Minnesota Session Laws - 2004, Regular Session

                            CHAPTER 246-H.F.No. 606 
                  An act relating to health; modifying prior 
                  authorization requirements for health care services; 
                  establishing requirements for provider contracting; 
                  modifying provisions for payment of claims; amending 
                  Minnesota Statutes 2002, sections 62M.07; 62Q.74; 
                  62Q.75, subdivision 2; proposing coding for new law in 
                  Minnesota Statutes, chapter 62Q; repealing Minnesota 
                  Statutes 2002, section 62Q.745. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2002, section 62M.07, is 
        amended to read: 
           62M.07 [PRIOR AUTHORIZATION OF SERVICES.] 
           (a) Utilization review organizations conducting prior 
        authorization of services must have written standards that meet 
        at a minimum the following requirements: 
           (1) written procedures and criteria used to determine 
        whether care is appropriate, reasonable, or medically necessary; 
           (2) a system for providing prompt notification of its 
        determinations to enrollees and providers and for notifying the 
        provider, enrollee, or enrollee's designee of appeal procedures 
        under clause (4); 
           (3) compliance with section 62M.05, subdivisions 3a and 3b, 
        regarding time frames for approving and disapproving prior 
        authorization requests; 
           (4) written procedures for appeals of denials of prior 
        authorization which specify the responsibilities of the enrollee 
        and provider, and which meet the requirements of sections 62M.06 
        and 72A.285, regarding release of summary review findings; and 
           (5) procedures to ensure confidentiality of 
        patient-specific information, consistent with applicable law. 
           (b) No utilization review organization, health plan 
        company, or claims administrator may conduct or require prior 
        authorization of emergency confinement or emergency treatment.  
        The enrollee or the enrollee's authorized representative may be 
        required to notify the health plan company, claims 
        administrator, or utilization review organization as soon after 
        the beginning of the emergency confinement or emergency 
        treatment as reasonably possible. 
           (c) If prior authorization for a health care service is 
        required, the utilization review organization, health plan 
        company, or claim administrator must allow providers to submit 
        requests for prior authorization of the health care services 
        without unreasonable delay by telephone, facsimile, or voice 
        mail or through an electronic mechanism 24 hours a day, seven 
        days a week.  This paragraph does not apply to dental service 
        covered under MinnesotaCare, general assistance medical care, or 
        medical assistance. 
           Sec. 2.  [62Q.732] [CITATION.] 
           Sections 62Q.732 to 62Q.75 may be cited as the "Minnesota 
        Health Plan Contracting Act."  
           Sec. 3.  [62Q.733] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] For purposes of sections 
        62Q.732 to 62Q.739, the following definitions apply.  
           Subd. 2.  [CONTRACT.] "Contract" means a written agreement 
        between a health care provider and a health plan company to 
        provide health care services.  
           Subd. 3.  [HEALTH CARE PROVIDER OR PROVIDER.] "Health care 
        provider" or "provider" means a physician, chiropractor, 
        dentist, podiatrist, or other provider as defined under section 
        62J.03, other than hospitals, ambulatory surgical centers, or 
        freestanding emergency rooms.  
           Subd. 4.  [HEALTH PLAN COMPANY.] (a) "Health plan company" 
        means: 
           (1) a health maintenance organization operating under 
        chapter 62D; 
           (2) a community integrated service network operating under 
        chapter 62N; 
           (3) a preferred provider organization as defined in section 
        145.61, subdivision 4c; or 
           (4) an insurance company licensed under chapter 60A, 
        nonprofit health service corporation operating under chapter 
        62C, fraternal benefit society operating under chapter 64B, or 
        any other entity that establishes, operates, or maintains a 
        health benefit plan or network of health care providers where 
        the providers have entered into a contract with the entity to 
        provide health care services.  
           (b) This subdivision does not apply to a health plan 
        company with respect to coverage described in section 62A.011, 
        subdivision 3, clauses (1) to (5) and (7) to (12).  
           Subd. 5.  [FEE SCHEDULE.] "Fee schedule" means the total 
        expected financial compensation paid to a health care provider 
        for providing a health care service as determined by the 
        contract between the health plan company and the provider, 
        inclusive of withhold amounts and any amount for which the 
        patient or other third party may be obligated to pay under the 
        contract.  
           Sec. 4.  [62Q.734] [EXEMPTION.] 
           Sections 62Q.735 to 62Q.739, and 62Q.74 do not apply to 
        health plan companies whose annual Minnesota health premium 
        revenues are less than three percent of the total annual 
        Minnesota health premium revenues, as measured by the assessment 
        base of the Minnesota Comprehensive Health Association.  For 
        purposes of this percentage calculation, a health plan company's 
        premiums include the Minnesota health premium revenues of its 
        affiliates.  
