Program Review and Investigations Committee

 

Minutes of the<MeetNo1> 6th Meeting

of the 2000-01 Interim

 

<MeetMDY1> January 11, 2001

 

The<MeetNo2> 6th meeting of the Program Review and Investigations Committee was held on<Day> Thursday,<MeetMDY2> January 11, 2001, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Katie Stine, Chair, called the meeting to order, and the secretary called the roll.

 

Present were:

 

Members:<Members> Senator Katie Stine, Chair; Representative Gippy Graham, Co-Chair; Senators Charlie Borders, Brett Guthrie, Vernie McGaha, Dan Seum, and Ed Worley; Representatives Adrian Arnold, Dwight Butler, Jack Coleman, Charlie Hoffman, Ruth Ann Palumbo, and Dottie Sims.

 

Guests:† State Auditor Ed Hatchett, Auditor of Public Accounts; Stephanie Z. Robey, Executive Director, Office of Planning and Management, Office of Auditor of Public Accounts;† Jim Henson, Executive Director, Kentucky Early Intervention System; Commissioner Margaret Pennington, Mental Health and Mental Retardation, Cabinet for Health Services; Commissioner Janie Miller, Department of Insurance.

 

LRC Staff:† Ginny Wilson, Ph.D., Committee Staff Administrator, Program Review staff Lowell Atchley, Judy Fritz, Greg Hager, Tom Hewlett, Alice Hobson, Joseph Hood, Doug Huddleston, Margaret Hurst, Dan Jacovitch, and Susan Spoonamore, Committee Assistant.

 

Minutes of the November 9, 2000 meeting were approved by voice vote upon motion made by Sen. Guthrie and seconded by Sen. McGaha.

 

Committee members were shown a short video of the First Steps Program which provided a better understanding of the nature of the children in the program and the types of services the children receive.

 

Ginny Wilson, Ph.D., Committee Staff Administrator told the Committee that the First Steps Program provides early intervention for children birth to age 36 months who have significant developmental delays. It is an entitlement program for the provision of coordinated family center services and it is also a fee for service program that reimburses private providers who provide speech, occupational and other forms of therapy. The Program is organized so as to qualify for a federal grant under the Individuals with Disabilities Education Act, Part C. In fiscal year 2000, Kentucky received a $4.8 million federal grant for this program. Total expenditures in fiscal year 2000 were about $34 million.†

 

Dr. Wilson also explained that, when requesting the study of First Steps, the Committee specifically asked staff to address three questions. The first question was what percentage of eligible children were receiving program services. She stated that due to the absence of data, it was not possible to estimate the total number of eligible children. However, several indicators led staff to conclude that all eligible children were not being served by the program. Therefore, the report recommended that the program improve penetration by targeting† child find efforts to areas and developmental conditions that appeared to be underreported and that the existing First Steps outreach structure be used to disseminate prevention information. The second question was whether the intervention services received by the children actually improved their subsequent developmental performance. Dr. Wilson stated that in conclusion, generally the early intervention services of the type offered by First Steps does improve the developmental progress of infants and toddlers with developmental delays.† However, the research literature indicated that developmental progress was not necessarily improved by adding more than a basic level of intervention services, and it was determined that the program might have been providing more services than were actually needed. Thirdly, Dr. Wilson stated that the report reviewed the fiscal accountability of the program, particularly of the Centralized Billing and Information System. The report raised concerns that sufficient procedures were not in place to ensure fiscal accountability. First Steps contracted with the University of Louisville to develop the Centralized Billing and Information System (CBIS) to be used as the claims processing system for providers and as a database on recipients. The report contained several recommendations for improving the usefulness of CBIS as an information system that would allow improved service planning and evaluation opportunities. At the time of the report, there was no indication that the claims processing function of CBIS had ever been subject to a financial audit. Therefore, the report recommended that an annual financial audit of the system be instituted and that the Auditor of Public Accounts perform the first audit. Dr. Wilson reported to the Committee that as of this date, the audit had not been done.†

 

She also stated that it was recommended that the Commissioner of the Department for Mental Health and Retardation Services devote sufficient resources and expertise to ensure that First Steps maximizes all opportunities for federal funding,† particularly† through Medicaid and KCHIP, and that program managers be given assistance to improve procedures for fiscal planning and control. To ensure that this effort was made, the Committee requested that the Budget Review Subcommittee on Human Resources request submission of a written fiscal operations improvement plan when it considered the First Steps budget during the 2000 Session of the General Assembly.† Dr. Wilson told the Committee that as of this date, the Subcommittee had† not reviewed a written plan, but had required the program to submit quarterly reports on its fiscal situation.†

 

Sen. Borders asked if the Kentucky Early Intervention System was different from the Early Childhood Intervention that was passed in the 2000 Legislature and if so, how are the two programs coordinating their efforts.

