SB-0278, As Passed Senate, October 4, 2007
SUBSTITUTE FOR
SENATE BILL NO. 278
A bill to promote the availability and affordability of health
coverage in this state and to facilitate the purchase of that
coverage; to create the Michigan helping ensure affordable and
reliable treatment exchange and board; to provide for a
determination of eligible health coverage plans; to provide for a
determination of eligibility for assistance of certain enrollees;
to prescribe certain powers and duties of certain officials and
departments of this state; to provide for certain funds; to provide
for the collection and disbursement of certain payments and
surcharges; and to provide for certain reports.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"Michigan helping ensure affordable and reliable treatment (MI-
HEART) act".
Sec. 3. As used in this act:
(a) "Board" or "MI-HEART exchange board" means the board of
the MI-HEART exchange created in section 5.
(b) "Carrier" means a health insurer, health maintenance
organization, or health care corporation.
(c) "Commissioner" means the commissioner of the office of
financial and insurance services.
(d) "Eligible employee" means an employee who works on a full-
time basis with a normal workweek of 30 or more hours. Eligible
employee includes an employee who works on a full-time basis with a
normal workweek of 17.5 to 30 hours, if an employer so chooses and
if this eligibility criterion is applied uniformly among all of the
employer's employees and without regard to health status-related
factors.
(e) "Eligible health coverage plan" or "plan" means any
individual or group contract, policy, or certificate of health,
accident, and sickness insurance or coverage issued by a carrier
that meets the eligibility requirements established by the board
under section 8 and is offered through the exchange. Eligible
health coverage plan does not include a contract, policy, or
certificate that provides coverage only for dental, vision,
specified accident or accident-only coverage, credit, disability
income, hospital indemnity, short-term or 1-time limited duration
policy or certificate of no longer than 6 months, long-term care
insurance, medicare supplement, coverage issued as a supplement to
liability insurance, and specified disease insurance that is
purchased as a supplement and not as a substitute for an eligible
health coverage plan. Eligible health coverage plan does not
include coverage arising out of a worker's compensation law or
similar law, automobile medical payment insurance, insurance under
which benefits are payable with or without regard to fault,
coverage under a plan through medicare, and coverage issued under
10 USC 1071 to 1110, and any coverage issued as a supplement to
that coverage.
(f) "Eligible individual" means an individual who is a
resident of the state who meets the eligibility requirements in
section 11.
(g) "ERISA" means the employee retirement income security act
of 1974, Public Law 93-406.
(h) "Exchange" or "MI-HEART exchange" means the MI-HEART
exchange created in section 5.
(i) "Fund" means the MI-HEART exchange fund created in section
19.
(j) "Health care corporation" means a health care corporation
operating pursuant to the nonprofit health care corporation reform
act of 1980, 1980 PA 350, MCL 550.1101 to 550.1704.
(k) "Health insurer" means a health insurer with a certificate
of authority under the insurance code of 1956, 1956 PA 218, MCL
500.100 to 500.8302.
(l) "Health maintenance organization" means a health
maintenance organization with a license or certificate of authority
under the insurance code of 1956, 1956 PA 218, MCL 500.100 to
500.8302.
(m) "Medicaid" means a program for medical assistance
established under title XIX of the social security act, 42 USC 1396
to 1396v.
(n) "Medicare" means the federal medicare program established
under title XVIII of the social security act, 42 USC 1395 to
1395hhh.
(o) "MI-HEART enrollee" or "enrollee" means an individual or
his or her dependent who is enrolled in a plan.
(p) "MI-HEART program" means the program administered under
section 9.
(q) "Premium assistance payment" means a payment of health
coverage premiums made by the board to a plan on behalf of a MI-
HEART enrollee who is an eligible individual.
(r) "Premium contribution payment" means a payment made by a
MI-HEART enrollee or employer toward an eligible health coverage
plan.
