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STATEMENTS OF POLICY

Title 31--INSURANCE

INSURANCE DEPARTMENT

[31 PA. CODE CH. 301]

Health Maintenance Organizations; Quality Health Care Accountability and Protection

[28 Pa.B. 5019]

   This statement of policy is adopted under the authority of the Health Maintenance Organization Act (HMO Act) (40 P. S. §§ 1551--1568), section 630 of the Insurance Company Law of 1921, the Accident and Health Filing Reform Act (AHFRA) (40 P. S. §§ 3801--3815) and Article XXI of the Insurance Company Law of 1929 (40 P. S. §§ 991.2101--991.2193) (Act 68). Specifically, the Insurance Commissioner's (Commissioner) authority to review HMO contracts is set forth in section 8 of the HMO Act (40 P. S. § 1558); the Commissioner's authority to review subscriber contracts and other marketing materials for HMOs and Gatekeeper PPOs is set forth in section 3 of AHFRA (40 P. S. § 3803).

Introduction

   The Insurance Department (Department) has adopted amendments to Chapter 301 (relating to health maintenance organizations) as set forth in Annex A, regarding the implementation of the quality health care accountability and protection provisions of Act 68. This statement of policy sets forth guidelines for compliance with the provisions of Act 68 with respect to ''managed care plans,'' as that term is defined under Act 68. These guidelines apply to those provisions of Act 68 which vest regulatory authority with the Department.

Applicability

   This statement of policy applies to managed care plans and licensed insurers and addresses the entities' compliance with Act 68 from the Department's regulatory perspective.

Background

   Act 68 was signed into law by the Governor on June 17, 1998. Article XXI, the quality health care accountability and protection provisions, is effective January 1, 1999. This statement of policy is being issued to provide guidance to managed care plans and licensed insurers, on an interim basis, to effectively implement Act 68. The Department intends to promulgate regulations in 1999. However, with the short time available prior to the effective date of the statutory provisions, a statement of policy will provide guidance to affected entities while regulations are reviewed in accordance with the Regulatory Review Act (71 P. S. §§ 745.1--745.15).

Purpose and Effect

   This statement of policy outlines the guidelines the Department will use when reviewing policy form filings, including subscriber contracts and marketing material, to ensure compliance with Act 68. This statement of policy also offers guidance to managed care plans and licensed insurers on issues related to the implementation of Act 68.

   This statement of policy provides guidance only, and does not constitute a rule or regulation entitled to the force and effect of law.

Companion Statement of Policy

   This statement of policy is issued in conjunction with a companion statement of policy issued by the Department of Health. (Editor's Note: See 28 Pa.B. 5011 (October 3, 1998).) Managed care plans covered by Act 68 are subject to regulation by both the Department of Health and the Department. Accordingly, both statements of policy must be consulted to gain a clear understanding of the implementation requirements for managed care plans under Act 68.

Fiscal Impact and Paperwork Requirements

   Adoption of this statement of policy, consistent with the mandates of Act 68, may result in additional costs and paperwork for the Commonwealth, managed care plans and licensed insurers. However, these guidelines are necessary for the Department to effectively implement, and for managed care plans and licensed insurers to comply with, Act 68. Costs to the Commonwealth are not expected to be significant.

Contact Person

   Questions relating to this statement of policy may be directed to Geoffrey Dunaway, Director, Accident and Health Bureau, Insurance Department, 1311 Strawberry Square, Harrisburg, PA 17120, (717) 787-4192.

Effective Date/Sunset Date

   This statement of policy is effective January 1, 1999. Upon promulgation of regulations as described in the Preamble, this statement of policy will be rescinded.

M. DIANE KOKEN,   
Insurance Commissioner

   (Editor's Note: The regulations of the Department, 31 Pa. Code Chapter 301, are amended by adding a statement of policy in §§ 301.401--301.403 and 301.411--301.416 (relating to quality health care accountability and protection) to read as set forth in Annex A.)

