H2005B2837A04770 JLW:CMM 12/04/07 #90 A04770
AMENDMENTS TO HOUSE BILL NO. 2005
Sponsor: REPRESENTATIVE SCHRODER
Printer's No. 2837
1 Amend Title, page 1, lines 1 through 14, by striking out all
2 of said lines and inserting
3 Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
4 act relating to insurance; amending, revising, and
5 consolidating the law providing for the incorporation of
6 insurance companies, and the regulation, supervision, and
7 protection of home and foreign insurance companies, Lloyds
8 associations, reciprocal and inter-insurance exchanges, and
9 fire insurance rating bureaus, and the regulation and
10 supervision of insurance carried by such companies,
11 associations, and exchanges, including insurance carried by
12 the State Workmen's Insurance Fund; providing penalties; and
13 repealing existing laws," providing for small group health
14 benefits.
15 Amend Bill, page 1, lines 17 through 23; pages 2 through 22,
16 lines 1 through 30; page 23, lines 1 through 17, by striking out
17 all of said lines on said pages and inserting
18 Section 1. The act of May 17, 1921 (P.L.682, No.284), known
19 as The Insurance Company Law of 1921, is amended by adding an
20 article to read:
21 ARTICLE XXII
22 SMALL GROUP HEALTH BENEFITS
23 Section 2201. Scope of article.
24 This article relates to health benefit plans offered by an
25 insurer to employees of small employers.
26 Section 2202. Definitions.
27 The following words and phrases when used in this article
28 shall have the meanings given to them in this section unless the
29 context clearly indicates otherwise:
30 "Community rate." An insurer's rating methodology that is
31 based on the experience of all risks covered by that plan
32 without regard to health status, occupation or any other factor.
33 An insurer may adjust its community rate for age, geographic
34 region as approved by the Insurance Department and family
35 composition.
36 "Department." The Insurance Department of the Commonwealth.
37 "Health benefit plan." Any individual or group health
38 insurance policy, subscriber contract, certificate or plan which
1 provides health or sickness and accident coverage which is
2 offered by an insurer. The term shall not include any of the
3 following:
4 (1) Accident only policy.
5 (2) Limited benefit policy.
6 (3) Credit only policy.
7 (4) Long-term or disability income policy.
8 (5) Specified disease policy.
9 (6) Medicare supplement policy.
10 (7) Civilian Health and Medical Program of the Uniformed
11 Services (CHAMPUS) supplement.
12 (8) Fixed indemnity.
13 (9) Dental only.
14 (10) Vision only.
15 (11) Workers' compensation policy.
16 (12) Automobile medical payment policy under 75 Pa.C.S.
17 (relating to vehicles).
18 "Insurer." A company or health insurance entity licensed in
19 this Commonwealth to issue any individual or group health,
20 sickness or accident policy or subscriber contract or
21 certificate or plan that provides medical or health care
22 coverage by a health care facility or licensed health care
23 provider that is offered or governed under this act or any of
24 the following:
25 (1) The act of December 29, 1972 (P.L.1701, No.364),
26 known as the Health Maintenance Organization Act.
27 (2) The act of May 18, 1976 (P.L.123, No.54), known as
28 the Individual Accident and Sickness Insurance Minimum
29 Standards Act.
30 (3) 40 Pa.C.S. Ch. 61 (relating to hospital plan
31 corporations) or 63 (relating to professional health services
32 plan corporations).
33 "Medical loss ratio." The ratio of incurred medical claim
34 costs to earned premiums.
35 "Preexisting condition." A disease or physical condition for
36 which medical advice or treatment has been recommended or
37 received prior to the effective date of coverage.
38 "Small employer." In connection with a group health plan
39 with respect to a calendar year and a plan year, an employer who
40 employs an average of at least two but not more than 50
41 employees on business days during the preceding calendar year
42 and who employs at least two such employees on the first day of
43 the plan year. In the case of an employer which was not in
44 existence throughout the preceding calendar year, the
45 determination whether an employer is a small employer shall be
46 based on the average number of employees that it is reasonably
47 expected that the employer will employ on business days in the
48 current calendar year.
49 "Small group health benefit plan." A health benefit plan
50 offered to a small employer.
51 "Standard plan." The health benefit package established by
52 the Insurance Department in accordance with section 2203(d).
53 Section 2203. Health insurance rate increases and standard
54 plan.
55 (a) Applicability.--This section shall apply to all small
56 group health benefit plans and individual health benefit plans
57 issued, made effective, delivered or renewed in this
58 Commonwealth after the effective date of this section.
59 (b) Premium rates.--
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1 (1) All insurers shall establish community rates for
2 plans subject to this section and shall file the rates with
3 the department as required by law.
