Current Status Introducing Body:
HouseBill Number: 4171Primary Sponsor: RichardsonCommittee Number: 27Type of Legislation: GBSubject: Comprehensive Health Care Reform Act of 1993Residing Body: HouseCurrent Committee: Medical, Military, Public and Municipal AffairsCompanion Bill Number: 749Computer Document Number: 436/11342AC.93Introduced Date: 19930506Last History Body: HouseLast History Date: 19930506Last History Type: Introduced, read first time, referred to CommitteeScope of Legislation: StatewideAll Sponsors: Richardson White Phillips Shissias Williams Stone R. Smith WhipperType of Legislation: General Bill
Bill Body Date Action Description CMN Leg Involved ____ ______ ____________ ______________________________ ___ ____________ 4171 House 19930506 Introduced, read first time, 27 referred to CommitteeView additional legislative information at the LPITS web site.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ENACTING THE "SOUTH CAROLINA COMPREHENSIVE HEALTH CARE REFORM ACT OF 1993" BY ADDING ARTICLES 4, 6, AND 8 TO CHAPTER 7, TITLE 44 SO AS TO PROVIDE FOR HEALTH CARE COOPERATIVE AGREEMENTS, TO REGULATE SELF-REFERRAL OF PATIENTS BY HEALTH CARE PROFESSIONALS, AND TO DIRECT THE SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL TO DEVELOP CLINICAL PRACTICE GUIDELINES; BY ADDING ARTICLES 7, 9, AND 11 TO CHAPTER 11, TITLE 1 SO AS TO PROVIDE FOR HEALTH CARE COST CONTAINMENT, TO PROVIDE FOR A TRANSITION TO UNIVERSAL HEALTH INSURANCE COVERAGE, AND TO PROVIDE FOR EDUCATION AND TRAINING OF HEALTH CARE PROFESSIONALS; BY ADDING ARTICLE 3 TO CHAPTER 70, TITLE 38 SO AS TO PROVIDE FOR MEDICAL REVIEW CRITERIA; BY ADDING ARTICLE 13 TO CHAPTER 71, TITLE 38 SO AS TO PROVIDE STANDARDS AND REQUIREMENTS FOR INDIVIDUAL AND GROUP HEALTH BENEFIT PLANS; BY ADDING CHAPTER 47 TO TITLE 15 SO AS TO PROVIDE IN MEDICAL MALPRACTICE ACTIONS FOR COURT-ORDERED ARBITRATION, BINDING ARBITRATION AGREEMENTS, PERIODIC PAYMENTS OF JUDGMENTS, AND PROCEDURES AND EVIDENCE IN THESE ACTIONS; BY AMENDING SECTION 15-48-10, RELATING TO VALIDITY OF ARBITRATION AGREEMENTS, SO AS TO PROVIDE THAT THE UNIFORM ARBITRATION ACT APPLIES TO CERTAIN MEDICAL MALPRACTICE ACTIONS; BY AMENDING SECTION 38-70-15, RELATING TO THE APPLICABILITY OF UTILIZATION REVIEWS OF HEALTH CARE RESOURCES AND SERVICES, SO AS TO MAKE IT APPLICABLE TO INSURANCE COMPANIES, ADMINISTRATORS OF INSURANCE BENEFIT PLANS, AND HEALTH MAINTENANCE ORGANIZATIONS; BY DESIGNATING SECTION 38-70-10 THROUGH 38-70-60 AS ARTICLE 1 OF CHAPTER 70, TITLE 38 AND NAMING IT "PRIVATE REVIEW AGENTS"; AND BY REPEALING SECTIONS 38-71-120, 38-71-140, 38-71-210, 38-71-325, 38-71-350, 38-71-360, 38-71-760, 38-71-770, 38-71-780, AND SECTIONS 38-71-910 THROUGH 38-71-1110 RELATING TO ACCIDENT AND HEALTH INSURANCE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This act may be known and cited as the "South Carolina Comprehensive Health Care Reform Act of 1993".
SECTION 2. Chapter 7, Title 44 of the 1976 Code is amended by adding:
Section 44-7-500. This article may be cited as the `Health Care Cooperative Agreement Act of 1993.'
Section 44-7-510. As used in this article:
(1) `Affected person' means a health care provider or purchaser who provides or purchases health care services in the health service area affected by the cooperative agreement and who has notified the department of his interest in applications for certificates of public advantage.
(2) `Certificate of public advantage' means the formal approval, including any conditions or modifications, by the department of a cooperative agreement.
(3) `Cooperative agreement' means an agreement between two health care providers or purchasers or among more than two health care providers or purchasers for the sharing, allocation, or referral of patients or the sharing or allocation of personnel, instructional programs, support services and facilities, or medical, diagnostic, or laboratory facilities or procedures, equipment, or other services traditionally offered by health care facilities.
(4) `Department' means the South Carolina Department of Health and Environmental Control.
(5) `Health care provider' means a health care professional licensed, certified, or registered under the laws of this State, an organization licensed pursuant to Section 44-69-30 or 44-71-30, and a facility licensed pursuant to Section 44-7-260 or 44-89-40 to provide health care services.
(6) `Health care purchaser' means a person or organization that purchases health care services on behalf of an identified group of persons regardless of whether the cost of coverage or services is paid for by the purchaser or by the persons receiving coverage or services including, but not limited to:
(a) health carriers as defined in Section 38-71-1210;
(b) employee health plans offered by self-insured employers;
(c) group health coverage offered by fraternal organizations, professional associations, or other organizations;
(d) state and federal health care programs; and
(e) state and local public employee health plans.
Section 44-7-520. (A) It is the intent of this article to require the State to provide direction, supervision, and control over approved cooperative agreements through the department and the Attorney General. This state direction, supervision, and control of cooperative agreements provides state action immunity under federal antitrust laws to the health care providers and purchasers who participate in discussions or negotiations authorized by this article.
(B) Notwithstanding any other provision of law, a cooperative agreement for which a certificate of public advantage has been issued is a lawful agreement. If the parties to a cooperative agreement file with the department an application for a certificate of public advantage governing the agreement, the conduct of the parties in negotiating and entering into a cooperative agreement is lawful conduct.
(C) Notwithstanding any other provision of law, a cooperative agreement may provide for the delivery of health services regardless of political or geographic boundaries, including multi-county and regional health delivery systems.
Section 44-7-530. A health care provider or purchaser may negotiate and enter into cooperative agreements with other health care providers or purchasers if the likely benefits resulting from the agreements outweigh any likely disadvantages resulting from the agreements. Parties to a cooperative agreement may apply to the department for a certificate of public advantage governing the cooperative agreement. The application must include an executed written copy of the cooperative agreement and describe the nature and scope of the cooperation in the agreement and any monetary or other consideration passing to any party under the agreement. The department may require an application fee sufficient to cover the cost of processing the application.
Section 44-7-540. (A) The department shall review the application in accordance with the standards set forth in Section 44-7-550 and may hold a public hearing, if requested, in accordance with regulations promulgated by the department. The department shall grant or deny the application within ninety days after receipt of a completed application and that decision must be in writing and set forth the basis for the decision. The department shall furnish a copy of the decision to the applicants, Attorney General, and any affected persons who have asked to be notified.
(B) The department may condition approval of a cooperative agreement on a modification of all or part of the agreement to eliminate any restriction on competition that is not reasonably related to the goals of controlling costs or improving access or quality. The department also may establish conditions for approval that are reasonably necessary to protect against any abuses of private economic power and to ensure that the arrangement is appropriately supervised and regulated by the State.
(C) A decision of the department to grant, modify, or deny an application or terminate a certificate may be appealed by an applicant or an affected person with standing to contest the decision in accordance with the Administrative Procedures Act.
Section 44-7-550. The department shall issue a certificate of public advantage for a cooperative agreement if it determines:
(1) that the applicants have demonstrated that the likely benefits resulting from the agreement outweigh the likely disadvantages resulting from the agreement:
(a) In evaluating the benefits likely to result from a cooperative agreement, the department shall consider, but is not limited to:
(i) enhancement of the quality of health and health related care provided to South Carolina citizens;
(ii) preservation of health care facilities close to the communities traditionally served by those facilities;
(iii) gains in the cost efficiency of services provided by the health care facilities involved;
(iv) improvements in the use of health care facility resources and equipment;
(v) improvements in the access to health care for citizens in the community; and
(vi) avoidance of duplication of health care resources.
(b) In evaluating any disadvantages likely to result from the agreement, the department shall consider, but is not limited to:
(i) the likely adverse impact, if any, on the ability of health care purchasers to negotiate optimal payment and service arrangements with health care providers;
(ii) the extent of any reduction in competition among health care providers or other persons furnishing goods or services to, or in competition with, health care providers that is likely to result directly or indirectly from the health care cooperative agreement; and
(iii) the likely adverse impact, if any, on patients in the quality, availability and price of health care services.
(2) that a reduction in competition likely to result from the agreement is reasonably necessary to obtain the benefits likely to result. In evaluating whether the reduction in competition is necessary to obtain the likely benefits, the department shall consider, but is not limited to the availability of arrangements that:
(a) are less restrictive to competition and achieve the same benefits; or
(b) offer a more favorable balance of benefits over disadvantages attributable to any reduction in competition likely to result from the agreement.
Section 44-7-560. (A) The department shall consult with the Attorney General regarding its evaluation of any potential reduction in competition resulting from a cooperative agreement. Any action brought by the Attorney General to enjoin the operation of a cooperative agreement must be brought within sixty days of the department's approval of the certificate of public advantage. After the sixty day period, the Attorney General may initiate legal action to revoke a certificate of public advantage based upon the standards for revocation set out in Section 44-7-570.
(B) Nothing in this article may limit the authority of the Attorney General to initiate civil enforcement action or criminal prosecution upon a determination that health care providers or purchasers have exceeded the scope of the cooperative agreement approved by the department.
Section 44-7-570. The department shall actively monitor and regulate agreements approved under this article to ensure that the agreements remain in compliance with the conditions of approval. The department shall charge an annual fee to cover the cost of monitoring and regulating these agreements and may request periodic written updates on the effects of the cooperative agreement. The department may revoke a certificate upon a finding that:
(1) the agreement is not in substantial compliance with the terms of the application or the conditions of approval;
(2) the likely benefits resulting from a certified agreement no longer outweigh any disadvantages attributable to any potential reduction in competition resulting from the agreement; or
(3) the department's approval was obtained as a result of material misrepresentation to the department or as a result of coercion, threats, or intimidation toward any party to the cooperative agreement.
Section 44-7-580. The department shall maintain on file all cooperative agreements for which certificates of public advantage remain in effect. Any dispute among the parties to a cooperative agreement concerning its meaning or terms is governed by normal principles of contract law. Any party to a cooperative agreement who terminates the agreement shall notify the department before termination. If all parties terminate their participation in a cooperative agreement, the department shall revoke the certificate of public advantage for the agreement.
Section 44-7-590. (A) Nothing in this article exempts health care providers or purchasers from complying with of Article 3 concerning certificates of need.
(B) This chapter does not apply to an agreement among health care facilities which places ownership or control over substantially all of the stock, assets, or activities of one or more previously licensed and operating health care facilities under the control of one or more other health care facilities.
Section 44-7-800. This article may be known and cited as the `Health Care Professional Self-Referral Act of 1993'.
Section 44-7-810. As used in this article:
(1) `Board' means any of the boards created pursuant to Title 40 to license, certify, or register health care professionals and the department for those entities licensed by the department.
(2) `Demonstrated need' means:
(a) there is no facility of reasonable quality or cost that provides medically appropriate service;
(b) use of existing facilities creates too great a hardship for patients;
(c) the entity is formed to own or lease medical equipment which replaces obsolete or otherwise inadequate equipment in or under the control of a hospital located in a federally designated health manpower shortage area; or
(d) other standards as established by regulations promulgated by the department.
(3) `Department' means the South Carolina Department of Health and Environmental Control.
(4) `Entity' means an individual, partnership, firm, corporation, or other business that provides or supplies health care services but does not include a health care professional.
(5) `Group practice' means a group of two or more health care professionals legally organized as a partnership, professional corporation, not-for-profit corporation, faculty practice plan, or similar association in which:
(a) each health care professional who is a member, employee, or independent contractor of the group provides substantially the full range of services which the professional routinely provides, including consultation, diagnosis, and treatment through the use of office space, facilities, equipment, and personnel of the group;
(b) substantially all of the services of the health care professionals who are members of the group are provided through the group and are billed in the name of the group and amounts so received are treated as receipts of the group; and
(c) the overhead expenses of and the income from the practice are distributed by methods previously determined by the group.
(6) `Health care professional' means a person licensed, certified, or registered under the laws of this State to provide health care services.
(7) `Health care services' means health care consultation, diagnosis, and treatment, including providing health care items through or by a health care professional.
(8) `Immediate family member' means a health care professional's spouse, child, child's spouse, grandchild, grandchild's spouse, parent, parent-in-law, or sibling.
(9) `Investment interest' means an equity or debt security issued by an entity including, but not limited to, shares of stock in a corporation, units or other interests in a partnership, bonds, debentures, notes, or other equity interests, or debt instruments except that for the purposes of this article, investment interest does not include interest in a hospital licensed under this chapter.
(10) `Investor' means a person or entity directly or indirectly owning a legal or beneficial ownership or investment interest including, but not limited to, through an immediate family member, trust, or another entity related to the investor within the meaning of 42 C.F.R. subsection 413.17.
(11) `Kickback' means a remuneration or payment pursuant to an investment interest, compensation arrangement, or otherwise, by a provider of health care services or items, of a portion of the charges for services rendered to a referring health care professional as an incentive or inducement to refer patients for future services or items when the payment is not tax deductible as an ordinary and necessary expense.
(12) `Office practice' means a facility at which a health care professional, on an ongoing basis, provides or supervises the provision of health services to individuals.
(13) `Referral' means a referral of a patient by a health care professional for health care services including, but not limited to:
(a) the forwarding of a patient by a health care professional to another health care professional or to an entity outside the health care professional's office or group practice; or
(b) the request or establishment of a plan of care by a health care professional which includes the provision of health care services outside the health care professional's office or group practice.
Section 44-7-820. A health care professional may not refer a patient to an entity in which the health care professional has an investment interest unless:
(1) the professional directly provides the health care services within the entity or will be personally involved with the provision of care to the referred patient;
(2) the professional's investment interest does not exceed one-half of one percent of the entity's total equity and is in registered securities listed on a national exchange or over the counter market and issued by a publicly-held corporation:
(a) which distributes a return on the investment interest tied to the health care professional's equity in the entity rather than to the volume of referrals made; and
(b) which markets or furnishes its services to referring health care professional investors and other health care professionals on equal terms;
(3) the health care professional refers a patient, who is a member of a health maintenance organization or integrated health service network licensed in this State, to an entity in which the professional has an investment interest if the referral is made pursuant to a contract with the health maintenance organization or integrated health service network; or
(4) the department finds a demonstrated need in the community for the entity and:
(a) alternative financing is not available;
(b) individuals who are not in a position to refer patients are given a bona fide opportunity to invest in the entity on the same terms as those offered a referring health care professional;
(c) no health care professional who invests is required or encouraged to make referrals to the entity or otherwise generate business as a condition of becoming or remaining an investor;
(d) the entity markets or furnishes its services to referring health care professional investors and other investors on equal terms;
(e) the entity does not loan funds or guarantee any loans for health care professionals who are in a position to refer to the entity;
(f) the income on the health care professional's investment is tied to the professional's equity in the entity rather than to the volume of referrals;
(g) an investment contract does not include a covenant or noncompetition clause that prevents the professional from investing in other entities;
(h) a health care professional's investment interest is disclosed, when requested, to health care purchasers;
(i) an internal utilization review program is established to ensure that investing health care professionals provide appropriate or necessary care; and
(j) the health care professional makes alternative arrangements for a patient's care when the professional's financial interest conflicts with the patient's interest.
Section 44-7-830. (A) The department shall make a determination of demonstrated need within ninety days of a completed written request from a health care professional. The department may charge a fee sufficient to cover the cost of processing the request. Failure to make a decision within the ninety-day period means that no alternative is practical based upon the facts set forth in the completed written request. A decision of the department to deny a request may be appealed in accordance with the Administrative Procedures Act.
