sb 0118

AN ACT relative to individual health insurance coverage and extending the reporting date for the healthy kids subcommittee and clarifying the mission statement of the healthy kids corporation.

SPONSORS: Sen. Francoeur, Dist 14; Sen. Klemm, Dist 22; Sen. Burns, Dist 1; Sen. D'Allesandro, Dist 20; Sen. Flanders, Dist 7; Rep. Downing, Rock 26; Rep. Herman, Hills 13; Rep. Francoeur, Rock 22

This bill establishes the health insurance risk pool for the purposes of individual health insurance coverage.

This bill also updates the mission statement of the healthy kids corporation and places the healthy kids subcommittee into the statutes.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to individual health insurance coverage and extending the reporting date for the healthy kids subcommittee and clarifying the mission statement of the healthy kids corporation.

Be it Enacted by the Senate and House of Representatives in General Court convened:

III. To regulate underwriting and rating practices in the small employer and individual markets so as to promote access to affordable coverage for higher risk groups or individuals.

295:2 Ratio Changed. RSA 420-G:4, I(a)(2) is repealed and reenacted to read as follows:

(2) Health carriers providing coverage to individuals may modify such average premium as established pursuant to subparagraph I(a)(1) for age, health status, and tobacco use only in accordance with the following limitations:

(A) The maximum premium differential for age as determined by ratio shall be 4 to 1. The limitation shall not apply for determining rates for an attained age of less than 19.

(B) The maximum differential due to health status shall be 1.5 to 1 and the maximum differential rate due to tobacco use shall be 1.5 to 1. Rate limitations based on health status do not apply to rate variations based on an insured's status as a tobacco user.

295:3 Guaranteed Issue and Renewability. Amend RSA 420-G:6, III to read as follows:

III. Health carriers shall actively market, issue, and renew all of the health coverages they sell in the [~~individual or~~] small employer market[,] to all [~~individuals or~~] small [~~employees~~] employers.

295:4 New Paragraph; Purpose of Chapter. Amend RSA 404-G:1 by inserting after paragraph II the following new paragraph:

III. Establish a high risk pool that will provide access to health insurance to all residents of the state who are denied health insurance for medical or health reasons. The premiums charged for coverage in the high risk pool shall be affordable and the coverage provided shall be reasonably comprehensive and comparable to coverage available outside of the high risk pool. It is the intent of the legislature that the high risk pool shall be adequately funded through an annual, and if necessary, a special assessment mechanism, that the high risk pool shall utilize cost containment measures, including, but not limited to, providing network based coverage, and that measures shall be taken to avoid inappropriate shifting of costs and risk to the high risk pool.

V. "Covered lives" shall include all persons living or working in New Hampshire for which a carrier provides health insurance evidenced by a policy or a group certificate issued in New Hampshire. For group excess loss insurance, or other types of group health insurance for which no certificates are issued, covered lives shall mean those New Hampshire employees and their dependents who are protected, in part, by a policy or a certificate, issued in New Hampshire, and purchased by a group health insurance plan subject to the Employee Retirement Income Security Act of 1974, Public Law No. 93-406 (ERISA).

295:6 New Paragraphs; Definitions Added. Amend RSA 404-G:2 by inserting after paragraph X the following new paragraphs:

X-a. "Plan of operation" means the plan of operation of the risk sharing mechanism and the high risk pool, including articles, bylaws and operating rules, procedures and policies adopted by the association.

295:7 Association's Powers and Duties. RSA 404-G:3 is repealed and reenacted to read as follows:

I. The association shall be a not-for-profit, voluntary corporation under RSA 292 and shall possess all general powers as derive from that status and such additional powers and duties as are approved by the commissioner or as specified below.

(a) Enter into contracts as necessary or proper to administer the plan of operation.

(b) Sue or be sued, including taking any legal action necessary or proper for the recovery of any assessments for, on behalf of, or against members of the association or other participating person.

(c) Take legal action as necessary to avoid the payment of improper claims against the plan or to defend the coverage provided by or through the pool.

(d) Oversee the issuance of policies of insurance and certificates or evidences of coverage.

(e) Retain appropriate legal, actuarial, and other persons as necessary to provide technical assistance in the operation of the plan, policy development, and other contract design and in any other function within the authority of the plan.

