UTILIZATION REVIEW FAIRNESS ACT

A suggested draft

Health Administration Responsibility Project, Inc.

Harvey S. Frey MD, PhD, Esq., Director

(310) 394-6342 hsfrey@harp.org

A Bill to:

Add Business & Professions Code Section 2052.1

Add Business & Professions Code Subsection 510(k)

Renumber Health and Safety Code subsection 1367.01(b)

Add Health and Safety Code subsection 1367.01(b)(2)

Renumber Health and Safety Code subsection 1367.01(e)

Add Health and Safety Code subsection 1367.01(e)(2)

Renumber Insurance Code subsection 10123.135(b)

Add Insurance Code subsection 10123.135(b)(2)

Renumber Insurance Code subsection 10123.135(e)

Add Insurance Code subsection 10123.135(e)(2)

Add Health and Safety Code subsection 1367.01(j) and (k)

Add Insurance Code sections 394 and 394.2.

THE PEOPLE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. The Legislature finds and declares as follows:

(a) Utilization Review is an essential element of Managed Health Care Plans, as well as many health and disability insurance plans.

(b) Many plan members and insureds are financially unable to obtain medical care without the aid of their plan or insurer.

(c) Unlike retroactive utilization review, which may result in non-payment for medical services already rendered, denials of payment resulting from prospective or concurrent utilization review may result in the inability of the patient to obtain physician-recommended and possibly needed medical care.

(d) Such denial of payment and resulting denial of care may result in irreparable injury to patients.

(e) The prospective or concurrent utilization review is usually done by the same entity, or its employee or agent, which will benefit financially from the denial of care, resulting in a potential conflict of interest.

(f) These rules are required to assure that financial conflicts of interest of utilization reviewers and their employers or principals do not intrude into medical decision making to the detriment of patients.

SECTION 2. [practice of medicine includes UR]

Business & Professions Code Section 2052.1 is added to read:

Sec. 2052.1

(a) Prospective or concurrent utilization review of the decisions of treating physicians, which may affect the medical care of patients, is and will be considered the practice of medicine.

(b) Persons engaged in such utilization review who modify orders of treating physicians must be licensed in the State of California, and have professional credentials in the relevant specialty at least as advanced as those of the treating physician whose orders they modify.

(c) Medical decisions of such utilization reviewers are subject to review and discipline by the appropriate professional licensing board. Mere application of undisputed facts to unambiguous contractual provisions is not a medical decision, but a coverage decision.

(d) Medical decisions of such utilization reviewers may be the basis for civil medical malpractice suits to the same extent as decisions of any other licensed practitioner.

SECTION 3. [practice of medicine includes UR]

Health and Safety Code subsection 1367.01(e) is renumbered 1367.01(e)(1)

Health and Safety Code subsection 1367.01(e)(2) is added to read:

(e)(2) The decisions of a licensed physician or a licensed health care professional to prospectively or concurrently deny or modify requests for authorization of health care services for an enrollee for reasons of medical necessity, constitute the practice of medicine, and are subject to review and discipline by the appropriate licensing board and may be the basis for civil medical malpractice suits.

SECTION 4. [practice of medicine includes UR]

Insurance Code subsection 10123.135(e) is renumbered 10123.135(e) (1)

Insurance Code subsection 10123.135(e)(2) is added to read:

(e)(2) The decisions of a licensed physician or a licensed health care professional to prospectively or concurrently deny or modify requests for authorization of health care services for an insured for reasons of medical necessity, constitute the practice of medicine, and are subject to review and discipline by the appropriate licensing board and may be the basis for civil medical malpractice suits.

SECTION 5. [protection of physician who refuses to write UR's order]

Business & Professions Code Subsection 510(k) is added to read:

(k) The protections of this section shall apply to any treating medical practitioner who, having appealed an adverse utilization review decision, declines to personally write the orders to implement that decision, so long as the patient's medical condition is not jeopardized thereby.

SECTION 6. [no denial allowed if no HSC 1363.5 guidelines]

Health and Safety Code subsection 1367.01(b) is renumbered 1367.01(b)(1)

Health and Safety Code subsection 1367.01(b)(2) is added to read:

(b)(2) If the health care service plan or its utilization review entity modifies, delays or denies a request of a health care provider for services for an enrollee, and it is unable to disclose to the provider and enrollee the relevant guidelines required by subsection (1) above, then the modification, delay, or denial shall be void, and the request shall be approved.

SECTION 7. [no denial allowed if no IC 10123.135 guidelines]

Insurance Code subsection 10123.135(b) is renumbered 10123.135(b)(1)

Insurance Code subsection 10123.135(b)(2) is added to read:

(b)(2) If the disability insurer or its utilization review entity modifies, delays or denies a request of a health care provider for services for an insured, and it is unable to disclose to the provider and insured the relevant guidelines required by subsection (1) above, then the modification, delay, or denial shall be void, and the request shall be approved.

SECTION 8. [construction of “medical necessity” clauses]

Health and Safety Code subsection 1367.01(j) is added to read:

The term “medically necessary” in any managed health care contract shall be construed as follows:

(1) A diagnostic, therapeutic, or prophylactic medical procedure is “medically necessary” if it will, more likely than not, correct, ameliorate, or prevent one or more adverse health consequences for the patient in question.

