Section 1 .   KRS 304.39-020 is amended to read as follows:

As used in this subtitle:

(1)     "Added reparation benefits" mean benefits provided by optional added reparation insurance.

(2)     "Basic reparation benefits" mean benefits providing reimbursement for net loss suffered through injury arising out of the operation, maintenance, or use of a motor vehicle, subject, where applicable, to the limits, deductibles, exclusions, disqualifications, and other conditions provided in this subtitle. The maximum amount of basic reparation benefits payable for all economic loss resulting from injury to any one (1) person as the result of one (1) accident shall be ten thousand dollars ($10,000), regardless of the number of persons entitled to such benefits or the number of providers of security obligated to pay such benefits. Basic reparation benefits consist of one (1) or more of the elements defined as "loss."

(3)     "Basic reparation insured" means:

(a)     A person identified by name as an insured in a contract of basic reparation insurance complying with this subtitle; and

(b)      While residing in the same household with a named insured, the following persons not identified by name as an insured in any other contract of basic reparation insurance complying with this subtitle: a spouse or other relative of a named insured; and a minor in the custody of a named insured or of a relative residing in the same household with the named insured if he usually makes his home in the same family unit, even though he temporarily lives elsewhere.

(4)     "Injury" and "injury to person" mean bodily harm, sickness, disease, or death.

(5)     "Loss" means accrued economic loss consisting only of medical expense, work loss, replacement services loss, and, if injury causes death, survivor's economic loss and survivor's replacement services loss. Noneconomic detriment is not loss. However, economic loss is loss although caused by pain and suffering or physical impairment.

(a)      "Medical expense" means reasonable charges incurred for reasonably needed products, services, and accommodations, including those for medical care, physical rehabilitation, rehabilitative occupational training, licensed ambulance services, and other remedial treatment and care. "Medical expense" may include non-medical remedial treatment rendered in accordance with a recognized religious method of healing. The term includes a total charge not in excess of one thousand dollars ($1,000) per person for expenses in any way related to funeral, cremation, and burial. It does not include that portion of a charge for a room in a hospital, clinic, convalescent or nursing home, or any other institution engaged in providing nursing care and related services, in excess of a reasonable and customary charge for semi-private accommodations, unless intensive care is medically required. Medical expense shall include all healing arts professions licensed by the Commonwealth of Kentucky. There shall be a presumption that any medical bill submitted is reasonable; however in no event shall a medical bill be presumed reasonable nor are benefit payments overdue if:

1.      The medical expense exceeds the amount the person or institution customarily charges for like products and services in cases not involving insurance; or

2.      The medical bill does not follow the Physicians' Current Procedural Terminology (CPT) in the year in which the expense is rendered; or

3.      The medical expense is not submitted within the time period set forth in subsection (7) of Section 2 of this Act.

(b)      "Work loss" means loss of income from work the injured person would probably have performed if he had not been injured, and expenses reasonably incurred by him in obtaining services in lieu of those he would have performed for income, reduced by any income from substitute work actually performed by him.

(c)      "Replacement services loss" means expenses reasonably incurred in obtaining ordinary and necessary services in lieu of those the injured person would have performed, not for income but for the benefit of himself or his family, if he had not been injured.

(d)      "Survivor's economic loss" means loss after decedent's death of contributions of things of economic value to his survivors, not including services they would have received from the decedent if he had not suffered the fatal injury, less expenses of the survivors avoided by reason of decedent's death.

(e)      "Survivor's replacement services loss" means expenses reasonably incurred by survivors after decedent's death in obtaining ordinary and necessary services in lieu of those the decedent would have performed for their benefit if he had not suffered the fatal injury, less expenses of the survivors avoided by reason of the decedent's death and not subtracted in calculating survivor's economic loss.

(6)     "Use of a motor vehicle" means any utilization of the motor vehicle as a vehicle including occupying, entering into, and alighting from it. It does not include:

(a)      Conduct within the course of a business of repairing, servicing, or otherwise maintaining motor vehicles unless the conduct occurs off the business premises; or

(b)      Conduct in the course of loading and unloading the vehicle unless the conduct occurs while occupying, entering into, or alighting from it.

