(Definitions):

a) “Emergency healthcare service” means healthcare services that are provided in an emergency facility after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson, who possesses an average knowledge of health and medicine, to result in: 

i) Placing the patient’s health in serious jeopardy; 

ii) Serious impairment to bodily function; or 

iii) Serious dysfunction of any bodily organ or part.  

b) “Healthcare professional” means a person who is licensed as a physician, advanced practice registered nurse, or physician assistant, with the authority to prescribe medical treatment and medication under [STATE LAW]. 

c) “Prior authorization” means the approval process used by a carrier before certain drug benefits or approval of healthcare services may be provided.

d) “Utilization review entity” means an individual or entity that performs prior authorization for one or more of the following entities: 

i) A health plan or insurer authorized to issue health plans or health insurance in the state; 

ii) A preferred provider organization, or health maintenance organization;  

iii) An employer with employees in [STATE] who are covered under a health plan or insurer; or

iv) Any other individual or entity that provides, offers to provide, or administers hospital, outpatient, medical, prescription drug, or other health benefits to a person treated by a healthcare provider in [STATE] under a policy, plan or contract. A health plan or insurer shall be a utilization review entity if it performs prior authorization. 

Section 4 (Provisions):

a) (Information transparency). 

i) A utilization review entity shall make any current prior authorization requirements and restrictions, including written clinical criteria and process and guidance for appealing adverse prior authorization determinations, easily findable on its publicly available Internet website. Requirements shall be described in detail but also in easily understandable language.

ii) If a utilization review entity intends either to implement a new prior authorization requirement or restriction, or amend an existing requirement or restriction, the utilization review entity shall provide contracted in-network healthcare providers with written notice of the new or amended requirement or amendment no less than 60 days before the requirement or restriction is implemented. The entity shall also ensure its website has been updated to reflect the new or amended requirement or restriction prior to implementation.

iii) A utilization review entity that uses prior authorization shall make the following statistics available on its publicly available internet website for the most recent calendar year in a machine-readable format, including:

1) The number of prior authorizations submitted to the utilization review entity;
2) The number of prior authorizations approved;
3) The number of prior authorizations denied;
4) The average time period for approval or denial of a prior authorization; and
5) The rate at which a prior authorization is resubmitted for approval or denial and the outcome of the resubmission.

iv) The data required by this subsection shall also be available broken into the following categories:

1) Physician specialty;
2) Medication or diagnostic tests and procedures;
3) Indication offered; and
4) Reason for denial.

v) The utilization review entity shall make the statistics described in section iv) available in its public website for a minimum of five years. 

b) (Response time requirements). 

i) If a utilization review entity requires prior authorization of a covered service, the utilization review entity shall make a prior authorization or adverse determination and notify the enrollee and the enrollee’s healthcare provider within two business days of obtaining all necessary information to make the prior authorization or adverse determination. Within one year of the effective date of this Act, a utilization review entity shall implement a standardized electronic system to notify enrollees and the enrollees’ healthcare provider of prior authorization determinations. Participation in the standardized electronic system shall be optional for enrollees and providers. 

1) For purposes of this section, “necessary information” includes the results of any clinical evaluation or second opinion, including through telehealth services where appropriate for the condition, that may be required.

ii) A utilization review entity shall render a prior authorization or adverse determination concerning an urgent healthcare service, and notify the enrollee and the subscriber’s healthcare provider of that prior authorization or adverse determination, not later than one business day after receiving all information needed to complete the review of the requested service.

1) An “Urgent healthcare service” means a healthcare service that the time periods for making a nonexpedited prior authorization could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or could subject the covered person to severe pain that cannot be adequately managed without the care or treatment that is the subject of the utilization review in the opinion of a physician with knowledge of the covered person’s medical condition.

iii) (Pre-hospital transportation).

