Act 98/Diabetes Mandate Act 68/Quality Health Care Accountability and Protection Act Act 150/Mental Health Mandate Physician Collective Bargaining

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1 Health Care Law/Legislation Federal and state governments continue to enact legislation that directly impacts the managed care industry and the delivery of the nation s health care. The information below is designed to better inform you about current legislation and laws that affect your health care benefits. For additional information on health care laws and legislation, visit our Resources section further below. Federal Legislation and Laws Health Insurance Portability and Accountability Act (HIPAA) Women s Health & Cancer Rights Act of 1998 Patient Bill of Rights/Health Plan Liability Gramm-Leach-Bliley Act (GLBA) Pennsylvania Legislation and Laws Act 98/Diabetes Mandate Act 68/Quality Health Care Accountability and Protection Act Act 150/Mental Health Mandate Physician Collective Bargaining Ohio Legislation and Laws Ohio Patient Protection Act Resources For additional details on managed care legislation and laws, please visit the following websites. phc4.org What is HIPAA? The Health Insurance Portability and Accountability Act (HIPAA) was enacted in August 1996 as the most comprehensive federal regulation of health plans to date. The Act and its related regulations established certain federal portability requirements for all group health plans, non-discrimination requirements, and restricted preexisting condition exclusion limitations.

2 HIPAA also included administrative simplification provisions designed to improve the efficiency of the health care industry and to reduce administrative costs by adopting and promoting the use of standardized, electronic transmissions of administrative, and financial information. In addition, a set of privacy and security rules will govern how personally identifiable health information may be obtained, used, and protected. HIPAA will have a significant impact on health plans since the use of personal health information, or PHI, is the cornerstone of health care operations. The HIPAA privacy rules provide specific requirements for covered entities to follow. Covered entities are health care providers, health plans, and health care clearinghouses. The privacy rules allow the use and disclosure of protected health information for payment, treatment, and health care operations, and certain other purposes required by law. Covered entities are required to obtain specific authorizations for other uses and disclosures. Health plans are required to have their business associates (companies that contract with health plans to perform services on its behalf) sign contracts that require them to maintain the confidentiality of the information they receive. Covered entities also have an obligation to inform a patient/member of how their protected health information may be used or shared. The final standards governing electronic transactions under HIPAA were finalized and became effective in 2000, and health plans must be in compliance with these standards by October The privacy rule became effective April 14, 2001, and health plans are required to be in compliance with these rules by April The final rule for security is still being developed by DHHS. For more information about HIPAA, visit the following websites below: Department of Health and Human Services Administrative Simplification website Center for Medicare and Medicaid Services website American Hospital Association website Women's Health & Cancer Rights Act of 1998

3 The Women s Health and Cancer Rights Act ( WHCRA ) is a federal law that requires most insurers, HMOs, or group-sponsored health plans that provide benefits for mastectomies to also cover reconstructive surgery and protheses after a mastectomy. In particular, the law requires that if a health plan covers mastectomies and if a member chooses breast reconstruction after the mastectomy, benefits must also be provided for: Reconstruction of the affected breast; Surgery and reconstruction of the other breast to produce a symmetrical appearance; Prostheses; and Treatment of physical complications at all stages of the mastectomy, including lymphedemas. This coverage is provided in consultation with a doctor. If applicable, the coverage is subject to the same annual deductibles and coinsurance provisions as those established for other plan benefits. HealthAmerica plans already provide coverage required by this law. However, certain government-sponsored plans, church plans, CHAMPUS programs, and Medicare-related programs are exempt from the requirements of the WHCRA. -- Patient Bill of Rights/Health Plan Liability What is the issue? Should individuals enrolled in managed care plans be able to sue their health plan for damages which result when a health care plan does not approve coverage for a requested service? Federal legislation propoes to provide members with the right to sue their health plan in these instances. Pennsylvania law already provides a solution Act 68, 1998 (the "Quality Health Care Accountability and Protection Act" which became effective January 1, 1999) provides a clearly defined internal and independent, external