(h) Perform any other functions within the authority of the association as may be necessary or proper to carry out the plan of operation.

(d) Determine and collect assessments for the risk sharing mechanism and for the high risk pool.

(e) Disburse assessment payments, as provided in the plan of operation for the high risk pool.

(f) Establish appropriate rates, rate schedules, rate adjustments, expense allowances, agent referral fees, claim reserve formulas and any other actuarial functions appropriate to the plan of operation for the high risk pool.

(g) Provide for and employ cost-containment measures and requirements, which shall include but not be limited to, preadmission screening, second surgical opinion, concurrent utilization review, and individual case management for the purpose of making the benefit plan more cost effective.

(h) Develop a list of medical or health conditions the existence or history of which makes an individual eligible for participation in the high risk pool without first requiring application to a carrier for health coverage.

(i) In connection with the managed care or network based coverage options required pursuant to RSA 404-G:5-b, III, design, utilize, contract or otherwise arrange for the delivery of cost-effective health care services, including establishing or contracting for administration and operation of the pool with a carrier, a preferred provider organization, a health maintenance organization, or any other network provider arrangement.

IV. Neither the association nor its employees shall be liable for any obligations of the plan. No member or employee of the association shall be liable, and no cause of action of any nature may arise against them, for any act or omission related to the performance of their powers and duties under this chapter unless such act or omission constitutes willful or wanton misconduct. The association may provide in its bylaws or rules for indemnification of, and legal representation for, its members and employees.

295:8 Association Membership and Governance. Amend RSA 404-G:4, II-VII to read as follows:

II. The initial board of directors of the association shall be the same as that set forth in the order. Except as provided in paragraph IV, each successor board shall consist of [5] 9 individuals who are representative of categories of members of the association, health care providers, consumers who have purchased or are likely to purchase coverage from the pool, insurance brokers, small employers, and the commissioner who shall be an ex-officio member. In the initial and in each successor board, [2] 3 directors shall be representative of and elected by qualified writers of group health insurance [~~and 3~~], 2 directors [~~shall be eligible to receive a subsidy under this chapter and~~] shall be representative of and elected by qualified writers of individual health insurance, one director shall be representative of the health care provider community and shall be appointed by the commissioner, one director shall be representative of consumers covered through the high risk pool and shall be appointed by the commissioner, one director shall be a representative of insurance brokers and shall be appointed by the commissioner, and one director shall be a representative of small employers and shall be appointed by the commissioner.

III. There shall be no more than one director representing any one qualified writer or its affiliate. For purposes of this section, the insurance activities of any elected director's affiliate shall be deemed to be insurance activities of the elected director.

IV. Qualified writers of individual or group health insurance shall be those that provide coverage for at least 500 covered lives or 5 percent of the total covered lives in the relevant market. A member's votes for individual or group market representatives shall be proportional to the member's assessment in that market.

V. If, at any board election subsequent to the establishment of the initial board, one or more elected group representatives are also [~~writing~~] qualified individual health insurance writers, then the membership of the board shall be altered by applying the provisions in subparagraphs (a) through (d) to such elected group representatives.

(a) If the elected group representative writing in the individual market is also an elected individual representative, then that member shall take a seat on the board as an individual representative and relinquish the group seat. The group writer with the next highest number of group votes shall take the relinquished group seat.

(b) If the elected group representative writing in the individual market is not also an elected individual representative, then up to 2 directors will be added to the board as follows:

(1) If the total size of the board-elect is [~~5 or 6~~] 9 or 10, the elected group representative shall remain on the board, but neither as a group or an individual representative, and the group writer with the next highest number of group votes shall join the board as a group representative; but

(2) If the total size of the board-elect is [7] 11, the elected group representative shall not remain on the board and the group writer with the next highest number of group votes shall take the relinquished group seat.

(c) The provisions in subparagraphs (a) and (b) shall be applied to elected group representatives in the order of the number of votes received.

(d) The seats added to the board pursuant to subparagraph (b) shall not survive the term of the seat-holder.

VII. The board of directors shall take action by affirmative vote [~~of one less than the total number of directors~~] representing a simple majority of the entire board.

