Senate Bill No. 23–Senator  Neal

 

Prefiled January 24, 2003

____________

 

Referred to  Committee on Commerce and Labor

 

SUMMARY—Provides for independent review of certain final adverse determinations made by health maintenance organizations and managed care organizations. (BDR 57‑209)

 

FISCAL NOTE:  Effect on Local Government: No.

                           Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to health care; requiring a health maintenance organization or managed care organization to establish a procedure for the independent review of certain final adverse determinations relating to the health care of an insured; requiring the Commissioner of Insurance to prepare and maintain a list of physicians to conduct independent reviews of certain final adverse determinations of health maintenance organizations and managed care organizations; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1  Section 1. Chapter 679B of NRS is hereby amended by adding

1-2  thereto a new section to read as follows:

1-3  1.  The Commissioner shall prepare and maintain a list of

1-4  physicians who are eligible to conduct independent reviews of

1-5  final adverse determinations pursuant to sections 9 to 13,

1-6  inclusive, of this act.

1-7  2.  To be eligible to conduct independent reviews of final

1-8  adverse determinations pursuant to sections 9 to 13, inclusive, of

1-9  this act, a physician must be:

 

2-1  (a) Licensed pursuant to chapter 630 or 633 of NRS; and

2-2  (b) Actively engaged in the practice of medicine.

2-3  Sec. 2.  NRS 695C.070 is hereby amended to read as follows:

2-4  695C.070  Each application for a certificate of authority shall

2-5  be verified by an officer or authorized representative of the

2-6  applicant, shall be in a form prescribed by the commissioner, and

2-7  shall set forth or be accompanied by the following:

2-8  1.  A copy of the basic organizational document, if any, of the

2-9  applicant, and all amendments thereto;

2-10      2.  A copy of the bylaws, rules or regulations, or similar

2-11  document, if any, regulating the conduct of the internal affairs of the

2-12  applicant;

2-13      3.  A list of the names, addresses, and official positions of the

2-14  persons who are to be responsible for the conduct of the affairs of

2-15  the applicant, including all members of the board of directors, board

2-16  of trustees, executive committee, or other governing board or

2-17  committee, the officers in the case of a corporation, and the partners

2-18  or members in the case of a partnership or association;

2-19      4.  A copy of any contract made or to be made between any

2-20  providers or persons listed in subsection 3 and the applicant;

2-21      5.  A statement generally describing the health maintenance

2-22  organization, its health care plan or plans, location of facilities at

2-23  which health care services will be regularly available to enrollees,

2-24  the type of health care personnel who will provide the health care

2-25  services;

2-26      6.  A copy of the form of evidence of coverage to be issued to

2-27  the enrollees;

2-28      7.  A copy of the form of the group contract, if any, which is to

2-29  be issued to employers, unions, trustees or other organizations;

2-30      8.  Certified financial statements showing the applicant’s assets,

2-31  liabilities and sources of financial support;

2-32      9.  The proposed method of marketing the plan, a financial plan

2-33  which includes a three-year projection of the initial operating results

2-34  anticipated and the sources of working capital as well as any other

2-35  sources of funding;

2-36      10.  A power of attorney duly executed by the applicant,

2-37  appointing the commissioner and his duly authorized deputies, as

2-38  the true and lawful attorney of such applicant in and for this state

2-39  upon whom all lawful process in any legal action or proceeding

2-40  against the health maintenance organization on a cause of action

2-41  arising in this state may be served;

2-42      11.  A statement reasonably describing the geographic area to

2-43  be served;

 

3-1  12.  A description of the complaint [procedures to] system and

3-2  the procedure for conducting independent reviews of final adverse

3-3  determinations which will be utilized as required under

3-4  NRS 695C.260;

3-5  13.  A description of the procedures and programs to be

3-6  implemented to meet the quality of health care requirements in

3-7  NRS 695C.080;

3-8  14.  A description of the mechanism by which enrollees will be

3-9  afforded an opportunity to participate in matters of program content

3-10  under subsection 2 of NRS 695C.110; and

3-11      15.  Such other information as the commissioner may require to

3-12  make the determinations required in NRS 695C.080.

