Bill Text: MI HB6035 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: Insurance; health; individual health coverage; regulate. Amends sec. 3539 of 1956 PA 218 (MCL 500.3539) & adds ch. 37A. TIE BAR WITH: HB 6034'10, 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 [HB6035 Detail]

Download: Michigan-2009-HB6035-Introduced.html

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HOUSE BILL No. 6035

 

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

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending section 3539 (MCL 500.3539), as amended by 2005 PA 306,

 

and by adding chapter 37A.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3539. (1) For an individual covered under a nongroup

 

contract or under a contract not covered under subsection (2), a

 

health maintenance organization 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 health maintenance contract.

 

     (1) (2) A health maintenance organization shall not exclude or

 

limit coverage for a preexisting condition for an individual

 

covered under a group contract.

 

     (3) Except as provided in subsection (5), a health maintenance

 

organization that has issued a nongroup contract shall renew or

 

continue in force the contract at the option of the individual.

 

     (2) (4) Except as provided in subsection (5) (3) and section

 

3711, a health maintenance organization that has issued a group

 

contract shall renew or continue in force the contract at the

 

option of the sponsor of the plan.

 

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

 

intentional misrepresentation of material fact, lack of payment, if

 

the health maintenance organization no longer offers that

 

particular type of coverage in the market, or if the individual or

 

group moves outside the service area.

 

     (4) (6) A health maintenance organization is not required to

 

continue a healthy lifestyle program or to continue any incentive

 

associated with a healthy lifestyle program, including, but not

 

limited to, goods, vouchers, or equipment.

 

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

 

more subscribers.

 

CHAPTER 37A

 

INDIVIDUAL HEALTH BENEFIT PLANS

 

     Sec. 3751. As used in this chapter:

 

     (a) "Carrier" means a person that provides health benefits,

 

coverage, or insurance to an individual under a health benefit plan

 

in this state. For the purposes of this chapter, carrier includes a

 

health insurance company authorized to do business in this state, a

 

health care corporation, a health maintenance organization, or any

 

other person providing a plan of health benefits, coverage, or

 

insurance subject to state insurance regulation. Carrier does not

 

include a health maintenance organization that provides only

 

medicaid coverage.

 

     (b) "Commercial carrier" means a carrier other than a health

 

care corporation or health maintenance organization.

 

     (c) "Eligible claim" means any claim covered under any health

 

benefit plan.

 

     (d) "Health benefit plan" or "plan" means an individual or

 

nongroup expense-incurred hospital, medical, or surgical policy,

 

health care corporation certificate, or health maintenance

 

organization contract. Health benefit plan does not include

 

accident-only, credit, or disability income insurance; long-term

 

care insurance; medicare supplemental coverage; coverage issued as

 

a supplement to liability insurance; coverage only for a specified

 

disease or illness; dental-only or vision-only insurance; worker's

 

compensation or similar insurance; automobile medical-payment

 

insurance; or medicaid or medicare coverage.

 

     (e) "Health care corporation" means a nonprofit health care

 

corporation operating pursuant to the nonprofit health care

 

corporation reform act, 1980 PA 350, MCL 550.1101 to 550.1704.

 

     (f) "Medicaid" means a program for medical assistance

 

established under title XIX of the social security act, 42 USC 1396

 

to 1396w-2.

 

     (g) "Medicare" means the federal medicare program established

 

under title XVIII of the social security act, 42 USC 1395 to

 

1395iii.

 

     (h) "MI-CaPP board" or "board" means the Michigan catastrophic

 

protection plan board created in section 3771.

 

     (i) "Short-term or 1-time limited duration benefit plan of no

 

longer than 6 months" means a health benefit plan that meets all of

 

the following:

 

     (i) Is issued to provide coverage for a period of 185 days or

 

less, except that the health benefit plan may permit a limited

 

extension of benefits after the date the plan ended solely for

 

expenses attributable to a condition for which a covered person

 

incurred expenses during the term of the plan.

 

     (ii) Is nonrenewable, provided that the carrier may provide

 

coverage for 1 or more subsequent periods that satisfy subparagraph

 

(i), if the total of the periods of coverage do not exceed a total

 

of 185 days out of any 365-day period, plus any additional days

 

permitted by the plan for a condition for which a covered person

 

incurred expenses during the term of the plan.

 

     (iii) Does not cover any preexisting conditions.

