First Substitute H.B. 35

Representative Judy Ann Buffmire proposes to substitute the following bill:

1 CATASTROPHIC MENTAL HEALTH
2 INSURANCE COVERAGE
3 2000 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Judy Ann Buffmire
6 AN ACT RELATING TO INSURANCE; DEFINING TERMS; REQUIRING THAT HEALTH
7 INSURANCE POLICIES APPLY THE SAME LIFETIME LIMITS, ANNUAL PAYMENT
8 LIMITS, AND OUT-OF-POCKET LIMITS TO MENTAL HEALTH CONDITIONS AS APPLY
9 TO PHYSICAL HEALTH CONDITIONS; PERMITTING THE USE OF MANAGED CARE
10 AND CLOSED PANELS; REQUIRING THAT SERVICES BE PROVIDED BY LICENSED
11 THERAPISTS AND FACILITIES; PERMITTING EMPLOYERS TO SEEK A HARDSHIP
12 EXEMPTION; IMPOSING DUTIES ON THE COMMISSIONER TO ADOPT RULES;
13 REQUIRING AN INTERIM REVIEW; AND PROVIDING A REPEAL DATE.
14 This act affects sections of Utah Code Annotated 1953 as follows:
15 AMENDS:
16 31A-22-617, as last amended by Chapters 314 and 316, Laws of Utah 1994
17 31A-22-618, as last amended by Chapter 204, Laws of Utah 1986
18 63-55-231, as last amended by Chapter 131, Laws of Utah 1999
19 ENACTS:
20 31A-22-625, Utah Code Annotated 1953
21 Be it enacted by the Legislature of the state of Utah:
22 Section 1. Section 31A-22-617 is amended to read:
23 31A-22-617. Preferred provider contract provisions.
24 Health insurance policies may provide for insureds to receive services or reimbursement
25 under the policies in accordance with preferred health care provider contracts as follows:

26 (1) Subject to restrictions under this section, any insurer or third party administrator may
27 enter into contracts with health care providers as defined in Section 78-14-3 under which the health
28 care providers agree to supply services, at prices specified in the contracts, to persons insured by
29 an insurer. The health care provider contract may require the health care provider to accept the
30 specified payment as payment in full, relinquishing the right to collect additional amounts from
31 the insured person. The insurance contract may reward the insured for selection of preferred health
32 care providers by reducing premium rates, reducing deductibles, coinsurance, or other copayments,
33 or in any other reasonable manner.
34 (2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health care
35 provider contracts shall pay for the services of health care providers not under the contract, unless
36 the illnesses or injuries treated by the health care provider are not within the scope of the insurance
37 contract. As used in this section, "class of health care providers" means all health care providers
38 licensed or licensed and certified by the state within the same professional, trade, occupational, or
39 facility licensure or licensure and certification category established pursuant to Titles 26 and 58.
40 (b) When the insured receives services from a health care provider not under contract, the
41 insurer shall reimburse the insured for at least 75% of the average amount paid by the insurer for
42 comparable services of preferred health care providers who are members of the same class of
43 health care providers. The commissioner may adopt a rule dealing with the determination of what
44 constitutes 75% of the average amount paid by the insurer for comparable services of preferred
45 health care providers who are members of the same class of health care providers.
46 (c) When reimbursing for services of health care providers not under contract, the insurer
47 may make direct payment to the insured.
48 (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
49 contracts may impose a deductible on coverage of health care providers not under contract.
50 (e) When selecting health care providers with whom to contract under Subsection (1), an
51 insurer may not unfairly discriminate between classes of health care providers, but may
52 discriminate within a class of health care providers, subject to Subsection (7).
53 (f) For purposes of this section, unfair discrimination between classes of health care
54 providers shall include:
55 (i) refusal to contract with class members in reasonable proportion to the number of
56 insureds covered by the insurer and the expected demand for services from class members; and