3-13      Sec. 3.  NRS 695C.260 is hereby amended to read as follows:

3-14      695C.260  [Every] Each health maintenance organization shall

3-15  establish [a] :

3-16      1.  A complaint system which complies with the provisions of

3-17  NRS 695G.200 to 695G.230, inclusive[.] ; and

3-18      2.  A procedure for conducting independent reviews of final

3-19  adverse determinations which complies with the provisions of

3-20  sections 9 to 13, inclusive, of this act.

3-21      Sec. 4.  NRS 695C.330 is hereby amended to read as follows:

3-22      695C.330  1.  The commissioner may suspend or revoke any

3-23  certificate of authority issued to a health maintenance organization

3-24  pursuant to the provisions of this chapter if he finds that any of the

3-25  following conditions exist:

3-26      (a) The health maintenance organization is operating

3-27  significantly in contravention of its basic organizational document,

3-28  its health care plan or in a manner contrary to that described in and

3-29  reasonably inferred from any other information submitted pursuant

3-30  to NRS 695C.060, 695C.070 and 695C.140, unless any amendments

3-31  to those submissions have been filed with and approved by the

3-32  commissioner;

3-33      (b) The health maintenance organization issues evidence of

3-34  coverage or uses a schedule of charges for health care services

3-35  which do not comply with the requirements of NRS 695C.170 to

3-36  695C.200, inclusive, or 695C.1694, 695C.1695 or 695C.207;

3-37      (c) The health care plan does not furnish comprehensive health

3-38  care services as provided for in NRS 695C.060;

3-39      (d) The state board of health certifies to the commissioner that

3-40  the health maintenance organization:

3-41          (1) Does not meet the requirements of subsection 2 of

3-42  NRS 695C.080; or

3-43          (2) Is unable to fulfill its obligations to furnish health care

3-44  services as required under its health care plan;

4-1  (e) The health maintenance organization is no longer financially

4-2  responsible and may reasonably be expected to be unable to meet its

4-3  obligations to enrollees or prospective enrollees;

4-4  (f) The health maintenance organization has failed to put into

4-5  effect a mechanism affording the enrollees an opportunity to

4-6  participate in matters relating to the content of programs pursuant to

4-7  NRS 695C.110;

4-8  (g) The health maintenance organization has failed to put into

4-9  effect the complaint system [for complaints] required by NRS

4-10  695C.260 in a manner reasonably to dispose of valid complaints;

4-11      (h) The health maintenance organization has failed to put into

4-12  effect the procedure for conducting independent reviews of final

4-13  adverse determinations required by NRS 695C.260 or has failed to

4-14  comply with that procedure;

4-15      (i) The health maintenance organization or any person on its

4-16  behalf has advertised or merchandised its services in an untrue,

4-17  misrepresentative, misleading, deceptive or unfair manner;

4-18      [(i)] (j) The continued operation of the health maintenance

4-19  organization would be hazardous to its enrollees; or

4-20      [(j)] (k) The health maintenance organization has otherwise

4-21  failed to comply substantially with the provisions of this chapter.

4-22      2.  A certificate of authority must be suspended or revoked only

4-23  after compliance with the requirements of NRS 695C.340.

4-24      3.  If the certificate of authority of a health maintenance

4-25  organization is suspended, the health maintenance organization shall

4-26  not, during the period of that suspension, enroll any additional

4-27  groups or new individual contracts, unless those groups or persons

4-28  were contracted for before the date of suspension.

4-29      4.  If the certificate of authority of a health maintenance

4-30  organization is revoked, the organization shall proceed, immediately

4-31  following the effective date of the order of revocation, to wind up its

4-32  affairs and shall conduct no further business except as may be

4-33  essential to the orderly conclusion of the affairs of the organization.

4-34  It shall engage in no further advertising or solicitation of any kind.

4-35  The commissioner may by written order permit such further

4-36  operation of the organization as he may find to be in the best interest

4-37  of enrollees to the end that enrollees are afforded the greatest

4-38  practical opportunity to obtain continuing coverage for health care.

