HOUSE OF REPRESENTATIVES
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO HEALTH.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Health insurance exchanges are a central component of the federal Patient Protection and Affordable Care Act, and the federal act gives states broad discretion in establishing the structure and governance of their own exchanges. The legislature finds that the Hawaii health connector was established by Act 205, Session Laws of Hawaii 2011, as Hawaii's health insurance exchange and was charged with the responsibility of implementing applicable parts of the federal act.
The successful and efficient operation of the Hawaii health connector is essential for the State, health insurers, and insured persons in Hawaii to comply with the new requirements of the federal act. The legislature also finds that the Hawaii health connector was established as a private nonprofit entity, rather than a state agency, to provide the connector with a certain degree of freedom and autonomy in establishing and operating the State's health insurance exchange.
However, the legislature believes that evolving federal health care regulations and the need for greater transparency and oversight over Hawaii's health insurance exchange necessitate that the State revise the structure of the Hawaii health connector. Accordingly, the legislature finds that the Hawaii health connector should be established as a state entity to ensure greater accountability for its actions and improved oversight of its ongoing operations.
The Patient Protection and Affordable Care Act mandates health insurance exchanges to be self-sustaining beginning in January 2015. The legislature further recognizes that the long-term financial sustainability of the connector must be facilitated in a way that promotes competition and ensures equity among the competitors. The legislature finds that a sustainability fee on insurers is an appropriate financing method that will strike a proper balance by promoting competition, facilitating a self-sustaining health insurance exchange market, and maintaining reasonable health insurance rates.
The purpose of this part is to:
(1) Establish the Hawaii health connector as a state entity; and
(2) Provide for the long-term sustainability of the Hawaii health connector by authorizing the insurance commissioner to assess a fee on all issuers selling plans, both inside and outside of the connector.
SECTION 2. Chapter 27, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:
"Part . Hawaii HEALTH INSURANCE EXCHANGE
§27-A Definitions. As used in this part:
"Board" means the board of directors of the Hawaii health connector.
"Commissioner" means the insurance commissioner of the department of commerce and consumer affairs.
"Connector" means the Hawaii health insurance exchange, known as the Hawaii health connector.
"Federal act" means the federal Patient Protection and Affordable Care Act, Public Law 111-148, as amended by the federal Health Care and Education Reconciliation Act of 2010, Public Law 111-152, and any amendments to, or regulations or guidance issued under, those acts.
"Insurer" means any person or entity that issues a policy of accident and health or sickness insurance subject to article 10A of chapter 431, or chapters 432 or 432D, or any dental insurer subject to chapter 432G.
"Qualified dental plan" means a dental benefit plan as described in section 1311(d)(2)(B)(ii) of the federal act.
"Qualified plan" means a health benefit plan offered by an insurer that meets the criteria for certification described in section 1311(c) of the federal act.
§27-B Establishment of the Hawaii health insurance exchange; purpose. (a) There is established the Hawaii health insurance exchange, to be known as the Hawaii health connector, which shall be a body corporate and politic and an instrumentality and agency of the State; provided that the debts and liabilities of the Hawaii health connector shall not constitute the debts and liabilities of the State. The Hawaii health connector shall be temporarily placed within the office of the governor; provided that the connector shall be permanently established within the state health planning and development agency for administrative purposes only, on December 31, 2017, or upon the approval of a state innovation waiver pursuant to section 1332 of the federal act, whichever occurs first.
(b) The duties of the connector shall include:
(1) Facilitating the purchase and sale of qualified plans and qualified dental plans;
(2) Connecting consumers to the information necessary to make informed health insurance choices;
(3) Enabling consumers to purchase coverage and manage health and dental plans electronically; and
(4) Performing any and all other duties required of a health insurance exchange pursuant to the federal act and this part.
(c) The connector shall serve as a clearinghouse for information on all qualified plans and qualified dental plans listed or included in the connector.
(d) The connector shall be audited annually by the auditor who shall submit the results of each annual audit to the commissioner no later than thirty days after the connector receives the results. The connector shall retain all annual audits on file, along with any documents, papers, books, records, and other evidence that is pertinent to its budget and operations for a period of ten years and shall permit the auditor, the commissioner, the legislature, or their authorized representatives to have access to, inspect, and make copies of any documents retained pursuant to this subsection.
