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                                                      PRINTER'S NO. 1604



No. 1191 Session of 2007

           DECEMBER 3, 2007


                                     AN ACT

     1  Establishing the Pennsylvania High-Risk Health Insurance Pool
     2     and the State Comprehensive Health Insurance Pool Board;
     3     providing for the powers and duties of the pool and the
     4     board; for selection of administering insurer and for payment
     5     of plan costs; and prescribing plan benefits.

     6     The General Assembly of the Commonwealth of Pennsylvania
     7  hereby enacts as follows:
     8  Section 1.  Short title.
     9     This act shall be known and may be cited as the High-Risk
    10  Health Insurance Pool Act.
    11  Section 2.  Definitions.
    12     The following words and phrases when used in this act shall
    13  have the meanings given to them in this section unless the
    14  context clearly indicates otherwise:
    15     "Board."  The State Comprehensive Health Insurance Pool
    16  Board.
    17     "Commissioner."  The Insurance Commissioner of the
    18  Commonwealth.
    19     "Health insurance."  A hospital or medical expense incurred

     1  policy, nonprofit health care services plan contract, health
     2  maintenance organization, subscriber contract or any other
     3  health care plan or arrangement that pays for or furnishes
     4  medical or health care services whether by insurance or
     5  otherwise, when sold to an individual or as a group policy. This
     6  term does not include short-term, accident, dental-only, fixed
     7  indemnity, limited benefit or credit insurance, coverage issued
     8  as a supplement to liability insurance, insurance arising out of
     9  a workers' compensation or similar law, automobile medical-
    10  payment insurance or insurance under which benefits are payable
    11  with or without regard to fault and which is statutorily
    12  required to be contained in any liability insurance policy or
    13  equivalent self-insurance.
    14     "Insured."  A person who is a legal resident of this
    15  Commonwealth and a citizen of the United States who is eligible
    16  to receive benefits from the pool. The term includes a dependent
    17  and family member.
    18     "Insurer."  An entity that is authorized in this Commonwealth
    19  to write health insurance or that provides health insurance in
    20  this Commonwealth. The term includes an insurance company,
    21  nonprofit health care services plan, fraternal benefits society,
    22  health maintenance organization, third-party administrators,
    23  State or local governmental unit, to the extent permitted by
    24  Federal law any self-insured arrangement covered by section 3 of
    25  the Employee Retirement Income Security Act of 1974 (Public Law
    26  93-406, 29 U.S.C. § 1002), that provides health care benefits in
    27  this Commonwealth, any other entity providing a plan of health
    28  insurance or health benefits subject to State insurance
    29  regulation and any reinsurer or stop-loss plan providing
    30  reinsurance or stop-loss coverage to a health insurer in this
    20070S1191B1604                  - 2 -     

     1  Commonwealth.
     2     "Medicare."  Coverage under both Parts A and B of Title XVIII
     3  of the Social Security Act (42 U.S.C. § 1395 et seq.)
     4     "Physician."  An individual licensed to practice medicine
     5  under the laws of this Commonwealth.
     6     "Plan."  The Comprehensive Health Insurance Plan as adopted
     7  by the State Comprehensive Health Insurance Board.
     8     "Pool."  The State High-Risk Health Insurance Pool.
     9     "Preexisting condition."  A condition for which medical
    10  advice, care or treatment was recommended or received during the
    11  X months prior to effective date of coverage under the pool.
    12  Except as otherwise provided in this act, preexisting conditions
    13  shall not be covered during the X months following the person's
    14  effective date of coverage under the plan.
    15     "Producer."  A person who is licensed to sell health
    16  insurance in this Commonwealth.
    17     "Resident."  Any of the following:
    18         (1)  An individual who has been legally domiciled in this
    19     Commonwealth for a minimum of 90 days for persons eligible
    20     for enrollment in the pool.
    21         (2)  An individual who is legally domiciled in this
    22     Commonwealth and is eligible for enrollment in the pool as a
    23     result of the Health Insurance Portability and Accountability
    24     Act of 1996 (Public Law 104-191, 110 Stat. 1936).
    25         (3)  An individual who is legally domiciled in the pool
    26     and is eligible for enrollment as a result of the Trade
    27     Adjustment Assistance Reform Act of 2002 (Public Law 107-210,
    28     116 Stat. 933).
    29  Section 3.  Pennsylvania High-Risk Health Insurance Pool.
    30     (a)  Establishment.--A nonprofit legal entity to be known as
    20070S1191B1604                  - 3 -     

