McKENNA, WAGNER AND LIESE.
Read 1st time January 13, 2000, and 1000 copies ordered printed.
ANNE C. WALKER, Chief Clerk
AN ACT
To repeal sections 376.962, 376.966, 376.970, 376.975, 376.980, 376.986, 379.930, 379.932, 379.934, 379.936 and 379.940, RSMo 1994, relating to health insurance, and to enact in lieu thereof fourteen new sections relating to the same subject.
Section A. Sections 376.962, 376.966, 376.970, 376.975, 376.980, 376.986, 379.930, 379.932, 379.934, 379.936 and 379.940, RSMo 1994, are repealed and fourteen new sections enacted in lieu thereof, to be known as sections 376.962, 376.966, 376.970, 376.975, 376.980, 376.986, 376.1530, 376.1533, 379.930, 379.932, 379.934, 379.936, 379.940 and 379.941, to read as follows:
376.962. 1. The board of directors on behalf of the pool shall submit to the director a plan of operation for the pool and any amendments thereto necessary or suitable to assure the fair, reasonable and equitable administration of the pool. After notice and hearing, the director shall approve the plan of operation, provided it is determined to be suitable to assure the fair, reasonable and equitable administration of the pool, and it provides for the sharing of pool gains or losses on an equitable proportionate basis. The plan of operation shall become effective upon approval in writing by the director consistent with the date on which the coverage [under] pursuant to sections 376.960 to 376.989 becomes available. If the pool fails to submit a suitable plan of operation within one hundred eighty days after the appointment of the board of directors, or at any time thereafter fails to submit suitable amendments to the plan, the director shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this section. Such rules shall continue in force until modified by the director or superseded by a plan submitted by the pool and approved by the director.
2. In its plan, the board of directors of the pool shall:
(1) Establish procedures for the handling and accounting of assets and moneys of the pool;
(2) Select an administering insurer in accordance with section 376.968;
(3) Establish procedures for filling vacancies on the board of directors;
(4) Establish procedures for the collection of assessments from all members to provide for claims paid under the plan and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made. The level of payments shall be established by the board pursuant to the provisions of section 376.973. Assessment shall occur at the end of each calendar year and shall be due and payable within thirty days of receipt of the assessment notice. No assessment shall exceed the amount an insurer paid in premium tax the previous year;
(5) Develop and implement a program to publicize the existence of the plan, the eligibility requirements, and procedures for enrollment, and to maintain public awareness of the plan. Information on the plan shall be available on an Internet web site and shall include an explanation of the various plans, premiums charge, an application and any other information necessary to enroll in the plan.
376.966. 1. No employee shall involuntarily lose his or her group coverage by decision of his or her employer on the grounds that such employee may subsequently enroll in the pool. The department of insurance shall have authority to promulgate rules and regulations to enforce this subsection.
2. Any individual who is a resident of this state shall be eligible for pool coverage, except the following:
(1) Persons who have, on the date of issue of coverage by the pool, coverage under health insurance or an insurance arrangement except that this exclusion shall not apply to a person who has such coverage but whose premiums have increased to [three hundred percent or more of rates established by the board as applicable for individual standard risks] an amount greater than the premium charged by the pool for their least expensive plan;
(2) Any person who is at the time of pool application receiving health care benefits [under] pursuant to section 208.151, RSMo;
(3) Any person having terminated coverage in the pool unless twelve months have elapsed since such termination;
(4) Any person on whose behalf the pool has paid out one million dollars in benefits;
(5) Inmates of public institutions and persons eligible for public programs;
(6) Any person whose medical condition which precludes other insurance coverage is directly due to alcohol or drug abuse or self-inflicted injury;
(7) Any person who is eligible for continuation or conversion of insurance coverage [under] pursuant to 29 U.S.C. 1161 to 29 U.S.C. 1168, 42 U.S.C. 300bb-1 to 42 U.S.C. 300bb-8, sections 376.395 to 376.404, or section 376.428, except that this exclusion shall not apply to a person who has such coverage but whose premiums have increased to [three hundred percent or more of rates established by the board as applicable for individual standard risks] an amount greater than the premium charged by the pool for their least expensive plan; or
(8) Any person who is eligible for Medicare coverage.
3. Any person who ceases to meet the eligibility requirements of this section may be terminated at the end of his policy period.
4. Any person whose health insurance coverage is involuntarily terminated for any reason other than nonpayment of premium or any person whose premiums have increased to [three hundred percent or more of rates established by the board as applicable for individual standard risks] an amount greater than the premium charged by the pool for their least expensive plan, may apply for coverage under the plan. If such coverage is applied for within sixty days after the involuntary termination and the application is approved and if premiums are paid for the entire coverage period, the effective date of the coverage shall be the date of termination of the previous coverage.
376.970. 1. The administering insurer shall serve for a period of three years subject to removal for cause. At least one year prior to the expiration of each three-year period of service by an administering insurer, the board shall invite all insurers, including the current administering insurer, to submit bids to serve as the administering insurer for the succeeding three-year period. Selection of the administering insurer for the succeeding period shall be made at least six months prior to the end of the current three-year period.
