REPORT TITLE:
Patients' Bill of Rights


DESCRIPTION:
Establishes an expedited process for an appeal of a managed care
plan's decision.  Extends the time period to request an external
review of a managed care plan's final determination.
Establishes standards for determining whether a health
intervention is a medical necessity.  Increases the Patient
Rights and Responsibilities Task Force membership from twenty to
twenty-five. (SB2655 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2655
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                H.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO HEALTH.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1                              PART I
 
 2      SECTION 1.  The legislature, in section 12 of Act 137,
 
 3 Session Laws of Hawaii 1999, directed the Hawaii patient rights
 
 4 and responsibilities task force to develop proposed legislation
 
 5 addressing issues within the scope of the task force's
 
 6 responsibilities under Act 178, Session Laws of Hawaii 1998.
 
 7 This part is submitted in response to the legislature's mandate.
 
 8      SECTION 2.  Section 432E-1, Hawaii Revised Statutes, is
 
 9 amended by adding six new definitions to be appropriately
 
10 inserted and to read as follows:
 
11      ""Appointed representative" means a person who is expressly
 
12 permitted by the enrollee or who has the power under Hawaii law
 
13 to make health care decisions on behalf of the enrollee,
 
14 including a court-appointed legal guardian, a person who has a
 
15 durable power of attorney for health care, or a person who is
 
16 designated in a written advance directive.
 
17      "Expedited appeal" means a managed care plan's review of its
 
18 adverse determination related to pre-service medical coverage
 
19 decisions within seventy-two hours after receipt of the request
 

 
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 1 for review.  An enrollee may request an expedited appeal when the
 
 2 application of a forty-five day standard review time frame may:
 
 3      (1)  Seriously jeopardize the life or health of the
 
 4           enrollee;
 
 5      (2)  Seriously jeopardize the enrollee's ability to gain
 
 6           maximum functioning; or
 
 7      (3)  Subject the enrollee to severe pain that cannot be
 
 8           adequately managed without the care or treatment that
 
 9           is the subject of the expedited appeal.
 
10      "External review" means an administrative review of an
 
11 enrollee's request for external review of a managed care plan's
 
12 final internal determination under section 432E-6.
 
13      "Independent review organization" means an independent
 
14 entity that is unbiased and able to make independent decisions,
 
15 engages adequate numbers of practitioners with the appropriate
 
16 level and type of clinical knowledge and expertise, applies
 
17 evidence-based decision making, demonstrates an effective process
 
18 to screen external reviews for eligibility, protects the
 
19 enrollee's identity from unnecessary disclosure, and has
 
20 effective systems in place to conduct a review.
 
21      "Licensed health care provider" means an individual
 
22 licensed, certified, or otherwise authorized or permitted by law
 
23 to provide health care in the ordinary course of business or
 
24 practice of a profession.
 

 
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                                     S.B. NO.           S.D. 2
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 1      "Medical necessity" means a health intervention as defined
 
 2 in section 432E-  ."
 
 3      SECTION 3.  Section 432E-5, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "§432E-5 Complaints and appeals procedure for enrollees.
 
 6 (a)  A managed care plan with enrollees in this State shall
 
 7 establish and maintain a procedure to provide for the resolution
 
 8 of an enrollee's complaints and appeals.  The definition of
 
 9 medical necessity in section 432E-   shall apply in a managed
 
10 care plan's complaints and appeals procedures.
 
11      (b)  The managed care plan at all times shall make available
 
12 its complaints and appeals procedures.  The complaints and
 
13 appeals procedures shall be reasonably understandable to the
 
14 average layperson and shall be provided in languages other than
 
15 English upon request.
 
16      (c)  A managed care plan shall decide any expedited appeal
 
17 as soon as possible after receipt of the complaint, taking into
 
18 account the medical exigencies of the case, but not later than
 
19 seventy-two hours after receipt of the request for review.  The
 
20 decision whether an enrollee's complaint is an expedited appeal
 
21 may be made by an individual acting on behalf of the plan and
 
22 applying the standard of a reasonable individual who is not a
 
23 trained health professional.  If a licensed health care provider
 

 
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 1 with knowledge of a claimant's medical condition requests an
 
 2 expedited appeal on behalf of an enrollee, the enrollee's
 
 3 complaint shall be treated as an expedited appeal by the managed
 
 4 care plan.
 
 5     [(c)] (d)  A managed care plan shall send notice of its final
 
 6 internal determination within forty-five days of the submission
 
 7 of the complaint to the enrollee, the enrollee's appointed
 
 8 representative, if applicable, the enrollee's treating provider,
 
 9 and the commissioner.  The notice shall include the following
 
10 information regarding the enrollee's rights and procedures [under
 
11 section 432E-6.]:
 
12      (1)  The enrollee's right to request an external review;
 
13      (2)  The sixty-day deadline for requesting the external
 
14           review;
 
15      (3)  Instructions on how to request an external review; and
 
16      (4)  Where to submit the request for an external review."
 
17      SECTION 4.  Section 432E-6, Hawaii Revised Statutes, is
 
18 amended to read as follows:
 
19      "§432E-6 [Appeals to the commissioner] External review
 
20 procedure.  (a)  After exhausting all internal complaint and
 
21 appeal procedures available, an enrollee, or the enrollee's
 
22 treating provider or appointed representative, may [appeal an
 
23 adverse decision] file a request for external review of a managed
 

 
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                                     S.B. NO.           S.D. 2
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 1 care [plan] plan's final internal determination to a three-member
 
 2 review panel appointed by the commissioner composed of a
 
 3 representative from a [health] managed care plan not involved in
 
 4 the complaint, a provider licensed to practice and practicing
 
 5 medicine in Hawaii not involved in the complaint, and the
 
 6 commissioner or the commissioner's designee in the following
 
 7 manner:
 
 8      (1)  The enrollee shall submit a request for external review
 
 9           to the commissioner within [thirty] sixty  days from
 
10           the date of the final internal determination by the
 
11           managed care plan;
 
12      (2)  The commissioner may retain, without regard to chapters
 
13           76 and 77, an independent medical expert trained in the
 
14           field of medicine most appropriately related to the
 
15           matter under review.  Presentation of evidence for this
 
16           purpose shall be exempt from section 91-9(g);
 
17      (3)  The commissioner may retain the services of an
 
18           independent review organization from an approved list
 
19           maintained by the commissioner;
 
20      (4)  Within seven days after receipt of the request for
 
21           external review, a managed care plan or its designee
 
22           utilization review organization shall provide to the
 
23           commissioner or the assigned independent review
 
24           organization:
 

 
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 1           (A)  Any documents or information used in making the
 
 2                final internal determination including the
 
 3                enrollee's medical records;
 
 4           (B)  Any documentation or written information submitted
 
 5                to the managed care plan in support of the
 
 6                enrollee's initial complaint; and
 
 7           (C)  A list of the names, addresses, and telephone
 
 8                numbers of each licensed health care provider who
 
 9                cared for the enrollee and who may have medical
 
10                records relevant to the external review;  
 
11           provided that where an expedited review is involved,
 
12           the managed care plan or its designee utilization
 
13           review organization shall provide the documents and
 
14           information within forty-eight hours of receipt of the
 
15           request for external review.
 
16                Failure by the managed care plan or its designee
 
17           utilization review organization to provide the
 
18           documents and information within the prescribed time
 
19           periods shall not delay the conduct of the external
 
20           review.  Where the plan or its designee utilization
 
21           review organization fails to provide the documents and
 
22           information within the prescribed time periods, the
 
23           commissioner may issue a decision to reverse the final
 

 
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                                     S.B. NO.           S.D. 2
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 1           internal determination, in whole or part, and shall
 
 2           promptly notify the independent review organization,
 
 3           the enrollee, the enrollee's appointed representative,
 
 4           if applicable, the enrollee's treating provider, and
 
 5           the managed care plan of the decision;
 
 6     [(2)] (5)  Upon receipt of the request for external review
 
 7           and upon a showing of good cause, the commissioner
 
 8           shall appoint the members of the panel and shall
 
 9           conduct a review hearing pursuant to chapter 91.  If
 
10           the amount in controversy is less than $500, the
 
11           commissioner may conduct a review hearing without
 
12           appointing a review panel;
 
13     [(3)] (6)  The review hearing shall be conducted as soon as
 
14           practicable, taking into consideration the medical
 
15           exigencies of the case; provided that [the]:
 
16           (A)  The hearing shall be held no later than sixty days
 
17                from the date of the request for the hearing; and
 
18           (B)  Any request for external review of a final
 
19                internal determination on an expedited basis shall
 
20                be determined no later than seventy-two hours
 
21                after receipt of the request for external review.
 

