S 10 Session 112 (1997-1998)
S 0010 General Bill, By McConnell, Courtney, Giese, Hayes, Jackson, Matthews,
Passailaigue, Patterson and Reese
A BILL TO AMEND CHAPTER 33, TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY
ADDING ARTICLE 3 SO AS TO ENACT THE SOUTH CAROLINA PATIENTS INSURANCE AND
BENEFITS PROTECTION ACT WHICH REQUIRES CERTIFICATION TO OFFER A MANAGED CARE
PLAN, WHICH ESTABLISHES CERTIFICATION STANDARDS, AND WHICH FURTHER PROVIDES
CERTAIN REQUIREMENTS AND PROHIBITIONS THAT MANAGED CARE PLANS MUST COMPLY WITH
IN ORDER TO BE CERTIFIED; AND TO DESIGNATE SECTIONS 38-33-10 THROUGH 38-33-310
AS ARTICLE 1, CHAPTER 33, TITLE 38 TO BE ENTITLED GENERAL PROVISIONS.
01/14/97 Senate Introduced and read first time SJ-89
01/14/97 Senate Referred to Committee on Banking and Insurance SJ-89
A BILL
TO AMEND CHAPTER 33, TITLE 38, CODE OF LAWS OF
SOUTH CAROLINA, 1976, BY ADDING ARTICLE 3 SO AS TO
ENACT THE SOUTH CAROLINA PATIENTS' INSURANCE
AND BENEFITS PROTECTION ACT WHICH REQUIRES
CERTIFICATION TO OFFER A MANAGED CARE PLAN,
WHICH ESTABLISHES CERTIFICATION STANDARDS, AND
WHICH FURTHER PROVIDES CERTAIN REQUIREMENTS
AND PROHIBITIONS THAT MANAGED CARE PLANS MUST
COMPLY WITH IN ORDER TO BE CERTIFIED; AND TO
DESIGNATE SECTIONS 38-33-10 THROUGH 38-33-310 AS
ARTICLE 1, CHAPTER 33, TITLE 38 TO BE ENTITLED
"GENERAL PROVISIONS".
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Chapter 33, Title 38 of the 1976 Code is amended by
adding:
"Article 3
South Carolina Patients' Insurance and Benefits Protection
Section 38-33-605. This article may be cited as the 'South
Carolina Patients' Insurance and Benefits Protection Act'.
Section 38-33-610. (A) The General Assembly finds that it is a
vital government concern that the citizens of this State have access to
quality health care services and that informed consumers will be
better able to identify and select plans that offer quality health care
services if they are provided specific information before they enroll
in health plans. As the health care market becomes increasingly
dominated by health care plans that use managed care techniques that
include decisions as to the appropriateness of care, the General
Assembly finds that it is a vital government function to protect
patients from managed care practices which have the effect of
denying or limiting appropriate care. The General Assembly further
finds it is the public policy of this State that physicians and health
care providers be encouraged to advocate for medically appropriate
health care for their patients.
(B) To achieve these ends, the General Assembly declares it
necessary for the director of the Department of Insurance to certify
qualified managed care plans to conduct business in this State for the
director to establish standards for certification.
Section 38-33-615. As used in this article:
(1) 'Director' means the director of the Department of Insurance.
(2) 'Emergency services' or 'emergency care' means those health
care services that are provided for a condition of recent onset and
sufficient severity including, but not limited to, severe pain that
would lead a prudent layperson, possessing an average knowledge of
medicine and health to believe that the condition, sickness, or injury
is of a nature that failure to obtain immediate medical care could
result in:
(a) placing the patient's health in serious jeopardy;
(b) serious impairment to bodily functions; or
(c) serious dysfunction of a bodily organ or part.
(3) 'Enrollee' means an individual who has elected to contract for
or participate in a managed care plan for that individual or for that
individual and that individual's eligible dependents.
(4) 'Health care provider' or 'provider' means a physician, dentist,
podiatrist, pharmacist, optometrist, psychologist, clinical social
worker, advanced practice nurse, registered optician, licensed
professional counselor, physical therapist, marriage and family
therapist, chiropractor, occupational therapist, speech language
pathologist, audiologist, dietitian, physician's assistant, or durable
medical equipment supplier.
(5) 'Limited utilization incentive plan' means a compensation
arrangement between the plan and a health care provider group that
has the effect of reducing or limiting services to patients.
(6) 'Managed care contractor' means a person who:
(a) establishes, operates, or maintains a network of participating
providers;
(b) conducts or arranges for utilization review activities;
(c) contracts with an insurance company, a hospital or medical
service plan, an employer, an employee organization, or any other
entity providing coverage for health care services to operate a
managed care plan.