295:9 Plan of Operation for the Risk Sharing Mechanism. RSA 404-G:5, II is repealed and reenacted to read as follows:

II. Subsidy determination for the risk sharing mechanism. For a given calendar year, the subsidy calculations for the risk sharing mechanism shall be based on the experience of the prior year. Only individual health insurance writers who are actively marketing individual health insurance, in accordance with the provisions of RSA 420-G, during the calendar year in which the subsidy is distributed shall be eligible for a subsidy. For companies that utilize health status factors, only individuals whose coverage is written at the maximum allowable health status factors under RSA 420-G and whose coverage was issued prior to July 1, 2002 shall be eligible for a subsidy. For companies that do not utilize varied health status factors, all individuals whose coverage is written under RSA 420-G and whose coverage was issued prior to July 1, 2002 shall be eligible for a subsidy. The subsidy determination process shall recognize and compensate writers based on the risk characteristics of coverage eligible for consideration in the subsidy relative to standards established by the association board. Nothing in this chapter shall preclude the commissioner from approving a subsidy mechanism that fully compensates individual health insurers for all costs incurred on subsidy-eligible coverages in excess of the premiums collected from subsidy-eligible coverages.

295:10 New Sections; High Risk Pool; Administrator; Premiums. Amend RSA 404-G by inserting after section 5 the following new sections:

I. The board of directors for the association shall adopt a plan of operation for the high risk pool. The high risk pool shall be funded in part through an assessment mechanism whereby writers of health insurance contribute an amount sufficient to cover the expenses and losses of the pool not covered by premiums.

(a) Procedures for handling and accounting for the assets and moneys of the plan;

(c) Procedures to establish and maintain public awareness of the plan, including its eligibility requirements and enrollment procedures;

(d) Procedures to create a fund, under management of the board, for administrative expenses;

(e) Procedures for handling, accounting and auditing of assets, moneys and claims of the pool;

(h) Procedures by which applicants and participants can submit utilization review determinations and grievances to the pool administrator. The procedures shall ensure that utilization review determinations and grievances will be processed properly and in accordance with all statutory and regulatory requirements.

III. The assessment for the high risk pool shall be based on the number of covered lives times a specified assessment rate. The association shall specify the basis used to set the assessment rate.

(b) Established no later than November 1 in the year preceding the calendar year for which the carrier's experience shall be used to calculate the assessment; and

V. In addition to the regular assessment rate, the association may establish a special assessment rate. Notwithstanding RSA 420-G:4, a writer of health insurance may increase the premiums charged by the amount of the special assessment. Any assessment may appear as a separate line item on a policyholder's bill.

(a) The association shall only establish a special assessment if the association determines that its funds are or will become insufficient to pay the high risk pool's expenses in a timely manner.

(b) The association shall only assess, through the special assessment, at a rate necessary to fund the deficiency ascertained in subparagraph (1) above.

VI. The regular assessment rate, and any special assessment rate, shall be subject to the approval of the commissioner. The commissioner shall approve the rate if she or he finds that the amount is required to fulfill the purposes of the high risk pool. For the purpose of making this determination, the commissioner may, at the expense of the association, seek independent actuarial certification of the need for the proposed rate.

VIII. If the assessment exceeds the amount actually needed, the excess shall be held and invested and, with the earnings and interest thereon, be used to offset future net losses.

IX. Each covered life should be included in the assessment only once. The association shall adopt procedures by which affiliated carriers calculate their assessment on an aggregate basis and procedures to ensure that no covered life is counted more than once.

X. The initial assessment rate to fund the high risk pool shall be 60 cents per covered life per month, and shall take effect on policies or certificates issued or renewed on or after July 1, 2001.

I. There is hereby created the New Hampshire high risk pool. This pool shall operate subject to the supervision and control of the association and shall offer policies of insurance on or after July 1, 2002. The pool shall offer health care coverage consisting of 4 benefit plans, 2 of which shall be either managed care or network based plans.

