Report Title:

Universal Health Care Insurance

Description:

Establishes a system of universal health care insurance in the State of Hawaii (HB2008 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

2008

TWENTY-SECOND LEGISLATURE, 2004

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to health.

 

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

SECTION 1. The legislature finds that the cost of health care in Hawaii and the nation is escalating exponentially, and that medicaid reimbursements are frequently less than the actual cost of the medical care provided. Additionally, health insurance premium costs, long-term care costs, and prescription drug costs are rising rapidly.

During the recent nurses’ strike in Honolulu, some of the State’s larger hospitals stated that consumers and employers would feel the impact of increased nursing labor costs through increased payment for hospital services, higher insurance premiums, and cost cutting measures that may result in consumers receiving fewer medical services.

In 2001, the Hawaii Medical Service Association (HMSA) raised premium rates by approximately five per cent, while Kaiser Permanente (Kaiser) raised its rates almost nine per cent.

In April 2003, HMSA filed documents with the state insurance division asking for an average rate increase of eleven and one-half per cent for its community-rated groups.

In September 2003, Kaiser followed suit by requesting a fourteen and one-half per cent rate increase to finance new multi-million dollar construction projects and a new medical record system.

These increases in premium costs translate into increased costs for employers. Under the State Prepaid Health Care Act (PHCA), private-sector employers are required to pay the bulk of health insurance premiums for their employees who work twenty hours or more per week. Because PHCA does not require employers to provide health insurance coverage for employees working fewer than twenty hours a week, increased health insurance costs may lead to employers hiring individuals to work only part-time, or fewer than twenty hours per week, to avoid these increased costs.

The legislature also finds that increasing technological advances in the provision of health care services is another factor of increasing health care costs. Although this new technology has greatly improved the quality of life for patients, it has also resulted in increased costs. It is estimated that new technology is responsible for almost fifty per cent of the total increase in health care costs over the last thirty years.

While Hawaii was once known for having a low uninsured population, estimated to be between two and five per cent in 1994, health agencies are now concerned about the growing number of uninsured individuals in the State. The Healthcare Association of Hawaii estimates that the current rate of uninsured individuals is ten per cent.

While PHCA has served its purpose over the years, it is now time to consider other options. Increased health care costs, insurance premiums, employer costs, prescription drug costs, and long-term care costs, together with the growing number of uninsured individuals and inadequate medicaid reimbursements, have created a need for new, innovative legislation that will provide affordable health care for all of Hawaii’s citizens.

Accordingly, the purpose of this Act is to initiate a comprehensive reformation of Hawaii's health care system with the ultimate goal of facilitating universal coverage for affordable, high-quality medical services for Hawaii's citizens by the year 2010.

PART I

SECTION 2. This part creates a single payer health care system, where a single governmental entity covers all the health care for a specific population either directly or through contracts with insurers.

SECTION 3. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

HAWAII HEALTH ALLIANCE

PART I. GENERAL PROVISIONS

§ -1 Definitions. As used in this chapter:

"Alliance" means the Hawaii health alliance.

"Board" means the board of directors of the Hawaii health alliance.

"Eligible business" means a business that employs at least two but not more than fifty eligible employees, the majority of whom are employed in the state.

"Eligible employee" means an employee of an eligible business who works at least twenty hours per week for that eligible business.

"Eligible individual" means:

(1) A self-employed individual who:

(A) Works and resides in the state; and

(B) Is organized as a sole proprietorship or in any other legally recognized manner in which a self-employed individual may organize, a substantial part of whose income derives from a trade or business through which the individual has attempted to earn taxable income;

(2) An unemployed individual who resides in this state; and

(3) Any individual who meets all of the eligibility conditions set forth by rules established by the board; provided that the rules shall be at least equal to eligibility conditions for the receipt of medical assistance established through the administrative rules of the department of human services.

"Hawaii health alliance insurance" means the health

insurance product established by the Hawaii health alliance that is offered by a private health insurance carrier or carriers.

"Health care provider" means a health care facility, physician, dentist licensed under chapter 448, chiropractor licensed under chapter 442, optometrist licensed under chapter 459, podiatrist licensed under chapter 463E, psychologist licensed under chapter 465, occupational therapist subject to chapter 457G, and physical therapist licensed under chapter 461J.

"Health insurance carrier" means:

(1) An insurance company operating in accordance with article 10A of chapter 431;

(2) A mutual benefit society operating in accordance with article 1 of chapter 432; or

(3) A health maintenance organization operating in accordance with chapter 432D.

"Participating employer" means an eligible business that contracts with the Hawaii health alliance pursuant to this chapter and that has employees enrolled in Hawaii health alliance insurance.

"Plan enrollee" means an eligible individual or eligible employee who has enrolled in Hawaii health alliance insurance through the Hawaii health alliance.

§ -2 Hawaii health alliance; establishment. There is established within the department of budget and finance for administrative purposes the Hawaii health alliance to arrange for the provision of comprehensive, affordable health care coverage to medicaid recipients, eligible businesses, eligible employees, and eligible individuals on a voluntary basis. The alliance shall serve as the designated state medicaid agency. The alliance shall be a body corporate and a public instrumentality of the State.

§ -3 Hawaii health alliance board of directors; establishment, powers and duties. (a) The alliance shall be headed by a board of directors to manage and control the general affairs, and have exclusive jurisdiction over the internal organization and management, of the alliance.

(b) The board shall consist of seven voting members appointed by the governor in accordance with section 26-34; provided that two members shall be selected from a list of nominees submitted by the speaker of the house of representatives and two members shall be selected from a list of nominees submitted by the president of the senate. All members shall be appointed for terms of six years, except that the initial terms for three members shall be for two years and the initial terms for two members shall be for four years, as designated by the governor at the time of appointment.

Voting members of the board shall have knowledge of and experience in one or more of the following areas:

(1) Health care purchasing;

(2) Health insurance;

(3) State medicaid programs;

(4) Health policy and law;

(5) State management and budget; or

(6) Health care financing;

provided that no member shall be currently affiliated with a health or health-related organization.

(c) The board shall also include the following ex officio, nonvoting members, or their designee:

(1) The director of budget and finance;

(2) The director of health;

(3) The director of human services; and

(4) The insurance commissioner.

The chair shall be elected annually by all members of the board but shall not be a representative of the government or of a governmental agency. The members shall serve without compensation but shall be reimbursed for necessary expenses in the discharge of their duties including attending meetings of the alliance

Each voting member shall hold office until the member's successor is appointed and qualified.

(d) The board shall conduct at least four meetings of the alliance each year to be held at times and places agreed upon by the members of the board.

(e) The concurrence of a majority of voting members shall be necessary to make any action of the alliance valid.

(f) The board may:

(1) Appoint a treasurer and any other officer as it deems necessary;

(2) Authorize any officer, elected or appointed by the board, to approve and sign any voucher or other document, which the board may approve and sign;

(3) Delegate to an administrator or the administrator's designee the authority to render the final decision in contested case proceedings subject to chapter 91, as it deems appropriate;

(4) Purchase or otherwise acquire land, buildings, appliances, and other property for the purposes of the alliance;

(5) Charge fees and assessments on any insurer, mutual benefit society, or health maintenance organization operating in the State in accordance with article 10A of chapter 431, article 1 of chapter 432, or chapter 432D;

(6) Enter into concession agreements without regard to chapter 102; and

(7) Expend sums of money as may from time to time be placed at the disposal of the alliance from whatever source.

The board, in accordance with law, shall manage the inventory, equipment, surplus property, and expenditures of the alliance and, subject to chapter 91, may adopt rules, further controlling and regulating the same.

§ -4 Powers and duties of the Hawaii health alliance. In addition to any others prescribed or granted by this chapter, the Hawaii health alliance shall have the following powers and duties:

(1) Appoint and retain attorneys to take any legal actions necessary or proper to recover or collect savings offset payments due the alliance or that are necessary for the proper administration of the alliance;

(2) Adopt, amend, and repeal bylaws, not inconsistent with this chapter or with the laws of this State, for the administration and regulation of the activities of the alliance;

(3) Have and exercise all powers necessary or convenient to effect the purposes for which the alliance is organized to further the activities in which the alliance may lawfully be engaged, including the establishment of Hawaii health alliance insurance;

(4) Engage in legislative liaison activities, including gathering information regarding legislation, analyzing the effect of legislation, communicating with legislators and attending and giving testimony at legislative sessions, public hearings, or committee hearings;

(5) Take any legal actions necessary to:

(A) Avoid the payment of improper claims against the alliance or the coverage provided by or through the alliance;

(B) Recover any amounts erroneously or improperly paid by the alliance;

(C) Recover any amounts paid by the alliance as a result of mistake of fact or law; and

(D) Recover other amounts due the alliance;

(6) Enter into contracts with qualified third parties, both private and public, for any service necessary to carry this chapter;

(7) Conduct studies and analyses related to the provision of health care, health care costs, and health care quality;

(8) Apply for and receive funds, grants, or contracts from public and private sources;

(9) Contract with organizations with expertise in health care data;

(10) Establish administrative and account procedures as recommended by the state comptroller for the operation of the alliance in accordance with this chapter;

(11) Collect savings offset payments;

(12) Determine the comprehensive services and benefits to be included in Hawaii health alliance insurance and develop the specifications for Hawaii health insurance;

(13) Develop and implement a program to publicize the existence of the alliance and Hawaii health alliance insurance and maintain public awareness of the alliance and Hawaii health alliance insurance;

(14) Arrange the provision of Hawaii health alliance insurance benefit coverage to eligible individuals and eligible employees through contracts with one or more qualified bidders;

(15) Develop a high-risk pool for plan enrollees in Hawaii health alliance insurance; and

(16) Adopt rules as the alliance deems necessary to effectuate the purposes of this chapter;

§ -5 Hawaii health alliance administrator. (a) By a majority vote of all voting members, the board of directors shall appoint an administrator who shall be exempt from chapter 76 and serve under and at the pleasure of the board. The salary of the administrator shall be set by the board; provided that the salary shall be set at no less than the salary of a deputy director established under section 26-53, and not more than the salary of a director of a department as established under section 26-52(3).

The attorney general or an appointed representative may serve as legal advisor to the board or the board may select its own legal counsel.

