Call to Order and Roll Call
The 1st meeting of the Interim Joint Committee on Banking and Insurance was held on Tuesday, June 27, 2017, at 10:00 AM, in Room 149 of the Capitol Annex. Representative Bart Rowland, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Tom Buford, Co-Chair; Representative Bart Rowland, Co-Chair; Senators Julie Raque Adams, Jared Carpenter, Rick Girdler, Christian McDaniel, Morgan McGarvey, Dennis Parrett, Dorsey Ridley, Albert Robinson, John Schickel, and Dan "Malano" Seum; Representatives Will Coursey, Jim DuPlessis, Joseph M. Fischer, Jim Gooch Jr., Jeff Greer, Adam Koenig, Stan Lee, Chad McCoy, Michael Meredith, Steve Riggs, Wilson Stone, Scott Wells, and Addia Wuchner.
Guests: Austin McKay; Jolie Matthews, National Association of Insurance Commissioners; Greg Humkey, Christina Heckathorn, and Mindy Farnsley, Kentucky Association of Health Underwriters; Christi LeMay, Executive Vice President, Professional Insurance Agents of Kentucky; David Thornton, Greater Lexington Insurance; Commissioner Nancy Atkins, Deputy Commissioner of Policy Patrick O’Connor, and Deputy Commissioner of Administration Tony Butcher, Kentucky Department of Insurance.
LRC Staff: Sean Donaldson, Jessica Sharpe, and Dawn Johnson.
Surprise Billing
Jolie Matthews, National Association of Insurance Commissioners (NAIC), spoke on the NAIC’s Health Benefit Plan Network Access and Adequacy Model Act developed to address plan issues including surprise medical billing. She explained that surprise billing is the difference between an insurer’s payment to a provider and the provider’s charges which most often occurs when a consumer receives services from out-of-network providers, whether intentionally or unintentionally. Ms. Matthews discussed requirements for participating facilities with non-participating facility-base providers. The NAIC report concluded that the best way to insulate the consumer from the dispute was requiring the carrier and the out-of-network provider to settle a payment issue through arbitration or other means. The carrier can elect to pay the provider’s bill as submitted or pay in accordance with an established benchmark set by the state. A state can set benchmark payments based on the higher of the health carrier’s contract rate or a percentage of the Medicare payment rate for the same or similar services in the area. Ms. Matthews outlined dispute resolution approaches used by other states. Key questions that arose include: defining an appropriate payment amount, whether to regulate provider rates, should dispute resolution be mandatory or voluntary, non-binding or binding, and whether to have arbitration where the reviewer chooses one of the two parties’ final offers.
Responding to Chairman Rowland’s question, Ms. Matthews said specific carriers were not identified, however, Preferred Provider Organizations were most often involved. Consumers choosing lower cost plans experienced more surprise billings due to out-of-network services. no state has implemented the NAIC’s approach. Approximately nine states have developed a resolution process. Most states look to New York’s resolution approach.
Chairman Rowland noted the members’ folders included a report from the National Academy for State Health Policy titled “Protecting Patients from Medical Debt: State Legislative Tools to Address Surprise Billing in the Health Care Industry.”
Austin McKay, an insurance agent from Bowling Green and former president of Kentucky Association of Insurance and Financial Advisers, spoke about surprise billing issues his clients have recently experienced. He said patients should be made aware when doctors working in hospitals are out-of-network or ensure that anyone working in a hospital is in-network.
Co-Chair Bufford suggested filing legislation as a means to discuss the issue with hospital representatives.
Responding to Representative Stone’s questions, Mr. McKay said any provider practicing in a hospital should have to accept the hospital’s networks. He said some insurance plans are chosen based on the hospital the client prefers.
Senator Seum noted that small communities are limited in where they receive healthcare.
Christina Heckathorn and Greg Humkey, Benefit Advisors with Employee Benefit Associates, Inc.; and Mindy Farnsley, Benefits Specialist with Preferred Benefits explained some of the recent surprise billing issues their clients have experienced.
Representative DuPlessis questioned why consumers can be billed extravagant rates for some medical services such as $45,000 for air ambulance services. Representative Rowland and Representative Greer said the air ambulance billing issue is separate in itself and will be a topic of discussion at July’s National Conference of Insurance Legislators.
Representative Riggs said, as an agent, he finds it complicated to track in-network providers and consumers are expected to be more sophisticated than they should have to be to navigate the system.
Referring to previous testimony, Representative Gooch said allowing policyholders to change policies solely to cover upcoming medical procedures may be a part of the healthcare problem.
Representative Meredith said a big issue is services performed outside the doctor’s office such as laboratory or radiologic services.
Senator Girdler expressed concern about policy holders increasing insurance plans to cover upcoming procedures.
Representative Wuchner said there is a gap in purchasing a plan and understanding what is covered. Hospitals are inundated with unpaid bills as a result. Responding to Representative Wuchner, Ms. Farnsley said she rarely sees precertification or shopping for less expensive services.
Credit Card Processing Fees Paid by Insureds
Christi LeMay, Executive Vice President, Professional Insurance Agents of Kentucky, and David Thornton, Greater Lexington Insurance explained that some insurance agents provide a payment service allowing clients to pay for their insurance in the agent’s office. If the agent chooses to accept credit card payment the agent must absorb the 3 to 3.5 percent credit card fee resulting in the loss of almost half their revenue to provide that service. Most agents find the 18 to 20 percent that finance companies charge onerous and will therefore accept credit card payment. Mr. Thornton asked that agents be allowed to pass on the actual credit card company charge to the consumer instead of the agent having to absorb the fee.
Responding to Senator McDaniel’s question, Mr. Thornton said an insurance agent is not allowed to accept additional fees and are only allowed a set commission. Mr. Thornton explained that this refers to a specific segment of the population who cannot produce the $2,000 to $5,000 insurance premium and would like to pay via credit card. He noted that the average premium through his agency is less than $2,000 per year.
Responding to Representative DuPlessis, Mr. Thornton said the Department of Insurance does now allow agents to build in a percentage of the fees they are paid to cover such a transaction due to specifically defined sources of revenue.
Kentucky Department of Insurance
Newly appointed Commissioner Nancy Atkins, Deputy Commissioner of Policy Patrick O’Connor, and Deputy Commissioner of Administration Tony Butcher introduced themselves and gave a brief overview of the department.
Responding to Representative Greer’s question, Commissioner Atkins said the captive market is currently stable.
There being no further business to come before the committee, the meeting adjourned at 11:40 AM.