Original Notice.

Preproposal statement of inquiry was filed as WSR 00-14-061.

Title of Rule: Chapter 246-305 WAC, Certification of independent review organizations.

Purpose: To implement the provisions of RCW 43.70.235 regarding the certification of independent review organizations. Certified independent review organizations are qualified to receive referrals from the insurance commissioner under RCW 48.43.535 to make binding determinations related to health care coverage and payment disputes between health insurance carriers and their enrollees.

Statutory Authority for Adoption: RCW 43.70.235.

Statute Being Implemented: RCW 43.70.235.

Summary: The rule establishes requirements for IRO certification, consistent with the statute. As specified in RCW 43.70.235, the requirements take into consideration national accreditation standards for external review. The rule sets requirements for the review organizations themselves and for the expert reviewers they may assign to a Washington case. It defines and prohibits conflicts of interest and specifies required aspects of the review process, including timelines, criteria, documentation, notification of affected parties, and confidentiality. The rule also establishes an application process for IRO certification; details what actions are grounds for denying an application or taking enforcement action against an IRO; authorizes the department to investigate applications and complaints using various means; and establishes a means for IROs to contest department actions.

Reasons Supporting Proposal: RCW 43.70.235 requires the Department of Health to adopt rules for this purpose. The proposal reflects input form consumer advocates, health plans, health care provider organizations, IROs, IRO accrediting organizations, other state agencies, and other stakeholders, obtained through meetings, written comments, and a survey of interested IROs. The proposal parallels national accreditation standards where possible and appropriate, in order to minimize duplicative regulatory burden.

Name of Agency Personnel Responsible for Drafting: Dan Rubin and Patti Rathbun, 1107 Eastside Street, Olympia, WA 98501-7879, (360) 236-4023; Implementation and Enforcement: Steve Boruchowitz, 1110 Eastside Street, Olympia, WA 98504-7851, (360) 236-4621.

Name of Proponent: Washington Department of Health, governmental.

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

Explanation of Rule, its Purpose, and Anticipated Effects: This new Department of Health rule is required by statute to implement RCW 43.70.235, which was adopted as part of the Health Care Patient Bill of Rights of 2000 (chapter 5, Laws of 2000). RCW 43.70.235 requires the Department of Health to certify independent review organizations (IROs). Only certified IROs may be assigned by the insurance commissioner to make binding determinations of coverage and payment disputes between health insurance carriers and their enrollees under RCW 48.43.535 (section 11 of the Patient Bill of Rights).

     A number of IROs exist around the United States, but until now, there were no legal standards for how they conduct independent reviews of disputes originating in Washington state. The rule will ensure that only qualified IROs carry out independent reviews under Washington's PBOR Act. It will provide enforcement for legislative requirements for the process, including time frames and provisions intended to guarantee neutrality. It also will minimize regulatory burden by paralleling, wherever possible, industry standards already met or considered reasonable by most IROs.

     The rule establishes requirements for IRO certification, consistent with the statute. As specified in RCW 43.70.235, the requirements take into consideration national accreditation standards for external review. The rule sets requirements for the review organizations themselves and for the expert reviewers they may assign to a Washington case. It defines and prohibits conflicts of interest and specifies required aspects of the review process, including timelines, criteria, documentation, notification of affected parties, and confidentiality. The rule also establishes an application process for IRO certification; details what actions are grounds for denying an application or taking enforcement action against an IRO; authorizes the department to investigate applications and complaints using various means; and establishes a means for IROs to contest department actions.

     The rule's anticipated effect is to permit the department to accept applications early in 2001 and certify sufficient IROs so that the insurance commission[er] can refer coverage disputes to an IRO starting on the date the new consumer protections apply to new insurance contracts - July 1, 2001. This will allow consumers to "have access to a quick and impartial process for appealing plan decisions" as the legislature intended in RCW 48.43.535. It is anticipated that the new law will result in an increased volume of independent reviews, and the rule allows an orderly process for qualified organizations to receive referral of cases from the insurance commissioner that will increase their business.

Proposal does not change existing rules. This is a new rule to implement a program established by the legislature in 2000.

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

     The external reviews must be carried out by impartial "independent review organizations" (IROs) meeting requirements in the law. Section 12 of the Patient Bill of Rights legislation (RCW 43.70.235) requires the Department of Health to adopt rules "providing a procedure and criteria for certifying" IROs. Additional requirements involving IROs are contained in section 11 of the legislation, which is part of the Insurance Code (RCW 48.43.535).

     Prior to passage of this legislation, similar reviews of Washington disputes occurred, but there was no state regulation of the reviews or the organizations conducting them. In 1999 the Association of Washington Health Plans announced that all of its member plans would begin voluntarily implementing a binding independent review process. Some plans executed contracts with IROs for that purpose. Medicare also contracts nationwide with a single IRO, the Center for Health Dispute Resolution, to conduct binding reviews of disputes related to denial of coverage involving Medicare beneficiaries enrolled in health maintenance organizations.

     Nationwide, independent reviews are conducted by a number of organizations. Many are part of or affiliated with broader utilization and clinical review organizations.

     The Patient Bill of Rights Act is a legislative response to low consumer confidence in receiving expert, unbiased determinations from health plans on coverage issues. The benefits to the public from these rules are related to the statutory intent that health plan enrollees "have access to a quick and impartial process for appealing plan decisions" (RCW 48.43.500). A November 1998 study by the Kaiser Family Foundation¹ stressed the importance of maintaining confidence in the independence and expertise of the IRO process in order to attain desired goals.

     The burden of complying with IRO regulations falls upon the IROs that seek or receive Washington state certification. By statute (RCW 48.43.535), IROs will charge health plans for the costs of reviews themselves. Since Washington's statute has no provisions for price regulation, competitive bidding of IRO status, or health plan (carrier) negotiation about price, health plans are "price takers" and certified IROs are able to pass on costs of business, including regulatory compliance.

