October 11, 2007, Introduced by Reps. Virgil Smith, Scott, Polidori, Condino, Lemmons, Farrah, Hopgood, Accavitti, Gonzales, Mayes, Gaffney, Young, Hune, Constan, Robert Jones, Simpson, Wojno, Kathleen Law, Spade, Meadows, Vagnozzi, Alma Smith, Warren, Bauer, Johnson, Melton, Rick Jones, Moore, Hammon, Ward, Clack, Clemente, Griffin, Valentine, Ebli, Gillard, Byrnes, Sak, Hildenbrand, Meisner, Bennett, Hammel, Leland, Miller, Angerer, Corriveau, LeBlanc, Coulouris, Hood, Sheltrown, Dean, Brown, Cheeks, Green, Moolenaar, Byrum, Wenke, Stakoe, David Law, LaJoy, Hansen, Donigan, Palsrok, Bieda, Cushingberry and Shaffer and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2213b, 3406f, 3503, 3519, 3521, 3525, and 3539
(MCL 500.2213b, 500.3406f, 500.3503, 500.3519, 500.3521, 500.3525,
and 500.3539), section 2213b as amended by 1998 PA 457, section
3406f as added by 1996 PA 517, section 3503 as amended by 2006 PA
366, sections 3519 and 3539 as amended by 2005 PA 306, and sections
3521 and 3525 as added by 2000 PA 252, and by adding chapter 37A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
2213b. (1) Except as provided in this section, an insurer
that
delivers, issues for delivery, or renews in this state an
expense-incurred
hospital, medical, or surgical individual policy
under
chapter 34 shall renew or continue in force the policy at the
option
of the individual.
(1) (2)
Except as provided in this section and section 3711,
an insurer that delivers, issues for delivery, or renews in this
state an expense-incurred hospital, medical, or surgical group
policy or certificate under chapter 36 shall renew or continue in
force the policy or certificate at the option of the sponsor of the
plan.
(2) (3)
Guaranteed renewal is not required
in cases of fraud,
intentional misrepresentation of material fact, lack of payment, if
the insurer no longer offers that particular type of coverage in
the market, or if the individual or group moves outside the service
area.
(3) (4)
Subsections (1) , and (2) ,
and (3) do not apply to a
short-term or 1-time limited duration policy or certificate of no
longer than 6 months.
(4) (5)
For the purposes of this section
and section 3406f, a
short-term or 1-time limited duration policy or certificate of no
longer than 6 months is an individual health policy that meets all
of the following:
(a) Is issued to provide coverage for a period of 185 days or
less, except that the health policy may permit a limited extension
of benefits after the date the policy ended solely for expenses
attributable to a condition for which a covered person incurred
expenses during the term of the policy.
(b) Is nonrenewable, provided that the health insurer may
provide coverage for 1 or more subsequent periods that satisfy
subdivision (a), if the total of the periods of coverage do not
exceed a total of 185 days out of any 365-day period, plus any
additional days permitted by the policy for a condition for which a
covered person incurred expenses during the term of the policy.
(c) Does not cover any preexisting conditions.
(d) Is available with an immediate effective date, without
underwriting, upon receipt by the insurer of a completed
application indicating eligibility under the health insurer's
eligibility requirements, except that coverage that includes
optional benefits may be offered on a basis that does not meet this
requirement.
(5) (6)
An insurer that delivers, issues
for delivery, or
renews in this state a short-term or 1-time limited duration policy
or
certificate of no longer than 6 months shall provide the
following
to the commissioner:
(a)
By no later than February 1, 1999, a written report that
discloses
both of the following:
(i) The gross written premium for short-term or 1-time
limited
duration
policies or certificates of no longer than 6 months issued
in
this state during the 1996 calendar year.
(ii) The gross written premium for all individual
expense-
incurred
hospital, medical, or surgical policies or certificates
issued
or delivered in this state during the 1996 calendar year
other
than policies or certificates described in subparagraph (i).
(b)
By by no later than March 31, 1999
and annually
thereafter, a written annual report that discloses both of the
following:
(a) (i) The
gross written premium for short-term or 1-time
limited duration policies or certificates issued in this state
during the preceding calendar year.
(b) (ii) The
gross written premium for all individual expense-
incurred hospital, medical, or surgical policies or certificates
issued or delivered in this state during the preceding calendar
year
other than policies or certificates described in subparagraph
(i) subdivision
(a).
