As Introduced

129th General Assembly Regular Session 2011-2012

S. B. No. 136

Senators Oelslager, Cafaro 

Cosponsors: Senators Seitz, Lehner, Gillmor, Patton, Manning, Tavares, Grendell, Sawyer, Wagoner 

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A BILL

To amend sections 1753.16, 3901.381, 3901.385,

1

3901.388, and 3963.04 of the Revised Code to make

2

changes to the law regarding preapproval of and

3

payment for health care services.

4

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That sections 1753.16, 3901.381, 3901.385,	5
3901.388, and 3963.04 of the Revised Code be amended to read as	6
follows:	7

Sec. 1753.16.  A health insuring corporation or utilization	8
review organization that authorizes in writing a proposed	9
admission, treatment, or health care service by a participating	10
provider based upon the complete and accurate submission of all	11
necessary information relative to an eligible enrollee shall not	12
retroactively deny this authorization if the provider renders the	13
health care service in good faith and pursuant toduring or after	14
the performance of the service unless the authorization and all of	15
the terms and conditions of the provider's contract withwas based	16
upon fraudulent information provided to the health insuring	17
corporation or utilization review organization by the enrollee or	18
provider.	19

Sec. 3901.381. (A) Except as provided in sections 3901.382,	20
3901.383, 3901.384, and 3901.386 of the Revised Code, a	21
third-party payer shall process a claim for payment for health	22
care services rendered by a provider to a beneficiary in	23
accordance with this section.	24

(B)(1) Unless division (B)(2) or (3) of this section applies,	25
when a third-party payer receives from a provider or beneficiary a	26
claim on the standard claim form prescribed in rules adopted by	27
the superintendent of insurance under section 3902.22 of the	28
Revised Code, the third-party payer shall pay or deny the claim	29
within fifteen days after receipt of the claim or, if the provider	30
submits the claim by some method other than electronically	31
pursuant to an agreement entered into with the third-party payer	32
under section 3901.382 of the Revised Code, not later than thirty	33
days after receipt of the claim. When a third-party payer denies a	34
claim, the third-party payer shall notify the provider and the	35
beneficiary. The notice shall state, with specificity, why the	36
third-party payer denied the claim.	37

(2)(a) Unless division (B)(3) of this section applies, when a	38
provider or beneficiary has used the standard claim form, but the	39
third-party payer determines that reasonable supporting	40
documentation is needed to establish the third-party payer's	41
responsibility to make payment, the third-party payer shall pay or	42
deny the claim not later than thirty days after receipt of the	43
claim, or forty-five days after receipt of the claim if the	44
provider submitted the claim by some method other than	45
electronically pursuant to an agreement entered into with the	46
third-party payer under section 3901.382 of the Revised Code.	47
Supporting documentation includes the verification of employer and	48
beneficiary coverage under a benefits contract, confirmation of	49
premium payment, medical information regarding the beneficiary and	50
the services provided, information on the responsibility of	51
another third-party payer to make payment or confirmation of the	52
amount of payment by another third-party payer, and information	53
that is needed to correct material deficiencies in the claim	54
related to a diagnosis or treatment or the provider's	55
identification.	56

Not later than fifteen days after receipt of the claim, or	57
thirty days after receipt of the claim if the provider submitted	58
the claim by some method other than electronically pursuant to an	59
agreement entered into with the third-party payer under section	60
3901.382 of the Revised Code, the third-party payer shall notify	61
all relevant external sources that the supporting documentation is	62
needed. All such notices shall state, with specificity, the	63
supporting documentation needed. If the notice was not provided in	64
writing, the provider, beneficiary, or third-party payer may	65
request the third-party payer to provide the notice in writing,	66
and the third-party payer shall then provide the notice in	67
writing. If any of the supporting documentation is under the	68
control of the beneficiary, the beneficiary shall provide the	69
supporting documentation to the third-party payer.	70

The number of days that elapse between the third-party	71
payer's last request for supporting documentation within the	72
fifteen- or thirty-day period and the third-party payer's receipt	73
of all of the supporting documentation that was requested shall	74
not be counted for purposes of determining the third-party payer's	75
compliance with the time period of not more than forty-five days	76
for payment or denial of a claim under division (B)(2)(a) of this	77
section. Except as provided in division (B)(2)(b) of this section,	78
if the third-party payer requests additional supporting	79
documentation after receiving the initially requested	80
documentation, the number of days that elapse between making the	81
request and receiving the additional supporting documentation	82
shall be counted for purposes of determining the third-party	83
payer's compliance with the time period of not more than	84
forty-five daysfor payment or denial of a claim under division	85
(B)(2)(a) of this section.	86