4-39      Sec. 5.  Chapter 695G of NRS is hereby amended by adding

4-40  thereto the provisions set forth as sections 6 to 13, inclusive, of this

4-41  act.

4-42      Sec. 6.  “Authorized representative” means a person who has

4-43  obtained the consent of an insured to represent him in an

4-44  independent review of a final adverse determination conducted

4-45  pursuant to sections 9 to 13, inclusive, of this act.

5-1  Sec. 7.  “Final adverse determination” means a final decision

5-2  of a managed care organization to deny coverage for health care

5-3  services or to deny payment for those services because the health

5-4  care services were determined to be medically unnecessary. The

5-5  term does not include a determination relating to a claim for

5-6  workers’ compensation pursuant to chapters 616A to 617,

5-7  inclusive, of NRS.

5-8  Sec. 8.  “Life-threatening condition” means a disease or

5-9  other medical condition with respect to which death is probable

5-10  unless the course of the disease or medical condition is

5-11  interrupted.

5-12      Sec. 9.  A managed care organization shall establish a

5-13  procedure for conducting independent reviews of final adverse

5-14  determinations which complies with the provisions of sections 9 to

5-15  13, inclusive, of this act.

5-16      Sec. 10.  If an insured or a primary care physician of an

5-17  insured receives notice of a final adverse determination from a

5-18  managed care organization concerning the insured, the insured,

5-19  the primary care physician of the insured or an authorized

5-20  representative may, within 30 days after receiving notice of the

5-21  final adverse determination, submit a written request to the

5-22  managed care organization for an independent review of the final

5-23  adverse determination.

5-24      Sec. 11. 1.  A managed care organization shall:

5-25      (a) Within 3 days after it receives a request pursuant to section

5-26  10 of this act, notify the insured, his authorized representative or

5-27  his primary care physician and the Commissioner that the request

5-28  has been filed with the managed care organization;

5-29      (b) Within 5 days after providing notice pursuant to paragraph

5-30  (a), choose, with the approval of the insured and the primary care

5-31  physician of the insured, a physician from the list of physicians

5-32  maintained by the Commissioner pursuant to section 1 of this act

5-33  to conduct independent review; and

5-34      (c) Within 5 days after choosing the physician pursuant to

5-35  paragraph (b), notify the Commissioner and the physician who

5-36  has been chosen to conduct the independent review and provide to

5-37  the physician all documents and materials relating to the final

5-38  adverse determination, including, without limitation:

5-39          (1) Any medical records of the insured relating to the

5-40  independent review;

5-41          (2) A copy of the provisions of the health care plan upon

5-42  which the final adverse determination was based;

5-43          (3) Any documents used by the managed care organization

5-44  to make the final adverse determination;

5-45          (4) The reasons for the final adverse determination; and

6-1       (5) Insofar as practicable, a list that specifies each provider

6-2  of health care who has provided health care to the insured and the

6-3  medical records of the provider of health care relating to the

6-4  independent review.

6-5  2.  The physician chosen pursuant to paragraph (b) of

6-6  subsection 1 to conduct the independent review must:

6-7  (a) Be certified by the Board of Medical Examiners in the

6-8  same or similar area of practice as is the health care service that is

6-9  the subject of the final adverse determination; and

6-10      (b) Not have a financial interest in the managed care

6-11  organization of the insured who requested the independent review.

6-12      Sec. 12.  1.  Not later than 5 days after the receipt of the

6-13  notice, documents and materials from the managed care

6-14  organization pursuant to section 11 of this act, the physician shall:

6-15      (a) Review the documents and materials submitted pursuant to

6-16  section 11 of this act and make a determination whether the health

6-17  care services are medically necessary; and

6-18      (b) Notify the insured, his primary care physician and the

6-19  managed care organization if any additional information is

6-20  required to conduct an independent review of the final adverse

6-21  determination.

6-22      2.  Except as otherwise provided in subsection 3, the physician

6-23  shall submit his determination within 15 days after he receives the

6-24  information required to make that determination pursuant to this

6-25  section. The physician shall submit a copy of his determination,

6-26  including the reasons therefor, to:

6-27      (a) The insured;

6-28      (b) The primary care physician of the insured;

6-29      (c) The authorized representative of the insured, if any;

6-30      (d) The managed care organization; and

6-31      (e) The Commissioner.

