WSR 99-12-106

PROPOSED RULES

INSURANCE COMMISSIONER'S OFFICE


[ Insurance Commissioner Matter No. R 98-21-- Filed June 2, 1999, 9:02 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 98-22-108.

Title of Rule: Provider contracts.

Purpose: Current rules governing healthcare provider contracts will be amended to address problems brought to the attention of the commissioner by health care professionals and health care facilities.

Statutory Authority for Adoption: RCW 48.02.060, 48.30.010, 48.43.055, 48.44.050, 48.44.070, 48.46.030, 48.46.200, and 48.46.243.

Statute Being Implemented: RCW 48.44.070, 48.46.243.

Summary: Provider contracts cannot modify health plan benefits. Providers have the right to review any insurer standards, manuals, or documents that will impose responsibilities upon providers before the provider signs a contract. Insurers cannot change these responsibilities without giving sixty days notice and the chance for the provider to terminate the contract if the changes are unacceptable. Insurers cannot punish providers who report a possible violation of any state or federal law.

Insurers must pay "clean" claims in thirty days and must pay interest when the payment is delayed. Every contract must have a dispute resolution process that is fast and fair. To be fair the dispute must be resolved in thirty days and no subject may be excluded from the process. Insurers must make every effort to resolve billing disputes informally and quickly. The costs and inconvenience of an audit must be reasonable. Every material change to contract must be filed whether or not such changes affect provisions required by law.

Reasons Supporting Proposal: Health care providers and facilities have complained that contracts with health carriers contain provisions which are unfair and inappropriate for proper health care delivery. Without new rules, carriers may continue to use contract terms and conditions that interfere with the delivery of health plan benefits.

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: Proposed amendments to WAC 284-43-320 require carriers to give notice of at least sixty days of changes in contracted responsibilities and the opportunity for providers to terminate the contract without penalty. Contracts often incorporate by reference carrier documents that contain standards for participating providers. Changing these documents indirectly amends the contract without notice to providers. The amendments would also clarify existing law that a provider contract cannot alter the terms and conditions of the health plan sold to the public.

Proposed WAC 284-43-330 requires that carriers submit to the commissioner material changes to a sample contract rather than just those changes affected by agency rules. The agency needs sample copies of all provider contracts on file for information purposes. The old rule resulted in major changes to contracts without agency awareness because the changes did not implicate provisions required by rule.

Proposed WAC 284-43-350 provides for terms and conditions of payment from health carriers to providers. Carriers are unfairly delaying payments to providers and some contracts either contain no timeline for payment or grossly favor the carrier. There is a requirement in this section that would require carriers to pay "clean claims" within thirty days of submission and to pay interest on claim payment delays that are not caused by the provider or subscriber, enrollee, or patient.

Proposed WAC 284-43-360 requires certain elements in a carrier's dispute resolution process. Contracts cannot exclude contract dispute matters from the statutorily required dispute resolution process. Carriers must resolve disputes within thirty days. Carriers may not make the resolution process the sole remedy for contract disputes foreclosing judicial remedies. These changes are intended to clarify the statutory requirement for a "fair" dispute resolution process.

Proposed WAC 284-43-370 requires billing audit guidelines. Contracts often contain clauses permitting carriers to conduct necessary audits of provider files to determine the honesty and appropriateness of billings to the carrier. However, these clauses often inappropriately favor carriers and burden providers with unnecessary costs and delays in obtaining payment for legitimate claims.

Proposed WAC 284-43-380 requires that participating provider and facility contracts entered into prior to the effective date of the rule shall be amended no later than July 1, 2000, in order to bring the contract into compliance. This lengthy effective date should minimize disruption in provider contracting.

Proposal Changes the Following Existing Rules: See above.

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

Small Business Economic Impact Statement

Is the rule required by federal law or federal regulation? This rule is not required by federal law or regulation. Several sections of the rule may require carriers to apply to privately-financed plans practices which they are already required to apply to publicly-financed plans.

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).

