PRINTER'S NO. 1298
No. 1068 Session of 1999
INTRODUCED BY SCHWARTZ, COSTA, BELAN, TARTAGLIONE, STAPLETON,
BOSCOLA, MUSTO AND BODACK, AUGUST 20, 1999
REFERRED TO BANKING AND INSURANCE, AUGUST 20, 1999
AN ACT
1 Requiring certain health insurers, service corporations and
2 health maintenance organizations to offer standardized health
3 benefits programs to certain employers; establishing a
4 reinsurance program; providing for coverage by multiple
5 employer arrangements; providing for action by the Insurance
6 Commissioner regarding health benefit plans; and imposing a
7 penalty.
8 TABLE OF CONTENTS
9 Chapter 1. General Provisions
10 Section 101. Short title.
11 Section 102. Definitions.
12 Section 103. Application and availability of coverage.
13 Chapter 3. Small Employer Health Benefits Plans
14 Section 301. Health benefits plans required.
15 Section 302. Hospital confinement or other supplemental limited
16 benefit insurance plan.
17 Section 303. Application of coinsurance and deductibles.
18 Section 304. Standard coordination of benefits provisions.
19 Section 305. Prohibition on preexisting condition provisions.
20 Section 306. Renewal of policies or contracts of small
1 employers.
2 Section 307. Standards of carrier for acceptance of small
3 group.
4 Section 308. Transitional provisions, prohibitions and
5 application.
6 Section 309. Limitations and compliance with act.
7 Section 310. Continued coverage for terminated employees.
8 Chapter 5. Reinsurance
9 Section 501. Small Employer Health Benefits Program.
10 Section 502. Plan of operation.
11 Section 503. Program powers and duties generally.
12 Section 504. Reinsurance.
13 Section 505. Methodology for determining premium rates.
14 Section 506. Premium rates.
15 Section 507. Review of methodology.
16 Section 508. Adjustments to premium rates.
17 Section 509. Reporting and recoupment of losses.
18 Section 510. Establishment by commissioner of health benefits
19 plans available to all employers.
20 Section 511. Immunity.
21 Section 512. Standards for compensation.
22 Section 513. Tax exemption.
23 Chapter 7. Penalties, Limitations and Special Circumstances
24 Section 701. Penalties for violations.
25 Section 702. Prohibition on charge of assessment to
26 policyholders or public.
27 Section 703. Group hospital or medical coverage of residents
28 obtained through out-of-State trust.
29 Section 704. Multiple employer arrangements.
30 Section 705. Notification of multiple employer arrangements.
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1 Section 706. Limitations.
2 Section 707. Action by commissioner.
3 Section 708. Other insurance coverage not required.
4 Section 709. Plans for selective contracting.
5 Chapter 9. Miscellaneous Provisions
6 Section 901. Effective date.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 CHAPTER 1
10 GENERAL PROVISIONS
11 Section 101. Short title.
12 This act shall be known and may be cited as the Small
13 Employer Health Insurance Act.
14 Section 102. Definitions.
15 The following words and phrases when used in this act shall
16 have the meanings given to them in this section unless the
17 context clearly indicates otherwise:
18 "Actuarial certification." A written statement by a member
19 of the American Academy of Actuaries or other individual
20 acceptable to the Insurance Commissioner that a small employer
21 carrier is in compliance with section 308, based upon
22 examination, including a review of the appropriate records and
23 actuarial assumptions and methods used by the small employer
24 carrier in establishing premium rates for applicable health
25 benefits plans.
26 "Anticipated loss ratio." The ratio of the present value of
27 the expected benefits, not including dividends, to the present
28 value of the expected premiums, not reduced by dividends, over
29 the entire period for which rates are computed to provide
30 coverage. For purposes of this ratio, the present values must
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1 incorporate realistic rates of interest which are determined
2 before Federal taxes but after investment expenses.
3 "Carrier." An insurance company, health service corporation,
4 hospital service corporation, medical service corporation or
5 health maintenance organization authorized to issue health
6 benefits plans in this Commonwealth. For purposes of this act,
7 carriers that are affiliated companies shall be treated as one
8 carrier, except that any insurance company, health service
9 corporation, hospital service corporation or medical service
10 corporation that is an affiliate of a health maintenance
11 organization located in this Commonwealth or any health
12 maintenance organization located in this Commonwealth that is
13 affiliated with an insurance company, health service
14 corporation, hospital service corporation or medical service
15 corporation shall treat the health maintenance organization as a
16 separate carrier.
17 "Commissioner." The Insurance Commissioner of the
18 Commonwealth.
19 "Community rating." A rating methodology in which the
20 premium for all persons covered by a policy or contract form is
21 the same based upon the experience of the entire pool of risks
22 covered by that policy or contract form without regard to age,
23 gender, health status, residence or occupation.
24 "Department." The Insurance Department of the Commonwealth.
25 "Dependent." The spouse or child of an eligible employee,
26 subject to applicable terms of the health benefits plan covering
27 the employee.
28 "Eligible employee." A full-time employee who works a normal
29 work week of 25 or more hours. The term includes a sole
30 proprietor, a partner of a partnership or an independent
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1 contractor, if the sole proprietor, partner or independent
2 contractor is included as an employee under a health benefits
3 plan of a small employer, but does not include employees who
4 work fewer than 25 hours a week, work on a temporary or
5 substitute basis or are participating in an employee welfare
6 arrangement established pursuant to a collective bargaining
7 agreement.
8 "Financially impaired." A carrier which, after the effective
9 date of this act, is not insolvent but is deemed by the
10 Insurance Commissioner to be potentially unable to fulfill its
11 contractual obligations or a carrier which is placed under an
12 order of rehabilitation or conservation by a court of competent
13 jurisdiction.
14 "Health benefits plan." A hospital and medical expense
15 insurance policy or certificate; health, hospital or medical
16 service corporation contract or certificate; or health
17 maintenance organization subscriber contract or certificate
18 delivered or issued for delivery in this Commonwealth by any
19 carrier to a small employer group under section 301. The term
20 excludes the following plans, policies or contracts: accident
21 only, credit, disability, long-term care, coverage for Medicare
22 services pursuant to a contract with the Federal Government,
23 Medicare supplement, dental only or vision only, insurance
24 issued as a supplement to liability insurance, coverage arising
25 out of a workers' compensation or similar law, hospital
26 confinement or other supplemental limited benefit insurance
27 coverage or automobile medical payment insurance.
28 "Late enrollee." An eligible employee or dependent who
29 requests enrollment in a health benefits plan of a small
30 employer following the initial minimum 30-day enrollment period
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1 provided under the terms of the health benefits plan. An
2 eligible employee or dependent shall not be considered a late
3 enrollee if the individual:
4 (1) was covered under another employer's health benefits
5 plan at the time he was eligible to enroll and stated at the
6 time of the initial enrollment that coverage under that other
7 employer's health benefits plan was the reason for declining
8 enrollment;
9 (2) has lost coverage under that other employer's health
10 benefits plan as a result of termination of employment, the
11 termination of the other plan's coverage, death of a spouse
12 or divorce; and
13 (3) requests enrollment within 90 days after termination
14 of coverage provided under another employer's health benefits
15 plan.
16 An eligible employee or dependent also shall not be considered a
17 late enrollee if the individual is employed by an employer which
18 offers multiple health benefits plans and the individual elects
19 a different plan during an open enrollment period or if a court
20 of competent jurisdiction has ordered coverage to be provided
21 for a spouse or minor child under a covered employee's health
22 benefits plan and request for enrollment is made within 30 days
23 after issuance of that court order.
24 "Licensed producer." As defined in section 701 of the act of
25 May 17, 1921 (P.L.789, No.285), known as The Insurance
26 Department Act of 1921.
27 "Member." All carriers issuing health benefits plans in this
28 Commonwealth on or after the effective date of this act.
29 "Multiple employer arrangement." An arrangement established
30 or maintained to provide health benefits to employees and their
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1 dependents of two or more employers, under an insured plan
2 purchased from a carrier in which the carrier assumes all or a
3 substantial portion of the risk, as determined by the Insurance
4 Commissioner, and shall include, but is not limited to, a
5 multiple employer welfare arrangement, or MEWA, multiple
6 employer trust or other form of benefit trust.
7 "Plan of operation." The plan of operation of the Small
8 Employer Health Benefits Program, including articles, bylaws and
9 operating rules approved under section 502.
10 "Preexisting condition provision." A policy or contract
11 provision that excludes coverage under that policy or contract
12 for charges or expenses incurred during a specified period
13 following the insured's effective date of coverage, for a
14 condition that, during a specified period immediately preceding
15 the effective date of coverage, had manifested itself in such a
16 manner as would cause an ordinarily prudent person to seek
17 medical advice, diagnosis, care or treatment, or for which
18 medical advice, diagnosis, care or treatment was recommended or
19 received as to that condition or as to pregnancy existing on the
20 effective date of coverage.
21 "Program." The Small Employer Health Benefits Program
22 established under Chapter 5.
23 "Small employer." Any person, firm, corporation, partnership
24 or association actively engaged in business which, on at least
25 50% of its working days during the preceding calendar year
26 quarter, employed at least two but no more than 49 eligible
27 employees, the majority of whom are employed within this
28 Commonwealth. In determining the number of eligible employees,
29 companies which are affiliated companies shall be considered one
30 employer. Subsequent to the issuance of a health benefits plan
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1 to a small employer under this act and for the purpose of
2 determining eligibility, the size of a small employer shall be
3 determined annually. Except as otherwise specifically provided,
4 the provisions of this act which apply to a small employer shall
5 continue to apply until the anniversary date of the health
6 benefits plan next following the date the employer no longer
7 meets the definition of a small employer.
8 "Small employer carrier." Any carrier that offers health
9 benefits plans to small employers in accordance with this act.
10 "Small employer health benefits plan." A health benefits
11 plan for small employers approved by the Insurance Commissioner
12 under section 510.
13 "Supplemental limited benefit insurance." Insurance that is
14 provided in addition to a health benefits plan on an indemnity
15 nonexpense incurred basis.
16 Section 103. Application and availability of coverage.
17 Every health insurer, health service corporation, medical
18 service corporation, hospital service corporation and health
19 maintenance organization licensed or authorized to provide
20 health benefits or services in this Commonwealth which offer
21 health insurance policies or coverages covering two or more
22 employees of a small employer shall be subject to the provisions
23 of this act. Coverage shall be offered to all eligible employees
24 and their dependents and shall not exclude any employee or
25 eligible dependent on the basis of an actual or expected health
26 condition.
27 CHAPTER 3
28 SMALL EMPLOYER HEALTH BENEFITS PLANS
29 Section 301. Health benefits plans required.
30 (a) Plans required to be offered.--Except as provided in
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1 subsection (f), every small employer carrier shall, as a
2 condition of transacting business in this Commonwealth, offer to
3 every small employer the five health benefits plans as provided
4 in this section. The commissioner shall establish a standard
5 policy form for each of the five plans, which shall be the only
6 plans offered to small groups on or after January 1, 1997. In
7 the case of indemnity carriers, one policy form shall be
8 established which contains benefits and cost-sharing levels
9 which are equivalent to the health benefits plans of health
10 maintenance organizations pursuant to the Health Maintenance
11 Organization Act of 1973 (Public Law 93-222, 87 Stat. 914). The
12 remaining policy forms shall contain basic hospital and medical-
13 surgical benefits, including, but not limited to:
14 (1) Basic inpatient and outpatient hospital care.
15 (2) Basic and extended medical-surgical benefits.
16 (3) Diagnostic tests, including X-rays.
17 (4) Maternity benefits, including prenatal and postnatal
18 care.
19 (5) Preventive medicine, including periodic physical
20 examinations and inoculations.
21 At least three of the forms shall provide for major medical
22 benefits in varying lifetime aggregates, one of which shall
23 provide at least $1,000,000 in lifetime aggregate benefits. The
24 policy forms provided under this section shall contain benefits
25 representing progressively greater actuarial values.
26 (b) Availability.--Initially, a carrier shall offer a plan
27 within 90 days of the approval of the plan by the commissioner.
28 Thereafter, the plans shall be available to all small employers
29 on a continuing basis. Every small employer which elects to be
30 covered under any health benefits plan who pays the premium
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1 therefor and who satisfies the participation requirements of the
2 plan shall be issued a policy or contract by the carrier.
3 (c) Premium payment plan.--The carrier may establish a
4 premium payment plan which provides installment payments and
5 which may contain reasonable provisions to ensure payment
6 security, provided that provisions to ensure payment security
7 are uniformly applied.
8 (d) Rider packages.--In addition to the five standard
9 policies described in subsection (a), the commissioner may
10 develop up to five rider packages. Any such package which a
11 carrier chooses to offer shall be issued to a small employer who
12 pays the premium therefor and shall be subject to the rating
13 methodology set forth in section 308.
14 (e) Benefits exception.--Notwithstanding the provisions of
15 subsection (a) to the contrary, the commissioner may approve a
16 health benefits plan containing only medical-surgical benefits
17 or major medical expense benefits, or a combination thereof,
18 which is issued as a separate policy in conjunction with a
19 contract of insurance for hospital expense benefits issued by a
20 hospital service corporation, if the health benefits plan and
21 hospital service corporation contract combined otherwise comply
22 with this act.
23 (f) Alternative health benefit plans.--
24 (1) Notwithstanding the provisions of this section to
25 the contrary, a health maintenance organization which is a
26 qualified health maintenance organization pursuant to the
27 Health Maintenance Organization Act of 1973 shall be
28 permitted to offer health benefits plans formulated by the
29 commissioner which are in accordance with the provisions of
30 that law in lieu of the five plans required pursuant to this
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1 section.
