Bill Text: MI HB6034 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: Insurance; health care corporations; individual health coverage; regulate. Amends secs. 401e, 402b, 608, 609, 610, 612 & 613 of 1980 PA 350 (MCL 550.1401e et seq.) & adds secs. 220, 409b & 419c. TIE BAR WITH: HB 6035'10, HB 6036'10, HB 6037'10, SB 1242'10, SB 1243'10, SB 1244'10, SB 1245'10

Spectrum: Slight Partisan Bill (Democrat 3-1)

Status: (Introduced - Dead) 2010-04-14 - Printed Bill Filed 04/14/2010 [HB6034 Detail]

Download: Michigan-2009-HB6034-Introduced.html

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HOUSE BILL No. 6034

 

April 13, 2010, Introduced by Reps. Johnson, Corriveau, Ball and Roy Schmidt and referred to the Committee on Health Policy.

 

     A bill to amend 1980 PA 350, entitled

 

"The nonprofit health care corporation reform act,"

 

by amending sections 401e, 402b, 608, 609, 610, 612, and 613 (MCL

 

550.1401e, 550.1402b, 550.1608, 550.1609, 550.1610, 550.1612, and

 

550.1613), section 401e as added by 1996 PA 516, section 402b as

 

amended by 1999 PA 7, section 608 as amended by 1991 PA 73, and

 

section 609 as amended by 2003 PA 59, and by adding sections 220,

 

409b, and 419c.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 220. (1) Except as otherwise provided, a health care

 

corporation is subject to chapters 37A and 37B of the insurance

 

code of 1956, 1956 PA 218, MCL 500.3751 to 500.3788.

 

     (2) A nongroup health care corporation certificate introduced

 

on or after April 1, 2009 is not subject to section 401(3)(a), (b),

 

and (c) or sections 608 to 614.

 

     (3) An individual enrolled in a health care corporation

 

nongroup or group conversion certificate "A" through "G" or

 

medicare supplemental certificate on March 31, 2010 may remain

 

enrolled in that certificate. Certificates described in this

 

subsection are not subject to section 3759, 3761(3) or (4), or 3762

 

of the insurance code of 1956, 1956 PA 218, MCL 500.3759, 500.3761,

 

and 500.3762. The rates for certificates described in this

 

subsection shall be determined under a system of community rating.

 

     Sec. 401e. (1) Except as provided in this section, a health

 

care corporation that has issued a nongroup certificate shall renew

 

or continue in force the certificate at the option of the

 

individual.

 

     (1) (2) Except as provided in this section, a health care

 

corporation that has issued a group certificate shall renew or

 

continue in force the certificate at the option of the sponsor of

 

the plan.

 

     (2) (3) Guaranteed renewal is not required in cases of fraud,

 

intentional misrepresentation of material fact, lack of payment, if

 

the health care corporation no longer offers that particular type

 

of coverage in the market, or if the individual or group moves

 

outside the service area.

 

     Sec. 402b. (1) For an individual covered under a nongroup

 

certificate or under a certificate not covered under subsection

 

(2), a health care corporation may exclude or limit coverage for a

 

condition only if the exclusion or limitation relates to a

 

condition for which medical advice, diagnosis, care, or treatment

 

was recommended or received within 6 months before enrollment and

 

the exclusion or limitation does not extend for more than 6 months

 

after the effective date of the certificate.

 

     (2) A health care corporation shall not exclude or limit

 

coverage for a preexisting condition for an individual covered

 

under a group certificate.

 

     (3) Notwithstanding subsection (1), a health care corporation

 

shall not issue a certificate to a person eligible for nongroup

 

coverage or eligible for a certificate not covered under subsection

 

(2) that excludes or limits coverage for a preexisting condition or

 

provides a waiting period if all of the following apply:

 

     (a) The person's most recent health coverage prior to applying

 

for coverage with the health care corporation was under a group

 

health plan.

 

     (b) The person was continuously covered prior to the

 

application for coverage with the health care corporation under 1

 

or more health plans for an aggregate of at least 18 months with no

 

break in coverage that exceeded 62 days.

 

     (c) The person is no longer eligible for group coverage and is

 

not eligible for medicare or medicaid.

