71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1505
Senate Bill 894
Sponsored by Senators BURDICK, GEORGE; Senators BROWN, CARTER,
CASTILLO, CLARNO, MINNIS, Representatives BATES, KNOPP, KROPF,
KRUMMEL, MONNES ANDERSON, PATRIDGE, STARR, TOMEI, C WALKER, V
WALKER, WESTLUND, WINTERS, ZAUNER (at the request of Oregon
Association of Orthopaedists and Oregon Medical Association)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Requires insurance companies and health plans to pay claims for
payment of health care services in timely manner.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to claims for payment of health care services; and
declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 to 9 of this 2001 Act are added to
and made a part of the Insurance Code. + }
SECTION 2. { + The Legislative Assembly finds and declares
that:
(1) Patients and physicians often do not receive the
reimbursements to which they are entitled from health insurance
carriers in a timely manner, even when the claim is submitted on
a completed standard claim form and does not require additional
information for processing.
(2) Such delays are unnecessary and costly, often causing
patients and physicians to spend considerable time and resources
attempting to secure reimbursement. + }
SECTION 3. { + As used in sections 2 to 9 of this 2001 Act:
(1) 'Carrier' includes but is not limited to any person that
provides health benefit plans, a licensed insurance company, a
health care service contractor, a health maintenance
organization, a self-insured employer or multiple employer
welfare arrangement not exempt from state regulation by the
Employee Retirement Income Security Act of 1974, or any other
person or corporation responsible for the payment of benefits or
provision of services under a health benefit plan. 'Carrier'
includes any person acting within the scope of the carrier's
authority that is authorized to represent, act on behalf of or
perform any activity of the carrier with respect to a claim,
including but not limited to an independent practice association,
managed care organization or third party administrator.
(2) 'Claim' means a request for payment submitted by a claimant
to a carrier for reimbursement of health care services.
(3) 'Claimant' includes any first party claimant and any third
party claimant, the designated legal representative of any such
claimants and any members of a claimant's immediate family who
are designated for this purpose by the claimant.
(4) 'Clean claim' means a claim that is:
(a) Submitted by a noninstitutional provider:
(A) On a Health Care Financing Administration 1500 form, its
successor or such other uniform health insurance claim form
prescribed by the Department of Consumer and Business Services;
and
(B) With all items or fields reasonably required by the carrier
completed with no defect, impropriety, lack of required
substantiating documentation or circumstances requiring special
treatment that prevent timely payment from being made on the
claim;
(b) Submitted electronically by a noninstitutional provider on
an electronic billing instrument that consists of the Health Care
Financing Administration 1500 data set or its successor if all
required fields are completed with correct and required
information in accordance with the carrier's published filing
requirements; or
(c) Submitted by an institutional provider:
(A) On a properly and accurately completed paper or electronic
billing instrument that consists of the UB-92 data set, its
successor or such other uniform health insurance claim form or
data set prescribed by the Department of Consumer and Business
Services; and
(B) With all items or fields reasonably required by the carrier
completed with no defect, impropriety, lack of required
substantiating documentation or circumstances requiring special
treatment that prevent timely payment from being made on the
claim.
(5) 'Enrollee' has the meaning given that term in ORS 743.730.
(6) 'First party claimant' means a person asserting a right,
whether by assignment or otherwise, to payment under a health
benefit plan arising out of the provision of health care services
covered by the plan.
(7) 'Health benefit plan' has the meaning given that term in
ORS 743.730.
(8) 'Health care services' has the meaning given that term in
ORS 750.005.
(9) 'Investigation' means the activities of a carrier directly
or indirectly related to the determination of liabilities under
coverages provided by a health benefit plan.
(10) 'Overpayment' means a payment made by a carrier to a
claimant that the carrier determines is in excess of the
carrier's actual obligation to pay the claimant and such
determination is the result of a retroactive review of claims
payments made by the carrier to the claimant.
(11) 'Provider' has the meaning given that term in ORS 743.801.
(12) 'Third party claimant' means any person asserting a claim
against any person covered or insured under a health benefit
plan.
