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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY McILHINNEY, RAFFERTY, ARGALL, LOGAN, ALLOWAY AND O'PAKE, MARCH 11, 2010 |
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| REFERRED TO BANKING AND INSURANCE, MARCH 11, 2010 |
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| AN ACT |
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1 | Imposing restrictions relating to premium rates for small |
2 | employer group health benefit plans; providing for |
3 | renewability and availability of coverage; establishing |
4 | standards to assure fair marketing; providing for powers and |
5 | duties of the Insurance Commissioner; and repealing |
6 | provisions of the Accident and Health Filing Reform Act. |
7 | The General Assembly of the Commonwealth of Pennsylvania |
8 | hereby enacts as follows: |
9 | Section 1. Short title. |
10 | This act shall be known and may be cited as the Pennsylvania |
11 | Health Care Security Act. |
12 | Section 2. Purpose. |
13 | The purpose and intent of this act is to promote the |
14 | availability of health insurance coverage to small employers |
15 | regardless of their health status in order to prevent abusive |
16 | rating practices, to spread health insurance risk more broadly, |
17 | to establish rules regarding renewability of coverage and to |
18 | establish limitations on the use of preexisting condition |
19 | exclusions. |
20 | Section 3. Definitions. |
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1 | The following words and phrases when used in this act shall |
2 | have the meanings given to them in this section unless the |
3 | context clearly indicates otherwise: |
4 | "Carrier." A health insurance entity subject to the act of |
5 | May 17, 1921 (P.L.682, No.284), known as The Insurance Company |
6 | Law of 1921, insurance laws and regulations of this Commonwealth |
7 | or subject to the jurisdiction of the Insurance Commissioner |
8 | that contracts or offers to contract to provide, deliver, |
9 | arrange for, pay for or reimburse any of the costs of health |
10 | care services, including a sickness and accident insurance |
11 | company, a health maintenance organization as defined in the act |
12 | of December 29, 1972 (P.L.1701, No.364), known as the Health |
13 | Maintenance Organization Act, a hospital plan corporation as |
14 | defined in 40 Pa.C.S. Ch. 61 (relating to hospital plan |
15 | corporations), a professional health service plan corporation as |
16 | defined in 40 Pa.C.S. Ch. 63 (relating to professional health |
17 | services plan corporations), a fraternal benefit society |
18 | organized and operating under Article XXIV of The Insurance |
19 | Company Law of 1921, or any other entity providing a plan of |
20 | health insurance, health benefits or health services. |
21 | "Commissioner." The Insurance Commissioner of the |
22 | Commonwealth. |
23 | "Creditable coverage." With respect to an individual, health |
24 | benefits or coverage provided under any of the following: |
25 | (1) A group health plan. |
26 | (2) A health plan. |
27 | (3) Medicare under Part A or Part B of Title XVIII of |
28 | the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et |
29 | seq.). |
30 | (4) Medicaid under Title XIX of the Social Security Act |
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1 | (49 Stat. 620, 42 U.S.C. § 301 et seq.), other than coverage |
2 | consisting solely of benefits under section 1928 of that act. |
3 | (5) CHAMPUS, under 10 U.S.C. Ch. 55 (relating to medical |
4 | and dental care), where "uniformed services" means the armed |
5 | forces and the Commissioned Corps of the National Oceanic and |
6 | Atmospheric Administration and of the Public Health Services. |
7 | (6) A health plan offered under 5 U.S.C. Ch. 89 |
8 | (relating to Federal employees group health insurance). |
9 | (7) A health insurance program administered by the |
10 | Insurance Department. |
11 | "Department." The Insurance Department of the Commonwealth. |
12 | "Dependent." Subject to applicable terms of a health |
13 | benefits plan: |
14 | (1) the spouse of an eligible employee; or |
15 | (2) an unmarried child who is under 19 years of age of |
16 | an eligible employee. |
17 | "Eligible employee." An employee who works on a full-time |
18 | basis with a normal work week of 30 or more hours, except that |
19 | at the employer's sole discretion, the term shall also include |
20 | an employee who works on a full-time basis with a normal work |
21 | week of anywhere between at least 17.5 and 30 hours, as long as |
22 | this eligibility criterion is applied uniformly among all of the |
23 | employer's employees and without regard to any health status- |
