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. (HB2811 HD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2811
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 2000                                
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 five 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;
 
15      (1)  A court-appointed legal guardian;
 
16      (2)  A person who has a durable power of attorney for health
 
17           care; or
 
18      (3)  A person who is designated in a written advance health-
 
19           care directive.
 
20      "Expedited appeal" means:
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (1)  A managed care plan's review of an adverse
 
 2           determination regarding pre-service medical coverage,
 
 3           that is completed within seventy-two hours after
 
 4           receipt of the request for review; or
 
 5      (2)  An external administrative review conducted by a review
 
 6           panel appointed or retained by the commissioner, of a
 
 7           managed care plan's review of an adverse determination
 
 8           regarding pre-service medical coverage, that is
 
 9           completed within seventy-two hours after receipt of the
 
10           request for external review.
 
11      "External review" means an administrative review requested
 
12 by an enrollee under section 432E-6, of a managed care plan's
 
13 final decision in an internal review of an adverse determination
 
14 regarding pre-service medical coverage that is conducted by:
 
15      (1)  An independent review panel retained by the
 
16           commissioner; or
 
17      (2)  A review panel appointed or retained by the
 
18           commissioner.
 
19      "Independent review organization" means an independent
 
20 entity that:
 
21      (1)  Is unbiased and able to make independent decisions;
 
22      (2)  Engages adequate numbers of practitioners with the
 
23           appropriate level and type of clinical knowledge and
 
24           expertise;
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (3)  Applies evidence-based decision making;
 
 2      (4)  Demonstrates an effective process to screen external
 
 3           reviews for eligibility;
 
 4      (5)  Protects the enrollee's identity from unnecessary
 
 5           disclosure; and
 
 6      (6)  Has effective systems in place to conduct a review.
 
 7      "Medical necessity" means a health intervention as defined
 
 8 in section 432E-  ."
 
 9      SECTION 3.  Section 432E-5, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "§432E-5 Complaints and appeals procedure for enrollees.
 
12 (a)  A managed care plan with enrollees in this State shall
 
13 establish and maintain a procedure to provide for the resolution
 
14 of an enrollee's complaints and appeals.  The definition of
 
15 medical necessity in section 432E-   shall apply in a managed
 
16 care plan's complaints and appeals procedures.
 
17      (b)  The managed care plan at all times shall make available
 
18 its complaints and appeals procedures.  The complaints and
 
19 appeals procedures shall be reasonably understandable to the
 
20 average layperson and shall be provided in languages other than
 
21 English upon request.
 
22      (c)  An enrollee may request an expedited appeal when the
 
23 application of a forty-five day standard review time frame may:
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (1)  Seriously jeopardize the life or health of the
 
 2           enrollee;
 
 3      (2)  Seriously jeopardize the enrollee's ability to gain
 
 4           maximum functioning; or
 
 5      (3)  Subject the enrollee to severe pain that cannot be
 
 6           adequately managed without the care or treatment that
 
 7           is the subject of the expedited appeal.
 
 8      A managed care plan shall decide any expedited appeal as
 
 9 soon as possible after receipt of the complaint, taking into
 
10 account the medical exigencies of the case, but not later than
 
11 seventy-two hours after receipt of the request for review.  The
 
12 decision regarding whether an enrollee's complaint merits an
 
13 expedited appeal may be made by an individual acting on behalf of
 
14 the plan and applying the standard of a reasonable individual who
 
15 is not a trained health professional.  If a health care provider
 
16 with knowledge of a claimant's medical condition requests an
 
17 expedited appeal on behalf of an enrollee, the enrollee's
 
18 complaint shall be treated as an expedited appeal by the managed
 
19 care plan.
 
20     [(c)] (d)  A managed care plan shall send notice of its final
 
21 internal determination within forty-five days of the submission
 
22 of the complaint to the enrollee, the enrollee's appointed
 
23 representative, if applicable, the enrollee's treating provider,
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1 and the commissioner.  The notice shall include the following
 
 2 information regarding the enrollee's rights and procedures [under
 
 3 section 432E-6.]:
 
 4      (1)  The enrollee's right to request an external review;
 
 5      (2)  The sixty-day deadline for requesting the external
 
 6           review;
 
 7      (3)  Instructions on how to request an external review; and
 
 8      (4)  Where to submit the request for an external review."
 