 

     (d) The person did not lose eligibility for coverage for

 

failure to pay any required contribution or for an act to defraud a

 

health care corporation, a health insurer, or a health maintenance

 

organization.

 

     (e) If the person was eligible for continuation of health

 

coverage from that group health plan pursuant to the consolidated

 

omnibus budget reconciliation act of 1985, Public Law 99-272, 100

 

Stat. 82, he or she has elected and exhausted that coverage.

 

     (4) As used in this section, "group" means a group of 2 or

 

more subscribers.

 

     Sec. 409b. (1) Any certificate delivered, issued for delivery,

 

or renewed in this state that provides for hospital or medical care

 

coverage for dependent children shall permit continuation of that

 

coverage for a child until that child attains age 26 even if the

 

child is no longer considered a dependent if the child meets all of

 

the following:

 

     (a) Is unmarried.

 

     (b) Has no dependents of his or her own.

 

     (c) Is a resident of this state or resides somewhere else

 

temporarily.

 

     (d) Is not eligible for a group health benefits or coverage

 

plan from his or her employer.

 

     (e) Is not provided coverage under any other group or

 

individual health benefits or coverage plan.

 

     (f) Has not accepted a financial incentive from his or her

 

employer or other source to decline any other group or individual

 

health benefits or coverage plan.

 

     (g) Was continuously covered prior to the application for

 

continuation coverage under 1 or more individual or group health

 

benefits or coverage plans with no break in coverage that exceeded

 

62 days.

 

     (2) If a certificate provides continuation coverage under

 

subsection (1) and the child for which the continuation coverage is

 

provided attains age 27 during the certificate year, coverage for

 

that child shall continue through the end of the certificate year.

 

     (3) A covered person's certificate may require payment of a

 

premium by the covered person or child, subject to the

 

commissioner's approval, for any period of continuation coverage

 

elected under subsection (1). The premium shall not exceed 102% of

 

the applicable portion of the premium previously paid for that

 

dependent's coverage under the certificate before the termination

 

of coverage at the specific age provided for in the certificate.

 

The applicable portion of the premium previously paid for that

 

dependent's coverage shall be determined pursuant to rules adopted

 

by the commissioner under the administrative procedures act, based

 

upon the difference between the certificate's rating tiers for

 

adult and dependent coverage or family coverage, as appropriate,

 

and single coverage, or based upon any other formula or dependent

 

rating tier that the commissioner considers appropriate and that

 

provides a substantially similar result.

 

     (4) This section does not prohibit an employer from requiring

 

an employee to pay all or part of the cost of coverage provided for

 

that employee's child under this section.

 

     Sec. 419c. (1) If the MI-Health board determines that section

 

401b, 401f, 401g, 414a, 415, 416, 416a, 416b, 416c, 416d, or 417

 

should be waived as provided in section 3783 of the insurance code

 

of 1956, 1956 PA 218, MCL 500.3783, then the sections so identified

 

by the MI-Health board are not required to be provided or offered

 

in a standard guaranteed issue health plan or an enhanced

 

guaranteed issue health plan.

 

     (2) As used in this section:

 

     (a) "MI-Health board" means the MI-Health board created in

 

section 3782 of the insurance code of 1956, 1956 PA 218, MCL

 

500.3782.

 

     (b) "Standard guaranteed issue health plan" and "enhanced

 

guaranteed issue health plan" mean those plans as regulated under

 

chapter 37B of the insurance code of 1956, 1956 PA 218, MCL

 

500.3780 to 500.3788.

 

     Sec. 608. (1) The rates charged to nongroup subscribers for

 

each nongroup or group conversion certificate "A" through "G" or

 

medicare supplement certificate shall be filed in accordance with

 

section 610 and shall be subject to the prior approval of the

 

commissioner. Annually, the The commissioner shall approve,

 

disapprove, or modify and approve the proposed or existing rates

 

for each certificate subject to the standard that the rates must be

 

determined to be equitable, adequate, and not excessive, as defined

 

in section 609. The burden of proof that rates to be charged meet

 

these standards shall be upon the health care corporation proposing

 

to use the rates.

