SB2690 would create a new “Primary Care Protection Act” in Hawaii law aimed at stabilizing and expanding the state’s primary care system. The bill finds that Hawaii faces a significant primary care shortage and that stagnant reimbursement, rising operating costs, and insurer practices such as downcoding, restrictive prior authorization, and utilization review are contributing to provider exits and reduced patient access. To address that, it would require health carriers to devote a minimum share of total medical expenditures to primary care, starting at 6% in 2027 and rising to 12% by 2029.
The measure also imposes a series of payment and contracting rules intended to ensure that primary care dollars reach treating providers directly. It bars carriers from diverting those payments through intermediaries, from counting them as administrative expenses, and from using quality scoring or shared-savings mechanisms to reduce them below required levels. It further prohibits downcoding absent documented clinical justification, requires prompt payment timelines and interest on late claims, and restricts retaliatory conduct against providers who complain, appeal, or challenge claim changes. The bill also limits contract terms by banning nondisclosure clauses, mandatory arbitration for disputes under the act, waivers of provider rights, and unilateral contract changes by carriers.
The bill would significantly expand reporting, audit, and enforcement authority for the Insurance Commissioner, with additional coordination from the Department of Human Services Med-QUEST division and the Department of Health. Health carriers would have to file annual transparency reports on spending, downcoding, prior authorization, payment timing, network participation, and provider turnover, and the commissioner would maintain public reporting and enforcement databases. Violations could lead to fines, corrective action plans, monitoring, restrictions on new plan approvals, suspended rate filings, or referral to the Attorney General. The bill also creates a primary care stabilization special fund to receive fines and other revenues for rural access, workforce retention, community access sites, and telehealth infrastructure.
For rural and underserved areas, SB2690 would require parity for primary care access visits, community access primary care sites, and telehealth primary care services, including reimbursement parity and limits on prior authorization and utilization review. It would also require carriers to address island- and region-specific access gaps, including medically necessary inter-island transportation when local primary care is inadequate, and to maintain adequate access standards on a per-island and per-region basis. The bill extends many of these concepts to Medicaid managed care, subject to federal approval, including a 12% primary care spending target, payment protections, and workforce retention initiatives.
The overall sentiment reflected in the bill text is strongly supportive of primary care providers and access expansion, with the measure framed as a response to a workforce crisis and insurer practices viewed as harmful to care delivery. At the same time, the committee history shows the measure was deferred by the Senate CPN committee, suggesting unresolved concerns or the need for further review. Likely points of contention include the mandated spending percentages, the prohibition on premium increases to meet those requirements, the limits on carrier claim review and contracting practices, the administrative burden of reporting and audits, and the feasibility of applying the framework to Medicaid without federal approval.
SB2690 would add a comprehensive new article to chapter 431, Hawaii Revised Statutes, regulating health carriers’ payment, utilization review, contracting, reporting, and enforcement practices as they relate to primary care. It would impose a phased minimum primary care spending requirement on fully insured individual, small group, and large group markets, and would also direct Med-QUEST to implement similar requirements for Medicaid managed care to the extent allowed by federal law. The bill would create new statutory duties for carriers, new oversight powers for the Insurance Commissioner, a new special fund, and new reporting and enforcement obligations for state agencies and carriers.
The bill’s stated purpose and structure reflect a strong pro-primary-care, pro-provider sentiment, with lawmakers asserting that current reimbursement and insurer practices are undermining access and workforce stability. The absence of recorded votes or transcript debate limits direct evidence of opposition or support, but the committee’s decision to defer the measure indicates that it was not advanced immediately and likely faced concerns about implementation, cost, or regulatory scope. Overall, the bill appears designed to respond to a perceived access crisis, but with enough complexity and potential fiscal/regulatory impact to warrant further committee scrutiny.
The main points of contention are likely to be the mandated 6% rising to 12% primary care spending requirement, the prohibition on carriers raising premiums to comply, and the restrictions on downcoding, prior authorization, and contract terms. Health carriers may object to the bill’s limits on utilization management, the burden of quarterly and annual reporting, and the commissioner’s audit and penalty authority, while providers and patient advocates are likely to support those provisions as necessary protections. Another likely issue is the Medicaid component, which depends on federal approvals and could raise concerns about feasibility, timing, and conformity with federal managed care rules.