4 grievance process for Pennsylvania consumers and providers. Act 68 gives consumers or providers the right to appeal health care service denials based on medical necessity to a qualified independent medical reviewer selected by the Department of Health. There is a 60-day time limit on the external grievance process as well as an expedited process (48 hours) for urgent medical conditions. The grievance processes in Act 68 provide a more timely, fair and cost efficient dispute resolution for patients, providers, employers and health plans than an expansion of health plan liability. How will litigation impact health care quality? Instead of strengthening the relationship between providers and managed care plans, health plan liability would create a highly adversarial provider/health plan relationship. Health plans will be forced to provide coverage for unnecessary services that may not benefit and may even be harmful to patients in order to avoid costly litigation. Increased litigation will undermine the activities which have made health plans successful at delivering affordable, high quality care. Those activities include quality assurance programs, utilization management, provider credentialing, and provider payment incentives which reward delivery of quality care. Litigation does not provide equitable solutions as evidenced by the current medical malpractice system which is arbitrary and costly. What will be the cost impact? Enactment of health plan liability would have a detrimental impact on consumers and purchasers of health care services. Prohibiting health plans from conducting utilization review and other activities designed to determine the medical appropriateness of requested services will raise the cost of health care for the nearly 5 million Pennsylvanians currently enrolled in managed care plans. When the cost of health insurance increases as a result of legislative mandates, the cost is passed on to health care purchasers whether they be employers or public purchasers such as the Commonwealth. Employers provide health care benefits on a voluntary basis. Increased premium costs associated with liability will require business owners to carefully weigh the impact of offering health benefits. Such increases may result in more employee cost-sharing, elimination of coverage for employee dependents or the employer may drop coverage altogether. Such mandates most adversely impact small employers and individuals who pay for their health care. Potential impacts of health plan liability include:

5 According to an August, 1998 U.S. Chamber of Commerce survey, two-thirds of small businesses would no longer provide health insurance coverage for their employees if a health plan liability provision is passed by the U.S. Congress. Increased health care premiums of between 2.7 percent to 8.6 percent, according to a KPMG Peat Marwick's Barents Group report. If employers absorb the 2.7 percent to 8.6 percent increase in premiums, Barents projects a potential wage loss of up to $1,512 per covered household from as wages are reduced to offset higher premiums. If health care premium increases are shared by employers and employees, the following cost impacts are projected: An increase in employment-based spending by up to $123.1 billion for private firms, households, and state and federal governments from A per covered household increase of up to $346 from The loss of up to 239,500 jobs in For additional information on this topic, visit the American Association of Health Plans website. Gramm-Leach-Bliley Act (GLBA) The Gramm-Leach-Bliley Act (GLBA) was signed into law on November 12, In addition to allowing banks and financial holding companies to engage in other lines of business, the Act also requires these financial institutions (including insurance companies) to disclose to customers their policies and practices for protecting the privacy of non-public personal information (NPPI). How will GLBA be regulated? Regulation of the insurance industry has been left to state insurance departments and, for this reason, requirements may vary from state to state. However, most states, regardless of the timing of their specific regulations, have committed to implementing

6 GLBA's requirements by July 1, Additionally, many states, including Pennsylvania, are closely following the model regulations developed by the National Association of Insurance Commissioners (NAIC). What are HealthAmerica and HealthAssurance doing to address GLBA requirements? HealthAmerica has issued an initial Notice of Privacy Practices that is available at the Privacy Practices section of this website. A notice will be provided by our health plans on an annual basis or more often if revised. At this time, because HealthAmerica and HealthAssurance only disclose NPPI in the course of transacting their business, and as otherwise permitted by law, no opt out notice is required. Act 98/Diabetes Mandate In October 1998, the Pennsylvania Act 98 of 1998 was enacted. It requires insurers and HMOs to cover drugs, equipment, supplies, and outpatient self-management training (including medical nutrition therapy) for the treatment of insulin-dependent diabetes, insulinusing diabetes, gestational diabetes, and non-insulin using diabetes. Equipment and supplies include: blood glucose monitors, monitor supplies, insulin, injection aids, syringes, insulin infusion devices, pharmacological agents for controlling blood sugar and orthotics. The self-management training must be provided under the supervision of a licensed health care professional with expertise in diabetes. Coverage is subject to applicable annual deductibles, copayments, and coinsurance. The law took effect on February 13, 1999.

