the request for an extension has been granted, based on a finding that:
             109          (i) there is a good faith and articulable reason to believe that the insurer is not obligated
             110      to pay some part or all of the claim; and
             111          (ii) the investigation cannot reasonably be completed within 60 days; and
             112          (d) the insurer identifies and pays all sums the insurer is obligated to pay on the claim and
             113      which are not subject to the extension requested under this Subsection (5).
             114          (6) An extension granted by the commissioner under Subsection (5)(c) shall include the
             115      completion date for the investigation.
             116          (7) (a) An insurer shall pay all sums to the provider that the insurer is obligated to pay on
             117      the claim, and provide a written explanation of any part of the claim that is denied within h [ 15 ] 20 h
             117a      days
             118      of:


             119          (i) receiving the information requested under Subsection (3)(a)(iii);
             120          (ii) completing an investigation under Subsection (4) or (5); or
             121          (iii) the latter of Subsection (3)(a)(iii) or (iv), if Subsection (3)(a)(v) applies.
             122          (b) (i) Except as provided in Subsection (7)(c), an insurer may send a follow-up request
             123      for additional information within the h [ 15 ] 20 h -day time period in Subsection (7)(a) if the
             123a      previous
             124      response of the provider was h [ insufficient ] NOT SUFFICIENT FOR THE INSURER TO MAKE A
             124a      DECISION ON THE CLAIM h .
             125          (ii) A follow-up request for additional necessary information shall state with specificity:
             126          (A) the reason why the previous response was insufficient;
             127          (B) the information that is necessary to comply with the request for information; and
             128          (C) the reason why the requested information is necessary to process the claim.
             129          (c) Unless an insurer has an extension for an investigation pursuant to Subsection (4) or
             130      (5), the insurer shall pay all sums it is obligated to pay on a claim and provide a written
             131      explanation of any part of the claim that is denied within 15 days of receiving a notice from the
             132      provider that the provider has submitted all requested information in the provider's possession that
             133      is related to the claim.
             134          (8) (a) Whenever an insurer makes a payment to a provider on any part of a claim under
             135      this section, the insurer shall also send to the insured an explanation of benefits paid.
             136          (b) Whenever an insurer denies any part of a claim under this section, the insurer shall also
             137      send to the insured a written explanation of the part of the claim that was denied and notice of the
             138      grievance review process established under Section 31A-22-629 .
             139          (c) This Subsection (8) does not apply to a person receiving benefits under the state
             140      Medicaid program as defined in Section 26-18-2 , unless required by the Department of Health or
             141      federal law.
             142          (9) (a) h [ A ] BEGINNING WITH HEALTH CARE CLAIMS SUBMITTED ON OR AFTER JANUARY
             142a      1, 2002, A h late fee shall be imposed on:
             143          (i) an insurer that fails to timely pay a claim in accordance with this section; and
             144          (ii) a provider that fails to timely provide information on a claim in accordance with this
             145      section.
             146          (b) For the first 90 days that a claim payment or a provider response to a request for
             147      information is late, the late fee shall be determined by multiplying together:
             148          (i) the total amount of the claim;
             149          (ii) the total number of days the response or the payment; and


