January 26, 2005, Introduced by Senators HARDIMAN, SWITALSKI, KUIPERS, ALLEN, JELINEK, GOSCHKA, CROPSEY, BIRKHOLZ and SIKKEMA and referred to the Committee on Health Policy.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 3515, 3519, 3523, 3529, 3533, 3569, and 3571
(MCL 500.3515, 500.3519, 500.3523, 500.3529, 500.3533, 500.3569,
and 500.3571), sections 3515 and 3519 as amended by 2002 PA 621,
sections 3523 and 3529 as amended by 2002 PA 304, and sections
3533, 3569, and 3571 as added by 2000 PA 252.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3515. (1) A health maintenance organization may provide
additional health maintenance services or any other related health
care service or treatment not required under this chapter.
(2) A health maintenance organization may have health
maintenance
contracts with deductibles. A For
specific health
maintenance services, a health maintenance organization may have
health
maintenance contracts with that
require copayments, that
are
required for specific health maintenance services. Copayments
for
services required under section 3501(b) stated as dollar
amounts for the cost of covered services, and coinsurance, stated
as percentages for the cost of covered services. Coinsurance for
basic health services and copayments for inpatient hospital
services and facility-based outpatient surgical services, excluding
deductibles,
shall be nominal, shall not exceed 50% of a health
maintenance organization's reimbursement to an affiliated provider
for
providing the service to an enrollee , and shall not be based
on the provider's standard charge for the service.
(3) An enrollee's aggregate out-of-pocket costs for
coinsurance for basic health services and an enrollee's aggregate
out-of-pocket costs for copayments for inpatient hospital services
and facility-based outpatient surgical services shall not exceed
$5,000.00 per year for an individual covered under a health
maintenance contract and $10,000.00 per year for a family covered
under a health maintenance contract. The maximum coinsurance and
copayment out-of-pocket costs shall be adjusted annually to the
greater of the following:
(a) By March 31 each year in accordance with the annual
average percentage change in the consumer price index for all urban
consumers in the United States city average for medical care for
the 12-month period ending the preceding December 31, as reported
by the United States department of labor, bureau of labor
statistics, and as certified by the commissioner.
(b) The maximum annual out-of-pocket expenses for a high
deductible health plan under section 223 of the internal revenue
code, 26 USC 223, as certified by the commissioner.
(4) Upon petition by a health maintenance organization to the
commissioner, the maximum coinsurance and co-payment out-of-pocket
costs under subsection (3) shall be adjusted to an amount warranted
by current market conditions. Within 90 days after the date of the
petition, the commissioner shall make the adjustment or reject the
adjustment as not being warranted by current market conditions. As
used in this subsection:
(a) "Current market conditions" includes higher coinsurances
and co-payments being used in the same or similar products marketed
by other health insurers.
(b) "Health insurer" means a health maintenance organization,
nonprofit health care corporation, or commercial insurer regulated
by the insurance laws of this state and providing any form of
health insurance or coverage.
(5) A health maintenance organization may have health
maintenance contracts under section 3533 with separate out-of-
pocket costs for services performed by nonaffiliated providers that
do not exceed 2 times the out-of-pocket costs under subsection (3)
or (4) for services performed by affiliated providers. A health
maintenance organization shall not have separate out-of-pocket
costs under this subsection for emergency services or for services
performed by nonaffiliated providers that are authorized by the
health maintenance organization.
(6) A health maintenance organization shall not require
contributions
be made to a deductible for preventative preventive
health
care services. As used in this subsection, "preventative
"preventive health care services" means services designated to
maintain an individual in optimum health and to prevent unnecessary
injury, illness, or disability.
(7) (3)
A health maintenance organization
may accept from
governmental agencies and from private persons payments covering
any part of the cost of health maintenance contracts.
