DEPARTMENT OF HEALTH AND SOCIAL SERVICES

Division of Public Health

Office of Health Facilities Licensing and Certification

Statutory Authority: 16 Delaware Code,Section 9110 (16 Del.C. 9110)

FINAL

Managed Care Organizations

IN THE MATTER OF: |

REVISION OF STATE OF DELAWARE |

RULES AND REGULATIONS GOVERNING |

THE APPLICATION AND OPERATION OF |

MANAGED CARE ORGANIZATIONS |

NATURE OF THE PROCEEDINGS:

FINDINGS OF FACT:

THEREFORE, IT IS ORDERED, that the proposed Rules And Regulations Governing The Application and Operation of Managed Care Organizations are adopted and shall become effective February 1, 1999, after publication of the final regulation in the Delaware Register.

November 16, 1998

Gregg C. Sylvester, MD

Secretary

SUMMARY OF EVIDENCE

STATE OF DELAWARE RULES AND REGULATIONS GOVERNING THE APPLICATION AND OPERATION OF MANAGED CARE ORGANIZATIONS

Agency Response: DHSS recommends maintaining this requirement. It was the recommendation of the HR#94 Committee on Public Oversight of Managed Care Costs, Quality and Care to require the MCO Medical Directors be a licensed Delaware physician. In addition, this recommendation is unanimously supported by the Delaware Board of Medical Practitioners who state, “...Medicare Directors of MCOs operating in Delaware and making decisions about Delaware patients must hold a registration to practice medicine in Delaware.” DHSS supports their position that if the MCO is using the clinical judgment of a physician (as Medical Director) to limit payment for health services, that physician should be a Delaware licensed physician.

Agency Response: The Agency recommends maintaining these regulations as submitted. The HR#94 Committee supported the regulations as written. While some duplication of reporting may exist between DHSS and the Department of Insurance, these reports are either required by Delaware Code or are already required by the current Health Maintenance Organization regulations. However, DHSS recognizes industry concern over the cost of duplicative and excess paperwork to the industry and ultimately the consumer. In response to these concerns, DHSS will explore the development of a joint Delaware Health and Social Services/Department of Insurance application and annual reporting process.

Agency Response: DHSS recommends maintaining the Stage 3 grievance appeal process as written. The Stage 3 appeal process provides enrollees with an unbiased review of their appeal and avoids costly litigation. It is the Agency’s position that enrollees have the right to an unbiased review of their appeal. The HR#94 Committee supported this need as well. The alternative procedure recommended by one of the commentees was not presented in sufficient detail so as to be usable. Regardless, in the Agency’s opinion, it presented two major obstacles to a fair grievance process by mandating the incurred cost of the denied service eligible for a State 3 appeal be $1,000 or more and requiring the enrollee to pay $100 upon filing the appeal.

Agency Response: The Agency recommends maintaining these regulations as written. DHSS acknowledges that similar “contract provision” language exists in both these and Department of Insurance regulations. DHSS added this language at the request of the Department of Insurance because the Delaware Code does not provide the Department of Insurance with sufficient statutory authority to regulate contracts.

RULES AND REGULATIONS GOVERNING THE APPLICATION AND OPERATION OF MANAGED CARE ORGANIZATIONS

Adopted by the Department of Health and Social Services on November 16, 1998, effective February 1, 1999.

TABLE OF CONTENTS PAGE

PART ONE 4

69.0 Legal Authority and Definitions 4

69.1 Definitions 4

PART TWO 9

69.2 Application and Certificate of Authority 9

PART THREE 14

69.3 General Requirements 14

PART FOUR 21

69.4 Quality Assurance and Operations 21

PART FIVE 38

69.5 Enrollee Rights and Responsibility 38

PART SIX 41

69.6 Staff Model MCO Requirements 41

PART SEVEN 45

69.6 Administrative Requirements 45

Appendix Certification Application

* Please note the above page numbers refer to the original document and not to page numbers in the Register.

