1.1                          A bill for an act 
  1.2             relating to health; modifying prior authorization 
  1.3             requirements for health care services; establishing 
  1.4             requirements for provider contracting; requiring a 
  1.5             report on cost and quality of care disclosure; 
  1.6             amending Minnesota Statutes 2000, sections 62M.07; 
  1.7             62Q.74, as amended; 62Q.75, subdivision 2, by adding a 
  1.8             subdivision; proposing coding for new law in Minnesota 
  1.9             Statutes, chapter 62Q; repealing Minnesota Statutes 
  1.10            2001 Supplement, section 62Q.745. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2000, section 62M.07, is 
  1.13  amended to read: 
  1.14     62M.07 [PRIOR AUTHORIZATION OF SERVICES.] 
  1.15     (a) Utilization review organizations conducting prior 
  1.16  authorization of services must have written standards that meet 
  1.17  at a minimum the following requirements: 
  1.18     (1) written procedures and criteria used to determine 
  1.19  whether care is appropriate, reasonable, or medically necessary; 
  1.20     (2) a system for providing prompt notification of its 
  1.21  determinations to enrollees and providers and for notifying the 
  1.22  provider, enrollee, or enrollee's designee of appeal procedures 
  1.23  under clause (4); 
  1.24     (3) compliance with section 62M.05, subdivisions 3a and 3b, 
  1.25  regarding time frames for approving and disapproving prior 
  1.26  authorization requests; 
  1.27     (4) written procedures for appeals of denials of prior 
  1.28  authorization which specify the responsibilities of the enrollee 
  2.1   and provider, and which meet the requirements of sections 62M.06 
  2.2   and 72A.285, regarding release of summary review findings; and 
  2.3      (5) procedures to ensure confidentiality of 
  2.4   patient-specific information, consistent with applicable law. 
  2.5      (b) No utilization review organization, health plan 
  2.6   company, or claims administrator may conduct or require prior 
  2.7   authorization of emergency confinement or emergency treatment.  
  2.8   The enrollee or the enrollee's authorized representative may be 
  2.9   required to notify the health plan company, claims 
  2.10  administrator, or utilization review organization as soon after 
  2.11  the beginning of the emergency confinement or emergency 
  2.12  treatment as reasonably possible. 
  2.13     (c) If prior authorization for a health care service is 
  2.14  required, the utilization review organization, health plan 
  2.15  company, or claim administrator must provide access without 
  2.16  unreasonable delay by telephone or through electronic 
  2.17  communications, 24 hours a day, seven days a week, the 
  2.18  opportunity for a provider to request prior authorization of a 
  2.19  health care service.  A utilization review organization, health 
  2.20  plan company, or claim administrator may not charge a provider 
  2.21  any sort of fee, including a user fee of an electronic 
  2.22  communication system, for requesting prior authorization of a 
  2.23  health care service. 
  2.24     Sec. 2.  [62Q.732] [CITATION.] 
  2.25     Sections 62Q.732 to 62Q.751 may be cited as the "Minnesota 
  2.26  Fair Health Plan Contracting Act." 
  2.27     Sec. 3.  [62Q.733] [DEFINITIONS.] 
  2.28     Subdivision 1.  [APPLICABILITY.] For purposes of sections 
  2.29  62Q.732 to 62Q.751, the following definitions apply.  
  2.30     Subd. 2.  [ALLOWABLE PAYMENT.] "Allowable payment" means 
  2.31  the total financial compensation to be paid to a health care 
  2.32  provider for providing a health care service as determined by 
  2.33  the contract between the health plan company and the provider, 
  2.34  including any amount for which the patient or other third party 
  2.35  may be obligated to pay under the contract.  
  2.36     Subd. 3.  [CONTRACT.] "Contract" means a written agreement 
  3.1   between a health care provider and a health plan company to 
  3.2   provide health care services.  For purposes of this definition, 
  3.3   a contract shall not be construed to include a health care 
  3.4   professional employment contract. 
