THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DeLUCA, BELFANTI, CONKLIN, D. COSTA, DONATUCCI, GOODMAN, KIRKLAND, KORTZ, KULA, MUNDY, M. O'BRIEN, PICKETT, SEIP, STABACK, J. TAYLOR, WHITE, HENNESSEY, JOSEPHS, CALTAGIRONE, K. SMITH, WAGNER AND MURT, MARCH 5, 2009

AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 4, 2009   

AN ACT

Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

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act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," further providing for conditions

subject to which policies are to be issued; providing for

health insurance coverage for certain children of insured

parents and for affordable small group health care coverage;

and making inconsistent repeals. Amending the act of May 17,

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1921 (P.L.682, No.284), entitled "An act relating to

insurance; amending, revising, and consolidating the law

providing for the incorporation of insurance companies, and

the regulation, supervision, and protection of home and

foreign insurance companies, Lloyds associations, reciprocal

and inter-insurance exchanges, and fire insurance rating

bureaus, and the regulation and supervision of insurance

carried by such companies, associations, and exchanges,

including insurance carried by the State Workmen's Insurance

Fund; providing penalties; and repealing existing laws,"

further providing for conditions subject to which policies

are to be issued; providing for exemption from general

applicability, for health insurance coverage for certain

children of insured parents for guaranteed availability and

renewability of small group health benefit plans and for

affordable small group health care coverage; and making

inconsistent repeals.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 617(A)(3) and (9) of the act of May 17,

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1921 (P.L.682, No.284), known as The Insurance Company Law of

1921, added May 25, 1951 (P.L.417, No.99) and January 18, 1968

(1967 P.L.969, No.433), are amended to read:

Section 617.  Conditions Subject to Which Policies Are to Be

Issued.--(A)  No such policy shall be delivered or issued for

delivery to any person in this Commonwealth unless:

* * *

(3)  it purports to insure only one person, except that a

policy may insure, originally or by subsequent amendment, upon

the application of an adult head of a family who shall be deemed

the policyholder, any two or more eligible members of that

family, including husband, wife, dependent children or any

children under a specified age which, except as provided under

section 617.1, shall not exceed nineteen years and any other

person dependent upon the policyholder; and

* * *

(9)  A policy delivered or issued for delivery after January

1, 1968, under which coverage of a dependent of a policyholder

terminates at a specified age shall, with respect to an

unmarried child covered by the policy prior to the attainment of

the age of nineteen or except as provided under section 617.1,

the age of thirty, who is incapable of self-sustaining

employment by reason of mental retardation or physical handicap

and who became so incapable prior to attainment of age nineteen

and who is chiefly dependent upon such policyholder for support

and maintenance, not so terminate while the policy remains in

force and the dependent remains in such condition, if the

policyholder has within thirty-one days of such dependent's

attainment of the limiting age submitted proof of such

dependent's incapacity as described herein. The foregoing

provisions of this paragraph shall not require an insurer to

insure a dependent who is a mentally retarded or physically

handicapped child where the policy is underwritten on evidence

of insurability based on health factors set forth in the

application or where such dependent does not satisfy the

conditions of the policy as to any requirement for evidence of

insurability or other provisions of the policy, satisfaction of

which is required for coverage thereunder to take effect. In any

such case the terms of the policy shall apply with regard to the

coverage or exclusion from coverage of such dependent.

* * *

Section 2.  The act is amended by adding a section to read:

Section 617.1.  Health Insurance Coverage for Certain

Children of Insured Parents.--(A)  An insurer that issues,

delivers, executes or renews health care insurance in this

Commonwealth, under which coverage of a child would otherwise

terminate at a specified age, shall, at the option of the

child's parent or guardian, provide coverage to a child of the

insured beyond that specified age, up through the age of twenty-

nine, provided that the child meet all of the following

requirements:

(1)  Is not married.

(2)  Has no dependents.

(3)  Is a resident of this Commonwealth or is enrolled as a

full-time student at an institution of higher education in this

Commonwealth.

(4)  Is not covered by another health insurance policy.

(B)  An insured may exercise the option provided under

subsection (A) at any time during the term of the policy by

notice to the insurer.

(C)  Employers shall not be required to contribute to any

increased premium charged by the insurer for the exercise of the

option provided under subsection (A), but the contributions may

be agreed to by the employer.

(D)  This section shall not include the following types of

insurance or any combination thereof:

(1)  Hospital indemnity.

(2)  Accident.

(3)  Specified disease.

(4)  Disability income.

(5)  Dental.

(6)  Vision.

(7)  Civilian Health and Medical Program of the Uniformed

Services (CHAMPUS) supplement.