 
 
 
 
 
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                                     S.B. NO.           S.D. 2
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 1      The decision whether a request for external review should be
 
 2 expedited shall be made by applying the standard of a reasonable
 
 3 individual who is not a trained health professional.  If a
 
 4 licensed health care provider with knowledge of an enrollee's
 
 5 medical condition requests an expedited external review on behalf
 
 6 of an enrollee, the request shall be treated as such for purposes
 
 7 of this section;
 
 8     [(4)  The commissioner may retain, without regard to chapters
 
 9           76 and 77, an independent medical expert trained in the
 
10           field of medicine most appropriately related to the
 
11           matter under review.  Presentation of evidence for this
 
12           purpose shall be exempt from section 91-9(g);
 
13      (5)] (7)  After considering the enrollee's complaint, the
 
14           managed care plan's response, and any affidavits filed
 
15           by the parties, the commissioner may dismiss the
 
16           [appeal] request for external review if it is
 
17           determined that the [appeal] request is frivolous or
 
18           without merit; and
 
19     [(6)] (8)  The review panel shall review every [adverse]
 
20           final internal determination to determine whether [or
 
21           not] the managed care plan involved acted reasonably
 
22           [and with sound medical judgment].  The review panel
 

 
 
 
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                                     S.B. NO.           S.D. 2
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 1           and the commissioner or the commissioner's designee
 
 2           shall consider the terms of the agreement of the
 
 3           enrollee's insurance policy, evidence of coverage, or
 
 4           similar document, whether the medical director properly
 
 5           applied the medical necessity criteria in section
 
 6           432E-   in making the final internal determination, all
 
 7           relevant medical records, clinical standards of the
 
 8           plan, the information provided, the attending
 
 9           physician's recommendations, and generally accepted
 
10           practice guidelines.
 
11      The commissioner, upon a majority vote of the panel, shall
 
12 issue an order affirming, modifying, or reversing the decision
 
13 within thirty days of the hearing.
 
14      (b)  The procedure set forth in this section shall not apply
 
15 to claims or allegations of health provider malpractice,
 
16 professional negligence, or other professional fault against
 
17 participating providers.
 
18      (c)  No person shall serve on the review panel or in the
 
19 independent review organization who within the second degree of
 
20 consanguinity or affinity has a direct and substantial
 
21 professional, financial, or personal interest in:
 
22      (1)  The plan involved in the complaint, including an
 
23           officer, director, or employee of the plan; or
 

 
Page 10                                                    2655
                                     S.B. NO.           S.D. 2
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 1      (2)  The treatment of the enrollee, including but not
 
 2           limited to the developer or manufacturer of the
 
 3           principal drug, device, procedure, or other therapy at
 
 4           issue.
 
 5     [(c)] (d)  Members of the review panel shall be granted
 
 6 immunity from liability and damages relating to their duties
 
 7 under this section.
 
 8     [(d)] (e)  An enrollee may be allowed, at the commissioner's
 
 9 discretion, an award of a reasonable sum for attorney's fees and
 
10 reasonable costs [of suit in an action brought against the
 
11 managed care plan.] incurred in connection with the external
 
12 review under this section, unless the commissioner upon
 
13 administrative proceeding determines that the appeal was
 
14 unreasonable, fraudulent, excessive, or frivolous.
 
15      (f)  The disclosure of an enrollee's protected health
 
16 information shall be limited to the purposes relating to the
 
17 external review."
 
18      SECTION 5.  Section 5, Act 178, Session Laws of Hawaii 1998,
 
19 is amended by amending subsection (c) to read as follows:
 
20      "(c)  The task force shall be [comprised] composed of
 
21 interested parties with the total membership of the task force
 
22 between twelve and [twenty] twenty-five  members.  The insurance
 
23 commissioner or the commissioner's designated representative[,]
 

 
Page 11                                                    2655
                                     S.B. NO.           S.D. 2
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 1 shall be a member and serve as the chair of the task force and
 
 2 appoint [it] its remaining members.  At least one representative
 
 3 from each of the following shall be appointed as a member;
 
 4 members of other groups may also be appointed:
 
 5      (1)  The department of health;
 
 6      (2)  The department of labor and industrial relations,
 
 7           disability compensation division; 
 
 8      (3)  A health insurance company that provides accident and
 
 9           sickness policies under chapter 431, article 10A,
 
10           Hawaii Revised Statutes;
 
11      (4)  A mutual benefit society that provides health insurance
 
12           under chapter 432, Hawaii Revised Statutes;
 
13      (5)  A health maintenance organization that holds a
 
14           certificate of authority under chapter 432D, Hawaii
 
15           Revised Statutes;
 
16      (6)  The American Association of Retired Persons;
 
17      (7)  The Hawaii Coalition for Health;
 
18      (8)  The Hawai'i Business Health Coalition;
 
19      (9)  The Legal Aid Society of Hawaii;
 
20     (10)  The Hawaii Medical Association;
 
21     (11)  An organization that represents nurses; and
 
22     (12)  A hospital or an organization that represents
 
23           hospitals."   
 