 

     (2) The methodology and definitions of each rating system,

 

formula, component, and factor used to calculate rates for group

 

subscribers for each certificate, including the methodology and

 

definitions used to calculate administrative costs for

 

administrative services only and cost-plus arrangements, shall be

 

filed in accordance with section 610 and shall be are subject to

 

the prior approval of the commissioner. The definition of a group,

 

including any clustering principles applied to nongroup subscribers

 

or small group subscribers for the purpose of group formation,

 

shall be is subject to the prior approval of the commissioner.

 

However, if a Michigan caring program is created under section 436,

 

that program shall be defined as a group program for the purpose of

 

establishing rates. The commissioner shall approve, disapprove, or

 

modify and approve the methodology and definitions of each rating

 

system, formula, component, and factor for each certificate subject

 

to the standard that the resulting rates for group subscribers must

 

be determined to be equitable, adequate, and not excessive, as

 

defined in section 609. In addition, the commissioner may from time

 

to time review the records of the corporation to determine proper

 

application of a rating system, formula, component, or factor with

 

respect to any group. The corporation shall refile for approval

 

under this subsection, every 3 years, the methodology and

 

definitions of each rating system, formula, component, and factor

 

used to calculate rates for group subscribers, including the

 

methodology and definitions used to calculate administrative costs

 

for administrative services only and cost-plus arrangements. The

 

burden of proof that the resulting rates to be charged meet these

 

standards shall be upon the health care corporation proposing to

 

use the rating system, formula, component, or factor.

 

     (3) A proposed rate shall not take effect until a filing has

 

been made with the commissioner and approved under section 607 or

 

this section, as applicable, except as provided in subsections (4)

 

and (5).

 

     (4) Upon request by a health care corporation, the

 

commissioner may allow rate adjustments to become effective prior

 

to approval, for federal or state mandated benefit changes.

 

However, a filing for these adjustments shall be submitted before

 

the effective date of the mandated benefit changes. If the

 

commissioner disapproves or modifies and approves the rates, an

 

adjustment shall be made retroactive to the effective date of the

 

mandated benefit changes or additions.

 

     (5) Implementation prior to approval may be allowed if the

 

health care corporation is participating with 1 or more health care

 

corporations to underwrite a group whose employees are located in

 

several states. Upon request from the commissioner, the corporation

 

shall file with the commissioner, and the commissioner shall

 

examine, the financial arrangement, formulae, and factors. If any

 

are determined to be unacceptable, the commissioner shall take

 

appropriate action.

 

     Sec. 609. (1) A rate is not excessive if the rate is not

 

unreasonably high relative to the following elements, individually

 

or collectively; provision for anticipated benefit costs; provision

 

for administrative expense; provision for cost transfers, if any;

 

provision for a contribution to or from surplus that is consistent

 

with the attainment or maintenance of adequate and unimpaired

 

surplus as provided in section 204a; and provision for adjustments

 

due to prior experience of groups, as defined in the group rating

 

system. A determination as to whether a rate is excessive relative

 

to these elements, individually or collectively, shall be based on

 

the following: reasonable evaluations of recent claim experience;

 

projected trends in claim costs; the allocation of administrative

 

expense budgets; and the present and anticipated unimpaired surplus

 

of the health care corporation. To the extent that any of these

 

elements are considered excessive, the provision in the rates for

 

these elements shall be modified accordingly.

 

     (2) The administrative expense budget must be reasonable, as

 

determined by the commissioner after examination of material and

 

substantial administrative and acquisition expense items.

 

     (3) A rate is equitable if the rate can be compared to any

 

other rate offered by the health care corporation to its

 

subscribers, and the observed rate differences can be supported by

 

differences in anticipated benefit costs, administrative expense

 

cost, differences in risk, or any identified cost transfer

 

provisions.

 

     (4) A rate is adequate if the rate is not unreasonably low

 

relative to the elements prescribed in subsection (1), individually

 

or collectively, based on reasonable evaluations of recent claim

 

experience, projected trends in claim costs, the allocation of

 

administrative expense budgets, and the present and anticipated

 

unimpaired surplus of the health care corporation.