PART ONE

LEGAL AUTHORITY AND DEFINITIONS

SECTION 69.0 LEGAL AUTHORITY

SECTION 69.1 DEFINITIONS

69.101 “Administrator/Chief Executive Officer” means the individual employed to manage and direct the activities of the MCO.

69.102 “Basic health services” means a range of services, including at least the following:

69.103 “Certificate of Authority” means the authorization by the Department of Health and Social Services to operate the MCO and this certificate shall be deemed to be a license to operate such an Organization.

69.104 “Certified Managed Care Organization” (MCO) means a managed care organization which has been issued a Certificate of Authority under 16 Del. C. and either a Certificate of Authority from the Insurance Department under the relevant provisions of Title 18 or a statement from the Insurance Department that the Insurance Department Certificate of Authority is not required.

69.105 “Commissioner” means the Insurance Commissioner of Delaware.

69.106 “Department” means the Delaware Department of Health and Social Services.

69.107 “Emergency Care” means health care items or services furnished or required to evaluate or treat an emergency medical condition.

69.108 “Emergency Medical Condition” means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in:

69.109 “Enrollee” means an individual and/or family who has entered into a contractual arrangement, or on whose behalf a contractual arrangement has been entered into with the MCO, under which the MCO assumes the responsibility to provide to such person(s) basic health services and such supplemental health services as are enumerated in the Health Care Contract.

69.110 “Geographical area” refers to the stated primary geographical area served by a MCO. The primary area served shall be a radius of not more than twenty (20) miles nor more than thirty (30) minutes driving time from a primary care office operated or contracted by the MCO.

69.111 “Health care contract” refers to any agreement between a MCO and an enrollee or group plan which sets forth the services to be supplied to the enrollee in exchange for payments made by the enrollee or group plan.

69.112 “Health care professional” means individuals engaged in the delivery of health services as licensed or certified by the State of Delaware.

69.113 “Health care services” means any services included in the furnishing to any individual of medical or dental care, or hospitalization or incidental to the furnishing of such care or hospitalization, as well as the furnishing to any person of any and all other services for the purpose of preventing, alleviating, curing or healing human illness, injury or physical disability.

69.114 “Independent Practice Association” (IPA) means an arrangement in which health care professionals provide their services through the association in accordance with a mutually accepted compensation arrangement while retaining their private practices.

69.115 “Insurance Department” means the Delaware Insurance Department.

69.116 “Insurance Department Certificate of Authority” means the authorization by the Insurance Commissioner that the MCO has met the relevant provisions of Title 18 of the Delaware Code.

69.117 “Intermediary” means a person authorized to negotiate and execute provider contracts with MCOs on behalf of health care providers or on behalf of a network.

69.118 “Level 1 Trauma Center” means a regional resource trauma center that has the capability of providing leadership and comprehensive, definitive care for every aspect of injury from prevention through rehabilitation.

69.119 “Level 2 Trauma Center” means a regional trauma center with the capability to provide initial care for all trauma patients. Most patients would continue to be cared for in this center; there may be some complex cases which would require transfer for the depth of services of a regional Level 1 or specialty center.

69.120 “Managed Care Organization” (MCO) means a public or private organization organized under the laws of any state, which:

9.121 “Network” means the participating providers delivering services to enrollees in a managed care plan.

69.122 “Office” means any facility where enrollees receive primary care or other health services.

69.123 “Out of area coverage” refers to health care services provided outside the organization’s geographic service areas with appropriate limitations and guidelines acceptable to the Department and the Commissioner. At a minimum, such coverage must include emergency care.

69.124 “Participating provider” means a provider who, under a contract with the Organization or with its contractor or subcontractor, has agreed to provide health care services to enrollees with an expectation of receiving payment, other than coinsurance, co-payments or deductibles, directly or indirectly from the Organization.

69.125 “Premium” refers to payment(s) called for in the Health Care Contract which must be:

69.126 “Primary Care Physician” (PCP) means a participating health care physician chosen by the enrollee and designated by the Organization to supervise, coordinate, or provide initial care or continuing care to an enrollee, and who may be required by the Organization to initiate a referral for specialty care and maintain supervision of health care services rendered to the enrollee.

