S*0238(Rat #0097, Act #0058 of 1995)  General Bill, By Leatherman and Elliott
 A Bill to amend Section 38-33-20, as amended, Code of Laws of South Carolina,
 1976, relating to health maintenance organizations and definitions, so as to
 change the meaning of "copayment of deductible"; to amend Section 38-33-80, as
 amended, relating to health maintenance organizations, enrollee's entitlement
 to evidence of coverage, contents of such evidence, discontinuance or
 replacement of coverage, and charges for services, so as to provide that a
 health maintenance organization that issues an HMO contract which requires the
 enrollee to pay a specified percentage of the cost of covered health care
 services shall calculate those copayment and deductibles on the negotiated
 rate or lesser charge of the provider and that nothing in this Section
 precludes a health maintenance organization from issuing a contract which
 contains fixed dollar copayments and deductibles; to amend the 1976 Code by
 adding Section 38-71-241 so as to provide that an insurer that negotiates
 rates with providers for covered health care services under an individual or
 group accident and health insurance policy must provide that percentage
 copayments and deductibles paid by the insured are applied to the negotiated
 rates or lesser charge of that provider and that nothing in this Section
 precludes an insurer from issuing a policy which contains fixed dollar
 copayments and deductibles; to amend Section 38-33-80, as amended, relating to
 health maintenance organizations, enrollee's entitlement to evidence of
 coverage, contents of such evidence, discontinuance or replacement of
 coverage, and charges for services, so as to delete certain language and
 provisions, and provide, among other things, that the Director of the
 Department of Insurance or his designee may disapprove a certain schedule of
 charges if it is determined that the benefits provided in the contracts are
 unreasonable in relation to the charges and that at any time the director or
 his designee, after a public hearing of which at least thirty days' notice has
 been given, may withdraw approval of a schedule of charges previously approved
 or an approved evidence of coverage if he determined that the schedule of
 charges or evidence of coverage no longer meets the standards for approval
 specified in this Section; to amend Section 38-55-20, as amended, relating to
 conduct of insurance business, the requirement that insurers shall do business
 in their own name, and combination policies, so as to delete certain language,
 and provide that an insurer may elect to use a trade name in the conduct of
 its business if the insurer also clearly discloses its proper or corporate
 name on its policies, contracts of insurance, and other documents filed with
 the Department of Insurance; to amend Section 38-55-570, relating to insurance
 fraud and reporting immunity and notification of the Insurance Fraud Division
 of knowledge or belief of false statements or misrepresentations, so as to
 provide that the Department of Insurance may receive and must maintain as
 confidential any documents or information furnished to it by the National
 Association of Insurance Commissioners or insurance departments of other
 states which is classified as confidential by that Association or state,
 permit the South Carolina Department of Insurance to share documents or
 information including confidential documents or information, with the National
 Association of Insurance Commissioners or Insurance departments of other
 states, if the Association or other state agrees to maintain the same level of
 confidentiality as is provided under South Carolina law, and provide that if
 the documents or information received by the South Carolina Department of
 Insurance from the National Association of Insurance Commissioners or the
 insurance departments of other states involve allegations of insurance fraud,
 the documents or information must be forwarded by the South Carolina
 Department of Insurance to the Insurance Fraud Division of the Office of the
 Attorney General; and to amend the 1976 Code by adding Section 38-33-310 so as
 to provide that nothing in Title 38, Chapter 33 (Health Maintenance
 Organizations) may be construed to prevent a health maintenance organization
 from contracting with an out-of-state provider.-amended title

   10/31/94  Senate Prefiled
   10/31/94  Senate Referred to Committee on Banking and Insurance
   01/10/95  Senate Introduced and read first time SJ-82
   01/10/95  Senate Referred to Committee on Banking and Insurance SJ-82
   03/09/95  Senate Committee report: Favorable with amendment
                     Banking and Insurance SJ-14
   03/15/95  Senate Amended SJ-20
   03/15/95  Senate Read second time SJ-20
   03/22/95  Senate Read third time and sent to House SJ-8
   03/23/95  House  Introduced and read first time HJ-6
   03/23/95  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-7
   04/26/95  House  Committee report: Favorable with amendment Labor,
                     Commerce and Industry HJ-8
   05/03/95  House  Amended HJ-65
   05/03/95  House  Read second time HJ-68
   05/04/95  House  Read third time and returned to Senate with
                     amendments HJ-11
   05/18/95  Senate House amendment amended SJ-48
   05/18/95  Senate Returned to House with amendments SJ-48
   05/23/95  House  Concurred in Senate amendment and enrolled HJ-119
   06/06/95         Ratified R 97
   06/12/95         Signed By Governor
   06/12/95         Effective date 120 days after signature
                     (10/10/95), except as otherwise specifically
                     provided in this Act
   08/11/95         Copies available
   08/11/95         Act No. 58