 

Dr. Wilson stated that the two programs are different and that she would defer to Jim Henson, Executive Director for Kentucky Early Intervention System, to elaborate on how the two programs are integrated.

 

State Auditor Ed Hatchett, in response to Dr. Wilsonís follow-up report, told the Committee that his office recognized the importance of an audit to ensure accurate accountability for the program.†† He said that the Auditorís Office had taken the request to pertain to an evaluation of the Centralized Billing and Information System rather than a full financial statement audit of First Steps, although he believed† that the program could benefit from both. An evaluation of CBIS would be an attempt to determine whether the information system is producing data that is reliable and once that data is perceived to be reliable then you can move to the question about the need for a full scope financial statement audit.† Auditor Hatchett, also stated that it was possible that he simply misunderstood what the Committee was asking of the Auditorís Office.† The Auditorís Office has eight employees who are capable of doing an evaluation of an information system and all of their time has been completely immersed in Kentuckyís movement from the Statewide Accounting and Reporting System (STARS) to the Management Accounting Reporting Systems (MARS) during this audit cycle and it is going to be continued to be taken up during the next audit cycle. Auditor Hatchett said that in order for his office to render an opinion on the Stateís financial statement, his office had to be satisfied that the new MARS system was generating accurate and reliable data. That is why the Auditorís Office has not had the resources to be able to respond positively to the Committeeís request. Auditor Hatchett went on to say that his office had offered to provide coordinating and oversight services that would facilitate completion of both of these two types of studies, one being the evaluation of the system and the other being a full scope financial statement audit. Furthermore, Auditor Hatchett stated that it was not possible for the Auditorís Office to undertake the costs associated with the ad hoc projects, given the budget status of the Auditorís Office, including this Committeeís request of an audit of a program that has roughly $6.5 million in state dollars. He felt that either the agency should shoulder the financial burden of the audit or in the alternative this Committee might choose to find the money to fund the audit, it is possible that federal funds would underwrite a certain portion of the audit costs.†

 

Rep. Graham stated that when the request for an audit was made in December of 1999, he was the acting Chairman of the Committee. Reading from KRS Chapters 6.930, 6.935 and 43.050, Rep. Graham pointed out that the purpose and functions of the Program Review and Investigations Committee and State Auditorís Office indicate that the Auditor is legally obligated to fulfill the Committeeís request. Rep. Graham noted that two letters from this Committee, dated December 9, 1999 and September 18, 2000, had been sent to Auditor Hatchett requesting that the audit be performed. Finally, in a letter to the Committee dated October 31, 2000 the Auditor of Public Accounts declined to undertake the requested audit.

Rep. Graham asked Auditor Hatchett if his office had received the amount of money that was requested in their budget request for 2000, and was there not a specific line item request for funds to perform this audit.

 

Auditor Hatchett stated that their budget request had been approved. His office began the year 2000 with the hope that they would have the resources to accomplish the request, but because of the transition from STARS to MARS it became very apparent that they were not going to be able to do anything. †In addition, the year 2000 had seen the office involved in a number of very high profile fraud detection efforts and that had zapped their resources as well.† With regard to their budget, Auditor Hatchett said he was unaware of any specific provision within the budget addressing KRS 6.935.† The General Fund appropriation is allocated to the completion of the Comprehensive Annual Financial Report (CAFR) and the Single Statewide Audit of Kentucky (SSWAK) responsibilities that the office has for state government. It requires almost half of the Auditorís Office staff every year and it takes virtually all of the resources from a state audit perspective.† At the local level, the Auditorís Office has mandatory audit duties that require the auditors to go into county governments. The general fund appropriation that the office receives is calculated on the basis on how much it will cost to audit the state dollars associated with the CAFR and SSWAK work.† Some of the expense of the audit comes back through federal funds, but certainly none when following the state dollars. CAFR and SSWAK always has to take priority among the competing interests that we might have. Auditor Hatchett stated that so long as his office has the duty of taking responsibility for CAFR and SSWAK, that has to be the number one priority. The Auditorís office would like to be responsive to the Committee but he believes that a mandate from the Committee to undertake the project is going to have to be accompanied by resources to do that, or his office will need to have instructions from the General Assembly that his office is not to conduct the CAFR and the SSWAK and local government audits and the IT work that is presently ongoing. Auditor Hatchett further told the Committee that his office has to put priority in testing $30 billion as opposed to testing $6.5 million.†

 

Rep. Graham referred to the statutory mandates of the Auditor of Public Accounts, KRS 6.935(1).† He asked Dr. Wilson if this was included in the Auditorís budget request.

