PRINTER'S NO. 4289
No. 3018 Session of 1996
INTRODUCED BY MANDERINO, GEORGE, YOUNGBLOOD, COLAIZZO, ROBINSON,
BEBKO-JONES, LAUGHLIN, JAROLIN, HALUSKA, VAN HORNE,
SCRIMENTI, THOMAS, DeLUCA, WALKO, MELIO, JOSEPHS, PISTELLA,
SHANER, CAPPABIANCA, MYERS, TRELLO, WASHINGTON, STEELMAN,
KUKOVICH, STURLA AND STETLER, NOVEMBER 21, 1996
REFERRED TO COMMITTEE ON INSURANCE, NOVEMBER 21, 1996
AN ACT
1 Providing for health care insurance for individuals, for group
2 insurance, for managed care, for premium rates and amounts,
3 for required and optional coverages, for group policies for
4 employees and for the rights and duties of health care
5 providers; establishing the Pennsylvania Individual Health
6 Coverage Program and the Pennsylvania Small Employer Health
7 Benefit Program and providing for the powers and duties of
8 their respective governing boards; providing for additional
9 powers of the Insurance Commissioner; and providing for civil
10 penalties.
11 TABLE OF CONTENTS
12 Chapter 1. General Provisions
13 Section 101. Short title.
14 Chapter 3. Individual Health Benefit Plans
15 Section 301. Definitions.
16 Section 302. Deadlines for filing certain expense claims.
17 Section 303. Application of chapter.
18 Section 304. Individual health benefit plans.
19 Section 305. Coverage for child.
20 Section 306. Medicaid.
1 Section 307. Medicaid eligibility.
2 Section 308. Quality assurance provisions applicable to managed
3 care health benefit plans.
4 Section 309. Guarantee of coverage on community-rated basis.
5 Section 310. Policy and contract forms and benefit levels.
6 Section 311. Grievance procedure and due process requirements.
7 Section 312. Exceptions to required coverage.
8 Section 313. Rates of payment.
9 Section 314. Pennsylvania Individual Health Coverage
10 Program.
11 Section 315. Powers and authority of program and board.
12 Section 316. Equitable sharing of program losses.
13 Section 317. Statement of net paid losses.
14 Section 318. Determination of carriers with disproportionate
15 share of substandard risks.
16 Section 319. Sale of plan through licensed insurance producer.
17 Section 320. Health uncompensated charity care study.
18 Section 321. Notice of intended action by board.
19 Section 322. Temporary plan of operation.
20 Section 323. Carriers prohibited from requiring purchase of
21 other insurance in conjunction with purchase of
22 health benefit plan.
23 Section 324. Standard claim form.
24 Section 325. Renewal of policies and contracts after conversion
25 to domestic mutual insurer.
26 Chapter 5. Small Employer Provisions
27 Section 501. Definitions.
28 Section 502. Application of chapter.
29 Section 503. Coverage to be provided for covered person's
30 child.
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1 Section 504. Imposition of certain additional requirements
2 prohibited.
3 Section 505. Health benefit plans offered to small employers.
4 Section 506. Hospital confinement or other supplemental limited
5 benefit insurance plan.
6 Section 507. Rating methodology and calculation of loss ratios.
7 Section 508. Coinsurance and deductibles.
8 Section 509. Coordination of benefits.
9 Section 510. Medicaid.
10 Section 511. Preexisting conditions.
11 Section 512. Renewals.
12 Section 513. Notification requirement for ineligible employers.
13 Section 514. Standards of carrier for acceptance of small
14 group.
15 Section 515. Community rating and other requirements.
16 Section 516. Limitations on coverage.
17 Section 517. Continued coverage for terminated employees.
18 Section 518. Small employer health benefit program.
19 Section 519. Board of directors.
20 Section 520. Immunity, defense and indemnification.
21 Section 521. Voluntary risk pooling.
22 Section 522. Plan of operation.
23 Section 523. Provisions of plan.
24 Section 524. Authority of board.
25 Section 525. Establishment by board of health benefit plans.
26 Section 526. Civil penalty.
27 Section 527. Prohibition on charge of civil penalty to
28 policyholders or public.
29 Section 528. Standard claim form.
30 Section 529. Group hospital or medical coverage of residents
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1 obtained through out-of-State trust.
2 Section 530. Multiple employer arrangements.
3 Section 531. Notice to commissioner.
4 Section 532. Limitations on certain purchases.
5 Section 533. Intended actions by board.
6 Section 534. Other insurance coverage not required.
7 Section 535. Selective contracting.
8 Chapter 11. Miscellaneous Provisions
9 Section 1101. Repeals.
10 Section 1102. Effective date.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 CHAPTER 1
14 GENERAL PROVISIONS
15 Section 101. Short title.
16 This act shall be known and may be cited as the Health
17 Insurance Reform Act.
18 CHAPTER 3
19 INDIVIDUAL HEALTH BENEFIT PLANS
20 Section 301. Definitions.
21 The following words and phrases when used in this chapter
22 shall have the meanings given to them in this section unless the
23 context clearly indicates otherwise:
24 "Board." The board of directors of the Pennsylvania
25 Individual Health Coverage Program.
26 "Carrier." An insurance company, health service corporation
27 or health maintenance organization authorized to issue health
28 benefit plans in this Commonwealth. For purposes of this act,
29 carriers that are affiliated companies shall be treated as one
30 carrier.
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1 "Commissioner." The Insurance Commissioner of the
2 Commonwealth.
3 "Community rating." A rating system in which the premium for
4 all persons covered by a contract is the same, based on the
5 experience of all persons covered by that contract, without
6 regard to age, sex, health status, occupation and geographical
7 location.
8 "Department." The Insurance Department of the Commonwealth.
9 "Dependent." The spouse or child of an eligible person,
10 subject to applicable terms of the individual health benefits
11 plan.
12 "Eligible person." A person who is a resident of this
13 Commonwealth who is not eligible to be insured under a group
14 health insurance policy.
15 "Financially impaired." A carrier which, after the effective
16 date of this act, is not insolvent, but is deemed by the
17 Insurance Commissioner to be potentially unable to fulfill its
18 contractual obligations or a carrier which is placed under an
19 order of rehabilitation or conservation by a court of competent
20 jurisdiction.
21 "Group health benefit plan." A health benefit plan for
22 groups of two or more persons.
23 "Health benefit plan." A hospital and medical expense
24 insurance policy; health service corporation contract; or health
25 maintenance organization subscriber contract delivered or issued
26 for delivery in this Commonwealth. The term does not include the
27 following plans, policies or contracts: accident only, credit,
28 disability, long-term care, Medicare supplement coverage,
29 CHAMPUS supplement coverage, coverage for Medicare services
30 pursuant to a contract with the Federal Government, coverage for
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1 Medicaid services pursuant to a contract with the State,
2 coverage arising out of a workers' compensation or similar law,
3 automobile medical payment insurance or hospital confinement
4 indemnity coverage.
5 "HMO." Health maintenance organization.
6 "HMO Act." The act of December 29, 1972 (P.L.1701, No.364),
7 known as the Health Maintenance Organization Act.
8 "Individual health benefit plan." A health benefit plan for
9 eligible persons and their dependents, as evidenced by a
10 certificate issued to an eligible person stating coverage under
11 a policy or contract issued to a trust or association,
12 regardless of the situs of delivery of the policy or contract,
13 if the eligible person pays the premium and is not being covered
14 under the policy or contract pursuant to continuation of
15 benefits provisions applicable under Federal or State law. The
16 term does not include a certificate issued under a policy or
17 contract issued to a trust or to the trustees of a fund, which
18 trust or fund is established or adopted by two or more
19 employers, by one or more labor unions or similar employee
20 organizations or by one or more employers and one or more labor
21 unions or similar employee organizations to insure employees of
22 the employers or members of the unions or organizations.
23 "Medicaid." The Medicaid program established under Title
24 XVIII of the Social Security Act (Public Law 74-271, 42 U.S.C. §
25 1395 et seq.).
26 "Medicare." The Medicare program established under Title XIX
27 of the Social Security Act (Public Law 74-271, 42 U.S.C. § 1396
28 et seq.).
29 "Member." A carrier that is a member of the Pennsylvania
30 Individual Health Coverage Program pursuant to this act.
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1 "Modified community rating." A rating system in which the
2 premium for all persons covered by a contract is formulated
3 based on the experience of all persons covered by that contract,
4 without regard to age, sex, occupation and geographical
5 location, but which may differ by health status. The term shall
6 apply to contracts and policies issued prior to the effective
7 date of this act which are subject to section 303(e).
8 "Net earned premium." The premiums earned in this
9 Commonwealth on health benefit plans, less return premiums
10 thereon and dividends paid or credited to policy or
11 contractholders on the health benefit plan business. The term
12 includes the aggregate premiums earned on the carrier's insured
13 group and individual business and health maintenance
14 organization business, including premiums from any Medicare,
15 Medicaid or HealthStart Plus contracts with the Federal or State
16 Government, but shall not include any excess or stop-loss
17 coverage issued by a carrier in connection with any self-insured
18 health benefit plan or Medicare supplement policies or
19 contracts.
20 "Open enrollment." The offering of an individual health
21 benefit plan to any eligible person on a guaranteed issue basis,
22 pursuant to procedures established by the board.
23 "Plan of operation." The plan of operation of the
24 Pennsylvania Individual Health Coverage Program adopted by the
25 board pursuant to this act.
26 "Preexisting condition." A condition that, during a
27 specified period of not more than six months immediately
28 preceding the effective date of coverage, had manifested itself
29 in such a manner as would cause an ordinarily prudent person to
30 seek medical advice, diagnosis, care or treatment, or for which
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1 medical advice, diagnosis, care or treatment was recommended or
2 received as to that condition or as to a pregnancy existing on
3 the effective date of coverage.
4 "Program." The Pennsylvania Individual Health Coverage
5 Program established under this chapter.
6 "QAP." Quality assurance provisions.
7 Section 302. Deadlines for filing certain expense claims.
8 (a) Filing.--Every carrier issuing health benefit plans in
9 this Commonwealth shall file its paid hospital expense claims
10 paid by January 30, 1997, and by January 30, 1998, respectively,
11 in accordance with the following:
12 (1) A carrier issuing individual health benefit plans
13 shall file with the board created under this chapter and with
14 the commissioner the aggregate hospital expense claims paid
15 for the calendar year 1996 which are attributable to its
16 policies or contracts for individual health benefit plans.
17 (2) A carrier issuing small employer or small group
18 health benefit plans shall file with the board created under
19 Chapter 5 and with the commissioner the aggregate hospital
20 expense claims paid for the calendar year 1996 which are
21 attributable to its policies or contracts for small employer
22 or small group health benefit plans.
23 (3) A carrier issuing group health benefit plans other
24 than small employer or small group health benefit plans shall
25 file with the commissioner the aggregate hospital expense
26 claims paid for the calendar year 1996 which are attributable
27 to its policies or contracts for group health benefit plans.
28 (b) Premiums.--
29 (1) In formulating policy or contract rates for calendar
30 year 1997, a carrier shall take into account any
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1 modifications in exposure for hospital expenses which may be
2 brought about by the changes in billing procedures
3 established under this act and shall modify its premiums
4 accordingly as is appropriate to reflect those modifications.
5 (2) No later than March 1, 1998, the board created under
6 this chapter, the board created under Chapter 5 and the
7 commissioner shall determine if any premium modifications
8 made in accordance with this subsection accurately reflect
9 any differential in claims paid for hospital expenses between
10 calendar years 1996 and 1997 which are attributable to the
11 changes in hospital billing procedures under this act, as
12 opposed to any differential in expenses which may be caused
13 by changes in utilization, cost and morbidity normally used
14 in trending. To the extent that further modifications may
15 need to be made in the premium level as a result of the
16 changes in loss experience reflected by any extraordinary
17 differential between the claims paid in 1996 and 1997, the
18 board and the commissioner shall require that rates be
19 modified accordingly.
20 (c) Definitions.--As used in this section, the following
21 words and phrases shall have the meanings given to them in this
22 subsection:
23 "Carrier." An insurance company, health service corporation
24 or health maintenance organization authorized to issue health
25 benefit plans in this Commonwealth.
26 "Health benefit plans." A hospital and medical expense
27 insurance policy, health service corporation contract or health
28 maintenance organization subscriber contract delivered or issued
29 for delivery in this Commonwealth.
30 "Hospital expenses." Any charges billed by and payable
19960H3018B4289 - 9 -
1 directly by a carrier to a hospital.
2 Section 303. Application of chapter.
3 (a) General rule.--An individual health benefit plan issued
4 on or after the effective date of this chapter shall be subject
5 to the provisions of this chapter.
6 (b) Application to or by certain provisions.--
7 (1) An individual health benefit plan issued on an open
8 enrollment, modified community-rated basis or community-rated
9 basis prior to the effective date of this chapter shall not
10 be subject to sections 304 through 313, inclusive, of this
11 act, unless otherwise specified in those sections.
12 (2) An individual health benefit plan issued other than
13 on an open enrollment basis prior to the effective date of
14 this chapter shall not be subject to the provisions of this
15 chapter, except that the plan shall be liable for assessments
16 made under section 316.
17 (3) A group conversion contract or policy issued prior
18 to the effective date of this chapter that is not issued on a
19 modified community-rated basis or community-rated basis shall
20 not be subject to the provisions of this chapter, except that
21 the contract or policy shall be liable for assessments made
22 pursuant to section 316.
23 (c) Group plans.--After the effective date of this chapter,
24 an individual who is eligible to participate in a group health
25 benefit plan that provides coverage for hospital or medical
26 expenses shall not be covered by an individual health benefit
27 plan which provides benefits for hospital and medical expenses
28 that are the same or similar to coverage provided in the group
29 health benefit plan, except that an individual who is eligible
30 to participate in a group health benefit plan but is currently
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1 covered by an individual health benefit plan may continue to be
2 covered by that plan until the first anniversary date of the
3 group plan occurring on or after January 1, 1997.
4 (d) Civil penalty.--Except as otherwise provided in
5 subsection (c), after the effective date of this chapter, a
6 person who is covered by an individual health benefit plan who
7 is a participant in or is eligible to participate in a group
8 health benefit plan that provides the same or similar coverages
9 as the individual health benefit plan, and a person, including
10 an employer or insurance producer, who causes another person to
11 be covered by an individual health benefit plan which person is
12 a participant in or who is eligible to participate in a group
13 health benefit plan that provides the same or similar coverages
14 as the individual health benefit plan shall be subject to a
15 civil penalty by the commissioner in an amount not less than
16 twice the annual premium paid for the individual health benefit
17 plan, together with any other penalties permitted by law.
18 (e) Premium rates.--Every individual health benefit plan
19 issued prior to the effective date of this chapter shall be
20 rated as follows:
21 (1) No later than 180 days after the effective date of
22 this chapter, the premium rate charged by a carrier to the
23 highest rated individual who purchased an individual health
24 benefit plan prior to the effective date of this chapter
25 shall not be greater than 150% of the premium rate charged to
26 the lowest rated individual purchasing that same or a similar
27 health benefit plan.
28 (2) During the period July 1, 1998, to June 30, 1999,
29 the premium rate charged by a carrier to the highest rated
30 individual who purchased an individual health benefit plan
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1 prior to the effective date of this chapter shall not be
2 greater than 125% of the premium rate charged to the lowest
3 rated individual purchasing that same or a similar health
4 benefit plan.
5 (3) On and after July 1, 1999, every individual health
6 benefit plan which was issued before the effective date of
7 this chapter shall be community rated upon the date of its
8 renewal.
9 (4) A carrier that issues an individual health benefit
10 plan with modified community rating subject to the provisions
11 of this subsection shall make an informational filing with
12 the board whenever it adjusts or modifies its rates.
13 Section 304. Individual health benefit plans.
14 (a) Offering.--No later than 180 days after the effective
15 date of this chapter, a carrier shall, as a condition of issuing
16 health benefit plans in this Commonwealth, offer individual
17 health benefit plans. The plans shall be offered on an open
18 enrollment, community-rated basis, pursuant to this chapter,
19 except that a carrier shall be deemed to have satisfied its
20 obligation to provide the individual health benefit plans by
21 paying an assessment or receiving an exemption pursuant to
22 section 316.