     The volume of independent reviews that will be referred to IROs under Washington's law is unknown, but based on the experience of other states, will be a very small proportion in relation to the number of health plan enrollees. The 1998 Kaiser Family Foundation study reports between one and thirty-seven independent reviews per million health plan enrollees covered by various state laws. This is equivalent to between one and fifteen reviews per million state residents (using United States Census population projections for 2000). New York state, whose mandatory independent review program was initiated in July 1999, reports a first-year volume of 1200 appeals, which is about seventy-seven per million state population.² New York attributes their higher rate to specific features of New York's law and to vigorous publicity. Based on the rates of appeals per gross population in New York, Washington might experience four hundred fifty reviews per year. Based on rates per population in six other states, Washington would expect under one hundred reviews.

     Discussions with representatives of IROs and others familiar with the industry strongly suggest that it would be difficult for an organization to be a going concern if its only line of business were to accept its rotational³ share of Washington state independent reviews. It is unknown how many IROs will seek or receive certification, but the smallest-volume IROs handle over one hundred cases per year (see below). We are aware of no party exploring the creation of a new business exclusively to handle Washington independent reviews.

     Is an SBEIS necessary? Yes. Under the Regulatory Fairness Act (chapter 19.85 RCW), a small business economic impact statement (SBEIS) is required whenever a regulation imposes "more than minor" costs on a regulated business.

     We could not find a Standard Industrial Classification (SIC) code that directly corresponds to IROs. However, the closest approximation is probably SIC 641, Insurance Agents, Brokers and Services, which includes claims adjusters not employed by insurance companies and contracted medical insurance claims processing.⁴ The Washington State Business Assistance Center has developed a "more than minor" threshold for SIC code 641 of $221. While costs to comply with this rule have not been quantified, the department expects they will exceed $221.

     Does the proposed rule affect both large and small businesses? Yes. The Regulatory Fairness Act defines a business as "...[any] entity, including a sole proprietorship, corporation, partnership, or other legal entity, that is owned and operated independently from all other businesses, that has the purpose of making a profit...." The act also defines a small business as one that employs less than fifty individuals.

     The Department of Health sent a survey to all organized IROs⁵ identified from accreditation lists, other national listings, contracting processes of the national Medicare program and Washington health plans, and other contacts made in the course of rule development. The department followed up at least once with each IRO that responded to requests for comment on rule development, but did not send in a survey. The IROs following rule development are the most likely to be affected by the rule, because they are the most likely to apply for certification in Washington.

     The survey asked questions about the economic scale of each IRO. Ten organizations (out of 11 respondents) supplied information requested for classification in relation to the "small business" threshold. Of the ten, seven (70%) were "small" organizations (fifty or fewer full-time equivalent employees) and three (30%) were "large" organizations. Six of the organizations do other types of clinical review as well as independent reviews. In this analysis, the distinction between "small" and "large" is based on the entire organization because the IRO sub-division of a larger organization, by itself, is not "owned and operated independently from all other businesses" as specified in the statutory definition of "small business." See the table below.

	Portion of entity that does (or will do) independent reviews
Entire Organization	SMALL: 9 organizations or subdivisions, with 0 to 40 FTE employees (mean 11)	LARGE: 1 organizational subdivision, with 70 FTE employees
SMALL: 7 organizations, with 1 to 40 FTE employees (mean 17)	7 (of which 4 are IROs only and 3 have other lines of review business)	Logical impossibility
LARGE: 3 organizations, with 65 to over 700 FTE employees (mean 313)	2 (both IRO plus other lines of review business)	1 (IRO plus other lines of review business)

     Only two of the potentially interested IROs are located in Washington - one a "large" organization which would be setting up a new and small IRO program, and the other a "small" organization which now conducts a different type of independent clinical review.

     Note that all IROs contract with expert reviewers who are not employees. "Small" IROs reported a mean of 202 contracted reviewers, while "large" IROs reported a mean of 327. Among "small" IROs, the number of independent reviews per year ranges from somewhat over 100 (in two) to around 20,000 (in two). Among the three "large" IROs, review volume ranged from around 160 to 43,000. Business revenues also vary widely. In general, the variability of volume indicators within each category ("small" and "large") is more striking than the fact that the means are higher in the "large" firms.

     In summary, there are both "small" and "large" IROs as defined in statute, but the distinction is somewhat weak as a proxy for other aspects of business scale.

     Does the proposed rule impose disproportionate cost on small businesses? It is very difficult to quantify the cost of this rule on the regulated parties, but there may be a higher cost impact on small IROs due to the ability of large IROs to spread fixed costs, such as the preparation of an application and revision of policies, over more units of service. Even if accurate data on compliance impacts were available, previous comments on business "scale" in IROs suggest that the number of employees may not be the most appropriate basis for "spreading" costs in order to quantify any disproportionate impact. This analysis assumes a small but unquantifiable disproportionate impact.

     In developing this rule, the Department of Health builds upon a number of legislative requirements from RCW 43.70.235. The rule has a distinct impact on cost only where discretion exists to implement in more than one way, differing in impact. Furthermore, the cost impact can be disproportionate for small businesses only if it is a fixed cost (that must be spread over fewer employees or service units) or if it is a variable cost of a type that is systematically higher for small businesses.

     In addition, the legislature has directed that "In adopting rules for this section, the department shall take into consideration standards for independent review organizations adopted by national accreditation organizations" (RCW 43.70.235(9)). This indicates a preference, but not a requirement, for implementation approaches that are consistent with accreditation standards.

     The department's rule proposal directly parallels standards of national accreditation organizations in many regards. The table below shows that small IROs who returned the survey are as likely as large IROs to already have accreditation from URAC, the Utilization Review Accreditation Commission⁶ (or, in one case, to already have plans to seek it). Small IROs are also as likely to view accreditation as a market requirement, rather than a regulatory requirement lacking market significance.

	Small IROs (7)	Large IROs (3)
Have URAC accreditation?	5 (71%)	2 (67%)
Have IMQ7 accreditation?	2 (29%)	1 considering
Believe some accreditation is becoming a market requirement?	5 (71%)	2 (67%)

     This evidence shows that rule-making requirements that closely parallel URAC standards are not prohibitive for small IROs, and that most small IROs appear willing to achieve certification. The evidence also suggests that, as a class, small IROs are not disproportionately impacted by compliance costs of proposed regulatory standards that also are URAC accreditation requirements - because 70% of small IROs already must meet those standards as a result of prior decisions, and small IROs are as likely to be meeting them already as large IROs. However, regulatory requirements paralleling those of URAC still may have a disproportionate impact on individual small IROs.