 9      SECTION 4.  Section 432E-6, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "§432E-6 Appeals to the commissioner.(a)  After
 
12 exhausting all internal complaint and appeal procedures
 
13 available, an enrollee, or the enrollee's treating provider or
 
14 appointed representative, may [appeal an adverse decision] file a
 
15 request for external review of a managed care [plan] plan's final
 
16 internal determination to a three-member review panel appointed
 
17 by the commissioner composed of a representative from a [health]
 
18 managed care plan not involved in the complaint, a provider
 
19 licensed to practice and practicing medicine in Hawaii not
 
20 involved in the complaint, and the commissioner or the
 
21 commissioner's designee in the following manner:
 
22      (1)  The enrollee shall submit a request for external review
 
23           to the commissioner within [thirty] sixty days from the
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           date of the final internal determination by the managed
 
 2           care plan;
 
 3      (2)  The commissioner may retain, without regard to chapters
 
 4           76 and 77, an independent medical expert trained in the
 
 5           field of medicine most appropriately related to the
 
 6           matter under review.  Presentation of evidence for this
 
 7           purpose shall be exempt from section 91-9(g);
 
 8      (3)  The commissioner may retain the services of an
 
 9           independent review organization from an approved list
 
10           maintained by the commissioner;
 
11      (4)  Within seven days after receipt of the request for
 
12           external review, a managed care plan or its designee
 
13           utilization review organization shall provide to the
 
14           commissioner or the assigned independent review
 
15           organization:
 
16           (A)  Any documents or information used in making the
 
17                final internal determination including the
 
18                enrollee's medical records;
 
19           (B)  Any documentation or written information submitted
 
20                to the managed care plan in support of the
 
21                enrollee's initial complaint;
 
22           (C)  A list of the names, addresses, and telephone
 
23                numbers of each health care provider who cared for
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1                the enrollee and who may have medical records
 
 2                relevant to the external review;
 
 3           provided that where an expedited review is involved,
 
 4           the managed care plan or its designee utilization
 
 5           review organization shall provide the documents and
 
 6           information within forty-eight hours of receipt of the
 
 7           request for external review.  Failure by the managed
 
 8           care plan or its designee utilization review
 
 9           organization to provide the documents and information
 
10           within the prescribed time periods shall not delay the
 
11           conduct of the external review.  Where the managed care
 
12           plan or its designee utilization review organization
 
13           fails to provide the documents and information within
 
14           the prescribed time periods, the commissioner may issue
 
15           a decision to reverse the final internal determination,
 
16           in whole or part, and shall promptly notify the
 
17           independent review organization, the enrollee, the
 
18           enrollee's appointed representative, if applicable, the
 
19           enrollee's treating provider, and the managed care plan
 
20           of the decision;
 
21     [(2)] (5)  Upon receipt of the request for external review
 
22           and upon a showing of good cause, the commissioner
 
23           shall appoint the members of the panel and shall
 

 
Page 8                                                     2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           conduct a review hearing pursuant to chapter 91.  If
 
 2           the amount in controversy is less than $500, the
 
 3           commissioner may conduct a review hearing without
 
 4           appointing a review panel;
 
 5     [(3)] (6)  The review hearing shall be conducted as soon as
 
 6           practicable, taking into consideration the medical
 
 7           exigencies of the case; provided that the hearing shall
 
 8           be held no later than sixty days from the date of the
 
 9           request for the hearing; and provided further that any
 
10           request for external review of a final internal
 
11           determination on an expedited appeal shall be
 
12           determined no later than seventy-two hours after
 
13           receipt of the request for external review.  The
 
14           decision whether a request for external review is an
 
15           expedited appeal shall be made applying the standard of
 
16           a reasonable individual who is not a trained health
 
17           professional.  If a health care provider with knowledge
 
18           of an enrollee's medical condition requests an
 
19           expedited appeal on behalf of an enrollee, the request
 
20           shall be treated as such for purposes of this section;
 
