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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