23 (b) Plans.--
24 (1) A carrier shall offer to an eligible person a choice
25 of five individual health benefit plans, any of which may
26 contain provisions for managed care. One plan shall be a
27 basic health benefit plan, one plan shall be a managed care
28 plan and three plans shall include enhanced benefits of
29 proportionally increasing actuarial value. A carrier may
30 elect to convert any individual contract or policy forms in
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1 force on the effective date of this chapter to any of the
2 five benefit plans, except that the carrier may not convert
3 more than 25% of existing contracts or policies each year,
4 and the replacement plan shall be of no less actuarial value
5 than the policy or contract being replaced.
6 (2) At any time after three years after the effective
7 date of this chapter, the board, by regulation, may reduce
8 the number of plans required to be offered by a carrier.
9 (3) A health maintenance organization which is a
10 qualified health maintenance organization under the Health
11 Maintenance Organization Act of 1973 (Public Law 93-222, 87
12 Stat. 914) shall be permitted to offer a basic health benefit
13 plan in accordance with that law in lieu of the five plans
14 required by this subsection.
15 (c) Benefits, coverages and other matters.--
16 (1) A basic health benefit plan shall provide, at a
17 minimum, the following:
18 (i) Family planning and reproductive health
19 services.
20 (ii) Any health benefit currently mandated under
21 Federal or State laws, including care for newborn
22 children, childhood immunizations, mammography screening,
23 chemotherapy, alcohol and substance abuse treatment, and
24 continuing care for persons with physical or mental
25 disabilities.
26 (iii) Comprehensive maternal and child health care,
27 including prenatal, delivery and postpartun care, and
28 well-baby and well-child visits, routine and preventive
29 dental services for children and routine vision and
30 hearing services for children.
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1 (iv) Home health care provider services.
2 (v) Inpatient, outpatient and emergency hospital
3 care.
4 (vi) Preventive examinations, screenings and
5 diagnostic services, including routine periodic
6 physicals, cancer screening and pap smears.
7 (vii) Laboratory, radiological and testing services.
8 (viii) Home health services in cases where it is
9 determined that the coverage of such services is cost
10 effective.
11 (ix) Ambulatory and institutional services.
12 (x) Drugs or biologicals that are provided as part
13 of any inpatient hospital services.
14 (2) A carrier may, with the approval of the board,
15 modify the coverage provided for under paragraph (1) or
16 provide alternative benefits or services from those required
17 by this subsection if they are within the intent of this act.
18 (3) A contract or policy for a basic health benefit plan
19 provided for in this section may contain or provide for
20 coinsurance or deductibles, or both, not to total more than
21 $250 during any benefit year, except that no deductible shall
22 be payable for uninsured persons whose incomes are less than
23 200% of the Federal poverty level. Any person previously
24 covered under a group or individual plan may apply
25 deductibles paid under the previous plan to annual limits
26 under this section.
27 (4) Notwithstanding paragraph (3) or any other law to
28 the contrary, a carrier may provide for increased deductibles
29 or coinsurance for a basic health benefit plan if approved by
30 the board.
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1 (d) Group conversion contract.--Every group conversion
2 contract or policy issued after the effective date of this
3 chapter shall be issued under this section, except that this
4 requirement shall not apply to any group conversion contract or
5 policy in which a portion of the premium is chargeable to or
6 subsidized by the group policy from which the conversion is
7 made.
8 (e) Phase in of plans.--If all five of the individual health
9 benefit plans are not established by the board by the effective
10 date of Chapter 5, a carrier may phase-in the offering of the
11 five health benefit plans by offering each health benefit plan
12 as it is established by the board; however, once the board
13 establishes all five plans, the carrier shall be required to
14 offer the five plans described in this chapter.
15 Section 305. Coverage for child.
16 (a) General rule.--A policy or contract which provides
17 hospital or medical expense benefits under which dependent
18 coverage is available shall not deny coverage for a policy or
19 contractholder's child for any one or more of the following:
20 (1) The child was born out of wedlock.
21 (2) The child is not claimed as a dependent on the
22 policy or contractholder's Federal tax return.
23 (3) The child does not reside with the policy or
24 contract holder or in the carrier's service area, provided
25 that, in the case of a managed care plan, the child complies
26 with the terms and conditions of the policy or contract with
27 respect to the use of specified providers.
28 (b) Noncustodial parent.--If a child has coverage through a
29 policy or contract of a noncustodial parent, the carrier shall:
30 (1) provide such information to the custodial parent as
19960H3018B4289 - 15 -
1 may be necessary for the child to obtain benefits through the
2 child's noncustodial parent's coverage;
3 (2) permit the custodial parent or the health care
4 provider with the authorization of the custodial parent to
5 submit claims for covered services without the approval of
6 the noncustodial parent; and
7 (3) make payments on claims submitted in accordance with
8 paragraph (2) directly to the custodial parent, the health
9 care provider or the Department of Public Welfare.
10 (c) Court-ordered coverage.--When a parent who is the policy
11 or contractholder is eligible for dependent coverage and is
12 required by a court or administrative order to provide health
13 insurance coverage for his child, the carrier shall do all of
14 the following:
15 (1) Permit the parent to enroll his child as a
16 dependent, without regard to any enrollment season
17 restrictions.
18 (2) Permit the child's other parent or the Department of
19 Public Welfare to enroll the child under the policy or
20 contract if the parent who is the policy or contractholder
21 fails to enroll the child.
22 (3) Not terminate coverage of the child unless the
23 parent who is the policy or contractholder provides the
24 carrier with satisfactory written evidence that the court or
25 administrative order is no longer in effect or the child is
26 or will be enrolled in a comparable health benefit plan whose
27 coverage will be effective on the date of the termination of
28 coverage.
29 Section 306. Medicaid.
30 A carrier shall not impose requirements on the Department of
19960H3018B4289 - 16 -
1 Public Welfare which has been assigned the rights of an
2 individual who is eligible for medical assistance under Medicaid
3 that are different from requirements applicable to an agent or
4 assignee of any other policy or contractholder.
5 Section 307. Medicaid eligibility.
6 A carrier shall not consider a person's eligibility for
7 medical assistance under the act of June 13, 1967 (P.L.31,
8 No.21), known as the Public Welfare Code, or the equivalent
9 statute in another state, when determining the person's
10 eligibility for enrollment in or the provision of benefits under
11 an individual health benefit plan delivered, issued or executed
12 in this Commonwealth.
13 Section 308. Quality assurance provisions applicable to managed
14 care health benefit plans.
15 (a) General rule.--The provisions set forth in this section
16 shall apply to managed care health benefit plans issued pursuant
17 to section 304.
18 (b) Clinical quality assurance.--All managed care
19 organizations shall develop and adhere to a written plan of
20 clinical quality assurance for monitoring, evaluating and
21 assuring the delivery of quality health care by all
22 practitioners providing services on its behalf.
23 (c) Approval by Department of Health.--The QAP shall be
24 submitted to and approved by the Department of Health prior to
25 the organization's enrolling members or for existing
26 organizations, within six months of the effective date of this
27 section, and shall be reviewed and approved by the Department of
28 Health at least every 12 months thereafter.
29 (d) Components of program.--The QAP shall include those
30 components which the Department of Health may by regulation
19960H3018B4289 - 17 -
1 require and the following:
2 (1) An identifiable structure for performing quality
3 assurance functions within the organization, including
4 required regular meetings, contemporaneous records of such
5 meetings and direct accountability of the quality assurance
6 entity or entities to the governing body of the organization.
7 (2) A detailed set of quality assurance objectives which
8 include a timetable for implementation and accomplishment.
9 (3) A system of continuous review by physicians and
10 other health professionals with feedback to participating
11 health professionals and health maintenance organization
12 staff regarding performance and patient results.
13 (4) A methodology for assuring that the range of review
14 includes all demographic groups, care settings and types of
15 services.
16 (5) A system for evaluating health outcomes, consistent
17 with current technology.
18 (6) Written guidelines for quality of care studies and
19 related monitoring activities which include specification of
20 the clinical or health service delivery areas to be monitored
21 and which reflect the population served by the managed care
22 organization in terms of age groups, disease categories and
23 special risk status.
24 (7) For the medical assistance population, a system
25 which monitors and evaluates, at a minimum, care and services
26 in certain areas of concern selected by the Department of
27 Public Welfare. The Secretary of Public Welfare is required
28 to establish standards by which managed care plans are found
29 to have improved the health status of medical assistance
30 clients enrolled in the plan with an emphasis to be placed on
19960H3018B4289 - 18 -
1 the health needs of women and children.
2 (8) A methodology for identifying quality indicators
3 relating to specific clinical or health service delivery
4 areas which are objective, measurable and based on current
5 knowledge and clinical experience.
6 (9) Health service delivery standards or practice
7 guidelines, consistent with standards and guidelines
8 developed by commonly accepted sources in the medical
9 community, which are aimed not only at cure, but also at
10 maintaining function and improving quality of life and which
11 are:
12 (i) updated continuously pursuant to a mechanism
13 specified in the plan;
14 (ii) disseminated to providers as they are adopted;
15 (iii) developed for the full spectrum of populations
16 enrolled in the plan;
17 (iv) based on reasonable scientific knowledge;
18 (v) focused on the process and outcomes of health
19 care delivery, as well as access to such care; and
20 (vi) applied to the organization's providers,
21 whether they are organized in groups, as individuals or
22 in combinations.
23 (10) A methodology for the evaluation and monitoring by
24 appropriate clinicians, including multidisciplinary teams
25 where indicated, of individual cases where there are
26 questions about care.
27 (11) Provision for periodic medical audits at least once
28 every 24 months by independent medical professionals approved
29 by the Department of Health which include:
30 (i) medical record reviews to measure the level of
19960H3018B4289 - 19 -
1 conformity to the health services delivery standards or
2 practice guidelines;
3 (ii) a search for trigger diagnoses which indicate a
4 breakdown in delivery of care;
5 (iii) surveys of a sampling of enrollees to assure
6 the accuracy of medical records; and
7 (iv) certification of the effectiveness of the QAP.
8 (12) A grievance system.
9 (13) Procedures for taking remedial action, including
10 suspension or termination of physicians and other
11 professionals for inappropriate service or under service.
12 (14) Provision for a year-end written report which shall
13 be delivered promptly to the governing body and the
14 Department of Health, and which shall be available to the
15 public at no charge, which:
16 (i) addresses demonstrated improvements in quality
17 and areas of deficiency;
18 (ii) makes recommendations for corrective action;
19 and
20 (iii) assesses the effectiveness of all past
21 corrective actions.
22 (15) A system for protecting and promoting members'
23 rights and for communicating members' rights to both
24 providers and members.
25 (16) A system for assuring compliance with medical
26 records standards.
27 (17) A system of credentialing and recredentialing.
28 (18) A system for sharing a copy of any standard for
29 coverage decisions not explicitly covered in the subscriber
30 agreement with participating providers and the Department of
19960H3018B4289 - 20 -
1 Health, and for making members aware of their right to a
2 copy.
3 (19) A system to insure that any initial decision
4 regarding coverage is made by a person with expertise and
5 experience in the field relevant to coverage sought or on the
6 advice of a person with such expertise and experience. The
7 system must have protections to assure that no coverage is
8 denied prior to review by a health professional with equal or
9 greater qualifications in the relevant field.
10 (20) The organization's anticipated direct services
11 ratio.
12 (21) The methodology to insure a provider network which
13 demonstrates the full continuum of care, geographic
14 availability, cultural sensitivity and planning for special
15 needs populations.
16 (22) Evaluations by the independent nonprofit consumer
17 and family satisfaction teams.
18 (23) A system to do discharge planning for enrollees
19 about to be discharged from State mental hospitals or
20 correctional facilities.
21 (e) Regulations.--The QAP shall specifically address any
22 area which the Department of Health shall identify as being of
23 concern, in a manner acceptable to the Department of Health, and
24 the Department of Health shall promulgate such regulations as
25 are necessary to carry out this section.
26 Section 309. Guarantee of coverage on community-rated basis.
27 An individual health benefit plan issued pursuant to section
28 304 is subject to the following provisions:
29 (1) The health benefit plan shall guarantee coverage for
30 an eligible person and his dependents on a community-rated
19960H3018B4289 - 21 -
1 basis.
2 (2) A health benefit plan shall be renewable with
3 respect to an eligible person and his dependents at the
4 option of the policy or contractholder except under the
5 following circumstances:
6 (i) nonpayment of the required premiums by the
7 policy or contractholder;
8 (ii) fraud or misrepresentation by the policy or
9 contractholder;
10 (iii) termination of eligibility of the policy or
11 contractholder; or
12 (iv) cancellation or amendment by the board of the
13 specific individual health benefit plan.
14 Section 310. Policy and contract forms and benefit levels.
15 (a) Establishment by board.--The board shall establish the
16 policy and contract forms and benefit levels to be made
17 available by all carriers for the policies required to be issued
18 pursuant to section 304. The board shall provide the
19 commissioner with the informational filing of the policy and
20 contract forms and benefit levels it establishes.
21 (b) Managed care.--The individual health benefit plans
22 established by the board shall include cost containment measures
23 such as, but not limited to, utilization review of health care
24 services to prevent unfair denials of treatment, including
25 review of medical necessity of hospital and physician services
26 and case management benefit alternatives.
27 (c) Preexisting conditions.--An individual health benefit
28 plan offered pursuant to section 304 shall contain a limitation
29 of no more than 12 months on coverage for preexisting
30 conditions, except that the limitation shall not apply to an
19960H3018B4289 - 22 -
1 individual who has, under a prior group or individual health
2 benefit plan or Medicaid, with no intervening lapse in coverage
3 of more than 30 days, been treated or diagnosed by a physician
4 for a condition under that plan or satisfied a 12-month
5 preexisting condition limitation.
6 (d) Riders.--In addition to the five standard individual
7 health benefit plans provided for in section 304, the board may
8 develop up to five rider packages. Premium rates for the rider
9 packages shall be determined under section 313.
10 (e) Compliance.--After the board's establishment of the
11 individual health benefit plans required pursuant to section
12 304, and notwithstanding any law to the contrary, a carrier
13 shall file the policy or contract forms with the board and
14 certify to the board that the health benefit plans to be used by
15 the carrier are in substantial compliance with the provisions in
16 the corresponding board-approved plans. The certification shall
17 be signed by the chief executive officer of the carrier. Upon
18 receipt by the board of the certification, the certified plans
19 may be used until the board, after notice and hearing,
20 disapproves their continued use.
21 (f) Required coverages.--
22 (1) Health benefit plans shall contain benefits for
23 expenses incurred for screening by blood lead measurement for
24 lead poisoning of children, including medical evaluation and
25 any necessary medical follow-up and treatment for lead-
26 poisoned children.
27 (2) The benefits shall be provided to the same extent as
28 for any other medical condition under the health benefit
29 plan, except that no deductible shall be applied for
30 screenings, follow-up and treatment for potentially lead-
19960H3018B4289 - 23 -
1 poisoned children or for childhood immunizations. This
2 subsection shall apply to all individual health benefit plans
3 in which the carrier has reserved the right to change the
4 premium.
5 Section 311. Grievance procedure and due process requirements.
6 (a) General rule.--Health benefit plans shall maintain an
7 internal grievance procedure for the prompt and effective
8 resolution of policyholder grievances pertaining to care and/or
9 services, without charge to policyholders.
10 (b) Documentation required.--A health plan shall notify in
11 writing any subscriber/enrollee or provider requesting the types
12 of information and documentation the plan requires in order to
13 make a decision on coverage of any item, equipment or service
14 which requires prior approval. This shall be sent within three
15 business days of the date of request.
16 (c) Initial review of requests for coverage.--A health plan
17 shall keep a record of the date a request for coverage of an
18 item, equipment or service requiring prior approval is received.
