HB1476

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

HAWAII HEALTH INSURANCE purchasing pool

§ -1 Definitions. Whenever used in this chapter, unless the context otherwise requires:

"Commissioner" means the state insurance commissioner.

"Eligible employee" means a person employed in the employment of any one employer who is not eligible for coverage under chapter 393, the prepaid health care act, and includes sole proprietors and partners of a partnership.

"Employer" has the same meaning as defined in section 393-3(3).

"Employment" has the same meaning as defined in section 393-3(4); provided that the term includes service performed by an individual in the employ of the individual's spouse, son, or daughter, and service performed by an individual under the age of twenty-one in the employ of the individual's father or mother.

"Health care plan" means any agreement by which any health care plan carrier undertakes in consideration of a stipulated premium:

(1) Either to furnish health care, including hospitalization, surgery, medical or nursing care, drugs or other restorative appliances, subject to, if at all, only a nominal per service charge; or

(2) To defray or reimburse, in whole or in part, the expenses of health care.

"Health care plan carrier" or "carrier" means:

(1) Any medical group or organization which undertakes under a health care plan to provide health care;

(2) Any nonprofit organization which undertakes under a health care plan to defray or reimburse in whole or in part the expenses of health care; or

(3) Any insurer who undertakes under a health care plan to defray or reimburse in whole or in part the expenses of health care.

"Program" means the Hawaii health insurance purchasing pool.

§ -2 Hawaii health insurance purchasing pool; established. (a) The Hawaii health insurance purchasing pool is hereby established. The commissioner shall administer the program as provided by this chapter.

§ -3 Powers of the commissioner. The commissioner may:

(1) Enter into contracts with carriers to provide health care coverage to eligible employees and their dependents. Any contract entered into pursuant to this chapter shall be exempt from chapter 103D. The commissioner shall not be required to specify the amounts encumbered for each contract, but may allocate funds to each contract based on projected and actual subscriber enrollments;

(2) Enter into other contracts as are necessary or proper to carry out this article;

(3) Employ necessary staff;

(4) Sue or be sued, including taking any legal actions necessary or proper for recovering any penalties for, on behalf of, or against, the Hawaii health insurance purchasing pool or the commissioner;

(5) Define the health care coverage that the program will purchase from carriers;

(6) Appoint committees as necessary to provide technical assistance in the operation of the program;

(7) Assess participating employers a reasonable fee for necessary costs in connection with the program;

(8) Undertake activities necessary to administer the program, including the establishment of rules, conditions, and procedures for participation; marketing and publicizing the program; and assuring carrier, employer, and enrollee compliance with program requirements;

(9) Establish a financial relationship directly with producers or insurance brokers to provide services pursuant to the program;

(10) Approve the health care plans of carriers participating in the pool;

(11) Adopt rules pursuant to chapter 91 to administer the program; and

(12) Exercise all powers reasonably necessary to carry out the commissioner's responsibilities under this chapter.

§ -4 Contracts with carriers. On or after the effective date of this article, the commissioner shall enter into contracts with carriers for the purpose of providing health care coverage to eligible employees. Operating characteristics of participating carriers shall include:

(1) Strong financial condition, including the ability to assume the risk of providing and paying for covered services. A participating carrier may utilize reinsurance, provider risk sharing, and other appropriate mechanisms to share a portion of the risk;

(2) Adequate administrative management;

(3) A system for identifying in a simple and clear fashion both in its own records and in the medical records of subscribers and enrollees of the health care plan the fact that the services provided are provided under the program;

(4) A satisfactory grievance procedure; and

(5) Where carriers contract with or employ health care providers, adequate mechanisms to:

(A) Review the quality of care provided;

(B) Review the appropriateness of care provided; and

§ -5 Carrier selection. The commissioner shall contract with a broad range of carriers, if available, to ensure that enrollees have a choice from among a reasonable number and types of competing carriers. The commissioner shall develop and make available objective criteria for carrier selection and provide adequate notice of the application process to permit all carriers a reasonable and fair opportunity to participate. The criteria and application process shall allow participating carriers to comply with their state and federal licensing and regulatory obligations, except as otherwise provided in this chapter. Carrier selection shall be based on criteria developed by the commissioner. The administrator shall not eliminate any carrier from selection solely because of the carrier's size or limited service area.

