SB-0234,As Passed Senate,May 28, 2003
SUBSTITUTE FOR
SENATE BILL NO. 234
(As amended May 28, 2003)
A bill to amend 1980 PA 350, entitled
"The nonprofit health care corporation reform act,"
by amending sections 204, 206, 207, 211, 401, 502, 602, 606,
and 609 (MCL 550.1204, 550.1206, 550.1207, 550.1211,
550.1401, 550.1502, 550.1602, 550.1606, and 550.1609), section
207 as amended by 1999 PA 210, section 211 as amended by 1993 PA
127, section 401 as amended by 2000 PA 26, section 502 as amended
by 1998 PA 446, and section 609 as amended by 1991 PA 61, and by
adding sections 204a, 205a, 219, and 401j; and to repeal acts and
parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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Senate Bill No. 234 as amended May 28, 2003
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Senate Bill No. 234 as amended May 28, 2003
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6 Sec. 204. (1) Before entering into contracts or securing
7 applications of subscribers, the persons incorporating a health
8 care corporation shall file all of the following in the office of
9 the commissioner:
10 (a) Three copies of the articles of incorporation, with the
11 certificate of the attorney general required under section 202(3)
12 attached.
13 (b) A statement showing in full detail the plan upon which
14 the corporation proposes to transact business.
15 (c) A copy of all certificates to be issued to subscribers.
16 (d) A copy of the financial statements of the corporation.
17 (e) Proposed advertising to be used in the solicitation of
18 certificates for subscribers.
19 (f) A copy of the bylaws.
20 (g) A copy of all proposed contracts and reimbursement
21 methods.
22 (2) The commissioner shall examine the statements and
23 documents filed under subsection (1), may conduct any
24 investigation which that
he or she considers necessary, may
25 request additional oral and written information from the
26 incorporators, and may examine under oath any persons interested
27 in or connected with the proposed health care corporation. The
1 commissioner shall ascertain whether all of the following
2 conditions are met:
3 (a) The solicitation of certificates will not work a fraud
4 upon the persons solicited by the corporation.
5 (b) The rates to be charged and the benefits to be provided
6 are adequate, equitable, and not excessive, as defined in section
7 609.
8 (c) The amount of money actually available for working
9 capital is sufficient to carry all acquisition costs and
10 operating expenses for a reasonable period of time from the date
11 of issuance of the certificate of authority, and is not less than
12 $500,000.00 or a greater amount, if the commissioner considers it
13 necessary.
14 (d) The amounts contributed as the working capital of the
15 corporation are payable only out of amounts in excess of minimum
16 required reserves of the corporation.
17 (e) Adequate and reasonable
reserves are provided, as
18 defined in section 205
unimpaired surplus is provided,
as
19 determined under section 204a.
20 (3) If the commissioner finds that the conditions prescribed
21 in subsection (2) are met, the commissioner shall do all of the
22 following:
23 (a) Return to the incorporators 1 copy of the articles of
24 incorporation, certified
for filing with the chief officer
25 director of the
department of commerce consumer and industry
26 services or of any other agency or department authorized by law
27 to administer Act No.
284 of the Public Acts of 1972, as
1 amended, being
sections 450.1101 to 450.2099 of the Michigan
2 Compiled Laws the business corporation act, 1972 PA 284,
3 MCL 450.1101 to 450.2098, or his or her designated
4 representative, and 1 copy of the articles of incorporation
5 certified for the records of the corporation itself.
6 (b) Retain 1 copy of the articles of incorporation for the
7 commissioner's office files.
8 (c) Deliver to the corporation a certificate of authority to
9 commence business and to
issue certificates which that have
10 been approved by the
commissioner, or which that are exempted
11 from prior approval
pursuant to section 607(2) or (7) (8),
12 entitling subscribers to certain health care benefits.
13 Sec. 204a. (1) A health care corporation shall possess and
14 maintain unimpaired surplus in an amount determined adequate by
15 the commissioner to comply with section 403 of the insurance code
16 of 1956, 1956 PA 218, MCL 500.403. The commissioner shall follow
17 the risk-based capital requirements as developed by the national
18 association of insurance commissioners in order to determine
19 whether a health care corporation is in adequate compliance with
20 section 403 of the insurance code of 1956, 1956 PA 218,
21 MCL 500.403.
22 (2) If a health care corporation files a risk-based capital
23 report that indicates that its surplus is less than the amount
24 determined adequate by the commissioner under subsection (1), the
25 health care corporation shall prepare and submit a plan for
26 remedying the deficiency in accordance with risk-based capital
27 requirements adopted by the commissioner. Among the remedies
1 that a health care corporation may employ are planwide viability
2 contributions to surplus by subscribers.
3 (3) If contributions for planwide viability under subsection
4 (2) are employed, those contributions shall be made in accordance
5 with the following:
6 (a) If the health care corporation's surplus is less than
7 200% but more than 150% of the authorized control level under
8 risk-based capital requirements, the maximum contribution rate
9 shall be 0.5% of the rate charged to subscribers for the benefits
10 provided.
11 (b) If the health care corporation's surplus is 150% or less
12 than the authorized control level under risk-based capital
13 requirements, the maximum contribution rate shall be 1% of the
14 rate charged to subscribers for the benefits provided.
15 (c) The actual contribution rate charged is subject to the
16 commissioner's approval.
17 (4) As used in subsection (3), "authorized control level"
18 means the number determined under the risk-based capital formula
19 in accordance with the instructions developed by the national
20 association of insurance commissioners and adopted by the
21 commissioner.