(b) In addition to any others prescribed or granted by this chapter, the administrator shall have the following powers and duties:

(1) Serve as the liaison between the board of directors and the alliance and serve as secretary and treasurer to the board;

(2) Manage alliance programs and services;

(3) Employ or contract on behalf of the alliance for professional and nonprofessional personnel or services in accordance with chapters 76, 89, and 123D;

(4) Approve all accounts for salaries, per diems, allowable expenses of the alliance or of any employee or consultant, and expenses incidental to the operation of the alliance; and

(5) Perform other duties prescribed by the board to carry out the purposes of this chapter.

§ -6 Annual audits and reports. (a) The alliance shall be audited by the auditor on an annual basis. The board may, at its discretion, arrange for an independent audit to be conducted. A copy of the audit shall be provided to the governor and the legislature at least twenty days prior to the convening of each regular session.

(b) The board shall report on the impact of the alliance on the small group and individual health insurance markets in the State and any reduction in the number of uninsured individuals in the State. The board shall also report on:

(1) Membership in the alliance;

(2) The administrative expenses of the alliance;

(3) The extent of coverage;

(4) The effect on premiums;

(5) The number of covered lives;

(6) The number of Hawaii health alliance insurance policies issued or renewed; and

(7) Hawaii health alliance insurance premiums earned and claims incurred by health insurance carriers offering Hawaii health alliance insurance.

The board shall submit the report to the governor and the legislature at least twenty days prior to the convening of each regular session.

PART II. PARTICIPATING INSURANCE CARRIERS

§ -7 Coverage; established. (a) The alliance shall arrange for the provision of health benefits coverage through Hawaii health alliance insurance. Hawaii health alliance insurance shall comply with all relevant requirements of chapters 393, 431, 431M, 432, and 432D and may be offered by health insurance carriers that are approved by the board.

(b) The alliance shall request proposals from insurance carriers for the provision of health care services to persons eligible for Hawaii health alliance insurance. The alliance shall evaluate the proposals from insurance carriers to ensure that the proposals meet the conditions and requirements described in the alliance's request for proposal.

(c) Contracts for participation in the alliance shall be awarded to qualified health insurance carriers upon finalization of financial agreements with the alliance.

(d) The alliance shall develop a request for proposals prior to the lapse of existing contracts with participating insurance carriers to ensure that individuals eligible for coverage through Hawaii health alliance insurance shall receive continued health care coverage.

§ -8 Contracting authority. (a) The alliance may contract with health insurance carriers to sell health insurance in this state or with other private or public third-party administrators to provide Hawaii health alliance insurance; provided that the alliance:

(1) Shall issue requests for proposals from qualified health insurance carriers;

(2) May include quality improvement, disease prevention, disease management, and cost containment provisions in the contracts with participating health insurance carriers or may arrange for the provision of such services through contracts with other entities;

(3) Shall require participating health insurance carriers to offer a benefit plan identical to Hawaii health alliance insurance, for which no alliance subsidies are available, in the general small group market;

(4) Shall make payments to participating health insurance carriers under a Hawaii health alliance insurance contract to provide Hawaii health alliance insurance benefits to plan enrollees not enrolled in medicaid;

(5) May set allowable rates for administration and underwriting gains for Hawaii health alliance insurance;

(6) May administer continuation benefits for eligible individuals from employers with twenty or more employees who have purchased health insurance coverage through the alliance for the duration of their eligibility periods for continuation benefits pursuant to the federal Consolidated Omnibus Budget Reconciliation Act, Public Law 99-272, Title X, Private Health Insurance Coverage, sections 10001 to 10003; and

(7) May administer or contract to administer the United States Internal Revenue Code of 1986, section 125 plans for employers and employees participating in the alliance, including medical expense reimbursement accounts and dependent care reimbursement accounts.

(b) The alliance shall contract with eligible businesses seeking assistance from the alliance in arranging for health benefits coverage by Hawaii health alliance insurance for their employees and dependents pursuant to this section. The alliance may establish contract and other reporting forms and procedures necessary for the efficient administration of contracts. The alliance shall collect payments from participating employers and plan enrollees to cover the cost of:

(1) Hawaii health alliance insurance for enrolled employees and dependents in contribution amounts determined by the board;

(2) The alliance's quality assurance, disease prevention, disease management, and cost-containment programs;

(3) The alliance's administrative services; and

(4) Other health promotion costs.

(c) The alliance shall permit eligible individuals to contract for purchase of Hawaii health alliance insurance for themselves and their dependents in accordance with this chapter.

§ -9 Standard benefits package. (a) Each health insurance carrier contracted to provide Hawaii health alliance insurance shall be required to provide certain benefits as defined in the contract between the carrier and the alliance. Participating carriers shall provide all required basic medical services, as defined in the contract with the alliance.

(b) Participating behavioral health managed care plans that contract with the alliance to treat individuals who are diagnosed by an independent clinical evaluator as suffering from severe disabling mental illness, shall provide the services defined in the contract with the alliance.

(c) Benefits minimally required of the participating carriers shall be known as the standard benefits package. A participating carrier may, at the carrier's option, provide benefits that exceed the requirements of the standard benefits package.

(d) All contracts that provide, at the minimum, the standard benefits package, shall be deemed in compliance with chapter 393.

§ -10 Carrier participation requirements. To qualify as a carrier of Hawaii health alliance insurance, a health insurance carrier shall:

(1) Provide comprehensive services and benefits as determined by the board, including a standard benefit package that meets the requirements of sections 431:10A- , 432:1- , and 432D- , chapter 393, and 42 Code of Federal Regulations, Part 438, as amended, and any supplemental benefits the board wishes to make available;

(2) Ensure that providers contracting with a carrier contracted to provide coverage to plan enrollees:

(A) Do not charge plan enrollees or third parties for covered health care services in excess of the amount allowed by the carrier the provider has contracted with, except for applicable copayments, or deductibles of coinsurance;

(B) Do not refuse to provide services to a plan enrollee on the basis of health status, medical condition, previous insurance status, race, color, creed, age, national origin, citizenship status, gender, sexual orientation, disability, or marital status; provided that this paragraph shall not be construed to require a provider to furnish medical services that are not within the scope of that provider's license; and

(C) Are reimbursed at the negotiated reimbursement rates between the carrier and its provider network.

Furthermore, only those health insurance carriers that qualify as health plans in medicaid shall seek to qualify to provide Hawaii health alliance insurance.

§ -11 Basic medical services to be provided by participating carriers. (a) Participating medical plans shall provide all medical services that are required by medicaid.

(b) There shall be a one-month waiting period for all nonurgent and nonemergency medically necessary services as determined by the alliance or the participating carrier. This provision shall not apply to an enrollee below the age of twenty-one.

(c) Participating insurance carriers shall provide preventative, diagnostic, and medically necessary services, which include the following:

(1) Inpatient hospital services for medical, surgical, rehabilitative, maternity, and newborn care, including room and board, nursing care, medical supplies, equipment, drugs, diagnostic services, physical and occupational therapy, speech and language therapy, and other medically necessary services;

(2) Outpatient hospital services, including emergency room services, ambulatory surgery, urgent care services, medical supplies and equipment, drugs, diagnostic services, therapeutic services such as chemotherapy and radiation therapy, and other medically necessary services;

(3) Preventative services, including initial and interval histories, physical examinations and developmental assessments, immunizations, family planning services, diagnostic and screening laboratory and radiology services, including screening for tuberculosis;

(4) Prescribed drugs, blood, and blood products;

(5) Radiology, laboratory, and other diagnostic mammograms, screening and diagnostic laboratory tests, therapeutic radiology, and other medically necessary diagnostic services;

(6) Physician services, including services of psychiatrists;

(7) Maternity services such as prenatal care and laboratory screening tests, treatment of missed, threatened, incomplete, and elective abortions, delivery of infants, and postpartum care;

(8) Other practitioner services, including podiatrists, optometrists, psychologists, nurse midwives, pediatric nurse practitioners, family nurse practitioners, and other practitioner services needed to provide medical care;

(9) Therapeutic services, including physical therapy, occupational therapy, speech therapy, and audiology services, and other medically necessary therapeutic services;

(10) Durable medical equipment, prosthetic devices, orthotics, and medical supplies, including but not limited to oxygen tanks, oxygen concentrators, eyeglasses, ventilators, wheelchairs, crutches, canes, braces, hearing aids, pacemakers, and other medically necessary appliances, supplies, and artificial aids;

(11) Home health services, including skilled nursing, home health aides, therapeutic services, medical supplies and equipment, and other medically necessary home health services;

(12) Hospice services;

(13) Organ and tissue transplant services, including those required for corneal, kidney, allogenic and bone marrow transplants;

(14) Transportation services;

(15) Sterilizations;

(16) Hysterectomies;

(17) Services federally mandated by the early and periodic diagnosis, screening, and treatment program;

(18) Behavioral health services, including preventative, diagnostic, therapeutic, and rehabilitative services for mental health problems, drug abuse, and substance abuse; and

(19) Out-of-state services.

§ -12 Limitations on behavioral health benefits. (a) Behavioral health benefits provided through contract with participating carriers shall be limited as follows:

(1) Twenty-four hours of outpatient visits and thirty days of hospitalization per benefit year; provided that outpatient hours or inpatient days not used in a benefit year shall not be added to the benefits of the following year; and

(2) The diagnosis and treatment of substance abuse shall be included in the inpatient and outpatient benefits for psychiatric treatment; provided that each day of inpatient hospital services may be exchanged for two days of nonhospital residential services, two days of partial hospitalization services, two days of day treatment, or two days of intensive outpatient services; and provided further that detoxification, whether provided in a hospital or in a nonhospital facility, shall be considered as part of the inpatient benefit limit.

(b) A participating carrier may, at the carrier's option, exceed the limits on behavioral health services.

(c) For an enrollee below the age of twenty-one, the participating carrier may exceed the limits for medically necessary services to be in compliance with federal or state requirements.

§ -13 Dental services. (a) All required preventative dental services and all medically necessary dental services, as determined by the board, shall be provided to an individual under age twenty-one. Services shall include the following:

(1) Diagnostic and preventative services provided once every six months;

(2) Nonemergency care, including endodontic therapy, periodontic therapy, restoration, and prosthodontic services;

(3) Emergency treatment which includes services to relieve dental pain, eliminate infection, and treatment of acute injuries to the teeth and supporting structures of the oro-facial complex; and

(4) Federally mandated early and periodic screening, diagnosis, and treatment program services shall be provided routinely beginning at twelve months of age; however, these services shall be allowable as early as six months of age at the discretion of the participating dentist.

