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 and adds 3 members.  (CD1)

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


                     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
 
20 completed within seventy-two hours of receipt of the request for
 

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

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

 
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 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      "Internal review" means the review under section 432E-5 of
 
 8 an enrollee's complaint by a managed care plan.
 
 9      "Medical necessity" means a health intervention as defined
 
10 in section 432E-  ."
 
11      SECTION 3.  Section 432E-5, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "432E-5 Complaints and appeals procedure for enrollees.
 
14 (a)  A managed care plan with enrollees in this State shall
 
15 establish and maintain a procedure to provide for the resolution
 
16 of an enrollee's complaints and appeals.  The procedure shall
 
17 provide for expedited appeals under section 432E-  .  The
 
18 definition of medical necessity in section 432E-   shall apply in
 
19 a managed care plan's complaints and appeals procedures.
 
20      (b)  The managed care plan shall at all times [shall] make
 
21 available its complaints and appeals procedures.  The complaints
 
22 and appeals procedures shall be reasonably understandable to the
 
23 average layperson and shall be provided in [languages] a language
 

 
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 1 other than English upon request.
 
 2      (c)  A managed care plan shall decide any expedited appeal
 
 3 as soon as possible after receipt of the complaint, taking into
 
 4 account the medical exigencies of the case, but not later than
 
 5 seventy-two hours after receipt of the request for expedited
 
 6 appeal.
 
 7     [(c)] (d)  A managed care plan shall send notice of its final
 
 8 internal determination within forty-five days of the submission
 
 9 of the complaint to the enrollee, the enrollee's appointed
 
10 representative, if applicable, the enrollee's treating provider,
 
11 and the commissioner.  The notice shall include the following
 
12 information regarding the enrollee's rights and procedures [under
 
13 section 432E-6.]:
 
14      (1)  The enrollee's right to request an external review;
 
15      (2)  The sixty-day deadline for requesting the external
 
16           review;
 
17      (3)  Instructions on how to request an external review; and
 
18      (4)  Where to submit the request for an external review."
 
19      SECTION 4.  Section 432E-6, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "432E-6 [Appeals to the commissioner.] External review
 
22 procedure.  (a)  After exhausting all internal complaint and
 
23 appeal procedures available, an enrollee, or the enrollee's
 

 
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 1 treating provider or appointed representative, may [appeal an
 
 2 adverse decision] file a request for external review of a managed
 
 3 care [plan] plan's final internal determination to a three-member
 
 4 review panel appointed by the commissioner composed of a
 
 5 representative from a [health] managed care plan not involved in
 
 6 the complaint, a provider licensed to practice and practicing
 
 7 medicine in Hawaii not involved in the complaint, and the
 
 8 commissioner or the commissioner's designee in the following
 
 9 manner:
 
10      (1)  The enrollee shall submit a request for external review
 
11           to the commissioner within [thirty] sixty  days from
 
12           the date of the final internal determination by the
 
13           managed care plan;
 
14      (2)  The commissioner may retain:
 
15           (A)  Without regard to chapters 76 and 77, an
 
16                independent medical expert trained in the field of
 
17                medicine most appropriately related to the matter
 
18                under review.  Presentation of evidence for this
 
19                purpose shall be exempt from section 91-9(g); and
 
20           (B)  The services of an independent review organization
 
21                from an approved list maintained by the
 
22                commissioner;
 
23      (3)  Within seven days after receipt of the request for
 

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

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

 
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 1                two hours after receipt of the request for
 
 2                external review;
 
 3     [(4)  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      (5)] (6)  After considering the enrollee's complaint, the
 
 9           managed care plan's response, and any affidavits filed
 
10           by the parties, the commissioner may dismiss the
 
11           [appeal] request for external review if it is
 
12           determined that the [appeal] request is frivolous or
 
13           without merit; and
 
14     [(6)] (7)  The review panel shall review every [adverse]
 
15           final internal determination to determine whether [or
 
16           not] the managed care plan involved acted reasonably
 
17           [and with sound medical judgment].  The review panel
 
18           and the commissioner or the commissioner's designee
 
19           shall consider [the]:
 
20           (A)  The terms of the agreement of the enrollee's
 
21                insurance policy, evidence of coverage, or similar
 
22                document;
 
23           (B)  Whether the medical director properly applied the
 

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

 
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 1           limited to the developer or manufacturer of the
 
 2           principal drug, device, procedure, or other therapy at
 
 3           issue.
 
 4     [(c)] (d)  Members of the review panel shall be granted
 
 5 immunity from liability and damages relating to their duties
 
 6 under this section.
 
 7     [(d)] (e)  An enrollee may be allowed, at the commissioner's
 
 8 discretion, an award of a reasonable sum for attorney's fees and
 
 9 reasonable costs [of suit in an action brought against the
 
10 managed care plan.] incurred in connection with the external
 
11 review under this section, unless the commissioner in an
 
12 administrative proceeding determines that the appeal was
 
13 unreasonable, fraudulent, excessive, or frivolous.
 
14      (f)  Disclosure of an enrollee's protected health
 
15 information shall be limited to disclosure for purposes relating
 
16 to the external review."
 
