May 13, 2009, Introduced by Reps. Corriveau, Ball, Coulouris, Johnson, Simpson, Haugh, Melton, Young, Lipton, Marleau, Mayes, Gregory, Roy Schmidt, Hansen, LeBlanc, Scripps, Meadows, Moore and Green and referred to the Committee on Health Policy.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2213b, 3406f, 3501, 3503, 3519, 3521, 3525,
3539, and 3851 (MCL 500.2213b, 500.3406f, 500.3501, 500.3503,
500.3519, 500.3521, 500.3525, 500.3539, and 500.3851), section
2213b as amended by 1998 PA 457, section 3406f as added by 1996 PA
517, sections 3501, 3521, and 3525 as added by 2000 PA 252, section
3503 as amended by 2006 PA 366, sections 3519 and 3539 as amended
by 2005 PA 306, and section 3851 as added by 1992 PA 84, and by
adding chapter 37A; and to repeal acts and parts of acts.
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. This subsection does not apply to a
health benefit plan as defined in section 3751.
(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.
(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.
(4) Subsections (1), (2), and (3) do not apply to a short-term
or 1-time limited duration policy or certificate of no longer than
6 months.
(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.
(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 to the commissioner 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).
(7) The commissioner shall maintain copies of reports prepared
pursuant to subsection (6) on file with the annual statement of
each reporting insurer. The commissioner shall annually compile the
reports received under subsection (6). 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) are provided.
(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.
(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.
(c)
For 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. 3501. As used in this chapter:
(a) "Affiliated provider" means a health professional,
licensed hospital, licensed pharmacy, or any other institution,
organization, or person having a contract with a health maintenance
organization to render 1 or more health maintenance services to an
enrollee.
(b) "Basic health services" means:
(i) Physician services including consultant and referral
services by a physician, but not including psychiatric services.
(ii) Ambulatory services.
(iii) Inpatient hospital services, other than those for the
treatment of mental illness.
(iv) Emergency health services.
(v) Outpatient mental health services, not fewer than 20
visits per year.
(vi) Intermediate and outpatient care for substance abuse as
follows:
(A) For group contracts, if the fees for a group contract
would be increased by 3% or more because of the provision of
services under this subparagraph, the group subscriber may decline
the services. For individual contracts, if the total fees for all
individual contracts would be increased by 3% or more because of
the provision of the services required under this subparagraph in
all of those contracts, the named subscriber of each contract may
decline the services.
(B) Charges, terms, and conditions for the services required
to be provided under this subparagraph shall not be less favorable
than the maximum prescribed for any other comparable service.
(C) The services required to be provided under this
subparagraph shall not be reduced by terms or conditions that apply
to other services in a group or individual contract. This sub-
subparagraph shall not be construed to prohibit contracts that
provide for deductibles and copayment provisions for services for
intermediate and outpatient care for substance abuse.
(D) The services required to be provided under this
subparagraph shall, at a minimum, provide for up to $2,968.00 in
services for intermediate and outpatient care for substance abuse
per individual per year. This minimum shall be adjusted annually by
March 31 each year in accordance with the annual average percentage
increase or decrease in the United States consumer price index for
the 12-month period ending the preceding December 31.
(E) As used in this subparagraph, "intermediate care",
"outpatient care", and "substance abuse" have those meanings
ascribed to them in section 3425.
(vii) Diagnostic laboratory and diagnostic and therapeutic
radiological services.
(viii) Home health services.
(ix) Preventive health services.
(c) "Credentialing verification" means the process of
obtaining and verifying information about a health professional and
evaluating that health professional when that health professional
applies to become a participating provider with a health
maintenance organization.
(d) "Enrollee" means an individual who is entitled to receive
health maintenance services under a health maintenance contract.
(e) "Health maintenance contract" means a contract between a
health maintenance organization and a subscriber or group of
subscribers, to provide, when medically indicated, designated
health maintenance services, as described in and pursuant to the
terms
of the contract. , including, at a minimum, basic health
maintenance
services. Health maintenance
contract includes a
prudent purchaser contract.
