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AN ACT

RELATING TO INSURANCE; ENACTING THE PATIENT PROTECTION ACT;

PROVIDING PROTECTIONS FOR PERSONS IN MANAGED HEALTH CARE

PLANS; APPLYING PATIENT PROTECTIONS TO MEDICAID MANAGED CARE;

IMPOSING A CIVIL PENALTY; AMENDING AND ENACTING SECTIONS OF

THE NMSA 1978; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new section of the New Mexico Insurance

Code is enacted to read:

"SHORT TITLE.--Sections 1 through 11 of this act may be

cited as the "Patient Protection Act"."

Section 2. A new section of the New Mexico Insurance

Code is enacted to read:

"PURPOSE OF ACT.--The purpose of the Patient Protection

Act is to regulate aspects of health insurance by specifying

patient and provider rights and confirming and clarifying the

authority of the department to adopt regulations to provide

protections to persons enrolled in managed health care plans.

The insurance protections should ensure that managed health

care plans treat patients fairly and arrange for the delivery

of good quality services."

Section 3. A new section of the New Mexico Insurance

Code is enacted to read:

"DEFINITIONS.--As used in the Patient Protection Act:

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A. "continuous quality improvement" means an

ongoing and systematic effort to measure, evaluate and improve

a managed health care plan's process in order to improve

continually the quality of health care services provided to

enrollees;

B. "covered person", "enrollee", "patient" or

"consumer" means an individual who is entitled to receive

health care benefits provided by a managed health care plan;

C. "department" means the insurance department;

D. "emergency care" means health care procedures,

treatments or services delivered to a covered person after the

sudden onset of what reasonably appears to be a medical

condition that manifests itself by symptoms of sufficient

severity, including severe pain, that the absence of immediate

medical attention could be reasonably expected by a reasonable

layperson to result in jeopardy to a person's health, serious

impairment of bodily functions, serious dysfunction of a

bodily organ or part or disfigurement to a person;

E. "health care facility" means an institution

providing health care services, including a hospital or other

licensed inpatient center; an ambulatory surgical or treatment

center; a skilled nursing center; a residential treatment

center; a home health agency; a diagnostic, laboratory or

imaging center; and a rehabilitation or other therapeutic

health setting;

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F. "health care insurer" means a person that has a

valid certificate of authority in good standing under the

Insurance Code to act as an insurer, health maintenance

organization, nonprofit health care plan or prepaid dental

plan;

G. "health care professional" means a physician or

other health care practitioner, including a pharmacist, who is

licensed, certified or otherwise authorized by the state to

provide health care services consistent with state law;

H. "health care provider" or "provider" means a

person that is licensed or otherwise authorized by the state

to furnish health care services and includes health care

professionals and health care facilities;

I. "health care services" includes, to the extent

offered by the plan, physical health or community-based mental

health or developmental disability services, including

services for developmental delay;

J. "managed health care plan" or "plan" means a

health care insurer or a provider service network when

offering a benefit that either requires a covered person to

use, or creates incentives, including financial incentives,

for a covered person to use health care providers managed,

owned, under contract with or employed by the health care

insurer or provider service network. "Managed health care

plan" or "plan" does not include a health care insurer or

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provider service network offering a traditional

fee-for-service indemnity benefit or a benefit that covers

only short-term travel, accident-only, limited benefit,

student health plan or specified disease policies;

K. "person" means an individual or other legal

entity;

L. "point-of-service plan" or "open plan" means a

managed health care plan that allows enrollees to use health

care providers other than providers under direct contract with

or employed by the plan, even if the plan provides incentives,

including financial incentives, for covered persons to use the

plan's designated participating providers;

M. "provider service network" means two or more

health care providers affiliated for the purpose of providing

health care services to covered persons on a capitated or

similar prepaid flat-rate basis that hold a certificate of

authority pursuant to the Provider Service Network Act;

N. "superintendent" means the superintendent of

insurance; and

O. "utilization review" means a system for

reviewing the appropriate and efficient allocation of health

care services given or proposed to be given to a patient or

group of patients."

