R.I. Lawmakers Tackle Blue Cross Management

The legislation promised by House and Senate leaders to address the management of Blue Cross and Blue Shield of Rhode Island and oversight of the insurance industry in the state has been introduced in both chambers.

The legislatio is a result of three months of study by the Joint Committee on Health Care Oversight, and is meant primarily to rein in the questionable practices and spending for which Blue Cross has been criticized in recent months.

Titled collectively the Rhode Island Health Care Reform Act of 2004, the legislation was introduced Thursday in each chamber as five bills, each addressing a different aspect of the health insurance industry.

“We intend to use this legislation to steer Blue Cross and Blue Shield of Rhode Island back toward what it is supposed to be: a non-profit entity dedicated to providing affordable health care to the public. For that mission to succeed, its board must be accountable to the public,” said Rep. Steven M. Costantino (D-Dist. 8) of Providence, co-chairperson of the Joint Committee on Health Care Oversight.

Although primarily aimed at Blue Cross, parts of the bills will also expand regulation of other insurers in the state. Provisions include one creating a new post of health insurance commissiioner within the Department of Business Regulation.

“The broader purpose of this legislation is to improve the state of health care delivery in Rhode Island by making health insurance more affordable and available to the public,” said Sen. Elizabeth H. Roberts (D-Dist. 28) of Cranston and Warwick, co-chairperson of the joint committee. “This legislation not only addresses the biggest insurer in Rhode Island, but also makes changes to way the industry is regulated and overseen, and encourages continual improvement.”

The bills are:
(2004 – H8516) and (2004 – S3103) – These bills, sponsored in the House by Rep. Brian Patrick Kennedy (D-Dist. 38) of Hopkinton and Westerly and in the Senate by Sen. John J. Tassoni Jr. (D-Dist. 22) of Smithfield and North Smithfield, are aimed at providing more flexibility for businesses with health insurance plans. They:

* Require all health insurers to hold an open enrollment period annually for at least 30 days and entitles employers with 50 or more persons covered by their health plan to receive reports of their specific health plan’s claims information.

* Remove an Oct. 1, 2004 sunset provision from a law allowing small employers to vary adjusted community rates based on health status, making the provision permanent.

* Make employers with fewer than 10 employees eligible for small employer health insurance if at least 75 percent of employees participate, instead of the current requirement of 100-percent participation.

* Require promoters of a mandated health benefit to provide evidence of the medical efficacy and estimated cost of the proposed benefit.

(2004 – H8515) and (2004 – S3102) – This legislation reforms the governance of Blue Cross and Blue Shield of Rhode Island, which was created by the General Assembly as a non-profit insurance provider. Sponsored in the House by Rep. Paul W. Crowley (D-Dist. 75) of Newport and in the Senate by joint committee Co-Chairperson Roberts, the bill increases the accountability of the Blue Cross board of directors and refocuses the insurer’s mission statement. These measures:

* Require the board of directors to act in good faith, ensure that Blue Cross carries out its charitable mission, perform an annual evaluation of board performance and hold an annual meeting for public comment.

* Forbid compensation of board members.

* Prohibit loans to directors or officers.

* Require the adoption of a code of ethics and provides the attorney general with the authority to investigate violations of this code

* Require a published mission statement for Blue Cross.

* Require that board vacancies be filled by public members appointed by the governor with the advice and consent of the Senate, until one seat less than a majority is occupied by members of the public.

* Require that public solicitation of candidates be part of the selection process for board members

* Require the board to have specified standing committees.

* Requires board approval for significant changes in benefit levels, reimbursement levels, underwriting guidelines, product offerings and types of businesses.

* Requires a community benefits program.

* Requires that administrative expenses be no more than 10 percent of revenue for insurers with a 30-percent market share.

* Allows extravagant expenditures to be disallowed by a health insurance commissioner.

* Prohibits incentives for executives if the corporation is sold.

(2004 – H8513) and (2004 – S3101) – Sponsored by Rep. Joanne M. Giannini (D-Dist. 7) of Providence and Sen. Stephen D. Alves (D-Dist. 32) of West Warwick, this legislation establishes a health insurance commissioner within the Department of Business Regulation, appointed by the governor with Senate confirmation. The commissioner would conduct annual public hearings, make recommendations to the director and governor, propose draft legislation, chair a consumer/ business/medical advisory group, propose caps on reserves, review administrative expenses, pursue quality improvement, review copays and deductibles, review competition in the marketplace, review reimbursement policies, review best practices for high-cost insurance enrollees, require a health insurance governance report and assist in the design of billing. The office of the health insurance commissioner would be paid for through assessments on licensed health insurers.