(e) The board shall submit an annual report to the legislature that shall include the most recent audit report received pursuant to subsection (d), no later than twenty days prior to the convening of each regular session of the legislature.
(f) The connector shall offer consumer assistance in a culturally and linguistically appropriate manner.
(g) The connector shall make qualified plans and qualified dental plans available to qualified individuals and qualified employers beginning with effective dates on or before January 1, 2014.
§27-C Funding. The connector may receive contributions, grants, endowments, fees, or gifts in cash or otherwise from public and private sources including corporations, businesses, foundations, governments, individuals, and other sources subject to rules adopted by the board. The State may appropriate moneys to the connector. As required by section 1311(d)(5)(A) of the federal act, the connector shall be self-sustaining by January 1, 2015, and may charge assessments or user fees to health and dental carriers, or may otherwise generate funding to support its operations.
§27-D Hawaii health connector sustainability revolving fund; subaccount. (a) There is established the Hawaii health connector sustainability revolving fund into which shall be deposited moneys received by or under the supervision of the connector, pursuant to section 27-C, including:
(1) Hawaii health connector universal federally mandated sustainability fee revenues collected pursuant to section 27-E; and
(2) Any other assessments or user fees established by the connector.
Moneys in the Hawaii health connector sustainability revolving fund shall not be considered part of the general fund.
(b) A separate subaccount shall be established in the Hawaii health connector sustainability revolving fund into which shall be deposited the remainder of all moneys received by the connector from the federal government prior to January 1, 2015. Notwithstanding any provision to the contrary, moneys in this subaccount shall be expended by the connector exclusively for purposes permitted by the federal act or subject to the conditions under which the moneys were granted to the connector.
(c) All moneys in the Hawaii health connector sustainability revolving fund are appropriated for the purposes of and shall be expended by the connector for the administration and operations of the Hawaii health insurance exchange in compliance with this part and the federal act.
§27-E Hawaii health connector universal federally mandated sustainability fee; determination by the insurance commissioner. (a) By April 1 of each year, the board shall inform the commissioner of the amount of funding required to finance the operations and cash reserve of the connector for each ensuing fiscal year beginning on July 1; provided that the balance of the cash reserve does not exceed the value of the cost of three months of administering and operating the connector.
(b) Any other provision of law notwithstanding, beginning on July 1, 2015, and on each July 1 thereafter, the commissioner shall assess a fee upon each insurer, on a pro rata basis, based upon the number of individuals covered by each insurer on the preceding December 31, excluding individuals covered under a medicaid plan pursuant to Title XIX of the Social Security Act, 42 U.S.C. section 1396 et seq. At the discretion of the commissioner, the fee assessed against each dental insurer subject to chapter 432G may be set at a level up to per cent of the fee assessed upon all other insurers in this subsection. The total of all revenues collected from the fee shall not exceed the amount of funding required to finance the operations and cash reserve of the connector as specified in subsection (a). This fee shall be known as the Hawaii health connector universal federally mandated sustainability fee.
§27-F Board of directors; composition; operation. (a) The Hawaii health connector shall be governed by a board of directors that shall comprise nine voting members as follows:
(1) The director of commerce and consumer affairs, or the director's designee;
(2) The director of human services, or the director's designee;
(3) The healthcare transformation coordinator;
(4) Two members who shall be appointed by the governor;
(5) Two members who shall be appointed by the president of the senate; and
(6) Two members who shall be appointed by the speaker of the house of representatives.
The board shall elect one of its members to serve as the chair of the board. The board, by majority vote, may remove or suspend for cause any member after due notice and public hearing.
(b) The membership of the board shall reflect geographic diversity and the diverse interests of stakeholders, including consumers and employers. Each person appointed to the board shall have education, training, or professional experience in at least one of the following areas:
(1) Health care policy;
(2) Health benefits plan administration, including medicaid administration;
(3) Health insurance;
(4) Health care financing and purchasing;
(5) Health care delivery;
(6) Information technology; or
(7) Economics and actuarial science.