(6) (7)
The commissioner shall maintain
copies of reports
prepared
pursuant to subsection (6) (5)
on file with the annual
statement of each reporting insurer. The commissioner shall
annually
compile the reports received under subsection (6) (5).
The
commissioner shall provide this annual compilation to the senate
and house of representatives standing committees on insurance
issues no later than the June 1 immediately following the February
1
or March 31 date for which the reports under subsection (6) (5)
are provided.
(7) (8)
In each calendar year, a health
insurer shall not
continue to issue short-term or 1-time limited duration policies or
certificates if to do so the collective gross written premiums on
those policies or certificates would total more than 10% of the
collective gross written premiums for all individual expense-
incurred hospital, medical, or surgical policies or certificates
issued or delivered in this state either directly by that insurer
or through a corporation that owns or is owned by that insurer.
Sec. 3406f. (1) An insurer may exclude or limit coverage for a
condition as follows:
(a)
For an individual covered under an individual policy or
certificate
or any other policy or certificate not covered under
subdivision
(b) or (c), only if the exclusion or limitation relates
to
a condition for which medical advice, diagnosis, care, or
treatment
was recommended or received within 6 months before
enrollment
and the exclusion or limitation does not extend for more
than
12 months after the effective date of the policy or
certificate.
(a) (b)
For an individual covered under a
group policy or
certificate covering 2 to 50 individuals, only if the exclusion or
limitation relates to a condition for which medical advice,
diagnosis, care, or treatment was recommended or received within 6
months before enrollment and the exclusion or limitation does not
extend for more than 12 months after the effective date of the
policy or certificate.
(b) (c)
For an individual covered under a
group policy or
certificate covering more than 50 individuals, only if the
exclusion or limitation relates to a condition for which medical
advice, diagnosis, care, or treatment was recommended or received
within 6 months before enrollment and the exclusion or limitation
does not extend for more than 6 months after the effective date of
the policy or certificate.
(2) As used in this section, "group" means a group health plan
as
defined in section 2791(a)(1) and (2) of part C of title XXVII
of
the public health service act, chapter 373, 110 Stat. 1972, 42
U.S.C.
300gg-91 42 USC 300gg-91, and includes government plans that
are not federal government plans.
(3) This section applies only to an insurer that delivers,
issues for delivery, or renews in this state an expense-incurred
hospital, medical, or surgical policy or certificate. This section
does not apply to any policy or certificate that provides coverage
for specific diseases or accidents only, or to any hospital
indemnity, medicare supplement, long-term care, disability income,
or 1-time limited duration policy or certificate of no longer than
6 months.
(4)
The commissioner and the director of community health
shall
examine the issue of crediting prior continuous health care
coverage
to reduce the period of time imposed by preexisting
condition
limitations or exclusions under subsection (1)(a), (b),
and
(c) and shall report to the governor and the senate and the
house
of representatives standing committees on insurance and
health
policy issues by May 15, 1997. The report shall include the
commissioner's
and director's findings and shall propose
alternative
mechanisms or a combination of mechanisms to credit
prior
continuous health care coverage towards the period of time
imposed
by a preexisting condition limitation or exclusion. The
report
shall address at a minimum all of the following:
(a)
Cost of crediting prior continuous health care coverages.
(b)
Period of lapse or break in coverage, if any, permitted in
a
prior health care coverage.
(c)
Types and scope of prior health care coverages that are
permitted
to be credited.
(d)
Any exceptions or exclusions to crediting prior health
care
coverage.
(e)
Uniform method of certifying periods of prior creditable
coverage.
Sec. 3503. (1) All of the provisions of this act that apply to
a domestic insurer authorized to issue an expense-incurred
hospital, medical, or surgical policy or certificate, including,
but
not limited to, sections 223 and 7925 and chapters 34, and
36,
and 37A apply to a health maintenance organization under this
chapter unless specifically excluded, or otherwise specifically
provided for in this chapter.
(2) Sections 408, 410, 411, 901, and 5208, chapter 77, and,
except as otherwise provided in subsection (1), chapter 79 do not
apply to a health maintenance organization.
Sec. 3519. (1) A health maintenance organization contract and
the contract's rates, including any deductibles, 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. A healthy lifestyle
program as defined in section 3517(2) is not subject to the
commissioner's approval under this subsection and is not required
to be supported by sound actuarial principles, a reasonable
classification system, or be related to 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.
