STAND. COM. REP. NO. 3166

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.C.R. No. 164
                                        




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.C.R. No. 164 entitled:

     "SENATE CONCURRENT RESOLUTION REQUESTING THE INSURANCE
     COMMISSIONER TO INVESTIGATE AND DETERMINE THE FAIRNESS OF
     THE ELIGIBLE CHARGE REIMBURSEMENT RATES OF HAWAII'S MUTUAL
     BENEFIT SOCIETIES AND HEALTH MAINTENANCE ORGANIZATIONS,"

begs leave to report as follows:

     The purpose of this measure is to authorize an investigation
into the reimbursement practices of health insurers. 

     Testimony on the measure was received from Legislative
Information Services of Hawaii, Kaiser Permanente, Hawaii Medical
Service Association, and two individuals.  

     Your Committee finds that concerns have been raised that
health insurers' inadequate reimbursements to preferred provider
hospitals for medical services rendered are adversely affecting
the care of Hawaii's residents because hospitals are unable to
employ qualified personnel and are forced to implement cost
cutting measures, including shortened hospital stays.  

     Your Committee further finds that while hospitals may elect
to not accept the insurers' schedule for eligible charges and to
seek reimbursement as a non-participating provider, this option
entails payment delays and additional administrative costs for
those facilities, and the difference between the eligible charge

 
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and the facilities' charges for services must be paid by the
consumer.

     In order to determine whether further regulatory measures
are necessary to protect Hawaii's consumers, it is first
necessary to assess whether and to what extent a problem exists
with the reimbursement practices of health insurers.
Accordingly, this measure authorizes the Insurance Commissioner
to investigate the fairness of eligible charge reimbursement
rates established by mutual benefit societies and health
maintenance organizations, and to report any findings to the
legislature.             

     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 concurs with the intent and purpose
of S.C.R. No. 164, and recommends that it be referred to the
Committee on Ways and Means.

                                   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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