First Regular Session
Sixty-second General Assembly
LLS NO. 99-0901.01 Bart Miller SENATE BILL 99-230
STATE OF COLORADO
BY SENATOR Epps;
also REPRESENTATIVE Morrison.
HEALTH, ENVIRONMENT, WELFARE & INSTITUTIONS
A BILL FOR AN ACT
101 CONCERNING THE RESPONSIBILITY OF HEALTH CARE COVERAGE CARRIERS
102 FOR THE SOLVENCY OF ENTITIES THROUGH WHICH CARRIERS
103 CONTRACT FOR COVERED HEALTH CARE SERVICES.
Bill Summary
(Note: This summary applies to this bill as introduced and does
not necessarily reflect any amendments that may be subsequently
adopted.)
Requires health care coverage carriers to assume responsibility for
the payment of all providers that have provided covered health care
services under a health plan if any contractor, subcontractor, or
intermediary of the carrier does not pay for such services or otherwise
becomes insolvent. Exempts carriers from this requirement if they
require contractors, subcontractors, or intermediaries to comply with due
diligence requirements. States that a carrier shall deem itself insecure in
a contractual arrangement if the contractor, subcontractor, or intermediary
is not meeting financial obligations to participating providers,
experiencing deficits that exceed reserves, or in 3 consecutive months
experiences net operating losses. Requires carriers that deem themselves
insecure to take action to direct administration of contracts with
contractors, subcontractors, and intermediaries. Specifies that direct
administration of a contract by a carrier under this law does not otherwise
subject the carrier to liability for debts of the contractor, subcontractor,
or intermediary.
1 Be it enacted by the General Assembly of the State of Colorado:
2 SECTION 1. 10-16-705 (5), Colorado Revised Statutes, is
[ ] denotes HOUSE amendment. { } denotes SENATE amendment.
Capital letters indicate new material to be added to existing statute.
Dashes through the words indicate material to be deleted from existing statute.
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1 amended to read:
2 10-16-705. Requirements for carriers and participating
3 providers. (5) (a) Except as provided for in paragraph (b) of this
4 subsection (5), notwithstanding any contractual provision to the contrary,
5 a carrier that has entered into contracts with one or more contractors or
6 subcontractors or their intermediaries to provide covered health care
7 services to covered persons of the carrier under any managed care plan
8 shall, in the event of nonpayment by or A DECLARATION OF insolvency OR
9 BANKRUPTCY of ANY such contractors or subcontractors or their
10 intermediaries, remain responsible ASSUME RESPONSIBILITY for the
11 payment of all participating providers that have provided covered health
12 care services to covered persons of the carrier pursuant to one or more
13 contracts with such contractors or subcontractors or their intermediaries
14 IN ACCORDANCE WITH THE TERMS OF THE CONTRACT BETWEEN SUCH
15 CONTRACTOR, SUBCONTRACTOR, OR INTERMEDIARY AND THE PROVIDER.
16 Any contracting provider that provides covered health care services to
17 covered persons of the carrier under a managed care contract shall, in the
18 event of nonpayment for such services BY CONTRACTORS,
19 SUBCONTRACTORS, OR INTERMEDIARIES, have legal standing to enforce
20 the managed care contract against the carrier and receive payment for
21 such services. In the event of the insolvency of a carrier, participating
22 provider claims for unpaid services shall be a class 6 claim under section
23 10-3-541 (1) (f). FOR PURPOSES OF THIS SUBSECTION (5), THE TERM
24 "NONPAYMENT" SHALL NOT INCLUDE CONTRACTUAL COMPENSATION
25 ARRANGEMENTS THAT RESULT IN RECEIPT BY A PARTICIPATING PROVIDER
26 OF LESS THAN BILLED CHARGES.
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1 (b) (I) IN ADDITION TO THE REQUIREMENTS CONTAINED IN SECTION
2 10-16-706, A CARRIER THAT REQUIRES THE FOLLOWING AS PART OF ITS
3 CONTRACT WITH A CONTRACTOR, SUBCONTRACTOR, OR INTERMEDIARY
4 AND ACTS AS REQUIRED UNDER SUBPARAGRAPH (II) OF THIS PARAGRAPH
5 (b) SHALL BE EXEMPT FROM THE REQUIREMENTS OF PARAGRAPH (a) OF
6 THIS SUBSECTION (5): A CONTRACTUAL REQUIREMENT THAT THE
7 CONTRACTOR, SUBCONTRACTOR, OR INTERMEDIARY COMPLY WITH THE
8 CARRIER'S DUE DILIGENCE ACTIVITIES WITH RESPECT TO THE CONTRACT.
9 REQUIRED DUE DILIGENCE ACTIVITIES SHALL INCLUDE ONGOING
10 REASONABLE EFFORTS AT LEAST QUARTERLY SUFFICIENT TO MONITOR
11 THAT PARTICIPATING PROVIDERS ARE BEING PAID IN ACCORDANCE WITH
12 THE TERMS OF THE CONTRACT, AND EXAMINATION OF FINANCIAL
13 STATEMENTS OF THE CONTRACTOR, SUBCONTRACTOR, OR INTERMEDIARY
14 SUFFICIENT TO MONITOR THEIR FINANCIAL STATUS AND TRENDS. THE
15 CARRIER SHALL DEEM ITSELF INSECURE UPON FINDING THAT THE
16 CONTRACTOR, SUBCONTRACTOR, OR INTERMEDIARY IS:
17 (A) NOT MEETING ITS FINANCIAL OBLIGATIONS TO PARTICIPATING
18 PROVIDERS WITH RESPECT TO THE CARRIER'S BUSINESS;
19 (B) EXPERIENCING DEFICITS, TAKING INTO ACCOUNT CLAIMS
20 INCURRED BUT NOT REPORTED, THAT EXCEED RESERVES; OR
21 (C) IN THREE CONSECUTIVE MONTHS, EXPERIENCING NET
22 OPERATING LOSSES TAKING INTO ACCOUNT CLAIMS INCURRED BUT NOT
23 REPORTED.
24 (II) THE CARRIER SHALL BE EXEMPT FROM THE REQUIREMENTS OF
25 PARAGRAPH (a) OF THIS SUBSECTION (5) ONLY IF, UPON DEEMING ITSELF
26 INSECURE, THE CARRIER TAKES ACTION TO DIRECT ADMINISTRATION OF
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1 THE CONTRACT INCLUDING INCREASING WITHHOLDS FOR THE PAYMENT OF
2 CLAIMS, CEASING ENROLLMENT WITH THE CONTRACTOR, SUBCONTRACTOR,
3 OR INTERMEDIARY, OR PAYING PROVIDERS DIRECTLY IN LIEU OF PAYING
4 THE CONTRACTOR, SUBCONTRACTOR, OR INTERMEDIARY AS PERMITTED BY
5 THE CONTRACT BETWEEN THE CARRIER AND THE CONTRACTOR,
6 SUBCONTRACTOR, OR INTERMEDIARY. DIRECT ADMINISTRATION OF THE
7 CONTRACT PURSUANT TO THIS SUBPARAGRAPH (II) SHALL NOT MAKE THE
8 CARRIER LIABLE FOR THE DEBTS OF THE CONTRACTOR, SUBCONTRACTOR,
9 OR INTERMEDIARY NOR OTHERWISE SUBJECT THE CARRIER TO LIABILITY.
10 (b) (c) A carrier may apply to the commissioner for the use of an
11 alternative mechanism to ensure that all participating providers that have
12 provided covered health care services to covered persons of the carrier
13 pursuant to one or more contracts with such contractors or subcontractors
14 or their intermediaries receive payment due. If approval is granted, said
15 carrier shall be exempt from the requirements of paragraph (a) of this
16 subsection (5).
17 (d) THE COMMISSIONER MAY PROMULGATE RULES AS NECESSARY
18 FOR CARRYING OUT THE COMMISSIONER'S DUTIES UNDER THIS SUBSECTION
19 (5).
20 SECTION 2. Effective date. This act shall take effect at 12:01
21 a.m. on the day following the expiration of the ninety-day period after
22 final adjournment of the general assembly that is allowed for submitting
23 a referendum petition pursuant to article V, section 1 (3) of the state
24 constitution; except that, if a referendum petition is filed against this act
25 or an item, section, or part of this act within such period, then the act,
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1 item, section, or part, if approved by the people, shall take effect on the
2 date of the official declaration of the vote thereon by proclamation of the
3 governor.