(4) This section does not apply to the extent that it
conflicts with chapter 37A.
Sec. 3521. (1) The methodology used to determine prepayment
rates by category rates charged by the health maintenance
organization and any changes to either the methodology or the rates
shall be filed with and approved by the commissioner before
becoming effective.
(2) A health maintenance organization shall submit supporting
data used in the development of a prepayment rate or rating
methodology and all other data sufficient to establish the
financial soundness of the prepayment plan or rating methodology.
(3) The commissioner may annually require a schedule of rates
for all subscriber contracts and riders. All submissions shall note
changes of rates previously filed or approved.
(4) This section does not apply to the extent that it
conflicts with chapter 37A.
Sec. 3525. (1) Except as otherwise provided in subsection (2),
if a health maintenance organization desires to change a contract
it offers to enrollees or desires to change a rate charged, a copy
of the proposed revised contract or rate shall be filed with the
commissioner and shall not take effect until 60 days after the
filing, unless the commissioner approves the change in writing
before the expiration of 60 days after the filing. If the
commissioner considers that the proposed revised contract or rate
is illegal or unreasonable in relation to the services provided,
the commissioner, not more than 60 days after the proposed revised
contract or rate is filed, shall notify the organization in
writing, specifying the reasons for disapproval or for approval
with modifications. For an approval with modifications, the notice
shall specify what modifications in the filing are required for
approval, the reasons for the modifications, and that the filing
becomes effective after the modifications are made and approved by
the commissioner. The commissioner shall schedule a hearing not
more than 30 days after receipt of a written request from the
health maintenance organization, and the revised contract or rate
shall not take effect until approved by the commissioner after the
hearing. Within 30 days after the hearing, the commissioner shall
notify the organization in writing of the disposition of the
proposed revised contract or rate, together with the commissioner's
findings of fact and conclusions.
(2) If the revised contract or rate is the result of
collective bargaining and affects only the members of the groups
engaged in the collective bargaining, subsection (1) does not apply
but the revised contract or rate shall be immediately filed with
the commissioner.
(3) Not less than 30 days before the effective date of a
proposed change in a health maintenance contract or the rate
charged, the health maintenance organization shall issue to each
subscriber or group of subscribers who will be affected by the
proposed change a clear written statement stating the extent and
nature of the proposed change. If the commissioner has approved a
proposed change in a contract or rate in writing before the
expiration of 60 days after the date of filing, the organization
immediately shall notify each subscriber or group of subscribers
who will be affected by the proposed change.
(4) This section does not apply to the extent that it
conflicts with chapter 37A.
Sec.
3539. (1) For an individual covered under a nongroup
contract
or under a contract not covered under subsection (2), a
health
maintenance organization may exclude or limit coverage for a
condition
only if the exclusion or limitation relates to a
condition
for which medical advice, diagnosis, care, or treatment
was
recommended or received within 6 months before enrollment and
the
exclusion or limitation does not extend for more than 6 months
after
the effective date of the health maintenance contract.
(1) (2)
A health maintenance organization
shall not exclude or
limit coverage for a preexisting condition for an individual
covered under a group contract.
(3)
Except as provided in subsection (5), a health maintenance
organization
that has issued a nongroup contract shall renew or
continue
in force the contract at the option of the individual.
(2) (4)
Except as provided in subsection (5)
(3) and section
3711, a health maintenance organization that has issued a group
contract shall renew or continue in force the contract at the
option of the sponsor of the plan.
(3) (5)
Guaranteed renewal is not required
in cases of fraud,
intentional misrepresentation of material fact, lack of payment, if
the health maintenance organization no longer offers that
particular type of coverage in the market, or if the individual or
group moves outside the service area.
(4) (6)
A health maintenance organization
is not required to
continue a healthy lifestyle program or to continue any incentive
associated with a healthy lifestyle program, including, but not
limited to, goods, vouchers, or equipment.
(5) (7)
As used in this section,
"group" means a group of 2 or
more subscribers.
CHAPTER 37A
INDIVIDUAL HEALTH COVERAGE PLANS
Sec. 3751. As used in this chapter:
(a) "Base premium" means the lowest premium charged for a
rating period under a rating system by a carrier to individuals for
each health benefit plan in a geographic area.
