Assembly Bill No. 31-Committee on Health and Human Services
Prefiled on January 17, 1997
____________
Referred to Committee on Health and Human Services
SUMMARY--Provides in skeleton form for creation of office to regulate managed care organizations. (BDR 57-1002)
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; providing in skeleton form for the creation of an office within the department of business and industry to regulate managed care organizations; transferring the duties of the commissioner of insurance related to the oversight of managed care organizations to the office; 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 12, 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 6, inclusive, of this act have the meanings ascribed to them in those sections.
Sec. 3 "Enrollee" means a natural person who has been voluntarily enrolled in a managed care organization, whether directly or through an insurer.
Sec. 4 "Managed care" means a method of providing or arranging for the provision of health care services, other than a method based on fee-for-service wherein an insurer:
1. Reimburses a provider of health care for each service provided to an insured;
2. Allows an insured to choose any provider of health care and does not encourage the use of any specific provider of health care; and
3. Does not require any preauthorization or referral for a specific service to be covered.
The term includes, without limitation, a health maintenance organization, preferred provider organization, point-of-service plan or exclusive provider organization.
Sec. 5 "Managed care organization" means an organization that provides managed care.
Sec. 6 "Office" means the office for the oversight of managed care created pursuant to section 7 of this act.
Sec. 7 1. The office for the oversight of managed care is hereby created in the department of business and industry.
2. The office shall:
(a) Oversee the finances of each managed care organization that conducts business in this state;
(b) Issue certificates of authority to qualified managed care organizations;
(c) Ensure quality and access to health care services provided by each managed care organization that conducts business in this state;
(d) Conduct examinations and investigations of managed care organizations to determine whether a managed care organization has violated a provision of this Title;
(e) Appoint an advocate for the rights of patients of managed care organizations; and
(f) Have such additional powers and duties as may be provided by the laws of this state.
3. The office may adopt necessary and reasonable regulations governing the administration and enforcement of sections 2 to 12, inclusive, of this act.
Sec. 8 1. To determine its financial condition, fulfillment of its contractual obligations and compliance with law, the office shall, when a managed care organization applies for an initial certification of authorization and as often as it deems advisable thereafter examine the affairs, transactions, accounts, records and assets of:
(a) Each managed care organization; and
(b) Any person as to any matter relevant to the financial affairs of the managed care organization or to the examination.
2. Except as otherwise expressly provided in this chapter, the office shall examine the affairs, transactions, accounts, records and assets of each managed care organization not less frequently than every 5 years.
3. In lieu of an examination pursuant to this section, the office may accept a report of the examination of a foreign or alien managed care organization prepared by the office for a foreign managed care organization's state of domicile or an alien managed care organization's state of entry into the United States.
4. As far as practical, the examination of a foreign or alien managed care organization must be made in cooperation with the supervisory officers of managed care organizations of other states in which the managed care organization transacts business. If no such officers exist, the examination may be made in cooperation with the insurance supervisory officers of other states in which the managed care organization transacts business.
Sec. 9 A managed care organization may apply to the office for and obtain a certificate of authority to establish and operate a managed care organization in this state in compliance with this chapter. No person shall operate a managed care organization without obtaining a certificate of authority pursuant to this chapter. A foreign corporation may qualify under this chapter, subject to its qualification to do business in this state as a foreign corporation.
Sec. 10 1. Each application for a certificate of authority submitted to the office by a managed care organization must be:
(a) Verified by an officer or authorized representative of the applicant;
(b) In a form prescribed by the office; and
(c) Accompanied by the items listed in subsection 2.
2. The following must be submitted with the application:
(a) A copy of the basic organizational document, if any, of the applicant, and all amendments thereto;
(b) A copy of the bylaws, rules or regulations, or a similar document, if any, regulating the conduct of the internal affairs of the applicant;
(c) A list of the names, addresses and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including all members of the board of directors, board of trustees, executive committee or other governing board or committee, the officers in the case of a corporation, and the partners or members in the case of a partnership or association;
(d) A copy of any contract made or to be made between a provider of health care or person listed in paragraph (c) and the applicant;
(e) A statement generally describing the managed care organization, its health care plan or plans, the location of the facilities at which health care services will be regularly available to persons who receive services from the organization and the type of health care personnel who will provide the health care services;
(f) A copy of the form of evidence of coverage to be issued to the enrollees;
(g) A copy of the form of the group contract, if any, that is to be issued to employers, unions, trustees or other organizations;
(h) Certified financial statements showing the applicant's assets, liabilities and sources of financial support;
(i) The proposed method of marketing its services, a financial plan which includes a 3-year projection of the initial operating results anticipated and the sources of working capital as well as any other sources of funding;
(j) A power of attorney duly executed by the applicant, appointing the office as the true and lawful attorney of the applicant in and for this state upon whom all lawful process in any legal action or proceeding against the managed care organization on a cause of action arising in this state may be served;
(k) A statement reasonably describing the geographical area to be served;
(l) A description of the complaint procedures to be used;
(m) A description of the procedures and programs to be implemented to meet the quality of health care requirements;
(n) A description of the mechanism by which a person who receives services from the organization will be afforded an opportunity to participate in matters regarding the type of services provided; and
(o) Such other information as the office may require.
Sec. 11 Except as otherwise provided in this chapter, a managed care organization shall file notice with the office before any material modification of the operations described in the information required by section 10 of this act. If the office does not disapprove within 90 days after the filing of the notice, the modification is deemed approved.
Sec. 12 1. When the office has cause to believe that grounds for the denial of an application for a certificate of authority exist, or that grounds for the suspension or revocation of a certificate of authority exist, it shall notify the managed care organization and the state board of health in writing specifically stating the grounds for denial, suspension or revocation and fixing a time at least 30 days thereafter for a hearing on the matter.
2. After the hearing, or upon the failure of the managed care organization to appear at the hearing, the office shall take such action as it deems advisable on written findings that must be mailed to the managed care organization. The action of the office is subject to review by the First Judicial District Court of the State of Nevada in and for Carson City. The court may, in disposing of the issue before it, modify, affirm or reverse the order of the office in whole or in part.
Sec. 13 NRS 679B.230 is hereby amended to read as follows:
679B.2301. [For] Except as otherwise provided in this section, for the purpose of determining its financial condition, fulfillment of its contractual obligations and compliance with law, the commissioner shall, as often as he deems advisable, examine the affairs, transactions, accounts, records and assets of each authorized insurer, and of any person as to any matter relevant to the financial affairs of the insurer or to the examination. Except as otherwise expressly provided in this Title, he shall so examine each authorized insurer not less frequently than every 5 years. Examination of an alien insurer must be limited to its insurance transactions, assets, trust deposits and affairs in the United States, except as otherwise required by the commissioner.
2. [The] Except as otherwise provided in this section, the commissioner shall in like manner examine each insurer applying for an initial certificate of authority to transact insurance in this state.
3. In lieu of an examination under this chapter, the commissioner may accept a report of the examination of a foreign or alien insurer prepared by the division for a foreign insurer's state of domicile or an alien insurer's state of entry into the United States.
4. As far as practical the examination of a foreign or alien insurer must be made in cooperation with the insurance supervisory officers of other states in which the insurer transacts business.
5. This section does not apply to a managed care organization.
Sec. 14 NRS 695C.060, 695C.070, 695C.140 and 695C.340 are hereby repealed.
LEADLINES OF REPEALED SECTIONS
695C.060Establishment of health maintenance organizations.
695C.070Certificate of authority: Application.
695C.140Notice and approval required for modification of operations; regulations.
695C.340Disciplinary proceedings: Notice; hearing; judicial review.