PROPOSED RULEMAKING
DEPARTMENT OF HEALTH
[28 PA. CODE CH. 9]
Managed Care Organizations
[29 Pa.B. 6409] The Department of Health (Department) proposes to amend Chapter 9 (relating to managed care organizations) by deleting the existing regulations in Subchapter A (relating to health care organizations), the statement of policy in Subchapter D (relating to PHOs, POs and IDSs) and the statement of policy in Subchapter E (relating to quality health care accountability and protection). The Department proposes to replace these regulations and statements of policy with the proposed rulemaking regulations in Annex A.
Purpose of the Proposed Rulemaking
The Department's regulations governing health maintenance organizations (HMOs) in Chapter 9 (HMO regulations) were adopted in 1983. The rapid growth in the industry of managed care and the changes in the entities that may deliver and finance health services in the managed care field have caused the Department to supplement those regulations over time through statements of policy. One statement of policy addresses an HMO's ability to contract for certain services through an integrated delivery system. See §§ 9.401--9.416. Another provides guidelines for the implementation of Article XXI of the Insurance Company Law of 1921 amended by the act of June 17, 1998 (P. L. 464, No. 68) (40 P. S. §§ 991.2101--991.2361) (Act 68). See §§ 9.501--9.519.
In 1996, Governor Ridge issued Executive Order 1996-1, which required all State agencies under the Governor's jurisdiction to review their existing regulations. In response to Executive Order 1996-1, the Department convened managed care policy work groups on the following seven topics: consumers; providers; special needs; behavioral health; data collection and standards; quality assurance, utilization and credentialing; and risk assignment, fiscal and financial issues. Included in the work groups were representatives from health plans, providers, purchasers and consumers, as well as Department staff and select staff from the Departments of Public Welfare, Aging, Insurance, Education and the Health Care Cost Containment Council. These groups met from July 1997 to December 1997 for the explicit purpose of providing public input to the Department regarding managed care public policy, in preparation for the revision of the HMO regulations.
In 1998, before revisions to the HMO regulations were completed, the General Assembly passed amendments to The Insurance Company Law of 1921. Act 68 set out specific requirements for managed care plans, which it specifically defined to include any health care plan using a gatekeeper to manage the utilization of health care services. See 40 P. S. § 991.2102 (definition of ''managed care plan''). In October of 1998, the Department issued a statement of policy providing interim guidance on implementation of The Insurance Company Law of 1921 (Article XXI). The Department also stated that in 1999 it would adopt formal regulations facilitating the implementation of Article XXI. In May 1999, the Department provided to stakeholders draft regulations combining revisions to the HMO regulations and new provisions facilitating the implementation of Article XXI, and received comments from those entities. The Department has also received input, comments and suggestions from stakeholders concerning their experiences during the implementation stage of Article XXI.
In drafting its proposed regulations, the Department has taken into account the recommendations of the managed care work groups as well as the comments received on the draft regulations from stakeholders. The Department's proposed regulations are intended to address both those areas which specifically impact HMOs, and those requirements which managed care plans (other than managed care plans subject to ERISA) shall meet under Article XXI. These proposed regulations do not apply to traditional indemnity products or preferred provider organizations without gatekeepers, except with respect to proposed § 9.672 (relating to emergency services). Proposed § 9.742 (relating to CREs) reiterates the requirement of section 2151 of Article XXI (40 P. S. § 991.2152) concerning operational standards for utilization review (UR). Section 2151 requires licensed insurers and managed care plans with certificates of authority performing UR to comply with the operational standards for certified utilization review entities (CREs) in section 2152, although it does not require them to be certified by the Department. See 40 P. S. § 991.2151(e).
In proposing these regulations, the Department is attempting to address changes in the managed care industry, to include the statements of policy in regulation as necessary, and to implement the accountability and protection provisions of Act 68. Subchapter A is proposed to be repealed because the Department is updating its regulations governing health maintenance organizations. Subchapters D and E are proposed to be repealed, and relevant sections are being included in the proposed regulations.
Summary of the Proposed Rulemaking
Subchapter F. General Section 9.601. Applicability.
This section would deal with new subject matter. Proposed § 9.601 defines the purpose of Chapter 9, and clarifies what entities are governed by the chapter. Chapter 9 is intended to apply to managed care plans as defined by Act 68, except when its application is specifically limited to HMOs. Chapter 9 would not apply to plans and HMOs exempted by the exception and preemption provisions of Act 68 (40 P. S. § 991.2193) and the HMO Act (40 P. S. § 1566). Generally, nothing in Chapter 9 is intended to prohibit plans from providing administrative services and health care provider networks to self-funded employers and other licensed insurers.