     1  the Pennsylvania High-Risk Health Insurance Pool is hereby
     2  established.
     3     (b)  Availability date for health insurance policies.--Health
     4  insurance policies available in accordance with this act shall
     5  be available for sale within one year from the effective date of
     6  this section.
     7  Section 4.  Pool coverage eligibility.
     8     (a)  General rule.--Any individual person who is and
     9  continues to be a resident of this Commonwealth and a citizen of
    10  the United States shall be eligible for coverage from the pool
    11  if evidence is provided of one of the following:
    12         (1)  (i)  A notice of rejection or refusal to issue
    13         substantially similar insurance for health reasons by two
    14         insurers, provided that at least two insurers offer
    15         individual health insurance coverage in this
    16         Commonwealth.
    17             (ii)  If only one insurer offers individual market
    18         health insurance coverage in this Commonwealth then one
    19         rejection shall be sufficient.
    20             (iii)  A rejection or refusal by an insurer offering
    21         only stop-loss, excess loss or reinsurance coverage with
    22         respect to the applicant shall not be sufficient except
    23         under this subsection.
    24         (2)  (i)  A refusal by two insurers to issue insurance
    25         except at a rate exceeding the pool rate, provided that
    26         at least two insurers offer individual health insurance
    27         coverage in this Commonwealth.
    28             (ii)  If only one insurer offers individual market
    29         health insurance coverage in this Commonwealth, then one
    30         quote that exceeds the pool rate shall be sufficient.
    20070S1191B1604                  - 4 -     

     1         (3)  A diagnosis of the individual with one of the
     2     medical or health conditions listed by the board in
     3     accordance with section 6. A person diagnosed with one or
     4     more of these conditions shall be eligible for a pool
     5     coverage without applying for health insurance coverage.
     6         (4)  For persons eligible due to eligibility under the
     7     Health Insurance Portability and Accountability Act of 1996
     8     (Public Law 104-191, 110 Stat. 1936), the maintenance of
     9     health insurance coverage for the previous 18 months with no
    10     gap in coverage greater than 63 days of which the most recent
    11     coverage was through an employer-sponsored plan.
    12         (5)  For persons eligible as a result of certification
    13     for Federal trade adjustment assistance or for pension
    14     benefit guarantee corporation assistance as provided by the
    15     Trade Adjustment Assistance Reform Act of 2002 (Public Law
    16     107-210. 116 Stat. 933), coverage with no preexisting
    17     conditions limitation for individuals with three months of
    18     prior creditable coverage with a break in coverage of no more
    19     than 63 days.
    20     (b)  Dependents.--Each dependent of a person who is eligible
    21  for coverage from the pool shall also be eligible for coverage
    22  from the pool. In the instance of a child who is the primary
    23  insured, resident family members shall also be eligible for
    24  coverage.
    25     (c)  Preexisting waiting periods.--A person may maintain pool
    26  coverage for the period of time the person is satisfying a
    27  preexisting waiting period under another health insurance policy
    28  or insurance arrangement intended to replace the pool policy.
    29     (d)  Conditions for ineligibility.--A person is ineligible
    30  for coverage from the pool if the person:
    20070S1191B1604                  - 5 -     

     1         (1)  has in effect on the date pool coverage takes effect
     2     health insurance coverage from an insurer or insurance
     3     arrangement;
     4         (2)  is eligible for other health care benefits at the
     5     time application is made to the pool, including COBRA
     6     continuation except:
     7             (i)  coverage, including COBRA continuation, other
     8         continuation or conversion coverage, maintained for the
     9         period of time the person is satisfying any preexisting
    10         condition waiting period under a pool policy;
    11             (ii)  employer group coverage conditioned by the
    12         limitations described by subsection (a)(4) and (5); or
    13             (iii)  individual coverage conditioned by the
    14         limitation described by subsection (a)(1), (2) or (3).
    15         (3)  has terminated coverage in the pool within 12 months
    16     of the date that application is made to the pool unless the
    17     person demonstrates a good faith reason for the termination;
    18         (4)  is confined in a county jail or imprisoned in a
    19     State correctional institution;
    20         (5)  has premiums that are paid for or reimbursed by any
    21     third-party payer or under any government-sponsored program
    22     or by any government agency or health care provider, except
    23     as an otherwise qualifying full-time employee or dependent
    24     thereof, of a government agency or health care provider, or
    25     if the individual receives premium payment assistance through
    26     the Federal health insurance tax credit established by the
    27     Trade Adjustment Assistance Reform Act of 2002; or
    28         (6)  has not had prior coverage with the pool terminated
    29     for nonpayment of premiums or fraud.
    30     (e)  Waiver of preexisting condition requirements.--Pool
    20070S1191B1604                  - 6 -     

