Bill Text: PA HB1983 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Dividing the act into Federal compliance and Commonwealth exclusivity; in Federal compliance, further providing for definitions, for required filings, for review procedure, for notice of disapproval, for use of disapproved forms or rates, for review of form or rate disapproval, for disapproval after use, for filing of provider contracts, for record maintenance, for public comment and for penalties and providing for regulations and for expiration; in Commonwealth exclusivity, providing for regulations and for action by the Insurance Commissioner; and making editorial changes.

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2011-12-14 - Referred to BANKING AND INSURANCE [HB1983 Detail]

Download: Pennsylvania-2011-HB1983-Amended.html

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PRIOR PRINTER'S NO. 2739 PRINTER'S NO. 2764
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1983 Session of2011
INTRODUCED BY MICOZZIE, DeLUCA, GODSHALL, GROVE, KILLION, CLYMER, HALUSKA, HESS, MILLARD, MURPHY, READSHAW, REICHLEY, STURLA, VULAKOVICH, BARBIN AND D. COSTA, NOVEMBER 15, 2011
AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF REPRESENTATIVES, AS AMENDED, NOVEMBER 16, 2011
AN ACT
Amending the act of December 18, 1996 (P.L.1066, No.159),
entitled "An act providing for review procedures pertaining
to accident and health insurance form and rate filings;
providing penalties; and making repeals," dividing the act
into Federal compliance and Commonwealth exclusivity; in
Federal compliance, further providing for definitions, for
required filings, for review procedure, for notice of
disapproval, for use of disapproved forms or rates, for
review of form or rate disapproval, for disapproval after
use, for filing of provider contracts, for record
maintenance, for public comment and for penalties and
providing for regulations and for expiration; in Commonwealth
exclusivity, providing for regulations and for action by the
Insurance Commissioner; and making editorial changes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of December 18, 1996 (P.L.1066, No.159),
known as the Accident and Health Filing Reform Act, is amended
by adding a chapter heading to read:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 2. Section 1 of the act is renumbered to read:
Section [1] 101. Short title.
This act shall be known and may be cited as the Accident and
Health Filing Reform Act.
Section 3. The act is amended by adding a chapter heading to
read:
CHAPTER 3
FEDERAL COMPLIANCE
Section 4. The introductory paragraph and the definitions of
"group accident and health insurance" and "insurer" in section 2
of the act are amended, the section is amended by adding a
definition and the section is renumbered to read:
Section [2] 301. Definitions.
The following words and phrases when used in this [act]
chapter shall have the meanings given to them in this section
unless the context clearly indicates otherwise:
* * *
"Group accident and health insurance." A form affording
insurance coverage against death, injury, disablement, disease
or sickness resulting from an accident and covering [more than
one person] a large or small group. The term shall not include
blanket accident insurance policies or franchise accident and
sickness insurance policies as defined in [section] sections
621.3 and 621.4 of the act of May 17, 1921 (P.L.682, No.284),
known as The Insurance Company Law of 1921.
* * *
"Insurer." A foreign or domestic company, association or
exchange, hospital plan corporation, professional health
services plan corporation, fraternal benefits society, health
maintenance organization and risk-assuming preferred provider
organization.
* * *
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"Small group." A group that purchases accident and health
insurance in the small group market, as defined in section
2791(e)(5) of the Public Health Service Act (110 Stat. 1972, 42
U.S.C. § 300gg-91(e)(5)), provided, however, that for plan years
beginning prior to January 1, 2016, or other date as established
in Federal law, "50 employees" is substituted for "100
employees" in the definition of "small employer" in section
2791(e)(4) of the Public Health Service Act.
* * *
Section 4.1. The act is amended by adding a section to read:
Section 302. (Reserved).
Section 5. Sections 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13
of the act are amended to read:
Section [3] 303. Required filings.
(a) Form filings.--Each insurer [and HMO] shall file with
the department any form which it proposes to issue in this
Commonwealth except a type or kind of form which, in the opinion
of the commissioner, does not require filing. The form filings
required by this section shall be made no less than 45 days, or
a shorter period of time as the department may establish, prior
to their effective dates. The filings shall be subject to filing
and review in accordance with the provisions of section 304.
(b) Notice of exemption from form filing.--The commissioner
shall issue notice in the Pennsylvania Bulletin identifying any
type or kind of form which has been exempted from filing. The
commissioner may subsequently require the forms to be filed
under this section upon notice published in the Pennsylvania
Bulletin. Any such subsequent notice shall not be effective
until 90 days after publication.
(c) Individual rates.--Each insurer [and HMO] shall file
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with the department rates for individual accident and health
insurance policies which it proposes to use in this Commonwealth
except those rates which, in the opinion of the commissioner,
cannot practicably be filed before they are used. The
commissioner shall publish notice in the Pennsylvania Bulletin
identifying rates which the commissioner determines cannot
practicably be filed. The filings required by this subsection
shall be made no less than 45 days, or a shorter period of time
as the department may establish, prior to their effective dates.
