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					                                 South Carolina General Assembly
                                     117th Session, 2007-2008

S. 974

STATUS INFORMATION

General Bill
Sponsors: Senator Rankin
Document Path: l:\s-res\lar\ 008prom.dag.doc

Introduced in the Senate on January 10, 2008
Currently residing in the Senate Committee on Banking and Insurance

Summary: Health care


HISTORY OF LEGISLATIVE ACTIONS

    Date   Body Action Description with journal page number
 1/10/2008 Senate Introduced and read first time SJ-2
 1/10/2008 Senate Referred to Committee on Banking and Insurance SJ-2


VERSIONS OF THIS BILL

1/10/2008
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 9                               A BILL
10
11   TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
12   1976, BY ADDING CHAPTER 94 TO TITLE 38, SO AS TO
13   PROVIDE FOR THE PROMPT PAYMENT OF HEALTH CARE
14   PROVIDERS BY AN INSURER, AND TO PROVIDE CIVIL
15   PENALTIES, AND BY ADDING SECTION 38-71-225 SO AS
16   TO PROVIDE THAT A HEALTH INSURER MAY NOT DENY
17   AN INSURANCE CLAIM FOR HEALTH CARE SERVICE TO
18   ANY PROVIDER OF HEALTH CARE SERVICES PROVIDED
19   ON THE SAME DAY UNDER CERTAIN CIRCUMSTANCES.
20
21   Be it enacted by the General Assembly of the State of South
22   Carolina:
23
24   SECTION 1. Title 38 of the 1976 Code is amended by adding:
25
26                             “CHAPTER 94
27
28                          Prompt Payment of
29                  Health Care Providers by an Insurer
30
31      Section 38-94-10. The provisions of this chapter apply to all
32   insurers, insurance companies, provider networks, provider
33   organizations, managed care organizations, managed care plans,
34   health maintenance organizations, third party payors, payment
35   administrators, and other agents, contractors and subcontractors in
36   the administration of programs of health, hospital, dental, and
37   medical insurance. The provisions of this chapter are remedial and
38   must be liberally construed to effectuate their purpose and apply in
39   addition to other remedies available at law or equity.
40
41     Section 38-94-20. As used in this chapter:
42     (1)(a) A ‘clean claim’ means:

     [974]                            1
 1             (i) a nonelectronic claim by a provider, other than an
 2   institutional provider, if the claim is submitted using the Centers
 3   for Medicare and Medicaid Services Form 1500 or, if promulgated
 4   by the director by regulation, a successor to that form developed
 5   by the National Uniform Claim Committee or its successor. An
 6   electronic claim by a provider, other than an institutional provider,
 7   is a ‘clean claim’ if the claim is submitted using the Professional
 8   837 (ASC X12N 837) format or, if promulgated by the director by
 9   regulation, a successor to that format adopted by the Centers for
10   Medicare and Medicaid Services or its successor;
11            (ii) a nonelectronic claim by an institutional provider if the
12   claim is submitted using the Centers for Medicare and Medicaid
13   Services Form UB-92 or, if promulgated by the director by
14   regulation, a successor to that form developed by the National
15   Uniform Billing Committee or its successor. An electronic claim
16   by an institutional provider is a ‘clean claim’ if the claim is
17   submitted using the Institutional 837 (ASC X12N 837) format or,
18   if promulgated by the director by regulation, a successor to that
19   format adopted by the Centers for Medicare and Medicaid Services
20   or its successor.
21         (b) The director may promulgate regulations that specify the
22   information that must be entered into the appropriate fields on the
23   applicable claim form for a claim to be a clean claim.
24         (c) The director may not require any data element for an
25   electronic claim that is not required in an electronic transaction set
26   needed to comply with federal law.
27         (d) An insurer and a provider may agree by contract to use
28   fewer data elements than are required in an electronic transaction
29   set needed to comply with federal law.
30         (e) An otherwise clean claim submitted by a provider that
31   includes additional fields, data elements, attachments, or other
32   information not required by this section is considered to be a clean
33   claim for the purposes of this chapter.
34         (f) Except as provided by subitem (d) of this item, the
35   provisions of this section may not be waived, voided, or nullified
36   by contract.
37      (2) ‘Health care services’ means services included in
38   furnishing an individual medical or dental care or hospitalization,
39   or services incident to the furnishing of medical or dental care or
40   hospitalization, and other services to prevent, alleviate, cure, or
41   heal human illness, injury, or physical disability.



