PRINTER'S NO.  2739

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1983

Session of

2011

  

  

INTRODUCED BY MICOZZIE, DeLUCA, GODSHALL, GROVE, KILLION, CLYMER, HALUSKA, HESS, MILLARD, MURPHY, READSHAW, REICHLEY, STURLA, VULAKOVICH AND BARBIN, NOVEMBER 15, 2011

  

  

REFERRED TO COMMITTEE ON INSURANCE, NOVEMBER 15, 2011  

  

  

  

AN ACT

  

1

Amending the act of December 18, 1996 (P.L.1066, No.159),

2

entitled "An act providing for review procedures pertaining

3

to accident and health insurance form and rate filings;

4

providing penalties; and making repeals," dividing the act

5

into Federal compliance and Commonwealth exclusivity; in

6

Federal compliance, further providing for definitions, for

7

required filings, for review procedure, for notice of

8

disapproval, for use of disapproved forms or rates, for

9

review of form or rate disapproval, for disapproval after

10

use, for filing of provider contracts, for record

11

maintenance, for public comment and for penalties and

12

providing for regulations and for expiration; in Commonwealth

13

exclusivity, providing for regulations and for action by the

14

Insurance Commissioner; and making editorial changes.

15

The General Assembly of the Commonwealth of Pennsylvania

16

hereby enacts as follows:

17

Section 1.  The act of December 18, 1996 (P.L.1066, No.159),

18

known as the Accident and Health Filing Reform Act, is amended

19

by adding a chapter heading to read:

20

CHAPTER 1

21

PRELIMINARY PROVISIONS

22

Section 2.  Section 1 of the act is renumbered to read:

23

Section [1] 101.   Short title.

 


1

This act shall be known and may be cited as the Accident and

2

Health Filing Reform Act.

3

Section 3.  The act is amended by adding a chapter heading to

4

read:

5

CHAPTER 3

6

FEDERAL COMPLIANCE

7

Section 4.  The introductory paragraph and the definitions of

8

"group accident and health insurance" and "insurer" in section 2

9

of the act are amended, the section is amended by adding a

10

definition and the section is renumbered to read:

11

Section [2] 301.  Definitions.

12

The following words and phrases when used in this [act]

13

chapter shall have the meanings given to them in this section

14

unless the context clearly indicates otherwise:

15

* * *

16

"Group accident and health insurance."  A form affording

17

insurance coverage against death, injury, disablement, disease

18

or sickness resulting from an accident and covering [more than

19

one person] a large or small group. The term shall not include

20

blanket accident insurance policies or franchise accident and

21

sickness insurance policies as defined in [section] sections 

22

621.3 and 621.4 of the act of May 17, 1921 (P.L.682, No.284),

23

known as The Insurance Company Law of 1921.

24

* * *

25

"Insurer."  A foreign or domestic company, association or

26

exchange, hospital plan corporation, professional health

27

services plan corporation, fraternal benefits society, health

28

maintenance organization and risk-assuming preferred provider

29

organization.

30

* * *

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1

"Small group."  A group that purchases accident and health

2

insurance in the small group market, as defined in section

3

2791(e)(5) of the Public Health Service Act (110 Stat. 1972, 42

4

U.S.C. § 300gg-91(e)(5)), provided, however, that for plan years

5

beginning prior to January 1, 2016, or other date as established

6

in Federal law, "50 employees" is substituted for "100

7

employees" in the definition of "small employer" in section

8

2791(e)(4) of the Public Health Service Act.

9

* * *

10

Section 4.1.  The act is amended by adding a section to read:

11

Section 302.  (Reserved).

12

Section 5.  Sections 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13

13

of the act are amended to read:

14

Section [3] 303.  Required filings.

15

(a)  Form filings.--Each insurer [and HMO] shall file with

16

the department any form which it proposes to issue in this

17

Commonwealth except a type or kind of form which, in the opinion

18

of the commissioner, does not require filing. The form filings

19

required by this section shall be made no less than 45 days, or

20

a shorter period of time as the department may establish, prior

21

to their effective dates. The filings shall be subject to filing

22

and review in accordance with the provisions of section 304.

23

(b)  Notice of exemption from form filing.--The commissioner

24

shall issue notice in the Pennsylvania Bulletin identifying any

25

type or kind of form which has been exempted from filing. The

26

commissioner may subsequently require the forms to be filed

27

under this section upon notice published in the Pennsylvania

28

Bulletin. Any such subsequent notice shall not be effective

29

until 90 days after publication.

30

(c)  Individual rates.--Each insurer [and HMO] shall file

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1

with the department rates for individual accident and health

2

insurance policies which it proposes to use in this Commonwealth

3

except those rates which, in the opinion of the commissioner,

4

cannot practicably be filed before they are used. The

5

commissioner shall publish notice in the Pennsylvania Bulletin

6

identifying rates which the commissioner determines cannot

7

practicably be filed. The filings required by this subsection

8

shall be made no less than 45 days, or a shorter period of time

9

as the department may establish, prior to their effective dates.

10

The filings shall be subject to filing and review in accordance

11

with the provisions of section 304.

12

(d)  Certain group rates exempt.--Except as provided in

13

subsection (e), an insurer shall not be required to file with

14

the department rates for accident and health insurance policies

15

which it proposes to issue on a group[, blanket or franchise]

16

basis in this Commonwealth.