  3.5      Subd. 4.  [HEALTH CARE PROVIDER OR PROVIDER.] "Health care 
  3.6   provider" or "provider" means: 
  3.7      (1) a physician, chiropractor, dentist, or other provider 
  3.8   as defined under section 62J.03; or 
  3.9      (2) a hospital licensed under chapter 144, ambulatory 
  3.10  surgical treatment center, pharmacy, long-term care facility, or 
  3.11  other facility that is licensed or otherwise authorized to 
  3.12  deliver health care services. 
  3.13  For purposes of this definition, health care provider includes 
  3.14  independent practice associations and physician-hospital 
  3.15  organizations. 
  3.16     Subd. 5.  [HEALTH PLAN COMPANY.] "Health plan company" 
  3.17  means: 
  3.18     (1) a health maintenance organization operating under 
  3.19  chapter 62D; 
  3.20     (2) a community integrated service network operating under 
  3.21  chapter 62N; 
  3.22     (3) a preferred provider organization as defined in section 
  3.23  145.61, subdivision 4c; or 
  3.24     (4) an insurance company licensed under chapter 60A, a 
  3.25  nonprofit health service corporation operating under chapter 
  3.26  62C, a fraternal benefit society operating under chapter 64B, or 
  3.27  any other entity that establishes, operates, or maintains a 
  3.28  network of health care providers where the providers have 
  3.29  entered into a contract with the entity to provide health care 
  3.30  services.  
  3.31     Sec. 4.  [62Q.734] [PROVIDER CONTRACTING PROCEDURES.] 
  3.32     Subdivision 1.  [CONTRACT DISCLOSURE.] Before requiring a 
  3.33  health care provider to sign a contract, a health plan company 
  3.34  shall provide to the provider a complete copy of the proposed 
  3.35  contract with all attachments and exhibits, including a copy of 
  3.36  all guidelines and treatment parameters incorporated or 
  4.1   referenced in the contract.  The health plan company shall make 
  4.2   available to the provider a method or process that allows the 
  4.3   provider to determine the allowable payment amounts for each 
  4.4   health care service to be provided under the contract.  The 
  4.5   provider shall be allowed 90 days to review the complete 
  4.6   contract before being required to sign the contract.  
  4.7      Subd. 2.  [PROPOSED AMENDMENTS.] (a) Any amendment or 
  4.8   change in the terms of an existing contract between a health 
  4.9   plan company and a provider must be disclosed to the provider at 
  4.10  least 90 days prior to the effective date of the proposed 
  4.11  change, with the exception of amendments required of the health 
  4.12  plan company by law or governmental regulatory authority where 
  4.13  notice shall be given when received. 
  4.14     (b) Any amendment or change in the contract that alters the 
  4.15  financial reimbursement or alters the written contractual 
  4.16  policies and procedures governing the relationship between the 
  4.17  provider and the health plan company must be disclosed to the 
  4.18  provider not less than 90 days prior to the effective date of 
  4.19  the proposed change and the provider must have the opportunity 
  4.20  to terminate the contract before the amendment or change is 
  4.21  deemed to be in effect.  
  4.22     Sec. 5.  [62Q.735] [PAYMENT RATES.] 
  4.23     A formal or informal contract, term, condition, or policy 
  4.24  may not mandate or require a health care provider to accept from 
  4.25  the health plan company any payment amounts for services agreed 
  4.26  to in a contract with any other health plan company or any 
  4.27  payment amounts other than those stated in the contract between 
  4.28  the health plan company and the health care provider. 
