Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Health and Human Services, to which was referred S.B. No. 2096 entitled:

begs leave to report as follows:

The purpose of this measure is to allow health insurers to directly reimburse health care providers who do not participate in the health insurer's plan, when the nonparticipating provider has treated an insured.

Your Committee received testimony in support of this measure, with proposed amendments, from the Hawaii Medical Association. Testimony in opposition was submitted by the Hawaii Medical Service Association, the Hawaii Association of Health Plans, and the Royal State National Insurance Co., Ltd.

Your Committee finds that the paperwork involved with settling a payment claim for medical services rendered is staggering and beyond the realm of understanding for most patients.

Therefore, your Committee supports this measure, which will streamline the process somewhat by allowing health insurers to directly reimburse nonparticipating providers for medical services rendered to a person covered by that health insurer.

However, your Committee is concerned that physicians may start to balance bills and charge their patients excessive charges. Therefore, your Committee amended this measure to require the nonparticipating provider to disclose to the patient, prior to treatment, that the provider does not participate in the patient's insurance plan, that the provider's nonparticipation deprives the patient of some of the benefits and protections of the health plan, and that the out-of-pocket expenses of the patient may be higher as a result.

Your Committee believes that these amendments strike the appropriate balance between making the payment process more efficient and protecting the rights of the insured.

Your Committee heard concerns that direct payment to providers may result in higher charges. Accordingly, your Committee urges the Committee on Commerce and Consumer Affairs to consider a cap on provider charges, perhaps 150 per cent of Medicare eligible charges, to mitigate cost increases to consumers.

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. 2096, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2096, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection and Housing.