WSR 99-11-102

PROPOSED RULES

INSURANCE COMMISSIONER'S OFFICE


[ Insurance Commissioner Matter No. R 98-20-- Filed May 19, 1999, 11:18 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 98-22-041.

Title of Rule: Every category of health care provider.

Purpose: The rules are intended to implement RCW 48.43.045 by identifying health insurance practices that would violate the statute.

Other Identifying Information: Insurance Commissioner Matter No. R 98-20.

Statutory Authority for Adoption: RCW 48.02.060, 48.18.120, 48.20.450, 48.20.460, 48.30.010, 48.44.050, and 48.46.200.

Statute Being Implemented: RCW 48.43.045.

Summary: The proposed rules identify the standards for inclusion of every category of health care provider in the health care networks for health plans. Carriers are prohibited from excluding entire categories of health care providers based upon a finding that no service for the particular category is cost-effective or efficacious. Other issues relating to the offering of coverage that includes all categories of health care providers are clarified.

Reasons Supporting Proposal: Numerous questions have arisen about the way in which health plans incorporate the services of health care providers who were previously excluded from health plan participation. These rules are intended to address these questions.

Name of Agency Personnel Responsible for Drafting: John S. Conniff, P.O. Box 40255, Olympia, WA, (360) 664-3786; Implementation and Enforcement: Bethany Weidner, P.O. Box 40255, Olympia, WA, (360) 664-8137.

Name of Proponent: Deborah Senn, Insurance Commissioner, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Carriers are prohibited from excluding entire categories of health care providers based upon a finding that no service for the particular category is cost-effective or efficacious. Health plans may contain reasonable limits on individual services so long as such limitations are consistent with the statute. Carriers may use restricted health networks and are not required to include all providers within any particular category. Carriers may restrict coverage for certain categories of providers to those who have purchased these benefits as an optional rider. These provisions are intended to create uniform standards for including all categories of providers in health plans. In addition, these rules will respond to specific complaints from providers regarding the practices of some health carriers.

Proposal does not change existing rules.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

Small Business Economic Impact Statement

Background: The underlying statute, RCW 48.43.045, was adopted in April of 1995, the effective date was January 1, 1996. In December, the insurance commissioner issued an interpretation of the statute. In January of 1996, carriers filed a lawsuit over that interpretation. A long and complex legal history has followed.

Over the last several years, the commissioner and the staff of her office have held numerous and lengthy discussions with carriers, providers, and consumers regarding the statute and possible rules to clarify and implement the statute. In October of 1998, the commissioner issued a CR-101 announcing her intent to begin rule making in this area.

Is the rule required by federal law or federal regulation? This rule is not required by federal law or regulation.

What industry is affected by the proposed rule? The industry code that would be affected by the proposed rules includes hospital and medical service plans, industry code # 6324. In Washington, such plans are called health care service contractors (HCSCs) and health maintenance organizations (HMOs). It will also apply to group and blanket disability carriers, unless exempted by RCW 48.21.190, which fall under the classification of Accident and Health Insurance Companies, industry code # 6321.

List the specific parts of the proposed rule, based on the underlying statutory authority (RCW section), which may impose a cost to business: The rule is an attempt to clarify the existing statute. It is not intended to impose additional burdens or costs and it is not believed that any specific provisions do impose additional costs. Any costs that may be incurred are associated with the underlying statute.

One carrier indicated that the rule would cause a change in benefits. That is not correct - the benefits are traced to the underlying statute which was passed in 1995. The rule does not add any benefit. The rule is not adding a new burden. It is clarifying an existing requirement that some carriers may not be fully complying with.

Carriers did ask for some measures that could possibly be mitigatory. They are addressed later in this report. They include a delayed effective date and some suggested text additions or clarifications.

What will be the compliance costs for the industries affected? The rule was designed to clarify the existing statute. Any substantive costs are associated with the statute, not the rule. However, there may be some costs inherent in the rule making. These costs would include the costs in reading and comprehending any rule and any costs in changing existing contracts or documents. It should be noted that if existing contracts or documents are not in compliance with the underlying statute, these costs are attributable to that statute not the rule.

There were some concerns mentioned about the scope of some of the language. Carriers asked for additional language to clarify or narrow the proposed text to preclude some possible costs. This is addressed in greater detail later in this report.

One carrier suggested that there would be no additional costs attributable to the rule if their mitigation suggestions are utilized (one of their suggested changes was made).

Another carrier indicated that there would be costs associated with implementing the rule and changing their documents and contracts. They stated that these costs would be greatly reduced if the effective date of the rules was delayed until January 2000. This would allow the stock of existing documents to be used and enable the carrier to include these changes in with all other provider contract changes in their annual provider contract renewal. This is addressed later in this report.