  4.29     Sec. 6.  [62Q.736] [SERVICE CODE CHANGES.] 
  4.30     (a) A health plan company shall not change a service code 
  4.31  (current procedural terminology (CPT), current dental 
  4.32  terminology (CDT), ICD-9-CM, diagnosis-related groups (DRGs), or 
  4.33  other system) properly submitted by a health care provider.  The 
  4.34  health plan company shall determine the manner in which it 
  4.35  adjudicates claims and may limit the service codes it pays for 
  4.36  based upon factors recognized by a service code (current 
  5.1   procedural terminology (CPT), current dental terminology (CDT), 
  5.2   ICD-9-CM, diagnosis-related groups (DRGs), or other system). 
  5.3      (b) Notwithstanding paragraph (a), a health plan company 
  5.4   may correct errors in submitted claims which prevent the claims 
  5.5   from being processed provided that the health plan company: 
  5.6      (1) utilizes as specifically defined the most recently 
  5.7   issued service code (current procedural terminology (CPT), 
  5.8   current dental terminology (CDT), ICD-9-CM, diagnosis-related 
  5.9   groups (DRGs), or other system) within a year of its release; 
  5.10     (2) notifies the provider of the corrections; and 
  5.11     (3) offers the provider the opportunity to appeal any 
  5.12  corrections.  
  5.13     Sec. 7.  [62Q.737] [RECOUPMENTS.] 
  5.14     (a) A health plan company shall provide a health care 
  5.15  provider with a written explanation of any proposed recoupment 
  5.16  that includes the name of the patient, the date of the service, 
  5.17  the service code, the payment amount, the details concerning the 
  5.18  reasons for the recoupment, and an explanation of the appeal 
  5.19  process.  Upon receiving the written explanation, the provider 
  5.20  has 30 days to either appeal the proposed recoupment or to repay 
  5.21  the recoupment amount.  If the provider chooses to appeal the 
  5.22  proposed recoupment, and, upon appeal, the proposed recoupment 
  5.23  is determined to be appropriate, the provider must pay the 
  5.24  recoupment within 30 days of receiving the notice of the final 
  5.25  appeal's decision.  If the provider fails to make the required 
  5.26  recoupment payment within the required time period or fails to 
  5.27  appeal the proposed recoupment within the required time period, 
  5.28  the health plan company may offset future payments to effectuate 
  5.29  the recoupment.  
  5.30     (b) Any attempts by the health plan company to recoup 
  5.31  payments shall be limited to the same period of time allowed in 
  5.32  contract for the submission of initial claims from the date of 
  5.33  payment, except where the provider has been convicted of 
  5.34  insurance fraud. 
  5.35     Sec. 8.  [62Q.738] [UNILATERAL TERMS PROHIBITED.] 
  5.36     (a) A contract between a health plan company and a health 
  6.1   care provider shall not contain or require unilateral terms 
  6.2   regarding termination, indemnification, or arbitration.  These 
  6.3   provisions shall apply equally to both the health plan company 
  6.4   and the provider.  
  6.5      (b) A health plan company may not terminate a health care 
  6.6   provider's contract except for good cause.  If a health plan 
  6.7   company terminates a provider's contract, the health plan 
  6.8   company must inform the provider 90 days prior to the date of 
  6.9   termination of the reasons for termination.  For purposes of 
  6.10  this paragraph, good cause includes failure to meet the health 
  6.11  plan company's credentialing standards, failure to comply with 
  6.12  the terms of the contract, and failure to comply with the 
  6.13  managed care protocols of the health plan company as defined in 
  6.14  section 62Q.095, subdivision 2. 
  6.15     Sec. 9.  Minnesota Statutes 2000, section 62Q.74, as 
  6.16  amended by Laws 2001, chapter 170, is amended to read: 
  6.17     62Q.74 [NETWORK SHADOW CONTRACTING.] 
  6.18     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  6.19  section, the terms defined in this subdivision have the meanings 
  6.20  given. 
  6.21     (b) "Category of coverage" means one of the following types 
  6.22  of health-related coverage: 
  6.23     (1) health; 
  6.24     (2) no-fault automobile medical benefits; or 
  6.25     (3) workers' compensation medical benefits. 
  6.26     (c) "Health care provider" or "provider" means an 
  6.27  individual licensed, registered, or regulated by the board of 
  6.28  medical practice under chapter 147, a chiropractor licensed 
  6.29  under sections 148.01 to 148.106, a dentist licensed under 
  6.30  chapter 150A, or a hospital licensed under chapter 144. 