(s) "Resident" means a person living in the state, including a
qualified alien, as defined by section 431 of the personal
responsibility and work opportunity reconciliation act of 1996,
Public Law 104-193, or a person who is not a citizen of the United
States but who is otherwise permanently residing in the United
States under color of law; provided, however, that the person has
not moved into the state for the sole purpose of securing health
coverage under this act.
(t) "Seal of approval" means the approval given by the board
under section 8.
(u) "Small employer" means any person, firm, corporation,
partnership, limited liability company, or association actively
engaged in business who, on at least 50% of its working days during
the preceding and current calendar years, employed at least 2 but
not more than 50 eligible employees. In determining the number of
eligible employees, companies that are affiliated companies or that
are eligible to file a combined tax return for state taxation
purposes shall be considered 1 employer.
(v) "Uninsured" means a resident who is not covered by a
health insurance or coverage plan offered by a carrier, a self-
funded health coverage plan, medicaid, medicare, or a medical
assistance program.
Sec. 5. (1) The MI-HEART exchange is created within the
department of community health and shall exercise its prescribed
statutory duties, powers, and functions independently of the
director of the department of community health. The exchange is
responsible for facilitating the availability, choice, and adoption
of private eligible health coverage plans to individuals and groups
and facilitating the purchase of health coverage products through
the exchange at an affordable price by individuals and groups.
(2) The MI-HEART exchange shall be governed by a board
consisting of the following 17 members:
(a) The director of the department of community health or his
or her designee.
(b) The director of the department of human services or his or
her designee, who shall serve as an ex officio nonvoting member.
(c) The commissioner or his or her designee.
(d) The deputy director for medical services administration or
his or her designee, who shall serve as an ex officio nonvoting
member.
(e) Three members appointed by the governor with the advice
and consent of the senate, 1 of whom shall be a member in good
standing of the American academy of actuaries, 1 of whom shall be a
health economist, and 1 of whom shall represent a health care
corporation.
(f) Five members appointed by the senate majority leader, 1 of
whom shall represent small employers with less than 10 employees, 1
of whom shall be an employee health benefit specialist, 1 of whom
shall represent health maintenance organizations but shall not be
from a health maintenance organization owned by a health care
corporation, 1 of whom shall represent low-income health care
advocacy organizations, and 1 of whom shall represent medical
providers.
(g) Five members appointed by the speaker of the house of
representatives, 1 of whom shall represent the general public, 1 of
whom shall represent small employers with 10 or more employees, 1
of whom shall represent health insurers, 1 of whom shall represent
organized labor, and 1 of whom shall represent hospitals.
(3) The members first appointed to the board shall be
appointed within 30 days after the effective date of this act.
Appointed board members shall serve for terms of 4 years or until a
successor is appointed, whichever is later, except that of the
members first appointed 3 shall serve for 1 year, 4 shall serve for
2 years, 4 shall serve for 3 years, and 4 shall serve for 4 years.
(4) If a vacancy occurs on the board, the vacancy shall be
filled for the unexpired term in the same manner as the original
appointment. An appointed board member is eligible for
reappointment.
(5) The governor may remove a member of the board for
incompetency, dereliction of duty, malfeasance, misfeasance, or
nonfeasance in office, or any other good cause.
(6) The first meeting of the board shall be called by the
director of the department of community health, who shall serve as
chairperson. After the first meeting, the board shall meet at least
monthly, or more frequently at the call of the chairperson or if
requested by 8 or more members.
(7) Eight members of the board constitute a quorum for the
transaction of business at a meeting of the board. An affirmative
vote of 8 board members is necessary for official action of the
board.
(8) The business that the board may perform shall be conducted
at a public meeting of the board held in compliance with the open
meetings act, 1976 PA 267, MCL 15.261 to 15.275.
(9) A writing prepared, owned, used, in the possession of, or
retained by the board in the performance of an official function is
subject to the freedom of information act, 1976 PA 442, MCL 15.231
to 15.246.
(10) Board members shall serve without compensation. However,
board members may be reimbursed for their actual and necessary
expenses incurred in the performance of their official duties as
board members.
