Codified Law 58-17F | South Dakota Legislature

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CHAPTER 58-17F

NETWORK ADEQUACY STANDARDS

58-17F-1 Definitions.

58-17F-2 Health benefit plan defined.

58-17F-3 Medical director required for managed care plans.

58-17F-4 Health carrier to provide written information to prospective enrollees--Specific information required.

58-17F-5 Health carrier to maintain provider network sufficient to assure services without unreasonable delay--Emergency services--Determination of sufficiency.

58-17F-6 Where provider network is insufficient, covered benefit to be made available at no greater cost.

58-17F-7 Health carrier to ensure provider proximity to covered persons.

58-17F-8 Health carrier to monitor provider ability, capacity, and authority--Financial capability to be monitored in capitated plans.

58-17F-9 Factors to consider in determining network adequacy.

58-17F-10 Access plan required for managed care plans--Annual update--Contents--Exemptions for discounted fee-for-service networks.

58-17F-11 Requirements for health carrier and providers in managed care plans.

58-17F-12 Provisions governing contractual arrangements between health carriers and intermediaries.

58-17F-13 Sample contract forms to be filed with director--Material changes to be submitted--Certain changes not material--Director's inaction within certain time deemed approval--Contract copies to be provided upon request.

58-17F-14 Contract does not relieve health carrier of liability.

58-17F-15 Remedies available to director against health carrier found not in compliance.

58-17F-16 Managed care contractor to register with director.

58-17F-17 Filing changes in registration information.

58-17F-18 Request for information from managed care contractor.

58-17F-19 Activities of nonregistered managed care contractor prohibited.

58-17F-20 Registration fee for managed care contractor.

58-17F-21 Promulgation of rules.

58-17F-1. Definitions.

Terms used in this chapter mean:

(1) "Closed plan," a managed care plan or health carrier that requires covered persons to use participating providers under the terms of the managed care plan or health carrier and does not provide any benefits for out-of-network services except for emergency services;

(2) "Covered benefits" or "benefits," those health care services to which a covered person is entitled under the terms of a health benefit plan;

(3) "Covered person," a policyholder, subscriber, enrollee, or other individual participating in a health benefit plan;

(4) "Director," the director of the Division of Insurance;

(5) "Emergency medical condition," a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect that the absence of immediate medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person's health or, with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy;

(6) "Emergency services," with respect to an emergency medical condition:

(a) A medical screening examination that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency condition; and

(b) Such further medical examination and treatment, to the extent they are within the capability of the staff and facilities at a hospital to stabilize a patient;

(7) "Facility," an institution providing health care services or a health care setting, including hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory, and imaging centers, and rehabilitation, and other therapeutic health settings;

(8) "Health care professional," a physician or other health care practitioner licensed, accredited, or certified to perform specified health services consistent with state law;

(9) "Health care provider" or "provider," a health care professional or a facility;

(10) "Health care services," services for the diagnosis, prevention, treatment, cure, or relief of a health condition, illness, injury, or disease;

(11) "Health carrier," an entity subject to the insurance laws and regulations of this state, or subject to the jurisdiction of the director, that contracts or offers to contract, or enters into an agreement to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including a sickness and accident insurance company, a health maintenance organization, a nonprofit hospital and health service corporation, or any other entity providing a plan of health insurance, health benefits, or health services;

(12) "Health indemnity plan," a health benefit plan that is not a managed care plan;

(13) "Intermediary," a person authorized to negotiate and execute provider contracts with health carriers on behalf of health care providers or on behalf of a network;

(14) "Managed care contractor," a person who establishes, operates, or maintains a network of participating providers; or contracts with an insurance company, a hospital or medical service plan, an employer, an employee organization, or any other entity providing coverage for health care services to operate a managed care plan or health carrier;

(15) "Managed care entity," a licensed insurance company, hospital or medical service plan, health maintenance organization, or an employer or employee organization, that operates a managed care plan or a managed care contractor. The term does not include a licensed insurance company unless it contracts with other entities to provide a network of participating providers;

(16) "Managed care plan," a plan operated by a managed care entity that provides for the financing or delivery of health care services, or both, to persons enrolled in the plan through any of the following:

(a) Arrangements with selected providers to furnish health care services;

(b) Explicit standards for the selection of participating providers; or

(c) Financial incentives for persons enrolled in the plan to use the participating providers and procedures provided for by the plan;

(17) "Network," the group of participating providers providing services to a health carrier;

(18) "Open plan," a managed care plan or health carrier other than a closed plan that provides incentives, including financial incentives, for covered persons to use participating providers under the terms of the managed care plan or health carrier;

(19) "Participating provider," a provider who, under a contract with the health carrier or with its contractor or subcontractor, has agreed to provide health care services to covered persons with an expectation of receiving payment, other than coinsurance, copayments, or deductibles, directly or indirectly, from the health carrier;

(20) "Primary care professional," a participating health care professional designated by a health carrier to supervise, coordinate or provide initial care or continuing care to a covered person, and who may be required by the health carrier to initiate a referral for specialty care and maintain supervision of health care services rendered to the covered person; and

(21) "Secretary," the secretary of the Department of Health.

Source: SL 2011, ch 219, § 2.

Commission Note: SL 2012, ch 239, § 1 provides: "The provisions of chapter 219 of the 2011 Session Laws shall be deemed repealed if the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) is found to be unconstitutional in its entirety by a final decision of a federal court of competent jurisdiction and all appeals exhausted or time for appeals elapsed."

58-17F-2. Health benefit plan defined.

For the purposes of this chapter, the term, health benefit plan, means a policy, contract, certificate, or agreement entered into, offered, or issued by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services. The term includes short-term and catastrophic health insurance policies, and a policy that pays on a cost-incurred basis, except as otherwise specifically exempted in this definition.

The term does not include coverage only for accident, or disability income insurance, or any combination thereof; coverage issued as a supplement to liability insurance; liability insurance, including general liability insurance and automobile liability insurance; workers' compensation or similar insurance; automobile medical payment insurance; credit-only insurance; coverage for on-site medical clinics; and other similar insurance coverage, specified in federal regulations issued pursuant to Public Law No. 104-191, as amended to January 1, 2011, under which benefits for medical care are secondary or incidental to other insurance benefits.

The term does not include the following benefits if they are provided under a separate policy, certificate, or contract of insurance or are otherwise not an integral part of the plan: limited scope dental or vision benefits; benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof; or other similar, limited benefits specified in federal regulations issued pursuant to Public Law No. 104-191, as amended to January 1, 2011.

The term does not include the following benefits if the benefits are provided under a separate policy, certificate, or contract of insurance, there is no coordination between the provision of the benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor, and the benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor: coverage only for a specified disease or illness; or hospital indemnity or other fixed indemnity insurance.

The term does not include the following if offered as a separate policy, certificate, or contract of insurance: medicare supplemental health insurance as defined under Section 1882(g)(1) of the Social Security Act, as amended to January 1, 2011; coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)), as amended to January 1, 2011; or similar supplemental coverage provided to coverage under a group health plan.

Source: SL 2011, ch 219, § 89; SL 2021, ch 210, § 12.

58-17F-3. Medical director required for managed care plans.

Any managed care plan shall provide for the appointment of a medical director who has an unrestricted license to practice medicine. However, a managed care plan that specializes in a specific healing art shall provide for the appointment of a director who has an unrestricted license to practice in that healing art. The director is responsible for oversight of treatment policies, protocols, quality assurance activities, and utilization management decisions of the managed care plan.

Source: SL 2011, ch 219, § 3.

58-17F-4. Health carrier to provide written information to prospective enrollees--Specific information required.

Any health carrier shall provide to any prospective enrollee written information describing the terms and conditions of the plan. If the plan is described orally, easily understood, truthful, objective terms shall be used. The written information need not be provided to any prospective enrollee who makes inquiries of a general nature directly to a carrier. In the solicitation of group coverage to an employer, a carrier is not required to provide the written information required by this section to individual employees or their dependents and if no solicitation is made directly to the employees or dependents and if no request to provide the written information to the employees or dependents is made by the employer. All written plan descriptions shall be readable, easily understood, truthful, and in an objective format. The format shall be standardized among each plan that a health carrier offers so that comparison of the attributes of the plans is facilitated. The following specific information shall be communicated:

(1) Coverage provisions, benefits, and any exclusions by category of service, provider, and if applicable, by specific service, including prescription drugs and drugs administered in a physician office or clinic;

(2) Any and all authorization or other review requirements, including preauthorization review, and any procedures that may lead the patient to be denied coverage for or not be provided a particular service;

(3) The existence of any financial arrangements or contractual provisions with review companies or providers of health care services that would directly or indirectly limit the services offered, restrict referral, or treatment options;

(4) Explanation of how plan limitations impact enrollees, including information on enrollee financial responsibility for payment of coinsurance or other non-covered or out-of-plan services;