24 | related factor. The term shall include a self-employed |
25 | individual, a sole proprietor, a partner of a partnership and an |
26 | independent contractor if the self-employed individual, sole |
27 | proprietor, partner or independent contractor is included as an |
28 | employee under a health benefit plan of a small employer. The |
29 | term does not include an employee who works on a temporary or |
30 | substitute basis or who works less than 17.5 hours per week. |
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1 | "Health benefit plan." A hospital or medical expense |
2 | insurance policy offered by a carrier for medical care delivered |
3 | or issued for delivery for a subscriber. The term does not |
4 | include one or more or any combination of the following: |
5 | (1) Coverage only for accident or disability income |
6 | insurance or any combination thereof. |
7 | (2) Coverage issued as a supplement to liability |
8 | insurance. |
9 | (3) Liability insurance, including general liability |
10 | insurance and automobile liability insurance. |
11 | (4) Stop-loss or excess-risk insurance. |
12 | (5) Workers' compensation or similar insurance. |
13 | (6) Automobile medical payment insurance. |
14 | (7) Credit-only insurance. |
15 | (8) Other similar insurance coverage as specified in |
16 | Federal regulations under which benefits for medical care are |
17 | secondary or incidental to other insurance benefits. |
18 | The term shall not include Medicare supplemental health |
19 | insurance as defined under section 1882(g)(1) of the Social |
20 | Security Act (49 Stat. 620, 42 U.S.C. § 1395ss(g)(1)). |
21 | "Health status-related." Any of the following factors: |
22 | (1) Health status. |
23 | (2) Medical condition, including both physical and |
24 | mental illness. |
25 | (3) Substance abuse. |
26 | (4) Claims experience. |
27 | (5) Receipt of health care. |
28 | (6) Medical history. |
29 | (7) Genetic information. |
30 | (8) Evidence of insurability, including conditions |
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1 | arising out of acts of domestic violence. |
2 | (9) Disability. |
3 | "Modified demographic rating." A rating method used to |
4 | develop a carrier's premium that spreads financial risk across |
5 | the carrier's small group population, which results in a small |
6 | group premium rate that may be modified based on rate class |
7 | factors such as age, gender, family composition, industry and |
8 | geographic area. The geographic area for small group policies |
9 | shall have counties as the smallest permissible rating |
10 | territory. |
11 | "Preexisting condition." A condition, regardless of the |
12 | cause of the condition, for which medical advice, diagnosis, |
13 | care or treatment was recommended or received during the six |
14 | months immediately preceding the enrollment date of coverage. |
15 | "Restricted network provision." Any provision of a health |
16 | benefit plan that conditions the payment of benefits, in whole |
17 | or in part, on the use of health care providers that have |
18 | entered into a contractual arrangement with the carrier to |
19 | provide health care services to covered individuals. |
20 | "Significant break in coverage." A period of 63 consecutive |
21 | days during which an individual does not have any creditable |
22 | coverage, excluding any waiting period or affiliation period. |
23 | "Small employer." A person, firm, corporation, partnership |
24 | or political subdivision that is located in this Commonwealth |
25 | and is actively engaged in business that on at least 50% of its |
26 | working days during the preceding calendar quarter, employed a |
27 | combination of no more than 50 eligible employees and is not |
28 | formed primarily for the purposes of buying health insurance and |
29 | in which a bona fide employer-employee relationship exists. |
30 | "Small group carrier." A carrier that provides small group |
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1 | health benefit plans. |
2 | "Small group health benefit plan." A health benefit plan for |
3 | groups of two to 50 eligible persons, whether issued directly to |
4 | small employers or made available to small employers through |
5 | membership in an association. |
6 | Section 4. Restrictions relating to premium rates. |
7 | (a) Applicability.--This section shall apply to all small |
8 | group health benefit plans that are issued, made effective, |
9 | delivered or renewed in this Commonwealth after the effective |
10 | date of this section. |
11 | (b) Premium rates.-- |
12 | (1) An insurer shall establish a geographic average rate |
13 | for plans and shall file the geographic average rates with |
14 | the department as required by law. The geographic average |
15 | rate may not be changed more frequently than once every 12 |
16 | months. An insurer may adjust its geographic average rates |
17 | for age only. |
18 | (2) An insurer shall apply the risk adjustment factor |
19 | under paragraph (1) consistently with respect to all plans |
20 | subject to this section. |
21 | (3) An insurer shall not charge a rate that is more than |
22 | 33% above or below the geographic average rate as permitted |
23 | under paragraph (1). Additional adjustments may be made to |
24 | reflect the inclusion of additional benefits as specified and |
25 | differences in family composition. |
26 | (4) The premium for a small group health benefit plan |
27 | shall not be adjusted by an insurer more than once each year, |
28 | except that rates may be changed more frequently to reflect: |
29 | (i) Changes to the enrollment of the small employer |
30 | group. |
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1 | (ii) Changes to a small group health benefit plan |
2 | that have been requested by the small employer. |
3 | (iii) Changes pursuant to a government order or |
4 | judicial proceeding. |
5 | (5) No form of medical underwriting is permitted, |
6 | including use of any of the following factors: |
7 | (i) Medical condition or health status-related |
8 | factors including both physical and mental illness and |
9 | the use of group or individual medical questionnaires. |
10 | (ii) Claims experience. |
11 | (iii) Genetic information. |
12 | (iv) Evidence of insurability, including conditions |
13 | arising out of acts of domestic violence. |
14 | (v) Disability. |
15 | (c) Base rates.--Rating factors for small group health |
16 | benefit plans shall produce base rates for identical groups |
17 | which differ only in the amounts attributable to plan design. |
18 | (d) Construction.--For the purposes of this section, a small |
19 | group health benefit plan that contains a restricted network |
20 | provision or operates in a limited service area shall not be |
21 | construed as having similar coverage as a small group health |
22 | benefit plan that does not contain such a provision. |
23 | (e) Filing requirements.--All carriers offering small group |
24 | health benefit plans shall place on file with the department all |
25 | small group base rates and modifying factors. Rates for a |
26 | specific group may not deviate by more than 15% from the rate |
27 | developed utilizing the filed small group base rates or base |
28 | rate formulas and modifying factors, unless the specific group |
29 | rates are placed on file with the department. All filings |
30 | required by this section shall be made no less than 45 days |
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1 | prior to their effective dates. Filings made under this |
2 | subsection shall be deemed approved at the expiration of 45 days |
3 | after filing unless earlier approved or disapproved by the |
4 | commissioner. The commissioner, by written notice to the |
5 | insurer, may within the 45-day period extend the period for |
6 | approval or disapproval for an additional 45 days. |
7 | (f) Regulations.--The commissioner shall establish |
8 | regulations to implement the provisions of this section and to |
9 | assure that rating practices used by small group carriers are |
10 | consistent with the purposes of this act. |
11 | Section 5. Renewability of coverage. |
12 | A small employer's health benefit plan subject to this act |
13 | shall be renewable with respect to all eligible employees or |
14 | dependents, at the option of the small employer, except in any |
15 | of the following cases: |
16 | (1) The small employer has failed to pay premiums or |
17 | contributions in accordance with the terms of the small group |
18 | health benefit plan or the carrier has not received timely |
19 | premium payments. |
20 | (2) The small employer has performed an act or practice |
21 | that constitutes fraud or made an intentional |
22 | misrepresentation of material fact. |
23 | (3) Noncompliance by the small employer with the |
24 | carrier's minimum participation requirements. |
25 | (4) Noncompliance by the small employer with the |
26 | carrier's employer contribution requirements. |
27 | (5) The carrier elects to discontinue offering some or |
28 | all of its small group health benefit plans delivered or |
29 | issued for delivery to small employers in this Commonwealth, |
30 | if the carrier provides notice of the decision to: |
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1 | (i) All affected small employers and covered |
2 | employees. |
3 | (ii) The commissioner at least 90 days prior to the |