Subsection (a) would also put plans on notice that the Department also has pertinent regulations on these topics, and that plans shall be in compliance with both sets of regulations.
Subsection (b) would clarify that Chapter 9 applies to entities, including integrated delivery systems (IDS), which undertake plan functions through contracting arrangements. In some instances, the proposed regulations apply specifically to HMO-IDS arrangements.
Subsection (c) would clarify that Chapter 9 would not apply to licensed insurers, except with respect to those licensed insurers performing UR.
Subsection (d) would also clarify that Chapter 9 would not apply to ancillary services.
Section 9.602. Definitions.
The definition section would do two things: update and replace the current definitions relating to the HMO regulations in § 9.2 (relating to definitions); and add definitions relevant to the Department's responsibilities under Act 68.
In proposing changes to the current HMO regulations, the Department is proposing to eliminate outdated and unnecessary definitions, and to revise and add other definitions to reflect current industry trends. For example, the Department is proposing to delete the definitions of three types of HMOs: group practice HMOs, individual practice association HMOs and staff HMOs. Distinguishing these different types of HMOs by definition is no longer relevant for purposes of regulations; the Department applies the same regulations to all HMOs. Further, it is possible that listing only three types could give the impression that only three types of HMOs exist. That is not the case.
The Department is also proposing to delete the definition of the term, ''Federally qualified health maintenance organization.'' Since Federal law no longer provides that a Federally qualified HMO may require an employer to offer it to employes, Federally qualified HMOs are no longer the dominant market force, and need not be addressed specifically in the Department's regulations.
The Department has attempted to recognize industry trends by proposing to add a definition for ''IDS--integrated delivery system.'' An IDS is a method of provider contracting which has evolved since the passage of the HMO Act, and the promulgation of regulations under that act. This arrangement also allows a plan to delegate functions, including medical management oversight, to an entity more closely associated with and expert in those matters. An HMO-IDS arrangement also allows providers to benefit from the additional bargaining power provided by group activity. The Department's proposal to include IDSs in its proposed regulations is recognition that IDS arrangements exist, and are growing in size, scope and responsibility. The Department's responsibilities under the HMO Act require that it have the ability to regulate the arrangements and activities of these entities insofar as they perform the functions of and for HMOs.
The Department's proposal to add a definition for ''medical management'' is also intended to address the actual manner of doing business in the managed care industry. Medical management is a comprehensive term incorporating the full range of UR, quality assurance, and disease and case management activities. These services have been traditionally performed by HMOs, but with increasing frequency are being delegated by the HMO to IDSs and other entities, such as CREs.
The Department is also proposing to add definitions of terms used but not defined in the HMO Act. These terms include, ''external quality assurance assessment,'' ''external quality review organization,'' ''foreign HMO,'' ''inpatient services,'' ''outpatient services,'' ''preventive health care services,'' ''provider network'' and ''service area.'' These definitions would add clarity to the regulations.
The Department is proposing to delete the term ''primary care physician,'' and replace it with the term, ''primary care provider.'' ''Primary care provider'' is the term used by Act 68. The term does not limit a primary care provider to a physician. By changing and broadening the term used, the Department intends to address concerns over enrollee access and availability to physicians in medically underserved areas, and to recognize the ability of licensed professionals other than physicians to perform certain primary care functions by the terms of their licenses.
The Department is proposing to add definitions for the following terms: ''ancillary service plans,'' ''complaint,'' ''drug formulary,'' ''emergency service,'' ''grievance,'' health care provider,'' ''health care service,'' ''managed care plan,'' ''utilization review'' and ''utilization review entity.'' These definitions are included in Act 68.
The Department is also proposing to add a definition for the term ''ancillary services'' since the industry usage of that term encompasses more than what is included by definition in the term ''ancillary service plans.''
Act 68 does not specifically define the term ''gatekeeper.'' That term, however, is intrinsic to the determination of what entities are managed care plans for the purposes of the act. Act 68 specifically defines a managed care plan covered by the act as, among other things, ''a health care plan that uses a gatekeeper . . . .'' In proposing a definition for the term, ''gatekeeper,'' the Department has attempted to include the description of a gatekeeper included in definition of ''managed care plan.'' Further, the Department would define ''gatekeeper'' to include an agent of a managed care plan. These agents may be entities acting on behalf of the plan as well as natural persons.
Along with the proposed definition of ''gatekeeper,'' the Department is proposing to include definitions for two types of managed care plans covered by Act 68: ''gatekeeper PPOs'' and ''POS--point-of-service'' plans.
Section 9.603. Technical advisories.
