Senate committee considers bill after 122-0 approval vote in House
by Andy Marso, KHI News Service
Last year the Kansas Legislature increased a fee on health maintenance organizations to help balance the budget.
This year, with the state budget again in need of help, insurance companies are promoting a bill that essentially would allow them to sell HMO plans without paying the fee.
House Bill 2454 allows for insurers to sell “exclusive provider organization,” or EPO, plans that are subject only to the same taxes as traditional health insurance plans but not the HMO privilege fee.
The bill is written broadly enough to allow the EPO plans to require referrals from primary care physicians, a step usually associated with HMOs.
“The bill gives us maximum flexibility,” said Steven Robino, senior director of government affairs for Aetna.
Last year’s privilege fee increase was aimed at drawing down more federal matching dollars for the three managed care organizations that administer Kansas Medicaid, or KanCare.
Private insurers that offer similar plans were collateral damage, with Robino’s company taking the biggest hit.
He said getting around the fee would allow Aetna to once again sell HMO-like plans for less.
“In Kansas the issue we’re trying to address is the tax change that made really affordable plans much less affordable,” Robino said.
The bill passed the House 122-0 last month, but members of the Senate Committee on Financial Institutions and Insurance had some questions about it in a hearing Thursday.
The big prize in the privilege fee for the state revenue picture comes from the KanCare companies, which get about $3 billion a year in state and federal dollars. But Sen. Tom Hawk, a Democrat from Manhattan, asked what kind of revenue the state might miss by allowing private insurers to circumvent the fee.
A fiscal note prepared by the state budget office says the state collects about $110 million per year from the fee but did not break down how much of that comes from the KanCare companies.
A member of the committee’s research team said the private insurers’ share is less than 10 percent.
After the hearing, Hawk said he also was unclear on what would stop the KanCare companies from also circumventing the privilege fee. But he said they would have no incentive to do so.
“It doesn’t really cost them anything,” Hawk said of the privilege fee. “It’s all federal dollars, and they don’t have to market their plans.”
Hawk said last year’s fee increase and this year’s effort by the insurance industry to get around it amount to a “legislative cat-and-mouse game.” He expressed skepticism of Republicans’ efforts to use the privilege fee to fix the state budget instead of reconsidering a tax exemption for businesses passed in 2012.
He also said there seemed to be inconsistency within a Republican caucus eager to draw down federal Medicaid funds via the privilege fee but deeply resistant to accepting federal dollars to expand Medicaid in Kansas under the Affordable Care Act.
“We hate those federal dollars. But let’s see if somehow, even though we — they — hate them, we can capture more federal dollars that we can use to fill our (budget) hole,” Hawk said.
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