   Fiscal Note: 11-191. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 31.  INSURANCE

PART X.  HEALTH MAINTENANCE ORGANIZATIONS

CHAPTER 301.  HEALTH MAINTENANCE ORGANIZATIONS

Subchapter J.  QUALITY HEALTH CARE ACCOUNTABILITY AND PROTECTION--STATEMENT OF POLICY

GENERAL PROVISIONS

Sec.

301.401.Definitions.
301.402.Applicability and purpose.
301.403.Changes, modifications and disclosures.

REQUIRED PROVISIONS AND ENROLLEE DISCLOSURES

301.411.Managed care plan requirements.
301.412.Emergency services.
301.413.Continuity of care.
301.414.Information for enrollees.
301.415.Complaints and grievances.
301.416.Prompt payment.

GENERAL PROVISIONS

§ 301.401.  Definitions.

   (a)  For the purpose of this subchapter, the definitions in section 2102 of the Insurance Company Law of 1921 (40 P. S. § 991.2102), as added by the act are incorporated herein by reference as if set forth in their entirety.

   (b)  As used in this subchapter, the term ''act'' refers to Article XXI of the Insurance Company Law of 1921 (40 P. S. §§ 991.2101--991.2193), as added by the act of July 17, 1998 (P. L. 464, No. 68).

§ 301.402.  Applicability and purpose.

   (a)  This subchapter is effective January 1, 1999, and applies and provides compliance guidance to assist managed care plans and licensed insurers subject to the act.

   (b)  The terms and conditions of group and individual contract renewals and new business written by managed care plans on or after January 1, 1999, shall conform to the act.

   (c)  This subchapter applies to products issued by a managed care plan which partially insure an entity's risk, including those products which are known as ''cost plus'' or their equivalent.

   (d)  This subchapter does not apply to managed care plans that do not meet the statutory definition of ''managed care plan'' specified in section 2102 of the act (40 P. S. § 991.2102). The Department and the Department of Health have determined that managed care plans utilizing a passive gatekeeper structure, whereby an enrollee needs a referral from a primary care provider in the network, rather than from a preselected primary care provider, before receiving specialty care, will not be considered managed care plans for purposes of implementation of the act.

§ 301.403.  Changes, modifications and disclosures.

   (a)  Managed care plans and licensed insurers may implement changes, modifications and disclosures to subscriber and other contracts and marketing materials, as required under the act, in several different ways including, contract endorsements, contract amendments and modification to the contract then in effect.

   (b)  Managed care plans will be given reasonable discretion with respect to the precise manner in which the managed care plans modify their contracts and other documents to comply with the act. The Department will review all managed care plan documents within its regulatory authority intended to address the changes required by the act.

   (c)  Licensed insurers performing utilization review services for or on behalf of managed care plans within this Commonwealth shall file with the Department of Health evidence of compliance with the standards and procedures in section 2152 of the act (40 P. S. § 991.2152) at the same time as the annual statement filing to the Department, beginning with annual statements for Fiscal Year 1999.

REQUIRED PROVISIONS AND ENROLLEE DISCLOSURES

§ 301.411.  Managed care plan requirements.

   Section 2111(13) of the act (40 P. S. § 991.2111(13)) requires managed care plans to report specific information to the Department of Health and the Department with respect to the number, type and disposition of complaints and grievances filed with the managed care plan. Managed care plans currently report this type of information to the Department of Health with respect to grievances. The Departments will accept the information required by the act from managed care plans based on the current format utilized to report grievance information.

§ 301.412.  Emergency services.

   (a)  For purposes of clarification, the sections of the act which apply to emergency services are:

   (1)  Section 2102 of the act (40 P. S. § 991.2102) which defines ''emergency service.''

   (2)  Section 2116 of the act (40 P. S. § 991.2116) which establishes the parameters for the appropriate provision of, and payment by managed care plans for, emergency services rendered to enrollees by emergency health care providers.

   (3)  Section 2136(a) of the act (40 P. S. § 991.2136(a)) which establishes the requirement that certain written disclosures be provided to enrollees, and on written request, to prospective enrollees and health care providers.

