April 13, 2010, Introduced by Reps. Ball, Corriveau, Johnson and Roy Schmidt and referred to the Committee on Health Policy.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3539 (MCL 500.3539), as amended by 2005 PA 306,
and by adding chapter 37A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
(1) For an individual covered under a nongroup contract
or under a contract not covered under subsection (2), a health
maintenance organization may exclude or limit coverage for a condition
only if the exclusion or limitation relates to a condition
for which medical advice, diagnosis, care, or treatment was
recommended or received within 6 months before enrollment and the
exclusion or limitation does not extend for more than 6 months after
the effective date of the health maintenance contract.
A health maintenance organization
shall not exclude or
limit coverage for a preexisting condition for an individual
covered under a group contract.
Except as provided in subsection (5), a health maintenance organization
that has issued a nongroup contract shall renew or continue
in force the contract at the option of the individual.
Except as provided in subsection (5)
(3) and section
3711, a health maintenance organization that has issued a group
contract shall renew or continue in force the contract at the
option of the sponsor of the plan.
Guaranteed renewal is not required in
cases of fraud,
intentional misrepresentation of material fact, lack of payment, if
the health maintenance organization no longer offers that
particular type of coverage in the market, or if the individual or
group moves outside the service area.
A health maintenance organization
is not required to
continue a healthy lifestyle program or to continue any incentive
associated with a healthy lifestyle program, including, but not
limited to, goods, vouchers, or equipment.
As used in this section,
"group" means a group of 2 or
INDIVIDUAL HEALTH BENEFIT PLANS
Sec. 3751. As used in this chapter:
(a) "Carrier" means a person that provides health benefits,
coverage, or insurance to an individual under a health benefit plan
in this state. For the purposes of this chapter, carrier includes a
health insurance company authorized to do business in this state, a
health care corporation, a health maintenance organization, or any
other person providing a plan of health benefits, coverage, or
insurance subject to state insurance regulation. Carrier does not
include a health maintenance organization that provides only
(b) "Commercial carrier" means a carrier other than a health
care corporation or health maintenance organization.
(c) "Eligible claim" means any claim covered under any health
(d) "Health benefit plan" or "plan" means an individual or
nongroup expense-incurred hospital, medical, or surgical policy,
health care corporation certificate, or health maintenance
organization contract. Health benefit plan does not include
accident-only, credit, or disability income insurance; long-term
care insurance; medicare supplemental coverage; coverage issued as
a supplement to liability insurance; coverage only for a specified
disease or illness; dental-only or vision-only insurance; worker's
compensation or similar insurance; automobile medical-payment
insurance; or medicaid or medicare coverage.
(e) "Health care corporation" means a nonprofit health care
corporation operating pursuant to the nonprofit health care
corporation reform act, 1980 PA 350, MCL 550.1101 to 550.1704.
(f) "Medicaid" means a program for medical assistance
established under title XIX of the social security act, 42 USC 1396
(g) "Medicare" means the federal medicare program established
under title XVIII of the social security act, 42 USC 1395 to
(h) "MI-CaPP board" or "board" means the Michigan catastrophic
protection plan board created in section 3771.
(i) "Short-term or 1-time limited duration benefit plan of no
longer than 6 months" means a health benefit plan that meets all of
(i) Is issued to provide coverage for a period of 185 days or
less, except that the health benefit plan may permit a limited
extension of benefits after the date the plan ended solely for
expenses attributable to a condition for which a covered person
incurred expenses during the term of the plan.
(ii) Is nonrenewable, provided that the carrier may provide
coverage for 1 or more subsequent periods that satisfy subparagraph
(i), if the total of the periods of coverage do not exceed a total
of 185 days out of any 365-day period, plus any additional days
permitted by the plan for a condition for which a covered person
incurred expenses during the term of the plan.
(iii) Does not cover any preexisting conditions.
(iv) Is available with an immediate effective date, without
underwriting, upon receipt by the carrier of a completed
application indicating eligibility under the carrier's eligibility
requirements, except that coverage that includes optional benefits
may be offered on a basis that does not meet this requirement.
Sec. 3753. This chapter applies to a health benefit plan that
is subject to policy form or premium approval by the commissioner.
Sec. 3755. (1) A carrier may exclude or limit coverage under a
health benefit plan for a condition only if the exclusion or
limitation relates to a condition for which medical advice,
diagnosis, care, or treatment was recommended or received within 6
months before enrollment and the exclusion or limitation does not
extend for more than 6 months after the effective date of the
policy, certificate, or contract.
(2) Notwithstanding subsection (1), a carrier shall not
exclude or limit coverage for a preexisting condition or provide a
waiting period if all of the following apply:
(a) The individual's most recent health care coverage prior to
applying for coverage with the carrier was under a group health
(b) The individual was continuously covered prior to the
application for coverage with the carrier under 1 or more health
plans for an aggregate of at least 18 months with no break in
coverage that exceeded 62 days.
(c) The individual is no longer eligible for group coverage
and is not eligible for medicare or medicaid.
(d) The individual did not lose eligibility for coverage for
failure to pay any required contribution or for an act to defraud
(e) If the individual was eligible for continuation of health
coverage from that group health plan pursuant to the consolidated
omnibus budget reconciliation act of 1985, Public Law 99-272, he or
she has elected and exhausted the coverage.
(3) As used in this section, "group health plan" means a group
health benefit plan that covers 2 or more insureds, subscribers,
members, enrollees, or employees.
Sec. 3757. Notwithstanding any other provision of this act, a
carrier shall not rescind, cancel, or limit a health benefit plan
due to the carrier's failure to complete medical underwriting and
resolve all reasonable questions arising from the written
information submitted on or with an application before issuing the
plan's contract. This section does not limit a carrier's remedies
upon a showing of intentional misrepresentation of material fact.
Sec. 3759. Rate differentials for health conditions may be
used only when coverage is initially issued and cannot be changed
by a carrier at any time after issue as a result of subsequent
changes in health conditions of individuals already covered under
the health benefit plan. A carrier may use rate differentials based
on health conditions for any individual who is subsequently added
to the health benefit plan only at the time the individual is added
to the plan.
Sec. 3761. (1) Except as otherwise provided in this section, a
carrier that has issued a health benefit plan shall renew or
continue in force the plan at the option of the individual.
(2) A guaranteed renewal under subsection (1) is not required
in cases of fraud, intentional misrepresentation of material fact,
nonpayment of premiums, if the carrier no longer offers that plan,
if the carrier no longer offers coverage in the individual market,
or if the individual moves outside the carrier's service area.
(3) A carrier shall not discontinue offering a particular plan
in the individual market unless the carrier does all of the
(a) Provides notice to the commissioner and to each covered
individual provided coverage under the plan of the discontinuation
at least 90 days prior to the date of the discontinuation.
(b) Offers to each covered individual provided coverage under
the plan the option to purchase any other plan currently being
offered in the individual market by that carrier without excluding
or limiting coverage for a preexisting condition or providing a
(c) Acts uniformly without regard to any health status factor
of enrolled individuals or individuals who may become eligible for
coverage in making the determination to discontinue coverage and in
offering other plans.
(4) A carrier shall not discontinue offering all coverage in
the individual market unless the carrier does all of the following:
(a) Provides notice to the commissioner and to each individual
of the discontinuation at least 180 days prior to the date of the
expiration of coverage.
(b) Discontinues all health benefit plans issued in the
individual market and does not renew coverage under such plans.
(5) If a carrier discontinues coverage under subsection (4),
the carrier shall not provide for the issuance of any health
benefit plans in the individual market during the 5-year period
beginning on the date of the discontinuation of the last plan not
(6) Subsections (1) through (5) do not apply to a short-term
or 1-time limited duration benefit plan of no longer than 6 months.
