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                                                      PRINTER'S NO. 3402

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2348 Session of 2008


        INTRODUCED BY EACHUS, DeLUCA, CARROLL, COHEN, COSTA, CURRY,
           DePASQUALE, DERMODY, DeWEESE, D. EVANS, FRANKEL, KORTZ,
           KOTIK, KULA, MANDERINO, McCALL, MUNDY, PARKER, PASHINSKI,
           SIPTROTH, SURRA, WHEATLEY AND YUDICHAK, MARCH 12, 2008

        REFERRED TO COMMITTEE ON INSURANCE, MARCH 12, 2008

                                     AN ACT

     1  Amending the act of March 20, 2002 (P.L.154, No.13), entitled
     2     "An act reforming the law on medical professional liability;
     3     providing for patient safety and reporting; establishing the
     4     Patient Safety Authority and the Patient Safety Trust Fund;
     5     abrogating regulations; providing for medical professional
     6     liability informed consent, damages, expert qualifications,
     7     limitations of actions and medical records; establishing the
     8     Interbranch Commission on Venue; providing for medical
     9     professional liability insurance; establishing the Medical
    10     Care Availability and Reduction of Error Fund; providing for
    11     medical professional liability claims; establishing the Joint
    12     Underwriting Association; regulating medical professional
    13     liability insurance; providing for medical licensure
    14     regulation; providing for administration; imposing penalties;
    15     and making repeals," further providing for medical
    16     professional liability insurance, for the Medical Care
    17     Availability and Reduction of Error Fund and for actuarial
    18     data; establishing the Pennsylvania Access to Basic Care (PA
    19     ABC) Program Fund and the Continuing Access with Relief for
    20     Employers (CARE) Fund; further defining "health care
    21     provider"; further providing for the Health Care Provider
    22     Retention Program; establishing the Supplemental Assistance
    23     and Funding Account; further providing for expiration of the
    24     Health Care Provider Retention Program; establishing the
    25     Pennsylvania Access to Basic Care (PA ABC) Program; providing
    26     for Continuing Access with Relief for Employers (CARE)
    27     Grants, for health care coverage for certain adults,
    28     individuals, employees and employers and for expiration of
    29     certain sections; and repealing provisions of the Tobacco
    30     Settlement Act.

    31     The General Assembly of the Commonwealth of Pennsylvania

     1  hereby enacts as follows:
     2     Section 1.  Section 711(d) and (g) of the act of March 20,
     3  2002 (P.L.154, No.13), known as the Medical Care Availability
     4  and Reduction of Error (Mcare) Act, are amended to read:
     5  Section 711.  Medical professional liability insurance.
     6     * * *
     7     (d)  Basic coverage limits.--A health care provider shall
     8  insure or self-insure medical professional liability in
     9  accordance with the following:
    10         (1)  For policies issued or renewed in the calendar year
    11     2002, the basic insurance coverage shall be:
    12             (i)  $500,000 per occurrence or claim and $1,500,000
    13         per annual aggregate for a health care provider who
    14         conducts more than 50% of its health care business or
    15         practice within this Commonwealth and that is not a
    16         hospital.
    17             (ii)  $500,000 per occurrence or claim and $1,500,000
    18         per annual aggregate for a health care provider who
    19         conducts 50% or less of its health care business or
    20         practice within this Commonwealth.
    21             (iii)  $500,000 per occurrence or claim and
    22         $2,500,000 per annual aggregate for a hospital.
    23         (2)  For policies issued or renewed in the calendar years
    24     2003[, 2004 and 2005] through 2008, the basic insurance
    25     coverage shall be:
    26             (i)  $500,000 per occurrence or claim and $1,500,000
    27         per annual aggregate for a participating health care
    28         provider that is not a hospital.
    29             (ii)  $1,000,000 per occurrence or claim and
    30         $3,000,000 per annual aggregate for a nonparticipating
    20080H2348B3402                  - 2 -     

     1         health care provider.
     2             (iii)  $500,000 per occurrence or claim and
     3         $2,500,000 per annual aggregate for a hospital.
     4         [(3)  Unless the commissioner finds pursuant to section
     5     745(a) that additional basic insurance coverage capacity is
     6     not available, for policies issued or renewed in calendar
     7     year 2006 and each year thereafter subject to paragraph (4),
     8     the basic insurance coverage shall be:
     9             (i)  $750,000 per occurrence or claim and $2,250,000
    10         per annual aggregate for a participating health care
    11         provider that is not a hospital.
    12             (ii)  $1,000,000 per occurrence or claim and
    13         $3,000,000 per annual aggregate for a nonparticipating
    14         health care provider.
    15             (iii)  $750,000 per occurrence or claim and
    16         $3,750,000 per annual aggregate for a hospital.
    17     If the commissioner finds pursuant to section 745(a) that
    18     additional basic insurance coverage capacity is not
    19     available, the basic insurance coverage requirements shall
    20     remain at the level required by paragraph (2); and the
    21     commissioner shall conduct a study every two years until the
    22     commissioner finds that additional basic insurance coverage
    23     capacity is available, at which time the commissioner shall
    24     increase the required basic insurance coverage in accordance
    25     with this paragraph.
    26         (4)  Unless the commissioner finds pursuant to section
    27     745(b) that additional basic insurance coverage capacity is
    28     not available, for policies issued or renewed three years
    29     after the increase in coverage limits required by paragraph
    30     (3) and for each year thereafter, the basic insurance
    20080H2348B3402                  - 3 -     

     1     coverage shall be:
     2             (i)  $1,000,000 per occurrence or claim and
     3         $3,000,000 per annual aggregate for a participating
     4         health care provider that is not a hospital.
     5             (ii)  $1,000,000 per occurrence or claim and
     6         $3,000,000 per annual aggregate for a nonparticipating
     7         health care provider.
     8             (iii)  $1,000,000 per occurrence or claim and
     9         $4,500,000 per annual aggregate for a hospital.
    10     If the commissioner finds pursuant to section 745(b) that
    11     additional basic insurance coverage capacity is not
    12     available, the basic insurance coverage requirements shall
    13     remain at the level required by paragraph (3); and the
    14     commissioner shall conduct a study every two years until the
    15     commissioner finds that additional basic insurance coverage
    16     capacity is available, at which time the commissioner shall
    17     increase the required basic insurance coverage in accordance
    18     with this paragraph.]
    19         (5)  For policies issued or renewed in calendar year
    20     2009, the basic insurance coverage shall be:
    21             (i)  $550,000 per occurrence or claim and $1,650,000
    22         per annual aggregate for a participating health care
    23         provider that is not a hospital.
    24             (ii)  $1,000,000 per occurrence or claim and
    25         $3,000,000 per annual aggregate for a nonparticipating
    26         health care provider.
    27             (iii)  $550,000 per occurrence or claim and
    28         $2,700,000 per annual aggregate for a hospital.
    29         (6)  For policies issued or renewed in calendar years
    30     2010 and thereafter:
    20080H2348B3402                  - 4 -     

     1             (i)  The basic insurance coverage for a participating
     2         health care provider that is not a hospital shall
     3         increase by $50,000 per occurrence or claim and $150,000
     4         per annual aggregate per year until such time as the
     5         basic insurance coverage required shall be $1,000,000 per
     6         occurrence or claim and $3,000,000 per annual aggregate.
     7             (ii)  The basic insurance coverage for a
     8         nonparticipating health care provider shall be $1,000,000
     9         per occurrence or claim and $3,000,000 per annual
    10         aggregate.
    11             (iii)  The basic insurance coverage for a hospital
    12         shall increase by $50,000 per occurrence or claim and
    13         $200,000 per annual aggregate until such time as the
    14         basic insurance coverage requirement shall be $1,000,000
    15         per occurrence or claim and $4,500,000 per annual
    16         aggregate per year.
    17         (7)  Basic insurance coverage amounts shall be exclusive
    18     of a deductible or any other contribution from the health
    19     care provider.
    20     * * *
    21     (g)  Basic insurance liability.--
    22         (1)  An insurer providing medical professional liability
    23     insurance shall not be liable for payment of a claim against
    24     a health care provider for any loss or damages awarded in a
    25     medical professional liability action in excess of the basic
    26     insurance coverage required by subsection (d) unless the
    27     health care provider's medical professional liability
    28     insurance policy or self-insurance plan provides for a higher
    29     limit.
    30         (2)  If a claim exceeds the limits of a participating
    20080H2348B3402                  - 5 -     

     1     health care provider's basic insurance coverage or self-
     2     insurance plan, the fund shall be responsible for payment of
     3     the claim against the participating health care provider up
     4     to the fund liability limits. The fund shall not be
     5     responsible if a claimant has waived collection of any
     6     portion of the applicable basic insurance coverage limit.
     7         (3)  If the health care provider has more than one basic
     8     insurance coverage policy with more than one insurer
     9     applicable to a claim, the fund shall be liable when the
    10     policy with the highest limit has been tendered to the fund.
    11     * * *
    12     Section 2.  Section 712(c), (d), (e), (i), (j) and (m) of the
    13  act are amended and the section is amended by adding a
    14  subsection to read:
    15  Section 712.  Medical Care Availability and Reduction of Error
    16                 Fund.
    17     * * *
    18     (c)  Fund liability limits.--
    19         (1)  For calendar year 2002, the limit of liability of
    20     the fund created in section 701(d) of the former Health Care
    21     Services Malpractice Act for each health care provider that
    22     conducts more than 50% of its health care business or
    23     practice within this Commonwealth and for each hospital shall
    24     be $700,000 for each occurrence and $2,100,000 per annual
    25     aggregate.
    26         (2)  The limit of liability of the fund for each
    27     participating health care provider shall be [as follows:
    28             (i)  For] for calendar year 2003 and each year
    29         thereafter, the limit of liability of the fund shall be
    30         $500,000 for each occurrence and $1,500,000 per annual
    20080H2348B3402                  - 6 -     

