HOUSE BILL No. 5511 March 15, 2000, Introduced by Reps. Shulman, Hart, DeWeese, Gilbert and Kowall and referred to the Committee on Health Policy. A bill to provide review of certain health care treatment decisions; to provide for a health care coverage complaint system; to provide for review of health care coverage treatment decisions by independent review organizations; to prescribe the powers and duties of certain health care coverage issuers; to prescribe the powers and duties of certain persons; to prescribe the powers and duties of certain state officials; to provide for the reporting of certain information; to provide fees; and to provide penalties for violations of this act. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. This act shall be known and may be cited as the 2 "health care treatment decision review act". 3 Sec. 3. As used in this act: 4 (a) "Adverse determination" means a determination by a 5 health care coverage issuer that the health care services 05071'99 ** DKH 2 1 furnished or proposed to be furnished to an enrollee are not 2 appropriate or medically necessary. 3 (b) "Alternative system of health care delivery and 4 financing" means a person operating a system of health care 5 delivery and financing under section 21042 of the public health 6 code, 1978 PA 368, MCL 333.21042. 7 (c) "Commissioner" means the commissioner of insurance. 8 (d) "Dental care corporation" means a dental care corpora- 9 tion incorporated under 1963 PA 125, MCL 550.351 to 550.373. 10 (e) "Enrollee" means an individual who is enrolled in a 11 health care plan, including covered dependents. 12 (f) "Health care corporation" means a health care corpora- 13 tion operating under the nonprofit health care corporation reform 14 act, 1980 PA 350, MCL 550.1101 to 550.1704. 15 (g) "Health care coverage issuer" means an insurer, a dental 16 care corporation, health care corporation, health maintenance 17 organization, managed care entity, alternative system of health 18 care delivery and financing, or a physician service organization, 19 physician hospital organization, group medical practice, or other 20 similar entity. 21 (h) "Health care plan" means a plan or other arrangement 22 whereby a health care coverage issuer undertakes to provide, 23 arrange for, pay for, or reimburse any part of the cost of health 24 care services. 25 (i) "Health care provider" means a health facility or a 26 person licensed, certified, or registered under parts 61 to 65 or 05071'99 ** 3 1 161 to 183 of the public health code, 1978 PA 368, MCL 333.6101 2 to 333.6523 and 333.16101 to 333.18311. 3 (j) "Health facility" means: 4 (i) A facility or agency licensed or authorized under 5 parts 201 to 217 of the public health code, 1978 PA 368, 6 MCL 333.20101 to 333.21799e, or a licensed part thereof. 7 (ii) A mental hospital, psychiatric hospital, psychiatric 8 unit, or mental retardation facility operated by the department 9 of community health or certified or licensed under the mental 10 health code, 1974 PA 258, MCL 330.1001 to 330.2106. 11 (iii) A facility providing outpatient physical therapy serv- 12 ices, including speech pathology services. 13 (iv) A kidney disease treatment center, including a free- 14 standing hemodialysis unit. 15 (v) An ambulatory health care facility. 16 (vi) A tertiary health care service facility. 17 (vii) A substance abuse treatment program licensed under 18 parts 61 to 65 of the public health code, 1978 PA 368, 19 MCL 333.6101 to 333.6523. 20 (viii) An outpatient psychiatric clinic. 21 (ix) A home health agency. 22 (k) "Health maintenance organization" means a health mainte- 23 nance organization licensed under part 210 of the public health 24 code, 1978 PA 368, MCL 333.21001 to 333.21098. 25 (l) "Independent review organization" means an organization 26 designated by the commissioner under section 9. 05071'99 ** 4 1 (m) "Insurer" means a health insurer authorized to do 2 business in this state under the insurance code of 1956, 1956 3 PA 218, MCL 500.100 to 500.8302. 4 (n) "Managed care entity" means an entity that delivers, 5 administers, or assumes risk for health care services with sys- 6 tems or techniques to control or influence the quality, accessi- 7 bility, utilization, or costs and prices of those services to a 8 defined enrollee population. 9 (o) "Physician" means a person licensed as a doctor of allo- 10 pathic medicine or as a doctor of osteopathic medicine and sur- 11 gery under part 170 or 175 of the public health code, 1978 12 PA 368, MCL 333.17001 to 333.17084 and 333.17501 to 333.17556. 13 Sec. 5. (1) Except as provided in subsection (2), every 14 health care coverage issuer shall establish for approval by the 15 commissioner a complaint system to provide reasonable and prompt 16 procedures for the resolution of oral and written complaints ini- 17 tiated by enrollees concerning health care services. 18 (2) Subsection (1) does not apply but subsection (4) does 19 apply to a health care issuer that has an internal formal griev- 20 ance procedure established under section 21035 of the public 21 health code, 1978 PA 368, MCL 333.21035, section 2213 of the 22 insurance code of 1956, 1956 PA 218, MCL 500.2213, or section 404 23 of the nonprofit health care corporation reform act, 1980 PA 350, 24 MCL 550.1404. 25 (3) The commissioner shall promulgate pursuant to the admin- 26 istrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 05071'99 ** 5 1 24.328, rules and standards for complaint systems for health care 2 coverage issuers. 