SB3079

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 bill 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 to article 10A a new section 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 sub-section 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) The term healthcare provider as used in this section means a provider of services, as defined in 42 U.S.C. § 1395x(u), a provider of medical and other health services, as defined in 42 U.S.C. § 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 U.S.C. § 100, et seq."

SECTION 3. Chapter 432, Hawaii Revised Statutes, is amended by adding to article 1 a new section 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 sub-section 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.

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 health care 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 sub-section 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 U.S.C. § 100, et seq."

SECTION 5. New statutory material is underscored.

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

INTRODUCED BY:

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BY REQUEST

THE SENATE	S.B. NO.	3079
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII