Relating to certain cost controls for health care services, and including penalties

Topics:Health care Insurance

Same legislation: SF 2381

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Official bill page Lobbyist declarations One-pager to print

Where it is now

Done: IntroducedFebruary 27, 2023
Done: SubcommitteeMarch 2, 2023
Done: Senate committeeFebruary 15, 2024
Skipped: Passes the SenateContinued as SF 2381
Next: House committee
Next: Passes the House
Next: To the Governor
Next: Signed into law

Became SF 2381 → Its progress continues under the new number. Go to SF 2381 What’s a funnel?

What’s in it

AI summary Healthcare providers must tell patients the discounted cash price for services, and insurance companies must post these prices online. Patients and uninsured individuals will be informed of their right to pay these cash prices, which can count toward their insurance deductibles. The bill also gives the insurance commissioner more power to investigate and punish companies that wrongly deny insurance claims.¹

Read the official explanation

This bill relates to certain cost controls for health care services and may be cited as “The Patient’s Right to Save Act”. Under the bill, all health care providers (providers) are required to establish and disclose the discounted cash price (cash price) the provider will accept for specific health care services (services). “Discounted cash price” is defined in the bill as the price an individual pays for a specific service if the individual pays with cash or a cash equivalent. The cash price shall be available to all covered persons (persons) and to all uninsured individuals. A health carrier (carrier) shall post the cash prices via an easily accessible and secure internet site, update any change in a cash price within five days of the change, and review each cash price at least annually. During the appointment scheduling process, and any intake process prior to the provision of a service, persons and uninsured individuals shall be informed of their right to pay for the service via the cash price. A person shall also be advised that they qualify for a deductible credit if they have not exceeded their deductible to date, and the criteria in the bill is satisfied. A carrier shall not enter into a contract that prevents the carrier from offering a cash price below the contracted rates the carrier has with other commercial or public payors, or that prevents the carrier from disclosing the carrier’s cash price to persons. A person’s out-of-pocket pricing for each drug on a carrier’s formulary shall be available to a provider via an easily accessible and secure internet site hosted by the carrier at the point the provider prescribes drugs to a person. Each plan shall disclose to the plan’s covered persons the negotiated charge for each service that is covered under the person’s plan. If a plan fails to disclose each negotiated charge, a person may substitute a benchmark selected by the commissioner of insurance (commissioner) for the negotiated charge. A person who elects to receive service at a cash price that is below the deidentified minimum negotiated charge (negotiated charge) shall receive credit toward the person’s cost-sharing as if the service had been provided by a network provider. “Deidentified minimum negotiated charge” is defined in the bill as the lowest cost for a specific service that a provider has negotiated with a carrier for a person’s plan. A plan shall not discriminate in the form of payment for any in-network covered service solely on the basis that the person was referred for the service by an out-of-network provider. If a person elects to use a pharmacy discount program, a drug manufacturer’s rebate, or other discount or rebate program that results in a lower cost for a drug than if the person uses the person’s plan, the plan shall apply any payments made by the person for the drug as detailed in the bill. A plan is required to provide an online form for the purpose of a person submitting proof of payment, and to annually inform persons of their options related to discounts and rebates. Annually at enrollment or renewal, a carrier shall provide notice to persons via the carrier’s health plan materials and on the carrier’s internet site of the option and the process to receive a covered service at a cash price below the negotiated charge. If a person pays a cash price that is above the negotiated charge, the plan shall give the person credit toward the person’s cost-sharing in an amount equal to the cash price. If a carrier denies a claim submitted by a person, the carrier shall notify the commissioner and provide evidence to support the denial to the person and the commissioner. A person may appeal a denial of a claim to the commissioner as detailed in the bill. If the commissioner determines that the carrier improperly denied the person’s claim, the carrier shall pay the person’s costs and attorney fees, accept the person’s claim, and provide cash compensation to the person as detailed in the bill. If a carrier denies or more claims in any one quarter, the commissioner shall have the authority to investigate the denials.6. If, after hearing, the commissioner determines that a person has engaged in an unfair or deceptive act or practice, the commissioner shall reduce the findings to writing and shall issue and cause to be served upon the person charged with the violation a copy of such findings, an order requiring such person to cease and desist from engaging in such act or practice, and may at the commissioner’s discretion order any one or more penalties, license suspension, or license revocation as detailed in the bill. For costs that exceed a person’s deductible, the person shall have access to a program that directly rewards the person with a savings incentive as detailed in the bill. A provider shall not initiate or pursue a collection action (action) against a person, or a person’s guarantor, for a debt owed for a service unless the provider is in material compliance with the bill on the date that the service is provided to the person. If a provider initiates or pursues an action, the person may file for a declaratory judgment with a court of competent jurisdiction and the provider shall not continue the collection action while the suit is pending. If the court finds in favor of the person, the court shall order the provider to comply with the requirements detailed in the bill. Provided the provider does not initiate or pursue an action in violation of the bill, the bill shall not be construed to prohibit a provider from billing a person, a person’s guarantor, or a third-party payor, including a health insurer, for a service provided to the person, or to require a provider to refund any payment made to the provider for a service provided to a person. If a provision of the bill or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the bill which can be given effect without the invalid provision or application.