(B) Health care professionals may request from the department an advisory opinion that a referral to an existing or proposed entity under specified circumstances does or does not violate this article. The department's opinion is presumptively correct. Failure to render an opinion within ninety days of a completed written request creates a rebuttable presumption that a referral described in the request is not or will not be a violation of this article.
Section 44-7-840. (A) Health care professionals who refer patients to entities in which the professionals have an investment interest, as permitted by Section 44-7-820(1) and (4), must disclose their investment interest to the patients before making the referral. In addition patients must be given:
(1) a schedule of typical fees for items or services usually provided by the entity or, if impracticable because of the nature of the treatment, a written estimate specific to the patient; and
(2) a list of effective alternative entities if other entities are reasonably available.
(B) The health care professional must inform patients that they have the option to use one of the alternative entities and assure them that they will not be treated differently by the professional if they use another entity.
Section 44-7-850. No entity, including hospitals licensed under this chapter, may discriminate against or otherwise penalize a health care professional for complying with this article. No claim for payment may be presented by an entity to an individual, health care purchaser, or other entity for a service furnished pursuant to a referral prohibited under this article. If an entity collects any amount that was billed in violation of this article, the entity shall refund the amount on a timely basis to the purchaser or individual, whichever is applicable.
Section 44-7-860. (A) It is unlawful for a health care professional or a provider of health care services to offer, pay, solicit, or receive a kickback, directly or indirectly, overtly or covertly, in cash or in kind, for referring or soliciting patients.
(B) A health care professional may not charge an additional amount for services rendered by an entity outside of that professional's practice. However, a handling fee of no more than two dollars may be charged as long as each charge is disclosed separately and itemized as part of the professional's bill for services.
Section 44-7-870. An entity in this State in which a health care professional has an investment interest and which receives referrals must submit information to the department concerning its ownership, including identification of the owners who are health care professionals, and each investor's percentage of ownership.
Section 44-7-880. (A) An entity or health care professional that violates any provision of this article is subject to disciplinary action by the applicable board including, but not limited to, a civil penalty of not more than ten thousand dollars for each occurrence.
(B) A health care professional or other entity that enters into an arrangement which the professional or entity knows or should know has a principal purpose of assuring referrals by the health care professional to a particular entity in violation of this article is subject to disciplinary action by the applicable board including, but not limited to, a civil penalty of not more than one hundred thousand dollars for each arrangement.
(C) Disciplinary actions taken by an applicable board must be proportionate to the severity of the violation as set forth by regulations of the board.
Section 44-7-890. This article applies to referrals for health care services made on or after the effective date of this article. However, nothing in the article except the disclosure provisions of Section 44-7-840 and the penalty provisions of Section 44-7-880 apply to investment interests acquired before January 1, 1993.
Section 44-7-1200. As used in this article:
(1) `Center' means the Center for Health Data created by Section 1-11-870.
(2) `Clinical practice guidelines' means systematically developed statements to assist health care providers and patients make decisions about appropriate health care for specific clinical circumstances, including treatment and condition specific practice guidelines as well as general guidelines for patient information and consent.
(3) `Health care provider' means a health care professional licensed, certified, or registered under the laws of this State, an organization licensed pursuant to Section 44-69-30 or 44-71-30, and a facility licensed pursuant to Section 44-7-260 or 44-89-40 to provide health care services.
(4) `Licensing boards' means the boards responsible for licensing, certifying, or registering health care professionals pursuant to Title 40 and the department for those entities licensed by the department.
(5) `Department' means the South Carolina Department of Health and Environmental Control.
Section 44-7-1210. (A) From among the clinical practice guidelines developed by federal agencies or national societies of health care providers, the department shall select, revise if necessary, and adopt clinical practice guidelines for five specific conditions or procedures.
(B) Using data provided by the center, the department shall give priority to the selection of clinical practice guidelines for conditions and services:
(1) most frequently involved in medical malpractice claims as reported to the Chief Insurance Commissioner of the Department of Insurance pursuant to Section 38-79-10;
(2) for which there are large variations in treatment method or frequency of treatment in all or part of the State; or
(3) which account for a significant amount of total health care costs in the State, when considering both the frequency and the unit cost of treatment.
Section 44-7-1220. (A) When the department has identified the five conditions and services of interest, based on Section 44-7-1210, it shall appoint and convene private sector panels of nine to fifteen experts and a consumer representative. Each panel's membership must encompass a diversity of expertise, depending on the condition or service under study. Nominations must be solicited from all areas of the State. The department shall facilitate the panel's work but may not take part in panel deliberations.
(B) The panels shall review all relevant clinical practice guidelines developed by federal agencies and national societies of health care providers. To the extent possible, clinical practice guidelines selected or revised by the panels must:
(1) define appropriate clinical indications and methods of treatment;
(2) be accompanied by descriptions of the strength of the evidence and expert judgment behind them and estimates of the health and cost outcomes expected from the interventions in question, compared with alternative practices;
(3) be valid so that when followed they lead to the health and cost outcomes projected for them;
(4) be reproducible and reliable, that is, given the same evidence and methods for guideline development, another set of experts should produce essentially the same statements, and given the same clinical circumstances, the guidelines should be interpreted and applied consistently by providers;
(5) be as inclusive of appropriately defined patient populations as evidence and expert judgment permit and define the populations to which the statements apply;
(6) anticipate the needs of health care providers, patients, and other interested parties;
(7) be flexible, identifying the specifically known or generally expected exceptions to their recommendations and discussing how patient preferences are to be identified and considered;
(8) use unambiguous language, define terms precisely, and use logical, easy-to-follow modes of presentation;
(9) be developed by a process that includes participation by representatives of key affected groups including, but not limited to, serving on panels that develop guidelines, providing evidence and viewpoints to the panels, and reviewing draft guidelines;
(10) include statements about when they should be reviewed to determine whether revisions are warranted, given new clinical evidence or professional consensus; and
(11) establish standards of practice designed to avoid malpractice claims and to increase the defensibility of malpractice claims when they occur, thereby eliminating the need to practice unnecessary defensive medicine.
(C) The panels shall format the guidelines in physical arrangements or media that can be readily understood and applied by providers, patients, or other intended groups. The procedures followed in selecting and revising the guidelines, the participants involved, the evidence used, the assumptions and rationales accepted, and the analytic methods employed must be documented. Periodic reviews and revisions, where suitable, must be scheduled to ensure that clinical practice guidelines continue to be based on the latest scientific findings.
Section 44-7-1230. (A) The department shall convene a twenty-member clinical practice guideline advisory committee comprised of health care providers, health care consumers, health care purchasers, and the academic research community. To the extent possible, members of the advisory committee shall reflect the diversity within each of these interest groups.
(B) Recommendations from the expert panels convened pursuant to Section 44-7-1220 must be submitted to the advisory committee for review and comment. The advisory committee also shall advise and assist the department in carrying out its duties as provided in Sections 44-7-1210, 44-7-1220, and 44-7-1250.
Section 44-7-1240. Clinical practice guidelines adopted by the department must be promulgated as regulations pursuant to the Administrative Procedures Act. Guidelines previously approved by the federal Agency for Health Care Policy and Research or a national society of health care providers do not have to be submitted to the General Assembly for review. Clinical practice guidelines that are revised substantially by the department must be submitted to the General Assembly for review. Emergency regulations which consist of emergency revisions to previously promulgated clinical practice guidelines remain in effect for one year or until permanent regulations are approved, whichever is earlier.
Section 44-7-1250. (A) Based on data collected by the center, the department may request peer review by the appropriate professional association or licensing board for specific health care conditions for which practice in all or part of the State deviates from clinical practice guidelines. The department also may request peer review by the appropriate professional association or licensing board for specific conditions for which there are large variations in treatment method or frequency of treatment in all or part of the State. Peer review may be requested for all health care professionals statewide or limited to professionals in specific areas of the State.
(B) The peer review must determine whether the services provided by the professionals are necessary and appropriate and within the clinical practice guidelines adopted by the department. If a health care professional continues to provide services that are inappropriate, even after educational efforts by the review panel, the professional must be reported to the appropriate professional licensing board.
Section 44-7-1260. (A) The department shall review each clinical practice guideline at least as often as specified in the guideline pursuant to Section 44-7-1220, but no less often than every three years. In addition, any member of the expert panel which developed the guideline, the clinical practice guideline advisory committee, or a health care provider affected by the guideline may petition the department for a review to determine whether revisions of a guideline are warranted.
(B) The department must promulgate the clinical practice guidelines authorized in this article by January 1, 1995. Three years after the effective date of each clinical practice guideline, the department shall evaluate the effect of the guideline on professional practice, health care costs, and medical malpractice claims and file a report with the Governor and the General Assembly. The report shall include the department's recommendations for changes to this article. The clinical practice guideline advisory committee shall assist in developing the evaluation and recommendations."
SECTION 3. Chapter 11, Title 1 of the 1976 Code is amended by adding:
Section 1-11-810. As used in this article:
(1) `Board' means the State Budget and Control Board.
(2) `Center' means the Center for Health Data.
(3) `Committee' means the Health Data Collection Advisory Committee.
(4) `Division' means the Division of Research and Statistical Services of the State Budget and Control Board.
(5) `Health care provider' means a health care professional licensed, certified, or registered under the laws of this State, an organization licensed pursuant to Section 44-69-30 or 44-71-30, and a facility licensed pursuant to Section 44-7-260 or 44-89-40 to provide health care services.
(6) `Health care purchaser' means a person or organization that purchases health care services on behalf of an identified group of persons, regardless of whether the cost of coverage or services is paid for by the purchaser or by the persons receiving coverage or services including, but not limited to:
(a) health carriers as defined by Section 38-71-1210;
(b) employee health plans offered by self-insured employers;
(c) group health coverage offered by fraternal organizations, professional associations, or other organizations;
(d) state and federal health care programs; and
(e) state and local public employee health plans.
(7) `Purchasing cooperative' means the South Carolina Government Health Insurance Purchasing Cooperative.
Section 1-11-820. The board shall establish the South Carolina Government Health Insurance Purchasing Cooperative for the purpose of coordinating and enhancing the purchasing power of health care benefit plans for the groups identified in this article. It is not the intent of the General Assembly to exacerbate cost shifting or adverse selection in the health care system through the creation of the purchasing cooperative. In offering and administering the purchasing cooperative, the board may not discriminate against individuals or groups based on age, gender, geographic area, industry, health status, or medical history. The board may not administer the purchasing cooperative in a manner that pools the risks of participants.
Section 1-11-830. (A) On or after July 1, 1994, the board shall include in the purchasing cooperative all active and retired employees and their eligible dependents covered by Sections 1-11-710 and 1-11-720 and those portions of the Medicare and Medicaid caseload as the board considers proper and for which permission from the federal government has been obtained. Inclusion in the purchasing cooperative is not intended to diminish access to medical care or benefit levels for Medicare and Medicaid recipients.
(B) On and after July 1, 1995, the board may make the purchasing cooperative available to any employer group, association, or trust that chooses to participate in the cooperative on behalf of the employees or members of the group, association, or trust.
(C) On and after July 1, 1996, the board may make the purchasing cooperative available to an individual who chooses to participate in the cooperative, if the individual is not eligible to participate in a group health benefit plan which provides benefits that are the same or similar to coverage provided in the purchasing cooperative.
Section 1-11-840. On or before January 1, 1996, the board shall report to the General Assembly with its recommendations concerning the feasibility and merits of allowing the cooperative to act as an insurer in pooling risks and providing benefits to participants, including a common benefits plan.
Section 1-11-850. The board may administer the purchasing cooperative using its own employees or may contract for some or all of the administrative functions, whichever is most cost effective. In administering the purchasing cooperative the board shall:
(1) consolidate administrative functions on behalf of participants in the cooperative, including claims processing, utilization review, management reporting, benefit management, and bulk purchasing;
(2) create a health care cost and utilization data base for participants in the cooperative and evaluate potential cost savings. These data collection and analysis efforts must be coordinated with the Center for Health Data;
(3) establish incentive programs to encourage cooperative participants to use health care services judiciously and to improve their health status; and
(4) contract with qualified integrated health services networks on behalf of participants in the cooperative. If sufficient qualified networks are not available to serve all of the participants in the cooperative, the board shall contract with other health care providers or health carriers for the delivery of health care services, including agreements securing discounts for regular bulk payments to providers and establishing uniform provider reimbursement.
Section 1-11-860. On or before December fifteenth of each year, the board shall report to the General Assembly on the operation of the purchasing cooperative, including the number and types of groups and group members participating in the cooperative, the costs of administering the cooperative, and the savings attributable to participating groups from the operation of the cooperative.
Section 1-11-870. The Center for Health Data is established within the Division of Research and Statistical Services of the board to conduct data and research initiatives in order to improve the efficiency and effectiveness of health care in this State. Within funds appropriated for these purposes, the center shall:
(1) conduct applied research using existing and newly established health care data bases and promote applications based on existing research;
(2) develop and implement data collection procedures which minimize the administrative burden on and ensure a high level of cooperation from health care providers and health care purchasers;
(3) work closely with health care purchasers and health care providers to promote improvements in health care efficiency and effectiveness;
(4) participate as a partner or sponsor of public and private sector initiatives that promote publicly disseminated applied research on health care delivery, outcomes, costs, quality, and management;
(5) provide technical assistance to health benefit plan purchasers and health care purchasers;
(6) publish and disseminate information to the public which will enhance informed decisions in the selection of health care providers, facilities, and services;
(7) provide technical assistance as needed to the health planning committee created pursuant to Section 44-7-180; and
(8) minimize any privacy impact on individuals and comply with all state and federal laws regarding the confidentiality of health records.
Section 1-11-880. (A) The center must be the primary source for collection and dissemination of health care data. No other agency of state government may gather data from a health care provider or health care purchaser without first determining if the data is collected by the center and demonstrating that it would be more cost effective for the agency to gather the health care data. It is the express intent of the General Assembly that all health care data, other than data directly related to regulatory responsibilities or program administration, be collected by the center and that all other agencies of state government obtain data for analysis and public dissemination purposes from the center.
(B) In order to produce comparable and uniform health information and statistics, the center shall:
(1) review the statistical activities of state agencies to assure that they are consistent with the center's health care data bases;
(2) develop written agreements with local, state, and federal agencies for the sharing of health care data or using the facilities and services of these agencies. State agencies and other agencies under contract with state government shall assist the center in obtaining health care data maintained by state and local agencies. Written agreements shall specify the types, methods, and frequency of data exchanges and specify the types of data that will be transferred to the center; and
(3) establish minimum health care data sets which are necessary on a continuing basis to fulfill the collection requirements of the center and which must be used by state agencies in collecting and compiling health care data.
(C) Data and research initiatives related to public sector health care programs must:
(1) assist the state's health care financing and delivery programs to deliver and purchase health care in a manner that promotes improvements in health care efficiency and effectiveness;
(2) assist the State in its public health activities, including the analysis of disease prevalence and trends and the development of public health responses;
(3) assist the State in developing and refining its overall health policy, including policy related to health care costs, quality, and access; and
(4) provide a data source that allows the evaluation of state health care financing and delivery programs.
Section 1-11-890. The center shall establish and maintain a health care data base to enable the center to accomplish the purposes provided in Section 1-11-870. The data base shall contain unique patient and provider identifiers and a uniform coding system and shall reflect all health care utilization, costs, and resources in this State and, to the extent possible, health care utilization and costs for services provided in another state to residents of this State.
Section 1-11-900. (A) The center shall establish a separate data base for a limited number of health conditions and diseases and must:
(1) be collected for specific health conditions rather than specific procedures or types of health care providers or services. The number of specific conditions for which data is collected is subject to the availability of appropriations;
(2) emphasize conditions that account for significant total costs when considering both the frequency of a condition and the unit cost of treatment and may include entire episodes of care for a given condition, whether or not treatment includes use of a hospital or a freestanding outpatient surgical center, if adequate data collection and evaluation techniques are available for that condition;
(3) include information on health outcomes, including information on mortality, morbidity, patient functional status and quality of life, symptoms, and patient satisfaction. The data collected must include information necessary to measure and make adjustments for differences in the severity of patient condition across different health care providers and may include data obtained directly from the patient or from patient medical records. The data must be collected in a manner that allows comparisons to be made between health care providers, health care purchasers, public programs, and other entities.