1) A utilization review entity shall not require prior authorization for pre-hospital transportation or provision of emergency healthcare services.
2) A utilization review entity shall allow an enrollee and the enrollee’s healthcare provider a minimum of 24 hours following an emergency admission or provision of emergency healthcare services for the enrollee or healthcare provider to notify the utilization review entity of the admission or provision of covered services.  If the admission or covered service occurs on a holiday or weekend, a utilization review entity shall not require notification until the next business day after the admission or provision of the service.
3) A utilization review entity shall approve coverage for emergency healthcare services necessary to screen and stabilize an enrollee. If a healthcare provider certifies in writing to a utilization review entity within 72 hours of an enrollee’s admission that the enrollee’s condition requires emergency healthcare services, that certification shall create a presumption that the emergency healthcare services are medically necessary and that presumption may be rebutted only if the utilization review entity establishes, with clear and convincing evidence, that the emergency healthcare services were not medically necessary in a form and manner determined by the [HEALTH INSURANCE REGULATORY OR SIMILAR DEPARTMENT] hereafter referred to as the Department.
4) A utilization review entity shall not determine medical necessity or appropriateness of emergency healthcare services based on whether or not those services are provided by participating or nonparticipating providers. A utilization review entity shall ensure that restrictions on coverage of emergency healthcare services provided by nonparticipating providers are not greater than restrictions that apply when those services are provided by participating providers.
5) If an enrollee receives an emergency healthcare service that requires immediate post-evaluation or post-stabilization services, a utilization review entity shall make an authorization determination within 60 minutes of receiving the request. If the authorization determination is not made within 60 minutes, those services shall be deemed approved.

c) (Existing prior authorization).

i) A prior authorization shall be valid for purposes of authorizing the healthcare provider to provide the preauthorized care for a period of one year from the date the healthcare provider receives the prior authorization.

ii) A prior authorization shall be valid for a minimum of one year from the date the healthcare provider receives the prior authorization, and the authorization period shall be effective regardless of any changes in dosage for a prescription drug prescribed by the healthcare provider.

iii) If a utilization review entity requires a prior authorization for a healthcare service for the treatment of a chronic or long-term care condition, the prior authorization shall remain valid for the length of the treatment and the utilization review entity shall not require the enrollee to obtain a prior authorization again for the healthcare service subject to the prior authorization.

iv) (New healthcare providers).

1) On receipt of information documenting a prior authorization from the enrollee or from the enrollee’s healthcare provider, a utilization review entity shall honor a prior authorization granted to an enrollee from a previous utilization review entity for at least the initial 90 days of an enrollee’s coverage under a new health plan or insurer.
2) During the time period described in paragraph iii) of this subsection, a utilization review entity may perform its own review to grant a prior authorization.
3) If there is a change in coverage or approval criteria for a prior authorized covered service by the health plan or insurer issuing the change, the change in coverage or approval criteria shall not affect an enrollee who received prior authorization before the effective date of the change for the remainder of the plan year of the enrollee, unless the prior authorization previously issued for a covered service was based on materially inaccurate medical or fraudulent information.
4) A health plan or insurer shall continue to honor a prior authorization it has granted to an enrollee when the covered person changes products under the same health plan or insurer, provided the service for which prior authorization was issued remains a covered benefit under the terms and conditions of the replacement health plan or insurer.

d) Any failure by a utilization review entity to comply with a deadline or other requirement under the provisions of this Act shall result in any healthcare services subject to review being automatically deemed authorized.

e) (Provider exemptions from prior authorization requirements)

i) The Department shall establish by regulation a program whereby a healthcare provider shall be exempt from preauthorization requirements for a period of one year subject to annual renewal provided the healthcare provider maintains the standard required by this subsection, including: 

1) The utilization review entity has approved not less than 80 percent of the prior authorization requests submitted by the healthcare provider for that healthcare service, including any approval granted after an appeal in the most recent 12 month period. 

ii) A utilization review entity may evaluate whether a healthcare provider continues to qualify for exemptions as described in subsection i) not more than once every 12 months. Nothing in this Act requires a utilization review entity to evaluate an existing exemption or prevents a utilization review entity from establishing a longer exemption period.

