0001| HOUSE LABOR AND HUMAN RESOURCES COMMITTEE SUBSTITUTE FOR | 0002| HOUSE BILL 350 | 0003| 43rd legislature - STATE OF NEW MEXICO - first session, 1997 | 0004| | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO INSURANCE; ENACTING THE PATIENT PROTECTION ACT; | 0013| PROVIDING PROTECTIONS FOR PERSONS IN MANAGED HEALTH CARE PLANS; | 0014| APPLYING PATIENT PROTECTIONS TO MEDICAID MANAGED CARE; IMPOSING | 0015| A CIVIL PENALTY; AMENDING AND ENACTING SECTIONS OF THE NMSA | 0016| 1978; MAKING AN APPROPRIATION. | 0017| | 0018| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0019| Section 1. A new section of the New Mexico Insurance Code | 0020| is enacted to read: | 0021| "[NEW MATERIAL] SHORT TITLE.--Sections 1 through 11 of | 0022| this act may be cited as the "Patient Protection Act"." | 0023| Section 2. A new section of the New Mexico Insurance Code | 0024| is enacted to read: | 0025| "[NEW MATERIAL] PURPOSE OF ACT.--The purpose of the | 0001| Patient Protection Act is to regulate aspects of health | 0002| insurance by specifying patient and provider rights and | 0003| confirming and clarifying the authority of the department to | 0004| adopt regulations to provide protections to persons enrolled in | 0005| managed health care plans. The insurance protections should | 0006| ensure that managed health care plans treat patients fairly and | 0007| fulfill their primary obligation to deliver good quality health | 0008| care services." | 0009| Section 3. A new section of the New Mexico Insurance Code | 0010| is enacted to read: | 0011| "[NEW MATERIAL] DEFINITIONS.--As used in the Patient | 0012| Protection Act: | 0013| A. "continuous quality improvement" means an | 0014| ongoing and systematic effort to measure, evaluate and improve | 0015| a managed health care plan's operations in order to improve | 0016| continually the quality of health care services provided to | 0017| enrollees; | 0018| B. "covered person", "enrollee", "patient" or | 0019| "consumer" means an individual who is entitled to receive | 0020| health care benefits from a managed health care plan; | 0021| C. "department" means the insurance department; | 0022| D. "emergency care" means a health care procedure, | 0023| treatment or service delivered to a covered person after the | 0024| sudden onset of what appears to be a medical condition that | 0025| manifests itself by symptoms of sufficient severity that the | 0001| absence of immediate medical attention could be expected by a | 0002| reasonable layperson to result in jeopardy to a person's | 0003| health, serious impairment of bodily functions, serious | 0004| dysfunction of a body part or disfigurement to a person; | 0005| E. "health care facility" means an institution | 0006| providing health care services, including a hospital or other | 0007| licensed inpatient center; an ambulatory surgical or treatment | 0008| center; a skilled nursing center; a residential treatment center; | 0009| a home health agency; a diagnostic, laboratory or imaging center; | 0010| and a rehabilitation or other therapeutic health setting; | 0011| F. "health care insurer" means a person that has a | 0012| valid certificate of authority in good standing under the New | 0013| Mexico Insurance Code to act as an insurer, health maintenance | 0014| organization, nonprofit health care plan or prepaid dental plan; | 0015| G. "health care professional" means a physician or | 0016| other health care practitioner, including a pharmacist, who is | 0017| licensed, certified or otherwise authorized by the state to | 0018| provide health care services consistent with state law; | 0019| H. "health care provider" or "provider" means a person | 0020| that is licensed or otherwise authorized by the state to furnish | 0021| health care services and includes health care professionals and | 0022| health care facilities; | 0023| I. "health care services" includes physical health or | 0024| community-based mental health or developmental disability | 0025| services, including services for developmental delay; | 0001| J. "managed health care plan" or "plan" means a health | 0002| benefit plan of a health care insurer or a provider service | 0003| network that either requires a covered person to use, or creates | 0004| incentives, including financial incentives, for a covered person | 0005| to use health care providers managed, owned, under contract with | 0006| or employed by the