SENATE BILL No. 234

 

 

February 27, 2003, Introduced by Senators HAMMERSTROM, JACOBS, CHERRY, PATTERSON, ALLEN and GOSCHKA and referred to the Committee on Health Policy.

 

 

        

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                 A bill to amend 1980 PA 350, entitled                                             

                                                                                

    "The nonprofit health care corporation reform act,"                         

                                                                                

    by amending sections 107, 201, 204, 206, 207, 211, 401, 502, 602,           

                                                                                

    608, 609, 610, 611, 612, 613, and 614 (MCL 550.1107, 550.1201,              

                                                                                

    550.1204, 550.1206, 550.1207, 550.1211, 550.1401, 550.1502,                 

                                                                                

    550.1602, 550.1608, 550.1609, 550.1610, 550.1611, 550.1612,                 

                                                                                

    550.1613, and 550.1614), 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, section 608 as           

                                                                                

    amended by 1991 PA 73, and section 609 as amended by 1991 PA 61,            

                                                                                

    and by adding sections 204a, 205a, 422c, 608a, 608b, 608c, 608d,            

                                                                                

    and 620; and to repeal acts and parts of acts.                              

                                                                                

                THE PEOPLE OF THE STATE OF MICHIGAN ENACT:                      

                                                                                

1       Sec. 107.  (1) "Participating provider" means a provider                    

                                                                                

2   that has entered into a participating contract with a health care           

                                                                                


                                                                                

1   corporation and that meets the standards set by the corporation             

                                                                                

2   for that class of providers.                                                

                                                                                

3       (2) "Participating contract" means an agreement, contract, or               

                                                                                

4   other arrangement under which a provider agrees to accept the               

                                                                                

5   payment of the health care corporation as payment in full for               

                                                                                

6   health care services or parts of health care services covered               

                                                                                

7   under a certificate, as provided for in section 502(1).                     

                                                                                

8       (3) "Person" means an individual, corporation, partnership,                 

                                                                                

9   organization, limited liability company, or association.                    

                                                                                

10      (4) "Personal data" means a document incorporating medical or               

                                                                                

11  surgical history, care, treatment, or service; or any similar               

                                                                                

12  record, including an automated or computer accessible record,               

                                                                                

13  relative to a member, which is maintained or stored by a health             

                                                                                

14  care corporation.                                                           

                                                                                

15      (5) "Proposed rate" means any of the following:                             

                                                                                

16      (a) A proposed increase or decrease in the rates to be                      

                                                                                

17  charged to nongroup subscribers.                                            

                                                                                

18      (b) For group subscribers, any proposed changes in the                      

                                                                                

19  methodology or definitions of any rating system, formula,                   

                                                                                

20  component, or factor subject to prior approval by the                       

                                                                                

21  commissioner.                                                               

                                                                                

22      (c) A proposed increase or decrease in deductible amounts or                

                                                                                

23  coinsurance percentages.                                                    

                                                                                

24      (d) A proposed extension of benefits, additional benefits, or               

                                                                                

25  a reduction or limitation in benefits.                                      

                                                                                

26      (e) A review pursuant to section 608(2).                                    

                                                                                

27      (6) "Provider class" means classes of providers, as defined                 


                                                                                

1   in section 105(4), that have a provider contract or a                       

                                                                                

2   reimbursement arrangement with a health care corporation to                 

                                                                                

3   render health care services to subscribers, as those classes are            

                                                                                

4   established by the corporation.                                             

                                                                                

5       (7) "Provider class plan" or "plan" means a document                        

                                                                                

6   containing a reimbursement arrangement and objectives for a                 

                                                                                

7   provider class, and, in the case of those providers with which a            

                                                                                

8   health care corporation contracts, provisions that are included             

                                                                                

9   in that contract.                                                           

                                                                                

10      (8) "Provider contract" or "contract" means an agreement                    

                                                                                

11  between a provider and a health care corporation that contains              

                                                                                

12  provisions to implement the provider class plan.                            

                                                                                

13      Sec. 201.  (1) A health care corporation shall not be                       

                                                                                

14  incorporated in this state except under this act.                           

                                                                                

15      (2) Not less than 7 persons, all of whom shall be residents                 

                                                                                

16  of this state, may form a health care corporation under this act            

                                                                                

17  for the purpose of providing 1 or more health care benefits at              

                                                                                

18  the expense of the corporation to persons or groups of persons              

                                                                                

19  who become subscribers to the plan, under certificates  which               

                                                                                

20  that will entitle each subscriber to certain health care services           

                                                                                

21  by providers with which the corporation has contracted for that             

                                                                                

22  purpose.                                                                    

                                                                                

23      (3) A certificate shall not provide for the payment of cash                 

                                                                                

24  or any other material benefit to a subscriber or the estate of a            

                                                                                

25  subscriber on account of death, illness, or injury except where             

                                                                                

26  payment is made to a subscriber for health care services by a               

                                                                                

27  provider who has not entered into a participating contract with             


                                                                                

1   the corporation or to reimburse a subscriber who has made, or is            

                                                                                

2   obligated to make, payment directly to a provider.                          

                                                                                

3       (4) A health care corporation  shall  is not  be  subject to                

                                                                                

4   the laws of this state with respect to insurance corporations,              

                                                                                

5   except as provided in this act.  A health care corporation                  

                                                                                

6   shall  is not  be  subject to the laws of this state with                  

                                                                                

7   respect to corporations generally.                                          

                                                                                

8       (5) A health care corporation subject to this act is                        

                                                                                

9   declared to be a charitable and benevolent institution, and its             

                                                                                

10  funds,  and  property,  shall be  and activities are exempt from            

                                                                                

11  taxation by this state or any political subdivision of this                 

                                                                                

12  state.                                                                      

                                                                                

13      (6) A person shall not act as a health care corporation or                  

                                                                                

14  issue a certificate except as authorized by and pursuant to a               

                                                                                

15  certificate of authority granted to the person by the                       

                                                                                

16  commissioner pursuant to this act.                                          

                                                                                

17      (7) A health care corporation shall provide only the kinds                  

                                                                                

18  of health care benefits and certificates authorized by this act.            

                                                                                

19  A health care corporation shall not make or issue a certificate             

                                                                                

20  relative to health care benefits except as approved or otherwise            

                                                                                

21  authorized under this act.                                                  

                                                                                

22      Sec. 204.  (1) Before entering into contracts or securing                   

                                                                                

23  applications of subscribers, the persons incorporating a health             

                                                                                

24  care corporation shall file all of the following in the office of           

                                                                                

25  the commissioner:                                                           

                                                                                

26      (a) Three copies of the articles of incorporation, with the                 

                                                                                

27  certificate of the attorney general required under section 202(3)           


                                                                                

1   attached.                                                                   

                                                                                

2       (b) A statement showing in full detail the plan upon which                  

                                                                                

3   the corporation proposes to transact business.                              

                                                                                

4       (c) A copy of all certificates to be issued to subscribers.                 

                                                                                

5       (d) A copy of the financial statements of the corporation.                  

                                                                                

6       (e) Proposed advertising to be used in the solicitation of                  

                                                                                

7   certificates for subscribers.                                               

                                                                                

8       (f) A copy of the bylaws.                                                   

                                                                                

9       (g) A copy of all proposed contracts and reimbursement                      

                                                                                

10  methods.                                                                    

                                                                                

11      (2) The commissioner shall examine the statements and                       

                                                                                

12  documents filed under subsection (1), may conduct any                       

                                                                                

13  investigation  which  that he or she considers necessary, may               

                                                                                

14  request additional oral and written information from the                    

                                                                                

15  incorporators, and may examine under oath any persons interested            

                                                                                

16  in or connected with the proposed health care corporation.  The             

                                                                                

17  commissioner shall ascertain whether all of the following                   

                                                                                

18  conditions are met:                                                         

                                                                                

19      (a) The solicitation of certificates will not work a fraud                  

                                                                                

20  upon the persons solicited by the corporation.                              

                                                                                

21      (b) The rates to be charged and the benefits to be provided                 

                                                                                

22  are adequate, equitable, and not excessive, as defined in section           

                                                                                

23  609.                                                                        

                                                                                

24      (c) The amount of money actually available for working                      

                                                                                

25  capital is sufficient to carry all acquisition costs and                    

                                                                                

26  operating expenses for a reasonable period of time from the date            

                                                                                

27  of issuance of the certificate of authority, and is not less than           


                                                                                

1   $500,000.00 or a greater amount, if the commissioner considers it           

                                                                                

2   necessary.                                                                  

                                                                                

3       (d) The amounts contributed as the working capital of the                   

                                                                                

4   corporation are payable only out of amounts in excess of minimum            

                                                                                

5   required reserves of the corporation.                                       

                                                                                

6       (e) Adequate and  reasonable reserves are provided, as                      

                                                                                

7   defined in section 205  unimpaired surplus is provided, as                  

                                                                                

8   determined under section 204a.                                              

                                                                                

9       (3) If the commissioner finds that the conditions prescribed                

                                                                                

10  in subsection (2) are met, the commissioner shall do all of the             

                                                                                

11  following:                                                                  

                                                                                

12      (a) Return to the incorporators 1 copy of the articles of                   

                                                                                

13  incorporation, certified for filing with the  chief officer                 

                                                                                

14  director of the department of  commerce  consumer and industry              

                                                                                

15  services or of any other agency or department authorized by law             

                                                                                

16  to administer  Act No. 284 of the Public Acts of 1972, as                   

                                                                                

17  amended, being sections 450.1101 to 450.2099 of the Michigan                

                                                                                

18  Compiled Laws  the business corporation act, 1972 PA 284,                   

                                                                                

19  MCL 450.1101 to 450.2098, or his or her designated                          

                                                                                

20  representative, and 1 copy of the articles of incorporation                 

                                                                                

21  certified for the records of the corporation itself.                        

                                                                                

22      (b) Retain 1 copy of the articles of incorporation for the                  

                                                                                

23  commissioner's office files.                                                

                                                                                

24      (c) Deliver to the corporation a certificate of authority to                

                                                                                

25  commence business and to issue certificates  which  that have               

                                                                                

26  been approved by the commissioner, or  which  that are exempted             

                                                                                

27  from prior approval pursuant to section 607(2) or (7), entitling            


                                                                                

1   subscribers to certain health care benefits.                                

                                                                                

2       Sec. 204a.  (1) A health care corporation shall possess and                 

                                                                                

3   maintain unimpaired surplus in an amount determined adequate by             

                                                                                

4   the commissioner to comply with section 403 of the insurance code           

                                                                                

5   of 1956, 1956 PA 218, MCL 500.403.  The commissioner shall follow           

                                                                                

6   the risk-based capital requirements as developed by the national            

                                                                                

7   association of insurance commissioners in order to determine                

                                                                                

8   whether a health care corporation is in adequate compliance with            

                                                                                

9   section 403 of the insurance code of 1956, 1956 PA 218,                     

                                                                                

10  MCL 500.403.                                                                

                                                                                

11      (2) If a health care corporation files a risk-based capital                 

                                                                                

12  report that indicates that its surplus is less than the amount              

                                                                                

13  determined adequate by the commissioner under subsection (1), the           

                                                                                

14  health care corporation shall prepare and submit a plan for                 

                                                                                

15  remedying the deficiency in accordance with risk-based capital              

                                                                                

16  requirements adopted by the commissioner.  Among the remedies               

                                                                                

17  that a health care corporation may employ are planwide viability            

                                                                                

18  contributions to surplus by subscribers.                                    

                                                                                

19      (3) If contributions for planwide viability under subsection                

                                                                                

20  (2) are employed, those contributions shall be made in accordance           

                                                                                

21  with the following:                                                         

                                                                                

22      (a) If the health care corporation's surplus is less than                   

                                                                                

23  200% but more than 150% of the authorized control level under               

                                                                                

24  risk-based capital requirements, the maximum contribution rate              

                                                                                

25  shall be 0.5% of the rate charged to subscribers for the benefits           

                                                                                

26  provided.                                                                   

                                                                                

27      (b) If the health care corporation's surplus is 150% or less                


                                                                                

1   than the authorized control level under risk-based capital                  

                                                                                

2   requirements, the maximum contribution rate shall be 1% of the              

                                                                                

3   rate charged to subscribers for the benefits provided.                      