This section would deal with new subject matter. It is intended to provide the Department with the flexibility to address the issues of a rapidly changing industry. A technical advisory issued by the Department would be guidance from the Department on how to meet statutory and regulatory requirements, but would not in and of itself set legally binding standards.
Section 9.604. Plan reporting requirements.
This section would revise and replace current §§ 9.91 and 9.92 (relating to annual reports; and quarterly reports). The Department is proposing to expand the requirements of annual and quarterly reporting, currently applicable only to HMOs, to all managed care plans covered by Act 68. This will enable the Department to fulfill its monitoring and enforcement responsibilities under that article.
The Department is proposing to add several items to the list of reportable items included in § 9.91. Subsection (a)(1) would request enrollment and disenrollment data by product line and county, rather than simply request enrollment and disenrollment data, as does § 9.91. The Department does ask for similar data with this specificity and clarity at the current time. The proposed regulation would merely require what HMOs are now doing voluntarily. Similarly, subsection (a)(4) would require a plan to provide, in an annual report, copies of enrollee literature, including any documents that contain information concerning complaint and grievance rights and procedures. The Department currently requests this information so that the information is available to Department staff to aid enrollees calling for assistance. The proposed regulation would also enable the Department to fulfill its responsibilities relating to the complaint and grievance procedures under Act 68.
In subsection (a)(2), the Department is proposing to ask for utilization data annually as well as quarterly. The Department would also require the plan to provide a copy of its current provider directory, (see subsection (a)(5)) and a listing of all IDS arrangements and enrollment. See subsection (a)(7)). The former is required by section 2111(12) of Article XXI (40 P. S. § 991.2111(12)) concerning responsibilities of managed care plans. The latter is a necessary part of ensuring that the HMO entering into the arrangement remains in compliance with the HMO Act. Since IDSs perform functions originally required of the HMO, the Department must ensure that the HMO-IDS arrangement has sufficient resources and oversight to provide adequate services based on the population being served. Requiring and reviewing reports including specific enrollment and disenrollment data is one way of ensuring that compliance.
In subsection (a)(10), the Department is also proposing to add the requirement that a plan provide a listing of all CREs that perform UR for the plan or a contracted IDS. This would limit possible conflicts of interest by enabling the Department to determine whether a CRE assigned by the Department to review external grievances had provided services to the plan in the past.
Current § 9.91 requires the submission of copies of the HMO's quality assurance report and grievance resolution system. The Department is proposing to extend these requirements to all managed care plans by virtue of Act 68 and the PPO Act. Section 5.1(b)(1)(ii) of the HMO Act (40 P. S. § 1555.1(b)(1)(ii)) provides the Department with authority to determine whether an HMO has demonstrated it has arrangements for an ongoing quality of health care assurance program. Section 10(e) of the HMO Act (40 P. S. § 1560(e)), requires that an HMO establish and maintain a grievance resolution system satisfactory to the Secretary. Section 630 of The Insurance Company Law of 1921, known as the PPO Act (40 P. S. § 764a(e)), provides the Department with the authority to review and approve grievance resolution systems and to require quality and utilization controls of certain preferred provider organizations (PPOs).
The Department is proposing to delete references to Federally qualified HMOs since that distinction is no longer relevant.
Section 9.605. Department investigations.
This section would replace and revise § 9.94 (relating to Departmental investigation) of the HMO regulations. The Department is proposing to extend the section to managed care plans covered by Act 68, under the authority given to it by that act to ensure compliance. See 40 P. S. § 991.2181(d) concerning Departmental powers and duties and 40 P. S. § 2131(c)(2)(ii) concerning confidentiality and Department access to medical records.
Subsection (b) would also expand onsite inspection to any IDS with which an HMO has contracted. This provision is included since an IDS is taking over functions which could have been reviewed during an onsite inspection of the Department if those functions were still being performed by the HMO.
Subsection (d) would allow the Department access to medical records for the purposes of quality assurance, investigation of complaints or grievances, enforcement or other activities related to ensuring an HMO's compliance with Article XXI, the regulations and the laws of the Commonwealth. Section 2131(c)(2)(ii) of Article XXI (40 P. S. § 991.2131(c)(2)(ii)) provides for the Department's review of medical records for this purpose.
Section 9.606. Penalties and sanctions.
Authority for this provision is contained in, and the language is taken directly from, section 15 of the HMO Act (40 P. S. § 1565) and section 2182 of Article XXI (40 P. S. § 991.2182).
Subchapter G. HMOs This subchapter would be applicable to any corporation that proposes to undertake to establish, maintain and operate an HMO within this Commonwealth, with the exception of an HMO exempted under sections 16 and 17(b) of the HMO Act (40 P. S. §§ 1566 and 1567(b)).