   (4)  Section 2136(a)(9) of the act which sets forth the disclosure requirements with respect to managed care plans' procedures for providing emergency services.

   (b)  The definition of ''emergency service,'' as provided in section 2102 of the act, and the written disclosures referenced in subsection (a), should be incorporated into subscriber and master group contracts and, beginning January 1, 1999, in all other appropriate documents, including marketing materials.

§ 301.413.  Continuity of care.

   (a)  Continuity of care.

   (1)  Section 2117 of the act (40 P. S. § 991.2117) provides for continuity of care for enrollees when one of the following applies:

   (i)  A managed care plan terminates a contract with a participating provider.

   (ii)  A managed care plan terminates a contract with a participating provider for cause (in which case continuity of care is not required).

   (iii)  A new enrollee enters a managed care plan and is currently in an ongoing course of treatment with a nonparticipating provider.

   (2)  Continuity of care is at the option of the enrollee.

   (b)  Continuation of ongoing treatment. Section 2117(a) of the act allows an enrollee to continue an ongoing course of treatment with a provider whose contract has been terminated for reasons other than cause. Section 2117(d) allows new enrollees to continue an ongoing course of treatment with a nonparticipating provider when joining a new managed care plan. Health care services provided under these provisions shall, by statute, be ''covered by the managed care plan under the same terms and conditions as applicable for participating health care providers.'' The Department interprets these requirements to require nonparticipating and terminated providers who agree to continue to provide care to an enrollee to accept the terms applicable to participating providers, including, prohibitions on balance billing and agreements to hold enrollees harmless for moneys which may be owed by the managed care plan to the provider.

   (c)  Written disclosure. Written disclosure of the continuity of care benefit requirements imposed under the act should be incorporated into the subscriber and master group contracts and all other appropriate documents, including marketing materials.

§ 301.414.  Information for enrollees.

   (a)  Section 2136(a) of the act (40 P. S. § 991.2136(a)) sets forth an extensive list of written information required to be provided to enrollees and, on written request, to prospective enrollees and health care providers. Managed care plans may select the format for disclosure of required information. If the information is disclosed through these materials as subscriber contracts, schedules of benefits and enrollee handbooks, the information should be easily identified within the materials provided.

   (b)  For the purposes of section 2136 of the act, the Department has determined that the definition of ''prospective enrollee'' varies based on whether the coverage is offered on a group or individual basis. Accordingly:

   (1)  For group policies, prospective enrollees are those persons that are eligible for coverage under a specific group as either a subscriber or dependent. In the case of group policies, the distribution of information to prospective enrollees should be coordinated between the managed care plan and the group policyholder, with the group policyholder ordinarily handling the distribution of written materials supplied by the managed care plan. In those instances in which the group policyholder communicates to the managed care plan that it will not coordinate the distribution of information, the managed care plan should supply the information directly to prospective enrollees.

   (2)  For individual policies, a prospective enrollee is any person who meets the eligibility requirements of the managed care plan. In the case of potential individual coverage, the managed care plan is responsible for providing the required information to a prospective enrollee.

   (c)  The disclosure of information required by section 2136(a) of the act to enrollees, prospective enrollees and health care providers should be provided as follows:

   (1)  During open enrollment periods, including those which may occur prior to January 1, 1999, managed care plans may disclose summary information to enrollees and prospective enrollees. If the information does not include all the information required by section 2136(a) of the act, the managed care plan should simultaneously provide the enrollees and prospective enrollees (either directly or through the group policyholder) with a list of all other information which is required by this section but that has not been included with the open enrollment information. This information should also be available to enrollees and prospective enrollees upon request.

   (2)  Disclosure of information required by section 2136(a) of the act to enrollees following initial enrollment or upon renewal should be made within a reasonable period of time after the effective date, renewal date of coverage or the date of request for the information.

   (3)  Disclosure of information required by section 2136(a) of the act to health care providers should be made within a reasonable period of time from the date of request for the information.