     1         aggregate.
     2             [(ii)  If the basic insurance coverage requirement is
     3         increased in accordance with section 711(d)(3) and,
     4         notwithstanding subparagraph (i), for each calendar year
     5         following the increase in the basic insurance coverage
     6         requirement, the limit of liability of the fund shall be
     7         $250,000 for each occurrence and $750,000 per annual
     8         aggregate.
     9             (iii)  If the basic insurance coverage requirement is
    10         increased in accordance with section 711(d)(4) and,
    11         notwithstanding subparagraphs (i) and (ii), for each
    12         calendar year following the increase in the basic
    13         insurance coverage requirement, the limit of liability of
    14         the fund shall be zero.]
    15         (3)  The limit of liability of the fund for each
    16     participating health care provider shall be:
    17             (i)  For calendar years 2003 through 2008, $500,000
    18         for each occurrence and $1,500,000 per annual aggregate.
    19             (ii)  For calendar year 2009, $450,000 per occurrence
    20         or claim and $1,350,000 per annual aggregate.
    21             (iii)  For calendar years 2010 and thereafter, the
    22         limit of liability shall decrease by $50,000 per
    23         occurrence or claim and $150,000 per annual aggregate per
    24         year until such time as the fund limit of liability shall
    25         be zero dollars per occurrence or claim and zero dollars
    26         per annual aggregate.
    27     (d)  Assessments.--
    28         (1)  For calendar [year 2003 and for each year
    29     thereafter,] years 2003 through 2017, the fund shall be
    30     funded by an assessment on each participating health care
    20080H2348B3402                  - 7 -     

     1     provider. Assessments shall be levied by the department on or
     2     after January 1 of each year. The assessment shall be based
     3     on the prevailing primary premium for each participating
     4     health care provider and shall, in the aggregate, produce an
     5     amount sufficient to do all of the following:
     6             (i)  Reimburse the fund for the payment of reported
     7         claims which became final during the preceding claims
     8         period.
     9             (ii)  Pay expenses of the fund incurred during the
    10         preceding claims period.
    11             (iii)  Pay principal and interest on moneys
    12         transferred into the fund in accordance with section
    13         713(c).
    14             (iv)  Provide a reserve that shall be 10% of the sum
    15         of subparagraphs (i), (ii) and (iii).
    16         (2)  The department shall notify all basic insurance
    17     coverage insurers and self-insured participating health care
    18     providers of the assessment by November 1 for the succeeding
    19     calendar year.
    20         (3)  Any appeal of the assessment shall be filed with the
    21     department.
    22     [(e)  Discount on surcharges and assessments.--
    23         (1)  For calendar year 2002, the department shall
    24     discount the aggregate surcharge imposed under section
    25     701(e)(1) of the Health Care Services Malpractice Act by 5%
    26     of the aggregate surcharge imposed under that section for
    27     calendar year 2001 in accordance with the following:
    28             (i)  Fifty percent of the aggregate discount shall be
    29         granted equally to hospitals and to participating health
    30         care providers that were surcharged as members of one of
    20080H2348B3402                  - 8 -     

     1         the four highest rate classes of the prevailing primary
     2         premium.
     3             (ii)  Notwithstanding subparagraph (i), 50% of the
     4         aggregate discount shall be granted equally to all
     5         participating health care providers.
     6             (iii)  The department shall issue a credit to a
     7         participating health care provider who, prior to the
     8         effective date of this section, has paid the surcharge
     9         imposed under section 701(e)(1) of the former Health Care
    10         Services Malpractice Act for calendar year 2002 prior to
    11         the effective date of this section.
    12         (2)  For calendar years 2003 and 2004, the department
    13     shall discount the aggregate assessment imposed under
    14     subsection (d) for each calendar year by 10% of the aggregate
    15     surcharge imposed under section 701(e)(1) of the former
    16     Health Care Services Malpractice Act for calendar year 2001
    17     in accordance with the following:
    18             (i)  Fifty percent of the aggregate discount shall be
    19         granted equally to hospitals and to participating health
    20         care providers that were assessed as members of one of
    21         the four highest rate classes of the prevailing primary
    22         premium.
    23             (ii)  Notwithstanding subparagraph (i), 50% of the
    24         aggregate discount shall be granted equally to all
    25         participating health care providers.
    26         (3)  For calendar years 2005 and thereafter, if the basic
    27     insurance coverage requirement is increased in accordance
    28     with section 711(d)(3) or (4), the department may discount
    29     the aggregate assessment imposed under subsection (d) by an
    30     amount not to exceed the aggregate sum to be deposited in the
    20080H2348B3402                  - 9 -     

     1     fund in accordance with subsection (m).]
     2     * * *
     3     (i)  Change in basic insurance coverage.--If a participating
     4  health care provider changes the term of its medical
     5  professional liability insurance coverage, the assessment shall
     6  be calculated on an annual basis and shall reflect the
     7  assessment percentages in effect for the period over which the
     8  policies are in effect. A policy period less than 12 months may
     9  result in a prorated reduction in the Mcare annual aggregate
    10  limit.
    11     (j)  Payment of claims.--Claims which became final during the
    12  preceding claims period shall be paid on [or before] December 31
    13  or the last business day of the year following the August 31 on
    14  which they became final.
    15     * * *
    16     (m)  Supplemental funding.--Notwithstanding the provisions of
    17  75 Pa.C.S. § 6506(b) (relating to surcharge) to the contrary,
    18  beginning January 1, 2004, [and for a period of nine calendar
    19  years thereafter,] through June 30, 2018, all surcharges levied
    20  and collected under 75 Pa.C.S. § 6506(a) by any division of the
    21  unified judicial system shall be remitted to the Commonwealth
    22  for deposit in the Medical Care Availability and [Restriction]
    23  Reduction of Error Fund. These funds shall be used to reduce
    24  surcharges and assessments in accordance with subsection (e).
    25  Beginning [January 1, 2014] July 1, 2018, and each year
    26  thereafter, the surcharges levied and collected under 75 Pa.C.S.
    27  § 6506(a) shall be deposited into the [General Fund.] Health
    28  Care Provider Retention Account.
    29     * * *
    30     (o)  Coverage of claims in relation to payment of certain
    20080H2348B3402                 - 10 -     

     1  late assessments.--
     2         (1)  All basic insurance coverage insurers, self-insured
     3     participating health care providers and risk retention groups
     4     shall bill, collect and remit the assessment to the
     5     department within 60 days of the inception or renewal date of
     6     the primary professional liability policy.
     7         (2)  All basic insurance coverage insurers, self-insured
     8     participating health care providers and risk retention groups
     9     shall be subject to the following:
    10             (i)  For assessments remitted to the department in
    11         excess of 60 days after the inception or renewal date of
    12         the primary policy, the basic insurance coverage insurer,
    13         self-insured participating health care provider or risk
    14         retention group shall pay to the department a penalty
    15         equal to 10% per annum of each untimely assessment
    16         accruing from the 61st day after the inception or renewal
    17         date of the primary policy until the remittance is
    18         received by the department.
    19             (ii)  In addition to the provisions of subparagraph
    20         (i), if the department finds that there has been a
    21         pattern or practice of not complying with this section,
    22         the basic insurance coverage insurer, self-insured
    23         participating health care provider or risk retention
    24         group shall be subject to the penalties and process set
    25         forth in the act of July 22, 1974 (P.L.589, No.205),
    26         known as the Unfair Insurance Practices Act.
    27             (iii)  If the basic insurance coverage insurer, self-
    28         insurer or risk retention group receives the assessment
    29         from a health care provider, professional corporation or
    30         professional association with less than 30 days to make
    20080H2348B3402                 - 11 -     

     1         the remittance timely as provided under this subsection,
     2         the basic insurance coverage insurer, self-insurer or
     3         risk retention group remittance period shall be extended
     4         by 30 days from the date of receipt upon providing
     5         reasonable evidence to the department regarding the date
     6         of receipt and shall not be subject to the penalties
     7         provided for under this section.
     8             (iv)  If the basic insurance coverage insurer, self-
     9         insurer or risk retention group receives an assessment
    10         after 60 days of the inception or renewal date of the
    11         primary professional liability policy and remits the
    12         assessment within 30 days from the date of receipt, the
    13         basic insurance coverage insurer, self-insurer or risk
    14         retention group shall not be subject to the penalties
    15         provided for under this section. Remittances to the
    16         department beyond the 30-day period shall be subject to
    17         the penalties provided for under this section.
    18             (v)  (A)  A health care provider or professional
    19             corporation, professional association or partnership
    20             shall be provided coverage from the inception or
    21             renewal date of the primary professional liability
    22             policy if the billed assessment is paid to the basic
    23             insurance coverage insurer, self-insurer or risk
    24             retention group within 60 days of the inception or
    25             renewal date of the primary professional liability
    26             policy.
    27                 (B)  A health care provider or professional
    28             corporation, professional association or partnership
    29             that fails to pay the billed assessment to its basic
    30             insurance coverage insurer, self-insurer or risk
    20080H2348B3402                 - 12 -     

