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S.B. 69

             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. The act defines an unfair claim settlement practice. The act authorizes the
             9      Insurance Commissioner to audit compliance, impose sanctions, and adopt rules necessary
             10      to enforce the act.
             11      This act affects sections of Utah Code Annotated 1953 as follows:
             12      ENACTS:
             13          31A-26-301.6, Utah Code Annotated 1953
             14      Be it enacted by the Legislature of the state of Utah:
             15          Section 1. Section 31A-26-301.6 is enacted to read:
             16          31A-26-301.6. Health care provider claims practices.
             17          (1) As used in this section:
             18          (a) "Articulable reason" may include a determination regarding:
             19          (i) eligibility for coverage;
             20          (ii) preexisting conditions;
             21          (iii) applicability of other public or private insurance; and
             22          (iv) any other reason that would justify an extension of the time to investigate a claim.
             23          (b) "Insurer" is as defined in Section 31A-1-301 and includes:
             24          (i) a health maintenance organization; and
             25          (ii) a third-party administrator that offers, sells, manages, or administers a health insurance
             26      policy or health maintenance organization contract that is subject to this title.
             27          (c) "Medical treatment protocol" means a preferred, standardized course of medical


             28      treatment for a particular health condition, and does not include utilization review or
             29      preauthorization requirements.
             30          (d) "Provider" means a health care provider to whom an insurer is obligated to pay directly
             31      in connection with a claim by virtue of:
             32          (i) an agreement between the insurer and the provider;
             33          (ii) a health insurance policy or contract of the insurer; or
             34          (iii) state or federal law.
             35          (2) An insurer shall timely pay every valid insurance claim submitted by a provider in
             36      accordance with this section.
             37          (3) (a) Within 30 days of receiving a written claim, an insurer shall:
             38          (i) pay all sums to the provider that the insurer is obligated to pay on a claim that is not
             39      subject to:
             40          (A) a request for information under Subsection (3)(a) (iii); or
             41          (B) an investigation that cannot be reasonably completed within 30 days under Subsection
             42      (4);
             43          (ii) provide a complete explanation in writing of any part of the claim that is denied;
             44          (iii) specifically describe and request any additional information from the provider that is
             45      necessary to process some part or all of the claim that is unpaid; and
             46          (iv) investigate the claim if the insurer has a good faith and articulable reason to believe
             47      that the insurer is not obligated to pay some part or all of the claim.
             48          (b) A provider shall respond to each request by an insurer for additional necessary
             49      information made under Subsection (3)(a)(iii) within 30 days of receipt of the request by providing
             50      the requested information that is in the possession of the provider, unless the provider has
             51      requested and received the permission of the insurer to extend the 30-day period.
             52          (4) Notwithstanding Subsection (3)(a)(iv), the time to investigate a claim may be extended
             53      by the insurer for an additional 30 days if:
             54          (a) the investigation cannot reasonably be completed within 30 days; and
             55          (b) before the end of the 30-day period in Subsection (3)(a)(iv), the insurer informs the
             56      provider in writing of the reason for the payment delay, the nature of the investigation, the
             57      timelines for investigations established in this section, and the anticipated completion date.
             58          (5) Notwithstanding Subsections (3)(a)(iv) and (4), the time to investigate a claim may be


             59      extended beyond the initial 30-day period and the extended 30-day period if:
             60          (a) due to matters beyond the control of the insurer, the investigation cannot reasonably
             61      be completed within 60 days;
             62          (b) before the end of the combined 60-day period, the insurer makes a written request to
             63      the commissioner for an extension, including the reason for the delay, the nature of the
             64      investigation, and the anticipated completion date; and
             65          (c) before the end of the combined 60-day period, the commissioner informs the insurer
             66      that the request for an extension has been granted, based on a finding that:
             67          (i) there is a good faith and articulable reason to believe that the insurer is not obligated
             68      to pay some part or all of the claim; and
             69          (ii) the investigation cannot reasonably be completed within 60 days.
             70          (6) An extension granted by the commissioner under Subsection (5)(c) shall include the
             71      completion date for the investigation.
             72          (7) Within 15 days of receiving the information requested under Subsection (3)(a)(ii) or
             73      within 15 days of completing an investigation under Subsection (4) or (5), an insurer shall:
             74          (a) pay all sums to the provider that the insurer is obligated to pay on the claim; and
             75          (b) provide a complete explanation in writing of any part of the claim that is denied.
             76          (8) (a) Whenever an insurer makes a payment to a provider on any part of a claim under
             77      this section, the insurer shall also send to the insured an explanation of benefits paid.
             78          (b) Whenever an insurer denies any part of a claim under this section, the insurer shall also
             79      send to the insured a complete explanation in writing of the part of the claim that was denied and
             80      notice of the grievance review process established under Section 31A-22-629 .
             81          (9) (a) A late fee shall be imposed on:
             82          (i) an insurer that fails to timely pay a claim in accordance with this section; and
             83          (ii) a provider that fails to timely provide information on a claim in accordance with this
             84      section.
             85          (b) For the first 90 days that a claim or a response to a request for information is
             86      delinquent, the late fee shall be determined by multiplying together:
             87          (i) the total amount of the claim;
             88          (ii) the total number of days the claim was delinquent; and
             89          (iii) .1%.


