Skip to Content

Session Law

2000

Jump to:

Chapter 141 AN ACT RELATIVE TO MANAGED CARE PRACTICES IN THE INSURANCE INDUSTRY.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


SECTION 1. Chapter 6A of the General Laws is hereby amended by inserting after section 16C the following section:-

Section 16D. (a) The managed care oversight board is hereby established within, but not subject to the control of, the executive office of health and human services. The board shall consist of the following members: the secretary of said office, the commissioner of insurance, the commissioner of public health, the commissioner of the department of mental health, the commissioner of medical assistance, the executive director of the group insurance commission, the director of consumer affairs and business regulation, a physician member of the board of registration in medicine to be appointed by the governor, and the secretary of administration and finance. The board shall be chaired by the secretary of health and human services. Each such member may appoint a designee to serve in the member's place.

(b) The board shall appoint an executive director to oversee and coordinate the activities of the board. The board shall be assisted in its duties by the office, which shall provide technical, technological, operational and administrative support. The expenses of the board shall be funded from amounts appropriated from the general fund or any other fiscal resource of the commonwealth designated for such purpose.

(c) The board shall have oversight authority over the office of patient protection in the department of public health established by section 217 of chapter 111, and the managed care bureau in the division of insurance established by section 2 of chapter 176O, but the board's authority in this regard shall be limited to coordinating functions between said office and said bureau and reviewing and commenting upon regulations promulgated by said office and said bureau. The board shall not have authority to approve or disapprove such regulations except to the extent of a conflict between the regulations promulgated or proposed or any actions undertaken by said office and said bureau. The board shall take all necessary steps to coordinate the functions of said office and said bureau in order to avoid, to the maximum extent possible, redundancy and duplication of effort.

(d) There is hereby established an advisory committee to advise the board on issues relating to managed care practices including, but not limited to, issues involving health care cost, quality and access. Said committee shall also have the right to review and comment upon all rules, regulations and guidelines issued by the office of patient protection and the managed care bureau at least 60 days before the date such regulations become final, but in the case of emergency regulations the time period shall be a reasonable time under the circumstances as determined by the secretary of health and human services. Said committee shall designate one person to serve as a liaison to the managed care oversight board. Said committee shall consist of 14 persons to be appointed by the secretary of health and human services one of whom shall represent Health Care for All; one of whom shall represent the Massachusetts Medical Society; one of whom shall represent the Massachusetts Association of Health Maintenance Organizations; one of whom shall represent the Associated Industries of Massachusetts; one of whom shall represent the Massachusetts Nurses Association; one of whom shall represent the Massachusetts Hospital Association; one of whom shall represent the Ad Hoc Committee to Defend Health Care; one of whom shall represent a mental health consumer advocacy organization; one of whom shall represent a senior citizen organization; one of whom shall represent an organization representing the disabled and chronically ill; one of whom shall represent community health centers; one of whom shall represent the Massachusetts Health Care Purchasers Group; one of whom shall represent the Life Insurance Association of Massachusetts; and one of whom shall represent a utilization review organization not otherwise represented. Said committee shall elect a chair from among its members and adopt bylaws for its proceedings.

SECTION 2. Chapter 111 of the General Laws is hereby amended by inserting after section 51F the following section:-

Section 51G. (1) No original license shall be granted to establish or maintain an acute-care hospital, as defined by section 25B unless there is a determination by the department of the suitability and responsibility of the prospective licensee in accordance with regulations of the department.

For purposes of this section, the department's determination of suitability and responsibility shall include the following factors:

(a) the financial capacity of the prospective licensee to operate the hospital in accordance with applicable laws;

(b) the history of the prospective licensee in providing acute care, including in states other than the commonwealth, if any, measured by compliance with the applicable statutes and regulations governing the operation of hospitals in such states;

(c) the participation of persons residing in the non-profit entity's primary service area in oversight of the resulting hospital; and

(d) whether the transaction will create a significant effect on the availability or accessibility of health care services to the affected communities.

(2) No original license shall be granted to establish or maintain an acute care hospital as defined in section 25B unless all financial transactions, including remuneration of all officers of hospitals affected by the transaction, are disclosed as part of the licensure process, and unless a public hearing is held, according to procedures established in regulation by the department, prior to the granting of the license.

(3) No original license shall be granted to establish or maintain an acute-care hospital, as defined by section 25B and any subsequent successor or acquirer, unless the applicant agrees to maintain or increase the percentage of gross patient service revenues allocated to free care. The department may permit the applicant to reduce said percentage if the department determines that demographic or other changes in the hospital's service area justify a reduction in said percentage. The department shall promulgate regulations to enforce this paragraph and any agreement made by an applicant concerning free care.

(4) Any hospital shall inform the department 90 days prior to the closing of the hospital or the discontinuance of any essential health service provided therein. The department shall by regulation define "essential health service" for the purposes of this section. The department shall, in the event that a hospital proposes to discontinue an essential health service or services, determine whether any such discontinued services are necessary for preserving access and health status in the hospital's service area, require hospitals to submit a plan for assuring access to such necessary services following the hospital's closure of the service, and assure continuing access to such services in the event that the department determines that their closure will significantly reduce access to necessary services. The department shall conduct a public hearing prior to a determination on the closure of said essential services or of the hospital. No original license shall be granted to establish or maintain an acute-care hospital, as defined by section 25B, unless the applicant submits a plan, to be approved by the department, for the provision of community benefits, including the identification and provision of essential health services. In approving the plan, the department may take into account the applicant's existing commitment to primary and preventive health care services and community contributions as well as the primary and preventive health care services and community contributions of the predecessor hospital. The department may waive this requirement, in whole or in part, at the request of the applicant which has provided or at the time the application is filed, is providing, substantial primary and preventive health care services and community contributions in its service area.

(5) No original license shall be granted to establish or maintain an acute care hospital as defined by section 25B which results from the merger or acquisition of the hospital, unless the board of trustees of the hospital publicly presents and evaluates all proposals for such a merger or acquisition according to rules and regulations promulgated by the department.

(6) Whenever the department finds upon inspection, or through information in its possession, that a licensee is not in compliance with a requirement established under this section, the department may order the licensee to correct such deficiency. Every such correction order shall include a statement of the deficiencies found, the period prescribed within which the deficiency must be corrected, and the provisions of law relied upon. The department may assess the licensee ordered to correct deficiencies no less than $1,000 and not more than $10,000 per deficiency for each day the deficiency continues to exist beyond the date prescribed for correction. Within seven days of receipt, the affected licensee may file a written request with the department for administrative reconsideration of the order or any portion thereof.

SECTION 3. Said chapter 111 is hereby further amended by adding the following section:-

Section 217. (a) There is hereby established within the department an office of patient protection. The office shall:-

(1) have the authority to administer and enforce the standards and procedures established by sections 13, 14, 15 and 16 of chapter 176O, and to promulgate regulations therefor. Such regulations shall protect the confidentiality of any information about a carrier or utilization review organization, as defined in said chapter 176O, which, in the opinion of the office, and in consultation with the division of insurance, is proprietary in nature. The regulations authorized by this section shall be consistent with, and not duplicate or overlap with, regulations promulgated by the bureau of managed care established in the division of insurance pursuant to said chapter 176O;

(2) establish a site on the internet and through other communication media in order to make managed care information collected by the office readily accessible to consumers. Said internet site shall, at a minimum, include (i) the health plan report card developed pursuant to section 24 of chapter 118G , (ii) a chart, prepared by the office, comparing the information obtained on premium revenue expended for health care services as provided pursuant to subsection (3) of paragraph (b) of section 7 of chapter 176O,for the most recent year for which information is available, and (iii) data collected pursuant to paragraph (c);

(3) assist consumers with questions or concerns relating to managed care, including but not limited to exercising the grievance and appeals rights established by sections 13 and 14, of said chapter 176O;

(4) monitor quality-related health insurance plan information relating to managed care practices;

(5) regulate the establishment and functions of review panels established by section 14 of chapter 176O;

(6) periodically advise the commissioner, the managed care oversight board established by section 16D of chapter 6A, the joint committee on health care and the joint committee on insurance on actions, including legislation, which may improve the quality of managed care health insurance plans.

(b) The commissioner shall establish an external review system for the review of grievances submitted by or on behalf of insureds of carriers pursuant to section 14 of chapter 176O.

(c) Each entity that compiles the health plan employer data and information set, so-called, for the National Committee on Quality Assurance, or collects other information deemed by the entity as similar or equivalent thereto, shall, upon submitting said data and information set to the division of health care finance and policy pursuant to section 24 of chapter 118G, concurrently submit to the office of patient protection a copy thereof excluding, at the entity's option, proprietary financial data.

SECTION 4. Chapter 112 of the General Laws is hereby amended by inserting after section 5L the following section:-

Section 5M. The board shall promulgate regulations addressing the issue of physician investment and ownership in for-profit acute-care hospitals and health maintenance organizations.

SECTION 5. Chapter 118E of the General Laws is hereby amended by inserting after section 17 the following section:-

Section 17A. (a) As used in this section, the following words shall have the following meanings:

"Attending physician", the emergency physician or consultant physician who actively treats the emergency medical condition of a beneficiary at an emergency facility.

"Beneficiary", a recipient of medical assistance or medical benefits pursuant to this chapter who is treated in an emergency facility for an emergency medical condition.

"Emergency medical condition", a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in placing the health of a beneficiary or another person in serious jeopardy, serious impairment to body function, or serious dysfunction of any body organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. section 1395dd(e)(1)(B).

"Stabilization for discharge", an emergency medical condition shall be deemed to be stabilized for purposes of discharging a beneficiary, other than for the purpose of transfer from one facility to another facility, when the attending physician has determined that, within reasonable clinical confidence, the beneficiary has reached the point where further care, including diagnostic work-up or treatment, or both, could be reasonably performed on an outpatient basis or a later scheduled inpatient basis if the beneficiary is given a reasonable plan for appropriate follow-up care and discharge instructions, or as further defined in section 1867(e)(3)(A) of the Social Security Act, 42 U.S.C. section 1395dd(e)(3)(A). Stabilization for discharge does not require final resolution of the emergency medical condition.

"Stabilization for transfer", an emergency medical condition shall be deemed to be stabilized for transfer if a beneficiary can be transferred from one facility to a second facility and the attending physician has determined, within reasonable clinical confidence, that the beneficiary is expected to leave the hospital and be received at a second facility with no material deterioration in his condition, or as further defined in section 1867(c) and (e)(4) of the Social Security Act, 42 U.S.C. section 1395dd(c) and (e)(4). Stabilization for transfer does not require final resolution of the emergency medical condition.