     1             retention group within 60 days of policy inception or
     2             renewal and before receiving notice of a claim shall
     3             not have coverage for that claim.
     4                 (C)  If a health care provider or professional
     5             corporation, professional association or partnership
     6             is billed by the basic insurance coverage insurer,
     7             self-insurer or risk retention group later than 30
     8             days after the policy inception or renewal date and
     9             the health care provider or professional corporation,
    10             professional association or partnership pays the
    11             basic insurance coverage insurer, self-insurer or
    12             risk retention group within 30 days from the date of
    13             receipt of the bill and the basic insurance coverage
    14             insurer, self-insurer or risk retention group carrier
    15             remits the assessment to the department within 30
    16             days from the date of receipt, the health care
    17             provider shall be provided coverage as of the
    18             inception or renewal date of the primary policy.
    19             Coverage shall also be provided to the health care
    20             provider or professional corporation, professional
    21             association or partnership for all professional
    22             liability claims made after payment of the
    23             assessment.
    24             (vi)  Except as to provisions in conflict with this
    25         section, nothing in this section shall be construed to
    26         affect existing regulations saved by section 5107(a), and
    27         all existing regulations shall remain in full force and
    28         effect.
    29     Section 3.  Section 745 of the act is repealed:
    30  [Section 745.  Actuarial data.
    20080H2348B3402                 - 13 -     

     1     (a)  Initial study.--The following shall apply:
     2         (1)  No later than April 1, 2005, each insurer providing
     3     medical professional liability insurance in this Commonwealth
     4     shall file loss data as required by the commissioner. For
     5     failure to comply, the commissioner shall impose an
     6     administrative penalty of $1,000 for every day that this data
     7     is not provided in accordance with this paragraph.
     8         (2)  By July 1, 2005, the commissioner shall conduct a
     9     study regarding the availability of additional basic
    10     insurance coverage capacity. The study shall include an
    11     estimate of the total change in medical professional
    12     liability insurance loss-cost resulting from implementation
    13     of this act prepared by an independent actuary. The fee for
    14     the independent actuary shall be borne by the fund. In
    15     developing the estimate, the independent actuary shall
    16     consider all of the following:
    17             (i)  The most recent accident year and ratemaking
    18         data available.
    19             (ii)  Any other relevant factors within or outside
    20         this Commonwealth in accordance with sound actuarial
    21         principles.
    22     (b)  Additional study.--The following shall apply:
    23         (1)  Three years following the increase of the basic
    24     insurance coverage requirement in accordance with section
    25     711(d)(3), each insurer providing medical professional
    26     liability insurance in this Commonwealth shall file loss data
    27     with the commissioner upon request. For failure to comply,
    28     the commissioner shall impose an administrative penalty of
    29     $1,000 for every day that this data is not provided in
    30     accordance with this paragraph.
    20080H2348B3402                 - 14 -     

     1         (2)  Three months following the request made under
     2     paragraph (1), the commissioner shall conduct a study
     3     regarding the availability of additional basic insurance
     4     coverage capacity. The study shall include an estimate of the
     5     total change in medical professional liability insurance
     6     loss-cost resulting from implementation of this act prepared
     7     by an independent actuary. The fee for the independent
     8     actuary shall be borne by the fund. In developing the
     9     estimate, the independent actuary shall consider all of the
    10     following:
    11             (i)  The most recent accident year and ratemaking
    12         data available.
    13             (ii)  Any other relevant factors within or outside
    14         this Commonwealth in accordance with sound actuarial
    15         principles.]
    16     Section 4.  Chapter 7 of the act is amended by adding
    17  subchapters to read:
    18                            SUBCHAPTER E
    19                 PENNSYLVANIA ACCESS TO BASIC CARE
    20                       (PA ABC) PROGRAM FUND
    21  Section 751.  Establishment.
    22     There is established within the State Treasury a special fund
    23  to be known as the Pennsylvania Access to Basic Care (PA ABC)
    24  Program Fund.
    25  Section 752.  Allocation.
    26     Money in the Pennsylvania Access to Basic Care (PA ABC)
    27  Program Fund is hereby appropriated upon approval of the
    28  Governor for health care coverage and services under Chapter 13.
    29                            SUBCHAPTER F
    30                 CONTINUING ACCESS WITH RELIEF FOR
    20080H2348B3402                 - 15 -     

     1                       EMPLOYERS (CARE) FUND
     2  Section 761.  Establishment.
     3     There is established within the State Treasury a special fund
     4  to be known as the Continuing Access with Relief for Employers
     5  (CARE) Fund.
     6  Section 762.  Allocation.
     7     Money in the Continuing Access with Relief for Employers
     8  (CARE) Fund is hereby appropriated on a continuing basis to the
     9  Department of Community and Economic Development and shall be
    10  dedicated to assisting certain employers that currently offer
    11  and maintain health care coverage for their employees in
    12  compliance with the requirements under section 1308.
    13     Section 5.  The definition of "health care provider" in
    14  section 1101 of the act, added December 22, 2005 (P.L.458,
    15  No.88), is amended to read:
    16  Section 1101.  Definitions.
    17     The following words and phrases when used in this chapter
    18  shall have the meanings given to them in this section unless the
    19  context clearly indicates otherwise:
    20     * * *
    21     "Health care provider."  [An individual who is all of the
    22  following:
    23         (1)  A physician, licensed podiatrist, certified nurse
    24     midwife or nursing home.
    25         (2)  A participating health care provider as defined in
    26     section 702.] Any of the following:
    27         (1)  A nursing home or birth center that is a
    28     participating health care provider as defined in section 702.
    29         (2)  An individual who is a physician, licensed
    30     podiatrist or certified nurse midwife.
    20080H2348B3402                 - 16 -     

     1     * * *
     2     Section 6.  Section 1102 of the act, amended October 27, 2006
     3  (P.L.1198, No.128), is amended to read:
     4  Section 1102.  Abatement program.
     5     (a)  Establishment.--There is hereby established within the
     6  Insurance Department a program to be known as the Health Care
     7  Provider Retention Program. The Insurance Department, in
     8  conjunction with the Department of Public Welfare, shall
     9  administer the program. The program shall provide assistance in
    10  the form of assessment abatements to health care providers for
    11  calendar years [2003, 2004, 2005, 2006 and 2007] beginning 2003
    12  and ending 2017, except that licensed podiatrists shall not be
    13  eligible for calendar years 2003 and 2004, and nursing homes
    14  shall not be eligible for calendar years 2003, 2004 and 2005.
    15     (b)  Other [abatement.--] abatements.--
    16         (1)  Emergency physicians not employed full time by a
    17     trauma center or working under an exclusive contract with a
    18     trauma center shall retain eligibility for an abatement
    19     pursuant to section 1104(b)(2) for calendar years 2003, 2004,
    20     2005 and 2006. Commencing in calendar year 2007, these
    21     emergency physicians shall be eligible for an abatement
    22     pursuant to section 1104(b)(1).
    23         (2)  Birth centers shall retain eligibility for abatement
    24     pursuant to section 1104(b)(2) for calendar years 2003, 2004,
    25     2005, 2006 and 2007. Commencing in calendar year 2008, birth
    26     centers shall be eligible for abatement pursuant to section
    27     1104(b)(1).
    28     Section 7.  Section 1103 of the act, added December 22, 2005
    29  (P.L.458, No.88), is amended by adding paragraphs to read:
    30  Section 1103.  Eligibility.
    20080H2348B3402                 - 17 -     

     1     A health care provider shall not be eligible for [assessment]
     2  abatement under the program if any of the following apply:
     3         * * *
     4         (6)  The health care provider has refused to be an active
     5     provider in the Pennsylvania Access to Basic Care (PA ABC)
     6     Program in the health care provider's service area.
     7         (7)  The active health care provider is an active
     8     provider in the Pennsylvania Access to Basic Care (PA ABC)
     9     Program and places restrictions on benefits for patients
    10     enrolled in that program.
    11         (8)  The health care provider has refused to be an active
    12     provider in the children's health insurance program
    13     established under Article XXIII of the act of May 17, 1921
    14     (P.L.682, No.284), known as The Insurance Company Law of
    15     1921.
    16         (9)  The active health care provider is an active
    17     provider in the children's health insurance program and
    18     places restrictions on benefits for patients enrolled in the
    19     children's health insurance program.
    20         (10)  The Department of Revenue has determined that the
    21     health care provider has not filed all required State tax
    22     reports and returns for all applicable taxable years or has
    23     not paid any balance of State tax due as determined at
    24     settlement, assessment or determination by the Department of
    25     Revenue that are not subject to a timely perfected
    26     administrative or judicial appeal or subject to a duly
    27     authorized deferred payment plan as of the date of
    28     application. Notwithstanding the provisions of section 353(f)
    29     of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
    30     Reform Code of 1971, the Department of Revenue shall supply
    20080H2348B3402                 - 18 -     

