Establishes a safety net health plan program under the department
of human services to distribute QUEST funds to safety net health

HOUSE OF REPRESENTATIVES                H.B. NO.544        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature finds that Medicaid is the most
 2 important insurer of the nation's low-income population and the
 3 most important source of revenue for community health centers,
 4 hospitals, and other safety net health care providers serving the
 5 medically indigent population.  Safety net providers have the
 6 administrative expertise to meet federal and state requirements
 7 to serve Medicaid patients and to receive Medicaid reimbursement.
 8 Safety net providers also have a myriad of additional services
 9 appropriate to culturally sensitive care in Hawaii's multi ethnic
10 population, including outreach community services to enable a
11 client to access case management services, transportation
12 services, and health education programs.
13      The legislature further finds that Medicaid is in the
14 process of transforming from a fee-for-service arrangement to a
15 managed care system, such as Hawaii's QUEST program.  The
16 legislature further finds that managed care for QUEST may present
17 serious financial problems to safety net providers, who would
18 have to operate under a capitated rate structure.  As a possible
19 solution, safety net providers have organized their own managed

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 1 care plans, known as "safety net health plans."  In Hawaii,
 2 safety net health plans would be able to accept Medicaid
 3 capitation rates while maintaining their financial viability.
 4      The legislature further finds that there are no state or
 5 county clinics in Hawaii to provide primary care for the
 6 medically indigent, nor are there free clinics to serve a
 7 substantial number of charity patients.  An estimated ten per
 8 cent of the State's population is uninsured.  The legislature
 9 further finds that the State's economy is severely impacting the
10 solvency of the State's safety net providers, resulting in a
11 reduced ability to provide medical services.
12      The legislature further finds that it is incumbent upon the
13 State to assure adequate reimbursement for safety net providers
14 in order to continue to furnish medical services to the sickest
15 and the poorest of the State's population.
16      The purpose of this Act is to establish a safety net health
17 plan program for the distribution of QUEST funds.
18      SECTION 2.  Chapter 346, Hawaii Revised Statutes, is amended
19 by adding a new section to part I to be appropriately designated
20 and to read as follows:
21      "346-    Safety net health plan program.  (a)  There is
22 established a safety net health plan program to be administered
23 by the department.  The program shall distribute QUEST funds in

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                                     H.B. NO.544        

 1 accordance with this section to one or more safety net health
 2 plans established under subsection (b) or (c).
 3      (b)  A health maintenance organization under chapter 432D
 4 may file with the department for approval as a safety net health
 5 plan, if the health maintenance organization:
 6      (1)  Is owned or controlled by a federally qualified health
 7           center, as defined in Title XIX of the Social Security
 8           Act; or
 9      (2)  Is owned or controlled by a public or private non-
10           profit organization or a mutual benefit society under
11           chapter 432:1 that:
12           (A)  Has a membership of not less than fifty per cent
13                with incomes below two hundred per cent of the
14                current federal income poverty level;
15           (B)  Has not less than twenty five per cent of all of
16                its providers that are safety net providers;
17           (C)  Has not less than fifty per cent of its providers
18                on contract with its safety net health plan that
19                are safety net providers;
20           (D)  Has contracts with all federally qualified health
21                centers; and
22           (E)  Has contracts with service area hospitals that
23                have a disproportionate share of medically

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 1                indigent patients;
 2      (3)  Pays a capitation or fee-for-service rate to network
 3           providers that is sufficient to cover the costs of
 4           providing the services;
 5      (4)  Places not less than one fifth of one per cent of its
 6           annual revenues into the community to strengthen and
 7           build services and activities that facilitate the
 8           health and well-being of its low-income patients and
 9           the community it serves;
10      (5)  Provides the following ancillary services, including:
11           (A)  Culturally sensitive care that is responsive to
12                the diverse ethnic and cultural make-up of
13                patients being served;
14           (B)  Outreach community programs to serve those without
15                access to regular health care;
16           (C)  Social and medical case management;
17           (D)  Translation;
18           (E)  Transportation;
19           (F)  Health education;
20           (G)  Assistance with applying for eligibility;
21           (H)  Home visits; and
22           (I)  Referral for information and follow-up on the
23                referrals; and

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                                     H.B. NO.544        

 1      (6)  Files annually with the insurance commissioner evidence
 2           of the requirements of this subsection.
 3      (c)  A hospital having a disproportionate share of patients
 4 who are medically indigent, or a medical care provider with a
 5 mission statement and demonstrated ability to provide health care
 6 and related services regardless of the patient's ability to pay,
 7 may file with the department for approval as a safety net health
 8 plan.
 9      (d)  The department shall develop a payment methodology
10 under the QUEST program to reimburse safety net health plans that
11 are approved under subsection (b) or (c).  The payment
12 methodology shall account for risk factor adjustments and the:
13      (1)  Additional costs of providing ancillary services under
14           subsection (b)(5);
15      (2)  Health status of the plan's enrollees; and
16      (3)  Socio-demographic characteristics of the plan's
17           enrollees, including homelessness, illiteracy, and
18           English as a second language.
19      (e)  The department shall award QUEST contracts only to
20 safety net health plans qualifying under this section; provided
21 that the plan's bid:
22      (1)  Meets the basic requirements of the QUEST request for
23           proposals; and

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                                     H.B. NO.544        

 1      (2)  Is no higher than five per cent above the fixed bid
 2           amount, or a range amount, as appropriate, as
 3           established by the department for QUEST bid awards.
 4      (f)  A QUEST contract awarded under subsection (e) shall
 5 include provisions to:
 6      (1)  Limit the amount of operating gain to not more than
 7           three per cent of the amount of the contract;
 8      (2)  Require the plan to refund to the department operating
 9           gains exceeding three per cent of the contract amount;
10      (3)  Limit the amount of operating loss to not exceed one
11           and one half per cent of the amount of the contract;
12           and
13      (4)  Require the department to reimburse the plan for
14           operating losses that exceed one and one half per cent
15           of the amount of the contract but not over five per
16           cent."
17      SECTION 3.  The department of human services shall award
18 QUEST bids meeting the requirements of this Act beginning July 1,
19 1999; provided that the health status of enrollees shall not be
20 considered in awarding bids until July 1, 2000; and provided
21 further that socio-demographic characteristics of patients shall
22 not be considered in awarding bids until July 1, 2001.
23      SECTION 4.  New statutory material is underscored.

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                                     H.B. NO.544        

 1      SECTION 5.  This Act shall take effect upon its approval.
 3                           INTRODUCED BY:  _______________________