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H.B. 246

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CHOICE OF HEALTH CARE PROVIDERS

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1997 GENERAL SESSION

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STATE OF UTAH

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Sponsor: Patricia B. Larson

5    AN ACT RELATING TO HEALTH; PERMITTING AN INSURED TO CHOOSE A HEALTH
6    CARE PROVIDER OR FACILITY; REQUIRING THE INSURER TO REIMBURSE THE
7    INSURED'S HEALTH CARE PROVIDER OR FACILITY ON THE SAME TERMS AS THE
8    INSURER REIMBURSES ITS PROVIDERS AND FACILITIES; REQUIRING A HEALTH
9    CARE PROVIDER OR FACILITY TO ACCEPT PAYMENT UNDER THE TERMS OF THE
10    INSURANCE CONTRACT; AND PROVIDING AN EFFECTIVE DATE.
11    This act affects sections of Utah Code Annotated 1953 as follows:
12    AMENDS:
13         31A-8-103 (Effective 07/01/97), as last amended by Chapter 339, Laws of Utah 1996
14         31A-22-617, as last amended by Chapters 314 and 316, Laws of Utah 1994
15    ENACTS:
16         31A-22-623, Utah Code Annotated 1953
17    Be it enacted by the Legislature of the state of Utah:
18        Section 1. Section 31A-8-103 (Effective 07/01/97) is amended to read:
19         31A-8-103 (Effective 07/01/97). Applicability to other provisions of law.
20        (1) Except for exemptions specifically granted under this title, organizations are subject
21    to regulation under all of the provisions of this title. Notwithstanding any provision of this title,
22    organizations licensed under this chapter are wholly exempt from the provisions of Chapters 7, 9,
23    10, 11, 12, 13, 19, and 28. In addition, organizations are not subject to:
24        (a) Chapter 3, except for Part I;
25        (b) Section 31A-4-107;
26        (c) Chapter 5, except for provisions specifically made applicable by this chapter;
27        (d) Chapter 14, except for provisions specifically made applicable by this chapter;


1        (e) Chapters 17 and 18, except as made applicable by the commissioner by rule consistent
2    with this chapter; and
3        (f) Chapter 22, except for Parts VI, VII, and XII.
4        (2) The commissioner may by rule waive other specific provisions of this title that he
5    considers inapplicable to health maintenance organizations or limited health plans, upon a finding
6    that such a waiver will not endanger the interests of enrollees, investors, or the public.
7        (3) Title 16, Chapter 6, Utah Nonprofit Corporation and Cooperative Association Act, and
8    Title 16, Chapter 10a, Utah Revised Business Corporation Act, do not apply to organizations
9    except as specifically made applicable by:
10        (a) this chapter;
11        (b) a provision referenced under this chapter; or
12        (c) a rule adopted by the commissioner to deal with corporate law issues of health
13    maintenance organizations that are not settled under this chapter.
14        (4) Whenever in this chapter a section, subsection, or paragraph of Chapter 5 or 14 is made
15    applicable to organizations, the application is of those provisions that apply to mutual corporations
16    if the organization is nonprofit and of those that apply to stock corporations if the organization is
17    for profit. Whenever a provision under Chapter 5 or 14 is made applicable to organizations under
18    this chapter, "mutual" means nonprofit organization.
19        (5) Solicitation of enrollees by an organization is not a violation of any provision of law
20    relating to solicitation or advertising by health professionals if that solicitation is made in
21    accordance with the provisions of this chapter and Chapter 23.
22        (6) Nothing in this title prohibits any health maintenance organization from meeting the
23    requirements of any federal law that enables the health maintenance organization to receive federal
24    funds or to obtain or maintain federal qualification status.
25        (7) Except as provided in Section [31A-22-617.5] 31A-22-623, organizations are exempt
26    from statutes in this title or department rules that restrict or limit their freedom of choice in
27    contracting with or selecting health care providers, including Section 31A-22-618.
28        (8) Organizations are exempt from the assessment or payment of premium taxes imposed
29    by Sections 59-9-101 through 59-9-104.
30        Section 2. Section 31A-22-617 is amended to read:
31         31A-22-617. Preferred provider contract provisions.

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1        Health insurance policies may provide for insureds to receive services or reimbursement
2    under the policies in accordance with preferred health care provider contracts as follows:
3        (1) Subject to restrictions under this section, any insurer or third party administrator may
4    enter into contracts with health care providers as defined in Section 78-14-3 under which the health
5    care providers agree to supply services, at prices specified in the contracts, to persons insured by
6    an insurer. The health care provider contract may require the health care provider to accept the
7    specified payment as payment in full, relinquishing the right to collect additional amounts from
8    the insured person. The insurance contract may reward the insured for selection of preferred health
9    care providers by reducing premium rates, reducing deductibles, coinsurance, or other copayments,
10    or in any other reasonable manner.
11        [(2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health care
12    provider contracts shall pay for the services of health care providers not under the contract, unless
13    the illnesses or injuries treated by the health care provider are not within the scope of the insurance
14    contract. As used in this section, "class of health care providers" means all health care providers
15    licensed or licensed and certified by the state within the same professional, trade, occupational,
16    or facility licensure or licensure and certification category established pursuant to Titles 26 and
17    58.]
18        [(b) ] (2) (a) When the insured receives services from a health care provider not under
19    contract, the insurer shall reimburse the insured [for at least 75% of the average amount paid by
20    the insurer for comparable services of preferred health care providers who are members of the
21    same class of health care providers. The commissioner may adopt a rule dealing with the
22    determination of what constitutes 75% of the average amount paid by the insurer for comparable
23    services of preferred health care providers who are members of the same class of health care
24    providers] as provided in Section 31A-22-623.
25        [(c) When reimbursing for services of health care providers not under contract, the insurer
26    may make direct payment to the insured.]
27        [(d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
28    contracts may impose a deductible on coverage of health care providers not under contract.]
29        [(e)] (b) When selecting health care providers with whom to contract under Subsection (1),
30    an insurer may not unfairly discriminate between classes of health care providers, but may
31    discriminate within a class of health care providers, subject to Subsection (7).