(f) "Health maintenance organization" means an entity that
does the following:
(i) Delivers health maintenance services that are medically
indicated to enrollees under the terms of its health maintenance
contract, directly or through contracts with affiliated providers,
in exchange for a fixed prepaid sum or per capita prepayment,
without regard to the frequency, extent, or kind of health
services.
(ii) Is responsible for the availability, accessibility, and
quality of the health maintenance services provided.
(g) "Health maintenance services" means services provided to
enrollees of a health maintenance organization under their health
maintenance contract.
(h) "Health professional" means an individual licensed,
certified, or authorized in accordance with state law to practice a
health profession in his or her respective state.
(i) "Primary verification" means verification by the health
maintenance organization of a health professional's credentials
based upon evidence obtained from the issuing source of the
credential.
(j) "Prudent purchaser contract" means a contract offered by a
health maintenance organization to groups or to individuals under
which enrollees who select to obtain health care services directly
from the organization or through its affiliated providers receive a
financial advantage or other advantage by selecting those
providers.
(k) "Secondary verification" means verification by the health
maintenance organization of a health professional's credentials
based upon evidence obtained by means other than direct contact
with the issuing source of the credential.
(l) "Service area" means a defined geographical area in which
health maintenance services are generally available and readily
accessible to enrollees and where health maintenance organizations
may market their contracts.
(m) "Subscriber" means an individual who enters into a health
maintenance contract, or on whose behalf a health maintenance
contract is entered into, with a health maintenance organization
that has received a certificate of authority under this chapter and
to whom a health maintenance contract is issued.
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 A health maintenance
organization shall offer at least
1
health maintenance organization contracts
shall include, contract
that includes, at a minimum, basic health services.
(4) Subsections (1) and (2) do not apply to the extent that
they conflict 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 a health benefit
plan 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. Carrier does not include a health maintenance
organization that provides only medicaid coverage.
(c) "Enrollee" means an individual or his or her dependent who
is a resident of this state and is enrolled in a health benefit
plan.
(d) "Federal poverty level" means the poverty guidelines
published annually in the federal register by the United States
department of health and human services under its authority to
revise the poverty line under section 673(2) of subtitle B of title
VI of the omnibus budget reconciliation act of 1981, Public Law 97-
35, 42 USC 9902.
(e) "Geographic area" means an area in this state that
includes not less than 4 entire counties, established by a carrier
under this chapter and used for adjusting premium for a health
benefit plan subject to this chapter. Each county in the geographic
area shall be contiguous with at least 1 other county in that
geographic area.
(f) "Health benefit plan" or "plan" means an individual
expense-incurred hospital, medical, or surgical policy, nonprofit
health care corporation certificate, or health maintenance
organization contract and includes a health benefit plan sold
directly to an individual under a group trust or certificate.
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; dental-only or vision-only insurance;
worker's compensation or similar insurance; automobile medical-
payment insurance; medicaid coverage; or medicare, medicare
advantage, or medicare part D.
(g) "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.
(h) "Medicaid" means a program for medical assistance
established under title XIX of the social security act, 42 USC 1396
to 1396w-2.
(i) "Medicare" means the federal medicare program established
under title XVIII of the social security act, 42 USC 1395 to
1395iii.
(j) "MICapp fund" means the Michigan catastrophic protection
plan fund created in section 3781.
(k) "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.
(l) "Premium" means all money paid by an individual as a
condition of receiving coverage under a health benefit plan from a
carrier.
(m) "Rating period" means the defined calendar period for
which premiums established by a carrier for a health benefit plan
are assumed to be in effect, as determined by the carrier.
(n) "Resident" means an individual who lives in this state
voluntarily with the intention of making his or her home in this
state and not for a temporary purpose and who is not receiving
assistance from another state. Resident does not include an
individual who has moved into this state for the sole purpose of
securing coverage under a health benefit plan under this chapter.
(o) "Short-term or 1-time limited duration benefit plan of no
longer than 6 months" means a 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 a health benefit plan,
including a medicare supplement plan, that is subject to policy
form or premium approval by the commissioner.
Sec. 3754. A carrier shall guarantee issue to an individual
all health benefit plans offered by the carrier and shall not
refuse to issue coverage to an individual for any reason, including
any past, present, or future health condition, except as follows:
(a) As otherwise permitted under section 3755.
(b) Because of fraud or intentional misrepresentation of the
applicant.
(c) Because of lack of payment.
(d) Because the applicant resides outside of the geographic
coverage area.
(e) As otherwise permitted under section 401 of the nonprofit
health care corporation reform act, 1980 PA 350, MCL 550.1401.
Sec. 3755. (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 6 months after the effective date of the
policy, certificate, or contract.
(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 individual 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 individual is no longer eligible for group coverage
and is not eligible for medicare or medicaid.
(d) The individual did not lose eligibility for coverage for
failure to pay any required contribution or for an act to defraud
any carrier.
(e) If the individual 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. 3757. (1) As used in this section:
(a) "Actual loss ratio" means the ratio for a 12-month rating
period of the incurred claims to premiums.
(b) "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 incurred claims during the rating period defined in
the rate filing to the future premiums, based on a credible premium
volume over a reasonable period of time with proper weight given to
rating trends and other relevant factors. Statistical data relating
to expected future incurred claims shall be provided to the
commissioner from carriers for health benefit plans sold or to be
sold in this state when available.
(2) The rates charged to individuals for health benefit plans
that are not nonprofit health care corporation 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. The benefits provided shall
be presumed reasonable in relation to the premiums charged and the
premiums are presumed adequate, equitable, and not excessive as
follows:
(a) For a health benefit plan that is not a health maintenance
organization contract or a medicare supplement plan, if the
anticipated loss ratio equals or exceeds 70%.
(b) For a health maintenance organization contract, if the
anticipated loss ratio equals or exceeds 80%.
(c) For a medicare supplement plan, if the anticipated loss
ratio equals or exceeds 90%.
(3) 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, for health benefit plans
introduced on or after January 1, 2010, 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
provided to the commissioner at the time of the rate filing:
(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 January 1, 2010.
(e) The applicability of the filing to in-force business on
substantially similar health benefit plans.
(f) Lapse rate experience.
(4) No later than 4 months after the end of a 12-month rating
period for rates filed under subsection (2), 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.
(5) If the actual loss ratio for all health benefit plans in a
line of business does not equal or exceed the applicable
anticipated loss ratio under subsection (2), the commissioner shall
order the carrier to issue rate credits or refunds to individuals
currently in a health benefit plan in that line of business in an
amount that will result in a minimum loss ratio for the rating
period equal to the applicable anticipated loss ratio for the line
of business. A carrier shall not be ordered to issue a refund under
this subsection in an amount that is less than $25.00 per
individual applicant. The rate credits or refunds shall be issued
no later than 90 days after the commissioner's order to issue rate
credits or refunds. The claims experience of any line of business
not determined to be credible shall be combined with other similar
individual lines of business for purposes of determining loss
ratios. The rate credits or refunds shall include interest from the
beginning of the rating period to the date of the credit or refund
calculated at the average rate of interest for 13-week United
States treasury rates, as determined by the commissioner. 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.
(c) All health benefit plans that are neither medicare
supplement nor group conversion plans.
Sec. 3759. (1) For adjusting premiums for health benefit plans
subject to this chapter, all of the following apply:
(a) A carrier may establish up to 5 geographic areas in this
state.
(b) A carrier that is a nonprofit health care corporation
shall establish geographic areas that cover all counties in this
state.
(c) A carrier shall not establish geographic areas for any
medicare supplement plan.