17      SECTION 5.  Section 5, Act 178, Session Laws of Hawaii 1998,
 
18 is amended by amending subsection (c) to read as follows:
 
19      "(c)  The task force shall be [comprised] composed of
 
20 interested parties with the total membership of the task force
 
21 between twelve and [twenty] twenty-seven members.  The insurance
 
22 commissioner or the commissioner's designated representative[,]
 
23 shall be a member and serve as the chair of the task force and
 

 
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 1 appoint [it] its remaining members.  At least one representative
 
 2 from each of the following shall be appointed as a member;
 
 3 members of other groups may also be appointed:
 
 4      (1)  The department of health;
 
 5      (2)  The department of labor and industrial relations,
 
 6           disability compensation division; 
 
 7      (3)  A health insurance company that provides accident and
 
 8           sickness policies under chapter 431, article 10A,
 
 9           Hawaii Revised Statutes;
 
10      (4)  A mutual benefit society that provides health insurance
 
11           under chapter 432, Hawaii Revised Statutes;
 
12      (5)  A health maintenance organization that holds a
 
13           certificate of authority under chapter 432D, Hawaii
 
14           Revised Statutes;
 
15      (6)  The American Association of Retired Persons;
 
16      (7)  The Hawaii Coalition for Health;
 
17      (8)  The Hawai'i Business Health Coalition;
 
18      (9)  The Legal Aid Society of Hawaii;
 
19     (10)  The Hawaii Medical Association;
 
20     (11)  An organization that represents nurses; [and]
 
21     (12)  A hospital or an organization that represents
 
22           hospitals[.]; and
 
23     (13)  Hawaii Psychiatric Medical Association;
 

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

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

 
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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 licensed health care provider and the
 
 6 health plan's medical director or physician designee do not agree
 
 7 on whether a health intervention is medically necessary, a
 
 8 reviewing body, whether internal to the plan or external, shall
 
 9 give consideration to, but shall not be bound by, the
 
10 recommendations of the treating licensed health care provider and
 
11 the health plan's medical director or physician designee.
 
12      (d)  For the purposes of this section:
 
13      "Cost-effective" means a health intervention where the
 
14 benefits and harms relative to the costs represent an
 
15 economically efficient use of resources for patients with the
 
16 medical condition being treated through the health intervention;
 
17 provided that the characteristics of the individual patient shall
 
18 be determinative when applying this criterion to an individual
 
19 case.
 
20      "Effective" means a health intervention that may reasonably
 
21 be expected to produce the intended results and to have expected
 
22 benefits that outweigh potential harmful effects.
 
23      "Health intervention" means an item or service delivered or
 

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

 
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 1 measured by the length or quality of a patient's life, primarily
 
 2 as perceived by the patient.
 
 3      "Medical condition" means a disease, illness, injury,
 
 4 genetic or congenital defect, pregnancy, or a biological or
 
 5 psychological condition that lies outside the range of normal,
 
 6 age-appropriate human variation.
 
 7      "Physician designee" means a physician or other health care
 
 8 practitioner designated to assist in the decision making process
 
 9 who has training and credentials at least equal to the treating
 
10 licensed health care provider.
 
11      "Scientific evidence" means controlled clinical trials that
 
12 either directly or indirectly demonstrate the effect of the
 
13 intervention on health outcomes.  If controlled clinical trials
 
14 are not available, observational studies that demonstrate a
 
15 causal relationship between the intervention and the health
 
16 outcomes may be used.  Partially controlled observational studies
 
17 and uncontrolled clinical series may be suggestive, but do not by
 
18 themselves demonstrate a causal relationship unless the magnitude
 
19 of the effect observed exceeds anything that could be explained
 
20 either by the natural history of the medical condition or
 
21 potential experimental biases.  Scientific evidence may be found
 
22 in the following and similar sources:
 
23      (1)  Peer-reviewed scientific studies published in or
 

 
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 1           accepted for publication by medical journals that meet
 
 2           nationally recognized requirements for scientific
 
 3           manuscripts and that submit most of their published
 
 4           articles for review by experts who are not part of the
 
 5           editorial staff;
 
 6      (2)  Peer-reviewed literature, biomedical compendia, and
 
 7           other medical literature that meet the criteria of the
 
 8           National Institute of Health's National Library of
 
 9           Medicine for indexing in Index Medicus, Excerpta
 
10           Medicus (EMBASE), Medline, and MEDLARS database Health
 
11           Services Technology Assessment Research (HSTAR);
 
12      (3)  Medical journals recognized by the Secretary of Health
 
13           and Human Services under section 1861(t)(2) of the
 
14           Social Security Act, as amended;
 
15      (4)  Standard reference compendia including the American
 
16           Hospital Formulary Service-Drug Information, American
 
17           Medical Association Drug Evaluation, American Dental
 
18           Association Accepted Dental Therapeutics, and United
 
19           States Pharmacopoeia-Drug Information;
 
20      (5)  Findings, studies, or research conducted by or under
 
21           the auspices of federal agencies and nationally
 
22           recognized federal research institutes including but
 
23           not limited to the Federal Agency for Health Care
 

 
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 1           Policy and Research, National Institutes for Health,
 
 2           National Cancer Institute, National Academy of
 
 3           Sciences, Health Care Financing Administration,
 
 4           Congressional Office of Technology Assessment, and any
 
 5           national board recognized by the National Institutes of
 
 6           Health for the purpose of evaluating the medical value
 
 7           of health services; and
 
 8      (6)  Peer-reviewed abstracts accepted for presentation at
 
 9           major medical association meetings.
 
10      "Treat" means to prevent, diagnose, detect, provide medical
 
11 care, or palliate.
 
12      "Treating licensed health care provider" means a licensed
 
13 health care provider who has personally evaluated the patient."
 
14                             PART III
 
15      SECTION 8.  Statutory material to be repealed is bracketed.
 
16 New statutory material is underscored.
 
17      SECTION 9.  This Act shall take effect upon its approval.