Bill Text: CT SB00204 | 2012 | General Assembly | Introduced

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Bill Title: An Act Concerning The State Medical Loss Ratio.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2012-02-24 - Public Hearing 03/01 [SB00204 Detail]

Download: Connecticut-2012-SB00204-Introduced.html

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General Assembly		Raised Bill No. 204
February Session, 2012		LCO No. 876
		*00876_______INS*
Referred to Committee on Insurance and Real Estate
Introduced by:
(INS)

AN ACT CONCERNING THE STATE MEDICAL LOSS RATIO.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 38a-478l of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2013):

(a) Not later than October fifteenth of each year, the Insurance Commissioner, after consultation with the Commissioner of Public Health, shall develop and distribute a consumer report card on all managed care organizations. The commissioner shall develop the consumer report card in a manner permitting consumer comparison across organizations.

(b) (1) The consumer report card shall be known as the "Consumer Report Card on Health Insurance Carriers in Connecticut" and shall include (A) all health care centers licensed pursuant to chapter 698a, (B) the fifteen largest licensed health insurers that use provider networks and that are not included in subparagraph (A) of this subdivision, (C) the state medical loss ratio of each such health care center or licensed health insurer, (D) the federal medical loss ratio of each such health care center or licensed health insurer, (E) the information required under subdivision (6) of subsection (a) of section 38a-478c, and (F) information concerning mental health services, as specified in subsection (c) of this section. The insurers selected pursuant to subparagraph (B) of this subdivision shall be selected on the basis of Connecticut direct written health premiums from such network plans.

(2) Not later than May fifteenth of each year, the health care centers and health insurers specified in subdivision (1) of this subsection shall provide to the Insurance Commissioner in a form prescribed by the commissioner the information required for the consumer report card. The commissioner may impose a civil penalty of not less than one thousand dollars per day and not more than ten thousand dollars per day for each day after May fifteenth such health care center or health insurer fails to provide such information. A health care center or health insurer aggrieved because of a penalty levied under this subdivision may appeal therefrom in accordance with the provisions of section 38a-19.

[(2)] (3) For the purposes of this section and sections 38a-477c, 38a-478c and 38a-478g:

(A) (i) "State medical loss ratio" means the ratio of incurred claims to earned premiums for the prior calendar year for managed care plans issued in the state; [. Claims shall be limited to medical expenses for services and supplies provided to enrollees and shall]

(ii) "Incurred claims" means the amount paid and obligations incurred by the health care center or health insurer for medical services, pharmaceutical drugs, medical supplies and devices provided to enrollees, and includes amounts paid by the health care center or health insurer to a health care provider or a hospital for performance, quality or efficiency enhancing initiatives. "Incurred claims" does not include (I) expenses for stop loss coverage, (II) expenses for reinsurance, (III) expenses for enrollee educational programs or other cost containment programs or features, (IV) copayments, coinsurance, deductibles or other out-of-pocket expense that an enrollee is obligated to pay, (V) the health care center's or health insurer's administrative costs, or (VI) expenses for which the health care center or health insurer is reimbursed by a third party or an enrollee's other insurance coverage; and

(iii) "Administrative costs" means expenses associated with the administration of health insurance or medical benefits, including, but not limited to, claims processing, premium collection, utilization review, benefits management, fraud detection, clinical health policy development, network contracting and management, salaries and benefits, advertising, marketing, operations and state and federal regulatory compliance;

(B) "Federal medical loss ratio" has the same meaning as provided in, and shall be calculated in accordance with, the Patient Protection and Affordable Care Act, P.L. 111-148, as amended from time to time, and regulations adopted thereunder.

(c) With respect to mental health services, the consumer report card shall include information or measures with respect to the percentage of enrollees receiving mental health services, utilization of mental health and chemical dependence services, inpatient and outpatient admissions, discharge rates and average lengths of stay. Such data shall be collected in a manner consistent with the National Committee for Quality Assurance Health Plan Employer Data and Information Set (HEDIS) measures.

(d) The commissioner shall test market a draft of the consumer report card prior to its publication and distribution. As a result of such test marketing, the commissioner may make any necessary modification to its form or substance. The Insurance Department shall prominently display a link to the consumer report card on the department's Internet web site.

