State of Illinois
90th General Assembly

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[ Introduced ]


      New Act
          Creates the Patient Protection in Utilization Review Act.
      Requires persons  who  are  health  care  utilization  review
      agents  to  be  certificated  by the Department of Insurance.
      Preempts home rule.  Effective January 1, 1998.
HB1562 Engrossed                               LRB9004799WHmg
 1        AN ACT  concerning  utilization  review  of  health  care
 2    services.
 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:
 5        Section 1.  Short Title.  This Act may be  cited  as  the
 6    Patient Protection  in Utilization Review Act.
 7        Section  5.   Legislative  Intent.   The General Assembly
 8    finds  and declares that:
 9        (a)  Utilization review by insurers and other third party
10    payers of  the medical necessity and  costs  of  health  care
11    services is a  widespread practice, affecting the delivery of
12    health  care services  throughout the State of Illinois.  The
13    procedures and criteria used  to conduct private  utilization
14    review  directly  affect  the  ability  of patients to access
15    health  care  services,  the  rights  of  patients   who  are
16    receiving needed health care services,  and  the  quality  of
17    health  care  services  provided  in the State.  Patients and
18    providers  have a right to know the procedures  and  criteria
19    used in  utilization review.
20        (b)  Private  utilization  review is conducted largely by
21    and for  persons  or  entities  licensed  to  engage  in  the
22    business  of   insurance,  and  it is proper for the State of
23    Illinois to oversee that activity as a part  of  the  State's
24    regulation and supervision  of the insurance industry.
25        Section 10.  Purposes.  The purposes of this Act are to:
26        (a)  promote the delivery of quality health care services
27    in a cost  effective manner;
28        (b)  protect  the  rights  of  patients,  businesses, and
29    providers of  health  care  services  by  making  information
30    about the practices of  private review agents available;
HB1562 Engrossed            -2-                LRB9004799WHmg
 1        (c)  ensure  that  private  review  agents  maintain  the
 2    confidentiality  of patient medical information in accordance
 3    with applicable State  and federal law; and
 4        (d)  improve  coordination  among  patients,  health care
 5    providers, and third party payors.
 6        Section 15.  Definitions.  As used in this Act:
 7        "Certificate" means a certificate of registration granted
 8    by  the Director to a private review agent.
 9        "Department" means the Department of Insurance.
10        "Director" means the Director of Insurance.
11        "Private review agent" means (1)  any  person  or  entity
12    performing    utilization  review in the State of Illinois or
13    (2) any person or  entity performing  utilization  review  in
14    the  State of Illinois that  is either affiliated with, under
15    contract with, or acting on behalf  of:
16             (i)  an Illinois business entity; or
17             (ii)  a third party that is  licensed  to  and  does
18        provide  or   administer  hospital or medical benefits to
19        citizens of  this State including but not limited to  any
20        insurance    company   authorized   to   transact  health
21        insurance business  in this State and any entity that  is
22        organized   under  Article  XXXI  1/4  of  the   Illinois
23        Insurance Code, the Voluntary Health Services  Plans Act,
24        the Health Care Reimbursement Reform Act of  1985, or the
25        Limited Health Service Organization Act.
26        "Provider"  means  any  licensed   physician,    dentist,
27    podiatrist,  health facility, or other person or  institution
28    that is duly licensed or otherwise authorized to  deliver  or
29    furnish health services.
30        "Utilization  review"  means  a  system for reviewing the
31    appropriate or effective allocation of health  care  services
32    given   or  proposed  to  be given to a patient or a group of
33    patients for determining whether  those  services  should  be
HB1562 Engrossed            -3-                LRB9004799WHmg
 1    covered  or paid  for by an insurer, health benefits plan, or
 2    other entity.  Utilization review includes but is not limited
 3    to preadmission review, second  surgical   opinions,  medical
 4    necessity  review,  length-of-stay review, review relating to
 5    the appropriateness of the site at which services  were    or
 6    are to be delivered, and review of discharge planning.