(11) The chairperson shall hire an executive director to
supervise the administrative affairs and general management and
operations of the exchange and also serve as secretary of the
exchange. The executive director shall receive a salary
commensurate with the duties of the office. The executive director
may appoint other officers and employees of the exchange necessary
to the functioning of the exchange. The executive director, with
the approval of the board, shall do all of the following:
(a) Plan, direct, coordinate, and execute administrative
functions in conformity with the policies and directives of the
board and this act.
(b) Employ professional and clerical staff as necessary.
(c) Report to the board on all operations under his or her
control and supervision.
(d) Prepare an annual budget and manage the administrative
expenses of the exchange.
(e) Undertake any other activities necessary to implement the
powers and duties under this act.
(12) The exchange shall begin offering eligible health
coverage plans to individuals no later than 180 days after, and to
small businesses no later than 240 days after, procuring federal
matching funds under section 31.
Sec. 7. The board shall do all of the following:
(a) Develop a plan of operation for the exchange, which shall
include, but is not limited to, all of the following:
(i) Establishes procedures for operations of the exchange.
(ii) Establishes procedures for communications with the
executive director.
(iii) Establishes procedures and criteria for the selection of
and the seal of approval for eligible health coverage plans as
provided in section 8 to be offered through the exchange.
(iv) Establishes procedures for the enrollment of individuals
and groups in plans.
(v) Establishes procedures for appeals of eligibility
decisions as provided in section 13.
(vi) Establishes and manages a system of collecting and
depositing into the fund all premium payments made by, or on behalf
of, individuals obtaining health coverage through the exchange,
including any premium payments made by enrollees, employees,
unions, or other organizations.
(vii) Establishes and manages a system for remitting premium
assistance payments to carriers.
(viii) Establishes and manages a system for remitting premium
contribution payments to carriers.
(ix) Establishes a plan for publicizing the existence of the
exchange and the exchange's eligibility requirements and enrollment
procedures.
(x) Develops criteria for determining that certain health
coverage plans shall no longer be made available through the
exchange, and develops a plan to remove the seal of approval from
certain health coverage plans.
(xi) Develops a standard application form for individuals and
groups, seeking to purchase health coverage through the exchange,
and for eligible individuals who are seeking a premium assistance
payment that includes information necessary to determine an
applicant's eligibility under section 11, previous and current
health coverage, and payment method.
(b) Determine each applicant's eligibility for purchasing
health coverage offered by the exchange, including eligibility for
premium assistance payments.
(c) Seek and receive any funding from the federal government,
departments or agencies of the state, private foundations, and
other entities.
(d) Contract with professional service firms as may be
necessary and fix their compensation.
(e) Contract with companies that provide third-party
administrative and billing services for health coverage products.
(f) Adopt bylaws for the regulation of its affairs and the
conduct of its business.
(g) Adopt an official seal and alter the same.
(h) Maintain an office at such place or places as it may
designate.
(i) Sue and be sued in its own name.
(j) Approve the use of its trademarks, brand names, seals,
logos, and similar instruments by participating carriers,
employers, or organizations.
(k) Enter into interdepartmental agreements.
(l) Publish each year the premiums for plans with the MI-HEART
seal of approval.
(m) Subject to this act, review annually the publication of
the income levels for the federal poverty guidelines and devise a
schedule of a percentage of income for each 50% increment of the
federal poverty level at which an individual could be expected to
contribute said percentage of income toward the purchase of health
coverage and examine any contribution schedules, such as those set
for government benefits programs. The report shall be published
annually. Prior to publication, the schedule shall be reported to
the house of representatives and senate standing committees on
appropriations, health, and insurance issues.
Sec. 8. (1) The exchange shall only offer eligible health
coverage plans that have received the exchange seal of approval to
individuals and groups.
(2) Each eligible health coverage plan offered through the
exchange shall contain a detailed description of benefits offered,
including maximums, limitations, exclusions, and other benefit
limits.