22 (5) Subject to this subsection, a health care corporation
23 shall not maintain surplus in an amount that equals or is greater
24 than 200% of the authorized control level under risk-based
25 capital requirements multiplied by 5. If a health care
26 corporation files a risk-based capital report that indicates that
27 its surplus is more than the allowable maximum surplus permitted
1 under this subsection for 2 successive calendar years, the health
2 care corporation shall file a plan for approval by the
3 commissioner to adjust its surplus to a level below the allowable
4 maximum surplus. If the commissioner disapproves the health care
5 corporation's plan, the commissioner shall formulate an alternate
6 plan and forward the alternate plan to the health care
7 corporation. The health care corporation shall begin
8 implementation of the plan immediately upon receipt of approval
9 of its plan by the commissioner or upon receipt of the
10 commissioner's alternate plan.
11 Sec. 205a. A health care corporation shall report financial
12 information in conformity with sound actuarial practices and
13 statutory accounting principles in the same manner as designated
14 by the commissioner for other carriers pursuant to section 438(2)
15 of the insurance code of 1956, 1956 PA 218, MCL 500.438.
16 Approved permitted practices may be used by a health care
17 corporation until January 1, 2007 to effectuate the transfer to
18 statutory accounting principles required by this section.
19 Sec. 206. (1) The funds and property of a health care
20 corporation shall be acquired, held, and disposed of only for the
21 lawful purposes of the corporation and for the benefit of the
22 subscribers of the corporation as a whole. A health care
23 corporation shall only
transact such business, receive,
24 collect, and disburse such
money, and acquire, hold, protect,
25 and convey such property,
as are that is properly within the
26 scope of the purposes of the corporation as specifically set
27 forth in section 202(1)(d), for the benefit of the subscribers of
1 the corporation as a whole, and consistent with this act.
2 (2) The funds of a health care corporation shall be invested
3 only in securities permitted by the laws of this state for the
4 investments of assets of life insurance companies, as described
5 in chapter 9 of Act
No. 218 of the Public Acts of 1956, as
6 amended, being
sections 500.901 to 500.947 of the Michigan
7 Compiled Laws the insurance code of 1956, 1956 PA 218,
8 MCL 500.901 to 500.947.
9 (3) Without regard to the limitation in subsection (2), up to
10 2% of the assets of the health care corporation may be invested
11 in venture-type
investments. For purposes of calculating the
12 contingency reserve
pursuant to section 205 adequate
and
13 unimpaired surplus under section 204a, a venture-type investment
14 shall be carried on the books of a health care corporation at the
15 original acquisition cost, and losses may only be realized as an
16 offset against gains from venture-type investments. All
17 venture-type investments under this subsection shall provide
18 employment or capital investment primarily within this state.
19 Each investment under
this subsection shall be is subject to
20 prior approval by the board of directors. As used in this
21 subsection, "venture-type investments" include:
22 (a) Common stock, preferred stock, limited partnerships, or
23 similar equity interests acquired from the issuer subject to a
24 provision barring resale without consent of the issuer for 5
25 years from the date of acquisition by the corporation.
26 (b) Unsecured debt
instruments which that are either
27 convertible into equity or have equity acquisition rights. These
1 debt instruments shall be subordinated by their terms to all
2 borrowings of the issuer from other institutional lenders and
3 shall have no part amortized during the first 5 years.
4 (4) A health care corporation shall not market or transact,
5 as defined in sections
402a and 402b of Act No. 218 of the
6 Public Acts of 1956,
being sections 500.402a and 500.402b of the
7 Michigan Compiled Laws
the insurance code of 1956, 1956
PA 218,
8 MCL 500.402a and 500.402b, any type of insurance described in
9 chapter 6 of Act No.
218 of the Public Acts of 1956, as amended,
10 being sections 500.600
to 500.644 of the Michigan Compiled Laws
11 the insurance code of 1956, 1956 PA 218, MCL 500.600 to 500.644.
12 This subsection shall not be construed to prohibit the provision
13 of prepaid health care benefits.
14 Sec. 207. (1) A health care corporation, subject to any
15 limitation provided in this act, in any other statute of this
16 state, or in its articles of incorporation, may do any or all of
17 the following:
18 (a) Contract to provide computer services and other
19 administrative consulting services to 1 or more providers or
20 groups of providers, if the services are primarily designed to
21 result in cost savings to subscribers.
22 (b) Engage in experimental health care projects to explore
23 more efficient and economical means of implementing the
24 corporation's programs, or the corporation's goals as prescribed
25 in section 504 and the purposes of this act, to develop
26 incentives to promote alternative methods and alternative
27 providers, including nurse midwives, nurse anesthetists, and
1 nurse practitioners, for delivering health care, including
2 preventive care and home health care.
3 (c) For the purpose of providing health care services to
4 employees of this state, the United States, or an agency,
5 instrumentality, or political subdivision of this state or the
6 United States, or for the purpose of providing all or part of the
7 costs of health care services to disabled, aged, or needy
8 persons, contract with this state, the United States, or an
9 agency, instrumentality, or political subdivision of this state
10 or the United States.
11 (d) For the purpose of administering any publicly supported
12 health benefit plan, accept and administer funds, directly or
13 indirectly, made available by a contract authorized under
14 subdivision (c), or made available by or received from any
15 private entity.
16 (e) For the purpose of administering any publicly supported
17 health benefit plan, subcontract with any organization that has
18 contracted with this state, the United States, or an agency,
19 instrumentality, or political subdivision of this state or the
20 United States, for the administration or furnishing of health
21 services or any publicly supported health benefit plan.