(b) All dental services required under the federally mandated early and periodic screening, diagnosis, and treatment program for an individual under the age of twenty-one shall be provided by a participating dentist.

(c) An individual age twenty-one or older shall only have coverage for emergency dental services that do not include services aimed at restoring and replacing teeth and shall include services for the following:

(1) Relief of dental pain;

(2) Elimination of infection; and

(3) Treatment of acute injuries to the teeth or supporting structures of the oro-facial complex.

(d) The dental services provided pursuant to subsections (a) through (c) shall be provided on a fee-for-service basis.

§ -14 Enforcement of contracts with participating insurance carriers. (a) The alliance shall monitor a participating insurance carrier's performance during the contract period.

(b) The alliance may impose civil or administrative monetary penalties not to exceed the maximum amount established by federal and state statutes and regulations if the participating insurance carrier:

(1) Fails to provide medically necessary items and services that are required under law or under contract;

(2) Imposes on beneficiaries excess premiums and charges;

(3) Unlawfully discriminates among enrollees;

(4) Misrepresents or falsifies information;

(5) Violates marketing guidelines established by the alliance; and

(6) Violates other contract provisions and requirements.

(c) The alliance may appoint temporary management to oversee compliance efforts if a participating insurance carrier continues to violate the contract conditions between the participating insurance carrier and the alliance, violates federal or state law, or if there is a substantial risk to the health of enrollees.

(d) The alliance shall notify the insurance commission whenever a sanction under this section is contemplated and provide the specific reasons for the contemplated action.

PART III. ENROLLMENT

§ -15 Nonfinancial eligibility. (a) Applicants and recipients shall meet basic eligibility requirements, which include but are not limited to U.S. citizenship or legal resident alien status, state residency, residence not in a public institution, and social security number.

(b) All individuals who meet the requirements of subsection (a) and who are not ineligible to participate pursuant to the categorical requirements of section    -      , or are not inmates of a public institution or residents or patients of an institution for mental disease or tuberculosis, shall be eligible to participate in Hawaii health alliance insurance, including individuals who are recipients of financial assistance under the general assistance program, and recipients of Title VI-E foster care maintenance payments who are eligible for medical assistance.

§ -16 Residency and institutional status. (a) For purposes of this chapter, residents of the State are individuals who:

(1) Live voluntarily in Hawaii with the intent to remain permanently or indefinitely;

(2) Reside in Hawaii and for whom an adoption assistance agreement is in effect under Title IV-E of the Social Security Act, without regard to the state, which entered into the agreement with the individual;

(3) Reside in Hawaii and receive Title IV-E foster care maintenance payments, without regard to the state which makes the payments; or

(4) Receive state supplemental payments under the supplemental security income program.

(b) An individual retains residence in a given state until the individual abandons residence, such as:

(1) Voluntarily indicating intent not to return at the point of or after leaving the state;

(2) Requesting to vote in another state or jurisdiction; or

(3) Declaring and paying taxes as a resident of another state.

(c) A resident who is eligible for medical assistance and who is temporarily absent from the state with the intention of returning to Hawaii when the purpose of the absence has been accomplished, shall not interrupt a resident's state residency. Within ninety days after the date of departure, the alliance shall reevaluate the individual's intent to return to the State.

(d) The state of residency for institutionalized individuals who:

(1) Become incapable of indicating intent before age twenty-one shall be either:

(A) That of the individual's parents or guardian, if one has been appointed; or

(B) That of the parent applying for Hawaii health alliance insurance on the individual's behalf if the parents reside in separate states and there is no appointed guardian;

(2) Become incapable of indicating intent at or after age twenty-one is the state in which the individual was residing when the individual became incapable of indicating intent; and

(3) Are over twenty-one, in all other cases, is the state where the individual is living with intention to remain permanently or indefinitely.

(e) For purposes of this section, an individual shall be considered incapable of indicating intent when:

(1) The individual's IQ is forty-nine or less, or has a mental age of seven or less, based on tests acceptable to the developmental disabilities division of the department of health;

(2) The individual is judged legally incompetent; or

(3) Medical documentation, or other documentation acceptable to the alliance, supports a finding that the individual is incapable of indicating intent.

(f) Medical assistance shall be provided to residents temporarily absent from the state who meet all the conditions of eligibility for medical assistance, and require medical services outside the state under circumstances where services were emergent, or when it would have been impractical to return to Hawaii for the necessary medical services.

§ -17 Eligibility requirements for residents of public institutions. (a) The following individuals shall not be eligible for Hawaii health alliance insurance:

(1) An inmate in a public institution; and

(2) A resident or patient in an institution for mental disease or tuberculosis.

(b) An individual may be eligible for Hawaii health alliance insurance if the individual has been paroled from a public institution or is on conditional release or convalescent leave from an institution for mental disease or tuberculosis.

(c) An inmate of a public institution may apply for Hawaii health alliance insurance but participation shall not begin until the inmate has left the institution.

(d) An individual shall not be considered an inmate of a public institution when the individual is in a public educational or vocational training institution for purposes of securing education or vocational training.

§ -18 Categorical requirements. Persons who are not eligible to participate in Hawaii health alliance insurance include the following groups of individuals:

(1) Persons who are age sixty-five or older;

(2) Persons who are blind or disabled according to the criteria employed by the Social Security Administration;

(3) Persons who are age eighteen but under age sixty-five, and are employed and receive employer-sponsored health care coverage through their employer; provided that this paragraph shall apply to affected employed persons and not to their dependent family members; and provided further that this paragraph shall not apply to individuals and families covered under the provisions of section 1931 of the Social Security Act, general assistance recipients of financial assistance, and recipients of transitional medical assistance; and

(4) Persons who have had employer-sponsored health care coverage over the last twelve months.

§ -19 Subsidies. (a) The alliance shall establish sliding-scale subsidies for the purchase of Hawaii health alliance insurance paid by every individual whose income is under three hundred per cent of the federal poverty level.

(b) Assets shall be evaluated in the determination of financial eligibility for subsidies in the following manner:

(1) Assets shall be evaluated for an individual or family, with the exception of a pregnant woman and a child under the age of nineteen;

(2) An individual or family subject to the asset determination, whose total countable assets exceed the personal reserve standard, shall be ineligible for subsidies; and

(3) The following personal reserve standard shall apply:

(A) For an individual or a couple applying for or receiving a subsidy, the standard shall be equal to the standard employed by the supplemental security income program; and

(B) For each additional family member, $250 shall be added to the supplemental security income personal reserve standard for a couple; provided that the resultant amount shall be the standard for that family.

(c) An individual or family whose monthly countable family income does not exceed the following income limits shall be financially eligible for subsidies; provided that:

(1) The income limit for a pregnant woman is one hundred eighty-five per cent of the federal poverty level for a family size that includes the number of unborn children expected;

(2) The income limit for an infant under one year of age is one hundred eighty-five per cent of the federal poverty level for a family of comparable size;

(3) The income limit for a child age one but under age six is one hundred thirty-three per cent of the federal poverty level for a family of comparable size; and

(4) The income limit for all other individuals is one hundred per cent of the federal poverty level for a family of comparable size.

(d) A woman whose eligibility is established under the provisions of subsection (c)(1) shall retain her eligibility for subsidy throughout her pregnancy and for a sixty-day period following childbirth until the end of the month in which the sixty-day period ends. The woman's eligibility for subsidy shall be redetermined for the first month following the month in which the sixty-day period ends.

(e) For a newborn who is added to a Hawaii health alliance insurance recipient household, eligibility for subsidy shall continue for a period of one year following the birth of the newborn; provided the following conditions are met:

(1) The newborn continues to be a member of the mother's household; and

(2) The mother remains eligible for subsidies or would have remained eligible if she were still pregnant.

The newborn's eligibility for subsidies shall be determined for the first month following the month in which a child attains one year of age.

(f) Eligibility shall be redetermined for the first month following the month in which a child will attain the maximum age, for a child whose eligibility for subsidies is established under subsection (c)(2) and (3);

(g) An uninsured individual under age nineteen, whose monthly countable income exceeds the appropriate income limit under the provisions of subsection (c), but does not exceed two hundred per cent of the federal poverty level for a family of applicable size shall be financially eligible for subsidies.

(h) For an applicant or recipient, eligibility for subsidies shall be determined when any of the following conditions are met:

(1) The applicant or recipient has monthly countable income that exceeds the appropriate income limit under subsections (c) or (g); or

(2) The applicant meets any of the categorical requirements for ineligibility pursuant to

section - .

(i) The countable family income shall be determined in the following manner:

(1) For a pregnant woman and a child under nineteen years old who is born after September 30, 1983:

(A) Subtract a standard deduction of $90 from the monthly gross earned income of each employed individual; and

(B) Add the monthly net earned income for each employed individual as well as any monthly unearned income to determine the countable family income;

and

(2) For all other family members, add the monthly gross earned income of each employed person and any monthly unearned income.

(j) When determining the financial eligibility of an applicant for a specific calendar month, the applicant's total countable family income for that month shall be used, regardless of the date of application.

(k) A prospective budgeting method employing the alliance's best estimate of family size, income, and any other relevant factor shall be used in determining continued eligibility for subsidies.

(l) When determining the premium-share for applicants or recipients of Hawaii health alliance insurance, the total countable family income for a month shall be rounded down to the next lower whole dollar and compared to the federal poverty level.

§ -20 Choice of participating insurance carriers. (a) An eligible individual shall be allowed to choose from among the participating insurance carriers that service the geographical area in which the individual resides. In the absence of a choice of an insurance carrier in a rural service area, an eligible individual who resides in that particular service area shall be enrolled with the participating insurance carrier.

(b) An eligible individual shall be allowed, under the procedures established by the participating insurance carrier, to select a primary care provider from among those available within the plan. If timely selection by an enrollee from among the available primary care providers is not made, the participating insurance carrier shall assign the individual's care to a primary care provider of the carrier's choice.

§ -21 Initial enrollment. (a) After being found eligible for enrollment, the applicant or recipient shall be allowed ten days to select from among the participating insurance carriers available in the area in which the applicant or recipient resides.

(b) If an individual does not select a medical plan within ten days of being determined eligible, enrollment in a participating insurance carrier shall be assigned by the alliance.