Sec. 2. Section 38a-477c of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2013):

(a) (1) Each individual health insurance policy or group health insurance policy for a small employer, as defined in section 38a-564, delivered, issued for delivery, renewed, amended or continued in this state providing coverage of the type specified in subdivisions (1), (2), (4), (11) and (12) of section 38a-469, shall have a state medical loss ratio, as defined in section 38a-478l, as amended by this act, of not less than eighty-two per cent.

(2) If a policy subject to subdivision (1) of this subsection does not meet a state medical loss ratio of eighty-two per cent or greater for the calendar year, the insurer or health care center delivering, issuing, renewing, amending or continuing such policy shall pay a rebate to each enrollee insured under such policy calculated and in such manner as prescribed by the commissioner in regulations adopted in accordance with the provisions of chapter 54.

(3) The provisions of subdivision (1) of this subsection shall not apply to policies delivered or issued for delivery by a nonprofit corporation or a mutual insurance company.

(b) An insurer or health care center shall include a written notice with each application for individual or group health insurance coverage that discloses such insurer's or health care center's state medical loss ratio and federal medical loss ratio, as both terms are defined in section 38a-478l, as reported in the last Consumer Report Card on Health Insurance Carriers in Connecticut, to an applicant at the time of application for coverage.

Sec. 3. Section 38a-481 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2013):

(a) No individual health insurance policy shall be delivered or issued for delivery to any person in this state, nor shall any application, rider or endorsement be used in connection with such policy, until a copy of the form thereof and of the classification of risks and the premium rates have been filed with the commissioner. The commissioner shall adopt regulations, in accordance with chapter 54, to establish a procedure for reviewing such policies. The commissioner shall disapprove the use of such form at any time if it does not comply with the requirements of law, or if it contains a provision or provisions which are unfair or deceptive or which encourage misrepresentation of the policy. The commissioner shall notify, in writing, the insurer [which] that has filed any such form of the commissioner's disapproval, specifying the reasons for disapproval, and ordering that no such insurer shall deliver or issue for delivery to any person in this state a policy on or containing such form. The provisions of section 38a-19 shall apply to such orders.

(b) No rate filed under the provisions of subsection (a) of this section shall be effective until the expiration of thirty days after it has been filed or unless sooner approved by the commissioner in accordance with regulations adopted pursuant to this subsection. The commissioner shall adopt regulations, in accordance with chapter 54, to prescribe standards to ensure that such rates shall not be excessive, inadequate or unfairly discriminatory. The commissioner may disapprove such rate within thirty days after it has been filed if it fails to comply with such standards, except that no rate filed under the provisions of subsection (a) of this section for any Medicare supplement policy shall be effective unless approved in accordance with section 38a-474.

(c) No insurance company, fraternal benefit society, hospital service corporation, medical service corporation, health care center or other entity [which] that delivers or issues for delivery in this state any Medicare supplement policies or certificates shall incorporate in its rates or determinations to grant coverage for Medicare supplement insurance policies or certificates any factors or values based on the age, gender, previous claims history or the medical condition of any person covered by such policy or certificate.

(d) Rates on a particular policy form [will] other than an individual health insurance policy providing coverage of the type specified in subdivisions (1), (2), (4), (11) and (12) of section 38a-469 shall not be deemed excessive if the insurer has filed a loss ratio guarantee with the Insurance Commissioner [which] that meets the requirements of subsection (e) of this section, provided (1) the form of such loss ratio guarantee has been explicitly approved by the Insurance Commissioner, and (2) the current expected lifetime loss ratio is not more than five per cent less than the filed lifetime loss ratio as certified by an actuary. The insurer shall withdraw the policy form if the commissioner determines that the lifetime loss ratio will not be met. Rates also [will] shall not be deemed excessive if the insurer complies with the terms of the loss ratio guarantee. The Insurance Commissioner may adopt regulations, in accordance with chapter 54, to assure that the use of a loss ratio guarantee does not constitute an unfair practice.