19 The plan shall determine within seven business days whether the
20 information supplied is sufficient to make a decision. If the
21 plan deems the information supplied to be insufficient, it shall
22 notify the party submitting the request and the
23 subscriber/enrollee within that seven day period and shall
24 specify what additional information is required.
25 (d) Decision and notice on complete requests.--Upon
26 submission of a nonurgent request for coverage of an item,
27 equipment or service that contains the documentation requested
28 by the plan, the plan shall make its decision and notify in
29 writing the subscriber/enrollee, the prescriber and the
30 provider, if indicated on the request, within 21 calendar days
19960H3018B4289 - 24 -
1 from the date the request with sufficient documentation is
2 received. Where a complete request is received with a written
3 statement signed by a physician attesting that the requested
4 item, equipment or service is needed on an urgent basis, the
5 decision shall be made within seven calendar days from the date
6 the request with sufficient documentation is received.
7 (e) Approval notice.--Where a request is approved, the
8 written notice specified in subsection (d), shall set forth all
9 of the following:
10 (1) the item, equipment or service approved;
11 (2) any limitations on the frequency, duration and scope
12 of the approval;
13 (3) any restrictions on the practitioner, agency or
14 supplier who may provide the approved item, equipment or
15 service; and
16 (4) any restrictions on the site or setting where the
17 item, equipment or service may be provided.
18 Any item, equipment or service which is approved in a lesser
19 frequency, duration or scope than requested or is approved in a
20 different site or setting or for a different provider than
21 requested, shall be deemed a partial denial subject to the
22 requirements set out in subsections (f) through (p).
23 (f) Denial notice.--Where a request is denied or partially
24 denied, the written notice shall specify the reasons for the
25 denial, the right to appeal, how an appeal is filed, the time
26 limits in which to file an appeal and the name and telephone
27 number of a responsible person working for the plan to contact
28 for more information.
29 (g) Failure to make timely decisions.--Where a health plan
30 fails to make a decision on a request with sufficient
19960H3018B4289 - 25 -
1 documentation within the applicable seven-day or 21-day time
2 limit, the request shall be deemed approved and the plan shall
3 be responsible for paying for the item, equipment or service
4 requested.
5 (h) Discontinuation/reduction notice.--A health plan shall
6 provide a written notice to the enrollee/subscriber, the
7 prescriber and the provider whenever the health plan makes a
8 decision to:
9 (1) discontinue or reduce coverage of an ongoing or
10 recurring service;
11 (2) discontinue payment for the rental of equipment
12 which had previously been approved by the plan; or
13 (3) overturn a previous approval where the plan claims
14 the previous approval was made in error.
15 The notice shall be provided at least ten days prior to the date
16 the decision is to be effective. The notice shall contain the
17 same information as a denial notice.
18 (i) Qualifications of decision maker.--Where a decision is
19 made by a health plan to deny a request for coverage or to
20 terminate or reduce coverage of ongoing services or equipment on
21 grounds of lack of medical necessity, or on grounds that the
22 item, equipment or service is experimental, or on grounds that
23 there is a less costly alternative, or any other grounds
24 involving a medical determination, the individual making that
25 decision must have all of the following qualifications:
26 (1) Professional credentials which are at least equal to
27 the credentials of the individual prescribing the item,
28 equipment or service.
29 (2) Knowledge and experience with the disease or
30 condition for which the item, equipment or service is
19960H3018B4289 - 26 -
1 prescribed which is at least equal to the knowledge and
2 experience of the individual prescribing or recommending the
3 item, equipment or service.
4 (3) Knowledge and experience with the item, equipment or
5 service requested that is at least equal to the knowledge and
6 experience of the individual prescribing or recommending the
7 item, equipment or service.
8 The qualifications of the individual making the decision shall
9 be provided upon request to the party making the request for
10 coverage.
11 (j) Appeal procedures.--The health plan shall provide the
12 subscriber/enrollee with the opportunity to appeal a denial,
13 partial denial, discontinuation or reduction of service
14 coverage. For subscribers/enrollees who have disabilities
15 limiting their ability to put their appeal into writing, the
16 appeal may be submitted in alternative formats. The appeals
17 process for decisions made by HMOs or other entities licensed
18 under the HMO Act shall be as specified in that act and the
19 regulations promulgated thereunder. For all other health plans,
20 the appeal shall be decided by one or more professionals who:
21 (1) are not employed by the plan;
22 (2) were not involved in making the decision being
23 appealed;
24 (3) have professional credentials, knowledge and
25 experience with the disease or condition for which the item,
26 equipment or service is prescribed that are at least equal to
27 the credentials, knowledge and experience of the individual
28 prescribing or recommending the item, equipment or service;
29 and
30 (4) have knowledge and experience with the item,
19960H3018B4289 - 27 -
1 equipment or service requested that is at least equal to the
2 knowledge and experience of the individual prescribing or
3 recommending the item, equipment or service.
4 The subscriber/enrollee and the individual prescribing or
5 recommending the item, equipment or service under appeal shall
6 have the right to present additional documentation in support of
7 their appeal provided they submit it with their appeal or notify
8 the health plan of their intent to submit additional
9 documentation with 15 days of filing their appeal. The health
10 plan may not raise grounds for denial, discontinuation or
11 reduction during the appeal that were not included in the
12 original notice.
13 (k) Payment pending appeal decision.--Where an appeal is
14 filed prior to the effective date of a decision to discontinue
15 or reduce coverage of an ongoing or recurring service or rental
16 of equipment, the plan shall continue to make payments for the
17 full level of service or equipment previously approved pending
18 the issuance of a written appeal decision. If the appeal is
19 denied, the subscriber/enrollee can be held liable by the plan
20 for the payments made from the effective date of the decision
21 under appeal to the date of the appeal decision.
22 (l) Appeal decisions.--Appeals shall be decided within 30
23 calendar days of the date the appeal was filed except where the
24 person appealing indicates that he or she intends to submit
25 additional documentation in support of the appeal. In that
26 situation, the appeal shall be decided within 30 calendar days
27 of the date on which the additional documentation is submitted.
28 A written notice of the decision shall be provided to the
29 subscriber/enrollee, the prescriber and the provider, if any is
30 indicated on the request. If the subscriber/enrollee obtains a
19960H3018B4289 - 28 -
1 second opinion from a practitioner or prescriber which is used
2 in the appeal and the denial, partial denial, discontinuation or
3 reduction is overturned, the plan shall reimburse the
4 subscriber/enrollee the reasonable cost of that second opinion.
5 (m) Information regarding due process rights.--The health
6 plan shall provide written information, and in alternative
7 formats where requested, to all subscribers/enrollees setting
8 forth the rights and procedures set out in this section. This
9 information shall be provided upon the enrollment of the
10 individual or family in the health plan and annually thereafter.
11 (n) Notices in alternative formats.--All notices required
12 under this section shall be provided in alternative formats upon
13 the request of a subscriber/enrollee. The subscriber/enrollee
14 shall be informed at the time of enrollment of his or her right
15 to request that notices be provided in alternative formats. The
16 alternative format shall be the format requested by the
17 subscriber/enrollee.
18 (o) Attorney fees.--Where a court of competent jurisdiction
19 enters an order in favor of a subscriber/enrollee finding that a
20 health plan has violated the provisions set out above, the
21 subscriber/enrollee shall be entitled to reasonable attorney
22 fees.
23 (p) Extension of time limits.--The time limits set out in
24 this section may be extended by the mutual written agreement of
25 the health plan and the subscriber/enrollee.
26 Section 312. Exceptions to required coverage.
27 (a) General rule.--A health maintenance organization shall
28 not be required to offer coverage to or accept an applicant
29 under this act if the applicant is not geographically located in
30 the health maintenance organization's approved service area or
19960H3018B4289 - 29 -
1 if the health maintenance organization does not have the
2 capacity in its facilities to enroll additional members; except
3 that, if the health maintenance organization does not have the
4 capacity in its facilities for additional individual enrollees,
5 it also shall not offer coverage to or accept any new group
6 enrollees.
7 (b) Financially impaired condition.--A carrier shall not be
8 required to offer coverage or accept applications under this act
9 if the commissioner finds that the acceptance of applications
10 would place the carrier in a financially impaired condition.
11 Section 313. Rates of payment.
12 (a) Application.--The board shall make application on behalf
13 of all carriers for approval of discounted or reduced rates of
14 payment to hospitals for health care services provided under an
15 individual health benefit plan provided under this act.
16 (b) Other subsidies, discounts, etc.--In addition to
17 discounted or reduced rates of hospital payment, the board shall
18 make application on behalf of all carriers for any other
19 subsidies, discounts or funds that may be provided for under
20 Federal or State law or regulation. A carrier may include
21 discounted or reduced rates of hospital payment and other
22 subsidies or funds granted to the board to reduce its premium
23 rates for individual health benefit plans subject to this act.
24 (c) Informational filing.--
25 (1) A carrier shall not issue individual health benefit
26 plans on a new contract or policy form under this act until
27 an informational filing of a full schedule of rates which
28 applies to the contract or policy form has been filed with
29 the board. The board shall forward the informational filing
30 to the commissioner and the Attorney General.
19960H3018B4289 - 30 -
1 (2) A carrier shall make an informational filing with
2 the board of any change in its rates for individual health
3 benefit plans pursuant to section 304 prior to the date the
4 rates become effective. The board shall file the
5 informational filing with the commissioner and the Attorney
6 General. If the carrier has filed all information required by
7 the board, the filing shall be deemed to be complete.
8 (d) Premium rates.--
9 (1) Rates shall be formulated on contracts or policies
10 required under section 304 so that the anticipated minimum
11 loss ratio for a contract or policy form shall not be less
12 than 75% of the premium. The carrier shall submit with its
13 rate filing supporting data, as determined by the board, and
14 a certification by a member of the American Academy of
15 Actuaries, or other individuals acceptable to the board and
16 to the commissioner, that the carrier is in compliance with
17 this subsection.
18 (2) Following the close of each calendar year, if the
19 board determines that a carrier's loss ratio was less than
20 75% for that calendar year, the carrier shall be required to
21 refund to policy or contractholders the difference between
22 the amount of net earned premium it received that year and
23 the amount that would have been necessary to achieve the 75%
24 loss ratio.
25 (3) The schedule of rates filed under this section by a
26 carrier which insured at least 50% of the community-rated
27 individually insured persons on the effective date of this
28 act shall not be required to produce a loss ratio which when
29 combined with the carrier's administrative costs and
30 investment income results in self-sustaining rates prior to
19960H3018B4289 - 31 -
1 January 1, 2000, for individual policies or contracts issued
2 prior to August 1, 1997. The carrier shall, not later than 30
3 days after the effective date of this chapter, file with the
4 board for approval a plan to achieve this objective.
5 Section 314. Pennsylvania Individual Health Coverage Program.
6 (a) Establishment.--There is hereby established the
7 Pennsylvania Individual Health Coverage Program. All carriers
8 subject to this act shall be members of the program.
9 (b) Organization and membership.--Within 30 days of the
10 effective date of this act, the commissioner shall give notice
11 to all members of the time and place for the initial
12 organizational meeting, which shall take place within 60 days of
13 the effective date of this chapter. The board shall consist of
14 nine representatives. The commissioner or his designee shall
15 serve as an ex officio member on the board. Four members of the
16 board shall be appointed by the Governor, with the advice and
17 consent of the Senate: one of whom shall be a representative of
18 an employer, appointed upon the recommendation of a business
19 trade association, who is a person with experience in the
20 management or administration of an employee health benefit plan;
21 one of whom shall be a representative of organized labor,
22 appointed upon the recommendation of the AFL-CIO, who is a
23 person with experience in the management or administration of an
24 employee health benefit plan; and two of whom shall be consumers
25 of a health benefit plan who are reflective of the population in
26 this Commonwealth. Four board members who represent carriers
27 shall be elected by the members, subject to the approval of the
28 commissioner, as follows: to the extent entities licensed in
29 this Commonwealth are willing to have a representative serve on
30 the board, a representative from each of the following entities
19960H3018B4289 - 32 -
1 shall be elected:
2 (1) a domestic mutual insurer which, either directly or
3 through a subsidiary health maintenance organization, is
4 primarily engaged in the business of issuing health benefit
5 plans;
6 (2) a health maintenance organization;
7 (3) a mutual health insurer of this Commonwealth; and
8 (4) a foreign health insurance company authorized to do
9 business in this Commonwealth.
10 In approving the selection of the carrier representatives of the
11 board, the commissioner shall assure that all members of the
12 program are fairly represented.
13 (c) Initial appointees.--
14 (1) Initially, two of the Governor's appointees and two
15 of the carrier representatives shall serve for a term of
16 three years; one of the Governor's appointees and one of the
17 carrier representatives shall serve for a term of two years;
18 and one of the Governor's appointees and one of the carrier
19 representatives shall serve for a term of one year.
20 Thereafter, all board members shall serve for a term of three
21 years. Vacancies shall be filled in the same manner as the
22 original appointments.
23 (2) If the initial carrier representatives to the board
24 are not elected at the organizational meeting, the
25 commissioner shall appoint those members to the initial board
26 within 15 days of the organizational meeting.
27 (d) Plan of operation.--Within 90 days after the appointment
28 of the initial board, the board shall submit to the commissioner
29 a plan of operation and, thereafter, any amendments to the plan
30 necessary or suitable to assure the fair, reasonable and
19960H3018B4289 - 33 -
1 equitable administration of the program. The commissioner may
2 disapprove the plan of operation if the commissioner determines
3 that it is not suitable to assure the fair, reasonable and
4 equitable administration of the program and that it does not
5 provide for the sharing of program losses on an equitable and
6 proportionate basis in accordance with section 316. The plan of
7 operation or amendments to it shall become effective unless
8 disapproved in writing by the commissioner within 45 days of
9 receipt by the commissioner.
10 (e) Temporary plan.--If the board fails to submit a suitable
11 plan of operation within 90 days after its appointment, the
12 commissioner shall adopt a temporary plan of operation pursuant
13 to section 322. The commissioner shall amend or rescind a
14 temporary plan adopted under this subsection at the time a plan
15 of operation is submitted by the board.
16 (f) Content of plan.--The plan of operation shall establish
17 procedures for the following:
18 (1) The handling and accounting of assets and moneys of
19 the program and an annual fiscal reporting to the
20 commissioner.
21 (2) Collecting assessments from members to provide for
22 sharing program losses in accordance with section 316 and
23 administrative expenses incurred or estimated to be incurred
24 during the period for which the assessment is made.
25 (3) Approving the coverage, benefit levels and contract
26 forms for individual health benefit plans in accordance with
27 section 304.
28 (4) The imposition of an interest penalty for late
29 payment of an assessment under section 316.
30 (5) Any additional matters at the discretion of the
19960H3018B4289 - 34 -
1 board.
2 (g) Advice to board.--The board shall appoint an insurance
3 producer licensed to sell health insurance in this Commonwealth
4 to advise the board on issues related to sales of individual
5 health benefit plans issued under this chapter.
6 Section 315. Powers and authority of program and board.
7 (a) General rule.--The program shall have the general powers
8 and authority granted under the laws of this Commonwealth to
9 insurance companies, health service corporations and health
10 maintenance organizations licensed or approved to transact
11 business in this Commonwealth, except that the program shall not
12 have the power to issue health benefit plans directly to either
13 groups or individuals.
14 (b) Powers of board.--The board shall have the authority to
15 do the following:
16 (1) Assess members their proportionate share of program
17 losses and administrative expenses in accordance with the
18 provisions of section 316 and make advance interim
19 assessments as may be reasonable and necessary for
20 organizational and reasonable operating expenses and
21 estimated losses. An interim assessment shall be credited as
22 an offset against any regular assessment due following the
23 close of the fiscal year.
24 (2) Establish rules, conditions and procedures
25 pertaining to the sharing of program losses and
26 administrative expenses among the members of the program.
27 (3) Review rate applications and form filings submitted
28 by carriers under this act.
29 (4) Define the provisions of individual health benefit
30 plans under this act.
19960H3018B4289 - 35 -
1 (5) Enter into contracts which are necessary or proper
2 to carry out the provisions and purposes of this act.