Sec. 3519. (1) A health maintenance organization contract and
the
contract's rates, including any deductibles, and copayments,
and coinsurances, between the organization and its subscribers
shall be fair, sound, and reasonable in relation to the services
provided, and the procedures for offering and terminating contracts
shall not be unfairly discriminatory.
(2) A health maintenance organization contract and the
contract's rates shall not discriminate on the basis of race,
color, creed, national origin, residence within the approved
service area of the health maintenance organization, lawful
occupation, sex, handicap, or marital status, except that marital
status may be used to classify individuals or risks for the purpose
of insuring family units. The commissioner may approve a rate
differential based on sex, age, residence, disability, marital
status, or lawful occupation, if the differential is supported by
sound actuarial principles, a reasonable classification system, and
is related to the actual and credible loss statistics or reasonably
anticipated experience for new coverages.
(3) All health maintenance organization contracts shall
include, at a minimum, basic health services.
Sec. 3523. (1) A health maintenance contract shall be filed
with and approved by the commissioner.
(2) A health maintenance contract shall include any approved
riders, amendments, and the enrollment application.
(3) In addition to the provisions of this act that apply to an
expense-incurred hospital, medical, or surgical policy or
certificate, a health maintenance contract shall include all of the
following:
(a) Name and address of the organization.
(b) Definitions of terms subject to interpretation.
(c) The effective date and duration of coverage.
(d) The conditions of eligibility.
(e) A statement of responsibility for payments.
(f) A description of specific benefits and services available
under the contract within the service area, with respective
copayments, coinsurances, and deductibles.
(g) A description of emergency and out-of-area services.
(h) A specific description of any limitation, exclusion, and
exception, including any preexisting condition limitation, grouped
together with captions in boldfaced type.
(i) Covenants that address confidentiality, an enrollee's
right to choose or change the primary care physician or other
providers, availability and accessibility of services, and any
rights of the enrollee to inspect and review his or her medical
records.
(j) Covenants of the subscriber shall address all of the
following subjects:
(i) Timely payment.
(ii) Nonassignment of benefits.
(iii) Truth in application and statements.
(iv) Notification of change in address.
(v) Theft of membership identification.
(k) A statement of responsibilities and rights regarding the
grievance procedure.
(l) A statement regarding subrogation and coordination of
benefits provisions, including any responsibility of the enrollee
to cooperate.
(m) A statement regarding conversion rights.
(n) Provisions for adding new family members or other acquired
dependents, including conversion of individual contracts to family
contracts and family contracts to individual contracts, and the
time constraints imposed.
(o) Provisions for grace periods for late payment.
(p) A description of any specific terms under which the health
maintenance organization or the subscriber can terminate the
contract.
(q) A statement of the nonassignability of the contract.
Sec. 3529. (1) A health maintenance organization may contract
with or employ health professionals on the basis of cost, quality,
availability of services to the membership, conformity to the
administrative procedures of the health maintenance organization,
and other factors relevant to delivery of economical, quality care,
but shall not discriminate solely on the basis of the class of
health professionals to which the health professional belongs.
(2) A health maintenance organization shall enter into
contracts with providers through which health care services are
usually provided to enrollees under the health maintenance
organization plan.
(3) An affiliated provider contract shall prohibit the
provider from seeking payment from the enrollee for services
provided pursuant to the provider contract, except that the
contract may allow affiliated providers to collect copayments,
coinsurances, and deductibles directly from enrollees.
(4) An affiliated provider contract shall contain provisions
assuring all of the following:
(a) The provider meets applicable licensure or certification
requirements.
(b) Appropriate access by the health maintenance organization
to records or reports concerning services to its enrollees.
(c) The provider cooperates with the health maintenance
organization's quality assurance activities.