22 (f) Provide administrative services only and cost-plus
23 arrangements for the federal medicare program established by
24 parts A and B of title XVIII of the social security act, chapter
25 531, 49 Stat. 620, 42
U.S.C. 1395 to 1395b, 1395b-2, 1395b-6 to
26 1395b-7, 1395c to 1395i, 1395i-2 to 1395i-5, 1395j to 1395t,
27 1395u to 1395w, and
1395w-2 to 1395w-4; , 1395w-21 to 1395w-28,
1 1395x to 1395yy, and
1395bbb to 1395ggg; for the federal
2 medicaid program established under title XIX of the social
3 security act, chapter 531, 49 Stat. 620, 42 U.S.C. 1396 to
4 1396f, 1396g-1 to 1396r-6, and 1396r-8 to 1396v; for title V of
5 the social security act, chapter 531, 49 Stat. 620, 42 U.S.C. 701
6 to 704 and 705 to 710; for the program of medical and dental care
7 established by the military medical benefits amendments of 1966,
8 Public Law 85-861, 80 Stat. 862; for the Detroit maternity and
9 infant care--preschool, school, and adolescent project; and for
10 any other health benefit program established under state or
11 federal law.
12 (g) Provide administrative services only and cost-plus
13 arrangements for any noninsured health benefit plan, subject to
14 the requirements of sections 211 and 211a.
15 (h) Establish, own, and operate a health maintenance
16 organization, subject to
the requirements of the public health
17 code, 1978 PA 368, MCL
333.1101 to 333.25211 insurance code
of
18 1956, 1956 PA 218, MCL 500.100 to 500.8302.
19 (i) Guarantee loans for the education of persons who are
20 planning to enter or have entered a profession that is licensed,
21 certified, or registered under parts 161 to 182 of the public
22 health code, 1978 PA 368, MCL 333.16101 to 333.18237, and has
23 been identified by the commissioner, with the consultation of the
24 office of health and medical affairs in the department of
25 management and budget, as a profession whose practitioners are in
26 insufficient supply in this state or specified areas of this
27 state and who agree, as a condition of receiving a guarantee of a
1 loan, to work in this state, or an area of this state specified
2 in a listing of shortage areas for the profession issued by the
3 commissioner, for a period of time determined by the
4 commissioner.
5 (j) Receive donations to assist or enable the corporation to
6 carry out its purposes, as provided in this act.
7 (k) Bring an action against an officer or director of the
8 corporation.
9 (l) Designate and maintain a registered office and a resident
10 agent in that office upon whom service of process may be made.
11 (m) Sue and be sued in all courts and participate in actions
12 and proceedings, judicial, administrative, arbitrative, or
13 otherwise, in the same cases as natural persons.
14 (n) Have a corporate seal, alter the seal, and use it by
15 causing the seal or a facsimile to be affixed, impressed, or
16 reproduced in any other manner.
17 (o) Invest Subject
to chapter 9 of the insurance code of
18 1956, 1956 PA 218, MCL 500.901 to 500.947, invest and reinvest
19 its funds and, for investment purposes only, purchase, take,
20 receive, subscribe for, or otherwise acquire, own, hold, vote,
21 employ, sell, lend, lease, exchange, transfer, or otherwise
22 dispose of, mortgage, pledge, use, and otherwise deal in and
23 with, bonds and other obligations, shares, or other securities or
24 interests issued by entities other than domestic, foreign, or
25 alien insurers, as defined in sections 106 and 110 of the
26 insurance code of 1956, 1956 PA 218, MCL 500.106 and 500.110,
27 whether engaged in a similar or different business, or
Senate Bill No. 234 as amended May 28, 2003
1 governmental or other activity, including banking corporations or
2 trust companies. However, a health care corporation may
3 purchase, take, receive, subscribe for, or otherwise acquire,
4 own, hold, vote, employ, sell, lend, lease, exchange, transfer,
5 or otherwise dispose of bonds or other obligations, shares, or
6 other securities or interests issued by a domestic, foreign, or
7 alien insurer, so long as the activity meets all of the
8 following:
9 (i) Is determined by the attorney general to be lawful under
10 section 202.
11 (ii) Is approved in writing by the commissioner as being in
12 the best interests of the health care corporation and its
13 subscribers.
14 (iii) Will For an activity that occurred
before the
15 effective date of the amendatory act that added subparagraph
16 (iv), will not result in the health care corporation owning or
17 controlling 10% or more of the voting securities of the insurer
18 or will not otherwise result in the health care corporation
19 having control of the insurer<<,>> either before or after the
20 effective date of the amendatory act that added subparagraph
21 (iv). Nothing
in this subdivision shall be interpreted as
22 expanding the lawful
purposes of a health care corporation under
23 this act. Except
where expressly authorized by statute, a health
24 care corporation shall
not indirectly engage in any investment
25 activity that it may
not engage in directly. A health care
26 corporation shall not
guarantee or become surety upon a bond or
27 other undertaking
securing the deposit of public money. As
used
1 in this subparagraph and subparagraph (iv), "control" means that
2 term as defined in section 115 of the insurance code of 1956,
3 1956 PA 218, MCL 500.115.
