Referred to Committee on Health and Human Services
SUMMARY--Makes various changes concerning certain entities that provide health care services through managed care. (BDR 57-393)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: Yes.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to health care; requiring certain entities that provide health care services through managed care to follow certain procedures before denying health care services to an insured; prohibiting such entities from engaging in certain practices that restrict the actions of a provider of health care; requiring such entities to provide coverage for medically necessary emergency services without requiring an insured to obtain any prior authorization for such services; requiring such entities to file a report containing certain information with the commissioner of insurance; requiring all insurers of health care and managed care organizations to establish a system for resolving complaints of insureds; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1 Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 2 to 27, inclusive, of this act.
Sec. 2 As used in this chapter, unless the context otherwise requires, the words and terms defined in sections 3 to 9, inclusive, of this act have the meanings ascribed to them in those sections.
Sec. 3. "Health care plan" means a policy, contract, certificate or agreement offered or issued by a managed care organization to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services.
Sec. 4. "Insured" means a person who receives benefits under a health care plan.
Sec. 5. "Managed care" means a system for delivering health care services that encourages the efficient use of health care services by using employed or independently contracted providers of health care and by using various techniques which may include, without limitation:
1. Managing the health care services of an insured who has a serious, complicated, protracted or other health-related condition that requires the use of numerous providers of health care or other costly services;
2. Providing utilization review;
3. Offering financial incentives for the effective use of health care services; or
4. Any combination of those techniques.
Sec. 6. "Managed care organization" means any insurer or organization authorized pursuant to this Title to conduct business in this state that provides or arranges for the provision of health care services through managed care.
Sec. 7. "Primary care physician" means a physician or group of physicians who:
1. Provides initial and primary health care services to an insured;
2. Maintains the continuity of care for the insured; and
3. May refer the insured to a specialized provider of health care.
Sec. 8. "Provider of health care" means any physician, hospital or other person who is licensed or otherwise authorized in this state to furnish any health care service.
Sec. 9. "Utilization review" means the various methods that may be used by a managed care organization to review the amount and appropriateness of the provision of a specific health care service to an insured.
Sec. 10. 1. The provisions of this chapter apply to each organization and insurer that operates as a managed care organization and may include, without limitation, an insurer that issues a policy of health insurance, an insurer that issues a policy of individual or group health insurance, a carrier serving small employers, a fraternal benefit society, a hospital or medical service corporation and a health maintenance organization.
2. In addition to the provisions of this chapter, each managed care organization shall comply with any other applicable provision of this Title.
Sec. 11. Each managed care organization shall authorize coverage of a health care service that has been recommended for the insured by a provider of health care acting within the scope of his practice if that service is covered by the health care plan of the insured, unless:
1. The decision not to authorize coverage is made by a physician who:
(a) Is licensed to practice medicine in the State of Nevada pursuant to chapter 630 of NRS;
(b) Possesses the education, training and expertise to evaluate the medical condition of the insured; and
(c) Has reviewed the available medical documentation, notes of the attending physician, test results and other relevant medical records of the insured.
The physician may consult with other providers of health care in determining whether to authorize coverage.
2. The decision not to authorize coverage and the reason for the decision have been transmitted in writing in a timely manner to the insured, the provider of health care who recommended the service and the primary care physician of the insured, if any.
Sec. 12. 1. Each managed care organization shall establish written criteria:
(a) Setting forth the manner in which it determines whether to authorize coverage of a health care service; and
(b) Setting forth its method for reviewing standards for the quality of health care services provided to an insured.
2. Such written criteria must be:
(a) Developed with the assistance of practicing providers of health care;
(b) Developed using generally recognized and, if appropriate, specialized clinical principles and processes;
(c) Reviewed at least one time each year and, if appropriate, updated; and
(d) Made available to an insured for review upon request of the insured any time that the managed care organization denies coverage of a specific health care service to the insured.
