HOUSE BILL No. 6045 May 9, 2002, Introduced by Rep. George and referred to the Committee on Health Insurance. A bill to amend 1956 PA 218, entitled "The insurance code of 1956," by amending sections 501, 503, 2059, 2212b, 2213, 2403, 2406, 2418, 2420, 3406f, 3539, 5104, and 7705 (MCL 500.501, 500.503, 500.2059, 500.2212b, 500.2213, 500.2403, 500.2406, 500.2418, 500.2420, 500.3406f, 500.3539, 500.5104, and 500.7705), sections 501 and 503 as added by 2001 PA 24, section 2059 as amended by 1986 PA 253, section 2212b as amended by 2000 PA 486, section 2213 as amended and section 3539 as added by 2000 PA 252, sec- tions 2403, 2406, 2418, and 2420 as amended by 1993 PA 200, sec- tion 3406f as added by 1996 PA 517, section 5104 as amended by 1999 PA 211, and section 7705 as amended by 1996 PA 548, and by adding chapters 36A and 37; and to repeal acts and parts of acts. 06816'02 * DKH 2 THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 501. (1) This chapter applies to the treatment of 2 nonpublic personal financial information about individuals who 3 obtain or are claimants or beneficiaries of products or services 4 primarily for personal, family, or household purposes from 5 licensees whether through an individual or group plan. This 6 chapter does not apply to information about companies or about 7 individuals who obtain products or services for business, commer- 8 cial, or agricultural purposes. 9 (2) This chapter does not modify, limit, or supersede any 10 provision of section 1243. 11 (3) This chapter does not modify, limit, or supersede stat- 12 ute or rules governing the confidentiality or privacy of individ- 13 ually identifiable health and medical information, including, but 14 not limited to, all of the following: 15 (a) Section 2157 of the revised judicature act of 1961, 1961 16 PA 236, MCL 600.2157. 17 (b) Section1750750 of the mental health code, 1974 18 PA 258, MCL 330.1750. 19 (c) The public health code, 1978 PA 368, MCL 333.1101 to 20 333.25211. 21(d) Section 406 of the nonprofit health care corporation22reform act, 1980 PA 350, MCL 550.1406.23 (D)(e)Sections 410 and492A492a of the Michigan penal 24 code, 1931 PA 328, MCL 750.410 and 750.492a. 25 (E)(f)Section 13 of the freedom of information act, 1976 26 PA 442, MCL 15.243. 06816'02 * 3 1 (F)(g)Section 34 of the third party administrator act, 2 1984 PA 218, MCL 550.934. 3 Sec. 503. As used in this chapter: 4 (a) "Affiliate" means any company that controls, is con- 5 trolled by, or is under common control with another company. 6 (b) "Annual notice" means the privacy notice required in 7 section 513. 8 (c) "Clear and conspicuous" means that a notice is reason- 9 ably understandable and designed to call attention to the nature 10 and significance of the information in the notice. 11 (d) "Collect" means to obtain information that the licensee 12 organizes or can retrieve by the name of an individual or by 13 identifying number, symbol, or other identifying particular 14 assigned to the individual, irrespective of the source of the 15 underlying information. 16 (e) "Company" means any corporation, limited liability com- 17 pany, business trust, general or limited partnership, associa- 18 tion, sole proprietorship, or similar organization. 19 (f) "Consumer" means an individual, or the individual's 20 legal representative, who seeks to obtain, obtains, or has 21 obtained an insurance product or service from a licensee that is 22 to be used primarily for personal, family, or household 23 purposes. As used in this chapter: 24 (i) "Consumer" includes, but is not limited to, all of the 25 following: 26 (A) An individual who provides nonpublic personal 27 information to a licensee in connection with obtaining or seeking 06816'02 * 4 1 to obtain financial, investment, or economic advisory services 2 relating to an insurance product or service. An individual is a 3 consumer under this subparagraph regardless of whether the 4 licensee establishes an ongoing advisory relationship. 5 (B) An applicant for insurance prior to the inception of 6 insurance coverage. 7 (C) An individual that a licensee discloses nonpublic, per- 8 sonal financial information about to a nonaffiliated third party 9 other than as permitted under sections 535, 537, and 539, if the 10 individual is any of the following: 11 (I) A beneficiary of a life insurance policy underwritten by 12 the licensee. 13 (II) A claimant under an insurance policy issued by the 14 licensee. 15 (III) An insured under an insurance policy or an annuitant 16 under an annuity issued by the licensee. 17 (IV) A mortgagor of a mortgage covered under a mortgage 18 insurance policy. 19 (ii) So long as the licensee provides the initial, annual, 20 and revised notices under this chapter to the plan sponsor, group 21 or blanket insurance policyholders, and group annuity contract 22 holder and does not disclose to a nonaffiliated third party non- 23 public personal financial information other than as permitted 24 under sections 535, 537, and 539, "consumer" does not include an 25 individual solely because he or she meets 1 of the following: 06816'02 * 5 1 (A) Is a participant or a beneficiary of an employee benefit 2 plan that the licensee administers or sponsors or for which the 3 licensee acts as a trustee, insurer, or fiduciary. 4 (B) Is covered under a group or blanket insurance policy or 5 group annuity contract issued by the licensee. 6 (iii) "Consumer" does not include an individual solely 7 because he or she meets 1 of the following: 8 (A) Is a beneficiary of a trust for which the licensee is a 9 trustee. 10 (B) Has designated the licensee as trustee for a trust. 11 (g) "Consumer reporting agency" has the same meaning as in 12 section 603(f) of the federal fair credit reporting act, title VI 13 of the consumer credit act, public law 90-321, 15 U.S.C. 1681a. 14 (h) "Customer" means a consumer who has a customer relation- 15 ship with a licensee. However, customer does not include an 16 individual solely because he or she meets 1 of the following: 17 (i) Is a participant or a beneficiary of an employee benefit 18 plan that the licensee administers or sponsors or for which the 19 licensee acts as a trustee, insurer, or fiduciary. 20 (ii) Is covered under a group or blanket insurance policy or 21 group annuity contract issued by the licensee. 22 (iii) Is a beneficiary or claimant under a policy of 23 insurance. 24 (i) "Customer relationship" means a continuing relationship 25 between a consumer and a licensee under which the licensee pro- 26 vides 1 or more insurance products or services to the consumer 06816'02 * 6 1 that are to be used primarily for personal, family, or household 2 purposes. 3 (j) "Initial notice" means the privacy notice required in 4 section 507. 5 (k) "Insurance product or service" means any product or 6 service that is offered by a licensee pursuant to the insurance 7 laws of this state or pursuant to a federal insurance program. 8 Insurance service includes a licensee's evaluation, brokerage, or 9 distribution of information that the licensee collects in connec- 10 tion with a request or an application from a consumer for an 11 insurance product or service. 12 (l) "Licensee" means a licensed insurer or producer, and 13 other persons licensed or required to be licensed, authorized or 14 required to be authorized, registered or required to be regis- 15 tered, or holding or required to hold a certificate of authority 16 under this act. Licensee includes, except as otherwise provided, 17a nonprofit health care corporation operating pursuant to the18nonprofit health care corporation reform act, 1980 PA 350,19MCL 550.1101 to 550.1704, anda nonprofit dental care corpora- 20 tion operating pursuant to 1963 PA 125, MCL 550.351 to 550.373. 21 Licensee includes an unauthorized insurer who places business 22 through a licensed surplus line agent or broker in this state, 23 but only for the surplus line placements placed under chapter 24 19. Licensee does not include any of the following: 25(i) A nonprofit health care corporation for member personal26data and information otherwise protected under section 406 of the06816'02 * 7 1nonprofit health care corporation reform act, 1980 PA 350,2MCL 550.1406.3 (i)(ii)The Michigan life and health guaranty association 4 and the property and casualty guaranty association. 5 (ii)(iii)The Michigan automobile insurance placement 6 facility, the Michigan worker's compensation placement facility, 7 and the assigned claims facility created under section 3171. 8 However, servicing carriers for these facilities are licensees. 9 (m) "Nonaffiliated third party" means any person except a 10 licensee's affiliate or a person employed jointly by a licensee 11 and any company that is not the licensee's affiliate. 12 Nonaffiliated third party includes the other company that jointly 13 employs a person with a licensee. Nonaffiliated third party also 14 includes any company that is an affiliate solely by virtue of the 15 direct or indirect ownership or control of the company by the 16 licensee or its affiliate in conducting merchant banking or 17 investment banking activities of the type described in section 18 4(k)(4)(H) of the bank holding company act of 1956, chapter 240, 19 70 Stat. 135, 12 U.S.C. 1843, or insurance company investment 20 activities of the type described in section 4(k)(4)(I) of the 21 bank holding company act of 1956, chapter 240, 70 Stat. 135, 12 22 U.S.C. 1843. 23 (n) "Nonpublic personal financial information" means person- 24 ally identifiable financial information and any list, descrip- 25 tion, or other grouping of consumers and publicly available 26 information pertaining to them that is derived using any 27 personally identifiable financial information that is not 06816'02 * 8 1 publicly available. Nonpublic personal financial information 2 does not include any of the following: 3 (i) Health and medical information otherwise protected by 4 state or federal law. 5 (ii) Publicly available information. 6 (iii) Any list, description, or other grouping of consumers 7 and publicly available information pertaining to them that is 8 derived without using any personally identifiable financial 9 information that is not publicly available. 10 (o) "Opt out" means a direction by the consumer that the 11 licensee not disclose nonpublic personal financial information 12 about that consumer to a nonaffiliated third party, other than as 13 permitted by sections 535, 537, and 539. 14 (p) "Personally identifiable financial information" means 15 any of the following: 16 (i) Information a consumer provides to a licensee to obtain 17 an insurance product or service from the licensee. 18 (ii) Information about a consumer resulting from any trans- 19 action involving an insurance product or service between a 20 licensee and a consumer. 21 (iii) Information the licensee otherwise obtains about a 22 consumer in connection with providing an insurance product or 23 service to that consumer. 24 (q) "Producer" means a person required to be licensed under 25 this act to sell, solicit, or negotiate insurance. 26 (r) "Publicly available information" means any information 27 that a licensee has a reasonable basis to believe is lawfully 06816'02 * 9 1 made available to the general public from federal, state, or 2 local government records by wide distribution by the media or by 3 disclosures to the general public that are required to be made by 4 federal, state, or local law. A licensee has a reasonable basis 5 to believe that information is lawfully made available to the 6 general public if both of the following apply: 7 (i) The licensee has taken steps to determine that the 8 information is of the type that is available to the general 9 public. 10 (ii) If an individual can direct that the information not be 11 made available to the general public, that the licensee's con- 12 sumer has not directed that the information not be made available 13 to the general public. 14 (s) "Revised notice" means the privacy notice required in 15 section 525. 16 Sec. 2059. (1)NoA person shall NOT maintain or operate 17 any office in this state for the transaction of the business of 18 insurance, except as provided for in thiscodeACT, or use the 19 name of any insurer, fictitious or otherwise, in conducting or 20 advertising any business not related or connected with the busi- 21 ness of insurance as governed by the provisions of thiscode22 ACT except as otherwise provided in subsection (2). 23 (2) Subsection (1) shall not be construed to prohibit an 24 agent licensed under chapter 12 from marketing or transacting any 25 of the following: 26 (a) Subject to the health benefit agent act, health care 27 coverage provided by ahealth care corporation regulated06816'02 * 10 1pursuant to the nonprofit health care corporation reform act, Act2No. 350 of the Public Acts of 1980, being sections 550.1101 to3550.1704 of the Michigan Compiled LawsNONPROFIT HEALTH INSURER 4 UNDER CHAPTER 37. 5 (b) Subject to the health benefit agent act, health care 6 coverage provided by a health maintenance organization regulated 7pursuant to part 210 of the public health code, Act No. 368 of8the Public Acts of 1978, being sections 333.21001 to 333.21098 of9the Michigan Compiled LawsUNDER CHAPTER 35. 10 (c) Subject to the health benefit agent act, dental care 11 coverage provided by a dental care corporation regulated pursuant 12 toAct No. 125 of the Public Acts of 1963, being sections13550.351 to 550.373 of the Michigan Compiled Laws1963 PA 125, 14 MCL 550.351 TO 550.373. 15 (d) Administrative services of a third party administrator 16 regulated pursuant to the third party administrator act,Act17No. 218 of the Public Acts of 1984, being sections 550.901 to18550.962 of the Michigan Compiled Laws1984 PA 218, MCL 550.901 19 TO 550.962. 20 Sec. 2212b. (1) This section applies to a policy or certif- 21 icate issued under section 3405 or 3631, TO A CERTIFICATE ISSUED 22 UNDER CHAPTER 37, and to a health maintenance organization 23 contract. 24 (2) If participation between a primary care physician and an 25 insurer terminates, the physician may provide written notice of 26 this termination within 15 days after the physician becomes aware 27 of the termination to each insured who has chosen the physician 06816'02 * 11 1 as his or her primary care physician. If an insured is in an 2 ongoing course of treatment with any other physician that is par- 3 ticipating with the insurer and the participation between the 4 physician and the insurer terminates, the physician may provide 5 written notice of this termination to the insured within 15 days 6 after the physician becomes aware of the termination. The 7 notices under this subsection may also describe the procedure for 8 continuing care under subsections (3) and (4). 9 (3) If participation between an insured's current physician 10 and an insurer terminates, the insurer shall permit the insured 11 to continue an ongoing course of treatment with that physician as 12 follows: 13 (a) For 90 days from the date of notice to the insured by 14 the physician of the physician's termination with the insurer. 15 (b) If the insured is in her second or third trimester of 16 pregnancy at the time of the physician's termination, through 17 postpartum care directly related to the pregnancy. 18 (c) If the insured is determined to be terminally ill prior 19 to a physician's termination or knowledge of the termination and 20 the physician was treating the terminal illness before the date 21 of termination or knowledge of the termination, for the remainder 22 of the insured's life for care directly related to the treatment 23 of the terminal illness. 24 (4) Subsection (3) applies only if the physician agrees to 25 all of the following: 06816'02 * 12 1 (a) To continue to accept as payment in full reimbursement 2 from the insurer at the rates applicable prior to the 3 termination. 4 (b) To adhere to the insurer's standards for maintaining 5 quality health care and to provide to the insurer necessary medi- 6 cal information related to the care. 7 (c) To otherwise adhere to the insurer's policies and proce- 8 dures, including, but not limited to, those concerning utiliza- 9 tion review, referrals, preauthorizations, and treatment plans. 10 (5) An insurer shall provide written notice to each partici- 11 pating physician that if participation between the physician and 12 the insurer terminates, the physician may do both of the 13 following: 14 (a) Notify the insurer's insureds under the care of the phy- 15 sician of the termination if the physician does so within 15 days 16 after the physician becomes aware of the termination. 17 (b) Include in the notice under subdivision (a) a descrip- 18 tion of the procedures for continuing care under subsections (3) 19 and (4). 20 (6) This section does not create an obligation for an 21 insurer to provide to an insured coverage beyond the maximum cov- 22 erage limits permitted by the insurer's policy or certificate 23 with the insured. This section does not create an obligation for 24 an insurer to expand who may be a primary care physician under a 25 policy or certificate. 26 (7) As used in this section: 06816'02 * 13 1 (a) "Physician" means an allopathic physician, osteopathic 2 physician, or podiatric physician. 3(b) "Terminal illness" means that term as defined in sec-4tion 5653 of the public health code, 1978 PA 368, MCL 333.5653.5 (B)(c)"Terminates" or "termination" includes the nonre- 6 newal, expiration, or ending for any reason of a participation 7 agreement or contract between a physician and an insurer, but 8 does not include a termination by the insurer for failure to meet 9 applicable quality standards or for fraud. 10 Sec. 2213. (1) Each insurer and health maintenance organi- 11 zation shall establish an internal formal grievance procedure for 12 approval by the commissioner for persons covered under a policy, 13 certificate, or contract issued under chapter 34, 35,or36, OR 14 37 that includes all of the following: 15 (a) Provides for a designated person responsible for admin- 16 istering the grievance system. 17 (b) Provides a designated person or telephone number for 18 receiving complaints. 19 (c) Ensures full investigation of a complaint. 20 (d) Provides for timely notification in plain English to the 21 insured or enrollee as to the progress of an investigation. 22 (e) Provides an insured or enrollee the right to appear 23 before the board of directors or designated committee or the 24 right to a managerial-level conference to present a grievance. 25 (f) Provides for notification in plain English to the 26 insured or enrollee of the results of the insurer's or health 27 maintenance organization's investigation and for advisement of 06816'02 * 14 1 the insured's or enrollee's right to review the grievanceby the2commissioner through September 30, 2000 and beginning October 1,32000by an independent review organization under the patient's 4 right to independent review act. 5 (g) Provides summary data on the number and types of com- 6 plaints and grievances filed. Beginning April 15, 2001, this 7 summary data for the prior calendar year shall be filed annually 8 with the commissioner on forms provided by the commissioner. 9 (h) Provides for periodic management and governing body 10 review of the data to assure that appropriate actions have been 11 taken. 12 (i) Provides for copies of all complaints and responses to 13 be available at the principal office of the insurer or health 14 maintenance organization for inspection by the commissioner for 2 15 years following the year the complaint was filed. 16 (j) That when an adverse determination is made, a written 17 statement in plain English containing the reasons for the adverse 18 determination is provided to the insured or enrollee along with 19 written notifications as required under the patient's right to 20 independent review act. 21 (k) That a final determination will be made in writing by 22 the insurer or health maintenance organization not later than 35 23 calendar days after a formal grievance is submitted in writing by 24 the insured or enrollee. The timing for the 35-calendar-day 25 period may be tolled, however, for any period of time the insured 26 or enrollee is permitted to take under the grievance procedure 27 and for a period of time that shall not exceed 10 business days 06816'02 * 15 1 if the insurer or health maintenance organization has not 2 received requested information from a health care facility or 3 health professional. 4 (l) That a determination will be made by the insurer or 5 health maintenance organization not later than 72 hours after 6 receipt of an expedited grievance. Within 10 days after receipt 7 of a determination, the insured or enrollee may request a deter- 8 mination of the matter by the commissioner or his or her designee 9 through September 30, 2000 and beginning October 1, 2000 by an 10 independent review organization under the patient's right to 11 independent review act. If the determination by the insurer or 12 health maintenance organization is made orally, the insurer or 13 health maintenance organization shall provide a written confirma- 14 tion of the determination to the insured or enrollee not later 15 than 2 business days after the oral determination. An expedited 16 grievance under this subdivision applies if a grievance is sub- 17 mitted and a physician, orally or in writing, substantiates that 18 the time frame for a grievance under subdivision (k) would seri- 19 ously jeopardize the life or health of the insured or enrollee or 20 would jeopardize the insured's or enrollee's ability to regain 21 maximum function. 22 (m) That the insured or enrollee has the right to a determi- 23 nation of the matterby the commissioner or his or her designee24through September 30, 2000 and beginning October 1, 2000by an 25 independent review organization under the patient's right to 26 independent review act. 06816'02 * 16 1 (2) An insured or enrollee may authorize in writing any 2 person, including, but not limited to, a physician, to act on his 3 or her behalf at any stage in a grievance proceeding under this 4 section. 5 (3) This section does not apply to a provider's complaint 6 concerning claims payment, handling, or reimbursement for health 7 care services. 8 (4) As used in this section: 9 (a) "Adverse determination" means a determination that an 10 admission, availability of care, continued stay, or other health 11 care service has been reviewed and denied, reduced, or 12 terminated. Failure to respond in a timely manner to a request 13 for a determination constitutes an adverse determination. 14 (b) "Grievance" means a complaint on behalf of an insured or 15 enrollee submitted by an insured or enrollee concerning any of 16 the following: 17 (i) The availability, delivery, or quality of health care 18 services, including a complaint regarding an adverse determina- 19 tion made pursuant to utilization review. 20 (ii) Benefits or claims payment, handling, or reimbursement 21 for health care services. 22 (iii) Matters pertaining to the contractual relationship 23 between an insured or enrollee and the insurer or health mainte- 24 nance organization. 25 Sec. 2403. (1) All rates shall be made in accordance with 26 this section and all of the following: 06816'02 * 17 1 (a) Due consideration shall be given to past and prospective 2 loss experience within and outside this state; to catastrophe 3 hazards; to a reasonable margin for underwriting profit and con- 4 tingencies; to dividends, savings, or unabsorbed premium deposits 5 allowed or returned by insurers to their policyholders, members, 6 or subscribers; to past and prospective expenses, both country- 7 wide and those specially applicable to this state; to underwrit- 8 ing practice, judgment, and to all other relevant factors within 9 and outside this state. For worker's compensation insurance, in 10 determining the reasonableness of the margin for underwriting 11 profit and contingencies, consideration shall be given to all 12 after-tax investment profit or loss from unearned premium and 13 loss reserves attributable to worker's compensation insurance, as 14 well as the factors used to determine the amount of reserves. 15 For all other kinds of insurance to which this chapter applies, 16 all factors to which due consideration is given under this subdi- 17 vision shall be treated in a manner consistent with the laws of 18 this state that existed on December 28, 1981. 19 (b) The systems of expense provisions included in the rates 20 for use by any insurer or group of insurers may differ from those 21 of other insurers or groups of insurers to reflect the require- 22 ments of the operating methods of the insurer or group with 23 respect to any kind of insurance, or with respect to any subdivi- 24 sion or combination thereof for which subdivision or combination 25 separate expense provisions are applicable. 26 (c) Risks may be grouped by classifications for the 27 establishment of rates and minimum premiums. Classification 06816'02 * 18 1 rates may be modified to produce rates for individual risks in 2 accordance with rating plans that measure variations in hazards, 3 expense provisions, or both. The rating plans may measure any 4 differences among risks that may have a probable effect upon 5 losses or expenses as provided for in subdivision (a). 6 (d) Rates shall not be excessive, inadequate, or unfairly 7 discriminatory. A rate shall not be held to be excessive unless 8 the rate is unreasonably high for the insurance coverage provided 9 and a reasonable degree of competition does not exist with 10 respect to the classification, kind, or type of risks to which 11 the rate is applicable. Except as otherwise provided in this 12 subdivision, a rate shall not be held to be inadequate unless the 13 rate is unreasonably low for the insurance coverage provided and 14 the continued use of the rate endangers the solvency of the 15 insurer; or unless the rate is unreasonably low for the insurance 16 coverage provided and the use of the rate has or will have the 17 effect of destroying competition among insurers, creating a 18 monopoly, or causing a kind of insurance to be unavailable to a 19 significant number of applicants who are in good faith entitled 20 to procure the insurance through ordinary methods. For commer- 21 cial liability insurance a rate shall not be held to be inade- 22 quate unless the rate, after consideration of investment income 23 and marketing programs and underwriting programs, is unreasonably 24 low for the insurance coverage provided and is insufficient to 25 sustain projected losses and expenses; or unless the rate is 26 unreasonably low for the insurance coverage provided and the use 27 of the rate has or will have the effect of destroying competition 06816'02 * 19 1 among insurers, creating a monopoly, or causing a kind of 2 insurance to be unavailable to a significant number of applicants 3 who are in good faith entitled to procure the insurance through 4 ordinary methods. As used in this subdivision, "commercial 5 liability insurance" means insurance that provides indemnifica- 6 tion for commercial, industrial, professional, or business 7 liabilities. For worker's compensation insurance provided by an 8 insurer that is controlled by anonprofit health care corpora-9tion formed pursuant to the nonprofit health care corporation10reform act, Act No. 350 of the Public Acts of 1980, being11sections 550.1101 to 550.1704 of the Michigan Compiled Laws12 NONPROFIT HEALTH INSURER REGULATED UNDER CHAPTER 37, a rate shall 13 not be held to be inadequate unless the rate is unreasonably low 14 for the insurance coverage provided. A rate for a coverage is 15 unfairly discriminatory in relation to another rate for the same 16 coverage, if the differential between the rates is not reasonably 17 justified by differences in losses, expenses, or both, or by dif- 18 ferences in the uncertainty of loss for the individuals or risks 19 to which the rates apply. A reasonable justification shall be 20 supported by a reasonable classification system; by sound actuar- 21 ial principles when applicable; and by actual and credible loss 22 and expense statistics or, in the case of new coverages and clas- 23 sifications, by reasonably anticipated loss and expense 24 experience. A rate is not unfairly discriminatory because the 25 rate reflects differences in expenses for individuals or risks 26 with similar anticipated losses, or because the rate reflects 27 differences in losses for individuals or risks with similar 06816'02 * 20 1 expenses. Rates are not unfairly discriminatory if they are 2 averaged broadly among persons insured on a group, franchise, 3 blanket policy, or similar basis. 4 (2) Except to the extent necessary to meet the provisions of 5 subsection (1)(d), uniformity among insurers in any matters 6 within the scope of this section is neither required nor 7 prohibited. 8 Sec. 2406. (1) Except for worker's compensation insurance, 9 every insurer shall file with the commissioner every manual of 10 classification, every manual of rules and rates, every rating 11 plan, and every modification of any of the foregoing that it pro- 12 poses to use. Every such filing shall state the proposed effec- 13 tive datethereofOF THE FILING and shall indicate the charac- 14 ter and extent of the coverage contemplated. If a filing is not 15 accompanied by the information upon which the insurer supports 16 the filing, and the commissioner does not have sufficient infor- 17 mation to determine whether the filing meets the requirements of 18 this chapter, the commissioner shall within 10 days of the filing 19 give written notice to the insurer to furnish the information 20 upon which it supports the filing. The information furnished in 21 support of a filing may include the experience or judgment of the 22 insurer or rating organization making the filing, its interpreta- 23 tion of any statistical data it relies upon, the experience of 24 other insurers or rating organizations, or any other relevant 25 factors. A filing and any supporting information shall be open 26 to public inspection after the filing becomes effective. 06816'02 * 21 1 (2) Except for worker's compensation insurance, an insurer 2 may satisfy its obligation to make such filings by becoming a 3 member of, or a subscriber to, a licensed rating organization 4 that makes such filings, and by filing with the commissioner a 5 copy of its authorization of the rating organization to make such 6 filings on its behalf. Nothing contained in this chapter shall 7 be construed as requiring any insurer to become a member of or a 8 subscriber to any rating organization. 9 (3) For worker's compensation insurance in this state the 10 insurer shall file with the commissioner all rates and rating 11 systems. Every insurer that insures worker's compensation in 12 this state on the effective date of this subsection shall file 13 the rates not later than the effective date of this subsection. 14 (4) Except as provided in subsection (3) and as otherwise 15 provided in this subsection, the rates and rating systems for 16 worker's compensation insurance shall be filed not later than the 17 date the rates and rating systems are to be effective. However, 18 if the insurer providing worker's compensation insurance is con- 19 trolled by anonprofit health care corporation formed pursuant20to the nonprofit health care corporation reform act, Act No. 35021of the Public Acts of 1980, being sections 550.1101 to 550.170422of the Michigan Compiled LawsNONPROFIT HEALTH INSURER REGULATED 23 UNDER CHAPTER 37, the rates and rating systems that it proposes 24 to use shall be filed with the commissioner not less than 45 days 25 before the effective date of the filing. These filings shall be 26 considered to meet the requirements of this chapter unless and 06816'02 * 22 1 until the commissioner disapproves a filing pursuant to section 2 2418 or 2420. 3 (5) Each filing under subsections (3) and (4) shall be 4 accompanied by a certification by the insurer that, to the best 5 of its information and belief, the filing conforms to the 6 requirements of this chapter. 7 Sec. 2418. If at any time after approval of any filing 8 either by act or order of the commissioner or by operation of 9 law, or before approval of a filing made by a worker's compensa- 10 tion insurer controlled by anonprofit health care corporation11formed pursuant to the nonprofit health care corporation reform12act, Act No. 350 of the Public Acts of 1980, being sections13550.1101 to 550.1704 of the Michigan Compiled LawsNONPROFIT 14 HEALTH INSURER REGULATED UNDER CHAPTER 37, the commissioner finds 15 that a filing does not meet the requirements of this chapter, the 16 commissioner shall, after a hearing held upon not less than 10 17 days' written notice, specifying the matters to be considered at 18 the hearing, to every insurer and rating organization that made 19 the filing, issue an order specifying in what respects the com- 20 missioner finds that the filing fails to meet the requirements of 21 this chapter, and stating for a filing that has gone into effect 22 when, within a reasonable period thereafter, that filing shall be 23 considered no longer effective. Copies of the order shall be 24 sent to every such insurer and rating organization. The order 25 shall not affect any contract or policy made or issued prior to 26 the expiration of the period set forth in the order. 06816'02 * 23 1 Sec. 2420. (1) Any person or organization aggrieved with 2 respect to any filing that is in effect may apply in writing to 3 the commissioner for a hearing on the filing. The application 4 shall specify the grounds to be relied upon by the applicant. If 5 the commissioner finds that the application is made in good 6 faith, that the applicant would be so aggrieved if his or her 7 grounds are established, and that the grounds otherwise justify 8 holding a hearing, the commissioner shall, within 30 days after 9 receipt of the application, hold a hearing upon not less than 10 10 days' written notice to the applicant and to every insurer and 11 rating organization that made the filing. 12 (2) If, after a hearing under subsection (1), the commis- 13 sioner finds that the filing does not meet the requirements of 14 this chapter, the commissioner shall issue an order specifying in 15 what respects he or she finds that the filing fails to meet the 16 requirements of this chapter, and stating when, within a reason- 17 able period thereafter, the filing shall be considered no longer 18 effective. Copies of the order shall be sent to the applicant 19 and to every insurer and rating organization. The order shall 20 not affect any contract or policy made or issued prior to the 21 expiration of the period set forth in the order. 22 (3) Upon receipt of a rate or rating system filing by an 23 insurer providing worker's compensation insurance that is con- 24 trolled by anonprofit health care corporation formed pursuant25to the nonprofit health care corporation act, Act No. 350 of the26Public Acts of 1980, being sections 550.1101 to 550.1704 of the27Michigan Compiled LawsNONPROFIT HEALTH INSURER REGULATED UNDER 06816'02 * 24 1 CHAPTER 37, the commissioner shall immediately notify each person 2 of the filing who has requested in writing notice of the filing 3 within the 2 years immediately preceding the filing. Notice to 4 the person shall identify the location, time, and place where a 5 copy of the filing will be open to public inspection and 6 copying. The filing shall become effective on the filing's pro- 7 posed effective date unless stayed or disapproved by the 8 commissioner. An aggrieved person, which shall include any 9 insurer transacting worker's compensation insurance in this state 10 and any person acting on behalf of 1 or more such insurers, who 11 claims a rate in the filing is inadequate is entitled to a con- 12 tested case hearing pursuant to the administrative procedures act 13 of 1969,Act No. 306 of the Public Acts of 1969, being14sections 24.201 to 24.328 of the Michigan Compiled Laws1969 PA 15 306, MCL 24.201 TO 24.328. The request for this hearing shall be 16 filed with the commissioner within 30 days of the date of the 17 filing alleged to contain inadequate rates and shall state the 18 grounds upon which a rate contained in the filing is alleged to 19 be inadequate. The notice of hearing shall be served upon the 20 insurer and shall state the time and place of the hearing and the 21 grounds upon which the rate is alleged to be inadequate. Unless 22 mutually agreed upon by the commissioner, the insurer, and the 23 aggrieved person, the hearing shall occur not less than 15 days 24 or more than 30 days after notice is served. Within 10 days of 25 receipt of the request for hearing, the commissioner shall issue 26 an order staying the use of any rate alleged to be inadequate and 27 with respect to which, on the basis of affidavits and pleadings 06816'02 * 25 1 submitted by the aggrieved person and the insurer, it appears 2 likely that the aggrieved person will prevail in the hearing. 3 The nonprevailing party shall have the right to an interlocutory 4 appeal to circuit court of the commissioner's decision granting 5 or denying the stay, and the court shall review de novo the 6 commissioner's decision. 7 (4) An insurer or rating organization shall not use this 8 section to obtain a hearing with the commissioner on the 9 insurer's or rating organization's own filing. 10 Sec. 3406f. (1) An insurer may exclude or limit coverage 11 for a condition as follows: 12 (a) For an individual covered under an individual policy or 13 certificate or any other policy or certificate not covered under 14 subdivision (b),or (c),only if the exclusion or limitation 15 relates to a condition for which medical advice, diagnosis, care, 16 or treatment was recommended or received within 6 months before 17 enrollment and the exclusion or limitation does not extend for 18 more than 12 months after the effective date of the policy or 19 certificate. 20(b) For an individual covered under a group policy or cer-21tificate covering 2 to 50 individuals, only if the exclusion or22limitation relates to a condition for which medical advice, diag-23nosis, care, or treatment was recommended or received within 624months before enrollment and the exclusion or limitation does not25extend for more than 12 months after the effective date of the26policy or certificate.06816'02 * 26 1 (B)(c)For an individual covered under a group policy or 2 certificate covering 100 OR morethan 50 individualsELIGIBLE 3 EMPLOYEES, only if the exclusion or limitation relates to a con- 4 dition for which medical advice, diagnosis, care, or treatment 5 was recommended or received within 6 months before enrollment and 6 the exclusion or limitation does not extend for more than 6 7 months after the effective date of the policy or certificate. 8 (2) As used in this section:, "group"9 (A) "ELIGIBLE EMPLOYEE" MEANS THAT TERM AS DEFINED IN SEC- 10 TION 3663. 11 (B) "GROUP" means a group health plan as defined in section 12 2791(a)(1) and (2) of part C of title XXVII of the public health 13 service act, chapter 373, 110 Stat. 1972, 42 U.S.C. 300gg-91, and 14 includes government plans that are not federal government plans. 15 (3) This section applies only to an insurer that delivers, 16 issues for delivery, or renews in this state an expense-incurred 17 hospital, medical, or surgical policy or certificate. This sec- 18 tion does not apply to any policy or certificate that provides 19 coverage for specific diseases or accidents only, or to any hos- 20 pital indemnity, medicare supplement, long-term care, disability 21 income, or 1-time limited duration policy or certificate of no 22 longer than 6 months. 23(4) The commissioner and the director of community health24shall examine the issue of crediting prior continuous health care25coverage to reduce the period of time imposed by preexisting con-26dition limitations or exclusions under subsection (1)(a), (b),27and (c) and shall report to the governor and the senate and the06816'02 * 27 1house of representatives standing committees on insurance and2health policy issues by May 15, 1997. The report shall include3the commissioner's and director's findings and shall propose4alternative mechanisms or a combination of mechanisms to credit5prior continuous health care coverage towards the period of time6imposed by a preexisting condition limitation or exclusion. The7report shall address at a minimum all of the following:8(a) Cost of crediting prior continuous health care9coverages.10(b) Period of lapse or break in coverage, if any, permitted11in a prior health care coverage.12(c) Types and scope of prior health care coverages that are13permitted to be credited.14(d) Any exceptions or exclusions to crediting prior health15care coverage.16(e) Uniform method of certifying periods of prior creditable17coverage.18 Sec. 3539. (1) For an individual covered under a nongroup 19 contract or under a contract not covered under subsection (2), a 20 health maintenance organization may exclude or limit coverage for 21 a condition only if the exclusion or limitation relates to a con- 22 dition for which medical advice, diagnosis, care, or treatment 23 was recommended or received within 6 months before enrollment and 24 the exclusion or limitation does not extend for more than 6 25 months after the effective date of the health maintenance 26 contract. 06816'02 * 28 1 (2) A health maintenance organization shall not exclude or 2 limit coverage for a preexisting condition for an individual 3 covered under a group contract. 4 (3) Except as provided in subsection (5), a health mainte- 5 nance organization that has issued a nongroup contract shall 6 renew or continue in force the contract at the option of the 7 individual. 8 (4) Except as provided in subsection (5), a health mainte- 9 nance organization that has issued a group contract shall renew 10 or continue in force the contract at the option of the sponsor of 11 the plan. 12 (5) Guaranteed renewal is not required in cases of fraud, 13 intentional misrepresentation of material fact, lack of payment, 14 if the health maintenance organization no longer offers that par- 15 ticular type of coverage in the market, or if the individual or 16 group moves outside the service area. 17 (6) As used in this section, "group" means a group of218 100 or moresubscribersELIGIBLE EMPLOYEES AS DEFINED IN SEC- 19 TION 3663. 20 CHAPTER 36A 21 SMALL EMPLOYER HEALTH INSURANCE 22 SEC. 3663. AS USED IN THIS CHAPTER: 23 (A) "ACTUARIAL CERTIFICATION" MEANS A WRITTEN STATEMENT 24 SIGNED BY A MEMBER OF THE AMERICAN ACADEMY OF ACTUARIES OR OTHER 25 INDIVIDUAL ACCEPTABLE TO THE COMMISSIONER THAT A SMALL EMPLOYER 26 CARRIER IS IN COMPLIANCE WITH THE PROVISIONS OF SECTION 3667 27 BASED UPON THE PERSON'S EXAMINATION AND INCLUDING A REVIEW OF THE 06816'02 * 29 1 APPROPRIATE RECORDS AND ACTUARIAL ASSUMPTIONS AND METHODS USED BY 2 THE CARRIER IN ESTABLISHING PREMIUM RATES FOR APPLICABLE HEALTH 3 BENEFIT PLANS. 4 (B) "ADJUSTED COMMUNITY RATING" MEANS A METHOD USED TO 5 DEVELOP A CARRIER'S PREMIUM THAT SPREADS FINANCIAL RISK IN 6 ACCORDANCE WITH THE REQUIREMENTS IN SECTION 3667. 7 (C) "AFFILIATION PERIOD" MEANS A PERIOD OF TIME REQUIRED BY 8 A SMALL EMPLOYER CARRIER THAT MUST EXPIRE BEFORE HEALTH INSURANCE 9 COVERAGE BECOMES EFFECTIVE. 10 (D) "CARRIER" MEANS AN ENTITY SUBJECT TO THE INSURANCE LAWS 11 AND REGULATIONS OF THIS STATE, OR SUBJECT TO THE JURISDICTION OF 12 THE COMMISSIONER, THAT CONTRACTS OR OFFERS TO CONTRACT TO PRO- 13 VIDE, DELIVER, ARRANGE FOR, PAY FOR, OR REIMBURSE ANY OF THE 14 COSTS OF HEALTH CARE SERVICES, INCLUDING A SICKNESS AND ACCIDENT 15 INSURANCE COMPANY, A HEALTH MAINTENANCE ORGANIZATION, A NONPROFIT 16 HEALTH INSURER, OR ANY OTHER ENTITY PROVIDING A PLAN OF HEALTH 17 INSURANCE, HEALTH BENEFITS, OR HEALTH SERVICES. 18 (E) "COBRA" MEANS THE CONSOLIDATED OMNIBUS BUDGET RECONCILI- 19 ATION ACT OF 1985, PUBLIC LAW 99-272, 100 STAT. 82. 20 (F) "CREDITABLE COVERAGE" MEANS, WITH RESPECT TO AN INDIVID- 21 UAL, HEALTH BENEFITS OR COVERAGE PROVIDED UNDER ANY OF THE 22 FOLLOWING: 23 (i) A GROUP HEALTH PLAN INCLUDING COVERAGE PROVIDED TO AN 24 ELIGIBLE SOLE PROPRIETOR. 25 (ii) A HEALTH BENEFIT PLAN. 26 (iii) PART A OR PART B OF TITLE XVIII OF THE SOCIAL SECURITY 27 ACT, CHAPTER 531, 49 STAT. 620, 42 U.S.C. 1395c TO 1395i AND 06816'02 * 30 1 1395i-2 TO 1395i-5, AND 42 U.S.C. 1395 TO 1395t, 1395u TO 1395w, 2 AND 1395w-2 TO 1395w-4. 3 (iv) TITLE XIX OF THE SOCIAL SECURITY ACT CHAPTER 531, 49 4 STAT. 620, 42 U.S.C. 1396 TO 1396r-6 AND 1396r-8 TO 1396v, OTHER 5 THAN COVERAGE CONSISTING SOLELY OF BENEFITS UNDER SECTION 2928 OF 6 TITLE XIX OF THE SOCIAL SECURITY ACT, 42 U.S.C. 1396t. 7 (v) CHAPTER 55 OF TITLE 10 OF THE UNITED STATES CODE, 10 8 U.S.C. 1071 TO 1110. FOR PURPOSES OF CHAPTER 55 OF TITLE 10 OF 9 THE UNITED STATES CODE, 10 U.S.C. 1071 TO 1110, "UNIFORMED 10 SERVICES" MEANS THE ARMED FORCES AND THE COMMISSIONED CORPS OF 11 THE NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION AND OF THE 12 PUBLIC HEALTH SERVICE. 13 (vi) A MEDICAL CARE PROGRAM OF THE INDIAN HEALTH SERVICE OR 14 OF A TRIBAL ORGANIZATION. 15 (vii) A STATE HEALTH BENEFITS RISK POOL. 16 (viii) A HEALTH PLAN OFFERED UNDER THE EMPLOYEES HEALTH BEN- 17 EFITS PROGRAM, CHAPTER 89 OF TITLE 5 OF THE UNITED STATES CODE, 5 18 U.S.C. 8901 TO 8914. 19 (ix) A PUBLIC HEALTH PLAN, WHICH FOR PURPOSES OF THIS CHAP- 20 TER MEANS A PLAN ESTABLISHED OR MAINTAINED BY A STATE, COUNTY, OR 21 OTHER POLITICAL SUBDIVISION OF A STATE THAT PROVIDES HEALTH 22 INSURANCE COVERAGE TO INDIVIDUALS ENROLLED IN THE PLAN. 23 (x) A HEALTH BENEFIT PLAN UNDER SECTION 5(E) OF TITLE I OF 24 THE PEACE CORPS ACT, PUBLIC LAW 87-293, 22 U.S.C. 2504. 25 (G) "ELIGIBLE EMPLOYEE" MEANS AN EMPLOYEE WHO WORKS ON A 26 FULL-TIME BASIS WITH A NORMAL WORKWEEK OF 30 OR MORE HOURS. 27 ELIGIBLE EMPLOYEE INCLUDES AN EMPLOYEE WHO WORKS ON A FULL-TIME 06816'02 * 31 1 BASIS WITH A NORMAL WORKWEEK OF ANYWHERE BETWEEN AT LEAST 17.5 2 AND 30 HOURS, IF AN EMPLOYER SO CHOOSES AND IF THIS ELIGIBILITY 3 CRITERION IS APPLIED UNIFORMLY AMONG ALL OF THE EMPLOYER'S 4 EMPLOYEES AND WITHOUT REGARD TO HEALTH STATUS-RELATED FACTORS. 5 PERSONS COVERED UNDER A HEALTH BENEFIT PLAN PURSUANT TO COBRA ARE 6 NOT ELIGIBLE EMPLOYEES FOR PURPOSES OF MINIMUM PARTICIPATION 7 REQUIREMENTS PURSUANT TO SECTION 3679. 8 (H) "ELIGIBLE SOLE PROPRIETOR" MEANS A PERSON WHO IS A SOLE 9 PROPRIETOR, SOLE SHAREHOLDER, OR PARTNER IN A TRADE OR BUSINESS 10 THROUGH WHICH THE SOLE PROPRIETOR ATTEMPTS TO EARN TAXABLE INCOME 11 AND FOR WHICH HE OR SHE HAS FILED THE APPROPRIATE INTERNAL REVE- 12 NUE SERVICE FORM 1040, SCHEDULE C OR F, FOR THE PREVIOUS TAXABLE 13 YEAR; WHO IS A RESIDENT OF THIS STATE ON THE DATE OF ENROLLMENT; 14 AND WHO IS ACTIVELY EMPLOYED IN THE OPERATION OF THE BUSINESS, 15 WORKING AT LEAST 30 HOURS PER WEEK, AT LEAST 6 MONTHS OUT OF THE 16 CALENDAR YEAR. 17 (I) "ENROLLMENT DATE" MEANS THE DATE ON WHICH THE GROUP CON- 18 TRACT GOES INTO EFFECT. 19 (J) "ESTABLISHED GEOGRAPHIC SERVICE AREA" MEANS A GEOGRAPHIC 20 AREA, AS APPROVED BY THE COMMISSIONER AND BASED ON THE CARRIER'S 21 CERTIFICATE OF AUTHORITY TO TRANSACT INSURANCE IN THIS STATE, 22 WITHIN WHICH THE CARRIER IS AUTHORIZED TO PROVIDE COVERAGE. 23 (K) "FAMILY COMPOSITION" MEANS ANY OF THE FOLLOWING: 24 (i) ENROLLEE. 25 (ii) ENROLLEE, SPOUSE, AND CHILDREN. 26 (iii) ENROLLEE AND SPOUSE. 06816'02 * 32 1 (iv) ENROLLEE AND CHILDREN. 2 (v) CHILD ONLY. 3 (l) "GENETIC INFORMATION" MEANS INFORMATION ABOUT GENES, 4 GENE PRODUCTS, AND INHERITED CHARACTERISTICS THAT MAY DERIVE FROM 5 THE INDIVIDUAL OR A FAMILY MEMBER. THIS INCLUDES INFORMATION 6 REGARDING CARRIER STATUS AND INFORMATION DERIVED FROM LABORATORY 7 TESTS THAT IDENTIFY MUTATIONS IN SPECIFIC GENES OR CHROMOSOMES, 8 PHYSICAL MEDICAL EXAMINATIONS, FAMILY HISTORIES, AND DIRECT ANAL- 9 YSIS OF GENES OR CHROMOSOMES. 10 (M) "GEOGRAPHIC AREA" IS AN AREA ESTABLISHED BY THE SMALL 11 GROUP CARRIER AND APPROVED BY THE COMMISSIONER AND USED FOR 12 ADJUSTING THE RATES FOR A HEALTH BENEFIT PLAN. 13 (N) "GROUP HEALTH PLAN" MEANS AN EMPLOYEE WELFARE BENEFIT 14 PLAN AS DEFINED IN SECTION 3(1) OF SUBTITLE A OF TITLE I OF THE 15 EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, PUBLIC LAW 16 93-406, 29 U.S.C. 1002, TO THE EXTENT THAT THE PLAN PROVIDES MED- 17 ICAL CARE AND INCLUDING ITEMS AND SERVICES PAID FOR AS MEDICAL 18 CARE TO EMPLOYEES OR THEIR DEPENDENTS AS DEFINED UNDER THE TERMS 19 OF THE PLAN DIRECTLY OR THROUGH INSURANCE, REIMBURSEMENT, OR 20 OTHERWISE. AS USED IN THIS CHAPTER, ALL OF THE FOLLOWING APPLY 21 TO THE TERM GROUP HEALTH PLAN: 22 (i) ANY PLAN, FUND, OR PROGRAM THAT WOULD NOT BE, BUT FOR 23 SECTION 2721(E) OF SUBPART 4 OF PART A OF TITLE XXVII OF THE 24 PUBLIC HEALTH SERVICE ACT, CHAPTER 373, 110 STAT. 1967, 42 25 U.S.C. 300gg-21, AN EMPLOYEE WELFARE BENEFIT PLAN AND THAT IS 26 ESTABLISHED OR MAINTAINED BY A PARTNERSHIP, TO THE EXTENT THAT 27 THE PLAN, FUND, OR PROGRAM PROVIDES MEDICAL CARE, INCLUDING ITEMS 06816'02 * 33 1 AND SERVICES PAID FOR AS MEDICAL CARE, TO PRESENT OR FORMER 2 PARTNERS IN THE PARTNERSHIP, OR TO THEIR DEPENDENTS, AS DEFINED 3 UNDER THE TERMS OF THE PLAN, FUND, OR PROGRAM, DIRECTLY OR 4 THROUGH INSURANCE, REIMBURSEMENT OR OTHERWISE, SHALL BE TREATED, 5 SUBJECT TO SUBPARAGRAPH (ii), AS AN EMPLOYEE WELFARE BENEFIT PLAN 6 THAT IS A GROUP HEALTH PLAN. 7 (ii) FOR A GROUP HEALTH PLAN, THE TERM "EMPLOYER" ALSO 8 INCLUDES THE PARTNERSHIP IN RELATION TO ANY PARTNER. 9 (iii) FOR A GROUP HEALTH PLAN, THE TERM "PARTICIPANT" ALSO 10 INCLUDES AN INDIVIDUAL WHO IS, OR MAY BECOME, ELIGIBLE TO RECEIVE 11 A BENEFIT UNDER THE PLAN, OR THE INDIVIDUAL'S BENEFICIARY WHO IS, 12 OR MAY BECOME, ELIGIBLE TO RECEIVE A BENEFIT UNDER THE PLAN, IF 13 IN CONNECTION WITH A GROUP HEALTH PLAN MAINTAINED BY A PARTNER- 14 SHIP, THE INDIVIDUAL IS A PARTNER IN RELATION TO THE PARTNERSHIP 15 OR IN CONNECTION WITH A GROUP HEALTH PLAN MAINTAINED BY A 16 SELF-EMPLOYED INDIVIDUAL, UNDER WHICH 1 OR MORE EMPLOYEES ARE 17 PARTICIPANTS, THE INDIVIDUAL IS THE SELF-EMPLOYED INDIVIDUAL. 18 (O) "HEALTH BENEFIT PLAN" MEANS A POLICY, CONTRACT, CERTIFI- 19 CATE, OR AGREEMENT OFFERED BY A CARRIER TO PROVIDE, DELIVER, 20 ARRANGE FOR, PAY FOR, OR REIMBURSE ANY OF THE COSTS OF HEALTH 21 CARE SERVICES. EXCEPT AS OTHERWISE SPECIFICALLY EXEMPTED IN THIS 22 DEFINITION, HEALTH BENEFIT PLAN INCLUDES SHORT-TERM AND CATA- 23 STROPHIC HEALTH INSURANCE POLICIES, AND A POLICY THAT PAYS ON A 24 COST-INCURRED BASIS. HEALTH BENEFIT PLAN DOES NOT INCLUDE ANY OF 25 THE FOLLOWING: 26 (i) ACCIDENT-ONLY, CREDIT-ONLY, OR DISABILITY INCOME 27 INSURANCE; COVERAGE ISSUED AS A SUPPLEMENT TO LIABILITY 06816'02 * 34 1 INSURANCE; LIABILITY INSURANCE, INCLUDING GENERAL LIABILITY 2 INSURANCE AND AUTOMOBILE LIABILITY INSURANCE; WORKER'S COMPENSA- 3 TION OR SIMILAR INSURANCE; AUTOMOBILE MEDICAL PAYMENT INSURANCE; 4 COVERAGE FOR ON-SITE MEDICAL CLINICS; AND OTHER SIMILAR INSURANCE 5 COVERAGE, SPECIFIED IN FEDERAL REGULATIONS ISSUED PURSUANT TO THE 6 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996, 7 PUBLIC LAW 104-191, 110 STAT. 1936, UNDER WHICH BENEFITS FOR MED- 8 ICAL CARE ARE SECONDARY OR INCIDENTAL TO OTHER INSURANCE 9 BENEFITS. 10 (ii) IF PROVIDED UNDER A SEPARATE POLICY, CERTIFICATE, OR 11 CONTRACT OF INSURANCE OR ARE OTHERWISE NOT AN INTEGRAL PART OF A 12 PLAN: LIMITED BENEFIT HEALTH INSURANCE; LIMITED SCOPE DENTAL OR 13 VISIONS BENEFITS; BENEFITS FOR LONG-TERM CARE, NURSING HOME CARE, 14 HOME HEALTH CARE, COMMUNITY-BASED CARE, OR ANY COMBINATION THERE- 15 OF; OR OTHER SIMILAR, LIMITED BENEFITS SPECIFIED IN FEDERAL REGU- 16 LATIONS ISSUED PURSUANT TO THE HEALTH INSURANCE PORTABILITY AND 17 ACCOUNTABILITY ACT OF 1996, PUBLIC LAW 104-191, 110 STAT. 1936. 18 (iii) IF THE BENEFITS ARE PROVIDED UNDER A SEPARATE POLICY, 19 CERTIFICATE, OR CONTRACT OF INSURANCE, THERE IS NO COORDINATION 20 BETWEEN THE PROVISION OF THE BENEFITS AND ANY EXCLUSION OF BENE- 21 FITS UNDER ANY GROUP HEALTH PLAN MAINTAINED BY THE SAME PLAN 22 SPONSOR, AND THE BENEFITS ARE PAID WITH RESPECT TO AN EVENT WITH- 23 OUT REGARD TO WHETHER BENEFITS ARE PROVIDED WITH RESPECT TO SUCH 24 AN EVENT UNDER ANY GROUP HEALTH PLAN MAINTAINED BY THE SAME PLAN 25 SPONSOR: COVERAGE ONLY FOR A SPECIFIED DISEASE OR ILLNESS OR 26 HOSPITAL INDEMNITY OR OTHER FIXED INDEMNITY INSURANCE. 06816'02 * 35 1 (iv) IF OFFERED AS A SEPARATE POLICY, CERTIFICATE, OR 2 CONTRACT OF INSURANCE: MEDICARE SUPPLEMENTAL POLICY AS DEFINED 3 UNDER SECTION 1882(g)(1) OF PART D OF TITLE XVIII OF THE SOCIAL 4 SECURITY ACT; 42 U.S.C. 1395ss; COVERAGE SUPPLEMENTAL TO THE COV- 5 ERAGE PROVIDED UNDER CHAPTER 55 OF TITLE 10 OF THE UNITED STATES 6 CODE, 10 U.S.C. 1071 TO 1110; OR SIMILAR SUPPLEMENTAL COVERAGE 7 PROVIDED TO COVERAGE UNDER A GROUP HEALTH PLAN. 8 (P) "HEALTH STATUS-RELATED FACTOR" MEANS ANY OF THE 9 FOLLOWING: 10 (i) HEALTH STATUS. 11 (ii) MEDICAL CONDITION, INCLUDING BOTH PHYSICAL AND MENTAL 12 ILLNESSES. 13 (iii) CLAIMS EXPERIENCE. 14 (iv) RECEIPT OF HEALTH CARE. 15 (v) MEDICAL HISTORY. 16 (vi) GENETIC INFORMATION. 17 (vii) EVIDENCE OF INSURABILITY, INCLUDING CONDITIONS ARISING 18 OUT OF ACTS OF DOMESTIC VIOLENCE. 19 (viii) DISABILITY. 20 (Q) "LATE ENROLLEE" MEANS AN ELIGIBLE EMPLOYEE OR DEPENDENT 21 WHO REQUESTS ENROLLMENT IN A HEALTH BENEFIT PLAN OF A SMALL 22 EMPLOYER FOLLOWING THE INITIAL ENROLLMENT PERIOD DURING WHICH THE 23 INDIVIDUAL IS ENTITLED TO ENROLL UNDER THE TERMS OF THE HEALTH 24 BENEFIT PLAN, PROVIDED THAT THE INITIAL ENROLLMENT PERIOD IS A 25 PERIOD OF AT LEAST 30 DAYS. LATE ENROLLEE DOES NOT INCLUDE AN 26 ELIGIBLE EMPLOYEE OR DEPENDENT WHO MEETS ANY OF THE FOLLOWING: 06816'02 * 36 1 (i) THE INDIVIDUAL WAS COVERED UNDER CREDITABLE COVERAGE AT 2 THE TIME OF THE INITIAL ENROLLMENT; LOST COVERAGE UNDER 3 CREDITABLE COVERAGE AS A RESULT OF CESSATION OF EMPLOYER CONTRI- 4 BUTION, TERMINATION OF EMPLOYMENT OR ELIGIBILITY, REDUCTION IN 5 THE NUMBER OF HOURS OF EMPLOYMENT, INVOLUNTARY TERMINATION OF 6 CREDITABLE COVERAGE, OR DEATH OF A SPOUSE, DIVORCE, OR LEGAL SEP- 7 ARATION; AND THE INDIVIDUAL REQUESTS ENROLLMENT WITHIN 30 DAYS 8 AFTER TERMINATION OF THE CREDITABLE COVERAGE OR THE CHANGE IN 9 CONDITIONS THAT GAVE RISE TO THE TERMINATION OF COVERAGE. 10 (ii) IF, WHERE PROVIDED FOR IN CONTRACT OR WHERE OTHERWISE 11 PROVIDED IN STATE LAW, THE INDIVIDUAL ENROLLS DURING THE SPECI- 12 FIED BONA FIDE OPEN ENROLLMENT PERIOD. 13 (iii) IF THE INDIVIDUAL IS EMPLOYED BY AN EMPLOYER THAT 14 OFFERS MULTIPLE HEALTH BENEFIT PLANS AND THE INDIVIDUAL ELECTS A 15 DIFFERENT PLAN DURING AN OPEN ENROLLMENT PERIOD. 16 (iv) IF A COURT HAS ORDERED COVERAGE BE PROVIDED FOR A 17 SPOUSE OR MINOR OR DEPENDENT CHILD UNDER A COVERED EMPLOYEE'S 18 HEALTH BENEFIT PLAN AND A REQUEST FOR ENROLLMENT IS MADE WITHIN 19 30 DAYS AFTER ISSUANCE OF THE COURT ORDER. 20 (v) IF THE INDIVIDUAL CHANGES STATUS FROM NOT BEING AN ELI- 21 GIBLE EMPLOYEE TO BECOMING AN ELIGIBLE EMPLOYEE AND REQUESTS 22 ENROLLMENT WITHIN 30 DAYS AFTER THE CHANGE IN STATUS. 23 (vi) IF THE INDIVIDUAL HAD COVERAGE UNDER A CONTINUATION 24 PROVISION UNDER THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION 25 ACT OF 1985, PUBLIC LAW 99-272, 100 STAT. 82, AND THE COVERAGE 26 UNDER THAT PROVISION HAS BEEN EXHAUSTED. 06816'02 * 37 1 (vii) IF THE INDIVIDUAL MEETS THE REQUIREMENTS FOR SPECIAL 2 ENROLLMENT PURSUANT TO SECTION 3677. 3 (R) "LIMITED BENEFIT HEALTH INSURANCE" MEANS THAT FORM OF 4 COVERAGE THAT PAYS STATED PREDETERMINED AMOUNTS FOR SPECIFIC 5 SERVICES OR TREATMENTS OR PAYS A STATED PREDETERMINED AMOUNT PER 6 DAY OR CONFINEMENT FOR 1 OR MORE NAMED CONDITIONS, NAMED DIS- 7 EASES, OR ACCIDENTAL INJURY. 8 (S) "MEDICAL CARE" MEANS AMOUNTS PAID FOR THE DIAGNOSIS, 9 CARE, MITIGATION, TREATMENT, OR PREVENTION OF DISEASE, OR AMOUNTS 10 PAID FOR THE PURPOSE OF AFFECTING ANY STRUCTURE OR FUNCTION OF 11 THE BODY; TRANSPORTATION PRIMARILY FOR AND ESSENTIAL TO THIS 12 CARE; AND INSURANCE COVERING THIS CARE. 13 (T) "MEDICARE" MEANS TITLE XVIII OF THE SOCIAL SECURITY ACT, 14 CHAPTER 531, 49 STAT. 620, 42 U.S.C. 1395 TO 1395b, 1395b-2, 15 1395b-6 TO 1395b-7, 1395c TO 1395i, 1395i-2 TO 1395i-5, 1395j TO 16 1395t, 1395u TO 1395w, 1395w-2 TO 1395w-4, 1395w-21 TO 1395w-28, 17 1395x TO 1395yy, AND 1395bbb TO 1395ggg. 18 (U) "PLAN SPONSOR" MEANS THAT TERM AS DEFINED UNDER SECTION 19 3(16)(B) OF SUBTITLE A OF TITLE I OF THE EMPLOYEE RETIREMENT 20 INCOME SECURITY ACT OF 1974, PUBLIC LAW 93-406, 29 U.S.C. 1002. 21 (V) "PREEXISTING CONDITION" MEANS A CONDITION, REGARDLESS OF 22 THE CAUSE OF THE CONDITION, FOR WHICH MEDICAL ADVICE, DIAGNOSIS, 23 CARE, OR TREATMENT WAS RECOMMENDED OR RECEIVED DURING THE 6 24 MONTHS PRECEDING THE ENROLLMENT DATE OF THE COVERAGE. 25 PREEXISTING CONDITION DOES NOT INCLUDE A CONDITION FOR WHICH MED- 26 ICAL ADVICE, DIAGNOSIS, CARE, OR TREATMENT WAS RECOMMENDED OR 27 RECEIVED FOR THE FIRST TIME WHILE THE COVERED PERSON HELD 06816'02 * 38 1 CREDITABLE COVERAGE AND THAT WAS A COVERED BENEFIT UNDER THE 2 PLAN, PROVIDED THAT THE PRIOR CREDITABLE COVERAGE WAS CONTINUOUS 3 TO A DATE NOT MORE THAN 90 DAYS BEFORE THE ENROLLMENT DATE OF THE 4 NEW COVERAGE. GENETIC INFORMATION SHALL NOT BE TREATED AS A CON- 5 DITION FOR WHICH A PREEXISTING CONDITION EXCLUSION MAY BE IMPOSED 6 IN THE ABSENCE OF A DIAGNOSIS OF THE CONDITION RELATED TO THE 7 INFORMATION. 8 (W) "PREMIUM" MEANS ALL MONEY PAID BY A SMALL EMPLOYER, ELI- 9 GIBLE EMPLOYEES, OR ELIGIBLE PERSONS AS A CONDITION OF RECEIVING 10 COVERAGE FROM A CARRIER SUBJECT TO THIS CHAPTER, INCLUDING ANY 11 FEES OR OTHER CONTRIBUTIONS ASSOCIATED WITH THE HEALTH BENEFIT 12 PLAN. 13 (X) "PRODUCER" OR "INSURANCE PRODUCER" MEANS THAT TERM AS 14 DEFINED IN SECTION 1201. 15 (Y) "RESTRICTED NETWORK PROVISION" MEANS ANY PROVISION OF A 16 HEALTH BENEFIT PLAN THAT CONDITIONS THE PAYMENT OF BENEFITS, IN 17 WHOLE OR IN PART, ON THE USE OF HEALTH CARE PROVIDERS THAT HAVE 18 ENTERED INTO A CONTRACTUAL ARRANGEMENT WITH THE CARRIER TO PRO- 19 VIDE HEALTH CARE SERVICES TO COVERED INDIVIDUALS. 20 (Z) "SMALL EMPLOYER" MEANS ANY PERSON THAT IS ACTIVELY 21 ENGAGED IN BUSINESS THAT ON AT LEAST 50% OF ITS WORKING DAYS 22 DURING THE PRECEDING CALENDAR YEAR EMPLOYED NO MORE THAN 99 ELI- 23 GIBLE EMPLOYEES, THE MAJORITY OF WHOM WERE EMPLOYED WITHIN THIS 24 STATE; IS NOT FORMED PRIMARILY FOR PURPOSES OF BUYING HEALTH 25 INSURANCE; AND IN WHICH A BONA FIDE EMPLOYER-EMPLOYEE RELATION- 26 SHIP EXISTS. IN DETERMINING THE NUMBER OF ELIGIBLE EMPLOYEES, 27 COMPANIES THAT ARE AFFILIATED COMPANIES, OR THAT ARE ELIGIBLE TO 06816'02 * 39 1 FILE A COMBINED TAX RETURN FOR PURPOSES OF TAXATION BY THIS 2 STATE, SHALL BE CONSIDERED 1 EMPLOYER. AFTER THE ISSUANCE OF A 3 HEALTH BENEFIT PLAN TO A SMALL EMPLOYER AND FOR THE PURPOSE OF 4 DETERMINING CONTINUED ELIGIBILITY, THE SIZE OF A SMALL EMPLOYER 5 SHALL BE DETERMINED ANNUALLY. EXCEPT AS OTHERWISE SPECIFICALLY 6 PROVIDED, PROVISIONS OF THIS CHAPTER THAT APPLY TO A SMALL 7 EMPLOYER SHALL CONTINUE TO APPLY AT LEAST UNTIL THE PLAN ANNIVER- 8 SARY FOLLOWING THE DATE THE SMALL EMPLOYER NO LONGER MEETS THE 9 REQUIREMENTS OF THE DEFINITION OF SMALL EMPLOYER. SMALL EMPLOYER 10 INCLUDES AN ELIGIBLE SOLE PROPRIETOR. SMALL EMPLOYER INCLUDES 11 ANY PERSON THAT IS ACTIVELY ENGAGED IN BUSINESS THAT ON AT LEAST 12 50% OF ITS WORKING DAYS DURING THE PRECEDING CALENDAR QUARTER 13 EMPLOYED A COMBINATION OF NO MORE THAN 99 ELIGIBLE EMPLOYEES AND 14 PART-TIME EMPLOYEES, THE MAJORITY OF WHOM WERE EMPLOYED WITHIN 15 THIS STATE; IS NOT FORMED PRIMARILY FOR PURPOSES OF BUYING HEALTH 16 INSURANCE; AND IN WHICH A BONA FIDE EMPLOYER-EMPLOYEE RELATION- 17 SHIP EXISTS. 18 (AA) "SMALL EMPLOYER CARRIER" MEANS A CARRIER THAT ISSUES OR 19 OFFERS TO ISSUE HEALTH BENEFIT PLANS COVERING ELIGIBLE EMPLOYEES 20 OF 1 OR MORE SMALL EMPLOYERS PURSUANT TO THIS CHAPTER, REGARDLESS 21 OF WHETHER COVERAGE IS OFFERED THROUGH AN ASSOCIATION OR TRUST OR 22 WHETHER THE POLICY OR CONTRACT IS SITUATED OUT OF STATE. 23 (BB) "WAITING PERIOD" MEANS, WITH RESPECT TO A GROUP HEALTH 24 PLAN AND AN INDIVIDUAL WHO IS A POTENTIAL ENROLLEE IN THE PLAN, 25 THE PERIOD THAT MUST PASS WITH RESPECT TO THE INDIVIDUAL BEFORE 26 THE INDIVIDUAL IS ELIGIBLE TO BE COVERED FOR BENEFITS UNDER THE 27 TERMS OF THE PLAN. FOR PURPOSES OF CALCULATING PERIODS OF 06816'02 * 40 1 CREDITABLE COVERAGE PURSUANT TO SECTION 3674, A WAITING PERIOD 2 SHALL NOT BE CONSIDERED A GAP IN COVERAGE. 3 SEC. 3665. THIS CHAPTER APPLIES TO ANY HEALTH BENEFIT PLAN 4 THAT PROVIDES COVERAGE TO THE EMPLOYEES OF A SMALL EMPLOYER IN 5 THIS STATE IF ANY OF THE FOLLOWING ARE MET: 6 (A) A PORTION OF THE PREMIUM OR BENEFITS IS PAID BY OR ON 7 BEHALF OF THE SMALL EMPLOYER. 8 (B) AN ELIGIBLE EMPLOYEE OR DEPENDENT IS REIMBURSED, WHETHER 9 THROUGH WAGE ADJUSTMENTS OR OTHERWISE, BY OR ON BEHALF OF THE 10 SMALL EMPLOYER FOR A PORTION OF THE PREMIUM. 11 (C) THE HEALTH BENEFIT PLAN IS TREATED BY THE EMPLOYER OR 12 ANY OF THE ELIGIBLE EMPLOYEES OR DEPENDENTS AS PART OF A PLAN OR 13 PROGRAM FOR THE PURPOSES OF SECTION 106, 125, OR 162 OF THE 14 INTERNAL REVENUE CODE OF 1986, 26 U.S.C. 106, 125, AND 162. 15 (D) THE HEALTH BENEFIT PLAN IS MARKETED TO INDIVIDUAL 16 EMPLOYEES THROUGH AN EMPLOYER. 17 SEC. 3667. (1) PREMIUM RATES FOR HEALTH BENEFIT PLANS 18 SUBJECT TO THIS CHAPTER ARE SUBJECT TO ALL OF THE FOLLOWING: 19 (A) THE SMALL EMPLOYER CARRIER SHALL DEVELOP ITS RATES BASED 20 ON AN ADJUSTED COMMUNITY RATE AND MAY ONLY VARY THE ADJUSTED COM- 21 MUNITY RATE FOR GEOGRAPHIC AREA, FAMILY COMPOSITION, AND AGE. 22 (B) THE ADJUSTMENT FOR AGE PURSUANT TO SUBDIVISION (A) SHALL 23 NOT USE AGE BRACKETS SMALLER THAN 5-YEAR INCREMENTS. THE AGE 24 BRACKETS SHALL NOT BEGIN BEFORE AGE 20 AND SHALL END WITH AGE 25 65. 26 (C) A SMALL EMPLOYER CARRIER MAY CHARGE THE LOWEST ALLOWABLE 27 ADULT RATE FOR CHILD ONLY COVERAGE. 06816'02 * 41 1 (D) A SMALL EMPLOYER CARRIER MAY DEVELOP SEPARATE RATES FOR 2 INDIVIDUALS AGE 65 OR OLDER FOR COVERAGE FOR WHICH MEDICARE IS 3 THE PRIMARY PAYER AND COVERAGE FOR WHICH MEDICARE IS NOT THE PRI- 4 MARY PAYER. BOTH RATES ARE OTHERWISE SUBJECT TO THIS 5 SUBSECTION. 6 (E) EFFECTIVE 5 YEARS AFTER THE EFFECTIVE DATE OF THIS CHAP- 7 TER, THE ADJUSTMENTS FOR AGE PURSUANT TO SUBDIVISION (A) SHALL 8 NOT RESULT IN A RATE PER ENROLLEE FOR THE HEALTH BENEFIT PLAN OF 9 MORE THAN 200% OF THE LOWEST RATE FOR ALL ADULT AGE GROUPS. 10 DURING THE FIRST 2 YEARS AFTER THE EFFECTIVE DATE OF THIS CHAP- 11 TER, THE PERMITTED RATES FOR ANY AGE GROUP SHALL BE NO MORE THAN 12 400% OF THE LOWEST RATE FOR ALL ADULT AGE GROUPS, AND EFFECTIVE 2 13 YEARS AFTER THE EFFECTIVE DATE OF THIS CHAPTER, THE PERMITTED 14 RATES FOR ANY AGE GROUP SHALL BE NO MORE THAN 300% OF THE LOWEST 15 RATE FOR ALL ADULT AGE GROUPS. 16 (2) THE PREMIUM CHARGED FOR A HEALTH BENEFIT PLAN SHALL NOT 17 BE ADJUSTED MORE FREQUENTLY THAN ANNUALLY EXCEPT THAT THE RATES 18 MAY BE CHANGED TO REFLECT CHANGES TO THE ENROLLMENT OF THE SMALL 19 EMPLOYER, CHANGES TO THE FAMILY COMPOSITION OF THE EMPLOYEE OR 20 ELIGIBLE PERSON, OR CHANGES TO THE HEALTH BENEFIT PLAN REQUESTED 21 BY THE SMALL EMPLOYER. 22 (3) RATING FACTORS SHALL PRODUCE PREMIUMS FOR IDENTICAL 23 GROUPS THAT DIFFER ONLY BY THE AMOUNTS ATTRIBUTABLE TO HEALTH 24 PLAN DESIGN AND DO NOT REFLECT DIFFERENCES DUE TO THE NATURE OF 25 THE GROUPS ASSUMED TO SELECT PARTICULAR HEALTH BENEFIT PLANS. 26 SEC. 3669. IN CONNECTION WITH THE OFFERING FOR SALE OF A 27 HEALTH BENEFIT PLAN TO A SMALL EMPLOYER, A SMALL EMPLOYER CARRIER 06816'02 * 42 1 SHALL MAKE A REASONABLE DISCLOSURE, AS PART OF ITS SOLICITATION 2 AND SALES MATERIALS, OF ALL OF THE FOLLOWING: 3 (A) THE PROVISIONS OF THE HEALTH BENEFIT PLAN CONCERNING THE 4 SMALL EMPLOYER CARRIER'S RIGHT TO CHANGE PREMIUM RATES AND THE 5 FACTORS, OTHER THAN CLAIM EXPERIENCE, THAT AFFECT CHANGES IN PRE- 6 MIUM RATES. 7 (B) THE PROVISIONS RELATING TO RENEWABILITY OF POLICIES AND 8 CONTRACTS. 9 (C) THE PROVISIONS RELATING TO ANY PREEXISTING CONDITION 10 PROVISION. 11 (D) A LISTING OF, AND DESCRIPTIVE INFORMATION INCLUDING BEN- 12 EFITS AND PREMIUMS ABOUT, ALL BENEFIT PLANS FOR WHICH THE SMALL 13 EMPLOYER IS QUALIFIED. 14 SEC. 3671. (1) EACH SMALL EMPLOYER CARRIER SHALL MAINTAIN 15 AT ITS PRINCIPAL PLACE OF BUSINESS A COMPLETE AND DETAILED 16 DESCRIPTION OF ITS RATING PRACTICES AND RENEWAL UNDERWRITING 17 PRACTICES, INCLUDING INFORMATION AND DOCUMENTATION THAT DEMON- 18 STRATE THAT ITS RATING METHODS AND PRACTICES ARE BASED UPON COM- 19 MONLY ACCEPTED ACTUARIAL ASSUMPTIONS AND ARE IN ACCORDANCE WITH 20 SOUND ACTUARIAL PRINCIPLES. 21 (2) EACH SMALL EMPLOYER CARRIER THAT IS NOT REQUIRED TO FILE 22 SMALL GROUP RATES FOR APPROVAL BY THE COMMISSIONER SHALL FILE 23 WITH THE COMMISSIONER ANNUALLY ON OR BEFORE MARCH 15 AN ACTUARIAL 24 CERTIFICATION CERTIFYING THAT THE CARRIER IS IN COMPLIANCE WITH 25 THIS CHAPTER AND THAT THE RATING METHODS OF THE SMALL EMPLOYER 26 CARRIER ARE ACTUARIALLY SOUND. THE CERTIFICATION SHALL BE IN A 27 FORM AND MANNER, AND SHALL CONTAIN SUCH INFORMATION, AS SPECIFIED 06816'02 * 43 1 BY THE COMMISSIONER. A COPY OF THE CERTIFICATION SHALL BE 2 RETAINED BY THE SMALL EMPLOYER CARRIER AT ITS PRINCIPAL PLACE OF 3 BUSINESS. 4 SEC. 3673. A SMALL EMPLOYER CARRIER SHALL RENEW SMALL 5 EMPLOYER HEALTH BENEFIT PLANS AS PROVIDED IN SECTIONS 2213B AND 6 3539 EXCEPT THAT A SMALL EMPLOYER CARRIER MAY NONRENEW A SMALL 7 EMPLOYER HEALTH BENEFIT PLAN FOR EITHER OF THE FOLLOWING: 8 (A) NONCOMPLIANCE WITH THE CARRIER'S MINIMUM PARTICIPATION 9 REQUIREMENTS. 10 (B) NONCOMPLIANCE WITH THE CARRIER'S EMPLOYER CONTRIBUTION 11 REQUIREMENTS. 12 SEC. 3674. A PERIOD OF CREDITABLE COVERAGE SHALL NOT BE 13 COUNTED FOR ENROLLMENT OF AN INDIVIDUAL UNDER A GROUP HEALTH PLAN 14 IF, AFTER THIS PERIOD AND BEFORE THE ENROLLMENT DATE, THERE WAS A 15 90-DAY PERIOD DURING ALL OF WHICH THE INDIVIDUAL WAS NOT COVERED 16 UNDER ANY CREDITABLE COVERAGE. 17 SEC. 3675. (1) EVERY SMALL EMPLOYER CARRIER SHALL, AS A 18 CONDITION OF TRANSACTING BUSINESS IN THIS STATE WITH SMALL 19 EMPLOYERS, ACTIVELY OFFER TO SMALL EMPLOYERS ALL HEALTH BENEFIT 20 PLANS IT ACTIVELY MARKETS TO SMALL EMPLOYERS IN THIS STATE. A 21 SMALL EMPLOYER CARRIER SHALL BE CONSIDERED TO BE ACTIVELY MARKET- 22 ING A HEALTH BENEFIT PLAN IF IT OFFERS THAT PLAN TO A SMALL 23 EMPLOYER NOT CURRENTLY RECEIVING A HEALTH BENEFIT PLAN FROM THAT 24 SMALL EMPLOYER CARRIER. A SMALL EMPLOYER CARRIER SHALL ISSUE ANY 25 HEALTH BENEFIT PLAN TO ANY ELIGIBLE SMALL EMPLOYER THAT APPLIES 26 FOR THE PLAN AND AGREES TO MAKE THE REQUIRED PREMIUM PAYMENTS AND 27 TO SATISFY THE OTHER REASONABLE PROVISIONS OF THE HEALTH BENEFIT 06816'02 * 44 1 PLAN NOT INCONSISTENT WITH THIS CHAPTER. A SMALL EMPLOYER 2 CARRIER SHALL NOT OFFER OR SELL TO SMALL EMPLOYERS A HEALTH BENE- 3 FIT PLAN THAT EXCLUDES OR LIMITS COVERAGE FOR A PREEXISTING CON- 4 DITION EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (3). 5 (2) A SMALL EMPLOYER CARRIER IS NOT REQUIRED TO ISSUE A 6 HEALTH BENEFIT PLAN TO AN ELIGIBLE SOLE PROPRIETOR WHO IS COVERED 7 BY, OR IS ELIGIBLE FOR COVERAGE UNDER, A HEALTH BENEFIT PLAN 8 OFFERED BY AN EMPLOYER. 9 (3) A SMALL EMPLOYER CARRIER MAY OFFER AND SELL A HEALTH 10 BENEFIT PLAN TO AN ELIGIBLE SOLE PROPRIETOR THAT EXCLUDES OR 11 LIMITS COVERAGE FOR A PREEXISTING CONDITION AS PROVIDED IN THIS 12 SUBSECTION. A HEALTH BENEFIT PLAN COVERING AN ELIGIBLE SOLE PRO- 13 PRIETOR SHALL NOT DENY, EXCLUDE, OR LIMIT BENEFITS FOR A COVERED 14 INDIVIDUAL FOR LOSSES INCURRED MORE THAN 6 MONTHS FOLLOWING THE 15 ENROLLMENT DATE OF THE INDIVIDUAL'S COVERAGE DUE TO A PREEXISTING 16 CONDITION, OR THE FIRST DATE OF THE WAITING PERIOD FOR ENROLLMENT 17 IF THAT DATE IS EARLIER THAN THE ENROLLMENT DATE. A HEALTH BENE- 18 FIT PLAN SHALL NOT DEFINE A PREEXISTING CONDITION MORE RESTRIC- 19 TIVELY THAN AS DEFINED IN SECTION 3663. 20 (4) A SMALL EMPLOYER CARRIER SHALL REDUCE THE PERIOD OF ANY 21 PREEXISTING CONDITION EXCLUSION ALLOWED UNDER SUBSECTION (3) 22 WITHOUT REGARD TO THE SPECIFIC BENEFITS COVERED DURING THE PERIOD 23 OF CREDITABLE COVERAGE BY THE AGGREGATE OF THE PERIOD OF CREDIT- 24 ABLE COVERAGE, PROVIDED THAT THE LAST PERIOD OF CREDITABLE COVER- 25 AGE ENDED ON A DATE NOT MORE THAN 90 DAYS BEFORE THE ENROLLMENT 26 DATE OF NEW COVERAGE. THE AGGREGATE PERIOD OF CREDITABLE 27 COVERAGE SHALL NOT INCLUDE ANY WAITING PERIOD OR AFFILIATION 06816'02 * 45 1 PERIOD FOR THE EFFECTIVE DATE OF THE NEW COVERAGE APPLIED BY THE 2 EMPLOYER OR THE CARRIER, OR FOR THE NORMAL APPLICATION AND 3 ENROLLMENT PROCESS FOLLOWING EMPLOYMENT OR OTHER TRIGGERING EVENT 4 FOR ELIGIBILITY. 5 (5) IF APPLIED UNIFORMLY TO ALL EMPLOYEES OF THE SMALL 6 EMPLOYER AND WITHOUT REGARD TO ANY HEALTH STATUS-RELATED FACTOR, 7 A SMALL EMPLOYER CARRIER MAY IMPOSE FOR HEALTH PLANS OFFERED TO 8 ALL SMALL EMPLOYERS OTHER THAN SOLE PROPRIETORS AN AFFILIATION 9 PERIOD THAT DOES NOT EXCEED 60 DAYS FOR NEW ENTRANTS AND DOES NOT 10 EXCEED 90 DAYS FOR LATE ENROLLEES AND FOR WHICH THE CARRIER 11 CHARGES NO PREMIUMS AND THE COVERAGE ISSUED IS NOT EFFECTIVE. 12 (6) A SMALL EMPLOYER CARRIER SHALL NOT OFFER OR SELL TO 13 SMALL EMPLOYERS A HEALTH BENEFIT PLAN THAT CONTAINS A WAITING 14 PERIOD APPLICABLE TO NEW ENROLLEES OR LATE ENROLLEES. 15 (7) A HEALTH BENEFIT PLAN OFFERED TO A SMALL EMPLOYER BY A 16 SMALL EMPLOYER CARRIER SHALL PROVIDE FOR THE ACCEPTANCE OF LATE 17 ENROLLEES SUBJECT TO THIS CHAPTER. 18 (8) A SMALL EMPLOYER CARRIER SHALL NOT IMPOSE A PREEXISTING 19 CONDITION EXCLUSION THAT RELATES TO PREGNANCY AS A PREEXISTING 20 CONDITION OR WITH REGARD TO A CHILD WHO IS COVERED UNDER ANY 21 CREDITABLE COVERAGE WITHIN 30 DAYS OF BIRTH, ADOPTION, OR PLACE- 22 MENT FOR ADOPTION, PROVIDED THAT THE CHILD DOES NOT EXPERIENCE A 23 SIGNIFICANT BREAK IN COVERAGE AND PROVIDED THAT THE CHILD WAS 24 ADOPTED OR PLACED FOR ADOPTION BEFORE ATTAINING 18 YEARS OF AGE. 25 (9) A SMALL EMPLOYER CARRIER SHALL NOT IMPOSE A PREEXISTING 26 CONDITION EXCLUSION FOR A CONDITION FOR WHICH MEDICAL ADVICE, 27 DIAGNOSIS, CARE, OR TREATMENT WAS RECOMMENDED OR RECEIVED FOR THE 06816'02 * 46 1 FIRST TIME WHILE THE COVERED PERSON HELD CREDITABLE COVERAGE, AND 2 THE MEDICAL ADVICE, DIAGNOSIS, CARE, OR TREATMENT WAS A COVERED 3 BENEFIT UNDER THE PLAN, PROVIDED THAT THE CREDITABLE COVERAGE WAS 4 CONTINUOUS TO A DATE NOT MORE THAN 90 DAYS BEFORE THE ENROLLMENT 5 DATE OF THE NEW COVERAGE. 6 SEC. 3677. (1) A SMALL EMPLOYER CARRIER SHALL PERMIT AN 7 EMPLOYEE OR A DEPENDENT OF THE EMPLOYEE, WHO IS ELIGIBLE, BUT NOT 8 ENROLLED, TO ENROLL FOR COVERAGE UNDER THE TERMS OF THE SMALL 9 EMPLOYER GROUP HEALTH PLAN DURING A SPECIAL ENROLLMENT PERIOD IF 10 ALL OF THE FOLLOWING APPLY: 11 (A) THE EMPLOYEE OR DEPENDENT WAS COVERED UNDER A GROUP 12 HEALTH PLAN OR HAD COVERAGE UNDER A HEALTH BENEFIT PLAN AT THE 13 TIME COVERAGE WAS PREVIOUSLY OFFERED TO THE EMPLOYEE OR 14 DEPENDENT. 15 (B) THE EMPLOYEE STATED IN WRITING AT THE TIME COVERAGE WAS 16 PREVIOUSLY OFFERED THAT COVERAGE UNDER A GROUP HEALTH PLAN OR 17 OTHER HEALTH BENEFIT PLAN WAS THE REASON FOR DECLINING ENROLL- 18 MENT, BUT ONLY IF THE PLAN SPONSOR OR CARRIER, IF APPLICABLE, 19 REQUIRED SUCH A STATEMENT AT THE TIME COVERAGE WAS PREVIOUSLY 20 OFFERED AND PROVIDED NOTICE TO THE EMPLOYEE OF THE REQUIREMENT 21 AND THE CONSEQUENCES OF THE REQUIREMENT AT THAT TIME. 22 (C) THE EMPLOYEE'S OR DEPENDENT'S COVERAGE DESCRIBED IN SUB- 23 DIVISION (A) WAS EITHER UNDER A COBRA CONTINUATION PROVISION AND 24 THAT COVERAGE HAS BEEN EXHAUSTED OR WAS NOT UNDER A COBRA CONTIN- 25 UATION PROVISION AND THAT OTHER COVERAGE HAS BEEN TERMINATED AS A 26 RESULT OF LOSS OF ELIGIBILITY FOR COVERAGE, INCLUDING BECAUSE OF 27 A LEGAL SEPARATION, DIVORCE, DEATH, TERMINATION OF EMPLOYMENT, OR 06816'02 * 47 1 REDUCTION IN THE NUMBER OF HOURS OF EMPLOYMENT OR EMPLOYER 2 CONTRIBUTIONS TOWARD THAT OTHER COVERAGE HAVE BEEN TERMINATED. 3 IN EITHER CASE, UNDER THE TERMS OF THE GROUP HEALTH PLAN, THE 4 EMPLOYEE MUST REQUEST ENROLLMENT NOT LATER THAN 30 DAYS AFTER THE 5 DATE OF EXHAUSTION OF COVERAGE OR TERMINATION OF COVERAGE OR 6 EMPLOYER CONTRIBUTION. IF AN EMPLOYEE REQUESTS ENROLLMENT PURSU- 7 ANT TO THIS SUBDIVISION, THE ENROLLMENT IS EFFECTIVE NOT LATER 8 THAN THE FIRST DAY OF THE FIRST CALENDAR MONTH BEGINNING AFTER 9 THE DATE THE COMPLETED REQUEST FOR ENROLLMENT IS RECEIVED. 10 (2) A SMALL EMPLOYER CARRIER THAT MAKES DEPENDENT COVERAGE 11 AVAILABLE UNDER A GROUP HEALTH PLAN SHALL PROVIDE FOR A DEPENDENT 12 SPECIAL ENROLLMENT PERIOD DURING WHICH THE PERSON MAY BE ENROLLED 13 UNDER THE GROUP HEALTH PLAN AS A DEPENDENT OF THE INDIVIDUAL OR, 14 IF NOT OTHERWISE ENROLLED, THE INDIVIDUAL MAY BE ENROLLED UNDER 15 THE GROUP HEALTH PLAN AND, IN THE CASE OF THE BIRTH OR ADOPTION 16 OF A CHILD, THE SPOUSE OF THE INDIVIDUAL MAY BE ENROLLED AS A 17 DEPENDENT OF THE INDIVIDUAL IF THE SPOUSE IS OTHERWISE ELIGIBLE 18 FOR COVERAGE. THIS SUBSECTION APPLIES ONLY IF BOTH OF THE FOL- 19 LOWING OCCUR: 20 (A) THE INDIVIDUAL IS A PARTICIPANT UNDER THE HEALTH BENEFIT 21 PLAN OR HAS MET ANY AFFILIATION PERIOD APPLICABLE TO BECOMING A 22 PARTICIPANT UNDER THE PLAN AND IS ELIGIBLE TO BE ENROLLED UNDER 23 THE PLAN, BUT FOR A FAILURE TO ENROLL DURING A PREVIOUS ENROLL- 24 MENT PERIOD. 25 (B) THE PERSON BECOMES A DEPENDENT OF THE INDIVIDUAL THROUGH 26 MARRIAGE, BIRTH, OR ADOPTION OR PLACEMENT FOR ADOPTION. 06816'02 * 48 1 (3) THE DEPENDENT SPECIAL ENROLLMENT PERIOD UNDER SUBSECTION 2 (2) FOR INDIVIDUALS SHALL BE A PERIOD OF NOT LESS THAN 30 DAYS 3 AND BEGINS ON THE LATER OF THE DATE DEPENDENT COVERAGE IS MADE 4 AVAILABLE OR THE DATE OF THE MARRIAGE, BIRTH, OR ADOPTION OR 5 PLACEMENT FOR ADOPTION. IF AN INDIVIDUAL SEEKS TO ENROLL A 6 DEPENDENT DURING THE FIRST 30 DAYS OF THE DEPENDENT SPECIAL 7 ENROLLMENT PERIOD UNDER SUBSECTION (2), THE COVERAGE OF THE 8 DEPENDENT SHALL BE EFFECTIVE AS FOLLOWS: 9 (A) FOR MARRIAGE, NOT LATER THAN THE FIRST DAY OF THE FIRST 10 MONTH BEGINNING AFTER THE DATE THE COMPLETED REQUEST FOR ENROLL- 11 MENT IS RECEIVED. 12 (B) FOR A DEPENDENT'S BIRTH, AS OF THE DATE OF BIRTH. 13 (C) FOR A DEPENDENT'S ADOPTION OR PLACEMENT FOR ADOPTION, 14 THE DATE OF THE ADOPTION OR PLACEMENT FOR ADOPTION. 15 SEC. 3679. (1) EXCEPT AS PROVIDED IN THIS SECTION, REQUIRE- 16 MENTS USED BY A SMALL EMPLOYER CARRIER IN DETERMINING WHETHER TO 17 PROVIDE COVERAGE TO A SMALL EMPLOYER SHALL BE APPLIED UNIFORMLY 18 AMONG ALL SMALL EMPLOYERS APPLYING FOR COVERAGE OR RECEIVING COV- 19 ERAGE FROM THE SMALL EMPLOYER CARRIER. 20 (2) A SMALL EMPLOYER CARRIER SHALL NOT REQUIRE A MINIMUM 21 PARTICIPATION LEVEL GREATER THAN 100% OF ELIGIBLE EMPLOYEES WORK- 22 ING FOR GROUPS OF 3 OR FEWER EMPLOYEES OR GREATER THAN 75% OF 23 ELIGIBLE EMPLOYEES WORKING FOR GROUPS WITH MORE THAN 3 24 EMPLOYEES. 25 (3) IN APPLYING MINIMUM PARTICIPATION REQUIREMENTS WITH 26 RESPECT TO A SMALL EMPLOYER, A SMALL EMPLOYER CARRIER SHALL NOT 27 CONSIDER EMPLOYEES OR DEPENDENTS WHO HAVE CREDITABLE COVERAGE IN 06816'02 * 49 1 DETERMINING WHETHER THE APPLICABLE PERCENTAGE OF PARTICIPATION IS 2 MET. IN APPLYING MINIMUM PARTICIPATION REQUIREMENTS WITH RESPECT 3 TO A SMALL EMPLOYER, A SMALL EMPLOYER CARRIER SHALL ONLY CONSIDER 4 THOSE EMPLOYEES WHO DO NOT HAVE OTHER GROUP COVERAGE AVAILABLE 5 THROUGH THEIR SPOUSE OR EMPLOYEES WHO HAVE SELECTED ANOTHER 6 HEALTH BENEFIT PLAN OFFERED BY THEIR EMPLOYER IF THE EMPLOYER 7 ALLOWS EMPLOYEES THE CHOICE OF MORE THAN 1 HEALTH BENEFIT PLAN. 8 (4) A SMALL EMPLOYER CARRIER SHALL NOT INCREASE ANY REQUIRE- 9 MENT FOR MINIMUM EMPLOYEE PARTICIPATION OR MODIFY ANY REQUIREMENT 10 FOR MINIMUM EMPLOYER CONTRIBUTION APPLICABLE TO A SMALL EMPLOYER 11 AT ANY TIME AFTER THE SMALL EMPLOYER HAS BEEN ACCEPTED FOR 12 COVERAGE. 13 SEC. 3681. (1) IF A SMALL EMPLOYER CARRIER OFFERS COVERAGE 14 TO A SMALL EMPLOYER, THE SMALL EMPLOYER CARRIER SHALL OFFER COV- 15 ERAGE TO ALL OF THE ELIGIBLE EMPLOYEES OF A SMALL EMPLOYER AND 16 THEIR DEPENDENTS WHO APPLY FOR ENROLLMENT DURING THE PERIOD IN 17 WHICH THE EMPLOYEE FIRST BECOMES ELIGIBLE TO ENROLL UNDER THE 18 TERMS OF THE PLAN. A SMALL EMPLOYER CARRIER SHALL NOT OFFER COV- 19 ERAGE TO ONLY CERTAIN INDIVIDUALS OR DEPENDENTS IN A SMALL 20 EMPLOYER GROUP OR TO ONLY PART OF THE GROUP. 21 (2) A SMALL EMPLOYER CARRIER SHALL NOT PLACE ANY RESTRICTION 22 IN REGARD TO ANY HEALTH STATUS-RELATED FACTOR ON AN ELIGIBLE 23 EMPLOYEE OR DEPENDENT WITH RESPECT TO ENROLLMENT OR PLAN 24 PARTICIPATION. 25 (3) EXCEPT AS PERMITTED UNDER SECTION 3675(3), A SMALL 26 EMPLOYER CARRIER SHALL NOT MODIFY A HEALTH BENEFIT PLAN FOR A 27 SMALL EMPLOYER OR ANY ELIGIBLE EMPLOYEE OR DEPENDENT, THROUGH 06816'02 * 50 1 RIDERS OR ENDORSEMENTS, OR OTHERWISE, THAT RESTRICT OR EXCLUDE 2 COVERAGE OR BENEFITS FOR SPECIFIC DISEASES, MEDICAL CONDITIONS, 3 OR SERVICES OTHERWISE COVERED BY THE PLAN. 4 SEC. 3683. (1) A SMALL EMPLOYER CARRIER IS NOT REQUIRED TO 5 OFFER COVERAGE TO A SMALL EMPLOYER IF THE SMALL EMPLOYER IS NOT 6 PHYSICALLY LOCATED IN THE CARRIER'S ESTABLISHED GEOGRAPHIC SERV- 7 ICE AREA. A SMALL EMPLOYER CARRIER SHALL APPLY THIS SUBSECTION 8 UNIFORMLY TO ALL SMALL EMPLOYERS WITHOUT REGARD TO THE CLAIMS 9 EXPERIENCE OF A SMALL EMPLOYER AND ITS EMPLOYEES AND THEIR DEPEN- 10 DENTS OR ANY HEALTH STATUS-RELATED FACTOR RELATING TO SUCH 11 EMPLOYEES AND THEIR DEPENDENTS. 12 (2) A SMALL EMPLOYER CARRIER IS NOT REQUIRED TO PROVIDE COV- 13 ERAGE TO SMALL EMPLOYERS IF FOR ANY PERIOD OF TIME THE COMMIS- 14 SIONER DETERMINES THE SMALL EMPLOYER CARRIER DOES NOT HAVE THE 15 FINANCIAL RESERVES NECESSARY TO UNDERWRITE ADDITIONAL COVERAGE 16 AND THE SMALL EMPLOYER CARRIER IS APPLYING THIS SUBSECTION UNI- 17 FORMLY TO ALL SMALL EMPLOYERS IN THE SMALL GROUP MARKET, CONSIS- 18 TENT WITH APPLICABLE STATE LAW, AND WITHOUT REGARD TO THE CLAIMS 19 EXPERIENCE OF A SMALL EMPLOYER AND ITS EMPLOYEES AND THEIR DEPEN- 20 DENTS OR ANY HEALTH STATUS-RELATED FACTOR RELATING TO SUCH 21 EMPLOYEES AND THEIR DEPENDENTS. A SMALL EMPLOYER CARRIER THAT 22 DENIES COVERAGE UNDER THIS SUBSECTION SHALL NOT OFFER COVERAGE IN 23 THE SMALL GROUP MARKET FOR THE LATER OF A PERIOD OF 180 DAYS 24 AFTER THE DATE THE COVERAGE IS DENIED OR UNTIL THE SMALL EMPLOYER 25 CARRIER HAS DEMONSTRATED TO THE COMMISSIONER THAT IT HAS SUFFI- 26 CIENT FINANCIAL RESERVES TO UNDERWRITE ADDITIONAL COVERAGE. 06816'02 * 51 1 (3) A SMALL EMPLOYER CARRIER IS NOT REQUIRED TO PROVIDE NEW 2 COVERAGE TO SMALL EMPLOYERS IF THE SMALL EMPLOYER CARRIER ELECTS 3 NOT TO OFFER NEW COVERAGE TO SMALL EMPLOYERS IN THIS STATE. 4 HOWEVER, A SMALL EMPLOYER CARRIER THAT ELECTS NOT TO OFFER NEW 5 COVERAGE TO SMALL EMPLOYERS UNDER THIS SUBSECTION REMAINS SUBJECT 6 TO SECTIONS 2213B AND 3539. A SMALL EMPLOYER CARRIER THAT ELECTS 7 NOT TO OFFER NEW COVERAGE TO SMALL EMPLOYERS SHALL PROVIDE NOTICE 8 OF ITS ELECTION TO THE COMMISSIONER AND SHALL NOT WRITE NEW BUSI- 9 NESS IN THE SMALL EMPLOYER MARKET IN THIS STATE FOR A PERIOD OF 5 10 YEARS BEGINNING ON THE DATE THE CARRIER CEASED OFFERING NEW COV- 11 ERAGE IN THIS STATE. 12 SEC. 3687. (1) A SMALL EMPLOYER CARRIER SHALL PROVIDE WRIT- 13 TEN CERTIFICATION OF CREDITABLE COVERAGE TO INDIVIDUALS AS 14 FOLLOWS: 15 (A) AT THE TIME AN INDIVIDUAL CEASES TO BE COVERED UNDER THE 16 HEALTH BENEFIT PLAN OR OTHERWISE BECOMES COVERED UNDER A COBRA 17 CONTINUATION PROVISION. 18 (B) FOR AN INDIVIDUAL WHO BECOMES COVERED UNDER A COBRA CON- 19 TINUATION PROVISION, AT THE TIME THE INDIVIDUAL CEASES TO BE COV- 20 ERED UNDER THAT PROVISION. 21 (C) AT THE TIME A REQUEST IS MADE ON BEHALF OF AN INDIVIDUAL 22 IF THE REQUEST IS MADE NOT LATER THAN 24 MONTHS AFTER THE DATE OF 23 CESSATION OF COVERAGE DESCRIBED IN SUBDIVISION (A) OR (B), WHICH- 24 EVER IS LATER. 25 (2) A SMALL EMPLOYER CARRIER MAY PROVIDE THE CERTIFICATION 26 OF CREDITABLE COVERAGE REQUIRED UNDER SUBSECTION (1)(A) AT A TIME 06816'02 * 52 1 CONSISTENT WITH NOTICES REQUIRED UNDER ANY APPLICABLE COBRA 2 CONTINUATION PROVISION. 3 (3) THE CERTIFICATE OF CREDITABLE COVERAGE REQUIRED TO BE 4 PROVIDED UNDER SUBSECTION (1) SHALL CONTAIN BOTH OF THE 5 FOLLOWING: 6 (A) WRITTEN CERTIFICATION OF THE PERIOD OF CREDITABLE COVER- 7 AGE OF THE INDIVIDUAL UNDER THE HEALTH BENEFIT PLAN AND THE COV- 8 ERAGE, IF ANY, UNDER THE APPLICABLE COBRA CONTINUATION 9 PROVISION. 10 (B) THE WAITING PERIOD, IF ANY, AND, IF APPLICABLE, AFFILIA- 11 TION PERIOD IMPOSED WITH RESPECT TO THE INDIVIDUAL FOR ANY COVER- 12 AGE UNDER THE HEALTH BENEFIT PLAN. 13 (4) TO THE EXTENT MEDICAL CARE UNDER A GROUP HEALTH PLAN 14 CONSISTS OF GROUP HEALTH INSURANCE COVERAGE, THE PLAN HAS SATIS- 15 FIED THE CERTIFICATION REQUIREMENT UNDER SUBSECTION (1) IF THE 16 HEALTH CARRIER OFFERING THE COVERAGE PROVIDES FOR CERTIFICATION 17 IN ACCORDANCE WITH SUBSECTION (1). 18 (5) IF AN INDIVIDUAL ENROLLS IN A GROUP HEALTH PLAN THAT 19 USES THE ALTERNATIVE METHOD OF COUNTING CREDITABLE COVERAGE PUR- 20 SUANT TO SECTION 3675 AND THE INDIVIDUAL PROVIDES A CERTIFICATE 21 OF COVERAGE THAT WAS PROVIDED TO THE INDIVIDUAL PURSUANT TO SUB- 22 SECTION (1), ON REQUEST OF THE GROUP HEALTH PLAN, THE ENTITY THAT 23 ISSUED THE CERTIFICATION TO THE INDIVIDUAL SHALL PROMPTLY DIS- 24 CLOSE TO THE GROUP HEALTH PLAN INFORMATION ON THE CLASSES AND 25 CATEGORIES OF HEALTH BENEFITS AVAILABLE UNDER THE ENTITY'S HEALTH 26 BENEFIT PLAN. THE ENTITY PROVIDING THIS INFORMATION MAY CHARGE 06816'02 * 53 1 THE REQUESTING GROUP HEALTH PLAN THE REASONABLE COST OF 2 DISCLOSING THE INFORMATION. 3 SEC. 3689. (1) SUBJECT TO SECTION 3675(1) AND (2), EACH 4 SMALL EMPLOYER CARRIER SHALL ACTIVELY MARKET ALL HEALTH BENEFIT 5 PLANS SOLD BY THE CARRIER TO ELIGIBLE SMALL EMPLOYERS IN THE 6 STATE. 7 (2) EXCEPT AS PROVIDED IN SUBSECTION (3), A SMALL EMPLOYER 8 CARRIER OR PRODUCER SHALL NOT, DIRECTLY OR INDIRECTLY, DO ANY OF 9 THE FOLLOWING: 10 (A) ENCOURAGE OR DIRECT SMALL EMPLOYERS OR INDIVIDUALS TO 11 REFRAIN FROM FILING AN APPLICATION FOR COVERAGE WITH THE SMALL 12 EMPLOYER CARRIER BECAUSE OF ANY HEALTH STATUS-RELATED FACTOR, 13 INDUSTRY, OCCUPATION, OR GEOGRAPHIC LOCATION OF THE SMALL 14 EMPLOYER OR INDIVIDUAL. 15 (B) ENCOURAGE OR DIRECT SMALL EMPLOYERS OR INDIVIDUALS TO 16 SEEK COVERAGE FROM ANOTHER CARRIER BECAUSE OF ANY HEALTH 17 STATUS-RELATED FACTOR, INDUSTRY, OCCUPATION, OR GEOGRAPHIC LOCA- 18 TION OF THE SMALL EMPLOYER OR INDIVIDUAL. 19 (3) SUBSECTION (2) DOES NOT APPLY WITH RESPECT TO INFORMA- 20 TION PROVIDED BY A SMALL EMPLOYER CARRIER OR PRODUCER TO A SMALL 21 EMPLOYER REGARDING THE ESTABLISHED GEOGRAPHIC SERVICE AREA OR A 22 RESTRICTED NETWORK PROVISION OF A SMALL EMPLOYER CARRIER. 23 (4) A SMALL EMPLOYER CARRIER SHALL NOT, DIRECTLY OR INDI- 24 RECTLY, ENTER INTO ANY CONTRACT, AGREEMENT, OR ARRANGEMENT WITH A 25 PRODUCER THAT PROVIDES FOR OR RESULTS IN THE COMPENSATION PAID TO 26 A PRODUCER FOR THE SALE OF A HEALTH BENEFIT PLAN TO BE VARIED 27 BECAUSE OF ANY INITIAL OR RENEWAL HEALTH STATUS-RELATED FACTOR, 06816'02 * 54 1 INDUSTRY, OCCUPATION, OR GEOGRAPHIC LOCATION OF THE SMALL 2 EMPLOYER OR INDIVIDUAL. THIS SUBSECTION DOES NOT APPLY TO A COM- 3 PENSATION ARRANGEMENT THAT PROVIDES COMPENSATION TO A PRODUCER ON 4 THE BASIS OF PERCENTAGE OF PREMIUM, PROVIDED THAT THE PERCENTAGE 5 DOES NOT VARY BECAUSE OF ANY HEALTH STATUS-RELATED FACTOR, INDUS- 6 TRY, OCCUPATION, OR GEOGRAPHIC AREA OF THE SMALL EMPLOYER OR 7 INDIVIDUAL. 8 (5) A SMALL EMPLOYER CARRIER SHALL NOT TERMINATE, FAIL TO 9 RENEW, OR LIMIT ITS CONTRACT OR AGREEMENT OF REPRESENTATION WITH 10 A PRODUCER FOR ANY REASON RELATED TO AN INITIAL OR RENEWAL HEALTH 11 STATUS-RELATED FACTOR, OCCUPATION, OR GEOGRAPHIC LOCATION OF THE 12 SMALL EMPLOYERS OR INDIVIDUALS PLACED BY THE PRODUCER WITH THE 13 SMALL EMPLOYER CARRIER. 14 (6) A SMALL EMPLOYER CARRIER OR PRODUCER MAY NOT INDUCE OR 15 OTHERWISE ENCOURAGE A SMALL EMPLOYER TO SEPARATE OR OTHERWISE 16 EXCLUDE AN EMPLOYEE OR DEPENDENT FROM HEALTH COVERAGE OR BENEFITS 17 PROVIDED IN CONNECTION WITH THE EMPLOYEE'S EMPLOYMENT. 18 (7) DENIAL BY A SMALL EMPLOYER CARRIER OF AN APPLICATION FOR 19 COVERAGE FROM A SMALL EMPLOYER OR INDIVIDUAL SHALL BE IN WRITING 20 AND SHALL STATE THE REASON OR REASONS FOR THE DENIAL. 21 (8) THE COMMISSIONER MAY ESTABLISH REGULATIONS SETTING FORTH 22 ADDITIONAL STANDARDS TO PROVIDE FOR THE FAIR MARKETING AND BROAD 23 AVAILABILITY OF HEALTH BENEFIT PLANS TO SMALL EMPLOYERS IN THIS 24 STATE. 25 (9) A SMALL EMPLOYER CARRIER SHALL NOT ENTER INTO A 26 "NONCOMPETE" AGREEMENT WITH ANY PERSON. 06816'02 * 55 1 (10) IF A SMALL EMPLOYER CARRIER ENTERS INTO A CONTRACT, 2 AGREEMENT, OR OTHER ARRANGEMENT WITH A THIRD PARTY ADMINISTRATOR 3 TO PROVIDE ADMINISTRATIVE, MARKETING, OR OTHER SERVICES RELATED 4 TO THE OFFERING OF HEALTH BENEFIT PLANS TO SMALL EMPLOYERS IN 5 THIS STATE, THE THIRD PARTY ADMINISTRATOR IS SUBJECT TO THIS 6 CHAPTER AS IF IT WERE A SMALL EMPLOYER CARRIER. 7 SEC. 3691. THE COMMISSIONER MAY REQUIRE SMALL EMPLOYER CAR- 8 RIERS, AS A CONDITION OF TRANSACTING BUSINESS WITH SMALL EMPLOY- 9 ERS IN THIS STATE AFTER THE EFFECTIVE DATE OF THIS CHAPTER, TO 10 REISSUE A HEALTH BENEFIT PLAN TO ANY SMALL EMPLOYER WHOSE HEALTH 11 BENEFIT PLAN HAS BEEN TERMINATED OR NOT RENEWED BY THE CARRIER ON 12 OR AFTER JANUARY 1, 2002. THE COMMISSIONER MAY PRESCRIBE, FOR 13 THE REISSUE OF COVERAGE, THOSE TERMS THE COMMISSIONER FINDS ARE 14 REASONABLE AND NECESSARY TO PROVIDE CONTINUITY OF COVERAGE TO 15 SMALL EMPLOYERS. 16 SEC. 3692. A VIOLATION OF THIS CHAPTER BY A SMALL EMPLOYER 17 CARRIER OR A PRODUCER IS AN UNFAIR TRADE PRACTICE UNDER CHAPTER 18 20. 19 CHAPTER 37 20 NONPROFIT HEALTH INSURER 21 PART 1 22 SEC. 3701. AS USED IN THIS CHAPTER: 23 (A) "BARGAINING REPRESENTATIVE" MEANS A REPRESENTATIVE DES- 24 IGNATED OR SELECTED BY A MAJORITY OF EMPLOYEES FOR THE PURPOSES 25 OF COLLECTIVE BARGAINING IN RESPECT TO RATES OF PAY, WAGES, HOURS 26 OF EMPLOYMENT, OR OTHER CONDITIONS OF EMPLOYMENT RELATIVE TO THE 27 EMPLOYEES REPRESENTED. 06816'02 * 56 1 (B) "CERTIFICATE" MEANS A CONTRACT BETWEEN A NONPROFIT 2 HEALTH INSURER AND A SUBSCRIBER OR A GROUP OF SUBSCRIBERS UNDER 3 WHICH HEALTH CARE BENEFITS ARE PROVIDED TO MEMBERS. A CERTIFI- 4 CATE INCLUDES THE EMPLOYER AGREEMENT OR GROUP AGREEMENT AND ANY 5 APPROVED RIDERS AMENDING THE CERTIFICATE. 6 (C) "COLLECTIVE BARGAINING AGREEMENT" MEANS AN AGREEMENT 7 ENTERED INTO BETWEEN THE EMPLOYER AND THE BARGAINING REPRESENTA- 8 TIVE OF ITS EMPLOYEES, AND INCLUDES THOSE AGREEMENTS ENTERED INTO 9 ON BEHALF OF GROUPS OF EMPLOYERS WITH THE BARGAINING REPRESENTA- 10 TIVE OF THEIR EMPLOYEES PURSUANT TO THE NATIONAL LABOR RELATIONS 11 ACT, CHAPTER 372, 49 STAT. 449, 29 U.S.C. 151 TO 158 AND 159 TO 12 169, UNDER 1939 PA 176, MCL 423.1 TO 423.30, OR UNDER 1947 PA 13 336, MCL 423.201 TO 423.217. 14 (D) "HEALTH CARE BENEFIT" MEANS THE RIGHT UNDER A CERTIFI- 15 CATE TO HAVE PAYMENT MADE BY A NONPROFIT HEALTH INSURER FOR A 16 SPECIFIED HEALTH CARE SERVICE, REGARDLESS OF WHETHER OR NOT THE 17 PAYMENT IS MADE PURSUANT TO AN ADMINISTRATIVE SERVICES ONLY OR 18 COST-PLUS ARRANGEMENT. 19 (E) "HEALTH CARE PROVIDER" MEANS A HEALTH FACILITY OR PERSON 20 LICENSED, CERTIFIED, OR AUTHORIZED TO DELIVER HEALTH CARE SERV- 21 ICES IN ACCORDANCE WITH STATE LAW. 22 (F) "HEALTH CARE SERVICES" MEANS SERVICES PROVIDED, ORDERED, 23 OR PRESCRIBED BY A HEALTH CARE PROVIDER, INCLUDING HEALTH AND 24 REHABILITATIVE SERVICES AND MEDICAL SUPPLIES, MEDICAL AND REHA- 25 BILITATIVE SERVICES AND MEDICAL SUPPLIES, MEDICAL PROSTHETICS AND 26 DEVICES, AND MEDICAL SERVICES ANCILLARY OR INCIDENTAL TO THE 27 PROVISION OF THOSE SERVICES. 06816'02 * 57 1 (G) "MEDIUM/LARGE SUBSCRIBER GROUP" MEANS AN UNDERWRITTEN 2 GROUP OF 100 OR MORE SUBSCRIBERS. 3 (H) "MEDICAID" MEANS TITLE XIX OF THE SOCIAL SECURITY ACT, 4 CHAPTER 531, 49 STAT. 620, 42 U.S.C. 1396 TO 1396r-6 AND 1396r-8 5 TO 1396v. 6 (I) "MEDICARE" MEANS TITLE XVIII OF THE SOCIAL SECURITY ACT, 7 CHAPTER 531, 49 STAT. 620, 42 U.S.C. 1395 TO 1395b, 1395b-2, 8 1395b-6 TO 1395b-7, 1395c TO 1395i, 1395i-2 TO 1395i-5, 1395j TO 9 1395t, 1395u TO 1395w, 1395w-2 TO 1395w-4, 1395w-21 TO 1395w-28, 10 1395x TO 1395yy, AND 1395bbb TO 1395ggg. 11 (J) "MEMBER" MEANS A SUBSCRIBER, A DEPENDENT OF A SUBSCRIB- 12 ER, OR ANY OTHER INDIVIDUAL ENTITLED TO RECEIVE HEALTH CARE BENE- 13 FITS UNDER A NONGROUP OR GROUP CERTIFICATE. 14 (K) "NONGROUP SUBSCRIBER" MEANS AN INDIVIDUAL SUBSCRIBER WHO 15 IS NOT ENROLLED AS A SUBSCRIBER THROUGH ANY SUBSCRIBER GROUP. 16 (l) "PARTICIPATING CONTRACT" MEANS AN AGREEMENT, CONTRACT, 17 OR OTHER ARRANGEMENT, INCLUDING A PRUDENT PURCHASER AGREEMENT, 18 UNDER WHICH A HEALTH CARE PROVIDER AGREES TO ACCEPT THE APPROVED 19 AMOUNT AS DETERMINED BY THE NONPROFIT HEALTH INSURER AS PAYMENT 20 IN FULL FOR THE RENDERING OF HEALTH CARE SERVICES COVERED UNDER A 21 CERTIFICATE. 22 (M) "PARTICIPATING PROVIDER" MEANS A HEALTH CARE PROVIDER 23 THAT HAS ENTERED INTO A PARTICIPATING CONTRACT WITH A NONPROFIT 24 HEALTH INSURER. 25 (N) "PERSONAL DATA" MEANS A DOCUMENT INCORPORATING MEDICAL 26 OR SURGICAL HISTORY, CARE, TREATMENT, OR SERVICE; OR ANY SIMILAR 27 RECORD, INCLUDING AN AUTOMATED OR COMPUTER ACCESSIBLE RECORD, 06816'02 * 58 1 RELATIVE TO A MEMBER, WHICH IS MAINTAINED OR STORED BY A 2 NONPROFIT HEALTH INSURER. 3 (O) "PROPOSED RATE" MEANS ANY OF THE FOLLOWING: 4 (i) A PROPOSED INCREASE OR DECREASE IN THE RATES TO BE 5 CHARGED TO NONGROUP SUBSCRIBERS. 6 (ii) FOR GROUP SUBSCRIBERS, ANY PROPOSED CHANGES IN THE 7 METHODOLOGY OR DEFINITIONS OF ANY RATING SYSTEM, FORMULA, COMPO- 8 NENT, OR FACTOR SUBJECT TO PRIOR APPROVAL BY THE COMMISSIONER. 9 (iii) A PROPOSED INCREASE OR DECREASE IN DEDUCTIBLE AMOUNTS 10 OR COINSURANCE PERCENTAGES. 11 (iv) A PROPOSED EXTENSION OF BENEFITS, ADDITIONAL BENEFITS, 12 OR A REDUCTION OR LIMITATION IN BENEFITS. 13 (v) A REVIEW PURSUANT TO SECTION 3753(2). 14 (P) "SELF-INSURED GROUP" MEANS A GROUP WHOSE CONTRACT WITH A 15 NONPROFIT HEALTH INSURER CONSISTS SOLELY OF AN ADMINISTRATIVE 16 SERVICES OR COST-PLUS ARRANGEMENT AUTHORIZED UNDER THIS CHAPTER. 17 (Q) "SMALL SUBSCRIBER GROUP" MEANS AN UNDERWRITTEN GROUP OF 18 FEWER THAN 100 SUBSCRIBERS. 19 (R) "SUBSCRIBER" MEANS AN INDIVIDUAL WHO CONTRACTS FOR 20 HEALTH CARE BENEFITS, EITHER INDIVIDUALLY OR THROUGH A GROUP, 21 WITH A NONPROFIT HEALTH INSURER. SUBSCRIBER INCLUDES AN INDIVID- 22 UAL WHOSE CONTRACT CONTAINS AN ADMINISTRATIVE SERVICES ONLY OR 23 COST-PLUS ARRANGEMENT. 24 SEC. 3702. (1) EACH NONPROFIT HEALTH CARE CORPORATION OPER- 25 ATING UNDER FORMER 1980 PA 350 ON THE EFFECTIVE DATE OF THIS 26 CHAPTER SHALL BECOME A NONPROFIT HEALTH INSURER SUBJECT TO THIS 27 CHAPTER WITHOUT FORMAL REORGANIZATION UNDER THIS CHAPTER, AND 06816'02 * 59 1 SHALL BE CONSIDERED TO EXIST UNDER THIS ACT. HOWEVER, WITHIN 120 2 DAYS FOLLOWING THE EFFECTIVE DATE OF THIS CHAPTER, THE NONPROFIT 3 HEALTH INSURER SHALL AMEND ITS ARTICLES OF INCORPORATION AND 4 BYLAWS TO CONFORM TO THE REQUIREMENTS OF THIS CHAPTER, SUBJECT TO 5 LEGAL REVIEW BY THE ATTORNEY GENERAL AND CERTIFICATION OF THE 6 COMMISSIONER AS PROVIDED IN SUBSECTION (2) AND SHALL OBTAIN FROM 7 THE COMMISSIONER A NEW CERTIFICATE OF AUTHORITY. 8 (2) RELATIVE TO THE CHANGES REQUIRED BY THIS CHAPTER, AMEND- 9 MENTS TO THE ARTICLES AND BYLAWS AND A WRITTEN DESCRIPTION OF THE 10 BOARD RESTRUCTURING SHALL BE SUBMITTED TO THE ATTORNEY GENERAL 11 FOR LEGAL REVIEW AND TO THE COMMISSIONER FOR APPROVAL. IF THE 12 ATTORNEY GENERAL FINDS THAT THE AMENDMENTS AND RESTRUCTURING CON- 13 FORM TO ALL STATUTORY REQUIREMENTS, AND THAT THEY COMPLY WITH 14 THIS CHAPTER AND ENSURE FAIR AND EQUITABLE REPRESENTATION OF THE 15 SUBSCRIBERS OF THE NONPROFIT HEALTH INSURER, THE ATTORNEY GENERAL 16 SHALL CERTIFY THESE FINDINGS TO THE COMMISSIONER. IN REVIEWING 17 THE AMENDMENTS AND DESCRIPTION OF THE BOARD RESTRUCTURING, THE 18 ATTORNEY GENERAL MAY CONSULT WITH THE BOARD OF DIRECTORS, OFFI- 19 CERS, OR EMPLOYEES OF A NONPROFIT HEALTH INSURER AND WITH ANY 20 OTHER INDIVIDUAL OR ORGANIZATION. 21 (3) IF THE COMMISSIONER APPROVES THE AMENDMENTS AND RESTRUC- 22 TURING, THE COMMISSIONER SHALL CERTIFY HIS OR HER APPROVAL TO THE 23 BOARD. THE APPROVED AMENDMENTS AND RESTRUCTURING SHALL TAKE 24 EFFECT 10 DAYS AFTER THE CERTIFICATION. IF THE COMMISSIONER DIS- 25 APPROVES ALL OR ANY PART OF THE AMENDMENTS OR RESTRUCTURING, OR 26 BOTH, THE COMMISSIONER SHALL RETURN THE DISAPPROVED AMENDMENTS OR 27 THE WRITTEN DESCRIPTION OF THE RESTRUCTURING, OR BOTH, TO THE 06816'02 * 60 1 BOARD WITH A WRITTEN STATEMENT STATING THE REASONS FOR THE 2 DISAPPROVAL AND ANY RECOMMENDATIONS FOR CHANGE THE COMMISSIONER 3 SUGGESTS. 4 (4) IF THE AMENDMENTS, WRITTEN DESCRIPTION OF RESTRUCTURING, 5 OR BOTH, REQUIRED BY THIS CHAPTER ARE NOT SUBMITTED TO THE ATTOR- 6 NEY GENERAL AND THE COMMISSIONER WITHIN 120 DAYS AFTER THE EFFEC- 7 TIVE DATE OF THIS CHAPTER, OR IF THE AMENDMENTS, WRITTEN DESCRIP- 8 TION, OR BOTH, ARE DISAPPROVED AS PROVIDED IN THIS SECTION, THE 9 COMMISSIONER AND THE ATTORNEY GENERAL SHALL, AND THE NONPROFIT 10 HEALTH INSURER MAY, SEEK JUDICIAL REMEDIES AS PROVIDED FOR BY LAW 11 IN THE INGHAM COUNTY CIRCUIT COURT. 12 (5) IF A NONPROFIT HEALTH INSURER FAILS TO COMPLY WITH THIS 13 SECTION, THE COMMISSIONER MAY ISSUE AN ORDER SUSPENDING THE RIGHT 14 AND PRIVILEGE OF THE NONPROFIT HEALTH INSURER TO SELL OR ISSUE 15 NEW CERTIFICATES UNTIL THIS SECTION HAS BEEN FULLY COMPLIED 16 WITH. 17 (6) THE CORPORATE EXISTENCE OF EACH NONPROFIT HEALTH INSURER 18 OPERATING IN THIS STATE SHALL BE CONSIDERED TO BE EXTENDED, AND 19 ITS POWERS IN ALL OTHER RESPECTS UNDIMINISHED, DURING THE 120-DAY 20 IMPLEMENTATION PERIOD PRESCRIBED IN SUBSECTION (1). 21 SEC. 3703. (1) ALL OF THE PROVISIONS OF THIS ACT THAT APPLY 22 TO A DOMESTIC DISABILITY MUTUAL INSURER APPLY TO A NONPROFIT 23 HEALTH INSURER UNDER THIS CHAPTER UNLESS SPECIFICALLY EXCLUDED OR 24 OTHERWISE SPECIFICALLY PROVIDED FOR IN THIS CHAPTER. 25 (2) SECTIONS 411 AND 901 AND CHAPTER 77 DO NOT APPLY TO A 26 NONPROFIT HEALTH INSURER. 06816'02 * 61 1 (3) IN ORDER TO ASCERTAIN THE INTERESTS OF SENIOR CITIZENS 2 REGARDING THE PROVISION OF MEDICARE SUPPLEMENTAL COVERAGE AND TO 3 ASCERTAIN THE INTERESTS OF SENIOR CITIZENS REGARDING THE ADMINIS- 4 TRATION OF THE MEDICARE PROGRAM WHEN ACTING AS FISCAL INTERMEDI- 5 ARY IN THIS STATE, A NONPROFIT HEALTH INSURER SHALL CONSULT WITH 6 THE OFFICE OF SERVICES TO THE AGING AND WITH SENIOR CITIZENS' 7 ORGANIZATIONS IN THIS STATE. 8 SEC. 3704. (1) A NONPROFIT HEALTH INSURER SUBJECT TO THIS 9 CHAPTER IS DECLARED TO BE A CHARITABLE AND BENEVOLENT INSTITU- 10 TION, AND ITS FUNDS AND PROPERTY ARE EXEMPT FROM TAXATION BY THIS 11 STATE OR ANY POLITICAL SUBDIVISION OF THIS STATE. 12 (2) A PERSON SHALL NOT ACT AS A NONPROFIT HEALTH INSURER OR 13 ISSUE A CERTIFICATE EXCEPT AS AUTHORIZED BY AND PURSUANT TO A 14 CERTIFICATE OF AUTHORITY GRANTED TO THE PERSON BY THE COMMIS- 15 SIONER PURSUANT TO THIS CHAPTER. 16 SEC. 3705. (1) A NONPROFIT HEALTH INSURER, IN ADDITION TO 17 THE REQUIREMENTS OF THIS CHAPTER, SHALL SUBSCRIBE TO ARTICLES OF 18 INCORPORATION THAT SHALL CONTAIN THE PURPOSES OF THE NONPROFIT 19 HEALTH INSURER, WHICH SHALL BE: 20 (A) TO PROVIDE HEALTH CARE BENEFITS. 21 (B) TO SECURE FOR ALL OF THE PEOPLE OF THIS STATE WHO APPLY 22 FOR A CERTIFICATE THE OPPORTUNITY FOR ACCESS TO COVERAGE FOR 23 HEALTH CARE SERVICES AT A FAIR AND REASONABLE PRICE. 24 (C) TO ASSURE FOR NONGROUP AND GROUP SUBSCRIBERS REASONABLE 25 ACCESS TO, AND REASONABLE COST AND QUALITY OF, HEALTH CARE 26 SERVICES. 06816'02 * 62 1 (D) TO OFFER SUPPLEMENTAL COVERAGE TO ALL MEDICARE ENROLLEES 2 AS PROVIDED IN CHAPTER 38. 3 (E) TO ENGAGE IN ACTIVITY OTHERWISE AUTHORIZED BY THIS ACT, 4 WITHIN THE PURPOSES FOR WHICH NONPROFIT HEALTH INSURERS MAY BE 5 ORGANIZED UNDER THIS CHAPTER. 6 (2) BY ACTION OF ITS BOARD OF DIRECTORS, A NONPROFIT HEALTH 7 INSURER MAY INTEGRATE INTO A SINGLE INSTRUMENT THE PROVISIONS OF 8 ITS ARTICLES OF INCORPORATION. ANY AMENDMENT OR RESTATEMENT OF 9 THE ARTICLES ARE SUBJECT TO LEGAL REVIEW BY THE ATTORNEY GENERAL 10 AND APPROVAL BY THE COMMISSIONER. 11 SEC. 3707. (1) A NONPROFIT HEALTH INSURER WISHING TO MAIN- 12 TAIN A CERTIFICATE OF AUTHORITY IN THIS STATE AFTER THE EFFECTIVE 13 DATE OF THIS CHAPTER SHALL POSSESS AND MAINTAIN UNIMPAIRED SUR- 14 PLUS IN AN AMOUNT DETERMINED ADEQUATE BY THE COMMISSIONER TO 15 COMPLY WITH SECTION 403. THE COMMISSIONER SHALL TAKE INTO 16 ACCOUNT THE RISK-BASED CAPITAL REQUIREMENTS AS DEVELOPED BY THE 17 NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS IN ORDER TO 18 DETERMINE ADEQUATE COMPLIANCE WITH SECTION 403. 19 (2) IF A NONPROFIT HEALTH INSURER FILES A RISK-BASED CAPITAL 20 REPORT THAT INDICATES THAT ITS SURPLUS IS LESS THAN THE AMOUNT 21 DETERMINED ADEQUATE BY THE COMMISSIONER UNDER SUBSECTION (1), THE 22 NONPROFIT HEALTH INSURER SHALL PREPARE AND SUBMIT A PLAN FOR REM- 23 EDYING THE DEFICIENCY IN ACCORDANCE WITH RISK-BASED CAPITAL 24 REQUIREMENTS ADOPTED BY THE COMMISSIONER. AMONG THE REMEDIES 25 THAT A NONPROFIT HEALTH INSURER MAY EMPLOY ARE PLANWIDE VIABILITY 26 CONTRIBUTIONS TO SURPLUS BY SUBSCRIBERS. 06816'02 * 63 1 (3) IF CONTRIBUTIONS FOR PLANWIDE VIABILITY UNDER SUBSECTION 2 (2) ARE EMPLOYED, THOSE CONTRIBUTIONS SHALL BE MADE IN ACCORDANCE 3 WITH THE FOLLOWING: 4 (A) IF THE NONPROFIT HEALTH INSURER'S SURPLUS IS LESS THAN 5 200% BUT MORE THAN 150% OF THE AUTHORIZED CONTROL LEVEL UNDER 6 RISK-BASED CAPITAL REQUIREMENTS, THE MAXIMUM CONTRIBUTION RATE 7 SHALL BE 0.5% OF THE RATE CHARGED TO SUBSCRIBERS FOR THE BENEFITS 8 PROVIDED. 9 (B) IF THE NONPROFIT HEALTH INSURER'S SURPLUS IS 150% OR 10 LESS THAN THE AUTHORIZED CONTROL LEVEL UNDER RISK-BASED CAPITAL 11 REQUIREMENTS, THE MAXIMUM CONTRIBUTION RATE SHALL BE 1% OF THE 12 RATE CHARGED TO SUBSCRIBERS FOR THE BENEFITS PROVIDED. 13 (C) THE ACTUAL CONTRIBUTION RATE CHARGED IS SUBJECT TO THE 14 COMMISSIONER'S APPROVAL. 15 (4) AS USED IN SUBSECTION (3), "AUTHORIZED CONTROL LEVEL" 16 MEANS THE NUMBER DETERMINED UNDER THE RISK-BASED CAPITAL FORMULA 17 IN ACCORDANCE WITH THE INSTRUCTIONS DEVELOPED BY THE NATIONAL 18 ASSOCIATION OF INSURANCE COMMISSIONERS AND ADOPTED BY THE 19 COMMISSIONER. 20 SEC. 3709. (1) THE FUNDS AND PROPERTY OF A NONPROFIT HEALTH 21 INSURER SHALL BE ACQUIRED, HELD, AND DISPOSED OF ONLY FOR THE 22 LAWFUL PURPOSES OF THE NONPROFIT HEALTH INSURER AND FOR THE BENE- 23 FIT OF THE NONPROFIT HEALTH INSURER'S SUBSCRIBERS AS A WHOLE. A 24 NONPROFIT HEALTH INSURER SHALL ONLY TRANSACT SUCH BUSINESS, 25 RECEIVE, COLLECT, AND DISBURSE SUCH MONEY, AND ACQUIRE, HOLD, 26 PROTECT, AND CONVEY SUCH PROPERTY, AS ARE PROPERLY WITHIN THE 27 SCOPE OF THE PURPOSES OF THE NONPROFIT HEALTH INSURER AS PROVIDED 06816'02 * 64 1 IN SECTION 3705(1), FOR THE BENEFIT OF THE NONPROFIT HEALTH 2 INSURER SUBSCRIBERS AS A WHOLE, AND CONSISTENT WITH THIS 3 CHAPTER. 4 (2) A NONPROFIT HEALTH INSURER SHALL NOT MARKET OR TRANSACT, 5 AS PROVIDED IN SECTIONS 402A AND 402B, ANY TYPE OF INSURANCE 6 DESCRIBED IN CHAPTER 6. THIS SUBSECTION DOES NOT PROHIBIT THE 7 PROVISION OF PREPAID HEALTH CARE BENEFITS. 8 SEC. 3711. A NONPROFIT HEALTH INSURER, SUBJECT TO ANY LIMI- 9 TATION PROVIDED IN THIS ACT, IN ANY OTHER STATUTE OF THIS STATE, 10 OR IN ITS ARTICLES OF INCORPORATION, MAY DO ANY OR ALL OF THE 11 FOLLOWING: 12 (A) WITH THE COMMISSIONER'S APPROVAL, BORROW MONEY AND ISSUE 13 ITS PROMISSORY NOTE, SURPLUS NOTE, OR BOND FOR THE REPAYMENT OF 14 THE BORROWED MONEY WITH INTEREST. 15 (B) WITH THE COMMISSIONER'S APPROVAL, PARTICIPATE WITH 16 OTHERS IN ANY JOINT VENTURE WITH RESPECT TO ANY TRANSACTION THAT 17 THE NONPROFIT HEALTH INSURER WOULD HAVE THE POWER TO CONDUCT BY 18 ITSELF. 19 SEC. 3713. DISSOLUTION OR ANY OTHER CHANGE OF LEGAL STATUS 20 OF A NONPROFIT HEALTH INSURER IS SUBJECT TO THE MICHIGAN COMMU- 21 NITY HEALTH TRUST FUND ACT. 22 PART 2 23 SEC. 3720. CHAPTER 52 APPLIES TO A NONPROFIT HEALTH INSURER 24 EXCEPT AS OTHERWISE PROVIDED IN THIS CHAPTER. 25 SEC. 3721. (1) THE BOARD OF DIRECTORS OF A NONPROFIT HEALTH 26 CARE CORPORATION OPERATING PURSUANT TO FORMER 1980 PA 350 SHALL 06816'02 * 65 1 BECOME THE BOARD OF DIRECTORS FOR A NONPROFIT HEALTH INSURER 2 UNDER THIS CHAPTER SUBJECT TO ALL OF THE FOLLOWING: 3 (A) THE TERMS OF ALL PROVIDER BOARD MEMBERS SERVING PURSUANT 4 TO FORMER SECTION 301(3), 1980 PA 350, SHALL END ON THE EFFECTIVE 5 DATE OF THIS CHAPTER. 6 (B) ALL BOARD MEMBERS WHOSE TERMS EXPIRE IN APRIL OF 2003 7 SHALL NOT BE REAPPOINTED OR REPLACED. 8 (C) BY JUNE 30, 2003, THE BOARD OF DIRECTORS SHALL SUBMIT A 9 PLAN TO THE COMMISSIONER DETAILING HOW IT WILL REDUCE THE SIZE OF 10 THE BOARD BY DECEMBER 31, 2003 TO 13 MEMBERS INCLUDING THE CHIEF 11 EXECUTIVE OFFICER. THE PLAN SHALL BE CONSISTENT WITH THE 12 REQUIREMENTS OF THIS PART AND SHALL PROVIDE THAT AN INDIVIDUAL 13 SHALL NOT SERVE MORE THAN 2 CONSECUTIVE TERMS ON THE BOARD. IF A 14 PLAN IS NOT SUBMITTED BY JUNE 30, 2003, THEN THE COMMISSIONER, 15 AFTER CONSULTATION WITH THE BOARD OF DIRECTORS, SHALL FORMULATE 16 AND PLACE INTO EFFECT A PLAN CONSISTENT WITH THIS PART. THE PLAN 17 SUBMITTED BY THE BOARD OF DIRECTORS SHALL BE CONSIDERED TO MEET 18 THE REQUIREMENTS OF THIS PART IF IT IS NOT DISAPPROVED BY WRITTEN 19 ORDER OF THE COMMISSIONER ON OR BEFORE OCTOBER 1, 2003. AS PART 20 OF A DISAPPROVAL ORDER, THE COMMISSIONER SHALL NOTIFY THE BOARD 21 OF DIRECTORS IN WHAT RESPECT ALL OR ANY PART OF THE PLAN SUBMIT- 22 TED BY THE BOARD OF DIRECTORS FAILS TO MEET THE REQUIREMENTS OF 23 THIS PART. NOT LATER THAN 30 DAYS AFTER THE DATE OF THE DISAP- 24 PROVAL ORDER, THE BOARD OF DIRECTORS SHALL SUBMIT A REVISED PLAN 25 THAT MEETS THE REQUIREMENTS OF THIS PART. IF THE BOARD OF DIREC- 26 TORS FAILS TO SUBMIT A REVISED PLAN OR IF THE SUBMITTED REVISED 27 PLAN DOES NOT MEET THE REQUIREMENTS OF THIS PART, AS DETERMINED 06816'02 * 66 1 BY THE COMMISSIONER, THEN THE COMMISSIONER SHALL IMMEDIATELY 2 FORMULATE AND PLACE INTO EFFECT A PLAN CONSISTENT WITH THIS 3 PART. 4 (2) EFFECTIVE JANUARY 1, 2004, THE BOARD OF DIRECTORS OF A 5 NONPROFIT HEALTH INSURER SHALL CONSIST OF 13 MEMBERS AS FOLLOWS: 6 (A) THREE PUBLIC MEMBERS APPOINTED BY THE GOVERNOR WITH THE 7 ADVICE AND CONSENT OF THE SENATE, AT LEAST 1 OF WHOM SHALL BE 62 8 YEARS OF AGE OR OLDER, AND WHO SHALL REPRESENT THE PUBLIC INTER- 9 EST IN THE CHARITABLE AND BENEVOLENT MISSION OF THE NONPROFIT 10 HEALTH INSURER. 11 (B) ONE MEMBER REPRESENTING NONGROUP SUBSCRIBERS. 12 (C) TWO MEMBERS REPRESENTING SELF-INSURED GROUPS. 13 (D) THREE MEMBERS REPRESENTING SMALL SUBSCRIBER GROUPS. 14 (E) THREE MEMBERS REPRESENTING MEDIUM/LARGE SUBSCRIBER 15 GROUPS. 16 (F) THE CHIEF EXECUTIVE OFFICER OF THE NONPROFIT HEALTH 17 INSURER. 18 (3) THE METHOD OF SELECTION OF THE DIRECTORS, OTHER THAN THE 19 DIRECTORS WHO ARE REPRESENTATIVES OF THE PUBLIC, SHALL BE SPECI- 20 FIED IN THE BYLAWS. THE METHOD FOR FILLING VACANCIES IN THE 21 OFFICES OF DIRECTORS, OTHER THAN THE DIRECTORS WHO ARE REPRESEN- 22 TATIVES OF THE PUBLIC, SHALL BE PROVIDED IN THE BYLAWS. THE TERM 23 OF OFFICE OF ANY DIRECTOR EXCEPT THE TERM OF OFFICE OF THE DIREC- 24 TOR UNDER SUBSECTION (2)(F) SHALL NOT EXCEED 3 YEARS, AND AT 25 LEAST 1/3 OF THE MEMBERS OF THE BOARD, EXCLUDING THE DIRECTOR 26 UNDER SUBSECTION (2)(F), SHALL BE SELECTED EACH YEAR. THE BYLAWS 27 SHALL PROVIDE THAT ALL MEMBERS OF THE BOARD SHALL BE REIMBURSED 06816'02 * 67 1 ONLY FOR ALL REASONABLE AND NECESSARY EXPENSES INCURRED IN 2 CARRYING OUT THEIR DUTIES UNDER THIS CHAPTER AND SHALL NOT 3 RECEIVE ANY COMPENSATION FOR SERVICES TO THE NONPROFIT HEALTH 4 INSURER AS DIRECTOR. 5 (4) THE METHOD OF SELECTION OF EACH CATEGORY OF SUBSCRIBERS 6 ENTITLED TO REPRESENTATION ON THE BOARD SHALL MAXIMIZE SUBSCRIBER 7 PARTICIPATION TO THE EXTENT REASONABLY PRACTICABLE. THIS SUBSEC- 8 TION PERMITS, BUT DOES NOT REQUIRE, THE STATEWIDE ELECTION OF A 9 DIRECTOR. THE METHOD OF SELECTION NEITHER PERMITS NOR REQUIRES 10 NOMINATION, ENDORSEMENT, APPROVAL, OR CONFIRMATION OF A CANDIDATE 11 OR DIRECTOR BY THE BOARD OF DIRECTORS OR THE MANAGEMENT OF THE 12 NONPROFIT HEALTH INSURER, OR BY ANY MEMBER OR MEMBERS OF THE 13 BOARD OF DIRECTORS OR THE MANAGEMENT OF THE NONPROFIT HEALTH 14 INSURER. THIS SUBSECTION DOES NOT LIMIT THE RIGHTS OF ANY DIREC- 15 TOR OR EMPLOYEE OR OFFICER OF THE NONPROFIT HEALTH INSURER TO 16 PARTICIPATE IN THE SELECTION PROCESS IN HIS OR HER CAPACITY AS A 17 SUBSCRIBER, TO THE SAME EXTENT AS ANY OTHER SUBSCRIBER MAY 18 PARTICIPATE. 19 (5) A DIRECTOR SHALL NOT BE AN EMPLOYEE, AGENT, OFFICER, OR 20 DIRECTOR OF AN INSURANCE COMPANY WRITING DISABILITY INSURANCE 21 INSIDE OR OUTSIDE THIS STATE. 22 SEC. 3722. (1) THE BOARD OF DIRECTORS MAY ESTABLISH 23 ADVISORY COUNCILS AND, UNLESS OTHERWISE PROVIDED IN THE ARTICLES 24 OF INCORPORATION OR BYLAWS, COMMITTEES IT CONSIDERS NECESSARY TO 25 PERFORM ITS DUTIES. WITH RESPECT TO BOARD COMMITTEES, THE BYLAWS 26 SHALL INCLUDE PROVISIONS REGARDING ALL OF THE FOLLOWING: 06816'02 * 68 1 (A) PROVISIONS THAT ASSURE THAT THE MEMBERSHIP OF EACH 2 COMMITTEE PROVIDES FOR REPRESENTATION OF ALL OF THE COMPONENTS OF 3 DIRECTORS, AS DEFINED IN THE BYLAWS, TO THE GREATEST EXTENT 4 PRACTICABLE. 5 (B) PROVISIONS REGARDING EMERGENCY MEETINGS OF THE NONPROFIT 6 HEALTH INSURER EXECUTIVE COMMITTEE, AND ACTION BY THAT COMMITTEE 7 ON BEHALF OF THE BOARD IN CASES OF EMERGENCY, AS DEFINED IN AND 8 AUTHORIZED BY THE BYLAWS. 9 (2) THE BOARD OF DIRECTORS SHALL ESTABLISH A PROVIDER 10 ADVISORY COUNCIL BY NOT LATER THAN 90 DAYS AFTER THE EFFECTIVE 11 DATE OF THIS CHAPTER. THE PROVIDER ADVISORY COUNCIL SHALL CON- 12 SIST OF NOT MORE THAN 12 MEMBERS WHO SHALL FAIRLY REPRESENT THE 13 CLASSES OF HEALTH CARE PROVIDERS WITH WHOM THE NONPROFIT HEALTH 14 INSURER CONTRACTS FOR SERVICES. 15 (3) THE PROVIDER ADVISORY COUNCIL ESTABLISHED UNDER 16 SUBSECTION (2) SHALL PROVIDE ADVICE TO THE BOARD OF DIRECTORS ON 17 MATTERS CONCERNING THE IMPACT OF BOARD POLICIES ON HEALTH CARE 18 PROVIDERS, INCLUDING, BUT NOT LIMITED TO, PARTICIPATING CON- 19 TRACTS, COVERAGE FOR MEDICAL SERVICES, BILLING AND PAYMENT PROCE- 20 DURES AND PRACTICES, AND SUBSCRIBER ACCESS TO AN APPROPRIATE 21 NUMBER AND MIX OF HEALTH CARE PROVIDERS IN THIS STATE. 22 (4) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (1)(B), A 23 COUNCIL OR COMMITTEE ESTABLISHED UNDER THIS SECTION SHALL ACT IN 24 AN ADVISORY CAPACITY TO THE BOARD OF DIRECTORS. EXCEPT AS OTHER- 25 WISE PROVIDED IN SUBSECTION (1)(B), THE BOARD OF DIRECTORS SHALL 26 MEET AND APPROVE A COUNCIL OR COMMITTEE RECOMMENDATION BEFORE IT 27 CAN BE IMPLEMENTED. THE MINUTES OF ALL MEETINGS OF COUNCILS AND 06816'02 * 69 1 COMMITTEES ESTABLISHED UNDER THIS SECTION SHALL BE GIVEN TO THE 2 MEMBERS OF THE BOARD OF DIRECTORS AND SHALL BE INCLUDED IN THE 3 MINUTES OF THE BOARD OF DIRECTORS' MEETINGS. 4 SEC. 3723. (1) THE BOARD OF DIRECTORS SHALL ADOPT INITIAL 5 BYLAWS AND MAY AMEND OR REPEAL THOSE BYLAWS OR ADOPT NEW BYLAWS, 6 SUBJECT TO LEGAL REVIEW BY THE ATTORNEY GENERAL AND PRIOR 7 APPROVAL BY THE COMMISSIONER. THE BYLAWS MAY CONTAIN ANY PROVI- 8 SION FOR THE REGULATION AND MANAGEMENT OF THE AFFAIRS OF THE NON- 9 PROFIT HEALTH INSURER NOT INCONSISTENT WITH THE ARTICLES OF 10 INCORPORATION, THIS ACT, OR ANY OTHER APPLICABLE PROVISION OF 11 LAW. 12 (2) THE INITIAL BYLAWS, AND ANY NEW BYLAWS, AMENDMENTS, OR 13 REPEALERS SHALL BE SUBMITTED TO THE ATTORNEY GENERAL FOR LEGAL 14 REVIEW AND FOR APPROVAL BY THE COMMISSIONER. THE COMMISSIONER 15 SHALL APPROVE THE INITIAL BYLAWS, NEW BYLAWS, AMENDMENTS, OR 16 REPEALERS IF THE COMMISSIONER DETERMINES THAT THEY COMPLY WITH 17 THIS ACT. 18 (3) IF THE COMMISSIONER DISAPPROVES ALL OR ANY PART OF THE 19 INITIAL BYLAWS, NEW BYLAWS, AMENDMENTS, OR REPEALERS, HE OR SHE 20 SHALL RETURN THEM TO THE BOARD WITH A WRITTEN STATEMENT STATING 21 THE REASONS FOR THE DISAPPROVAL AND ANY RECOMMENDATIONS FOR 22 CHANGE THAT HE OR SHE MAY WISH TO SUGGEST, NOT LATER THAN 30 DAYS 23 FOLLOWING THEIR RECEIPT. BYLAWS, AMENDMENTS, AND REPEALERS NOT 24 RETURNED TO THE NONPROFIT HEALTH INSURER WITHIN THIS 30-DAY 25 PERIOD ARE CONSIDERED TO COMPLY WITH THIS CHAPTER AND ARE CONSID- 26 ERED APPROVED. 06816'02 * 70 1 SEC. 3724. (1) REGULAR OR SPECIAL MEETINGS OF THE BOARD OF 2 DIRECTORS OR A BOARD COMMITTEE SHALL BE HELD WITHIN THIS STATE. 3 WITH RESPECT TO REGULAR OR SPECIAL MEETINGS OF THE BOARD OR A 4 BOARD COMMITTEE, THE BYLAWS SHALL INCLUDE PROVISIONS REGARDING 5 ALL OF THE FOLLOWING: 6 (A) THE MINIMUM NUMBER OF REGULAR MEETINGS TO BE HELD EACH 7 YEAR. 8 (B) THE PUBLICATION AND ADVANCE DISTRIBUTION OF AN AGENDA, 9 INCLUDING PROVISIONS RESPECTING THE TIME AND PLACE OF THE MEETING 10 AND THE BUSINESS TO BE CONDUCTED. NOTICE OF MEETINGS AND THE 11 AGENDA FOR THE MEETING SHALL BE POSTED ON THE NONPROFIT HEALTH 12 INSURER'S WEBSITE AS SOON AS PRACTICAL AFTER PUBLICATION OR DIS- 13 SEMINATION UNDER THIS SUBDIVISION. 14 (C) THE VOTING PROCEDURES TO BE USED. THE USE OF PROXIES OR 15 ROUND-ROBINS SHALL NOT BE ALLOWED. 16 (2) NOTICE OF A REGULAR MEETING SHALL BE GIVEN AT LEAST 15 17 DAYS BEFORE THE MEETING AND NOTICE OF A SPECIAL MEETING SHALL BE 18 GIVEN AT LEAST 24 HOURS BEFORE THE MEETING. ALL MEETINGS SHALL 19 BE OPEN TO THE PUBLIC EXCEPT AS OTHERWISE PROVIDED IN 20 SECTION 3725(2). 21 (3) UNLESS OTHERWISE RESTRICTED BY THE ARTICLES OF INCORPO- 22 RATION OR BYLAWS, A MEMBER OF THE BOARD OR OF A BOARD COMMITTEE 23 MAY PARTICIPATE IN A MEETING BY MEANS OF CONFERENCE TELEPHONE OR 24 SIMILAR COMMUNICATIONS EQUIPMENT BY MEANS OF WHICH ALL INDIVIDU- 25 ALS PARTICIPATING IN THE MEETING CAN HEAR EACH OTHER. 26 PARTICIPATION IN A MEETING PURSUANT TO THIS SUBSECTION 27 CONSTITUTES PRESENCE IN PERSON AT THE MEETING. 06816'02 * 71 1 (4) A MAJORITY OF BOARD MEMBERS THEN IN OFFICE, OR OF THE 2 MEMBERS OF A BOARD COMMITTEE, CONSTITUTES A QUORUM FOR THE TRANS- 3 ACTION OF BUSINESS, UNLESS THE ARTICLES OR BYLAWS PROVIDE FOR A 4 LARGER NUMBER. THE VOTE OF THE MAJORITY OF MEMBERS PRESENT AT A 5 MEETING AT WHICH A QUORUM IS PRESENT CONSTITUTES THE ACTION OF 6 THE BOARD OR OF THE COMMITTEE, UNLESS THE VOTE OF A LARGER NUMBER 7 IS REQUIRED BY THIS CHAPTER, THE ARTICLES, OR THE BYLAWS. THE 8 FOLLOWING ACTIONS SHALL REQUIRE THE VOTE OF NOT LESS THAN A 9 MAJORITY OF THE MEMBERS OF THE BOARD THEN IN OFFICE: 10 (A) ADOPTION OF BYLAWS, AMENDMENTS TO BYLAWS, OR REPEALERS 11 OF BYLAWS. 12 (B) ADOPTION OF ARTICLES OF INCORPORATION, AMENDMENTS TO 13 ARTICLES, OR REPEALERS OF ARTICLES. 14 (C) ADOPTION OF COMPENSATION FOR OFFICERS OF THE NONPROFIT 15 HEALTH INSURER. 16 (5) THE BYLAWS SHALL PROVIDE THAT A RECORD ROLL CALL VOTE 17 SHALL BE TAKEN AT THE REQUEST OF ANY BOARD MEMBER. THE VOTE OF 18 EACH MEMBER DURING A RECORD ROLL CALL VOTE SHALL BE RECORDED IN 19 THE MINUTES. 20 SEC. 3725. (1) A NONPROFIT HEALTH INSURER SHALL KEEP ACCU- 21 RATE BOOKS AND RECORDS OF ACCOUNT AND COMPLETE AND DETAILED 22 MINUTES OF THE PROCEEDINGS OF THE BOARD OF DIRECTORS AND BOARD 23 COMMITTEES. THE BOOKS, RECORDS, AND MINUTES MAY BE IN WRITTEN 24 FORM OR IN ANY OTHER FORM CAPABLE OF BEING CONVERTED INTO WRITTEN 25 FORM WITHIN A REASONABLE TIME AND SHALL BE MADE AVAILABLE ELEC- 26 TRONICALLY IN A FORM PRESCRIBED BY THE COMMISSIONER. ONE COPY OF 27 THE MINUTES OR DRAFT MINUTES FROM EACH MEETING OF THE BOARD OF 06816'02 * 72 1 DIRECTORS SHALL BE TRANSMITTED TO THE COMMISSIONER WITHIN 15 DAYS 2 AFTER THE MEETING WAS HELD. UPON REQUEST, A SUBSCRIBER SHALL 3 RECEIVE, WITHIN 15 DAYS AFTER RECEIPT OF THE REQUEST, A COPY OF 4 THE MINUTES OR DRAFT MINUTES OF 1 OR MORE MEETINGS OF THE BOARD 5 OR BOARD COMMITTEE AND MAY BE CHARGED NOT MORE THAN THE REASON- 6 ABLE COST OF COPYING AND POSTAGE. 7 (2) MINUTES SHALL BE KEPT AND NEED NOT BE DISCLOSED, EXCEPT 8 TO THE COMMISSIONER, FOR THOSE PORTIONS OF MEETINGS THAT ARE HELD 9 FOR THE FOLLOWING PURPOSES: 10 (A) TO CONSIDER THE HIRING, PROMOTION, DISMISSAL, SUSPEN- 11 SION, OR DISCIPLINE OF AN EMPLOYEE. 12 (B) TO CONSIDER THE PURCHASE, LEASE, OR SALE OF REAL 13 PROPERTY. 14 (C) FOR STRATEGY AND NEGOTIATION SESSIONS CONNECTED WITH THE 15 NEGOTIATIONS OF A COLLECTIVE BARGAINING AGREEMENT WHEN EITHER 16 PARTY REQUESTS A CLOSED MEETING. 17 (D) FOR TRIAL OR SETTLEMENT STRATEGY SESSIONS IN CONNECTION 18 WITH SPECIFIC CONTEMPLATED OR PENDING LITIGATION. IF THESE SES- 19 SIONS ARE WITH RESPECT TO LITIGATION TO WHICH THE COMMISSIONER OR 20 THE ATTORNEY GENERAL IS A PARTY, MINUTES REGARDING THESE SESSIONS 21 ARE NOT SUBJECT TO EXAMINATION AND FREE ACCESS BY THE 22 COMMISSIONER. 23 (E) TO CONSIDER MEDICAL RECORDS OF AN INDIVIDUAL. 24 (F) TO CONSIDER THE ACQUISITION OR DISPOSAL OF CERTIFICATES 25 OF STOCK, BONDS, CERTIFICATES OF INDEBTEDNESS, AND OTHER INTANGI- 26 BLES IN WHICH THE NONPROFIT HEALTH INSURER MAY INVEST FUNDS UNDER 06816'02 * 73 1 THIS CHAPTER, IF THE INFORMATION REGARDING PROPOSED ACQUISITION 2 OR DISPOSAL MAY AFFECT THE PRICE PAID OR RECEIVED. 3 (G) TO CONSIDER PROVIDER APPEALS WHEN THE PROVIDER HAS 4 REQUESTED A CLOSED HEARING. 5 (H) TO DISCUSS MARKETING STRATEGY WITH REGARD TO A PARTICU- 6 LAR CUSTOMER OR LIMITED GROUP OF CUSTOMERS, OR TO DISCUSS A NEW 7 OR CHANGED BENEFIT, THE PREMATURE DISCLOSURE OF WHICH WOULD HAVE 8 AN ADVERSE IMPACT ON THE NONPROFIT HEALTH INSURER. 9 (I) TO CONSIDER THE REMOVAL OF A DIRECTOR FROM THE BOARD 10 WHEN THE DIRECTOR REQUESTS A CLOSED HEARING. 11 (3) THE DATE AND TIME OF PREPARATION AND EXISTENCE OF THE 12 MINUTES DESCRIBED IN SUBSECTION (2), THE CONTENTS OF WHICH SHALL 13 NOT BE DISCLOSABLE EXCEPT TO THE COMMISSIONER, SHALL BE NOTED IN 14 THE MINUTES REQUIRED TO BE KEPT UNDER SUBSECTION (1). ONCE 15 ACTION IS TAKEN BY THE BOARD TO IMPLEMENT A CONSIDERATION OR DIS- 16 CUSSION DESCRIBED IN SUBSECTION (2)(B), (F), (G), OR (H), ONCE A 17 COLLECTIVE BARGAINING AGREEMENT IS REACHED AS DESCRIBED IN SUB- 18 SECTION (2)(C), ONCE LITIGATION IS NO LONGER PENDING AS DESCRIBED 19 IN SUBSECTION (2)(D), OR ONCE A CLOSED HEARING IS CONCLUDED AS 20 DESCRIBED IN SUBSECTION (2)(I), AND UPON THE REQUEST OF THE 21 DIRECTOR TO WHOM THE HEARING PERTAINED, THE MINUTES RELATING TO 22 THE CONSIDERATION, DISCUSSION, OR STRATEGY SESSION SHALL BE PUB- 23 LISHED AND DISSEMINATED WITH THE NEXT SUCCEEDING SET OF MINUTES 24 PUBLISHED AND DISSEMINATED UNDER SUBSECTION (1). 25 SEC. 3726. THE BOARD SHALL ESTABLISH A COMPENSATION PLAN 26 FOR EXECUTIVE AND SENIOR LEVEL MANAGEMENT OF THE NONPROFIT HEALTH 27 INSURER, INCLUDING ANY BONUS PLAN TIED TO PERFORMANCE OF THE 06816'02 * 74 1 NONPROFIT HEALTH INSURER, WHICH SHALL BE FILED WITH AND APPROVED 2 BY THE COMMISSIONER BEFORE IT BECOMES EFFECTIVE. THE COMMIS- 3 SIONER SHALL BE NOTIFIED OF ANY BONUS ISSUED TO AN EXECUTIVE OR 4 SENIOR LEVEL MEMBER OF MANAGEMENT OF THE NONPROFIT HEALTH INSURER 5 WITHIN 10 DAYS OF ISSUANCE OF THE BONUS. THE BOARD SHALL IDEN- 6 TIFY IN THE COMPENSATION PLAN, SUBJECT TO THE COMMISSIONER'S 7 APPROVAL, THOSE EXECUTIVE AND SENIOR LEVEL MANAGEMENT POSITIONS 8 COVERED UNDER THE COMPENSATION PLAN. 9 SEC. 3727. (1) A CONTRACT OR OTHER TRANSACTION BETWEEN A 10 NONPROFIT HEALTH INSURER AND 1 OR MORE OF ITS DIRECTORS OR OFFI- 11 CERS, OR BETWEEN A NONPROFIT HEALTH INSURER AND ANY OTHER CORPO- 12 RATION, FIRM, OR ASSOCIATION OF ANY TYPE OR KIND IN WHICH 1 OR 13 MORE OF ITS DIRECTORS OR OFFICERS ARE DIRECTORS OR OFFICERS, OR 14 ARE OTHERWISE INTERESTED, IS NOT VOID OR VOIDABLE SOLELY BECAUSE 15 OF THIS COMMON DIRECTORSHIP, OFFICERSHIP, OR INTEREST, OR SOLELY 16 BECAUSE THE DIRECTORS ARE PRESENT AT THE MEETING OF THE BOARD 17 THAT AUTHORIZES OR APPROVES THE CONTRACT OR TRANSACTION, IF ALL 18 OF THE FOLLOWING CONDITIONS ARE SATISFIED: 19 (A) THE CONTRACT OR OTHER TRANSACTION IS FAIR AND REASONABLE 20 TO THE NONPROFIT HEALTH INSURER WHEN IT IS AUTHORIZED, APPROVED, 21 OR RATIFIED. 22 (B) THE MATERIAL FACTS AS TO THE OFFICER'S OR DIRECTOR'S 23 RELATIONSHIP OR INTEREST AND AS TO THE CONTRACT OR TRANSACTION 24 ARE DISCLOSED OR KNOWN TO THE BOARD, AND THE BOARD AUTHORIZES, 25 APPROVES, OR RATIFIES THE CONTRACT OR TRANSACTION BY A VOTE SUF- 26 FICIENT FOR THE PURPOSE. THE CONDITIONS OF THIS SUBDIVISION 27 SHALL BE CONSIDERED SATISFIED ONLY IF THE OFFICER OR DIRECTOR HAS 06816'02 * 75 1 ANNOUNCED THE POTENTIAL CONFLICT BEFORE THE VOTE, THE MINUTES OF 2 THE MEETING REFLECT THAT ANNOUNCEMENT, AND THE OFFICER OR DIREC- 3 TOR ABSTAINED FROM THE VOTE. 4 (2) IF THE VALIDITY OF A CONTRACT DESCRIBED IN SUBSECTION 5 (1) IS QUESTIONED, THE BURDEN OF ESTABLISHING ITS VALIDITY ON THE 6 GROUNDS PRESCRIBED IS UPON THE DIRECTOR, OFFICER, CORPORATION, 7 FIRM, OR ASSOCIATION ASSERTING ITS VALIDITY. 8 (3) COMMON OR INTERESTED DIRECTORS SHALL NOT BE COUNTED IN 9 DETERMINING THE PRESENCE OF A QUORUM AT A BOARD MEETING AT THE 10 TIME A CONTRACT OR TRANSACTION DESCRIBED IN SUBSECTION (1) IS 11 AUTHORIZED, APPROVED, OR RATIFIED. 12 (4) THE BYLAWS OF A NONPROFIT HEALTH INSURER MAY INCLUDE 13 PROVISIONS REGARDING CONFLICT OF INTEREST THAT ARE MORE STRINGENT 14 THAN THIS SECTION. 15 PART 3 16 SEC. 3731. (1) A NONPROFIT HEALTH INSURER ESTABLISHED, 17 MAINTAINED, OR OPERATING IN THIS STATE SHALL OFFER HEALTH CARE 18 BENEFITS TO ALL RESIDENTS OF THIS STATE, AND MAY OFFER OTHER 19 HEALTH CARE BENEFITS AS THE INSURER SPECIFIES WITH THE APPROVAL 20 OF THE COMMISSIONER. 21 (2) A NONPROFIT HEALTH INSURER MAY LIMIT THE HEALTH CARE 22 BENEFITS THAT IT WILL FURNISH, EXCEPT AS PROVIDED IN THIS ACT, 23 AND MAY DIVIDE THE HEALTH CARE BENEFITS THAT IT ELECTS TO FURNISH 24 INTO CLASSES OR KINDS. 25 (3) A NONPROFIT HEALTH INSURER SHALL NOT DO ANY OF THE 26 FOLLOWING: 06816'02 * 76 1 (A) REFUSE TO ISSUE OR CONTINUE A CERTIFICATE TO 1 OR MORE 2 RESIDENTS OF THIS STATE, EXCEPT WHILE THE INDIVIDUAL, BASED ON A 3 TRANSACTION OR OCCURRENCE INVOLVING A NONPROFIT HEALTH INSURER, 4 IS SERVING A SENTENCE ARISING OUT OF A CHARGE OF FRAUD, IS SATIS- 5 FYING A CIVIL JUDGMENT, OR IS MAKING RESTITUTION PURSUANT TO A 6 VOLUNTARY PAYMENT AGREEMENT BETWEEN THE NONPROFIT HEALTH INSURER 7 AND THE INDIVIDUAL. 8 (B) REFUSE TO CONTINUE IN EFFECT A CERTIFICATE WITH 1 OR 9 MORE RESIDENTS OF THIS STATE, OTHER THAN FOR FAILURE TO PAY 10 AMOUNTS DUE FOR A CERTIFICATE, EXCEPT AS ALLOWED FOR REFUSAL TO 11 ISSUE A CERTIFICATE UNDER SUBDIVISION (A). 12 (C) LIMIT THE COVERAGE AVAILABLE UNDER A CERTIFICATE, WITH- 13 OUT THE PRIOR APPROVAL OF THE COMMISSIONER, UNLESS THE LIMITATION 14 IS AS A RESULT OF: AN AGREEMENT WITH THE PERSON PAYING FOR THE 15 COVERAGE; AN AGREEMENT WITH THE INDIVIDUAL DESIGNATED BY THE PER- 16 SONS PAYING FOR OR CONTRACTING FOR THE COVERAGE; OR A COLLECTIVE 17 BARGAINING AGREEMENT. 18 (4) A NONPROFIT HEALTH INSURER HAS THE RIGHT TO STATUS AS A 19 PARTY IN INTEREST, WHETHER BY INTERVENTION OR OTHERWISE, IN ANY 20 JUDICIAL, QUASI-JUDICIAL, OR ADMINISTRATIVE AGENCY PROCEEDING IN 21 THIS STATE FOR THE PURPOSE OF ENFORCING ANY RIGHTS IT MAY HAVE 22 FOR REIMBURSEMENT OF PAYMENTS MADE OR ADVANCED FOR HEALTH CARE 23 SERVICES ON BEHALF OF 1 OR MORE OF ITS SUBSCRIBERS OR MEMBERS. 24 (5) A NONPROFIT HEALTH INSURER SHALL NOT LIMIT OR DENY COV- 25 ERAGE TO A SUBSCRIBER OR LIMIT OR DENY REIMBURSEMENT TO A PRO- 26 VIDER ON THE GROUND THAT SERVICES WERE RENDERED WHILE THE 27 SUBSCRIBER WAS IN A HEALTH CARE FACILITY OPERATED BY THIS STATE 06816'02 * 77 1 OR A POLITICAL SUBDIVISION OF THIS STATE. A NONPROFIT HEALTH 2 INSURER SHALL NOT LIMIT OR DENY PARTICIPATION STATUS TO A HEALTH 3 CARE FACILITY ON THE GROUND THAT THE HEALTH CARE FACILITY IS 4 OPERATED BY THIS STATE OR A POLITICAL SUBDIVISION OF THIS STATE, 5 IF THE FACILITY MEETS THE STANDARDS SET BY THE NONPROFIT HEALTH 6 INSURER FOR ALL OTHER FACILITIES OF THAT TYPE, 7 GOVERNMENT-OPERATED OR OTHERWISE. TO QUALIFY FOR PARTICIPATION 8 AND REIMBURSEMENT, A FACILITY SHALL, AT A MINIMUM, MEET ALL OF 9 THE FOLLOWING REQUIREMENTS, WHICH SHALL APPLY TO ALL SIMILAR 10 FACILITIES: 11 (A) BE ACCREDITED BY THE JOINT COMMISSION ON ACCREDITATION 12 OF HOSPITALS. 13 (B) MEET THE CERTIFICATION STANDARDS OF THE MEDICARE PROGRAM 14 AND THE MEDICAID PROGRAM. 15 (C) MEET ALL STATUTORY REQUIREMENTS FOR CERTIFICATE OF 16 NEED. 17 (D) FOLLOW GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND 18 PRACTICES. 19 (E) HAVE A COMMUNITY ADVISORY BOARD. 20 (F) HAVE A PROGRAM OF UTILIZATION AND PEER REVIEW TO ASSURE 21 THAT PATIENT CARE IS APPROPRIATE AND AT AN ACUTE LEVEL. 22 (G) DESIGNATE THAT PORTION OF THE FACILITY THAT IS TO BE 23 USED FOR ACUTE CARE. 24 SEC. 3732. (1) A NONPROFIT HEALTH INSURER DELIVERING, ISSU- 25 ING FOR DELIVERY, OR RENEWING IN THIS STATE A MEDIUM/LARGE SUB- 26 SCRIBER GROUP CERTIFICATE SHALL FURNISH TO A PAYOR, WITHIN 30 27 DAYS AFTER RECEIVING A WRITTEN REQUEST THEREFORE AND UPON PAYMENT 06816'02 * 78 1 OF A REASONABLE CHARGE, ALL OF THE FOLLOWING INFORMATION BY 2 COVERAGE COMPONENT FOR THE CERTIFICATE INCURRED DURING THE IMME- 3 DIATELY PRECEDING 24-MONTH PERIOD: 4 (A) TOTAL NUMBER OF INDIVIDUALS COVERED. 5 (B) TOTAL NUMBER OF CLAIMS. 6 (C) TOTAL DOLLAR AMOUNT OF CLAIMS. 7 (D) AMOUNT PAID OR ALLOCATED TO PROVIDERS ON A PER INDIVID- 8 UAL BASIS NOT INCLUDED IN SUBDIVISIONS (A) TO (C). 9 (E) ALL PERTINENT INFORMATION USED BY THE NONPROFIT HEALTH 10 INSURER TO MAKE ITS RATES FOR THAT GROUP. THIS SUBDIVISION DOES 11 NOT REQUIRE THE RELEASE OF ANY INFORMATION OTHERWISE EXEMPT FROM 12 DISCLOSURE UNDER THIS CHAPTER. THE COMMISSIONER SHALL DETERMINE 13 NOT LESS OFTEN THAN ANNUALLY WHAT IS PERTINENT INFORMATION UNDER 14 THIS SUBDIVISION. 15 (2) INFORMATION FURNISHED UNDER SUBSECTION (1) SHALL NOT 16 DISCLOSE PERSONAL DATA THAT MAY REVEAL THE IDENTITY OF A COVERED 17 INDIVIDUAL. INFORMATION FURNISHED UNDER SUBSECTION (1) SHALL BE 18 COLLECTED AND PROVIDED TO A PAYOR BASED ON THE GROUP THE PAYOR 19 SPONSORS. 20 (3) AS USED IN THIS SECTION: 21 (A) "COVERAGE COMPONENT" INCLUDES, BUT IS NOT LIMITED TO, 22 IN-PATIENT AND OUT-PATIENT FACILITY COVERAGE, PROFESSIONAL PRO- 23 VIDER COVERAGE, AND PHARMACY COVERAGE. 24 (B) "PAYOR" MEANS THE PURCHASER OF GROUP COVERAGE WHETHER 25 THE PURCHASE IS MADE DIRECTLY FROM THE NONPROFIT HEALTH INSURER 26 OR IS MADE THROUGH A THIRD PARTY ADMINISTRATOR, AN AGENCY, OR 27 ANOTHER ENTITY. 06816'02 * 79 1 SEC. 3733. (1) IF A GROUP OR NONGROUP CERTIFICATE OF A 2 NONPROFIT HEALTH INSURER PROVIDES FOR HEALTH CARE BENEFITS FOR A 3 HEALTH CARE SERVICE AND IF THAT SERVICE WAS LEGALLY PERFORMED, 4 THOSE BENEFITS OR REIMBURSEMENT FOR THE PROVISION OF THE SERVICE 5 SHALL NOT BE DENIED BECAUSE THE SERVICE WAS RENDERED BY A 6 DENTIST. 7 (2) AS USED IN THIS SECTION, "DENTIST" MEANS AN INDIVIDUAL 8 LICENSED UNDER PART 166 OF THE PUBLIC HEALTH CODE, 1978 PA 368, 9 MCL 333.16601 TO 333.16648. 10 (3) THIS SECTION APPLIES TO CERTIFICATES ISSUED OR RENEWED 11 ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION AND APPLIES NOT- 12 WITHSTANDING ANY CERTIFICATE PROVISION TO THE CONTRARY. 13 SEC. 3734. (1) SUBJECT TO SUBSECTIONS (2) AND (3), IF A 14 NONPROFIT HEALTH INSURER GROUP OR NONGROUP CERTIFICATE PROVIDES 15 FOR HEALTH CARE BENEFITS FOR SERVICES PERFORMED BY A PHYSICIAN'S 16 ASSISTANT, THOSE BENEFITS OR REIMBURSEMENT FOR THOSE BENEFITS AT 17 THE PREVAILING RATE SHALL NOT BE DENIED IF THE SERVICES WERE PER- 18 FORMED BY A PHYSICIAN'S ASSISTANT ACTING WITHIN THE SCOPE OF HIS 19 OR HER LICENSE AND IF THE FOLLOWING ARE MET: 20 (A) IF THE SERVICES WERE PERFORMED BY A PHYSICIAN'S ASSIST- 21 ANT WORKING FOR A PHYSICIAN OR FACILITY SPECIALIZING IN A PARTIC- 22 ULAR AREA OF MEDICINE, A PHYSICIAN THAT SPECIALIZES IN THAT AREA 23 OF MEDICINE WAS PHYSICALLY PRESENT ON THE PREMISES WHEN THE 24 PHYSICIAN'S ASSISTANT PERFORMED THE SERVICES. 25 (B) IF THE SERVICES WERE PERFORMED BY A PHYSICIAN'S ASSIST- 26 ANT WORKING FOR A PHYSICIAN OR FACILITY ENGAGING IN GENERAL 27 FAMILY PRACTICE, A PHYSICIAN NEED NOT HAVE BEEN PHYSICALLY 06816'02 * 80 1 PRESENT ON THE PREMISES WHEN THE PHYSICIAN'S ASSISTANT PERFORMED 2 THE SERVICES SO LONG AS A CONSULTING PHYSICIAN IS WITHIN 150 3 MILES OR 3 HOURS' COMMUTE TO WHERE THE SERVICES ARE PERFORMED. 4 (2) THIS SECTION APPLIES TO A PHYSICIAN'S ASSISTANT WHO PER- 5 FORMS SERVICES IN ANY OF THE FOLLOWING: 6 (A) A COUNTY WITH A POPULATION OF 25,000 OR LESS. 7 (B) A CERTIFIED RURAL HEALTH CLINIC. 8 (C) A HEALTH PROFESSIONAL SHORTAGE AREA. 9 (3) FOR PURPOSES OF SUBSECTION (1), A PHYSICIAN SUPERVISING 10 A PHYSICIAN'S ASSISTANT SHALL DO SO FROM WITHIN MICHIGAN OR FROM 11 A STATE BORDERING MICHIGAN. 12 (4) AS USED IN THIS SECTION: 13 (A) "HEALTH PROFESSIONAL SHORTAGE AREA" MEANS THAT TERM AS 14 DEFINED IN SECTION 332(A)(1) OF SUBPART II OF PART D OF TITLE III 15 OF THE PUBLIC HEALTH SERVICE ACT, CHAPTER 373, 90 STAT. 2270, 42 16 U.S.C. 254e. 17 (B) "PHYSICIAN'S ASSISTANT" MEANS AN INDIVIDUAL LICENSED AS 18 A PHYSICIAN'S ASSISTANT UNDER ARTICLE 15 OF THE PUBLIC HEALTH 19 CODE, 1978 PA 368, MCL 333.16101 TO 333.18838. 20 (C) "RURAL HEALTH CLINIC" MEANS A RURAL HEALTH CLINIC AS 21 DEFINED UNDER SECTION 1861 OF PART D OF TITLE XVIII OF THE SOCIAL 22 SECURITY ACT, 42 U.S.C. 1395x, AND CERTIFIED TO PARTICIPATE IN 23 MEDICAID AND MEDICARE. 24 SEC. 3735. (1) A HEALTH CARE PROVIDER WHO HAS REASON TO 25 BELIEVE THAT A NONPROFIT HEALTH INSURER HAS VIOLATED SECTION 26 2005A, 2006, 2024, OR 2026 CONCERNING THAT HEALTH CARE PROVIDER 27 IS ENTITLED TO A PRIVATE INFORMAL MANAGERIAL-LEVEL CONFERENCE 06816'02 * 81 1 WITH THE NONPROFIT HEALTH INSURER AND TO A REVIEW BEFORE THE 2 COMMISSIONER IF THE CONFERENCE FAILS TO RESOLVE THE DISPUTE. 3 (2) A NONPROFIT HEALTH INSURER SHALL ESTABLISH REASONABLE 4 INTERNAL PROCEDURES TO PROVIDE A HEALTH CARE PROVIDER WITH A PRI- 5 VATE INFORMAL MANAGERIAL-LEVEL CONFERENCE AS PROVIDED IN 6 SUBSECTION (1). THESE PROCEDURES SHALL PROVIDE FOR ALL OF THE 7 FOLLOWING: 8 (A) THAT THE NONPROFIT HEALTH INSURER SHALL MAKE A FINAL 9 WRITTEN DETERMINATION NOT LATER THAN 35 CALENDAR DAYS AFTER A 10 GRIEVANCE IS SUBMITTED IN WRITING BY THE HEALTH CARE PROVIDER. 11 THE TIMING FOR THE 35-CALENDAR-DAY PERIOD MAY BE TOLLED, HOWEVER, 12 FOR ANY PERIOD OF TIME THE PROVIDER IS PERMITTED TO TAKE UNDER 13 THE GRIEVANCE PROCEDURE. 14 (B) A METHOD OF PROVIDING THE HEALTH CARE PROVIDER, UPON 15 REQUEST AND PAYMENT OF A REASONABLE COPYING CHARGE, WITH INFORMA- 16 TION PERTINENT TO THE MATTER IN DISPUTE. 17 (C) A METHOD FOR RESOLVING THE DISPUTE PROMPTLY AND INFOR- 18 MALLY, WHILE PROTECTING THE INTERESTS OF BOTH THE HEALTH CARE 19 PROVIDER AND THE NONPROFIT HEALTH INSURER. THE METHOD UNDER THIS 20 SUBDIVISION SHALL INCLUDE AT LEAST ALL OF THE FOLLOWING: 21 (i) THAT THE NONPROFIT HEALTH INSURER SHALL HOLD A PRIVATE 22 INFORMAL MANAGERIAL-LEVEL CONFERENCE UNDER THIS SECTION WITHIN A 23 REASONABLY ACCESSIBLE DISTANCE FROM THE MICHIGAN ADDRESS OF THE 24 HEALTH CARE PROVIDER AND AT A TIME REASONABLY CONVENIENT TO THE 25 HEALTH CARE PROVIDER OR THE HEALTH CARE PROVIDER'S AGENT OR 26 REPRESENTATIVE. AT THE REQUEST OF THE HEALTH CARE PROVIDER, THE 27 CONFERENCE SHALL BE HELD BY TELEPHONE. 06816'02 * 82 1 (ii) THAT NOT LATER THAN 20 DAYS AFTER THE CONFERENCE, THE 2 NONPROFIT HEALTH INSURER SHALL PROVIDE THE HEALTH CARE PROVIDER 3 WITH ALL OF THE FOLLOWING: 4 (A) THE NONPROFIT HEALTH INSURER'S PROPOSED RESOLUTION. 5 (B) THE FACTS, WITH SUPPORTING DOCUMENTATION, UPON WHICH THE 6 PROPOSED RESOLUTION IS BASED. 7 (C) THE SPECIFIC SECTION OR SECTIONS OF THE LAW, CERTIFI- 8 CATE, CONTRACT, OR OTHER WRITTEN POLICY OR DOCUMENT UPON WHICH 9 THE PROPOSED RESOLUTION IS BASED. 10 (D) A STATEMENT EXPLAINING THE HEALTH CARE PROVIDER'S RIGHT 11 TO APPEAL THE MATTER TO THE COMMISSIONER WITHIN 120 DAYS AFTER 12 RECEIPT OF THE NONPROFIT HEALTH INSURER'S FINAL DETERMINATION. 13 (E) A STATEMENT DESCRIBING THE STATUS OF THE CLAIM 14 INVOLVED. 15 (3) A NONPROFIT HEALTH INSURER SHALL DO ALL OF THE 16 FOLLOWING: 17 (A) AT THE TIME OF A REFUSAL TO PAY A CLAIM MADE BY A HEALTH 18 CARE PROVIDER, THE NONPROFIT HEALTH INSURER SHALL PROVIDE IN 19 WRITING TO THE HEALTH CARE PROVIDER A CLEAR, CONCISE, AND SPE- 20 CIFIC EXPLANATION OF ALL THE REASONS FOR THE REFUSAL. THIS 21 NOTICE SHALL NOTIFY THE HEALTH CARE PROVIDER OF HIS OR HER RIGHT 22 TO A PRIVATE INFORMAL MANAGERIAL-LEVEL CONFERENCE IF THE HEALTH 23 CARE PROVIDER BELIEVES THE REFUSAL TO BE IN VIOLATION OF SECTION 24 2005A, 2006, 2024, OR 2026. 25 (B) IN ADDITION TO THE NOTICE REQUIRED IN SUBDIVISION (A), 26 AT LEAST ANNUALLY PROVIDE NOTICE TO EACH HEALTH CARE PROVIDER 27 WITH WHOM THE NONPROFIT HEALTH INSURER HAS CONTACT OF THE HEALTH 06816'02 * 83 1 CARE PROVIDER'S RIGHT TO A PRIVATE INFORMAL MANAGERIAL-LEVEL 2 CONFERENCE UNDER THIS SECTION. THE NOTICE SHALL REASONABLY 3 INFORM HEALTH CARE PROVIDERS OF THEIR RIGHTS UNDER THIS SECTION. 4 (4) IF THE NONPROFIT HEALTH INSURER FAILS TO PROVIDE A CON- 5 FERENCE AND A FINAL DETERMINATION WITHIN 35 DAYS AFTER A REQUEST 6 BY A HEALTH CARE PROVIDER, OR IF THE HEALTH CARE PROVIDER DIS- 7 AGREES WITH THE PROPOSED RESOLUTION OF THE NONPROFIT HEALTH 8 INSURER AFTER COMPLETION OF THE CONFERENCE, THE HEALTH CARE PRO- 9 VIDER IS ENTITLED TO A DETERMINATION OF THE MATTER BY THE 10 COMMISSIONER. TO BE ENTITLED TO A DETERMINATION BY THE COMMIS- 11 SIONER UNDER THIS SUBSECTION, THE HEALTH CARE PROVIDER SHALL FILE 12 A WRITTEN REQUEST WITH THE COMMISSIONER NOT LATER THAN 120 DAYS 13 AFTER THE DATE OF THE FINAL DETERMINATION, 120 DAYS AFTER THE 14 COMPLETION OF THE CONFERENCE, OR 120 DAYS AFTER THE EXPIRATION OF 15 THE INITIAL 35 DAYS, AS APPLICABLE. THE COMMISSIONER MAY EXTEND 16 THIS 120-DAY TIME LIMIT IF HE OR SHE BELIEVES THERE IS JUST CAUSE 17 TO DO SO. 18 (5) IF EITHER THE NONPROFIT HEALTH INSURER OR A HEALTH CARE 19 PROVIDER DISAGREES WITH A DETERMINATION OF THE COMMISSIONER UNDER 20 THIS SECTION, THE COMMISSIONER, IF REQUESTED TO DO SO BY EITHER 21 PARTY, SHALL PROCEED TO HEAR THE MATTER AS A CONTESTED CASE UNDER 22 THE ADMINISTRATIVE PROCEDURES ACT OF 1969, 1969 PA 306, 23 MCL 24.201 TO 24.328. THE COMMISSIONER SHALL NOTIFY THE NON- 24 PROFIT HEALTH INSURER AND HEALTH CARE PROVIDER IN HIS OR HER 25 DETERMINATION UNDER THIS SECTION OF THE RIGHT TO A CONTESTED CASE 26 HEARING. TO BE ENTITLED TO A CONTESTED CASE HEARING UNDER THIS 27 SUBSECTION, THE PERSON REQUESTING THE CONTESTED CASE HEARING 06816'02 * 84 1 SHALL FILE A WRITTEN REQUEST WITH THE COMMISSIONER ON OR BEFORE 2 THE EXPIRATION OF 60 DAYS AFTER THE DATE OF THE DETERMINATION. 3 SEC. 3736. (1) A NONPROFIT HEALTH INSURER SHALL, IN ORDER 4 TO ENSURE THE CONFIDENTIALITY OF RECORDS CONTAINING PERSONAL DATA 5 THAT MAY BE ASSOCIATED WITH IDENTIFIABLE MEMBERS, USE REASONABLE 6 CARE TO SECURE THESE RECORDS FROM UNAUTHORIZED ACCESS AND TO COL- 7 LECT ONLY PERSONAL DATA NECESSARY FOR THE PROPER REVIEW AND PAY- 8 MENT OF CLAIMS. EXCEPT AS IS NECESSARY FOR CLAIMS ADJUDICATION, 9 CLAIMS VERIFICATION, OR WHEN REQUIRED BY LAW, A NONPROFIT HEALTH 10 INSURER SHALL NOT DISCLOSE RECORDS CONTAINING PERSONAL DATA THAT 11 MAY BE ASSOCIATED WITH AN IDENTIFIABLE MEMBER, OR PERSONAL INFOR- 12 MATION CONCERNING A MEMBER, TO A PERSON OTHER THAN THE MEMBER, 13 WITHOUT THE PRIOR AND SPECIFIC INFORMED CONSENT OF THE MEMBER TO 14 WHOM THE DATA OR INFORMATION PERTAINS. THE MEMBER'S CONSENT 15 SHALL BE IN WRITING. EXCEPT WHEN A DISCLOSURE IS MADE TO THE 16 COMMISSIONER OR ANOTHER GOVERNMENTAL AGENCY, A COURT, OR ANY 17 OTHER GOVERNMENTAL ENTITY, A NONPROFIT HEALTH INSURER SHALL MAKE 18 A DISCLOSURE FOR WHICH PRIOR AND SPECIFIC INFORMED CONSENT IS NOT 19 REQUIRED UPON THE CONDITION THAT THE PERSON TO WHOM THE DISCLO- 20 SURE IS MADE PROTECT AND USE THE DISCLOSED DATA OR INFORMATION 21 ONLY IN THE MANNER AUTHORIZED BY THE NONPROFIT HEALTH INSURER 22 UNDER SUBSECTION (2). IF A MEMBER HAS AUTHORIZED THE RELEASE OF 23 PERSONAL DATA TO A SPECIFIC PERSON, A NONPROFIT HEALTH INSURER 24 SHALL MAKE A DISCLOSURE TO THAT PERSON UPON THE CONDITION THAT 25 THE PERSON SHALL NOT RELEASE THE DATA TO A THIRD PERSON UNLESS 26 THE MEMBER EXECUTES IN WRITING ANOTHER PRIOR AND SPECIFIC 06816'02 * 85 1 INFORMED CONSENT AUTHORIZING THE ADDITIONAL RELEASE. THIS 2 SUBSECTION DOES NOT PRECLUDE EITHER OF THE FOLLOWING: 3 (A) THE RELEASE OF INFORMATION TO A MEMBER, PERTAINING TO 4 THAT MEMBER, BY TELEPHONE, IF THE IDENTITY OF THE MEMBER IS 5 VERIFIED. 6 (B) A REPRESENTATIVE OF A SUBSCRIBER GROUP, UPON REQUEST OF 7 A MEMBER OF THAT SUBSCRIBER GROUP, OR AN ELECTED OFFICIAL, UPON 8 REQUEST OF A CONSTITUENT, FROM ASSISTING THE INDIVIDUAL IN 9 RESOLVING A CLAIM. 10 (2) THE BOARD OF DIRECTORS OF A NONPROFIT HEALTH INSURER 11 SHALL ESTABLISH AND MAKE PUBLIC THE POLICY OF THE NONPROFIT 12 HEALTH INSURER REGARDING THE PROTECTION OF THE PRIVACY OF MEMBERS 13 AND THE CONFIDENTIALITY OF PERSONAL DATA. THE POLICY, AT A MINI- 14 MUM, SHALL DO ALL OF THE FOLLOWING: 15 (A) PROVIDE FOR THE NONPROFIT HEALTH INSURER'S IMPLEMENTA- 16 TION OF PROVISIONS IN THIS ACT AND OTHER APPLICABLE LAW RESPECT- 17 ING COLLECTION, SECURITY, USE, RELEASE OF, AND ACCESS TO PERSONAL 18 DATA. 19 (B) IDENTIFY THE ROUTINE USES OF PERSONAL DATA BY THE NON- 20 PROFIT HEALTH INSURER; PRESCRIBE THE MEANS BY WHICH MEMBERS WILL 21 BE NOTIFIED REGARDING THOSE USES; AND PROVIDE FOR NOTIFICATION 22 REGARDING THE ACTUAL RELEASE OF PERSONAL DATA AND INFORMATION 23 THAT MAY BE IDENTIFIED WITH, OR THAT CONCERN, A MEMBER, UPON SPE- 24 CIFIC REQUEST BY THAT MEMBER. AS USED IN THIS SUBDIVISION, 25 "ROUTINE USE" MEANS THE ORDINARY USE OR RELEASE OF PERSONAL DATA 26 COMPATIBLE WITH THE PURPOSE FOR WHICH THE DATA WERE COLLECTED. 06816'02 * 86 1 (C) ASSURE THAT NO PERSON SHALL HAVE ACCESS TO PERSONAL DATA 2 EXCEPT ON THE BASIS OF A NEED TO KNOW. 3 (D) ESTABLISH THE CONTRACTUAL OR OTHER CONDITIONS UNDER 4 WHICH THE NONPROFIT HEALTH INSURER WILL RELEASE PERSONAL DATA. 5 (E) PROVIDE THAT ENROLLMENT APPLICATIONS AND CLAIM FORMS 6 DEVELOPED BY THE NONPROFIT HEALTH INSURER SHALL CONTAIN A 7 MEMBER'S CONSENT TO THE RELEASE OF DATA AND INFORMATION THAT IS 8 LIMITED TO THE DATA AND INFORMATION NECESSARY FOR THE PROPER 9 REVIEW AND PAYMENT OF CLAIMS, AND SHALL REASONABLY NOTIFY MEMBERS 10 OF THEIR RIGHTS PURSUANT TO THE BOARD'S POLICY AND APPLICABLE 11 LAW. 12 (F) PROVIDE THAT APPLICANTS FOR NEW OR RENEWED CERTIFICATES 13 SHALL BE ADVISED THAT THE NONPROFIT HEALTH INSURER DOES NOT 14 REQUIRE THE USE OF THE APPLICANT'S FEDERAL SOCIAL SECURITY 15 ACCOUNT NUMBER AND THAT, WHEN APPLICABLE, ANOTHER AUTHORITY DOES 16 REQUIRE USE OF THE NUMBER. 17 (3) A NONPROFIT HEALTH INSURER THAT VIOLATES THIS SECTION IS 18 GUILTY OF A MISDEMEANOR PUNISHABLE BY A FINE OF NOT MORE THAN 19 $1,000.00 FOR EACH VIOLATION. 20 (4) A MEMBER MAY BRING A CIVIL ACTION FOR DAMAGES AGAINST A 21 NONPROFIT HEALTH INSURER FOR A VIOLATION OF THIS SECTION AND MAY 22 RECOVER ACTUAL DAMAGES OR $200.00, WHICHEVER IS GREATER, TOGETHER 23 WITH REASONABLE ATTORNEYS' FEES AND COSTS. 24 (5) THIS SECTION DOES NOT LIMIT ACCESS TO RECORDS OR ENLARGE 25 OR DIMINISH THE INVESTIGATIVE AND EXAMINATION POWERS OF GOVERN- 26 MENTAL AGENCIES, AS PROVIDED FOR BY LAW. 06816'02 * 87 1 SEC. 3737. A CIVIL ACTION FOR NEGLIGENCE BASED UPON, OR 2 ARISING OUT OF, THE HEALTH CARE PROVIDER-PATIENT RELATIONSHIP 3 SHALL NOT BE MAINTAINED AGAINST A NONPROFIT HEALTH INSURER. 4 SEC. 3738. (1) A NONPROFIT HEALTH INSURER SHALL OFFER BENE- 5 FITS FOR THE INPATIENT TREATMENT OF SUBSTANCE ABUSE BY A LICENSED 6 ALLOPATHIC PHYSICIAN OR A LICENSED OSTEOPATHIC PHYSICIAN IN A 7 HEALTH CARE FACILITY OPERATED BY THIS STATE OR APPROVED BY THE 8 DEPARTMENT OF COMMUNITY HEALTH FOR THE HOSPITALIZATION FOR, OR 9 TREATMENT OF, SUBSTANCE ABUSE. 10 (2) SUBJECT TO SUBSECTION (3), A NONPROFIT HEALTH INSURER 11 MAY ENTER INTO CONTRACTS WITH PROVIDERS FOR THE RENDERING OF 12 INPATIENT SUBSTANCE ABUSE TREATMENT BY THOSE PROVIDERS. 13 (3) A CONTRACTING PROVIDER RENDERING INPATIENT SUBSTANCE 14 ABUSE TREATMENT FOR PATIENTS OTHER THAN ADOLESCENT PATIENTS SHALL 15 BE A LICENSED HOSPITAL OR A SUBSTANCE ABUSE SERVICE PROGRAM 16 LICENSED UNDER ARTICLE 6 OF THE PUBLIC HEALTH CODE, 1978 PA 368, 17 MCL 333.6101 TO 333.6523, AND SHALL MEET THE STANDARDS SET BY THE 18 NONPROFIT HEALTH INSURER FOR CONTRACTING HEALTH CARE FACILITIES. 19 (4) IN ADDITION TO THE REQUIREMENTS OF THIS SECTION, A NON- 20 PROFIT HEALTH INSURER SHALL COMPLY WITH SECTIONS 3425 AND 3609A. 21 SEC. 3739. (1) A NONPROFIT HEALTH INSURER SHALL OFFER OR 22 INCLUDE COVERAGE, IN ALL GROUP AND NONGROUP CERTIFICATES, TO PRO- 23 VIDE BENEFITS FOR PROSTHETIC DEVICES TO MAINTAIN OR REPLACE THE 24 BODY PART OF AN INDIVIDUAL WHOSE COVERED ILLNESS OR INJURY HAS 25 REQUIRED THE REMOVAL OF THAT BODY PART. HOWEVER, CERTIFICATES 26 RESULTING FROM COLLECTIVE BARGAINING AGREEMENTS ARE EXEMPT FROM 27 THIS SUBSECTION. THIS COVERAGE SHALL PROVIDE THAT REASONABLE 06816'02 * 88 1 CHARGES FOR MEDICAL CARE AND ATTENDANCE FOR AN INDIVIDUAL FITTED 2 WITH A PROSTHETIC DEVICE SHALL BE COVERED BENEFITS AFTER THE 3 INDIVIDUAL'S ATTENDING PHYSICIAN HAS CERTIFIED THE MEDICAL NECES- 4 SITY OR DESIRABILITY FOR A PROPOSED COURSE OF REHABILITATIVE 5 TREATMENT. 6 (2) IN ALL GROUP AND NONGROUP CERTIFICATES, A NONPROFIT 7 HEALTH INSURER SHALL PROVIDE BENEFITS FOR PROSTHETIC DEVICES TO 8 MAINTAIN OR REPLACE THE BODY PART OF AN INDIVIDUAL WHO HAS UNDER- 9 GONE A MASTECTOMY. THIS COVERAGE SHALL PROVIDE THAT REASONABLE 10 CHARGES FOR MEDICAL CARE AND ATTENDANCE FOR AN INDIVIDUAL WHO 11 RECEIVES RECONSTRUCTIVE SURGERY FOLLOWING A MASTECTOMY OR WHO IS 12 FITTED WITH A PROSTHETIC DEVICE SHALL BE COVERED BENEFITS AFTER 13 THE INDIVIDUAL'S ATTENDING PHYSICIAN HAS CERTIFIED THE MEDICAL 14 NECESSITY OR DESIRABILITY OF A PROPOSED COURSE OF REHABILITATIVE 15 TREATMENT. THE COST AND FITTING OF A PROSTHETIC DEVICE FOLLOWING 16 A MASTECTOMY IS INCLUDED WITHIN THE TYPE OF COVERAGE INTENDED BY 17 THIS SUBSECTION. 18 SEC. 3739A. (1) A NONPROFIT HEALTH INSURER SHALL ESTABLISH 19 AND PROVIDE TO MEMBERS AND PARTICIPATING PROVIDERS A PROGRAM TO 20 PREVENT THE ONSET OF CLINICAL DIABETES. THIS PROGRAM FOR PARTIC- 21 IPATING PROVIDERS SHALL EMPHASIZE BEST PRACTICE GUIDELINES TO 22 PREVENT THE ONSET OF CLINICAL DIABETES AND TO TREAT DIABETES, 23 INCLUDING, BUT NOT LIMITED TO, DIET, LIFESTYLE, PHYSICAL EXERCISE 24 AND FITNESS, AND EARLY DIAGNOSIS AND TREATMENT. 25 (2) A NONPROFIT HEALTH INSURER SHALL REGULARLY MEASURE THE 26 EFFECTIVENESS OF A PROGRAM PROVIDED PURSUANT TO SUBSECTION (1) BY 27 REGULARLY SURVEYING GROUP AND NONGROUP MEMBERS COVERED BY THE 06816'02 * 89 1 CERTIFICATE. BY MARCH 28, 2003, EACH NONPROFIT HEALTH INSURER 2 SHALL PREPARE A REPORT CONTAINING THE RESULTS OF THE SURVEY AND 3 SHALL PROVIDE A COPY OF THE REPORT TO THE DEPARTMENT OF COMMUNITY 4 HEALTH. 5 (3) A NONPROFIT HEALTH INSURER CERTIFICATE SHALL PROVIDE 6 BENEFITS IN EACH GROUP AND NONGROUP CERTIFICATE FOR THE FOLLOWING 7 EQUIPMENT, SUPPLIES, AND EDUCATIONAL TRAINING FOR THE TREATMENT 8 OF DIABETES, IF DETERMINED TO BE MEDICALLY NECESSARY AND PRE- 9 SCRIBED BY AN ALLOPATHIC OR OSTEOPATHIC PHYSICIAN: 10 (A) BLOOD GLUCOSE MONITORS AND BLOOD GLUCOSE MONITORS FOR 11 THE LEGALLY BLIND. 12 (B) TEST STRIPS FOR GLUCOSE MONITORS, VISUAL READING AND 13 URINE TESTING STRIPS, LANCETS, AND SPRING-POWERED LANCET 14 DEVICES. 15 (C) INSULIN. 16 (D) SYRINGES. 17 (E) INSULIN PUMPS AND MEDICAL SUPPLIES REQUIRED FOR THE USE 18 OF AN INSULIN PUMP. 19 (F) NONEXPERIMENTAL MEDICATION FOR CONTROLLING BLOOD SUGAR. 20 (G) DIABETES SELF-MANAGEMENT TRAINING TO ENSURE THAT PERSONS 21 WITH DIABETES ARE TRAINED AS TO THE PROPER SELF-MANAGEMENT AND 22 TREATMENT OF THEIR DIABETIC CONDITION. 23 (4) A NONPROFIT HEALTH INSURER CERTIFICATE SHALL PROVIDE 24 BENEFITS IN EACH GROUP AND NONGROUP CERTIFICATE FOR MEDICALLY 25 NECESSARY MEDICATIONS PRESCRIBED BY AN ALLOPATHIC, OSTEOPATHIC, 26 OR PODIATRIC PHYSICIAN AND USED IN THE TREATMENT OF FOOT 06816'02 * 90 1 AILMENTS, INFECTIONS, AND OTHER MEDICAL CONDITIONS OF THE FOOT, 2 ANKLE, OR NAILS ASSOCIATED WITH DIABETES. 3 (5) COVERAGE UNDER SUBSECTION (3) FOR DIABETES 4 SELF-MANAGEMENT TRAINING IS SUBJECT TO ALL OF THE FOLLOWING: 5 (A) IS LIMITED TO COMPLETION OF A CERTIFIED DIABETES EDUCA- 6 TION PROGRAM UPON OCCURRENCE OF EITHER OF THE FOLLOWING: 7 (i) IF CONSIDERED MEDICALLY NECESSARY UPON THE DIAGNOSIS OF 8 DIABETES BY AN ALLOPATHIC OR OSTEOPATHIC PHYSICIAN WHO IS MANAG- 9 ING THE PATIENT'S DIABETIC CONDITION AND IF THE SERVICES ARE 10 NEEDED UNDER A COMPREHENSIVE PLAN OF CARE TO ENSURE THERAPY COM- 11 PLIANCE OR TO PROVIDE NECESSARY SKILLS AND KNOWLEDGE. 12 (ii) IF AN ALLOPATHIC OR OSTEOPATHIC PHYSICIAN DIAGNOSES A 13 SIGNIFICANT CHANGE WITH LONG-TERM IMPLICATIONS IN THE PATIENT'S 14 SYMPTOMS OR CONDITIONS THAT NECESSITATES CHANGES IN A PATIENT'S 15 SELF-MANAGEMENT OR A SIGNIFICANT CHANGE IN MEDICAL PROTOCOL OR 16 TREATMENT MODALITIES. 17 (B) SHALL BE PROVIDED BY A DIABETES OUTPATIENT TRAINING PRO- 18 GRAM CERTIFIED TO RECEIVE MEDICARE OR MEDICAID REIMBURSEMENT OR 19 CERTIFIED BY THE DEPARTMENT OF COMMUNITY HEALTH. TRAINING PRO- 20 VIDED UNDER THIS SUBDIVISION SHALL BE CONDUCTED IN GROUP SETTINGS 21 WHENEVER PRACTICABLE. 22 (6) BENEFITS UNDER THIS SECTION ARE NOT SUBJECT TO DOLLAR 23 LIMITS, DEDUCTIBLES, OR COPAYMENT PROVISIONS THAT ARE GREATER 24 THAN THOSE FOR PHYSICAL ILLNESS GENERALLY. 25 (7) AS USED IN THIS SECTION, "DIABETES" INCLUDES ALL OF THE 26 FOLLOWING: 06816'02 * 91 1 (A) GESTATIONAL DIABETES. 2 (B) INSULIN-DEPENDENT DIABETES. 3 (C) NON-INSULIN-DEPENDENT DIABETES. 4 PART 4 5 SEC. 3741. A NONPROFIT HEALTH INSURER SUBJECT TO THIS CHAP- 6 TER MAY ENTER INTO PARTICIPATING CONTRACTS WITH HEALTH CARE PRO- 7 VIDERS AS PROVIDED IN THIS PART. 8 SEC. 3742. (1) A NONPROFIT HEALTH INSURER MAY ENTER INTO 9 PARTICIPATING CONTRACTS WITH OR EMPLOY HEALTH CARE PROVIDERS ON 10 THE BASIS OF COST, QUALITY, AVAILABILITY OF SERVICES TO THE MEM- 11 BERSHIP, CONFORMITY TO THE ADMINISTRATIVE PROCEDURES OF THE NON- 12 PROFIT HEALTH INSURER, AND OTHER FACTORS RELEVANT TO DELIVERY OF 13 ECONOMICAL, QUALITY CARE, BUT SHALL NOT DISCRIMINATE SOLELY ON 14 THE BASIS OF THE CLASS OF HEALTH CARE PROVIDERS TO WHICH THE 15 HEALTH CARE PROVIDER BELONGS. 16 (2) A NONPROFIT HEALTH INSURER SHALL ENTER INTO PARTICIPAT- 17 ING CONTRACTS WITH HEALTH CARE PROVIDERS THROUGH WHICH COVERED 18 HEALTH CARE SERVICES ARE USUALLY PROVIDED TO MEMBERS. 19 (3) A PARTICIPATING CONTRACT SHALL PROHIBIT THE PARTICIPAT- 20 ING PROVIDER FROM SEEKING PAYMENT FROM A MEMBER FOR HEALTH CARE 21 SERVICES COVERED UNDER THE CERTIFICATE, EXCEPT THAT THE PARTICI- 22 PATING CONTRACT MAY ALLOW PARTICIPATING PROVIDERS TO COLLECT 23 DEDUCTIBLES AND COPAYMENTS DIRECTLY FROM MEMBERS. 24 (4) A PARTICIPATING CONTRACT SHALL PROVIDE FOR ALL OF THE 25 FOLLOWING: 26 (A) THAT THE PARTICIPATING PROVIDER MEET AND MAINTAIN 27 APPLICABLE LICENSURE OR CERTIFICATION REQUIREMENTS. 