21     [(4)  The commissioner may retain, without regard to chapters
 
22           76 and 77, an independent medical expert trained in the
 
23           field of medicine most appropriately related to the
 

 
Page 9                                                     2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           matter under review.  Presentation of evidence for this
 
 2           purpose shall be exempt from section 91-9(g);
 
 3      (5)] (7)  After considering the enrollee's complaint, the
 
 4           managed care plan's response, and any affidavits filed
 
 5           by the parties, the commissioner may dismiss the
 
 6           [appeal] request for external review if it is
 
 7           determined that the [appeal] request is frivolous or
 
 8           without merit; and
 
 9     [(6)] (8)  The review panel shall review every [adverse]
 
10           final internal determination to determine whether or
 
11           not the managed care plan involved acted reasonably
 
12           [and with sound medical judgment].  The review panel
 
13           and the commissioner or the commissioner's designee
 
14           shall consider the terms of the agreement of the
 
15           enrollee's insurance policy, evidence of coverage, or
 
16           similar document, whether the medical director properly
 
17           applied the medical necessity criteria in section
 
18           432E-   in making the final internal determination, all
 
19           relevant medical records, clinical standards of the
 
20           managed care plan, the information provided, the
 
21           attending physician's recommendations, and generally
 
22           accepted practice guidelines.
 

 
 
 
Page 10                                                    2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      The commissioner, upon a majority vote of the panel, shall
 
 2 issue an order affirming, modifying, or reversing the decision
 
 3 within thirty days of the hearing.
 
 4      (b)  The procedure set forth in this section shall not apply
 
 5 to claims or allegations of health provider malpractice,
 
 6 professional negligence, or other professional fault against
 
 7 participating providers.
 
 8      (c)  No person shall serve on the review panel or in the
 
 9 independent review organization who is related to a person in
 
10 paragraph (1) or (2) within the second degree of consanguinity or
 
11 affinity or who has a direct and substantial professional,
 
12 financial, or personal interest in:
 
13      (1)  The managed care plan involved in the complaint,
 
14           including an officer, director, or employee of the
 
15           plan; or
 
16      (2)  The treatment of the enrollee, including but not
 
17           limited to the developer or manufacturer of the
 
18           principal drug, device, procedure, or other therapy at
 
19           issue.
 
20     [(c)] (d)  Members of the review panel shall be granted
 
21 immunity from liability and damages relating to their duties
 
22 under this section.
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1     [(d)] (e)  An enrollee may be allowed, at the commissioner's
 
 2 discretion, an award of a reasonable sum for attorney's fees and
 
 3 reasonable costs [of suit in an action brought against the
 
 4 managed care plan.] incurred in connection with the external
 
 5 review under this section, unless the commissioner in an
 
 6 administrative proceeding determines that the appeal was
 
 7 unreasonable, fraudulent, excessive, or frivolous.
 
 8      (f)  The disclosure of an enrollee's protected health
 
 9 information shall be limited to the purposes relating to the
 
10 external review."
 
11                              PART II
 
12      SECTION 5.  In Senate Concurrent Resolution No. 152, S.D. 1,
 
13 the 1999 legislature requested the Hawaii patient rights and
 
14 responsibilities task force to make a thorough study of the
 
15 issues relating to the use of the term "medical necessity" and
 
16 determine the most appropriate definition of "medical necessity",
 
17 or develop new terms to better resolve the issues examined.
 
18      The purpose of this part is to establish a statutory
 
19 definition of the term "medical necessity" to:  
 
20      (1)  Promote uniformity among the various health plans; and
 
21      (2)  Serve as the standard of review governing a health
 
22           plan's internal and external appeals processes.
 

 
 
 
Page 12                                                    2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      SECTION 6.  Chapter 432E, Hawaii Revised Statutes, is
 
 2 amended by adding a new section to be appropriately designated
 
 3 and to read as follows:
 
 4      "§432E-    Medical necessity.  (a)  For contractual
 
 5 purposes, a health intervention shall be covered if it is an
 
 6 otherwise covered category of service, not specifically excluded,
 
 7 recommended by the treating physician or treating health care
 
 8 provider, and determined by the managed care plan's medical
 
 9 director to be medically necessary as defined in subsection (b).
 