3 (6) Establish a procedure for the joint distribution of
4 information on individual health benefit plans issued under
5 this chapter.
6 (7) Establish, at the board's discretion, standards for
7 the application of a means test for individual health benefit
8 plans issued under this chapter.
9 (8) Establish, at the board's discretion, reasonable
10 guidelines for the purchase of new individual health benefit
11 plans by persons who already are enrolled in or insured by
12 another individual health benefit plan.
13 (9) Establish minimum requirements for performance
14 standards for carriers that are reimbursed for losses
15 submitted to the program and provide for performance audits
16 from time to time.
17 (10) Sue or be sued, including taking any legal actions
18 necessary or proper for recovery of an assessment for, on
19 behalf of or against the program or a member.
20 (11) Appoint from among its members appropriate legal,
21 actuarial and other committees as necessary to provide
22 technical and other assistance in the operation of the
23 program, in policy and other contract design, and any other
24 function within the authority of the program.
25 (12) Borrow money to effect the purposes of the program.
26 Any notes or other evidence of indebtedness of the program
27 not in default shall be legal investments for carriers and
28 may be carried as admitted assets.
29 (13) Contract for an independent actuary and any other
30 professional services the board deems necessary to carry out
19960H3018B4289 - 36 -
1 its duties under this chapter.
2 Section 316. Equitable sharing of program losses.
3 (a) General rule.--The board shall establish procedures for
4 the equitable sharing of program losses among all members in
5 accordance with their total market share, as provided in this
6 section.
7 (b) Required filings.--By March 1, 1997, and following the
8 close of each calendar year thereafter, on a date established by
9 the board:
10 (1) Every carrier issuing health benefit plans in this
11 Commonwealth shall file with the board its net earned premium
12 for the preceding calendar year ending December 31.
13 (2) Every carrier issuing individual health benefit
14 plans in this Commonwealth shall file with the board the net
15 earned premium on policies or contracts issued and the claims
16 paid and the administrative expenses attributable to those
17 policies or contracts. If the claims paid and reasonable
18 administrative expenses for that calendar year exceed the net
19 earned premium and any investment income thereon, the amount
20 of the excess shall be the net paid loss for the carrier that
21 shall be reimbursable under this act. For the purposes of
22 this paragraph, "reasonable administrative expenses" shall be
23 actual expenses or a maximum of 25% of premium, whichever
24 amount is less.
25 (c) Assessment.--Every member shall be liable for an
26 assessment to reimburse carriers issuing individual health
27 benefit plans in this Commonwealth which sustain net paid losses
28 for the previous year, unless the member has received an
29 exemption from the board under subsection (g) and has written a
30 minimum number of nongroup persons as provided for in that
19960H3018B4289 - 37 -
1 subsection. The assessment of each member shall be in the
2 proportion that the net earned premium of the member for the
3 calendar year preceding the assessment bears to the net earned
4 premium of all members for the calendar year preceding the
5 assessment.
6 (d) Deferment.--A member that is financially impaired may
7 seek from the commissioner a deferment in whole or in part from
8 any assessment issued by the board. The commissioner may defer,
9 in whole or in part, the assessment of the member if, in the
10 opinion of the commissioner, the payment of the assessment would
11 endanger the ability of the member to fulfill its contractual
12 obligations. If an assessment against a member is deferred in
13 whole or in part, the amount by which the assessment is deferred
14 may be assessed against the other members in a manner consistent
15 with the basis for assessment set forth in this section. The
16 member receiving the deferment shall remain liable to the
17 program for the amount deferred.
18 (e) Nonliability.--The participation in the program as a
19 member, the establishment of rates, forms or procedures or any
20 other joint or collective action required by this act shall not
21 be the basis of any legal action, criminal or civil liability or
22 penalty against the program, a member of the board or a member
23 of the program either jointly or separately except as otherwise
24 provided in this act.
25 (f) Assessment as condition to issue.--Payment of an
26 assessment made under this section shall be a condition of
27 issuing health benefit plans in this Commonwealth for a carrier.
28 Failure to pay the assessment shall be grounds for forfeiture of
29 a carrier's authorization to issue health benefit plans of any
30 kind in this Commonwealth, as well as any other penalties
19960H3018B4289 - 38 -
1 permitted by law.
2 (g) Exemptions.--
3 (1) A carrier may apply to the board, by a date
4 established by the board, for an exemption from the
5 assessment and reimbursement for losses provided for in this
6 section. A carrier which applies for an exemption shall agree
7 to enroll or insure a minimum number of nongroup persons on
8 an open enrollment community-rated basis, under a managed
9 care or indemnity plan, as specified in this subsection,
10 provided that any indemnity plan so issued conforms with
11 sections 303 through 312, inclusive. For the purposes of this
12 subsection, nongroup persons include individually enrolled
13 persons, conversion policies issued pursuant to this act,
14 Medicare cost and risk lives and Medicaid and HealthStart
15 Plus recipients, except that, in determining whether the
16 carrier meets the minimum number of nongroup persons required
17 pursuant to this subsection, the number of Medicaid
18 recipients and Medicare cost and risk lives shall not exceed
19 50% of the total.
20 (2) Notwithstanding paragraph (1), a health maintenance
21 organization qualified pursuant to the Health Maintenance
22 Organization Act of 1973 (Public Law, 42 U.S.C. § 300e et
23 seq.) and tax exempt under section 501(c)(3) of the Internal
24 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
25 501(c)(3)), may include up to one-third Medicaid recipients
26 and up to one-third Medicare recipients in determining
27 whether it meets its minimum number.
28 (3) The minimum number of nongroup persons, as
29 determined by the board, shall equal the total number of
30 community-rated and modified community-rated, individually
19960H3018B4289 - 39 -
1 enrolled or insured persons, including Medicare cost and risk
2 lives and enrolled Medicaid and HealthStart Plus lives, of
3 all carriers subject to this chapter as of the end of the
4 calendar year, multiplied by the proportion that carrier's
5 net earned premium bears to the net earned premium of all
6 carriers for that calendar year, including those carriers
7 that are exempt from the assessment.
8 (4) Within 180 days after the effective date of this
9 chapter and on or before March 1 of each year thereafter,
10 every carrier seeking an exemption under this subsection
11 shall file with the board a statement of its net earned
12 premium for the preceding calendar year. The board shall
13 determine each carrier's minimum number of nongroup persons
14 in accordance with this subsection.
15 (5) On or before March 1 of each year, every carrier
16 that was granted an exemption for the preceding calendar year
17 shall file with the board the number of nongroup persons, by
18 category, enrolled or insured as of December 31 of the
19 preceding calendar year. To the extend that the carrier has
20 failed to enroll the minimum number of nongroup persons
21 established by the board, the carrier shall be assessed by
22 the board on a pro rata basis for any differential between
23 the minimum number established by the board and the actual
24 number enrolled or insured by the carrier.
25 (6) A carrier that applies for the exemption shall be
26 deemed to be in compliance with the requirements of this
27 subsection if:
28 (i) by the end of calendar year 1997, it has
29 enrolled or insured at least 40% of the minimum number of
30 nongroup persons required;
19960H3018B4289 - 40 -
1 (ii) by the end of calendar year 1998, it has
2 enrolled or insured at least 75% of the minimum number of
3 nongroup persons required; and
4 (iii) by the end of calendar year 1999, it has
5 enrolled or insured 100% of the minimum number of
6 nongroup persons required.
7 (7) Any carrier that writes both managed care and
8 indemnity business that is granted an exemption under this
9 subsection may satisfy its obligation to write a minimum
10 number of nongroup persons by writing either managed care or
11 indemnity business, or both.
12 (h) Limit on assessments.--Notwithstanding the provisions of
13 this section to the contrary, no carrier shall be liable for an
14 assessment to reimburse any carrier under this section in an
15 amount which exceeds 35% of the aggregate net paid losses of all
16 carriers filing under subsection (c). To the extent that this
17 limitation results in any unreimbursed paid losses to any
18 carrier, the unreimbursed net paid losses shall be distributed
19 among carriers:
20 (1) which owe assessments under subsection (c);
21 (2) whose assessments do not exceed 35% of the aggregate
22 net paid losses of all carriers; and
23 (3) who have not received an exemption under subsection
24 (g).
25 A carrier shall be deemed to have received an exemption
26 notwithstanding the fact that the carrier failed to enroll or
27 insure the minimum number of nongroup persons required for that
28 calendar year.
29 Section 317. Statement of net paid losses.
30 (a) Filing.--No later than March 1, 1997, any carrier
19960H3018B4289 - 41 -
1 issuing individual health benefit plans in this Commonwealth
2 shall file with the board a statement of any net paid losses for
3 the calendar year ending December 31, 1996, as calculated under
4 section 316(b), along with any supporting information required
5 by the board.
6 (b) Reimbursement.--The losses filed pursuant to subsection
7 (a) shall be reimbursed in an amount up to $10,000,000 or 50% of
8 the paid losses, whichever amount is less, to the carrier filing
9 the losses. The assessment shall be made as a separate
10 assessment from those required under section 316, but shall be
11 assessed in the same manner and at the same time as the first
12 assessment made after the effective date of this chapter as
13 provided for in section 316, except that the carrier filing for
14 the reimbursement shall not be subject to an assessment pursuant
15 to this section.
16 Section 318. Determination of carriers with disproportionate
17 share of substandard risks.
18 The board shall determine whether any carrier has a
19 disproportionate share of substandard risks insured or enrolled
20 under its individual health benefit plans and shall make
21 recommendations to the Governor and the General Assembly for
22 remedial action to minimize the losses sustained by the carrier
23 as a result of insuring these risks.
24 Section 319. Sale of plan through licensed insurance producer.
25 A health benefit plan issued under section 304 may be sold
26 through a licensed insurance producer.
27 Section 320. Health uncompensated charity care study.
28 (a) Charity care data.--The Health Care Cost Containment
29 Council shall collect each year commencing with the calendar
30 year beginning January 1, 1997, the following charity care data
19960H3018B4289 - 42 -
1 from all acute care hospitals licensed in this Commonwealth:
2 (1) Catastrophic inpatient and outpatient costs which
3 are defined as the allowable audited costs of services
4 provided to persons above 150% of the poverty level, with an
5 unpaid personal liability greater than annual family income,
6 less an amount equivalent to 150% of the Federal poverty
7 level. Such amount must be net, following reasonable
8 collection procedures, consistently applied, and may not
9 include any costs or services for which reimbursement could
10 have been secured from the medical assistance or Medicare
11 program or other third-party payor, nor any costs or services
12 rendered by a hospital in fulfillment of any charity care
13 obligation funding from foundations or Federal or State
14 sources including funding under the Hill-Burton program.
15 (2) Medical assistance which is defined as the inpatient
16 and outpatient patient-pay amount for medical assistance
17 recipients which has been unable to be collected following
18 reasonable collection procedures, consistently applied.
19 (3) Underinsured inpatient charity care which is defined
20 as the allowable audited cost of services provided to
21 uninsured persons below 150% of the Federal poverty level,
22 following reasonable collection procedures, consistently
23 applied. Such amount may not include payment for goods or
24 services which could have been reimbursed under the Medicaid
25 or Medicare program or other third-party payor, nor any costs
26 or services rendered by a hospital in fulfillment of any
27 charity care obligation funding from foundations or Federal
28 or State sources including funding under the Hill-Burton
29 program.
30 (4) Uninsured inpatient charity care which is defined as
19960H3018B4289 - 43 -
1 the allowable audited cost of services provided to persons
2 without public or private insurance coverage, with income
3 below 150% of the poverty level, following reasonable
4 collection procedures, consistently applied. Such amount may
5 not include payment for goods or services which could have
6 been reimbursed under the Medicaid or Medicare program or
7 other third-party payor, nor any costs or services rendered
8 by a hospital in fulfillment of any charity care obligation
9 funding from foundations or Federal or State sources
10 including funding under the Hill-Burton program.
11 (b) Recommendations to General Assembly.--Commencing March
12 1, 1998, and every March 1 thereafter, the council shall submit
13 recommendations to the Governor and the General Assembly as to
14 whether a source of funding is required for uncompensated
15 charity care provided by acute care hospitals in this
16 Commonwealth. These recommendations shall be based on data
17 collection for uncompensated charity care as defined in this
18 section for the preceding calendar year.
19 Section 321. Notice of intended action by board.
20 (a) General rule.--Effective January 1, 1998, all actions
21 adopted by the board shall be subject to this section.
22 (b) Publication.--Prior to the adoption of an action of the
23 board, the board shall publish notice of its intended action in
24 three newspapers of general circulation in this Commonwealth and
25 may publish the notice of intended action in any trade or
26 professional publication which it deems necessary. The notice of
27 intended action shall include procedures for obtaining a
28 detailed description of the intended action and the time, place
29 and manner by which interested persons may present their views.
30 The board shall provide the notice of intended action and a
19960H3018B4289 - 44 -
1 detailed description of the intended action by mail, or
2 otherwise, to affected trade and professional associations,
3 carriers subject to the provisions of this act and such other
4 interested persons or organizations which may request
5 notification. The board shall forward the notice of intended
6 action and the detailed description of the intended action
7 concurrently to the Legislative Reference Bureau for publication
8 as a notice in the Pennsylvania Bulletin.
9 (c) Fees.--The board shall not charge any fee for placement
10 upon the mailing list of associations, carriers or other persons
11 to be notified, but the board may charge a fee to an
12 association, carrier or other person requesting a copy of the
13 text of the intended action, which fee shall not be in excess of
14 the actual costs of reproducing and mailing the copy.
15 (d) Copy of text.--A copy of the text of the intended action
16 shall be available at the office of the Insurance Department.
17 (e) Public hearing.--The board shall hold a public hearing
18 on the establishment and modification of health benefit plans,
19 and the board may hold a public hearing on any other intended
20 action. Notice of a hearing shall be given in the notice of
21 intended action provided for in subsection (b).
22 (f) Written comments.--Whether or not a public hearing is
23 held, the board shall afford all interested persons an
24 opportunity to comment in writing on the intended action.
25 Written comments shall be submitted to the board within the time
26 established by the board in the notice of intended action, which
27 time shall not be less than 20 calendar days from the date of
28 notice.
29 (g) Comments received.--The board shall give due
30 consideration to all comments received. Within a reasonable
19960H3018B4289 - 45 -
1 period of time following submission of the comments under this
2 subsection, the board shall prepare for public distribution a
3 report listing all parties who provided written submissions
4 concerning the intended action, summarizing the content of the
5 submissions and providing the board's response to the data,
6 views and arguments contained in the submissions. A copy of the
7 report shall be filed with the Legislative Reference Bureau for
8 publication as a notice in the Pennsylvania Bulletin.
9 (h) Action by board.--The board may adopt the intended
10 action immediately following the expiration of the public
11 comment period provided in subsection (f) or the hearing
12 provided for in subsection (e), whichever date is later. The
13 final action adopted by the board shall be submitted for
14 publication as a notice in the Pennsylvania Bulletin and shall
15 be effective on the date of publication or such later date as
16 the board may establish.
17 (i) Rules and regulations.--Nothing in this section shall be
18 construed to prohibit the commissioner or the board from
19 promulgating any rule or regulation in the manner provided by
20 law.
21 (j) Definition.--As used in this section, the term "action"
22 includes, but is not limited to:
23 (1) the establishment and modification of health benefit
24 plans;
25 (2) procedures and standards for the:
26 (i) assessment of members and the apportionment
27 thereof;
28 (ii) filing of policy forms;
29 (iii) making of rate filings;
30 (iv) evaluation of material submitted by carriers
19960H3018B4289 - 46 -
1 with respect to loss ratios; and
2 (v) establishment of refunds to policy or contract
3 holders; and
4 (3) the promulgation or modification of policy forms.
5 The term shall not include the hearing and resolution of
6 contested cases, personnel matters and applications for
7 withdrawal or exemptions.
8 Section 322. Temporary plan of operation.
9 (a) General rule.--The commissioner shall adopt a temporary
10 plan of operation prepared under section 314, pending submission
11 or approval of a plan of operation prepared by the board under
12 section 314.
