October 11, 2007, Introduced by Reps. Gaffney, Angerer, Virgil Smith, Farrah, Hopgood, Mayes, Gonzales, Sheltrown, Rick Jones, Wenke, Elsenheimer, Green, LaJoy, Moore, Nitz, Ward, Ball, Palsrok, Hildenbrand, Steil, Accavitti, Wojno, Byrnes, Gillard, Condino, Polidori, Leland, Miller, Hansen, Simpson, Meadows, Lindberg, Robert Jones, Alma Smith, Spade, Ebli, Valentine, Donigan, Vagnozzi, Bieda, Cheeks, Pastor, Sak, Moolenaar, Shaffer, Griffin, Meisner, Casperson, David Law, Hune, Clemente, Corriveau, Lemmons, Scott, Bennett, Espinoza, Brown, Kathleen Law, Jackson, Clack, Hammon, Hammel, Warren, Melton, Constan, Young, Johnson, Cushingberry and Coulouris and referred to the Committee on Insurance.
A bill to amend 1980 PA 350, entitled
"The nonprofit health care corporation reform act,"
by amending sections 308, 401e, 402b, 608, and 610 (MCL 550.1308,
550.1401e, 550.1402b, 550.1608, and 550.1610), section 401e as
added by 1996 PA 516, section 402b as amended by 1999 PA 7, and
section 608 as amended by 1991 PA 73, and by adding section 220;
and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 220. A nonprofit health care corporation is subject to
chapter 37A of the insurance code of 1956, 1956 PA 218, MCL
500.3751 to 500.3771. To the extent that a provision of this act
concerning individual health coverage, including, but not limited
to, premiums, rates, filings, and coverages, conflicts with chapter
37A of the insurance code of 1956, 1956 PA 218, MCL 500.3751 to
500.3771, that chapter supersedes this act.
Sec. 308. (1) To the extent provided by resolution of the
board or in the bylaws or articles, a committee established
pursuant to section 307 may exercise the powers and authority of
the board in management of the business and affairs of the health
care corporation. The board shall review and may modify subject to
the rights of third parties any action or decision of a committee.
A committee shall not do any of the following:
(a) Amend the articles of incorporation.
(b) Adopt an agreement of merger or consolidation.
(c) Authorize the sale, lease, or exchange of all or
substantially all of the corporation's property and assets.
(d) Approve, adopt, or amend provider contracts, provider
class
plans, or rates charged to subscribers. ,
or a certificate.
(e) Amend the bylaws of the corporation.
(f) Fill vacancies on the board.
(g) Fix compensation of the directors or officers.
(h) Perform other similar acts of a final or binding nature
with respect to the business of the corporation.
(2)
This section shall does not prohibit emergency actions by
the executive committee on behalf of the board, as authorized in
the bylaws of the health care corporation.
Sec.
401e. (1) Except as provided in this section, a health
care
corporation that has issued a nongroup certificate shall renew
or
continue in force the certificate at the option of the
individual.
(1) (2)
Except as provided in this section,
a health care
corporation that has issued a group certificate shall renew or
continue in force the 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 health care corporation no longer offers that particular type
of coverage in the market, or if the individual or group moves
outside the service area.
Sec.
402b. (1) For an individual covered under a nongroup
certificate
or under a certificate not covered under subsection
(2),
a health care corporation 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 certificate.
(2)
A health care corporation shall not
exclude or limit
coverage for a preexisting condition for an individual covered
under a group certificate.
(3)
Notwithstanding subsection (1), a health care corporation
shall
not issue a certificate to a person eligible for nongroup
coverage
or eligible for a certificate not covered under subsection
(2)
that excludes or limits coverage for a preexisting condition or
provides
a waiting period if all of the following apply:
(a)
The person's most recent health coverage prior to applying
for
coverage with the health care corporation was under a group
health
plan.
(b)
The person was continuously covered prior to the
application
for coverage with the health care corporation 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 a
health
care corporation, a health insurer, or a health maintenance
organization.
(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, 100
Stat.
82, he or she has elected and exhausted that coverage.
(4)
As used in this section,
"group" means a group of 2 or
more subscribers.
Sec.
608. (1) The rates charged to nongroup subscribers for
each
certificate shall be filed in accordance with section 610 and
shall
be subject to the prior approval of the commissioner.
Annually,
the commissioner shall approve, disapprove, or modify and
approve
the proposed or existing rates for each certificate subject
to
the standard that the rates must be determined to be equitable,
adequate,
and not excessive, as defined in section 609. The burden
of
proof that rates to be charged meet these standards shall be
upon
the health care corporation proposing to use the rates. The
rates charged to nongroup subscribers are subject to chapter 37A of
the insurance code of 1956, 1956 PA 218, MCL 500.3751 to 500.3771,
and are not subject to sections 609 to 613, except for the cost
transfers allowed in section 609(5).
(2) The methodology and definitions of each rating system,
formula, component, and factor used to calculate rates for group
subscribers for each certificate, including the methodology and
definitions used to calculate administrative costs for
administrative services only and cost-plus arrangements, shall be
filed
in accordance with section 610 and shall be are subject
to
the prior approval of the commissioner. The definition of a group,
including any clustering principles applied to nongroup subscribers
or small group subscribers for the purpose of group formation,
shall
be are subject to the prior approval of the commissioner.