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1        [(f)] (c) For purposes of this section, unfair discrimination between classes of health care
2    providers shall include:
3        (i) refusal to contract with class members in reasonable proportion to the number of
4    insureds covered by the insurer and the expected demand for services from class members; and
5        (ii) refusal to cover procedures for one class of providers that are:
6        (A) commonly utilized by members of the class of health care providers for the treatment
7    of illnesses, injuries, or conditions;
8        (B) otherwise covered by the insurer; and
9        (C) within the scope of practice of the class of health care providers.
10        (3) Before the insured consents to the insurance contract, the insurer shall fully disclose
11    to the insured that it has entered into preferred health care provider contracts. The insurer shall
12    provide sufficient detail on the preferred health care provider contracts to permit the insured to
13    agree to the terms of the insurance contract. The insurer shall provide at least the following
14    information:
15        (a) a list of the health care providers under contract and if requested their business
16    locations and specialties;
17        (b) a description of the insured benefits, including any deductibles, coinsurance, or other
18    copayments;
19        (c) a description of the quality assurance program required under Subsection (4); and
20        (d) a description of the grievance procedures required under Subsection (5).
21        (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
22    assurance program for assuring that the care provided by the health care providers under contract
23    meets prevailing standards in the state.
24        (b) The commissioner in consultation with the executive director of the Department of
25    Health may designate qualified persons to perform an audit of the quality assurance program. The
26    auditors shall have full access to all records of the organization and its health care providers,
27    including medical records of individual patients.
28        (c) The information contained in the medical records of individual patients shall remain
29    confidential. All information, interviews, reports, statements, memoranda, or other data furnished
30    for purposes of the audit and any findings or conclusions of the auditors are privileged. The
31    information is not subject to discovery, use, or receipt in evidence in any legal proceeding except

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1    hearings before the commissioner concerning alleged violations of this section.
2        (5) An insurer using preferred health care provider contracts shall provide a reasonable
3    procedure for resolving complaints and grievances initiated by the insureds and health care
4    providers.
5        (6) An insurer may not contract with a health care provider for treatment of illness or
6    injury unless the health care provider is licensed to perform that treatment.
7        (7) (a) No health care provider or insurer may discriminate against a preferred health care
8    provider for agreeing to a contract under Subsection (1).
9        (b) Any health care provider licensed to treat any illness or injury within the scope of the
10    health care provider's practice, who is willing and able to meet the terms and conditions
11    established by the insurer for designation as a preferred health care provider, shall be able to apply
12    for and receive the designation as a preferred health care provider. Contract terms and conditions
13    may include reasonable limitations on the number of designated preferred health care providers
14    based upon substantial objective and economic grounds, or expected use of particular services
15    based upon prior provider-patient profiles.
16        (8) Upon the written request of a provider excluded from a provider contract, the
17    commissioner may hold a hearing to determine if the insurer's exclusion of the provider is based
18    on the criteria set forth in Subsection (7)(b).
19        (9) Insurers are subject to the provisions of Sections 31A-22-613.5, 31A-22-614.5, and
20    31A-22-618.
21        (10) Nothing in this section is to be construed as to require an insurer to offer a certain
22    benefit or service as part of a health benefit plan.
23        Section 3. Section 31A-22-623 is enacted to read:
24         31A-22-623. Choice of health care providers.
25        (1) An insured may receive health care services from a health care provider or facility of
26    his choice and the insurer shall pay for those services if:
27        (a) the illness, injury, or condition is covered by the insured's health insurance contract;
28        (b) the provider or facility is a member of a class of health care providers or facilities
29    covered by the insured's health insurance contract; and
30        (c) the insured has met any preauthorization or utilization review for the services as
31    required by the insured's health insurance contract.

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1        (2) (a) When an insurer receives a request for payment from a health care provider or
2    facility under Subsection (1), the insurer shall pay to the requesting provider or facility the average
3    amount the insurer pays for comparable services to a provider or facility who:
4        (i) is under contract or employed by the insurer; and
5        (ii) is in the same class as the requesting provider or facility.
6        (b) The commissioner may adopt rules for calculating the average amount the insurer pays
7    to providers or facilities who are under contract with or employed by it.
8        (3) If a health care provider or facility renders services that are eligible for payment under
9    Subsection (1), receives the information necessary for payment from the insured, and has not
10    entered into an agreement to the contrary with the insured before services were rendered, the
11    provider or facility shall accept as payment in full:
12        (a) the amount paid by the insurer as required by Subsection (2); and
13        (b) any deductible or copayment paid by the insured as required by the insured's health
14    insurance contract.
15        Section 4. Effective date.
16        This act takes effect on July 1, 1997.




Legislative Review Note
    as of 12-31-96 12:02 PM


A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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