§ -6 Marketing and servicing contracts allowed. Participating carriers may contract with producers or insurance brokers to provide marketing and servicing of health care coverage offered through the program. Any commissions shall be determined by the participating carrier and the producer or insurance broker.

§ -7 Conditions of participation; enforcement. The commissioner shall set and enforce conditions of participation in the program for employers and enrollees which shall conform with the requirements of this chapter.

§ -8 Premium collections. The commissioner shall establish a mechanism to collect premiums from employers, including remittance of the share of the premium paid by the enrollee.

§ -9 Reenrollment restrictions. The commissioner may prohibit employers or employees who drop coverage after enrolling in the pool from reenrolling in the program for up to twelve months.

§ -10 Rates offered. Premiums shall not exceed one hundred and ten percent of the median price of health insurance offered within the state calculated on an annual basis.

§ -11 Right to appeal. An employer or eligible employee may appeal decisions on eligibility for or enrollment in the program to the commissioner, and shall be accorded an opportunity for a fair hearing.

§ -12 Transfer of administrative and fiscal responsibility for the program. (a) No later than three years from the effective date of this chapter, the commissioner shall issue a request for proposals soliciting nonprofit entities to submit bids to assume administrative and fiscal responsibility for operation of the program. The commissioner shall assess a bidder's qualifications in the areas of administrative capacity, financial responsibility, local experience, and demonstrated ability. Within six months of issuing the request for proposals, the commissioner shall select a nonprofit entity from among the qualified bidders and award administrative and financial responsibility for the program to the selected nonprofit entity. If no qualified nonprofit entity submits a bid pursuant to the commissioner's request for proposals one year from the date that bids were due, the commissioner shall reissue a request for proposals if the commissioner has reason to believe that a qualified nonprofit entity will submit a bid. The commissioner shall provide for an orderly transfer of administrative and financial responsibility for the program to the successful nonprofit entity.

(b) At any time prior to the time set in subsection (a) a nonprofit entity may submit and the commissioner shall accept and review a proposal for the assumption of administrative and financial responsibility of the program. If the commissioner determines that a qualified entity exists, the commissioner may relinquish administrative and financial responsibility for the program to the nonprofit entity.

§ -13 Administrator conflicts of interest prohibited. (a) No decision maker for any nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to section -12 shall make, participate in making, or attempt to use the decisionmaker's official position to influence the making of any decision that the decisionmaker knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on the decisionmaker or a member of the decisionmaker's immediate family, or on any of the following:

(1) Any source of income received by or promised to the commissioner or to a decisionmaker for a nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to section -12 within twelve months prior to the time when the decision is made, other than gifts and other than loans by a commercial lending institution in the regular course of business on terms available to the public without regard to official status aggregating $250 or more in value; or

(2) Any business entity in which the commissioner or decisionmaker for a nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to section -12 is a director, officer, partner, trustee, employee, or holds any position of management.

(b) Commencing January 1, 2005, neither the commissioner nor a decisionmaker for any nonprofit entity that assumes administrative and fiscal responsibility for the program pursuant to section -12 may hold a position as an employee of, consultant to, or member of the board of directors of any carrier, insurance broker, or producer doing business in the state.

§ -16 Hawaii health insurance purchasing pool special fund. There is created a Hawaii health insurance purchasing pool special fund. The fund shall consist of moneys collected pursuant to this article, legislative appropriations for the commissioner's operating expenses, and any interest or earnings on moneys deposited into the fund. Moneys within the fund shall be utilized for the purposes of this article; provided that the commissioner's operating expenses shall not be paid with moneys other than those appropriated by the legislature for that purpose."

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2007-2008 and the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for the operating expenses of the Hawaii health insurance purchasing pool.

The sums appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 3. This Act shall take effect on July 1, 2007.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1476
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII