72nd OREGON LEGISLATIVE ASSEMBLY--2003 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 2413
 
                          Senate Bill 1
 
Sponsored by Senators COURTNEY, HANNON; Senator GORDLY
 
 
                             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.
 
  Prohibits health insurers from imposing treatment limitations,
limits on total payments or financial requirements on coverage
for chemical dependency, including alcoholism, and for mental or
nervous conditions unless similar limitations or requirements are
imposed on coverage of other medical conditions.
 
                        A BILL FOR AN ACT
Relating to limitations on health insurance coverage; creating
  new provisions; and amending ORS 430.065 and 743.556.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 743.556 is amended to read:
  743.556. A group health insurance policy providing coverage for
hospital or medical expenses shall provide coverage for expenses
arising from treatment for chemical dependency { + , + }
including alcoholism { + , + } and for mental or nervous
conditions { +  at the same level as, and subject to limitations
no more restrictive than, those imposed on coverage or
reimbursement of expenses arising from treatment for other
medical conditions + }. The following   { - conditions apply to
the requirement for - }   { + apply to + } such coverage:
   { +  (1) As used in this section:
  (a) 'Chemical dependency' means the addictive relationship with
any drug or alcohol characterized by either a physical or
psychological relationship, or both, that interferes with the
individual's social, psychological or physical adjustment to
common problems on a recurring basis. For purposes of this
section, chemical dependency does not include addiction to, or
dependency on, tobacco, tobacco products or foods.
  (b) 'Child or adolescent' means a person who is 17 years of age
or younger.
  (c) 'Facility' means a corporate or governmental entity or
other provider of services for the treatment of chemical
dependency or for the treatment of mental or nervous conditions.
  (d) 'Program' means a particular type or level of service that
is organizationally distinct within a facility. + }
    { - (1) - }   { + (2) + } The coverage may be made subject to
provisions of the policy that apply to other benefits under the
policy, including but not limited to provisions relating to
deductibles and coinsurance. Deductibles and coinsurance for
treatment in health care facilities or residential programs or
facilities shall be no greater than those under the policy for
expenses of hospitalization in the treatment of illness.
Deductibles and coinsurance for outpatient treatment shall be no
greater than those under the policy for expenses of outpatient
treatment of illness.
   { +  (3) The coverage for chemical dependency and for mental
or nervous conditions may not be made subject to treatment
limitations, limits on total payments for treatment, limits on
duration of treatment or financial requirements unless similar
limitations or requirements are imposed on coverage of other
medical conditions. The coverage of eligible expenses may be
limited to treatment that, in the professional judgment of
practitioners, is medically necessary.
  (4) Nothing in this section requires coverage for:
  (a) Services provided by a school or halfway house; or
  (b) Psychoanalysis or psychotherapy received as part of an
educational or training program, regardless of diagnosis or
symptoms that may be present. + }
    { - (2) - }   { + (5) + } Treatment provided in health care
facilities, residential programs or facilities, day or partial
hospitalization programs or outpatient services shall be
considered eligible for reimbursement if it is provided by:
  (a) Programs or providers described in ORS 430.010 or approved
by the Department of Human Services under subsection
  { - (3) - }   { + (6) + } of this section.
  (b) Programs accredited for the particular level of care for
which reimbursement is being requested by the Joint Commission on
Accreditation of Hospitals or the Commission on Accreditation of
Rehabilitation Facilities.
  (c) Inpatient programs provided by health care facilities as
defined in ORS 442.015. Residential, outpatient, or day or
partial hospitalization programs offered by or through a health
care facility must meet the requirements of either paragraph (a)
or (b) of this subsection in order to be eligible for
reimbursement.
  (d) Residential programs or facilities described in subsection
 { - (3) - }   { + (6) + } of this section if the patient is
staying overnight at the facility and is involved in a structured
program at least eight hours per day, five days per week.
  (e) Programs in which staff are directly supervised or in which
individual client treatment plans are approved by a person
described in ORS 430.010 (4)(a) and   { - which - }
 { + that + } meet the standards established under subsection
 { - (3) - }   { + (6) + } of this section.