 7        "Utilization  review plan" means a written description of
 8    the  procedures and other elements required by this Act under
 9    which  utilization review will  be  performed  by  a  private
10    review agent.
11        Section 20.  Certificate Required.
12        (a)  Except  as  specified  in  subsection  (b)  of  this
13    Section,  after  January 1, 1998, no private review agent who
14    approves  or  denies  payment,  who  recommends  approval  or
15    denial  of  payment,  or whose review results in the approval
16    or denial of payment for  hospital or medical services  on  a
17    case  by  case  basis may conduct  utilization review in this
18    State unless the Director has issued  a  certificate  to  the
19    private review agent.
20        (b)  A  certificate  is  not  required for private review
21    agents:
22             (1)  who are  employees  of  or  affiliated  with  a
23        hospital  or   other health care facility licensed in the
24        State of  Illinois and  who  are  conducting  utilization
25        review  for  the patients of that hospital or health care
26        facility either for purposes of:
27                  (A)  the hospital  or  health  care  facility's
28             in-house  utilization review activities,
29                  (B)  conducting review on a delegated basis for
30             an  insurer, plan, or other entity provided that the
31             insurer,  plan,  or  other  entity  has  obtained  a
32             certificate, or
33                  (C)  compliance    with   the   conditions   of
HB1562 Engrossed            -4-                LRB9004799WHmg
 1             participation for Medicare and Medicaid (Title XVIII
 2             and Title XIX of  the Social Security Act); or
 3             (2)  who operate  solely  under  contract  with  the
 4        State  or  Federal   Government for utilization review of
 5        patients eligible  for  services  under  Title  XVIII  or
 6        Title XIX of the Social  Security Act; or
 7             (3)  who  are  employees  of  or  affiliated  with a
 8        health maintenance organization licensed in the State  of
 9        Illinois  and  who are conducting utilization review with
10        respect to  the  enrollees  of  that  health  maintenance
11        organization  or  who  are  conducting utilization review
12        with  respect  to  enrollees  that  use  an  organization
13        operating in the State of Illinois that is an  affiliate,
14        as  defined  in  Section  131.1 of the Illinois Insurance
15        Code, of the health  maintenance  organization,  provided
16        that  the utilization review is substantially the same as
17        the utilization review performed  for  enrollees  of  the
18        health   maintenance   organization,  including  but  not
19        limited  to  the  clinical  review  criteria  used,   the
20        personnel  performing  the reviews, the quality assurance
21        standards  used,   the   appeals   processes,   and   the
22        confidentiality  protections.  The Department may request
23        information to verify that the conditions  for  exemption
24        under this paragraph are being satisfied.
25        Section 25.  Procedure for Certification.
26        (a)  An applicant for a certificate shall:
27             (1)  submit an application to the Department; and
28             (2)  pay  to  the  Department  the  application  fee
29        established by  the Director.
30        (b)  The application shall:
31             (1)  be  on  a form prescribed by the Department and
32        accompanied by any supporting  documentation required  by
33        the Department; and
HB1562 Engrossed            -5-                LRB9004799WHmg
 1             (2)  be signed by the applicant.
 2        (c)  The  private  review  agent  shall  submit  with the
 3    application the following information:
 4             (1)  The name and address of the applicant  and  the
 5        name   of      the  chief  executive  officer  or  person
 6        responsible for  managing  the  affairs  of  the  private
 7        review  agent.   When   the  private  review  agent  is a
 8        corporation, the date of  incorporation and the names  of
 9        the officers and directors  of the corporation shall also
10        be provided.
11             (2)  Written  policies and procedures to ensure that
12        the  private review agent maintains a written utilization
13        review plan that includes, for  each service that  is  to
14        be  reviewed  by  the  private  review agent the specific
15        review standards, criteria, and procedures to be used  in
16        evaluating  the  medical  necessity,  appropriateness, or
17        effectiveness  of  proposed  or   delivered  health  care
18        services.   However,  the  specific   review   standards,
19        criteria, and procedures need not be submitted as part of
20        the application.
