[31 Pa.B. 3043]
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Subchapter G. HMOs The Department received over 200 comments on this proposed subchapter.
Several commentators made general comments not addressed to any particular section. One commentator commenting on the overall subchapter, raised concerns that the Department would have little oversight in establishing criteria and review of HMO licensing.
The Department sets the standards for obtaining a certificate of authority, and will conduct a readiness review, as well as a review of the application to determine whether the applicant meets those standards. Use of a private entity to perform reviews is not unheard of, and does not eliminate the Department's responsibility for ensuring that an HMO complies with the HMO Act and the regulations.
One commentator raised concerns that the Department's proposed revisions to the HMO regulations would be disadvantageous to consumers, and that Act 68 did not provide the statutory authority to make these changes.
The Department is revising its HMO regulations to comply with Executive Order 1996-1, which requires all agencies to review all regulations for necessary changes. The Department was in the process of making these changes when Act 68 was passed. Because the two sets of regulations are highly interdependent, the Department chose to combine the two processes. The Department has the authority to accomplish the revisions and deletions it proposed through both Act 68 and the HMO Act. The Department disagrees that the regulations in any way harm consumers. The Department has gone to considerable lengths to include consumer protections in the final-form regulations adopted under both Act 68 and the HMO Act.
Two commentators commented that the proposed regulations did not include minimum standards for education, training, experience and record keeping, among other things. One commentator stated its concern that the proposed regulations would also fail to require Department review of information about practitioners, including substance abuse history, board certification and malpractice history.
This comment pertains to credentialing of providers, which the Department addresses in an entirely separate subchapter. See Subchapter L. This comment is addressed in that section. Again, that is a credentialing issue for the HMO.
Section 9.621. Applicability.
The Department received one comment on this proposed section. The commentator recommended that the Department identify specific types of plans covered by Act 68 and make this list available to consumers and providers.
The Department does not intend to develop a list of all types of plans subject to Act 68. Also, this subchapter applies exclusively to HMOs. Although all HMOs are subject to Act 68, not all plans subject to Act 68 are also subject to the HMO Act. Section 2102 of Article XXI contains a definition of what plans are subject to Act 68. To the extent that this comment was made in an effort to help consumers and health care providers understand their rights under Act 68, the Department believes that a list could be misleading to enrollees. An enrollee may in fact be covered by a plan administered by an HMO or other plan that is preempted by the Federal Employee Retirement Income Security Act (ERISA) from Act 68's jurisdiction. Through the disclosure requirements issued by Insurance and those contained in this section, a plan is responsible for providing Act 68 information to enrollees and health care providers.
Section 9.622 Prohibition against uncertified HMOs.
The Department received one comment on proposed subsection (a). That proposal would prohibit a corporation from operating an HMO within this Commonwealth without a certificate of authority. The commentator noted that the proposed subsection prohibited only corporations from engaging in HMO activity. The commentator recommended that the Department delete the first four words, and replace them with, ''no person, partnership, corporation, or limited liability company or other entity shall . . . .''
The language in the proposed subsection would track the HMO Act. The Department has not changed the proposed subsection. It is written in this manner because under the HMO Act, only a corporation may apply for a certificate of authority to operate as an HMO.
The Department received comments from one commentator on proposed subsection (b). The proposal would prohibit a foreign HMO from operating within this Commonwealth without a certificate of authority from the Commonwealth. The commentator recommended that the Department specifically exclude out-of-State HMOs that enroll Pennsylvania residents employed in another state under group contracts issued and delivered in that other state, if the HMO has a valid certificate of authority in that state.
The Department is not empowered to regulate contracts between non-Pennsylvania plans and non-Pennsylvania employers, even though they may affect residents of this Commonwealth who happen to work out-of-State. The HMO Act and Act 68 regulate the corporation, not the enrollee. HMOs licensed and regulated in other states, which issue contracts in this Commonwealth, are considered foreign HMOs under the section 6.1 of the HMO Act (40 P. S. § 1556.1) and the statute specifically requires foreign HMOs to obtain a certificate of authority from the Commonwealth.
The commentator also recommended that rather than requiring a separate certificate of authority for potentially small amount of business by foreign HMO, the Department should rely on and exercise its regulatory oversight in areas of access to quality of care and quality of care issues.
The statute requires a foreign HMO to obtain a certificate of authority to do business in the Commonwealth. The foreign HMO may always make an argument to the Secretary of the Department and the Commissioner of Insurance under section 6.1(b) of the HMO Act that specific requirements of the regulations or the HMO Act should be waived. The Department, however, is not prepared to make the sweeping declaration that only portions of the regulations apply to foreign HMOs.
Section 9.631. Content of an application for an HMO certificate of authority.
The Department received several comments on this proposed section.
One commentator recommended that the Department's and Insurance's requirements be the same for what is to be included in an HMO certificate of authority application. The Department disagrees. Each agency requires different information for its particular purposes, since each has different responsibilities under the HMO Act. Although both agencies require different information, there is a joint application.
Several commentators, including IRRC, commented on the Department's proposed deletions from the application which had been required by the regulations the Department was proposing to repeal. IRRC commented on the Department's proposed elimination of a job description for the medical director, of the procedure for referral of subscribers to nonparticipating specialists and of procedures for payment of emergency medical services. IRRC noted that in its Preamble to the proposed rulemaking, the Department stated that these requirements were either unnecessary or superseded by Act 68. IRRC disagreed, and stated that these requirements needed to be present for the Department to determine an applicant's ability to operate in accordance with Act 68 and the HMO Act. IRRC asked the Department to either reinsert these items, or explain why they were no longer necessary and what portions of Act 68 superseded them.
