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; amending 
  1.5             Minnesota Statutes 2000, sections 62M.07; 62Q.74, as 
  1.6             amended; 62Q.75, subdivision 2, by adding a 
  1.7             subdivision; proposing coding for new law in Minnesota 
  1.8             Statutes, chapter 62Q; repealing Minnesota Statutes 
  1.9             2001 Supplement, section 62Q.745. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2000, section 62M.07, is 
  1.12  amended to read: 
  1.13     62M.07 [PRIOR AUTHORIZATION OF SERVICES.] 
  1.14     (a) Utilization review organizations conducting prior 
  1.15  authorization of services must have written standards that meet 
  1.16  at a minimum the following requirements: 
  1.17     (1) written procedures and criteria used to determine 
  1.18  whether care is appropriate, reasonable, or medically necessary; 
  1.19     (2) a system for providing prompt notification of its 
  1.20  determinations to enrollees and providers and for notifying the 
  1.21  provider, enrollee, or enrollee's designee of appeal procedures 
  1.22  under clause (4); 
  1.23     (3) compliance with section 62M.05, subdivisions 3a and 3b, 
  1.24  regarding time frames for approving and disapproving prior 
  1.25  authorization requests; 
  1.26     (4) written procedures for appeals of denials of prior 
  1.27  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 make available without 
  2.16  unreasonable delay by telephone and 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 fee, including a user fee of an electronic communication 
  2.22  system, for requesting prior authorization of a health care 
  2.23  service. 
  2.24     (d) In the event that a health care service subject to 
  2.25  prior authorization by a utilization review organization, health 
  2.26  plan company, or claim administrator is recommended by a health 
  2.27  care provider but is not authorized by the utilization review 
  2.28  organization, health plan company, or claim administrator, the 
  2.29  determination not to authorize the service is a medical decision 
  2.30  by the utilization review organization, health plan company, or 
  2.31  claim administrator, and the utilization review organization, 
  2.32  health plan company, or claim administrator is subject to civil 
  2.33  liability for the decision in the same manner as a health care 
  2.34  provider.  
  2.35     Sec. 2.  [62Q.732] [CITATION.] 
  2.36     Sections 62Q.732 to 62Q.751 may be cited as the "Minnesota 
  3.1   Fair Health Plan Contracting Act." 
  3.2      Sec. 3.  [62Q.733] [DEFINITIONS.] 
  3.3      Subdivision 1.  [APPLICABILITY.] For purposes of sections 
  3.4   62Q.732 to 62Q.751, the following definitions apply.  
  3.5      Subd. 2.  [ALLOWABLE PAYMENT.] "Allowable payment" means 
  3.6   the total financial compensation to be paid to a health care 
  3.7   provider for providing a health care service as determined by 
  3.8   the contract between the health plan company and the provider, 
  3.9   including any amount for which the patient or other third party 
  3.10  may be obligated to pay under the contract.  
  3.11     Subd. 3.  [CONTRACT.] "Contract" means a written agreement 
  3.12  between a health care provider and a health plan company to 
  3.13  provide health care services.  For purposes of this subdivision, 
  3.14  a contract does not include a health care professional 
  3.15  employment contract. 
  3.16     Subd. 4.  [HEALTH CARE PROVIDER OR PROVIDER.] "Health care 
  3.17  provider" or "provider" means: 
  3.18     (1) a physician, chiropractor, dentist, or other provider 
  3.19  as defined under section 62J.03; or 
  3.20     (2) a hospital licensed under chapter 144, ambulatory 
  3.21  surgical treatment center, pharmacy, long-term care facility, or 
  3.22  other facility that is licensed or otherwise authorized to 
  3.23  deliver health care services. 
  3.24  For purposes of this subdivision, health care provider includes 
  3.25  independent practice associations and physician-hospital 
  3.26  organizations. 
  3.27     Subd. 5.  [HEALTH PLAN COMPANY.] "Health plan company" 
  3.28  means: 
  3.29     (1) a health maintenance organization operating under 
  3.30  chapter 62D; 
  3.31     (2) a community integrated service network operating under 
  3.32  chapter 62N; 
  3.33     (3) a preferred provider organization as defined in section 
  3.34  145.61, subdivision 4c; or 
  3.35     (4) an insurance company licensed under chapter 60A, 
  3.36  nonprofit health service corporation operating under chapter 
  4.1   62C, fraternal benefit society operating under chapter 64B, or 
  4.2   any other entity that establishes, operates, or maintains a 
  4.3   network of health care providers where the providers have 
  4.4   entered into a contract with the entity to provide health care 
  4.5   services.  