2. The administering insurer shall:
(1) Perform all eligibility and administrative claim-payment functions relating to the pool;
(2) Establish a premium billing procedure for collection of premium from insured persons. Billings shall be made on a period basis as determined by the board;
(3) Perform all necessary functions to assure timely payment of benefits to covered persons under the pool including:
(a) Making available information relating to the proper manner of submitting a claim for benefits to the pool and distributing forms upon which submission shall be made;
(b) Evaluating the eligibility of each claim for payment by the pool;
(4) Submit regular reports to the board regarding the operation of the pool. The frequency, content and form of the report shall be determined by the board;
(5) Following the close of each calendar year, 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 board and the department on a form prescribed by the director;
(6) Be paid as provided in the plan of operation for its expenses incurred in the performance of its services;
(7) Pay the finder's fee to insurance agents. Such fee shall not be less than fifty dollars nor more than seventy-five dollars.
376.975. Each member's proportion of participation in the pool shall be determined annually by the board based on annual statements and other reports deemed necessary by the board and filed by the member with it. Any deficit incurred by the pool shall be recouped by assessments apportioned as provided in subsections 1, 2, and 3 of section 376.973 by the board among members. The amount of assessments incurred by each member of the pool shall be allowed as an offset against certain taxes, and shall be subject to certain limitations, as follows: Each pool member subject to chapter 148, RSMo, may deduct from premium taxes payable for any calendar year to the state any and all assessments paid for the same year pursuant to sections 376.960 to 376.989. All assessments, for a fiscal year, shall not exceed the net premium tax due and payable by such member in the previous year. [If the assessment exceeds any premium tax due or payable in such year, the excess shall be a credit or offset carried forward against any premium tax due or payable in succeeding years until the excess is exhausted.] Any deficits after the assessment is made will be made up out of general revenue or from any source of revenue designated for this purpose.
376.980. Each pool member exempt from chapter 148, RSMo, shall be allowed to offset against any sales or use tax on purchases due, paid, or payable in the calendar year in which such assessments are made. Further, such assessment, for any fiscal year, shall not exceed one percent of nongroup premium income, exclusive of medicare supplement programs, received in the previous year. [If the assessment exceeds the part of any sales tax or use tax due or payable in such year, the excess shall be a credit or offset carried forward against the part of any sales tax or use tax due or payable in succeeding years until the excess is exhausted.] The director of revenue, in consultation with the board, shall promulgate and enforce reasonable rules and regulations and prescribe forms for the administration and enforcement of this law.
376.986. 1. The pool shall offer major medical expense coverage to every person eligible for coverage [under] pursuant to section 376.966. The coverage to be issued by the pool and its schedule of benefits, exclusions and other limitations, shall be established by the board with the advice and recommendations of the pool members, and such plan of pool coverage shall be submitted to the director for approval. The pool shall also offer coverage for drugs and supplies requiring a medical prescription and coverage for patient education services, to be provided at the direction of a physician, encompassing the provision of information, therapy, programs, or other services on an inpatient or outpatient basis, designed to restrict, control, or otherwise cause remission of the covered condition, illness or defect. The pool shall offer in areas where appropriate provider plans or any other plans which would be similar to the health in the regular health insurance market.
2. In establishing the pool coverage the board shall take into consideration the levels of health insurance provided in this 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 health insurance provided through a representative number of insurers in this state.
3. Premiums charged for pool coverage may not be unreasonable in relation to the benefits provided, the risk experience and the reasonable expenses of providing the coverage. Separate schedules of premium rates based on age, sex and geographical location may apply for individual risks.
4. The pool shall determine the standard risk rate by calculating the average individual standard rate charged by the five insurers with the largest number of individual contracts in force. In the event five insurers do not offer comparable coverage, the standard risk rate shall be established using reasonable actuarial techniques and shall reflect anticipated experience and expenses for such coverage. Initial rates for pool coverage shall not be less than one hundred [fifty] twenty-five percent of rates established as applicable for individual standard risks. Subsequent rates shall be established to provide fully for the expected costs of claims including recovery of prior losses, expenses of operation, investment income of claim reserves, and any other cost factors subject to the limitations described herein. In no event shall pool rates exceed [two hundred] one hundred seventy-five percent of rates applicable to individual standard risks. All rates and rate schedules shall be submitted to the director for approval. The pool shall develop premiums above one hundred twenty-five percent based on the income of the applicant. The premiums shall be adjusted on the relationship of the applicant's income to poverty level. Premium discounts shall not be available to those persons over two hundred fifty percent of poverty.
5. Pool coverage established pursuant to this section shall provide an appropriate high and low deductible to be selected by the pool applicant. The deductibles and coinsurance factors may be adjusted annually in accordance with the medical component of the consumer price index.
