THE SENATE                           S.C.R. NO.            71
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                    SENATE  CONCURRENT
                        RESOLUTION
  REQUESTING THE AUDITOR TO INVESTIGATE AND DETERMINE THE
    FAIRNESS OF THE ELIGIBLE CHARGE REIMBURSEMENT RATES OF THE
    HAWAII MEDICAL SERVICE ASSOCIATION WITH REGARD TO
    PARTICIPATING HOSPITALS.
 


 1        WHEREAS, it has been claimed that the reimbursement
 2   practices of the Hawaii Medical Service Association, one of
 3   Hawaii's largest pre-paid medical insurers, have caused
 4   problems for Hawaii's hospitals; and
 5   
 6        WHEREAS, the Hawaii Medical Service Association's low
 7   reimbursement rates have forced hospitals to institute cost-
 8   cutting measures that may not be in the best interest of
 9   consumers, including shortening hospital stays, to make up for
10   lost income; and
11   
12        WHEREAS, all hospitals in the State, including the
13   community hospitals under the Hawaii Health Systems
14   Corporation, are on the list of preferred providers with the
15   Hawaii Medical Service Association; and
16   
17        WHEREAS, reportedly, the Hawaii Medical Service
18   Association has increased its reimbursement rate to the Hawaii
19   Health Systems Corporation hospitals, but the hospitals
20   continue to face shortfalls in income even as they incur
21   expenditures for services rendered in excess of the amounts
22   they are reimbursed by the Hawaii Medical Service Association;
23   and
24   
25        WHEREAS, although preferred providers are party to an
26   agreement in which they agree to accept the Hawaii Medical
27   Service Association's low reimbursement "eligible charges," in
28   fact, preferred providers have little choice but to agree
29   because the option of becoming a non-preferred provider entails
30   serious disadvantages; and
31   
32        WHEREAS, for example, under a preferred provider contract,
33   Hawaii Medical Service Association reimbursement payments are
34   sent directly to preferred provider hospitals, thus saving the

 
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 1   hospitals the time and cost of collecting payments directly
 2   from each patient treated, providing a quick turnaround and
 3   regularity and predictability in payments, whereas if a
 4   hospital does not contract with the Hawaii Medical Service
 5   Association and is thus not a participating preferred provider,
 6   such payments go directly to patients; and
 7   
 8        WHEREAS, if the Hawaii Health Systems Corporation
 9   hospitals are not able to negotiate higher reimbursement rates
10   from the Hawaii Medical Service Association, their only
11   alternative would be to not contract with the Hawaii Medical
12   Service Association and become non-participating providers; and
13   
14        WHEREAS, although non-participating providers may impose
15   more realistic charges above the Hawaii Medical Service
16   Association reimbursement rates, the additional costs must be
17   borne by consumers of health care -- an unfair burden if the
18   Hawaii Medical Service Association reimbursement rates are
19   unrealistically low; and
20   
21        WHEREAS, it is in the public interest that the Hawaii
22   Medical Service Association's participating hospital
23   reimbursement rates be examined to determine their fairness;
24   now, therefore,
25   
26        BE IT RESOLVED by the Senate of the Twentieth Legislature
27   of the State of Hawaii, Regular Session of 1999, the House of
28   Representatives concurring, that the Auditor is requested to
29   investigate and determine the fairness of the eligible charge
30   reimbursement rates of the Hawaii Medical Service Association
31   for participating hospitals; and
32   
33        BE IT FURTHER RESOLVED that the Auditor is requested to
34   investigate the various profit and nonprofit entities used by
35   the Hawaii Medical Service Association, including their HMSA-
36   sponsored clinics, to determine the impact this has on the
37   profit margin of Hawaii Medical Service Association and/or the
38   increase in premiums, if any; and
39   
40        BE IT FURTHER RESOLVED that the Auditor is requested to
41   report the Auditor's findings and recommendations, including
42   any necessary proposed implementing legislation, to the
43   Legislature twenty days prior to the convening of the Regular
44   Session of 2000; and
45   

 
 
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 1        BE IT FURTHER RESOLVED that certified copies of this
 2   Concurrent Resolution be transmitted to the Auditor, the
 3   President of the Hawaii Medical Service Association, and the
 4   Chief Executive Officer of the Hawaii Health Systems
 5   Corporation.
 6 
 7 
 8 
 9                           OFFERED BY: ___________________________