iii) A healthcare provider who does not receive an exemption may request from the utilization review entity at any time, but not more than once per year per service, evidence to support the utilization review entity’s decision. A healthcare provider may appeal a utilization review entity’s decision to deny an exemption pursuant to a procedure established by the utilization review entity and made available to the healthcare provider upon request.

iv) A utilization review entity may only revoke an exemption at the end of the 12-month period if the utilization review entity:

1) Makes a determination that the healthcare provider did not meet the 80 percent approval criteria based on a retrospective review of the claims for the particular service for which the exemption applies for the immediately previous 3 months;
2) Provides the healthcare provider with all of the information it relied upon in making its determination to revoke the exemption; and
3) Provides the healthcare provider a plain language explanation of how to appeal the decision.

v) A utilization review entity shall provide a healthcare provider that receives an exemption a notice within thirty days of approval that includes:

1) A statement that the healthcare provider qualifies for an exemption from preauthorization requirements;
2) A list of services for which the exemption(s) apply; and
3) A statement of the duration of the exemption which shall not be less than 12 months.

vi) A utilization review entity shall not deny or reduce payment for a healthcare service exempted from a prior authorization requirement under this subsection, including a healthcare service performed or supervised by another healthcare provider when the healthcare provider who ordered such service received a prior authorization exemption, unless the rendering healthcare provider: 

1) Knowingly and materially misrepresented the healthcare service in request for payment submitted to the utilization review entity with the specific intent to deceive and obtain an unlawful payment from utilization review entity; or
2) Failed to substantially perform the healthcare service.

f) (Healthcare professional consultation prior to denials). 

i) Any denial of a request for prior authorization or limitation imposed by a health plan or insurer or its utilization review entity on a requested service shall be made by a healthcare professional with prescribing authority who shall:

1) Be of the same specialty as the healthcare professional who typically manages the medical condition or disease, or provides the healthcare service involved in the request;
2) Have experience treating patients with the medical condition or disease for which the healthcare service is being requested; and
3) Make the adverse determination under the clinical direction of a medical director of the utilization review entity who shall:

(a) Be licensed in [STATE]; and
(b) Strictly follow a medical policy that has been developed and made available to healthcare professionals and enrollees in accordance with [STATE LAW].

4) Not be compensated based on the approval or denial rate of the reviewing healthcare professional, and
5) Not be provided preferential treatment in the requests for prior authorization of the reviewing healthcare professional if that healthcare professional is also a network provider for the payer. 

ii) If a utilization review entity is questioning the medical necessity of a healthcare service, the utilization review entity shall notify the enrollee’s prescribing healthcare professional within 48 hours. Prior to issuing an adverse determination, the enrollee’s prescribing healthcare professional shall be offered the opportunity to discuss the medical necessity of the healthcare service for a minimum of two business days with the healthcare professional who will be responsible for determining authorization of the healthcare service under review.

iii) A utilization review entity shall develop a process and provide guidance for appealing adverse prior authorization determinations, and make it easily findable on its publicly available Internet website. Requirements shall be described in detail but also in easily understandable language.

g) (Retroactive denials). 

i) The utilization review entity shall not revoke, limit, condition, or restrict a prior authorization if care is provided within 45 business days from the date the healthcare provider received the prior authorization.

ii) A health plan or insurer shall pay a healthcare provider at the contracted payment rate for a healthcare service provided per a prior authorization unless:

1) The healthcare provider knowingly and materially misrepresented the healthcare service in the prior authorization request with the specific intent to deceive and obtain an unlawful payment from utilization review entity;
2) The healthcare service was no longer a covered benefit on the day it was provided;
3) The healthcare provider was no longer contracted with the enrollee’s health insurance plan on the date the care was provided;
4) The healthcare provider failed to meet the utilization review entity’s timely filing requirements;
5) The utilization review entity is not liable for the claim; or
6) The enrollee was no longer eligible for healthcare coverage on the day the care was provided.