Another commentator also raised concerns that the Department was proposing to eliminate the regulatory requirement that an HMO provide a detailed description of position of the medical director. The commentator also raised concerns that the Department was proposing to eliminate the requirement for review and approval of the HMO's procedure for referral of subscribers to nonparticipating specialists. This commentator stated that the Department could not determine whether the person in medical director's position had authority to oversee UR and quality assurance without reviewing the job description. The commentator recommended that the Department require that the medical director: (1) be qualified or have experience in performing these functions; (2) presently live in this Commonwealth or have lived here in recent memory; (3) have a job description requiring the medical director to perform these activities; (4) utilize appropriate review criteria for this purpose; (5) be employed for more than 1 hour per year; (6) not have incentives based on decreased utilization; and (7) report directly to the HMO's board. In the commentator's opinion, Act 68 did not require that these requirements be repealed.
The same commentator raised concerns that the Department was proposing to repeal the regulatory requirement that the applicant provide a copy of its financial information and proposed subscriber literature. The commentator stated that the Department had expertise in reviewing subscriber literature to determine whether it complied with Department policies. Secondly, the commentator stated that the Department could not determine if there was consistency between what the plan stated it would do to gain a certificate of authority and what it had done without seeing the subscriber literature. Thirdly, the commentator raised concerns that the Department would not have available needed financial statements to determine what the plan had in place regarding personnel, equipment and offices as opposed to what it would need to put in place if the requirement was deleted.
After reviewing these comments, the Department has decided to keep language requiring that an applicant provide the Department with information concerning the job description for the medial director. See paragraph (16). The Department has not addressed the issue of what qualifications the person holding the position of medical director must have in this section. The Department addresses this issue in the discussion of comments on proposed § 9.633 (relating to HMO board requirements).
The Department has also decided to keep language requiring applicants to submit a procedure for referrals to nonparticipating providers, see paragraph (17), and copies of member literature. See paragraph (18). Copies of general member literature are required in the agencies' joint application for a certificate of authority, which both agencies receive and review. Although the Department will receive the member literature, it is Insurance that has the authority to review and make certain the application contains this particular information.
The Department has decided against including language requiring the submission procedures for payment of emergency services in the HMO certificate of authority application. The regulatory requirement the Department is repealing was meant to ensure that plans were not summarily rejecting emergency room claims, regardless of the medical condition, on the technicality that the primary care provider had not given prior authorization. Under the prudent layperson standard, the condition must be considered and the lack of a prior authorization cannot be used to summarily reject the claim. Act 68 not only requires plans to utilize the prudent layperson standard when processing claims, it also delineates those services that must be included for payment. See section 2116 of Article XXI. Section 9.672 (relating to emergency services) addresses emergency services including payment requirements and nonparticipating requirements.
One commentator also raised concerns that the Department was proposing to eliminate the regulatory requirement that an HMO provide a description of the process of board selection. The commentator stated that this change was not required by Act 68. The commentator commented that the board of directors is ultimately responsible for policies that guide plan selection, and without the Department's review of the selection process or without a requirement that boards be balanced and diverse, HMOs could ''stack'' the board. The commentator stated that the Department could not regulate the outcome without regulating the process.
The Department has not changed the proposed section to address this concern. The Department does ask for the bylaws of the corporation, which include the process by which the board is selected. The Department also asks for a list of senior officials in paragraph (2). Matters related to the board of directors and the background of senior officials are handled by Insurance.
One commentator recommended that the Department include a requirement that the HMO notify the Department of any significant changes in operations or structure that would differ from the HMO's original application.
The Department has not changed the proposed section to address this concern. Plans do report changes in structure through the annual report. Changes in operations do not require prior approval under the HMO Act; however, the Department does monitor operational changes through annual site reviews, the external quality review process and complaint investigation.
IRRC and another commentator noted that the Department had stated that it was proposing to remove this subject matter addressed in proposed paragraph (1) from its regulations, but in fact it appeared in the proposed amendments. Proposed paragraph (1) would require the application to include information explaining the applicant's organizational structure.
The Department has reconsidered eliminating the subject matter addressed in the proposed paragraph, and has decided to retain the proposal in the final-form regulations.
IRRC commented that the Department had stated that it was proposing to remove the subject matter addressed in proposed paragraph (4) from the regulation, but paragraph (4) also appeared in the proposed regulations. Proposed paragraph (4) proposed to require the applicant to include a copy of each proposed standard form health care services contract and each IDS contract including a detailed description of the types of financial incentives that the HMO may utilize.
Another commentator commented that the proposed regulation lacked a requirement that an HMO provide the Department with a detailed description of the financial incentives that it will use. The commentator stated that the Department's proposed regulation would only require the HMO to tell what types of incentives it might use. The commentator expressed concern that bonus payments to reward low utilization could constitute up to half of a provider's compensation. This could expose members with high medical needs to an enormous risk of reduced levels of care. The commentator stated that a Health Care Financing Administration (HCFA) study had shown that when rewards for low utilization reach 25% of total potential payments, the provider reaches a threshold that can color treatment decisions and result in inadequate care for the patient.
The Department inadvertently included in the proposed regulations both proposed paragraphs (4) and (16), which proposed to require the applicant's submission of a detailed description of the applicant's incentives and mechanisms for cost-control within the structure and function of the HMO. In this context, cost-control is was a broad concept involving utilization review, case management and other administrative mechanisms employed to control health care costs. As these administrative mechanisms are well-established and well-known within the industry, the Department will only be requiring financial methodologies. The Department has changed the language in paragraph (4) to require that HMOs include a detailed description of reimbursement methodologies along with the standard IDS-provider contract. The Department has, therefore, deleted from the regulation proposed paragraph (16), which contained the requirement relating to cost control. The Department will continue to receive the necessary information to evaluate potential impact of reimbursement methodologies on the provision of health care services.