(c) An enrollee shall only be allowed to change enrollment from one participating insurance carrier to another during the annual open enrollment period; provided that this subsection shall not apply if a change is required pursuant to a decision from an administrative hearing, a legal decision, the termination of an insurance carrier's contract, mutual agreement by the insurance carriers involved, the enrollee, and the alliance, or other special circumstances.

(d) An individual who is disenrolled from Hawaii health alliance insurance shall be allowed to select a plan of their choice if:

(1) Disenrollment extends for more than sixty calendar days in a benefit year;

(2) Disenrollment occurred in a period involving the annual open enrollment period; or

(3) Disenrollment includes the first day of a new benefit year.

§ -22 Open enrollment period. (a) An eligible individual shall be allowed to change the individual's enrollment from one participating insurance carrier to another within the service area in which the individual or family resides during the annual open enrollment period. The open enrollment period shall generally occur in May of each calendar year. A recipient who is enrolled with a nonreturning insurance carrier shall be allowed to select from the available participating insurance carriers.

(b) If the recipient is required to select a participating insurance carrier, but does not select a participating insurance carrier during the open enrollment period, enrollment in a participating insurance carrier shall be assigned by the alliance.

(c) Changes in enrollment resulting from an open enrollment period shall be implemented effective July 1 of that calendar year and shall generally extend to June 30 of the following calendar year.

§ -23 Financial responsibilities of enrollees. (a) An enrollee may be assessed responsibility for payment of the monthly unadjusted contracted rate, which is paid by the department for the enrollee's coverage. For purposes of this section, "premium-share" means the unadjusted contracted rate, including that of catastrophic coverage, for which an enrollee may be responsible.

(b) An enrollee who is assessed a premium-share shall pay the amount to the alliance by the tenth day of the benefit month. The alliance shall initiate disenrollment procedures for an enrollee whose premium-share payments are two months in arrears.

(c) The following individuals shall be exempt from the requirements to satisfy premium-share debts:

(1) Recipients of financial assistance under the general assistance program;

(2) Individuals whose countable family income does not exceed the financial assistance payment standard;

(3) Pregnant women whose countable family income does not exceed one hundred eighty-five per cent of the federal poverty level for a family size which includes the number of unborn children expected;

(4) Children under the age of nineteen, whose countable family income does not exceed two hundred per cent of the federal poverty level;

(5) Individuals whose coverage in an employer-sponsored plan is terminated due to loss of employment that occurred within forty-five calendar days of the date of application for Hawaii health alliance insurance;

(6) Individuals whose health coverage in a group health plan is extended as a result of loss of employment and such coverage ends within forty-five calendar days of the date of application for Hawaii health alliance insurance;

(7) Children under twenty-one years of age who are eligible for foster care maintenance payments or adoption subsidy payments; and

(8) Individuals and families covered under the provisions of section 1931 of the Social Security Act.

(d) An adult enrollee who is self-employed or is the spouse of a self-employed adult in the family, with the exception of an enrollee who is pregnant, a recipient of financial assistance under the general assistance program, or an enrollee who is eligible for coverage under the provisions of section 1931 of the Social Security Act, shall be responsible for fifty per cent of the premium-share if the countable family income is equal to or less than one hundred per cent of the federal poverty level for a family of appropriate size.

§ -24 Authority to disenroll participants. The alliance shall have sole authority to disenroll an individual from Hawaii health alliance insurance. The alliance shall consider disenrollment of an individual in compliance with administrative appeal decisions or court orders and in response to mutual agreements among enrollees, the participating insurance carrier, and the alliance.

(b) An individual or family may be disenrolled for reasons including:

(1) Failure to pay the individual's or family's total designated premium-share for Hawaii health alliance insurance;

(2) A mutual agreement among an individual or family, the participating insurance carriers involved, and the alliance;

(3) A voluntary withdrawal from participation in Hawaii health alliance insurance by an individual or family; or

(4) Failure of an individual or family to meet Hawaii health alliance insurance eligibility requirements.

PART IV. THE HAWAII HEALTH ALLIANCE INSURANCE SPECIAL FUND

§ -25 The Hawaii health alliance insurance special fund. (a) There is established within the state treasury a special fund to be known as the Hawaii health alliance insurance special fund. The special fund shall be administered by the Hawaii health alliance for purposes of this chapter.

(b) Except as otherwise provided by law, all medicaid reimbursements received by the State shall be deposited into the special fund. In addition, the alliance shall deposit into the special fund legislative appropriations, all savings offset payments, civil fines and assessments, and all other funds collected by the alliance in accordance with this chapter.

(c) Moneys from the special fund shall be used for capitated payments, subsidy payments, and all other purposes in accordance with this chapter.

§ -26 Capitated payments. Each participating plan shall be paid on a capitated basis, as negotiated with the alliance, for individuals enrolled in the plan. The alliance shall provide the capitated payment, as stipulated in the contract between the alliance and each participating insurance carrier, in return for the insurance carrier's provision of all negotiated services for the carrier's enrollees.

§ -27 Savings offset payments. (a) The alliance shall determine annually no later than April, the aggregate measurable cost savings, including any reduction or avoidance of bad debt and charity care costs to health care providers in this state as the result of the operation of the alliance.

(b) The board shall establish a savings offset amount to be paid by health insurance carriers, mutual benefit societies, health maintenance organizations, and third-party administrators, not including accidental injury, specified disease, hospital indemnity, dental, vision, disability, income, long-term care, medicare supplement, or other limited benefit health insurance, annually at a rate that may not exceed savings resulting from decreased rates of growth in the state's health care spending and in bad debt and charity costs. Payment of the savings offset amount shall begin twelve months after the alliance begins providing health insurance coverage. The savings offset payment amount, as determined by the board, shall be the determining factor for inclusion of savings offset payments in premiums through rate setting review by the insurance division. Savings offset payments shall be made quarterly and shall be due not less than thirty days after written notice to the health insurance carriers, mutual benefit societies, health maintenance organizations, and third-party administrators and shall accrue interest at twelve per cent per annum on or after the due date.

§ -28 Maximum savings offset payments. Each health insurance carrier, mutual benefit society, health maintenance organization, and third-party administrator shall pay a savings offset in an amount not to exceed four per cent of annual health insurance premiums on policies issued pursuant to the laws of this state that insure residents of this state. The savings offset payment shall not exceed savings resulting from decreasing rates of growth in the State's health care spending and bad debt and charity care costs. The savings offset payments shall apply to premiums paid on or after July 1, 2006. Savings offset payments shall reflect aggregate measurable cost savings, including any reduction of avoidance of bad debt and charity care costs to health care providers in this state, as a result of the operation of the alliance and any increased enrollment due to the expansion of state-sponsored medical assistance after June 30, 2005, as determined by the board consistent with this chapter. A health insurance carrier, mutual benefit society, health maintenance organization, or third-party administrator shall not be required to pay a savings offset payment on policies or contracts insuring federal employees.

§ -29 Determination of savings offset payments. The board shall make reasonable efforts to ensure that premium revenue, or claims plus any administrative expenses and fees with respect to third-party administrators, is counted only once with respect to any savings offset payment. For that purpose, the board shall:

(1) Require each health insurance carrier to include in its premium revenue gross of reinsurance ceded;

(2) Allow a health insurance carrier to exclude from its gross premium revenue reinsurance premiums that have been counted by the primary insurer for the purpose of determining its savings offset payment under this section; and

(3) Allow each mutual benefit society to exclude from its gross premium revenue the amount of claims that have been counted by a third-party administrator for the purpose of determining its savings offset payment under this section.

The board may verify each health insurance carrier, mutual benefit society, health maintenance organization, and third-party administrator's savings offset payment based on annual statements and other reports determined to be necessary by the board.

§ -30 Failure to pay savings offset payments. The insurance commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this state of any health insurance carrier, mutual benefit society, health maintenance organization, or third-party administrator that fails to pay a savings offset payment. In addition, the commissioner may assess civil penalties against any health insurer, mutual benefit society, health maintenance organization, or third-party administrator that fails to pay a savings offset payment, or may take any other enforcement action authorized under law.

§ -31 Savings offset payments through reductions in health care spending, bad debt, and charity care. On an annual basis no later than April of each year, the board shall prospectively determine the savings offset to be applied during each twelve-month period. Annual offset payments shall be reconciled to determine whether unused payments may be returned to health insurance carriers, mutual benefit societies, health maintenance organizations, or third-party administrators according to a formula developed by the board. Savings offset payments shall be used solely for the following purposes:

(1) To fund the subsidies authorized by section - ; and

(2) To support the Hawaii quality forum established under section - .

Savings offset payments shall not exceed savings from reductions in growth of the State's health care spending, bad debt, and charity care. Every health insurance carrier and health provider shall demonstrate that best efforts have been made to ensure that a carrier has recovered savings offset payments made pursuant to this chapter through negotiated reimbursement rates that reflect health care providers reductions or stabilization in the cost of bad debt and charity care as a result of the operation of the alliance and any increase in medical assistance. A health insurance carrier shall use best efforts to ensure health insurance premiums reflect any such recovery of savings offset payments as those savings offset payments are reflected through incurred claims experience. During any negotiation with a health insurance carrier relating to a health care provider's reimbursement agreement with that carrier, a health care provider shall provide data relating to any reduction or avoidance of bad debt and charity care costs to health care providers in this state as a result of the operation of the alliance and any increase enrollment due to the expansion of medical assistance.

§ -32 Reports. (a) On a quarterly basis beginning with the first quarter after the alliance begins offering coverage, the board shall collect and report on the following:

(1) The total enrollment in the alliance, including the number of:

(A) Enrollees previously underinsured or uninsured; (B) Enrollees previously insured;

(C) Individual enrollees; and

(D) Enrollees enrolled through small employers;

(2) The total number of enrollees covered in health plans through large employers and self-insured employers;

(3) The number of employers, both small employers and large employers, who have ceased offering health insurance or contributing to the cost of health insurance for employees or who have begun offering coverage on a self-insured basis;

(4) The number of employers, both small employers and large employers, who have begun to offer health insurance or contribute to the cost of health insurance premiums for their employees;

(5) The number of new participating employers in the alliance;

(6) The number of employers ceasing to offer coverage through the alliance;

(7) The duration of employers participating in the alliance; and

(8) A comparison of actual enrollees in Hawaii health alliance insurance to the projected enrollees.

