PRIOR PRINTER'S NO. 2837 PRINTER'S NO. 3449
No. 2005 Session of 2007
INTRODUCED BY DeLUCA, CALTAGIRONE, GEORGE, M. O'BRIEN,
MACKERETH, SOLOBAY, HARKINS, BELFANTI, MUSTIO, WALKO,
JOSEPHS, YOUNGBLOOD, MELIO, BIANCUCCI, BARRAR, J. WHITE,
HENNESSEY, K. SMITH, McILVAINE SMITH, SIPTROTH, PETRONE,
PASHINSKI AND JAMES, NOVEMBER 14, 2007
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
MARCH 17, 2008
AN ACT
1 Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An <--
2 act relating to insurance; amending, revising, and
3 consolidating the law providing for the incorporation of
4 insurance companies, and the regulation, supervision, and
5 protection of home and foreign insurance companies, Lloyds
6 associations, reciprocal and inter-insurance exchanges, and
7 fire insurance rating bureaus, and the regulation and
8 supervision of insurance carried by such companies,
9 associations, and exchanges, including insurance carried by
10 the State Workmen's Insurance Fund; providing penalties; and
11 repealing existing laws," further providing for conditions
12 subject to which policies are to be issued; and providing for
13 health insurance coverage for certain children of insured
14 parents and for affordable small group health care coverage.
15 AMENDING THE ACT OF MAY 17, 1921 (P.L.682, NO.284), ENTITLED "AN <--
16 ACT RELATING TO INSURANCE; AMENDING, REVISING, AND
17 CONSOLIDATING THE LAW PROVIDING FOR THE INCORPORATION OF
18 INSURANCE COMPANIES, AND THE REGULATION, SUPERVISION, AND
19 PROTECTION OF HOME AND FOREIGN INSURANCE COMPANIES, LLOYDS
20 ASSOCIATIONS, RECIPROCAL AND INTER-INSURANCE EXCHANGES, AND
21 FIRE INSURANCE RATING BUREAUS, AND THE REGULATION AND
22 SUPERVISION OF INSURANCE CARRIED BY SUCH COMPANIES,
23 ASSOCIATIONS, AND EXCHANGES, INCLUDING INSURANCE CARRIED BY
24 THE STATE WORKMEN'S INSURANCE FUND; PROVIDING PENALTIES; AND
25 REPEALING EXISTING LAWS," PROVIDING FOR SMALL GROUP HEALTH
26 BENEFITS.
27 The General Assembly of the Commonwealth of Pennsylvania
28 hereby enacts as follows:
1 Section 1. Section 617(A)(3) and (9) of the act of May 17, <--
2 1921 (P.L.682, No.284), known as The Insurance Company Law of
3 1921, repealed and added May 25, 1951 (P.L.417, No.99) and
4 January 18, 1968 (1967 P.L.969, No.433), are amended to read:
5 Section 617. Conditions Subject to Which Policies Are to Be
6 Issued.--(A) No such policy shall be delivered or issued for
7 delivery to any person in this Commonwealth unless:
8 * * *
9 (3) it purports to insure only one person, except that a
10 policy may insure, originally or by subsequent amendment, upon
11 the application of an adult head of a family who shall be deemed
12 the policyholder, any two or more eligible members of that
13 family, including husband, wife, dependent children or any
14 children under a specified age which, except as provided under
15 section 617.1, shall not exceed nineteen years and any other
16 person dependent upon the policyholder; and
17 * * *
18 (9) A policy delivered or issued for delivery after January
19 1, 1968, under which coverage of a dependent of a policyholder
20 terminates at a specified age shall, with respect to an
21 unmarried child covered by the policy prior to the attainment of
22 the age of nineteen or except as provided under section 617.1,
23 the age of thirty, who is incapable of self-sustaining
24 employment by reason of mental retardation or physical handicap
25 and who became so incapable prior to attainment of age nineteen
26 and who is chiefly dependent upon such policyholder for support
27 and maintenance, not so terminate while the policy remains in
28 force and the dependent remains in such condition, if the
29 policyholder has within thirty-one days of such dependent's
30 attainment of the limiting age submitted proof of such
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1 dependent's incapacity as described herein. The foregoing
2 provisions of this paragraph shall not require an insurer to
3 insure a dependent who is a mentally retarded or physically
4 handicapped child where the policy is underwritten on evidence
5 of insurability based on health factors set forth in the
6 application or where such dependent does not satisfy the
7 conditions of the policy as to any requirement for evidence of
8 insurability or other provisions of the policy, satisfaction of
9 which is required for coverage thereunder to take effect. In any
10 such case the terms of the policy shall apply with regard to the
11 coverage or exclusion from coverage of such dependent.
12 * * *
13 Section 2. The act is amended by adding a section to read:
14 Section 617.1. Health Insurance Coverage for Certain
15 Children of Insured Parents.--(A) An insurer that issues,
16 delivers, executes or renews health care insurance in this
17 Commonwealth, under which coverage of a child would otherwise
18 terminate at a specified age, shall, at the option of the
19 child's parent or guardian, provide coverage to a child of the
20 insured beyond that specified age, up through the age of twenty-
21 nine, provided that the child meet all of the following
22 requirements:
23 (1) Is not married.
24 (2) Has no dependents.
25 (3) Is a resident of this Commonwealth or is enrolled as a
26 full-time student at an institution of higher education in this
27 Commonwealth.
28 (4) Is not covered by another health insurance policy.
29 (B) An insured may exercise the option provided under
30 subsection (A) at any time during the term of the policy by
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1 notice to the insurer.
2 (C) Employers shall not be required to contribute to any
3 increased premium charged by the insurer for the exercise of the
4 option provided under subsection (A), but the contributions may
5 be agreed to by the employer.
6 (D) This section shall not include the following types of
7 insurance or any combination thereof:
8 (1) Hospital indemnity.
9 (2) Accident.
10 (3) Specified disease.
11 (4) Disability income.
12 (5) Dental.
13 (6) Vision.
14 (7) Civilian Health and Medical Program of the Uniformed
15 Services (CHAMPUS) supplement.
16 (8) Medicare supplement.