57 (ii) refusal to cover procedures for one class of providers that are:
58 (A) commonly utilized by members of the class of health care providers for the treatment
59 of illnesses, injuries, or conditions;
60 (B) otherwise covered by the insurer; and
61 (C) within the scope of practice of the class of health care providers.
62 (3) Before the insured consents to the insurance contract, the insurer shall fully disclose
63 to the insured that it has entered into preferred health care provider contracts. The insurer shall
64 provide sufficient detail on the preferred health care provider contracts to permit the insured to
65 agree to the terms of the insurance contract. The insurer shall provide at least the following
66 information:
67 (a) a list of the health care providers under contract and if requested their business
68 locations and specialties;
69 (b) a description of the insured benefits, including any deductibles, coinsurance, or other
70 copayments;
71 (c) a description of the quality assurance program required under Subsection (4); and
72 (d) a description of the grievance procedures required under Subsection (5).
73 (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
74 assurance program for assuring that the care provided by the health care providers under contract
75 meets prevailing standards in the state.
76 (b) The commissioner in consultation with the executive director of the Department of
77 Health may designate qualified persons to perform an audit of the quality assurance program. The
78 auditors shall have full access to all records of the organization and its health care providers,
79 including medical records of individual patients.
80 (c) The information contained in the medical records of individual patients shall remain
81 confidential. All information, interviews, reports, statements, memoranda, or other data furnished
82 for purposes of the audit and any findings or conclusions of the auditors are privileged. The
83 information is not subject to discovery, use, or receipt in evidence in any legal proceeding except
84 hearings before the commissioner concerning alleged violations of this section.
85 (5) An insurer using preferred health care provider contracts shall provide a reasonable
86 procedure for resolving complaints and grievances initiated by the insureds and health care
87 providers.

88 (6) An insurer may not contract with a health care provider for treatment of illness or
89 injury unless the health care provider is licensed to perform that treatment.
90 (7) (a) No health care provider or insurer may discriminate against a preferred health care
91 provider for agreeing to a contract under Subsection (1).
92 (b) Any health care provider licensed to treat any illness or injury within the scope of the
93 health care provider's practice, who is willing and able to meet the terms and conditions established
94 by the insurer for designation as a preferred health care provider, shall be able to apply for and
95 receive the designation as a preferred health care provider. Contract terms and conditions may
96 include reasonable limitations on the number of designated preferred health care providers based
97 upon substantial objective and economic grounds, or expected use of particular services based
98 upon prior provider-patient profiles.
99 (8) Upon the written request of a provider excluded from a provider contract, the
100 commissioner may hold a hearing to determine if the insurer's exclusion of the provider is based
101 on the criteria set forth in Subsection (7)(b).
102 (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 , and
103 31A-22-618 .
104 (10) Nothing in this section is to be construed as to require an insurer to offer a certain
105 benefit or service as part of a health benefit plan.
106 (11) This section does not apply to mental health benefits provided pursuant to Section
107 31A-22-625 .
108 Section 2. Section 31A-22-618 is amended to read:
109 31A-22-618. Nondiscrimination among health care professionals.
110 (1) Except as provided under Section 31A-22-617 , and except as to insurers licensed under
111 Chapter 8, no insurer may unfairly discriminate against any licensed class of health care providers
112 by structuring contract exclusions which exclude payment of benefits for the treatment of any
113 illness, injury, or condition by any licensed class of health care providers when the treatment is
114 within the scope of the licensee's practice and the illness, injury, or condition falls within the
115 coverage of the contract. Upon the written request of an insured alleging an insurer has violated
116 this section, the commissioner shall hold a hearing to determine if the violation exists. The
117 commissioner may consolidate two or more related alleged violations into a single hearing.
118 (2) This section does not apply to mental health benefits provided pursuant to Section

119 31A-22-625 .
120 Section 3. Section 31A-22-625 is enacted to read:
121 31A-22-625. Catastrophic coverage of mental health conditions.
122 (1) As used in this section:
123 (a) (i) "Mental health condition" means any condition or disorder involving mental illness
124 that falls under any of the diagnostic categories listed in the mental disorders section of the
125 International Classification of Diseases, as periodically revised.
126 (ii) "Mental health condition" does not include the following when diagnosed as the
127 primary or substantial reason or need for treatment:
128 (A) marital or family problem;
129 (B) social, occupational, religious, or other social maladjustment;
130 (C) conduct disorder;
131 (D) chronic adjustment disorder;
132 (E) sexual paraphilias;
133 (F) personality disorder;
134 (G) specific developmental disorder or learning disability; or
135 (H) mental retardation.
136 (b) Until January 1, 2004:
137 (i) "Rate, term, or condition" means any lifetime limit, annual payment limit, episodic
138 limit, inpatient or outpatient service limit, and out-of-pocket limit.
139 (ii) "Rate, term, or condition" does not include any deductible, copayment, or coinsurance
140 prior to reaching any maximum out-of-pocket limit.
141 (iii) Out-of-pocket expenses for mental health conditions and physical health conditions
142 shall apply equally to any out-of-pocket limit within a policy or contract.
143 (c) Beginning January 1, 2004, "rate, term, or condition" means any lifetime or annual
144 payment limits, deductibles, copayments, coinsurance, and any other cost-sharing requirements,
145 out-of-pocket limits, visit limits, or any other financial component of health insurance coverage
146 that affects the insured.
147 (d) "Rate" does not mean an insurance premium.
148 (2) This section shall apply to health insurance policies and health maintenance
149 organization contracts in effect after:

