SB-0994, As Passed Senate, May 17, 2018

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 994

 

 

May 10, 2018, Introduced by Senators SHIRKEY, HORN, STAMAS, MACGREGOR, PROOS and SCHMIDT and referred to the Committee on Michigan Competitiveness.

 

 

     A bill to impose an assessment on certain insurance providers;

 

to impose certain duties and obligations on certain insurance

 

providers, state departments, agencies, and officials; to create

 

certain funds; to authorize certain expenditures; and to impose

 

certain remedies and penalties.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"insurance provider assessment act".

 

     Sec. 3. As used in this act:

 

     (a) "Department" means the department of treasury.

 

     (b) "Excess loss" or "stop loss" means coverage that provides

 

insurance protection against the accumulation of total claims


exceeding a stated level for a group as a whole or protection

 

against a high-dollar claim on any 1 individual.

 

     (c) "Federal employee health benefit" means the program of

 

health benefits plans, as defined in 5 USC 8901, available to

 

federal employees under 5 USC 8901 to 8914.

 

     (d) "Fund" means the insurance provider fund created in

 

section 13.

 

     (e) "Health insurer" means an insurer authorized under the

 

insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302, to

 

deliver, issue for delivery, or renew in this state a health

 

insurance policy. Health insurer includes a health maintenance

 

organization. Health insurer does not include a state department or

 

agency administering a plan of medical assistance under the social

 

welfare act, 1939 PA 280, MCL 400.1 to 400.119b, or a person

 

administering a self-funded plan.

 

     (f) "Insurance provider" means a Medicaid managed care

 

organization or a health insurer.

 

     (g) "Medicaid contracted health plan" means a contracted

 

health plan as that term is defined in section 106 of the social

 

welfare act, 1939 PA 280, MCL 400.106.

 

     (h) "Medicaid managed care organization" means a Medicaid

 

contracted health plan or a specialty prepaid health plan.

 

     (i) "Medicare" means the federal Medicare program established

 

under title XVIII of the social security act, 42 USC 1395 to

 

1395lll.

 

     (j) "Member months" means the total number of individuals for

 

whom the insurance provider has recognized revenue for 1 month. If


revenue is recognized for only part of a month for an individual, a

 

prorated partial member month may be counted. Member months are

 

determined by the department of insurance and financial services

 

and do not include individuals enrolled in short-term medical, 1-

 

time limited duration, noncomprehensive medical, specified disease,

 

limited benefit, accident only, accidental death and dismemberment,

 

disability income, long-term care, Medicare supplement, stand-alone

 

dental, dental, Medicare, Medicare advantage, Medicare part D,

 

vision, prescription, other individual write-in coverage, federal

 

employee health benefit, Tricare, other group write-in coverage,

 

credit, stop loss, excess loss, administrative services only, or

 

administrative services contracts.

 

     (k) "Specialty prepaid health plan" means an entity designated

 

by the department of health and human services as a regional entity

 

pursuant to section 204b of the mental health code, 1974 PA 258,

 

MCL 330.1204b, or a specialty prepaid health plan pursuant to

 

section 232b of the mental health code, 1974 PA 258, MCL 330.1232b,

 

to provide mental health services, services to individuals with

 

developmental disabilities, and substance use disorder services.

 

     Sec. 5. (1) If the department of health and human services has

 

not already submitted an application to the federal Centers for

 

Medicare and Medicaid Services to request a waiver, for a period of

 

not less than 5 years, of the broad-based and uniformity provisions

 

of section 1903(w)(3)(B) and (C) of title XIX of the social

 

security act, 42 USC 1396b, relating to the assessment imposed

 

under this act, the department of health and human services shall

 

submit the request before October 1, 2018 and as necessary


thereafter to implement this act.

 

     (2) Within 30 days after the effective date of this act, the

 

department of health and human services shall notify the department

 

of the number of member months and the rate to be imposed on these

 

member months under section 7(1)(a)(i) for the 2018-2019 state

 

fiscal year and identify the specialty prepaid health plans subject

 

to the assessment under this act.

 

     (3) Within 30 days after the effective date of this act, the

 

department of insurance and financial services shall provide the

 

department with a list of insurance providers by tier that are

 

subject to the assessment under this act.