(5) The commissioner may waive the contract requirement under
subsection (2) if a health maintenance organization has
demonstrated that it is unable to obtain a contract and
accessibility to patient care would not be compromised. When 10% or
more of a health maintenance organization's elective inpatient
admissions, or projected admissions for a new health maintenance
organization, occur in hospitals with which the health maintenance
organization does not have contracts or agreements that protect
enrollees from liability for authorized admissions and services,
the health maintenance organization may be required to maintain a
hospital reserve fund equal to 3 months' projected claims from such
hospitals.
(6) A health maintenance organization shall submit to the
commissioner for approval standard contract formats proposed for
use with its affiliated providers and any substantive changes to
those contracts. The contract format or change is considered
approved 30 days after filing unless approved or disapproved within
the 30 days. As used in this subsection, "substantive changes to
contract formats" means a change to a provider contract that alters
the method of payment to a provider, alters the risk assumed by
each party to the contract, or affects a provision required by law.
(7) A health maintenance organization or applicant shall
provide evidence that it has employed, or has executed affiliation
contracts with, a sufficient number of providers to enable it to
deliver the health maintenance services it proposes to offer.
Sec. 3533. (1) A health maintenance organization may offer
prudent purchaser contracts to groups or individuals and in
conjunction with those contracts a health maintenance organization
may pay or may reimburse enrollees, or may contract with another
entity to pay or reimburse enrollees, for unauthorized services or
for services by nonaffiliated providers in accordance with the
terms of the contract and subject to copayments, coinsurances,
deductibles, or other financial penalties designed to encourage
enrollees to obtain services from the organization's providers.
(2) Prudent purchaser contracts and the rates charged for them
are subject to the same regulatory requirements as health
maintenance contracts. The rates charged by an organization for
coverage under contracts issued under this section shall not be
unreasonably lower than what is necessary to meet the expenses of
the organization for providing this coverage and shall not have an
anticompetitive effect or result in predatory pricing in relation
to prudent purchaser agreement coverages offered by other
organizations.
(3) A health maintenance organization shall not issue prudent
purchaser contracts unless it is in full compliance with the
requirements for adequate working capital, statutory deposits, and
reserves as provided in this chapter and it is not operating under
any limitation to its authorization to do business in this state.
(4) A health maintenance organization shall maintain financial
records for its prudent purchaser contracts and activities in a
form separate or separable from the financial records of other
operations and activities carried on by the organization.
Sec. 3569. (1) Except as provided in section 3515(2), (3),
(4), and (5), a health maintenance organization shall assume full
financial risk on a prospective basis for the provision of health
maintenance services. However, the organization may do any of the
following:
(a) Require an affiliated provider to assume financial risk
under the terms of its contract.
(b) Obtain insurance.
(c) Make other arrangements for the cost of providing to an
enrollee health maintenance services the aggregate value of which
is more than $5,000.00 in a year for that enrollee.
(2) If the health maintenance organization requires an
affiliated provider to assume financial risk under the terms of its
contract, the contract shall require both of the following:
(a) The health maintenance organization to pay the affiliated
provider, including a subcontracted provider, directly or through a
licensed third party administrator for health maintenance services
provided to its enrollees.
(b) The health maintenance organization to keep all pooled
funds and withhold amounts and account for them on its financial
books and records and reconcile them at year end in accordance with
the written agreement between the affiliated provider and the
health maintenance organization.
(3) As used in this section, "requiring an affiliated provider
to assume financial risk" means a transaction whereby a portion of
the chance of loss, including expenses incurred, related to the
delivery of health maintenance services is shared with an
affiliated provider in return for a consideration. These
transactions include, but are not limited to, full or partial
capitation agreements, withholds, risk corridors, and indemnity
agreements.
Sec. 3571. A health maintenance organization is not precluded
from
meeting the requirements of, receiving moneys money
from,
and
enrolling beneficiaries or recipients of , state and federal
health programs. A health maintenance organization that
participates in a state or federal health program shall meet the
solvency and financial requirements of this act but is not required
to offer benefits or services that exceed the requirements of the
state or federal health program. This section does not apply to
state employee or federal employee health programs.