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Bill 3674

Indicates Matter Stricken
Indicates New Matter

Indicates Matter Stricken

Indicates New Matter

COMMITTEE REPORT

March 12, 2008

H. 3674

Introduced by Reps. Cato, Perry, J.H. Neal, Chellis, Harvin, F.N. Smith, Bedingfield, Simrill, Crawford, Leach, W.D. Smith, Alexander, Bales, Bannister, Dantzler, Edge, Gambrell, Hamilton, Haskins, Kennedy, Lowe, Mitchell, Mulvaney, Ott, Pinson, Sandifer, Scarborough, Shoopman, G.R. Smith, Spires, Stewart, Thompson, Toole, White, Young, Brady, Talley, Clemmons, Owens, Hiott, Skelton and Rice

S. Printed 3/12/08--S.

Read the first time March 4, 2008.

To whom was referred a Bill (H. 3674) to amend the Code of Laws of South Carolina, 1976, by adding Chapter 19 to Title 44 so as to enact the "South Carolina Health Care Financial Recovery and Protection Act", etc., respectfully

That they have duly and carefully considered the same and recommend that the same do pass:

DAVID L. THOMAS for Committee.

EXPLANATION OF IMPACT:

The Department of Insurance indicates that bill would require additional recurring General Funds of the State totaling $159,840. This cost would cover salary and fringe benefits for Two (2.00) FTE positions ($120,000), $30,000 for temporary positions and operating expenses of $9,840. These positions would be needed to investigate complaints, prepare and assimilate case files, perform analysis and conduct hearings on noncompliant insurers. One-time expenditures of $10,150 would be needed to acquire computers, furnishings and phones.

Approved By:

Harry Bell

Office of State Budget

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 19 TO TITLE 44 SO AS TO ENACT THE "SOUTH CAROLINA HEALTH CARE FINANCIAL RECOVERY AND PROTECTION ACT", TO ESTABLISH PROCEDURES FOR A HEALTH INSURER TO PAY OR REIMBURSE A PROVIDER FOR HEALTH CARE SERVICES FURNISHED BY THE PROVIDER, INCLUDING, AMONG OTHER THINGS, TIMEFRAMES WITHIN WHICH A CLAIM FOR SERVICES RENDERED, WHICH HAS NOT MATERIAL DEFECT OR IMPROPRIETY, MUST BE PAID BY AN INSURER, CONDITIONS WHICH CONSTITUTE A CONTESTED CLAIM, INTEREST RATES AND OTHER FEES THAT MAY BE RECOVERED FOR CLAIMS NOT PAID OR PROPERLY DISPUTED WITHIN THE TIMEFRAMES PROVIDED, THE APPLICABILITY OF UNFAIR TRADE PRACTICES, TIMEFRAMES WITHIN WHICH AN INSURER SEEKING A REFUND OF A PAYMENT MADE FOR HEALTH CARE SERVICES RENDERED MUST REQUEST THE REFUND, AND PROVISIONS LIMITING THE NUMBER OF SERVICES AND SUPPLIES REQUIRING PREAUTHORIZATION BY AN INSURER; AND TO AMEND SECTION 38-71-230, RELATING TO WRITTEN NOTICE WHICH MUST BE PROVIDED BY INSURERS OF CLAIM POLICIES AND PROCEDURES AND THE ADOPTION OF STANDARDIZED CLAIM FORMS, SO AS TO REVISE CERTAIN CLAIM FORM NUMBERS.

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

SECTION    1.    Title 38, Chapter 59 of the 1976 Code is amended by adding:

Section 38-59-200.    This article may be cited as the 'South Carolina Health Care Financial Recovery and Protection Act'.

Section 38-59-210.    As used in this article:

(1)    'Insurer' means an insurance company, a health maintenance organization, and any other entity providing health insurance coverage, as defined in Section 38-71-670(6), which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation.

(2)    'Health care services' means services included in furnishing an individual medical care or hospitalization, or services incident to the furnishing of medical care or hospitalization, and other services to prevent, alleviate, cure, or heal human illness, injury, or physical disability.

(3)    'Health maintenance organization' means an organization as defined in Section 38-33-20(8).

(4)    'Health insurance plan' means a health insurance policy or health benefit plan offered by a health insurer or a health maintenance organization that provides health insurance coverage, as defined in Section 38-71-670(6).

