Bill Text: MI SB0061 | 2013-2014 | 97th Legislature | Engrossed
Bill Title: Insurance; health care corporations; merger of health care corporation with a nonprofit mutual disability insurer; allow, and provide procedures, prescribe requirements on rating and certain contract provisions, and establish requirements for a health endowment fund corporation. Amends title & secs. 218, 401e & 414b of 1980 PA 350 (MCL 550.1218 et seq.) & adds secs. 201a, 220, 400, 401m, 410b, 501c & 620 & pt. 6A. TIE BAR WITH: SB 0062'13
Spectrum: Bipartisan Bill
Status: (Passed) 2013-03-19 - Assigned Pa 0004'13 With Immediate Effect [SB0061 Detail]
Download: Michigan-2013-SB0061-Engrossed.html
SB-0061, As Passed Senate, January 31, 2013
SENATE BILL No. 61
January 16, 2013, Introduced by Senators HUNE and SMITH and referred to the Committee on Insurance.
A bill to amend 1980 PA 350, entitled
"The nonprofit health care corporation reform act,"
by amending the title and sections 218, 401e, and 414b (MCL
550.1218, 550.1401e, and 550.1414b), the title as amended by 1994
PA 169, section 218 as added by 2002 PA 559, section 401e as added
by 1996 PA 516, and section 414b as added by 2006 PA 413, and by
adding sections 201a, 220, 400, 401m, 410b, 501c, and 620 and part
6A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to provide for the incorporation of nonprofit health
care corporations; to provide their rights, powers, and immunities;
to prescribe the powers and duties of certain state officers
relative to the exercise of those rights, powers, and immunities;
to prescribe certain conditions for the transaction of business by
those corporations in this state; to define the relationship of
health care providers to nonprofit health care corporations and to
specify their rights, powers, and immunities with respect thereto;
to provide for a Michigan caring program; to provide for the
regulation and supervision of nonprofit health care corporations by
the commissioner of insurance; to prescribe powers and duties of
certain other state officers with respect to the regulation and
supervision of nonprofit health care corporations; to provide for
the imposition of a regulatory fee; to regulate the merger or
consolidation of certain corporations; to prescribe an expeditious
and effective procedure for the maintenance and conduct of certain
administrative appeals relative to provider class plans; to provide
for certain administrative hearings relative to rates for health
care benefits; to provide for the creation of and the powers and
duties of a nonprofit corporation for the purpose of receiving and
administering funds for the public welfare; to provide for certain
causes of action; to prescribe penalties and to provide civil fines
for
violations of this act; and to repeal certain acts and parts of
acts.
Sec. 201a. Notwithstanding section 201, a health care
corporation shall not be formed in this state on or after the
effective date of this section.
Sec. 218. A health care corporation shall not do any of the
following:
(a) Take any action to change its nonprofit status.
(b)
Dissolve, Except as
otherwise provided in section 220,
dissolve, merge, consolidate, mutualize, or take any other action
that results in a change in direct or indirect control of the
health care corporation or sell, transfer, lease, exchange, option,
or convey assets that results in a change in direct or indirect
control of the health care corporation.
Sec. 220. (1) Notwithstanding any provision of this act to the
contrary, a health care corporation may establish, own, operate,
and merge with a nonprofit mutual disability insurer formed under
chapter 58 of the insurance code of 1956, 1956 PA 218, MCL 500.5800
to 500.5840. The surviving entity of a merger described in this
subsection is the nonprofit mutual disability insurer. A merger
described in this subsection is exempt from the application of
sections 1311 to 1319 of the insurance code of 1956, 1956 PA 218,
MCL 500.1311 to 500.1319.
(2) The merger of a health care corporation with a nonprofit
mutual disability insurer is effective upon completion of both of
the following:
(a) The adoption of a plan of merger by the majority of the
boards of directors of both the health care corporation and the
nonprofit mutual disability insurer. The health care corporation
shall include in the plan of merger that beginning in April 2014
the surviving entity of a merger described in subsection (1) shall
use its best efforts to make annual social mission contributions in
an aggregate amount of up to $1,560,000,000.00 over a period of up
to 18 years beginning in April 2014 to the Michigan health
endowment fund created under part 6A. If adopted, the boards of
directors shall submit the plan of merger to the commissioner for
his or her consideration as provided in subdivision (b). A
nonprofit mutual disability insurer is considered to be making its
best effort under this subdivision if it makes the annual social
mission contribution to the Michigan health endowment fund created
in part 6A when the nonprofit mutual disability insurer's surplus
is at least 375% of the authorized control level under risk-based
capital requirements.
(b) The approval of the plan of merger by the commissioner.
The commissioner shall make a determination to approve or
disapprove a plan of merger within 90 days of receipt of the plan,
and the commissioner shall not unreasonably withhold approval of a
plan of merger submitted under subdivision (a).
(3) Notwithstanding any other provision of this act to the
contrary, the directors of a health care corporation may serve as
incorporators of the corporate body of, directors of, or officers
of the nonprofit mutual disability insurer formed through a merger
described in subsection (1).
(4) A merger described in subsection (1) is the dissolution of
the health care corporation, and the surviving nonprofit mutual
disability insurer assumes the performance of all contracts and
policies of the merged health care corporation that exist on the
date of the merger, including the participating hospital agreement,
and its definition of certificate which excludes as covered
services benefits provided pursuant to automobile no-fault or
worker's compensation coverage, and all related contract
obligations that result from orders relating to hospital provider
class plans that are issued by the commissioner after July 1, 2012.
However, the officers of a health care corporation may perform any
act or acts necessary to close the affairs of the merged health
care corporation after the date of the merger.
Sec. 400. (1) Notwithstanding any provision of this act to the
contrary, this section applies to the use of a most favored nation
clause in a provider contract on and after February 1, 2013.
(2) Subject to subsection (3), beginning February 1, 2013, a
health care corporation shall not use a most favored nation clause
in any provider contract, including a provider contract in effect
on February 1, 2013, unless the most favored nation clause has been
filed with and approved by the commissioner. Subject to subsection
(3), beginning February 1, 2013, a health care corporation shall
not enforce a most favored nation clause in any provider contract
without the prior approval of the commissioner.
(3) Beginning January 1, 2014, a health care corporation shall
not use a most favored nation clause in any provider contract,
including a provider contract in effect on January 1, 2014.
(4) As used in this section, "most favored nation clause"
means a clause that does any of the following:
(a) Prohibits, or grants a contracting health care corporation
an option to prohibit, a provider from contracting with another
party to provide health care services at a lower rate than the
payment or reimbursement rate specified in the contract with the
health care corporation.
(b) Requires, or grants a contracting health care corporation
an option to require, a provider to accept a lower payment or
reimbursement rate if the provider agrees to provide health care
services to any other party at a lower rate than the payment or
reimbursement rate specified in the contract with the health care
corporation.
(c) Requires, or grants a contracting health care corporation
an option to require, termination or renegotiation of an existing
provider contract if a provider agrees to provide health care
services to any other party at a lower rate than the payment or
reimbursement rate specified in the contract with the health care
corporation.
(d) Requires a provider to disclose, to the health care
corporation or its designee, the provider's contractual payment or
reimbursement rates with other parties.
Sec. 401e. (1) Except as otherwise provided in this section, a
health care corporation that has issued a nongroup certificate
shall renew or continue in force the certificate at the option of
the individual.
(2) Except as otherwise provided in this section, a health
care corporation that has issued a group certificate shall renew or
continue in force the certificate at the option of the sponsor of
the plan.
(3) Guaranteed renewal is not required in cases of fraud,
intentional misrepresentation of material fact, lack of payment, if
the health care corporation no longer offers that particular type
of coverage in the market, or if the individual or group moves
outside the service area.
(4) A health care corporation shall not discontinue offering a
particular plan or product in the nongroup or group market unless
the health care corporation does all of the following:
(a) Provides notice to the commissioner and to each covered
individual or group, as applicable, provided coverage under the
plan or product of the discontinuation at least 90 days before the
date of the discontinuation.
(b) Offers to each covered individual or group, as applicable,
provided coverage under the plan or product the option to purchase
any other plan or product currently being offered in the nongroup
market or group market, as applicable, by that health care
corporation without excluding or limiting coverage for a
preexisting condition or providing a waiting period.
(c) Acts uniformly without regard to any health status factor
of enrolled individuals or individuals who may become eligible for
coverage in making the determination to discontinue coverage and in
offering other plans or products.
(5) A health care corporation shall not discontinue offering
all coverage in the nongroup or group market unless the health care
corporation does all of the following:
(a) Provides notice to the commissioner and to each covered
individual or group, as applicable, of the discontinuation at least
180 days before the date of the expiration of coverage.