13 (b) Amendments.--Subsequent amendments to the plan of
14 operation shall be reviewed and approved by the commissioner
15 under section 321.
16 Section 323. Carriers prohibited from requiring purchase of
17 other insurance in conjunction with purchase of
18 health benefit plan.
19 A carrier shall not require an eligible person to purchase
20 any other insurance coverage, including, but not limited to,
21 life insurance, accident insurance or disability insurance, as a
22 condition of or in conjunction with the purchase of a health
23 benefit plan under this chapter.
24 Section 324. Standard claim form.
25 The board, in conjunction with the Board of the Pennsylvania
26 Small Employer Health Benefit Program established under Chapter
27 5, shall adopt one standard claim form. In order to provide a
28 standard system of payment for medical services, all claim forms
29 for a claimant's use under an individual health benefit plan
30 issued or delivered in this Commonwealth shall conform to the
19960H3018B4289 - 47 -
1 form adopted by the board.
2 Section 325. Renewal of policies and contracts after conversion
3 to domestic mutual insurer.
4 A domestic mutual insurer which has converted from a health
5 service corporation shall not renew individual hospital or
6 medical insurance policies or health service contracts
7 originally issued prior to November 30, 1996, until it has made
8 an informational filing with the Pennsylvania Individual Health
9 Coverage Program Board of a full schedule of rates which are to
10 apply to those contracts. The Pennsylvania Individual Health
11 Coverage Program Board shall forward a copy of such filing to
12 the commissioner. The rates shall be formulated so that the
13 anticipated minimum loss ratio for such policy or contract form
14 shall not be less than 75% of the premium. The domestic mutual
15 insurer shall submit with its rate filing supporting data and a
16 certification that the insurer is in compliance with the
17 anticipated loss ratio requirement. The content and form of the
18 supporting data and certification required under section 313
19 shall satisfy the requirements of this section. Any other
20 insurer may irrevocably elect to become subject to the
21 provisions of this section by written notice to the
22 commissioner, except that such informational filing by any other
23 insurer shall be in a format specified by the commissioner and
24 shall be made directly to the commissioner and not to the
25 Pennsylvania Individual Health Coverage Program Board.
26 CHAPTER 5
27 SMALL EMPLOYER PROVISIONS
28 Section 501. Definitions.
29 The following words and phrases when used in this chapter
30 shall have the meanings given to them in this section unless the
19960H3018B4289 - 48 -
1 context clearly indicates otherwise:
2 "Actuarial certification." A written statement by a member
3 of the American Academy of Actuaries or other individual
4 acceptable to the Insurance Commissioner that a small employer
5 carrier is in compliance with section 515, based upon
6 examination, including a review of the appropriate records and
7 actuarial assumptions and methods used by the small employer
8 carrier in establishing premium rates for applicable health
9 benefit plans.
10 "Anticipated loss ratio." The ratio of the present value of
11 the expected benefits, not including dividends, to the present
12 value of the expected premiums, not reduced by dividends, over
13 the entire period for which rates are computed to provide
14 coverage. For purposes of this ratio, the present values must
15 incorporate realistic rates of interest which are determined
16 before Federal taxes but after investment expenses.
17 "Board." The board of directors of the Pennsylvania Small
18 Employer Health Benefit Program.
19 "Carrier." Any insurance company, health service
20 corporation, hospital service corporation, medical service
21 corporation or health maintenance organization authorized to
22 issue health benefit plans in this Commonwealth. For purposes of
23 this chapter, carriers that are affiliated companies shall be
24 treated as one carrier, except that any insurance company,
25 health service corporation, hospital service corporation or
26 medical service corporation that is an affiliate of a health
27 maintenance organization located in this Commonwealth or any
28 health maintenance organization located in this Commonwealth
29 that is affiliated with an insurance company, health service
30 corporation, hospital service corporation or medical service
19960H3018B4289 - 49 -
1 corporation shall treat the health maintenance organization as a
2 separate carrier.
3 "Commissioner." The Insurance Commissioner of the
4 Commonwealth.
5 "Community rating." A rating methodology in which the
6 premium for all persons covered by a policy or contract form is
7 the same based upon the experience of the entire pool of risks
8 covered by that policy or contract form without regard to age,
9 gender, health status, residence or occupation.
10 "Department." The Insurance Department of the Commonwealth.
11 "Dependent." The spouse or child of an eligible employee,
12 subject to applicable terms of the health benefit plan covering
13 the employee.
14 "Eligible employee." A full-time employee who works a normal
15 work week of 25 or more hours. The term includes a sole
16 proprietor, a partner of a partnership or an independent
17 contractor, if the sole proprietor, partner or independent
18 contractor is included as an employee under a health benefit
19 plan of a small employer, but does not include employees who
20 work less than 25 hours a week, work on a temporary or
21 substitute basis or are participating in an employee welfare
22 arrangement established pursuant to a collective bargaining
23 agreement.
24 "Financially impaired." A carrier which, after the effective
25 date of this chapter, is not insolvent, but is deemed by the
26 Insurance Commissioner to be potentially unable to fulfill its
27 contractual obligations or a carrier which is placed under an
28 order of rehabilitation or conservation by a court of competent
29 jurisdiction.
30 "Health benefit plan." Any hospital and medical expense
19960H3018B4289 - 50 -
1 insurance policy or certificate; health, hospital or medical
2 service corporation contract or certificate; or health
3 maintenance organization subscriber contract or certificate
4 delivered or issued for delivery in this Commonwealth by any
5 carrier to a small employer group under section 505. For
6 purposes of this chapter, the term does not include the
7 following plans, policies or contracts: accident only, credit,
8 disability, long-term care, coverage for Medicare services
9 pursuant to a contract with the United States Government,
10 Medicare supplement, dental only, prescription only or vision
11 only, insurance issued as a supplement to liability insurance,
12 coverage arising out of a workers' compensation or similar law,
13 hospital confinement or other supplemental limited benefit
14 insurance coverage, automobile medical payment insurance or
15 personal injury protection coverage issued under the laws of
16 this Commonwealth and stop loss or excess risk insurance.
17 "Late enrollee." An eligible employee or dependent who
18 requests enrollment in a health benefit plan of a small employer
19 following the initial minimum 30-day enrollment period provided
20 under the terms of the health benefit plan. An eligible employee
21 or dependent shall not be considered a late enrollee if the
22 individual:
23 (1) Was covered under another employer's health benefit
24 plan at the time he was eligible to enroll and stated at the
25 time of the initial enrollment that coverage under that other
26 employer's health benefit plan was the reason for declining
27 enrollment.
28 (2) Has lost coverage under that other employer's health
29 benefit plan as a result of termination of employment, the
30 termination of the other plan's coverage, death of a spouse
19960H3018B4289 - 51 -
1 or divorce.
2 (3) Requests enrollment within 90 days after termination
3 of coverage provided under another employer's health benefit
4 plan.
5 An eligible employee or dependent also shall not be considered a
6 late enrollee if the individual is employed by an employer which
7 offers multiple health benefit plans and the individual elects a
8 different plan during an open enrollment period or if a court of
9 competent jurisdiction has ordered coverage to be provided for a
10 spouse or minor child under a covered employee's health benefit
11 plan and request for enrollment is made within 30 days after
12 issuance of that court order.
13 Medicaid." The Medicaid program established under Title
14 XVIII of the Social Security Act (Public Law 74-271, 42 U.S.C. §
15 1395 et seq.).
16 "Medicare." The Medicare program established under Title XIX
17 of the Social Security Act (Public Law 74-271, 42 U.S.C. § 1396
18 et seq.).
19 "Member." All carriers issuing health benefit plans in this
20 Commonwealth on or after the effective date of this act.
21 "Multiple employer arrangement." An arrangement established
22 or maintained to provide health benefits to employees and their
23 dependents of two or more employers, under an insured plan
24 purchased from a carrier in which the carrier assumes all or a
25 substantial portion of the risk, as determined by the Insurance
26 Commissioner, and includes, but is not limited to, a multiple
27 employer welfare arrangement (MEWA), multiple employer trust or
28 other form of benefit trust.
29 "Plan of operation." The plan of operation of the
30 Pennsylvania Small Employer Health Benefit Program, including
19960H3018B4289 - 52 -
1 articles, bylaws and operating rules approved under section 522.
2 "Preexisting condition provision." A policy or contract
3 provision that excludes coverage under that policy or contract
4 for charges or expenses incurred during a specified period
5 following the insured's effective date of coverage, for a
6 condition that, during a specified period immediately preceding
7 the effective date of coverage, had manifested itself in such a
8 manner as would cause an ordinarily prudent person to seek
9 medical advice, diagnosis, care or treatment or for which
10 medical advice, diagnosis, care or treatment was recommended or
11 received as to that condition or as to pregnancy existing on the
12 effective date of coverage.
13 "Program." The Pennsylvania Small Employer Health Benefit
14 Program established under section 518.
15 "Qualifying previous coverage." Benefits or coverage
16 provided under any of the following:
17 (1) Medicare or Medicaid or any other federally funded
18 health benefits program.
19 (2) A group health insurance policy or contract,
20 including coverage by an insurance company, a health,
21 hospital or medical service corporation, or a health
22 maintenance organization, or an employer-based, self-funded
23 or other health benefit arrangement.
24 (3) An individual health insurance policy or contract,
25 including coverage by an insurance company, a health,
26 hospital or medical service corporation or a health
27 maintenance organization.
28 The term does not include the following policies, contracts or
29 arrangements, whether issued on an individual or group basis:
30 specified disease only, accident only, credit, disability, long-
19960H3018B4289 - 53 -
1 term care, Medicare supplement, dental only, prescription only
2 or vision only insurance issued as a supplement to liability
3 insurance, stop loss or excess risk insurance, coverage arising
4 out of a workers' compensation or similar law, hospital
5 confinement or other supplemental limited benefit coverage,
6 automobile medical payment insurance or hospital confinement
7 indemnity coverage.
8 "Reinsuring carrier." A small employer carrier electing to
9 receive reimbursement from the Pennsylvania Small Employer
10 Health Benefit Program under this chapter.
11 "Small employer." Any person, firm, corporation, partnership
12 or association actively engaged in business which, on at least
13 50% of its working days during the preceding calendar year
14 quarter, employed at least two but not more than 49 eligible
15 employees, the majority of whom are employed within this
16 Commonwealth. In determining the number of eligible employees,
17 companies which are affiliated companies shall be considered one
18 employer. Subsequent to the issuance of a health benefit plan to
19 a small employer under this chapter and for the purpose of
20 determining eligibility, the size of a small employer shall be
21 determined annually. Except as otherwise specifically provided,
22 the provisions of this chapter which apply to a small employer
23 shall continue to apply until the anniversary date of the health
24 benefit plan next following the date the employer no longer
25 meets the definition of a "small employer." For the purposes of
26 this chapter, a State, county or municipal body, agency, board
27 or department shall not be considered a small employer.
28 "Small employer carrier." Any carrier that offers health
29 benefit plans covering eligible employees of one or more small
30 employers.
19960H3018B4289 - 54 -
1 "Small employer health benefit plan." A health benefit plan
2 for small employers approved by the Insurance Commissioner under
3 section 525.
4 "Stop loss" or "excess risk insurance." An insurance policy
5 designed to reimburse a self-funded arrangement of one or more
6 small employers for catastrophic, excess or unexpected expenses,
7 wherein neither the employees nor other individuals are third-
8 party beneficiaries under the insurance policy. In order to be
9 considered stop loss or excess risk insurance for the purposes
10 of this chapter, the policy shall establish a per person
11 attachment point or retention or aggregate attachment point or
12 retention, or both, which meet all of the following
13 requirements:
14 (1) If the policy establishes a per person attachment
15 point or retention, that specific attachment point or
16 retention shall not be less than $25,000 per covered person
17 per plan year.
18 (2) If the policy establishes an aggregate attachment
19 point or retention, that aggregate attachment point or
20 retention shall not be less than 125% of expected claims per
21 plan year.
22 "Supplemental limited benefit insurance." Insurance that is
23 provided in addition to a health benefit plan on an indemnity
24 nonexpense incurred basis.
25 Section 502. Application of chapter.
26 Every health insurer, health service corporation, medical
27 service corporation, hospital service corporation and health
28 maintenance organization licensed or authorized to provide
29 health benefits or services in this Commonwealth which offers
30 health insurance policies or coverages covering two or more
19960H3018B4289 - 55 -
1 employees of a small employer shall be subject to this chapter.
2 Coverage shall be offered to all eligible employees and their
3 dependents and shall not exclude any employee or eligible
4 dependent on the basis of an actual or expected health
5 condition.
6 Section 503. Coverage to be provided for covered person's
7 child.
8 (a) General rule.--A policy or contract which provides
9 hospital or medical expense benefits under which dependent
10 coverage is available shall not deny coverage for a covered
11 employee's child on the grounds that:
12 (1) the child was born out of wedlock;
13 (2) the child is not claimed as dependent on the covered
14 employee's Federal tax return; or
15 (3) the child does not reside with the covered employee
16 or in the carrier's service area, provided that, in the case
17 of a managed care plan, the child complies with the terms and
18 conditions of the policy or contract with respect to the use
19 of specified providers.
20 (b) Duty of insurer.--If a child has coverage through a
21 policy or contract of a noncustodial parent, the carrier shall:
22 (1) Provide such information to the custodial parent as
23 may be necessary for the child to obtain benefits through the
24 child's noncustodial parent's coverage.
25 (2) Permit the custodial parent or the health care
26 provider with the authorization of the custodial parent to
27 submit claims for covered services without the approval of
28 the noncustodial parent.
29 (3) Make payments on claims submitted in accordance with
30 paragraph (2) directly to the custodial parent, the health
19960H3018B4289 - 56 -
1 care provider or the Department of Public Welfare which
2 administers the State Medicaid program, as appropriate.
3 (c) Additional duties.--When a parent who is the covered
4 employee is eligible for dependent coverage and is required by a
5 court or administrative order to provide health insurance
6 coverage for his child, the carrier shall:
7 (1) Permit the parent to enroll his child as a
8 dependent, without regard to any enrollment season
9 restrictions.
10 (2) Permit the child's other parent or the Department of
11 Public Welfare to enroll the child under the policy or
12 contract if the parent who is the covered employee fails to
13 enroll the child.
14 (3) Not terminate coverage of the child unless the
15 parent who is the covered employee provides the carrier with
16 satisfactory written evidence that the court or
17 administrative order is no longer in effect or the child is
18 or will be enrolled in a comparable health benefit plan whose
19 coverage will be effective on the date of the termination of
20 coverage.
21 Section 504. Imposition of certain additional requirements
22 prohibited.
23 A carrier shall not impose requirements on the Department of
24 Public Welfare which has been assigned the rights of an
25 individual who is eligible for medical assistance under the
26 State Medicaid program that are different from requirements
27 applicable to an agent or assignee of any other covered
28 employee.
29 Section 505. Health benefit plans offered to small employers.
30 (a) General rule.--Except as provided in subsection (h),
19960H3018B4289 - 57 -
1 every small employer carrier shall, as a condition of
2 transacting business in this Commonwealth, offer to every small
3 employer the five health benefit plans as provided in this
4 section. The board shall establish a standard policy form for
5 each of the five plans which, except as otherwise provided in
6 subsection (k), shall be the only plans offered to small groups
7 on or after January 1, 1998. One policy form shall be
8 established which contains benefits and cost sharing levels. In
9 the case of indemnity carriers, one policy form shall be
10 established which contains benefits and cost sharing levels
11 which are equivalent to the health benefit plans of health
12 maintenance organizations under the Health Maintenance
13 Organization Act of 1973 (Public Law 93-222, 87 Stat. 914). The
14 remaining policy forms shall contain basic hospital and medical-
15 surgical benefits, including, but not limited to:
16 (1) Basic inpatient and outpatient hospital care.
17 (2) Basic and extended medical-surgical benefits.
18 (3) Diagnostic tests, including X-rays.
