Senate Study Bill 3161 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON CHAPMAN) A BILL FOR An Act relating to incentive programs and health care cost 1 transparency tools offered by health carriers and health 2 care providers to enable insured individuals to seek lower 3 cost health care services, and including applicability 4 provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5344XC (1) 87 ko/rj

S.F. _____ Section 1. NEW SECTION . 514C.32 Patient protections to 1 enable individual insurers to seek lower health care costs. 2 1. Definitions. For the purpose of this section: 3 a. “Average amount” means the average price paid by a health 4 carrier to a network health care provider for health care 5 services within a one-calendar-year period. 6 b. “Commissioner” means the commissioner of insurance. 7 c. “Comparable health care services” means covered health 8 care services for which a covered person may receive an 9 incentive under a comparable health care services incentive 10 program. “Comparable health care services” includes 11 nonemergency health care services in any of the following 12 categories: 13 (1) Physical and occupational therapy services. 14 (2) Radiology and imaging services. 15 (3) Infusion therapy services. 16 (4) Clinical laboratory services. 17 (5) Outpatient nonsurgical diagnostic tests and procedures. 18 d. “Contracted amount” means the amount agreed to be paid by 19 a health carrier pursuant to a health benefit plan to a health 20 care provider for health care services covered by the health 21 benefit plan. 22 e. “Covered person” means the same as defined in section 23 514J.102. 24 f. “Emergency services” means the same as defined in section 25 514J.102. 26 g. “Health benefit plan” means the same as defined in 27 section 514J.102. 28 h. “Health care provider” means the same as defined in 29 section 514J.102. 30 i. “Health care services” means the same as defined in 31 section 514J.102. 32 j. “Health carrier” means the same as defined in section 33 514J.102. 34 k. “Program” means a comparable health care services 35 -1- LSB 5344XC (1) 87 ko/rj 1/ 11

S.F. _____ incentive program established by a health carrier pursuant to 1 this section. 2 2. Comparable health care services incentive program 3 requirements. 4 a. Notwithstanding the uniformity of treatment requirements 5 of section 514C.6, a health carrier shall offer a program that 6 provides an incentive for a covered person to elect to receive 7 comparable health care services from a health care provider 8 that charges less than the average amount for those comparable 9 health care services. An incentive under the program must be 10 provided in accordance with all of the following: 11 (1) The incentive may be a cash payment, a credit toward 12 a covered person’s annual deductible, or other incentive as 13 approved by the commissioner. A health carrier may allow a 14 covered person to choose between the incentive options. 15 (2) The incentive may be calculated as a percentage of 16 the difference between the contracted amount and the average 17 amount for comparable health care services or calculated by an 18 alternative method as approved by the commissioner. 19 (3) The incentive shall be no less than fifty percent of 20 the health carrier’s saved costs for the comparable health care 21 services elected to be received by a covered person that result 22 in a cost savings to the health carrier. 23 b. A health carrier is not required to pay an incentive 24 to a covered person if the health carrier’s cost savings for 25 comparable health care services elected to be received by a 26 covered person are twenty-five dollars or less. 27 c. A health carrier may require a covered person to provide 28 reasonable documentation, such as a written quote from a health 29 care provider, to substantiate that prior to receiving the 30 comparable health care services, the covered person sought care 31 from a health care provider that charges less than the average 32 amount. 33 d. A health carrier shall provide written notice of the 34 program to all covered persons annually and at the time of 35 -2- LSB 5344XC (1) 87 ko/rj 2/ 11

