EXCUSED:

Chairman Black explained that it is his intention to deal with agency
administrative rules next week, and to have the agency people present their
rules as well as any RS’s that they have before the committee. He hopes
this will expedite the process so the committee can move through the
pending rules and the 24 agency RS’s in an efficient and rapid manner.
Rep. Gagner will be chairing Monday’s meeting in the absence of Chairman
Black, who will be meeting with other members of the Pacific NorthWest
Economic Region.

Rep. Meyer asked Chairman Black whether the mad cow situation was
negatively affecting relations between the United States and Canada.
Chairman Black said that, as far as he could discern, relations are not
strained, although some Canadians are concerned about the finger pointing
from the U.S., attempting to affix blame on Canada for the mad cow
problems in this country. However, PNWER does not involve itself in issues
such as mad cow or soft lumber, which is another contentious issue between
the two countries.

EXCUSED:

10-0101-0301

10-0102-0301

Mr. Curtis noted that the Board had advertised the opportunity for hearings
on these two rules changes and had received no requests for a hearing. In
addition, license holders were notified of the pending changes, and the
Board has received no negative comments.

24-0101-0301

24-0401-0301

24-0701-0301

24-0801-0301

24-0802-0301

MOTION

SUBSTITUTE

MOTION

18-0115-0301

18-0119-0201

18-0138-0301

18-0144-0301

18-0153-0301

18-0159-0301

EXCUSED:

33-0101-0301

01-0101-0301

01-0101-0302

01-0101-0401

07-0201-0301

07-0207-0301

07-0206-0301

07-0303-0301

07-0308-0301

07-0312-0301

07-0501-0301

07-0601-0301

07-0701-0301

Mr. Munroe also noted that some problems have arisen with the startup of
this bureau, and that the proposed effective startup date of July 2004 now
seems to be unrealistic. No one has yet been hired for the HVAC board, and
Mr. Munroe said that a six-month delay may be necessary. Although he
thinks the bureau can start licensing HVAC contractors by July, the
permitting process will not be in place by that date. Committee members
noted that legislation will be necessary to effect the six-month delay that Mr.
Munroe is requesting.

In response to committee questions, Mr. Malmen verified that it would take
a total of eight years for a person to become a master electrician, including
four years as an apprentice and four years as a journeyman. He
acknowledged that those journeymen who are currently approaching the
two-year experience level may have to earn two more years in order to
qualify under the new requirements. Mr. Malmen also stated that the
legislation has been endorsed by the International Brotherhood of Electrical
Workers, the National Electrical Contractors Association, and the
Independent Electrical Contractors Association. Mr. Malmen was asked who
is sponsoring this legislation, and he replied that the legislation arose from
the industry, the bureau, and the electrical board.

Chairman Black noted that the electrical bureau may want to examine the
possibility of reciprocity with Canada, since upcoming major construction
projects in Canada will make work available to many northwest contractors.

There was some question from committee members about why the
consumer or purchaser of a manufactured home is not included in the list of
those who are involved in the dispute resolution. Mr. Malmen noted that the
consumer is involved because the initial complaint comes from the buyer of
the home, and this legislation will provide a mechanism to settle disputes
among the three entities who may be responsible for settling with the
consumer.

EXCUSED:

Mr. Corbell provided further testimony on RS 13656, pointing out that no new
hiring would take place to administer this inspection program, since the QEI
inspectors are already working at the Division of Building Safety. He also
noted that the proposed legislation was developed in cooperation with
retailers, the Associated General Contractors, the Idaho Association of
Commerce & Industry, and the Building Owners & Managers Association.
The legislation would also cover wheelchair and material lifts, as well as
dumb waiters.

Mr. Lyman also pointed out that on page 5, line 20, the word “are” was
inadvertently omitted after the word “state,” and he asked that the RS be
printed with that correction.

EXCUSED:

10-0102-0301

10-0101-0301

07-0701-0301

EXCUSED:

In response to committee questions, Mr. Curtis noted that these new regulations
will not affect existing surveys, but only surveys made after July 1, 2004. He also
explained that the change from the word “or” to the word “and” on page 2, line 8,
was being made because under the previous wording a surveyor could meet only
one of the requirements and still satisfy the code. The language change will
correctly reflect the intent of the law, which is to require that a surveyor meet all
requirements.

A question arose from the committee regarding land surveyors being able to gain
experience before graduation. Mr. Curtis explained that, after meeting with the
board of governors of the surveyors society, the engineers and land surveyors
board amended this legislation to allow surveyors to gain qualifying experience
before graduation.

