Section 6: Approval of health insurance policies; eligibility criteria; submission of information; approval of changes to small group product base rates or rating factors
Section 6. (a) Notwithstanding any general or special law to the contrary, the commissioner may approve health insurance policies submitted to the division of insurance for the purpose of being provided to eligible individuals or eligible small businesses. These health insurance policies shall be subject to this chapter and may include networks that differ from those of a health plan's overall network. The commissioner shall adopt regulations regarding eligibility criteria. These eligibility criteria shall require that health insurance policies that exclude mandated benefits shall only be offered to small businesses which did not provide health insurance to its employees as of April 1, 1992. These eligibility criteria shall also provide that small businesses shall not have any health insurance policies that exclude mandated benefits for more than a 5–year period.
(b) Notwithstanding any general or special law to the contrary, the commissioner shall require carriers offering health benefit plans to eligible small businesses and eligible individuals to submit information as required by the commissioner, which shall include the current and projected medical loss ratio for plans the components of projected administrative expenses and financial information, including, but not limited to:
(i) underwriting, auditing, actuarial, financial analysis, treasury and investment expenses;
(ii) marketing and sales expenses, including, but not limited to, advertising, member relations, member enrollment and all expenses associated with producers, brokers and benefit consultants;
(iii) claims operations expenses, including, but not limited to, adjudication, appeals, settlements and expenses associated with paying claims;
(iv) medical administration expenses, including, but not limited to, disease management, utilization review and medical management;
(v) network operations expenses, including, but not limited to, contracting, hospital and physician relations and medical policy procedures;
(vi) charitable expenses, including, but not limited to, contributions to tax-exempt foundations and community benefits;
(vii) state premium taxes;
(viii) board, bureau and association fees;
(ix) depreciation; and
(x) miscellaneous expenses described in detail by expense, including any expense not included in clauses (i) to (ix), inclusive.
(c) Notwithstanding any general or special law to the contrary, carriers offering small group health insurance plans, including carriers licensed under chapters 175, 176A, 176B or 176G, shall file small group product base rates and any changes to small group rating factors that are to be effective on January 1 of each year, on or before July 1 of the preceding year. The commissioner shall disapprove any proposed changes to base rates that are excessive, inadequate or unreasonable in relation to the benefits charged. The commissioner shall disapprove any change to small group rating factors that is discriminatory or not actuarially sound. Rates of reimbursement or rating factors included in the rate filing materials submitted for review by the division shall be deemed confidential and exempt from the definition of public records in clause Twenty-sixth of section 7 of chapter 4. The commissioner shall adopt regulations to carry out this section.
(d) If a carrier files a base rate change under this section and the administrative expense loading component, not including taxes and assessments, increases by more than the most recent calendar year's percentage increase in the New England medical CPI or if a carrier's reported contribution to surplus exceeds 1.9 per cent or if the aggregate medical loss ratio for all plans offered under this chapter is less than the applicable percentage set forth in subsection (e), then such carrier's rate, in addition to being subject to all other provisions of this chapter, shall be presumptively disapproved as excessive by the commissioner as set forth in this subsection; provided, however, that there is an exception for a carrier whose Risk Based Capital Ratio falls below 300 per cent for the most recent 4 consecutive quarters. For such carriers the reported contribution to surplus may not exceed 2.5 per cent.
If, however, a carrier's base rates are presumptively disapproved for failure to meet only the aggregate medical loss ratio threshold of the applicable percentage set forth in subsection (e), then the carrier's base rates shall not be presumptively disapproved as excessive by the commissioner if the carrier's aggregate medical loss ratio for all plans offered under this chapter is not less than 1 per cent greater than the carrier's equivalent medical loss ratio was 12–months prior to the carrier's present rate filing.
If the annual aggregate medical loss ratio for all plans offered under this chapter is less than the applicable percentage set forth in subsection (e), or less than the medical loss ratio that was not presumptively disapproved by the commissioner for being in excess of 1 per cent of the carrier's prior year base rate, over the applicable 12–month period, the carrier shall refund the excess premium to its eligible individuals and eligible small groups. A carrier shall communicate within 30 days to all individuals and small groups that were covered under plans during the relevant 12–month period that such individuals and small groups qualify for a refund to be issued under this paragraph, which may take the form of either a refund on the premium for the applicable 12–month period or, if the individual or groups are still covered by the carrier, a credit on the premium for the subsequent 12–month period. The total of all refunds issued shall equal the amount of a carrier's earned premium that exceeds that amount necessary to achieve a medical loss ratio of the applicable percentage set forth in subsection (e), calculated using data reported by the carrier as prescribed under regulations promulgated by the commissioner. The commissioner may authorize a waiver or adjustment of this requirement only if it is determined that issuing refunds would result in financial impairment for the carrier.
(e) The medical loss ratio set forth in subsection (d) shall be 90 per cent for the period through December 31, 2013. The medical loss ratio set forth in subsection (d) shall be 89 per cent for the period from January 1, 2014 through December 31, 2014. The medical loss ratio set forth in subsection (d) shall be 88 per cent for the period from January 1, 2015 forward.
[There is no subsection (f).]
(g) If a proposed base rate change has been presumptively disapproved:
(1) a carrier shall communicate to all employers and individuals covered under a small group product that the proposed increase has been presumptively disapproved and is subject to a hearing at the division of insurance;
(2) the commissioner shall conduct a public hearing and shall advertise that hearing in newspapers in the cities of Boston, Brockton, Fall River, Pittsfield, Springfield, Worcester, New Bedford and Lowell, or shall notify such newspapers of the hearing; and
(3) the attorney general may intervene in a public hearing or other proceeding under this subsection and may require additional information as the attorney general considers necessary to ensure compliance with this subsection.
The commissioner shall adopt regulations to specify the scheduling of the hearings required under this section.
(h) If the commissioner disapproves the rate submitted by a carrier the commissioner shall notify the carrier in writing no later than 45 days prior to the proposed effective date of the carrier's rate. The carrier may submit a request for hearing to the division of insurance within 10 days of such notice of disapproval. The division must schedule a hearing within 15 days of receipt. The commissioner shall issue a written decision within 30 days after the conclusion of the hearing. The carrier may not implement the disapproved rates, or changes at any time unless the commissioner reverses the disapproval after a hearing or unless a court vacates the commissioner's decision.