10 A health intervention may be medically indicated and not qualify
 
11 as a covered benefit or meet the definition of medical necessity.
 
12 A managed care plan may choose to cover health interventions that
 
13 do not meet the definition of medical necessity.
 
14      (b)  A health intervention is medically necessary if it is
 
15 recommended by the treating physician or treating health care
 
16 provider and approved by the managed care plan's medical director
 
17 or physician designee, and is:
 
18      (1)  For the purpose of treating a medical condition;
 
19      (2)  The most appropriate delivery or level of service,
 
20           considering potential benefits and harms to the
 
21           patient;
 
22      (3)  Known to be effective in improving health outcomes;
 
23           provided that effectiveness is determined first by
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           scientific evidence, and if no scientific evidence
 
 2           exists, then by professional standards of care, and if
 
 3           no professional standards of care exist or if they
 
 4           exist but are outdated or contradictory, then by expert
 
 5           opinion; and
 
 6      (4)  Cost-effective for the medical condition being treated
 
 7           compared to alternative health interventions, including
 
 8           no intervention.  For purposes of this section, cost-
 
 9           effective shall not necessarily mean the lowest price.
 
10 Giving priority to scientific evidence shall not mean that
 
11 coverage of existing interventions shall be denied in the absence
 
12 of conclusive scientific evidence.  Existing interventions may
 
13 meet the definition of medical necessity in the absence of
 
14 scientific evidence if there is a strong conviction of
 
15 effectiveness and benefit expressed through up-to-date and
 
16 consistent professional standards of care, or in the absence of
 
17 such standards, convincing expert opinion.
 
18      (c)  When the treating physician or treating health care
 
19 provider and the managed care plan's medical director or
 
20 physician designee do not agree on whether a health intervention
 
21 is medically necessary, a reviewing body, whether internal to the
 
22 plan or external, shall give consideration to, but shall not be
 
23 bound by, the recommendations of the treating physician or
 

 
Page 14                                                    2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1 treating health care provider and the managed care plan's medical
 
 2 director or physician designee.
 
 3      (d)  For the purposes of this section, the following
 
 4 definitions shall apply:
 
 5      "Cost-effective" as applied to a health intervention, means
 
 6 the benefits and harms relative to costs represent an
 
 7 economically efficient use of resources for patients with the
 
 8 medical condition being treated through the health intervention;
 
 9 provided that the characteristics of the individual patient shall
 
10 be determinative when applying this definition to an individual
 
11 case.
 
12      "Effective" means a health intervention that may reasonably
 
13 be expected to produce the intended results and to have expected
 
14 benefits that outweigh potential harmful effects.
 
15      "Health care provider" means a person who is licensed,
 
16 certified, or otherwise authorized or permitted by law to
 
17 administer health care in the ordinary course of business or
 
18 practice of a profession.
 
19      "Health intervention" means an item or service delivered or
 
20 undertaken primarily to treat a medical condition or to maintain
 
21 or restore functional ability.  A health intervention is
 
22 characterized not only by the intervention itself, but also by
 
23 the medical condition and patient indications to which it is
 
24 being applied.
 

 
Page 15                                                    2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      "Health outcomes" means outcomes that affect health status
 
 2 as measured by the length or quality of a patient's life,
 
 3 primarily 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 health intervention on health outcomes.  If controlled clinical
 
15 trials are not available, observational studies that demonstrate
 
16 a causal relationship between health the intervention and the
 
17 health outcomes may be used.  Partially controlled observational
 
18 studies and uncontrolled clinical series may be suggestive, but
 
19 do not by themselves demonstrate a causal relationship unless the
 
20 magnitude of the effect observed exceeds anything that could be
 
21 explained either by the natural history of the medical condition
 
22 or potential experimental biases.  Scientific evidence may be
 
23 found in the following and similar sources:
 

 
Page 16                                                    2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 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 17                                                    2811
                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 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, or to provide
 
12 medical care, or to palliate.
 
13      "Treating health care provider" means a licensed health care
 
14 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 7.  Statutory material to be repealed is bracketed.
 
19 New statutory material is underscored.
 
20      SECTION 8.  This Act shall take effect on ____________.