The proposed regulations in this subchapter would be, for the most part, revisions of the regulations in existing Chapter 9, Subchapter A (HMO regulations). The Department proposes to delete several of the provisions altogether. Section 9.31 of the HMO regulations, refers to the Certificate of Need process. Chapter 701 of the Health Care Facilities Act (35 P. S. §§ 448.701--448.712) sunset in December of 1996, therefore, this provision is no longer relevant.
Sections 9.55 and 9.95 (relating to alternative application format for Federally-qualified health maintenance organizatios; and Federally-qualified health maintenance organizations) would also be deleted as irrelevant. Since Federally-qualified HMOs are no longer relevant to the market, they no longer need to be regulated as a distinct entity.
Several of the current regulations add nothing to the Department's regulatory scheme. Retaining similar provisions in the new regulations would be unnecessary. Section 9.54 (relating to standards regarding approval of certificate of authority) merely states that an HMO must meet the minimum operating standards in the regulations. Section 9.71 (relating to operational standards), restates the HMO Act. The Department is proposing not to retain these provisions in the proposed rulemaking.
The Department is also proposing to not retain provisions in § 9.76 (relating to professional staffing) because specific staffing ratios contained in that section are obsolete. Staff model HMOs are no longer prevalent in the industry. Staffing requirements are dealt with at the individual HMO level through credentialing requirements, and provider network recruiting. The requirements for primary care physicians and health care providers would be incorporated into proposed §§ 9.678 and 9.681 (relating to primary care providers; and health care providers). So long as the HMO provides accessibility and access to personnel and facilities in a way that enhances the availability and accessibility of services, and provides for quality assurance mechanisms to ensure the safety of the enrollees, the Department would have no need to dictate staffing in this detail.
Section 9.622. Prohibition against uncertified HMOs.
This section would be substantially similar to current § 9.51 of the HMO regulations (relating to prohibition against uncertified health maintenance organizations). The Department proposes to clarify the language by adding provisions relating to foreign HMOs.
Section 9.623. Preapplication development activities.
This section would revise and replace current § 9.32 of the HMO regulations (relating to preapplication development activities). The revisions would not be substantive except for language stating that a certificate of authority would not be issued until the HMO is able to demonstrate that it has an adequate provider network. The Department has been deeming applications complete even though the applicant has not provided all necessary relevant information relating to provider networks.
Application for Certificate of Authority Section 9.631. Content of an application for an HMO certificate of authority.
This section would revise and replace current § 9.52 of the HMO regulations (relating to content of an application for certificate of authority). The proposed section would be substantially the same as § 9.52, with changes to reflect requirements of Act 68. For example, the Department would require the HMO to provide a copy of its policy on confidentiality (see § 9.631(10)), a description of its provider credentialing system, (see § 9.631(11)), and a description of its complaint and grievance systems. See § 9.631(7).
The Department is proposing to eliminate the requirement that the applicant provide a description of the manner in which subscribers would be selected to the HMO's board. The HMO Act requires that at least one-third of the board be subscribers. The Department is concerned with the outcome of the selection procedure, and not the procedure itself.
The Department is also proposing to eliminate current requirements that an HMO provide a detailed description or reasonable incentives for cost control within the structure and function of the HMO (§ 9.52(11) of the HMO regulations), a job description for the position of medical director, (§ 9.52(16) of the HMO regulations), a procedure for referral of subscribers to nonparticipating specialists (§ 9.52(17) of the HMO regulations), and written procedures for payment of emergency services provided by other than a participating provider (§ 9.52(18) of the HMO regulations). The Department has eliminated these requirements because they have been superceded by requirements in Act 68, or the Department believes they are no longer critical to the review of an applicant.
The Department also proposes to eliminate the requirement that HMOs provide a description of Federal grant or loan funds (§ 9.52(12) of the HMO regulations), since Federal qualification is no longer a relevant distinction.
The Department is also proposing to delete from its proposed regulations governing certificate of authority applications, requirements that the application include a copy of the applicant's most recent financial statement (§ 9.52(13) of the HMO regulations) and a copy of proposed subscriber literature § 9.52(15) of the HMO regulations. These two items are still required on the joint application developed by the Department and the Insurance Department. However, because they pertain to matters within the purview of the Insurance Department, the Department is proposing to remove them from its regulations.
Section 9.632. HMO certificate of authority review by the Department.
This section would be substantially similar to current § 9.53 of the HMO regulations (relating to review by the Department). This section would emphasize the fact that no application for a certificate of authority would be complete for purposes of the HMO Act until all requests for further information are adequately answered by the applicant, and there is evidence of a contracted and credentialed provider network of sufficient capacity to serve the proposed number of enrollees.