(b) Any program of medical assistance or medical benefits for which the division is the primary payor shall cover emergency services provided to a beneficiary for emergency medical conditions. After the beneficiary has been stabilized for discharge or transfer, the division or its designee may require a hospital emergency department to contact the physician on-call designated by the division or its designee for authorization of post-stabilization services to be provided. The hospital emergency department shall take all reasonable steps to initiate contact with the division or its designee within 30 minutes of stabilization. Such authorization shall be deemed granted if the division or its designee has not responded to said call within 30 minutes. Notwithstanding the foregoing provision, if the attending physician and said on-call physician do not agree on what constitutes appropriate medical treatment, the opinion of the attending physician shall prevail and such treatment shall be considered appropriate treatment for an emergency medical condition, if such treatment is consistent with generally accepted principles of professional medical practice and is a covered benefit under said program of medical assistance or medical benefits. Consistent with the foregoing, the division or its designee may enter into contracts with hospitals or emergency physician groups, or both, for the provision of emergency services.

(c) The division or its designee may require a beneficiary to contact the division or its designee or the primary care physician of the beneficiary within 48 hours of receiving such emergency services, but notification already given to said division, designee, or primary care physician by the attending physician shall satisfy the requirements of this subsection.

(d) Nothing in this section shall be construed to limit retrospective utilization review activities by the division or its designee with respect to screening, stabilization and post-stabilization services for the purposes of assessing quality, utilization patterns and coding and billing practices, but such activities shall not result in retroactive changes to treatment or reimbursement decisions previously made in accordance with this section. In conducting said utilization review activities, the division or its designee shall comply with section 12 of chapter 176O and all applicable state and federal confidentiality provisions.

(e) The division or its designee shall clearly state in its brochures, contracts, policy manuals and all printed materials that beneficiaries shall have the option of calling the local pre-hospital emergency medical service system by dialing the emergency telephone access number 911, or its local equivalent, whenever a beneficiary is confronted with an emergency medical condition which in the judgment of a prudent layperson would require pre-hospital emergency services. No beneficiary shall in any way be discouraged from using the local pre-hospital emergency medical service system, the 911 telephone number, or the local equivalent, or be denied coverage for medical and transportation expenses incurred as a result of such emergency medical condition.

SECTION 6. Chapter 118G of the General Laws is hereby amended by adding the following section:-

Section 24. The division shall develop and issue a document for consumers to be known as the health plan report card, containing information and data providing a basis by which health insurance plans may be evaluated and compared by consumers. The division may contract for the design and production of said report. The report shall be made available to residents of the commonwealth, upon request, by the office of patient protection in the department of public health, and shall be updated and issued annually by said office in consultation with the division. In preparing such report card, the division shall, to the extent possible, use information already reported by health insurance plans, including, but not limited to, the health plan employer data and information set established by the National Committee on Quality Assurance. The division shall consult with the department of public health and the division of insurance in determining the content and format of such report card, and shall make such report card available on the internet site established by the office of patient protection in the department of public health.

SECTION 7. Section 24B of chapter 175 of the General Laws, as appearing in the 1998 Official Edition, is hereby amended by inserting after the first sentence the following two sentences:- Such notices shall include any changes in clinical review criteria, as such term is defined in section 1 of chapter 176O, and a statement of the effect of such changes on the personal liability of the policyholder or subscriber for the cost of any such changes. All notices required by this section shall be provided 60 days before the effective date of such modification.

SECTION 8. Said chapter 175 is hereby further amended by inserting after section 47T the following section:-

Section 47U. (a) As used in this section, the following words shall have the following meanings:

"Attending physician", the emergency physician or consultant physician who actively treats the emergency medical condition of an insured at an emergency facility.

"Emergency medical condition", a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in placing the health of the insured or another person in serious jeopardy, serious impairment to body function, or serious dysfunction of any body organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. section 1395dd(e)(1)(B).

"Insured", a subscriber or policyholder of a company licensed to sell health and accident insurance in the commonwealth pursuant to this chapter who is treated in an emergency facility for an emergency medical condition.

"Stabilization for discharge", an emergency medical condition shall be deemed to be stabilized for purposes of discharging an insured, other than for the purpose of transfer from one facility to another facility, when the attending physician has determined that, within reasonable clinical confidence, the insured has reached the point where further care, including diagnostic work-up or treatment, or both, could be reasonably performed on an outpatient basis or a later scheduled inpatient basis if the insured is given a reasonable plan for appropriate follow-up care and discharge instructions, or as further defined in section 1867(e)(3)(A) of the Social Security Act, 42 U.S.C. section 1395dd(e)(3)(A). Stabilization for discharge does not require final resolution of the emergency medical condition.

"Stabilization for transfer", an emergency medical condition shall be deemed to be stabilized for transfer if an insured can be transferred from one facility to a second facility and the attending physician has determined, within reasonable clinical confidence, that the insured is expected to leave the hospital and be received at a second facility with no material deterioration in his condition, or as further defined in section 1867(c) and (e)(4) of the Social Security Act, 42 U.S.C. section 1395dd(c) and (e)(4). Stabilization for transfer does not require final resolution of the emergency medical condition.

(b) Any policy of accident or sickness insurance delivered, issued or renewed in the commonwealth pursuant to this chapter shall provide as benefits to all insureds coverage for emergency services provided to an insured for emergency medical conditions. After the insured has been stabilized for discharge or transfer, said policy of insurance may require a hospital emergency department to contact a physician on-call designated by the carrier or its designee for authorization of post-stabilization services to be provided. The hospital emergency department shall take all reasonable steps to initiate contact with the carrier or its designee within 30 minutes of stabilization. Such authorization shall be deemed granted if said carrier or its designee has not responded to said call within 30 minutes. Notwithstanding the foregoing provision, in the event the attending physician and said on-call physician do not agree on what constitutes appropriate medical treatment, the opinion of the attending physician shall prevail and such treatment shall be considered appropriate treatment for an emergency medical condition, provided that such treatment is consistent with generally accepted principles of professional medical practice and is a covered benefit under the policy or contract of the insured with a carrier. Consistent with the foregoing, said carrier or its designee may enter into contracts with hospitals or emergency physician groups, or both, for the provision of emergency services.

(c) Said policy of insurance may require an insured to contact either the carrier or its designee or the primary care physician of the insured within 48 hours of receiving such emergency services, but notification already given to said carrier, designee or primary care physician by the attending physician shall satisfy the requirements of this subsection.

(d) Nothing in this section shall be construed to limit retrospective utilization review activities by a carrier or its designee with respect to screening, stabilization and post-stabilization services for the purposes of assessing quality, utilization patterns and coding and billing practices, but such activities shall not result in retroactive changes to treatment or reimbursement decisions previously made in accordance with this section. In conducting said utilization review activities, said carrier or its designee shall be in compliance with section 12 of chapter 176O and all applicable state and federal confidentiality provisions.

(e) A carrier or its designee shall clearly state in its brochures, contracts, policy manuals and all printed materials that insureds shall have the option of calling the local pre-hospital emergency medical service system by dialing the emergency telephone access number 911, or its local equivalent whenever an insured is confronted with an emergency medical condition which in the judgment of a prudent layperson would require pre-hospital emergency services. No insured shall in any way be discouraged from using the local pre-hospital emergency medical service system, the 911 telephone number, or the local equivalent, or be denied coverage for medical and transportation expenses incurred as a result of such emergency medical condition.

SECTION 9. Section 108 of said chapter 175, as appearing in the 1998 Official Edition, is hereby amended by inserting after the word "expense", in line 462, the first time it appears, the following words:- , medical expense.

SECTION 10. Said section 108 of said chapter 175, as so appearing, is hereby further amended by striking out, in line 469, the words "for any claim relating to dental services".

SECTION 11. Section 110 of said chapter 175, as so appearing, is hereby amended by inserting after the word "expense", in line 198, the first time it appears, the following words:- , medical expense.

SECTION 12. Said section 110 of said chapter 175, as so appearing, is hereby further amended by striking out, in line 205, the words "for any claim relating to dental services".

SECTION 13. Section 8 of chapter 176A of the General Laws, as so appearing, is hereby amended by striking out, in lines 38 and 39, the words "for any claims relating to dental services".

SECTION 14. Said chapter 176A is hereby further amended by inserting after section 8T the following section:-

Section 8U. (a) As used in this section, the following words shall have the following meanings:-

"Attending physician", the emergency physician or consultant physician who actively treats the emergency medical condition of an insured at an emergency facility.

"Emergency medical condition", a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in placing the health of an insured or another person's health in serious jeopardy, serious impairment to body function, or serious dysfunction of any body organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. section 1395dd(e)(1)(B).

"Insured", a member or subscriber of a hospital service corporation who is treated in an emergency facility for an emergency medical condition, regardless of whether the member's or subscriber's contract with the corporation is delivered, issued or renewed on a group or individual basis.

"Stabilization for discharge", an emergency medical condition shall be deemed to be stabilized for purposes of discharging an insured, other than for the purpose of transfer from one facility to another facility, when the attending physician has determined that, within reasonable clinical confidence, the insured has reached the point where further care, including diagnostic work-up or treatment, or both, could be reasonably performed on an outpatient basis or a later scheduled inpatient basis if the insured is given a reasonable plan for appropriate follow-up care and discharge instructions, or as further defined in section 1867(e)(3)(A) of the Social Security Act, 42 U.S.C. section 1395dd(e)(3)(A). Stabilization for discharge does not require final resolution of the emergency medical condition.

"Stabilization for transfer", an emergency medical condition shall be deemed to be stabilized for transfer if an insured can be transferred from one facility to a second facility and the attending physician has determined, within reasonable clinical confidence, that the insured is expected to leave the hospital and be received at a second facility with no material deterioration in his condition, or as further defined in section 1867(c) and (e)(4), 42 U.S.C. section 1395dd(c) and (e)(4). Stabilization for transfer does not require final resolution of the emergency medical condition.

(b) Any contract or subscription certificate between an insured and the corporation shall provide as benefits coverage for emergency services provided to an insured for emergency medical conditions. After an insured has been stabilized for discharge or transfer, the corporation or its designee may require a hospital emergency department to contact the physician on-call designated by the corporation or its designee for authorization of post-stabilization services to be provided. The hospital emergency department shall take all reasonable steps to initiate contact with the corporation or its designee within 30 minutes of stabilization. Such authorization shall be deemed granted if the corporation or its designee has not responded to said call within 30 minutes. Notwithstanding the foregoing provision, in the event the attending physician and said on-call physician do not agree on what constitutes appropriate medical treatment, the opinion of the attending physician shall prevail and such treatment shall be considered appropriate treatment for an emergency medical condition provided that such treatment is consistent with generally accepted principles of professional medical practice and is a covered benefit under the contract or subscription certificate of an insured with the corporation. Consistent with the foregoing, the corporation or its designee may enter into contracts with hospitals or emergency physician groups, or both, for the provision of emergency services.