4 (iv) Beginning on the effective date of the amendatory act
5 that added this subparagraph, will not result in the health care
6 corporation owning or controlling part or all of the insurer
7 unless the transaction satisfies chapter 13 of the insurance code
8 of 1956, 1956 PA 218, MCL 500.1301 to 500.1379, and the insurer
9 being acquired is only authorized to sell disability insurance as
10 defined under section 606 of the insurance code of 1956, 1956 PA
11 218, MCL 500.606, or under a statute or regulation in the
12 insurer's domiciliary jurisdiction that is substantially similar to
13 section 606 of the insurance code of 1956, 1956 PA 218, MCL
14 500.606.
15 (p) Purchase, receive, take by grant, gift, devise, bequest
16 or otherwise, lease, or otherwise acquire, own, hold, improve,
17 employ, use and otherwise deal in and with, real or personal
18 property, or an interest therein, wherever situated.
19 (q) Sell, convey, lease, exchange, transfer or otherwise
20 dispose of, or mortgage or pledge, or create a security interest
21 in, any of its property, or an interest therein, wherever
22 situated.
23 (r) Borrow money and issue its promissory note or bond for
24 the repayment of the borrowed money with interest.
25 (s) Make donations for the public welfare, including
26 hospital, charitable, or educational contributions that do not
27 significantly affect rates charged to subscribers.
1 (t) Participate with others in any joint venture with respect
2 to any transaction that the health care corporation would have
3 the power to conduct by itself.
4 (u) Cease its activities and dissolve, subject to the
5 commissioner's authority under section 606(2).
6 (v) Make contracts, transact business, carry on its
7 operations, have offices, and exercise the powers granted by this
8 act in any jurisdiction, to the extent necessary to carry out its
9 purposes under this act.
10 (w) Have and exercise all powers necessary or convenient to
11 effect any purpose for which the corporation was formed.
12 (x) Notwithstanding subdivision (o) or any other provision of
13 this act, establish, own, and operate a domestic stock insurance
14 company only for the purpose of acquiring, owning, and operating
15 the state accident fund pursuant to chapter 51 of the insurance
16 code of 1956, 1956 PA 218, MCL 500.5100 to 500.5114, so long as
17 all of the following are met:
18 (i) For insurance products and services the insurer whether
19 directly or indirectly only transacts worker's compensation
20 insurance and employer's liability insurance, transacts
21 disability insurance limited to replacement of loss of earnings,
22 and acts as an administrative services organization for an
23 approved self-insured worker's compensation plan or a disability
24 insurance plan limited to replacement of loss of earnings and
25 does not transact any other type of insurance notwithstanding the
26 authorization in chapter 51 of the insurance code of 1956, 1956
27 PA 218, MCL 500.5100 to 500.5114. This subparagraph does not
1 preclude the insurer from providing either directly or indirectly
2 noninsurance products and services as otherwise provided by law.
3 (ii) The activity is determined by the attorney general to be
4 lawful under section 202.
5 (iii) The health care corporation does not directly or
6 indirectly subsidize the use of any provider or subscriber
7 information, loss data, contract, agreement, reimbursement
8 mechanism or arrangement, computer system, or health care
9 provider discount to the insurer.
10 (iv) Members of the board of directors, employees, and
11 officers of the health care corporation are not, directly or
12 indirectly, employed by the insurer unless the health care
13 corporation is fairly and reasonably compensated for the services
14 rendered to the insurer if those services were paid for by the
15 health care corporation.
16 (v) Health care corporation and subscriber funds are used
17 only for the acquisition from the state of Michigan of the assets
18 and liabilities of the state accident fund.
19 (vi) Health care corporation and subscriber funds are not
20 used to operate or subsidize in any way the insurer including the
21 use of such funds to subsidize contracts for goods and services.
22 This subparagraph does not prohibit joint undertakings between
23 the health care corporation and the insurer to take advantage of
24 economies of scale or arm's-length loans or other financial
25 transactions between the health care corporation and the
26 insurer.
27 (2) In order to ascertain the interests of senior citizens
1 regarding the provision of medicare supplemental coverage, as
2 described in section 202(1)(d)(v), and to ascertain the interests
3 of senior citizens regarding the administration of the federal
4 medicare program when acting as fiscal intermediary in this
5 state, as described in section 202(1)(d)(vi), a health care
6 corporation shall consult with the office of services to the
7 aging and with senior citizens' organizations in this state.
8 (3) An act of a health care corporation, otherwise lawful, is
9 not invalid because the corporation was without capacity or power
10 to do the act. However, the lack of capacity or power may be
11 asserted:
12 (a) In an action by a director or a member of the corporate
13 body against the corporation to enjoin the doing of an act.
14 (b) In an action by or in the right of the corporation to
15 procure a judgment in its favor against an incumbent or former
16 officer or director of the corporation for loss or damage due to
17 an unauthorized act of that officer or director.
18 (c) In an action or special proceeding by the attorney
19 general to enjoin the corporation from the transacting of
20 unauthorized business, to set aside an unauthorized transaction,
21 or to obtain other equitable relief.