6. Pool coverage shall exclude charges or expenses incurred during the first twelve months following the effective date of coverage as to any condition which, during the six-month period immediately preceding the effective date of coverage, had manifested itself in such a manner as would cause an ordinarily prudent person to seek diagnosis, care or treatment or for which medical advice, care or treatment was recommended or received as to such condition. Such preexisting condition exclusions shall be waived to the extent to which similar exclusions, if any, have been satisfied under any prior health insurance coverage which was involuntarily terminated, if that application for pool coverage is made not later than sixty days following such involuntary termination and, in such case, coverage in the pool shall be effective from the date on which such prior coverage was terminated.
7. Benefits otherwise payable under pool coverage shall be reduced by all amounts paid or payable through any other health insurance, or insurance arrangement, 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 payable under or provided pursuant to any state or federal law or program except medicaid. The insurer or the pool shall have a cause of action against an eligible person for the recovery of the amount of benefits paid which are not for covered expenses. Benefits due from the pool may be reduced or refused as a setoff against any amount recoverable under this subsection.
8. Medical expenses shall include expenses for comparable benefits for those who rely solely on spiritual means through prayer for healing, if such coverage is available in standard market health plans.
9. Effective January 1, 2001, no more than three thousand five hundred persons shall participate in the plan.
376.1530. 1. Premium rates for any block of individual health benefit plan business issued on or after January 1, 2001, by a health carrier shall be limited to the composite effect of allocating costs among the following:
(1) After making actuarial adjustments based upon benefit design and rating characteristics, the filed rate for any block of business shall not exceed the filed rate for any other block of business by more than twenty percent;
(2) The filed rate for any block of business shall not exceed the filed rate for any other block of business by more than thirty percent due to factors relating to rating characteristics;
(3) The filed rate for any block of business shall not exceed the filed rate for any other block of business by more than thirty percent due to any other factors approved by the director;
(4) Premium rates for individual health benefit plans shall comply with the requirements of this section notwithstanding any assessments paid or payable by the carrier pursuant to any reinsurance program or risk adjustment mechanism;
(5) Any adjustment applied to a single block of business shall not exceed the adjustment applied to all blocks of business by more than fifteen percent due to the claim experience or health status of that block of business;
(6) For purposes of this subsection, an individual health benefit plan that contains a restricted network provision shall not be considered similar coverage to an individual health benefit plan that does not contain such a provision; provided that the differential in payments made to network providers results in substantial differences in claim costs.
2. A carrier shall not transfer an individual involuntarily into or out of a block of business.
3. The director may suspend the application of subdivision (1) of subsection 1 of this section for a specified period as to the premium rates applicable to one or more blocks of business of a carrier for one or more rating periods upon a filing by the carrier requesting the suspension and a finding by the director that the suspension is reasonable in light of the financial condition of the carrier.
4. A carrier shall make a reasonable disclosure at the time of the offering for sale of any individual health benefit plan of all of the following:
(1) The extent to which premium rates for a specified individual are established or adjusted based upon rating characteristics;
(2) The carrier's right to change premium rates and the factors, other than claim experience, that affect changes in premium rates;
(3) The provisions relating to renewal of policies and contracts;
(4) Any provisions relating to any preexisting condition;
(5) All plans offered by the carrier, the prices of such plans and the availability of such plans to the individual.
5. A carrier shall maintain at its principal place of business a complete detailed description of its rating practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles.
6. A carrier shall file with the director on or before March fifteenth of each year an actuarial certification certifying that the carrier is in compliance with this section and section 376.1533 and that the rating methods of the carrier are actuarially sound. The certification shall be in a form and manner and shall contain information as specified by the director. A copy of the certification shall be retained by the carrier at its principal place of business. Rate adjustments made to comply with this section are exempt from loss ratio requirements.
7. A carrier shall make the information and documentation maintained pursuant to subsection 4 of this section available to the director upon request. The information and documentation shall be considered proprietary and trade secret information and shall not be subject to disclosure by the director to persons outside of the department except as agreed to by the carrier or as ordered by a court of competent jurisdiction.