     Costs imposed by the proposed rules are almost exclusively in the areas of staff effort and contracted reviewers' time. The department is not aware of any equipment that would be required under the rules that is not already present in all IROs (such as fax machines, copy machines, PCs, and secure filing areas for confidential information).

     Examination of specific standards in the rules suggests that requirements for the conduct of each review are less likely to have disproportionate impact on small IROs than requirements for policies or practices which have a fixed one-time or annual impact. Examples of standards affecting each review include requirements for the composition of review panels, acceptance of supplementary information on the case, application of Washington-specific criteria and decision-making procedures, and the maintenance of case files and logs.

     Examples of standards with one-time or annual impact include application requirements, annual self-assessment of compliance, developing internal policies to assure that Washington-specific conflict of interest and provider credentialing qualification requirements are met, creating logs, filing annual statistical reports, and having a medical director.

     A final category of potential impact deals with enforcement of requirements. There is no reason to think that small IROs are more likely to face investigation or enforcement sanctions, so disproportionate impact of enforcement provisions of the rules (WAC 246-305-100 and 246-305-110) is unlikely and assumed to be zero.

     Proper estimation of disproportionate impact excludes costs directly attributable to the statutory language. It also may properly exclude costs for standards that URAC-accredited IROs already meet, but this cannot be claimed with confidence. This analysis assumes a small but unquantifiable disproportionate impact.

     Steps taken by the agency to reduce the disproportionate cost of the rule on small businesses or justification for not doing so. The Regulatory Fairness Act requires state agencies to take steps to reduce the disproportionate burden a regulation places on small businesses where "legal and feasible."

     The Department of Health has taken a number of steps to reduce the impact of regulations on all IROs, including those that are small businesses:

•	The rules build on national accreditation standards in many particulars. In addition to the expression of legislative interest in this approach, the department's survey verified that meeting national accreditation standards has not been a prohibitive to the majority of small IROs. As previously noted, it is unclear whether disparate impact exists for small IROs to comply with standards that also exist in URAC accreditation requirements. Paralleling accreditation standards, where relevant and appropriate, has the added benefit of avoiding duplicative requirements that address the same concerns in slightly different ways. Most IROs, large and small alike, operate in a number of states and are potentially subject to multiple regulatory requirements. Avoiding duplicative or conflicting requirements is particularly favorable to small IROs, because duplication imposes costs for applications, policy development, and recordkeeping which have heightened impact on small businesses because there are fewer units of business over which to spread the fixed costs.
•	While providing evidence of accreditation may be a cost-effective way for some IROs to demonstrate that they meet many certification standards, the rules do not require accreditation. Applicants have the option of independently demonstrating that they meet standards in the rules, thus avoiding direct and indirect costs of accreditation.
•	In choosing among rule-making alternatives, approaches with lower burden on IROs were generally selected where possible. Examples: Not requiring participation of an attorney in reviews of health plan coverage provisions. Specifying required competencies for reviews, rather than number of reviewers. Clarification in rules that, in considering standards of practice in Washington as required by statute, reviewers may use national standards, absent evidence that the Washington standard is different.

     Every approach taken to reduce fixed costs reduces the potential for disproportionate impact on small businesses. However, disproportionate impacts may remain.

     The department has determined that it would not be legal and feasible to further mitigate any remaining disproportionate impact of this rule on small businesses.

•	Legal barriers to further mitigation: Many requirements are statutory and cannot be mitigated for small IROs without departing from legislative direction. Examples: Statute requires IROs to file an application and specifies many requirements. Statute sets stringent time frames for completing reviews. Statute specifies stringent conflict of interest requirements, which have been clarified through rules to reduce costs related to uncertainty about interpretation, but cannot be further mitigated. Statute requires IROs to have the capacity to review health plan coverage provisions as well as medical necessity and appropriateness; even though this may impose a new fixed cost of staffing or consultation retainers on some IROs, it cannot be removed as a requirement for certification.
•	Methods of mitigation that are not feasible: In some cases agencies can mitigate the impact of rules on small businesses through variation of fees or compliance timetables. Neither of these methods is possible in the case of the proposed rule. There is no legislative authority for fees for IRO certification, and deferring compliance for small IROs is inconsistent with the nature of a front-end certification review (lacking ongoing inspections).
•	Other legal and feasibility barriers to further mitigation: The remaining regulatory standards are necessary to assure the competence of reviews and maintain public trust in their independence and impartiality. Further mitigation would jeopardize the intended public benefit of having quick, impartial, expert reviews.

     Two special circumstances related to IROs, both previously noted, will reduce the practical significance of any unmitigated disproportionate impact.

•

The statutory distinction between "small" and "large" businesses based on number of employees can be (and has been) applied to IROs. However, the number of employees is not a good proxy for other aspects of business scale, such as volume of reviews or number of contracted reviewers.

•

Health plans must pay IROs their charges and have no choice over what IRO is assigned a case involving their enrollee (RCW 48.43.535). The price charged by an IRO also has no bearing on the number of independent review cases assigned (rotationally) by the insurance commissioner. Therefore, any disproportionate impact of the rules on small IROs can be recovered through pricing without loss of business volume.

•	In June 2000 the IROs were sent a letter bringing the new statute to their attention and asking them to respond to nine questions about implementation of the law. IROs, along with other interested parties, were asked to identify anticipated implementation difficulties, models for implementation from other states, accreditation standards that should or should not be included in Washington's rules, and other recommendations or concerns.
•	During July and August department staff attended four public forums in Seattle, Spokane, Vancouver and Yakima sponsored by the Office of the Insurance Commissioner to obtain comment on how to implement a variety of provisions of the Health Care Patient Bill of Rights of 2000 (including its provisions related to independent review).
•	In August the department also sponsored two public meetings in SeaTac and Spokane. The SeaTac meeting was attended by representatives of three IROs, two of them "small" by the statutory definition. Substantive discussion of appropriate regulatory standards occurred.
•	In September 2000 a structured issue paper was distributed for comment, which identified statutory requirements, tentative implementation directions of the department, and additional options and questions. At this time IROs also were sent the survey previously mentioned.
•	In November all stakeholders which had provided the department with e-mail addresses (including IROs) were provided with an opportunity to comment on a draft of the proposed rule.
•	Additional opportunities for formal comment in writing or at the rule hearing will occur during December and early January.