(13) 'Violation' means:
(a) A failure by a carrier to pay, deny or settle a claim
within the time periods required by section 5 of this 2001 Act;
or
(b) A reduction or set-off by a carrier of any payment to a
claimant, unless:
(A) The claimant agrees to such reduction or set-off; or
(B) The claimant fails to pay or deny a carrier's claim for
overpayment within the time periods required by section 7 of this
2001 Act. + }
SECTION 4. { + (1) All carriers that receive and process
claims shall file with the Department of Consumer and Business
Services a description of the carrier's own claims filing
requirements, including the information, data, fields and other
requirements reasonably required by the carrier in order to
process and pay a claim, and any subsequently made changes. A
carrier shall provide, in writing, a copy of its filing
requirements to:
(a) An enrollee or provider, upon request, within 15 calendar
days of the request;
(b) A provider, upon acceptance of the provider into the
carrier's network of participating providers; and
(c) Every enrollee and provider that has requested a copy of
the filing requirements and every participating provider, within
15 calendar days of any change in the filing requirements.
(2) A claimant must complete the items or fields required by
the carrier on the claim form only insofar as the claimant knows
the information or as the information is reasonably available to
the claimant filing the claim. If any required information is
unknown and not reasonably available to the claimant filing,
either because obtaining it would involve unreasonable effort or
expense or because it rests peculiarly within the knowledge of
another person not affiliated with the claimant, the claimant may
omit the information. However, the claimant filing shall:
(a) Give such information on the subject as the claimant
possesses or can acquire without unreasonable effort or expense,
together with the sources thereof; and
(b) Include a statement either showing that unreasonable effort
or expense would be involved or indicating the absence of any
affiliation with the person that has the information and stating
the result of a request made to such person for the information.
(3) The requirements for carriers to accept claims on a uniform
health insurance claim form do not apply to claims for
prescription drugs or other services or benefits paid on other
than an expense-incurred basis.
(4) The Department of Consumer and Business Services shall
adopt rules to establish uniform health insurance claim forms and
formats consistent with federal claim-filing standards required
by the federal Health Care Financing Administration and
consistent with other regulatory and technological developments.
The department may adopt rules relating to procedure and
diagnosis coding standards consistent with Medicare coding
standards adopted by the federal Health Care Financing
Administration.
(5) The department shall adopt rules providing penalties for
the failure by a carrier to file with the department and provide
to providers and enrollees the filing requirements of the carrier
as required by subsection (1) of this section. + }
SECTION 5. { + (1)(a) A carrier shall pay or deny + } { +
any clean claim, or any uncontested portion of a clean claim,
made by a claimant within 14 days of the carrier's receipt of the
claim if the claim is electronically submitted.
(b) If settlement of a claim submitted electronically requires
additional information, the carrier shall notify the claimant
electronically or in writing and provide the claimant with a full
explanation of what additional information is needed within 14
calendar days after receipt of the claim. The carrier must
identify the contested portion of the claim, specify the reason
or reasons for contesting the claim and request the additional
information from the claimant. The claimant receiving a request
for additional information from a carrier under this paragraph
shall submit all additional information requested by the carrier
within 30 calendar days after receipt of the request. The carrier
shall pay or deny the claim or portion of the claim within 15
days after receipt of the additional information.
(2) For purposes of this section:
(a) Payment of an electronic claim occurs on the date the
electronic payment is electronically transferred or otherwise
delivered from the carrier to the claimant. Payment of a claim
sent by mail shall occur on the date the payment is deposited
with the United States Postal Service or equivalent common
carrier for forwarding to the claimant and as verified by a
postmark date or receipt.
(b) Receipt of an electronic claim occurs when the claim's
electronic information has been transferred from the claimant to
the carrier and is verified electronically. Receipt of a claim
submitted to the carrier by mail occurs on the day the carrier
signs for the mailing, or three days after the mailing if mailed
to an address within the state, or seven days after the mailing
if mailed to an address outside of the state, whichever occurs
first.
(3)(a) A carrier shall pay or deny any clean claim, or any
uncontested portion of a clean claim, made by a claimant within
30 days of the carrier's receipt of the claim if the claim is
submitted on paper.
(b) If settlement of a claim submitted on paper requires
additional information, the carrier shall notify the claimant in
writing and provide the claimant with a full explanation of what
additional information is needed within 30 calendar days after
receipt of the claim. The carrier must identify the contested
portion of the claim, specify the reason or reasons for
contesting the claim and request the additional information from
the claimant. The claimant receiving a request for additional
information from a carrier under this paragraph shall submit all
additional information requested by the carrier within 30
calendar days after receipt of such request. The carrier shall
pay or deny the claim or portion of the claim within 15 days
after receipt of the additional information.
(4) If a carrier receives a claim that involves other existing
coverages and coordination of benefits, the time period within
which the carrier must pay, deny or otherwise settle such claim
pursuant to subsections (1) and (3) of this section may be
extended by 15 days. The additional 15 days are allowed only if
the carrier notifies the claimant electronically or on paper of
the delay and the reason therefor not later than the 15th day
after receipt of notification of the claim.