(b) Discontinues all health benefit plans issued in the
nongroup or group market from which the health care corporation
withdrew and does not renew coverage under those plans.
(6) If a health care corporation discontinues coverage under
subsection (5), the health care corporation shall not provide for
the issuance of any health benefit plans in the nongroup or group
market from which the health care corporation withdrew during the
5-year period beginning on the date of the discontinuation of the
last plan not renewed under that subsection.
Sec. 401m. Until January 1, 2014, a health care corporation
established, maintained, or operating in this state shall offer
health care benefits to all residents of this state regardless of
health status.
Sec. 410b. Notwithstanding section 410a(8), for a certificate
delivered, issued for delivery, or renewed in this state on or
after January 1, 2014, the premium for a group conversion
certificate under section 410a shall be determined only by using
the rating factors set forth in section 3474a of the insurance code
of 1956, 1956 PA 218, MCL 500.3474a.
Sec. 414b. (1) A health care corporation may offer group
wellness coverage. Wellness coverage may provide for an appropriate
rebate or reduction in premiums or for reduced copayments,
coinsurance, or deductibles, or a combination of these incentives,
for participation in any health behavior wellness, maintenance, or
improvement program offered by the employer. The employer shall
provide evidence of demonstrative maintenance or improvement of the
members' health behaviors as determined by assessments of agreed-
upon health status indicators between the employer and the health
care corporation. Any rebate or premium provided by the health care
corporation is presumed to be appropriate unless credible data
demonstrate
otherwise, but shall not exceed 10% 30% of paid
premiums, unless otherwise approved by the commissioner. A health
care corporation shall make available to employers all wellness
coverage plans that it markets to employers in this state.
(2) A health care corporation may offer nongroup wellness
coverage. Wellness coverage may provide for an appropriate rebate
or reduction in premiums or for reduced copayments, coinsurance, or
deductibles, or a combination of these incentives, for
participation in any health behavior wellness, maintenance, or
improvement program approved by the health care corporation. The
member shall provide evidence of demonstrative maintenance or
improvement of the individual's or family's health behaviors as
determined by assessments of agreed-upon health status indicators
between the member and the health care corporation. Any rebate of
premium provided by the health care corporation is presumed to be
appropriate unless credible data demonstrate otherwise, but shall
not
exceed 10% 30% of paid premiums, unless otherwise approved by
the commissioner. A health care corporation shall make available to
individuals all wellness coverage plans that it markets to
individuals in this state.
(3) A health care corporation is not required to continue any
health behavior wellness, maintenance, or improvement program or to
continue any incentive associated with a health behavior wellness,
maintenance, or improvement program.
Sec. 501c. Beginning January 1, 2014, a health care
corporation shall establish and maintain a provider network that,
at a minimum, satisfies any network adequacy requirements imposed
by the commissioner pursuant to federal law.
Sec. 620. (1) Notwithstanding any provision of this act to the
contrary, a certificate delivered, issued for delivery, or renewed
in this state on or after January 1, 2014 by a health care
corporation is subject to the policy and certificate issuance and
rate filing requirements of the insurance code of 1956, 1956 PA
218, MCL 500.100 to 500.8302, including the rating factor
requirements of section 3474a of the insurance code of 1956, 1956
PA 218, MCL 500.3474a.
(2) For a certificate delivered, issued for delivery, or
renewed in this state on or after January 1, 2014, subject to the
prior approval of the commissioner, a health care corporation may
establish reasonable open enrollment periods.
(3) The commissioner shall establish minimum standards for the
frequency and duration of open enrollment periods established under
subsection (2). The commissioner shall uniformly apply the minimum
standards for the frequency and duration of open enrollment periods
established under this subsection to all health care corporations.
(4) A health care corporation offering coverage during an open
enrollment period established under subsection (2) shall not deny
or condition the issuance or effectiveness of a certificate and
shall not discriminate in the pricing of the certificate on the
basis of health status, claims experience, receipt of health care,
or medical condition.
PART 6A
MICHIGAN HEALTH ENDOWMENT FUND
Sec. 651. As used in this part:
(a) "Board" means the Michigan health endowment fund board
created in section 652.
(b) "Executive director" means the executive director of the
fund appointed by the board under section 654.
(c) "Fund" means the Michigan health endowment fund organized
Senate Bill No. 61 as amended January 31, 2013
as a nonprofit corporation under section 653.
Sec. 652. (1) The Michigan health endowment fund board is
created to organize and govern the fund. The board is the
incorporator of the fund for the purposes of the nonprofit
corporation act, 1982 PA 162, MCL 450.2101 to 450.3192.
(2) The board shall adopt a conflict of interest policy. A
board member with a direct or indirect interest in any matter
before the fund shall disclose the member's interest to the board
before the board takes any action on the matter. The board shall
record the member's disclosure in the minutes of the board meeting.
If a board member or a member of his or her immediate family,
organizationally or individually, would derive a direct and
specific benefit from a decision of the board, that member shall
recuse himself or herself from the discussion and vote on the
issue.
(3) Subject to this subsection, the governor shall appoint the
members of the board with the advice and consent of the senate. <<An
individual who is an employee, officer, or board member of a health
care corporation; a lobbyist affiliated with a health care
corporation; or an employee of a health insurer, health care
provider, or third party administrator is not eligible to and
shall not be appointed to the board under this subsection.>> On
or before the expiration of 60 days after the effective date of
this section, the governor shall appoint the following initial
members of the board with the advice and consent of the senate:
(a) One member from a list of 3 or more individuals
recommended by the senate majority leader.
(b) One member from a list of 3 or more individuals
recommended by the speaker of the house of representatives.
(c) One member representing the interests of minor children.
(d) One member representing the interests of senior citizens.
(e) Two members of the general public.
(f) One member representing the business community.
(g) One member from a list of 3 or more individuals
recommended by the house minority leader.
(h) One member from a list of 3 or more individuals
recommended by the senate minority leader.
(4) A vacancy in the board shall be filled in the same manner
as the initial appointment of that member under subsection (3).
Except as otherwise provided in this subsection, a board member
shall serve for a term of 4 years or until a successor is
appointed, whichever is later. For an initial member appointed to
the board under subsection (3), 3 members shall serve for 2-year
terms, 3 members shall serve for 3-year terms, and 3 members shall
serve for 4-year terms.
(5) Six members of the board constitute a quorum for the
transaction of business at a meeting of the board. An affirmative
vote of 5 board members is necessary for official action of the
board.
(6) The business that the board may perform shall be conducted
at a meeting of the board that is held in this state, is open to
the public, and is held in a place that is available to the general
public. However, the board may establish reasonable rules and
regulations to minimize disruption of a meeting of the board. At
least 10 days and not more than 60 days before a meeting, the board
shall provide public notice of its meeting at its principal office
and on its internet website. The board shall include in the public
notice of its meeting the address where board minutes required
under subsection (7) may be inspected by the public. The board may
Senate Bill No. 61 as amended January 31, 2013
meet in a closed session for any of the following purposes:
(a) To consider the hiring, dismissal, suspension, or
disciplining of board members or its employees or agents.
(b) To consult with its attorney.
(c) To comply with state or federal law, rules, or regulations
regarding privacy or confidentiality.
(7) The board shall keep minutes of each meeting. Board
minutes shall be open to public inspection, and the board shall
make the minutes available at the address designated on the public
notice of its meeting under subsection (6). The board shall make
copies of the minutes available to the public at the reasonable
estimated cost for printing and copying. The board shall include
all of the following in its board minutes:
(a) The date, time, and place of the meeting.
(b) Board members who are present and absent.
(c) Board decisions made at a meeting open to the public.
(d) All roll call votes taken at the meeting.
(8) Board members shall serve without compensation. However,
board members may be reimbursed for their actual and necessary
expenses incurred in the performance of their official duties as
board members.
Sec. 653. (1) The board shall organize a nonprofit
corporation, on a nonstock, directorship basis, under the nonprofit
corporation act, 1982 PA 162, MCL 450.2101 to 450.3192. The
nonprofit corporation shall be known as the Michigan health
endowment fund and is organized to receive and administer funds for
the public welfare. <<As soon as practicable after organization of
the nonprofit corporation under this subsection, the board shall
apply for and make its best effort to obtain tax-exempt status for
the fund under section 501(c)(3) of the internal revenue code, 26
USC 501.>>
Senate Bill No. 61 as amended January 31, 2013
(2) The purpose of the fund is to <<support programs that
improve the quality of health care while reducing costs to
residents of this state and to>> benefit the health and
wellness of minor children and seniors throughout this state with a
significant focus in the following areas:
(a) Infant mortality.
(b) Wellness programs and fitness programs.
(c) Access to healthy food.
(d) Technology enhancements.
(e) Health-related transportation needs.
