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South Carolina Healthcare Reform: 2008 in Review and 2009 Outlook


Email Alert

By Elizabeth T. Thomas and Carolyn A. Campbell*

February 19, 2009

In 2008, the South Carolina General Assembly passed few bills focusing on healthcare reform. As did many other states, South Carolina suffered an economic downturn causing significant budget cuts. By December 2008, Medicaid budget cuts totaled $137 million or almost 15% of the agency's general funds budget, resulting in funding cuts for preventative dental care for children; hospices, psychiatric services, adult dental and vision services, and the number of allowed physician visits, among others. Despite the economic downturn, in May 2008, Governor Sanford vetoed a cigarette tax increase of fifty-cents a pack because the tax was not part of a fundamental tax reform package. The tax increase was expected to generate $158 million per year. The funds would have been used in part to expand the state's Medicaid program.

Despite the distractions of the economic downturn and budget crisis, the only healthcare reform bill passed (and not vetoed) was a prompt pay law.

  • Prompt Pay Statute. The S.C. Health Care Financial Recovery and Protection Act (S.C. Code §38-59-200 et seq.) creates certain requirements, safeguards, and incentives for the prompt payment of claims by health insurers. Under the Act, claims submitted by paper generally must be paid within forty days of receipt, and claims submitted electronically must be paid within twenty days of receipt. Insurers are now required to acknowledge receipt of claims, provide notice of any claim errors or defects, and maintain a system for tracking the receipt and payment of claims. Subject to certain exceptions, insurers now must pay interest on claims that are not timely paid. Further, the Act sets forth procedures and timeframes for the initiation of overpayment recovery efforts.

The 2009-2010 South Carolina General Assembly session convened on January 13, 2009. A number of significant bills relating to healthcare reform were pre-filed or filed within the first week. These bills likely will be eclipsed by the general economic downturn and state budgetary crisis. Coverage and/or reimbursement to healthcare providers is expected to be cut further in the 2009 fiscal year.

Pending bills related to access, affordability, and coverage of healthcare services in South Carolina for the 2009-2010 session include the following:

  • Cigarette Tax. Several competing bills have been filed proposing a significant increase in the South Carolina cigarette tax, the lowest in the nation. The competing bills propose various uses for the tax. These uses include funding Medicaid services, creating a Community Mental Health Fund, providing tax incentives to small businesses for providing health insurance premium assistance to low income families, providing tax credits to individuals with qualified health savings accounts, and funding smoking cessation treatments. Governor Sanford continues to state that he will veto the cigarette tax if it is not part of a larger tax reform plan that is revenue neutral.

  • Income Tax Credits. A House bill proposes income tax credits to small employers that provide certain health benefit plans.

  • South Carolina HealthNet Program. A bill would create a pilot program to promote availability of health insurance to employees and to promote fair practices in the small group health insurance market.

  • Behavioral Health. A bill has been introduced seeking to restructure and consolidate South Carolina's Department of Mental Health and Department of Alcohol and Other Drug Abuse into the Department of Behavioral Health Sciences, with the purpose of coordinating the provision of behavioral health services.

    Another bill proposes parity for mental health and drug abuse treatment coverage in any policy in which a large group health plan (fifty-one or more employees) covers medical and surgical benefits as well as mental health and substance abuse coverage. The large group health insurer must apply annual and aggregate lifetime limits that are no less than those for medical and surgical benefits. Also, large group policies cannot impose more restrictive financial or treatment limitations on mental health or substance abuse benefits than are imposed on medical and surgical benefits. If the bill passes, large group health plans will not be able to require larger deductibles or co-payments, or limit the number of visits, unless the same or greater restrictions apply to medical and surgical benefits.

  • Hospice. A joint resolution would require the State to restore Medicaid funds for the hospice benefit cut in 2008.

  • Insurance. A House bill would require insurers to pay network rates to providers during the remaining benefit period of the provider's patients, if the provider is terminated from the network during the patient's benefit period. The insurers would not be able to require the patient to pay higher out-of-network deductibles or co-payments during the remaining benefit period. Likewise, if the provider does not renew or terminates the agreement, or if it is terminated for failure to meet credentialing standards, the provider would be required to accept in-network payments and would not be permitted to balance bill the patient.

    A Senate bill would require health benefit plans to extend coverage for a six month period to a policy holder's child who served six months of active duty in the S.C. National Guard, the U.S. armed forces, or the reserves upon honorable discharge. To be eligible the child must be unmarried, under thirty, and have no other coverage.

  • Hospital Charges. A Senate bill would prohibit a hospital from charging uninsured patients more than the amounts charged for the same services to insured patients.

  • Pharmacy. A bill would require licensure and registration of pharmacy benefit managers (PBMs) in South Carolina—including mail order pharmacies—and would impose certain standards for certification and prohibit PBMs from discriminating against pharmacies on the basis of co-payments and days of supply. PBMs would be prohibited from intervening in the delivery or transmission of prescriptions between the prescriber and the pharmacist.

Legislators are also debating a number of other healthcare bills, including those addressing such matters as reproductive rights, the certificate of need process, the scope of practice of optometrists and podiatrists, false claims, and mandatory professional insurance coverage for nursing homes, among others.

*We wish to thank Elizabeth T. Thomas, Esquire, and Carolyn A. Campbell, Esquire (Haynsworth Sinkler Boyd PA, Charleston, SC) for writing this email alert.

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