6-32      3.  If the insured who submitted the request for an

6-33  independent review has a life-threatening condition, the physician

6-34  shall make his determination as soon as practicable, but not later

6-35  than 72 hours after he receives the notice, documents and

6-36  materials from the managed care organization pursuant to section

6-37  11 of this act.

6-38      4.  In making a determination whether the health care

6-39  services are medically necessary, the physician who conducts an

6-40  independent review of a final adverse determination for a

6-41  managed care organization shall consider, without limitation:

6-42      (a) The medical records of the insured;

6-43      (b) Any recommendations of the primary care physician of the

6-44  insured;

7-1  (c) Any generally accepted medical guidelines, including

7-2  guidelines established by the Federal Government or any national

7-3  or professional society, board or association that establishes such

7-4  guidelines approved by the Commissioner; and

7-5  (d) Any applicable criteria relating to adverse final

7-6  determinations established and used by the managed care

7-7  organization.

7-8  Sec. 13.  1.  A determination made by a physician who

7-9  conducts an independent review of a final adverse determination

7-10  pursuant to sections 9 to 13, inclusive, of this act is final and

7-11  binding upon the managed care organization and the insured.

7-12      2.  A physician who conducts an independent review of a final

7-13  adverse determination pursuant to sections 9 to 13, inclusive, of

7-14  this act is not liable in a civil action for damages relating to his

7-15  determination if the determination is made in good faith and

7-16  without gross negligence.

7-17      3.  The cost of conducting an independent review of a final

7-18  adverse determination pursuant to sections 9 to 13, inclusive, of

7-19  this act must be paid by the managed care organization which

7-20  made the final adverse determination.

7-21      Sec. 14.  NRS 695G.010 is hereby amended to read as follows:

7-22      695G.010  As used in this chapter, unless the context otherwise

7-23  requires, the words and terms defined in NRS 695G.020 to

7-24  695G.080, inclusive, and sections 6, 7 and 8 of this act have the

7-25  meanings ascribed to them in those sections.

7-26      Sec. 15.  NRS 695G.080 is hereby amended to read as follows:

7-27      695G.080  1.  “Utilization review” means the various methods

7-28  that may be used by a managed care organization to review the

7-29  amount and appropriateness of the provision of a specific health

7-30  care service to an insured.

7-31      2.  The term does not include an independent review of a final

7-32  adverse determination conducted pursuant to sections 9 to 13,

7-33  inclusive, of this act.

7-34      Sec. 16.  NRS 695G.210 is hereby amended to read as follows:

7-35      695G.210  1.  [A] Except as otherwise provided in sections 9

7-36  to 13, inclusive, of this act, a system for resolving complaints

7-37  created pursuant to NRS 695G.200 to 695G.230, inclusive, must

7-38  include, without limitation, an initial investigation, a review of the

7-39  complaint by a review board and a procedure for appealing a

7-40  determination regarding the complaint. The majority of the members

7-41  of the review board must be insureds who receive health care

7-42  services from the managed care organization.

7-43      2.  Except as otherwise provided in subsection 3, a review

7-44  board shall complete its review regarding a complaint or appeal and

7-45  notify the insured of its determination not later than 30 days after

8-1  the complaint or appeal is filed, unless the insured and the review

8-2  board have agreed to a longer period of time.

8-3  3.  If a complaint involves an imminent and serious threat to the

8-4  health of the insured, the managed care organization shall inform the

8-5  insured immediately of his right to an expedited review of his

8-6  complaint. If an expedited review is required, the review board shall

8-7  notify the insured in writing of its determination within 72 hours

8-8  after the complaint is filed.

8-9  4.  Notice provided to an insured by a review board regarding a

8-10  complaint must include, without limitation, an explanation of any

8-11  further rights of the insured regarding the complaint that are

8-12  available under his health care plan.