Sec. 13. Each managed care organization shall:
1. Develop and maintain written policies and procedures setting forth the manner in which it conducts utilization review; and
2. Require any person with whom it subcontracts to provide utilization review to use the same policies and procedures developed pursuant to subsection 1.
Sec. 14. 1. Each managed care organization shall establish a quality assurance program designed to direct, evaluate and monitor the effectiveness of health care services provided to its insureds. The program must include, without limitation:
(a) A method for analyzing the outcomes of health care services;
(b) Peer review;
(c) A system to collect and maintain information related to the health care services provided to insureds;
(d) Recommendations for remedial action; and
(e) Written guidelines that set forth the procedures for remedial action when problems related to quality of care are identified.
2. Each managed care organization shall:
(a) Maintain a written description of the quality assurance program established pursuant to subsection 1, including, without limitation, the specific actions used by the managed care organization to promote adequate quality of health care services provided to insureds and the persons responsible for such actions;
(b) Provide information to each provider of health care whom it employs or with whom it contracts to provide health care services to insureds regarding the manner in which the quality assurance program functions;
(c) Provide the necessary staff to implement the quality assurance program and to evaluate the effectiveness of the program; and
(d) At least one time each year, review the continuity and effectiveness of the quality assurance program, review any findings of the quality improvement committee established pursuant to section 15 of this act and take any reasonable actions to improve the program.
3. Each managed care organization is responsible for an activity conducted pursuant to its quality assurance program, regardless of whether the managed care organization or another entity performs the activity.
Sec. 15. 1. As part of a quality assurance program established pursuant to section 14 of this act, each managed care organization shall create a quality improvement committee directed by a physician who is licensed to practice medicine in the State of Nevada pursuant to chapter 630 of NRS.
2. Each managed care organization shall:
(a) Establish written guidelines setting forth the procedure for selecting the members of the committee;
(b) Select members pursuant to such guidelines; and
(c) Provide staff to assist the committee.
3. The committee shall:
(a) Select and review appropriate medical records of insureds and other data related to the quality of health care provided to insureds by providers of health care;
(b) Review the clinical processes used by providers of health care in providing services;
(c) Identify any problems related to the quality of health care to insureds; and
(d) Advise providers of health care regarding issues related to quality of care.
Sec. 16. A managed care organization shall not restrict or interfere with any communication between a provider of health care and his patient regarding any information that the provider of health care determines is relevant to the health care of the patient.
Sec. 17. A managed care organization shall not terminate a contract with, demote, refuse to contract with or refuse to compensate a provider of health care solely because the provider, in good faith:
1. Advocates in private or in public on behalf of a patient;
2. Assists a patient in seeking reconsideration of a decision by the managed care organization to deny coverage for a health care service; or
3. Reports a violation of law to an appropriate authority.
Sec. 18. 1. A managed care organization shall not offer or pay any type of material inducement, bonus or other financial incentive to a provider of health care to deny, reduce, withhold, limit or delay specific medically necessary health care services to an insured.
2. Nothing in this section prohibits an arrangement for payment between a managed care organization and a provider of health care that uses capitation or other financial incentives, if the arrangement is designed to provide an incentive to the provider of health care to use health care services effectively and consistently in the best interest of the health care of the insured.
Sec. 19. 1. Each managed care organization shall provide coverage for medically necessary emergency services.
2. A managed care organization shall not require prior authorization for medically necessary emergency services.
3. As used in this section, "medically necessary emergency services" means health care services that are provided to an insured by a provider of health care after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity that a prudent person would believe that the absence of immediate medical attention could result in:
(a) Serious jeopardy to the health of an insured;
(b) Serious jeopardy to the health of an unborn child;
(c) Serious impairment of a bodily function; or
(d) Serious dysfunction of any bodily organ or part.
4. A health care plan subject to the provisions of this section that is delivered, issued for delivery or renewed on or after October 1, 1997, has the legal effect of including the coverage required by this section, and any provision of the plan or the renewal which is in conflict with this section is void.
Sec. 20. Each managed care organization shall employ or contract with a physician who is licensed to practice medicine in the State of Nevada pursuant to chapter 630 of NRS to serve as its medical director.