             90          (c) For a claim that is delinquent for 91 or more days, the late fee shall be determined by
             91      adding together:
             92          (i) the late fee for a 90-day delinquency under Subsection (9)(b); and
             93          (ii) the following sum multiplied together:
             94          (A) the total amount of the claim;
             95          (B) the total number of days the claim was delinquent beyond 90 days; and
             96          (C) the rate of interest set in accordance with Section 15-1-1 .
             97          (d) Any late fee paid or collected under this section shall be separately identified on the
             98      documentation used by the insurer to pay the claim.
             99          (10) No insurer or person representing an insurer may engage in any unfair claim
             100      settlement practice with respect to a provider. Unfair claim settlement practices include:
             101          (a) knowingly misrepresenting a material fact or the contents of an insurance policy or
             102      provider contract in connection with a claim;
             103          (b) failing to acknowledge and substantively respond within 15 days to any written
             104      communication from a provider relating to a pending claim;
             105          (c) denying or threatening to deny the payment of a claim for any reason that is not clearly
             106      described in the insured's policy or the provider agreement;
             107          (d) rescinding, cancelling, or threatening to rescind or cancel a provider agreement for any
             108      reason that is not clearly described as a ground for denial, cancellation, or rescission in the
             109      agreement;
             110          (e) failing to maintain a payment process sufficient to comply with this section;
             111          (f) failing to maintain claims documentation sufficient to demonstrate compliance with
             112      this section;
             113          (g) requesting additional information from a provider that:
             114          (i) is not necessary to process a claim; and
             115          (ii) is intended to materially delay payment of the claim; or
             116          (iii) has the effect of imposing an unreasonable and unjustifiable burden on the provider;
             117          (h) failing to disclose in a provider contract the specific rate and terms under which the
             118      provider will be paid for health care services;
             119          (i) failing to timely pay a valid claim in accordance with this section as a means of
             120      influencing, intimidating, retaliating, or gaining an advantage over the provider with respect to an


             121      unrelated claim or some other aspect of the contractual relationship;
             122          (j) connecting provider claims reimbursement to compliance with medical treatment
             123      protocols or the performance or utilization patterns of noneconomically integrated providers;
             124          (k) conditioning the payment of an undisputed part of a claim on the provider's acceptance
             125      to forgo payment on all or part of the disputed part of a claim;
             126          (l) failing to pay the sum when required and as required under Subsection (9) when a
             127      violation has occurred;
             128          (m) threatening to retaliate or actual retaliation against a provider for availing himself of
             129      the provisions of this section;
             130          (n) any material violation of this section; and
             131          (o) any other unfair claim settlement practice established in rule or otherwise recognized
             132      by a court or administrative body.
             133          (11) (a) Pursuant to Chapter 2, Part 2, Duties and Powers of Commissioner and within
             134      existing legislative appropriations, the commissioner may conduct examinations to determine an
             135      insurer's level of compliance with this section and impose sanctions for each violation.
             136          (b) The commissioner may adopt rules as necessary to implement this section, which may
             137      include any one or more of the following:
             138          (i) confirmations between insurers and providers when electronic claims-related
             139      information has been received; and
             140          (ii) an independent review process for resolving payment-related disputes between insurers
             141      and providers.
             142          (12) Nothing in this section may be construed as limiting the collection rights of a provider
             143      under Section 31A-26-301.5 .
             144          (13) Nothing in this section may be construed as limiting the ability of an insurer to:
             145          (a) recover within 12 months any amount improperly paid to a provider pursuant to Section
             146      31A-31-103 or any other provision of state or federal law;
             147          (b) consistent with due process requirements for notice and an opportunity to be heard,
             148      take any action against a provider that is permitted under the terms of the provider contract for
             149      violations of the contract;
             150          (c) report the provider to a state or federal agency with regulatory authority over the
             151      provider for unprofessional, unlawful, or fraudulent conduct; or


             152          (d) enter into a mutual agreement with a provider to resolve alleged violations of this
             153      section through mediation or binding arbitration.
             154          (14) (a) The provisions of this section shall be included in each contract between an insurer
             155      and a contracting provider and shall remain in full force and effect for the duration of the contract.
             156          (b) Nothing in Subsection (14)(a) may be construed as limiting an insurer and a provider
             157      from including provisions in their contract that exceed the provisions of this section.




Legislative Review Note
    as of 1-9-01 1:32 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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