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.  (SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2655
THE SENATE                              S.B. NO.           S.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 Act 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 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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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1 for review.  An enrollee may request an expedited appeal when the
 
 2 application of a forty-five day standard review timeframe 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 decisionmaking, 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      "Medical necessity" means a health intervention as defined
 
22 in section 432E-  ."
 
23      SECTION 3.  Section 432E-5, Hawaii Revised Statutes, is
 

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1 amended to read as follows:
 
 2      "§432E-5 Complaints and appeals procedure for enrollees.
 
 3 (a)  A managed care plan with enrollees in this State shall
 
 4 establish and maintain a procedure to provide for the resolution
 
 5 of an enrollee's complaints and appeals.  The definition of
 
 6 medical necessity in section 432E-   shall apply in a managed
 
 7 care plan's complaints and appeals procedures.
 
 8      (b)  The managed care plan at all times shall make available
 
 9 its complaints and appeals procedures.  The complaints and
 
10 appeals procedures shall be reasonably understandable to the
 
11 average layperson and shall be provided in languages other than
 
12 English upon request.
 
13      (c)  A managed care plan shall decide any expedited appeal
 
14 as soon as possible after receipt of the complaint, taking into
 
15 account the medical exigencies of the case, but not later than
 
16 seventy-two hours after receipt of the request for review.  The
 
17 decision whether an enrollee's complaint is an expedited appeal
 
18 may be made by an individual acting on behalf of the plan and
 
19 applying the standard of a reasonable individual who is not a
 
20 trained health professional.  If a health care provider with
 
21 knowledge of a claimant's medical condition requests an expedited
 
22 appeal on behalf of an enrollee, the enrollee's complaint shall
 
23 be treated as an expedited appeal by the managed care plan.
 

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

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1 involved in the complaint, and the commissioner or the
 
 2 commissioner's designee in the following manner:
 
 3      (1)  The enrollee, or the enrollee's treating provider or
 
 4           appointed representative, shall submit a request for
 
 5           external review to the commissioner within [thirty]
 
 6           sixty days from the date of the final internal
 
 7           determination by the managed care plan;
 
 8      (2)  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      (3)  The commissioner may retain the services of an
 
14           independent review organization from an approved list
 
15           maintained by the commissioner;
 
16      (4)  Within seven days after receipt of the request for
 
17           external review, a managed care plan or its designee
 
18           utilization review organization shall provide to the
 
19           commissioner or the assigned independent review
 
20           organization any documents or information used in
 
21           making the final internal determination including the
 
22           enrollee's medical records, any documentation or
 
23           written information submitted to the managed care plan
 

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1           76 and 77, an independent medical expert trained in the
 
 2           field of medicine most appropriately related to the
 
 3           matter under review.  Presentation of evidence for this
 
 4           purpose shall be exempt from section 91-9(g);
 
 5      (5)] (7)  After considering the enrollee's complaint, the
 
 6           managed care plan's response, and any affidavits filed
 
 7           by the parties, the commissioner may dismiss the
 
 8           [appeal] request for external review if it is
 
 9           determined that the [appeal] request is frivolous or
 
10           without merit; and
 
11     [(6)] (8)  The review panel shall review every [adverse]
 
12           final internal determination to determine whether or
 
13           not the managed care plan involved acted reasonably
 
14           [and with sound medical judgment].  The review panel
 
15           and the commissioner or the commissioner's designee
 
16           shall consider the terms of the agreement of the
 
17           enrollee's insurance policy, evidence of coverage, or
 
18           similar document, whether the medical director properly
 
19           applied the medical necessity criteria in section
 
20           432E-   in making the final internal determination, all
 
21           relevant medical records, clinical standards of the
 
22           plan, the information provided, the attending
 
23           physician's recommendations, and generally accepted
 

 
Page 9                                                     2655
                                     S.B. NO.           S.D. 2
                                                        
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1 managed care plan.] incurred in connection with the external
 
 2 review under this section, unless the commissioner upon
 
 3 administrative proceeding determines that the appeal was
 
 4 unreasonable, fraudulent, excessive, or frivolous.
 
 5      (f)  The disclosure of an enrollee's protected health
 
 6 information shall be limited to the purposes relating to the
 
 7 external review."
 
 8                              PART II
 
 9      SECTION 5.  In Senate Concurrent Resolution No. 152, S.D. 1,
 
10 the 1999 legislature requested the Hawaii patient rights and
 
11 responsibilities task force to make a thorough study of the
 
12 issues relating to the use of the term "medical necessity" and
 
13 determine the most appropriate definition of "medical necessity",
 
14 or develop new terms to better resolve the issues examined.  The
 
15 purpose of this Act is to establish a statutory definition of the
 
16 term "medical necessity" to:  
 
17      (1)  Promote uniformity among the various health plans; and
 
18      (2)  Serve as the standard of review governing a health
 
19           plan's internal appeals process and the external
 
20           appeals process.
 
21      SECTION 6.  Chapter 432E, Hawaii Revised Statutes, is
 
22 amended by adding a new section to be appropriately designated
 
23 and to read as follows:
 

 
Page 11                                                    2655
                                     S.B. NO.           S.D. 2
                                                        
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1                professional standards of care, if no scientific
 
 2                evidence exists; and
 
 3           (C)  Third by generally accepted expert opinion, if no
 
 4                professional standards of care exist or if they
 
 5                exist but are outdated or contradictory.
 