(8)  Medicare supplement.

(9)  Long-term care.

(10)  Other limited benefit plans.

Section 3.  The act is amended by adding an article to read:

ARTICLE XLII

AFFORDABLE SMALL GROUP HEALTH CARE COVERAGE

Section 4201.  Scope of article.

This article relates to health care reform.

Section 4202.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Accident and Health Filing Reform Act."  The act of December

18, 1996 (P.L.1066, No.159), known as the Accident and Health

Filing Reform Act.

"Commissioner."  The Insurance Commissioner of the

Commonwealth.

"Commonwealth Attorneys Act."  The act of October 15, 1980

(P.L.950, No.164), known as the Commonwealth Attorneys Act.

"Commonwealth Documents Law."  The act of July 31, 1968

(P.L.769, No.240), referred to as the Commonwealth Documents

Law.

"Department."  The Insurance Department of the Commonwealth.

"Health benefit plan."  Any individual or group health

insurance policy, subscriber contract, certificate or plan which

provides health or sickness and accident coverage which is

offered by an insurer. The term shall not include any of the

following:

(1)  An accident only policy.

(2)  A credit only policy.

(3)  A long-term or disability income policy.

(4)  A specified disease policy.

(5)  A Medicare supplement policy.

(6)  A Civilian Health and Medical Program of the

Uniformed Services (CHAMPUS) supplement policy.

(7)  A fixed indemnity policy.

(8)  A dental only policy.

(9)  A vision only policy.

(10)  A workers' compensation policy.

(11)  An automobile medical payment policy under 75

Pa.C.S. (relating to vehicles).

(12)  Any other similar policies providing for limited

benefits.

"Health care-associated infection."  A localized or systemic

condition that results from an adverse reaction to the presence

of an infectious agent or its toxins and meets all of the

following:

(1)  Occurs in a patient in a health care setting.

(2)  Was not present or incubating at the time of

admission, unless the infection was related to a previous

admission to the same setting.

(3)  If occurring in a hospital setting, meets the

criteria for a specific infection site as defined by the

Centers for Disease Control and Prevention and its National

Health Care Safety Network.

"Health insurance region."  Any of the following:

(1)  "Region I."  The geographic area covered by the

counties of Bucks, Chester, Delaware, Montgomery and

Philadelphia.

(2)  "Region II."  The geographic area covered by the

counties of Adams, Berks, Cumberland, Dauphin, Franklin,

Fulton, Lancaster, Lebanon, Lehigh, Northampton, Perry,

Schuylkill and York.

(3)  "Region III."  The geographic area covered by the

counties of Bradford, Carbon, Clinton, Lackawanna, Luzerne,

Lycoming, Monroe, Pike, Sullivan, Susquehanna, Tioga, Wayne

and Wyoming.

(4)  "Region IV."  The geographic area covered by the

counties of Centre, Columbia, Juniata, Mifflin, Montour,

Northumberland, Synder and Union.

(5)  "Region V."  The geographic area covered by the

counties of Bedford, Blair, Cambria, Clearfield, Huntingdon,

Jefferson and Somerset.

(6)  "Region VI."  The geographic area covered by the

counties of Allegheny, Armstrong, Beaver, Butler, Fayette,

Greene, Indiana, Lawrence, Washington and Westmoreland.

(7)  "Region VII."  The geographic area covered by the

counties of Cameron, Clarion, Crawford, Elk, Erie, Forest,

McKean, Mercer, Potter, Venango and Warren.

"Individual market."  The health insurance market for

individuals as defined under section 2791 of the Health

Insurance Portability and Accountability Act of 1996 (Public Law

104-191, 110 Stat. 1936).

"Insurer."  A company or health insurance entity licensed in

this Commonwealth to issue any individual or group health,

sickness or accident policy or subscriber contract or

certificate or plan that provides medical or health care

coverage by a health care facility or licensed health care

provider that is offered or governed under this act or any of

the following:

(1)  The act of December 29, 1972 (P.L.1701, No.364),

known as the Health Maintenance Organization Act.

(2)  The act of May 18, 1976 (P.L.123, No.54), known as

the Individual Accident and Sickness Insurance Minimum

Standards Act.

(3)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or Ch. 63 (relating to professional health

services plan corporations).

"Insurer group."  A group of insurers writing coverage in

this Commonwealth, including a parent insurer, its subsidiaries

and affiliates.

"Large group market."  The health insurance market for the

large group market as defined under section 2791 of the Health

Insurance Portability and Accountability Act of 1996 (Public Law

104-191, 110 Stat. 1936).

"Medical loss ratio."  The ratio of incurred medical claim

costs to earned premiums.