Since the Department has included a requirement for reimbursement methodologies in paragraph (4), the Department is also including language that states that the Department will maintain the confidentiality of this information unless ordered to release it by a court of law. The Department will notify the HMO of any request for the information to either obtain consent to release the information from the HMO, or to allow the HMO to take action to prevent the release of the information.
With respect to the comment relating to the HCFA standard, that standard refers to 25% of total potential payments. The Department's regulation requires that whatever the bonus or incentive program is, the bonus program cannot weigh utilization factors more highly than a combination of all other factors. The Departments' standard addresses incentive plans separate from payment for services, whether fee-for-service or capitation. Regardless of the amount of the bonus, it cannot be paid out or earned based solely on utilization. This issue is more fully discussed in the Department's response to comments on § 9.722 (relating to plan and health care provider contracts).
Section 9.632. HMO certificate of authority review by the Department.
The Department received several comments on this proposed section.
One commentator raised a general concern that the proposal included no standards for quality assurance and no requirement to use generally accepted medical standards for UR.
The Department has changed the regulations to link the requirement that an HMO have and provide a detailed description of its proposed system for on-going quality assurance to § 9.674 (relating to quality assurance standards). See § 9.631(8) (relating to content of an application for an HMO certificate of authority). The Department has also changed the regulations to link the requirement that the HMO have and provide a detailed description of its proposed UR system to §§ 9.749--9.751 (relating to UR system description; UR system standards; and time frames for UR).
In subsection (b), the Department proposed that it publish notification of receipt of a complete application for a certificate of authority in the Pennsylvania Bulletin, and that a public meeting on the application might be held if the Department chose to do so. One commentator recommended that the discretionary public meeting on new HMO applications should be mandatory to better serve the public interest.
The Department has not changed the proposed subsection. The Department is providing for public comment, even though it does not intend to hold public hearings in all instances. This should be sufficient to protect the public interest.
One commentator supported the requirement in proposed subsection (c) that would give the Department additional time to determine what additional information is needed from a plan, since the regulations that are being repealed only gave the Department 10 days for this purpose.
One commentator supported the proposed elimination of the practice of deeming applications complete even though the Department might not have all the necessary relevant information relating to provider networks. See subsection (d). The commentator stated that the Department needed all information required by the regulations before providing a certificate of authority.
Several commentators raised concerns that proposed subsection (e) would not require the Department to conduct a visit to an HMO applicant, and that the Department could rely solely on external review by firm hired and paid for by the HMO.
The Department does conduct a readiness review of an HMO applicant before granting a certificate of authority; that may not in all instances entail a site visit. After consideration of the comments, the Department has included language in subsection (e) stating that it will conduct a site visit as part of its readiness review.
With respect to the comment concerning external review organizations, these organizations are selected and approved by the Department, and they do not review the plan until after the first year of enrollment activity. The Department does not and is not proposing to use them to conduct readiness reviews.
Section 9.633. Location of HMO activities, staff and materials.
The Department received several comments on this proposed section. Three commentators noted that the Department was proposing to repeal requirements for the position of medical director, and recommended the inclusion of these requirements in the final-form regulations.
The Department agrees that the regulations should contain qualifications for the position of medical director. The Department has included language in § 9.633(2) (relating to location of HMO activities, staff and materials) of the final-form regulations similar to that which is included in the regulations it is repealing. See repealed § 9.76(b) (relating to professional staffing of health maintenance organizations). Section 9.633 requires the HMO to identify a physician to serve as its medical director. Section 9.633(2) also requires the medical director to be licensed in this Commonwealth, and qualified to oversee the delivery of health care services in this Commonwealth. As did the regulation the Department is repealing, § 9.633(2) makes the medical director responsible for overseeing UR and quality assurance activities regarding coverage and services provided to enrollees, general coordination of the medical care of the HMO on behalf of the HMO and appropriate professional staffing of the HMO. Section 9.633(2) also requires the medical director to design protocols for quality assurance and makes the medical director responsible for the evaluation of quality assurance programs and continuing education requirements. This was also required by the regulation the Department is repealing.
One commentator recommended including qualifying requirements for quality assurance (QA) committee members.
Two commentators also raised concerns that the proposed amendments would have no standards for ownership of HMOs, and that owners and operators do not have to demonstrate prior experience in health care management.
Another commentator recommended that the Department reinstate the language it had included in 1999 draft regulations, a version of the regulations that the Department circulated before promulgating proposed rulemaking. That draft section related to the character and competency of owners and officials. The commentator also recommended that any HMO that employs an officer, director or other management person who has been convicted of a Federal offense as defined by Medicare regulations should be disapproved until the official is removed. It noted that the Federal Office of Inspector General could automatically exclude that entity from participation in Medicare.
The Department received several comments on proposed subsection (a), which would require an HMO to establish a board of directors, at least 1/3 of whom were enrollees of the HMO, within 1-year of the award of the certificate. Comments were divided into three separate topics: (1) the requirement for enrollees to be members of the board in 1 year or in 18 months; (2) the prohibition against undue influence and the requirement for diverse representation; and (3) the need to prohibit HMO employees from being enrollee members.
Four commentators remarked on the Department's failure to remove the requirement that an HMO have enrollee board members within 1 year of the certificate of authority from the proposed amendments, and replace it with an 18-month time period, as it stated it intended to do in the Preamble to the proposed rulemaking. One commentator supported the change, since the 1-year period was onerous for HMOs, three recommended the Department retain the 1-year time period. These commentators commented that the 1-year period would ensure that there were sufficient qualified individuals to serve as members of the board, and it was critical that plan be held accountable for actions from initial date of operation.