What percentage of the industries in the four-digit standard industrial classification will be affected by the rule? The proposed rule would affect 100% of the health carriers that offer health plans subject to regulation by the insurance commissioner.

Will the rule impose a disproportionately higher economic burden on small businesses within the four-digit classification? No. The proposed rule will not impose a disproportionately higher economic burden on smaller carriers. All carriers are currently required to comply with the existing statute. The rules are an attempt to clarify what the carriers must do to comply. The rules should not be an economic burden for any carrier.

Can mitigation be used to reduce the economic impact of the rule on small businesses and still meet the stated objective of the statutes that are the basis of the proposed rule? Yes. The commissioner designed the rule to clarify and narrow the existing statutory requirements. The commissioner solicited mitigation suggestions that would meet the objectives in a more cost-efficient manner.

WAC 284-43-205(1): The suggestion that was made was to include the phrase "and is acting within the scope of practice" between "condition," and "unless," - this suggestion was intended to clarify the subsection and possibly to mitigate costs.

The commissioner and the rule drafter intend to continue to work with all parties to mitigate possible costs while still accomplishing the goals of the rule making.

What steps will the commissioner take to reduce the costs of the rule on small businesses? The commissioner does not believe that the rule will incur significant costs on small businesses or larger businesses. The commissioner and the rule writer will continue to work with affected carriers and interested parties in mitigating costs when that is possible while still accomplishing the goals of the rule making.

Which mitigation techniques have been considered and incorporated into the proposed rule? See above.

Which mitigation techniques were considered for incorporation into the proposed rule but were rejected, and why? Several suggested changes may help clarify the rule or mitigate the costs. The commissioner has chosen not to make all of the suggested changes at this time. Many of the suggestions are intriguing and the commissioner has not rejected the possibility of making of any of the proposed changes. They will be considered and discussed throughout the remainder of the rule-making process.

Effective Date: It was suggested that the effective date be delayed until December of 1999 or January of 2000. The deferred date would eliminate some administrative burdens and costs upon carriers. This would allow carriers to process these network changes at the same time they are renewing contracts with providers. The commissioner has not made a final decision on this issue and will continue to consider delaying the effective date of the rules. It should be noted however that the underlying statute was effective January 1, 1996. These rules are intended to simply clarify a current statutory requirement. Any costs associated with the requirements of the statute should have been borne by now. At the present time, the effective date clause was removed and the rules would be effective thirty-one days after adoption. The commissioner and the rule drafter will continue to discuss this issue with the carriers.

Text Changes: Suggested text changes include the following:

One suggestion was to insert the phrase in subsection (2) "submitted or possessed by either health carrier or provider" between "evidence" and "of the type."

Another text suggestion for subsection (2) was to include the phrase "or any of the other standards contemplated by RCW 48.43.045 (1)(b)." after "clinical efficiency."

Another carrier indicated that they interpreted the rule to say that carriers could only exclude services if they could prove the services were not cost-effective or clinically efficacious. They believed this to be potentially very costly. It was suggested that subsection (2) should be deleted or rewritten to allow carriers to exclude services that have not been demonstrated to be:

(1) Clinically efficacious through generally accepted scientific methods; or

(2) Cost-effective through customary methods used to determine cost-effectiveness.

The commissioner is not convinced that the suggested changes add clarity or mitigate costs. The commissioner and the rule drafter will continue to study these proposals and work with the carriers who made these suggestions to determine if these changes are truly advantageous. These changes or variants may be incorporated at a later date.

The rule drafter will continue to work with all parties, including carriers of all sizes, throughout the rule-making period. If any further mitigation techniques are proposed that do not undermine the goals of the rule, they will be considered.

Briefly describe the reporting, recordkeeping, and other compliance requirements of the proposed rule: There are no new reporting or record-keeping requirements as a result of this rule.

List the kinds of professional services that a small business is likely to need in order to comply with the reporting, recordkeeping, and other compliance requirements of the proposed rule: There are no new reporting or record-keeping requirements in these rules. It is expected that no new professional services will be needed by smaller carriers.

Cost of Equipment: There is no anticipated additional cost of equipment.

Cost of Supplies: There is no anticipated additional cost of supplies.

Cost of Labor: There should be no more than minimal labor costs associated with evaluating contracts for possible changes. If changes are necessary to the carrier’s network or documents, the changes may incur some costs.

Cost of Increased Administration: There may be some minimal costs associated with reading and comprehending the new rule. The commissioner may be able to offer technical assistance to carriers in this regard.

