Legislature(2001 - 2002)
03/20/2001 03:03 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 113-HEALTH CARE INSURANCE PAYMENTS CHAIR DYSON announced that the committee would hear HOUSE BILL NO. 113, "An Act relating to health care insurance payments for hospital or medical services; and providing for an effective date." [Before the committee was CSHB 113(L&C).] Number 2038 REPRESENTATIVE COGHILL made a motion to adopt the proposed committee substitute (CS) for HB 113, version O, 22-LS0418\O, Ford, 3/19/01, as a work draft. There being no objection, proposed CSHB 113, Version O, was before the committee. Number 2050 REPRESENTATIVE JOE GREEN, Alaska State Legislature, came forth as sponsor of HB 113. He stated that HB 113 allows physicians to be reimbursed from insurance carriers in a reasonable time, which is 30 calendar days. If for some reason the insurance company finds a defect in the claim, the physician must provide a "clean claim," and then there are 15 calendar days, from that point, for the insurance company to make payment. CHAIR DYSON asked if the bill allows or requires [the insurance companies] to promptly pay. REPRESENTATIVE GREEN answered yes, [it requires the insurance companies to promptly pay]. Number 2120 KEVIN JARDELL, Staff to Representative Joe Green, Alaska State Legislature, stated that Section 1 requires the director of the Division of Insurance to place in his or her annual report the percentage of claims that are meeting the deadlines imposed by the legislation in order to see how it is having an effect on the insurance companies and providers. He stated that Section 2 ensures that if insurers receive a clean claim, they have 30 calendar days to pay that. If they do not in fact send that payment by the 30th day, interest will begin accruing on the outstanding claim. He said if the claim is not clean, the physician has 30 days to notify the provider or the insured as to what items are necessary to complete it as a clean claim and to make a judgment as to whether or not it is covered. CHAIR DYSON asked who decides what's clean. MR. JARDELL replied that there is a standard form that providers use to send claims to the insurers. Insurers will look at the claim and decide whether all the necessary information is there on that claim. If [the insurer] sees that there are items missing, [the insurer] can send a notification to the provider or the insured of what certain individual items are needed for determination. He remarked that in situations in which there is a "bad faith" action and insurers are saying that things are necessary that aren't, complaints would be expected to be filed with the Division of Insurance, which would then appropriately address them. Number 2212 REPRESENTATIVE WILSON asked what a clean claim is. MR. JARDELL answered that a clean claim is defined in subsection (k), as, "a claim that does not have a defect, impropriety, or circumstance requiring special treatment that [precludes] timely payment on the claim." He stated that definitions similar to this are used for Medicare payments. He added that he understands this is a broad definition, which is somewhat beneficial to the insurers. Number 2287 JIM JORDAN, Executive Director, Alaska State Medical Association, testified via teleconference. He clarified that the bill covers other types of medical care providers besides physicians such as hospitals, dentists, and nurses. CHAIR DYSON stated that his wife is a mental health provider; he asked if this bill would allow her to get paid quicker. MR. JARDELL responded that it is his understanding that an insurance claim made for a mental health provider would be covered. Number 2341 REPRESENTATIVE STEVENS remarked that, in Section 1, the bill asks something additional of the director of [the Division of] Insurance. He asked if there is an additional cost that would be accrued to find these figures. TAPE 01-30, SIDE B KEVIN JARDELL answered that it is his understanding that [the director has such a long report], this would not be burdensome. Number 2337 KATIE CAMPBELL, Actuary Life/Health, Division of Insurance, Department of Community & Economic Development, came forth in support of HB 113. In response to Representative Stevens' questions, she stated that it shouldn't be an additional expense. She explained that [the Division of Insurance] sends out a survey every year to the health insurers. REPRESENTATIVE COGHILL remarked that he noticed the effective date is 2002 and asked if that was to allow for more time to compile the information. MR. JARDELL responded that the extended effective date was to make sure the insurers have time to update their computers and systems in order to not "get behind the curve". Number 2259 NICOLE BAGBY, Account Executive, Aetna, testified via teleconference. She stated that Aetna is a large payer of health benefit claims in Alaska, in addition to other vendors. She stated that many customers in Alaska are self-funded, such as the State of Alaska, and [Aetna] serves as their plan administrator. Aetna does not profit from any delay in the payment of claims and, she said, the money to fund the payment of claims usually resides in the customer's bank account, not [Aetna's]. She stated that all of [Aetna's] large contracts with customers already have performance guarantees, which can financially penalize [Aetna] if it doesn't pay claims within agreed-upon timeframes. She noted that [the timeframes] are usually 30 days or less. MS. BAGBY continued, stating that [Aetna] also fully insures about 10,000 individuals in the state of Alaska, which is a small number compared to the total fully insured market segment. She concluded that with the amendments adopted by the House Labor and Commerce Standing Committee and the subsequent changes suggested by Representative Green, [Aetna] feels this requirement is in line with and similar to other states' statutes. MR. JARDELL, in response to Chair Dyson's earlier question, stated that he believes if the group insurance policy covered mental health issues it would be covered under this requirement. Number 2148 REPRESENTATIVE STEVENS asked why the [requirement] is necessary if, as Nicole Bagby said, it's in line with similar and other statutes. MR. JARDELL replied that he believes it is in line with other states' statutes, but not Alaska's. Number 2125 REPRESENTATIVE COGHILL made a motion to move the CS for HB 113, Version O, [22-LS0418\O, Ford, 3/19/01] from committee with individual recommendations and the attached zero fiscal note. REPRESENTATIVE KOHRING objected for comments. He asked what prompted the need for this legislation, MR. JARDELL responded that a number of providers had approached Representative Green's office and outlined some of the problems they were having, when dealing with the insurance companies under the current statute and regulations, with timely payments and receipts to those payments. He reported that currently the statute says an insurer may pay within 30 working days and that there is a provision that if the insured puts in writing the requirement, then [the insurer] must pay within 30 working days. Under the regulations [3] AAC 26.040, there is a ten-day notification whereby the insurance company is supposed to notify [the first-party claimant], identifying the person handling the claim including the person's name, and address, and phone number ,and file number of the claim. Under [3 AAC 26.070] there's a 15-working-day notification requirement to advise, in writing, of acceptance or denial. If further time is required, the reasons must be given and then there is a 30-working-day requirement to pay a complete claim. MR. JARDELL continued, stating that under [3 AAC 26.050] there is a 30-working-day requirement to give notification that specifically states the need and reasons for additional investigative time. After that, [3 AAC 26.070] says that within 45 working days after initial notification, reasons must be given if more investigation is needed; after that, [reasons must be given] every 45 working days until the insurance company determines whether they should be paid or not. He added that there's no finality; therefore, without some structure to hold the insurance companies accountable, it was the belief of the providers that their intake procedures were not efficient or effective. He remarked that they have never been forced to be effective because there is no requirement to pay within a certain time. Number 2001 REPRESENTATIVE KOHRING remarked that he understands that there are statutory requirements in place. He stated that he was wondering if there were any specific examples [of problems]. CHAIR DYSON responded that there certainly are to him. He remarked that a significant number of medical providers had said that they were waiting up to four months to be paid. REPRESENTATIVE KOHRING added that he sees this legislation as using the heavy hand of government to force an industry to operate a certain way. REPRESENTATIVE GREEN suggested that the heavy-handedness is actually more of a compromise. He stated that [this legislation] has brought the two factions together, and that both sides have agreed through this bill. REPRESENTATIVE KOHRING removed his objection. Number 1902 CHAIR DYSON announced that there being no objection, CSHB 113(HES) moved from the House Health, Education and Social Services Standing Committee.
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