Changed since by amendment S-5039; see Amendments.

Full bill text²

Senate subcommittee

Named March 2, 2023. On January 25, 2024 it recommended amendment and passage. [].

Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part

1 written public comment to its subcommittee: January 25, 2024 (1) · on the Legislature’s site

Fiscal note

AI summary This bill implements new cost controls for health care services, including rules for discounted cash prices, deductible credits, and claim denial protections. The fiscal impact of increasing operational and administrative expenses for the State of Iowa Insurance Plan and the Board of Regents Insurance Plans cannot be estimated at this time, but may be significant. Additionally, the cost to the Department of Administrative Services to conduct a required analysis and report cannot be determined.³

Read the fiscal note

Description

Senate File 2381 relates to certain cost controls for health care services and does the following:

Adds the improper denial of claims, as described in the Bill, to the list of unfair methods of competition and unfair or deceptive acts or practices defined in Iowa Code section 507B.4.
Provides requirements for health care providers (providers) establishment and disclosure of discounted cash prices the provider will accept for specific health care services (services). The Bill prohibits a provider from entering into a contract that prevents the provider from offering or disclosing a cash price below the contracted rates the provider has with a health carrier.
Establishes disclosure requirements regarding deductible credits and for covered persons’ out-of-pocket pricing for prescription drugs that meet the conditions in the Bill.
Establishes disclosure and substitution requirements for health benefit plans regarding the average allowed amount for each health care service.
Requires credit to be applied towards in-network cost-sharing for covered persons who receive service at a discounted cash price other than the average allowed amount at the lower of the two amounts if the service is provided by an in-network provider.
Prohibits a health benefit plan from discriminating in the form of payment for an in-network covered service on the basis of the covered person’s being referred for the service by an out-of-network provider.
Establishes payment credit requirements for a covered person’s cost-sharing who purchases generic covered prescription drugs for less than the average allowed amounts for the name-brand equivalent.
Establishes requirements for health-denying claims pursuant to the Bill, including an appeal process and a trigger for an investigation into claim denials by the Commissioner of Insurance (Commissioner).
Requires health benefit carriers to provide covered persons with a program that rewards the covered person with a savings incentive for medically necessary services received from providers that offer a cash price below the average allowed amount.
Provides requirements for a provider’s initiation or pursuit of a collection action against a person for a debt owed for a service.
Requires the Department of Administrative Services (DAS) to conduct an analysis of the cost-effectiveness of offering a savings incentive program and deductible credit for State employees and retirees before August 1, 2025, and to submit a report to the General Assembly on or before September 1, 2025, containing an explanation of the implementation decision regarding a savings incentive program or deductible credit program. The Bill requires any such program to be implemented for the 2025 State employee health insurance open enrollment period.

Background

Iowa Code section 507B.4 establishes a list of unfair methods of competition and unfair or deceptive acts or practices with respect to the insurance trade, including but not limited to misrepresentation and false advertising of insurance policies, unfair discrimination, and unfair claim settlement practices.

Iowa Code section 507B.6 permits the Commissioner to issue and serve a statement of charges upon a person who the Commissioner believes has been engaged or is engaging in any unfair method of competition or any unfair or deceptive act or practice that would be in the public interest. At the hearing, the person has the opportunity to be heard and show cause why an order should not be made by the Commissioner to require the person to cease and desist from the acts, methods, or practices complained of.

The 2025 State employee health insurance open enrollment period begins October 2024.

Assumptions

Providers will be required to make the discounted cash price for health care services available to consumers.
Insurers will be required to provide the minimum negotiated charge a provider has negotiated with the carrier.
Health carriers offering prescription drug coverage will be required to make the out-of-pocket pricing for all formulary medications available.
The Bill may require operational and administrative changes to the insurance plans, which may increase expenses.
According to the DAS, in order to conduct the analysis of the savings incentive program required by the Bill, the DAS will need to hire an outside consultant with expertise in the subject matter. The outside consultant may cost up to $495 per hour. The total cost cannot be estimated at this time. The DAS states that any associated fiscal impact is not currently included within their operating budget.
According to the DAS, any savings that may result from the implementation of the savings incentive program or deductible credit program will be implemented for the 2026 State employee health insurance open enrollment period beginning October 2025.

Fiscal Impact

Senate File 2381 is estimated to increase operational and administrative expenses for the State of Iowa Insurance Plan and the Board of Regents Insurance Plans. However, the fiscal impact cannot be estimated at this time, but may be significant.

The fiscal impact to the DAS to conduct the analysis and complete the report required by the Bill cannot be determined.