(3) No health coverage plan shall be offered through the
exchange that excludes an individual from coverage because of race,
color, religion, national origin, sex, sexual orientation, marital
status, health status, personal appearance, political affiliation,
source of income, or age.
(4) The exchange shall offer a variety of health coverage
plans, at least 1 of which shall provide for a high deductible with
only catastrophic coverage. Eligible health coverage plans
receiving the exchange seal of approval shall meet all requirements
of health coverage plans required under state law, rule, and
regulation except that, in order to satisfy the goal of universal
health care coverage in this state, the board may permit a health
care plan to be offered through the exchange that does not provide
for the coverages or offerings required under section 3406a, 3406b,
3406c, 3406d, 3406e, 3406m, 3406n, 3406p, 3406q, 3406r, 3425,
3609a, 3613, 3614, 3615, 3616, or 3616a of the insurance code of
1956, 1956 PA 218, MCL 500.3406a, 500.3406b, 500.3406c, 500.3406d,
500.3406e, 500.3406m, 5003406n, 500.3406p, 500.3406q, 500.3604r,
500.3425, 500.3609a, 500.3613, 500.3614, 500.3615, 500.3616, and
500.3616a, or section 401b, 401f, 401g, 414a, 415, 416, 416a, 416b,
416c, 416d, or 417 of the nonprofit health care corporation reform
act of 1980, 1980 PA 350, MCL 550.1401b, 550.1401f, 550.1401g,
550.1414a, 550.1415, 550.1416, 550.1416a, 550.1416b, 550.1416c,
550.1416d, and 550.1417. In making the determination of which
provisions of section 3406a, 3406b, 3406c, 3406d, 3406e, 3406m,
3406n, 3406p, 3406q, 3406r, 3425, 3609a, 3613, 3614, 3615, 3616, or
3616a of the insurance code of 1956, 1956 PA 218, MCL 500.3406a,
500.3406b, 500.3406c, 500.3406d, 500.3406e, 500.3406m, 500.3406n,
500.3406p, 500.3406q, 500.3604r, 500.3425, 500.3609a, 500.3613,
500.3614, 500.3615, 500.3616, and 500.3616a, or section 401b, 401f,
401g, 414a, 415, 416, 416a, 416b, 416c, 416d, or 417 of the
nonprofit health care corporation reform act of 1980, 1980 PA 350,
MCL 550.1401b, 550.1401f, 550.1401g, 550.1414a, 550.1415, 550.1416,
550.1416a, 550.1416b, 550.1416c, 550.1416d, and 550.1417, are not
required to be provided in a health coverage plan offered through
the exchange, the board shall determine whether real cost savings
will be achieved so that the variety of health coverage plans
available through the exchange and the affordability of these plans
are maximized.
(5) The exchange seal of approval shall be assigned to an
eligible health coverage plan that the board determines satisfies
this section, provides good value to residents, and provides
quality medical benefits and administrative services.
(6) The board may withdraw an eligible health coverage plan
from the exchange only after notice to the carrier.
(7) The board shall procure eligible health coverage plans for
the MI-HEART program that include, but are not limited to, all of
the following:
(a) Wellness services.
(b) Inpatient services.
(c) Outpatient services and preventive care.
(d) Prescription drugs.
(e) Medically necessary inpatient and outpatient mental health
services and substance abuse services.
(f) Emergency care services.
Sec. 9. (1) For the purpose of reducing the number of
uninsured individuals in the state, there shall be a MI-HEART
program within the exchange. The MI-HEART program shall be
administered by the board in consultation with the department of
community health and the department of human services. The MI-HEART
program shall provide subsidies to assist eligible individuals in
purchasing health coverage, provided that subsidies shall only be
paid on behalf of an eligible individual who is enrolled in an
eligible health coverage plan, and shall be made under a sliding-
scale premium contribution payment schedule for enrollees, as
determined by the board. Eligibility for premium assistance
payments under this section shall be determined as provided in this
act. After consultation with representatives of any carrier
eligible to receive premium subsidy payments under this act,
representatives of small employers eligible under section 11(2),
representatives of hospitals that serve a high number of uninsured
individuals, and representatives of low-income health care advocacy
organizations, the board shall develop a plan for outreach and
education that is designed to reach low-income uninsured residents
and maximize their enrollment in the MI-HEART program.
