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Senate
File
2226
-
Introduced
SENATE
FILE
2226
BY
STAED
,
DONAHUE
,
HARDMAN
,
DREY
,
PETERSEN
,
ZIMMER
,
and
BENNETT
A
BILL
FOR
An
Act
relating
to
the
use
of
automated
adjudication
systems
by
1
health
carriers,
and
including
civil
penalties.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
NEW
SECTION
.
514M.1
Definitions.
1
As
used
in
this
chapter,
unless
the
context
otherwise
2
requires:
3
1.
“Automated
adjudication
system”
means
any
software,
4
algorithm,
artificial
intelligence,
machine-learning
system,
5
or
rule-based
automated
process
used
by
a
health
carrier
or
6
third-party
administrator
to
evaluate,
adjust,
approve,
deny,
7
or
downcode
a
claim
submitted
by
a
health
care
provider.
8
2.
“Claim”
means
a
request
for
payment
or
reimbursement
9
submitted
by
a
health
care
provider
to
a
health
carrier
for
10
health
care
services
rendered
to
a
covered
person
enrolled
in
a
11
health
benefit
plan
of
the
health
carrier.
12
3.
“Clinical
reviewer”
means
an
individual
employed
by
a
13
health
carrier
to
review
and
decide
insurance
claims
submitted
14
to
the
health
carrier.
15
4.
“Code”
means
a
current
procedural
terminology
code,
16
international
classification
of
diseases
code,
health
care
17
common
procedure
coding
system
code,
a
diagnosis-related
group
18
code,
or
any
other
procedure
or
diagnosis
code.
19
5.
“Commissioner”
means
the
commissioner
of
insurance.
20
6.
“Covered
person”
means
the
same
as
defined
in
section
21
514J.102.
22
7.
“Deny”
means
rejection
of
a
claim,
in
whole
or
in
part,
23
submitted
by
a
health
care
provider
to
a
health
carrier
for
24
reimbursement
of
health
care
services,
including
rejection
25
based
on
alleged
lack
of
medical
necessity,
incorrect
coding,
26
insufficient
documentation,
or
policy
exclusion,
when
such
27
determination
is
made
by
an
automated
adjudication
system
28
without
human
oversight.
29
8.
“Downcode”
means
the
adjustment,
alteration,
or
30
reassignment
of
a
code
submitted
by
a
health
care
provider
31
to
a
lower
complexity,
lower
cost,
or
less
intensive
code,
32
including
a
change
that
reduces
the
reimbursement
rate,
without
33
individualized
review
by
a
clinical
reviewer
of
the
health
34
care
provider’s
documentation
and
the
medical
necessity
of
the
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health
care
services
provided
by
the
health
care
provider.
1
“Downcode”
includes
reassignment
of
a
code
to
a
lesser
2
alternative
code
by
an
automated
adjudication
system.
3
9.
“Facility”
means
the
same
as
defined
in
section
514J.102.
4
10.
“Health
care
professional”
means
the
same
as
defined
in
5
section
514J.102.
6
11.
“Health
care
provider”
means
a
health
care
professional
7
or
a
facility.
8
12.
“Health
care
services”
means
the
same
as
defined
in
9
section
514J.102.
10
13.
“Health
carrier”
means
an
entity
subject
to
the
11
insurance
laws
and
regulations
of
this
state,
or
subject
12
to
the
jurisdiction
of
the
commissioner,
including
an
13
insurance
company
offering
sickness
and
accident
plans,
a
14
health
maintenance
organization,
a
nonprofit
health
service
15
corporation,
a
plan
established
pursuant
to
chapter
509A
16
for
public
employees,
or
any
other
entity
providing
a
plan
17
of
health
insurance,
health
care
benefits,
or
health
care
18
services.
19
Sec.
2.
NEW
SECTION
.
514M.2
Downcoding
and
denial
of
20
claims.
21
1.
A
health
carrier
shall
not
use
an
automated
adjudication
22
system
to
downcode
or
deny
a
claim
unless
the
health
carrier
23
first
performs
a
documented
individualized
review,
conducted
24
by
a
clinical
reviewer,
of
the
claim,
supporting
medical
25
documentation,
and
applicable
clinical
criteria.
26
2.
For
a
claim
that
a
health
carrier
intends
to
downcode
27
or
deny,
the
health
carrier
shall
provide
written
notice
to
28
the
health
care
provider
of
the
proposed
downcoding
or
denial,
29
including,
at
a
minimum,
all
of
the
following:
30
a.
The
originally
billed
code
and
health
care
service.
31
b.
The
proposed
adjusted
code
or
reason
for
the
denial.
32
c.
The
clinical,
contractual,
or
administrative
33
justification
for
the
downcode
or
denial,
including
a
specific
34
citation
to
the
health
carrier’s
applicable
policy,
guideline,
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or
contract
provision
that
permits
the
downcode
or
denial.
1
d.
Identification
of
the
clinical
reviewer
responsible
for
2
the
downcode
or
denial,
including
the
clinical
reviewer’s
name,
3
credentials,
and
the
date
and
time
of
the
review.
4
e.
A
detailed
explanation
of
the
health
care
provider’s
5
right
to
appeal
the
downcode
or
denial.
The
health
care
6
provider
must
be
given
no
less
than
thirty
calendar
days
7
from
the
date
of
the
health
care
provider’s
receipt
of
the
8
notice
under
this
subsection,
to
appeal
the
decision
or
submit
9
additional
documentation
pursuant
to
section
514M.4,
before
the
10
downcode
or
denial
is
finalized.
If
a
health
care
provider
11
does
not
appeal
a
downcode
or
denial
within
the
required
time
12
period,
and
the
health
carrier
finalizes
the
downcode
or
13
denial,
the
downcode
or
denial
must
be
clearly
identified
in
14
the
explanation
of
benefits
or
remittance
advice
and
labeled
as
15
“code
adjustment”,
“downcoding”,
or
“denial
due
to
[reason]”,
16
with
all
associated
documentation
and
justification.
17
3.
An
automated
adjudication
system
shall
not
be
used
by
a
18
health
carrier
as
the
sole
basis
for
any
of
the
following:
19
a.
Denying
a
claim
based
on
lack
of
medical
necessity.
20
b.
Rejecting
a
claim
due
to
missing
or
insufficient
21
documentation.
22
c.
Modifying
a
code
without
verification
by
a
clinical
23
reviewer.
24
d.
Flagging
or
withholding
payment
of
a
claim
for
health
25
care
services
that
are
routine,
commonly
accepted,
or
26
historically
validated
from
the
same
health
care
provider
or
27
group
of
health
care
providers.
28
Sec.
3.
NEW
SECTION
.
514M.3
Disclosure
requirements.
29
1.
A
health
carrier
shall
disclose
to
the
division
the
30
health
carrier’s
use
of
an
automated
adjudication
system
in
the
31
processing
of
claims.
The
disclosure
must
include
all
of
the
32
following:
33
a.
A
description
of
the
health
carrier’s
automated
34
adjudication
system,
including
whether
the
automated
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adjudication
system
performs
downcoding
or
automated
denials.
1
b.
The
criteria,
threshold,
or
decision
rules
used
by
the
2
health
carrier’s
automated
adjudication
system.
3
c.
The
health
carrier’s
oversight
process
by
clinical
4
reviewers,
including
the
frequency
of
internal
and
external
5
audits
conducted
of
automated
decisions
by
the
automated
6
adjudication
system.
7
d.
Measures
taken
by
the
health
carrier
to
ensure
fairness,
8
accuracy,
and
prevention
of
unlawful
bias
or
disparate
impact
9
on
health
care
providers
and
covered
persons.
10
2.
A
health
carrier
shall
maintain
documentation
for
each
11
claim
that
is
downcoded
by
an
automated
adjudication
system
12
that
shows
the
submitted
code,
the
adjusted
code,
the
reason
13
for
the
downcode,
and
whether
a
clinical
reviewer
conducted
a
14
review.
The
health
carrier
shall
retain
the
documentation
for
15
a
minimum
of
five
years
from
the
date
of
payment
of
the
claim.
16
Sec.
4.
NEW
SECTION
.
514M.4
Appeals.
17
1.
If
a
health
care
provider
receives
a
notice
of
a
18
proposed
denial
or
downcode
of
a
claim
under
section
514M.2,
19
subsection
2,
the
health
care
provider
may
appeal
the
downcode
20
or
denial
no
later
than
thirty
calendar
days
following
the
date
21
the
health
care
provider
received
the
notice.
A
health
care
22
provider
may
appeal
by
submitting
additional
documentation
to
23
the
health
carrier
or
requesting
that
the
health
carrier’s
24
clinical
reviewer
review
the
claim.
A
health
carrier
shall
25
respond
to
an
appeal
from
a
health
care
provider
no
later
26
than
forty-five
calendar
days
from
the
date
of
receipt
of
the
27
appeal.
28
2.
After
a
health
carrier
performs
a
review
by
a
clinical
29
reviewer
as
required
by
subsection
1,
if
the
health
carrier
30
determines
that
the
code
originally
billed
for
the
health
31
care
service
is
supported
by
proper
documentation,
the
health
32
carrier
shall
readjust
the
claim
to
the
code
originally
33
billed
and
shall
provide
the
health
care
provider
with
written
34
explanation
for
the
reversal.
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3.
Upon
request
by
a
health
care
provider,
a
health
carrier
1
shall
provide
an
annual
report
to
the
health
care
provider
2
that
summarizes
the
following
for
the
claims
submitted
to
the
3
health
carrier
by
the
health
care
provider
for
the
immediately
4
preceding
calendar
year:
5
a.
The
total
number
of
claims
the
health
carrier
processed
6
by
an
automated
adjudication
system.
7
b.
The
number
and
percentage
of
claims
that
the
health
8
carrier
denied
or
downcoded
by
an
automated
adjudication
9
system.
10
c.
The
number
and
percentage
of
claims
that
the
health
care
11
provider
appealed,
and
the
number
of
claims
that
were
adjusted
12
after
review
by
a
clinical
reviewer.
13
Sec.
5.
NEW
SECTION
.
514M.5
Enforcement
——
penalties.
14
1.
The
commissioner
may,
if
the
commissioner
finds
that
15
a
health
carrier
has
intentionally
or
recklessly
processed
16
claims
by
an
automated
adjudication
system
in
violation
of
this
17
chapter,
impose
a
penalty
of
not
more
than
ten
thousand
dollars
18
per
violation.
A
penalty
collected
under
this
subsection
shall
19
be
deposited
as
provided
in
section
505.7.
20
2.
A
health
care
provider
or
person
injured
by
a
violation
21
of
this
chapter
may
bring
a
civil
action
in
district
court
22
against
a
health
carrier
for
violation
of
this
chapter
to
23
recover
damages,
to
enjoin
the
health
carrier
from
further
24
violations,
and
to
seek
any
other
relief
available
by
law.
25
In
addition
to
damages,
a
health
care
provider
or
person
26
who
prevails
in
an
action
against
a
health
carrier
shall
be
27
entitled
to
an
award
of
court
costs
and
reasonable
attorney
28
fees.
29
Sec.
6.
NEW
SECTION
.
514M.6
Rules.
30
The
commissioner
shall
adopt
rules
pursuant
to
chapter
17A
31
to
administer
this
chapter,
including
but
not
limited
to
rules
32
that
specify
all
of
the
following:
33
1.
The
standards
for
the
review
process
by
a
clinical
34
reviewer.
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2.
The
form
and
content
of
notices
provided
by
health
1
carriers
to
health
care
providers
as
required
by
section
2
514M.2,
subsection
2.
3
3.
The
requirements
for
the
appeals
process
pursuant
to
4
section
514M.4.
5
4.
The
recordkeeping
and
audit
standards
applicable
to
6
health
carriers
that
use
automated
adjudication
systems.
7
EXPLANATION
8
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
9
the
explanation’s
substance
by
the
members
of
the
general
assembly.
10
This
bill
relates
to
the
use
of
automated
adjudication
11
systems
by
health
carriers.
12
The
bill
prohibits
a
health
carrier
(carrier)
from
using
13
an
automated
adjudication
system
(system)
to
downcode
or
14
deny
a
claim
unless
the
carrier
first
performs
a
documented
15
individualized
review
of
the
claim,
conducted
by
a
clinical
16
reviewer
(reviewer),
including
a
review
of
the
supporting
17
medical
documentation
and
applicable
clinical
criteria.