17

(e)  Required group rate filings.--Each [hospital plan

18

corporation, professional health services plan corporation and

19

HMO] insurer shall file with the department rates for small

20

group accident and health insurance policies which it proposes

21

to issue on a group[, blanket or franchise] basis in this

22

Commonwealth in accordance with the following:

23

(1)  Each [hospital plan corporation, professional health

24

services plan corporation and HMO] insurer shall establish

25

and file with the department prior to use a base rate which

26

is not excessive, inadequate or unfairly discriminatory. The

27

initial base rate for existing hospital plan corporations,

28

professional health services plan corporations and HMOs shall

29

be the rate or the rating formula currently on file and

30

approved by the department as of the effective date of [this

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1

act] section 314. The initial base rate or base rating

2

formula for any [hospital plan corporation, professional

3

health services plan corporation or HMO] insurer with no base

4

rate or base rating formula on file and approved as of the

5

effective date of [this act] section 314 shall be [subject to

6

filing, review and prior approval by the department] the base

7

rate or base rating formula in effect on the effective date

8

of section 314, and shall be filed with the department no

9

more than 45 days thereafter.

10

(2)  Proposed changes to [an approved] a base rate or

11

[any approved component of an approved] base rating formula

12

which effect an increase or decrease in the [approved] base

13

rate or [in an approved component of an approved] base rating

14

formula of [more than] 10% or more annually in the aggregate

15

shall be subject to filing[,] and review [and prior approval]

16

by the department in accordance with the provisions of

17

section 304. The filings required by this paragraph shall be

18

made no less than 45 days, or a shorter period of time as the

19

department may establish, prior to their effective dates.

20

(3)  Proposed changes to [an approved] a base rate or

21

[any approved component of an approved] base rating formula

22

which effect an increase or decrease in the [approved] base

23

rate or [in an approved component of an approved] base rating

24

formula of [not more] less than 10% annually in the aggregate

25

shall be [subject to filing and review in accordance with the

26

provisions of section 4] filed with the department and may be

27

used 45 days thereafter.

28

(4)  Rates developed for a specific group which do not

29

deviate from the base rate or base rate formula by more than

30

15% may be used without filing with the department.

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1

(5)  Rates developed for a specific group which deviate

2

from the base rate or base rate formula by more than 15%

3

shall be subject to filing and review in accordance with the

4

provisions of section [4] 304. The filings required by this

5

paragraph shall be made no less than 45 days, or a shorter

6

period of time as the department may establish, prior to

7

their effective dates.

8

(6)  The commissioner shall have discretion to exempt any

9

type or kind of rate filing under this subsection by

10

regulation except for filings required under subsection (c)

11

and paragraph (2).

12

[(f)  Applicability of filings.--All filings required by this

13

section shall be made no less than 45 days prior to their

14

effective dates. Filings under subsection (e)(1) and (2) shall

15

be deemed approved at the expiration of 45 days after filing

16

unless earlier approved or disapproved by the commissioner. The

17

commissioner, by written notice to the insurer, may within such

18

45-day period extend the period for approval or disapproval for

19

an additional 45 days. All other filings under this section

20

shall become effective as provided in section 4.]

21

(f)  Power of the department.--The department may, at the

22

discretion of the commissioner through notice in the

23

Pennsylvania Bulletin, adjust the 10% threshold set forth in

24

subsection (e)(2) and (3) only for purposes of coordinating the

25

filing requirements of this section to a state-specific

26

percentage determined by the Secretary of the United States

27

Department of Health and Human Services.

28

Section [4] 304.  Review procedure.

29

(a)  General rule.--Filings under section 303(c) and (e)(1),

30

(2) and (5) shall be reviewed as appropriate and necessary to

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1

carry out the provisions of this [act] chapter. [Unless a filing

2

is disapproved by the department within the 45-day period

3

provided in section 3(f), filings made under section 3 shall

4

become effective for use 45 days following:

5

(1)  the expiration of any public comment period

6

established by the commissioner under section 11; or

7

(2)  receipt of the filing by the department if no public

8

comment period is established.] The following apply:

9

(1)  Unless a filing that is subject to review under

10

section 303(c) or (e)(1), (2) or (5) is earlier disapproved

11

by the department, or the department, by written notice to

12

the insurer, extends the period for approval or disapproval

13

for an additional 45 days, the filings shall be deemed

14

approved 45 days following receipt of the filing by the

15

department.

16

(2)  Unless a resubmitted filing made under subsection

17

(c) is earlier disapproved by the department, the resubmitted

18

filing shall be deemed approved 30 days following receipt of

19

the resubmitted filing by the department.

20

(3)  The department may hire the services of a competent

21

actuarial firm as reasonably necessary under any section of

22

this chapter to assist the department in the review of an

23

insurer's rate filing or resubmitted rate filing under

24

section 303(c) or (e)(1), (2) or (5). The reasonable and

25

necessary costs for the services shall be paid by the insurer

26

within 30 days of the insurer's receipt of a bill for the

27

services.

28

(4)  An insurer intending to use any rate deemed approved

29

under this subsection shall provide written notice to the

30

department prior to use.

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1

(b)  Disapproval.--Disapproval of a filing shall be based

2

only on specific provisions of applicable law, regulation or

3

statement of policy or if insufficient information is submitted

4

to support the filing. Rates [filed under section 3(e)] shall

5

not be disapproved unless the rates are determined to be

6

excessive, inadequate or unfairly discriminatory.

