Report Title:

Medical Plan Administrators; Oversight and Accountability

Description:

Requires DHS to maintain fair and impartial relationships with private entities that administer its medical assistance programs and to require operations and expenditures reports from these entities. Clarifies restrictions on use of mutual benefit society funds. Prohibits mutual benefit societies from operating medical clinics and engaging in insurance business, other than medical insurance. Requires a mutual benefit society's annual audit to include an accounting of management and operating expenses. Requires the insurance commissioner's annual report to include a listing of mutual benefit societies that provide medical benefits.

THE SENATE

S.B. NO.

356

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO administration of medical benefits.

 

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

SECTION 1. Section 346-14, Hawaii Revised Statutes, is amended to read as follows:

"346-14 Duties generally. Except as otherwise provided by law, the department of human services shall:

(1) Establish and administer programs and standards, and adopt rules as deemed necessary for all public assistance programs;

(2) Establish, extend, and strengthen services for the protection and care of abused or neglected children and children in danger of becoming delinquent to make paramount the safety and health of children who have been harmed or are in life circumstances that threaten harm;

(3) Establish and administer programs, and adopt rules as deemed necessary, for the prevention of domestic and sexual violence and the protection and treatment of victims of domestic and sexual violence;

(4) Assist in preventing family breakdown;

(5) Place, or cooperate in placing, abused or neglected children in suitable private homes or institutions and place, or cooperate in placing, children in suitable adoptive homes;

(6) Have authority to establish, maintain, and operate receiving homes for the temporary care and custody of abused or neglected children until suitable plans are made for their care; and accept from the police and other agencies, for temporary care and custody, any abused or neglected child until satisfactory plans are made for the child;

(7) Administer the medical assistance programs for eligible public welfare and other medically needy individuals by establishing standards, eligibility, and health care participation rules, payment methodologies, reimbursement allowances[,] and systems to monitor recipient and provider compliance[, and]; assuring compliance with federal requirements to maximize federal financial participation; and maintaining fair and impartial relationships with its medical benefits plan administrators and requiring them to provide the department with complete and accurate reports on their operations and expenditures;

(8) Cooperate with the federal government in carrying out the purposes of the Social Security Act and in other matters of mutual concern pertaining to public welfare, public assistance, and child welfare services, including the making of reports, the adoption of methods of administration, and the making of rules as are found by the federal government, or any properly constituted authority thereunder, to be necessary or desirable for the efficient operation of the plans for public welfare, assistance, and child welfare services or as may be necessary or desirable for the receipt of financial assistance from the federal government;

(9) Carry on research and compile statistics relative to public and private welfare activities throughout the State, including those dealing with dependence, defectiveness, delinquency, and related problems;

(10) Develop plans in cooperation with other public and private agencies for the prevention and treatment of conditions giving rise to public welfare problems;

(11) Adopt rules governing the procedure in hearings, investigations, recording, registration, determination of allowances, and accounting and conduct other activities as may be necessary or proper to carry out this chapter;

(12) Supervise or administer any other activities authorized or required by this chapter, including the development of the staff of the department through in-service training and educational leave to attend schools and other appropriate measures, and any other activities placed under the jurisdiction of the department by any other law;

(13) Make, prescribe, and enforce policies and rules governing the activities provided for in section 346-31 it deems advisable, including the allocation of moneys available for assistance to persons assigned to work projects among the several counties or to particular projects where the apportionment has not been made pursuant to other provisions of law, if any, governing expenditures of the funds;

(14) Determine the appropriate level for the Hawaii security net, by developing a tracking and monitoring system to determine what segments of the population are not able to afford the basic necessities of life, and advise the legislature annually regarding the resources required to maintain the security net at the appropriate level;

(15) Subject to the appropriation of state funds and availability of federal matching assistance, expand optional health care to low-income persons as follows:

(A) Pregnant women and infants under one year of age living in families with incomes up to one hundred eighty-five per cent of the federal poverty level and without any asset restrictions;

(B) Children under six years of age living in families with incomes up to one hundred thirty-three per cent of the federal poverty level and without any asset restrictions;

(C) Older children to the extent permitted under optional federal medicaid rules;

(D) Elder persons;

(E) Aliens;

(F) The homeless; and

(G) Other handicapped and medically needy persons; and

(16) Subject to the appropriation of state funds and availability of federal matching assistance, establish the income eligibility level for the medically needy program at one hundred thirty-three per cent of the assistance allowance."