In making appointments, the appointing authorities shall consider the background and expertise of all members of the board and the geographic, socioeconomic, and other characteristics of the State, so that the board's composition reflects a diversity of expertise, skills, and background relevant to the State.
(c) Appointed board members shall serve staggered terms of four years each, provided that the terms of the initial appointments of members pursuant to subsection (a)(4) through (6), shall be as follows:
(1) One member appointed by each appointing authority shall be appointed for two years; and
(2) One member appointed by each appointing authority shall be appointed for four years.
Members appointed pursuant to subsection (a)(1) through (3) shall serve during their entire term of office.
(d) Any vacancy on the board shall be filled for the remainder of the unexpired term in the same manner as the original appointment as specified in subsection (a). Any member whose term has expired and who is not disqualified from membership may continue in office until a successor is appointed.
(e) The members appointed pursuant to subsection (a)(1) through (3) shall receive no additional compensation for their service on the board. The members of the board appointed under subsection (a)(4) through (6) shall serve without compensation, but shall be reimbursed for expenses, including travel expenses, incurred in the performance of their duties.
(f) The board shall manage the budget of the connector according to generally accepted accounting principles and a plan for financial organization adopted by the legislature based upon recommendations of the board.
§27-G Board meetings; transparency. (a) In addition to the exceptions in section 92-5, the board may hold an executive meeting that is closed to the public when it is necessary for the board to consider information that is proprietary to a particular entity with which it has business dealings and the disclosure of which might be harmful to the business interest of the entity.
(b) The board shall adopt rules pursuant to chapter 91 that require transparency of board actions, including public disclosure and posting of board minutes on the connector's website.
§27-H Executive officer; employees. (a) The board shall appoint an executive director, who shall serve at the pleasure of the board and shall be exempt from chapter 76. The board shall set the salary and duties of the executive director.
(b) Through its executive director, the board may appoint officers, agents, and employees, prescribe their duties and qualifications, and fix their salaries without regard to chapter 76.
§27-I Eligibility of insurers and plans. The commissioner shall determine eligibility for the inclusion of insurers and plans in the connector; provided that all qualified plans and qualified dental plans that apply for inclusion shall be included in the connector.
§27-J Eligibility determination for applicants in medicaid adult and children's health insurance program. The department of human services shall determine the qualifications and eligibility of individuals to participate in medicaid adult or children's health insurance programs. The department of human service's determination of eligibility shall enable qualified individuals and authorized adults on behalf of qualified children to purchase qualified plans and qualified dental plans from the connector. The department of human services shall verify for the connector the eligibility of individuals and children to participate in subsidized plans purchased through the connector.
§27-K Oversight; rate regulation. (a) The commissioner, pursuant to the authority granted by part II of article 2 of chapter 431, shall retain full regulatory jurisdiction over all insurers and qualified plans and qualified dental plans included in the connector.
(b) Rates for qualified plans and qualified dental plans included in the connector shall be regulated pursuant to applicable state and federal law.
§27-L Agents and brokers. Certified insurance agents and brokers may enroll individuals and employers in qualified plans through the connector and assist individuals and employers in applying for applicable premium tax credits and cost-sharing reductions for which they may be eligible. The commissioner shall adopt rules for certifying insurance agents and brokers pursuant to this section; provided that the rules shall include qualifications and educational requirements for agents and brokers that comply with the federal act.
§27-M Effect on the prepaid health care act. Nothing in this part shall in any manner diminish or limit the consumer protections contained in, or alter the provisions of, chapter 393.
§27-N Rules. The board shall adopt rules pursuant to chapter 91 necessary to implement this part. Rules adopted pursuant to this section shall not conflict with or prevent the application of regulations promulgated by the Secretary of the United States Department of Health and Human Services under the federal act.
§27-O Network adequacy. The commissioner shall provide the Hawaii health connector with a list of qualified health plans that meet network adequacy standards as determined by the commissioner.
§27-P Procurement. Notwithstanding any provision to the contrary, procurement by the connector shall be made pursuant to chapter 103F.
