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H.B. 140






Sponsor: Chad E. Bennion

             6      This act modifies the Health Code to establish a Health Claims Processing and Health Claims
             7      Auditing Act. The act requires health care service providers to timely respond to a health
             8      claims adjudicator's request for information or face certain penalties. The act establishes
             9      the elements of a claims auditing violation. The act creates a private right of action for
             10      health claims adjudicators to sue service providers for penalties when service providers
             11      violate the response time, or other provisions of the Health Claims Processing and Health
             12      Claims Auditing Act, or if a service provider commits a fraudulent act under the Insurance
             13      Code.
             14      This act affects sections of Utah Code Annotated 1953 as follows:
             15      ENACTS:
             16          26-45-101, Utah Code Annotated 1953
             17          26-45-102, Utah Code Annotated 1953
             18          26-45-103, Utah Code Annotated 1953
             19          26-45-104, Utah Code Annotated 1953
             20          26-45-105, Utah Code Annotated 1953
             21          26-45-106, Utah Code Annotated 1953
             22      Be it enacted by the Legislature of the state of Utah:
             23          Section 1. Section 26-45-101 is enacted to read:


             26          26-45-101. Title.
             27          This chapter is known as the "Health Claims Processing and Health Claims Auditing Act."

             28          Section 2. Section 26-45-102 is enacted to read:
             29          26-45-102. Purpose.
             30          The purpose of this chapter is to:
             31          (1) enable health claims adjudicators to obtain and review information from service
             32      providers related to health care services for which the service providers have requested or received
             33      compensation, payment, or reimbursement; and
             34          (2) provide a private right of action and remedy to health claims adjudicators.
             35          Section 3. Section 26-45-103 is enacted to read:
             36          26-45-103. Definitions.
             37          As used in this chapter:
             38          (1) "COBRA" means the health coverage continuation provisions of the federal
             39      Consolidated Omnibus Budget Reconciliation Act of 1985.
             40          (2) (a) "Conceal" means to take affirmative action to prevent others from discovering
             41      information.
             42          (b) "Conceal" does not include inadvertent failure to disclose.
             43          (3) "Group health plan" means the same as "Group Health Plan" under COBRA.
             44          (4) "Health claims" means an electronic or written request for payment, compensation,
             45      reimbursement, or benefit submitted to a health claims adjudicator for adjudication, review, audit,
             46      or payment of benefits under any group health plan a group or individual, insurance policy, or other
             47      similar arrangement.
             48          (5) "Health claims adjudicator" means any of the entities described in this Subsection (5)
             49      which adjudicate, review, audit, or pay for any health claims:
             50          (a) an insurer described in Subsection 31A-31-102 (3);
             51          (b) a third-party administrator; and
             52          (c) an employee welfare fund or plan, whether or not it is subject to supervision by the
             53      commissioner of insurance under Title 31A, Insurance Code, including a:
             54          (i) self-insured plan;
             55          (ii) reinsured plan;
             56          (iii) medical, dental, optometric, or similar health service plan;
             57          (iv) a plan qualified under the federal Employee Retirement Income Security Act of 1974;
             58      or

             59          (v) other trust.
             60          (6) "Health claims audit" means an investigation conducted by a health claims adjudicator
             61      for the purpose of determining whether there has been any improper, incomplete, or incorrect
             62      billing, coding, or request for compensation, payment, or reimbursement.
             63          (7) "Person" means an individual, firm, company, corporation, association, limited liability
             64      company, partnership, organization, society, business trust, service provider, agency of
             65      government, or any legal entity.
             66          (8) "Service provider" means:
             67          (a) an individual licensed or certified by the state under Title 58, Occupations and
             68      Professions;
             69          (b) an individual similarly licensed in another jurisdiction;
             70          (c) an individual practicing any nonmedical treatment rendered in accordance with a
             71      recognized religious method of healing; and
             72          (d) a hospital, healthcare facility, ambulance service, emergency medical service provider,
             73      or other person whose services are compensated directly or indirectly by a group health plan.
             74          Section 4. Section 26-45-104 is enacted to read:
             75          26-45-104. Request for health claims information -- Notice to service provider.
             76          (1) (a) A health claims adjudicator may send a written request for information to a service
             77      provider for the purpose of processing one or more health claims or for conducting a health claims
             78      audit in accordance with this section.
             79          (b) The request for information must:
             80          (i) identify the information or records sought with reasonable specificity;
             81          (ii) include a release from the subject of the records or his legal representative in
             82      compliance with normal professional practice and medical ethics, which release must be dated
             83      within four years of the request for information; and
             84          (iii) include a statement that the failure of the service provider to respond to the request
             85      of the health claims adjudicator in accordance with this section may result in legal action by the
             86      health claims adjudicator and the imposition of penalties under Section 26-45-106 .
             87          (c) The information or records sought must:
             88          (i) be related to treatment, services, or procedures for which the service provider has
             89      requested or received compensation, payment, or reimbursement from the health claims

