PRINTER'S NO. 1403
No. 1165 Session of 1997
INTRODUCED BY HOLL, OCTOBER 20, 1997
REFERRED TO BANKING AND INSURANCE, OCTOBER 20, 1997
AN ACT 1 Providing for the regulation of individual access to health care 2 insurance and for penalties. 3 The General Assembly of the Commonwealth of Pennsylvania 4 hereby enacts as follows: 5 Section 1. Short title. 6 This act shall be known and may be cited as the Health Care 7 Insurance Individual Accessibility Act. 8 Section 2. Purpose. 9 It is necessary to maintain the Commonwealth's sovereignty 10 over the regulation of health insurance in this Commonwealth by 11 complying with the requirements of the Health Insurance 12 Portability and Accountability Act of 1996 (Public Law 104-191, 13 110 Stat. 1936). This act is intended to meet those requirements 14 while retaining the Commonwealth's authority to regulate health 15 insurance in this Commonwealth. 16 Section 3. Definitions. 17 (a) General rule.--The following words and phrases when used
1 in this act shall have the meanings given to them in this 2 section unless the context clearly indicates otherwise: 3 "Commissioner." The Insurance Commissioner of the 4 Commonwealth. 5 Company," "association" or "exchange." An entity holding a 6 current certificate of authority which are defined in section 7 101 of the act of May 17, 1921 (P.L.682, No.284), known as The 8 Insurance Company Law of 1921. 9 "Department." The Insurance Department of the Commonwealth. 10 Designated insurers." An insurer required to offer health 11 coverage to eligible individuals under section 4. 12 "Eligible individual." A resident of this Commonwealth who 13 meets the definition in section 2741(b) of the Federal Health 14 Insurance Portability and Accountability Act of 1996 (P.L.104- 15 191, 110 Stat. 1936). 16 "Federal act." The Federal Health Insurance Portability and 17 Accountability Act of 1996 (P.L.104-191, 110 Stat. 1936). 18 "Fraternal benefit society." An entity holding a current 19 certificate of authority in this Commonwealth under the act of 20 December 14, 1992 (P.L.835, No.124), known as the Fraternal 21 Benefit Societies Code. 22 "Health maintenance organization" or "HMO." An entity 23 holding a current certificate of authority under the act of 24 December 29, 1972 (P.L.1701, No.364), known as the Health 25 Maintenance Organization Act. 26 "Hospital plan corporation." An entity holding a current 27 certificate of authority organized and operated under 40 Pa.C.S. 28 Ch. 61 (relating to hospital plan corporations). 29 "Insurer." A foreign or domestic insurance company, 30 association or exchange, health maintenance organization, 19970S1165B1403 - 2 -
1 hospital plan corporation, professional health services plan 2 corporation, fraternal benefit society or risk-assuming 3 preferred provider organization. The term does not include a 4 group health plan as defined in section 2791 of the Federal 5 Health Insurance Portability and Accountability Act of 1996 6 (P.L.104-191, 110 Stat. 1936). 7 "Medical loss ratio." The ratio of incurred medical claim 8 costs to earned premiums. 9 "Preferred provider organization" or "PPO." An entity 10 holding a current certificate of authority organized and 11 operated under section 630 of the act of May 17, 1921 (P.L.682, 12 No.284), known as The Insurance Company Law of 1921. 13 "Professional health services plan corporation." An entity 14 holding a current certificate of authority organized and 15 operated under 40 Pa.C.S. Ch. 63 (relating to professional 16 health services plan corporations). The term does not include 17 dental service corporations or optometric service corporations, 18 as defined under 40 Pa.C.S. § 6302(a) (relating to definitions). 19 (b) Adoption of Federal act.--The words, terms and 20 definitions found in the Federal Health Insurance Portability 21 and Accountability Act of 1996 (P.L.104-191, 119 Stat. 1936), 22 including those in section 2791, are hereby adopted for purposes 23 of implementing this act unless otherwise provided by this act. 24 The term "health insurance issuer" found in section 2791(b)(2) 25 of the Federal Health Insurance Portability and Accountability 26 Act of 1996 (P.L.104-191, 110 Stat. 1936) shall have the same 27 meaning as "insurer" in subsection (a). 28 Section 4. Designated insurers. 29 (a) Alternative mechanism requirements.--The following 30 insurers shall comply with sections 5 and 6 in order to 19970S1165B1403 - 3 -