S.F. _____ enrollment or renewal. The notice shall include a description 1 of all available incentives and the requirements for a covered 2 person to earn an incentive. 3 e. A health carrier shall provide, upon a covered person’s 4 request related to comparable health care services provided by 5 a network health care provider, all of the following: 6 (1) A good-faith cost estimate for the services based on a 7 description of the services or the applicable standard medical 8 codes or current procedural terminology used by the American 9 medical association as provided by the health care provider. 10 The health carrier shall request additional information from 11 the health care provider if necessary to provide a good-faith 12 estimate. 13 (2) A good-faith estimate of the covered person’s total 14 out-of-pocket costs including but not limited to copayments, 15 deductibles, coinsurance, and any other cost-sharing 16 requirements. 17 (3) A written notice that the good-faith estimate is 18 only an estimate and the actual amount the covered person is 19 responsible for may vary based on unforeseen circumstances that 20 arise from the provision of health care services. 21 f. This subsection does not prohibit a health carrier from 22 imposing a cost-sharing requirement on a covered person for 23 unforeseen circumstances that may arise from the provision of 24 comparable health care services if the cost-sharing requirement 25 is disclosed in the covered person’s health benefit plan. 26 g. Prior to offering a program to a covered person, a health 27 benefit plan filed with the commissioner pursuant to this 28 section shall disclose all of the following as related to the 29 program: 30 (1) All comparable health care services that are available 31 as part of the program. 32 (2) A detailed description of all incentives available to 33 a covered person. 34 (3) All actions required of a covered person to earn each 35 -3- LSB 5344XC (1) 87 ko/rj 3/ 11

S.F. _____ incentive. 1 (4) Any limitations on any of the available incentives. 2 h. This subsection does not preclude a health carrier from 3 including additional categories of nonemergency health care 4 services in the health carrier’s program. 5 3. Health carrier cost transparency tool 6 requirements. Notwithstanding the uniformity of treatment 7 requirements of section 514C.6, a health carrier shall create 8 and maintain a publicly accessible interactive internet site 9 and provide a toll-free number that allows a covered person 10 access to all of the following: 11 a. A tool to compare the contracted amount for all network 12 health care providers for all nonemergency health care services 13 and all comparable health care services. 14 b. A tool to compare the average amount for all network 15 health care providers for all nonemergency health care services 16 and all comparable health care services. 17 c. Quality data or health care provider ratings, to the 18 extent available, for all network health care providers. 19 4. Health care provider cost transparency requirements. 20 a. Within two business days of a covered person’s request, a 21 network health care provider under the covered person’s health 22 benefit plan shall provide the covered person with all of the 23 following as related to proposed nonemergency health care 24 services: 25 (1) Sufficient information necessary to allow the covered 26 person to obtain a good-faith cost estimate from the covered 27 person’s health carrier. If the information is unavailable, 28 the health care provider must note that any information 29 provided is incomplete and inform the covered person of the 30 covered person’s ability to obtain the updated information when 31 it becomes available. 32 (2) All facility or other fees or costs that may be assessed 33 to the covered person as part of the proposed nonemergency 34 health care services. 35 -4- LSB 5344XC (1) 87 ko/rj 4/ 11

S.F. _____ b. Within two business days of a covered person’s request, 1 an out-of-network health care provider shall provide the 2 covered person with the total cost, including all facility 3 fees, for proposed nonemergency health care services. 4 c. All health care providers shall post a sign in an area 5 visible to patients that provides notice of a covered person’s 6 right to all of the following: 7 (1) Sufficient detail regarding proposed nonemergency 8 health care services to allow a covered person to obtain 9 assistance from the covered person’s health carrier to compare 10 all costs associated with the proposed nonemergency health care 11 services and all health care providers who provide those health 12 care services. 13 (2) Health care transparency tools on a covered person’s 14 health carrier’s internet site or accessible by a toll-free 15 number that allows the covered person to compare contracted 16 amounts and average amounts for nonemergency health care 17 services and comparable health care services. 18 (3) A good faith cost estimate, including all fees and 19 out-of-pocket costs, from the covered person’s health carrier 20 for proposed nonemergency health care services. 21 (4) A program offered by a covered person’s health carrier 22 that may allow the covered person to earn an incentive provided 23 that the covered person meets the requirements of such program. 24 (5) The ability to select an out-of-network health care 25 provider for the delivery of nonemergency health care services 26 at a cost equal to or less than the cost of the same health 27 care services provided in network provided the covered person 28 complies with all requirements under the covered person’s 29 health benefit plan. 30 5. Covered health care services obtained from an 31 out-of-network health care provider. 32 a. If a covered person elects to receive covered health 33 care services from an out-of-network health care provider at a 34 cost less than or equal to the average price that the covered 35 -5- LSB 5344XC (1) 87 ko/rj 5/ 11

