2014 -- S 3064

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LC005767

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO INSURANCE - DURABLE MEDICAL EQUIPMENT FREEDOM OF

CHOICE – FAIR COMPETITION AND PRACTICES

     Introduced By: Senators Nesselbush, Conley, Archambault, and DaPonte

     Date Introduced: June 03, 2014

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended

by adding thereto the following chapter:

CHAPTER 29.3

DURABLE MEDICAL EQUIPMENT FREEDOM OF CHOICE - FAIR COMPETITION AND

PRACTICES

     27-29.3-1. Definitions. – For purposes of this chapter, the following terms shall mean:

     (1) "Commissioner" means the health insurance commissioner.

     (2) "Durable medical equipment" means equipment (including repair and replacement

parts) which: (i) Can withstand repeated use; (ii) Is primarily and customarily used to serve a

medical purpose; (iii) Generally is not useful to a person in the absence of illness or injury; and

(iv) Is appropriate for use in the home.

     Durable medical equipment does not include mobility enhancing equipment.

     (3) "Eligible bidder" means a supplier of durable medical equipment, irrespective of

corporate structure, who is willing to bid for participation in a restricted durable medical

equipment contract.

     (4) "Insurer" means an insurance carrier as defined in chapters 18, 19, 20 and 41 of title

27.

     (5) "Insured" mean any person who is entitled to have all or some costs associated with

durable medical equipment paid by an insurer pursuant to a policy, certificate, contract or

agreement of insurance or coverage.

     (6) "Non-restricted durable medical equipment supplier network" means a network that

permits any supplier of durable medical equipment to participate on substantially uniform terms

and conditions established by an insurer.

     (7) "Restricted durable medical equipment network" means an arrangement: (i) For the

provision of durable medical equipment and/or services directly associated with the durable

medical equipment including, but not limited to, maintenance to insureds and; (ii) Which, under

the terms of an insurer's policy, certificate, contract or agreement of insurance or coverage,

requires an insured or creates a financial incentive for an insured to obtain said equipment and/or

services from one or more participating suppliers that have entered into a specific contractual

relationship with the insurer.

     27-29.3-2. Fair competition – Requirements for carriers offering durable medical

equipment networks. – (a) Any insurer that offers insureds a restricted durable medical

equipment network shall, in soliciting, arranging, competitively bidding, contracting for, and

operating such a network, comply with the following requirements for the purpose of promoting

fair and competitive bidding:

     (1) Conduct and complete an initial open bidding process to establish the restricted

network and at least once every three (3) years thereafter;

     (2) Provide notice to all eligible bidders of the insurer's intent to solicit bids for

participation in a restricted durable medical equipment network;

     (3) Inform eligible bidders of the date such bids will be solicited;

     (4) Provide eligible bidders with identical, equal and uniform information, including, but

not limited to, bid procedure information, financial and utilization information needed to make an

informed competitive bid, criteria to be used in awarding a restricted durable medical equipment

network contract and proposed contractual requirements for the restricted durable medical

equipment network;

     (5) Provide eligible bidders with at least thirty (30) days to prepare and submit bids

between the bid solicitation date and the bid submission deadline;

     (6) Open all bids: (i) At a previously specified time, which shall not be more than thirty

(30) days after the bid submission deadline; and (ii) In a public manner, provided, that certain,

information contained in said bids may be held as confidential from public review consistent with

regulations promulgated by the commissioner regarding the disclosure of proprietary data or

information submitted by any bidders; and

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     (7) Select a successful bidder using solely the criteria provided to eligible bidders

pursuant to subsection (a)(4) above, applied in a uniform manner.

     (b) An insurer shall neither exclude nor favor any individual durable medical equipment

supplier in the design of a competitive bid involving restricted or unrestricted durable medical

equipment networks in compliance with the requirements of this section. An entity and its

affiliates that assists an insurer in the development of the bid, design, bid specifications or the bid

process, or assists in the review or evaluation of said bids, shall be prohibited from bidding on

such a contract.