health care insurer. "Managed health care | 0007| plan" or "plan" does not include a traditional fee-for-service | 0008| indemnity plan or a plan that covers only short-term travel, | 0009| accident-only, limited benefit, student health plan or specified | 0010| disease policies; | 0011| K. "person" means an individual or other legal entity; | 0012| L. "point-of-service plan" or "open plan" means a | 0013| managed health care plan that allows enrollees to use health care | 0014| providers other than providers under direct contract with the | 0015| plan, even if the plan provides incentives, including financial | 0016| incentives, for covered persons to use the plan's designated | 0017| participating providers; | 0018| M. "primary health care clinic" means a nonprofit | 0019| community-based entity established to provide the first level of | 0020| basic or general health care needs, including diagnostic and | 0021| treatment services, for residents of a health care underserved | 0022| area as that area is defined in regulation adopted by the | 0023| department of health and includes an entity that serves primarily | 0024| low-income populations; | 0025| N. "provider service network" means two or more health | 0001| care providers affiliated for the purpose of providing health care | 0002| services to covered persons on a capitated or similar prepaid | 0003| flat-rate basis; | 0004| O. "superintendent" means the superintendent of | 0005| insurance; and | 0006| P. "utilization review" means a system for reviewing | 0007| the appropriate and efficient allocation of health care services, | 0008| including hospitalization, given or proposed to be given to a | 0009| patient or group of patients." | 0010| Section 4. A new section of the New Mexico Insurance Code | 0011| is enacted to read: | 0012| "[NEW MATERIAL] PATIENT RIGHTS--DISCLOSURES--RIGHTS TO | 0013| BASIC AND COMPREHENSIVE HEALTH CARE SERVICES--GRIEVANCE PROCEDURE- | 0014| -UTILIZATION REVIEW PROGRAM--CONTINUOUS QUALITY PROGRAM.-- | 0015| A. Each covered person enrolled in a managed health | 0016| care plan has the right to be treated fairly. A managed health | 0017| care plan shall deliver good quality and appropriate health care | 0018| services to enrollees. The department shall adopt regulations to | 0019| implement the provisions of the Patient Protection Act and shall | 0020| monitor and oversee a managed health care plan to ensure that each | 0021| covered person enrolled in a plan is treated fairly and is | 0022| accorded the rights necessary or appropriate to protect patient | 0023| interests. In adopting regulations to implement the provisions of | 0024| Subparagraphs (a) and (b) of Paragraph (3) and Paragraphs (5) and | 0025| (6) of Subsection B of this section regarding health care | 0001| standards and specialists, utilization review programs and | 0002| continuous quality improvement programs, the department shall | 0003| cooperate with and seek advice from the department of health. | 0004| B. The regulations adopted by the department to | 0005| protect patient rights shall provide at a minimum that: | 0006| (1) a managed health care plan shall provide | 0007| oral and written summaries, policies and procedures that explain, | 0008| prior to or at the time of enrollment and at subsequent periodic | 0009| times as appropriate, in a clear, conspicuous and readily | 0010| understandable form, full and fair disclosure of the plan's | 0011| benefits, terms, conditions, prior authorization requirements, | 0012| enrollee financial responsibility for payments, grievance | 0013| procedures, appeal rights and the patient rights generally | 0014| available to all covered persons; | 0015| (2) a managed health care plan shall provide | 0016| each covered person with appropriate basic and comprehensive | 0017| health care services that are reasonably accessible and available | 0018| in a timely manner to each covered person; | 0019| (3) in providing the right to reasonably | 0020| accessible health care services that are available in a timely | 0021| manner, a managed health care plan shall ensure that: | 0022| (a) the plan offers sufficient numbers and | 0023| types of safe and adequately staffed health care providers at | 0024| reasonable hours of service to meet the health needs of the | 0025| enrollee population, and takes into account cultural aspects of | 0001| the enrollee population; | 0002| (b) health