March 25, 2010, Introduced by Senators GEORGE, GLEASON, BIRKHOLZ and ALLEN and referred to the Committee on Health Policy.
A bill to amend 1980 PA 350, entitled
"The nonprofit health care corporation reform act,"
by amending sections 401e, 402b, 608, 609, 610, 612, and 613 (MCL
550.1401e, 550.1402b, 550.1608, 550.1609, 550.1610, 550.1612, and
550.1613), section 401e as added by 1996 PA 516, section 402b as
amended by 1999 PA 7, section 608 as amended by 1991 PA 73, and
section 609 as amended by 2003 PA 59, and by adding sections 220,
409b, and 419c.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 220. (1) Except as otherwise provided, a health care
corporation is subject to chapters 37A and 37B of the insurance
code of 1956, 1956 PA 218, MCL 500.3751 to 500.3788.
(2) A nongroup health care corporation certificate introduced
on or after April 1, 2009 is not subject to section 401(3)(a), (b),
and (c) or sections 608 to 614.
(3) An individual enrolled in a health care corporation
nongroup or group conversion certificate "A" through "G" or
medicare supplemental certificate on March 31, 2010 may remain
enrolled in that certificate. Certificates described in this
subsection are not subject to section 3759, 3761(3) or (4), or 3762
of the insurance code of 1956, 1956 PA 218, MCL 500.3759, 500.3761,
and 500.3762. The rates for certificates described in this
subsection shall be determined under a system of community rating.
Sec.
401e. (1) Except as provided in this section, a health
care
corporation that has issued a nongroup certificate shall renew
or
continue in force the certificate at the option of the
individual.
(1) (2)
Except as provided in this section,
a health care
corporation that has issued a group certificate shall renew or
continue in force the certificate at the option of the sponsor of
the plan.
(2) (3)
Guaranteed renewal is not required
in cases of fraud,
intentional misrepresentation of material fact, lack of payment, if
the health care corporation no longer offers that particular type
of coverage in the market, or if the individual or group moves
outside the service area.
Sec.
402b. (1) For an individual covered under a nongroup
certificate
or under a certificate not covered under subsection
(2),
a health care corporation may exclude or limit coverage for a
condition
only if the exclusion or limitation relates to a
condition
for which medical advice, diagnosis, care, or treatment
was
recommended or received within 6 months before enrollment and
the
exclusion or limitation does not extend for more than 6 months
after
the effective date of the certificate.
(2)
A health care corporation shall not
exclude or limit
coverage for a preexisting condition for an individual covered
under a group certificate.
(3)
Notwithstanding subsection (1), a health care corporation
shall
not issue a certificate to a person eligible for nongroup
coverage
or eligible for a certificate not covered under subsection
(2)
that excludes or limits coverage for a preexisting condition or
provides
a waiting period if all of the following apply:
(a)
The person's most recent health coverage prior to applying
for
coverage with the health care corporation was under a group
health
plan.
(b)
The person was continuously covered prior to the
application
for coverage with the health care corporation under 1
or
more health plans for an aggregate of at least 18 months with no
break
in coverage that exceeded 62 days.
(c)
The person is no longer eligible for group coverage and is
not
eligible for medicare or medicaid.
(d)
The person did not lose eligibility for coverage for
failure
to pay any required contribution or for an act to defraud a
health
care corporation, a health insurer, or a health maintenance
organization.
(e)
If the person was eligible for continuation of health
coverage
from that group health plan pursuant to the consolidated
omnibus
budget reconciliation act of 1985, Public Law 99-272, 100
Stat.
82, he or she has elected and exhausted that coverage.
(4)
As used in this section,
"group" means a group of 2 or
more subscribers.
Sec. 409b. (1) Any certificate delivered, issued for delivery,
or renewed in this state that provides for hospital or medical care
coverage for dependent children shall permit continuation of that
coverage for a child until that child attains age 26 even if the
child is no longer considered a dependent if the child meets all of
the following:
(a) Is unmarried.
(b) Has no dependents of his or her own.
(c) Is a resident of this state or resides somewhere else
temporarily.
(d) Is not eligible for a group health benefits or coverage
plan from his or her employer.
(e) Is not provided coverage under any other group or
individual health benefits or coverage plan.
(f) Has not accepted a financial incentive from his or her
employer or other source to decline any other group or individual
health benefits or coverage plan.