The filings shall be subject to filing and review in accordance
with the provisions of section 304.
(d) Certain group rates exempt.--Except as provided in
subsection (e), an insurer shall not be required to file with
the department rates for accident and health insurance policies
which it proposes to issue on a group[, blanket or franchise]
basis in this Commonwealth.
(e) Required group rate filings.--Each [hospital plan
corporation, professional health services plan corporation and
HMO] insurer shall file with the department rates for small
group accident and health insurance policies which it proposes
to issue on a group[, blanket or franchise] basis in this
Commonwealth in accordance with the following:
(1) Each [hospital plan corporation, professional health
services plan corporation and HMO] insurer shall establish
and file with the department prior to use a base rate which
is not excessive, inadequate or unfairly discriminatory. The
initial base rate for existing hospital plan corporations,
professional health services plan corporations and HMOs shall
be the rate or the rating formula currently on file and
approved by the department as of the effective date of [this
20110HB1983PN2764 - 4 -
act] section 314. The initial base rate or base rating
formula for any [hospital plan corporation, professional
health services plan corporation or HMO] insurer with no base
rate or base rating formula on file and approved as of the
effective date of [this act] section 314 shall be [subject to
filing, review and prior approval by the department] the base
rate or base rating formula in effect on the effective date
of section 314, and shall be filed with the department no
more than 45 days thereafter.
(2) Proposed changes to [an approved] a base rate or
[any approved component of an approved] base rating formula
which effect an increase or decrease in the [approved] base
rate or [in an approved component of an approved] base rating
formula of [more than] 10% or more annually in the aggregate
shall be subject to filing[,] and review [and prior approval]
by the department in accordance with the provisions of
section 304. The filings required by this paragraph shall be
made no less than 45 days, or a shorter period of time as the
department may establish, prior to their effective dates.
(3) Proposed changes to [an approved] a base rate or
[any approved component of an approved] base rating formula
which effect an increase or decrease in the [approved] base
rate or [in an approved component of an approved] base rating
formula of [not more] less than 10% annually in the aggregate
shall be [subject to filing and review in accordance with the
provisions of section 4] filed with the department and may be
used 45 days thereafter.
(4) Rates developed for a specific group which do not
deviate from the base rate or base rate formula by more than
15% may be used without filing with the department.
20110HB1983PN2764 - 5 -
(5) Rates developed for a specific group which deviate
from the base rate or base rate formula by more than 15%
shall be subject to filing and review in accordance with the
provisions of section [4] 304. The filings required by this
paragraph shall be made no less than 45 days, or a shorter
period of time as the department may establish, prior to
their effective dates.
(6) The commissioner shall have discretion to exempt any
type or kind of rate filing under this subsection by
regulation except for filings required under subsection (c)
and paragraph (2).
[(f) Applicability of filings.--All filings required by this
section shall be made no less than 45 days prior to their
effective dates. Filings under subsection (e)(1) and (2) shall
be deemed approved at the expiration of 45 days after filing
unless earlier approved or disapproved by the commissioner. The
commissioner, by written notice to the insurer, may within such
45-day period extend the period for approval or disapproval for
an additional 45 days. All other filings under this section
shall become effective as provided in section 4.]
(f) Power of the department.--The department may, at the
discretion of the commissioner through notice in the
Pennsylvania Bulletin, adjust the 10% threshold set forth in
subsection (e)(2) and (3) only for purposes of coordinating the
filing requirements of this section to a state-specific
percentage determined by the Secretary of the United States
Department of Health and Human Services.
Section [4] 304. Review procedure.
(a) General rule.--Filings under section 303(c) and (e)(1),
(2) and (5) shall be reviewed as appropriate and necessary to
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carry out the provisions of this [act] chapter. [Unless a filing
is disapproved by the department within the 45-day period
provided in section 3(f), filings made under section 3 shall
become effective for use 45 days following:
(1) the expiration of any public comment period
established by the commissioner under section 11; or
(2) receipt of the filing by the department if no public
comment period is established.] The following apply:
(1) Unless a filing that is subject to review under
section 303(c) or (e)(1), (2) or (5) is earlier disapproved
by the department, or the department, by written notice to
the insurer, extends the period for approval or disapproval
for an additional 45 days, the filings shall be deemed
approved 45 days following receipt of the filing by the
department.
(2) Unless a resubmitted filing made under subsection
(c) is earlier disapproved by the department, the resubmitted
filing shall be deemed approved 30 days following receipt of
the resubmitted filing by the department.
(3) The department may hire the services of a competent
actuarial firm as reasonably necessary under any section of
this chapter to assist the department in the review of an
insurer's rate filing or resubmitted rate filing under
section 303(c) or (e)(1), (2) or (5). The reasonable and
necessary costs for the services shall be paid by the insurer
within 30 days of the insurer's receipt of a bill for the
services.
(4) An insurer intending to use any rate deemed approved
under this subsection shall provide written notice to the
department prior to use.
20110HB1983PN2764 - 7 -
(b) Disapproval.--Disapproval of a filing shall be based
only on specific provisions of applicable law, regulation or
statement of policy or if insufficient information is submitted
to support the filing. Rates [filed under section 3(e)] shall
not be disapproved unless the rates are determined to be
excessive, inadequate or unfairly discriminatory.
(c) Resubmission.--A filing disapproved by the department
may be resubmitted within 120 days after the date of the
disapproval. [Filings resubmitted within this time shall become
effective for use 30 days after the receipt of the resubmission
by the department unless the filing is disapproved by the
department before the expiration of the 30-day period. This
subsection shall not apply to filings made prior to the
effective date of this act.]
(d) Disapproval of resubmissions.--Disapproval of a filing
resubmitted under subsection (c) shall be based only on specific
provisions of applicable law, regulation or statement of policy
or if insufficient information is submitted to support the
filing. Rates shall not be disapproved unless the rates are
determined to be excessive, inadequate or unfairly
discriminatory. Disapproval may not be based on any grounds not
specified in the initial disapproval issued by the department
except to the extent that new information is presented in the
resubmission.
(e) Subsequent resubmissions.--Any further resubmission
following a second disapproval shall be considered a new filing
[and reviewed in accordance with subsection (a)] under section
303.
(f) [Commissioner's] Department's discretion.--Nothing in
this section shall be construed to prevent the [commissioner]
20110HB1983PN2764 - 8 -
department from affirmatively approving a filing at the
[commissioner's] department's discretion.
Section [5] 305. Notice of approval or disapproval.
(a) Requirement.--Upon the disapproval of any filing under
this [act] chapter, the department shall notify the insurer [or
HMO] of the disapproval in writing, specifying the reason or
reasons for such disapproval.
(b) Report.--A report of the approval or disapproval of a
rate filing subject to review under Federal law shall be
provided by the department to the United States Department of
Health and Human Services in a form and manner prescribed by the
Secretary of the United States Department of Health and Human
Services.
Section [6] 306. Use of disapproved forms or rates.
It shall be unlawful for any insurer [or HMO] to use in this
Commonwealth a form or rate disapproved under this [act]
chapter.
Section [7] 307. Review of form or rate disapproval.
(a) Request for hearing.--Within 30 days from the date of
mailing of a notice of disapproval of a filing under this [act]
chapter, the insurer [or HMO] may make a written application to
the commissioner for a hearing.
(b) Hearing.--Upon receipt of a timely written application
for hearing, the commissioner shall schedule and conduct a
hearing as provided in 2 Pa.C.S. Ch. 5 Subch. A (relating to
practice and procedure of Commonwealth agencies) and Ch. 7
Subch. A (relating to judicial review of Commonwealth agency
action). All of the actions which may be performed by the
commissioner in this section may be performed by the
commissioner's designated representative.
20110HB1983PN2764 - 9 -
Section [8] 308. Disapproval after use.
(a) General rule.--Any form or rate filed and used [after
the expiration of the appropriate review period] under this
[act] chapter, whether or not subject to review under this
chapter, may be subsequently disapproved. The [commissioner]
department shall notify the insurer [or HMO] in writing and
provide the opportunity for a hearing as provided in 2 Pa.C.S.
Ch. 5 Subch. A (relating to practice and procedure of
Commonwealth agencies) and Ch. 7 Subch. A (relating to judicial
review of Commonwealth agency action).
(b) Discontinuance of form.--If following a hearing the
commissioner finds that a form in use should be disapproved, the
commissioner shall order its use to be discontinued for any
policy issued after a date specified in the order.
(c) Discontinuance of rate.--If following a hearing the
commissioner finds that a rate in use should be disapproved, the
commissioner shall order its use to be discontinued
prospectively for any policy issued or renewed after a date
specified in the order.
(d) Suspension of forms.--Pending a hearing, the
commissioner may order the suspension of use of a form filed if
the commissioner has reasonable cause to believe that:
(1) The form is contrary to applicable law, regulation
or statement of policy.
(2) Unless a suspension order is issued, insureds will
suffer substantial harm.
(3) The harm insureds will suffer outweighs any hardship
the insurer will suffer by the suspension of the use of the
form.
(4) The suspension order will result in no harm to the
20110HB1983PN2764 - 10 -
public.
