STAND. COM. REP. NO. 2383

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2186
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 2186 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to require licensing of
independent medical bill reviewers by the Insurance Division.

     Your Committee received testimony in support of this measure
from the State Insurance Commissioner, Consumer Lawyers of
Hawaii, Mauka Physical Therapy Inc., Fukuji & Lum Physical
Therapy Associates, Inc., Hawaii Chapter American Physical
Therapy Association, Hawaii Medical Association, and two private
individuals.  Testimony in opposition was received from the
Hawaii Insurers Council and Argonaut Insurance Company.
Informational testimony was presented by State Farm Insurance
Companies and Integrated Medical Solutions.

     Independent bill reviewers (IBRs) are independent
contractors hired by insurers to review provider submissions of
codings and billings.  IBRs review and recommend to insurers
whether submissions should be accepted or rejected.  According to
testimony of the State Insurance Commissioner, the Department of
Commerce and Consumer Affairs has been receiving complaints from
providers about the harsh and unreasonable tactics used by IBRs,
causing them to withdraw from the workers' compensation and motor
vehicle insurance markets.  The providers also claim that IBRs
have an incentive to deny or reduce payments because they receive

 
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                                   STAND. COM. REP. NO. 2383
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a percentage of the fees that insurers do not have to pay
providers by reason of their review.

     While your Committee does not believe that all IBRs perform
their work in the manner alleged by the providers, your Committee
finds that the use of IBRs to handle loss claims is becoming a
standard industry practice, similar to adjusters.  Your Committee
further finds that licensing of IBRs is warranted to ensure that
they meet certain minimum qualifications.

     Your Committee has amended this measure by:

     (1)  Amending the title of article 431:9 of the Hawaii
          Revised Statutes to reflect the addition of IBRs;

     (2)  Exempting data base providers for insurers from the
          definition of IBRs;

     (3)  Adding an alternative to the qualifications in holding
          a credential of a certified professional coder;

     (4)  Amending the title of section 431:9-229, Hawaii Revised
          Statutes, to reflect the addition of IBRs;

     (5)  Clarifying that the appropriation is for the purposes
          of this measure; and

     (6)  Making technical amendments for purposes of style.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 2186, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 2186, S.D. 1, and be referred to the Committee on Ways and
Means.


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



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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