Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Commerce, Consumer Protection, and Housing and Health, to which was referred S.B. No. 940 entitled:

beg leave to report as follows:

The purpose of this measure is to modify the review process for health coverage disputes arising under managed care plans.

The Coalition and three individuals testified in support of this measure. The Department of Commerce and Consumer Affairs, Kaiser Permanente, and Hawaii Medical Service Association testified in opposition to this measure.

Currently, complaints regarding health care coverage under managed care plans that are not successfully resolved under the plan's internal review process may be referred to the Insurance Commissioner (Commissioner) for referral to a three-member external review panel. This measure modifies this process by requiring that complaints arising under managed care plans subject to ERISA be submitted for review to an independent review organization.

Disputes arising under non-ERISA plans and involving amounts of $500 or more will continue to be referred to the external review panel for hearing. This measure also requires the Commissioner to retain a tax exempt organization to serve as the State Health Consumer Advocate to assist the Commissioner in carrying out the Commissioner's duties under chapter 432E, Hawaii Revised Statutes.

Your Committees have concerns that this measure establishes a dual system of dispute resolution for ERISA and non-ERISA managed care plans, and find that the issues raised herein require further review and discussion. Accordingly, your Committees have amended this measure by inserting an effective date of July 1, 2050.

As affirmed by the records of votes of the members of your Committees on Commerce, Consumer Protection, and Housing and Health that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 940 and recommend that it pass Second Reading and be referred to the Committee on Judiciary and Hawaiian Affairs.