"Regulatory Review Act."  The act of June 25, 1982 (P.L.633,

No.181), known as the Regulatory Review Act.

"Small employer."  In connection with a group health plan

with respect to a calendar year and a plan year, an employer who

employs an average of at least two but not more than 50

employees on business days during the preceding calendar year

and who employs at least two such employees on the first day of

the plan year. In the case of an employer which was not in

existence throughout the preceding calendar year, the

determination whether an employer is a small employer shall be

based on the average number of employees that it is reasonably

expected that the employer will employ on business days in the

current calendar year.

"Small group health benefit plan."  A health benefit plan

offered to a small employer.

"Small group market."  The health insurance market for the

small group market as defined in section 2791 of the Health

Insurance Portability and Accountability Act of 1996 (Public Law

104-191, 110 Stat. 1936).

"Standard plan."  One of the health benefit packages

established by the Insurance Department in accordance with

section 4203.

Section 4203.  Standard plans.

(a)  Applicability.--This section shall apply to all small

group health benefit plans issued, made effective, delivered or

renewed in this Commonwealth after the effective date of this

section.

(b)  Standard plans required.--

(1)  An insurer shall not offer a plan that does not meet

the minimum benefits specified in one of the standard plans

developed by the department in accordance with the following

criteria:

(i)  The standard plans shall not include coverage

for behavioral health services except as required by

Federal law.

(ii)  The standard plans may not contain any

preexisting condition exclusions.

(2)  Standard plans may include options for deductibles

and cost-sharing if the department determines that the

options:

(i)  Do not dissuade consumers from seeking necessary

services.

(ii)  Promote a balance of the impact of cost-sharing

in reducing premiums and in effecting utilization of

appropriate services.

(iii)  Limit the total cost-sharing that may be

incurred by an individual in a year.

(3)  The following apply:

(i)  The department shall forward notice of the

elements of the standard plans to the Legislative

Reference Bureau for publication as a notice in the

Pennsylvania Bulletin.

(ii)  An insurer subject to the provisions of this

section shall be required to begin offering its standard

plans as soon as practicable following the publication

but in no event later than 180 days following the

publication under subparagraph (i).

(c)  Additional benefits.--

(1)  An insurer shall offer as an additional benefit to

every standard plan a behavioral health services benefit that

complies with the provisions of sections 601-A, 602-A, 603-A,

604-A, 605-A, 606-A, 607-A and 608-A.

(2)  An insurer may offer benefits in addition to those

in any of its standard plans.

(3)  Each additional benefit shall:

(i)  Be offered and priced separately from benefits

specified in the standard plan with which the benefits

are being offered.

(ii)  Not have the effect of duplicating any of the

benefits in the standard plan with which the benefits are

being offered.

(iii)  Be clearly specified as additions to the

standard plan with which the benefits are being offered.

(4)  The department may prohibit an insurer from offering

an additional benefit under this section if the department

finds that the additional benefit will be sold in conjunction

with one of the insurer's standard plans in a manner designed

to promote risk selection or underwriting practices otherwise

prohibited under this section or other State law.

Section 4204.  Health insurance premium rates for dominant

insurers.

(a)  Applicability.--This section shall apply to all small

group health benefit plans that are issued, made effective,

delivered or renewed in this Commonwealth after the effective

date of this section, by an insurer that is part of an insurer

group, if that insurer group insures 10% or more of the covered

lives in the health insurance region in which the plan is being

issued, made effective, delivered or renewed.

(b)  Premium rates.--

(1)  An insurer shall establish a base rate for plans and

shall file the base rates with the department as required by

law. An insurer may adjust its base rates for the following:

(i)  Age.

(ii)  Health insurance region.

(iii)  Wellness incentives as determined by the

department.

(2)  An insurer shall apply all risk adjustment factors

under paragraph (1) consistently with respect to all plans

subject to this section and consistently with department

regulatory authority.

(3)  An insurer shall not charge a rate that is more than

33% above or below the community rate, as adjusted as

permitted under paragraph (1). Additional adjustments may be

made to reflect the inclusion of additional benefits as

specified under section 4203(c) and differences in family

composition.

(4)  The premium for a small group health benefit plan

shall not be adjusted by an insurer more than once each year,

except that rates may be changed more frequently to reflect:

(i)  Changes to the enrollment of the small employer

group.

(ii)  Changes to a small group health benefit plan

that have been requested by the small employer.

(iii)  Changes to the family composition of

employees.

(iv)  Changes pursuant to a government order or

judicial proceeding.

(5)  An insurer shall base its rating methods and

practices on commonly accepted actuarial assumptions and

sound actuarial principles. Rates shall not be excessive,

inadequate or unfairly discriminatory.