     What are the reporting, record-keeping, and other compliance requirements? The proposed rule requires IROs to apply for certification, including documentation of meeting standards (WAC 246-305-080). They must update filings if there is a material change (WAC 246-305-090).

     IROs are required to maintain case files; summary case logs; and complaint logs. They must maintain a quality assurance program including a written plan, and action plans to correct identified problems (WAC 246-305-070).

     IROs must conduct annual self-assessments of compliance with certification requirements (WAC 246-305-090).

     IROs must file an annual statistical report with the department summarizing reviews conducted, including volumes, types of cases, compliance with timeframes, number and nature of complaints, and compliance with conflict of interest rules (WAC 246-305-090).

     Will the proposed rule cause affected industries to lose business? The proposed rule will not cause affected industries to lose business. RCW 43.70.235 and 48.43.535 (the independent review sections of the Health Care Patient Bill of Rights of 2000) will increase the number of independent reviews originating in Washington by making them mandatory when requested by enrollees, following exhaustion of the health plan's internal appeals. RCW 48.43.535 requires certification as a condition of accepting referral of independent review cases from the insurance commissioner. Without these rules, there would be no way for an IRO to become eligible for additional business in Washington state.

¹External Review of Health Plan Decisions: An Overview of Key Program Features in the States and Medicare. The Henry J. Kaiser Family Foundation. Menlo Park, CA.

²External Appeal Program Annual Report, July 1, 1999 - June 30, 2000. New York State Insurance Department and New York State Health Department. (Albany, NY). 2000.

³ RCW 48.43.535 directs the Insurance Commissioner to use a "rotational registry system" for the assignment of a certified IRO to each dispute.

⁴ SIC Major Group 80, Health Services, is focused on direct clinical services. Within Health Services, the most appropriate classification would be SIC 809, Health and Allied Services Not Elsewhere Classified, which includes (in-person) insurance physical examination services. However, IROs conduct paper reviews focused on the effectiveness, appropriateness, and contractual coverage of treatments, rather than examinations of patients to determine a diagnosis, a plan of care, or eligibility and rates for insurance.

⁵ Some listings of resources for independent review, such as the referral list maintained by the state of Arizona, include individual physicians or other health practitioners. Individual practitioners were not surveyed because it is extremely unlikely they could meet statutory requirements for certification in Washington.

⁶ URAC also is called the American Accreditation HealthCare Commission.

⁷ IMQ, the Institute for Medical Quality, is a second accreditation organization for IROs. Originally established to approve IROs under a California law, its accreditation also is accepted for a number of other purposes. Two of the URAC-accredited IROs shown on the table also have IMQ accreditation, and one is undecided about whether to seek it.

A copy of the statement may be obtained by writing to Steve Boruchowitz, Senior Health Policy Analyst, Department of Health, P.O. Box 47851, Olympia, WA 98504-7851, phone (360) 236-4621, fax (360) 236-4626, e-mail steve.boruch@doh.wa.gov.

RCW 34.05.328 applies to this rule adoption. The proposed rule is "significant" as defined in RCW 34.05.028 [34.05.328]. It adopts substantive provisions of law pursuant to delegated legislative authority, the violation of which subjects a violator of such rule to a penalty or sanction. It also establishes standard for the issuance, suspension, and revocation of state certification for IROs. Finally, it also adopts a new regulatory program.

Hearing Location: Department of Health Conference Center, Large Conference Room, 1101 Eastside Street, Olympia, WA, on January 3, 2001, at 1:00 p.m.

Assistance for Persons with Disabilities: Contact Michelle Davis by December 21, 2000, TDD (800) 833-6388, or (360) 236-4044.

Submit Written Comments to: Steve Boruchowitz, e-mail comments to IRO@doh.wa.gov, fax (360) 236-4621, by January 3, 2001.

Date of Intended Adoption: January 12, 2001.

November 22, 2000

Nancy Ellison

Deputy

for Mary C. Selecky

Secretary

OTS-4513.2

(1) Purpose. These rules are adopted by the Washington state department of health to implement the provisions of RCW 43.70.235 regarding the certification of independent review organizations. Certified independent review organizations are qualified to receive referrals from the insurance commissioner under RCW 48.43.535 to make binding determinations related to health care coverage and payment disputes between health insurance carriers and their enrollees.

     (2) Other applicable rules. Independent review also is subject to rules of the insurance commissioner implementing RCW 48.43.535.

     (3) Applicability. These rules apply to independent review cases originating in Washington state under RCW 48.43.535, and to independent review organizations conducting these reviews.

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For the purpose of this chapter, the following words and phrases shall have the following meanings unless the context clearly indicates otherwise.

     (1) "Adverse determination" means a decision by a health carrier to deny, modify, reduce, or terminate coverage of or payment for a health care service for an enrollee.

     (2) "Applicant" means a person or entity seeking to become a Washington certified IRO (independent review organization).

     (3) "Attending provider" includes "treating provider" or "ordering provider" as used in WAC 284-43-620 and 284-43-630.

     (4) "Carrier" or "health carrier" has the same meaning in this chapter as in WAC 284-43-130.

     (5) "Case" means a dispute relating to a carrier's decision to deny, modify, reduce, or terminate coverage of or payment for health care service for an enrollee, which has been referred to a specific IRO by the insurance commissioner under RCW 48.43.535.

     (6) "Clinical peer" means a physician or other health professional who holds an unrestricted license or certification and is in the same or similar specialty as typically manages the medical condition, procedures, or treatment under review. Generally, as a peer in a similar specialty, the individual must be in the same profession, i.e., the same licensure category, as the attending provider.