SECTION 2. Section 432:1-305, Hawaii Revised Statutes, is amended to read as follows:

"432:1-305 Authority to offer death, sick, disability, or other benefits; restrictions on use of funds[.] and operations. (a) At no time shall the society, except as provided in subsection (c), use more than twenty-five per cent of the payments up to $100,000 and seven per cent of the payments in excess of $100,000, received from its members or applicants in the form of admission fees, dues, contributions or assessments of any nature for expenses other than taxes, in connection with the management or operation of the death benefit, sick, disability, or other benefit funds.

(b) Any commissions or other payments or allowances to persons soliciting membership in or making collections for the society shall be included in the foregoing expenditures and no part of the commissions, payments or allowances may be in addition thereto; provided, that any society which exacts a membership fee of its new members not in excess of $10 for each membership may pay commissions or other payments to persons soliciting membership out of the fund created by the membership fees, and the amounts so paid as commissions or as such other payments out of such fund shall not be considered as expenses within the meaning of section 432:1-304 and section [[]432:1-305[]].

(c) Any association or society organized and operating solely as a nonprofit medical indemnity or hospital service association or society may use for [such] expenses[,] related to the management and operation of the society, in addition to taxes, not more than thirty-five per cent of the payments received from its members or applicants in the form of admission fees, dues, contributions, or assessments of any nature[.]; provided that the expenses are reasonably necessary for the enhancement of medical benefits for its members. The commissioner, while conducting an examination as required by section 432:1-501, shall report the expenses and associated expense ratios in the annual report to the legislature required by section 431:2-211.

(d) No association or society organized and operating a nonprofit medical indemnity or hospital services association or society, directly or through any subsidiary or affiliate, may use its funds to:

(1) Operate or cause to be operated any clinic, office, or other similar facility for the provision of medicine, dentistry, chiropractic, osteopathy, naturopathy, optometry, podiatry, psychology, or other health services; provided that this paragraph shall not apply to:

(A) Those geographic areas determined by federal standards to be medically underserved; and

(B) Those medical or dental clinics, offices, or other facilities in existence prior to July 1, 2003; or

(2) Engage in the business of any line of insurance except insurance for medical and hospital benefits."

SECTION 3. Section 432:1-404, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each society shall file with the commissioner annually, on or before April 30 in each year, a statement under oath, and in such form and detail as the commissioner shall prescribe; provided that any association or society organized and operating as a nonprofit medical indemnity or hospital service association shall file a report with the commissioner covering the preceding calendar year and verified by at least two principal officers. The report shall comply with sections 431:3-301 and 431:3-302. The commissioner may prescribe the forms on which the report is to be filed.

In addition, any association or society organized and operating as a nonprofit medical indemnity or hospital service association annually shall file with the commissioner the following by the dates specified:

(1) An audit, by an independent certified public accountant or an accounting firm designated by the association or society, of the financial statements, reporting the financial condition and results of operations of the association or society on or before June 1, or a later date as the commissioner upon request or for cause may specify. The audit shall include a detailed accounting of the entity's management and operating expenses that identifies and separates the costs involved in any expansion of the entity's operations, programs, or functions, from the costs of maintenance of current services or enhancement of benefits for its members. The association or society, on an annual basis and prior to the commencement of the audit, shall notify the commissioner in writing of the name and address of the person or firm retained to conduct the annual audit. The commissioner may disapprove the association's or society's designation within fifteen days of receipt of the association's or society's notice, and the association or society shall be required to designate another independent certified public accountant or accounting firm. The audit required in this paragraph shall be prepared in accordance with the National Association of Insurance Commissioners' annual statement instructions, following the practices and procedures prescribed by the National Association of Insurance Commissioners' accounting practices and procedures manuals; and

(2) A description of the available grievance procedures, the total number of grievances handled through those procedures, a compilation of the causes underlying those grievances, and a summary of the final disposition of those grievances on or before April 30."

SECTION 4. Section 432:1-501, Hawaii Revised Statutes, is amended to read as follows:

"432:1-501 Examination by commissioner[,]; assistance of other officers. (a) The powers, authorities, and duties relating to examinations vested in and imposed upon the commissioner under article 2 of the insurance code are extended to and imposed upon the commissioner in respect to examinations of mutual benefit societies.

(b) The commissioner in the exercise of any of the commissioner's functions, powers, and duties under this article, may use the staff or any members of the staff of the commissioner of financial institutions and may appoint and constitute them as agents for such purpose.

(c) The commissioner shall include in the annual report required by section 431:2-211, a complete listing of all mutual benefit societies authorized to transact business in the State that provide medical and hospital benefits, and a descriptive synopsis of the findings of each examination conducted during the period covered by the annual report in addition to the financial data reported."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2003.

INTRODUCED BY:

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