exempt

                                                   (REPRINTED WITH ADOPTED AMENDMENTS)

 

Senate Bill No. 320–Senator O’Connell (by request)

 

March 13, 2001

____________

 

Joint Sponsor: Assemblywoman Buckley

____________

 

Referred to Committee on Commerce and Labor

 

SUMMARY—Provides for external review of certain determinations made by managed care and health maintenance organizations. (BDR 57‑676)

 

FISCAL NOTE:  Effect on Local Government: Yes.

                             Effect on the State: Yes.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to health care; requiring an external review organization to be certified by the commissioner of insurance before conducting an external review of a final adverse determination of a managed care organization or health maintenance organization; authorizing an insured under certain health care plans to submit to a managed care organization or health maintenance organization a request for such a review under certain circumstances; requiring an external review organization to approve, modify or reverse a final adverse determination within a certain period; providing that an external review organization is not liable in a civil action for damages relating to a determination issued by the external review organization under certain circumstances; requiring the director of the office for consumer health assistance in the office of the governor to contract with certain external review organizations; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1. Chapter 683A of NRS is hereby amended by adding

1-2  thereto a new section to read as follows:

1-3    1.  An external review organization shall not conduct an external

1-4  review of a final adverse determination pursuant to sections 4 to 12,

1-5  inclusive, of this act unless it is certified in accordance with regulations

1-6  adopted by the commissioner. The regulations must include, without

1-7  limitation, provisions setting forth:

1-8    (a) The manner in which an external review organization may apply

1-9  for a certificate and the requirements for the issuance and renewal of the

1-10  certificate pursuant to this section;

2-1    (b) The grounds for which the commissioner may refuse to issue,

2-2  suspend, revoke or refuse to renew a certificate issued pursuant to this

2-3  section; and

2-4    (c) The manner and circumstances under which an external review

2-5  organization is required to conduct its business.

2-6    2.  A certificate issued pursuant to this section expires 1 year after it

2-7  is issued and may be renewed in accordance with regulations adopted by

2-8  the commissioner.

2-9    3.  Except as otherwise provided in subsection 6, before the

2-10  commissioner may certify an external review organization, the external

2-11  review organization must:

2-12  (a) Demonstrate to the satisfaction of the commissioner that it is able

2-13  to carry out, in a timely manner, the duties of an external review

2-14  organization set forth in this section and sections 4 to 12, inclusive, of

2-15  this act. The demonstration must include, without limitation, proof that

2-16  the external review organization employs, contracts with or otherwise

2-17  retains only persons who are qualified because of their education,

2-18  training, professional licensing and experience to perform the duties

2-19  assigned to those persons; and

2-20  (b) Provide assurances satisfactory to the commissioner that the

2-21  external review organization will:

2-22      (1) Conduct its external review activities in accordance with the

2-23  provisions of this section and sections 4 to 12, inclusive, of this act;

2-24      (2) Provide its determinations in a clear, consistent, thorough and

2-25  timely manner; and

2-26      (3) Avoid conflicts of interest.

2-27  4.  For the purposes of this section, an external review organization

2-28  has a conflict of interest if the external review organization or any

2-29  employee, agent or contractor of the external review organization who

2-30  conducts an external review has a material professional, familial or

2-31  financial interest in any person who has a substantial interest in the

2-32  outcome of the external review, including, without limitation:

2-33  (a) The insured;

2-34  (b) The insurer or any officer, director or management employee of

2-35  the insurer;

2-36  (c) The provider of health care services that are provided or proposed

2-37  to be provided, his partner or any other member of his medical group or

2-38  practice;

2-39  (d) The hospital or other licensed health care facility where the health

2-40  care service or treatment that is subject to external review has been or

2-41  will be provided; or

2-42  (e) A developer, manufacturer or other person who has a substantial

2-43  interest in the principal procedure, equipment, drug, device or other

2-44  instrumentality that is the subject of the external review.

2-45  5.  The commissioner shall not certify an external review

2-46  organization that is affiliated with:

2-47  (a) A health care plan; or

2-48  (b) A national, state or local trade association.

