HOUSE BILL REPORT

2SSB 5346

As Passed House - Amended:

April 13, 2009

Title: An act relating to establishing streamlined and uniform administrative procedures for payors and providers of health care services.

Brief Description: Concerning administrative procedures for payors and providers of health care services.

Sponsors: Senate Committee on Ways & Means (originally sponsored by Senators Keiser, Franklin, Marr, Parlette, Murray and Kohl-Welles).

Brief History:

Committee Activity:

Health Care & Wellness: 3/19/09, 3/26/09 [DPA];

Ways & Means: 4/4/09 [DPA(HCW)].

Floor Activity

Passed House - Amended: 4/13/09, 97-0.

Majority Report: Do pass as amended. Signed by 9 members: Representatives Cody, Chair; Driscoll, Vice Chair; Campbell, Clibborn, Green, Kelley, Moeller, Morrell and Pedersen.

Minority Report: Do not pass. Signed by 4 members: Representatives Ericksen, Ranking Minority Member; Bailey, Herrera and Hinkle.

Staff: Dave Knutson (786-7146)

Majority Report: Do pass as amended by Committee on Health Care & Wellness. Signed by 20 members: Representatives Linville, Chair; Ericks, Vice Chair; Alexander, Ranking Minority Member; Bailey, Assistant Ranking Minority Member; Dammeier, Assistant Ranking Minority Member; Chandler, Cody, Darneille, Haigh, Hunt, Hunter, Kagi, Kenney, Kessler, Pettigrew, Priest, Ross, Schmick, Seaquist and Sullivan.

Staff: Chris Blake (786-7392)

Background:

At the request of the Blue Ribbon Commission on Health Care Costs and Access, the Office of the Insurance Commissioner (OIC) initiated some efforts to identify the administrative costs associated with health care. Legislation that passed in 2007 directed the OIC to formally report on opportunities to lower administrative expenses. The 2008 Legislature directed the OIC to convene a work group of health care providers, carriers, and payors, and to identify the five highest priority goals for achieving significant efficiencies and reducing health care administrative costs.

The five highest priority goals for achieving efficiencies and reducing health care administrative costs have been identified in a report submitted to the Legislature to:

• establish a standardized process and central data source for provider credentialing and other provider demographic data needs;

• amend state regulations regarding coordination-of-benefits claims processing to eliminate estimated payment requirements;

• expand electronic sharing of patient eligibility and benefits information and efficient patient cost-share collection processes;

• standardize use of pre-authorization requirements and introduce transparency where standardization is not reasonable; and

• standardize code edits and payment policies, and introduce transparency of variations where standardization is not reasonable.

The report recommends that the state establish a formal public-private partnership to develop and promote standards for simplifying these top priority administrative processes.

Summary of Amended Bill:

The Insurance Commissioner (Commissioner) must designate a lead organization to identify and convene work groups to define key processes, guidelines, and standards by December 31, 2010. The Commissioner is directed to participate in and review the work of the lead organization, adopt rules and draft any necessary legislation, form an executive-level work group, and consult with the Office of the Attorney General to determine whether an antitrust safe harbor is necessary to enable carriers and providers to develop common rules and standards.

The lead organization must develop a uniform electronic process for collecting and transmitting provider data to support credentialing, admitting privileges, and other related processes that will serve as the source of credentialing information. The work must assure that data used in the uniform electronic process can be electronically exchanged with the Department of Health's professional licensing process. The lead organization must establish a uniform standard companion document and data set for electronic eligibility and coverage verification. Patient information must provide detailed information on the eligibility and the benefit coverage and cost-sharing requirements that assist the provider with collection of the patient cost-sharing. The lead organization must develop implementation guidelines for the use of code edits, including use of the National Correct Coding Initiative code edit policy, publication of any variations in codes, and use of the Health Insurance Portability and Accountability Act standard group codes, reason codes, and remark codes. The lead organization must develop a proposed set of goals and a work plan for additional code standardization efforts by October 31, 2010.

The lead organization must develop guidelines to ensure payors do not automatically deny claims for services when extenuating circumstances interfere with a provider obtaining preauthorization before services are performed, or delayed provider notification to the payor of a patient's admission. The guidelines should require payors use common and consistent timeframes for reviewing requests for medical management, consistent where possible with standards established by a national organization. The lead organization must develop a single, common website for providers to obtain payors' preauthorization, benefits advisory, and preadmission requirements. By October 31, 2010, the lead organization must develop a set of goals and a work plan for the development of medical management protocols.

The Department of Social and Health Services, the Health Care Authority, and the Department of Labor and Industries, to the extent possible under their laws in Title 51, must adopt the processes and guidelines recommended by the lead organization.

Payors are allowed to develop and implement temporary code edits to detect and deter aberrant billing patterns that could expose fraudulent billings. Implementation of administrative simplification guidelines by state agencies is contingent upon funding provided in the budget.

Appropriation: None.

Fiscal Note: Preliminary fiscal note available.

Effective Date of Amended Bill: The bill takes effect 90 days after adjournment of the session in which the bill is passed.

Staff Summary of Public Testimony (Health Care & Wellness):

(In support) It is important to improve consistency and reduce administrative complexity in the health care field. This should save money and free up health care providers' time to actually deliver patient care rather than dealing with complex administrative requirements.

(Opposed) None.

Staff Summary of Public Testimony (Ways & Means):

(In support) This bill reflects the recommendations of an Insurance Commissioner report issued last year related to administrative simplification. For a very small investment, this bill establishes a framework to simplify the administration of the health care system that would lead to cost reductions. This bill will ease the burdens on physician offices by streamlining the rules and requirements of all of the different health plans.

(Opposed) None.

Persons Testifying (Health Care & Wellness): Senator Keiser, prime sponsor; Peggy Quan, American Association of Retired Persons; Abbi Kaplan, Washington Health Care Forum; Tim Layton, Washington State Medical Association; and Mel Sorensen, America's Health Insurance Plans.

Persons Testifying (Ways & Means): Tim Layton, Washington State Medical Association; and Pete Cutler, Office of the Insurance Commissioner.

Persons Signed In To Testify But Not Testifying (Health Care & Wellness): None.

Persons Signed In To Testify But Not Testifying (Ways & Means): None.