(e) Suspension of rates.--Pending a hearing, the
commissioner may order the suspension of use of a rate filed and
reinstate the last previous rate in effect if the commissioner
has reasonable cause to believe that:
(1) The rate is excessive, inadequate or unfairly
discriminatory under section [4(b)] 304(b).
(2) Unless a suspension order is issued, insureds will
suffer substantial harm.
(3) The harm insureds will suffer outweighs any hardship
the insurer will suffer by the suspension of the use of the
[form] rate.
(4) The suspension order will result in no harm to the
public.
Section [9] 309. Filing of provider contracts.
(a) Filing and review process.--Provider contracts shall be
filed by insurers and reviewed by the department as follows:
(1) Provider contracts shall be filed with the
department no later than 30 days prior to the effective date
specified in the contract.
(2) Provider contracts shall become effective unless
disapproved within 30 days following:
(i) the expiration of [the] any public comment
period established by the [commissioner] department under
section [11] 311; or
(ii) receipt of the filing by the department if no
public comment is established.
(3) The department may disapprove a provider contract
whenever it is determined that the contract:
(i) provides for excessive payments;
20110HB1983PN2764 - 11 -
(ii) fails to include reasonable incentives for cost
control;
(iii) contributes to the escalation of the cost of
providing health care services; or
(iv) does not provide for the realization of
potential and achieved savings under the contract by
insureds/subscribers.
(b) Review of the disapproval.--Upon disapproval of a
provider contract under this section, the insurer may seek
review of the disapproval as provided in section [7] 307.
(c) Payment rates and fee information.--Provider contracts
filed under this section need not contain payment rates and fees
unless requested by the department. Payment rates and fees
requested by the department shall be given confidential
treatment, are not subject to subpoena and may not be made
public by the department, except that the payment rates and fee
information may be disclosed to the insurance department of
another state or to a law enforcement official of this State or
any other state or agency of the Federal Government at any time
so long as the agency or office receiving the information agrees
in writing to hold it confidential and in a manner consistent
with this [act] chapter.
(d) Disapproval of existing contract.--If at any time the
commissioner determines that a provider contract which has
become effective under this section violates the standards as
provided in subsection (a)(3), the commissioner may disapprove
the provider contract after notice and hearing as provided in 2
Pa.C.S. Ch. 5 Subch. A (relating to practice and procedure of
Commonwealth agencies) and Ch. 7 Subch. A (relating to judicial
review of Commonwealth agency action).
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(e) Department of Health authority.--Nothing in this section
shall be construed to expand or limit the authority of the
Department of Health to review provider contracts under its
authority under the act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act, and section
630 of the act of May 17, 1921 (P.L.682, No.284), known as The
Insurance Company Law of 1921, and regulations promulgated
thereunder, including review of size of network and quality of
care provided.
Section [10] 310. Record maintenance.
Upon request, the [commissioner] department shall be provided
a copy of any form being issued in this Commonwealth. Insurers
[and HMOs] shall maintain complete and accurate specimen or
actual copies of all forms which are issued to Pennsylvania
residents, including copies of all applications, certificates
and endorsements used with policies. Retention of the forms may
be kept on diskette, microfiche or any other electronic method.
Specimen copies shall also indicate the date the form was first
issued in this Commonwealth. The records shall be maintained
until at least two years after a claim can no longer be reported
under the form.
Section [11] 311. Public comment.
[Public] (a) Certain rate filings.--A form of notice for
each rate filing subject to review under Federal law shall be
required to be provided by the filing insurer for posting on the
department's website. The form of notice shall satisfy the
requirements set forth in section 2794 of the Public Health
Service Act (110 Stat. 1972, 42 U.S.C. § 300gg-94) and any
regulations promulgated thereunder.
(b) Other filings.--Except as provided for under subsection
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(a), public notice of filings made under this [act] chapter
shall not be required. At the [commissioner's] department's
discretion, however, notice of a filing may be published in the
Pennsylvania Bulletin [and a time period established for the
receipt of public comment by the department] or on the
department's website or on any other publicly accessible
electronic medium.
(c) Period for public comment.--At the department's
discretion, the department may establish a time period for the
receipt of public comment on any filing.
Section [12] 312. Required policy provisions.
(a) General rule.--An individual or group, blanket or
franchise form issued by a hospital plan corporation or
professional health services plan corporation shall also be
subject to the following provisions of the act of May 17, 1921
(P.L.682, No.284), known as The Insurance Company Law of 1921:
(1) Section 617.
(2) Section 618.
(3) Section 619.
(4) Section 619.1.
(5) Section 621.2(a)(6).
(6) Section 621.2(b) through (d).
(7) Section 621.3.
(8) Section 621.4.
(9) Section 621.5.
(10) Section 622.
(11) Section 625.
(12) Section 626.
(13) Section 628.