4 | nonrenewal of any health benefit plans by the carrier. |
5 | Section 6. Availability of coverage. |
6 | (a) General rule.--As a condition of transacting business in |
7 | this Commonwealth, a small group carrier shall actively offer to |
8 | small employers all health benefit plans that it actively |
9 | markets to small groups. |
10 | (b) Small groups.--A small group health benefit plan shall |
11 | not deny, exclude or limit benefits for a covered individual for |
12 | losses incurred more than 12 months following the enrollment day |
13 | of the individual's coverage due to a preexisting condition or |
14 | the first date of the waiting period for enrollment if that date |
15 | is earlier than the enrollment date. |
16 | Section 7. Standards to assure fair marketing. |
17 | (a) General rule.--A small group carrier shall actively |
18 | market all small group health benefit plans sold by the carrier |
19 | to eligible small employers in this Commonwealth. |
20 | (b) Prohibited conduct.--Except as provided in subsection |
21 | (c), no small group carrier or producer shall, directly or |
22 | indirectly, engage in the following conduct: |
23 | (1) Encouraging or directing a group of small employers |
24 | to refrain from filing an application for coverage with the |
25 | small group carrier or producer because of any health status |
26 | factor, industry, occupation or geographic location of a |
27 | small employer. |
28 | (2) Encouraging or directing a small employer to seek |
29 | coverage from another carrier because of any health status |
30 | factor, industry, occupation or geographic location of the |
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1 | small employer. |
2 | (c) Exception.--The provisions of subsection (b) shall not |
3 | apply with respect to information provided by a carrier or |
4 | producer to a small employer regarding the established |
5 | geographic service area or a restricted network provision of a |
6 | carrier. |
7 | (d) Entrance into contracts.--No small group carrier shall, |
8 | directly or indirectly, enter into any contract, agreement or |
9 | arrangement with a producer that provides for or results in the |
10 | compensation paid to a producer for the sale of a small group |
11 | health benefit plan to be varied because of any initial or |
12 | renewal health status-related factor, industry or occupation of |
13 | the small employer. |
14 | (e) Termination of contracts.--No small group carrier may |
15 | terminate, fail to renew or limit its contract or agreement of |
16 | representation with a producer for any reason related to any |
17 | initial or renewal health status-related factor or occupation of |
18 | the small employer carrier. |
19 | (f) Separation or exclusion from coverage or benefits.--A |
20 | small group carrier or producer may not induce or otherwise |
21 | encourage a small employer to separate or otherwise exclude an |
22 | employee or dependent from health coverage or benefits provided |
23 | in connection with the employee's employment. |
24 | Section 8. Filing of certification. |
25 | Each small group carrier shall file with the commissioner on |
26 | or before March 1 of each year an actuarial certification that |
27 | the carrier is in compliance with this act and that the rating |
28 | methods of the carrier are actuarially sound. A copy of the |
29 | certification shall be retained by the carrier at its principal |
30 | place of business. |
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1 | Section 9. Transition period. |
2 | The commissioner may establish a phase-in period for renewal |
3 | rates of no less than one year and no more than two years in |
4 | duration for carriers to implement rate adjustments. Any |
5 | transition period shall be applied uniformly to all carriers. |
6 | Section 10. Repeals. |
7 | Repeals are as follows: |
8 | (1) The General Assembly finds that the repeals under |
9 | paragraph (2) are necessary to effectuate this act. |
10 | (2) The following provisions of the act of December 18, |
11 | 1996 (P.L.1066, No.159), known as the Accident and Health |
12 | Filing Reform Act, are repealed insofar as they provide for |
13 | required rate filings, review procedures and related matters |
14 | for small group health benefit plans or are otherwise |
15 | inconsistent with the requirements of this act: |
16 | (i) Section 3(e)(1), (2), (3), (4), (5) and (6) and |
17 | (f). |
18 | (ii) Section 4(a), (b), (c), (d), (e) and (f). |
19 | (iii) Section 5. |
20 | (iv) Section 6. |
21 | (v) Section 7. |
22 | (vi) Section 8(a), (c) and (e). |
23 | Section 11. Effective date. |
24 | This act shall take effect in 180 days. |
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