7

(c)  Resubmission.--A filing disapproved by the department

8

may be resubmitted within 120 days after the date of the

9

disapproval. [Filings resubmitted within this time shall become

10

effective for use 30 days after the receipt of the resubmission

11

by the department unless the filing is disapproved by the

12

department before the expiration of the 30-day period. This

13

subsection shall not apply to filings made prior to the

14

effective date of this act.]

15

(d)  Disapproval of resubmissions.--Disapproval of a filing

16

resubmitted under subsection (c) shall be based only on specific

17

provisions of applicable law, regulation or statement of policy

18

or if insufficient information is submitted to support the

19

filing. Rates shall not be disapproved unless the rates are

20

determined to be excessive, inadequate or unfairly

21

discriminatory. Disapproval may not be based on any grounds not

22

specified in the initial disapproval issued by the department

23

except to the extent that new information is presented in the

24

resubmission.

25

(e)  Subsequent resubmissions.--Any further resubmission

26

following a second disapproval shall be considered a new filing

27

[and reviewed in accordance with subsection (a)] under section

28

303.

29

(f)  [Commissioner's] Department's discretion.--Nothing in

30

this section shall be construed to prevent the [commissioner]

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1

department from affirmatively approving a filing at the

2

[commissioner's] department's discretion.

3

Section [5] 305.  Notice of approval or disapproval.

4

(a)  Requirement.--Upon the disapproval of any filing under

5

this [act] chapter, the department shall notify the insurer [or

6

HMO] of the disapproval in writing, specifying the reason or

7

reasons for such disapproval.

8

(b)  Report.--A report of the approval or disapproval of a

9

rate filing subject to review under Federal law shall be

10

provided by the department to the United States Department of

11

Health and Human Services in a form and manner prescribed by the

12

Secretary of the United States Department of Health and Human

13

Services.

14

Section [6] 306.  Use of disapproved forms or rates.

15

It shall be unlawful for any insurer [or HMO] to use in this

16

Commonwealth a form or rate disapproved under this [act]

17

chapter.

18

Section [7] 307.  Review of form or rate disapproval.

19

(a)  Request for hearing.--Within 30 days from the date of

20

mailing of a notice of disapproval of a filing under this [act]

21

chapter, the insurer [or HMO] may make a written application to

22

the commissioner for a hearing.

23

(b)  Hearing.--Upon receipt of a timely written application

24

for hearing, the commissioner shall schedule and conduct a

25

hearing as provided in 2 Pa.C.S. Ch. 5 Subch. A (relating to

26

practice and procedure of Commonwealth agencies) and Ch. 7

27

Subch. A (relating to judicial review of Commonwealth agency

28

action). All of the actions which may be performed by the

29

commissioner in this section may be performed by the

30

commissioner's designated representative.

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1

Section [8] 308.  Disapproval after use.

2

(a)  General rule.--Any form or rate filed and used [after

3

the expiration of the appropriate review period] under this

4

[act] chapter, whether or not subject to review under this

5

chapter, may be subsequently disapproved. The [commissioner]

6

department shall notify the insurer [or HMO] in writing and

7

provide the opportunity for a hearing as provided in 2 Pa.C.S.

8

Ch. 5 Subch. A (relating to practice and procedure of

9

Commonwealth agencies) and Ch. 7 Subch. A (relating to judicial

10

review of Commonwealth agency action).

11

(b)  Discontinuance of form.--If following a hearing the

12

commissioner finds that a form in use should be disapproved, the

13

commissioner shall order its use to be discontinued for any

14

policy issued after a date specified in the order.

15

(c)  Discontinuance of rate.--If following a hearing the

16

commissioner finds that a rate in use should be disapproved, the

17

commissioner shall order its use to be discontinued

18

prospectively for any policy issued or renewed after a date

19

specified in the order.

20

(d)  Suspension of forms.--Pending a hearing, the

21

commissioner may order the suspension of use of a form filed if

22

the commissioner has reasonable cause to believe that:

23

(1)  The form is contrary to applicable law, regulation

24

or statement of policy.

25

(2)  Unless a suspension order is issued, insureds will

26

suffer substantial harm.

27

(3)  The harm insureds will suffer outweighs any hardship

28

the insurer will suffer by the suspension of the use of the

29

form.

30

(4)  The suspension order will result in no harm to the

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1

public.

2

(e)  Suspension of rates.--Pending a hearing, the

3

commissioner may order the suspension of use of a rate filed and

4

reinstate the last previous rate in effect if the commissioner

5

has reasonable cause to believe that:

6

(1)  The rate is excessive, inadequate or unfairly

7

discriminatory under section [4(b)] 304(b).

8

(2)  Unless a suspension order is issued, insureds will

9

suffer substantial harm.

10

(3)  The harm insureds will suffer outweighs any hardship

11

the insurer will suffer by the suspension of the use of the

12

[form] rate.

13

(4)  The suspension order will result in no harm to the

14

public.

15

Section [9] 309.  Filing of provider contracts.

16

(a)  Filing and review process.--Provider contracts shall be

17

filed by insurers and reviewed by the department as follows:

18

(1)  Provider contracts shall be filed with the

19

department no later than 30 days prior to the effective date

20

specified in the contract.