    { - (3) - }   { + (6) + } Subject to ORS 430.065, the
Department of Human Services shall adopt rules relating to the
approval, for insurance reimbursement purposes, of noninpatient
chemical dependency programs that are not related to the
department or any county mental health program. The department
shall adopt rules relating to the approval, for insurance
reimbursement purposes, of noninpatient programs for mental or
nervous conditions that are not related to the department or any
county mental health program.
    { - (4) - }   { + (7) + } A program that provides services
for persons with both a chemical dependency diagnosis and a
mental or nervous condition shall be considered to be a distinct
and specialized type of program for both chemical dependency and
mental or nervous conditions. The Department of Human Services
shall develop specific standards related to such programs for
program approval purposes and shall adopt rules relating to the
approval, for insurance reimbursement purposes, of such
noninpatient programs that are not related to the department and
any county mental health program.
    { - (5) As used in this section: - }
    { - (a) 'Chemical dependency' means the addictive
relationship with any drug or alcohol characterized by either a
physical or psychological relationship, or both, that interferes
with the individual's social, psychological or physical
adjustment to common problems on a recurring basis. For purposes
of this section, chemical dependency does not include addiction
to, or dependency on, tobacco, tobacco products or foods. - }
    { - (b) 'Child or adolescent' means a person who is 17 years
of age or younger. - }
    { - (c) 'Facility' means a corporate or governmental entity
or other provider of services for the treatment of chemical
dependency or for the treatment of mental or nervous
conditions. - }
    { - (d) 'Program' means a particular type or level of service
that is organizationally distinct within a facility. - }
    { - (6) Notwithstanding the limits for particular types of
services specified in this section, a policy shall not limit the
total of payments for all treatment of any kind under this
section for chemical dependency, together with payments for all
treatment of any kind for mental or nervous conditions, to less
than $13,125 for adults and $15,625 for children or adolescents.
For persons requesting payments for treatment of any kind for
chemical dependency, but not requesting payments for treatment of
any kind of mental or nervous condition, a policy shall not limit
the total of payments for all treatment to less than $8,125 for
adults and $13,125 for children and adolescents. - }
    { - (7) The limits for mental or nervous conditions specified
in this section shall apply to persons with diagnoses of both
chemical dependency and mental or nervous conditions, who are
being treated for both types of diagnosis, as well as persons
with only a diagnosis of a mental or nervous condition. - }
    { - (8) The higher benefit levels in this section for
children or adolescents are in recognition of the longer period
of treatment and the greater levels of staffing that may be
required for children or adolescents and are intended to permit
more services to meet the needs of children and adolescents. - }
    { - (9) - }   { + (8) + } Payments   { - shall - }
 { + may + } not be made under this section for educational
programs to which drivers are referred by the judicial system,
nor for volunteer mutual support groups.
    { - (10) Except as permitted by subsections (1), (6) and (12)
of this section, the policy shall not limit payments for
inpatient treatment in hospitals and other health care facilities
thereunder: - }
    { - (a) For chemical dependency to an amount less than $5,625
for adults and $5,000 for children or adolescents; and - }
    { - (b) For mental or nervous conditions to an amount less
than $5,000 for adults and $7,500 for children or
adolescents. - }
    { - (11) Except as permitted by subsections (1), (6) and (12)
of this section, the policy shall not limit payments for
treatment in residential programs or facilities or day or partial
hospitalization programs: - }
    { - (a) For chemical dependency to an amount less than $4,375
for adults and $3,750 for children or adolescents; and - }
    { - (b) For mental or nervous conditions to an amount less
than $1,250 for adults and $3,125 for children or
adolescents. - }
    { - (12) Notwithstanding the minimum benefits for particular
types of services specified in subsections (10) and (11) of this
section, and except as permitted by subsection (1) of this
section, the policy shall not limit total payments for inpatient,
residential and day or partial hospitalization program care or
treatment: - }
    { - (a) For chemical dependency to an amount less than
$10,625 for children or adolescents; and - }
    { - (b) For mental or nervous conditions to an amount less
than $10,625 for adults and $13,125 for children or
adolescents. - }
    { - (13) Except as permitted by subsections (1) and (6) of
this section, in the case of benefits for outpatient services,
the policy shall not limit payments: - }
    { - (a) For chemical dependency to an amount less than $1,875
for adults and $2,500 for children or adolescents; and - }
    { - (b) For mental or nervous conditions to an amount less
than $2,500. - }
    { - (14) - }   { + (9) + } If so specified in the policy,
outpatient coverage may include follow-up in-home service
associated with any health care facility, residential, day or
partial hospitalization or outpatient services. The policy may
limit coverage for in-home service to persons who have completed
their initial health care facility, residential, day or partial
hospitalization or outpatient treatment and did not terminate
that initial treatment against advice. The policy may also limit
coverage for in-home service by defining the circumstances of
need under which payment will or will not be made.