care providers that are | 0003| specialists may act as primary care providers for patients with | 0004| chronic medical conditions, provided the specialists offer all | 0005| reasonable primary care services required by a managed health care | 0006| plan; | 0007| (c) reasonable access is provided to | 0008| out-of-network health care providers; and | 0009| (d) emergency care is immediately available | 0010| without prior authorization requirements, and appropriate out-of- | 0011| network emergency care is not subject to additional costs; | 0012| (4) a managed health care plan shall adopt and | 0013| implement a prompt and fair grievance procedure for resolving | 0014| patient complaints and addressing patient questions and concerns | 0015| regarding any aspect of the plan, including the quality of and | 0016| access to health care, the choice of health care provider or | 0017| treatment and the adequacy of the plan's provider network. The | 0018| grievance procedures shall notify patients of their statutory | 0019| appeal rights, including the option of seeking immediate relief in | 0020| court, and shall provide for a prompt and fair appeal of a plan's | 0021| decision to the superintendent, including special provisions to | 0022| govern emergency appeals to the superintendent in health | 0023| emergencies; | 0024| (5) a managed health care plan shall adopt and | 0025| implement a comprehensive utilization review program. The basis | 0001| of a decision to approve or deny care shall be disclosed to an | 0002| affected enrollee. The decision to approve or deny care to a | 0003| patient shall be made in a timely manner, and the final decision | 0004| shall be made by a qualified health care professional. A plan's | 0005| utilization review program shall ensure that enrollees have proper | 0006| access to health care services, including referrals to necessary | 0007| specialists. A decision made in a plan's utilization review | 0008| program shall be subject to the plan's grievance procedure and | 0009| appeal to the superintendent; and | 0010| (6) a managed health care plan shall adopt and | 0011| implement a continuous quality improvement program that monitors | 0012| the quality and appropriateness of the health care services | 0013| provided by the plan." | 0014| Section 5. A new section of the New Mexico Insurance Code | 0015| is enacted to read: | 0016| "[NEW MATERIAL] CONSUMER ASSISTANCE--CONSUMER ADVISORY | 0017| BOARDS--OMBUDSMAN OFFICE--REPORTS TO CONSUMERS--SUPERINTENDENT'S | 0018| ORDERS TO PROTECT CONSUMERS.-- | 0019| A. Each health care insurer that offers a managed | 0020| health care plan shall establish and adequately staff a consumer | 0021| assistance office. The purpose of the consumer assistance office | 0022| is to respond to consumer questions and concerns and assist | 0023| patients in exercising their rights and protecting their interests | 0024| as consumers of health care. | 0025| B. Each health care insurer that offers a managed | 0001| health care plan shall establish a consumer advisory board. The | 0002| board shall meet at least quarterly and shall advise the insurer | 0003| about the plan's general operations from the perspective of the | 0004| enrollee as a consumer of health care. The board shall also | 0005| oversee the plan's consumer assistance office. | 0006| C. The department shall establish and adequately staff | 0007| a managed care ombudsman office, either within the department or | 0008| by contract. The purpose of the managed care ombudsman office | 0009| shall be to assist patients in exercising their rights and help | 0010| advocate for and protect patient interests. The department's | 0011| managed care ombudsman office shall work in conjunction with each | 0012| insurer's consumer assistance office and shall independently | 0013| evaluate the effectiveness of the insurer's consumer assistance | 0014| office. The department's managed care ombudsman office may | 0015| require an insurer's consumer assistance office to adopt measures | 0016| to ensure that the plan operates effectively to protect patient | 0017| rights and inform consumers of the information to which they are | 0018| entitled. | 0019| D. The department shall prepare an annual report | 0020| assessing the operations of managed health care plans subject to | 0021| the department's oversight, including information about consumer | 0022| complaints. | 