                                                                                

4       (c) The actual contribution rate charged is subject to the                  

                                                                                

5   commissioner's approval.                                                    

                                                                                

6       (4) As used in subsection (3), "authorized control level"                   

                                                                                

7   means the number determined under the risk-based capital formula            

                                                                                

8   in accordance with the instructions developed by the national               

                                                                                

9   association of insurance commissioners and adopted by the                   

                                                                                

10  commissioner.                                                               

                                                                                

11      Sec. 205a.  A health care corporation shall report financial                

                                                                                

12  information in conformity with sound actuarial practices and                

                                                                                

13  statutory accounting principles, including approved permitted               

                                                                                

14  practices, in the same manner as designated by the commissioner             

                                                                                

15  for other carriers pursuant to section 438(2) of the insurance              

                                                                                

16  code of 1956, 1956 PA 218, MCL 500.438.                                     

                                                                                

17      Sec. 206.  (1) The funds and property of a health care                      

                                                                                

18  corporation shall be acquired, held, and disposed of only for the           

                                                                                

19  lawful purposes of the corporation and for the benefit of the               

                                                                                

20  subscribers of the corporation as a whole.  A health care                   

                                                                                

21  corporation shall only transact  such  business, receive,                   

                                                                                

22  collect, and disburse  such  money, and acquire, hold, protect,             

                                                                                

23  and convey  such  property,  as are  that is properly within the            

                                                                                

24  scope of the purposes of the corporation as specifically set                

                                                                                

25  forth in section 202(1)(d), for the benefit of the subscribers of           

                                                                                

26  the corporation as a whole, and consistent with this act.                   

                                                                                

27      (2) The funds of a health care corporation shall be invested                


                                                                                

1   only in securities permitted by the laws of this state for the              

                                                                                

2   investments of assets of life insurance companies, as described             

                                                                                

3   in chapter 9 of  Act No. 218 of the Public Acts of 1956, as                 

                                                                                

4   amended, being sections 500.901 to 500.947 of the Michigan                  

                                                                                

5   Compiled Laws  the insurance code of 1956, 1956 PA 218,                     

                                                                                

6   MCL 500.901 to 500.947.                                                     

                                                                                

7       (3) Without regard to the limitation in subsection (2), up                  

                                                                                

8   to 2% of the assets of the health care corporation may be                   

                                                                                

9   invested in venture-type investments.  For purposes of                      

                                                                                

10  calculating  the contingency reserve pursuant to section 205                

                                                                                

11  adequate and unimpaired surplus under section 204a, a                       

                                                                                

12  venture-type investment shall be carried on the books of a health           

                                                                                

13  care corporation at the original acquisition cost, and losses may           

                                                                                

14  only be realized as an offset against gains from venture-type               

                                                                                

15  investments.  All venture-type investments under this subsection            

                                                                                

16  shall provide employment or capital investment primarily within             

                                                                                

17  this state.  Each investment under this subsection  shall be  is            

                                                                                

18  subject to prior approval by the board of directors.  As used in            

                                                                                

19  this subsection, "venture-type investments" include:                        

                                                                                

20      (a) Common stock, preferred stock, limited partnerships, or                 

                                                                                

21  similar equity interests acquired from the issuer subject to a              

                                                                                

22  provision barring resale without consent of the issuer for 5                

                                                                                

23  years from the date of acquisition by the corporation.                      

                                                                                

24      (b) Unsecured debt instruments  which  that are either                      

                                                                                

25  convertible into equity or have equity acquisition rights.  These           

                                                                                

26  debt instruments shall be subordinated by their terms to all                

                                                                                

27  borrowings of the issuer from other institutional lenders and               


                                                                                

1   shall have no part amortized during the first 5 years.                      

                                                                                

2       (4) A health care corporation shall not market or transact,                 

                                                                                

3   as defined in sections 402a and 402b of  Act No. 218 of the                 

                                                                                

4   Public Acts of 1956, being sections 500.402a and 500.402b of the            

                                                                                

5   Michigan Compiled Laws  the insurance code of 1956, 1956 PA 218,            

                                                                                

6   MCL 500.402a and 500.402b, any type of insurance described in               

                                                                                

7   chapter 6 of  Act No. 218 of the Public Acts of 1956, as amended,           

                                                                                

8   being sections 500.600 to 500.644 of the Michigan Compiled Laws             

                                                                                

9   the insurance code of 1956, 1956 PA 218, MCL 500.600 to 500.644.            

                                                                                

10  This subsection shall not be construed to prohibit the provision            

                                                                                

11  of prepaid health care benefits.                                            

                                                                                

12      Sec. 207.  (1) A health care corporation, subject to any                    

                                                                                

13  limitation provided in this act, in any other statute of this               

                                                                                

14  state, or in its articles of incorporation, may do any or all of            

                                                                                

15  the following:                                                              

                                                                                

16      (a) Contract to provide computer services and other                         

                                                                                

17  administrative consulting services to 1 or more providers or                

                                                                                

18  groups of providers, if the services are primarily designed to              

                                                                                

19  result in cost savings to subscribers.                                      

                                                                                

20      (b) Engage in experimental health care projects to explore                  

                                                                                

21  more efficient and economical means of implementing the                     

                                                                                

22  corporation's programs, or the corporation's goals as prescribed            

                                                                                

23  in section 504 and the purposes of this act, to develop                     

                                                                                

24  incentives to promote alternative methods and alternative                   

                                                                                

25  providers, including nurse midwives, nurse anesthetists, and                

                                                                                

26  nurse practitioners, for delivering health care, including                  

                                                                                

27  preventive care and home health care.                                       


                                                                                

1       (c) For the purpose of providing health care services to                    

                                                                                

2   employees of this state, the United States, or an agency,                   

                                                                                

3   instrumentality, or political subdivision of this state or the              

                                                                                

4   United States, or for the purpose of providing all or part of the           

                                                                                

5   costs of health care services to disabled, aged, or needy                   

                                                                                

6   persons, contract with this state, the United States, or an                 

                                                                                

7   agency, instrumentality, or political subdivision of this state             

                                                                                

8   or the United States.                                                       

                                                                                

9       (d) For the purpose of administering any publicly supported                 

                                                                                

10  health benefit plan, accept and administer funds, directly or               

                                                                                

11  indirectly, made available by a contract authorized under                   

                                                                                

12  subdivision (c), or made available by or received from any                  

                                                                                

13  private entity.                                                             

                                                                                

14      (e) For the purpose of administering any publicly supported                 

                                                                                

15  health benefit plan, subcontract with any organization that has             

                                                                                

16  contracted with this state, the United States, or an agency,                

                                                                                

17  instrumentality, or political subdivision of this state or the              

                                                                                

18  United States, for the administration or furnishing of health               

                                                                                

19  services or any publicly supported health benefit plan.                     

                                                                                

20      (f) Provide administrative services only and cost-plus                      

                                                                                

21  arrangements for the federal medicare program established by                

                                                                                

22  parts A and B of title XVIII of the social security act, chapter            

                                                                                

23  531, 49 Stat. 620, 42 U.S.C.  1395 to 1395b, 1395b-2, 1395b-6 to            

                                                                                

24  1395b-7,  1395c to 1395i, 1395i-2 to 1395i-5, 1395j to 1395t,               

                                                                                

25  1395u to 1395w, and 1395w-2 to 1395w-4;  , 1395w-21 to 1395w-28,            

                                                                                

26  1395x to 1395yy, and 1395bbb to 1395ggg;  for the federal                   

                                                                                

27  medicaid program established under title XIX of the social                  


                                                                                

1   security act, chapter 531, 49 Stat. 620, 42 U.S.C. 1396 to                  

                                                                                

2   1396f, 1396g-1 to  1396r-6  ,  and 1396r-8 to 1396v; for title V           

                                                                                

3   of the social security act, chapter 531, 49 Stat. 620,                      

                                                                                

4   42 U.S.C. 701 to 704 and 705 to 710; for the program of medical             

                                                                                

5   and dental care established by the military medical benefits                

                                                                                

6   amendments of 1966, Public Law 85-861, 80 Stat. 862; for the                

                                                                                

7   Detroit maternity and infant care--preschool, school, and                   

                                                                                

8   adolescent project; and for any other health benefit program                

                                                                                

9   established under state or federal law.                                     

                                                                                

10      (g) Provide administrative services only and cost-plus                      

                                                                                

11  arrangements for any noninsured health benefit plan, subject to             

                                                                                

12  the requirements of sections 211 and 211a.                                  

                                                                                

13      (h) Establish, own, and operate a health maintenance                        

                                                                                

14  organization, subject to the requirements of the  public health             

                                                                                

15  code, 1978 PA 368, MCL 333.1101 to 333.25211  insurance code of             

                                                                                

16  1956, 1956 PA 218, MCL 500.100 to 500.8302.                                 

                                                                                

17      (i) Guarantee loans for the education of persons who are                    

                                                                                

18  planning to enter or have entered a profession that is licensed,            

                                                                                

19  certified, or registered under parts 161 to 182 of the public               

                                                                                

20  health code, 1978 PA 368, MCL 333.16101 to 333.18237, and has               

                                                                                

21  been identified by the commissioner, with the consultation of the           

                                                                                

22  office of health and medical affairs in the department of                   

                                                                                

23  management and budget, as a profession whose practitioners are in           

                                                                                

24  insufficient supply in this state or specified areas of this                

                                                                                

25  state and who agree, as a condition of receiving a guarantee of a           

                                                                                

26  loan, to work in this state, or an area of this state specified             

                                                                                

27  in a listing of shortage areas for the profession issued by the             


                                                                                

1   commissioner, for a period of time determined by the                        

                                                                                

2   commissioner.                                                               

                                                                                

3       (j) Receive donations to assist or enable the corporation to                

                                                                                

4   carry out its purposes, as provided in this act.                            

                                                                                

5       (k) Bring an action against an officer or director of the                   

                                                                                

6   corporation.                                                                

                                                                                

7                                                                                (l) Designate and maintain a registered office and a resident                       

                                                                                

8   agent in that office upon whom service of process may be made.              

                                                                                

9       (m) Sue and be sued in all courts and participate in actions                

                                                                                

10  and proceedings, judicial, administrative, arbitrative, or                  

                                                                                

11  otherwise, in the same cases as natural persons.                            

                                                                                

12      (n) Have a corporate seal, alter the seal, and use it by                    

                                                                                

13  causing the seal or a facsimile to be affixed, impressed, or                

                                                                                

14  reproduced in any other manner.                                             

                                                                                

15      (o) Invest and reinvest its funds and  , for investment                     

                                                                                

16  purposes only,  purchase, take, receive, subscribe for, or                  

                                                                                

17  otherwise acquire, own, hold, vote, employ, sell, lend, lease,              

                                                                                

18  exchange, transfer, or otherwise dispose of, mortgage, pledge,              

                                                                                

19  use, and otherwise deal in and with, bonds and other obligations,           

                                                                                

20  shares, or other securities or interests issued by other entities           

                                                                                

21  other than domestic, foreign, or alien insurers, as defined in             

                                                                                

22  sections 106 and 110 of the insurance code of 1956, 1956 PA 218,            

                                                                                

23  MCL 500.106 and 500.110,  whether engaged in a similar or                   

                                                                                

24  different business, or governmental or other activity, including            

                                                                                

25  banking corporations or trust companies.   However, a health care           

                                                                                

26  corporation may purchase, take, receive, subscribe for, or                  

                                                                                

27  otherwise acquire, own, hold, vote, employ, sell, lend, lease,              


                                                                                

1   exchange, transfer, or otherwise dispose of bonds or other                  

                                                                                

2   obligations, shares, or other securities or interests issued by a           

                                                                                

3   domestic, foreign, or alien insurer, so long as the activity                

                                                                                

4   meets all of the following:                                                 

                                                                                

5                                                                                (i) Is determined by the attorney general to be lawful under                        

                                                                                

6   section 202.                                                                

                                                                                

7       (ii) Is approved in writing by the commissioner as being in                  

                                                                                

8   the best interests of the health care corporation and its                   

                                                                                

9   subscribers.                                                                

                                                                                

10      (iii) Will not result in the health care corporation owning                  

                                                                                

11  or controlling 10% or more of the voting securities of the                  

                                                                                

12  insurer.  Nothing in this subdivision shall be interpreted as               

                                                                                

13  expanding the lawful purposes of a health care corporation under            

                                                                                

14  this act.  Except where expressly authorized by statute, a health           

                                                                                

15  care corporation shall not indirectly engage in any investment              

                                                                                

16  activity that it may not engage in directly.  A health care                 

                                                                                

17  corporation shall not guarantee or become surety upon a bond or             

                                                                                

18  other undertaking securing the deposit of public money.                     