   { +  (10) Nothing in this section prohibits a group health
insurer from managing the provision of benefits through common
methods, including but not limited to preadmission screening,
prior authorization of services, utilization review or other
mechanisms designed to limit eligible services to those described
in subsection (3) of this section. + }
    { - (15) Under ORS 430.021 and 430.315, the Legislative
Assembly has found that health care cost containment is necessary
and intends to encourage insurance policies designed to achieve
cost containment by assuring that reimbursement is limited to
appropriate utilization under criteria incorporated into such
policies, either directly or by reference. - }
    { - (16) A group health insurance policy may provide, with
respect to treatment for chemical dependency or mental or nervous
conditions, that any one or more of the following cost
containment methods shall be in effect and the method or methods
used by an insurer in one part of the state may be different from
the method or methods used by that insurer in another part of the
state: - }
    { - (a) Proportion of coinsurance required for treatment in
residential programs or facilities, day or partial
hospitalization programs or outpatient services less than the
proportion of coinsurance required for treatment in health care
facilities. - }
    { - (b) Subject to the patient or client confidentiality
provisions of ORS 40.235 relating to physicians, ORS 40.240
relating to nurse practitioners, ORS 40.230 relating to
psychologists and ORS 40.250 and 675.580 relating to licensed
clinical social workers, review for level of treatment of
admissions and continued stays for treatment in health care
facilities, residential programs or facilities, day or partial
hospitalization programs and outpatient services by either
insurer staff or personnel under contract to the insurer, or by a
utilization review contractor, who shall have the authority to
certify for or deny level of payment: - }
    { - (A) This review shall be made according to criteria made
available to providers in advance upon request. - }
    { - (B) To facilitate implementation of utilization review
programs by insurers, the Director of Human Services shall draft
an advisory or model set of criteria for appropriate utilization
of inpatient, residential, day or partial hospitalization, and
outpatient facilities, programs and services by adults, children
and adolescents, and persons with both a chemical dependency
diagnosis and a mental or nervous condition. These criteria shall
be consistent with this section and shall not be binding on any
insurer or other party. However, at the time of contract
negotiation or amendment, with the agreement of the parties to
the contract, any insurer may adopt the criteria or similar
criteria with or without modification. The director shall revise
these criteria at least every two years. In developing and
revising these criteria, the director shall organize a technical
advisory panel including representatives of the Department of
Consumer and Business Services, the Department of Human Services,
the insurance industry, the business community and providers of
each level of care. The director shall place substantial weight
on the advice of this panel. - }
    { - (C) Review shall be performed by or under the direction
of a medical or osteopathic physician licensed by the Board of
Medical Examiners for the State of Oregon; a psychologist
licensed by the State Board of Psychologist Examiners; a nurse
practitioner registered by the Oregon State Board of Nursing; or
a clinical social worker licensed by the State Board of Clinical
Social Workers, with physician consultation readily available.
The reviewer shall have expertise in the evaluation of mental or
nervous condition services or chemical dependency services. - }
    { - (D) Review may involve prior approval, concurrent review
of the continuation of treatment, post-treatment review or any
combination of these. However, if prior approval is required,
provision shall be made to allow for payment of urgent or
emergency admissions, subject to subsequent review. If prior
approval is not required, insurers shall permit treatment
providers, policyholders or persons acting on their behalf to
make advance inquiries regarding the appropriateness of a
particular admission to a treatment program. Insurers shall
provide a timely response to such inquiries. Approval of a
particular admission does not represent a guarantee of future
payment. - }
    { - (E) An appeals process shall be provided. - }
    { - (F) An insurer may choose to review all providers on a
sampling or audit basis only; or to review on a less frequent
basis those providers who consistently supply full documentation,
consistent with confidentiality statutes on each case in a timely
fashion to the insurer. - }
    { - (17) For purposes of subsection (16)(b) of this section,
a utilization review contractor is a professional review
organization or similar entity which, under contract with an
insurance carrier, performs certification of reimbursability of
level of treatment for admissions and maintained stays in
treatment programs, facilities or services. - }
    { - (18) For purposes of subsection (16)(b) of this section,
when implemented through an insurance contract, reimbursability
of inpatient treatment requires demonstration that medical
circumstances require 24-hour nursing care, or physician or nurse
assessment, treatment or supervision that cannot be readily made
available on an outpatient basis, or in: - }
    { - (a) The current living situation; - }
    { - (b) An alternative, nontreatment living situation; - }
    { - (c) An alternative residential program or facility;
or - }
    { - (d) A day or partial hospitalization program. - }
    { - (19) For purposes of subsection (16)(b) of this section,
when implemented through an insurance contract, reimbursability
of treatment at the residential, day or partial hospitalization
level of treatment shall require demonstration that outpatient
services, if appropriate and less costly than residential, day or
partial hospitalization services: - }
    { - (a) Are not presently appropriate and available; - }
    { - (b) Cannot be readily and timely made available; and - }
    { - (c) Cannot meet documented needs for nonmedical
supervision, protection, assistance and treatment, either in the
current living situation or in a readily and timely available
alternative, nontreatment living situation, taking into account
the extent of both the available positive support and existing
negative influences in the occupational, social and living
 
situations; risks to self or others; and readiness to participate
consistently in treatment. - }
    { - (20) For purposes of subsection (16)(b) of this section,
reimbursability of treatment at the level for outpatient
facility, service or program shall require demonstration that
treatment is justified, considering the individual's history, and
the current medical, occupational, social and psychological
situation, and the overall prognosis. - }
    { - (21) Discrete medical or neurologic diagnostic or
treatment services including any professional component of that
service, costing in excess of $300, occurring concurrently with
but not directly related to treatment of mental or nervous
conditions shall not be charged against the inpatient benefit
level. - }
    { - (22) The benefits described in this section shall renew
in full either on the first day of the 25th month of coverage
following the first use of services for the treatment of chemical
dependency or mental or nervous conditions, or both, or on the
first day following two consecutive contract years. - }
    { - (23) - }   { + (11) + } Health maintenance organizations,
as defined in ORS 750.005 (3), shall be subject to the following
conditions and requirements in their provision of benefits for
chemical dependency or mental or nervous conditions to enrollees:
  (a) Notwithstanding the provisions of subsection   { - (1) - }
 { + (2) + } of this section, health maintenance organizations
may establish reasonable provisions for enrollee cost-sharing, so
long as the amount the enrollee is required to pay  { + complies
with subsection (3) of this section and + } does not exceed the
amount of coinsurance and deductible customarily required by
other insurance policies
  { - which - }   { + that + } are subject to the provisions of
this chapter for that type and level of service.
    { - (b) Nothing in this section prevents health maintenance
organizations from establishing durational limits which are
actuarially equivalent to the benefits required by this
section. - }
    { - (c) - }   { + (b) + } Health maintenance organizations
may limit the receipt of covered services by enrollees to
services provided by or upon referral by providers associated
with the health maintenance organization.