Section 4. A new section of the New Mexico Insurance

Code is enacted to read:

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"PATIENT RIGHTS--DISCLOSURES--RIGHTS TO BASIC AND

COMPREHENSIVE HEALTH CARE SERVICES--GRIEVANCE PROCEDURE--

UTILIZATION REVIEW PROGRAM--CONTINUOUS QUALITY PROGRAM.--

A. Each covered person enrolled in a managed

health care plan has the right to be treated fairly. A

managed health care plan shall arrange for the delivery of

good quality and appropriate health care services to enrollees

as defined in the particular subscriber agreement. The

department shall adopt regulations to implement the provisions

of the Patient Protection Act and shall monitor and oversee a

managed health care plan to ensure that each covered person

enrolled in a plan is treated fairly and in accordance with

the requirements of the Patient Protection Act. In adopting

regulations to implement the provisions of Subparagraphs (a)

and (b) of Paragraph (3) and Paragraphs (5) and (6) of

Subsection B of this section regarding health care standards

and specialists, utilization review programs and continuous

quality improvement programs, the department shall cooperate

with and seek advice from the department of health.

B. The regulations adopted by the department to

protect patient rights shall provide at a minimum that:

(1) prior to or at the time of enrollment, a

managed health care plan shall provide a summary of benefits

and exclusions, premium information and a provider listing;

within a reasonable time after enrollment and at subsequent

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periodic times as appropriate, a managed health care plan

shall provide written material that contains, in a clear,

conspicuous and readily understandable form, a full and fair

disclosure of the plan's benefits, limitations, exclusions,

conditions of eligibility, prior authorization requirements,

enrollee financial responsibility for payments, grievance

procedures, appeal rights and the patients' rights generally

available to all covered persons;

(2) a managed health care plan shall provide

health care services that are reasonably accessible and

available in a timely manner to each covered person;

(3) in providing reasonably accessible

health care services that are available in a timely manner, a

managed health care plan shall ensure that:

(a) the plan offers sufficient numbers

and types of qualified and adequately staffed health care

providers at reasonable hours of service to provide health

care services to the plan's enrollees;

(b) health care providers that are

specialists may act as primary care providers for patients

with chronic medical conditions, provided the specialists

offer all basic health care services that are required of them

by a managed health care plan;

(c) reasonable access is provided to

out-of-network health care providers if medically necessary

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covered services are not reasonably available through

participating health care providers or if necessary to provide

continuity of care during brief transition periods;

(d) emergency care is immediately

available without prior authorization requirements, and

appropriate out-of-network emergency care is not subject to

additional costs; and

(e) the plan, through provider

selection, provider education, the provision of additional

resources or other means, reasonably addresses the cultural

and linguistic diversity of its enrollee population;

(4) a managed health care plan shall adopt

and implement a prompt and fair grievance procedure for

resolving patient complaints and addressing patient questions

and concerns regarding any aspect of the plan, including the

quality of and access to health care, the choice of health

care provider or treatment and the adequacy of the plan's

provider network. The grievance procedure shall notify

patients of their right to obtain review by the plan, their

right to obtain review by the superintendent, their right to

expedited review of emergent utilization decisions and their

rights under the Patient Protection Act;

(5) a managed health care plan shall adopt

and implement a comprehensive utilization review program. The

basis of a decision to deny care shall be disclosed to an

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affected enrollee. The decision to approve or deny care to an

enrollee shall be made in a timely manner, and the final

decision shall be made by a qualified health care

professional. A plan's utilization review program shall

ensure that enrollees have proper access to health care

services, including referrals to necessary specialists. A

decision made in a plan's utilization review program shall be

subject to the plan's grievance procedure and appeal to the

superintendent; and

(6) a managed health care plan shall adopt

and implement a continuous quality improvement program that

monitors the quality and appropriateness of the health care

services provided by the plan."

Section 5. A new section of the New Mexico Insurance

Code is enacted to read:

"CONSUMER ASSISTANCE--CONSUMER ADVISORY BOARDS

--OMBUDSMAN OFFICE--REPORTS TO CONSUMERS--SUPERINTENDENT'S

ORDERS TO PROTECT CONSUMERS.--

A. Each managed health care plan shall establish

and adequately staff a consumer assistance office. The

purpose of the consumer assistance office is to respond to

consumer questions and concerns and assist patients in

exercising their rights and protecting their interests as

consumers of health care.

B. Each managed health care plan shall establish a

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consumer advisory board. The board shall meet at least

quarterly and shall advise the plan about the plan's general

operations from the perspective of the enrollee as a consumer

of health care. The board shall also review the operations of

and be advisory to the plan's consumer assistance office.

C. The department shall establish and adequately

staff a managed care ombudsman office, either within the

department or by contract. The purpose of the managed care

ombudsman office shall be to assist patients in exercising

their rights and help advocate for and protect patient

interests. The department's managed care ombudsman office

shall work in conjunction with each plan's consumer assistance

office and shall independently evaluate the effectiveness of

the plan's consumer assistance office. The department's

managed care ombudsman office may require a plan's consumer

assistance office to adopt measures to ensure that the plan

operates effectively to protect patient rights and inform

consumers of the information to which they are entitled.