                                                                                

19      (p) Purchase, receive, take by grant, gift, devise, bequest                 

                                                                                

20  or otherwise, lease, or otherwise acquire, own, hold, improve,              

                                                                                

21  employ, use and otherwise deal in and with, real or personal                

                                                                                

22  property, or an interest therein, wherever situated.                        

                                                                                

23      (q) Sell, convey, lease, exchange, transfer or otherwise                    

                                                                                

24  dispose of, or mortgage or pledge, or create a security interest            

                                                                                

25  in, any of its property, or an interest therein, wherever                   

                                                                                

26  situated.                                                                   

                                                                                

27      (r) Borrow money and issue its promissory note or bond for                  


                                                                                

1   the repayment of the borrowed money with interest.                          

                                                                                

2       (s) Make donations for the public welfare, including                        

                                                                                

3   hospital, charitable, or educational contributions that do not              

                                                                                

4   significantly affect rates charged to subscribers.                          

                                                                                

5       (t) Participate with others in any joint venture with respect               

                                                                                

6   to any transaction that the health care corporation would have              

                                                                                

7   the power to conduct by itself.                                             

                                                                                

8       (u) Cease its activities and dissolve, subject to the                       

                                                                                

9   commissioner's authority under section 606(2).                              

                                                                                

10      (v) Make contracts, transact business, carry on its                         

                                                                                

11  operations, have offices, and  exercise the powers granted by               

                                                                                

12  this act  engage in any other lawful activity in any                        

                                                                                

13  jurisdiction.  , to the extent necessary to carry out its                   

                                                                                

14  purposes under this act.                                                    

                                                                                

15      (w) Have and exercise all powers necessary or convenient to                 

                                                                                

16  effect any purpose for which the corporation was formed.                    

                                                                                

17      (x) Notwithstanding subdivision (o) or any other provision of               

                                                                                

18  this act, establish, own, and operate a domestic stock insurance            

                                                                                

19  company only for the purpose of acquiring, owning, and operating            

                                                                                

20  the state accident fund pursuant to chapter 51 of the insurance             

                                                                                

21  code of 1956, 1956 PA 218, MCL 500.5100 to 500.5114, so long as             

                                                                                

22  all of the following are met:                                               

                                                                                

23                                                                               (i) For insurance products and services the insurer whether                         

                                                                                

24  directly or indirectly only transacts worker's compensation                 

                                                                                

25  insurance and employer's liability insurance, transacts                     

                                                                                

26  disability insurance limited to replacement of loss of earnings,            

                                                                                

27  and acts as an administrative services organization for an                  


                                                                                

1   approved self-insured worker's compensation plan or a disability            

                                                                                

2   insurance plan limited to replacement of loss of earnings and               

                                                                                

3   does not transact any other type of insurance notwithstanding the           

                                                                                

4   authorization in chapter 51 of the insurance code of 1956, 1956             

                                                                                

5   PA 218, MCL 500.5100 to 500.5114.  This subparagraph does not               

                                                                                

6   preclude the insurer from providing either directly or indirectly           

                                                                                

7   noninsurance products and services as otherwise provided by law.            

                                                                                

8       (ii) The activity is determined by the attorney general to be                

                                                                                

9   lawful under section 202.                                                   

                                                                                

10      (iii) The health care corporation does not directly or                       

                                                                                

11  indirectly subsidize the use of any provider or subscriber                  

                                                                                

12  information, loss data, contract, agreement, reimbursement                  

                                                                                

13  mechanism or arrangement, computer system, or health care                   

                                                                                

14  provider discount to the insurer.                                           

                                                                                

15      (iv) Members of the board of directors, employees, and                       

                                                                                

16  officers of the health care corporation are not, directly or                

                                                                                

17  indirectly, employed by the insurer unless the health care                  

                                                                                

18  corporation is fairly and reasonably compensated for the services           

                                                                                

19  rendered to the insurer if those services were paid for by the              

                                                                                

20  health care corporation.                                                    

                                                                                

21      (v) Health care corporation and subscriber funds are used                   

                                                                                

22  only for the acquisition from the state of Michigan of the assets           

                                                                                

23  and liabilities of the state accident fund.                                 

                                                                                

24      (vi) Health care corporation and subscriber funds are not                    

                                                                                

25  used to operate or subsidize in any way the insurer including the           

                                                                                

26  use of such funds to subsidize contracts for goods and services.            

                                                                                

27  This subparagraph does not prohibit joint undertakings between              


                                                                                

1   the health care corporation and the insurer to take advantage of            

                                                                                

2   economies of scale or arm's-length loans or other financial                 

                                                                                

3   transactions between the health care corporation and the                    

                                                                                

4   insurer.                                                                    

                                                                                

5       (2) In order to ascertain the interests of senior citizens                  

                                                                                

6   regarding the provision of medicare supplemental coverage, as               

                                                                                

7   described in section 202(1)(d)(v), and to ascertain the interests           

                                                                                

8   of senior citizens regarding the administration of the federal              

                                                                                

9   medicare program when acting as fiscal intermediary in this                 

                                                                                

10  state, as described in section 202(1)(d)(vi), a health care                  

                                                                                

11  corporation shall consult with the office of services to the                

                                                                                

12  aging and with senior citizens' organizations in this state.                

                                                                                

13      (3) An act of a health care corporation, otherwise lawful, is               

                                                                                

14  not invalid because the corporation was without capacity or power           

                                                                                

15  to do the act.  However, the lack of capacity or power may be               

                                                                                

16  asserted:                                                                   

                                                                                

17      (a) In an action by a director or a member of the corporate                 

                                                                                

18  body against the corporation to enjoin the doing of an act.                 

                                                                                

19      (b) In an action by or in the right of the corporation to                   

                                                                                

20  procure a judgment in its favor against an incumbent or former              

                                                                                

21  officer or director of the corporation for loss or damage due to            

                                                                                

22  an unauthorized act of that officer or director.                            

                                                                                

23      (c) In an action or special proceeding by the attorney                      

                                                                                

24  general to enjoin the corporation from the transacting of                   

                                                                                

25  unauthorized business, to set aside an unauthorized transaction,            

                                                                                

26  or to obtain other equitable relief.                                        

                                                                                

27      (4) A health care corporation may engage in any activity not                


                                                                                

1   prohibited by law.  The absence of any specific grant of                    

                                                                                

2   authority in this act shall not be construed to prohibit a health           

                                                                                

3   care corporation from engaging in any activity not otherwise                

                                                                                

4   prohibited by law.                                                          

                                                                                

5       Sec. 211.  (1) Pursuant to section 207(1)(g), a health care                 

                                                                                

6   corporation may enter into service contracts containing an                  

                                                                                

7   administrative services only or cost-plus arrangement.  Except as           

                                                                                

8   otherwise provided in this section, a corporation shall not enter           

                                                                                

9   into a service contract containing an administrative services               

                                                                                

10  only or cost-plus arrangement for a noninsured benefit plan                 

                                                                                

11  covering a group of less than 500 individuals, except that a                

                                                                                

12  health care corporation may continue an administrative services             

                                                                                

13  only or cost-plus arrangement with a group of less than 500,                

                                                                                

14  which arrangement is in existence in September of 1980.  A                  

                                                                                

15  corporation may enter into contracts containing an administrative           

                                                                                

16  services only or cost-plus arrangement for a noninsured benefit             

                                                                                

17  plan covering a group of less than 500 individuals if either the            

                                                                                

18  corporation makes arrangements for excess loss coverage or the              

                                                                                

19  sponsor of the plan that covers the individuals is liable for the           

                                                                                

20  plan's liabilities and is a sponsor of 1 or more plans covering a           

                                                                                

21  group of 500 or more individuals in the aggregate.  The                     

                                                                                

22  commissioner, upon obtaining the advice of the corporations                 

                                                                                

23  subject to this act, shall establish the standards for the manner           

                                                                                

24  and amount of the excess loss coverage required by this                     

                                                                                

25  subsection.  It is the intent of the legislature that the excess            

                                                                                

26  loss coverage requirements be uniform as between corporations               

                                                                                

27  subject to this act and other persons authorized to provide                 


                                                                                

1   similar services.  The corporation shall offer in connection with           

                                                                                

2   a noninsured benefit plan a program of specific or aggregate                

                                                                                

3   excess loss coverage.                                                       

                                                                                

4       (2) Relative to actual administrative costs, fees for                       

                                                                                

5   administrative services only and cost-plus arrangements shall be            

                                                                                

6   set in a manner that precludes cost transfers between subscribers           

                                                                                

7   subject to either of these arrangements and other subscribers of            

                                                                                

8   the health care corporation.  Administrative costs for these                

                                                                                

9   arrangements shall be determined in accordance with the                     

                                                                                

10  administrative costs allocation methodology and definitions filed           

                                                                                

11  and approved under part 6, and shall be expressed clearly and               

                                                                                

12  accurately in the contracts establishing the arrangements, as a             

                                                                                

13  percentage of costs rather than charges.  This subsection shall             

                                                                                

14  not be construed to prohibit the inclusion, in fees charged, of             

                                                                                

15  contributions to  the contingency reserve of the corporation,               

                                                                                

16  consistent with section 205  adequate and unimpaired surplus as             

                                                                                

17  provided in section 204a.                                                   

                                                                                

18      (3) Before a health care corporation may enter into contracts               

                                                                                

19  containing administrative services only or cost-plus arrangements           

                                                                                

20  pursuant to section 207(1)(g), the board of directors of the                

                                                                                

21  corporation shall approve a marketing policy  with respect to               

                                                                                

22  such  for these arrangements that is consistent with  the                   

                                                                                

23  provisions of  this section.  The marketing policy may contain              

                                                                                

24  other provisions as the board considers necessary.  The marketing           

                                                                                

25  policy shall be carried out by the corporation consistent with              

                                                                                

26  this act.                                                                   

                                                                                

27      (4) A corporation providing services under a contract                       


                                                                                

1   containing an administrative services only or cost-plus                     

                                                                                

2   arrangement in connection with a noninsured benefit plan shall              

                                                                                

3   provide in its service contract a provision that the person                 

                                                                                

4   contracting for the services in connection with a noninsured                

                                                                                

5   benefit plan shall notify each covered individual of what                   

                                                                                

6   services are being provided; the fact that individuals are not              

                                                                                

7   insured or are not covered by a certificate from the corporation,           

                                                                                

8   or are only partially insured or are only partially covered by a            

                                                                                

9   certificate from the corporation, as the case may be; which party           

                                                                                

10  is liable for payment of benefits; and of future changes in                 

                                                                                

11  benefits.                                                                   

                                                                                

12      (5) A service contract containing an administrative services                

                                                                                

13  only arrangement between a corporation and a governmental entity            

                                                                                

14  not subject to the employee retirement income security act of               

                                                                                

15  1974, Public Law 93-406, 88 Stat. 829, whose plan provides                  

                                                                                

16  coverage under a collective bargaining agreement utilizing a                

                                                                                

17  policy or certificate issued by a carrier before the signing of             

                                                                                

18  the service contract, is void unless the governmental entity has            

                                                                                

19  provided the notice described in subsection (4) to the collective           

                                                                                

20  bargaining agent and to the members of the collective bargaining            

                                                                                

21  unit not less than 30 days before signing the service contract.             

                                                                                

22  The voiding of a service contract under this subsection shall not           

                                                                                

23  relieve the governmental entity of any obligations to the                   

                                                                                

24  corporation under the service contract.                                     