     1     the Insurance Department with information concerning the
     2     status of delinquent taxes owed by a health care provider for
     3     purposes of this paragraph.
     4         (11)  (i)  The health care provider has not attended at
     5         least one Commonwealth-sponsored independent drug
     6         information service session, either in person or by
     7         videoconference.
     8             (ii)  This paragraph does not apply if the
     9         Commonwealth has not made a Commonwealth-sponsored
    10         independent drug information service session available to
    11         the health care provider prior to the date that the
    12         health care provider's application is submitted under
    13         section 1104.
    14     Section 8.  Section 1104(b) of the act, amended December 22,
    15  2005 (P.L.458, No.88), is amended to read:
    16  Section 1104.  Procedure.
    17     * * *
    18     (b)  Review.--Upon receipt of a completed application, the
    19  Insurance Department shall review the applicant's information
    20  and grant the applicable abatement of the assessment for the
    21  previous calendar year specified on the application in
    22  accordance with all of the following:
    23         (1)  The Insurance Department shall notify the Department
    24     of Public Welfare that the applicant has self-certified as
    25     eligible and was not disqualified for an abatement under
    26     section 1103(6), (7), (8), (9), (10) and (11) for a 100%
    27     abatement of the imposed assessment if the health care
    28     provider was assessed under section 712(d) as:
    29             (i)  a physician who is assessed as a member of one
    30         of the four highest rate classes of the prevailing
    20080H2348B3402                 - 19 -     

     1         primary premium;
     2             (ii)  an emergency physician;
     3             (iii)  a physician who routinely provides obstetrical
     4         services in rural areas as designated by the Insurance
     5         Department; [or]
     6             (iv)  a certified nurse midwife[.]; or
     7             (v)  a birth center.
     8         (2)  The Insurance Department shall notify the Department
     9     of Public Welfare that the applicant has self-certified as
    10     eligible and was not disqualified for an abatement under
    11     section 1103(6), (7), (8), (9), (10) and (11) for a 50%
    12     abatement of the imposed assessment in calendar years 2008
    13     through 2012, a 56.5% abatement in calendar year 2013, a
    14     63.5% abatement in calendar year 2014, a 70% abatement in
    15     calendar year 2015, a 78% abatement in calendar year 2016, an
    16     88% abatement in calendar year 2017 and a 100% abatement in
    17     calendar year 2018 if the health care provider was assessed
    18     under section 712(d) as:
    19             (i)  a physician but is a physician who does not
    20         qualify for abatement under paragraph (1);
    21             (ii)  a licensed podiatrist; [or]
    22             (iii)  a nursing home[.]; or
    23             (iv)  a birth center.
    24     * * *
    25     Section 9.  Section 1112(c) and (e) of the act, added
    26  December 22, 2005 (P.L.458, No.88), are amended and the section
    27  is amended by adding subsections to read:
    28  Section 1112.  Health Care Provider Retention Account.
    29     * * *
    30     (a.1)  Supplemental Assistance and Funding Account.--There is
    20080H2348B3402                 - 20 -     

     1  established within the Health Care Provider Retention Account a
     2  special account to be known as the Supplemental Assistance and
     3  Funding Account. Funds in this account shall be used annually to
     4  supplement the funding of the Pennsylvania Access to Basic Care
     5  (PA ABC) Program.
     6     * * *
     7     (c)  Transfers from account.--
     8         (1)  The Secretary of the Budget may annually transfer
     9     from the account to the Medical Care Availability and
    10     Reduction of Error (Mcare) Fund an amount up to the aggregate
    11     amount of abatements granted by the Insurance Department
    12     under section 1104(b).
    13         (2)  In addition to the transfers specified in paragraph
    14     (1), the Secretary of the Budget may also transfer funds from
    15     the account to the Medical Care Availability and Reduction of
    16     Error (Mcare) Fund for the purpose of paying claims and
    17     operating expenses coming due after January 1, 2018.
    18         (3)  The Secretary of the Budget may transfer funds from
    19     the account to the Pennsylvania Access to Basic Care (PA ABC)
    20     Program Fund.
    21         (4)  The Secretary of the Budget shall annually transfer
    22     from the account to the Continuing Access Relief for
    23     Employers (CARE) Fund an amount at least equal to the amount
    24     deposited under section 712(m).
    25     (c.1)  Transfers from the Supplemental Assistance and Funding
    26  Account.--The Secretary of the Budget shall annually transfer
    27  funds from the Supplemental Assistance and Funding Account
    28  established under subsection (a.1) to the Pennsylvania Access to
    29  Basic Care (PA ABC) Program Fund.
    30     * * *
    20080H2348B3402                 - 21 -     

     1     [(e)  Administration assistance.--The Insurance Department
     2  shall provide assistance to the Department of Public Welfare in
     3  administering the account.]
     4     Section 10.  Section 1115 of the act, amended October 27,
     5  2006 (P.L.1198, No.128), is amended to read:
     6  Section 1115.  Expiration.
     7     The Health Care Provider Retention Program established under
     8  this chapter shall expire December 31, [2008] 2018.
     9     Section 11.  The act is amended by adding a chapter to read:
    10                             CHAPTER 13
    11         PENNSYLVANIA ACCESS TO BASIC CARE (PA ABC) PROGRAM
    12  Section 1301.  Scope.
    13     This chapter relates to offering health care coverage to
    14  eligible adults, individuals, employees and employers.
    15  Section 1302.  Definitions.
    16     The following words and phrases when used in this chapter
    17  shall have the meanings given to them in this section unless the
    18  context clearly indicates otherwise:
    19     "AdultBasic Program."  The adult basic coverage insurance
    20  program established under section 1303 of the act of June 26,
    21  2001 (P.L.755, No.77), known as the Tobacco Settlement Act.
    22     "Average annual wage."  The total annual wages paid by an
    23  employer divided by the number of the employer's full-time
    24  equivalent employees.
    25     "Behavioral health services."  Mental health or substance
    26  abuse services.
    27     "Children's health insurance program."  The children's health
    28  care program established under Article XXIII of the act of May
    29  17, 1921 (P.L.682, No.284), known as The Insurance Company Law
    30  of 1921.
    20080H2348B3402                 - 22 -     

     1     "Chronic disease management program."  A program that allows
     2  a patient, with the support of a health care team, to play an
     3  active role in the patient's care and assures that there is an
     4  infrastructure to ensure compliance with established practice
     5  guidelines.
     6     "Community Health Reinvestment Agreement."  The Agreement on
     7  Community Health Reinvestment entered into February 2, 2005, by
     8  the Insurance Department and Capital Blue Cross, Highmark Inc.,
     9  Hospital Service Association of Northeastern Pennsylvania and
    10  Independence Blue Cross and published in the Pennsylvania
    11  Bulletin at 35 Pa.B. 4155.
    12     "Contractor."  An insurer awarded a contract to provide
    13  health care services under this chapter. The term includes an
    14  entity and its subsidiary which is established under 40 Pa.C.S.
    15  Ch. 61 (relating to hospital plan corporations) or 63 (relating
    16  to professional health services plan corporations), the act of
    17  May 17, 1921 (P.L.682, No.284), known as The Insurance Company
    18  Law of 1921, or the act of December 29, 1972 (P.L.1701, No.364),
    19  known as the Health Maintenance Organization Act.
    20     "Department."  The Insurance Department of the Commonwealth.
    21     "Eligible adult."  An individual who meets all of the
    22  following:
    23         (1)  Is at least 19 years of age but not more than 64
    24     years of age.
    25         (2)  Legally resides within the United States.
    26         (3)  Has been domiciled in this Commonwealth for at least
    27     90 days prior to application to the program.
    28         (4)  Is ineligible to receive continuous eligibility
    29     coverage under Title XIX or XXI of the Social Security Act
    30     (49 Stat. 620, 42 U.S.C. § 301 et seq.), except for benefits
    20080H2348B3402                 - 23 -     

     1     authorized under a waiver granted by the United States
     2     Department of Health and Human Services to implement the
     3     Pennsylvania Access to Basic Care (PA ABC) Program.
     4         (5)  Is ineligible for medical assistance or Medicare.
     5         (6)  May currently be enrolled in the AdultBasic Program
     6     or is on the waiting list for that program on the effective
     7     date of this section.
     8         (7)  Subject to the provisions of section 1305, has a
     9     household income that is no greater than 300% of the Federal
    10     poverty level at the time of application.
    11         (8)  Has not been covered by any health insurance plan or
    12     program for at least 180 days immediately preceding the date
    13     of application, except that the 180-day period shall not
    14     apply to an eligible adult who meets one of the following:
    15             (i)  is eligible to receive benefits under the act of
    16         December 5, 1936 (2nd Sp.Sess., 1937 P.L.2897, No.1),
    17         known as the Unemployment Compensation Law;
    18             (ii)  was covered under a health insurance plan or
    19         program provided by an employer, but at the time of
    20         application is no longer covered because of a change in
    21         the individual's employment status and is ineligible to
    22         receive benefits under the Unemployment Compensation Law;
    23             (iii)  lost coverage as a result of divorce or
    24         separation from a covered individual, the death of a
    25         covered individual or a change in employment status of a
    26         covered individual; or
    27             (iv)  is transferring from another government-
    28         subsidized health insurance program, including a transfer
    29         that occurs as a result of failure to meet income
    30         eligibility requirements.
    20080H2348B3402                 - 24 -     

