SENATE BILL No. 348

 

 

April 27, 2011, Introduced by Senator KAHN and referred to the Committee on Appropriations.

 

 

 

     A bill to impose a tax on certain health care claims; to

 

impose certain duties and obligations on certain insurance or

 

health coverage providers; to impose certain duties on certain

 

state departments, agencies, and officials; to create certain

 

funds; to authorize certain expenditures; and to impose certain

 

remedies and penalties.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"health insurance claims assessment act".

 

     Sec. 2. As used in this act:

 

     (a) "Carrier" means any of the following:

 

     (i) An insurer or health maintenance organization regulated

 

under the insurance code of 1956, 1956 PA 218, MCL 500.100 to

 

500.8302.

 

     (ii) A health care corporation regulated under the nonprofit


 

health care corporation reform act, 1980 PA 350, MCL 550.1101 to

 

550.1704.

 

     (iii) A nonprofit dental care corporation subject to 1963 PA

 

125, MCL 550.351 to 550.373.

 

     (iv) A specialty prepaid health plan as described in section

 

109f of the social welfare act, 1939 PA 280, MCL 400.109f.

 

     (v) A group health plan sponsor including, but not limited to,

 

1 or more of the following:

 

     (A) An employer if a group health plan is established or

 

maintained by a single employer.

 

     (B) An employee organization if a plan is established or

 

maintained by an employee organization.

 

     (C) If a plan is established or maintained by 2 or more

 

employers or jointly by 1 or more employers and 1 or more employee

 

organizations, the association, committee, joint board of trustees,

 

or other similar group of representatives of the parties that

 

establish or maintain the plan.

 

     (b) "Claims-related expenses" means all of the following:

 

     (i) Cost containment expenses including, but not limited to,

 

payments for utilization review, care management, disease

 

management, risk assessment, and similar administrative services

 

intended to reduce the claims paid for health and medical services

 

rendered to covered individuals by attempting to ensure that needed

 

services are delivered in the most efficacious manner possible or

 

by helping those covered individuals maintain or improve their

 

health.

 

     (ii) Payments that are made to or by an organized group of


 

health and medical service providers in accordance with managed

 

care risk arrangements or network access agreements, which payments

 

are unrelated to the provision of services to specific covered

 

individuals.

 

     (iii) General administrative expenses.

 

     (c) "Commissioner" means the commissioner of the office of

 

financial and insurance regulation or his or her designee.

 

     (d) "Department" means the department of treasury.

 

     (e) "Excess loss" or "stop loss" means coverage that provides

 

insurance protection against the accumulation of total claims

 

exceeding a stated level for a group as a whole or protection

 

against a high-dollar claim on any 1 individual.

 

     (f) "Fund" means the health insurance claims assessment fund

 

created in section 7.

 

     (g) "Group health plan" means an employee welfare benefit plan

 

as defined in section 3(1) of subtitle A of title I of the employee

 

retirement income security act of 1974, Public Law 93-406, 29 USC

 

1002, to the extent that the plan provides medical care, including

 

items and services paid for as medical care to employees or their

 

dependents as defined under the terms of the plan directly or

 

through insurance, reimbursement, or otherwise.

 

     (h) "Group insurance coverage" means a form of voluntary

 

health and medical services insurance that covers members, with or

 

without their eligible dependents, and that is written under a

 

master policy.

 

     (i) "Health and medical services" means 1 or more of the

 

following:


 

     (i) Services included in furnishing medical care, dental care,

 

pharmaceutical benefits, or hospitalization, including, but not

 

limited to, services provided in a hospital or other medical

 

facility.

 

     (ii) Ancillary services, including, but not limited to,

 

ambulatory services.

 

     (iii) Services provided by a physician or other practitioner,

 

including, but not limited to, health professionals defined by

 

article 15 of the public health code, 1978 PA 368, MCL 333.16101 to

 

333.18838.

 

     (iv) Behavioral health services, including, but not limited to,

 

mental health and substance abuse services.

 

     (j) "Managed care risk arrangement" means an arrangement where

 

participating hospitals and physicians agree to a managed care risk

 

incentive which shares favorable and unfavorable claims experience.