                                                                                

25      (6) Nothing in this section shall be construed to permit an                 

                                                                                

26  actionable interference by a corporation with the rights and                

                                                                                

27  obligations of the parties under a collective bargaining                    


                                                                                

1   agreement.                                                                  

                                                                                

2       (7) An individual covered under a noninsured benefit plan for               

                                                                                

3   which services are provided under a service contract authorized             

                                                                                

4   under subsection (1)  shall  is not  be  liable for that portion            

                                                                                

5   of claims incurred and subject to payment under the plan if the             

                                                                                

6   service contract is entered into between an employer and a                  

                                                                                

7   corporation, unless that portion of the claim has been paid                 

                                                                                

8   directly to the covered individual.                                         

                                                                                

9       (8) A corporation shall report with its annual statement the                

                                                                                

10  amount of business it has conducted as services provided under              

                                                                                

11  subsection (1) that are performed in connection with a noninsured           

                                                                                

12  benefit plan, and the commissioner shall transmit annually this             

                                                                                

13  information to the state  commissioner of revenue  treasurer.               

                                                                                

14  The commissioner shall submit to the legislature on April 1,                

                                                                                

15  1994, a report detailing the impact of this section on employers            

                                                                                

16  and covered individuals, and similar activities under other                 

                                                                                

17  provisions of law, and in consultation with the  revenue                    

                                                                                

18  commissioner  state treasurer the total financial impact on the             

                                                                                

19  state for the preceding legislative biennium.                               

                                                                                

20      (9) As used in this section, "noninsured benefit plan" or                   

                                                                                

21  "plan" means a health benefit plan without coverage by a health             

                                                                                

22  care corporation, health maintenance organization, or insurer or            

                                                                                

23  the portion of a health benefit plan without coverage by a health           

                                                                                

24  care corporation, health maintenance organization, or insurer               

                                                                                

25  that has a specific or aggregate excess loss coverage.                      

                                                                                

26      Sec. 401.  (1) A health care corporation established,                       

                                                                                

27  maintained, or operating in this state shall offer health care              


                                                                                

1   benefits to all residents of this state, and may offer other                

                                                                                

2   health care benefits as the corporation specifies with the                  

                                                                                

3   approval of the commissioner.                                               

                                                                                

4       (2) A health care corporation may limit the health care                     

                                                                                

5   benefits that it will furnish, except as provided in this act,              

                                                                                

6   and may divide the health care benefits that it elects to furnish           

                                                                                

7   into classes or kinds.                                                      

                                                                                

8       (3) A health care corporation shall not do any of the                       

                                                                                

9   following:                                                                  

                                                                                

10      (a) Refuse to issue or continue a certificate to 1 or more                  

                                                                                

11  residents of this state, except while the individual, based on a            

                                                                                

12  transaction or occurrence involving a health care corporation, is           

                                                                                

13  serving a sentence arising out of a charge of fraud, is                     

                                                                                

14  satisfying a civil judgment, or is making restitution pursuant to           

                                                                                

15  a voluntary payment agreement between the corporation and the               

                                                                                

16  individual.                                                                 

                                                                                

17      (b) Refuse to continue in effect a certificate with 1 or more               

                                                                                

18  residents of this state, other than for failure to pay amounts              

                                                                                

19  due for a certificate, except as allowed for refusal to issue a             

                                                                                

20  certificate under subdivision (a).                                          

                                                                                

21      (c) Limit the coverage available under a certificate, without               

                                                                                

22  the prior approval of the commissioner, unless the limitation is            

                                                                                

23  as a result of:  an agreement with the person paying for the                

                                                                                

24  coverage; an agreement with the individual designated by the                

                                                                                

25  persons paying for or contracting for the coverage; or a                    

                                                                                

26  collective bargaining agreement.                                            

                                                                                

27      (d) Rate, cancel benefits on, refuse to provide benefits for,               


                                                                                

1   or refuse to issue or continue a certificate solely because a               

                                                                                

2   subscriber or applicant is or has been a victim of domestic                 

                                                                                

3   violence.  A health care corporation shall not be held civilly              

                                                                                

4   liable for any cause of action that may result from compliance              

                                                                                

5   with this subdivision.  This subdivision applies to all health              

                                                                                

6   care corporation certificates issued or renewed on or after                 

                                                                                

7   June 1, 1998.  As used in this subdivision, "domestic violence"             

                                                                                

8   means inflicting bodily injury, causing serious emotional injury            

                                                                                

9   or psychological trauma, or placing in fear of imminent physical            

                                                                                

10  harm by threat or force a person who is a spouse or former spouse           

                                                                                

11  of, has or has had a dating relationship with, resides or has               

                                                                                

12  resided with, or has a child in common with the person committing           

                                                                                

13  the violence.                                                               

                                                                                

14      (e) Require a member or his or her dependent or an applicant                

                                                                                

15  for coverage or his or her dependent to do either of the                    

                                                                                

16  following:                                                                  

                                                                                

17                                                                               (i) Undergo genetic testing before issuing, renewing, or                            

                                                                                

18  continuing a health care corporation certificate.                           

                                                                                

19      (ii) Disclose whether genetic testing has been conducted or                  

                                                                                

20  the results of genetic testing or genetic information.                      

                                                                                

21      (4) Subsection (3) does not prevent a health care corporation               

                                                                                

22  from denying to a resident of this state coverage under a                   

                                                                                

23  certificate for any of the following grounds:                               

                                                                                

24      (a) That the individual was not a member of a group that had                

                                                                                

25  contracted for coverage under this certificate.                             

                                                                                

26      (b) That the individual is not a member of a group with a                   

                                                                                

27  size greater than a minimum size established for a certificate              


                                                                                

1   pursuant to sound underwriting requirements.                                

                                                                                

2       (c) That the individual does not meet requirements for                      

                                                                                

3   coverage contained in a certificate.                                        

                                                                                

4       (d) That the group the individual is a member of has failed                 

                                                                                

5   to enroll enough of its eligible members to meet the minimum                

                                                                                

6   participation rules established by the health care corporation              

                                                                                

7   pursuant to sound underwriting requirements.  A minimum                     

                                                                                

8   participation rule may require a group to enroll a certain number           

                                                                                

9   or percentage of its members with the health care corporation or            

                                                                                

10  its subsidiary health maintenance organization as a condition of            

                                                                                

11  coverage.  A minimum participation rule for groups of 6 or more             

                                                                                

12  members shall not require enrollment of more than 75% of the                

                                                                                

13  group's members who are receiving health care coverage from the             

                                                                                

14  group.  A minimum participation rule for groups of fewer than 6             

                                                                                

15  members may require enrollment of up to 100% of the group's                 

                                                                                

16  members who are receiving health care coverage from the group.              

                                                                                

17      (5) A certificate may provide for the coordination of                       

                                                                                

18  benefits, subrogation, and the nonduplication of benefits.                  

                                                                                

19  Savings realized by the coordination of benefits, subrogation,              

                                                                                

20  and nonduplication of benefits shall be reflected in the rates              

                                                                                

21  for those certificates.  If a group certificate issued by the               

                                                                                

22  corporation contains a coordination of benefits provision, the              

                                                                                

23  benefits shall be payable pursuant to the coordination of                   

                                                                                

24  benefits act, 1984 PA 64, MCL 550.251 to 550.255.                           

                                                                                

25      (6) A health care corporation shall have the right to status                

                                                                                

26  as a party in interest, whether by intervention or otherwise, in            

                                                                                

27  any judicial, quasi-judicial, or administrative agency proceeding           


                                                                                

1   in this state for the purpose of enforcing any rights it may have           

                                                                                

2   for reimbursement of payments made or advanced for health care              

                                                                                

3   services on behalf of 1 or more of its subscribers or members.              

                                                                                

4       (7) A health care corporation shall not directly reimburse a                

                                                                                

5   provider in this state who has not entered into a participating             

                                                                                

6   contract with the corporation.                                              

                                                                                

7       (8) A health care corporation shall not limit or deny                       

                                                                                

8   coverage to a subscriber or limit or deny reimbursement to a                

                                                                                

9   provider on the ground that services were rendered while the                

                                                                                

10  subscriber was in a health care facility operated by this state             

                                                                                

11  or a political subdivision of this state.  A health care                    

                                                                                

12  corporation shall not limit or deny participation status to a               

                                                                                

13  health care facility on the ground that the health care facility            

                                                                                

14  is operated by this state or a political subdivision of this                

                                                                                

15  state, if the facility meets the standards set by the corporation           

                                                                                

16  for all other facilities of that type, government-operated or               

                                                                                

17  otherwise.  To qualify for participation and reimbursement, a               

                                                                                

18  facility shall, at a minimum, meet all of the following                     

                                                                                

19  requirements, which shall apply to all similar facilities:                  

                                                                                

20      (a) Be accredited by the joint commission on accreditation of               

                                                                                

21  hospitals.                                                                  

                                                                                

22      (b) Meet the certification standards of the medicare program                

                                                                                

23  and the medicaid program.                                                   

                                                                                

24      (c) Meet all statutory requirements for certificate of need.                

                                                                                

25      (d) Follow generally accepted accounting principles and                     

                                                                                

26  practices.                                                                  

                                                                                

27      (e) Have a community advisory board.                                        


                                                                                

1       (f) Have a program of utilization and peer review to assure                 

                                                                                

2   that patient care is appropriate and at an acute level.                     

                                                                                

3       (g) Designate that portion of the facility that is to be used               

                                                                                

4   for acute care.                                                             

                                                                                

5       (9) As used in this section:                                                

                                                                                

6       (a) "Clinical purposes" includes all of the following:                      

                                                                                

7                                                                                (i) Predicted risk of diseases.                                                     

                                                                                

8       (ii) Identifying carriers for single-gene disorders.                         

                                                                                

9       (iii) Establishing prenatal and clinical diagnosis or                        

                                                                                

10  prognosis.                                                                  

                                                                                

11      (iv) Prenatal, newborn, and other carrier screening, as well                 

                                                                                

12  as testing in high-risk families.                                           

                                                                                

13      (v) Tests for metabolites if undertaken with high probability               

                                                                                

14  that an excess or deficiency of the metabolite indicates or                 

                                                                                

15  suggests the presence of heritable mutations in single genes.               

                                                                                

16      (vi) Other tests if their intended purpose is diagnosis of a                 

                                                                                

17  presymptomatic genetic condition.                                           

                                                                                

18      (b) "Genetic information" means information about a gene,                   

                                                                                

19  gene product, or inherited characteristic derived from a genetic            

                                                                                

20  test.                                                                       

                                                                                

21      (c) "Genetic test" means the analysis of human DNA, RNA,                    

                                                                                

22  chromosomes, and those proteins and metabolites used to detect              

                                                                                

23  heritable or somatic disease-related genotypes or karyotypes for            

                                                                                

24  clinical purposes.  A genetic test must be generally accepted in            

                                                                                

25  the scientific and medical communities as being specifically                

                                                                                

26  determinative for the presence, absence, or mutation of a gene or           

                                                                                

27  chromosome in order to qualify under this definition.  Genetic              


                                                                                

1   test does not include a routine physical examination or a routine           

                                                                                

2   analysis, including, but not limited to, a chemical analysis, of            

                                                                                

3   body fluids, unless conducted specifically to determine the                 

                                                                                

4   presence, absence, or mutation of a gene or chromosome.                     

                                                                                

5       Sec. 422c.  A health care corporation may condition the                     

                                                                                

6   granting of long-term care coverage based on answers given on an            

                                                                                

7   application under section 422a and pursuant to underwriting                 

                                                                                

8   standards established by the corporation.                                   

                                                                                

9       Sec. 502.  (1) A health care corporation may enter into                     

                                                                                

10  participating contracts for reimbursement with professional                 

                                                                                

11  health care providers practicing legally in this state or with              

                                                                                

12  health practitioners practicing legally in any other jurisdiction           

                                                                                

13  for health care services that the professional health care                  

                                                                                

14  providers or practitioners may legally perform.  A participating            

                                                                                

15  contract may cover all members or may be a separate and                     

                                                                                

16  individual contract on a per claim basis, as set forth in the               

                                                                                

17  provider class plan, if, in entering into a separate and                    

                                                                                

18  individual contract on a per claim basis, the participating                 

                                                                                

19  provider certifies to the health care corporation:                          

                                                                                

20      (a) That the provider will accept payment from the                          

                                                                                

21  corporation as payment in full for services rendered for the                

                                                                                

22  specified claim for the member indicated.                                   

                                                                                

23      (b) That the provider will accept payment from the                          

                                                                                

24  corporation as payment in full for all cases involving the                  

                                                                                

25  procedure specified, for the duration of the calendar year.  As             

                                                                                

26  used in this subdivision, provider does not include a person                

                                                                                

27  licensed as a dentist under part 166 of the public health code,             


                                                                                

1   1978 PA 368, MCL 333.16601 to 333.16648.                                    

                                                                                

2       (c) That the provider will not determine whether to                         

                                                                                

3   participate on a claim on the basis of the race, color, creed,              

                                                                                

4   marital status, sex, national origin, residence, age, disability,           

                                                                                

5   or lawful occupation of the member entitled to health care                  

                                                                                

6   benefits.                                                                   

                                                                                

7       (2) A contract entered into pursuant to subsection (1) shall                

                                                                                

8   provide that the private provider-patient relationship shall be             

                                                                                

9   maintained to the extent provided for by law.  A health care                

                                                                                

10  corporation shall continue to offer a reimbursement arrangement             

                                                                                

11  to any class of providers with which it has contracted prior to             

                                                                                

12  August 27, 1985 and that continues to meet the standards set by             

                                                                                

13  the corporation for that class of providers.                                

                                                                                

14      (3) A health care corporation shall not restrict the methods                

                                                                                

15  of diagnosis or treatment of professional health care providers             

                                                                                

16  who treat members.  Except as otherwise provided in section 502a,           

                                                                                

17  each member of the health care corporation shall at all times               

                                                                                

18  have a choice of professional health care providers.  This                  

                                                                                

19  subsection does not apply to limitations in benefits contained in           

                                                                                

20  certificates, to the reimbursement provisions of a provider                 

                                                                                

21  contract or reimbursement arrangement, or to standards set by the           

                                                                                

22  corporation for all contracting providers.  A health care                   

                                                                                

23  corporation may refuse to reimburse a health care provider for              

                                                                                

24  health care services that are overutilized, including those                 

                                                                                

25  services rendered, ordered, or prescribed to an extent that is              

                                                                                

26  greater than reasonably necessary.                                          

                                                                                

27      (4) A health care corporation may provide to a member, upon                 


                                                                                

1   request, a list of providers with whom the corporation contracts,           

                                                                                

2   for the purpose of assisting a member in obtaining a type of                

                                                                                

3   health care service.  However, except as otherwise provided in              

                                                                                

4   section 502a, an employee, agent, or officer of the corporation,            

                                                                                

5   or an individual on the board of directors of the corporation,              

                                                                                

6   shall not make recommendations on behalf of the corporation with            

                                                                                

7   respect to the choice of a specific health care provider.  Except           

                                                                                

8   as otherwise provided in section 502a, an employee, agent, or               

                                                                                

9   officer of the corporation, or a person on the board of directors           

                                                                                

10  of the corporation who influences or attempts to influence a                

                                                                                

11  person in the choice or selection of a specific professional                

                                                                                

12  health care provider on behalf of the corporation, is guilty of a           

                                                                                

13  misdemeanor.                                                                

                                                                                

14      (5) A health care corporation shall provide a symbol of                     

                                                                                

15  participation, which can be publicly displayed, to providers who            

                                                                                

16  participate on all claims for covered health care services                  

                                                                                

17  rendered to subscribers.                                                    

                                                                                

18      (6) This section does not impede the lawful operation of, or                

                                                                                

19  lawful promotion of, a health maintenance organization owned by a           

                                                                                

20  health care corporation.                                                    

                                                                                

21      (7) Contracts entered into under this section with                          

                                                                                

22  professional health care providers licensed in this state are               

                                                                                

23  subject to the provisions of sections 504 to 518.                           

                                                                                

24      (8) A health care corporation shall not deny participation to               

                                                                                

25  a freestanding surgical outpatient facility on the basis of                 

                                                                                

26  ownership if the facility meets the reasonable standards set by             

                                                                                

27  the health care corporation for similar facilities, is licensed             


                                                                                

1   under part 208 of the public health code, 1978 PA 368,                      

                                                                                

2   MCL 333.20801 to 333.20821, and complies with part 222 of the               

                                                                                

3   public health code, 1978 PA 368, MCL 333.22201 to 333.22260.                

                                                                                

4       (9) Notwithstanding any other provision of this act, if a                   

                                                                                

5   certificate provides for benefits for services that are within              

                                                                                

6   the scope of practice of optometry, a health care corporation is            

                                                                                

7   not required to provide benefits or reimburse for a practice of             

                                                                                

8   optometric service unless that service was included in the                  

                                                                                

9   definition of practice of optometry under section 17401 of the              

                                                                                

10  public health code, 1978 PA 368, MCL 333.17401, as of May 20,               

                                                                                

11  1992.                                                                       

                                                                                

12      (10) Notwithstanding any other provision of this act, a                     

                                                                                

13  health care corporation is not required to reimburse for services           

                                                                                

14  otherwise covered under a certificate if the services were                  

                                                                                

15  performed by a member of a health care profession, which health             

                                                                                

16  care profession was not licensed or registered by this state on             

                                                                                

17  or before January 1, 1998 but that becomes a health care                    

                                                                                

18  profession licensed or registered by this state after January 1,            

                                                                                

19  1998.  This subsection does not change the status of a health               

                                                                                

20  care profession that was licensed or registered by this state on            

                                                                                

21  or before January 1, 1998.                                                  

                                                                                

22      Sec. 602.  (1) Not later than March 1 each year, subject to                 

                                                                                

23  a 30-day extension  which  that may be granted by the                       

                                                                                

24  commissioner, a health care corporation shall file in the office            

                                                                                

25  of the commissioner a sworn statement verified by at least 2 of             

                                                                                

26  the principal officers of the corporation showing its condition             

                                                                                

27  as of the preceding December 31.  The statement shall be in a               


                                                                                

1   form  ,  and contain those matters  , which  that the                       

                                                                                

2   commissioner prescribes for a health care corporation, including            

                                                                                

3   those matters contained in section  205  204a.  The statement               

                                                                                

4   shall include the number of members and the number of                       

                                                                                

5   subscribers' certificates issued by the corporation and                     

                                                                                

6   outstanding.                                                                

                                                                                

7       (2) The commissioner, by order, may require a health care                   

                                                                                

8   corporation to submit statistical, financial, and other reports             

                                                                                

9   for the purpose of monitoring compliance with this act.                     

                                                                                

10      Sec. 608.  (1) The rates charged to nongroup medicare                       

                                                                                

11  supplemental subscribers for each certificate shall be filed in             

                                                                                

12  accordance with section 610 and shall be subject to the prior               

                                                                                

13  approval of the commissioner.  Annually, the commissioner shall             

                                                                                

14  approve, disapprove, or modify and approve the proposed or                  

                                                                                

15  existing rates for each certificate subject to the standard that            

                                                                                

16  the rates must be determined to be equitable, adequate, and not             

                                                                                

17  excessive, as defined in section 609.  The rates charged to                 

                                                                                

18  nongroup medicare supplemental subscribers shall not include rate           

                                                                                

19  differentials based on age or residence. The burden of proof that           

                                                                                

20  rates to be charged meet these standards shall be upon the health           

                                                                                

21  care corporation proposing to use the rates.                                

                                                                                

22      (2) The methodology and definitions of each rating system,                  

                                                                                

23  formula, component, and factor used to calculate rates for group            

                                                                                

24  subscribers for each certificate, including the methodology and             

                                                                                

25  definitions used to calculate administrative costs for                      

                                                                                

26  administrative services only and cost-plus arrangements, shall be           

                                                                                

27  filed in accordance with section 610 and shall be subject to the            


                                                                                

1   prior approval of the commissioner.  The definition of a group,             

                                                                                

2   including any clustering principles applied to nongroup                     

                                                                                

3   subscribers or small group subscribers for the purpose of group             

                                                                                

4   formation, shall be subject to the prior approval of the                    

                                                                                

5   commissioner.  However, if a Michigan caring program is created             

                                                                                

6   under section 436, that program shall be defined as a group                 

                                                                                

7   program for the purpose of establishing rates.  The commissioner            

                                                                                

8   shall approve, disapprove, or modify and approve the methodology            

                                                                                

9   and definitions of each rating system, formula, component, and              

                                                                                

10  factor for each certificate subject to the standard that the                

                                                                                

11  resulting rates for group subscribers must be determined to be              

                                                                                

12  equitable, adequate, and not excessive, as defined in section               

                                                                                

13  609.  In addition, the commissioner may from time to time review            

                                                                                

14  the records of the corporation to determine proper application of           

                                                                                

15  a rating system, formula, component, or factor with respect to              

                                                                                

16  any group.  The corporation shall refile for approval under this            

                                                                                

17  subsection, every 3 years, the methodology and definitions of               

                                                                                

18  each rating system, formula, component, and factor used to                  

                                                                                

19  calculate rates for group subscribers, including the methodology            

                                                                                

20  and definitions used to calculate administrative costs for                  

                                                                                

21  administrative services only and cost-plus arrangements.  The               

                                                                                

22  burden of proof that the resulting rates to be charged meet these           

                                                                                

23  standards shall be upon the health care corporation proposing to            

                                                                                

24  use the rating system, formula, component, or factor.                       

                                                                                

25      (2)  (3)  A proposed rate filed under subsection (1) shall                  

                                                                                

26  not take effect until a filing has been made with the                       

                                                                                

27  commissioner and approved under section 607 or this section, as             


                                                                                

1   applicable, except as provided in  subsections (4) and (5)                  

                                                                                

2   subsection (3).                                                             

                                                                                

3       (3)  (4)  Upon request by a health care corporation, the                    

                                                                                

4   commissioner may allow rate adjustments to become effective prior           

                                                                                

5   to approval, for federal or state mandated benefit changes.                 

                                                                                

6   However, a filing for these adjustments shall be submitted before           

                                                                                

7   the effective date of the mandated benefit changes.  If the                 

                                                                                

8   commissioner disapproves or modifies and approves the rates, an             

                                                                                

9   adjustment shall be made retroactive to the effective date of the           

                                                                                

10  mandated benefit changes or additions.                                      

                                                                                

11      (5) Implementation prior to approval may be allowed if the                  

                                                                                

12  health care corporation is participating with 1 or more health              

                                                                                

13  care corporations to underwrite a group whose employees are                 

                                                                                

14  located in several states.  Upon request from the commissioner,             

                                                                                

15  the corporation shall file with the commissioner, and the                   

                                                                                

16  commissioner shall examine, the financial arrangement, formulae,            

                                                                                

17  and factors.  If any are determined to be unacceptable, the                 

                                                                                

18  commissioner shall take appropriate action.                                 

