AN ACT RELATIVE TO NONGROUP HEALTH INSURANCE PRODUCTS.
Whereas , The deferred operation of this act would tend to defeat its purpose, which is to provide forthwith for affordable health insurance, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
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. Section 1 of chapter 176M of the General Laws, as appearing in the 1998 Official Edition, is hereby amended by striking out the definitions of "Adjusted composite rate" and "Average composite rate" and inserting in place thereof the following three definitions:-
"Adjusted composite rate", the composite rate for each guaranteed issue health plan issued by a carrier adjusted in a consistent manner to be prescribed by the commissioner by regulation to account for differences in premiums between carriers that are the result of (i) geographic differences in the cost of health care; (ii) the average age of eligible individuals enrolled in a carrier's guaranteed issue health plan; and (iii) differences in benefit levels.
"Alternative benefits plans", a set of benefits offered pursuant to subsection (d) of section 2, to be provided in each alternative guaranteed issue managed care plan, alternative guaranteed issue medical plan, and alternative guaranteed issue preferred provider plan.
"Average adjusted composite rate", the average of the adjusted composite rates filed by the carriers as calculated by the commissioner of insurance pursuant to the provisions of section 5.
SECTION 2. Said section 1 of said chapter 176M, as so appearing, is hereby further amended by inserting after the definition of "Composite rate" the following definition:-
"Creditable coverage", coverage of an individual under any of the following:
(a) a group health plan;
(b) a health plan, including, but not limited to, a health plan issued, renewed or delivered within or without the commonwealth to a natural person who is enrolled in a qualifying student health insurance program pursuant to section 18 of chapter 15A or a qualifying student health program of another state;
(c) Part A or Part B of Title XVIII of the Social Security Act;
(d) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928;
(e) 10 U.S.C. 55
(f) a medical care program of the Indian Health Service or of a tribal organization;
(g) a state health benefits risk pool;
(h) a health plan offered under 5 U.S.C.89;
(i) a public health plan as defined in federal regulations authorized by the Public Health Service Act, section 2701(c)(1)(I), as amended by P.L. 104-191; or
(j) a health benefit plan under the Peace Corps Act, 22 U.S.C. 2504(e).
SECTION 3. Said section 1 of said chapter 176M, as so appearing, is hereby further amended by striking out the definition of "Eligible individual" and inserting in place thereof the following definition:-
"Eligible individual", any natural person who is a resident of the commonwealth and who is not enrolled for coverage under Part A or Part B of Title XVIII of the federal Social Security Act, or a state plan under Title XIX of such act or any successor program.
SECTION 4. Said section 1 of said chapter 176M, as so appearing, is hereby further amended by inserting after the definition of "Financial impairment" the following definition:-
"Group health plan", an employee welfare benefit plan, as defined in section 3(1) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. section 1002, to the extent that the plan provides medical care, and including items and services paid for as medical care to employees or their dependents, as defined under the terms of the plan directly or through insurance, reimbursement or otherwise. For the purposes of this chapter, medical care means amounts paid for (i) the diagnosis, cure, mitigation, treatment or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body; (ii) amounts paid for transportation primarily for and essential to medical care referred to in clause (i); and (iii) amounts paid for insurance covering medical care referred to in clauses (i) and (ii).
Also, for the purposes of this chapter, (a) any plan, fund or program which would not be, but for section 2721(e) of the federal Public Health Service Act, an employee welfare benefit plan, and which is established or maintained by a partnership, to the extent that such plan, fund or program provides medical care, including items and services paid for as medical care, to present or former partners in the partnership, or to their dependents, as defined under the terms of the plan, fund or program, directly or through insurance, reimbursement or otherwise, shall be treated, subject to clause (b), as an employee welfare benefit plan which is a group health plan; (b) in the case of a group health plan, the term "employer" also includes the partnership in relation to any partner; and (c) in the case of a group health plan, the term "participant" also includes:
(1) in connection with a group health plan maintained by a partnership, an individual who is a partner in relation to the partnership, or (2) in connection with a group health plan maintained by a self-employed individual, under which one or more employees are participants, the self-employed individual; if such individual is, or may become, eligible to receive a benefit under the plan or such individual's beneficiaries may be eligible to receive any such benefit.