List the specific parts of the proposed rule, based on the underlying statutory authority (RCW section), which may impose a cost to business: RCW 48.44.070 and 48.46.243 require the filing of provider contracts with the commissioner fifteen days prior to use. The commissioner may disapprove of the filing if it is in any respect a violation of chapter 48.44 or 48.46 RCW or if it does not conform with minimum provisions or standards adopted by rule by the commissioner.

Proposed WAC 284-43-320 requires that carriers give notice of at least sixty days of changes in the responsibilities of carriers and providers and facilities and the opportunity to terminate the contract if the providers or facilities do not agree with the changes. Several larger carriers indicated that they currently give thirty day notice for material changes only. There may be costs associated with providing notice of more than just material changes. Concerns were noted only by larger carriers, who have larger networks of providers and facilities. These carriers did not object to the costs of providing notices as much administration of the notice provisions and the requirement of telling each provider or facility what are the rights and responsibilities of each party.

Proposed WAC 284-43-330 requires that carriers submit to the commissioner material changes to a sample contract, fifteen days prior to use. The requirement to file contracts fifteen days prior to use is a current statutory requirement (RCW 48.44.070 and RCW 48.46.243). The commissioner mitigated costs in past rule makings by allowing carriers to file sample contracts. The existing rule required filing of material changes that affected only chapter 284-43 WAC.

Proposed WAC 284-43-350 provides for terms and conditions of payment from health carriers to providers. There is a requirement in this section that would require carriers to pay "clean claims" within thirty days of submission and to pay interest on claim payment delays that are not caused by the provider or subscriber, enrollee, or patient.

Carriers indicated in their responses that they currently have standards for payment of "clean claims." Deadlines and definitions may vary from carrier to carrier causing confusion for providers. These rules will standardize language and deadlines. Some carriers, larger carriers, have indicated that costs may result from having a thirty day claim payment deadline.

Additionally, there may be some slight administrative costs to oversee program requiring interest to be included on late payments. Finally, there will be the cost of that interest itself. There will be negligible costs (and no interest) if the clean claims are paid within thirty days.

Proposed WAC 284-43-360 requires certain elements in a carrier's dispute resolution process. Currently, WAC 284-43-320 requires that all contracts between carriers and providers must contain procedures for the fair resolution of disputes arising out of the contracts. This allowed considerable latitude for the carriers but, unfortunately, the resolution processes instituted by some carriers did not meet the goals of the rule and establish a quick, efficient, and unbiased system. The rules propose a framework and timeframes for the dispute resolution process. Whether or not any particular contract will need to be revised in order to satisfy the requirements of the rule will depend upon the carrier's existing process.

Carriers indicated that some modifications of their existing dispute resolution processes may need to be performed. No carrier indicated anything other than moderate costs would occur due to modification.

Proposed WAC 284-43-370 requires billing audit guidelines. Carriers currently have various auditing requirements. All perform some type of audit but not all carriers audit all providers annually. Carriers indicated that some provisions could result in costs such as the carrier paying requirement that a one-hundred dollar audit fee be paid to the audited party, copying costs, and on-site review unless the provider agrees to an off-site audit.

Proposed WAC 284-43-380 requires that participating provider and facility contracts entered into prior to the effective date of the rule shall be amended no later than July 1, 2000, in order to bring the contract into compliance. There is a provision that allows the commissioner to extend that deadline up to six months if a carrier who has tried to comply in good faith requests the extension in writing.

What will be the compliance costs for the industries affected? The intent of the proposed rules is to standardize practices in the area of provider contracting by carriers. Some of the requirements mirror existing practices of carriers; others would require changes to the contract language, practices, or the timeframes in which a carrier performs the obligation.

The largest potential cost is the revision of existing contracts and the issuance of new contracts. The rules are intended to minimize the costs of issuing new contracts by delaying the implementation of the rules until July 1, 2000, with a possible additional six month extension available to the carriers. Carriers update their contracts periodically, some indicate that they make changes and issue new contracts as a routine business practice every two to three years. Others may make changes more or less frequently. Costs may range depending on the size of the provider network and the carrier’s next intended revision of their contracts. The highest estimate (by one of the largest carriers) was six full-time employees. The lowest estimate (by one of the smallest carriers) was negligible costs.

