House Bill (HB) 1393, which was referred to as the "patient protection act," was passed by the 1996 Session of the General Assembly. As originally introduced, HB 1393 would have required carriers which offer health plans that limit enrollees' choices of providers to provide a "point-of-service" option for an enrollee to receive health care services from a provider who is not a member of the provider panel. However, this provision was stricken from the bill. The approved version of HB 1393 directed the Joint Commission on Health Care, in cooperation with the State Corporation Commission's Bureau of Insurance and the Division of Legislative Services, to study the need to require a point-of-service feature which would allow an enrollee the option to receive health care services outside the provider panel.

House Bill 1393 also directs the Joint Commission, in cooperation with the Bureau of Insurance, to study: (i) the extent to which provider panels, which may currently not be subject to state regulation, are forming in the Commonwealth; (ii) the impact that the formation of such provider panels has on the ability of enrollees to receive care from providers not in such panels; (iii) the extent to which these panels enhance or impede the ability of Virginians to access quality, affordable health care; and (iv) the need to extend the provisions of § 38.2-3407.10 as added by HB 1393 or other relevant code sections to such provider panels.

House Joint Resolution (HJR) 231 of the 1996 Session of the General Assembly directed the Joint Commission, in cooperation with the Bureau of Insurance, to study the effects of certain legislative proposals on managed care cost containment strategies, including whether a point-of-service option or similar mechanisms should be mandated through legislation. This report is submitted in response to both HB 1393 and HJR 231.

Based on our research and analysis of the issues contained in HB 1393 and HJR 231, we concluded the following:

• The number of point-of-service (POS) plans being offered in the marketplace is increasing; POS is readily available in the marketplace for employers;

• There is no definitive information on the number of Virginia employers which offer only closed-panel HMO benefit plans to their employees;

• The threshold question to be addressed by this study is a public policy decision regarding whether the Commonwealth should enact legislation that requires pas plans to be offered at the employee level;

• If it is decided to require a POS feature, many important design issues would have to be addressed and resolved;

• Should a POS feature be required in Virginia, HMO regulations and relevant statutes would have to be reviewed and possibly revised;

• Few states have enacted POS legislation; New York is the only state which requires POS be offered to enrollees (individual market); and

• Other types of provider panels are forming in Virginia; however, to date, these panels are contracting with. health plans similar to other providers. Provider panels which assume risk are required to be licensed as an insurer or HMO.

The following policy options were offered for consideration by the Joint Commission in deciding what actions, if any, to take regarding point-of-service health plans. Option ill could be pursued. along with either Option I or Option II.

Option I: Take No Legislative Action In 1997, And Monitor The Marketplace To Gain Greater Insight Into The Availability Of POS Plans At The Employee Level.

Option II: Introduce Legislation In The 1997 Session Stating That It Is The Policy Of The Commonwealth To Ensure That All Virginians Have Access To Health Plans Which Allow The Enrollee To Access Care From Their Provider Of Choice; And Direct The Bureau Of Insurance To Convene A Task Force Composed Of Actuarial Experts And Representatives Of The HMO/Insurance Industry, Providers, And Consumers To Develop POS Legislation That Would Ensure The Availability Of POS Plans At The Employee Level.

Option III: Introduce A Resolution Directing The Bureau Of Insurance To Review The Advisability Of Revising Current HMO/Insurer Licensing Laws To More Accurately Reflect The Changing Health Care Delivery System And Report Its Findings And Recommendations To The Joint Commission On Health Care And The General Assembly.

Our review process on this topic included an initial staff briefing which you will find in the body of this report followed by a public comment period during which time interested parties forwarded written comments to us on the report. In many cases, the public comments, which are provided at the end of this report, provided additional insight into the various topics covered in this study.

Due to the complexity of this study, we were not able to resolve a number of specific issues which required actuarial analysis. Accordingly, the Joint Commission introduced companion study resolutions (House Joint Resolution 631 and Senate Joint Resolution 297) in the 1997 General Assembly Session to establish a task force within the Joint Commission to address these outstanding actuarial issues. These resolutions were approved by the General Assembly.