(c) Any contract or subscription certificate between an insured and the hospital service corporation may require an insured to contact the corporation or its designee or the primary care physician of the insured within 48 hours of receiving such emergency services, but notification already given to the corporation, its designee or to said primary care physician by the attending physician shall satisfy the requirements of this paragraph.

(d) Nothing in this section shall be construed to limit retrospective utilization review activities by the corporation or its designee with respect to screening, stabilization and post-stabilization services for the purposes of assessing quality, utilization patterns and coding and billing practices, but such activities shall not result in retroactive changes to treatment or reimbursement decisions previously made in accordance with this section. In conducting said utilization review activities, the corporation or its designee shall be in compliance with section 12 of chapter 176O and all applicable state and federal confidentiality provisions.

(e) The corporation or its designee shall clearly state in its brochures, contracts, policy manuals and all printed materials that insureds shall have the option of calling the local pre-hospital emergency medical service system by dialing the emergency telephone access number 911, or its local equivalent, whenever an insured is confronted with an emergency medical condition which in the judgment of a prudent layperson would require pre-hospital emergency services. No insured shall in any way be discouraged from using the local pre-hospital emergency medical service system, the 911 telephone number, or the local equivalent, or be denied coverage for medical and transportation expenses incurred as a result of such emergency medical condition.

SECTION 15. Chapter 176B of the General Laws is hereby amended by inserting after section 4T the following section:-

Section 4U. (a) As used in this section, the following words shall have the following meanings:-

"Attending physician", the emergency physician or consultant physician who actively treats the emergency medical condition of an insured at an emergency facility.

"Emergency medical condition", a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in placing the health of an insured or another person in serious jeopardy, serious impairment to body function, or serious dysfunction of any body organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. section 1395dd(e)(1)(B).

"Insured", a member or subscriber of a medical service corporation who is treated in an emergency facility for an emergency medical condition, regardless of whether the member's or subscriber's contract with the corporation is delivered, issued or renewed on a group or individual basis.

"Stabilization for discharge", an emergency medical condition shall be deemed to be stabilized for purposes of discharging an insured, other than for the purpose of transfer from one facility to another facility, when the attending physician has determined that, within reasonable clinical confidence, the insured has reached the point where further care, including diagnostic work-up or treatment, or both, could be reasonably performed on an outpatient basis or a later scheduled inpatient basis if the insured is given a reasonable plan for appropriate follow-up care and discharge instructions, or as further defined in section 1867(e)(3)(A) of the Social Security Act, 42 U.S.C. section 1395dd(e)(3)(A). Stabilization for discharge does not require final resolution of the emergency medical condition.

"Stabilization for transfer", an emergency medical condition shall be deemed to be stabilized for transfer if an insured can be transferred from one facility to a second facility and the attending physician has determined, within reasonable clinical confidence, that the insured is expected to leave the hospital and be received at a second facility with no material deterioration in his condition, or as further defined in section 1867(c) and (e)(4) of the Social Security Act, 42 U.S.C. section 1395dd(c) and (e)(4). Stabilization for transfer does not require final resolution of the emergency medical condition.

(b) Any contract or subscription certificate between an insured and the corporation shall provide as benefits coverage for emergency services provided to an insured for emergency medical conditions. After an insured has been stabilized for discharge or transfer, the corporation or its designee may require a hospital emergency department to contact the physician on call designated by the corporation or its designee for authorization of post-stabilization services to be provided. The hospital emergency department shall take all reasonable steps to initiate contact with said corporation or its designee within 30 minutes of stabilization. Such authorization shall be deemed granted if said corporation or its designee has not responded to said call within 30 minutes. Notwithstanding the foregoing provision, in the event the attending physician and said on-call physician do not agree on what constitutes appropriate medical treatment, the opinion of the attending physician shall prevail and such treatment shall be considered appropriate treatment for an emergency medical condition provided that such treatment is consistent with generally accepted principles of professional medical practice and is a covered benefit under the contract or subscription certificate of an insured with the corporation. Consistent with the foregoing, said corporation or its designee may enter into contracts with hospitals or emergency physician groups, or both, for the provision of emergency services.

(c) Any contract or subscription certificate between an insured and the medical service corporation may require an insured to contact either the corporation or its designee or the primary care physician of the insured within 48 hours of receiving such emergency services, but notification already given to said corporation, designee or said primary care physician by the attending physician shall satisfy the requirements of this paragraph.

(d) Nothing in this section shall be construed to limit retrospective utilization review activities by said corporation or its designee with respect to screening, stabilization and post-stabilization services for the purposes of assessing quality, utilization patterns and coding and billing practices, but such activities shall not result in retroactive changes to treatment or reimbursement decisions previously made in accordance with this section. In conducting said utilization review activities, said corporation or its designee shall be in compliance with section 12 of chapter 176O and all applicable state and federal confidentiality provisions.

(e) The corporation or its designee shall clearly state in its brochures, contracts, policy manuals and all printed materials that insureds shall have the option of calling the local pre-hospital emergency medical service system by dialing the emergency telephone access number 911, or its local equivalent, whenever an insured is confronted with an emergency medical condition which in the judgment of a prudent layperson would require pre-hospital emergency services. No insured shall in any way be discouraged from using the local pre-hospital emergency medical service system, the 911 telephone number, or the local equivalent, or be denied coverage for medical and transportation expenses incurred as a result of such emergency medical condition.

SECTION 16. Section 7 of chapter 176B, as appearing in the 1998 Official Edition, is hereby amended by striking out, in line 66, the word "sixty" and inserting in place thereof the following figure:- 45.

SECTION 17. Said section 7 of said chapter 176B, as so appearing, is hereby further amended by striking out, in lines 81 and 82, the words "for any claim relating to dental services".

SECTION 18. Said section 7 of said chapter 176B, as so appearing, is hereby further amended by striking out, in line 84, the word "sixty" and inserting in place thereof the following figure:- 45.

SECTION 19. Chapter 176G of the General Laws is hereby amended by striking out section 5, as so appearing, and inserting in place thereof, the following section:-

Section 5. (a) As used in this section, the following words shall have the following meanings:-

"Attending physician", the emergency physician or consultant physician who actively treats the emergency medical condition of a member at an emergency facility.

"Emergency medical condition", a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in placing the health of a member or another person in serious jeopardy, serious impairment to body function, or serious dysfunction of any body organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. section 1395dd(e)(1)(B).

"Stabilization for discharge", an emergency medical condition shall be deemed to be stabilized for purposes of discharging a member, other than for the purpose of transfer from one facility to another facility, when the attending physician has determined that, within reasonable clinical confidence, the member has reached the point where further care, including diagnostic work-up or treatment, or both, could be reasonably performed on an outpatient basis or a later scheduled inpatient basis if the member is given a reasonable plan for appropriate follow-up care and discharge instructions, or as further defined in section 1867(e)(3)(A) of the Social Security Act, 42 U.S.C. section 1395dd(e)(3)(A). Stabilization for discharge does not require final resolution of the emergency medical condition.

"Stabilization for transfer", an emergency medical condition shall be deemed to be stabilized for transfer if a member can be transferred from one facility to a second facility and the attending physician has determined, within reasonable clinical confidence, that the member is expected to leave the hospital and be received at a second facility with no material deterioration in his condition, or as further defined in section 1867(c) and (e)(4) of the Social Security Act, 42 U.S.C. section 1395dd(c) and (e)(4). Stabilization for transfer does not require final resolution of the emergency medical condition.

(b) A health maintenance organization shall cover emergency services provided to members for emergency medical conditions. After the member has been stabilized for discharge or transfer, the health maintenance organization or its designee may require a hospital emergency department to contact the physician on-call designated by the health maintenance organization or its designee for authorization of post-stabilization services to be provided. The hospital emergency department shall take all reasonable steps to initiate contact with the health maintenance organization or its designee within 30 minutes of stabilization. Such authorization shall be deemed granted if the health maintenance organization or its designee has not responded to said call within 30 minutes. Notwithstanding the foregoing provision, in the event the attending physician and said on-call physician do not agree on what constitutes appropriate medical treatment, the opinion of the attending physician shall prevail and such treatment shall be considered appropriate treatment for an emergency medical condition provided that such treatment is consistent with generally accepted principles of professional medical practice and a covered benefit under the member's evidence of coverage. Consistent with the foregoing, a health maintenance organization may enter into contracts with hospitals or emergency physician groups, or both, for the provision of emergency services.

(c) A health maintenance organization may require a member to contact either the health maintenance organization or its designee or the primary care physician of the member within 48 hours of receiving such emergency services, but notification already given to the health maintenance organization or to said primary care physician by the attending physician shall satisfy the requirements of this paragraph.

(d) Nothing in this section shall be construed to limit retrospective utilization review activities by a health maintenance organization with respect to screening, stabilization and post-stabilization services for the purposes of assessing quality, utilization patterns and coding and billing practices, but such activities shall not result in retroactive changes to treatment or reimbursement decisions previously made in accordance with this section. In conducting said utilization review activities, the health maintenance organization shall be in compliance with section 12 of chapter 176O and all applicable state and federal confidentiality provisions.

(e) A health maintenance organization shall clearly state in its brochures, contracts, policy manuals and printed materials that members shall have the option of calling the local pre-hospital emergency medical service system by dialing the emergency telephone access number 911, or its local equivalent, whenever an enrollee is confronted with an emergency medical condition which in the judgment of a prudent layperson would require pre-hospital emergency services. No member shall in any way be discouraged from using the local pre-hospital emergency medical service system, the 911 telephone number, or the local equivalent, or be denied coverage for medical and transportation expenses incurred as a result of an emergency medical condition.

(f) A health maintenance organization shall provide or arrange for indemnity payments to a member or provider for a reasonable amount charged for the cost of emergency medical services by a provider who is not normally affiliated with the health maintenance organization when the member requires services for an emergency medical condition. Said indemnity payment under this section shall not be subject to the insurance laws of the commonwealth.