One carrier indicated that it will incur some administrative costs in implementing a system to comply with WAC 284-43-350 that would require interest on late payments of "clean claims." This cost is expected to be moderate since the carrier already has systems to monitor payments of clean claims. The cost of interest will be zero unless payments to providers or facilities are later than thirty days on clean claims.

No carrier stated that it anticipated any more than moderate costs to set up and administer the dispute resolution requirements. Some carriers did note that they believe that this process is not necessary.

Billing audit guidelines are also mentioned as a section of the rule that may potentially result in costs to carriers. On-site review (which may be waived by the provider), a one-hundred dollar audit fee, and payment of copying expenses are the provisions that may incur costs.

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? A comparison of the responses from the smaller carriers to responses from larger carriers indicate that the proposed rule would not impose a disproportionately higher economic burden on small business.

The largest potential costs of this rule involve the revising of existing contracts between carriers and providers or facilities. Carriers vary in how often their provider contracts are updated. When contracts are updated, larger carriers have more plans and more varieties of provider contracts needing modification than do the small carriers. As a result, the larger carriers have indicated significantly higher proportional costs. The smallest responding carrier indicated that its contracts would be updated prior to July 1, 2000, regardless of the promulgation of this rule; therefore updating the contracts to comply with this proposed rule would not impose more than marginal costs.

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? The rule has been modified to extend the effective date until July 1, 2000. This would allow an extra year for carriers to revise their contracts and is expected to reduce costs. By this time many affected carriers, including at least one of the smaller carriers involved, will have updated their contracts through the normal course of business, thereby reducing or eliminating the need to update those contracts solely as a result of this rule making.

Additionally, a section was included that would allow the commissioner to extend the compliance process by an additional six months for carriers. The carriers must make a written request and explain how they have made a good faith effort to meet the July 1, 2000, deadline, state why the deadline can not be met, and state when the carrier expects to be in compliance. A carrier meeting those criteria may be allowed six months from July 1, 2000, to bring their contracts into compliance.

What steps will the commissioner take to reduce the costs of the rule on small businesses? See above. The rule-drafting process will continue and small businesses are invited to comment on any proposed section of the rule and offer suggestions or alternatives. The rule drafters will continue to discuss the proposed rules with industry representatives to discuss methods to reduce costs on smaller carriers. Additionally, the commissioner will provide technical assistance to aid carriers in understanding and implementing the new rules.

Which mitigation techniques have been considered and incorporated into the proposed rule? Preliminary drafts of this proposed rule required that carriers modify all existing contracts by July 1, 1999. The proposed rule extended this deadline to July 1, 2000, or longer if a carrier demonstrates a need. This mitigation will obviate the need for many contracts to be modified as a result of this rule, since many contracts will need to be modified by July 1, 2000, regardless of this rule. An additional six months may be allowed for carriers as noted infra.

A proposed section was removed which would have required that payment for procedures be based on the service performed rather than the type of provider performing the service. Carriers had indicated that this section could be difficult and costly to implement.

Timeframes and processes often mirror existing timelines and requirements imposed by the federal government. Rule drafters will continue to work with industry representatives to develop the fairest, most efficient process. This may include utilizing more of the new Medicare standards.

Which mitigation techniques were considered for incorporation into the proposed rule but were rejected, and why? Carriers were concerned with giving notice of all changes in contractual rights and responsibilities to their contracting providers and facilities. They suggested amending the rules to require only notice of material changes.

Another carrier suggestion was to use all of the Medicare’s standards for payment of claims.

These suggestions were considered but not incorporated at the time of this filing. As noted above, the issues will be further explored and considered as the rule-making process continues.

Briefly describe the reporting, recordkeeping, and other compliance requirements of the proposed rule. The rule provides for prompt payment of amounts owed by a carrier to a provider or facility by requiring that contracts obligate carriers to pay "clean claims" (claims containing information necessary for payment) within thirty days of submission. The rule defines a process which carriers and providers must follow for claims that are not clean.