(b) Network-based programs.--Nothing in this [act] chapter
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shall prohibit a hospital plan corporation or professional
health services plan corporation from establishing or offering
provider network-based programs under 40 Pa.C.S. Ch. 61
(relating to hospital plan corporations) or 63 (relating to
professional health services plan corporations).
Section [13] 313. Penalties.
(a) General rule.--Upon satisfactory evidence of the
violation of any section of this [act] chapter by an insurer[,
HMO] or any other person, one or more of the following penalties
may be imposed at the commissioner's discretion:
(1) Suspension or revocation of the license of the
offending insurer[, HMO] or other person.
(2) Refusal, for a period not to exceed one year, to
issue a new license to the offending insurer[, HMO] or other
person.
(3) A fine of not more than $5,000 for each violation of
this [act] chapter.
(4) A fine of not more than $10,000 for each willful
violation of this [act] chapter.
(5) A fine of not more than $10,000 for each violation
of section [6] 306.
(6) A fine of not more than $25,000 for each willful
violation of section [6] 306.
(b) Limitation.--Fines imposed against an individual insurer
under this [act] chapter shall not exceed $500,000 in the
aggregate during a single calendar year.
Section 6. The act is amended by adding sections to read:
Section 314. Regulations.
The department may promulgate regulations as may be necessary
or appropriate to carry out this chapter.
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Section 315. Expiration.
This chapter shall expire upon publication of the notice
under section 5103.
Section 7. The act is amended by adding a chapter to read:
CHAPTER 5
COMMONWEALTH EXCLUSIVITY
Section 501. (Reserved).
Section 502. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Company," "association" or "exchange." An entity defined in
section 101 of the act of May 17, 1921 (P.L.682, No.284), known
as The Insurance Company Law of 1921.
"Department." The Insurance Department of the Commonwealth.
"Filing." A form or rate required by section 503.
"Form." A policy, contract, certificate, evidence of
coverage, application, rider or endorsement affording insurance
coverage or benefit against loss from sickness or loss or damage
from bodily injury or death of the insured by accident and each
modification of any of the above.
"Fraternal benefits society." An entity organized and
operating under Article XXIV of the act of May 17, 1921
(P.L.682, No.284), known as The Insurance Company Law of 1921.
"Group accident and health insurance." A form affording
insurance coverage against death, injury, disablement, disease
or sickness resulting from an accident and covering more than
one person. The term shall not include blanket accident
20110HB1983PN2764 - 16 -
insurance policies as defined in section 621.3 of the act of May
17, 1921 (P.L.682, No.284), known as The Insurance Company Law
of 1921.
"Health care provider." A person, corporation, facility,
institution or other entity licensed, certified or approved by
the Commonwealth to provide health care or professional medical
services. The term includes, but is not limited to, physicians,
professional nurses, certified nurse-midwives, podiatrists,
hospitals, nursing homes, ambulatory surgical centers or birth
centers.
"Health maintenance organization" or "HMO." An entity
organized and operating under the act of December 29, 1972
(P.L.1701, No.364), known as the Health Maintenance Organization
Act.
"Hospital plan corporation." An entity organized and
operating under 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations).
"Insurer." A foreign or domestic company, association or
exchange, hospital plan corporation, professional health
services plan corporation, fraternal benefits society and risk-
assuming preferred provider organization.
"Preferred provider organization." An entity organized and
operating under section 630 of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921.
"Professional health services plan corporation." An entity
organized and operating under 40 Pa.C.S. Ch. 63 (relating to
professional health services plan corporations).
"Provider contracts." An agreement made between an insurer
and a health care provider regarding the provision of any
payment for health care services. The term shall not include
20110HB1983PN2764 - 17 -
contracts or related documents which are subject to the
exclusive approval of the Department of Health under 40 Pa.C.S.
§ 6324 (relating to rights of health service doctors) and
section 630 of the act of May 17, 1921 (P.L.682, No.284), known
as The Insurance Company Law of 1921.
"Rate." A manual of classification, rules and rates, each
rating plan and each modification of any of the above.
"Statement of policy." A document as defined in 45 Pa.C.S. §
501 (relating to definitions), provided that the document has
been published in the Pennsylvania Bulletin.
Section 503. Required filings.
(a) Form filings.--Each insurer and HMO shall file with the
department any form which it proposes to issue in this
Commonwealth except a type or kind of form which, in the opinion
of the commissioner, does not require filing.
(b) Notice of exemption from filing.--The commissioner shall
issue notice in the Pennsylvania Bulletin identifying any type
or kind of form which has been exempted from filing. The
commissioner may subsequently require the forms to be filed
under this section upon notice published in the Pennsylvania
Bulletin. Any such subsequent notice shall not be effective
until 90 days after publication.
