1.1                          A bill for an act  
  1.2             relating to health; providing for certain patient 
  1.3             rights and protections; regulating coverages and the 
  1.4             classification of treatment; specifying the duties of 
  1.5             certain carriers and providers; providing remedies; 
  1.6             amending Minnesota Statutes 1998, sections 62A.60; 
  1.7             62J.71, subdivision 3; 62J.72, by adding a 
  1.8             subdivision; 62J.80; 62M.05, subdivision 3; 62M.09, 
  1.9             subdivisions 2, 3, 6, and by adding a subdivision; 
  1.10            62M.10, subdivision 7; 62Q.58, subdivision 3; and 
  1.11            144.335, by adding a subdivision; proposing coding for 
  1.12            new law in Minnesota Statutes, chapter 62Q; proposing 
  1.13            coding for new law as Minnesota Statutes, chapter 62U. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1998, section 62A.60, is 
  1.16  amended to read: 
  1.17     62A.60 [RETROACTIVE DENIAL OF EXPENSES.] 
  1.18     In cases where the subscriber or insured is liable for 
  1.19  costs beyond applicable copayments or deductibles, no insurer 
  1.20  may retroactively deny payment to a person who is covered when 
  1.21  the services are provided for health care services that are 
  1.22  otherwise covered, if the insurer or its representative failed 
  1.23  to provide prior or concurrent review or authorization for the 
  1.24  expenses when required to do so under the policy, plan, or 
  1.25  certificate.  If prior or concurrent review or authorization was 
  1.26  provided by the insurer or its representative, and the 
  1.27  preexisting condition limitation provision, the general 
  1.28  exclusion provision and any other coinsurance, or other policy 
  1.29  requirements have been met, the insurer may not deny payment for 
  2.1   the authorized service or time period except in cases where 
  2.2   fraud or substantive misrepresentation occurred.  A health 
  2.3   carrier that has given preauthorization approval for a service 
  2.4   or treatment may not subsequently deny payment for that service 
  2.5   or treatment on the grounds that the service or treatment is not 
  2.6   covered by the health plan.  At the time a decision regarding 
  2.7   the medical necessity of a service or treatment is communicated 
  2.8   to an enrollee in accordance with section 62M.05, a health 
  2.9   carrier shall also communicate whether the requested service or 
  2.10  treatment is a covered benefit. 
  2.11     Sec. 2.  Minnesota Statutes 1998, section 62J.71, 
  2.12  subdivision 3, is amended to read: 
  2.13     Subd. 3.  [RETALIATION PROHIBITED.] No person, health plan 
  2.14  company, or other organization may take retaliatory action 
  2.15  against a health care provider solely on the grounds that the 
  2.16  provider: 
  2.17     (1) refused to enter into an agreement or provide services 
  2.18  or information in a manner that is prohibited under this section 
  2.19  or took any of the actions listed in subdivision 1; 
  2.20     (2) disclosed accurate information about whether a health 
  2.21  care service or treatment is covered by an enrollee's health 
  2.22  plan company, health insurer, or health coverage plan; 
  2.23     (3) discussed diagnostic, treatment, or referral options 
  2.24  that are not covered or are limited by the enrollee's health 
  2.25  plan company, health insurer, or health coverage plan; 
  2.26     (4) criticized coverage of the enrollee's health plan 
  2.27  company, health insurer, or health coverage plan; or 
  2.28     (5) expressed personal disagreement with a decision made by 
  2.29  a person, organization, or health care provider regarding 
  2.30  treatment or coverage provided to a patient of the provider, or 
  2.31  assisted or advocated for the patient in seeking reconsideration 
  2.32  of such a decision, provided the health care provider makes it 
  2.33  clear that the provider is acting in a personal capacity and not 
  2.34  as a representative of or on behalf of the entity that made the 
  2.35  decision; 
  2.36     (6) discloses information relating to the care, services, 
  3.1   or conditions affecting an enrollee to an appropriate public 
  3.2   regulatory agency, private accreditation body, or management 
  3.3   personnel of the health plan company; or 
  3.4      (7) initiates, cooperates, or otherwise participates in a 
  3.5   utilization review under chapter 62M or in an investigation or 
  3.6   proceeding by a public regulatory agency. 