8-13      Sec. 17.  NRS 695G.220 is hereby amended to read as follows:

8-14      695G.220  1.  Each managed care organization shall submit to

8-15  the Commissioner and the State Board of Health an annual report

8-16  regarding its system for resolving complaints established pursuant to

8-17  NRS 695G.200 to 695G.230, inclusive, and the procedure

8-18  established to conduct independent reviews of final adverse

8-19  determinations pursuant to sections 9 to 13, inclusive, of this act.

8-20  The report must be on a form prescribed by the Commissioner in

8-21  consultation with the State Board of Health which includes, without

8-22  limitation:

8-23      (a) A description of the procedures used for resolving

8-24  complaints of an insured;

8-25      (b) The total number of complaints , [and] appeals and requests

8-26  for independent reviews handled through the system for resolving

8-27  complaints since the last report and a compilation of the causes

8-28  underlying the complaints filed;

8-29      (c) The current status of each complaint , [and] appeal and

8-30  request for independent review filed; and

8-31      (d) The average amount of time that was needed to resolve a

8-32  complaint and an appeal, if any.

8-33      2.  Each managed care organization shall maintain records of

8-34  complaints filed with it which concern something other than health

8-35  care services and shall submit to the Commissioner a report

8-36  summarizing such complaints at such times and in such format as

8-37  the Commissioner may require.

8-38      Sec. 18.  NRS 695G.230 is hereby amended to read as follows:

8-39      695G.230  1.  [Following] After approval by the

8-40  Commissioner, each managed care organization shall provide a

8-41  written notice to an insured, in clear and comprehensible language

8-42  that is understandable to an ordinary layperson, explaining the right

8-43  of the insured to file a written complaint and to obtain an expedited

8-44  review pursuant to NRS 695G.210. Such a notice must be provided

8-45  to an insured:

9-1  (a) At the time he receives his certificate of coverage or

9-2  evidence of coverage;

9-3  (b) Any time that the managed care organization denies

9-4  coverage of a health care service or limits coverage of a health care

9-5  service to an insured; and

9-6  (c) Any other time deemed necessary by the Commissioner.

9-7  2.  [Any time that] If a managed care organization denies

9-8  coverage of a health care service to an insured, including, without

9-9  limitation, a health maintenance organization that denies a claim

9-10  related to a health care plan pursuant to NRS 695C.185, it shall

9-11  notify the insured in writing within 10 working days after it denies

9-12  coverage of the health care service of:

9-13      (a) The reason for denying coverage of the service;

9-14      (b) The criteria by which the managed care organization or

9-15  insurer determines whether to authorize or deny coverage of the

9-16  health care service; and

9-17      (c) His right to [file] :

9-18          (1) File a written complaint and the procedure for filing such

9-19  a complaint[.] ;

9-20          (2) Appeal a final adverse determination pursuant to

9-21  sections 9 to 13, inclusive, of this act;

9-22          (3) Receive an expedited independent review of a final

9-23  adverse determination if he has a life-threatening condition,

9-24  including notification of the procedure for requesting the

9-25  expedited independent review; and

9-26          (4) Receive assistance from any person, including an

9-27  attorney, for an independent review of a final adverse

9-28  determination.

9-29      3.  A written notice which is approved by the Commissioner

9-30  shall be deemed to be in clear and comprehensible language that is

9-31  understandable to an ordinary layperson.

9-32      Sec. 19.  NRS 287.04335 is hereby amended to read as

9-33  follows:

9-34      287.04335  [If]

9-35      1.  Except as otherwise provided in this section, if the board

9-36  provides health insurance through a plan of self-insurance, it shall

9-37  comply with the provisions of NRS 689B.255, 695G.150,

9-38  695G.160, 695G.170 and 695G.200 to 695G.230, inclusive, in the

9-39  same manner as an insurer that is licensed pursuant to title 57 of

9-40  NRS is required to comply with those provisions.

9-41      2.  The board is not required to comply with the provisions of

9-42  NRS 695G.200 to 695G.230, inclusive, which relate to independent

9-43  reviews of final adverse determinations.

 

10-1      Sec. 20.  The amendatory provisions of this act apply to

10-2  policies, contracts and plans for health insurance, managed care or

10-3  the provision of health care services entered into or renewed on or

10-4  after October 1, 2003.

 

10-5  H