SECTION 5. Said section 1 of said chapter 176M, as so appearing, is hereby further amended by striking out the definitions of "Guaranteed issue managed care plan", "Guaranteed issue medical plan" and "Guaranteed issue preferred provider plan" and inserting in place thereof the following three definitions:-
"Guaranteed issue managed care plan", a nongroup health plan, including a conversion nongroup health plan, sold, issued, delivered, made effective or renewed by a carrier, within or without the commonwealth pursuant to chapter 176G or the laws of any other jurisdiction, to any eligible individual for said individual or his eligible dependents and for which the carrier may not decline to offer to or deny enrollment of such eligible individual or his eligible dependents and which is to be renewed or continued in force at the option of the individual or his eligible dependents, subject to the exclusions set forth in this chapter, that provides the benefits specified in section 2. A carrier may establish no more than one standard guaranteed issue managed care plan and no more than one alternative guaranteed issue managed care plan.
"Guaranteed issue medical plan", a nongroup health plan, including a conversion nongroup health plan, sold, issued, delivered, made effective or renewed by a carrier, within or without the commonwealth pursuant to either chapter 175, 176A or 176B or the laws of any other jurisdiction, to any eligible individual for said individual or his eligible dependents and for which the carrier may not decline to offer to or deny enrollment of such eligible individual or his eligible dependents and which is to be renewed or continued in force at the option of the individual or his eligible dependents, subject to the exclusions set forth in this chapter, that provides the benefits specified in section 2. A carrier may establish no more than one standard guaranteed issue medical plan and no more than one alternative guaranteed issue medical plan.
"Guaranteed issue preferred provider plan", a nongroup health plan, including a conversion nongroup health plan, sold, issued, delivered, made effective or renewed by a carrier, within or without the commonwealth pursuant to chapter 176I or the laws of any other jurisdiction, to any eligible individual for said individual or his eligible dependents and for which the carrier may not decline to offer to or deny enrollment of such eligible individual and his eligible dependents and which is to be renewed or continued in force at the option of the individual or his eligible dependents, subject to the exclusions set forth in this chapter, that provides the benefits specified in section 2. A carrier may establish no more than one standard guaranteed issue preferred provider plan and no more than one alternative guaranteed issue preferred provider plan.
SECTION 6. The definition of "Health plan" in said section 1 of said chapter 176M, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The words "health plan" shall not include accident only, credit-only, limited scope dental benefits if offered separately, hospital indemnity insurance policies if offered as independent, noncoordinated benefits which for the purposes of this chapter shall mean policies issued pursuant to chapter 175 which provide a benefit not to exceed $500 per day, as adjusted on an annual basis by the amount of increase in the average weekly wages in the commonwealth as defined in section 1 chapter 152, to be paid to an insured or a dependent, including the spouse of an insured, on the basis of a hospitalization of the insured or a dependent, disability income insurance, coverage issued as a supplement to liability insurance, specified disease insurance that is purchased as a supplement and not as a substitute for a health plan and meets any requirements the commissioner by regulation may set, insurance arising out of a workers' compensation law or similar law, automobile medical payment insurance, insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in a liability insurance policy or equivalent self insurance, long-term care if offered separately, coverage supplemental to the coverage provided under 10 U.S.C. 55 if offered as a separate insurance policy, or any policy subject to the provisions of chapter 176K.
SECTION 7. Said section 1 of said chapter 176M, as so appearing, is hereby further amended by striking out the definition of "Modified community rate" and inserting in place thereof the following definition:-
"Modified community rate", a rate resulting from a rating methodology in which the premium for all persons within the same rate basis type who are covered under a guaranteed issue health plan is the same without regard to health status; provided, however, that premiums may vary due to age, geographic area, or benefit level for each rate basis type as permitted by this chapter.
SECTION 8. Said section 1 of said chapter 176M, as so appearing, is hereby further amended by striking out the definition of "Pre-existing condition provision" and inserting in place thereof the following definition:-
"Pre-existing condition exclusion", with respect to coverage, a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for such coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before such date. Genetic information shall not be treated as a condition in the absence of a diagnosis of the condition related to such information.
SECTION 9. Said section 1 of said chapter 176M, as so appearing, is hereby further amended by striking out the definition of "Standard benefits plans" and inserting in place thereof the following definition:-
"Standard benefits plans", a set of benefits to be determined pursuant to subsection (c) of section 2, which sets a minimum level of benefits to be provided in each standard guaranteed issue managed care plan, standard guaranteed issue medical plan, and standard guaranteed issue preferred provider plan on an actuarially equivalent basis.
