1.1                          A bill for an act 
  1.2             relating to health; regulating coverages and the 
  1.3             classification of treatment; specifying the duties of 
  1.4             certain carriers and providers; providing remedies; 
  1.5             amending Minnesota Statutes 1998, sections 62A.60; 
  1.6             62J.71, subdivision 1; 62J.72, by adding a 
  1.7             subdivision; 62M.07; 62M.09, subdivision 3; 62Q.58, 
  1.8             subdivision 3; and 144.335, by adding a subdivision; 
  1.9             proposing coding for new law in Minnesota Statutes, 
  1.10            chapter 62Q; proposing coding for new law as Minnesota 
  1.11            Statutes, chapter 62U. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1998, section 62A.60, is 
  1.14  amended to read: 
  1.15     62A.60 [RETROACTIVE DENIAL OF EXPENSES.] 
  1.16     In cases where the subscriber or insured is liable for 
  1.17  costs beyond applicable copayments or deductibles, no insurer 
  1.18  may retroactively deny payment to a person who is covered when 
  1.19  the services are provided for health care services that are 
  1.20  otherwise covered, if the insurer or its representative failed 
  1.21  to provide prior or concurrent review or authorization for the 
  1.22  expenses when required to do so under the policy, plan, or 
  1.23  certificate.  If prior or concurrent review or authorization was 
  1.24  provided by the insurer or its representative, and the 
  1.25  preexisting condition limitation provision, the general 
  1.26  exclusion provision and any other coinsurance, or other policy 
  1.27  requirements have been met, the insurer may not deny payment for 
  1.28  the authorized service or time period except in cases where 
  2.1   fraud or substantive misrepresentation occurred.  A health plan, 
  2.2   as defined under section 62Q.01, subdivision 3, that has given 
  2.3   preauthorization approval for any services or benefits may not 
  2.4   subsequently deny payment for those services or benefits on the 
  2.5   grounds that the services or benefits are not covered by the 
  2.6   health plan.  At the time a decision regarding the medical 
  2.7   necessity of a treatment is communicated to an enrollee, a 
  2.8   health plan shall also communicate whether the requested 
  2.9   treatment is a covered benefit. 
  2.10     Sec. 2.  Minnesota Statutes 1998, section 62J.71, 
  2.11  subdivision 1, is amended to read: 
  2.12     Subdivision 1.  [PROHIBITED AGREEMENTS AND DIRECTIVES.] The 
  2.13  following types of agreements and directives are contrary to 
  2.14  state public policy, are prohibited under this section, and are 
  2.15  null and void: 
  2.16     (1) any agreement or directive that prohibits a health care 
  2.17  provider from communicating with an enrollee with respect to the 
  2.18  enrollee's health status, health care, or treatment options, if 
  2.19  the health care provider is acting in good faith and within the 
  2.20  provider's scope of practice as defined by law; 
  2.21     (2) any agreement or directive that prohibits a health care 
  2.22  provider from making a recommendation regarding the suitability 
  2.23  or desirability of a health plan company, health insurer, or 
  2.24  health coverage plan for an enrollee, unless the provider has a 
  2.25  financial conflict of interest in the enrollee's choice of 
  2.26  health plan company, health insurer, or health coverage plan; 
  2.27     (3) any agreement or directive that prohibits a provider 
  2.28  from providing testimony, supporting or opposing legislation, or 
  2.29  making any other contact with state or federal legislators or 
  2.30  legislative staff or with state and federal executive branch 
  2.31  officers or staff; 
  2.32     (4) any agreement or directive that prohibits a health care 
  2.33  provider from disclosing accurate information about whether 
  2.34  services or treatment will be paid for by a patient's health 
  2.35  plan company or health insurer or health coverage plan; and 
  2.36     (5) any agreement or directive that prohibits a health care 
  3.1   provider from informing an enrollee about the nature of the 
  3.2   reimbursement methodology used by an enrollee's health plan 
  3.3   company, health insurer, or health coverage plan to pay the 
  3.4   provider; and 
  3.5      (6) any agreement or directive that provides either a 
  3.6   financial or other reward or penalty to a health care provider 
  3.7   for making or not making a referral or for prescribing or not 
  3.8   prescribing a good or service to be provided by other providers 
  3.9   not owned, operated, or otherwise subject to the control of the 
  3.10  provider. 
  3.11     Sec. 3.  Minnesota Statutes 1998, section 62J.72, is 
  3.12  amended by adding a subdivision to read: 
  3.13     Subd. 1a.  [DISCLOSURE OF COVERAGE AGREEMENT OR SUBSCRIBER 
  3.14  CONTRACT.] Before contracting to provide coverage, a health plan 
  3.15  company, as defined under section 62J.70, subdivision 3, shall, 
  3.16  when requested by the enrollee in writing or orally, provide to 
  3.17  a prospective enrollee a specimen copy of the actual certificate 
  3.18  or other evidence of coverage required to be filed with the 
  3.19  commissioner of commerce or commissioner of health under chapter 
  3.20  62A, 62C, or 62D. 
  3.21     Sec. 4.  Minnesota Statutes 1998, section 62M.07, is 
  3.22  amended to read: 
  3.23     62M.07 [PRIOR AUTHORIZATION OF SERVICES.] 
  3.24     (a) Utilization review organizations conducting prior 
  3.25  authorization of services must have written standards that meet 
  3.26  at a minimum the following requirements: 
  3.27     (1) written procedures and criteria used to determine 
  3.28  whether care is appropriate, reasonable, or medically necessary; 
  3.29     (2) a system for providing prompt notification of its 
  3.30  determinations to enrollees and providers and for notifying the 
  3.31  provider, enrollee, or enrollee's designee of appeal procedures 
  3.32  under clause (4); 
  3.33     (3) compliance with section 72A.201, subdivision 4a, 
  3.34  regarding time frames for approving and disapproving prior 
  3.35  authorization requests; 
  3.36     (4) written procedures for appeals of denials of prior 
  4.1   authorization which specify the responsibilities of the enrollee 
  4.2   and provider, and which meet the requirements of section 
  4.3   72A.285, regarding release of summary review findings; and 
  4.4      (5) procedures to ensure confidentiality of 
  4.5   patient-specific information, consistent with applicable law. 
  4.6      (b) No utilization review organization, health plan 
  4.7   company, or claims administrator may conduct or require prior 
  4.8   authorization of emergency confinement or emergency treatment.  
  4.9   The enrollee or the enrollee's authorized representative may be 
  4.10  required to notify the health plan company, claims 
  4.11  administrator, or utilization review organization as soon after 
  4.12  the beginning of the emergency confinement or emergency 
  4.13  treatment as reasonably possible. 
  4.14     (c) A utilization review organization, health plan company, 
  4.15  or claims administrator that uses the written procedures 
  4.16  required by paragraph (a), clause (1), in determining that care 
  4.17  is not appropriate, reasonable, or medically necessary, must 
  4.18  provide a copy of the written procedures to the enrollee seeking 
  4.19  the care. 
  4.20     Sec. 5.  Minnesota Statutes 1998, section 62M.09, 
  4.21  subdivision 3, is amended to read: 
  4.22     Subd. 3.  [PHYSICIAN REVIEWER INVOLVEMENT.] A physician 
  4.23  must review all cases in which the utilization review 
  4.24  organization has concluded that a determination not to certify 
  4.25  for clinical reasons is appropriate.  The physician should shall 
  4.26  be reasonably available by telephone to discuss the 
  4.27  determination with the attending physician and either or both of 
  4.28  the following:  (1) the enrollee; or (2) the enrollee's 
  4.29  representative.  This subdivision does not apply to outpatient 
  4.30  mental health or substance abuse services governed by 
  4.31  subdivision 3a.  
  4.32     Sec. 6.  [62Q.235] [CLASSIFICATION OF MEDICAL TREATMENT.] 
  4.33     Subdivision 1.  [EXPERIMENTAL OR INVESTIGATIVE 
  4.34  TREATMENT.] A health plan may not classify a drug, device, 
  4.35  medical treatment, diagnostic procedure, or other procedure that 
  4.36  is recommended for a patient, enrollee, or insured's use by a 
  5.1   licensed physician as "experimental" or "investigative" unless 
  5.2   the health plan demonstrates that it is unsafe or ineffective 
  5.3   with respect to the health outcome of the patient, insured, or 
  5.4   enrollee seeking the treatment.  In making a demonstration that 
  5.5   a drug, device, medical treatment, diagnostic procedure, or 
  5.6   other procedure is experimental or investigative, a health plan 
  5.7   may not rely exclusively on a finding that the drug, device, 
  5.8   medical treatment, diagnostic procedure, or other procedure is 
  5.9   under study by medical providers or researchers. 
  5.10     Subd. 2.  [MEDICALLY NECESSARY TREATMENT.] For purposes of 
  5.11  coverage under a health plan as defined in section 62Q.01, a 
  5.12  treatment is considered "medically necessary" if it is 
  5.13  consistent with the prevailing practice parameters and medical 
  5.14  standards as determined by practicing health care providers for 
  5.15  treatment of a particular patient's medical condition. 
  5.16     Sec. 7.  Minnesota Statutes 1998, section 62Q.58, 
  5.17  subdivision 3, is amended to read: 
  5.18     Subd. 3.  [DISCLOSURE.] Information regarding referral 
  5.19  procedures, including the application process and criteria and 
  5.20  conditions for a standing referral to a health care provider who 
  5.21  is a specialist, must be included in member contracts or 
  5.22  certificates of coverage and must be provided to an enrollee or 
  5.23  prospective enrollee by a health plan company upon request. 
  5.24     Sec. 8.  [62U.01] [SHORT TITLE.] 
  5.25     This chapter may be cited as the "Health Care Liability 
  5.26  Act." 
  5.27     Sec. 9.  [62U.02] [DEFINITIONS.] 
  5.28     Subdivision 1.  [ENROLLEE.] "Enrollee" means an individual 
  5.29  who is enrolled in a health care plan, including covered 
  5.30  dependents. 
  5.31     Subd. 2.  [HEALTH CARE PLAN.] "Health care plan" means a 
  5.32  plan whereby any person undertakes to provide, arrange for, pay 
  5.33  for, or reimburse any part of the cost of any health care 
  5.34  services. 
  5.35     Subd. 3.  [HEALTH CARE PROVIDER.] "Health care provider" 
  5.36  means a person or entity as defined in section 144.335, 
  6.1   subdivision 1, paragraph (b). 
  6.2      Subd. 4.  [HEALTH CARE TREATMENT DECISION.] "Health care 
  6.3   treatment decision" means a determination made when medical 
  6.4   services are actually provided by the health care plan and a 
  6.5   decision that affects the quality of the diagnosis, care, or 
  6.6   treatment provided to the plan's insureds or enrollees.  Health 
  6.7   care treatment decision includes, but is not limited to, a 
  6.8   determination that treatment is not medically necessary. 
  6.9      Subd. 5.  [HEALTH INSURANCE CARRIER.] "Health insurance 
  6.10  carrier" means an insurance company licensed under chapter 60A 
  6.11  to offer, sell, or issue a policy of accident and sickness 
  6.12  insurance as defined in section 62A.01, a nonprofit health 
  6.13  service plan corporation operating under chapter 62C, or a 
  6.14  health maintenance organization operating under chapter 62D. 
  6.15     Subd. 6.  [MEDICALLY NECESSARY TREATMENT.] "Medically 
  6.16  necessary treatment" means treatment that is consistent with the 
  6.17  prevailing practice parameters and medical standards as 
  6.18  determined by practicing health care providers for treatment of 
  6.19  a particular patient's medical condition. 
  6.20     Subd. 7.  [ORDINARY CARE.] "Ordinary care" means, in the 
  6.21  case of a health insurance carrier, that degree of care that a 
  6.22  principled, provident provider would exercise in a matter of the 
  6.23  gravest importance.  In the care of a person who is an employee, 
  6.24  agent, ostensible agent, or representative of a health insurance 
  6.25  carrier, ordinary care means that degree of care that a person 
  6.26  of ordinary prudence in the same profession, specialty, or area 
  6.27  of practice as the person would use in the same or similar 
  6.28  circumstances. 
  6.29     Sec. 10.  [62U.03] [APPLICATION.] 
  6.30     Subdivision 1.  [DUTY OF ORDINARY CARE.] A health insurance 
  6.31  carrier has the duty to exercise ordinary care when making 
  6.32  health care treatment decisions and is liable for damages for 
  6.33  harm to an insured or enrollee proximately caused by its failure 
  6.34  to exercise ordinary care.  Damages awarded pursuant to this 
  6.35  subdivision must not be considered claims-related expenses. 