 

     (5) For a nongroup certificate "A" through "G", a rate shall

 

be presumed adequate, equitable, and not excessive if the health

 

care corporation actuarially certifies that the rate does not

 

exceed the projected trend in claim costs. For a group conversion

 

certificate "A" though "G", a rate shall be presumed adequate,

 

equitable, and not excessive if the health care corporation

 

actuarially certifies that the rate change does not exceed the

 

projected trend in claim costs. For a medicare supplement

 

certificate, a rate shall be presumed adequate, equitable, and not

 

excessive if the health care corporation actuarially certifies that

 

the rate does not exceed the projected trend in claim costs. As

 

used in this subsection, projected trend in claim costs shall be

 

determined by dividing the per member per month cost for the 12-

 

month period ending 6 months prior to the filing by the per member

 

per month cost for the 12-month period ending 18 months prior to

 

the filing. If surplus exceeds the maximum surplus permitted under

 

section 204a(5), a contribution from surplus may be considered in

 

determining whether rates are adequate, equitable, and not

 

excessive, and promote the health care corporation's charitable and

 

social mission obligations.

 

     (6) (5) Except for identified cost transfers, each line of

 

business, over time, shall be self-sustaining. However, there may

 

be cost transfers for the benefit of senior citizens who are

 

residents of this state and group conversion subscribers. Cost

 

transfers for the benefit of senior citizens, in the aggregate,

 

annually shall not exceed 1% of the earned subscription income of

 

the health care corporation as reported in the most recent annual

 

statement of the corporation. Group conversion subscribers are

 

those who have maintained coverage with the health care corporation

 

on an individual basis after leaving a subscriber group. As used in

 

this subsection, earned subscription income is the sum of the group

 

and nongroup premium and the claim and administrative expense

 

reimbursements for administrative services contracts, less the

 

income from the federal employee health benefit program, medicare

 

supplement policies, medicare advantage plans, and MiChild

 

policies. Cost transfers for the benefit of resident senior

 

citizens shall be expended as determined by the commissioner so

 

that not less than 66-2/3% of the cost transfer shall be used to

 

provide a subsidy for seniors with a household income of not more

 

than 300% of the federal poverty level as defined in the poverty

 

guidelines published periodically in the federal register by the

 

United States department of health and human services under its

 

authority to revise the poverty line under 42 USC 9902.

 

     Sec. 610. (1) Except as provided under section 608(4) or (5),

 

a filing of information and materials relative to a proposed rate

 

shall be made not less than 120 60 days before the proposed

 

effective date of the proposed rate. A filing shall not be

 

considered to have been received until there has been substantial

 

and material compliance with the requirements prescribed in

 

subsections (6) and (8).

 

     (2) Within 30 15 days after a filing is made of information

 

and materials relative to a proposed rate, the commissioner shall

 

do either of the following:

 

     (a) Give written notice to the corporation, and to each person

 

described under section 612(1), that the filing is in material and

 

substantial compliance with subsections (6) and (8) this section

 

and that the filing is complete. The commissioner shall then

 

proceed to approve, approve with modifications, or disapprove the

 

rate filing 60 30 days after receipt of the filing, based upon

 

whether the filing meets the requirements of this act. However, if

 

a hearing has been requested under section 613, the commissioner

 

shall not approve, approve with modifications, or disapprove a

 

filing until the hearing has been completed and an order issued.

 

     (b) Give written notice to the corporation that the

 

corporation has not yet complied with subsections (6) and (8) this

 

section. The notice shall state specifically in what respects the

 

filing fails to meet the requirements of subsections (6) and (8)

 

this section.

 

     (3) Within 10 8 days after the filing of notice pursuant to

 

subsection (2)(b), the corporation shall submit to the commissioner

 

such additional information and materials, as requested by the

 

commissioner. Within 10 8 days after receipt of the additional

 

information and materials, the commissioner shall determine whether

 

the filing is in material and substantial compliance with

 

subsections (6) and (8) this section. If the commissioner

 

determines that the filing does not yet materially and

 

substantially meet the requirements of subsections (6) and (8) this

 

section, the commissioner shall give notice to the corporation

 

pursuant to subsection (2)(b) or use visitation of the

 

corporation's facilities and examination of the corporation's

 

records to obtain the necessary information described in the notice

 

issued pursuant to subsection (2)(b). The commissioner shall use

 

either procedure previously mentioned, or a combination of both

 

procedures, in order to obtain the necessary information as

 

expeditiously as possible. The per diem, traveling, reproduction,

 

and other necessary expenses in connection with visitation and

 

examination shall be paid by the corporation, and shall be credited

 

to the general fund of the state.