 
Page 12                                                    2655
                                     S.B. NO.           S.D. 2
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 1                              PART II
 
 2      SECTION 6.  In Senate Concurrent Resolution No. 152, S.D. 1,
 
 3 the 1999 legislature requested the Hawaii patient rights and
 
 4 responsibilities task force to make a thorough study of the
 
 5 issues relating to the use of the term "medical necessity" and
 
 6 determine the most appropriate definition of "medical necessity",
 
 7 or develop new terms to better resolve the issues examined.
 
 8      The purpose of this part is to establish a statutory
 
 9 definition of the term "medical necessity" to:  
 
10      (1)  Promote uniformity among the various health plans; and
 
11      (2)  Serve as the standard of review governing a health
 
12           plan's internal appeals process and the external
 
13           appeals process.
 
14      SECTION 7.  Chapter 432E, Hawaii Revised Statutes, is
 
15 amended by adding a new section to be appropriately designated
 
16 and to read as follows:
 
17      "§432E-    Medical necessity.  (a)  For contractual
 
18 purposes, a health intervention shall be covered if it is an
 
19 otherwise covered category of service, not specifically excluded,
 
20 recommended by the treating physician or treating licensed health
 
21 care provider, and determined by the health plan's medical
 
22 director to be medically necessary as defined in subsection (b).
 

 
 
 
Page 13                                                    2655
                                     S.B. NO.           S.D. 2
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 1 A health intervention may be medically indicated and not qualify
 
 2 as a covered benefit or meet the definition of medical necessity.
 
 3 A managed care plan may choose to cover health interventions that
 
 4 do not meet the definition of medical necessity.
 
 5      (b)  A health intervention is medically necessary if it is
 
 6 recommended by the treating physician or treating licensed health
 
 7 care provider, is approved by the health plan's medical director
 
 8 or physician designee, and is:
 
 9      (1)  For the purpose of treating a medical condition;
 
10      (2)  The most appropriate delivery or level of service,
 
11           considering potential benefits and harms to the
 
12           patient;
 
13      (3)  Known to be effective in improving health outcomes;
 
14           provided that:
 
15           (A)  Effectiveness is determined first by scientific
 
16                evidence; 
 
17           (B)  If no scientific evidence exists, then by
 
18                professional standards of care; and 
 
19           (C)  If no professional standards of care exist or if
 
20                they exist but are outdated or contradictory, then
 
21                by expert opinion;
 
22           and
 

 
 
 
Page 14                                                    2655
                                     S.B. NO.           S.D. 2
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 1      (4)  Cost-effective for the medical condition being treated
 
 2           compared to alternative health interventions, including
 
 3           no intervention.  For purposes of this paragraph, cost-
 
 4           effective shall not necessarily mean the lowest price.
 
 5      (c)  When the treating physician or treating licensed health
 
 6 care provider and the health plan's medical director or physician
 
 7 designee do not agree on whether a health intervention is
 
 8 medically necessary, a reviewing body, whether internal to the
 
 9 plan or external, shall give consideration to, but shall not be
 
10 bound by, the recommendations of the treating physician or
 
11 treating licensed health care provider and the health plan's
 
12 medical director or physician designee.
 
13      (d)  For the purposes of this section:
 
14      "Cost-effective" means a health intervention where the
 
15 benefits and harms relative to the costs represent an
 
16 economically efficient use of resources for patients with the
 
17 medical condition being treated through the health intervention;
 
18 provided that the characteristics of the individual patient shall
 
19 be determinative when applying this criterion to an individual
 
20 case.
 
21      "Effective" means a health intervention that may reasonably
 
22 be expected to produce the intended results and to have expected
 
23 benefits that outweigh potential harmful effects.
 

 
Page 15                                                    2655
                                     S.B. NO.           S.D. 2
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 1      "Health intervention" means an item or service delivered or
 
 2 undertaken primarily to treat a medical condition or to maintain
 
 3 or restore functional ability.  A health intervention is defined
 
 4 not only by the intervention itself, but also by the medical
 
 5 condition and patient indications for which it is being applied.
 
