AB295 - Revises provisions relating to health insurance. (BDR 57-238)

A.B. 295 - *AB295* ASSEMBLY BILL NO. 295–ASSEMBLYMEMBERS YUREK, EDGEWORTH; AND BROWN-MAY FEBRUARY 25, 2025 ____________ Referred to Committee on Commerce and Labor SUMMARY—Revises provisions relating to health insurance. (BDR 57-238) FISCAL NOTE: Effect on Local Government: May have Fiscal Impact. Effect on the State: Yes. CONTAINS UNFUNDED MANDATE (§ 12) (NOT REQUESTED BY AFFECTED LOCAL GOVERNMENT) ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to insurance; imposing requirements relating to prior authorization; prescribing certain requirements relating to the use of artificial intelligence by health insurers; requiring the compilation and publication of certain reports relating to prior authorization; providing for the investigation and adjudication of certain violations; providing for the imposition of civil and administrative penalties for such violations; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law authorizes certain health insurers to require prior authorization 1 before an insured may receive coverage for health and dental care in certain 2 circumstances. If an insurer requires prior authorization, existing law requires the 3 insurer to respond to a request for prior authorization within 20 days of the 4 receiving the request. (NRS 687B.225) Sections 9 and 17 of this bill require an 5 insurer, including Medicaid and the Children’s Health Insurance Program, to 6 approve or make an adverse determination on a request for prior authorization, or 7 request additional, medically relevant information within: (1) five days after 8 receiving the request, for medical or dental care that is not urgent; or (2) forty-eight 9 hours after receiving the request, for care that is urgent. Sections 9 and 17 require 10 an insurer to transmit certain information to an insured and his or her provider of 11 health care after making an adverse determination on a request for prior 12 authorization pertaining to the insured. Sections 9 and 17 also provide that a 13 request for prior authorization that has been approved by the insurer for a 14 – 2 – - *AB295* continuous course of treatment relating to a chronic or long-term condition remains 15 valid for 12 months, with certain exceptions. 16 Sections 6 and 18 of this bill require an insurer that employs or utilizes an 17 artificial intelligence system or automated decision tool and, if such a system or 18 tool is used under Medicaid or the Children’s Health Insurance Program, the 19 Department of Health and Human Services to process requests for prior 20 authorization to transmit a notice to each of its insureds that: (1) discloses the 21 insurer’s use of the system or tool to process requests for prior authorization; and 22 (2) describes certain aspects of the system or tool. Section 6 and 18 prohibit an 23 insurer from using an artificial intelligence system or automated decision tool to 24 make an adverse determination on a request for prior authorization, or to terminate, 25 reduce or modify a previously approved request for prior authorization, unless that 26 action is independently reviewed by a physician or dentist, as applicable, who 27 possesses certain qualifications. 28 Section 7 of this bill requires certain insurers to annually compile and submit a 29 report to the Commissioner of Insurance and the Director of the Department of 30 Health and Human Services that contains certain information relating to the 31 requests for prior authorization for care provided to insureds in this State during the 32 immediately preceding year. Section 7 requires the Director and the Commissioner 33 to publish the reports submitted by insurers to on their respective Internet websites. 34 Section 19 of this bill requires the Department to annually compile and publish a 35 similar report containing information relating to requests for prior authorization for 36 care provided to recipients of Medicaid during the immediately preceding calendar 37 year. 38 Section 8 of this bill prescribes procedures for investigating and imposing 39 penalties against a private sector insurer that: (1) fails to submit a report required by 40 section 7; or (2) fails to comply with the requirements for making determinations 41 on requests for prior authorization during the periods of time established by section 42 9. Section 8 also prescribes the amount of the civil penalty that the Commissioner 43 must impose for such violations and authorizes the Commissioner to adopt 44 regulations prescribing additional sanctions for repeated noncompliance. 