(2) There is a presumption, rebuttable by clear and convincing evidence, that a procedure decided on by an informed patient and his or her treating physician is medically necessary.

(3) If a payer seeks to deny or substitute an alternative procedure for that selected by the informed patient and his or her treating physician, it must prove by clear and convincing evidence that that option is superior in either safety or efficacy or both.

(4) If the evidence can reasonably support either approving or disapproving the treating physician's recommendation, the payer may not substitute its judgment for that of the treating physician.

(5) If a patient is unable to make an informed decision, the decision may be made by his or her legal guardian or, if there is none, his or her next of kin.

(6) Cost, cost-effectiveness, and contractual coverage are issues entirely separate and independent from medical necessity, and must not be considered in making medical necessity decisions.

SECTION 9. [construction of “medical necessity” clauses]

Insurance Code subsection 394 is added to read:

The term “medically necessary” in any insurance contract shall be construed as follows:

(a) A diagnostic, therapeutic, or prophylactic medical procedure is “medically necessary” if it will, more likely than not, correct, ameliorate, or prevent one or more adverse health consequences for the patient in question.

(b) There is a presumption, rebuttable by clear and convincing evidence, that a procedure decided on by an informed patient and his or her treating physician is medically necessary.

(c) If a payer seeks to deny or substitute an alternative procedure for that selected by the informed patient and his or her treating physician, it must prove by clear and convincing evidence that that option is superior in either safety or efficacy or both.

(d) If the evidence can reasonably support either approving or disapproving the treating physician's recommendation, the payer may not substitute its judgment for that of the treating physician.

(e) If a patient is unable to make an informed decision, the decision may be made by his or her legal guardian or, if there is none, his or her next of kin.

(f) Cost, cost-effectiveness, and contractual coverage are issues entirely separate and independent from medical necessity, and must not be considered in making medical necessity decisions.

SECTION 10. [Construction of “experimental” or “investigative” clauses]

Health and Safety Code subsection 1367.01(k) is added to read:

The terms “experimental” and “investigative” in any managed health care contract shall be construed as follows:

(1) "Experimental" and "Investigational" are deemed synonymous.

(2) A medical procedure is "Experimental" if it is undertaken, not for the benefit of the particular patient, but solely to advance scientific knowledge.

(3) A medical procedure, proposed by a treating or consulting physician and accepted by an informed patient, is NOT "Experimental" if one or more of the following is true:

(A) it is within the range of standard practice within the relevant specialty,

(B) it is generally accepted as safe and effective within the relevant specialty,

(D) there is substantial evidence that it is safer or more effective than the next best alternative.

(4) An otherwise non-experimental procedure is not rendered experimental merely because:

(A) some individual or group is seeking to determine the parameters of its optimal use, or to compare it with other procedures, OR

(B) there is a lack of majority acceptance of its benefits within the relevant specialty.

(5) There is a presumption, rebuttable by clear and convincing evidence, that a procedure proposed by the treating or consulting physician and the informed patient is Not experimental.

(6) A procedure which is performed by no one except the physician proposing it, and which has never been positively evaluated in the peer-reviewed literature, may be rebuttably presumed experimental.

(7) If the evidence can reasonably support either approving or disapproving the treating physician's recommendation, the payer may not substitute its judgment for that of the treating physician.

(8) Cost, cost-effectiveness, and contractual exclusions are issues to be considered separately, and must not be considered in making the determination of whether a medical procedure is "experimental".

SECTION 11. [Construction of “experimental” or “investigative” clauses]

Insurance Code subsection 394.2 is added to read:

The terms “experimental” and “investigative” in any insurance contract shall be construed as follows:

(a) "Experimental" and "Investigational" are deemed synonymous.

(b) A medical procedure is "Experimental" if it is undertaken, not for the benefit of the particular patient, but solely to advance scientific knowledge.

(c) A medical procedure, proposed by a treating or consulting physician and accepted by an informed patient, is NOT "Experimental" if one or more of the following is true:

(1) it is within the range of standard practice within the relevant specialty,

(2) it is generally accepted as safe and effective within the relevant specialty,

(3) it is approved for use by the FDA, CMS, or other government agency, OR

(4) there is substantial evidence that it is safer or more effective than the next best alternative.

(d) An otherwise non-experimental procedure is not rendered experimental merely because:

(1) some individual or group is seeking to determine the parameters of its optimal use, or to compare it with other procedures, or

(2) there is a lack of majority acceptance of its benefits within the relevant specialty.

(e) There is a presumption, rebuttable by clear and convincing evidence, that a procedure proposed by the treating or consulting physician and the informed patient is Not experimental.

(f) A procedure which is performed by no one except the physician proposing it, and which has never been positively evaluated in the peer-reviewed literature, may be rebuttably presumed experimental.

(g) If the evidence can reasonably support either approving or disapproving the treating physician's recommendation, the payer may not substitute its judgment for that of the treating physician.

(h) Cost, cost-effectiveness, and contractual exclusions are issues to be considered separately, and must not be considered in making the determination of whether a medical procedure is "experimental".