     (7) "Clinical reviewer" means a medical reviewer, as defined in this section.

     (8) "Conflict of interest" means violation of any provision of WAC 246-305-030, including, but not limited to, material familial, professional and financial affiliations.

     (9) "Contract specialist" means a reviewer who deals with interpretation of health plan coverage provisions. If a clinical reviewer is also interpreting health plan coverage provisions, that reviewer must have the qualifications required of a contract specialist.

     (10) "Department" means the Washington department of health.

     (11) "Enrollee" means a "covered person" as defined in WAC 284-43-130. "Enrollee" also means a person lawfully acting on behalf of the enrollee, including, but not limited to, a parent or guardian.

     (12) "Health care provider" or "provider" means a person practicing health care services consistent with Washington state law, or a person with valid credentials from another state for a similar scope of practice.

     (13) "Independent review" means the process of review and determination of a case referred to an IRO under RCW 48.43.535.

     (14) "Independent review organization" or "IRO" means an entity certified by the department under this chapter.

     (15) "IRO," see independent review organization.

     (16) "Medical reviewer" means a physician or other health care provider who is assigned to an external review case by a certified IRO, consistent with this chapter.

     (17) "Medical, scientific, and cost-effectiveness evidence" means published evidence on results of clinical practice of any health profession which complies with one or more of the following requirements:

     (a) Peer-reviewed scientific studies published in or accepted for publication by medical journals that meet nationally recognized requirements for scientific manuscripts and that submit most of their published articles for review by experts who are not part of the editorial staff;

     (b) Peer-reviewed literature, biomedical compendia, and other medical literature that meet the criteria of the National Institute of Health's National Library of Medicine for indexing in Index Medicus, Excerpta Medicus (EMBASE), Medline, and MEDLARS data base Health Services Technology Assessment Research (HSTAR);

     (c) Medical journals recognized by the Secretary of Health and Human Services, under Section 1861(t)(2) of the Social Security Act;

     (d) The American Hospital Formulary Service-Drug Information, the American Medical Association Drug Evaluation, the American Dental Association Accepted Dental Therapeutics, and the United States Pharmacopoeia-Drug Information;

     (e) Findings, studies, or research conducted by or under the auspices of federal government agencies and nationally recognized federal research institutes including the Federal Agency for Health Care Policy and Research, National Institutes of Health, National Cancer Institute, National Academy of Sciences, Health Care Financing Administration, Congressional Office of Technology Assessment, and any national board recognized by the National Institutes of Health for the purpose of evaluating the medical value of health services;

     (f) Clinical practice guidelines that meet institute of medicine criteria; or

     (g) Peer-reviewed abstracts accepted for presentation at major scientific or clinical meetings.

     (18) "Material familial affiliation" means any relationship as a spouse, child, parent, sibling, spouse's parent, or child's spouse.

     (19) "Material professional affiliation" includes, but is not limited to, any provider-patient relationship, any partnership or employment relationship, or a shareholder or similar ownership interest in a professional corporation.

     (20) "Material financial affiliation" means any financial interest including employment, contract or consultation which generates more than five percent of total annual revenue or total annual income of an IRO or an individual director, officer, executive or reviewer of the IRO. This includes a consulting relationship with a manufacturer regarding technology or research support for a specific product.

     (21) "Referral" means receipt by an IRO of notification from the insurance commissioner that a case has been assigned to that IRO under provisions of RCW 48.43.535.

     (22) "Reviewer" or "expert reviewer" means a clinical reviewer or a contract specialist, as defined in this section.

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In order to qualify for certification, an IRO must:

     (1) Demonstrate expertise and a history of reviewing health care in terms of medical necessity, appropriateness, and the application of other health plan coverage provisions.

     (2) Demonstrate the ability to handle a full range of review cases occurring in Washington. Certified IROs may contract with more specialized review organizations; however, the certified IRO must ensure that each review conducted meets all the requirements of this chapter.

     (3) Demonstrate capability to review administrative and contractual coverage issues, as well as medical necessity and effectiveness and the appropriateness of experimental and investigational treatments.

     (4) Comply with all conflict of interest provisions in WAC 246-305-030.

     (5) Maintain and assign qualified expert reviewers in compliance with WAC 246-305-040.

     (6) Conduct reviews, reach determinations and document determinations consistent with WAC 246-305-050 and 246-305-060.

     (7) Maintain administrative processes and capabilities in compliance with WAC 246-305-070.

     (8) File an application for certification meeting the requirements of WAC 246-305-080.

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(1) An IRO:

     (a) Must not be a subsidiary of, or in any way owned or controlled by, a carrier or an association of health care providers or carriers;

     (b) Must provide information to the department on its own organizational affiliations and potential conflicts of interest at the time of application and when material changes occur;

     (c) Must immediately turn down a case referred by the insurance commissioner if accepting it would constitute an organizational conflict of interest; and

     (d) Must ensure that reviewers are free from any actual or potential conflict of interest in assigned cases.

     (2) An IRO, as well as its reviewers, must not have any material professional, familial, or financial affiliation, as defined in WAC 246-305-010, with the health carrier, enrollee, enrollee's provider, that provider's medical or practice group, the facility at which the service would be provided, or the developer or manufacturer of a drug or device under review. An affiliation with any director, officer or executive of an IRO shall be considered to be an affiliation with the IRO.

     (3) The following do not constitute violations of this section:

     (a) Staff affiliation with an academic medical center or National Cancer Institute-designated clinical cancer research center;

     (b) Staff privileges at a health facility;

     (c) Maintaining a provider contract with a carrier which provides no more than five percent of the provider's or clinical group's annual revenue; or

     (d) An IRO's receipt of a carrier's payment for independent reviews assigned by the insurance commissioner under RCW 48.43.535.

     (4) Notwithstanding the provisions of subsection (3) of this section, a provider who is a member of a standing committee of a facility, a health plan or a provider network that contracts with a health plan, shall be considered to have a conflict of interest with regard to that facility or health plan, regardless of revenue from that source.

