Bill Text: MI SB0348 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Insurance; health; health insurance claims assessment act; create. Creates & repeals new act. TIE BAR WITH: SB 0347'11
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2011-09-21 - Assigned Pa 0142'11 With Immediate Effect [SB0348 Detail]
Download: Michigan-2011-SB0348-Introduced.html
SENATE BILL No. 348
April 27, 2011, Introduced by Senator KAHN and referred to the Committee on Appropriations.
A bill to impose a tax on certain health care claims; to
impose certain duties and obligations on certain insurance or
health coverage providers; to impose certain duties on certain
state departments, agencies, and officials; to create certain
funds; to authorize certain expenditures; and to impose certain
remedies and penalties.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"health insurance claims assessment act".
Sec. 2. As used in this act:
(a) "Carrier" means any of the following:
(i) An insurer or health maintenance organization regulated
under the insurance code of 1956, 1956 PA 218, MCL 500.100 to
500.8302.
(ii) A health care corporation regulated under the nonprofit
health care corporation reform act, 1980 PA 350, MCL 550.1101 to
550.1704.
(iii) A nonprofit dental care corporation subject to 1963 PA
125, MCL 550.351 to 550.373.
(iv) A specialty prepaid health plan as described in section
109f of the social welfare act, 1939 PA 280, MCL 400.109f.
(v) A group health plan sponsor including, but not limited to,
1 or more of the following:
(A) An employer if a group health plan is established or
maintained by a single employer.
(B) An employee organization if a plan is established or
maintained by an employee organization.
(C) If a plan is established or maintained by 2 or more
employers or jointly by 1 or more employers and 1 or more employee
organizations, the association, committee, joint board of trustees,
or other similar group of representatives of the parties that
establish or maintain the plan.
(b) "Claims-related expenses" means all of the following:
(i) Cost containment expenses including, but not limited to,
payments for utilization review, care management, disease
management, risk assessment, and similar administrative services
intended to reduce the claims paid for health and medical services
rendered to covered individuals by attempting to ensure that needed
services are delivered in the most efficacious manner possible or
by helping those covered individuals maintain or improve their
health.
(ii) Payments that are made to or by an organized group of
health and medical service providers in accordance with managed
care risk arrangements or network access agreements, which payments
are unrelated to the provision of services to specific covered
individuals.
(iii) General administrative expenses.
(c) "Commissioner" means the commissioner of the office of
financial and insurance regulation or his or her designee.
(d) "Department" means the department of treasury.
(e) "Excess loss" or "stop loss" means coverage that provides
insurance protection against the accumulation of total claims
exceeding a stated level for a group as a whole or protection
against a high-dollar claim on any 1 individual.
(f) "Fund" means the health insurance claims assessment fund
created in section 7.
(g) "Group health plan" means an employee welfare benefit plan
as defined in section 3(1) of subtitle A of title I of the employee
retirement income security act of 1974, Public Law 93-406, 29 USC
1002, to the extent that the plan provides medical care, 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.
(h) "Group insurance coverage" means a form of voluntary
health and medical services insurance that covers members, with or
without their eligible dependents, and that is written under a
master policy.
(i) "Health and medical services" means 1 or more of the
following:
(i) Services included in furnishing medical care, dental care,
pharmaceutical benefits, or hospitalization, including, but not
limited to, services provided in a hospital or other medical
facility.
(ii) Ancillary services, including, but not limited to,
ambulatory services.
(iii) Services provided by a physician or other practitioner,
including, but not limited to, health professionals defined by
article 15 of the public health code, 1978 PA 368, MCL 333.16101 to
333.18838.
(iv) Behavioral health services, including, but not limited to,
mental health and substance abuse services.
(j) "Managed care risk arrangement" means an arrangement where
participating hospitals and physicians agree to a managed care risk
incentive which shares favorable and unfavorable claims experience.
Under a managed care risk arrangement, payment to a participating
physician is generally subject to a retention requirement and the
distribution of that retained payment is contingent on the result
of the risk incentive arrangement.
(k) "Network access agreement" means an agreement that allows
a network access to another provider network for certain services
that are not readily available in the accessing network.
(l) "Paid claims" means actual payments made to a health and
medical services provider or reimbursed to an individual by a third
party administrator, excess loss or stop loss carrier, a property
or casualty carrier, or a carrier. Paid claims include payments
made under a service contract for administrative services only,
cost-plus or noninsured benefit plan arrangements under section 211
of the nonprofit health care corporation reform act, 1980 PA 350,
MCL 550.1211, or section 5208 of the insurance code of 1956, 1956
PA 218, MCL 500.5208, for health and medical services provided
under group health plans, and individual, nongroup and group
insurance coverage delivered, issued for delivery, or renewed in
this state that affect the rights of an insured in this state and
bear a reasonable relation to this state, regardless of whether the
coverage is delivered, renewed, or issued for delivery in this
state. If a carrier or a third party administrator is contractually
entitled to withhold a certain amount from payments due to
providers of health and medical services in order to help ensure
that the providers can fulfill any financial obligations they may
have under a managed care risk arrangement, the full amounts due
the providers before that amount is withheld shall be included in
paid claims. Paid claims do not include any of the following:
(i) Claims-related expenses.
(ii) Payments made to a qualifying provider under an incentive
compensation arrangement if the payments are not reflected in the
processing of claims submitted for services rendered to specific
covered individuals.
(iii) Claims paid by carriers or third party administrators for
vision, specified accident, specified disease, accident-only
coverage, credit, disability income, long-term care, or medicare
supplement.
(iv) Claims paid for services rendered to a nonresident of this
state.
(v) The proportionate share of claims paid for services
rendered to a person covered under a health benefit plan for
federal employees.
