1.1                          A bill for an act 
  1.2             relating to health; establishing independent review 
  1.3             organizations to review adverse determinations in the 
  1.4             provision of health care services; imposing liability 
  1.5             in making health care treatment decisions; amending 
  1.6             Minnesota Statutes 1996, sections 62M.01, subdivision 
  1.7             3; 62M.02, subdivision 12, and by adding a 
  1.8             subdivision; 62M.04, subdivision 4; 62M.06, 
  1.9             subdivision 1; 62M.07; and 62M.11; proposing coding 
  1.10            for new law in Minnesota Statutes, chapter 62M; 
  1.11            repealing Minnesota Statutes 1996, sections 62M.06, 
  1.12            subdivisions 2, 3, and 4; and 62M.09, subdivisions 4, 
  1.13            4a, and 6. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1996, section 62M.01, 
  1.16  subdivision 3, is amended to read: 
  1.17     Subd. 3.  [SCOPE.] Sections 62M.02~~,~~ and 62M.07~~, and 62M.09,~~ 
  1.18  ~~subdivision 4,~~ apply to prior authorization of services.  
  1.19  Nothing in sections 62M.01 to 62M.16 applies to review of claims 
  1.20  after submission to determine eligibility for benefits under a 
  1.21  health benefit plan.  
  1.22     Sec. 2.  Minnesota Statutes 1996, section 62M.02, 
  1.23  subdivision 12, is amended to read: 
  1.24     Subd. 12.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
  1.25  means a policy, contract, or certificate issued by a health 
  1.26  ~~carrier~~ plan company to an employer or individual for the 
  1.27  coverage of medical, dental, or hospital benefits.  A health 
  1.28  benefit plan does not include coverage that is: 
  1.29     (1) limited to disability or income protection coverage; 
  2.1      (2) automobile medical payment coverage; 
  2.2      (3) supplemental to liability insurance; 
  2.3      (4) designed solely to provide payments on a per diem, 
  2.4   fixed indemnity, or nonexpense incurred basis; 
  2.5      (5) credit accident and health insurance issued under 
  2.6   chapter 62B; 
  2.7      (6) blanket accident and sickness insurance as defined in 
  2.8   section 62A.11; 
  2.9      (7) accident only coverage issued by a licensed and tested 
  2.10  insurance agent; or 
  2.11     (8) workers' compensation. 
  2.12     Sec. 3.  Minnesota Statutes 1996, section 62M.02, is 
  2.13  amended by adding a subdivision to read: 
  2.14     Subd. 12a.  [HEALTH PLAN COMPANY.] "Health plan company" 
  2.15  means an insurance company licensed under chapter 60A to offer, 
  2.16  sell, or issue a policy of accident and sickness insurance as 
  2.17  defined in section 62A.01; a health service plan licensed under 
  2.18  chapter 62C; a health maintenance organization licensed under 
  2.19  chapter 62D; a joint self-insurance employee health plan 
  2.20  operating under chapter 62H; a community integrated service 
  2.21  network licensed under chapter 62N; or a fraternal benefit 
  2.22  society operating under chapter 64B. 
  2.23     Sec. 4.  Minnesota Statutes 1996, section 62M.04, 
  2.24  subdivision 4, is amended to read: 
  2.25     Subd. 4.  [ADDITIONAL INFORMATION.] A utilization review 
  2.26  organization may request information in addition to that 
  2.27  described in subdivision 3 when there is significant lack of 
  2.28  agreement between the utilization review organization and the 
  2.29  health care provider regarding the appropriateness of 
  2.30  certification during the review ~~or appeal~~ process.  For purposes 
  2.31  of this subdivision, "significant lack of agreement" means that 
  2.32  the utilization review organization has: 
  2.33     (1) tentatively determined through its professional staff 
  2.34  that a service cannot be certified; 
  2.35     (2) referred the case to a physician for review; and 
  2.36     (3) talked to or attempted to talk to the attending 
  3.1   physician for further information. 