21             (3)  The  specific  written  policies and procedures
22        for  implementation of  the  following  elements  of  the
23        utilization review plan:
24                  (A)  a provision that no final determination or
25             recommendation  adverse  to  a  patient  or  to  any
26             affected  provider  concerning the medical necessity
27             or  appropriateness  for  any  form   of   hospital,
28             medical,  or  other  health  care  services shall be
29             made by  the  private  review  agent  without  prior
30             evaluation  and  concurrence  by  a  provider who is
31             licensed to practice medicine in the same or similar
32             clinical specialty as  the  provider  under  review,
33             except  for  mental health services other than those
34             provided by a psychiatrist,  this  determination  or
HB1562 Engrossed            -6-                LRB9004799WHmg
 1             recommendation  shall  be made by a provider who has
 2             the  same   or   similar   professional   education,
 3             training,  and  qualifications  as the mental health
 4             provider under review;
 5                  (B)  a description of the process for providing
 6             timely written notification and explanation  to  the
 7             patient   and  to  all  providers  involved  in  the
 8             patient's  care   of  a recommendation of or a final
 9             adverse decision  by the private review agent, which
10             shall  include   requirements   that   (i)   written
11             notification  include   references  to  the specific
12             review criteria,   standards,  and  procedures  upon
13             which  any denial or  reduction in services is based
14             and (ii) the  written  review  criteria,  standards,
15             and  procedures   relevant  to  the  notification of
16             denial or reduction  in services shall  be  provided
17             to   the  patient  and   all  providers  within  one
18             business day of a request for the information;
19                  (C)  the manner in which patients or  providers
20             may   seek  reconsideration,  appeal,  or  expedited
21             review of  adverse decisions by the  private  review
22             agent  including a provision that (i) determinations
23             of all reviews of  adverse decisions shall  be  made
24             in  a  timely  fashion; (ii) when the private review
25             agent  conducts  review  on  a   concurrent   basis,
26             expedited  review  must be completed within 24 hours
27             of a request for review; (iii) all specific   review
28             standards,  criteria,  and procedures relevant  to a
29             particular  case  under  review  be   disclosed   in
30             writing  to a provider or patient within 24 hours of
31             the receipt of a request for  the  information;  and
32             (iv)  any  appeal  or  review of an adverse decision
33             shall include a review by a person  other  than  the
34             initial   reviewer   who   recommended  the  adverse
HB1562 Engrossed            -7-                LRB9004799WHmg
 1             action; and
 2                  (D)  those circumstances, if any,  under  which
 3             utilization  review  may  be delegated to a hospital
 4             or health care facility.
 5             (4)  A   summary   of   the   number,   type,    and
 6        qualifications of the  personnel either employed or under
 7        contract to perform  the utilization review.
 8             (5)  A summary of the average annual number of lives
 9        for   which the private review agent shall be responsible
10        for  conducting utilization review.
11             (6)  An annual summary of the number  and  types  of
12        reviews   undertaken;  the number and types of denials or
13        recommendations for denials issued;  the  number,  types,
14        and  outcomes  of  appeals  processed; and the number and
15        types of complaints received and the disposition of those
16        complaints.
17             (7)  The written policies and procedures  to  ensure
18        that  a   representative  of  the private review agent is
19        reasonably  accessible to patients and providers 5 days a
20        week during   normal  business  hours  in  the  State  of
21        Illinois.
22             (8)  The  written  policies and procedures to ensure
23        that all  applicable State and federal  laws  to  protect
24        the   confidentiality  of  medical  records  or any other
25        patient   information  are  followed  including  but  not
26        limited  to   the   Mental   Health   and   Developmental
27        Disabilities    Confidentiality  Act  and 42 CFR Part 2 -
28        Confidentiality   of  Alcohol  and  Drug  Abuse   Patient
29        Records.
30             (9)  A  copy  of  the  materials used by the private
31        review agent to inform  patients  and  providers  of  the
32        requirements  of   the  utilization review plan affecting
33        those patients and  providers.