22 Sec. 211. (1) Pursuant to section 207(1)(g), a health care
23 corporation may enter into service contracts containing an
24 administrative services only or cost-plus arrangement. Except as
25 otherwise provided in this section, a corporation shall not enter
26 into a service contract containing an administrative services
27 only or cost-plus arrangement for a noninsured benefit plan
1 covering a group of less than 500 individuals, except that a
2 health care corporation may continue an administrative services
3 only or cost-plus arrangement with a group of less than 500,
4 which arrangement is in existence in September of 1980. A
5 corporation may enter into contracts containing an administrative
6 services only or cost-plus arrangement for a noninsured benefit
7 plan covering a group of less than 500 individuals if either the
8 corporation makes arrangements for excess loss coverage or the
9 sponsor of the plan that covers the individuals is liable for the
10 plan's liabilities and is a sponsor of 1 or more plans covering a
11 group of 500 or more individuals in the aggregate. The
12 commissioner, upon obtaining the advice of the corporations
13 subject to this act, shall establish the standards for the manner
14 and amount of the excess loss coverage required by this
15 subsection. It is the intent of the legislature that the excess
16 loss coverage requirements be uniform as between corporations
17 subject to this act and other persons authorized to provide
18 similar services. The corporation shall offer in connection with
19 a noninsured benefit plan a program of specific or aggregate
20 excess loss coverage.
21 (2) Relative to actual administrative costs, fees for
22 administrative services only and cost-plus arrangements shall be
23 set in a manner that precludes cost transfers between subscribers
24 subject to either of these arrangements and other subscribers of
25 the health care corporation. Administrative costs for these
26 arrangements shall be determined in accordance with the
27 administrative costs allocation methodology and definitions filed
1 and approved under part 6, and shall be expressed clearly and
2 accurately in the contracts establishing the arrangements, as a
3 percentage of costs rather than charges. This subsection shall
4 not be construed to prohibit the inclusion, in fees charged, of
5 contributions to the
contingency reserve of the corporation,
6 consistent with
section 205 adequate and
unimpaired surplus as
7 provided in section 204a.
8 (3) Before a health care corporation may enter into contracts
9 containing administrative services only or cost-plus arrangements
10 pursuant to section 207(1)(g), the board of directors of the
11 corporation shall approve
a marketing policy with respect to
12 such for these arrangements that is consistent with
the
13 provisions of this section. The marketing policy may contain
14 other provisions as the board considers necessary. The marketing
15 policy shall be carried out by the corporation consistent with
16 this act.
17 (4) A corporation providing services under a contract
18 containing an administrative services only or cost-plus
19 arrangement in connection with a noninsured benefit plan shall
20 provide in its service contract a provision that the person
21 contracting for the services in connection with a noninsured
22 benefit plan shall notify each covered individual of what
23 services are being provided; the fact that individuals are not
24 insured or are not covered by a certificate from the corporation,
25 or are only partially insured or are only partially covered by a
26 certificate from the corporation, as the case may be; which party
27 is liable for payment of benefits; and of future changes in
1 benefits.
2 (5) A service contract containing an administrative services
3 only arrangement between a corporation and a governmental entity
4 not subject to the employee retirement income security act of
5 1974, Public Law 93-406, 88 Stat. 829, whose plan provides
6 coverage under a collective bargaining agreement utilizing a
7 policy or certificate issued by a carrier before the signing of
8 the service contract, is void unless the governmental entity has
9 provided the notice described in subsection (4) to the collective
10 bargaining agent and to the members of the collective bargaining
11 unit not less than 30 days before signing the service contract.
12 The voiding of a service contract under this subsection shall not
13 relieve the governmental entity of any obligations to the
14 corporation under the service contract.
15 (6) Nothing in this section shall be construed to permit an
16 actionable interference by a corporation with the rights and
17 obligations of the parties under a collective bargaining
18 agreement.
19 (7) An individual covered under a noninsured benefit plan for
20 which services are provided under a service contract authorized
21 under subsection (1) shall
is not be liable for that portion
22 of claims incurred and subject to payment under the plan if the
23 service contract is entered into between an employer and a
24 corporation, unless that portion of the claim has been paid
25 directly to the covered individual.
26 (8) A corporation shall report with its annual statement the
27 amount of business it has conducted as services provided under
1 subsection (1) that are performed in connection with a noninsured
2 benefit plan, and the commissioner shall transmit annually this
3 information to the state commissioner
of revenue treasurer.
4 The commissioner shall submit to the legislature on April 1,
5 1994, a report detailing the impact of this section on employers
6 and covered individuals, and similar activities under other
7 provisions of law, and in
consultation with the revenue
8 commissioner state treasurer the total financial impact on
the
9 state for the preceding legislative biennium.
10 (9) As used in this section, "noninsured benefit plan" or
11 "plan" means a health benefit plan without coverage by a health
12 care corporation, health maintenance organization, or insurer or
13 the portion of a health benefit plan without coverage by a health
14 care corporation, health maintenance organization, or insurer
15 that has a specific or aggregate excess loss coverage.
16 Sec. 219. A nonprofit health care corporation is subject to
17 chapter 37 of the insurance code of 1956, 1956 PA 218,
18 MCL 500.3701 to 500.3723. To the extent that a provision of this
19 act concerning health coverage, including, but not limited to,
20 premiums, rates, filings, and coverages, conflicts with chapter
21 37 of the insurance code of 1956, 1956 PA 218, MCL 500.3701 to
22 500.3723, chapter 37 of the insurance code of 1956, 1956 PA 218,
23 MCL 500.3701 to 500.3723, supersedes this act.
24 Sec. 401. (1) A health care corporation established,
25 maintained, or operating in this state shall offer health care
26 benefits to all residents of this state, and may offer other
27 health care benefits as the corporation specifies with the
1 approval of the commissioner.
2 (2) A health care corporation may limit the health care
3 benefits that it will furnish, except as provided in this act,
4 and may divide the health care benefits that it elects to furnish
5 into classes or kinds.