  6.36     Subd. 2.  [RESPONSIBILITY FOR ACTIONS OF OTHERS.] A health 
  7.1   insurance carrier, health maintenance organization, or other 
  7.2   managed care entity for a health care plan is also liable for 
  7.3   damages for harm to an insured or enrollee proximately caused by 
  7.4   the health care treatment decisions made by its: 
  7.5      (1) employees; 
  7.6      (2) agents; 
  7.7      (3) ostensible agents; or 
  7.8      (4) representatives who are acting on its behalf and over 
  7.9   whom it has the right to exercise influence or control or has 
  7.10  actually exercised influence or control that results in the 
  7.11  failure to exercise ordinary care. 
  7.12     In an action against a health insurance carrier, a finding 
  7.13  that a physician or other health care provider is an employee, 
  7.14  agent, ostensible agent, or representative of the health 
  7.15  insurance carrier shall not be based solely on proof that the 
  7.16  person's name appears in a listing of approved physicians or 
  7.17  health care providers made available to insureds or enrollees 
  7.18  under a health care plan. 
  7.19     Subd. 3.  [DEFENSES.] It shall be a defense to an action 
  7.20  asserted against a health insurance carrier that: 
  7.21     (1) neither the health insurance carrier, nor any employee, 
  7.22  agent, ostensible agent, or representative for whose conduct the 
  7.23  health insurance is liable under subdivision 2, controlled, 
  7.24  influenced, or participated in the health care treatment 
  7.25  decision; and 
  7.26     (2) the health insurance carrier did not deny or delay 
  7.27  payment for any treatment prescribed or recommended by a 
  7.28  provider to the insured or enrollee. 
  7.29     Subd. 4.  [LIMITATIONS.] (a) The standards in subdivisions 
  7.30  1 and 2 create no obligation on the part of the health insurance 
  7.31  carrier to provide to an insured or enrollee treatment that is 
  7.32  not covered by the health care plan of the entity. 
  7.33     (b) This chapter does not create liability on the part of 
  7.34  an employer or an employer group purchasing organization that 
  7.35  purchases coverage or assumes risk on behalf of its employees. 
  7.36     Subd. 5.  [LIMITATION ON DEFENSES.] Nothing in any law of 
  8.1   this state prohibiting a health insurance carrier from 
  8.2   practicing medicine or being licensed to practice medicine may 
  8.3   be asserted as a defense by the health insurance carrier in an 
  8.4   action brought against it pursuant to this section or any other 
  8.5   law. 
  8.6      Subd. 6.  [NONAPPLICATION.] This chapter does not apply to 
  8.7   workers' compensation insurance coverage under chapter 79 or 
  8.8   workers' compensation self-insurance under chapter 79A. 
  8.9      Subd. 7.  [RECOVERY OF ATTORNEYS FEES AND OTHER 
  8.10  EXPENSES.] If an enrollee is the prevailing party in a 
  8.11  proceeding under this section, the court shall award attorneys 
  8.12  fees and other reasonable expenses to the enrollee.  This 
  8.13  subdivision does not preclude an enrollee from recovering costs, 
  8.14  disbursements, fees, and expenses under other applicable law. 
  8.15     Sec. 11.  Minnesota Statutes 1998, section 144.335, is 
  8.16  amended by adding a subdivision to read: 
  8.17     Subd. 2a.  [DISCLOSURE OF INCENTIVE AGREEMENTS.] A 
  8.18  provider, as defined in subdivision 1, clause (b)(1), shall 
  8.19  disclose to a patient orally and in writing the reimbursement 
  8.20  methodology used by a health plan company as defined under 
  8.21  section 62J.70, a health care network cooperative as defined 
  8.22  under section 62R.04, subdivision 3, and a health care provider 
  8.23  as defined under section 62J.70, subdivision 2.  The disclosure 
  8.24  must explain clearly any aspect of the reimbursement methodology 
  8.25  that creates a financial incentive for the provider to limit or 
  8.26  restrict the health care provided to that patient.  The written 
  8.27  disclosure must be made to the patient when the patient enrolls 
  8.28  or registers with the provider, and upon request.  The oral 
  8.29  disclosure must be made whenever the patient requests or 
  8.30  receives services that are subject to or implicated by a 
  8.31  financial incentive in the reimbursement methodology, including, 
  8.32  but not limited to, referrals to or utilization of specialists, 
  8.33  diagnostic testing, prescription drugs, or special medical 
  8.34  treatments or courses of treatment.