Bill Text: IA SSB3098 | 2015-2016 | 86th General Assembly | Introduced

---

Bill Title: A study bill for an act relating to transparency in health insurer payment transactions with health care providers and including applicability provisions.

Spectrum: Unknown

Status: (Introduced - Dead) 2016-02-16 - 1:30PM; Senate Lobbyist Lounge Commerce. [SSB3098 Detail]

Download: Iowa-2015-SSB3098-Introduced.html

---

Senate Study Bill 3098 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE
ON COMMERCE BILL BY
CHAIRPERSON PETERSEN)
A BILL FOR
An Act relating to transparency in health insurer payment
transactions with health care providers and including
applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
TLSB 5537XC (4) 86
av/nh

S.F. _____
Section 1. LEGISLATIVE FINDINGS. The general assembly
finds and declares all of the following:
1. Despite the potential benefits associated with
electronic funds transfer payments, many health care providers
are being subjected to fees associated with electronic payment
that essentially reduce their contracted fee amounts.
2. Some health care providers are being subjected to
percentage-based fees for federal Health Insurance Portability
and Accountability Act —— standard automated clearing house
electronic funds transfer payments when the only fee that
should be assessed with automated clearing house electronic
funds transfer payments is a nominal banking fee.
3. In recent years, many health insurers have started paying
health care providers through payer-issued credit cards, which
are often virtual credit cards, thereby shifting the costs of
transferring money electronically from the health insurer to
the health care provider.
4. Although credit cards are a valid electronic alternative
to paper checks, the use of credit cards for payment by health
insurers requires health care providers to manually enter
payments into the health care providers’ own credit card
processing systems.
5. Processing payments through a credit card system often
comes at a significant cost to health care providers, as the
payments are subject to interchange and transaction fees,
thereby reducing the agreed upon contractual fee amount
received by the health care provider for the provided health
care services.
6. Health care providers are often unaware of these high
interchange and transaction fees when accepting credit card
payments.
7. Unlike patient credit card payments, health insurer
credit card payments do not offer significant risk reduction
for health care providers, but nevertheless carry increased
processing charges.
-1-
LSB 5537XC (4) 86
av/nh 1/ 5

S.F. _____
8. Health insurers often receive cash-back incentives from
credit card companies for such transactions.
Sec. 2. NEW SECTION . 514M.1 Title.
This chapter shall be known and may be cited as the
“Transparency in Health Insurer Payment Transactions Act” .
Sec. 3. NEW SECTION . 514M.2 Definitions.
As used in this chapter, unless the context otherwise
requires:
1. “Credit card payment” means a type of electronic funds
transfer in which the health insurer or its contracted vendor
sends credit card payment information and instructions to the
health care provider, who then processes the payments using
standard credit card technology. “Credit card payment” includes
virtual or online credit card payments where no physical
credit card is presented to the health care provider and the
single-use credit card expires upon payment processing.
2. “Health care provider” means the same as defined in
section 135.61, a hospital licensed pursuant to chapter 135B,
or a health care facility licensed pursuant to chapter 135C.
3. “Health insurance coverage” means the same as defined in
section 513B.2.
4. “Health insurer” means a carrier, as defined in section
513B.2, and includes an entity or person that offers or
administers health insurance coverage in this state, or
contracts with a health care provider to furnish specified
health care services to enrollees pursuant to health insurance
coverage.
5. “Nominal” means a monetary amount equal to or less
than the bank fee associated with a federal Health Insurance
Portability and Accountability Act —— standard automated
clearing house electronic funds transfer payment.
Sec. 4. NEW SECTION . 514M.3 Requirements.
1. A contract issued, amended, or renewed on or after
January 1, 2017, between a health insurer or the health
insurer’s contracted vendor and a health care provider for
-2-
LSB 5537XC (4) 86
av/nh 2/ 5