In response to another question, Mr. Curtis explained that, until 1978, engineers
licensed to practice in the state of Idaho were also licensed to practice land
surveying, although one could be licensed only as a land surveyor. Because of
the historical connection between these two professions and their licensing
procedures, both engineering and land surveying were administered by one
board. Although land surveying is now a separate profession from engineering,
the two professions remain under one board for administrative purposes.

EXCUSED:

In response to committee questions, Michael McPeek, deputy attorney
general, said that the power to subpoena records is in effect only after a
complaint goes to the hearing stage. The securing of documents is an
important part of a full investigation and hearing process. He also explained
that H 498’s omnibus provision is a smoother way to handle adding the
subpoena power to all 19 bureaus, rather than drafting 19 separate bills.

EXCUSED:

Responding to questions from the committee, Mr. Priest said that the list of
surplus lines carriers is posted on the internet and is thus available to anyone.
Although the department does not have any regulatory authority over these
companies, and thus cannot enforce the reporting requirements, it will be in the
best interest of the companies to comply, since they will be removed from the list
of eligible insurers if they do not cooperate by providing current information. Mr.
Priest also said that a 60-day period was chosen because it seemed to be a
reasonable period of time within which to receive updated information from the
surplus lines carriers.

Answering questions from the committee, Mr. Priest said that the judgment
about whether or not a name is “deceptively similar” is a subjective decision, and
is based on an evaluation of whether the similarity in names is so great that it
would tend to confuse consumers.

A member of the committee asked whether electronic filings could be potentially
problematic since they could be lost due to a computer malfunction or problem.
Mr. Priest explained that the NAIC maintains these reports and backs them up
for safety, and that the insurance companies filing the reports are also required
to maintain hard copies of the reports.

Mr. Priest also presented an amendment to H499. The amendment clarifies
that the prior approval requirement applies to changes in a company’s articles
of incorporation but not to changes in bylaws. The amended bylaws are still
required to be filed with the department, but they do not require prior approval
from the department.

EXCUSED:

Responding to committee questions, Mr. Corbell said that a person running
telephone lines in a house or a person installing burglar or smoke alarms would
fall under this legislation because those installations are now covered under the
national electrical code.

Gary Malmen, Bureau Chief of the State Electrical Bureau, was recognized to
address this matter. Mr. Malmen said that the bureau’s administrative rules
currently exempt installations of smoke and fire alarms in one- or two-family
dwellings, and that the board could look at exempting certain telephone
installations as well.

The committee also expressed concerns about a lack of knowledge about what
constituted a communications installer. If the bill is printed, the committee will
need to have a fuller discussion on who needs to be licensed.

Responding to committee questions, Mr. Bauman stated that there has not been
a governor’s work comp advisory committee since Governor Batt left office,
since Governor Kempthorne has chosen not to continue that committee. Mr.
Bauman said that the Industrial Commission does have an advisory committee,
and that he appeared before them on January 13 to explain this legislation.
Although he did not have enough copies at that time to distribute to the advisory
committee, he did tell them that copies would be readily available at the IACI
offices. Mr. Bauman also stated that Senator Andreason is a member of the
advisory committee at the Industrial Commission. He stated again that the
Industrial Commission now has a workers’ compensation advisory committee
because Governor Kempthorne chose not to continue the governor’s advisory
committee after Governor Batt left office.

In response to committee questions, Mr. Bauman said that the term “qualified
physicians” is not limited to medical doctors, but in fact can include chiropractors
or other professionals. It is up to the Industrial Commission or the Supreme
Court to decide who is most qualified to provide evaluations in particular cases.

Dave Munroe, Director of the Division of Building Safety, testified that this will
result in a $205,000 savings to the Industrial Commission. These costs are
currently being passed through to the commission from the division. Mr. Munroe
also explained that about $96,700 of this expense is for time and travel, as well
as for re-inspections. The current safety advisors will be attending QEI training
so they can perform elevator inspections. Since at least one will be located in
each region of the state, this will save on time and travel expenses.

Mr. Corbell answered further questions from the committee. He said that,
although he had not had any feedback from owners of equipment such as dumb
waiters, this equipment is included in the federal law and thus will also be
covered by Idaho’s inspection requirements. Mr. Corbell also said that there are
five major installers of elevators in the state of Idaho, and that they support this
legislation.