§27-Q Consumer, patient, business, and health care advisory group. The board shall establish a consumer, patient, business, and health care advisory group to provide input and recommendations to the board. The advisory group shall reflect geographic diversity and diversity of interests. Members shall include individuals with education, training, or professional experience in the fields of consumer advocacy, patient advocacy, health insurance, public health, health care provision, economics, financial management, risk management, and small business. Members of the advisory group shall serve in an advisory capacity only and shall not be considered state employees for any purpose. Members shall not be compensated but shall be reimbursed for necessary expenses incurred in the performance of their duties.
§27-R Intergovernmental agency advisory group. There is established an intergovernmental agency advisory group that shall serve in an advisory capacity to provide input and recommendations to the board. The advisory group shall consist of the following members, or their designees:
(1) The insurance commissioner;
(2) The director of health; and
(3) The director of labor and industrial relations.
The governor shall designate one member to convene and serve as the chair of the advisory group."
SECTION 3. Section 432F-2, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:
"(d) To enable the
commissioner to determine the network adequacy for qualified health plans to be
listed with the Hawaii health connector under section [
the commissioner may request that a managed care plan demonstrate the adequacy
of its provider network at the time that it files its health plan benefit
document with the commissioner."
SECTION 4. Chapter 435H, Hawaii Revised Statutes, is repealed.
SECTION 5. On January 1, 2015, all rights, powers, functions, and duties of the Hawaii health connector established pursuant to chapter 435H, Hawaii Revised Statutes, shall be transferred to the Hawaii health connector established pursuant to this Act, and the Hawaii nonprofit corporation known as the Hawaii health connector established pursuant to chapter 435H, Hawaii Revised Statutes, shall be dissolved.
Employees shall be transferred without loss of salary, seniority, prior service credit, vacation or sick leave credits previously earned, or other employee benefits or privileges as a consequence of this Act; provided that the employee possesses the legal and public employment requirements for the position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable employment and compensation laws. Any employee transferred as a consequence of this Act shall be exempt from civil service and shall not be appointed to a civil service position as a consequence of this Act. The board of directors of the Hawaii health connector established pursuant to this Act may prescribe the duties and qualifications of these employees and fix their salaries without regard to chapter 76, Hawaii Revised Statutes.
SECTION 6. On January 1, 2015, all appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii nonprofit corporation known as the Hawaii health connector and established pursuant to chapter 435H, Hawaii Revised Statutes, relating to the functions transferred to the Hawaii health connector established pursuant to this Act shall be transferred with the functions to which they relate.
SECTION 7. On January 1, 2015, all moneys held by the Hawaii nonprofit corporation known as the Hawaii health connector and established pursuant to chapter 435H, Hawaii Revised Statutes, including but not limited to federal grant moneys, shall be transferred to the Hawaii health connector sustainability revolving fund established pursuant to section 27-D, Hawaii Revised Statutes. The director of budget and finance shall take all actions necessary to effectuate the timely transfer of those moneys.
SECTION 8. The office of the governor shall work with the board of directors of the Hawaii health connector established under chapter 435H, Hawaii Revised Statutes, to effectuate a seamless transition of duties, functions, and records to the Hawaii health connector established pursuant to this Act. Transition procedures shall ensure that no interruption occurs in the provision of health coverage or health care services to any individual or business served by or eligible for service through the Hawaii health connector.
Planning and coordination for the transition of the duties, functions, and records of the Hawaii health connector as provided by this Act shall be completed in a timely manner in order for the transition to take effect on January 1, 2015.
SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2014-2015 for the administration and operations of the Hawaii health connector.
The sum appropriated shall be expended by the office of the governor for the purposes of this Act; provided that the Hawaii health connector first shall submit a proposed budget to the office of the governor that is based on zero-based budgeting principles and includes an itemized accounting of the proposed uses of the appropriation. For the purposes of formulating the proposed budget, "zero-based budgeting principles" means that the Hawaii health connector shall justify all projected allocations and expenditures, starting with an initial balance of zero dollars to spend.
SECTION 10. The legislature finds that the Patient Protection and Affordable Care Act encourages states to develop innovative approaches to insuring their populations by authorizing states to apply for waivers from certain requirements of the Act. To be eligible, a state must demonstrate that its proposed health insurance reforms are as comprehensive and affordable as the federal requirements for insurance sold in its state health insurance exchange. In addition, proposed reforms must be budget neutral for the federal government. States that are granted innovation waivers may receive federal assistance to operate their reform programs in an amount that is equivalent to the aggregate amount of tax credits and cost-sharing subsidies that the federal government would have paid for individuals enrolled in state health insurance exchanges.
