SB-0460,As Passed Senate,May 28, 2003
SUBSTITUTE FOR
SENATE BILL NO. 460
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 3406q (MCL 500.3406q), as added by 2002 PA
538, and by adding chapter 37.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 3406q. (1) An expense-incurred hospital, medical, or
2 surgical policy or certificate delivered, issued for delivery, or
3 renewed in this state that provides pharmaceutical coverage and a
4 health maintenance organization contract that provides
5 pharmaceutical coverage shall provide coverage for an off-label
6 use of a federal food and drug administration approved drug and
7 the reasonable cost of supplies medically necessary to administer
8 the drug.
9 (2) Coverage for a drug under subsection (1) applies if all
10 of the following conditions are met:
1 (a) The drug is approved by the federal food and drug
2 administration.
3 (b) The drug is prescribed by an allopathic or osteopathic
4 physician for the treatment of either of the following:
5 (i) A life-threatening condition so long as the drug is
6 medically necessary to treat that condition and the drug is on
7 the plan formulary or accessible through the health plan's
8 formulary procedures.
9 (ii) A chronic and seriously debilitating condition so long
10 as the drug is medically necessary to treat that condition and
11 the drug is on the plan formulary or accessible through the
12 health plan's formulary procedures.
13 (c) The drug has been recognized for treatment for the
14 condition for which it is prescribed by 1 of the following:
15 (i) The American medical association drug evaluations.
16 (ii) The American hospital formulary service drug
17 information.
18 (iii) The United States pharmacopoeia dispensing information,
19 volume 1, "drug information for the health care professional".
20 (iv) Two articles from major peer-reviewed medical journals
21 that present data supporting the proposed off-label use or uses
22 as generally safe and effective unless there is clear and
23 convincing contradictory evidence presented in a major
24 peer-reviewed medical journal.
25 (3) Upon request, the prescribing allopathic or osteopathic
26 physician shall supply to the insurer or health maintenance
27 organization documentation supporting compliance with subsection
1 (2).
2 (4) This section does not prohibit the use of a copayment,
3 deductible, sanction, or a mechanism for appropriately
4 controlling the utilization of a drug that is prescribed for a
5 use different from the use for which the drug has been approved
6 by the food and drug administration. This may include prior
7 approval or a drug utilization review program. Any copayment,
8 deductible, sanction, prior approval, drug utilization review
9 program, or mechanism described in this subsection shall not be
10 more restrictive than for prescription coverage generally.
11 (5) As used in this section:
12 (a) "Chronic and seriously debilitating" means a disease or
13 condition that requires ongoing treatment to maintain remission
14 or prevent deterioration and that causes significant long-term
15 morbidity.
16 (b) "Life-threatening" means a disease or condition where the
17 likelihood of death is high unless the course of the disease is
18 interrupted or that has a potentially fatal outcome where the end
19 point of clinical intervention is survival.
20 (c) "Off-label" means the use of a drug for clinical
21 indications other than those stated in the labeling approved by
22 the federal food and drug administration.
23 CHAPTER 37
24 SMALL EMPLOYER GROUP HEALTH COVERAGE
25 Sec. 3701. As used in this chapter:
26 (a) "Actuarial certification" means a written statement by a
27 member of the American academy of actuaries or another individual
1 acceptable to the commissioner that a small employer carrier is
2 in compliance with the provisions of section 3705, based upon the
3 person's examination, including a review of the appropriate
4 records and the actuarial assumptions and methods used by the
5 carrier in establishing premium rates for applicable health
6 benefit plans.
7 (b) "Affiliation period" means a period of time required by a
8 small employer carrier that must expire before health coverage
9 becomes effective.
10 (c) "Carrier" means a person that provides health benefits,
11 coverage, or insurance in this state. For the purposes of this
12 chapter, carrier includes a health insurance company authorized
13 to do business in this state, a nonprofit health care
14 corporation, a health maintenance organization, a multiple
15 employer welfare arrangement, or any other person providing a
16 plan of health benefits, coverage, or insurance subject to state
17 insurance regulation.
