THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BOYD, AUMENT, CLYMER, CUTLER, EVERETT, HARHART, KILLION AND WATSON, MAY 21, 2012

REFERRED TO COMMITTEE ON INSURANCE, MAY 21, 2012  

AN ACT

Establishing the Commonwealth Health Insurance Interchange.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

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

Health Insurance Interchange Act (CHIIA).

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Basic care."  A health insurance plan, available to

individuals and small employers, as set forth in this act.

"Department."  The Insurance Department of the Commonwealth.

"Health care payment."  An amount established by the employer

to contribute to the employee's health benefits.

"Health insurer."  A company or health insurance entity

licensed in this Commonwealth to issue any individual or group

health, sickness or accident policy or subscriber contract or

certificate or plan that provides medical or health care

coverage by a health care facility or licensed health care

provider that is offered or governed under any of the following:

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

The Insurance Company Law of 1921.

(2)  The act of December 29, 1972 (P.L.1701, No.364),

known as the Health Maintenance Organization Act.

(3)  The act of May 18, 1976 (P.L.123, No.54), known as

the Individual Accident and Sickness Insurance Minimum

Standards Act.

(4)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or 63 (relating to professional health services

plan corporations).

"Health plan."  A plan, other than basic care, as provided

for in this act. The term shall not include any of the

following:

(1)  An accident-only policy.

(2)  A credit-only policy.

(3)  A long-term care or disability income policy.

(4)  A specified-disease policy.

(5)  A Medicare supplemental policy.

(6)  The Civilian Health and Medical Program of the

Uniformed Services (CHAMPUS) supplemental policy.

(7)  A fixed-indemnity policy.

(8)  A dental-only policy.

(9)  A vision-only policy.

(10)  A workers' compensation policy.

(11)  An automobile medical payment policy under 75

Pa.C.S. (relating to vehicles).

(12)  A short-term medical insurance policy for an

eligible individual who is temporarily without health

insurance, such as an individual between jobs, a student or a

new employee waiting for coverage to begin.

(13)  Medical assistance.

(14)  The Children's Health Insurance Program established

under Article XXIII of the act of May 17, 1921 (P.L.682,

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

(15)  Other limited benefit plans as recognized by the

department as exempted from this act.

"Interchange."  The Commonwealth Health Insurance Interchange

Act (CHIIA).

"Licensed health insurance producer."  An entity licensed

under Article VI-A of the act of May 17, 1921 (P.L.789, No.285),

known as The Insurance Department Act of 1921.

"Medical service fee."  An amount charged to the patient by a

health care provider for services rendered.

"Rate band."  A limit on the amount that insurers may vary

premiums based on health status.

"Small employer."  An employer that employed an average of

not more than 50 employees during the preceding calendar year,

as defined in section 301 of the act of December 18, 1996

(P.L.1066, No.159), known as the Accident and Health Filing

Reform Act, under the definition of "small group."

Section 3.  Commonwealth Health Insurance Interchange Act.

(a)  Establishment.--The Commonwealth Health Insurance

Interchange (CHIIA) is established within the department.

(b)  Function.--The interchange shall:

(1)  Facilitate the purchase and sale of basic care as

provided for in this act.

(2)  Meet the requirements of this act and any

regulations implemented under this act.

(c)  Contracts.--The interchange may facilitate a contract

with an eligible third party for any of its functions described

in this act.

(d)  Information.--The interchange shall enter into

information–sharing agreements with Federal and State agencies

to carry out its responsibilities under this act, provided that

such agreements include adequate protections with respect to the

confidentiality of the information to be shared and comply with

all Federal and State regulations.

Section 4. General requirements. 

(a)  Website.--The interchange shall maintain an Internet

website through which individuals and small employers may do all

of the following:

(1)  Obtain information on basic care as provided for in

this act.

(2)  Do various premium comparisons of basic care in a

particular zip code.

(3)  Complete a preliminary application for enrollment in

basic care.

(4)  Provide for the purchase of basic care by the

applicant.

(b)  Updates.--The website shall be updated at least monthly.

(c)  Contact information.--The interchange shall provide for

the operation of a toll-free telephone hotline to respond to

requests for assistance.

(d)  Links for research.--The interchange shall provide links

to health insurance companies so individuals and small employers

may chose which company they want to research. This link shall

provide a health insurance company insurance producer locator by

zip code so that the consumer using the interchange site is

connected to a licensed health insurance producer who may sell,

solicit and negotiate placement of basic care and other health

care plans. Nothing in this section shall restrict a consumer

from enrolling in the interchange through any health insurance

company or a licensed health insurance producer that is

authorized by the department to participate in the interchange

or that is entitled to receive compensation from the health

insurance company chosen to issue the policy.

(e)  Other links.--The interchange shall provide linkage to

other interactive Internet systems including portals providing

access to medical assistance and the Children's Health Insurance

Program eligibility. It shall also provide a link to department

health insurance consumer educational materials and supply a

form where eligible individuals and small employers may make an

inquiry or register a complaint or concern.

(f)  Applications.--The interchange shall develop a uniform

application with health insurance companies for use by

individuals and small employers.

(g)  Expanded coverage.--Every licensed health insurance

company may offer additional coverages to provide broader

benefits. An individual or small employer shall be charged for

any additional coverages added to basic care by endorsement.

(h)  Changes in premiums.--A change in the premium shall only

be effective for basic care on the annual renewal date for that

policy or for new policies purchased after the effective date of

the rate change period. Every insurer offering basic care shall

develop a base rate for department approval; this base rate

shall not be excessive, inadequate or unfairly discriminatory.

(i)  Limits on increases and decreases.--A proposed rate band

premium adjustment to the base rate for basic care shall

increase no more than 20% or decrease no more than 15% from the

current approved base rate. The insurer may not, without prior

approval of the department, use rating characteristics when

determining a rate band premium adjustment for basic care other

than:

(1)  Age of each applicant.

(2)  Tobacco use.

(3)  The geographic area/zip code for the applicant's

residency.

(j)  Preexisting condition.--

(1)  A preexisting condition shall not be considered by

the insurer when an eligible individual or small employer

initially enrolls in or renews basic care coverage.

(2)  However, if basic care lapses or is terminated,

reenrollment in basic care shall consider preexisting

conditions for rating purposes according to the rules of the

Health Insurance Portability and Accountability Act of 1996

(Public Law 104-191, 110 Stat. 1936).

Section 5.  Payments to employees for the purchase of basic

care.

A small employer may, in lieu of providing health care

coverage, provide an employee with a health care payment for the

purpose of paying all or a portion of the basic care that is

independently purchased by an employee. This payment shall not

be considered compensation for the employee as defined under

section 301 of the act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971.

Section 6.  Funding.

The General Assembly shall appropriate funds for startup

costs to implement the interchange. Within 60 days of the

effective date of this act, the department shall determine a

cost estimate to administer the interchange.

Section 7.  Basic care.

(a)  Required offering.--An insurer licensed in this

Commonwealth to sell health insurance and has at least 1% of the

health insurance market Statewide shall offer basic care.

(b)  Service fee.--All eligible benefits may be subject to a

medical service fee. A medical service fee shall not exceed 10%

of the health care provider's approved fee schedule, as provided

for in section 8. The additional medical service fee shall be

limited to $1,000 maximum per health care provider per calendar

year and shall be paid to the provider rendering services.

(c)  Benefits.--Basic care benefits include all of the

following:

(1)  Twenty-one days of inpatient surgical and medical

coverage per policy year.

(2)  Eight office visits for primary health care

services.

(3)  Surgery and anesthesia.

(4)  Emergency accident and medical treatment.

(5)  Diagnostic services up to $2,500 for each policy

year.

(6)  Chemotherapy and radiation treatment.

(7)  Maternity care.

(8)  Newborn care up to 31 days following birth.

(9)  Prescription drugs as provided for in a formulary of

commonly dispensed medications covered under basic care to be

established by the department with assistance from the

Department of Health.

Section 8.  Health care provider fee schedule.