                                                                                

19      Sec. 608a.  (1) The rates for nongroup and group conversion                 

                                                                                

20  subscribers shall be filed with and approved by the                         

                                                                                

21  commissioner.  The rates under this section shall not be filed              

                                                                                

22  more frequently than annually.  The rates shall be reasonable in            

                                                                                

23  relation to the benefits provided.  The rates shall be considered           

                                                                                

24  reasonable if the filing includes an actuarial certification that           

                                                                                

25  the anticipated loss ratio will not be less than 70%.  The rates            

                                                                                

26  shall be considered approved and effective 30 days after filing             

                                                                                

27  with the commissioner.                                                      


                                                                                

1       (2) Not later than 180 days after every 2 years after a rate                

                                                                                

2   approved under subsection (1) has been in effect, the health care           

                                                                                

3   corporation shall determine if the minimum loss ratio has been              

                                                                                

4   met for nongroup and group conversion subscribers.  This                    

                                                                                

5   determination shall be based on the actual experience of the                

                                                                                

6   nongroup and group conversion lines of business over the 2-year             

                                                                                

7   period under review.  The results of this determination shall be            

                                                                                

8   filed with the commissioner.                                                

                                                                                

9       (3) If the actual loss ratio is less than the minimum loss                  

                                                                                

10  ratio under subsection (1) for nongroup or group conversion                 

                                                                                

11  subscribers, the health care corporation shall give a pro rata              

                                                                                

12  rate credit or credits to current subscribers.  The rate credits            

                                                                                

13  shall be determined separately for nongroup subscribers and group           

                                                                                

14  conversion subscribers.  In the aggregate, the rate credits shall           

                                                                                

15  be in an amount equal to the difference between the actual loss             

                                                                                

16  ratio and the minimum loss ratio.  The rate credits shall begin             

                                                                                

17  no later than 180 days after there has been a determination that            

                                                                                

18  the minimum loss ratio was not met.  The rate credits shall be              

                                                                                

19  filed with the commissioner.                                                

                                                                                

20      (4) The rates charged to nongroup and group conversion                      

                                                                                

21  subscribers may include rate differentials based on age and                 

                                                                                

22  residence if the differentials are supported by sound actuarial             

                                                                                

23  principles and a reasonable classification system and are related           

                                                                                

24  to actual and credible loss statistics or, for new coverages,               

                                                                                

25  reasonably anticipated experience.                                          

                                                                                

26      Sec. 608b.  (1) The rates for group subscribers, other than                 

                                                                                

27  those covered under the small employer health market reform act,            


                                                                                

1   shall be filed with and approved by the commissioner.  The rates            

                                                                                

2   under this section shall not be filed more frequently than                  

                                                                                

3   annually.  The rates shall be reasonable in relation to the                 

                                                                                

4   benefits provided.  The rates shall be considered reasonable if             

                                                                                

5   the filing includes an actuarial certification that the                     

                                                                                

6   anticipated loss ratio will not be less than 70%.  The rates                

                                                                                

7   shall be considered approved and effective 30 days after filing             

                                                                                

8   with the commissioner.                                                      

                                                                                

9       (2) Not later than 180 days after every 2 years after a rate                

                                                                                

10  approved under subsection (1) has been in effect, the health care           

                                                                                

11  corporation shall determine if the minimum loss ratio has been              

                                                                                

12  met for each of the group lines of business.  This determination            

                                                                                

13  shall be based on the actual experience of each group line of               

                                                                                

14  business over the 2-year period under review.  The results of               

                                                                                

15  this determination shall be filed with the commissioner.                    

                                                                                

16      (3) If the actual loss ratio is less than the anticipated                   

                                                                                

17  minimum loss ratio under subsection (1) for group subscribers,              

                                                                                

18  the health care corporation shall give a pro rata rate credit or            

                                                                                

19  credits to current group subscribers.  The rate credits shall be            

                                                                                

20  determined separately for each group line of business.  In the              

                                                                                

21  aggregate, the rate credits shall be in an amount equal to the              

                                                                                

22  difference between the actual loss ratio and the minimum loss               

                                                                                

23  ratio.  The rate credits shall begin no later than 180 days after           

                                                                                

24  there has been a determination that the anticipated minimum loss            

                                                                                

25  ratio was not met.  The rate credits shall be filed with the                

                                                                                

26  commissioner.                                                               

                                                                                

27      Sec. 608c.  (1) If the commissioner disapproves the rates                   


                                                                                

1   filed under section 608a or 608b, the commissioner shall issue a            

                                                                                

2   written order of disapproval.  The order shall state specifically           

                                                                                

3   the reasons the rates fail to achieve the minimum loss ratio and            

                                                                                

4   what modifications are required to meet the minimum loss ratio.             

                                                                                

5       (2) If the commissioner disapproves the rates filed under                   

                                                                                

6   section 608a or 608b, the health care corporation may request a             

                                                                                

7   contested case hearing contesting the disapproval under the                 

                                                                                

8   administrative procedures act.  The hearing shall be conducted by           

                                                                                

9   an independent hearing officer appointed by the commissioner.               

                                                                                

10  The person appointed as the independent hearing officer shall               

                                                                                

11  meet the qualifications and conditions listed under section                 

                                                                                

12  613(1).  The hearing shall be conducted under the time frames and           

                                                                                

13  guidelines established under section 613(2).                                

                                                                                

14      Sec. 608d.  (1) For purposes of sections 608a to 608c, the                  

                                                                                

15  premium income used to calculate the anticipated and actual loss            

                                                                                

16  ratio shall include any cost transfer received by the line of               

                                                                                

17  business pursuant to section 609(5), but shall not include any              

                                                                                

18  cost transfer paid by the line of business pursuant to section              

                                                                                

19  609(5).  In addition, the premium income used to calculate the              

                                                                                

20  anticipated and actual loss ratio for group business shall not              

                                                                                

21  include the reserve for the prior experience of the group.                  

                                                                                

22      (2) As used in this section and sections 608a to 608c:                      

                                                                                

23      (a) "Loss ratio" means incurred claims as a percentage of                   

                                                                                

24  earned subscription income, where incurred claims are the amount            

                                                                                

25  paid for health care services during the applicable period plus             

                                                                                

26  the reserve for claims incurred but not paid as of the end of the           

                                                                                

27  applicable period minus the reserve for claims incurred but not             


                                                                                

1   paid as of the beginning of the applicable period.                          

                                                                                

2       (b) "Rate" includes any rating methodology or formula used by               

                                                                                

3   the health care corporation to develop rates for group, nongroup,           

                                                                                

4   or group conversion business.                                               

                                                                                

5       Sec. 609.  (1) A rate is not excessive if the rate is not                   

                                                                                

6   unreasonably high relative to the following elements,                       

                                                                                

7   individually or collectively; provision for anticipated benefit             

                                                                                

8   costs; provision for administrative expense; provision for cost             

                                                                                

9   transfers, if any; provision for a contribution to or from  the             

                                                                                

10  corporate contingency reserve that is consistent with the                   

                                                                                

11  attainment or maintenance of the target contingency reserve level           

                                                                                

12  prescribed in section 205  surplus that is consistent with the              

                                                                                

13  attainment or maintenance of adequate and unimpaired surplus as             

                                                                                

14  provided in section 204a; and provision for adjustments due to              

                                                                                

15  prior experience of groups, as defined in the group rating                  

                                                                                

16  system.  A determination as to whether a rate is excessive                  

                                                                                

17  relative to  the  these elements,  listed above,  individually or           

                                                                                

18  collectively, shall be based on the following:  reasonable                  

                                                                                

19  evaluations of recent claim experience; projected trends in claim           

                                                                                

20  costs; the allocation of administrative expense budgets; and the            

                                                                                

21  present and anticipated  contingency reserve positions                      

                                                                                

22  unimpaired surplus of the health care corporation.  To the extent           

                                                                                

23  that any of these elements are considered excessive, the                    

                                                                                

24  provision in the rates for these elements shall be modified                 

                                                                                

25  accordingly.                                                                

                                                                                

26      (2) The administrative expense budget must be reasonable, as                

                                                                                

27  determined by the commissioner after examination of material and            


                                                                                

1   substantial administrative and acquisition expense items.                   

                                                                                

2       (3) A rate is equitable if the rate can be compared to any                  

                                                                                

3   other rate offered by the health care corporation to its                    

                                                                                

4   subscribers, and the observed rate differences can be supported             

                                                                                

5   by differences in anticipated benefit costs, administrative                 

                                                                                

6   expense cost, differences in risk, or any identified cost                   

                                                                                

7   transfer provisions.                                                        

                                                                                

8       (4) A rate is adequate if the rate is not unreasonably low                  

                                                                                

9   relative to the elements prescribed in subsection (1),                      

                                                                                

10  individually or collectively, based on reasonable evaluations of            

                                                                                

11  recent claim experience, projected trends in claim costs, the               

                                                                                

12  allocation of administrative expense budgets, and the present and           

                                                                                

13  anticipated  contingency reserve positions  unimpaired surplus of           

                                                                                

14  the health care corporation.                                                

                                                                                

15      (5) Except for identified cost transfers, each line of                      

                                                                                

16  business, over time, shall be self-sustaining.  However, there              

                                                                                

17  may be cost transfers for the benefit of senior citizens and                

                                                                                

18  group conversion subscribers.  Cost transfers for the benefit of            

                                                                                

19  senior citizens, in the aggregate, annually shall not exceed 1%             

                                                                                

20  of the earned subscription income of the health care corporation            

                                                                                

21  as reported in the most recent annual statement of the                      

                                                                                

22  corporation.  Group conversion subscribers are those who have               

                                                                                

23  maintained coverage with the health care corporation on an                  

                                                                                

24  individual basis after leaving a subscriber group.   The Michigan           

                                                                                

25  caring program created in section 436 is not subject to any                 

                                                                                

26  assessment or surcharge for cost transfer under this subsection.            

                                                                                

27      Sec. 610.  (1) Except as provided under section  608(4) or                  


                                                                                

1   (5)  608(3), a filing of information and materials relative to a            

                                                                                

2   proposed nongroup medicare supplemental rate shall be made not              

                                                                                

3   less than  120  90 days before the proposed effective date of the           

                                                                                

4   proposed rate.  A filing shall not be considered to have been               

                                                                                

5   received until there has been substantial and material compliance           

                                                                                

6   with the requirements prescribed in subsections (6) and (8).                

                                                                                

7       (2) Within 30 days after a filing is made of information and                

                                                                                

8   materials relative to a proposed nongroup medicare supplemental             

                                                                                

9   rate, the commissioner shall do either of the following:                    

                                                                                

10      (a) Give written notice to the corporation, and to each                     

                                                                                

11  person described under section 612(1), that the filing is in                

                                                                                

12  material and substantial compliance with subsections (6) and (8)            

                                                                                

13  and that the filing is complete.  The commissioner shall then               

                                                                                

14  proceed to approve, approve with modifications, or disapprove the           

                                                                                

15  rate filing 60 days after receipt of the filing, based upon                 

                                                                                

16  whether the filing meets the requirements of this act.  However,            

                                                                                

17  if a hearing has been requested under section 613, the                      

                                                                                

18  commissioner shall not approve, approve with modifications, or              

                                                                                

19  disapprove a filing until the hearing has been completed and an             

                                                                                

20  order issued.                                                               

                                                                                

21      (b) Give written notice to the corporation that the                         

                                                                                

22  corporation has not yet complied with subsections (6) and (8).              

                                                                                

23  The notice shall state specifically  in what respects  the                  

                                                                                

24  reasons the filing fails to meet the requirements of subsections            

                                                                                

25  (6) and (8).                                                                

                                                                                

26      (3) Within 10 days after the filing of notice pursuant to                   

                                                                                

27  subsection (2)(b), the corporation shall submit to the                      


                                                                                

1   commissioner  such  additional information and materials  , as              

                                                                                

2   requested by the commissioner.  Within 10 days after receipt of             

                                                                                

3   the additional information and materials, the commissioner shall            

                                                                                

4   determine whether the filing is in material and substantial                 

                                                                                

5   compliance with subsections (6) and (8).  If the commissioner               

                                                                                

6   determines that the filing does not yet materially and                      

                                                                                

7   substantially meet the requirements of subsections (6) and (8),             

                                                                                

8   the commissioner shall give notice to the corporation pursuant to           

                                                                                

9   subsection (2)(b) or use visitation of the corporation's                    

                                                                                

10  facilities and examination of the corporation's records to obtain           

                                                                                

11  the necessary information described in the notice issued pursuant           

                                                                                

12  to subsection (2)(b).  The commissioner shall use either                    

                                                                                

13  procedure previously mentioned, or a combination of both                    

                                                                                

14  procedures, in order to obtain the necessary information as                 

                                                                                

15  expeditiously as possible.  The per diem, traveling,                        

                                                                                

16  reproduction, and other necessary expenses in connection with               

                                                                                

17  visitation and examination shall be paid by the corporation, and            

                                                                                

18  shall be credited to the general fund of the state.                         

                                                                                

19      (4) If a filing is approved, approved with modifications, or                

                                                                                

20  disapproved under subsection (2)(a), the commissioner shall issue           

                                                                                

21  a written order of the approval, approval with modifications, or            

                                                                                

22  disapproval.  If the filing was approved with modifications or              

                                                                                

23  disapproved, the order shall state specifically  in what                    

                                                                                

24  respects  the reasons the filing fails to meet the requirements             

                                                                                

25  of this act and, if applicable, what modifications are required             

                                                                                

26  for approval under this act.  If the filing was approved with               

                                                                                

27  modifications, the order shall state that the filing shall take             


                                                                                

1   effect after the modifications are made and approved by the                 

                                                                                

2   commissioner.  If the filing was disapproved, the order shall               

                                                                                

3   state that the filing shall not take effect.                                