     (5) A conflict of interest may be waived only if both the enrollee and the health plan agree in writing after receiving full disclosure of the conflict, and only if:

     (a) The conflict involves a reviewer, and no alternate reviewer with necessary special expertise is available; or

     (b) The conflict involves an IRO and the insurance commissioner determines that seeking a waiver of conflict is preferable to reassigning the review to a different IRO.

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(1) Each IRO must maintain an adequate number and range of qualified expert reviewers in order to:

     (a) Make determinations regarding the full range of independent review cases occurring in Washington under RCW 48.43.535; and

     (b) Meet timelines specified in WAC 246-305-050 including those for expedited review.

     (2) All reviewers shall be health care providers with the exception of contract specialists.

     (3) IROs must maintain policies and practices that assure that all clinical reviewers:

     (a) Hold a current, unrestricted license, certification, or registration in Washington, or current, unrestricted credentials from another state with substantially comparable requirements, as determined by the department and outlined in the 2000 recent edition of the department of health publication, Health Care Professional Credentialing Requirements;

     (b) Have at least five years of recent clinical experience;

     (c) Are board-certified in the case of a medical doctor, a doctor of osteopathy, a podiatrist, or a member of another profession in which board certification exists as determined by the department of health; and

     (d) Have the ability to apply scientific standards of evidence in judging research literature pertinent to review issues, as demonstrated through relevant training or professional experience.

     (4) Contract specialists must be knowledgeable in health insurance contract law, as evidenced by training and experience, but do not need to be an attorney or have any state credential.

     (5) Assignment of appropriate reviewers to a case.

     (a) An IRO shall assign one or more expert reviewer to each case, as necessary to meet requirements of this subsection.

     (b) Any reviewer assigned to a case must comply with the conflict of interest provisions in WAC 246-305-030.

     (c) The IRO shall assign one or more clinical reviewers to each case. Among them, the clinical reviewers must meet each of the following requirements, but a single reviewer may meet multiple requirements:

     (i) Have expertise to address each of the issues that are the source of the dispute;

     (ii) Be a clinical peer of the attending provider;

     (iii) Have the ability to evaluate alternatives to the proposed treatment.

     (d) All clinical reviewers assigned must have at least five years of recent clinical experience dealing with the same health conditions under review or similar conditions. Exceptions may be made to this requirement in unusual situations when the only experts available for a highly specialized review are in academic or research life and do not meet the clinical experience requirement.

     (e) If contract interpretation issues must be addressed, a contract specialist must be assigned to the review.

     (f) Each IRO must have a policy specifying the number and qualifications of reviewers to be assigned to each case. The number of expert reviewers should be dictated by what it takes to meet the requirements of this subsection.

     (i) The number of expert reviewers should reflect the complexity of the case, the goal of avoiding unnecessary cost, and the need to avoid tie votes.

     (ii) The IRO may consider, but shall not be bound by, recommendations regarding complexity from the carrier or attending provider.

     (iii) Special attention should be given to situations such as review of experimental and investigational treatments that may benefit from an expanded panel.

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(1) Information for review.

     (a) IROs must request as necessary, accept and consider the following information as relevant to a case referred:

     (i) Information that the carrier is required to submit to the IRO under WAC 284-43-630, including information identified in that section that is initially missing or incomplete as submitted by the carrier.

     (ii) Other medical, scientific, and cost-effectiveness evidence which is relevant to the case. For the purposes of this section, medical, scientific, and cost-effectiveness evidence has the meaning assigned in WAC 246-305-010.

     (b) After referral of a case, an IRO must accept additional information from the enrollee, the carrier, or a provider acting on behalf of the enrollee or at the enrollee's request, provided the information is submitted within seven calendar days of the referral or, in the case of an expedited referral, within twenty-four hours. The additional information must be related to the case and relevant to statutory criteria.

     (2) Completion of reviews: Once the insurance commissioner refers a review, the IRO must proceed to final determination unless requested otherwise by both the carrier and the enrollee.

     (3) Time frames for reviews.

     (a) An IRO must make its determination within the following time limits:

     (i) If the review is not expedited, within fifteen days after receiving necessary information, or within twenty days after receiving the referral, whichever is earlier. In exceptional circumstances where information is incomplete, the determination may be delayed until no later than twenty-five days after receiving the referral.

     (ii) If the review is expedited, within seventy-two hours after receiving all necessary information, or within eight days after receiving the referral, whichever is earlier. Expedited time frames apply when a condition could seriously jeopardize the enrollee's health or ability to regain maximum function, as determined consistent with WAC 284-43-620. If information on whether a referral is expedited is not provided to the IRO, the IRO may presume that it is not an expedited review, but IRO has the option to seek clarification from the insurance commissioner.

     (b) An IRO must provide notice to enrollees and the carrier of the result and basis for the determination, consistent with subsection (5) of this section, within two business days of making a determination in regular cases and immediately in expedited cases.

     (c) As used in this subsection, a day is a calendar day, except that if the period ends on a weekend or an official Washington state holiday, the time limit is extended to the next business day. A business day is any day other than Saturday, Sunday or an official Washington state holiday.

     (4) Decision-making procedures.

     (a) The independent review process is intended to be neutral and independent of influence by any affected party or by state government. The department may conduct investigations under the provisions of this chapter but the department has no involvement in the disposition of specific cases.

     (b) Independent review is a paper review process. These rules do not establish a right to in-person participation or attendance by the enrollee, the health plan, or the attending provider nor to reconsideration of IRO determinations.

     (c) An IRO shall present cases to reviewers in a way that maximizes the likelihood of a clear, unambiguous determination. This may involve stating or restating the questions for review in a clear and precise manner that encourages yes or no answers.

     (d) If more than one reviewer is used, the IRO shall:

     (i) Provide an opportunity for the reviewers to exchange ideas and opinions about the case with one another, if requested by a reviewer. This shall be done in a manner that avoids pressure on reviewers to take a position with which they do not agree and preserves a dissenting reviewer's opportunity to document the rationale for dissent in the case file.

     (ii) Accept the majority decision of the clinical reviewers in determining clinical issues.

     (e) When a case requires an interpretation regarding the application of health plan coverage provisions, that determination shall be made by a reviewer or reviewers who are qualified as contract specialists.