  3.2      Nothing in sections 62M.01 to 62M.16 prohibits a 
  3.3   utilization review organization from requiring submission of 
  3.4   data necessary to comply with the quality assurance and 
  3.5   utilization review requirements of chapter 62D or other 
  3.6   appropriate data or outcome analyses. 
  3.7      Sec. 5.  Minnesota Statutes 1996, section 62M.06, 
  3.8   subdivision 1, is amended to read: 
  3.9      Subdivision 1.  [PROCEDURES FOR APPEAL.] A utilization 
  3.10  review organization must have written procedures for appeals to 
  3.11  an independent review organization of determinations not to 
  3.12  certify an admission, procedure, service, or extension of stay.  
  3.13  The right to appeal must be available to the enrollee or 
  3.14  designee and to the attending physician.  The right of appeal to 
  3.15  an independent review organization must be communicated to the 
  3.16  enrollee or designee or to the attending physician, whomever 
  3.17  initiated the original certification request, at the time that 
  3.18  the original determination is communicated. 
  3.19     Sec. 6.  Minnesota Statutes 1996, section 62M.07, is 
  3.20  amended to read: 
  3.21     62M.07 [PRIOR AUTHORIZATION OF SERVICES.] 
  3.22     (a) Utilization review organizations conducting prior 
  3.23  authorization of services must have written standards that meet 
  3.24  at a minimum the following requirements: 
  3.25     (1) written procedures and criteria used to determine 
  3.26  whether care is appropriate, reasonable, or medically necessary; 
  3.27     (2) a system for providing prompt notification of its 
  3.28  determinations to enrollees and providers and for notifying the 
  3.29  provider, enrollee, or enrollee's designee of appeal procedures 
  3.30  under clause (4); 
  3.31     (3) compliance with section 72A.201, subdivision 4a, 
  3.32  regarding time frames for approving and disapproving prior 
  3.33  authorization requests; 
  3.34     (4) written procedures for appeals of denials of prior 
  3.35  authorization to an independent review organization which 
  3.36  specify the responsibilities of the enrollee and provider, and 
  4.1   which meet the requirements of section 72A.285, regarding 
  4.2   release of summary review findings; and 
  4.3      (5) procedures to ensure confidentiality of 
  4.4   patient-specific information, consistent with applicable law. 
  4.5      (b) No utilization review organization, health plan 
  4.6   company, or claims administrator may conduct or require prior 
  4.7   authorization of emergency confinement or emergency treatment.  
  4.8   The enrollee or the enrollee's authorized representative may be 
  4.9   required to notify the health plan company, claims 
  4.10  administrator, or utilization review organization as soon after 
  4.11  the beginning of the emergency confinement or emergency 
  4.12  treatment as reasonably possible. 
  4.13     Sec. 7.  Minnesota Statutes 1996, section 62M.11, is 
  4.14  amended to read: 
  4.15     62M.11 [COMPLAINTS TO COMMERCE OR HEALTH.] 
  4.16     Notwithstanding the provisions of sections 62M.01 to ~~62M.16~~ 
  4.17  62M.201, an enrollee may file a complaint regarding a 
  4.18  determination not to certify directly to the commissioner 
  4.19  responsible for regulating the utilization review organization. 
  4.20     Sec. 8.  [62M.20] [INDEPENDENT REVIEW ORGANIZATIONS.] 
  4.21     Subdivision 1.  [HEALTH PLAN COMPLIANCE.] A health plan 
  4.22  company shall comply with the determination of an independent 
  4.23  review organization with respect to the medical necessity or 
  4.24  appropriateness of health care items or services for an enrollee.
