STAND. COM. REP. NO. 955-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2186
                                     S.D. 2
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 2186, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to subject independent bill
reviewers (IBRs) to regulatory oversight by the Insurance
Commissioner (Commissioner) of the Department of Commerce and
Consumer Affairs.  The bill defines IBRs as persons who review or
audit billings for medical services on behalf of insurers, and as
independent contractors.  Under the bill IBRs are:

     (1)  Prohibited from being paid on a contingency basis; and

     (2)  Subject to regulation by the Commissioner and must:

          (A)  Be licensed by the State;

          (B)  Meet specified qualifications for licensure;

          (C)  Keep records of each bill reviewed and of fees and
               commissions for each review performed; and

          (D)  Make records available for inspection by the
               Commissioner.


 
 
 
                                 STAND. COM. REP. NO. 955-00
                                 Page 2

 
The bill also provides the Commissioner with the authority needed
to regulate IBRs and impose fees to pay for the costs of
regulation.

     Your Committee received testimony in support of this measure
from the Commissioner, Hawaii State Chiropractic Association,
State Farm Insurance Companies, Consumer Lawyers of Hawaii,
Hawaii Medical Association, Hawaii Chapter American Physical
Therapy Association, Massage Therapists Association of Hawaii,
and a physician.  A private individual expressed support with
reservations.  Testimony in opposition was provided by the Hawaii
Insurers Council.

     Your Committee finds that reviews performed by the currently
unregulated IBRs serve as the basis for an insurer's payment or
denial of reimbursement for medical care and may thus have a
significant effect on businesses, the consumer, and the delivery
of health care services in this community.  As IBRs are paid by
insurers contingent on their denial of reimbursement and no
mechanism other than costly litigation exists to contest
individual billing reductions supported by IBRs reviews, your
Committee finds that State oversight of IBRs is needed to guard
against abuse of the system and underpayment of medical claims.

     This measure has been amended as requested by the
Commissioner, to provide for an appropriation of $96,508 out of
the Insurance Regulation Fund for 2000-2002, for the purposes of
this bill.  Your Committee notes that the time period of the
appropriation straddles fiscal bienniums, and requests that any
corrections necessary be made by the Committee on Finance.

     The Commissioner also stated that there was presently
insufficient information to evaluate the option added by the
Senate Commerce and Consumer Protection Committee, that would
allow an applicant for an IBR license to qualify if the applicant
holds the certified professional coder credential granted by the
American Academy of Professional Coders (AAPC).  Your Committee
requests that this option be reviewed when AAPC testing and
credentialing criteria is received and evaluated by the
Commissioner.

     A technical, nonsubstantive amendment to the AAPC's name has
been made as suggested by the Commissioner, for purposes of
accuracy.  Other technical, nonsubstantive amendments have been
made for purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and

 
                                 STAND. COM. REP. NO. 955-00
                                 Page 3

 
purpose of S.B. No. 2186, S.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 2186, S.D. 2, H.D. 1, and be referred to the
Committee on Finance.

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



                                   ______________________________
                                   RON MENOR, Chair