     1     "Eligible employee."  An eligible adult or an employee who
     2  meets all the requirements of an eligible adult or employee at
     3  the time the eligible employer makes application to the program.
     4     "Eligible employer."  An employer that meets all of the
     5  following:
     6         (1)  Has at least two but not more than 50 full-time
     7     equivalent employees.
     8         (2)  Has not offered health care coverage through any
     9     plan or program during the 180 days immediately preceding the
    10     date of application for participation in the Pennsylvania
    11     Access to Basic Care (PA ABC) Program.
    12         (3)  Has not provided remuneration in any form to an
    13     employee on payroll for the purchase of health care coverage
    14     during the 180 days immediately preceding the date on which
    15     the employer applies for participation in the program.
    16         (4)  Pays an average annual wage that is less than 300%
    17     of the Federal poverty level for an individual.
    18     "Employee."  An individual who is employed for more than 20
    19  hours in a single week and from whose wages an employer is
    20  required under the Internal Revenue Code of 1986 (Public Law 99-
    21  514, 26 U.S.C. § 1 et seq.) to withhold Federal income tax.
    22     "Employer."  The term shall include:
    23         (1)  Any of the following who or which employs two but
    24     not more than 50 employees to perform services for
    25     remuneration:
    26             (i)  an individual, partnership, association,
    27         domestic or foreign corporation or other entity;
    28             (ii)  the legal representative, trustee in
    29         bankruptcy, receiver or trustee of any individual,
    30         partnership, association or corporation or other entity;
    20080H2348B3402                 - 25 -     

     1         or
     2             (iii)  the legal representative of a deceased
     3         individual.
     4         (2)  An individual who is self-employed.
     5         (3)  The executive, legislative and judicial branches of
     6     the Commonwealth and any one of its political subdivisions.
     7     "Fund."  The Pennsylvania Access to Basic Care (PA ABC)
     8  Program Fund.
     9     "Health benefit plan."  An insurance coverage plan that
    10  provides the benefits set forth under section 1313. The term
    11  does not include any of the following:
    12         (1)  An accident-only policy.
    13         (2)  A credit-only policy.
    14         (3)  A long-term or disability income policy.
    15         (4)  A specified disease policy.
    16         (5)  A Medicare supplement policy.
    17         (6)  A Civilian Health and Medical Program of the
    18     Uniformed Services (CHAMPUS) supplement policy.
    19         (7)  A fixed indemnity policy.
    20         (8)  A dental-only policy.
    21         (9)  A vision-only policy.
    22         (10)  A workers' compensation policy.
    23         (11)  An automobile medical payment policy pursuant to 75
    24     Pa.C.S. (relating to vehicles).
    25         (12)  Such other similar policies providing for limited
    26     benefits.
    27     "Health care coverage."  A health benefit plan or other form
    28  of health care coverage that is approved by the Department of
    29  Community and Economic Development in consultation with the
    30  Insurance Department. The term does not include coverage under
    20080H2348B3402                 - 26 -     

     1  the PA ABC program.
     2     "Health maintenance organization" or "HMO."  An entity
     3  organized and regulated under the act of December 29, 1972
     4  (P.L.1701, No.364), known as the Health Maintenance Organization
     5  Act.
     6     "Health savings account."  An account established by an
     7  employer under section 1307 on behalf of an employee whose
     8  income is greater than 200% of the Federal poverty level.
     9     "Hospital."  An institution that has an organized medical
    10  staff engaged primarily in providing to inpatients, by or under
    11  the supervision of physicians, diagnostic and therapeutic
    12  services for the care of injured, disabled, pregnant, diseased
    13  or sick or mentally ill persons. The term includes a facility
    14  for the diagnosis and treatment of disorders within the scope of
    15  specific medical specialties. The term does not include a
    16  facility that cares exclusively for the mentally ill.
    17     "Hospital plan corporation."  A hospital plan corporation as
    18  defined in 40 Pa.C.S. § 6101 (relating to definitions).
    19     "Individual."  A person who meets all the requirements of an
    20  eligible adult but whose household income is greater than 300%
    21  of the Federal poverty level.
    22     "Insurer."  A company or health insurance entity licensed in
    23  this Commonwealth to issue an individual or group health,
    24  sickness or accident policy or subscriber contract or
    25  certificate or plan that provides medical or health care
    26  coverage by a health care facility or licensed health care
    27  provider and that is offered or governed under this act or any
    28  of the following:
    29         (1)  The act of May 17, 1921 (P.L.682, No.284), known as
    30     The Insurance Company Law of 1921.
    20080H2348B3402                 - 27 -     

     1         (2)  The act of December 29, 1972 (P.L.1701, No.364),
     2     known as the Health Maintenance Organization Act.
     3         (3)  The act of May 18, 1976 (P.L.123, No.54), known as
     4     the Individual Accident and Sickness Insurance Minimum
     5     Standards Act.
     6         (4)  40 Pa.C.S. Ch. 61 (relating to hospital plan
     7     corporations) or 63 (relating to professional health services
     8     plan corporations).
     9     "Medical assistance."  The State program of medical
    10  assistance established under the act of June 13, 1967 (P.L.31,
    11  No.21), known as the Public Welfare Code.
    12     "Medical loss ratio."  The ratio of paid medical claim costs
    13  to earned premiums.
    14     "Medicare."  The Federal program established under Title
    15  XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C. § 1395
    16  et seq.).
    17     "Offeror."  An insurer that submits a bid or proposal under
    18  section 1311 in response to the department's procurement
    19  solicitation.
    20     "Preexisting condition."  A disease or physical condition for
    21  which medical advice or treatment has been received prior to the
    22  effective date of coverage.
    23     "Prescription drug."  A controlled substance, other drug or
    24  device for medication dispensed by order of an appropriately
    25  licensed medical professional.
    26     "Professional health services plan corporation."  A not-for-
    27  profit corporation operating under the provisions of 40 Pa.C.S.
    28  Ch. 63 (relating to professional health services plan
    29  corporations).
    30     "Program."  The Pennsylvania Access to Basic Care (PA ABC)
    20080H2348B3402                 - 28 -     

     1  Program established under this chapter.
     2     "Qualifying health care coverage."  A health benefit plan or
     3  other form of health care coverage actuarially equivalent to the
     4  benefits in section 1313 and approved by the Insurance
     5  Department.
     6     "Terminate."  The term includes cancellation, nonrenewal and
     7  rescission.
     8     "Unemployment Compensation Law."  The act of December 5, 1936
     9  (2nd Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment
    10  Compensation Law.
    11     "Uninsured period."  A continuous period of time of not less
    12  than 180 consecutive days immediately preceding enrollment
    13  application during which an adult has been without health care
    14  coverage in accordance with the requirements of this chapter.
    15  Section 1303.  Establishment of program.
    16     The Pennsylvania Access to Basic Care (PA ABC) Program is
    17  established in the department.
    18  Section 1304.  Funding.
    19     (a)  Sources.--The following are the sources of money for the
    20  program:
    21         (1)  Money received from the Supplemental Assistance and
    22     Funding Account established under section 1112(a.1).
    23         (2)  Money received from the Federal Government or other
    24     sources.
    25         (3)  Money required to be deposited pursuant to other
    26     provisions of this chapter or any other law of this
    27     Commonwealth.
    28         (4)  Upon implementation of the program:
    29             (i)  Only those funds appropriated for health
    30         investment insurance under section 306(b)(1)(vi) of the
    20080H2348B3402                 - 29 -     

     1         act of June 26, 2001 (P.L.755, No.77), known as the
     2         Tobacco Settlement Act, and designated for the AdultBasic
     3         Program.
     4             (ii)  Money currently required to be dedicated to the
     5         AdultBasic Program or any alternative program to benefit
     6         persons of low income under the Community Health
     7         Reinvestment Agreement within the respective service
     8         areas for each party to that agreement. Money under this
     9         subparagraph shall be used only to defray the cost of the
    10         program and subsidies approved under sections 1305 and
    11         1306.
    12         (5)  Any moneys derived from whatever sources and
    13     designated specifically to fund the program.
    14         (6)  Return on investments in the fund.
    15  Section 1305.  Purchase by eligible adults and individuals.
    16     (a)  Eligible adults.--An eligible adult who seeks to
    17  purchase coverage under the program must:
    18         (1)  Submit an application to the department or its
    19     contractor.
    20         (2)  Pay to the department or its contractor the amount
    21     of the premium specified.
    22         (3)  Be responsible for any required copayments for
    23     health care services rendered under the health benefit plan
    24     in section 1313 subject to Federal waiver requirements.
    25         (4)  Notify the department or its contractor of any
    26     change in the eligible adult's or individual's household
    27     income.
    28     (b)  Monthly premiums.--Except to the extent that changes may
    29  be necessary to meet Federal requirements under section 1317 or
    30  to encourage eligible employer participation, subsidies for the
    20080H2348B3402                 - 30 -     

