Second Substitute S.B. 34

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Tue, Feb 1, 2005 at 2:23 PM by rday. --> This document includes Senate Committee Amendments incorporated into the bill on Fri, Feb 4, 2005 at 11:51 AM by rday. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Fri, Feb 4, 2005 at 12:00 PM by rday. -->

Senator D. Chris Buttars proposes the following substitute bill:

1 PATIENT ACCESS REFORM
2 2005 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: D. Chris Buttars

5 Parley G. Hellewell 6 Allen M. Christensen 7 Mike Dmitrich 8 Dan R. Eastman 9 Beverly Ann Evans

Thomas V. Hatch Sheldon L. Killpack Peter C. Knudson Mark B. Madsen

Darin G. Peterson Howard A. Stephenson David L. Thomas Michael G. Waddoups

10
11 LONG TITLE
12 General Description:
13 This bill amends provisions related to access to health care providers in the Health
14 Maintenance Organization and Preferred Provider Organization Chapters of the
15 Insurance Code.
16 Highlighted Provisions:
17 This bill:
18 . provides that a health maintenance organization and preferred provider organization
19 must reimburse an insured for services of a health care provider who is not under
20 contract if those services are otherwise covered by the insurance plan;
21 . establishes the reimbursement rate for noncontracted providers which is based on
22 the amount that would be paid to a member of the same class of health care
23 provider;
24 . allows the health maintenance organization or preferred provider organization to
25 impose copayments and deductibles for noncontracted providers;
26 . prohibits the insurer from imposing cost sharing measures greater than those

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- 2 - 27 imposed with participating providers;
28 . requires the insurer to make payment directly to the health care provider for
29 out-patient services;
30 . clarifies the payment responsibilities of the insured;
31 . prohibits a nonparticipating provider who accepts the 95% reimbursement rate from
32 balance billing the insured for additional costs; and
33 . requires that out-of-pocket payments by insureds to noncontracted providers shall
34 apply to any plan deductible or out-of-pocket maximums.
35 Monies Appropriated in this Bill:
36 None
37 Other Special Clauses:
38 None
39 Utah Code Sections Affected:
40 AMENDS:
41 31A-22-617, as last amended by Chapter 131, Laws of Utah 2003
42 ENACTS:
43 31A-8-503, Utah Code Annotated 1953
44
45 Be it enacted by the Legislature of the state of Utah:
46 Section 1. Section 31A-8-503 is enacted to read:
47 31A-8-503. Reimbursement of noncontracted providers.
48 (1) As used in this section, "class of health care providers" means all health care
49 providers licensed, or licensed and certified by the state, within the same professional, trade,
50 occupational, or facility licensure, or licensure and certification category established pursuant
51 to Title 26, Utah Health Code, and Title 58, Occupations and Professions.
52 (2) (a) Subject to Subsections (2)(b) through (2)(d), a health maintenance organization
53 shall pay for the services of providers who are not participating providers with the health
54 maintenance organization, unless the illnesses or injuries treated by the provider are not within
55 the scope of the insured's health maintenance organization's health benefit plan.
56 (b) When the insured receives services from a provider who is not a participating
57 provider for the insured's health maintenance organization benefit plan, the health maintenance

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Senate 2nd Reading Amendments 2-1-2005 rd/cjd 58

organization shall reimburse the insured, in accordance with Subsection (2)(c), in an amount
59 equal to at least 95% of the amount that would be paid by the health maintenance organization
60 to:
61 (i) a participating provider; and
62 (ii) a member of the same class of health care provider.
63 (c) When reimbursing for services of out-patient providers who are not participating
64 providers, the health maintenance organization shall make direct payment to the provider.
65 (d) Notwithstanding Subsection (2)(b), a health maintenance organization may:
66 (i) impose a deductible or copayment on coverage of a medical condition treated by
67 nonparticipating providers if the deductible or copayment is not greater than the deductible or
68 copayment imposed on the same medical condition treated by participating providers for the
69 insured's health benefit plan; and
70 (ii) not impose cost-sharing measures, including copayments, deductibles, and
71 coinsurance, greater than those imposed on the same medical condition treated by participating
72 providers for the insured's health benefit plan.
73 (3) (a) When an insured receives services from a nonparticipating provider who is
74 reimbursed under the provisions of Subsection (2)(b), the insured is responsible for any
75 copayments and deductibles that are imposed by the insurer under Subsection (2)(d).
76 (b) A nonparticipating provider who accepts the 95% reimbursement rate designated in
77 Subsection (2)(b) may not balance bill the insured for any costs above those designated in
78 Subsection (3)(a).
78a S. (4) This section does not apply when an individual's health maintenance organization
78b benefit plan is a medicaid program or the Children's Health Insurance Program under Title
78c 26, Chapter 18, Medical Assistance Act. .S
79 Section 2. Section 31A-22-617 is amended to read:
80 31A-22-617. Preferred provider contract provisions.
81 Health insurance policies may provide for insureds to receive services or
82 reimbursement under the policies in accordance with preferred health care provider contracts as
83 follows:
84 (1) Subject to restrictions under this section, any insurer or third party administrator
85 may enter into contracts with health care providers as defined in Section 78-14-3 under which
86 the health care providers agree to supply services, at prices specified in the contracts, to

