Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Health and Human Services, to which was referred S.B. No. 171 entitled:

begs leave to report as follows:

The purpose of this measure is to clarify that a "clean claim" cannot be contested by a health insurer under procedures for reimbursement for health insurance benefits. This measure also defines clean claims.

Testimony in support of this measure was submitted by the Department of Commerce and Consumer Affairs, Hawaii Medical Association, and Hawaii Psychiatric Association. Testimony in opposition to this measure was submitted by ADP Integrated Medical Solutions, Hawaii Medical Service Association, Mutual Benefit Association of Hawaii, Royal State National Insurance Co., Ltd., Voluntary Employees' Benefit Association of Hawaii, and Kapiolani Health Hawaii.

Your Committee finds that the current draft of this measure does not accomplish the intended goals of the proponents. Your Committee recognizes that there are some insurers that have been circumventing the law by giving physicians notice, thus allowing further delay in payment. However, Your Committee does not believe that this is happening with the majority of insurers, in fact, testimony indicated that some insurers are paying their claims faster since the effective date of this law.

Your Committee has amended this measure by removing the notice requirement, requiring a enrollee verification electronic system, requiring quarterly reports to the Insurance Commissioner for unpaid claims, and amending the effective date to promote further discussion.

Your Committee would, however, like to amend this law to preclude a few insurers from developing unfair practices. Thus, your Committee requested the proponents and opponents to develop preliminary language for consideration by the next committees. Your Committee respectfully requests the Committees on Commerce, Consumer Protection and Housing and Judiciary to accept this amended measure as a work in progress and accept the further amendments that will be presented by the proponents and opponents.

As affirmed by the record of votes of the members of your Committee on Health and Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 171, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 171, S.D. 1, and be referred to the Committees on Commerce, Consumer Protection and Housing and Judiciary.