Health Insurance Reimbursement

Requires health insurers, mutual benefit societies, and health
maintenance organizations to reimburse providers and patients
within a specified time period; this requirement becoming
effective January 1, 2001. (SD1)

THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature finds that patients, health care
 2 facilities, and health care providers do not receive timely
 3 reimbursement from health insurance companies, mutual benefit
 4 societies, and health maintenance organizations, even when claims
 5 are submitted on the required standard forms.  The legislature
 6 further finds that these delays are unnecessary and costly,
 7 causing patients, health care providers, and health care
 8 facilities to spend considerable time and resources to secure
 9 their reimbursement.
10      The purpose of this Act is to establish minimum
11 reimbursement requirements for health care insurance and to
12 establish contested claims procedures. 
13      SECTION 2.  Chapter 431:13, Hawaii Revised Statutes, is
14 amended by adding a new section to be appropriately designated
15 and to read as follows:
16      "431:13-    Reimbursement for health insurance benefits.
17 (a)  This section applies to accident and sickness insurance
18 under part I of chapter 431:10A, mutual benefit societies under
19 chapter 432:1, and health maintenance organizations under chapter

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 1 432D, known collectively as an "entity" for purposes of this
 2 section.
 3      (b)  Unless specified otherwise in a contract, an entity
 4 shall reimburse a claim that is not contested or denied not more
 5 than thirty calendar days after receiving the claim filed in
 6 writing, or fifteen calendar days after receiving the claim filed
 7 electronically, as appropriate.
 8      (c)  If a claim is contested or denied or requires more time
 9 for review by an entity, the entity shall notify the health care
10 provider, unless specified otherwise in a contract, in writing
11 not more than fifteen calendar days after receiving a claim filed
12 in writing, or not more than seven calendar days after receiving
13 a claim filed electronically, as appropriate.  The notice shall
14 identify the contested portion of the claim and the specific
15 reason for contesting or denying the claim, and may request
16 additional information.
17      (d)  If information received pursuant to a request for
18 additional information is satisfactory to warrant paying the
19 claim, the claim shall be paid not more than thirty calendar days
20 from receiving the claim filed in writing, or not more than seven
21 calendar days after receiving the claim filed electronically, as
22 appropriate.
23      (e)  Payment of a claim under this section shall be

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                                     S.B. NO.           S.D. 1

 1 effective upon the date of the postmark of the mailing of the
 2 payment, or the date of the electronic transfer of the payment,
 3 as applicable.
 4      (f)  Notwithstanding section 478-2, interest shall be
 5 allowed at a rate of fifteen per cent a year for money owed by an
 6 entity on payment of a claim exceeding the applicable time
 7 limitations under this section, as follows:
 8      (1)  For an uncontested claim:
 9           (A)  Filed in writing, interest from the first calendar
10                day after the thirty day period in subsection (b);
11                or
12           (B)  Filed electronically, interest from the first
13                calendar day after the fifteen day period in
14                subsection (b); or
15      (2)  For a contested claim:
16           (A)  Filed in writing, and for which notice was
17                provided under subsection (c), interest from the
18                first calendar day thirty days after the date the
19                additional information is received; or
20           (B)  Filed in writing, and for which notice was not
21                provided within the time specified under
22                subsection (c), interest from the first calendar
23                day after the claim is received; or

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                                     S.B. NO.           S.D. 1

 1      (3)  For a contested claim:
 2           (A)  Filed electronically, and for which notice was
 3                provided under subsection (c), interest from the
 4                first calendar day fifteen days after the
 5                additional information is received; or
 6           (B)  Filed electronically, and for which notice was not
 7                provided within the time specified under
 8                subsection (c), interest from the first calendar
 9                date after the claim is received.
10      The commissioner may suspend the accrual of interest if the
11 commissioner determines that the entity's failure to pay a claim
12 within the applicable time limitations was the result of a major
13 disaster or of an unanticipated major computer system failure, or
14 was necessary to protect the solvency of the entity.
15      (g)  In determining the penalties under section 431:13-201
16 for a violation of this section, the commissioner shall consider:
17      (1)  The appropriateness of the penalty in relation to the
18           financial resources and good faith of the entity;
19      (2)  The gravity of the violation;
20      (3)  The history of the entity for previous similar
21           violations;
22      (4)  The economic benefit to be derived by the entity and
23           the economic impact upon the health care facility or