(c) Individual rates.--Each insurer and HMO shall file with
the department rates for individual accident and health
insurance policies which it proposes to use in this Commonwealth
except those rates which, in the opinion of the commissioner,
cannot practicably be filed before they are used. The
commissioner shall publish notice in the Pennsylvania Bulletin
identifying rates which the commissioner determines cannot
practicably be filed.
20110HB1983PN2764 - 18 -
(d) Certain group rates exempt.--Except as provided in
subsection (e), an insurer shall not be required to file with
the department rates for accident and health insurance policies
which it proposes to issue on a group, blanket or franchise
basis in this Commonwealth.
(e) Required group rate filings.--Each hospital plan
corporation, professional health services plan corporation and
HMO shall file with the department rates for accident and health
insurance policies which it proposes to issue on a group,
blanket or franchise basis in this Commonwealth in accordance
with the following:
(1) Each hospital plan corporation, professional health
services plan corporation and HMO shall establish a base rate
which is not excessive, inadequate or unfairly
discriminatory. The initial base rate for existing hospital
plan corporations, professional health services plan
corporations and HMOs shall be the rate or the rating formula
currently on file and approved by the department as of
February 17, 1997. The initial base rate or base rating
formula for any hospital plan corporation, professional
health services plan corporation or HMO with no base rate or
base rating formula on file and approved as of February 17,
1997, shall be subject to filing, review and prior approval
by the department.
(2) Proposed changes to an approved base rate or any
approved component of an approved rating formula which effect
an increase or decrease in the approved base rate or in an
approved component of an approved rating formula of more than
10% annually in the aggregate shall be subject to filing,
review and prior approval by the department.
20110HB1983PN2764 - 19 -
(3) Proposed changes to an approved base rate or any
approved component of an approved rating formula that effect
an increase or decrease in the approved base rate or in an
approved component of an approved rating formula of not more
than 10% annually in the aggregate shall be subject to filing
and review in accordance with the provisions of section 504.
(4) Rates developed for a specific group which do not
deviate from the base rate or base rate formula by more than
15% may be used without filing with the department.
(5) Rates developed for a specific group which deviate
from the base rate or base rate formula by more than 15%
shall be subject to filing and review in accordance with the
provisions of section 504.
(6) The commissioner shall have discretion to exempt any
type or kind of rate filing under this subsection by
regulation.
(f) Applicability of filings.--All filings required by this
section shall be made no less than 45 days prior to their
effective dates. Filings under subsection (e)(1) and (2) shall
be deemed approved at the expiration of 45 days after filing
unless earlier approved or disapproved by the commissioner. The
commissioner, by written notice to the insurer, may within such
45-day period extend the period for approval or disapproval for
an additional 45 days. All other filings under this section
shall become effective as provided in section 504.
Section 504. Review procedure.
(a) General rule.--Filings shall be reviewed as appropriate
and necessary to carry out the provisions of this chapter.
Unless a filing is disapproved by the department within the 45-
day period provided in section 503(f), filings made under
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section 503 shall become effective for use 45 days following:
(1) the expiration of any public comment period
established by the commissioner under section 511; or
(2) receipt of the filing by the department if no public
comment period is established.
(b) Disapproval.--Disapproval of a filing shall be based
only on specific provisions of applicable law, regulation or
statement of policy or if insufficient information is submitted
to support the filing. Rates filed under section 503(e) shall
not be disapproved unless the rates are determined to be
excessive, inadequate or unfairly discriminatory.
(c) Resubmission.--A filing disapproved by the department
may be resubmitted within 120 days after the date of the
disapproval. Filings resubmitted within this time shall become
effective for use 30 days after the receipt of the resubmission
by the department unless the filing is disapproved by the
department before the expiration of the 30-day period. This
subsection shall not apply to filings made prior to February 17,
1997.
(d) Disapproval of resubmissions.--Disapproval of a filing
resubmitted under subsection (c) shall be based only on specific
provisions of applicable law, regulation or statement of policy
or if insufficient information is submitted to support the
filing. Disapproval may not be based on any grounds not
specified in the initial disapproval issued by the department
except to the extent that new information is presented in the
resubmission.
(e) Subsequent resubmissions.--Any further resubmission
following a second disapproval shall be considered a new filing
and reviewed in accordance with subsection (a).
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(f) Commissioner's discretion.--Nothing in this section
shall be construed to prevent the commissioner from
affirmatively approving a filing at the commissioner's
discretion.
Section 505. Notice of disapproval.
Upon the disapproval of any filing under this chapter, the
department shall notify the insurer or HMO of the disapproval in
writing, specifying the reason or reasons for such disapproval.
Section 506. Use of disapproved forms or rates.
It shall be unlawful for any insurer or HMO to use in this
Commonwealth a form or rate disapproved under this chapter.
Section 507. Review of form or rate disapproval.
(a) Request for hearing.--Within 30 days from the date of
mailing of a notice of disapproval of a filing under this
chapter, the insurer or HMO may make a written application to
the commissioner for a hearing.