 

Dr. Wilson stated that information obtained from documents provided by the Budget Review Office, showed that the Auditorís Office did list the mandatory requirements of KRS 6.935 as part of the support documentation for the base budget request.† Within that listing was the KRS relevant to this Committee as one of the mandatory tasks that were listed.†

 

Auditor Hatchett responded that was correct along with all of the others such as CAFR and SSWAK.†

 

Sen. Borders asked if the Auditorís Office was presently involved in auditing a wedding.

 

Auditor Hatchett answered in the affirmative.

 

Sen. Borders stated that even though the audit of the wedding should be addressed, he felt that the request for the audit of this program should have been equally as important and carried out in a timely fashion.

 

†Auditor Hatchett agreed that accountability is important to such programs as First Steps.† He stated that his office would need instructions from the Committee on what mandated responsibilities his office would not carry out in order to undertake the requested audit since he would have to pull auditors off of other mandatory duties in order to accomplish the audit.† Furthermore, Auditor Hatchett stated that he believes it is a good public policy for the Committee to either mandate that the General Assembly pay for the cost of the work or that it use its power of persuasion to ask the agency itself to fund the cost of the audit.†† The most important part of the equation, which has not been† addressed yet, is who is going to pay for it.

 

Sen. Stine presented information obtained from the Supplementary Information Reports (1996 to 1999) Financial Accounting System which indicated that the Auditorís Office had an ending balance of over $1 million dollars for each of the last three fiscal years. Sen. Stine asked if some of that surplus could be used for the audit and not necessitate the avoidance of some other mandatory obligation.

 

Stephanie Z. Robey, Executive Director, Planning and Management, Office of Auditor of Public Accounts, stated that five years ago the Auditorís Office had 150 employees and had only 19 machines that were capable of running in a Windows environment.† Staff has worked diligently to bring the Auditorís Office into an IT situation that would allow staff to audit in the environment that state government has evolved in. She also stated that at some point in time the system will have to be upgraded and the Auditorís Office was planning to use those resources for a future upgrade of its IT capacities.

 

Rep. Coleman asked how much the audit would cost?

 

Ms. Robey estimated it would cost somewhere between $60,000 and $80,000. There may be some federal funds to underwrite part of that.†

 

Rep. Coleman stated that if this Committee needs an audit done then it needs an audit done.† Obviously different information is being obtained from different agencies and†† the Auditor or the Attorney General has always been the backup.† He further said that he Committee was asking that the Auditorís office substantiate what information has been found and if not that is not possible, the Committee needs to know that.

 

Auditor Hatchett responded that the Auditorís Office has a long history of being supportive of this Committee and he personally supports the work of the Committee and has the utmost respect for this Committee.† Auditor Hatchett asked that whenever this Committee requests something like this, that it take into account the fiscal dimension of that request. Auditing is not free. A $80,000 audit costs $80,000 and it takes the time of people who are worth $80,000, who otherwise would be doing the CAFER or the SSWACK or one of the other mandated duties that you all have put into the statutes for my office.† He assured the Committee that he would do his dead level best to help the Committee achieve its objectives, but he believes it should be done by contract with a private firm. Either the agency should take responsibility for the cost of the audit or the General Assembly should.† He said his office would work with the Committee to get this accomplished.

 

Sen. Stine asked that in the future the Auditorís Office include in their budget any auditing costs associated with a request from the Committee.

 

Sen. McGaha asked if the Auditorís Office did indeed have $1 million in excess?

 

Ms. Robey stated that it was not a million.†

 

Sen. McGaha asked once again, ďDid you or did you not have $1 million left over?Ē

 

Ms. Robey stated that there was not.

 

Sen. McGaha then asked if the information regarding the excess was accurate?

 

Dr. Wilson pointed out to Ms. Robey that the document handed to her and Auditor Hatchett contained information showing a carry forward in restricted funds in this last fiscal year of $1.5 million dollars.†

 

Ms. Robey asked from what source the figures were obtained.

 

Dr. Wilson stated that the figure was provided by FAS Ė the Financial and Accounting System.†

 

Auditor Hatchett told the Committee that they did have a carry forward but was not sure how much it was.