3-1    6.  An external review organization that is certified or accredited by

3-2  an accrediting body that is nationally recognized shall be deemed to have

3-3  satisfied all the conditions and qualifications required for certification

3-4  pursuant to this section.

3-5    7.  The commissioner may charge and collect a fee for issuing or

3-6  renewing a certificate of an external review organization pursuant to this

3-7  section. The fee must not exceed the cost of issuing or renewing the

3-8  certificate.

3-9    8.  The commissioner shall annually prepare and make available to

3-10  the general public a list that includes the name of each external review

3-11  organization which is issued a certificate or whose certificate is renewed

3-12  pursuant to this section during the year immediately preceding the year

3-13  in which the commissioner prepares the list.

3-14  9.  As used in this section:

3-15  (a) “External review organization” has the meaning ascribed to it in

3-16  section 6 of this act.

3-17  (b) “Final adverse determination” has the meaning ascribed to it in

3-18  section 7 of this act.

3-19  (c) “Provider of health care” means any physician or other person

3-20  who is licensed, certified or otherwise authorized in this state or any

3-21  other state to provide any health care service.

3-22  Sec. 2.  NRS 695C.260 is hereby amended to read as follows:

3-23  695C.260  [Every] Each health maintenance organization shall

3-24  establish [a] :

3-25  1.  A complaint system which complies with the provisions of NRS

3-26  695G.200 to 695G.230, inclusive[.] ; and

3-27  2.  A system for conducting external reviews of final adverse

3-28  determinations that complies with the provisions of sections 4 to 12,

3-29  inclusive, of this act.

3-30  Sec. 3.  Chapter 695G of NRS is hereby amended by adding thereto

3-31  the provisions set forth as sections 4 to 12, inclusive, of this act.

3-32  Sec. 4.  “Authorized representative” means a person who has

3-33  obtained the consent of an insured to represent him in an external review

3-34  of a final adverse determination conducted pursuant to sections 4 to 12,

3-35  inclusive, of this act.

3-36  Sec. 5.  “Clinical peer” means a physician who is:

3-37  1.  Engaged in the practice of medicine; and

3-38  2.  Certified or is eligible for certification by the board of medical

3-39  examiners in the same or similar area of practice as is the health care

3-40  service that is the subject of a final adverse determination.

3-41  Sec. 6.  “External review organization” means an organization that:

3-42  1.  Conducts an external review of a final adverse determination;

3-43  2.  Is certified by the commissioner in accordance with section 1 of

3-44  this act; and

3-45  3.  Has contracted with the director of the office for consumer health

3-46  assistance to conduct external reviews of final adverse determinations

3-47  pursuant to subsection 8 of NRS 223.560.

3-48  Sec. 7.  “Final adverse determination” means a final decision of a

3-49  managed care organization to deny, reduce or terminate coverage for

4-1  health care services or to deny payment for those services concerning a

4-2  complaint filed pursuant to NRS 695G.200 because the health care

4-3  services were determined to be:

4-4    1.  Not medically necessary; or

4-5    2.  Experimental or investigational.

4-6  The term does not include a determination relating to a claim for

4-7  workers’ compensation pursuant to chapters 616A to 617, inclusive, of

4-8  NRS.

4-9    Sec. 8.  “Medically necessary” means health care services or

4-10  products that a prudent physician would provide to a patient to prevent,

4-11  diagnose or treat an illness, injury or disease or any symptoms thereof

4-12  that are:

4-13  1.  Provided in accordance with generally accepted standards of

4-14  medical practice;

4-15  2.  Clinically appropriate with regard to type, frequency, extent,

4-16  location and duration; and

4-17  3.  Not primarily provided for the convenience of the patient,

4-18  physician or other provider of health care.

4-19  Sec. 8.3. “Office for consumer health assistance” means the office

4-20  for consumer health assistance in the office of the governor.