(a)  General fees.--Except as provided for in section 7(b), a

health care provider or institution providing treatment,

accommodations, products or services to a patient for a benefit

covered by basic care shall not require, request or accept

payment for treatment, accommodations, products or services in

excess of any of the following:

(1)  One hundred twenty percent of the prevailing charge

at the 75th percentile.

(2)  One hundred twenty percent of the applicable fee

schedule, the recommended fee or the inflation index charge.

(3)  One hundred twenty percent of the diagnostic-related

groups (DRG) payment, whichever pertains to the specialty

service involved, determined to be applicable in this

Commonwealth under the Medicare program for comparable

services at the time the services were rendered or the

provider's usual and customary charge, whichever is less.

(b)  Calculating payments.--The reimbursement allowances

applicable in this Commonwealth under the Medicare program are

an appropriate basis for the department and health care insurers

to calculate payment for treatments, accommodations, products or

services.

(c)  Subsequent fee schedules.--Future changes or additions

to Medicare allowances are applicable under this section.

(d)  Unreasonable fees.--If the department determines that an

allowance under the Medicare program is not reasonable, the

Insurance Commissioner may adopt a different allowance by

regulation, which allowance shall be applied against the

percentage limitation in this subsection.

(e)  Other charges.--If a prevailing charge, fee schedule,

recommended fee, inflation index charge or DRG payment has not

been calculated under the Medicare program for a particular

treatment, accommodation, product or service, the amount of the

payment may not exceed 80% of the provider's usual and customary

charge.

(f)  Emergency treatment.--If acute care is provided in an

acute care facility to a patient with an immediately

life-threatening or urgent injury by a Level I or Level II

trauma center accredited by the Pennsylvania Trauma Systems

Foundation under 35 Pa.C.S. § 8107 (relating to Pennsylvania

Trauma Systems Foundation) or to a major burn injury patient by

a burn facility which meets all the service standards of the

American Burn Association, the amount of payment may not exceed

the usual and customary charge.

(g)  Billing.--Providers subject to this section may not bill

the insured directly but must bill the insurer for a

determination of the amount payable.

Section 9.  Advisory committee.

(a)  Establishment.--An advisory committee is formed to

assist in overseeing the provisions of this act.

(b)  Members.--The advisory committee shall be comprised of

the following members:

(1)  The Insurance Commissioner or a department designee

who will serve as chairperson.

(2)  Two members of the Senate appointed by the President

pro tempore, one of whom shall be a member of the minority

party.

(3)  Two members of the House of Representatives

appointed by the Speaker, one of whom shall be a member of

the minority party.

(4)  Two representatives of hospitals selected by the

Governor from a list of five individuals supplied by an

association whose membership consists primarily of hospitals.

(5)  Two primary health care practitioners selected by

the Governor from a list of five individuals supplied by an

association whose membership consists of medical care

practitioners.

(6)  One individual appointed by the Governor and

employed by a for-profit insurance carrier licensed to

provide health insurance from a list supplied by an

association whose membership consists of for-profit insurers.

(7)  One individual employed by a nonprofit health

insurer appointed by the Governor.

(8)  Two members of the general public appointed by the

Governor.

(9)  Two insurance producers licensed to sell health

insurance in this Commonwealth appointed by the Governor from

a list of five individuals submitted by an association whose

members consist of insurance producers licensed to sell

health insurance.

(10)  One actuary who is not an employee of this

Commonwealth appointed by the department.

(c)  Legislative terms.--Legislative members shall serve so

long as they remain in office.

(d)  Other terms.--All other members of the advisory

committee shall serve for a two-year term, not to exceed two

terms.

(e)  Compensation.--No member of the advisory committee shall

be eligible to receive financial reimbursement, except for

travel.

(f)  Duties.--The advisory committee shall have the following

responsibilities:

(1)  Assist the Insurance Commissioner in preparing the

interchange annual report as specified in subsection (g).

(2)  Provide expertise to the Insurance Commissioner.

(3)  Assist the department in reviewing the Internet

website for accuracy and clarity in communication to

individuals and small employers.

(g)  Report.--A report shall be submitted to the General

Assembly by March 1 of each calendar year, to include a summary

of the previous year's interchange data.

Section 10.  Effective date.

This act shall take effect in 180 days.