h) (Reducing claims subject to prior authorization)

i) Health plans or insurers operating within this state shall make efforts to reduce the number of covered services requiring prior authorization. 

ii) Health plans or insurers operating within this state shall not increase the percentage of covered services requiring prior authorization from levels at the time of passage of this Act. 

i) (Enforcement). In the event that the Department or a court finds that a health plan or insurer or its utilization review entity has wrongfully denied or insufficiently covered a valid prior authorization request the following shall apply:

i) Compensation to enrollee:

1) The health plan or insurer or its utilization review entity shall pay the policyholder double the amount wrongfully denied or insufficiently covered plus reasonable attorney’s fees incurred to pursue the action against the health plan or insurer or its utilization review entity;
2) The Department or a court may assess an additional amount in damages, the entirety of which shall be paid to the policyholder, if the Department or a court determines that the harm to the policyholder caused by the wrongful claim denial is severe. When assessing an additional amount in damages against a health plan or insurer or its utilization review entity, the Department or court shall determine the appropriate amount in damages payable to the policyholder based on one or more factors, as applicable, including: 

(a) The nature, scope, and gravity of the violation;
(b) The severity of the potential harm to the policyholder in terms of loss of life, loss of health, emotional distress, or financial harm;
(c) The nature and extent to which the health plan or insurer or its utilization review entity cooperated with the Department;
(d) The nature and extent to which the health plan or insurer or its utilization review entity aggravated or mitigated any injury or damage caused by the violation; and
(e) The nature and extent to which the  health plan or insurer or its utilization review entity has taken corrective action to ensure the violation will not recur.

3) The Department shall promulgate rules and guidance to meet the requirements of this subsection.

ii) Administrative penalties

1) The Department, after appropriate notice and opportunity to remedy violations, may issue a civil penalty of up to $25,000 for each violation to a health plan or insurer or its utilization review entity, who wrongfully denied or limited a valid prior authorization request.
2) The Department may issue additional penalties if it finds continuous violations of this Act.
3) When assessing penalties against a health plan or insurer or its utilization review entity, the Department shall determine the appropriate penalty for each violation of this Act based upon one or more factors, including, but not limited to, the following:

(a) The nature, scope, and gravity of the violation;
(b) The good or bad faith of the health plan or insurer or its utilization review entity;
(c) The health plan or insurer or its utilization review entity’s history of violations;
(d) The willfulness of the violation;
(e) Whether the violation is an isolated incident;
(f) The nature and extent to which the health plan or insurer or its utilization review entity cooperated with the Department;
(g) The nature and extent to which the health plan or insurer or its utilization review entity aggravated or mitigated any injury or damage caused by the violation;
(h) The nature and extent to which the health plan or insurer or its utilization review entity has taken corrective action to ensure the violation will not recur;
(i) The financial status of the health plan or insurer or its utilization review entity, including reserves, financial solvency, revenues in excess of expenditures and other factors relating to the financial status of the domestic corporation and any parent company, subsidiary, affiliate, or other financially connected entity, if any;
(j) The financial cost of the healthcare service that was denied, delayed, or modified, including whether the penalty is commensurate with or exceeds the avoided cost based on the number of enrollees estimated to be affected;
(k) The number of enrollees estimated to be affected;
(l) The frequency of the violation based on the number of days for a continuous violation or the estimated number of incidents with potential harm to enrollees;
(m) The severity of the potential harm in terms of loss of life, loss of health, emotional distress, or financial harm to the enrollee; and
(n) The amount of the penalty necessary to deter similar violations in the future.