19 (4) Maternity benefits, including prenatal and postnatal
20 care.
21 (5) Preventive medicine, including periodic physical
22 examinations and innoculations.
23 (b) Major medical.--At least three of the forms shall
24 provide for major medical benefits in varying lifetime
25 aggregates, one of which shall provide at least $1,000,000 in
26 lifetime aggregate benefits. The policy forms provided under
27 this section shall contain benefits representing progressively
28 greater actuarial values.
29 (c) Dual arrangements.--The board also may establish
30 additional policy forms by which a small employer carrier, other
19960H3018B4289 - 58 -
1 than a health maintenance organization, may provide indemnity
2 benefits for health maintenance organization enrollees by direct
3 contract with the enrollees' small employer through a dual
4 arrangement with the health maintenance organization. The dual
5 arrangement shall be filed with the commissioner for approval.
6 The additional policy forms shall be consistent with the general
7 requirements of this chapter.
8 (d) Availability.--Initially, a carrier shall offer a plan
9 within 90 days of the approval of the plan by the commissioner.
10 Thereafter, the plans shall be available to all small employers
11 on a continuing basis. Every small employer which elects to be
12 covered under any health benefit plan who pays the premium for
13 it and who satisfies the participation requirements of the plan
14 shall be issued a policy or contract by the carrier.
15 (e) Premium payment plan.--The carrier may establish a
16 premium payment plan which provides installment payments and
17 which may contain reasonable provisions to ensure payment
18 security, provided that provisions to ensure payment security
19 are uniformly applied.
20 (f) Riders.--In addition to the five standard policies
21 described in subsection (a), the board may develop up to five
22 rider packages. Any such package which a carrier chooses to
23 offer shall be issued to a small employer who pays the premium
24 for it and shall be subject to the rating methodology set forth
25 in section 515.
26 (g) Major surgical.--Notwithstanding subsection (a), the
27 board may approve a health benefit plan containing only medical-
28 surgical benefits or major medical expense benefits, or a
29 combination of them, which is issued as a separate policy in
30 conjunction with a contract of insurance for hospital expense
19960H3018B4289 - 59 -
1 benefits issued by a hospital service corporation, if the health
2 benefit plan and hospital service corporation contract combined
3 otherwise comply with this chapter. Deductibles and coinsurance
4 limits for the contract combined may be allocated between the
5 separate contracts at the discretion of the carrier and the
6 hospital service corporation.
7 (h) Health maintenance organization.--
8 (1) A health maintenance organization which is a
9 qualified health maintenance organization pursuant to the
10 Health Maintenance Organization Act of 1973 (Public Law 93-
11 222, 87 Stat. 914 et seq.) shall be permitted to offer health
12 benefit plans formulated by the board and approved by the
13 commissioner which are in accordance with the provisions of
14 that law in lieu of the five plans required under this
15 section.
16 (2) A licensed health maintenance organization shall be
17 permitted to offer health benefit plans formulated by the
18 board and approved by the commissioner in lieu of the five
19 plans required under this section, except that the plans
20 shall provide the same level of benefits as required for a
21 federally qualified health maintenance organization,
22 including any requirements concerning copayments by
23 enrollees.
24 (3) A carrier shall not be required to own or control a
25 health maintenance organization or otherwise affiliate with a
26 health maintenance organization in order to comply with this
27 section, but the carrier shall be required to offer the five
28 health benefit plans which are formulated by the board and
29 approved by the commissioner, including one plan which
30 contains benefits and cost-sharing levels that are equivalent
19960H3018B4289 - 60 -
1 to those required for health maintenance organizations.
2 (i) Other riders and amendments.--
3 (1) In addition to the rider packages provided for in
4 subsection (f), every carrier may offer, in connection with
5 the five health benefit plans required to be offered by this
6 section, any number of riders which may revise the coverage
7 offered by the five plans in any way, provided, however, that
8 any form of a rider or amendment to a rider which decreases
9 benefits or decreases the actuarial value of one of the five
10 plans shall be filed for informational purposes with the
11 board and for approval by the commissioner before the rider
12 may be sold. Any rider or amendment to a rider which adds
13 benefits or increases the actuarial value of one of the five
14 plans shall be filed with the board for informational
15 purposes before that rider may be sold.
16 (2) The commissioner shall disapprove any rider filed
17 under this subsection that is unjust, unfair, inequitable,
18 unreasonably discriminatory, misleading, contrary to law or
19 the public policy of this Commonwealth. The commissioner
20 shall not approve any rider which reduces benefits below
21 those required by this act and required to be sold pursuant
22 to this section. The commissioner's determination shall be in
23 writing and shall be appealable.
24 (3) The benefit riders provided for in paragraph (1)
25 shall be subject to subsection (d) and to sections 502, 511,
26 512, 514, 515 and 517.
27 (k) Certain anniversary dates.--A health benefit plan issued
28 by or through a carrier, association, multiple employer
29 arrangement prior to January 1, 1998, or, if the requirements of
30 subsection (o) are met, issued by or through an out-of-State
19960H3018B4289 - 61 -
1 trust prior to January 1, 1998, at the option of a small
2 employer policy or contractholder, may be renewed or continued
3 after February 28, 1998, or, in the case of such a health
4 benefit plan whose anniversary date occurred between March 1,
5 1998, and the effective date of this act may be reinstated
6 within 60 days of that anniversary date and renewed or continued
7 if, beginning on the first 12-month anniversary date occurring
8 on or after the 60th day after the board adopts regulations
9 concerning the implementation of the rating factors permitted by
10 section 515 and, regardless of the situs of delivery of the
11 health benefit plan, the health benefit plan renewed, continued
12 or reinstated pursuant to this subsection complies with
13 subsection (d) and sections 502, 511, 512, 514, 515 and 517.
14 (l) Construction.--Nothing in this section shall be
15 construed to require an association, multiple employer
16 arrangement or out-of-State trust to provide health benefit
17 coverage to small employers that are not contemplated by the
18 organizational documents, bylaws or other regulations governing
19 the purpose and operation of the association, multiple employer
20 arrangement or out-of-State trust. Notwithstanding this
21 subsection, an association, multiple employer arrangement or
22 out-of-State trust that offers health benefit coverage to its
23 members' employees and dependents:
24 (1) shall offer coverage to all eligible employees and
25 their dependents within the membership of the association,
26 multiple employer arrangement or out-of-State trust;
27 (2) shall not use actual or expected health status in
28 determining its membership; and
29 (3) shall make available to its small employer members
30 at least one of the standard benefit plans, as determined by
19960H3018B4289 - 62 -
1 the commissioner, in addition to any health benefit plan
2 permitted to be renewed or continued pursuant to this
3 subsection.
4 (m) Offering to any employer.--Notwithstanding the
5 provisions of this subsection to the contrary, a carrier or out-
6 of-State trust which writes the health benefit plans required
7 pursuant to subsection (a) shall be required to offer those
8 plans to any small employer, association or multiple employer
9 arrangement.
10 (n) Withdrawal of plan.--
11 (1) A carrier, association, multiple employer
12 arrangement or out-of-State trust may withdraw a health
13 benefit plan marketed to small employers that was in effect
14 on December 31, 1997, with the approval of the commissioner.
15 The commissioner shall approve a request to withdraw a plan,
16 consistent with regulations adopted by the commissioner, only
17 on the grounds that retention of the plan would cause an
18 unreasonable financial burden to the issuing carrier, taking
19 into account the rating provisions of sections 507 and 515.
20 (2) A carrier which has renewed, continued or reinstated
21 a health benefit plan pursuant to this subsection that has
22 not been newly issued to a new small employer group since
23 January 1, 1998, may, upon approval of the commissioner,
24 continue to establish its rates for that plan based on the
25 loss experience of that plan if the carrier does not issue
26 that health benefit plan to any new small employer groups.
27 (o) Deemed compliance.--A health benefit plan that otherwise
28 conforms to the requirements of this section shall be deemed to
29 be in compliance with this section, notwithstanding any change
30 in the plan's deductible or copayment.
19960H3018B4289 - 63 -
1 (p) Filing with commissioner.--
2 (1) Except as otherwise provided in paragraphs (2) and
3 (3), a health benefit plan renewed, continued or reinstated
4 pursuant to this subsection shall be filed with the
5 commissioner for informational purposes within 30 days after
6 its renewal date. No later than 60 days after the board
7 adopts regulations concerning the implementation of the
8 rating factors permitted by section 515, the filing shall be
9 amended to show any modifications in the plan that are
10 necessary to comply with this subsection. The commissioner
11 shall monitor compliance of any such plan within the
12 requirements of this section, except that the board shall
13 enforce the loss ratio requirements.
14 (2) A health benefit plan filed with the commissioner
15 under paragraph (1) may be amended as to its benefit
16 structure if the amendment does not reduce the actuarial
17 value and benefits coverage of the health benefit plan below
18 that of the lowest standard health benefit plan established
19 by the board pursuant to subsection (a). The amendment shall
20 be filed with the commissioner for approval under this act
21 and shall comply with sections 502, 507 and 515.
22 (3) A health benefit plan issued by a carrier through an
23 out-of-State trust shall be permitted to be renewed or
24 continued pursuant to subsection (k)(1) upon approval by the
25 commissioner and only if the benefits offered under the plan
26 are at least equal to the actuarial value and benefits
27 coverage of the lowest standard health benefit plan
28 established by the board under subsection (a). For the
29 purposes of meeting the requirements of this subsection,
30 carriers shall be required to file with the commissioner the
19960H3018B4289 - 64 -
1 health benefit plan issued through an out-of-State trust no
2 later than 180 days after the effective date of this chapter.
3 A health benefit plan issued by a carrier through an out-of-
4 State trust that is not filed with the commissioner pursuant
5 to this paragraph shall not be permitted to be continued or
6 renewed after the 180-day period.
7 (q) Certain authorizations.--
8 (1) An association, multiple employer arrangement or
9 out-of-State trust may offer a health benefit plan authorized
10 to be renewed, continued or reinstated pursuant to this
11 subsection to small employer groups that are otherwise
12 eligible pursuant to subsection (k)(1) during the period for
13 which such health benefit plan is otherwise authorized to be
14 renewed, continued or reinstated.
15 (2) A carrier, association, multiple employer
16 arrangement or out-of-State trust may offer coverage under a
17 health benefit plan authorized to be renewed, continued or
18 reinstated pursuant to this subsection to new employees of
19 small employer groups covered by the health benefit plan in
20 accordance with subsection (k)(1).
21 (r) Election to purchase or continue coverage.--Any
22 individual who is eligible for small employer coverage under a
23 policy issued, renewed, continued or reinstated under this
24 subsection, but who is subject to a preexisting condition
25 exclusion under the small employer health benefit plan or who is
26 a member of a small employer group who has been denied coverage
27 under the small employer group health benefit plan for health
28 reasons may elect to purchase or continue coverage under an
29 individual health benefit plan until such time as the group
30 health benefit plan covering the small employer group of which
19960H3018B4289 - 65 -
1 the individual is a member complies with this chapter.
2 (s) Deemed eligible.--
3 (1) In a case in which an association made available a
4 health benefit plan on or before March 1, 1998, and
5 subsequently changed the issuing carrier between March 1,
6 1998, and the effective date of this act, the new issuing
7 carrier shall be deemed to have been eligible to continue and
8 renew the plan under subsection (k)(1).
9 (2) In a case in which an association, multiple employer
10 arrangement or out-of-State trust made available a health
11 benefit plan on or before March 1, 1998, and subsequently
12 changes the issuing carrier for that plan after the effective
13 date of this act, the new issuing carrier shall file the
14 health benefit plan with the commissioner for approval in
15 order to be deemed eligible to continue and renew that plan
16 pursuant to subsection (k)(1).
17 (3) In a case in which a small employer purchased a
18 health benefit plan directly from a carrier on or before
19 March 1, 1998, and subsequently changes the issuing carrier
20 for that plan after the effective date of this act, the new
21 issuing carrier shall file the health benefit plan with the
22 commissioner for approval in order to be deemed eligible to
23 continue and renew that plan pursuant to subsection (k)(1). A
24 small employer who changes its health benefit plan's issuing
25 carrier under this paragraph shall not, upon changing
26 carriers, modify the benefit structure of that health benefit
27 plan within six months of the date the issuing carrier was
28 changed.
29 (t) Required coverages.--Effective immediately for a health
30 benefit plan issued on or after the effective date of this act,
19960H3018B4289 - 66 -
1 and effective on the first 12-month anniversary date of a health
2 benefit plan in effect on the effective date of this act, the
3 health benefit plans required under this section, including any
4 plans offered by a federally qualified or State-approved health
5 maintenance organization, shall contain benefits for expenses
6 incurred in the following:
7 (1) Screening by blood lead measurement for lead
8 poisoning for children, including confirmatory blood lead
9 testing as specified by the Department of Health; and medical
10 evaluation and any necessary medical follow-up and treatment
11 for lead poisoned children.
12 (2) All childhood immunizations as recommended by the
13 Advisory Committee on Immunization Practices of the United
14 States Public Health Service and the Department of Health. A
15 carrier shall notify its insureds in writing of any change in
16 the health care services provided with respect to childhood
17 immunizations and any related changes in premium. The
18 notification shall be in a form and manner to be determined
19 by the commissioner.
20 (u) No deductible.--The benefits shall be provided to the
21 same extent as for any other medical condition under the health
22 benefit plan, except that no deductible shall be applied for
23 benefits provided under this section. This section shall apply
24 to all small employer health benefit plans in which the carrier
25 has reserved the right to change the premium.
26 Section 506. Hospital confinement or other supplemental limited
27 benefit insurance plan.
28 (a) General rule.--A carrier shall not deliver or issue for
29 delivery a hospital confinement or other supplemental limited
30 benefit insurance plan unless the applicant for such coverage
19960H3018B4289 - 67 -
1 signs a statement on the application form that confirms that the
2 applicant is already covered under a health benefit plan
3 contract or policy. The application form shall be filed with the
4 board on an informational basis.
5 (b) Content of plan.--A hospital confinement plan or other
6 supplemental limited benefit insurance plan issued to a small
7 employer or other group health benefit plan provider or to
8 individual employees of a small employer or other group health
9 benefit provider:
10 (1) shall be subject to the same rating requirements
11 that apply to health benefit plans issued under section
12 515(a)(2), except that a hospital confinement plan and
13 supplemental limited benefit insurance plan shall be subject
14 to the commissioner's exclusive review and regulation with
15 regard to loss ratios, medical underwriting and eligibility
16 requirements and form approval; and
17 (2) may include preexisting condition exclusions.
18 (c) Limitation.--A health benefit plan shall not coordinate
19 benefits against any hospital confinement or other supplemental
20 limited benefit insurance plan.
21 Section 507. Rating methodology and calculation of loss ratios.
22 (a) General rule.--The commissioner, in consultation with
23 the board, shall promulgate regulations governing the applicable
24 rating methodology and manner in which loss ratios shall be
25 calculated for health benefit plans permitted to be renewed or
26 continued under section 505(k), (l), (m), (n), (o), (p), (q),
27 (r) and (s). In establishing these regulations, the commissioner
28 may consider, but shall not be limited to, the impact of
29 allowing these health benefit plans to continue to be rated
30 separately from the standard health benefit plans established
19960H3018B4289 - 68 -
1 under section 505(a), (b) and (c) and on their own claims
2 experience. If the commissioner determines that the continuation
3 of separate rating pools adversely affects the small employer
4 insurance market and serves to counter the public policy goals
5 which led to the enactment of this act, the commissioner shall
6 develop a methodology which creates a linkage between the
7 standard health benefit plans established under section 505(a),
8 (b) and (c) and the plans permitted to be continued or renewed
9 under section 505(k), (l), (m), (n), (o), (p), (q), (r) and (s)
10 for the purpose of rating and loss ratio calculation.
11 (b) Additional obligations.--Regulations established under
12 this section shall detail all additional obligations of carriers
13 continuing or renewing health benefit plans under section
14 505(k), (l), (m), (n), (o), (p), (q), (r) and (s) which are
15 necessary to meet the general requirements of this chapter.