4 (2) An insurer shall apply all risk adjustment factors
5 under subsection (c)(1)(i), (ii) and (iii) consistently with
6 respect to all plans subject to this section.
7 (3) An insurer shall not charge a rate that is more than
8 33% above or below the community rate, as adjusted as
9 permitted under paragraph (1).
10 (4) An insurer shall base its rating methods and
11 practices on commonly accepted actuarial assumptions and
12 sound actuarial principles. Rates shall not be excessive,
13 inadequate or unfairly discriminatory.
14 (c) Additional rate review.--
15 (1) In conjunction with and in addition to the standards
16 set forth under the act of December 18, 1996 (P.L.1066,
17 No.159), known as the Accident and Health Filing Reform Act,
18 and all other applicable statutory and regulatory
19 requirements, the department may disapprove a rate filing
20 based upon the following:
21 (i) The rate is not actuarially sound.
22 (ii) The increase is requested because the insurer
23 has not operated efficiently or has factored in
24 experience that conflicts with recognized best practices
25 in the health care industry.
26 (iii) The increase is requested because the insurer
27 has incurred costs of additional care due to avoidable
28 hospital-acquired infections and avoidable
29 hospitalizations due to ineffective chronic care
30 management, after data for the incidents has become
31 available to and can be analyzed by the insurer and the
32 department.
33 (iv) For small group health plans, the medical loss
34 ratio is less than 85%.
35 (2) In the event a small group health benefit plan has a
36 medical loss ratio of less than 85%, the department may, in
37 addition to any other remedies available under law, require
38 the insurer to refund the difference to policyholders on a
39 pro rata basis as soon as practicable following receipt of
40 notice from the department of such requirement but in no
41 event later than 120 days following receipt of the notice.
42 The department shall establish procedures for the
43 circumstances under which the refunds will be required.
44 (3) The filing and review procedures set forth under the
45 Accident and Health Filing Reform Act shall apply to any
46 filing conducted under this section.
47 (d) Standard plan required.--
48 (1) An insurer shall not offer a plan that does not meet
49 the minimum benefits specified in the standard plan developed
50 by the department in accordance with the following criteria:
51 (i) Plans offered by an insurer on an expense-
52 incurred basis shall be actuarially equivalent to at
53 least the minimum benefits required to be offered under
54 the standard plan.
55 (ii) The standard plan shall at least include all of
56 the benefits of the basic benefit package.
57 (iii) The standard plan shall not contain
58 preexisting condition exclusion.
59 (2) The standard plan may include options for deductible
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1 and cost-sharing provisions if the department determines that
2 the provisions meet all of the following:
3 (i) Dissuade consumers from seeking unnecessary
4 services.
5 (ii) Balance the effect of cost-sharing in reducing
6 premiums and in effecting utilization of appropriate
7 services.
8 (iii) Limit the total cost-sharing that may be
9 incurred by an individual in a year.
10 (3) Each individual in this Commonwealth who applies to
11 an insurer for enrollment in a plan offered by the insurer
12 shall be accepted as an enrollee.
13 (4) The department shall forward a notice of the
14 elements of the standard plan to the Legislative Reference
15 Bureau for publication in the Pennsylvania Bulletin. Insurers
16 subject to the provisions of this section shall be required
17 to begin offering the standard plan as soon as practicable
18 following the publication but in no event later than 120 days
19 following the publication.
20 (e) Optional additional coverage.--
21 (1) An insurer may offer benefits in addition to those
22 in the standard plan if the additional benefits meet all of
23 the following:
24 (i) Are offered and priced separately from benefits
25 specified in the standard plan.
26 (ii) Do not have the effect of duplicating any of
27 the benefits in the standard plan.
28 (iii) Are clearly specified as enhancements to the
29 standard plan.
30 (2) Each benefit offered in addition to the standard
31 plan that increases health care choices or lowers the cost-
32 sharing arrangement is subject to all of the provisions of
33 this section applicable to the standard plan.
34 (3) The department may prohibit an insurer from offering
35 an additional benefit under this section if the department
36 finds that the additional benefit will be sold in conjunction
37 with the standard plan of the insurer in a manner designed to
38 promote risk selection or underwriting practices otherwise
39 prohibited by this section or other statute.
40 (f) Regulations.--The department may promulgate regulations
41 necessary for the implementation and administration of this
42 article.
43 Section 2. This act shall take effect in 120 days.
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