 

     (iv) Is available with an immediate effective date, without

 

underwriting, upon receipt by the carrier of a completed

 

application indicating eligibility under the carrier's eligibility

 

requirements, except that coverage that includes optional benefits

 

may be offered on a basis that does not meet this requirement.

 

     Sec. 3753. This chapter applies to a health benefit plan that

 

is subject to policy form or premium approval by the commissioner.

 

     Sec. 3755. (1) A carrier may exclude or limit coverage under a

 

health benefit plan 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

 

policy, certificate, or contract.

 

     (2) Notwithstanding subsection (1), a carrier shall not

 

exclude or limit coverage for a preexisting condition or provide a

 

waiting period if all of the following apply:

 

     (a) The individual's most recent health care coverage prior to

 

applying for coverage with the carrier was under a group health

 

plan.

 

     (b) The individual was continuously covered prior to the

 

application for coverage with the carrier 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 individual is no longer eligible for group coverage

 

and is not eligible for medicare or medicaid.

 

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

 

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

 

any carrier.

 

     (e) If the individual 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, he or

 

she has elected and exhausted the coverage.

 

     (3) As used in this section, "group health plan" means a group

 

health benefit plan that covers 2 or more insureds, subscribers,

 

members, enrollees, or employees.

 

     Sec. 3757. Notwithstanding any other provision of this act, a

 

carrier shall not rescind, cancel, or limit a health benefit plan

 

due to the carrier's failure to complete medical underwriting and

 

resolve all reasonable questions arising from the written

 

information submitted on or with an application before issuing the

 

plan's contract. This section does not limit a carrier's remedies

 

upon a showing of intentional misrepresentation of material fact.

 

     Sec. 3759. Rate differentials for health conditions may be

 

used only when coverage is initially issued and cannot be changed

 

by a carrier at any time after issue as a result of subsequent

 

changes in health conditions of individuals already covered under

 

the health benefit plan. A carrier may use rate differentials based

 

on health conditions for any individual who is subsequently added

 

to the health benefit plan only at the time the individual is added

 

to the plan.

 

     Sec. 3761. (1) Except as otherwise provided in this section, a

 

carrier that has issued a health benefit plan shall renew or

 

continue in force the plan at the option of the individual.

 

     (2) A guaranteed renewal under subsection (1) is not required

 

in cases of fraud, intentional misrepresentation of material fact,

 

nonpayment of premiums, if the carrier no longer offers that plan,

 

if the carrier no longer offers coverage in the individual market,

 

or if the individual moves outside the carrier's service area.

 

     (3) A carrier shall not discontinue offering a particular plan

 

in the individual market unless the carrier does all of the

 

following:

 

     (a) Provides notice to the commissioner and to each covered

 

individual provided coverage under the plan of the discontinuation

 

at least 90 days prior to the date of the discontinuation.

 

     (b) Offers to each covered individual provided coverage under

 

the plan the option to purchase any other plan currently being

 

offered in the individual market by that carrier without excluding

 

or limiting coverage for a preexisting condition or providing a

 

waiting period.

 

     (c) Acts uniformly without regard to any health status factor

 

of enrolled individuals or individuals who may become eligible for

 

coverage in making the determination to discontinue coverage and in

 

offering other plans.

 

     (4) A carrier shall not discontinue offering all coverage in

 

the individual market unless the carrier does all of the following:

 

     (a) Provides notice to the commissioner and to each individual

 

of the discontinuation at least 180 days prior to the date of the

 

expiration of coverage.

 

     (b) Discontinues all health benefit plans issued in the

 

individual market and does not renew coverage under such plans.

 

     (5) If a carrier discontinues coverage under subsection (4),

 

the carrier shall not provide for the issuance of any health

 

benefit plans in the individual market during the 5-year period

 

beginning on the date of the discontinuation of the last plan not

 

so renewed.

 

     (6) Subsections (1) through (5) do not apply to a short-term

 

or 1-time limited duration benefit plan of no longer than 6 months.

