SB 0110

CHAPTER 188

SB 110 - FINAL VERSION

AN ACT relative to small group health insurance coverage and relative to health plan loss information.

SPONSORS: Sen. Prescott, Dist 23; Sen. Clegg, Dist 14; Sen. Eaton, Dist 10; Sen. Flanders, Dist 7; Sen. Morse, Dist 22; Rep. Rogers Johnson, Rock 83; Rep. M. Carter, Hills 44; Rep. Letourneau, Rock 77; Rep. R. Wheeler, Hills 48

This bill revises the laws relative to small group health insurance. The bill changes the definition of small group employer to employers with 1-50 employees. Current law defines small group employers to have 1-100 employees. The bill establishes a legislative oversight committee on small group health insurance reform.

This bill also allows all private and public employers with at least 50 employees enrolled in their group health plan to receive health plan loss information upon request and without charge.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to small group health insurance coverage and relative to health plan loss information.

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

188:1 Definition; "Base Rate." RSA 420-G:2, I is repealed and reenacted to read as follows:

I. "Base rate" means a single rate reflecting the carrier's average cost of actual or anticipated claims for all health coverages or health benefit plans the carrier writes and maintains in a market, including the nongroup individual health insurance market and the small employer group health insurance market.

188:2 New Paragraph; Definition Added. Amend RSA 420-G:2 by inserting after paragraph IX the following new paragraph:

IX-a. "Health coverage plan rate" means a rate that is uniquely determined for each of the coverages or health benefit plans a health carrier writes and that is derived from the base rate through the application of factors that reflect actuarially demonstrated differences in expected utilization or cost attributable to differences in the coverage design and/or the provider contracts that support the coverage.

188:3 Definition of Large Employer. Amend RSA 420-G:2, XII(a) to read as follows:

XII.(a) "Large employer" means an employer that employed on average at least [~~101~~] 51 persons, on business days, during the previous calendar year.

188:4 Definition of a Small Employer. Amend RSA 420-G:2, XVI(a) to read as follows:

XVI.(a) "Small employer" means a business or organization which employed on average, one and up to [~~100~~] 50 employees, including owners and self-employed persons, on business days during the previous calendar year. A small employer is subject to this chapter whether or not it becomes part of an association, multi-employer plan, trust, or any other entity cited in RSA 420-G:3 provided it meets this definition.

188:5 Premium Rates for Small Employers. RSA 420-G:4, I is repealed and reenacted to read as follows:

I. Health carriers providing health coverage to individuals and small employers under this chapter shall be subject to the following:

(a) All premiums charged shall be guaranteed for at least 12 months, unless otherwise allowed by the commissioner.

(b) Base rate shall be established by each health carrier for all of its health coverages offered to individuals and, separately, for all of its health coverages offered to small employers.

(c) Health carriers shall calculate health coverage plan rates for each of the coverages or health benefit plans written by that carrier. Variations in health coverage plan rates shall be solely attributable to variations in expected utilization or cost due to differences in coverage design and/or the provider contracts or other provider costs associated with specific coverages and shall not reflect differences due to the nature of the groups or eligible persons assumed to select particular health coverages.

(d) In establishing the premium charged, health carriers providing coverage to individuals shall calculate a rate that is derived from the health coverage plan rate through the application of rating factors that the carrier chooses to utilize for age, health status, and tobacco use. Such factors may be utilized only in accordance with the following limitations:

(1) 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.

(2) 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.

(3) Permissible rating characteristics shall not include changes in health status after issue.

(e) In establishing the premium charged, health carriers providing coverage to small employers shall calculate a rate that is derived from the health coverage plan rate through the application of rating factors that the carrier chooses to utilize for age, group size, industry classification, geographic location, and health status. Such factors may be utilized only in accordance with the following limitations:

(1) Carriers may use the attained age of covered persons as a rating factor. However, the maximum premium differential for age as determined by ratio shall be 4 to 1 beginning with age 19.

(2) Carriers modifying such average premium for age may do so only by using the following age brackets:

50 - 54

55 - 59

60 - 64

65 +

(3) Carriers may use group size as a rating factor. However, the highest factor based on group size shall not exceed the lowest factor based on group size by more than 20 percent; provided that for groups of one, an additional 10 percent rating factor shall be allowed from the highest factor.