(2) The rates charged to individuals for health benefit plans
may include rate differentials based only on age and only 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 65%. Rate differentials based on age
shall not be used with any medicare supplement plan. This
subsection does not prohibit adjustments pursuant to subsection
(3).
(3) In addition to the premium adjustments under subsection
(2), health benefit plan options, number of family members covered,
and medicare eligibility may be used in establishing the premium
for a health benefit plan. A premium discount, after the initial
effective date of coverage, based on a lifestyle-based good health
discount for adherence to a healthy lifestyle, shall be offered.
However, the total maximum discount for a lifestyle-based good
health discount, including, but not limited to, discounts for no
tobacco use and healthy body mass index, shall not exceed 50% of
the premium for the health benefit plan.
Sec. 3761. 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 based on age that 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 3759(3).
Sec. 3763. Health benefit plans that have been or will be
closed to new applicants are subject to rating limits and
restrictions in sections 3759 and 3761.
Sec. 3765. Notwithstanding any other provision of this act, a
carrier shall not rescind, cancel, or limit a health benefit plan
due to the carrier's failure to resolve all reasonable questions
arising from the written information submitted on or with an
application before issuing the health benefit plan. This section
does not limit a carrier's remedies upon a showing of intentional
misrepresentation of material fact.
Sec. 3767. (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 at a
premium rate that does not take into account the claims experience
or any change in the health status of any covered 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 section.
(3) A carrier shall not discontinue offering a particular
health benefit plan 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 covered individual provided coverage under
the plan the option to purchase any other health benefit plan
currently being offered by that carrier.
(c) Acts uniformly without regard to any health status factor
of covered 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 health
benefit plans in this state unless the carrier does all of the
following:
(a) Provides notice to the commissioner and to each covered
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 this state 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. 3769. (1) A carrier 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 health status or claims experience of the
individual.
(b) Encouraging or directing an individual to seek coverage
from another carrier because of the health status or claims
experience of the individual.
(2) Except as otherwise 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 health status 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 health status 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 health status or claims experience of the
individual placed by the producer with the carrier.
Sec. 3771. (1) A health care affordability fund is created as
a charitable endowment fund within the state treasury. The state
treasurer may receive money or other assets from any source for
deposit into the fund. The state treasurer shall direct the
investment of the fund. The state treasurer shall credit to the
fund interest and earnings from fund investments. Money in the fund
at the close of the fiscal year shall remain in the fund and shall
not lapse to the general fund. The commissioner shall be the
administrator of the fund for auditing purposes.
(2) By May 1, 2010 and annually thereafter, the commissioner
shall assess each nonprofit carrier with an assessment fee
equivalent to the amount of local tax and tax levied under the
Michigan business tax act, 2007 PA 36, MCL 208.1101 to 208.1601,
that the nonprofit carrier would have been required to pay in the
immediately preceding calendar year if the carrier was subject to
those taxes.
(3) A nonprofit carrier assessed under subsection (2) shall
pay the assessment fee to the commissioner by no later than 60 days
after the assessment fee notice is issued. The commissioner shall
deposit assessment fees into the health care affordability fund.
(4) Money in the health care affordability fund shall be
expended to subsidize the cost of health benefit plans in the
following order of priority:
(a) To extend the eligibility of the MIChild program to
include children in households with a household income of not more
than 300% of the federal poverty level.
(b) To subsidize the cost of health benefit plans, other than
medicare supplement plans, for individuals with a household income
of not more than 300% of the federal poverty level.
(c) To subsidize the cost of health benefit plans that are
medicare supplement plans for individuals with a household income
of not more than 300% of the federal poverty level.
(5) A subsidy granted under this section shall not be used
except to lower premiums or proposed premium increases for health
benefit plans as described in subsection (4).
(6) The commissioner shall report by November 1, 2010 and
annually thereafter to the governor, and all members of the senate
and house of representatives standing committees on appropriations,
insurance, and health issues on the amounts of the assessment fees
collected under this section and the amount of subsidies granted
under this section.