The Department is also proposing not to include in this section some of the language from § 9.53(f) of the HMO regulations (relating to public meetings on the application). Since the decision to hold a meeting is within the discretion of the Department, the time frames included in § 9.53(f), which are regulatory and not statutory, are unnecessary.
Section 9.633. HMO board requirements.
This section would be substantially the same as current § 9.96 of the HMO regulations (relating to board composition). The Department is proposing to remove the requirement that the board be composed of one-third enrollees within 1 year from the date of receipt of the certificate of authority, since this is an artificial deadline. The HMO is required to have a board made up of one-third enrollees by the HMO Act (40 P. S. § 1557). The board must reflect the requirements of the act as soon as an HMO has enrollees.
Section 9.634. Location of HMO activities, staff and materials.
This section would deal with new subject matter. Paragraph (1) would require an HMO to make books, records and other documents relevant to it maintaining its certification and complying with Act 68, available to the Department at a location within this Commonwealth, within 48 hours of a Department request. This requirement would ensure that the Department has access to information necessary for it to perform its responsibilities, while allowing the HMO to run its operations as it finds its business requires. The Department is proposing, however, in paragraph (2), that the HMO's medical director responsible for overseeing UR and quality assurance activities would be licensed to practice in this Commonwealth, and qualified to oversee the delivery of health care services here. In paragraph (3), the Department is proposing that the HMO's quality assurance/improvement committee include Pennsylvania licensed health care providers. The Department believes these requirements would be essential for the provision of adequate services to enrollees of this Commonwealth.
Section 9.635. Delegation of HMO operations.
This section would deal with new subject matter. Subsection (a) would address a growing industry trend of the managed care organization delegating certain functions to a contractor with expertise in performing the function. HMOs have never been prohibited from this delegation. The Department asks for delegation information in § 9.52(7) of the HMO regulations (relating to content of application for a certificate of authority).
Although the ''management'' contracts are traditionally the province of the Insurance Department (see 40 P. S. § 1558(b)), they can impact upon the Department's ability to oversee the quality of health care services through review of provider contracts. See 40 P. S. § 1558(a) (The Secretary has the authority to require renegotiation of provider contracts when they are inconsistent with the purposes of the HMO Act). Subsection (a) would ensure that the Department is able to carry out its responsibilities under the HMO Act.
Further, the Department has the responsibility to ensure that an HMO can provide available and accessible services, and continuity of care. Since these are some of the responsibilities delegated to the contractor, the Department must have the same ability to oversee the contractor performing functions for which the HMO is responsible, as it would the HMO itself, if the functions were still performed directly by the HMO.
To ensure that delegation occurs in a controlled manner that protects both the enrollee and the participating health care provider, the Department is proposing standards for delegation of this authority in proposed Subchapter H (relating to access and availability), and would require an HMO to meet these standards before a delegation contract would be approved.
Section 9.636. Issuance of a certificate of authority to a foreign HMO.
This section would deal with new subject matter. This proposed section tracks section 6.1 of the HMO Act (40 P. S. § 1556.1). The Department has received more inquiries in recent years from foreign HMOs seeking to do business in this Commonwealth. Therefore, the Department is proposing to include the HMO Act's requirements for a foreign HMO to obtain a certificate of authority in its regulations.
Operational Standards Section 9.651. HMO provision and coverage of basic health services to enrollees.
Section 9.652. HMO provision of other than basic health services to enrollees.
These sections would revise and replace current § 9.72 of the HMO regulations (relating to basic health services). Section 9.72 implements the HMO Act's requirement that an HMO provide basic health services to the enrollee. See 40 P. S. § 1554. The Department is proposing to divide § 9.72 into several sections, one addressing the provision of basic health services, as defined by the HMO Act (see proposed § 9.651), and the other addressing nonbasic health services, as set out in § 9.72(d). See proposed § 9.652.
Section 9.651 would contain a listing of basic health services that the HMO Act requires an HMO to provide. The Department is proposing to eliminate the definitional language in § 9.72, and to expand, update and combine definitions when necessary. For example, the Department proposes to include physician services in the definition for ''inpatient services.'' See proposed definition of ''inpatient services'' in proposed § 9.602 (relating to definition). The Department is also proposing to revise the definition of ''emergency services'' to reflect Act 68's definition of this term. See proposed definitions of ''emergency care,'' ''inpatient services,'' ''outpatient services'' and ''preventive care services'' in proposed § 9.602. Finally, the Department is proposing to insert the definitions, revised and updated, from current § 9.72 into proposed § 9.602.
The Department is also proposing to include the relevant material in § 9.72(b), which discusses co-pays and coinsurances, in a separate section specifically on those topics. See proposed § 9.653 (relating to use of co-payments and co-insurances in HMOs).
