SENATE DOCKET, NO. 525        FILED ON: 1/13/2009

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 585

The Commonwealth of Massachusetts

_______________

In the Year Two Thousand Nine

_______________

An Act to reduce health care costs and improve patient care..

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1.  (a) Definitions: For the purposes of this section, the following terms shall have the following meanings:

1)      Direct Premiums Earned--premiums earned during a particular period plus the unearned premiums at the beginning of the period less the unearned premiums at the end of the period.

2)      Direct Claims Incurred—Claims paid during a particular period which pertain only to that specific period, plus any unpaid claim reserve at the end of period which is attributable to that period.

3)      Loss ratio—the ratio of direct claims incurred to direct premiums earned, expressed as a percentage.

(b) The commissioner of the division of healthcare finance and policy is hereby authorized and directed to convene a special commission for the purpose of developing a system employing loss ratios in order to maximize the amount of direct premiums earned which are expended on the provision of care in the commonwealth, consistent with prudent insurance practices and any other relevant issues of commercial practicability.

Said commission shall consist of the commissioner, who shall serve as its chair, the commissioner of the division of insurance, the secretary of health and human services or his designee, the director of the executive office of consumer affairs or his designee, and the following members appointed by the governor: two representatives of health maintenance organizations doing business in the commonwealth, two representatives of commercial insurers doing business in the commonwealth, two representatives of preferred provider organizations doing business in the commonwealth, two representatives of organizations providing indemnity plans, so-called, in the commonwealth, a representative of a healthcare advocacy organization in the commonwealth, a representative of the Massachusetts Nurses Association, a representative of the Massachusetts Medical Society, three representatives of Massachusetts hospitals of a diverse nature, an attorney with healthcare expertise in healthcare financing, an economist with expertise in healthcare financing, and three individuals representing consumers in the commonwealth.

(c) Said commission shall investigate and evaluate potential methodologies for employing the use of loss ratios in statute, regulation, or both, to minimize administrative expenses and maximize actual funds expended on healthcare in the commonwealth.  Said commission shall design a system utilizing those methodologies it finds to be most effective, practical and efficient in their application of loss ratios.  The commission shall file a report containing said system, together with any and all necessary legislative recommendations for its implementation, with the clerks of the House and Senate and the joint committees on public health, healthcare financing and financial services not later than eight months following the passage of this act.