     (f) An IRO may uphold an adverse determination if the patient or any provider refuses to provide relevant medical records that are available and requested, or may overturn the adverse determination if the carrier refuses to provide such records.

     (g) If reviewers are deadlocked, the IRO may add another reviewer if time allows.

     (h) If all pertinent information has been disclosed and reviewers are unable to make a determination, the IRO shall decide in favor of the enrollee.

     (5) Notification and documentation of determinations. An IRO must notify the enrollee and the carrier of the result and clinical basis for the determination within the time frame in subsection (3)(b) of this section.

     (a) Documentation of the basis for the determination shall include references to support evidence, and if applicable, the rationale for any interpretation regarding the application of health plan coverage provisions.

     (b) If the determination overrides the health plan's medical necessity or appropriateness standards, the rationale should document why the health plan's standards are unreasonable, inconsistent or unsound.

     (c) The written report shall include the qualifications of reviewers but shall not disclose the identity of the reviewers.

     (d) Notification of the determination shall be provided initially by phone, e-mail or fax, followed by a written report by mail. In the case of expedited reviews the initial notification shall be immediate and by phone.

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(1) General criteria and considerations.

     (a) An IRO's determination must use fair procedures and be consistent with the standards in RCW 43.70.235, 48.43.535, and this chapter.

     (b) The expert reviewers from a certified IRO will make determinations regarding the medical necessity or appropriateness of, and the application of health plan coverage provisions to, health care services for an enrollee.

     (c) The IRO must ensure that determinations are consistent with the scope of covered benefits as outlined in the medical coverage agreement.

     (i) Clinical reviewers may override the health plan's medical necessity or appropriateness standards if the standards are determined upon review to be unreasonable or inconsistent with sound, evidence-based medical practice.

     (ii) Reviewers may make determinations about the application of general health plan coverage provisions to specific issues concerning health care services for an enrollee. For example, whether a specific service is excluded by more general benefit exclusion language may require independent interpretation.

     (2) Medical necessity and appropriateness -- Criteria and considerations. Only clinical reviewers may determine whether a service, which is the subject of an adverse decision, is medically necessary and appropriate. These determinations must be based upon their expert clinical judgment, after consideration of relevant medical, scientific, and cost-effectiveness evidence, and medical standards of practice in the state of Washington.

     (a) Medical standards of practice include the standards appropriately applied to physicians or other health care providers, as pertinent to the case.

     (b) In considering medical standards of practice within the state of Washington:

     (i) Clinical reviewers may use national standards of care, absent evidence presented by the health plan or enrollee that the Washington standard of care is different.

     (ii) A health care service or treatment should be considered part of the Washington standard of practice if reviewers believe that failure to provide it would be inconsistent with that degree of care, skill and learning expected of a reasonably prudent health care provider acting in the same or similar circumstances.

     (c) Medical necessity may not be the only factor in the IRO's decision.

     (3) Health plan coverage provisions -- Criteria and considerations. The following requirements shall be observed when a review requires making determinations about the application of health plan coverage provisions to issues concerning health care services for an enrollee.

     (a) These determinations shall be made by one or more contract specialists meeting the requirements of WAC 246-305-040(4), except that a clinical determination of medical necessity or appropriateness, by itself, is not an interpretation of the scope of covered benefits and does not require a contract specialist.

     (b) If necessary, the IRO shall request additional provisions from the health plan coverage agreement in effect during the relevant period of the enrollee's coverage, in order to have an adequate context for determinations.

     (c) In general, the IRO and its contract specialists may assume that the contractual health plan coverage provisions themselves are lawful, absent information to the contrary. Primary responsibility for determining the legality of a health insurance contract, when at issue, rests with the insurance commissioner.

     (4) No provision of this chapter should be interpreted to establish a standard of medical care, or to create or eliminate any cause of action.

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(1) An IRO must maintain written policies and procedures covering all aspects of review.

     (2) An IRO must ensure the confidentiality of medical records received for use in independent reviews, in accordance with applicable federal and state laws.

     (3) An IRO must have a quality assurance mechanism that ensures the timeliness, quality of review and communication of determinations to enrollees and carriers. The mechanism must also ensure the qualifications, impartiality, and freedom from conflict of interest of the organization, its staff, and expert reviewers.

     (a) The quality assurance program must include a written plan addressing scope and objectives, program organization, monitoring and oversight mechanisms, and evaluation and organizational improvement of IRO activities.

     (b) Quality of reviews includes use of appropriate methods to match the case, confidentiality, and systematic evaluation of complaints for patterns or trends. Complaints must be recorded on a log, including nature of complaint and how resolved. The department reserves the right to examine both the complaints and the log.

     (c) Organizational improvement efforts must include the implementation of action plans to improve or correct identified problems, and communication of the results of action plans to staff and reviewers.

     (4) An IRO must maintain case logs and case files with full documentation of referrals, reviewers, questions posed, information considered (including sources of the information and citations of studies or criteria), determinations and their rationale, and key dates in the process, for at least two years following the review.

     (5) An IRO must maintain a training program for staff and expert reviewers, addressing at least:

     (a) Confidentiality;

     (b) Neutrality and conflict of interest;

     (c) Appropriate conduct of reviews;

     (d) Documentation of evidence for determination; and

     (e) In the case of contract specialists, principles of health contract law and any provisions of Washington law determined to be essential.

     (6) An IRO must maintain business hours, methods of contact (including by telephone), procedures for after-hours requests, and other relevant procedures to ensure timely availability to conduct expedited as well as regular reviews.

     (7) An IRO shall not disclose reviewers' identities. The department will not require reviewers' identities as part of the certification application process but may examine identified information about reviewers as part of enforcement activities.

     (8) An IRO shall promptly report any attempt at interference by any party, including a state agency, to the department.

     (9) An IRO shall have a medical director who holds a current unrestricted license as a medical doctor or osteopathic physician and has had experience in direct patient care. The medical director shall provide guidance for medical aspects of the independent review process and oversee medical aspects of the IRO's quality assurance and credentialing programs.