D. The department shall prepare an annual report

assessing the operations of managed health care plans subject

to the department's oversight, including information about

consumer complaints.

E. A person adversely affected may file a

complaint with the superintendent regarding a violation of the

Patient Protection Act. Prior to issuing any remedial order

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regarding violations of the Patient Protection Act or its

regulations, the superintendent shall hold a hearing in

accordance with the provisions of Chapter 59A, Article 4 NMSA

1978. The superintendent may issue any order he deems

necessary or appropriate, including ordering the delivery of

appropriate care, to protect consumers and enforce the

provisions of the Patient Protection Act. The superintendent

shall adopt special procedures to govern the submission of

emergency appeals to him in health emergencies."

Section 6. A new section of the New Mexico Insurance

Code is enacted to read:

"FAIRNESS TO HEALTH CARE PROVIDERS--GAG RULES

PROHIBITED--GRIEVANCE PROCEDURE FOR PROVIDERS.--

A. No managed health care plan may:

(1) adopt a gag rule or practice that

prohibits a health care provider from discussing a treatment

option with an enrollee even if the plan does not approve of

the option;

(2) include in any of its contracts with

health care providers any provisions that offer an inducement,

financial or otherwise, to provide less than medically

necessary services to an enrollee; or

(3) require a health care provider to

violate any recognized fiduciary duty of his profession or

place his license in jeopardy.

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B. A plan that proposes to terminate a health care

provider from the managed health care plan shall explain in

writing the rationale for its proposed termination and deliver

reasonable advance written notice to the provider prior to the

proposed effective date of the termination.

C. A managed health care plan shall adopt and

implement a process pursuant to which providers may raise with

the plan concerns that they may have regarding operation of

the plan, including concerns regarding quality of and access

to health care services, the choice of health care providers

and the adequacy of the plan's provider network. The process

shall include, at a minimum, the right of the provider to

present the provider's concerns to a plan committee

responsible for the substantive area addressed by the concern,

and the assurance that the concern will be conveyed to the

plan's governing body. In addition, a managed health care

plan shall adopt and implement a fair hearing plan that

permits a health care provider to dispute the existence of

adequate cause to terminate the provider's participation with

the plan to the extent that the relationship is terminated for

cause and shall include in each provider contract a dispute

resolution mechanism."

Section 7. A new section of the New Mexico Insurance

Code is enacted to read:

"POINT-OF-SERVICE OPTION PLAN.--

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A. Except as otherwise provided in this section,

the department may require a plan that offers a

point-of-service plan or open plan to include in any managed

health care plan it offers an option for a point-of-service

plan or open plan to the extent that the department determines

that the open plan option is financially sound.

B. No health care insurer may be required to offer

a point-of-service plan or open plan as an option under a

medicaid-funded managed health care plan unless the human

services department has established such a requirement as part

of a procurement for managed health care under the medicaid

program."

Section 8. A new section of the New Mexico Insurance

Code is enacted to read:

"ADMINISTRATIVE COSTS AND BENEFIT COSTS DISCLOSURES.--

The department shall adopt regulations to ensure that both the

administrative costs and the direct costs of providing health

care services of each managed health care plan are fully and

fairly disclosed to consumers in a uniform manner that allows

meaningful cost comparisons among plans."

Section 9. A new section of the New Mexico Insurance

Code is enacted to read:

"PRIVATE REMEDIES TO ENFORCE PATIENT AND PROVIDER

INSURANCE RIGHTS--ENROLLEE AS THIRD-PARTY BENEFICIARY TO

ENFORCE RIGHTS.--

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A. A person who suffers a loss as a result of a

violation of a right protected pursuant to the provisions of

the Patient Protection Act, its regulations or a managed

health care plan may bring an action to recover actual damages

or the sum of one hundred dollars ($100), whichever is

greater.

B. A person likely to be damaged by a denial of a

right protected pursuant to the provisions of the Patient

Protection Act or its regulations may be granted an injunction

under the principles of equity and on terms that the court

considers reasonable. Proof of monetary damage or intent to

violate a right is not required.