  3.7      Sec. 3.  Minnesota Statutes 1998, section 62J.72, is 
  3.8   amended by adding a subdivision to read: 
  3.9      Subd. 1a.  [DISCLOSURE OF COVERAGE AGREEMENT OR SUBSCRIBER 
  3.10  CONTRACT.] A health plan company shall, upon request, provide to 
  3.11  a prospective enrollee a specimen copy of the actual certificate 
  3.12  or other evidence of coverage required to be filed with the 
  3.13  commissioner of commerce or commissioner of health under chapter 
  3.14  62A, 62C, or 62D. 
  3.15     Sec. 4.  Minnesota Statutes 1998, section 62J.80, is 
  3.16  amended to read: 
  3.17     62J.80 [RETALIATION.] 
  3.18     A health plan company or health care provider shall not 
  3.19  retaliate or take adverse action against an enrollee or, 
  3.20  patient, or health care provider who, in good faith, makes a 
  3.21  complaint against a health plan company or health care 
  3.22  provider or who participates in a utilization review under 
  3.23  chapter 62M.  If retaliation is suspected, the executive 
  3.24  director of a health-related licensing board as defined in 
  3.25  section 214.01, subdivision 2, may report it to the appropriate 
  3.26  regulatory authority.  
  3.27     Sec. 5.  Minnesota Statutes 1998, section 62M.05, 
  3.28  subdivision 3, is amended to read: 
  3.29     Subd. 3.  [NOTIFICATION OF DETERMINATIONS.] A utilization 
  3.30  review organization must have written procedures for providing 
  3.31  notification of its determinations on all certifications in 
  3.32  accordance with the following: 
  3.33     (a) When an initial determination is made to certify, 
  3.34  notification must be provided promptly by telephone to the 
  3.35  provider according to paragraph (c).  The utilization review 
  3.36  organization shall send written notification to the hospital, 
  4.1   attending physician, or applicable service provider within ten 
  4.2   business days of the determination in accordance with section 
  4.3   72A.201, subdivision 4a, or and the enrollee according to 
  4.4   paragraph (c).  The utilization review organization shall 
  4.5   maintain an audit trail of the determination and telephone 
  4.6   notification.  For purposes of this subdivision, "audit trail" 
  4.7   includes documentation of the telephone notification, including 
  4.8   the date; the name of the person spoken to; the enrollee or 
  4.9   patient; the service, procedure, or admission certified; and the 
  4.10  date of the service, procedure, or admission.  If the 
  4.11  utilization review organization indicates certification by use 
  4.12  of a number, the number must be called the "certification 
  4.13  number." 
  4.14     (b) When a determination is made not to certify a hospital 
  4.15  or surgical facility admission or extension of a hospital stay, 
  4.16  or other service requiring review determination, within one 
  4.17  working day after making the decision the attending physician 
  4.18  and hospital must be notified by telephone and a written 
  4.19  notification must be sent to the hospital, attending physician, 
  4.20  and enrollee or patient.  The written notification must include 
  4.21  the principal reason or reasons for the determination and the 
  4.22  process for initiating an appeal of the determination.  Upon 
  4.23  request, the utilization review organization shall provide the 
  4.24  attending physician or, provider, enrollee, or patient with the 
  4.25  criteria used to determine the necessity, appropriateness, and 
  4.26  efficacy of the health care service and identify the database, 
  4.27  professional treatment parameter, or other basis for the 
  4.28  criteria.  Reasons for a determination not to certify may 
  4.29  include, among other things, the lack of adequate information to 
  4.30  certify after a reasonable attempt has been made to contact the 
  4.31  attending physician. 
  4.32     (c) When an initial determination is made to certify, the 
  4.33  utilization review organization shall provide notice according 
  4.34  to this paragraph: 
  4.35     (1) The utilization review organization shall provide 
  4.36  notice as soon as possible according to medical exigencies of 
  5.1   the case and in no event later than seven business days after 
  5.2   the date of receipt of information that is necessary to make the 
  5.3   determination. 
  5.4      (2) In the case of a utilization review involving 
  5.5   retrospective review of health care services previously 
  5.6   provided, the utilization review organization shall provide 
  5.7   notice within 30 days of the date of receipt of information that 
  5.8   is necessary to make the determination.  