(g) Was continuously covered prior to the application for
continuation coverage under 1 or more individual or group health
benefits or coverage plans with no break in coverage that exceeded
62 days.
(2) If a certificate provides continuation coverage under
subsection (1) and the child for which the continuation coverage is
provided attains age 27 during the certificate year, coverage for
that child shall continue through the end of the certificate year.
(3) A covered person's certificate may require payment of a
premium by the covered person or child, subject to the
commissioner's approval, for any period of continuation coverage
elected under subsection (1). The premium shall not exceed 102% of
the applicable portion of the premium previously paid for that
dependent's coverage under the certificate before the termination
of coverage at the specific age provided for in the certificate.
The applicable portion of the premium previously paid for that
dependent's coverage shall be determined pursuant to rules adopted
by the commissioner under the administrative procedures act, based
upon the difference between the certificate's rating tiers for
adult and dependent coverage or family coverage, as appropriate,
and single coverage, or based upon any other formula or dependent
rating tier that the commissioner considers appropriate and that
provides a substantially similar result.
(4) This section does not prohibit an employer from requiring
an employee to pay all or part of the cost of coverage provided for
that employee's child under this section.
Sec. 419c. (1) If the MI-Health board determines that section
401b, 401f, 401g, 414a, 415, 416, 416a, 416b, 416c, 416d, or 417
should be waived as provided in section 3783 of the insurance code
of 1956, 1956 PA 218, MCL 500.3783, then the sections so identified
by the MI-Health board are not required to be provided or offered
in a standard guaranteed issue health plan or an enhanced
guaranteed issue health plan.
(2) As used in this section:
(a) "MI-Health board" means the MI-Health board created in
section 3782 of the insurance code of 1956, 1956 PA 218, MCL
500.3782.
(b) "Standard guaranteed issue health plan" and "enhanced
guaranteed issue health plan" mean those plans as regulated under
chapter 37B of the insurance code of 1956, 1956 PA 218, MCL
500.3780 to 500.3788.
Sec. 608. (1) The rates charged to nongroup subscribers for
each nongroup or group conversion certificate "A" through "G" or
medicare supplement certificate shall be filed in accordance with
section 610 and shall be subject to the prior approval of the
commissioner.
Annually, the The commissioner shall approve,
disapprove, or modify and approve the proposed or existing rates
for each certificate subject to the standard that the rates must be
determined to be equitable, adequate, and not excessive, as defined
in section 609. The burden of proof that rates to be charged meet
these standards shall be upon the health care corporation proposing
to use the rates.
(2) The methodology and definitions of each rating system,
formula, component, and factor used to calculate rates for group
subscribers for each certificate, including the methodology and
definitions used to calculate administrative costs for
administrative services only and cost-plus arrangements, shall be
filed
in accordance with section 610 and shall be are
subject to
the prior approval of the commissioner. The definition of a group,
including any clustering principles applied to nongroup subscribers
or small group subscribers for the purpose of group formation,
shall
be is subject to the prior approval of the commissioner.
However, if a Michigan caring program is created under section 436,
that program shall be defined as a group program for the purpose of
establishing rates. The commissioner shall approve, disapprove, or
modify and approve the methodology and definitions of each rating
system, formula, component, and factor for each certificate subject
to the standard that the resulting rates for group subscribers must
be determined to be equitable, adequate, and not excessive, as
defined in section 609. In addition, the commissioner may from time
to time review the records of the corporation to determine proper
application of a rating system, formula, component, or factor with
respect to any group. The corporation shall refile for approval
under this subsection, every 3 years, the methodology and
definitions of each rating system, formula, component, and factor
used to calculate rates for group subscribers, including the
methodology and definitions used to calculate administrative costs
for administrative services only and cost-plus arrangements. The
burden of proof that the resulting rates to be charged meet these
standards shall be upon the health care corporation proposing to
use the rating system, formula, component, or factor.
(3) A proposed rate shall not take effect until a filing has
been made with the commissioner and approved under section 607 or
this section, as applicable, except as provided in subsections (4)
and (5).
(4) Upon request by a health care corporation, the
commissioner may allow rate adjustments to become effective prior
to approval, for federal or state mandated benefit changes.
However, a filing for these adjustments shall be submitted before
the effective date of the mandated benefit changes. If the
commissioner disapproves or modifies and approves the rates, an
adjustment shall be made retroactive to the effective date of the
mandated benefit changes or additions.
