2012 -- S 2287

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LC00809

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- HEALTH INSURANCE

OVERSIGHT

     Introduced By: Senators Miller, Perry, Picard, Jabour, and Nesselbush

     Date Introduced: February 01, 2012

     Referred To: Senate Health & Human Services

It is enacted by the General Assembly as follows:

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     SECTION 1. The general assembly hereby finds and declares that:

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     (1) Reducing readmissions, preventing hospital acquired conditions, placing greater

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emphasis on primary and preventative care, and other improvements, are critical to reducing costs

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and improving healthcare quality;

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     (2) That the fee-for-service (FFS) model is a payment mechanism wherein a provider is

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paid for each individual service rendered to a patient;

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     (3) That under the fee-for-service reimbursement model, efforts such as reducing

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readmissions, preventing hospital acquired conditions, and placing greater emphasis on primary

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and preventative care can result in reduced revenue to hospitals;

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     (4) That insurers and hospitals are beginning to implement new payment methodologies

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that better align financial incentives with improved safety, care, and quality;

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     (5) That the 2011 special senate commission to study cost containment, efficiency, and

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transparency in the delivery of quality patient care and access by hospitals testimony

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recommended expediting the full transition away from fee-for-service payment methodologies by

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2014; and

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     (6) That monitoring the market transition away from fee-for-service models and reporting

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this information to the general assembly is critical to ensuring this transition is taking place and

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informing any measures the general assembly may elect to consider to further encourage and

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accelerate this transition.

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     SECTION 2. Section 42-14.5-3 of the General Laws in Chapter 42-14.5 entitled "The

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Rhode Island Health Care Reform Act of 2004 - Health Insurance Oversight" is hereby amended

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to read as follows:

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     42-14.5-3. Powers and duties. [Contingent effective date; see effective dates under

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this section.] -- The health insurance commissioner shall have the following powers and duties:

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      (a) To conduct quarterly public meetings throughout the state, separate and distinct from

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rate hearings pursuant to section 42-62-13, regarding the rates, services and operations of insurers

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licensed to provide health insurance in the state the effects of such rates, services and operations

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on consumers, medical care providers, patients, and the market environment in which such

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insurers operate and efforts to bring new health insurers into the Rhode Island market. Notice of

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not less than ten (10) days of said hearing(s) shall go to the general assembly, the governor, the

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Rhode Island Medical Society, the Hospital Association of Rhode Island, the director of health,

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the attorney general and the chambers of commerce. Public notice shall be posted on the

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department's web site and given in the newspaper of general circulation, and to any entity in

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writing requesting notice.

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      (b) To make recommendations to the governor and the house of representatives and

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senate finance committees regarding health care insurance and the regulations, rates, services,

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administrative expenses, reserve requirements, and operations of insurers providing health

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insurance in the state, and to prepare or comment on, upon the request of the governor, or

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chairpersons of the house or senate finance committees, draft legislation to improve the regulation

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of health insurance. In making such recommendations, the commissioner shall recognize that it is

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the intent of the legislature that the maximum disclosure be provided regarding the

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reasonableness of individual administrative expenditures as well as total administrative costs. The

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commissioner shall also make recommendations on the levels of reserves including consideration

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of: targeted reserve levels; trends in the increase or decrease of reserve levels; and insurer plans

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for distributing excess reserves.

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      (c) To establish a consumer/business/labor/medical advisory council to obtain

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information and present concerns of consumers, business and medical providers affected by

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health insurance decisions. The council shall develop proposals to allow the market for small

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business health insurance to be affordable and fairer. The council shall be involved in the

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planning and conduct of the quarterly public meetings in accordance with subsection (a) above.

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The advisory council shall develop measures to inform small businesses of an insurance

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complaint process to ensure that small businesses that experience rate increases in a given year

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may request and receive a formal review by the department. The advisory council shall assess

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views of the health provider community relative to insurance rates of reimbursement, billing and

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reimbursement procedures, and the insurers' role in promoting efficient and high quality health

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care. The advisory council shall issue an annual report of findings and recommendations to the

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governor and the general assembly and present their findings at hearings before the house and

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senate finance committees. The advisory council is to be diverse in interests and shall include

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representatives of community consumer organizations; small businesses, other than those

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involved in the sale of insurance products; and hospital, medical, and other health provider

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organizations. Such representatives shall be nominated by their respective organizations. The

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advisory council shall be co-chaired by the health insurance commissioner and a community

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consumer organization or small business member to be elected by the full advisory council.

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      (d) To establish and provide guidance and assistance to a subcommittee ("The

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Professional Provider-Health Plan Work Group") of the advisory council created pursuant to

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subsection (c) above, composed of health care providers and Rhode Island licensed health plans.