  5.9      Sec. 6.  Minnesota Statutes 1998, section 62M.09, 
  5.10  subdivision 2, is amended to read: 
  5.11     Subd. 2.  [LICENSURE REQUIREMENT.] Except as provided under 
  5.12  subdivision 3, nurses, physicians, and other licensed health 
  5.13  professionals conducting reviews of medical services, and other 
  5.14  clinical reviewers conducting specialized reviews in their area 
  5.15  of specialty must be currently licensed or certified by an 
  5.16  approved state licensing agency in the United States. 
  5.17     Sec. 7.  Minnesota Statutes 1998, section 62M.09, 
  5.18  subdivision 3, is amended to read: 
  5.19     Subd. 3.  [PHYSICIAN REVIEWER INVOLVEMENT.] A physician 
  5.20  must review all cases in which the utilization review 
  5.21  organization has concluded that a determination not to certify 
  5.22  for clinical reasons is appropriate.  The physician conducting 
  5.23  the review must be licensed.  The physician should shall be 
  5.24  reasonably available by telephone to discuss the determination 
  5.25  with the attending physician.  This subdivision does not apply 
  5.26  to outpatient mental health or substance abuse services governed 
  5.27  by subdivision 3a.  
  5.28     Sec. 8.  Minnesota Statutes 1998, section 62M.09, 
  5.29  subdivision 6, is amended to read: 
  5.30     Subd. 6.  [PHYSICIAN CONSULTANTS.] A utilization review 
  5.31  organization must use physician consultants in the appeal 
  5.32  process described in section 62M.06, subdivision 3.  The 
  5.33  physician consultants should include, as needed and available, 
  5.34  specialists who are must be board-certified, or board-eligible 
  5.35  and working towards certification, in a specialty board approved 
  5.36  by the American Board of Medical Specialists or the American 
  6.1   Board of Osteopathy. 
  6.2      Sec. 9.  Minnesota Statutes 1998, section 62M.09, is 
  6.3   amended by adding a subdivision to read: 
  6.4      Subd. 9.  [ANNUAL REPORT.] A utilization review 
  6.5   organization shall file an annual report with the commissioner 
  6.6   of commerce that includes: 
  6.7      (1) the number and rate of denied prior authorization 
  6.8   requests for each procedure or service; and 
  6.9      (2) the number and rate of denials overturned on appeal. 
  6.10     Sec. 10.  Minnesota Statutes 1998, section 62M.10, 
  6.11  subdivision 7, is amended to read: 
  6.12     Subd. 7.  [AVAILABILITY OF CRITERIA.] Upon request, a 
  6.13  utilization review organization shall provide to an enrollee or 
  6.14  to, an attending physician or provider, and the commissioners of 
  6.15  commerce and health the criteria used for a specific procedure 
  6.16  to determine the medical necessity, appropriateness, and 
  6.17  efficacy of that a procedure or service and identify the 
  6.18  database, professional treatment guideline, or other basis for 
  6.19  the criteria. 
  6.20     Sec. 11.  [62Q.235] [MEDICALLY NECESSARY CARE.] 
  6.21     For purposes of coverage under a health plan, "medically 
  6.22  necessary care" means diagnostic testing, preventative services, 
  6.23  and health care services that are appropriate, in terms of 
  6.24  types, frequency, level, setting, and duration, to the 
  6.25  enrollee's diagnosis or condition.  Medically necessary care 
  6.26  must be consistent with generally accepted practice parameters, 
  6.27  as determined by licensed health care providers in the same or 
  6.28  similar general specialty as typically manages the condition, 
  6.29  procedure, or treatment at issue and must: 
  6.30     (1) help restore, establish, maintain, or improve the 
  6.31  enrollee's health or function; or 
  6.32     (2) prevent deterioration of the enrollee's health 
  6.33  condition. 
  6.34     Sec. 12.  Minnesota Statutes 1998, section 62Q.58, 
  6.35  subdivision 3, is amended to read: 
  6.36     Subd. 3.  [DISCLOSURE.] Information regarding referral 
  7.1   procedures, including the application process and criteria and 
  7.2   conditions for a standing referral to a health care provider who 
  7.3   is a specialist, must be included in member contracts or 
  7.4   certificates of coverage and must be provided to an enrollee or 
  7.5   prospective enrollee by a health plan company upon request. 