376.1533. 1. An individual health benefit plan shall be renewable with respect to an eligible individual or dependents, at the option of the individual, except for one or more of the following reasons:
(1) The individual fails to pay or to make timely payment of premiums or contributions pursuant to the terms of the individual health benefit plan;
(2) The individual performs an act or practice constituting fraud or makes an intentional misrepresentation of a material fact under the terms of the individual health benefit plan;
(3) A decision by the individual carrier or organized delivery system to discontinue offering a particular type of individual health benefit plan in the state's individual insurance market. An individual health benefit plan may be discontinued by the carrier or organized delivery system in that market with the approval of the director and only if the carrier or organized delivery system does all of the following:
(a) Provides advance notice of its decision to discontinue such plan to the director. Notice to the director, at a minimum, shall be no less than three days prior to the notice provided for in paragraph (b) of this subdivision to affected individuals;
(b) Provides notice of its decision not to renew such plan to all affected individuals no less than ninety days prior to the nonrenewal date of any discontinued individual health benefit plans;
(c) Offers to each individual of the discontinued plan the option to purchase any other health plan currently offered by the carrier or organized delivery system to individuals in this state;
(d) Acts uniformly in opting to discontinue the plan and in offering the option pursuant to paragraph (c) of this subdivision, without regard to the claims experience of any affected eligible individual or beneficiary under the discontinued plan or to a health status-related factor relating to any covered individuals or beneficiaries who may become eligible for the coverage;
(4) A decision by the carrier or organized delivery system to discontinue offering and to cease to renew all of its individual health benefit plans delivered or issued for delivery to individuals in this state. A carrier or organized delivery system making such decision shall do all of the following:
(a) Provide advance notice of its decision to discontinue such plan to the director. Notice to the director, at a minimum, shall be no less than three days prior to the notice provided for in paragraph (b) of this subdivision to affected individuals;
(b) Provide notice of its decision not to renew such plan to all individuals and to the director in each state in which an individual under the discontinued plan is known to reside no less than one hundred eighty days prior to the nonrenewal of the plan;
(5) The director finds that the continuation of the coverage is not in the best interests of the individuals, or would impair the carrier's or organized delivery system's ability to meet its contractual obligations.
2. At the time of coverage renewal, a carrier or organized delivery system may modify the health insurance coverage for a policy form offered to individuals in the individual market so long as such modification is consistent with state law and effective on a uniform basis among all individuals with that policy form.
3. An individual carrier or organized delivery system that elects not to renew an individual health benefit plan pursuant to subdivision (4) of subsection 1 of this section shall not write any new business in the individual market in this state for a period of five years after the date of notice to the director.
4. The provisions of this section with respect to a carrier or organized delivery system doing business in one established geographic service area of the state applies only to such carrier's or organized delivery system's operations in that service area.
5. A carrier or organized delivery system offering coverage through a network plan is not required to renew or continue in force coverage or to accept applications from an individual who no longer resides or lives in, or is no longer employed in, the service area of such carrier or organized delivery system, or no longer resides or lives in, or is no longer employed in, a service area for which the carrier is authorized to do business, but only if coverage is not offered or terminated uniformly without regard to health status-related factors of a covered individual.
6. A carrier or organized delivery system offering coverage through a bona fide association is not required to renew or continue in force coverage or to accept applications from an individual through an association if the membership of the individual in the association on which the basis of coverage is provided ceases, but only if the coverage is not offered or terminated pursuant to this subsection uniformly without regard to health status-related factors of a covered individual.
379.930. 1. Sections 379.930 to 379.952 shall be known and may be cited as the "Small Employer Health Insurance Availability Act".
2. For the purposes of sections 379.930 to 379.952:
(1) "Actuarial certification" means a written statement by a member of the American Academy of Actuaries or other individual acceptable to the director that a small employer carrier is in compliance with the provisions of section 379.936, based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods used by the small employer carrier in establishing premium rates for applicable health benefit plans;
(2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, a specified entity or person;
(3) "Agent" means "insurance agent" as that term is defined in section 375.012, RSMo;
(4) "Base premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or that could have been charged under the rating system for that class of business, by the small employer carrier to small employers with similar case characteristics for health benefit plans with the same or similar coverage;
(5) "Basic health benefit plan" means a lower cost health benefit plan developed pursuant to section 379.944;
(6) "Board" means the board of directors of the program established pursuant to sections 379.942 and 379.943;
(7) "Broker" means "broker" as that term is defined in section 375.012, RSMo;
(8) "Carrier" means any entity that provides health insurance or health benefits in this state. For the purposes of sections 379.930 to 379.952, carrier includes an insurance company, health services corporation, fraternal benefit society, health maintenance organization, multiple employer welfare arrangement specifically authorized to operate in the state of Missouri, or any other entity providing a plan of health insurance or health benefits subject to state insurance regulation;
(9) "Case characteristics" means demographic or other objective characteristics of a small employer that are considered by the small employer carrier in the determination of premium rates for the small employer, provided that claim experience, health status and duration of coverage since issue shall not be case characteristics for the purposes of sections 379.930 to 379.952;
(10) "Class of business" means all or a separate grouping of small employers established pursuant to section 379.934;
(11) "Committee" means the health benefit plan committee created pursuant to section 379.944;
(12) "Control" shall be defined in manner consistent with chapter 382, RSMo;