  4.25     Subd. 2.  [RECORDS.] (a) No later than three business days 
  4.26  after the date that a utilization review organization receives a 
  4.27  request for independent review under section 62M.06, the 
  4.28  utilization review organization shall provide to the appropriate 
  4.29  independent review organization a copy of: 
  4.30     (1) medical records of the enrollee that are relevant to 
  4.31  the review; 
  4.32     (2) documents used by the utilization review organization 
  4.33  in making the determination to be reviewed by the independent 
  4.34  review organization; 
  4.35     (3) the written notification of the utilization review 
  4.36  organization's adverse determination; 
  5.1      (4) documentation and written information submitted to the 
  5.2   utilization review organization in support of the appeal; and 
  5.3      (5) a list of each provider that has provided care to the 
  5.4   enrollee and who may have medical records relevant to the appeal.
  5.5      (b) Confidential information in the custody of a 
  5.6   utilization review organization may be provided to an 
  5.7   independent review organization, subject to rules adopted by the 
  5.8   commissioner under section 62M.201. 
  5.9      Subd. 3.  [DETERMINATIONS.] An independent review 
  5.10  organization must make its determination: 
  5.11     (1) no later than the earlier of: 
  5.12     (i) the 15th day after the date the independent review 
  5.13  organization receives the information necessary to make the 
  5.14  determination; or 
  5.15     (ii) the 20th day after the date the independent review 
  5.16  organization receives the request that the determination be 
  5.17  made; or 
  5.18     (2) in the case of a life-threatening condition, no later 
  5.19  than the earlier of: 
  5.20     (i) the fifth day after the date the independent review 
  5.21  organization receives the information necessary to make the 
  5.22  determination; or 
  5.23     (ii) the eighth day after the date the independent review 
  5.24  organization receives the request that the determination be made.
  5.25     Subd. 4.  [EXPEDITED APPEALS.] When the attending physician 
  5.26  believes that a determination not to certify a health care 
  5.27  service warrants immediate appeal, the independent review 
  5.28  organization must ensure that the physician, enrollee, or 
  5.29  designee has an opportunity to appeal over the telephone on an 
  5.30  expedited basis. 
  5.31     Subd. 5.  [APPLICATION.] (a) To be certified as an 
  5.32  independent review organization, an organization must submit an 
  5.33  application prescribed by the commissioner of commerce.  The 
  5.34  application shall include: 
  5.35     (1) for an applicant that is publicly held, the name of 
  5.36  each stockholder or owner of more than five percent of any stock 
  6.1   or options; 
  6.2      (2) the name of any holder of bonds or notes of the 
  6.3   applicant that exceed $100,000; 
  6.4      (3) the name and type of business of each corporation or 
  6.5   other organization that the applicant controls or is affiliated 
  6.6   with and the nature and extent of the affiliation or control; 
  6.7      (4) the name and a biographical sketch of each director, 
  6.8   officer, and executive of the applicant and any entity listed 
  6.9   under clause (3), and a description of any relationship the 
  6.10  named individual has with: 
  6.11     (i) a health plan company; 
  6.12     (ii) an insurer; 
  6.13     (iii) a utilization review organization; 
  6.14     (iv) a provider; or 
  6.15     (v) a group representing any of the entities described in 
  6.16  items (i) to (iv); 
  6.17     (5) the percentage of the applicant's revenue that is 
  6.18  anticipated to be derived from reviews conducted under this 
  6.19  section; 
  6.20     (6) a description of the areas of expertise of the health 
  6.21  care professionals making review determinations for the 
  6.22  applicant; and 
  6.23     (7) the procedures to be used by the independent review 
  6.24  organization in making review determinations under this section. 
  6.25     Subd. 6.  [ANNUAL REQUIREMENT; UPDATE.] An independent 
  6.26  review organization shall annually submit the information 
  6.27  required under subdivision 5.  If at any time there is a 
  6.28  material change in the information included in the application 
  6.29  under subdivision 5, the independent review organization shall 
  6.30  submit updated information to the commissioner. 