2 (2) Notwithstanding the provisions of this section to
3 the contrary, a health maintenance organization which is
4 approved under the act of December 29, 1972 (P.L.1701,
5 No.364), known as the Health Maintenance Organization Act,
6 shall be permitted to offer health benefits plans formulated
7 by the commissioner which are in accordance with the
8 provisions of that law in lieu of the five plans required
9 pursuant to this section, except that the plans shall provide
10 the same level of benefits as required for a federally
11 qualified health maintenance organization, including any
12 requirements concerning copayments by enrollees.
13 (g) Carrier not required to own or control health
14 maintenance organization.--A carrier shall not be required to
15 own or control a health maintenance organization or otherwise
16 affiliate with a health maintenance organization in order to
17 comply with the provisions of this section, but the carrier
18 shall be required to offer the five health benefits plans which
19 are formulated by the commissioner, including one plan which
20 contains benefits and cost-sharing levels that are equivalent to
21 those required for health maintenance organizations.
22 (h) Other riders.--
23 (1) In addition to the rider packages provided for in
24 subsection (d), every carrier may offer, in connection with
25 the five health benefits plans required to be offered by this
26 section, any number of riders which may revise the coverage
27 offered by the five plans in any way. However, any form of
28 the rider or amendment thereof which decreases benefits or
29 decreases the actuarial value of one of the five plans shall
30 be filed for approval by the commissioner before the rider
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1 may be sold. Any rider or amendment thereof which adds
2 benefits or increases the actuarial value of one of the five
3 plans shall be filed with the commissioner for informational
4 purposes before the rider may be sold.
5 (2) The commissioner shall disapprove any rider filed
6 pursuant to this subsection that is unjust, unfair,
7 inequitable, unreasonably discriminatory, misleading,
8 contrary to law or the public policy of this Commonwealth.
9 The commissioner's determination shall be in writing and
10 shall be appealable.
11 (3) The benefit riders provided for in paragraph (1)
12 shall be subject to subsection (b) and sections 103, 305,
13 306, 307, 308 and 310.
14 Section 302. Hospital confinement or other supplemental limited
15 benefit insurance plan.
16 (a) Coverage under health benefits plan contract or policy
17 required.--A carrier shall not deliver or issue for delivery a
18 hospital confinement or other supplemental limited benefit
19 insurance plan unless the applicant for such coverage signs a
20 statement on the application form that confirms that the
21 applicant is already covered under a health benefits plan
22 contract or policy. The application form shall be filed with the
23 commissioner on an informational basis.
24 (b) Requirements.--A hospital confinement plan or other
25 supplemental limited benefit insurance plan issued to a small
26 employer or other group health benefits plan provider or to
27 individual employees of a small employer or other group health
28 benefits provider:
29 (1) shall be subject to the same rating requirements
30 that apply to health benefits plans issued under section
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1 308(a)(2), except that a hospital confinement plan and
2 supplemental limited benefit insurance plan shall be subject
3 to the commissioner's exclusive review and regulation with
4 regard to loss ratios, medical underwriting and eligibility
5 requirements and form approval; and
6 (2) may include preexisting condition exclusions.
7 (c) Coordination of benefits.--A health benefits plan shall
8 not coordinate benefits against any hospital confinement or
9 other supplemental limited benefit insurance plan.
10 Section 303. Application of coinsurance and deductibles.
11 Plans required to be offered under this act may be subject to
12 coinsurance and deductibles, which may vary by selected portions
13 of the coverage, except that no deductible applicable to any
14 portion of the coverage shall exceed $250 for an individual or
15 family unit during any benefit year, and no coinsurance
16 applicable to any portion of the coverage shall exceed $500 for
17 an individual or family unit during any benefit year unless
18 provided by the commissioner under section 510. Any person
19 previously covered by a group or individual health benefits plan
20 may apply any deductibles paid in the current benefit year under
21 the previous plan to the annual limits of the successor plan.
22 Section 304. Standard coordination of benefits provisions.
23 Coverage provided under this act shall be subject to standard
24 coordination of benefits provisions for all persons covered
25 under the policy or contract.
26 Section 305. Prohibition on preexisting condition provisions.
27 (a) General rule.--No health benefits plan subject to this
28 act shall include any preexisting condition provision. However,
29 a preexisting condition provision may apply to a late enrollee
30 or to any group of two to five persons if such provision
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1 excludes coverage for a period of no more than 180 days
2 following the effective date of coverage of such enrollee and
3 relates only to conditions manifesting themselves during the six
4 months immediately preceding the effective date of coverage of
5 such enrollee in such a manner as would cause an ordinarily
6 prudent person to seek medical advice, diagnosis, care or
7 treatment or for which medical advice, diagnosis, care or
8 treatment was recommended or received during the six months
9 immediately preceding the effective date of coverage, or as to a
10 pregnancy existing on the effective date of coverage. In any
11 event, if ten or more late enrollees request enrollment during
12 any 30-day enrollment period, then no preexisting condition
13 provision shall apply to any late enrollee.
14 (b) Application of preexisting condition provision.--In
15 determining whether a preexisting condition provision applies to
16 an eligible employee or dependent, all health benefits plans
17 shall credit the time that person was covered under any previous
18 health benefits plan if the previous coverage was continuous to
19 a date not more than 90 days prior to the effective date of the
20 new coverage, exclusive of any applicable waiting period under
21 such plan.
22 Section 306. Renewal of policies or contracts of small
23 employers.
24 Every policy or contract issued to small employers in this
25 Commonwealth under this act shall be renewable with respect to
26 all eligible employees or dependents at the option of the policy
27 or contract holder or small employer except under the following
28 circumstances:
29 (1) Nonpayment of the required premiums by the
30 policyholder, contract holder or employer.
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1 (2) Fraud or misrepresentation of the policyholder,
2 contract holder or employer or, with respect to coverage of
3 eligible employees or dependents, the enrollees or their
4 representatives.
5 (3) The number of employees covered under the health
6 benefits plan is less than the number or percentage of
7 employees required by participation requirements under the
8 health benefits policy or contract.
9 (4) Noncompliance with a carrier's employment
10 contribution requirements.
11 (5) Any carrier doing business under Chapter 3 ceases
12 doing business in the small employer market if the following
13 conditions are satisfied:
14 (i) The carrier gives notice to cease doing business
15 in the small employer market to the commissioner not
16 later than eight months prior to the date of the planned
17 withdrawal from the small group market, during which time
18 the carrier shall continue to be governed by this act
19 with respect to business written under this act. For the
20 purposes of this subsection, "date of planned withdrawal"
21 means the date upon which the first notice to small
22 employers is sent by the carrier pursuant to subparagraph
23 (ii).
24 (ii) No later than two months following the date of
25 the notification to the commissioner that the carrier
26 intends to cease doing business in the small employer
27 market, the carrier shall mail a notice to every small
28 business employer insured by the carrier that the policy
29 or contract of insurance will be terminated. This notice
30 shall be sent by certified mail to the small business
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1 employer not less than six months in advance of the
2 effective date of the cancellation date of the policy or
3 contract.