S.F. _____ person’s health carrier has paid all network providers for 1 the same health care services for the last twelve consecutive 2 months, the covered person’s health carrier shall do all of the 3 following: 4 (1) Allow the covered person to obtain the covered health 5 care services from the out-of-network health care provider at 6 the out-of-network health care provider’s price. 7 (2) Apply any payments made by the covered person for the 8 health care services toward the covered person’s deductible 9 and out-of-pocket maximum as specified in the covered person’s 10 health benefit plan as if the health care services had been 11 provided by a network health care provider. 12 (3) Provide a downloadable or interactive online form 13 for the covered person to submit proof of payment to the 14 out-of-network health care provider. 15 b. A health carrier may base the average price that the 16 health carrier has paid all network health care providers for 17 covered health care services for the last twelve consecutive 18 months either under a covered person’s health benefit plan or 19 under all health benefit plans offered by the health carrier 20 in this state. 21 c. A health carrier shall provide written notice annually 22 to all covered persons of the covered person’s right to 23 elect to receive covered nonemergency health care services 24 from an out-of-network health care provider pursuant to this 25 subsection. 26 6. Incentives are not an administrative expense. An 27 incentive provided by a health carrier to a covered person 28 shall not be classified as an administrative expense of the 29 health carrier for a rate filing calculation or for a rate 30 filing with the commissioner. 31 7. Annual report to the commissioner. A health carrier 32 shall file an annual report with the commissioner in the form 33 required by the commissioner that contains all of the following 34 for each of the health carrier’s health benefit plans: 35 -6- LSB 5344XC (1) 87 ko/rj 6/ 11

S.F. _____ a. The total number of each type of incentive issued to 1 covered persons. 2 b. Each comparable health care services category, by 3 category, for which an incentive was issued. 4 c. The average dollar amount of all incentives, by incentive 5 type, issued for each category of comparable health care 6 services. 7 d. The percentage of covered persons who participated in the 8 program. 9 e. The total dollar amount saved by the health carrier 10 as compared with the average amount for each category of 11 comparable health care services. 12 f. The number of out-of-network nonemergency health care 13 services elected by covered persons. 14 g. The type of out-of-network nonemergency health care 15 services elected by covered persons. 16 h. The total dollar amount saved by the health carrier for 17 out-of-network nonemergency health care services elected by 18 covered persons. 19 8. Rules. The commissioner shall adopt rules pursuant to 20 chapter 17A to administer this section. 21 9. Applicability. 22 a. This section shall apply to the following classes of 23 third-party payment provider contracts, policies, or plans 24 delivered, issued for delivery, continued, or renewed in this 25 state on or after January 1, 2019: 26 (1) Individual or group accident and sickness insurance 27 providing coverage on an expense-incurred basis. 28 (2) An individual or group hospital or medical service 29 contract issued pursuant to chapter 509, 514, or 514A. 30 (3) An individual or group health maintenance organization 31 contract regulated under chapter 514B. 32 (4) A plan established for public employees pursuant to 33 chapter 509A. 34 b. This section shall not apply to accident-only, 35 -7- LSB 5344XC (1) 87 ko/rj 7/ 11

S.F. _____ specified disease, short-term hospital or medical, hospital 1 confinement indemnity, credit, dental, vision, Medicare 2 supplement, long-term care, basic hospital and medical-surgical 3 expense coverage as defined by the commissioner, disability 4 income insurance coverage, coverage issued as a supplement 5 to liability insurance, workers’ compensation or similar 6 insurance, or automobile medical payment insurance. 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanation’s substance by the members of the general assembly. 10 This bill relates to incentive programs and health care cost 11 transparency tools offered by health carriers and health care 12 providers to enable insured individuals to seek lower cost 13 health care services. 14 The bill requires a health carrier to offer a program that 15 provides an incentive, such as a cash payment, for a covered 16 person to elect to receive comparable health care services, as 17 defined in the bill, from a health care provider that charges 18 less than the average amount for those services. Prior to 19 offering a comparable health care service incentive program 20 (program), the bill requires a health carrier to file a 21 health benefit plan with the commissioner that discloses all 22 health care services that qualify for the program, a detailed 23 description of all available incentives, all actions required 24 of a covered person to earn each incentive, and all limitations 25 on any incentive. The bill does not preclude a health carrier 26 from expanding the types of health care services that are 27 eligible for the program. 28 The bill provides for an incentive calculated as a 29 percentage of the difference between the contracted amount and 30 the average amount for health care services as those terms are 31 defined in the bill. The incentive paid to a covered person 32 must be no less than 50 percent of the cost savings by the 33 health carrier. The health carrier may require documentation 34 that shows that prior to receiving the comparable health care 35 -8- LSB 5344XC (1) 87 ko/rj 8/ 11