 

     (4) If a filing is approved, approved with modifications, or

 

disapproved under subsection (2)(a), the commissioner shall issue a

 

written order of the approval, approval with modifications, or

 

disapproval. If the filing was approved with modifications or

 

disapproved, the order shall state specifically in what respects

 

the filing fails to meet the requirements of this act and, if

 

applicable, what modifications are required for approval under this

 

act. If the filing was approved with modifications, the order shall

 

state that the filing shall take effect after the modifications are

 

made and approved by the commissioner. If the filing was

 

disapproved, the order shall state that the filing shall not take

 

effect.

 

     (5) The inability to approve 1 or more rating classes of

 

business within a line of business because of a requirement to

 

submit further data or because a request for a hearing under

 

section 613 has been granted shall not delay the approval of rates

 

by the commissioner which could otherwise be approved or the

 

implementation of rates already approved, unless the approval or

 

implementation would affect the consideration of the unapproved

 

classes of business.

 

     (6) Information furnished under subsection (1) in support of a

 

nongroup or group conversion certificate "A" through "G" or

 

medicare supplement certificate rate filing shall include the

 

following:

 

     (a) Recent claim experience on the benefits or comparable

 

benefits for which the rate filing applies.

 

     (b) Actual prior trend experience.

 

     (c) Actual prior administrative expenses.

 

     (d) Projected trend factors.

 

     (e) Projected administrative expenses.

 

     (f) Contributions for risk and contingency reserve factors.

 

     (g) Actual health care corporation contingency reserve

 

position.

 

     (h) Projected health care corporation contingency reserve

 

position.

 

     (i) Other information which that the corporation considers

 

pertinent to evaluating the risks to be rated, or relevant to the

 

determination to be made under this section.

 

     (j) Other information which that the commissioner considers

 

pertinent to evaluating the risks to be rated, or relevant to the

 

determination to be made under this section.

 

     (7) A copy of the filing, and all supporting information,

 

except for the information which may not be disclosed under section

 

604, shall be open to public inspection as of the date filed with

 

the commissioner.

 

     (8) The commissioner shall make available forms and

 

instructions for filing for proposed rates under sections section

 

608(1) and 608(2) (2). The forms with instructions shall be

 

available not less than 180 90 days before the proposed effective

 

date of the filing.

 

     Sec. 612. (1) Upon receipt of a rate filing under section 610,

 

the commissioner immediately shall notify each person who has

 

requested in writing notice of those filings within the previous 2

 

years, specifying the nature and extent of the proposed rate

 

revision and identifying the location, time, and place where the

 

copy of the rate filing described in section 610(7) shall be open

 

to public inspection and copying. The notice shall also state that

 

if the person has standing, the person shall have, upon making a

 

written request for a hearing within 60 30 days after receiving

 

notice of the rate filing, an opportunity for an evidentiary

 

hearing under section 613 to determine whether the proposed rates

 

meet the requirements of this act. The request shall identify the

 

issues which the requesting party asserts are involved, what

 

portion of the rate filing is requested to be heard, and how the

 

party has standing. The corporation shall place advertisements

 

giving notice, containing the information specified above, in at

 

least 1 newspaper which serves each geographic area in which

 

significant numbers of subscribers reside.