45 Sections 3-5 and 16 of this bill define certain terms, and section 2 of this bill 46 establishes the applicability of the definitions set forth in sections 3-5. Section 10 47 of this bill makes sections 2-8 applicable to nonprofit medical or dental service 48 corporations. Section 11 of this bill makes a conforming change to require the 49 Director of the Department of Health and Human Services to administer the 50 provisions of sections 15-19 in the same manner as other provisions governing 51 Medicaid. Sections 12, 13 and 21 of this bill require plans of self-insurance for 52 employees of local governments, the Public Employees’ Benefits Program and 53 plans of self-insurance for private employers, respectively, to comply with certain 54 requirements of sections 6 and 9, to the extent applicable. Section 15 of this bill 55 provides that managed care organizations that provide services to recipients of 56 Medicaid or the Children’s Health Insurance Program are exempt from sections 16- 57 19, which govern prior authorization under Medicaid and the Children’s Health 58 Insurance Program provided directly by the Department, but such managed care 59 organizations must comply with sections 3-9, which govern prior authorization 60 required by private sector health insurers. Section 20 of this bill requires any policy 61 or procedure established for prescription drug coverage under Medicaid relating to 62 prior authorization to comply with the provisions of sections 16-19. 63 – 3 – - *AB295* THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 687B of NRS is hereby amended by adding 1 thereto the provisions set forth as sections 2 to 8, inclusive, of this 2 act. 3 Sec. 2. As used in NRS 687B.225 and sections 2 to 8, 4 inclusive, of this act, unless the context otherwise requires, the 5 words and terms defined in sections 3, 4 and 5 of this act have the 6 meanings ascribed to them in those sections. 7 Sec. 3. “Adverse determination” means a determination by a 8 health carrier that an admission, availability of care, continued 9 stay or other health care service that is a covered benefit has been 10 reviewed and, based on the information provided, does not meet 11 the health carrier’s requirements for medical necessity, 12 appropriateness, health care setting, level of care or effectiveness, 13 and the requested service or payment for the service is therefore 14 denied, reduced or terminated. 15 Sec. 4. “Health carrier” has the meaning ascribed to it in 16 NRS 695G.024, and includes, without limitation, an organization 17 for dental care. 18 Sec. 5. “Insured” means a policyholder, subscriber, enrollee 19 or other person covered by a health carrier. 20 Sec. 6. 1. If a health carrier utilizes an artificial 21 intelligence system or an automated decision tool to process 22 requests for prior authorization, the health carrier shall transmit 23 to each of its insureds, in writing: 24 (a) A statement that the health carrier utilizes an artificial 25 intelligence system or automated decision tool to process requests 26 for prior authorization; 27 (b) A general description of how the artificial intelligence 28 system or automated decision tool works; and 29 (c) A description of the specific types of information or data 30 utilized by the artificial intelligence system or automated decision 31 tool to enable the system or tool to generate an outcome. 32 2. Except as otherwise provided in subsection 3, a health 33 carrier shall not utilize or employ an artificial intelligence system 34 or automated decision tool to: 35 (a) Make an adverse determination on a request for prior 36 authorization; or 37 (b) Terminate, reduce or modify coverage for medical or 38 dental care that was previously approved by the health carrier. 39 3. A health carrier may utilize or employ an artificial 40 intelligence system or automated decision tool for a purpose 41 described in subsection 2 if, when the artificial intelligence system 42 – 4 – - *AB295* or automated decision tool generates an outcome on a request for 1 prior authorization described in subsection 2, the request for prior 2 authorization is independently reviewed by a physician or, for a 3 request for dental care, a dentist, who: 4 (a) Holds an unrestricted license to practice medicine or 5 dentistry, as applicable, in any state or territory of the United 6 States; 7 (b) Holds a current certification by a specialty board of the 8 American Board of Medical Specialties or, if a dentist, a certifying 9 board approved by the Commission on Dental Accreditation of the 10 American Dental Association, in the area or areas appropriate to 11 the subject of the request; and 12 (c) Possesses the education, training and expertise to evaluate 13 the specific clinical issues involved in the request. 