17 (9) Long-term care.
18 (10) Other limited benefit plans.
19 Section 3. The act is amended by adding an article to read:
20 ARTICLE XLII
21 AFFORDABLE SMALL GROUP HEALTH CARE COVERAGE
22 Section 4201. Scope of article.
23 This article relates to health care reform.
24 Section 4202. Definitions.
25 The following words and phrases when used in this article
26 shall have the meanings given to them in this section unless the
27 context clearly indicates otherwise:
28 "Accident and Health Filing Reform Act." The act of December
29 18, 1996 (P.L.1066, No.159), known as the Accident and Health
30 Filing Reform Act.
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1 "Commissioner." The Insurance Commissioner of the
2 Commonwealth.
3 "Commonwealth Attorneys Act." The act of October 15, 1980
4 (P.L.950, No.164), known as the Commonwealth Attorneys Act.
5 "Commonwealth Documents Law." The act of July 31, 1968
6 (P.L.769, No.240), referred to as the Commonwealth Documents
7 Law.
8 "Department." The Insurance Department of the Commonwealth
9 of Pennsylvania.
10 "Health benefit plan." Any individual or group health
11 insurance policy, subscriber contract, certificate or plan which
12 provides health or sickness and accident coverage which is
13 offered by an insurer. The term shall not include any of the
14 following:
15 (1) An accident only policy.
16 (2) A credit only policy.
17 (3) A long-term or disability income policy.
18 (4) A specified disease policy.
19 (5) A Medicare supplement policy.
20 (6) A Civilian Health and Medical Program of the
21 Uniformed Services (CHAMPUS) supplement policy.
22 (7) A fixed indemnity policy.
23 (8) A dental only policy.
24 (9) A vision only policy.
25 (10) A workers' compensation policy.
26 (11) An automobile medical payment policy under 75
27 Pa.C.S. (relating to vehicles).
28 (12) Any other similar policies providing for limited
29 benefits.
30 "Health care-associated infection." A localized or systemic
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1 condition that results from an adverse reaction to the presence
2 of an infectious agent or its toxins and meets all of the
3 following:
4 (1) Occurs in a patient in a health care setting.
5 (2) Was not present or incubating at the time of
6 admission, unless the infection was related to a previous
7 admission to the same setting.
8 (3) If occurring in a hospital setting, meets the
9 criteria for a specific infection site as defined by the
10 Centers for Disease Control and Prevention and its National
11 Health Care Safety Network.
12 "Health insurance region." Any of the following:
13 (1) "Region I." The geographic area covered by the
14 counties of Bucks, Chester, Delaware, Montgomery and
15 Philadelphia.
16 (2) "Region II." The geographic area covered by the
17 counties of Adams, Berks, Cumberland, Dauphin, Franklin,
18 Fulton, Lancaster, Lebanon, Lehigh, Northampton, Perry,
19 Schuylkill and York.
20 (3) "Region III." The geographic area covered by the
21 counties of Bradford, Carbon, Clinton, Lackawanna, Luzerne,
22 Lycoming, Monroe, Pike, Sullivan, Susquehanna, Tioga, Wayne
23 and Wyoming.
24 (4) "Region IV." The geographic area covered by the
25 counties of Centre, Columbia, Juniata, Mifflin, Montour,
26 Northumberland, Synder and Union.
27 (5) "Region V." The geographic area covered by the
28 counties of Bedford, Blair, Cambria, Clearfield, Huntingdon,
29 Jefferson and Somerset.
30 (6) "Region VI." The geographic area covered by the
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1 counties of Allegheny, Armstrong, Beaver, Butler, Fayette,
2 Greene, Indiana, Lawrence, Washington and Westmoreland.
3 (7) "Region VII." The geographic area covered by the
4 counties of Cameron, Clarion, Crawford, Elk, Erie, Forest,
5 McKean, Mercer, Potter, Venango and Warren.
6 "Individual market." The health insurance market for
7 individuals as defined under section 2791 of the Health
8 Insurance Portability and Accountability Act of 1996 (Public Law
9 104-191, 110 Stat. 1936).
10 "Insurer." A company or health insurance entity licensed in
11 this Commonwealth to issue any individual or group health,
12 sickness or accident policy or subscriber contract or
13 certificate or plan that provides medical or health care
14 coverage by a health care facility or licensed health care
15 provider that is offered or governed under this act or any of
16 the following:
17 (1) The act of December 29, 1972 (P.L.1701, No.364),
18 known as the Health Maintenance Organization Act.
19 (2) The act of May 18, 1976 (P.L.123, No.54), known as
20 the Individual Accident and Sickness Insurance Minimum
21 Standards Act.
22 (3) 40 Pa.C.S. Ch. 61 (relating to hospital plan
23 corporations) or Ch. 63 (relating to professional health
24 services plan corporations).
25 "Insurer group." A group of insurers writing coverage in
26 this Commonwealth, including a parent insurer, its subsidiaries
27 and affiliates.
28 "Large group market." The health insurance market for the
29 large group market as defined under section 2791 of the Health
30 Insurance Portability and Accountability Act of 1996 (Public Law
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1 104-191, 110 Stat. 1936).
2 "Licensee." An individual who is licensed by the Department
3 of State to provide professional health care services in this
4 Commonwealth.
5 "Medical loss ratio." The ratio of incurred medical claim
6 costs to earned premiums.
7 "Regulatory Review Act." The act of June 25, 1982 (P.L.633,
8 No.181), known as the Regulatory Review Act.
9 "Small employer." In connection with a group health plan
10 with respect to a calendar year and a plan year, an employer who
11 employs an average of at least two but not more than 50
12 employees on business days during the preceding calendar year
13 and who employs at least two such employees on the first day of
14 the plan year. In the case of an employer which was not in
15 existence throughout the preceding calendar year, the
16 determination whether an employer is a small employer shall be
17 based on the average number of employees that it is reasonably
18 expected that the employer will employ on business days in the
19 current calendar year.
20 "Small group health benefit plan." A health benefit plan
21 offered to a small employer.
