STAND. COM. REP. NO.672

Honolulu, Hawaii

, 2001

RE: H.B. No. 202

H.D. 1

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 202 entitled:

"A BILL FOR AN ACT RELATING TO HEALTH INSURANCE,"

begs leave to report as follows:

The purpose of this bill is to reduce delays in the payment of claims by insurers by:

(1) Defining "clean claim" in the law governing time limits for insurer reimbursement of health care provider claims, to mean a claim showing that the patient and services were insured, and services were actually provided by an authorized practitioner; and

(2) Providing that a "clean claim" must be paid immediately, and payment cannot be withheld pending a request for additional information.

The Department of Commerce and Consumer Affairs, Insurance Division, and Hawaii Medical Association submitted testimony in support of this bill. The American Physical Therapy Association, Hawaii Chapter, submitted testimony in support of the bill with suggested amendments. The Hawaii Medical Service Association (HMSA), Mutual Benefit Association of Hawaii, Royal State National Insurance Company, Ltd., and Voluntary Employees' Benefit Association of Hawaii testified in opposition to the bill.

Your Committee finds that the law being amended in this bill was enacted in 1999 to ensure timely payment of claims by insurers. However, there is testimony that under the law, the payment of any claim can still be delayed if the insurer states that additional information is necessary to process the claim. Providers have testified that these delayed claims represent a significant percentage of their cash flow and are a heavy burden for small businesses.

However, there was testimony from providers that insurers are paying their claims faster since this law became effective, that once a claim is paid, the payment is difficult to recover, and payment statistics of one of the largest insurers show that 98 percent of claims are paid within 30 days.

Your Committee has amended this bill according to the recommendations of HMSA, by:

(1) Removing the provision prohibiting insurers from delaying the payment of a clean claim pending the receipt of additional information;

(2) Removing the requirement that insurers provide notice of the specific reason for contesting the claim, as well as language conditioning interest on late claim payments according to whether or not notice was timely provided.

(3) Removing the section of the bill that repealed the sunset date of the claim payment law and made the law permanent;

(4) Adding more conditions and exclusions to the definition of clean claim;

(5) Requiring insurers to make available an electronic system that can be used to immediately verify enrollee eligibility under the insurer's plan;

(6) Allowing the Insurance Commissioner oversight by requiring health providers to submit a quarterly report of unpaid claims and the reason these claims were contested; and

(7) Making technical, nonsubstantive amendments for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 202, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 202, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,

____________________________

KENNETH T. HIRAKI, Chair