Bulletin 1995-4

TO: All Companies Authorized to Transact Accident and Health Insurance Business in Kansas

FROM: Kathleen Sebelius

Commissioner of Insurance

SUBJECT: Utilization Review Organization Certification Requirement

DATE: February 23, 1995

The purpose of this bulletin is to advise you of the passage of Senate Bill No. 487 by the 1994 Kansas Legislature codified as K.S.A. 1994 Supp. 40-22a01, et seq. (copy enclosed). This act pertains to the issuance of a certificate to utilization review organizations and the insurance department’s regulation of such entities.

No utilization review organization may conduct utilization review services in Kansas or affecting Kansas residents on or after May 1, 1995 without first obtaining a certificate from the commissioner. K.S.A. 1994 Supp. 40-22a06(a) exempts certain utilization review activities from the certification requirement. In addition, K.S.A. 1994 Supp. 40-22a05(e) clarifies other exempted utilization review services.

Your company may not utilize a utilization review organization on or after May 1, 1995 if the utilization review organization does not have a certificate issued by the commissioner or is not exempted as stated above. We do not have a comprehensive list of all entities which perform utilization review services in Kansas or affecting Kansas residents, therefore, it is imperative that you immediately notify all utilization review organizations which perform utilization review for your company in Kansas or affecting Kansas residents of the certification requirement. This will be necessary to ensure that there is no interruption of business resulting in claim delay which may constitute violations of Sections 7 and 8 of K.A.R. 40-1-34 as they relate to the standards for prompt investigation of claims, and prompt, fair and equitable settlements, as well as Article 24 of the Kansas Insurance Code, the regulation of unfair trade practices act.

A utilization review organization is defined in K.S.A. 1994 Supp. 40-22a03 as "any entity which conducts utilization review and determines certification of an admission, extension of stay or other health care service." The standards for performing utilization review in Kansas or affecting Kansas residents are to be set forth in Kansas Insurance Department administrative regulations. Although the regulations have not yet been finalized, it is anticipated that they will apply to prospective, concurrent and retrospective utilization review for inpatient and outpatient care rendered by a health care provider. It is also anticipated that the types of insurance to which the utilization review organization act will apply will include any individual, group or blanket policy of accident and sickness, medical or surgical expense coverage and any provision of a policy, contract, plan or agreement for medical service including any contract of a health maintenance organization, nonprofit medical and hospital service corporation, or municipal group-funded sickness and accident pool. It is further anticipated that they will not include a policy or certificate covering only credit, disability income, coverage issued as a supplement to liability insurance, insurance arising out of a workers compensation or similar law, automobile medical payment insurance, insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy, Medicare or Medicaid.

In order for utilization review organizations to meet the May 1, 1995 deadline, it is imperative that they immediately contact this department in writing to request a utilization review organization certificate. The request should be directed to the Accident and Health Division of the Kansas Insurance Department, 420 S.W. 9th Street, Topeka, KS 66612. The request must include the name of the utilization review organization, address, telephone number and contact person. Upon receipt of the written request, this department will send the utilization review organization a formal application, a copy of K.S.A. 1994 Supp. 40-22a01, et seq. and a copy of the regulations. The completed application must be submitted as soon as possible in order for our staff to complete its review and to obtain any additional information which may be needed in order to issue a utilization review organization certificate.

The time factor involved creates a sense of urgency. This bulletin needs your immediate attention in order for utilization review organizations to meet the May 1, 1995 deadline.


Kathleen Sebelius
Commissioner of Insurance