PRINTER'S NO. 1073
No. 865 Session of 2007
INTRODUCED BY D. WHITE, PUNT, BOSCOLA, ERICKSON, O'PAKE, VANCE, RAFFERTY, EARLL, RHOADES, MADIGAN, WAUGH AND ROBBINS, MAY 31, 2007
REFERRED TO BANKING AND INSURANCE, MAY 31, 2007
AN ACT 1 Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An 2 act relating to insurance; amending, revising, and 3 consolidating the law providing for the incorporation of 4 insurance companies, and the regulation, supervision, and 5 protection of home and foreign insurance companies, Lloyds 6 associations, reciprocal and inter-insurance exchanges, and 7 fire insurance rating bureaus, and the regulation and 8 supervision of insurance carried by such companies, 9 associations, and exchanges, including insurance carried by 10 the State Workmen's Insurance Fund; providing penalties; and 11 repealing existing laws," providing for small group health 12 plan rates, for coverage requirements and for marketing 13 requirements. 14 The General Assembly of the Commonwealth of Pennsylvania 15 hereby enacts as follows: 16 Section 1. The act of May 17, 1921 (P.L.682, No.284), known 17 as The Insurance Company Law of 1921, is amended by adding an 18 article to read: 19 ARTICLE XXII 20 SMALL GROUP HEALTH BENEFIT PLAN REQUIREMENTS 21 Section 2201. Scope of article. 22 This article relates to any small group health benefit plan 23 offered by an insurance carrier that provides insurance coverage
1 to employees of a small employer. 2 Section 2202. Definitions. 3 The following words and phrases when used in this article 4 shall have the meanings given to them in this section unless the 5 context clearly indicates otherwise: 6 "Carrier." A company or health insurance entity licensed in 7 this Commonwealth to issue group health insurance, subscriber 8 contracts, certificates or plans that provide medical or health 9 care coverage by a health care facility or licensed health care 10 provider that is offered or governed under this act or any of 11 the following: 12 (1) The act of December 29, 1972 (P.L.1701, No.364), 13 known as the Health Maintenance Organization Act. 14 (2) A nonprofit corporation subject to 40 Pa.C.S. Ch. 61 15 (relating to hospital plan corporations) or 63 (relating to 16 professional health services plan corporations). 17 "Carrier group." A carrier writing coverage in Pennsylvania, 18 including, but not limited to, the parent carrier, its 19 subsidiaries and affiliates. 20 "Commissioner." The Insurance Commissioner of the 21 Commonwealth. 22 "Community rating." The rating methodology where premiums 23 are based on the average health care costs of the community 24 covered, and not the age, gender or occupation of the individual 25 subscribers. 26 "Department." The Insurance Department of the Commonwealth. 27 "Dominant market share." A carrier group determined by the 28 Insurance Department to provide coverage for 50% or more of the 29 covered lives within a region. 30 "Middle market share." A carrier group determined by the 20070S0865B1073 - 2 -
1 Insurance Department to provide coverage for 11% or more, but 2 less than 50% of the covered lives in a region. 3 "Modified community rating." The rating methodology where 4 premiums are based on the average health care costs of the 5 community covered, as modified by rating factors that have been 6 filed with the Insurance Department. 7 "Region I." The geographic area covered by the counties of 8 Bucks, Chester, Delaware, Montgomery and Philadelphia. 9 "Region II." The geographic area covered by the counties of 10 Adams, Berks, Cumberland, Dauphin, Franklin, Fulton, Lancaster, 11 Lebanon, Lehigh, Northampton, Perry, Schuylkill and York. 12 "Region III." The geographic area covered by the counties of 13 Bradford, Carbon, Clinton, Lackawanna, Luzerne, Lycoming, 14 Monroe, Pike, Sullivan, Susquehanna, Tioga, Wayne and Wyoming. 15 "Region IV." The geographic area covered by the counties of 16 Centre, Columbia, Juniata, Mifflin, Montour, Northumberland, 17 Synder and Union. 18 "Region V." The geographic area covered by the counties of 19 Bedford, Blair, Cambria, Clearfield, Huntingdon, Jefferson and 20 Somerset. 21 "Region VI." The geographic area covered by the counties of 22 Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Indiana, 23 Lawrence, Washington and Westmoreland. 24 "Region VII." The geographic area covered by the counties of 25 Cameron, Clarion, Crawford, Elk, Erie, Forest, McKean, Mercer, 26 Potter, Venango and Warren. 27 "Small employer." In connection with a group health plan 28 with respect to a calendar year and a plan year, an employer who 29 employs an average of at least two but not more than 50 30 employees on business days during the preceding calendar year 20070S0865B1073 - 3 -