4 (iii) Any carrier that ceases to do business
5 pursuant to this act shall be prohibited from writing new
6 business in the small employer market for a period of
7 five years from the date of notice to the commissioner.
8 (6) In the case of policies or contracts issued in
9 connection with membership in an association or trust of
10 employers, an employer ceases to maintain its membership in
11 the association or trust.
12 (7) The number of employees covered under the health
13 benefits plan is less than two.
14 Section 307. Standards of carrier for acceptance of small
15 group.
16 Any small employer carrier may require a reasonable specified
17 minimum participation of eligible employees, which shall not
18 exceed 75%, or reasonable minimum employer contributions in
19 determining whether to accept a small group under this act. The
20 standards so established by the carrier shall be first approved
21 by the commissioner and shall be applied uniformly to all small
22 groups, except that in no event shall a carrier require an
23 employer to contribute more than 10% to the annual cost of the
24 policy or contract, or an amount as otherwise provided by the
25 commissioner and any minimum participation standards established
26 by the carrier shall be reasonable. In establishing the
27 percentage of employee participation, a one-to-one credit shall
28 be given for each employee covered by a spouse's health benefits
29 coverage or for each employee participating in an employee
30 welfare benefits plan established in accordance with a
19990S1068B1298 - 16 -
1 collective bargaining agreement. In calculating an employer's
2 participation, the carrier shall include all insured employees,
3 regardless of whether the employees chose an indemnity plan or a
4 health maintenance organization, or a combination thereof.
5 Section 308. Transitional provisions, prohibitions and
6 application.
7 (a) Transition from rating methodology to community
8 rating.--
9 (1) Beginning on the third 12-month anniversary date of
10 any policy or contract issued in 1999, no small employer
11 health benefits plan shall be issued in this Commonwealth,
12 unless the plan is community related.
13 (2) Beginning January 1, 2000, and upon the first 12-
14 month anniversary date thereafter of the policy or contract,
15 the premium rate charged by a carrier to the highest rated
16 small group purchasing a small employer health benefits plan
17 issued under this act shall not be greater than 300% of the
18 premium rate charged to the lowest rated small group
19 purchasing that same health benefits plan. However, the only
20 factors upon which the rate differential may be based are
21 age, gender and geography. These factors shall be applied in
22 a manner consistent with regulations adopted by the
23 commissioner.
24 (3) Beginning on the second 12-month anniversary after
25 the date established in paragraph (2) of the policy or
26 contract, the premium rate charged by a carrier to the
27 highest rated small group purchasing a small employer health
28 benefits plan issued under this act shall not be greater than
29 200% of the premium rate charged for the lowest rated small
30 group purchasing that same health benefits plan. However, the
19990S1068B1298 - 17 -
1 only factors upon which the rate differential may be based
2 are age, gender and geography. These factors shall be applied
3 in a manner consistent with regulations adopted by the
4 commissioner.
5 (4) Any policy or contract issued after January 1, 2000,
6 to a small employer who was not previously covered by a
7 health benefits plan issued by the issuing small employer
8 carrier shall be subject to the same premium rate
9 restrictions as provided in paragraphs (1), (2) and (3),
10 which rate restrictions shall be effective on the date the
11 policy or contract is issued.
12 (5) The commissioner shall establish under section 707:
13 (i) up to six geographic territories, none of which
14 is smaller than a county; and
15 (ii) age classifications which, at a minimum, shall
16 be in five-year increments.
17 (b) Prohibition on carriers acting as third-party
18 administrators.--Notwithstanding any other provision of law to
19 the contrary, no carrier offering any health benefits plan
20 pursuant to the provisions of this act shall act to circumvent
21 the intent of this act by acting as a third-party administrator
22 for groups of small employers, any one of whom was insured as of
23 September 1, 1998. However, this provision shall not act to
24 limit a bona fide group of small employers who voluntarily act
25 together to provide health benefits to their employees.
26 (c) Application to carriers.--
27 (1) Notwithstanding any other provision of law to the
28 contrary, the provisions of this act relating to small
29 employer health insurance shall apply to a carrier which
30 issues a policy to an association or trust of employers, if
19990S1068B1298 - 18 -
1 the group includes one or more member employers or other
2 member groups which have at least two but no more than 49
3 employees or members exclusive of spouses and dependents. The
4 provisions of this act relating to small employer health
5 insurance shall not apply to a carrier which issued a policy
6 exclusively to the members of an association on or before the
7 effective date of this act if the policy was written in the
8 name of the association, the carrier writes no other group
9 health insurance policy in this Commonwealth and the
10 aggregate number of insured association members exceeds 49.
11 (2) A carrier which is not exempt from the provisions of
12 this act under this subsection and which issues a policy to
13 an association or trust of employers after the effective date
14 of this act shall be required to offer small employer health
15 benefits plans to nonassociation or trust employers in the
16 same manner as any other small employer carrier is required
17 under this act.
18 (d) Premium rates for individuals and family units.--
19 Nothing contained herein shall prohibit the use of premium rate
20 structures to establish different premium rates for individuals
21 and family units.
22 (e) Informational filing of schedule of premiums.--No
23 insurance contract or policy subject to the provisions of this
24 act relating to small employer health insurance may be entered
25 into unless and until the carrier has made an informational
26 filing with the commissioner of a schedule of premiums, not to
27 exceed 12 months in duration, to be paid pursuant to the
28 contract or policy, of the carrier's rating plan and
29 classification system in connection with the contract or policy,
30 and of the actuarial assumptions and methods used by the carrier
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1 in establishing premium rates for the contract or policy.
2 (f) Increase or decrease of premiums.--Beginning January 1,
3 1999, a carrier desiring to increase or decrease premiums for
4 any policy form or benefit rider offered under section 301(h)
5 subject to this act may implement such increase or decrease upon
6 making an informational filing with the commissioner of the
7 increase or decrease, along with the actuarial assumptions and
8 methods used by the carrier in establishing the increase or
9 decrease, if the anticipated minimum loss ratio for a policy
10 form shall not be less than 85% of the premium therefor. Until
11 December 31, 2000, the informational filing shall also include
12 the carrier's rating plan and classification system in
13 connection with the increase or decrease.
14 (g) Dividends and credits.--Each calendar year, a carrier
15 shall return in the form of aggregate benefits for each of the
16 five standard policy forms offered by the carrier under section
17 301 at least 85% of the aggregate premiums collected for the
18 policy form during that calendar year. Carriers shall annually
19 report, no later than August 1 of each year, the loss ratio
20 calculated pursuant to this section for each such policy form
21 for the previous calendar year. In each case where the loss
22 ratio for a policy fails to substantially comply with the 85%
23 loss ratio requirement, the carrier shall issue a dividend or
24 credit against future premiums for all policyholders with that
25 policy form in an amount sufficient to assure that the aggregate
26 benefits paid in the previous calendar year plus the amount of
27 the dividends and credits shall equal 85% of the aggregate
28 premiums collected for the policy form in the previous calendar
29 year. The dividend or credit shall be issued to each policy
30 which was in effect as of March 30 of the applicable year and
19990S1068B1298 - 20 -
1 remains in effect as of the date the dividend or credit is
2 issued. All dividends and credits must be distributed by
3 December 31 of the year following the calendar year in which the
4 loss ratio requirements were not satisfied. The annual report
5 required by this paragraph shall include a carrier's calculation
6 of the dividends and credits as well as an explanation of the
7 carrier's plan to issue dividends or credits. The instructions
8 and format for calculating and reporting loss ratios and issuing
9 dividends or credits shall be specified by the commissioner by
10 regulation. Regulations shall include provisions for the
11 distribution of a dividend or credit in the event of
12 cancellation or termination by a policyholder.