(4) Data collection for any one condition must continue for a sufficient time to permit adequate analysis by researchers and appropriate health care providers, feedback to providers, and monitoring for changes in practice patterns. The center annually shall review all specific health conditions for which data is being collected in order to determine if data collection for that condition should be continued.
(B) The center shall use existing public sector data bases, such as those existing for Medicaid and Medicare, to the greatest extent possible. The center shall negotiate with private sector organizations currently collecting data on specific health conditions of interest to the center in order to obtain required data in a cost-effective manner and minimize administrative costs.
(C) The center shall attempt to establish linkages between the large scale data base established by the center and existing public and private sector data bases. The center shall consider and implement methods to streamline data collection in order to reduce public and private sector administrative costs.
Section 1-11-910. The center shall convene a fifteen-member data collection advisory committee consisting of health service researchers, health care providers, health care purchasers, and consumers. To the extent possible, members of the advisory committee shall reflect the diversity within each of these broad interest groups with no more than one member from any particular interest group. The Governor, the Insurance Commissioner, the Executive Director of the State Health and Human Services Finance Commission, the Commissioner of the Department of Health and Environmental Control, the Commissioner of the Department of Mental Health, two representatives of the State Health and Human Services Coordinating Council, and one member of a professional and occupational licensing board appointed by the Governor, or their respective designees, also shall serve as ex-officio voting members of the committee. The committee shall evaluate methods of data collection and shall recommend to the division methods of data collection that minimize administrative burdens, address data privacy concerns, and meet the needs of health services researchers and providers.
Section 1-11-920. The center in consultation with its advisory committee shall establish an annual benchmark to allow evaluation of public and private efforts to reduce increases in health care spending. The benchmark must be based on:
(1) data collected by the center on total public and private health care expenditures in the State, by source of payment and the type of expenditure, including any necessary adjustments for cost shifting;
(2) accepted indicators of health status for the state residents; and
(3) the recommendations of the Executive Director of the State Health and Human Services Finance Commission, the Commissioner of the Department of Health and Environmental Control, and the Director of the Division of Research and Statistical Services.
The benchmark should be achievable through good faith, cooperative efforts of health care consumers, purchasers, and providers. The benchmark may include targets for health care facilities, health care providers, or any other part of the health care system that the center determines is necessary.
Section 1-11-930. Before adopting the benchmark the center shall develop a proposed benchmark and discuss the proposed benchmark with health care providers and health care purchasers and hold one or more public hearings for the purpose of receiving public comments.
Section 1-11-940. The center shall prepare for setting an annual benchmark by:
(1) collecting data on total public and private health care expenditures in the State by source of payment and the type of expenditure; and
(2) recommending data and methods that could be used to:
(a) calculate regional and statewide benchmarks and the various options for expressing these standards;
(b) adjust the benchmark to account for patients who are not state residents, to reflect care provided to a person outside the person's region, and to adjust for demographic changes over time;
(c) compare performance with the benchmarks;
(d) identify activities of consumers, providers, or purchasers that contribute to excessive growth in spending; and
(e) avoid, prevent, or recover spending in excess of the rate of growth identified by the center.
Section 1-11-950. For purposes of collecting data pursuant to Section 1-11-940, the center shall obtain from the South Carolina Tax Commission and the United States Internal Revenue Service summary data on health care revenues generated during a period specified by the center. The center also shall use data from the health data base established pursuant to Section 1-11-890. If necessary to supplement this information, the center is authorized to collect data on health care revenue and spending during the same period from all South Carolina health care providers and health care purchasers.
Section 1-11-960. (A) To enable the center to meet its responsibilities as provided in this article, the division shall promulgate regulations pursuant to the Administrative Procedures Act. These regulations shall establish criteria and procedures to govern collection of, access to, and the release and use of data collected through the center.
(B) All health care providers and health care purchasers doing business in the State shall provide the data requested by the center at the times and in the form specified in regulations promulgated by the division. The center shall collect this data in the most cost-effective manner which does not unduly burden providers or purchasers. Professional licensing boards and state agencies responsible for licensing, registering, or regulating providers shall cooperate with the center in achieving compliance with the reporting requirements.
(C) Regulations promulgated by the division also must define the data elements that health care providers and all health care purchasers must submit. The regulations must recognize provider and purchaser concern about the confidentiality of proprietary and trade secret information.
(D) Regulations promulgated by the division also must specify the data elements and analyses, including provider specific price and quality data, which will be published to allow the public to make informed decisions in the selection of health care providers, facilities, and services. Except as provided in regulation, data collected by the center pursuant to this article must be considered proprietary and trade secret information and is not subject to disclosure by the center to persons outside the division except in a form that does not identify individual patients, providers, employers, purchasers, or other individuals and organizations.
Section 1-11-970. (A) The center may release data collected through its data bases to existing health care providers and researchers affiliated with university research centers or departments who are conducting research on health outcomes, clinical practice guidelines, and professional practice style and researchers working under contract with the center. Release of private or confidential data under this section must be made without releasing data that could reveal the identity of individuals and instead must be released using the identification numbers required by Section 1-11-890.
(B) Before releasing nonpublic or private data to an entity other than the source of the data or its designee under this chapter that identify or relate to a specific health care purchaser or health care provider, the center shall provide at least thirty days' notice to the subject of the data, including a copy of the relevant data, and allow the subject of the data to provide a brief explanation or comment on the data which must be released with the data.
(C) This proprietary information may be used in published analyses and reports or otherwise made available for public disclosure in a manner that preserves the confidentiality of the identity of the provider or purchaser. The identity of the health care provider or purchaser who submits any data to the center under this article which is proprietary information remains confidential. Except for data which is made available to all health care purchasers, any data obtained by the center pursuant to this article may not be used by the State for purposes of direct contracting with health care providers.
Section 1-11-980. To carry out the duties and responsibilities of the center the division shall seek federal funding and funding from private charitable foundations or trusts and may contract with or provide grants to private sector entities. Any contract or grant must require the private sector entity to maintain the data on individuals which it receives according to the state and federal laws or regulations applicable to the data.
Section 1-11-990. (A) Intentional failure to provide data at the times and in the form requested by the center under this article is grounds for revocation of a license or other disciplinary or regulatory action against a health care provider or health care purchaser. In addition, the division may assess a fine not to exceed ten thousand dollars for each violation. Disciplinary actions taken pursuant to this section must be proportionate to the severity of the violation as set forth by regulation and may be appealed in accordance with the Administrative Procedures Act.
(B) If a health care provider or health care purchaser refuses to provide a report or information required under this article, the division may request a court order requiring the individual or organization to produce documents and allowing the center to inspect the records for purposes of obtaining the information required under this article. Nothing in this section may be construed as limiting the right of a health care provider or health care purchaser to contest or appeal such a court order.
Section 1-11-1000. No health care purchaser, health care provider, or other reporting entity or its employees or agents may be held liable for civil damages nor subject to criminal penalties either for the reporting of patient data to the center or for the release of such data by the center as authorized by this article.
Section 1-11-1100. As used in this chapter:
(1) `Agency' means a state officer, department, division, board, bureau, commission, and any other public or private agency, person, partnership, corporation, or business entity acting on behalf of a state agency.
(2) `Board' means the State Budget and Control Board.
(3) `Commission' means the State Health and Human Services Finance Commission.
(4) `Contractor' means a person or entity that enters into a contract with an agency to provide services or to furnish materials of any kind. It includes a subcontractor, but does not include a person or entity that enters into an agreement with the commission to provide services under the Medicaid program.
(5) `Council' means the South Carolina Health Reform Transition Council.
(6) `Subcontractor' means a person or entity who is in privity with a contractor to provide services or to furnish materials of any kind, either to the contractor or to the agency.
Section 1-11-1110. (A) There is established the South Carolina Health Reform Transition Council to serve as the single focal point for efforts to reform the state's health care system, to monitor changes in the nation's health care system proposed at the federal level, and to propose legislative and policy changes to allow all South Carolinians to have access to affordable basic health care.
(B) The council is composed of nine members appointed by the Governor with the advice and consent of the General Assembly. Members of the council must reflect the diversity among groups with an interest in reform of the state's health care system, with no more than one member from any particular interest group. The Governor shall designate one member as the chair of the council. The council shall meet at the call of the chair. A member of the council is not entitled to compensation but, with prior approval of the chair, is entitled to reimbursement for subsistence and travel expenses incurred in performing the duties of the council.
Section 1-11-1120. The State Budget and Control Board shall provide the staff assistance necessary to facilitate the work of the council. On behalf of the council, the board may:
(1) require state agencies, colleges, and universities to provide staff support and other nonfinancial resources to the council;
(2) employ or otherwise use consultants with expertise in particular aspects of health planning, health care delivery, insurance and other financing options, cost containment, and accountability; and
(3) accept contributions from private sources and transfer of funds and other resources from state agencies.
Section 1-11-1130. (A) The council shall discover through hearings, town meetings, surveys, and other methods the expectations residents of this State have concerning:
(1) the amount of public and private resources which should be devoted to health care; and
(2) acceptable ways to assure access to good quality health care while managing health spending within the limits of those resources.
(B) The council shall draw on the expertise and achievements of other groups in the State working on various aspects of health reform. Specifically, the council shall use and build on the work of South Carolina Health Decisions and the three Governor's committees appointed in 1992: the Committee on Basic Health Services, the Committee on Health Insurance Reform, and the Committee on Defensive Medicine and Scope of Practice.
Section 1-11-1140. (A) On or before July 1, 1994, the council shall submit a report to the Governor and General Assembly which shall contain the council's recommendations for a plan to provide all South Carolinians with health care coverage based on a concept of multiple qualified integrated health service networks. The plan shall contain recommendations that, if implemented, will provide universally accessible, medically necessary, and preventive health care by January 1, 1996. The council shall consult with health care providers and health care purchasers in the development of its recommendations.
(B) The council must consider, but is not limited to, these concepts:
(1) Health benefit plans may be employment or other group or individually based, but enrollment in at least a basic health benefit plan is compulsory and universal.
(2) Health benefit claims are processed by multiple health carriers.
(3) Benefits are `portable' regardless of job status.
(4) Every resident of this State is assured of at least the basic set of benefits as established by the commissioner of the Department of Insurance as provided in Section 38-71-1410.
(5) Basic health benefit plans are available for all state residents from a variety of qualified integrated health service networks with additional benefits available for purchase.
(6) Basic health benefit plans are financed through some method which takes into account a family's ability to pay and state and federal payments in accordance with Medicare and Medicaid. The council regularly shall report to and consult with the Joint Legislative Health Care Planning and Oversight Committee as it develops its recommendations about financing basic health benefit plans.
(7) Employers must make at least one basic group health benefit plan available to employees.
(8) Health care services are delivered through integrated health services networks or some other method through which incentives are aligned so that only medically necessary care in cost-effective settings is provided and unnecessary duplication of services is discouraged.
Section 1-11-1150. (A) The State Health and Human Services Finance Commission shall work with the council and the board to ensure that the State obtains all waivers of requirements under health care programs established under Medicare and Medicaid that are necessary to enable the State to use federal payments under those programs to help finance the universal access plan recommended by the council.
(B) To maximize the amount of federal matching funds available to reduce the cost to state taxpayers of the universal access plan recommended by the council, the commission shall work with the council and the board to:
(1) estimate the costs of expanding Medicaid eligibility standards to the fullest extent permitted by federal law including, but not limited to, increasing Medicaid eligibility for all children to three hundred percent of federal poverty guidelines; and
(2) identify all state funds including, but not limited to, all existing state funds for children's health services which could be reallocated to the Medicaid program. These projections must be made available to the council at least six months before submitting its report.
Section 1-11-1160. (A) From July 1, 1995, until the General Assembly adopts a method of assuring every resident of this State access to a basic health benefit plan, every contractor shall ensure that each employee who works on a competitively-bid state agency contract valued in excess of one hundred thousand dollars has access to a group basic health benefit plan or its equivalent during employment on the agency contracts. The contractor's obligation to ensure employee access to a basic health benefit plan must be fulfilled by making a group health benefit plan available to all employees and by paying at least half of the cost of the plan for each employee.
(B) As part of the competitive bid process, potential contractors shall provide the agency with sufficient written documentation to demonstrate that this section would be satisfied by the contractor. Before signing the contract, the agency shall examine the written documentation to ascertain that each employee who will work on the contract has access to a group basic health benefit plan. If the agency finds that the contractor has not ensured employees' access to a group basic health benefit plan, the agency shall notify the contractor in writing that the requirements of this section have not been met and shall provide sufficient detail to enable the contractor to take remedial action. A contractor who has been notified by an agency that the requirements of this section have not been met has fifteen days from the date the agency provided written notice to ensure access to a group basic health benefit plan for each employee who will work on the contract and to provide written documentation of the remedial action to the agency. No later than ten days after receiving written documentation from the contractor, the agency shall examine the written documentation pertaining to the contractor's remedial action to determine if the requirements of this section have been met. If the agency finds that the contractor still has not ensured access to a group basic health benefit plan for each employee who will work on the contract, the agency shall award the contract to another contractor who has complied with this section.
(C) Each agency contract governed by this section shall mandate that the contractor to whom the contract is awarded:
(1) may not pay health benefit plan contributions in lieu of the employee's regular wages for the type of work the employee will perform under the state contract;
(2) shall pay to the State two hundred dollars as liquidated damages for each employee of the contractor who performs any portion of the contract work for each calendar day, or portion of a calendar day, if at least half of the employee's health benefit plan contributions have not been paid by the employer;
(3) shall post, in a conspicuous place on the site where the contract work is performed:
(a) a statement of the employee's right to access to a group basic health benefit plan;
(b) the amount of liquidated damages for failure to pay these benefits; and
(c) the name and address of the responsible state official to whom complaints may be given;
(4) may not terminate an employee performing work on the contract because of the employee's filing a complaint regarding the underpayment or nonpayment of health benefit plan contributions.
(D) If an agency determines that a contractor substantially or repeatedly has failed to comply with this section, the noncomplying contractor and the principal owners are prohibited from bidding on or otherwise participating in state contracts for a period of three years.
Section 1-11-1170. The provisions of Section 1-11-1160 do not apply to:
(1) a contract that is in effect on or for which bids have been advertised or proposals have been requested before the effective date of this act;
(2) blanket contracts designed to consolidate an indeterminate number of smaller contracts which may be needed over a fixed period of time if the overall contract ceiling does not exceed five hundred thousand dollars and if no individual work order issued under the contract exceeds twenty-five thousand dollars;
(3) state agency contracts which are subject to the Davis-Bacon Act;
(4) contractors who are subject to a collective bargaining agreement which provides access to hospitalization and medical insurance benefits.
Section 1-11-1180. The board shall promulgate the necessary regulations to administer Section 1-11-1160 and shall establish administrative procedures for the resolution of written complaints pertaining to the underpayment or nonpayment of health benefit plan contributions.
Section 1-11-1300. As used in this article:
(1) `Board' means the State Budget and Control Board.
(2) `Center' means the Center for Health Data.
(3) `Health care professional' means a person licensed, certified, or registered under the laws of this State to provide health care services.
(4) `Health care provider' means a health care professional, an organization licensed pursuant to Section 44-69-30 or 44-71-30, and a facility licensed pursuant to Section 44-7-260 or 44-89-40 to provide health care services.
(5) `Health care purchaser' means a person or organization that purchases health care services on behalf of an identified group of persons, regardless of whether the cost of coverage or services is paid for by the purchaser or by the persons receiving coverage or services including, but not limited to:
(a) health carriers as defined by Section 38-71-1210;
(b) employee health plans offered by self-insured employers;
(c) group health coverage offered by fraternal organizations, professional associations, or other organizations;
(d) state and federal health care programs; and
(e) state and local public employee health plans.
Section 1-11-1310. Under the supervision of the board, the center shall develop a biennial report, including projected future needs, concerning the health care professionals required to provide good quality, cost-effective health care services in this State. The report shall focus on the number, type, and distribution of health care professionals and the skills those professionals should have and should relate to the health needs of the State as reflected in accepted health status indicators. The center shall consult with health care providers and health care purchasers in preparing the report.
Section 1-11-1320. Under the supervision of the board, the Commission on Higher Education and the State Board for Technical and Comprehensive Education shall conduct a biennial review of all publicly-supported programs in this State which educate and train health care professionals. These reviews shall focus on the relationship between:
(1) the center's estimate of the number, type, distribution, and skill level of health care professionals needed by the state's health care system; and
(2) the number, type, distribution, and skill level of health care professionals graduating from the publicly-supported programs.
