HOUSE BILL NO. 113 An Act relating to health care insurance payments for hospital or medical services; and providing for an effective date. REPRESENTATIVE JOE GREEN testified that HB 113 would build upon a national trend to develop fair payment provisions that would enable health insurance companies to make sound business decisions while ensuring that patients receive benefit payments in an appropriate time frame. The concept of "prompt pay" legislation has been successfully adopted and implemented by 39 states. HB 113 requires health insurers to pay benefits within thirty calendar days of receiving a "clean claim". If a payment is not made on time, the insurer would be charged interest on the outstanding claim. HB 113 would also establish a definition for "clean claim" that recognizes an insurance company's need to make payment decisions based upon complete and accurate information. Vice-Chair Bunde noted that since the legislation indicates that interest would be paid for delayed payments, that concept indicates that currently, the insurance companies are making money on those payments delayed past thirty days. He asked if it was known what that amount was nationally. Representative Green explained that there is a presumption by the insurance companies that if they delay payment, they then have use of that money. Representative Croft asked about the definition of clean claim. He asked if it had been "tested" in other states. KEVIN JARDELL, STAFF, REPRESENTATIVE JOE GREEN, responded that the definition of "clean claim" has been addressed by many states and is difficult to formulate. He noted that the definition chosen, benefits insurance companies and is broadly written. Physicians requested that "hard" date lines be established. Clean claim terminology comes from the Medicare definition. Representative Croft asked an alternative definition. Mr. Jardell replied that the American Medical Association (AMA) is agreeable with the proposed definition. He stressed that the intent was not to undermine the viability of insurance companies in Alaska. Representative Croft asked where the procedures would be outlined regarding whether the insurance companies owe the claim or not. Mr. Jardell replied that the claimant would go through the Insurance Division by filing a complaint. It is the intent that the legislation would make insurance companies develop more efficient methods of paying claims. Representative Davies referenced Page 4, and asked if the qualifier that precludes timely payments on the claim, apply into propriety as well as circumstances. Mr. Jardell understood that it would not apply to language that resulted from a technical or grammatical error. If the information needed had been included on the claim, then that claim would be a clean claim. Representative Green advised that most of the larger insurance companies insure more than one state and that this language was used by a significant number of states. He stated that it was reasonable. Representative Hudson asked if the "clean claim" would be impacted by Medicare's delay response. Representative Green replied that the legislation would apply between the insured and the insurance company. JAMES JORDAN, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE DIRECTOR, ALASKA STATE MEDICAL ASSOCIATION, ANCHORAGE, testified that the Alaska State Medical Association does support the proposed legislation. He stated that "clean claim" definition included in the bill is based on Medicare's definition. Currently, there are regulations being adopted on the federal level, which deal with the confidentiality of medical records and information for the payment of health insurance claims. In enacting that bill, Mr. Jordan stated that there would be an activation of regulations. It is anticipated that the State Division of Insurance will adopt regulations defining what a clean claim is. Representative Davies asked how to read Subsection K, Page 4, the qualifier of timely payments. He asked if that would be in reference to all three clauses, the defect, the impropriety and the circumstance. Mr. Jordan replied that it would. Representative Hudson MOVED to report CS HB 113 (HES) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Harris OBJECTED in order to ask about all the fiscal notes. Representative Green stated that they were all zero. Representative Harris WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. CS HB 113 (HES) was reported out of Committee with a "do pass" recommendations and with zero fiscal notes by Department of Administration and Department of Community & Economic Development dated 3/07/01.