(6)  For purposes of this subsection, an insurer's "base

rate" for a plan shall refer to a rating methodology that is

based on the experience of all risks covered by the plan

without regard to health status, occupation or any other

factor.

(c)  Additional rate review and prior approval.--

(1)  In conjunction with and in addition to the standards

set forth in the Accident and Health Filing Reform Act and

all other applicable statutory and regulatory requirements,

all rate filings shall be subject to prior approval by the

department within the 45-day period provided by section 3(f)

of the Accident and Health Filing Reform Act.

(2)  In conjunction with and in addition to the standards

set forth under the Accident and Health Filing Reform Act and

all other applicable statutory and regulatory requirements,

the department may disapprove a rate filing based upon any of

the following:

(i)  The rate is not actuarially sound.

(ii)  The increase is requested because the insurer

has not operated efficiently or has factored in

experience that conflicts with recognized best practices

in the health care industry, including the allocation of

administrative expenses to the plan on a less favorable

basis than expenses are allocated to other health benefit

plans.

(iii)  The increase is requested because the insurer

has incurred costs due to failure to follow best

practices for cost control, including costs due to

avoidable health care-associated infections and avoidable

hospitalizations due to ineffective chronic care

management.

(iv)  The medical loss ratio for a plan is less than

85%.

(3)  In the event a plan has a medical loss ratio of less

than 85%, the department may, in addition to any other

remedies available under law, require the insurer to refund

the difference to policyholders on a pro rata basis as soon

as practicable following receipt of notice from the

department of the requirement but in no event later than 120

days following receipt of the notice. The department shall

establish procedures under which such refunds will be made.

(d)  Procedures.--The filing and review procedures set forth

under the Accident and Health Filing Reform Act shall apply to

any filing conducted under this section, except that no filing

deemed to meet the requirements of this act shall take effect

unless the department receives written notice of the insurer's

intent to exercise the right granted under this section at least

ten calendar days prior to the effective date of this section.

Section 4205.  Health insurance premium rates for nondominant

insurers.

(a)  Applicability.--This section applies to all small group

health benefit plans that are issued, made effective, delivered

or renewed in this Commonwealth after the effective date of this

section, by an insurer that is part of an insurer group, if that

insurer group insures less than 10% of the covered lives in the

region in which the plan is being issued, made effective,

delivered or renewed.

(b)  Premium rates.--

(1)  An insurer shall establish a base rate for plans and

shall file the base rates with the department as required by

law. An insurer may modify its base rates only by the

following demographic factors:

(i)  Age.

(ii)  Health insurance region.

(iii)  Industry or class of business.

(iv)  Wellness incentives as determined by the

department.

(2)  An insurer shall apply all risk adjustment factors

under paragraph (1) consistently with respect to all plans

subject to this section and consistently with department

regulatory authority.

(3)  An insurer shall not charge a rate that is more than

50% above or below the base rate, as adjusted as permitted

under paragraph (1). Additional adjustments may be made to

reflect the inclusion of additional benefits as specified in

section 4203(c) and differences in family composition.

(4)  The premium for a small group health benefit plan

shall not be adjusted by an insurer more than once each year,

except that rates may be changed more frequently to reflect:

(i)  Changes to the enrollment of the small employer

group.

(ii)  Changes to a small group health benefit plan

that have been requested by the small employer.

(iii)  Changes to the family composition of

employees.

(iv)  Changes pursuant to a government order or

judicial proceeding.

(5)  An insurer shall base its rating methods and

practices on commonly accepted actuarial assumptions and

sound actuarial principles. Rates shall not be excessive,

inadequate, or unfairly discriminatory.

(6)  For purposes of this subsection, an insurer's "base

rate" for a plan shall refer to a rating methodology that is

based on the experience of all risks covered by the plan

without regard to health status, occupation or any other

factor.

(c)  Additional rate review and prior approval.--

(1)  In conjunction with and in addition to the standards

set forth in the Accident and Health Filing Reform Act and

all other applicable statutory and regulatory requirements,

all rate filings shall be subject to prior approval by the

department within the 45-day period provided by section 3(f)

of the Accident and Health Filing Reform Act.

(2)  In conjunction with and in addition to the standards

set forth in the Accident and Health Filing Reform Act and

all other applicable statutory and regulatory requirements,

the department may disapprove a rate filing based upon any of

the following:

(i)  The rate is not actuarially sound.

(ii)  The increase is requested because the insurer

has not operated efficiently or has factored in

experience that conflicts with recognized best practices

in the health care industry, including the allocation of

administrative expenses to the plan on a less favorable

basis than expenses are allocated to other health benefit

plans.