  4.6      Sec. 4.  [62Q.734] [PROVIDER CONTRACTING PROCEDURES.] 
  4.7      Subdivision 1.  [CONTRACT DISCLOSURE.] Before requiring a 
  4.8   health care provider to sign a contract, a health plan company 
  4.9   shall provide to the provider a complete copy of the proposed 
  4.10  contract with all attachments and exhibits, including a copy of 
  4.11  all guidelines and treatment parameters incorporated or 
  4.12  referenced in the contract.  The health plan company shall make 
  4.13  available to the provider a method or process that allows the 
  4.14  provider to determine the allowable payment amounts for each 
  4.15  health care service to be provided under the contract.  The 
  4.16  provider shall be allowed 90 days to review the complete 
  4.17  contract before being required to sign the contract.  
  4.18     Subd. 2.  [PROPOSED AMENDMENTS.] (a) Any amendment or 
  4.19  change in the terms of an existing contract between a health 
  4.20  plan company and a provider must be disclosed to the provider at 
  4.21  least 90 days prior to the effective date of the proposed change.
  4.22     (b) Any amendment or change in the contract that alters the 
  4.23  financial reimbursement or alters the written contractual 
  4.24  policies and procedures governing the relationship between the 
  4.25  provider and the health plan company must be disclosed to the 
  4.26  provider not less than 90 days prior to the effective date of 
  4.27  the proposed change and the provider must have the opportunity 
  4.28  to terminate the contract before the amendment or change is 
  4.29  deemed to be in effect.  
  4.30     Sec. 5.  [62Q.735] [PAYMENT RATES.] 
  4.31     A formal or informal contract, term, condition, or policy 
  4.32  may not mandate or require a health care professional or a 
  4.33  health care provider to accept from the health plan company any 
  4.34  payment amounts for services agreed to in a contract with any 
  4.35  other health plan company or any payment amounts other than 
  4.36  those stated in the contract between the health plan company and 
  5.1   the health care professional or health care provider. 
  5.2      Sec. 6.  [62Q.736] [PAYMENT DISCLOSURE.] 
  5.3      A health plan company shall make available to anyone, 
  5.4   including a consumer, employer, or provider upon request or 
  5.5   through electronic communication, the current allowable payment 
  5.6   for each health care service covered under any health plan 
  5.7   offered by the health plan company.  
  5.8      Sec. 7.  [62Q.737] [SERVICE CODE CHANGES.] 
  5.9      (a) For purposes of this section, "service code" means 
  5.10  current procedural terminology (CPT), current dental terminology 
  5.11  (CDT), ICD-9-CM, diagnosis-related groups (DRGs), or other 
  5.12  coding system. 
  5.13     (b) A health plan company shall not change a service code 
  5.14  properly submitted by a health care provider.  The health plan 
  5.15  company shall determine the manner in which it adjudicates 
  5.16  claims and may limit the service codes it pays for based upon 
  5.17  factors recognized by a service code. 
  5.18     (c) Notwithstanding paragraph (b), a health plan company 
  5.19  may correct errors in submitted claims that prevent the claims 
  5.20  from being processed, provided that the health plan company: 
  5.21     (1) utilizes as specifically defined the most recently 
  5.22  issued service code within a year of its release; 
  5.23     (2) notifies the provider of the corrections; and 
  5.24     (3) offers the provider the opportunity to appeal any 
  5.25  corrections.  
  5.26     Sec. 8.  [62Q.738] [RECOUPMENTS.] 
  5.27     (a) A health plan company shall provide a health care 
  5.28  provider with a written explanation of any proposed recoupment 
  5.29  that includes the name of the patient, the date of the service, 
  5.30  the service code, the payment amount, the details concerning the 
  5.31  reasons for the recoupment, and an explanation of the appeal 
  5.32  process.  Upon receiving the written explanation, the provider 
  5.33  has 30 days to either appeal the proposed recoupment or to repay 
  5.34  the recoupment amount.  If the provider chooses to appeal the 
  5.35  proposed recoupment, and, upon appeal, the proposed recoupment 
  5.36  is determined to be appropriate, the provider must pay the 
  6.1   recoupment within 30 days of receiving the notice of the final 
  6.2   appeal's decision.  If the provider fails to make the required 
  6.3   recoupment payment within the required time period or fails to 
  6.4   appeal the proposed recoupment within the required time period, 
  6.5   the health plan company may offset future payments to effectuate 
  6.6   the recoupment.  
  6.7      (b) Any attempts by the health plan company to recoup 
  6.8   payments shall be limited to 24 months after the date of 
  6.9   service, except when the provider has been convicted of 
  6.10  insurance fraud. 
  6.11     Sec. 9.  [62Q.739] [UNILATERAL TERMS PROHIBITED.] 
  6.12     (a) A contract between a health plan company and a health 
  6.13  care provider shall not contain or require unilateral terms 
  6.14  regarding termination, indemnification, or arbitration.  These 
  6.15  provisions shall apply equally to both the health plan company 
  6.16  and the provider.  
