Hawaii-2012-SB2299-Introduced

SECTION 1. In 2007, the State transitioned its fee-for-service medicaid program for beneficiaries who are sixty-five years or older and disabled of all ages, to a managed care program named QUEST expanded access. The stated goals of QUEST expanded access include reduced fragmentation, improved quality, and reduced cost of care provided by the program. In addition, the program is intended to be fiscally predictable, stable, and sustainable to ensure access to high quality and cost-effective care for its approximately thirty-nine thousand beneficiaries.

QUEST expanded access is administered by the department of human services and health plan administrative services are contracted to private managed care health insurers. Beneficiaries of the QUEST expanded access program are low-income persons who typically have multiple medical conditions and require care from multiple providers. The annual budget of QUEST expanded access is approximately $500,000,000. The contracts with the private health insurers who now manage enrollee care represent two of the largest service contracts ever issued by the State.

The legislature finds that UnitedHealth Group and WellCare Health Plans, Inc., which operate in the State as Evercare and Ohana Health Plan, respectively, are the only insurers the department of human services contracted with to provide managed care services for the QUEST expanded access program. Both Evercare and Ohana Health Plan are private, for-profit health plans based on the mainland.

At the time of the procurement for the QUEST expanded access contracts, there were many concerns expressed by the health care community and state and national policymakers about the wisdom of hiring the for-profit companies, with their primary loyalty to their shareholders, for services traditionally performed in Hawaii by non-profit, local insurance plans. Among those who questioned the policy was then-Congressman Neil Abercrombie, who expressed concern about jobs being removed from the State, in addition to the financial transactions necessary to attract for-profit companies and the lack of knowledge of Hawaii's unique population, lack of support from providers, and ability of mainland entities to provide effective customer service.

Throughout QUEST expanded access' history, enrollees, advocates, and health care providers have raised frequent complaints about the program and have expressed serious concern that QUEST expanded access is failing to meet its stated goals. For example, QUEST expanded access has been criticized for denying important services requested by patients and their doctors, denying payment to providers for covered goods and services, late payments to providers, and imposing a high degree of administrative burden on providers. The plans were also unable to perform the services for the price of their original bids, and were granted a large increase in fees in 2010 without the department of human services rebidding the contract.

Unfavorable opinion of Evercare and Ohana Health Plan by providers has been verified by regular surveys conducted on behalf of the department of human services. Evercare and Ohana Health Plan have been criticized for having problems that compromise the continuity and quality of QUEST expanded access care, among them, difficulty receiving authorization for medication, inadequacies in physician provider lists, lack of service coordination, communication lapses, and considerable wait times in obtaining assistance through health plan customer service call centers.

As a result, health care providers are discouraged from participating in QUEST expanded access provider networks relied upon by QUEST expanded access' medically frail and vulnerable population for necessary care. This raises questions about the ability of QUEST expanded access health plans to maintain adequate provider networks as doctors resist participation due to the company's poor reputation. Despite the department of human services internal audits, these problems persist.

Additionally, there are widespread media reports about similar problems with the parent companies, WellCare Health Plans, Inc., and UnitedHealth Group, in other jurisdictions which have resulted in federal sanctions and legal issues.

Questions have also been raised about the department of human services practice of reimbursing for-profit health plans the 4.265 per cent insurance premium tax mandated of all for-profit insurers doing business in Hawaii. The speculation is that the practice was initiated by the department of human services under then-Governor Linda Lingle to make it financially feasible for the for-profit companies to bid on the QUEST expanded access contract. In 2010, the legislature attempted to prohibit special treatment of the premium tax expense and passed Act 69, Session Laws of Hawaii 2010, by overriding a veto by then-Governor Lingle. However, despite Act 69's clear legislative intent, the department of human services has continued the policy for the QUEST expanded access contract and is now also using a nearly identical preferential system for QUEST contracts. Procurement for QUEST, the medicaid program for low-income individuals under the age of sixty-five years, is currently underway with contracts scheduled to take effect July 1, 2012. QUEST has approximately 235,000 enrollees with an annual budget of $800,000,000 for contracts with health insurers to manage enrollee care.

These issues also must be reviewed in the light of sweeping new changes in the health care system being implemented in Hawaii and across the nation. Governor Abercrombie has established the healthcare transformation coordinator and senior healthcare advisor who are actively leading initiatives involving all health care stakeholders. The legislature is considering legislation relating to health system reforms involving the Hawaii health insurance exchange, the Hawaii health information exchange, and other efforts. Likewise, major policy decisions surrounding the medicaid program should be carried out with ample opportunity for legislative and public input and debate.

The legislature finds it is in the public's interest to have clear and unambiguous data and independent review of the performance of the companies, the QUEST expanded access program, and the state management of the program.

The purpose of this Act is to direct the auditor to conduct a management and financial audit of the services provided by Evercare and Ohana Health Plan to medicaid clients under QUEST expanded access.

SECTION 2. The auditor is directed to conduct a management and financial audit of the QUEST expanded access program. The audit shall evaluate, among other things, the following:

(1) The quality and efficiency of services provided to medicaid clients by Evercare and Ohana Health Plan;

(2) Provider network adequacy of Evercare and Ohana Health Plan;

(3) Client access to services provided by Evercare and Ohana Health Plan;

(4) Timeliness of payments to providers by Evercare and Ohana Health Plan;

(5) The history of the department of human services' management decisions involving the QUEST expanded access and QUEST procurements, the premium tax, and compliance with the legislative intent of Act 69, Session Laws of Hawaii 2010; and

(6) The adequacy of the department of human services' management of Evercare and Ohana Health Plan to resolve issues raised by providers.

SECTION 3. The auditor shall submit a report to the legislature no later than twenty days prior to the convening of the regular session of 2013, containing findings and recommendations, including any proposed legislation, concerning the management and financial audit of QUEST expanded access.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2012-2013 for the auditor to conduct a management and financial audit of the QUEST expanded access program.

The sum appropriated shall be expended by the auditor for the purposes of this Act.

SECTION 5. This Act shall take effect on July 1, 2012.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2299
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII