Bill Text: PA HB318 | 2011-2012 | Regular Session | Introduced

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Bill Title: Providing for affordable small group health care coverage; and making inconsistent repeals.

Spectrum: Strong Partisan Bill (Democrat 13-1)

Status: (Introduced - Dead) 2011-01-31 - Referred to INSURANCE [HB318 Detail]

Download: Pennsylvania-2011-HB318-Introduced.html

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PRINTER'S NO. 273
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 318 Session of2011
INTRODUCED BY DeLUCA, D. COSTA, FABRIZIO, CALTAGIRONE, GEORGE, HARKINS, WHITE, JOSEPHS, YOUNGBLOOD, KOTIK, KIRKLAND, LONGIETTI, MURT AND STURLA, JANUARY 31, 2011
REFERRED TO COMMITTEE ON INSURANCE, JANUARY 31, 2011
AN ACT
Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
act relating to insurance; amending, revising, and
consolidating the law providing for the incorporation of
insurance companies, and the regulation, supervision, and
protection of home and foreign insurance companies, Lloyds
associations, reciprocal and inter-insurance exchanges, and
fire insurance rating bureaus, and the regulation and
supervision of insurance carried by such companies,
associations, and exchanges, including insurance carried by
the State Workmen's Insurance Fund; providing penalties; and
repealing existing laws," providing for affordable small
group health care coverage; and making inconsistent repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of May 17, 1921 (P.L.682, No.284), known
as The Insurance Company Law of 1921, is amended by adding an
article to read:
ARTICLE XLII
AFFORDABLE SMALL GROUP HEALTH CARE COVERAGE
Section 4201. Scope of article.
This article relates to health care reform.
Section 4202. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Accident and Health Filing Reform Act." The act of December
18, 1996 (P.L.1066, No.159), known as the Accident and Health
Filing Reform Act.
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Commonwealth Attorneys Act." The act of October 15, 1980
(P.L.950, No.164), known as the Commonwealth Attorneys Act.
"Commonwealth Documents Law." The act of July 31, 1968
(P.L.769, No.240), referred to as the Commonwealth Documents
Law.
"Creditable coverage." As defined in section 2701 of the
Health Insurance Portability and Accountability Act of 1996
(Public Law 104-191, 42 U.S.C. § 300gg).
"Department." The Insurance Department of the Commonwealth.
"Eligible employee." A person employed by a large employer
or a small employer on a regularly scheduled basis, with a
normal work week of 17.5 hours or more, but does not include
persons who work on a temporary, seasonal or substitute basis.
"Health benefit plan." Any individual or group health
insurance policy, subscriber contract, certificate or plan which
provides health or sickness and accident coverage which is
offered by an insurer. The term shall not include any of the
following:
(1) An accident only policy.
(2) A credit only policy.
(3) A long-term or disability income policy.
(4) A long-term care policy.
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(5) A specified disease policy.
(6) A Medicare supplement policy.
(7) A Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS) supplement policy.
(8) A fixed indemnity policy.
(9) A dental only policy.
(10) A vision only policy.
(11) A workers' compensation policy.
(12) An automobile medical payment policy under 75
Pa.C.S. (relating to vehicles).
(13) Any other similar policy providing for limited
benefits.
"Individual market." The health insurance market for
individuals as defined in section 2791 of the Health Insurance
Portability and Accountability Act of 1996 (Public Law 104-191,
42 U.S.C. § 300gg-91).
"Insurer." A company or health insurance entity licensed in
this Commonwealth to issue any individual or group health,
sickness or accident policy or subscriber contract or
certificate or plan that provides medical or health care
coverage by a health care facility or licensed health care
provider that is offered or governed under this act or any of
the following:
(1) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(2) The act of May 18, 1976 (P.L.123, No.54), known as
the Individual Accident and Sickness Insurance Minimum
Standards Act.
(3) 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations) or 63 (relating to professional health services
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plan corporations).
(4) Article XXIV.
"Large employer." In connection with a group health plan
with respect to a calendar year and a plan year, an employer who
employs an average of 51 or more eligible employees on business
days during the preceding calendar year and who employs at least
51 eligible employees on the first day of the plan year. In the
case of an employer which was not in existence throughout the
preceding calendar year, the determination whether an employer
is a large employer shall be based on the average number of
eligible employees that it is reasonably expected that the
employer will employ on business days in the current calendar
year.
"Large group market." The health insurance market for large
employers.
"Medical loss ratio." As defined in the Patient Protection
and Affordable Care Act (Public Law 111-148, 124 Stat. 119).
"NAIC." The National Association of Insurance Commissioners.
"Plan year." The 12-consecutive-month period beginning on
the first day of coverage under a health benefit plan.
"Preexisting condition exclusion." As defined in section
2701 of the Health Insurance Portability and Accountability Act
of 1996 (Public Law 104-191, 42 U.S.C. § 300gg). Pregnancy and
conditions for which medical advice, diagnosis, care or
treatment was recommended or received before birth or within the
first 60 days after birth or within the first 60 days after
adoption of a minor child shall not be treated as conditions
described in the definition in section 2701.
"Small employer." In connection with a group health plan
with respect to a calendar year and a plan year, an employer who
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employs an average of at least two but not more than 50 eligible
employees on business days during the preceding calendar year