(b) Hearing.--Upon receipt of a timely written application
for hearing, the commissioner shall schedule and conduct a
hearing as provided in 2 Pa.C.S. Ch. 5 Subch. A (relating to
practice and procedure of Commonwealth agencies) and Ch. 7
Subch. A (relating to judicial review of Commonwealth agency
action). All of the actions which may be performed by the
commissioner in this section may be performed by the
commissioner's designated representative.
Section 508. Disapproval after use.
(a) General rule.--Any form or rate filed and used after the
expiration of the appropriate review period under this chapter
may be subsequently disapproved. The department shall notify the
insurer or HMO in writing and provide the opportunity for a
hearing as provided in 2 Pa.C.S. Ch. 5 Subch. A (relating to
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practice and procedure of Commonwealth agencies) and Ch. 7
Subch. A (relating to judicial review of Commonwealth agency
action).
(b) Discontinuance of form.--If following a hearing the
commissioner finds that a form in use should be disapproved, the
commissioner shall order its use to be discontinued for any
policy issued after a date specified in the order.
(c) Discontinuance of rate.--If following a hearing the
commissioner finds that a rate in use should be disapproved, the
commissioner shall order its use to be discontinued
prospectively for any policy issued or renewed after a date
specified in the order.
(d) Suspension of forms.--Pending a hearing, the
commissioner may order the suspension of use of a form filed if
the commissioner has reasonable cause to believe that:
(1) The form is contrary to applicable law, regulation
or statement of policy.
(2) Unless a suspension order is issued, insureds will
suffer substantial harm.
(3) The harm insureds will suffer outweighs any hardship
the insurer will suffer by the suspension of the use of the
form.
(4) The suspension order will result in no harm to the
public.
(e) Suspension of rates.--Pending a hearing, the
commissioner may order the suspension of use of a rate filed and
reinstate the last previous rate in effect if the commissioner
has reasonable cause to believe that:
(1) The rate is excessive, inadequate or unfairly
discriminatory under section 504(b).
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(2) Unless a suspension order is issued, insureds will
suffer substantial harm.
(3) The harm insureds will suffer outweighs any hardship
the insurer will suffer by the suspension of the use of the
form.
(4) The suspension order will result in no harm to the
public.
Section 509. Filing of provider contracts.
(a) Filing and review process.--Provider contracts shall be
filed by insurers and reviewed by the department as follows:
(1) Provider contracts shall be filed with the
department no later than 30 days prior to the effective date
specified in the contract.
(2) Provider contracts shall become effective unless
disapproved within 30 days following:
(i) the expiration of the public comment period
established by the commissioner under section 511; or
(ii) receipt of the filing by the department if no
public comment is established.
(3) The department may disapprove a provider contract
whenever it is determined that the contract:
(i) provides for excessive payments;
(ii) fails to include reasonable incentives for cost
control;
(iii) contributes to the escalation of the cost of
providing health care services; or
(iv) does not provide for the realization of
potential and achieved savings under the contract by
insureds/subscribers.
(b) Review of the disapproval.--Upon disapproval of a
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provider contract under this section, the insurer may seek
review of the disapproval as provided in section 507.
(c) Payment rates and fee information.--Provider contracts
filed under this section need not contain payment rates and fees
unless requested by the department. Payment rates and fees
requested by the department shall be given confidential
treatment, are not subject to subpoena and may not be made
public by the department, except that the payment rates and fee
information may be disclosed to the insurance department of
another state or to a law enforcement official of this State or
any other state or agency of the Federal Government at any time
so long as the agency or office receiving the information agrees
in writing to hold it confidential and in a manner consistent
with this chapter.
(d) Disapproval of existing contract.--If at any time the
commissioner determines that a provider contract which has
become effective under this section violates the standards as
provided in subsection (a)(3), the commissioner may disapprove
the provider contract after notice and hearing as provided in 2
Pa.C.S. Chs. 5 Subch. A (relating to practice and procedure of
Commonwealth agencies) and 7 Subch. A (relating to judicial
review of Commonwealth agency action).
(e) Department of Health authority.--Nothing in this section
shall be construed to expand or limit the authority of the
Department of Health to review provider contracts under its
authority under the act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act, and section
630 of the act of May 17, 1921 (P.L.682, No.284), known as The
Insurance Company Law of 1921, and regulations promulgated
thereunder, including review of size of network and quality of
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care provided.
Section 510. Record maintenance.
Upon request, the department shall be provided a copy of any
form being issued in this Commonwealth. Insurers and HMOs shall
maintain complete and accurate specimen or actual copies of all
forms which are issued to residents of this Commonwealth,
including copies of all applications, certificates and
endorsements used with policies. Retention of the forms may be
kept on diskette, microfiche or any other electronic method.
