THE SENATE                           S.C.R. NO.            129
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.



 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, including the
11   community hospitals under the Hawaii Health Systems Corporation
12   negotiate their own contracts with mutual benefit societies;
13   and
14   
15        WHEREAS, reportedly, some mutual benefit societies have
16   not been willing to increase their reimbursement rates to the
17   Hawaii Health Systems Corporation hospitals in contract
18   negotiations so that the hospitals continue to face shortfalls
19   in income even as they incur expenditures for services rendered
20   far in excess of the amounts they are reimbursed by the mutual
21   benefit societies; and
22   
23        WHEREAS, although preferred providers are party to an
24   agreement in which they agree to accept the mutual benefit
25   societies' low reimbursement "eligible charges," in fact,
26   preferred providers have little choice but to agree because of
27   the mutual benefit societies' unwillingness to increase
28   reimbursement rates and because the option of becoming a
29   non-preferred provider entails serious disadvantages; and
30   
31        WHEREAS, for example, under a preferred provider contract,
32   mutual benefit society reimbursement payments are sent directly
33   to preferred provider hospitals, thus saving the hospitals the
34   time and cost of collecting payments directly from each patient
35   treated, providing a quick turnaround and regularity and
36   predictability in payments, whereas if a hospital does not

 
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                                  S.C.R. NO.            129
                                                        
                                                        

 
 1   contract with a mutual benefit society and is thus not a
 2   participating preferred provider, such payments go directly to
 3   patients; and
 4   
 5        WHEREAS, if the Hawaii Health Systems Corporation
 6   hospitals are not able to negotiate higher reimbursement rates
 7   from mutual benefit societies, their only alternative would be
 8   to not contract with mutual benefit societies and become
 9   non-participating providers; and
10   
11        WHEREAS, although non-participating providers may impose
12   more realistic charges above some mutual benefit societies'
13   reimbursement rates, the additional costs must be borne by
14   consumers of health care -- an unfair burden when some mutual
15   benefit societies' reimbursement rates are clearly and
16   unrealistically low; and
17   
18        WHEREAS, it is in the public interest that all mutual
19   benefit societies' reimbursement rates be examined to determine
20   their fairness, especially in light of the unwillingness of
21   some mutual benefit societies to negotiate more realistic
22   rates; now, therefore,
23   
24        BE IT RESOLVED by the Senate of the Twentieth Legislature
25   of the State of Hawaii, Regular Session of 1999, the House of
26   Representatives concurring, that the Insurance Commissioner is
27   requested to investigate in confidence and determine the
28   fairness of the eligible charge reimbursement rates of all
29   mutual benefit societies; and
30   
31        BE IT FURTHER RESOLVED that the Insurance Commissioner is
32   requested to investigate the various profit and nonprofit
33   entities used by mutual benefit societies to determine the
34   impact this has on the profit margin and/or the increase in
35   premiums of mutual benefit societies, if any; and
36   
37        BE IT FURTHER RESOLVED that the Insurance Commissioner is
38   requested to report findings and recommendations in confidence,
39   including any necessary proposed implementing legislation, to
40   the Legislature twenty days prior to the convening of the
41   Regular Session of 2000; and
42   

 
 
 
 
 
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                                  S.C.R. NO.            129
                                                        
                                                        

 
 1        BE IT FURTHER RESOLVED that certified copies of this
 2   Concurrent Resolution be transmitted to the Insurance
 3   Commissioner, the President of the Hawaii Medical Service
 4   Association, the Chief Executive Officer of the Hawaii Health
 5   Systems Corporation, the President of the Hawaii Management
 6   Alliance Association, the President of the Mutual Benefit
 7   Association of Hawaii, the President of Queen's Preferred Plan,
 8   the President of the University of Hawaii Health Alliance, and
 9   the President of the Voluntary Employee Benefit Association of
10   Hawaii.
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14                         OFFERED BY:  ____________________________