The rule provides for a more fair and efficient dispute resolution process by allowing providers up to thirty days for providers and facilities initiate the process by complaining, and requiring disputes to be resolved within thirty days after receipt of the complaint.

The rule provides for a more fair and efficient billing auditing process by requiring carriers and providers to follow certain guidelines. Several of the guidelines contained in the rule may be modified with consent of the parties.

RCW 48.44.070 and 48.46.243 require carriers to file with the commissioner fifteen days prior to use sample contract forms proposed for use with its participating providers and facilities. Previous rules had limited the application of these laws by limiting the definition of a contract. Recent rule changes increased the protection of consumers by removing some of the limitations. The commissioner determined that the new regulation was not broad enough in requiring carriers to file only material changes that affect a provision of chapter 284-43 WAC.

This rule will require carriers to file any material changes to a sample contract form to the commissioner fifteen days prior to use. However, changes in provider payment rates, coinsurance, copayments, or deductibles are not considered material changes for the purpose of this subsection.

Carriers will need to bring existing contracts into compliance with this rule by July 1, 2000, or within six months after that date if the carrier demonstrates that such additional time is needed.

Carriers will need to be able to provide the commissioner with copies of provider and facility contracts upon twenty days prior written notice from the commissioner. As noted above, carriers are currently required by statute to provide this information to the commissioner prior to use.

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. The smaller carriers did not indicate that additional professional services would be needed to comply with this rule. The commissioner will seek to provide whatever technical assistance is necessary to enable the smaller carriers to understand and implement the rule.

Analyze the cost of compliance including, specifically:

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

Cost of Supplies: If sample contract forms are changed materially, there will be some additional minimal supply costs associated with the requirement to file such changes with the commissioner. Providing copies of contracts to the commissioner may require photocopying on occasion.

Cost of Labor: Some carriers may need to devote additional labor hours to revise those contracts which would not otherwise be revised by the deadlines in the rule. There will be the costs associated with learning the requirements of new rules.

Cost of Increased Administration: Some carriers indicate that they may need to devote additional administration to ensure that their existing dispute resolution and claim payment processes comply with timeframes in the rule. However, the agency understands that all carriers already track timeframes for claim payment and dispute resolution. It appears that any increased administrative costs would be marginal. One carrier indicated it may take some administrative time to implement a program to track interest payments on claims. However, it is worth noting that the interest money represents profit for the carrier which is derived from untimely claims payments to providers and facilities. Many provider groups who otherwise would have use of these funds but for untimely payments are small businesses.

Compare the cost of compliance for small business with the cost of compliance for the largest business in the same four-digit classification: Cost of compliance does not appear to be disproportionately greater for the small carriers. Larger carriers indicated that the overall cost of compliance would be significant. Conversely, only moderate costs are expected by the smallest carrier. The smallest carrier indicated that it would incur negligible costs for the majority of the provisions of the rule, including the section concerning the updating of contracts, which the larger carriers claimed would result in the greatest costs. Since the smaller carrier indicted its costs due to this key provision would be negligible, it would incur a lesser cost per employee for this task than would the larger carriers. In addition, the smaller carriers have considerably fewer contracts, providers, and regulations to track; this results in a per-employee burden on smaller carriers which is at most proportional to the burden imposed on larger carriers.

The only sections that caused possible concern for that carrier were those sections concerning possible payment of interest and the costs associated with billing auditing. These costs of establishing a program to oversee that late payments on clean claims should not be great. The carriers already track their claims payments. If a payment on a clean claim is not made over thirty days from submission of the claim, then no action must be taken and there is no interest due. Finally, all responding carriers expressed concern at the costs associated with billing audits, specifically a $100 audit fee cost and the cost of copying. These costs are not disproportionate, the larger carriers have larger networks and will audit considerably larger numbers of providers or facilities. The costs can not be easily mitigated for small carriers either.

The rules drafters will continue to consider alternatives that accomplish the goals of the rules while mitigating the costs of compliance, particularly those costs incurred by small businesses.