AN ACT TO AMEND SECTION 38-33-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO HEALTH MAINTENANCE ORGANIZATIONS AND DEFINITIONS, SO AS TO CHANGE THE MEANING OF "COPAYMENT OR DEDUCTIBLE"; TO AMEND SECTION 38-33-80, AS AMENDED, RELATING TO HEALTH MAINTENANCE ORGANIZATIONS, ENROLLEE'S ENTITLEMENT TO EVIDENCE OF COVERAGE, CONTENTS OF SUCH EVIDENCE, DISCONTINUANCE OR REPLACEMENT OF COVERAGE, AND CHARGES FOR SERVICES, SO AS TO PROVIDE THAT A HEALTH MAINTENANCE ORGANIZATION THAT ISSUES AN HMO CONTRACT WHICH REQUIRES THE ENROLLEE TO PAY A SPECIFIED PERCENTAGE OF THE COST OF COVERED HEALTH CARE SERVICES SHALL CALCULATE THOSE COPAYMENTS AND DEDUCTIBLES ON THE NEGOTIATED RATE OR LESSER CHARGE OF THE PROVIDER AND THAT NOTHING IN THIS SECTION PRECLUDES A HEALTH MAINTENANCE ORGANIZATION FROM ISSUING A CONTRACT WHICH CONTAINS FIXED DOLLAR COPAYMENTS AND DEDUCTIBLES; TO AMEND THE 1976 CODE BY ADDING SECTION 38-71-241 SO AS TO PROVIDE THAT AN INSURER THAT NEGOTIATES RATES WITH PROVIDERS FOR COVERED HEALTH CARE SERVICES UNDER AN INDIVIDUAL OR GROUP ACCIDENT AND HEALTH INSURANCE POLICY MUST PROVIDE THAT PERCENTAGE COPAYMENTS AND DEDUCTIBLES PAID BY THE INSURED ARE APPLIED TO THE NEGOTIATED RATES OR LESSER CHARGE OF THAT PROVIDER AND THAT NOTHING IN THIS SECTION PRECLUDES AN INSURER FROM ISSUING A POLICY WHICH CONTAINS FIXED DOLLAR COPAYMENTS AND DEDUCTIBLES; TO AMEND SECTION 38-33-80, AS AMENDED, RELATING TO HEALTH MAINTENANCE ORGANIZATIONS, ENROLLEE'S ENTITLEMENT TO EVIDENCE OF COVERAGE, CONTENTS OF SUCH EVIDENCE, DISCONTINUANCE OR REPLACEMENT OF COVERAGE, AND CHARGES FOR SERVICES, SO AS TO DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE, AMONG OTHER THINGS, THAT THE DIRECTOR OF THE DEPARTMENT OF INSURANCE OR HIS DESIGNEE MAY DISAPPROVE A CERTAIN SCHEDULE OF CHARGES IF IT IS DETERMINED THAT THE BENEFITS PROVIDED IN THE CONTRACTS ARE UNREASONABLE IN RELATION TO THE CHARGES AND THAT AT ANY TIME THE DIRECTOR OR HIS DESIGNEE, AFTER A PUBLIC HEARING OF WHICH AT LEAST THIRTY DAYS' NOTICE HAS BEEN GIVEN, MAY WITHDRAW APPROVAL OF A SCHEDULE OF CHARGES PREVIOUSLY APPROVED OR AN APPROVED EVIDENCE OF COVERAGE IF HE DETERMINED THAT THE SCHEDULE OF CHARGES OR EVIDENCE OF COVERAGE NO LONGER MEETS THE STANDARDS FOR APPROVAL SPECIFIED IN THIS SECTION; TO AMEND SECTION 38-55-20, AS AMENDED, RELATING TO CONDUCT OF INSURANCE BUSINESS, THE REQUIREMENT THAT INSURERS SHALL DO BUSINESS IN THEIR OWN NAME, AND COMBINATION POLICIES, SO AS TO DELETE CERTAIN LANGUAGE, AND PROVIDE THAT AN INSURER MAY ELECT TO USE A TRADE NAME IN THE CONDUCT OF ITS BUSINESS IF THE INSURER ALSO CLEARLY DISCLOSES ITS PROPER OR CORPORATE NAME ON ITS POLICIES, CONTRACTS OF INSURANCE, AND OTHER DOCUMENTS FILED WITH THE DEPARTMENT OF INSURANCE; TO AMEND SECTION 38-55-570, RELATING TO INSURANCE FRAUD AND REPORTING IMMUNITY AND NOTIFICATION OF THE INSURANCE FRAUD DIVISION OF KNOWLEDGE OR BELIEF OF FALSE STATEMENTS OR MISREPRESENTATIONS, SO AS TO PROVIDE THAT THE DEPARTMENT OF INSURANCE MAY RECEIVE AND MUST MAINTAIN AS CONFIDENTIAL ANY DOCUMENTS OR INFORMATION FURNISHED TO IT BY THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS OR INSURANCE DEPARTMENTS OF OTHER STATES WHICH IS CLASSIFIED AS CONFIDENTIAL BY THAT ASSOCIATION OR STATE, PERMIT THE SOUTH CAROLINA DEPARTMENT OF INSURANCE TO SHARE DOCUMENTS OR INFORMATION, INCLUDING CONFIDENTIAL DOCUMENTS OR INFORMATION, WITH THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS OR INSURANCE DEPARTMENTS OF OTHER STATES, IF THE ASSOCIATION OR OTHER STATE AGREES TO MAINTAIN THE SAME LEVEL OF CONFIDENTIALITY AS IS PROVIDED UNDER SOUTH CAROLINA LAW, AND PROVIDE THAT IF THE DOCUMENTS OR INFORMATION RECEIVED BY THE SOUTH CAROLINA DEPARTMENT OF INSURANCE FROM THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS OR THE INSURANCE DEPARTMENTS OF OTHER STATES INVOLVE ALLEGATIONS OF INSURANCE FRAUD, THE DOCUMENTS OR INFORMATION MUST BE FORWARDED BY THE SOUTH CAROLINA DEPARTMENT OF INSURANCE TO THE INSURANCE FRAUD DIVISION OF THE OFFICE OF THE ATTORNEY GENERAL; AND TO AMEND THE 1976 CODE BY ADDING SECTION 38-33-310 SO AS TO PROVIDE THAT NOTHING IN TITLE 38, CHAPTER 33 (HEALTH MAINTENANCE ORGANIZATIONS) MAY BE CONSTRUED TO PREVENT A HEALTH MAINTENANCE ORGANIZATION FROM CONTRACTING WITH AN OUT-OF-STATE PROVIDER.