                                                                                

4       (5) The inability to approve 1 or more rating classes of                    

                                                                                

5   business within a line of business because of a requirement to              

                                                                                

6   submit further data or because a request for a hearing under                

                                                                                

7   section 613 has been granted shall not delay the approval of                

                                                                                

8   rates by the commissioner  which  that could otherwise be                   

                                                                                

9   approved or the implementation of rates already approved, unless            

                                                                                

10  the approval or implementation would affect the consideration of            

                                                                                

11  the unapproved classes of business.                                         

                                                                                

12      (6) Information furnished under subsection (1) in support of                

                                                                                

13  a nongroup medicare supplemental rate filing shall include the              

                                                                                

14  following:                                                                  

                                                                                

15      (a) Recent claim experience on the benefits or comparable                   

                                                                                

16  benefits for which the rate filing applies.                                 

                                                                                

17      (b) Actual prior trend experience.                                          

                                                                                

18      (c) Actual prior administrative expenses.                                   

                                                                                

19      (d) Projected trend factors.                                                

                                                                                

20      (e) Projected administrative expenses.                                      

                                                                                

21      (f) Contributions for risk and contingency reserve factors.                 

                                                                                

22      (g) Actual health care corporation contingency reserve                      

                                                                                

23  position.                                                                   

                                                                                

24      (h) Projected health care corporation contingency reserve                   

                                                                                

25  position.                                                                   

                                                                                

26      (i) Other information  which  the corporation considers                     

                                                                                

27  pertinent to evaluating the risks to be rated, or relevant to the           


                                                                                

1   determination to be made under this section.                                

                                                                                

2       (j) Other information  which  the commissioner considers                    

                                                                                

3   pertinent to evaluating the risks to be rated, or relevant to the           

                                                                                

4   determination to be made under this section.                                

                                                                                

5       (7) A copy of the filing, and all supporting information,                   

                                                                                

6   except for the information  which  that may not be disclosed                

                                                                                

7   under section 604, shall be open to public inspection as of the             

                                                                                

8   date filed with the commissioner.                                           

                                                                                

9       (8) The commissioner shall make available forms and                         

                                                                                

10  instructions for filing for proposed rates under  sections                  

                                                                                

11  section 608(1).  and 608(2).  The forms with instructions shall             

                                                                                

12  be available not less than 180 days before the proposed effective           

                                                                                

13  date of the filing.                                                         

                                                                                

14      Sec. 611.  It is the intent of the legislature to promote                   

                                                                                

15  uniformity of rates among subscribers to the greatest extent                

                                                                                

16  practicable.  This section does not prohibit the use of rate                

                                                                                

17  differentials as permitted by sections 608a and 608b.                       

                                                                                

18      Sec. 612.  (1) Upon receipt of a nongroup medicare                          

                                                                                

19  supplemental rate filing under section 610, the commissioner                

                                                                                

20  immediately shall notify each person who has requested in writing           

                                                                                

21  notice of those filings within the previous 2 years, specifying             

                                                                                

22  the nature and extent of the proposed rate revision and                     

                                                                                

23  identifying the location, time, and place where the copy of the             

                                                                                

24  rate filing described in section 610(7) shall be open to public             

                                                                                

25  inspection and copying.  The notice shall also state that if the            

                                                                                

26  person has standing, the person shall have, upon making a written           

                                                                                

27  request for a hearing within  60  30 days after receiving notice            


                                                                                

1   of the rate filing, an opportunity for an evidentiary hearing               

                                                                                

2   under section 613 to determine whether the proposed rates meet              

                                                                                

3   the requirements of this act.  The request shall identify the               

                                                                                

4   issues  which  that the requesting party asserts are involved,              

                                                                                

5   what portion of the rate filing is requested to be heard, and how           

                                                                                

6   the party has standing.  The corporation shall place                        

                                                                                

7   advertisements giving notice, containing the information                    

                                                                                

8   specified above, in at least 1 newspaper  which serves  serving             

                                                                                

9   each geographic area in which significant numbers of subscribers            

                                                                                

10  reside.                                                                     

                                                                                

11      (2) The commissioner may charge a fee for providing, pursuant               

                                                                                

12  to subsection (1), a copy of the rate filing described in section           

                                                                                

13  610(7).  The commissioner may charge a fee for providing a copy             

                                                                                

14  of the entire filing to a person whose request for a hearing has            

                                                                                

15  been granted by the commissioner pursuant to section 613.  The              

                                                                                

16  fee shall be limited to actual mailing costs and to the actual              

                                                                                

17  incremental cost of duplication, including labor and the cost of            

                                                                                

18  deletion and separation of information as provided in section 14            

                                                                                

19  of  Act No. 442 of the Public Acts of 1976, being section 15.244            

                                                                                

20  of the Michigan Compiled Laws  the freedom of information act,              

                                                                                

21  1976 PA 442, MCL 15.244.  Copies of the filing may be provided              

                                                                                

22  free of charge or at a reduced charge if the commissioner                   

                                                                                

23  determines that a waiver or reduction of the fee is in the public           

                                                                                

24  interest because the furnishing of a copy of the filing will                

                                                                                

25  primarily benefit the general public.  In calculating the costs             

                                                                                

26  under this subsection, the commissioner shall not attribute more            

                                                                                

27  than the hourly wage of the lowest paid, full-time clerical                 


                                                                                

1   employee of the  insurance bureau  office of financial and                  

                                                                                

2   insurance services to the cost of labor incurred in duplication             

                                                                                

3   and mailing and to the cost of separation and deletion.  The                

                                                                                

4   commissioner shall use the most economical means available to               

                                                                                

5   provide copies of a rate filing.                                            

                                                                                

6       Sec. 613.  (1) If the request for a hearing under this                      

                                                                                

7   section is with regard to a rate filing not yet acted upon under            

                                                                                

8   section 610(2)(a), no such action shall be taken by the                     

                                                                                

9   commissioner until after the hearing has been completed.                    

                                                                                

10  However, the commissioner shall proceed to act upon those                   

                                                                                

11  portions of a rate filing upon which no hearing has been                    

                                                                                

12  requested.  Within 15 days after receipt of a request for a                 

                                                                                

13  hearing, the commissioner shall determine if the person has                 

                                                                                

14  standing.  If the commissioner determines that the person has               

                                                                                

15  standing, the person may have access to the entire filing subject           

                                                                                

16  to the same confidentiality requirements as the commissioner                

                                                                                

17  under section 604, and shall be subject to the penalty provision            

                                                                                

18  of section 604(5).  Upon determining that the person has                    

                                                                                

19  standing, the commissioner shall immediately appoint an                     

                                                                                

20  independent hearing officer before whom the hearing shall be                

                                                                                

21  held.  In appointing an independent hearing officer, the                    

                                                                                

22  commissioner shall select a person qualified to conduct hearings,           

                                                                                

23  who has experience or education in the area of health care                  

                                                                                

24  corporation or insurance rate determination and finance, and who            

                                                                                

25  is not otherwise associated financially with a health care                  

                                                                                

26  corporation or a health care provider.  The person selected shall           

                                                                                

27  not be currently or actively employed by this state.  For                   


                                                                                

1   purposes of this subsection, an employee of an educational                  

                                                                                

2   institution shall not be considered to be employed by this                  

                                                                                

3   state.  For purposes of this section, a person has "standing" if            

                                                                                

4   any of the following circumstances exist:                                   

                                                                                

5       (a) The person is, or there are reasonable grounds to believe               

                                                                                

6   that the person could be, aggrieved by the proposed rate.                   

                                                                                

7       (b) The person is acting on behalf of 1 or more named persons               

                                                                                

8   described in subdivision (a).                                               

                                                                                

9       (c) The person is the commissioner, the attorney general, or                

                                                                                

10  the health care corporation.                                                

                                                                                

11      (2)  Not more than 30 days after receipt of a request for a                 

                                                                                

12  hearing, and upon not less than 15 days' notice to all parties,             

                                                                                

13  the hearing shall be commenced.  A hearing shall be held not                

                                                                                

14  later than 45 days after receipt of a request for a hearing.  A             

                                                                                

15  pretrial conference may be held prior to the start of a hearing             

                                                                                

16  but cannot delay the start of a hearing. Each party to the                  

                                                                                

17  hearing shall be given a reasonable opportunity for discovery               

                                                                                

18  before and throughout the course of the hearing.  However, the              

                                                                                

19  hearing officer may terminate discovery at any time, for good               

                                                                                

20  cause shown, and discovery cannot delay the start of a hearing.             

                                                                                

21  The hearing officer shall conduct the hearing pursuant to the               

                                                                                

22  administrative procedures act.  The hearing shall be conducted in           

                                                                                

23  an expeditious manner.  At the hearing, the burden of proving               

                                                                                

24  compliance with this act shall be upon the health care                      

                                                                                

25  corporation.                                                                

                                                                                

26      (3) In rendering a proposal for a decision, the hearing                     

                                                                                

27  officer shall consider the factors prescribed in section 609.               


                                                                                

1       (4) Within 30 days after receipt of the hearing officer's                   

                                                                                

2   proposal for decision, the commissioner shall by order render a             

                                                                                

3   decision  which  that shall include a statement of findings.                

                                                                                

4       (5) The commissioner shall withdraw an order of approval or                 

                                                                                

5   approval with modifications if the commissioner finds that the              

                                                                                

6   filing no longer meets the requirements of this act.                        

                                                                                

7       Sec. 614.  (1) Not less than  75  45 days after a nongroup                  

                                                                                

8   medicare supplemental rate filing is received, as provided in               

                                                                                

9   section 610, the health care corporation may petition the                   

                                                                                

10  commissioner, who shall make a determination with respect to                

                                                                                

11  interim rates and shall order interim rates in the amount                   

                                                                                

12  prescribed in subsection (2).  Interim rates shall not be                   

                                                                                

13  implemented if the commissioner finds that the health care                  

                                                                                

14  corporation has substantially contributed to the delay or that              

                                                                                

15  the health care corporation has not provided information                    

                                                                                

16  requested by the commissioner relative to a determination under             

                                                                                

17  this section.  The interim rate determination shall not be a                

                                                                                

18  contested case under chapter 4 of the administrative procedures             

                                                                                

19  act, MCL 24.271 to 24.287.                                                  

                                                                                

20      (2)  The  Within 15 days after receiving the petition for                   

                                                                                

21  interim rates, the commissioner shall grant an interim rate, in             

                                                                                

22  an amount as determined by the commissioner, if the commissioner            

                                                                                

23  makes a finding that the corporation has  made a convincing                 

                                                                                

24  showing that there is  shown probable cause to believe that the             

                                                                                

25  failure to grant the interim rate will result in an underwriting            

                                                                                

26  loss for that line of business for the period for which rates are           

                                                                                

27  being requested.  As used in this subsection, "underwriting loss"           


                                                                                

1   means the difference between income from current rates plus                 

                                                                                

2   investment income, and projected claims plus projected                      

                                                                                

3   administrative expenses.                                                    

                                                                                

4       (3) If the final rate determination results in approval of a                

                                                                                

5   lower rate, appropriate refunds or adjustments, as determined by            

                                                                                

6   the commissioner, shall be made to reflect payments made in                 

                                                                                

7   excess of the approved rate.                                                

                                                                                

8       (4) The order establishing an interim rate adjustment made                  

                                                                                

9   pursuant to this section  shall be  is limited to adjusting rates           

                                                                                

10  for certificates then in effect, and shall not be used to alter             

                                                                                

11  certificates or implement new certificates.                                 

                                                                                

12      (5) This section shall apply only to rates subject to section               

                                                                                

13  608(1) for which a hearing has been requested.                              

