As Recommended by House Committee on



Sub. for S.B. 439 would amend several sections of Kansas health maintenance organization (HMO) regulatory statutes to incorporate into those statutes the regulation of Medicare provider organizations referred to as provider-sponsored organizations or PSOs; amend several statutes applicable to group health insurance; and add a new statute mandating increased coverage for diabetes.

Medicare provider-sponsored organizations. Areas of existing law that would be made applicable to PSOs include:

In lieu of the listed disclosures, the Commissioner may accept certificates of coverage issued by a PSO which is in conformity with requirements imposed by the appropriate federal regulatory agency.

On a matter unrelated to PSOs, the bill would repeal the requirement that the Commissioner of Insurance publish all health maintenance rules and regulations.

Kassebaum-Kennedy amendments. The bill also would include the provisions of 1998 H.B. 2705 to:

Increased health insurance coverage for the treatment of diabetes. Finally, Sub. for S.B. 439 would require individual and group health insurance policies, medical service plans, contracts, nonprofit medical and hospital service corporations, and health maintenance organizations to provide coverage for certain equipment and supplies used in the treatment of diabetes.


That part of Sub. for S.B. 439 dealing with PSOs was requested by the Insurance Commissioner (originally in S.B. 439). The Commissioner's representative explained the bill would give the Insurance Commissioner authority to regulate Medicare provider sponsored organizations in nearly the same manner as it currently regulates health maintenance organizations. He noted Congress, through the Balanced Budget Act authorized Medicare+Choice Plans to be offered through HMOs or a PSO. Since Kansas has no regulation of PSOs, S.B. 439 puts in place the authority to regulate doctors and hospitals who offer their services directly to Medicare enrollees on a risk bearing basis without using an insurer as an intermediary. The federal act includes consumer protection provisions applicable to all Medicare+Choice alternatives.

The American Association of Retired Persons, the Kansas Association of Health Plans, and the Kansas Hospital Association supported S.B. 439.

Further, the provisions of the substitute bill concerning Kassebaum-Kennedy were requested by the Insurance Commissioner originally in H.B. 2705. The Commissioner's representative explained that the changes proposed by the bill arise from a review of the 1997 federal legislation and its implementation in Kansas and from technical corrections suggested by the Office of the Revisor of Statutes.

Finally, the provisions of the substitute bill concerning diabetes were a part of H.B. 2997 and supported by the American Diabetes Association, the Kansas Diabetes Association, diabetes educators, and a dietitian. Representatives of the Health Insurance Association of America and the Kansas Employer Coalition on Health spoke against the diabetes provisions.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at