13 (h) Application of act.--The provisions of this act relating
14 to small employer health insurance shall apply to health
15 benefits plans which are delivered, issued for delivery, renewed
16 or continued on or after January 1, 2000.
17 (i) Policy required to be offered.--A policy or contract
18 covering two or more employees of a small employer issued by a
19 carrier prior to January 1, 2000, shall remain in effect until
20 the first 12-month anniversary date after February 28, 2000, of
21 that policy or contract, but at least 60 days before the first
22 12-month anniversary date thereof the carrier shall be required
23 to offer the small employer a policy or contract under section
24 301.
25 Section 309. Limitations and compliance with act.
26 (a) Limitations on coverage for small employers.-- No health
27 maintenance organization shall be required to offer coverage or
28 accept applications under section 301 to a small employer if the
29 small employer is not physically located in the health
30 maintenance organization's approved service area, to an employee
19990S1068B1298 - 21 -
1 when the employee does not work or reside within a service area
2 or if the health maintenance organization reasonably anticipates
3 and demonstrates to the satisfaction of the commissioner that it
4 will not have the capacity in its network of providers within
5 the service area to deliver service adequately to the members of
6 such groups because of its obligations to existing group
7 contract holders and enrollees.
8 (b) Potentially financially impaired carriers.--No small
9 employer carrier shall be required to offer coverage or accept
10 applications under this act for any period of time in which the
11 commissioner determines that the requiring of the issuing of
12 policies or contracts under this act would place the carrier in
13 a financially impaired position.
14 (c) Compliance with act.--A health maintenance organization
15 which complies with the basic health benefits, underwriting and
16 rating standards established by the Federal Government under
17 Subact XI of the Health Maintenance Organization Act of 1973
18 (Public Law 93-222, 87 Stat. 914) and which also provides the
19 comprehensive health benefits plans coverage required by section
20 301(f) shall be deemed in compliance with this act.
21 Section 310. Continued coverage for terminated employees.
22 (a) General rule.--Every policy or contract issued to a
23 small employer in this Commonwealth, including, but not limited
24 to, policies or contracts which are subject to this act and
25 which are delivered, issued, renewed or continued on or after
26 January 1, 2000, shall offer continued coverage under the plan
27 to any employee whose employment was terminated for a reason
28 other than for cause and to any employee covered by such plan
29 whose hours of employment were reduced to fewer than 30
30 subsequent to the effective date of coverage for that employee.
19990S1068B1298 - 22 -
1 The employee shall make a written election for continued
2 coverage within 30 days of a qualifying event. For the purposes
3 of this section, "qualifying event" shall mean the date of
4 termination of employment or the date on which a reduction in an
5 employee's hours of employment becomes effective. For the
6 purposes of this section, the date on which a health benefits
7 plan is continued shall be the anniversary date of the issuance
8 of the plan.
9 (b) Type of coverage required.--Coverage continued pursuant
10 to subsection (a) shall consist of coverage which is identical
11 to the coverage provided under the policy or contract to
12 similarly situated beneficiaries whose coverage has not been
13 terminated or hours of employment reduced. If coverage is
14 modified under the policy or contract for any group of similarly
15 situated beneficiaries, this coverage shall also be modified in
16 the same manner for persons who are qualified beneficiaries
17 entitled under subsection (a) to continued coverage.
18 Continuation of coverage may not be conditioned upon or
19 discriminate on the basis of lack of evidence of insurability.
20 (c) Payment of premium.--The health benefits plan may
21 require payment of a premium by the employee for any period of
22 continuation coverage as provided for in this section, except
23 that the premium shall not exceed 102% of the applicable premium
24 paid for similarly situated beneficiaries under the health
25 benefits plan for a specified period and may at the election of
26 the payor be made in monthly installments. No premium payment
27 shall be due before the 30th day after the day on which the
28 covered employee made the initial election for continued
29 coverage.
30 (d) Cessation of coverage.--Coverage continued pursuant to
19990S1068B1298 - 23 -
1 this section shall continue until the earlier of the following:
2 (1) The date upon which the employer under whose health
3 benefits plan coverage is continued ceases to provide any
4 health benefits plan to any employee or other qualified
5 beneficiary.
6 (2) The date on which the continued coverage ceases
7 under the health benefits plan by reason of a failure to make
8 timely payment of any premium required under the plan by the
9 former employee having the continued coverage. The payment of
10 any premium shall be considered to be timely if made within
11 30 days after the due date or within such longer period as
12 may be provided for by the policy or contract.
13 (3) The date after the date of election on which the
14 qualified beneficiary first becomes:
15 (i) covered under any other health benefits plan, as
16 an employee or otherwise, which does not contain a
17 provision which limits or excludes coverage with respect
18 to any preexisting condition of a covered employee or any
19 spouse or dependent who is included under the coverage
20 provided the covered employee, for such period of the
21 limitation or exclusion; or
22 (ii) eligible for benefits under Title XVIII of the
23 Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et
24 seq.).
25 (e) Notice required.--Notice shall be provided to employees
26 at the commencement of coverage as to their continuation rights
27 under the plan. A qualified beneficiary may elect continuation
28 coverage offered pursuant to this section no later than 30 days
29 after the qualifying event. For the purposes of this section,
30 "qualified beneficiary" means any person covered under a small
19990S1068B1298 - 24 -
1 employer group policy.
2 (f) Application of section.--The provisions of this section
3 shall not apply to any person who is a qualified beneficiary for
4 the purposes of continuation of coverage as provided in
5 accordance with section 4980B of the Internal Revenue Code of
6 1986 (Public Law 99-514, 26 U.S.C. § 4980B).
7 (g) Duration of coverage.--In no event shall any
8 continuation of coverage provided for under this section exceed
9 12 months from the qualifying event.
10 CHAPTER 5
11 REINSURANCE
12 Section 501. Small Employer Health Benefits Program.
13 (a) Establishment.--There is hereby established a nonprofit
14 entity to be known as the Small Employer Health Benefits
15 Program. A small employer carrier issuing health benefits plan
16 policies and contracts may be a member of the program.
17 (b) Commissioner duties.--The program shall operate subject
18 to the supervision and control of the commissioner.
19 Section 502. Plan of operation.
20 (a) Commissioner duties.--Within 180 days after the
21 effective date of this act, the commissioner shall, after notice
22 and hearing, adopt and promulgate a plan of operation and
23 thereafter any amendments thereto necessary or suitable to
24 assure the fair, reasonable and equitable administration of the
25 program. The plan of operation shall be suitable to assure the
26 fair, reasonable and equitable administration of the program and
27 to provide for the sharing of program gains or losses on an
28 equitable and proportionate basis in accordance with this
29 chapter.
30 (b) Content of plan.--The plan of operation shall:
19990S1068B1298 - 25 -
1 (1) Establish procedures for handling and accounting of
2 program assets and moneys and for an annual fiscal reporting
3 to the department.
4 (2) Establish procedures for selecting an administering
5 carrier and setting forth the powers and duties of the
6 administering carrier.
7 (3) Establish procedures for reinsuring risks under this
8 act.
9 (4) Establish procedures for collecting assessments from
10 small employer carriers to fund claims and for administrative
11 expenses incurred or estimated to be incurred by the program.
12 (5) Establish a methodology for applying the dollar
13 thresholds contained in this act in the case of carriers that
14 pay or reimburse health care providers through capitation or
15 salary.
16 (6) Provide for any additional matters necessary for the
17 implementation and administration of the program.
18 Section 503. Program powers and duties generally.
19 The program shall have the general powers and authority
20 granted under the laws of this Commonwealth to insurance
21 companies and health maintenance organizations licensed to
22 transact business except the power to issue health benefit plans
23 directly to either groups or individuals. In addition, the
24 program shall have the specific authority to:
25 (1) Enter into contracts as are necessary or proper to
26 carry out the provisions and purposes of this act, including
27 the authority, with the approval of the commissioner, to
28 enter into contracts with similar programs of other states
29 for the joint performance of common functions or with persons
30 or other organizations for the performance of administrative
19990S1068B1298 - 26 -
1 functions.
2 (2) Sue or be sued, including taking any legal actions
3 necessary or proper to recover any assessments and penalties
4 for, on behalf of or against the program or any small
5 employer carriers.
6 (3) Take any legal action necessary to avoid the payment
7 of improper claims against the program.
8 (4) Define the health benefits plans for which
9 reinsurance will be provided and to issue reinsurance
10 policies in accordance with the requirements of this act.
11 (5) Establish rules, conditions and procedures for
12 reinsuring risks under the program.
13 (6) Establish actuarial functions as appropriate for the
14 operation of the program.
15 (7) Assess small employer carriers under section 509(c)
16 and to make advance interim assessments as may be reasonable
17 and necessary for organizational and interim operating
18 expenses. Any interim assessments shall be credited as
19 offsets against any regular assessments due following the
20 close of the fiscal year.
21 (8) Appoint appropriate legal, actuarial and other
22 committees as necessary to provide technical assistance in
23 the operation of the program, policy and other contract
24 design and any other function within the authority of the
25 program.
26 (9) Borrow money to effect the purposes of the program.
27 Any notes or other evidence of indebtedness of the program
28 not in default shall be legal investments for carriers and
29 may be carried as admitted assets.
30 Section 504. Reinsurance.
19990S1068B1298 - 27 -
1 A small employer carrier may reinsure with the program as
2 provided for in this section:
3 (1) With respect to a health benefits plan, the program
4 shall reinsure the level of coverage provided.
5 (2) A carrier participating under this act shall
6 reinsure an entire employer group within 60 days of the
7 commencement of the group's coverage under a health benefits
8 plan.
9 (3) The program shall not reimburse a small employer
10 carrier with respect to the claims of a reinsured employee or
11 dependent until the carrier has incurred an initial level of
12 claims for such employee or dependent of $5,000 in a calendar
13 year for benefits covered by the program. In addition, the
14 small employer carrier shall be responsible for 10% of the
15 next $50,000 of benefit payments during a calendar year and
16 the program shall reinsure the remainder. A small employer
17 carrier's liability under this paragraph shall not exceed a
18 maximum limit of $10,000 in any one calendar year with
19 respect to any reinsured individual.
20 (4) The commissioner annually shall adjust the initial
21 level of claims and the maximum limit to be retained by the
22 carrier to reflect increases in costs and utilization within
23 the standard market for health benefits plans within this
24 Commonwealth. The adjustment shall not be less than the
25 annual change in the medical component of the Consumer Price
26 Index for All Urban Consumers of the Department of Labor,
27 Bureau of Labor Statistics unless the commissioner approves a
28 lower adjustment factor.
29 (5) A small employer carrier must apply all managed care
30 and claims handling techniques, including, but not limited
19990S1068B1298 - 28 -
1 to, utilization review, individual case management, preferred
2 provider provisions and other managed-care provisions or
3 methods of operation, consistently with respect to both
4 reinsured and nonreinsured business.
5 Section 505. Methodology for determining premium rates.
6 The commissioner as part of the plan of operation shall
7 establish a methodology for determining premium rates to be
8 charged by the program for reinsuring small employers and
9 individuals under this act. The methodology shall include a
10 system for classification of small employers that reflects the
11 types of case characteristics commonly used by small employer
12 carriers in this Commonwealth. The methodology shall provide for
13 the development of base reinsurance premium rates which shall be
14 multiplied by the factors set forth in section 506 to determine
15 the premium rates for the program. The base reinsurance premium
16 rates shall be established by the commissioner.
17 Section 506. Premium rates.
18 An entire small employer group may be reinsured for a rate
19 that is 1.5 times the base reinsurance premium rate for the
20 group established.
21 Section 507. Review of methodology.
22 The commissioner periodically shall review the methodology
23 established under section 505, including the system of
24 classification and any rating factors, to assure that it
25 reasonably reflects the claims experience of the program.
26 Section 508. Adjustments to premium rates.
27 The commissioner may consider adjustments to the premium
28 rates charged by the program to reflect the use of effective
29 cost containment and managed-care arrangements.
30 Section 509. Reporting and recoupment of losses.
19990S1068B1298 - 29 -
1 (a) Report.--Prior to March 1 of each year, the commissioner
2 shall determine the program net loss for the previous calendar
3 year, including administrative expenses and incurred losses for
4 the year, taking into account investment income and other
5 appropriate gains and losses.
6 (b) Losses recouped by assessment.--Any net loss for the
7 year shall be recouped by assessments of small employer
8 carriers. The following shall apply:
9 (1) The commissioner shall establish, as part of the
10 plan of operation, a formula by which to make assessments
11 against small employer carriers. The assessment formula shall
12 be based on:
13 (i) each small employer carrier's share of the total
14 premiums earned in the preceding calendar year from
15 health benefits plans delivered or issued for delivery to
16 small employers in this Commonwealth by small employer
17 carriers; and
18 (ii) each small employer carrier's share of the
19 premiums earned in the preceding calendar year from newly
20 issued health benefits plans delivered or issued for
21 delivery during the calendar year to small employers in
22 this Commonwealth by small employer carriers.