  6.31     Subd. 7.  [PROHIBITED ASSOCIATIONS.] An independent review 
  6.32  organization may not be a subsidiary of, or in any way owned or 
  6.33  controlled by, a utilization review organization, a health plan 
  6.34  company, or a professional trade association of health plan 
  6.35  companies. 
  6.36     Subd. 8.  [NO LIABILITY.] An independent review 
  7.1   organization conducting a review under this section is not 
  7.2   liable for damages arising from the determination made by the 
  7.3   organization.  This subdivision does not apply to an act or 
  7.4   omission of the independent review organization that is made in 
  7.5   bad faith or that involves gross negligence. 
  7.6      Sec. 9.  [62M.201] [COMMISSIONER'S DUTIES; INDEPENDENT 
  7.7   REVIEW ORGANIZATIONS.] 
  7.8      Subdivision 1.  [COMMISSIONER'S DUTIES.] The commissioner 
  7.9   of commerce shall: 
  7.10     (1) annually designate the independent review organizations 
  7.11  that meet certification requirements; 
  7.12     (2) charge a fee of health plan companies sufficient to 
  7.13  fund the operations of independent review organizations; and 
  7.14     (3) provide ongoing oversight of the independent review 
  7.15  organizations to ensure continued compliance with section 62M.20 
  7.16  and rules adopted under this section. 
  7.17     Subd. 2.  [RULES.] (a) The commissioner of commerce shall 
  7.18  adopt rules to: 
  7.19     (1) certify and select independent review organizations; 
  7.20     (2) regulate the operation of independent review 
  7.21  organizations; and 
  7.22     (3) suspend and revoke the certification of independent 
  7.23  review organizations. 
  7.24     (b) Rules adopted under this section must ensure: 
  7.25     (1) the timely response of an independent review 
  7.26  organization; 
  7.27     (2) the confidentiality of medical records transmitted to 
  7.28  an independent review organization for use in independent 
  7.29  reviews; 
  7.30     (3) the qualifications and independence of each provider 
  7.31  making review determinations for an independent review 
  7.32  organization; 
  7.33     (4) the fairness of the procedures used by an independent 
  7.34  review organization in making determinations; and 
  7.35     (5) the timely notice to enrollees of the results of the 
  7.36  independent review, including the clinical basis for the 
  8.1   determination. 
  8.2      Sec. 10.  [62M.30] [HEALTH CARE LIABILITY.] 
  8.3      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  8.4   section and section 62M.301, the terms defined in this 
  8.5   subdivision have the meanings given. 
  8.6      (b) "Appropriate and medically necessary" means the 
  8.7   standard for health care services as determined by providers 
  8.8   according to prevailing practices and standards of the medical 
  8.9   profession and community. 
  8.10     (c) "Health care treatment decision" means a determination 
  8.11  made when medical services are actually provided under a health 
  8.12  benefit plan and a decision that affects the quality of the 
  8.13  diagnosis, care, or treatment provided to the plan's enrollee. 
  8.14     (d) "Ordinary care" means, in the case of a health plan 
  8.15  company, that degree of care that a health plan company of 
  8.16  ordinary prudence would use under the same or similar 
  8.17  circumstances.  In the case of a person who is an employee, 
  8.18  agent, ostensible agent, or representative of the health plan 
  8.19  company, ordinary care means that degree of care that a person 
  8.20  of ordinary prudence in the same profession, specialty, or area 
  8.21  of practice as the person would use in the same or similar 
  8.22  circumstances. 
  8.23     Subd. 2.  [LIABILITY.] A health plan company has the duty 
  8.24  to exercise ordinary care when making health care treatment 
  8.25  decisions and is liable for damages for harm to an enrollee 
  8.26  proximately caused by its failure to exercise ordinary care. 
