STAND. COM. REP. NO. 1282

Honolulu, Hawaii

, 2005

RE: H.B. No. 395

H.D. 2

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Health, to which was referred H.B. No. 395, H.D. 2, entitled:

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

begs leave to report as follows:

The purpose of this measure is to establish a new, non-judicial external review procedure by which patients may challenge a health plan's final, internal denial of coverage.

The Hawaii Management Alliance Association submitted testimony in support of this measure. The Department of Commerce and Consumer Affairs, the Hawaii Medical Service Association, the Hawaii Coalition for Health, the Hawaii Disability Rights Center, the Kokua Council, and four individuals submitted testimony in opposition. Kaiser Permanente submitted comments.

This measure is in response to a recent Hawaii State Supreme Court decision that found that the external review procedure under chapter 432E, Hawaii Revised Statutes, is preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA). As a result, patients with health plans subject to ERISA (private-sector employer-sponsored health plans) must challenge a denial of coverage by arbitration or judicial review. However, as these procedures are both expensive and time consuming, patients may be unwilling or unable to challenge a health plan's final internal denial of coverage.

According to the Insurance Commissioner, the vast majority of coverage disputes will not fall under the independent review organization (IRO) process provided by this measure because managed care plans usually deny coverage based on a lack of coverage and not a lack of medical necessity. The Commissioner and several opponents suggested revisions to address this and other concerns to better balance the measure. The Commissioner submitted a proposal for the Committee's consideration.

However, other opponents of the measure expressed concern over whether the interests of the enrollee are sufficiently protected. For instance, one opponent noted that under the current measure, an enrollee has no right to present medical testimony, results of medical trials, or other documentation to the review organization to support a finding of medical necessity.

Upon further consideration, your Committee has amended this measure by inserting the language proposed by the Commissioner resulting in the following substantive changes:

(1) An enrollee may request an external review by the Commissioner who will then determine whether the plan's determination is consistent with the benefit coverage as stated in the contract;

(2) If the Commissioner determines that the request requires an interpretation of medical necessity or a finding regarding the experimental or investigational nature of a proposed service, the Commissioner will refer the request for review by an IRO;

(3) Eliminates the need for three IROs;

(4) A decision by the Commissioner or an IRO shall be binding; and

(5) A managed care plan shall pay for one IRO per external review request under that applicable section.

Your Committee further amended the measure by:

(1) Allowing an enrollee to present medical testimony, the results of medical trials, or other documentation to the IRO for its consideration in support of a finding of medical necessity or in dispute of a finding regarding the experimental or investigational nature of a proposed service;

(2) Requiring that the IRO is nationally accredited by the Utilization Review Accreditation Commission; and

(3) Defecting the date to October 1, 2050, to ensure continued dialogue and further review of this measure.

As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 395, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 395, H.D. 2, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection, and Housing.

Respectfully submitted on behalf of the members of the Committee on Health,

____________________________

ROSALYN H. BAKER, Chair