   (d)  The act requires certain disclosures of information to enrollees, and, on written request, to prospective enrollees and health care providers, and that the disclosures are easily understandable by the layperson and include:

   (1)  The information specified in section 2136(a)(1)--(15) of the act.

   (2)  The information covered under section 2113(d)(2) of the act (40 P. S. § 991.2113(d)(2)), if applicable. If applicable, managed care plans shall disclose in their subscriber contracts, schedule of benefits and other appropriate material when the managed care plan does not provide, reimburse for or cover counseling, referral or other health care services due to a managed care plan's objections to the provision of the services on moral or religious grounds.

   (3)  The specified disclosure statement required by section 2136(a)(1) of the act. Subscriber and group master contracts and riders, amendments and endorsements, will not be considered to constitute marketing materials subject to the specified disclosure statement.

   (e)  For the purposes of section 2136 of the act, the information that shall be disclosed to enrollees will ordinarily be provided to the enrollee by the managed care plan. However, this information may also be provided to enrollees by the group policyholder or other designated entity.

   (f)  The act requires that managed care plans, on written request of enrollees or prospective enrollees, provide written information, which should be easily understandable by the layperson, as follows:

   (1)  The information specified in section 2136(b)(1)--(9) of the act.

   (2)  Other information, as required by the Department or the Department of Health, under section 2136(b)(10) of the act.

§ 301.415.  Complaints and grievances.

   (a)  Section 2102 of act (40 P. S. § 991.2102) defines ''complaints'' and ''grievances.''

   (b)  The Department and the Department of Health have determined that the ''complaint process'' includes issues of contract exclusions and noncovered benefit disputes and the ''grievance'' process includes review of the medical necessity and appropriateness of services otherwise covered by the managed care plan. Examples of complaints to be filed with the Department include:

   (1)  Denial of payment by the plan based upon contractual limitation rather than on medical necessity, for example, denial of payment for a visit by an enrollee on the basis that the enrollee failed to meet the contractual requirement of obtaining a referral from a primary care provider.

   (2)  Failure of a plan to approve a standing referral to a specialist or to designate a specialist to serve as an enrollee's primary care provider for an enrollee with a life-threatening, degenerative or disabling disease or condition in accordance with the plan's established qualification standards for the referral or designation.

   (3)  Refusal of the plan to provide, arrange for or pay for a procedure, drug or treatment on the basis that the procedure, drug or treatment is experimental, investigational or a cosmetic service excluded under the contract's provisions.

   (4)  Upon a determination by the enrollee's primary care provider that a referral is medically necessary and appropriate, a restriction on the enrollee's ability to obtain a referral to a participating specialist or provider of the enrollee's choice, unless the restriction is clearly disclosed in the provider directory or other written materials provided to the enrollee.

   (5)  A dispute involving a noncovered benefit or contract exclusion--for example, a request for additional physical therapy services, even if medically necessary, beyond the number specified in the enrollee contract.

   (6)  Problems relating to:

   (i)  Coordination of benefits.

   (ii)  Subrogation.

   (iii)  Conversion coverage.

   (iv)  Alleged nonpayment of premium.

   (v)  Dependent coverage.

   (vi)  Involuntary disenrollment.

   (c)  Section 2141 of the act (40 P. S. § 991.2141) establishes an internal complaint process to be followed by managed care plans.

   (d)  Section 2141(c)(4) requires the managed care plan to notify the enrollee within 5 business days of the rendering of a decision by the second level complaint review committee, including the basis for the decision and the procedure for appealing the decision to the Department or the Department of Health.

   (e)  Section 2142 of the act (40 P. S. § 991.2142) establishes an external process for enrollees who wish to appeal the internal complaint decision of the managed care plan to either the Department or the Department of Health, dependent upon the subject matter of the complaint.

   (f)  Appeals of enrollee complaints to the Department should include information such as:

   (1)  The enrollee's name, address and daytime phone number.

   (2)  The enrollee's policy number, identification number and group number (if applicable).

   (3)  A copy of the complaint submitted to the managed care plan.