4-21  Sec. 8.5. In carrying out its duties set forth in sections 4 to 12,

4-22  inclusive, of this act, each managed care organization shall adopt

4-23  procedures to ensure that the organization and its employees cooperate

4-24  fully with an external review organization that is conducting a review of

4-25  a final adverse determination or conducting a review pursuant to section

4-26  10.5 of this act, including, without limitation, providing all documents

4-27  and materials relating to the determination in an accurate, fair, impartial

4-28  and complete manner.

4-29  Sec. 9.  1.  Except as otherwise provided in section 10.5 of this act,

4-30  if an insured or a physician of an insured receives notice of a final

4-31  adverse determination from a managed care organization concerning the

4-32  insured, and if the insured is required to pay $500 or more for the health

4-33  care services that are the subject of the final adverse determination, the

4-34  insured, the physician of the insured or an authorized representative

4-35  may, within 60 days after receiving notice of the final adverse

4-36  determination, submit a request to the managed care organization for an

4-37  external review of the final adverse determination.

4-38  2.  Within 5 days after receiving a request pursuant to subsection 1,

4-39  the managed care organization shall notify the insured, his authorized

4-40  representative or his physician, the agent who performed utilization

4-41  review for the managed care organization, if any, and the office for

4-42  consumer health assistance that the request has been filed with the

4-43  managed care organization.

4-44  3.  Within 5 days after receiving a notification pursuant to subsection

4-45  2, the office for consumer health assistance shall:

4-46  (a) Randomly select an external review organization to conduct an

4-47  external review of the final adverse determination;

4-48  (b) Notify the external review organization that it has been selected to

4-49  conduct the external review; and

5-1    (c) Notify the insured, his authorized representative or his physician,

5-2  the agent who performed utilization review for the managed care

5-3  organization, if any, and the managed care organization of the external

5-4  review organization selected to conduct the external review.

5-5    4.  Upon notification by the office for consumer health assistance of

5-6  the external review organization selected pursuant to subsection 3, the

5-7  managed care organization shall provide to the external review

5-8  organization all documents and other materials relating to the final

5-9  adverse determination, including, without limitation:

5-10  (a) Any medical records of the insured relating to the external review;

5-11  (b) A copy of the provisions of the health care plan upon which the

5-12  final adverse determination was based;

5-13  (c) Any documents used by the managed care organization to make

5-14  the final adverse determination;

5-15  (d) A statement of the reasons for the final adverse determination;

5-16  and

5-17  (e) Insofar as practicable, a list that specifies each provider of health

5-18  care who has provided health care to the insured and the medical records

5-19  of the provider of health care relating to the external review.

5-20  Sec. 10.  1.  Except as otherwise provided in section 10.5 of this act,

5-21  upon receipt of a request for an external review pursuant to section 9 of

5-22  this act, the external review organization shall, within 5 days after

5-23  receiving the request:

5-24  (a) Review the request and the documents and materials submitted

5-25  pursuant to section 9 of this act; and

5-26  (b) Notify the insured, his physician and the managed care

5-27  organization if any additional information is required to conduct a

5-28  review of the final adverse determination.

5-29  2.  The external review organization shall approve, modify or reverse

5-30  the final adverse determination within 15 days after it receives the

5-31  information required to make that determination pursuant to this section.

5-32  The external review organization shall submit a copy of its

5-33  determination, including the reasons therefor, to:

5-34  (a) The insured;

5-35  (b) The physician of the insured;

5-36  (c) The authorized representative of the insured, if any;

5-37  (d) The managed care organization; and

5-38  (e) The director of the office for consumer health assistance.

5-39  3.  In making a determination pursuant to this section, an external

5-40  review organization or any clinical peer who conducts or participates in

5-41  an external review of a final adverse determination for the external

5-42  review organization shall consider, without limitation:

5-43  (a) The medical records of the insured;

5-44  (b) Any recommendations of the physician of the insured;

5-45  (c) Any generally accepted medical guidelines, including guidelines

5-46  established by the Federal Government or any national or professional

5-47  society, board or association that establishes such guidelines, if approved

5-48  by the commissioner for consideration by the external review

5-49  organization; and

6-1    (d) Any applicable criteria relating to utilization review established

6-2  and used by the managed care organization or the agent it designates to

6-3  perform utilization review.