                                                                                

14      Sec. 620.  (1) Except as otherwise provided in this section,                

                                                                                

15  a health care corporation compliance self-evaluative audit                  

                                                                                

16  document is privileged information and is not discoverable or               

                                                                                

17  admissible as evidence in any civil, criminal, or administrative            

                                                                                

18  proceeding.                                                                 

                                                                                

19      (2) Except as otherwise provided in this section, a person                  

                                                                                

20  involved in preparing a compliance self-evaluative audit or                 

                                                                                

21  compliance self-evaluative audit document is not subject to                 

                                                                                

22  examination concerning that audit or audit document in any civil,           

                                                                                

23  criminal, or administrative proceeding.  However, if the                    

                                                                                

24  compliance self-evaluative audit, compliance self-evaluative                

                                                                                

25  audit document, or any portion of the audit or audit document is            

                                                                                

26  not privileged, the individual involved in the preparation of the           

                                                                                

27  audit or audit document may be examined concerning the portion of           


                                                                                

1   the audit or audit document that is not privileged.  A person               

                                                                                

2   involved in preparing a compliance self-evaluative audit or                 

                                                                                

3   compliance self-evaluative audit document who becomes aware of              

                                                                                

4   any alleged criminal violation of this act shall report that act            

                                                                                

5   to the health care corporation.  Within 30 days after receiving             

                                                                                

6   the report, the health care corporation shall provide the                   

                                                                                

7   information to the commissioner.                                            

                                                                                

8       (3) A compliance self-evaluative audit document furnished to                

                                                                                

9   the commissioner voluntarily or as a result of a request of the             

                                                                                

10  commissioner under a claim of authority to compel disclosure                

                                                                                

11  under subsection (7) shall not be provided by the commissioner to           

                                                                                

12  any other person and shall be accorded the same confidentiality             

                                                                                

13  and other protections provided under this act without waiving the           

                                                                                

14  privileges in subsections (1) and (2).  Any use of a compliance             

                                                                                

15  self-evaluative audit document furnished voluntarily or as a                

                                                                                

16  result of a request of the commissioner under a claim of                    

                                                                                

17  authority to compel disclosure under subsection (7) is limited to           

                                                                                

18  determining whether or not any disclosed defects in a health care           

                                                                                

19  corporation's policies and procedures or inappropriate treatment            

                                                                                

20  of customers has been remedied or that an appropriate plan for              

                                                                                

21  remedy is in place.                                                         

                                                                                

22      (4) A compliance self-evaluative audit document submitted to                

                                                                                

23  the commissioner remains subject to all applicable statutory or             

                                                                                

24  common law privileges including, but not limited to, the work               

                                                                                

25  product doctrine, attorney-client privilege, or the subsequent              

                                                                                

26  remedial measures exclusion.  A compliance self-evaluative audit            

                                                                                

27  document submitted to the commissioner remains the property of              


                                                                                

1   the health care corporation and is not subject to disclosure                

                                                                                

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

                                                                                

3   15.246.                                                                     

                                                                                

4       (5) Disclosure of a compliance self-evaluative audit document               

                                                                                

5   to a governmental agency, whether voluntary or pursuant to                  

                                                                                

6   compulsion of law, does not constitute a waiver of the privileges           

                                                                                

7   under subsections (1) and (2) with respect to any other person or           

                                                                                

8   other governmental agency.                                                  

                                                                                

9       (6) The privileges under subsections (1) and (2) do not apply               

                                                                                

10  to the extent that they are expressly waived by the health care             

                                                                                

11  corporation that prepared or caused to be prepared the compliance           

                                                                                

12  self-evaluative audit document.                                             

                                                                                

13      (7) The privileges in subsections (1) and (2) do not apply as               

                                                                                

14  follows:                                                                    

                                                                                

15      (a) If a court, after an in camera review, requires                         

                                                                                

16  disclosure in a civil or administrative proceeding after                    

                                                                                

17  determining 1 or more of the following:                                     

                                                                                

18                                                                               (i) The privilege is asserted for a fraudulent purpose.                             

                                                                                

19      (ii) The material is not subject to the privilege as provided                

                                                                                

20  under subsection (13).                                                      

                                                                                

21      (b) If a court, after an in camera review, requires                         

                                                                                

22  disclosure in a criminal proceeding after determining 1 or more             

                                                                                

23  of the following:                                                           

                                                                                

24                                                                               (i) The privilege is asserted for a fraudulent purpose.                             

                                                                                

25      (ii) The material is not subject to the privilege as provided                

                                                                                

26  under subsection (13).                                                      

                                                                                

27      (iii) The material contains evidence relevant to the                         


                                                                                

1   commission of a criminal offense under this act.                            

                                                                                

2       (8) Within 14 days after the commissioner or the attorney                   

                                                                                

3   general makes a written request by certified mail for disclosure            

                                                                                

4   of a compliance self-evaluative audit document, the health care             

                                                                                

5   corporation that prepared the document or caused the document to            

                                                                                

6   be prepared may file with the Ingham county circuit court a                 

                                                                                

7   petition requesting an in camera hearing on whether the                     

                                                                                

8   compliance self-evaluative audit document or portions of the                

                                                                                

9   audit document are subject to disclosure.  Failure by the health            

                                                                                

10  care corporation to file a petition waives the privilege provided           

                                                                                

11  by this section for that request.  A health care corporation                

                                                                                

12  asserting the compliance self-evaluative privilege in response to           

                                                                                

13  a request for disclosure under this subsection shall include in             

                                                                                

14  its request for an in camera hearing all of the information                 

                                                                                

15  listed in subsection (10).  Within 30 days after the filing of              

                                                                                

16  the petition, the court shall issue an order scheduling an in               

                                                                                

17  camera hearing to determine whether the compliance                          

                                                                                

18  self-evaluative audit document or portions of the audit document            

                                                                                

19  are privileged or are subject to disclosure.                                

                                                                                

20      (9) If the court requires disclosure under subsections (7)                  

                                                                                

21  and (8), the court may compel the disclosure of only those                  

                                                                                

22  portions of a compliance self-evaluative audit document relevant            

                                                                                

23  to issues in dispute in the underlying proceeding.  Information             

                                                                                

24  required to be disclosed shall not be considered a public                   

                                                                                

25  document and shall not be considered to be a waiver of the                  

                                                                                

26  privilege for any other civil, criminal, or administrative                  

                                                                                

27  proceeding.                                                                 


                                                                                

1       (10) A health care corporation asserting the privilege under                

                                                                                

2   this section in response to a request for disclosure under                  

                                                                                

3   subsection (8) shall provide to the commissioner or the attorney            

                                                                                

4   general, at the time of filing any objection to the disclosure,             

                                                                                

5   all of the following information:                                           

                                                                                

6       (a) The date of the compliance self-evaluative audit                        

                                                                                

7   document.                                                                   

                                                                                

8       (b) The identity of the entity or individual conducting the                 

                                                                                

9   audit.                                                                      

                                                                                

10      (c) The general nature of the activities covered by the                     

                                                                                

11  compliance self-evaluative audit.                                           

                                                                                

12      (d) An identification of the portions of the compliance                     

                                                                                

13  self-evaluative audit document for which the privilege is being             

                                                                                

14  asserted.                                                                   

                                                                                

15      (11) A health care corporation asserting the privilege under                

                                                                                

16  this section has the burden of demonstrating the applicability of           

                                                                                

17  the privilege.  Once a health care corporation has established              

                                                                                

18  the applicability of the privilege, a party seeking disclosure              

                                                                                

19  under subsection (7)(a)(i) has the burden of proving that the               

                                                                                

20  privilege is asserted for a fraudulent purpose.  The commissioner           

                                                                                

21  or attorney general seeking disclosure under                                

                                                                                

22  subsection (7)(b)(iii) has the burden of proving the elements                

                                                                                

23  listed in subsection (7)(b)(iii).                                            

                                                                                

24      (12) The parties may at any time stipulate in proceedings                   

                                                                                

25  under this section to entry of an order directing that specific             

                                                                                

26  information contained in a compliance self-evaluative audit                 

                                                                                

27  document is or is not subject to the privileges provided under              


                                                                                

1   subsections (1) and (2).  Any such stipulation may be limited to            

                                                                                

2   the instant proceeding and, absent specific language to the                 

                                                                                

3   contrary, is not applicable to any other proceeding.                        

                                                                                

4       (13) The privileges provided under subsections (1) and (2) do               

                                                                                

5   not extend to any of the following:                                         

                                                                                

6       (a) Documents, communications, data, reports, or other                      

                                                                                

7   information expressly required to be collected, developed,                  

                                                                                

8   maintained, or reported to a regulatory agency under this act or            

                                                                                

9   other federal or state law.                                                 

                                                                                

10      (b) Information obtained by observation or monitoring by any                

                                                                                

11  regulatory agency.                                                          

                                                                                

12      (c) Information obtained from a source independent of the                   

                                                                                

13  compliance audit.                                                           

                                                                                

14      (d) Documents, communication, data, reports, memoranda,                     

                                                                                

15  drawings, photographs, exhibits, computer records, maps, charts,            

                                                                                

16  graphs, and surveys kept or prepared in the ordinary course of              

                                                                                

17  business.                                                                   

                                                                                

18      (14) This section does not limit, waive, or abrogate the                    

                                                                                

19  scope or nature of any other statutory or common law privilege.             

                                                                                

20      (15) As used in this section:                                               

                                                                                

21      (a) "Compliance self-evaluative audit" means a voluntary,                   

                                                                                

22  internal evaluation, review, assessment, audit, or investigation            

                                                                                

23  for the purpose of identifying or preventing noncompliance with             

                                                                                

24  or promoting compliance with laws, regulations, orders, or                  

                                                                                

25  industry or professional standards, conducted by or on behalf of            

                                                                                

26  a health care corporation licensed or regulated under this act or           

                                                                                

27  which involves an activity regulated under this act.                        


                                                                                

1       (b) "Compliance self-evaluative audit document" means a                     

                                                                                

2   document prepared as a result of or in connection with a                    

                                                                                

3   compliance audit.  A compliance self-evaluative audit document              

                                                                                

4   may include a written response to the findings of a compliance              

                                                                                

5   self-evaluative audit.  A compliance self-evaluative audit                  

                                                                                

6   document may include, but is not limited to, field notes and                

                                                                                

7   records of observations, findings, opinions, suggestions,                   

                                                                                

8   conclusions, drafts, memoranda, drawings, photographs, exhibits,            

                                                                                

9   computer-generated or electronically recorded information,                  

                                                                                

10  telephone records, maps, charts, graphs, and surveys, if this               

                                                                                

11  supporting information is collected or prepared in the course of            

                                                                                

12  a compliance self-evaluative audit or attached as an exhibit to             

                                                                                

13  the audit.  A compliance self-evaluative audit document also                

                                                                                

14  includes, but is not limited to, any of the following:                      

                                                                                

15                                                                               (i) A compliance self-evaluative audit report prepared by an                        

                                                                                

16  auditor, who may be an employee of the health care corporation or           

                                                                                

17  an independent contractor, which may include the scope of the               

                                                                                

18  audit, the information gained in the audit, and conclusions and             

                                                                                

19  recommendations, with exhibits and appendices.                              

                                                                                

20      (ii) Memoranda and documents analyzing portions or all of the                

                                                                                

21  compliance self-evaluative audit report and discussing potential            

                                                                                

22  implementation issues.                                                      

                                                                                

23      (iii) An implementation plan that addresses correcting past                  

                                                                                

24  noncompliance, improving current compliance, and preventing                 

                                                                                

25  future noncompliance.                                                       

                                                                                

26      (iv) Analytic data generated in the course of conducting the                 

                                                                                

27  compliance self-evaluative audit.                                           


                                                                                

1       Enacting section 1.  To the extent that a provision of this                 

                                                                                

2   act concerning health coverage, including, but not limited to,              

                                                                                

3   premiums, rates, filings, and coverages, conflicts with the small           

                                                                                

4   employer health market reform act, the small employer health                

                                                                                

5   market reform act supersedes this act.                                      

                                                                                

6       Enacting section 2.  This amendatory act does not take                      

                                                                                

7   effect unless Senate Bill No. 235                                           

                                                                                

8                          of the 92nd Legislature is enacted into              

                                                                                

9   law.                                                                        

                                                                                

10      Enacting section 3.  Section 205 of the nonprofit health                    

                                                                                

11  care corporation reform act, 1980 PA 350, MCL 550.1205, is                  

                                                                                

12  repealed.