           Sec. 5.  [62Q.735] [PROVIDER CONTRACTING PROCEDURES.] 
           Subdivision 1.  [CONTRACT DISCLOSURE.] (a) Before requiring 
        a health care provider to sign a contract, a health plan company 
        shall give to the provider a complete copy of the proposed 
        contract, including:  
           (1) all attachments and exhibits; 
           (2) operating manuals; 
           (3) a general description of the health plan company's 
        health service coding guidelines and requirement for procedures 
        and diagnoses with modifiers, and multiple procedures; and 
           (4) all guidelines and treatment parameters incorporated or 
        referenced in the contract.  
           (b) The health plan company shall make available to the 
        provider the fee schedule or a method or process that allows the 
        provider to determine the fee schedule for each health care 
        service to be provided under the contract.  
           (c) Notwithstanding paragraph (b), a health plan company 
        that is a dental plan organization, as defined in section 
        62Q.76, shall disclose information related to the individual 
        contracted provider's expected reimbursement from the dental 
        plan organization.  Nothing in this section requires a dental 
        plan organization to disclose the plan's aggregate maximum 
        allowable fee table used to determine other providers' fees.  
        The contracted provider must not release this information in any 
        way that would violate any state or federal antitrust law.  
           Subd. 2.  [PROPOSED AMENDMENTS.] (a) Any amendment or 
        change in the terms of an existing contract between a health 
        plan company and a provider must be disclosed to the provider at 
        least 45 days prior to the effective date of the proposed 
        change, with the exception of amendments required of the health 
        plan company by law or governmental regulatory authority, when 
        notice shall be given to the provider when the requirement is 
        made known to the health plan company.  
           (b) Any amendment or change in the contract that alters the 
        fee schedule or materially alters the written contractual 
        policies and procedures governing the relationship between the 
        provider and the health plan company must be disclosed to the 
        provider not less than 45 days before the effective date of the 
        proposed change and the provider must have the opportunity to 
        terminate the contract before the amendment or change is deemed 
        to be in effect.  
           (c) By mutual consent, evidenced in writing in amendments 
        separate from the base contract and not contingent on 
        participation, the parties may waive the disclosure requirements 
        under paragraphs (a) and (b).  
           (d) Notwithstanding paragraphs (a) and (b), the effective 
        date of contract termination shall comply with the terms of the 
        contract when a provider terminates a contract.  
           Subd. 3.  [HOSPITAL CONTRACT AMENDMENT DISCLOSURE.] (a) Any 
        amendment or change in the terms of an existing contract between 
        a network organization and a hospital, ambulatory surgical 
        center, or freestanding emergency room must be disclosed to that 
        provider. 
           (b) Any amendment or change in the contract that alters the 
        financial reimbursement or alters the written contractual 
        policies and procedures governing the relationship between the 
        hospital, ambulatory surgical center, or freestanding emergency 
        room and the network organization must be disclosed to that 
        provider before the amendment or change is deemed to be in 
        effect. 
           (c) For purposes of this subdivision, "network organization"
        means a preferred provider organization, as defined in section 
        145.61, subdivision 4c; a managed care organization, as defined 
        in section 62Q.01, subdivision 5; or other entity that uses or 
        consists of a network of health care providers. 
           Sec. 6.  [62Q.736] [PAYMENT RATES.] 
           A contract between a health plan company and a provider 
        shall comply with section 62A.64.  
           Sec. 7.  [62Q.737] [SERVICE CODE CHANGES.] 
           (a) For purposes of this section, "service code" means 
        current procedural terminology (CPT), current dental terminology 
        (CDT), ICD-CM, diagnosis-related groups (DRGs), or other coding 
        system. 
           (b) The health plan company shall determine the manner in 
        which it adjudicates claims.  The provider may request a 
        description of the general coding guidelines applicable to the 
        health care services the provider is reasonably expected to 
        render pursuant to the contract.  The health plan company or its 
        designee shall provide the coding guidelines not later than 30 
        days after the date the health plan receives the request.  The 
        health plan company shall provide notice of material changes to 
        the coding guidelines not later than 45 days prior to the date 
        the changes take effect and shall not make retroactive revision 
        to the coding guidelines, but may issue new guidelines.  A 
        provider who receives information under this section may use or 
        disclose the information only for the purpose of practice 
        management, billing activities, or other business operations and 
        may not disclose the information to third parties without the 
        consent of the health plan company.  
           (c) The health plan company may correct an error in a 
        submitted claim that prevents the claim from being processed, 
        provided that the health plan company:  
           (1) notifies the provider of the change and reason for the 
        change according to federal Health Insurance Portability and 
        Accountability Act (HIPAA) transaction standards; and 
           (2) offers the provider the opportunity to appeal any 
        changes.  