(7)     "Motor vehicle" means any vehicle which transports persons or property upon the public highways of the Commonwealth, propelled by other than muscular power except road rollers, road graders, farm tractors, vehicles on which power shovels are mounted, such other construction equipment customarily used only on the site of construction and which is not practical for the transportation of persons or property upon the highways, such vehicles as travel exclusively upon rails, and such vehicles as are propelled by electrical power obtained from overhead wires while being operated within any municipality or where said vehicles do not travel more than five (5) miles beyond the said limits of any municipality. Motor vehicle shall not mean moped as defined in this section.

(8)     "Moped" means either a motorized bicycle whose frame design may include one (1) or more horizontal crossbars supporting a fuel tank so long as it also has pedals, or a motorized bicycle with a step-through type frame which may or may not have pedals rated no more than two (2) brake horsepower, a cylinder capacity not exceeding fifty (50) cubic centimeters, an automatic transmission not requiring clutching or shifting by the operator after the drive system is engaged, and capable of a maximum speed of not more than thirty (30) miles per hour.

(9)     "Public roadway" means a way open to the use of the public for purposes of motor vehicle travel.

(10)   "Net loss" means loss less benefits or advantages, from sources other than basic and added reparation insurance, required to be subtracted from loss in calculating net loss.

(11)   "Noneconomic detriment" means pain, suffering, inconvenience, physical impairment, and other nonpecuniary damages recoverable under the tort law of this Commonwealth. The term does not include punitive or exemplary damages.

(12)   "Owner" means a person, other than a lienholder or secured party, who owns or has title to a motor vehicle or is entitled to the use and possession of a motor vehicle subject to a security interest held by another person. The term does not include a lessee under a lease not intended as security.

(13)   "Reparation obligor" means an insurer, self-insurer, or obligated government providing basic or added reparation benefits under this subtitle.

(14)   "Survivor" means a person identified in KRS 411.130 as one entitled to receive benefits by reason of the death of another person.

(15)   A "user" means a person who resides in a household in which any person owns or maintains a motor vehicle.

(16)   "Maintaining a motor vehicle" means having legal custody, possession or responsibility for a motor vehicle by one other than an owner or operator.

(17)   "Security" means any continuing undertaking complying with this subtitle, for payment of tort liabilities, basic reparation benefits, and all other obligations imposed by this subtitle.

(18)   “Emergency care” means medical care required for a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that the absence of immediate medical attention could reasonably be expected to result in:

(a)      Placing the health of the individual or, with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy;

(b)      Serious impairment to bodily functions;

(c)      Serious dysfunction of any bodily organ or part; or

(d)      With respect to a pregnant woman who is having contractions:

1.      A situation in which there is inadequate time to affect a safe transfer to another hospital before delivery; or

2.      A situation in which transfer may pose a threat to the health or safety of the woman or the unborn child.

Section 2 .   KRS 304.39-210 is amended to read as follows:

(1)     Basic and added reparation benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as work loss, replacement services loss, or medical expense is incurred. Benefits are overdue if not paid within thirty (30) days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, unless the reparation obligor elects to accumulate claims for periods not exceeding thirty-one (31) days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, and pays them within fifteen (15) days after the period of accumulation. Notwithstanding any provision of this chapter to the contrary, except for emergency care expense benefits, benefits are not overdue if a reparation obligor has not made payment to a provider of services due to the request of a secured person when the secured person is directing the payment of benefits among the different elements of loss. If reasonable proof is supplied as to only part of a claim, and the part totals one hundred dollars ($100) or more, the part is overdue if not paid within the time provided by this section. Medical expense benefits for providers of emergency care shall[may] be paid by the reparation obligor directly to persons supplying products, services, or accommodations to the claimant[, if the claimant so designates].

(2)     Overdue payments bear interest at the rate of twelve percent (12%) per annum, except that if delay was without reasonable foundation the rate of interest shall be eighteen percent (18%) per annum.