6 (3) A health care corporation shall not do any of the
7 following:
8 (a) Refuse to issue or continue a certificate to 1 or more
9 residents of this state, except while the individual, based on a
10 transaction or occurrence involving a health care corporation, is
11 serving a sentence arising out of a charge of fraud, is
12 satisfying a civil judgment, or is making restitution pursuant to
13 a voluntary payment agreement between the corporation and the
14 individual.
15 (b) Refuse to continue in effect a certificate with 1 or more
16 residents of this state, other than for failure to pay amounts
17 due for a certificate, except as allowed for refusal to issue a
18 certificate under subdivision (a).
19 (c) Limit the coverage available under a certificate, without
20 the prior approval of the commissioner, unless the limitation is
21 as a result of: an agreement with the person paying for the
22 coverage; an agreement with the individual designated by the
23 persons paying for or contracting for the coverage; or a
24 collective bargaining agreement.
25 (d) Rate, cancel benefits on, refuse to provide benefits for,
26 or refuse to issue or continue a certificate solely because a
27 subscriber or applicant is or has been a victim of domestic
1 violence. A health care corporation shall not be held civilly
2 liable for any cause of action that may result from compliance
3 with this subdivision. This subdivision applies to all health
4 care corporation certificates issued or renewed on or after
5 June 1, 1998. As used in this subdivision, "domestic violence"
6 means inflicting bodily injury, causing serious emotional injury
7 or psychological trauma, or placing in fear of imminent physical
8 harm by threat or force a person who is a spouse or former spouse
9 of, has or has had a dating relationship with, resides or has
10 resided with, or has a child in common with the person committing
11 the violence.
12 (e) Require a member or his or her dependent or an applicant
13 for coverage or his or her dependent to do either of the
14 following:
15 (i) Undergo genetic testing before issuing, renewing, or
16 continuing a health care corporation certificate.
17 (ii) Disclose whether genetic testing has been conducted or
18 the results of genetic testing or genetic information.
19 (4) Subsection (3) does not prevent a health care corporation
20 from denying to a resident of this state coverage under a
21 certificate for any of the following grounds:
22 (a) That the individual was not a member of a group that had
23 contracted for coverage under this certificate.
24 (b) That the individual is not a member of a group with a
25 size greater than a minimum size established for a certificate
26 pursuant to sound underwriting requirements.
27 (c) That the individual does not meet requirements for
Senate Bill No. 234 as amended May 28, 2003
1 coverage contained in a certificate.
2 (d) <<For groups of under 100 subscribers and except>> as otherwise provided in section 3709 of the
3 insurance code of 1956, 1956 PA 218, MCL 500.3709, that the group
4 that the individual is a member of has failed to enroll enough of
5 its eligible members with the health care corporation. This
6 denial shall only be made if the health care corporation
7 determines, using sound actuarial principles<<based on rating factors permitted under this act>>, that the portion of
8 the group applying for coverage would be at least 50% more costly
9 than the group as a whole. Not later than the close of business
10 on the seventh business day after denying coverage under this
11 subdivision, the health care corporation shall notify the
12 commissioner of this denial and shall supply the information
13 supporting the denial. The commissioner shall determine whether
14 it will approve or disapprove the denial not later than the close
15 of business on the seventh business day after receipt of the
16 notice and shall promptly notify the health care corporation of
17 his or her determination. The health care corporation or the
18 employer may appeal the decision of the commissioner in circuit
19 court.
20 (5) A certificate may provide for the coordination of
21 benefits, subrogation, and the nonduplication of benefits.
22 Savings realized by the coordination of benefits, subrogation,
23 and nonduplication of benefits shall be reflected in the rates
24 for those certificates. If a group certificate issued by the
25 corporation contains a coordination of benefits provision, the
26 benefits shall be payable pursuant to the coordination of
27 benefits act, 1984 PA 64, MCL 550.251 to 550.255.
1 (6) A health care corporation shall have the right to status
2 as a party in interest, whether by intervention or otherwise, in
3 any judicial, quasi-judicial, or administrative agency proceeding
4 in this state for the purpose of enforcing any rights it may have
5 for reimbursement of payments made or advanced for health care
6 services on behalf of 1 or more of its subscribers or members.
7 (7) A health care corporation shall not directly reimburse a
8 provider in this state who has not entered into a participating
9 contract with the corporation.
10 (8) A health care corporation shall not limit or deny
11 coverage to a subscriber or limit or deny reimbursement to a
12 provider on the ground that services were rendered while the
13 subscriber was in a health care facility operated by this state
14 or a political subdivision of this state. A health care
15 corporation shall not limit or deny participation status to a
16 health care facility on the ground that the health care facility
17 is operated by this state or a political subdivision of this
18 state, if the facility meets the standards set by the corporation
19 for all other facilities of that type, government-operated or
20 otherwise. To qualify for participation and reimbursement, a
21 facility shall, at a minimum, meet all of the following
22 requirements, which shall apply to all similar facilities:
23 (a) Be accredited by the joint commission on accreditation of
24 hospitals.
25 (b) Meet the certification standards of the medicare program
26 and the medicaid program.
27 (c) Meet all statutory requirements for certificate of need.
1 (d) Follow generally accepted accounting principles and
2 practices.
3 (e) Have a community advisory board.
4 (f) Have a program of utilization and peer review to assure
5 that patient care is appropriate and at an acute level.
6 (g) Designate that portion of the facility that is to be used
7 for acute care.
8 (9) As used in this section:
9 (a) "Clinical purposes" includes all of the following:
10 (i) Predicted risk of diseases.