  6.17     (b) A health plan company may not terminate a health care 
  6.18  provider's contract except for good cause.  If a health plan 
  6.19  company terminates a provider's contract, the health plan 
  6.20  company must inform the provider of the reasons for 
  6.21  termination.  For purposes of this paragraph, good cause 
  6.22  includes failure to meet the health plan company's credentialing 
  6.23  standards, failure to comply with the terms of the contract, and 
  6.24  failure to comply with the managed care protocols of the health 
  6.25  plan company as defined in section 62Q.095, subdivision 2. 
  6.26     Sec. 10.  Minnesota Statutes 2000, section 62Q.74, as 
  6.27  amended by Laws 2001, chapter 170, sections 4 and 5, is amended 
  6.28  to read: 
  6.29     62Q.74 [NETWORK SHADOW CONTRACTING.] 
  6.30     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  6.31  section, the terms defined in this subdivision have the meanings 
  6.32  given. 
  6.33     (b) "category of coverage" means one of the following types 
  6.34  of health-related coverage: 
  6.35     (1) health; 
  6.36     (2) no-fault automobile medical benefits; or 
  7.1      (3) workers' compensation medical benefits. 
  7.2      (c) "Health care provider" or "provider" means an 
  7.3   individual licensed, registered, or regulated by the board of 
  7.4   medical practice under chapter 147, a chiropractor licensed 
  7.5   under sections 148.01 to 148.106, a dentist licensed under 
  7.6   chapter 150A, or a hospital licensed under chapter 144. 
  7.7      (d) "Network organization" means a preferred provider 
  7.8   organization as defined in section 145.61, subdivision 4c; a 
  7.9   managed care organization as defined in section 62Q.01, 
  7.10  subdivision 5; or other entity that uses or consists of a 
  7.11  network of health care providers. 
  7.12     Subd. 2.  [PROVIDER CONSENT REQUIRED.] (a) No network 
  7.13  organization health plan company shall require a health care 
  7.14  provider to participate in a network under a category of 
  7.15  coverage that differs from the category or categories of 
  7.16  coverage to which the existing contract between the network 
  7.17  organization health plan company and the provider applies, 
  7.18  without the affirmative consent of the provider obtained under 
  7.19  subdivision 3.  
  7.20     (b) This section does not apply to situations in which the 
  7.21  network organization wishes No health plan company shall require 
  7.22  the provider to participate in a new or different health plan, 
  7.23  product, or other arrangement within a category of coverage that 
  7.24  is already provided for in an existing contract between the 
  7.25  network organization and the provider without the affirmative 
  7.26  consent of the provider obtained under subdivision 3.  This 
  7.27  paragraph does not apply to participating in health plans that 
  7.28  provide health care services to government programs, including 
  7.29  the prepaid medical assistance program, the MinnesotaCare 
  7.30  program, the prepaid general assistance medical care program, 
  7.31  and the demonstration project for people with disabilities. 
  7.32     (c) Compliance with this section may not be waived in a 
  7.33  contract or otherwise. 
  7.34     Subd. 3.  [CONSENT PROCEDURE.] (a) The network organization 
  7.35  health plan company, if it wishes to apply an existing contract 
  7.36  with a provider to a different category of coverage or health 
  8.1   plan, shall first notify the provider in writing.  The written 
  8.2   notice must include at least the following: 
  8.3      (1) the network organization's health plan company's name, 
  8.4   address, and telephone number, and the name of the specific 
  8.5   network, if it differs from that of the network organization; 
  8.6      (2) a description of the proposed new category of 
  8.7   coverage or health plan; 
  8.8      (3) the names of all payers expected by the network 
  8.9   organization health plan company to use the network for the new 
  8.10  category of coverage or health plan; 
  8.11     (4) the approximate number of current enrollees of the 
  8.12  network organization health plan company in that category of 
  8.13  coverage or health plan within the provider's geographical area; 
  8.14     (5) a disclosure of all contract terms of the proposed new 
  8.15  category of coverage or health plan, including the discount or 
  8.16  reduced fees, care guidelines, utilization review criteria, 
  8.17  prior authorization process, and dispute resolution process; 
  8.18     (6) a form for the provider's convenience in accepting or 
  8.19  declining participation in the proposed new category of coverage 
  8.20  or health plan, provided that the provider need not use that 
  8.21  form in responding; and 
  8.22     (7) a statement informing the provider of the provisions of 
  8.23  paragraph (b). 
  8.24     (b) Unless the provider has affirmatively agreed to 
  8.25  participate within 60 days after the postmark date of the 
  8.26  notice, the provider is deemed to have not accepted the proposed 
  8.27  new category of coverage or health plan. 