(4) Carriers may use the small employer group's industry classification as a rating factor. However, the highest factor based on industry classification shall not exceed the lowest factor based on industry classification by more than 20 percent.

(5) Carriers may use the small employer group's geographic location as a rating factor. However, the highest factor based on geographic location shall not exceed the lowest factor based on geographic location by more than 15 percent.

(6) Carriers may use the health status of the small employer group as a rating factor. However, the application of a health status factor shall be subject to the following limitations:

(A) The health status factor may reflect health status of covered persons, the small employer's claim experience, or the duration of coverage since health statements were last provided.

(B) Variations from the arithmetic average of the highest rate charged to the lowest rate charged shall not exceed 25 percent.

(C) Upon the renewal of a small employer policy, any increase in the premium rate that is solely attributable to changes in the health status factor from the prior year shall be no more than 15 percent.

(7) Upon the renewal of a small employer policy, a carrier is prohibited from increasing the premium rate by more than 25 percent of the rate that was charged in the preceding year. Such rate increase limitation shall not include any premium rate increase that is based on a carrier's annual cost and utilization trends or changes in the rating factor for attained age of covered persons.

(f) Each rating factor that a carrier chooses to utilize shall be reflective of claim cost variations that correlate with that factor independently of claim cost variations that correlate with any of the other allowable factors.

(g) The same rating methodology shall apply to newly covered individuals and to individuals renewing at each annual renewal date, or to new small employers and small employers renewing at each annual renewal date or anniversary date. Rating methodology shall not be construed to include health carrier incentives to individual subscribers or members to participate in wellness and fitness programs provided such incentives are approved by the insurance department.

(h) The commissioner shall not approve any filing if such filing is excessive, inadequate, or contrary to the intent of this chapter.

188:6 New Paragraph; Premium Rates. Amend RSA 420-G:4 by inserting after paragraph II the following new paragraph:

III. A health carrier, when determining the premium charged to a large employer group that employs from 51 to 100 employees, shall calculate the rate using a weighted average calculation consisting of the group's experience and the carrier's large employer group pool experience. The weight used for the group's experience shall be no more than 25 percent and the weight used for the experience of the carrier's large employer group pool shall be a minimum of 75 percent.

188:7 Medical Underwriting. RSA 420-G:5 is repealed and reenacted to read as follows:

I Health carriers providing health coverage for individuals or small employer groups may perform medical underwriting, including the use of health statements or screenings or the use of prior claims history, to the extent necessary to establish or modify premium rates as provided in RSA 420-G:4. Such underwriting shall be limited to the use of a standardized health statement for use in adjustments to rating pursuant to RSA 420-G:4. The commissioner shall, by rule, require carriers to use standardized health statements.

II. Health carriers providing health coverage for individuals may refuse to write or issue coverage to an individual because of his or her health status. Regardless of claim experience, health status, or medical history, health carriers providing health coverage for small employers shall not refuse to write or issue any of their available coverages or health benefit plans to any small employer group that elects to be covered under that plan and agrees to make premium payments and meet the other requirements of the plan.

III. Health carriers providing health coverage for small employer groups shall not knowingly provide health coverage to groups where the employer has discriminated based on health status or claims history against any employee or potential employee or his or her dependents with respect to participation in an employer-sponsored health benefit plan.

IV. Health carriers shall not offer riders or endorsements to exclude certain illnesses or health conditions in order to avoid the purpose of this chapter.

V. 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.

VI. 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.

188:8 Qualified Association Trust. RSA 420-G:10 is repealed and reenacted to read as follows:

I. A qualified association trust or other entity, as defined in RSA 420-G:2, XV, shall:

(a) Comply with the rating restrictions outlined in RSA 420-G:4 for all small employer members with 50 or fewer employees based upon the association's group experience, except that no rating factor shall be utilized without the express written consent of the association.

(b) Offer all eligible members, as defined under the applicable trust or other documents, coverage and rates on a guaranteed issue and renewable basis.

II. Nothing in this chapter shall be interpreted to limit the size of employers who may participate in coverage with a qualified association trust.

188:9 Group Health Insurance; Health Plan Loss Information. RSA 420-G:12-a is repealed and reenacted to read as follows:

I. To ensure maximum competition in the purchase of group health insurance, all private and public employers with at least 50 employees enrolled in their group health plan shall be entitled to receive their specific health plan loss information upon request and without charge. No contract between any health carrier, third-party administrator, employer group, or pool of employers shall abridge this right in any manner.