(b) The board shall establish the total health care spending in the state for the base year of 2003 and shall annually, in collaboration with the insurance commissioner:

(1) Appropriate, actuarially supported trend factors that reflect savings consistent with this chapter and compare rates of spending growth to the base year of 2003; and

(2) Collect the total cost to the State's health care providers of bad debt and charity care beginning with the base year of 2003. This information may be compiled through mechanisms, including but not limited to standard reporting or statistically accurate surveys of providers and practitioners.

The board shall use existing data on file with state agencies or other organizations to minimize duplication. The comparisons to the base year shall be reported beginning March 1, 2005, and annually thereafter.

(c) Health insurance carriers and health care providers shall report annually, beginning March 1, 2005, and thereafter, information regarding the experience of the prior twelve-month period on efforts undertaken by the carrier and provider to recover savings offset payments, as reflected in reimbursement rates, through a reduction or stabilization in bad debt and charity care costs as a result of the operation of the alliance and any increased enrollment due to an expansion of medical assistance. The board shall determine the appropriate format for the report and use existing data on file with state agencies or other organizations to minimize duplication. The report shall be submitted to the board. Using information submitted by carriers and providers, the board shall submit a summary of that information to the governor and the legislature at least twenty days prior to the convening of each regular session. Quarterly and annual reports shall also be submitted to the insurance commissioner, the governor, and the legislature.

§ -33 Claims experience. The claims experience used to determine any filed premiums or rating formula shall reasonably reflect, in accordance with accepted actuarial standards, known changes and offsets in payments by the carrier to health care providers in this State, including any reduction or avoidance of bad debt and charity care costs to health care providers in this state as a result of the operation of the alliance and any increased enrollment due to an expansion in medical assistance.

PART V. HIGH-RISK POOL

§ -34 Hawaii health alliance high-risk pool. The alliance shall establish a high-risk pool for plan enrollees in accordance with this chapter. A plan enrollee shall be included in the high-risk pool if either:

(1) The total cost of health care services for the enrollee exceeds $100,000 in any twelve-month period; or

(2) The enrollee has been diagnosed with one or more of the following conditions:

(A) Acquired immune deficiency syndrome (HIV/AIDS);

(B) Angina pectoris;

(C) Cirrhosis of the liver;

(D) Coronary occlusion;

(E) Cystic fibrosis;

(F) Friedreich's ataxia;

(G) Hemophilia;

(H) Hodgkin's disease;

(I) Huntington's chorea;

(J) Juvenile diabetes;

(K) Leukemia;

(L) Metastatic cancer;

(M) Motor or sensory aphasia;

(N) Myotonia;

(O) Heart disease requiring open-heart surgery;

(P) Parkinson's disease;

(Q) Polycystic kidney disease;

(R) Psychotic disorders;

(S) Quadriplegia;

(T) Stroke;

(U) Syringomyelia; or

(V) Wilson's disease.

§ -35 Disease management. The alliance shall develop appropriate disease management protocols, develop procedures for implementing those protocols, and determine the manner in which disease management shall be provided to plan enrollees in the high-risk pool. The alliance may include disease management in its contract with participating carriers for Hawaii health alliance insurance, contract separately with another entity for disease management services, or provide disease management services directly through the alliance."

PART II

SECTION 4. This part integrates the single-payor system with the Hawaii Prepaid Health Care Act. More specifically, this part authorizes insurance carriers, mutual benefit societies, and health maintenance organizations to issue policies that are medically-equivalent to the standard benefits authorized under the Hawaii QUEST program for a contracting employer to be in compliance with the prepaid health care act.

SECTION 5. Chapter 431, part I, Hawaii Revised Statutes, is amended by adding a new section to article 10A to be appropriately designated and to read as follows:

"§431:10A- Hawaii health alliance policies and contracts. (a) All health insurance policies and contracts issued by the Hawaii health alliance shall provide standard hospital, surgical, medical, and other health care benefits at a premium commensurate with the benefits included, taking proper account of the limitations, coinsurance features, and deductibles specified in the policy or contract.

(b) Without limiting the development of medically more desirable combinations and the inclusion of new types of benefits, a policy or contract issued by the Hawaii health alliance shall include at least the following benefit types:

(1) Hospital benefits:

(A) In-patient care for a period of at least one hundred twenty days of confinement in each calendar year covering:

  (i) Room accommodations;

 (ii) Regular and special diets;

(iii) General nursing services;

 (iv) Use of operating room, surgical supplies, anesthesia services, and supplies;

(v) Drugs, dressings, oxygen, antibiotics, and blood transfusion services;

and

(B) Out-patient care:

(i) Covering use of out-patient hospital; and

 (ii) Facilities for surgical procedures or medical care of an urgent, emergent, and medically necessary nature;

(2) Surgical benefits:

(A) Surgical services performed by a licensed physician, as determined by the Hawaii health alliance and in accordance with section 393-7;

(B) After-care visits for a reasonable period; and

(C) Anesthesiologist services;

(3) Medical benefits:

(A) Necessary home, office, and hospital visits by a licensed physician;

(B) Intensive medical care while hospitalized; and

(C) Medical or surgical consultations while confined;

(4) Diagnostic laboratory services, x-ray films, and radio-therapeutic services necessary for diagnosis or treatment of injuries or diseases; and

(5) Maternity benefits, at least if the insured has been covered for nine consecutive months prior to the delivery.

(c) No policy or contract issued by the Hawaii health alliance shall be required to:

(1) Provide coverages beyond those that are required pursuant to this section, sections 393-7, and 393-12, and those not determined to be urgent, emergent, and medically necessary by the Hawaii health alliance; or

(2) Make reimbursements for care furnished by government agencies and are available at no cost to the patient, or for which no charge would have been made if there were no coverage.

(d) Each insurer that contracts with the Hawaii health alliance to provide coverage for insureds shall file an annual report supplement on or before March 1 of each year, or within any reasonable extension of time that the insurance commissioner for good cause may grant on or before March 1. The annual report supplements shall provide the public with general, understandable, and comparable financial information relative to the operations and results of authorized insurers. Such information shall include but not be limited to medical claims expense, administrative expense, and underwriting gain for each line segment of the market in this State in which the insurer participates. The annual report supplements shall contain sufficient detail for the public to understand the components of costs incurred by authorized health insurers as well as the annual cost trends of these carriers. The insurance commissioner shall develop standardized definitions of each reported measure."

SECTION 6. Chapter 431M, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§431M- Hawaii health alliance policies and coverages. (a) All health insurance policies and contracts issued by the Hawaii health alliance shall provide sound basic mental health and substance abuse benefits at a premium commensurate with the benefits included, taking proper account of the limitations, coinsurance features, and deductibles specified in the policy or contract.

(b) Without limiting the development of medically more desirable combinations and the inclusion of new types of benefits, a policy or contract issued by the Hawaii health alliance shall include at least the following benefit types:

(1) Alcoholism and drug addiction are illnesses and shall receive benefits as such. In-patient and out-patient benefits for the diagnosis and treatment of substance abuse, including but not lmited to alcoholism and drug addiction, shall be specifically stated and shall not be less than the benefits for any other illness, except as provided in this subsection. Medical treatment of substance abuse shall not be limited or reduced by restricting coverage to the mental health or psychiatric benefits of a policy or contract. Any psychiatric services received as a result of the treatment of substance abuse may be limited to the psychiatric benefits of the contract;

(2) Out-patient benefits provided by a physician, psychiatrist, or psychologist without restriction as to place of services, except as otherwise provided in section 393-7; and

(3) Detoxification and acute care benefits in a hospital or any other public or private treatment facility, or portion thereof, providing services especially for the detoxification of intoxicated persons or drug addicts, which is appropriately licensed, certified, or approved by the department of health in accordance with the standards prescribed by the Joint Commission on Accreditation of Hospitals. In-patient benefits for detoxification and acute care shall be limited in the case of alcohol abuse to three admissions per calendar year, not to exceed seven days per admission, and shall be limited in the case of other substance abuse to three admissions per calendar year, not to exceed twenty-one days per admission.

(c) No policy or contract issued by the Hawaii health alliance shall be required to:

(1) Provide coverages beyond those that are required pursuant to this section, sections 393-7, and 393-12, and those not determined to be urgent, emergent, and medically necessary by the Hawaii health alliance; or

(2) Make reimbursements for care furnished by government agencies and are available at no cost to the patient, or for which no charge would have been made if there were no coverage."

SECTION 7. Chapter 432, part VI, Hawaii Revised Statutes, is amended by adding a new section to article 1 to be appropriately designated and to read as follows:

"§432:1- Hawaii health alliance policies and contracts. (a) All health insurance policies and contracts issued by a mutual benefit society pursuant to its participation with the Hawaii health alliance in accordance with chapter     shall provide sound basic hospital, surgical, medical, and other health care benefits at a premium commensurate with the benefits included, taking proper account of the limitations, coinsurance features, and deductibles specified in the policy or contract.

(b) Without limiting the development of medically more desirable combinations and the inclusion of new types of benefits, a policy or contract issued by a mutual benefit society pursuant to its participation with the Hawaii health alliance in accordance with chapter     shall include at least the following benefit types:

(1) Hospital benefits:

(A) In-patient care for a period of at least one hundred twenty days of confinement in each calendar year covering:

  (i) Room accommodations;

 (ii) Regular and special diets;

(iii) General nursing services;

 (iv) Use of operating room, surgical supplies, anesthesia services, and supplies; and

  (v) Drugs, dressings, oxygen, antibiotics, and blood transfusion services;

and

(B) Out-patient care:

 (i) Covering use of out-patient hospital; and

(ii) Facilities for surgical procedures or medical care of an urgent, emergent, and medically necessary nature;

(2) Surgical benefits:

(A) Surgical services performed by a licensed physician, as determined by the Hawaii health alliance and in accordance with section 393-7;

(B) After-care visits for a reasonable period; and

(C) Anesthesiologist services;

(3) Medical benefits:

(A) Necessary home, office, and hospital visits by a licensed physician;

(B) Intensive medical care while hospitalized; and

(C) Medical or surgical consultations while confined;

(4) Diagnostic laboratory services, x-ray films, and radio-therapeutic services necessary for diagnosis or treatment of injuries or diseases; and

(5) Maternity benefits, at least if the insured has been covered for nine consecutive months prior to the delivery.

