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TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 19 TO TITLE 44 SO AS TO ENACT THE "SOUTH CAROLINA HEALTH CARE FINANCE RECOVERY ACT" WHICH AUTHORIZES AN INSURED TO ASSIGN DIRECTLY TO A HEALTH CARE PROVIDER REIMBURSEMENT RIGHTS FOR SERVICES RECEIVED FROM THE PROVIDER, TO ESTABLISH PROCEDURES FOR SUCH ASSIGNMENTS AND PAYMENT PURSUANT TO AN ASSIGNMENT, TO PROVIDE THAT CERTAIN VIOLATIONS CONSTITUTE UNFAIR TRADE PRACTICES AND RESTRAINT OF TRADE, AND TO FURTHER PROVIDE FOR CIVIL PENALTIES; AND TO AMEND SECTION 38-71-230, RELATING TO THE ADOPTION OF STANDARDIZED CLAIM FORMS AND THE ADDITION OF LOGOS TO CLAIM FORMS, SO AS TO MAKE TECHNICAL CORRECTIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 44 of the 1976 Code is further amended by adding:
Section 44-19-10. This chapter may be cited as the 'South Carolina Health Care Financial Recovery Act'.
Section 44-19-20. The provisions of this chapter apply to all insurers, insurance companies, provider networks, provider organizations, managed care organizations, managed care plans, health maintenance organizations, third party payors, payment administrators, and other agents, contractors and subcontractors in the administration of programs of health, hospital, dental, and medical insurance. The provisions of this chapter are remedial and must be liberally construed to effectuate their purpose and apply in addition to other remedies available at law or equity.
Section 44-19-30. As used in this chapter:
(1) 'Accident and health insurance' means insurance of human beings against death or personal injury by accident and insurance of human beings against sickness, ailment, and any type of physical disability resulting from accident or disease and prepaid dental service, including coverages required by the workers' compensation law of this State, under the terms of any hospital, medical, dental policy or certificate, major medical expense insurance, hospital or medical service plan, contract, or health maintenance organization subscriber contract which provides benefits consisting of medical care provided directly, through insurance or reimbursement, or otherwise, and including items and services paid for as medical care or health care services. 'Accident and health insurance' includes the entire contract between the insurer and the insured, including the policy, riders, endorsements, and the application, if attached.
(2) 'All products clause' means a provision in a participating provider agreement that requires a provider, as a condition of participation in any one of an insurer's products, services, plans, or provider networks, to participate in any other product, service, plan, or provider network owned, operated, administered, or participated in by that insurer presently or in the future.
(3) 'Antitrust laws' means federal or state law prohibiting monopolies, monopsonies, illegal product tying arrangements, unlawful price discrimination, boycotts, market divisions or other anti-competitive agreements in restraint of trade, including the federal Sherman Act, Clayton Act, Robinson-Patman Act, Federal Trade Commission Act, but excluding the McCarran-Ferguson Act, Chapters 3 and 5 of Title 39, and Section 38-57-30.
(4) 'Exclusive dealing clause' means a condition, agreement, or understanding contained or incorporated into a participating provider agreement that expressly, or through practical effect, prohibits, constrains, or limits a provider or patient from accessing the products or services of a competing insurer by limiting a provider's decision to either refuse or accept new patients of an insurer or a competing insurer.
(5) 'Clean claim' means an eligible electronic or paper claim for reimbursement submitted as required on a standardized HCFA 1500 or UB 92 claim form, or the successor of each or as either may be amended from time to time, or other forms or formats as may be required under the Health Insurance Portability and Accountability Act of 1996, for health care services rendered by an eligible provider to an insured person that has no material defect or impropriety including, but not limited to, any lack of required substantiating documentation or coding, or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under the terms of the policy or the insurer's published filing requirements.
(6) 'Health care services' means services included in furnishing an individual medical or dental care or hospitalization, or services incident to the furnishing of medical or dental care or hospitalization, and other services to prevent, alleviate, cure, or heal human illness, injury, or physical disability.
(7) 'Health maintenance organization' means an entity, group, or person who undertakes to provide or arrange for basic health care services to enrollees in exchange for a fixed prepaid premium.
(8) 'Insured' means an individual resident of this State who is eligible to receive benefits from an insurer.
(9) 'Insurer' includes an entity, corporation, fraternal organization, burial association, health maintenance organization, managed care organization, managed care plan, other association, partnership, society, order, individual, or aggregation of individuals engaging or proposing or attempting to engage as principals in any kind of insurance or surety business, including the exchanging of reciprocal or interinsurance contracts between individuals, partnerships, and corporations. For purposes of this chapter, an insurer is an entity, person, or group providing health insurance or reimbursement for health care services whether for profit or otherwise, which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation, including multiple employer self-insured health plans licensed pursuant to Chapter 41 of Title 38.
(10) 'Managed care organization' means a licensed insurance company, a hospital or medical services plan contract, a health maintenance organization, or any other entity which is subject to state insurance regulation and which operates a managed care plan.
(11) 'Managed care plan' means a plan operated by a managed care organization which provides for the financing and delivery of health care and treatment services to individuals enrolled in the plan through its own employed health care providers or contracting with selected specific providers that conform to explicit selection standards, or both. A managed care plan also customarily has a formal organizational structure for continual quality assurance, a certified utilization review program, dispute resolution, and financial incentives for individual enrollees to use the plan's participating providers and procedures.
(12) 'Most favored nation clause' means a provision in a participating provider agreement that requires a provider of health care services to provide an insurer with the lowest price or highest discount that it provides to any other insurer or person.
(13) 'Participating provider agreement' means a contract, agreement, arrangement, or other instrument executed between a provider and insurer that requires or permits the provider to furnish or arrange for health care services to the insurer or the insurer's insured on a fee-for service, capitation, or other contractually specified payment method.
(14) 'Provider' means a physician, dentist, hospital, or other person properly licensed, certified, or permitted, where required, to furnish health care services.
Section 44-19-40. (A) An insured may assign reimbursement rights for health care services directly to a provider. The insurer, when authorized by its insured, shall pay directly to the provider the amount of the claim, under the same criteria and payment schedule that would have been reimbursed directly to the insured. An insurer making a payment to the insured after the rights to reimbursement have been assigned to the provider is liable to the provider for the payment. A policy of accident or health insurance may not prohibit assignment of benefits or reimbursement to a provider by an insured.
(B) All correspondence, both paper and electronic, between insurers, insureds, and providers regarding claims and matters of reimbursement must bear the date of its origination at the time it is transmitted or delivered. Correspondence not dated in accordance with this subsection has no legal effect or evidentiary value for the purposes of enforcing or defending against enforcement of this chapter.
(C) An insurer providing payment or reimbursement for health care services furnished by a provider in this State shall accept the standardized HCFA 1500 claim form, or its successor or as it may be amended from time to time. An insurer providing payment or reimbursement for health care services furnished by a hospital licensed in this State shall accept the standardized UB 92 claim form, or its successor as it may be amended from time to time. The HCFA 1500 or the UB 92 claim form, or the successor of each or as either may be amended from time to time, 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 44-19-50. (A) An insurer shall acknowledge receipt of all claims for benefits or reimbursement by paper or electronic means, dated as specified in Section 44-19-40, within two working days of receipt of the claim, whether or not the claim is a clean claim as defined in Section 44-19-30. The acknowledgement must be transmitted directly to the person filing the claim. However, the notice is not required where full payment on all portions of the claim is transmitted within fifteen days of the insurer's receipt of the claim.
(B) A insurer may not, by contract provision or other means, require providers to submit claims any earlier than one hundred eighty days from the date health care services were furnished. Any such policy provision or claims filing requirement is void. An insurer, or its agent, or holder in due course, may not, by contract provision or other means, seek to recoup or recover payments or any portion of payments from a provider or an insured if the services were precertified, or any time after the payment was made or transmitted, unless the payment was obtained by submission of a claim proven to be fraudulently submitted.
(C) Clean claims submitted electronically are due and payable within thirty days from the date received by the insurer. Clean claims submitted on paper are due and payable within forty-five days from the date received by the insurer.
(D) An insurer shall, within fifteen calendar days after receipt of a claim that is not a clean claim, mail to the person claiming payment or benefits a letter or notice, dated as specified in Section 44-19-40, which disputes the claim and states the reasons the insurer may have for failing to pay the claim, either in whole or in part, and which also gives the person notified a written itemization of any documents or other information needed to process the claim or any portions of the claim which are being disputed. Failure to provide this notice is deemed a waiver as to any defect in the claim, and the claim must be processed, paid, and enforceable as if it were a clean claim.
(E) Any portion of a disputed claim that meets the criteria established for a clean claim must be paid in accordance with the applicable time limits as set forth in this section.
(F) A resubmitted claim or portion of a resubmitted claim that was not a clean claim when originally filed and was properly disputed by the insurer must be processed upon resubmission in strict accordance with the time limits in the same manner as specified in this section for original clean claims.
(G) An insurer that pays or reimburses health care providers though capitation methods shall make or transmit payments to providers within thirty calendar days from the date the provider becomes legally responsible for furnishing health care services to the insured, or within thirty calendar days from the date health care services are rendered, whichever is earliest.
Section 44-19-60. (A) A claim not paid or properly disputed and capitation payments not paid within the time limits set forth in Section 44-19-50 are considered overdue and automatically accrue interest in the same manner and at the same rate set forth in Section 34-31-20 for money decrees and court judgments. Interest continues to accrue until payment in full is mailed or otherwise transmitted and becomes a just debt due and immediately payable upon accrual.
(B) Providers, insureds, and their agents or assignees may recover, in any court of competent jurisdiction, the amount of overdue claims plus reasonable court costs, attorney's fees, and additional compensatory damages as the court may award in its discretion for electronic claims or portions of electronic claims that remain unpaid after sixty calendar days from receipt by the insurer or receipt of resubmission, and paper claims or portions of paper claims that remain unpaid after ninety calendar days from the date of receipt by the insurer or receipt of resubmission. Providers, insureds, and their agents or assignees may recover, in any court of competent jurisdiction, the amount of overdue capitation payments plus reasonable court costs, attorney's fees, and additional compensatory damages as the court may award in its discretion for payments or portions of payments that remain unpaid after sixty calendar days from the date the provider becomes legally responsible for furnishing health care services to the insured, or sixty calendar days after the date health care services were rendered, whichever is earliest.
(C) The civil remedies in subsections (A) and (B) are in addition to any administrative and criminal penalties or any other remedies provided by law. The remedies in subsections (A) and (B) do not preclude administrative or criminal proceedings from taking place at any time. A violation by an insurer of any provision of this chapter, if committed without just cause and performed with such frequency as to indicate a general business practice, constitutes an improper claim practice punishable under the insurance laws of this State and is an unfair trade practice actionable under both Section 38-57-30 and Chapter 5 of Title 39. However, no portion of this section may be construed to prohibit parties to a provider contract from agreeing to submit their disputes to mediation or arbitration.
(D) A provider may not be terminated or deselected from any provider network, provider organization, managed care organization, managed care plan, health maintenance organization, or other health carrier network without first being provided written, dated notice of the precise reasons for the termination. This section does not prevent a provider and insurer from establishing by contract the terms and grounds upon which their relationship may be created and terminated. However, it is unlawful to terminate or deselect a provider in retaliation for attempts to enforce this chapter or the insurance law of this State, and any single instance of retaliatory termination or deselection is an unfair trade practice actionable under both Section 38-57-30 and Chapter 5 of Title 39.
Section 44-19-70. (A) If a participating provider agreement offered by an insurer to a provider contains an all-products clause, the agreement also must contain a clear, conspicuous opt-out provision allowing the provider to refuse participation in any product, service, plan, or provider network owned, operated, administered, or participated in by the insurer at the time the contract is executed, or to terminate, suspend, or discontinue participation in any product, service, plan, or provider network owned, operated, administered, or participated in by that insurer, without terminating the entire contract or affecting the provider's status or eligibility as a provider in any existing or new product, service, plan, or provider network owned, operated, administered, or participated in by that insurer.
(B) It is unlawful in this State for an insurer to offer a contract to a provider without the opt-out provisions required pursuant to subsection (A). Such a contract is unlawful product tying arrangements in restraint of trade, enforceable and actionable under the antitrust laws. A single instance of an insurer, agent, or broker offering such a contract to a provider after June 30, 2003, constitutes an unfair method of competition and an unfair or deceptive act or practice in the conduct of trade or commerce. A pattern of conduct need not be demonstrated. A participating provider agreement existing in effect on July 1, 2003, that contains an all-products clause is, and must be, amended to conform to the requirements of this chapter.
(C) It is unlawful in this State for an insurer to offer a contract containing or incorporating an exclusive dealing arrangement or a most favored nation clause to any provider. Such a contract is an unlawful agreement in restraint of trade. A single instance of an insurer, agent, or broker offering such a contract to a provider after June 30, 2003, constitutes an unfair method of competition and an unfair or deceptive act or practice in the conduct of trade or commerce. A pattern of conduct need not be demonstrated. A participating provider agreement existing in effect on July 1, 2003, that contains an all products clause is, and must be, amended to conform to the requirements of this chapter.
(D) An insurer may not unfairly discriminate, by payment scale differential, methodology, or otherwise, against providers who initially refuse or subsequently terminate participation in any product, service, plan, or provider network owned, operated, administered, or participated in by the insurer. However, nothing in this section may be construed to prevent providers and insurers from otherwise lawfully negotiating and contracting for reimbursement rates or methodologies in individual products, services, plans, or provider networks owned, operated, administered, or participated in by that insurer."
SECTION 2. Section 38-71-230(B) and (C) of the 1976 Code is amended to read:
"(B) An organization providing payment or reimbursement for diagnosis and treatment of a condition or a complaint by a licensed physician in South Carolina must accept the standardized HCFA 1500 claim form, or its successor as it may be amended from time to time, or other forms or formats as may be required under this Health Insurance Portability Accountability Act of 1996. An organization providing payment or reimbursement for diagnosis and treatment of a condition or a complaint by a hospital licensed in South Carolina shall accept the standardized UB 82 92 claim form, or its successor as it may be amended from time to time, or other forms or formats as may be required under the Health Insurance Portability and Accountability Act of 1996.
(C) The HCFA 1500 or the UB 82 92 claim form, or the successor of each or as either may be amended from time to time, 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 3. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 4. This act takes effect July 1, 2003.
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