Responding to committee questions, Mr. Rayne explained that enforcement
would be achieved by means of fines up to $10,000, as well as possible
suspension or revocation of state licenses. A question was raised about whether
the subcontractor who lays a foundation for a manufactured home is considered
an “installer.” Mr. Rayne responded that the only person exempted from the
dispute resolution process is the one who pours concrete. However, the dealer
who subcontracts with the concrete person can be held responsible for his work.

Responding to questions from the committee, Mr. Lyman stated that the use of
licensed electricians and plumbers does not guarantee a better product. He
explained that manufacturing plants that produce modular buildings did not exist
back in 1947 when the legislature made it a policy to use licensed electricians,
or in 1957 when they extended this requirement to plumbers.

The proposed legislation will require that modular buildings exported to other
states will have to meet the building codes of the state of destination. Mr. Lyman
explained that the destination of a particular building is already specified as the
building moves through production, and that it can be inspected at any point
along the line to make sure that it meets the destination state’s code. Mr. Lyman
reiterated his belief that it is incorrect to assume that a worker is unskilled or
inferior just because he is unlicensed. Businesses engaged in producing these
buildings will want to pass necessary inspections, because they will not want to
face a potential liability from an inferior product. He also pointed out that
modular buildings produced in Colorado, for instance, are coming into Idaho for
installation here, and no one is checking to see whether Colorado is requiring or
using licensed electricians in their production.

Mr. Lyman responded to further questions by stating that the five production
facilities in Idaho are in Caldwell, Boise (2), Nampa, and Weiser. A question
arose as to whether manufacturers are willing to face lawsuits if their products
result in problems with fire or other hazards because of the use of unlicensed
contractors. Mr. Lyman said that if a manufacturer meets the code in the state
of destination, that will insulate it from some liability for such problems, since the
state’s code has been met.

Mr. Berry answered committee questions, saying that he employs about 150
people in his work force; these employees are not required to be licensed. The
homes they build which are intended for export are inspected according to the
rules of the destination state. Some of these states send their own inspectors
to Idaho to inspect the buildings during construction; others contract out to
inspectors who do the inspections. If the buildings are built for installation in
Idaho, they are inspected just like stick homes are inspected. Mr. Berry also said
that the differential in labor costs between licensed and unlicensed workers is
as much as $40 per hour.

In response to questions from committee members, Mr. Whaley said that,
although the buildings are inspected, there are still things missed by inspectors
that may make the buildings unsafe unless licensed workers are used in their
construction. Mr. Whaley also stated that he thinks that lowering standards, as
this legislation does, is the wrong way to go in an effort to lower the costs.

Responding to a question, Mr. Butterfield said that, in talking about “doing away
with inspections,” he was referring to Idaho inspections being eliminated. Mr.
Butterfield also apologized to committee members for implying that they were
not knowledgeable enough in the technical aspects of plumbing and electrical
work to make an informed decision about the legislation.

There being no further business to come before the committee, the meeting was
adjourned at 4:00 p.m.

EXCUSED:

Responding to questions from committee members, Rep. Henbest
acknowledged that most health insurance premiums are funded by employers
and that, because of this, the legislation may not provide an incentive to
individuals. However, she thinks it will set a tone that will encourage healthy
lifestyles. She also noted that the discount will be “up to” 20%, but may be less
than that amount.

A question was raised about what qualifies as “weight reduction services” that
would require reimbursement. For instance, does this legislation limit that
definition to medical services, or could it include such programs as Weight
Watchers? Rep. Henbest said she thought that was a valid question, and
explained that it was not her intention to reimburse except for health care
providers. This may be a point that will need to be clarified.

EXCUSED:

EXCUSED:

Responding to committee questions, Mr. Peterson said that, although the law will
apply to all rental car companies, regardless of size, it is still his contention that
the effect of the law will be felt more seriously by small businesses because they
can’t spread the cost or absorb it as readily as a large corporation can. Mr.
Peterson also said that, if a person with no insurance rents a car and then has
an accident, the rental car company’s insurance would be responsible for the
damage and would pay the costs.

In response to committee questions, Mr. Tucker clarified that the bill is, in fact,
dealing with only liability insurance; in fact, the entire code section that is being
amended, 49-1212, covers liability insurance. He also stated that, in his mind,
there would be little incentive for people to “take advantage” of a rental car
company’s insurance coverage if the law is changed, since the driver still bears
responsibility for the accident in terms of any ticket or other ramifications. Mr.
Tucker said that there is no specific law that requires rental car companies to
carry insurance; what is required is financial responsibility, in the way of
adequate bonding or other assets. Asked about how other states handle this
matter, Mr. Tucker said that it is a mixed bag; some states place rental car
companies’ insurance as primary, some as excess, and some do not specify.
This latter situation results in disagreements between rental car companies and
insurance companies, as has happened in Idaho.