(iii)  The increase is requested because the insurer

has incurred costs due to failure to follow best

practices for cost control, including costs due to

avoidable health care-associated infections and avoidable

hospitalizations due to ineffective chronic care

management.

(d)  Procedures.--The filing and review procedures set forth

in the Accident and Health Filing Reform Act shall apply to any

filing conducted under this section, except that no filing

deemed to meet the requirements of this act shall take effect

unless the department receives written notice of the insurer's

intent to exercise the right granted under this section at least

ten calendar days prior to the effective date of this section.

Section 4206.  College student insurance requirements.

(a)  Minimum health benefit package.--Within 90 days

following the effective date of this section, the commissioner

shall establish a minimum health benefit package for full-time

students enrolled in public or private baccalaureate and

postbaccalaureate programs in this Commonwealth and transmit a

description of the package to the Legislative Reference Bureau

for publication in the Pennsylvania Bulletin. As soon as

practicable after the date of publication of the package, but in

no event later than 120 days following the publication, all

insurers shall offer the package as individual coverage

available to students and as group coverage through the

institution. The commissioner may make revisions to the minimum

health benefit package periodically, but no more than one time

per 12-month period. Each revision shall be implemented by

insurers as soon as practicable following publication of the

revision in the Pennsylvania Bulletin, but in no event later

than 120 days following such publication.

(b)  Required health insurance coverage.--

(1)  Every full-time student enrolled in a public or

private baccalaureate or postbaccalaureate program in this

Commonwealth shall maintain health insurance coverage which

provides the minimum benefit package established under this

section. The coverage shall be maintained throughout the

period of the student's enrollment.

(2)  Every student required to meet the mandatory

coverage under this section shall present evidence of such

coverage to the institution in which the student is enrolled

at least annually, in a manner prescribed by the institution.

(3)  Every public or private college or university or

postbaccalaureate program in this Commonwealth shall make

available health insurance coverage on a group or individual

basis for purchase by students who are required to maintain

the coverage under this section.

(4)  Notwithstanding paragraphs (1), (2) and (3), the

requirements of this section may be satisfied if the

baccalaureate or postbaccalaureate program provides on-campus

student health care coverage equivalent to the minimum

benefit package through its own clinics and health care

facilities and receives approval from the Department of

Education, in consultation with the department, that such

coverage is equivalent. The coverage shall provide that the

student is covered for hospital admissions and emergency

services at facilities throughout this Commonwealth.

(b)  Effective date.--This section shall apply to every

public or private baccalaureate or postbaccalaureate program in

this Commonwealth beginning the first August 1 following 180

days after the publication of the notice of the elements of the

standard plans.

(c)  Annual certification.--Every public or private

baccalaureate or postbaccalaureate program in this Commonwealth

shall certify to the Department of Education at least annually

that the requirements of this section have been met for all

periods of the preceding year.

(d)  Penalty for failure to comply.--The Secretary of

Education may impose a fine of up to $500 per day for each day

that a public or private baccalaureate or postbaccalaureate

program fails to meet any of its obligations in this section.

The fine shall be due within 30 days following receipt by the

institution of notice of the violation. Funds collected under

this subsection and any returns on the funds shall be deposited

into the Tobacco Settlement Fund established under the act of

June 26, 2001 (P.L.755, No.77), known as the Tobacco Settlement

Act.

Section 4207.  Fair marketing standards.

Every insurer and producer must meet the following standards,

as appropriate:

(1)  An insurer that offers small group health benefit

plans shall offer to small employers all of the small group

health benefit plans that the insurer actively markets in

this Commonwealth. An insurer shall be considered to be

actively marketing a small group health benefit plan if it

offers that plan to any small group not currently covered by

that insurer.

(2)  The following shall apply:

(i)  Except as provided in subparagraph (ii), a

producer or an insurer that provides small group health

benefit plans shall not encourage or direct a small

employer to refrain from filing an application for

coverage with the insurer or seek coverage from another

insurer because of a health status-related factor or the

nature of the industry, occupation or geographic location

of the small employer.

(ii)  The provisions of subparagraph (i) shall not

apply with respect to information provided by an insurer

or producer to a small employer regarding an established

geographic service area or a restricted network provision

of an insurer.

(3)  An insurer that provides small group health benefit

plans shall not enter into a contract, agreement or

arrangement that provides for or results in a producer's

compensation being varied because of a health status-related

factor or the nature of the industry or occupation of the

small employer.

(4)  An insurer that provides small group health benefit

plans shall not terminate, fail to renew or limit its

contract or agreement with a producer for a reason related to

a health status-related factor or occupation of the small

employer.