Sec. 21. 1. In addition to any other report which is required to be filed with the commissioner or the state board of health, each managed care organization shall file with the commissioner and the state board of health, on or before March 1 of each year, a report regarding its methods for reviewing the quality of health care services provided to its insureds.
2. Each managed care organization shall include in its report the criteria, data, benchmarks or studies used to:
(a) Assess the nature, scope, quality and staffing of health care services provided to insureds; or
(b) Determine any reduction or modification of the provision of health care services to insureds.
3. Except as already required to be filed with the commissioner or the state board of health, if the managed care organization is not owned and operated by a public entity and has more than 100 insureds, the report filed pursuant to subsection 1 must include:
(a) A copy of all of its quarterly and annual financial reports;
(b) A statement of any financial interest it has in any other business which is related to health care that is greater than 5 percent of that business or $5,000, whichever is less; and
(c) A description of each complaint filed with or against it that resulted in arbitration, a lawsuit or other legal proceeding, unless disclosure is prohibited by law or a court order.
4. A report filed pursuant to this section must be made available for public inspection within a reasonable time after it is received by the commissioner.
Sec. 22. Any person who receives, collects, disburses or invests money for a managed care organization is responsible for such money in a fiduciary relationship to the insured.
Sec. 23. 1. Each managed care organization shall establish a system for resolving complaints of an insured concerning:
(a) Payment or reimbursement for covered health care services;
(b) Availability, delivery or quality of covered health care services, including, without limitation, an adverse determination made pursuant to utilization review; or
(c) The terms and conditions of a health care plan.
The system must be approved by the commissioner in consultation with the state board of health.
2. If an insured makes an oral complaint, a managed care organization shall inform the insured that if he is not satisfied with the resolution of the complaint, he must file the complaint in writing to receive further review of the complaint.
3. Each managed care organization shall:
(a) Upon request, assign an employee of the managed care organization to assist an insured or other person in filing a complaint or appealing a decision of the review board;
(b) Authorize an insured who appeals a decision of the review board to appear before the review board to present testimony at a hearing concerning the appeal; and
(c) Authorize an insured to introduce any documentation into evidence at a hearing of a review board and require an insured to provide the documentation required by his health care plan to the review board not later than 5 business days before a hearing of the review board.
4. The commissioner or the state board of health may examine the system for resolving complaints established pursuant to this section at such times as either deems necessary or appropriate.
Sec. 24. 1. A system for resolving complaints created pursuant to section 23 of this act must include, without limitation, an initial investigation, a review of the complaint by a review board and a procedure for appealing a determination regarding the complaint. The majority of the members of the review board must be insureds who receive health care services from the managed care organization.
2. Except as otherwise provided in subsection 3, a review board shall complete its review regarding a complaint or appeal and notify the insured of its determination not later than 30 days after the complaint or appeal is filed, unless the insured and the review board have agreed to a longer period of time.
3. If a complaint involves an imminent and serious threat to the health of the insured, the managed care organization shall inform the insured immediately of his right to an expedited review of his complaint. If an expedited review is required, the review board shall notify the insured in writing of its determination within 72 hours after the complaint is filed.
4. Notice provided to an insured by a review board regarding a complaint must include, without limitation, an explanation of any further rights of the insured regarding the complaint that are available under his health care plan.
Sec. 25. 1. Each managed care organization shall submit to the commissioner and the state board of health an annual report regarding its system for resolving complaints established pursuant to section 23 of this act on a form prescribed by the commissioner in consultation with the state board of health which includes, without limitation:
(a) A description of the procedures used for resolving complaints of an insured;
(b) The total number of complaints and appeals handled through the system for resolving complaints since the last report and a compilation of the causes underlying the complaints filed;
(c) The current status of each complaint and appeal filed; and
(d) The average amount of time that was needed to resolve a complaint and an appeal, if any.