(b) If a third-party payer determines, after receiving	87
initially requested documentation, that it needs additional	88
supporting documentation pertaining to a beneficiary's preexisting	89
condition, which condition was unknown to the third-party payer	90
and about which it was reasonable for the third-party payer to	91
have no knowledge at the time of its initial request for	92
documentation, and the third-party payer subsequently requests	93
this additional supporting documentation, the number of days that	94
elapse between making the request and receiving the additional	95
supporting documentation shall not be counted for purposes of	96
determining the third-party payer's compliance with the time	97
period of not more than forty-five daysfor payment or denial of a	98
claim under division (B)(2)(a) of this section.	99

(c) When a third-party payer denies a claim, the third-party	100
payer shall notify the provider and the beneficiary. The notice	101
shall state, with specificity, why the third-party payer denied	102
the claim.	103

(d) If a third-party payer determines that supporting	104
documentation related to medical information is routinely	105
necessary to process a claim for payment of a particular health	106
care service, the third-party payer shall establish a description	107
of the supporting documentation that is routinely necessary and	108
make the description available to providers in a readily	109
accessible format.	110

Third-party payers and providers shall, in connection with a	111
claim, use the most current CPT code in effect, as published by	112
the American medical association, the most current ICD-9 code in	113
effect, as published by the United States department of health and	114
human services, the most current CDT code in effect, as published	115
by the American dental association, or the most current HCPCS code	116
in effect, as published by the United States health care financing	117
administration.	118

(3) When a provider or beneficiary submits a claim by using	119
the standard claim form prescribed in the superintendent's rules,	120
but the information provided in the claim is materially deficient,	121
the third-party payer shall notify the provider or beneficiary not	122
later than fifteen days after receipt of the claim. The notice	123
shall state, with specificity, the information needed to correct	124
all material deficiencies. Once the material deficiencies are	125
corrected, the third-party payer shall proceed in accordance with	126
division (B)(1) or (2) of this section.	127

It is not a violation of the notification time period of not	128
more than fifteen days if a third-party payer fails to notify a	129
provider or beneficiary of material deficiencies in the claim	130
related to a diagnosis or treatment or the provider's	131
identification. A third-party payer may request the information	132
necessary to correct these deficiencies after the end of the	133
notification time period. Requests for such information shall be	134
made as requests for supporting documentation under division	135
(B)(2) of this section, and payment or denial of the claim is	136
subject to the time periods specified in that division.	137

(C) For purposes of this section, if a dispute exists between	138
a provider and a third-party payer as to the day a claim form was	139
received by the third-party payer, both of the following apply:	140

(1) If the provider or a person acting on behalf of the	141
provider submits a claim directly to a third-party payer by mail	142
and retains a record of the day the claim was mailed, there exists	143
a rebuttable presumption that the claim was received by the	144
third-party payer on the fifth business day after the day the	145
claim was mailed, unless it can be proven otherwise.	146

(2) If the provider or a person acting on behalf of the	147
provider submits a claim directly to a third-party payer	148
electronically, there exists a rebuttable presumption that the	149
claim was received by the third-party payer twenty-four hours	150
after the claim was submitted, unless it can be proven otherwise.	151

(D) Nothing in this section requires a third-party payer to	152
provide more than one notice to an employer whose premium for	153
coverage of employees under a benefits contract has not been	154
received by the third-party payer.	155

(E) Compliance with the provisions of division (B)(3) of this	156
section shall be determined separately from compliance with the	157
provisions of divisions (B)(1) and (2) of this section.	158

(F) A third-party payer shall transmit electronically any	159
payment with respect to claims that the third-party payer receives	160
electronically and pays to a contracted provider under this	161
section and under sections 3901.383, 3901.384, and 3901.386 of the	162
Revised Code. A provider shall not refuse to accept a payment made	163
under this section or sections 3901.383, 3901.384, and 3901.386 of	164
the Revised Code on the basis that the payment was transmitted	165
electronically.	166

Sec. 3901.385. (A) A third-party payer shall not do either	167
of the following:	168

(A)(1) Engage in any business practice that unfairly or	169
unnecessarily delays the processing of a claim or the payment of	170
any amount due for health care services rendered by a provider to	171
a beneficiary;	172

(B)(2) Refuse to process or pay within the time periods	173
specified in section 3901.381 of the Revised Code a claim	174
submitted by a provider on the grounds the beneficiary has not	175
been discharged from the hospital or the treatment has not been	176
completed, if the submitted claim covers services actually	177
rendered and charges actually incurred over at least a thirty-day	178
period.	179

(B) No third-party payer that agrees in writing to cover a	180
health care service before the service is rendered shall deny	181
payment for that service during or after the performance of the	182
service unless the agreement to cover the service was based upon	183
fraudulent information provided to the third-party payer by the	184
beneficiary or provider.	185

(C) Each third-party payer that requires or allows a	186
beneficiary or provider to give notification of, or to obtain	187
authorization or certification for, a health care service before	188
the service is rendered shall do all of the following:	189

(1) Make current prior authorization or precertification	190
requirements and restrictions readily accessible to beneficiaries,	191
providers, and the general public on the third-party payer's web	192
site;	193

(2) Update the third-party payer's web site to reflect any	194
new or amended prior authorization or precertification requirement	195
and restriction at least sixty days prior to the effective date of	196
the change;	197

(3) Provide written notice to providers of any new or amended	198
prior authorization or precertification requirement and	199
restriction at least sixty days prior to the effective date of the	200
change;	201

(4) Establish and maintain a web-based system through which	202
beneficiaries and providers may provide that prenotification or	203
obtain the prior authorization or precertification;	204

(5) Make statistics that detail the number of approvals and	205
denials of prior authorization or precertification of claims	206
readily accessible to beneficiaries, providers, and the general	207
public on the third-party payer's web site in the following	208
categories:	209

(a) Physician specialty;

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(b) Medication or diagnostic tests and procedures;

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(c) Indication offered in the request;

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(d) Reason for denial.

213

(D) The information concerning current prior authorization or	214
precertification requirements and restrictions that the	215
third-party payer posts on its web site under division (C)(1) of	216
this section shall satisfy all of the following requirements:	217

(1) The information shall include written clinical criteria.

218

(2) The information shall be described in detail.

219

(3) The information shall be described in easily	220
understandable language.	221

Sec. 3901.388. (A) A(1) Except as provided in division	222
(A)(2) of this section, a payment made by a third-party payer to a	223
provider in accordance with sections 3901.381 to 3901.386 of the	224
Revised Code shall be considered final two yearsone hundred	225
eighty days after payment is made. After that date, the amount of	226
the payment is not subject to adjustment, except in the case of	227
fraud by the provider.	228

(2) If the terms of a contract between a third-party payer	229
and a provider limit the period of time that the provider has to	230
submit claims for payment to a period of less than one hundred	231
eighty days, any payment made by the third-party payer to that	232
provider in accordance with sections 3901.381 to 3901.386 of the	233
Revised Code shall be considered final upon the expiration of that	234
same amount of time after payment is made. After that date, the	235
amount of the payment is not subject to adjustment, except in the	236
case of fraud by the provider.	237

(B) A third-party payer may recover the amount of any part of	238
a payment that the third-party payer determines to be an	239
overpayment if the recovery process is initiated not later than	240
two years afterbefore the payment was made to the provideris	241
considered final under division (A) of this section. The	242
third-party payer shall inform the provider of its determination	243
of overpayment by providing notice in accordance with division (C)	244
of this section. The third-party payer shall give the provider an	245
opportunity to appeal the determination. If the provider fails to	246
respond to the notice sooner than thirty days after the notice is	247
made, elects not to appeal the determination, or appeals the	248
determination but the appeal is not upheld, the third-party payer	249
may initiate recovery of the overpayment.	250

When a provider has failed to make a timely response to the	251
notice of the third-party payer's determination of overpayment,	252
the third-party payer may recover the overpayment by deducting the	253
amount of the overpayment from other payments the third-party	254
payer owes the provider or by taking action pursuant to any other	255
remedy available under the Revised Code. When a provider elects	256
not to appeal a determination of overpayment or appeals the	257
determination but the appeal is not upheld, the third-party payer	258
shall permit a provider to repay the amount by making one or more	259
direct payments to the third-party payer or by having the amount	260
deducted from other payments the third-party payer owes the	261
provider.	262