     1  2008-2009 fiscal year and each fiscal year thereafter shall
     2  result in the following premium amount based on household income
     3  for a health benefit plan:
     4         (1)  For an eligible adult whose household income is not
     5     greater than 150% of the Federal poverty level, no monthly
     6     premium.
     7         (2)  For an eligible adult whose household income is
     8     greater than 150% but not greater than 175% of the Federal
     9     poverty level, a monthly premium of $40.
    10         (3)  For an eligible adult whose household income is
    11     greater than 175% but not greater than 200% of the Federal
    12     poverty level, a monthly premium of $50.
    13         (4)  For an eligible adult whose household income is
    14     greater than 200%, a monthly premium may be established based
    15     upon Federal requirements and in accordance with Federal
    16     waivers, if applicable, by the commissioner.
    17     (c)  Other eligible adults.--An eligible adult whose
    18  household income is greater than 200% of the Federal poverty
    19  level may purchase under the program either the benefit package
    20  under section 1313 or other qualifying health care coverage at
    21  the per-member, per-month premium cost.
    22     (d)  Individuals.--For an individual whose household income
    23  is greater than 300% of the Federal poverty level, an individual
    24  may purchase the benefit package under section 1313 at the per-
    25  member, per-month premium cost as long as the individual
    26  demonstrates, on an annual basis and in a manner determined by
    27  the department, either one of the following:
    28         (1)  The individual is unable to afford individual or
    29     group coverage because that coverage would exceed 10% of the
    30     individual's household income or because the total cost of
    20080H2348B3402                 - 31 -     

     1     coverage for the individual is 150% of the premium cost
     2     established under this section for that service area.
     3         (2)  The individual has been refused coverage by an
     4     insurer because the individual or a member of that
     5     individual's immediate family has a preexisting condition and
     6     coverage is not available to the individual.
     7     (e)  Establishing premiums.--For each fiscal year beginning
     8  after June 30, 2009, the department may adjust the premium
     9  amounts under subsection (b) to reflect changes in the cost of
    10  medical services and shall forward notice of the new premium
    11  amounts to the Legislative Reference Bureau for publication as a
    12  notice in the Pennsylvania Bulletin.
    13     (f)  Purchase of health benefit plan.--An eligible adult's or
    14  individual's payment to the department or its contractor under
    15  subsection (b) shall be used to purchase the benefit health plan
    16  established under section 1313 and must be remitted in a timely
    17  manner.
    18     (g)  Subsidy.--Funding for the program shall be used by the
    19  department to pay the difference between the total monthly cost
    20  of the health benefit plan and the eligible adult's premium.
    21  Subsidization of the health benefit plan is contingent upon the
    22  amount of the funding for the program and is limited to eligible
    23  adults in compliance with this section.
    24  Section 1306.  Participation by eligible employers and eligible
    25                 employees.
    26     (a)  Eligible employers.--An eligible employer that seeks to
    27  participate in the program shall:
    28         (1)  Offer to all eligible employees the opportunity to
    29     participate in the program and enroll at least one-half of
    30     the eligible employees.
    20080H2348B3402                 - 32 -     

     1         (2)  Comply with the application process established by
     2     the department or its contractor.
     3         (3)  Remit to the department or its contractor any
     4     premium amounts required under subsections (c) and (d).
     5         (4)  Allow health insurance premiums to be paid by
     6     eligible employees on a pretax basis and inform its employees
     7     of the availability of such program.
     8         (5)  Notify the department or its contractor of any
     9     change in the eligible employee's income.
    10     (b)  Eligible employees.--An eligible employee who seeks to
    11  participate with an eligible employer under the program must:
    12         (1)  Submit an application with the eligible employer to
    13     the department or its contractor.
    14         (2)  Be responsible for any required copayments for
    15     health care services rendered under the health benefit plan
    16     in section 1313.
    17     (c)  Premiums for employers.--
    18         (1)  In addition to remitting the eligible employee
    19     portion under subsections (a) and (d), an eligible employer
    20     shall pay the employer share of the total monthly cost for
    21     each participating employee to the department or its
    22     contractor each month.
    23         (2)  In addition to remitting the eligible employee
    24     portion under paragraph (1), an eligible employer's premium
    25     payment to the department or its contractor shall be at least
    26     50% of the total monthly cost for each eligible employee but
    27     not less than $150.
    28     (d)  Premiums for eligible employees.--The premium for
    29  eligible employees shall be the same as the premium required to
    30  be paid by eligible adults under section 1305(b).
    20080H2348B3402                 - 33 -     

     1     (e)  Purchase by certain eligible employees.--An eligible
     2  employee whose household income is greater than 200% of the
     3  Federal poverty level may purchase either the benefit package
     4  under section 1313 or other qualifying health care coverage
     5  under section 1307 at the per-member, per-month premium cost
     6  minus any amount remitted by the employer under subsection (c).
     7     (f)  Publishing premium amounts.--For each fiscal year
     8  beginning after June 30, 2009, the department may establish
     9  different premium amounts for eligible employees and eligible
    10  employers as required under this section and shall forward
    11  notice of the new premium amounts to the Legislative Reference
    12  Bureau for publication as a notice in the Pennsylvania Bulletin.
    13     (g)  Purchase of coverage.--A premium payment made by an
    14  eligible employer to the department or its contractor shall be
    15  used to purchase the health benefit plan and must be remitted in
    16  a timely manner.
    17     (h)  Alternative coverage.--
    18         (1)  Notwithstanding any other provision of law to the
    19     contrary, employer-based coverage may, in the commissioner's
    20     sole discretion, be purchased in place of participation in
    21     the program or may be purchased in conjunction with any
    22     portion of the program provided outside the scope of the
    23     program contracts by the Commonwealth paying the employee's
    24     share of the premium to the employer if it is more cost
    25     effective for the Commonwealth to purchase health care
    26     coverage from an employee's employer-based program than to
    27     pay the Commonwealth's share of a subsidized premium.
    28         (2)  This section shall apply to any employer-based
    29     program, whether individual or family, such that if the
    30     Commonwealth's share for the employee plus its share for any
    20080H2348B3402                 - 34 -     

     1     spouse under the program or children under the children's
     2     health insurance program is greater than the employee's
     3     premium share for family coverage under the employer-based
     4     program, the Commonwealth may choose to pay the latter alone
     5     or in combination with providing any benefit the Commonwealth
     6     does not provide through its program contracts.
     7     (i)  Termination of employment.--An eligible employee who is
     8  terminated from employment shall be eligible to continue
     9  participating in the program if the eligible employee continues
    10  to meet the requirements as an eligible adult and pays any
    11  increased premium required.
    12  Section 1307.  Health savings accounts.
    13     The department shall permit the establishment of health
    14  savings accounts that are actuarially equivalent to the benefits
    15  in section 1313 for employees who enroll in the program. Health
    16  savings accounts established under the program shall meet the
    17  requirements as defined in section 223(d) of the Internal
    18  Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 223(d)).
    19  Section 1308.  Continuing Access with Relief for Employers
    20                 (CARE) grants.
    21     (a)  General rule.--A Continuing Access with Relief for
    22  Employers (CARE) grant shall be provided to employers that meet
    23  the requirements of this section.
    24     (b)  Eligibility.--An employer is eligible to receive a CARE
    25  grant if that employer meets the following:
    26         (1)  has maintained coverage for at least 12 consecutive
    27     months prior to the effective date of this act; or
    28         (2)  (i)  has maintained coverage for at least 12
    29         consecutive months prior to applying for the CARE grant;
    30             (ii)  has incurred a health care expense in this
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     1         Commonwealth; and
     2             (iii)  has a tax liability for the year in which
     3         application is made for the CARE grant.
     4     (c)  Application.--Beginning July 1, 2009, and for each year
     5  thereafter, an employer seeking to receive a CARE grant shall
     6  submit an application to the department containing, at a
     7  minimum, the following information:
     8         (1)  A statement of the aggregate health care expense
     9     made by the employer to provide coverage during the previous
    10     12 consecutive months to employees.
    11         (2)  The names, addresses and Social Security numbers of
    12     the employees provided health care coverage under paragraph
    13     (1) and whether that health care coverage is for the employee
    14     or the employee and the employee's spouse and/or dependents.
    15         (3)  The names and addresses of the insurance carriers or
    16     underwriters that received payment from the employer for the
    17     health care coverage provided under paragraph (2).
    18     (d)  Computation.--An employer who qualifies under subsection
    19  (b) shall receive a grant limited to actual employer health care
    20  expenses paid for the previous 12 consecutive months in
    21  accordance with the following:
    22         (1)  No greater than 25% of the employer's health care
    23     expense to maintain health care coverage for the employee.
    24         (2)  No greater than 50% of the employer's health care
    25     expense to maintain health care coverage for the employee,
    26     the employee's spouse and/or dependents.
    27         (3)  The total amount of paragraphs (1) and (2) shall not
    28     exceed the tax liability owed by the employer for the year
    29     application is made for the CARE grant.
    30         (4)  If no tax liability is owed by the employer then the
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     1     employer may not apply for a CARE grant.
     2     (e)  Duties of department.--The department has the following
     3  duties:
     4         (1)  Administer the program.
     5         (2)  In consultation with other appropriate Commonwealth
     6     agencies:
     7             (i)  Develop an application for the collection of
     8         information that is consistent with the requirements of
     9         this section and that contains any other information that
    10         may be necessary to award CARE grants.
    11             (ii)  Develop a process to determine the validity of
    12         information collected by the department from the
    13         application with information filed by the employer, the
    14         employee or insurers with any other agency. This process
    15         shall include guaranteeing confidentiality of employer
    16         and employee information that is consistent with Federal
    17         and State laws.
    18     (f)  Coordination.--The department shall coordinate with
    19  other departments in the implementation of this section.
    20     (g)  Limitation on grants.--The total amount of grants
    21  approved by the department shall not exceed the amount of
    22  funding designated under section 762. Any application filed by
    23  an employer when funding is not available shall not be
    24  considered and cannot be carried forward for consideration in
    25  any succeeding fiscal year.
    26     (h)  Lapse.--Funds not used by the department for CARE grants
    27  at the end of the fiscal year shall lapse back to the Health
    28  Care Provider Retention Account and be designated to the PA ABC
    29  Program.
    30     (i)  Report to General Assembly.--The department shall submit
    20080H2348B3402                 - 37 -     