6-4    Sec. 10.5. 1.  If a managed care organization receives a request

6-5  pursuant to subsection 1 of section 9 of this act and proof from the

6-6  insured’s provider of health care that failure to proceed in an expedited

6-7  manner may jeopardize the life or health of the insured, the managed

6-8  care organization shall, not later than 72 hours after it receives such

6-9  proof:

6-10  (a) Notify the insured, his authorized representative or his physician,

6-11  the agent who performed utilization review for the managed care

6-12  organization, if any, and, except as otherwise provided in subsection 6,

6-13  the office for consumer health assistance that the request has been filed

6-14  with the managed care organization; and

6-15  (b) Except as otherwise provided in subsection 6, provide to the office

6-16  for consumer health assistance all documents and other materials set

6-17  forth in subsection 4 of section 9 of this act.

6-18  2.  Not later than 1 working day after being notified by a managed

6-19  care organization pursuant to subsection 1 that a request for an

6-20  expedited review has been filed, the office for consumer health assistance

6-21  shall:

6-22  (a) Randomly select an external review organization to conduct an

6-23  external review of the final adverse determination;

6-24  (b) Notify the external review organization that it has been selected to

6-25  conduct the external review and provide the documents and other

6-26  materials it received from the managed care organization pursuant to

6-27  paragraph (b) of subsection 1 to the external review organization; and

6-28  (c) Notify the insured, his authorized representative or his physician,

6-29  the agent who performed utilization review for the managed care

6-30  organization, if any, and the managed care organization of the external

6-31  review organization selected to conduct the external review.

6-32  3.  An external review organization that receives a request for an

6-33  external review pursuant to subsection 2 shall, not later than 2 working

6-34  days after receiving the request, approve, modify or reverse the final

6-35  adverse determination, unless the managed care organization and the

6-36  insured or his authorized representative consent to a longer period of

6-37  time. The external review organization shall, not later than 1 working

6-38  day after the external review is completed, provide notification of its

6-39  determination by telephone, including the reasons therefor, to:

6-40  (a) The insured;

6-41  (b) The physician of the insured;

6-42  (c) The authorized representative of the insured, if any;

6-43  (d) The managed care organization; and

6-44  (e) The director of the office for consumer health assistance.

6-45  4.  Not later than 5 working days after the external review is

6-46  completed, the external review organization shall provide its

6-47  determination, including the reasons therefor, in writing to the persons

6-48  listed in subsection 3.

7-1    5.  In making a determination pursuant to this section, an external

7-2  review organization or any clinical peer who conducts or participates in

7-3  an external review of a final adverse determination for the external

7-4  review organization shall consider the list of considerations set forth in

7-5  subsection 3 of section 10 of this act.

7-6    6.  The office for consumer health assistance shall make reasonable

7-7  arrangements to be available 24 hours a day, 7 days a week, including

7-8  weekends and holidays, to receive a notice, documents and other

7-9  materials pursuant to subsection 1. If the managed care organization

7-10  that is required to provide a notice pursuant to subsection 1 finds that the

7-11  office for consumer health assistance is not available to receive the

7-12  notice, the managed care organization shall provide the notice and any

7-13  documents and other materials to the division of mental health and

7-14  developmental services of the department of human resources. If the

7-15  division of mental health and developmental services receives a notice,

7-16  documents or other materials pursuant to this subsection, it shall forward

7-17  them to the office for consumer health assistance the following business

7-18  day.

7-19  7.  Any notice or other information required to be provided pursuant

7-20  to this section must be sent by the most expeditious method possible,

7-21  including, without limitation, facsimile or electronic mail, or conveyed

7-22  orally by telephone.

7-23  Sec. 11.  1.  If the decision of an external review organization on a

7-24  request for external review is in favor of the insured, the decision is final,

7-25  conclusive and binding upon the managed care organization.

7-26  2.  An external review organization or any clinical peer who conducts

7-27  or participates in an external review of a final adverse determination for

7-28  the external review organization is not liable in a civil action for

7-29  damages relating to a determination made by the external review

7-30  organization if the determination is made in good faith.