and who employs at least two eligible employees on the first day
of the plan year. In the case of an employer which was not in
existence throughout the preceding calendar year, the
determination whether an employer is a small employer shall be
based on the average number of eligible employees that it is
reasonably expected that the employer will employ on business
days in the current calendar year.
"Small group health benefit plan." A health benefit plan
offered to a small employer.
"Small group market." The health insurance market for small
employers.
"Standard plan." One of the health benefit packages
established by the Insurance Department in accordance with
section 4204.
Section 4203. Health insurance premium rates.
(a) Applicability.--This section shall apply to all small
group health benefit plans that are issued, made effective,
delivered or renewed in this Commonwealth after the effective
date of this section.
(b) Premium rates.--
(1) The premium for a small group health benefit plan
shall not be adjusted by an insurer more than once each year,
except that rates may be changed more frequently to reflect:
(i) Changes to the enrollment of the small employer
group.
(ii) Changes to a small group health benefit plan
that have been requested by the small employer.
(iii) Changes pursuant to a government order or
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judicial proceeding.
(2) An insurer shall base its rating methods and
practices on commonly accepted actuarial assumptions and
sound actuarial principles. Rates shall not be excessive,
inadequate or unfairly discriminatory.
(c) Additional rate review and prior approval.--
(1) In conjunction with and in addition to the standards
set forth in the Accident and Health Filing Reform Act, and
all other applicable statutory and regulatory requirements,
all rate filings shall be subject to prior approval by the
department within the 45-day period provided under section
3(f) of the Accident and Health Filing Reform Act.
(2) In conjunction with and in addition to the standards
set forth under the Accident and Health Filing Reform Act,
and all other applicable statutory and regulatory
requirements, the department may disapprove a rate filing
based upon any of the following:
(i) The rate is not actuarially sound.
(ii) The increase is requested because the insurer
has factored in experience that conflicts with recognized
best practices in the health care industry, including the
allocation of administrative expenses to the plan on a
less favorable basis than expenses are allocated to other
health benefit plans.
(iii) The increase is requested because the insurer
has incurred costs due to failure to follow best
practices for cost control, including efforts to promote
a reduction in hospital-acquired infections and serious
preventable adverse events.
(iv) The medical loss ratio for a plan violates the
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Patient Protection and Affordable Care Act (Public Law
111-148, 124 Stat. 119).
(3) In the event a plan has a medical loss ratio that
violates the Patient Protection and Affordable Care Act, the
department may, in addition to any other remedies available
under law, require the insurer to refund the difference to
policyholders on a pro rata basis as soon as practicable
following receipt of notice from the department of the
requirement but in no event later than 120 days following
receipt of the notice. The department shall establish
procedures under which such refunds will be made.
(d) Procedures.--The filing and review procedures set forth
under the Accident and Health Filing Reform Act shall apply to
any filing conducted under this section, except that no filing
deemed to meet the requirements of this act shall take effect
unless the department receives written notice of the insurer's
intent to exercise the right granted under this section at least
ten calendar days prior to implementation of rates authorized by
this act.
Section 4204. Fair marketing standards.
Every insurer and producer must meet the following standards,
as appropriate:
(1) An insurer that offers small group health benefit
plans shall offer to small employers all of the small group
health benefit plans that the insurer actively markets in
this Commonwealth. An insurer shall be considered to be
actively marketing a small group health benefit plan if it
offers that plan to any small group not currently covered by
that insurer.
(2) The following shall apply:
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(i) Except as provided in subparagraph (ii), a
producer or an insurer that provides small group health
benefit plans shall not encourage or direct a small
employer to refrain from filing an application for
coverage with the insurer or seek coverage from another
insurer because of a health status-related factor or the
nature of the industry, occupation or geographic location
of the small employer.
(ii) The provisions of subparagraph (i) shall not
apply with respect to information provided by an insurer
or producer to a small employer regarding an established
geographic service area or a restricted network provision
of an insurer.
(3) An insurer that provides small group health benefit
plans shall not enter into a contract, agreement or
arrangement that provides for or results in a producer's
compensation being varied because of a health status-related
factor or the nature of the industry or occupation of the
small employer.
(4) An insurer that provides small group health benefit
plans shall not terminate, fail to renew or limit its
contract or agreement with a producer for a reason or reasons
related to a health status-related factor or occupation of
the small employer.
(5) A producer or insurer that provides small group
health benefit plans shall not induce or encourage a small
employer to exclude an employee or the employee's dependents
from health coverage or benefits available under the plan.
Section 4205. Reporting requirements.
(a) Health insurance market reports.--Not less frequently
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than March 1 of every calendar year, the department may require
each insurer and each insurer group to file the following
