Call to Order and Roll Call
The 1st meeting of the Interim Joint Committee on Banking and Insurance was held on Tuesday, June 28, 2016, at 10:00 AM, in Room 149 of the Capitol Annex. Representative Jeff Greer, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Tom Buford, Co-Chair; Representative Jeff Greer, Co-Chair; Senators Julie Raque Adams, Jared Carpenter, Chris Girdler, Christian McDaniel, Morgan McGarvey, Dennis Parrett, Albert Robinson, John Schickel, and Dan "Malano" Seum; Representatives Will Coursey, Ron Crimm, Joseph M. Fischer, Chris Harris, Dennis Horlander, Thomas Kerr, Adam Koenig, Michael Meredith, Russ A. Meyer, David Osborne, Sannie Overly, Ruth Ann Palumbo, Steve Riggs, Jonathan Shell, Fitz Steele, Wilson Stone, James Tipton, and Ken Upchurch.
Guests: Kevin Winstead, Assistant Attorney General; Eric Ellman, Senior Vice President, Public Policy and Legal Affairs, Consumer Data Industry Association; Tim Pickering, Director of Government Affairs, Air Evac EMS; Rusty Cress and David Kennedy, America’s Health Insurance Plans; Lawrence Ford, Senior Director, Government Relations, Anthem Insurance; and Derek Dennison.
Legislative Guests: Senator Ralph Alvarado.
LRC Staff: Sean Donaldson, Dale Hardy, and Dawn Johnson.
Credit Freezes for Protected Consumers
Representative Sannie Overly and Senator Ralph Alvarado explained the provisions of legislation from the 2016 General Assembly that would provide protection of online identities and credit profiles of children. The proposed legislation was drafted with the assistance of the Consumer Data Industry Association to reflect what other states have enacted. Representative Overly stated that under current Kentucky statute parents and legal guardians are unable to place a “credit freeze” on a child’s credit record. Twenty-two states have some form of similar protective legislation. Referring to a 2012 child identity theft report, Representative Overly stated children are 35 times more likely to experience identity theft than an adult. Identity theft of a child may go unnoticed for years. Senator Alvarado said he also worked with the Retail Federation, and the House and Senate bills became “sister bills” in both chambers. He said the Senate bill also included language for individuals who are vulnerable and require guardianship, who have mental instabilities, and cannot handle their own financial affairs that would allow guardians to place credit freezes on their behalf. He noted three other states have enacted legislation since the 2016 session. Senator Alvarado and Representative Overly urged support of the bills in the 2017 legislative session.
Responding to Representative Riggs’ question, Representative Overly said under current law a person cannot request a credit freeze for another person and anyone 16 and over can place their own credit freeze.
Kevin Winstead, Assistant Attorney General said, based on national reports of consumer identity theft, approximately 200,000 reported identity thefts occur in Kentucky. Potentially, 5 to 10 percent of those thefts are children. He stated security freezes are an important tool in consumer protection.
Responding to Chairman Buford’s question Mr. Winstead said his office will assist anyone who requests assistance by providing information on services available.
Representative Overly said the legislation could be used proactively by issuing a credit freeze before a theft occurred.
Responding to Representative Crimm’s question Representative Overly said her legislation was based on a request by a constituent whose family’s personal information was breached through a third party--the insurance company. Senator Alvarado added that newborns are issued Social Security numbers that can then be compromised through insurance companies.
Eric Ellman, Senior Vice President, Public Policy and Legal Affairs, Consumer Data Industry Association said CDIA worked closely with the bill sponsors and are willing to do so again in 2017. The CDIA requested a delay in the effective date to allow time to implement the legislation. The bills include substantial penalties for consumer reporting agencies that commit a willful violation. Responding to Senator Seum’s question, he said Social Security numbers are no longer related to the birth year of the applicant.
Air Ambulance Billing Issues
Tim Pickering, Director of Government Affairs, Air Evac EMS explained that the agency has 18 air medical bases statewide that primarily serve rural areas. Air medical services are very costly and not for every patient. As part of the first responders system, Air Evac works under protocols established by the Kentucky Board of Emergency Medical Services. Ninety percent of the $2.5 to $3 million expenses to transport approximately 328 patients annually are fixed. Mr. Pickering provided information comparing Kentucky’s services to Montana. Nationwide, most private insurance companies pay 90 to 100 percent of billed charges with the patient paying only coinsurance and deductibles. In Kentucky, major insurance companies often pay 30 to 40 percent of billed charges with the patient paying the remainder plus coinsurance and deductibles. Mr. Pickering noted that Florida’s HMO-based statutory language would, for the most part, equally address some of these issues. He mentioned legislation sponsored by Representative McKee that addressed price transparency, however, it was specific to the air medical industry not all entities involved in patient which includes health care insurance carriers. He also noted Senator Buford’s proposed legislation requiring a fair and reasonable rate for emergency services as well as direct payment to the provider.
Responding to Chairman Buford’s and Representative Horlander’s questions, Mr. Pickering said that payments sent directly to the beneficiary are difficult to collect. It would be helpful if payment is sent directly to the company. The only litigation is with patients who receive payments and do not submit payment to the company.
In response to Senator Parrett’s questions Mr. Pickering said EMS requirements based on federal guidelines determine when air services are used. The senior staff persons on the scene make the determination.
Responding to Senator McDaniel’s question, Mr. Pickering said that it would be most beneficial of the payment services did not involve the patient. However, as a small emergency healthcare provider, Air Evac is unable to negotiate fair and reasonable market value rates. The “usual and customary rate” based on the market index as set in a geographic area by like services for a certain time period using the Fair Health Database would be ideal.
Representative Riggs said an issue to consider is how much service should be provided to people who choose to live in remote areas.
Responding to Representative Meredith question, Mr. Pickering said the subscription service is a minimal part of Air Evac’s profitability.
Rusty Cress with America’s Health Insurance Plans introduced David Kennedy. Mr. Kennedy gave an overview of the agency, a national association representing health insurance plans whose members provide health insurance and supplemental benefits through employer-sponsored coverage, the individual insurance market, and public programs such as Medicare and Medicaid. The agency advocates public policies that expand access to affordable healthcare coverage.
Mr. Derek Dennison explained his experience of being billed in excess of $30,000 after being airlifted following a collision with a truck and subsequent minor head injury while running.
Responding to Chairman Buford’s question Mr. Pickering said air services provided at the request of a physician are plan-specific. Lawrence Ford, Senior Director of Government Relations, Anthem Insurance, said hospital to hospital transfer via air must meet certain criteria for payment to be paid at 200 percent of the rural Medicare rate, for Anthem health plans.
There being no further business, the meeting was adjourned at 11:45 AM.