23 (2) The formula established under paragraph (1) shall
24 not result in any small employer carrier having an assessment
25 share that is less than 50% nor more than 150% of an amount
26 which is based on the proportion of the small employer
27 carrier's total premiums earned in the preceding calendar
28 year from health benefit plans delivered or issued for
29 delivery to small employers in this Commonwealth by small
30 employer carriers to the total premiums earned in the
19990S1068B1298 - 30 -
1 preceding calendar year from health benefit plans delivered
2 or issued for delivery to small employers in this
3 Commonwealth by all small employer carriers.
4 (3) The commissioner may change the assessment formula
5 established pursuant to paragraph (1) from time to time as
6 appropriate. The commissioner may provide for the shares of
7 the assessment base attributable to total premium and to the
8 previous year's premium to vary during a transition period.
9 (4) The commissioner shall make an adjustment to the
10 assessment formula for small employer carriers that are
11 approved health maintenance organizations which are federally
12 qualified under the Health Maintenance Organization Act of
13 1973 (Public Law 93-222, 87 Stat. 914) to the extent, if any,
14 that restrictions are placed on them that are not imposed on
15 other small employer carriers.
16 (c) Assessment determination.--
17 (1) Prior to March 1 of each year, the commissioner
18 shall determine an estimate of the assessments needed to fund
19 the losses incurred by the program in the previous calendar
20 year.
21 (2) If the commissioner determines that the assessments
22 needed to fund the losses incurred by the program in the
23 previous calendar year will exceed the amount specified in
24 paragraph (3), the commissioner shall evaluate the operation
25 of the program. The evaluation shall include an estimate of
26 future assessments and consideration of the administrative
27 costs of the program, the appropriateness of the premiums
28 charged, the level of insurer retention under the program and
29 the costs of coverage for small employers. The commissioner
30 may implement such amendments to the plan of operation the
19990S1068B1298 - 31 -
1 commissioner deems necessary to reduce future losses and
2 assessments.
3 (3) For any calendar year, the amount specified in this
4 paragraph is 5% of total premiums earned in the previous
5 calendar year from health benefit plans delivered or issued
6 for delivery to small employers in this Commonwealth by small
7 employer carriers.
8 (d) When assessments exceed actual losses.--If assessments
9 exceed net losses of the program, the excess shall be held at
10 interest and used by the commissioner to offset future losses or
11 to reduce program premiums. As used in this subsection, the term
12 "future losses" includes reserves for incurred but not reported
13 claims.
14 (e) Annual determination.--Each small employer carrier's
15 proportion of the assessment shall be determined annually by the
16 commissioner based on annual statements and other reports deemed
17 necessary by the commissioner and filed by the small employer
18 carrier with the commissioner.
19 (f) Late payments.--The plan of operation shall provide for
20 the imposition of an interest penalty for late payment of
21 assessments.
22 (g) Deferment.--A small employer carrier may seek from the
23 commissioner a deferment from all or part of an assessment
24 imposed by the commissioner. The commissioner may defer all or
25 part of the assessment of a small employer carrier if the
26 commissioner determines that the payment of the assessment would
27 place the carrier in a financially impaired condition. If all or
28 part of an assessment against a carrier is deferred, the amount
29 deferred shall be assessed against the other participating
30 carriers in a manner consistent with the basis for assessment
19990S1068B1298 - 32 -
1 set forth in this section. The small employer carrier receiving
2 the deferment shall remain liable to the program for the amount
3 deferred and shall be prohibited from reinsuring any groups with
4 the program until it pays the assessments.
5 Section 510. Establishment by commissioner of health benefits
6 plans available to all employers.
7 (a) Formulation of plans.--The commissioner shall formulate
8 the five health benefits plans to be made available by small
9 employer carriers in accordance with this act and shall
10 promulgate five standard forms. The commissioner may establish
11 benefits levels, deductibles and copayments, exclusions and
12 limitations for such health benefits plans in accordance with
13 the law.
14 (b) Forms.--The forms shall be consistent with section 301.
15 Such forms may contain, but shall not be limited to, the
16 following provisions:
17 (1) Utilization review of health care services,
18 including review of medical necessity of hospital and
19 physician services.
20 (2) Managed care systems, including large case
21 management.
22 (3) Provision for selective contracting with hospitals,
23 physicians and other health care providers.
24 (4) Reasonable benefits differentials which are
25 applicable to participating and nonparticipating providers.
26 (5) Notwithstanding the provisions of section 303 to the
27 contrary, the commissioner may from time to time adjust
28 coinsurance and deductibles.
29 (6) Such other provisions which may be quantifiably
30 established to be cost containment devices.
19990S1068B1298 - 33 -
1 (7) The department shall publish annually a list of the
2 premiums charged for each of the five small employer health
3 benefits plans and for any rider package by all carriers
4 writing such plans. The department shall also publish the
5 toll-free telephone number of each such carrier.
6 Section 511. Immunity.
7 Neither the participation in the program as small employer
8 carriers, the establishment of rates, forms or procedures nor
9 any other joint or collective action required by this act shall
10 be the basis of any legal action, criminal or civil liability,
11 or penalty against the program or any of its small employer
12 carriers either jointly or separately.
13 Section 512. Standards for compensation.
14 The commissioner, as part of the plan of operation, shall
15 develop standards setting forth the manner and levels of
16 compensation to be paid to licensed producers for the sale of
17 health benefits plans. In establishing such standards, the
18 commissioner shall take into consideration the need to assure
19 the broad availability of coverages, the objectives of the
20 program, the time and effort expended in placing the coverage,
21 the need to provide ongoing service to the small employer, the
22 levels of compensation currently used in the industry and the
23 overall costs of coverage to small employers selecting these
24 plans.
25 Section 513. Tax exemption.
26 The program shall be exempt from all State and local taxes.
27 CHAPTER 7
28 PENALTIES, LIMITATIONS AND SPECIAL CIRCUMSTANCES
29 Section 701. Penalties for violations.
30 A carrier which violates any provision of this act shall be
19990S1068B1298 - 34 -
1 liable for a penalty of not less than $2,000 and not greater
2 than $5,000 for each violation. The penalty shall be collected
3 by the commissioner in the name of the Commonwealth in a summary
4 proceeding.
5 Section 702. Prohibition on charge of assessment to
6 policyholders or public.
7 No assessment provided for under this act shall be charged,
8 directly or indirectly, to policyholders or the public, provided
9 that a carrier may charge such an assessment to policyholders to
10 the extent that the charging of the assessment is necessary to
11 enable the carrier to earn a constitutionally adequate rate of
12 return.
13 Section 703. Group hospital or medical coverage of residents
14 obtained through out-of-State trust.
15 Group hospital or medical coverage obtained through an out-
16 of-State trust covering a group of 49 or fewer employees or
17 participating persons who are residents of this State shall
18 comply with this act, regardless of the situs of delivery of the
19 policy.
20 Section 704. Multiple employer arrangements.
21 A multiple employer arrangement covering a group of 49 or
22 fewer employees or participating persons of an individual
23 employer who are residents of this Commonwealth shall register
24 with the commissioner. The multiple employer arrangements shall
25 be required to offer the health benefits plans established by
26 the commissioner. The premium rates charged for the multiple
27 employer arrangement health benefits plan shall conform to the
28 requirements of sections 301(b), 305 and 306, regardless of the
29 situs of delivery of the multiple employer arrangement.