SECTION 20. Section 6 of said chapter 176G, as so appearing, is hereby amended by adding the following paragraph:-

No contract between a participating provider of health care services and a health maintenance organization shall be issued or delivered in the commonwealth unless it contains a provision requiring that within 45 days after the receipt by the organization of completed forms for reimbursement to the provider of health care services, the health maintenance organization shall (i) make payments for such services provided, (ii) notify the provider in writing of the reason or reasons for nonpayment, or (iii) notify the provider in writing of what additional information or documentation is necessary to complete said forms for such reimbursement. If the health maintenance organization fails to comply with this paragraph for any claims related to the provision of health care services, said health maintenance organization shall pay, in addition to any reimbursement for health care services provided, interest on such benefits, which shall accrue beginning 45 days after the health maintenance organization's receipt of request for reimbursement at the rate of 1.5 per cent per month, not to exceed 18 per cent per year. The provisions of this paragraph relating to interest payments shall not apply to a claim that the health maintenance organization is investigating because of suspected fraud.

SECTION 21. Section 7 of said chapter 176G is hereby repealed.

SECTION 22. Said chapter 176G is hereby further amended by striking out section 14, as appearing in the 1998 Official Edition, and inserting in place thereof the following section:-

Section 14. Each applicant for licensure or licensure renewal for a health maintenance organization shall submit to the commissioner for his approval and to the office of patient protection in the department of public health such materials as the commissioner shall by regulation require, in a form approved by the commissioner. Said materials shall include, but not be limited to:

(1) a copy of the basic organization document such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents establishing the health maintenance organization;

(2) a copy of the by-laws, rules and regulations, or similar document, regulating the conduct of the internal affairs of the applicant;

(3) a statement generally describing the health maintenance organization, its health care plan or plans, facilities and personnel;

(4) an internal operations plan, including an organizational chart, description of organizational structure, a description of the service area and provider network, the roles, functions, responsibilities of and interrelationships among providers, and the methods of provider reimbursement and risk-sharing arrangements;

(5) a provider inventory, including a listing of providers by specialty, a calculation of physician to population ratios, and an inventory of owned, operated, contracting and participating provider facilities, including, but not limited to, hospitals, skilled nursing facilities, home health care and medical care services;

(6) a copy of every contract form made or to be made between the applicant and any providers of health services, copies of administrative contracts, and a statement of written procedures and standards for the prior review and approval by the applicant of provider subcontracts;

(7) a copy of the form of evidence of coverage to be issued to the members;

(8) a copy of the form of group contract, if any, which is to be issued to employers, unions, trustees, or other organizations;

(9) financial statements showing the applicant's assets, liabilities, and sources of working capital and other sources of financial support and projections of the results of operations for the succeeding three years;

(10) a financial plan, including a statement indicating when the applicant estimates that income from operations will equal expenses, a statement of the applicant's plan to establish and maintain sufficient reserves to cover projected risks, copies of reinsurance or other agreements to provide for provision of contracted health services in the event the applicant is unable to provide such services for any reason, and a detailed description of mechanisms to monitor the financial solvency of any organization contraction with the applicant that assumes substantial financial risk for the provision of health services;

(11) a plan for compliance with section 15, including copies of any contract or agreement with a carrier for reinsurance;

(12) an enrollment and marketing plan describing the marketing methods, anticipated enrollment, the service area population and utilization rates projected for health services delivered in the organization's service area;

(13) a utilization plan describing inpatient and outpatient utilization review measures and a statement of actuarial review and certification of actuarial assumptions made regarding utilization as applied to projected financial statements;

(14) premium rates for all products offered;

(15) a member services plan, including a statement of procedures to be used to maintain member confidentiality of medical records, grievances, and quality assurance study responses;

(16) a detailed description of the quality assurance system;

(17) a detailed description of the formal internal grievance system including procedures for the registration and resolution of member grievances, and, for renewal applications only, the total number and disposition of malpractice claims and other claims relating to the service or care rendered by the health maintenance organization made by, or on behalf of, members of the organization that were settled or resulted in a judgment during the year by the health maintenance organization; and

(18) evidence of compliance with chapter 176O. Any applicant accredited by the managed care bureau established under section 2 of said chapter 176O shall be deemed to meet the requirements of this chapter with respect to requirements with any utilization review standards.

A license granted to a health maintenance organization pursuant to this section shall be renewed on an annual basis. The fee for such renewal, in an amount determined by the commissioner, shall be no less than $500.

SECTION 23. Section 1 of chapter 176I of the General Laws, as so appearing, is hereby amended by striking out the definition of "Emergency care" and inserting in place thereof the following definition:-

"Emergency care", services provided in or by a hospital emergency facility to a covered person after the development of a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in placing the covered person's or another person's health in serious jeopardy, serious impairment to body function, or serious dysfunction of any body organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. section 1395dd(e)(1)(B).

SECTION 24. Section 2 of said chapter 176I, as so appearing, is hereby amended by adding the following paragraph:-

No organization may enter into a preferred provider arrangement with one or more health care providers unless said written arrangement contains a provision requiring that within 45 days after the receipt by the organization of completed forms for reimbursement to the health care provider, the organization shall (i) make payments for the provision of such services, (ii) notify the provider in writing of the reason or reasons for nonpayment, or (iii) notify the provider in writing of what additional information or documentation is necessary to complete said forms for such reimbursement. If the organization fails to comply with the provisions of this paragraph for any claims related to the provision of health care services, said organization shall pay, in addition to any reimbursement for health care services provided, interest on such benefits, which shall accrue beginning 45 days after the organization's receipt of request for reimbursement at the rate of 1.5 per cent per month, not to exceed 18 per cent per year. The provisions of this paragraph relating to interest payments shall not apply to a claim that the organization is investigating because of suspected fraud.

SECTION 25. Section 3 of said chapter 176I, as so appearing, is hereby amended by inserting after the word "provider", in line 13, the following words:- ; provided, however, that every brochure, contract, policy manual and all printed materials shall clearly state that covered persons shall have the option of calling the local pre-hospital emergency medical service system by dialing the emergency telephone access number 911, or its local equivalent, whenever a covered person is confronted with a need for emergency care, and no covered person shall in any way be discouraged from using the local pre-hospital emergency medical service system, the 911 telephone number, or the local equivalent, or be denied coverage for medical and transportation expenses incurred as a result of such use of emergency care;.

SECTION 26. Section 9 of said chapter 176I, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- An organization which offers or administers a health benefit plan or furnishes workers' compensation, under a preferred provider arrangement shall be subject to all of the provisions of its enabling or licensing statute and of any other provisions of the general laws applicable thereto, including but not limited to, the provisions of chapter 176O and any benefits required to be provided by law.

SECTION 27. The General Laws are hereby amended by inserting after chapter 176N the following chapter:- CHAPTER 176O. HEALTH INSURANCE CONSUMER PROTECTIONS.

Section 1. As used in this chapter, the following words shall have the following meanings:-

"Adverse determination", a determination, based upon a review of information provided by a carrier or its designated utilization review organization, to deny, reduce, modify, or terminate an admission, continued inpatient stay, or the availability of any other health care services, for failure to meet the requirements for coverage based on medical necessity, appropriateness of health care setting and level of care, or effectiveness.

"Ambulatory review", utilization review of health care services performed or provided in an outpatient setting, including, but not limited to, outpatient or ambulatory surgical, diagnostic and therapeutic services provided at any medical, surgical, obstetrical, psychiatric and chemical dependency facility, as well as other locations such as laboratories, radiology facilities, provider offices and patient homes.

"Capitation", a set payment per patient per unit of time made by a carrier to a licensed health care professional, health care provider group or organization that employs or utilizes services of health care professionals to cover a specified set of services and administrative costs without regard to the actual number of services provided.

"Carrier", an insurer licensed or otherwise authorized to transact accident or health insurance under chapter 175; a nonprofit hospital service corporation organized under chapter 176A; a nonprofit medical service corporation organized under chapter 176B; a health maintenance organization organized under chapter 176G; and an organization entering into a preferred provider arrangement under chapter 176I, but not including an employer purchasing coverage or acting on behalf of its employees or the employees of one or more subsidiaries or affiliated corporations of the employer.

"Case management", a coordinated set of activities conducted for individual patient management of serious, complicated, protracted or other health conditions.

"Clinical peer reviewer", a physician or other health care professional, other than the physician or other health care professional who made the initial decision, who holds a non-restricted license from the appropriate professional licensing board in the commonwealth, current board certification from a specialty board approved by the American Board of Medical Specialties or of the Advisory Board of Osteopathic Specialists from the major areas of clinical services or, for non-physician health care professionals, the recognized professional board for their specialty, who actively practices in the same or similar specialty as typically manages the medical condition, procedure or treatment under review, and whose compensation does not directly or indirectly depend upon the quantity, type or cost of the services that such person approves or denies.

"Clinical review criteria", the written screening procedures, decisions, abstracts, clinical protocols and practice guidelines used by a carrier to determine the medical necessity and appropriateness of health care services.

"Commissioner", the commissioner of insurance.

"Concurrent review", utilization review conducted during an insured's inpatient hospital stay or course of treatment.

"Covered benefits" or "benefits", health care services to which an insured is entitled under the terms of the health benefit plan.

"Discharge planning", the formal process for determining, prior to discharge from a facility, the coordination and management of the care that an insured receives following discharge from a facility.

"Division", the division of insurance.

"Emergency medical condition", a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine, to result in placing the health of the insured or another person in serious jeopardy, serious impairment to body function, or serious dysfunction of any body organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. section 1395dd(e)(1)(B).

"Facility", a licensed institution providing health care services or a health care setting, including, but not limited to, hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings.

"Grievance", any oral or written complaint submitted to the carrier which has been initiated by an insured, or on behalf of an insured with the consent of the insured, concerning any aspect or action of the carrier relative to the insured, including, but not limited to, review of adverse determinations regarding scope of coverage, denial of services, quality of care and administrative operations, in accordance with the requirements of this chapter.

"Health benefit plan", a policy, contract, certificate or agreement entered into, offered or issued by a carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services.

"Health care professional", a physician or other health care practitioner licensed, accredited or certified to perform specified health services consistent with law.

"Health care provider" or "provider", a health care professional or a facility.

"Health care services", services for the diagnosis, prevention, treatment, cure or relief of a health condition, illness, injury or disease.

"Incentive plan", any compensation arrangement between a carrier and licensed health care professional or licensed health care provider group or organization that employs or utilizes services of one or more licensed health care professionals that may directly or indirectly have the effect of reducing or limiting services furnished to insureds of the organization.

"Insured", an enrollee, covered person, insured, member, policyholder or subscriber of a carrier, including an individual whose eligibility as an insured of a carrier is in dispute or under review, or any other individual whose care may be subject to review by a utilization review program or entity as described under other provisions of this chapter.

"Licensed health care provider group", a partnership, association, corporation, individual practice association, or other group that distributes income from the practice among members. An individual practice association is a licensed health care provider group only if it is composed of individual health care professionals and has no subcontracts with licensed health care provider groups.

"Medical necessity" or "medically necessary", health care services that are consistent with generally accepted principles of professional medical practice.