Findings from these reviews and any recommendations must be submitted to the board.
Section 1-11-1330. (A) Based on the reports received pursuant to Sections 1-11-1310 and 1-11-1320, the board shall provide a biennial report to the Governor and the General Assembly concerning the appropriate allocation of state resources dedicated to the education and training of health care professionals. This report may include recommendations for changes in school admission or financial aid policies, educational curriculum and other training opportunities, and any other policies which affect the number, type, and distribution of health care professionals in the State.
(B) It is the intent of the General Assembly to reduce the number of census tracts designated as health professional shortage areas by fifty percent within five years after the submission of the first biennial report."
SECTION 4. Staff and funding for the Center for Health Data as established in Section 1-11-870 of the 1976 Code, as added by Section 3 of this act, shall consist of the existing staff and resources, of the Division of Research and Statistical Services already committed to health data and analysis. In addition, the State Health and Human Services Finance Commission and the Department of Health and Environmental Control shall transfer to the center all staff and resources currently committed within those agencies to health data and research. The State Budget and Control Board shall supervise the transfer of the staff and resources.
SECTION 5. Sections 1-11-1110 through 1-11-1150, of the 1976 Code concerning the Health Reform Transition Council, as contained in Section 3 of this act, are repealed effective July 1, 1994, unless specifically reauthorized by the General Assembly or by Executive Order.
SECTION 6. Sections 1-11-1160 through 1-11-1180 of the 1976 Code concerning state contractors, as contained in Section 3 of this act, are repealed on the effective date of legislation which assures every resident of this State access to a basic health benefits plan.
SECTION 7. Chapter 70, Title 38 of the 1976 Code is amended by adding:
Section 38-70-110. As used in this article:
(1) `Clinical practice guidelines' means those guidelines promulgated by the South Carolina Department of Health and Environmental Control pursuant to Section 44-7-1210.
(2) `Health care purchaser' means a person or organization that purchases health care services on behalf of an identified group of persons regardless of whether the cost of coverage or services is paid for by the purchaser or by the persons receiving coverage or services including, but not limited to:
(a) health carriers as defined in Section 38-71-1210;
(b) employee health plans offered by self-insured employers;
(d) state and federal health care programs; and
(e) state and local public employee health plans.
(3) `Medical review criteria' means systematically developed statements that are used to assess the appropriateness of specific health care decisions, services, and outcomes.
Section 38-70-120. For each appropriate clinical practice guideline promulgated by the South Carolina Department of Health and Environmental Control, the commissioner shall develop and promulgate medical review criteria which are based on the guideline. The Department of Health and Environmental Control and the technical advisory committee appointed pursuant to Section 44-7-1230 shall provide technical assistance to the commissioner in the development of the medical review criteria. If the commissioner finds that health purchasers, including health carriers, are not sufficiently represented on the technical advisory committee, the commissioner also shall consult with these groups.
Section 38-70-130. The commissioner shall seriously consider the recommendations of the Institute of Medicine for developing medical review criteria. To the extent possible, medical review criteria must:
(1) be sensitive enough so that it is highly likely that a case will be identified as deficient when it really is deficient;
(2) be specific enough so that it is highly likely that they will identify truly good care;
(3) identify a role for patient preferences, or the process that uses them should allow for some consideration of patient preferences;
(4) be presented in language and formats that can be read and understood by nonphysician reviewers, health care professionals, patients, and consumers;
(5) be used so as to minimize direct interaction with and burdens on the treating health care professional and patient;
(6) require information for review that can be obtained easily from direct communication with health care providers, patients, records, and other sources;
(7) be accompanied by explicit instructions for their application and scoring, and decision criteria should be easy to apply;
(8) be straightforward enough that they can be transformed readily into computer-based protocols and similar formats that can make the review process more efficient for all involved parties; and
(9) provide explicit guidance about the considerations to be taken into account when adverse review decisions are appealed by providers or patients.
Section 38-70-140. Health care purchasers or a person or organization acting on behalf of a health care purchaser is not required to use the medical review criteria promulgated by the commissioner. However, if the commissioner has promulgated medical review criteria for a health care condition or service, no health care purchaser or any person or organization acting on behalf of a health care purchaser may use any other medical review criteria for the condition or service as part of a utilization review program.
Section 38-70-150. The commissioner may impose an administrative fine not to exceed ten thousand dollars for each violation of this article and may otherwise discipline violators regulated by the Department of Insurance. Disciplinary actions taken pursuant to this section must be proportionate to the severity of the violation as set forth by regulation of the Department of Insurance. Persons or organizations fined or otherwise disciplined by the commissioner may appeal the action in accordance with the Administrative Procedures Act."
SECTION 8. Chapter 71, Title 38 of the 1976 Code is amended by adding:
Section 38-71-1200. Notwithstanding any other provision of law, nothing in Articles 1, 3, 5, 9, and 11 applies to individual and group health benefit plans regulated by the provisions of this article.
Section 38-71-1210. As used in this article:
(1) `Actuarial certification' means a written statement by a member of the American Academy of Actuaries or other person acceptable to the commissioner that a health carrier is in compliance with this article, based on the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods utilized by the health carrier in establishing premium rates for health benefit plans.
(2) `Class of business' means all or a distinct grouping of individuals or groups as shown on the records of the health carrier. The commissioner must approve the establishment of distinct groupings upon application to the commissioner and a finding by the commissioner that establishing these groupings would enhance the efficiency and fairness of the health benefit plan market.
(3) `Commissioner' means the Chief Insurance Commissioner of the South Carolina Department of Insurance.
(4) `Community rating' means a rating methodology in which the premium for all persons covered by a health benefit plan form is the same based on the experience of the entire pool of risks covered by that form without regard to any risk classification factors except age, gender, industry or occupation, and geographic area.
(5) `Department' means the South Carolina Department of Insurance.
(6) `Dependent' means an insured's spouse, unmarried child who is under the age of nineteen years, unmarried child who is a full-time student under the age of twenty-five years and financially dependent upon the eligible employee, or a dependent child of any age who is handicapped and who meets the eligibility criteria in Section 38-71-1340(1). For the purpose of this definition, a child may include a child for whom the employee or the employee's spouse has been appointed legal guardian.
(7) `Direct response solicitation' means an offer by a health carrier to persons in this State to effect insurance coverage which enables the individual to apply or enroll for the insurance on the basis of that offer.
(8) `Employees' means persons employed by a single employer and the officers, managers, and employees of the employer and of subsidiary or affiliated corporations of a corporate employer and the individual proprietors, partners, and employees of individuals and firms the business of which is controlled by the insured employer through stock ownership, contract, or otherwise. A health benefit plan may provide that the term `employees' includes retired employees.
(9) `Established geographic area' means the county or counties, or a portion of a county or counties, within which the carrier provides or arranges for health care services to be available to its insureds.
(10) `Financially impaired' means a situation in which a health carrier is not insolvent but is considered by the commissioner to be potentially unable to fulfill its contractual obligations or is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.
(11) `Format' means style, arrangement, and overall appearance including, but not limited to, the size, color, and prominence of type and the arrangement of text and captions.
(12) `Group health benefit plan' means a health benefit plan which is issued to a trust or to insure two or more persons who are associated in a health insurance purchasing cooperative or in a common group formed for purposes other than the obtaining of insurance. The benefits provided by the health benefit plan are based on a plan or plans precluding individual selection, except that insurance supplemental to the basic coverage may be available to persons insured under the policy. The premium for the health benefit plan must be paid by the policyholder from the policyholder's funds or from funds contributed by the insured persons, or both.
(13) `Health benefit plan' means a hospital or medical expense-incurred policy or certificate, hospital or medical service plan contract, or health maintenance organization or integrated health services network subscriber contract. It includes the entire contract between the health carrier and the insured, including the policy, riders, endorsements, and the application, if attached, and also includes subscriber contracts issued by nonprofit hospital, medical, and dental service associations. Health benefit plan does not include coverage that is:
(a) limited to disability or income protection coverage;
(b) automobile medical payment coverage;
(c) supplemental to liability insurance;
(d) designed solely to provide payments on a per diem, fixed indemnity, or nonexpense-incurred basis;
(e) credit accident and health insurance;
(f) designed solely to provide dental or vision care;
(g) blanket accident and sickness insurance as defined in Section 38-71-1010;
(h) accident-only coverage;
(i) specified disease coverage;
(j) long-term care insurance as defined in Section 38-72-40;
(k) issued as a supplement to Medicare or those policies governed by Section 1833 or 1876 of the federal Social Security Act, United States Code, Title 42, Section 1395, et seq., as amended;
(l) workers' compensation insurance or similar coverage;
(m) for Medicare services pursuant to a contract with the United States government; and
(n) for Medicaid services pursuant to a contract with the State.
(14) `Health care professional' means a person licensed, certified, or registered under the laws of this State to provide health care services.
(15) `Health carrier' means a person who offers, issues, provides, or delivers health benefit plans in this State, including a licensed insurance company, a prepaid hospital or medical service plan, an integrated health services network, a health maintenance organization, a multiple-employer welfare arrangement, or any person providing a health benefit plan that is subject to insurance regulation in this State.
(16) `Hospital' means a facility licensed as a general or specialized hospital under Section 44-7-260(A).
(17) `Individual health benefit plan' means a health benefit plan that purports to insure only one individual, except that an individual health benefit plan may insure originally or by subsequent amendment, upon the application of an adult member of a family who is considered the policyholder, any two or more eligible members of that family, including husband, wife, dependent children, or any children under a specified age which may not exceed nineteen years, and any other individual dependent upon the policyholder. It includes individual health benefit plans issued on a franchise plan issued to:
(a) three or more employees of a corporation, copartnership, or individual employer or a governmental corporation, agency, or department; or
(b) ten or more members of a trade or professional association, labor union, or any other association having had an active existence for at least two years when the association or union has a constitution or bylaws and is formed in good faith for purposes other than that of obtaining insurance; when the insureds, with or without their dependents, are issued the same form of an individual health benefit plan varying only as to amounts and kinds of coverage applied for by the insureds, and the employer, union, or association has approved and endorsed the health benefit plan being sold to its employees or members.
(18) `Late enrollee' means an eligible group member or dependent who requests enrollment in a group health benefit plan following the initial enrollment period applicable to the eligible member or dependent under the terms of the health benefit plan, if the initial enrollment period is at least thirty days. However, an eligible member or dependent must not be considered a late entrant if:
(a) the individual was covered under another group health benefit plan at the time the individual was eligible to enroll in the health benefit plan and declined enrollment on that basis and presents to the carrier a certificate of termination of the prior coverage, if the individual requests enrollment within thirty days after coverage under that plan was terminated;
(b) the individual has lost coverage under another group health plan due to the expiration of benefits available under the Consolidated Omnibus Budget Reconciliation Act of 1985, Public Law 99-272, as amended, and any state continuation laws applicable to the employer or carrier, if the individual requests enrollment within thirty days after coverage under that plan was terminated;
(c) the individual is a new spouse of an eligible employee, if enrollment is requested within thirty days of becoming legally married;
(d) the individual is a new dependent child of an eligible employee, if enrollment is requested within thirty days of becoming a dependent; or
(e) a court has ordered that coverage be provided for a dependent child under a covered employee's health benefit plan and request for enrollment is made within thirty days after issuance of the court order.
(19) `Loss ratio' means the ratio of incurred losses to earned premiums.
(20) `Mass-marketed accident, health, or accident and health insurance' means coverage under a group or blanket health benefit plan which is offered by means of direct response solicitation whether through a sponsoring organization or the mails or other media, except that it does not include coverage offered to an employee or union member through his employer or union, to a member of a professional association, to a member of a national association of retired or aged persons through the association, or to a member of a national association of war veterans either chartered by Congress or composed of veterans of a particular ethnic, racial, or religious background through the association. This coverage offered through a trust formed by one or more employers or labor unions, or both, or by a professional association or association of retired or aged persons or war veterans to provide insurance coverage for employees or union members, and their dependents or for association members and their dependents is considered to be offered through the employer, union, or association, respectively.
(21) `Preexisting condition' means a condition that, during a period of not more than six months immediately preceding the effective date of coverage, had manifested itself in symptoms which would cause an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment or for which medical advice, diagnosis, care, or treatment was recommended or received for that condition; or pregnancy existing on the effective date of coverage.
(22) `Rating period' means the twelve-month period for which premium rates established by a health carrier are assumed to be in effect, as determined by the health carrier.
(23) `Integrated health services network' means an organized public, private, proprietary, or nonprofit delivery system which meets all of the department's licensing standards for health maintenance organizations and additional standards promulgated pursuant to Section 38-71-1365 and which provides a continuum of preventive, primary, acute, and rehabilitative health care services.
(24) `Health insurance purchasing cooperative' means a nonprofit membership corporation that has a board of directors elected by employers and individuals that participate in the cooperative and that acts as a purchasing agent for health benefit plans on behalf of all individuals and employers permitted to obtain coverage through the cooperative.
(25) `Health care provider' means a health care professional, an organization licensed pursuant to Section 44-69-30 or 44-71-30, and a facility licensed pursuant to Section 44-7-260 or 44-89-40 to provide health care services.
Section 38-71-1220. (A) No health benefit plan may be issued or delivered in this State and no application, endorsement, or rider which becomes a part of the plan may be used until a copy of its form has been filed with and approved by the commissioner except as exempted by regulation as permitted by Section 38-61-20(C).
As soon as practicable, the commissioner shall provide his approval or disapproval in writing to the health carrier which filed the form. If the commission disapproves, he must give the reasons for disapproval, and the health carrier is entitled to a hearing pursuant to the Administrative Procedures Act. If no action has been taken to approve or disapprove a form for a health benefit plan, application, endorsement, or rider after the documents have been filed for ninety days, they are deemed to be approved. The commissioner may disapprove the form if the form:
(1) does not meet the requirements of law;
(2) contains any provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory; or
(3) is going to be solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading.
(B) (1) No premium rates applicable to individual health benefit plans and group health benefit plans with fifty or fewer insureds, excluding dependents, may be used unless they have been filed with and approved by the commissioner. The commissioner may disapprove premium rates if he determines that the benefits provided in the health benefit plans are unreasonable in relation to the premiums charged. The commissioner may consider the financial condition of the health carrier in approving or disapproving a premium. In determining whether to approve the schedule of premiums filed, the commissioner shall consider the prior experience of the carrier's community pool and the carrier's projections relating to claim costs, utilization, and administrative expenses. As soon as practicable, the commissioner shall provide his approval or disapproval in writing to the health carrier which has filed the premium rates. If the commissioner disapproves, he must give the reasons for disapproval, and the health carrier is entitled to a hearing pursuant to the Administrative Procedures Act on the disapproval. If no action has been taken to approve or disapprove the premium rates after they have been filed for ninety days, they are deemed to be approved.
(2) A health carrier at any time, except when required by law or order of the commissioner, may voluntarily decrease its premium charge for any approved health benefit plan form covered by item (1) without the prior approval of the commissioner. However, the health carrier must notify the commissioner and the consumer advocate of this decrease thirty days before the use of the revised premium charge. Notwithstanding any other provision of law, any time within one year after using a revised premium charge, the health carrier may return its premium charge back to the previously approved level by informing the commissioner and the consumer advocate of the revision thirty days before the effective date. The commissioner may not disapprove this revision.
(C) At any time the commissioner, after a public hearing of which at least thirty days' written notice has been given, may withdraw approval of forms or rates previously approved under subsection (A) or (B) if he determines that the forms or rates no longer meet the standards for approval specified in the applicable subsection.
(D) This section does not apply to policies issued in connection with loans made under the Small Loan Act of 1966.
Section 38-71-1230. (A) A health carrier shall return in the form of aggregate benefits for each health benefit plan form filed with the commissioner at least:
(1) seventy percent of the aggregate premiums collected for an individual health benefit plan; and
(2) seventy-five percent of the aggregate premiums collected for a group health benefit plan.
