Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 853

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Health and Human Services, to which was
referred S.B. No. 853 entitled: 


begs leave to report as follows:

     The purpose of this measure is to establish a safety net
health plan program for the distribution of QUEST funds.

     Your Committee received testimony in support of this measure
from the Hawaii State Primary Care Association, Waikiki Health
Center, Aloha Care, Bay Clinic Hilo, Hana Community Health
Center, Kalihi-Palama Health Center, Waianae Coast Comprehensive
Health Center, Hawaii Nurses' Association, and Kokua Kalihi
Valley.  Testimony in partial support was received from the
Hawaii Medical Association.  Testimony in opposition was received
from the Department of Human Services (DHS).

     This measure facilitates the transformation of the QUEST
payment system of compensating providers from fee-for-service to
managed care.  QUEST providers are primarily community health
centers, which bid annually for QUEST contracts with the DHS.
Because of the capitated reimbursement structure of managed care,
and particularly bid contracts, community health centers have
become financially at-risk of closing or severely curtailing
services.  This measure is an attempt to equitably compensate
QUEST managed care providers while assuring they do not profit
unreasonably from QUEST.

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                                   STAND. COM. REP. NO. 445
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     Your Committee acknowledges that the DHS is in the process
of procuring services for their QUEST program and that this
process will not be completed until the end of February, 1999;
however, your Committee also recognizes that the issue of safety
net provider plans should be discussed further.  Your Committee
would like to pass this measure in an unamended form to provide
the opportunity for the DHS and interested parties to discuss
this issue further after the DHS's procurement process is

     As affirmed by the record of votes of the members of your
Committee on Health and Human Services that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 853 and recommends that it pass Second Reading and be
referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Health and Human

                                   SUZANNE CHUN OAKLAND, Chair

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