 

     Sec. 7. (1) Beginning on the first day of the calendar quarter

 

in which the director of the department of health and human

 

services notifies the secretary of state and the department in

 

writing that the federal Centers for Medicare and Medicaid Services

 

has approved its request for a waiver of the broad-based and

 

uniformity provisions of section 1903(w)(3)(B) and (C) of title XIX

 

of the social security act, 42 USC 1396b, for implementation of

 

this act or October 1, 2018, whichever is later, there is levied

 

and imposed an annual assessment on the number of member months for

 

each insurance provider reported on its annual financial statement

 

filed with the department of insurance and financial services or

 

the department of health and human services, whichever is

 

applicable, for the previous calendar year at the following rates

 

in the following circumstances:

 

     (a) For tier 1, a Medicaid contracted health plan's member

 

months supported with federal funds authorized under subchapter XIX


of the social security act, 42 USC 1396 to 1396w-5, as follows:

 

     (i) For the number of member months and the dollar amount

 

necessary per member month, as determined each year by the

 

department of health and human services, to achieve a result of

 

between 1.00 and 1.02 on the statistical test imposed by the

 

federal Centers for Medicare and Medicaid Services according to 42

 

CFR 433.68(e).

 

     (ii) For each remaining member month not assessed under

 

subparagraph (i), $1.20 per member month.

 

     (b) For tier 2, a health insurer's member months not supported

 

with federal funds authorized under subchapter XIX of the social

 

security act, 42 USC 1396 to 1396w-5, $2.40 per member month.

 

     (c) For tier 3, a specialty prepaid health plan's member

 

months supported with federal funds authorized under subchapter XIX

 

of the social security act, 42 USC 1396 to 1396w-5, $1.20 per

 

member month.

 

     (2) Beginning May 15 and by each May 15 thereafter, the

 

department of insurance and financial services and the department

 

of health and human services shall make available to the department

 

the number of member months for each insurance provider and the

 

necessary assessment information for the department to calculate

 

the assessment due under this act, including the number of member

 

months and the rate to be imposed in accordance with subsection

 

(1)(a)(i) to satisfy the statistical test.

 

     (3) For the initial year of implementation only, the

 

department shall notify each insurance provider after June 15, 2018

 

but before October 15, 2018, of the number of member months and the


rate imposed on these member months in accordance with subsection

 

(1)(a)(i) and of its assessment, prorated for 2 quarters, due based

 

on the insurance provider's member months for the previous calendar

 

year. The initial assessment is payable in 2 equal installments.

 

Each insurance provider shall submit the payments to the department

 

by January 30, 2019 and April 30, 2019.

 

     (4) The department shall notify each insurance provider after

 

June 1, but before June 15 each year after implementation, of the

 

number of member months and the rate imposed on these member months

 

under subsection (1)(a)(i) and of its annual assessment due under

 

this act based on the insurance provider's member months for the

 

previous calendar year. The assessment is payable on a quarterly

 

basis and each insurance provider shall submit quarterly payments

 

on July 30, October 30, January 30, and April 30 to the department

 

for the amount of the assessment imposed under this act with

 

respect to the number of member months reported on its financial

 

statements for the previous calendar year.

 

     (5) If a due date falls on a Saturday, Sunday, state holiday,

 

or legal banking holiday, the payments are due on the next

 

succeeding business day.

 

     (6) The department may require that payment of the assessment

 

be made by an electronic funds transfer method approved by the

 

department.

 

     Sec. 9. (1) An insurance provider liable for the assessment

 

under this act shall keep accurate and complete records and

 

pertinent documents as may be required by the department. Records

 

required by the department shall be retained for a period of 4


years after the assessment imposed under this act to which the

 

records apply is due or as otherwise provided by law.

 

     (2) If the department considers it necessary, the department

 

may require a person, by notice served upon that person, to make a

 

return, render under oath certain statements, or keep certain

 

records the department considers sufficient to show whether that

 

person is liable for the assessment under this act.

