Bill Text: MI SB0579 | 2009-2010 | 95th Legislature | Introduced
Bill Title: Insurance; health; MI-Health act; create. Creates new act. TIE BAR WITH: SB 0580'09, SB 0581'09, SB 0582'09
Spectrum: Partisan Bill (Republican 4-0)
Status: (Introduced - Dead) 2009-05-14 - Referred To Committee On Health Policy [SB0579 Detail]
Download: Michigan-2009-SB0579-Introduced.html
SENATE BILL No. 579
May 14, 2009, Introduced by Senators GEORGE, JANSEN, BIRKHOLZ and HARDIMAN and referred to the Committee on Health Policy.
A bill to promote the availability and affordability of health
coverage in this state and to facilitate the purchase of that
coverage; to create MI-Health; to provide for a determination of
eligible health coverage plans; to provide for a determination of
eligibility for assistance of certain enrollees; to provide for a
health access surcharge; to prescribe certain powers and duties of
certain officials and departments of this state; to provide for
certain funds; to provide for the collection and disbursement of
certain payments and surcharges; and to provide for certain
reports.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
PART I MI-HEALTH
Sec. 1. This act shall be known and may be cited as the "MI-
Health act".
Sec. 3. As used in this act:
(a) "Board" means the cover Michigan board created in section
5.
(b) "Carrier" means a health insurer, health maintenance
organization, or health care corporation.
(c) "Commissioner" means the commissioner of the office of
financial and insurance regulation.
(d) "Eligible health coverage plan" or "plan" means any
individual or nongroup contract, policy, or certificate of health,
accident, and sickness insurance or coverage issued by a carrier
that meets the eligibility requirements established by the board
under section 8 and is offered through MI-Health. Eligible health
coverage plan does not include a contract, policy, or certificate
that provides coverage only for dental, vision, specified accident
or accident-only coverage, credit, disability income, hospital
indemnity, short-term or 1-time limited duration policy or
certificate of no longer than 6 months, long-term care insurance,
medicare supplement, coverage issued as a supplement to liability
insurance, and specified disease insurance that is purchased as a
supplement and not as a substitute for an eligible health coverage
plan. Eligible health coverage plan does not include coverage
arising out of a worker's compensation law or similar law,
automobile medical payment insurance, insurance under which
benefits are payable with or without regard to fault, coverage
under a plan through medicare, and coverage issued under 10 USC
1071 to 1110, and any coverage issued as a supplement to that
coverage.
(e) "Eligible individual" means an individual who is a
resident of the state who meets the eligibility requirements in
section 11.
(f) "MI-Health" means MI-Health created in section 5.
(g) "Fund" means the MI-Health fund created in section 19.
(h) "Health care corporation" means a health care corporation
operating pursuant to the nonprofit health care corporation reform
act of 1980, 1980 PA 350, MCL 550.1101 to 550.1704.
(i) "Health insurer" means a health insurer with a certificate
of authority under the insurance code of 1956, 1956 PA 218, MCL
500.100 to 500.8302.
(j) "Health maintenance organization" means a health
maintenance organization with a license or certificate of authority
under the insurance code of 1956, 1956 PA 218, MCL 500.100 to
500.8302.
(k) "Medicaid" means a program for medical assistance
established under title XIX of the social security act, 42 USC 1396
to 1396v.
(l) "Medicare" means the federal medicare program established
under title XVIII of the social security act, 42 USC 1395 to
1395hhh.
(m) "MI-Health enrollee" or "enrollee" means an individual or
his or her dependent who is enrolled in a plan.
(n) "Premium assistance payment" means a payment of health
coverage premiums made by the board to a plan on behalf of a MI-
Health enrollee who is an eligible individual.
(o) "Premium contribution payment" means a payment made by a
MI-Health enrollee or employer on behalf of a Mi-Health enrollee
toward an eligible health coverage plan.