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

Definition changed

SECTION 1. Section 38-33-20(3) of the 1976 Code, as last amended by Act 403 of 1992, is further amended to read:

"(3) `Copayment' or `deductible' means the amount specified in the evidence of coverage that the enrollee shall pay directly to the provider for covered health care services, which may be stated in either specific dollar amounts or as a percentage of the negotiated rate or lesser charge of the provider. For good cause shown, the Director of the South Carolina Department of Insurance may, in his discretion, approve forms with provisions which vary from the provisions required in this subsection if he finds the provisions are more favorable to the enrollee."

Calculation of copayments, deductibles

SECTION 2. Section 38-33-80(A) of the 1976 Code, as last amended by Section 633 of Act 181 of 1993, is further amended by adding:

"(7) A health maintenance organization that issues a health maintenance organization contract which requires the enrollee to pay a specified percentage of the cost of covered health care services shall calculate those copayments and deductibles on the negotiated rate or lesser charge of the provider. Nothing in this section precludes a health maintenance organization from issuing a contract which contains fixed dollar copayments and deductibles."

Percentage copayments, deductibles, applied to negotiated rates or lesser charge

SECTION 3. The 1976 Code is amended by adding:

"Section 38-71-241. An insurer that negotiates rates with providers for covered health care services under an individual or group accident and health insurance policy must provide that percentage copayments and deductibles paid by the insured are applied to the negotiated rates or lesser charge of that provider. Nothing in this section precludes an insurer from issuing a policy which contains fixed dollar copayments and deductibles."