Have businesses that will be affected been asked what the economic impact will be? This subject had been a part of an overall regulatory scheme change in a previous rule making (R 97-3, managed care rules). As that proposal progressed through the rule-making process, the proposed rules were modified in response to the comments made. Numerous mitigatory measures were taken in the area of provider contracts. The rule drafter reviewed that rule making, the goals and efficacy of the rules before undertaking this rule making.

All carriers were informed of the commissioner's intent to draft rules regarding provider contracting in November, 1998. The CR-101 was mailed to all health carriers and posted on the agency’s website after filing and publication in the Washington State Register. An open public meeting was held on December 7, 1998, in Olympia, Washington to discuss the proposed rules. Carriers, providers, and consumers were invited to participate. A draft of the rules was circulated and comments by the carriers were solicited. A representative sample of carriers were asked to respond to a specific set of questions regarding the possible economic impacts of the proposed rule in March, 1999.

How did the commissioner involve small business in the development of the proposed rule? A cross-section of carriers, including smaller carriers, were also asked to respond to a questionnaire regarding the possible economic impacts of the proposed rule. See also the section above for additional methods used to involve smaller carriers.

How and when were affected small businesses advised of the proposed rule? Small carriers were advised in writing of the proposed rules on November 4, 1998. See above two sections for additional methods used to involve smaller carriers.

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

RCW 34.05.328 applies to this rule adoption.

Hearing Location: Marshal Community Center, 1009 East McLaughlin, Vancouver, WA, on August 2, 1999, at 10:00 a.m.; at Seattle Central Community College, 1701 Broadway, Seattle, WA, on August 2, 1999, at 6:00 p.m.; at the Spokane Public Library (downtown branch), 906 West Main Avenue, on August 3, 1999, at 2:00 p.m.; at Columbia Basin Community College, 2600 North 20th, Pasco, WA, on August 4, 1999, at 9:00 a.m.; and at the Yakima County Courthouse, Yakima, Washington, on August 4, 1999, 4:00 p.m.

Assistance for Persons with Disabilities: Contact Lorie Villaflores by July 30, 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 July 30, 1999.

Date of Intended Adoption: August 18, 1999.

June 2, 1999

Robert A. Harkins

Chief Deputy Commissioner

OTS-2971.3


AMENDATORY SECTION(Amending Order R 97-3, filed 1/22/98, effective 2/22/98)

WAC 284-43-320
Provider contracts--Standards--Hold harmless provisions.

The execution of a contract by a health carrier shall not relieve the health carrier of its obligations to any covered person for the provision of health care services, nor of its responsibility for compliance with statutes or regulations.  In addition to the contract form filing requirements of this subchapter, all individual provider and facility contracts shall be in writing and available for review upon request by the commissioner.

(1) A health carrier shall establish a mechanism by which its participating providers and facilities can obtain timely information on patient eligibility for health care services and health plan benefits, including any limitations or conditions on services or benefits. Nothing contained in a participating provider or a participating facility contract may have the effect of modifying benefits, terms, or conditions contained in the health plan. In the event of any conflict between the contract and a health plan, the benefits, terms, and conditions of the health plan shall govern with respect to coverage provided to covered persons.

(2) Each participating provider and participating facility contract shall contain the following provisions or variations approved by the commissioner:

(a) "{Name of provider or facility} hereby agrees that in no event, including, but not limited to nonpayment by {name of carrier}, {name of carrier's} insolvency, or breach of this contract shall {name of provider or facility} bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from, or have any recourse against a covered person or person acting on their behalf, other than {name of carrier}, for services provided pursuant to this contract.  This provision shall not prohibit collection of {deductibles, copayments, coinsurance, and/or noncovered services}, which have not otherwise been paid by a primary or secondary carrier in accordance with regulatory standards for coordination of benefits, from covered persons in accordance with the terms of the covered person's health plan."

(b) "{Name of provider or facility} agrees, in the event of {name of carrier's} insolvency, to continue to provide the services promised in this contract to covered persons of {name of carrier} for the duration of the period for which premiums on behalf of the covered person were paid to {Name of carrier} or until the covered person's discharge from inpatient facilities, whichever time is greater."

(c) "Notwithstanding any other provision of this contract, nothing in this contract shall be construed to modify the rights and benefits contained in the covered person's health plan."