S.F. _____
the provision of health care services to an enrollee of a
policy, contract, or plan of health insurance coverage shall
not contain restrictions on methods of payment from the health
insurer or vendor to the health care provider in which the only
acceptable payment method is a credit card payment.
2. Prior to initiating or changing payments to a health
care provider using electronic funds transfer payments,
including virtual credit card payments, a health insurer or its
contracted vendor shall do all of the following:
a. Notify the health care provider of all fees associated
with a particular payment method.
b. Provide clear instructions to the health care provider
about how to opt out of a payment method at any time following
initial agreement to that payment method.
c. Following completion of the requirements in paragraphs
“a” and “b” , obtain written consent from the health care
provider for the payment method.
3. A health insurer or its contracted vendor is not required
to obtain consent from a health care provider in accordance
with subsection 2 prior to a subsequent payment transaction
unless a new type of electronic fund transfer payment is
initiated with the health care provider.
4. A health insurer or its contracted vendor shall not
impose any interchange, transaction, or processing fees, or
other charges, on a health care provider beyond a nominal
amount for receiving federal Health Insurance Portability
and Accountability Act —— standard automated clearing house
electronic funds transfer payments.
Sec. 5. NEW SECTION . 514M.4 Waiver prohibited.
The provisions of this chapter shall not be waived by
contract, and any contractual clause in conflict with the
provisions of this chapter or that purports to waive any
requirements of this chapter is void.
Sec. 6. NEW SECTION . 514M.5 Severability.
If any provision of this chapter or its application to any
-3-
LSB 5537XC (4) 86
av/nh 3/ 5

S.F. _____
person or circumstance is held invalid, the invalidity does
not affect other provisions or application of this chapter
which can be given effect without the invalid provision or
application, and to this end the provisions of this chapter are
severable.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill creates the transparency in health insurer payment
transactions Act. The bill includes legislative findings which
include recognition of the burdens and loss of revenue for
health care providers who are paid for their services by health
insurers or their contracted vendors through payer-issued
credit cards, including virtual credit cards. Such payments
are subject to interchange and transaction fees of which
health care providers are often unaware. The bill’s findings
also include recognition that some health care providers are
also being subjected to percentage-based fees for federal
Health Insurance Portability and Accountability Act (HIPAA) ——
standard automated clearing house electronic funds transfer
payments when the only fee that should be assessed with such
payments is a nominal banking fee.
The bill creates new Code chapter 514M which provides that
contracts issued, amended, or renewed on or after January
1, 2017, between a health insurer or the health insurer’s
contracted vendor and a health care provider for payment
for health care services provided to enrollees in health
insurance coverage shall not contain restrictions on the
method of payment to the health care provider in which the
only acceptable method of payment is a credit card payment.
The bill also provides that prior to initiating payments to a
health care provider using electronic funds transfer payments,
including virtual credit card payments, the health insurer
or vendor must notify the health care provider of all fees
associated with each payment method; provide clear instructions
-4-
LSB 5537XC (4) 86
av/nh 4/ 5

S.F. _____
about how the health care provider can opt out of a payment
method; and after such notice and instructions, obtain written
consent from the health care provider for the payment method.
Such consent does not have to be obtained from the health care
provider prior to subsequent transactions unless a new type of
electronic funds transfer payment is being initiated.
The new Code chapter prohibits a health insurer or its vendor
from imposing any interchange, transaction, or processing fees,
or other charges on a health care provider beyond a nominal
amount for receiving federal HIPAA —— standard automated
clearing house electronic funds transfer payments. “Nominal”
is defined as a monetary amount equal to or less than the bank
fee associated with a federal HIPAA —— standard automated
clearing house electronic funds transfer payment.
The provisions of the new Code chapter cannot be waived
by contract and any contractual clause in conflict with the
provisions of the Code chapter is void. The provisions of the
new Code chapter or its application are severable in the event
that any provision or its application is held invalid.
-5-
LSB 5537XC (4) 86
av/nh 5/ 5