(5) A description of the accessibility and availability of services and an easily accessible online list of providers and facilities, including a list of providers participating in the managed care network and of the providers in the network who are accepting new patients, the addresses of primary care physicians and participating hospitals, and the specialty of each provider in the network. The list of providers and facilities must be updated at least once every six months;

(6) A description of any drug formulary provisions in the plan and the process for obtaining a copy of the current formulary upon request and the method by which an enrollee or prospective enrollee may determine whether a specific drug is available on the current formulary. There shall be a process for requesting an exception to the formulary and instructions as to how to request an exception to the formulary and a description of an easily accessible method to obtain a prior authorization or step edit requirement for each specific drug included on the formulary; and

(7) The description of the drug formularies in subdivision (6) shall be promptly updated with any adverse change.

The provisions of this section do not apply to plans that are not actively marketed by a carrier.

Source: SL 2011, ch 219, § 4; SL 2015, ch 251, § 1, eff. Jan. 1, 2016.

58-17F-5. Health carrier to maintain provider network sufficient to assure services without unreasonable delay--Emergency services--Determination of sufficiency.

A health carrier providing a managed care plan shall maintain a network that is sufficient in numbers and types of providers to assure that all services to covered persons will be accessible without unreasonable delay. In the case of emergency services, covered persons shall have access twenty-four hours a day, seven days a week. Sufficiency shall be determined in accordance with the requirements of this section, and may be established by reference to any reasonable criteria used by the carrier, including: provider-covered person ratios by specialty; primary care provider-covered person ratios; geographic accessibility; waiting times for appointments with participating providers; hours of operation; and the volume of technological and specialty services available to serve the needs of covered persons requiring technologically advanced or specialty care.

Source: SL 2011, ch 219, § 5.

58-17F-6. Where provider network is insufficient, covered benefit to be made available at no greater cost.

In any case where the health carrier has an insufficient number or type of participating provider to provide a covered benefit, the health carrier shall ensure that the covered person obtains the covered benefit at no greater cost to the covered person than if the benefit were obtained from participating providers, or shall make other arrangements acceptable to the director.

Source: SL 2011, ch 219, § 6.

58-17F-7. Health carrier to ensure provider proximity to covered persons.

The health carrier shall establish and maintain adequate arrangements to ensure reasonable proximity of participating providers to the business or personal residence of covered persons.

Source: SL 2011, ch 219, § 7.

58-17F-8. Health carrier to monitor provider ability, capacity, and authority--Financial capability to be monitored in capitated plans.

The health carrier shall monitor, on an ongoing basis, the ability, clinical capacity, and legal authority of its providers to furnish all contracted benefits to covered persons. In the case of capitated plans, the health carrier shall also monitor the financial capability of the provider.

Source: SL 2011, ch 219, § 8.

58-17F-9. Factors to consider in determining network adequacy.

In determining whether a health carrier has complied with any network adequacy provision of this chapter, the director shall give due consideration to the relative availability of healthcare providers in the service area and to the willingness of providers to join a network.

Source: SL 2011, ch 219, § 9.

58-17F-10. Access plan required for managed care plans--Annual update--Contents--Exemptions for discounted fee-for-service networks.

The health carrier shall file with the director, in a manner and form defined by rules promulgated pursuant to chapter 1-26 by the director, an access plan meeting the requirements of this chapter, for each of the managed care plans that the carrier offers in this state. The carrier shall prepare an access plan prior to offering a new managed care plan, and shall annually update an existing access plan. The access plan shall describe or contain at least the following:

(1) The health carrier's network;

(2) The health carrier's procedures for making referrals within and outside its network;

(3) The health carrier's process for monitoring and assuring on an ongoing basis the sufficiency of the network to meet the health care needs of populations that enroll in managed care plans;

(4) The health carrier's methods for assessing the health care needs of covered persons and their satisfaction with services;

(5) The health carrier's method of informing covered persons of the plan's services and features, including the plan's grievance procedures and its procedures for providing and approving emergency and specialty care;

(6) The health carrier's system for ensuring the coordination and continuity of care for covered persons referred to specialty physicians, for covered persons using ancillary services, including social services and other community resources, and for ensuring appropriate discharge planning;

(7) The health carrier's process for enabling covered persons to change primary care professionals;

(8) The health carrier's proposed plan for providing continuity of care in the event of contract termination between the health carrier and any of its participating providers, or in the event of the health carrier's insolvency or other inability to continue operations. The description shall explain how covered persons will be notified of the contract termination, or the health carrier's insolvency or other cessation of operations, and transferred to other providers in a timely manner; and

(9) Any other information required by the director to determine compliance with the provisions of this chapter.

