REPORT TITLE:
Patients' Bill of Rights


DESCRIPTION:
Establishes an expedited procedure for appealing a managed care
plan's decision.  Extends the time allowed 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 and must be included within
the services covered by a health plan.  Increases the membership
of the Patient Rights and Responsibilities Task Force from
twenty to twenty-five. (SB2655 HD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2655
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                H.D. 2
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.  Chapter 432E, Hawaii Revised Statutes, is
 
 9 amended by adding a new section to be appropriately inserted and
 
10 to read as follows:
 
11      "§432E-    Expedited appeal, when authorized; standard for
 
12 decision.  (a)  An enrollee may request that the following be
 
13 conducted as an expedited appeal:
 
14      (1)  The internal review under section 432E-5 of the
 
15           enrollee's complaint; or
 
16      (2)  The external review under section 432E-6 of the managed
 
17           care plan's final internal determination.
 
18 If a request for expedited appeal is approved by the managed care
 
19 plan or the commissioner, the appropriate review shall be
 

 
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 1 completed within seventy-two hours of receipt of the request for
 
 2 expedited appeal.
 
 3      (b)  An expedited appeal shall be authorized if the
 
 4 application of the forty-five day standard review time frame may:
 
 5      (1)  Seriously jeopardize the life or health of the
 
 6           enrollee;
 
 7      (2)  Seriously jeopardize the enrollee's ability to gain
 
 8           maximum functioning; or
 
 9      (3)  Subject the enrollee to severe pain that cannot be
 
10           adequately managed without the care or treatment that
 
11           is the subject of the expedited appeal.
 
12      (c)  The decision as to whether an enrollee's complaint is
 
13 an expedited appeal shall be made by applying the standard of a
 
14 reasonable individual who is not a trained health professional.
 
15 The decision may be made for the managed care plan by an
 
16 individual acting on behalf of the managed care plan.  If a
 
17 licensed health care provider with knowledge of a claimant's
 
18 medical condition requests an expedited appeal on behalf of an
 
19 enrollee, the request shall be treated as an expedited appeal."
 
20      Section 432E-1, Hawaii Revised Statutes, is amended by
 
21 adding six new definitions to be appropriately inserted and to
 
22 read as follows:
 

 
 
 
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 1      ""Appointed representative" means a person who is expressly
 
 2 permitted by the enrollee or who has the power under Hawaii law
 
 3 to make health care decisions on behalf of the enrollee,
 
 4 including:
 
 5      (1)  A court-appointed legal guardian;
 
 6      (2)  A person who has a durable power of attorney for health
 
 7           care; or
 
 8      (3)  A person who is designated in a written advance
 
 9           directive.
 
10      "Expedited appeal" means the internal review of a complaint
 
11 or an external review of the final internal determination of an
 
12 enrollee's complaint, which is completed within seventy-two hours
 
13 after receipt of the request for expedited appeal.
 
14      "External review" means an administrative review requested
 
15 by an enrollee under section 432E-6 of a managed care plan's
 
16 final internal determination of an enrollee's complaint.
 
17      "Health care provider" means an individual licensed or
 
18 certified to provide health care in the ordinary course of
 
19 business or practice of a profession.
 
20      "Independent review organization" means an independent
 
21 entity that:
 

 
 
 
 
 
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 1      (1)  Is unbiased and able to make independent decisions;
 
 2      (2)  Engages adequate numbers of practitioners with the
 
 3           appropriate level and type of clinical knowledge and
 
 4           expertise;
 
 5      (3)  Applies evidence-based decision making;
 
 6      (4)  Demonstrates an effective process to screen external
 
 7           reviews for eligibility;
 
 8      (5)  Protects the enrollee's identity from unnecessary
 
 9           disclosure; and
 
10      (6)  Has effective systems in place to conduct a review.
 
11      "Internal review" means the review under section 432E-5 of
 
12 an enrollee's complaint by a managed care plan.
 
13      "Medical necessity" means a health intervention as defined
 
14 in section 432E-  ."
 
15      SECTION 3.  Section 432E-5, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "§432E-5 Complaints and appeals procedure for enrollees.
 
18 (a)  A managed care plan with enrollees in this State shall
 
19 establish and maintain a procedure to provide for the resolution
 
20 of an enrollee's complaints and appeals.  The procedure shall
 
21 provide for expedited appeals under section 432E-   .  The
 
22 definition of medical necessity in section 432E-   shall apply in
 
23 a managed care plan's complaints and appeals procedures.
 