S.F. _____ service, the covered person sought coverage from a health care 1 provider that charges less than the average amount. 2 The bill requires a health carrier to establish cost 3 transparency tools that are available on an interactive 4 internet site or by a toll-free number that allow a covered 5 person to obtain quality data and to compare the contracted 6 and average amounts for all network health care providers for 7 nonemergency and comparable health care services. 8 A covered person’s health carrier must provide a good-faith 9 cost estimate, including total out-of-pocket costs, to the 10 covered person for comparable health care services. The 11 health carrier must provide written notice that the good-faith 12 estimate is only an estimate. The health carrier may impose 13 any cost-sharing requirements arising from unforeseen 14 circumstances from the comparable health care services if the 15 requirement is disclosed to a covered person in the covered 16 person’s health benefit plan. 17 The bill requires a health care provider to provide a 18 covered person’s health carrier with all treatment information 19 necessary for the covered person to receive a good-faith cost 20 estimate for proposed nonemergency health care services from 21 the covered person’s health carrier. The health care provider 22 must also disclose all facility fees or other costs that may 23 be assessed to the covered person as part of the nonemergency 24 health care services. 25 All health care providers are required to post a sign 26 in an area visible to patients that provides notice of a 27 covered person’s right to sufficient detail regarding proposed 28 nonemergency health care services to allow the covered person 29 to get assistance from the covered person’s health carrier to 30 compare all costs associated with the proposed nonemergency 31 health care services, a right to the health carrier’s cost 32 transparency tools, a right to have access to the covered 33 person’s health carrier’s comparable health care services 34 incentive program, and a right to select an out-of-network 35 -9- LSB 5344XC (1) 87 ko/rj 9/ 11

S.F. _____ health care provider under certain circumstances. 1 The bill allows a covered person to receive covered health 2 care services from an out-of-network health care provider at 3 a cost less than or equal to the average price that the health 4 carrier has paid all in-network providers for the same health 5 care services for the last consecutive twelve months. The 6 health carrier must allow the covered person to obtain the 7 covered health care services from the out-of-network health 8 care provider at the out-of-network health care provider’s 9 price, must apply any payments made by the covered person for 10 the health care services toward the covered person’s deductible 11 and out-of-pocket maximum, and must provide an online form 12 for the covered person to submit proof of payment to the 13 out-of-network provider. 14 The bill specifies that an incentive provided by a health 15 carrier is not an administrative expense of the health carrier 16 for a rate filing calculation or a rate filing with the 17 commissioner. 18 The bill requires a health carrier to file an annual report 19 with the commissioner for each of the health carrier’s health 20 benefit plans and provide statistics related to participation 21 rates in the program, the number and average amount of 22 incentives paid out for each comparable health care services 23 category, the health carrier’s cost savings for each comparable 24 health care services category, and the out-of-network 25 nonemergency health care services elected by covered persons. 26 The bill requires the commissioner to adopt rules to 27 administer the requirements of the bill. 28 The bill applies to third-party payment provider contracts, 29 policies, or plans delivered, issued for delivery, continued, 30 or renewed in this state on or after January 1, 2019, including 31 individual or group accident and sickness insurance providing 32 coverage on an expense-incurred basis, an individual or group 33 hospital or medical service contract issued pursuant to Code 34 chapter 509, 514, or 514A, an individual or group health 35 -10- LSB 5344XC (1) 87 ko/rj 10/ 11

S.F. _____ maintenance organization contract regulated under Code chapter 1 514B, and a plan established for public employees pursuant to 2 Code chapter 509A. 3 The bill does not apply to accident-only, specified disease, 4 short-term hospital or medical, hospital confinement indemnity, 5 credit, dental, vision, Medicare supplement, long-term care, 6 basic hospital and medical-surgical expense coverage as defined 7 by the commissioner, disability income insurance coverage, 8 coverage issued as a supplement to liability insurance, 9 workers’ compensation or similar insurance, or automobile 10 medical payment insurance. 11 -11- LSB 5344XC (1) 87 ko/rj 11/ 11