Committee approves bill expanding guarantee association coverage to HMOs, allowing providers to file claims

Senate Bill 292, presented with an amendment adopted in committee, would change the Arkansas Life and Health Insurance Guarantee Association statute to broaden protections in the event of insurer insolvency.

Lee Douglas, executive director of the Arkansas Life and Health Insurance Guarantee Association, told the Insurance & Commerce Committee the amendments add health maintenance organizations (HMOs) to the association’s coverage so that enrollees of an insolvent HMO could have pending claims paid by the fund. Douglas said current law excludes HMOs from coverage as health insurers.

The bill also would allow providers (for example, hospitals and doctors contracted with HMOs) to file claims with the guarantee fund. Douglas explained that current statutory 'hold harmless' language can prevent providers from pursuing unpaid claims; the amendment would permit them to file with the fund so they can be paid for services.

The measure excludes third‑party purchasers of structured settlements from making claims on the fund; Douglas said those purchasers are financially sophisticated and typically funded by annuity contracts and should not be the intended beneficiaries of a fund designed to protect individual policyholders.

The amendment also creates an assessment formula for long‑term‑care insolvencies to split assessments between life insurers and health insurers, reflecting industry agreement to share assessment responsibility.

Committee members questioned drafting placement and numbering of inserted subsections; sponsors explained the insertion aligns with the underlying section and that staff would correct formatting. A motion to adopt the amendment passed, then a do‑pass motion carried in committee; the transcript records one abstention during the final vote.

The bill will move forward from committee with the adopted amendment.