However, if a Michigan caring program is created under section 436,
that program shall be defined as a group program for the purpose of
establishing rates. The commissioner shall approve, disapprove, or
modify and approve the methodology and definitions of each rating
system, formula, component, and factor for each certificate subject
to the standard that the resulting rates for group subscribers must
be determined to be equitable, adequate, and not excessive, as
defined in section 609. In addition, the commissioner may from time
to time review the records of the corporation to determine proper
application of a rating system, formula, component, or factor with
respect to any group. The corporation shall refile for approval
under this subsection, every 3 years, the methodology and
definitions of each rating system, formula, component, and factor
used to calculate rates for group subscribers, including the
methodology and definitions used to calculate administrative costs
for administrative services only and cost-plus arrangements. The
burden of proof that the resulting rates to be charged meet these
standards shall be upon the health care corporation proposing to
use the rating system, formula, component, or factor.
(3) A proposed rate shall not take effect until a filing has
been made with the commissioner and approved under section 607 or
this
section subsection (2), as applicable, except as provided in
subsections (4) and (5).
(4) Upon request by a health care corporation, the
commissioner may allow rate adjustments to become effective prior
to approval, for federal or state mandated benefit changes.
However, a filing for these adjustments shall be submitted before
the effective date of the mandated benefit changes. If the
commissioner disapproves or modifies and approves the rates, an
adjustment shall be made retroactive to the effective date of the
mandated benefit changes or additions.
(5) Implementation prior to approval may be allowed if the
health care corporation is participating with 1 or more health care
corporations to underwrite a group whose employees are located in
several states. Upon request from the commissioner, the corporation
shall file with the commissioner, and the commissioner shall
examine, the financial arrangement, formulae, and factors. If any
are determined to be unacceptable, the commissioner shall take
appropriate action.
Sec. 610. (1) Except as provided under section 608(4) or (5),
a filing of information and materials relative to a proposed rate
made pursuant to section 608(2) shall be made not less than 120
days before the proposed effective date of the proposed rate. A
filing shall not be considered to have been received until there
has been substantial and material compliance with the requirements
prescribed
in subsections (6) and (8) this
section.
(2) Within 30 days after a filing is made of information and
materials relative to a proposed rate, the commissioner shall do
either of the following:
(a) Give written notice to the corporation, and to each person
described under section 612(1), that the filing is in material and
substantial
compliance with subsections (6) and (8) this section
and that the filing is complete. The commissioner shall then
proceed to approve, approve with modifications, or disapprove the
rate filing 60 days after receipt of the filing, based upon whether
the filing meets the requirements of this act. However, if a
hearing has been requested under section 613, the commissioner
shall not approve, approve with modifications, or disapprove a
filing until the hearing has been completed and an order issued.
(b) Give written notice to the corporation that the
corporation
has not yet complied with subsections (6) and (8) this
section. The notice shall state specifically in what respects the
filing
fails to meet the requirements of subsections (6) and (8)
this section.
(3) Within 10 days after the filing of notice pursuant to
subsection (2)(b), the corporation shall submit to the commissioner
such additional information and materials, as requested by the
commissioner. Within 10 days after receipt of the additional
information and materials, the commissioner shall determine whether
the filing is in material and substantial compliance with
subsections
(6) and (8) this section. If the commissioner
determines that the filing does not yet materially and
substantially
meet the requirements of subsections (6) and (8) this
section, the commissioner shall give notice to the corporation
pursuant to subsection (2)(b) or use visitation of the
corporation's facilities and examination of the corporation's
records to obtain the necessary information described in the notice
issued pursuant to subsection (2)(b). The commissioner shall use
either procedure previously mentioned, or a combination of both
procedures, in order to obtain the necessary information as
expeditiously as possible. The per diem, traveling, reproduction,
and other necessary expenses in connection with visitation and
examination shall be paid by the corporation, and shall be credited
to the general fund of the state.
(4) If a filing is approved, approved with modifications, or
disapproved under subsection (2)(a), the commissioner shall issue a
written order of the approval, approval with modifications, or
disapproval. If the filing was approved with modifications or
disapproved, the order shall state specifically in what respects
the filing fails to meet the requirements of this act and, if
applicable, what modifications are required for approval under this
act. If the filing was approved with modifications, the order shall
state that the filing shall take effect after the modifications are
made and approved by the commissioner. If the filing was
disapproved, the order shall state that the filing shall not take
effect.
(5) The inability to approve 1 or more rating classes of
business within a line of business because of a requirement to
submit further data or because a request for a hearing under
section 613 has been granted shall not delay the approval of rates
by the commissioner which could otherwise be approved or the
implementation of rates already approved, unless the approval or
implementation would affect the consideration of the unapproved
classes of business.
(6)
Information furnished under subsection (1) in support of a
nongroup
rate filing shall include the following:
(a)
Recent claim experience on the benefits or comparable
benefits
for which the rate filing applies.
(b)
Actual prior trend experience.
(c)
Actual prior administrative expenses.
(d)
Projected trend factors.
(e)
Projected administrative expenses.
(f)
Contributions for risk and contingency reserve factors.
(g)
Actual health care corporation contingency reserve
position.
(h)
Projected health care corporation contingency reserve
position.
(i)
Other information which the corporation considers
pertinent
to evaluating the risks to be rated, or relevant to the
determination
to be made under this section.
(j)
Other information which the commissioner considers
pertinent
to evaluating the risks to be rated, or relevant to the
determination
to be made under this section.
(6) (7)
A copy of the filing, and all
supporting information,
except for the information which may not be disclosed under section
604, shall be open to public inspection as of the date filed with
the commissioner.
(7) (8)
The commissioner shall make
available forms and
instructions
for filing for proposed rates under sections 608(1)
and
section 608(2). The forms with instructions shall be
available
not less than 180 days before the proposed effective date of the
filing.
Enacting section 1. Section 614 of the nonprofit health care
corporation reform act, 1980 PA 350, MCL 550.1614, is repealed.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 5282(request no.
03041'07*) of the 94th Legislature is enacted into law.