STAND. COM. REP. NO. 478

Honolulu, Hawaii

, 2005

RE: H.B. No. 395

H.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Consumer Protection & Commerce and Judiciary, to which was referred H.B. No. 395, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE PATIENTS' BILL OF RIGHTS,"

beg leave to report as follows:

The purpose of this bill is to amend the Patients' Bill of Rights external review procedure under which patients may appeal a managed care plan's final internal decision to deny coverage of a health intervention.

The Hawaii Medical Service Association, Kaiser Permanente, and Hawaii Association of Health Plans submitted testimony in support of this measure. The Department of Commerce and Consumer Affairs and Hawaii Coalition for Health submitted testimony in opposition.

Your Committees find that patients who are denied coverage for a health treatment by a health plan or "managed care plan" have a right to an external review of that decision by a three-member panel, which is then, in turn, subject to review in the state courts.

The Hawaii State Supreme Court recently struck down this review procedure in Hawaii Management Alliance Association v. Baldado, finding that the procedure was preempted by the federal Employee Retirement Security Act of 1974 (ERISA). Therefore, patients with health plans subject to ERISA (those with private sector employer-sponsored health plans) must challenge a denial of coverage by seeking arbitration or judicial review.

However, those procedures are both costly and time-consuming. Your Committees find that this measure provides patients who may be unreasonably denied coverage for medical treatment with a quick, inexpensive alternative method of appeal. Your Committees further find that this bill does not make provision for a review by the state courts, and is therefore not preempted under the reasoning of Hawaii Management Alliance Association v. Baldado.

Your Committees have amended the bill by changing the effective date to July 1, 2099, to promote further discussion.

As affirmed by the records of votes of the members of your Committees on Consumer Protection & Commerce and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 395, H.D. 1, as amended herein, and recommend that it be referred to the Committee on Finance, in the form attached hereto as H.B. No. 395, H.D. 2.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection & Commerce and Judiciary,

 

____________________________

SYLVIA LUKE, Chair

____________________________

KENNETH HIRAKI, Chair