11 (ii) Identifying carriers for single-gene disorders.
12 (iii) Establishing prenatal and clinical diagnosis or
13 prognosis.
14 (iv) Prenatal, newborn, and other carrier screening, as well
15 as testing in high-risk families.
16 (v) Tests for metabolites if undertaken with high probability
17 that an excess or deficiency of the metabolite indicates or
18 suggests the presence of heritable mutations in single genes.
19 (vi) Other tests if their intended purpose is diagnosis of a
20 presymptomatic genetic condition.
21 (b) "Genetic information" means information about a gene,
22 gene product, or inherited characteristic derived from a genetic
23 test.
24 (c) "Genetic test" means the analysis of human DNA, RNA,
25 chromosomes, and those proteins and metabolites used to detect
26 heritable or somatic disease-related genotypes or karyotypes for
27 clinical purposes. A genetic test must be generally accepted in
Senate Bill No. 234 as amended May 28, 2003
1 the scientific and medical communities as being specifically
2 determinative for the presence, absence, or mutation of a gene or
3 chromosome in order to qualify under this definition. Genetic
4 test does not include a routine physical examination or a routine
5 analysis, including, but not limited to, a chemical analysis, of
6 body fluids, unless conducted specifically to determine the
7 presence, absence, or mutation of a gene or chromosome.
8 Sec. 401j. The rates charged to nongroup and group
9 conversion subscribers for a certificate that includes
10 prescription drug coverage pursuant to section 401i may include
11 rate differentials based on age, with not more than 8 separate
12 age bands. The health care corporation shall file its rates for
13 the prescription drug coverage in this section in the same manner
14 and under the same requirements as provided in section 607.
15 Sec. 502. (1) A health care corporation may enter into
16 participating contracts for reimbursement with professional
17 health care providers practicing legally in this state for health
18 care services or with health practitioners practicing legally in
19 any other jurisdiction for health care services that the
20 professional health care providers or practitioners may legally
21 perform. <<A health care corporation shall not reimburse a health practitioner located out of state at a higher rate for the same health care services than it reimburses an in-state health care provider.>> A participating contract may cover all members or may
22 be a separate and individual contract on a per claim basis, as
23 set forth in the provider class plan, if, in entering into a
24 separate and individual contract on a per claim basis, the
25 participating provider certifies to the health care corporation:
26 (a) That the provider will accept payment from the
27 corporation as payment in full for services rendered for the
1 specified claim for the member indicated.
2 (b) That the provider will accept payment from the
3 corporation as payment in full for all cases involving the
4 procedure specified, for the duration of the calendar year. As
5 used in this subdivision, provider does not include a person
6 licensed as a dentist under part 166 of the public health code,
7 1978 PA 368, MCL 333.16601 to 333.16648.
8 (c) That the provider will not determine whether to
9 participate on a claim on the basis of the race, color, creed,
10 marital status, sex, national origin, residence, age, disability,
11 or lawful occupation of the member entitled to health care
12 benefits.
13 (2) A contract entered into pursuant to subsection (1) shall
14 provide that the private provider-patient relationship shall be
15 maintained to the extent provided for by law. A health care
16 corporation shall continue to offer a reimbursement arrangement
17 to any class of providers with which it has contracted prior to
18 August 27, 1985 and that continues to meet the standards set by
19 the corporation for that class of providers.
20 (3) A health care corporation shall not restrict the methods
21 of diagnosis or treatment of professional health care providers
22 who treat members. Except as otherwise provided in section 502a,
23 each member of the health care corporation shall at all times
24 have a choice of professional health care providers. This
25 subsection does not apply to limitations in benefits contained in
26 certificates, to the reimbursement provisions of a provider
27 contract or reimbursement arrangement, or to standards set by the
1 corporation for all contracting providers. A health care
2 corporation may refuse to reimburse a health care provider for
3 health care services that are overutilized, including those
4 services rendered, ordered, or prescribed to an extent that is
5 greater than reasonably necessary.
6 (4) A health care corporation may provide to a member, upon
7 request, a list of providers with whom the corporation contracts,
8 for the purpose of assisting a member in obtaining a type of
9 health care service. However, except as otherwise provided in
10 section 502a, an employee, agent, or officer of the corporation,
11 or an individual on the board of directors of the corporation,
12 shall not make recommendations on behalf of the corporation with
13 respect to the choice of a specific health care provider. Except
14 as otherwise provided in section 502a, an employee, agent, or
15 officer of the corporation, or a person on the board of directors
16 of the corporation who influences or attempts to influence a
17 person in the choice or selection of a specific professional
18 health care provider on behalf of the corporation, is guilty of a
19 misdemeanor.
20 (5) A health care corporation shall provide a symbol of
21 participation, which can be publicly displayed, to providers who
22 participate on all claims for covered health care services
23 rendered to subscribers.
24 (6) This section does not impede the lawful operation of, or
25 lawful promotion of, a health maintenance organization owned by a
26 health care corporation.
27 (7) Contracts entered into under this section with
1 professional health care providers licensed in this state are
2 subject to the provisions of sections 504 to 518.
3 (8) A health care corporation shall not deny participation to
4 a freestanding surgical outpatient facility on the basis of
5 ownership if the facility meets the reasonable standards set by
6 the health care corporation for similar facilities, is licensed
7 under part 208 of the public health code, 1978 PA 368,
8 MCL 333.20801 to 333.20821, and complies with part 222 of the
9 public health code, 1978 PA 368, MCL 333.22201 to 333.22260.