             90      adjudicator;
             91          (ii) be related to treatment, services, or procedures which the service provider has
             92      previously provided and which are relevant to a determination of whether the health claims
             93      adjudicator is obligated in its own capacity, or on behalf of a third party, to pay health claims under
             94      a group health plan, a group or individual insurance policy, or a similar arrangement; and
             95          (iii) pertain to treatment or services provided within the four years preceding the date of
             96      the request for information.
             97          (2) A service provider who receives a written request for information in compliance with
             98      this section must, within 20 days of receipt of the request, provide the health claims adjudicator
             99      with the requested information that is in the possession of the service provider, unless the service
             100      provider has requested and received the consent of the health claims adjudicator to extend the
             101      20-day period.
             102          (3) A provider who fails to comply with this section is subject to the penalties and
             103      damages under Section 26-45-106 .
             104          Section 5. Section 26-45-105 is enacted to read:
             105          26-45-105. Health claims violations.
             106          It is a violation of this chapter and is subject to sanctions under Section 26-45-106 , if the
             107      service provider:
             108          (1) commits a fraudulent insurance act within the meaning of Subsection 31A-31-103 (2);
             109          (2) does not comply with the request for information requirements of Section 26-45-104 ;
             110          (3) misrepresents or conceals a material fact concerning any of the following:
             111          (a) a claim for payment or benefit pursuant to any group health plan;
             112          (b) payments made in accordance with the terms of any insurance policy; or
             113          (c) a treatment code, office visit code, Current Procedural Terminology Code, or other
             114      similar code; or
             115          (4) when submitting a claim to a health claims adjudicator knowingly with the intent to
             116      deceive or defraud:
             117          (a) withholds information material to the payment of the claim; or
             118          (b) provides false or misleading information.
             119          Section 6. Section 26-45-106 is enacted to read:
             120          26-45-106. Remedies and enforcement.

             121          (1) If a service provider commits a violation under Section 26-45-105 , a health claims
             122      adjudicator has a private right of action and remedy against the service provider. The private right
             123      of action and remedy includes the right of the health claims adjudicator to pursue an action in court
             124      to:
             125          (a) enforce provisions of this chapter;
             126          (b) recover the penalties described in Subsection (2);
             127          (c) obtain preliminary and other equitable or declaratory relief; and
             128          (d) recover an award of attorney's fees and litigation costs reasonably incurred by the
             129      health claims adjudicator in pursuing the private right of action.
             130          (2) (a) A service provider who commits a health claim violation under Section 26-45-105
             131      shall pay to the health claims adjudicator the following penalties:
             132          (i) for the first violation within a 90-day period for the same or a different health claim,
             133      a penalty equal to the greater of $100 or 1/3 of the amount of the health claim;
             134          (ii) for the second violation within a 90-day period for the same or a different health claim,
             135      a penalty equal to the greater of $500 or 2/3 of the amount of the health claim; and
             136          (iii) for the third violation within a 90-day period for the same or a different health claim,
             137      a penalty equal to the greater of $1,000 or 100% of the amount of the health claim.
             138          (b) If the service provider does not pay the penalties imposed under this Subsection (2)(a)
             139      to the health claims adjudicator within 20 days of written demand by the health claims adjudicator,
             140      the health claims adjudicator may offset the penalties against any current and future payments
             141      otherwise due from the health claims adjudicator to the service provider on other health claims.
             142      If no payments are currently due from the health claim adjudicator to the service provider on other
             143      health claims, the health claims adjudicator may pursue a private action against the service
             144      provider in accordance with Subsection (1).
             145          (c) A penalty imposed under this Subsection (2):
             146          (i) must be separately identified on the documentation used by the health claims
             147      adjudicator to pay or adjust a health claim; and
             148          (ii) shall be automatically assessed without further action or notice by the health claims
             149      adjudicator.
             150          (d) Any penalty or award of costs and fees imposed under this section may not be billed
             151      or charged by the service provider to the patient or the person covered by a group health plan,

             152      insurance policy, or similar arrangement.

Legislative Review Note
    as of 2-1-01 12:54 PM

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

Office of Legislative Research and General Counsel

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