0023| E. A person may file a complaint with the | 0024| superintendent regarding a violation of the Patient Protection | 0025| Act. Prior to issuing any remedial order regarding violations of | 0001| the Patient Protection Act or its regulations, the superintendent | 0002| shall hold a hearing in accordance with the provisions of Chapter | 0003| 59A, Article 4 NMSA 1978. The superintendent may issue any order | 0004| he deems necessary or appropriate, including ordering the delivery | 0005| of appropriate care, to protect consumers and enforce the | 0006| provisions of the Patient Protection Act. The superintendent | 0007| shall adopt special procedures to govern the submission of | 0008| emergency appeals to him in health emergencies." | 0009| Section 6. A new section of the New Mexico Insurance Code | 0010| is enacted to read: | 0011| "[NEW MATERIAL] FAIRNESS TO HEALTH CARE PROVIDERS--GAG | 0012| RULES PROHIBITED--GRIEVANCE PROCEDURE FOR PROVIDERS.-- | 0013| A. No managed health care plan may: | 0014| (1) adopt a gag rule or practice that prohibits | 0015| a health care provider from discussing a treatment option with an | 0016| enrollee even if the plan does not approve of the option; | 0017| (2) offer a health care provider inducements, | 0018| other than those inherent in a capitation payment system, to | 0019| reduce or limit medically necessary health care services; or | 0020| (3) require a health care provider to violate | 0021| the ethical duties of his profession or place his license in | 0022| jeopardy. | 0023| B. A health care insurer that proposes to terminate a | 0024| health care provider from the insurer's managed health care plan | 0025| shall explain in writing the rationale for its proposed | 0001| termination and deliver reasonable advance written notice to the | 0002| provider prior to the proposed effective date of the termination. | 0003| C. A managed health care plan shall adopt and | 0004| implement a prompt and fair grievance procedure for resolving | 0005| health care provider complaints and addressing provider questions | 0006| and concerns regarding any aspect of the plan, including the | 0007| quality of and access to health care, the choice of health care | 0008| provider or treatment and the adequacy of the plan's provider | 0009| network. The grievance procedures shall notify providers of their | 0010| statutory appeal rights, including the option of seeking immediate | 0011| relief in court, and shall provide for a prompt and fair appeal of | 0012| a plan's decision to the superintendent, including special | 0013| provisions to govern emergency appeals to the superintendent in | 0014| health emergencies." | 0015| Section 7. A new section of the New Mexico Insurance Code | 0016| is enacted to read: | 0017| "[NEW MATERIAL] POINT-OF-SERVICE OPTION PLAN.--The | 0018| department may require a health care insurer that offers a | 0019| point-of-service plan or open plan to include in any managed | 0020| health care plan it offers an option for a point-of-service plan | 0021| or open plan." | 0022| Section 8. A new section of the New Mexico Insurance Code | 0023| is enacted to read: | 0024| "[NEW MATERIAL] ADMINISTRATIVE COSTS AND BENEFIT COSTS | 0025| DISCLOSURES.--The department shall adopt regulations to ensure | 0001| that both the administrative costs and the direct costs of | 0002| providing health care services of each managed health care plan | 0003| are fully and fairly disclosed to consumers in a uniform manner | 0004| that allows meaningful cost comparisons among plans." | 0005| Section 9. A new section of the New Mexico Insurance Code | 0006| is enacted to read: | 0007| "[NEW MATERIAL] PRIVATE REMEDIES TO ENFORCE PATIENT AND | 0008| PROVIDER INSURANCE RIGHTS--ENROLLEE AS THIRD-PARTY BENEFICIARY TO | 0009| ENFORCE RIGHTS.