(5) Implementation prior to approval may be allowed if the
health care corporation is participating with 1 or more health care
corporations to underwrite a group whose employees are located in
several states. Upon request from the commissioner, the corporation
shall file with the commissioner, and the commissioner shall
examine, the financial arrangement, formulae, and factors. If any
are determined to be unacceptable, the commissioner shall take
appropriate action.
Sec. 609. (1) A rate is not excessive if the rate is not
unreasonably high relative to the following elements, individually
or collectively; provision for anticipated benefit costs; provision
for administrative expense; provision for cost transfers, if any;
provision for a contribution to or from surplus that is consistent
with the attainment or maintenance of adequate and unimpaired
surplus as provided in section 204a; and provision for adjustments
due to prior experience of groups, as defined in the group rating
system. A determination as to whether a rate is excessive relative
to these elements, individually or collectively, shall be based on
the following: reasonable evaluations of recent claim experience;
projected trends in claim costs; the allocation of administrative
expense budgets; and the present and anticipated unimpaired surplus
of the health care corporation. To the extent that any of these
elements are considered excessive, the provision in the rates for
these elements shall be modified accordingly.
(2) The administrative expense budget must be reasonable, as
determined by the commissioner after examination of material and
substantial administrative and acquisition expense items.
(3) A rate is equitable if the rate can be compared to any
other rate offered by the health care corporation to its
subscribers, and the observed rate differences can be supported by
differences in anticipated benefit costs, administrative expense
cost, differences in risk, or any identified cost transfer
provisions.
(4) A rate is adequate if the rate is not unreasonably low
relative to the elements prescribed in subsection (1), individually
or collectively, based on reasonable evaluations of recent claim
experience, projected trends in claim costs, the allocation of
administrative expense budgets, and the present and anticipated
unimpaired surplus of the health care corporation.
(5) For a nongroup certificate "A" through "G", a rate shall
be presumed adequate, equitable, and not excessive if the health
care corporation actuarially certifies that the rate does not
exceed the projected trend in claim costs. For a group conversion
certificate "A" though "G", a rate shall be presumed adequate,
equitable, and not excessive if the health care corporation
actuarially certifies that the rate change does not exceed the
projected trend in claim costs. For a medicare supplement
certificate, a rate shall be presumed adequate, equitable, and not
excessive if the health care corporation actuarially certifies that
the rate does not exceed the projected trend in claim costs. As
used in this subsection, projected trend in claim costs shall be
determined by dividing the per member per month cost for the 12-
month period ending 6 months prior to the filing by the per member
per month cost for the 12-month period ending 18 months prior to
the filing. If surplus exceeds the maximum surplus permitted under
section 204a(5), a contribution from surplus may be considered in
determining whether rates are adequate, equitable, and not
excessive, and promote the health care corporation's charitable and
social mission obligations.
(6) (5)
Except for identified cost
transfers, each line of
business, over time, shall be self-sustaining. However, there may
be cost transfers for the benefit of senior citizens who are
residents of this state and group conversion subscribers. Cost
transfers for the benefit of senior citizens, in the aggregate,
annually shall not exceed 1% of the earned subscription income of
the health care corporation as reported in the most recent annual
statement of the corporation. Group conversion subscribers are
those who have maintained coverage with the health care corporation
on an individual basis after leaving a subscriber group. As used in
this subsection, earned subscription income is the sum of the group
and nongroup premium and the claim and administrative expense
reimbursements for administrative services contracts, less the
income from the federal employee health benefit program, medicare
supplement policies, medicare advantage plans, and MiChild
policies. Cost transfers for the benefit of resident senior
citizens shall be expended as determined by the commissioner so
that not less than 66-2/3% of the cost transfer shall be used to
provide a subsidy for seniors with a household income of not more
than 300% of the federal poverty level as defined in the poverty
guidelines published periodically in the federal register by the
United States department of health and human services under its
authority to revise the poverty line under 42 USC 9902.
Sec. 610. (1) Except as provided under section 608(4) or (5),
a filing of information and materials relative to a proposed rate
shall
be made not less than 120 60
days before the proposed
effective date of the proposed rate. A filing shall not be
considered to have been received until there has been substantial
and material compliance with the requirements prescribed in
subsections (6) and (8).