II. The plans to be issued by the pool, including schedules of benefits, exclusions and other limitations shall be established by the association subject to the approval of the commissioner. In establishing the plans, the association shall take into consideration the levels of health insurance coverage provided in the state and medical economic factors as may be deemed appropriate and shall promulgate benefit levels, deductibles, coinsurance factors, exclusions and limitations determined to be generally reflective of and commensurate with comprehensive, major medical health insurance coverage provided in the state. The association shall, utilizing standard morbidity assumptions, annually place a value on all plans presently being written or issued in the individual market. The association shall average these values, weighed according to each plan's written premium volume, or some other suitable proxy, and utilizing the same standard morbidity assumptions, shall develop 2 coverage options: Option A and Option B.

III. The value of Option A developed by the association shall be 10 percent higher than the average value computed under paragraph II and the value of Option B shall be 10 percent lower than the average value computed under paragraph II. The association shall also provide either a managed care or network based version of Option A and a managed care version of Option B for a total of 4 plan choices.

IV. The insurance plans developed by the association shall comply with all applicable insurance laws and rules, except as provided herein.

V.(a) The pool shall be payer of last resort of benefits whenever any other benefit or source of third-party payment is available. The pool shall have a right of subrogation for any other health insurance coverage and by all hospital and medical expense benefits paid or payable under any workers' compensation coverage, automobile medical payment or liability insurance whether provided on the basis of fault or nonfault, and by any hospital or medical benefits paid or payables under or provided pursuant to any state or federal law or program.

(b) The pool shall have a cause of action against an eligible person for the recovery of the amount of benefits paid that are not for covered expenses. Benefits due from the plan may be reduced or applied as a set-off against any amount recoverable under this paragraph.

VI. The high risk pool shall be funded by premiums charged for coverage and by assessments which the association shall calculate based on the number of covered lives times a specified amount. The high risk pool shall not be funded with state general fund revenue. The high risk pool shall never cease writing policies to eligible individuals.

I. The board shall select a high risk pool administrator through a competitive bidding process to administer the pool. The board shall evaluate bids submitted based on criteria established by the board which shall include:

(a) The high risk pool administrator's proven ability to handle health insurance coverage to individuals;

(b) The efficiency and timeliness of the high risk pool administrator's claim processing procedures;

(d) The high risk pool administrator's ability to apply effective cost containment programs and procedures and to administer the pool in a cost efficient manner; and

II.(a) The high risk pool administrator shall serve for a period of at least 3 years and shall be subject to removal for cause; and

(b) At least one year prior to the expiration of each period of service by a high risk pool administrator, the association shall invite eligible entities, including the current high risk pool administrator to submit bids to serve as the high risk pool administrator. Selection of the high risk pool administrator for the succeeding period shall be made at least 6 months prior to the end of the current period.

III. The high risk pool administrator shall perform such functions relating to the plan as may be as assigned to it, including:

(b) The payment of claims and the development of procedures to ensure that each claim is promptly paid;

(e) The development of procedures to ensure that medical utilization reviews and grievance determinations are conducted in a fair and timely manner and in accordance with all statutory and regulatory requirements; and

(f) Other necessary functions to assure timely payment of benefits to covered persons under the pool.

IV. The high risk pool administrator shall submit regular reports to the association and the commissioner regarding the operation of the pool. The frequency, content and form of the report shall be specified in the contract between the association and the high risk pool administrator.

V. Following the close of each calendar year, the high risk pool administrator shall determine net written and earned premiums, the expense of administration, and the paid and incurred losses for the year and report this information to the association and the commissioner on a form prescribed by the commissioner.

VI. The high risk pool administrator shall be paid as provided in the contract between the association and the high risk pool administrator.

VII. The association shall submit the contract between itself and the high risk pool administrator to the commissioner for approval.

VIII. The association may select more than one administrator for the high risk pool.

I. Premiums charged for the policies issued by the plan shall be based on the standard risk rate calculated pursuant to paragraph II of this section.

II. The standard risk rate shall be calculated using the average rate, based on the lowest allowable health status factor, for health benefit plans or policies which are presently available in

New Hampshire and adjusted for the difference in the actuarial value of the pool's plans relative to these available plans using the factors derived pursuant to RSA 404-G:5-a, II.

III. Premium rates for coverage under the plan may not be less than 125 percent and may not exceed 150 percent of the standard risk rate pursuant to paragraph II of this section. The association shall charge high risk pool enrollees a premium charge based on the average rate for the plan adjusted for the attained age of the high risk pool enrollee. The adjustment for attained age shall conform to the provisions of RSA 420-G.

IV. All premium rates and rate schedules shall be submitted to the commissioner for approval.

I. An individual who is a New Hampshire resident shall be eligible for coverage through the high risk pool if:

(a) The individual has applied to a carrier of individual health insurance for coverage that is substantially similar to the coverage that is available through the pool, and the carrier has refused to write or issue that coverage to that individual because of his or her health or medical condition;

(b) The individual has applied to a carrier of individual health insurance for coverage that is substantially similar to the coverage that is available through the pool, and such application has been accepted, but at a premium rate exceeding the rate available through the pool;

(d) The individual is an "eligible individual" as defined in section 2741(b) of the Public Health Service Act.

II. The association shall promulgate a list of medical or health conditions for which a person shall be eligible for plan coverage without applying for health insurance coverage. Persons who can demonstrate the existence or history of any medical or health conditions on the list promulgated by the association shall not be required to provide evidence of a notice of rejection or refusal. The list shall be effective on the first day of the operation of the pool and may be amended from time to time as may be appropriate.

III. Each resident dependent of a person who is eligible for pool coverage shall also be eligible for pool coverage. If the primary insured is a child, resident family members shall also be eligible for pool coverage.

IV. New Hampshire residents who are insured through an individual policy shall be eligible for pool coverage only if the rate assessed by the individual carrier exceeds the pool rate.

(a) The individual is eligible for employer sponsored health coverage, including continuation of group coverage, as either an employee or an eligible dependent; or

(b) The individual is eligible for publicly funded health insurance coverage, including Medicare, Medicaid or Title XXI; or

(c) The individual's premiums are paid for or reimbursed by the health care provider, except if the person is an "eligible individual" as defined in section 2741(b) of the Public Health Service Act.

(e) After the second of 2 successive inquiries made by the plan concerning the person's eligibility or place of residence to which the person does not reply, provided the person has 90 days to respond to each inquiry.

I. The pool shall be subject to examination and regulation by the insurance department.

II. The following provisions of title 37 shall apply to the pool to the extent applicable and

inconsistent with the express provisions of this chapter: RSA 415:5, 415:6, 415:6-a, 415:6-b, 415:6-c, 415:6-f, 415:6-g, 415:6-h, 415:7, 415:9 - 415:13, 415:22, 415:22-a, 415:22-b, 415:23, RSA 415-A, RSA 417, RSA 420-B:8, 420-B:8-b, 420-B:8-d, 420-B:8-e, 420-B:8-ee, 420-B:8-f, 420-B:8-ff, 420-B:8-g, 420-B:8-gg, 420-B:8-h, 420-B:8-i, 420-B:8-j, 420-B:8-k, 420-B:8-m, 420-B:11-12, RSA 420-C, RSA 420-E:4, RSA 420-G:7, 420-G:8, 420-G:11, RSA 420-H, RSA 420-I, and RSA 420-J:3. For the purposes of this chapter, the pool shall be deemed an insurer, pool coverage shall be deemed individual health insurance, and pool coverage contracts shall be deemed policies.

404-G:7 Examination and Annual Report. The association shall be subject to examination by the commissioner. The board of directors shall submit to the commissioner each year, not later than 120 days after the association's fiscal year, a financial report in a form approved by the commissioner and a report of its activities during the proceeding fiscal year. The report shall summarize the activities of the risk sharing mechanism and the high risk pool in the preceding calendar year, including the net written and earned premiums, enrollment, the expense of administration, and the paid and incurred losses. The association's fiscal year shall be the calendar year.

295:12 New Paragraphs; Notice to Residents; Unfair Referral to the Pool. Amend RSA 420-G:5 by inserting after paragraph III the following new paragraphs:

IV. Individual health insurance carriers shall be responsible for ascertaining the eligibility of any individual applicant or insured for high risk pool coverage. If a carrier determines that an individual meets any of the eligibility criteria set forth in RSA 404-G:5-e, the carrier shall give the individual written notice, with the declination of coverage, the coverage offering or upon a rate increase at renewal. The notice shall include information about available benefits and exclusions of high risk pool coverage and the name, address, and telephone number of the pool administrator or the administrator's designee.