(d) "{Name of provider or facility} may not bill the covered person for covered services (except for deductibles, copayments, or coinsurance) where {name of carrier} denies payments because the provider or facility has failed to comply with the terms or conditions of this contract."

(e) "{Name of provider or facility} further agrees (i) that the provisions of (a), (b), (c), and (d) of this subsection {or identifying citations appropriate to the contract form} shall survive termination of this contract regardless of the cause giving rise to termination and shall be construed to be for the benefit of {name of carrier's} covered persons, and (ii) that this provision supersedes any oral or written contrary agreement now existing or hereafter entered into between {name of provider or facility} and covered persons or persons acting on their behalf."

(f) "If {name of provider or facility} contracts with other providers or facilities who agree to provide covered services to covered persons of {name of carrier} with the expectation of receiving payment directly or indirectly from {name of carrier}, such providers or facilities must agree to abide by the provisions of (a), (b), (c), (d), and (e) of this subsection {or identifying citations appropriate to the contract form}."

(3) The contract shall inform participating providers and facilities that willfully collecting or attempting to collect an amount from a covered person knowing that collection to be in violation of the participating provider or facility contract constitutes a class C felony under RCW 48.80.030(5).

(4) A health carrier shall notify participating providers and facilities of their responsibilities with respect to the health carrier's applicable administrative policies and programs, including but not limited to payment terms, utilization review, quality assessment and improvement programs, credentialing, grievance procedures, data reporting requirements, confidentiality requirements and any applicable federal or state requirements. An explanation of these responsibilities must be available for review by the provider or facility prior to contracting. Participating providers and facilities must be given reasonable notice of not less than sixty days of changes to these responsibilities and the opportunity to terminate the contract without penalty if the provider or facility does not agree with the changes.

(5) The following provision is a restatement of a statutory requirement found in RCW 48.43.075 included here for ease of reference:

(a) "No health carrier subject to the jurisdiction of the state of Washington may in any way preclude or discourage their providers from informing patients of the care they require, including various treatment options, and whether in their view such care is consistent with medical necessity, medical appropriateness, or otherwise covered by the patient's service agreement with the health carrier.  No health carrier may prohibit, discourage, or penalize a provider otherwise practicing in compliance with the law from advocating on behalf of a patient with a health carrier.  Nothing in this section shall be construed to authorize providers to bind health carriers to pay for any service."

(b) "No health carrier may preclude or discourage patients or those paying for their coverage from discussing the comparative merits of different health carriers with their providers.  This prohibition specifically includes prohibiting or limiting providers participating in those discussions even if critical of a carrier."

(6) A health carrier shall require participating providers and facilities to make health records available to appropriate state and federal authorities involved in assessing the quality of care or investigating the grievances or complaints of covered persons subject to applicable state and federal laws related to the confidentiality of medical or health records.

(7) A health carrier and participating provider and facility shall provide at least sixty days' written notice to each other before terminating the contract without cause.  The health carrier shall make a good faith effort to assure that written notice of a termination within fifteen working days of receipt or issuance of a notice of termination is provided to all covered persons who are patients seen on a regular basis by the provider whose contract is terminating, irrespective of whether the termination was for cause or without cause.  Where a contract termination involves a primary care provider, that carrier shall make a good faith effort to assure that notice is provided to all covered persons who are patients of that primary care provider.

(8) A health carrier is responsible for ensuring that participating providers and facilities furnish covered services to covered persons without regard to the covered person's enrollment in the plan as a private purchaser of the plan or as a participant in publicly financed programs of health care services.  This requirement does not apply to circumstances when the provider should not render services due to limitations arising from lack of training, experience, skill, or licensing restrictions.

(9) A health carrier shall not penalize a provider because the provider, in good faith, reports to state or federal authorities any act or practice by the health carrier that jeopardizes patient health or welfare or that may violate state or federal law.

(10) The following provision is a restatement of a statutory requirement found in RCW 48.43.085: "Notwithstanding any other provision of law, no health carrier subject to the jurisdiction of the state of Washington may prohibit directly or indirectly its enrollees from freely contracting at any time to obtain any health care services outside the health care plan on any terms or conditions the enrollees choose.  Nothing in this section shall be construed to bind a carrier for any services delivered outside the health plan."