(p) "Resident" means a person living in the state, including a
qualified alien as defined in 8 USC 1641, or a person who is not a
citizen of the United States but who is otherwise permanently
residing in the United States under color of law; provided,
however, that the person has not moved into the state for the sole
purpose of securing health coverage under this act.
(q) "Uninsured" means a resident who is not covered by a
health insurance or coverage plan offered by a carrier, a self-
funded health coverage plan, medicaid, medicare, or a medical
assistance program.
Sec. 5. (1) MI-Health is created within the department of
community health and shall exercise its prescribed statutory
duties, powers, and functions independently of the director of the
department of community health. MI-Health is responsible for
facilitating the availability, choice, and purchase of eligible
health coverage plans by eligible individuals.
(2) MI-Health shall be governed by a board of directors called
the cover Michigan board consisting of the following 13 members:
(a) The director of the department of community health or his
or her designee.
(b) The director of the department of human services or his or
her designee, who shall serve as an ex officio nonvoting member.
(c) The commissioner or his or her designee.
(d) The deputy director for medical services administration or
his or her designee, who shall serve as an ex officio nonvoting
member.
(e) Three members appointed by the governor with the advice
and consent of the senate, 1 of whom shall be a member in good
standing of the American academy of actuaries, 1 of whom shall be a
health economist, and 1 of whom shall represent a health care
corporation.
(f) Three members appointed by the senate majority leader, 1
of whom shall represent health maintenance organizations but shall
not be from a health maintenance organization owned by a health
care corporation, 1 of whom shall represent low-income health care
advocacy organizations, and 1 of whom shall represent health
professionals.
(g) Three members appointed by the speaker of the house of
representatives, 1 of whom shall represent the general public, 1 of
whom shall represent health insurers, and 1 of whom shall represent
hospitals.
(3) The members first appointed to the board shall be
appointed within 30 days after the effective date of this act.
Appointed board members 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 1 year, 2 shall serve for
2 years, 2 shall serve for 3 years, and 3 shall serve for 4 years.
(4) If a vacancy occurs on the board, the vacancy shall be
filled for the unexpired term in the same manner as the original
appointment. An appointed board member is eligible for
reappointment.
(5) 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.
(6) The first meeting of the board shall be called by the
director of the department of community health, who shall serve as
chairperson. After the first meeting, the board shall meet at least
monthly, or more frequently at the call of the chairperson or if
requested by 7 or more members.
(7) Seven members of the board constitute a quorum for the
transaction of business at a meeting of the board. An affirmative
vote of 7 board members is necessary for official action of the
board.
(8) 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.
(9) 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.
(10) Board members shall serve without compensation. However,
board members may be reimbursed for their actual and necessary
expenses incurred in the performance of their official duties as
board members.
Sec. 7. The board shall do all of the following:
(a) Develop a plan of operation for MI-Health, which shall
include, but is not limited to, all of the following:
(i) Establishes procedures for MI-Health operations.
(ii) Establishes procedures and criteria for the approval of
eligible health coverage plans as provided in section 8.
(iii) Establishes procedures for the enrollment of individuals
in plans.
(iv) Establishes procedures for appeals of eligibility
decisions as provided in section 13.
(v) Establishes and manages a system of collecting and
depositing into the fund all premium payments made by, or on behalf
of, MI-Health enrollees, including any premium payments made by
enrollees, employers, unions, or other organizations.
(vi) Establishes and manages a system for remitting premium
assistance payments to carriers.
(vii) Establishes and manages a system for remitting premium
contribution payments to carriers.
(viii) Establishes a plan for publicizing the existence of MI-
Health and MI-Health's eligibility requirements and enrollment
procedures.
(ix) Develops criteria for determining that certain health
coverage plans shall no longer be made available through MI-Health.
(x) Develops a standard application form for individuals
seeking to purchase or obtain health coverage through MI-Health,
and for eligible individuals who are seeking a premium assistance
payment that includes information necessary to determine an
applicant's eligibility under section 11, previous and current
health coverage, and payment method.