  8.27     Subd. 3.  [AGENTS.] A health plan company is liable for 
  8.28  damages for harm to an enrollee proximately caused by the health 
  8.29  care treatment decisions made by its: 
  8.30     (1) employees; 
  8.31     (2) agents; 
  8.32     (3) ostensible agents; or 
  8.33     (4) representatives who are acting on its behalf and over 
  8.34  whom it has the right to exercise influence or control or has 
  8.35  actually exercised influence or control that results in the 
  8.36  failure to exercise ordinary care. 
  9.1      Subd. 4.  [DEFENSE.] It is a defense to any action asserted 
  9.2   against a health plan company under this section that: 
  9.3      (1) neither the health plan company nor any employee, 
  9.4   agent, ostensible agent, or representative for whose conduct the 
  9.5   health plan company is liable under subdivision 3 controlled, 
  9.6   influenced, or participated in the health care treatment 
  9.7   decision; and 
  9.8      (2) the health plan company did not deny or delay payment 
  9.9   for any treatment prescribed or recommended by a provider to the 
  9.10  enrollee. 
  9.11     Subd. 5.  [TREATMENT NOT COVERED.] The standards in 
  9.12  subdivisions 2 and 3 create no obligation on the part of the 
  9.13  health plan company to provide to an enrollee treatment that is 
  9.14  not covered by the health benefit plan. 
  9.15     Subd. 6.  [EMPLOYER EXCLUDED.] This section does not create 
  9.16  a liability on the part of an employer or an employer group 
  9.17  purchasing organization that purchases coverage or assumes risk 
  9.18  on behalf of its employees. 
  9.19     Subd. 7.  [RETALIATION PROHIBITED.] A health plan company 
  9.20  may not remove a provider from its health benefit plan or refuse 
  9.21  to renew the provider with its plan for advocating on behalf of 
  9.22  an enrollee for appropriate and medically necessary health care 
  9.23  for the enrollee. 
  9.24     Subd. 8.  [PROHIBITED CONTRACTUAL TERMS.] A health plan 
  9.25  company may not enter into a contract with a physician, 
  9.26  hospital, or other health care provider or pharmaceutical 
  9.27  company that includes an indemnification or hold harmless clause 
  9.28  for the acts or conduct of the health plan company.  Any such 
  9.29  indemnification or hold harmless clause in an existing contract 
  9.30  is hereby declared void. 
  9.31     Subd. 9.  [PROHIBITED DEFENSE.] No law prohibiting a health 
  9.32  plan company from practicing medicine or being licensed to 
  9.33  practice medicine may be asserted as a defense by the health 
  9.34  plan company in an action brought against it under this section 
  9.35  or any other law. 
  9.36     Subd. 10.  [PROOF OF AGENCY.] In an action against a health 
 10.1   plan company, a finding that a provider is an employee, agent, 
 10.2   ostensible agent, or representative of the health plan company 
 10.3   shall not be based solely on proof that the person's name 
 10.4   appears in a listing of approved providers made available to 
 10.5   enrollees under a health benefit plan. 
 10.6      Subd. 11.  [WORKERS' COMPENSATION EXCLUSION.] This section 
 10.7   and section 62M.301 do not apply to workers' compensation 
 10.8   insurance coverage. 
 10.9      Sec. 11.  [62M.301] [LIMITATIONS ON CAUSE OF ACTION.] 
 10.10     Subdivision 1.  [REQUIREMENTS.] A person may not maintain a 
 10.11  cause action under section 62M.30 against a health plan company 
 10.12  that complies with the utilization review requirements of 
 10.13  sections 62M.03 to 62M.16, unless the affected enrollee or the 
 10.14  enrollee's representative: 
 10.15     (1) exhausts the review process applicable under the 
 10.16  utilization review requirements of sections 62M.03 to 62M.16; or 
 10.17     (2) before instituting the action: 
 10.18     (i) gives written notice of the claim as provided under 
 10.19  subdivision 2; and 
 10.20     (ii) agrees to submit the claim to review by an independent 
 10.21  review organization under section 62M.20, as required by 
 10.22  subdivision 3. 
