HB557INTRODUCED
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HB557
5VL5133-1
By Representative Datcher
RFD: Insurance
First Read: 09-Apr-25
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5 5VL5133-1 04/01/2025 JC (L)lg 2025-835
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First Read: 09-Apr-25
SYNOPSIS:
Under existing law, "utilization review," the
process by which health insurers determine whether or
not to pay or reimburse for health care services, is
regulated under the Alabama Department of Public
Health.
This bill would place regulation of utilization
review functions under the Department of Insurance.
This bill would require health insurers to
annually report the number of coverage requests denied
to the Department of Insurance and make their coverage
criteria accessible to enrollees and health care
providers.
This bill would require coverage determinations
to be made and communicated to a health care provider
within 72 hours for nonurgent care requests and 24
hours for urgent care requests.
This bill would require that coverage
determinations be reviewed by a licensed health care
professional.
This bill would also require the Department of
Insurance to establish an ombudsman to receive and
investigate complaints from enrollees and health care
providers concerning coverage decisions.
This bill would further provide enforcement
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This bill would further provide enforcement
powers to the Department of Insurance, including the
authority to impose civil fines on an insurer who
violates this act, and would recognize that an enrollee
aggrieved by a utilization review determination may
pursue civil damages.
A BILL
TO BE ENTITLED
AN ACT
Relating to health insurance; to amend Sections
27-3A-1, 27-3A-2, 27-3A-3, 27-3A-4, 27-3A-5, and 27-3A-6, Code
of Alabama 1975, to further regulate utilization review by
health insurers; to place enforcement of utilization review
requirements under the Department of Insurance; to provide
time limits for determinations of coverage and the resolution
of appeals of coverage denials; to require that determinations
of coverage be reviewed by a licensed health care
professional; to require the the Department of Insurance to
establish an ombudsman program to receive complaints from
enrollees and health care providers; to provide civil
penalties for violations of this act; and to add Section
27-3A-7 to the Code of Alabama 1975, to recognize that an
enrollee may have a civil action for damages.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 27-3A-1, 27-3A-2, 27-3A-3, 27-3A-4,
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Section 1. Sections 27-3A-1, 27-3A-2, 27-3A-3, 27-3A-4,
27-3A-5, and 27-3A-6, Code of Alabama 1975, are amended to
read as follows:
"§27-3A-1
This chapter may be cited as the "Health Care Service
Utilization Review , Accountability, and Transparency Act.""
"§27-3A-2
The purposes of this chapter are to:
(1) Promote the delivery of quality health care in a
cost-effective manner in the recognition that Alabamians have
a right to timely and equitable access to medically necessary
care.;
(2) Assure that utilization review agents adhere to
reasonable standards for conducting utilization review .;
(3) Foster greater coordination and cooperation between
health care providers and utilization review agents .;
(4) Improve communications and knowledge of benefit
plan requirements among all parties concerned before expenses
are incurred, and to require transparency and oversight of
insurance operations in order to ensure fair treatment of
Alabama consumers .;
(5) Ensure that utilization review agents maintain the
confidentiality of medical records in accordance with
applicable laws; and
(6) Hold health insurers accountable for industry
practices that deny or delay medically necessary care that
results in harm to consumers ."
"§27-3A-3
As used in this chapter, the following words and
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As used in this chapter, the following words and
phrases shall have the following meanings:
(1) ARTIFICIAL INTELLIGENCE. A machine-based system
that may include software or physical hardware that performs
tasks, based upon data set inputs, which require human-like
perception, cognition, planning, learning, communication, or
physical action and which is capable of improving performance
based upon learned experience without significant human
oversight toward influencing real or virtual environments.
(2) COMMISSIONER. The Commissioner of the Alabama
Department of Insurance.
(3) COVERAGE DENIAL. A coverage determination by a
utilization review agent to deny or refuse to certify a
payment or reimbursement for a health care treatment,
admission, service, procedure, or medication.
(4) COVERAGE DETERMINATION. A written or oral
determination made by a utilization review agent that a
treatment, admission, service, procedure, or medication, under
the enrollee's clinical circumstances is or is not: (i) a
benefit covered under the applicable health benefit plan; (ii)
medically necessary; or (iii) in compliance with another
requirement in the policies or guidelines imposed by the
utilization review agent, and thus satisfies the requirements
for payment or reimbursement.
(1)(5) DEPARTMENT. The Alabama Department of Insurance
Public Health.
