THE SENATE	S.B. NO.	2425
THIRTY-THIRD LEGISLATURE, 2026		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

RELATING TO HEALTH INSURANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that substance use disorder remains a significant public health challenge in the State and that timely, uninterrupted access to treatment is essential to recovery and community well-being. The legislature further finds that current insurance payment practices, including restrictions on the assignment of benefits, create administrative and financial barriers for treatment providers and patients seeking care. Therefore, the legislature believes that establishing clear rules for the fair assignment of benefits will promote payment transparency, strengthen provider participation, and improve access to life-saving treatment services.

The purpose of this Act is to increase access to substance use disorder treatment in the State by requiring health insurance carriers to honor a patient's written assignment of benefits to treatment providers.

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- Fair assignment of benefits for substance use disorder services. (a) An insurer shall honor and accept a written assignment that is validly executed in compliance with this title of benefits executed by a policy holder or individual covered by a policy of accident and health or sickness insurance for the purpose of directing payment for covered substance use disorder treatment services to the treating provider. Upon receipt of a written assignment that is validly executed in compliance with this title, the insurer shall issue payment for covered services directly to the substance use disorder treatment provider. Payment made to the provider pursuant to this section shall discharge the insurer's obligation to the extent of the payment made. Payment under this subsection shall be issued within thirty days of receipt of a claim that meets the requirements of section 431:13-108.

(b) No individual or group policy of accident and health or sickness insurance that is issued or renewed on or after the effective date of this Act in the State shall contain any provision that prohibits, restricts, or renders void the assignment of benefits to a substance use disorder treatment provider. Any clause or provision contained in a policy subject to this subsection shall be unenforceable.

(c) An insurer shall provide an explanation of benefits to the assigned provider upon request, if the provider presents a valid assignment of benefits, power of attorney, or authorization executed by the policy holder or individual covered by the policy in compliance with the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191.

(d) This section shall apply to all fully insured health benefit plans governed by the laws of the State, except self‑funded employer health benefit plans regulated exclusively under the Employee Retirement Income Security Act of 1974, as amended, unless and to the extent permitted under federal law.

(e) A violation of this section shall constitute an unfair method of competition and unfair or deceptive act or practice in the business of insurance under section 431:13-103.

(f) The insurance commissioner may adopt rules pursuant to chapter 91 and take enforcement action necessary to implement this section.

(g) For the purposes of this section:

"Assignment of benefits" means a written direction by a policy holder or individual covered by a policy of accident and health or sickness insurance authorizing an insurer to pay insurance benefits directly to a substance use disorder treatment provider.

"Substance use disorder treatment provider" or "provider" means any facility licensed by the office of health care assurance to provide residential or detoxification services for substance use disorders."

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- Fair assignment of benefits for substance use disorder services. (a) A mutual benefit society shall honor and accept a written assignment that is validly executed in compliance with this title of benefits executed by an enrollee, subscriber, or individual covered by a plan contract for the purpose of directing payment for covered substance use disorder treatment services to the treating provider. Upon receipt of a written assignment that is validly executed in compliance with this title, the mutual benefit society shall issue payment for covered services directly to the substance use disorder treatment provider. Payment made to the provider pursuant to this section shall discharge the mutual benefit society's obligation to the extent of the payment made. Payment under this subsection shall be issued within thirty days of receipt of a claim that meets the requirements of section 431:13‑108.

(b) No individual or group hospital or medical service plan contract issued or renewed on or after the effective date of this Act in the State shall contain any provision that prohibits, restricts, or renders void the assignment of benefits to a substance use disorder treatment provider. Any clause or provision contained in a plan contract subject to this subsection shall be unenforceable.

(c) A mutual benefit society shall provide an explanation of benefits to the assigned provider upon request, if the provider presents a valid assignment of benefits, power of attorney, or authorization executed by the enrollee, subscriber, or individual covered by the plan contract in compliance with the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191.

