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Bill Summary · SB 475

SB 475 — Health Insurance: Utilization Review Exemption for Value‑Based Care Participation (Digest)

Status: Hearing scheduled 2/12 at 1:00 p.m.
Introduced: January 22, 2025 (Sen. Beidle). Effective date in bill: January 1, 2026. Applies to policies/contracts/health benefit plans issued, delivered, or renewed on or after that date.

Main purpose

To prevent carriers (insurers, nonprofit health service plans, and health maintenance organizations) from imposing utilization‑management controls — specifically prior authorization, step therapy, or quantity limits — on health care services that are included in a “two‑sided incentive arrangement” between the carrier and an eligible provider. The intent is to align utilization review rules with value‑based payment models and reduce administrative barriers for providers participating in two‑sided risk arrangements.

Key definitions

  • Eligible provider: a licensed physician or a set of health care practitioners that voluntarily participate in a two‑sided incentive arrangement.
  • Two‑sided incentive arrangement: a contract between an eligible provider and a carrier under which the provider can earn incentives and the carrier can recoup funds based on agreed performance/financial targets (total cost of care or episode cost).

Major provisions

  • Prohibition: A carrier may not impose prior authorization, step therapy, or quantity limits for a health care service that is included in a two‑sided incentive arrangement.
  • Scope: Section 15‑147 clarifies applicability to insurers, nonprofit health plans, and HMOs providing hospital/medical/surgical benefits in the State.
  • Two‑sided arrangement minimum contract terms (existing statutory framework reiterated): must set target budgets (risk‑adjusted), limit recoupment (≤50% of excess above target), cap total recoupment liability (≤10% of annual payments), provide greater upside opportunity than downside, permit independent audit/dispute resolution, allow good‑faith adjustments for material changes, and require carrier payment or recoupment within 6 months after contract year end (unless disputed).
  • Reporting/disclosure: carriers must provide quarterly cost/distribution information for arrangements tied to total cost of care; other disclosure and negotiation safeguards apply.
  • Protected period: unless mutually agreed otherwise, no recoupment opportunity based on performance during the first 12 months of an arrangement.

Who is affected

  • Directly: carriers (insurers, nonprofit health plans, HMOs) and eligible providers participating in two‑sided incentive arrangements.
  • Indirectly: patients and other providers (through potential impacts on access, care coordination, and administrative burden).
  • Notably, the State Employee and Retiree Health and Welfare Benefits Program does not participate in value‑based arrangements per the fiscal analysis.

Enforcement, timeline, and fiscal impact

  • Effective January 1, 2026, for new/renewed policies and contracts on or after that date.
  • Eligible providers retain rights to file complaints with the Maryland Insurance Administration (MIA) for violations.
  • Fiscal note: minimal one‑time special fund revenue to MIA from required filing fee (FY2026 only); ongoing workload and broader fiscal impacts judged minimal/absorbable.

Context

Builds on Chapters 297 and 298 (2022) that authorized two‑sided incentive arrangements and established guardrails for bonus/recoupment programs. SB 475 removes certain utilization management tools as a lever when carriers and providers enter into two‑sided risk/value‑based contracts.

Compiled from official sources — confirm details with the bill’s official record.

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