16 (c) Adoption of regulations.--The regulations shall be
17 initially published in the Pennsylvania Bulletin no later than
18 180 days following the effective date of this act. Until such
19 time as the regulations are finally adopted, the health benefit
20 plans shall continue to be rated and subject to the loss ratio
21 calculations in accordance with applicable law in effect on the
22 effective date of this chapter.
23 Section 508. Coinsurance and deductibles.
24 Plans required to be offered under this chapter may be
25 subject to coinsurance and deductibles, which may vary by
26 selected portions of the coverage, except that no deductible
27 applicable to any portion of the coverage shall exceed $250 for
28 an individual or family unit during any benefit year, and no
29 coinsurance applicable to any portion of the coverage shall
30 exceed $500 for an individual or family unit during any benefit
19960H3018B4289 - 69 -
1 year, unless provided by the board under section 525.
2 Section 509. Coordination of benefits.
3 Coverage provided pursuant to this chapter shall be subject
4 to standard coordination of benefits provisions for all persons
5 covered under the policy or contract.
6 Section 510. Medicaid.
7 Notwithstanding any other provision of law to the contrary, a
8 carrier shall not consider a person's eligibility for Medical
9 Assistance under the act of June 13, 1967 (P.L.31, No.21), known
10 as the Public Welfare Code, or the equivalent statute in another
11 state when determining the person's eligibility for enrollment
12 in or the provision of benefits under a small employer health
13 benefit plan delivered, issued or executed in this Commonwealth.
14 Section 511. Preexisting conditions.
15 (a) General rule.--No health benefit plan subject to this
16 chapter shall include any preexisting condition provision. A
17 preexisting condition provision may, however, apply to a late
18 enrollee or to any group of two to five persons if such
19 provision excludes coverage for a period of no more than 180
20 days following the effective date of coverage of such enrollee
21 and relates only to conditions manifesting themselves during the
22 six months immediately preceding the effective date of coverage
23 of the enrollee in a manner that would cause an ordinarily
24 prudent person to seek medical advice, diagnosis, care or
25 treatment or for which medical advice, diagnosis, care or
26 treatment was recommended or received during the six months
27 immediately preceding the effective date of coverage, or as to a
28 pregnancy existing on the effective date of coverage, provided
29 that, if ten or more late enrollees request enrollment during
30 any 30-day enrollment period, then no preexisting condition
19960H3018B4289 - 70 -
1 provision shall apply to any such enrollee.
2 (b) Determination of condition.--In determining whether a
3 preexisting condition provision applies to an eligible employee
4 or dependent, all health benefit plans shall credit the time
5 that person was covered under any qualifying previous coverage
6 if the previous coverage was continuous to a date not more than
7 90 days prior to the effective date of the new coverage,
8 exclusive of any applicable waiting period under such plan.
9 Section 512. Renewals.
10 Every policy or contract issued to small employers in this
11 Commonwealth under this chapter shall be renewable with respect
12 to all eligible employees or dependents at the option of the
13 policy or contractholder or small employer except under any one
14 or more of the following circumstances:
15 (1) Nonpayment of the required premiums by the
16 policyholder, contractholder or employer.
17 (2) Fraud or misrepresentation of the policyholder,
18 contractholder or employer or, with respect to coverage of
19 eligible employees or dependents, the enrollees or their
20 representatives.
21 (3) The number of employees covered under the health
22 benefit plan is less than the number or percentage of
23 employees required by participation requirements under the
24 health benefit policy or contract.
25 (4) Noncompliance with a carrier's employment
26 contribution requirements.
27 (5) Any carrier doing business under this act ceases
28 doing business in the small employer market if the following
29 conditions are satisfied:
30 (i) The carrier gives notice to cease doing business
19960H3018B4289 - 71 -
1 in the small employer market to the commissioner not
2 later than eight months prior to the date of the planned
3 withdrawal from the small group market, during which time
4 the carrier shall continue to be governed by this act
5 with respect to business written pursuant to this act.
6 For the purposes of this subsection, "date of withdrawal"
7 means the date upon which the first notice to small
8 employers is sent by the carrier under paragraph (2).
9 (ii) No later than two months following the date of
10 the notification to the commissioner that the carrier
11 intends to cease doing business in the small employer
12 market, the carrier shall mail a notice to every small
13 business employer insured by the carrier that the policy
14 or contract of insurance will be terminated. This notice
15 shall be sent by certified mail to the small business
16 employer not less than six months in advance of the
17 effective date of the cancellation date of the policy or
18 contract.
19 (iii) Any carrier that ceases to do business under
20 this chapter shall be prohibited from writing new
21 business in the small employer market for a period of
22 five years from the date of notice to the commissioner.
23 (6) In the case of policies or contracts issued in
24 connection with membership in an association or trust of
25 employers, an employer ceases to maintain its membership in
26 the association or trust.
27 Section 513. Notification requirement for ineligible employers.
28 If a small employer is no longer eligible for coverage under
29 a health benefit plan under this chapter, the carrier shall so
30 notify the small employer at least 60 days prior to the
19960H3018B4289 - 72 -
1 termination of the policy or contract. This 60-day notification
2 requirement shall not apply in cases of nonpayment of required
3 premiums by the policy or contractholder or employer, or fraud
4 or misrepresentation of the policy or contractholder or employer
5 or, with respect to coverage of eligible employees or
6 dependents, fraud or misrepresentation of the enrollees or their
7 representatives.
8 Section 514. Standards of carrier for acceptance of small
9 group.
10 Any small employer carrier may require a reasonable specified
11 minimum participation of eligible employees, which shall not
12 exceed 75%, or reasonable minimum employer contributions in
13 determining whether to accept a small group under this act. The
14 standards established by the carrier shall be first approved by
15 the board and shall be applied uniformly to all small groups,
16 except that in no event shall a carrier require an employer to
17 contribute more than 10% to the annual cost of the policy or
18 contract, or an amount as otherwise provided by the board, and
19 any minimum participation standards established by the carrier
20 shall be reasonable. In establishing the percentage of employee
21 participation, a one-to-one credit shall be given for each
22 employee covered by a spouse's health benefit coverage. In
23 calculating an employer's participation, the carrier shall
24 include all insured employees, regardless of whether the
25 employees chose an indemnity plan or a health maintenance
26 organization or a combination of them.
27 Section 515. Community rating and other requirements.
28 (a) Rating and premiums.--
29 (1) Beginning on the fourth 12-month anniversary date of
30 any policy or contract issued in 1998, no small employer
19960H3018B4289 - 73 -
1 health benefit plan shall be issued in this Commonwealth
2 unless the plan is community rated.
3 (2) Beginning January 1, 1998, and upon the first 12-
4 month anniversary date thereafter of the policy or contract,
5 the premium rate charged by a carrier to the highest-rated
6 small group purchasing a small employer health benefit plan
7 issued under this chapter shall not be greater than 300% of
8 the premium rate charged to the lowest-rated small group
9 purchasing that same health benefit plan. However, the only
10 factors upon which the rate differential may be based are
11 age, gender and geography. Additionally, these factors shall
12 be applied in a manner consistent with the regulations of the
13 board.
14 (3) Beginning on the second 12-month anniversary after
15 the date established in paragraph (2) of the policy or
16 contract, the premium rate charged by a carrier to the
17 highest-rated small group purchasing a small employer health
18 benefit plan issued under section 505(a), (b) and (c) shall
19 not be greater than 200% of the premium rate charged for the
20 lowest-rated small group purchasing that same health benefit
21 plan. However, the only factors upon which the rate
22 differential may be based are age, gender and geography.
23 Additionally, these factors shall be applied in a manner
24 consistent with the regulations of the board.
25 (4) A health benefit plan issued under section 505(k),
26 (l), (m), (n), (o), (p), (q), (r) and (s) shall be rated in
27 accordance with section 508 for the purposes of meeting the
28 requirements of this subsection.
29 (5) Any policy or contract issued after January 1, 1998,
30 to a small employer who was not previously covered by a
19960H3018B4289 - 74 -
1 health benefit plan issued by the issuing small employer
2 carrier shall be subject to the same premium rate
3 restrictions as provided in paragraphs (1), (2) and (3),
4 which rate restrictions shall be effective on the date the
5 policy or contract is issued.
6 (6) The board shall establish, under section 535, the
7 following:
8 (i) Up to six geographic territories, none of which
9 is smaller than a county.
10 (ii) Age classifications which at a minimum shall be
11 in five-year increments.
12 (b) Application of chapter.--This chapter shall apply to a
13 carrier which provides a health benefit plan to one or more
14 small employers through a policy to an association or trust of
15 employers.
16 (c) Offering of plans.--A carrier which provides a health
17 benefit plan to one or more small employers through a policy
18 issued to an association or trust of employers after the
19 effective date of this chapter shall be required to offer small
20 employer health benefit plans to nonassociation or trust
21 employers in the same manner as any other small employer carrier
22 is required under this chapter.
23 (d) Premiums.--Nothing contained in this chapter shall
24 prohibit the use of premium rate structures to establish
25 different premium rates for individuals and family units.
26 (e) Informational filing.--No insurance contract or policy
27 subject to this act may be entered into unless and until the
28 carrier has made an informational filing with the commissioner
29 of a schedule of premiums, not to exceed 12 months in duration,
30 to be paid under that contract or policy, of the carrier's
19960H3018B4289 - 75 -
1 rating plan and classification system in connection with that
2 contract or policy, and of the actuarial assumptions and methods
3 used by the carrier in establishing premium rates for that
4 contract or policy.
5 (f) Change in premiums.--
6 (1) Beginning January 1, 1999, a carrier desiring to
7 increase or decrease premiums for any policy form or benefit
8 rider offered under section 505(j) may implement that
9 increase or decrease upon making an informational filing with
10 the commissioner of that increase or decrease, along with the
11 actuarial assumptions and methods used by the carrier in
12 establishing the increase or decrease, provided that the
13 anticipated minimum loss ratio for a policy form shall not be
14 less than 75% of the premium. Until December 31, 2000, the
15 informational filing shall also include the carrier's rating
16 plan and classification system in connection with that
17 increase or decrease.
18 (2) Each calendar year, a carrier shall return, in the
19 form of aggregate benefits for each of the five standard
20 policy forms offered by the carrier under section 505(a), (b)
21 and (c), at least 75% of the aggregate premiums collected for
22 the policy form during that calendar year. Carriers shall
23 annually report, no later than August 1 of each year, the
24 loss ratio calculated under this section for each policy
25 form for the previous calendar year. In each case where the
26 loss ratio for a policy fails to substantially comply with
27 the 75% loss ratio requirement, the carrier shall issue a
28 dividend or credit against future premiums for all
29 policyholders with that policy form in an amount sufficient
30 to assure that the aggregate benefits paid in the previous
19960H3018B4289 - 76 -
1 calendar year plus the amount of the dividends and credits
2 equal 75% of the aggregate premiums collected for the policy
3 form in the previous calendar year. All dividends and credits
4 must be distributed by December 31 of the year following the
5 calendar year in which the loss ratio requirements were not
6 satisfied. The annual report required by this paragraph shall
7 include a carrier's calculation of the dividends and credits,
8 as well as an explanation of the carrier's plan to issue
9 dividends or credits. The instructions and format for
10 calculating and reporting loss ratios and issuing dividends
11 or credits shall be specified by the commissioner by
12 regulation. These regulations shall include provisions for
13 the distribution of a dividend or credit in the event of
14 cancellation or termination by a policyholder.
15 (3) The loss ratio of a health benefit plan issued under
16 section 505(k), (l), (m), (n), (o), (p), (q), (r) and (s)
17 shall be calculated under section 508 for the purposes of
18 meeting the requirements of this subsection.
19 (h) Application of chapter.--This chapter shall apply to
20 health benefit plans which are delivered, issued for delivery,
21 renewed or continued on or after January 1, 1998.
22 Section 516. Limitations on coverage.
23 (a) General rule.--No health maintenance organization shall
24 be required to offer coverage or accept applications under
25 section 505 to a small employer if the small employer is not
26 physically located in the health maintenance organization's
27 approved service area or to an employee when the employee does
28 not work or reside within a service area or if the health
29 maintenance organization reasonably anticipates and demonstrates
30 to the satisfaction of the commissioner that it will not have
19960H3018B4289 - 77 -
1 the capacity in its network of providers within the service area
2 to deliver service adequately to the members of such groups
3 because of its obligations to existing group contractholders and
4 enrollees.
5 (b) Financial impairment.--No small employer carrier shall
6 be required to offer coverage or accept applications under this
7 chapter for any period of time in which the commissioner
8 determines that the requiring of the issuing of policies or
9 contracts under this chapter would place the carrier in a
10 financially impaired position.
11 (c) Deemed compliance.--A health maintenance organization
12 which complies with the basic health benefits, underwriting and
13 rating standards established by the Federal Government under the
14 Health Maintenance Organization Act of 1973 (Public Law 93-222,
15 42 U.S.C. § 300e et seq.) and which also provides the
16 comprehensive health benefit plans coverage required by section
17 505(h) shall be deemed in compliance with this chapter.
18 Section 517. Continued coverage for terminated employees.
19 (a) General rule.--
20 (1) Every policy or contract issued to a small employer
21 in this Commonwealth, including, but not limited to, policies
22 or contracts which are subject to this chapter and which are
23 delivered, issued, renewed or continued on or after January
24 1, 1998, shall offer continued coverage under the plan to any
25 employee whose employment was terminated for a reason other
26 than for cause and to any employee covered by the plan whose
27 hours of employment were reduced to fewer than 25 hours
28 subsequent to the effective date of coverage for that
29 employee. The employee shall make a written election for
30 continued coverage within 30 days of a qualifying event. For
19960H3018B4289 - 78 -
1 the purposes of this section, the date on which a health
2 benefit plan is continued shall be the anniversary date of
3 the issuance of the plan.
4 (2) As used in this subsection, the term "qualifying
5 event" shall mean the date of termination of employment or
6 the date on which a reduction in an employee's hours of
7 employment becomes effective.
8 (b) Nature of continued coverage.--Coverage continued under
9 subsection (a) shall consist of coverage which is identical to
10 the coverage provided under the policy or contract to similarly
11 situated beneficiaries whose coverage has not been terminated or
12 hours of employment reduced. If coverage is modified under the
13 policy or contract for any group of similarly situated
14 beneficiaries, this coverage shall also be modified in the same
15 manner for persons who are qualified beneficiaries entitled to
16 continued coverage under subsection (a). Continuation of
17 coverage may not be conditioned upon or denied on the basis of a
18 lack of evidence of insurability.
19 (c) Premium.--The health benefit plan may require payment of
20 a premium by the employee for any period of continuation
21 coverage as provided for in this section, except that the
22 premium shall not exceed 102% of the applicable premium paid for
23 similarly situated beneficiaries under the health benefit plan
24 for a specified period and may at the election of the payor be
25 made in monthly installments. No premium payment shall be due
26 before the 30th day after the day on which the covered employee
27 made the initial election for continued coverage.
28 (d) Time.--Coverage continued under this section shall
29 continue until the earlier of the following:
30 (1) The date upon which the employer under whose health
19960H3018B4289 - 79 -
1 benefit plan coverage is continued ceases to provide any
2 health benefit plan to any employee or other qualified
3 beneficiary.
4 (2) The date on which the continued coverage ceases
5 under the health benefit plan by reason of a failure to make
6 timely payment of any premium required under the plan by the
7 former employee having the continued coverage. The payment of
8 any premium shall be considered to be timely if made within
9 30 days after the due date or within a longer period as may
10 be provided for by the policy or contract.
11 (3) The date after the date of election on which the
12 qualified beneficiary first becomes:
13 (i) covered under any other health benefit plan, as
14 an employee or otherwise, which does not contain a
15 provision which limits or excludes coverage with respect
16 to any preexisting condition of a covered employee or any
17 spouse or dependent who is included under the coverage
18 provided to the covered employee, for the period of the
19 limitation or exclusion; or
20 (ii) eligible for Medicare benefits under Title
21 XVIII of the Social Security Act (Public Law 74-271, 42
22 U.S.C. § 1395 et seq.).
23 (e) Notice.--Notice shall be provided to employees in the
24 certificate of coverage prepared for employees by the carrier on
25 or about the commencement of coverage and by the small employer
26 at the time of the qualifying event as to their continuation
27 rights under the plan. A qualified beneficiary may elect
28 continuation coverage offered under this section no later than
29 30 days after the qualifying event.