(f) Foodborne illness prevention.
(3) The fund may award grants for projects that will promote
the purpose of the fund described in subsection (2). The board
shall establish a comprehensive and competitive process to award
grants. The board shall not award a grant that is longer than 3
years in duration.
(4) The fund has the power and duties of a nonprofit
corporation under the nonprofit corporation act, 1982 PA 162, MCL
450.2101 to 450.3192. If a conflict between a power or duty of the
fund under this section conflicts with a power or duty under other
state law, this section controls.
(5) The board shall implement a program that disburses
foundation money to subsidize the cost of individual medigap
coverage to senior citizens in this state who demonstrate a
financial need in order to be able to purchase individual medigap
coverage. Subject to approval by the attorney general, the
commissioner shall develop a means test to determine if a senior
citizen applicant is eligible for the medigap coverage subsidy
provided for in this subsection.
(6) Beginning August 1, 2016 and ending December 31, 2021, the
board shall disburse $120,000,000.00 to subsidize the cost of
individual medigap coverage purchased by senior citizens in this
state, subject to the means test required in subsection (5).
Sec. 654. (1) The board shall appoint an executive director of
the fund. The executive director is the chief executive officer of
the fund and serves at the pleasure of the board. The executive
director may employ staff and hire consultants as necessary with
the approval of the board. The board shall determine compensation
for the executive director and staff employed under this subsection
and shall approve contracts under this subsection.
(2) The executive director shall display on the fund internet
website information relevant to the public, as defined by the
board, concerning the fund's operations and efficiencies, as well
as the board's assessments of those activities.
Sec. 655. (1) Subject to this section, the board may disburse
money contributed to the fund each year, not including any
interest, earnings, or unrealized gains or losses on those
contributions, for the purposes of the fund as described in section
653. The board may expend a portion of the money contributed to the
fund in each year according to the following schedule:
(a) Years 1 through 4, 80%.
(b) Years 5 through 8, 67%.
(c) Years 9 through 12, 60%.
(d) Years 13 through 18, 25%.
(2) On and after the date that the accumulated principal in
the fund reaches $750,000,000.00, the board shall maintain that
amount for investment to provide an ongoing income to the fund. On
and after the date that the accumulated principal in the fund
reaches $750,000,000.00, the board shall not allow the accumulated
principal of the fund to fall below $750,000,000.00 due to
expenditures made for the purposes of the fund as described in
section 653.
(3) The board may expend money received by the fund from any
source in a fiscal year that is in excess of the amount required to
maintain the accumulated principal goals as described in subsection
(2), not including any interest, earnings, or unrealized gains or
losses on those funds, on the reasonable administrative costs of
the fund and for the purposes of the fund as described in section
653. The investment of fund money and donations by the fund are
under the exclusive control and discretion of the executive
director and the board.
(4) The board may invest accumulated principal in the fund
only in securities permitted by the laws of this state for the
investment of assets of life insurance companies, as described in
chapter 9 of the insurance code of 1956, 1956 PA 218, MCL 500.901
to 500.947.
(5) The board shall provide in the fund's articles of
incorporation or bylaws for a system of financial accounting,
controls, audits, and reports. The board annually shall have an
audit of the fund conducted by an independent public accountant
firm, and the auditor's audit report and findings shall be
submitted to the board. The expense of an audit required under this
subsection is considered a reasonable administrative cost under
subsection (3).
(6) The board shall appoint from its members an audit
committee consisting of no less than 3 members. At a minimum, the
audit committee shall contract with an independent auditing firm to
provide an annual financial audit in accordance with applicable
auditing standards.
(7) The executive director shall do all of the following:
(a) Review and certify the reports of the external auditor.
(b) Make the external auditor reports available to the board
and to the general public.
(c) Develop and implement corrective actions to address
weaknesses identified in an audit report.
(8) The fund shall meet all of the following financial
transparency requirements:
(a) Keep an accurate accounting of all activities, receipts,
and expenditures and annually submit to the governor, the senate
and house of representatives appropriations committees, and the
senate and house of representatives standing committees on health
policy a report regarding those accountings.
(b) Fully cooperate with any investigation conducted by this
state or a federal agency under its authority under state or
federal law, to do any of the following:
(i) Investigate the affairs of the fund.
(ii) Examine the assets and records of the fund.
(iii) Require periodic reports in relation to the activities
undertaken by the fund.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 62
of the 97th Legislature is enacted into law.