 

Sen. McGaha asked if the carry over could be as much as $60,000 or $80,000 dollars.

 

Ms. Robey said that they had a carry forward of several hundred thousand dollars but it was earmarked in the budget documents for computer expenditures during this biennium.†

 

Sen. Worley asked the Auditor if the audit was going to be done.

 

Auditor Hatchett responded that he would work with the Committee to make sure that the audit was conducted.† His office would have to find the money for it and he would have to pull auditors off other projects in order to accomplish it.†

 

Sen. Worley stated the position of the Auditorís Office should be that the request of the statutory committee needs to have a higher priority than a computer upgrade, especially when an office is running a surplus of close to a million dollars.† It is a priority that has to be set by the State Auditor.† Sen. Worley added that as a legislator and member of this Committee, he thought if the Auditor makes any other choice but to agree with that statement, he has erred in judgment very seriously.†

 

Auditor Hatchett stated that if his office had done anything to protect the taxpayers of Kentucky, it had been to invest in technology and his office is still committed to that. Presently the Auditorís Office is capable of examining paperless offices in this government which is something that could not be done when his administration began.† Auditor Hatchett stated that if the investment in technology is not made, then the auditor will be behind the auditee which will be absolutely deadly when it comes to taxpayer protection.

 

Sen. Worley said he agreed with that.† However, the Auditorís Office does not have the luxury of choosing when it comes to a request of a statutory legislative committee as to whether or not you are going to upgrade computers versus comply with a request. If there is a surplus close to a million dollars, first it is a matter of respect and second it is a matter of priority that the money be appropriated to honor the request of this Committee.†

 

Sen. Stine stated that the audit was requested in the Report and that request still stands.†

 

Jim Henson, State Coordinator for the First Step Program, stated that the Report and the Recommendations adopted by this Committee had been taken very seriously and in order to the address the recommendations, Commissioner Pennington had appointed a work group known as the Response Team. He detailed the status of implementation of each of the recommendations.† (a copy of Mr. Hensonís response can be found in the LRC Library file).†

 

Brenda-Curry White, Director, Central Billing Insurance System (CBIS) presented information regarding the income of the eligible families that received services in the first quarter of the year.† Of the eligible families, 72.7% are under the 200% poverty level.†† Of those families who are under 200% poverty, 50.2% are eligible only for KCHIP or Medicaid; 6.6% are eligible for Medicaid as well as the family having some third party insurance; 14.2% have third party insurance only; and 1.7% have no health coverage at all. As to the 6.6% children who are eligible for Medicaid as well as insurance, we can not access Medicaid dollars for those children because the Medicaid program requires the use of insurance and the federal program requires that families have the option to not use their insurance.† Medicaid is accessed for the 52.2% of children who are Medicaid or KCHIP eligible.†

 

Mr. Henson stated that accessing Medicaid funds for the 52.2% of children who are eligible has generated approximately 47.6% of the expenditures on services each month.† It has been a significant funding for the program.†

 

Rep. Coleman asked if the Medicaid percentages have changed and if the federal matching funds were also changing.

 

Mr. Henson acknowledged that the Medicaid percentages have changed, but he was not aware of changes in the federal matching funds.

 

Dr. Wilson stated that the federal matching funds do change because of changes in† per capita personal income in the Commonwealth. The match rate for next federal fiscal year will decline by approximately three-tenths of a percentage point.†

 

Sen. McGaha asked if the First Steps program was under any requirements in the implementation of the program to secure an audit, and, if so, would it be an internal or external audit.†

 

Mr. Henson stated that he was not aware of any requirement to secure an audit, but would do a follow-up on the question and get an answer for the Committee.†††

 

Margaret Pennington, Commissioner of Mental Health and Mental Retardation, stated that the program is handled just like any of the other programs and would be subject to the normal state audit.

 

Sen. McGaha asked if she was referring to an audit like the one that was requested in the Report.

 

Commissioner Pennington stated that was correct.†

 

Rep. Palumbo asked if legislators could do something to help alleviate the problem of access to† Medicaid funds when the family also has private insurance.

 

Mr. Henson stated that he did not know of anything that could be done although they are exploring if changes in the insurance law might help to make a difference.† This is not only a problem for Kentucky, it is a national problem as well.

 

Rep. Palumbo asked if Medicaid could be accessed if insurance was denied, and if so, then legislators can help such as educating constituents.†

 

Mr. Henson stated that she was correct.

