Second 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 HEALTH
7 INSURERS TO OFFER MENTAL HEALTH COVERAGE THAT APPLIES THE SAME
8 LIFETIME LIMITS, ANNUAL PAYMENT LIMITS, AND MAXIMUM OUT-OF-POCKET
9 LIMITS TO MENTAL HEALTH CONDITIONS AS APPLY TO PHYSICAL HEALTH
10 CONDITIONS; PERMITTING THE USE OF MANAGED CARE AND CLOSED PANELS;
11 REQUIRING THAT SERVICES BE PROVIDED BY LICENSED THERAPISTS AND
12 FACILITIES; IMPOSING DUTIES ON THE COMMISSIONER TO ADOPT RULES;
13 REQUIRING AN INTERIM REVIEW AND RECOMMENDATION; IMPOSING
14 REQUIREMENTS ON STATE EMPLOYEE HEALTH PLANS; AND PROVIDING A REPEAL
15 DATE.
16 This act affects sections of Utah Code Annotated 1953 as follows:
17 AMENDS:
18 31A-22-617, as last amended by Chapters 314 and 316, Laws of Utah 1994
19 31A-22-618, as last amended by Chapter 204, Laws of Utah 1986
20 49-8-401, as last amended by Chapter 360, Laws of Utah 1998
21 63-55-231, as last amended by Chapter 131, Laws of Utah 1999
22 ENACTS:
23 31A-22-625, Utah Code Annotated 1953
24 Be it enacted by the Legislature of the state of Utah:
25 Section 1. Section 31A-22-617 is amended to read:

26 31A-22-617. Preferred provider contract provisions.
27 Health insurance policies may provide for insureds to receive services or reimbursement
28 under the policies in accordance with preferred health care provider contracts as follows:
29 (1) Subject to restrictions under this section, any insurer or third party administrator may
30 enter into contracts with health care providers as defined in Section 78-14-3 under which the health
31 care providers agree to supply services, at prices specified in the contracts, to persons insured by
32 an insurer. The health care provider contract may require the health care provider to accept the
33 specified payment as payment in full, relinquishing the right to collect additional amounts from
34 the insured person. The insurance contract may reward the insured for selection of preferred health
35 care providers by reducing premium rates, reducing deductibles, coinsurance, or other copayments,
36 or in any other reasonable manner.
37 (2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health care
38 provider contracts shall pay for the services of health care providers not under the contract, unless
39 the illnesses or injuries treated by the health care provider are not within the scope of the insurance
40 contract. As used in this section, "class of health care providers" means all health care providers
41 licensed or licensed and certified by the state within the same professional, trade, occupational, or
42 facility licensure or licensure and certification category established pursuant to Titles 26 and 58.
43 (b) When the insured receives services from a health care provider not under contract, the
44 insurer shall reimburse the insured for at least 75% of the average amount paid by the insurer for
45 comparable services of preferred health care providers who are members of the same class of
46 health care providers. The commissioner may adopt a rule dealing with the determination of what
47 constitutes 75% of the average amount paid by the insurer for comparable services of preferred
48 health care providers who are members of the same class of health care providers.
49 (c) When reimbursing for services of health care providers not under contract, the insurer
50 may make direct payment to the insured.
51 (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
52 contracts may impose a deductible on coverage of health care providers not under contract.
53 (e) When selecting health care providers with whom to contract under Subsection (1), an
54 insurer may not unfairly discriminate between classes of health care providers, but may
55 discriminate within a class of health care providers, subject to Subsection (7).
56 (f) For purposes of this section, unfair discrimination between classes of health care

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

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

119 this section, the commissioner shall hold a hearing to determine if the violation exists. The
120 commissioner may consolidate two or more related alleged violations into a single hearing.
121 (2) This section does not apply to mental health coverage as provided in Section
122 31A-22-625 .
123 Section 3. Section 31A-22-625 is enacted to read:
124 31A-22-625. Catastrophic coverage of mental health conditions.
125 (1) As used in this section:
126 (a) (i) "Mental health condition" means any condition or disorder involving mental illness
127 that falls under any of the diagnostic categories listed in the Diagnostic and Statistical Manual, as
128 periodically revised.
129 (ii) "Mental health condition" does not include the following when diagnosed as the
130 primary or substantial reason or need for treatment:
131 (A) marital or family problem;
132 (B) social, occupational, religious, or other social maladjustment;
133 (C) conduct disorder;
134 (D) chronic adjustment disorder;
135 (E) psychosexual disorder;
136 (F) chronic organic brain syndrome
137 (G) personality disorder;
138 (H) specific developmental disorder or learning disability; or
139 (I) mental retardation.
140 (b) "Term or condition" means any lifetime limit, annual payment limit, episodic limit,
141 inpatient or outpatient service limit, and maximum out-of-pocket limit.
142 (ii) "Term or condition" does not include any deductible, copayment, or coinsurance prior
143 to reaching any maximum out-of-pocket limit.
144 (iii) Out-of-pocket expenses for mental health conditions and physical health conditions
145 shall apply equally to any maximum out-of-pocket limit within a policy or contract.
146 (2) (a) At the time of purchase and renewal, an insurer shall offer to provide mental health
147 coverage to each individual or group that it insurers or seeks to insurer, which, at a minimum, shall
148 comply with Subsection (3).
149 (b) Individuals and groups may accept or reject an insurer's offer of mental health coverage