22 "Small group market." The health insurance market for the
23 small group market as defined in section 2791 of the Health
24 Insurance Portability and Accountability Act of 1996 (Public Law
25 104-191, 110 Stat. 1936).
26 "Standard plan." One of the health benefit packages
27 established by the Insurance Department in accordance with
28 section 4203.
29 Section 4203. Standard plans.
30 (a) Applicability.--This section shall apply to all small
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1 group health benefit plans issued, made effective, delivered or
2 renewed in this Commonwealth after the effective date of this
3 section.
4 (b) Standard plans required.--
5 (1) An insurer shall not offer a plan that does not meet
6 the minimum benefits specified in one of the standard plans
7 developed by the department in accordance with the following
8 criteria:
9 (i) The standard plans shall not include coverage
10 for behavioral health services except as required by
11 Federal law.
12 (ii) The standard plans may not contain any pre-
13 existing condition exclusions.
14 (2) Standard plans may include options for deductibles
15 and cost-sharing if the department determines that the
16 options:
17 (i) Do not dissuade consumers from seeking necessary
18 services.
19 (ii) Promote a balance of the impact of cost-sharing
20 in reducing premiums and in effecting utilization of
21 appropriate services.
22 (iii) Limit the total cost-sharing that may be
23 incurred by an individual in a year.
24 (3) The following apply:
25 (i) The department shall forward notice of the
26 elements of the standard plans to the Legislative
27 Reference Bureau for publication as a notice in the
28 Pennsylvania Bulletin.
29 (ii) An insurer subject to the provisions of this
30 section shall be required to begin offering its standard
20070H2005B3449 - 9 -
1 plans as soon as practicable following the publication
2 but in no event later than 180 days following the
3 publication under subparagraph (i).
4 (c) Additional benefits.--
5 (1) An insurer shall offer as an additional benefit to
6 every standard plan a behavioral health services benefit that
7 complies with the provisions of sections 601-A, 602-A, 603-A,
8 604-A, 605-A, 606-A, 607-A and 608-A.
9 (2) An insurer may offer benefits in addition to those
10 in any of its standard plans.
11 (3) Each additional benefit shall:
12 (i) Be offered and priced separately from benefits
13 specified in the standard plan with which the benefits
14 are being offered.
15 (ii) Not have the effect of duplicating any of the
16 benefits in the standard plan with which the benefits are
17 being offered.
18 (iii) Be clearly specified as additions to the
19 standard plan with which the benefits are being offered.
20 (4) The department may prohibit an insurer from offering
21 an additional benefit under this section if the department
22 finds that the additional benefit will be sold in conjunction
23 with one of the insurer's standard plans in a manner designed
24 to promote risk selection or underwriting practices otherwise
25 prohibited under this section or other State law.
26 Section 4204. Health insurance premium rates for dominant
27 insurers.
28 (a) Applicability.--This section shall apply to all small
29 group health benefit plans that are issued, made effective,
30 delivered or renewed in this Commonwealth after the effective
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1 date of this section, by an insurer that is part of an insurer
2 group, if that insurer group insures 10% or more of the covered
3 lives in the health insurance region in which the plan is being
4 issued, made effective, delivered or renewed.
5 (b) Premium rates.--
6 (1) An insurer shall establish a base rate for plans and
7 shall file the base rates with the department as required by
8 law. An insurer may adjust its base rates for the following:
9 (i) Age.
10 (ii) Health insurance region.
11 (iii) Wellness incentives as determined by the
12 department.
13 (2) An insurer shall apply all risk adjustment factors
14 under paragraph (1) consistently with respect to all plans
15 subject to this section and consistently with department
16 regulatory authority.
17 (3) An insurer shall not charge a rate that is more than
18 33% above or below the community rate, as adjusted as
19 permitted under paragraph (1). Additional adjustments may be
20 made to reflect the inclusion of additional benefits as
21 specified under section 4203(c) and differences in family
22 composition.
23 (4) The premium for a small group health benefit plan
24 shall not be adjusted by an insurer more than once each year,
25 except that rates may be changed more frequently to reflect:
26 (i) Changes to the enrollment of the small employer
27 group.
28 (ii) Changes to a small group health benefit plan
29 that have been requested by the small employer.
30 (iii) Changes to the family composition of
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1 employees.
2 (iv) Changes pursuant to a government order or
3 judicial proceeding.
4 (5) An insurer shall base its rating methods and
5 practices on commonly accepted actuarial assumptions and
6 sound actuarial principles. Rates shall not be excessive,
7 inadequate or unfairly discriminatory.
8 (6) For purposes of this subsection, an insurer's "base
9 rate" for a plan shall refer to a rating methodology that is
10 based on the experience of all risks covered by the plan
11 without regard to health status, occupation or any other
12 factor.
13 (c) Additional rate review and prior approval.--
14 (1) In conjunction with and in addition to the standards
15 set forth in the Accident and Health Filing Reform Act and
16 all other applicable statutory and regulatory requirements,
17 all rate filings shall be subject to prior approval by the
18 department within the 45-day period provided by section 3(f)
19 of the Accident and Health Filing Reform Act.
20 (2) In conjunction with and in addition to the standards
21 set forth under the Accident and Health Filing Reform Act and
22 all other applicable statutory and regulatory requirements,
23 the department may disapprove a rate filing based upon any of
24 the following:
25 (i) The rate is not actuarially sound.
26 (ii) The increase is requested because the insurer
27 has not operated efficiently or has factored in
28 experience that conflicts with recognized best practices
29 in the health care industry, including the allocation of
30 administrative expenses to the plan on a less favorable
20070H2005B3449 - 12 -
1 basis than expenses are allocated to other health benefit
2 plans.
3 (iii) The increase is requested because the insurer
4 has incurred costs due to failure to follow best
5 practices for cost control, including costs due to
6 avoidable health care-associated infections and avoidable
7 hospitalizations due to ineffective chronic care
8 management.
9 (iv) The medical loss ratio for a plan is less than
10 85%.
