HBA-NIK H.B. 3021 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3021 By: Smithee Insurance 3/29/1999 Introduced BACKGROUND AND PURPOSE Enacted by the 75th Legislature, Article 20A.12, Insurance Code, requires health maintenance organizations (HMOs) to establish a system for complaints and appeals brought by enrollees and health care providers. The system must include a provision to notify an enrollee of the enrollee's right to appeal an adverse determination to an independent review organization (IRO). Some HMOs have concluded that an enrollee's disagreement with an adverse determination constitutes a complaint and not an appeal within the meaning of Article 20A.12. This is important because an appeal of an adverse determination activates the requirements set forth by Article 21.58A, Insurance Code, to which HMOs are subject. Under Article 21.58A, an enrollee can 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 usually 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 every HMO to implement and maintain a complaint system to provide reasonable procedures concerning health care services. This bill also establishes the provisions for the appeal of adverse determinations. 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.C.S. (Texas Health Maintenance Organization Act), to redefine "complaint" by including procedures related to review or appeal of an adverse determination; 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, rather than a complaint is not, 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.C.S. (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, rather than an internal system for the notice and appeal of complaints. (b) Deletes the requirement that each HMO implement and maintain a system for the resolution of complaints as provided by this section. (c)-(e) Redesignated from Subsections (b)-(d), respectively. (f) Makes conforming changes. (g) Deletes the provision that if the resolution is to deny services on 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 the request for appeal must be in writing, and that the HMO shall complete the appeals process under this section not later than the 30th calendar day after the date of the receipt of the written request for appeal. (i) Redesignated from Subsection (h). Makes a conforming change. (j) Provides that if specialty care is in dispute, the appeal panel must include a person, rather than an additional person, who is a specialist in the field of care to which the appeal relates. Redesignates from Subsection (i). (k)-(r) Redesignated from Subsections (j)-(q), respectively. SECTION 3. Amends Section 12A, Article 20A.12, V.T.C.S. (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) Deletes the provision that the complaint system required by Section 12 of this Act must include the enumerated notifications to an independent review organization. Redefines "adverse determination" to include a utilization review agent's determination that the health care services furnished or proposed to be furnished to an enrollee are not medically necessary. (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 in accordance with Article 21.58A (Health Care Utilization Review Agents), Insurance Code. (c) Requires the HMO or utilization review agent to regard the 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. 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 Act 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.12, V.T.C.S. (Texas Health Maintenance Organization Act), as added by Chapter 1026, Acts of the 75th Legislature, Texas Health Maintenance Organization Act, as Section 12B. SECTION 5. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 6. Emergency clause.