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

181 coverage in a manner that is inconsistent with the provisions of this section.
182 (6) The commissioner shall adopt rules as necessary to ensure compliance with this
183 section.
184 (7) The Health and Human Services Interim Committee shall review:
185 (a) the impact of this section on insurers, employers, providers, and consumers of mental
186 health services before January 1, 2004; and
187 (b) make a recommendation as to whether the cost-sharing requirements for mental health
188 conditions should be the same as for physical health conditions.
189 (8) Nothing in this section may be construed as restricting the ability of an insurer to offer
190 mental health coverage that exceeds the requirements of this section.
191 (9) This section shall be repealed in accordance with Section 63-55-231 .
192 Section 4. Section 49-8-401 is amended to read:
193 49-8-401. Group insurance division -- Powers and duties.
194 (1) The group insurance division of the retirement office shall:
195 (a) act as a self-insurer of employee group benefit plans and administer those plans;
196 (b) enter into contracts with private insurers to underwrite employee group benefit plans
197 and to reinsure any appropriate self-insured plans;
198 (c) publish and disseminate descriptions of all employee benefit plans under this chapter
199 in cooperation with the Department of Human Resource Management and political subdivisions;
200 (d) administer the process of claims administration of all employee benefit plans under this
201 chapter or enter into contracts, after competitive bids are taken, with other benefit administrators
202 to provide for the administration of the claims process;
203 (e) obtain an annual actuarial evaluation of all self-insured benefit plans and prepare an
204 annual report for the governor and the Legislature describing the employee benefit plans being
205 administered by the retirement office detailing historical and projected program costs and the status
206 of reserve funds;
207 (f) consult with the Department of Human Resource Management and the executive bodies
208 of other political subdivisions to evaluate employee benefit plans and develop recommendations
209 for new or improved benefit plans;
210 (g) submit annually a budget which includes total projected benefit and administrative
211 costs;

212 (h) maintain reserves sufficient to liquidate the unrevealed claims liability and other
213 liabilities of the self-funded employee group benefit plans as estimated by the board's consulting
214 actuary;
215 (i) submit its recommended benefit adjustments for state employees upon approval of the
216 board to the director of the Department of Human Resource Management. The Department of
217 Human Resource Management shall include the benefit adjustments in the total compensation plan
218 recommended to the governor required by Subsection 67-19-12 (6)(a);
219 (j) adjust benefits, upon approval of the board, and upon appropriate notice to the state,
220 its educational institutions, and political subdivisions;
221 (k) for the purposes of stimulating competition, establishing better geographical
222 distribution of medical care services, and providing alternative health and dental plan coverage for
223 both active and retired employees, request proposals for alternative health and dental coverage at
224 least once every three years, proposals which meet the criteria specified in the request shall be
225 offered to active and retired state employees and may be offered to active and retired employees
226 of political subdivisions at the option of the political subdivision; [and]
227 (l) offer no less than two health plans to state employees that provide mental health
228 coverage consistent with Section 31A-22-625 ; and
229 [(l)] (m) perform the same functions established in Subsections (1)(a), (b), (d), and (g) for
230 the Department of Health if the group insurance division provides program benefits to children
231 enrolled in the Utah Children's Health Insurance Program created in Title 26, Chapter 40.
232 (2) Funds budgeted and expended shall accrue from premiums paid by the various
233 employers. Administrative costs may not exceed that percentage of premium income which is
234 recommended by the board and approved by the governor and the Legislature.
235 Section 5. Section 63-55-231 is amended to read:
236 63-55-231. Repeal dates, Title 31A.
237 (1) Section 31A-2-208.5 , Comparison tables, is repealed July 1, 2005.
238 (2) Section 31A-22-315 , Motor Vehicle Insurance Reporting, is repealed July 1, 2000.
239 (3) Title 31A, Chapter 31, Insurance Fraud Act, is repealed July 1, 2007.
240 (4) Section 31A-22-625 , Catastrophic Coverage of Mental Health Conditions, is repealed
241 July 1, 2011.