 6      (4)  Cost-effective for the medical condition being treated
 
 7           compared to alternative health interventions, including
 
 8           no intervention.  For purposes of this paragraph, cost-
 
 9           effectiveness shall not be:
 
10           (A)  Deemed by the lowest price; or
 
11           (B)  Used as a criterion for medical necessity unless
 
12                evidence supporting the use of the health
 
13                intervention is consistent or uncontroversial.
 
14      (c)  When the treating health care provider and the health
 
15 plan's medical director or health care provider designee do not
 
16 agree on whether a health intervention is medically necessary, a
 
17 reviewing body, whether internal to the plan or external, shall
 
18 give consideration to, but shall not be bound by, the
 
19 recommendations of the treating health care provider and the
 
20 health plan's medical director or health care provider designee.
 
21      (d)  For the purposes of this section, the following
 
22 definitions shall apply:
 
23      "Cost-effective" means a health intervention where the
 

 
Page 13                                                    2655
                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1 benefits and harms relative to costs represent an economically
 
 2 efficient use of resources for patients with the medical
 
 3 condition being treated through the health intervention; provided
 
 4 that the characteristics of the individual patient shall be
 
 5 determinative when applying this criterion to an individual case.
 
 6      "Effective" means a health intervention that may reasonably
 
 7 be expected to produce the intended results and to have expected
 
 8 benefits that outweigh potential harmful effects.
 
 9      "Health care provider designee" means a health care
 
10 practitioner designated by a health care provider to assist in
 
11 the decisionmaking process who has training and credentials at
 
12 least equal to the treating physician.
 
13      "Health intervention" means an item or service delivered or
 
14 undertaken primarily to treat a medical condition or to maintain
 
15 or restore functional ability, including functional and
 
16 developmental delays in children.  A health intervention is
 
17 defined not only by the intervention itself, but also by the
 
18 medical condition and patient indications for which it is being
 
19 applied.  New interventions for which clinical trials have not
 
20 been conducted and effectiveness has not been scientifically
 
21 established shall be evaluated on the basis of professional
 
22 standards of care or expert opinion.
 
23      For existing interventions, medical necessity for a health
 

 
Page 14                                                    2655
                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1 intervention shall be determined in the following order:
 
 2      (1)  First by scientific evidence;
 
 3      (2)  Second by current and generally accepted professional
 
 4           standards of care, if no scientific evidence exists;
 
 5           and
 
 6      (3)  Third by generally accepted expert opinion, if no
 
 7           professional standards of care exist or if they exist
 
 8           but are outdated or contradictory.
 
 9 Giving priority to scientific evidence shall not mean that
 
10 coverage of existing interventions shall be denied in the absence
 
11 of conclusive scientific evidence.  Existing interventions may
 
12 meet the definition of medical necessity in the absence of
 
13 scientific evidence if there is a strong conviction of
 
14 effectiveness and benefit expressed through up-to-date and
 
15 consistent professional standards of care, or in the absence of
 
16 such standards, convincing expert opinion.
 
17      "Health outcomes" means outcomes that affect health status
 
18 as measured by the length or quality of a patient's life,
 
19 primarily as perceived by the patient. 
 
20      "Medical condition" means a disease, illness, injury,
 
21 genetic or congenital defect, pregnancy, or a biological or
 
22 psychological condition that lies outside the range of normal,
 
23 age-appropriate human variation.
 

 
Page 15                                                    2655
                                     S.B. NO.           S.D. 2
                                                        
                                                        

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

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1      (3)  Medical journals recognized by the Secretary of Health
 
 2           and Human Services under section 1861(t)(2) of the
 
 3           Social Security Act as amended;
 
 4      (4)  Standard reference compendia including the American
 
 5           Hospital Formulary Service-Drug Information, American
 
 6           Medical Association Drug Evaluation, American Dental
 
 7           Association Accepted Dental Therapeutics, and United
 
 8           States Pharmacopoeia-Drug Information;
 
 9      (5)  Findings, studies, or research conducted by or under
 
10           the auspices of federal agencies and nationally
 
11           recognized federal research institutes including but
 
12           not limited to the Federal Agency for Health Care
 
13           Policy and Research, National Institutes for Health,
 
14           National Cancer Institute, National Academy of
 
15           Sciences, Health Care Financing Administration,
 
16           Congressional Office of Technology Assessment, and any
 
17           national board recognized by the National Institutes of
 
18           Health for the purpose of evaluating the medical value
 
19           of health services; and
 
20      (6)  Peer-reviewed abstracts accepted for presentation at
 
21           major medical association meetings.
 
22      "Treat" means to prevent, diagnose, detect, provide medical
 
23 care, or palliate.
 

 
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                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1      "Treating health care provider means a health care provider
 
 2 who has personally evaluated the patient."
 
 3                             PART III
 
 4      SECTION 7.  Statutory material to be repealed is bracketed.
 
 5 New statutory material is underscored.
 
 6      SECTION 8.  This Act shall take effect upon its approval.