(13) "Dependent" means a spouse or an unmarried child under the age of nineteen years; an unmarried child who is a full-time student under the age of twenty-three years and who is financially dependent upon the parent; or an unmarried child of any age who is medically certified as disabled and dependent upon the parent;
(14) "Director" means the director of the department of insurance of this state;
(15) "Eligible employee" means an employee who works on a full-time basis and has a normal work week of thirty or more hours, or a permanent part-time employee who has a normal work week of twenty or more hours. For purposes of this definition, a permanent part-time employee may be treated differently regarding employer contributions to the employee's plan. The term includes a sole proprietor, a partner of a partnership, and an independent contractor, if the sole proprietor, partner or independent contractor is included as an employee under a health benefit plan of a small employer, but does not include an employee who works on a part-time, temporary or substitute basis. For purposes of sections 379.930 to 379.952, a person, his or her spouse and his or her minor children shall constitute only one eligible employee when they are employed by the same small employer;
(16) "Established geographic service area" means a geographical area, as approved by the director and based on the carrier's certificate of authority to transact insurance in this state, within which the carrier is authorized to provide coverage;
(17) "Health benefit plan" means any hospital or medical policy or certificate, health services corporation contract, or health maintenance organization subscriber contract. Health benefit plan does not include a policy of individual accident and sickness insurance or hospital supplemental policies having a fixed daily benefit, or accident-only, specified disease-only, credit, dental, vision, medicare supplement, long-term care, or disability income insurance, or coverage issued as a supplement to liability insurance, worker's compensation or similar insurance, or automobile medical payment insurance;
(18) "Index rate" means, for each class of business as to a rating period for small employers with similar case characteristics, the arithmetic mean of the applicable base premium rate and the corresponding highest premium rate;
(19) "Late enrollee" means an eligible employee or dependent who requests enrollment in a health benefit plan of a small employer following the initial enrollment period for which such individual is entitled to enroll under the terms of the health benefit plan, provided that such initial enrollment period is a period of at least thirty days. However, an eligible employee or dependent shall not be considered a late enrollee if:
(a) The individual meets each of the following:
a. The individual was covered under qualifying previous coverage at the time of the initial enrollment;
b. The individual lost coverage under qualifying previous coverage as a result of termination of employment or eligibility, the involuntary termination of the qualifying previous coverage, death of a spouse or divorce;
c. The individual requests enrollment within thirty days after termination of the qualifying previous coverage;
(b) The individual is employed by an employer that offers multiple health benefit plans and the individual elects a different plan during an open enrollment period; or
(c) A court has ordered coverage be provided for a spouse or minor or dependent child under a covered employee's health benefit plan and request for enrollment is made within thirty days after issuance of the court order;
(20) "New business premium rate" means, for each class of business as to a rating period, the lowest premium rate charged or offered, or which could have been charged or offered, by the small employer carrier to small employers with similar case characteristics for newly issued health benefit plans with the same or similar coverage;
(21) "Plan of operation" means the plan of operation of the program established pursuant to sections 379.942 and 379.943;
(22) "Premium" means all moneys paid by a small employer and eligible employees as a condition of receiving coverage from a small employer carrier, including any fees or other contributions associated with the health benefit plan;
(23) "Producer" includes an insurance agent or broker;
(24) "Program" means the Missouri small employer health reinsurance program created pursuant to sections 379.942 and 379.943;
(25) "Qualifying previous coverage" and "qualifying existing coverage" mean benefits or coverage provided under:
(a) Medicare or Medicaid;
(b) An employer-based health insurance or health benefit arrangement that provides benefits similar to or exceeding benefits provided under the basic health benefit plan; or
(c) An individual health insurance policy (including coverage issued by a health maintenance organization, health services corporation or a fraternal benefit society) that provides benefits similar to or exceeding the benefits provided under the basic health benefit plan, provided that such policy has been in effect for a period of at least one year;
(26) "Rating period" means the calendar period for which premium rates established by a small employer carrier are assumed to be in effect;
(27) "Restricted network provision" means any provision of a health benefit plan that conditions the payment of benefits, in whole or in part, on the use of health care providers that have entered into a contractual arrangement with the carrier pursuant to section 354.400, RSMo, et seq. to provide health care services to covered individuals;
(28) "Small employer" means any person, firm, corporation, partnership or association that is actively engaged in business that, on at least fifty percent of its working days during the preceding calendar quarter, employed not less than three nor more than twenty-five eligible employees, the majority of whom were employed within this state. In determining the number of eligible employees, companies that are affiliated companies, or that are eligible to file a combined tax return for purposes of state taxation, shall be considered one employer;
(29) "Small employer carrier" means a carrier that offers health benefit plans covering eligible employees of one or more small employers in this state;
(30) "Standard health benefit plan" means a health benefit plan developed pursuant to section 379.944.
379.932. 1. Sections 379.930 to 379.952 shall apply to any health benefit plan that provides coverage to the employees of a small employer in this state if any of the following conditions are met:
(1) Any portion of the premium or benefits is paid by or on behalf of the small employer;
(2) An eligible employee or dependent is reimbursed, whether through wage adjustments or otherwise, by or on behalf of the small employer for any portion of the premium; or
(3) The health benefit plan is treated by the employer or any of the eligible employees or dependents as part of a plan or program for the purposes of section 162, section 125 or section 106 of the federal Internal Revenue Code.
2. (1) Except as provided in subdivision (2) of this subsection, for the purposes of sections 379.930 to 379.952, carriers that are affiliated companies or that are eligible to file a consolidated tax return shall be treated as one carrier and any restrictions or limitations imposed by [this act] sections 379.930 to 379.952 shall apply as if all health benefit plans delivered to small employers in this state by such affiliated carriers were issued by one carrier.
