Bill Text: PA SB39 | 2009-2010 | Regular Session | Introduced

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Bill Title: Authorizing privately established and operated health insurance purchasing cooperatives; and providing for the regulation of health insurance purchasing cooperatives by the Insurance Department.

Spectrum: Slight Partisan Bill (Republican 6-3)

Status: (Introduced - Dead) 2009-01-20 - Referred to BANKING AND INSURANCE [SB39 Detail]

Download: Pennsylvania-2009-SB39-Introduced.html

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PRINTER'S NO. 24
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 39 Session of2009
INTRODUCED BY GREENLEAF, CORMAN, FONTANA, BROWNE, RAFFERTY, EARLL AND O'PAKE, JANUARY 20, 2009
REFERRED TO BANKING AND INSURANCE, JANUARY 20, 2009
AN ACT
Authorizing privately established and operated health insurance
purchasing cooperatives; and providing for the regulation of
health insurance purchasing cooperatives by the Insurance
Department.
TABLE OF CONTENTS
Section 1. Short title.
Section 2. Statement of purpose.
Section 3. Definitions.
Section 4. Exemption.
Section 5. Department duties.
Section 6. Business plan.
Section 7. Membership.
Section 8. Health care benefits.
Section 9. Insurance risk.
Section 10. Disclosure and confidentiality.
Section 11. Merger and consolidation.
Section 12. Conflict of interest.
Section 13. Grounds for denial, nonrenewal, suspension or
revocation.
Section 14. Hearing and appeal.
Section 15. Solvency.
Section 16. Annual report.
Section 17. Rules and regulations.
Section 18. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Pennsylvania
Health Insurance Purchasing Cooperative Act.
Section 2. Statement of purpose.
The General Assembly recognizes that small employers are
unable to negotiate health insurance benefits at the same cost
as larger employers which makes it unaffordable for them to
offer it to their employees. Therefore, the General Assembly
seeks to increase the availability, accessibility and
affordability of health insurance coverage by allowing small
employers to join together through a health insurance purchasing
cooperative so that they gain the same administrative
efficiencies and purchasing strength as larger employers.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Business plan." The plan of operation of a health insurance
purchasing cooperative.
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Department." The Insurance Department of the Commonwealth.
"Dependent child." A natural or adopted child of an
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employee. The term includes a stepchild who resides in an
employee's household if the employee has assumed the financial
responsibility for the child and another parent is not legally
responsible for support for and medical expenses of the child.
"Eligible dependent." A spouse of an employee and a
dependent child who is under 19 years of age.
"Eligible employee." An employee or individual who is a
full-time employee of an eligible employer and qualified to
enroll in a health benefit plan offered through a health
insurance purchasing cooperative or eligible dependent.
"Full-time." The status of working at least 30 hours per
week for an eligible employer.
"Health insurance purchasing cooperative" or "cooperative."
A group of small employers and eligible employees who join
together to purchase health insurance or health care benefits.
"Insurer." An insurer, health maintenance organization,
fraternal benefit society, hospital plan or health services plan
corporation that offers basic small group insurance plans to
small employers.
"Small employer." A person, firm, corporation, partnership
or association that employed, on at least 50% of its working
days during the preceding year, at least two but not more than
50 employees.
Section 4. Exemption.
A health insurance purchasing cooperative shall be exempt
from any law in this Commonwealth relating to the establishment
of groups for the purchase of insurance.
Section 5. Department duties.
(a) General rule.--The department shall regulate the
establishment and conduct of health insurance purchasing
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cooperatives.
(b) Application procedure.--
(1) A health insurance purchasing cooperative may not
operate in this Commonwealth without an approved business
plan and without obtaining a license from the department.
(2) An application for a license must be completed and
signed by an authorized representative of the cooperative
sponsor and proposed health insurance purchasing cooperative
administrator, if applicable. The completed application for a
license must be verified and filed with the department.