(2) Premium assistance payments under the MI-HEART program
shall be made as provided in this act and under a schedule set
annually by the board in consultation with the department of
community health. The schedule shall be published annually. If the
executive director determines that amounts in the fund are
insufficient to meet the projected costs of enrolling new eligible
individuals, the executive director shall impose a cap on
enrollment in the MI-HEART program and shall notify the board, the
governor, and the house of representatives and senate standing
committees on appropriations, health, and insurance issues.
(3) The MI-HEART program shall provide that an enrollee with a
household income that does not exceed 100% of the federal poverty
level is only responsible for a copayment toward the purchase of
each pharmaceutical product and for use of emergency room services
in acute care hospitals for nonemergency conditions equal to that
required of enrollees in the medicaid program. The board may waive
copayments upon a finding of substantial financial or medical
hardship. No other premium, deductible, or other cost-sharing shall
apply to an enrollee described in this subsection under the MI-
HEART program.
(4) The MI-HEART program shall provide that an enrollee with a
household income that exceeds 100% of the federal poverty level but
does not exceed 200% of the federal poverty level is not
responsible for a premium contribution payment that exceeds 5% of
his or her gross household income and that copayments, deductibles,
and other cost-sharing measures are reasonably established so as to
encourage and promote maximum enrollment.
Sec. 11. (1) An uninsured individual is eligible to
participate in the MI-HEART program if all of the following are
met:
(a) The individual's household income does not exceed 200% of
the federal poverty level.
(b) The individual has been a resident of the state for the
previous 6 months.
(c) The individual is not eligible for any government program,
medicaid, medicare, or the state children's health insurance
program authorized under title XXI of the social security act, 42
USC 1397aa to 1397jj.
(d) The individual's or family member's employer has not
provided health coverage in the last 6 months for which the
individual is eligible. This subdivision does not apply if health
coverage was not provided due to the individual's or family
member's loss of employment, loss of eligibility for coverage due
to loss of employment hours, or loss of dependency status.
(e) The individual has not accepted a financial incentive from
his or her employer to decline his or her employer's subsidized
health coverage plan.
(2) An individual who is an employee of a small employer is
eligible to participate in the MI-HEART program if all of the
following are met:
(a) Not less than 75% of the small employer's eligible
employees seeking health care coverage through the small employer
are covered under an eligible health coverage plan.
(b) The small employer pays at least 33% of the premium
contribution payment.
(c) The small employer agrees to participate in a payroll
deduction program to facilitate premium contribution payments by
employees who will benefit from deductibility of gross income under
26 USC 104, 105, 106, and 125.
(d) The small employer agrees to make available in a timely
manner for confidential review by the executive director any of the
employer's documents, records, or information that the exchange
reasonably determines is necessary to determine compliance with
this act.
(e) The individual's household income does not exceed 200% of
the federal poverty level.
(f) The individual has been a resident of the state for the
previous 6 months.
(g) The individual is not eligible for any government program,
medicaid, medicare, or the state children's health insurance
program authorized under title XXI of the social security act, 42
USC 1397aa to 1397jj.
Sec. 12. The board shall encourage the use of incentives to
provide health promotion, chronic care management, and disease
prevention. Incentives may include rewards, premium discounts, or
rebates or 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. 13. All residents of the state may apply to purchase
health coverage through the exchange. A resident who has applied to
the MI-HEART program has the right to receive a written
determination of eligibility and, if eligibility is denied, a
written denial detailing the reasons for the denial and the right
to appeal any eligibility decision, provided the appeal is
conducted pursuant to the process established by the board.