 

     (3) If an insurance provider fails to file a return or keep

 

proper records as may be required under this section, or if the

 

department has reason to believe that any records kept or returns

 

filed are inaccurate or incomplete and that additional assessments

 

are due, the department may compute the amount of the assessment

 

due from the insurance provider based on information that is

 

available or that may become available to the department. An

 

assessment under this subsection is considered prima facie correct

 

under this act, and an insurance provider has the burden of proof

 

for refuting the assessment.

 

     Sec. 11. (1) The department shall administer the assessment

 

imposed under this act under 1941 PA 122, MCL 205.1 to 205.31, and

 

this act. If 1941 PA 122, MCL 205.1 to 205.31, and this act

 

conflict, the provisions of this act apply. The assessment imposed

 

under this act is a tax for the purpose of 1941 PA 122, MCL 205.1

 

to 205.31.

 

     (2) The department is authorized to promulgate rules to

 

implement this act under the administrative procedures act of 1969,

 

1969 PA 306, MCL 24.201 to 24.328.

 

     (3) The assessment imposed under this act shall not be


considered an assessment or burden for purposes of the tax, or as a

 

credit toward or payment in lieu of the tax under section 476a of

 

the insurance code of 1956, 1956 PA 218, MCL 500.476a.

 

     (4) The department shall submit an annual report to the state

 

budget director, the senate and house of representatives standing

 

committees on appropriations, and the senate and house fiscal

 

agencies not later than 120 days after May 15 that states the

 

amount of revenue collected from insurance providers under this act

 

for the immediately preceding state fiscal year and the costs

 

incurred for administration and compliance requirements under this

 

act for the immediately preceding state fiscal year.

 

     Sec. 13. (1) All money received and collected under this act

 

shall be deposited by the department in the insurance provider fund

 

established in this section.

 

     (2) The insurance provider fund is created within the state

 

treasury and shall be administered by the department for auditing

 

purposes.

 

     (3) 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.

 

     (4) The department shall expend money from the fund, upon

 

appropriation, only for 1 or more of the following purposes:

 

     (a) Beginning in the 2018-2019 state fiscal year, the first

 

$14,000,000.00 to be appropriated for the payment of actuarially

 

sound capitation rates to Medicaid managed care organizations, and

 

each state fiscal year thereafter, the amount necessary to continue


to support the payment of actuarially sound capitation rates to

 

Medicaid managed care organizations.

 

     (b) For the 2018-2019 state fiscal year, to appropriate an

 

amount not to exceed $315,000,000.00 to offset the net revenue lost

 

under the health insurance claims assessment act, 2011 PA 142, MCL

 

550.1731 to 550.1741.

 

     (c) For the 2019-2020 state fiscal year, to appropriate an

 

amount not to exceed $240,000,000.00 to offset the net revenue lost

 

under the health insurance claims assessment act, 2001 PA 142, MCL

 

550.1731 to 550.1741.

 

     (d) To pay administrative and compliance costs in accordance

 

with section 15.

 

     (e) The balance of the fund remaining after the appropriations

 

described in subdivisions (a), (b), (c), and (d) shall be

 

transferred to a separate restricted account within the insurance

 

provider fund and only used as appropriated by the legislature.

 

     (5) Money in the fund at the close of the fiscal year shall

 

remain in the fund and shall not lapse to the general fund.

 

     Sec. 15. For administration and compliance requirements

 

created by this act, in the 2018-2019 state fiscal year and each

 

fiscal year thereafter, the department shall receive from the

 

insurance provider fund created in section 13 an amount not to

 

exceed 1/2 of 1% of the annual remittances under this act in the

 

2018-2019 state fiscal year, subject to annual appropriation by the

 

legislature.

 

     Sec. 17. The department shall provide the director of the

 

department of insurance and financial services with written notice


of any final determination that an insurance provider has failed to

 

pay an assessment, interest, or penalty when due. The director of

 

the department of insurance and financial services may suspend or

 

revoke, after notice and hearing, the certificate of authority to

 

transact insurance in this state, or the license to operate in this

 

state, of any insurance provider that fails to pay an assessment,

 

interest, or penalty due under this act. A suspension of a

 

certificate of authority to transact insurance in this state or a

 

license to operate in this state under this section shall not be

 

withdrawn unless any delinquent assessment, interest, or penalty

 

has been paid.