11 (3) In the event a plan has a medical loss ratio of less
12 than 85%, the department may, in addition to any other
13 remedies available under law, require the insurer to refund
14 the difference to policyholders on a pro rata basis as soon
15 as practicable following receipt of notice from the
16 department of the requirement but in no event later than 120
17 days following receipt of the notice. The department shall
18 establish procedures under which such refunds will be made.
19 (d) Procedures.--The filing and review procedures set forth
20 under the Accident and Health Filing Reform Act shall apply to
21 any filing conducted under this section, except that no filing
22 deemed to meet the requirements of this act shall take effect
23 unless the department receives written notice of the insurer's
24 intent to exercise the right granted under this section at least
25 ten calendar days prior to the effective date of this section.
26 Section 4205. Health insurance premium rates for nondominant
27 insurers.
28 (a) Applicability.--This section applies to all small group
29 health benefit plans that are issued, made effective, delivered
30 or renewed in this Commonwealth after the effective date of this
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1 section, by an insurer that is part of an insurer group, if that
2 insurer group insures less than 10% of the covered lives in the
3 region in which the plan is being issued, made effective,
4 delivered or renewed.
5 (b) Premium rates.--
6 (1) An insurer shall establish a base rate for plans and
7 shall file the base rates with the department as required by
8 law. An insurer may modify its base rates only by the
9 following demographic factors:
10 (i) Age.
11 (ii) Health insurance region.
12 (iii) Industry or class of business.
13 (iv) Wellness incentives as determined by the
14 department.
15 (2) An insurer shall apply all risk adjustment factors
16 under paragraph (1) consistently with respect to all plans
17 subject to this section and consistently with department
18 regulatory authority.
19 (3) An insurer shall not charge a rate that is more than
20 50% above or below the base rate, as adjusted as permitted
21 under paragraph (1). Additional adjustments may be made to
22 reflect the inclusion of additional benefits as specified in
23 section 4203(c) and differences in family composition.
24 (4) The premium for a small group health benefit plan
25 shall not be adjusted by an insurer more than once each year,
26 except that rates may be changed more frequently to reflect:
27 (i) Changes to the enrollment of the small employer
28 group.
29 (ii) Changes to a small group health benefit plan
30 that have been requested by the small employer.
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1 (iii) Changes to the family composition of
2 employees.
3 (iv) Changes pursuant to a government order or
4 judicial proceeding.
5 (5) An insurer shall base its rating methods and
6 practices on commonly accepted actuarial assumptions and
7 sound actuarial principles. Rates shall not be excessive,
8 inadequate, or unfairly discriminatory.
9 (6) For purposes of this subsection, an insurer's "base
10 rate" for a plan shall refer to a rating methodology that is
11 based on the experience of all risks covered by the plan
12 without regard to health status, occupation or any other
13 factor.
14 (c) Additional rate review and prior approval.--
15 (1) In conjunction with and in addition to the standards
16 set forth in the Accident and Health Filing Reform Act and
17 all other applicable statutory and regulatory requirements,
18 all rate filings shall be subject to prior approval by the
19 department within the 45-day period provided by section 3(f)
20 of the Accident and Health Filing Reform Act.
21 (2) In conjunction with and in addition to the standards
22 set forth in the Accident and Health Filing Reform Act and
23 all other applicable statutory and regulatory requirements,
24 the department may disapprove a rate filing based upon any of
25 the following:
26 (i) The rate is not actuarially sound.
27 (ii) The increase is requested because the insurer
28 has not operated efficiently or has factored in
29 experience that conflicts with recognized best practices
30 in the health care industry, including the allocation of
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1 administrative expenses to the plan on a less favorable
2 basis than expenses are allocated to other health benefit
3 plans.
4 (iii) The increase is requested because the insurer
5 has incurred costs due to failure to follow best
6 practices for cost control, including costs due to
7 avoidable health care-associated infections and avoidable
8 hospitalizations due to ineffective chronic care
9 management.
10 (d) Procedures.--The filing and review procedures set forth
11 in the Accident and Health Filing Reform Act shall apply to any
12 filing conducted under this section, except that no filing
13 deemed to meet the requirements of this act shall take effect
14 unless the department receives written notice of the insurer's
15 intent to exercise the right granted under this section at least
16 ten calendar days prior to the effective date of this section.
17 Section 4206. College student insurance requirements.
18 (a) Minimum health benefit package.--Within 90 days
19 following the effective date of this section, the commissioner
20 shall establish a minimum health benefit package for full-time
21 students enrolled in public or private baccalaureate and
22 postbaccalaureate programs in this Commonwealth and transmit a
23 description of the package to the Legislative Reference Bureau
24 for publication in the Pennsylvania Bulletin. As soon as
25 practicable after the date of publication of the package, but in
26 no event later than 120 days following the publication, all
27 insurers shall offer the package as individual coverage
28 available to students and as group coverage through the
29 institution. The commissioner may make revisions to the minimum
30 health benefit package periodically, but no more than one time
20070H2005B3449 - 16 -
1 per 12-month period. Each revision shall be implemented by
2 insurers as soon as practicable following publication of the
3 revision in the Pennsylvania Bulletin, but in no event later
4 than 120 days following such publication.
5 (b) Required health insurance coverage.--
6 (1) Every full-time student enrolled in a public or
7 private baccalaureate or postbaccalaureate program in this
8 Commonwealth shall maintain health insurance coverage which
9 provides the minimum benefit package established under this
10 section. The coverage shall be maintained throughout the
11 period of the student's enrollment.
12 (2) Every student required to meet the mandatory
13 coverage under this section shall present evidence of such
14 coverage to the institution in which the student is enrolled
15 at least annually, in a manner prescribed by the institution.
16 (3) Every public or private college or university or
17 postbaccalaureate program in this Commonwealth shall make
18 available health insurance coverage on a group or individual
19 basis for purchase by students who are required to maintain
20 the coverage under this section.
21 (4) Notwithstanding paragraphs (1), (2) and (3), the
22 requirements of this section may be satisfied if the
23 baccalaureate or postbaccalaureate program provides on-campus
24 student health care coverage equivalent to the minimum
25 benefit package through its own clinics and health care
26 facilities and receives approval from the Department of
27 Education, in consultation with the department, that such
28 coverage is equivalent. The coverage shall provide that the
29 student is covered for hospital admissions and emergency
30 services at facilities throughout this Commonwealth.