Sec. 3773. Each carrier shall offer not less than 1 health
benefit plan that incorporates the principles of value-based
insurance design, promotes healthy behaviors, and strives for
improvements in both health outcomes and health care cost
containments. This health benefit plan shall use incentives to
provide health promotion, including, but not limited to, smoking
cessation programs and promoting nutrition and physical exercise;
chronic care management; and disease prevention. Incentives may
include rewards, premium discounts, or rebates or may otherwise
waive or modify copayments, deductibles, or other cost-sharing
measures. Incentives shall be available to all similarly situated
individuals, shall be designed to promote health and prevent
disease, and shall not be used to impose higher costs on an
individual based on a health factor.
Sec. 3775. (1) The commissioner shall develop by rule
promulgated pursuant to the administrative procedures act of 1969,
1969 PA 306, MCL 24.201 to 24.328, a basic health benefit plan and
a basic enhanced health benefit plan. The basic health benefit plan
shall approximate the lowest level of coverage offered in the state
in the individual health market. The basic enhanced health benefit
plan shall approximate the average level of coverage offered in the
state in the individual health market. Both plans shall be designed
to satisfy all of the following:
(a) To minimize nonemergency emergency room use.
(b) To encourage health and wellness.
(c) To include coverage for medically necessary and
appropriate inpatient and outpatient hospital services,
professional medical and surgical services, and diagnostic
services.
(2) As a condition of transacting business in this state, each
carrier engaged in writing health coverage or insurance in this
state shall offer the basic health benefit plan and the basic
enhanced health benefit plan developed under subsection (1) to
individuals in this state.
Sec. 3781. (1) The Michigan catastrophic protection plan fund
is created within the state treasury. Money in the MICapp fund
shall be used only as provided in section 3783.
(2) The state treasurer may receive money or other assets from
any source for deposit into the MICapp fund. The state treasurer
shall direct the investment of the MICapp fund. The state treasurer
shall credit to the MICapp fund interest and earnings from fund
investments.
(3) Money in the MICapp fund at the close of the fiscal year
shall remain in the MICapp fund and shall not lapse to the general
fund.
(4) The commissioner shall be the administrator of the MICapp
fund for auditing purposes.
Sec. 3783. (1) Money shall be expended from the MICapp fund to
reimburse carriers for eligible claims paid under a health benefit
plan. A carrier is eligible to receive reimbursement from the
MICapp fund for 100% of claims paid after $25,000.00 in claims in a
calendar year have been paid by the carrier on behalf of an
individual covered under a health benefit plan.
(2) Each carrier shall submit a request for reimbursement on a
form prescribed by the commissioner from the MICapp fund by no
later than March 1 following the end of the calendar year for which
the reimbursement request is being made. Claims are eligible for
reimbursement only for the calendar year in which the claims are
paid. Carriers may be required to submit claims data in connection
with the reimbursement request as the commissioner considers
necessary to distribute money and oversee the operation of the
MICapp fund. The commissioner may require that the data be
submitted on a per enrollee or aggregate basis.
(3) If the total amount requested for reimbursement under this
section by all carriers for a calendar year exceeds funds available
for distribution for claims paid by all carriers during that same
calendar year, the commissioner shall provide for the pro rata
distribution of the available funds. Each carrier shall be eligible
to receive only the proportionate amount of the available funds as
the individual carrier's total eligible claims paid bears to the
total eligible claims paid by all carriers.
(4) If funds available for distribution for claims paid by all
carriers during a calendar year exceed the total amount requested
for reimbursement by all carriers during that same calendar year,
any excess funds shall be carried forward and shall be made
available for distribution in the next calendar year.
Sec. 3785. (1) As a condition of transacting business in this
state, each carrier engaged in writing health coverage or insurance
in this state shall pay an annual participation contribution into
the MICapp fund as provided in this section.