Sec. 3762. (1) The rates charged to individuals for health
benefit plans shall be filed with the commissioner and shall not
take effect until 60 days after the filing, unless the commissioner
approves the rates in writing before the expiration of 60 days
after the filing. The rate filing shall include an actuarial
certification that the benefits provided are reasonable in relation
to the premium charged and are adequate, equitable, and not
excessive. The rate filing shall include supporting data used in
the development of the rate. The actuarial certification shall
include a certification that, to the best of the actuary's
knowledge and belief, the benefits provided are reasonable in
relation to the premiums charged and the premiums are established
in compliance with this chapter. The commissioner shall uniformly
apply for all carriers the standard as to whether the benefits
provided are reasonable in relation to the premium charged and are
adequate, equitable, and not excessive. If the commissioner
considers that the proposed rate is not adequate or equitable, is
excessive, or is otherwise not in compliance with this chapter, the
commissioner, not more than 60 days after the proposed rate is
filed, shall notify the carrier in writing, specifying the reasons
for disapproval or for approval with modifications. For an approval
with modifications, the notice shall specify what modifications in
the filing are required for approval, the reasons for the
modifications, and that the filing becomes effective after the
modifications are made and approved by the commissioner. The
commissioner shall schedule a hearing not more than 30 days after
receipt of a written request from the carrier, and the revised rate
shall not take effect until approved by the commissioner after the
hearing. Within 30 days after the hearing, the commissioner shall
notify the carrier in writing of the disposition of the proposed
revised rate, together with the commissioner's findings of fact and
(2) Not less than 30 days before the effective date of a
proposed change in a rate charged, the carrier shall issue to each
individual who will be affected by the proposed change a clear
written statement stating the extent and nature of the proposed
change. If the commissioner has approved a proposed change in a
rate in writing before the expiration of 60 days after the date of
filing, the carrier immediately shall notify each individual who
will be affected by the proposed change.
Sec. 3763. (1) A carrier shall not, directly or indirectly,
engage in any of the following:
(a) Encouraging or directing an individual to refrain from
filing an application for a health benefit plan with the carrier
because of the health condition or claims experience of the
(b) Encouraging or directing an individual to seek coverage
from another carrier because of the health condition or claims
experience of the individual.
(2) Except as otherwise provided in subsection (3), a carrier
shall not, directly or indirectly, enter into any contract,
agreement, or arrangement with a producer that provides for or
results in the compensation paid to a producer for the sale of a
health benefit plan to be varied because of the health condition or
claims experience of the individual.
(3) Subsection (2) does not apply to a compensation
arrangement that provides compensation to a producer on the basis
of percentage of premium, provided that the percentage does not
vary because of the health condition or claims experience of the
(4) A carrier shall not terminate, fail to renew, or limit its
contract or agreement of representation with a producer for any
reason related to the health condition or claims experience of the
individual placed by the producer with the carrier.
Sec. 3771. (1) The MI-CaPP board is created within the office
of financial and insurance regulation.
(2) The board shall consist of the commissioner and the
following 6 members, appointed by the commissioner:
(a) One member representing health care corporations.
(b) One member representing health maintenance organizations,
but not health maintenance organizations owned by a health care
(c) One member representing commercial carriers.
(d) One member representing the general public who is not
employed by a carrier.
(e) One member who is a health economist who is not employed
by a carrier.
(f) One member who is in good standing with the American
academy of actuaries who is not employed by a carrier.
(3) The members first appointed to the board shall be
appointed within 14 days after the effective date of this chapter.
(4) Members of the board shall serve for terms of 4 years or
until a successor is appointed, whichever is later, except that of
the members first appointed, 2 shall serve for 2 years, 2 shall
serve for 3 years, and 2 shall serve for 4 years.
(5) If a vacancy occurs on the board, the commissioner shall
make an appointment for the unexpired term in the same manner as
the original appointment.
(6) The governor may remove a member of the board for
incompetency, dereliction of duty, malfeasance, misfeasance, or
nonfeasance in office, or any other good cause.
(7) The first meeting of the board shall be called by the
commissioner. At the first meeting, the board shall elect from
among its members a chairperson and other officers as it considers
necessary or appropriate. After the first meeting, the board shall
meet at least quarterly, or more frequently at the call of the
chairperson or if requested by 4 or more members.
(8) Four members of the board constitute a quorum for the
transaction of business at a meeting of the board. Four members
present and serving are required for official action of the board.
(9) The business that the board may perform shall be conducted
at a public meeting of the board held in compliance with the open
meetings act, 1976 PA 267, MCL 15.261 to 15.275.