     1  preexisting condition requirements shall be waived for the
     2  following individuals:
     3         (1)  an individual for whom, as of the date on which the
     4     individual seeks plan coverage, the aggregate of the periods
     5     of creditable coverage is 18 months or more and whose most
     6     recent prior creditable coverage was under group health
     7     insurance coverage offered by a health insurance issuer, a
     8     group health plan, a governmental plan, or a church plan, or
     9     health insurance coverage offered in connection with any such
    10     plans, or any other type of creditable coverage that may be
    11     required by the Health Insurance Portability and
    12     Accountability Act of 1996, or the regulations under that
    13     act;
    14         (2)  an individual who is eligible for Federal trade
    15     adjustment assistance or for pension benefit guarantee
    16     corporation assistance, as provided by the Trade Adjustment
    17     Assistance Reform Act of 2002, provided that as of the date
    18     on which the individual was certified as eligible for Federal
    19     trade adjustment assistance, the individual had at least
    20     three months of prior creditable coverage with no longer than
    21     a 63-day break in coverage as established by the Trade
    22     Adjustment Assistance Reform Act of 2002 or the regulations
    23     under that act.
    24     (f)  Termination of pool coverage.--Pool coverage shall
    25  terminate:
    26         (1)  on the date a person is no longer a resident of the
    27     person's state, except for a child who is a student under 23
    28     years of age and who is financially dependent on a parent, a
    29     child for whom a person may be obligated to pay child support
    30     or a child of any age who is disabled and dependent on a
    20070S1191B1604                  - 7 -     

     1     parent;
     2         (2)  on the date a person requests coverage to end;
     3         (3)  on the death of the covered person;
     4         (4)  on the date State law requires cancellation of the
     5     policy;
     6         (5)  at the option of the pool, 30 days after the pool
     7     sends to the person an inquiry concerning the person's
     8     eligibility, including an inquiry concerning the person's
     9     residence, to which the person does not reply;
    10         (6)  on the 31st day after the day on which a premium
    11     payment for pool coverage becomes due, if the payment is not
    12     made before that date;
    13         (7)  on the date a person reaches the maximum lifetime
    14     limit, as provided in section 12; or
    15         (8)  at such time as the person ceases to meet the
    16     eligibility requirements of this section.
    17     (g)  Termination due to eligibility.--A person who ceases to
    18  meet the eligibility requirements of this section may have the
    19  person's coverage terminated at the end of the policy period.
    20  Section 5.  State Comprehensive Health Insurance Pool Board.
    21     (a)  Establishment.--The State Comprehensive Health Insurance
    22  Pool Board is established. The board members, appointed by the
    23  Insurance Commissioner, shall consist of:
    24         (1)  Two representatives of domestic insurance companies
    25     licensed to do business in this Commonwealth.
    26         (2)  One representative of a nonprofit health care
    27     service plan.
    28         (3)  One representative of a health maintenance
    29     organization.
    30         (4)  One member representing the medical provider
    20070S1191B1604                  - 8 -     

     1     community, such as a physician licensed to practice medicine
     2     in this Commonwealth or a hospital administrator.
     3         (5)  Five members of the general public who are not
     4     employed by or affiliated with an insurance company or plan,
     5     group hospital or other health care provider and are not
     6     reasonably expected to qualify for coverage in the pool.
     7     Representatives of the general public include persons whose
     8     only affiliation with an insurance company or plan, group
     9     hospital service corporation or health maintenance
    10     organization are as an insured or persons who have coverage
    11     through a plan provided by the corporation or organization.
    12         (6)  One member to represent resident licensed health
    13     insurance producers.
    14  No elected official may be a member of the board.
    15     (b)  Special qualification.--In making appointments to the
    16  board, the commissioner shall strive to ensure that at least one
    17  person serving on the board is at least 60 years of age.
    18     (c)  Terms of board members.--The original members of the
    19  board shall be appointed for the following terms:
    20         (1)  Three members for a term of one year.
    21         (2)  Two members for a term of two year.
    22         (3)  Two members for a term of three years.
    23         (4)  All terms after the initial term shall be for three
    24     years.
    25     (d)  Chairman.--The board shall elect one of its members as
    26  chairman, who may serve in that capacity only for two years.
    27     (e)  Reimbursement of expenses.--Members of the board may be
    28  reimbursed from moneys of the pool for actual and necessary
    29  expenses incurred by them in the performance of their official
    30  duties as members of the board but shall not otherwise be
    20070S1191B1604                  - 9 -     