21

(2)  Provider contracts shall become effective unless

22

disapproved within 30 days following:

23

(i)  the expiration of [the] any public comment

24

period established by the [commissioner] department under

25

section [11] 311; or

26

(ii)  receipt of the filing by the department if no

27

public comment is established.

28

(3)  The department may disapprove a provider contract

29

whenever it is determined that the contract:

30

(i)  provides for excessive payments;

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1

(ii)  fails to include reasonable incentives for cost

2

control;

3

(iii)  contributes to the escalation of the cost of

4

providing health care services; or

5

(iv)  does not provide for the realization of

6

potential and achieved savings under the contract by

7

insureds/subscribers.

8

(b)  Review of the disapproval.--Upon disapproval of a

9

provider contract under this section, the insurer may seek

10

review of the disapproval as provided in section [7] 307.

11

(c)  Payment rates and fee information.--Provider contracts

12

filed under this section need not contain payment rates and fees

13

unless requested by the department. Payment rates and fees

14

requested by the department shall be given confidential

15

treatment, are not subject to subpoena and may not be made

16

public by the department, except that the payment rates and fee

17

information may be disclosed to the insurance department of

18

another state or to a law enforcement official of this State or

19

any other state or agency of the Federal Government at any time

20

so long as the agency or office receiving the information agrees

21

in writing to hold it confidential and in a manner consistent

22

with this [act] chapter.

23

(d)  Disapproval of existing contract.--If at any time the

24

commissioner determines that a provider contract which has

25

become effective under this section violates the standards as

26

provided in subsection (a)(3), the commissioner may disapprove

27

the provider contract after notice and hearing as provided in 2

28

Pa.C.S. Ch. 5 Subch. A (relating to practice and procedure of

29

Commonwealth agencies) and Ch. 7 Subch. A (relating to judicial

30

review of Commonwealth agency action).

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1

(e)  Department of Health authority.--Nothing in this section

2

shall be construed to expand or limit the authority of the

3

Department of Health to review provider contracts under its

4

authority under the act of December 29, 1972 (P.L.1701, No.364),

5

known as the Health Maintenance Organization Act, and section

6

630 of the act of May 17, 1921 (P.L.682, No.284), known as The

7

Insurance Company Law of 1921, and regulations promulgated

8

thereunder, including review of size of network and quality of

9

care provided.

10

Section [10] 310.  Record maintenance.

11

Upon request, the [commissioner] department shall be provided

12

a copy of any form being issued in this Commonwealth. Insurers

13

[and HMOs] shall maintain complete and accurate specimen or

14

actual copies of all forms which are issued to Pennsylvania

15

residents, including copies of all applications, certificates

16

and endorsements used with policies. Retention of the forms may

17

be kept on diskette, microfiche or any other electronic method.

18

Specimen copies shall also indicate the date the form was first

19

issued in this Commonwealth. The records shall be maintained

20

until at least two years after a claim can no longer be reported

21

under the form.

22

Section [11] 311.  Public comment.

23

[Public] (a)  Certain rate filings.--A form of notice for

24

each rate filing subject to review under Federal law shall be

25

required to be provided by the filing insurer for posting on the

26

department's website. The form of notice shall satisfy the

27

requirements set forth in section 2794 of the Public Health

28

Service Act (110 Stat. 1972, 42 U.S.C. § 300gg-94) and any

29

regulations promulgated thereunder.

30

(b)  Other filings.--Except as provided for under subsection

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1

(a), public notice of filings made under this [act] chapter 

2

shall not be required. At the [commissioner's] department's 

3

discretion, however, notice of a filing may be published in the

4

Pennsylvania Bulletin [and a time period established for the

5

receipt of public comment by the department] or on the

6

department's website or on any other publicly accessible

7

electronic medium.

8

(c)  Period for public comment.--At the department's

9

discretion, the department may establish a time period for the

10

receipt of public comment on any filing.

11

Section [12] 312.  Required policy provisions.

12

(a)  General rule.--An individual or group, blanket or

13

franchise form issued by a hospital plan corporation or

14

professional health services plan corporation shall also be

15

subject to the following provisions of the act of May 17, 1921

16

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

17

(1)  Section 617.

18

(2)  Section 618.

19

(3)  Section 619.

20

(4)  Section 619.1.

21

(5)  Section 621.2(a)(6).

22

(6)  Section 621.2(b) through (d).

23

(7)  Section 621.3.

24

(8)  Section 621.4.

25

(9)  Section 621.5.

26

(10)  Section 622.

27

(11)  Section 625.

28

(12)  Section 626.

29

(13)  Section 628.

30

(b)  Network-based programs.--Nothing in this [act] chapter 

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1

shall prohibit a hospital plan corporation or professional

2

health services plan corporation from establishing or offering

3

provider network-based programs under 40 Pa.C.S. Ch. 61

4

(relating to hospital plan corporations) or 63 (relating to

5

professional health services plan corporations).

6

Section [13] 313.  Penalties.

7

(a)  General rule.--Upon satisfactory evidence of the

8

violation of any section of this [act] chapter by an insurer[,

9

HMO] or any other person, one or more of the following penalties

10

may be imposed at the commissioner's discretion:

11

(1)  Suspension or revocation of the license of the

12

offending insurer[, HMO] or other person.

13

(2)  Refusal, for a period not to exceed one year, to

14

issue a new license to the offending insurer[, HMO] or other

15

person.

16

(3)  A fine of not more than $5,000 for each violation of

17

this [act] chapter.

