2012 -- S 2479

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LC01476

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO INSURANCE - NONPROFIT HOSPITAL SERVICE CORPORATIONS

     Introduced By: Senators Nesselbush, Miller, Crowley, DeVall, and Gallo

     Date Introduced: February 16, 2012

     Referred To: Senate Health & Human Services

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-19-52 of the General Laws in Chapter 27-19 entitled "Nonprofit

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Hospital Service Corporations" is hereby amended to read as follows:

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     27-19-52. Prompt processing of claims. -- (a) A health care entity or health plan

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operating in the state shall pay all complete claims for covered health care services submitted to

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the health care entity or health plan by a health care provider or by a policyholder within forty

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(40) calendar days following the date of receipt of a complete written claim or within thirty (30)

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calendar days following the date of receipt of a complete electronic claim. Each health plan shall

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establish a written standard defining what constitutes a complete claim and shall distribute this

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standard to all participating providers.

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      (b) If the health care entity or health plan denies or pends a claim, the health care entity

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or health plan shall have thirty (30) calendar days from receipt of the claim to notify in writing

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the health care provider or policyholder of any and all reasons for denying or pending the claim

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and what, if any, additional information is required to process the claim. No health care entity or

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health plan may limit the time period in which additional information may be submitted to

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complete a claim.

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      (c) Any claim that is resubmitted by a health care provider or policyholder shall be

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treated by the health care entity or health plan pursuant to the provisions of subsection (a) of this

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section.

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      (d) A health care entity or health plan which fails to reimburse the health care provider

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or policyholder after receipt by the health care entity or health plan of a complete claim within the

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required timeframes shall pay to the health care provider or the policyholder who submitted the

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claim, in addition to any reimbursement for health care services provided, interest which shall

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accrue at the rate of twelve percent (12%) per annum commencing on the thirty-first (31st) day

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after receipt of a complete electronic claim or on the forty-first (41st) day after receipt of a

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complete written claim, and ending on the date the payment is issued to the health care provider

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or the policyholder.

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     (e) A health care entity or health plan shall be required to pay for health care services

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ordered by a health care provider if: (1) The services are a covered benefit under the insured’s

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health benefit plan; and (2) The services are medically necessary. A claim for treatment for

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medically necessary services may not be denied if a health care provider follows the health care

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insurer’s authorization procedures and receives authorization for a covered service for the

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policyholder or subscriber, unless the provider submitted information to the insurer with the

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willful intention to misinform the insurer.

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     (f) A health care entity or health plan shall not deny payment for a claim for medically

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necessary covered services on the basis of an administrative or technical defect in the claim

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except in the case where the insurer has a reasonable basis, supported by specific information

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available for review, that the claim for health care services rendered was submitted fraudulently.

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     (g) A health care entity or health plan shall have no more than twelve (12) months after

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the original payment was received by the health care provider to recoup a full or partial payment

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for a claim for services rendered, or to adjust a subsequent payment to reflect a recoupment of a

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full or partial payment.

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     (h) A health care entity or health plan shall not recoup payments received by a health care

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provider for services provided to a policy holder or subscriber that the insurer deems ineligible

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for coverage because the policyholder or subscriber was retroactively terminated or retroactively

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disenrolled for services, provided that the health care provider can document that it received

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verification of an individual’s eligibility status following the administrative requirements of the

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insurer at the time service was provided. Claims may also not be recouped for utilization review

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purposes if the services were already deemed medically necessary or the manner in which the

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services were accessed or provided were previously approved by the health care entity or health

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plan.

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      (e) (i) Exceptions to the requirements of this section are as follows:

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      (1) No health care entity or health plan operating in the state shall be in violation of this

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section for a claim submitted by a health care provider or policyholder if:

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      (i) Failure to comply is caused by a directive from a court or federal or state agency;

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      (ii) The health care provider or health plan is in liquidation or rehabilitation or is

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operating in compliance with a court-ordered plan of rehabilitation; or

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      (iii) The health care entity or health plan's compliance is rendered impossible due to

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matters beyond its control that are not caused by it.

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      (2) No health care entity or health plan operating in the state shall be in violation of this

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section for any claim: (i) initially submitted more than ninety (90) days after the service is

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rendered, or (ii) resubmitted more than ninety (90) days after the date the health care provider

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received the notice provided for in section 27-18-61(b); provided, this exception shall not apply

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in the event compliance is rendered impossible due to matters beyond the control of the health

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care provider and were not caused by the health care provider.

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      (3) No health care entity or health plan operating in the state shall be in violation of this

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section while the claim is pending due to a fraud investigation by a state or federal agency.

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      (4) No health care entity or health plan operating in the state shall be obligated under this

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section to pay interest to any health care provider or policyholder for any claim if the director of

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the department of business regulation finds that the entity or plan is in substantial compliance

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with this section. A health care entity or health plan seeking such a finding from the director shall

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submit any documentation that the director shall require. A health care entity or health plan which

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is found to be in substantial compliance with this section shall after this submit any

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documentation that the director may require on an annual basis for the director to assess ongoing

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compliance with this section.

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      (5) A health care entity or health plan may petition the director for a waiver of the

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provision of this section for a period not to exceed ninety (90) days in the event the health care

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entity or health plan is converting or substantially modifying its claims processing systems.

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      (j) For purposes of this section, the following definitions apply:

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      (1) "Claim" means:

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      (i) A bill or invoice for covered services;

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      (ii) A line item of service; or

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      (iii) All services for one patient or subscriber within a bill or invoice.

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      (2) "Date of receipt" means the date the health care entity or health plan receives the

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claim whether via electronic submission or has a paper claim.

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      (3) "Health care entity" means a licensed insurance company or nonprofit hospital or

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medical or dental service corporation or plan or health maintenance organization, or a contractor

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as described in section 23-17.13-2(2), that operates a health plan.

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      (4) "Health care provider" means an individual clinician, either in practice independently

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or in a group, who provides health care services, and referred to as a non-institutional provider.

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any health care facility, as defined in section 23-17-2, including any mental health and/or

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substance abuse treatment facility, physician or other licensed practitioners identified to the

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review agent as having primary responsibility for the care, treatment and services rendered to a

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patient.

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      (5) "Health care services" include, but are not limited to, medical, mental health,

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substance abuse, dental and any other services covered under the terms of the specific health plan.

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      (6) "Health plan" means a plan operated by a health care entity that provides for the

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delivery of health care services to persons enrolled in those plans through:

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      (i) Arrangements with selected providers to furnish health care services; and/or

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      (ii) Financial incentive for persons enrolled in the plan to use the participating providers

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and procedures provided for by the health plan.

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      (7) "Policyholder" means a person covered under a health plan or a representative

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designated by that person.

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      (8) "Substantial compliance" means that the health care entity or health plan is

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processing and paying ninety-five percent (95%) or more of all claims within the time frame

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provided for in section 27-18-61(a) and (b).

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      (k) Any provision in a contract between a health care entity or a health plan and a health

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care provider which is inconsistent with this section shall be void and of no force and effect.

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     SECTION 2. This act shall take effect upon passage.

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LC01476

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE - NONPROFIT HOSPITAL SERVICE CORPORATIONS

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     This act would set forth the circumstances and procedures whereby all health care entities

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and health plans would be required to pay for health care services if the services are covered

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under the insurance plan or the services are medically necessary.

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     This act would take effect upon passage.

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LC01476

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