(2) An affiliated carrier that is a health maintenance organization having a certificate of authority [under] pursuant to section 354.400, et seq., RSMo, may be considered to be a separate carrier for the purposes of sections 379.930 to 379.952.
(3) Unless otherwise authorized by the director, a small employer carrier shall not enter into one or more ceding arrangements with respect to health benefit plans delivered or issued for delivery to small employers in this state if such arrangements would result in less than fifty percent of the insurance obligation or risk for such health benefit plans being retained by the ceding carrier.
3. Sections 379.930 to 379.952 shall not apply to any plan or program when the full-time employees pay the total cost of the health benefit plan.
379.934. 1. A small employer carrier may establish a class of business only to reflect substantial differences in expected claims experience or administrative costs related to the following reasons:
(1) The small employer carrier uses more than one type of system for the marketing and sale of health benefit plans to small employers;
(2) The small employer carrier has acquired a class of business from another small employer carrier; however, the carrier shall not exceed rates established by law regarding blocks of business; or
(3) The small employer carrier provides coverage to one or more association groups that meet the requirements of subdivision (5) of subsection 1 of section 376.421, RSMo.
2. A small employer carrier may establish up to nine separate classes of business [under] pursuant to subsection 1 of this section. A small employer carrier which immediately prior to the effective date of sections 379.930 to 379.952 had established more than nine separate classes of business may, on the effective date of sections 379.930 to 379.952, establish no more than twelve separate classes of business, and shall reduce the number of such classes to eleven within one year after the effective date of sections 379.930 to 379.952; ten within two years after such date; and nine within three years after such date.
3. The director may promulgate rules to provide for a period of transition in order for a small employer carrier to come into compliance with subsection 2 of this section in the instance of acquisition of an additional class of business from another small employer carrier.
4. The director may approve the establishment of additional classes of business upon application to the director and a finding by the director that such action would enhance the efficiency and fairness of the small employer marketplace.
379.936. 1. Premium rates for health benefit plans subject to sections 379.930 to 379.952 shall be subject to the following provisions:
(1) The index rate for a rating period for any class of business shall not exceed the index rate for any other class of business by more than twenty percent;
(2) For a class of business, the premium rates charged during a rating period to small employers with similar case characteristics for the same or similar coverage, or the rates that could be charged to such employers under the rating system for that class of business shall not vary from the index rate by more than twenty-five percent of the index rate;
(3) The percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:
(a) The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a health benefit plan into which the small employer carrier is no longer enrolling new small employers, the small employer carrier shall use the percentage change in the base premium rate, provided that such change does not exceed, on a percentage basis, the change in the new business premium rate for the most similar health benefit plan into which the small employer carrier is actively enrolling new small employers;
(b) Any adjustment, not to exceed fifteen percent annually and adjusted pro rata for rating periods of less than one year, due to the claim experience, health status or duration of coverage of the employees or dependents of the small employer as determined from the small employer carrier's rate manual for the class of business; and
(c) Any adjustment due to change in coverage or change in the case characteristics of the small employer, as determined from the small employer carrier's rate manual for the class of business;
(4) Adjustments in rates for claim experience, health status and duration of coverage shall not be charged to individual employees or dependents. Any such adjustment shall be applied uniformly to the rates charged for all employees and dependents of the small employer;
(5) Premium rates for health benefit plans shall comply with the requirements of this section notwithstanding any assessments paid or payable by small employer carriers pursuant to sections 379.942 and 379.943;
(6) A small employer carrier may utilize the employer's industry as a case characteristic in establishing premium rates, provided that the rate factor associated with any industry classification shall not vary by more than ten percent from the arithmetic mean of the highest and lowest rate factors associated with all industry classifications;
(7) In the case of health benefit plans issued prior to July 1, 1993, a premium rate for a rating period may exceed the ranges set forth in subdivisions (1) and (2) of this subsection for a period of three years following July 1, 1993. In such case, the percentage increase in the premium rate charged to a small employer for a new rating period shall not exceed the sum of the following:
(a) The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a health benefit plan into which the small employer carrier is no longer enrolling new small employers, the small employer carrier shall use the percentage change in the base premium rate, provided that such change does not exceed, on a percentage basis, the change in the new business premium rate for the most similar health benefit plan into which the small employer carrier is actively enrolling new small employers;
(b) Any adjustment due to change in coverage or change in the case characteristics of the small employer, as determined from the carrier's rate manual for the class of business;
(8) (a) Small employer carriers shall apply rating factors, including case characteristics, consistently with respect to all small employers in a class of business. Rating factors shall produce premiums for identical groups which differ only by amounts attributable to plan design and do not reflect differences due to the nature of the groups assumed to select particular health benefit plans;
(b) A small employer carrier shall treat all health benefit plans issued or renewed in the same calendar month as having the same rating period;
(9) For the purposes of this subsection, a health benefit plan that utilizes a restricted provider network shall not be considered similar coverage to a health benefit plan that does not utilize such a network, provided that utilization of the restricted provider network results in substantial differences in claims costs;
(10) A small employer carrier shall not use case characteristics, other than age, sex, industry, geographic area, family composition, and group size without prior approval of the director;
(11) The director may promulgate rules to implement the provisions of this section and to assure that rating practices used by small employer carriers are consistent with the purposes of sections 379.930 to 379.952, including:
(a) Assuring that differences in rates charged for health benefit plans by small employer carriers are reasonable and reflect objective differences in plan design, not including differences due to the nature of the groups assumed to select particular health benefit plans; and
(b) Prescribing the manner in which case characteristics may be used by small employer carriers.