(d) This section shall apply to all fully insured health benefit plans governed by the laws of the State, except self‑funded employer health benefit plans regulated exclusively under the Employee Retirement Income Security Act of 1974, as amended, unless and to the extent permitted under federal law.

(e) A violation of this section shall constitute an unfair method of competition and unfair or deceptive act or practice in the business of insurance under section 431:13-103.

(f) The insurance commissioner may adopt rules pursuant to chapter 91 and take enforcement action necessary to implement this section.

(g) For the purposes of this section:

"Assignment of benefits" means a written direction by an enrollee, subscriber, or individual covered by the plan contract authorizing a mutual benefit society to pay insurance benefits directly to a substance use disorder treatment provider.

"Substance use disorder treatment provider" or "provider" means any facility licensed by the office of health care assurance to provide residential or detoxification services for substance use disorders."

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

"§432D- Fair assignment of benefits for substance use disorder services. (a) A health maintenance organization shall honor and accept a written assignment that is validly executed in compliance with this title of benefits executed by an enrollee, subscriber, or individual covered by a policy, contract, plan, or agreement for the purpose of directing payment for covered substance use disorder treatment services to the treating provider. Upon receipt of a written assignment that is validly executed in compliance with this title, the health maintenance organization shall issue payment for covered services directly to the substance use disorder treatment provider. Payment made to the provider pursuant to this section shall discharge the health maintenance organization's obligation to the extent of the payment made. Payment under this subsection shall be issued within thirty days of receipt of a claim that meets the requirements of section 431:13‑108.

(b) No policy, contract, plan, or agreement issued or renewed on or after the effective date of this Act in the State shall contain any provision that prohibits, restricts, or renders void the assignment of benefits to a substance use disorder treatment provider. Any clause or provision contained in a policy, contract, plan, or agreement subject to this subsection shall be unenforceable.

(c) A health maintenance organization shall provide an explanation of benefits to the assigned provider upon request, if the provider presents a valid assignment of benefits, power of attorney, or authorization executed by the enrollee, subscriber, or individual covered by the policy, contract, plan, or agreement in compliance with the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191.

(d) This section shall apply to all fully insured health benefit plans governed by the laws of the State, except self‑funded employer health benefit plans regulated exclusively under the Employee Retirement Income Security Act of 1974, as amended, unless and to the extent permitted under federal law.

(e) A violation of this section shall constitute an unfair method of competition and unfair or deceptive act or practice in the business of insurance under section 431:13-103.

(f) The insurance commissioner may adopt rules pursuant to chapter 91 and take enforcement action necessary to implement this section.

(g) For the purposes of this section:

"Assignment of benefits" means a written direction by an enrollee, subscriber, or individual covered by a policy, contract, plan, or agreement authorizing a health maintenance organization to pay insurance benefits directly to a substance use disorder treatment provider.

"Substance use disorder treatment provider" or "provider" means any facility licensed by the office of health care assurance to provide residential or detoxification services for substance use disorders."

SECTION 5. This Act shall not be applied so as to impair any contract existing as of the effective date of this Act in a manner violative of either the Hawaii State Constitution or article 1, section 10 of the United States Constitution.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on January 30, 2050.

Report Title:

Substance Use Disorder Treatment Providers; Substance Use Disorder Services; Assignment of Benefits; Anti-Assignment Clause; Enforcement; Rules; Civil Action

Description:

Requires health insurers, mutual benefit societies, and health maintenance organizations to honor a patient's written assignment of benefits to a substance use disorder treatment provider. Prohibits health insurance policies, plans, contracts, and agreements from including anti-assignment clauses that restrict or invalidate a patient's right to assign benefits. Authorizes the Insurance Commissioner to adopt rules and take enforcement action to ensure compliance. Deems violations to be unfair methods of competition and unfair or deceptive acts or practices in the business of insurance. Requires insurers, mutual benefit societies, and health maintenance organizations to furnish an explanation of benefits to the assigned provider upon request. Effective 1/30/2050. (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.