HB3157 HD1

SECTION 1. The legislature finds that the State's healthcare system is in financial crisis due to low reimbursements and increasing costs. The low reimbursement rates have forced hospitals and other providers to institute cost-cutting measures that may not be in the best interest of consumers. Providers negotiate contracts with insurers, mutual benefit societies, and health maintenance organizations. However, the providers are not in an equal bargaining position when negotiating the contracts. Providers are forced to either accept rates that are often substantially below the cost of providing the services or be classified as a "non-participating provider", which results in some payers making reimbursement directly to the patient rather than to the provider. The provider is then forced to collect the fees from the patient, which results in increased collection costs, delayed payments, and substantially lowered collection success with a potential for increased cost for the individual receiving the services.

The purpose of this Act is to further the public's interest in maintaining a financially sound healthcare system by requiring insurers, mutual benefit societies, and health maintenance organizations to pay healthcare providers directly regardless of the healthcare provider's participatory status with the insurer, mutual benefit society, or health maintenance organization.

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- Direct payment for healthcare services. (a) An insurer, after receiving a claim for payment of benefits, shall make the payment directly to the healthcare provider that provided the services, regardless of the healthcare provider's participatory status with the insurer's plan; provided that this subsection shall not require payment for services that are not covered under the plan.

(b) If the insurer makes payment to the insured, the insurer shall remain liable for payment to the healthcare provider. This subsection shall not prohibit the insurer from recovering any amount mistakenly paid to the insured.

(c) "Healthcare provider" as used in this section means a "provider of services", as defined in 42 United States Code Section 1395x(u), a provider of "medical and other health services", as defined in 42 United States Code Section 1395x(s), and any other person or organization who furnishes, bills, or is paid for healthcare in the normal course of business.

(d) The provisions of this section shall not apply to any entity or situation when their application to the entity or situation would be preempted under the Employee Retirement Income Security Act of 1974, 29 United States Code Sections 1001, et seq."

SECTION 3. Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to article 1 to be appropriately designated and to read as follows:

"§432:1- Direct payment for healthcare services. (a) A mutual benefit society, after receiving a claim for benefits under this chapter, shall make payment directly to the healthcare provider that provided the services, regardless of the healthcare provider's participatory status with the society's healthcare plan; provided that this subsection shall not require payment for services that are not covered under the plan.

(b) If the society makes payment to the member, the society shall remain liable for payment to the healthcare provider. This subsection shall not prohibit the society from recovering any amount mistakenly paid to the member.

(c) The term "healthcare provider" as used in this section means a provider of services, as defined in 42 United States Code Section 1395x(u), a provider of "medical and other health services", as defined in 42 United States Code Section 1395x(s), and any other person or organization who furnishes, bills, or is paid for healthcare in the normal course of business.

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

"§432D- Direct payment for healthcare services. (a) A health maintenance organization, after receiving a claim for benefits under this chapter, shall make payment directly to the healthcare provider that provided the services, regardless of the healthcare provider's participatory status with the health maintenance organization healthcare plan; provided that this subsection shall not require payment for services that are not covered under the plan.

(b) If the health maintenance organization makes payment to the enrollee, the health maintenance organization shall remain liable for payment to the healthcare provider. This subsection shall not prohibit the health maintenance organization from recovering any amount mistakenly paid to the enrollee.

(d) The provisions of this section shall not apply to any entity or situation when their application to the entity or situation would be preempted under The Employee Retirement Income Security Act of 1974, 29 United States Code Sections 1001, et seq."

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval and shall be repealed on May 1, 2013.

HOUSE OF REPRESENTATIVES	H.B. NO.	3157
TWENTY-FOURTH LEGISLATURE, 2008		H.D. 1
STATE OF HAWAII