"National accreditation organization", the American accreditation health care commission/URAC, the National Committee for Quality Assurance, or any other national accreditation entity approved by the division that accredits carriers subject to the provisions of this chapter.

"Network", a grouping of health care providers who contract with a carrier to provide services to insureds covered by any or all of the carrier's plans, policies, contracts or other arrangements.

"Office of patient protection", the office in the department of public health established by section 217 of chapter 111, responsible for the administration and enforcement of sections 13, 14, 15 and 16.

"Participating provider", a provider who, under a contract with the carrier or with its contractor or subcontractor, has agreed to provide health care services to insureds with an expectation of receiving payment, other than coinsurance, copayments or deductibles, directly or indirectly from the carrier.

"Person", an individual, a corporation, a partnership, an association, a joint venture, a joint stock company, a trust, an unincorporated organization, any similar entity or combination of the foregoing.

"Prospective review", utilization review conducted prior to an admission or a course of treatment and shall include any pre-authorization and pre-certification requirements of a carrier or utilization review organization.

"Religious non-medical provider", a provider who provides no medical care but who provides only religious non-medical treatment or religious non-medical nursing care.

"Retrospective review", utilization review of medical necessity that is conducted after services have been provided to a patient, but does not include the review of a claim that is limited to an evaluation of reimbursement levels, veracity of documentation, accuracy of coding or adjudication for payment.

"Second opinion", an opportunity or requirement to obtain a clinical evaluation by a health care professional other than the health care professional who made the original recommendation for a proposed health service, to assess the clinical necessity and appropriateness of the initial proposed health service.

"Terminally ill", an illness which is likely, within a reasonable degree of medical certainty, to cause one's death within six months, or as otherwise defined in section 1861(dd)(3)(A) of the Social Security Act, 42 U.S.C. section 1395x(dd)(3)(A).

"Utilization review", a set of formal techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of, health care services, procedures or settings. Such techniques may include, but are not limited to, ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning or retrospective review.

"Utilization review organization", an entity that conducts utilization review, other than a carrier performing utilization review for its own health benefit plans.

Section 2. (a) There is hereby established within the division a bureau of managed care. Said bureau shall by regulation establish minimum standards for the accreditation of carriers in the following areas:

(1) utilization review;

(2) quality management and improvement;

(3) credentialing;

(4) preventive health services; and

(5) compliance with sections 2 to 12, inclusive.

(b) In establishing said minimum standards, the bureau shall consult and use, where appropriate, standards established by national accreditation organizations. Notwithstanding the foregoing, the bureau shall not be bound by said standards established by such organizations, but wherever the bureau promulgates standards different from said national standards, it shall (1) do so pursuant to chapter 30A, (2) state the reason for such variation, and (3) take into consideration any projected compliance costs for such variation. Accreditation by the bureau shall be valid for a period of 12 months.

(c) Regulations promulgated by the bureau shall be consistent with and not duplicate or overlap with the regulations promulgated by the office of patient protection in the department of public health established by section 217 of chapter 111.

(d) A carrier that contracts with another entity to perform some or all of the functions governed by this chapter shall be responsible for ensuring compliance by said entity with the provisions of this chapter. Any failure by said entity to meet the requirements of this chapter shall be the responsibility of the carrier to remedy and shall subject the carrier to any and all enforcement actions, including financial penalties, authorized under this chapter.

(e) A carrier may apply to the bureau for deemed accreditation status. A carrier may be deemed to be in compliance with the bureau's standards, and may be so accredited by the bureau, only if the carrier, or an entity with which it contracts: (1) is accredited by a national accreditation organization; (2) is in compliance with all of the requirements of this chapter; and (3) demonstrates compliance with, and has obtained the highest possible rating from said national accreditation organization for: (i) utilization review, (ii) quality management, and (iii) member rights and responsibilities, as promulgated by the bureau pursuant to this chapter. The bureau shall publish by regulation the highest possible rating level in each such category used by every national accreditation organization recognized by the bureau. Nothing in this subsection shall be construed to require a carrier, as a condition of certification, to be in compliance at the highest possible rating with each of the accreditation requirements of a national accreditation organization.

(f) A carrier which is not accredited by the bureau pursuant to this section, and is not otherwise exempt from accreditation, shall not offer for sale, provide, or arrange for the provision of a defined set of health care services to insureds through affiliated and contracting providers or employ utilization review in making decisions about whether services are covered benefits under a health benefit plan.

(g) A carrier shall be exempt from accreditation if in the written opinion of the attorney general, the commissioner of insurance and the commissioner of public health, the health and safety of health care consumers would be materially jeopardized by requiring accreditation of the carrier. Before publishing such written exemption, the attorney general, the commissioner of insurance and the commissioner of public health shall jointly hold at least one public hearing at which testimony from interested parties on the subject of the exemption shall be solicited. A carrier granted such an exemption shall be provisionally accredited and, during such provisional accreditation, shall be subject to review not less than every four months and shall be subject to those requirements of this chapter as deemed appropriate by the commissioner of insurance.

(h) Nothing in this chapter shall relieve any carrier of its obligations pursuant to the applicable provisions of chapters 175, 176A, 176B, 176G and 176I. Compliance with such applicable provisions of chapter 175, 176A, 176B, 176G and 176I shall be a condition of accreditation.

Section 3. (a) The bureau shall investigate all complaints made against a carrier or any entity with which it contracts for allegations of noncompliance with the accreditation requirements established by section 2. The bureau shall notify a carrier when, in the opinion of the bureau, the complaints made against such a carrier indicate a pattern of noncompliance with a particular accreditation requirement. The notice shall detail the alleged noncompliance and establish a hearing date for the matter, which shall be held no later than 21 days after the date of the notice. The hearing shall be conducted pursuant to chapter 30A. The hearing shall provide such a carrier with the opportunity to respond to the alleged noncompliance.

(b) The bureau may, after said hearing, suspend or revoke the accreditation of such a carrier, or reprimand, censure or impose a civil administrative penalty not to exceed $10,000 for each classification of violation.

(c) If, after said hearing, the bureau determines that such a pattern of noncompliance has been substantiated, the bureau may issue an order requesting a corrective action plan and timeframe to achieve compliance.

(d) If a national accreditation organization takes any action to revoke the accreditation or otherwise limit or negatively affect the accreditation status of a carrier, or any entity with which it contracts for services regulated under this chapter, such carrier shall promptly notify the bureau. If a national accreditation entity revokes such accreditation, the carrier shall not be eligible for deemed accreditation status, and the bureau shall initiate proceedings pursuant to chapter 30A to revoke or suspend the carrier's accreditation.

(e) Nothing in this section shall be construed to prohibit the bureau and a carrier from resolving compliance issues through informal means.

(f) Accreditation granted to carriers pursuant to this section shall be renewed on an annual basis. The fee for such renewal shall be in an amount determined by the commissioner, but shall be no less than $500.

Section 4. A carrier shall not refuse to contract with or compensate for covered services an otherwise eligible health care provider solely because such provider has in good faith communicated with or advocated on behalf of one or more of his prospective, current or former patients regarding the provisions, terms or requirements of the carrier's health benefit plans as they relate to the needs of such provider's patients, or communicated with one or more of his prospective, current or former patients with respect to the method by which such provider is compensated by the carrier for services provided to the patient. Nothing in this section shall be construed to preclude a carrier from requiring a health care provider to hold confidential specific compensation terms.

Section 5. No contract between a carrier and a health care provider for the provision of services to insureds may require the health care provider to indemnify the carrier for any expenses and liabilities, including, without limitation, judgments, settlements, attorneys' fees, court costs and any associated charges, incurred in connection with any claim or action brought against the carrier based on the carrier's management decisions, utilization review provisions or other policies, guidelines or actions.

Section 6. (a) A carrier shall issue and deliver to at least one adult insured in each household residing in the commonwealth, upon enrollment, an evidence of coverage and any amendments thereto. Said evidence of coverage shall contain a clear, concise and complete statement of:

(1) the health care services and any other benefits which the insured is entitled to on a nondiscriminatory basis;

(2) the prepaid fee which must be paid by or on behalf of the insured;

(3) the limitations on the scope of health care services and any other benefits to be provided, including an explanation of any deductible or copayment feature and all restrictions relating to preexisting condition exclusions;

(4) the locations where, and the manner in which, health care services and other benefits may be obtained;

(5) the criteria by which an insured may be disenrolled or denied enrollment and the involuntary disenrollment rate among insureds of the carrier;

(6) a description of the carrier's method for resolving insured complaints, including a description of the formal internal grievance process required by section 13, and the external grievance process established pursuant to section 14, for appealing decisions pursuant to said grievances, as required by this chapter;

(7) the requirement that an insured's coverage may be canceled, or its renewal refused, only in the following circumstances: (i) failure by the insured or other responsible party to make payments required under the contract; (ii) misrepresentation or fraud on the part of the insured; (iii) commission of acts of physical or verbal abuse by the insured which pose a threat to providers or other insureds of the carrier and which are unrelated to the physical or mental condition of the insured; provided, that the commissioner prescribes or approves the procedures for the implementation of the provisions of this clause; (iv) relocation of the insured outside the service area of the carrier; and (v) non-renewal or cancellation of the group contract through which the insured receives coverage;

(8) a summary description of the procedure, if any, for out-of-network referrals and any additional charge for utilizing out-of-network providers;

(9) a summary description of the utilization review procedures and quality assurance programs used by the carrier, including the toll-free telephone number to be established by the carrier that enables consumers to determine the status or outcome of utilization review decisions;

(10) a statement detailing what translator and interpretation services are available to assist insureds; provided, that the commissioner shall determine in which languages other than English such statement shall be printed;

(11) a list of prescription drugs excluded from any restricted formulary available to insureds under the health benefit plan; provided, that the carrier shall annually disclose any changes in such a formulary, and shall provide a toll-free telephone number to enable consumers to determine whether a particular drug is included in the formulary;

(12) a summary description of the procedures followed by the carrier in making decisions about the experimental or investigational nature of individual drugs, medical devices or treatments in clinical trials;

(13) a statement on how to obtain the report regarding grievances from the office of patient protection pursuant to paragraph (2) of subsection (a) of section 217 of chapter 111;

(14) the toll-free telephone number, facsimile number, and internet site for the office of patient protection in the department of public health; and

(15) such other information as the commissioner may by regulation require.

Section 7. (a) A carrier shall provide to at least one adult insured in each household upon enrollment, and to a prospective insured upon request, the following information:

(1) a list of health care providers in the carrier's network, organized by specialty and by location and summarizing for each such provider the method used to compensate or reimburse such provider; provided, however, that nothing in this clause shall be construed to require disclosure of the specific details of any financial arrangements between a carrier and a provider; provided, further, that if any specific providers or type of providers requested by an insured are not available in said network, or are not a covered benefit, such information shall be provided in an easily obtainable manner;

(2) a statement that physician profiling information, so-called, may be available from the board of registration in medicine;

(3) a summary description of the process by which clinical guidelines and utilization review criteria are developed;

(4) the voluntary and involuntary disenrollment rate among insureds of the carrier;

(5) a statement that insureds have the opportunity to obtain health care services for an emergency medical condition, including the option of calling the local pre-hospital emergency medical service system, whenever the insured is confronted with an emergency medical condition which in the judgment of a prudent layperson would require pre-hospital emergency services; and

(6) a statement that the information specified in paragraph (b) is available to the insured or prospective insured from the office of patient protection in the department of public health.

(b) A carrier shall provide all of the information required under section 6 and subsection (a) of this section to the office of patient protection in the department of public health and, in addition, shall provide to said office the following information:

(1) a list of sources of independently published information assessing insured satisfaction and evaluating the quality of health care services offered by the carrier;

(2) the percentage of physicians who voluntarily and involuntarily terminated participation contracts with the carrier during the previous calendar year for which such data has been compiled and the three most common reasons for voluntary and involuntary physician disenrollment;

(3) the percentage of premium revenue expended by the carrier for health care services provided to insureds for the most recent year for which information is available; and

(4) a report detailing, for the previous calendar year, the total number of: (i) filed grievances, grievances that were approved internally, grievances that were denied internally, and grievances that were withdrawn before resolution; and (ii) external appeals pursued after exhausting the internal grievance process and the resolution of all such external appeals. The report shall identify for each such category, to the extent such information is available, the demographics of such insureds, which shall include, but need not be limited to, race, gender and age.

Section 8. A carrier neglecting to make and file its annual statement or the materials required by the commissioner to be filed with the division under this chapter or under chapter 176G in the form and within the time required thereby shall be fined $5,000 for each day during which such neglect continues after being notified by said commissioner of such neglect, and, after notice and a hearing by the commissioner to that effect, its authority to do new business shall cease while such neglect continues.

Section 9. A carrier shall annually provide a written attestation to the commissioner that the utilization review program of the carrier or its designee complies with all applicable state and federal laws concerning confidentiality and reporting requirements.

Section 10. (a) No contract between a carrier and a licensed health care provider group shall contain any incentive plan that includes a specific payment made to a health care professional as an inducement to reduce, delay or limit specific, medically necessary services covered by the health care contract. Health care professionals shall not profit from provision of covered services that are not medically necessary and appropriate. Carriers shall not profit from denial or withholding of covered services that are medically necessary and appropriate. Nothing in this section shall be construed to prohibit contracts that contain incentive plans that involve general payments such as capitation payments or shared risk agreements that are made with respect to physicians or physician groups or which are made with respect to groups of insureds if such contracts, which impose risk on such physicians or physician groups for the costs of medical care, services and equipment provided or authorized by another physician or health care provider, comply with subsection (b).

(b) In order that patient care decisions are based on medical need and not on financial incentives, no carrier shall enter into a new contract, revise the risk arrangements in an existing contract, or after July 1, 2001, revise the fee schedule in an existing contract with a physician or physician group which imposes financial risk on such physician or physician group for the costs of medical care, services or equipment provided or authorized by another physician or health care provider unless such contract includes specific provisions with respect to the following: (1) stop loss protection, (2) minimum patient population size for the physician or physician group, and (3) identification of the health care services for which the physician or physician group is at risk.

(c) A carrier or utilization review organization shall conduct an annual survey of insureds to assess satisfaction with access to specialist services, ancillary services, hospitalization services, durable medical equipment and other covered services. Said survey shall compare the actual satisfaction of insureds with projected measures of their satisfaction. Carriers that utilize incentive plans shall establish mechanisms for monitoring the satisfaction, quality of care and actual utilization compared with projected utilization of health care services of insureds.

Section 11. Nothing in this chapter shall be construed to restrict or limit the rights of health benefit plans to include as providers religious non-medical providers, require such health benefit plans to utilize medically based eligibility standards or criteria in deciding provider status for religious non-medical providers, use medical professionals or criteria to decide insured access to religious non-medical providers, utilize medical professionals or criteria in making decisions in internal appeals from decisions denying or limiting coverage or care by religious non-medical providers, compel an insured to undergo a medical examination or test as a condition of receiving coverage for treatment by a religious non-medical provider, or require such health benefit plans to exclude religious non-medical providers because they do not provide medical or other data otherwise required, if such data is inconsistent with the religious non-medical treatment or nursing care provided by the provider.

Section 12. (a) Utilization review conducted by a carrier or a utilization review organization shall be conducted pursuant to a written plan, under the supervision of a physician and staffed by appropriately trained and qualified personnel, and shall include a documented process to (i) review and evaluate its effectiveness, (ii) ensure the consistent application of utilization review criteria, and (iii) ensure the timeliness of utilization review determinations.

A carrier or utilization review organization shall adopt utilization review criteria and conduct all utilization review activities pursuant to said criteria. The criteria shall be, to the maximum extent feasible, scientifically derived and evidence-based, and developed with the input of participating physicians, consistent with the development of medical necessity criteria pursuant to the provisions of section 16. Utilization review criteria shall be applied consistently by a carrier or a utilization review organization.

Adverse determinations rendered by a program of utilization review, or other denials of requests for health services, shall be made by a person licensed in the appropriate specialty related to such health service and, where applicable, by a provider in the same licensure category as the ordering provider.

(b) A carrier or utilization review organization shall make an initial determination regarding a proposed admission, procedure or service that requires such a determination within two working days of obtaining all necessary information. For purposes of this section, "necessary information" shall include the results of any face-to-face clinical evaluation or second opinion that may be required. In the case of a determination to approve an admission, procedure or service, the carrier or utilization review organization shall notify the provider rendering the service by telephone within 24 hours, and shall provide written or electronic confirmation of the telephone notification to the insured and the provider within two working days thereafter. In the case of an adverse determination, the carrier or utilization review organization shall notify the provider rendering the service by telephone within 24 hours, and shall provide written or electronic confirmation of the telephone notification to the insured and the provider within one working day thereafter.

(c) A carrier or utilization review organization shall make a concurrent review determination within one working day of obtaining all necessary information. In the case of a determination to approve an extended stay or additional services, the carrier or utilization review organization shall notify by telephone the provider rendering the service within one working day, and shall provide written or electronic confirmation to the insured and the provider within one working day thereafter. A written or electronic notification shall include the number of extended days or the next review date, the new total number of days or services approved, and the date of admission or initiation of services. In the case of an adverse determination, the carrier or utilization review organization shall notify by telephone the provider rendering the service within 24 hours, and shall provide written or electronic notification to the insured and the provider within one working day thereafter. The service shall be continued without liability to the insured until the insured has been notified of the determination.

(d) The written notification of an adverse determination shall include a substantive clinical justification therefor that is consistent with generally accepted principles of professional medical practice, and shall, at a minimum: (1) identify the specific information upon which the adverse determination was based; (2) discuss the insured's presenting symptoms or condition, diagnosis and treatment interventions and the specific reasons such medical evidence fails to meet the relevant medical review criteria; (3) specify any alternative treatment option offered by the carrier, if any; and (4) reference and include applicable clinical practice guidelines and review criteria.

(e) A carrier or utilization review organization shall give a provider treating an insured an opportunity to seek reconsideration of an adverse determination from a clinical peer reviewer in any case involving an initial determination or a concurrent review determination. Said reconsideration process shall occur within one working day of the receipt of the request and shall be conducted between the provider rendering the service and the clinical peer reviewer or a clinical peer designated by the clinical peer reviewer if said reviewer cannot be available within one working day. If the adverse determination is not reversed by the reconsideration process, the insured, or the provider on behalf of the insured, may pursue the grievance process established pursuant to sections 13 and 14. The reconsideration process allowed herein shall not be a prerequisite to the formal internal grievance process or an expedited appeal required by section 13.

Section 13. (a) A carrier or utilization review organization shall maintain a formal internal grievance process that provides for adequate consideration and timely resolution of grievances, which shall include but not be limited to: (1) a system for maintaining records of each grievance filed by an insured or on his behalf, and responses thereto, for a period of seven years, which records shall be subject to inspection by the commissioner; (2) the provision of a clear, concise and complete description of the carrier's formal internal grievance process and the procedures for obtaining external review pursuant to section 14 with each notice of an adverse determination; (3) the carrier's toll-free telephone number for assisting insureds in resolving such grievances and the consumer assistance toll-free telephone number maintained by the office of patient protection; (4) a written acknowledgement of the receipt of a grievance within 15 days and a written resolution of each grievance within 30 days from receipt thereof; and (5) a procedure to accept grievances by telephone, in person, by mail, or by electronic means, provided that an oral grievance made by an insured shall be reduced to writing by the carrier and a copy thereof forwarded to the insured by the carrier within 48 hours of receipt. The time limits established by this paragraph may be waived or extended by mutual agreement of the insured and the carrier.

(b) The formal internal grievance process maintained by a carrier or utilization review organization shall provide for an expedited resolution of a grievance concerning a carrier's coverage or provision of immediate and urgently needed services. Said expedited resolution policy shall include, but not be limited to:

(i) a resolution before an insured's discharge from a hospital if the grievance is submitted by an insured who is an inpatient in a hospital;

(ii) provisions for the automatic reversal of decisions denying coverage for services or durable medical equipment, pending the outcome of the appeals process, within 48 hours, or earlier for durable medical equipment at the option of the physician responsible for treatment or proposed treatment of the covered patient, of receipt of certification by said physician that, in the physician's opinion, the service or use of durable medical equipment at issue in a grievance or appeal is medically necessary, that a denial of coverage for such services or durable medical equipment would create a substantial risk of serious harm to the patient, and that the risk of that harm is so immediate that the provision of such services or durable medical equipment should not await the outcome of the normal appeal or grievance process, but, in the event said physician exercises the option of automatic reversal earlier than 48 hours for durable medical equipment, he must further certify as to the specific, immediate and severe harm that will result to the patient absent action within the 48 hour time period;

(iii) a resolution within five days from the receipt of such grievance if submitted by an insured with a terminal illness.