C. To protect and enforce an enrollee's rights in

a managed health care plan, an individual enrollee

participating in or eligible to participate in a managed

health care plan shall be treated as a third-party beneficiary

of the managed health care plan contract between the plan and

the party with which the plan directly contracts. An

individual enrollee may sue to enforce the rights provided in

the contract that governs the managed health care plan;

provided, however, that the plan and the party to the contract

may amend the terms of, or terminate the provisions of, the

contract without the enrollee's consent.

D. The relief provided pursuant to this section is

in addition to other remedies available against the same

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conduct under the common law or other statutes of this state.

E. In any class action filed pursuant to this

section, the court may award damages to the named plaintiffs

as provided in this section and may award members of the class

the actual damages suffered by each member of the class as a

result of the unlawful practice.

F. Nothing in the Patient Protection Act is

intended to make a plan vicariously liable for the actions of

independent contractor health care providers."

Section 10. A new section of the New Mexico Insurance

Code is enacted to read:

"APPLICATION OF ACT TO MEDICAID PROGRAM.--

A. Except as otherwise provided in this section,

the provisions of the Patient Protection Act apply to the

medicaid program operation in the state. A managed health

care plan offered through the medicaid program shall grant

enrollees and providers the same rights and protections as are

granted to enrollees and providers in any other managed health

care plan subject to the provisions of the Patient Protection

Act.

B. Nothing in the Patient Protection Act shall be

construed to limit the authority of the human services

department to administer the medicaid program, as required by

law. Consistent with applicable state and federal law, the

human services department shall have sole authority to

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determine, establish and enforce medicaid eligibility

criteria, the scope, definitions and limitations of medicaid

benefits and the minimum qualifications or standards for

medicaid service providers.

C. Medicaid recipients and applicants retain their

right to appeal decisions adversely affecting their medicaid

benefits to the human services department, pursuant to the

Public Assistance Appeals Act. Notwithstanding other

provisions of the Patient Protection Act, a medicaid recipient

or applicant who files an appeal to the human services

department pursuant to the Public Assistance Appeals Act may

not file an appeal on the same issue to the superintendent

pursuant to the Patient Protection Act, unless the human

services department refuses to hear the appeal. The

superintendent may refer to the human services department any

appeal filed with the superintendent pursuant to the Patient

Protection Act if the complainant is a medicaid beneficiary

and the matter in dispute is subject to the provisions of the

Public Assistance Appeals Act.

D. Any managed health care plan participating in

the medicaid managed care program as of the effective date of

the Patient Protection Act and that is in compliance with

contractual and regulatory requirements applicable to that

program shall be deemed to comply with any requirements

established in accordance with that act until July 1, 1999;

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provided that, from the effective date of that act, any rights

established under that act beyond those under requirements of

the human services department shall apply to enrollees in

medicaid managed health care plans."

Section 11. A new section of the New Mexico Insurance

Code is enacted to read:

"PENALTY.--In addition to any other penalties provided

by law, a civil administrative penalty of up to ten thousand

dollars ($10,000) may be imposed for each violation of the

Patient Protection Act. An administrative penalty shall be

imposed by written order of the superintendent made after

holding a hearing as provided for in Chapter 59A, Article 4

NMSA 1978."

Section 12. Section 59A-1-16 NMSA 1978 (being Laws

1984, Chapter 127, Section 16) is amended to read:

"59A-1-16. EXEMPTED FROM CODE.--In addition to

organizations and businesses otherwise exempt, the Insurance

Code shall not apply to:

A. a labor organization that, incidental only to

operations as a labor organization, issues benefit

certificates to members or maintains funds to assist members

and their families in times of illness, injury or need, and

not for profit;

B. the credit union share insurance corporation,

as identified in Chapter 58, Article 12 NMSA 1978, and similar

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corporations and funds for protection of depositors,

shareholders or creditors of financial institutions and

businesses other than insurers; or

C. the risk management division of the general

services department or to insurance of public property or

public risks by any agency of government not otherwise engaged

in the business of insurance, except the provisions of the

Patient Protection Act shall apply to the risk management

division and any managed health care plan it offers."