(3)     A claim for basic or added reparation benefits shall be paid without deduction for the benefits which are to be subtracted pursuant to the provisions on calculation of net loss if these benefits have not been paid to the claimant before the reparation benefits are overdue or the claim is paid. The reparation obligor is entitled to reimbursement from the person obligated to make the payments or from the claimant who actually receives the payments.

(4)     A reparation obligor may bring an action to recover benefits which are not payable, but are in fact paid, because of an intentional misrepresentation of a material fact, upon which the reparation obligor relies, by the insured or by a person providing an item of medical expense. The action may be brought only against the person providing the item of medical expense, unless the insured has intentionally misrepresented the facts or knows of the misrepresentation. An insurer may offset amounts he is entitled to recover from the insured under this subsection against any basic or added reparation benefits otherwise due.

(5)     A reparation obligor who rejects a claim for basic reparation benefits shall give to the claimant prompt written notice of the rejection, specifying the reason. If a claim is rejected for a reason other than that the person is not entitled to the basic reparation benefits claimed, the written notice shall inform the claimant that he may file his claim with the assigned claims bureau and shall give the name and address of the bureau.

(6)     Except for benefits payable under any workers' compensation law, basic reparation benefits shall be paid without regard to fault and shall be primary.

(7)     A provider of services for medical expenses, other than medical expenses billed by a hospital or other provider for emergency care or inpatient services rendered at a hospital, shall submit claims for services to a reparation obligor within forty-five (45) days from the date the health services are provided to the reparation insured utilizing the uniform health insurance claim forms prescribed in accordance with KRS 304.14-135(1).

Section 3 .   KRS 304.39-241 is amended to read as follows:

Except for emergency care services where the reparation obligor shall pay the provider directly, an insured may direct the payment of benefits among the different elements of loss, if the direction is provided in writing to the reparation obligor. A reparation obligor shall honor the written direction of benefits provided by an insured on a prospective basis.

Section 4 .   KRS 304.39-270 is amended to read as follows:

(1)     If the mental or physical condition of a person is material to a claim for past or future basic or added reparation benefits, the reparation obligor may require[petition the circuit court for an order directing] the person to submit to a mental or physical examination by a health care provider licensed in the Commonwealth. A reparation insured shall provide or make available to the examining provider any pertinent medical records or medical history that the examining provider deems necessary to the examination. The costs of any examination requested by a reparation obligor shall be borne entirely by the reparation obligor. The examination shall be conducted within a reasonable proximity of the residence of the reparation insured. A reparation obligor providing basic or added reparation benefits is authorized to include reasonable policy contract provisions requiring a reparation obligee to submit to a mental or physical examination as requested by a reparation obligor under the provisions of this section. If the reparation insured fails to submit to a mental or physical examination as requested by a reparation obligor, the reparation obligor shall no longer be required to reimburse subsequent reparation benefits[physician. Upon notice to the person to be examined and all persons having an interest, the court may make the order for good cause shown. The order shall specify the time, place, manner, conditions, scope of the examination, and the physician by whom it is to be made].

(2)     If requested by the person examined, the reparation obligor causing a mental or physical examination to be made shall deliver to the person examined a copy of a detailed written report of the examining physician setting out his findings including results of all tests made, diagnoses, and conclusions, and reports of earlier examinations of the same condition. By requesting and obtaining a report of the examination ordered or by taking the deposition of the physician, the person examined waives any privilege he may have, in relation to the claim for basic or added reparation benefits, regarding the testimony of every other person who has examined or may thereafter examine him respecting the same condition. This subsection does not preclude discovery of a report of an examining physician, taking a deposition of the physician, or other discovery procedures in accordance with any rule of court or other provision of law. This subsection applies to examinations made by agreement of the person examined and the reparation obligor, unless the agreement provides otherwise.

[(3)   If any person refuses to comply with an order entered under this section the court may make any just order as to the refusal, but may not find a person in contempt for failure to submit to a mental or physical examination. ]

SECTION 5 .   A NEW SECTION OF SUBTITLE 39 OF KRS CHAPTER 304 IS CREATED TO READ AS FOLLOWS:

(1)     A reparation obligor may submit any claim for an independent review of reparation benefits to determine whether medical expenses furnished to a reparation insured are medically necessary or reasonable as provided in subparagraphs 1., 2., and 3. of paragraph (a) of subsection (5) of Section 1 of this Act. A reparation obligor may not make an independent review of emergency room care services.

(2)     A reparation obligor may contract with a private review agent to perform and provide independent reviews of medical expenses in connection with basic or added reparation benefits; and

(3)     A reparation obligor or private review agent shall not provide or perform independent reviews without being registered with the Department of Insurance. A registered reparation obligor or private review agent shall:

(a)      Have available the services of sufficient numbers of registered nurses, medical records technicians, or similarly qualified persons supported by licensed physicians with access to consultation with other appropriate physicians to carry out its independent review activities;

(b)      Ensure that only licensed physicians shall:

1.      Make an independent review decision to deny, reduce, limit, or terminate reimbursement of a medical expense, or to deny or reduce payment for a medical expense because that medical expense is not medically necessary, experimental, or investigational or determined not to be reasonable pursuant to subparagraphs 1., 2., and 3. of paragraph (a) of subsection (5) of Section 1 of this Act, except that if a health care service is rendered by a chiropractor or optometrist, then the denial or determination shall be made respectively by a chiropractor or optometrist, respectively, who is duly licensed in Kentucky; and

2.      Supervise qualified personnel conducting case reviews;

(c)      Have available the services of sufficient numbers of practicing physicians in appropriate specialty areas to ensure the adequate review of medical and surgical specialty and subspecialty cases;

(d)      Not disclose or publish individual medical records or any other confidential medical information in the performance of independent review activities, except as provided in the Health Insurance Portability and Accountability Act of 1996, as amended, Pub. L. 104-191, Subtitle F, secs. 261 to 264; 45 C.F.R. secs. 160 to 164; and other applicable laws and administrative regulations;

(e)      Provide decisions to reparation insureds and all providers on independent reviews, appeals of reviews, and coverage denials of the reparation obligor or private review agent, in accordance with this section;

(f)      Provide an independent review decision within thirty (30) business days of the receipt of requested medical information when the reparation obligor or private review agent has initiated a retrospective review that will be followed by written notice of the decision within seven (7) business days of the date the decision is rendered;

(g)      Provide written notice of review decisions to the reparation insured and providers. A reparation obligor or agent that denies coverage or reduces payment for a treatment, procedure, drug, or device shall include in the written notice:

1.      A statement of the specific medical and scientific reasons for denial or reduction of payment;

2.      A statement of the basis that the fee is unreasonable as described in subparagraphs 1., 2., and 3. of paragraph (a) of subsection (5) of Section 1 of this Act;

3.      The state of licensure, medical license number, and the title of the reviewer making the decision; and

4.      Instructions for initiating or complying with the reparation obligor's appeal procedure, as set forth in Section 6 of this Act, stating, at a minimum, whether the appeal shall be in writing any specific filing procedures, including any applicable time limitations or schedules, and the position and phone number of a contact person who can provide additional information;

(h)      Afford physicians an opportunity to review and comment on all medical and surgical and emergency room protocols, respectively, of the reparation obligor and afford other providers an opportunity to review and comment on all of the reparation obligor's protocols that are within the provider's legally authorized scope of practice; and

(l)      Comply with its own policies and procedures on file with the Department of Insurance.

(4)     The reparation obligor's failure to make a determination and provide written notice within the time frames set forth in this section shall be deemed to be an adverse determination by the reparation obligor for the purpose of initiating an appeal as set forth in Section 6 of this Act. This provision shall not apply where the failure to make the determination or provide the notice results from circumstances which are documented to be beyond the reparation obligor's control.

(5)     A reparation obligor or private review agent shall submit a copy of any changes to its independent review policies or procedures to the Department of Insurance.