87 persons insured by an insurer.
88 (a) A health care provider contract may require the health care provider to accept the

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- 4 - 89 specified payment as payment in full, relinquishing the right to collect additional amounts from
90 the insured person.
91 (b) The insurance contract may reward the insured for selection of preferred health care
92 providers by:
93 (i) reducing premium rates;
94 (ii) reducing deductibles;
95 (iii) coinsurance;
96 (iv) other copayments; or
97 (v) any other reasonable manner.
98 (c) If the insurer is a managed care organization, as defined in Subsection
99 31A-27-311.5 (1)(f):
100 (i) the insurance contract and the health care provider contract shall provide that in the
101 event the managed care organization becomes insolvent, the rehabilitator or liquidator may:
102 (A) require the health care provider to continue to provide health care services under
103 the contract until the earlier of:
104 (I) 90 days after the date of the filing of a petition for rehabilitation or the petition for
105 liquidation; or
106 (II) the date the term of the contract ends; and
107 (B) subject to Subsection (1)(c)(v), reduce the fees the provider is otherwise entitled to
108 receive from the managed care organization during the time period described in Subsection
109 (1)(c)(i)(A);
110 (ii) the provider is required to:
111 (A) accept the reduced payment under Subsection (1)(c)(i)(B) as payment in full; and
112 (B) relinquish the right to collect additional amounts from the insolvent managed care
113 organization's enrollee, as defined in Subsection 31A-27-311.5 (1)(b);
114 (iii) if the contract between the health care provider and the managed care organization
115 has not been reduced to writing, or the contract fails to contain the language required by
116 Subsection (1)(c)(i), the provider may not collect or attempt to collect from the enrollee:
117 (A) sums owed by the insolvent managed care organization; or
118 (B) the amount of the regular fee reduction authorized under Subsection (1)(c)(i)(B);
119 (iv) the following may not bill or maintain any action at law against an enrollee to

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- 5 - 120 collect sums owed by the insolvent managed care organization or the amount of the regular fee
121 reduction authorized under Subsection (1)(c)(i)(B):
122 (A) a provider;
123 (B) an agent;
124 (C) a trustee; or
125 (D) an assignee of a person described in Subsections (1)(c)(iv)(A) through (C); and
126 (v) notwithstanding Subsection (1)(c)(i):
127 (A) a rehabilitator or liquidator may not reduce a fee by less than 75% of the provider's
128 regular fee set forth in the contract; and
129 (B) the enrollee shall continue to pay the copayments, deductibles, and other payments
130 for services received from the provider that the enrollee was required to pay before the filing
131 of:
132 (I) a petition for rehabilitation; or
133 (II) a petition for liquidation.
134 (2) (a) Subject to Subsections (2)(b) through (2)[(f)](g), an insurer, including a health
135 maintenance organization governed by Chapter 8, Health Maintenance Organizations and
136 Limited Health Plans, using preferred or participating health care provider contracts shall pay
137 for the services of health care providers not under the contract, unless the illnesses or injuries
138 treated by the health care provider are not within the scope of the insurance contract. As used
139 in this section, "class of health care providers" means all health care providers licensed or
140 licensed and certified by the state within the same professional, trade, occupational, or facility
141 licensure or licensure and certification category established pursuant to Titles 26, Utah Health
142 Code and 58, Occupations and Professions.
143 (b) When the insured receives services from a health care provider not under contract,
144 the insurer shall reimburse the insured for at least [75%] 95% of the average amount paid by
145 the insurer for comparable services of preferred health care providers who are members of the
146 same class of health care providers. The commissioner may adopt a rule dealing with the
147 determination of what constitutes [75%] 95% of the average amount paid by the insurer for
148 comparable services of preferred health care providers who are members of the same class of
149 health care providers.
150 (c) When reimbursing for services of outpatient health care providers not under