69.127 “Provider” means a health care professional or facility.

69.128 “Staff model MCO” means a MCO in which physicians are employed directly by the MCO or in which the MCO directly operates facilities which provide health care services to enrollees.

69.129 “Supplemental payment” refers to any payment not incorporated in premium which is required to be paid to the MCO or providers under contract to the MCO by the enrollee.

69.130 “Supplementary health services” means any health services other than basic health services which may be provided by a MCO to its enrollees and/or for which the enrollee may contract such as:

69.131 “Tertiary services” means health care services provided for the intensive treatment of critically ill patients who require extraordinary care on a concentrated basis in special diagnostic categories (e.g. burns, cardiovascular, neonatal, pediatric, oncology, transplants, etc.).

PART TWO

SECTION 69.2 APPLICATION AND CERTIFICATE OF AUTHORITY

69.201 No person shall establish or operate a MCO in the State of Delaware or enter this State for purposes of enrolling persons in a MCO without obtaining a “Certificate of Authority” under Chapter 91 of Title 16 of the Delaware Code. A foreign corporation shall not be eligible to apply for such certificate unless it has first qualified to do business in the State of Delaware as a foreign corporation pursuant to 8 Del. C., §371.

69.202 Each application for a Certificate of Authority shall be made in writing to the Department of Health and Social Services, shall be certified by an officer or authorized representative of the applicant, shall be in a form prescribed by the Department (Appendix A) and shall set forth or be accompanied by the following:

69.203 Within sixty (60) days after receipt of a complete application for issuance of Certificate of Authority the Department shall determine whether the applicant, with respect to health care services to be furnished, has:

69.204 The Department shall issue a Certificate of Authority to any person filing an application under this section upon demonstration of compliance with these rules and regulations if:

69.205 If within 60 days after a complete application for a Certificate of Authority has been filed, the Department has not issued such certificate, the Department shall immediately notify the applicant, in writing, of the reasons why such certificate has not been issued and the applicant shall be entitled to request a hearing on the application. The hearing shall be held within 60 days of receipt of written request therefor. Proceedings in regard to such hearing shall be conducted in accordance with provisions for case decisions as set forth in the Administrative Procedures Act, Chapter 101 of Title 29, and in accordance with applicable rules and regulations of the Department (63 Del. Laws, c.382, §1;66 Del. Laws, c. 124, §7.).

69.206 No Certificate of Authority shall be issued without a Certificate of Authority from the Insurance Department under the relevant provisions of Title 18 or a statement from the Insurance Department that the Insurance Department Certificate of Authority is not required.

PART THREE

SECTION 69.3 GENERAL REQUIREMENTS

69.301 Every MCO operating in this State shall file with the Department every manual which it proposes to use. Every filing shall indicate the effective date thereof.

69.302 Annual reports shall be filed with the Department by any MCO on or before June 1 covering the preceding fiscal year. Such reports shall include a financial statement of the MCO, its balance sheet and receipts and disbursements for the preceding fiscal year, and any changes in the information originally submitted or required under 69.2, 69.404 E., 69.405 B. and 69.705.

69.303 Contract Provisions

69.304 Amendments or Revisions of Contracts

69.305 The MCO shall establish a policy governing termination of providers. The policy shall include at least:

69.306 The Medical Director and physicians designated to act on his behalf shall be Delaware licensed physicians.

69.307 Prohibited Practices

69.308 A MCO shall establish a mechanism by which the participating provider will be notified on an ongoing basis of the specific covered health services for which the provider will be responsible, including any limitations or conditions on services.

69.309 A MCO shall notify participating providers of the providers’ responsibilities with respect to the MCO’s applicable administrative policies and programs, including but not limited to payment terms, utilization review, quality assessment and improvement programs, credentialing, grievance procedures, data reporting requirements, confidentiality requirements and any applicable federal or state programs.

69.310 The rights and responsibilities under a contract between a MCO and a participating provider shall not be assigned or delegated by the provider without the prior written consent of the MCO.