Responding to questions, Mr. Jones said that there is a lot of confusion in the
area of which insurance company is primary. Many times, those who rent cars
do have liability and collision coverage for the rental car through their own car
insurance policies, but they are not aware of this coverage.

Answering questions from committee members, Mr. Dixon agreed that this
legislation will result in smoother claims settlement because it will avoid litigation
in some cases. He said, however, that since insurance rates are based on
multiple factors, he cannot say with any certainty whether this legislation will
result in lower insurance premiums. Mr. Dixon also said that surrounding states
are not consistent; for instance, Washington state does not have the rental car
insurance as primary, but Montana does place primary responsibility with the
rental company.

Responding to committee questions, Ms. Jacobsen said that, in order to be
considered for appointment as an examiner, a person must be a licensed
cosmetologist actively working in the field, and must have received training as
an examiner. She also stated that licensure is not required prior to admission
to a cosmetology school and, as far as she knows, no schools require such prior
licensure.

EXCUSED:

Professor MacDonald presented the highlights of H 671, as follows: 1) It allows
corporations to use new electronic technologies for certain functions such as the
use of e-mail for proxy voting. 2) It addresses corporate fraud, amending some
sections dealing with corporate officer behavior. 3) It allows out-of-state
corporations to move to Idaho and become Idaho corporations, doing away with
the necessity of dissolving the corporation and establishing a new Idaho
corporation. 4) It adopts uniform voting rules for shareholder approval of
corporation decisions. According to Professor MacDonald, H671 contains many
technical amendments and definitions, but its main thrust is to bring Idaho into
compliance with the Model Business Corporation Act.

In response to committee questions, Mr. Keys said that small communities who
cannot afford to hire a full-time inspector could band together and hire a joint
inspector to service several communities. He said that many communities use
journeymen electricians to conduct inspections, and that this gives rise to
possible conflicts of interest if an electrician is inspecting the work of one of his
competitors. Mr. Keys acknowledged that the bill does not change the
qualifications or the number of years of experience needed to become an
electrical inspector.

Responding to committee questions, Mr. Corbell explained that municipalities can
set up their own inspection programs, but that the majority of counties in Idaho
utilize the state inspectors. Mr. Corbell stated that there is a move among local
municipalities to move toward a “certification” process for inspectors rather than
to continue to require four years of experience and training.

In response to committee questions, Mr. Keys stated that there is no
grandfathering provision in the bill which would protect electricians who are
currently near the two-year experience level. Unless they attain a master
electrician’s license before this bill goes into effect, they will have to meet the
higher standard of four years’ experience.

EXCUSED:

Responding to committee questions, Mr. Street said that the bill removes the term
“prudent person” and uses “business judgment rule” because it is the standard
that is currently used. Mr. Street said that the Model Act further defines what a
“reasonable person” is. He pointed out the term “person in like position” on page
21, line 41, and explained that this means a person on a board rather than any
ordinary person on the street. He also noted the standards of liability for directors
of corporations on page 22. Mr. Street said that the bill is carefully drafted and
is written in such a way that it is not incomprehensible to a layman. Mr. Street
also responded to a question concerning director liability, saying that the bill does
offer some protection for directors who consult with experts when they are dealing
with a matter which they don’t fully understand.

Mr. Street then offered a brief summary of H671. In addition to the new
provisions on responsibilities of board members, the bill lists required offices of
a corporation and establishes standards of conduct for officers. It also deals with
domestication of corporations, providing that if a corporation moves to Idaho, it
can become an Idaho corporation without dissolving. Mr. Street stated that this
is becoming a common trend in corporation law, and that it considerably speeds
up the process. The bill defines when shareholder approval is needed for
disposition of assets, and sets up a procedural process that allows shareholders
to get a fair price for their stock. Finally, Mr. Street said that the bill specifies that
the dissolution of a corporation can occur without leaving future liabilities to the
board of directors, by having the corporation buy insurance to cover contingent
liabilities.

In response to further committee questions, Mr. Street said that the legislation
closely follows the Model Business Corporation Act of 2002. He also said that the
legislation anticipates the need for greater care in corporate dealings, in light of
the corporate scandals of the past few years. He pointed out in particular the
sections that deal with officer behavior on page 24 of the bill. Mr. Street also
noted that the bill removes the requirement of having nine directors before board
terms can be staggered, and said that the central issue is not really staggered
terms but rather the independence of the persons named to a board. The bill does
not change the standards for directors or officers.

EXCUSED:

H 709

H 743

Answering a question about the definition of “health care provider,” Mr. McClure
referenced H709, page 1, lines 33-40, and said that it contains a very broad definition
of “health care provider.” Pam Eaton pointed out that the definition of a provider does
not include pharmacies. Mr. McClure said that he would be okay with including
pharmacies in the definition. Mike Brassey noted that the three bills also differ on
which insurers are included.

Mr. Tobiason responded to a question about the fact that the real problem with
nonpayment of claims rests primarily with out-of-state insurance companies or
nonparticipating providers. He explained that in other states, if providers want to take
advantage of the prompt pay provisions of the law, they become contracted providers.
He also said that this legislation would not apply to self-funded health plans or to
ERISA, which is controlled by the Department of Labor, which has its own payment
standards.

Mr. McClure said that he does have some sympathy with the need for a time
differential. He also stated that, where a contract exists and where the contract’s
provisions are different from the prompt pay law, the contract should take precedence.
The prompt pay statute ought to apply in cases where there is no contract in place. Mr.
McClure said that, by including penalties for noncompliance, it is not his intention to
create problems or generate money for the department of insurance. He called the
committee’s attention to page 2, lines 48-52, and said that the purpose of the penalty
is not to penalize someone who is honestly trying to comply with the prompt pay
provisions.

Mr. Lempesis testified that he sees four problem areas, namely: 1) What is a health
care provider? He said there have to be some limitations on this, or even someone like
a barber could be considered a health care provider. 2) The Department of Insurance
cannot act as a collection agency. 3) Any penalties must be bilateral. He drew attention
to code section 41-1329, the Unfair Claims Practices Act, and compared it to carpet
bombing or to execution for a shoplifting offense. 4) It is important to always remember
that an insurance policy is a contract; a physician contracts with an insurer. Therefore,
the philosophical question arises: Is it the government’s role to interfere in a contract,
or to impose obligations where no contract exists?

Rep. Deal asked whether everything had been put on the table with regard to the three
bills. Mr. McClure responded that he is not wed to the Unfair Claims Act, although it
does allow the department of insurance some discretion in enforcement matters. He
also agrees that contracts are important.

Rep. Deal invited questions or comments from subcommittee members. Comment was
made that it seemed doctors would already have an incentive to submit billing in a
timely manner, since they cannot get paid until they bill. Tim Olson, Blue Shield,
explained that doctors sometimes delay a billing until the next calendar year, in order
to shift their taxable income to the next year. Mr. Lempesis also noted that doctors,
like lawyers, are not always good businessmen, and thus may not be efficient in
submitting billings. Mr. Kleaver pointed out that a contracted provider cannot balance
bill a patient. Ms. Taylor said that sometimes a doctor will say he’s submitted the
billing, but if it is a third party billing, the bill may not be received by the insurance
company in a timely fashion.

Rep. Deal summarized the five general topics discussed, and noted that three of the
five are points of possible agreement among parties. These are: 1) the need for a
better definition of “health care provider”; 2) the difference in acceptable time limits for
electronic versus paper billing, that is, 30 days for electronic and 45 days for paper; and
3) a determination of which companies are involved. The remaining two points, 4) how
to treat nonparticipating providers, and 5) penalties and enforcement, are areas that
remain in conflict.

Rep. Deal asked the parties to continue working on these two areas of conflict, and he
announced that he would schedule a subcommittee meeting sometime early next week
to assess progress and further identify areas of agreement.

EXCUSED:

Ms. Darrington commented on a number of objections to H710. She noted that this
bill is not an attempt at price fixing, since companies fix their own rates. She also said
that some fear this bill would result in the insurance companies reducing the amount
of payment for emergency services. She said that the bill is not about reimbursement,
but is instead intended to protect consumers from high balance bills submitted by non-contracting providers. Ms. Darrington distributed a sheet listing the top 40 procedure
codes and showing the comparative payment amounts for Regence Blue Shield of
Idaho, Idaho Medicare, and Regence in three other states.

