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KONNOR SMITH LEGISLATIVE RESEARCH INTERN |
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CHERIE STONE |
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LEGISLATIVE RESEARCH ANALYST HEALTH & HUMAN SERVICES COMMITTEE Telephone: (602) 926-3171 |
ARIZONA STATE SENATE
RESEARCH STAFF
TO: MEMBERS OF THE SENATE
HEALTH & HUMAN SERVICES COMMITTEE
DATE: February 10, 2020
SUBJECT: Strike everything amendment to S.B. 1024, relating to the applicability of out-of-network claims.
Purpose
Applies the out-of-network claim dispute resolution requirements to a
self-funded or
self-insured employee benefit plan that is otherwise preempted by the Employee
Retirement Income Security Act (ERISA) if the entity administering the plan
enters into a contract with the Department of Insurance (DOI) to voluntarily
comply with the specified requirements.
Background
Current statute outlines a process by which an enrollee of a health insurance plan who receives a surprise out-of-network bill (bill) may seek dispute resolution. The dispute resolution process consists of an informal settlement teleconference between the enrollee, the health care insurer (insurer) and the health care provider (provider), followed by an independent arbitration if no settlement to the disputed bill is reached. An enrollee may seek dispute resolution if: 1) the enrollee has resolved any existing health care appeal against the insurer following the insurer's initial adjudication of the claim; 2) the enrollee has not instituted legal action against the insurer or provider related to the same surprise bill or the health care services provided; and 3) the amount for which the enrollee is responsible, after deduction of their cost sharing requirements and the insurer's allowable reimbursement, is at least $1,000 (A.R.S. § 20-3114).
According to the National Conference of State Legislatures (NCSL), self-insurance refers to coverage that is provided by an organization seeking coverage for its members. These organizations set aside funds and pay for health benefits directly and bear the risk for covering medical expenses. Since self-insured plans are not purchased from an insurance carrier licensed by the state, they are exempt from state requirements and subject only to federal regulation (NCSL).
According to the U.S. Department of Labor (DOL), ERISA is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. ERISA: 1) requires plans to provide participants with plan information; 2) sets minimum standards for participation, vesting, benefit accrual and funding; 3) provides fiduciary responsibilities for those who manage and control plan assets; 4) requires plans to establish a grievance and appeals process for participants to get benefits from their plans; gives participants the right to sue for benefits and breaches of fiduciary duty; and 5) guarantees payment of certain benefits through a federally chartered corporation if a defined benefit plan is terminated. ERISA does not generally cover plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable worker compensation, unemployment or disability laws (DOL).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Applies the out-of-network claim dispute resolution process to a self-funded or self-insured employee benefit plan that is otherwise preempted by ERISA if the entity that administers the plan enters into a contract with DOI to voluntarily comply with the outlined claim dispute resolution and arbitration requirements.
2. Removes the exemption from out-of-network claim dispute resolution requirements for health plans that do not include coverage for out-of-network health care services and state health and accident coverage for full-time Arizona officers and employees and their dependents.
3. Allows an entity that administers a self-funded or self-insured employee benefit plan that is otherwise preempted from state regulation by ERISA to enter into a written agreement with DOI where the entity agrees to comply with the specified requirements and DOI agrees to allow the plan's enrollees to participate in the dispute resolution and arbitration proceedings.
4. Allows DOI to charge an ERISA entity a fee, in an amount determined by the DOI Director, for entering into a written agreement.
5. Expands the definition of a health insurer to include a health care services organization.
6. Includes a legislative intent clause.
7. Makes technical and conforming changes.
8. Becomes effective on the general effective date.