18 (d) "COBRA" means the consolidated omnibus budget
19 reconciliation act of 1985, Public Law 99-272, 100 Stat. 82.
20 (e) "Creditable coverage" means, with respect to an
21 individual, health benefits, coverage, or insurance provided
22 under any of the following:
23 (i) A group health plan.
24 (ii) A health benefit plan.
25 (iii) Part A or part B of title XVIII of the social security
26 act, chapter 531, 49 Stat. 620, 42 U.S.C. 1395c to 1395i and
27 1395i-2 to 1395i-5, and 42 U.S.C. 1395j to 1395t, 1395u to 1395w,
1 and 1395w-2 to 1395w-4.
2 (iv) Title XIX of the social security act, chapter 531, 49
3 Stat. 620, 42 U.S.C. 1396 to 1396r-6 and 1396r-8 to 1396v, other
4 than coverage consisting solely of benefits under section 1929 of
5 title XIX of the social security act, 42 U.S.C. 1396t.
6 (v) Chapter 55 of title 10 of the United States Code, 10
7 U.S.C. 1071 to 1110. For purposes of chapter 55 of title 10 of
8 the United States Code, 10 U.S.C. 1071 to 1110, "uniformed
9 services" means the armed forces and the commissioned corps of
10 the national oceanic and atmospheric administration and of the
11 public health service.
12 (vi) A medical care program of the Indian health service or
13 of a tribal organization.
14 (vii) A state health benefits risk pool.
15 (viii) A health plan offered under the employees health
16 benefits program, chapter 89 of title 5 of the United States
17 Code, 5 U.S.C. 8901 to 8914.
18 (ix) A public health plan, which for purposes of this chapter
19 means a plan established or maintained by a state, county, or
20 other political subdivision of a state that provides health
21 insurance coverage to individuals enrolled in the plan.
22 (x) A health benefit plan under section 5(e) of title I of
23 the peace corps act, Public Law 87-293, 22 U.S.C. 2504.
24 (f) "Eligible employee" means an employee who works on a
25 full-time basis with a normal workweek of 30 or more hours.
26 Eligible employee includes an employee who works on a full-time
27 basis with a normal workweek of 17.5 to 30 hours, if an employer
1 so chooses and if this eligibility criterion is applied uniformly
2 among all of the employer's employees and without regard to
3 health status-related factors.
4 (g) "Geographic area" means an area in this state that
5 includes not less than 1 entire county, established by a carrier
6 pursuant to section 3705 and used for adjusting rates for a
7 health benefit plan subject to this chapter. In addition, if the
8 geographic area includes 1 entire county and additional counties
9 or portions of counties, the counties or portions of counties
10 must be contiguous with at least 1 other county or portion of
11 another county in that geographic area.
12 (h) "Group health plan" means an employee welfare benefit
13 plan as defined in section 3(1) of subtitle A of title I of the
14 employee retirement income security act of 1974, Public Law
15 93-406, 29 U.S.C. 1002, to the extent that the plan provides
16 medical care, including items and services paid for as medical
17 care to employees or their dependents as defined under the terms
18 of the plan directly or through insurance, reimbursement, or
19 otherwise. As used in this chapter, all of the following apply
20 to the term group health plan:
21 (i) Any plan, fund, or program that would not be, but for
22 section 2721(e) of subpart 4 of part A of title XXVII of the
23 public health service act, chapter 373, 110 Stat. 1967, 42
24 U.S.C. 300gg-21, an employee welfare benefit plan and that is
25 established or maintained by a partnership, to the extent that
26 the plan, fund, or program provides medical care, including items
27 and services paid for as medical care, to present or former
1 partners in the partnership, or to their dependents, as defined
2 under the terms of the plan, fund, or program, directly or
3 through insurance, reimbursement or otherwise, shall be treated,
4 subject to subparagraph (ii), as an employee welfare benefit plan
5 that is a group health plan.
6 (ii) The term "employer" also includes the partnership in
7 relation to any partner.
8 (iii) The term "participant" also includes an individual who
9 is, or may become, eligible to receive a benefit under the plan,
10 or the individual's beneficiary who is, or may become, eligible
11 to receive a benefit under the plan. For a group health plan
12 maintained by a partnership, the individual is a partner in
13 relation to the partnership and for a group health plan
14 maintained by a self-employed individual, under which 1 or more
15 employees are participants, the individual is the self-employed
16 individual.
17 (i) "Health benefit plan" or "plan" means an expense-incurred
18 hospital, medical, or surgical policy or certificate, nonprofit
19 health care corporation certificate, or health maintenance
20 organization contract. Health benefit plan does not include
21 accident-only, credit, dental, or disability income insurance;
22 coverage issued as a supplement to liability insurance; worker's
23 compensation or similar insurance; or automobile medical-payment
24 insurance.
25 (j) "Index rate" means the arithmetic average during a rating
26 period of the lowest premium rate and the highest premium rate
27 charged for each health benefit plan offered by each small
Senate Bill No. 460 as amended May 28, 2003
1 employer carrier to small employers or sole proprietors in a
2 geographic area.
3 (k) "Nonprofit health care corporation" means a nonprofit
4 health care corporation operating pursuant to the nonprofit
5 health care corporation reform act, 1980 PA 350, MCL 550.1101 to
6 550.1704.
7 (l) "Premium rate" means all money paid by a small employer,
8 a sole proprietor, eligible employees, or eligible persons as a
9 condition of receiving coverage from a small employer carrier,
10 including any fees or other contributions associated with the
11 health benefit plan.
12 (m) "Rating period" means the calendar period for which
13 premium rates established by a small employer carrier are assumed
14 to be in effect, as determined by the small employer carrier.
15 (n) "Small employer" means any person, firm, corporation,
16 partnership, limited liability company, or association actively
17 engaged in business who, on at least 50% of its working days
18 during the preceding <<and>> current calendar year, employed at least
19 2 but not more than 50 eligible employees. In determining the
20 number of eligible employees, companies that are affiliated
21 companies or that are eligible to file a combined tax return for
22 state taxation purposes shall be considered 1 employer.
23 (o) "Small employer carrier" means either of the following:
24 (i) A carrier that offers health benefit plans covering the
25 employees of a small employer.
26 (ii) A carrier under section 3703(3).
27 (p) "Sole proprietor" means an individual who is a sole
1 proprietor or sole shareholder in a trade or business through
2 which he or she earns at least 50% of his or her taxable income
3 and for which he or she has filed the appropriate internal
4 revenue service form 1040, schedule C or F, for the previous
5 taxable year; who is a resident of this state; and who is
6 actively employed in the operation of the business, working at
7 least 30 hours per week in at least 40 weeks out of the calendar
8 year.
9 (q) "Waiting period" means, with respect to a health benefit
10 plan and an individual who is a potential enrollee in the plan,
11 the period that must pass with respect to the individual before
12 the individual is eligible to be covered for benefits under the
13 terms of the plan. For purposes of calculating periods of
14 creditable coverage under this chapter, a waiting period shall
15 not be considered a gap in coverage.
16 Sec. 3703. (1) This chapter applies to any health benefit
17 plan that provides coverage to 2 or more employees of a small
18 employer.
19 (2) This chapter does not apply to individual health
20 insurance policies that are subject to policy form and premium
21 rate approval by the commissioner.
22 (3) A nonprofit health care corporation shall offer upon
23 request a health benefit plan to a sole proprietor. This chapter
24 does apply to a nonprofit health care corporation providing a
25 health benefit plan to a sole proprietor and to any other small
26 employer carrier that elects to provide a health benefit plan to
27 a sole proprietor.
Senate Bill No. 460 as amended May 28, 2003
1 Sec. 3705. (1) For adjusting rates for health benefit plans
2 subject to this chapter, a carrier may establish up to 10
3 geographic areas in this state. A nonprofit health care
4 corporation shall establish geographic areas that cover all
5 counties in this state.
6 (2) Premium rates for a health benefit plan under this
7 chapter are subject to the following:
8 (a) For a nonprofit health care corporation and a health
9 maintenance organization, only industry and age may be used for
10 determining the premium rates within a geographic area for a
11 small employer or sole proprietor located in that geographic
12 area. For all other carriers, only industry, age, and health
13 status may be used for determining the premium rates within a
14 geographic area for a small employer or sole proprietor located
15 in that geographic area.
16 (b) The premium rates charged during a rating period by a
17 nonprofit health care corporation or a health maintenance
18 organization for a health benefit plan in a geographic area to
19 small employers or <<sole>> proprietors located in that geographic
20 area shall not vary from the index rate for that health benefit
21 plan by more than 35% of the index rate. However, for a health
22 benefit plan issued before the effective date of this chapter by
23 a nonprofit health care corporation or health maintenance
24 organization, the premium rate for the plan in a geographic area
25 shall not be higher than 15% above the index rate or lower than
26 35% below the index rate until the next renewal period for that
27 plan following December 31, 2004.
Senate Bill No. 460 as amended May 28, 2003
1 <<(c) Except as otherwise provided in subdivision (f), the premium
2 rates charged during a rating period by a small employer carrier other
3 than a nonprofit health care corporation or health maintenance
4 organization for a health benefit plan in a geographic area to small
5 employers or sole proprietors located in that geographic area shall not
6 vary from the index rate for that health benefit plan by more than 40% of
7 the index rate.
8 >>
9 (d) For a sole proprietor, a small employer carrier may
10 charge an additional premium of up to 25% above the premium rate
11 in subdivision (b), (c), or (f).
12 (e) Except as provided in subdivision (f), the percentage
13 increase in the premium rate charged to a small employer or sole
14 proprietor in a geographic area for a new rating period shall not
15 exceed the sum of the annual percentage adjustment in the
16 geographic area's index rate for the health benefit plan plus an
17 adjustment pursuant to subdivision (a)<<that does not
18 exceed 15% annually and shall be>> adjusted pro rata for rating periods of less than 1
19 year. This subdivision does not prohibit an adjustment due to
20 change in coverage.
21 (f) For a health benefit plan issued before the effective
22 date of this chapter by a small employer carrier other than a
23 nonprofit health care corporation or health maintenance
24 organization, the premium rate for the plan is subject to the
25 following until the next renewal period following December 31,
26 2006 instead of subdivision (c):
27 (i) For a renewal occurring on or after January 1, 2004 and
1 through December 31, 2004, the premium rates charged to small
2 employers or sole proprietors located in a geographic area shall
3 not vary from the index rate for that health benefit plan by more
4 than 80% of the index rate.
5 (ii) For a renewal occurring on or after January 1, 2005 and
6 through December 31, 2005, the premium rates charged to small
7 employers or sole proprietors located in a geographic area shall
8 not vary from the index rate for that health benefit plan by more
9 than 65% of the index rate.
10 (iii) For a renewal occurring on or after January 1, 2006 and
11 through December 31, 2006, the premium rates charged to small
12 employers or sole proprietors located in a geographic area shall
13 not vary from the index rate for that health benefit plan by more
14 than 50% of the index rate.
15 (3) Beginning 1 year after the effective date of this
16 chapter, if a small employer or sole proprietor had been
17 self-insured for health benefits immediately preceding
18 application for a health benefit plan subject to this chapter, a
19 carrier may charge an additional premium of up to 33% above the
20 premium rate in subsection (2)(b), (c), or (f) for no more than 2
21 years.
22 (4) Health benefit plan options, number of family members
23 covered, and medicare eligibility may be used in establishing a
24 small employer's or sole proprietor's premium.