30 Section 705. Notification of multiple employer arrangements.
19990S1068B1298 - 35 -
1 A carrier shall notify the commissioner by December 31 of
2 each year of any health care coverage or benefits, stop-loss
3 coverage or administrative services-only contracts it provides
4 or enters into with a multiple employer arrangement that
5 provides health care benefits to employees and their dependents
6 in this Commonwealth.
7 Section 706. Limitations.
8 (a) Plan or rider with greater actuarial value.--A small
9 employer who purchases a health benefits plan or rider under
10 this act shall not be permitted to purchase a health benefits
11 plan or rider with a greater actuarial value until the first
12 anniversary date of the small employer's existing health
13 benefits plan.
14 (b) Plan or rider with lesser actuarial value.--If, after
15 the first anniversary date of a small employer's health benefits
16 plan, the small employer purchases a health benefits plan or
17 rider of greater actuarial value than the existing health
18 benefits plan or rider, the small employer shall not be
19 permitted to change his health benefits plan or rider to one of
20 lesser actuarial value until the anniversary date of the small
21 employer's existing health benefits plan.
22 (c) Construction.--Nothing in this section shall be
23 construed to prohibit a small employer who has purchased a
24 health benefits plan or rider under this act from purchasing a
25 health benefits plan or rider of lesser actuarial value prior to
26 the anniversary date of the existing health benefits plan or
27 rider if the existing plan or rider was purchased at least 12
28 months prior to the latest anniversary date of the plan or
29 rider.
30 Section 707. Action by commissioner.
19990S1068B1298 - 36 -
1 (a) General rule.--All actions adopted by the commissioner
2 shall be subject to the provisions of this section,
3 notwithstanding any provisions of law to the contrary.
4 (b) Notice requirements.--
5 (1) Prior to the adoption of an action of the
6 commissioner, the commissioner shall publish notice of its
7 intended action in three newspapers of general circulation in
8 this Commonwealth and may publish the notice of intended
9 action in any trade or professional publication which it
10 deems necessary. The notice of intended action shall include
11 procedures for obtaining a detailed description of the
12 intended action and the time, place and manner by which
13 interested persons may present their views. The commissioner
14 shall provide the notice of intended action and a detailed
15 description of the intended action by mail, or otherwise, to
16 affected trade and professional associations, carriers
17 subject to this act and such other interested persons or
18 organizations which may request notification. The
19 commissioner shall forward the notice of intended action and
20 the detailed description of the intended action concurrently
21 to the Legislative Reference Bureau for publication in the
22 Pennsylvania Bulletin.
23 (2) The commissioner shall not charge any fee for
24 placement upon the mailing list of associations, carriers or
25 other persons to be notified, but the commissioner may charge
26 a fee to an association, carrier or other person requesting a
27 copy of the text of the intended action, which fee shall not
28 be in excess of the actual cost of reproducing and mailing
29 the copy.
30 (3) A copy of the text of the intended action shall be
19990S1068B1298 - 37 -
1 available in the department.
2 (c) Public hearing.--The commissioner shall hold a public
3 hearing on the establishment and modification of health benefits
4 plans, and the commissioner may hold a public hearing on any
5 other intended action. Notice of a hearing shall be given in the
6 notice of intended action provided for in subsection (b).
7 (d) Opportunity to comment in writing.--
8 (1) Whether or not a public hearing is held, the
9 commissioner shall afford all interested persons an
10 opportunity to comment in writing on the intended action.
11 Written comments shall be submitted to the commissioner
12 within the time established by the commissioner in the notice
13 of intended action, which time shall not be less than 20
14 calendar days from the date of notice.
15 (2) The commissioner shall give due consideration to all
16 comments received. Within a reasonable period of time
17 following submission of the comments pursuant to this
18 subsection, the commissioner shall prepare for public
19 distribution a report listing all parties who provided
20 written submissions concerning the intended action,
21 summarizing the content of the submissions and providing the
22 commissioner's response to the data, views and arguments
23 contained in the submissions. A copy of the report shall be
24 filed with the Legislative Reference Bureau for publication
25 in the Pennsylvania Bulletin.
26 (e) Final action.--The commissioner may adopt the intended
27 action immediately following the expiration of the public
28 comment period provided for in subsection (d) or the hearing
29 provided for in subsection (c), whichever date is later. The
30 final action adopted by the commissioner shall be submitted for
19990S1068B1298 - 38 -
1 publication in the Pennsylvania Bulletin and shall be effective
2 on the date of the submission or such later date as the
3 commissioner may establish.
4 (f) Construction.--Nothing in this section shall be
5 construed to prohibit the commissioner from adopting any rule or
6 regulation pursuant to the act of July 31, 1968 (P.L.769,
7 No.240), referred to as the Commonwealth Documents Law, or from
8 taking any other action required or authorized by this act.
9 (g) Definition.--As used in this section, the term "action"
10 includes, but is not limited to:
11 (1) The establishment and modification of health
12 benefits plans.
13 (2) Procedures and standards for the:
14 (i) assessment of members and the apportionment
15 thereof;
16 (ii) filing of policy forms;
17 (iii) making of rate filings;
18 (iv) evaluation of material submitted by carriers
19 with respect to loss ratios; and
20 (v) establishment of refunds to policy or contract
21 holders.
22 (3) The promulgation or modification of policy forms.
23 The term shall not include the hearing and resolution of
24 contested cases, personnel matters and applications for
25 withdrawal or exemptions.
26 Section 708. Other insurance coverage not required.
27 A carrier shall not require a small employer to purchase any
28 other insurance coverage, including, but not limited to, life
29 insurance, accident insurance or disability insurance, as a
30 condition of or in conjunction with the purchase of a health
19990S1068B1298 - 39 -
1 benefits plan under this act.
2 Section 709. Plans for selective contracting.
3 (a) General rule.--Notwithstanding any other law to the
4 contrary, the commissioner is authorized to approve the
5 establishment of an arrangement by an insurance company
6 operating pursuant to the insurance laws of this Commonwealth
7 and authorized to issue health benefits plans in this
8 Commonwealth, that is entered into on or after June 1, 1999, and
9 which provides for selective contracting with health care
10 providers and reasonable benefit differentials applicable to
11 participating and nonparticipating health care providers.
12 (b) Approval by commissioner required.--The agreement for an
13 arrangement shall be filed and approved by the commissioner
14 before it becomes effective. The commissioner shall approve the
15 agreement if he determines in consultation with the Secretary of
16 Health that the arrangement promotes health care cost
17 containment while adequately preserving quality of care. The
18 commissioner may adopt regulations necessary to enforce and
19 administer the arrangements.
20 CHAPTER 9
21 MISCELLANEOUS PROVISIONS
22 Section 901. Effective date.
23 This act shall take effect in 60 days.
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