(5)(a) A carrier may deny a claim only if the carrier specifies
the reason or reasons for the denial. A carrier may deny a claim
on the ground of a specific policy or contract provision,
condition or exclusion only if the denial includes a reference to
the provision, condition or exclusion.
(b) A claim denial must be in writing, with either a copy of
the denial or the capability of reproducing the text of the
denial in the carrier's own claim records.
(6) A carrier shall pay, deny or otherwise settle a claim not
later than 90 days after receiving the claim. Failure to do so
creates an incontestable obligation for the carrier to pay the
claim to the claimant.
(7) In addition to the penalties provided in section 6 of this
2001 Act, a carrier that fails to pay a claim within the time
limits contained in and established by this section shall pay to
the claimant interest at the rate of 10 percent annually,
compounded daily, on the amount of the claim that remains unpaid
that is due and owing to the claimant, accruing from the day
after the payment was due until the claim is paid. Interest on
any overdue payment for a clean claim or for any uncontested
portion of a clean claim begins to accrue on the 15th day, if
submitted electronically, or 31st day, if submitted on paper,
after the claim has been received. Interest payable under this
subsection is payable with the payment of the claim. + }
SECTION 6. { + (1) A person claiming to be aggrieved by an
alleged violation of section 5 or 7 of this 2001 Act may, or the
attorney of the person may, make, sign and file with the Director
of the Department of Consumer and Business Services, a verified
complaint in writing. The complaint shall state the name and
address of the carrier alleged to have violated section 5 or 7 of
this 2001 Act and shall state the particulars of the complaint. A
complaint filed pursuant to this subsection must be filed no
later than one year after the alleged violation.
(2) Whenever the Attorney General or director has reason to
believe that a carrier has violated section 5 or 7 of this 2001
Act, the Attorney General or director may make, sign and file a
complaint in the same manner as a complaint is filed under
subsection (1) of this section.
(3) The director shall notify the carrier against whom a
complaint is made within 15 days of the filing of the complaint.
The notice shall include the date, place and circumstances of the
alleged violation.
(4) After receiving a complaint under subsection (1) of this
section or after making and filing a complaint under subsection
(2) of this section, the director shall promptly begin an
investigation. If during the course of, or upon the conclusion
of, the investigation it appears to the director that additional
persons should be named as respondents in the complaint, the
names of such persons may be added as respondents. If the
investigation discloses any substantial evidence supporting the
allegations of the complaint, the director may cause immediate
steps to be taken through conference, conciliation and persuasion
to effect a settlement of the complaint and eliminate the effects
of the violations and to otherwise carry out the purpose of
sections 2 to 9 of this 2001 Act.
(5)(a) After receiving a complaint under subsection (1) of this
section or after making and filing of complaint under subsection
(2) of this section, the director may issue a temporary cease and
desist order requiring any respondent named in the complaint to
refrain from the violation alleged.
(b) If the investigation discloses substantial evidence
supporting the allegations of the complaint, the director may
impose, in addition to other steps taken to correct the
violation, a civil penalty upon each respondent found to have
committed the violation and may issue a permanent cease and
desist order requiring each such respondent to refrain from
further activity in violation of section 5 or 7 of this 2001 Act.
(c) A civil penalty imposed under this subsection may not
exceed:
(A) $500 for any violation that was due to reasonable cause and
not to willful neglect;
(B) $1,000 for any knowing or reckless violation, except as
provided in subparagraphs (C) and (D) of this paragraph;
(C) $5,000 for any willful violation committed under false
pretenses, except as provided in subparagraph (D) of this
paragraph; or
(D) $10,000 for any violation committed with malicious intent.
(6)(a) If the director imposes a penalty or issues a temporary
or permanent cease and desist order under subsection (5) of this
section, the director shall serve upon the respondent, in
accordance with ORCP 7 D, an order directing the respondent to
pay the penalty to the director and to cease and desist the
activities described in the order. The order shall include:
(A) A reference to the particular statutes or rules involved in
the violation;
(B) A short and concise statement of the matters that
constitute the violation;
(C) A statement of the amount of the penalty imposed;
(D) A statement of the respondent's right to a contested case
hearing and to be represented by counsel at such a hearing,
provided that any request for a contested case hearing must be
received by the director in writing within 20 days after receipt
by the respondent of the order;
(E) A statement that the respondent must either pay in full the
penalties assessed or present to the director a written request
for a contested case hearing as provided in this subsection
within 20 days after receipt of the order;
(F) A statement that failure to make a written request to the
director for a contested case hearing within the time specified
shall constitute a waiver of the right thereto; and
(G) A statement that unless the written requests provided for
in subparagraph (E) of this paragraph are received by the
director within the time specified for making such requests, the
order shall become final.