06816'02 * 92 1 (B) FOR APPROPRIATE ACCESS BY THE NONPROFIT HEALTH INSURER 2 TO RECORDS OR REPORTS CONCERNING SERVICE TO ITS MEMBERS. 3 (C) THAT THE PARTICIPATING PROVIDER COOPERATE WITH THE NON- 4 PROFIT HEALTH INSURER'S QUALITY ASSURANCE ACTIVITIES. 5 (D) FOR THE REIMBURSEMENT METHODOLOGY THAT IS USED TO PAY 6 THE PARTICIPATING PROVIDER. 7 (E) FOR A REASONABLE DISPUTE RESOLUTION PROCESS. 8 (F) PROCEDURES FOR THE TERMINATION OF THE PARTICIPATING 9 CONTRACT. 10 (G) PROCEDURES FOR AMENDMENTS TO THE CONTRACT, INCLUDING 11 NOTIFICATION TO PROVIDERS. 12 SEC. 3743. (1) A PARTICIPATING CONTRACT MAY COVER ALL MEM- 13 BERS OR MAY BE A SEPARATE AND INDIVIDUAL CONTRACT ON A PER CLAIM 14 BASIS, IF, IN ENTERING INTO A SEPARATE AND INDIVIDUAL CONTRACT ON 15 A PER CLAIM BASIS, THE PARTICIPATING PROVIDER CERTIFIES TO THE 16 NONPROFIT HEALTH INSURER: 17 (A) THAT THE PROVIDER WILL ACCEPT THE NONPROFIT HEALTH 18 INSURER'S APPROVED AMOUNT AS PAYMENT IN FULL FOR HEALTH CARE 19 SERVICES RENDERED FOR THE SPECIFIED CLAIM FOR THE MEMBER 20 INDICATED. 21 (B) THAT THE PROVIDER WILL ACCEPT THE NONPROFIT HEALTH 22 INSURER'S APPROVED AMOUNT AS PAYMENT IN FULL FOR ALL CASES 23 INVOLVING THE PROCEDURE SPECIFIED, FOR THE DURATION OF THE CALEN- 24 DAR YEAR. AS USED IN THIS SUBDIVISION, PROVIDER DOES NOT INCLUDE 25 A PERSON LICENSED AS A DENTIST UNDER PART 166 OF THE PUBLIC 26 HEALTH CODE, 1978 PA 368, MCL 333.16601 TO 333.16648. 06816'02 * 93 1 (C) THAT THE PROVIDER WILL NOT DETERMINE WHETHER TO 2 PARTICIPATE ON A CLAIM ON THE BASIS OF THE RACE, COLOR, CREED, 3 MARITAL STATUS, SEX, NATIONAL ORIGIN, RESIDENCE, AGE, DISABILITY, 4 OR LAWFUL OCCUPATION OF THE MEMBER ENTITLED TO HEALTH CARE 5 BENEFITS. 6 (2) A PARTICIPATING CONTRACT SHALL PROVIDE THAT THE PRIVATE 7 PROVIDER-PATIENT RELATIONSHIP SHALL BE MAINTAINED TO THE EXTENT 8 PROVIDED FOR BY LAW. 9 (3) A NONPROFIT HEALTH INSURER SHALL PROVIDE TO A MEMBER, 10 UPON REQUEST, A CURRENT LIST OF PROVIDERS WITH WHOM THE NONPROFIT 11 HEALTH INSURER HAS ENTERED INTO PARTICIPATING CONTRACTS. 12 SEC. 3744. A NONPROFIT HEALTH INSURER SHALL SUBMIT TO THE 13 COMMISSIONER FOR APPROVAL STANDARD PARTICIPATING CONTRACT FORMATS 14 AND ANY SUBSTANTIVE CHANGES TO THOSE PARTICIPATING CONTRACT 15 FORMATS. THE CONTRACT FORMAT OR CHANGE IS CONSIDERED APPROVED 30 16 DAYS AFTER FILING WITH THE COMMISSIONER UNLESS APPROVED OR DISAP- 17 PROVED WITHIN THE 30 DAYS. AS USED IN THIS SECTION, "SUBSTANTIVE 18 CHANGES TO THOSE PARTICIPATING CONTRACT FORMATS" MEANS ANY CHANGE 19 TO A PARTICIPATING CONTRACT THAT ALTERS THE METHOD OF PAYMENT TO 20 A HEALTH CARE PROVIDER, ALTERS THE RISK, IF ANY, ASSUMED BY EACH 21 PARTY TO THE CONTRACT, OR AFFECTS A PROVISION REQUIRED BY LAW. 22 SEC. 3745. (1) A NONPROFIT HEALTH INSURER SHALL PROVIDE 23 EVIDENCE TO THE COMMISSIONER THAT IT HAS EXECUTED PARTICIPATING 24 CONTRACTS WITH A SUFFICIENT NUMBER OF HEALTH CARE PROVIDERS TO 25 ENABLE THE NONPROFIT HEALTH INSURER TO DELIVER HEALTH CARE SERV- 26 ICES COVERED UNDER A CERTIFICATE. 06816'02 * 94 1 (2) A NONPROFIT HEALTH INSURER SHALL ESTABLISH AND MAINTAIN 2 ADEQUATE PARTICIPATING CONTRACTS TO ENSURE REASONABLE PROXIMITY 3 BETWEEN PARTICIPATING PROVIDERS AND MEMBERS FOR THE DELIVERY OF 4 COVERED HEALTH CARE SERVICES. IN DETERMINING WHETHER A NONPROFIT 5 HEALTH INSURER HAS COMPLIED WITH THIS SUBSECTION, THE COMMIS- 6 SIONER SHALL GIVE DUE CONSIDERATION TO THE RELATIVE AVAILABILITY 7 OF HEALTH CARE PROVIDERS IN A GEOGRAPHIC AREA. 8 PART 5 9 SEC. 3751. ADMINISTRATIVE COSTS FOR ADMINISTRATIVE SERVICES 10 AND COST-PLUS ARRANGEMENTS SHALL BE DETERMINED IN ACCORDANCE WITH 11 THE ADMINISTRATIVE COSTS ALLOCATION METHODOLOGY AND DEFINITIONS 12 FILED AND APPROVED UNDER THIS PART AND SHALL BE EXPRESSED CLEARLY 13 AND ACCURATELY IN THE CONTRACTS ESTABLISHING THE ARRANGEMENTS, AS 14 A PERCENTAGE OF COSTS RATHER THAN CHARGES. 15 SEC. 3752. (1) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION 16 (2), IF A NONPROFIT HEALTH INSURER WANTS TO OFFER A NEW CERTIFI- 17 CATE, CHANGE AN EXISTING CERTIFICATE, OR CHANGE A RATE CHARGE, A 18 COPY OF THE PROPOSED REVISED CERTIFICATE OR PROPOSED RATE SHALL 19 BE FILED WITH THE COMMISSIONER AND SHALL NOT TAKE EFFECT UNTIL 60 20 DAYS AFTER THE FILING UNLESS THE COMMISSIONER APPROVES THE CHANGE 21 IN WRITING BEFORE THE EXPIRATION OF THE 60 DAYS. THE COMMIS- 22 SIONER MAY SUBSEQUENTLY DISAPPROVE ANY CERTIFICATE OR RATE 23 CHANGE. 24 (2) THE COMMISSIONER SHALL EXEMPT FROM PRIOR APPROVAL CER- 25 TIFICATES RESULTING FROM A COLLECTIVE BARGAINING AGREEMENT. 06816'02 * 95 1 (3) THE COMMISSIONER MAY DISAPPROVE, OR APPROVE WITH 2 MODIFICATIONS, A CERTIFICATE AND APPLICABLE RATES UNDER 1 OR MORE 3 OF THE FOLLOWING CIRCUMSTANCES: 4 (A) IF THE RATE CHARGED FOR THE BENEFITS PROVIDED IS NOT 5 EQUITABLE, NOT ADEQUATE, OR EXCESSIVE, AS DEFINED IN SECTION 6 3756. 7 (B) IF THE CERTIFICATE CONTAINS 1 OR MORE PROVISIONS THAT 8 ARE UNJUST, UNFAIR, INEQUITABLE, MISLEADING, OR DECEPTIVE OR THAT 9 ENCOURAGE MISREPRESENTATION OF THE COVERAGE. 10 (4) THE COMMISSIONER SHALL APPROVE A CERTIFICATE AND APPLI- 11 CABLE PROPOSED RATES IF ALL OF THE FOLLOWING CONDITIONS ARE MET: 12 (A) IF THE RATE CHARGED FOR THE BENEFITS PROVIDED IS EQUITA- 13 BLE, ADEQUATE, AND NOT EXCESSIVE, AS DEFINED IN SECTION 3756. 14 (B) IF THE CERTIFICATE DOES NOT CONTAIN ANY PROVISION THAT 15 IS UNJUST, UNFAIR, INEQUITABLE, MISLEADING, OR DECEPTIVE OR THAT 16 ENCOURAGES MISREPRESENTATION OF THE COVERAGE. 17 (5) THE COMMISSIONER MAY DISAPPROVE A CERTIFICATE AND ANY 18 APPLICABLE PROPOSED RATES UNDER THIS SECTION BY ISSUING A NOTICE 19 OF DISAPPROVAL SPECIFYING HOW THE FILING FAILS TO MEET THE 20 REQUIREMENTS OF THIS CHAPTER. THE NOTICE SHALL STATE THAT THE 21 FILING SHALL NOT BECOME EFFECTIVE. 22 (6) THE COMMISSIONER MAY APPROVE, OR APPROVE WITH MODIFICA- 23 TIONS, A CERTIFICATE AND ANY APPLICABLE PROPOSED RATES UNDER THIS 24 SECTION BY ISSUING A NOTICE OF APPROVAL OR APPROVAL WITH 25 MODIFICATIONS. IF THE NOTICE IS OF APPROVAL WITH MODIFICATIONS, 26 THE NOTICE SHALL SPECIFY WHAT MODIFICATIONS IN THE FILING ARE 27 REQUIRED FOR APPROVAL UNDER THIS CHAPTER, AND THE REASONS FOR THE 06816'02 * 96 1 MODIFICATIONS. THE NOTICE SHALL ALSO STATE THAT THE FILING SHALL 2 BECOME EFFECTIVE AFTER THE MODIFICATIONS ARE MADE AND APPROVED BY 3 THE COMMISSIONER. 4 (7) UPON REQUEST BY A NONPROFIT HEALTH INSURER, THE COMMIS- 5 SIONER MAY ALLOW CERTIFICATES AND RATES TO BE IMPLEMENTED BEFORE 6 FILING TO ALLOW IMPLEMENTATION OF A NEW CERTIFICATE ON THE DATE 7 REQUESTED. 8 SEC. 3753. (1) THE RATES CHARGED TO NONGROUP SUBSCRIBERS 9 FOR EACH CERTIFICATE SHALL BE FILED IN ACCORDANCE WITH SECTION 10 3752. ANNUALLY, THE COMMISSIONER SHALL APPROVE, DISAPPROVE, OR 11 MODIFY AND APPROVE THE PROPOSED OR EXISTING RATES FOR EACH CER- 12 TIFICATE SUBJECT TO THE STANDARD THAT THE RATES MUST BE DETER- 13 MINED TO BE EQUITABLE, ADEQUATE, AND NOT EXCESSIVE, AS DEFINED IN 14 SECTION 3756. THE BURDEN OF PROOF THAT RATES TO BE CHARGED MEET 15 THESE STANDARDS IS ON THE NONPROFIT HEALTH INSURER PROPOSING TO 16 USE THE RATES. THE RATES CHARGED TO NONGROUP SUBSCRIBERS FOR 17 EACH CERTIFICATE SHALL BE CALCULATED ON A COMMUNITY RATING BASIS 18 AND MAY ONLY VARY BY BENEFIT PLAN AND FAMILY COMPOSITION. RATES 19 SHALL NOT BE BASED ON AGE, HEALTH STATUS, GENDER, OR GEOGRAPHIC 20 LOCATION. 21 (2) THE METHODOLOGY AND DEFINITIONS OF EACH RATING SYSTEM, 22 FORMULA, COMPONENT, AND FACTOR USED TO CALCULATE RATES FOR GROUP 23 SUBSCRIBERS FOR EACH CERTIFICATE, INCLUDING THE METHODOLOGY AND 24 DEFINITIONS USED TO CALCULATE ADMINISTRATIVE COSTS FOR ADMINIS- 25 TRATIVE SERVICES ONLY AND COST-PLUS ARRANGEMENTS, SHALL BE FILED 26 IN ACCORDANCE WITH SECTION 3752. THE DEFINITION OF A GROUP, 27 INCLUDING ANY CLUSTERING PRINCIPLES APPLIED TO NONGROUP 06816'02 * 97 1 SUBSCRIBERS OR SMALL GROUP SUBSCRIBERS FOR THE PURPOSE OF GROUP 2 FORMATION, IS SUBJECT TO THE PRIOR APPROVAL OF THE COMMISSIONER. 3 THE COMMISSIONER SHALL APPROVE, DISAPPROVE, OR MODIFY AND APPROVE 4 THE METHODOLOGY AND DEFINITIONS OF EACH RATING SYSTEM, FORMULA, 5 COMPONENT, AND FACTOR FOR EACH CERTIFICATE SUBJECT TO THE STAN- 6 DARD THAT THE RESULTING RATES FOR GROUP SUBSCRIBERS MUST BE 7 DETERMINED TO BE EQUITABLE, ADEQUATE, AND NOT EXCESSIVE, AS 8 DEFINED IN SECTION 3756. IN ADDITION, THE COMMISSIONER MAY FROM 9 TIME TO TIME REVIEW THE RECORDS OF THE NONPROFIT HEALTH INSURER 10 TO DETERMINE PROPER APPLICATION OF A RATING SYSTEM, FORMULA, COM- 11 PONENT, OR FACTOR FOR ANY GROUP. THE NONPROFIT HEALTH INSURER 12 SHALL REFILE EVERY 3 YEARS FOR APPROVAL UNDER THIS SUBSECTION OF 13 THE METHODOLOGY AND DEFINITIONS OF EACH RATING SYSTEM, FORMULA, 14 COMPONENT, AND FACTOR USED TO CALCULATE RATES FOR GROUP SUBSCRIB- 15 ERS, INCLUDING THE METHODOLOGY AND DEFINITIONS USED TO CALCULATE 16 ADMINISTRATIVE COSTS FOR ADMINISTRATIVE SERVICES ONLY AND 17 COST-PLUS ARRANGEMENTS. THE BURDEN OF PROOF THAT THE RESULTING 18 RATES TO BE CHARGED MEET THESE STANDARDS IS ON THE NONPROFIT 19 HEALTH INSURER PROPOSING TO USE THE RATING SYSTEM, FORMULA, COM- 20 PONENT, OR FACTOR. 21 SEC. 3755. (1) A PROPOSED RATE SHALL NOT TAKE EFFECT UNTIL 22 A FILING HAS BEEN MADE WITH THE COMMISSIONER AND APPROVED UNDER 23 SECTION 3752 OR THIS SECTION, AS APPLICABLE, EXCEPT AS PROVIDED 24 IN SUBSECTIONS (2) AND (3). 25 (2) UPON REQUEST BY A NONPROFIT HEALTH INSURER, THE COMMIS- 26 SIONER MAY ALLOW RATE ADJUSTMENTS TO BECOME EFFECTIVE BEFORE 27 APPROVAL, FOR FEDERAL OR STATE MANDATED BENEFIT CHANGES. 06816'02 * 98 1 HOWEVER, A FILING FOR THESE ADJUSTMENTS SHALL BE SUBMITTED BEFORE 2 THE EFFECTIVE DATE OF THE MANDATED BENEFIT CHANGES. IF THE COM- 3 MISSIONER DISAPPROVES OR MODIFIES AND APPROVES THE RATES, AN 4 ADJUSTMENT SHALL BE MADE RETROACTIVE TO THE EFFECTIVE DATE OF THE 5 MANDATED BENEFIT CHANGES OR ADDITIONS. 6 (3) IMPLEMENTATION BEFORE APPROVAL MAY BE ALLOWED IF THE 7 NONPROFIT HEALTH INSURER IS PARTICIPATING WITH 1 OR MORE NON- 8 PROFIT HEALTH INSURERS TO UNDERWRITE A GROUP WHOSE EMPLOYEES ARE 9 LOCATED IN SEVERAL STATES. UPON REQUEST FROM THE COMMISSIONER, 10 THE NONPROFIT HEALTH INSURER SHALL FILE WITH THE COMMISSIONER, 11 AND THE COMMISSIONER SHALL EXAMINE, THE FINANCIAL ARRANGEMENT, 12 FORMULAE, AND FACTORS. IF ANY ARE DETERMINED TO BE UNACCEPTABLE, 13 THE COMMISSIONER SHALL TAKE APPROPRIATE ACTION. 14 SEC. 3756. (1) A RATE IS NOT EXCESSIVE IF THE RATE IS NOT 15 UNREASONABLY HIGH RELATIVE TO THE FOLLOWING ELEMENTS, INDIVIDU- 16 ALLY OR COLLECTIVELY: PROVISION FOR ANTICIPATED BENEFIT COSTS; 17 PROVISION FOR ADMINISTRATIVE EXPENSE; PROVISION FOR COST TRANS- 18 FERS, IF ANY; PROVISION FOR A CONTRIBUTION TO OR FROM SURPLUS 19 THAT IS CONSISTENT WITH THE ATTAINMENT OR MAINTENANCE OF UNIM- 20 PAIRED SURPLUS AS REQUIRED BY SECTION 3707; AND PROVISION FOR 21 ADJUSTMENTS DUE TO PRIOR EXPERIENCE OF GROUPS, AS DEFINED IN THE 22 GROUP RATING SYSTEM. A DETERMINATION AS TO WHETHER A RATE IS 23 EXCESSIVE RELATIVE TO THESE ELEMENTS, INDIVIDUALLY OR COLLECTIVE- 24 LY, SHALL BE BASED ON THE FOLLOWING: REASONABLE EVALUATIONS OF 25 RECENT CLAIM EXPERIENCE; PROJECTED TRENDS IN CLAIM COSTS; THE 26 ALLOCATION OF ADMINISTRATIVE EXPENSE BUDGETS; AND THE PRESENT AND 27 ANTICIPATED UNIMPAIRED SURPLUS OF THE NONPROFIT HEALTH INSURER. 06816'02 * 99 1 TO THE EXTENT THAT ANY OF THESE ELEMENTS ARE CONSIDERED 2 EXCESSIVE, THE PROVISION IN THE RATES FOR THESE ELEMENTS SHALL BE 3 MODIFIED ACCORDINGLY. 4 (2) THE ADMINISTRATIVE EXPENSE BUDGET OF THE NONPROFIT 5 HEALTH INSURER MUST BE REASONABLE, AS DETERMINED BY THE COMMIS- 6 SIONER AFTER EXAMINATION OF MATERIAL AND SUBSTANTIAL ADMINISTRA- 7 TIVE AND ACQUISITION EXPENSE ITEMS. 8 (3) A RATE IS EQUITABLE IF THE RATE CAN BE COMPARED TO ANY 9 OTHER RATE OFFERED BY THE NONPROFIT HEALTH INSURER TO ITS SUB- 10 SCRIBERS, AND THE OBSERVED RATE DIFFERENCES CAN BE SUPPORTED BY 11 DIFFERENCES IN ANTICIPATED BENEFIT COSTS, ADMINISTRATIVE EXPENSE 12 COST, DIFFERENCES IN RISK, OR ANY IDENTIFIED COST TRANSFER 13 PROVISIONS. 14 (4) A RATE IS ADEQUATE IF THE RATE IS NOT UNREASONABLY LOW 15 RELATIVE TO THE ELEMENTS PRESCRIBED IN SUBSECTION (1), INDIVIDU- 16 ALLY OR COLLECTIVELY, BASED ON REASONABLE EVALUATIONS OF RECENT 17 CLAIM EXPERIENCE, PROJECTED TRENDS IN CLAIM COSTS, THE ALLOCATION 18 OF ADMINISTRATIVE EXPENSE BUDGETS, AND THE PRESENT AND ANTICI- 19 PATED UNIMPAIRED SURPLUS OF THE NONPROFIT HEALTH INSURER. 20 (5) EXCEPT FOR IDENTIFIED COST TRANSFERS, EACH LINE OF BUSI- 21 NESS SHALL BE SELF-SUSTAINING OVER TIME. HOWEVER, THERE MAY BE 22 COST TRANSFERS FOR THE BENEFIT OF SENIOR CITIZENS AND INDIVIDUAL 23 CONVERSION SUBSCRIBERS. COST TRANSFERS FOR THE BENEFIT OF SENIOR 24 CITIZENS, IN THE AGGREGATE, ANNUALLY SHALL NOT EXCEED 1% OF THE 25 EARNED SUBSCRIPTION INCOME OF THE NONPROFIT HEALTH INSURER AS 26 REPORTED IN THE MOST RECENT ANNUAL STATEMENT OF THE NONPROFIT 27 HEALTH INSURER. INDIVIDUAL CONVERSION SUBSCRIBERS ARE THOSE WHO 06816'02 * 100 1 HAVE MAINTAINED COVERAGE WITH THE NONPROFIT HEALTH INSURER ON AN 2 INDIVIDUAL BASIS AFTER LEAVING A SUBSCRIBER GROUP. 3 SEC. 3757. ANY FINAL ORDER OR DECISION MADE, ISSUED, OR 4 EXECUTED BY THE COMMISSIONER UNDER THIS PART AFTER A HEARING HELD 5 BEFORE THE COMMISSIONER OR HIS OR HER DESIGNEE PURSUANT TO THE 6 ADMINISTRATIVE PROCEDURES ACT OF 1969, 1969 PA 306, MCL 24.201 TO 7 24.328, IS SUBJECT TO REVIEW WITHOUT LEAVE BY THE CIRCUIT COURT 8 FOR INGHAM COUNTY AS PROVIDED IN CHAPTER 6 OF THE ADMINISTRATIVE 9 PROCEDURES ACT OF 1969, 1969 PA 306, MCL 24.301 TO 24.306. 10 Sec. 5104. (1) Subject to the requirements of this act 11 applicable to domestic stock insurers, domestic mutual insurers, 12 reciprocals or inter-insurance exchanges, and the further 13 requirements of this chapter, 13 or more persons may organize a 14 stock insurer or 20 or more persons may organize a mutual insurer 15 for the purpose of transacting any or all of the following kinds 16 of insurance: property, marine, inland navigation and transpor- 17 tation, casualty, or fidelity and surety, all as defined in chap- 18 ter 6. Once organized and authorized, the acquiring insurer is 19 subject to all applicable provisions of this act. 20 (2) If the acquiring insurer is a domestic stock insurer 21 owned by anonprofit health care corporation formed pursuant to22the nonprofit health care corporation reform act, 1980 PA 350,23MCL 550.1101 to 550.1704NONPROFIT HEALTH INSURER REGULATED 24 UNDER CHAPTER 37, then for insurance products and services the 25 acquiring insurer under this chapter whether directly or indi- 26 rectly shall only transact worker's compensation insurance and 27 employer's liability insurance, transact disability insurance 06816'02 * 101 1 limited to replacement of loss of earnings, and act as an 2 administrative services organization for an approved self-insured 3 worker's compensation plan or a disability insurance plan limited 4 to replacement of loss of earnings. This subsection does not 5 preclude the acquiring insurer from providing either directly or 6 indirectly noninsurance products and services as otherwise pro- 7 vided by law. 8 Sec. 7705. As used in this chapter: 9 (a) "Account" means either of the 2 accounts created under 10 section 7706. 11 (b) "Association" means the Michigan life and health insur- 12 ance guaranty association created under section 7706. 13 (c) "Contractual obligation" means an obligation under cov- 14 ered policies. 15 (d) "Covered policy" means a policy or contract or certifi- 16 cate under a group policy or contract, or portion thereof, for 17 which coverage is provided under section 7704. 18 (e) "Health insurance" means disability insurance as defined 19 in section 606. 20 (f) "Impaired insurer" means a member insurer considered by 21 the commissioner after May 1, 1982, to be potentially unable to 22 fulfill the insurer's contractual obligations or is placed under 23 an order of rehabilitation or conservation by a court of compe- 24 tent jurisdiction. Impaired insurer does not mean an insolvent 25 insurer. 26 (g) "Insolvent insurer" means a member insurerwhichTHAT 27 after May 1, 1982, becomes insolvent and is placed under an order 06816'02 * 102 1 of liquidation, by a court of competent jurisdiction with a 2 finding of insolvency. 3 (h) "Member insurer" means a person authorized to transact a 4 kind of insurance or annuity business in this state for which 5 coverage is provided under section 7704 and includes an insurer 6 whose certificate of authority in this state may have been sus- 7 pended, revoked, not renewed, or voluntarily withdrawn. Member 8 insurer does not include the following: 9 (i) A fraternal benefit society. 10 (ii) A cooperative plan insurer authorized under chapter 11 64. 12 (iii) A health maintenance organizationauthorized or13licensed under part 210 of the public health code, Act No. 368 of14the Public Acts of 1978, being sections 333.21001 to 333.21098 of15the Michigan Compiled LawsREGULATED UNDER CHAPTER 35. 16 (iv) A mandatory state pooling plan. 17 (v) A mutual assessment or any entity that operates on an 18 assessment basis. 19 (vi) A nonprofit dental care corporation operating under 20Act No. 125 of the Public Acts of 1963, being sections 550.35121to 550.373 of the Michigan Compiled Laws1963 PA 125, MCL 22 550.351 TO 550.373. 23 (vii)A nonprofit health care corporation operating under24the nonprofit health care corporation reform act, Act No. 350 of25the Public Acts of 1980, being sections 550.1101 to 550.1704 of26the Michigan Compiled LawsA NONPROFIT HEALTH INSURER REGULATED 27 UNDER CHAPTER 37. 06816'02 * 103 1 (viii) An insurance exchange. 2 (ix) Any entity similar to the entities described in this 3 subdivision. 4 (i) "Moody's corporate bond yield average" means the monthly 5 average corporates as published by Moody's investors service, 6 inc., or a successor to that service. 7 (j) "Person" means an individual, corporation, partnership, 8 association, or voluntary organization. 9 (k) "Premiums" means amounts received in a calendar year on 10 covered policies or contracts less premiums, considerations, and 11 deposits returned and less dividends and experience credits. The 12 term "premiums" does not include an amount received for a policy 13 or contract, or a portion of a policy or contract for which cov- 14 erage is not provided under section 7704. However, accessible 15 premiums shall not be reduced on account of sections 7704(3)(c) 16 relating to interest limitations and 7704(4)(b), (c), and (d) 17 relating to limitations with respect to any 1 individual, any 1 18 participant, and any 1 contract holder. Premiums shall not 19 include a premium in excess of $5,000,000.00 on an unallocated 20 annuity contract not issued under a governmental retirement plan 21 established under section 401(k), 403(b), or 457 of the internal 22 revenue code of 1986., 26 U.S.C. 401, 403, and 457.23 (l) "Resident" means a person who resides in this state at 24 the time a member insurer is determined to be an impaired or 25 insolvent insurer and to whom contractual obligations are owed. 26 A person shall be considered a resident of only 1 state, which in 06816'02 * 104 1 the case of a person other than a natural person, shall be its 2 principal place of business. 3 (m) "Supplemental contract" means an agreement entered into 4 for the distribution of policy or contract proceeds. 5 (n) "Unallocated annuity contract" means an annuity contract 6 or group annuity certificate that is not issued to and owned by 7 an individual, except to the extent of an annuity benefit guaran- 8 teed to an individual by an insurer under the contract or 9 certificate. The term shall also include, but not be limited to, 10 guaranteed investment contracts, deposit administration con- 11 tracts, and contracts qualified under section 403(b) of the 12 internal revenue code of 1986., 26 U.S.C. 403.13 Enacting section 1. This amendatory act applies to health 14 policies, certificates, or contracts issued or renewed on and 15 after the effective date of this amendatory act. 16 Enacting section 2. The nonprofit health care corporation 17 reform act, 1980 PA 350, MCL 550.1101 to 550.1704, is repealed. 18 Enacting section 3. This amendatory act does not take 19 effect unless Senate Bill No. _____ of House Bill No. 6046 20 (request no. 06817'02) of the 91st Legislature is enacted into 21 law. 06816'02 * Final page. DKH