SECTION 10. Section 2 of said chapter 176M, as so appearing, is hereby amended by adding the following subsection:-
(d) A carrier that participates in the nongroup health insurance market shall make available to eligible individuals a standard guaranteed issue health plan established pursuant to subsection (c) and may additionally make available to eligible individuals one alternative guaranteed issue health plan with benefits and cost-sharing requirements, including deductibles, that differ from the said standard guaranteed issue health plan. A carrier shall not make available an alternative plan unless said plan has been filed with and approved by the commissioner of insurance. The commissioner shall approve of an alternative plan if said plan: (1) includes at least the following medically necessary services: reasonably comprehensive physician services; inpatient and outpatient hospital services; emergency health care services; and a full range of effective, clinical preventive care administered on an outpatient basis; and (2) contains a disclosure form, which shall be provided to any potential insured, that clearly and concisely states the limitations on the scope of health services and any other benefits to be provided, including an explanation of any deductible or copayment feature; and (3) offers a ten day free look period in compliance with chapter 176D and any regulations promulgated thereunder. A carrier shall adhere to all other provisions of this chapter when offering any guaranteed issue health plan. The commissioner shall promulgate regulations relative to the guaranteed issue health plans permissible pursuant to this section.
SECTION 11. Section 3 of said chapter 176M, as so appearing, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:-
(a) No carrier, with respect to an eligible individual or eligible dependent desiring to enroll in any guaranteed issue health plan, may decline to offer such coverage to, or deny enrollment of, any such individual or dependent except as otherwise allowed in this section, nor impose any pre-existing condition exclusion with respect to any guaranteed issue health plan except as otherwise allowed in this section, nor impose any waiting period in any guaranteed issue health plan except as otherwise allowed in this section.
SECTION 12. The introductory paragraph of subsection (b) of said section 3 of said chapter 176M, as so appearing, is hereby amended by striking out the last sentence.
SECTION 13. Said subsection (b) of said section 3 of said chapter 176M, as so appearing, is hereby amended by striking out paragraphs (1) and (2) and inserting in place thereof the following two paragraphs:-
(1) A carrier shall enroll any person who meets the requirements of an eligible individual as defined in section 2741 of the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. section 300gg-41(b), into a guaranteed issue health plan if such person requests guaranteed issue coverage within 63 days of termination of any prior creditable coverage. Coverage shall become effective within 30 days of the date of application, subject to reasonable verification of eligibility.
(2) A carrier shall enroll any eligible individual who does not meet the requirements of an eligible individual as defined in section 2741 of the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. section 300gg-41(b), into a guaranteed issue health plan; provided, however, that a carrier may impose a pre-existing condition exclusion for no more than six months or a waiting period, which shall be applied uniformly without regard to any health status-related factors, for no more than six months following the individual's effective date of coverage. If a policy includes a waiting period, emergency services shall be covered to the same extent that emergency services are covered during a waiting period under chapter 176J. In determining whether a pre-existing condition exclusion or a waiting period applies, all health benefit plans shall credit the time such person was covered under prior creditable coverage provided by a carrier if the previous coverage was continuous to a date not more than 63 days prior to the date of the request for the new coverage and if the previous coverage was reasonably actuarially equivalent to the new coverage. Coverage shall become effective within 30 days of the date of application. The commissioner shall promulgate regulations relative to pre-existing condition exclusions and waiting periods permissible pursuant to this section.
SECTION 14. Said section 3 of said chapter 176M, as so appearing, is hereby further amended by striking out subsection (d) and inserting in place thereof the following subsection:-
(d) As of the first day of the first open enrollment period specified in subsection (b), no carrier shall issue a health plan to an eligible individual other than a guaranteed issue health plan. A carrier shall renew a closed plan, but may discontinue a closed plan when the number of subscribers in said plan is not more than 25 per cent of the plan's 1999 enrollment figure. A closed plan's 1999 enrollment figure shall be determined by the commissioner of insurance based on enrollment figures submitted to the division of insurance as of December 31, 1999. The commissioner of insurance shall approve or disapprove of a carrier's request to discontinue a closed plan based on the most recent figure submitted to the division of insurance. A carrier shall file its rates for a closed plan in accordance with subsection (a) of section 5. A closed plan shall not otherwise be subject to the requirements of said section 5. A closed plan shall not be subject to the requirements of section 4. No carrier shall add any new rating factor to the rating methodology which was applicable to its closed plan as of August 15, 1996. Nothing in this section shall prohibit a subscriber from enrolling in a guaranteed issue plan if the subscriber meets the requirements of this chapter.
SECTION 15. Subsection (h) of said section 3 of said chapter 176M, as so appearing, is hereby amended by striking out the first two sentences and inserting in place thereof the following sentence:-
A carrier that decides to terminate coverage for all eligible individuals enrolled in a specific guaranteed issue plan shall notify the commissioner of insurance no later than 180 days prior to terminating coverage under that guaranteed issue health benefit plan.
