insurance; third party
intermediary; bond
HB 2277 eliminates the statutory
exemption requiring third party intermediaries to post a bond in relation to
contracted services with health care providers.
Current Status
HB 2277 was amended in the Financial Institutions and Insurance Committee to add session law exempting existing third party intermediaries currently holding contracts with health care providers from the provisions of the bill.
HB 2600 (Laws 2000, Chapter 37)
contained numerous changes to statutes governing managed health care
plans. Among them was a requirement
that third party intermediaries (TPA) assuming risk post a bond in the amount
of two months annualized revenue. This
was intended to protect insureds, health care providers and health care
insurers whose monies the intermediary handled, particularly in the instance of
insolvency. Subsequently, HB 2117 (Laws
2001, Chapter 328) was enacted to address the issue of insolvency and
prioritization of payment of claims. In
particular, the bill created a bonding exemption for third party
intermediaries. Specifically, the bill
provided the exemption if:
·
the TPA was not delegated the
responsibility to process and pay the claims of the health care providers for
which the intermediary has assumed the business risk; or
·
the TPA was delegated the
responsibility to process and pay the claims of health care providers, but held
a contract with the health care provider that stipulated that the provider
agreed to hold the health care insurers harmless from having to pay the claims
of the health care providers in the event that the intermediary failed to pay
such claims.
After the legislation went into
effect, an entity exempt from the bonding requirement became insolvent, leaving
health care providers uncompensated for services provided. The proposed legislation eliminates the
exemption and restores the original bonding requirement set forth in HB 2600.
HB 2277 was amended
in the Financial Institutions and Insurance Committee as follows:
Establishes session law exempting existing third
party intermediaries currently holding contracts with health care providers
from the provisions of the bill. The
amendment requires any risk assuming third party intermediary to notify the
Department of Insurance that they are in operation
and identify the health care institution for which services are provided.