Prohibits inclusion of clause that allows an insurer, mutual benefit society, or HMO full discretionary authority to set type and scope of medical coverage to be provided in health insurance contracts with employers issued after 12/31/2005.

A BILL FOR AN ACT

SECTION 1. The legislature finds that certain health insurers in the State employ a variety of clauses in their health insurance contracts with employers that unfairly burden Hawaii employers with risk of liability. One such clause requires employers to pay for legal and medical expenses if a worker appeals a denial of medical coverage to the State's external review panel or a court and the insurer loses. Another clause allows full discretionary authority to insurers to set the type and scope of medical coverage provided to Hawaii employers. According to the office of the insurance commissioner, the "full discretionary authority" clause that gives insurers broad powers to define medical coverage is illegal in Maine and Minnesota. This full discretionary authority also gives the insurer the right to determine products to be offered to patients and who is eligible for coverage. Determining whether to cover a medical treatment that the insurer deems experimental is one example of the discretionary power to determine the scope of medical coverage for patients.

However, according to the office of the insurance commissioner, certain hospital and medical service associations and health maintenance organizations in Hawaii routinely invoke their "full discretionary authority" rights even in cases that do not involve experimental treatment when patients appeal a denial of coverage before the State's external review panel.

The purpose of this Act is to prohibit the use of "full discretionary authority" clauses in health insurance contracts in the State.

SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10A to be appropriately designated and to read as follows:

"§431:10A-    Full discretionary authority clauses; prohibited. No employer group health policy, contract, plan, or agreement issued or renewed in this State after December 31, 2005, by an insurer under this article shall contain any provision customarily known as "full discretionary authority" that grants broad powers to the insurer to determine the type and scope of medical coverage, including determining eligibility for coverage for experimental treatment, to be provided in contracts with an insured."

SECTION 3. Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§432-    Full discretionary authority clauses; prohibited. No individual and group hospital or medical service plan, policy, contract, or agreement issued or renewed in this State after December 31, 2005, by a mutual benefit society under this chapter shall contain any provision customarily known as "full discretionary authority" that grants broad powers to the mutual benefit society to determine the type and scope of medical coverage, including determining eligibility for coverage for experimental treatment, to be provided in contracts with a covered member."

SECTION 4. Chapter 432D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§432D-    Full discretionary authority clauses; prohibited. No policy, contract, plan, or agreement issued or renewed in the State after December 31, 2005, by a health maintenance organization under this chapter shall contain any provision customarily known as "full discretionary authority" that grants broad powers to the health maintenance organization to determine the type and scope of medical coverage, including determining eligibility for coverage for experimental treatment, to be provided in contracts with a covered subscriber."

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.