(11) Every participating provider contract shall contain procedures for the fair resolution of disputes arising out of the contract.

[Statutory Authority: RCW 48.02.060, 48.20.450, 48.20.460, 48.30.010, 48.44.020, 48.44.050, 48.44.080, 48.46.030, 48.46.060(2), 48.46.200 and 48.46.243.  98-04-005 (Order R 97-3), 284-43-320, filed 1/22/98, effective 2/22/98.]


AMENDATORY SECTION(Amending Order R 97-3, filed 1/22/98, effective 2/22/98)

WAC 284-43-330
Participating provider--Filing and approval.

(1) Beginning May 1, 1998, a health carrier shall file with the commissioner fifteen days prior to use sample contract forms proposed for use with its participating providers and facilities.

(2) A health carrier shall submit material changes to a sample contract form ((that would affect a provision required by this chapter)) to the commissioner fifteen days prior to use.  Changes in provider payment rates, coinsurance, copayments, or deductibles are not considered material changes for the purpose of this subsection.

(3) If the commissioner takes no action within fifteen days after submission of a sample contract or a material change to a sample contract form by a health carrier, the change or form is deemed approved except that the commissioner may extend the approval period an additional fifteen days upon giving notice before the expiration of the initial fifteen-day period.  Approval may be subsequently withdrawn for cause.

(4) The health carrier shall maintain provider and facility contracts at its principal place of business in the state, or the health carrier shall have access to all contracts and provide copies to facilitate regulatory review upon twenty days prior written notice from the commissioner.

[Statutory Authority: RCW 48.02.060, 48.20.450, 48.20.460, 48.30.010, 48.44.020, 48.44.050, 48.44.080, 48.46.030, 48.46.060(2), 48.46.200 and 48.46.243.  98-04-005 (Order R 97-3), 284-43-330, filed 1/22/98, effective 2/22/98.]


NEW SECTION
WAC 284-43-350
Provider contracts--Terms and conditions of payment.

(1) Every participating provider contract shall set forth a schedule for the prompt payment of amounts owed by the carrier to the provider or facility and shall include penalties for carrier failure to abide by that schedule. At a minimum, the contract must contain a provision that obligates the carrier to pay a "clean claim" within thirty days of submission to the carrier and to pay interest at the maximum rate allowed by RCW 19.52.025 on any claim payment delay not caused by the provider or the subscriber, enrollee, or patient.

(2) For the purposes of this section, a "clean claim" is one that contains the following elements; proper identification of the patient and covered person information, complete and appropriate coding of diagnoses and/or services performed, sufficient information to support coordination of benefits and special medical department review (e.g., EOBs, medical reports, a legible emergency department report) if indicated based upon the medical complexity of the services rendered. A completed UB92 or HCFA 1500 or their electronic equivalent or other formats adopted by the National Uniform Billing Committee shall also be considered a clean claim.

(3) The time period for calculating the time period for claim payment shall begin on the date that the claim is received in the mode agreed upon by the provider and carrier.

(4) Notice that claims are not clean must be provided within fifteen days and shall identify the portion of the claim that is contested and the reasonably relevant information needed from the provider to reconsider the claim. The provider shall supply such information within fifteen days of receipt of a written request that is clear and specific regarding the information sought by the carrier. If the carrier requires further information after reviewing the additional information submitted by the provider, the carrier shall have an additional ten days after the initial receipt of information to request information, at which time the claim shall be deemed clean.

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NEW SECTION
WAC 284-43-360
Provider contracts--Dispute resolution process.

No process for the resolution of disputes arising out of a participating provider or facility contract shall be considered fair unless the process meets all the provisions of this section.

(1) A process may include an initial informal procedure but must include a formal process for resolution of all disputes except those concerning what benefits are covered, which are subject to a different dispute resolution process. Carriers may not exclude any other subject matter from this dispute resolution process.