  6.31     (d) "Network organization" means a preferred provider 
  6.32  organization as defined in section 145.61, subdivision 4c; a 
  6.33  managed care organization as defined in section 62Q.01, 
  6.34  subdivision 5; or other entity that uses or consists of a 
  6.35  network of health care providers. 
  6.36     Subd. 2.  [PROVIDER CONSENT REQUIRED.] (a) No network 
  7.1   organization health plan company shall require a health care 
  7.2   provider to participate in a network under a category of 
  7.3   coverage that differs from the category or categories of 
  7.4   coverage to which the existing contract between the network 
  7.5   organization health plan company and the provider applies, 
  7.6   without the affirmative consent of the provider obtained under 
  7.7   subdivision 3.  
  7.8      (b) This section does not apply to situations in which the 
  7.9   network organization wishes No health plan company shall require 
  7.10  the provider to participate in a new or different health plan, 
  7.11  product, or other arrangement within a category of coverage that 
  7.12  is already provided for in an existing contract between the 
  7.13  network organization and the provider without the affirmative 
  7.14  consent of the provider obtained under subdivision 3.  This 
  7.15  paragraph does not apply to participating in health plans that 
  7.16  provide health care services to government programs, including 
  7.17  the prepaid medical assistance program, the MinnesotaCare 
  7.18  program, the prepaid general assistance medical care program, 
  7.19  and the demonstration project for people with disabilities. 
  7.20     (c) Compliance with this section may not be waived in a 
  7.21  contract or otherwise. 
  7.22     Subd. 3.  [CONSENT PROCEDURE.] (a) The network organization 
  7.23  health plan company, if it wishes to apply an existing contract 
  7.24  with a provider to a different category of coverage or health 
  7.25  plan, product, or other arrangement, shall first notify the 
  7.26  provider in writing.  The written notice must include at least 
  7.27  the following: 
  7.28     (1) the network organization's health plan company's name, 
  7.29  address, and telephone number, and the name of the specific 
  7.30  network, if it differs from that of the network organization; 
  7.31     (2) a description of the proposed new category of 
  7.32  coverage or health plan, product, or other arrangement; 
  7.33     (3) the names of all payers expected by the network 
  7.34  organization health plan company to use the network for the new 
  7.35  category of coverage or health plan, product, or other 
  7.36  arrangement; 
  8.1      (4) the approximate number of current enrollees of the 
  8.2   network organization health plan company in that category of 
  8.3   coverage or health plan, product, or other arrangement within 
  8.4   the provider's geographical area; 
  8.5      (5) a disclosure of all contract terms of the proposed new 
  8.6   category of coverage or health plan, product, or other 
  8.7   arrangement, including the discount or reduced fees, care 
  8.8   guidelines, utilization review criteria, prior authorization 
  8.9   process, and dispute resolution process; 
  8.10     (6) a form for the provider's convenience in accepting or 
  8.11  declining participation in the proposed new category of coverage 
  8.12  or health plan, product, or other arrangement, provided that the 
  8.13  provider need not use that form in responding; and 
  8.14     (7) a statement informing the provider of the provisions of 
  8.15  paragraph (b). 
  8.16     (b) Unless the provider has affirmatively agreed to 
  8.17  participate within 60 days after the postmark date of the 
  8.18  notice, the provider is deemed to have not accepted the proposed 
  8.19  new category of coverage or health plan, product, or other 
  8.20  arrangement. 
  8.21     Subd. 4.  [CONTRACT TERMINATION RESTRICTED.] A network 
  8.22  organization health plan company must not terminate an existing 
  8.23  contract with a provider, or fail to honor the contract in good 
  8.24  faith, based solely on the provider's decision not to accept a 
  8.25  proposed new category of coverage.  The most recent agreed-upon 
  8.26  contractual obligations remain in force until the existing 
  8.27  contract's renewal or termination date. 
