EXPLANATION: CAPITALS INDICATE MATTER ADDE D TO EXISTING LAW .
[Brackets] indicate matter deleted from existing law.
*sb0475*
SENATE BILL 475
J5 5lr2127
CF 5lr2018
By: Senator Beidle
Introduced and read first time: January 22, 2025
Assigned to: Finance
A BILL ENTITLED
AN ACT concerning 1
Health Insurance – Utilization Review – Exemption for Participation in 2
Value–Based Care Arrangements 3
FOR the purpose of prohibiting certain carriers from imposing a prior authorization, step 4
therapy, or quantity limit requirement on eligible providers for health care services 5
that are included in a two–sided incentive arrangement; and generally relating to 6
utilization review and value–based care arrangements. 7
BY repealing and reenacting, without amendments, 8
Article – Insurance 9
Section 15–113(a) 10
Annotated Code of Maryland 11
(2017 Replacement Volume and 2024 Supplement) 12
BY repealing and reenacting, with amendments, 13
Article – Insurance 14
Section 15–113(f) 15
Annotated Code of Maryland 16
(2017 Replacement Volume and 2024 Supplement) 17
BY adding to 18
Article – Insurance 19
Section 15–147 20
Annotated Code of Maryland 21
(2017 Replacement Volume and 2024 Supplement) 22
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 23
That the Laws of Maryland read as follows: 24
Article – Insurance 25
2 SENATE BILL 475
15–113. 1
(a) (1) In this section the following words have the meanings indicated. 2
(2) “Carrier” means: 3
(i) an insurer; 4
(ii) a nonprofit health service plan; 5
(iii) a health maintenance organization; 6
(iv) a dental plan organization; or 7
(v) any other person that provides health benefit plans subject to 8
regulation by the State. 9
(3) “Eligible provider” means: 10
(i) a licensed physician, as defined in § 14–101 of the Health 11
Occupations Article, who voluntarily participates in a two–sided incentive arrangement; or 12
(ii) a set of health care practitioners that voluntarily participate in 13
a two–sided incentive arrangement. 14
(4) “Health care practitioner” means an individual who is licensed, 15
certified, or otherwise authorized under the Health Occupations Article to provide health 16
care services. 17
(5) “Set of health care practitioners” means: 18
(i) a group practice; 19
(ii) a clinically integrated organization established in accordance 20
with Subtitle 19 of this title; 21
(iii) an accountable care organization established in accordance with 22
42 U.S.C. § 1395jjj and any applicable federal regulations; or 23
(iv) a clinically integrated network that is a provider entity that 24
meets the criteria established in guidance issued by the Federal Trade Commission, 25
including a network of behavioral health care programs licensed under § 7.5–401 of the 26
Health – General Article. 27
(6) “Two–sided incentive arrangement” means an arrangement between an 28
eligible provider and a carrier in which the eligible provider may earn an incentive and a 29 SENATE BILL 475 3
carrier may recoup funds from the eligible provider in accordance with the terms of a 1
contract entered into with the eligible provider that meets the requirements of this section. 2
(f) (1) Under a two–sided incentive arrangement that complies with the 3
requirements of this section, a carrier may recoup funds paid to an eligible provider based 4
on the terms of a written contract between the carrier and the eligible provider that at a 5
minimum: 6
(i) establish a target budget for: 7
1. the total cost of care of a population of patients adjusted 8
for risk and population size; or 9
2. the cost of an episode of care; 10
(ii) limit recoupment to not more than 50% of the excess above the 11
mutually agreed on target established in accordance with item (i) of this paragraph; 12
(iii) specify a mutually agreed on maximum liability for total 13
recoupment that may not exceed 10% of the annual payments from the carrier to the eligible 14
provider; 15
(iv) provide an opportunity for gains by an eligible provider that is 16
greater than the opportunity for recoupment by the carrier; 17