25 (5) A small employer carrier shall apply all rating factors
26 consistently with respect to all small employers and sole
27 proprietors in a geographic area. Except as provided in
1 subsection (4), a small employer carrier shall bill a small
2 employer group only with a composite rate and shall not bill so
3 that 1 or more employees in a small employer group are charged a
4 higher premium than another employee in that small employer
5 group.
6 Sec. 3706. (1) A small employer carrier may apply an open
7 enrollment period for sole proprietors. If a small employer
8 carrier applies an open enrollment period for sole proprietors,
9 the open enrollment period shall be offered at least annually and
10 shall be at least 1 month long.
11 (2) A small employer carrier is not required to offer or
12 provide to a sole proprietor all health benefit plans available
13 to small employers who are not sole proprietors. However, a
14 small employer carrier is required to offer to all sole
15 proprietors all health benefit plans in a geographic area that
16 are available to any sole proprietor in that geographic area.
17 (3) A small employer carrier may exclude or limit coverage
18 for a sole proprietor for a condition only if the exclusion or
19 limitation relates to a condition for which medical advice,
20 diagnosis, care, or treatment was recommended or received within
21 6 months before enrollment and the exclusion or limitation does
22 not extend for more than 6 months after the effective date of the
23 health benefit plan.
24 (4) A small employer carrier shall not impose a preexisting
25 condition exclusion for a sole proprietor that relates to
26 pregnancy as a preexisting condition or with regard to a child
27 who is covered under any creditable coverage within 30 days of
1 birth, adoption, or placement for adoption, provided that the
2 child does not experience a significant break in coverage and
3 provided that the child was adopted or placed for adoption before
4 attaining 18 years of age. A period of creditable coverage under
5 this subsection shall not be counted for enrollment of an
6 individual under a health benefit plan if, after this period and
7 before the enrollment date, there was a 90-day period during all
8 of which the individual was not covered under any creditable
9 coverage.
10 Sec. 3707. (1) As a condition of transacting business in
11 this state with small employers, every small employer carrier
12 shall offer to small employers all health benefit plans it
13 markets to small employers in this state. A small employer
14 carrier shall be considered to be marketing a health benefit plan
15 if it offers that plan to a small employer not currently
16 receiving a health benefit plan from that small employer
17 carrier. A small employer carrier shall issue any health benefit
18 plan to any small employer that applies for the plan and agrees
19 to make the required premium payments and to satisfy the other
20 reasonable provisions of the health benefit plan not inconsistent
21 with this chapter.
22 (2) Except as otherwise provided in this subsection, a small
23 employer carrier shall not offer or sell to small employers a
24 health benefit plan that contains a waiting period applicable to
25 new enrollees or late enrollees. However, a small employer
26 carrier may offer or sell to small employers other than sole
27 proprietors a health benefit plan that provides for an
1 affiliation period of time that must expire before coverage
2 becomes effective for a new enrollee or a late enrollee if all of
3 the following are met:
4 (a) The affiliation period is applied uniformly to all new
5 and late enrollees and dependents of the new and late enrollees
6 of the small employer and without regard to any health
7 status-related factor.
8 (b) The affiliation period does not exceed 60 days for new
9 enrollees and does not exceed 90 days for late enrollees.
10 (c) The small employer carrier does not charge any premiums
11 for the enrollee during the affiliation period.
12 (d) The coverage issued is not effective for the enrollee
13 during the affiliation period.
14 Sec. 3708. (1) A health benefit plan offered to a small
15 employer by a small employer carrier shall provide for the
16 acceptance of late enrollees subject to this chapter.
17 (2) A small employer carrier shall permit an employee or a
18 dependent of the employee, who is eligible, but not enrolled, to
19 enroll for coverage under the terms of the small employer health
20 benefit plan during a special enrollment period if all of the
21 following apply:
22 (a) The employee or dependent was covered under a group
23 health plan or had coverage under a health benefit plan at the
24 time coverage was previously offered to the employee or
25 dependent.