     [974]                              2
 1      (3) ‘Health maintenance organization’ means an entity, group,
 2   or person who undertakes to provide or arrange for basic health
 3   care services to enrollees in exchange for a fixed prepaid premium.
 4      (4) ‘Insured’ means an individual resident of this State who is
 5   eligible to receive benefits from an insurer.
 6      (5) ‘Insurer’ includes an entity, corporation, fraternal
 7   organization, burial association, health maintenance organization,
 8   managed care organization, managed care plan, other association,
 9   partnership, society, order, individual, or aggregation of
10   individuals engaging or proposing or attempting to engage as
11   principals in any kind of insurance or surety business, including
12   the exchanging of reciprocal or interinsurance contracts between
13   individuals, partnerships, and corporations. For purposes of this
14   chapter, an insurer is an entity, person, or group providing health
15   insurance or reimbursement for health care services whether for
16   profit or otherwise, which is licensed to engage in the business of
17   insurance in this State and which is subject to state insurance
18   regulation, including multiple employer self-insured health plans
19   licensed pursuant to Chapter 41, Title 38.
20      (6) ‘Managed care organization’ means a licensed insurance
21   company, a hospital or medical services plan contract, a health
22   maintenance organization, or any other entity which is subject to
23   state insurance regulation and which operates a managed care plan.
24      (7) ‘Managed care plan’ means a plan operated by a managed
25   care organization which provides for the financing and delivery of
26   health care and treatment services to individuals enrolled in the
27   plan through its own employed health care providers or contracting
28   with selected specific providers that conform to explicit selection
29   standards, or both. A managed care plan also customarily has a
30   formal organizational structure for continual quality assurance, a
31   certified utilization review program, dispute resolution, and
32   financial incentives for individual enrollees to use the plan’s
33   participating providers and procedures.
34      (8) ‘Preauthorization’ means a determination by an insurer that
35   medical care or health care services proposed to be provided to a
36   patient are medically necessary and appropriate.
37      (9) ‘Provider’ means a physician, dentist, hospital, or other
38   person properly licensed, certified, or permitted, where required, to
39   furnish health care services.
40      (10) ‘Verification’ means a reliable representation by an insurer
41   to a health care provider that the insurer will pay the provider for
42   proposed medical care or health care services if the provider
43   renders those services to the patient for whom the services are

     [974]                             3
 1   proposed.      The term includes precertification, certification,
 2   recertification, and any other term that would be a reliable
 3   representation by an insurer to a provider.
 4
 5      Section 38-94-30. (A) A provider must submit a claim to an
 6   insurer not later than the ninety-fifth day after the date the provider
 7   provides the medical care or health care services for which the
 8   claim is made. An insurer shall accept as proof of timely filing a
 9   claim filed in compliance with subsection (B) or information from
10   another insurer or health maintenance organization showing that
11   the provider submitted the claim to the insurer or health
12   maintenance organization in compliance with subsection (B). If a
13   provider fails to submit a claim in compliance with this subsection,
14   the provider forfeits the right to payment unless the failure to
15   submit the claim in compliance with this subsection is a result of a
16   catastrophic event that substantially interferes with the normal
17   business operations of the provider. The period for submitting a
18   claim under this subsection may be extended by contract. A
19   provider may not submit a duplicate claim for payment before the
20   forty-sixth day after the date the original claim was submitted.
21   The director shall promulgate regulations under which an insurer
22   may determine whether a claim is a duplicate claim.
23      (B) A provider, as appropriate, may:
24        (1) mail a claim by United States mail, first class, or by
25   overnight delivery service;
26        (2) submit the claim electronically;
27        (3) fax the claim; or
28        (4) hand deliver the claim.
29      (C) If a claim for medical care or health care services provided
30   to a patient is mailed, the claim is presumed to have been received
31   by the insurer on the fifth day after the date the claim is mailed or,
32   if the claim is mailed using overnight service or return receipt
33   requested, on the date the delivery receipt is signed. If the claim is
34   submitted electronically, the claim is presumed to have been
35   received on the date of the electronic verification of receipt by the
36   insurer or the insurer’s clearinghouse. If the insurer or the
37   insurer’s clearinghouse does not provide a confirmation within
38   twenty-four hours of submission by the provider, the provider’s
39   clearinghouse shall provide the confirmation. The provider’s
40   clearinghouse must be able to verify that the filing contained the
41   correct payor identification of the entity to receive the filing. If the
42   claim is faxed, the claim is presumed to have been received on the
43   date of the transmission acknowledgment. If the claim is hand

