HBA-NIK C.S.H.B. 3021 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3021 By: Smithee Insurance 4/16/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE In 1975, The 64th Texas Legislature enacted the Texas Health Maintenance Organization Act (Article 20A, V.T.C.S.) to regulate the health maintenance organization (HMO) industry. Art 20.12A of the Act (Review of Adverse Determinations), as added in 1997 by the 75th Legislature, requires an HMO to notify an enrollee of the enrollee's right to appeal an adverse determination to an independent review organization (IRO); to notify an enrollee of the procedure for such an appeal; and to notify an enrollee with a life-threatening condition of the enrollee's right to an immediate appeal. Art.2012A (Complaint System), which requires every HMO to implement a system to address a complaint brought by an enrollee, was also amended. Some HMOs contend that an enrollee's disagreement with an adverse determination constitutes a complaint and not an appeal within the meaning of Article 20A.12. An appeal of an adverse determination activates the requirements set forth by Article 21.58A, V.T.C.S. (Health Care Utilization Review Agents), to which HMOs are subject. Under Article 21.58A, an enrollee may request an IRO review of a denied claim. However, an enrollee must first complete the utilization review agent's appeal process before requesting an IRO review. This process is usually used by insurers to help make payment determinations. C.S.H.B. 3021 redefines "complaint" to include procedures related to review or appeal of an adverse determination, and provides that the term does not include a written dissatisfaction with an adverse determination. This bill requires each HMO to implement and maintain a complaint system to address complaints of enrollees and health care providers, and establishes the process for an appeal of an adverse determination, as that term is defined by this Act. C.S.H.B. 3021 redefines "adverse determination," for the purposes of Section 20A.12A, as a determination by an HMO or a utilization review agent (in addition to an HMO) that health care services, either furnished or proposed are not appropriate (in addition to not medically necessary). RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 2(f), Article 20A.02, V.T.C.S. (Definitions), to redefine "complaint" by including procedures related to review or appeal of an adverse determination as that term is defined by Section 12A of this Act; the denial, reduction, or termination of a service for reasons not related to medical necessity as aspects of the health maintenance organization's (HMO) operation. Provides that the term does not include, rather than a complaint is not, a provider's or enrollee's oral or written dissatisfaction or disagreement with an adverse determination. SECTION 2. Amends Section 12, Article 20A.12, V.T.C.S., as amended by Chapters 163 and 1026, Acts of the 75th Legislature, Regular Session, 1997, as follows: Sec. 12. COMPLAINT SYSTEM. (a) Requires every HMO to implement, rather than establish, and maintain a complaint system to provide reasonable procedures for the resolution of oral and written complaints initiated by enrollees or providers concerning health care services, rather than an internal system for the notice and appeal of complaints. (b) Makes a conforming change. (c)-(e) Redesignated from Subsections (b)-(d), respectively. (f) Makes conforming changes. (g) Deletes the provision that if a resolution is to deny services upon an adverse determination of medical necessity, the clinical basis used to reach that decision must be included. Makes a conforming change. Redesignated from Subsection (f). (h) Specifies that a request for appeal must be in writing. (i) Redesignated from Subsection (h). Makes a conforming change. (j) Makes a nonsubstantive change. Redesignated from Subsection (i). (k)-(r) Redesignated from Subsections (j)-(q), respectively. SECTION 3. Amends Section 12A, Article 20A.12, V.T.C.S. (Texas Health Maintenance Organization Act), as added by Chapter 163, Acts of the 75th Legislature, Regular Session, 1997, as follows: Sec. 12A. New title: APPEAL OF ADVERSE DETERMINATIONS. (a) Redefines "adverse determination" to include a utilization review agent as an entity who may determine that furnished or proposed health care services are not medically appropriate, in addition to not medically necessary. Makes conforming changes. (b) Requires an HMO to implement and maintain an internal appeal system that provides reasonable procedures for the resolution of an oral or written appeal concerning dissatisfaction or disagreement with an adverse determination that is initiated by an enrollee, a person acting on behalf of an enrollee, or an enrollee's provider of record. Provides that the appeal system must include procedures for notification, review, and appeal of an adverse determination, as defined by this section, in accordance with Article 21.58A (Health Care Utilization Review Agents), Insurance Code. (c) Requires the HMO or utilization review agent to regard oral or written expression of dissatisfaction or disagreement as an appeal of the adverse determination, when an enrollee, a person acting on behalf of an enrollee, or an enrollee's provider of record expresses orally or in writing any dissatisfaction or disagreement with an adverse determination, as defined by this section Requires the HMO to review and resolve the appeal in accordance with Article 21.58A, Insurance Code. (d) Authorizes an HMO to integrate its appeal procedures related to adverse determinations with the complaint and appeal procedures established by the HMO under Section 12 of this Act only if the procedures related to adverse determinations comply with this section and Article 21.58A, Insurance Code. SECTION 4. Redesignates Section 12A, Article 20A.12, V.T.C.S. (Texas Health Maintenance Organization Act), as added by Chapter 1026, Acts of the 75th Legislature, Texas Health Maintenance Organization Act, as Section 12B. Makes a conforming change. SECTION 5. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 6. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3021 modifies the original in SECTION 1 (Section 2f, Art.20A.02, V.T.C.S. (Texas Health Maintenance Organization Act)), by specifying that "adverse determination" has the meaning assigned in Section 12A of this Act. C.S.B.H. 3021 modifies the original in SECTION 3 (Section 12A, Article 20A.12, V.T.C.S. (Texas Health Maintenance Organization Act) to provide that "adverse determination" means a determination by a health maintenance organization or a utilization review agent that proposed or furnished health care services are not medically appropriate, in addition to not medically necessary, and to make conforming changes.