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F I S C A L I M P A C T R E P O R T

SPONSOR King

DATE TYPED 3/7/05

HB 624/aHJC

SHORT TITLE PRC Review of Patient Protection Act Appeals

SB

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

Duplicates SB 374

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Public Regulation Commission (PRC)

Public School Insurance Authority (PRC)

Retiree Health Care Authority (RHCA)

SUMMARY

Synopsis of HJC Amendment

The House Judiciary Committee amendment to House Bill 624 deletes language requiring the

superintendent to fix the reasonable compensation of each appointee based upon, but not limited

to, compensation amounts suggested by national or state legal or medical professional societies,

organizations or associations. Upon completion of the external grievance appeal review, the su-

perintendent shall prepare a detailed statement of compensation due each appointee and shall

present the statement to the enrollee's health insurer.

Synopsis of Original Bill

House Bill 624 eliminates the Insurance Superintendent’s adjudication and rule-making role in

reviewing external appeals or non-utilization complaints under the Patient Protection Act and the

Insurance Division’s (ID) Managed Health Care and Grievance Procedure Rules.

House Bill 624/aHJC -- Page 2

The bill establishes the Public Regulation Commissioners as the decision-makers for managed

health care grievance appeals and non-utilization complaints.

This bill also grants the Public Regulation Commissioners the rule-making authority to imple-

ment the grievance and complaint processes and impose administrative penalties.

Significant Issues

The PRC provided the following:

This bill may complicate the Superintendent’s ability to set policy and regulate managed health

care plans. The Superintendent and ID staff has developed a historical and institutional knowl-

edge and expertise in interpreting insurance coverage and administering the Patient Protection

Act. The fact that these responsibilities have been housed within the ID has assisted the Superin-

tendent and staff in closely monitoring trends, interacting with the industry and consumers

through task forces, and appropriately responding through rule, investigation, examination or

other action to remedy business practices in a manner that maximizes the competitiveness and

solvency in the delicate commercial managed health care market and consumer protection.

This bill also poses a cost-benefit policy question as to whether the existing or proposed alterna-

tive dispute resolution system best serves managed health care plans and consumers who are the

parties to grievance appeals. Is a single appointed decision-maker in the form of a Superinten-

dent, who is supervised by the Public Regulation Commissioners a more cost-effective, qualita-

tive and timely framework to better serve managed health care plans and consumers.

Due to the unique rights of managed health care enrollees under the Managed Health Care Rule

and Patient Protection Act, the managed health care bureau was established in the ID in 1999.

Under the original 1999 program design, the ID developed a “Managed Health Care Assistance

and Advocacy Program” with three primary goals:

• regulation & enforcement;

• consumer assistance & advocacy; and

• education & outreach.

Under this design, the key function of the managed health care bureau was to assist the Superin-

tendent in administering requests for external review appeals for enrollees who had been denied

a requested health care service by a managed health care plan. Staff also monitored the internal

review process, reviewed compliance plans, assisted other ID units such as the life and health

form and rate filing units and the examinations units in reviewing managed health care contracts,

worked closely with the life and health actuary in administrative enforcement actions and an-

swering consumer inquiries.

Over time, the education and outreach functions of the unit were developed to provide standard

Power-Point presentations around the State to advise enrollees of commercial health care plans

of their rights under the Patient Protection Act and the Superintendent’s grievance procedures.

Being an alternative dispute resolution process, the managed health care unit has never engaged

in the role of consumer advocate, but assists the Superintendent in administering and enforcing

the Patient Protection Act and Managed Health Care Rule. For instance, the patient and the

House Bill 624/aHJC -- Page 3

managed health care plan are the parties to a grievance with the Superintendent exercising the

role of administrative decision maker. The managed health care unit staff assists the parties and

the Superintendent in administering this process.

FISCAL IMPLICATIONS

The PRC may need increased staff and fiscal support in terms of hearing officers, general coun-

sel attorneys, legal division staff attorneys, court reporters and other costs associated with admin-

istering, hearing and enforcing these grievance appeals and rules. Such resources could come

from the managed health care unit in the ID.

ADMINISTRATIVE IMPLICATIONS

The PRC will need to reassign existing staff to fulfill the requirements of this bill.

DUPLICATION

HB 624 duplicates SB 374.

DW/njw:yr