One commentator commented that proposed subsection (a) would exceed the Department's statutory authority. The commentator noted that the HMO Act only states that the board must be 1/3 subscribers and follow HMO's charter and guidelines. Therefore, the Department's addition of language requiring the selection process to be structured to secure ''diverse representation of broad segments of the enrollees'' and prevent ''undue influence in the selection process by non-enrollee members of the board'' would go beyond the HMO Act.
IRRC commented that the phrases ''undue influence'' and ''diverse representation of broad segments'' needed to be clarified. Another commentator commented that they should be deleted, as they were editorial in nature and invited litigation.
One commentator also recommended that the Department clarify in proposed subsection (a) that employees of the plan or board members could not qualify as enrollee board members.
After reviewing these comments, the Department has decided to delete this section. Since Insurance is the agency responsible for reviewing the organizational and business structure of the HMO, and has mechanisms in place to do so, there is no need for the Department to duplicate that function. The review of officers and directors of the HMO board is routinely addressed by Insurance, which, together with the Department, has authority over the certification of HMOs. The decision on this particular part of the application is within the jurisdiction of Insurance.
One commentator recommended that the Department add language allowing the medical director or quality assurance committee to report quality or access problems to the board as soon as they were identified.
While the Department does not object to the QA committee going directly to the board if need be, the Department believes that the decisions on how reports of this nature are to flow within the corporation should be left to the corporation.
One commentator commented that decisions relating to medical necessity and coverage of emergency services should be made by emergency physicians licensed in this Commonwealth, actively practicing emergency medicine at least 20 hours per week. This commentator stated that there were no medical specialties similar to emergency medicine.
This comment is more appropriately addressed to § 9.672 (relating to emergency services). The Department has not changed either § 9.672 or this section. Now that the prudent layperson standard must be applied by plans, there is no need for a specialist to review emergency services. The standard is no longer what is a true emergency, but rather whether a prudent layperson would believe that an emergency existed.
Section 9.634. Delegation of HMO operations.
The Department received several comments on this proposed section, which has been renumbered as § 9.633 in the final-form regulations.
Seven commentators objected to the Department's elimination of specific enrollee/provider ratios from the regulations the Department is repealing. See repealed § 9.76. The commentators recommended that the final-form regulations contain specific requirements for plans to maintain sufficient staff to carry out functions required by Act 68, and that the Department impose these requirements on all plans, not just on HMOs.
One commentator disputed the Department's rationale for repealing several of these ratios included in the Preamble to the Department's proposed rulemaking in the commentator's general discussion on Subchapter G (relating to HMOs). The commentator stated that these standards were not obsolete, the requirements were not sufficiently dealt with at the individual HMO level through credentialing, and that the requirements of §§ 9.678 and 9.681 (relating to primary care providers; and health care providers) were not sufficient. The commentator stated that the same objective criteria were not present in these proposed regulations, and that there was a need to establish network enrollee ratios and standards for all HMO models.
This commentator further stated that failure to include a primary care provider/enrollee ratio, which must be used to determine network adequacy, would eliminate the Department's basis for disapproval of network adequacy.
The Department has decided against including specific provider to patient ratios in the regulations. Staffing levels at an HMO are reviewed through the certificate of authority application, (see § 9.631(11) and (14)), with on-going requirements that do apply to all plans in quality assurance and utilization review. See §§ 9.678 and 9.681. HMO staffing levels can and should vary significantly based on the technology available, the population served and the corporate structure. For example, the number of member services calls, and, consequently the staff required to answer the calls is much larger for Medicare+Choice and Health Choices enrollees who have more questions and concerns and issues than the general population. The technology used to route calls and assist member services staff can also significantly impact the number of calls a representative can take per day. The Department does not wish to dictate business operations at this level. The Department monitors effectiveness of operations through site reviews, audits and complaint investigations.
Further, the HMO regulations that the Department is repealing are not applicable to the current managed care environment in this Commonwealth. Those regulations require a primary care physician to enrollee ratio of 1:1,600, and overall physicians to enrollees of 1:1,200. These standards are relevant to staff model HMOs, a model in which physicians are employees of the HMO, and service only the HMO's enrollees. The ratios are not and would not be applicable to contracts with independent physicians who see patients with all types of insurance and are not able or willing to dedicate room in their practices for 1,600 patients of any particular HMO. To apply this standard today would mean that an HMO with less than 1,000 enrollees in one county need only have one primary care provider in that county. This also presupposes that the single primary care provider is willing and able to take 1,000 enrollees of one HMO. This is highly unlikely. This ratio does not support development of an adequate network promoting access and availability. Therefore, the Department declines to reinsert it, as it pertains to an HMO model no longer prevalent in the industry.
Further, the Department does not use physician/enrollee ratios for network review. The standards for network review are included in § 9.679.
One commentator also stated that plans should be required to maintain adequate numbers of staff in this Commonwealth. The commentator stated that plans do not want to spend time and money on tasks such as utilization review by appropriate specialists, answering requests for information, providing documents to which enrollees are entitled to have access and responding to complaints and grievances. Plans will assign people whose primary responsibilities are elsewhere, and these tasks will be delayed. This commentator stated that the regulations must include requirements for adequate staff, and that the proposed regulations allowed the plans to decide whether or not to maintain adequate staff. The commentator stated that the proposed regulations would probably result in State oversight only after a serious problem developed and complaints about inaccessibility had grown loud enough.