(6)     A private review agent shall provide to the Department of Insurance the names of the entities for which the private review agent is performing independent review in this state. Notice shall be provided within thirty (30) days of any change.

SECTION 6 .   A NEW SECTION OF SUBTITLE 39 OF KRS CHAPTER 304 IS CREATED TO READ AS FOLLOWS:

(1)     For purposes of this section "adverse determination" means a determination by an reparation obligor or its designee that the health care services furnished or proposed to be furnished to a reparation insured are:

(a)      Not medically necessary, as determined by the reparation obligor or its designee, or experimental or investigational, as determined by the reparation obligor or its designee; or

(b)      Not reasonable as provided in subparagraphs 1., 2., and 3. of paragraph (a) of subsection (5) of Section 1 of this Act.

(2)     Every reparation obligor shall have an appeal process to be utilized by the reparation obligor or its designee, consistent with this section and which shall be disclosed to reparation insureds. A reparation obligor shall disclose the availability of the process to the reparation insured or the provider in the timely notice of an adverse determination which meets the requirements set forth in subparagraph 4. of paragraph (g) of subsection (3) of Section 5 of this Act.

(3)     The appeals process may be initiated by the reparation insured or a provider acting on his own behalf or on behalf of the reparation insured. The appeals process shall include adequate and reasonable procedures for review and resolution of appeals concerning adverse determinations made under an independent review. At a minimum, these procedures shall include the following:

(a)      Reparation obligors or their designees shall provide decisions to reparation insureds and providers on appeals of adverse determinations or coverage denials within forty-five (45) days of receipt of the request for appeal;

(b)     An appeal of an adverse determination shall only be conducted by a licensed physician who did not participate in the initial review. However, in the case of a review involving a medical or surgical specialty or subspecialty, the reparation obligor or agent shall, upon request by a reparation insured or provider, utilize a board eligible or certified physician in the appropriate specialty or subspecialty area to conduct the appeal;

(c)      Those portions of the medical record that are relevant to the appeal, if authorized by the reparation insured and in accordance with state or federal law, shall be considered and providers given the opportunity to present additional information; and

(d)     In addition to any previous notice required under subparagraph 4. of paragraph (g) of subsection (3) of Section 5 of this Act, and to facilitate expeditious handling of a request for external review of an adverse determination, a reparation obligor or agent that denies, limits, reduces, or terminates coverage for a treatment, procedure, drug, or device for a reparation insured shall provide the reparation insured or provider acting on his own behalf or on behalf of the reparation insured with an appeal determination letter that shall include:

1.      A statement of the specific medical and scientific reasons for the adverse determination;

2.      A statement of the basis that the fee is unreasonable as described in subparagraphs 1., 2., 3. of paragraph (a) of subsection (5) of Section 1 of this Act; and

• Sen. Tom Buford, Co-Chair
• Rep. James Bruce, Co-Chair
• Sen. Lindy Casebier
• Sen. Julie Denton
• Sen. Ernie Harris
• Sen. Daniel Mongiardo
• Sen. R.J. Palmer II
• Sen. Albert Robinson
• Sen. Richard Sanders Jr.
• Sen. Larry Saunders
• Sen. Dan Seum
• Sen. Tim Shaughnessy

• Rep. John Adams
• Rep. Paul Bather
• Rep. Sheldon Baugh
• Rep. James Comer
• Rep. Brian Crall
• Rep. Ron Crimm
• Rep. Robert Damron
• Rep. Mike Denham
• Rep. Ted "Teddy" Edmonds
• Rep. Joseph Fischer
• Rep. Danny Ford
• Rep. James Gooch
• Rep. J.R. Gray
• Rep. Dennis Horlander
• Rep. Don Pasley
• Rep. Frank Rasche
• Rep. Steve Riggs
• Rep. Arnold Simpson
• Rep. Brandon Smith
• Rep. Roger Thomas
• Rep. Tommy Thompson
• Rep. Ken Upchurch
• Rep. Susan Westrom
• Rep. Rob Wilkey