 
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 1      (b)  The managed care plan shall at all times [shall] make
 
 2 available its complaints and appeals procedures.  The complaints
 
 3 and appeals procedures shall be reasonably understandable to the
 
 4 average layperson and shall be provided in [languages] a language
 
 5 other than English upon request.
 
 6      (c)  A managed care plan shall decide any expedited appeal
 
 7 as soon as possible after receipt of the complaint, taking into
 
 8 account the medical exigencies of the case, but not later than
 
 9 seventy-two hours after receipt of the request for expedited
 
10 appeal.
 
11     [(c)] (d)  A managed care plan shall send notice of its final
 
12 internal determination within forty-five days of the submission
 
13 of the complaint to the enrollee, the enrollee's appointed
 
14 representative, if applicable, the enrollee's treating provider,
 
15 and the commissioner.  The notice shall include the following
 
16 information regarding the enrollee's rights and procedures [under
 
17 section 432E-6.]:
 
18      (1)  The enrollee's right to request an external review;
 
19      (2)  The sixty-day deadline for requesting the external
 
20           review;
 
21      (3)  Instructions on how to request an external review; and
 
22      (4)  Where to submit the request for an external review."
 

 
 
 
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 1      SECTION 4.  Section 432E-6, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§432E-6 [Appeals to the commissioner.] External review
 
 4 procedure.  (a)  After exhausting all internal complaint and
 
 5 appeal procedures available, an enrollee, or the enrollee's
 
 6 treating provider or appointed representative, may [appeal an
 
 7 adverse decision] file a request for external review of a managed
 
 8 care [plan] plan's final internal determination to a three-member
 
 9 review panel appointed by the commissioner composed of a
 
10 representative from a [health] managed care plan not involved in
 
11 the complaint, a provider licensed to practice and practicing
 
12 medicine in Hawaii not involved in the complaint, and the
 
13 commissioner or the commissioner's designee in the following
 
14 manner:
 
15      (1)  The enrollee shall submit a request for external review
 
16           to the commissioner within [thirty] sixty  days from
 
17           the date of the final internal determination by the
 
18           managed care plan;
 
19      (2)  The commissioner may retain:
 
20           (A)  Without regard to chapters 76 and 77, an
 
21                independent medical expert trained in the field of
 
22                medicine most appropriately related to the matter
 

 
 
 
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 1                under review.  Presentation of evidence for this
 
 2                purpose shall be exempt from section 91-9(g); and
 
 3           (B)  The services of an independent review organization
 
 4                from an approved list maintained by the
 
 5                commissioner;
 
 6      (3)  Within seven days after receipt of the request for
 
 7           external review, a managed care plan or its designee
 
 8           utilization review organization shall provide to the
 
 9           commissioner or the assigned independent review
 
10           organization:
 
11           (A)  Any documents or information used in making the
 
12                final internal determination including the
 
13                enrollee's medical records;
 
14           (B)  Any documentation or written information submitted
 
15                to the managed care plan in support of the
 
16                enrollee's initial complaint; and
 
17           (C)  A list of the names, addresses, and telephone
 
18                numbers of each licensed health care provider who
 
19                cared for the enrollee and who may have medical
 
20                records relevant to the external review;  
 
21           provided that where an expedited review is involved,
 
22           the managed care plan or its designee utilization
 
23           review organization shall provide the documents and
 

 
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 1           information within forty-eight hours of receipt of the
 
 2           request for external review.
 
 3                Failure by the managed care plan or its designee
 
 4           utilization review organization to provide the
 
 5           documents and information within the prescribed time
 
 6           periods shall not delay the conduct of the external
 
 7           review.  Where the plan or its designee utilization
 
 8           review organization fails to provide the documents and
 
 9           information within the prescribed time periods, the
 
10           commissioner may issue a decision to reverse the final
 
11           internal determination, in whole or part, and shall
 
12           promptly notify the independent review organization,
 
13           the enrollee, the enrollee's appointed representative,
 
14           if applicable, the enrollee's treating provider, and
 
15           the managed care plan of the decision;
 
16     [(2)] (4)  Upon receipt of the request for external review
 
17           and upon a showing of good cause, the commissioner
 
18           shall appoint the members of the panel and shall
 
19           conduct a review hearing pursuant to chapter 91.  If
 
20           the amount in controversy is less than $500, the
 
21           commissioner may conduct a review hearing without
 
22           appointing a review panel;
 

 
 
