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90_HB1562eng 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. LRB9004799WHmg 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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