PRIOR PRINTER'S NO. 1403 PRINTER'S NO. 1411
No. 1165 Session of 1997
INTRODUCED BY HOLL, OCTOBER 20, 1997
SENATOR HOLL, BANKING AND INSURANCE, AS AMENDED,
OCTOBER 21, 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,
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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
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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
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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.
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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
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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
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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 GROUP <--
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.
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1 Section 14. Effective date.
2 This act shall take effect January 1, 1998.
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