Section 13. Section 59A-46-30 NMSA 1978 (being Laws

1993, Chapter 266, Section 29, as amended) is amended to read:

"59A-46-30. STATUTORY CONSTRUCTION AND RELATIONSHIP TO

OTHER LAWS.--

A. The provisions of the Insurance Code other than

Chapter 59A, Article 46 NMSA 1978 shall not apply to health

maintenance organizations except as expressly provided in the

Insurance Code and that article. To the extent reasonable and

not inconsistent with the provisions of that article, the

following articles and provisions of the Insurance Code shall

also apply to health maintenance organizations and their

promoters, sponsors, directors, officers, employees, agents,

solicitors and other representatives. For the purposes of

such applicability, a health maintenance organization may

therein be referred to as an "insurer":

(1) Chapter 59A, Article 1 NMSA 1978;

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(2) Chapter 59A, Article 2 NMSA 1978;

(3) Chapter 59A, Article 3 NMSA 1978;

(4) Chapter 59A, Article 4 NMSA 1978;

(5) Subsection C of Section 59A-5-22 NMSA

1978;

(6) Sections 59A-6-2 through 59A-6-4 and

59A-6-6 NMSA 1978;

(7) Chapter 59A, Article 8 NMSA 1978;

(8) Chapter 59A, Article 10 NMSA 1978;

(9) Section 59A-12-22 NMSA 1978;

(10) Chapter 59A, Article 16 NMSA 1978;

(11) Chapter 59A, Article 18 NMSA 1978;

(12) Chapter 59A, Article 19 NMSA 1978;

(13) Section 59A-22-14 NMSA 1978;

(14) Chapter 59A, Article 23B NMSA 1978;

(15) Sections 59A-34-9 through 59A-34-13,

59A-34-17, 59A-34-23, 59A-34-36 and 59A-34-37 NMSA 1978;

(16) Chapter 59A, Article 37 NMSA 1978; and

(17) the Patient Protection Act.

B. Solicitation of enrollees by a health

maintenance organization granted a certificate of authority,

or its representatives, shall not be construed as violating

any provision of law relating to solicitation or advertising

by health professionals, but health professionals shall be

individually subject to the laws, rules, regulations and

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ethical provisions governing their individual professions.

C. Any health maintenance organization authorized

under the provisions of the Health Maintenance Organization

Law shall not be deemed to be practicing medicine and shall be

exempt from the provisions of laws relating to the practice of

medicine."

Section 14. Section 59A-47-33 NMSA 1978 (being Laws

1984, Chapter 127, Section 879.32, as amended by Laws 1997,

Chapter 7, Section 4 and by Laws 1997, Chapter 248, Section 3

and also by Laws 1997, Chapter 255, Section 4) is amended to

read:

"59A-47-33. OTHER PROVISIONS APPLICABLE.--The

provisions of the Insurance Code other than Chapter 59A,

Article 47 NMSA 1978 shall not apply to health care plans

except as expressly provided in the Insurance Code and that

article. To the extent reasonable and not inconsistent with

the provisions of that article, the following articles and

provisions of the Insurance Code shall also apply to health

care plans, their promoters, sponsors, directors, officers,

employees, agents, solicitors and other representatives; and,

for the purposes of such applicability, a health care plan may

therein be referred to as an "insurer":

A. Chapter 59A, Article 1 NMSA 1978;

B. Chapter 59A, Article 2 NMSA 1978;

C. Chapter 59A, Article 4 NMSA 1978;

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D. Subsection C of Section 59A-5-22 NMSA 1978;

E. Sections 59A-6-2 through 59A-6-4 and

59A-6-6 NMSA 1978;

F. Section 59A-7-11 NMSA 1978;

G. Chapter 59A, Article 8 NMSA 1978;

H. Chapter 59A, Article 10 NMSA 1978;

I. Section 59A-12-22 NMSA 1978;

J. Chapter 59A, Article 16 NMSA 1978;

K. Chapter 59A, Article 18 NMSA 1978;

L. Chapter 59A, Article 19 NMSA 1978;

M. Subsections B through E of Section

59A-22-5 NMSA 1978;

N. Section 59A-22-14 NMSA 1978;

O. Section 59A-22-34.1 NMSA 1978;

P. Section 59A-22-39 NMSA 1978;

Q. Section 59A-22-40 NMSA 1978;

R. Section 59A-22-41 NMSA 1978;

S. Sections 59A-34-9 through 59A-34-13 and

59A-34-23 NMSA 1978;

T. Chapter 59A, Article 37 NMSA 1978, except

Section 59A-37-7 NMSA 1978;

U. Section 59A-46-15 NMSA 1978; and

V. the Patient Protection Act."

Section 15. APPROPRIATION.--Five hundred thousand

dollars ($500,000) is appropriated from the general fund to

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the department of insurance for expenditure in fiscal year

1999 to pay salaries and benefits and other costs necessary to

establish a managed care ombudsman office and administer the

provisions of the Patient Protection Act. Any unexpended or

unencumbered balance remaining at the end of fiscal year 1999

shall revert to the general fund.

Section 16. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 1998. HBIC/HB 361

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