  7.6      Sec. 13.  [62U.01] [SHORT TITLE.] 
  7.7      This chapter may be cited as the "Health Care Liability 
  7.8   Act." 
  7.9      Sec. 14.  [62U.02] [DEFINITIONS.] 
  7.10     Subdivision 1.  [ENROLLEE.] "Enrollee" means an individual 
  7.11  who is covered by a health carrier, health insurance, or health 
  7.12  coverage plan, including an insured, policyholder, subscriber, 
  7.13  contract holder, member-covered person, or certificate holder. 
  7.14     Subd. 2.  [HEALTH PLAN.] "Health plan" means a policy or 
  7.15  certificate of accident and sickness insurance as defined in 
  7.16  section 62A.01 offered by an insurance company licensed under 
  7.17  chapter 60A; a subscriber contract or certificate offered by a 
  7.18  nonprofit health service plan corporation operating under 
  7.19  chapter 62C; a health maintenance contract or certificate 
  7.20  offered by a health maintenance organization operating under 
  7.21  chapter 62D; a health benefit certificate offered by a fraternal 
  7.22  benefit society operating under chapter 64B; or health coverage 
  7.23  offered by a joint self-insurance employee health plan operating 
  7.24  under chapter 62H.  Health plan means individual and group 
  7.25  coverage, unless otherwise specified.  
  7.26     Subd. 3.  [HEALTH CARE PROVIDER.] "Health care provider" or 
  7.27  "provider" means a person defined in section 144.335, 
  7.28  subdivision 1, paragraph (b).  
  7.29     Subd. 4.  [HEALTH CARE TREATMENT DECISION.] "Health care 
  7.30  treatment decision" means determinations or decisions made that 
  7.31  affect the quality of the diagnosis, care, or treatment provided 
  7.32  to the enrollees.  A health care treatment decision includes, 
  7.33  but is not limited to, a determination that a service, 
  7.34  treatment, or procedure is not medically necessary. 
  7.35     Subd. 5.  [HEALTH CARRIER.] "Health carrier" means an 
  7.36  insurance company licensed under chapter 60A to offer, sell, or 
  8.1   issue a policy of accident and sickness insurance as defined in 
  8.2   section 62A.01; a nonprofit health service plan corporation 
  8.3   operating under chapter 62C; a health maintenance organization 
  8.4   operating under chapter 62D; a joint self-insurance employee 
  8.5   health plan operating under chapter 62H; a community integrated 
  8.6   systems network licensed under chapter 62N; a fraternal benefit 
  8.7   society operating under chapter 64B; or an association, 
  8.8   partnership, corporation, or limited liability corporation 
  8.9   organized for the purpose of providing, arranging, or 
  8.10  administering health care services or treatment. 
  8.11     Subd. 6.  [MEDICALLY NECESSARY TREATMENT.] "Medically 
  8.12  necessary treatment" means services, treatment, or procedures 
  8.13  that are appropriate in terms of type, frequency, level, 
  8.14  setting, and duration of the enrollee's diagnosis or condition 
  8.15  and is: 
  8.16     (1) consistent with generally accepted practice parameters 
  8.17  as determined by a practicing health care provider in the same 
  8.18  or similar general specialty that typically manages the 
  8.19  condition, treatment, or procedure at issue; and 
  8.20     (2) helps to restore, maintain, establish, or improve the 
  8.21  enrollee's health or function; or 
  8.22     (3) prevents deterioration of the enrollee's condition; or 
  8.23     (4) prevents the reasonably likely onset of a health 
  8.24  problem or detects an incipient problem. 
  8.25     Subd. 7.  [ORDINARY CARE.] "Ordinary care" means, in the 
  8.26  case of a health carrier, that degree of care that a health 
  8.27  insurance carrier of ordinary prudence would use under the same 
  8.28  or similar circumstances.  In the case of a person who is an 
  8.29  employee, agent, or representative of a health carrier, ordinary 
  8.30  care means that degree of care that a person of ordinary 
  8.31  prudence in the same profession, specialty, or area of practice 
  8.32  would use in the same or similar circumstances. 
  8.33     Sec. 15.  [62U.03] [APPLICATION.] 
  8.34     Subdivision 1.  [DUTY OF ORDINARY CARE.] A health carrier 
  8.35  has the duty to exercise ordinary care when making health care 
  8.36  treatment decisions and is liable for damages to an enrollee for 
  9.1   harm proximately caused by its failure to exercise ordinary 
  9.2   care.  Damages awarded pursuant to this subdivision must not be 
  9.3   considered claims-related expenses. 