(2)(6) ENROLLEE. An individual who has contracted for
or who participates in coverage under an insurance policy, a
health maintenance organization contract, a health service
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health maintenance organization contract, a health service
corporation contract, a health benefit plan an employee welfare
benefit plan, a hospital or medical services plan, or any
other benefit program providing payment, reimbursement, or
indemnification for health care costs for the individual or
the eligible dependents of the individual .
(7) HEALTH BENEFIT PLAN. a. Any plan, policy, or
contract issued, delivered, or renewed in this state by an
insurer that provides health coverage that includes payment
for hospitalization, physician care, treatment, surgery,
therapy, drugs, equipment, and any other medical expense,
regardless of whether the plan is for a group or an
individual.
b. The term does not include accident-only, specified
disease, individual hospital indemnity, credit, dental-only,
Medicare supplement, long-term care, disability income, or
other limited benefit health insurance policies, or coverage
issued as supplemental to liability insurance, workers'
compensation, or automobile medical payment insurance.
(8) INSURER. Any entity that issues, delivers, or
renews a health benefit plan, including a person as defined in
Section 27-1-2, a health maintenance organization established
under Chapter 21A, or a nonprofit health care services plan
established under Article 6, Chapter 20, Title 10A.
(9) POLICIES AND GUIDELINES. Written standards
developed or adopted by a utilization review agent, which
include parameters and considerations for prior authorization
or coverage of treatments, services, procedures, medications,
diagnostic services, therapies, final medical policies, and
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diagnostic services, therapies, final medical policies, and
medical policies in draft form.
(3)(10) PROVIDER. A health care provider duly licensed
or certified by the State of Alabama.
(11) URGENT CARE REQUEST. A request for a coverage
determination for treatments, services, procedures,
medications, diagnostic services, or therapies for which the
time period for making a nonurgent determination of prior
authorization could result in at least one of the following
outcomes for the enrollee:
a. Death.
b. Permanent impairment of health.
c. Inability to regain maximum bodily function.
d. Severe pain that cannot be adequately managed.
(4)(12) UTILIZATION REVIEW. A system for prospective
and concurrent review of the medical necessity and
appropriateness in the allocation of health care resources and
services given or proposed to be given to an individual within
this state, including a coverage determination on a request
for prior authorization or otherwise . The term does not
include elective requests for clarification of coverage.
(5)(13) UTILIZATION REVIEW AGENT. Any person or entity,
including the State of Alabama, performing a utilization
reviewthat makes coverage determinations and performs other
utilization review functions for an insurer in the
administration of a health benefit plan , except the following:
a. An agency of the federal government.
b. An agent acting on behalf of the federal government,
but only to the extent that the agent is providing services to
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but only to the extent that the agent is providing services to
the federal government.
c. The internal quality assurance program of a
hospital.
d. An employee of a utilization review agent.
e. Health maintenance organizations licensed and
regulated by the state, but only to the extent of providing a
utilization review to their own members.
f. Any entity that has a current accreditation from the
Utilization Review Accreditation Commission (URAC). However,
entities with current URAC accreditation shall file a URAC
certification with the department annually.
g.e. An entity performing utilization reviews or bill
audits, or both, exclusively for workers' compensation claims
pursuant to Section 25-5-312. If an entity also performs
services for claims other than workers' compensation, it shall
be considered a private review agent subject to this chapter
for those claims.
h.f. An entity performing utilization reviews or bill
audits, or both, exclusively for the Medicaid Agency.
i.g. A person performing utilization reviews or bill
audits, or both, exclusively for their company's health plan,
independent of a utilization review companyagent.
j.h. An insurance company licensed by the State of
Alabama performing utilization reviews or bill audits, or
both, exclusively for their company's health plan, independent
of a utilization review companyagent.
k.i. The Peer Review Committee of the Alabama State
Chiropractic Association."
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Chiropractic Association."
"§27-3A-4
(a) Utilization review agents shall adhere to the
minimum standards set forth in Section 27-3A-5.
(b) On or after July 1, 1994, a A utilization review
agent shall not conduct a utilization review in this state
unless the agent has certified to the department in writing
that the agent is in compliance with Section 27-3A-5.
Certification shall be made annually on or before July 1 of
each calendar year. In addition, a utilization review agent
shall file the following information:
(1) The name, address, telephone number, and normal
business hours of the utilization review agent.
(2) The name and telephone number of a personan
individual for the department to contact.
(3) A description of the appeal procedures for
utilization review determinations.
(c) Any material changes in the information filed in
accordance with this sectionsubsection (b) shall be filed with
the State Health Officer commissioner within 30 days of the
change.