  8.28     Subd. 5.  [REMEDY.] If a network organization health plan 
  8.29  company violates this section by reimbursing a provider as if 
  8.30  the provider had agreed under this section to participate in the 
  8.31  network under a category of coverage to which the provider has 
  8.32  not agreed, the provider has a cause of action against 
  8.33  the network organization health plan company to recover two 
  8.34  times the difference between the reasonable charges for claims 
  8.35  affected by the violation and the amounts actually paid to the 
  8.36  provider.  The provider is also entitled to recover costs, 
  9.1   disbursements, and reasonable attorney fees. 
  9.2      Sec. 10.  Minnesota Statutes 2000, section 62Q.75, is 
  9.3   amended by adding a subdivision to read: 
  9.4      Subd. 1a.  [SUBMITTING CLAIMS.] A health care provider must 
  9.5   submit to a health plan company an initial claim for health care 
  9.6   services within a reasonable period as provided in accordance 
  9.7   with the contract or within one year and any final claims within 
  9.8   15 months of the date of service.  
  9.9      Sec. 11.  Minnesota Statutes 2000, section 62Q.75, 
  9.10  subdivision 2, is amended to read: 
  9.11     Subd. 2.  [CLAIMS PAYMENTS.] (a) This section applies to 
  9.12  clean claims submitted to a health plan company or third-party 
  9.13  administrator for services provided by any: 
  9.14     (1) health care provider, except a provider licensed under 
  9.15  chapter 151; 
  9.16     (2) home health care provider, as defined in section 
  9.17  144A.43, subdivision 4; or 
  9.18     (3) health care facility. 
  9.19  All health plan companies and third-party administrators must 
  9.20  pay or deny claims that are clean claims within 30 calendar days 
  9.21  after the date upon which the health plan company or third-party 
  9.22  administrator received the claim, or, upon the determination 
  9.23  that a claim is not clean, the health plan company or 
  9.24  third-party administrator must inform the provider of this 
  9.25  determination and the reasons preventing timely payment within 
  9.26  30 calendar days after the date upon which the health plan 
  9.27  company or third-party administrator received the claim. 
  9.28     (b) If a health plan company or third-party administrator 
  9.29  does not pay or deny a clean claim within the period provided in 
  9.30  paragraph (a), the health plan company or third-party 
  9.31  administrator must pay interest on the claim for the period 
  9.32  beginning on the day after the required payment date specified 
  9.33  in paragraph (a) and ending on the date on which the health plan 
  9.34  company or third-party administrator makes the payment or denies 
  9.35  the claim.  In any payment, the health plan company or 
  9.36  third-party administrator must itemize any interest payment 
 10.1   being made separately from other payments being made for 
 10.2   services provided.  The health plan company or third-party 
 10.3   administrator may, at its discretion, require the health care 
 10.4   provider The provider shall not be required to bill the health 
 10.5   plan company or third-party administrator for the interest 
 10.6   required under this section before any interest payment is 
 10.7   made.  Payment of interest must be paid to the provider 
 10.8   automatically with the original claim.  
 10.9      (c) The rate of interest paid by a health plan company or 
 10.10  third-party administrator under this subdivision shall be 1.5 
 10.11  percent per month or any part of a month. 
 10.12     (d) A health plan company or third-party administrator is 
 10.13  not required to make an interest payment on a claim for which 
 10.14  payment has been delayed for purposes of reviewing potentially 
 10.15  fraudulent or abusive billing practices.  If payment of a claim 
 10.16  is delayed, the health plan company or third-party administrator 
 10.17  must promptly inform the provider of the delay and the reasons 
 10.18  for it.  
 10.19     (e) The commissioner may not assess a financial 
 10.20  administrative penalty against a health plan company for 
 10.21  violation of this subdivision. 