(B) Health carriers annually shall report the loss ratio, calculated pursuant to this section for each health benefit plan form. To calculate the loss ratio the aggregate benefits returned to insured persons over the three most recent rating periods must be divided by the aggregate premiums collected over the same three rating periods. In each case where the loss ratio for a form fails to comply with the appropriate loss ratio required in subsection (A), the carrier shall issue a refund or credit against future premiums for all policyholders with that health benefit plan form in an amount sufficient to assure that the aggregate benefits paid plus the amount of the refunds and credits equal the appropriate percent of the aggregate premiums collected for the health benefit plan form. The instructions and format for calculating and reporting loss ratios and issuing refunds and credits must be specified in regulations promulgated by the commissioner. These regulations also shall include provisions for the distribution of a refund or credit in the event of cancellation or termination by a policyholder. A refund under a plan for reduction of the rate of premium based on the loss ratios under group plans and a credit given under these policies may be used to reduce the policyholder's contribution to group insurance for the insureds of the policyholder, and the excess over the contribution by the employer must be applied by the policyholder for the sole benefit of the insureds.
(C) The commissioner may suspend all or any part of this section upon a filing by the health carrier and a finding by the commissioner that either the suspension is reasonable in light of the financially-impaired condition of the health carrier or that the suspension would enhance the efficiency and fairness of the marketplace for health benefit plans.
Section 38-71-1240. All health carriers are entitled to:
(1) issue and deliver health benefit plans to provide for prepayment of a health care service and to make payment directly to the provider of the services, in whole or in part, including, but not limited to, professional services, institutional care, personal services, and supplies;
(2) issue and deliver benefit health plans providing for payment of money directly to the insureds or on their behalf for health care services; and
(3) contract to act as agent in the administration of programs of health, hospital, and medical insurance sponsored or financed by an agency of the United States government or any political subdivision.
Section 38-71-1250. No health carrier or its employee or agent may make a misleading representation or incomplete or fraudulent comparison of a health benefit plan or health carrier for the purpose of inducing, or which may tend to induce, a person to lapse, forfeit, surrender, terminate, return, or convert a health benefit plan.
Section 38-71-1260. (A) A health carrier offering health benefit plans in the State shall deliver with each health benefit plan issued by it a copy of the application made by the insured so that the whole contract appears in the application and health benefit plan. If the health carrier fails to comply with this subsection, the contents of or an omission from the application is not a defense to a claim made under the health benefit plan. If the health benefit plan is issued upon an oral application, the contents of or an omission from the oral application is not a defense to a claim made under the health benefit plan.
(B) The falsity of a statement in the application for a health benefit plan covered by this article does not bar the right to recovery under the plan unless the false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the health carrier.
(C) No alteration of a written application for insurance by erasure, insertion, or otherwise may be made by a person other than the applicant without the person's written consent, and the making of an alteration without the consent of the applicant is a misdemeanor. However, insertions may be made by the health carrier for administrative purposes only in a manner that clearly indicates that the insertions are not to be ascribed to the applicant.
Section 38-71-1270. The acknowledgment of a health carrier of the receipt of notice given under a health benefit plan covered by this article, the furnishing of forms for filing proofs of loss, the acceptance of proofs of loss, or the investigation of a claim does not operate as a waiver of any right of the health carrier in defense of a claim arising under the health benefit plan.
Section 38-71-1280. (A) A foreign health carrier authorized to do business in this State with the commissioner's approval may insert in a health benefit plan covered by this plan issued or delivered pursuant to this article any provision required by the laws of any state or country in which the health carrier is licensed if the provision is not substantially in conflict with any law of this State. A domestic health carrier may insert in a health benefit plan covered by this article issued for delivery in another state or foreign country and governed by the laws of that state or county any provision required by the laws of the other state or country applicable to the health benefit plan.
(B) All health benefit plans extended to residents of this State under a plan issued outside this State must include in substance the provisions required by this article unless the commissioner determines that certain provisions are not appropriate for the coverage provided. A health carrier extending individual or group coverage to persons within the State under a health benefit plan issued outside this State to residents of this State shall comply with the requirements of this State relating to advertising and to claims settlement practices with respect to the health benefit plan.
(C) Upon request of the commissioner, copies of health benefit plans issued outside this State and covering residents of this State must be made available on an informational basis only. However, mass-marketed health benefit plans shall receive prior approval of the commissioner before they may be offered for sale to residents of this State. No mass-marketed health benefit plan may be effected on a person in this State if the charges to the individual insureds are unreasonable in relation to the benefits provided.
(D) If a health benefits plan is issued by a health carrier domiciled in this State for delivery to a person or group residing in another state and if the official having responsibility for the administration of the insurance laws of the other state has advised the commissioner that the health benefit plan is not subject to approval or disapproval by the official, the commissioner by ruling may require that the health benefit plan meet the standards set forth in this article.
Section 38-71-1290. (A) The commissioner shall promulgate regulations governing the format and required and optional provisions for individual and group health benefit plans. The regulations shall include, but are not limited to, changes, time limits on certain defenses, grace periods, reinstatement, notice of claim, claim forms, proofs of loss, time of payment of claims, payment of claims, physical examination and autopsy, legal actions, change of beneficiary, conformity with state statutes, change of occupation, misstatement of age, other insurance with the health carrier, insurance with other health carriers, unpaid premium, illegal occupation, and intoxicants and narcotics.
(B) No health benefit plan may be delivered or issued for delivery to a person or group in this State:
(1) unless the entire money and other considerations are expressed in the plan;
(2) unless the time at which the health benefit plan takes effect and terminates is expressed in the plan;
(3) unless each form, including riders and endorsements, is identified by a form number in the lower left-hand corner of the first page;
(4) if it contains a provision purporting to make a portion of the charter, rules, constitution, or bylaws of the health carrier a part of the health benefit plan unless that portion is set forth in full in the health benefit plan, except in the case of the incorporation of or reference to a statement of rates or classification of risks or short-rate table filed with the commissioner.
(C) The commissioner may promulgate regulations that specify prohibited health benefit plan provisions not otherwise specifically authorized by law which, in the opinion of the commissioner, are unjust, unfair, or unfairly discriminatory to the policyholder, a person insured under the health benefit plan, or beneficiary.
Section 38-71-1295. (A) The commissioner shall promulgate regulations governing the formation and operation of health insurance purchasing cooperatives in this State. All applications and filings and annual or quarterly financial reports required by regulations promulgated pursuant to this section must be treated as public documents.
(B) Nothing in this section may be construed to require disclosure of trade secrets, privileged or confidential commercial information, or replies to a specific request for information made by the commissioner. This information must be considered proprietary information and is not subject to disclosure by the commissioner to persons outside of the department except as agreed to by the health carrier or as ordered by a court of competent jurisdiction.
(C) A health insurance purchasing cooperative created pursuant to this chapter must:
(1) provide access for its members, to the extent practicable, to at least the following plans from which members may select their coverage:
(a) three health benefit plans that integrate financing and delivery of health care, such as health maintenance organizations or integrated health service networks; and
(b) one health benefit plan that is an indemnity plan;
(2) require each health benefit plan to accept all members of the cooperative who select that plan;
(3) allow voluntary membership of individuals, employers, and other purchaser groups;
(4) require each health benefit plan to provide a standard basic benefit package, as established by the commissioner pursuant to Section 38-71-1410, that may be compared according to price and quality and additional benefits that may be added to the basic benefit package;
(5) require the health insurance purchasing cooperative to serve as the single point of entry for members to have access to health benefit plans; and
(6) allow annual open enrollment opportunities for each subscriber and, at the option of each individual or group member, his dependents and procedures for enrollment of new members and members with changes in employment or family composition.
(D) A health insurance purchasing cooperative must provide informative materials for members about the benefits covered, the characteristics of the health benefit plans, the locations of participating health care providers, the prices for basic and additional benefits, and relevant information about quality. Each health insurance purchasing cooperative must disclose to its members all health benefit plans offered by the cooperative under which a provider has a contract to provide services. The board of directors of the cooperative may select and remove health benefit plans based on membership enrollment.
(E) Under an agreement between a health insurance purchasing cooperative and a health benefit plan, the cooperative shall offer, on behalf of the health benefit plan, enrollment in the health benefit plan to members of the cooperative. The offer of enrollment must be available on a continuous, year-round basis. Payment of premiums must be made, by individuals or employers on their behalf, directly to the cooperative for the benefit of the health benefit plan. Nothing in this subsection may be construed as placing upon a health insurance purchasing cooperative any risk associated with failure to make prompt payment of premiums. An eligible individual who enrolls with a health benefit plan through the cooperative is liable to the health benefit plan for premiums.
Section 38-71-1300. A health carrier or its officer or agent that issues or delivers to a person in this State a health benefit plan in wilful violation of this article is subject to Section 38-2-10 for each offense. A health benefit plan issued in violation of this article is held valid but must be construed as provided in this article and, when any provision in the health benefit plan is in conflict with this article, the rights, duties, and obligations of the health carrier, the policyholder, and the beneficiary are governed by this article.
Section 38-71-1310. (A) A health benefit plans delivered or issued for delivery in this State must include a provision that the policyholder is entitled to a grace period of at least thirty-one days for the payment of a premium due except the first, during which grace period the health benefit plan continues in force, unless the policyholder has given the health carrier written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The health benefit plan may provide that the policyholder is liable to the health carrier for the payment of a pro rata premium for the time the health benefit plan was in force during the grace period.
(B) No health carrier doing business in this State and issuing health benefit plans, the premium for which is to be collected in weekly, monthly, or other periodic installments by authority of a payroll deduction order executed by the insured and delivered to the health carrier or the insured's employer authorizing the deduction of premium installments from the insured's salary or wages, during the period for which the health benefit plan is issued and while the insured remains employed by the authorized employer may declare forfeited or lapsed the health benefit plan until and unless a written or printed notice of the failure of the employer to remit the premium or installment, stating the amount or portion due on the health benefit plan and to whom it must be paid, has been addressed and mailed to the person who is insured under the health benefit plan at least fifteen days before the health benefit plan is terminated or lapsed.
(C) A health carrier issuing health benefit plans in this State, where the premiums on the policies are collected directly by mail on a quarterly, semiannual, or annual basis, shall give a written notice to the policyholder of a premium due on the health benefit plan at least ten days before the due date. No premium is considered past due on the health benefit plan unless the policyholder has been given this notice and the health benefit plan remains in full force and effect until the expiration of the ten-day period after notice has been given. If the premium is not paid upon first notice, at least ten days before lapsing of the health benefit plan a second notice must be forwarded to the insured. Nothing contained in this subsection applies to health benefit plans where premiums are paid by bank draft or preauthorized check service.
(D) If a health benefit plan subject to this article provides for automatic discontinuance of the health benefit plan after a premium or subscription charge has remained unpaid through the grace period allowed for the payment, the health carrier is liable for valid claims for covered losses incurred before the end of the grace period. If the actions of the health carrier after the end of the grace period indicate that it considers the health benefit plan as continuing in force beyond the end of the grace period such as by continuing to recognize claims subsequently incurred, the carrier is liable for valid claims for losses beginning on or before the effective date of the written notice of discontinuance to the policyholder or other entity responsible for making payments or submitting subscription charges to the carrier. The effective date of discontinuance may not be before midnight at the end of the third scheduled work day after the date upon which the notice is delivered.
(E) This section may not be construed to relieve a policyholder from paying a premium or portion of a premium and it may not be construed so as to prevent termination for any other valid reason.
Section 38-71-1320. (A) If a health benefit plan contains provisions which reserve the right to the health carrier to increase the premium, the health benefit plan also shall provide that at least thirty-one days' prior written notice of a rate increase must be given to the insured before the rate increase becomes effective.
(B) If a health benefit plan contains provisions which establish, as an age limit or otherwise, a date after which the coverage provided by the health benefit plan will not be effective and if the date falls within a period for which a premium is accepted by the health carrier or if the health carrier accepts a premium after the date, the coverage provided by the health benefit plan must continue in force until the end of the period for which the premium has been accepted. If the age of the insured has been misstated and if, according to the correct age of the insured, the coverage provided by the health benefit plan would not have become effective or would have ceased before the acceptance of the premium or premiums, then the liability of the health carrier is limited to the refund, upon request, of all premiums paid for the period not covered by the policy.
Section 38-71-1330. (A) All health benefit plans and individual and group indemnity-type contracts issued by a nonprofit corporation which provide coverage for a family member of the insured must provide that the health insurance benefits applicable for children are payable with respect to a newly born child of the insured from the moment of birth. The coverage for a newly born child consists of coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities. If payment of a specific premium or subscription fee is required to provide coverage for a child, the health benefit plan may require that notification of birth of a newly born child and payment of the required premium or fees must be furnished to the health carrier within thirty-one days after the date of birth in order to have the coverage continue beyond the thirty-one-day period.
(B) This section applies to a child with respect to whom a decree of adoption by the insured has been entered within thirty-one days after the date of the child's birth and to a child with respect to whom:
(1) adoption proceedings have been instituted by the insured within thirty-one days after the date of the child's birth and the insured has temporary custody pursuant to Section 20-7-1738;
(2) the adoption proceedings have been completed and a decree of adoption entered within one year from the institution of proceedings, unless extended by order of the court by reason of the special needs of the child pursuant to Section 20-7-1760.
(C) Coverage must be provided as long as the insured has custody of the child pursuant to decree of the court and the required premiums or fees are furnished to the health carrier.
Section 38-71-1340. A health benefit plan delivered or issued for delivery in this State which provides that coverage of a dependent child terminates upon attainment of the limiting age for dependent children specified in the health benefit plan also shall:
(1) provide in substance that attainment of the limiting age does not operate to terminate the coverage of the child while the child is and continues to be both:
(a) incapable of self-sustaining employment by reason of mental retardation or physical handicap; and
(b) chiefly dependent upon the insured for support and maintenance, so long as proof of the incapacity and dependency is furnished to the health carrier by the insured within thirty-one days of the child's attainment of the limiting age and subsequently as may be required by the health carrier but not more frequently than annually after the two-year period following the child's attainment of the limiting age;
(2) for nonhandicapped dependent children, provide that upon the attainment of the limiting age the child is entitled to have an individual health benefit plan issued to him without evidence of insurability upon application made to the health carrier within thirty days following the attainment of the age and upon payment of the appropriate premium. The health benefit plan shall provide the coverage then being issued by the health carrier which is closest to, but not greater than, the terminated coverage. A probationary or waiting period set forth in the health benefit plan must be considered to be met to the extent coverage was in force under the prior health benefit plan.
Section 38-71-1350. (A) No health benefit plan issued or delivered in this State which in addition to covering the insured also provides coverage to the spouse of the insured may contain a provision for termination of coverage for a spouse covered under the health benefit plan solely as a result of a break in the marital relationship except by reason of an entry of a valid decree of divorce between the parties.
(B) A health benefit plan which contains a provision for termination of coverage of the spouse upon divorce shall contain a provision to the effect that upon the entry of a valid decree of divorce between the insured parties the divorced spouse is entitled to have an individual health benefit plan issued to him or her upon application made to the health carrier within sixty days following the entry of the decree and upon payment of the appropriate premium. The health benefit plan shall provide the coverage then being issued by the health carrier which is most nearly similar to, but not greater than, the terminated coverage. A probationary or waiting period set forth in the health benefit plan is considered to be met to the extent coverage was in force under the prior health benefit plan.
Section 38-71-1360. (A) A health benefit plan issued in this State may include provision for subrogation by the health carrier to the insured's right of recovery against a liable third party for not more than the amount of insurance benefits that the health carrier has paid previously in relation to the insured's injury by the liable third party. If the commissioner upon being petitioned by the insured, determines that the exercise of subrogation by a health carrier is inequitable and commits an injustice to the insured subrogation is not allowed. Attorneys' fees and costs must be paid by the health carrier from the amounts recovered.
(B) Employers who are wholly or partially self-insured for accident or health coverage whether or not they have engaged a third party administrator to administer a self-insurance health benefit plan have the same rights and responsibilities as health carriers have under this section.
Section 38-71-1365. (A) No person may establish or operate an integrated health service network without first obtaining a certificate of authority from the commissioner. An integrated health service network must meet the licensing standards for health maintenance organizations as provided in Chapter 33 and have the powers and duties of these organizations. Integrated health service networks also must meet additional standards promulgated by the commissioner which must be based on quality and performance, and must address:
(1) organizing and integrating service delivery to improve quality and enhance value which may mean integrating financing with delivery;
(2) developing information networks designed to improve the coordination, cost effectiveness, and quality of care;
(3) developing measures of quality which enable networks to identify health care providers which produce the best results;
(4) purchasing care from health care providers that deliver the best quality at a reasonable cost with strong incentives for consumers to use these providers;
(5) managing and coordinating care to continuously improve quality and cost effectiveness;
(6) promoting health by emphasizing wellness, prevention, and primary care;
(7) aligning incentives so that health care providers share a stake in the performance of the network to which they belong; and
(8) planning for cost effective allocation of resources systemwide, including dedicating facilities to specific uses and sharing technology.