Compare the cost of compliance for small business with the cost of compliance for the largest business in the same four-digit classification: The cost of compliance should be proportional for small businesses. There should be no proportional differences in costs of equipment, supplies, labor, or administration. Smaller carriers have fewer plans, smaller provider network, fewer materials, and fewer internal and external rules and regulations to track. Compliance should require less employee time and lower per-employee costs for smaller carriers. Larger carriers with more plans and larger networks may have slightly higher proportional per-employee costs to comply with this rule.

Have businesses that will be affected been asked what the economic impact will be? All parties were informed of the commissioner's intent to revisit this subject and to draft rules regarding provider contracting on October 29, 1998. The proposal was published in the Washington State Register and a response form was posted on the insurance commissioner’s website. Interested parties and carriers, including smaller carriers, were mailed the CR-101 on November 12, 1998. The CR-101 requested comments and gave agency contact numbers for parties interested in participating in the rule-making process.

Additionally, a cross-section of carriers were sent a questionnaire and draft rules and asked about possible economic impacts. Suggestions for mitigation were also solicited at that time.

How did the commissioner involve small business in the development of the proposed rule? See above.

How and when were affected small businesses advised of the proposed rule? The CR-101 was filed on October 29, 1999 [1998]. The proposal was published in the Washington State Register and was posted on the Insurance Commissioner’s website. The website includes a form for carriers and other interested parties to comment on any rule proposal at any stage in the process. Interested parties and carriers, including smaller carriers, were mailed the CR-101 on November 12, 1998. The CR-101 requested comments and gave agency contact numbers for parties interested in participating in the rule-making process.

A copy of the statement may be obtained by writing to Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, phone (360) 664-3784, fax (360) 664-2782.

RCW 34.05.328 applies to this rule adoption.

Hearing Location: Seattle Center, Fidalgo Room (part of NW Rooms), Seattle, Washington, on June 29, 1999, at 6:00 p.m.

Assistance for Persons with Disabilities: Contact Lorie Villaflores by June 28, 1999, TDD (360) 407-0409.

Submit Written Comments to: Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, Internet e-mail KacyB@oic.wa.gov, fax (360) 664-2782 by June 29, 1999.

Date of Intended Adoption: July 13, 1999.

May 19, 1999

Robert A. Harkins

Chief Deputy Commissioner

OTS-2926.3


NEW SECTION
WAC 284-43-205
Every category of health care providers.

(1) To effectuate the requirement of RCW 48.43.045 that health plans provide coverage for treatments and services by every category of provider, networks maintained by health carriers for health plans shall not exclude any category of providers licensed by the state of Washington who provide health care services or care within the scope of their practice for conditions covered by basic health plan (BHP) services as defined by RCW 48.43.005(4). If the BHP covers the condition, the carrier may not exclude a category of provider who is licensed to provide services for that condition, and is acting within the scope of practice, unless such services would not meet the carrier's standards pursuant to RCW 48.43.045 (1)(b). For example, if the BHP provides coverage for outpatient treatment of lower back pain, any category of provider that provides cost-effective and clinically efficacious outpatient treatment for lower back pain within its scope practice and otherwise abides by standards pursuant to RCW 48.43.045 (1)(b) may not be excluded from the network.

(2) RCW 48.43.045 (1)(b) permits health carriers to require providers to abide by certain standards. These standards may not be used in a manner designed to exclude categories of providers unreasonably. For example, health carriers may not decide that a particular category of provider can never render any cost-effective or clinically efficacious services and thereby exclude that category of provider completely from health plans on that basis. However, health carriers may determine that particular services for particular conditions by particular categories of providers are not cost-effective or clinically efficacious, and may exclude such services from coverage or reimbursement under a health plan. Any such determinations must be supported by relevant information or evidence of the type usually considered and relied upon in making determinations of cost-effectiveness or clinical efficacy.

(3) Health plans are not prohibited by this section from placing reasonable limits on individual services rendered by specific categories of providers. However, health plans may not contain unreasonable limits, and may not include limits on the type of provider permitted to render the covered service unless such limits comply with RCW 48.43.045 (1)(b).

(4) This section does not prohibit health plans from using restricted networks. Health carriers offering plans with restricted networks may select the individual providers in any category of provider with whom they will contract or whom they will reimburse. A health carrier is not required by RCW 48.43.045 or this section to accede to a request by any individual provider for inclusion in any network for any health plan. Health plans that use "gatekeepers" for access to specialist providers may use them for access to specified categories of providers.

(5) Health carriers may not offer coverage for health services for certain categories of providers solely as a separately priced optional benefit.

(6) The insurance commissioner may grant reasonable temporary extensions of time for implementation of RCW 48.43.045 or this section, or any part thereof, for good cause shown.

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