-- | 0010| A. A person who suffers a loss as a result of a | 0011| violation of a right protected pursuant to the provisions of the | 0012| Patient Protection Act, its regulations or a managed health care | 0013| plan may bring an action to recover actual damages or the sum of | 0014| one hundred dollars ($100), whichever is greater. | 0015| B. A person likely to be damaged by a denial of a | 0016| right protected pursuant to the provisions of the Patient | 0017| Protection Act, its regulations or a managed health care plan may | 0018| be granted an injunction under the principles of equity and on | 0019| terms that the court considers reasonable. Proof of monetary | 0020| damage or intent to violate a right is not required. | 0021| C. To protect and enforce an enrollee's rights in a | 0022| managed health care plan, an individual enrollee participating in | 0023| or eligible to participate in a managed health care plan shall be | 0024| treated as a third-party beneficiary of the managed health care | 0025| plan contract between the health care insurer and the party with | 0001| which the health care insurer directly contracts. An individual | 0002| enrollee may sue to enforce the rights provided in the contract | 0003| that governs the managed health care plan. | 0004| D. The relief provided pursuant to this section is in | 0005| addition to other remedies available against the same conduct | 0006| under the common law or other statutes of this state. | 0007| E. In any class action filed pursuant to this section, | 0008| the court may award damages to the named plaintiffs as provided in | 0009| this section and may award members of the class the actual damages | 0010| suffered by each member of the class as a result of the unlawful | 0011| practice." | 0012| Section 10. A new section of the New Mexico Insurance Code | 0013| is enacted to read: | 0014| "[NEW MATERIAL] APPLICATION OF ACT TO MEDICAID PROGRAM.-- | 0015| The provisions of the Patient Protection Act apply to the medicaid | 0016| program operation in the state. A managed health care plan | 0017| offered through the medicaid program shall grant enrollees and | 0018| providers the same rights and protections as are granted to | 0019| enrollees and providers in any other managed health care plan | 0020| subject to the provisions of the Patient Protection Act." | 0021| Section 11. A new section of the New Mexico Insurance Code | 0022| is enacted to read: | 0023| "[NEW MATERIAL] PENALTY.--In addition to any other | 0024| penalties provided by law, a civil administrative penalty of up to | 0025| twenty-five thousand dollars ($25,000) may be imposed for each | 0001| violation of the Patient Protection Act. An administrative | 0002| penalty shall be imposed by written order of the superintendent | 0003| made after holding a hearing as provided for in Chapter 59A, | 0004| Article 4 NMSA 1978." | 0005| Section 12. Section 59A-1-16 NMSA 1978 (being Laws 1984, | 0006| Chapter 127, Section 16) is amended to read: | 0007| "59A-1-16. EXEMPTED FROM CODE.--In addition to | 0008| organizations and businesses otherwise exempt, the Insurance Code | 0009| shall not apply [as] to: | 0010| A. a labor organization [which] that, incidental only | 0011| to operations as a labor organization, issues benefit certificates | 0012| to members or maintains funds to assist members and their families | 0013| in times of illness, injury or need, and not for profit; | 0014| B. the credit union share insurance corporation, as | 0015| identified in [Article 58-12] Chapter 58, Article 12 NMSA 1978, | 0016| and similar corporations and funds for protection of depositors, | 0017| shareholders or creditors of financial institutions and businesses | 0018| other than insurers; or | 0019| C. the risk management division of the general | 0020| services department [of finance and administration of New Mexico] | 0021| or [as] to insurance of public property or public risks by any | 0022| agency of government not otherwise engaged in the business of | 0023| insurance, except the provisions of the Patient Protection Act | 0024| shall apply to the risk management division and any managed health | 0025| care plan it offers." | 0001| Section 13. Section 59A-46-30 NMSA 1978 (being Laws 1993, | 0002| Chapter 266, Section 29) is amended to read: | 0003| "59A-46-30. STATUTORY CONSTRUCTION AND RELATIONSHIP TO | 0004| OTHER LAWS.