     1  an annual report to the General Assembly indicating the
     2  effectiveness of the program provided under this section no
     3  later than March 15, 2010. The report shall include the names of
     4  all the employers that received a CARE grant as of the date of
     5  the report and the amount of each CARE grant approved. The
     6  report may also include any recommendations for changes in the
     7  calculation or administration of the CARE grant.
     8     (j)  Sunset.--This section shall sunset January 1, 2018.
     9     (k)  Definitions.--As used in this section, the following
    10  words and phrases shall have the meanings given to them in this
    11  subsection:
    12     "CARE grant."  A Continuing Access with Relief for Employers
    13  (CARE) grant provided by the Department of Community and
    14  Economic Development.
    15     "Coverage."  Health care coverage that is maintained by an
    16  employer for an employee, the employee's spouse and/or
    17  dependents for 12 consecutive months.
    18     "Department."  The Department of Community and Economic
    19  Development of the Commonwealth.
    20     "Employee."  An individual who meets the following:
    21         (1)  Is employed for more than 20 hours in a single week
    22     and from whose wages an employer is required under the
    23     Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
    24     §1 et seq.) to withhold Federal income tax.
    25         (2)  Is at least 19 years of age but no older than 64
    26     years of age.
    27         (3)  Legally resides within the United States.
    28         (4)  Has been domiciled in this Commonwealth for at least
    29     90 days prior to enrollment.
    30         (5)  Has a household income that is no greater than 300%
    20080H2348B3402                 - 38 -     

     1     of the Federal poverty level at the time of application.
     2     "Employer."  An employer that meets all of the following:
     3         (1)  Has at least two, but not more than 50 full-time
     4     equivalent employees.
     5         (2)  Pays an average annual wage that is not greater than
     6     300% of the Federal poverty limit for an individual.
     7     "Health care coverage."  A health benefit plan or other form
     8  of health care coverage that is approved by the Department of
     9  Community and Economic Development in consultation with the
    10  Insurance Department. The term does not include coverage under
    11  the PA ABC program.
    12     "Health care expense."  A payment made by an employer to
    13  maintain health care coverage for an employee, the employee's
    14  spouse and/or dependents.
    15     "Program."  The Continuing Access with Relief for Employers
    16  (CARE) Grant Program established under this section.
    17     "Tax liability."  Liability under Article III, IV or VI of
    18  the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
    19  Code of 1971.
    20  Section 1309.  Program requirements.
    21     (a)  Rates.--Rates for the program shall be approved annually
    22  by the department and may vary by region and contractor. Rates
    23  shall be based on an actuarially sound and adequate review.
    24     (b)  Annual premiums review.--Premiums for the program shall
    25  be established annually by the department.
    26     (c)  Use of funding.--Funding shall be used by the department
    27  to pay the difference between the total monthly cost of the
    28  health benefit plan and the premium payments by the eligible
    29  employee, the eligible employer or the eligible adult.
    30     (d)  Monthly increases.--With respect to a continuous period
    20080H2348B3402                 - 39 -     

     1  of eligibility for an eligible employer to apply for
     2  participation in the program and in addition to the requirements
     3  of section 1306(d), an eligible employer shall be subject to a
     4  1% increase in the base premium for each month after the latter
     5  of the following:
     6         (1)  twelve months from the date of the effective date of
     7     this section; or
     8         (2)  twelve months from the date the eligible employer
     9     files for a Federal or State tax identification number.
    10     (e)  Funding contingency for subsidization.--Subsidization of
    11  premiums paid under sections 1305 and 1306 is contingent upon
    12  the amount of the funding available to the program, the Federal
    13  poverty levels approved by the Federal waiver or State plan
    14  amendments granted under section 1317 and is limited to eligible
    15  adults and eligible employees who are in compliance with the
    16  requirements under this chapter.
    17     (f)  Limit on subsidy.--At no time shall the subsidy paid by
    18  the Commonwealth from funds other than Federal moneys for the
    19  premium of eligible employees be more than 40% of the total cost
    20  of the health benefit plan purchased in each region or with each
    21  contractor.
    22  Section 1310.  Duties of department.
    23     The department has the following duties:
    24         (1)  Administer the program on a Statewide basis.
    25         (2)  Solicit bids or proposals and award contracts as
    26     follows:
    27             (i)  The department shall solicit bids or proposals
    28         and award contracts for the basic benefit package under
    29         section 1313 through a competitive procurement process in
    30         accordance with 62 Pa.C.S. (relating to procurement) and
    20080H2348B3402                 - 40 -     

     1         subsection (g). The department may award contracts on a
     2         multiple-award basis as described in 62 Pa.C.S. § 517
     3         (relating to multiple awards).
     4             (ii)  (A)  In order to effectuate the program
     5             promptly upon receipt of all applicable waivers and
     6             approvals from the Federal Government, the department
     7             may amend such contracts as currently exist to
     8             provide benefits under either the AdultBasic Program
     9             or the Public Welfare Code, or may otherwise procure
    10             services outside of the competitive procurement
    11             process of 62 Pa.C.S.
    12                 (B)  This subparagraph shall expire at such time
    13             as there are effective contracts awarded under this
    14             section in every county of this Commonwealth, but not
    15             later than 18 months after the effective date of this
    16             section.
    17         (3)  Subject to Federal requirements, impose reasonable
    18     cost-sharing arrangements and encourage appropriate use by
    19     contractors of cost-effective health care providers who will
    20     provide quality health care by establishing and adjusting
    21     copayments to be incorporated into the program by
    22     contractors. The department shall forward changes of
    23     copayments to the Legislative Reference Bureau for
    24     publication as notices in the Pennsylvania Bulletin. The
    25     changes shall be implemented by contractors as soon as
    26     practicable following publication, but in no event more than
    27     120 days following publication.
    28         (4)  In consultation with other appropriate Commonwealth
    29     agencies, conduct monitoring and oversight of contracts
    30     entered into with contractors.
    20080H2348B3402                 - 41 -     

     1         (5)  In consultation with other appropriate Commonwealth
     2     agencies, monitor, review and evaluate the adequacy,
     3     accessibility and availability of services delivered to
     4     eligible adults or eligible employees.
     5         (6)  In consultation with other appropriate Commonwealth
     6     agencies, establish and coordinate the development,
     7     implementation and supervision of an outreach plan to ensure
     8     that all those who may be eligible are aware of the program.
     9     The outreach plan shall include provisions for:
    10             (i)  Reaching special populations, including nonwhite
    11         and non-English speaking individuals and individuals with
    12         disabilities.
    13             (ii)  Reaching different geographic areas, including
    14         rural and inner-city areas.
    15             (iii)  Assuring that special efforts are coordinated
    16         within the overall outreach activities throughout this
    17         Commonwealth.
    18         (7)  At the request of an eligible adult, eligible
    19     employee or eligible employer, facilitate the payment on a
    20     pretax basis of premiums:
    21             (i)  for the program and dependents covered under the
    22         program; or
    23             (ii)  if applicable, for the children's health
    24         insurance program.
    25         (8)  Establish penalties for eligible adults, eligible
    26     employees or eligible employers who enroll in the program,
    27     drop enrollment and subsequently re-enroll for the purpose of
    28     avoiding the ongoing payment of premiums. The commissioner
    29     shall forward notice of these penalties to the Legislative
    30     Reference Bureau for publication as a notice in the
    20080H2348B3402                 - 42 -     