Ms. Darrington was asked to provide an illustration of what the cost difference would
be to a patient going to a “preferred” provider as opposed to a “non-preferred”
provider. She responded that a patient going to a non-preferred provider would be
responsible for 30% of the amount of the contractual payment (since Regence pays
non-contracting providers 70% of the approved payment amount), and the patient
would also be responsible for the balance of the bill above the contracted amount. If
a non-contracting provider charges $150 for a procedure, and Regence’s payment
amount for a contracting provider is $100 for that procedure, Regence will pay a non-contracting provider $70 (70%), and the patient is responsible for the remainder of the
bill, which would be $30 plus $50. She said that doctors can write off the balance
even without this legislation, but that they seldom do so. Ms. Darrington reiterated
that the bill is aimed at protecting patients in situations beyond their control, when they
go to an emergency room of a contracting hospital and are treated by non-contracting
medical service providers.

Answering committee questions, Mr. Tobiason said that some physicians do not
contract with insurance companies because they may be the only specialist in a
certain geographical area and therefore do not have to contract. Mr. Tobiason sees
no indication that this bill will affect the quality of care in emergency rooms.

MOTION

Rep. Snodgrass argued against the substitute motion, saying that emergency room
doctors become contracted only if the hospital in which they are working is contracted.
He also said that current reimbursement rates may move up, rather than down, if the
current rates fail to attract enough contracting physicians. He pointed out that, under
H710, insurance companies will not benefit, but rather will end up paying more.

Rep. Henbest invoked Rule 38, stating that her husband is a physician. She said that
the bill covers only one part of the problem and that there are inherent conflicts in how
the system is set up, since emergency room physicians are a “captive” group of
doctors. She noted that no one had talked about the responsibilities of the hospitals;
if they offer emergency room services, do they have a responsibility to assure that
they have adequate staff? Rep. Henbest said that H710 is just one indication of how
broken the health care delivery system really is.

Rep. Smith argued against the substitute motion, saying that her primary concern is
patient protection. Rep. Rydalch stated that, in her view, H710 is not a consumer
protection bill. Rep. Douglas argued in support of the substitute motion, stating that
she does believe the bill will affect the quality of care. She said that when one group,
such at patients, gets a break, another group ends up paying. She also noted that the
uninsured are not part of this discussion at all.

Answering committee questions, Mr. Allcott said that the new Code would require
sprinkler systems in three-plex and four-plex buildings, but that Rep. Gagner had
exempted those two classifications in this bill. He agreed that local governments can
require sprinklers in those smaller units, but that fire districts have no authority to do
so.

Rep. Cannon expressed support for the substitute motion, saying that this matter
needs to be left to local jurisdictions. Rep. Collins stated support for the substitute
motion, saying that the 2003 code represents better law than the 2000 code. He also
expressed opposition to sending H756 to General Orders.

Rep. Henbest stated support for the original motion, primarily because of safety
considerations. Rep. Rydalch pointed out that presently tri-plex and four-plex
buildings are not covered, and this bill does not change that, but that it adds
extensively to the requirements for buildings above that number.

Responding to committee questions, Mr. McClure said that the form is not intended
for use in emergency situations, but would only apply to doctor’s office calls. He said
that it would be virtually impossible to have the form reflect all the specific companies
and plans that are available for contracting, since they are so numerous. For
instance, Primary Health contracts with about 1,300 carriers, so it would be impossible
to list all of them on a form. Mr. McClure said that the patient needs to know about his
coverage and it is hoped that the use of this simple form will be enough to alert a
patient to ask about whether or not his doctor is contracting with his insurance plan.
Asked whether he supported the proposed legislation contained in H757, Mr. McClure
stated that he is “nervously supportive” based on an understanding that his proposed
patient notification form will satisfy the requirements of the bill.

EXCUSED:

Members of the committee commended Mr. Ferguson and ICRMP for the
progress made in the last few years, saying that their operations and their claims
services have both improved. The committee thanked Mr. Kane and Mr.
Ferguson for their presentation, and expressed the hope that they would be able
to continue their good work for the local governments within the state.

Mr. Richards explained that the current definition of “managed care plan” in Idaho
Code is overly broad and could be applied to virtually all health care contracts.
The language in Section 2 of the legislation creates a dividing line between
managed care products and other health care plans. The legislation also
contains important consumer protections, included at the request of the
Department of Insurance. Mr. Richards stated that other provisions were included
as a result of input from the Idaho Medical Association; these requirements are
being transplanted from Chapter 39. Mr. Richards further testified that this
legislation will not eliminate consumer choices in health care plans; managed
care, PPO, and traditional plans will still be offered.