18
“Automated
adjudication
system”,
“claim”,
“deny”,
and
19
“downcode”
are
defined
by
the
bill.
20
For
each
claim
a
carrier
intends
to
downcode
or
deny,
the
21
carrier
shall
provide
notice
to
the
health
care
provider
22
(provider)
of
the
proposed
downcoding
or
denial
that
includes
23
the
required
information
detailed
in
the
bill,
and
shall
allow
24
the
provider
a
minimum
of
30
days
to
appeal
the
decision
or
25
submit
additional
documentation.
If
no
appeal
is
submitted
and
26
the
downcode
or
denial
is
finalized,
the
downcode
or
denial
27
must
be
clearly
identified
in
the
explanation
of
benefits
28
or
remittance
advice,
labeled,
and
include
all
associated
29
documentation
and
justification.
30
A
system
shall
not
be
used
by
a
carrier
as
the
sole
basis
for
31
denying
a
claim
based
on
lack
of
medical
necessity,
rejecting
a
32
claim
due
to
missing
or
insufficient
documentation,
modifying
33
a
code
without
verification
by
a
reviewer,
or
flagging
or
34
withholding
a
claim
for
health
care
services
that
are
routine,
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commonly
accepted,
or
historically
validated.
1
A
carrier
shall
disclose
to
the
insurance
division
the
use
2
of
a
system
in
the
processing
of
claims
that
includes
the
3
information
detailed
in
the
bill.
A
carrier
shall
maintain
4
documentation
for
each
claim
for
which
reimbursement
is
5
decreased
by
a
system
that
shows
the
submitted
code,
the
6
adjusted
code,
the
reason
for
the
downcode,
and
whether
a
7
review
by
a
reviewer
was
conducted,
and
shall
retain
the
8
documentation
for
a
minimum
of
five
years.
9
If
a
provider
receives
a
notice
of
a
proposed
denial
or
10
downcode
of
a
claim,
the
provider
may
appeal
the
denial
or
11
downcode
within
30
days
by
submitting
additional
documentation
12
to
a
carrier
or
requesting
the
carrier
to
provide
a
review
by
13
a
reviewer.
A
carrier
shall
respond
to
an
appeal
within
45
14
days.
If,
after
review,
it
is
determined
that
the
originally
15
billed
code
was
supported
by
proper
documentation,
the
carrier
16
shall
readjust
the
claim
to
the
original
code
and
provide
the
17
provider
with
a
written
explanation
of
the
readjustment.
Upon
18
request
by
a
provider,
a
carrier
shall
provide
an
annual
report
19
that
summarizes
the
total
number
of
claims
processed
under
the
20
carrier’s
system,
the
number
and
percentage
of
claims
that
21
were
denied
or
downcoded
by
the
carrier’s
system,
the
number
22
and
percentage
of
claims
the
provider
appealed,
and
the
number
23
of
claims
that
were
adjusted
after
performing
a
review
by
a
24
reviewer.
25
The
commissioner
of
insurance
may,
upon
a
finding
that
a
26
carrier
intentionally
or
recklessly
processed
claims
by
a
27
system
in
violation
of
the
bill,
impose
a
penalty
of
not
more
28
than
$10,000
for
each
violation.
A
provider
or
person
damaged
29
by
a
violation
of
the
bill
may
bring
a
civil
action
against
a
30
carrier
for
violation
of
the
bill
to
recover
damages,
to
enjoin
31
the
carrier
from
further
violations,
and
to
seek
any
other
32
relief
available
by
law.
A
provider
or
person
who
prevails
in
33
an
action
against
a
carrier
shall
be
entitled
to
an
award
of
34
court
costs
and
reasonable
attorney
fees.
35
-7-
LSB
5237XS
(4)
91
nls/ko
7/
8
S.F.
2226
The
commissioner
of
insurance
shall
adopt
rules
to
1
administer
the
bill,
including
but
not
limited
to
rules
that
2
specify
the
standards
for
the
review
process
by
a
reviewer,
the
3
form
and
content
of
notices
to
providers,
the
requirements
for
4
appeals,
and
recordkeeping
and
audit
standards.
5
-8-
LSB
5237XS
(4)
91
nls/ko
8/
8