(c) No policy or contract issued by a mutual benefit society pursuant to its participation with the Hawaii health alliance in accordance with chapter     shall be required to:

(1) Provide coverages beyond those that are required pursuant to this section, sections 393-7, and 393-12, and those not determined to be urgent, emergent, and medically necessary by the Hawaii health alliance; or

(2) Make reimbursements for care furnished by government agencies and are available at no cost to the patient, or for which no charge would have been made if there were no coverage.

(d) Each mutual benefit society that contracts with the Hawaii health alliance to provide coverage for insureds shall file an annual report supplement on or before March 1 of each year, or within any reasonable extension of time that the insurance commissioner for good cause may grant on or before March 1. The annual report supplements shall provide the public with general, understandable, and comparable financial information relative to the operations and results of authorized insurers. Such information shall include but not be limited to medical claims expense, administrative expense, and underwriting gain for each line segment of the market in the State in which the insurer participates. The annual report supplements shall contain sufficient detail for the public to understand the components of costs incurred by the authorized mutual benefit society as well as the annual cost trends of these carriers. The insurance commissioner shall develop standardized definitions of each reported measure."

SECTION 8. Chapter 432E, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§432E- Hawaii health alliance policies and contracts. (a) All health insurance policies and contracts issued by a health maintenance organization pursuant to its participation with the Hawaii health alliance in accordance with chapter      shall provide sound basic hospital, surgical, medical, and other health care benefits at a premium commensurate with the benefits included, taking proper account of the limitations, coinsurance features, and deductibles specified in the policy or contract.

(b) Without limiting the development of medically more desirable combinations and the inclusion of new types of benefits, a policy or contract issued by a health maintenance organization pursuant to its participation with the Hawaii health alliance in accordance with chapter     shall include at least the following benefit types:

(1) Hospital benefits:

(A) In-patient care for a period of at least one hundred twenty days of confinement in each calendar year covering:

  (i) Room accommodations;

 (ii) Regular and special diets;

(iii) General nursing services;

 (iv) Use of operating room, surgical supplies, anesthesia services, and supplies; and

  (v) Drugs, dressings, oxygen, antibiotics, and blood transfusion services;

and

(B) Out-patient care:

 (i) Covering use of out-patient hospital; and

(ii) Facilities for surgical procedures or medical care of an urgent, emergent, and medically necessary nature;

(2) Surgical benefits:

(A) Surgical services performed by a licensed physician, as determined by the Hawaii health alliance and in accordance with section 393-7;

(B) After-care visits for a reasonable period; and

(C) Anesthesiologist services;

(3) Medical benefits:

(A) Necessary home, office, and hospital visits by a licensed physician;

(B) Intensive medical care while hospitalized; and

(C) Medical or surgical consultations while confined;

(4) Diagnostic laboratory services, x-ray films, and radio-therapeutic services necessary for diagnosis or treatment of injuries or diseases; and

(5) Maternity benefits, at least if the insured has been covered for nine consecutive months prior to the delivery.

(c) No policy or contract issued by a health maintenance organization pursuant to its participation with the Hawaii health alliance in accordance with chapter     shall be required to:

(1) Provide coverages beyond those that are required pursuant to this section, sections 393-7, and 393-12, and those not determined to be urgent, emergent, and medically necessary by the Hawaii health alliance; or

(2) Make reimbursements for care furnished by government agencies and are available at no cost to the patient, or for which no charge would have been made if there were no coverage.

(d) Each health maintenance organization that contracts with the Hawaii health alliance to provide coverage for insureds shall file an annual report supplement on or before March 1 of each year, or within any reasonable extension of time that the insurance commissioner for good cause may grant on or before March 1. The annual report supplements shall provide the public with general, understandable, and comparable financial information relative to the operations and results of authorized insurers. Such information shall include medical claims expense, administrative expense, and underwriting gain for each line segment of the market in this state in which the insurer participates. The annual report supplements shall contain sufficient detail for the public to understand the components of costs incurred by the authorized health maintenance organization as well as the annual cost trends of these carriers. The insurance commissioner shall develop standardized definitions of each reported measure."

SECTION 9. Section 28-8.3, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:

(1) By the public utilities commission, the labor and industrial relations appeals board, and the Hawaii labor relations board;

(2) By any court or judicial or legislative office of the State;

(3) By the legislative reference bureau;

(4) By any compilation commission that may be constituted from time to time;

(5) By the real estate commission for any action involving the real estate recovery fund;

(6) By the contractors license board for any action involving the contractors recovery fund;

(7) By the trustees for any action involving the travel agency recovery fund;

(8) By the office of Hawaiian affairs;

(9) By the department of commerce and consumer affairs for the enforcement of violations of chapters 480 and 485;

(10) As grand jury counsel;

(11) By the Hawaiian home lands trust individual claims review panel;

(12) By the Hawaii health systems corporation or any of its facilities;

(13) By the auditor;

(14) By the office of ombudsman;

(15) By the insurance division;

(16) By the University of Hawaii;

(17) By the Kahoolawe island reserve commission;

(18) By the division of consumer advocacy; [or]

(19) By the Hawaii health alliance; or

[(19)] (20) By a department, in the event the attorney general, for reasons deemed by the attorney general good and sufficient, declines, to employ or retain an attorney for a department; provided that the governor thereupon waives the provision of this section."

2. By amending subsection (c) to read:

"(c) Every attorney employed by any department on a full-time basis, except an attorney employed by the public utilities commission, the labor and industrial relations appeals board, the Hawaii labor relations board, the office of Hawaiian affairs, the Hawaii health systems corporation, the department of commerce and consumer affairs in prosecution of consumer complaints, insurance division, the division of consumer advocacy, the University of Hawaii, the Hawaiian home lands trust individual claims review panel, the Hawaii health alliance, or as grand jury counsel, shall be a deputy attorney general."

SECTION 10. Section 431:10A-116, Hawaii Revised Statutes, is amended to read as follows:

"§431:10A-116 Coverage for specific services. [Every] Except as otherwise provided in section 431:10A- , every person insured under a policy of accident and health or sickness insurance delivered or issued for delivery in this State shall be entitled to the reimbursements and coverages specified below:

(1) Notwithstanding any provision to the contrary, whenever a policy, contract, plan, or agreement provides for reimbursement for any visual or optometric service, which is within the lawful scope of practice of a duly licensed optometrist, the person entitled to benefits or the person performing the services shall be entitled to reimbursement whether the service is performed by a licensed physician or by a licensed optometrist. Visual or optometric services shall include eye or visual examination, or both, or a correction of any visual or muscular anomaly, and the supplying of ophthalmic materials, lenses, contact lenses, spectacles, eyeglasses, and appurtenances thereto;

(2) Notwithstanding any provision to the contrary, for all policies, contracts, plans, or agreements issued on or after May 30, 1974, whenever provision is made for reimbursement or indemnity for any service related to surgical or emergency procedures, which is within the lawful scope of practice of any practitioner licensed to practice medicine in this State, reimbursement or indemnification under such policy, contract, plan, or agreement shall not be denied when such services are performed by a dentist acting within the lawful scope of the dentist's license;

(3) Notwithstanding any provision to the contrary, whenever the policy provides reimbursement or payment for any service, which is within the lawful scope of practice of a psychologist licensed in this State, the person entitled to benefits or performing the service shall be entitled to reimbursement or payment, whether the service is performed by a licensed physician or licensed psychologist;

(4) Notwithstanding any provision to the contrary, each policy, contract, plan, or agreement issued on or after February 1, 1991, except for policies that only provide coverage for specified diseases or other limited benefit coverage, but including policies issued by companies subject to chapter 431, article 10A, part II and chapter 432, article 1 shall provide coverage for screening by low-dose mammography for occult breast cancer as follows:

(A) For women forty years of age and older, an annual mammogram; and

(B) For a woman of any age with a history of breast cancer or whose mother or sister has had a history of breast cancer, a mammogram upon the recommendation of the woman's physician.

The services provided in this paragraph are subject to any coinsurance provisions that may be in force in these policies, contracts, plans, or agreements.

For the purpose of this paragraph, the term "low-dose mammography" means the x-ray examination of the breast using equipment dedicated specifically for mammography, including but not limited to the x-ray tube, filter, compression device, screens, films, and cassettes, with an average radiation exposure delivery of less than one rad mid-breast, with two views for each breast. An insurer may provide the services required by this paragraph through contracts with providers; provided that the contract is determined to be a cost-effective means of delivering the services without sacrifice of quality and meets the approval of the director of health;

(5) (A) (i) Notwithstanding any provision to the contrary, whenever a policy, contract, plan, or agreement provides coverage for the children of the insured, that coverage shall also extend to the date of birth of any newborn child to be adopted by the insured; provided that the insured gives written notice to the insurer of the insured's intent to adopt the child prior to the child's date of birth or within thirty days after the child's birth or within the time period required for enrollment of a natural born child under the policy, contract, plan, or agreement of the insured, whichever period is longer; provided further that if the adoption proceedings are not successful, the insured shall reimburse the insurer for any expenses paid for the child; and

(ii) Where notification has not been received by the insurer prior to the child's birth or within the specified period following the child's birth, insurance coverage shall be effective from the first day following the insurer's receipt of legal notification of the insured's ability to consent for treatment of the infant for whom coverage is sought; and

(B) When the insured is a member of a health maintenance organization (HMO), coverage of an adopted newborn is effective:

(i) From the date of birth of the adopted newborn when the newborn is treated from birth pursuant to a provider contract with the health maintenance organization, and written notice of enrollment in accord with the health maintenance organization's usual enrollment process is provided within thirty days of the date the insured notifies the health maintenance organization of the insured's intent to adopt the infant for whom coverage is sought; or

(ii) From the first day following receipt by the health maintenance organization of written notice of the insured's ability to consent for treatment of the infant for whom coverage is sought and enrollment of the adopted newborn in accord with the health maintenance organization's usual enrollment process if the newborn has been treated from birth by a provider not contracting or affiliated with the health maintenance organization; and

(6) Notwithstanding any provision to the contrary, any policy, contract, plan, or agreement issued or renewed in this State shall provide reimbursement for services provided by advanced practice registered nurses recognized pursuant to chapter 457. Services rendered by advanced practice registered nurses are subject to the same policy limitations generally applicable to health care providers within the policy, contract, plan, or agreement."