If the expedited review process affirms the denial of coverage or treatment to an insured with a terminal illness, the carrier shall provide the insured, within five business days of the decision (1) a statement setting forth the specific medical and scientific reasons for denying coverage or treatment; (2) a description of alternative treatment, services or supplies covered or provided by the carrier, if any; and (3) said procedure shall allow the insured to request a conference. The carrier or utilization review organization shall schedule such a conference within ten days of receiving such a request from an insured, at which the information provided to the insured pursuant to clauses (1) and (2) shall be reviewed by the insured and a representative of the carrier who has authority to determine the disposition of the grievance. The carrier shall permit attendance at the conference of the insured, a designee of the insured or both, or, if the insured is a minor or incompetent, the parent, guardian or conservator of the insured as appropriate. The conference required by this paragraph shall be held within five business days if the treating physician determines, after consultation with the carrier's medical director or his designee, and based on standard medical practice, that the effectiveness of either the proposed treatment, services or supplies or any alternative treatment, services or supplies covered by the carrier, would be materially reduced if not provided at the earliest possible date.

(c) A grievance not properly acted on by the carrier within the time limits required by this section shall be deemed resolved in favor of the insured.

Section 14. (a) An insured who remains aggrieved by an adverse determination and has exhausted all remedies available from the formal internal grievance process required pursuant to section 13, may seek further review of the grievance by a review panel established by the office of patient protection pursuant to paragraph (5) of subsection (a) of section 217 of chapter 111. The insured shall pay the first $25 of the cost of the review to said office which may waive the fee in cases of extreme financial hardship. The commonwealth shall assess the carrier for the remainder of the cost of the review pursuant to regulations promulgated by the commissioner of public health in consultation with the commissioner of insurance. The office of patient protection shall contract with at least three unrelated and objective review agencies through a bidding process, and refer grievances to one of the review agencies on a random selection basis. The review agencies shall develop review panels appropriate for the given grievance, which shall include qualified clinical decision-makers experienced in the determination of medical necessity, utilization management protocols and grievance resolution, and shall not have any financial relationship with the carrier making the initial determination. The standard for review of a grievance by such a panel shall be the determination of whether the requested treatment or service is medically necessary, as defined herein, and a covered benefit under the policy or contract. The panel shall consider, but not be limited to considering: (i) written documents submitted by the insured, (ii) additional information from the involved parties or outside sources that the review panel deems necessary or relevant, and (iii) information obtained from any informal meeting held by the panel with the parties. The panel shall send final written disposition of the grievance, and the reasons therefor, to the insured and the carrier within 60 days of receipt of the request for review, unless the panel determines additional time is necessary to fully and fairly evaluate the grievance and notifies the carrier and the insured of the decision to extend the review beyond 60 days.

(b) If a grievance is filed concerning the termination of ongoing coverage or treatment, the disputed coverage or treatment shall remain in effect through completion of the formal internal grievance process. An insured may apply to the external review panel to seek continued provision of health care services which are the subject of the grievance during the course of said external review upon a showing of substantial harm to the insured's health absent such continuation, or other good cause as determined by the panel.

(c) The decision of the review panel shall be binding. The superior court shall have jurisdiction to enforce the decision of the review panel.

(d) A carrier shall allow a guardian, conservator, holder of a power of attorney, family member, or other responsible party to act as the insured's representative in the event that an insured is unable to pursue a grievance due to physical or mental disability. An insured may designate such a representative or, if the insured is unable to so designate, a guardian, conservator, holder of a power of attorney or family member, in order of priority, may serve as representative or may designate another responsible party to act as representative. The representative shall have the same rights of grievance as the insured, including the right to review the insured's medical file relevant to a dispute concerning coverage or treatment.

(e) The grievance procedures authorized by this section shall be in addition to any other procedures that may be available to any insured pursuant to contract or law, and failure to pursue, exhaust or engage in the procedures described in this subsection shall not preclude the use of any other remedy provided by any contract or law.

(f) No health care provider nor any agent or employee thereof, shall provide information relative to unpaid charges for health care services to a consumer reporting agency, as defined by section 50 of chapter 93, while an internal or external review under this section is pending, or for 15 days following the resolution of such a grievance.

Section 15. (a) A carrier that allows or requires the designation of a primary care physician shall notify an insured at least 30 days before the disenrollment of such insured's primary care physician and shall permit such insured to continue to be covered for health services, consistent with the terms of the evidence of coverage, by such primary care physician for at least 30 days after said physician is disenrolled, other than disenrollment for quality-related reasons or for fraud. Such notice shall also include a description of the procedure for choosing an alternative primary care physician.

(b) A carrier shall allow any female insured who is in her second or third trimester of pregnancy and whose provider in connection with her pregnancy is involuntarily disenrolled, other than disenrollment for quality-related reasons or for fraud, to continue treatment with said provider, consistent with the terms of the evidence of coverage, for the period up to and including the insured's first postpartum visit.

(c) A carrier shall allow any insured who is terminally ill and whose provider in connection with said illness is involuntarily disenrolled, other than disenrollment for quality-related reasons or for fraud, to continue treatment with said provider, consistent with the terms of the evidence of coverage, until the insured's death.

(d) A carrier shall provide coverage for health services for up to 30 days from the effective date of coverage to a new insured by a physician who is not a participating provider in the carrier's network if: (1) the insured's employer only offers the insured a choice of carriers in which said physician is not a participating provider, and (2) said physician is providing the insured with an ongoing course of treatment or is the insured's primary care physician. With respect to a insured in her second or third trimester of pregnancy, this provision shall apply to services rendered through the first postpartum visit. With respect to an insured with a terminal illness, this provision shall apply to services rendered until death.

(e) A carrier may condition coverage of continued treatment by a provider under subsections (a) to (d), inclusive, upon the provider's agreeing (1) to accept reimbursement from the carrier at the rates applicable prior to notice of disenrollment as payment in full and not to impose cost sharing with respect to the insured in an amount that would exceed the cost sharing that could have been imposed if the provider had not been disenrolled; (2) to adhere to the quality assurance standards of the carrier and to provide the carrier with necessary medical information related to the care provided; and (3) to adhere to such carrier's policies and procedures, including procedures regarding referrals, obtaining prior authorization and providing services pursuant to a treatment plan, if any, approved by the carrier. Nothing in this subsection shall be construed to require the coverage of benefits that would not have been covered if the provider involved remained a participating provider.

(f) A carrier that requires an insured to designate a primary care physician shall allow such a primary care physician to authorize a standing referral for specialty health care provided by a health care provider participating in such carrier's network when (1) the primary care physician determines that such referrals are appropriate, (2) the provider of specialty health care agrees to a treatment plan for the insured and provides the primary care physician with all necessary clinical and administrative information on a regular basis, and (3) the health care services to be provided are consistent with the terms of the evidence of coverage. Nothing in this section shall be construed to permit a provider of specialty health care who is the subject of a referral to authorize any further referral of an insured to any other provider without the approval of the insured's carrier.

(g) No carrier shall require an insured to obtain a referral or prior authorization from a primary care physician for the following specialty care provided by an obstetrician, gynecologist, certified nurse-midwife or family practitioner participating in such carrier's health care provider network: (1) annual preventive gynecologic health examinations, including any subsequent obstetric or gynecological services determined by such obstetrician, gynecologist, certified nurse-midwife or family practitioner to be medically necessary as a result of such examination; (2) maternity care; and (3) medically necessary evaluations and resultant health care services for acute or emergency gynecological conditions. No carrier shall require higher copayments, coinsurance, deductibles or additional cost sharing arrangements for such services provided to such insureds in the absence of a referral from a primary care physician. Carriers may establish reasonable requirements for participating obstetricians, gynecologists, certified nurse-midwives or family practitioners to communicate with an insured's primary care physician regarding the insured's condition, treatment, and need for follow-up care. Nothing in this section shall be construed to permit an obstetrician, gynecologist, certified nurse-midwife or family practitioner to authorize any further referral of an insured to any other provider without the approval of the insured's carrier.

(h) A carrier shall provide coverage of pediatric specialty care, including mental health care, by persons with recognized expertise in specialty pediatrics to insureds requiring such services.

(i) A carrier shall provide health care providers applying to be participating providers who are denied such status with a written reason or reasons for denial of such application.

(j) No carrier shall make a contract with a health care provider which includes a provision permitting termination without cause. A carrier shall provide a written statement to a provider of the reason or reasons for such provider's involuntary disenrollment.

(k) A carrier shall provide insureds, upon request, interpreter and translation services related to administrative procedures.

Section 16. (a) The physician treating an insured, shall, consistent with generally accepted principles of professional medical practice and in consultation with the insured, make all clinical decisions regarding medical treatment to be provided to the insured, including the provision of durable medical equipment and hospital lengths of stay. Nothing in this section shall be construed as altering, affecting or modifying either the obligations of any third party or the terms and conditions of any agreement or contract between either the treating physician or the insured and any third party.

(b) A carrier shall be required to pay for health care services ordered by a treating physician if (1) the services are a covered benefit under the insured's health benefit plan; and (2) the services are medically necessary. A carrier may develop guidelines to be used in applying the standard of medical necessity, as defined herein. Any such medical necessity guidelines utilized by a carrier in making coverage determinations shall be: (i) developed with input from practicing physicians in the carrier's or utilization review organization's service area; (ii) developed in accordance with the standards adopted by national accreditation organizations; (iii) updated at least biennially or more often as new treatments, applications and technologies are adopted as generally accepted professional medical practice; and (iv) evidence-based, if practicable. In applying such guidelines, a carrier shall consider the individual health care needs of the insured.

(c) With respect to an insured enrolled in a health benefit plan under which the carrier or utilization review organization only provides administrative services, the obligations of a carrier or utilization review organization created by this section and related to payment shall be limited to recommending to the third party payor that coverage should be authorized.

Section 17. The commissioner shall promulgate regulations to enforce sections 2 to 12, inclusive. The commissioner of public health shall promulgate regulations to enforce sections 13, 14, 15 and 16.

SECTION 28. Section 8A of chapter 180 of the General Laws, as appearing in the 1998 Official Edition, is hereby amended by adding the following subsection:-

(d) (1) A nonprofit acute-care hospital, as defined in section 25B of chapter 111, or a nonprofit health maintenance organization as defined in chapter 176G shall give written notice of not less than 90 days to the attorney general and to the commissioner of public health if such notice concerns a nonprofit health maintenance organization, before it enters into a sale, lease, exchange, or other disposition of a substantial amount of its assets or operations with a person or entity other than a public charity. No such notice shall be required if a written waiver of such notice is executed by the attorney general. When investigating the proposed transaction, the attorney general shall consider any factors that the attorney general deems relevant, including, but not limited to, whether:

(i) the proposed transaction complies with applicable general nonprofit and charities law;

(ii) due care was followed by the nonprofit entity;

(iii) conflict of interest was avoided by the nonprofit entity at all phases of decision making;

(iv) fair value will be received for the nonprofit assets; and

(v) the proposed transaction is in the public interest.