(7) 'Managed care entity' includes an insurance company, hospital
or medical service plan, hospital, health care provider network,
physician hospital organization, health care provider, health
maintenance organization, health care corporation, employer or
employee organization, or managed care contractor that offers a
managed care plan.
(8) 'Managed care plan' means a major medical, hospitalization,
or dental plan that provides for the financing and delivery of health
care services to persons enrolled in the plan through:
(a) arrangements with selected providers to furnish health care
services;
(b) explicit standards for the selection of participating providers;
(c) cost savings for persons enrolled in the plan to use the
participating providers and procedures provided for by the plan.
(9) 'Out of network' or 'point of service' refers to health care items
or services provided to an enrollee by providers who do not belong
to the provider network in the managed care plant.
(10) 'Patient' means a person who seeks or receives health care
services under a managed care plan.
(11) 'Qualified managed care plan' means a managed care plan that
the director certifies as meeting the requirements of this article.
Section 38-33-620. (A) In addition to other requirements of law
before offering a managed care plan to a resident in this State, a
managed care entity first must obtain a certificate from the director
indicating that the managed care plan meets the requirements of this
article. The director may impose costs established in regulation on
managed care entities as the director considers necessary to carry out
the provisions of this article.
(B) The director shall establish procedures for the periodic review
and recertification of qualified managed care plans.
(C) The director shall terminate the certification of a qualified
managed care plan, revoke or suspend the license of a managed care
entity, or impose a monetary penalty if the director determines that
the plan no longer meets the applicable requirements for certification
or violates a provision of this article. Before effecting a sanction, the
director shall provide the plan with notice and opportunity for a
hearing on the proposed sanctions. Nothing in this section may be
construed to preclude other remedies at law.
(D) The director shall establish a process for certification through
alternative methods providing that:
(1) an eligible organization, as defined in Section 1876(b) of the
federal Social Security Act, is deemed to meet the requirements of
subsections (A) and (B) for certification as a qualified managed care
plan; or
(2) if the director finds that a national accreditation body has
established requirements for accreditation of a managed care entity
which offers a managed care plan that are at least equivalent to the
requirements established under this article and that the eligible
organization and its plans comply with the requirements of the
national accreditation body, then the organization and its plans must
be deemed to meet the requirements of subsections (A) and (B).
Section 38-33-625. The director shall establish standards for the
certification of qualified managed care plans that conduct business in
this State. The standards must require:
(1) a managed care entity to disclose to enrollees and
prospective enrollees who inquire as individuals into a plan or plans
offered by the managed care entity the information required by this
item. In the case of an employer negotiating for a health care plan on
behalf of his employees, sufficient copies of disclosure information
must be made available to employees upon request. Disclosure of
information under this item must be readable, understandable, and on
a standardized form containing information regarding all of the
following for each plan in effect:
(a) the health care services or other benefits under the plan
offered as well as limitations on services, kinds of services, benefits,
or kinds of benefits to be provided;
(b) rules regarding copayments, prior authorization, or review
requirements including, but not limited to, preauthorization review,
concurrent review, postservice review, or postpayment review that
could result in the patient's being denied coverage or provision of a
particular service;
(c) potential liability for cost sharing for out of network
services including, but not limited to, providers, drugs, and devices
or surgical procedures that are not on a list or a formulary;
(d) the financial obligations of the enrollee, including
premiums, deductibles, copayments, and maximum limits on
out-of-pocket expenses for items and services, both in and out of
network;
(e) the number, mix, and distribution of participating
providers. An enrollee or a participating provider, an enrollee, or a
prospective enrollee must be entitled to a list of individual
participating providers upon request;
(f) enrolled rights and responsibilities, including an
explanation of the grievance process provided under this article;
(g) an explanation of what constitutes an emergency situation
and what constitutes emergency services;
(h) the existence of any limited utilization incentive plans;
(i) the existence of restrictive formularies or prior approval
requirements for prescription drugs. An enrolled or a prospective
enrolled is entitled, upon request, to a description of specific drug and
therapeutic class restrictions;
(j) the existence of limitations on choice of health care
providers;
(k) a statement as to where and in what manner additional
information is available;
(l) a statement that a summary of the number, nature, and
outcome results of grievances filed in the previous three years must
be available for inspection. Copies of the summary must be made
available at reasonable costs.
Information required to be disclosed pursuant to this subsection
must be disclosed to each enrolled under this article at the time of
enrollment and at least annually thereafter.
A managed care plan licensed by the Department of Insurance is
deemed to have met the certification requirements of this subsection.