           (d) Nothing in this section shall be interpreted to require 
        a health plan company to violate copyright or other law by 
        disclosing proprietary licensed software.  In addition to the 
        above, the health plan company shall, upon request of a 
        contracted provider, disclose the name, edition, and model 
        version of the software that the health plan company uses to 
        determine bundling and unbundling of claims.  
           (e) This section does not apply to government programs, 
        including state public programs, Medicare, and Medicare-related 
        coverage.  
           Sec. 8.  [62Q.739] [UNILATERAL TERMS PROHIBITED.] 
           (a) A contract between a health plan company and a health 
        care provider shall not contain or require unilateral terms 
        regarding indemnification or arbitration.  Notwithstanding any 
        prohibitions in this section, a contract between a health plan 
        company and a health care provider may be unilaterally 
        terminated by either party in accordance with the terms of the 
        contract. 
           (b) A health plan company may not terminate or fail to 
        renew a health care provider's contract without cause unless the 
        company has given the provider a written notice of the 
        termination or nonrenewal 120 days before the effective date. 
           Sec. 9.  Minnesota Statutes 2002, section 62Q.74, is 
        amended to read: 
           62Q.74 [NETWORK SHADOW CONTRACTING.] 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the terms defined in this subdivision have the meanings 
        given. 
           (b) "category of coverage" means one of the following types 
        of health-related coverage: 
           (1) health; 
           (2) no-fault automobile medical benefits; or 
           (3) workers' compensation medical benefits. 
           (c) "Health care provider" or "provider" means an 
        individual licensed, registered, or regulated by the Board of 
        Medical Practice under chapter 147, a chiropractor licensed 
        under sections 148.01 to 148.106, a dentist licensed under 
        chapter 150A, or a hospital licensed under chapter 144. 
           (d) "Network organization" means a preferred provider 
        organization as defined in section 145.61, subdivision 4c; a 
        managed care organization as defined in section 62Q.01, 
        subdivision 5; or other entity that uses or consists of a 
        network of health care providers. 
           (b) "Health care provider" or "provider" means a physician, 
        chiropractor, dentist, podiatrist, hospital, ambulatory surgical 
        center, freestanding emergency room, or other provider, as 
        defined in section 62J.03. 
           Subd. 2.  [PROVIDER CONSENT REQUIRED.] (a) No network 
        organization health plan company shall require a health care 
        provider to participate in a network under a category of 
        coverage that differs from the category or categories of 
        coverage to which the existing contract between the network 
        organization health plan company and the provider applies, 
        without the affirmative consent of the provider obtained under 
        subdivision 3.  
           (b) This section does not apply to situations in which the 
        network organization wishes No health plan company shall 
        require, as a condition of participation in any health plan, 
        product, or other arrangement, the provider to participate in a 
        new or different health plan, product, or other arrangement 
        within a category of coverage that is already provided for in an 
        existing contract between the network organization and the 
        provider results in a different underlying financial 
        reimbursement methodology without the affirmative consent of the 
        provider obtained under subdivision 3.  This paragraph does not 
        apply to participation in health plan products or other 
        arrangements that provide health care services to government 
        programs, including state public programs, Medicare, and 
        Medicare-related coverage. 
           (c) Compliance with this section may not be waived in a 
        contract or otherwise. 
           Subd. 3.  [CONSENT PROCEDURE.] (a) The network organization 
        health plan company, if it wishes to apply an existing contract 
        with a provider to a different category of coverage or health 
        plan, product, or other arrangement within a category of 
        coverage that results in a different underlying financial 
        reimbursement methodology, shall first notify the provider in 
        writing.  The written notice must include at least the following:
           (1) the network organization's health plan company's name, 
        address, and telephone number, and the name of the specific 
        network, if it differs from that of the network organization 
        health plan company; 
           (2) a description of the proposed new category of 
        coverage or health plan, product, or other arrangement within a 
        category of coverage; 
           (3) the names of all payers expected by the network 
        organization health plan company to use the network for the new 
        category of coverage or health plan, product, or other 
        arrangement within a category of coverage; 
           (4) the approximate number of current enrollees of the 
        network organization health plan company in that category of 
        coverage or health plan, product, or other arrangement within a 
        category of coverage within the provider's geographical area; 
           (5) a disclosure of all contract terms of the proposed new 
        category of coverage or health plan, product, or other 
        arrangement within a category of coverage, including the 
        discount or reduced fees, care guidelines, utilization review 
        criteria, prior notification process, prior authorization 
        process, and dispute resolution process; 
           (6) a form for the provider's convenience in accepting or 
        declining participation in the proposed new category of coverage 
        or health plan, product, or other arrangement within a category 
        of coverage, provided that the provider need not use that form 
        in responding; and 
           (7) a statement informing the provider of the provisions of 
        paragraph (b). 