(b) Upon failure of the respondent to pay the amount specified
in the order within the time specified, and upon failure to
request a contested case hearing within the time specified, the
order shall become final.
(c) All sums collected as penalties pursuant to subsection (5)
of this section shall be first applied toward reimbursement of
the costs incurred under this section in determining the
violations, conducting hearings and assessing and collecting such
penalties. The remainder, if any, of the sums collected as
penalties pursuant to subsection (5) of this section shall be
paid by the director to the State Treasurer for the benefit of
the General Fund. The treasurer shall issue a receipt for the
money to the director.
(d) The terms of any settlement of a complaint under this
section shall be contained in a written conciliation agreement
filed with the director. Such agreement may include any or all
terms and conditions that may be included in a cease and desist
order.
(e) The director may modify any terms or conditions of a
conciliation agreement or cease and desist order, the performance
of which would cause an undue hardship on the respondent or
another person and are not essential to protection of the
complainant's rights. In the absence of such modifications by the
director, a respondent may not violate any terms or conditions of
a cease and desist order or conciliation agreement to which the
respondent was a party, nor shall the agent or successor in
interest violate any of the terms or conditions.
(7) Prior to a final administrative determination on the merits
of a complaint filed against the respondent under this section
and subsequent to receipt of notice from the director that such
complaint has been filed, a respondent may not, with an intention
to retaliate or defeat a purpose of sections 2 to 9 of this 2001
Act, take any action that makes unavailable to the complainant,
any services sought by the complainant.
(8)(a) In case of failure to resolve a complaint after
reasonable effort, or if it appears to the director that the
interest of justice requires a hearing without first proceeding
by conference, conciliation and persuasion, or if a written
request is made by a respondent in accordance with subsection (6)
of this section, the director shall cause to be prepared and
served upon each respondent required to appear at the hearing
such specific charges, in writing, as the respondent will be
required to answer, together with a written notice of the time
and place of the hearing.
(b) All proceedings before the director under this section
shall be in conformity with the provisions of ORS 183.310 to
183.550.
(c) After considering all the evidence, the director shall
issue findings of facts and conclusions of law. The director
shall issue an order dismissing the charge and complaint against
any respondent not found to have engaged in any violation charged
and an appropriate cease and desist order against any respondent
found to have engaged in any violation charged.
(d) Nothing in this section shall be construed to prevent a
settlement of any case scheduled for hearing under this section
by conciliation, conference and persuasion, nor to prevent the
director from appointing a hearing officer.
(9) Any conciliation agreement or order issued by the director
under subsection (6) of this section may be enforced by mandamus
or injunction or by a suit in equity to compel specific
performance of the order. Any agreement or order that awards
money damages, unless paid, shall constitute a judgment and may
be recorded in the County Clerk Lien Record pursuant to ORS
205.125 and may be enforced as provided in ORS 205.126.
(10) Judicial review of orders issued under subsection (6) of
this section shall be conducted in accordance with ORS 183.310 to
183.550.
(11) If, within 60 days following the filing of a complaint
pursuant to subsection (1) or (2) of this section, the director
has been unable to obtain a conciliation agreement with a
respondent, or has not caused to be prepared and attempted to
serve the specific charges in accordance with subsection (8) of
this section, the director shall notify the complainant in
writing and within 60 days after the date of mailing of such
notice, the complainant may file a civil action as provided for
in subsection (15)(a) of this section. If prior to the expiration
of 60 days from the filing of a complaint pursuant to subsection
(1) of this section, the director dismisses the complaint for any
reason other than a dismissal pursuant to subsection (8) of this
section or the complainant requests the director to terminate
proceedings with respect to the complaint, the director shall
notify the complainant of the dismissal or termination in
writing. Within 60 days after the date of mailing of the notice
of dismissal or termination, a complainant may file a civil
action as provided in subsection (15)(a) of this section.
(12) The Director of the Department of Consumer and Business
Services, shall assign an authorized representative and such
other personnel as may be necessary to carry into effect the
powers and duties conferred upon the Department of Consumer and
Business Services and the director under sections 2 to 9 of this
2001 Act and may prescribe the duties and responsibilities of
such employees. The director may delegate any of the powers
conferred under sections 2 to 9 of this 2001 Act to the
authorized representative.