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This subcommittee shall include in its annual report and presentation before the house and senate

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finance committees the following information:

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      (i) A method whereby health plans shall disclose to contracted providers the fee

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schedules used to provide payment to those providers for services rendered to covered patients;

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      (ii) A standardized provider application and credentials verification process, for the

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purpose of verifying professional qualifications of participating health care providers;

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      (iii) The uniform health plan claim form utilized by participating providers;

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      (iv) Methods for health maintenance organizations as defined by section 27-41-1, and

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nonprofit hospital or medical service corporations as defined by chapters 27-19 and 27-20, to

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make facility-specific data and other medical service-specific data available in reasonably

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consistent formats to patients regarding quality and costs. This information would help consumers

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make informed choices regarding the facilities and/or clinicians or physician practices at which to

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seek care. Among the items considered would be the unique health services and other public

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goods provided by facilities and/or clinicians or physician practices in establishing the most

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appropriate cost comparisons.

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      (v) All activities related to contractual disclosure to participating providers of the

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mechanisms for resolving health plan/provider disputes; and

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      (vi) The uniform process being utilized for confirming in real time patient insurance

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enrollment status, benefits coverage, including co-pays and deductibles.

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      (vii) Information related to temporary credentialing of providers seeking to participate in

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the plan's network and the impact of said activity on health plan accreditation;

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      (viii) The feasibility of regular contract renegotiations between plans and the providers

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in their networks.

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      (ix) Efforts conducted related to reviewing impact of silent PPOs on physician practices.

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      (e) To enforce the provisions of Title 27 and Title 42 as set forth in section 42-14-5(d).

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      (f) To provide analysis of the Rhode Island Affordable Health Plan Reinsurance Fund.

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The fund shall be used to effectuate the provisions of sections 27-18.5-8 and 27-50-17.

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      (g) To analyze the impact of changing the rating guidelines and/or merging the

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individual health insurance market as defined in chapter 27-18.5 and the small employer health

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insurance market as defined in chapter 27-50 in accordance with the following:

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      (i) The analysis shall forecast the likely rate increases required to effect the changes

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recommended pursuant to the preceding subsection (g) in the direct pay market and small

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employer health insurance market over the next five (5) years, based on the current rating

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structure, and current products.

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      (ii) The analysis shall include examining the impact of merging the individual and small

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employer markets on premiums charged to individuals and small employer groups.

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      (iii) The analysis shall include examining the impact on rates in each of the individual

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and small employer health insurance markets and the number of insureds in the context of

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possible changes to the rating guidelines used for small employer groups, including: community

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rating principles; expanding small employer rate bonds beyond the current range; increasing the

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employer group size in the small group market; and/or adding rating factors for broker and/or

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tobacco use.

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      (iv) The analysis shall include examining the adequacy of current statutory and

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regulatory oversight of the rating process and factors employed by the participants in the

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proposed new merged market.

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      (v) The analysis shall include assessment of possible reinsurance mechanisms and/or

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federal high-risk pool structures and funding to support the health insurance market in Rhode

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Island by reducing the risk of adverse selection and the incremental insurance premiums charged

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for this risk, and/or by making health insurance affordable for a selected at-risk population.

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      (vi) The health insurance commissioner shall work with an insurance market merger task

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force to assist with the analysis. The task force shall be chaired by the health insurance

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commissioner and shall include, but not be limited to, representatives of the general assembly, the

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business community, small employer carriers as defined in section 27-50-3, carriers offering

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coverage in the individual market in Rhode Island, health insurance brokers and members of the

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general public.

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      (vii) For the purposes of conducting this analysis, the commissioner may contract with

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an outside organization with expertise in fiscal analysis of the private insurance market. In

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conducting its study, the organization shall, to the extent possible, obtain and use actual health

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plan data. Said data shall be subject to state and federal laws and regulations governing

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confidentiality of health care and proprietary information.

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      (viii) The task force shall meet as necessary and include their findings in the annual

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report and the commissioner shall include the information in the annual presentation before the

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house and senate finance committees.

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     (h)(i) To monitor a transition away from fee-for-service and toward global and other

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alternative payment methodologies for the payment of healthcare, and to promote access to

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affordable health insurance, the health insurance commissioner shall:

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     (A) Annually collect from each health insurer operating in the State of Rhode Island

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information regarding the number and percentage of their hospital contracts that continue to use

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fee-for-service payment methodologies and the number and percentage of their hospital contracts

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that use alternative payment methodologies.

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     (B) Annually collect from each health insurer operating in the State of Rhode Island de-

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identified information regarding the types of alternative payment methodologies implemented

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with hospitals.

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     (C) By March 31, 2013 and the same date each subsequent year, submit a report to the

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general assembly detailing:

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     (I) The extent that fee-for-service payment methodologies are being phased out;

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     (II) The number, percentage, and types of alternative methodologies that have been

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adopted; and

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     (III) Any improvements towards administrative simplification in hospital and insurer

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payment transactions that can be attributed to the adoption of alternative payment methodologies.

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     (D) Notwithstanding any other provision of this subsection, the commissioner shall

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encourage and assist providers with the voluntary adoption of alternative payment methodologies

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as much as practicable relative to funding and resources available to the office under this chapter.

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     SECTION 3. This act shall take effect upon passage.

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LC00809

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- HEALTH INSURANCE

OVERSIGHT

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     This act would require the health insurance commissioner monitor a transition away from

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fee-for-service and toward global and other alternative payment methodologies for the payment

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of healthcare.

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      This act would take effect upon passage.

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LC00809

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