SECTION 16. Subsection (a) of section 4 of said chapter 176M, as amended by section 3 of chapter 61 of the acts of 1999, is hereby further amended by striking out paragraphs (1) to (6), inclusive, and inserting in place thereof the following six paragraphs:-
(1) Each carrier shall establish a base premium rate for each rate basis type within each guaranteed issue health plan it offers. The premium charged to any eligible purchaser shall be limited to the base premium rate multiplied by the factors specified in paragraphs (2), (3) and (4).
(2) A carrier may establish a premium rate adjustment based upon the age of an insured individual. Such an adjustment shall be known as the age rate adjustment. A carrier may establish an age rate adjustment, the value of which may range from 0.67 to 1.33. If a carrier chooses to establish age rate adjustments, the premium charged to every individual enrolled in a guaranteed issue health plan shall be subject to the applicable age rate adjustment.
(3) The commissioner shall annually establish not fewer than five distinct regions of the state for the purpose of area rate adjustments. A carrier may establish an area rate adjustment for each different region, the value of which shall range from 0.8 to 1.2. If a carrier chooses to establish area rate adjustments, the premium charged for a guaranteed issue health plan to each eligible individual who resides within each geographic area shall be subject to the applicable area rate adjustment.
(4) A carrier may establish a benefit level rate adjustment for each type of approved alternative guaranteed issue health plan. The benefit level rate adjustment shall be expressed as a number and shall only represent the actuarial value of the benefit level of the alternative guaranteed issue health plan authorized by subsection (d) of section 2 as compared to the actuarial value of the benefit level of the standard guaranteed issue health plan authorized by subsection (c) of section 2, assuming no difference in expected cost and utilization for those in the standard guaranteed issue health plans as compared to those in the alternative guaranteed issue health plans, as certified in an actuarial opinion and memorandum signed by a member of the American Academy of Actuaries, which includes sufficient documentation to support the benefit level rate adjustment. The benefit level rate adjustment may not reflect the nature of the actual populations covered by the guaranteed issue health plans. The premium charged to every individual enrolled in an alternative guaranteed issue health plan shall be subject to the applicable benefit level rate adjustment. There shall be no benefit level rate adjustment to a standard guaranteed issue health plan.
(5) The premium rate charged by a carrier to each individual on the date of the individual's guaranteed issue health policy is issued or renewed shall be the base premium rate charged for that rate basis type, multiplied by the age rate adjustment, multiplied by the area rate adjustment, multiplied by the benefit level rate adjustment as may be applicable pursuant to this section.
(6) Nothing shall preclude a carrier from directly subsidizing the premium rate established pursuant to this section charged to eligible individuals who meet eligibility criteria established by the carrier, including individual or household income and asset tests, to assess economic need.
SECTION 17. Paragraph (2) of subsection (a) of section 5 of said chapter 176M, as appearing in the 1998 Official Edition, is hereby amended by striking out clause (ii) and inserting in place thereof the following clause:-
(ii) the age, geographic and benefit level adjustments to be charged within each rate basis type for each guaranteed issue health plan and for each closed plan.
SECTION 18. Said chapter 176M is hereby further amended by striking out section 6, as so appearing, and inserting in place thereof the following section:-
Section 6. (a) There is hereby established a nonprofit entity to be known as the Massachusetts Nongroup Health Reinsurance Plan. Any carrier issuing or renewing a guaranteed issue health plan shall be a member of the plan.
(b) The plan shall be prepared and administered by a five member governing committee to be appointed by the governor. Such appointees shall represent carriers selling nongroup health plans in the commonwealth, of which at least one appointee shall represent a foreign nongroup carrier. The initial appointment of two such appointees shall be for a term of three years. The initial appointment of two such appointees shall be for a term of two years. The initial appointment of the remaining appointee shall be for a term of one year. All appointments thereafter shall be for a term of three years. The governing committee shall be responsible for the hiring of any employees or contractors of the plan.
(c) On or before January 1, 2001, the governing committee shall submit to the commissioner a plan of operation. The commissioner shall, after notice and hearing, approve, disapprove or modify the plan of operation. Subsequent amendments to the plan shall be deemed approved by the commissioner if not expressly disapproved in writing by the commissioner within 30 days from the date of the filing. The commissioner shall establish the plan of operation by March 1, 2001, if the governing committee does not propose such a plan.
(d) Meetings of the governing committee of the plan shall be conducted in accordance with the provisions of section 11A of chapter 30A.
(e) The plan shall not reimburse a carrier with respect to the claims of a reinsured individual or dependent in any calendar year until the carrier has paid an amount determined by the governing board and approved by the commissioner for benefits otherwise covered by the plan during the calendar year.