(v) following good faith negotiations, provide an opportunity for an 18
audit by an independent third party and an independent third–party dispute resolution 19
process; 20
(vi) require the carrier and the eligible provider to negotiate in good 21
faith adjustments to the target budget when: 22
1. certain circumstances beyond the control of the carrier or 23
the eligible provider arise, including changes in hospital rates; and 24
2. material changes occur in health care economics, health 25
care delivery, or regulations that impact the arrangement; and 26
(vii) require the carrier to pay any incentive to or request any 27
recoupment from the eligible provider within 6 months after the end of the contract year, 28
unless the carrier or eligible provider initiates a dispute relating to the recoupment or 29
incentive amount. 30
(2) Unless mutually agreed to by an eligible provider and a carrier, an 31
arrangement entered into under this subsection may not provide an opportunity for 32
recoupment by the carrier based on the eligible provider’s performance during the first 12 33
months of the arrangement. 34 4 SENATE BILL 475
(3) A carrier that enters into a two–sided incentive arrangement with an 1
eligible provider in which the amount of any payment is determined, in whole or in part, 2
on the total cost of care of a population of patients or an episode of care, shall, at least 3
quarterly, disclose to the eligible provider the following information in a manner that meets 4
federal and State data use and privacy standards: 5
(i) any amount paid to another health care provider that is included 6
in the total cost of care of a patient in the population or episode of care; and 7
(ii) any copayment, coinsurance, or deductible that is included in the 8
total cost of care of a patient in the population or episode of care. 9
(4) Unless mutually agreed to by the carrier and eligible provider, a 10
two–sided incentive arrangement may not be amended during the term of the contract. 11
(5) A CARRIER MAY NOT IMPO SE A PRIOR AUTHORIZA TION, STEP 12
THERAPY, OR QUANTITY LIMIT RE QUIREMENT ON AN ELIG IBLE PROVIDER FOR A 13
HEALTH CARE SERVICE THAT IS INCLUDED IN A TWO–SIDED INCENTIVE 14
ARRANGEMENT . 15
[(5)] (6) The opportunity for independent third–party dispute resolution 16
provided for in paragraph (1)(v) of this subsection may not be required to be exhausted 17
before a member or member’s representative is allowed to file an appeal of a coverage 18
decision under § 15–10D–02 of this title. 19
[(6)] (7) [Nothing in this] THIS subsection may NOT be construed to: 20
(i) alter any requirement for a carrier to pay a hospital or related 21
institution the rate approved by the Health Services Cost Review Commission for hospital 22
services; or 23
(ii) supersede the Health Services Cost Review Commission’s 24
jurisdiction or authority over rate review and approval for hospital services. 25
15–147. 26
(A) IN THIS SECTION , “TWO–SIDED INCENTIVE ARRA NGEMENT” HAS THE 27
MEANING STATED IN § 15–113 OF THIS SUBTITLE. 28
(B) THIS SECTION APPLIES TO: 29
(1) INSURERS AND NONPROF IT HEALTH SERVICE PL ANS THAT 30
PROVIDE HOSPITAL , MEDICAL, OR SURGICAL BENEFITS TO INDIVIDUALS OR GR OUPS 31
ON AN EXPENSE –INCURRED BASIS UNDER HEALTH INSURANCE POL ICIES OR 32
CONTRACTS THAT ARE I SSUED OR DELIVERED I N THE STATE; AND 33 SENATE BILL 475 5
(2) HEALTH MAINTENANCE O RGANIZATIONS THAT PR OVIDE 1
HOSPITAL, MEDICAL, OR SURGICAL BENEFITS TO INDIVIDUALS OR GR OUPS UNDER 2
CONTRACTS THAT ARE I SSUED OR DELIVERED I N THE STATE. 3
(C) AN ENTITY SUBJECT TO THIS SECTION MAY NOT IMPOSE A PRIOR 4
AUTHORIZATION, STEP THERAPY , OR QUANTITY LIMIT RE QUIREMENT FOR A 5
HEALTH CARE SERVICE THAT IS INCLUDED IN A TWO–SIDED INCENTIVE 6
ARRANGEMENT . 7
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to all 8
policies, contracts, and health benefit plans issued, delivered, or renewed in the State on or 9
after January 1, 2026. 10
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 11
January 1, 2026. 12