 

     (2) The commissioner may charge a fee for providing, pursuant

 

to subsection (1), a copy of the rate filing described in section

 

610(7). The commissioner may charge a fee for providing a copy of

 

the entire filing to a person whose request for a hearing has been

 

granted by the commissioner pursuant to section 613. The fee shall

 

be limited to actual mailing costs and to the actual incremental

 

cost of duplication, including labor and the cost of deletion and

 

separation of information as provided in section 14 of Act No. 442

 

of the Public Acts of 1976, being section 15.244 of the Michigan

 

Compiled Laws the freedom of information act, 1976 PA 442, MCL

 

15.244. Copies of the filing may be provided free of charge or at a

 

reduced charge if the commissioner determines that a waiver or

 

reduction of the fee is in the public interest because the

 

furnishing of a copy of the filing will primarily benefit the

 

general public. In calculating the costs under this subsection, the

 

commissioner shall not attribute more than the hourly wage of the

 

lowest paid, full-time clerical employee of the insurance bureau

 

office of financial and insurance regulation to the cost of labor

 

incurred in duplication and mailing and to the cost of separation

 

and deletion. The commissioner shall use the most economical means

 

available to provide copies of a rate filing.

 

     Sec. 613. (1) If the request for a hearing under this section

 

is with regard to a rate filing not yet acted upon under section

 

610(2)(a), no such action shall be taken by the commissioner until

 

after the hearing has been completed. However, the commissioner

 

shall proceed to act upon those portions of a rate filing upon

 

which no hearing has been requested. Within 15 8 days after receipt

 

of a request for a hearing, the commissioner shall determine if the

 

person has standing. If the commissioner determines that the person

 

has standing, the person may have access to the entire filing

 

subject to the same confidentiality requirements as the

 

commissioner under section 604, and shall be subject to the penalty

 

provision of section 604(5). Upon determining that the person has

 

standing, the commissioner shall immediately appoint an independent

 

hearing officer before whom the hearing shall be held. In

 

appointing an independent hearing officer, the commissioner shall

 

select a person qualified to conduct hearings, who has experience

 

or education in the area of health care corporation or insurance

 

rate determination and finance, and who is not otherwise associated

 

financially with a health care corporation or a health care

 

provider. The person selected shall not be currently or actively

 

employed by this state. For purposes of this subsection, an

 

employee of an educational institution shall not be considered to

 

be employed by this state. For purposes of this section, a person

 

has "standing" if any of the following circumstances exist:

 

     (a) The person is, or there are reasonable grounds to believe

 

that the person could be, aggrieved by the proposed rate.

 

     (b) The person is acting on behalf of 1 or more named persons

 

described in subdivision (a).

 

     (c) The person is the commissioner, the attorney general, or

 

the health care corporation.

 

     (2) Not more than 30 15 days after receipt of a request for a

 

hearing, and upon not less than 15 8 days' notice to all parties,

 

the hearing shall be commenced. Each party to the hearing shall be

 

given a reasonable opportunity for discovery before and throughout

 

the course of the hearing. However, the hearing officer may

 

terminate discovery at any time, for good cause shown. The hearing

 

officer shall conduct the hearing pursuant to the administrative

 

procedures act. The hearing shall be conducted in an expeditious

 

manner and the hearing officer shall render a proposal for decision

 

not later than 30 days after the start of the hearing. At the

 

hearing, the burden of proving compliance with this act shall be

 

upon the health care corporation.

 

     (3) In rendering a proposal for a decision, the hearing

 

officer shall consider the factors prescribed in section 609.

 

     (4) Within 30 8 days after receipt of the hearing officer's

 

proposal for decision, the commissioner shall by order render a

 

decision which shall include a statement of findings.

 

     (5) The commissioner shall withdraw an order of approval or

 

approval with modifications if the commissioner finds that the

 

filing no longer meets the requirements of this act.

 

     Enacting section 1. This amendatory act does not take effect

 

unless all of the following bills of the 95th Legislature are

 

enacted into law:

 

     (a) Senate Bill No. 1244 or House Bill No.    (request no.

 

00083'09).

 

     (b) Senate Bill No.____ or House Bill No. 6036(request no.

 

H00083'09 *).

 

     (c) Senate Bill No.____ or House Bill No. 6037(request no.

 

06174'10).

 

     (d) Senate Bill No. 1245 or House Bill No.    (request no.

 

S06174'10 *).

 

     (e) Senate Bill No. 1243 or House Bill No.____(request no.

 

06472'10).

 

     (f) Senate Bill No.____ or House Bill No. 6035(request no.

 

06473'10).

 

     (g) Senate Bill No. 1242 or House Bill No.____(request no.

 

S06473'10 *).