(b) Determine each applicant's eligibility for purchasing
health coverage offered by MI-Health, including eligibility for
premium assistance payments.
(c) Seek and receive any funding from the federal government,
departments or agencies of the state, private foundations, and
other entities.
(d) Contract with professional service firms as may be
necessary and fix their compensation.
(e) Contract with companies that provide third-party
administrative and billing services for health coverage products.
(f) Adopt bylaws for the regulation of its affairs and the
conduct of its business.
(g) Adopt an official seal and alter the same.
(h) Maintain an office at such place or places as it may
designate.
(i) Sue and be sued in its own name.
(j) Approve the use of its trademarks, brand names, seals,
logos, and similar instruments by participating carriers,
employers, or organizations.
(k) Enter into interdepartmental agreements.
(l) Publish each year the premiums for eligible health coverage
plans.
(m) Subject to this act, review annually the publication of
the income levels for the federal poverty guidelines and devise a
schedule of a percentage of income for each 50% increment of the
federal poverty level at which an individual could be expected to
contribute a percentage of income toward the purchase of health
coverage and examine any contribution schedules, such as those set
for government benefits programs. The report shall be published
annually. Prior to publication, the schedule shall be reported to
the house of representatives and senate standing committees on
appropriations, health, and insurance issues.
Sec. 8. (1) MI-Health shall only offer eligible health
coverage plans that have been approved by the board.
(2) Each eligible health coverage plan offered through MI-
Health shall contain a detailed description of benefits offered,
including maximums, limitations, exclusions, and other benefit
limits. Each eligible health coverage plan shall reimburse health
care professionals and health facilities at medicare reimbursement
rates.
(3) No health coverage plan shall be offered through MI-Health
that excludes an individual from coverage because of race, color,
religion, national origin, sex, sexual orientation, marital status,
health status, personal appearance, political affiliation, source
of income, or age.
(4) MI-Health shall offer a variety of health coverage plans.
To be approved by the board, a health coverage plan shall meet all
requirements of health coverage plans required under state law,
rule, and regulation except that, in order to satisfy the goal of
universal health care coverage in this state, the board may permit
a health coverage plan provided through MI-Health to not provide
for the coverages or offerings required under section 3406a, 3406b,
3406c, 3406d, 3406e, 3406m, 3406n, 3406p, 3406q, 3406r, 3425,
3609a, 3613, 3614, 3615, 3616, or 3616a of the insurance code of
1956, 1956 PA 218, MCL 500.3406a, 500.3406b, 500.3406c, 500.3406d,
500.3406e, 500.3406m, 5003406n, 500.3406p, 500.3406q, 500.3604r,
500.3425, 500.3609a, 500.3613, 500.3614, 500.3615, 500.3616, and
500.3616a, or section 401b, 401f, 401g, 414a, 415, 416, 416a, 416b,
416c, 416d, or 417 of the nonprofit health care corporation reform
act of 1980, 1980 PA 350, MCL 550.1401b, 550.1401f, 550.1401g,
550.1414a, 550.1415, 550.1416, 550.1416a, 550.1416b, 550.1416c,
550.1416d, and 550.1417. In making the determination of which
provisions of section 3406a, 3406b, 3406c, 3406d, 3406e, 3406m,
3406n, 3406p, 3406q, 3406r, 3425, 3609a, 3613, 3614, 3615, 3616, or
3616a of the insurance code of 1956, 1956 PA 218, MCL 500.3406a,
500.3406b, 500.3406c, 500.3406d, 500.3406e, 500.3406m, 500.3406n,
500.3406p, 500.3406q, 500.3604r, 500.3425, 500.3609a, 500.3613,
500.3614, 500.3615, 500.3616, and 500.3616a, or section 401b, 401f,
401g, 414a, 415, 416, 416a, 416b, 416c, 416d, or 417 of the
nonprofit health care corporation reform act of 1980, 1980 PA 350,
MCL 550.1401b, 550.1401f, 550.1401g, 550.1414a, 550.1415, 550.1416,
550.1416a, 550.1416b, 550.1416c, 550.1416d, and 550.1417, are not
required to be provided in a health coverage plan offered through
MI-Health, the board shall determine whether real cost savings will
be achieved and affordability maximized.