(C) The notice of overpayment a third-party payer is required	263
to give a provider under division (B) of this section shall be	264
made in writing and shall specify all of the following:	265

(1) The full name of the beneficiary who received the health	266
care services for which overpayment was made;	267

(2) The date or dates the services were provided;

268

(3) The amount of the overpayment;

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(4) The claim number or other pertinent numbers;

270

(5) A detailed explanation of basis for the third-party	271
payer's determination of overpayment;	272

(6) The method in which payment was made, including, for	273
tracking purposes, the date of payment and, if applicable, the	274
check number;	275

(7) That the provider may appeal the third-party payer's	276
determination of overpayment, if the provider responds to the	277
notice within thirty days;	278

(8) The method by which recovery of the overpayment would be	279
made, if recovery proceeds under division (B) of this section.	280

(D) Any provision of a contractual arrangement entered into	281
between a third-party payer and a provider or beneficiary that is	282
contrary to divisions (A) to (C) of this section is unenforceable.	283

Sec. 3963.04. (A)(1) If an amendment to a health care	284
contract is not a material amendment, the contracting entity shall	285
provide the participating provider notice of the amendment at	286
least fifteen days prior to the effective date of the amendment.	287
The contracting entity shall provide all other notices to the	288
participating provider pursuant to the health care contract.	289

(2) A material amendment to a health care contract shall	290
occur only if the contracting entity provides to the participating	291
provider the material amendment in writing and notice of the	292
material amendment not later than ninety days prior to the	293
effective date of the material amendment. The notice shall be	294
conspicuously entitled "Notice of Material Amendment to Contract."	295

(3) If within fifteen days after receiving the material	296
amendment and notice described in division (A)(2) of this section,	297
the participating provider objects in writing to the material	298
amendment, and there is no resolution of the objection, either	299
party may terminate the health care contract upon written notice	300
of termination provided to the other party not later than sixty	301
days prior to the effective date of the material amendment.	302

(4) If the participating provider does not object to the	303
material amendment in the manner described in division (A)(3) of	304
this section, the material amendment shall be effective as	305
specified in the notice described in division (A)(2) of this	306
section.	307

(5) If the participating provider objects to the material	308
amendment in the manner described in division (A)(3) of this	309
section, and there is no resolution, and neither party terminates	310
the health care contract, the material amendment shall not become	311
part of the existing health care contract.	312

(B)(1) Division (A) of this section does not apply if the	313
delay caused by compliance with that division could result in	314
imminent harm to an enrollee, if the material amendment of a	315
health care contract is required by state or federal law, rule, or	316
regulation, or if the provider affirmatively accepts the material	317
amendment in writing and agrees to an earlier effective date than	318
otherwise required by division (A)(2) of this section.	319

(2) This section does not apply under any of the following	320
circumstances:	321

(a) The participating provider's payment or compensation is	322
based on the current medicaid or medicare physician fee schedule,	323
and the change in payment or compensation results solely from a	324
change in that physician fee schedule.	325

(b) A routine change or update of the health care contract is	326
made in response to any addition, deletion, or revision of any	327
service code, procedure code, or reporting code, or a pricing	328
change is made by any third party source.	329

For purposes of division (B)(2)(b) of this section:

330

(i) "Service code, procedure code, or reporting code" means	331
the current procedural terminology (CPT), current dental	332
terminology (CDT), the healthcare common procedure coding system	333
(HCPCS), the international classification of diseases (ICD), or	334
the drug topics redbook average wholesale price (AWP).	335

(ii) "Third party source" means the American medical	336
association, American dental association, the centers for medicare	337
and medicaid services, the national center for health statistics,	338
the department of health and human services office of the	339
inspector general, the Ohio department of insurance, or the Ohio	340
department of job and family services.	341

(C) Notwithstanding divisions (A) and (B) of this section, a	342
health care contract may be amended by operation of law as	343
required by any applicable state or federal law, rule, or	344
regulation. Nothing in this section shall be construed to require	345
the renegotiation of a health care contract that is in existence	346
before the effective date of this sectionJune 25, 2008, until the	347
time that the contract is renewed or materially amended.	348

Section 2.  That existing sections 1753.16, 3901.381,	349
3901.385, 3901.388, and 3963.04 of the Revised Code are hereby	350
repealed.	351