(3) An application shall not be deemed to be filed until
all information necessary to properly process the application
has been received by the commissioner. Upon filing, the
department shall make its determination concerning the
application and shall provide notice of the determination to
the cooperative.
(4) If the application is approved, a copy of the
approved license shall be provided to the sponsor of the
cooperative. The license shall serve as the cooperative's
authorization to operate until the yearly renewal date.
(5) Any request for an amendment to the license shall be
filed in the same manner as the application and approved by
the commissioner before the change proposed by the amendment
is effective.
(c) Application.--A health insurance purchasing cooperative
applying for a license or a renewal of a license or operating in
this Commonwealth shall file with the department all of the
following information or documents:
(1) A business plan for approval by the commissioner.
(2) Quarterly financial statements and annual reports on
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forms approved by the commissioner. Financial statements and
annual reports submitted shall provide evidence that allows
the commissioner to ensure that the health insurance
purchasing cooperative:
(i) Is operating in a fiscally sound fashion.
(ii) Is not a risk-bearing entity.
(iii) Has sound financial controls and money
management.
(iv) Has procedures in place to prevent
mismanagement or misappropriation of funds either through
neglect or malfeasance.
(3) Reports of any proposed changes in policy or
operations that constitute material changes in the business
plan that was the basis of licensure or a renewal of
licensure.
(4) Any other information deemed relevant by the
commissioner.
(d) License revocation.--Failure to provide requested
information shall be a basis for denial, suspension or
revocation of a license issued under this act.
(e) Audits.--Financial and performance audits or
examinations of the health insurance purchasing cooperative
shall be conducted on a regular basis by the commissioner.
Failure by a cooperative to meet minimum standards in a
financial or performance audit or examination shall be the basis
for license denial, suspension or revocation or other action to
protect consumers. The commissioner may impose conditions on
licensure, including, but not limited to, the removal and
replacement of managerial or marketing staff or contractors to
remedy compliance or performance problems.
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(f) Compliance with business plan.--Failure of a health
insurance purchasing cooperative to comply with the business
plan approved by the commissioner may constitute a basis for
suspension or revocation of the cooperative's license.
Section 6. Business plan.
A health insurance purchasing cooperative shall not receive a
license unless the business plan of the cooperative has been
reviewed and approved by the commissioner. The business plan
submitted for approval shall include the following information:
(1) The steps the sponsor of the cooperative plans to
take to advance cost control and quality improvement and to
improve access to health insurance or health care services.
The business plan shall demonstrate that the cooperative will
reduce cost, improve quality and improve access to health
insurance or health care services.
(2) The scope of cooperative services that will be
offered in the service territory and the resources and
expertise that will be used by the sponsor of the cooperative
to implement and administer the plan.
(3) The corporate charter, bylaws and other business
operation documents of the cooperative. As a condition of
licensure, the cooperative must demonstrate to the
satisfaction of the commissioner that its corporate
governance makes it an appropriate and effective
representative of the buyers' interests within the service
territory. A cooperative shall, whenever feasible, contract
with multiple, unaffiliated insurers to offer health benefit
plans and other insurance to its members. A cooperative may
selectively contract with insurers based on the quality and
cost-effectiveness of services and other factors deemed to be
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relevant by the cooperative.
(4) A list of officers and directors of the cooperative
and of the contract administrator, if one is employed, and
personal biographical information or firm descriptions for
each person named. The officers, directors or contract
administrator of a cooperative may not have a prior record of
administrative, civil or criminal violation within any
financial service industry. The personal biographical
information and firm descriptions submitted shall demonstrate
by clear and convincing evidence that the persons involved in
the cooperative have the expertise, experience and character
to effectively and professionally represent buyers in a
fiduciary capacity.
(5) Information concerning procedures for accounting,
deposit, collection, handling and transfer of moneys. Because
the cooperative may handle payments or accounting, the
cooperative shall demonstrate the presence of adequate
financial controls to the satisfaction of the commissioner as
a condition of licensure. Failure to have adequate controls
or to follow approved procedures may constitute a basis for
denial, suspension or revocation of licensure.
(6) The market segments and participants to which the
cooperative will be marketing. The cooperative shall
demonstrate to the satisfaction of the commissioner that the
cooperative will extend health insurance purchasing services
to a group of buyers not currently served by a cooperative.
Failure to achieve this result may constitute a basis for
denial of an application to renew a license.
(7) Any other information required by the commissioner
to verify that the cooperative is qualified to operate in
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this Commonwealth.
Section 7. Membership.
(a) No capital stock.--A health insurance purchasing
cooperative shall be organized on a membership basis with no
capital stock.
(b) Voluntary.--Membership in a health insurance purchasing
cooperative shall be voluntary.
(c) Eligibility.--A health insurance purchasing cooperative
shall accept for membership in the cooperative any small
employers and eligible employees or dependents which agree to
pay the membership fee and any premium for coverage through the
cooperative and which abide by the bylaws and rules of the
cooperative.
(d) Additional membership.--A health insurance purchasing
cooperative may, at its option, accept for membership in the
cooperative any otherwise eligible employer that does not
qualify as a small employer because it employed more than 50
eligible employees during 50% or more of its working days during
the previous calendar quarter.
(e) Sole proprietor.--A health insurance purchasing
cooperative may, at its option, accept for membership in the
cooperative any otherwise eligible employer that does not
qualify as a small employer because it is an individual or sole
proprietor. If a cooperative chooses to accept such employers,
the cooperative may not discriminate in the acceptance process
based on health status.
Section 8. Health care benefits.
(a) Benefit plans.--A health insurance purchasing
cooperative shall provide to its members clear, standardized
information on each health care benefit plan or other coverage
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offered by insurers through the cooperative to its members,
including information on price, enrollee costs, quality, patient
satisfaction, enrollment and enrollee responsibility and
obligations and shall provide health benefit plan and other
insurance comparison sheets as may be required by the
department.
(b) Discrimination.--A health insurance purchasing
cooperative may not:
(1) Vary conditions of eligibility, including premium
rates and membership fees, for any employer meeting the
membership requirements of the cooperative.
(2) Vary conditions of eligibility for any eligible
employee to qualify for a health benefit plan offered by the
cooperative to eligible employers and their employees.
(c) Open enrollment.--A health insurance purchasing
cooperative shall provide for an annual open enrollment period
of 30 calendar days during which members of the cooperative may
change the coverage option in which members are enrolled. A
cooperative shall, whenever feasible, contract with multiple,
unaffiliated insurers to offer health benefit plans and other
insurance to its members. A cooperative may selectively contract
with insurers based on quality and cost-effectiveness of
services and other factors deemed to be relevant by the
cooperative.
(d) Waiver of State mandates.--A health insurance purchasing
cooperative may provide a health benefit plan in whole or in
part that does not offer or provide State-mandated health
benefits. A cooperative that offers a health benefit plan
without such mandates must also offer at least one benefit plan
that includes coverage for all State-mandated health benefits.
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(e) Notice requirements.--In each sale of a health benefit
plan to a proposed eligible employer through a health insurance
purchasing cooperative in which the cooperative offers an option
to an eligible employer to obtain a health benefit plan that,
either in whole or in part, does not provide State-mandated
health benefits, the cooperative, after the employer has
selected its health benefit plan, shall provide to each eligible
employee of the employer a written notice, in a form and manner
prescribed by rule or regulation promulgated by the
commissioner, that one or more mandated benefits are not
included in the health benefit plan.
(f) Licensed insurers.--A health benefit plan offered
through a health insurance purchasing cooperative shall be
underwritten by an insurer that is licensed or otherwise
regulated under State law and meets all applicable State
standards relating to consumer protection, including, but not
limited to, State solvency and market conduct.
Section 9. Insurance risk.
A health insurance purchasing cooperative shall not bear
insurance risk. The cooperative shall facilitate the purchase of
insurance and health care services.
Section 10. Disclosure and confidentiality.