SECTION 11. Section 431:10A-116.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431:10A-116.5[]] In vitro fertilization procedure coverage. [All] Except as otherwise provided in section 431:10A- , all individual and group health insurance policies which provide pregnancy-related benefits shall include in addition to any other benefits for treating infertility, a one-time only benefit for all outpatient expenses arising from in vitro fertilization procedures performed on the insured or the insured's dependent spouse; provided that:

(1) Benefits under this section shall be provided to the same extent as the benefits provided for other pregnancy-related benefits;

(2) The patient is the insured or covered dependent of the insured;

(3) The patient's oocytes are fertilized with the patient's spouse's sperm;

(4) The:

(A) Patient and the patient's spouse have a history of infertility of at least five years' duration; or

(B) Infertility is associated with one or more of the following medical conditions:

(i) Endometriosis;

(ii) Exposure in utero to diethylstilbestrol, commonly known as DES;

(iii) Blockage of, or surgical removal of, one or both fallopian tubes (lateral or bilateral salpingectomy); or

(iv) Abnormal male factors contributing to the infertility[.];

(5) The patient has been unable to attain a successful pregnancy through other applicable infertility treatments for which coverage is available under the insurance contract; and

(6) The in vitro fertilization procedures are performed at medical facilities that conform to the American College of Obstetric and Gynecology guidelines for in vitro fertilization clinics or to the American Fertility Society minimal standards for programs of in vitro fertilization.

[(7) The term] For the purposes of this section, "spouse" means a person who is lawfully married to the patient under the laws of the State.

[The] Except as otherwise provided in section

431:10A- , the requirements of this section shall apply to all new policies delivered or issued for delivery in this State after June 26, 1987."

SECTION 12. Section 431:10A-116.7, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) [Health] Except as otherwise provided in section 431:10A- , health insurers, mutual benefit societies, and health maintenance organizations shall allow enrollees in a health plan exempted under this section to directly purchase coverage of contraceptive supplies and outpatient contraceptive services. The enrollee's cost of purchasing such coverage shall not exceed the enrollee's pro rata share of the price the group purchaser would have paid for such coverage had the group plan not invoked a religious exemption."

SECTION 13. Section 431:10A-119, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431:10A-119[]] Hospice care coverage. (a) [Any other law to the contrary notwithstanding,] Except as otherwise provided in section 431:10A- , commencing on January 1, 2000, all authorized insurers that provide for payment of or reimbursement for hospice care, shall reimburse hospice care services for each insured policyholder covered for hospice care according to the following:

(1) A minimum daily rate as set by the Health Care Financing Administration for hospice care;

(2) Reimbursement for residential hospice room and board expenses directly related to the hospice care being provided; and

(3) Reimbursement for each hospice referral visit during which a patient is advised of hospice care options, regardless of whether the referred patient is eventually admitted to hospice care.

(b) [Every] Except as otherwise provided in section 431:10A- , every insurer shall provide notice to its policyholders regarding the coverage required by this section. Notice shall be in writing and in literature or correspondence sent to policyholders, beginning with calendar year 2000, along with any other mailing to policyholders, but in no case later than July 1, 2000."

SECTION 14. Section 431:10A-120, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) [Each] Except as otherwise provided in section 431:10A- , each policy of accident and health or sickness insurance, other than life insurance, disability income insurance, and long-term care insurance, issued or renewed in this State, each employer group health policy, contract, plan, or agreement issued or renewed in this State, all health insurance policies issued or renewed in this State, all policies providing family coverages as defined in section 431:10A-103, and all policies providing reciprocal beneficiary family coverage as defined in section 431:10A-601, shall contain a provision for coverage for medical foods and low-protein modified food products for the treatment of an inborn error of metabolism for its policyholders or dependents of the policyholder in this State; provided that the medical food or low-protein modified food product is:

(1) Prescribed as medically necessary for the therapeutic treatment of an inborn error of metabolism; and

(2) Consumed or administered enterally under the supervision of a physician licensed under chapter 453 or 460.

Coverage shall be for at least eighty per cent of the cost of the medical food or low-protein modified food product prescribed and administered pursuant to this subsection.

(b) [Every] Except as otherwise provided in section 431:10A- , every insurer shall provide notice to its policyholders regarding the coverage required by this section. The notice shall be in writing and prominently placed in any literature or correspondence sent to policyholders and shall be transmitted to policyholders during calendar year 2000 when annual information is made available to policyholders, or in any other mailing to policyholders, but in no case later than December 31, 2000."

SECTION 15. Section 431:10A-121, Hawaii Revised Statutes, is amended to read as follows:

"§431:10A-121 Coverage for diabetes. [Each] Except as otherwise provided in section 431:10A- , each policy of accident and health or sickness insurance providing coverage for health care, other than an accident-only, specified disease, hospital indemnity, medicare supplement, long-term care, or other limited benefit health insurance policy, that is issued or renewed in this State, shall provide coverage for outpatient diabetes self-management training, education, equipment, and supplies, if:

(1) The equipment, supplies, training, and education are medically necessary; and

(2) The equipment, supplies, training, and education are prescribed by a health care professional authorized to prescribe."

SECTION 16. Section 431M-2, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431M-2[]] Policy coverage. [All] Except as otherwise provided in section 431M- , all individuals and group accident and sickness insurance policies issued in this State, individual or group hospital or medical service plan contracts, and nonprofit mutual benefit association and health maintenance organization health plan contracts shall include within their hospital and medical coverage the benefits of alcohol dependence, drug dependence, and mental illness treatment services provided in section 431M-4 except that this section shall not apply to insurance policies that are issued solely for single diseases, or otherwise limited specialized coverage."

SECTION 17. Section 432:1-604, Hawaii Revised Statutes, is amended to read as follows:

"[[]§432:1-604[]] In vitro fertilization procedure coverage. [All] Except as otherwise provided in section

432:1- , all individual and group hospital or medical service plan contracts which provide pregnancy-related benefits shall include in addition to any other benefits for treating infertility, a one-time only benefit for all outpatient expenses arising from in vitro fertilization procedures performed on the subscriber or member or the subscriber's or member's dependent spouse; provided that:

(1) Benefits under this section shall be provided to the same extent as the benefits provided for other pregnancy-related benefits;

(2) The patient is a subscriber or member or covered dependent of the subscriber or member;

(3) The patient's oocytes are fertilized with the patient's spouse's sperm;

(4) The:

(A) Patient and the patient's spouse have a history of infertility of at least five years' duration; or

(B) Infertility is associated with one or more of the following medical conditions:

  (i) Endometriosis;

 (ii) Exposure in utero to diethylstilbestrol, commonly known as DES;

(iii) Blockage of, or surgical removal of, one or both fallopian tubes (lateral or bilateral salpingectomy); or

 (iv) Abnormal male factors contributing to the infertility[.];

(5) The patient has been unable to attain a successful pregnancy through other applicable infertility treatments for which coverage is available under the contract; and

(6) The in vitro fertilization procedures are performed at medical facilities that conform to the American College of Obstetric and Gynecology guidelines for in vitro fertilization clinics or to the American Fertility Society minimal standards for programs of in vitro fertilization.

[(7) The term] For the purposes of this section, "spouse" means a person who is lawfully married to the patient under the laws of the State.

[The] Except as otherwise provided in section 432:1- , the requirements of this section shall apply to all hospital or medical service plan contracts delivered or issued for delivery in this State after June 26, 1987."

SECTION 18. Section 432:1-604.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) [Notwithstanding any provision of law to the contrary,] Except as otherwise provided by section 432:1- , each employer group health policy, contract, plan, or agreement issued or renewed in this State on or after January 1, 2000, shall cease to exclude contraceptive services or supplies, and contraceptive prescription drug coverage for the subscriber or any dependent of the subscriber who is covered by the policy, subject to the exclusion under section 431:10A-116.7."

SECTION 19. Section 432:1-605, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Notwithstanding any provision to the contrary, each policy, contract, plan, or agreement issued on or after February 1, 1991, except [for] as otherwise provided by section

432:1- , and policies that only provide coverage for specified diseases or other limited benefit coverage, but including policies issued by companies subject to chapter 431, article 10A, part II and chapter 432, article 1 shall provide coverage for screening by low-dose mammography for occult breast cancer as follows:

(1) For women forty years of age and older, an annual mammogram; and

(2) For a woman of any age with a history of breast cancer or whose mother or sister has had a history of breast cancer, a mammogram upon the recommendation of the woman's physician."

SECTION 20. Section 432:1-608, Hawaii Revised Statutes, is amended to read as follows:

"[[]§432:1-608[]] Hospice care coverage. (a) [Any other law to the contrary notwithstanding,] Except as otherwise provided in section 432:1- , commencing on January 1, 2000, all mutual benefit societies issuing or renewing an individual and group hospital or medical service plan, policy, contract, or agreement in this State that provides for payment of or reimbursement for hospice care, shall reimburse hospice care services for each insured member covered for hospice care according to the following:

(1) A minimum daily rate as set by the Health Care Financing Administration for hospice care;

(2) Reimbursement for residential hospice room and board expenses directly related to the hospice care being provided; and

(3) Reimbursement for each hospice referral visit during which a patient is advised of hospice care options, regardless of whether the referred patient is eventually admitted to hospice care.

(b) [Every] Except as otherwise provided by section

432:1- , every insurer shall provide notice to its members regarding the coverage required by this section. Notice shall be in writing and in literature or correspondence sent to members, beginning with calendar year 2000, along with any other mailing to members, but in no case later than July 1, 2000."

SECTION 21. Section 432:1-609, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) [All] Except as otherwise provided by section

432:1- , all individual and group hospital and medical service plan contracts and medical service corporation contracts under this chapter shall provide coverage for medical foods and low-protein modified food products for the treatment of an inborn error of metabolism for its members or dependents of the member in this State; provided that the medical food or low-protein modified food product is:

(1) Prescribed as medically necessary for the therapeutic treatment of an inborn error of metabolism; and

(2) Consumed or administered enterally under the supervision of a physician licensed under chapter 453 or 460.

Coverage shall be for at least eighty per cent of the cost of the medical food or low-protein modified food product prescribed and administered pursuant to this subsection.

(b) [Every] Except as otherwise provided by section

432:1- , every mutual benefit society shall provide notice to its members regarding the coverage required by this section. The notice shall be in writing and prominently placed in any literature or correspondence sent to members and shall be transmitted to members during calendar year 2000 when annual information is made available to members, or in any other mailing to members, but in no case later than December 31, 2000."