 

     Sec. 3762. (1) The rates charged to individuals for health

 

benefit plans shall be filed with the commissioner and shall not

 

take effect until 60 days after the filing, unless the commissioner

 

approves the rates in writing before the expiration of 60 days

 

after the filing. The rate filing shall include an actuarial

 

certification that the benefits provided are reasonable in relation

 

to the premium charged and are adequate, equitable, and not

 

excessive. The rate filing shall include supporting data used in

 

the development of the rate. The actuarial certification shall

 

include a certification that, to the best of the actuary's

 

knowledge and belief, the benefits provided are reasonable in

 

relation to the premiums charged and the premiums are established

 

in compliance with this chapter. The commissioner shall uniformly

 

apply for all carriers the standard as to whether the benefits

 

provided are reasonable in relation to the premium charged and are

 

adequate, equitable, and not excessive. If the commissioner

 

considers that the proposed rate is not adequate or equitable, is

 

excessive, or is otherwise not in compliance with this chapter, the

 

commissioner, not more than 60 days after the proposed rate is

 

filed, shall notify the carrier in writing, specifying the reasons

 

for disapproval or for approval with modifications. For an approval

 

with modifications, the notice shall specify what modifications in

 

the filing are required for approval, the reasons for the

 

modifications, and that the filing becomes effective after the

 

modifications are made and approved by the commissioner. The

 

commissioner shall schedule a hearing not more than 30 days after

 

receipt of a written request from the carrier, and the revised rate

 

shall not take effect until approved by the commissioner after the

 

hearing. Within 30 days after the hearing, the commissioner shall

 

notify the carrier in writing of the disposition of the proposed

 

revised rate, together with the commissioner's findings of fact and

 

conclusions.

 

     (2) Not less than 30 days before the effective date of a

 

proposed change in a rate charged, the carrier shall issue to each

 

individual who will be affected by the proposed change a clear

 

written statement stating the extent and nature of the proposed

 

change. If the commissioner has approved a proposed change in a

 

rate in writing before the expiration of 60 days after the date of

 

filing, the carrier immediately shall notify each individual who

 

will be affected by the proposed change.

 

     Sec. 3763. (1) A carrier shall not, directly or indirectly,

 

engage in any of the following:

 

     (a) Encouraging or directing an individual to refrain from

 

filing an application for a health benefit plan with the carrier

 

because of the health condition or claims experience of the

 

individual.

 

     (b) Encouraging or directing an individual to seek coverage

 

from another carrier because of the health condition or claims

 

experience of the individual.

 

     (2) Except as otherwise provided in subsection (3), a carrier

 

shall not, directly or indirectly, enter into any contract,

 

agreement, or arrangement with a producer that provides for or

 

results in the compensation paid to a producer for the sale of a

 

health benefit plan to be varied because of the health condition or

 

claims experience of the individual.

 

     (3) Subsection (2) does not apply to a compensation

 

arrangement that provides compensation to a producer on the basis

 

of percentage of premium, provided that the percentage does not

 

vary because of the health condition or claims experience of the

 

individual.

 

     (4) A carrier shall not terminate, fail to renew, or limit its

 

contract or agreement of representation with a producer for any

 

reason related to the health condition or claims experience of the

 

individual placed by the producer with the carrier.

 

     Sec. 3771. (1) The MI-CaPP board is created within the office

 

of financial and insurance regulation.

 

     (2) The board shall consist of the commissioner and the

 

following 6 members, appointed by the commissioner:

 

     (a) One member representing health care corporations.

 

     (b) One member representing health maintenance organizations,

 

but not health maintenance organizations owned by a health care

 

corporation.

 

     (c) One member representing commercial carriers.

 

     (d) One member representing the general public who is not

 

employed by a carrier.

 

     (e) One member who is a health economist who is not employed

 

by a carrier.

 

     (f) One member who is in good standing with the American

 

academy of actuaries who is not employed by a carrier.

 

     (3) The members first appointed to the board shall be

 

appointed within 14 days after the effective date of this chapter.

 

     (4) Members of the board shall serve for terms of 4 years or

 

until a successor is appointed, whichever is later, except that of

 

the members first appointed, 2 shall serve for 2 years, 2 shall

 

serve for 3 years, and 2 shall serve for 4 years.

 

     (5) If a vacancy occurs on the board, the commissioner shall

 

make an appointment for the unexpired term in the same manner as

 

the original appointment.

 

     (6) The governor may remove a member of the board for

 

incompetency, dereliction of duty, malfeasance, misfeasance, or

 

nonfeasance in office, or any other good cause.

 

     (7) The first meeting of the board shall be called by the

 

commissioner. At the first meeting, the board shall elect from

 

among its members a chairperson and other officers as it considers

 

necessary or appropriate. After the first meeting, the board shall

 

meet at least quarterly, or more frequently at the call of the

 

chairperson or if requested by 4 or more members.

 

     (8) Four members of the board constitute a quorum for the

 

transaction of business at a meeting of the board. Four members

 

present and serving are required for official action of the board.