The provisions of subdivisions (2), (4), (6), (7), and (8), of this section, and the provisions regarding primary care provider-covered person ratios and hours of operation in § 58-17F-5 do not apply to discounted fee-for-service only networks.

Source: SL 2011, ch 219, § 10.

58-17F-11. Requirements for health carrier and providers in managed care plans.

Any health carrier offering a managed care plan shall satisfy all the following requirements:

(1) The health carrier shall establish a mechanism by which the participating provider will be notified on an ongoing basis of the specific covered health services for which the provider will be responsible, including any limitations or conditions on services;

(2) In no event may a participating provider collect or attempt to collect from a covered person any money owed to the provider by the health carrier nor may the provider have any recourse against covered persons for any covered charges in excess of the copayment, coinsurance, or deductible amounts specified in the coverage, including covered persons who have a health savings account;

(3) The provisions of this chapter do not require the health carrier, its intermediaries or the provider networks with which they contract, to employ specific providers or types of providers that may meet their selection criteria, or to contract with or retain more providers or types of providers than are necessary to maintain an adequate network;

(4) The health carrier shall notify participating providers of the providers' responsibilities with respect to the health carrier's applicable administrative policies and programs, including payment terms, utilization review, quality assessment, and improvement programs, grievance procedures, data reporting requirements, confidentiality requirements, and any applicable federal or state programs;

(5) The health carrier may not prohibit or penalize a participating provider from discussing treatment options with covered persons irrespective of the health carrier's position on the treatment options, from advocating on behalf of covered persons within the utilization review or grievance processes established by the carrier or a person contracting with the carrier or from, in good faith, reporting to state or federal authorities any act or practice by the health carrier that jeopardizes patient health or welfare;

(6) The health carrier shall contractually require a provider to make health records available to the carrier upon request but only those health records necessary to process claims, perform necessary quality assurance or quality improvement programs, or to comply with any lawful request for information from appropriate state authorities. Any person that is provided records pursuant to this section shall maintain the confidentiality of such records and may not make such records available to any other person who is not legally entitled to the records;

(7) The health carrier and participating provider shall provide at least sixty days written notice to each other before terminating the contract without cause. If a provider is terminated without cause or chooses to leave the network, upon request by the provider or the covered person and upon agreement by the provider to follow all applicable network requirements, the carrier shall permit the covered person to continue an ongoing course of treatment for ninety days following the effective date of contract termination. If a covered person that has entered a second trimester of pregnancy at the time of contract termination as specified in this section, the continuation of network coverage through that provider shall extend to the provision of postpartum care directly related to the delivery;

(8) The health carrier shall notify the participating providers of their obligations, if any, to collect applicable coinsurance, copayments, or deductibles from covered persons pursuant to the evidence of coverage, or of the providers' obligations, if any, to notify covered persons of their personal financial obligations for noncovered services; and

(9) The health carrier shall establish a mechanism by which the participating providers may determine in a timely manner whether or not a person is covered by the carrier.

Source: SL 2011, ch 219, § 11.

58-17F-12. Provisions governing contractual arrangements between health carriers and intermediaries.

In any contractual arrangement between a health carrier and an intermediary, the following shall apply:

(1) The health carrier's ultimate statutory responsibility to monitor the offering of covered benefits to covered persons shall be maintained whether or not any functions or duties are contractually delegated or assigned to the intermediary;

(2) The health carrier may approve or disapprove participation status of a subcontracted provider in its own or a contracted network for the purpose of delivering covered benefits to the carrier's covered persons;

(3) The health carrier shall maintain copies of all intermediary health care subcontracts at its principal place of business in the state, or ensure that it has access to all intermediary subcontracts, including the right to make copies to facilitate regulatory review, upon twenty days prior written notice from the health carrier;

(4) If applicable, an intermediary shall transmit utilization documentation and claims paid documentation to the health carrier. The carrier shall monitor the timeliness and appropriateness of payments made to providers and health care services received by covered persons;

(5) An intermediary shall maintain the books, records, financial information, and documentation of services provided to covered persons and preserve them for examination pursuant to chapter 58-3;

(6) An intermediary shall allow the director access to the intermediary's books, records, financial information, and any documentation of services provided to covered persons, as necessary to determine compliance with this chapter; and

(7) The health carrier may, in the event of the intermediary's insolvency, require the assignment to the health carrier of the provisions of a provider's contract addressing the provider's obligation to furnish covered services.