2. Each managed care organization shall maintain records of complaints filed with it which concern something other than health care services and shall submit to the commissioner a report summarizing such complaints at such times and in such format as the commissioner may require.
Sec. 26. 1. Following approval by the commissioner, each managed care organization shall provide written notice to an insured, in clear and comprehensible language that is understandable to an ordinary layperson, explaining the right of the insured to file a written complaint and to obtain an expedited review pursuant to section 24 of this act. Such notice must be provided to an insured:
(a) At the time he receives his certificate of coverage or evidence of coverage;
(b) Any time that the managed care organization denies coverage of a health care service or limits coverage of a health care service to an insured; and
(c) Any other time deemed necessary by the commissioner.
2. Any time that a managed care organization denies coverage of a health care service to an insured it shall notify the insured in writing of:
(a) The reason for denying coverage of the service;
(b) The criteria by which the managed care organization or insurer determines whether to authorize or deny coverage of the health care service; and
(c) His right to file a written complaint.
3. A written notice which is approved by the commissioner shall be deemed to be in clear and comprehensible language that is understandable to an ordinary layperson.
Sec. 27. Any document required to be filed with the commissioner pursuant to this chapter, other than medical records and other information relating to a specific insured, must be treated as a public record.
Sec. 28. NRS 687B.225 is hereby amended to read as follows:
687B.2251. [Any] Except as otherwise provided in section 19 of this act, a contract for group, blanket or individual health insurance or any contract by a nonprofit hospital, medical or dental service corporation or organization for dental care which provides for payment of a certain part of medical or dental care may require the insured or member to obtain prior authorization for that care from the insurer or organization. The insurer or organization shall:
(a) File its procedure for obtaining approval of care [under] pursuant to this section for approval by the commissioner; and
(b) Respond to any request for approval by the insured or member [under] pursuant to this section within 20 days after it receives the request.
2. The procedure for prior authorization may not discriminate among persons licensed to provide the covered care.
Sec. 29. Chapter 689A of NRS is hereby amended by adding thereto the provisions set forth as sections 30, 31 and 32 of this act.
Sec. 30. 1. Each insurer that issues a policy of health insurance in this state shall establish a system for resolving any complaints of an insured concerning health care services covered under the policy. The system must be approved by the commissioner in consultation with the state board of health.
2. A system for resolving complaints pursuant to subsection 1 must include an initial investigation, a review of the complaint by a review board and a procedure for appealing a determination regarding the complaint. The majority of the members on a review board must be insureds who receive health care services pursuant to a policy of health insurance issued by the insurer.
3. The commissioner or the state board of health may examine the system for resolving complaints established pursuant to this section at such times as either deems necessary or appropriate.
Sec. 31. 1. Each insurer that issues a policy of health insurance in this state shall submit to the commissioner and the state board of health an annual report regarding its system for resolving complaints established pursuant to section 30 of this act on a form prescribed by the commissioner in consultation with the state board of health which includes, without limitation:
(a) A description of the procedures used for resolving any complaints of an insured;
(b) The total number of complaints and appeals handled through the system for resolving complaints since the last report and a compilation of the causes underlying the complaints filed;
(c) The current status of each complaint and appeal filed; and
(d) The average amount of time that was needed to resolve a complaint and an appeal, if any.
2. Each insurer shall maintain records of complaints filed with it which concern something other than health care services and shall submit to the commissioner a report summarizing such complaints at such times and in such format as the commissioner may require.
Sec. 32. 1. Following approval by the commissioner, each insurer that issues a policy of health insurance in this state shall provide written notice to an insured, in clear and comprehensible language that is understandable to an ordinary layperson, explaining the right of the insured to file a written complaint. Such notice must be provided to an insured:
(a) At the time he receives his evidence of coverage;
(b) Any time that the insurer denies coverage of a health care service or limits coverage of a health care service to an insured; and
(c) Any other time deemed necessary by the commissioner.
2. Any time that an insurer denies coverage of a health care service to an insured it shall notify the insured in writing of:
(a) The reason for denying coverage of the service;
(b) The criteria by which the insurer determines whether to authorize or deny coverage of the health care service; and
(c) His right to file a written complaint.
