SECTION 1. The legislature finds that the federal Patient Protection and Affordable Care Act of 2010 (Affordable Care Act) required states to establish health insurance exchanges to connect buyers and sellers of health and dental insurance and facilitate the purchase and sale of federally-qualified health insurance plans and qualified dental plans. The initial intent of the state health insurance exchanges was to reduce the number of uninsured individuals, provide a transparent marketplace, conduct consumer education, and assist individuals in gaining access to assistance programs, premium assistance tax credits, and cost-share reductions.

The legislature further finds that, largely due to the success of the Hawaii Prepaid Health Care Act, the State enjoys an overall healthier population, lower uninsured rates, and lower premium costs than mainland states. It is, therefore, imperative that Hawaii's health insurance exchange, known as the Hawaii health connector, work in tandem with the Hawaii Prepaid Health Care Act to preserve the Prepaid Health Care Act's existing benefits for Hawaii residents.

The legislature additionally finds that, as part of its initial phase of operation, the Hawaii health connector has benefited from new tax credits available under the Affordable Care Act, including the advanced premium tax credit and small business health insurance tax credit. The combined value of these benefits through 2024 is estimated at $505,000,000, which is expected to provide direct financial stimulus to the State, facilitate the expansion of health insurance, and reduce uncompensated health care costs associated with the delivery of medical services to the State's eligible population.

The legislature also finds that the Hawaii health connector can provide further services to the people of Hawaii through the expanded use of its business model and technologies. The Hawaii health connector has the capability to provide non-biased enrollment, implementation, and benefit administration services for employers and their employees, which will generate additional revenue. The connector also has the potential to provide an integrated solution for medicaid enrollment and state-provided social services, which will reduce state social services costs.

The purpose of this Act is to:

(1) Ensure that group health plans offered through the Connector are in compliance with federal network adequacy requirements through requiring that insurers contract for with federally-qualified health centers in relevant service areas to provide covered services; and

(2) Facilitate the Connector's achievement of financial self-sustainability by authorizing the Connector to develop independent revenue streams through providing certain benefit administration services on the open market.

SECTION 2. Section 435H-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Qualified health plan" means a qualified plan or a qualified dental plan."

SECTION 3. Section 431:2-201.5, Hawaii Revised Statutes, is amended to read as follows:

"§431:2-201.5 Conformity to federal law. (a) The provisions of title 42 United States Code section 300gg, et seq., as they relate to group and individual health insurance shall apply to title 24, except:

(1) Where state law provides greater health benefits or coverage than title 42 United States Code section 300gg, et seq., state law shall be applicable; and

(2) This section shall not apply to or affect life insurance, endowment, or annuity contracts, or any supplemental contract thereto, described in section 431:10A-101(4).

(b) The following definitions shall be used when applying title 42 United States Code section 300gg, et seq.:

"Employee" means an employee who works on a full-time basis with a normal workweek of twenty hours or more.

"Group health issuer" means all persons offering health insurance coverage to any group or association, but shall not include those persons offering benefits exempted from title I of the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191, under sections 732(c) and 733(c) of title I of the Employee Retirement Income Security Act of 1974 and sections 2747 and 2791(c) of the Public Health Service Act.

"Small employer" means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least one but no more than fifty employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.

(c) All group health issuers shall offer all small group health plans to all small employers whose employees live, work, or reside in the group health issuer's service areas; provided that the commissioner may exempt a group health issuer if the commissioner determines that the group health issuer does not have the capacity to deliver services adequately to enrollees of additional groups given its obligation to existing employer groups; and provided further that the commissioner shall exempt from this subsection group health plans offered to small employers that employ only one employee, if the group health issuer offers the small employer groups at least one small group health plan that meets the requirements of chapter 393, and upon the determination by the commissioner that the group health issuer has the capacity to adequately deliver services to enrollees of the additional groups, subject to its obligations to existing employer groups.

(d) A group health issuer shall be prohibited from imposing any preexisting condition exclusion.

(e) All group health issuers shall:

(1) Offer to enter into a contract with any federally-qualified health center that serves the same geographic area as at least one qualified health plan of the issuer to provide all covered ambulatory services offered by the federally-qualified health center to ensure reasonable and timely access to services for medically underserved individuals in the qualified health plan's service area in accordance with the network adequacy standards of the Hawaii health connector; and

(2) Reimburse each federally-qualified health center for services provided under the contract at a rate that is not less than:

(A) The amount that would have been paid to federally-qualified health center for the same service pursuant to section 1902(bb) of the Social Security Act, 42 United States Code section 1396a; or

(B) A rate that is mutually agreed upon by the federally-qualified health center and the group health issuer and that is not less than issuer's generally-applicable payment rate for the same service.