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1 (b) Effective date.--This section shall apply to every
2 public or private baccalaureate or postbaccalaureate program in
3 this Commonwealth beginning the first August 1 following 180
4 days after the publication of the notice of the elements of the
5 standard plans.
6 (c) Annual certification.--Every public or private
7 baccalaureate or postbaccalaureate program in this Commonwealth
8 shall certify to the Department of Education at least annually
9 that the requirements of this section have been met for all
10 periods of the preceding year.
11 (d) Penalty for failure to comply.--The Secretary of
12 Education may impose a fine of up to $500 per day for each day
13 that a public or private baccalaureate or postbaccalaureate
14 program fails to meet any of its obligations in this section.
15 The fine shall be due within 30 days following receipt by the
16 institution of notice of the violation. Funds collected under
17 this subsection and any returns on the funds shall be deposited
18 into the Tobacco Settlement Fund established under the act of
19 June 26, 2001 (P.L.755, No.77), known as the Tobacco Settlement
20 Act.
21 Section 4207. Fair marketing standards.
22 Every insurer and producer must meet the following standards,
23 as appropriate:
24 (1) An insurer that offers small group health benefit
25 plans shall offer to small employers all of the small group
26 health benefit plans that the insurer actively markets in
27 this Commonwealth. An insurer shall be considered to be
28 actively marketing a small group health benefit plan if it
29 offers that plan to any small group not currently covered by
30 that insurer.
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1 (2) The following shall apply:
2 (i) Except as provided in subparagraph (ii), a
3 producer or an insurer that provides small group health
4 benefit plans shall not encourage or direct a small
5 employer to refrain from filing an application for
6 coverage with the insurer or seek coverage from another
7 insurer because of a health status-related factor or the
8 nature of the industry, occupation or geographic location
9 of the small employer.
10 (ii) The provisions of subparagraph (i) shall not
11 apply with respect to information provided by an insurer
12 or producer to a small employer regarding an established
13 geographic service area or a restricted network provision
14 of an insurer.
15 (3) An insurer that provides small group health benefit
16 plans shall not enter into a contract, agreement or
17 arrangement that provides for or results in a producer's
18 compensation being varied because of a health status-related
19 factor or the nature of the industry or occupation of the
20 small employer.
21 (4) An insurer that provides small group health benefit
22 plans shall not terminate, fail to renew or limit its
23 contract or agreement with a producer for a reason related to
24 a health status-related factor or occupation of the small
25 employer.
26 (5) A producer or insurer that provides small group
27 health benefit plans shall not induce or encourage a small
28 employer to exclude an employee or the employee's dependents
29 from health coverage or benefits available under the plan.
30 Section 4208. Reporting requirements.
20070H2005B3449 - 19 -
1 (a) Health insurance region market share.--Not less
2 frequently than March 1 of every calendar year, each insurer
3 group shall file a report with the department of the insurer
4 group's small group market share by health insurance region and
5 the small group market share of each insurer within the insurer
6 group by health insurance region, for the immediately preceding
7 calendar year.
8 (b) Segregated report.--Not less frequently than March 1 of
9 every calendar year, each insurer and each insurer group shall
10 file a report with the department for the immediately preceding
11 calendar year. The report shall contain the following
12 information, both Statewide and by health insurance region,
13 segregated for the individual market, the small group market and
14 the large group market:
15 (1) The aggregate number of covered lives and the time
16 periods over which coverage was provided.
17 (2) The number of individuals and groups covered by
18 health benefit plans issued, made effective, delivered or
19 renewed.
20 (3) The aggregate loss ratio for all policies issued,
21 made effective, delivered or renewed.
22 (4) The average annual premium per insured life.
23 (5) The average claims cost per insured life.
24 (6) The range of administrative expenses, commissions
25 paid, profit load, and any other retention items.
26 (7) The average administrative expenses, commissions
27 paid and profit load and any other retention items.
28 (8) A description of each rating method used to
29 determine rates indicating the specific group size for which
30 each method was used.
20070H2005B3449 - 20 -
1 (9) A listing of all factors used in the rating for each
2 market and the range of these factors.
3 (10) The number of groups, including the number of
4 employees and members in those groups, covered by entities
5 with administrative services contract or administrative
6 services only arrangements.
7 (c) Review of reports.--By July 1 of each year, the
8 department shall review the reports provided for under
9 subsection (a) and shall transmit to the Legislative Reference
10 Bureau for publication in the Pennsylvania Bulletin a statement
11 of the status of each insurer within each region in which the
12 insurer provides coverage.
13 (d) Data calls.--The department may issue data calls as
14 necessary to fulfill the requirements of this chapter. Any data
15 calls issued under this section shall be published in the
16 Pennsylvania Bulletin.
17 (e) Limitation.--The commissioner shall have discretion to
18 modify the reporting requirements of this section by
19 transmitting notice to the Legislative Reference Bureau for
20 publication in the Pennsylvania Bulletin.
21 (f) Compliance.--For failure to comply with any reports or
22 data calls required under this section, the commissioner shall
23 impose an administrative penalty of $1,000 against each insurer
24 or $5,000 against each insurer group for every day that the
25 report or data is not provided in accordance with this section.
26 Section 4209. Regulations.
27 (a) Implementation and administration.--The department and
28 the Department of Education may promulgate regulations as
29 necessary for the implementation and administration of this
30 article.
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1 (b) Exemption.--Except as may be otherwise provided in this
2 article, the promulgation of regulations under this chapter by
3 the department or the Department of Education shall, until three
4 years from the effective date of this section, be exempt from
5 the following:
6 (1) Sections 201 through 205 of the Commonwealth
7 Documents Law.
8 (2) The Commonwealth Attorneys Act.
9 (3) The Regulatory Review Act.