(5) Benefits provided in eligible health coverage plans for
MI-Health shall include, but are not limited to, all of the
following:
(a) Wellness services.
(b) Inpatient services.
(c) Outpatient services and preventive care.
(d) Value-based pharmaceutical benefit.
(6) All of the following apply for adjusting premiums for an
eligible health coverage plan:
(a) A carrier may establish up to 5 geographic areas in this
state.
(b) A health care corporation shall establish geographic areas
that cover all counties in this state.
(7) The rates charged to individuals for eligible health
coverage plans may include rate differentials based only on age,
tobacco use, body mass index, and other healthy behaviors and only
if the differentials are supported by sound actuarial principles
and a reasonable classification system and are related to actual
and credible loss statistics or reasonably anticipated experience
in the case of new eligible health coverage plans.
(8) Eligible health coverage plans are subject to part II.
(9) The board shall approve as eligible a health coverage plan
that the board determines satisfies this section, provides good
value to residents, and provides quality medical benefits and
administrative services.
(10) The board may remove a health coverage plan from being
offered through MI-Health only after notice to the carrier.
Sec. 9. (1) MI-Health shall provide subsidies to assist
eligible individuals in purchasing eligible health coverage plans,
provided that subsidies shall only be paid on behalf of an eligible
individual who is enrolled in an eligible health coverage plan, and
shall be made under a sliding-scale premium contribution payment
schedule for enrollees.
(2) Premium assistance payments under MI-Health shall be made
as provided in this act and under a schedule set annually by the
board in consultation with the department of community health. The
schedule shall be published annually. If amounts in the fund are
insufficient to meet the projected costs of enrolling new eligible
individuals, the board shall impose a cap on enrollment in MI-
Health and shall notify the governor and the house of
representatives and senate standing committees on appropriations,
health, and insurance issues.
(3) An enrollee with a household income that does not exceed
200% of the federal poverty level shall only be responsible for a
copayment toward the purchase of each pharmaceutical product and
for use of emergency room services in acute care hospitals for
nonemergency conditions equal to that required of enrollees in the
medicaid program. The board may waive copayments upon a finding of
substantial financial or medical hardship. The premium shall not
exceed 5% of the enrollee's gross household income and no other
deductible or cost-sharing shall apply to an enrollee described in
this subsection.
(4) An enrollee with a household income that exceeds 200% of
the federal poverty level but does not exceed 300% of the federal
poverty level shall be responsible for a premium contribution
payment, and copayments, deductibles, or other cost-sharing
measures, that are reasonably established so as to encourage and
promote maximum enrollment.
Sec. 11. An uninsured individual is eligible to participate in
MI-Health if all of the following are met:
(a) The individual's household income does not exceed the
federal poverty levels established in section 9.
(b) The individual has been a resident of the state for the
previous 6 months.
(c) The individual is not eligible for any government program,
medicaid, medicare, or the state children's health insurance
program authorized under title XXI of the social security act, 42
USC 1397aa to 1397jj.
(d) The individual's or family member's employer has not
provided health coverage in the last 6 months for which the
individual is eligible. This subdivision does not apply if health
coverage was not provided due to the individual's or family
member's loss of employment, loss of eligibility for coverage due
to loss of employment hours, or loss of dependency status.
(e) The individual has not accepted a financial incentive from
his or her employer to decline his or her employer's subsidized
health coverage plan.
Sec. 12. The board shall encourage eligible health coverage
plans to use incentives to provide health promotion, chronic care
management, and disease prevention. Incentives may include rewards,
premium discounts, or rebates or otherwise waive or modify
copayments, deductibles, or other cost-sharing measures. Incentives
shall be available to all similarly situated individuals, shall be
designed to promote health and prevent disease, and shall not be
used to impose higher costs on an individual based on a health
factor.
