129
THE SENATE                           S.C.R. NO.            S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                    SENATE  CONCURRENT
                        RESOLUTION
  REQUESTING THE INSURANCE COMMISSIONER TO INVESTIGATE AND
    DETERMINE THE FAIRNESS OF THE ELIGIBLE CHARGE
    REIMBURSEMENT RATES OF HAWAII'S MUTUAL BENEFIT SOCIETIES
    AND HEALTH MAINTENANCE ORGANIZATIONS.



 1        WHEREAS, it has been claimed that the reimbursement
 2   practices of some of Hawaii's mutual benefit societies have
 3   caused many problems for Hawaii's hospitals; and
 4   
 5        WHEREAS, the low reimbursement rates have forced hospitals
 6   to institute cost-cutting measures that may not be in the best
 7   interest of consumers, including shortening hospital stays, to
 8   make up for lost income; and
 9   
10        WHEREAS, all hospitals in the State negotiate their own
11   contracts with mutual benefit societies; and
12   
13        WHEREAS, reportedly, some mutual benefit societies have
14   not been willing to increase their reimbursement rates to
15   hospitals in contract negotiations so that the hospitals
16   continue to face shortfalls in income even as they incur
17   expenditures for services rendered far in excess of the amounts
18   they are reimbursed by the mutual benefit societies; and
19   
20        WHEREAS, although preferred providers are party to an
21   agreement in which they agree to accept the mutual benefit
22   societies' low reimbursement "eligible charges," in fact,
23   preferred providers have little choice but to agree because of
24   the mutual benefit societies' unwillingness to increase
25   reimbursement rates and because the option of becoming a
26   non-preferred provider entails serious disadvantages; and
27   
28        WHEREAS, for example, under a preferred provider contract,
29   mutual benefit society reimbursement payments are sent directly
30   to preferred provider hospitals, thus saving the hospitals the
31   time and cost of collecting payments directly from each patient
32   treated, providing a quick turnaround and regularity and
33   predictability in payments, whereas if a hospital does not
34   contract with a mutual benefit society and is thus not a
35   participating preferred provider, such payments go directly to

 
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                                  S.C.R. NO.            S.D. 1
                                                        
                                                        

 
 1   patients; and
 2   
 3        WHEREAS, if hospitals are not able to negotiate higher
 4   reimbursement rates from mutual benefit societies, their only
 5   alternative would be to not contract with mutual benefit
 6   societies and become non-participating providers; and
 7   
 8        WHEREAS, although non-participating providers may impose
 9   more realistic charges above some mutual benefit societies'
10   reimbursement rates, the additional costs must be borne by
11   consumers of health care -- an unfair burden when some mutual
12   benefit societies' reimbursement rates are clearly and
13   unrealistically low; and
14   
15        WHEREAS, not only mutual benefit societies, but also
16   health maintenance organizations make reimbursements to
17   hospitals; and 
18   
19        WHEREAS, it is in the public interest that all mutual
20   benefit societies' and health maintenance organizations'
21   reimbursement rates be examined to determine their fairness,
22   especially in light of the unwillingness of some mutual benefit
23   societies to negotiate more realistic rates; now, therefore,
24   
25        BE IT RESOLVED by the Senate of the Twentieth Legislature
26   of the State of Hawaii, Regular Session of 1999, the House of
27   Representatives concurring, that the Insurance Commissioner is
28   requested to investigate in confidence and determine the
29   fairness of the eligible charge reimbursement rates of all
30   mutual benefit societies and health maintenance organizations;
31   and
32   
33        BE IT FURTHER RESOLVED that the Insurance Commissioner is
34   requested to investigate the various profit and nonprofit
35   entities used by mutual benefit societies to determine the
36   impact this has on the profit margin and/or the increase in
37   premiums of mutual benefit societies, if any; and
38   
39        BE IT FURTHER RESOLVED that the study include a review of
40   the following:
41   
42        (1)  The reimbursement rates of mutual benefit societies

 
 
 
 
 
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                                  S.C.R. NO.            S.D. 1
                                                        
                                                        

 
 1             as compared to for-profit insurance companies;
 2   
 3        (2)  A comparison of coverages offered by mutual benefit
 4             societies to coverages offered by for-profit
 5             insurance companies;
 6   
 7        (3)  A comparison between administrative fees charged by
 8             mutual benefit societies and administrative fees and
 9             commissions assessed against policy costs by
10             for-profit insurance companies;
11   
12        (4)  Whether the elimination of special participating
13             provider fee caps will increase the cost of premiums,
14             and if so, who will pay for the increase; and 
15   
16        (5)  Whether any mandate that increases costs will result
17             in an unfunded mandate against employers, and whether
18             this mandated change in coverage or payment schedules
19             would violate the provisions of the Employee
20             Retirement Income Security Act;
21   
22   and
23   
24        BE IT FURTHER RESOLVED that the Insurance Commissioner is
25   requested to report findings and recommendations in confidence,
26   including any necessary proposed implementing legislation, to
27   the Legislature twenty days prior to the convening of the
28   Regular Session of 2000; and
29   
30        BE IT FURTHER RESOLVED that certified copies of this
31   Concurrent Resolution be transmitted to the Insurance
32   Commissioner, the President of the Hawaii Medical Service
33   Association, the Chief Executive Officer of the Hawaii Health
34   Systems Corporation, the President of the Hawaii Management
35   Alliance Association, the President of the Mutual Benefit
36   Association of Hawaii, the President of Queen's Preferred Plan,
37   the President of the University of Hawaii Health Alliance, the
38   President of the Voluntary Employee Benefit Association of
39   Hawaii, the Chief Executive Officer of Kaiser Permanente, the
40   Chief Executive Officer of Kapiolani HealthHawaii, and the
41   Chief Executive Officer of Island Care.