(2)
Within 30 15 days after a filing is made of information
and materials relative to a proposed rate, the commissioner shall
do either of the following:
(a) Give written notice to the corporation, and to each person
described under section 612(1), that the filing is in material and
substantial
compliance with subsections (6) and (8) this section
and that the filing is complete. The commissioner shall then
proceed to approve, approve with modifications, or disapprove the
rate
filing 60 30 days after receipt of the filing, based upon
whether the filing meets the requirements of this act. However, if
a hearing has been requested under section 613, the commissioner
shall not approve, approve with modifications, or disapprove a
filing until the hearing has been completed and an order issued.
(b) Give written notice to the corporation that the
corporation
has not yet complied with subsections (6) and (8) this
section. The notice shall state specifically in what respects the
filing
fails to meet the requirements of subsections (6) and (8)
this section.
(3)
Within 10 8 days after the filing of notice pursuant to
subsection (2)(b), the corporation shall submit to the commissioner
such additional information and materials, as requested by the
commissioner.
Within 10 8 days after receipt of the additional
information and materials, the commissioner shall determine whether
the filing is in material and substantial compliance with
subsections
(6) and (8) this section. If the commissioner
determines that the filing does not yet materially and
substantially
meet the requirements of subsections (6) and (8) this
section, the commissioner shall give notice to the corporation
pursuant to subsection (2)(b) or use visitation of the
corporation's facilities and examination of the corporation's
records to obtain the necessary information described in the notice
issued pursuant to subsection (2)(b). The commissioner shall use
either procedure previously mentioned, or a combination of both
procedures, in order to obtain the necessary information as
expeditiously as possible. The per diem, traveling, reproduction,
and other necessary expenses in connection with visitation and
examination shall be paid by the corporation, and shall be credited
to the general fund of the state.
(4) If a filing is approved, approved with modifications, or
disapproved under subsection (2)(a), the commissioner shall issue a
written order of the approval, approval with modifications, or
disapproval. If the filing was approved with modifications or
disapproved, the order shall state specifically in what respects
the filing fails to meet the requirements of this act and, if
applicable, what modifications are required for approval under this
act. If the filing was approved with modifications, the order shall
state that the filing shall take effect after the modifications are
made and approved by the commissioner. If the filing was
disapproved, the order shall state that the filing shall not take
effect.
(5) The inability to approve 1 or more rating classes of
business within a line of business because of a requirement to
submit further data or because a request for a hearing under
section 613 has been granted shall not delay the approval of rates
by the commissioner which could otherwise be approved or the
implementation of rates already approved, unless the approval or
implementation would affect the consideration of the unapproved
classes of business.
(6) Information furnished under subsection (1) in support of a
nongroup or group conversion certificate "A" through "G" or
medicare supplement certificate rate filing shall include the
following:
(a) Recent claim experience on the benefits or comparable
benefits for which the rate filing applies.
(b) Actual prior trend experience.
(c) Actual prior administrative expenses.
(d) Projected trend factors.
(e) Projected administrative expenses.
(f) Contributions for risk and contingency reserve factors.
(g) Actual health care corporation contingency reserve
position.
(h) Projected health care corporation contingency reserve
position.
(i)
Other information which that
the corporation considers
pertinent to evaluating the risks to be rated, or relevant to the
determination to be made under this section.
(j)
Other information which that
the commissioner considers
pertinent to evaluating the risks to be rated, or relevant to the
determination to be made under this section.
(7) A copy of the filing, and all supporting information,
except for the information which may not be disclosed under section
604, shall be open to public inspection as of the date filed with
the commissioner.
(8) The commissioner shall make available forms and
instructions
for filing for proposed rates under sections section
608(1)
and 608(2) (2). The forms with instructions shall be
available
not less than 180 90 days before the proposed effective
date of the filing.
Sec. 612. (1) Upon receipt of a rate filing under section 610,
the commissioner immediately shall notify each person who has
requested in writing notice of those filings within the previous 2
years, specifying the nature and extent of the proposed rate
revision and identifying the location, time, and place where the
copy of the rate filing described in section 610(7) shall be open
to public inspection and copying. The notice shall also state that
if the person has standing, the person shall have, upon making a
written
request for a hearing within 60 30
days after receiving
notice of the rate filing, an opportunity for an evidentiary
hearing under section 613 to determine whether the proposed rates
meet the requirements of this act. The request shall identify the
issues which the requesting party asserts are involved, what
portion of the rate filing is requested to be heard, and how the
party has standing. The corporation shall place advertisements
giving notice, containing the information specified above, in at
least 1 newspaper which serves each geographic area in which
significant numbers of subscribers reside.