(5)  A producer or insurer that provides small group

health benefit plans shall not induce or encourage a small

employer to exclude an employee or the employee's dependents

from health coverage or benefits available under the plan.

Section 4208.  Reporting requirements.

(a)  Health insurance region market share.--Not less

frequently than March 1 of every calendar year, each insurer

group shall file a report with the department of the insurer

group's small group market share by health insurance region and

the small group market share of each insurer within the insurer

group by health insurance region, for the immediately preceding

calendar year.

(b)  Segregated report.--Not less frequently than March 1 of

every calendar year, each insurer and each insurer group shall

file a report with the department for the immediately preceding

calendar year. The report shall contain the following

information, both Statewide and by health insurance region,

segregated for the individual market, the small group market and

the large group market:

(1)  The aggregate number of covered lives and the time

periods over which coverage was provided.

(2)  The number of individuals and groups covered by

health benefit plans issued, made effective, delivered or

renewed.

(3)  The aggregate loss ratio for all policies issued,

made effective, delivered or renewed.

(4)  The average annual premium per insured life.

(5)  The average claims cost per insured life.

(6)  The range of administrative expenses, commissions

paid, profit load, and any other retention items.

(7)  The average administrative expenses, commissions

paid and profit load and any other retention items.

(8)  A description of each rating method used to

determine rates indicating the specific group size for which

each method was used.

(9)  A listing of all factors used in the rating for each

market and the range of these factors.

(10)  The number of groups, including the number of

employees and members in those groups, covered by entities

with administrative services contract or administrative

services only arrangements.

(c)  Review of reports.--By July 1 of each year, the

department shall review the reports provided for under

subsection (a) and shall transmit to the Legislative Reference

Bureau for publication in the Pennsylvania Bulletin a statement

of the status of each insurer within each region in which the

insurer provides coverage.

(d)  Data calls.--The department may issue data calls as

necessary to fulfill the requirements of this article. Any data

calls issued under this section shall be published in the

Pennsylvania Bulletin.

(e)  Limitation.--The commissioner shall have discretion to

modify the reporting requirements of this section by

transmitting notice to the Legislative Reference Bureau for

publication in the Pennsylvania Bulletin.

(f)  Compliance.--For failure to comply with any reports or

data calls required under this section, the commissioner shall

impose an administrative penalty of $1,000 against each insurer

or $5,000 against each insurer group for every day that the

report or data is not provided in accordance with this section.

Section 4209.  Regulations.

(a)  Implementation and administration.--The department and

the Department of Education may promulgate regulations as

necessary for the implementation and administration of this

article.

(b)  Exemption.--Except as may be otherwise provided in this

article, the promulgation of regulations under this article by

the department or the Department of Education shall, until three

years from the effective date of this section, be exempt from

the following:

(1)  Sections 201 through 205 of the Commonwealth

Documents Law.

(2)  The Commonwealth Attorneys Act.

(3)  The Regulatory Review Act.

Section 4210.  Enforcement.

(a)  Determination of violation.--Upon a determination that a

person licensed by the department has violated any provision of

this article, the department may, subject to 2 Pa.C.S. Chs. 5

Subch. A (relating to practice and procedure of Commonwealth

agencies) and 7 Subch. A (relating to judicial review of

Commonwealth agency action), do any of the following:

(1)  Issue an order requiring the person to cease and

desist from engaging in the violation.

(2)  Suspend or revoke or refuse to issue or renew the

certificate or license of the offending party or parties.

(3)  Impose an administrative penalty of up to $5,000 for

each violation.

(4)  Seek restitution.

(5)  Impose any other penalty or pursue any other remedy

deemed appropriate by the commissioner.

(b)  Other remedies.--The enforcement remedies imposed under

this section shall be in addition to any other remedies or

penalties that may be imposed by any other statute, including:

(1)  The act of July 22, 1974 (P.L.589, No.205), known as

the Unfair Insurance Practices Act. A violation by any person

of this article is deemed an unfair method of competition and

an unfair or deceptive act or practice pursuant to the Unfair

Insurance Practices Act.

(2)  The act of December 18, 1996 (P.L.1066, No.159),

known as the Accident and Health Filing Reform Act.

(c)  Private cause of action.--Nothing in this article shall

be construed as to create or imply a private cause of action for

violation of this article.

Section 4.  Repeals are as follows:

(1)  The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the addition of

Article XLII of the act.

(2)  Section 3(e)(2), (3), (4) and (5) of the act of

December 18, 1996 (P.L.1066, No.159), known as the Accident

and Health Filing Reform Act, are repealed insofar as they

apply to small group health benefit plan rates.