SECTION 22. Section 432:1-612, Hawaii Revised Statutes, is amended to read as follows:

"[[]§432:1-612[]] Diabetes coverage. [All] Except as otherwise provided in section 432:1- , all group health care contracts under this chapter shall provide, to the extent provided under section 431:10A-121, coverage for outpatient diabetes self-management training, education, equipment, and supplies."

SECTION 23. Section 432D-23, Hawaii Revised Statutes, is amended to read as follows:

"§432D-23 Required provisions and benefits. (a) Notwithstanding any provision of law to the contrary, each policy, contract, plan, or agreement issued in the State after January 1, 1995, by health maintenance organizations pursuant to this chapter, shall include benefits provided in sections 431:10-212, 431:10A-115, and 431:10A-115.5[, 431:10A-116, 431:10A-116.5, 431:10A-116.6, 431:10A-119, 431:10A-120, and 431:10A-121, and chapter 431M].

(b) Except as otherwise provided by section 432D- , each policy, contract, plan, or agreement issued in the state after January 1, 2005, by a health maintenance organization pursuant to this chapter, shall include benefits provided in sections 431:10A-116, 431:10A-116.5, 431:10A-116.6, 431:10A-119, 431:10A-120, and 431:10A-121, and chapter 431M."

PART III

SECTION 24. This part ensures the cost-efficient provision of affordable and quality health care by promoting consumer education and objectively comparing health care services.

SECTION 25. Chapter 323D, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§323D- Consumer information. (a) Each health facility authorized to conduct business in accordance with a certificate of need shall maintain a price list of the most common inpatient services and outpatient procedures provided at the health facility.

(b) For inpatient services, the price list shall include a per diem bed charge and an average charge of all ancillary charges for the fifteen most common nonemergency services involving inpatient stays. If the per diem charge includes all ancillary charges for a procedure, no further information shall be required.

(c) For outpatient nonemergency procedures for which an individual would not incur a bed charge, the price list shall include average charges for the twenty most common surgical and diagnostic procedures, excluding laboratory services.

(d) For emergency services, the price list shall include average charges for facility and physician services according to the level of emergency services provided by the facility and based on the time and intensity of services provided.

(e) The facility shall post in a conspicuous place a statement about the availability of the price list as required by this section. Posting of the price list shall not be required.

(f) The facility shall provide its price list upon request by a consumer. The price list may include a statement that actual charges may vary depending on individual need and other factors.

(g) Each facility shall notify patients in writing of the charges for health care services commonly offered by the practitioner. Upon request of a patient, a practitioner shall assist the patient in determining the actual payment from a third-party payor for a health care service commonly offered by the practitioner. A patient may file a complaint with the appropriate licensing board regarding a health care practitioner who fails to provide the consumer information required by this section.

§323D- Quality data; reports. (a) The state agency shall adopt rules regarding the collection of quality data. The rules shall be based on the quality measures adopted pursuant to section - . The rules shall specify the content, form, medium, and frequency of quality data to be submitted to the state agency. In the collection of quality data, the organization shall minimize duplication of effort, minimize the burden on those required to provide data, and focus on data that may be retrieved in electronic format from within a health care practitioner's office or health care facility.

(b) The state agency shall:

(1) Produce clearly labeled and easy-to-understand reports;

(2) Distribute the reports on a publicly accessible site on the Internet or via mail or e-mail, through the creation of a list of interested parties;

(3) Publish a notice of the availability of these reports at least once per year in at least two daily newspapers of the greatest general circulation published in the State; and

(4) Make reports available to members of the public upon request.

(c) At a minimum, the state agency shall develop and produce annual quality reports. The state agency shall also develop and produce annual reports on prices charged for the fifteen most common services provided by health care facilities and health care practitioners, excluding emergency services. For health care facilities, the reports shall include but not be limited to the average prices charged per service per facility and the total number of services per facility.

(d) At a minimum, the state agency shall develop and produce an annual report that compares:

(1) The fifteen most common diagnosis-related groups;

(2) The fifteen most common outpatient procedures for all hospitals in the state; and

(3) The fifteen most common procedures for nonhospital health care facilities in the state,

to similar data for medical care rendered in other states, when such data are available.

(e) The state agency shall provide an annual report of the ten services and procedures most often provided by osteopathic and allopathic physicians in the private office setting in this state. The state agency shall distribute this report to all physician practices in the state.

§323D- Billing for health care services. (a) Each facility authorized to conduct business in the state pursuant to a certificate of need shall use the current standardized claim form for professional services approved by the federal government and shall after January 1, 2005, submit claims in electronic data format to a carrier that accepts claims in an electronic format. A health care practitioner or group of health care practitioners with fewer than ten full-time equivalent health care practitioners and other employees is exempt from the requirements to submit claims in electronic format until January 1, 2007. Beginning January 1, 2005, a health care practitioner or group of health care practitioners with fewer than ten full-time equivalent health care practitioners and other employees may apply to the state agency for a continued exemption from the requirement to submit claims in electronic data format based on hardship. The state agency shall adopt rules relating to the process for a hardship exemption and the standard for determining whether a practitioner has demonstrated hardship."

SECTION 26. Section 323D-12, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The state agency shall:

(1) Have a principal function the responsibility for promoting accessibility for all the people of the State to quality health care services at reasonable cost. The state agency shall conduct such studies and investigations as may be necessary as to the causes of health care costs including inflation. The state agency shall also collect and disseminate research regarding health care quality, evidence-based medicine, and patient safety to promote best practices. The state agency may contract for services to implement this paragraph. The certificate of need program mandated under part V shall serve this function. The state agency shall promote the sharing of facilities or services by health care providers whenever possible to achieve economies and shall restrict unusual or unusually costly services to individual facilities or providers where appropriate;

(2) Serve as staff to and provide technical assistance and advice to the statewide council and the subarea councils in the preparation, review, and revision of the state health services and facilities plan;

(3) Conduct the health planning activities of the State in coordination with the subarea councils, implement the state health services and facilities plan, and determine the statewide health needs of the State after consulting with the statewide council; and

(4) Administer the state certificate of need program pursuant to part V."

SECTION 27. Section 323D-18, Hawaii Revised Statutes, is amended to read as follows:

"§323D-18 Information required of providers. (a) The state agency shall coordinate the collection of health care quality data in the state. The state agency shall work collaboratively with health care providers, insurance carriers, and others to report in useable formats, comparative health care quality information to consumers, purchasers, providers, insurers, and policymakers. Providers of health care doing business in the State shall submit such statistical and other reports of information related to health and health care as the state agency finds necessary to the performance of its functions. The information deemed necessary includes but is not limited to:

(1) Information regarding changes in the class of usage of the bed complement of a health care facility under section 323D-54(9);

(2) Implementation of services under section 323D-54;

(3) Projects that are wholly dedicated to meeting the State's obligations under court orders, including consent decrees, under section 323D-54(10);

(4) Replacement of existing equipment with an updated equivalent under section 323D-54(11);

(5) Primary care clinics under the expenditure thresholds under section 323D-54(12); and

(6) Equipment and services related to that equipment, that are primarily intended for research purposes as opposed to usual and customary diagnostic and therapeutic care.

(b) The state agency shall conduct education campaigns to help health care consumers make informed decisions and engage in healthy lifestyles. In addition, the state agency shall encourage the adoption of electronic technology and assist health care practitioners to implement electronic systems for medical records and submission of claims. The assistance may include practitioner education, identification, or establishment of low-interest financing options for hardware and software and system implementation support."

PART IV

SECTION 28. This part transfers the rights, powers, functions, and duties of the department of human services, relating to the Hawaii QUEST program, to the Hawaii health alliance.

SECTION 29. All rights, powers, functions, and duties of the department of human services, relating to the Hawaii QUEST program, are transferred to the Hawaii health alliance.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

SECTION 30. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of human services, relating to the Hawaii QUEST program shall be transferred with the functions to which they relate.

SECTION 31. All rules, policies, procedures, guidelines, and other material adopted or developed by the agency transferred under this Act to implement provisions of the Hawaii Revised Statutes which are reenacted or made applicable to the Hawaii health alliance by this Act, shall remain in full force and effect until amended or repealed by the Hawaii health alliance pursuant to chapter 91.

All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the agency transferred under this Act pursuant to the provisions of the Hawaii Revised Statutes, which are reenacted or made applicable to the Hawaii health alliance by this Act shall remain in full force and effect.

PART V

SECTION 32. This part is intended to immediately stabilize health care costs in the State of Hawaii, and provide policy makers with the necessary data to analyze the effectiveness of this Act.

SECTION 33. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2004-2005 for the provision of Hawaii health alliance insurance to Hawaii citizens.

The sum appropriated shall be expended by the Hawaii health alliance for the purposes of this Act.

SECTION 34. (a) To control the rate of growth of costs of health care and health coverage, the legislature requests the cooperation of health care practitioners, hospitals, health insurance carriers, mutual benefit societies, and health maintenance organizations.

(b) Each health care provider, as defined in section

323D-2, Hawaii Revised Statutes, is requested to limit the growth of net revenues of the practitioner's practice to three per cent for the practitioner's fiscal year beginning July 1, 2004, and ending June 30, 2005.

(c) Each facility authorized to conduct business in accordance with chapter 323D, Hawaii Revised Statutes, is requested to voluntarily restrain cost increases, measured as expenses per case mix adjusted discharge, to no more than three and one-half per cent for the facility fiscal year beginning July 1, 2004, and ending June 30, 2005. Each facility is also requested to voluntarily hold consolidated operating margins to no more than three per cent for the facility's fiscal year beginning July 1, 2004, and ending July 1, 2005.

(d) Each health insurance carrier, mutual benefit society, and health maintenance organization is requested to voluntarily limit the pricing of products it sells in this State to the level that supports no more than three per cent underwriting gain less federal taxes for the carrier's, mutual benefit society's, or health maintenance organization's fiscal year beginning July 1, 2004, and ending June 30, 2005.

SECTION 35. The Hawaii health alliance shall conduct a comprehensive review of reimbursement rates in the QUEST program and shall submit a report to the legislature at least twenty days prior to the convening of the regular session of 2005. The review shall provide opportunity for input from health care consumers, providers, practitioners, and insurance carriers and shall include consideration of the costs of providing health care in different settings, reflecting the recovery offset in bad debt and charity care, and a review of rates paid in other states and by insurance carriers and the medicare program. The review shall also identify options and costs for increasing rates and shall propose strategies for achieving stated priorities.

PART VI

SECTION 36. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 37. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 38. This Act shall take effect on February 31, 3003.