Medical necessity in insurance contracts.

WORKING DRAFT
2008
STATE OF
WYOMING
08LSO-0126

SENATE FILE
NO.
SF0092

Medical necessity in insurance contracts.

Sponsored by:
Senator(s) Sessions, Hastert, Job, Massie, Mockler, Scott and Von Flatern

A BILL

for

AN ACT
relating to insurance;
defining medical necessity
;
setting requirements for analyzing insurance coverage and benefit payments under a medical necessity standard
;
setting requirements for denying payment or coverage
;
allowing the insurance commissioner to request, collect and analyze data
;
and providing for an effective date.

Be It Enacted by the Legislature of the State of
Wyoming
:

Section 1

W.S. 26
‑
40
‑
201 is created to read:

ARTICLE 2
PAYMENT OF CLAIMS UNDER MEDICAL
NECESSITY STANDARD

26
‑
40
‑
201
.

Payment of claims under medical necessity standard.

(a)

If any disability insurance policy provides for settlement of a claim for payment of medical services, procedures or supplies provided by a health care provider using a medical necessity or other similar basis the insurer shall:

(i)

Define medical necessity or other similar basis as "medical necessity" is defined in this chapter;

(ii)

Submit to the department upon request all data upon which the insurer has based payment or nonpayment of claims for medical services, procedures and supplies. Such data shall be submitted upon request of the commissioner. The commissioner's request shall specify the types of medical services, procedures or supplies upon which data is sought and the insurer shall be required to submit data only for those types of services, procedures and supplies specified;

(iii)

Provide to the claimant, in writing, a complete explanation of the basis of settlement, if requested by the claimant in writing, and maintain the explanation in the claim file. If payment is denied because the service, procedure or supply is not medically necessary the explanation shall state the specific reason why the medical service, procedure or supply is not medically necessary. In such event, the explanation shall attach the signed opinions of two (2) licensed physicians in the same or similar general specialty as typically manages the condition, service, procedure, or supply at issue, at least one (1) of whom is not employed by the insurer, stating their opinion that the service, procedure or supply at issue is not medically necessary and the specific bases for that opinion;

(iv)

Make all determinations whether a medical service, procedure or supply is medically necessary based only upon the factors stated in the definition of medical necessity contained in W.S. 2
6
‑
40
‑
102(a)(iii).

(b)

If the commissioner, based either on a review of the data submitted pursuant to subsection (a) of this section or on the receipt of complaints from one (1) or more insureds, has reason to suspect that a claim or one (1) or more classes of claims is not being settled on the basis provided by the policy and as required by this section he may order the insurer to show cause why the settlement or settlements should not be changed
.

(c)

If the commissioner finds, after notice and opportunity for hearing, that an insurer is not settling a claim or one (1) or more classes of claims as required by the policy and this section, he may order a different settlement or settlements.

(d)

Data submitted to the department pursuant to this section shall be confidential in nature and not available for public inspection.
Submitted data may be used by the department for enforcement and regulatory purposes.

(e)

As used in this section, "medical necessity or other similar basis" includes, but is not limited to, "medically necessary," "medically necessary care" and "medically necessary and appropriate"
.
"Medical necessity or other similar basis" includes all standards for insurance coverage or payment which limit coverage or payment to medical services, procedures or supplies which are medically necessary, regardless of the policy language used to establish the standard.

Section 2.

W.S.
26
‑
13
‑
124(a)(xiii), (xiv) and by creating a new paragraph (xv) and
26
‑
40
‑
102
(a) by creating
a new
paragraph (iii)
are
amended to read:

26
‑
13
‑
124.

Unfair claims settlement practices.

(a)

A person is considered to be engaging in an unfair method of competition and unfair and deceptive act or practice in the business of insurance if that person commits or performs with such frequency as to indicate a general business practice any of the following unfair claims settlement practices:

(xiii)

Failing to promptly settle claims, where liability has become reasonably clear, under one (1) portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
or

(xiv)

Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement
;
.

or

(xv)

Denying or failing to timely pay disability insurance claims for
medically necessary
services, procedures or supplies
as required by
W.S. 26
‑
40
‑
201.

26
‑
40
‑
102.

Definitions.

(a)

As used in this chapter:

(iii)

"Medical necessity," means
:

(A)

A
medical service, procedure or supply provided for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or symptom and is a service, procedure or supply that:

(
I
)

A prudent physician would provide;

(
II
)

The omission of which could adversely affect or fail to maintain the insured's condition;

(
III
)

Is clinically appropriate in terms of type, frequency, extent, site and duration; and

(
IV
)

Is not primarily for the convenience of the patient, physician or other health care provider.

(B)

A medical service, procedure or supply shall not be excluded from being a medical necessity under this section solely because the service, procedure or supply is not in common use where the safety and effectiveness of the service, procedure or supply is supported by scientific studies published in two (2) or more articles in peer reviewed medical journals;

(C)

A medical service, procedure or supply provided for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or symptom is a medical necessity where such service, procedure or supply has been approved by Medicare for use in the manner prescribed.

Section
3
.

This act is effective July 1, 2008.

(END)

1
SF0092