Nothing in this subsection shall be construed to require the group health issuer to contract with any entity that refuses to accept the issuer's generally applicable payment rate. Nothing in this subsection shall be construed to affect any contract entered into by a group health issuer that is in effect as of the effective date of Act , Session Laws of Hawaii 2015.

For purposes of this section, "federally-qualified health center" has the same meaning as in section 1905(l)(2)(B) of the Social Security Act, title 42 United States Code section 1396d.

[~~(e)~~] (f) The commissioner may adopt rules to implement, clarify, or conform title 24 to title 42 United States Code section 300gg, et seq.

[~~(f)~~] (g) The adoption of the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191, for the purposes of title 24 is not an adoption for any purposes for income taxes under chapter 235.

[~~(g)~~] (h) The State shall have jurisdiction over any matter that title 42 United States Code section 300gg, et seq., permits, including jurisdiction over enforcement.

[~~(h)~~] (i) As used in this section, "small group health plans" means the medical plans currently offered, advertised, or marketed by a group health issuer for small employers."

SECTION 4. Section 435H-2, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:

"(b) The purposes of the connector shall include:

(1) Facilitating the purchase and sale of qualified plans and qualified dental plans;

(2) Connecting consumers to the information necessary to make informed health care choices;

(3) Enabling consumers to purchase coverage and manage health and dental plans electronically; [~~and~~]

(4) Performing any and all other duties required of a health insurance exchange pursuant to the Federal Act[.]; and

(5) Providing enrollment, implementation, and benefit administration services for employers and their employees for non-qualified health plans.

(c) The connector shall serve as a clearinghouse for enrollment and information on all qualified plans and qualified dental plans listed or included in the connector."

SECTION 5. Section 435H-3, Hawaii Revised Statutes, is amended to read as follows:

"§435H-3 Funding. (a) The connector may receive contributions, grants, endowments, fees, or gifts in cash or otherwise from public and private sources including corporations, businesses, foundations, governments, individuals, and other sources subject to rules adopted by the board. The State may appropriate moneys to the connector. As required by section 1311(d)(5)(A) of the Federal Act, the connector shall be self-sustaining by January 1, 2015[~~, and~~]. To achieve continued self-sustainability, the connector may charge assessments or user fees to participating [~~health and dental~~] carriers, or may otherwise generate non-insurer based funding to support its operations. Moneys received by or under the supervision of the connector shall not be placed into the state treasury and the State shall not administer any moneys of the connector nor be responsible for the financial operations or solvency of the connector.

(b) In addition to any other means of generating revenue pursuant to subsections (a) [~~and~~], (c), and (d), the connector may sell or lease its information technology infrastructure and services to other separate non-connector programs; provided that the sale or lease is in compliance with federal regulations.

(c) In addition to any other means of generating revenue pursuant to subsections (a) [~~and~~], (b), and (d), the connector may also charge fees for displaying advertisements for ancillary services on the connector's website.

(d) In addition to any other means of generating revenue pursuant to subsections (a), (b), and (c), the connector may conduct enrollment, implementation, and benefit administration services for employers and their employees for non-qualified health plans or other ancillary products and services.

[~~(d)~~] (e) All plans to generate revenue for the connector shall be in compliance with federal [~~law.~~] and state laws, rules, and regulations."

SECTION 6. Section 435H-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§435H-11[]] Network adequacy. (a) The commissioner shall provide the Hawaii health connector with a list of qualified health plans that meet network adequacy standards as determined by the commissioner. The network adequacy standards shall include, but not be limited to adherence to the requirements for contracts with federally-qualified health centers under section 431:2-201.5(e).

(b) For purposes of this section, "federally-qualified health center" has the same meaning as in section 1905(l)(2)(B) of the Social Security Act, title 42 United States Code section 1396d."

SECTION 7. This Act does not affect the application of any provision effective on the effective date of this Act, or any rights and duties that matured, penalties that were incurred, and proceedings that were begun pursuant to a contract entered into by a group health issuer before its effective date.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2112.

THE SENATE	S.B. NO.	1028
TWENTY-EIGHTH LEGISLATURE, 2015		S.D. 2
STATE OF HAWAII		H.D. 1