Some concern was expressed about bypassing the normal procedure of having
the bill returned to the Business Committee for a full hearing. Chairman Black
reminded the committee that the bill will go to the Senate after passage in the
House and that it will receive a full hearing in the germane Senate committee.
Mr. McClure also assured committee members that his organization had studied
all the provisions that would benefit patients, and that those provisions they
requested had moved across into this legislation. Mr. Richards noted that, given
the conflict that has historically existed between insurance providers and the
medical community, the level of cooperation among all parties was particularly
gratifying, and he thanked the Idaho Medical Association and the Idaho Hospital
Association for their interest in this legislation.

EXCUSED:

Ken McClure, representing the Idaho Medical Association, presented his draft and
distributed copies to all present. Mr. McClure said that he had met with most or all
interested parties and had been able to reach some agreement on some issues.
However, he made it clear that the draft is not consensus legislation. He stated that
he started by looking at all three bills, H705, H709, and H743, and tried to satisfy
various needs in his new draft. He explained that he started with H709, so the
stricken and underlined portions of his draft represent changes from H709. Mr.
McClure said that one change is that the new legislation will not apply to Delta
Dental. Secondly, since some third-party administrators pay claims on behalf of
insurers, these third-party administrators will not be defined as “insurers.” Other
changes include a differential of 30 days or 45 days for payment, depending on
whether the claim is submitted electronically or in paper form; a requirement for
prompt payment if prompt submission of claims takes place (as determined by
postmark); and the inclusion of interest payments. Mr. McClure pointed out other
features of the draft that attempted to accommodate requests from other parties,
including the issue of nonpayment of premiums, the allowance that a company will
not be penalized for late payment if during a calendar year they make timely
payment of at least 95% of their claims, and a provision that the contract between
an insurer and a practitioner or facility will take precedence.

In response to a committee question, Mr. McClure said that the draft legislation
requires prompt payment to whomever the payments are due. The insurance
companies must pay the patients as promptly as they pay the doctors. He also
acknowledged that interested parties had received copies of the draft legislation only
an hour or so previous to the meeting and thus have not had adequate time to fully
study its provisions.

Steve Tobiason, representing the Idaho Association of Health Plans, said that the
biggest point of separation is the contracting versus non-contracting issue. He said
that in a case where the health care provider doesn’t contract with an insurance
company, the provider still contracts with the patient. There is also a contract
between the patient and the insurance company. But there is no contract between
the insurance company and the provider. Mr. Tobiason pointed out that, if there is
a contract between only the provider and the patient, that contract will govern the
timing and method of payment to the patient. He asked why there was a need to
modify the contract, adding that if the patient is not getting paid in a timely fashion,
there would be complaints from patients. He stated that the payment standard is
already in the insurance contract, and this bill would override that contract
relationship. Mr. Tobiason also said that this bill does not impose prompt
submission of claims, but only prompt payment. He stated that he has not had a
chance to fax the bill to his board members to get their input.

In response to committee questions, Ms. Taylor said that Blue Cross processes
about 2.5 million claims each year, and that they are “scored” on a quarterly basis
on the timeliness and accuracy of their payments. Mr. McClure noted that Blue
Cross’s score is well above the 95% minimum, somewhere in the neighborhood of
99%. Ms. Taylor said that their fourth quarter 2003 score was 99.6%, and that the
lowest score she could recall in the last few years was 97.5%. When asked whether
the 95% figure in the legislation was perhaps set too low, Mr. McClure stated that
the objective is not to get companies in trouble, but rather to give the Department
of Insurance some credible guidelines which will allow them some enforcement
power in this area.

Mr. Tobiason responded that Idaho Code section 41-1329 sets forth penalties and
allows administrative fines up to $5,000 and the loss of ability to do business. He
stated that the Department of Insurance could develop an administrative rule
detailing prompt payment requirements, which would preclude the necessity of
legislation. Ms. Taylor stated that the legislation will create a level playing field
because it applies to non-contracting providers. In this case, if the provider knows
that the patient is being paid within 30 days, they can predict when their bill will be
paid by the patient. Mr. McClure said he would entertain any technical changes to
make the legislation work for all parties. He said that the matter boils down to the
question, if there is a reason not to pay a patient as quickly as a doctor is paid, then
what is that reason? Mr. Richards stated that the exclusion of Delta Dental would
not be acceptable to his clients.

EXCUSED:

Joan Krosch responded to a question about whether this benefit was limited
only to those who lost jobs due to trade agreements. She responded that it
would depend upon whether the job was lost as a result of some trade
adjustment.