Health maintenance organization contracts; etc.

SECTION 4. Section 38-33-80(B), (C), and (D) of the 1976 Code, as last amended by Section 633 of Act 181 of 1993, are further amended to read:

"(B) No schedule of charges applicable to individual health maintenance organization contracts may be used until a copy of the schedule has been filed with and approved by the director or his designee. The director or his designee may disapprove this schedule of charges if it is determined that the benefits provided in the contracts are unreasonable in relation to the charges.

(C) The director or his designee shall, within a reasonable period, approve any form if the requirements of subsection (A) are met and any schedule of charges if the requirements of subsection (B) are met. It is unlawful to issue a form or to use a schedule of charges until approved. If the director or his designee disapproves the filing, he shall notify the filer. The notice must contain the reasons for disapproval, and the filer, upon request in writing, is entitled to a public hearing thereon. If no action is taken to approve or disapprove any form or schedule of charges within ninety days of the filing of the forms or charges, the filing is deemed approved.

(D) At any time the director or his designee, after a public hearing of which at least thirty days' notice has been given, may withdraw approval of a schedule of charges previously approved under subsection (B) or an evidence of coverage approved under subsection (A) if he determined that the schedule of charges or evidence of coverage no longer meets the standards for approval specified in this section."

Use of a trade name

SECTION 5. Section 38-55-20 of the 1976 Code, as last amended by Section 703, Act 181 of 1993, is further amended to read:

"Section 38-55-20. Every insurer shall conduct its business in the State in, and the policies and contracts of insurance issued by it must be headed or entitled by, its proper or corporate name; provided, however, notwithstanding any other provision of law, an insurer may elect to use a trade name in the conduct of its business if the insurer also clearly discloses its proper or corporate name on its policies, contracts of insurance, and other documents filed with the Department of Insurance. Two or more authorized insurers may, with the approval of the director or his designee, issue a combination policy which shall contain provisions substantially as follows:

(1) That the insurers executing the policy are severally liable for the full amount of any loss or damage, according to the terms of the policy, or for specified percentages or amounts thereof aggregating the full amount of insurance under the policy; and

(2) That service of process or of any notice or proof of loss required by the policy upon any of the insurers executing the policy constitutes service upon all the insurers."

Confidentiality of documents, information; etc.

SECTION 6. Subsection (D) of Section 38-55-570 of the 1976 Code, as added by Section 31A, Part II of Act 497 of 1994, is amended to read:

"(D) Except as otherwise provided by law, any information furnished pursuant to this section is privileged and shall not be part of any public record. Any information or evidence furnished to an authorized agency pursuant to this section is not subject to subpoena or subpoena duces tecum in any civil or criminal proceeding unless, after reasonable notice to any person, insurer, or authorized agency which has an interest in the information and after a subsequent hearing, a court of competent jurisdiction determines that the public interest and any ongoing investigation will not be jeopardized by obedience of the subpoena or subpoena duces tecum. The Department of Insurance may receive and must maintain as confidential any documents or information furnished to it by the National Association of Insurance Commissioners or insurance departments of other states which is classified as confidential by that association or state. The Department of Insurance may share documents or information, including confidential documents or information, with the National Association of Insurance Commissioners or insurance departments of other states, if the association or other state agrees to maintain the same level of confidentiality as is provided under South Carolina law. If the documents or information received by the Department of Insurance from the National Association of Insurance Commissioners or the insurance departments of other states involve allegations of insurance fraud, the documents or information must be forwarded by the Department of Insurance to the Insurance Fraud Division of the Office of the Attorney General."

HMO may contract with out-of-state provider

SECTION 7. The 1976 Code is amended by adding:

"Section 38-33-310. Nothing in this chapter may be construed to prevent a health maintenance organization from contracting with an out-of-state provider."

Effective clause for certain provisions

SECTION 8. Sections 4, 6, and 7 of this act take effect upon approval by the Governor.

Effective clause for remainder of act

SECTION 9. Except as otherwise specifically provided in this act, this act takes effect one hundred twenty days after approval by the Governor.

Approved the 12th day of June, 1995.