18

(4)  A fine of not more than $10,000 for each willful

19

violation of this [act] chapter.

20

(5)  A fine of not more than $10,000 for each violation

21

of section [6] 306.

22

(6)  A fine of not more than $25,000 for each willful

23

violation of section [6] 306.

24

(b)  Limitation.--Fines imposed against an individual insurer

25

under this [act] chapter shall not exceed $500,000 in the

26

aggregate during a single calendar year.

27

Section 6.  The act is amended by adding sections to read:

28

Section 314.  Regulations.

29

The department may promulgate regulations as may be necessary

30

or appropriate to carry out this chapter.

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1

Section 315.  Expiration.

2

This chapter shall expire upon publication of the notice

3

under section 5103.

4

Section 7.  The act is amended by adding a chapter to read:

5

CHAPTER 5

6

COMMONWEALTH EXCLUSIVITY

7

Section 501.  (Reserved).

8

Section 502.  Definitions.

9

The following words and phrases when used in this chapter 

10

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

11

context clearly indicates otherwise:

12

"Commissioner."  The Insurance Commissioner of the

13

Commonwealth.

14

"Company," "association" or "exchange."  An entity defined in

15

section 101 of the act of May 17, 1921 (P.L.682, No.284), known

16

as The Insurance Company Law of 1921.

17

"Department."  The Insurance Department of the Commonwealth.

18

"Filing."  A form or rate required by section 503.

19

"Form."  A policy, contract, certificate, evidence of

20

coverage, application, rider or endorsement affording insurance

21

coverage or benefit against loss from sickness or loss or damage

22

from bodily injury or death of the insured by accident and each

23

modification of any of the above.

24

"Fraternal benefits society."  An entity organized and

25

operating under Article XXIV of the act of May 17, 1921

26

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

27

"Group accident and health insurance."  A form affording

28

insurance coverage against death, injury, disablement, disease

29

or sickness resulting from an accident and covering more than

30

one person. The term shall not include blanket accident

- 16 -

 


1

insurance policies as defined in section 621.3 of the act of May

2

17, 1921 (P.L.682, No.284), known as The Insurance Company Law

3

of 1921.

4

"Health care provider."  A person, corporation, facility,

5

institution or other entity licensed, certified or approved by

6

the Commonwealth to provide health care or professional medical

7

services. The term includes, but is not limited to, physicians,

8

professional nurses, certified nurse-midwives, podiatrists,

9

hospitals, nursing homes, ambulatory surgical centers or birth

10

centers.

11

"Health maintenance organization" or "HMO."  An entity

12

organized and operating under the act of December 29, 1972

13

(P.L.1701, No.364), known as the Health Maintenance Organization

14

Act.

15

"Hospital plan corporation."  An entity organized and

16

operating under 40 Pa.C.S. Ch. 61 (relating to hospital plan

17

corporations).

18

"Insurer."  A foreign or domestic company, association or

19

exchange, hospital plan corporation, professional health

20

services plan corporation, fraternal benefits society and risk-

21

assuming preferred provider organization.

22

"Preferred provider organization."  An entity organized and

23

operating under section 630 of the act of May 17, 1921 (P.L.682,

24

No.284), known as The Insurance Company Law of 1921.

25

"Professional health services plan corporation."  An entity

26

organized and operating under 40 Pa.C.S. Ch. 63 (relating to

27

professional health services plan corporations).

28

"Provider contracts."  An agreement made between an insurer

29

and a health care provider regarding the provision of any

30

payment for health care services. The term shall not include

- 17 -

 


1

contracts or related documents which are subject to the

2

exclusive approval of the Department of Health under 40 Pa.C.S.

3

§ 6324 (relating to rights of health service doctors) and

4

section 630 of the act of May 17, 1921 (P.L.682, No.284), known

5

as The Insurance Company Law of 1921.

6

"Rate."  A manual of classification, rules and rates, each

7

rating plan and each modification of any of the above.

8

"Statement of policy."  A document as defined in 45 Pa.C.S. §

9

501 (relating to definitions), provided that the document has

10

been published in the Pennsylvania Bulletin.

11

Section 503.  Required filings.

12

(a)  Form filings.--Each insurer and HMO shall file with the

13

department any form which it proposes to issue in this

14

Commonwealth except a type or kind of form which, in the opinion

15

of the commissioner, does not require filing.

16

(b)  Notice of exemption from filing.--The commissioner shall

17

issue notice in the Pennsylvania Bulletin identifying any type

18

or kind of form which has been exempted from filing. The

19

commissioner may subsequently require the forms to be filed

20

under this section upon notice published in the Pennsylvania

21

Bulletin. Any such subsequent notice shall not be effective

22

until 90 days after publication.

23

(c)  Individual rates.--Each insurer and HMO shall file with

24

the department rates for individual accident and health

25

insurance policies which it proposes to use in this Commonwealth

26

except those rates which, in the opinion of the commissioner,

27

cannot practicably be filed before they are used. The

28

commissioner shall publish notice in the Pennsylvania Bulletin

29

identifying rates which the commissioner determines cannot

30

practicably be filed.

- 18 -

 


1

(d)  Certain group rates exempt.--Except as provided in

2

subsection (e), an insurer shall not be required to file with

3

the department rates for accident and health insurance policies

4

which it proposes to issue on a group, blanket or franchise

5

basis in this Commonwealth.