     [974]                              4
 1   delivered, the claim is presumed to have been received on the date
 2   the delivery receipt is signed.
 3      (D) Except as provided by subsection (H), not later than the
 4   forty-fifth day after the date the insurer receives a clean claim from
 5   a provider in a nonelectronic format or the thirtieth day after the
 6   date the insurer receives a clean claim from a provider that is
 7   electronically submitted, the insurer shall make a determination of
 8   whether the claim is payable and if the insurer determines:
 9        (1) the entire claim is payable, pay the total amount of the
10   claim in accordance with the contract between the provider and the
11   insurer;
12        (2) a portion of the claim is payable, pay the portion of the
13   claim that is not in dispute and notify the provider in writing why
14   the remaining portion of the claim will not be paid; or
15        (3) that the claim is not payable, notify the provider in
16   writing why the claim will not be paid.
17      (E) Not later than the twenty-first day after the date an insurer
18   affirmatively adjudicates a pharmacy claim that is electronically
19   submitted, the insurer shall pay the total amount of the claim.
20      (F) Except as provided by subsection (H), if the insurer intends
21   to audit the provider claim, the insurer shall pay the charges
22   submitted at one hundred percent of the contracted rate on the
23   claim not later than the thirtieth day after the date the insurer
24   receives the clean claim from the provider if submitted
25   electronically or if submitted nonelectronically not later than the
26   forty-fifth day after the date the insurer receives the clean claim
27   from the provider. The insurer clearly shall indicate on the
28   explanation of payment statement in the manner prescribed by the
29   director by regulation that the clean claim is being paid at one
30   hundred percent of the contracted rate, subject to completion of the
31   audit. If the insurer requests additional information to complete
32   the audit, the request must describe with specificity the clinical
33   information requested and relate only to information the insurer in
34   good faith can demonstrate is specific to the claim or episode of
35   care. The insurer may not request as a part of the audit
36   information that is not contained in, or is not in the process of
37   being incorporated into, the patient’s medical or billing record
38   maintained by a provider. If the provider does not supply
39   information reasonably requested by the insurer in connection with
40   the audit, the insurer may:
41        (1) notify the provider in writing that the provider shall
42   provide the information not later than the forty-fifth day after the
43   date of the notice or forfeit the amount of the claim; and

     [974]                             5
 1         (2) if the provider does not provide the information required
 2   by this subsection, recover the amount of the claim.
 3      (G) The insurer shall complete the audit on or before the one
 4   hundredth eightieth day after the date the clean claim is received
 5   by the insurer, and any additional payment due a provider or any
 6   refund due the insurer must be made not later than the thirtieth day
 7   after the completion of the audit. If a provider disagrees with a
 8   refund request made by an insurer based on the audit, the insurer
 9   shall provide the provider with an opportunity to appeal, and the
10   insurer may not attempt to recover the payment until all appeal
11   rights are exhausted.
12      (H) The investigation and determination of payment, including
13   any coordination of other payments, does not extend the period for
14   determining whether a claim is payable under subsection (D) or
15   (E) or for auditing a claim under subsection (F).
16      (I) If an insurer needs additional information from a treating
17   provider to determine payment, the insurer, not later than the
18   thirtieth calendar day after the date the insurer receives a clean
19   claim, shall request in writing that the provider provide an
20   attachment to the claim that is relevant and necessary for
21   clarification of the claim. The request must describe with
22   specificity the clinical information requested and relate only to
23   information the insurer can demonstrate is specific to the claim or
24   the claim’s related episode of care. The provider is not required to
25   provide an attachment that is not contained in, or is not in the
26   process of being incorporated into, the patient’s medical or billing
27   record maintained by a provider. An insurer that requests an
28   attachment under this subsection shall determine whether the claim
29   is payable on or before the later of the fifteenth day after the date
30   the insurer receives the requested attachment or the latest date for
31   determining whether the claim is payable under subsection (D) or
32   (E). An insurer may not make more than one request under this
33   subsection in connection with a claim. Subsections (B) and (C)
34   apply to a request for and submission of an attachment under this
35   subsection.
36      (J) If an insurer requests an attachment or other information
37   from a person other than the provider who submitted the claim, the
38   insurer shall provide notice containing the name of the provider
39   from whom the insurer is requesting information to the provider
40   who submitted the claim. The insurer may not withhold payment
41   pending receipt of an attachment or information requested under
42   this subsection. If on receiving an attachment or information
43   requested under this subsection the insurer determines that there