30 (f) Continuation of coverage.--This section shall not apply
19960H3018B4289 - 80 -
1 to any person who is a qualified beneficiary for the purposes of
2 continuation of coverage as provided in accordance with section
3 3011(a) of the Technical and Miscellaneous Revenue Act of 1988
4 (Public Law 100-647, 102 Stat. 3342).
5 (g) Limitation.--In no event shall any continuation of
6 coverage provided for under this section exceed 12 months from
7 the qualifying event.
8 (h) Definition.--As used in this section, the term
9 "qualified beneficiary" means any person covered under a small
10 employer group policy.
11 Section 518. Small employer health benefit program.
12 There is hereby created a nonprofit entity to be known as the
13 Pennsylvania Small Employer Health Benefit Program. All carriers
14 issuing health benefit plan policies and contracts in this
15 Commonwealth shall be members of this program. The program shall
16 be administered by the board of directors established under
17 section 519.
18 Section 519. Board of directors.
19 (a) Composition and terms.--Within 60 days of the effective
20 date of this act, the commissioner shall give notice to all
21 members of the time and place for the initial organizational
22 meeting, which shall take place within 90 days of the effective
23 date. The members shall elect the initial board, subject to the
24 approval of the commissioner. The board shall consist of ten
25 elected public members and two ex officio members who include
26 the Secretary of Health and the commissioner or their designees.
27 Initially, three of the public members of the board shall be
28 elected for a three-year term, three shall be elected for a two-
29 year term and three shall be elected for a one-year term.
30 Thereafter, all elected board members shall serve for a term of
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1 three years. The following categories shall be represented among
2 the elected public members:
3 (1) three carriers whose principal health insurance
4 business is in the small employer market;
5 (2) one carrier whose principal health insurance
6 business is in the large employer market;
7 (3) until December 31, 2003, a health, hospital or
8 medical service corporation or a domestic mutual insurer
9 which converted from a health service corporation. After that
10 date, a health, hospital or medical service corporation or a
11 domestic mutual insurer which, either directly or through a
12 subsidiary health maintenance organization, is primarily
13 engaged in the business of issuing health benefit plans;
14 (4) two health maintenance organizations; and
15 (5) three persons representing small employers, at least
16 one of whom represents minority small employers.
17 No carrier shall have more than one representative on the board.
18 (b) Public members.--In addition to the ten elected public
19 members, the board shall include six public members appointed by
20 the Governor with the advice and consent of the Senate who shall
21 include:
22 (1) Two insurance producers licensed to sell health
23 insurance in this Commonwealth.
24 (2) One representative of organized labor.
25 (3) One physician licensed to practice medicine and
26 surgery in this Commonwealth.
27 (4) Two persons who represent the general public and are
28 not employees of a health benefit plan provider.
29 The public members shall be appointed for a term of three years,
30 except that of the members first appointed, two shall be
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1 appointed for a term of one year, two for a term of two years
2 and two for a term of three years. A vacancy in the membership
3 of the board shall be filled for an unexpired term in the manner
4 provided for the original election or appointment, as
5 appropriate.
6 (c) Appointed members.--If the initial board is not elected
7 at the organizational meeting, the commissioner shall appoint
8 the public members within 15 days of the organizational meeting,
9 in accordance with subsection (a)(1) through (5).
10 (d) Sunshine Act.--All meetings of the board shall be
11 subject to the act of July 3, 1986 (P.L.388, No.84), known as
12 the Sunshine Act.
13 (e) Minutes.--At least two copies of the minutes of every
14 meeting of the board shall be delivered to the commissioner.
15 Section 520. Immunity, defense and indemnification.
16 A member of the board and an employee of the board shall not
17 be liable in an action for damages to any person for any action
18 taken or recommendation made by him within the scope of his
19 functions as a member or employee, if the action or
20 recommendation was taken or made without malice. The members of
21 the board shall be indemnified and their defense of any action
22 provided for, on account of acts or omissions made in the scope
23 of their employment.
24 Section 521. Voluntary risk pooling.
25 The board may, in the manner provided by law, promulgate
26 regulations establishing a voluntary risk pooling arrangement
27 for program members.
28 Section 522. Plan of operation.
29 Within 90 days after the election of the initial board, the
30 board shall submit to the commissioner a plan of operation which
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1 shall establish the administration of the program under this
2 chapter. The plan of operation and any subsequent amendments to
3 the plan shall be submitted to the commissioner who shall, after
4 notice and hearing, approve the plan if he finds that it is
5 reasonable and equitable and sufficiently carries out this
6 chapter. The plan of operation shall become effective after the
7 commissioner has approved it in writing. The plan or any
8 subsequent amendments to the plan shall be deemed approved if
9 not expressly disapproved by the commissioner in writing within
10 90 days of receipt by the commissioner.
11 Section 523. Provisions of plan.
12 The plan of operation shall constitute a public record and
13 shall include, but not be limited to, the following:
14 (1) A method of handling and accounting for assets and
15 moneys of the program and an annual fiscal reporting to the
16 commissioner.
17 (2) A means of providing for the filling of vacancies on
18 the board, subject to the approval of the commissioner.
19 (3) Any additional matters which are appropriate to
20 effectuate the provisions of this chapter.
21 Section 524. Authority of board.
22 The board shall have the authority to:
23 (1) Enter into contracts as are necessary to carry out
24 the provisions and purposes of this chapter.
25 (2) Sue or be sued, including taking any legal actions
26 as may be necessary for recovery of any assessments due to
27 the program or to avoid paying any improper claims.
28 (3) Establish rules, conditions and procedures
29 pertaining to the assessment of members by the program.
30 (4) Assess members in accordance with the provisions of
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1 this act, including such interim assessments as may be
2 reasonable and necessary for organizational and reasonable
3 operating expenses. These interim assessments shall be
4 credited as offsets against any regular assessments due
5 following the close of the fiscal year.
6 (5) Appoint from among its members appropriate legal,
7 actuarial and other committees as necessary to provide
8 technical assistance in the operation of the program, policy
9 and other contract design, and any other function within the
10 authority of the program.
11 (6) Contract for an independent actuary or any other
12 professional services the board deems necessary to carry out
13 its duties under this chapter.
14 Section 525. Establishment by board of health benefit plans.
15 (a) Plans.--Subject to the approval of the commissioner, the
16 board shall formulate the five health benefit plans to be made
17 available by small employer carriers in accordance with this act
18 and shall promulgate five standard forms in connection with
19 these plans. The board may establish benefit levels, deductibles
20 and copayments, exclusions and limitations for such health
21 benefit plans in accordance with law.
22 (b) Forms.--The board shall submit the forms so established
23 to the commissioner for his approval. The commissioner shall
24 approve the forms if he finds them to be consistent with section
25 505. Any form submitted to the commissioner by the board shall
26 be deemed approved if not expressly disapproved in writing
27 within 60 days of its receipt by the commissioner. These forms
28 may contain, but shall not be limited to, the following
29 provisions:
30 (1) Utilization review of health care services,
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1 including review of medical necessity of hospital and
2 physician services.
3 (2) Managed care systems, including large case
4 management.
5 (3) Provision for selective contracting with hospitals,
6 physicians and other health care providers.
7 (4) Reasonable benefit differentials which are
8 applicable to participating and nonparticipating providers.
9 (5) Such other provisions which may be quantifiably
10 established to be cost containment devices.
11 (c) Adjustments.--Notwithstanding section 508 to the
12 contrary, the board may from time to time adjust coinsurance and
13 deductibles.
14 (d) Publication.--The department shall publish annually a
15 list of the premiums charged for each of the five small employer
16 health benefit plans and for any rider package by all carriers
17 writing these plans. The department shall also publish the toll-
18 free telephone number of each such carrier.
19 Section 526. Civil penalty.
20 Any carrier which violates this act shall be subject to a
21 civil penalty as determined by the commissioner. The hearing and
22 appeals procedure provided for in 2 Pa.C.S. (relating to
23 administrative law and procedure) shall apply.
24 Section 527. Prohibition on charge of civil penalty to
25 policyholders or public.
26 No civil penalty shall be charged, directly or indirectly, to
27 policyholders or the public, provided that a carrier may charge
28 such penalty to policyholders to the extent that the charging of
29 the penalty is necessary to enable the carrier to earn a
30 constitutionally adequate rate of return.
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1 Section 528. Standard claim form.
2 The board, in conjunction with the board of the Pennsylvania
3 Individual Health Coverage Program established under section
4 314, shall promulgate one standard claim form. In order to
5 provide a standard system of payment for medical services, all
6 claim forms for any claimant's use under a group health
7 insurance policy issued or delivered in this Commonwealth shall
8 conform to the form adopted by the board.
9 Section 529. Group hospital or medical coverage of residents
10 obtained through out-of-State trust.
11 Group hospital or medical coverage obtained through an out-
12 of-State trust covering a group of 49 or fewer employees or
13 participating persons who are residents of this Commonwealth
14 shall comply with this chapter regardless of the situs of
15 delivery of the policy.
16 Section 530. Multiple employer arrangements.
17 (a) Registration.--A multiple employer arrangement covering
18 a group of 49 or fewer employees or participating persons of an
19 individual employer who are residents of this Commonwealth shall
20 register with the board of directors established under section
21 519.
22 (b) Premiums.--The multiple employer arrangement shall be
23 required to offer the health benefit plans established by the
24 board. The premium rates charged for the multiple employer
25 arrangement health benefit plan shall conform to the
26 requirements of section 514, and the coverage shall comply with
27 the provisions of sections 505(d), 511 and 512 regardless of the
28 situs of delivery of the multiple employer arrangement.
29 Section 531. Notice to commissioner.
30 A carrier shall notify the commissioner by December 31 of
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1 each year of any health care coverage or benefits, stop-loss
2 coverage or administrative services only contracts it provides
3 or enters into with a multiple employer arrangement that
4 provides health care benefits to employees and their dependents
5 in this Commonwealth.
6 Section 532. Limitations on certain purchases.
7 (a) General rule.--A small employer who purchases a health
8 benefit plan or rider under this chapter shall not be permitted
9 to purchase a health benefit plan or rider with a greater
10 actuarial value until the first anniversary date of the small
11 employer's existing health benefit plan.
12 (b) Certain change not permitted.--If, after the first
13 anniversary date of a small employer's health benefit plan, the
14 small employer purchases a health benefit plan or rider of
15 greater actuarial value than the existing health benefit plan or
16 rider, the small employer shall not be permitted to change his
17 health benefit plan or rider to one of lesser actuarial value
18 until the anniversary date of the small employer's existing
19 health benefit plan.
20 (c) Other plan.--Nothing in this section shall be construed
21 to prohibit a small employer who has purchased a health benefit
22 plan or rider under this chapter from purchasing a health
23 benefit plan or rider of lesser actuarial value prior to the
24 anniversary date of the existing health benefit plan or rider,
25 if the existing plan or rider was purchased at least 12 months
26 prior to the latest anniversary date of the plan or rider.
27 Section 533. Intended actions by board.
28 (a) General rule.--Effective January 1, 1998, all actions
29 adopted by the board shall be subject to this section,
30 notwithstanding the provisions of law to the contrary.
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1 (b) Notice.--
2 (1) Prior to the adoption of an action of the board, the
3 board shall publish notice of its intended action in three
4 newspapers of general circulation in this Commonwealth and
5 may publish the notice of intended action in any trade or
6 professional publication which it deems necessary. The notice
7 of intended action shall include procedures for obtaining a
8 detailed description of the intended action and the time,
9 place and manner by which interested persons may present
10 their views. The board shall provide the notice of intended
11 action and a detailed description of the intended action by
12 mail, or otherwise, to affected trade and professional
13 associations, carriers subject to this chapter and other
14 interested persons or organizations which may request
15 notification. The board shall forward the notice of intended
16 action and the detailed description of the intended action
17 concurrently to the Legislative Reference Bureau for
18 publication as a notice in the Pennsylvania Bulletin.
19 (2) The board shall not charge any fee for placement
20 upon the mailing list of associations, carriers or other
21 persons to be notified, but the board may charge a fee to an
22 association, carrier or other person requesting a copy of the
23 text of the intended action, which fee shall not be in excess
24 of the actual cost of reproducing and mailing the copy.
25 (3) A copy of the text of the intended action shall be
26 available at the department.
27 (c) Public hearing.--The board shall hold a public hearing
28 on the establishment and modification of health benefit plans,
29 and the board may hold a public hearing on any other intended
30 action. Notice of a hearing shall be given in the notice of
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1 intended action provided for in subsection (b).
2 (d) Comments.--
3 (1) Whether or not a public hearing is held, the board
4 shall afford all interested persons an opportunity to comment
5 in writing on the intended action. Written comments shall be
6 submitted to the board within the time established by the
7 board in the notice of intended action, which time shall not
8 be less than 20 calendar days from the date of notice.
9 (2) The board shall give due consideration to all
10 comments received. Within a reasonable period of time
11 following submission of the comments under this subsection,
12 the board shall prepare for public distribution a report
13 listing all parties who provided written submissions
14 concerning the intended action, summarizing the content of
15 the submissions and providing the board's response to the
16 data, views and arguments contained in the submissions. A
17 copy of the report shall be filed with the Legislative
18 Reference Bureau for publication as a notice in the
19 Pennsylvania Bulletin.
20 (e) Action by board.--The board may adopt the intended
21 action immediately following the expiration of the public
22 comment period provided in subsection (d) or the hearing
23 provided for in subsection (c), whichever date is later. The
24 final action adopted by the board shall be submitted for
25 publication as a notice in the Pennsylvania Bulletin and shall
26 be effective on the date of the submission or a later date as
27 the board may establish.
28 (f) Construction.--Nothing in this section shall be
29 construed to prohibit the commissioner from adopting any rule or
30 regulation in the manner provided by law for the promulgation of
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1 rules and regulations.
2 (g) Definition.--As used in this section, the term "action"
3 includes, but is not limited to:
4 (1) the establishment and modification of health benefit
5 plans;
6 (2) procedures and standards for the:
7 (i) assessment and apportionment of members;
8 (ii) filing of policy forms;
9 (iii) making of rate filings;
10 (iv) evaluation of material submitted by carriers
11 with respect to loss ratios; and
12 (v) establishment of refunds to policy or contract
13 holders; and
14 (3) the promulgation or modification of policy forms.
15 The term shall not include the hearing and resolution of
16 contested cases, personnel matters and applications for
17 withdrawal or exemptions.
18 Section 534. Other insurance coverage not required.
19 A carrier shall not require a small employer to purchase any
20 other insurance coverage, including, but not limited to, life
21 insurance, accident insurance or disability insurance, as a
22 condition of or in conjunction with the purchase of a health
23 benefit plan under this chapter.
24 Section 535. Selective contracting.
25 (a) General rule.--The commissioner may approve the
26 establishment of an arrangement by an insurance company
27 authorized to issue health benefit plans in this Commonwealth,
28 that is entered into on or after June 1, 1997, and which
29 provides for selective contracting with health care providers
30 and reasonable benefit differentials applicable to participating
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1 and nonparticipating health care providers.
2 (b) Approval by commissioner.--The agreement for an
3 arrangement shall be filed and approved by the commissioner
4 before it becomes effective. The commissioner shall approve the
5 agreement if he determines, in consultation with the Secretary
6 of Health, that the arrangement promotes health care cost
7 containment while adequately preserving quality of care.
8 CHAPTER 11
9 MISCELLANEOUS PROVISIONS
10 Section 1101. Repeals.
11 All acts and parts of acts are repealed insofar as they are
12 inconsistent with this act.
13 Section 1102. Effective date.
14 This act shall take effect in 60 days.
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