     1     Pennsylvania Bulletin.
     2         (9)  Coordinate with the Department of Public Welfare in
     3     the implementation of this chapter and may designate the
     4     Department of Public Welfare to perform any duties that are
     5     appropriate under this chapter.
     6  Section 1311.  Submission of proposals and award of contracts.
     7     (a)  Corporations required to submit.--Each professional
     8  health services plan corporation and hospital plan corporation
     9  and their subsidiaries and affiliates doing business in this
    10  Commonwealth shall submit a bid or proposal to the department to
    11  carry out the purposes of this section in the geographic area
    12  serviced by the corporation. All other insurers may submit a bid
    13  or proposal to the department to carry out the purposes of this
    14  section.
    15     (b)   Review and scoring of bids or proposals.--The
    16  department shall review and score the bids or proposals on the
    17  basis of all the requirements for the program. The department
    18  may include other criteria in the solicitation and in the
    19  scoring and selection of the bids or proposals that the
    20  department, in the exercise of its duties under section 1310,
    21  deems necessary. The department shall do all of the following:
    22         (1)  Select, to the greatest extent practicable, offerors
    23     that contract with health care providers to provide health
    24     care services on a cost-effective basis. The department shall
    25     select offerors that use appropriate cost-management methods,
    26     including the chronic care and prevention measures, which
    27     will enable the program to provide coverage to the maximum
    28     number of enrollees.
    29         (2)  Select, to the greatest extent practicable, only
    30     offerors that comply with all procedures relating to
    20080H2348B3402                 - 43 -     

     1     coordination of benefits as required by the department and
     2     the Department of Public Welfare.
     3     (c)  Contract terms.--Contracts may be for an initial term of
     4  up to five years, with options to extend for five one-year
     5  periods.
     6     (d)  Duties of contractors.--A contractor that contracts with
     7  the department to provide a health benefit plan to eligible
     8  adults or eligible employees:
     9         (1)  Shall process claims for the coverage.
    10         (2)  May not deny coverage to an eligible adult or
    11     eligible employee who has been approved by the department to
    12     participate in the program.
    13  Section 1312.  Rates and charges.
    14     (a)  Medical loss ratio.--The medical loss ratio for a
    15  contract shall be not less than 85%.
    16     (b)  Limitation on fees.--No eligible adult or eligible
    17  employee shall be charged a fee, other than those specified in
    18  this chapter, as a requirement for participating in the program.
    19  Section 1313.  Health benefit plan.
    20     (a)  Benefits.--The health benefit plan to be offered under
    21  the program shall be of the scope and duration as the department
    22  determines and shall provide for all of the following, which may
    23  be as limited or unlimited as the department may determine:
    24         (1)  Preliminary and annual health assessments.
    25         (2)  Emergency care.
    26         (3)  Inpatient and outpatient care.
    27         (4)  Prescription drugs, medical supplies and equipment.
    28         (5)  Emergency dental care.
    29         (6)  Maternity care.
    30         (7)  Skilled nursing.
    20080H2348B3402                 - 44 -     

     1         (8)  Home health and hospice care.
     2         (9)  Chronic disease management.
     3         (10)  Preventive and wellness care.
     4         (11)  Inpatient and outpatient behavioral health
     5     services.
     6     (b)  Commonwealth election.--The Commonwealth may elect to
     7  provide any benefit independently and outside the scope of the
     8  program contracts.
     9     (c)  Enrollment.--Enrollment in the program may not be
    10  prohibited based upon a preexisting condition, nor may a program
    11  health benefit plan exclude a diagnosis or treatment for a
    12  condition based upon its preexistence.
    13     (d)  Copayments.--The department may establish a copayment
    14  for any of the services provided in the health benefit plan as
    15  long as the copayment meets any Federal requirements under
    16  section 1317. The department shall forward notice of the
    17  copayment amounts to the Legislative Reference Bureau for
    18  publication as a notice in the Pennsylvania Bulletin.
    19  Section 1314.  Data matching.
    20     (a)  Covered individuals.--All entities providing health
    21  insurance or health care coverage within this Commonwealth
    22  shall, not less frequently than once every month, provide the
    23  names, identifying information and any additional information on
    24  coverage and benefits as the department may specify for all
    25  individuals for whom the entities provide insurance or coverage.
    26     (b)  Use of information.--
    27         (1)  The department shall use information obtained in
    28     subsection (a) to determine whether any portion of an
    29     eligible adult's, eligible employee's or eligible employer's
    30     premium is being paid from any other source and to determine
    20080H2348B3402                 - 45 -     

     1     whether another entity has primary liability for any health
     2     care claims paid under any program administered by the
     3     department.
     4         (2)  If a determination is made that an eligible adult's,
     5     eligible employee's or eligible employer's premium is being
     6     paid from another source, the department may not make any
     7     additional payments to the insurer for the eligible adult,
     8     eligible employee or eligible employer.
     9     (c)  Excess payment.--If a payment has been made to an
    10  insurer by the department for an eligible adult, eligible
    11  employee or eligible employer for whom any portion of the
    12  premium paid by the department is being paid from another
    13  source, the insurer shall reimburse the department the amount of
    14  any excess payment or payments.
    15     (d)  Reimbursement.--The department may seek reimbursement
    16  from an entity that provides health insurance or health care
    17  coverage that is primary to the coverage provided under any
    18  program administered by the department.
    19     (e)  Timeliness.--To the maximum extent permitted by law and
    20  notwithstanding any policy or plan provision to the contrary, a
    21  claim by the department for reimbursement under subsection (c)
    22  or (d) shall be deemed timely filed if it is filed with the
    23  insurer or entity within three years following the date of
    24  payment.
    25     (f)  Agreements.--The department may enter into agreements
    26  with entities that provide health insurance and health care
    27  coverage for the purpose of carrying out the provisions of this
    28  section. The agreements shall provide for the electronic
    29  exchange of data between the parties at a mutually agreed upon
    30  frequency, but not less than monthly, and may also allow for
    20080H2348B3402                 - 46 -     

     1  payment of a fee by the department to the entity providing
     2  health insurance or health care coverage.
     3     (g)  Other coverage.--
     4         (1)  The department shall determine whether any other
     5     health care coverage is available to an eligible adult,
     6     eligible employee or eligible employer through an alimony
     7     agreement or an employment-related or other group basis.
     8         (2)  If other health care coverage is available, the
     9     department shall reevaluate the enrollee's eligibility under
    10     this chapter.
    11     (h)  Penalty.--
    12         (1)  The department may impose a penalty of up to $1,000
    13     per violation on any insurer that fails to comply with the
    14     obligations imposed by this chapter.
    15         (2)  All moneys collected under this subsection shall be
    16     deposited into the fund.
    17  Section 1315.  Entitlements and claims.
    18     Nothing in this chapter shall be construed as an entitlement
    19  derived from the Commonwealth or a claim on any funds of the
    20  Commonwealth. The Department of Public Welfare, in conjunction
    21  with the department, shall establish a waiting list and State
    22  plan amendments and revisions to Federal waivers as are
    23  necessary to ensure that expenditures in the program do not
    24  exceed available funding.
    25  Section 1316.  Regulations.
    26     The department may promulgate regulations for the
    27  implementation and administration of this chapter.
    28  Section 1317.  Federal waivers.
    29         (1)  The Department of Public Welfare, in cooperation
    30     with the department, shall apply for all applicable waivers
    20080H2348B3402                 - 47 -     

     1     from the Federal Government and shall seek approval to amend
     2     the State plan as necessary to carry out the provisions of
     3     this chapter.
     4         (2)  If the Department of Public Welfare receives
     5     approval of a waiver or approval of a State plan amendment as
     6     required by this section, it shall notify the department and
     7     transmit notice of the waiver or State plan amendment
     8     approvals to the Legislative Reference Bureau for publication
     9     as a notice in the Pennsylvania Bulletin.
    10         (3)  The department may change the benefits under section
    11     1313 and the premium and copayment amounts payable under
    12     sections 1305 and 1306 and eligibility requirements in order
    13     for the program to meet Federal requirements.
    14  Section 1318.  Federal funds.
    15     Notwithstanding any other provision of law, the Department of
    16  Public Welfare, in cooperation with the department, shall take
    17  any action necessary to do all of the following:
    18         (1)  Ensure the receipt of Federal financial
    19     participation under Title XIX of the Social Security Act (49
    20     Stat. 620, 42 U.S.C. § 1396 et seq.) for coverage and for
    21     services provided under this chapter.
    22         (2)  Qualify for available Federal financial
    23     participation under Title XIX of the Social Security Act.
    24     Section 12.  The Insurance Department shall publish a notice
    25  in the Pennsylvania Bulletin when a law is enacted that provides
    26  for or designates at least $120,000,000 for the Supplemental
    27  Assistance and Funding Account.
    28     Section 13.  Repeals are as follows:
    29         (1)  The General Assembly declares that the repeal under
    30     paragraph (2) is necessary to effectuate this act.
    20080H2348B3402                 - 48 -     

     1         (2)  Chapter 13 of the act of June 26, 2001 (P.L.755,
     2     No.77), known as the Tobacco Settlement Act.
     3         (3)  All other acts and parts of acts are repealed
     4     insofar as they are inconsistent with this act.
     5     Section 14.  The amendment of section 712(e) of the act shall
     6  apply retroactively to December 31, 2007.
     7     Section 15.  This act shall take effect as follows:
     8         (1)  The following provisions shall take effect July 1,
     9     2008, or immediately, whichever is later:
    10             (i)  The amendment of section 712(e) and (m) of the
    11         act.
    12             (ii)  The amendment of the definition of "health care
    13         provider" in section 1101 of the act.
    14             (iii)  The amendment of section 1112 of the act.
    15             (iv)  Section 12 of this act.
    16         (2)  The remainder of this act shall take effect upon
    17     publication of the notice specified under section 12 of this
    18     act.








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