(B) All applications and filings and annual or quarterly financial reports required by regulations promulgated pursuant to this section must be treated as public documents.
(C) Nothing in this section may be construed to require disclosure of trade secrets, privileged or confidential commercial information, or replies to a specific request for information made by the commissioner. This information must be considered proprietary information and is not subject to disclosure by the commissioner to persons outside of the department except as agreed to by the health carrier or as ordered by a court of competent jurisdiction.
Section 38-71-1370. (A) If a health benefit plan provides for payment or reimbursement for a service which is within the scope of practice of a licensed podiatrist, licensed oral surgeon, or licensed optometrist, the insured or other person entitled to benefits under the policy is entitled to payment or reimbursement in accordance with the usual and customary fee for the services whether the services are performed by a licensed physician or a licensed podiatrist, a licensed oral surgeon, or a licensed optometrist notwithstanding any provision contained in the policy, and the policyholder, insured, or beneficiary has the right to choose the provider of the services.
(B) If an individual or group health benefit plan denies a health care provider the right to participate as a contract provider under the plan, the health carrier shall provide a written explanation to the provider, including the factors used to evaluate the provider's offer to participate. However, nothing in this subsection or subsection (A) may be construed to require a health maintenance organization or integrated health services network to contract with a health care provider.
(C) Except as provided in subsection (D), if a health carrier offers a group health benefit plan containing a provision for medical expense benefits that does not provide payment for the services of certain types of health care professionals, it shall offer an optional rider or endorsement as part of the plan , if specifically requested by the policyholder, which defines these benefits as including payment to those health care professionals for procedures specified in the group health benefit plan which are within the scope of the practice of the health care professionals. Any additional cost to the insured must be reasonably related to benefits provided.
(D) If none of the group health benefit plans offered by the health carrier provide payment for the services of a certain type of health care professional, subsection (C) does not require an optional rider or endorsement to cover the services of that type of health care professional.
Section 38-71-1380. (A) All health care professionals and hospitals are required to provide written notice of the policies and procedures with regard to health benefit plan claims. The notice may take the form of a patient information card or notice clearly posted in all patient waiting areas of the providers' place of business.
(B) For filing and processing claims for services provided by health care professionals and covered by a health benefit plan, health carriers and health care professionals must use the standardized HCFA 1500 claim form or its successor as it may be amended from time to time. For filing and processing claims for services provided by hospitals and covered by a health benefit plan, health carriers and hospitals must use the standardized UB 82 claim form or its successor as it may be amended from time to time. The HCFA 1500 or the UB 82 claim forms or their successors may be altered only with a customized logo which must appear in the top portion of the claim form one inch vertical from the top.
Section 38-71-1390. (A) The commissioner shall promulgate regulations to establish specific standards, including standards of full and fair disclosure, that set forth the manner, content, and required disclosure for the sale of health benefit plans which may cover, but are not limited to, the following:
(1) terms of renewability;
(2) initial and subsequent conditions of eligibility;
(3) nonduplication of coverage provisions;
(4) coverage of dependents;
(5) preexisting conditions;
(6) termination of insurance;
(7) probationary periods;
(11) elimination periods;
(12) requirements for replacement;
(13) recurrent conditions;
(14) the definition of terms including, but not limited to, the following:
(vi) accidental means;
(vii) total disability;
(viii) partial disability;
(ix) nervous disorder;
(x) guaranteed renewable;
(xii) usual and customary fees.
(B) A health carrier shall make reasonable disclosure in solicitation and sales materials provided to individuals and groups of:
(1) the provisions concerning the health carrier's right to change premium rates;
(2) a description of the class of business in which the individual or group is or will be included, including the applicable grouping of plans;
(3) the provisions relating to renewability of coverage.
(C) In order to provide for full and fair disclosure in the sale of health benefit plans, no plan may be delivered or issued for delivery in this State unless, in the case of a direct response insurance product, the outline of coverage described in this subsection accompanies the health benefit plan and, in all other cases, the outline of coverage described in this subsection is delivered to the applicant at the time application is made and an acknowledgment of receipt or certificate of delivery of the outline is provided the insured with the application. If the health benefit plan is issued on a basis other than that applied for, the outline of coverage properly describing the health benefit plan shall accompany the health benefit plan when it is delivered and clearly state that it is not the health benefit plan for which application was made. The commissioner by regulation shall prescribe the format and content of the outline of coverage including, but not limited to:
(1) a statement identifying the applicable category or categories of coverage provided by the health benefit plan;
(2) a description of the principal benefits and coverage provided in the health benefit plan;
(3) a statement of the exceptions, reductions, and limitations contained in the health benefit plan;
(4) a statement of the renewal provisions, including any reservation by the health carrier of a right to change premiums;
(5) a statement that the outline is a summary of the health benefit plan issued or applied for and that the health benefit plan should be consulted to determine governing contractual provisions.
(D) A health benefit plan which is advertised, marketed, or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare must equal and may exceed the minimum standards for Medicare supplement policies as contained in regulations promulgated by the commissioner.
Section 38-71-1400. (A) An individual health benefit plan issued for delivery in this State shall have printed on the plan or attached to the plan a notice to the insured that ten days are allowed from the date of the receipt of the health benefit plan to examine its provisions and that the insured may for any reason surrender the health benefit plan to the health carrier. In addition, if the health benefit plan was solicited by a direct response health carrier rather than through a licensed insurance agent, the health benefit plan shall have printed on the plan or attached to the plan a notice to the insured that thirty days are allowed from the date of the receipt of the health benefit plan to examine its provisions and that the insured may for any reason surrender the health benefit plan to the health carrier. A premium advanced by the insured upon appropriate surrender as provided in this section, must be immediately returned in full by the health carrier to the insured.
(B) For purposes of this section, the insured is considered to have returned a health benefit plan sold on a direct response basis as of the date shown on the postmark or the date the insured notifies the health carrier or an agent of the health carrier in writing or in person that the insured does not want the health benefit plan, whichever is the earlier.
Section 38-71-1410. (A) The commissioner shall establish by regulation basic health benefit plans for individuals and for groups, including plans consistent with the operation and benefit plans of health maintenance organizations. A health carrier which delivers or issues for delivery individual health benefit plans must offer the individual basic health benefit plan established by the commissioner. A health carrier which delivers or issues for delivery group health benefit plans must offer the group basic health benefit plans established by the commissioner.
(B) No health benefit plan may be delivered or issued for delivery in this State which does not meet the actuarial equivalence of the basic health benefit plan unless the commissioner finds the health benefit plan will be in the public interest. This section does not preclude the issuance of any other health benefit plan which meets or exceeds the actuarial equivalence of the basic health benefit plan. The commissioner by regulation shall prescribe the method of identification of policies and contracts based upon coverage provided.
Section 38-71-1420. (A) Notwithstanding any other provision of law, except as provided in subsection (B) of this section, the underwriting of any health benefit plan may involve no more than the imposition of a pre-existing condition limitation as permitted by this section. A health benefit plan may contain a provision limiting coverage for pre-existing conditions. However, a health benefit plan delivered or issued for delivery in this State and every employee health plan offered by self-insured employers which includes a pre-existing condition provision shall contain the following provision or provisions which the commissioner finds to be more favorable to the individuals, group members, or their eligible dependents:
(1) in determining whether a pre-existing condition provision applies to an eligible person, the health benefit plan or employee health plan offered by a self-insured employer shall credit the time the person was previously covered under a previous health benefit plan or employee plan offered by a self-insured employer if the previous coverage was continuous to a date not more than sixty days before the effective date of the new coverage; and
(2) no pre-existing condition provision may exclude coverage for a period in excess of twelve months after the effective date of the coverage.
(B) Late enrollees may be excluded from coverage for up to six months if both a period of exclusion from coverage and a pre-existing condition exclusion are applicable to a late enrollee, the combined period shall not exceed twelve months.
Section 38-71-1430. (A) This section applies to group health benefit plans that are delivered, issued for delivery, or renewed in this State, including those to a trust located out of the State but which includes participating employers located in the State. A health carrier is considered to be a succeeding carrier within the meaning of this section if the effective date of the coverage provided by it is sixty-two days or less after the date of termination of coverage of the prior carrier.
(B) A notice of discontinuance by a health carrier shall include a request to the group policyholder or other entity involved to notify employees covered under the health benefit plan of the date when the group health benefit plan will discontinue and advise that, unless otherwise provided in the health benefit plan, the carrier is not liable for claims for losses incurred after that date. The notice also shall advise, when the plan involves employee contributions, that if the policyholder or other entity continues to collect contributions for the coverage beyond the date of discontinuance, the policyholder or other entity may be held solely liable for the benefits for which the contributions are collected.
(C) The health carrier shall prepare and furnish to the policyholder or other entity at the same time an appropriate sample notice form to be distributed to the employees or members concerned indicating the effective date of the discontinuance and urge the employees or members to refer to their health benefit plans in order to determine what rights are available to them as a result of the discontinuance.
(D) A group health benefit plan issued subject to this article or under which the level of benefits is modified or amended shall provide for a reasonable extension of benefits or accrued liability in the event of total disability at the date of discontinuance of the group health benefit plan. The provision is considered reasonable if it provides an extension of at least twelve months under major medical and comprehensive medical type coverage and under other types of hospital or medical expense coverage provides either an extension of at least ninety days or an accrued liability for expenses incurred during a period of disability or during a period of at least ninety days starting with a specific event which occurred while coverage was in force such as an accident. An applicable extension of benefits or accrued liability must be described in a health benefit plan involved and in group insurance certificates. The benefits payable during a period of extension or accrued liability may be subject to the policy's or contract's regular benefit limits such as benefits ceasing at exhaustion of a benefit period or of maximum benefits.
(E) The carrier responsible for liability must be indicated in those instances in which one carrier's contract replaces a plan of similar benefits of another. The prior carrier remains liable only to the extent of its accrued liabilities and extensions of benefits. The position of the prior carrier is the same whether the group policyholder or other entity secures replacement coverage from a new carrier, self-insures, or forgoes the provision of coverage.
(F)(1) A person who is eligible for coverage in accordance with the succeeding carrier's plan of benefits with respect to classes eligible and activity at work and nonconfinement rules must be covered by that carrier's plan of benefits.
(2) A person not covered under the succeeding carrier's plan of benefits in accordance with subsection (F)(1) nevertheless must be covered by the succeeding carrier in accordance with the following rules if the individual was validly covered, including benefit extension, under the prior plan on the date of discontinuance and if the individual is a member of the class of individuals eligible for coverage under the succeeding carrier's plan. A reference in the following rules to an individual who was or was not totally disabled is a reference to the individual's status immediately before the date the succeeding carrier's coverage becomes effective.
(a) The minimum level of benefits to be provided by the succeeding carrier must be the applicable level of benefits of the succeeding carrier's plan reduced by any benefits payable by the prior plan.
(b) Coverage must be provided by the succeeding carrier until at least the earliest of the following dates:
(i) the date the individual becomes eligible under the succeeding carrier's plan as described in subsection (F)(1);
(ii) for each type of coverage, the date the individual's coverage would terminate in accordance with the succeeding carrier's plan provisions applicable to individual termination of coverage, such as at termination of employment or ceasing to be an eligible dependent.
(iii) in the case of an individual who was totally disabled and in the case of a type of coverage for which subsection (D) requires an extension of accrued liability, the end of a period of extension or accrued liability which is required of the prior carrier by that subsection or if the prior carrier's health benefit plan is not subject to that subsection, would have been required of that carrier had its health benefit plan been subject to that subsection at the time the prior plan was discontinued and replaced by the succeeding carrier's plan.
(3) In the case of a pre-existing conditions limitation included in the succeeding carrier's plan, the level of benefits applicable to pre-existing conditions of persons becoming covered by the succeeding carrier's plan in accordance with this subsection during the period of time this limitation applies under the new plan must be the lesser of:
(a) the benefits of the new plan determined without application of the pre-existing conditions limitation; and
(b) the benefits of the prior plan.
(4) The succeeding carrier, in applying a deductible or waiting period in its plan, shall give credit for the satisfaction or partial satisfaction of the same or similar provisions under a prior plan providing similar benefits. In the case of deductible provisions, the credit must apply for the same or overlapping benefit periods and must be given for expenses actually incurred and applied against the deductible provisions of the prior carrier's plan during the ninety days preceding the effective date of the succeeding carrier's plan but only to the extent these expenses are recognized under the terms of the succeeding carrier's plan and are subject to similar deductible provisions.
(5) In a situation where a determination of the prior carrier's benefit is required by the succeeding carrier, at the succeeding carrier's request the prior carrier shall furnish a statement of the benefits available or pertinent information sufficient to permit verification of the benefit determination or the determination itself by the succeeding carrier. For the purposes of this section, benefits of the prior plan are determined in accordance with all of the definitions, conditions, and covered expense provisions of the prior plan rather than those of the succeeding plan. The benefit determination must be made as if coverage had not been replaced by the succeeding carrier.
Section 38-71-1440. (A) A group health benefit plan issued for delivery or renewed in this State must provide that an employee or member who has been insured continuously under the group health benefit plan for at least six months whose coverage under the group health benefit plan has been terminated for any reason other than nonpayment of the required contribution is entitled to continue coverage under the group health benefit plan for the fractional month remaining at termination plus six additional health benefit plan months. A notification of the privilege to continue coverage after termination must be included in each certificate of coverage. In addition, the employer or group policyholder shall clearly and meaningfully advise an employee or group member upon termination of:
(1) the right to continue insurance;
(2) the amount of premium required; and
(3) the employee's or group member's responsibility to pay the premium each month before the date that the health benefit plan month begins.
Continuation of coverage is subject to the group health benefit plan or a successor health benefit plan remaining in force and the employee or group member paying the entire group premium, including any portion usually paid by the former employer before the date each month that the group health benefit plan month begins. A group health benefit plan is considered to be a successor health benefit plan within the meaning of this subsection if the effective date of the coverage provided by it is sixty-two days or less after the date of termination of coverage of the prior carrier.
(B) An employee or group member is not entitled to continue coverage under the group if the employee or group member is:
(1) eligible for other group coverage which provides similar benefits;
(2) eligible for Medicare benefits under federal law;
(3) entitled under federal law to continuation of coverage for a period of greater duration than provided by this section.
Benefits, except extended benefits payable by the health benefit plan during the period of continuation, are considered secondary to benefits under any other group health benefit plan that is in force on a person insured through this continuation privilege.
(C) An employee or group member who wishes continuation of coverage pursuant to this section must request such continuation in writing within sixty days following the later of:
(1) the date of termination; or
(2) the date the employee or member is given notice of the right of continuation by either the employer or group remitting agent.
Section 38-71-1450. (A) The benefits payable under a group health benefit plan are payable to the insured or to a beneficiary or beneficiaries designated by the insured, other than the employer. However, if there is no designated beneficiary for all or any part of the insurance at the death of the employee or member, the amount of insurance payable for which there is no designated beneficiary is payable to the estate of the employee or member, except that:
(1) the health carrier may in this case, at its option, pay the insurance to one or more of the following surviving relatives of the employee or member: wife, husband, mother, father, child or children, or brothers or sisters; and
(2) payment of benefits for expenses incurred on account of hospitalization or medical or surgical aid, as provided in subsection (B), may be made by the health carrier to the hospital or other person furnishing the aid. This payment discharges the health carrier's obligation with respect to the amount of insurance paid.
The term `insured' as used in this article may not be construed as preventing a person other than the insured, with a proper insurable interest, from making application for and owning a health benefit plan covering the insured or from being entitled under the health benefit plan to indemnities, benefits, and rights provided in the plan.
(B) A health benefit plan may include provisions for the payment by the health carrier of benefits to the employee or other member of the insured group on account of hospitalization or medical or surgical aid for himself, his spouse, his child or children, or other individuals chiefly dependent upon him for support and maintenance.
Section 38-71-1460. (A) No health benefit plan may be issued in this State unless the plan is community rated. Group health benefit plans obtained through an out-of-state trust must be community rated regardless of the site of delivery of the policy.