6

(e)  Required group rate filings.--Each hospital plan

7

corporation, professional health services plan corporation and

8

HMO shall file with the department rates for accident and health

9

insurance policies which it proposes to issue on a group,

10

blanket or franchise basis in this Commonwealth in accordance

11

with the following:

12

(1)  Each hospital plan corporation, professional health

13

services plan corporation and HMO shall establish a base rate

14

which is not excessive, inadequate or unfairly

15

discriminatory. The initial base rate for existing hospital

16

plan corporations, professional health services plan

17

corporations and HMOs shall be the rate or the rating formula

18

currently on file and approved by the department as of

19

February 17, 1997. The initial base rate or base rating

20

formula for any hospital plan corporation, professional

21

health services plan corporation or HMO with no base rate or

22

base rating formula on file and approved as of February 17,

23

1997, shall be subject to filing, review and prior approval

24

by the department.

25

(2)  Proposed changes to an approved base rate or any

26

approved component of an approved rating formula which effect

27

an increase or decrease in the approved base rate or in an

28

approved component of an approved rating formula of more than

29

10% annually in the aggregate shall be subject to filing,

30

review and prior approval by the department.

- 19 -

 


1

(3)  Proposed changes to an approved base rate or any

2

approved component of an approved rating formula that effect

3

an increase or decrease in the approved base rate or in an

4

approved component of an approved rating formula of not more

5

than 10% annually in the aggregate shall be subject to filing

6

and review in accordance with the provisions of section 504.

7

(4)  Rates developed for a specific group which do not

8

deviate from the base rate or base rate formula by more than

9

15% may be used without filing with the department.

10

(5)  Rates developed for a specific group which deviate

11

from the base rate or base rate formula by more than 15%

12

shall be subject to filing and review in accordance with the

13

provisions of section 504.

14

(6)  The commissioner shall have discretion to exempt any

15

type or kind of rate filing under this subsection by

16

regulation.

17

(f)  Applicability of filings.--All filings required by this

18

section shall be made no less than 45 days prior to their

19

effective dates. Filings under subsection (e)(1) and (2) shall

20

be deemed approved at the expiration of 45 days after filing

21

unless earlier approved or disapproved by the commissioner. The

22

commissioner, by written notice to the insurer, may within such

23

45-day period extend the period for approval or disapproval for

24

an additional 45 days. All other filings under this section

25

shall become effective as provided in section 504.

26

Section 504.  Review procedure.

27

(a)  General rule.--Filings shall be reviewed as appropriate

28

and necessary to carry out the provisions of this chapter.

29

Unless a filing is disapproved by the department within the 45-

30

day period provided in section 503(f), filings made under

- 20 -

 


1

section 503 shall become effective for use 45 days following:

2

(1)  the expiration of any public comment period

3

established by the commissioner under section 511; or

4

(2)  receipt of the filing by the department if no public

5

comment period is established.

6

(b)  Disapproval.--Disapproval of a filing shall be based

7

only on specific provisions of applicable law, regulation or

8

statement of policy or if insufficient information is submitted

9

to support the filing. Rates filed under section 503(e) shall

10

not be disapproved unless the rates are determined to be

11

excessive, inadequate or unfairly discriminatory.

12

(c)  Resubmission.--A filing disapproved by the department

13

may be resubmitted within 120 days after the date of the

14

disapproval. Filings resubmitted within this time shall become

15

effective for use 30 days after the receipt of the resubmission

16

by the department unless the filing is disapproved by the

17

department before the expiration of the 30-day period. This

18

subsection shall not apply to filings made prior to February 17,

19

1997.

20

(d)  Disapproval of resubmissions.--Disapproval of a filing

21

resubmitted under subsection (c) shall be based only on specific

22

provisions of applicable law, regulation or statement of policy

23

or if insufficient information is submitted to support the

24

filing. Disapproval may not be based on any grounds not

25

specified in the initial disapproval issued by the department

26

except to the extent that new information is presented in the

27

resubmission.

28

(e)  Subsequent resubmissions.--Any further resubmission

29

following a second disapproval shall be considered a new filing

30

and reviewed in accordance with subsection (a).

- 21 -

 


1

(f)  Commissioner's discretion.--Nothing in this section

2

shall be construed to prevent the commissioner from

3

affirmatively approving a filing at the commissioner's

4

discretion.

5

Section 505.  Notice of disapproval.

6

Upon the disapproval of any filing under this chapter, the

7

department shall notify the insurer or HMO of the disapproval in

8

writing, specifying the reason or reasons for such disapproval.

9

Section 506.  Use of disapproved forms or rates.

10

It shall be unlawful for any insurer or HMO to use in this

11

Commonwealth a form or rate disapproved under this chapter.

12

Section 507.  Review of form or rate disapproval.

13

(a)  Request for hearing.--Within 30 days from the date of

14

mailing of a notice of disapproval of a filing under this

15

chapter, the insurer or HMO may make a written application to

16

the commissioner for a hearing.

17

(b)  Hearing.--Upon receipt of a timely written application

18

for hearing, the commissioner shall schedule and conduct a

19

hearing as provided in 2 Pa.C.S. Ch. 5 Subch. A (relating to

20

practice and procedure of Commonwealth agencies) and Ch. 7

21

Subch. A (relating to judicial review of Commonwealth agency

22

action). All of the actions which may be performed by the

23

commissioner in this section may be performed by the

24

commissioner's designated representative.