4) The Department may, after two weeks notice and opportunity to remedy violations within 30 days, by order suspend or revoke any license issued under this chapter to a health plan or insurer or its utilization review entity, or assess administrative penalties if the Department determines that the licensee has committed any of the acts or omissions constituting a violation of this Act;
5) Commencing [ONE YEAR AFTER ENACTMENT], and every year thereafter, the penalty amounts specified in this section shall be adjusted based on whichever is the higher of: 

(a) The average rate of change in premium rates for the individual and small group markets, weighted by enrollment since the previous adjustment; OR
(b) Adjustment based on inflation.

iii) MEDICAL MALPRACTICE

1) A health plan or insurer’s utilization review entity that has made an adverse determination of both a request for prior authorization and a subsequent appeal by an enrollee’s healthcare provider may be subject to medical malpractice pursuant to [STATE MEDICAL MALPRACTICE STATUTE] if it is found that the medical care furnished in accordance with a utilization review entity’s approval of medical care deviated from accepted norms of practice in the medical community, the recommendation of an enrollee’s healthcare provider, and causes injury to the enrollee. A utilization review entity shall only be found liable for medical malpractice if the following documentation is provided:

(a) Documentation that a utilization review entity undermined the judgment of the enrollee’s medical provider; and
(b) All relevant information utilized to support the initial request for prior authorization and any appeal of the adverse determination. 

iv) DATA COLLECTION

1) The Department shall keep record of violations of this Act brought to the Department and is authorized to compel health plans or insurers and their utilization review entities to disclose the following data on denied prior authorization requests, including, but not limited to:

(a) Number, percentage, and type of denied prior authorization requests; and
(b) Number, percentage, and type of wrongfully denied prior authorization requests. 

2) The Department shall require health plans or insurers and their utilization review entities to provide the data enumerated in section iv) 1) and section h) to the Department in a machine-readable file.
3) The Department is authorized to investigate health plans or insurers and their utilization review entities for violations of coverage laws.
4) If upon review, a health plan or insurer and its utilization review entity is found to be in violation of this Act in more than the median percentage of wrongful prior authorization request denials in the previous year, the Department shall review violations considering one or more factors enumerated in subsection ii) 3) of this section on penalties. The Department shall report these violations to the Attorney General, Governor, and the Majority and Minority leaders of both chambers in the Legislature.

j) (Reporting requirements).

i) Commencing [ONE YEAR FOLLOWING ENACTMENT], and every year thereafter, the Department shall report to the state Attorney General, Governor, and Minority and Majority Leaders in both chambers of the Legislature, and publish on its publically available website a report including the following data: 

1) Number and type of denied prior authorization requests, including raw numbers and numbers as a percent of total claims;
2) Number and type of wrongfully denied prior authorization requests, including raw numbers and numbers as a percent of total prior authorization requests;
3) Number and type of denied prior authorization appeals reported to Department;
4) Of denied prior authorization appeals brought to Department, the number, type, and percentage of denied prior authorization requests that are found to be wrongful by each health insurance plan or its utilization review entity;
5) Information and outcomes of any investigations conducted by the Department for the health plan or insurer or its utilization review entity violations of coverage laws; and
6) The Department shall post the report on their website in a machine-readable format. 

ii) The Department shall annually assess data reporting requirements as outlined in section iv) 1) and update health plan or insurer or its utilization review entity data reporting requirements based on Department needs to fulfill the requirements of this Act.

k) [State] has a compelling interest in protecting privacy and personal information. In administering this Act, state and local agencies, businesses, and any other entities, shall only request data necessary to administer this Act and retain it only as required to administer and achieve the purposes of the Act. Any personal information or data collected or obtained in the course of administering this Act shall be shared only in a manner that has been deidentified and aggregated to the greatest extent allowable while still in compliance with federal eligibility requirements and every allowable effort shall be made to revoke access to such data should programs be eliminated or should there be an ineligibility determination. Personal information or data collected or obtained in the course of administering this Act shall not be otherwise disclosed without the informed consent of the individual, a warrant signed by a [state] judge or federal judge, lawful court order administered within [state] or a lawful federal court order, or subpoena administered within [state] or federal subpoena, or unless otherwise required by federal or state statute. Personal information or data may be considered deidentified if it cannot reasonably be used to infer information about, or otherwise be linked to, a particular individual or household.

l) The provisions of this Act are severable. If any provision of this Act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.