 

Rep. Coleman asked if the First Steps program was coordinating its efforts in regard to overlaying with preschool, special education, extended school services and family resources centers.

 

Mr. Henson stated that they are working extensively with the HANDS program and are working on making the transitions smoother.

 

Rep. Coleman asked if the 34% of children who were denied services, were given other alternatives for services and is there any data showing where they go.

 

Mr. Henson stated that it is programís intent to help families find an alternative source for services and they do have the ability to collect data as to where the child went.†

 

Rep. Hoffman asked how much it would cost to add the two additional positions, monitoring supervisor and fiscal analyst.

 

Mr. Henson stated that the Department of Administration, Financial Management assigned a position so that was not a cost factor for the program. A managing position would be fairly costly and at this time the program has not added that administrative cost for that position.

 

Greg Hager, Ph.D. of the Program Review staff, told the Committee that a survey was mailed to over 15,000 health care providers in Kentucky, asking them questions about the insurersí handling of claims since the passage of SB 279 by the 2000 General Assembly.†† He said that despite the fact that the respondents to the survey were not representative of all providers, staff was able to make some reasonable inferences about provider satisfaction with claims payments.† (a copy of the results of the survey can be found in the LRC Library file). Almost half of the people who answered and returned the survey were physicians or dentists with the remainder comprised of other kinds of providers. Dr. Hager gave a brief summary of the questions that were asked and answered. He said that, based upon 1,400 returned questionnaires, at least five percent of providers believe that insurers only sometimes, rarely, or never provide clear explanations for delayed or denied claims; acknowledge receipt of paper claims within 20 days; or pay interest on late payment. At least 50% feel that electronic claims are usually, almost always, or always acknowledged within 48 hours. He also noted that about half of the respondents to the survey said they usually filed claims electronically. Almost 90% of respondents responded that insurers do not try to arrange more favorable payment terms for the insurers; less than one percent of all those who received surveys said yes to this question. Over 80% of respondents answered that they had not filed a claims complaint with the Department of Insurance; about one percent of all those who received surveys said they had.† For those who responded to the survey, the worst problems seem to be lack of explanations for delays or denials, and slow payments. Over 80% of those who responded to the questionnaire cited slow payments as a serious problem.†

 

Sen. Stine asked if the types of poor or good were categorized as it related to particular types of services.†

 

Dr. Hager stated that he had not reviewed all the specific comments related to poor and good handling of claims to see if there were patterns, but will follow-up on the question when he looks over the results more closely.

 

In continuing with his summary, Dr. Hager stated that the main problems reflected in the comments are slow payments and lack of clear communication from insurers about delayed or denied claims and that dealing with claims consumes a lot of resources in the medical practice.† There was also concern about what a ďcleanĒ claim is.†† Insurers have the ability to deny claims or delay processing based upon their creative interpretation of what constitutes a clean claim.†

 

Sen. Seum asked if the offices who use the electronic process do better than those offices who do not use the electronic process and would it make any difference in the payment of claims if the physicianís office was able to hire the staff necessary to process the claims more quickly.

 

Dr. Hager stated that there is not a major difference in results between those using the electronic process for filing claims versus those filing paper claims.†

 

Commissioner Jane Miller, Department of Insurance, gave a brief overview of the implementation of SB 279 and the Departmentís activities in regard to that. She stated that SB 279 is a complex piece of legislation, but is one of the best pieces of patient protection legislation passed in the last Session, along with the external appeals program and utilization review program. Senate Bill 279 focuses on a very specific set of claims relating to health benefit plans and it elevates the standards for prompt payment of those claims. In addition, it also improves the enforcement monitoring system as well as giving the Department additional penalties and enforcement remedies. Commissioner Miller stated that the Department has interpreted and implemented the Bill to apply to health benefit plans and claims for health benefit plans occurring on or after July 14th. New processes have been developed for dealing with enforcement, understanding complaints, and† how to go about investigating the complaints. There have been meetings with the insurance industry to discuss their concerns and questions about how the Department is interpreting various provisions of the Bill; and† the Department has also had meetings with the Kentucky State Uniform Billing Committee to discuss SB 279ís requirement relating to bill attachments in order to develop standardized attachments that can accompany a clean claim. The Bill requires insurers to report data to the Department on how many claims have been processed, how many were processed in a timely standard and how many were outside the prompt pay standard and also how much interest was paid on the claims. This data allows the Department to monitor the business practice of the insurer. The Department processed what appeared to be SB 279 claims through an attorney within the Department so that complaints could be examined to see if there was a central theme as to the problem or what other information was needed.† She said this allowed the Department to develop a process which could be used to officially respond to the complaints. From October through November the Department received 36 complaints involving 99 different insureds. It was typical for a complaint to come in from a provider with an attached listing that had been generated off of their billing system. Because there was no documentation, the Department could not look at the line items and say that it was claim that had not been paid by the insurance company. After reviewing the 36 complaints, the Department developed a form which was sent back to those 36 complainants to get the necessary information in order for the Department to make a determination of which law it falls under.