     1  compensated for their services.
     2     (f)  Limitation of liability.--Members of the board are not
     3  liable for an action or omission performed in good faith in the
     4  performance of powers and duties under this act, and no cause of
     5  action may arise against a member for the action or omission.
     6     (g)  Plan to be submitted.--
     7         (1)  The board shall adopt a plan pursuant to this act
     8     and submit its articles, bylaws and operating rules to the
     9     commissioner for approval.
    10         (2)  If the board fails to adopt a plan and suitable
    11     articles, bylaws and operating rules within 180 days after
    12     appointment of the board, the commissioner shall promulgate
    13     rules to effectuate the provisions of this act and such rules
    14     shall remain in effect until superseded by a plan and
    15     articles, bylaws and operating procedures submitted by the
    16     board and approved by the commissioner.
    17  Section 6.  Board duties.
    18     The board shall:
    19         (1)  Operate, supervise and administer the pool.
    20         (2)  Establish administrative and accounting procedures
    21     for the operation of the pool.
    22         (3)  Establish procedures under which applicants and
    23     participants in the plan may have grievances reviewed by an
    24     impartial body and reported to the board.
    25         (4)  Select an administering insurer in accordance with
    26     section 8.
    27         (5)  Require that all policy forms issued by the board
    28     conform to standard forms developed by the board. The forms
    29     shall be approved by the commissioner.
    30         (6)  Develop a program to publicize the existence of the
    20070S1191B1604                 - 10 -     

     1     plan, the eligibility requirements of the plan, the
     2     procedures for enrollment in the plan and shall maintain
     3     public awareness of the plan.
     4         (7)  Promulgate a list of medical or health conditions
     5     for which a person shall be eligible for pool coverage
     6     without applying for health insurance. The list shall be
     7     effective on the first day of the operation of the pool and
     8     may be amended from time to time as may be appropriate.
     9         (8)  No later than June 1 of each year, make an annual
    10     report to the Governor, the General Assembly and the
    11     commissioner. The report shall summarize the activities of
    12     the pool in the preceding calendar year, including
    13     information regarding net written and earned premiums, plan
    14     enrollment, administration expenses and paid and incurred
    15     losses.
    16  Section 7.  Operation of pool.
    17     (a)  General rule.--The pool may exercise any of the
    18  authority that an insurance company authorized to write health
    19  insurance in this Commonwealth may exercise under the laws of
    20  this Commonwealth.
    21     (b)  Specific powers.--As part of its authority, the pool
    22  may:
    23         (1)  Provide health benefits coverage to persons who are
    24     eligible for that coverage under this act.
    25         (2)  Enter into contracts that are necessary to carry out
    26     this act, including, with the approval of the commissioner,
    27     entering into contracts with similar pools in other states
    28     for the joint performance of common administrative functions
    29     or with other organizations for the performance of
    30     administrative functions.
    20070S1191B1604                 - 11 -     

     1         (3)  Sue or be sued, including taking any legal actions
     2     necessary or proper to recover or collect assessments due the
     3     pool.
     4         (4)  Institute any legal action necessary to avoid
     5     payment of improper claims against the pool or the coverage
     6     provided by or through the pool, to recover any amounts
     7     erroneously or improperly paid by the pool, to recover any
     8     amount paid by the pool as a mistake of fact or law and to
     9     recover other amounts due the pool.
    10         (5)  Establish appropriate rates, rate schedules, rate
    11     adjustments, expense allowance, agents' referral fees and
    12     claim reserve formulas and perform any actuarial function
    13     appropriate to the operation of the pool.
    14         (6)  Adopt policy forms, endorsements and riders and
    15     applications for coverage.
    16         (7)  Issue insurance policies subject to this act and the
    17     plan of operation.
    18         (8)  Appoint appropriate legal, actuarial and other
    19     committees that are necessary to provide technical assistance
    20     in operating the pool and performing any of the functions of
    21     the pool.
    22         (9)  Employ and set the compensation of any persons
    23     necessary to assist the pool in carrying out its
    24     responsibilities and functions.
    25         (10)  Contract for stop-loss insurance for risks incurred
    26     by the pool.
    27         (11)  Borrow money as necessary to implement the purposes
    28     of the pool.
    29         (12)  Issue additional types of health insurance policies
    30     to provide optional coverage which comply with applicable
    20070S1191B1604                 - 12 -     