3. A written notice which is approved by the commissioner shall be deemed to be in clear and comprehensible language that is understandable to an ordinary layperson.
Sec. 33. Chapter 689B of NRS is hereby amended by adding thereto the provisions set forth as sections 34, 35 and 36 of this act.
Sec. 34. 1. Each insurer that issues a policy of group health insurance in this state shall establish a system for resolving any complaints of an insured concerning health care services covered under the policy. The system must be approved by the commissioner in consultation with the state board of health.
2. A system for resolving complaints pursuant to subsection 1 must include an initial investigation, a review of the complaint by a review board and a procedure for appealing a determination regarding the complaint. The majority of the members on a review board must be insureds who receive health care services pursuant to a policy of group health insurance issued by the insurer.
3. The commissioner or the state board of health may examine the system for resolving complaints established pursuant to this section at such times as either deems necessary or appropriate.
Sec. 35. 1. Each insurer that issues a policy of group health insurance in this state shall submit to the commissioner and the state board of health an annual report regarding its system for resolving complaints established pursuant to section 34 of this act on a form prescribed by the commissioner in consultation with the state board of health which includes, without limitation:
(a) A description of the procedures used for resolving any complaints of an insured;
(b) The total number of complaints and appeals handled through the system for resolving complaints since the last report and a compilation of the causes underlying the complaints filed;
(c) The current status of each complaint and appeal filed; and
(d) The average amount of time that was needed to resolve a complaint and an appeal, if any.
2. Each insurer shall maintain records of complaints filed with it which concern something other than health care services and shall submit to the commissioner a report summarizing such complaints at such times and in such format as the commissioner may require.
Sec. 36. 1. Following approval by the commissioner, each insurer that issues a policy of group health insurance in this state shall provide written notice to an insured, in clear and comprehensible language that is understandable to an ordinary layperson, explaining the right of the insured to file a written complaint. Such notice must be provided to an insured:
(a) At the time he receives his certificate of coverage or evidence of coverage;
(b) Any time that the insurer denies coverage of a health care service or limits coverage of a health care service to an insured; and
(c) Any other time deemed necessary by the commissioner.
2. Any time that an insurer denies coverage of a health care service to an insured it shall notify the insured in writing of:
(a) The reason for denying coverage of the service;
(b) The criteria by which the insurer determines whether to authorize or deny coverage of the health care service; and
(c) His right to file a written complaint.
3. A written notice which is approved by the commissioner shall be deemed to be in clear and comprehensible language that is understandable to an ordinary layperson.
Sec. 37. Chapter 695B of NRS is hereby amended by adding thereto the provisions set forth as sections 38, 39 and 40 of this act.
Sec. 38. 1. Each insurer that issues a contract for hospital or medical services in this state shall establish a system for resolving any complaints of an insured concerning health care services covered under the policy. The system must be approved by the commissioner in consultation with the state board of health.
2. A system for resolving complaints pursuant to subsection 1 must include an initial investigation, a review of the complaint by a review board and a procedure for appealing a determination regarding the complaint. The majority of the members on a review board must be insureds who receive health care services pursuant to a contract for hospital or medical services issued by the insurer.
3. The commissioner or the state board of health may examine the system for resolving complaints established pursuant to this section at such times as either deems necessary or appropriate.
Sec. 39. 1. Each insurer that issues a contract for hospital or medical services in this state shall submit to the commissioner and the state board of health an annual report regarding its system for resolving complaints established pursuant to section 38 of this act on a form prescribed by the commissioner in consultation with the state board of health which includes, without limitation:
(a) A description of the procedures used for resolving any complaints of an insured;
(b) The total number of complaints and appeals handled through the system for resolving complaints since the last report and a compilation of the causes underlying the complaints filed;
(c) The current status of each complaint and appeal filed; and
(d) The average amount of time that was needed to resolve a complaint and an appeal, if any.