The Department has made no change to the proposed amendments to address these concerns. For reasons stated earlier, technology and innovation make it difficult to set minimum staffing standards in regulations. These standards may serve to stifle improvements in productivity and service by requiring outmoded, unproductive and inefficient standards.
Further, with respect to the fact that the comment addresses all plans, and not just HMOs, this section only addresses the Department's responsibilities in granting certificates of authority to HMOs. The Department only has certification authority over HMOs, and not other managed care plans. Assurance of adequate resources is required in the on-going quality assurance program (§ 9.674 (relating to quality assurance standards)), and in UR (see Subchapter K) both of which apply to all plans.
With respect to the concern that an HMO shall maintain adequate staff numbers in this Commonwealth, the Department has no authority to require that activities be done only within this Commonwealth. A plan is obligated to adhere to the requirements of the law and regulations with respect to services provided within this Commonwealth, regardless of where support activities take place. The Department's authority and oversight is not diminished by a plan's out-of-State activities.
One commentator raised concerns that the Department was proposing to eliminate qualifications for primary care physicians, contained in the regulations the Department is repealing (see repealed § 9.76). These include a requirement that a primary care physician must practice 50% of time as a primary care physician, and have practiced as a primary care physician for the previous 2 years.
The Department has decided not to change the proposed section to include qualifications for an HMO's primary care physician. Act 68 now defines the term ''primary care provider.'' See definition of ''primary care provider'' in section 2102 of Article XXI. The Department has included Act 68's definition in its regulations, as well as additional requirements for primary care providers in § 9.678. The Department sees no need to retain standards for primary care physicians. The 50% practice requirement was to ensure patient access, and that the provider would be able to address primary care concerns. For example, a board certified internal medicine physician also has a subspecialty in cardiology. If this physician dedicates all patient hours to cardiology, the physician will not have sufficient access for general primary care concerns, and may not be keeping current with general primary care issues. Act 68, however, contemplates that a patient with a heart condition would receive approval for the patient's cardiologist to serve as the primary care provider. Rather than set an arbitrary standard in regulation which could prevent specialists from serving as primary care providers, the Department is requiring plans to adopt credentialing standards for who can and should serve as primary care providers, and what patient access protections should be in place, whether they pertain to a specialist or a primary care provider.
One commentator recommended that the Department keep the language in its 1999 draft regulations that would have required an HMO to have a place of business accessible to enrollees and providers, and personnel sufficient to respond to complaints, grievances, and urgent and emergent requests for assistance concerning the provision of health care services.
The Department has decided against including this language in its final-form regulations. The Department does review staffing and operations to ensure there are resources in place to respond to enrollee inquiries from the first day of operation.
One commentator recommended that the Department change the proposed time frame included in proposed paragraph (1) within which documents are to be made available from 48 hours, to 20 days, consistent with timing in civil suits. IRRC also commented on this proposed paragraph and asked the Department to explain how it decided upon 48 hours. IRRC also asked whether the Department considered using business days rather than hours. The Department has changed the language to require that documents be made available within 30 days, unless the Department determines that the matter relates to patient safety. In that case, the HMO shall provide the records within 2-business days.
With respect to the other comments, the Department is requiring that it be afforded access to the documents, not as part of discovery in a civil suit, but as the regulator responsible for the welfare of the citizens of this Commonwealth. If a serious problem arises which requires the Department to have access to the information quickly, 2-business days would permit the plan to have the documents either sent by some type of express mail, or brought by courier to the State, while still allowing the Department quick access.
The Department received two comments on proposed paragraph (2), which would require the medical director to be licensed in this Commonwealth, and qualified to perform the duties of a medical director in this Commonwealth.
One commentator recommended that the medical director not be required to be licensed in this Commonwealth, but merely be required to have a license in good standing.
The other commentator, IRRC, stated that there was no statutory requirement that a medical director be licensed in the Commonwealth. IRRC noted that some HMOs may have operations in other states and may employ physicians licensed in other states. IRRC asked what other factors qualified a physician to oversee delivery of health care services, and why Pennsylvania licensure should be required.
It is correct that there is no specific statutory requirement that an HMO with a certificate of authority in this Commonwealth have a medical director licensed in this Commonwealth. However, the Department has the responsibility for the oversight of quality of care provided or arranged for by an HMO, and to that end the Department has determined that a medical director licensed in this Commonwealth would be more aware of the rules and regulations of this Commonwealth. A medical director licensed in this Commonwealth would also be more familiar with the practice of medicine and delivery systems issues within this Commonwealth, as well as more in touch with the needs of Pennsylvania enrollees.
The Department also notes that the HMO regulations it is repealing required an HMO to have a physician as its medical director. Since 1 Pa.C.S. Part V (relating to Statutory Construction Act of 1972) defines a ''physician'' as a person licensed in this Commonwealth to practice medicine or osteopathic medicine (see 2 Pa.C.S. § 1991 (relating to definitions)), the regulations could have been read to require the medical director to be licensed in this Commonwealth.
IRRC also asked whether it was the Department's intention to require a separate medical director with separate license requirements to oversee those enrollees who work in this Commonwealth but reside in a neighboring state. If this was not the case, IRRC questioned the necessity of the reference to enrollees who are residents of this Commonwealth.
Another commentator also requested that the Department delete the phrase ''residents of this Commonwealth,'' since not all enrollees are residents of this Commonwealth.
The Department has deleted this language as unnecessary.
IRRC commented that it was not clear from proposed paragraph (3) how many health care providers on the HMO's quality assurance/improvement committee had to be licensed in this Commonwealth, and requested clarification. Proposed paragraph (3) would require the HMO's quality assurance/improvement committee to include health care providers licensed in this Commonwealth.