(b) "Carrier" means a person that provides health benefits,
coverage, or insurance to an individual in this state. For the
purposes of this chapter, carrier includes a health insurance
company authorized to do business in this state, a nonprofit health
care corporation, a health maintenance organization, or any other
person providing a plan of health benefits, coverage, or insurance
subject to state insurance regulation.
(c) "Geographic area" means an area in this state that
includes not less than 1 entire county, established by a carrier
pursuant to section 3765 and used for adjusting premium for an
individual health benefit plan subject to this chapter. In
addition, if the geographic area includes 1 entire county and
additional counties or portions of counties, the counties or
portions of counties must be contiguous with at least 1 other
county or portion of another county in that geographic area.
(d) "Health benefit plan" or "plan" means an individual
expense-incurred hospital, medical, surgical, or dental policy,
nonprofit health care corporation certificate, or health
maintenance organization contract. Health benefit plan does not
include accident-only, credit, or disability income insurance;
long-term care insurance; coverage issued as a supplement to
liability insurance; coverage only for a specified disease or
illness; worker's compensation or similar insurance; or automobile
medical-payment insurance.
(e) "Index rate" means the arithmetic average during a rating
period of the base premium and the highest premium charged to an
individual for each health benefit plan offered by each carrier to
individuals in a geographic area.
(f) "Individual" means a person who is not eligible for or who
would pay more than 50% of the premium to participate in a health
benefit plan through a group.
(g) "Initial condition" means the initial health condition at
the time of application of the applicant and each individual who
will be covered under the applicant's health benefit plan. Initial
condition also means the initial health condition at the time of
enrollment of any individual subsequently added to the health
benefit plan.
(h) "Medicaid" means a program for medical assistance
established under title XIX of the social security act, 42 USC 1396
to 1396v.
(i) "Medicare" means the federal medicare program established
under title XVIII of the social security act, 42 USC 1395 to
1395hhh.
(j) "Nonprofit health care corporation" means a nonprofit
health care corporation operating pursuant to the nonprofit health
care corporation reform act, 1980 PA 350, MCL 550.1101 to 550.1704.
(k) "Premium" means all money paid by an individual as a
condition of receiving coverage from a carrier.
(l) "Rating period" means the calendar period for which
premiums established by a carrier are assumed to be in effect, as
determined by the carrier.
(m) "Short-term or 1-time limited duration benefit plan of no
longer than 6 months" means an individual health benefit plan that
meets all of the following:
(i) Is issued to provide coverage for a period of 185 days or
less, except that the health benefit plan may permit a limited
extension of benefits after the date the plan ended solely for
expenses attributable to a condition for which a covered person
incurred expenses during the term of the plan.
(ii) Is nonrenewable, provided that the carrier may provide
coverage for 1 or more subsequent periods that satisfy subparagraph
(i), if the total of the periods of coverage do not exceed a total
of 185 days out of any 365-day period, plus any additional days
permitted by the plan for a condition for which a covered person
incurred expenses during the term of the plan.
(iii) Does not cover any preexisting conditions.
(iv) Is available with an immediate effective date, without
underwriting, upon receipt by the carrier of a completed
application indicating eligibility under the carrier's eligibility
requirements, except that coverage that includes optional benefits
may be offered on a basis that does not meet this requirement.
Sec. 3753. This chapter applies to any individual health
benefit plan, including a medicare supplement plan, that is subject
to policy form or premium approval by the commissioner.
Sec. 3755. (1) At the time of initial application, each
individual seeking to be covered under a health benefit plan shall
complete a health questionnaire established by the carrier. A
carrier, except a nonprofit health care corporation, may refuse
coverage to an individual under a health benefit plan if based on
the responses to the health questionnaire the individual does not
satisfy the criteria established for coverage by the carrier. If a
carrier refuses coverage for an individual under this subsection,
the carrier shall provide the individual with a written notice of
rejection. An individual refused coverage under this subsection is
eligible for a guaranteed access health benefit plan from a
nonprofit health care corporation under subsection (3).
(2) A nonprofit health care corporation shall not refuse
coverage to an individual due to any past or current medical
condition, history, or treatment. A nonprofit health care
corporation may, based on the responses to the health
questionnaire, make available to an individual coverage only under
a guaranteed access health benefit plan under subsection (3).
(3) A nonprofit health care corporation shall establish at
least 4 guaranteed access health benefit plans for individuals who
do not qualify for coverage under subsections (1) and (2).