   (4)  The reasons for appealing the managed care plan's decision.

   (5)  Correspondence and decisions from the managed care plan regarding the complaint.

   (g)  If the Department believes that the appeal more appropriately relates to issues and matters under the jurisdiction of the Department of Health--for example, an issue involving quality of care, the Department will notify the enrollee in writing of its finding and promptly transmit the appeal to the Department of Health for consideration. The original submission date of the appeal will be utilized to determine compliance with the filing time frame provided for in section 2142(a) of the act (40 P. S. § 991.2142(a)).

   (h)  Section 2161 of the act (40 P. S. § 991.2161) establishes an internal grievance process to be followed by managed care plans.

   (i)  Section 2162 of the act (40 P. S. § 991.2162) establishes an external process for enrollees and, under certain circumstances, providers, who wish to appeal the internal grievance decision of the managed care plan. Regulatory oversight for the external grievance process lies with the Department of Health.

   (j)  The Department and the Department of Health intend to continue the joint regulation of complaints which is currently in place. The Department's focus is to review cases which concern the potential violation of insurance statutes, including, those that fall under the Unfair Insurance Practices Act (40 P. S. §§ 1171.1--1171.15). The Department of Health will focus on complaint issues primarily involving enrollee quality of care and quality of service.

   (k)  Complaint appeals can be filed with the Department at the following address:

Pennsylvania Insurance Department
Bureau of Consumer Services
1321 Strawberry Square
Harrisburg, Pennsylvania 17120

   (l)  Complaints and grievances that were filed with either the Department or Department of Health prior to January 1, 1999, will be reviewed and resolved under the system in place at the time the complaints and grievances were filed. Complaints and grievances filed on or after January 1, 1999, will be reviewed based on the contract provisions in effect on the date the complaint or grievance is filed.

§ 301.416.  Prompt payment.

   (a)  Section 2166 of the act (40 P. S. § 991.2166) applies to licensed insurers and managed care plans. Although the Blue Cross and Blue Shield plans have not historically been defined as a ''licensed insurer,'' the Blue Cross and Blue Shield plans will utilize the standards of section 2166 of the act regarding prompt payment.

   (b)  Section 2166 of the act requires that licensed insurers and managed care plans pay ''clean claims,'' as defined in section 2102 of the act (40 P. S. § 991.2102), within 45 days of the licensed insurer's or managed care plan's receipt of the clean claim from the health care provider. The Department has determined that a claim is determined to have been ''paid'' on either the date:

   (1)  A check is issued by the licensed insurer or managed care plan to the provider.

   (2)  An electronic transfer of funds from the licensed insurer or managed care plan to the provider occurs.

   (c)  The act does not expressly require that licensed insurers or managed care plans notify health care providers if a claim is determined by the licensed insurer or managed care plan to be incomplete or to be other than a clean claim as defined by the statute. The Department strongly encourages licensed insurers and managed care plans to notify health care providers when claims are incomplete or determined by the licensed insurer or managed care plan to be other than a clean claim.

   (d)  Prior to filing a complaint with the Department, providers who believe that a licensed insurer or managed care plan has not paid a clean claim in accordance with the act should first contact the licensed insurer or managed care plan to determine the status of the claim, to ensure that sufficient documentation supporting the claim has been provided, and to determine whether the claim is considered by the licensed insurer or the managed care plan to be a clean claim.

   (e)  Complaints to the Department regarding the prompt payment of claims by a licensed insurer or managed care plan under the act should contain information such as:

   (1)  The provider's name, address and daytime phone number.

   (2)  The name of the licensed insurer or managed care plan.

   (3)  The dates of service and the dates the claims were filed with the licensed insurer or managed care plan.

   (4)  Relevant correspondence between the provider and the licensed insurer or managed care plan, including requests for additional information from the licensed insurer or managed care plan.

   (5)  Additional information which the provider believes would be of assistance in the Department's review.

[Pa.B. Doc. No. 98-1642. Filed for public inspection October 2, 1998, 9:00 a.m.]



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