The Department has not changed the proposed amendments to specify an absolute number or percentage. The number of providers on the committee licensed in this Commonwealth is not as important as the undertakings and results of the committee with regard to assuring and improving quality. The Department does not wish to create an artificial ratio not related to the caliber of the committee and the results achieved. The Department has added language to clarify that at least one health care provider on the committee must be licensed in this Commonwealth.
Another commentator commented that the QA committee should only include Pennsylvania-licensed health care providers.
The Department has not changed the proposed paragraph to impose this as a requirement. Multistate plans frequently have National QA committees that determine policy based on National standards. This creates convergence and sharing of techniques, technologies and practice that are at the forefront of medical evolution. The Department cannot require plans to have only physicians licensed in this Commonwealth on a National committee. The Department is, however, requiring the medical director responsible for oversight of services in this Commonwealth to be licensed in this Commonwealth as that position involves daily oversight of and responsibilities for medical management activities, including utilization review of health care services. The person occupying that position must be aware of and familiar with the practice of medicine in this Commonwealth.
Section 9.635. Issuance of a certificate of authority to a foreign HMO.
This section has been renumbered as § 9.634 in the final-form regulations. The Department received six comments on proposed subsection (a), which would recognize that HMOs may delegate by contract HMO operations and that the Department has the ability to monitor quality of care and require corrective action of the HMO regardless of the contracted delegation.
The Department received one comment in support of the Department's authority to require renegotiation of contracts between an HMO and its contractors for delegated duties.
Several commentators commented on the lack of a definition for ''HMO operations,'' which is a term used in the proposed amendments. One commentator noted that a broad interpretation of the term would result in HMOs having to file with the Commissioner every vendor or outsource contract, whether for printing, or advertising, or for any similar type of arrangement. This would be burdensome for plans, and for the Department.
One commentator recommended that the Department use the following language: ''An HMO may contract with any individual, partnership, association, corporation, or organization. A contract for the delegation of HMO operations does not diminish the authority or responsibility of the board of directors of the HMO, or the ability of the Department to monitor the quality of care and require prompt corrective action of the HMO when necessary.''
One commentator stated that this proposed section appeared to be duplicative of the Pennsylvania Holding Company Act (40 P. S. §§ 991.1401--991.1413), under which HMOs must file management agreements with Insurance.
This commentator, as well as IRRC, recommended that if the Department did not delete the proposed provision, it should add several things. First, the Department should clarify what constituted a delegation of HMO operations subject to this provision. Secondly, the Department should limit the requirement that delegation agreements be submitted to areas specific to the Department's jurisdiction, for example, delivery systems, quality of care or access to care. Thirdly, the Department should clarify what agreements were likely to be produced, relative to other current regulatory requirements, under the Department, Insurance and Department of Public Welfare. IRRC also recommended that if the Department retained the provision, it define what contracts it will review under the HMO Act.
The Department has made changes to proposed subsection (a) for clarity and to cite to section 8(b) of the HMO Act (40 P. S. § 1558(b)), which defines by example the types of matters that are considered to be HMO operations. The Department will not attempt to define every arrangement considered to be a contract for the delegation of HMO operations, or seek to assume jurisdiction over every arrangement. The Department is simply saying that whatever delegation arrangements an HMO may make, those arrangements do not relieve the HMO from meeting its responsibilities to enrollees or its duty to correct deficiencies, and will not prevent the Department from regulating HMOs under the HMO Act and under these regulations with respect to work they seek to delegate. The Department has not said that it must review and approve every type of delegation of HMO operations, it has specifically stated, under subsection (b), that it will review contracts for the delegation of medical management. The Department has the authority over these medical management agreements because, among other reasons, they involve utilization review, and because of the need for these subcontractors to be certified by the Department.
One commentator noted that Insurance has traditionally been responsible for oversight of management contracts. The commentator requested clarification concerning how the Department and Insurance will coordinate regulatory oversight in regard to the delegation of HMO operations. The commentator asked whether the requirements of this section impacted current IDS arrangements and filing requirements, and recommended that, if this were the case, the changes should be specifically stated.
Another commentator commented that delegations should be listed with the Department rather than filed with Insurance, and should be limited to delegation of performance of covered services that relate to quality of care rather than administrative functions, which are corporate operational concerns.
It is extremely unlikely that an IDS will contract to provide services without also requiring some autonomy or control over its own operations, over how resources are allocated to provide health care services, and how money is spent. To the extent this includes UR, this is a contract that must be reviewed by the Department under Subchapter J (relating to health care provider contracts), and will most likely not fall under this section, since it does not deal solely with operations, but involves the provision of services. If a contract, which would otherwise fall under this section, deals strictly with utilization review services and does not involve an arrangement with health care providers it is a medical management contract, and would be subject to the Department's review under § 9.675. Insurance, as co-regulator, will continue to carry out its duties and responsibilities by focusing on areas under its expertise and purview.
Section 9.636. Issuance of a certificate of authority to a foreign HMO.
The Department received several comments on this proposed section, which has been renumbered as § 9.635 in the final-form regulations.
IRRC commented that the HMO Act states that the Department may develop reciprocal licensing agreements with other states which permit audits, inspections and reviews of agencies from other states to determine whether the HMO meets Commonwealth requirements. IRRC recommended that the Department include in the final-form regulations standards related to this provision.
The Department has included in the regulations language which states that in the event or to the extent the Department and Insurance are able to arrive at reciprocal licensing agreements with other states, the requirements of the section may be waived or modified. See subsection (e).
One commentator stated that the Department should not require certificates of authority for foreign HMOs.