(vi) Claims paid for services rendered outside of this state to
a person who is a resident of this state.
(vii) Claims paid under medicare, medicare advantage, tricare,
and by the United States veterans administration.
(viii) Reimbursements to individuals under a flexible spending
arrangement as that term is defined in section 106(c)(2) of the
internal revenue code, 26 USC 106, a health savings account as that
term is defined in section 223 of the internal revenue code, 26 USC
223, an Archer medical savings account as defined in section 220 of
the internal revenue code, 26 USC 220, and a medicare advantage
medical savings account as that term is defined in section 138 of
the internal revenue code, 26 USC 138.
(ix) Health and medical services costs paid by an individual
for cost-sharing requirements, including deductibles or copays.
(m) "Qualifying provider" means a provider that is paid based
on an incentive compensation arrangement.
(n) "Third party administrator" means an entity that processes
claims under a service contract and that may also provide 1 or more
other administrative services under a service contract.
Sec. 3. Beginning October 1, 2011, there is levied upon and
there shall be collected from every carrier and third party
administrator in this state an assessment equal to 1% of that
carrier's or third party administrator's paid claims.
Sec. 4. (1) Every carrier and third party administrator with
paid claims subject to the assessment under this act shall file
with the department on or before the fifteenth day of each calendar
month a return for the preceding calendar month, in a form
prescribed by the department, showing all information that the
department considers necessary for the proper administration of
this act. At the same time, each carrier and third party
administrator shall pay to the department the amount of the
assessment imposed under this act with respect to the paid claims
included in the return.
(2) The assessment imposed under this act shall accrue to this
state on the last day of each calendar month.
(3) If a due date falls on a Saturday, Sunday, state holiday,
or legal banking holiday, the returns and assessments are due on
the next succeeding business day.
(4) The department, if necessary to ensure payment of the
assessment or to provide a more efficient administration, may
require the filing of returns and payment of the assessment for
other than monthly periods.
(5) The department may require that payment of the assessment
be made by an electronic funds transfer method approved by the
department.
Sec. 5. (1) A carrier or third party administrator liable for
an assessment under this act shall keep accurate and complete
records and pertinent documents as required by the department.
Records required by the department shall be retained for a period
of 4 years after the assessment imposed under this act to which the
records apply is due or as otherwise provided by law.
(2) If the department considers it necessary, the department
may require a person, by notice serviced upon that person, to make
a return, render under oath certain statements, or keep certain
records the department considers sufficient to show whether that
person is liable for the assessment under this act.
(3) If a carrier or third party administrator fails to file a
return or keep proper records as required under this section, or if
the department has reason to believe that any records kept or
returns filed are inaccurate or incomplete and that additional
assessments are due, the department may assess the amount of the
assessment due from the carrier or third party administrator based
on information that is available or that may become available to
the department. An assessment under this subsection is considered
prima facie correct under this act, and a carrier or third party
administrator has the burden of proof for refuting the assessment.
Sec. 6. (1) The department shall administer the assessment
imposed under this act under 1941 PA 122, MCL 205.1 to 205.31, and
this act. If 1941 PA 122, MCL 205.1 to 205.31, and this act
conflict, the provisions of this act apply. The assessment imposed
under this act shall be considered a tax for the purpose of 1941 PA
122, MCL 205.1 to 205.31.
(2) The department is authorized to promulgate rules to
implement this act under the administrative procedures act of 1969,
1969 PA 306, MCL 24.201 to 24.328.
(3) The assessment imposed under this act shall not be
considered an assessment or burden for purposes of the tax, or as a
credit toward or payment in lieu of the tax under section 476a of
the insurance code of 1956, 1956 PA 218, MCL 500.476a.
Sec. 7. (1) All money received and collected under this act
shall be deposited by the department in the health insurance claims
assessment fund established in this section.
(2) The health insurance claims assessment fund is created
within the department.
(3) The state treasurer may receive money or other assets from
any of the following sources for deposit into the fund:
(a) Money received by the department under this act.
(b) Interest and earnings from fund investments. The state
treasurer shall direct the investment of the fund. The state
treasurer shall credit to the fund interest and earnings from fund
investments.
(c) Donations of money made to the fund from any source.
(4) Money in the fund at the close of the fiscal year shall
remain in the fund and shall not lapse to the general fund.
(5) The department of treasury shall be the administrator of
the fund for auditing purposes.
(6) Except as otherwise provided in this act, the department
of treasury shall expend money from the fund, upon appropriation,
only for 1 or more of the following purposes:
(a) To finance medicaid program expenditures.
(b) To finance a shortfall in the medicaid program resulting
from disallowance of medicaid payments from the federal government.
(c) To offset any decline in revenue or increase in
expenditures caused by federal medicaid policy change.
(d) To finance department of community health or office of
financial and insurance regulation expenditures incurred to
implement, enforce, or otherwise carry out the responsibilities of
this act.
Sec. 8. An amount equal to 1% of the annual remittances of
assessments shall be retained by the department to implement and
administer this act.
Sec. 9. The department shall provide the commissioner with
written notice of any final determination that a carrier or a third
party administrator has failed to pay an assessment, interest, or
penalty when due. The commissioner may suspend or revoke, after
notice and hearing, the certificate of authority to transact
insurance in this state, or the license to operate in this state,
of any carrier or third party administrator that fails to pay an
assessment, interest, or penalty due under this act. A certificate
of authority to transact insurance in this state or a license to
operate in this state that is suspended or revoked under this
section shall not be reinstated unless any delinquent assessment,
interest, or penalty has been paid.
Enacting section 1. This act does not take effect unless
Senate Bill No. 347
of the 96th Legislature is enacted into law.
