SB 638
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Enrolled - Revised
Senate Bill 638 (Senator Augustine, et al.)
Finance Health and Government Operations
Maryland Insurance Commissioner - Specialty Mental Health Services and
Payment of Claims - Enforcement
This emergency bill requires the Maryland Insurance Commissioner to enforce a provision
of law that specifies that § 15-1005 of the Insurance Article (which governs clean claims)
applies to the delivery system for specialty mental health services established for Medicaid
managed care organization (MCO) enrollees and administered by an administrative
services organization (ASO). The bill also specifically subjects an ASO that administers
the specialty mental health system to (1) the requirement to pay interest on unpaid clean
claims; (2) specified current law fines and penalties for certain violations of clean claims
requirements; and (3) the Insurance Commissioner’s enforcement authority in connection
with any investigation or examination of potential violations of clean claims provisions.
The bill specifies certain actions the Insurance Commissioner must take related to
complaint investigations, examinations, and imposition of interest and penalties relating to
an ASO. If the Insurance Commissioner conducts an examination of an ASO, the ASO
may not use State funds or pass on to the State any expenses related to the examination.
The bill terminates two years from the date of enactment.
Fiscal Summary
State Effect: The Maryland Insurance Administration (MIA) can likely enforce clean
claims provisions as required under the bill using existing budgeted resources. MIA special
fund revenues increase by an indeterminate amount in FY 2021 through 2023 to the extent
fines are assessed.
Local Effect: None.
Small Business Effect: Minimal.
 Analysis
Bill Summary: If the Insurance Commissioner determines that an ASO will use State
funds or otherwise pass on the cost of any interest or penalty to the State, the Commissioner
may not require payment of interest or impose a fine or penalty on the ASO. If the Insurance
Commissioner investigates a complaint that an ASO violated clean claims requirements,
any findings must be provided to the Maryland Department of Health (MDH). If the
Insurance Commissioner conducts an examination of an ASO, the Commissioner must
submit the examination report to specified committees of the General Assembly.
Current Law:
Specialty Mental Health System
Medicaid MCOs cover mental health and substance use disorder services provided by an
enrollee’s primary care provider. As part of Maryland’s § 1115 HealthChoice waiver,
specialty mental health and substance use disorder services (services not performed as part
of a primary care practitioner office visit) are “carved out” into a separate managed
fee-for-service system.
Under § 15-103(b)(21) of the Health-General Article, MDH must establish a delivery
system for specialty mental health services for MCO enrollees. The provisions of
§ 15-1005 of the Insurance Article (clean claims requirements) apply to the delivery system
administered by an ASO. However, the provisions are enforced by MDH and not subject
to the jurisdiction of MIA and the Insurance Commissioner. For other claims paid by
MCOs under HealthChoice, MIA and the Insurance Commissioner are responsible for
evaluating and determining the application of clean claims requirements.
Clean Claims Requirements
Under § 15-1005 of the Insurance Article, within 30 days of receipt of a claim for
reimbursement, an insurer, nonprofit health service plan, or health maintenance
organization (collectively known as carriers) must pay a clean claim or send a notice of
receipt with the status of the claim. If a carrier disputes a portion of a claim, it must provide
payment for any undisputed portion within 30 days of receipt of the claim. If a carrier
requests specific additional information necessary for the claim to be considered clean, the
carrier must pay the claim within 30 days after receipt of the requested information.
A carrier that does not pay a clean claim (or violates any other related requirements) must
pay interest on the amount of the claim that remains unpaid 30 days after the claim is
received at a monthly rate of 1.5% from the 31st day through the 60th day, 2% from the
61st day through the 120th day, and 2.5% after the 120th day.
SB 638/ Page 2
A carrier that violates these provisions is subject to a fine of up to $500 for each violation
that is arbitrary and capricious, based on all available information, and the penalties
prescribed under § 4-113 of the Insurance Article, which authorizes the Insurance
Commissioner to suspend or revoke a certificate of authority, or to impose monetary
penalties in lieu of suspension or revocation.
Title 2, Subtitle 2 of the Insurance Article provides for the enforcement authority of the
Insurance Commissioner, including authority to examine the accounts, records, documents,
and transactions that relate to the insurance affairs or proposed insurance affairs of
specified entities; it also establishes requirements relating to the conduct of examinations,
hearings, issuance of orders, and judicial review.
State Fiscal Effect: MDH is currently responsible for enforcing the ASO’s compliance
with § 15-1005 of the Insurance Article. Under the bill, this responsibility transfers to the
Insurance Commissioner, but only for two years. Thus, MIA’s workload increases by an
indeterminate amount in fiscal 2021 through 2023 to investigate complaints and conduct
market conduct exams of the ASO to determine compliance with § 15-1005 of the
Insurance Article. MIA advises that any additional workload can likely be handled with
existing budgeted resources. Any operational or fiscal savings to MDH are assumed to be
minimal.
As the bill subjects an ASO that administers the specialty mental health system to existing
fines and penalties for specified violations of clean claims provisions, MIA special fund
revenues increase by an indeterminate amount, beginning as early as fiscal 2021 and
through fiscal 2023, to the extent such fines are assessed.
Additional Comments: MDH recently switched ASOs for the specialty mental health
system from Beacon to Optum and instituted an estimated payment process by which
providers were paid based on historic claims averages in calendar 2019 rather than actual
claims from January 1, 2020, to August 3, 2020. This prospective payment arrangement
was intended to give Optum time to stabilize its system and reliably process claims. MDH
directed Optum to work with providers to reconcile the estimated payment balance against
actual claims submitted. Estimated payments were $1.0 billion to providers, and an
estimated $300.0 million remains to be reconciled. MDH has received a request from
three providers to apply the clean claims requirements of § 15-1005 of the Insurance
Article, but due to the provision of estimated payments, MDH only plans to evaluate claims
under these provisions that were submitted for billing and dates of service after
August 3, 2020.
SB 638/ Page 3
 Additional Information
Prior Introductions: None.
Designated Cross File: HB 919 (Delegate Bagnall) - Health and Government Operations.
Information Source(s): Maryland Department of Health; Maryland Insurance
Administration; Department of Legislative Services
Fiscal Note History: First Reader - February 22, 2021
rh/ljm Third Reader - March 22, 2021
Revised - Amendment(s) - March 22, 2021
Revised - Updated Information - March 22, 2021
Enrolled - April 7, 2021
Revised - Amendment(s) - April 7, 2021
Analysis by: Jennifer B. Chasse Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 638/ Page 4


Statutes affected:
Text - First - Maryland Insurance Commissioner – Specialty Mental Health Services and Payment of Claims – Enforcement: 15-103 Health General, 2-108 Health General
Text - Third - Maryland Insurance Commissioner – Specialty Mental Health Services and Payment of Claims – Enforcement: 15-103 Health General, 2-108 Insurance, 15-1005 Insurance
Text - Enrolled - Maryland Insurance Commissioner - Specialty Mental Health Services and Payment of Claims - Enforcement: 15-103 Health General, 2-108 Insurance, 2-208 Insurance, 1-510B Insurance, 15-103 Insurance, 15-1005 Insurance