The HMO Act requires that foreign HMOs doing business in the Commonwealth must have a certificate of authority in this Commonwealth. See section 6.1 of the HMO Act (40 P. S. § 1556.1). The Department cannot alter a statutory requirement. However, an HMO licensed and operating solely outside of this Commonwealth, including issuing coverage to non-Pennsylvania employers, does not constitute a foreign HMO operating in this Commonwealth, even though some residents of this Commonwealth may have coverage through this out-of-State arrangement.
IRRC noted that although the proposed amendments would allow the Department to grant a certificate of authority to a foreign HMO if the Department is satisfied that it is fully and legally organized and approved and regulated under laws of another state and complies with requirements of this Commonwealth, proposed subsection (a) does not specify what documentation the Department needs to have to be satisfied. IRRC recommended that the Department include this information in the final-form regulations.
The Department rejects the recommendation. The Department will accept the application currently on file with the regulatory agency of the ''home'' state of the foreign HMO. The Department will contact that regulatory agency and verify whether the standards in that state match the standards set out in this Commonwealth. The Department has added language to this subsection that requires the foreign HMO to provide the Department with a copy of its application for licensure or certification on file with its state of domicile. This will allow the Department to review official documentation as it considers the applicant.
Several commentators, including IRRC, raised concerns with proposed subsection (c), which would permit the Department to waive or modify its requirements under the HMO Act and the proposed regulations. One commentator commented that the Department was proposing to allow secret waivers of statutory requirements by foreign HMOs without comment or public hearing.
Three commentators stated that the proposed amendments failed to ensure quality of care, since the Department would be allowed to waive requirements for out-of-State HMOs.
IRRC requested that the Department clarify how it would determine to grant a waiver of State requirements with respect to foreign HMOs.
The HMO Act specifically permits the Department and Insurance to waive the requirements of that act so long as the waiver or modification is consistent with the purposes of the HMO Act, and the waiver or modification does not unfairly discriminate on behalf of the foreign HMO. See section 6.1(b) of the HMO Act. The language in subsection (c) is taken directly from the HMO Act, with the exception that the Department's proposed regulation made reference to the HMO Act and to this chapter. The language has been revised to reference those chapters that deal with matters relating solely to HMOs under the HMO Act. It excludes the requirements of Act 68 from the waiver provision because the Department is not empowered by Act 68 to waive any of its requirements.
Further, because the Department accepts public comment on applications for certificates of authority for HMOs, the Department agrees that it would be useful to accept public comment on applications for foreign HMOs as well. The Department has included language in subsection (f) to allow for public comment concerning the application, including any potential waiver, so that the Department has the opportunity to consider those comments before the Department and Insurance grant a waiver.
Section 9.651. HMO provision and coverage of basic health care services to enrollees.
The Department received several comments on this proposed section.
Several commentators commented that the proposed section would fail to require HMOs to provide access to providers within 24 hours for urgent care.
Subsection (c)(1) does require access to providers within 24 hours for urgent care by requiring primary care providers to be available 24 hours-per-day, 7 days-per-week to provide services or to refer enrollees for services when necessary. Additionally, enrollees have the prudent layperson standard to protect them when they access care through the emergency room directly even when the ultimate diagnosis was less than a true clinical emergency.
One commentator recommended that the Department delete the inclusion of skilled nursing care from inpatient services, since the two are entirely different. The Department rejected the recommendation, as it explains in its discussion on the comments on the definition of ''inpatient services.''
Another commentator commented that the proposed regulations would eliminate inpatient physician care and ambulatory physician care as a defined required basic health care service. This was unintentional. The definitions of ''inpatient services'' and ''outpatient services'' in § 9.602 have been revised to include professional services.
The same commentator raised concerns that the Department would allow an HMO to refuse to cover services prescribed by a licensed health care provider based on medical necessity. The commentator also raised concerns that the Department would not require that the denial be based on accepted medical practice, unlike the draft regulations it circulated in 1999. The commentator stated that the proposed section would allow HMOs to have unfettered discretion in defining medical necessity criteria and in applying it.
The Department has addressed the issue of definitions of medical necessity in § 9.677 (relating to requirements of definitions of medical necessity). Plans have the responsibility to define ''medical necessity'' under Act 68. This section addresses the types of services that must be covered as basic benefits.
IRRC commented that the terms ''adequate,'' ''appropriate'' and ''unreasonable'' used in proposed subsection (a) were vague. Proposed subsection (a) would require an HMO to maintain an adequate network of health care providers through which it would provide coverage for basic health services as medically necessary and appropriate without unreasonable limitations as to frequency and cost. IRRC asked how the Department would enforce this provision and require compliance with Act 68 without more specific standards.
The Department has not made a change to the proposed subsection. The word ''appropriate'' is part of the term ''medically necessary and appropriate,'' and the Department has declined to set a definition for that term for reasons that are discussed in commentary on § 9.677. Plans, however, are required to set a definition for this term under section 2111(1) of Act 68. The term, therefore, does not go undefined, although the definition may alter from HMO to HMO. Further, an enrollee who has an issue concerning the manner in which the term is applied may file a grievance.
Further, the Department's use of the terms ''appropriate,'' ''adequate'' and ''unreasonable'' with respect to networks and network services are also sufficient, given the complicated nature of the task of determining the adequacy of networks. In any case, because the Department also sets out specific standards for what constitutes an adequate network in § 9.679, these terms are not vague. The difficulty with setting standards such as these in regulation is that the context of necessity is always unique to the enrollee, and for the provision of health care services, must remain so. Definition of the terms in regulations run the risk of setting standards that could serve to limit an enrollee's access to the care required more swiftly than other enrollees' typically need. (See Pennsylvania Association of Township Supervisors v. Commonwealth, Department of Insurance, 412 A.2d 675 (Pa.Cmwlth. 1980) (statute which used the terms, ''equitable,'' ''impartial,'' ''inadequate'' and ''discriminatory'' had adequate standards to guide the Commissioner in considering rate proposals, given the complicated nature of that task).