1 implement the alternative mechanism requirements of the Federal 2 act: 3 (1) Hospital plan corporations. 4 (2) Professional health services plan corporations. 5 (b) Certain parent designated insurers.--If a designated 6 insurer owns a hospital plan corporation or a professional 7 health services plan corporation which provides services within 8 substantially the same service area as the parent organization, 9 the subsidiary hospital plan corporation and professional health 10 services plan corporation are not required to offer coverage to 11 eligible individuals if the parent organization offers coverage 12 to eligible individuals under sections 5 and 6. 13 Section 5. Alternative mechanism in individual market. 14 (a) Rights of eligible individuals.--A designated insurer 15 shall: 16 (1) Offer continuous year-round open enrollment to 17 eligible individuals. 18 (2) Offer to eligible individuals, upon request, a 19 choice of at least two individual health insurance policies, 20 as specified in section 6. 21 (3) Issue to eligible individuals, upon request, an 22 individual policy that meets the requirements of section 6. 23 (b) Policy limitations.--Unless an eligible individual 24 chooses to purchase a policy pursuant to section 6(c), a policy 25 offered or issued to an eligible individual under section 6 26 shall not contain preexisting condition limitations or 27 restrictions. 28 (c) Financial subsidization for eligible individuals.-- 29 Designated insurers shall provide financial subsidization of 30 policies issued to eligible individuals. Designated insurers 19970S1165B1403 - 4 -
1 shall file for review by the commissioner a method for financial 2 subsidization in all rate filings on policy choices for eligible 3 individuals. The total subsidy provided by the designated 4 insurer to all of its products shall not be affected by the 5 requirement to subsidize products issued to eligible 6 individuals. 7 Section 6. Policy choice for eligible individuals. 8 (a) Comprehensive and standard policies.--Designated 9 insurers shall offer eligible individuals a choice of policies. 10 The choices shall include: 11 (1) At least one other policy that is comparable to a 12 standard health insurance policy or a comprehensive health 13 insurance policy being actively marketed by the insurer to 14 persons other than eligible individuals in the voluntary 15 individual market. 16 (2) At least one other policy that is being actively 17 marketed by the insurer to persons other than eligible 18 individuals in the voluntary individual market. 19 (b) Filing requirements.--Each designated insurer shall file 20 with and identify to the commissioner the comprehensive policy 21 form or the standard policy form the insurer intends to offer to 22 eligible individuals under subsection (a)(1). A designated 23 insurer may elect to identify more than one comprehensive or 24 standard policy form which will be offered to eligible 25 individuals. Each policy form shall contain benefits and limits 26 comparable to policies being actively marketed to persons other 27 than eligible individuals in the voluntary individual market. 28 The policy forms shall be considered comparable even if the 29 policies marketed in the voluntary individual market include a 30 preexisting condition exclusion. 19970S1165B1403 - 5 -
1 (c) Preexisting condition provisions.--Nothing in this act 2 shall prohibit an eligible individual from purchasing a policy 3 which includes a preexisting condition provision or is not 4 otherwise offered under this section from a designated insurer 5 or any other insurer. 6 Section 7. Coordination of benefits. 7 Benefits provided under individual policies by an insurer may 8 be subject to coordination of benefits with any other group 9 policy, individual policy, Federal or State government program, 10 labor-management trustee plan, union welfare plan, employer 11 organization plan or employee benefit organization plan, except 12 as otherwise provided by law. 13 Section 8. Excessive loss provision. 14 (a) General rule.