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Session of 2000
          SENATE BILL No. 575           By Committee on Financial Institutions and Insurance           2-7          

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10             AN  ACT concerning insurance; relating to standards for prompt, fair and
11             equitable settlement of health care claims and payment for health care
12             services.
13      
14       Be it enacted by the Legislature of the State of Kansas:
15             New Section  1. This section shall apply to any policy of accident and
16       sickness insurance. The term "policy of accident and sickness insurance"
17       as used herein includes any policy or contract insuring against loss re-
18       sulting from sickness or bodily injury or death by accident, or both, any
19       hospital or medical expense policy, health, hospital, medical service cor-
20       poration contract issued by a stock or mutual company or association, a
21       health maintenance organization or any other insurer. The term policy of
22       accident and sickness insurance does not include any policy or contract
23       of reinsurance, life insurance, endowment or annuity contract, policies or
24       certificates covering only credit, disability income, long-term care, med-
25       icare supplement, coverage issued as a supplement to liability insurance,
26       insurance arising out of a workers compensation or similar law, automo-
27       bile medical-payment insurance or insurance under which benefits are
28       payable without regard to fault and which is statutorily required to be
29       contained in any liability insurance policy or equivalent self-insurance.
30             New Sec  2. (a) Within 45 days after receipt of any written proof of
31       loss as defined in paragraph (7) of subsection (A) of K.S.A. 40-2203, and
32       amendments thereto, any insurer issuing a policy of accident and sickness
33       insurance shall pay the claim for reimbursement in accordance with this
34       section or send a written notice acknowledging receipt of the proof of
35       loss and the status of the claim. Such notice shall state that: (1) The insurer
36       refuses to reimburse all or part of the claim and specify each reason for
37       denial; or (2) additional information is necessary to determine if all or any
38       part of the claim will be reimbursed and what specific additional infor-
39       mation is necessary.
40             (b) If any insurer issuing a policy of accident and sickness insurance
41       fails to comply with subsection (a), such insurer shall pay interest at the
42       rate of 1% per month on the amount of the claim that remains unpaid
43       45 days after the receipt of the written proof of loss. The interest paid

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  1       pursuant to this subsection shall be included in any late reimbursement
  2       without requiring the person who filed the original claim to make any
  3       additional claim for such interest.
  4             (c) After receiving a request for additional information, the person
  5       claiming reimbursement shall submit all additional information requested
  6       by the insurer within 30 days after receipt of the request for additional
  7       information. Failure to furnish such additional information within the
  8       time required shall not invalidate nor reduce the claim if it was not rea-
  9       sonably possible to give such information within such time, provided such
10       proof is furnished as soon as possible, and in no event, except in the
11       absence of legal capacity, later than 90 days from the time proof is oth-
12       erwise required.
13             (d) Within 10 days after receipt of all the requested additional infor-
14       mation, an insurer issuing a policy of accident and sickness insurance shall
15       pay the claim in accordance with this section or send a written notice that
16       states: (1) Such insurer refuses to reimburse all or part of the claim; and
17       (2) specifies each reason for denial. Any insurer issuing a policy of acci-
18       dent and sickness insurance that fails to comply with this subsection shall
19       pay interest on any amount of the claim that remains unpaid at the rate
20       of 1% per month.
21             (e) A provider who is paid interest under this section shall pay the
22       proportionate amount of such interest to the enrollee or insured to the
23       extent and for the time period that the enrollee or insured has paid for
24       the services and for which reimbursement was due to the insured or
25       enrollee. For the purposes of this section, "provider" shall have the mean-
26       ing ascribed to it in K.S.A. 1999 Supp. 40-4601 and amendments thereto.
27             (f) The provisions of subsection (b) or (e) shall not apply when there
28       is a good faith dispute about the legitimacy of the claim, or when there
29       is a reasonable basis supported by specific information that such claim
30       was submitted fraudulently.
31             (g) The commissioner of insurance shall adopt rules and regulations
32       necessary to carry out the purposes of this act.
33        Sec.  3. This act shall take effect and be in force from and after its
34       publication in the statute book.