  9.4      Subd. 2.  [RESPONSIBILITY FOR ACTIONS OF OTHERS.] A health 
  9.5   carrier is also liable for damages to an enrollee for harm 
  9.6   proximately caused by a health care treatment decision made by 
  9.7   its: 
  9.8      (1) employees; 
  9.9      (2) agents; or 
  9.10     (3) representatives who are acting on its behalf and over 
  9.11  whom it has the right to exercise influence or control or has 
  9.12  actually exercised influence or control that results in the 
  9.13  failure to exercise ordinary care. 
  9.14     In an action against a health carrier, a finding that a 
  9.15  health care provider is an employee, agent, or representative of 
  9.16  the health carrier shall not be based solely on proof that the 
  9.17  person's name appears in a listing of approved health care 
  9.18  providers made available to enrollees under a health plan. 
  9.19     Subd. 3.  [DEFENSES.] It shall be a defense to an action 
  9.20  asserted against a health carrier that: 
  9.21     (1) neither the health carrier, nor any employee, agent, or 
  9.22  representative for whose conduct the health carrier is liable 
  9.23  under subdivision 2, controlled, influenced, or participated in 
  9.24  the health care treatment decision; and 
  9.25     (2) the health carrier did not deny or delay payment for 
  9.26  any service, treatment, or procedure prescribed or recommended 
  9.27  by a provider to the enrollee. 
  9.28     Subd. 4.  [LIMITATIONS.] (a) The standards in subdivisions 
  9.29  1 and 2 create no obligation on the part of the health carrier 
  9.30  to provide to an enrollee a service, treatment, or procedure 
  9.31  that is not covered by the health plan. 
  9.32     (b) This chapter does not create liability on the part of 
  9.33  an employer or an employer group purchasing organization that 
  9.34  purchases coverage or assumes risk on behalf of its employees. 
  9.35     Subd. 5.  [LIMITATION ON DEFENSES.] Nothing in any law of 
  9.36  this state prohibiting a health carrier from practicing medicine 
 10.1   or being licensed to practice medicine may be asserted as a 
 10.2   defense by the health carrier in an action brought against it 
 10.3   pursuant to this section or any other law. 
 10.4      Subd. 6.  [NONAPPLICATION.] This chapter does not apply to 
 10.5   workers' compensation insurance coverage under chapter 79 or 
 10.6   workers' compensation self-insurance under chapter 79A. 
 10.7      Subd. 7.  [RECOVERY OF ATTORNEY FEES AND OTHER 
 10.8   EXPENSES.] If an enrollee is the prevailing party in a 
 10.9   proceeding under this section, the court may award attorney fees 
 10.10  and other reasonable expenses to the enrollee.  This subdivision 
 10.11  does not preclude an enrollee from recovering costs, 
 10.12  disbursements, fees, and expenses under other applicable law. 
 10.13     Subd. 8.  [TRANSFER OF LIABILITY.] Any agreement or 
 10.14  directive that attempts to transfer to a health care provider, 
 10.15  by indemnification or otherwise, any tort liability relating to 
 10.16  the activities, actions, or omissions of a health carrier is 
 10.17  contrary to state public policy and is null and void. 
 10.18     Sec. 16.  Minnesota Statutes 1998, section 144.335, is 
 10.19  amended by adding a subdivision to read: 
 10.20     Subd. 2a.  [DISCLOSURE OF INCENTIVE AGREEMENTS.] A provider 
 10.21  shall disclose to a patient in writing the precise reimbursement 
 10.22  methodology used by the patient's health plan company as defined 
 10.23  under section 62J.70 to reimburse the provider.  The disclosure 
 10.24  must explain clearly and in plain, ordinary language any aspects 
 10.25  of the reimbursement methodology that creates a direct or 
 10.26  indirect financial incentive for the provider to limit or 
 10.27  restrict the health care provided to that patient.  
 10.28     Sec. 17.  [APPLICATION.] 
 10.29     Sections 1, 2, 3, 11, 12, 13, 14, and 15 shall not apply to 
 10.30  an insurance company licensed under Minnesota Statutes, chapter 
 10.31  60A, to offer, sell, or issue a policy of accident and sickness 
 10.32  insurance as defined in Minnesota Statutes, section 62A.01.