Section 9.653. Use of co-payments and co-insurances in HMOs.
This section would replace and revise § 9.72(b) of the HMO regulations (relating to basic health services). Section 9.72(b) prohibits unreasonable limitations as to time and cost on an HMO's provision of basic health services. It provides for the imposition of copayments only if those copayments do not exceed the maximum allowable percentages included in the regulations. The Department is proposing to eliminate those percentages because they are too confusing to be effective.
Section 9.654. HMO provision of limited networks to select enrollees.
This section would deal with new subject matter. In the current market, purchasers of health care looking to limit cost are willing to purchase limited networks of health care providers. The Department has the responsibility to ensure HMOs are able to provide access and availability of adequate health care services to enrollees. See 40 P. S. § 1555.1(b)(1)(i). The Department is proposing to add this section to ensure that the limited networks offered are not so circumscribed as to force enrollees out of network to obtain necessary services. If that were to happen, the enrollee could be continuously in a position of incurring maximum out-of-pocket expense for health care services. This situation would violate requirements of the HMO Act that the HMO be able to assure the accessibility and availability of adequate health care services.
In subsection (b)(1), the Department is proposing to require that enrollees in limited networks be fully informed by the HMO of out of network consequences. This would prevent enrollees from incurring unexpected costs.
Section 9.655. HMO external quality assurance assessment.
This section would replace and revise § 9.93 of the HMO regulations (relating to external quality assurance assessment). In subsection (a), the Department is proposing to increase the time frame in which the quality assurance assessment would be required of the HMO from 1 year from the date the HMO receives its certificate of authority to 18 months from that date. This change would be in accordance with standards of Nationally recognized accrediting bodies. In subsection (e), the Department is also proposing to increase the time frame in which an HMO is required to submit a copy of the external quality assurance assessment report to it from 10 business days from the date of receipt by the HMO to 15 days from that date.
Section 9.656. Standards for approval of point-of-service options by HMOs.
This section would deal with new subject matter. Subsection (a) would require an HMO to submit a formal filing in order to offer a POS option. In response to market forces and consumer demand, HMOs have developed benefit plans that provide for greater freedom of choice on the part of consumers. The Department has a responsibility to monitor POSs to ensure access and availability of provider networks to enrollees. The issues that could arise with POS plans would be the same as those that could arise from limited networks. There is the possibility that the primary care provider would perform an inadequate job of gatekeeping, so that enrollees would be forced to choose the higher-out-of pocket option. This situation would defeat the purpose of managed care, and would raise questions of violations of the HMO Act. In subsection (b), the Department is proposing to set out conditions under which POS options could be offered.
Subchapter H. Availability and Access Section 9.671. Applicability.
This subchapter would be new, and would be derived mainly from the provisions of Act 68. Some sections would incorporate parts of the Department's current relating to HMOs; however, this subchapter would apply to all managed care plans as defined by Act 68, as well as to IDS arrangements with those managed care plans, for the services provided to enrollees of those plans.
Section 9.672. Emergency services.
This section would deal with new subject matter. It would be based on sections 2111(4) and 2116 of Article XXI (40 P. S. §§ 991.2111(4) and 991.2116). Section 2114(g) of Article XXI sets time frames in which emergency services must be provided. Section 2116 of Article XXI eliminates the need for prior authorization for emergency services, and sets out the requirement that the plan pay necessary costs. Subsections (b)--(e) would track these requirements and emphasize the need for the plan to apply the prudent layperson standard to the enrollee's presenting symptoms.
Subsection (f) would be derived from § 9.75(f) of the HMO regulations. Act 68 does not limit coverage for emergency services to participating plan providers. Subsection (f) would require the plan to pay for services provided by a nonparticipating provider at the same rate as it pays to a participating provider, when the services are determined by the plan to be necessary based on the prudent layperson standard.
Emergency services are also referenced in § 9.72 of the HMO regulations. The language included in Act 68 and proposed here would replace and revise the language in this provision.
Section 9.673. Plan provision of prescription drug benefits to enrollees.
Act 68 requires a plan to disclose to enrollees upon written request a description of the procedure by which prescribing providers may prescribe certain drugs. Subsection (c) would, among other things, clarify that a plan must have a procedure that allows for coverage of these prescriptions, and not merely a procedure for writing them.
The Department is also proposing, in subsection (b), to require that any refusal to permit an exception to the plan's formulary requirement would be handled by the plan as a grievance under Act 68. The Department is proposing this requirement because any decision not to provide a drug that is not on the formulary would be based on a determination that there is a prescription drug on the formulary that would be appropriate, and, therefore, would come within Act 68's definition of grievance. See 40 P. S. § 991.2102. Subsection (b) would require that a plan respond to an enrollee's written inquiry concerning whether a specific drug is on the formulary within 30 days of the receipt of the inquiry, and that the plan's response be in writing. This would aid the enrollee to prepare and timely file a grievance.