 

     (9) The business that the board may perform shall be conducted

 

at a public meeting of the board held in compliance with the open

 

meetings act, 1976 PA 267, MCL 15.261 to 15.275.

 

     (10) A writing prepared, owned, used, in the possession of, or

 

retained by the board in the performance of an official function is

 

subject to the freedom of information act, 1976 PA 442, MCL 15.231

 

to 15.246.

 

     (11) Members of the board shall serve without compensation.

 

However, members of the board may be reimbursed for their actual

 

and necessary expenses incurred in the performance of their

 

official duties as members of the board.

 

     Sec. 3773. (1) The Michigan claims fund is created within the

 

state treasury. Money in the fund shall be used only as provided in

 

section 3775.

 

     (2) The state treasurer may receive money or other assets from

 

any source for deposit into the Michigan claims fund. The state

 

treasurer shall direct the investment of the Michigan claims fund.

 

The state treasurer shall credit to the Michigan claims fund

 

interest and earnings from fund investments.

 

     (3) Money in the Michigan claims fund at the close of the

 

fiscal year shall remain in the fund and shall not lapse to the

 

general fund.

 

     (4) The commissioner shall be the administrator of the

 

Michigan claims fund for auditing purposes.

 

     Sec. 3775. (1) The board shall expend money from the Michigan

 

claims fund to reimburse carriers for eligible claims. A carrier is

 

eligible to receive reimbursement from the Michigan claims fund for

 

90% of claims paid between $80,000.00 and $800,000.00 in a calendar

 

year that have been paid by the carrier on behalf of a covered

 

enrollee.

 

     (2) Each carrier shall submit a request for reimbursement on a

 

form prescribed by the board from the Michigan claims fund by no

 

later than April 1 following the end of the calendar year for which

 

the reimbursement request is being made. Claims are eligible for

 

reimbursement only for the calendar year in which the claims are

 

paid. Once claims paid on behalf of a covered enrollee reach

 

$800,000.00 in a given calendar year, no further claims on behalf

 

of that covered enrollee in that calendar year are eligible for

 

reimbursement. Carriers may be required to submit claims data in

 

connection with the reimbursement request as the board considers

 

necessary to distribute money and oversee the operation of the

 

Michigan claims fund. The board may require that the data be

 

submitted on a per enrollee, aggregate basis or categorical basis.

 

     (3) If the total amount requested for reimbursement under this

 

section by all carriers for a calendar year exceeds funds available

 

for distribution for claims paid by all carriers during that same

 

calendar year, the board shall provide for the pro rata

 

distribution of the available funds. Each carrier shall be eligible

 

to receive only the proportionate amount of the available funds as

 

the individual carrier's total eligible claims paid bears to the

 

total eligible claims paid by all carriers.

 

     (4) If funds available for distribution for claims paid by all

 

carriers during a calendar year exceed the total amount requested

 

for reimbursement by all carriers during that same calendar year,

 

any excess funds shall be carried forward, shall not revert to the

 

general fund, and shall be made available for distribution in the

 

next calendar year.

 

     Sec. 3777. (1) As a condition of transacting business in this

 

state, each carrier engaged in writing a health benefit plan shall

 

pay an annual assessment into the Michigan claims fund as provided

 

in this section.

 

     (2) The total assessment in a calendar year shall be the sum

 

of the estimate of total reimbursement to be made for claims paid

 

in the same calendar year plus the estimated cost of administering

 

the Michigan claims fund for the same calendar year. By not later

 

than April 1 of each year, the board shall determine the total

 

assessment and shall notify carriers of their assessment. A

 

carrier's assessment shall be determined by the board and shall be

 

apportioned on an equitable basis among all carriers of health

 

benefit plans in proportion to each carrier's share of covered

 

lives in the individual market. By not later than 90 days after the

 

assessment notice is issued, each carrier shall pay the amount of

 

its assessment to the Michigan claims fund.

 

     Sec. 3778. The premium rates established by a carrier for a

 

health benefit plan shall recognize the availability of

 

reimbursement from the Michigan claims fund.

 

     Sec. 3779. The board shall keep an accurate account of all

 

Michigan claims fund receipts and expenditures and shall report by

 

October 1, 2011 and annually thereafter to the governor and to all

 

members of the house of representatives and senate standing

 

committees on appropriations, health, and insurance issues on the

 

amount of assessments collected and claims paid under sections 3775

 

and 3777.

 

     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. 6034(request no.

 

H06472'10 *).

 

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

 

S06473'10 *).