25

Section 508.  Disapproval after use.

26

(a)  General rule.--Any form or rate filed and used after the

27

expiration of the appropriate review period under this chapter 

28

may be subsequently disapproved. The department shall notify the

29

insurer or HMO in writing and provide the opportunity for a

30

hearing as provided in 2 Pa.C.S. Ch. 5 Subch. A (relating to

- 22 -

 


1

practice and procedure of Commonwealth agencies) and Ch. 7

2

Subch. A (relating to judicial review of Commonwealth agency

3

action).

4

(b)  Discontinuance of form.--If following a hearing the

5

commissioner finds that a form in use should be disapproved, the

6

commissioner shall order its use to be discontinued for any

7

policy issued after a date specified in the order.

8

(c)  Discontinuance of rate.--If following a hearing the

9

commissioner finds that a rate in use should be disapproved, the

10

commissioner shall order its use to be discontinued

11

prospectively for any policy issued or renewed after a date

12

specified in the order.

13

(d)  Suspension of forms.--Pending a hearing, the

14

commissioner may order the suspension of use of a form filed if

15

the commissioner has reasonable cause to believe that:

16

(1)  The form is contrary to applicable law, regulation

17

or statement of policy.

18

(2)  Unless a suspension order is issued, insureds will

19

suffer substantial harm.

20

(3)  The harm insureds will suffer outweighs any hardship

21

the insurer will suffer by the suspension of the use of the

22

form.

23

(4)  The suspension order will result in no harm to the

24

public.

25

(e)  Suspension of rates.--Pending a hearing, the

26

commissioner may order the suspension of use of a rate filed and

27

reinstate the last previous rate in effect if the commissioner

28

has reasonable cause to believe that:

29

(1)  The rate is excessive, inadequate or unfairly

30

discriminatory under section 504(b).

- 23 -

 


1

(2)  Unless a suspension order is issued, insureds will

2

suffer substantial harm.

3

(3)  The harm insureds will suffer outweighs any hardship

4

the insurer will suffer by the suspension of the use of the

5

form.

6

(4)  The suspension order will result in no harm to the

7

public.

8

Section 509.  Filing of provider contracts.

9

(a)  Filing and review process.--Provider contracts shall be

10

filed by insurers and reviewed by the department as follows:

11

(1)  Provider contracts shall be filed with the

12

department no later than 30 days prior to the effective date

13

specified in the contract.

14

(2)  Provider contracts shall become effective unless

15

disapproved within 30 days following:

16

(i)  the expiration of the public comment period

17

established by the commissioner under section 511; or

18

(ii)  receipt of the filing by the department if no

19

public comment is established.

20

(3)  The department may disapprove a provider contract

21

whenever it is determined that the contract:

22

(i)  provides for excessive payments;

23

(ii)  fails to include reasonable incentives for cost

24

control;

25

(iii)  contributes to the escalation of the cost of

26

providing health care services; or

27

(iv)  does not provide for the realization of

28

potential and achieved savings under the contract by

29

insureds/subscribers.

30

(b)  Review of the disapproval.--Upon disapproval of a

- 24 -

 


1

provider contract under this section, the insurer may seek

2

review of the disapproval as provided in section 507.

3

(c)  Payment rates and fee information.--Provider contracts

4

filed under this section need not contain payment rates and fees

5

unless requested by the department. Payment rates and fees

6

requested by the department shall be given confidential

7

treatment, are not subject to subpoena and may not be made

8

public by the department, except that the payment rates and fee

9

information may be disclosed to the insurance department of

10

another state or to a law enforcement official of this State or

11

any other state or agency of the Federal Government at any time

12

so long as the agency or office receiving the information agrees

13

in writing to hold it confidential and in a manner consistent

14

with this chapter.

15

(d)  Disapproval of existing contract.--If at any time the

16

commissioner determines that a provider contract which has

17

become effective under this section violates the standards as

18

provided in subsection (a)(3), the commissioner may disapprove

19

the provider contract after notice and hearing as provided in 2

20

Pa.C.S. Chs. 5 Subch. A (relating to practice and procedure of

21

Commonwealth agencies) and 7 Subch. A (relating to judicial

22

review of Commonwealth agency action).

23

(e)  Department of Health authority.--Nothing in this section

24

shall be construed to expand or limit the authority of the

25

Department of Health to review provider contracts under its

26

authority under the act of December 29, 1972 (P.L.1701, No.364),

27

known as the Health Maintenance Organization Act, and section

28

630 of the act of May 17, 1921 (P.L.682, No.284), known as The

29

Insurance Company Law of 1921, and regulations promulgated

30

thereunder, including review of size of network and quality of

- 25 -

 


1

care provided.

2

Section 510.  Record maintenance.

3

Upon request, the department shall be provided a copy of any

4

form being issued in this Commonwealth. Insurers and HMOs shall

5

maintain complete and accurate specimen or actual copies of all

6

forms which are issued to residents of this Commonwealth,

7

including copies of all applications, certificates and

8

endorsements used with policies. Retention of the forms may be

9

kept on diskette, microfiche or any other electronic method.

10

Specimen copies shall also indicate the date the form was first

11

issued in this Commonwealth. The records shall be maintained

12

until at least two years after a claim can no longer be reported

13

under the form.

14

Section 511.  Public comment.