2. Each insurer shall maintain records of complaints filed with it which concern something other than health care services and shall submit to the commissioner a report summarizing such complaints at such times and in such format as the commissioner may require.
Sec. 40. 1. Following approval by the commissioner, each insurer that issues a contract for hospital or medical services in this state shall provide written notice to an insured, in clear and comprehensible language that is understandable to an ordinary layperson, explaining the right of the insured to file a written complaint. Such notice must be provided to an insured:
(a) At the time he receives his certificate of coverage or evidence of coverage;
(b) Any time that the insurer denies coverage of a health care service or limits coverage of a health care service to an insured; and
(c) Any other time deemed necessary by the commissioner.
2. Any time that an insured denies coverage of a health care service to a beneficiary or subscriber it shall notify the beneficiary or subscriber in writing of:
(a) The reason for denying coverage of the service;
(b) The criteria by which the insurer determines whether to authorize or deny coverage of the health care service; and
(c) His right to file a written complaint.
3. A written notice which is approved by the commissioner shall be deemed to be in clear and comprehensible language that is understandable to an ordinary layperson.
Sec. 41. NRS 695C.050 is hereby amended to read as follows:
695C.0501. Except as otherwise provided in this chapter or in specific provisions of this Title, the provisions of this Title are not applicable to any health maintenance organization granted a certificate of authority under this chapter. This provision does not apply to an insurer licensed and regulated pursuant to this Title except with respect to its activities as a health maintenance organization authorized and regulated pursuant to this chapter.
2. Solicitation of enrollees by a health maintenance organization granted a certificate of authority, or its representatives, must not be construed to violate any provision of law relating to solicitation or advertising by practitioners of a healing art.
3. Any health maintenance organization authorized [under] pursuant to this chapter shall not be deemed to be practicing medicine and is exempt from the provisions of chapter 630 of NRS.
4. The provisions of NRS 695C.110, 695C.170 to 695C.200, inclusive, 695C.250 [, 695C.260] and 695C.265 do not apply to a health maintenance organization that provides health care services through managed care to recipients of Medicaid pursuant to a contract with the welfare division of the department of human resources. This subsection does not exempt a health maintenance organization from any provision of this chapter for services provided pursuant to any other contract.
Sec. 42. NRS 695C.055 is hereby amended to read as follows:
695C.0551. The provisions of NRS 449.465, 679B.158 and 680B.025 to 680B.060, inclusive, subsections 2, 4, 18, 19 and 32 of NRS 680B.010 and NRS 689C.015 to 689C.350, inclusive, and sections 2 to 27, inclusive, of this act apply to a health maintenance organization.
2. For the purposes of subsection 1, unless the context requires that a provision apply only to insurers, any reference in those sections to "insurer" must be replaced by "health maintenance organization."
Sec. 43. NRS 695C.260 is hereby amended to read as follows:
695C.260[1.] Every health maintenance organization shall establish a complaint system [which has been approved by the commissioner after consultation with the state board of health to resolve complaints initiated by enrollees concerning health care services. Such system shall provide reasonable procedures for the resolution of complaints. Each health maintenance organization shall submit to the commissioner and the state board of health an annual report in a form prescribed by the commissioner after consultation with the state board of health which shall include:
(a) A description of the procedures of such complaint system; and
(b) The total number of complaints handled through such complaint system and a compilation of causes underlying the complaints filed.
2. The health maintenance organization shall maintain records of complaints filed with it concerning other than health care services and shall submit to the commissioner a summary report at such times and in such format as the commissioner may require. Such complaints involving other persons shall be referred to such persons with a copy to the commissioner.
3. The commissioner or the state board of health may examine such complaint system, subject to the limitations concerning medical records of individuals set forth in subsection 3 of NRS 695C.310.] which complies with the provisions of sections 23 to 26, inclusive, of this act.
Sec. 44. The provisions of this act apply to all contracts for health insurance, managed care or for the provision of health care services entered into or renewed on or after October 1, 1997.