26 (b) The employee stated in writing at the time coverage was
27 previously offered that coverage under a group health plan or
1 other health benefit plan was the reason for declining
2 enrollment, but only if the small employer or carrier, if
3 applicable, required such a statement at the time coverage was
4 previously offered and provided notice to the employee of the
5 requirement and the consequences of the requirement at that
6 time.
7 (c) The employee's or dependent's coverage described in
8 subdivision (a) was either under a COBRA continuation provision
9 and that coverage has been exhausted or was not under a COBRA
10 continuation provision and that other coverage has been
11 terminated as a result of loss of eligibility for coverage,
12 including because of a legal separation, divorce, death,
13 termination of employment, or reduction in the number of hours of
14 employment or employer contributions toward that other coverage
15 have been terminated. In either case, under the terms of the
16 health benefit plan, the employee must request enrollment not
17 later than 30 days after the date of exhaustion of coverage or
18 termination of coverage or employer contribution. If an employee
19 requests enrollment pursuant to this subdivision, the enrollment
20 is effective not later than the first day of the first calendar
21 month beginning after the date the completed request for
22 enrollment is received.
23 (3) A small employer carrier that makes dependent coverage
24 available under a health benefit plan shall provide for a
25 dependent special enrollment period during which the person may
26 be enrolled under the health benefit plan as a dependent of the
27 individual or, if not otherwise enrolled, the individual may be
1 enrolled under the health benefit plan. For a birth or adoption
2 of a child, the spouse of the individual may be enrolled as a
3 dependent of the individual if the spouse is otherwise eligible
4 for coverage. This subsection applies only if both of the
5 following occur:
6 (a) The individual is a participant under the health benefit
7 plan or has met any affiliation period applicable to becoming a
8 participant under the plan and is eligible to be enrolled under
9 the plan, but for a failure to enroll during a previous
10 enrollment period.
11 (b) The person becomes a dependent of the individual through
12 marriage, birth, or adoption or placement for adoption.
13 (4) The dependent special enrollment period under subsection
14 (3) for individuals shall be a period of not less than 30 days
15 and begins on the later of the date dependent coverage is made
16 available or the date of the marriage, birth, or adoption or
17 placement for adoption. If an individual seeks to enroll a
18 dependent during the first 30 days of the dependent special
19 enrollment period under subsection (3), the coverage of the
20 dependent shall be effective as follows:
21 (a) For marriage, not later than the first day of the first
22 month beginning after the date the completed request for
23 enrollment is received.
24 (b) For a dependent's birth, as of the date of birth.
25 (c) For a dependent's adoption or placement for adoption, the
26 date of the adoption or placement for adoption.
27 Sec. 3709. (1) Except as provided in this section,
1 requirements used by a small employer carrier in determining
2 whether to provide coverage to a small employer shall be applied
3 uniformly among all small employers applying for coverage or
4 receiving coverage from the small employer carrier. If a small
5 employer carrier waives a minimum participation rule for a small
6 employer, the carrier cannot later enforce that minimum
7 participation rule for that small employer.
8 (2) A small employer carrier may deny coverage to a small
9 employer of 10 or fewer eligible employees if the small employer
10 fails to enroll with the small employer carrier 100% of its
11 employees seeking health care coverage through the small
12 employer.
13 (3) A nonprofit health care corporation and a health
14 maintenance organization may deny coverage to a small employer of
15 11 to 50 eligible employees if the small employer enrolls 50% or
16 more of its employees seeking health care coverage through the
17 small employer with a small employer carrier authorized to use
18 health status as an underwriting or rating factor.
19 Sec. 3711. (1) Except as provided in this section, a small
20 employer carrier that offers health coverage in the small
21 employer group market in connection with a health benefit plan
22 shall renew or continue in force that plan at the option of the
23 small employer or sole proprietor.