II. Upon written request from any private or public employer with 50 or more employees enrolled in its group health plan, every health carrier, third-party administrator, pooled risk management program under RSA 5-B, or any other type of multiple employer health plan shall provide that employer's loss information within 30 calendar days of receipt of the request. The loss information shall include all physician, hospital, prescription drug, and other covered medical claims specific to the employer's group plan incurred for the 12-month period paid through the 14 months which end within the 60-day period prior to the date of the request. An employer shall not be entitled by this section to more than 2 loss information requests in any 12-month period; however, nothing shall prohibit a carrier from fulfilling more frequent requests on a mutually agreed-upon basis.

III. If an employer requests loss information from an insurance agent or other authorized representative, including an administrator of a pooled risk management program or a multiple employer health plan, the agent or authorized representative shall transmit the request to the health carrier or carriers or third-party administrator within 4 working days.

188:10 Commissioner's Requested Information. Amend RSA 420-G:14-a to read as follows:

I. As authorized in accordance with RSA 420-G:14, the commissioner may request the submission of such information by carriers as is necessary to better understand the coverage history and choices of participants in the nongroup market. The commissioner shall make every attempt to ensure the reasonableness of such request, both in terms of scope and timeframe, and to limit this request to information the commissioner deems necessary to better understand the dynamics of the nongroup health insurance market and to assess the appropriateness of alternative sources of funding for the nongroup subsidy.

II. The commissioner shall request and health carriers shall supply information no later than April 1 of each year sufficient to report on the distribution of rating factors being applied to small employers. The commissioner's report shall summarize the rating factors utilized by health carriers in the preceding calendar year.

III. The commissioner shall request and health carriers shall supply information no later than April 1 of each year sufficient to report on the types of health coverage being purchased by individuals and employers by geographic area. The report shall include specific details regarding the type of coverage, including, but not limited to, co-pays, out-of-pocket maximums, network restrictions, and deductibles.

IV. The commissioner shall file the required reports by July 1 of each year with the senate president, the speaker of the house, the chairperson of the house commerce committee, and the chairperson of the senate insurance committee.

188:11 Preexisting Condition Exclusion Periods. Amend RSA 420-G:7, I(a) to read as follows:

(a) No preexisting condition exclusion shall extend beyond a period of [3] 9 consecutive months [while the person's health coverage is in force and during which the person incurred no medical treatment expenses in connection with the preexisting condition, or beyond 6 consecutive months while the person has been continuously covered and actively at work full-time, or beyond 12 months] after the effective date of the person's health coverage; and

188:12 Preexisting Condition Exclusion Periods. Amend RSA 420-G:7, II(a) to read as follows:

(a) No preexisting condition exclusion period shall extend beyond a period of [3] 9 consecutive months [ending while the individual's or covered person's health coverage is in force and during which the individual incurred no medical care treatment expenses in connection with the preexisting condition, or beyond 9 months following] after the effective date of the person's health coverage.

188:13 New Section; Legislative Oversight Committee Established. Amend RSA 420-G by inserting after section 14-b the following new section:

I. There is hereby established a joint legislative oversight committee on small group health insurance reform. The committee shall review the reports filed by the commissioner pursuant to RSA 420-G:14-a, monitor the small group health insurance market in the state, and monitor the effect of SB 110 of the 2003 legislative session. The committee shall make recommendations for any legislative changes the committee deems necessary. The committee shall include 3 members of the house, appointed by the speaker of the house and 2 senators, appointed by the president of the senate.

II. The committee shall submit a written report of its findings and recommendations to the president of the senate, the speaker of the house of representatives, and the chairpersons of the house commerce committee and senate insurance committee on November 1 of each year.

188:14 Repeal. RSA 420-G:4, I(e)(7) relative to increasing the premium rate, is repealed.

188:15 Repeal. RSA 420-G:4, III, relative to premium rates for certain large employers, is repealed.

188:16 Repeal. RSA 420-G:8, I(b), relative to medical underwriting, is repealed.

188:17 Repeal. RSA 420-G:14-c, relative to a legislative oversight committee, is repealed.

II. Section 14 shall take effect January 1, 2005.

III. Section 15 shall take effect January 1, 2006

IV. Section 17 shall take effect January 1, 2009.

V. Remainder shall take effect January 1, 2004)