 
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 1     [(3)] (5)  The review hearing shall be conducted as soon as
 
 2           practicable, taking into consideration the medical
 
 3           exigencies of the case; provided that [the]:
 
 4           (A)  The hearing shall be held no later than sixty days
 
 5                from the date of the request for the hearing; and
 
 6           (B)  An external review conducted as an expedited
 
 7                appeal shall be determined no later than seventy-
 
 8                two hours after receipt of the request for
 
 9                external review;
 
10     [(4)  The commissioner may retain, without regard to chapters
 
11           76 and 77, an independent medical expert trained in the
 
12           field of medicine most appropriately related to the
 
13           matter under review.  Presentation of evidence for this
 
14           purpose shall be exempt from section 91-9(g);
 
15      (5)] (6)  After considering the enrollee's complaint, the
 
16           managed care plan's response, and any affidavits filed
 
17           by the parties, the commissioner may dismiss the
 
18           [appeal] request for external review if it is
 
19           determined that the [appeal] request is frivolous or
 
20           without merit; and
 
21     [(6)] (7)  The review panel shall review every [adverse]
 
22           final internal determination to determine whether [or
 
23           not] the managed care plan involved acted reasonably
 

 
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 1           [and with sound medical judgment].  The review panel
 
 2           and the commissioner or the commissioner's designee
 
 3           shall consider [the]:
 
 4           (A)  The terms of the agreement of the enrollee's
 
 5                insurance policy, evidence of coverage, or similar
 
 6                document;
 
 7           (B)  Whether the medical director properly applied the
 
 8                medical necessity criteria in section 432E-   in
 
 9                making the final internal determination;
 
10           (C)  All relevant medical records;
 
11           (D)  The clinical standards of the plan[, the];
 
12           (E)  The information provided[, the];
 
13           (F)  The attending physician's recommendations[,]; and
 
14           (G)  [generally] Generally accepted practice
 
15                guidelines.
 
16      The commissioner, upon a majority vote of the panel, shall
 
17 issue an order affirming, modifying, or reversing the decision
 
18 within thirty days of the hearing.
 
19      (b)  The procedure set forth in this section shall not apply
 
20 to claims or allegations of health provider malpractice,
 
21 professional negligence, or other professional fault against
 
22 participating providers.
 

 
 
 
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 1      (c)  No person shall serve on the review panel or in the
 
 2 independent review organization who, through a familial
 
 3 relationship within the second degree of consanguinity or
 
 4 affinity, or for other reasons, has a direct and substantial
 
 5 professional, financial, or personal interest in:
 
 6      (1)  The plan involved in the complaint, including an
 
 7           officer, director, or employee of the plan; or
 
 8      (2)  The treatment of the enrollee, including but not
 
 9           limited to the developer or manufacturer of the
 
10           principal drug, device, procedure, or other therapy at
 
11           issue.
 
12     [(c)] (d)  Members of the review panel shall be granted
 
13 immunity from liability and damages relating to their duties
 
14 under this section.
 
15     [(d)] (e)  An enrollee may be allowed, at the commissioner's
 
16 discretion, an award of a reasonable sum for attorney's fees and
 
17 reasonable costs [of suit in an action brought against the
 
18 managed care plan.] incurred in connection with the external
 
19 review under this section, unless the commissioner in an
 
20 administrative proceeding determines that the appeal was
 
21 unreasonable, fraudulent, excessive, or frivolous.
 

 
 
 
 
 
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 1      (f)  Disclosure of an enrollee's protected health
 
 2 information shall be limited to disclosure for purposes relating
 
 3 to the external review."
 
 4      SECTION 5.  Section 5, Act 178, Session Laws of Hawaii 1998,
 
 5 is amended by amending subsection (c) to read as follows:
 
 6      "(c)  The task force shall be [comprised] composed of
 
 7 interested parties with the total membership of the task force
 
 8 between twelve and [twenty] twenty-five  members.  The insurance
 
 9 commissioner or the commissioner's designated representative[,]
 
10 shall be a member and serve as the chair of the task force and
 
11 appoint [it] its remaining members.  At least one representative
 
12 from each of the following shall be appointed as a member;
 
13 members of other groups may also be appointed:
 
14      (1)  The department of health;
 
15      (2)  The department of labor and industrial relations,
 
16           disability compensation division; 
 
17      (3)  A health insurance company that provides accident and
 
18           sickness policies under chapter 431, article 10A,
 
19           Hawaii Revised Statutes;
 
20      (4)  A mutual benefit society that provides health insurance
 
21           under chapter 432, Hawaii Revised Statutes;
 