Sec. 13. A resident who has applied to MI-Health has the right
to receive a written determination of eligibility and, if
eligibility is denied, a written denial detailing the reasons for
the denial and the right to appeal any eligibility decision,
provided the appeal is conducted pursuant to the process
established by the board.
Sec. 15. The board shall enter into interagency agreements
with the department of treasury to verify income data for
participants in MI-Health. The written agreements shall include
provisions permitting the board to provide a list of individuals
participating in or applying for an eligible health coverage plan,
including any applicable members of the households of those
individuals, who would be counted in determining eligibility, and
to furnish relevant information, including, but not limited to,
name, social security number, if available, and other data required
to assure positive identification. The department of treasury shall
furnish the requested information, including, but not limited to,
name, social security number, and other data to ensure positive
identification, name and identification number of employer, and
amount of wages received and gross income from all sources.
Sec. 17. (1) The board may apply a surcharge to all eligible
health coverage plans, which shall be used only to pay actual
administrative and operational expenses of MI-Health and so long as
the surcharge is applied uniformly to all eligible health coverage
plans. A surcharge shall not be used to pay any premium assistance
payments.
(2) Each carrier offering an eligible health coverage plan
shall furnish such reasonable reports as the board determines
necessary under this act, including, but not limited to, detailed
loss-ratio and experience reports that identify administrative cost
and medical charge trends.
Sec. 19. (1) The MI-Health fund is created within the state
treasury.
(2) Premium contribution payments and surcharges collected
under MI-Health shall be deposited into the fund. The health access
surcharge collected under part II shall be deposited into the fund.
The state treasurer may receive money or other assets from any
source, including federal matching funds or stimulus funds, for
deposit into the fund. The state treasurer shall direct the
investment of the fund. The state treasurer shall credit to the
fund interest and earnings from fund investments.
(3) Money in the fund at the close of the fiscal year shall
remain in the fund and shall not lapse to the general fund.
(4) Money in the fund shall be expended only as provided in
this act. The department of community health shall be the
administrator of the fund for auditing purposes.
Sec. 21. The board shall keep an accurate account of all MI-
Health activities and of all its receipts and expenditures and
shall annually make a report thereof at the end of its fiscal year
to the governor, to the house of representatives and senate
standing committees on appropriations, health, and insurance
issues, and to the auditor general. The auditor general may
investigate the affairs of MI-Health, may severally examine its
properties and records, and may prescribe methods of accounting and
the rendering of periodical reports. MI-Health is subject to annual
audit by the auditor general.
PART II HEALTH ACCESS SURCHARGE
Sec. 31. As used in this part:
(a) "Paid claims" means all payments made by third-party
administrators or carriers, including payments made pursuant to a
service contract for administrative services or cost plus
arrangements under section 211 of the nonprofit health care
corporation reform act of 1980, 1980 PA 350, MCL 550.1211, for
health and medical services provided under individual, nongroup,
and group policies, certificates, or contracts delivered, issued
for delivery, or renewed in this state that insure or cover
residents of this state. If a carrier or third-party administrator
is contractually entitled to withhold certain amounts 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 application of such withholds
shall be reflected in the calculation of paid claims. Paid claim
does not include any of the following:
(i) Claims-related expenses and general administrative
expenses.
(ii) Payments made to qualifying providers under a "pay for
performance" or other 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 and third-party administrators
with respect to dental, vision, specified accident or accidental
only coverage, credit, disability income, hospital indemnity, long-
term care insurance, medicare supplement, coverage issued as a
supplement to liability insurance, and specified disease insurance,
except that claims paid for dental services covered under a medical
policy are included.
(iv) Claims paid for services rendered to nonresidents of this
state.
(v) Claims paid under retiree health benefit plans that are
separate from and not included within benefit plans for existing
employees.
(vi) Claims paid for services rendered to persons covered under
a benefit plan for federal employees.