     1     provisions of Federal and State law, including Medicare
     2     supplemental health insurance.
     3         (13)  Provide for and employ cost containment measures
     4     and requirements, including, but not limited to, preadmission
     5     screening, second surgical opinion and concurrent utilization
     6     case management for the purpose of making the benefit plans
     7     more cost effective.
     8         (14)  Design, utilize, contract or otherwise arrange for
     9     delivery of cost-effective health care services, including
    10     establishing or contracting with preferred provider
    11     organizations and health maintenance organizations.
    12         (15)  Provide for reinsurance on either a facultative or
    13     treaty basis, or both.
    14  Section 8.  Selection of administering insurer.
    15     (a)  General rule.--The board shall select an insurer,
    16  through a competitive bidding process, to administer the plan.
    17  The board shall evaluate the bids submitted under this
    18  subsection based on criteria established by the board, which
    19  criteria shall include, but not be limited to, the following:
    20         (1)  The insurer's proven ability to handle large group
    21     accident and health policies insurance.
    22         (2)  The efficiency of the insurer's claims-paying
    23     procedures.
    24         (3)  An estimate of total charges for administering the
    25     plan.
    26     (b)  Term of contract.--
    27         (1)  The administering insurer must enter into a contract
    28     with the board. The term of the contract shall be for a
    29     period of three years.
    30         (2)  At least one year prior to the expiration of each
    20070S1191B1604                 - 13 -     

     1     three-year period of service by an administering insurer, the
     2     board shall invite all insurers, including the current
     3     administering insurer, to submit bids to serve as the
     4     administering insurer for the succeeding three-year period.
     5         (3)  The selection of the administering insurer for the
     6     succeeding three-year period shall be made at least six
     7     months prior to the end of the current three-year period.
     8     (c)  Duties of administering insurer.--The administering
     9  insurer shall:
    10         (1)  Perform all eligibility and administrative claims-
    11     payment functions relating to the plan.
    12         (2)  Pay an agent's referral fee as established by the
    13     board to each agent who refers an applicant to the plan, if
    14     the applicant is accepted. The selling or marketing of plans
    15     shall not be limited to the administering insurer or its
    16     agents. The referral fees shall be paid by the administering
    17     insurer from moneys received as premiums for the plan.
    18         (3)  Establish a premium billing procedure for collection
    19     of premiums from persons insured under the plan.
    20         (4)  Perform all necessary functions to assure timely
    21     payment of benefits to covered persons under the plan,
    22     including, but not limited to, the following:
    23             (i)  Making available information relating to the
    24         proper manner of submitting a claim for benefits under
    25         the plan and distributing forms upon which submissions
    26         will be made.
    27             (ii)  Evaluating the eligibility of each claim for
    28         payment under the plan.
    29             (iii)  Notifying each claimant within 30 days after
    30         receiving a properly completed and executed proof of
    20070S1191B1604                 - 14 -     

     1         loss, whether the claim is accepted, rejected or
     2         compromised.
     3         (5)  Submit regular reports to the board regarding the
     4     operation of the plan. The frequency, content and form of the
     5     reports shall be determined by the board.
     6         (6)  Following the close of each calendar year, determine
     7     net premiums, reinsurance premiums less administrative
     8     expenses allowance, the expense of administration pertaining
     9     to the reinsurance operations of the pool and the incurred
    10     losses for the year, and report this information to the board
    11     and the commissioner.
    12         (7)  Pay claims expenses from the premium payments
    13     received from or on behalf of covered persons under the plan.
    14  Section 9.  Payment of plan costs.
    15     (a)  General rule.--The board shall pay plan costs, excluding
    16  any premium, deductible and copayment subsidies, first from
    17  Federal funds, if any, that are transferred to the fund under
    18  subsection (b) and that exceed premium, deductible and copayment
    19  subsidy costs in a policy year. The remainder of the plan costs,
    20  excluding premium, deductible and copayment subsidy costs, shall
    21  be paid as follows:
    22         (1)  66 2/3% from premiums paid by eligible persons.
    23         (2)  33 1/3% from the funds appropriated to the Community
    24     Health Reimbursement Program.
    25     (b)  Application for Federal funds.--The board shall make
    26  application for any Federal grants or other sources under which
    27  the plan may be eligible to receive moneys. To the extent
    28  allowable, the board shall use any moneys received from a
    29  Federal grant or other source to offset plan deficits before
    30  drawing from any alternative funding sources authorized under
    20070S1191B1604                 - 15 -     