 
 
 
 
 
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 1      (5)  A health maintenance organization that holds a
 
 2           certificate of authority under chapter 432D, Hawaii
 
 3           Revised Statutes;
 
 4      (6)  The American Association of Retired Persons;
 
 5      (7)  The Hawaii Coalition for Health;
 
 6      (8)  The Hawai'i Business Health Coalition;
 
 7      (9)  The Legal Aid Society of Hawaii;
 
 8     (10)  The Hawaii Medical Association;
 
 9     (11)  An organization that represents nurses; and
 
10     (12)  A hospital or an organization that represents
 
11           hospitals."
 
12                              PART II
 
13      SECTION 6.  In Senate Concurrent Resolution No. 152, S.D. 1,
 
14 the 1999 legislature requested the Hawaii patient rights and
 
15 responsibilities task force to make a thorough study of the
 
16 issues relating to the use of the term "medical necessity" and
 
17 determine the most appropriate definition of "medical necessity",
 
18 or develop new terms to better resolve the issues examined.
 
19      The purpose of this part is to establish a statutory
 
20 definition of the term "medical necessity" to:  
 
21      (1)  Promote uniformity among the various health plans; and
 

 
 
 
 
 
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 1      (2)  Serve as the standard of review governing a health
 
 2           plan's internal appeals process and the external
 
 3           appeals process.
 
 4      SECTION 7.  Chapter 432E, Hawaii Revised Statutes, is
 
 5 amended by adding a new section to be appropriately designated
 
 6 and to read as follows:
 
 7      "§432E-    Medical necessity.  (a)  For contractual
 
 8 purposes, a health intervention shall be covered if it is an
 
 9 otherwise covered category of service, not specifically excluded,
 
10 recommended by the treating licensed health care provider, and
 
11 determined by the health plan's medical director to be medically
 
12 necessary as defined in subsection (b).  A health intervention
 
13 may be medically indicated and not qualify as a covered benefit
 
14 or meet the definition of medical necessity.  A managed care plan
 
15 may choose to cover health interventions that do not meet the
 
16 definition of medical necessity.
 
17      (b)  A health intervention is medically necessary if it is
 
18 recommended by the treating physician or treating licensed health
 
19 care provider, is approved by the health plan's medical director
 
20 or physician designee, and is:
 
21      (1)  For the purpose of treating a medical condition;
 

 
 
 
 
 
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 1      (2)  The most appropriate delivery or level of service,
 
 2           considering potential benefits and harms to the
 
 3           patient;
 
 4      (3)  Known to be effective in improving health outcomes;
 
 5           provided that:
 
 6           (A)  Effectiveness is determined first by scientific
 
 7                evidence;
 
 8           (B)  If no scientific evidence exists, then by
 
 9                professional standards of care; and 
 
10           (C)  If no professional standards of care exist or if
 
11                they exist but are outdated or contradictory, then
 
12                by expert opinion;
 
13           and
 
14      (4)  Cost-effective for the medical condition being treated
 
15           compared to alternative health interventions, including
 
16           no intervention.  For purposes of this paragraph, cost-
 
17           effective shall not necessarily mean the lowest price.
 
18      (c)  When the treating licensed health care provider and the
 
19 health plan's medical director or physician designee do not agree
 
20 on whether a health intervention is medically necessary, a
 
21 reviewing body, whether internal to the plan or external, shall
 
22 give consideration to, but shall not be bound by, the
 

 
 
 
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 1 recommendations of the treating licensed health care provider and
 
 2 the health plan's medical director or physician designee.
 
 3      (d)  For the purposes of this section:
 
 4      "Cost-effective" means a health intervention where the
 
 5 benefits and harms relative to the costs represent an
 
 6 economically efficient use of resources for patients with the
 
 7 medical condition being treated through the health intervention;
 
 8 provided that the characteristics of the individual patient shall
 
 9 be determinative when applying this criterion to an individual
 
10 case.
 
11      "Effective" means a health intervention that may reasonably
 
12 be expected to produce the intended results and to have expected
 
13 benefits that outweigh potential harmful effects.
 
14      "Health intervention" means an item or service delivered or
 
15 undertaken primarily to treat a medical condition or to maintain
 
16 or restore functional ability.  A health intervention is defined
 
17 not only by the intervention itself, but also by the medical
 
18 condition and patient indications for which it is being applied.
 