     [974]                             6
 1   was an error in payment of the claim, the insurer may recover any
 2   overpayment pursuant to the provisions of Section 38-94-40.
 3      (K) The director shall promulgate regulations under which an
 4   insurer can easily identify attachments or other information
 5   submitted by a provider pursuant to the provisions of subsection (I)
 6   or (J).
 7      (L) The insurer’s claims payment processes must:
 8        (1) use nationally recognized, generally accepted Current
 9   Procedural Terminology codes, notes, and guidelines, including all
10   relevant modifiers; and
11        (2) be consistent with nationally recognized, generally
12   accepted bundling edits and logic.
13      (M) A provider may recover reasonable attorney’s fees and
14   court costs in an action to recover payment pursuant to the
15   provisions this section.
16      (N) The director of insurance may promulgate regulations as
17   necessary to implement this chapter.
18      (O) Except as provided by subsection (A), the provisions of this
19   section may not be waived, voided, or nullified by contract.
20
21      Section 38-94-40. (A) An insurer may recover an overpayment
22   to a provider if:
23        (1) not later than the one hundred eightieth day after the date
24   the provider receives the payment, the insurer provides written
25   notice of the overpayment to the provider that includes the basis
26   and specific reasons for the request for recovery of funds; and
27        (2) the provider does not make arrangements for repayment
28   of the requested funds on or before the forty-fifth day after the date
29   the provider receives the notice.
30      (B) If a provider disagrees with a request for recovery of an
31   overpayment, the insurer shall provide the provider with an
32   opportunity to appeal, and the insurer may not attempt to recover
33   the overpayment until all appeal rights are exhausted.
34
35     Section 38-94-50. (A) In this section, ‘verification’ includes
36   preauthorization only when preauthorization is a condition for the
37   verification.
38     (B) On the request of a provider for verification of a particular
39   medical care or health care service the provider proposes to
40   provide to a particular patient, the insurer shall inform the provider
41   without delay whether the service, if provided to that patient, will
42   be paid by the insurer and shall specify any deductibles,
43   copayments, or coinsurance for which the insured is responsible.

     [974]                             7
 1      (C) An insurer shall have appropriate personnel reasonably
 2   available at a toll-free telephone number to provide a verification
 3   under this section between six a.m. and six p.m. Eastern Time
 4   Monday through Friday on each day that is not a legal holiday and
 5   between nine a.m. and noon Eastern Time on Saturday, Sunday,
 6   and legal holidays. An insurer shall have a telephone system
 7   capable of accepting or recording incoming phone calls for
 8   verifications after six p.m. Eastern Time Monday through Friday
 9   and after noon Eastern Time on Saturday, Sunday, and legal
10   holidays and responding to each of those calls on or before the
11   second calendar day after the date the call is received.
12      (D) An insurer may decline to determine eligibility for payment
13   if the insurer notifies the provider who requested the verification of
14   the specific reason the determination was not made.
15      (E) An insurer may establish a specific period during which the
16   verification is valid of not less than thirty days.
17      (F) An insurer that declines to provide a verification shall
18   notify the provider who requested the verification of the specific
19   reason the verification was not provided.
20      (G) If an insurer has provided a verification for proposed
21   medical care or health care services, the insurer may not deny or
22   reduce payment to the provider for those medical care or health
23   care services if provided to the insured on or before the thirtieth
24   day after the date the verification was provided unless the provider
25   has materially misrepresented the proposed medical or health care
26   services or has substantially failed to perform the proposed
27   medical or health care services.
28      (H) The provisions of this section may not be waived, voided,
29   or nullified by contract.
30
31      Section 38-94-60. (A) An insurer may require a provider to
32   retain in the provider’s records updated information concerning
33   other health benefit plan coverage and to provide the information
34   to the insurer on the applicable form described in Section
35   38-94-20(1).
36      Except as provided by this subsection, an insurer may not
37   require a provider to investigate coordination of other health
38   benefit plan coverage.
39      (B) Coordination of payment under this section does not extend
40   the period for determining whether a service is eligible for
41   payment.
42      (C) A provider who submits a claim for particular medical care
43   or health care services to more than one health maintenance

