Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2094, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to make permanent section 431:13-108, Hawaii Revised Statutes, Hawaii's prompt payment law, which is scheduled for repeal on July 1, 2002.

This measure also makes various amendments to the law which went into effect on July 1, 2000, to eliminate confusion and simplify its administration. The amendments include exempting an entity from the notice requirement if monthly reimbursement reports are provided to the provider; requiring entities to provide a system for providers to verify enrollee eligibility; limiting the payment of interest on delayed claims for accruals of at least $2; and defining "clean claim".

Testimony in support of this measure was submitted by Hawaii Medical Service Association (HMSA) and Hawaii Medical Association. The State Insurance Commissioner submitted testimony supporting the deletion of the sunset requirement, and opposing the proposed limit on interest payments. Royal State National Insurance Co., Ltd. submitted comments requesting an amendment.

Your Committee finds that the regulation of reimbursements for health care services provided in good faith must be maintained in order to assure that claims based upon accurate billing are expeditiously processed. Your Committee further finds that Hawaii's "Prompt Payment Law" is an appropriate mechanism for ensuring good business practices between providers of medical services and health insurers, mutual benefit societies, and health maintenance organizations.

Your Committee has amended this measure by making technical non-substantive changes for the purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2094, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2094, S.D. 2.