2012 -- S 2476

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LC01311

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO INSURANCE - DURABLE MEDICAL EQUIPMENT FREEDOM OF

CHOICE

     Introduced By: Senators DeVall, Miller, Crowley, and Nesselbush

     Date Introduced: February 16, 2012

     Referred To: Senate Health & Human Services

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended

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by adding thereto the following chapter:

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     CHAPTER 29.3

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DURABLE MEDICAL EQUIPMENT FREEDOM OF CHOICE

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     27-29.3-1. Definitions. – For purposes of this chapter, the following terms shall mean:

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     (1) “Commissioner” means the health insurance commissioner.

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     (2) "Durable medical equipment" means equipment (including repair and replacement

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parts) which:  (i) Can withstand repeated use; (ii) is primarily and customarily used to serve a

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medical purpose; (iii) Generally is not useful to a person in the absence of illness or injury; and

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(iv) Is appropriate for use in the home. Durable medical equipment does not include mobility

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enhancing equipment.

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     (3) "Eligible bidder" means a supplier of durable medical equipment, irrespective of

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corporate structure, who is willing to bid for participation in a restricted durable medical

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equipment contract.

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     (4) "Insurer" means an insurance carrier as defined in chapters 18, 19, 20 and 41 of title

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27.

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     (5) "Insured" means any person who is entitled to have all or some costs associated with

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durable medical equipment paid by an insurer pursuant to a policy, certificate, contract or

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agreement of insurance or coverage.

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     (6) "Non-restricted durable medical equipment supplier network" means a network that

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permits any supplier of durable medical equipment to participate on substantially uniform terms

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and conditions established by an insurer.

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     (7) "Restricted durable medical equipment network" means an arrangement:  (i) For the

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provision of durable medical equipment and/or services directly associated with the durable

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medical equipment including, but not limited to, maintenance to insureds, and; (ii) Which, under

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the terms of an insurer's policy, certificate, contract or agreement of insurance or coverage,

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requires an insured or creates a financial incentive for an insured to obtain said equipment and/or

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services from one or more participating suppliers that have entered into a specific contractual

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relationship with the insurer.

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     27-29.3-2. Fair competition – Requirements for carriers offering durable medical

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equipment networks. -- (a) Any insurer that offers insureds a restricted durable medical

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equipment network shall, in soliciting, arranging, competitively bidding, contracting for, and

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operating such a network, comply with the following requirements for the purpose of promoting

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fair and competitive bidding:

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     (1) Conduct and complete an initial open bidding process to establish the restricted

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network and at least once every three (3) years thereafter;

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     (2) Provide notice to all eligible bidders of the insurer's intent to solicit bids for

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participation in a restricted durable medical equipment network;

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     (3) Inform eligible bidders of the date such bids will be solicited;

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     (4) Provide eligible bidders with identical, equal and uniform information, including, but

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not limited to, bid procedure information, financial and utilization information needed to make an

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informed competitive bid, criteria to be used in awarding a restricted durable medical equipment

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network contract and proposed contractual requirements for the restricted durable medical

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equipment network;

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     (5) Provide eligible bidders with at least thirty (30) days to prepare and submit bids

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between the bid solicitation date and the bid submission deadline;

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     (6) Open all bids: (i) At a previously specified time, which shall not be more than thirty

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(30) days after the bid submission deadline; and (ii) In a public manner; provided, that certain

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information contained in said bids may be held as confidential from public review consistent with

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regulations promulgated by the commissioner regarding the disclosure of proprietary data or

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information submitted by any bidders; and

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     (7) Select a successful bidder using solely the criteria provided to eligible bidders

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pursuant to subdivision (a)(4) herein, applied in a uniform manner.

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     (b) An insurer shall neither exclude nor favor any individual durable medical equipment

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supplier in the design of a competitive bid involving restricted or nonrestricted durable medical

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equipment networks in compliance with the requirements of this section. An entity and its

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affiliates that assists an insurer in the development of the bid, design, bid specifications or the bid

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process, or assists in the review or evaluation of said bids, shall be prohibited from bidding on

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such a contract.

