Second Substitute S.B. 216

Senator Parley G. Hellewell proposes the following substitute bill:

1 HEALTH PROVIDER REIMBURSEMENT
2 AMENDMENTS
3 2004 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Parley G. Hellewell
6
7 LONG TITLE
8 General Description:
9 This bill amends provisions related to access to health care providers.
10 Highlighted Provisions:
11 This bill:
12 . provides that a health maintenance organization and preferred provider organization
13 must reimburse an insured for services of noncontracted health care providers if
14 those services are otherwise covered by the insurance plan;
15 . establishes a phased in reimbursement rate for noncontracted providers;
16 . allows the insurer to impose a deductible for noncontracted providers; and
17 . requires that noncontracted health care providers give written notice to the insured if
18 the provider will charge more than the reimbursement rate.
19 Monies Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 31A-22-617, as last amended by Chapter 131, Laws of Utah 2003

26 ENACTS:
27 31A-8-502, Utah Code Annotated 1953
28
29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 31A-8-502 is enacted to read:
31 31A-8-502. Reimbursement of noncontracted providers.
32 (1) As used in this section, "class of health care providers" means all health care
33 providers licensed, or licensed and certified by the state, within the same professional, trade,
34 occupational, or facility licensure, or licensure and certification category established pursuant
35 to Titles 26, Utah Health Code and 58, Occupations and Professions.
36 (2) (a) Subject to Subsections (2)(b) through (2)(d), a health maintenance organization
37 shall pay for the services of health care providers not under contract with the health
38 maintenance organization, unless the illnesses or injuries treated by the health care provider are
39 not within the scope of the health maintenance organization's health benefit plan.
40 (b) (i) When the insured receives services from a health care provider not under
41 contract, the health maintenance organization shall reimburse the insured the percentage
42 designated in Subsection (2)(b)(ii) of the average amount paid by the health maintenance
43 organization for comparable services of health care providers who are:
44 (A) under contract with the health maintenance organization; and
45 (B) members of the same class of health care providers.
46 (ii) The percentage of reimbursement required under Subsection (2)(b)(i) is:
47 (A) beginning July 1, 2004, at least 85%; and
48 (B) beginning July 1, 2005, at least 95%.
49 (iii) The commissioner may adopt a rule dealing with the determination of what
50 constitutes the percentage of the average amount paid by the health maintenance organization
51 for comparable services of health care providers who are members of the same class of health
52 care providers.
53 (c) When reimbursing for services of outpatient health care providers not under
54 contract, the health maintenance organization shall make direct payment to the health care
55 provider.
56 (d) Notwithstanding Subsection (2)(b), a health maintenance organization may impose

57 a deductible on coverage of a medical condition treated by health care providers not under
58 contract with the health maintenance organization if the deductible is not greater than the
59 deductible imposed on the same medical condition treated by health care providers who are
60 under contract with the health maintenance organization.
61 (3) Any health care provider not under contract with the health maintenance
62 organization, who accepts the reimbursement rate from the insured's health maintenance
63 organization may charge the insured for costs above the reimbursement rate only if the health
64 care provider gives written notice to the insured prior to rendering services.
65 Section 2. Section 31A-22-617 is amended to read:
66 31A-22-617. Preferred provider contract provisions.
67 Health insurance policies may provide for insureds to receive services or
68 reimbursement under the policies in accordance with preferred health care provider contracts as
69 follows:
70 (1) Subject to restrictions under this section, any insurer or third party administrator
71 may enter into contracts with health care providers as defined in Section 78-14-3 under which
72 the health care providers agree to supply services, at prices specified in the contracts, to
73 persons insured by an insurer.
74 (a) A health care provider contract may require the health care provider to accept the
75 specified payment as payment in full, relinquishing the right to collect additional amounts from
76 the insured person.
77 (b) The insurance contract may reward the insured for selection of preferred health care
78 providers by:
79 (i) reducing premium rates;
80 (ii) reducing deductibles;
81 (iii) coinsurance;
82 (iv) other copayments; or
83 (v) any other reasonable manner.
84 (c) If the insurer is a managed care organization, as defined in Subsection
85 31A-27-311.5 (1)(f):
86 (i) the insurance contract and the health care provider contract shall provide that in the
87 event the managed care organization becomes insolvent, the rehabilitator or liquidator may:

88 (A) require the health care provider to continue to provide health care services under
89 the contract until the earlier of:
90 (I) 90 days after the date of the filing of a petition for rehabilitation or the petition for
91 liquidation; or
92 (II) the date the term of the contract ends; and
93 (B) subject to Subsection (1)(c)(v), reduce the fees the provider is otherwise entitled to
94 receive from the managed care organization during the time period described in Subsection
95 (1)(c)(i)(A);
96 (ii) the provider is required to:
97 (A) accept the reduced payment under Subsection (1)(c)(i)(B) as payment in full; and
98 (B) relinquish the right to collect additional amounts from the insolvent managed care
99 organization's enrollee, as defined in Subsection 31A-27-311.5 (1)(b);
100 (iii) if the contract between the health care provider and the managed care organization
101 has not been reduced to writing, or the contract fails to contain the language required by
102 Subsection (1)(c)(i), the provider may not collect or attempt to collect from the enrollee:
103 (A) sums owed by the insolvent managed care organization; or
104 (B) the amount of the regular fee reduction authorized under Subsection (1)(c)(i)(B);
105 (iv) the following may not bill or maintain any action at law against an enrollee to
106 collect sums owed by the insolvent managed care organization or the amount of the regular fee
107 reduction authorized under Subsection (1)(c)(i)(B):
108 (A) a provider;
109 (B) an agent;
110 (C) a trustee; or
111 (D) an assignee of a person described in Subsections (1)(c)(iv)(A) through (C); and
112 (v) notwithstanding Subsection (1)(c)(i):
113 (A) a rehabilitator or liquidator may not reduce a fee by less than 75% of the provider's
114 regular fee set forth in the contract; and
115 (B) the enrollee shall continue to pay the copayments, deductibles, and other payments
116 for services received from the provider that the enrollee was required to pay before the filing
117 of:
118 (I) a petition for rehabilitation; or