 10.23     Subd. 2.  [NOTICE.] The notice required by subdivision 1, 
 10.24  clause (2), item (i), must be delivered or mailed to the health 
 10.25  plan company against whom the action is made not later than the 
 10.26  30th day before the date the claim is filed. 
 10.27     Subd. 3.  [INDEPENDENT CLAIM REVIEW.] The enrollee or the 
 10.28  enrollee's representative must submit the claim to review by an 
 10.29  independent review organization under section 62M.02 if the 
 10.30  health plan company against whom the complaint is made requests 
 10.31  the review no later than the 14th day after the date notice 
 10.32  under subdivision 1, clause (2), item (i), is received by the 
 10.33  health plan company.  If the health plan company does not 
 10.34  request the review within the period specified by this 
 10.35  subdivision, the enrollee or the enrollee's representative is 
 10.36  not required to submit the claim to independent review before 
 11.1   maintaining the action. 
 11.2      Subd. 4.  [REMEDY FOR NONCOMPLIANCE.] Subject to 
 11.3   subdivision 5, if the enrollee does not comply with subdivision 
 11.4   1, an action under section 62M.30 shall not be dismissed by the 
 11.5   court, but the court may, in its discretion, order the parties 
 11.6   to submit to an independent review or mediation or other 
 11.7   nonbinding alternative dispute resolution and may abate the 
 11.8   action for a period not to exceed 30 days for such purposes.  An 
 11.9   order of the court under this subdivision is the sole remedy 
 11.10  available to a party complaining of an enrollee's failure to 
 11.11  comply with subdivision 1. 
 11.12     Subd. 5.  [EXEMPTION FROM REQUIREMENTS.] The enrollee is 
 11.13  not required to comply with subdivision 3 and no abatement or 
 11.14  other order under subdivision 4 for failure to comply shall be 
 11.15  imposed if the enrollee files a pleading alleging in substance 
 11.16  that: 
 11.17     (1) harm to the enrollee has already occurred because of 
 11.18  the conduct of the health plan company or because of an act or 
 11.19  omission of an employee, agent, ostensible agent, or 
 11.20  representative of the health plan company for whose conduct it 
 11.21  is liable under section 62M.30, subdivision 3; and 
 11.22     (2) the review would not be beneficial to the enrollee, 
 11.23  unless the court, upon motion by a defendant health plan company 
 11.24  finds after hearing that such pleading was not made in good 
 11.25  faith, in which case the court may enter an order under 
 11.26  subdivision 4. 
 11.27     Subd. 6.  [TOLLING OF LIMITATIONS PERIOD.] If the enrollee 
 11.28  or the enrollee's representative seeks to exhaust the appeals 
 11.29  and review or provides notice, as required by subdivision 1, 
 11.30  before the statute of limitations applicable to a claim against 
 11.31  a health plan company has expired, the limitations period is 
 11.32  tolled until the later of: 
 11.33     (1) the 30th day after the date the enrollee or the 
 11.34  enrollee's representative exhausts the process for appeals and 
 11.35  review applicable under the utilization review requirements; or 
 11.36     (2) the 40th day after the date the enrollee or the 
 12.1   enrollee's representative gives notice under subdivision 1, 
 12.2   clause (2), item (i). 
 12.3      Subd. 7.  [OTHER REMEDIES.] This section does not prohibit 
 12.4   an enrollee from pursuing other appropriate remedies, including 
 12.5   injunctive relief, declaratory judgment, or other relief 
 12.6   available under law, if the requirement of exhausting the 
 12.7   process for appeal and review places the enrollee's health in 
 12.8   serious jeopardy. 
 12.9      Sec. 12.  [REPEALER.] 
 12.10     Minnesota Statutes 1996, sections 62M.06, subdivisions 2, 
 12.11  3, and 4; and 62M.09, subdivisions 4, 4a, and 6, are repealed.