STAND. COM. REP. NO. 1071-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2655
                                     S.D. 2
                                     H.D. 2




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. 2655, S.D. 2, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO HEALTH,"

begs leave to report as follows:

     The purpose of this bill is to strengthen the Patient's Bill
of Rights Law (PBR) found in chapter 432E, Hawaii Revised
Statutes, which provides protection to consumers receiving health
care under managed care plans.  The bill is the product of the
Hawaii Patient Rights and Responsibilities Task Force (Task
Force), established by the Legislature in 1998, and composed of
representatives of health care plans, consumer groups, health
care providers, employers, and governmental agencies.

     Part I of the bill attempts to address the problem of
delayed provision of health care or denials of health coverage,
by amending provisions of the PBR that give health plan enrollees
the right to an internal health plan review and to an external,
administrative review of a health plan's denial of coverage.  
     Part II of the bill responds to a 1999 legislative request
in Senate Concurrent Resolution No. 152, S.D. 1, that the Task
Force attempt to define the term "medical necessity."

     This bill:

     (1)  Provides a specific definition for the term "medical
          necessity," which term generally refers to those

 
 
                                 STAND. COM. REP. NO. 1071-00
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          services that must be covered by the plan because they
          fall within a general category of services covered
          under the plan, and are also "medically necessary;"

     (2)  Requires that the new definition of medical necessity
          be used during the internal and external review of a
          health plan's denial of coverage;

     (3)  Clarifies that notice of a final internal review
          determination must be given to an enrollee within 45
          days of the enrollee's complaint, and that the notice
          must contain information about the enrollee's right to
          appeal the determination through an external review;

     (4)  Extends from 30 days to 60 days, the time period within
          which an external review must be requested once a final
          internal review determination is made;

     (5)  Gives the Insurance Commissioner powers and flexibility
          to facilitate external reviews, including:

          (A)  The authority to retain an independent medical
               expert in the area under review, as well as the
               services of an independent review organization;
               and

          (B)  The ability to withhold attorney's fees and costs
               where enrollee appeals are determined to be
               unreasonable, fraudulent, excessive, or frivolous;

     (6)  Provides that the internal or external review may be
          conducted as an expedited appeal, to be completed
          within 72 hours of request, in cases where the standard
          review period would result in serious physical harm or
          subject the consumer to severe pain;

     (7)  Details information that must be provided by the health
          plan for external reviews, specifies the deadline for
          providing the information, and authorizes sanctions for
          noncompliance;

     (8)  Disqualifies those with conflicts of interest from
          serving on the external review panel or in the
          independent review organization; and

     (9)  Restricts disclosure of health care information in
          external reviews to disclosure for purposes relating to
          the external review.

The bill also increases the Task Force membership from 20 to 25.

 
                                 STAND. COM. REP. NO. 1071-00
                                 Page 3

 

     Your Committee received testimony in support of this bill
from the Task Force, Department of Health, Queen's Health
Management, Hawaii Medical Service Association, Hawaii Coalition
for Health, AARP, Hawaii Government Employees Association,
Healthcare Association of Hawaii, the Kokua Council, Hawaii
Nurses' Association (HNA), and an individual member of the Task
Force.

     Hawaii Psychological Association (HPA), American Academy of
Pediatrics, Hawaii Chapter (AAP), Hawaii Medical Association
(HMA), Community Advisory Council for the Center on Disabilities
Studies, Hawaii Early Intervention Coordinating Council, and
Hawaii Biodyne, Inc., stated concerns about the bill and
requested amendments.

     Your Committee finds that this bill represents a great deal
of thought and effort by the Task Force in a new and complex area
where the law, and the rapidly changing fields of health care,
and health insurance, intersect.  Your Committee thanks the Task
Force for its successful efforts and its resolution of the
varying interests of Task Force participants as memorialized in
this measure.  Your Committee recognizes that issues first raised
in this session still remain, but there may be insufficient time
to fully address and resolve them.  In particular, your Committee
notes that the subject of this bill is the PBR, thus issues
should be resolved consistently with the intent of this law, in a
manner that would facilitate the provision of appropriate health
care to consumers consistent with existing coverage, rather than
expand health plan coverage.

     Therefore, your Committee requests that during the interim
following the 2000 session, the Task Force, augmented by those
interested in improving the PBR, address issues raised and left
unresolved this session, with a focus on those stated by HPA,
AAP, and HMA with regard to whether:

     (1)  The use of "cost-effectiveness and other criteria;"

     (2)  The hierarchy of information to be considered; and

     (3)  The kinds of scientific evidence that may be
          considered,

in the determination of medical necessity unduly limits coverage
as provided to particular populations of patients.  Your
Committee requests that the Task Force submit any proposed
legislation to improve the PBR, to the 2001 Legislature.


 
                                 STAND. COM. REP. NO. 1071-00
                                 Page 4

 
     Technical, nonsubstantive amendments, including those
requested by HNA, 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
purpose of S.B. No. 2655, S.D. 2, H.D. 1, as amended herein, and
recommends that it be referred to the Committee on Finance in the
form attached hereto as S.B. No. 2655, S.D. 2, H.D. 2.

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



                                   ______________________________
                                   RON MENOR, Chair