3 (4) Every health care coverage issuer's complaint system 4 shall include all of the following: 5 (a) Written notification to the commissioner of each 6 enrollee who appeals, whether through the internal formal griev- 7 ance procedure or through the independent review organization 8 review procedure, an adverse determination made by the health 9 care issuer. 10 (b) A process by which an enrollee or a person acting on 11 behalf of the enrollee, including the enrollee's health care pro- 12 vider, shall be permitted by the health care coverage issuer to 13 seek review of an adverse determination by an independent review 14 organization. 15 (c) Written notification to an enrollee of the enrollee's 16 right to review of an adverse determination by an independent 17 review organization and the procedures to obtain that review. 18 (d) Written notification to an enrollee of the enrollee's 19 right to expedited review by an independent review organization, 20 and the procedures to obtain that review, if for a denial of a 21 continued hospital stay or if the enrollee's physician, whether 22 orally or in writing, substantiates that the normal time frame 23 for review by an independent review organization would acutely 24 jeopardize the health or life of the enrollee. 25 (5) The written notice to the enrollee required by 26 subsection (4) shall include all of the following: 05071'99 ** 6 1 (a) A clear and concise written statement of the clinical 2 basis for the adverse determination. 3 (b) A list of all documents reviewed or relied upon by the 4 health care coverage issuer in making the adverse determination. 5 (c) The name and a description of the qualifications and 6 clinical experience of each person making the denial. 7 (6) A health care coverage issuer shall provide to the 8 appropriate independent review organization not later than the 9 third business day after the date that the health care coverage 10 issuer receives a request for review, or immediately for an expe- 11 dited review, a copy of all of the following: 12 (a) Any medical records of the enrollee that are relevant to 13 the review. 14 (b) Any documents reviewed or relied upon by the health care 15 coverage issuer in making the adverse determination. 16 (c) The written notification to the enrollee required by 17 subsection (4). 18 (d) Any documentation and written information submitted to 19 the health care coverage issuer in support of the enrollee's 20 request for review. 21 (e) A list of each health care provider who has provided 22 care to the enrollee and who may have medical records relevant to 23 the appeal. 24 (7) A health care coverage issuer shall pay for the indepen- 25 dent review and shall comply with the independent review 26 organization's determination with respect to the medical 05071'99 ** 7 1 necessity or appropriateness of health care items and services 2 for an enrollee. 3 (8) Confidential information in the custody of a health care 4 coverage issuer may be provided to an independent review organi- 5 zation, subject to rules and standards adopted by the 6 commissioner. 7 Sec. 7. (1) An enrollee shall not resubmit for review to 8 the same or a different independent review organization the same 9 issue that has already been determined by an independent review 10 organization. 11 (2) A person shall not maintain a cause of action against a 12 health care coverage issuer based on an adverse determination, 13 unless the enrollee has first exhausted review by an independent 14 review organization. 15 (3) If the enrollee or the enrollee's representative seeks 16 to exhaust the appeal and review, as required by subsection (2), 17 before the statute of limitations applicable to a claim against a 18 health care coverage issuer has expired, the limitations period 19 is tolled until the later of the thirtieth day after the date the 20 enrollee or the enrollee's representative has exhausted the 21 applicable process for appeal and review. 22 (4) This section does not prohibit an enrollee from pursuing 23 other appropriate remedies, including injunctive relief, a 24 declaratory judgment, or relief available under law, if the 25 requirement of exhausting the process for appeal and review 26 places the enrollee's health or life in serious jeopardy. 05071'99 ** 8 1 Sec. 9. (1) The commissioner shall do all of the 2 following: 3 (a) Promulgate pursuant to the administrative procedures act 4 of 1969, 1969 PA 306, MCL 24.201 to 24.328, rules and standards 5 for the certification, selection, and operation of independent 6 review organizations and for the suspension and revocation of a 7 certification. 8 (b) Designate annually each organization that meets the 9 standards as an independent review organization and who has been 10 certified by the commissioner under subdivision (a). 11 (c) Provide ongoing oversight of independent review organi- 12 zations to ensure continued compliance with this act and the 13 standards and rules adopted under this act. 14 (d) Report to the senate and house of representatives stand- 15 ing committees on health and insurance issues by April 1, 2002, 16 and annually thereafter, on whether or not grievance and indepen- 17 dent review organization procedures should apply to third party 18 administrators and on the number of enrollees appealing an 19 adverse determination made by a health care issuer in the immedi- 20 ately preceding calendar year disaggregated as follows: 21 (i) The number of enrollees per health care issuer appealing 22 an adverse determination through the internal formal grievance 23 procedure. 