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                                     S.B. NO.           S.D. 1

 1           health care provider resulting from the violation; and
 2      (5)  Any other relevant factors bearing upon the violation.
 3      (h)  As used in this section:
 4      "Claim" means any claim, bill, or request for payment for
 5 all or any portion of health care services provided by a health
 6 care provider of services submitted by an individual or pursuant
 7 to a contract or agreement with an entity.
 8      "Contest", "contesting", or "contested" means the
 9 circumstances under which an entity was not provided with, or did
10 not have reasonable access to, sufficient information needed to
11 determine payment liability or basis for payment of the claim.
12      "Deny", "denying", or "denied" means the assertion by an
13 entity that it has no liability to pay a claim based upon
14 eligibility of the patient, coverage of a service, medical
15 necessity of a service, liability of another payer, or other
16 grounds.
17      "Health care facility" shall have the same meaning as in
18 section 327D-2.
19      "Health care provider" means a Hawaii health care facility,
20 physician, nurse, or any other provider of health care services
21 covered by an entity."
22      SECTION 3.  Section 478-8, Hawaii Revised Statutes, is
23 amended by amending subsection (b) to read as follows:

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                                     S.B. NO.           S.D. 1

 1      "(b)  The provisions of this chapter (except for this
 2 section and section 478-3) shall not apply to any:
 3      (1)  Indebtedness which is secured by a first mortgage lien
 4           on real property, and is agreed to or incurred after
 5           May 30, 1980; [or]
 6      (2)  Consumer credit agreement of sale made after May 30,
 7           1980, under which a vendor agrees to sell real property
 8           to a vendee but retains legal title to the real
 9           property and in which the rate of interest or the
10           manner in which such rate shall be determined is
11           clearly stated.  As used in this paragraph, agreement
12           of sale includes subagreement of sale or other
13           subsequent subagreement of sale made on or after
14           June 18, 1982.  Notwithstanding the first sentence of
15           this paragraph, with respect to any consumer credit
16           agreement of sale made on or after July 1, 1985, upon
17           extension at maturity or renegotiation thereof, the
18           maximum rate of interest charged thereafter shall not
19           be more than the greater of the rate of interest
20           payable under the agreement of sale immediately prior
21           to such maturity or renegotiation or four percentage
22           points above the highest weekly average yield on United
23           States Treasury securities adjusted to a constant

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                                     S.B. NO.           S.D. 1

 1           maturity of three years, as made available by the
 2           Federal Reserve Board within sixty days prior to the
 3           time of extension or renegotiation; [or]
 4      (3)  Indebtedness which is secured by a purchase-money
 5           junior mortgage lien on real property that is agreed to
 6           and incurred after June 18, 1982; provided that
 7           purchase-money junior mortgage lien means a mortgage
 8           that is subordinate in lien priority to an existing
 9           mortgage on the same real property which is given to
10           the seller as part of the buyer's consideration for the
11           purchase of real property and delivered at the same
12           time that the real property is transferred as a
13           simultaneous part of the transaction; [or]
14      (4)  [Any transaction] Transaction for the sale of goods,
15           services, or both, by a seller in the business of
16           selling such goods or services, if the transaction is
17           subject to chapter 476 or the rate of interest charged
18           by the seller in the transaction does not exceed
19           eighteen per cent a year; provided that this paragraph
20           shall not apply to any transaction regulated by chapter
21           412 or 431 or to any transaction for the sale of
22           financial services.  This paragraph shall not be deemed
23           to limit any seller's right to charge interest under

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                                     S.B. NO.           S.D. 1

 1           section 478-2[.]; or
 2      (5)  The payment of any claim under section 431:13-    ."
 3      SECTION 4.  Statutory material to be repealed is bracketed.
 4 New statutory material is underscored.
 5      SECTION 5.  This Act, upon its approval, shall take effect
 6 on January 1, 2001.