69.311 A MCO is responsible for ensuring that a participating provider furnishes covered benefits to all enrollees without regard to the enrollee’s enrollment in the plan as a private purchaser of the plan or as a participant in publicly financed programs of health care services. This requirement does not apply to circumstances when the provider should not render services due to limitations arising from lack of training, experience, skill or licensing restrictions.

69.312 A MCO shall notify the participating providers of their obligations, if any, to collect applicable coinsurance, copayments or deductibles from enrollees pursuant to the evidence of coverage, or of the providers’ obligations, if any, to notify enrollees of their personal financial obligations for non-covered services.

69.313 A MCO shall establish procedures for resolution of administrative, payment or other disputes between providers and the MCO.

69.314 Notice of Changes in MCO Operations

69.315 Changes in Ownership Interests

69.316 Examinations

69.317 Suspension or Revocation of Certificate of Authority.

69.318 Fees

69.319 Confidentiality of Health Information

69.320 The MCO is responsible for meeting each requirement of these regulations. If the MCO chooses to utilize contract support or to contract functions under these regulations, the MCO retains responsibility for ensuring that the requirements of this regulation are met.

69.321 Specific standards may be waived by the Department provided that each of the following conditions are met:

PART FOUR

SECTION 69.4 QUALITY ASSURANCE AND OPERATIONS

69.401 Health Care Professional Credentialing

69.402 Provider Network Adequacy

69.403 Utilization Management

69.404 Grievance/Appeal Procedure

69.405 Quality Assessment and Improvement

PART FIVE

SECTION 69.5 ENROLLEE RIGHTS AND RESPONSIBILITIES

69.501 The MCO shall establish and implement written policies and procedures regarding the rights of enrollees and the implementation of these rights.

69.502 In the case of nonpayment by the MCO to a provider for a covered service in accordance with the enrollee’s health care contract, the provider may not bill the enrollee. This does not prohibit the provider from collecting coinsurance, deductibles or co-payments as determined by the MCO. This does not prohibit the provider and enrollee from agreeing to continue services solely at the expense of the enrollee, as long as the provider clearly informs the enrollee that the MCO will not cover these services.

69.503 The MCO shall permit enrollees to choose their own primary care physician from a list of health care professionals within the plan. This list shall be updated as health care professionals are added or removed and shall include:

69.504 The MCO shall provide each enrollee with an enrollee’s benefit handbook which includes a complete statement of the enrollee’s rights, a description of all complaint and grievance procedures, a clear and complete summary of the evidence of coverage, and notification of their personal financial obligations for non- covered services. The statement of the enrollee’s rights shall include at least the right:

69.505 The MCO shall establish and implement written policies and procedures regarding the responsibilities of enrollees. A complete statement of these responsibilities shall be included in the enrollee’s benefit handbook.

69.506 The MCO shall disclose to each new enrollee, and any enrollee upon request, in a format and language understandable to a lay person, the following minimum information:

69.507 The MCO shall provide culturally competent services to the greatest extent possible.

PART SIX

SECTION 69.6 REQUIREMENTS FOR STAFF MODEL MCOs

69.601 Environmental Health and Safety

69.602 Emergency Utilities or Facilities

69.603 Construction

69.604 Personnel

69.605 Equipment

69.606 Specialized Services

69.607 Central Sterilizing and Supply

PART SEVEN

SECTION 69.7 ADMINISTRATIVE REQUIREMENTS

69.701 Administration

69.702 Qualifications

69.703 Medical Privileges

69.704 Medical Records

69.705 Reporting Requirements and Statistics

Appendix A

A. IDENTIFYING INFORMATION

_____________________________________

Individual Practice Association o

Other ______________________________________

B. Statement of Certification and Acknowledgment:

___________________ _________ _________

Signature of Chief Title Date

Executive Officer

C. Fee Schedule Checks should be made payable to: State of Delaware

D. Please return this application to:

2 DE Reg. 962 (12/01/98) (Final)