     1  this section.
     2     (c)  Surplus funds.--
     3         (1)  If grants, assessments and other receipts by the
     4     pool exceed the actual losses and administrative expenses of
     5     the plan, the excess shall be held at interest and used by
     6     the board to offset future losses or to reduce premiums.
     7         (2)  As used in this subsection, the term "future losses"
     8     include reserves for claims incurred but not reported.
     9  Section 10.  Direct insurance by pool.
    10     The coverage provided by the plan shall be directly insured
    11  by the pool and the policies administered through the
    12  administering insurer.
    13  Section 11.  Plan benefits.
    14     (a)  General rule.--The plan shall offer in an annually
    15  renewable policy the coverage specified in this section for each
    16  eligible person. In approving any of the benefit plans to be
    17  offered by the plan, the board shall establish such benefit
    18  levels, deductibles, coinsurance factors, exclusions and
    19  limitations as it may deem appropriate and that it believes to
    20  be generally reflective of and commensurate with individual
    21  market health insurance that is provided in the individual
    22  health insurance market in this Commonwealth.
    23     (b)  High deductible health plan option.--Notwithstanding any
    24  other provisions of this section, the plan shall provide every
    25  eligible person the option of selecting a health plan option
    26  from at least one high deductible health plan that would qualify
    27  to be used in conjunction with a health savings account under
    28  section 223 of the Internal Revenue Code of 1986 (Public Law 99-
    29  514, 26 U.S.C. § 1 et seq.). In conjunction with such a high
    30  deductible health plan, the plan shall provide for the
    20070S1191B1604                 - 16 -     

     1  establishment and administration of health savings accounts on
     2  behalf of eligible persons who chose to be covered by a high
     3  deductible health plan under this section.
     4     (c)  Major medical expense coverage.--The plan shall offer
     5  major medical expense coverage to every eligible person who is
     6  not eligible for Medicare. Major medical expense coverage
     7  offered under the plan shall pay an eligible person's covered
     8  expenses, subject to the limits on the deductible and
     9  coinsurance payments authorized under subsection (f) to a
    10  lifetime limit of $1,000,000 per covered individual.
    11     (d)  Covered expenses.--
    12         (1)  The usual customary charges or negotiable
    13     reimbursement for the following services and articles, when
    14     prescribed by a physician and medically necessary, shall be
    15     covered expenses:
    16             (i)  Hospital services.
    17             (ii)  Professional services for the diagnosis or
    18         treatment of injuries, illness or conditions, other than
    19         dental, which are rendered by a physician or by others at
    20         his direction.
    21             (iii)  Drugs requiring a physician's prescription.
    22             (iv)  Services of a licensed skilled nursing facility
    23         for eligible individuals, ineligible for Medicare, for
    24         not more than 100 calendar days during a policy year, if
    25         the services and reimbursements are the type which would
    26         qualify as reimbursable services under Medicare.
    27             (v)  Services of a home health agency, which services
    28         are of a type that would qualify reimbursable services
    29         under Medicare.
    30             (vi)  Use of radium or other radioactive materials.
    20070S1191B1604                 - 17 -     

