Insurance; third party
intermediaries; bond
DPA |
Committee on Financial Institutions and Insurance |
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dpa |
Caucus and COW |
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DPA |
Third Read |
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DPA |
As Passed the House |
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As Transmitted to the Governor |
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HB 2277 eliminates the statutory exemption requiring third party
intermediaries to post a bond in relation to contracted services with health
care providers. The bill establishes session law exempting existing
third party intermediaries, but requires notification to the Department of
Insurance that they are in operation.
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:
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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.
· Reduces the bond requirement from two months to one month annualized revenue for an intermediary with the contractual responsibility to process and pay claims.
· Stipulates that exempt intermediaries must provide an affidavit attesting that all subcontracts with health care providers contain a provision specifying that insurers and insureds are held harmless if the intermediary fails to pay the claims.
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45th Legislature
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Second Regular Session 2 June
6, 2002
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