(2) The total participation contribution in a calendar year
shall be the sum of the estimate of total reimbursement to be made
for claims paid in the same calendar year plus the estimated cost
of administering the MICapp fund for the same calendar year. By not
later than May 1 of each year, the commissioner shall determine the
total participation contribution and shall notify each carrier of
the amount owed. A carrier's participation contribution shall be
determined by multiplying the total participation contribution by a
fraction, the numerator of which shall be the carrier's direct
premiums earned in the preceding calendar year for all health
benefit plans subject to this chapter, and the denominator of which
shall be the direct premiums earned in the preceding calendar year
for all health benefit plans subject to this chapter for all
carriers. By not later than 90 days after the participation
contribution notice is issued, each carrier shall pay the amount it
owes to the commissioner. The commissioner shall deposit
participation contribution payments into the MICapp fund.
Sec. 3787. The commissioner shall keep an accurate account of
all MICapp fund receipts and expenditures and shall report by
November 1, 2010 and annually thereafter to the governor and to all
members of the house of representatives and senate standing
committees on appropriations, health, and insurance issues on the
amount of participation contributions collected and reimbursement
for claims paid under sections 3783 and 3785.
Sec. 3799. (1) The commissioner shall conduct an independent,
comprehensive analysis of the individual health coverage market on
a statewide basis. In conducting this analysis, the commissioner
shall seek advice and input from appropriate independent sources
and may retain qualified accounting and actuarial consultants.
(2) By not later than October 1, 2012, the commissioner shall
issue a report on the specific classifications and kinds or types
of insurance, if any, where competition does not exist and any
suggested statutory or other changes necessary to increase or
encourage competition, lower premiums, and provide greater access
to all state residents. The findings shall not be based on any
single measure of competition, but appropriate weight shall be
given to all measures of competition. The findings shall be based
on relevant economic tests, including, but not limited to, all of
the following:
(a) The extent to which any carrier controls all or a portion
of the health benefit plan market.
(b) Whether the total number of carriers writing health
benefit plan coverage in this state is sufficient to provide
multiple options to individuals.
(c) The disparity among health benefit plan rates and
classifications to the extent that those classifications result in
rate differentials.
(d) The availability of health benefit plan coverage to
individuals in all geographic areas.
(e) The overall rate level that is not excessive, inadequate,
or unfairly discriminatory.
(f) Any other factors the commissioner considers relevant.
(3) The report required under subsection (2) shall be
forwarded to the governor, the secretary of the senate, the clerk
of the house of representatives, and all the members of the senate
and house standing committees on insurance and health issues.
Sec. 3851. (1) A group medicare supplement policy form or
certificate form shall not be delivered or issued for delivery
unless the policy form or certificate form can be expected, as
estimated for the entire period for which rates are computed to
provide coverage, to return to policyholders and certificate
holders in the form of aggregate benefits, not including
anticipated
refunds or credits, the following:
(a)
For group policies at least 75% of
the aggregate amount of
premiums earned calculated on the basis of incurred claims
experience and earned premiums for the entire period for which
rates are computed and in accordance with accepted actuarial
principles and practices.
(b)
For individual policies at least 65% of the aggregate
amount
of premium earned calculated on the basis of incurred claims
experience
and earned premiums for the entire period for which
rates
are computed and in accordance with accepted actuarial
principles
and practices.
(2) Individual medicare supplement policies are subject to
chapter 37A.
(3) (2)
All filings of rates and rating
schedules under
subsection (1) shall demonstrate that expected claims in relation
to premiums comply with the requirements of this section when
combined with actual experience to date. Filings of rate revisions
shall also demonstrate that the anticipated loss ratio over the
entire future period for which the revised rates are computed to
provide coverage can be expected to meet the appropriate loss ratio
standards.
Enacting section 1. Section 3537 of the insurance code of
1956, 1956 PA 218, MCL 500.3537, is repealed.
Enacting section 2. This amendatory act takes effect October
1, 2009.
Enacting section 3. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 4935(request no.
01734'09) of the 95th Legislature is enacted into law.