 10.22     Sec. 12.  [62Q.751] [PROFILING.] 
 10.23     (a) A health plan company or health plan sponsor that uses 
 10.24  data, or whose data is used, for utilization profiling as a 
 10.25  method of differentiating providers, including, but not limited 
 10.26  to, distinctions relating to cost of service, quality of care, 
 10.27  or differences in reimbursements, or as a requirement for 
 10.28  continued participation in the health plan company's provider 
 10.29  network shall make available to participating providers and 
 10.30  their agents at least 90 days prior to its release the following 
 10.31  information: 
 10.32     (1) a description of the methodology used in profiling so 
 10.33  that providers can clearly understand why and how they are 
 10.34  affected: 
 10.35     (i) a list of the codes measured; 
 10.36     (ii) a provider's personal frequency data within each code 
 11.1   so that the accuracy of the data may be verified; and 
 11.2      (iii) an individual provider's representation of scoring 
 11.3   that compares the provider to classification points established 
 11.4   in the profiling methodology; and 
 11.5      (2) a list of factors affecting a provider's profile not 
 11.6   included in the profiling methodology.  
 11.7      (b) Before a health plan company or health plan sponsor may 
 11.8   release any data covered by this section, the health plan 
 11.9   company or plan sponsor must provide the subject of the data the 
 11.10  opportunity to provide the health plan company or plan sponsor 
 11.11  with information supporting or critical to the methodology 
 11.12  procedure or information utilized in assembling the data to be 
 11.13  released.  The health plan company or plan sponsor must consider 
 11.14  any information provided by the data subject and provide a 
 11.15  written response to the data subject before releasing the data.  
 11.16  A health plan company or plan sponsor must provide the subject 
 11.17  of the data with a timely appeal process if the subject of the 
 11.18  data after receiving the health plan company or plan sponsor's 
 11.19  written response continues to contest the methodology, 
 11.20  procedure, or information utilized by the health plan company or 
 11.21  plan sponsor.  
 11.22     Sec. 13.  [COST AND QUALITY DISCLOSURE.] 
 11.23     (a) The commissioner of health shall assess options and 
 11.24  develop recommendations for the legislature on methods of making 
 11.25  available to patients information on the expected costs of 
 11.26  receiving a course of treatment from a particular health care 
 11.27  provider or system of providers and information on the 
 11.28  provider's quality of care.  The commissioner shall submit a 
 11.29  report to the legislature by December 1, 2002. 
 11.30     (b) The commissioner's recommendations must ensure that the 
 11.31  cost information to be made available to consumers is based on: 
 11.32     (1) the expected course of treatment as determined by the 
 11.33  patient's health care provider; 
 11.34     (2) the provider's charges for each service and how many 
 11.35  times each service is expected to be provided; and 
 11.36     (3) the methodology used to make any adjustments or 
 12.1   discounts to the provider's charges under the patient's health 
 12.2   coverage plan. 
 12.3      (c) The commissioner's recommendations shall ensure that 
 12.4   patients will have access to reliable and useful information on 
 12.5   health care provider quality.  The commissioner shall consider, 
 12.6   among other possible measures of quality, information on 
 12.7   consumer satisfaction and complaint rates; patient outcomes 
 12.8   measures; mortality and morbidity rates; rates of infections, 
 12.9   complications, and medical errors; chart reviews to determine 
 12.10  whether best practice guidelines were followed; preventive care 
 12.11  rates; reputation among peers; frequency and experience with a 
 12.12  particular procedure; research assessments of the effectiveness 
 12.13  of a procedure, drug, device, or technology; and accreditation 
 12.14  status. 
 12.15     (d) The report must include an analysis of the impact of 
 12.16  various options and recommendations on the cost of health care 
 12.17  services and health coverage, antitrust implications, and the 
 12.18  expected impact on the health care marketplace.  In developing 
 12.19  the report and recommendations, the commissioner shall solicit 
 12.20  input from interested organizations. 
 12.21     Sec. 14.  [REPEALER.] 
 12.22     Minnesota Statutes 2001 Supplement, section 62Q.745, is 
 12.23  repealed.