24 (2) Guaranteed renewal under subsection (1) is not required
25 in cases of: fraud or intentional misrepresentation of the small
26 employer or, for coverage of an insured individual, fraud or
27 misrepresentation by the insured individual or the individual's
1 representative; lack of payment; if the small employer carrier no
2 longer offers that particular type of coverage in the market; or
3 if the sole proprietor or small employer moves outside the
4 geographic area.
5 Sec. 3712. (1) If a small employer carrier decides to
6 discontinue offering all small employer health benefit plans in a
7 geographic area, all of the following apply:
8 (a) The small employer carrier shall provide notice to the
9 commissioner and to each small employer covered by the small
10 employer carrier in the geographic area of the discontinuation at
11 least 180 days prior to the date of the discontinuation of the
12 coverage.
13 (b) All small employer health benefit plans issued or
14 delivered for issuance in the geographic area are discontinued
15 and all current health benefit plans in the geographic area are
16 not renewed.
17 (c) The small employer carrier shall not issue or deliver for
18 issuance any small employer health benefit plans in the
19 geographic area for 5 years beginning on the date the last small
20 employer health benefit plan in the geographic area is not
21 renewed under subdivision (b).
22 (d) The small employer carrier shall not issue or deliver for
23 issuance for 5 years any small employer health benefit plans in
24 an area that was not a geographic area where the small employer
25 carrier was issuing or delivering for issuance small employer
26 health benefit plans on the date notice was given under
27 subdivision (a). The 5-year period under this subdivision begins
Senate Bill 460 as amended May 28, 2003
1 on the date notice was given under subdivision (a).
2 (2) A nonprofit health care corporation shall not cease to
3 renew all health benefit plans in a geographic area.
4 Sec. 3713. Each small employer carrier shall provide all of
5 the following to a small employer upon request and upon entering
6 into a contract with the small employer:
7 (a) The extent to which premium rates for a specific small
8 employer are established or adjusted due to any permitted
9 characteristic and rating factors of the small employer's
10 employees and the employees' dependents.
11 (b) The provisions concerning the carrier's right to change
12 premium rates, permitted characteristics, and any rating factors
13 under this chapter that affect changes in premium rates.
14 (c) The provisions relating to renewability of coverage.
15 Sec. 3715. (1) Each small employer carrier shall maintain
16 at its principal place of business a complete and detailed
17 description of its rating practices and renewal underwriting
18 practices, including information and documentation that
19 demonstrate that its rating methods and practices are based upon
20 commonly accepted actuarial assumptions and are in accordance
21 with sound actuarial principles.
22 (2) Each small employer carrier shall file each March 1 with
23 the commissioner an actuarial certification, <<
24 >>that the carrier is in
25 compliance with this section and that the rating methods of the
26 carrier are actuarially sound. A copy of the actuarial
27 certification shall be retained by the carrier at its principal
1 place of business.
2 (3) A small employer carrier shall make the information and
3 documentation described in subsection (1) available to the
4 commissioner upon request.
5 (4) This section is in addition to, and not in substitution
6 of, the applicable filing provisions in this act and in the
7 nonprofit health care corporation reform act, 1980 PA 350, MCL
8 550.1101 to 550.1704.
9 Sec. 3717. (1) Upon a filing for suspension by the small
10 employer carrier and a finding by the commissioner after
11 consulting with the attorney general that either the suspension
12 is reasonable in light of the financial condition of the carrier
13 or that the suspension would enhance the efficiency and fairness
14 of the marketplace for small employer health insurance, the
15 commissioner may suspend all or any part of section 3705 as to
16 the premium rates applicable to 1 or more small employers for 1
17 or more rating periods and may suspend section 3712(1)(c) or
18 (d).
19 (2) A small employer carrier that is not a nonprofit health
20 care corporation or health maintenance organization and whose
21 capital and surplus as concerns policyholders as of December 31,
22 2003 as shown on the annual financial statement filed with the
23 commissioner is $8,000,000.00 or less may be exempt from this
24 chapter, if the carrier files with the commissioner a written
25 request for an exemption and the commissioner, after reviewing
26 the carrier's request and annual financial statement, determines
27 an exemption is warranted.