Sec. 3757. (1) A carrier may exclude or limit coverage under a
health benefit plan for a condition only if the exclusion or
limitation relates to a condition for which medical advice,
diagnosis, care, or treatment was recommended or received within 6
months before enrollment and the exclusion or limitation does not
extend for more than 12 months after the effective date of the
policy.
(2) Notwithstanding subsection (1), a carrier shall not
exclude or limit coverage for a preexisting condition or provide a
waiting period if all of the following apply:
(a) The individual's most recent health care coverage prior to
applying for coverage with the carrier was under a group health
plan.
(b) The person was continuously covered prior to the
application for coverage with the carrier under 1 or more health
plans for an aggregate of at least 18 months with no break in
coverage that exceeded 62 days.
(c) The person is no longer eligible for group coverage and is
not eligible for medicare or medicaid.
(d) The person did not lose eligibility for coverage for
failure to pay any required contribution or for an act to defraud
any carrier.
(e) If the person was eligible for continuation of health
coverage from that group health plan pursuant to the consolidated
omnibus budget reconciliation act of 1985, Public Law 99-272, he or
she has elected and exhausted the coverage.
(3) As used in this section, "group health plan" means a group
health benefit plan that covers 2 or more insureds, subscribers,
members, enrollees, or employees.
Sec. 3759. (1) Except as otherwise provided in this section, a
carrier that has issued a health benefit plan shall renew or
continue in force the plan at the option of the individual.
(2) A guaranteed renewal under subsection (1) is not required
in cases of nonpayment of premiums, fraud, intentional
misrepresentation of material fact, if the carrier no longer offers
that plan, if the carrier no longer offers coverage in the
individual market, or if the individual moves outside the carrier's
service area. Guaranteed renewal of a medicare supplement plan is
subject to section 3819 and is not subject to this subsection.
(3) A carrier shall not discontinue offering a particular plan
in the individual market unless the carrier does all of the
following:
(a) Provides notice to each covered individual provided
coverage under the plan of the discontinuation at least 90 days
prior to the date of the discontinuation.
(b) Offers to each individual in the individual market
provided this plan the option to purchase any other plan currently
being offered in the individual market.
(c) Acts uniformly without regard to any health status factor
of enrolled individuals or individuals who may become eligible for
coverage in making the determination to discontinue coverage and in
offering other plans.
(4) A carrier shall not discontinue offering all coverage in
the individual market unless the carrier does all of the following:
(a) Provides notice to the commissioner and to each individual
of the discontinuation at least 180 days prior to the date of the
expiration of coverage.
(b) Discontinues all health benefit plans issued in the
individual market and does not renew coverage under such plans.
(5) If a carrier discontinues coverage under subsection (4),
the carrier shall not provide for the issuance of any health
benefit plans in the individual market during the 5-year period
beginning on the date of the discontinuation of the last plan not
so renewed.
(6) Subsections (1) through (5) do not apply to a short-term
or 1-time limited duration benefit plan of no longer than 6 months.
Sec. 3763. (1) As used in this section, "anticipated loss
ratio" means the ratio at the time of the rate filing, or at a time
of subsequent rate revisions, of the expected future benefits
during the rating period, excluding dividends, to the future
premiums, less dividends, based on a credible premium volume over a
reasonable period of time with proper weight given to trends and
other relevant factors. Statistical data relating to expected
future benefits shall be provided to the commissioner upon request
from health benefit plans sold or to be sold in this state when
available.
(2) The rates charged to individuals for health benefit plans
shall be filed with the commissioner and shall not take effect
until 60 days after the filing, unless the commissioner approves
the rates in writing before the expiration of 60 days after the
filing. The rate filing shall include an actuarial certification
that the benefits provided are reasonable in relation to the
premium charged and are adequate, equitable, and not excessive. The
rate filing shall show the anticipated loss ratio or plan premium.
Except for guaranteed-access health benefit plans, the benefits
provided are presumed reasonable in relation to the premiums
charged and the premiums are presumed adequate, equitable, and not
excessive if the anticipated loss ratio equals or exceeds 70%. For
a guaranteed-access health benefit plan, the benefits are presumed
reasonable in relation to the premium charged and the premium is
presumed adequate, equitable, and not excessive if the premium does
not exceed 150% of the weighted average premium associated with an
initial condition rating factor of 2 charged by the 5 carriers with
at least 50% of the individual market. The weighted average premium
is for an equivalent health benefit plan adjusted appropriately for
the differences in actuarial value of benefits, age, and geography.
