SENATE BILL NO. 185 February 2, 1999, Introduced by Senator BYRUM and referred to the Committee on Health Policy. A bill to regulate certain managed care plans; to create the office of the managed care ombudsman and to prescribe its powers and duties; to create a health care data committee and to pre- scribe its powers and duties; to prescribe the powers and duties of certain state agencies and persons; to provide for certain surveys and reports; and to prescribe penalties and civil sanctions. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 ARTICLE 1 2 Sec. 101. This act shall be known and may be cited as the 3 "health care accountability act". 4 Sec. 103. As used in this act: 5 (a) "Council" means the legislative council established 6 under section 15 of article IV of the state constitution of 7 1963. 00387'99 DKH 2 1 (b) "Commissioner" means the state commissioner of 2 insurance. 3 (c) "Council" means the legislative council. 4 (d) "Department" means the department of community health. 5 (e) "Director" means the director of the department of com- 6 munity health. 7 (f) "Enrollee" means an individual who is entitled to 8 receive health services under a managed care plan. 9 (g) "Health professional" or "health profession" means that 10 term as defined in section 16105 of the public health code, 1978 11 PA 368, MCL 333.16105. 12 (h) "Managed care plan" means a health plan offered by a 13 health maintenance organization licensed under part 210 of the 14 public health code, 1978 PA 368, MCL 333.21001 to 333.21098, or a 15 policy, certificate, or contract offered by a health insurer or 16 health care corporation under which covered individuals elect to 17 obtain health care services from health care providers who have 18 entered into prudent purchaser agreements. 19 (i) "Office" means the office of the managed care ombudsman 20 created in article 2. 21 (j) "Ombudsman" means the managed care ombudsman created in 22 article 2. 23 (k) "Utilization review" means a system for prospective and 24 concurrent review of the medical necessity and appropriateness in 25 the allocation of health care resources and services given or 26 proposed to be given to an enrollee in a managed care plan. 00387'99 3 1 Utilization review does not include elective requests for 2 clarification of coverage. 3 (l) "Utilization review accreditation commission" means the 4 American accreditation healthcare commission/utilization review 5 accreditation commission. 6 Sec. 104. (1) A managed care plan that has allegedly vio- 7 lated any part of this act shall be afforded an opportunity for a 8 hearing before the commissioner pursuant to the administrative 9 procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. If 10 the commissioner finds that a violation has occurred, the commis- 11 sioner shall reduce the findings and decision to writing and 12 shall issue and cause to be served upon the managed care plan 13 charged with the violation a copy of the findings and an order 14 requiring the plan to cease and desist from the violation. In 15 addition, the commissioner may order any of the following: 16 (a) Payment of a civil fine of not more than $500.00 for 17 each violation. An order of the commissioner under this subdivi- 18 sion shall not require the payment of civil fines exceeding 19 $25,000.00. A fine collected under this subdivision shall be 20 turned over to the state treasurer and credited to the general 21 fund. 22 (b) The suspension, limitation, or revocation of the managed 23 care plan's license or certificate of authority. 24 (2) After notice and opportunity for hearing, the commis- 25 sioner may by order reopen and alter, modify, or set aside, in 26 whole or in part, an order issued under this section if, in the 00387'99 4 1 commissioner's opinion, conditions of fact or law have changed to 2 require that action or the public interest requires that action. 3 (3) The commissioner may apply to the Ingham county circuit 4 court for an order of the court enjoining a violation of this 5 act. 6 ARTICLE 2 7 Sec. 201. (1) The managed care ombudsman's office is cre- 8 ated within the legislative council. 9 (2) The principal executive officer of the office is the 10 managed care ombudsman who shall be appointed by and serve at the 11 pleasure of the council. 12 (3) The council shall establish procedures for approving the 13 office's budget, expending funds, and employing the ombudsman and 14 personnel for the office. 15 Sec. 203. The ombudsman shall do all of the following: 16 (a) Advise the legislature on issues regarding managed 17 care. 18 (b) Review and comment on managed care issues involving the 19 department or the insurance bureau of the department of consumer 20 and industry services. 21 (c) Research and investigate matters that affect the quali- 22 ty, delivery, costs, management, and operation of managed care as 23 it affects consumers. 24 (d) Provide technical assistance and act as a resource to 25 consumers regarding managed care including all of the following: 26 (i) Educating enrollees about their rights and 27 responsibilities. 