150 (a) January 1, 2001, if the policy or contract covers 11 or more employees; and
151 (b) January 1, 2002, if the policy or contract covers an individual or 10 or less employees.
152 (3) Except as provided in Subsection (5), a policy or contract:
153 (a) shall provide coverage for the diagnosis and treatment of mental health conditions; and
154 (b) may not establish any rate, term, or condition that places a greater financial burden on
155 an insured for the diagnosis and treatment of a mental health condition than for the diagnosis and
156 treatment of a covered physical health condition.
157 (4) (a) A policy or contract may provide coverage for the diagnosis and treatment of
158 mental health conditions through a managed care organization or system, regardless of whether
159 the policy or contract uses a managed care organization or system for the treatment of physical
160 health conditions.
161 (b) (i) Notwithstanding any other provision of this title, an insurer may:
162 (A) establish a closed panel of providers under this section; and
163 (B) refuse to provide any benefit to be paid for services rendered by a nonpanel provider
164 unless:
165 (I) the insured is referred to a nonpanel provider with the prior authorization of the insurer;
166 and
167 (II) the nonpanel provider agrees to follow the insurer's protocols and treatment guidelines.
168 (ii) If an insured receives services from a nonpanel provider in the manner permitted by
169 Subsection (4)(d)(i)(B), the insurer shall reimburse the insured for not less than 75% of the average
170 amount paid by the insurer for comparable services of panel providers under a noncapitated
171 arrangement who are members of the same class of health care providers.
172 (iii) Nothing in this Subsection (4)(b) may be construed as requiring an insurer to authorize
173 a referral to a nonpanel provider.
174 (c) To be eligible for coverage under this section, a diagnosis or treatment of a mental
175 health condition must be rendered:
176 (i) by a mental health therapist as defined in Section 58-60-102 ; or
177 (ii) in a health care facility licensed or otherwise authorized to provide mental health
178 services pursuant to Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act, or
179 Title 62A, Chapter 2, Licensure of Programs and Facilities, that provides a program for the
180 treatment of a mental health condition pursuant to a written plan.

181 (5) An employer that provides a policy or contract that is subject to this section may
182 request a hardship exemption from the insurance commissioner by showing by clear and
183 convincing evidence in an administrative proceeding that:
184 (a) the employer:
185 (i) has two to 10 employees; and
186 (ii) has experienced an overall premium increase of no less than 2% during the previous
187 12 month period based on actuarially sound data:
188 (A) as a direct result of complying with the requirements of this section; and
189 (B) discounting any increase that may be the result of inflation or providing coverage
190 beyond what is required by this section; or
191 (b) the employer:
192 (i) has 11 or more employees; and
193 (ii) has experienced an overall premium increase of no less than 3% during the previous
194 12-month period based on actuarially sound data:
195 (A) as a direct result of complying with the requirements of this section; and
196 (B) discounting any increase that may be the result of inflation or providing coverage
197 beyond what is required by this section.
198 (6) The commissioner may disapprove any policy or contract that the commissioner
199 determines to be inconsistent with the provisions of this section.
200 (7) The commissioner shall adopt rules as necessary to ensure compliance with this
201 section.
202 (8) The Health and Human Services Interim Committee shall review the impact of this
203 section on insurers, employers, providers, and consumers of mental health services before January
204 1, 2003.
205 (9) Nothing in this section may be construed as restricting the ability of an insurer to offer
206 greater coverage or benefits for the diagnosis and treatment of mental health conditions than is
207 required by this section.
208 (10) This section shall be repealed in accordance with Section 63-55-231 .
209 Section 4. Section 63-55-231 is amended to read:
210 63-55-231. Repeal dates, Title 31A.
211 (1) Section 31A-2-208.5 , Comparison tables, is repealed July 1, 2005.

212 (2) Section 31A-22-315 , Motor Vehicle Insurance Reporting, is repealed July 1, 2000.
213 (3) Title 31A, Chapter 31, Insurance Fraud Act, is repealed July 1, 2007.
214 (4) Section 31A-22-625 , Catastrophic Coverage of Mental Health Conditions, is repealed
215 July 1, 2011.