24 (ii) The number of enrollees per health care issuer appeal- 25 ing an adverse determination through the independent review 26 organization procedure. 05071'99 ** 9 1 (2) The standards required by subsection (1) shall ensure 2 all of the following: 3 (a) The timely response of an independent review organiza- 4 tion to a request for an independent review of an adverse 5 determination. 6 (b) The confidentiality of medical records transmitted to an 7 independent review organization for use in independent reviews. 8 (c) The qualifications and independence of each health care 9 provider making review determinations for an independent review 10 organization, including standards that ensure that each health 11 care provider making review determinations spend over 20% of 12 their time in active clinical practice and have the same provider 13 license as the health care provider providing the medical serv- 14 ices that are under review. 15 (d) The fairness of the procedures used by an independent 16 review organization in making the determinations. 17 (e) Timely notice to enrollees and health care coverage 18 issuers of the results of the independent review, including the 19 clinical basis for the determination. 20 (f) That independent review organizations disclose to 21 enrollees and health care coverage issuers the names of each 22 health care provider making review determinations, their spe- 23 cialty areas, the states in which they practice, and the justifi- 24 cations for their decision. 25 (3) The standards required under subsection (1) shall 26 include standards that require each independent review 27 organization to make its determination as follows: 05071'99 ** 10 1 (a) Except as provided in subdivision (b), not later than 2 the earlier of the fifteenth day after the date the independent 3 review organization receives the information necessary to make 4 the determination. 5 (b) If immediate review is required, not later than the ear- 6 lier of the fifth day after the date the independent review 7 organization receives the information necessary to make the 8 determination. 9 (4) To be certified as an independent review organization, 10 an organization shall submit to the commissioner an application 11 in the form required by the commissioner. The application shall 12 include all of the following: 13 (a) For an applicant that is publicly held, the name of each 14 stockholder or owner of more than 5% of any stock or options. 15 (b) The name of any holder of bonds or notes of the appli- 16 cant that exceed $100,000.00. 17 (c) The name and type of business of each corporation or 18 other organization that the applicant controls or is affiliated 19 with and the nature and extent of the affiliation or control. 20 (d) The name and a biographical sketch of each director, 21 officer, and executive of the applicant and any entity listed 22 under subdivision (c) and a description of any relationship the 23 named individual has with a health care coverage issuer. 24 (e) The percentage of the applicant's revenues that are 25 anticipated to be derived from independent reviews. 05071'99 ** 11 1 (f) A description of the areas of expertise of the health 2 care professionals making review determinations for the 3 applicant. 4 (g) The procedures to be used by the independent review 5 organization in making review determinations with respect to 6 independent reviews. 7 (5) The independent review organization shall annually 8 submit the information required by subsection (4). If at any 9 time there is a material change in the information included in 10 the application under subsection (4), the independent review 11 organization shall submit updated information to the 12 commissioner. 13 (6) An independent review organization may not be a subsid- 14 iary of, or in any way owned or controlled by, a health care cov- 15 erage issuer or a trade association of health care coverage 16 issuers. 17 (7) An independent review organization conducting a review 18 is not liable for damages arising from the determination made by 19 the organization. This subsection does not apply to an act or 20 omission of the independent review organization that is made in 21 bad faith or that involves gross negligence. 22 Sec. 11. If, after opportunity for a hearing held pursuant 23 to the administrative procedures act of 1969, 1969 PA 306, 24 MCL 24.201 to 24.328, the commissioner determines that a health 25 care coverage issuer has violated this act, the commissioner 26 shall reduce his or her findings and decision to writing and 27 shall issue and cause to be served upon the health care coverage 05071'99 ** 12 1 issuer a copy of the findings and an order requiring the health 2 care coverage issuer to cease and desist from violating this act 3 and ordering payment of a monetary penalty of $5,000.00 for each 4 violation. The commissioner may bring a civil action to enforce 5 any order issued under this act. This section does not prohibit 6 the commissioner from taking enforcement action authorized by any 7 other law, in addition to any action taken under this section. 8 Enacting section 1. This act takes effect on January 1, 9 2001 and applies to all adverse determinations made on and after 10 January 1, 2001. 05071'99 ** Final page. DKH