Section 9.674. Quality assurance standards.
This section would revise and replace § 9.74 of the HMO regulations (relating to quality assurance systems), and extend it to all plans covered by Act 68. The proposed revisions would more closely match the quality assurance standards of Nationally recognized accrediting bodies than the provisions of § 9.74. The Department is proposing standards for a plan's quality assurance program, which are intended to be a counterweight to the potential for underservice and undertreatment which exists in a managed care system. Managed care restricts access and availability of enrollees to a plan-selected network of health care providers. Financial mechanisms used in managed care (for example, capitation) potentially are incentives for underservice and underutilization resulting in poor quality service. The Department, because of its responsibilities under the HMO Act, Act 68 and the PPO Act, has an obligation to set standards for the mechanism by which the plan is to monitor itself for the effectiveness and quality of services being provided. Through subsection (b)(10), the Department proposes to monitor the plan's effectiveness in this area by requiring a copy of the plan's annual report of quality assurance activities.
Section 9.675. Delegation of medical management.
This section would deal with new subject matter. It would set standards for a plan's delegation of medical management authority. The section would ensure that delegation would occur in a controlled manner that would protect both the enrollee and the participating health care provider. The purpose of this type of delegation is, as previously stated, to allow the plan to delegate certain responsibilities to health care providers and those entities with specialized expertise in particular disease groups or populations. Because of the Department's responsibility to ensure the quality of health care services, cost effectiveness, and access to services, the Department must have the same oversight over a contractor, which is performing a service otherwise performed by the plan, as it would have over the plan.
Subsection (b) would require any contractor performing UR, unless the contractor is a licensed insurer or a plan with a certificate of authority, to be certified in accordance with section 2151 of Article XXI.
Section 9.676. Standards for enrollee rights and responsibilities.
This section would replace and revise § 9.77 of the HMO regulations (relating to subscriber rights), and would extend the requirement that an HMO have standards for enrollee rights to all managed care plans. Section 9.77 is a collection of personal rights provided enrollees by statutory and common law and regulation. This new section would require plans to develop procedures to implement enrollee rights and responsibilities. The Department is also proposing that a plan address the disclosure requirements in section 2136 of Article XXI (40 P. S. § 991.2136).
Section 9.677. Requirements of definitions of medical necessity.
This section would deal with new subject matter. Based on information provided to the Department by various work groups involved in the examination of the HMO regulations, it became clear that plans use differing definitions of medical necessity in various documents related to operations of the plan. The Department is proposing language requiring that all definitions of ''medical necessity'' would be the same to ensure uniformity and consistency of decision making concerning coverage and exclusions.
Section 9.678. Primary care providers.
This proposed section would be based upon the definitions in Act 68 relating to primary care providers. The Department has a similar requirement in § 9.75(c) of the HMO regulations (relating to assurance of access to care) that an HMO must make a primary care physician who is to supervise and coordinate the health care of the subscriber available to each subscriber. This section would establish minimum criteria for availability of a primary care provider to ensure that the provider would be able to fulfill responsibilities as a gatekeeper for the managed care plan. Failure of a primary care provider to perform adequately could seriously weaken the ability of the managed care plan to ensure access and availability of services.
Subsections (c) and (d) would allow a plan to consider, as a primary care provider, both a physician in a nonprimary care specialty and a certified registered nurse practitioner, if those individuals meet certain standards, including the plan's certification requirements.
Subsection (f) would require plans to have in place policies and procedures allowing an individual to change a primary care provider.
Section 9.679. Access requirements in service areas.
This section would deal with new subject matter. This section would require a plan to have adequate and accessible provider networks by service area before enrollment could be undertaken in those areas. Subsection (c) would require a plan to maintain an adequate number and range of health care providers by specialty and service area to ensure that enrollees would have adequate access to and availability of health care services in each area covered by the plan. Subsection (d) would require a plan to report a change in a service area significant enough to affect a substantial number of enrollees in that area. The Department is proposing it be notified upon an alteration which would affect 10% of enrollees in the service area, 10% being a change significant enough to cause collapse of a delivery system or to stress the delivery system to the point when services are not adequately available. Subsection (e) would require services to be available to enrollees within 20 minutes or 20 miles in urban areas and 30 minutes or 30 miles in rural areas. These times and distances would reflect Federal Health Care Financing Administration (HCFA) requirements for access.
Section 9.680. Access for persons with disabilities.