1 (3) An exemption granted under subsection (2) is effective
2 for 3 years, so long as the carrier experiences no
3 disproportionate growth in premium volume in business written, or
4 changes in the carrier's pattern, location, or contours of that
5 insurance business which indicate that the carrier is utilizing
6 its exemption to take unfair competitive advantage of competing
7 carriers who do not qualify for the exemption. A carrier that
8 meets the requirements of subsections (2) to (5) may reapply
9 every 3 years to the commissioner for a subsection (2)
10 exemption. The commissioner shall determine whether the
11 continuation of the exemption is in the best interest of the
12 public, the carrier, and the carrier's policyholders.
13 (4) The commissioner shall not grant an exemption under
14 subsection (2) to any carrier that directly, or indirectly
15 through 1 or more intermediaries, controls, is controlled by, or
16 is under common control with a carrier whose surplus as concerns
17 policyholders is in excess of the amount stated in subsection
18 (2).
19 (5) A carrier admitted to do business in this state after
20 January 1, 2004 is not eligible for an exemption under subsection
21 (2).
22 Sec. 3718. A nonprofit health care corporation is subject
23 to section 619 of the nonprofit health care corporation reform
24 act, 1980 PA 350, MCL 550.1619.
25 Sec. 3721. (1) By January 1, 2006 and by each January 1
26 after 2006, the commissioner shall make a determination as to
27 whether a reasonable degree of competition in the small employer
1 carrier health market exists on a statewide basis. In making
2 this determination, the commissioner shall hold a public hearing
3 and shall issue a report delineating specific classifications and
4 kinds or types of insurance, if any, where competition does not
5 exist and any suggested statutory or other changes necessary to
6 increase or encourage competition. The report shall be based on
7 relevant economic tests, including, but not limited to, those in
8 subsection (3). The findings in the report shall not be based on
9 any single measure of competition, but appropriate weight shall
10 be given to all measures of competition.
11 (2) If the results of the report issued under subsection (1)
12 are disputed or if the commissioner determines that circumstances
13 that the report was based on have changed, the commissioner shall
14 issue a supplemental report to the report under subsection (1)
15 that includes a certification of whether or not a reasonable
16 degree of competition exists in the small employer carrier health
17 market. The supplemental report and certification shall be
18 issued not later than December 15 immediately following the
19 release of the report under subsection (1) that this report
20 supplements and shall be supported by substantial evidence.
21 (3) All of the following shall be considered by the
22 commissioner for purposes of subsections (1) and (2):
23 (a) The extent to which any carrier controls all or a portion
24 of the small employer carrier health benefit plan market.
25 (b) Whether the total number of carriers writing small
26 employer health benefit plan coverage in this state is sufficient
27 to provide multiple options to small employers.
1 (c) The disparity among small employer health benefit plan
2 rates and classifications to the extent that those
3 classifications result in rate differentials.
4 (d) The availability of small employer health benefit plan
5 coverage to small employers in all geographic areas and all types
6 of business.
7 (e) The overall rate level that is not excessive, inadequate,
8 or unfairly discriminatory.
9 (f) Any other factors the commissioner considers relevant.
10 (4) The reports and certifications required under subsections
11 (1) and (2) shall be forwarded to the governor, the clerk of the
12 house, the secretary of the senate, and all the members of the
13 senate and house of representatives standing committees on
14 insurance and health issues.
15 Sec. 3723. The provisions of this chapter apply to each
16 health benefit plan for a small employer or sole proprietor that
17 is delivered, issued for delivery, renewed, or continued in this
18 state on or after the effective date of this chapter. For
19 purposes of this section, the date a health benefit plan is
20 continued is the first rating period that begins on or after the
21 effective date of this chapter.
22 Enacting section 1. This amendatory act does not take
23 effect unless Senate Bill No. 234 of the 92nd Legislature is
24 enacted into law.
25 Enacting section 2. This amendatory act takes effect
26 January 1, 2004.