2. A small employer carrier shall not transfer a small employer involuntarily into or out of a class of business. A small employer carrier shall not offer to transfer a small employer into or out of a class of business unless such offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status or duration of coverage.
3. The director may suspend for a specified period the application of subdivision (1) of subsection 1 of this section as to the premium rates applicable to one or more small employers included within a class of business of a small employer carrier for one or more rating periods upon a filing by the small employer carrier and a finding by the director either that the suspension is reasonable in light of the financial condition of the small employer carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance.
4. In connection with the offering for sale of any health benefit plan to a small employer, a small employer carrier shall make a reasonable disclosure, as part of its solicitation and sales materials, of all of the following:
(1) The extent to which premium rates for a specified small employer are established or adjusted based upon the actual or expected variation in claims costs or actual or expected variation in health status of the employees of the small employer and their dependents;
(2) The provisions of the health benefit plan concerning the small employer carrier's right to change premium rates and factors, other than claim experience, that affect changes in premium rates;
(3) The provisions relating to renewability of policies and contracts; and
(4) The provisions relating to any preexisting condition provision;
(5) The carrier's reason for not accepting the group for coverage. If coverage is declined or rated up more than twenty-five percent, the carrier shall inform the applicant of the options provided under this act.
5. (1) Each small employer carrier shall maintain at its principal place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrate that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles.
(2) Each small employer carrier shall file with the director annually on or before March fifteenth an actuarial certification certifying that the carrier is in compliance with sections 379.930 to 379.952 and that the rating methods of the small employer carrier are actuarially sound. Such certification shall be in a form and manner, and shall contain such information, as specified by the director. A copy of the certification shall be retained by the small employer carrier at its principal place of business.
(3) A small employer carrier shall make the information and documentation described in subdivision (1) of this section available to the director upon request.
379.940. 1. (1) Every small employer carrier shall, as a condition of transacting business in this state with small employers, actively offer to small employers at least two health benefit plans. One plan offered by each small employer carrier shall be a basic health benefit plan and one plan shall be a standard health benefit plan.
(2) (a) A small employer carrier shall issue a basic health benefit plan or a standard health benefit plan to any eligible small employer that applies for either such plan and agrees to make the required premium payments and to satisfy the other reasonable provisions of the health benefit plan not inconsistent with sections 379.930 to 379.952.
(b) In the case of a small employer carrier that establishes more than one class of business pursuant to section 379.934, the small employer carrier shall maintain and issue to eligible small employers at least one basic health benefit plan and at least one standard health benefit plan in each class of business so established. A small employer carrier may apply reasonable criteria in determining whether to accept a small employer into a class of business, provided that:
a. The criteria are not intended to discourage or prevent acceptance of small employers applying for a basic or standard health benefit plan;
b. The criteria are not related to the health status or claim experience of the small employer;
c. The criteria are applied consistently to all small employers applying for coverage in the class of business; and
d. The small employer carrier provides for the acceptance of all eligible small employers into one or more classes of business. The provisions of this paragraph shall not apply to a class of business into which the small employer carrier is no longer enrolling new small employers.
(3) A small employer is eligible under subdivision (2) of this subsection if it employed at least three or more eligible employees within this state on at least fifty percent of its working days during the preceding calendar quarter.
(4) The provisions of this subsection shall be effective one hundred eighty days after the director's approval of the basic health benefit plan and the standard health benefit plan developed pursuant to section 379.944, provided that if the small employer health reinsurance program created pursuant to sections 379.942 and 379.943 is not yet in operation on such date, the provisions of this subsection shall be effective on the date that such program begins operation.
2. Health benefit plans covering small employers shall comply with the following provisions:
(1) A health benefit plan shall not deny, exclude or limit benefits for a covered individual for losses incurred more than twelve months following the effective date of the individual's coverage due to a preexisting condition. A health benefit plan shall not define a preexisting condition more restrictively than:
(a) A condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care or treatment during the six months immediately preceding the effective date of coverage;
(b) A condition for which medical advice, diagnosis, care or treatment was recommended or received during the six months immediately preceding the effective date of coverage; or
(c) A pregnancy existing on the effective date of coverage.