(a) Right to preclude repurchase.--
(1) A health insurance purchasing cooperative may elect
to preclude a participant who leaves the cooperative from
returning to the cooperative to purchase health insurance or
health care benefits for a period of time.
(2) This subsection shall not be construed to authorize
discrimination against high-risk participants.
(b) Access to information.--
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(1) Except as provided in paragraph (2), and subject to
review and approval by the commissioner, a health insurance
purchasing cooperative may restrict access to information in
its possession that is essential to the operation of the
cooperative.
(2) Restriction of access to information shall be
allowed for the following reasons:
(i) To induce voluntary participation in the
cooperative.
(ii) To protect the privacy of participants.
(iii) To protect the negotiating strategy of the
cooperative from disclosure to contractors or
competitors.
(iv) To protect proprietary information in like
circumstances as those that are applicable to insurers.
Section 11. Merger and consolidation.
(a) Legal entity.--A health insurance purchasing cooperative
shall be a legal entity that operates on behalf of its sponsor
or participants.
(b) Disclosure.--A health insurance purchasing cooperative
shall disclose its total administrative cost in its annual
report to the commissioner in the same manner and on the same
basis as insurers.
(c) Prior approval.--A change in control, a merger or an
acquisition of a health insurance purchasing cooperative is
subject to the prior review and approval of the commissioner on
the same terms as a change in control, a merger or an
acquisition of a Pennsylvania domestic insurance company.
Section 12. Conflict of interest.
(a) Sponsors.--Health care providers or insurers that offer
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competing products within the same service territory may not
participate in a health insurance purchasing cooperative as
sponsors.
(b) Affiliations.--A sponsor of a health insurance
purchasing cooperative may not be an employee of, be affiliated
with or be a subsidiary of a health care provider or insurer
that offers competing products within the same service
territory.
Section 13. Grounds for denial, nonrenewal, suspension or
revocation.
The following grounds constitute a basis for denial,
nonrenewal, suspension or revocation of an application or
existing license, following notice and an opportunity for
hearing:
(1) Failure to comply with any provisions of this act or
rules or regulations adopted pursuant to this act.
(2) Failure to disclose preexisting oral or written
agreement during the cooperative application process.
(3) Failure to fairly offer, market and sell all of the
health benefit plan designs offered through a cooperative
that are sold or offered to small employers to all
participants.
(4) Failure to comply with a lawful order of the
commissioner.
(5) Committing an unfair or deceptive act or practice as
defined under section 5 of the act of July 22, 1974 (P.L.589,
No.205), known as the Unfair Insurance Practices Act.
(6) Filing any necessary form with the department which
contains fraudulent information or omission.
(7) Misappropriating, converting, illegally withholding
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or refusing to pay over on proper demand any moneys that
belong to a person or health care insurer or any organized
delivery system or to which the cooperative is otherwise not
entitled and that have been entrusted to the cooperative in
its fiduciary capacity.
Section 14. Hearing and appeal.
Prior to denying an application for a license or an
application for renewal of a license or suspending or revoking a
license issued under this act, a license holder shall be
provided with written notice of the commissioner's decision and
provided an opportunity for a hearing and a right to appeal.
Section 15. Solvency.
If a health insurance purchasing cooperative becomes
insolvent, the commissioner shall maintain jurisdiction of the
cooperative for the purposes of protecting the interests of the
health insurance purchasing cooperative's participants and
health insurance carriers and health benefit plans.
Section 16. Annual report.
The commissioner shall submit an annual report to the General
Assembly no later than February 1 of each year. The report shall
include a description of the operations of all health insurance
purchasing cooperatives and a review of the success of
cooperatives in improving the quality, access or affordability
of health insurance. The commissioner may require cooperatives
to provide information in a uniform format for use in preparing
this report and for other public purposes.
Section 17. Rules and regulations.
The commissioner may promulgate any rules or regulations
necessary to implement the provisions of this act.
Section 18. Effective date.
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This act shall take effect in 60 days.
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