(3)  All other acts and parts of acts are repealed

insofar as they are inconsistent with the addition of Article

XLII of the act.

Section 5.  This act shall take effect as follows:

(1)  The amendment or addition of sections 617(A)(3) and

(9) and 617.1 of the act shall take effect in 60 days.

(2)  The remainder of this act shall take effect

immediately.

Section 1.  The act of May 17, 1921 (P.L.682, No.284), known

<--

as The Insurance Company Law of 1921, is amended by adding an

article to read:

ARTICLE XLII

AFFORDABLE SMALL GROUP HEALTH CARE COVERAGE

Section 4201.  Scope of article.

This article relates to health care reform.

Section 4202.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Accident and Health Filing Reform Act."  The act of December

18, 1996 (P.L.1066, No.159), known as the Accident and Health

Filing Reform Act.

"Commissioner."  The Insurance Commissioner of the

Commonwealth.

"Commonwealth Attorneys Act."  The act of October 15, 1980

(P.L.950, No.164), known as the Commonwealth Attorneys Act.

"Commonwealth Documents Law."  The act of July 31, 1968

(P.L.769, No.240), referred to as the Commonwealth Documents

Law.

"Creditable coverage."  As defined in section 2701 of the

Health Insurance Portability and Accountability Act of 1996

(Public Law 104-191, 42 U.S.C. § 300gg-91).

"Department."  The Insurance Department of the Commonwealth.

"Eligible employee."  A person employed by a large employer

or a small employer on a regularly scheduled basis, with a

normal work week of 17.5 hours or more, but does not include

persons who work on a temporary, seasonal or substitute basis.

"Geographic average rate."  The arithmetical average of the

lowest premium and the corresponding highest premium to be

charged by an insurer in a health insurance region for the

insurer's small employer health benefits plan. The term does not

include premium differences that are due to differences in

benefit design or family composition.

"Health benefit plan."  Any individual or group health

insurance policy, subscriber contract, certificate or plan which

provides health or sickness and accident coverage which is

offered by an insurer. The term shall not include any of the

following:

(1)  An accident only policy.

(2)  A credit only policy.

(3)  A long-term care or disability income policy.

(4)  A long-term care policy.

(5)  A specified disease policy.

(6)  A Medicare supplement policy.

(7)  A Civilian Health and Medical Program of the

Uniformed Services (CHAMPUS) supplement policy.

(8)  A fixed indemnity policy.

(9)  A dental only policy.

(10)  A vision only policy.

(11)  A workers' compensation policy.

(12)  An automobile medical payment policy under 75

Pa.C.S. (relating to vehicles).

(13)  Any other similar policies providing for limited

benefits.

"Health insurance region."  Any of the following:

(1)  "Region I."  The geographic area covered by the

counties of Bucks, Chester, Delaware, Montgomery and

Philadelphia.

(2)  "Region II."  The geographic area covered by the

counties of Adams, Berks, Cumberland, Dauphin, Franklin,

Fulton, Lancaster, Lebanon, Lehigh, Northampton, Perry,

Schuylkill and York.

(3)  "Region III."  The geographic area covered by the

counties of Bradford, Carbon, Clinton, Lackawanna, Luzerne,

Lycoming, Monroe, Pike, Sullivan, Susquehanna, Tioga, Wayne

and Wyoming.

(4)  "Region IV."  The geographic area covered by the

counties of Centre, Columbia, Juniata, Mifflin, Montour,

Northumberland, Snyder and Union.

(5)  "Region V."  The geographic area covered by the

counties of Bedford, Blair, Cambria, Clearfield, Huntingdon,

Jefferson and Somerset.

(6)  "Region VI."  The geographic area covered by the

counties of Allegheny, Armstrong, Beaver, Butler, Fayette,

Greene, Indiana, Lawrence, Washington and Westmoreland.

(7)  "Region VII."  The geographic area covered by the

counties of Cameron, Clarion, Crawford, Elk, Erie, Forest,

McKean, Mercer, Potter, Venango and Warren.

"Individual market."  The health insurance market for

individuals as defined in section 2791 of the Health Insurance

Portability and Accountability Act of 1996 (Public Law 104-191,

42 U.S.C. § 300gg-91).

"Insurer."  A company or health insurance entity licensed in

this Commonwealth to issue any individual or group health,

sickness or accident policy or subscriber contract or

certificate or plan that provides medical or health care

coverage by a health care facility or licensed health care

provider that is offered or governed under this act or any of

the following:

(1)  The act of December 29, 1972 (P.L.1701, No.364),

known as the Health Maintenance Organization Act.

(2)  The act of May 18, 1976 (P.L.123, No.54), known as

the Individual Accident and Sickness Insurance Minimum

Standards Act.

(3)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or Ch. 63 (relating to professional health

services plan corporations).

(4)  Article XXIV.

"Insurer group."  A group of insurers writing coverage in

this Commonwealth, including a parent insurer, its subsidiaries

and affiliates.

"Large employer."  In connection with a group health plan

with respect to a calendar year and a plan year, an employer who

employs an average of 51 or more eligible employees on business

days during the preceding calendar year and who employs at least

51 eligible employes on the first day of the plan year. In the

case of an employer which was not in existence throughout the

preceding calendar year, the determination whether an employer

is a large employer shall be based on the average number of

eligible employes that it is reasonably expected that the

employer will employ on business days in the current calendar

year.

"Large group market."  The health insurance market for large

employers.

"Medical loss ratio."  The ratio of incurred medical claim

costs to health earned premiums, as reported on the statement

convention blank adopted by the National Association of

Insurance Commissioners and filed with the Insurance

Commissioner.

"NAIC."  The National Association of Insurance Commissioners.

"Plan year."  The 12-consecutive-month period beginning on

the first day of coverage under a health benefit plan.

"Preexisting condition exclusion."  As defined in section

2701 of the Health Insurance Portability and Accountability Act

of 1996 (Public Law 104-191, 42 U.S.C. § 300gg-91). Pregnancy

and conditions for which medical advice, diagnosis, care or

treatment was recommended or received before birth or within the

first 60 days after birth or within the first 60 days after

adoption as a minor child shall not be treated as conditions

described in the definition in section 2701.

"Regulatory Review Act."  The act of June 25, 1982 (P.L.633,

No.181), known as the Regulatory Review Act.

"Small employer."  In connection with a group health plan

with respect to a calendar year and a plan year, an employer who

employs an average of at least two but not more than 50 eligible

employes on business days during the preceding calendar year and

who employs at least two eligible employees on the first day of

the plan year. In the case of an employer which was not in

existence throughout the preceding calendar year, the

determination whether an employer is a small employer shall be

based on the average number of eligible employees that it is

reasonably expected that the employer will employ on business

days in the current calendar year.

"Small group health benefit plan."  A health benefit plan

offered to a small employer.

"Small group market."  The health insurance market for small

employers.

"Standard plan."  One of the health benefit packages

established by the Insurance Department in accordance with

section 4204.

Section 4203.  Exemption from general applicability.

Sections 4204 and 4206 shall not apply to small group health

benefit plans issued, made effective, delivered or renewed in

this Commonwealth by any insurer that is part of an insurer

group where that insurer group insures or administers health

care coverage for less than 1% of the health insurance premiums

in the Commonwealth, as measured by NAIC annual statement data.

If the NAIC annual statement data does not contain the

specificity to demonstrate that the insurer group premium for

health insurance is less than 1% of the health insurance premium

in the Commonwealth, an insurer group seeking to claim exemption

from the requirements of this article shall present additional

evidence supported by a statement by an independent, certified

public accountant, utilizing agreed-upon procedures acceptable

to the department to demonstrate its market share.

Section 4204.  Standard plans.

(a)  Applicability.--This section shall apply to all small

group health benefit plans issued, made effective, delivered or

renewed in this Commonwealth after the effective date of this

section.

(b)  Standard plans required.--

(1)  An insurer shall not offer a plan that does not meet

the minimum benefits specified in one of the standard plans

developed by the department. The department shall consult

with insurers in developing the standard plans.

(2)  The standard plans may not contain any preexisting

condition exclusions.

(3)  Standard plans may include options for deductibles

and cost-sharing if the department determines that the

options:

(i)  Do not dissuade consumers from seeking necessary

services.

(ii)  Promote a balance of the impact of cost-sharing

in reducing premiums and in effecting utilization of

appropriate services.

(iii)  Limit the total cost-sharing that may be

incurred by an individual in a year.

(4)  The following apply:

(i)  The department shall forward notice of the

elements of the standard plans to the Legislative

Reference Bureau for publication as a notice in the

Pennsylvania Bulletin.

(ii)  An insurer subject to the provisions of this

section shall be required to begin offering its standard

plans as soon as practicable following the publication

but in no event later than 180 days following the

publication under subparagraph (i).

(5)  Each standard plan shall qualify as creditable

coverage.

(c)  Additional benefits.--

(1)  An insurer may offer benefits in addition to those

in any of its standard plans.

(2)  Each additional benefit shall:

(i)  Be offered and priced separately from benefits

specified in the standard plan with which the benefits

are being offered.

(ii)  Not have the effect of duplicating any of the

benefits in the standard plan with which the benefits are

being offered.