(2) A health benefit plan shall waive any time period applicable to a preexisting condition exclusion or limitation period with respect to particular services for the period of time an individual was previously covered by qualifying previous coverage that provided benefits with respect to such services, provided that the qualifying previous coverage was continuous to a date not less than thirty days prior to the effective date of the new coverage. This subdivision does not preclude application of any waiting period applicable to all new enrollees under the health benefit plan.
(3) A health benefit plan may exclude coverage for late enrollees for the greater of eighteen months or provide for an eighteen-month preexisting condition exclusion, provided that if both a period of exclusion from coverage and a preexisting condition exclusion are applicable to a late enrollee, the combined period shall not exceed eighteen months from the date the individual enrolls for coverage under the health benefit plan.
(4) (a) Except as provided in paragraph (d) of this subdivision, requirements used by a small employer carrier in determining whether to provide coverage to a small employer, including requirements for minimum participation of eligible employees and minimum employer contributions, shall be applied uniformly among all small employers with the same number of eligible employees applying for coverage or receiving coverage from the small employer carrier.
(b) A small employer carrier may vary application of minimum participation requirements only by the size of the small employer group.
(c) a. Except as provided in paragraph (b) of this subdivision, in applying minimum participation requirements with respect to a small employer, a small employer carrier shall not consider employees or dependents who have qualifying existing coverage in determining whether the applicable percentage of participation is met.
b. With respect to a small employer with ten or fewer eligible employees, a small employer carrier may consider employees or dependents who have coverage under another health benefit plan sponsored by such small employer in applying minimum participation requirements.
(d) A small employer carrier shall not increase any requirement for minimum employee participation or any requirement for minimum employer contribution applicable to a small employer at any time after the small employer has been accepted for coverage.
(e) Permanent part-time employees shall not be considered regarding contribution or participation requirements.
(5) (a) If a small employer carrier offers coverage to a small employer, the small employer carrier shall offer coverage to all of the eligible employees of a small employer and their dependents. A small employer carrier shall not offer coverage to only certain individuals in a small employer group or to only part of the group, except in the case of late enrollees as provided in subdivision (3) of this subsection.
(b) A small employer carrier shall not modify a basic or standard health benefit plan with respect to a small employer or any eligible employee or dependent through riders, endorsements or otherwise, to restrict or exclude coverage for certain diseases or medical conditions otherwise covered by the health benefit plan.
3. (1) A small employer carrier shall not be required to offer coverage or accept applications pursuant to subsection 1 of this section in the case of the following:
(a) To a small employer, where the small employer is not physically located in the carrier's established geographic service area;
(b) To an employee, when the employee does not work or reside within the carrier's established geographic service area; or
(c) Within an area where the small employer carrier reasonably anticipates, and demonstrates to the satisfaction of the director, that it will not have the capacity within its established geographic service area to deliver service adequately to the members of such groups because of its obligations to existing group policyholders and enrollees.
(2) A small employer carrier that cannot offer coverage pursuant to paragraph (c) of subdivision (1) of this subsection may not offer coverage in the applicable area to new cases of employer groups with more than twenty-five eligible employees or to any small employer groups until the later of one hundred eighty days following each such refusal or the date on which the carrier notifies the director that it has regained capacity to deliver services to small employer groups.
4. A small employer carrier shall not be required to provide coverage to small employers pursuant to subsection 1 of this section for any period of time for which the director determines that requiring the acceptance of small employers in accordance with the provisions of subsection 1 of this section would place the small employer carrier in a financially impaired condition.
5. Sections 379.930 to 379.938 and sections 379.942 to 379.950 shall become effective July 1, 1993, this section and section 379.952 shall become effective July 1, 1994.
379.941. If a small employer carrier fails to offer coverage or has offered coverage at more than one hundred twenty-five percent of its standard rate by its normal underwriting practices, the carrier shall inform the employer on the basis for which coverage was not offered or rated up. If coverage is denied or a plan is rated up due to the health condition of one or more employees, the carrier may allow the employer to reapply for coverage under the following conditions:
(1) Upon being denied coverage or coverage premiums exceed one hundred twenty-five percent due to the health condition of one or more employees, the employer may have the employee or employees apply to the Missouri health insurance pool for coverage. The plan applied for shall be as similar as possible to the plan for which the employer was declined or rated up. If the employees receive coverage, the employer may reapply for small group coverage with any carrier;
(2) The employer shall pay the same percentage of the premiums to the pool that was offered in the original application. In the case of a rate up, the employee or employees shall not pay more for their coverage in the pool than they would have paid under the plan applied for. The employer may make adjustments in its contribution to the pool to guarantee that the employee will not pay more than other employees of the employer. The employer shall have the premiums from the pool billed to the employer's office and all premiums shall be paid by the employer;
(3) The employer shall maintain coverage for employees in the pool;
(4) Nothing in this section shall be used by a small employer carrier, broker or agent to encourage or coerce an
employer to remove any employee from applying for small group coverage.
Missouri House of Representatives