Another commentator requested that the Department clarify that services are provided according to a contractual relationship. The commentator recommended language stating that: ''An HMO shall maintain an adequate network of health care providers through which coverage for medically necessary and appropriate basic health services is provided to enrollees in accordance with the benefits included in the enrollee's contract or benefit category.''
The Department has rejected the recommendation. By statute, the HMO is required to provide at least the basic health services listed in the HMO Act and in these regulations. That cannot be further limited by contract.
Four commentators, including IRRC, raised issues concerning the language ''customarily excluded by indemnity insurers'' in proposed subsection (b). Two requested clarification of the language, including what it meant, who would evaluate whether the term applied, and how it would be evaluated now that commercial group products are not filed.
One commentator commented that the proposed subsection, which would permit an HMO to exclude coverage for services that was customarily excluded by indemnity insurers, appeared to suggest that HMOs must wait for indemnity insurers to add an exclusion before the exclusion becomes customary.
One commentator suggested that the subsection be deleted altogether.
One commentator commented that the proposed subsection was unsupported by Act 68, since consumers give up access to providers available under indemnity insurance to obtain more comprehensive and preventative services provided by managed care.
The Department has reviewed the language in proposed subsection (b) in light of the comments. The Department has deleted references to customary exclusions by indemnity insurers, and has simply stated that an HMO may exclude coverage for a service, except to the extent that a service is required to be covered by State or Federal law.
IRRC commented that there were no parameters defining the term ''medically necessary'' in proposed subsection (c). IRRC recommended that the Department consider identifying basic components required in the definition of ''medical necessity'' to ensure that the HMO's definition met requirements of Act 68. Another commentator recommended that the Department approve definitions of ''medical necessity.''
This has been more fully addressed in the discussion of comments on § 9.677 (relating to requirements of definitions of ''medical necessity'').
One commentator suggested that the first sentence of the proposed subsection (b), ''An HMO may exclude coverage for the services as are customarily excluded by indemnity insurers, except to the extent that a service is required to be covered by State or Federal law,'' be amended to read that HMOs must either provide or arrange for the provision of basic health care services, to clarify that most HMOs do not provide services through its employees.
The Department has added the language ''or arrange for the provision of'' after the words ''shall provide'' for the purposes of clarification.
One commentator commended the Department for including language in proposed subsection (c)(1) that would prohibit an HMO from requiring an enrollee to use a participating service, including an ambulance service, in an emergency.
The same commentator recommended the inclusion in the final-form regulations of a requirement for disclosure, and a clarification of the extent of coverage, as described in the statute. The commentator stated that to be consistent with the statute, an HMO shall disclose to enrollees and health care providers financial and other responsibilities regarding emergency services. The plan must also provide reasonable payment or reimbursement for emergency services. The Department has not made the recommended change. The Department has addressed the issue of payment in § 9.672 (relating to emergency services). Insurance has addressed the issue of disclosure in its regulations. See 31 Pa. Code § 154.16(h).
The commentator also recommended that the Department add two sentences to clarify that the prudent layperson standard should be used as the definition of medical necessity for the provision and coverage of emergency services, without prior authorization: ''In considering emergency services, the plan shall provide coverage according to the prudent layperson standard;'' and ''Coverage of emergency services is not subject to prior approval.''
The Department has not added the recommended language here. This language already exists in § 9.672. Further, emergency services are determined by application of the prudent layperson standard. See definition of ''emergency services'' in § 9.602. The Department has, however, added in subsection (c)(1) a cross-reference to § 9.672 to eliminate the possibility of confusion.
The commentator also recommended substitution of the word ''shall'' for ''may'' in subsection (c)(1) to strengthen the language of the proposed subsection as it was in the draft 1999 regulation. The proposed subsection would read ''The plan shall not require an enrollee . . .''
The Department has not made the change. The phrase, ''may not'' is a stronger negative than the phrase ''shall not.''
IRRC commented that the regulations the Department was proposing to repeal had a standard for general acute care inpatient hospitalization services of 90 days per contract or calendar year, and asked why that standard had not been included in subsection (c)(3), which would list inpatient services as a basic health service. Another commentator stated that there was no statutory justification for this repeal.
After considering the comments and the language in repealed § 9.72(a)(3) (relating to basic health services), the Department has decided to retain the 90-day minimum requirement for covered general acute care inpatient hospital days since the Department believes this would be beneficial to enrollees to retain. For purposes of this section of the regulations, inpatient general acute care does not include behavioral health services.
One commentator commented, with respect to proposed subsection (d), that benefits could be defined to include the right to be evaluated and stabilized in an emergency department as required by the Emergency Medical Transportation and Action Labor Act (EMTALA). Proposed subsection (d) would state that ''An HMO shall provide other benefits as may be mandated by State and Federal law.'' The commentator recommended adding the language ''reimbursement for'' directly after the opening phrase: ''An HMO shall provide . . . .''
The Department has not made any change to the proposed subsection. The Department does not intend to require plans to pay what is charged. Plans are free to negotiate reimbursement terms with providers. The Department is concerned with the integrity of the coverage. Further, the Department will not list all currently mandated benefits, as this list is subject to change more frequently than the Department wishes to revise the regulations. The HMO shall provide whatever benefit a law requires it to provide.
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