(2) A managed care entity to demonstrate that its plan:
(a) makes benefits available and accessible to each enrolled
electing the managed care plan in the defined service area with
reasonable promptness and in a manner which promotes continuity
in the provision of health care services;
(b) when medically necessary provides health care services
twenty-four hours a day and seven days a week;
(c) provides payment or reimbursement for emergency
services and out-of-area services;
(3) A managed care plan to have arrangements, established in
regulation for an ongoing quality assurance program for health care
service it provides to individuals and the quality assurance program
shall:
(a) provide for a utilization review program;
(b) stress health outcomes;
(c) provide for the establishment of written protocols for
utilization review, based on current standards of the relevant health
care profession;
(d) provide review by physicians and appropriate health care
providers of the process followed in the provision of health care
services;
(e) monitor and evaluate high volume and high risk services
and the care of acute and chronic conditions;
(f) evaluate the continuity and coordination of care that
enrollees receive;
(g) has mechanisms to detect underutilization and over
utilization of services;
(h) establish a grievance procedure which provides the
enrolled with a prompt and meaningful hearing on the issue of denial,
in whole or in part, of a health care treatment or service or claim for
treatment or service. The hearing must be conducted by a panel of
not less than three persons, at least one member of which must be a
physician other than the medical director of the plan and at least one
member of which must be a health care provider competent by reason
of training and licensure in the treatment or procedure which has been
denied. The enrolled must be provided prompt notice in writing of
the outcome of the grievance procedure. If the outcome of the
grievance is favorable to the enrolled, appropriate relief must be
granted without delay. If the outcome is adverse to the enrolled, the
notice shall include specific findings related to the care, the policies
and procedures relied upon in making the determination, the
physician's and provider's recommendations, including any
recommendations for alternative procedures or services, and a
description of the procedures, if any, for reconsideration of the
adverse decision.
Section 38-33-630. A managed care plan may not use a financial
incentive program that directly compensates a health care provider
for ordering or providing less than medically necessary and
appropriate care to his patients. Nothing in this section may be
construed to prohibit a managed care entity from using a capitated
payment arrangement consistent with the intent of this section.
Section 38-33-635. (A) A clause in a managed care participating
provider agreement, either express or implied, may not shift legal
responsibility and liability for the acts, omissions, or a combination
of acts and omissions from the managed care entity to the health care
provider and may not require the health care provider to reimburse
the managed care organization for damages, costs, attorney's fees, or
other sums a court may order or may be paid by the managed care
organization by way of settlement of a claim. Each party to a
managed care participating provider agreement is responsible for the
legal consequences and costs of their own acts or omissions, or both,
and is not responsible for the acts or omissions, or both, or the costs
of the other party.
(B) A clause in a managed care participating provider agreement
may not directly or indirectly limit in any way the participating
provider's right to discuss treatment options, method, or accuracy of
utilization review, or any other matter encompassed by the
provider-patient relationship is unlawful.
(C) As used in this section:
(1) 'Managed care participating provider agreement' means a
contract or other legally cognizable obligation in which a health care
provider agrees to provide health care services to a managed care
entity organization or persons eligible to receive health care benefits
through the managed care organization.
(2) 'Participating provider' means a health care provider who
has entered into a managed care participating provider agreement
with a managed care organization.
Section 38-33-640. A managed care plan shall establish
procedures to safeguard the privacy of individually identifiable
patient information and to maintain accurate and timely records for
patients.
Section 38-33-645. A managed care plan shall require that:
(1) if a patient seeks emergency services and if necessary in the
opinion of the emergency health care provider responsible for the
patient's emergency care and treatment and warranted by an
evaluation, the emergency provider may initiate necessary
intervention to stabilize the condition of the patient without seeking
or receiving prospective authorization by the managed care entity or
managed care plan. If in the opinion of the emergency health care
provider a patient's condition has stabilized and the emergency health
care provider certifies that the patient can be transported to another
facility without suffering detrimental consequences or aggravating
the patient's condition, the patient may be relocated to another
facility which will provide continued care and treatment as necessary;
(2) when a managed care plan uses a restrictive formulary for
prescription drugs, the use shall include a written procedure whereby
patients can obtain, without penalty and in a timely fashion, specific
drugs and medications not included in the formulary when the
formulary's:
(a) equivalent has been ineffective in the treatment of the
patient's disease or condition; or
(b) drug causes or is reasonably expect to cause adverse or
harmful reactions in the patient.
Section 38-33-650. Nothing in this article applies to workers'
compensation insurance or benefits."
SECTION 2. Sections 38-33-10 through 38-33-310 of the 1976
Code are designated as Article 1, Chapter 33, Title 38 entitled
"General Provisions".
SECTION 3. This act takes effect July 1, 1997.
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