(2) Carriers must allow not less than thirty days after the action giving rise to a dispute for providers and facilities to complain and initiate the dispute resolution process.

(3) Carriers may not require alternative dispute resolution to the exclusion of judicial remedies.

(4) Carriers must render a decision on formal complaints within thirty days following receipt of the complaint.

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NEW SECTION
WAC 284-43-370
Provider contracts--Billing audit guidelines.

No provider or facility contract may contain provisions that conflict with this section. As used in this section, "provider" includes facilities.

(1) Carriers and providers shall make every effort to resolve billing disputes informally and promptly.

(2) If a satisfactory resolution of the questions surrounding the bill is not achieved by carrier and provider representatives, then a full audit process may be initiated by the carrier. A health carrier shall make prompt payment of a bill and shall not delay for an audit process. Payment on a submitted bill from a third-party carrier shall be based on amounts billed and covered by the patient's health benefit plan.

(3) All carrier billing audits shall begin with a notification to the provider of an intent to audit. Notification to the provider by the qualified billing auditor shall occur no later than four months following receipt by the carrier of the final claim for payment. Once notified, the provider shall respond to the auditor within one month with a schedule for the conduct of the audit. The auditor shall complete the audit within six months of receipt of the claim by the carrier. By mutual agreement, the parties may alter this schedule from time to time.

(4) All billing audits shall be conducted on the premises of the provider unless the provider agrees to an off-site audit.

(5) In order to have a fair, efficient, and effective audit process:

(a) The scheduling of an audit shall not preclude late billing;

(b) The parties involved in the audit shall mutually agree to set and adhere to a predetermined schedule for the resolution of any discrepancies, questions or errors that surface in the audit;

(c) An exit conference and a written report shall be part of each audit; if the provider waives the exit conference, the auditor shall note that action in the written report. The content of the final report shall be disclosed only to those parties involved in the audit;

(d) The provider shall be afforded sixty days to contest all findings, after which the audit shall be considered final; and

(e) Once both parties agree to the audit findings, audit results are final.

(6) Billing audits shall be made in accordance with one of the following three audit fee and payment schedules:

(a) A one hundred dollar audit fee shall be paid by the auditor to the audited party. The audited party shall not require payment greater than one hundred percent of the audited party's submitted bill minus the audited party's historic error rate.

(b) In those instances where the audited party has had less than twelve audits in a calendar year, the error rate shall be set by mutual agreement between the audited party and the qualified billing auditor. When the parties cannot agree, the historic error rate shall be presumed to be seven percent.

(c) The one hundred dollar fee shall not apply in the following situations:

(i) Payment of one hundred percent of the covered benefit has been made;

(ii) The on-site audit begins more than sixty days after the request for audit; or

(iii) Audit fees are not required or are otherwise being waived.

(7) Audit fees, if required, are to be paid upon commencement of the on-site billing audit. A payment identified in the audit report that is owed to either party by the other, shall be settled by the audit parties within thirty days after delivery of the final audit report to the party owing the payment unless the parties agree otherwise.

(8) Neither the provider nor the auditor shall require a billing, rebilling or refund request following final audit determination, but all findings shall be netted and the net payable will be payable by the appropriate party without additional billing.

(9) Photocopying and duplication charges shall not exceed fifty cents per page.

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NEW SECTION
WAC 284-43-399
Effective date.

(1) All participating provider and facility contracts entered into after the effective date of this subchapter shall comply with this subchapter no later than July 1, 1999.

(2) Participating provider and facility contracts entered into prior to the effective date of this subchapter shall be amended upon renewal to comply with the provisions of this subchapter, and all such contracts shall conform to the provisions of this subchapter no later than July 1, 2000.  The commissioner may extend the July 1, 2000 deadline for a health carrier for an additional six months, if the health carrier makes a written request. That request must explain how a good faith effort at compliance has been made, provide the specific reasons the deadline cannot be met, and state the date the health carrier expects to be in compliance (no more than six months beyond July 1, 2000).

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OTS-3007.1


REPEALER

     The following section of the Washington Administrative Code is repealed:
WAC 284-43-340Effective date.

Washington State Code Reviser's Office