(B) Nothing in this section shall prohibit the use of premium rate structures to establish different premium rates for individuals as opposed to groups or separate community rates for different classes of business. Differences among classes of business must be based only upon actual administrative costs or other business costs borne by the health carrier for serving different individuals or groups. Discrimination is prohibited between individuals or groups of the same class in the amount of premiums or rates charged for a health benefit plan covered by this article, in the benefits payable under the plan, in terms or conditions of the health benefit plan, or in any other manner whatsoever.
(C) A health carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal practices, including information and documentation which demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles. A health carrier shall make this information and documentation available to the commissioner upon request. The information must be considered proprietary and trade secret information and is not subject to disclosure by the commissioner to persons outside of the department except as agreed to by the health carrier or as ordered by a court of competent jurisdiction.
(D) A health carrier shall file each March first with the commissioner an actuarial certification certifying that the health carrier is in compliance with this section and that the rating methods of the health carrier are actuarially sound. A copy of the certification must be retained by the health carrier at its principal place of business.
(E) The commissioner shall permit the use of separate community rates for established geographic areas which may in a given case include a single county. The areas must be approved by the commissioner as part of the rate filing. The commissioner may not require the inclusion of any established geographic areas within the proposed community rated areas selected by the health carrier in its rate filing so long as the carrier's proposed areas do not contain configurations designed to avoid or segregate particular areas within a county covered by the carrier's community rates.
Section 38-71-1470. (A) An individual and dependents of the individual applying for an individual health benefit plan must be accepted at all times throughout the year. A group, including all employees or group members and dependents of these employees or members, applying for a group health benefit plan must be accepted at all times throughout the year. Once accepted for coverage, an individual or group may not be terminated by the health carrier due to claims experience.
A health carrier may not be required to cover an individual or group which is not physically located in the carrier's approved service area or if the carrier demonstrates to the commissioner's satisfaction, that it will not have the capacity within its network of providers to deliver adequate service because of existing individual and group contract obligations.
(B) Except as provided in subsection (C), a health benefit plan must be renewable to all eligible individuals, groups, and dependents at the option of the policyholder except for:
(1) nonpayment of required premiums;
(2) fraud or material misrepresentation by the policyholder, including equitable fraud, with respect to coverage of eligible individuals or their dependents;
(3) noncompliance with plan provisions;
(4) termination of eligibility of the policyholder; or
(5) cancellation or amendment by the commissioner of the specific health benefits plan.
(C) No health benefit plan may contain a provision which gives the health carrier the right to terminate the health benefit plan at a date other than the health benefit plan anniversary date or the premium due date. A health carrier may cease to renew all health benefit plans within a class of business. The health carrier shall provide notice to all affected health benefit plans and to the commissioner in each state in which an affected insured individual is known to reside at least ninety days before termination of coverage. A health carrier which exercises its right to cease to renew all plans within a class of business may not transfer or otherwise provide coverage to any of the individuals or groups from the nonrenewed health benefit plan or class of business unless the health carrier offers to transfer or provide coverage to all affected individuals and groups including dependents. In addition any health carrier which exercises its right to cease to renew all plans within a class of business may not establish a new class of business for five years after the nonrenewal of the plans without prior approval of the commissioner.
(D) A health carrier may not transfer involuntarily an individual or group into or out of a class of business. A small employer health carrier may not offer to transfer a group into or out of a class of business, unless the offer is made to transfer all groups in the class of business.
(E) A health carrier may not be required to offer coverage or accept applications pursuant to this section if the commissioner finds that the acceptance of applications would place the carrier in a financially impaired condition.
Section 38-71-1480. (A) Except as provided in (B), this article applies to each health benefit plan that is delivered, issued for delivery, renewed, or continued in this State after the effective date of this act. For purposes of this section, the date a plan is continued is the first rating period which commences after the effective date of this act.
(B) The loss ratio provisions of Section 38-71-1230, the limitations on underwriting in Section 38-71-1420, the community rating provisions of Section 38-71-1450, and the open enrollment and guaranteed renewal provisions of Section 38-71-1460, and the basic health benefit plan requirements of Section 38-71-1410 apply to each health benefit plan that is delivered, issued for delivery, renewed, or continued in this State after January 1, 1995.
Section 38-71-1490. (A) An individual who is eligible to participate in a group health benefit plan may not be covered by an individual health benefit plan which provides benefits that are the same or similar to coverage provided in the group plan.
(B) If a health carrier offers a health benefit plan to a group, the carrier shall offer coverage to all eligible members of the group and their dependents. A health carrier may not offer coverage only to certain individuals or to only part of the group. Except for late enrollees, a health carrier may not modify a health benefit plan with respect to a group, eligible members, or dependents, through riders, endorsements or otherwise, to restrict or exclude coverage for certain diseases or medical conditions otherwise covered by the health benefit plan.
(C) A health carrier or an employee or agent of a health carrier may not directly or indirectly:
(1) discourage an individual or group from applying or direct an individual or group not to apply for coverage with the carrier because of health status, medical history, claims experience, industry, occupation, or geographic location of the individual or group;
(2) encourage or direct an individual or group to seek coverage from another health carrier because of health status, medical history, claims experience, industry, occupation, or geographic location of the individual or group;
(3) enter into a contract, agreement, or arrangement with an intermediary that provides for or results in compensation to an intermediary for the sale of a health benefit plan that varies according to the health status, medical history, claims experience, industry, occupation, or geographic location of the individual or group;
(4) terminate, fail to renew, or limit its contract or agreement of representation with an intermediary for any reason related to the health status, medical history, claims experience, industry, occupation, or geographic location of the individuals or groups placed by the intermediary with the health carrier;
(5) induce or otherwise encourage a group to separate or otherwise exclude a group member from a health benefit plan provided in connection with the member's employment;
(D) Every health carrier actively shall market all of its health benefit plans, including the basic benefit plan, in the geographic areas in which the carrier makes coverage available or provides benefits. Subsections (B)(1) and (B)(2) do not prohibit a health carrier from providing an individual or group with information about an established geographic service area or restricted network provision. Upon the request of an individual or group, a health carrier must provide information, including price, about every health benefit plan it provides to individuals or groups in the same class of business. The commissioner may promulgate regulations to establish additional standards to provide for the fair marketing and broad availability of health benefit plans in the State.
(E) No health carrier, subsidiary of a health carrier, or controlled person of a holding company of a health carrier may:
(1) act as an administrator or claims paying agent, as opposed to a health carrier, on behalf of groups of fifty or fewer insureds, excluding dependents, which if they purchased a health benefit plan would be subject to this article; or
(2) provide stop-loss, catastrophic, or reinsurance coverage to a group of fifty or fewer insureds, excluding dependents which if it purchased a health benefit plan would be subject to this article.
(F) A person including an employer or health carrier who violates or causes another person to violate this section may be fined by the commissioner in an amount not less than ten thousand dollars for each occurrence, in addition to other penalties permitted by law.
Section 38-71-1500. A person violating a requirement of this article may be fined in an amount not to exceed ten thousand dollars for each violation. Penalties must be proportionate to the severity of the violation as set forth by regulations of the department. These fines are in addition to any other penalties prescribed by law.
Section 38-71-1510. (A) The commissioner shall promulgate regulations to assure an orderly implementation and ongoing operation of the higher loss ratios, open enrollment, and community rating required by this article, including provisions designed to encourage health carriers to remain in or enter the small group or individual health benefit plan markets. The regulations must be designed to promote an insurance market where premiums do not unduly fluctuate, health carriers are reasonably protected against unexpected significant shifts in the number of persons covered, and other market stability features deemed appropriate by the commissioner. The regulations may not require a health carrier or a subsidiary or controlled person of a holding company of the carrier to enter, continue to conduct, or withdraw from any line of business as a condition of entering, continuing in, or withdrawing from any other line of business.
(B) Before adopting these regulations the commissioner shall convene a technical advisory committee to provide advice and recommendations to the commissioner on issues including, but not limited to, voluntary reinsurance, pooling, risk sharing, the moderation of initial community rates as compared to prior rates, or premium stabilization methods. The technical advisory committee is comprised of nine members:
(1) the commissioner or the commissioner's designee;
(2) the Chair of the Senate Banking and Insurance Committee or the Chair's designee;
(3) the Chair of the House Labor, Commerce and Industry Committee or the Chair's designee;
(4) six members appointed by the Governor to represent health carriers and purchasers of health benefit plans.
The commissioner or designee shall chair the committee and shall convene its first meeting within three months of the effective date of this act. In addition, the commissioner may obtain the services of an actuary with experience relating to premium rates and market stabilization.
(C) The regulations shall include reinsurance or a pooling process involving health carrier contributions to or receipts from a fund which must be designed to share the risk of cost variations among health carriers based upon demographic factors of the persons covered which correlate with the cost variations designed to protect health carriers from disproportionate adverse risks of offering coverage to all applicants. The reinsurance or pooling may not protect carriers from variations in claims costs due to competition, innovation, and efficiency of operation."
SECTION 9. (A) The Governor's Committee on Basic Health Services shall recommend the form and level of coverage to be required as basic health benefit plans under Section 38-71-1410 of the 1976 Code, as contained in Section 8 of this act. The committee shall recommend benefit levels, cost-sharing levels, exclusions, and limitations for the basic health benefit plan. The committee shall specifically recommend which, if any, mandated coverage of health care services or health care providers should be included in the basic health benefit plan. The committee also shall design and submit to the commissioner by July 1, 1994, a basic health benefit plan which contains benefit and cost-sharing levels that are consistent with the basic method of operation and the benefit plans of health maintenance organizations, including any restrictions imposed by federal law. The plans recommended by the committee may include cost containment features such as:
(1) utilization review of health care services, including review of medical necessity of hospital and physician services;
(2) case management;
(3) selective contracting with hospitals, physicians, and other health care providers;
(4) reasonable benefit differentials applicable to providers that participate or do not participate in arrangements using restricted network provisions; and
(5) other managed care provisions.
(B) Within one year of the effective date of this act the technical advisory committee created by Section 38-71-1510 of the 1976 Code, as contained in Section 8 of this act, also shall report to the Governor and the General Assembly regarding the efficacy of developing wellness incentives that could be used to allow premium reductions for certain individuals or groups from established community rates. Wellness incentives to be considered shall include, but are not limited to, smoking status, physical fitness activities, frequency of physician fitness evaluations, and dietary habits.
SECTION 10. Title 15 of the 1976 Code, as amended, is amended by adding:
Section 15-47-10. (A) An action to recover monetary damages not exceeding fifty thousand dollars total, exclusive of interests, costs, and attorneys' fees, for injury to a person arising out of medical, surgical, or dental treatment, omission, or operation by a licensed health care provider as defined in Article 5, Chapter 79, Title 38 acting within the scope of his profession is subject to court-ordered arbitration before the commencement of a trial of the action. Pursuant to this article the court may order a case to arbitration before trial if it finds that the amount actually in issue is fifty thousand dollars or less, even though a greater amount is claimed. The court may exempt or withdraw an action from arbitration on its own motion or on motion of a party made not less than ten days before the arbitration hearing and a showing that:
(1) the amount of the claim exceeds fifty thousand dollars; or
(2) there is a strong and compelling reason to exempt or withdraw the action.
(B) The parties may at any time agree that the decision of the arbitrator will be binding; otherwise, the decision may be appealed as provided in Section 15-47-50.
Section 15-47-20. (A) A cause of action under this article may be filed with the court on forms provided by the court and must be accompanied by the fee established by the court. The court shall send copies by certified mail, return receipt requested, to all other affected parties.
(B) Designation of an action for arbitration does not affect a party's right to file a motion with the court.
Section 15-47-30. The court shall select and maintain a list of qualified arbitrators which is a public record. Unless the parties file a stipulation identifying their choice of an arbitrator on the court's list within the first twenty days of the one hundred twenty-day period fixed in Section 15-47-40(B), the court shall appoint an arbitrator chosen at random from the list, and will notify the parties of the arbitrator selected in the notice of the hearing. The court shall establish the qualifications, fees, and expenses for arbitrators.
Section 15-47-40. (A) Except as provided in this section, the proceedings of the arbitration hearing are governed by Sections 15-48-50, 15-48-60, 15-48-70, 15-48-80, and 15-48-90 and rules adopted by the South Carolina Supreme Court.
(B) The date set for the hearing may not be later than one hundred twenty days from the date the cause of action is filed. Within thirty days after the completion of a hearing but no later than one hundred eighty days after filing the cause of action, the arbitrator shall file a written decision with the court. The court shall mail copies of the decision to all parties concerned and their counsel. If the decision is not filed within one hundred eighty days, the cause of action may be filed directly in circuit court.
(C) The cause of action must be submitted to the arbitrator in an informal manner. Strict adherence to the rules of procedure and evidence are not required. No party in a proceeding under this article may be required to produce expert testimony as a prerequisite to a decision in the party's favor.
(D) If the decision is in favor of the plaintiff, it shall specify the amount of damages considered to be just compensation based on the claim; if there are multiple plaintiffs or defendants, the award shall specify the allocation of amounts to be paid or received by the parties. The decision of the arbitrator may, but is not required to, contain findings of fact, conclusions of law, or opinions supporting an award.
Section 15-47-50. (A) If the parties have agreed that the decision of the arbitrator will be binding, the court, upon application by the prevailing party, shall issue a judgment order in accordance with the decision of the arbitrator and the judgment order has the same effect as any other judgment order issued by the court.
(B) In all other cases within thirty days after issuance of a final decision by the arbitrator, any party may appeal to the court. The court shall hear the matter de novo and any party is entitled to trial by jury. In accordance with Rule 26 of the South Carolina Rules of Civil Procedure, in a trial under this section no party may be required to duplicate discovery related to the cause of action which was obtained in conjunction with the arbitration hearing. A trial de novo must be conducted as if there had been no arbitration proceeding. No reference may be made to prior arbitration proceedings in the presence of a jury without consent of all parties to the arbitration and the court's approval.
Section 15-47-60. The arbitrator's expenses and fees and other expenses, not including counsel fees incurred in the conduct of the arbitration, must be paid as provided in the award. If an award made by the panel is final and not appealed and the defendant fails to comply with the award, the plaintiff may proceed to collect all or any part of a past due award in court. In a proceeding under this section, the plaintiff shall be awarded costs, reasonable attorney fees, and interest. The award must resolve all issues raised by the pleadings and may exceed fifty thousand dollars.
Section 15-47-70. The term `court' means any court of competent jurisdiction in this State.
Section 15-47-110. With the agreement of all parties involved, an action to recover damages for past injury to a person which arose out of medical, surgical, or dental treatment, omission, or operation by a licensed health care provider as defined in Article 5, Chapter 79, Title 38 acting within the scope of his profession may be submitted to binding arbitration in accordance with the provisions of the Uniform Arbitration Act, Chapter 48 of Title 15. However, the arbitrator in a binding arbitration of a medical malpractice claim must be drawn from the list of qualified arbitrators maintained by the court pursuant to Section 15-47-30.
Section 15-47-120. No agreement for binding arbitration of a dispute concerning professional negligence of a health care provider may be submitted to a patient for approval when the patient's condition prevents the patient from making a rational decision whether or not to execute the agreement.
Section 15-47-130. (A) An agreement for binding arbitration of a dispute concerning professional negligence of a health care provider must have the following statement set forth as part of the agreement: `It is understood that this claim of medical malpractice, including any claim that medical services were unnecessary or unauthorized or were improperly, negligently, or incompetently rendered or omitted, will be determined by submission to binding arbitration in accordance with the provisions of the Uniform Arbitration Act, Chapter 48 of Title 15 of the 1976 Code, as amended, and not by a lawsuit or resort to court process except as South Carolina law provides for judicial review of arbitration proceedings. The patient is encouraged to seek legal counsel concerning this agreement. By entering into this agreement, the parties to the agreement have agreed to the use of binding arbitration in lieu of having the dispute decided in a court of law before a jury.'
(B) Immediately preceding the signature lines in a binding arbitration agreement, the following notice must be printed in at least ten-point, bold-face type:
`NOTE: BY SIGNING THIS AGREEMENT YOU ARE AGREEING TO HAVE THIS ISSUE OF MEDICAL MALPRACTICE DECIDED BY NEUTRAL BINDING ARBITRATION RATHER THAN BY A JURY OR COURT TRIAL.