1 and who employs at least two employees on the first day of the 2 plan year. In the case of an employer which was not in existence 3 throughout the preceding calendar year, the determination of 4 whether an employer is a small employer shall be based on the 5 average number of employees that it is reasonably expected that 6 the employer will employ on business days in the current 7 calendar year. 8 "Small group health benefit plan." The health insurance plan 9 under which individuals obtain insurance coverage, directly or 10 through any arrangement, on behalf of themselves and their 11 dependents through a group health plan maintained by a small 12 employer or through membership in an association. The term shall 13 not include any of the following: 14 (1) Accident only policy. 15 (2) Limited benefit policy. 16 (3) Credit policy. 17 (4) Long-term or disability income policy. 18 (5) Specified disease policy. 19 (6) Medicare supplement policy. 20 (7) Civilian Health and Medical Program of the Uniformed 21 Services (CHAMPUS) supplement. 22 (8) Workers' compensation policy. 23 (9) Automobile medical payment policy. 24 "Small market share." A carrier group determined by the 25 Insurance Department to provide coverage for less than 11% of 26 the covered lives in the region. 27 "Status." Dominant market share, small market share or 28 middle market share. 29 Section 2203. Data calls. 30 (a) Reports.--Not less frequently than March 1 of every 20070S0865B1073 - 4 -
1 other calendar year, each carrier group shall file a report with 2 the department of the carrier group's market share by region, 3 and the market share of each carrier within the carrier group by 4 region, for the immediately preceding calendar year. The carrier 5 shall report the number of covered lives of all small group 6 health benefit plans, the time periods over which coverage was 7 provided during the preceding calendar year, and such other 8 information as the department shall determine. 9 (b) Data calls.--The department may issue all other data 10 calls necessary to fulfill the requirements of this article. 11 (c) Review of reports.--By July 1 of each reporting year, 12 the department shall review the reports provided for under this 13 article and shall publish in the Pennsylvania Bulletin the 14 status of each carrier within each region in which the carrier 15 provides coverage. 16 (d) Penalty.--The commissioner shall impose an 17 administrative penalty of $1,000 against each carrier within the 18 carrier group for every day that the report is not provided in 19 accordance with subsection (a). 20 Section 2204. Rating requirements. 21 (a) Small group health benefit plans.--Each carrier within a 22 carrier group within a region which has a dominant market share 23 status shall use community rating in writing small group health 24 benefit plans in that region and may increase or decrease its 25 approved rate base by not more than 10% without the prior 26 approval of the department. 27 (b) Modified community rating factors.--Each carrier within 28 a carrier group within a region which has a middle market share 29 status may use modified community rating in writing small group 30 health benefit plans in that region and may include in its rate 20070S0865B1073 - 5 -
1 structure such modified community rating factors as are filed 2 with the department. The application of modified community 3 rating factors to a specific employer group shall not exceed 4 plus or minus 35% of the community rate. 5 (c) Rating methodology.--Each carrier within a carrier group 6 within a region which has a small market share status may use 7 any rating methodology in writing small group health benefit 8 plans without prior approval of the department. 9 (d) Rate filings.--Carriers shall make all rate filings 10 necessary to ensure compliance with this article. 11 Section 2205. Transition rates and rating methodology. 12 (a) Different status.--In any year that the department 13 determines that the status of a carrier group's market share 14 transitions the carrier group into a status different from the 15 preceding year, each carrier within the carrier group shall 16 institute a new rating methodology consistent with this section. 17 (b) First year rating methodology.--For the first year in 18 which a carrier group's status has changed, each carrier within 19 the carrier group shall utilize a rating methodology which 20 consists of two-thirds of the previous year's methodology and 21 one-third of the methodology of the new status. 22 (c) Second year rating methodology.--For the second year 23 after a carrier group's status has changed, each carrier within 24 the carrier group shall utilize a rating methodology which 25 consists of one-third of the methodology of the base year and 26 two-thirds of the methodology of the new status. 27 (d) Third year rating methodology.--For the third year after 28 a carrier group's status has changed, each carrier within the 29 carrier group shall utilize the new rating methodology 30 determined to be applicable at the beginning of the transition. 20070S0865B1073 - 6 -
1 (e) Exemption.--The department may, upon application of the 2 carrier group, exempt a carrier group from the conditions of 3 this section upon a showing by the carrier group of 4 extraordinary circumstances. 5 Section 2206. Regulations. 6 The commissioner may promulgate any and all regulations 7 necessary to implement and administer this article. 8 Section 2207. Application. 9 (a) Initial data call; reports.--Within 90 days of passage 10 of this section, the initial data call provided for in section 11 2203 shall be commenced, and the department shall provide notice 12 to all carriers by publishing in the Pennsylvania Bulletin the 13 due date for the reports required under this article. 14 (b) Rate filings.--All rate filings made pursuant to this 15 act shall be subject to and in compliance with applicable law 16 and regulations. 17 Section 2. This act shall take effect immediately. B16L40DMS/20070S0865B1073 - 7 -