V. It shall constitute an unfair trade practice under RSA 417 for an insurer, insurance producer, or third party administrator to refer an individual employee to the pool, or arrange for an individual employee to apply to the pool, for the purpose of separating that employee from group health insurance coverage provided in connection with the employee's employment.

295:14 Emergency Rules. In the event that approvals required for the high risk pool have not been obtained by July 1, 2002, the commissioner of insurance may adopt emergency rules to establish a high risk pool.

295:15 New Section; Biannual Report Required. Amend RSA 404-G by inserting after section 1 the following new section:

404-G:1-a Study and Biannual Report. The commissioner shall evaluate the impact and effectiveness of RSA 404-G in effectuating the principles outlined in RSA 404-G:1, III. This review shall be based on data collected from carriers in the individual market and from the association, including but not limited to the following data elements: data on premiums and carrier profitability, carriers entering or exiting the market, products being sold, basis for high risk pool eligibility, and overall denial rate. The study shall be completed within 6 months of the availability of data on the first 2 years of operation of the high risk pool. Upon completion of the study, the commissioner shall make an initial report relative to the findings of the study to the governor, the president of the senate and the speaker of the house of representatives and shall make biannual reports to such persons thereafter.

295:16 New Section; Healthy Kids Corporation Expanded. Amend RSA 126-H by inserting after section 6 the following:

I. The department of health and human services shall work with a subcommittee that is comprised of appropriate members of the board and that includes other members as follows:

(d) One member from a community health center appointed by the Bi-State Primary Care Association.

(f) One member appointed by the University of New Hampshire School of Health and Human Services.

II. The members appointed pursuant to subparagraph I(g) shall be appointed to a 2-year term.

(a) Review information on the characteristics of New Hampshire's uninsured population, based on the results of the New Hampshire Health Insurance Coverage and Access Survey.

(b) Identify, based on the Health Insurance Coverage and Access Survey, the population groups and geographic areas that are most appropriately targeted.

(f) Research the level of premium contributions that eligible individuals would be willing to pay.

IV. The subcommittee shall elect annually from among the members a chairperson. The first meeting of the subcommittee shall be called by the commissioner of health and human services. The department of health and human services shall provide administrative staff support. The department of health and human services and the corporation shall jointly seek funding to support the subcommittee's work.

V. The subcommittee shall make an annual report relative to its findings and any recommendations for proposed legislation to the speaker of the house of representatives, the senate president, the house clerk, the senate clerk, the governor, and the state library beginning November 1, 2002.

295:17 Purpose and Scope of Healthy Kids Corporation Expanded. Amend RSA 126-H:2 to read as follows:

126-H:2 Corporation Established. There is hereby created a body politic and corporate having a distinct legal existence separate from the state and not constituting a department of state government, to be known as the New Hampshire healthy kids corporation to carry out the provisions of this chapter. The corporation is hereby deemed to be a public instrumentality and the exercise by the authority of the powers conferred by this chapter shall be deemed and held to be the performance of public and essential governmental functions of the state. [~~The corporation shall operate at no more than 5 pilot sites to be designated by the corporation, which sites may include multiple school districts.~~] The corporation shall be a private nonprofit corporation and shall have all the powers necessary to carry out the purposes of this chapter, including, but not limited to, the power to receive and accept grants, loans, or advances of funds from any public or private agency and to receive and accept from any source, contributions of money, property, labor, or any other thing of value, to be held, used, and applied for the purposes of this chapter. Notwithstanding any other provision of law, any payments made by the corporation for insurance coverage for children under this chapter, either directly or indirectly, shall be exempt from the premium tax under RSA 400-A:32.

II. Sections 1-3 of this act shall take effect on the first day that the board established in RSA 404-G has obtained all approvals for the high risk pool and policies of insurance are available through the high risk pool. The high risk pool shall not issue policies of insurance until July 1, 2002, until all approvals are obtained, or until the commissioner adopts emergency rules to establish a high risk pool, whichever comes last.

III. Section 16 shall take effect July 17, 2001

IV. Remainder shall take effect September 15, 2001)