EXCUSED:

In response to committee questions, Mr. Moore said that the bill will affect both
current and future contracts. He also pointed out that dealership contracts are
not typical contracts, but instead are “contracts of adhesion” which are made on
a “take it or leave it” basis offered by equipment manufacturers.

Responding to committee questions, Rep. Roberts noted that the farm
equipment business is, in a certain sense, different from other dealerships
because the equipment dealers have to house extensive amounts of equipment
to repair and service the farm equipment they sell. If a dealership agreement
is terminated, this service equipment should be able to be bought back by the
manufacturers. Mr. Moore also commented that these dealership agreements
are not franchise businesses, but are contracts of adhesion. He stated that the
“buy-back” provisions of the bill are not the only important portions, pointing out
that the bill also covers termination and notice requirements which are equally
important.

RS 14268

Chairman Black announced that the Speaker had designated the Business
Committee as a privileged committee for the purpose of holding a print hearing
on RS14268. He said that it was his intention to ask the committee to hold
H833 in committee, and to send RS14268 to print and then directly to the
second reading calendar, as a replacement for H833. The new bill, however,
will receive a different bill number.

Mr. McClure pointed out the problem in H833 and said that the new RS has
language inserted on page 1, line 41, after the word “corporation” which will
more closely define “insurer.” This is the only difference between H833 and the
new RS. Mr. McClure also expressed his gratitude to all involved for their time
and efforts in arriving at RS14268. He further requested that, in the interest of
time, the committee introduce RS14268 and send it directly to the second
reading calendar.

RS14268 requires insurance companies to pay a claim within thirty days
following receipt of a bill if the claim is sent electronically, or within 45 days if
sent by paper. The RS includes exceptions in cases where companies may not
be able to pay within this time restriction, for instance, when they do not have
adequate documentation. The legislation includes some penalty provisions and
it also changes the mechanism for awarding interest, stating that if the amount
of interest is under $4, no interest has to be collected. It also includes a
definition of “electronic claims.”

In response to committee questions, Mr. McClure explained that the legislation
includes a “safe harbor” provision to protect companies who are paying most
claims in a timely manner. He also stated that, if a company finds that it does
not have proper documentation for a claim, the 30-day clock stops, and when
documentation is received, the 30-day time frame starts over.

EXCUSED:

EXCUSED:

Responding to committee questions, Mr. Anderson said that the new licensing
will help eliminate fraud and predatory practices because it will provide a
mechanism for the Department of Finance to revoke licensing for unscrupulous
loan originators. At the present time, a loan originator can be dismissed for
wrongful practice by one broker and still be hired by another broker. Mr.
Anderson also stated that it is preferable to require a bond from each loan
originator because if the originator engages in unethical practices, his bond
would be attached first, and the broker’s bond would not be adversely affected.
He said that the amount of the bond is usually sufficient to cover any damages
to a consumer. In response to a question about whether this bill is an attempt
to keep new people from entering the industry, Mr. Anderson said that it is
aimed at keeping people out of the loan origination business who should not be
in the business because of unscrupulous practices. He also noted that present
loan originators will be “grandfathered” so they will not be required to pass an
examination in order to be licensed; an exam will be required for those who are
entering the field for the first time.

Responding to committee questions, Ms. Smith said that she does not think the
fee schedule is unduly high. She pointed out that the annual licensing fee for
loan originators will be $100 and the annual bonding fee will be about $150 to
$200. In addition, continuing education costs should be fairly low; Oregon’s
continuing education program costs $79 per year. Ms. Smith said that there are
1,700 mortgage brokers in Idaho, and that her association’s membership is 250.
The majority of the 250 are mortgage brokers, and the rest (about 20%) are
mortgage lenders. She also said that the legislation was publicized to
interested parties through the association’s newsletter, as well as by the
Department of Finance. She stated that the Department of Finance is neutral
on S1389, but that her organization had worked with the department for a
number of years to develop this legislation.

Responding to committee questions, Mr. Manwaring said that, should a loan
originator’s bonding amount be exhausted in settlement of a claim, then the
broker’s bond will pick up the additional amount of the claim. Even though loan
originators will be licensed and bonded under S1389, their brokers will still be
liable for their practices.

Mr. Anderson was recognized to answer further committee questions. He
delineated the requirements for licensing as a loan originator, which include
three years of experience, a $10,000 net worth, and the absence of any
misdemeanors or felonies in the financial services field. Mr. Anderson also

testified that loan originators are not required to maintain errors and omissions
insurance; rather, their liability is covered under the bonding requirement.