19 New interventions for which clinical trials have not been
 
20 conducted and effectiveness has not been scientifically
 
21 established shall be evaluated on the basis of professional
 
22 standards of care or expert opinion.  For existing interventions,
 
23 scientific evidence shall be considered first and to the greatest
 

 
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 1 extent possible, shall be the basis for determinations of medical
 
 2 necessity.  If no scientific evidence is available, professional
 
 3 standards of care shall be considered.  If professional standards
 
 4 of care do not exist or are outdated or contradictory, decisions
 
 5 about existing interventions shall be based on expert opinion.
 
 6 Giving priority to scientific evidence shall not mean that
 
 7 coverage of existing interventions shall be denied in the absence
 
 8 of conclusive scientific evidence.  Existing interventions may
 
 9 meet the definition of medical necessity in the absence of
 
10 scientific evidence if there is a strong conviction of
 
11 effectiveness and benefit expressed through up-to-date and
 
12 consistent professional standards of care, or in the absence of
 
13 such standards, convincing expert opinion.
 
14      "Health outcomes" mean outcomes that affect health status as
 
15 measured by the length or quality of a patient's life, primarily
 
16 as perceived by the patient.
 
17      "Medical condition" means a disease, illness, injury,
 
18 genetic or congenital defect, pregnancy, or a biological or
 
19 psychological condition that lies outside the range of normal,
 
20 age-appropriate human variation.
 
21      "Physician designee" means a physician or other health care
 
22 practitioner designated to assist in the decision making process
 

 
 
 
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 1 who has training and credentials at least equal to the treating
 
 2 licensed health care provider.
 
 3      "Scientific evidence" means controlled clinical trials that
 
 4 either directly or indirectly demonstrate the effect of the
 
 5 intervention on health outcomes.  If controlled clinical trials
 
 6 are not available, observational studies that demonstrate a
 
 7 causal relationship between the intervention and the health
 
 8 outcomes may be used.  Partially controlled observational studies
 
 9 and uncontrolled clinical series may be suggestive, but do not by
 
10 themselves demonstrate a causal relationship unless the magnitude
 
11 of the effect observed exceeds anything that could be explained
 
12 either by the natural history of the medical condition or
 
13 potential experimental biases.  Scientific evidence may be found
 
14 in the following and similar sources:
 
15      (1)  Peer-reviewed scientific studies published in or
 
16           accepted for publication by medical journals that meet
 
17           nationally recognized requirements for scientific
 
18           manuscripts and that submit most of their published
 
19           articles for review by experts who are not part of the
 
20           editorial staff;
 
21      (2)  Peer-reviewed literature, biomedical compendia, and
 
22           other medical literature that meet the criteria of the
 
23           National Institute of Health's National Library of
 

 
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 1           Medicine for indexing in Index Medicus, Excerpta
 
 2           Medicus (EMBASE), Medline, and MEDLARS database Health
 
 3           Services Technology Assessment Research (HSTAR);
 
 4      (3)  Medical journals recognized by the Secretary of Health
 
 5           and Human Services under section 1861(t)(2) of the
 
 6           Social Security Act, as amended;
 
 7      (4)  Standard reference compendia including the American
 
 8           Hospital Formulary Service-Drug Information, American
 
 9           Medical Association Drug Evaluation, American Dental
 
10           Association Accepted Dental Therapeutics, and United
 
11           States Pharmacopoeia-Drug Information;
 
12      (5)  Findings, studies, or research conducted by or under
 
13           the auspices of federal agencies and nationally
 
14           recognized federal research institutes including but
 
15           not limited to the Federal Agency for Health Care
 
16           Policy and Research, National Institutes for Health,
 
17           National Cancer Institute, National Academy of
 
18           Sciences, Health Care Financing Administration,
 
19           Congressional Office of Technology Assessment, and any
 
20           national board recognized by the National Institutes of
 
21           Health for the purpose of evaluating the medical value
 
22           of health services; and
 

 
 
 
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 1      (6)  Peer-reviewed abstracts accepted for presentation at
 
 2           major medical association meetings.
 
 3      "Treat" means to prevent, diagnose, detect, provide medical
 
 4 care, or palliate.
 
 5      "Treating licensed health care provider" means a licensed
 
 6 health care provider who has personally evaluated the patient."
 
 7                             PART III
 
 8      SECTION 8.  Statutory material to be repealed is bracketed.
 
 9 New statutory material is underscored.
 
10      SECTION 9.  This Act shall take effect upon its approval.