10 Section 4210. Enforcement.
11 (a) Determination of violation.--Upon a determination that a
12 person licensed by the department has violated any provision of
13 this article, the department may, subject to 2 Pa.C.S. Chs. 5
14 Subch. A (relating to practice and procedure of Commonwealth
15 agencies) and 7 Subch. A (relating to judicial review of
16 Commonwealth agency action), do any of the following:
17 (1) Issue an order requiring the person to cease and
18 desist from engaging in the violation.
19 (2) Suspend or revoke or refuse to issue or renew the
20 certificate or license of the offending party or parties.
21 (3) Impose an administrative penalty of up to $5,000 for
22 each violation.
23 (4) Seek restitution.
24 (5) Impose any other penalty or pursue any other remedy
25 deemed appropriate by the commissioner.
26 (b) Other remedies.--The enforcement remedies imposed under
27 this section shall be in addition to any other remedies or
28 penalties that may be imposed by any other statute, including:
29 (1) The act of July 22, 1974 (P.L.589, No.205), known as
30 the Unfair Insurance Practices Act. A violation by any person
20070H2005B3449 - 22 -
1 of this article is deemed an unfair method of competition and
2 an unfair or deceptive act or practice pursuant to the Unfair
3 Insurance Practices Act.
4 (2) The act of December 18, 1996 (P.L.1066, No.159),
5 known as the Accident and Health Filing Reform Act.
6 (c) Private cause of action.--Nothing in this chapter shall
7 be construed as to create or imply a private cause of action for
8 violation of this article.
9 Section 4. Repeals are as follows:
10 (1) The General Assembly declares that the repeal under
11 paragraph (2) is necessary to effectuate the addition of
12 Article XLII of the act.
13 (2) Section 3(e)(2), (3), (4) and (5) of the act of
14 December 18, 1996 (P.L.1066, No.159), known as the Accident
15 and Health Filing Reform Act, are repealed insofar as they
16 apply to small group health benefit plan rates.
17 (3) All other acts and parts of acts are repealed
18 insofar as they are inconsistent with the addition of Article
19 XLII of the act.
20 Section 5. This act shall take effect as follows:
21 (1) The amendment or addition of sections 617(A)(3) and
22 (9) and 617.1 of the act shall take effect in 60 days.
23 (2) The remainder of this act shall take effect
24 immediately.
25 SECTION 1. THE ACT OF MAY 17, 1921 (P.L.682, NO.284), KNOWN <--
26 AS THE INSURANCE COMPANY LAW OF 1921, IS AMENDED BY ADDING AN
27 ARTICLE TO READ:
28 ARTICLE XXII
29 SMALL GROUP HEALTH BENEFITS
30 SECTION 2201. SCOPE OF ARTICLE.
20070H2005B3449 - 23 -
1 THIS ARTICLE RELATES TO HEALTH BENEFIT PLANS OFFERED BY AN
2 INSURER TO EMPLOYEES OF SMALL EMPLOYERS.
3 SECTION 2202. DEFINITIONS.
4 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE
5 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
6 CONTEXT CLEARLY INDICATES OTHERWISE:
7 "COMMUNITY RATE." AN INSURER'S RATING METHODOLOGY THAT IS
8 BASED ON THE EXPERIENCE OF ALL RISKS COVERED BY THAT PLAN
9 WITHOUT REGARD TO HEALTH STATUS, OCCUPATION OR ANY OTHER FACTOR.
10 AN INSURER MAY ADJUST ITS COMMUNITY RATE FOR AGE, GEOGRAPHIC
11 REGION AS APPROVED BY THE INSURANCE DEPARTMENT AND FAMILY
12 COMPOSITION.
13 "DEPARTMENT." THE INSURANCE DEPARTMENT OF THE COMMONWEALTH.
14 "HEALTH BENEFIT PLAN." ANY INDIVIDUAL OR GROUP HEALTH
15 INSURANCE POLICY, SUBSCRIBER CONTRACT, CERTIFICATE OR PLAN WHICH
16 PROVIDES HEALTH OR SICKNESS AND ACCIDENT COVERAGE WHICH IS
17 OFFERED BY AN INSURER. THE TERM SHALL NOT INCLUDE ANY OF THE
18 FOLLOWING:
19 (1) ACCIDENT ONLY POLICY.
20 (2) LIMITED BENEFIT POLICY.
21 (3) CREDIT ONLY POLICY.
22 (4) LONG-TERM OR DISABILITY INCOME POLICY.
23 (5) SPECIFIED DISEASE POLICY.
24 (6) MEDICARE SUPPLEMENT POLICY.
25 (7) CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED
26 SERVICES (CHAMPUS) SUPPLEMENT.
27 (8) FIXED INDEMNITY.
28 (9) DENTAL ONLY.
29 (10) VISION ONLY.
30 (11) WORKERS' COMPENSATION POLICY.
20070H2005B3449 - 24 -
1 (12) AUTOMOBILE MEDICAL PAYMENT POLICY UNDER 75 PA.C.S.
2 (RELATING TO VEHICLES).
3 "INSURER." A COMPANY OR HEALTH INSURANCE ENTITY LICENSED IN
4 THIS COMMONWEALTH TO ISSUE ANY INDIVIDUAL OR GROUP HEALTH,
5 SICKNESS OR ACCIDENT POLICY OR SUBSCRIBER CONTRACT OR
6 CERTIFICATE OR PLAN THAT PROVIDES MEDICAL OR HEALTH CARE
7 COVERAGE BY A HEALTH CARE FACILITY OR LICENSED HEALTH CARE
8 PROVIDER THAT IS OFFERED OR GOVERNED UNDER THIS ACT OR ANY OF
9 THE FOLLOWING:
10 (1) THE ACT OF DECEMBER 29, 1972 (P.L.1701, NO.364),
11 KNOWN AS THE HEALTH MAINTENANCE ORGANIZATION ACT.
12 (2) THE ACT OF MAY 18, 1976 (P.L.123, NO.54), KNOWN AS
13 THE INDIVIDUAL ACCIDENT AND SICKNESS INSURANCE MINIMUM
14 STANDARDS ACT.
15 (3) 40 PA.C.S. CH. 61 (RELATING TO HOSPITAL PLAN
16 CORPORATIONS) OR 63 (RELATING TO PROFESSIONAL HEALTH SERVICES
17 PLAN CORPORATIONS).
18 "MEDICAL LOSS RATIO." THE RATIO OF INCURRED MEDICAL CLAIM
19 COSTS TO EARNED PREMIUMS.
20 "PREEXISTING CONDITION." A DISEASE OR PHYSICAL CONDITION FOR
21 WHICH MEDICAL ADVICE OR TREATMENT HAS BEEN RECOMMENDED OR
22 RECEIVED PRIOR TO THE EFFECTIVE DATE OF COVERAGE.
23 "SMALL EMPLOYER." IN CONNECTION WITH A GROUP HEALTH PLAN
24 WITH RESPECT TO A CALENDAR YEAR AND A PLAN YEAR, AN EMPLOYER WHO
25 EMPLOYS AN AVERAGE OF AT LEAST TWO BUT NOT MORE THAN 50
26 EMPLOYEES ON BUSINESS DAYS DURING THE PRECEDING CALENDAR YEAR
27 AND WHO EMPLOYS AT LEAST TWO SUCH EMPLOYEES ON THE FIRST DAY OF
28 THE PLAN YEAR. IN THE CASE OF AN EMPLOYER WHICH WAS NOT IN
29 EXISTENCE THROUGHOUT THE PRECEDING CALENDAR YEAR, THE
30 DETERMINATION WHETHER AN EMPLOYER IS A SMALL EMPLOYER SHALL BE
20070H2005B3449 - 25 -
1 BASED ON THE AVERAGE NUMBER OF EMPLOYEES THAT IT IS REASONABLY
2 EXPECTED THAT THE EMPLOYER WILL EMPLOY ON BUSINESS DAYS IN THE
3 CURRENT CALENDAR YEAR.
4 "SMALL GROUP HEALTH BENEFIT PLAN." A HEALTH BENEFIT PLAN
5 OFFERED TO A SMALL EMPLOYER.
6 "STANDARD PLAN." THE HEALTH BENEFIT PACKAGE ESTABLISHED BY
7 THE INSURANCE DEPARTMENT IN ACCORDANCE WITH SECTION 2203(D).
8 SECTION 2203. HEALTH INSURANCE RATE INCREASES AND STANDARD
9 PLAN.
10 (A) APPLICABILITY.--THIS SECTION SHALL APPLY TO ALL SMALL
11 GROUP HEALTH BENEFIT PLANS AND INDIVIDUAL HEALTH BENEFIT PLANS
12 ISSUED, MADE EFFECTIVE, DELIVERED OR RENEWED IN THIS
13 COMMONWEALTH AFTER THE EFFECTIVE DATE OF THIS SECTION.
14 (B) PREMIUM RATES.--
15 (1) ALL INSURERS SHALL ESTABLISH COMMUNITY RATES FOR
16 PLANS SUBJECT TO THIS SECTION AND SHALL FILE THE RATES WITH
17 THE DEPARTMENT AS REQUIRED BY LAW.
18 (2) AN INSURER SHALL APPLY ALL RISK ADJUSTMENT FACTORS
19 UNDER SUBSECTION (C)(1)(I), (II) AND (III) CONSISTENTLY WITH
20 RESPECT TO ALL PLANS SUBJECT TO THIS SECTION.
21 (3) AN INSURER SHALL NOT CHARGE A RATE THAT IS MORE THAN
22 33% ABOVE OR BELOW THE COMMUNITY RATE, AS ADJUSTED AS
23 PERMITTED UNDER PARAGRAPH (1).
24 (4) AN INSURER SHALL BASE ITS RATING METHODS AND
25 PRACTICES ON COMMONLY ACCEPTED ACTUARIAL ASSUMPTIONS AND
26 SOUND ACTUARIAL PRINCIPLES. RATES SHALL NOT BE EXCESSIVE,
27 INADEQUATE OR UNFAIRLY DISCRIMINATORY.
28 (C) ADDITIONAL RATE REVIEW.--
29 (1) IN CONJUNCTION WITH AND IN ADDITION TO THE STANDARDS
30 SET FORTH UNDER THE ACT OF DECEMBER 18, 1996 (P.L.1066,
20070H2005B3449 - 26 -
1 NO.159), KNOWN AS THE ACCIDENT AND HEALTH FILING REFORM ACT,
2 AND ALL OTHER APPLICABLE STATUTORY AND REGULATORY
3 REQUIREMENTS, THE DEPARTMENT MAY DISAPPROVE A RATE FILING
4 BASED UPON THE FOLLOWING:
5 (I) THE RATE IS NOT ACTUARIALLY SOUND.
6 (II) THE INCREASE IS REQUESTED BECAUSE THE INSURER
7 HAS NOT OPERATED EFFICIENTLY OR HAS FACTORED IN
8 EXPERIENCE THAT CONFLICTS WITH RECOGNIZED BEST PRACTICES
9 IN THE HEALTH CARE INDUSTRY.
10 (III) THE INCREASE IS REQUESTED BECAUSE THE INSURER
11 HAS INCURRED COSTS OF ADDITIONAL CARE DUE TO AVOIDABLE
12 HOSPITAL-ACQUIRED INFECTIONS AND AVOIDABLE
13 HOSPITALIZATIONS DUE TO INEFFECTIVE CHRONIC CARE
14 MANAGEMENT, AFTER DATA FOR THE INCIDENTS HAS BECOME
15 AVAILABLE TO AND CAN BE ANALYZED BY THE INSURER AND THE
16 DEPARTMENT.
17 (IV) FOR SMALL GROUP HEALTH PLANS, THE MEDICAL LOSS
18 RATIO IS LESS THAN 85%.
19 (2) IN THE EVENT A SMALL GROUP HEALTH BENEFIT PLAN HAS A
20 MEDICAL LOSS RATIO OF LESS THAN 85%, THE DEPARTMENT MAY, IN
21 ADDITION TO ANY OTHER REMEDIES AVAILABLE UNDER LAW, REQUIRE
22 THE INSURER TO REFUND THE DIFFERENCE TO POLICYHOLDERS ON A
23 PRO RATA BASIS AS SOON AS PRACTICABLE FOLLOWING RECEIPT OF
24 NOTICE FROM THE DEPARTMENT OF SUCH REQUIREMENT BUT IN NO
25 EVENT LATER THAN 120 DAYS FOLLOWING RECEIPT OF THE NOTICE.
26 THE DEPARTMENT SHALL ESTABLISH PROCEDURES FOR THE
27 CIRCUMSTANCES UNDER WHICH THE REFUNDS WILL BE REQUIRED.
28 (3) THE FILING AND REVIEW PROCEDURES SET FORTH UNDER THE
29 ACCIDENT AND HEALTH FILING REFORM ACT SHALL APPLY TO ANY
30 FILING CONDUCTED UNDER THIS SECTION EXCEPT THAT ALL OF
20070H2005B3449 - 27 -
1 PARAGRAPH (1)(III) SHALL APPLY TO ALL GROUP HEALTH BENEFIT
2 PLANS SUBJECT TO FILING UNDER THE ACCIDENT AND HEALTH FILING
3 REFORM ACT WITHOUT REGARD TO THE SIZE OF THE GROUPS COVERED
4 BY THE PLAN.
5 (D) STANDARD PLAN REQUIRED.--
6 (1) AN INSURER SHALL NOT OFFER A PLAN THAT DOES NOT MEET
7 THE MINIMUM BENEFITS SPECIFIED IN THE STANDARD PLAN DEVELOPED
8 BY THE DEPARTMENT IN ACCORDANCE WITH THE FOLLOWING CRITERIA:
9 (I) PLANS OFFERED BY AN INSURER ON AN EXPENSE-
10 INCURRED BASIS SHALL BE ACTUARIALLY EQUIVALENT TO AT
11 LEAST THE MINIMUM BENEFITS REQUIRED TO BE OFFERED UNDER
12 THE STANDARD PLAN.
13 (II) THE STANDARD PLAN SHALL AT LEAST INCLUDE ALL OF
14 THE BENEFITS OF THE BASIC BENEFIT PACKAGE.
15 (III) THE STANDARD PLAN SHALL NOT CONTAIN
16 PREEXISTING CONDITION EXCLUSION.
17 (2) THE STANDARD PLAN MAY INCLUDE OPTIONS FOR DEDUCTIBLE
18 AND COST-SHARING PROVISIONS IF THE DEPARTMENT DETERMINES THAT
19 THE PROVISIONS MEET ALL OF THE FOLLOWING:
20 (I) DISSUADE CONSUMERS FROM SEEKING UNNECESSARY
21 SERVICES.
22 (II) BALANCE THE EFFECT OF COST-SHARING IN REDUCING
23 PREMIUMS AND IN EFFECTING UTILIZATION OF APPROPRIATE
24 SERVICES.
25 (III) LIMIT THE TOTAL COST-SHARING THAT MAY BE
26 INCURRED BY AN INDIVIDUAL IN A YEAR.
27 (3) EACH INDIVIDUAL IN THIS COMMONWEALTH WHO APPLIES TO
28 AN INSURER FOR ENROLLMENT IN A PLAN OFFERED BY THE INSURER
29 SHALL BE ACCEPTED AS AN ENROLLEE.
30 (4) THE DEPARTMENT SHALL FORWARD A NOTICE OF THE
20070H2005B3449 - 28 -
1 ELEMENTS OF THE STANDARD PLAN TO THE LEGISLATIVE REFERENCE
2 BUREAU FOR PUBLICATION IN THE PENNSYLVANIA BULLETIN. INSURERS
3 SUBJECT TO THE PROVISIONS OF THIS SECTION SHALL BE REQUIRED
4 TO BEGIN OFFERING THE STANDARD PLAN AS SOON AS PRACTICABLE
5 FOLLOWING THE PUBLICATION BUT IN NO EVENT LATER THAN 120 DAYS
6 FOLLOWING THE PUBLICATION.
7 (E) OPTIONAL ADDITIONAL COVERAGE.--
8 (1) AN INSURER MAY OFFER BENEFITS IN ADDITION TO THOSE
9 IN THE STANDARD PLAN IF THE ADDITIONAL BENEFITS MEET ALL OF
10 THE FOLLOWING:
11 (I) ARE OFFERED AND PRICED SEPARATELY FROM BENEFITS
12 SPECIFIED IN THE STANDARD PLAN.
13 (II) DO NOT HAVE THE EFFECT OF DUPLICATING ANY OF
14 THE BENEFITS IN THE STANDARD PLAN.
15 (III) ARE CLEARLY SPECIFIED AS ENHANCEMENTS TO THE
16 STANDARD PLAN.
17 (2) EACH BENEFIT OFFERED IN ADDITION TO THE STANDARD
18 PLAN THAT INCREASES HEALTH CARE CHOICES OR LOWERS THE COST-
19 SHARING ARRANGEMENT IS SUBJECT TO ALL OF THE PROVISIONS OF
20 THIS SECTION APPLICABLE TO THE STANDARD PLAN.
21 (3) THE DEPARTMENT MAY PROHIBIT AN INSURER FROM OFFERING
22 AN ADDITIONAL BENEFIT UNDER THIS SECTION IF THE DEPARTMENT
23 FINDS THAT THE ADDITIONAL BENEFIT WILL BE SOLD IN CONJUNCTION
24 WITH THE STANDARD PLAN OF THE INSURER IN A MANNER DESIGNED TO
25 PROMOTE RISK SELECTION OR UNDERWRITING PRACTICES OTHERWISE
26 PROHIBITED BY THIS SECTION OR OTHER STATUTE.
27 (F) REGULATIONS.--THE DEPARTMENT MAY PROMULGATE REGULATIONS
28 NECESSARY FOR THE IMPLEMENTATION AND ADMINISTRATION OF THIS
29 ARTICLE.
30 SECTION 2. THIS ACT SHALL TAKE EFFECT IN 120 DAYS.
K1L40MSP/20070H2005B3449 - 29 -