14 4. As used in this section: 15 (a) “Artificial intelligence system” means a machine-based 16 system that can, for a given set of human-defined objectives, make 17 predictions, recommendations or decisions influencing real or 18 virtual environments. 19 (b) “Automated decision tool” means an automated or 20 computerized system that is specifically developed or modified to 21 make, or to be a controlling factor in making, consequential 22 decisions. 23 Sec. 7. 1. On or before March 1 of each calendar year, a 24 health carrier shall compile and transmit to the Commissioner and 25 to the Director of the Department of Health and Human Services 26 a report containing the following information for the immediately 27 preceding calendar year: 28 (a) The total number of requests for prior authorization for 29 care provided in this State that were received by the health carrier. 30 (b) The average time that elapsed between the health carrier 31 receiving a request described in paragraph (a) and the health 32 carrier approving or making an adverse determination on the 33 request. 34 (c) The percentage and total number of requests for prior 35 authorization described in paragraph (a) that were approved upon 36 initial review. 37 (d) The percentage and total number of requests for prior 38 authorization described in paragraph (a) that resulted in an 39 adverse determination upon initial review. 40 (e) The percentage and total number of the adverse 41 determinations described in paragraph (d) that were appealed. 42 (f) The percentage and total number of appeals described in 43 paragraph (e) that resulted in the reversal of an adverse 44 determination. 45 – 5 – - *AB295* 2. The report compiled pursuant to subsection 1 must present 1 the information described in that subsection: 2 (a) In aggregated form; and 3 (b) Disaggregated by the types of care at issue in the requests 4 for prior authorization, which may include, without limitation, 5 mental health, chronic care, preventive services and dental care. 6 3. On or before April 1 of each calendar year, the Director of 7 the Department of Health and Human Services and the 8 Commissioner of Insurance shall publish the reports submitted 9 pursuant to subsection 1 for that calendar year on an Internet 10 website maintained by the Department or the Commissioner, as 11 applicable. 12 Sec. 8. 1. The Commissioner, in consultation with the 13 Director of the Department of Health and Human Services, shall 14 adopt any regulations that are necessary to carry out the 15 provisions of NRS 687B.225 and sections 2 to 8, inclusive, of this 16 act. 17 2. The Commissioner may delegate to the Director of the 18 Department of Health and Human Services his or her authority 19 under this chapter to audit or investigate the compliance of a 20 health carrier with the provisions of NRS 687B.225 and sections 2 21 to 8, inclusive, of this act. 22 3. If an audit or investigation of a health carrier conducted 23 by the Director of the Department of Health and Human Services 24 causes the Director to believe that a health carrier has potentially 25 violated the provisions of NRS 687B.225 or sections 2 to 8, 26 inclusive, of this act, the Director shall immediately notify the 27 Commissioner of the potential violation and transmit to the 28 Commissioner any information collected as a part of the audit or 29 investigation. 30 4. If the Commissioner determines, after conducting a 31 hearing in accordance with NRS 679B.310 to 679B.370, inclusive, 32 that a health carrier has violated paragraph (b) or (c) of 33 subsection 2 of NRS 687B.225 or section 7 of this act, the 34 Commissioner shall assess the civil penalty described in subsection 35 5 for each such violation. 36 5. A civil penalty assessed against a health carrier pursuant 37 to subsection 4 must be equivalent to 5 percent of the gross income 38 that the health carrier earned from conducting business in this 39 State during the quarter during which a violation described in 40 subsection 4 is determined to have occurred. 41 6. The Commissioner may examine the books and records of 42 a health carrier in order to determine the amount of the civil 43 penalty that must be assessed against the health carrier pursuant 44 to subsection 5. 45 – 6 – - *AB295* 7. The Commissioner shall deposit any money recovered as a 1 civil penalty pursuant to subsection 4 into the Fund for Hospital 2 Care to Indigent Persons created by NRS 428.175. 3 8. The Commissioner may establish by regulation additional 4 sanctions that may be imposed against a health carrier that is 5 determined to have committed five or more violations of 6 paragraph (b) or (c) of subsection 2 of NRS 687B.225 or section 7 7 of this act within any 18-month period. 8 Sec. 9. NRS 687B.225 is hereby amended to read as follows: 9 687B. [Text truncated for display. Full text available on LegiScan.]