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(1) To be certified as an independent review organization under this chapter, an organization must submit to the department an application in the form required by the department. The application must include:

     (a) For an applicant that is publicly held, the name of each stockholder or owner of more than five percent of any stock or options;

     (b) The name of any holder of bonds or notes of the applicant that exceed one hundred thousand dollars;

     (c) The name and type of business of each corporation or other organization that the applicant controls or is affiliated with and the nature and extent of the affiliation or control;

     (d) The name and a biographical sketch of each director, officer, and executive of the applicant and any entity listed under (c) of this subsection and a description of any relationship the named individual has with:

     (i) A carrier;

     (ii) A utilization review agent;

     (iii) A nonprofit or for-profit health corporation;

     (iv) A health care provider;

     (v) A drug or device manufacturer; or

     (vi) A group representing any of the entities described by (d)(i) through (v) of this subsection;

     (e) The percentage of the applicant's revenues that the applicant anticipates will be derived from reviews conducted under RCW 48.43.535;

     (f) A description of the areas of expertise of the health care professionals and contract specialists making review determinations for the applicant;

     (g) The procedures that the independent review organization will use in making review determinations regarding reviews conducted under RCW 48.43.535;

     (h) Attestations that all requirements will be met;

     (i) Evidence of accreditations, certifications, and government IRO contracts that the applicant believes demonstrate compliance with certain requirements of this chapter.

     (i) Applicants must authorize release of information from primary sources, including full reports of site visits, inspections and audits;

     (ii) The department may require the applicant to indicate which requirements demonstrate compliance with specific Washington state certification requirements under this chapter.

     (j) Other documentation, including, but not limited to, legal and financial information, policies and procedures, and data that are pertinent to requirements of this chapter; and

     (k) Any other reasonable application requirements demonstrating ability to meet all requirements for certification in Washington.

     (2) Department investigation and verification activities regarding the applicant may include, but are not limited to:

     (a) Review of application and filings for completeness and compliance with standards;

     (b) On-site survey or examination;

     (c) Primary-source verification with accreditation or regulatory bodies of compliance with requirements which are used to demonstrate compliance with certain standards in this chapter;

     (d) Other means of determining regulatory and accreditation histories; and

     (e) Exercising any power of the department under WAC 246-305-100.

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A certified IRO shall:

     (1) Comply with the provisions of RCW 43.70.235, 48.43.535(5), and this chapter;

     (2) Cooperate with the department during investigations;

     (3) Provide the department with information requested in a prompt manner;

     (4) Conduct annual self-assessments of compliance with Washington certification requirements;

     (5) File an annual statistical report with the department on a form specified by the department summarizing reviews conducted. The report shall include, but may not be limited to, volumes, types of cases, compliance with timelines for expedited and nonexpedited cases, determinations, number and nature of complaints, and compliance with conflict of interests rules.

     (6) Submit updated information to the department if at any time there is a material change in the information included in the application.

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(1) The department may deny, suspend, revoke or modify certification of an IRO if the department has reason to believe the applicant, certified IRO, its agents, officers, directors, or any person with any interest therein has failed or refused to comply with the requirements established under this chapter.

     (2) The department may conduct an on-site review, audit, and examine records to investigate complaints alleging that an applicant, certified IRO or reviewer committed conduct described in WAC 246-305-110.

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(1) The department may deny an application for certification or suspend, revoke or modify certification if the applicant, certified IRO, its agents, officers, directors, or any person with any interest therein:

     (a) Knowingly or with reason to know makes a misrepresentation of, false statement of, or fails to disclose, a material fact to the department. This applies to any data attached to any record requested or required by the department or matter under investigation or in a self-inspection;

     (b) Obtains or attempts to obtain certification by fraudulent means or misrepresentation;

     (c) Fails or refuses to comply with the requirements of RCW 43.70.235, 48.43.535(5), or this chapter;

     (d) Conducts business or advertising in a misleading or fraudulent manner;

     (e) Refuses to allow the department access to records, or fails to promptly produce for inspection any book, record, document or item requested by the department, or willfully interferes with an investigation;

     (f) Accepts referral of cases from the insurance commissioner under RCW 48.43.535 without certification or with certification which has been terminated or is subject to sanction;

     (g) Was the holder of a license, certification or contract issued by the department or by any competent authority in any state, federal, or foreign jurisdiction that was terminated for cause and never reissued, or sanctioned for cause and the terms of the sanction have not been fulfilled;

     (h) Had accreditation from a recognized national or state IRO accrediting body that was terminated for cause and never reissued, or sanctioned for cause and the terms of the section not fulfilled;

     (i) Willfully prevents, interferes with, or attempts to impede in any way the work of any representative of the department and the lawful enforcement of any provision of this chapter. This includes, but is not limited to: Willful misrepresentation of facts during an investigation, or administrative proceeding or any other legal action; or use of threats or harassment against any patient, client, customer, or witness, or use of financial inducements to any patient, client, customer, or witness to prevent or attempt to prevent him or her from providing evidence during an investigation, in an administrative proceeding, or any other legal action involving the department;

     (j) Willfully prevents or interferes with any department representative in the preservation of evidence;

     (k) Misrepresented or was fraudulent in any aspect of the conduct of business;

     (l) Within the last five years, has been found in a civil or criminal proceeding to have committed any act that reasonably relates to the person's fitness to establish, maintain, or administer an IRO;

     (m) Violates any state or federal statute, or administrative rule regulating the IRO;

     (n) Fails to comply with an order issued by the secretary or designee;

     (o) Uses interference, coercion, discrimination, reprisal, or retaliation against a patient, client, or customer exercising his or her rights;

     (p) Offers, gives, or promises anything of value or benefit to any federal, state, or local employee or official for the purpose of influencing that employee or official to circumvent federal, state, or local laws, regulations, or ordinances governing the certification holder or applicant;

     (2) A person, including, but not limited to, enrollees, carriers, and providers, may submit a written complaint to the department alleging that a certified IRO committed conduct described in this section.

     (3) An applicant or certified IRO may contest a department decision or action according to the provisions of RCW 43.70.115, chapter 34.05 RCW, and chapter 246-10 WAC.

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