           (b) Unless the provider has affirmatively agreed to 
        participate within 60 days after the postmark date of the 
        notice, the provider is deemed to have not accepted the proposed 
        new category of coverage or health plan, product, or other 
        arrangement within a category of coverage that results in a 
        different underlying financial reimbursement methodology. 
           Subd. 4.  [CONTRACT TERMINATION RESTRICTED.] A network 
        organization health plan company must not terminate an existing 
        contract with a provider, or fail to honor the contract in good 
        faith, based solely on the provider's decision not to accept a 
        proposed new category of coverage or health plan, product, or 
        other arrangement within a category of coverage that results in 
        a different underlying financial reimbursement methodology.  The 
        most recent agreed-upon contractual obligations remain in force 
        until the existing contract's renewal or termination date. 
           Subd. 5.  [REMEDY.] If a network organization health plan 
        company violates this section by reimbursing a provider as if 
        the provider had agreed under this section to participate in the 
        network under a category of coverage or health plan, product, or 
        other arrangement within a category of coverage that results in 
        a different underlying financial reimbursement methodology to 
        which the provider has not agreed, the provider has a cause of 
        action against the network organization health plan company to 
        recover two times the difference between the reasonable charges 
        for claims affected by the violation and the amounts actually 
        paid to the provider.  The provider is also entitled to recover 
        costs, disbursements, and reasonable attorney fees. 
           Subd. 6.  [BENEFIT DESIGN CHANGES.] For purposes of this 
        section, "different underlying financial reimbursement 
        methodology" does not include health plan benefit design 
        changes, including, but not limited to, changes in co-payment or 
        deductible amounts or other changes in member cost-sharing 
        requirements. 
           Sec. 10.  Minnesota Statutes 2002, section 62Q.75, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CLAIMS PAYMENTS.] (a) This section applies to 
        clean claims submitted to a health plan company or third-party 
        administrator for services provided by any: 
           (1) health care provider, except as defined in section 
        62Q.74, but does not include a provider licensed under chapter 
        151; 
           (2) home health care provider, as defined in section 
        144A.43, subdivision 4; or 
           (3) health care facility. 
        All health plan companies and third-party administrators must 
        pay or deny claims that are clean claims within 30 calendar days 
        after the date upon which the health plan company or third-party 
        administrator received the claim. 
           (b) The health plan company or third-party administrator 
        shall, upon request, make available to the provider information 
        about the status of a claim submitted by the provider consistent 
        with section 62J.581. 
           (c) If a health plan company or third-party administrator 
        does not pay or deny a clean claim within the period provided in 
        paragraph (a), the health plan company or third-party 
        administrator must pay interest on the claim for the period 
        beginning on the day after the required payment date specified 
        in paragraph (a) and ending on the date on which the health plan 
        company or third-party administrator makes the payment or denies 
        the claim.  In any payment, the health plan company or 
        third-party administrator must itemize any interest payment 
        being made separately from other payments being made for 
        services provided.  The health plan company or third-party 
        administrator may, at its discretion, require the health care 
        provider to bill the health plan company or third-party 
        administrator for the interest required under this section 
        before any interest payment is made.  Interest payments must be 
        made to the health care provider no less frequently than 
        quarterly. 
           (c) (d) The rate of interest paid by a health plan company 
        or third-party administrator under this subdivision shall be 1.5 
        percent per month or any part of a month. 
           (d) (e) A health plan company or third-party administrator 
        is not required to make an interest payment on a claim for which 
        payment has been delayed for purposes of reviewing potentially 
        fraudulent or abusive billing practices. 
           (e) The commissioner may not assess a financial 
        administrative penalty against a health plan company for 
        violation of this subdivision. 
           (f) The commissioner may assess a financial administrative 
        penalty against a health plan company for violation of this 
        subdivision when there is a pattern of abuse that demonstrates a 
        lack of good faith effort and a systematic failure of the health 
        plan company to comply with this subdivision. 
           Sec. 11.  [REPEALER.] 
           Minnesota Statutes 2002, section 62Q.745, is repealed.  
           Sec. 12.  [EFFECTIVE DATE.] 
           Sections 1, 2, and 4 are effective for provider contracts 
        issued, renewed, or amended on or after July 1, 2004.  Sections 
        3, 6, 8, and 10 are effective for provider contracts issued, 
        renewed, or amended on or after January 1, 2005.  Sections 5, 7, 
        9, and 11 are effective for provider contracts issued, renewed, 
        or amended on or after July 1, 2006. 
           Presented to the governor May 18, 2004 
           Signed by the governor May 29, 2004, 3:10 p.m.