Bill 329

                    Current Status

Bill Number:               329
Ratification Number:       316
Act Number                 311
Introducing Body:          Senate
Subject:                   Regulation of utilization reviews and
                           private review agents in regard to health
                           care

(A311, R316, S329)

AN ACT TO AMEND TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INSURANCE BY ADDING CHAPTER 70 SO AS TO PROVIDE FOR THE REGULATION OF "UTILIZATION REVIEWS" AND "PRIVATE REVIEW AGENTS" IN REGARD TO HEALTH CARE SERVICES GIVEN OR PROPOSED TO BE GIVEN TO A PATIENT OR A GROUP OF PATIENTS.

Be it enacted by the General Assembly of the State of South Carolina:

Purpose of act

SECTION 1. The purpose of this act is to:

(1) promote the delivery of quality health care in a cost effective manner;

(2) foster greater coordination between providers and payers conducting utilization review activities;

(3) improve communications and knowledge of benefits among all parties concerned before expenses are incurred; and

(4) ensure that private review agents maintain the confidentiality of medical records in accordance with applicable laws.

Utilization reviews and private review agents

SECTION 2. Title 38 of the 1976 Code is amended by adding:

Section 38-70-10. As used in this chapter:

(1) 'Utilization review' means a system for reviewing the necessary, appropriate, and efficient allocation of health care resources and services given or proposed to be given to a patient or group of patients.

(2) 'Private review agent' means a person performing utilization reviews who is either under contract with or acting on behalf of, but not employed by:

(a) a South Carolina business entity;

(b) the State of South Carolina;

(c) a hospital; or

(d) a third party that provides or administers health care benefits to citizens of this State. These third parties include but are not limited to:

(i) a health maintenance organization to which this chapter applies; or

(ii) a health insurer, hospital service corporation, or preferred provider organization to which this chapter applies offering health benefits in this State.

(3) 'Utilization review program' means an overview of the activities performed by the private review agent.

(4) 'Commissioner' means the Chief Insurance Commissioner of South Carolina.

(5) 'Certificate' means a renewable certificate of registration granted by the commissioner to a private review agent, authorizing the agent to perform utilization review activities in this State for two years. This certificate is not transferable.

Section 38-70-15. This chapter does not apply to insurance companies and health maintenance organizations licensed and regulated by the South Carolina Department of Insurance.

Section 38-70-20. (A) No private review agent may conduct utilization reviews in this State unless the commissioner has granted the private review agent a certificate to perform these activities. The commissioner, in his discretion, may approve or deny certificate applications. However, private review agents conducting utilization review activities on the effective date of this chapter have ninety days from the effective date to submit an application to the commissioner, and the commissioner shall act upon the applications within six months of the date of receipt of the application, during which time the private review agent may continue to conduct utilization review activities, subject to the jurisdiction of the commissioner.

(B) An applicant for a certificate shall pay the commissioner the application fee as provided in Section 38-70-50 and shall submit an application to the commissioner on forms and with any supporting documentation that the commissioner requires. The application must contain information regarding the utilization review programs to be conducted by the applicant which must meet the requirements contained in subsection (C) below.

(C) A utilization review program of the applicant must meet the following minimum standards:

(1) Notification of an adverse decision by the utilization review agent must be provided to the insured or other party designated by the insured within five business days.

(2) All utilization review agents shall maintain a procedure by which insured or providers may seek reconsideration of appeal of determinations of the utilization review agent.

(3) A representative of the utilization review agent must be accessible by telephone to insureds or providers in South Carolina, at least forty hours each week during normal business hours.

(4) The type and qualification of the personnel either employed or under contract to perform the utilization reviews must be included in the utilization review program information submitted to the commissioner.

(5) A copy of the materials designed to inform applicable patients of the requirements of the utilization plan and the responsibilities and rights of patients under the plan must be provided interested parties upon request; and

(6) An acknowledgment that all applicable state and federal laws to protect the confidentiality of individual medical records are followed.

Section 38-70-30. A certificate must be renewed on the second anniversary of its effective date and is considered to be approved upon payment of the fee unless the commissioner takes action to withdraw or cancel the certificate.

Section 38-70-40. (A) The commissioner may conduct periodic reviews of the operations of private review agents in this State to ensure that they continue to meet the specifications outlined in this chapter and any applicable regulations which may be promulgated by the commissioner. The commissioner may perform periodic telephone audits of private review agents authorized to conduct business in this State, to determine if the agents are reasonably accessible.

(B) Within ninety days upon receipt of a complaint from a licensed health care provider, the commissioner may investigate the complaint, including holding hearings and taking testimony or other appropriate actions, and shall present a written response to the complainant and the private review agent named. This response must include the following:

(1) a statement of the original complaint;

(2) a determination of findings of the commissioner;

(3) corrective actions, if any, on the part of the private review agent which the commissioner finds appropriate; and

(4) a time frame in which any corrective actions are to be completed.

(C) The commissioner is authorized to take appropriate action against a private review agent who fails to meet the standards of this chapter or of any applicable regulations promulgated by the commissioner, or who fails to respond in a timely fashion to corrective actions ordered by the commissioner. The commissioner may impose an administrative fine not to exceed one thousand dollars for each violation or may deny, suspend, or revoke the certificate of the private review agent.

(D) The commissioner may also deny, suspend, or revoke a certificate if, upon review, the commissioner finds that the private review agent does not:

(1) have a utilization review program that meets the requirements of subsection (C) of Section 38-70-20;

(2) have available the services of sufficient numbers of registered nurses, medical records technicians, or similarly qualified persons supported and supervised by appropriate physicians to carry out its utilization review activities;

(3) meet any applicable regulations the commissioner promulgates under this chapter relating to the qualifications of private review agents or the performance of utilization review;

(4) remain accessible to patients and providers.

(E) Before taking the actions authorized by this section to deny, suspend, or revoke the certificate of a private review agent, the commissioner shall provide the private review agent with reasonable time to supply additional information demonstrating compliance with the requirements of this chapter and the opportunity to request a hearing. If a private review agent requests a hearing, the commissioner shall send a hearing notice to the involved parties by certified mail, return receipt requested, at least thirty days before the hearing. The commissioner shall hold the hearing in accordance with the provisions of Chapter 3 of this title, and the State Administrative Procedures Act.

Section 38-70-50. (A) Every private review agent, before transacting any business in this State, shall pay an application fee of not more than four hundred dollars, and an annual registration fee of not more than four hundred dollars to the commissioner by July first of each year. The certificate year runs from July first to the following June thirtieth.

(B) The commissioner shall promulgate regulations necessary to establish these registration and application fees.

Section 38-70-60. The commissioner, after consultation with payers, providers, utilization review agents, the Department of Health and Environmental Control and other interested parties, shall promulgate regulations to implement and enforce the requirements of this chapter in accordance with the State Administrative Procedures Act."

Time effective

SECTION 3. This act takes effect upon approval by the Governor.

Approved the 31st day of January, 1990.