reports with the department:
(1) Aggregate financial information for the preceding
year derived from each insurer's NAIC annual statement blank
or, if not available from the annual statement blank, from
other certifiable records:
(i) Total amount of general administrative expenses,
including identification of the five largest nonmedical
administrative expenses.
(ii) Total amount of surplus maintained.
(iii) Total amount of reserves maintained for unpaid
claims.
(iv) Total net underwriting gain or loss.
(v) Insurer's net income after taxes.
(2) Market information for the preceding calendar year,
derived from each insurer's NAIC annual statement blank or,
if not available from the annual statement blank, from other
certifiable records that are segmented Statewide and
segregated for the individual market, the small group market
and the large group market:
(i) Total number of members as of December 31.
(ii) Total number of member months.
(iii) Premiums earned.
(iv) Incurred medical claims costs.
(v) Medical loss ratio.
(vi) Average premium per member per month for the
reporting year, derived by dividing earned premiums by
member months.
(vii) Average premium per member per month for the
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preceding reporting year, derived by dividing earned
premiums by member months.
(viii) A description of each rating method used to
determine rates indicating the specific group size for
which each method was used.
(ix) A listing of all factors used in the rating for
each market and the range of these factors.
(3) Aggregate market information for the preceding year
derived from each insurer's NAIC annual statement blank or,
if not available there, from other certifiable records, for
covered lives in Pennsylvania by individual market, small
group market and large group market:
(i) Total number of members covered by entities with
administrative services contracts or administrative
services-only arrangements.
(ii) Total number of members covered by associations
or out-of-State trusts covering lives in Pennsylvania.
(b) Submission.--Each report required by this section shall
be electronically submitted in a format and according to
instructions prescribed by the department.
(c) Public access.--The department shall make the
information reported under this section available to the public
through a searchable public Internet website.
(d) Data calls.--The department may issue data calls as
necessary to fulfill the requirements of this article. Any data
calls issued under this section shall be published in the
Pennsylvania Bulletin.
(e) Limitation.--The department shall have discretion to
modify the reporting requirements of this section by
transmitting notice to the Legislative Reference Bureau for
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publication in the Pennsylvania Bulletin.
(f) Compliance.--For failure to comply with any reports or
data calls required under this section, the commissioner shall
impose an administrative penalty of $1,000 against each insurer
for every day that the report or data is not provided in
accordance with this section.
(g) Definition.--As used in this section, specifically for
purposes of the reporting required in subsection (a), "member"
means an individual person covered by a health benefit plan, an
association or an out-of-State trust. The term includes
dependents.
Section 4206. Regulations.
The department and the Department of Education shall
promulgate regulations as necessary for the implementation and
administration of this article. The department may promulgate
regulations as necessary for the implementation of this article.
Section 4207. Small employer groups.
(a) Formation authority.--A group of two or more small
employers may form a purchasing group for the purpose of
purchasing a small group health benefit plan provided for under
this article from an insurer.
(b) Certification.--No insurance policy may be issued,
delivered or renewed to a purchasing group unless that
purchasing group has a valid certification from the department.
(c) Certification subject to criteria.--Unless certification
requirements are promulgated, certification under this
subsection shall be subject to the criteria set forth in section
621.2(a)(5.1).
(d) Applicability.--The provisions of this section shall
apply notwithstanding the provisions of section 621.2(a)(2).
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Section 4208. Enforcement.
(a) Determination of violation.--Upon a determination that a
person licensed by the department has violated any provision of
this article, the commissioner may, subject to 2 Pa.C.S. Chs. 5
Subch. A (relating to practice and procedure of Commonwealth
agencies) and 7 Subch. A (relating to judicial review of
Commonwealth agency action), do any of the following:
(1) Issue an order requiring the person to cease and
desist from engaging in the violation.
(2) Suspend or revoke or refuse to issue or renew the
certificate or license of the offending party or parties.
(3) Impose an administrative penalty of up to $5,000 for
each violation.
(4) Seek restitution.
(b) Other remedies.--The enforcement remedies imposed under
this section shall be in addition to any other remedies or
penalties that may be imposed by any other statute, including:
(1) The act of July 22, 1974 (P.L.589, No.205), known as
the Unfair Insurance Practices Act. A violation by any person
of this article is deemed an unfair method of competition and
an unfair or deceptive act or practice under the Unfair
Insurance Practices Act.
(2) The Accident and Health Filing Reform Act.
Section 2. Repeals are as follows:
(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the addition of
Article XLII of the act.
(2) Section 3 of the act of December 18, 1996 (P.L.1066,
No.159), known as the Accident and Health Filing Reform Act,
is repealed insofar as it applies to small group health
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benefit plan rates.
(3) All other acts and parts of acts are repealed
insofar as they are inconsistent with the addition of Article
XLII of the act.
Section 3. This act shall take effect immediately.
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