Source: SL 2011, ch 219, § 12.

58-17F-13. Sample contract forms to be filed with director--Material changes to be submitted--Certain changes not material--Director's inaction within certain time deemed approval--Contract copies to be provided upon request.

Any health carrier shall file with the director sample contract forms proposed for use with its participating providers and intermediaries. Any health carrier shall submit material changes to a sample contract that would affect a provision required by this chapter, or any rules promulgated pursuant to this chapter, to the director for approval thirty days prior to use. Changes in provider payment rates, coinsurance, copayments, or deductibles, or other plan benefit modifications are not considered material changes for the purpose of this section. If the director takes no action within sixty days after submission of a material change to a contract by a health carrier, the change is deemed approved. The health carrier shall maintain provider and intermediary contracts and provide copies to the division or department upon request.

Source: SL 2011, ch 219, § 13.

58-17F-14. Contract does not relieve health carrier of liability.

The execution of a contract by a health carrier does not relieve the health carrier of its liability to any person with whom it has contracted for the provision of services, nor of its responsibility for compliance with the law or applicable regulations. Any contract shall be in writing and subject to review by the director, if requested.

Source: SL 2011, ch 219, § 14.

58-17F-15. Remedies available to director against health carrier found not in compliance.

In addition to any other remedies permitted by law, if the director determines that a health carrier has not contracted with enough participating providers to assure that covered persons have accessible health care services in a geographic area, that a health carrier's access plan does not assure reasonable access to covered benefits, that a health carrier has entered into a contract that does not comply with this chapter, or that a health carrier has not complied with a provision of this chapter, the director may institute a corrective action that shall be followed by the health carrier or may use any of the director's other enforcement powers to obtain the health carrier's compliance with this chapter.

A covered person shall have access to emergency services twenty-four hours a day, seven days a week to treat emergency medical conditions that require immediate medical attention.

Source: SL 2011, ch 219, § 15.

58-17F-16. Managed care contractor to register with director.

Each managed care contractor, as defined in § 58-17F-1, shall register with the director prior to engaging in any managed care business in this state. The registration shall be in a format prescribed by the director. In prescribing the form or in carrying out other functions required by §§ 58-17F-16 to 58-17F-20, inclusive, the director shall consult with the secretary if applicable. The director or the secretary may require that the following information be submitted:

(1) Information relating to its actual or anticipated activities in this state;

(2) The status of any accreditation designation it holds or has sought;

(3) Information pertaining to its place of business, officers, and directors;

(4) Qualifications of review staff; and

(5) Any other information reasonable and necessary to monitor its activities in this state.

Source: SL 2011, ch 219, § 16.

58-17F-17. Filing changes in registration information.

Any managed care contractor which has previously registered in this state shall, on or before July first of each year, file with the Division of Insurance any changes to the initial or subsequent annual registration for the managed care contractor.

Source: SL 2011, ch 219, § 17.

58-17F-18. Request for information from managed care contractor.

The director or the secretary may request information from any managed care contractor at any time pertaining to its activities in this state. The managed care contractor shall respond to all requests for information within twenty days.

Source: SL 2011, ch 219, § 18.

58-17F-19. Activities of nonregistered managed care contractor prohibited.

No managed care contractor may engage in managed care activities in this state unless the managed care contractor is properly registered. The director may issue a cease and desist order against any managed care contractor which fails to comply with the requirements of §§ 58-17F-16 to 58-17F-20, inclusive, prohibiting the managed care contractor from engaging in managed care activities in this state.

Source: SL 2011, ch 219, § 19.

58-17F-20. Registration fee for managed care contractor.

The director may require the payment of a fee in conjunction with the initial or annual registration of a managed care contractor not to exceed two hundred fifty dollars per registration. The fee shall be established by rules promulgated pursuant to chapter 1-26.

Source: SL 2011, ch 219, § 20.

58-17F-21. Promulgation of rules.

The director may, after consultation with the secretary, promulgate, pursuant to chapter 1-26, reasonable rules to protect the public in its purchase of network health insurance products and to achieve the goals of this chapter, by ensuring adequate networks and by assuring quality of health care to the public that purchases network products. The rules may include:

(1) Definition of terms;

(2) Provider/covered person ratios;

(3) Geographic access requirements;

(4) Accessibility of care;

(5) Contents of reports and filings;

(6) Notification requirements;

(7) Selection criteria; and

(8) Record keeping.

Source: SL 2011, ch 219, § 21.