(3) A nonprofit health care corporation shall assume full
liability for all administrative expenses for guaranteed-access
health benefit plans and for claim expenses for guaranteed-access
health benefit plans up to 35% above the minimum loss ratio for
health benefit plans that are not guaranteed-access health benefit
plans. The nonprofit health care corporation shall file annual
reports with the commissioner regarding the premiums,
administrative expenses, claims experience, and losses for all
guaranteed-access health benefit plans.
(4) Beginning 2 years after the effective date of this
chapter, all carriers, including a nonprofit health care
corporation, shall assume full liability for all excess losses in
the guaranteed-access health benefit plans. Excess losses are all
claims losses over 35% above the minimum loss ratio for health
benefit plans that are not guaranteed-access health benefit plans.
Each carrier shall be required to pay its proportionate share of
such losses based on each carrier's share of the individual market.
For purposes of this section, the individual market includes all
individual health benefit plans except medicare supplement and
guaranteed-access health benefit plans.
(5) The commissioner shall determine each carrier's
proportionate share of the excess losses for the guaranteed-access
health benefit plans. The commissioner shall issue assessment
notices to carriers for their proportionate share of such losses.
No later than 90 days after the assessment notices are issued, the
carriers shall pay the amount of their respective assessments to
the commissioner. The commissioner shall deposit assessment
payments into an interest bearing escrow account. When assessments
have been collected, the commissioner shall pay the assessments and
any accumulated interest to the nonprofit health care corporation
to offset all excess losses in the guaranteed-access health benefit
plans. The commissioner shall not issue an assessment to any
carrier until the excess loss equals or exceeds $10,000,000.00. The
commissioner shall be entitled to reimbursement of the actual costs
of administering this section. Documentation of the actual costs of
administration shall be made available to any carrier upon request.
(6) The actuarial certification required under subsection (2)
shall include a description of the gross premiums, the anticipated
loss ratios, and a certification that, to the best of the actuary's
knowledge and belief, the benefits provided are reasonable in
relation to the premiums charged, the premiums are established in
compliance with this chapter, and any premium differences among the
health benefit plans reflect the actuarial value of the health
benefit plan differences and not the underlying experience of the
health benefit plans. The information used to support the
certification shall include all of the following and shall be
available upon request to the commissioner:
(a) The specific formula and assumptions used in calculating
gross premiums.
(b) The expected claim costs.
(c) Identification of morbidity and mortality tables or
experience studies used and sufficient explanation for evaluation
of their validity, including copies of such tables if they are not
currently published.
(d) The experience of the carrier on similar coverages or on
the same health benefit plan if the health benefit plan is in
effect on the effective date of this chapter.
(e) The applicability of the filing to in-force business on
substantially similar health benefit plans.
(f) Lapse rate experience.
(7) No later than 4 months after the end of a 12-month rating
period, a carrier shall submit information to the commissioner that
shows the actual loss ratio for the rating period for all health
benefit plans, including plans that have been or will be closed to
new applicants.
(8) If the actual loss ratio for all health benefit plans in a
line of business does not equal or exceed 70%, the commissioner
shall order the carrier to pay an amount into an interest bearing
escrow account maintained by the commissioner that will result in a
minimum loss ratio for the rating period equal to 70% for the line
of business. The carrier shall pay amounts due under this section
no later than 90 days after the commissioner's order. Amounts paid
into the escrow account shall be used to offset the aggregate
assessment for the guaranteed-access health benefit plan by
reducing any assessment amounts under subsection (5). The
commissioner shall be entitled to reimbursement of the actual costs
of administering this section. Documentation of the actual costs of
administration shall be made available to any carrier upon request.
As used in this subsection, all of the following constitute lines
of business:
(a) All health benefit plans that are medicare supplement
plans.
(b) All health benefit plans that are group conversion plans a
carrier is required to issue under section 3612 or section 410a of
the nonprofit health care corporation reform act, 1980 PA 350, MCL
550.1410a.
(c) All health benefit plans that are neither medicare
supplement nor group conversion plans.
(9) For a health benefit plan issued by a nonprofit health
care corporation, the attorney general may bring an action or apply
to the circuit court for a court order to enforce an order under
this section.
Sec. 3765. (1) For adjusting premiums for health benefit plans
subject to this chapter, a carrier may establish up to 10
geographic areas in this state.