(5)    'Physician' means a doctor of medicine or doctor of osteopathic medicine licensed by the South Carolina Board of Medical Examiners.

(6)    'Provider' means a physician, hospital, or other person properly licensed, certified, or permitted, where required, to furnish health care services.

(7)    'Participating provider' means a provider who provides covered health care services to an insured or a member pursuant to a contract with an insurer or health insurance plan.

(8)    'Clean claim' means an eligible electronic or paper claim for reimbursement that:

(a)    is received by the insurer within one hundred twenty business days of the date the health care services at issue were performed;

(b)(i)    when submitted via paper has all the elements of the standardized CMS 1500 or UB 04 claim form, or the successor of each as either may be amended from time to time; or

(ii)    when submitted via an electronic transaction, uses only permitted standard code sets and has all the elements of the standard electronic formats as required by the Health Insurance Portability and Accountability Act of 1996 and other federal and state regulatory authority;

(c)    is for health care services covered by the health insurance plan and rendered to an insured person by a provider eligible for reimbursement under the health insurance plan;

(d)    has any corresponding referral that may be required for the applicable claim;

(e)    is a claim for which the insurer is the primary payor, or for which the insurer's responsibility as a secondary payor has been clearly established;

(f)    has no material defect, error, or impropriety that would affect the adjudication of the claim;

(g)    includes all required substantiating documentation or coding;

(h)    is not subject to any particular circumstance that the insurer reasonably believes, subject to review by the Department of Insurance, would prevent accurate or timely payment from being made on the claim under the terms of the health insurance plan, the participating provider agreement, or the insurer's published filing requirements; and

(i)        is under a health insurance plan for which the insurer has been timely paid all applicable premiums.

(9)    'Force majeure' means any act of God, governmental act, act of terrorism, war, fire, flood, earthquake, hurricane, or other natural disaster, explosion or civil commotion.

Section 38-59-220.    (A)    Within six months of the effective date of this article, each insurer, upon written request from a physician who is also a participating provider will provide, by CD-ROM, or electronically at the insurer's option, the fee schedule that is contracted with that physician for up to 100 CPT(r) Codes customarily and routinely used by the specialty type of such physician. Each physician may request from an insurer an updated fee schedule no more than two times annually.

(B)    A physician requesting a fee schedule pursuant to subsection (A) may elect to receive a hard copy of the fee schedule in lieu of the foregoing; however, the insurer may charge the physician a reasonable fee to cover the increased administrative costs of providing the hard copy.

(C)    The physician shall keep all fee schedule information provided pursuant to this section confidential. The physician shall disclose fee schedule information only to those employees of the physician who have a reasonable need to access this information in order to perform their duties for the physician and who have been placed under an obligation to keep this information confidential. Any failure of a physician's office to abide by this subsection shall result in the physician's forfeiture of the right to receive fee schedules pursuant to this section and at the option of the insurer may constitute a breach of contract by the physician.

(D)    Nothing in this section prohibits an insurer from basing actual compensation to the physician on the insurer's maximum allowable amount or other contract adjustments, including those stated in the patient's plan of benefits, or both.

Section 38-59-230(A).    An insurer shall direct the issuance of a check or an electronic funds transfer in payment for a clean claim that is submitted via paper within forty business days following the later of the insurer's receipt of the claim or the date on which the insurer is in receipt of all information needed and in a format required for the claim to constitute a clean claim and is in receipt of all documentation which may be requested by an insurer which is reasonably needed by the insurer:

(1)    to determine that such claim does not contain any material defect, error, or impropriety; or

(2)    to make a payment determination.

(B)    An insurer shall direct the issuance of a check or an electronic funds transfer in payment for a clean claim that is submitted electronically within twenty business days following the later of the insurer's receipt of the claim or the date on which the insurer is in receipt of all information needed and in a format required for the claim to constitute a clean claim and is in receipt of all documentation which may be requested by an insurer which is reasonably needed by the insurer:

(1)    to determine that such claim does not contain any material defect, error, or impropriety; or

(2)    to make a payment determination.