34             (10)  A list  of  the  insurers,  plans,  and  other
HB1562 Engrossed            -8-                LRB9004799WHmg
 1        entities   for    which   the  private  review  agent  is
 2        performing utilization  review in this State.
 3             (11)  Any ownership interest by or in  any  insurer,
 4        plan, or  other entity for which the private review agent
 5        performs  utilization review.
 6             (12)  Any   other   information   the  Director  may
 7        require.
 8        (d)  The  Director  shall  issue  a  certificate  to   an
 9    applicant  that  has met all the requirements of this Section
10    and all applicable  regulations of the Department.
11        (e)  A certificate is not transferable.
12        Section 30.  Private  Review  Agent  Certified  in  Other
13    State.
14        (a)  Upon  payment  of the required fee, the Director may
15    grant  a   certificate  to  conduct  utilization  review   in
16    Illinois, without  submission of an application, to a private
17    review  agent  that  is   certified,  licensed,  or otherwise
18    authorized to conduct utilization  review under the  laws  of
19    another  state.   Certification without  application shall be
20    granted  only  if  the   requirements   for    certification,
21    licensure,  or  other  authorization  of  the other state are
22    substantially equal to those  in  force  in  this  State  and
23    require,   at  a  minimum,  that  the  private  review  agent
24    maintain   the   policies    and   procedures  related  to  a
25    utilization review plan described in paragraphs (2)  and  (3)
26    of subsection (c) of Section 25.
27        (b)  A  private  review agent that receives certification
28    under this  Section 30 shall be subject to any laws  of  this
29    State  or rules or  regulations promulgated by the Department
30    that govern the  practice of private utilization review.
31        Section 35.  Expiration and renewal of certificate.
32        (a) A  certificate expires on the second  anniversary  of
HB1562 Engrossed            -9-                LRB9004799WHmg
 1    its effective date  unless the certificate is renewed for a 2
 2    year term as provided in this  Section.
 3        (b)  Before  it expires, a certificate may be renewed for
 4    an  additional 2 year term if the applicant pays the  renewal
 5    fee set by  the Director and submits to the Department:
 6             (1)  a renewal application on a form supplied by the
 7        Department;
 8             (2)  satisfactory  evidence  of  compliance with the
 9        requirements of this Act for certification; and
10             (3)  an update of the information  required  for  an
11        application for certification under Section 25.
12    Before  renewing  a certificate the Department shall consider
13    complaints filed  under  Section  45  against  a  certificate
14    holder.
15        Section 40.  Availability of information.
16        (a) On request of any  provider or any patient whose care
17    is subject to review, the  Department shall provide copies of
18    the  application  required  under  Section 25 of  any private
19    review agent who has been issued a  certificate  to   conduct
20    review in this State.
21        (b)  Every  3  months the Department shall compile a list
22    of  certified private review agents along  with  the  renewal
23    dates  of   their  certifications.  This information shall be
24    made available upon request.
25        Section 45.  Complaints and investigations.
26        (a) Any provider or  any patient whose care is subject to
27    review may  submit  to  the   Director  a  written  complaint
28    concerning  the  activities of a private  review agent.  When
29    the  patient  or  provider  receives  an  adverse    decision
30    concerning the health care services provided to a  particular
31    patient, that decision must be appealed through the  policies
32    and  procedures  described in paragraph (3) of subsection (c)
HB1562 Engrossed            -10-               LRB9004799WHmg
 1    of Section 25 before a  complaint may  be  submitted  to  the
 2    Department.
 3        (b)  The   Department   shall  establish  a  process  for
 4    reviewing written  complaints.  The process shall include  at
 5    a minimum the following:
 6             (1)  sending a copy of the complaint, within 10 days
 7        of   receipt,  to  the private review agent and requiring
 8        that  any written reply be sent to the Director within 10
 9        days  after receipt  of  the  complaint  by  the  private
10        review  agent; and
11             (2)  establishing   a  method  to  resolve  disputes
12        between  private    review  agents  and   providers   and
13        patients.