7 Act 68/Quality Health Care Accountability On January 1, 1999, Pennsylvania Act 68 took effect to guarantee consumers certain protections and assurances with regard to health care quality, accountability, and protection. Act 68 applies to all HMO and POS plans and contains the following: Utilization Review Entities conducting utilization review must be certified by the Pennsylvania Department of Health. Utilization review response standards for telephone inquiries, prospective reviews, concurrent reviews, and retrospective reviews. Utilization review decisions must be communicated in writing. Utilization review denials must be made by a licensed physician or psychologist. Claims Clean claims must be paid within 45 days. Claims interest penalty of 10% per annum. Appeals (Complaints & Grievances) Members, or providers with the member's consent, have the right to file appeals. Grievances relate to medical necessity determinations and complaints relate to all other issues. Physicians must be involved in grievance reviews. Two levels of internal review by the health plan are required, excluding those individuals involved in the original decision being disputed. Members have the opportunity to attend a second level internal review and provide information. External appeals are available (complaints go to the Department of Insurance and grievances go to an independent review organization assigned by the Department of Health). Emergencies

8 The standard for determining what is an emergency must be based on the "prudent layperson" language standard. Emergencies cannot require referrals or authorizations. Emergency procedures must also be covered at nonparticipating providers. Health plans must consider symptoms and services provided when evaluating claims for payment. Continuity of Care If a participating provider leaves the network (other than for cause), members can continue with ongoing treatment for 60 days (or through post-partum care for women in 2nd or 3rd trimester of pregnancy). New members can continue ongoing treatment with nonparticipating providers for 60 days (or through post-partum care for women in 2nd or 3rd trimester of pregnancy). Credentialing Credentialing requirements established for more than just health care providers. No participation discrimination against providers for 1) high volumes of high-cost patients, 2) refusal to provide services on moral/religious grounds, or 3) discussing all treatment options with patients. Health Plan Literature Literature and advertising must disclose that a health plan may not cover all a members' health care expenses and provide a contact number for questions regarding coverage. Membership certificates must provide full disclosure of certain information including benefits, prior authorization requirements, member financial responsibilities, member rights, emergency coverage, procedures for selecting and changing physicians, standing referrals to specialists, and services for members speaking different languages.

9 Act 150/Mental Health Mandate In December 1998, Governor Ridge signed into law Pennsylvania Act 150 of 1998, which contains a mental health mandate. This law took effect on April 20, This law pertains to groups with 50 or more employees only and mandates the following: Coverage of at least 30 days of inpatient days and 60 outpatient visits annually for a serious mental illness, defined in the law as: schizophrenia, bipolar disorder, obsessive-compulsive disorder, major depressive disorder, panic disorder, anorexia nervosa, bulimia nervosa, schizo-affective disorder, and dilusional disorder. That there can be no difference between serious mental illnesses and any other illnesses in the annual or lifetime dollar limits. That cost-sharing arragements, such as deductibles and copayments, cannot prohibit an individual's access to care. The ability to swap one inpatient mental health day for two outpatient mental health visits. Ohio Patient Protection Act The Ohio Patient Protection Act applies to all health insurance carriers and includes the following provisions:

10 24-hour Access to Care Direct Access to OB/GYN Services Member Disclosure Effective October 1999 ID cards and other health plan documents must include a toll-free numbers where members can get information about access to covered benefits and their appeal rights. Health plans must disclose to members the availability of a toll-free number, utilization review process and time frames, and internal and external appeal rights. Health plans must allow members direct access to OB/GYN services without a referral and with no visit limits. Emergency Services Effective April 2000 Explanation of an emergency must be in "prudent layperson" language to ensure understanding. Emergencies must not require referrals or authorizations. Emergencies must be covered at nonparticipating providers. A member's Certificate of Insurance must document the appropriate use of emergency services, including Internal and External Appeals Process Effective May 2000 The process must contain three levels for appeal (reconsideration, internal review, external review). Appeals can be filed by a member or a provider with the member's consent. Members may request an internal review if utilization review decisions are not timely. Internal reviews must include a "clincial peer."

11 External appeals are available by an independent review organization for medical necessity determinations and to the Department of Insurance for other issues. All internal review processes must be exhausted first and for medical necessity determinations, the service disputed must cost the member greater than $500. ###