00387'99 5 1 (ii) Assisting enrollees with filing grievances or appeals 2 of managed care plan determinations. 3 (iii) Disseminating information and reports concerning man- 4 aged care plans and issues. 5 (e) Establish a statewide toll-free telephone line to give 6 state residents access to the ombudsman's office. 7 (f) Perform other functions as determined by the council. 8 Sec. 205. (1) Correspondence between the ombudsman and a 9 consumer is confidential and exempt from disclosure under the 10 freedom of information act, 1976 PA 442, MCL 15.231 to 15.246. 11 (2) The ombudsman shall maintain secrecy with respect to all 12 matters and the identities of complainants or persons from whom 13 information is acquired, except to the extent disclosure is nec- 14 essary to enable the ombudsman to perform the duties of the 15 office or to support recommendations resulting from an 16 investigation. 17 Sec. 207. The ombudsman shall submit to the council and the 18 legislature an annual report on the actions of the office, on 19 issues and matters under section 203(a), (b), and (c), and on the 20 need for any suggested legislative action. 21 ARTICLE 3 22 Sec. 301. (1) A managed care plan shall not condition 23 employment with the managed care plan or cancel coverage on, 24 refuse to provide coverage for, or refuse to issue or renew a 25 plan because an employee, an applicant for employment, an enroll- 26 ee, or an applicant for enrollment refuses to have a genetic test 27 or because of the results of a genetic test. 00387'99 6 1 (2) As used in this section: 2 (a) "Genetic characteristic" means an inherited gene or 3 chromosome, or alteration of a gene or chromosome, that is scien- 4 tifically or medically believed to predispose an individual to a 5 disease, disorder, or syndrome, or to be associated with a sta- 6 tistically significant increased risk of development of a dis- 7 ease, disorder, or syndrome. 8 (b) "Genetic test" means a test for determining the presence 9 or absence of an inherited genetic characteristic in an individu- 10 al, including tests of nucleic acids such as DNA, RNA, and mito- 11 chondrial DNA, chromosomes, or proteins, in order to identify a 12 genetic characteristic. 13 Sec. 303. A managed care plan shall establish a policy gov- 14 erning termination of providers. The policy shall include, but 15 is not limited to, all of the following: 16 (a) Notice to the provider of the termination in the time 17 and manner specified in the provider's contract. 18 (b) Methods by which the termination policy will be made 19 known to providers and enrollees at the time of enrollment and on 20 a periodic basis. 21 (c) Written notification to each enrollee at least 30 busi- 22 ness days prior to the termination or withdrawal from the managed 23 care plan's provider network of an enrollee's primary care pro- 24 vider and any other provider from which the enrollee is currently 25 receiving a course of treatment. The 30-day prior notice to 26 enrollees may be waived in cases of immediate termination of a 00387'99 7 1 provider where it was necessary for the protection of the health, 2 safety, and welfare of enrollees. 3 (d) Assurance of continued coverage of services at the con- 4 tract price by a terminated provider for up to 120 calendar days 5 where it is medically necessary for the enrollee to continue 6 treatment with the terminated provider. If an enrollee is preg- 7 nant, medical necessity shall be considered demonstrated and cov- 8 erage shall continue to the postpartum evaluation of the enroll- 9 ee, up to 6 weeks after delivery. This subdivision does not 10 apply if a provider is terminated by a managed care plan based in 11 whole or in part on issues concerning inadequate care or if qual- 12 ity control standards have not been met by the provider. 13 Sec. 305. A managed care plan shall not terminate a health 14 professional's contract with the managed care plan because of the 15 utilization of services caused by 1 or more high utilization 16 enrollees. 17 Sec. 307. (1) A managed care plan that wishes to perform 18 utilization review in-house shall do so only under either of the 19 following circumstances: 20 (a) If the utilization review standards to be used have been 21 approved or accredited by the utilization review accreditation 22 commission. 23 (b) The plan has demonstrated to the commissioner that it 24 adheres to utilization review standards that are substantially 25 similar to standards approved or accredited by the utilization 26 review accreditation commission and the standards provide the 00387'99 8 1 same or greater protection to the rights of enrollees whose care 2 is reviewed. 3 (2) A managed care plan shall only contract with a utiliza- 4 tion review company for the performance of utilization review 5 services if the utilization review company shows either of the 6 following: 7 (a) The utilization review company has been approved or 8 accredited by the utilization review accreditation commission. 