 

Sen. Stine asked how the form was distributed to the provider.

 

Commissioner Miller stated that it had been put out on the Web site and in working with KMA and writing letters to all the other associations and provider groups to let them know that there is a form that they need to use.

 

Commissioner Miller went on to state that out of the 36 complaints the Department is still waiting on 14 to be returned.† Of the forms returned,† six noted that the claims had been paid; three claims asserted that it was an ERISA complaint and the federal government had jurisdiction; another three were related to Workerís Compensation claims and therefore were not subject to SB 279; and 10 others were personal injury protection claims under automobile insurance.† In closing, Commissioner Miller stated that insurers were still not fully compliant, although the Department does feel like the insurers are taking the Bill seriously.† It is the belief of the Department that the consumer has the right to have their claim paid and handled appropriately.

 

Sen. Stine asked what the Department of Insurance defines as a clean claim and when does the Department consider proof of claim being sent.

 

Commissioner Miller stated the Department has taken the position that the statute is very clear.† It says that if the UB-92 or the HFCA-1500 is properly completed, and if the insurers has specified an attachment for this particular type of service and it is placed in the provider manual, then that is a clean claim.† The Department is aware that there is confusion out there from providers and possibly with some insurers. There is a question on the attachment as to whether or not it can be used for medical information or can additional information be requested that is not in the attachment, unrelated to medical information.†

 

Commissioner Miller also stated that this Bill is driven off of when a claim is paid.† The Department thinks that paid means paid. To the industry, payment is the date that their system adjudicates the claim.† To the provider organizations, it means when they get the check in hand. The Department will accept from the provider the payment date received as evidenced by the postmark on the envelope or the insurer could use the payment date which is what their system captures, plus three days.†

 

Rep. Palumbo asked what the deadline is for notifying the providers.

 

Commissioner Miller stated that the Department does have a letter that has been drafted, but has not gone out yet.

 

Rep. Palumbo asked when the letter would be going out.

 

Commissioner Miller stated that if it was possible it would go in the mail today, and this will not let all the providers know, it gets it to the association.

 

Sen. Worley said he had a document from the Department indicating that the July 14th date pertained to health benefit plans rather than claims.† Sen. Worley asked the Commissioner to respond to that.

 

Commissioner Miller stated that the document was probably pulled off their website and it is in error.† It has been corrected.†

 

Sen. Worley asked if it was the Departmentís intent to audit compliance with all of the provisions of Senate Bill 279.

 

Commissioner Miller stated that was correct.† The Departmentís priority is always the consumer.† It is the Departmentís intent to enforce all of the legislation.†

 

Sen. McGaha asked for an update on Advantage Care.

 

Commissioner Miller stated that the Department had entered into the liquidation proceedings and is working with the Court in identifying all of the claims.† It was a priority with the Department to move the policyholders into coverage with other carriers so that consumers would not go without coverage. At this point in time, the Department is hopeful that there will be assets in order to pay all claims.†

 

Sen. McGaha asked if it would take nine months or a year to settle the proceedings.

 

Commissioner Miller stated that it would probably be nine months or longer, depending on what problems are encountered.

 

Rep. Coleman stated that from a personal experience in the emergency room, he received a collection bill around six to nine months later and as it turned out, the hospital subcontracts the emergency room physicians to Knoxville, therefore the billing for the physicians came out of Knoxville and the bill for the use of the emergency room came from the hospital. He asked that if these claims are separated are they no longer clean claims and how do you solve that problem.

 

Commissioner Miller stated that it is more of a function of the fact that more and more hospitals are contracting out rather than using employed physicians to staff the emergency rooms. It is not unusual in that situation for the hospital to bill for the facility component and the physician to bill their own services. It would be two provider bills and would be two separate claims. The problem that the Department sees a lot, is that the insured looks at the provider directory and sees that the hospital is listed on the provider directory and therefore assumes that the services are going to be covered. That problem appears to have moderated over time, as more and more hospitals are requiring that the contractors participate with the same health care plans.†

 

Meeting adjourned.