(2) The commissioner may charge a fee for providing, pursuant
to subsection (1), a copy of the rate filing described in section
610(7). The commissioner may charge a fee for providing a copy of
the entire filing to a person whose request for a hearing has been
granted by the commissioner pursuant to section 613. The fee shall
be limited to actual mailing costs and to the actual incremental
cost of duplication, including labor and the cost of deletion and
separation
of information as provided in section 14 of Act No. 442
of
the Public Acts of 1976, being section 15.244 of the Michigan
Compiled
Laws the freedom of
information act, 1976 PA 442, MCL
15.244. Copies of the filing may be provided free of charge or at a
reduced charge if the commissioner determines that a waiver or
reduction of the fee is in the public interest because the
furnishing of a copy of the filing will primarily benefit the
general public. In calculating the costs under this subsection, the
commissioner shall not attribute more than the hourly wage of the
lowest
paid, full-time clerical employee of the insurance bureau
office of financial and insurance regulation to the cost of labor
incurred in duplication and mailing and to the cost of separation
and deletion. The commissioner shall use the most economical means
available to provide copies of a rate filing.
Sec. 613. (1) If the request for a hearing under this section
is with regard to a rate filing not yet acted upon under section
610(2)(a), no such action shall be taken by the commissioner until
after the hearing has been completed. However, the commissioner
shall proceed to act upon those portions of a rate filing upon
which
no hearing has been requested. Within 15 8 days after receipt
of a request for a hearing, the commissioner shall determine if the
person has standing. If the commissioner determines that the person
has standing, the person may have access to the entire filing
subject to the same confidentiality requirements as the
commissioner under section 604, and shall be subject to the penalty
provision of section 604(5). Upon determining that the person has
standing, the commissioner shall immediately appoint an independent
hearing officer before whom the hearing shall be held. In
appointing an independent hearing officer, the commissioner shall
select a person qualified to conduct hearings, who has experience
or education in the area of health care corporation or insurance
rate determination and finance, and who is not otherwise associated
financially with a health care corporation or a health care
provider. The person selected shall not be currently or actively
employed by this state. For purposes of this subsection, an
employee of an educational institution shall not be considered to
be employed by this state. For purposes of this section, a person
has "standing" if any of the following circumstances exist:
(a) The person is, or there are reasonable grounds to believe
that the person could be, aggrieved by the proposed rate.
(b) The person is acting on behalf of 1 or more named persons
described in subdivision (a).
(c) The person is the commissioner, the attorney general, or
the health care corporation.
(2)
Not more than 30 15 days after receipt of a request for a
hearing,
and upon not less than 15 8
days' notice to all parties,
the hearing shall be commenced. Each party to the hearing shall be
given a reasonable opportunity for discovery before and throughout
the course of the hearing. However, the hearing officer may
terminate discovery at any time, for good cause shown. The hearing
officer shall conduct the hearing pursuant to the administrative
procedures act. The hearing shall be conducted in an expeditious
manner and the hearing officer shall render a proposal for decision
not later than 30 days after the start of the hearing. At the
hearing, the burden of proving compliance with this act shall be
upon the health care corporation.
(3) In rendering a proposal for a decision, the hearing
officer shall consider the factors prescribed in section 609.
(4)
Within 30 8 days after receipt of the hearing officer's
proposal for decision, the commissioner shall by order render a
decision which shall include a statement of findings.
(5) The commissioner shall withdraw an order of approval or
approval with modifications if the commissioner finds that the
filing no longer meets the requirements of this act.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 95th Legislature are
enacted into law:
(a) Senate Bill No. 1244.
(b) Senate Bill No.____ or House Bill No.____ (request no.
H00083'09 *).
(c) Senate Bill No.____ or House Bill No.____ (request no.
06174'10).
(d) Senate Bill No. 1245.
(e) Senate Bill No.____ or House Bill No.____ (request no.
H06472'10 *).
(f) Senate Bill No.____ or House Bill No.____ (request no.
06473'10).
(g) Senate Bill No. 1242.