15

Public notice of filings made under this chapter shall not be

16

required. At the commissioner's discretion, however, notice of a

17

filing may be published in the Pennsylvania Bulletin and a time

18

period established for the receipt of public comment by the

19

department.

20

Section 512.  Required policy provisions.

21

(a)  General rule.--An individual or group, blanket or

22

franchise form issued by a hospital plan corporation or

23

professional health services plan corporation shall also be

24

subject to the following provisions of the act of May 17, 1921

25

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

26

(1)  Section 617.

27

(2)  Section 618.

28

(3)  Section 619.

29

(4)  Section 619.1.

30

(5)  Section 621.2(a)(6).

- 26 -

 


1

(6)  Section 621.2(b), (c) and (d).

2

(7)  Section 621.3.

3

(8)  Section 621.4.

4

(9)  Section 621.5.

5

(10)  Section 622.

6

(11)  Section 625.

7

(12)  Section 626.

8

(13)  Section 628.

9

(b)  Network-based programs.--Nothing in this chapter shall

10

prohibit a hospital plan corporation or professional health

11

services plan corporation from establishing or offering provider

12

network-based programs under 40 Pa.C.S. Ch. 61 (relating to

13

hospital plan corporations) or 63 (relating to professional

14

health services plan corporations).

15

Section 513.  Penalties.

16

(a)  General rule.--Upon satisfactory evidence of the

17

violation of any section of this chapter by an insurer, HMO or

18

any other person, one or more of the following penalties may be

19

imposed at the commissioner's discretion:

20

(1)  Suspension or revocation of the license of the

21

offending insurer, HMO or other person.

22

(2)  Refusal, for a period not to exceed one year, to

23

issue a new license to the offending insurer, HMO or other

24

person.

25

(3)  A fine of not more than $5,000 for each violation of

26

this chapter.

27

(4)  A fine of not more than $10,000 for each willful

28

violation of this chapter.

29

(5)  A fine of not more than $10,000 for each violation

30

of section 506.

- 27 -

 


1

(6)  A fine of not more than $25,000 for each willful

2

violation of section 506.

3

(b)  Limitation.--Fines imposed against an individual insurer

4

under this chapter shall not exceed $500,000 in the aggregate

5

during a single calendar year.

6

Section 514.  Regulations.

7

The department may promulgate regulations as may be necessary

8

or appropriate to carry out this chapter.

9

Section 8.  Sections 14 and 15 of the act are amended to

10

read:

11

Section [14] 5101.  Repeals.

12

(a)  Absolute.--The following acts and parts of acts are

13

repealed:

14

Sections 616 and the last sentence of section 621.5 of the

15

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

16

Company Law of 1921.

17

Section 3104 of the act of December 2, 1992 (P.L.741,

18

No.113), known as the Children's Health Care Act.

19

(b)  Partial.--The following acts and parts of acts are

20

repealed to the extent specified:

21

Section 354 of the act of May 17, 1921 (P.L.682, No.284),

22

known as The Insurance Company Law of 1921, insofar as it

23

provides for the approval of accident and health forms.

24

Section 621.2(a)(1) of the act of May 17, 1921 (P.L.682,

25

No.284), known as The Insurance Company Law of 1921, insofar as

26

it defines the number of employees in a group insurance policy.

27

Section 630(f) of the act of May 17, 1921 (P.L.682, No. 284),

28

known as The Insurance Company Law of 1921, insofar as it

29

provides for the approval of rates and forms.

30

Section 10(c) of the act of December 29, 1972 (P.L.1701,

- 28 -

 


1

No.364), known as the Health Maintenance Organization Act,

2

insofar as it provides for the approval of rates and forms.

3

40 Pa.C.S. §§ 6124(a) and 6329(a), insofar as they provide

4

for the approval of rates and contracts.

5

Section [15] 5102.  Applicability.

6

This act shall apply as follows:

7

(1)  [Section 4] Sections 304 and 504 shall apply to

8

benefits forms filings for hospital plan corporations and

9

professional health services plan corporations made on or

10

after July 1, 1997.

11

(2)  [Section 12] Sections 312 and 512 shall apply to new

12

forms issued after July 1, 1997.

13

(3)  This act shall apply to all forms or rate filings

14

made and all provider contracts filed after [the effective

15

date of this act] February 17, 1997.

16

Section 9.  The act is amended by adding a section to read:

17

Section 5103.  Action by commissioner.

18

If Congress of the United States repeals section 1003 of the

19

Patient Protection and Affordable Care Act (Public Law 111-148,

20

42 U.S.C. § 300gg-94) or if the Supreme Court of the United

21

States invalidates section 1003 of the Patient Protection and

22

Affordable Care Act, the commissioner shall transmit notice of

23

that action to the Legislative Reference Bureau for publication

24

in the Pennsylvania Bulletin.

25

Section 10.  Section 16 of the act is amended to read:

26

Section [16] 5104.  Effective date.

27

This act shall take effect in 60 days.

28

Section 11.  This act shall take effect as follows:

29

(1)  The following provisions shall take effect

30

immediately:

- 29 -

 


1

(i)  The addition of section 5103 of the act.

2

(ii)  This section.

3

(2)  The addition of Chapter 5 of the act shall take

4

effect upon publication of the notice under section 5103 of

5

the act.

6

(3)  The remainder of this act shall take effect in 90

7

days.

- 30 -