(d) Unless exempted pursuant to paragraph f. of
subdivision (5) of Section 27-3A-3, each Each utilization
review agent, upon filing the certification under subsection
(b), shall pay an annual fee in the amount of one thousand
dollars ($1,000) to the department. All fees paid pursuant to
this subdivision shall be held by the department as expendable
receipts for the purpose of administering this chapter.
(e) No later than March 31 of each year, a utilization
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(e) No later than March 31 of each year, a utilization
review agent shall file a report with the commissioner which
shall include all of the following information for the
previous calendar year:
(1) The total number of coverage determinations.
(2) The number of coverage denials, arranged by
category of treatment, admission, service, procedure, or
medication.
(3) Within each category of coverage denial as required
under subdivision (2), the principal reason for the denial,
ranked in order according to numerical frequency.
(f) The commissioner shall make available to the public
the information filed by the insurer pursuant to subsection
(c) by posting the information in an accessible format on the
website of the department.
(e)(g) The department may adopt rules pursuant to the
Administrative Procedure Act necessary to implement this
chapter."
"§27-3A-5
(a) Except as provided in subsection (b), all All
utilization review agents shall meet the following minimum
standards:
(1) Notification of a coverage determination by the
utilization review agent shall be electronically mailed or
otherwise communicated to the provider of record or the
enrollee or other appropriate individual within two business
days72 hours of the receipt of thea request for coverage
determination and the receipt of all information necessary to
complete the review.
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complete the review.
(2) Notification of a coverage determination by the
utilization review agent shall be electronically mailed to the
provider of record or the enrollee or other appropriate
individual within 24 hours of the receipt of a request for
coverage determination for urgent care and the receipt of all
information necessary to complete the review.
(3) A request for coverage determination is deemed
granted when all information necessary to complete the review
is received by the utilization review agent and notification
is not provided to the provider of record or the enrollee or
other appropriate individual within the applicable time period
required for a nonurgent care request under subdivision (1) or
a request for urgent care under subdivision (2).
(2)(4) Any coverage determination by a utilization
review agent as to the necessity or appropriateness of ana
treatment, admission, service, or procedure, or medication
shall be reviewed by a physician or other provider or
determined in accordance with standards or for compliance with
policies and guidelines approved by a physician .
(3)(5) Any notification of coverage determination not
to certify ana treatment, admission, service, or procedure, or
medication shall include the principal reason for the
determination and the procedures to initiate an appeal of the
determination.
(4)(6) Utilization review agents shall maintain and
make available a written description of the appeal procedure
by which the enrollee or the provider of record may seek
review of a coverage determination by the utilization review
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review of a coverage determination by the utilization review
agent. The appeal procedure shall provide for the following:
a. On appeal, all coverage determinations not to
certify anto deny a treatment, admission, service, or
procedure, or medications as being medically necessary or
appropriate shall be made by a physician in the same or a
similar general specialty as typically manages the medical
condition, procedure, or treatment under discussion as
mutually deemed appropriate. A chiropractor mustshall review
all cases in which the utilization review organization has
concluded that a determination not to certify a chiropractic
service or procedure is appropriate and an appeal has been
made by the attending chiropractor, enrollee, or designee.
b. Utilization review agents shall complete the
adjudication of appeals of determinations not to certify
admissions, services, and procedures a treatment, admission,
service, procedure, or medication no later than 30five
business days in the case of a request for nonurgent care, or
no later than 24 hours in the case of a request for urgent
care, from the date the appeal is filed and the receipt of all
information necessary to complete the appeal.
c. When an initial determination not to certify a
health care service is made prior to or during an ongoing
service requiring review, and the attending physician believes
that the determination warrants immediate appeal, the
attending physician shall have an opportunity to appeal that
determination over the telephone on an expedited basis. A
representative of a hospital or other health care provider or
a representative of the enrollee or covered patient may assist
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a representative of the enrollee or covered patient may assist
in an appeal. Utilization review agents shall complete the
adjudication on an expedited basis. Utilization review agents
shall complete the adjudication of expedited appeals within 48
hours of the date the appeal is filed and the receipt of all
information necessary to complete the appeal. Expedited
appeals that do not resolve a difference of opinion may be
resubmitted through the standard appeal process A determination
to deny coverage of a treatment, admission, service,
procedure, or medication is deemed reversed, with coverage
granted, when a utilization review agent receives all
information necessary to complete the appeal but does not
complete the adjudication within the time period that applies
to a request for nonurgent care or a request for urgent care
as required in paragraph b .
(7) Utilization review agents shall maintain an
electronic portal to communicate with providers and to receive
and respond to coverage determination or prior authorization
requests.
(5)(8) Utilization review agents shall make staff
available by toll-free telephone at least 4055 hours per week
duringthat include normal business hours.