(e) [Premium] Except for premium rates for an individual health insurance policy providing coverage of the type specified in subdivisions (1), (2), (4), (11) and (12) of section 38a-469, premium rates shall be deemed approved upon filing with the Insurance Commissioner if the filing is accompanied by a loss ratio guarantee. The loss ratio guarantee shall be in writing, signed by an officer of the insurer, and shall contain as a minimum the following:

(1) A recitation of the anticipated lifetime and durational target loss ratios contained in the original actuarial memorandum filed with the policy form when it was originally approved;

(2) A guarantee that the actual Connecticut loss ratios for the experience period in which the new rates take effect and for each experience period thereafter until any new rates are filed will meet or exceed the loss ratios referred to in subdivision (1) of this subsection. If the annual earned premium volume in Connecticut under the particular policy form is less than one million dollars and therefore not actuarially credible, the loss ratio guarantee will be based on the actual nation-wide loss ratio for the policy form. If the aggregate earned premium for all states is less than one million dollars, the experience period will be extended until the end of the calendar year in which one million dollars of earned premium is attained;

(3) A guarantee that the actual Connecticut or nation-wide loss ratio results, as the case may be, for the experience period at issue will be independently audited by a certified public accountant or a member of the American Academy of Actuaries at the insurer's expense. The audit shall be done in the second quarter of the year following the end of the experience period and the audited results must be reported to the Insurance Commissioner not later than June thirtieth following the end of the experience period;

(4) A guarantee that affected Connecticut policyholders will be issued a proportional refund, which will be based on the premiums earned, of the amount necessary to bring the actual loss ratio up to the anticipated loss ratio referred to in subdivision (1) of this subsection. If nation-wide loss ratios are used, the total amount refunded in Connecticut shall equal the dollar amount necessary to achieve the loss ratio standards multiplied by the total premium earned from all Connecticut policyholders who will receive refunds and divided by the total premium earned in all states on the policy form. The refund shall be made to all Connecticut policyholders who are insured under the applicable policy form as of the last day of the experience period and whose refund would equal two dollars or more. The refund shall include interest, at six per cent, from the end of the experience period until the date of payment. Payment shall be made during the third quarter of the year following the experience period for which a refund is determined to be due;

(5) A guarantee that refunds less than two dollars will be aggregated by the insurer. The insurer shall deposit such amount in a separate interest-bearing account in which all such amounts shall be deposited. At the end of each calendar year each such insurer shall donate such amount to The University of Connecticut Health Center;

(6) A guarantee that the insurer, if directed by the Insurance Commissioner, shall withdraw the policy form and cease the issuance of new policies under the form in this state if the applicable loss ratio exceeds the durational target loss ratio for the experience period by more than twenty per cent, provided the calculations are based on at least two thousand policyholder-years of experience either in Connecticut or nation-wide.

(f) For the purposes of this section:

(1) "Loss ratio" means the ratio of incurred claims to earned premiums by the number of years of policy duration for all combined durations; and

(2) "Experience period" means the calendar year for which a loss ratio guarantee is calculated.

(g) Nothing in this chapter shall preclude the issuance of an individual health insurance policy [which] that includes an optional life insurance rider, provided the optional life insurance rider [must] shall be filed with and approved by the Insurance Commissioner pursuant to section 38a-430. Any company offering such policies for sale in this state shall be licensed to sell life insurance in this state pursuant to the provisions of section 38a-41.

(h) No insurance company, fraternal benefit society, hospital service corporation, medical service corporation, health care center or other entity that delivers, issues for delivery, amends, renews or continues an individual health insurance policy in this state shall: (1) Move an insured individual from a standard underwriting classification to a substandard underwriting classification after the policy is issued; (2) increase premium rates due to the claim experience or health status of an individual who is insured under the policy, except that the entity may increase premium rates for all individuals in an underwriting classification due to the claim experience or health status of the underwriting classification as a whole; or (3) use an individual's history of taking a prescription drug for anxiety for six months or less as a factor in its underwriting unless such history arises directly from a medical diagnosis of an underlying condition.

This act shall take effect as follows and shall amend the following sections:
Section 1	January 1, 2013	38a-478l
Sec. 2	January 1, 2013	38a-477c
Sec. 3	January 1, 2013	38a-481

Statement of Purpose:

To establish a civil penalty for a health care center or a health insurer that fails to provide the information required for the Consumer Report Card on Health Insurance Carriers in Connecticut, to amend the factors taken into account for calculation of the state medical loss ratio, and to establish a minimum state medical loss ratio of eighty-two per cent for certain individual and small employer group health insurance policies.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]