(vii) Claims paid for services rendered outside of this state
to a person who is a resident of this state.
(b) "Claims-related expenses" includes the following:
(i) 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, usually either by attempting to
ensure that needed services are delivered in the most efficacious
manner possible or by helping those covered individuals to maintain
or improve their health.
(ii) Payments that are made to or by organized groups of
providers of health and medical services in accordance with managed
care risk arrangements or network access agreements, which payments
are unrelated to the provision of services to specific covered
individuals.
(c) "Health and medical services" includes, but is not limited
to, any services included in the furnishing of medical care, dental
care to the extent covered under a medical insurance policy,
pharmaceutical benefits, or hospitalization, including, but not
limited to, services provided in a hospital or other medical
facility; ancillary services, including, but not limited to,
ambulatory services; physician and other practitioner services,
including, but not limited to, services provided by a physician's
assistant, nurse practitioner, or midwife; and behavioral health
services, including, but not limited to, mental health and
substance abuse services.
Sec. 33. All carriers and third-party administrators shall pay
a health access surcharge that shall not exceed 1.8% on all paid
claims. All of the following apply to the health access surcharge:
(a) The surcharge applies to paid claims beginning July 1,
2010.
(b) Surcharge payments shall be made monthly to the Mi-Health
fund beginning August 2010, are due not less than 15 days after the
end of the month, and shall accrue interest at 12% per annum on or
after the due date, except that surcharge payments for third-party
administrators for groups of 500 or fewer members may be made
annually not less than 60 days after the close of the plan year.
Sec. 35. The commissioner may suspend or revoke, after notice
and hearing, the certificate of authority of any carrier to
transact insurance in this state or the license of any third-party
administrator to operate in this state that fails to pay a health
access surcharge.
PART III REPORTS
Sec. 51. (1) By 18 months after the effective date of this
act, the board shall report on whether the health coverage plans
offered through MI-Health are affordable and competitively priced
in the individual market. In making this determination, the board
shall consider all of the following:
(a) The extent to which any carrier controls all or a portion
of the health coverage plan market.
(b) Whether the total number of carriers offering eligible
health coverage plans in this state is sufficient to provide
multiple options to individuals.
(c) Whether underwriting needs to be expanded or restricted
for MI-Health eligible health coverage plans.
(d) The availability of eligible health coverage plans to
individuals in all geographic areas.
(e) The overall rate level that is not excessive, inadequate,
or unfairly discriminatory.
(2) The report under subsection (1) shall be forwarded to the
governor, the clerk of the house, the secretary of the senate, and
all the members of the senate and house of representatives standing
committees on insurance and health issues.
Sec. 53. No later than 2 years after MI-Health begins
operation and every year thereafter, the board shall conduct a
study of MI-Health and the persons enrolled in eligible health
coverage plans and shall submit a written report to the governor
and the house of representatives and senate standing committees on
appropriations, health, and insurance issues on the status and
activities of MI-Health based on data collected in the study. The
report shall also be available to the general public upon request.
The study shall review all of the following for the immediately
preceding year:
(a) The operation, administration, and costs of MI-Health.
(b) What health coverage plans are available to individuals
through MI-Health and the experience of those plans including any
adverse selection trends. The experience of the plans shall include
data on number of enrollees in the plans, plans' expenses, claims
statistics, and complaints data. Health information obtained under
this act is subject to the federal health insurance portability and
accountability act of 1996, Public Law 104-191, or regulations
promulgated under that act, 45 CFR parts 160 and 164.
(c) The number of MI-Health enrollees and the total amount of
premium assistance payments made under each eligible health
coverage plan.
(d) The amount and reasonableness of a surcharge applied
pursuant to section 17 and its impact on premiums.
(e) Other information considered pertinent by the board.
Enacting section 1. This act does not take effect unless all
of the following bills of the 95th Legislature are enacted into
law:
(a) Senate Bill No. 580.
(b) Senate Bill No. 581.
(c) Senate Bill No. 582.