(6)(9) Utilization review agents shall have a telephone
system capable of accepting or recording incoming telephone
calls during other than normal business hours and shall
respond to theseall calls or electronic mail within two
workingbusiness days.
(7)(10) Utilization review agents shall comply with all
applicable laws to protect the confidentiality of individual
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applicable laws to protect the confidentiality of individual
medical records, including the federal Health Insurance
Portability and Accountability Act (HIPAA), 42 U.S.C. § 1320d
et seq.
(8)(11) Physicians, chiropractors, or psychologists and
other health care professionals who makingreview utilization
review determinations and who would require an occupational
license to practice their profession in the State of Alabama
shall have current licenses from aan applicable state
licensing board agency in the United States .
(9)(12) Utilization review agents shall allow a minimum
of 24 hours after an emergency treatment, admission, service,
or procedure for an enrollee or representative of the enrollee
to notify the utilization review agent and request
certification or continuing treatment a coverage determination
for that condition .
(13) Utilization review agents shall make their
policies and guidelines easily accessible to enrollees and
providers in electronic format.
(14) Utilization review agents shall make coverage
determinations that are consistent with the provisions of the
health benefit contract, and policies and guidelines that may
apply to an enrollee's clinical condition.
(15) A utilization review agent shall ensure that all
coverage determinations are reviewed by a physician or other
health care professional who is competent to evaluate and
reject, if appropriate, any recommendation or conclusion of
artificial intelligence that is in conflict with independent
professional judgment as informed by an enrollee's unique
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professional judgment as informed by an enrollee's unique
clinical condition, the recommendation of the provider, and
any applicable policies and guidelines .
(b) Any utilization review agent that has received
accreditation by the utilization review accreditation
commission shall be exempt from this section ."
"§27-3A-6
(a) The commissioner shall establish an ombudsman
program to receive and investigate complaints from enrollees
or providers aggrieved by a coverage determination by a
utilization review agent.
(b) An ombudsman may do any of the following:
(1) Help an aggrieved enrollee or provider use the
utilization review agent's internal appeal process for seeking
a reversal or modification of a coverage denial.
(2) Help an aggrieved enrollee or provider understand
provisions of a health benefit plan or the utilization review
agent's policies and guidelines that may be relevant to a
claim, or correspondence received from a utilization review
agent.
(3) Based on complaints received, investigate any
general business pattern or practice by a utilization review
agent that indicates that coverage denials are being made
contrary to the requirements imposed pursuant to Sections
27-3A-5(13) through (15).
(4) Audit compliance by a utilization review agent with
the coverage provisions of a health benefit plan, its policies
and guidelines, and the requirements of this chapter, and
issue a report with findings.
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issue a report with findings.
(5) Refer a utilization review agent to the department
for action pursuant to subsection (c).
(c)(1) Whenever the department has reason to believe
that a utilization review agent subject to this chapter has
been or is engaged in conduct that violates this chapter, the
department shall notify the utilization review agent of the
alleged violation. The agent shall respond to the notice not
later than 30 days after the notice is made.
(b)(2)Upon receiving a response from the utilization
review agent, Ifif the department finds the response to be
unsatisfactory or that the utilization review agent has
violated this chapter, or that the alleged violation has not
been corrected, the department may conduct a contested case
hearing on the alleged violation in accordance with the
Administrative Procedure Act commissioner may hold a hearing as
provided in Article 1, Chapter 2 .
(c)(3) If, after the hearing, the department determines
that the utilization review agent has engaged in a violation,
the department shall reduce the findings to writing and shall
issue and cause to be served upon the agent a copy of the
findings and an order requiring the agent to cease and desist
from engaging in the violation.
(d)(4) The department may also exercise either or both
of the following disciplinary powers:
(1)a. Impose an administrative fine of not more than
one thousand dollars ($1,000) for a violation, or not more
thanfiveten thousand dollars ($5,000)($10,000) for a
violation that occurred with such frequency as to indicate a
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violation that occurred with such frequency as to indicate a
general business pattern or practice.
(2)b. Suspend or revoke the certification of a
utilization review agent if the agent knew the act was in
violation of this chapter and repeated the act with such
frequency as to indicate a general business pattern or
practice."
Section 2. Section 27-3A-7 is added to the Code of
Alabama 1975, to read as follows:
§27-3A-7
Nothing in this chapter shall be construed to prohibit
an enrollee from pursuing any available remedies, including
civil damages, in an appropriate forum as a consequence of the
determination, act, or omission of a utilization review agent,
consistent with other state and federal law.
Section 3. This act shall become effective on October
1, 2025.
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