Sec. 15. The exchange shall enter into interagency agreements
with the department of treasury to verify income data for
participants in the MI-HEART program. Such written agreements shall
include provisions permitting the exchange to provide a list of
individuals participating in or applying for the MI-HEART program,
including any applicable members of the households of such
individuals, who would be counted in determining eligibility, and
to furnish relevant information, including, but not limited to,
name, social security number, if available, and other data required
to assure positive identification. The department of treasury shall
furnish the exchange with information on the cases of persons so
identified, including, but not limited to, name, social security
number, and other data to ensure positive identification, name and
identification number of employer, and amount of wages received and
gross income from all sources.
Sec. 17. (1) The exchange may apply a surcharge to all
eligible health coverage plans, which shall be used only to pay
actual administrative and operational expenses of the exchange and
so long as the surcharge is applied uniformly to all eligible
health coverage plans offered through the exchange. A surcharge
shall not be used to pay any premium assistance payments.
(2) Each carrier participating in the exchange shall furnish
such reasonable reports as the board determines necessary to enable
the executive director to carry out his or her duties under this
act, including, but not limited to, detailed loss-ratio and
experience reports that identify administrative cost and medical
charge trends.
Sec. 19. (1) The MI-HEART exchange fund is created within the
state treasury.
(2) Premium contribution payments and surcharges collected by
the exchange shall be deposited into the fund. 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.
(3) Money in the fund at the close of the fiscal year shall
remain in the fund and shall not lapse to the general fund.
(4) Money in the fund shall be expended only as provided in
this act.
Sec. 21. The board shall keep an accurate account of all
exchange activities and of all its receipts and expenditures and
shall annually make a report thereof at the end of its fiscal year
to the governor, to the house of representatives and senate
standing committees on appropriations, health, and insurance
issues, and to the auditor general. The auditor general may
investigate the affairs of the exchange, may severally examine the
properties and records of the exchange, and may prescribe methods
of accounting and the rendering of periodical reports in relation
to projects undertaken by the exchange. The exchange is subject to
annual audit by the auditor general.
Sec. 23. No later than 2 years after the exchange begins
operation and every year thereafter, the board shall conduct a
study of the exchange and the persons enrolled in the exchange and
shall submit a written report to the governor and the house of
representatives and senate standing committees on appropriations,
health, and insurance issues on the status and activities of the
exchange based on data collected in the study. The report shall
also be available to the general public upon request. The study
shall review all of the following for the immediately preceding
year:
(a) The operation, administration, and costs of the exchange.
(b) What health coverage plans are available to individuals
and groups through the exchange and the experience of those plans
including any adverse selection trends. The experience of the plans
shall include data on number of enrollees in the plans, plans'
expenses, claims statistics, and complaints data. Health
information obtained under this act is subject to the federal
health insurance portability and accountability act of 1996, Public
Law 104-191, or regulations promulgated under that act, 45 CFR
parts 160 and 164.
(c) The number of MI-HEART enrollees in the MI-HEART program
and the total amount of premium assistance payments made.
(d) How the exchange met its goals.
(e) The amount and reasonableness of a surcharge applied
pursuant to section 17 and its impact on premiums.
(f) Other information considered pertinent by the board.
Sec. 25. The board shall report to the governor and to the
house of representatives and senate standing committees on
appropriations, health, and insurance issues by January 1, 2011 on
progress in achieving universal health coverage in this state. The
report shall examine any trends in the number of uninsured
individuals in this state since the effective date of this act,
trends in adverse selection, and the types and costs of health
coverage available and shall make recommendations on methods to
achieve universal health coverage in this state, including, but not
limited to, whether health coverage should be mandated, how a
mandate would be implemented, and how a mandate would be enforced.
Sec. 31. This act shall not take effect unless federal
matching funds are secured as necessary to implement this act.
Enacting section 1. This act does not take effect unless all
of the following bills of the 94th Legislature are enacted into
law:
(a) Senate Bill No. 280.
(b) Senate Bill No. 283.