(f) Premium rates charged for coverage reinsured by the plan shall be established by the governing committee and shall be subject to the approval of the commissioner.
(g) Any member of the reinsurance plan may only reinsure the coverage of an eligible individual, or any eligible dependent of such an individual, who enrolls in a guaranteed issue health plan on or after November 1, 2001. The reinsurance plan shall reinsure the level of coverage provided by the guaranteed issue health plan.
(h) Following the close of the fiscal year established in the plan of operation, the governing committee shall determine the premiums charged for reinsurance coverage, the reinsurance plan expenses for administration and the incurred losses, if any, for the fiscal year, taking into account investment income and other appropriate gains and losses. Any net loss for the year shall be recouped by assessment of the members which shall be apportioned in proportion to each such members' respective shares of the total premiums earned in the commonwealth from health plans, but in no event shall such assessments exceed 1 per cent of the premiums earned from such health plans.
(i) If the assessment level is inadequate, the governing committee may adjust reinsurance thresholds, retention levels or consider other forms of reinsurance. The governing committee shall report annually to the commissioner and the joint committee on insurance on its experience, the effect of the reinsurance plan on nongroup rates and shall make recommendations, if necessary, relative to sustaining the viability of the reinsurance plan. The committee may enter into negotiations with plan members to resolve any deficit through reductions in future payment levels for reinsurance plans. Any such recommendations shall take into account the findings of an actuarial study to be undertaken after the first three years of the plan's operation to evaluate and measure the relative risks assumed by differing types of carriers. The study shall be conducted by three actuaries appointed by the commissioner, one of whom shall represent risk assuming carriers, one of whom shall represent reinsuring carriers and one of whom shall represent the commissioner.
SECTION 19. Said chapter 176M is hereby further amended by adding the following section:-
Section 7. The commissioner may promulgate rules and regulations as are necessary or proper to carry out the provisions of this chapter.
SECTION 20. Chapter 297 of the acts of 1996 is hereby amended by striking out section 31, as amended by section 35 of chapter 467 of the acts of 1996, and inserting in place thereof the following section:-
Section 31. There is hereby established within the office of the governor a board to be known as the nongroup health insurance advisory board, consisting of: the director of consumer affairs or his designee; two members to be appointed by the attorney general, both of whom shall represent consumers, but shall not be members of the same consumer organization; and five members to be appointed by the governor, one of whom shall represent a nonprofit hospital service corporation, one of whom shall represent a commercial insurance company, one of whom shall represent health maintenance organizations not affiliated with a hospital service corporation, one of whom shall represent small business organizations, and one of whom shall represent a large group carrier. The appointments by the governor and the attorney general shall be made on or before January 1, 2001. The initial appointment of three of the board gubernatorial appointees shall be for a term of three years. The initial appointment of three of the members, including the two members appointed by the attorney general, shall be for a term of two years. The initial appointment of the remaining two board gubernatorial appointees shall be for a term of one year. All appointments thereafter shall be for a term of three years. The board shall meet from time to time and shall advise the division on issues relating to nongroup health insurance.
SECTION 21. There is hereby established a special committee of the general court consisting of the chairs of the joint committee on insurance, the chairs of the joint committee on health care, the chairs of the standing committees of post audit and oversight, and one member to be appointed by the minority leader of the senate and one member to be appointed by the minority leader of the house of representatives. The special committee shall collect such data and solicit such testimony as it deems necessary to review, evaluate and make recommendations relative to the implementation of nongroup health insurance reforms established by this act.
SECTION 22. Notwithstanding the provisions of any general or special law to the contrary, the commissioner of insurance shall promulgate regulations requiring that any health plan issued pursuant to the provisions of chapter 176M of the General Laws shall offer to its subscribers beginning on or after November 1, 2001 a minimum of four rate basis type categories for which separate rates are charged and requiring that all filings due to the division of insurance by May 1, 2001 include these provisions; provided, however that at least one of such categories shall be classified as containing a single parent with dependents.
SECTION 23. Notwithstanding the provisions of any general or special law to the contrary, the commissioner of insurance shall, no later than 14 days after the effective date of this act, issue to all nongroup health carriers a bulletin explaining any changes to the law pursuant to section 14 of this act. Any carrier with subscribers in a nongroup closed plan under section 3 of chapter 176M of the General Laws shall notify its closed plan subscribers of such changes in the law no later than 14 days after the commissioner has issued the bulletin.
SECTION 24. Sections 1, 5, 7, 12, 15, 16 and 17 shall take effect on April 30, 2001.
SECTION 25. Sections 3, 6, 10, 11 and 13 shall take effect on November 1, 2001.