The legislature also finds that Hawaii has a bold history as an innovator in ensuring that its residents have access to health care. The Hawaii Prepaid Health Care Act has ensured the availability of employer-sponsored health insurance for workers and their families, and the State's Med-QUEST program has provided access to comprehensive managed care for low-income families. The legislature believes that, while Hawaii has taken great steps in implementing the health insurance exchange and other insurance reforms required by the Patient Protection and Affordable Care Act, the State may be able to create a more effective alternative solution for providing affordable health coverage to individuals.
The purpose of this part is to establish a state innovation waiver task force to develop a health care reform plan that meets requirements for obtaining a state innovation waiver.
SECTION 11. (a) There is created the state innovation waiver task force, to be attached to the office of the governor for administrative purposes.
(b) The task force shall consist of the following members, or their respective designees:
(1) The healthcare transformation coordinator, who shall serve as chair;
(2) The director of health;
(3) The director of commerce and consumer affairs;
(4) The director of labor and industrial relations;
(5) The administrator of the MedQUEST division of the department of human services;
(6) The insurance commissioner;
(7) The administrator of the Hawaii employer-union health benefits trust fund;
(8) The chairperson of the board of directors of the Hawaii Health Connector;
(9) The executive director of the Hawaii Health Connector;
(10) The executive director of the Hawaii Health Information Exchange;
(11) Two persons with expertise in health care delivery or health insurance, to be designated by president of the senate; and
(12) Two persons with expertise in health care delivery or health insurance, to be designated by the speaker of the house of representatives.
(c) The task force shall:
(1) Examine the feasibility of alternative approaches to the health reform requirements described under section 1332(a)(2) of the federal act;
(2) Examine alternatives to and possible exemptions or waivers from requirements relating to allowable premium rate variations based upon age, as described in section 1201 of the federal act; and
(3) Develop a plan for applying for a state innovation waiver that meets the requirements of section 1332 of the federal act, including:
(A) Developing a strategy for health care reform that:
(i) Provides coverage that is at least as comprehensive as required by the federal act;
(ii) Provides coverage and cost-sharing protections that are at least as affordable as under the federal act;
(iii) Makes health insurance coverage available to as many residents of Hawaii as under the federal act; and
(iv) Is budget neutral for the federal government;
(B) Examining the feasibility of options for providing affordable insurance coverage for uninsured and underinsured individuals in Hawaii that include innovations to the State's existing medicaid program; and
(C) Ensuring compliance with all applicable public notice requirements of 31 Code of Federal Regulations part 33 and 45 Code of Federal Regulations part 155, as amended.
(d) The task force shall prepare a draft application for a state innovation waiver, to take effect for plan years beginning after January 1, 2017.
(e) The members of the task force shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.
(f) The task force shall submit a report of its findings and recommendations to the legislature, including any proposed legislation and the draft application, no later than twenty days prior to the convening of the regular session of 2016.
(g) The task force shall be dissolved on June 30, 2017.
(h) For the purposes of this section, "federal act" means the Patient Protection and Affordable Care Act (Public Law 111-148), as amended, and any regulations adopted thereunder.
SECTION 12. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2014-2015 for the operations of the state innovation waiver task force.
The sum appropriated shall be expended by the office of the governor for the purposes of this Act.
SECTION 13. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 14. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.
SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 16. This Act shall take effect upon its approval; provided that:
(1) Sections 9 and 12 of this Act shall take effect on July 1, 2014; and
(2) Sections 2, 3, and 4 of this Act shall take effect on January 1, 2015.
Health; Hawaii Health Connector; Sustainability Fee; State Innovation Waiver
Establishes the Hawaii Health Connector as a state entity as of 01/01/2015. Creates the consumer, patient, business, and health care advisory group and the intergovernmental agency advisory group to advise the Connector board of directors. Appropriates moneys to the Connector. Establishes a sustainability fee to support operations of the Connector. Establishes and appropriates moneys for a state innovation waiver task force to develop a plan for applying for a state innovation waiver under the PPACA. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.