--At any time, the designated insurer may 15 file for a rate adjustment for products offered under section 6 16 with the commissioner in accordance with the act of December 18, 17 1996 (P.L.1066, No.159), known as the Accident and Health Filing 18 Reform Act. 19 (b) Request for hearing.--The designated insurer may request 20 that the commissioner conduct a hearing if: 21 (1) the losses experienced by the designated insurer on 22 products offered under section 6(a)(1) or by eligible 23 individuals under section 6(a)(2) require a rate increase of 24 greater than 20% and the losses are in excess of a 110% 25 medical loss ratio for any calendar year; or 26 (2) the designated insurer requested a rate increase for 27 products under section 6(a) and has reason to believe that 28 continuation as a designated insurer will have a detrimental 29 impact on its financial condition or solvency. 30 (c) Action by commissioner.--Upon the request of a 19970S1165B1403 - 6 -
1 designated insurer under subsection (b), the commissioner shall 2 conduct a public hearing regarding the rate filing, medical loss 3 ratio and the impact that being a designated insurer is having 4 on the designated insurer's solvency. The hearing shall be held 5 as provided for in 2 Pa.C.S. Ch. 5 Subch. A (relating to 6 practice and procedure of Commonwealth agencies). Following the 7 hearing, the commissioner shall determine the extent of the 8 impact, if any, of being a designated insurer under this act on 9 the designated insurer's rate filing, medical loss ratio, 10 overall operations and solvency, and shall do one or more of the 11 following: 12 (1) grant, modify or deny the requested rate filing; or 13 (2) request to withdraw from the approved alternative 14 mechanism and to authorize implementation of the Federal 15 default standards set forth in section 2741 of the Federal 16 act. 17 Section 9. Review of filings. 18 The department shall review filings submitted under sections 19 5(c), 6(b) and 8(a) in accordance with the act of December 18, 20 1996 (P.L.1066, No.159), known as the Accident and Health Filing 21 Reform Act. 22 Section 10. Conversion policies. 23 (a) Notification.--Notification of the conversion privilege 24 shall be included with each certificate of coverage issued under 25 section 621.2(d) of the act of May 17, 1921 (P.L.682, No.284), 26 known as The Insurance Company Law of 1921. Each certificate 27 holder in an insured group shall be given written notification 28 of the conversion privilege and its duration within a period 29 beginning 15 days before and ending 30 days after the date of 30 termination of the group coverage. The certificate holder or the 19970S1165B1403 - 7 -
1 holder's dependent shall have no less than 31 days following 2 notification to exercise the conversion privilege. Written 3 notification provided by the contract holder and supplied to the 4 certificate holder or mailed to the certificate holder's last 5 known address or the last address furnished to the insurer by 6 the contract holder or employer shall constitute full compliance 7 with this section. 8 (b) Limitation on rates for conversion policies.--The 9 premium rates for individuals who purchase a comparable 10 conversion policy offered pursuant to applicable law shall be 11 limited to 120% of the approved premium rates for comparable 12 group coverage. 13 Section 11. Penalties. 14 (a) General rule.--Upon satisfactory evidence of a violation 15 of this act by an insurer or other person, the commissioner may 16 pursue any one or more of the following penalties: 17 (1) Suspend, revoke or refuse to renew the license of 18 the insurer or other person. 19 (2) Enter a cease and desist order. 20 (3) Impose a civil penalty of not more than $5,000. 21 (4) Impose a civil penalty of not more than $10,000 for 22 a willful violation of this act. 23 (b) Limitation.--Penalties imposed on an insurer or other 24 person under this act shall not exceed $500,000 in the aggregate 25 during a single calendar year. 26 Section 12. Regulations. 27 The department may promulgate regulations as may be necessary 28 or appropriate to carry out this act. 29 Section 13. Expiration. 30 This act shall expire on December 31, 2000. 19970S1165B1403 - 8 -
1 Section 14. Effective date. 2 This act shall take effect January 1, 1998. J15L40DMS/19970S1165B1403 - 9 -