(C)    An insurer shall affix to or on paper claims, or otherwise maintain a system for determining, the date claims are received by the insurer. An insurer shall send an electronic acknowledgement of claims submitted electronically either to the provider or the provider's designated vendor for the exchange of electronic health care transactions. The acknowledgement must identify the date claims are received by the insurer. If an insurer determines that there is any defect, error, or impropriety in a claim that prevents the claim from entering the insurer's adjudication system, the insurer shall provide notice of the defect or error either to the provider or the provider's designated vendor for the exchange of electronic health care transactions within twenty business days of the submission of the claim if it was submitted electronically or within forty business days of the claim if it was submitted via paper. Nothing contained in this section is intended or may be construed to alter an insurer's ability to request clinical information reasonably necessary for the proper adjudication of the claim or for the purpose of investigating fraudulent or abusive billing practices.

Section 38-59-240.    (A)    For each clean claim with respect to which an insurer has directed the issuance of a check or the electronic funds transfer later than the applicable period specified in Section 38-59-230, the insurer shall pay interest in the same manner and at the same rate set forth in Section 34-31-20(A) on the balance due on each claim computed from the twenty-first or the forty-first business day, as appropriate, based on the circumstances described in Section 38-59-230, up to the date on which the insurer directs the issuance of the check or the electronic funds transfer for payment of the clean claim. At the insurer's election, interest paid pursuant to this section must be included in the claim payment check or wire transfer or must be remitted periodically, but at least quarterly, in a separate check or wire transfer along with a report detailing the claims for which interest is being paid.

(B)    No insurer has an obligation to make any interest payment pursuant to subsection (A):

(1)    with respect to any clean claim if within twenty business days of the submission of an original claim submitted electronically or within forty business days of an original claim submitted via paper, a duplicate claim is submitted while the adjudication of the original claim is still in process;

(2)    to any participating provider who balance bills a plan member in violation of the participating provider's agreement with the insurer;

(3)    with respect to any time period during which a force majeure prevents the adjudication of claims; or

(4)    when payment is made to a plan member.

Section 38-59-250.    (A)(1)    An insurer shall initiate any overpayment recovery efforts by sending a written notice to the provider at least thirty business days prior to engaging in the overpayment recovery efforts, other than for recovery of duplicate payments or other similar adjustments relating to:

(a)    claims where a provider has received payment for the same services from another payor whose obligation is primary; or

(b)    timing or sequence of claims for the same insured that are received by the insurer out of chronological order in which the services were performed.

(2)    The written notice required by this section shall include:

(a)    the patient's name;

(b)    the service date;

(c)    the payment amount received by the provider; and

(d)    a reasonably specific explanation of the change in payment.

(B)    An insurer may not initiate overpayment recovery efforts more than eighteen months after the initial payment was received by the provider; however, this time limit does not apply to the initiation of overpayment recovery efforts:

(1)    based upon a reasonable belief of fraud or other intentional misconduct;

(2)    required by a self-insured plan; or

(3)    required by a state or federal government program.

Section 38-59-260.    The requirements of this article do not apply to claims that are processed under any national account delivery program in which an insurer participates but is not solely responsible for the processing and payment of the claims or claims for services under a program offered or sponsored by any state or federal governmental entity other than in its capacity as an employer, or both.

Section 38-59-270.    The Department of Insurance shall enforce the provisions of this article. If, after due notice and hearing, the director of the Department of Insurance or his designee determines that an insurer has failed to meet the obligations imposed by this article, he shall order the insurer to cease and desist from the practice, to correct any errant business practices, and to make any payments due, including applicable interest. If an insurer does not comply with the order within thirty days, the director or his designee may then impose a penalty as provided in Section 38-2-10. Nothing in this article may be construed to create a private right of action to enforce the specific provisions of this article."

SECTION    2.    Section 38-71-230 (B) and (C) of the 1976 Code are amended to read:

"(B)    An organization providing payment or reimbursement for diagnosis and treatment of a condition or a complaint by a licensed physician in South Carolina must accept the standardized HCFA CMS 1500 claim form, or its successor as it may be amended from time to time. An organization providing payment or reimbursement for diagnosis and treatment of a condition or a complaint by a hospital licensed in South Carolina shall accept the standardized UB 82 04 claim form, or its successor as it may be amended from time to time.

(C)    The HCFA CMS 1500 or the UB 82 04 claim form or the successor of each or as either may be amended from time to time may be altered only with a customized logo which must appear in the top portion of the claim form one inch vertical from the top."

SECTION    3.    If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

SECTION    4.    This act takes effect one year after approval by the Governor.

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