9 (b) The utilization review company has demonstrated to the 10 commissioner that it adheres to utilization review standards that 11 are substantially similar to standards approved or accredited by 12 the utilization review accreditation commission and the standards 13 provide the same or greater protection to the rights of enrollees 14 whose care is reviewed. 15 ARTICLE 4 16 Sec. 401. (1) The department shall develop a performance 17 and outcome measurement system for monitoring the quality of care 18 provided to managed care plan enrollees. The data collected 19 through this system shall be used by the department to do all of 20 the following: 21 (a) Assist managed care plans and their providers in quality 22 improvement efforts. 23 (b) Provide information on the performance of managed care 24 plans for regulatory oversight. 25 (c) Subject to subsection (4), inform the legislature and 26 consumers through a user-friendly annual report about individual 27 managed care plan performances. 00387'99 9 1 (d) Promote the standardization of data reporting by managed 2 care plans and providers. 3 (2) The performance and outcome measures shall include 4 population-based and patient-centered indicators of quality of 5 care, appropriateness, access, utilization, and satisfaction. To 6 minimize costs to managed care plans, providers, and the depart- 7 ment, performance measures will incorporate, when possible, data 8 routinely collected or available to the department from other 9 sources. The department shall take all necessary measures to 10 reduce duplicative reporting of information to state agencies. 11 Sources of data for these performance measures may include but 12 are not limited to all of the following: 13 (a) Indicator data collected by managed care plans from 14 chart reviews and administrative data bases. 15 (b) Member and patient satisfaction surveys. 16 (c) Provider surveys. 17 (d) Quarterly and annual reports submitted by managed care 18 plans to the department. 19 (e) Computerized health care encounter data. 20 (f) Data collected by the department for administrative, 21 epidemiological, and other purposes. 22 (3) The department shall make, when appropriate, statisti- 23 cally valid adjustments in its annual report to account for demo- 24 graphic variations among managed care plans. 25 (4) Each managed care plan shall have 30 days to comment on 26 the compilation and interpretation of the data before its release 27 to consumers. 00387'99 10 1 Sec. 403. (1) Managed care plans shall submit such 2 performance and outcome data as the department requests from time 3 to time. 4 (2) A managed care plan shall disclose upon request how much 5 of each premium dollar is spent on administrative costs. 6 Sec. 405. The department shall conduct audits at least once 7 every 3 years of each managed care plan's performance and outcome 8 data including desk and on-site audits. 9 Sec. 407. The department shall conduct or arrange for 10 periodic enrollee satisfaction surveys. The managed care plan 11 shall provide the department with the enrollee mailing list, upon 12 request, to be used to select samples of the managed care plans 13 membership for the surveys. 14 Sec. 409. The department shall ensure the confidentiality 15 of patient-specific information. 16 Sec. 411. (1) The department shall establish a health care 17 data committee to assist the department in developing a per- 18 formance measurement and assessment system for monitoring the 19 quality of care provided to managed care plan enrollees. 20 (2) The health care data committee shall be composed of no 21 more than 12 and no fewer than 10 members who are appointed by 22 and serve at the pleasure of the director and the commissioner. 23 The members shall include providers, consumers, and at least 3 24 managed care plan representatives. In addition, the director and 25 the commissioner shall serve as ex officio members without vote. 26 The health care data committee shall be chaired by the director 00387'99 11 1 or his or her designee. Additional experts may be invited to 2 participate on an invitational ad hoc basis as needed. 3 (3) The health care data committee shall advise the director 4 and the commissioner on the development of a uniform data report- 5 ing system to obtain reliable, standardized, and comparable 6 information from all managed care plans. In the process of 7 developing this system, the health care data committee shall 8 address all of the following: 9 (a) The relevance, validity, and reliability of each measure 10 selected to be an indicator of performance. 11 (b) Protection of confidentiality of patient-specific 12 information. 13 (c) Cost and difficulty of data collection and existing data 14 collection requirements. 15 (d) Measures to reduce duplicative reporting of information 16 to state agencies. 17 (e) Public release of data in formats useful to purchasers 18 and consumers. 19 ARTICLE 5 20 Sec. 501. This act takes effect January 1, 2000. 00387'99 Final page. DKH