     [974]                             8
 1   organization or insurer shall provide written notice on the claim
 2   submitted to each health maintenance organization or insurer of the
 3   identity of each other health maintenance organization or insurer
 4   with which the same claim is being filed.
 5      (D) On receipt of notice under subsection (C), an insurer shall
 6   coordinate and determine the appropriate payment for each health
 7   maintenance organization or insurer to make to the provider.
 8      (E) Except as provided by subsection (F), if an insurer is a
 9   secondary payor and pays a portion of a claim that should have
10   been paid by the insurer or health maintenance organization that is
11   the primary payor, the overpayment may only be recovered from
12   the health maintenance organization or insurer that is primarily
13   responsible for that amount.
14      (F) If the portion of the claim overpaid by the secondary
15   insurer was also paid by the primary health maintenance
16   organization or insurer, the secondary insurer may recover the
17   amount of overpayment under Section 38-94-40 from the provider
18   who received the payment. An insurer processing an electronic
19   claim as a secondary payor shall rely on the primary payor
20   information submitted on the claim by the provider. Primary
21   payor information may be submitted electronically by the primary
22   payor to the secondary payor.
23      (G) An insurer may share information with a health
24   maintenance organization or another insurer to the extent
25   necessary to coordinate appropriate payment obligations on a
26   specific claim.
27      (H) The provisions of this section may not be waived, voided,
28   or nullified by contract.
29
30     Section 38-94-70. (A) An insurer that uses a preauthorization
31   process for medical care and health care services shall provide to
32   each provider, not later than the tenth business day after the date a
33   request is made, a list of medical care and health care services that
34   require preauthorization and information concerning the
35   preauthorization process.
36     (B) If proposed medical care or health care services require
37   preauthorization as a condition of the insurer’s payment to a
38   provider under a health insurance policy, the insurer shall
39   determine whether the medical care or health care services
40   proposed to be provided to the insured are medically necessary and
41   appropriate.
42     (C) On receipt of a request from a provider for
43   preauthorization, the insurer shall review and issue a determination

     [974]                             9
 1   indicating whether the proposed medical or health care services are
 2   preauthorized. The determination must be issued and transmitted
 3   not later than the third calendar day after the date the request is
 4   received by the insurer.
 5      (D) If the proposed medical care or health care services involve
 6   inpatient care and the insurer requires preauthorization as a
 7   condition of payment, the insurer shall review the request and issue
 8   a length of stay for the admission into a health care facility based
 9   on the recommendation of the patient’s provider and the insurer’s
10   written medically accepted screening criteria and review
11   procedures. If the proposed medical or health care services are to
12   be provided to a patient who is an inpatient in a health care facility
13   at the time the services are proposed, the insurer shall review the
14   request and issue a determination indicating whether proposed
15   services are preauthorized within twenty-four hours of the request
16   by the provider.
17      (E) An insurer shall have appropriate personnel reasonably
18   available at a toll-free telephone number to respond to requests for
19   a preauthorization between six a.m. and six p.m. Eastern Time
20   Monday through Friday on each day that is not a legal holiday and
21   between nine a.m. and noon Eastern Time on Saturday, Sunday,
22   and legal holidays. An insurer shall have a telephone system
23   capable of accepting or recording incoming phone calls for
24   preauthorizations after six p.m. Eastern Time Monday through
25   Friday and after noon Eastern Time on Saturday, Sunday, and legal
26   holidays and responding to each of those calls not later than
27   twenty-four hours after the call is received.
28      (F) If an insurer has preauthorized medical care or health care
29   services, the insurer may not deny or reduce payment to the
30   provider for those services based on medical necessity or
31   appropriateness of care unless the provider has materially
32   misrepresented the proposed medical or health care services or has
33   substantially failed to perform the proposed medical or health care
34   services.
35      (G) This section applies to an agent or other person with whom
36   an insurer contracts to perform, or to whom the insurer delegates
37   the performance of, preauthorization of proposed medical or health
38   care services.
39      (H) The provisions of this section may not be waived, voided,
40   or nullified by contract.
41
42     Section 38-94-80. (A) A contract between an insurer and a
43   provider must provide that the:

     [974]                             10
 1        (1) provider may request a description and copy of the
 2   coding guidelines, including any underlying bundling, recoding, or
 3   other payment process and fee schedules applicable to specific
 4   procedures that the provider will receive under the contract;
 5        (2) insurer or the insurer’s agent will provide the coding
 6   guidelines and fee schedules not later than the thirtieth day after
 7   the date the insurer receives the request;
 8        (3) insurer or the insurer’s agent will provide notice of
 9   changes to the coding guidelines and fee schedules that will result
10   in a change of payment to the provider not later than the ninetieth
11   day before the date the changes take effect and will not make
12   retroactive revisions to the coding guidelines and fee schedules;
13   and
14        (4) contract may be terminated by the provider on or before
15   the thirtieth day after the date the provider receives information
16   requested under this subsection without penalty or discrimination
17   in participation in other health care products or plans.
18      (B) A provider who receives information under subsection (A)
19   may only:
20        (1) use or disclose the information for the purpose of
21   practice management, billing activities, and other business
22   operations; and
23        (2) disclose the information to a governmental agency
24   involved in the regulation of health care or insurance.
25      (C) The insurer, on request of the provider, shall provide the
26   name, edition, and model version of the software that the insurer
27   uses to determine bundling and unbundling of claims.
28      (D) The provisions of this section may not be waived, voided,
29   or nullified by contract.
30
31      Section 38-94-90. (A) Except as provided by this section, if a
32   clean claim submitted to an insurer is payable and the insurer does
33   not determine under Section 38-94-30 that the claim is payable and
34   pay the claim on or before the date the insurer is required to make
35   a determination or adjudication of the claim, the insurer shall pay
36   the provider making the claim the contracted rate owed on the
37   claim plus a penalty in the amount of the lesser of:
38        (1) fifty percent of the difference between the billed charges,
39   as submitted on the claim, and the contracted rate; or
40        (2) one hundred thousand dollars.
41      (B) If the claim is paid on or after the forty-sixth day and
42   before the ninetieth-first day after the date the insurer is required to


     [974]                              11
 1   make a determination or adjudication of the claim, the insurer shall
 2   pay a penalty in the amount of the lesser of:
 3        (1) one hundred percent of the difference between the billed
 4   charges, as submitted on the claim, and the contracted rate; or
 5        (2) two hundred thousand dollars.
 6      (C) If the claim is paid on or after the ninetieth-first day after
 7   the date the insurer is required to make a determination or
 8   adjudication of the claim, the insurer shall pay a penalty computed
 9   under subsection (B) plus eighteen percent annual interest on that
10   amount. Interest under this subsection accrues beginning on the
11   date the insurer was required to pay the claim and ending on the
12   date the claim and the penalty are paid in full.
13      (D) Except as provided by this section, an insurer that
14   determines under Section 38-94-30 that a claim is payable, pays
15   only a portion of the amount of the claim on or before the date the
16   insurer is required to make a determination or adjudication of the
17   claim, and pays the balance of the contracted rate owed for the
18   claim after that date shall pay to the provider, in addition to the
19   contracted amount owed, a penalty on the amount not timely paid
20   in the amount of the lesser of:
21        (1) fifty percent of the underpaid amount; or
22        (2) one hundred thousand dollars.
23      (E) If the balance of the claim is paid on or after the forty-sixth
24   day and before the ninetieth-first day after the date the insurer is
25   required to make a determination or adjudication of the claim, the
26   insurer shall pay a penalty on the balance of the claim in the
27   amount of the lesser of:
28        (1) one hundred percent of the underpaid amount; or
29        (2) two hundred thousand dollars.
30      (F) If the balance of the claim is paid on or after the
31   ninetieth-first day after the date the insurer is required to make a
32   determination or adjudication of the claim, the insurer shall pay a
33   penalty on the balance of the claim computed under subsection (E)
34   plus eighteen percent annual interest on that amount. Interest
35   under this subsection accrues beginning on the date the insurer was
36   required to pay the claim and ending on the date the claim and the
37   penalty are paid in full.
38      (G) For the purposes of subsections (D) and (E), the underpaid
39   amount is calculated on the ratio of the amount underpaid on the
40   contracted rate to the contracted rate as applied to the billed
41   charges as submitted on the claim.
42      (H) An insurer is not liable for a penalty under this section:


     [974]                             12
 1         (1) if the failure to pay the claim in accordance with Section
 2   38-94-30 is a result of a catastrophic event that substantially
 3   interferes with the normal business operations of the insurer; or
 4         (2) if the claim was paid in accordance with Section
 5   38-94-30, but for less than the contracted rate, and the:
 6           (a) provider notifies the insurer of the underpayment after
 7   the one hundred eightieth day after the date the underpayment was
 8   received; and
 9           (b) insurer pays the balance of the claim on or before the
10   forty-fifth day after the date the insurer receives the notice.
11      (I) Subsection (H) does not relieve the insurer of the obligation
12   to pay the remaining unpaid contracted rate owed the provider.
13      (J) An insurer that pays a penalty under this section shall
14   clearly indicate on the explanation of payment statement in the
15   manner prescribed by the director by regulation the amount of the
16   contracted rate paid and the amount paid as a penalty.”
17
18   SECTION 2. Article 1, Chapter 71, Title 38 of the 1976 Code is
19   amended by adding:
20
21      “Section 38-71-225. A health insurer may not deny an
22   insurance claim to any health care provider when, in the judgment
23   of the primary health care provider, medically necessary services,
24   including care and treatment services, are provided to an insured
25   on the same date. The provisions of this section include diagnostic
26   services.”
27
28   SECTION 3. (A) With respect to a contract entered into between
29   an insurer or health maintenance organization and a physician or
30   health care provider, and payment for medical care or health care
31   services under the contract, the changes in law made by this act
32   apply only to a contract entered into or renewed on or after the
33   sixtieth day after the effective date of this act and payment for
34   services under the contract. Such a contract entered into before the
35   sixtieth day after the effective date of this act and not renewed or
36   that was last renewed before the sixtieth day after the effective date
37   of this act, and payment for medical care or health care services
38   under the contract, are governed by the law in effect immediately
39   before the effective date of this act, and that law is continued in
40   effect for that purpose.
41      (B) With respect to the payment for medical care or health care
42   services provided, but not provided under a contract to which
43   subsection (A) applies, the changes in law made by this act apply

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 1   only to the payment for those services provided on or after the
 2   sixtieth day after the effective date of this act. Payment for those
 3   services provided before the sixtieth day after the effective date of
 4   this act is governed by the law in effect immediately before the
 5   effective date of this act, and that law is continued in effect for that
 6   purpose.
 7
 8   SECTION 4. If any section, subsection, paragraph, subparagraph,
 9   sentence, clause, phrase, or word of this act is for any reason held
10   to be unconstitutional or invalid, such holding shall not affect the
11   constitutionality or validity of the remaining portions of this act,
12   the General Assembly hereby declaring that it would have passed
13   this act, and each and every section, subsection, paragraph,
14   subparagraph, sentence, clause, phrase, and word thereof,
15   irrespective of the fact that any one or more other sections,
16   subsections, paragraphs, subparagraphs, sentences, clauses,
17   phrases, or words hereof may be declared to be unconstitutional,
18   invalid, or otherwise ineffective.
19
20   SECTION 5. This act takes effect July 1, 2008.
21                            ----XX----
22




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