-- | 0005| A. The provisions of the Insurance Code other than | 0006| Chapter 59A, Article 46 NMSA 1978 shall not apply to health | 0007| maintenance organizations except as expressly provided in the | 0008| Insurance Code and that article. To the extent reasonable and not | 0009| inconsistent with the provisions of that article, the following | 0010| articles and provisions of the Insurance Code shall also apply to | 0011| health maintenance organizations, their promoters, sponsors, | 0012| directors, officers, employees, agents, solicitors and other | 0013| representatives [and]. For the purposes of such applicability, a | 0014| health maintenance organization may [therein] be referred to as an | 0015| "insurer": | 0016| (1) Chapter 59A, Article 1 NMSA 1978; | 0017| (2) Chapter 59A, Article 2 NMSA 1978; | 0018| (3) Chapter 59A, Article 3 NMSA 1978; | 0019| (4) Chapter 59A, Article 4 NMSA 1978; | 0020| (5) Subsection C of Section 59A-5-22 NMSA 1978; | 0021| (6) Sections 59A-6-2 through 59A-6-4 and 59A-6-6 | 0022| NMSA 1978; | 0023| (7) Chapter 59A, Article 8 NMSA 1978; | 0024| (8) Chapter 59A, Article 10 NMSA 1978; | 0025| (9) Section 59A-12-22 NMSA 1978; | 0001| (10) Chapter 59A, Article 16 NMSA 1978; | 0002| (11) Chapter 59A, Article 18 NMSA 1978; | 0003| (12) Chapter 59A, Article 19 NMSA 1978; | 0004| (13) Section 59A-22-14 NMSA 1978; | 0005| [(13)] (14) Chapter 59A, Article 23B NMSA 1978; | 0006| [(14)] (15) Sections 59A-34-9 through | 0007| 59A-34-13, 59A-34-23, 59A-34-36 and 59A-34-37 NMSA 1978; [and | 0008| (15)] (16) Chapter 59A, Article 37 NMSA 1978; | 0009| and | 0010| (17) the Patient Protection Act. | 0011| B. Solicitation of enrollees by a health maintenance | 0012| organization granted a certificate of authority, or its | 0013| representatives, shall not be construed as violating any provision | 0014| of law relating to solicitation or advertising by health | 0015| professionals, but health professionals shall be individually | 0016| subject to the laws, rules, regulations and ethical provisions | 0017| governing their individual professions. | 0018| C. Any health maintenance organization authorized | 0019| under the provisions of the Health Maintenance Organization Law | 0020| shall not be deemed to be practicing medicine and shall be exempt | 0021| from the provisions of laws relating to the practice of medicine." | 0022| Section 14. Section 59A-47-33 NMSA 1978 (being Laws 1984, | 0023| Chapter 127, Section 879.32, as amended by Laws 1994, Chapter 64, | 0024| Section 10 and also by Laws 1994, Chapter 75, Section 34) is | 0025| amended to read: | 0001| "59A-47-33. OTHER PROVISIONS APPLICABLE.--The provisions of | 0002| the Insurance Code other than Chapter 59A, Article 47 NMSA 1978 | 0003| shall not apply to health care plans except as expressly provided | 0004| in the Insurance Code and that article. To the extent reasonable | 0005| and not inconsistent with the provisions of that article, the | 0006| following articles and provisions of the Insurance Code shall also | 0007| apply to health care plans, their promoters, sponsors, directors, | 0008| officers, employees, agents, solicitors and other representatives; | 0009| and, for the purposes of such applicability, a health care plan | 0010| may [therein] be referred to as an "insurer": | 0011| A. Chapter 59A, Article 1 NMSA 1978; | 0012| B. Chapter 59A, Article 2 NMSA 1978; | 0013| C. Chapter 59A, Article 4 NMSA 1978; | 0014| D. Subsection C of Section 59A-5-22 NMSA 1978; | 0015| E. Sections 59A-6-2 through 59A-6-4 and | 0016| 59A-6-6 NMSA 1978; | 0017| F. Section 59A-7-11 NMSA 1978; | 0018| G. Chapter 59A, Article 8 NMSA 1978; | 0019| H. Chapter 59A, Article 10 NMSA 1978; | 0020| I. Section 59A-12-22 NMSA 1978; | 0021| J. Chapter 59A, Article 16 NMSA 1978; | 0022| K. Chapter 59A, Article 18 NMSA 1978; | 0023| L. Chapter 59A, Article 19 NMSA 1978; | 0024| M. Subsections B through E of Section | 0025| 59A-22-5 NMSA 1978; | 0001| N. Section 59A-22-14 NMSA 1978; | 0002| [N.] O. Section 59A-22-34.1 NMSA 1978; | 0003| [O.] P. Section 59A-22-39 NMSA 1978; | 0004| [P.] Q. Section 59A-22-40 NMSA 1978; | 0005| [Q.] R. Sections 59A-34-9 through 59A-34-13 [NMSA | 0006| 1978] and [Section] 59A-34-23 NMSA 1978; | 0007| [R.] S. Chapter 59A, Article 37 NMSA 1978, except | 0008| Section 59A-37-7 NMSA 1978; [and | 0009| S.] T. Section 59A-46-15 NMSA 1978; and | 0010| U. the Patient Protection Act." | 0011| Section 15. APPROPRIATION.--Two hundred four thousand nine | 0012| hundred dollars ($204,900) is appropriated from the general fund | 0013| to the department of insurance for expenditure in fiscal year 1998 | 0014| to pay salaries and benefits and other costs necessary to | 0015| establish a managed care ombudsman office and administer the | 0016| provisions of the Patient Protection Act. Any unexpended or | 0017| unencumbered balance remaining at the end of fiscal year 1998 | 0018| shall revert to the general fund. | 0019| Section 16. EFFECTIVE DATE.--The effective date of the | 0020| provisions of this act is July 1, 1997. | 0021|  |