Bill Text - HB1495 (2016)

Relative to insurance incentives to lower costs of health care.

Revision: Dec. 14, 2015, midnight

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AN ACT\trelative to insurance incentives to lower costs of health care.


SPONSORS:\tRep. Kurk, Hills. 2; Rep. D. McGuire, Merr. 21


COMMITTEE:\tCommerce and Consumer Affairs






\tThis bill requires health insurance carriers issuing health benefit plans under the managed care law to offer financial incentives to covered persons for choosing certain health care providers.


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Explanation:\tMatter added to current law appears in bold italics.

\t\tMatter removed from current law appears [in brackets and struckthrough.]

\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.






In the Year of Our Lord Two Thousand Sixteen


AN ACT\trelative to insurance incentives to lower costs of health care.


Be it Enacted by the Senate and House of Representatives in General Court convened:


\t1  New Section; Financial Incentives for Choosing Certain Health Care Providers.  Amend RSA 420-J by inserting after section 8-d the following new section:

\t420-J:8-e  Financial Incentives for Covered Persons.

\t\tI.  Health carriers shall provide covered persons with a financial incentive to obtain care for specific health care services from a less expensive health care provider.

\t\t\t(a)  The price of health care services shall be based on the contract payment rate between the carrier and the health care provider for services received from a health care provider participating in the carrier's provider network for the health insurance product.

\t\t\t(b)  The provisions of this section shall apply to the carrier when the covered person receives the following health care services:  ambulatory surgery, outpatient laboratory, radiology, maternity care, eye care, services using telemedicine, primary care, physical therapy, durable medical equipment, emergency or urgent care, and rehabilitation services.

\t\t\t(c)  The less expensive health care provider may be within the same specialty and holding the same license to provide medical services, or of a different specialty or medical license, but shall be able to perform the same service.

\t\t\t(d)  The financial incentive shall be the greater of $25 or 25 percent of the savings that accrued to the carrier as a result of the member selecting the less expensive health care provider.  The incentive shall be paid to the member in cash, by check, or at the option of the covered person, reductions in covered person cost sharing, either through a reduced deductible amount, coinsurance due, copayments, or other financial incentives.

\t\t\t(e)  Carriers shall inform covered persons regarding their benefits offered under this section.

\t\tII.  Nothing in this section shall be construed to authorize covered persons to obtain care from unlicensed health care providers.

\t2  Effective Date.  This act shall take effect January 1, 2017.








AN ACT\trelative to insurance incentives to lower costs of health care.




The Insurance Department, Department of Health and Human Services, New Hampshire Municipal Association, and the New Hampshire Association of Counties state this bill, as introduced, will decrease state revenue, and have an indeterminable impact on state, county and local expenditures and county revenue in FY 2017 and each year thereafter.  There is no fiscal impact on local revenue.



The Insurance Department states this bill mandates site-of-service benefit designs for certain services.  The Department assumes:

•\tAmbulatory surgery refers to all outpatient surgery and not only procedures performed at ambulatory surgical centers.  

•\tThe incentives are based on a comparison of in-network providers only.  If a lower cost provider is not in the network, the mandated financial incentive would not need to be provided.  

•\tThe incentive would be calculated based on the provider actually chosen versus the highest cost provider in the network.


Based on a report of 2013 Medical Cost Drivers published in November 2014 by Gorman Actuarial, Inc., the Department assumes this bill would have an impact on health care claim costs, premiums and the insurance premium tax base. This report described cost savings of approximately 30% for selected services and noted an increase in utilization of 10%.   The Department states 45% of the premium tax revenue is associated with the insurance lines impacted by this bill.  In addition, the Department indicates an estimated 35% to 60% of the claims might be impacted by this bill and estimates 1/3 of the cost savings would be paid out as incentives.  The Department is not able to estimate the potential decrease in premium tax revenue.


The Department of Health and Human Services assumes the new section, RSA 420-J, would apply to all managed care organizations (MCOs) operating in the state including those providing coverage to Medicaid recipients.  The bill would require MCOs and qualified health plans to provide monetary incentives to Medicaid recipients to choose lower cost providers within the provider network.  The incentive could be paid directly to the recipient or, at the option of the recipient, reduce the recipient’s cost sharing.  The Department states the bill would require a new amendment to the managed care contract which will require approval from the Centers for Medicare and Medicaid Services (CMS).  The Department has concerns as to whether the bill would be permissible under federal law and does not know if CMS would approve the requirements as applicable to the Medicaid program.  The Department has no way of calculating the potential cost or determining if there would be any cost savings.  In addition, the Department assumes:


•\tSome Medicaid recipients would be paid for going to a low cost provider they already see as a patient.

•\tAdditional costs could result if the lower cost provider orders additional visits or services such as x-rays, laboratory testing, or prescriptions.

•\tSavings could be reduced or additional costs incurred if transportation services are necessary for visits to lower cost providers since the MCO’s and the Department must reimburse recipients or pay for transportation providers.


The New Hampshire Municipal Association states it is conceivable that the provisions of the bill could affect the health insurance costs incurred by municipal employers, but any such effects are too speculative to try and quantify.  The Association states the impact on municipal expenditures cannot be determined and there should be no impact on municipal revenues.


The New Hampshire Association of Counties states this bill may have an indeterminable impact on county revenue and expenditures.


The Department of Administrative Service states this bill amends RSA 420-J to add a provision for financial incentives for covered individuals.  The Department indicates the State of New Hampshire administers a self-insured health benefit plan which is not subject to the provisions of RSA 420-J and the bill would have no impact on the state plan expenditures or revenue.