 

Under a managed care risk arrangement, payment to a participating

 

physician is generally subject to a retention requirement and the

 

distribution of that retained payment is contingent on the result

 

of the risk incentive arrangement.

 

     (k) "Network access agreement" means an agreement that allows

 

a network access to another provider network for certain services

 

that are not readily available in the accessing network.

 

     (l) "Paid claims" means actual payments made to a health and

 

medical services provider or reimbursed to an individual by a third

 

party administrator, excess loss or stop loss carrier, a property

 

or casualty carrier, or a carrier. Paid claims include payments

 

made under a service contract for administrative services only,


 

cost-plus or noninsured benefit plan arrangements under section 211

 

of the nonprofit health care corporation reform act, 1980 PA 350,

 

MCL 550.1211, or section 5208 of the insurance code of 1956, 1956

 

PA 218, MCL 500.5208, for health and medical services provided

 

under group health plans, and individual, nongroup and group

 

insurance coverage delivered, issued for delivery, or renewed in

 

this state that affect the rights of an insured in this state and

 

bear a reasonable relation to this state, regardless of whether the

 

coverage is delivered, renewed, or issued for delivery in this

 

state. If a carrier or a third party administrator is contractually

 

entitled to withhold a certain amount from payments due to

 

providers of health and medical services in order to help ensure

 

that the providers can fulfill any financial obligations they may

 

have under a managed care risk arrangement, the full amounts due

 

the providers before that amount is withheld shall be included in

 

paid claims. Paid claims do not include any of the following:

 

     (i) Claims-related expenses.

 

     (ii) Payments made to a qualifying provider under an incentive

 

compensation arrangement if the payments are not reflected in the

 

processing of claims submitted for services rendered to specific

 

covered individuals.

 

     (iii) Claims paid by carriers or third party administrators for

 

vision, specified accident, specified disease, accident-only

 

coverage, credit, disability income, long-term care, or medicare

 

supplement.

 

     (iv) Claims paid for services rendered to a nonresident of this

 

state.


 

     (v) The proportionate share of claims paid for services

 

rendered to a person covered under a health benefit plan for

 

federal employees.

 

     (vi) Claims paid for services rendered outside of this state to

 

a person who is a resident of this state.

 

     (vii) Claims paid under medicare, medicare advantage, tricare,

 

and by the United States veterans administration.

 

     (viii) Reimbursements to individuals under a flexible spending

 

arrangement as that term is defined in section 106(c)(2) of the

 

internal revenue code, 26 USC 106, a health savings account as that

 

term is defined in section 223 of the internal revenue code, 26 USC

 

223, an Archer medical savings account as defined in section 220 of

 

the internal revenue code, 26 USC 220, and a medicare advantage

 

medical savings account as that term is defined in section 138 of

 

the internal revenue code, 26 USC 138.

 

     (ix) Health and medical services costs paid by an individual

 

for cost-sharing requirements, including deductibles or copays.

 

     (m) "Qualifying provider" means a provider that is paid based

 

on an incentive compensation arrangement.

 

     (n) "Third party administrator" means an entity that processes

 

claims under a service contract and that may also provide 1 or more

 

other administrative services under a service contract.

 

     Sec. 3. Beginning October 1, 2011, there is levied upon and

 

there shall be collected from every carrier and third party

 

administrator in this state an assessment equal to 1% of that

 

carrier's or third party administrator's paid claims.

 

     Sec. 4. (1) Every carrier and third party administrator with


 

paid claims subject to the assessment under this act shall file

 

with the department on or before the fifteenth day of each calendar

 

month a return for the preceding calendar month, in a form

 

prescribed by the department, showing all information that the

 

department considers necessary for the proper administration of

 

this act. At the same time, each carrier and third party

 

administrator shall pay to the department the amount of the

 

assessment imposed under this act with respect to the paid claims

 

included in the return.

 

     (2) The assessment imposed under this act shall accrue to this

 

state on the last day of each calendar month.

 

     (3) If a due date falls on a Saturday, Sunday, state holiday,

 

or legal banking holiday, the returns and assessments are due on

 

the next succeeding business day.

 

     (4) The department, if necessary to ensure payment of the

 

assessment or to provide a more efficient administration, may

 

require the filing of returns and payment of the assessment for

 

other than monthly periods.

