HBA-NIK C.S.H.B. 3021 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 3021
By: Smithee
Insurance
4/16/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

In 1975, The 64th Texas Legislature enacted the Texas Health Maintenance
Organization Act (Article 20A, V.T.C.S.) to regulate the health maintenance
organization (HMO) industry.  Art 20.12A of the Act (Review of Adverse
Determinations), 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.  Art.2012A (Complaint System), which requires every HMO to
implement a system to address a complaint brought by an enrollee, was also
amended. 

Some HMOs contend that an enrollee's disagreement with an adverse
determination constitutes 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, V.T.C.S. (Health Care Utilization
Review Agents), 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 usually used by insurers to help
make payment determinations. 

C.S.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
by this Act. C.S.H.B. 3021 redefines "adverse determination," for the
purposes of Section 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). 

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. (Definitions), 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
Act; 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., 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)  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)  Makes a nonsubstantive change.  Redesignated 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) 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 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.  Makes a conforming change. 

SECTION 5.  Effective date: September 1, 1999.
      Makes application of this Act prospective.

SECTION 6.  Emergency clause.


 COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 3021 modifies the original in SECTION 1 (Section 2f, Art.20A.02,
V.T.C.S. (Texas Health Maintenance Organization Act)), by specifying that
"adverse determination" has the meaning assigned in Section 12A of this
Act. 

C.S.B.H. 3021 modifies the original in SECTION 3 (Section 12A, Article
20A.12, V.T.C.S. (Texas Health Maintenance Organization Act) to provide
that "adverse determination" means a determination by a health maintenance
organization or a utilization review agent that proposed or furnished
health care services are not medically appropriate, in addition to not
medically necessary, and to make conforming changes.