HBA-ATS, NIK H.B. 3021 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3021 By: Smithee Insurance 9/14/1999 Enrolled BACKGROUND AND PURPOSE In 1975, The 64th Texas Legislature enacted the Texas Health Maintenance Organization Act (Article 20A, V.T.I.C.) to regulate the health maintenance organization (HMO) industry. Article 20A.12A (Review of Adverse Determinations) of the Act, as added in 1997 by the 75th Legislature, requires an HMO to notify an enrollee of the enrollee's right to appeal an adverse determination to an independent review organization (IRO); to notify an enrollee of the procedure for such an appeal; and to notify an enrollee with a life-threatening condition of the enrollee's right to an immediate appeal. Article 20A.12 (Complaint System), which requires every HMO to implement a system to address a complaint brought by an enrollee, was also amended. Prior to the 76th Legislature, some HMOs contended that an enrollee's disagreement with an adverse determination constituted a complaint and not an appeal within the meaning of Article 20A.12. An appeal of an adverse determination activates the requirements set forth by Article 21.58A (Health Care Utilization Review Agents), Insurance Code, to which HMOs are subject. Under Article 21.58A, an enrollee may request an IRO review of a denied claim. However, an enrollee must first complete the utilization review agent's appeal process before requesting an IRO review. This process is typically used by insurers to help make payment determinations. H.B. 3021 redefines "complaint" to include procedures related to review or appeal of an adverse determination, and provides that the term does not include a written dissatisfaction with an adverse determination. This bill requires each HMO to implement and maintain a complaint system to address complaints of enrollees and health care providers, and establishes the process for an appeal of an adverse determination, as that term is defined. H.B. 3021 redefines "adverse determination," for the purposes of Article 20A.12A, as a determination by an HMO or a utilization review agent (in addition to an HMO) that health care services, either furnished or proposed, are not appropriate (in addition to not medically necessary). This bill also establishes the consumer assistance program for HMOs. The program is required to assist individual consumers in complaints or appeals within and outside the operation of an HMO, including appeals under Article 21.58A or in Medicaid and Medicare fair hearings, and to refer consumers to other programs or agencies if appropriate. However, this program would not take effect unless the legislature appropriates money specifically for the purpose of administering that section. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 2(f), Article 20A.02, V.T.I.C. (Texas Health Maintenance Organization Act), to redefine "complaint" by including procedures related to review or appeal of an adverse determination as that term is defined by Section 12A of this article; and the denial, reduction, or termination of a service for reasons not related to medical necessity as aspects of the health maintenance organization's (HMO) operation. Provides that the term does not include a provider's or enrollee's oral or written dissatisfaction or disagreement with an adverse determination. SECTION 2. Amends Section 12, Article 20A.12, V.T.I.C. (Texas Health Maintenance Organization Act), as amended by Chapters 163 and 1026, Acts of the 75th Legislature, Regular Session, 1997, as follows: Sec. 12. COMPLAINT SYSTEM. (a) Requires every HMO to implement, rather than establish, and maintain a complaint system to provide reasonable procedures for the resolution of oral and written complaints initiated by enrollees or providers concerning health care services. Rectifies statutory duplication by deleting "an internal system for the notice and appeal of complaints." (b) Makes a conforming change. (c)-(e) Redesignated from Subsections (b)-(d), respectively. (f) Makes conforming changes. (g) Deletes the provision that if a resolution is to deny services upon an adverse determination of medical necessity, the clinical basis used to reach that decision must be included. Makes a conforming change. Redesignated from Subsection (f). (h) Specifies that a request for appeal must be in writing. (i) Redesignated from Subsection (h). Makes a conforming change. (j) Provides that the appeal panel must include a, rather than an additional, person who is a specialist in the field of care to which an appeal relates. Redesignated from Subsection (i). (k)-(r) Redesignated from Subsections (j)-(q), respectively. SECTION 3. Amends Section 12A, Article 20A.12A, V.T.I.C. (Texas Health Maintenance Organization Act), as added by Chapter 163, Acts of the 75th Legislature, Regular Session, 1997, as follows: Sec. 12A. New title: APPEAL OF ADVERSE DETERMINATIONS. (a) Redefines "adverse determination" to include a utilization review agent as an entity who may determine that furnished or proposed health care services are not medically appropriate, in addition to not medically necessary. Makes conforming changes. (b) Requires an HMO to implement and maintain an internal appeal system that provides reasonable procedures for the resolution of an oral or written appeal concerning dissatisfaction or disagreement with an adverse determination that is initiated by an enrollee, a person acting on behalf of an enrollee, or an enrollee's provider of record. Provides that the appeal system must include procedures for notification, review, and appeal of an adverse determination, as defined by this section, in accordance with Article 21.58A (Health Care Utilization Review Agents), Insurance Code. (c) Requires the HMO or utilization review agent to regard oral or written expression of dissatisfaction or disagreement as an appeal of the adverse determination, when an enrollee, a person acting on behalf of an enrollee, or an enrollee's provider of record expresses orally or in writing any dissatisfaction or disagreement with an adverse determination, as defined by this section Requires the HMO to review and resolve the appeal in accordance with Article 21.58A, Insurance Code. (d) Authorizes an HMO to integrate its appeal procedures related to adverse determinations with the complaint and appeal procedures established by the HMO under Section 12 of this article only if the procedures related to adverse determinations comply with this section and Article 21.58A, Insurance Code. SECTION 4. Redesignates Section 12A, Article 20A.12A, V.T.I.C. (Texas Health Maintenance Organization Act), as added by Chapter 1026, Acts of the 75th Legislature, Regular Session, 1997, as Section 12B. Makes a conforming change. SECTION 5. Amends Subchapter G, Chapter 3, Insurance Code, by adding Article 3.70-3D, as follows: Art. 3.70-3D. CONSUMER ASSISTANCE PROGRAM FOR HEALTH MAINTENANCE ORGANIZATIONS. (a) Establishes the consumer assistance program (program) for HMOs. Authorizes the commissioner of insurance (commissioner) to contract, through a request for proposals, with a nonprofit organization to operate the program. (b) Requires the program to assist individual consumers in complaints or appeals within and outside the operation of an HMO, including appeals under Article 21.58A or in Medicaid and Medicare fair hearings, and to refer consumers to other programs or agencies if appropriate. (c) Authorizes the program to operate a statewide clearinghouse for objective consumer information about health care coverage, including options for obtaining health care coverage, and to accept gifts, grants, or donations from any source for the purpose of operating the program. Authorizes the program to charge reasonable fees to consumers to support the program. (d) Authorizes the commissioner or an entity contracting with the commissioner to implement this article to establish an advisory committee composed of consumers, health care providers, and health care plan representatives. (e) Provides that a nonprofit organization contracting with the commissioner must not be involved in providing health care or health care plans and must demonstrate that it has expertise in providing direct assistance to consumers with respect to their concerns and problems with HMOs. SECTION 6. Sets forth that the changes made by Section 5 do not take effect unless the legislature appropriates money specifically for the purpose of administering that section. SECTION 7. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 8. Emergency clause.