Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Commerce, Consumer Protection and Housing and Judiciary, to which was referred S.B. No. 171, S.D. 1, entitled:

beg leave to report as follows:

The purpose of this measure is to clarify the requirements for prompt reimbursement for health insurance claims.

Testimony in support of this measure with amendments was submitted by the Insurance Commissioner (Commissioner), Hawaii Medical Association, Hawaii Medical Service Association, Hawaii Chapter American Physical Therapy Association, Kaiser Permanente, and ADP Integrated Medical Solutions-Hawaii.

Act 99, Session Laws of Hawaii 1999, was intended to ensure prompt reimbursement for claims made under a health insurance policy by establishing minimum reimbursement requirements for insurers and contested claim procedures. However, your Committees find that there continues to be a problem with health care providers not receiving prompt payment, and that insurers are withholding payment pending receipt of further information without specifying the information required.

This measure addresses the problem of untimely reimbursement by defining a "clean claim", requiring health insurers to maintain an electronic system that allows for immediate verification of enrollee eligibility, and requiring insurers to file quarterly reports with the Commissioner on unpaid claims.

Your Committees further find that the requirement that health insurers make available an electronic system that provides for immediate verification of enrollee eligibility imposes an undue burden on insurers because not all insurers currently utilize electronic verification systems and because immediate verification during nonbusiness hours is not feasible. Therefore, your Committees have amended this measure by removing the requirements that a verification system be electronic in nature and provide immediate verification.

Additionally, your Committees have amended this measure by:

As affirmed by the records of votes of the members of your Committees on Commerce, Consumer Protection and Housing and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 171, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as S.B. No. 171, S.D. 2.