7-31  3.  The cost of conducting an external review of a final adverse

7-32  determination pursuant to sections 4 to 12, inclusive, of this act must be

7-33  paid to the office for consumer assistance by the managed care

7-34  organization that made the final adverse determination.

7-35  Sec. 12.  In lieu of resolving a complaint of an insured in accordance

7-36  with a system for resolving complaints established pursuant to the

7-37  provisions of NRS 695G.200, a managed care organization may:

7-38  1.  Submit the complaint to an external review organization pursuant

7-39  to the provisions of sections 4 to 12, inclusive, of this act; or

7-40  2.  If a federal law or regulation provides a procedure for submitting

7-41  the complaint for resolution that the commissioner determines is

7-42  substantially similar to the procedure for submitting the complaint to an

7-43  external review organization pursuant to sections 4 to 12, inclusive, of

7-44  this act, submit the complaint for resolution in accordance with the

7-45  federal law or regulation.

7-46  Sec. 13.  NRS 695G.010 is hereby amended to read as follows:

7-47  695G.010  As used in this chapter, unless the context otherwise

7-48  requires, the words and terms defined in NRS 695G.020 to 695G.080,

8-1  inclusive, and sections 4 to 8.3, inclusive, of this act have the meanings

8-2  ascribed to them in those sections.

8-3    Sec. 14.  NRS 695G.210 is hereby amended to read as follows:

8-4    695G.210  1.  [A] Except as otherwise provided in section 12 of this

8-5  act, a system for resolving complaints created pursuant to NRS 695G.200

8-6  must include, without limitation, an initial investigation, a review of the

8-7  complaint by a review board and a procedure for appealing a determination

8-8  regarding the complaint. The majority of the members of the review board

8-9  must be insureds who receive health care services from the managed care

8-10  organization.

8-11  2.  Except as otherwise provided in subsection 3, a review board shall

8-12  complete its review regarding a complaint or appeal and notify the insured

8-13  of its determination not later than 30 days after the complaint or appeal is

8-14  filed, unless the insured and the review board have agreed to a longer

8-15  period . [of time.]

8-16  3.  If a complaint involves an imminent and serious threat to the health

8-17  of the insured, the managed care organization shall inform the insured

8-18  immediately of his right to an expedited review of his complaint. If an

8-19  expedited review is required, the review board shall notify the insured in

8-20  writing of its determination within 72 hours after the complaint is filed.

8-21  4.  Notice provided to an insured by a review board regarding a

8-22  complaint must include, without limitation, an explanation of any further

8-23  rights of the insured regarding the complaint that are available under his

8-24  health care plan.

8-25  Sec. 15.  NRS 695G.230 is hereby amended to read as follows:

8-26  695G.230  1.  [Following] After approval by the commissioner, each

8-27  managed care organization shall provide a written notice to an insured, in

8-28  clear and comprehensible language that is understandable to an ordinary

8-29  layperson, explaining the right of the insured to file a written complaint

8-30  and to obtain an expedited review pursuant to NRS 695G.210. Such a

8-31  notice must be provided to an insured:

8-32  (a) At the time he receives his certificate of coverage or evidence of

8-33  coverage;

8-34  (b) Any time that the managed care organization denies coverage of a

8-35  health care service or limits coverage of a health care service to an insured;

8-36  and

8-37  (c) Any other time deemed necessary by the commissioner.

8-38  2.  [Any time that] If a managed care organization denies coverage of a

8-39  health care service to an insured, including, without limitation, a health

8-40  maintenance organization that denies a claim related to a health care plan

8-41  pursuant to NRS 695C.185, it shall notify the insured in writing within 10

8-42  working days after it denies coverage of the health care service of:

8-43  (a) The reason for denying coverage of the service;

8-44  (b) The criteria by which the managed care organization or insurer

8-45  determines whether to authorize or deny coverage of the health care

8-46  service; [and]

8-47  (c) His right to [file] :

8-48      (1) File a written complaint and the procedure for filing such a

8-49  complaint[.] ;