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- 6 - 151 contract, the insurer [may] shall make direct payment to the [insured] provider.
152 (d) (i) Notwithstanding Subsection (2)(b), an insurer using preferred or participating
153 health care provider contracts may impose a deductible and copayments on coverage of a
154 medical condition treated by health care providers not under contract with the insurer, if the
155 deductible, copayment, or coinsurance is not greater than the deductible, copayment, or
156 coinsurance imposed on the same medical condition treated by health care providers who are
157 under contract with the insurer.
158 (ii) Out-of-pocket payments by insureds to health care providers not under contract
159 shall apply toward deductibles and out-of-pocket maximums in the same way and to the same
160 extent as payments to preferred or participating providers.
161 (e) When selecting health care providers with whom to contract under Subsection (1),
162 an insurer may not unfairly discriminate between classes of health care providers, but may
163 discriminate within a class of health care providers, subject to Subsection (7).
164 (f) For purposes of this section, unfair discrimination between classes of health care
165 providers shall include:
166 (i) refusal to contract with class members in reasonable proportion to the number of
167 insureds covered by the insurer and the expected demand for services from class members; and
168 (ii) refusal to cover procedures for one class of providers that are:
169 (A) commonly utilized by members of the class of health care providers for the
170 treatment of illnesses, injuries, or conditions;
171 (B) otherwise covered by the insurer; and
172 (C) within the scope of practice of the class of health care providers.
173 (g) (i) A health care provider not under contract with the insurer, who accepts the 95%
174 reimbursement rate from the insured's health plan may not balance bill the insured for costs
175 above the reimbursement rate.
176 (ii) When an insured receives services from a health care provider not under contract
177 who is reimbursed under the provisions of Subsection (2)(b), the insured is responsible for any
178 copayments or deductibles that are imposed by the insurer under Subsection (2)(d).
179 . (3) Before the insured consents to the insurance contract, the insurer shall fully disclose
180 to the insured that it has entered into preferred health care provider contracts. The insurer shall
181 provide sufficient detail on the preferred health care provider contracts to permit the insured to

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- 7 - 182 agree to the terms of the insurance contract. The insurer shall provide at least the following
183 information:
184 (a) a list of the health care providers under contract and if requested their business
185 locations and specialties;
186 (b) a description of the insured benefits, including any deductibles, coinsurance, or
187 other copayments;
188 (c) a description of the quality assurance program required under Subsection (4); and
189 (d) a description of the adverse benefit determination procedures required under
190 Subsection (5).
191 (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
192 assurance program for assuring that the care provided by the health care providers under
193 contract meets prevailing standards in the state.
194 (b) The commissioner in consultation with the executive director of the Department of
195 Health may designate qualified persons to perform an audit of the quality assurance program.
196 The auditors shall have full access to all records of the organization and its health care
197 providers, including medical records of individual patients.
198 (c) The information contained in the medical records of individual patients shall
199 remain confidential. All information, interviews, reports, statements, memoranda, or other data
200 furnished for purposes of the audit and any findings or conclusions of the auditors are
201 privileged. The information is not subject to discovery, use, or receipt in evidence in any legal
202 proceeding except hearings before the commissioner concerning alleged violations of this
203 section.
204 (5) An insurer using preferred health care provider contracts shall provide a reasonable
205 procedure for resolving complaints and adverse benefit determinations initiated by the insureds
206 and health care providers.
207 (6) An insurer may not contract with a health care provider for treatment of illness or
208 injury unless the health care provider is licensed to perform that treatment.
209 (7) (a) A health care provider or insurer may not discriminate against a preferred health
210 care provider for agreeing to a contract under Subsection (1).
211 (b) Any health care provider licensed to treat any illness or injury within the scope of
212 the health care provider's practice, who is willing and able to meet the terms and conditions

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- 8 - 213 established by the insurer for designation as a preferred health care provider, shall be able to
214 apply for and receive the designation as a preferred health care provider. Contract terms and
215 conditions may include reasonable limitations on the number of designated preferred health
216 care providers based upon substantial objective and economic grounds, or expected use of
217 particular services based upon prior provider-patient profiles.
218 (8) Upon the written request of a provider excluded from a provider contract, the
219 commissioner may hold a hearing to determine if the insurer's exclusion of the provider is
220 based on the criteria set forth in Subsection (7)(b).
221 (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 , and
222 31A-22-618 .
223 (10) Nothing in this section is to be construed as to require an insurer to offer a certain
224 benefit or service as part of a health benefit plan.
225 (11) This section does not apply to catastrophic mental health coverage provided in
226 accordance with Section 31A-22-625 .