Specimen copies shall also indicate the date the form was first
issued in this Commonwealth. The records shall be maintained
until at least two years after a claim can no longer be reported
under the form.
Section 511. Public comment.
Public notice of filings made under this chapter shall not be
required. At the commissioner's discretion, however, notice of a
filing may be published in the Pennsylvania Bulletin and a time
period established for the receipt of public comment by the
department.
Section 512. Required policy provisions.
(a) General rule.--An individual or group, blanket or
franchise form issued by a hospital plan corporation or
professional health services plan corporation shall also be
subject to the following provisions of the act of May 17, 1921
(P.L.682, No.284), known as The Insurance Company Law of 1921:
(1) Section 617.
(2) Section 618.
(3) Section 619.
(4) Section 619.1.
(5) Section 621.2(a)(6).
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(6) Section 621.2(b), (c) and (d).
(7) Section 621.3.
(8) Section 621.4.
(9) Section 621.5.
(10) Section 622.
(11) Section 625.
(12) Section 626.
(13) Section 628.
(b) Network-based programs.--Nothing in this chapter shall
prohibit a hospital plan corporation or professional health
services plan corporation from establishing or offering provider
network-based programs under 40 Pa.C.S. Ch. 61 (relating to
hospital plan corporations) or 63 (relating to professional
health services plan corporations).
Section 513. Penalties.
(a) General rule.--Upon satisfactory evidence of the
violation of any section of this chapter by an insurer, HMO or
any other person, one or more of the following penalties may be
imposed at the commissioner's discretion:
(1) Suspension or revocation of the license of the
offending insurer, HMO or other person.
(2) Refusal, for a period not to exceed one year, to
issue a new license to the offending insurer, HMO or other
person.
(3) A fine of not more than $5,000 for each violation of
this chapter.
(4) A fine of not more than $10,000 for each willful
violation of this chapter.
(5) A fine of not more than $10,000 for each violation
of section 506.
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(6) A fine of not more than $25,000 for each willful
violation of section 506.
(b) Limitation.--Fines imposed against an individual insurer
under this chapter shall not exceed $500,000 in the aggregate
during a single calendar year.
Section 514. Regulations.
The department may promulgate regulations as may be necessary
or appropriate to carry out this chapter.
Section 8. Sections 14 and 15 of the act are amended to
read:
Section [14] 5101. Repeals.
(a) Absolute.--The following acts and parts of acts are
repealed:
Sections 616 and the last sentence of section 621.5 of the
act of May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921.
Section 3104 of the act of December 2, 1992 (P.L.741,
No.113), known as the Children's Health Care Act.
(b) Partial.--The following acts and parts of acts are
repealed to the extent specified:
Section 354 of the act of May 17, 1921 (P.L.682, No.284),
known as The Insurance Company Law of 1921, insofar as it
provides for the approval of accident and health forms.
Section 621.2(a)(1) of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921, insofar as
it defines the number of employees in a group insurance policy.
Section 630(f) of the act of May 17, 1921 (P.L.682, No. 284),
known as The Insurance Company Law of 1921, insofar as it
provides for the approval of rates and forms.
Section 10(c) of the act of December 29, 1972 (P.L.1701,
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No.364), known as the Health Maintenance Organization Act,
insofar as it provides for the approval of rates and forms.
40 Pa.C.S. §§ 6124(a) and 6329(a), insofar as they provide
for the approval of rates and contracts.
Section [15] 5102. Applicability.
This act shall apply as follows:
(1) [Section 4] Sections 304 and Section 504 shall apply <--
to benefits forms filings for hospital plan corporations and
professional health services plan corporations made on or
after July 1, 1997.
(2) [Section 12] Sections 312 and Section 512 shall <--
apply to new forms issued after July 1, 1997.
(3) This act shall apply to all forms or rate filings
made and all provider contracts filed after [the effective
date of this act] February 17, 1997.
Section 9. The act is amended by adding a section to read:
Section 5103. Action by commissioner.
If Congress of the United States repeals section 1003 of the
Patient Protection and Affordable Care Act (Public Law 111-148,
42 U.S.C. § 300gg-94) or if the Supreme Court of the United
States invalidates section 1003 of the Patient Protection and
Affordable Care Act, the commissioner shall transmit notice of
that action to the Legislative Reference Bureau for publication
in the Pennsylvania Bulletin.
Section 10. Section 16 of the act is amended to read:
Section [16] 5104. Effective date.
This act shall take effect in 60 days.
Section 11. This act shall take effect as follows:
(1) The following provisions shall take effect
immediately:
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(i) The addition of section 5103 of the act.
(ii) This section.
(2) The addition of Chapter 5 of the act shall take
effect upon publication of the notice under section 5103 of
the act.
(3) The remainder of this act shall take effect in 90
days.
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