119 (II) a petition for liquidation.
120 (2) (a) Subject to Subsections (2)(b) through (2)[(f)] (h), an insurer using preferred
121 health care provider contracts shall pay for the services of health care providers not under the
122 contract, unless the illnesses or injuries treated by the health care provider are not within the
123 scope of the insurance contract. As used in this section, "class of health care providers" means
124 all health care providers licensed or licensed and certified by the state within the same
125 professional, trade, occupational, or facility licensure or licensure and certification category
126 established pursuant to Titles 26, Utah Health Code and 58, Occupations and Professions.
127 (b) When the insured receives services from a health care provider not under contract,
128 the insurer shall reimburse the insured for [at least 75%] the percentage designated in
129 Subsection (2)(g) of the average amount paid by the insurer for comparable services of
130 preferred health care providers who are members of the same class of health care providers.
131 The commissioner may adopt a rule dealing with the determination of what constitutes [75%]
132 the percentage of the average amount paid by the insurer for comparable services of preferred
133 health care providers who are members of the same class of health care providers.
134 (c) When reimbursing for services of outpatient health care providers not under
135 contract, the insurer [may] shall make direct payment to the [insured] provider.
136 (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
137 contracts may impose a deductible on coverage of a medical condition treated by health care
138 providers not under contract with the insurer, if the deductible is not greater than the deductible
139 imposed on the same medical condition treated by health care providers who are under contract
140 with the insurer.
141 (e) When selecting health care providers with whom to contract under Subsection (1),
142 an insurer may not unfairly discriminate between classes of health care providers, but may
143 discriminate within a class of health care providers, subject to Subsection (7).
144 (f) For purposes of this section, unfair discrimination between classes of health care
145 providers shall include:
146 (i) refusal to contract with class members in reasonable proportion to the number of
147 insureds covered by the insurer and the expected demand for services from class members; and
148 (ii) refusal to cover procedures for one class of providers that are:
149 (A) commonly utilized by members of the class of health care providers for the

150 treatment of illnesses, injuries, or conditions;
151 (B) otherwise covered by the insurer; and
152 (C) within the scope of practice of the class of health care providers.
153 (g) The percentage of reimbursement required by Subsection (2)(b) is:
154 (i) at least 75% until July 1, 2004;
155 (ii) beginning July 1, 2004, at least 85%; and
156 (iii) beginning July 1, 2005, at least 95%.
157 (h) Any health care provider not under contract with the insurer, who accepts the
158 reimbursement rate from the insured's health plan may charge the insured for costs above the
159 reimbursement rate only if the health care provider gives written notice to the insured prior to
160 rendering services.
161 (3) Before the insured consents to the insurance contract, the insurer shall fully disclose
162 to the insured that it has entered into preferred health care provider contracts. The insurer shall
163 provide sufficient detail on the preferred health care provider contracts to permit the insured to
164 agree to the terms of the insurance contract. The insurer shall provide at least the following
165 information:
166 (a) a list of the health care providers under contract and if requested their business
167 locations and specialties;
168 (b) a description of the insured benefits, including any deductibles, coinsurance, or
169 other copayments;
170 (c) a description of the quality assurance program required under Subsection (4); and
171 (d) a description of the adverse benefit determination procedures required under
172 Subsection (5).
173 (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
174 assurance program for assuring that the care provided by the health care providers under
175 contract meets prevailing standards in the state.
176 (b) The commissioner in consultation with the executive director of the Department of
177 Health may designate qualified persons to perform an audit of the quality assurance program.
178 The auditors shall have full access to all records of the organization and its health care
179 providers, including medical records of individual patients.
180 (c) The information contained in the medical records of individual patients shall

181 remain confidential. All information, interviews, reports, statements, memoranda, or other data
182 furnished for purposes of the audit and any findings or conclusions of the auditors are
183 privileged. The information is not subject to discovery, use, or receipt in evidence in any legal
184 proceeding except hearings before the commissioner concerning alleged violations of this
185 section.
186 (5) An insurer using preferred health care provider contracts shall provide a reasonable
187 procedure for resolving complaints and adverse benefit determinations initiated by the insureds
188 and health care providers.
189 (6) An insurer may not contract with a health care provider for treatment of illness or
190 injury unless the health care provider is licensed to perform that treatment.
191 (7) (a) A health care provider or insurer may not discriminate against a preferred health
192 care provider for agreeing to a contract under Subsection (1).
193 (b) Any health care provider licensed to treat any illness or injury within the scope of
194 the health care provider's practice, who is willing and able to meet the terms and conditions
195 established by the insurer for designation as a preferred health care provider, shall be able to
196 apply for and receive the designation as a preferred health care provider. Contract terms and
197 conditions may include reasonable limitations on the number of designated preferred health
198 care providers based upon substantial objective and economic grounds, or expected use of
199 particular services based upon prior provider-patient profiles.
200 (8) Upon the written request of a provider excluded from a provider contract, the
201 commissioner may hold a hearing to determine if the insurer's exclusion of the provider is
202 based on the criteria set forth in Subsection (7)(b).
203 (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 , and
204 31A-22-618 .
205 (10) Nothing in this section is to be construed as to require an insurer to offer a certain
206 benefit or service as part of a health benefit plan.
207 (11) This section does not apply to catastrophic mental health coverage provided in
208 accordance with Section 31A-22-625 .