9-1       (2) Appeal a final adverse determination pursuant to sections 4 to

9-2  12, inclusive, of this act;

9-3       (3) Receive an expedited external review of a final adverse

9-4  determination if the managed care organization receives proof from the

9-5  insured’s provider of health care that failure to proceed in an expedited

9-6  manner may jeopardize the life or health of the insured, including

9-7  notification of the procedure for requesting the expedited external

9-8  review; and

9-9       (4) Receive assistance from any person, including an attorney, for

9-10  an external review of a final adverse determination; and

9-11  (d) The telephone number of the office for consumer health

9-12  assistance.

9-13  3.  A written notice which is approved by the commissioner shall be

9-14  deemed to be in clear and comprehensible language that is understandable

9-15  to an ordinary layperson.

9-16  Sec. 16.  NRS 223.560 is hereby amended to read as follows:

9-17  223.560  The director shall:

9-18  1.  Respond to written and telephonic inquiries received from

9-19  consumers and injured employees regarding concerns and problems related

9-20  to health care and workers’ compensation;

9-21  2.  Assist consumers and injured employees in understanding their

9-22  rights and responsibilities under health care plans and policies of industrial

9-23  insurance;

9-24  3.  Identify and investigate complaints of consumers and injured

9-25  employees regarding their health care plans and policies of industrial

9-26  insurance and assist those consumers and injured employees to resolve

9-27  their complaints, including, without limitation:

9-28  (a) Referring consumers and injured employees to the appropriate

9-29  agency, department or other entity that is responsible for addressing the

9-30  specific complaint of the consumer or injured employee; and

9-31  (b) Providing counseling and assistance to consumers and injured

9-32  employees concerning health care plans and policies of industrial

9-33  insurance;

9-34  4.  Provide information to consumers and injured employees

9-35  concerning health care plans and policies of industrial insurance in this

9-36  state;

9-37  5.  Establish and maintain a system to collect and maintain information

9-38  pertaining to the written and telephonic inquiries received by the office;

9-39  6.  Take such actions as are necessary to ensure public awareness of the

9-40  existence and purpose of the services provided by the director pursuant to

9-41  this section; [and]

9-42  7.  In appropriate cases and pursuant to the direction of the governor,

9-43  refer a complaint or the results of an investigation to the attorney general

9-44  for further action[.] ; and

9-45  8.  On or before January 1 of each year, and in accordance with

9-46  regulations adopted by the commissioner of insurance, contract with at

9-47  least two external review organizations that are certified by the

9-48  commissioner of insurance pursuant to section 1 of this act to conduct

9-49  external reviews of final adverse determinations in accordance with the

10-1  provisions of sections 4 to 12, inclusive, of this act. A contract entered

10-2  into pursuant to this subsection may be renewed by the director.

10-3  Sec. 17.  NRS 223.580 is hereby amended to read as follows:

10-4  223.580  On or before February 1 of each year, the director shall

10-5  submit a written report to the governor, and to the director of the legislative

10-6  counsel bureau for transmittal to the appropriate committee or committees

10-7  of the legislature. The report must include, without limitation:

10-8  1.  A statement setting forth the number and geographic origin of the

10-9  written and telephonic inquiries received by the office and the issues to

10-10  which those inquiries were related;

10-11  2.  A statement setting forth the type of assistance provided to each

10-12  consumer and injured employee who sought assistance from the director,

10-13  including, without limitation, the number of referrals made to the attorney

10-14  general pursuant to subsection 7 of NRS 223.560; [and]

10-15  3.  A statement setting forth the disposition of each inquiry and

10-16  complaint received by the director[.] ; and

10-17  4.  A statement setting forth the number of external reviews

10-18  conducted by external review organizations pursuant to sections 4 to 12,

10-19  inclusive, of this act and the disposition of each of those reviews.

10-20  Sec. 18.  This act becomes effective upon passage and approval for the

10-21  purpose of adopting regulations by the commissioner of insurance to carry

10-22  out the provisions of this act and on July 1, 2002, for all other purposes.

 

10-23  H