 

     (5) The department may require that payment of the assessment

 

be made by an electronic funds transfer method approved by the

 

department.

 

     Sec. 5. (1) A carrier or third party administrator liable for

 

an assessment under this act shall keep accurate and complete

 

records and pertinent documents as required by the department.

 

Records required by the department shall be retained for a period

 

of 4 years after the assessment imposed under this act to which the

 

records apply is due or as otherwise provided by law.


 

     (2) If the department considers it necessary, the department

 

may require a person, by notice serviced upon that person, to make

 

a return, render under oath certain statements, or keep certain

 

records the department considers sufficient to show whether that

 

person is liable for the assessment under this act.

 

     (3) If a carrier or third party administrator fails to file a

 

return or keep proper records as required under this section, or if

 

the department has reason to believe that any records kept or

 

returns filed are inaccurate or incomplete and that additional

 

assessments are due, the department may assess the amount of the

 

assessment due from the carrier or third party administrator based

 

on information that is available or that may become available to

 

the department. An assessment under this subsection is considered

 

prima facie correct under this act, and a carrier or third party

 

administrator has the burden of proof for refuting the assessment.

 

     Sec. 6. (1) The department shall administer the assessment

 

imposed under this act under 1941 PA 122, MCL 205.1 to 205.31, and

 

this act. If 1941 PA 122, MCL 205.1 to 205.31, and this act

 

conflict, the provisions of this act apply. The assessment imposed

 

under this act shall be considered a tax for the purpose of 1941 PA

 

122, MCL 205.1 to 205.31.

 

     (2) The department is authorized to promulgate rules to

 

implement this act under the administrative procedures act of 1969,

 

1969 PA 306, MCL 24.201 to 24.328.

 

     (3) The assessment imposed under this act shall not be

 

considered an assessment or burden for purposes of the tax, or as a

 

credit toward or payment in lieu of the tax under section 476a of


 

the insurance code of 1956, 1956 PA 218, MCL 500.476a.

 

     Sec. 7. (1) All money received and collected under this act

 

shall be deposited by the department in the health insurance claims

 

assessment fund established in this section.

 

     (2) The health insurance claims assessment fund is created

 

within the department.

 

     (3) The state treasurer may receive money or other assets from

 

any of the following sources for deposit into the fund:

 

     (a) Money received by the department under this act.

 

     (b) Interest and earnings from fund investments. The state

 

treasurer shall direct the investment of the fund. The state

 

treasurer shall credit to the fund interest and earnings from fund

 

investments.

 

     (c) Donations of money made to the fund from any source.

 

     (4) Money in the fund at the close of the fiscal year shall

 

remain in the fund and shall not lapse to the general fund.

 

     (5) The department of treasury shall be the administrator of

 

the fund for auditing purposes.

 

     (6) Except as otherwise provided in this act, the department

 

of treasury shall expend money from the fund, upon appropriation,

 

only for 1 or more of the following purposes:

 

     (a) To finance medicaid program expenditures.

 

     (b) To finance a shortfall in the medicaid program resulting

 

from disallowance of medicaid payments from the federal government.

 

     (c) To offset any decline in revenue or increase in

 

expenditures caused by federal medicaid policy change.

 

     (d) To finance department of community health or office of


 

financial and insurance regulation expenditures incurred to

 

implement, enforce, or otherwise carry out the responsibilities of

 

this act.

 

     Sec. 8. An amount equal to 1% of the annual remittances of

 

assessments shall be retained by the department to implement and

 

administer this act.

 

     Sec. 9. The department shall provide the commissioner with

 

written notice of any final determination that a carrier or a third

 

party administrator has failed to pay an assessment, interest, or

 

penalty when due. The commissioner may suspend or revoke, after

 

notice and hearing, the certificate of authority to transact

 

insurance in this state, or the license to operate in this state,

 

of any carrier or third party administrator that fails to pay an

 

assessment, interest, or penalty due under this act. A certificate

 

of authority to transact insurance in this state or a license to

 

operate in this state that is suspended or revoked under this

 

section shall not be reinstated unless any delinquent assessment,

 

interest, or penalty has been paid.

 

     Enacting section 1. This act does not take effect unless

 

Senate Bill No. 347                                              

 

    of the 96th Legislature is enacted into law.