     27-29.3-3. Participation of small and mid-sized durable medical equipment

manufacturers and suppliers. – (a) Any durable medical equipment suppliers that are licensed,

accredited, and located within the state that are not owned or controlled, directly or indirectly, by

an entity licensed in two (2) or more jurisdictions in addition to Rhode Island, which are not

participating in an insurer's restricted durable medical equipment network contract shall

nevertheless have the right to provide durable medical equipment and/or services directly

associated with the durable medical equipment including, but not limited to, maintenance to the

insurer's insureds and be paid by the insurer as if the durable medical equipment manufacturer or

supplier were participating in the insurer's restricted durable medical equipment network, and be

entitled to all the rights and privileges associated with participating in the insurer's restricted

durable medical equipment network including access to fee schedules and covered codes,

provided that such non-network durable medical equipment manufacturers or suppliers agree:

     (1) To accept as the insurer's payments, in full, the price required of durable medical

equipment manufacturers or suppliers in the insurer's restricted durable medical equipment

network;

     (2) To bill to the insured up to and not in excess of any copayment, coinsurance,

deductible, other amount required of an insured by the insurer, or for other uncovered services;

     (3) To be reimbursed on the same methodological basis, including, but not limited to,

capitation or other risk-sharing methodology, as required of durable medical equipment

manufacturers or suppliers in the insurer's restricted durable medical equipment network;

     (4) To participate in the insurer's utilization review and quality assurance programs,

including utilization reports as required of durable medical equipment manufacturers or suppliers

in the carrier's restricted durable medical equipment network;

     (5) To provide computerized online eligibility determinations and claims submissions if

and as required of durable medical equipment manufacturers or suppliers in the insurer's

restricted durable medical equipment network;

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     (6) To participate in the insurer's satisfaction surveys and complaint resolution programs

for its insureds;

     (7) To protect the insurer's proprietary information and an insured's confidentiality and

privacy;

     (8) To abide by the insurer's performance standards with respect to waiting times,

response rates and inventory management;

     (9) To comply with the insurer's claims audit provisions; and

     (10) To certify, using audit results or accountant statements, the fiscal soundness of the

non-network durable medical equipment manufacturer or supplier.

     (b) An insurer may waive any of the aforementioned agreements in arranging for the

provision of durable medical equipment to insureds through a non-network durable medical

equipment manufacturer or supplier. An insurer shall not impose any agreements, terms or

conditions on any non-network durable medical equipment supplier which are more restrictive

than those required of durable medical equipment suppliers in the insurer's restricted durable

medical equipment network. The failure of a non-network durable medical equipment supplier to

abide by the aforementioned agreements may, at the option of the insurer, serve as the basis for

cancellation of the non-network durable medical equipment supplier's participation.

     27-29.3-4. Applicability and allowances. – (a) Nothing in this section shall preclude an

insurer from entering into an agreement to allow non-network providers the ability to participate

with the insurer's plans under terms and conditions set forth by the insurer.

     (b) Nothing in this section shall be construed to require the provision of pharmacy

benefits to insureds through a restricted durable medical equipment network nor any other

arrangement for the provision of durable medical equipment.

     27-29.3-5. Enforcement. – The office of the health insurance commission shall have

authority to enforce the provisions of §§ 27-29.3-2 – 27-29.3-4, subject to the provisions of

chapter 35 of title 42.

     27-29.3-6. Severability. – If any provision of §§ 27-29.3-1 – 27-29.3-5, or the

application of those sections to any person or circumstances is held invalid, the invalidity shall

not affect other provisions or applications of §§ 27-29.3-1 – 27-29.3-5 which can be given effect

without the invalid provision or application; to this end the provisions of §§ 27-29.3-1 – 27-29.3-

5 are declared to be severable.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE - DURABLE MEDICAL EQUIPMENT FREEDOM OF

CHOICE – FAIR COMPETITION AND PRACTICES

***

     This act would authorize freedom of choice by an insured party in the selection of

durable medical equipment, and would establish criteria for fair competition between carriers

offering durable medical equipment.

     This act would take effect upon passage.

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