STAND. COM. REP. NO. 1349

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.C.R. No. 129
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Commerce and Consumer Protection and
Health and Human Services, to which was referred S.C.R. No. 129
entitled:

     "SENATE CONCURRENT RESOLUTION REQUESTING THE INSURANCE
     COMMISSIONER TO INVESTIGATE AND DETERMINE THE FAIRNESS OF
     THE ELIGIBLE CHARGE REIMBURSEMENT RATES OF HAWAII'S MUTUAL
     BENEFIT SOCIETIES,"

beg leave to report as follows:

     The purpose of this measure is to request the State
Insurance Commissioner to investigate and determine the fairness
of the eligible charge reimbursement rates of mutual benefit
societies operating in this State.

     The Health Systems Corporation presented testimony in
support of the measure.  The West Hawaii Regional MAC, and two
individuals, while not present, submitted testimony in support of
the measure.  The Hawaii Medical Service Association presented
comments on the measure.  Legislative Information Services of
Hawaii, Inc., while not present, also submitted comments. 

     Your Committees find that the issue of provider
reimbursement for health care services is a matter that affects
all parties involved in the provision or receipt of health care.
Insurers must provide comprehensive coverage that meets the needs
of their insureds and that is affordable for individuals, groups,
and employers.  


 
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     Reimbursement rates may not always cover the costs of
providing service, thereby creating a hardship on providers,
especially those in rural areas where health care is more costly
in general.  Providers who are not willing to accept the
insurer's participating provider reimbursement rate must rely
upon receiving payment directly from their patients who may fail
to make payment or whose payments may not cover the provider's
costs.  Low reimbursement rates may affect the availability of
health care or the quality of health care available to consumers. 

     This measure would address some of the concerns raised by
the issue of provider reimbursement rates by requesting the
Insurance Commissioner to investigate and determine the fairness
of reimbursement rates. 

     Upon careful consideration of all the testimony, your
Committees have amended this measure by:

     (1)  Deleting references to the Hawaii Health Systems
          Corporation except in the last paragraph;

     (2)  Adding a statement that clarifies that health
          maintenance organizations (HMOs) also make
          reimbursements to hospitals; 

     (3)  Broadening the scope of the investigation to include
          the reimbursement rates of HMOs, and amending the title
          of the measure accordingly; 

     (4)  Requesting that the investigation include:

          (A)  A comparison of reimbursement rates, coverages,
               and administrative fees between mutual benefit
               societies and for-profit insurers;

          (B)  A determination of whether the elimination of
               special participating provider fee caps will
               increase premium costs and who will pay for any
               cost increase; and 

          (C)  A determination of whether mandated changes in
               coverage or payment schedules will violate the
               Employee Retirement Income Security Act;

          and

     (5)  Making technical amendments. 
      

 
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     As affirmed by the records of votes of the members of your
Committees on Commerce and Consumer Protection and Health and
Human Services that are attached to this report, your Committees
concur with the intent and purpose of S.C.R. No. 129, as amended
herein, and recommend that it be referred to the Committee on
Ways and Means, in the form attached hereto as S.C.R. No. 129,
S.D. 1.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Commerce and
                                   Consumer Protection and Health
                                   and Human Services,



____________________________       ______________________________
SUZANNE CHUN OAKLAND, Chair        BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Chair

 
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