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     27-29.3-3. Participation of small and mid-sized durable medical equipment

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manufacturers and suppliers. -- (a) Any durable medical equipment suppliers that are licensed,

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accredited, and located within the state of Rhode Island that are not owned or controlled, directly

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or indirectly, by an entity licensed in two (2) or more jurisdictions in addition to Rhode Island,

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which are not participating in an insurer's restricted durable medical equipment network contract

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shall nevertheless have the right to provide durable medical equipment and/or services directly

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associated with the durable medical equipment including, but not limited to, maintenance, to the

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insurer's insureds and be paid by the insurer as if the durable medical equipment manufacturer or

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supplier were participating in the insurer's restricted durable medical equipment network, and be

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entitled to all the rights and privileges associated with participating in the insurer's restricted

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durable medical equipment network including access to fee schedules and covered codes,

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provided that such non-network durable medical equipment manufacturers or suppliers agree:

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     (1) To accept as the insurer's payments in full the price required of durable medical

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equipment manufacturers or suppliers in the insurer's restricted durable medical equipment

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network;

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     (2) To bill to the insured up to and not in excess of any copayment, coinsurance,

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deductible, other amount required of an insured by the insurer, or for other uncovered services;

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     (3) To be reimbursed on the same methodological basis, including, but not limited to,

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capitation or other risk-sharing methodology, as required of durable medical equipment

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manufacturers or suppliers in the insurer's restricted durable medical equipment network;

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     (4) To participate in the insurer's utilization review and quality assurance programs,

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including utilization reports as required of durable medical equipment manufacturers or suppliers

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in the carrier's restricted durable medical equipment network;

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     (5) To provide computerized online eligibility determinations and claims submissions if

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and as required of durable medical equipment manufacturers or suppliers in the insurer's

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restricted durable medical equipment network;

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     (6) To participate in the insurer's satisfaction surveys and complaint resolution programs

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for its insureds;

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     (7) To protect the insurer's proprietary information and an insured's confidentiality and

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privacy;

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     (8) To abide by the insurer's performance standards with respect to waiting times,

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response rates and inventory management;

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     (9) To comply with the insurer's claims audit provisions; and

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     (10) To certify, using audit results or accountant statements, the fiscal soundness of the

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non-network durable medical equipment manufacturer or supplier.

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     (b) An insurer may waive any of the aforementioned agreements in arranging for the

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provision of durable medical equipment to insureds through a non-network durable medical

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equipment manufacturer or supplier. An insurer shall not impose any agreements, terms or

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conditions on any non-network durable medical equipment supplier which are more restrictive

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than those required of durable medical equipment suppliers in the insurer's restricted durable

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medical equipment network. The failure of a non-network durable medical equipment supplier to

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abide by the aforementioned agreements may, at the option of the insurer, serve as the basis for

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cancellation of the non-network durable medical equipment supplier's participation.

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     27-29.3-4. Applicability and allowances. -- (a) Nothing in this chapter shall preclude an

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insurer from entering into an agreement to allow non-network providers the ability to participate

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with the insurer's plans under terms and conditions set forth by the insurer.

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     (b) Nothing in this chapter shall be construed to require the provision of pharmacy

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benefits to insureds through a restricted durable medical equipment network nor any other

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arrangement for the provision of durable medical equipment.

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     27-29.3-5. Enforcement. – The health insurance commission shall have authority to

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enforce the provisions of sections 27-29.3-2 and 27-29.3-4, subject to provisions of “The

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Administrative Procedures Act”, chapter 35 of title 42.

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     27-29.3-6. Severability. – If any provision of this chapter or of any rule or regulation

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made under this chapter, or its application to any person or circumstance is held invalid by a court

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of competent jurisdiction, the remainder of the chapter, rule, or regulation and the application of

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the provision to other persons or circumstances shall not be affected by this invalidity. The

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invalidity of any section or sections or parts of any section or sections shall not affect the validity

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of the remainder of the chapter.

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     SECTION 2. This act shall take effect upon passage.

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LC01311

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE - DURABLE MEDICAL EQUIPMENT FREEDOM OF

CHOICE

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     This act would provide consumers of durable medical equipment with freedom of choice

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in the selection of a supplier.

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     This act would take effect upon passage.

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LC01311

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