(10) A writing prepared, owned, used, in the possession of, or
retained by the board in the performance of an official function is
subject to the freedom of information act, 1976 PA 442, MCL 15.231
(11) Members of the board shall serve without compensation.
However, members of the board may be reimbursed for their actual
and necessary expenses incurred in the performance of their
official duties as members of the board.
Sec. 3773. (1) The Michigan claims fund is created within the
state treasury. Money in the fund shall be used only as provided in
(2) The state treasurer may receive money or other assets from
any source for deposit into the Michigan claims fund. The state
treasurer shall direct the investment of the Michigan claims fund.
The state treasurer shall credit to the Michigan claims fund
interest and earnings from fund investments.
(3) Money in the Michigan claims fund at the close of the
fiscal year shall remain in the fund and shall not lapse to the
(4) The commissioner shall be the administrator of the
Michigan claims fund for auditing purposes.
Sec. 3775. (1) The board shall expend money from the Michigan
claims fund to reimburse carriers for eligible claims. A carrier is
eligible to receive reimbursement from the Michigan claims fund for
90% of claims paid between $80,000.00 and $800,000.00 in a calendar
year that have been paid by the carrier on behalf of a covered
(2) Each carrier shall submit a request for reimbursement on a
form prescribed by the board from the Michigan claims fund by no
later than April 1 following the end of the calendar year for which
the reimbursement request is being made. Claims are eligible for
reimbursement only for the calendar year in which the claims are
paid. Once claims paid on behalf of a covered enrollee reach
$800,000.00 in a given calendar year, no further claims on behalf
of that covered enrollee in that calendar year are eligible for
reimbursement. Carriers may be required to submit claims data in
connection with the reimbursement request as the board considers
necessary to distribute money and oversee the operation of the
Michigan claims fund. The board may require that the data be
submitted on a per enrollee, aggregate basis or categorical basis.
(3) If the total amount requested for reimbursement under this
section by all carriers for a calendar year exceeds funds available
for distribution for claims paid by all carriers during that same
calendar year, the board shall provide for the pro rata
distribution of the available funds. Each carrier shall be eligible
to receive only the proportionate amount of the available funds as
the individual carrier's total eligible claims paid bears to the
total eligible claims paid by all carriers.
(4) If funds available for distribution for claims paid by all
carriers during a calendar year exceed the total amount requested
for reimbursement by all carriers during that same calendar year,
any excess funds shall be carried forward, shall not revert to the
general fund, and shall be made available for distribution in the
next calendar year.
Sec. 3777. (1) As a condition of transacting business in this
state, each carrier engaged in writing a health benefit plan shall
pay an annual assessment into the Michigan claims fund as provided
in this section.
(2) The total assessment in a calendar year shall be the sum
of the estimate of total reimbursement to be made for claims paid
in the same calendar year plus the estimated cost of administering
the Michigan claims fund for the same calendar year. By not later
than April 1 of each year, the board shall determine the total
assessment and shall notify carriers of their assessment. A
carrier's assessment shall be determined by the board and shall be
apportioned on an equitable basis among all carriers of health
benefit plans in proportion to each carrier's share of covered
lives in the individual market. By not later than 90 days after the
assessment notice is issued, each carrier shall pay the amount of
its assessment to the Michigan claims fund.
Sec. 3778. The premium rates established by a carrier for a
health benefit plan shall recognize the availability of
reimbursement from the Michigan claims fund.
Sec. 3779. The board shall keep an accurate account of all
Michigan claims fund receipts and expenditures and shall report by
October 1, 2011 and annually thereafter to the governor and to all
members of the house of representatives and senate standing
committees on appropriations, health, and insurance issues on the
amount of assessments collected and claims paid under sections 3775
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 95th Legislature are
enacted into law:
(a) Senate Bill No. 1244 or House Bill No.____ (request no.
(b) Senate Bill No.____ or House Bill No. 6036(request no.
(c) Senate Bill No.____ or House Bill No. 6037(request no.
(d) Senate Bill No. 1245 or House Bill No.____ (request no.
(e) Senate Bill No. 1243 or House Bill No.____ (request no.
(f) Senate Bill No.____ or House Bill No. 6034(request no.
(g) Senate Bill No. 1242 or House Bill No.____ (request no.