  8.28     Subd. 4.  [CONTRACT TERMINATION RESTRICTED.] A network 
  8.29  organization health plan company must not terminate an existing 
  8.30  contract with a provider, or fail to honor the contract in good 
  8.31  faith, based solely on the provider's decision not to accept a 
  8.32  proposed new category of coverage.  The most recent agreed-upon 
  8.33  contractual obligations remain in force until the existing 
  8.34  contract's renewal or termination date. 
  8.35     Subd. 5.  [REMEDY.] If a network organization health plan 
  8.36  company violates this section by reimbursing a provider as if 
  9.1   the provider had agreed under this section to participate in the 
  9.2   network under a category of coverage to which the provider has 
  9.3   not agreed, the provider has a cause of action against 
  9.4   the network organization health plan company to recover two 
  9.5   times the difference between the reasonable charges for claims 
  9.6   affected by the violation and the amounts actually paid to the 
  9.7   provider.  The provider is also entitled to recover costs, 
  9.8   disbursements, and reasonable attorney fees. 
  9.9      Sec. 11.  Minnesota Statutes 2000, section 62Q.75, is 
  9.10  amended by adding a subdivision to read: 
  9.11     Subd. 1a.  [SUBMITTING CLAIMS.] A health care provider must 
  9.12  submit to a health plan company an initial claim for health care 
  9.13  services provided in accordance with the contract within six 
  9.14  months and any final claims within one year of the date of 
  9.15  service.  
  9.16     Sec. 12.  Minnesota Statutes 2000, section 62Q.75, 
  9.17  subdivision 2, is amended to read: 
  9.18     Subd. 2.  [CLAIMS PAYMENTS.] (a) This section applies to 
  9.19  clean claims submitted to a health plan company or third-party 
  9.20  administrator for services provided by any: 
  9.21     (1) health care provider, except a provider licensed under 
  9.22  chapter 151; 
  9.23     (2) home health care provider, as defined in section 
  9.24  144A.43, subdivision 4; or 
  9.25     (3) health care facility. 
  9.26  All health plan companies and third-party administrators must 
  9.27  pay or deny claims that are clean claims within 30 calendar days 
  9.28  after the date upon which the health plan company or third-party 
  9.29  administrator received the claim, or, upon the determination 
  9.30  that a claim is not clean, the health plan company or 
  9.31  third-party administrator must inform the provider of this 
  9.32  determination and the reasons preventing timely payment within 
  9.33  30 calendar days after the date upon which the health plan 
  9.34  company or third-party administrator received the claim. 
  9.35     (b) If a health plan company or third-party administrator 
  9.36  does not pay or deny a clean claim within the period provided in 
 10.1   paragraph (a), the health plan company or third-party 
 10.2   administrator must pay interest on the claim for the period 
 10.3   beginning on the day after the required payment date specified 
 10.4   in paragraph (a) and ending on the date on which the health plan 
 10.5   company or third-party administrator makes the payment or denies 
 10.6   the claim.  In any payment, the health plan company or 
 10.7   third-party administrator must itemize any interest payment 
 10.8   being made separately from other payments being made for 
 10.9   services provided.  The health plan company or third-party 
 10.10  administrator may, at its discretion, require the health care 
 10.11  provider The provider shall not be required to bill the health 
 10.12  plan company or third-party administrator for the interest 
 10.13  required under this section before any interest payment is 
 10.14  made.  Payment of interest must be paid to the provider 
 10.15  automatically with the original claim.  
 10.16     (c) The rate of interest paid by a health plan company or 
 10.17  third-party administrator under this subdivision shall be 1.5 
 10.18  percent per month or any part of a month. 
 10.19     (d) A health plan company or third-party administrator is 
 10.20  not required to make an interest payment on a claim for which 
 10.21  payment has been delayed for purposes of reviewing potentially 
 10.22  fraudulent or abusive billing practices.  If payment of a claim 
 10.23  is delayed, the health plan company or third-party administrator 
 10.24  must promptly inform the provider of the delay and the reasons 
 10.25  for it.  
 10.26     (e) The commissioner may not assess a financial 
 10.27  administrative penalty against a health plan company for 
 10.28  violation of this subdivision. 
 10.29     Sec. 13.  [62Q.751] [PROFILING.] 
 10.30     Any health plan company that assembles data on health care 
 10.31  providers or groups of providers for marketing purposes must 
 10.32  offer the provider or group of providers an opportunity to 
 10.33  review the data assembled before the data is released either 
 10.34  publicly or privately to a third party.  
 10.35     Sec. 14.  [REPEALER.] 
 10.36     Minnesota Statutes 2001 Supplement, section 62Q.745, is 
 11.1   repealed.