(13) The director or the director's authorized representative
may issue subpoenas to require the production of evidence
necessary for the performance of any of the duties under sections
3 to 8 of this 2001 Act.
(14) A person delegated any powers or duties under subsections
(12) and (13) of this section may not act as hearing officer in
processing a violation under section 5 or 7 of this 2001 Act.
(15)(a) A person claiming to be aggrieved by an alleged
violation of section 5 or 7 of this 2001 Act may file a civil
action in an appropriate court to recover for each violation
actual damages or $500, whichever is greater. In addition, the
court may award injunctive and equitable relief as it considers
appropriate. At the request of any party, the trial of such case
shall be by jury. In any action brought under this paragraph, the
court shall allow the prevailing plaintiff costs and reasonable
attorney fees at trial and on appeal.
(b) The civil action authorized by paragraph (a) of this
subsection must be commenced within two years of the occurrence
of the alleged violation.
(16) This section shall not be construed to limit or alter in
any way the authority or power of the Department of Consumer and
Business Services under ORS 731.988 and 731.992.
(17) Each violation of sections 5 and 7 of this 2001 Act is a
separate violation. + }
SECTION 7. { + (1)(a) If, as a result of retroactive review of
claim payments made to claimants, a carrier determines that it
has made an overpayment to a claimant, the carrier must make a
claim for the overpayment. The carrier must mail or
electronically transfer the claim for overpayment to the
claimant. The carrier may not reduce or set off any payment to
the claimant for other services to collect such overpayment
unless the claimant agrees to the reduction or fails to respond
to the carrier's claim as required in this subsection.
(b) A claimant must pay a claim for an overpayment made by a
carrier that the claimant does not contest or deny within 30 days
after receipt of the claim.
(c) A claimant that denies or contests a carrier's claim for
overpayment or any portion of a claim shall notify the carrier
that the claim for overpayment is contested or denied in writing
within 30 days after the claimant receives the claim. The notice
that the claim for overpayment is denied or contested must
identify the contested portion of the claim and specify the
reason or reasons for contesting or denying the claim. If the
claim for overpayment is contested, the notice must include a
request for additional information. If the carrier submits
additional information, the carrier must mail or electronically
transfer the information to the claimant within 30 days after
receipt of the request. The claimant shall pay or deny the claim
for overpayment within 45 days after receipt of the information.
(d) Payment of a claim for overpayment is considered to be made
on the date payment was received or electronically transferred or
otherwise delivered to the carrier, or the date that the claimant
receives a payment from the carrier that reduces or deducts the
overpayment. An overdue payment of a claim for overpayment bears
simple interest at the rate of 10 percent a year. Interest on an
overdue payment of a claim for overpayment or for any uncontested
portion of a claim for overpayment begins to accrue on the 31st
day after the claim for overpayment has been received.
(e) A claimant shall pay or deny any claim for overpayment no
later than 120 days after receiving the claim. Failure to do so
creates an incontestable obligation for the claimant to pay the
claim to the carrier.
(2) Any reductions of payments or demands for refund of
previous overpayments that are due to retroactive
review-of-coverage decisions or payment levels must be reconciled
to specific claims. The retroactive review period may be
specified by the terms of a contract between a carrier and
claimant, but in no event may such period exceed one year from
the date of the service or treatment subject to the retroactive
review of coverage.
(3) A carrier may not reduce or set off any payment to a
claimant unless:
(a) The claimant agrees to such reduction or set-off; or
(b) The claimant fails to pay or deny a carrier's claim for
overpayment within the time periods required by this section. + }
SECTION 8. { + A contract between a carrier and a claimant may
not include a provision that abridges, limits, reduces or in any
way derogates the rights and remedies available to claimants
under sections 3 to 7 of this 2001 Act or has the effect of
relieving either party of the obligations and liability under
sections 5, 6 and 7 of this 2001 Act. + }
SECTION 9. { + The Department of Consumer and Business
Services shall adopt all rules necessary for the implementation
of sections 3 to 7 of this 2001 Act. + }
SECTION 10. { + Sections 2 to 9 of this 2001 Act apply to
claims for payment of health care services submitted to a carrier
on or after the effective date of this 2001 Act. + }
SECTION 11. { + The Department of Consumer and Business
Services shall report to the Seventy-second Legislative Assembly
on the implementation of sections 2 to 9 of this 2001 Act,
including information on the percentage of claims that are paid
in accordance with the requirements of sections 5 and 7 of this
2001 Act. + }
SECTION 12. { + This 2001 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2001 Act takes effect on
its passage. + }
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