14        (c)  The  Department may establish reporting requirements
15    to:
16             (1)  evaluate the effectiveness  of  private  review
17        agents; or
18             (2)  determine  if  the utilization review conducted
19        by the  private review agents is in compliance  with  the
20        provisions of this Act and any applicable regulations.
21        Section 50.  Denial or revocation of certification.
22        (a)  The   Director  shall  deny  a  certificate  to  any
23    applicant  if,  upon review  of the application, the Director
24    finds that the applicant proposing   to  conduct  utilization
25    review does not:
26             (1)  Have  available  the  services  of a sufficient
27        number of  physicians, registered nurses, medical records
28        technicians, or similarly qualified medical professionals
29        supported and supervised  by  appropriate  physicians  to
30        carry out its utilization review.
31             (2)  Provide    assurances   satisfactory   to   the
32        Department that   the  procedures  and  policies  of  the
33        private review agent will:
HB1562 Engrossed            -11-               LRB9004799WHmg
 1                  (A)  protect  the  confidentiality  of  patient
 2             information  in  compliance  with  state and federal
 3             law;
 4                  (B)  ensure that the private review agent  will
 5             be   reasonably accessible to patients and providers
 6             for  5 working days a week  during  normal  business
 7             hours in this State; and
 8                  (C)  provide for timely notification of adverse
 9             decisions   and  timely  processing  of  appeals  or
10             reviews  of  adverse  decisions  to  ensure  that  a
11             patient's care is not interrupted.
12             (3)  Meet any applicable regulations the  Department
13        may  adopt  under this Act relating to the qualifications
14        of  private   review  agents  or   the   performance   of
15        utilization review.
16        (b)  The  Director may revoke or refuse to issue or renew
17    a  certificate if the holder or applicant:
18             (1)  violates any  provision  of  this  Act  or  its
19        rules;
20             (2)  fraudulently  or  deceptively obtains, attempts
21        to obtain, or uses a certificate; or
22             (3)  fails to substantially meet the  standards  and
23        qualifications  set  forth  in  this  Act  or  any  rules
24        promulgated by the Department.
25        (c)  Before  refusing  to  issue  or  renew or revoking a
26    certificate  under this Section, the Director  shall  provide
27    the  applicant  or  certificate holder with written notice of
28    the reasons for the  refusal to issue or renew or revocation,
29    reasonable   time   to   supply     additional    information
30    demonstrating  compliance with the  requirements of this Act,
31    and the opportunity to request a hearing.  If an applicant or
32    certificate holder requests a hearing,   the  Director  shall
33    send  a  hearing  notice  by  certified mail, return  receipt
34    requested, and conduct  a  hearing  in  accordance  with  the
HB1562 Engrossed            -12-               LRB9004799WHmg
 1    Illinois Administrative Procedure Act.
 2        Section  55.  Prohibited  acts.  Any private review agent
 3    certified  in Illinois is prohibited from:
 4        (a)  Disclosing  any  patient  information  obtained   in
 5    conducting   utilization  review,  except  that  the  private
 6    review  agent may  disclose that information to the provider,
 7    third party insurer,  plan, or other entity  responsible  for
 8    the coverage of the  beneficiary.  The provider shall be held
 9    harmless  for  any   abrogation  of  this  obligation  of the
10    private review agent, insurer, plan, or other entity.