    { - (d) - }   { + (c) + } The Department of Human Services
shall make rules establishing objective and quantifiable criteria
for determining when a health maintenance organization meets the
conditions and requirements of this subsection.
    { - (24) - }   { + (12) + } Nothing in this section
 { - shall prevent - }   { + prevents + } an insurer or health
care service contractor other than a health maintenance
organization, except as provided in subsection   { - (23) - }
 { + (11) + } of this section, from contracting with providers of
health care services to furnish services to policyholders or
certificate holders according to ORS 743.531 or 750.005, subject
to the following conditions:
    { - (a) An insurer or health care service contractor may
establish limits for contracted services which are actuarially
equivalent to the benefits required by this section, so long as
the same range of treatment settings is made available. - }
    { - (b) An insurer or health care service contractor, other
than a health maintenance organization, may negotiate with
contracting providers as to the cost of actuarially equivalent
benefits, and such actuarially equivalent benefits for services
of contracting providers shall be deemed to equal the minimum
benefit levels specified in this section. - }
    { - (c) - }   { + (a) + } An insurer or health care service
contractor is not required to contract with all eligible
providers  { - , and payment for covered services of contracting
 
providers may be in alternative methods or amounts rather than as
specified in this section - } .
    { - (d) - }   { + (b) + } Insurers and health care service
contractors other than health maintenance organizations shall pay
benefits toward the covered charges of noncontracting providers
of services for the treatment of chemical dependency or mental or
nervous conditions at the same level of deductible or coinsurance
as would apply to covered charges of noncontracting providers of
other health services under the same group policy or contract.
The insured shall have the right to use the services of a
noncontracting provider of services for the treatment of chemical
dependency or mental or nervous conditions. Policies described in
this subsection shall be subject to the provisions of subsection
  { - (1) - }   { + (2) + } of this section, whether or not the
services for chemical dependency or mental or nervous conditions
are provided by contracting or noncontracting providers.
    { - (e) - }   { + (c) + } The department shall make rules
establishing objective and quantifiable criteria for determining
that a contract meets the conditions and requirements of this
subsection and that actuarially equivalent services of
contracting providers equal or exceed services obtainable with
the minimum benefits specified in this section.
    { - (25) The intent of the Legislative Assembly in adopting
this section is to reserve benefits for different types of care
to encourage cost effective care and to assure continuing access
to levels of care most appropriate for the insured's condition
and progress. - }
    { - (26) - }   { + (13) + } The Director { +  of the
Department of Consumer and Business Services + }, after notice
and hearing, may adopt reasonable rules not inconsistent with
this section that are considered necessary for the proper
administration of these provisions.
  SECTION 2. ORS 430.065 is amended to read:
  430.065. (1) In adopting rules pursuant to ORS 743.556
 { - (3) - }  { +  (6) + }, the Department of Human Services may
consider standards proposed by the American Association of
Partial Hospitalization as one possible source for such rules. In
addition, an insurer or insurers and the department may mutually
develop agreements, standards and procedures for programs that
are approved by the department and that provide alternative
arrangements for supervision or for review of treatment plans to
become qualified to receive payments for treatment.
  (2) The Department of Human Services may require payment of an
application fee and a certification fee for the approval of
noninpatient programs described in ORS 743.556   { - (3) and
(4) - }  { +  (6) and (7) + }.
  (3) Subject to the review of the Oregon Department of
Administrative Services, the Department of Human Services may
establish any fees to be imposed under subsection (2) of this
section. The fees and charges established under this section
shall not exceed the cost of administering the regulatory program
of the Department of Human Services pertaining to the purpose for
which the fee or charge is established, as authorized by the
Legislative Assembly for the department's budget, as the budget
may be modified by the Emergency Board.
  SECTION 3.  { + The amendments to ORS 743.556 by section 1 of
this 2003 Act apply to group health insurance policies issued or
renewed on or after the effective date of this 2003 Act. + }
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