             150          (iii) .1%.
             151          (c) For a claim payment or a provider response to a request for information that is 91 or
             152      more days late, the late fee shall be determined by adding together:
             153          (i) the late fee for a 90-day period under Subsection (9)(b); and
             154          (ii) the following sum multiplied together:
             155          (A) the total amount of the claim;
             156          (B) the total number of days the response or payment was late beyond the initial 90-day
             157      period; and
             158          (C) the rate of interest set in accordance with Section 15-1-1 .
             159          (d) Any late fee paid or collected under this section shall be separately identified on the
             160      documentation used by the insurer to pay the claim.
             161          (e) For purposes of this Subsection (9), "late fee" does not include an amount that is less
             162      than $1.
             163          (10) Each insurer shall establish a grievance review process to resolve claims-related
             164      disputes between the insurer and providers.
             165          (11) No insurer or person representing an insurer may engage in any unfair claim
             166      settlement practice with respect to a provider. Unfair claim settlement practices include:
             167          (a) knowingly misrepresenting a material fact or the contents of an insurance policy in
             168      connection with a claim;
             169          (b) failing to acknowledge and substantively respond within 15 days to any written
             170      communication from a provider relating to a pending claim;
             171          (c) denying or threatening to deny the payment of a claim for any reason that is not clearly
             172      described in the insured's policy;
             173          (d) failing to maintain a payment process sufficient to comply with this section;
             174          (e) failing to maintain claims documentation sufficient to demonstrate compliance with
             175      this section;
             176          (f) failing, upon request, to give to the provider written information regarding the specific
             177      rate and terms under which the provider will be paid for health care services;
             178          (g) failing to timely pay a valid claim in accordance with this section as a means of
             179      influencing, intimidating, retaliating, or gaining an advantage over the provider with respect to an
             180      unrelated claim, an undisputed part of a pending claim, or some other aspect of the contractual


             181      relationship;
             182          (h) failing to pay the sum when required and as required under Subsection (9) when a
             183      violation has occurred;
             184          (i) threatening to retaliate or actual retaliation against a provider for availing himself of
             185      the provisions of this section;
             186          (j) any material violation of this section; and
             187          (k) any other unfair claim settlement practice established in rule or law.
             188          (12) (a) The provisions of this section shall apply to each contract between an insurer and
             189      a provider for the duration of the contract.
             190          (b) Notwithstanding Subsection (12)(a), h [ a provider may not use this section as ] THIS
             190a      SECTION MAY NOT BE h the basis
             191      for a bad faith insurance claim.
             192          (c) Nothing in Subsection (12)(a) may be construed as limiting the ability of an insurer and
             193      a provider from including provisions in their contract that are more stringent than the provisions
             194      of this section.
             195          (13) (a) Pursuant to Chapter 2, Part 2, Duties and Powers of Commissioner h [ and within
             196      existing legislative appropriations
] , AND BEGINNING JANUARY 1, 2002 h
, the commissioner may
             196a      conduct examinations to determine an
             197      insurer's level of compliance with this section and impose sanctions for each violation.
             198          (b) The commissioner may adopt rules only as necessary to implement this section.
             199          (c) After December 31, 2002, the commissioner may establish rules to facilitate the
             200      exchange of electronic confirmations when claims-related information has been received.
             201          (d) Notwithstanding the provisions of Subsection (13)(b), the commissioner may not adopt
             202      rules regarding the grievance process required by Subsection (10).
             203          (14) Nothing in this section may be construed as limiting the collection rights of a provider
             204      under Section 31A-26-301.5 .
             205          (15) Nothing in this section may be construed as limiting the ability of an insurer to:
             206          (a) recover any amount improperly paid to a provider:
             207          (i) in accordance with Section 31A-31-103 or any other provision of state or federal law;
             208          (ii) within 36 months for a coordination of benefits error; or
             209          (iii) within 18 months for any other reason not identified in Subsection (15)(a)(i) or (ii);
             210          (b) take any action against a provider that is permitted under the terms of the provider
             211      contract and not prohibited by this section;


             212          (c) report the provider to a state or federal agency with regulatory authority over the
             213      provider for unprofessional, unlawful, or fraudulent conduct; or
             214          (d) enter into a mutual agreement with a provider to resolve alleged violations of this
             215      section through mediation or binding arbitration.
             216          Section 3. Effective date.
             217          This act takes effect on September 1, 2001.
             217a           h SECTION 4. COORDINATION CLAUSE.
             217b          IF THIS BILL AND H.B. 140, HEALTH CLAIMS PROCESSING AND HEALTH CLAIMS AUDITING
             217c      ACT, BOTH PASS, IT IS THE INTENT OF THE LEGISLATURE THAT THE AMENDMENTS TO
             217d      SUBSECTION 31A-26-301.5(2)(b) IN THIS BILL SHALL SUPERCEDE THE AMENDMENTS TO
             217e      SUBSECTION 31A-26-301.5(2)(b) IN H.B. 140 . h


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