 6 New interventions for which clinical trials have not been
 
 7 conducted and effectiveness has not been scientifically
 
 8 established shall be evaluated on the basis of professional
 
 9 standards of care or expert opinion.  For existing interventions,
 
10 scientific evidence shall be considered first and to the greatest
 
11 extent possible, shall be the basis for determinations of medical
 
12 necessity.  If no scientific evidence is available, professional
 
13 standards of care shall be considered.  If professional standards
 
14 of care do not exist or are outdated or contradictory, decisions
 
15 about existing interventions shall be based on expert opinion.
 
16 Giving priority to scientific evidence shall not mean that
 
17 coverage of existing interventions shall be denied in the absence
 
18 of conclusive scientific evidence.  Existing interventions may
 
19 meet the definition of medical necessity in the absence of
 
20 scientific evidence if there is a strong conviction of
 
21 effectiveness and benefit expressed through up-to-date and
 
22 consistent professional standards of care, or in the absence of
 
23 such standards, convincing expert opinion.
 

 
Page 16                                                    2655
                                     S.B. NO.           S.D. 2
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 1      "Health outcomes" mean outcomes that affect health status as
 
 2 measured by the length or quality of a patient's life, primarily
 
 3 as perceived by the patient.
 
 4      "Medical condition" means a disease, illness, injury,
 
 5 genetic or congenital defect, pregnancy, or a biological or
 
 6 psychological condition that lies outside the range of normal,
 
 7 age-appropriate human variation.
 
 8      "Physician designee" means a physician or other health care
 
 9 practitioner designated to assist in the decision making process
 
10 who has training and credentials at least equal to the treating
 
11 physician.
 
12      "Scientific evidence" means controlled clinical trials that
 
13 either directly or indirectly demonstrate the effect of the
 
14 intervention on health outcomes.  If controlled clinical trials
 
15 are not available, observational studies that demonstrate a
 
16 causal relationship between the intervention and the health
 
17 outcomes may be used.  Partially controlled observational studies
 
18 and uncontrolled clinical series may be suggestive, but do not by
 
19 themselves demonstrate a causal relationship unless the magnitude
 
20 of the effect observed exceeds anything that could be explained
 
21 either by the natural history of the medical condition or
 
22 potential experimental biases.  Scientific evidence may be found
 
23 in the following and similar sources:
 

 
Page 17                                                    2655
                                     S.B. NO.           S.D. 2
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 1      (1)  Peer-reviewed scientific studies published in or
 
 2           accepted for publication by medical journals that meet
 
 3           nationally recognized requirements for scientific
 
 4           manuscripts and that submit most of their published
 
 5           articles for review by experts who are not part of the
 
 6           editorial staff;
 
 7      (2)  Peer-reviewed literature, biomedical compendia, and
 
 8           other medical literature that meet the criteria of the
 
 9           National Institute of Health's National Library of
 
10           Medicine for indexing in Index Medicus, Excerpta
 
11           Medicus (EMBASE), Medline, and MEDLARS database Health
 
12           Services Technology Assessment Research (HSTAR);
 
13      (3)  Medical journals recognized by the Secretary of Health
 
14           and Human Services under section 1861(t)(2) of the
 
15           Social Security Act, as amended;
 
16      (4)  Standard reference compendia including the American
 
17           Hospital Formulary Service-Drug Information, American
 
18           Medical Association Drug Evaluation, American Dental
 
19           Association Accepted Dental Therapeutics, and United
 
20           States Pharmacopoeia-Drug Information;
 
21      (5)  Findings, studies, or research conducted by or under
 
22           the auspices of federal agencies and nationally
 
23           recognized federal research institutes including but
 

 
Page 18                                                    2655
                                     S.B. NO.           S.D. 2
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 1           not limited to the Federal Agency for Health Care
 
 2           Policy and Research, National Institutes for Health,
 
 3           National Cancer Institute, National Academy of
 
 4           Sciences, Health Care Financing Administration,
 
 5           Congressional Office of Technology Assessment, and any
 
 6           national board recognized by the National Institutes of
 
 7           Health for the purpose of evaluating the medical value
 
 8           of health services; and
 
 9      (6)  Peer-reviewed abstracts accepted for presentation at
 
10           major medical association meetings.
 
11      "Treat" means to prevent, diagnose, detect, provide medical
 
12 care, or palliate.
 
13      "Treating licensed health care provider" means a licensed
 
14 health care provider who has personally evaluated the patient.
 
15      "Treating physician" means a physician who has personally
 
16 evaluated the patient."
 
17                             PART III
 
18      SECTION 8.  Statutory material to be repealed is bracketed.
 
19 New statutory material is underscored.
 
20      SECTION 9.  This Act shall take effect upon its approval.