(2) The attorney general shall assess the entity proposing to receive such assets or operations for reasonable costs related to, and shall expend such amounts for the review of the proposed transaction, as determined by the attorney general to be necessary. Such reasonable costs may include expert review of the transaction, a process for educating the public about the transaction and obtaining public input, and administrative costs. All materials filed by the parties in the course of the attorney general's review shall be made available for public inspection pursuant to section 10 of chapter 66 and section 7 of chapter 4.

(3) The attorney general shall, during the course of his investigation, hold at least one public hearing, in a location convenient to the population served by the nonprofit entity, at which any person may file written comments and exhibits or appear and make a statement. At least 21 days in advance of the public hearing, the nonprofit entity shall publish notice of the hearing in a newspaper of general circulation where the entity is located. The notice shall include the name of the nonprofit entity, the name of the acquirer, or other parties to the proposed transaction, the nature of the proposed transaction and the anticipated consideration that will be paid by the acquirer. In addition, the notice shall offer to provide to any person upon request to the nonprofit entity a detailed summary of the proposed transaction and copies of all transaction and collateral agreements. As defined in section 7 of chapter 4, compliance with this notice requirement will not require disclosure of confidential trade secret, commercial or financial information contained in schedules or exhibits of those agreements.

(4) If a charitable fund results from the transaction, and if the nonprofit entity making the disposition does not continue its operation of a nonprofit hospital or nonprofit health maintenance organization, the governance of the charitable fund shall be subject to review by the attorney general and approval by the court. The governance of the charitable fund shall be broadly based in the community historically served by the predecessor nonprofit acute care hospital or health maintenance organization and shall be independent of the new for-profit entity. The attorney general shall conduct a public hearing in connection with his review of the plan for the governance of the resulting charitable fund. An appropriate portion of any resulting proceeds shall, if determined to be necessary by the attorney general, be used for assistance in the development of a community-based plan for the use of the resulting charitable fund.

(5) The entity receiving such assets or operations shall, if determined to be necessary by the attorney general in consultation with the department of public health, provide the funds, in an amount determined by the commissioner of public health, for the hiring by the department of public health of an independent health care access monitor to monitor and report quarterly to the attorney general, the department of public health and the committee on health care on community health care access by the entity, including levels of free care provided by the entity. The funding shall be provided for three years after the transaction. The entity receiving such assets or operations shall provide the monitor with appropriate access to the entity's records in order to enable the monitor to fulfill this function. To prevent the duplication of any information already reported by the entity, the monitor shall, to the extent possible, utilize data already provided by the entity to the division of health care finance and policy pursuant to chapter 118G or to any other agency. No personal identifiers shall be attached to any of the records obtained by the monitor and all such records shall be subject to the privacy and confidentiality provisions of section 70E of chapter 111.

(6) No officer, director, incorporator, member, employee, staff, physician, expert or advisor of the nonprofit entity making the disposition shall derive improper benefit from the transaction. The officers, directors, incorporators, members, senior managers, staff, physicians, experts and advisors of the nonprofit entity making the disposition shall be prohibited from investing in the for-profit entity for a period of three years following such disposition.

SECTION 29. There is hereby established a special commission to conduct an analysis of physician compensation. Said commission shall consist of: the commissioner of public health, or his designee; the commissioner of medical assistance, or his designee; and four persons to be appointed by the governor, one of whom shall represent a graduate school of public health and who shall be a medical economist; one of whom shall represent health care for all; one of whom shall represent the ad hoc committee to defend health care; and one of whom shall represent the Massachusetts Medical Society. Said commission shall evaluate physician compensation arrangements, including, but not limited to, risk threshold arrangements, the feasibility of compensation arrangements that are severity adjusted based on the population of patients served, and inducements to limit, reduce or deny health care. Said commission shall report its findings, and file any draft legislation prohibiting or regulating such arrangements with the clerks of the house of representatives and the senate, the joint committee on health care and the house and senate committees on ways and means not later than February 15, 2001. Thereafter, the office of patient protection in the department of public health shall conduct, every two years, analyses to evaluate physician compensation arrangements using evidence based studies to review and report on arrangements that may inappropriately limit, deny or withhold services. Upon request, the office shall have access to patient surveys and outcome studies as provided in this section. For purposes of this section, "risk threshold" means the maximum financial risk to which a licensed health care professional, licensed health care provider group or organization that employs or utilizes services of a licensed health care professional may be exposed under a licensed health care provider incentive plan.

SECTION 30. Not later than six months after the effective date of this act, the division of health care finance and policy shall issue a proposed methodology for the preparation of the health plan report card pursuant to section 24 of chapter 118G of the General Laws. The division shall issue the initial report card not later than six months after the announcement of the methodology and annually thereafter.

SECTION 31. (a) The office of patient protection in the department of public health shall establish a pilot program in a labor market area, other than the city of Boston, which requires carriers offering health care benefits through a network also to offer such benefits through a point of service option to all insureds. For the purposes of this section, "point of service option" means a choice exercised by an insured and their dependents to obtain diagnostic and treatment services from a provider of health care services who is not under contract with or otherwise a participating provider in a carrier's network.

(b)(1) A carrier may require an insured that accepts the additional coverage under a point of service option under subsection (a) to be responsible for the payment of a reasonable additional cost over the amount of the premium for the coverage offered by the carrier for the services restricted to network providers.

(2) A carrier may impose reasonable cost sharing provisions for the point of service option based on whether the health care services are provided through the carrier's network or outside the carrier's network.

(c) A carrier may require that the insured accept or reject the point of service option at the beginning of the term of the contract or policy under which health care benefits are to be provided, with the option of modifying such decision during the carrier's open enrollment period.

(d) The office of patient protection shall require such carriers to maintain and forward to the office statistics on usage of such point of service option, the cost of such option, the impact on health care quality and access, and customer satisfaction. Such pilot program shall expire on December 31, 2001. The office shall file a report on the impact of such pilot program on health care quality and cost, together with any draft legislation, on or before October 1, 2001.

SECTION 32. There is hereby established an advisory committee for the purpose of arranging for and evaluating an independent analysis of the feasibility and fiscal implications of establishing a system of consolidated health care financing and streamlined health care delivery model accessible to every resident of the commonwealth.

Said advisory committee shall review and evaluate said independent analysis in order to ensure that (1) access to affordable health care services that eliminates barriers to such services, medications and supplies necessary for the prevention, diagnosis, treatment, rehabilitation and palliation of physical and mental illness is available for all residents of the commonwealth; (2) patients have the right, within the terms of their health benefit plan and applicable state statutes, to freely choose their health care providers; (3) the high quality of health care in Massachusetts shall be preserved and promoted; (4) health services are organized in the most efficient manner possible, including the simplification of administrative procedures and reduction in administrative costs, to promote quality, affordable accessible patient care; (5) no financial incentives be permitted that limit patient access to medically necessary health care services.

Said advisory committee shall consist of the chairmen of the house and senate committees on ways and means, the joint committee on taxation, the joint committee on health care, and the joint committee on insurance, or their designees; one member of the minority party to be appointed by the minority leader of the house of representatives; one member of the minority party to be appointed by the minority leader of the senate; the secretary of health and human services or his designee, the commissioner of health care finance and policy or his designee, and one representative from each of the following organizations: the state labor council of the American Federation of Labor/Congress of Industrial Organizations, Associated Industries of Massachusetts, the Massachusetts Business Roundtable, the Massachusetts Municipal Association, the Massachusetts Hospital Association, the Massachusetts Medical Society, the Massachusetts Nurses Association, the Massachusetts Association of Health Maintenance Organizations, the Massachusetts League of Community Health Centers, the Home and Health Care Association of Massachusetts, the Massachusetts Human Services Coalition, the Massachusetts Extended Care Federation, the Massachusetts Law Reform Institute, the Massachusetts Senior Action Council, Health Care for All, Mass-Care, the Small Business Service Bureau, the Life Insurance Association of Massachusetts, the Ad Hoc Committee to Defend Health care, and the Service Employees International Union. Said advisory committee shall be co-chaired by one advisory committee senate member designated by the senate president and one advisory committee house member designated by the speaker of the house of representatives.

Said advisory committee shall, subject to appropriation and upon the approval of the appointed co-chairs of said advisory committee, commission an independent consultant to analyze, evaluate and measure the implications of creating said system of consolidated health care financing and streamlined health care delivery model. Said advisory committee shall advise, direct and consult with said independent consultant on the execution and completion of said analysis. Said analysis shall include, but not be limited to, an account of the following: (a) the legal, political, and financial impacts associated with the transition from the existing health care delivery system in the commonwealth to a streamlined and unified system of health care benefits which may be administered by the state; (b) the projected cost of establishing said system and a detailed account of the savings resulting therefrom; (c) the cost of administering said system, including an itemized account of the methodology used to determine said cost projection; (d) the revenue streams necessary to implement and sustain said system; (e) a list of any and all required policy and budgetary changes needed to implement said system; (f) an analysis of said system's impact on the state's private health care market, the consumers, and the employers who may purchase such health care benefits.

Said advisory committee shall convene upon the call of the co-chairs in order to (a) advise and consult with said independent consultant on the completion and implementation of said analysis; (b) review and make recommendations on any and all preliminary findings of said independent consultant's analysis; (c) review and make recommendations to said independent consultant for a report to be submitted to the general court.

Said independent consultant shall report to the general court the preliminary results of its analysis by filing the same with the clerk of the house of representatives and the clerk of the senate on or before April 30, 2001. Said advisory committee shall file its preliminary recommendation, based on the preliminary report of said independent consultant with the clerk of the house of representatives and the clerk of the senate, on or before May 31, 2001. Said independent consultant shall report to the general court the final results of his analysis and findings by filing the same with the clerk of the house of representatives and the clerk of the senate on or before November 15, 2001. Said advisory committee shall file its final recommendations based on the final report of said independent consultant with the clerk of the house of representatives and the clerk of the senate on or before December 31, 2001.

SECTION 33. Sections 2, 4, 28 and 34 shall apply to all transactions for which notice to the attorney general pursuant to section 8A of chapter 180 of the General Laws has been given on or after December 4, 1996.

SECTION 34. Nothing contained in the provisions of sections 2, 4, 28, and 33 shall be construed to limit the existing authority of the attorney general, the commissioner of public health, any other government official or entity, or the court to review, approve, disapprove, or impose conditions upon a transaction or disposition under existing law.

SECTION 35. Sections 5, 6, 7, 8, 14, 15, 19, 21, 22, 23, 25, 26, 27, 30, and 31 shall take effect on January 1, 2001.

Approved July 21, 2000.

Error