This proposed section would be new, and would be taken directly from section 2111(11) of Article XXI.
Section 9.681. Health care providers.
This section would replace and revise § 9.75(b), (c) and (e) of the HMO regulations (relating to assurance of access to care). Subsection (a) would require a plan to have a provider directory and distribute it to enrollees. The Department proposes subsection (b) to ensure that an enrollee would be informed that a plan cannot guarantee continued access to a particular health care provider. Subsection (d), which would require a plan to have written procedures governing the accessibility and availability of the enumerated health care services, would replace § 9.75(e), although the Department proposes to make that requirement applicable to all managed care plans. Subsection (c), which would be a simplification of the requirements in § 9.75(d), would require a plan to provide coverage for health care services provided by nonparticipating health care providers according to the same terms and conditions as participating providers when there are no participating health care providers that are capable of performing the service. This subsection would prevent an enrollee from incurring out-of-pocket costs because the plan does not have an adequate network.
Section 9.682. Direct access for obstetrical and gynecological care.
This section would deal with new subject matter, and would be based on section 2111(7) of Article XXI. Subsection (d) would implement the requirements of direct access for obstetrical and gynecological care by requiring the plan's quality assurance committee to approve the terms and conditions under which a directly accessed provider could provide services without prior plan approval. Given the difficulty of defining clinical terms such as, ''routine gynecological care'' adequately and exhaustively in regulation, the Department proposes to refer the matter to the plan's committee of experts, the quality assurance committee.
Section 9.683. Standing referrals or specialists as primary care providers.
This section would deal with new subject matter, and would be based on section 2111(6) of Article XXI. Section 2111(6) of Article XXI allows an enrollee with a life threatening, degenerative or disabling disease or condition to request and receive an evaluation and, if the plan's established standards are met, receive either a standing referral to a specialist with clinical expertise in the area in question, or the designation of a specialist as the primary care provider. As in proposed § 9.682 (relating to direct access for obstetrical and gynecological care), subsection (b)(1) would require the plan to develop policies, procedures and clinical criteria for conducting evaluations and submit them to its quality assurance committee. In this way, the Department would avoid attempting to regulate clinical criteria, which could quickly become obsolete. The Department also proposes subsection (c) to require that the plan assess these standards annually to monitor the effectiveness of the polices and procedures, as well as the quality of the resultant services provided.
Further, the Department proposes to make a denial of the decision to authorize an arrangement a grievance, in accordance with the definition of grievance in Act 68. See 40 P. S. § 991.2102. Therefore, in subsection (b)(6) and (7) the Department would require that the plan issue its decision on the request in writing within 45 days and include information about the right to appeal the matter as a grievance in the decision.
Section 9.684. Continuity of care.
This section would deal with new subject matter and be based upon section 2117 of Article XXI (40 P. S. § 991.2117). Section 2117 of Article XXI sets out conditions in three circumstances under which a plan must allow for an enrollee to continue with a provider: (1) when the provider has been terminated by the plan, but has not been terminated by the plan for cause (see 40 P. S. § 991.2117(a)); (2) when the enrollee is entering into a plan in which the provider does not participate (see 40 P. S. § 991.2117(d)); and (3) when the new enrollee is pregnant. Id.
Subsection (a)(3) and (4) would facilitate implementation of section 2117 of Article XXI by requiring the plan to notify the enrollees it is able to identify through available data and, in that notification, provide the enrollee with written notice of how to exercise the option to continue care for a transitional period. These requirements would ensure that the enrollee is aware of the option as required by the act, and that the plan is aware of the enrollee's intention to exercise his option under the act.
Subsection (b) would require a new enrollee to notify the plan of the enrollee's intention to continue with a nonparticipating provider. Since the plan has the option under Act 68 to require nonparticipating providers to meet the same terms and conditions as participating providers, this notification requirement would provide the plan with the opportunity to negotiate terms. In addition, however, subsections (g) and (h) would require the plan to give a nonparticipating provider notice of its terms and conditions at the earliest possible opportunity, and to ascertain a terminated provider's willingness to continue with services prior to termination.
The Department has concerns over the possibility that a plan could continue to negotiate with a provider throughout the 60-day transition period accorded to the enrollee by Act 68. If this were the case, since Act 68 provides that a plan may require a nonparticipating provider to meet the same terms and conditions as a participating provider, an enrollee continuing on with the ongoing course of treatment could find the plan ending negotiations and, therefore, not required to cover the services. To protect enrollees in this situation, subsection (i) would require that the plan hold the enrollee harmless during the period of negotiations with the nonparticipating provider, until the plan notifies the enrollee that the nonparticipating provider would not agree to its terms.
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