(2) Except as otherwise provided in subsection (5), the rates
charged to individuals for health benefit plans may include rate
differentials based on age and initial condition if the
differentials are supported by sound actuarial principles and a
reasonable classification system and are related to actual and
credible loss statistics or reasonably anticipated experience in
the case of new health benefit plans. Premiums resulting from these
rate factors shall not vary from the index rate for that health
benefit plan by more than 80%. Rate differentials based on age
shall not be used with any medicare supplement plan.
(3) Carriers may use an application form for a health benefit
plan that is designed to elicit the health history of an applicant
and each individual who will be covered under the applicant's
health benefit plan.
(4) Carriers may establish up to 10 rating tiers to reflect
rate differentials for initial condition based on the answers given
on an application under subsection (3) if the differentials are
supported by sound actuarial principles and a reasonable
classification system and are related to actual and credible loss
statistics or reasonably anticipated experience in the case of new
health benefit plans. The variation in rates resulting from initial
condition shall not exceed a 2-to-1 ratio.
(5) Rate differentials for initial condition may be used only
when coverage is initially issued and shall not be used by a
carrier at any time after issue as a result of subsequent changes
in initial condition of individuals already covered under the
health benefit plan. A carrier may use rate differentials based on
initial condition for any individual who is subsequently added to
the health benefit plan only at the time the individual is added to
the plan. Initial condition rating shall not be used with any
medicare supplement plan.
(6) In addition to the premium adjustments under subsection
(2), health benefit plan options, number of family members covered,
medicare eligibility, and tobacco use may be used in establishing
the premium for a health benefit plan. The maximum surcharge for
tobacco use shall not exceed 35% of the premium for a health
benefit plan.
Sec. 3767. The percentage increase in premiums charged to an
individual in a geographic area for a new rating period shall not
exceed the sum of the annual percentage adjustment in the
geographic area's index rate for the health benefit plan and any
adjustment pursuant to section 3765(2). The adjustment pursuant to
section 3765(2) shall not exceed 10% annually and shall be adjusted
pro rata for rating periods of less than 1 year. This section does
not prohibit an adjustment due to change in coverage or to
adjustments under section 3765(6).
Sec. 3769. Health benefit plans that have been or will be
closed to new applicants are subject to rating limits and
restrictions in sections 3765 and 3767.
Sec. 3771. (1) A carrier or producer shall not, directly or
indirectly, engage in any of the following:
(a) Encouraging or directing an individual to refrain from
filing an application for a health benefit plan with the carrier
because of the initial condition or claims experience of the
individual.
(b) Encouraging or directing an individual to seek coverage
from another carrier because of the initial condition or claims
experience of the individual.
(2) Except as provided in subsection (3), a carrier shall not,
directly or indirectly, enter into any contract, agreement, or
arrangement with a producer that provides for or results in the
compensation paid to a producer for the sale of a health benefit
plan to be varied because of the initial condition or claims
experience of the individual.
(3) Subsection (2) does not apply to a compensation
arrangement that provides compensation to a producer on the basis
of percentage of premium, provided that the percentage does not
vary because of the initial condition or claims experience of the
individual.
(4) A carrier shall not terminate, fail to renew, or limit its
contract or agreement of representation with a producer for any
reason related to the initial condition or claims experience of the
individual placed by the producer with the carrier.
Sec. 3773. (1) An individual enrolled in a nonprofit health
care corporation nongroup or group conversion health benefit plan
"A" through "G" on the effective date of this chapter may remain
enrolled in that plan; however, an individual does not have the
option to change enrollment to another health benefit plan "A"
through "G". An individual who is not enrolled in health benefit
plan "A" through "G" on the effective date of this chapter is not
eligible to enroll in 1 of those plans.
(2) The rates charged to individuals in each health benefit
plan "A" through "G" shall be determined under a system of
community rating and shall not be adjusted for any of the rate
factors in section 3765. Rates shall be filed with the commissioner
and shall not take effect until 60 days after the filing, unless
the commissioner approves the rates in writing before the
expiration of 60 days after the filing. The rate filing shall
include an actuarial certification that the benefits provided are
reasonable in relation to the premiums charged. The benefits
provided are presumed reasonable in relation to the premiums
charged if the premiums filed with the commissioner are not greater
than the change in the annual claims cost trend for health benefit
plans "A" through "G" plus 10%.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 5283(request no.
03042'07) of the 94th Legislature is enacted into law.