     1             (vii)  Oxygen.
     2             (viii)  Anesthetics.
     3             (ix)  Prosthesis, other than dental prosthesis.
     4             (x)  Rental or purchase, as appropriate, of durable
     5         medical equipment, other than eyeglasses and hearing
     6         aids.
     7             (xi)  Diagnostic X-rays and laboratory tests.
     8             (xii)  Oral surgery for partially or completely
     9         erupted, impacted teeth and oral surgery with respect to
    10         the tissues of the mouth when not performed in connection
    11         with the extraction or repair of teeth.
    12             (xiii)  Services of a physical therapist.
    13             (xiv)   Transportation provided by a licensed
    14         ambulance service to the nearest facility qualified to
    15         treat a condition.
    16             (xv)  Processing of blood, including, but not limited
    17         to, collecting, testing, fractioning and distributing
    18         blood.
    19             (xvi)  Services for the treatment of alcohol and drug
    20         abuse, but the insured shall be required to make a 50%
    21         copayment, and the payment of the plan shall not exceed
    22         $4,000.
    23             (xvii)  As an option, made available at an additional
    24         premium, services provided by a duly licensed
    25         chiropractor.
    26     (e)  Excluded expenses.--Covered expenses shall not include
    27  the following:
    28         (1)  A charge for treatment for cosmetic purposes, other
    29     than for repair or treatment of an injury or congenital
    30     bodily defect to restore normal bodily functions.
    20070S1191B1604                 - 18 -     

     1         (2)  A charge for care which is primarily for custodial
     2     or domiciliary purposes which does not qualify as an eligible
     3     service under Medicaid.
     4         (3)  A charge for confinement in a private room, to the
     5     extent that the charge is in excess of the charge by the
     6     institution for its most common semiprivate room unless a
     7     private room is prescribed as medically necessary by a
     8     physician.
     9         (4)  Any part of a charge for services or articles
    10     rendered or provided by a physician or other health care
    11     personnel that exceeds the prevailing charge in the locality
    12     where the service is provided or any charge for services or
    13     articles not medically necessary.
    14         (5)  A charge for services or articles the provision of
    15     which is not within the authorized scope of practice of the
    16     institution or individual providing the services or articles.
    17         (6)  An expense incurred prior to the effective date of
    18     the coverage under the plan for the person on whose behalf
    19     the expense was incurred.
    20         (7)  A charge for routine physical examinations.
    21         (8)  A charge for the services of blood donors and any
    22     fee for the failure to replace the first three pints of blood
    23     provided to an eligible person annually.
    24         (9)  A charge for personal services or supplies provided
    25     by a hospital or nursing home or any other nonmedical or
    26     nonprescribed services or supplies.
    27     (f)  Annual deductible choices.--The board shall provide for
    28  at least two choices of annual deductibles for major medical
    29  expenses, plus the benefits payable under any other type of
    30  insurance coverage or workers' compensation, provided that if
    20070S1191B1604                 - 19 -     

     1  two individual members of a family satisfy the applicable
     2  deductible, no other members of the family shall be required to
     3  meet deductibles for the remainder of that calendar year.
     4     (g)  Schedule of premium rates to be determined.--
     5         (1)  The board shall annually determine the schedule of
     6     premium rates for each benefit plan option offered by the
     7     pool.
     8         (2)  Rates and rate schedules may be adjusted for
     9     appropriate risk factors, including age and variation in
    10     claim costs, and the board may consider appropriate risk
    11     factors in accordance with established actuarial and
    12     underwriting practices.
    13         (3)  (i)  The board shall determine the standard risk
    14         rate by considering the premium rates charged by other
    15         insurers offering health insurance coverage to
    16         individuals. The standard risk rate shall be established
    17         using reasonable actuarial techniques and shall reflect
    18         anticipated experience and expenses for such coverage.
    19             (ii)  The initial pool rate may not be less than 135%
    20         and may not exceed 150% of rates established as
    21         applicable for individual standard rates.
    22             (iii)  Subsequent rates shall be established to
    23         provide fully for the expected costs of claims, including
    24         recovery of prior losses, expenses of operation,
    25         investment income of claim reserves and any other cost
    26         factors subject to the limitations described in this
    27         subsection.
    28             (iv)  In no event shall pool rates exceed 150% of
    29         rates applicable to individual standard risks.
    30         (4)  All rates and rate schedules shall be submitted to
    20070S1191B1604                 - 20 -     

     1     the commissioner for approval, and the pool may not use them
     2     unless the commissioner approves the rates and rate
     3     schedules. The commissioner in evaluating the rates and rate
     4     schedule of the pool shall consider the factors provided by
     5     this section.
     6     (h)  Last payer of benefits.--The board shall provide that
     7  the pool shall be the last payer of benefits whenever any other
     8  benefit or source of third party payment is available.
     9  Section 12.  Effective date.
    10     This act shall take effect in 60 days.

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