10 (9) Notwithstanding any other provision of this act, if a
11 certificate provides for benefits for services that are within
12 the scope of practice of optometry, a health care corporation is
13 not required to provide benefits or reimburse for a practice of
14 optometric service unless that service was included in the
15 definition of practice of optometry under section 17401 of the
16 public health code, 1978 PA 368, MCL 333.17401, as of May 20,
17 1992.
18 (10) Notwithstanding any other provision of this act, a
19 health care corporation is not required to reimburse for services
20 otherwise covered under a certificate if the services were
21 performed by a member of a health care profession, which health
22 care profession was not licensed or registered by this state on
23 or before January 1, 1998 but that becomes a health care
24 profession licensed or registered by this state after January 1,
25 1998. This subsection does not change the status of a health
26 care profession that was licensed or registered by this state on
27 or before January 1, 1998.
1 Sec. 602. (1) Not later than March 1 each year, subject to
2 a 30-day extension which
that may be granted by the
3 commissioner, a health care corporation shall file in the office
4 of the commissioner a sworn statement verified by at least 2 of
5 the principal officers of the corporation showing its condition
6 as of the preceding December 31. The statement shall be in a
7 form , and
contain those matters , which that the
8 commissioner prescribes for a health care corporation, including
9 those matters contained
in section 205 204a. The statement
10 shall include the number of members and the number of
11 subscribers' certificates issued by the corporation and
12 outstanding.
13 (2) The commissioner, by order, may require a health care
14 corporation to submit statistical, financial, and other reports
15 for the purpose of monitoring compliance with this act.
16 Sec. 606. (1) The commissioner shall have the same
17 authority regarding the officers and directors of a health care
18 corporation as the commissioner has with respect to the officers
19 and directors of insurers
under sections 249 and 250 of Act
20 No. 218 of the Public
Acts of 1956, being sections 500.249 and
21 500.250 of the
Michigan Compiled Laws the
insurance code of
22 1956, 1956 PA 218, MCL 500.249 and 500.250.
23 (2) The commissioner shall have the same authority with
24 respect to the dissolution, taking over, or liquidation of
25 corporations formed or doing business under this act as is
26 provided in chapter 78
of Act No. 218 of the Public Acts of
27 1956, as amended,
being sections 500.7800 to 500.7868 of the
1 Michigan Compiled Laws
81 of the insurance code of 1956,
1956
2 PA 218, MCL 500.8101 to 500.8159. For purposes of this
3 subsection, a health care corporation shall be considered to be
4 insolvent if its liabilities exceed its assets, unless otherwise
5 defined in chapter 78
of Act No. 218 of the Public Acts of 1956,
6 as amended 81 of the insurance code of 1956, 1956 PA 218,
7 MCL 500.8101 to 500.8159.
8 Sec. 609. (1) A rate is not excessive if the rate is not
9 unreasonably high relative to the following elements,
10 individually or collectively; provision for anticipated benefit
11 costs; provision for administrative expense; provision for cost
12 transfers, if any;
provision for a contribution to or from the
13 corporate contingency
reserve that is consistent with the
14 attainment or
maintenance of the target contingency reserve level
15 prescribed in section
205 surplus that is consistent
with the
16 attainment or maintenance of adequate and unimpaired surplus as
17 provided in section 204a; and provision for adjustments due to
18 prior experience of groups, as defined in the group rating
19 system. A determination as to whether a rate is excessive
20 relative to the these
elements, listed above, individually or
21 collectively, shall be based on the following: reasonable
22 evaluations of recent claim experience; projected trends in claim
23 costs; the allocation of administrative expense budgets; and the
24 present and anticipated contingency
reserve positions
25 unimpaired surplus of the health care corporation. To the extent
26 that any of these elements are considered excessive, the
27 provision in the rates for these elements shall be modified
1 accordingly.
2 (2) The administrative expense budget must be reasonable, as
3 determined by the commissioner after examination of material and
4 substantial administrative and acquisition expense items.
5 (3) A rate is equitable if the rate can be compared to any
6 other rate offered by the health care corporation to its
7 subscribers, and the observed rate differences can be supported
8 by differences in anticipated benefit costs, administrative
9 expense cost, differences in risk, or any identified cost
10 transfer provisions.
11 (4) A rate is adequate if the rate is not unreasonably low
12 relative to the elements prescribed in subsection (1),
13 individually or collectively, based on reasonable evaluations of
14 recent claim experience, projected trends in claim costs, the
15 allocation of administrative expense budgets, and the present and
16 anticipated contingency
reserve positions unimpaired surplus of
17 the health care corporation.
18 (5) Except for identified cost transfers, each line of
19 business, over time, shall be self-sustaining. However, there
20 may be cost transfers for the benefit of senior citizens and
21 group conversion subscribers. Cost transfers for the benefit of
22 senior citizens, in the aggregate, annually shall not exceed 1%
23 of the earned subscription income of the health care corporation
24 as reported in the most recent annual statement of the
25 corporation. Group conversion subscribers are those who have
26 maintained coverage with the health care corporation on an
27 individual basis after
leaving a subscriber group. The Michigan
1 caring program created
in section 436 is not subject to any
2 assessment or
surcharge for cost transfer under this subsection.
3 Enacting section 1. This amendatory act does not take
4 effect unless Senate Bill No. 460 of the 92nd Legislature is
5 enacted into law.
6 Enacting section 2. Section 205 of the nonprofit health
7 care corporation reform act, 1980 PA 350, MCL 550.1205, is
8 repealed.