YOU HAVE THE RIGHT TO SEEK LEGAL COUNSEL.
NO HEALTH CARE PROVIDER MAY REFUSE TO PROVIDE MEDICAL CARE SERVICES TO A PATIENT SOLELY BECAUSE THE PATIENT REFUSED TO SIGN AN AGREEMENT.'
Section 15-47-140. The patient must be provided with a written copy of an agreement subject to the provisions of this article at the time that it is signed by the parties.
Section 15-47-150. Even if it complies with the provisions of this article, an agreement for binding arbitration of a dispute concerning professional negligence of a health care provider may be declared invalid by a court if the court finds:
(1) the agreement failed to meet the standards for binding arbitration agreements as specified in this article;
(2) the execution of the agreement was induced by fraud;
(3) the patient executed the agreement as a direct result of the willful or negligent disregard of the patient's right to refrain from executing the agreement; or
(4) the patient executing the agreement was not able to communicate effectively in spoken and written English, unless the agreement is written in the patient's native language.
Section 15-47-160. No health care provider may refuse to provide medical care services to a patient solely because the patient refused to sign an agreement containing a provision for binding arbitration of a dispute which has arisen concerning professional negligence of the provider.
Section 15-47-170. A violation of Section 15-47-130 or Section 15-47-160 constitutes unprofessional conduct and the appropriate authority which conducts disciplinary proceedings relating to the health care provider shall consider and take appropriate disciplinary action against the health care provider as provided under the relevant licensing statute.
Section 15-47-310. As used in this article:
(1) `Economic loss' means pecuniary harm for which damages are recoverable under the laws of this State.
(2) `Future damages' means damages of any kind arising from personal injuries which the trier of fact finds will accrue after the damages findings are made.
(3) `Health care facility' means a facility licensed pursuant to Section 44-7-260 to provide health care services.
(4) `Health care professional' means a person licensed, certified, or registered under the laws of this State to provide health care services. The term includes a professional corporation or other professional entity comprised of health care professionals as permitted by the laws of this State.
(5) `Noneconomic loss' means nonpecuniary harm for which damages are recoverable under the laws of this State, but the term does not include punitive or exemplary damages.
(6) `Past damages' means damages that have accrued before the damages findings are made, including punitive or exemplary damages allowed by the laws of this State.
(7) `Present value' means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the judgment is entered.
(8) `Qualified insurer' means a health carrier as defined by Section 38-71-1210 or a self-insurer, assignee, plan, or arrangement approved by the court.
Section 15-47-320. In a civil action for damages in tort brought against a health care professional or a health care facility, the trial judge shall enter a judgment ordering that awards for future damages be paid by periodic payments rather than by a lump sum payment if the award for future damages exceeds the present value of one hundred fifty thousand dollars, as determined by the court. In an action in which the award for future damages is one hundred fifty thousand dollars or less, present value, the trial judge may order that awards for future damages be paid by periodic payments. The fact that payment of a judgment is to be paid by periodic payments may not be disclosed to a jury.
Section 15-47-330. The court shall apply applicable rules of law to the findings of past and future damages. The court shall preserve the rights of a subrogee to be paid in a lump sum. The court shall specify the payment of attorney fees and litigation expenses in a manner separate from the periodic installments payable to the claimant, either in a lump sum or by periodic installments, pursuant to an agreement entered into between the plaintiff or beneficiary and his attorney, computed in accordance with the applicable principles of law.
Section 15-47-340. (A) The court in considering evidence of the need for one or more future major medical proceedings or services may enter judgment for lump sum payment, payable either immediately or at some designated date or dates in the future. Upon petition of a party before entry of judgment and a finding of incapacity to fund the periodic payments the court, at the election of the plaintiff or at the election of the beneficiaries in an action for wrongful death, shall enter a judgment for the present value of the periodic payments.
(B) Within no more than three months after the entry of verdict by the trier of fact and before the court enters judgment for periodic payments, the plaintiff may elect to receive the immediate payment to the plaintiff of the present value of the future damage award in a lump sum amount in lieu of periodic payments. In order to exercise this right, the plaintiff must:
(1) be twenty-one years old by the time the periodic payment order is entered;
(2) not be an incapacitated person, as defined in Section 62-5-101; and
(3) have been provided financial counseling and must be making an informed decision.
Section 15-47-350. (A) A judgment for periodic payments under this article shall provide that:
(1) the periodic payments are fixed and determinable as to amount and time of payment;
(2) the periodic payments may not be accelerated, deferred, increased, or decreased by the recipient of the payments; and
(3) the recipient of the payments must be a general creditor of the qualified insurer.
(B) Unless the court directs otherwise and the parties otherwise agree, periodic payments must be scheduled at one month intervals. Payments for damages accruing during the scheduled intervals are due at the beginning of the intervals. For good cause shown, the court may direct the periodic payments to continue for an initial term of years notwithstanding the death of the judgment creditor during that term.
(C) Money damages awarded for loss of future earnings may not be reduced or payments terminated by reason of the death of the judgment creditor. Remaining periodic payments must be paid to the heirs and devisees of the judgment creditor. Payments for future damages other than loss of future earnings cease at the death of the judgment creditor.
Section 15-47-360. (A) A judgment for periodic payments entered in accordance with this article shall provide for payments to be funded in one or more of the following forms approved by the court:
(1) annuity contract issued by a company licensed to do business as an insurance company under the laws of this State;
(2) an obligation or obligations of the United States;
(3) evidence of applicable and collectible liability insurance from one or more qualified insurers;
(4) an agreement by one or more personal injury liability assignees to assume the obligation of the judgment debtor;
(5) an obligation of the State of South Carolina or of a public entity other than the State which is self insured; or
(6) any other satisfactory form of funding.
(B) The court shall require that the annuity contract or other form of funding permitted by this section show that portion of each periodic payment which is attributable to loss of future earnings and that portion attributable to all other future damages.
Section 15-47-370. (A) If the court enters a judgment for periodic payments under this article, each party liable for all or a portion of the judgment, unless found to be incapable of doing so, separately or jointly with one or more others shall provide the funding for the periodic payments in a form prescribed in Section 15-47-360 within sixty days after the date the judgment is entered. A liability insurer having a contractual obligation and any other person adjudged to have an obligation to pay all or part of a judgment for periodic payments on behalf of a judgment debtor is obligated to provide this funding to the extent of its contractual or adjudged obligation if the judgment debtor has not done so.
(B) A judgment creditor or successor in interest and a party having rights under subsection (D) may move that the court find that funding has not been provided with regard to a judgment obligation owing to the moving party. Upon this finding, the court shall order that funding complying with this article be provided within thirty days. If funding is not provided within that time and subsection (C) does not apply, the court shall calculate the present value of the periodic payment obligation and enter a judgment for that amount in favor of the moving party.
(C) If a judgment debtor who is the only person liable for a portion of a judgment for periodic payments fails to provide funding, the right to present value payment described in subsection (B) applies only against that judgment debtor and the portion of the judgment so owed.
(D) If more than one party is liable for all or a portion of a judgment requiring funding under this article and the required funding is provided by one or more but fewer than all of the parties liable, the funding requirements are satisfied and those providing funding may proceed under subsection (B) to enforce rights for funding or present value payment to satisfy or protect rights of reimbursement from a party not providing funding.
Section 15-47-380. An assignment by a judgment creditor or an agreement by a judgment creditor to assign a right to receive periodic payments for future damages contained in a judgment entered under this article is enforceable only as to amounts:
(1) to secure payment of alimony, maintenance, or child support;
(2) for the costs of products, services, or accommodations provided or to be provided by the assignee for medical or other health care; or
(3) for attorney fees and other expenses of litigation incurred in securing the judgment.
Section 15-47-390. Except as provided in Section 15-47-380, periodic payments for future damages contained in a judgment entered under this article for loss of earnings are exempt from garnishment, attachment, execution, and any other process or claim to the extent that wages or earnings are exempt.
Section 15-47-400. Nothing in this article may be construed to limit or affect the settlement of actions triable under this chapter and this article does not apply to the settlement of actions except as otherwise agreed to by the parties. Parties to an action on a claim for personal injury are not required to but may file with the court in which the action is pending or, if none is pending, with the court of competent jurisdiction over the claim a settlement agreement for future damages payable in periodic payments. The settlement agreement may provide that one or more sections of this article apply to it.
Section 15-47-410. Upon entry of an order by the court that the form of funding complies with Section 15-47-360 and that the funding of the obligation complies with Section 15-47-370, the court shall order a satisfaction of judgment and discharge of the judgment debtor.
Section 15-47-510. (A) No action to recover damages for injury to a person arising out of medical, surgical, or dental treatment, omission, or operation by a licensed health care provider as defined in Article 5, Chapter 79, Title 38 acting within the scope of his profession may be commenced unless the defendant has been given at least ninety days' prior notice of the intention to commence the action. No particular form of notice is required, but it shall notify the defendant of the legal basis of the claim and the type of loss sustained, including with specificity the nature of the injuries suffered. This section is not applicable to a defendant whose name is unknown to the plaintiff at the time of filing the cause of action.
(B) Failure to comply with subsection (A) does not invalidate any proceedings of any court or arbitration panel of this State, and it does not affect the jurisdiction of the court or arbitration panel to render a judgement. However, an attorney's failure to comply with subsection (A) is grounds for professional discipline as provided by state law.
Section 15-47-520. For the purposes of Section 15-3-545, the date of filing with the court for a cause of action brought under Article 1 is considered the date of institution of action for purposes of the applicable statute of limitations. If the notice required by Section 15-47-510 is served within ninety days of the expiration of the applicable statute of limitations, the time for the commencement of the action must be extended ninety days from the service of the notice.
Section 15-47-530. (A) In an action against a health care provider, either before an arbitrator or before the court, for malpractice, error, mistake, or failure to cure, whether based in contract or tort, adherence to clinical practice guidelines adopted by the South Carolina Department of Health and Environmental Control pursuant to Section 44-7-1210 is an affirmative defense against a claim that the provider was negligent or did not comply with accepted standards of practice in the community. This section applies to claims arising or accruing on or after ninety days after the date the department promulgates the applicable clinical practice guideline.
(B) A health care provider who offers compliance with the clinical practice guidelines as an affirmative defense has the burden of proving that the provider's conduct was consistent with those guidelines. This subsection does not affect the plaintiff's burden to prove the plaintiff's cause of action as otherwise provided by law.
Section 15-47-540. Nothing in Section 15-47-530 changes the standard or burden of proof in an action alleging a delay in diagnosis, a misdiagnosis, inappropriate application of a clinical practice guideline, failure to obtain informed consent, battery or other intentional tort, breach of contract, or product liability.
Section 15-47-550. No person may be qualified to testify as an expert witness concerning issues of negligence in a medical malpractice action or proceeding against a health care professional unless the person is a licensed health care professional and can demonstrate by competent evidence that, as a result of training, education, knowledge, and experience in the evaluation, diagnosis, and treatment of the disease or injury which is the subject matter of the action or proceeding against the defendant, substantial familiarity with applicable standards of care and practice as they relate to the act or omission which is the subject of the claim on the date of the incident. The court may not permit an expert in one profession or medical subspecialty to testify against a health care professional in another profession or medical subspecialty unless, in addition to a showing of substantial familiarity, there is a showing that the standards of care and practice in the two fields are similar. The limitations in this section do not apply to expert witnesses testifying as to the degree or permanency of medical or physical impairment.
Section 15-47-560. In an action in a court or arbitration proceeding to recover damages for injury to a person arising out of medical, surgical, or dental treatment, omission, or operation by any licensed health care provider as defined in Article 5, Chapter 79, Title 38 acting within the scope of his profession:
(1) the plaintiff shall, within sixty days after filing the cause of action, give written notice to the third party payor or provider of collateral source payments and shall file a copy of the notice with the court or arbitrator;
(2) if a provider of collateral source payments has a right of subrogation for the payments, it shall file with the court or arbitrator written notice of the subrogated claim, without specifying a definite amount, within ninety days after receipt of the notice required in item (1) and transmit a copy of the notice to the plaintiff;
(3) the court or arbitrator shall allow the admission into evidence of proof of:
(a) collateral source payments which have already been made or which are substantially certain to be made to the plaintiff as compensation for the same damages sought in the cause of action; and
(b) premiums personally paid by the plaintiff to obtain a collateral sources paid or payable;
(4) evidence submitted pursuant to item (3) and the tax implications of all damage awards must be considered in arriving at the amount of an award and in reviewing awards made for excessiveness; and
(5) before entering final judgment, the court or arbitrator shall determine the amount due a provider of collateral source payments and enter its judgment in accordance with this finding.
Section 15-47-570. For the purposes of Section 15-47-560, `collateral source payment' means a benefit paid or payable to the plaintiff or on his behalf, under, from, or pursuant to:
(1) the United States Social Security Act;
(2) any state or federal income replacement, disability, workers' compensation, or other law designed to provide partial or full wage or income replacement;
(3) an accident, health, or sickness, income or wage replacement insurance, income disability insurance, casualty or property insurance, including automobile accident and homeowners' insurance benefits, or any other insurance benefits, except life insurance benefits;
(4) a contract or agreement of a group, organization, partnership, or corporation to provide, pay for, or reimburse the cost of medical, hospital, dental, or other health care services or provide similar benefits; and
(5) a contractual or voluntary wage continuation plan or payments made pursuant to the plan provided by an employer or otherwise or any other system intended to provide wages during a period of disability."
SECTION 11. Chapter 47 of Title 15, as contained in Section 10 of this act, applies to causes of action arising or accruing on or after the effective date of this act.
SECTION 12. Three years after the effective date of this act, the Division of Court Administration shall review Chapter 47 of Title 15, as contained in Section 10 of this act, and file a report with the Governor and the General Assembly. The report shall include the division's recommendations for changes to the chapter. The division shall seek advice and assistance in developing its recommendations under this section from an advisory group consisting of representatives of the judicial branch, the health care provider community, the legal community, health insurers, medical malpractice insurers, and health care consumers.
SECTION 13. The Joint Legislative Health Care Planning and Oversight Committee shall review the activities of the Department of Health and Environmental Control, the State Health and Human Services Finance Commission, the Department of Insurance, the State Budget and Control Board, the Medical University of South Carolina, the South Carolina Health Reform Transition Council, and all other state agencies involved in the implementation and administration of this act. These agencies shall report on their activities annually and at other times at the request of the committee, and these agencies shall provide periodic reports to the committee on the drafting and promulgation of regulations authorized or required under this act and shall notify the committee when a draft of a proposed regulation has been completed and scheduled for publication in the State Register. At the request of a member of the committee, an agency shall provide a description and a copy of a proposed regulation.
SECTION 14. This act focuses on reforming the system of financing and delivering preventive, primary, acute, and rehabilitative health care services. The Joint Legislative Health Care Planning and Oversight Committee shall prepare draft legislation reforming the system of financing and delivering long term health care and related social services. All appropriate state agencies shall assist the committee in developing the draft legislation. A copy of the draft legislation must be submitted to the Governor and the General Assembly by January 1, 1994.
SECTION 15. Section 15-48-10(b)(4) of the 1976 Code is amended to read:
"(4) except as provided in Chapter 47 Any a claim arising out of personal injury, based on contracts or tort, or to any insured or beneficiary under any insurance policy or annuity contract."
SECTION 16. Section 38-70-15 of the 1976 Code, as added by Act 311 of 1990, is amended to read:
"Section 38-70-15. This chapter does not apply applies to insurance companies, administrators of insurance benefit plans, and health maintenance organizations licensed and regulated by the South Carolina Department of Insurance. However, insurance companies, administrators of insurance benefit plans, and health maintenance organizations so regulated by the Department of Insurance are exempt from Sections 38-70-20(A) and (B), 38-70-30, and 38-70-50."
SECTION 17. Sections 38-71-120, 38-71-140, 38-71-210, 38-71-325, 38-71-350, 38-71-360, 38-71-760, 38-71-770, 38-71-780, 38-71-910, 38-71-920, 38-71-930, 38-71-940, 38-71-950, 38-71-960, 38-71-970, 38-71-980, 38-71-990, and 38-71-1110 of the 1976 Code are repealed.
SECTION 18. Sections 38-70-10 through 38-70-60 of the 1976 Code are designated as "Article 1, Private Review Agents".
SECTION 19. Unless otherwise provided, this act takes effect upon approval by the Governor.