11        (b)  Offering or undertaking to offer:
12             (1)  a   contingent   fee   contract   to    conduct
13        utilization  review   under  which  compensation  to  the
14        private  review entity is  based in whole or in part upon
15        amounts or expenditures  saved or reduced by the  private
16        review agent;
17             (2)  bonuses  or  commissions  to  be  paid  to  the
18        private  review  agent  based  upon  dollar reductions of
19        provider bills; or
20             (3)  promises to reduce health care expenditures  by
21        certain  amounts or percentages.
22        (c)  Refusing  to  identify  the name of the agent or the
23    identity of  a person employed  or  otherwise  engaged  by  a
24    private  review  agent  who  is conducting utilization review
25    when requested to do so by a  provider or patient.
26        (d)  Releasing data obtained in the review  process  that
27    identifies    individual  patients,  hospitals, or physicians
28    without  prior  consent   of  the  patient,   physician,   or
29    hospital, as the case may be.
30        Section 60.  Penalties.
31        (a)  Any  person or entity that acts as a  private review
32    agent  in  the  State  of  Illinois   without   obtaining   a
HB1562 Engrossed            -13-               LRB9004799WHmg
 1    certificate  or  any certified private review agent who fails
 2    to  comply with the provisions of this Act or its rules is:
 3             (1)  guilty of  a  Class  A  misdemeanor,  and  upon
 4        conviction  is  subject to a penalty not exceeding $1,000
 5        with each  day the violation continues  after  the  first
 6        violation  constituting a separate offense; and
 7             (2)  prohibited from denying payment to any provider
 8        or   patient  for services that the provider has rendered
 9        to  any patient whose care was reviewed by the person  or
10        entity.
11        (b)  Notwithstanding  the  existence  or  pursuit  of any
12    other remedy,  whenever the Attorney General  has  reason  to
13    believe that any  person or entity has engaged in or is about
14    to  engage  in  any act  or practice in violation of this Act
15    and that proceedings would be  in the public interest, he  or
16    she  may  bring  an  action in the name  of the People of the
17    State  against  that  person  or  entity  to   restrain,   by
18    preliminary  or  permanent  injunction, the prohibited act or
19    practice.  The court, in its  discretion,  may  exercise  all
20    powers  necessary,  including but not limited to, injunction,
21    revocation of   the  certificate  to  engage  in  utilization
22    review, dissolution of a  domestic corporation, suspension or
23    termination  of  the  right  of  a  foreign corporation to do
24    business in this State, and restitution.   In addition to the
25    other  remedies  provided  in  this  Section,  the   Attorney
26    General  may request and the court may impose a civil penalty
27    in a  sum not to exceed $50,000 against any person or  entity
28    found  by   the  court to have engaged in any act or practice
29    declared unlawful  under this Act.
30        Section 65.   Department  Rules.   The  Department  shall
31    adopt  rules necessary for the administration and enforcement
32    of this Act within 6 months of its effective date.
HB1562 Engrossed            -14-               LRB9004799WHmg
 1        Section 70.  Judicial Review.  All  final  administrative
 2    decisions    of the Department are subject to judicial review
 3    under the Administrative  Review Law and its rules.  The term
 4    "administrative decision" is defined  as in Section 3-101  of
 5    the Code of Civil Procedure.
 6        Section  75.  Administrative Procedure Act.  The Illinois
 7    Administrative  Procedure  Act  is  expressly   adopted   and
 8    incorporated  as  if    all  the  provisions of that Act were
 9    included in this Act.  For the  purposes  of  this  Act,  the
10    notice   required  under  Section  10-25  of  the    Illinois
11    Administrative Procedure Act is  considered  sufficient  when
12    mailed to  the last known address of a party.
13        Section 80.  Home rule.  The regulation and certification
14    of   private review agents are exclusive powers and functions
15    of the State.  A  home rule unit may not regulate or  license
16    private  review  agents.   This   Section is a denial of home
17    rule powers and functions under subsection  (h) of Section  6
18    of Article VII of the Illinois Constitution.
19        Section  999.  Effective  date.  This Act takes effect on
20    January 1, 1998.

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