00 CS FOR SENATE BILL NO. 289(FIN) 01 "An Act relating to the payment of insurer examination expenses, to the regulation of 02 managed care insurance plans, to actuarial opinions and supporting documentation for 03 an insurer, to insurance firms, managing general agents, and third-party 04 administrators, to eligibility of surplus lines insurers, to prompt payment of health care 05 insurance claims, to required notice by an insurer, to individual deferred annuities, to 06 mental health benefits under a health care insurance plan, to the definitions of 'title 07 insurance limited producer' and of other terms used in the title regulating the practice 08 of the business of insurance, and to small employer health insurance; repealing the 09 Small Employer Health Reinsurance Association; making conforming amendments; and 10 providing for an effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12  * Section 1. AS 21.06.110(8) is amended to read: 01 (8) the annual percentage of health claims paid in the state that meets 02 the requirements of AS 21.36.128(a) and (d) [AS 21.54.020(a) AND (d)]; and 03  * Sec. 2. AS 21.06.160(a) is amended to read: 04 (a) Each person examined, other than examinations under AS 21.06.130, shall 05 pay a reasonable rate calculated on salary, benefit costs, and estimated division 06 overhead for time spent directly or indirectly related to the examination. Each person 07 examined, other than examinations under AS 21.06.130, shall pay actual out-of-pocket 08 business expenses, including travel expenses, incurred by division staff examiners and 09 shall pay the compensation of a contract examiner, to be set at a reasonable customary 10 rate, for conducting the examination upon presentation of a detailed account of the 11 charges and expenses by the director or under an order of the director. The accounting 12 may either be presented periodically during the course of the examination or at the 13 termination of the examination. A person may not pay and an examiner may not 14 accept additional compensation for an examination. A person shall pay examination  15 expenses to the division under this subsection using an electronic payment  16 method specified by the director.  17  * Sec. 3. AS 21.07.010(a) is amended to read: 18 (a) A contract between a participating health care provider and a managed care 19 entity that offers a [GROUP] managed care plan must contain a provision that 20 (1) provides for a reasonable mechanism to identify all medical 21 [HEALTH] care services to be provided by the managed care entity; 22 (2) clearly states or references an attachment that states the health care 23 provider's rate of compensation; 24 (3) clearly states all ways in which the contract between the health care 25 provider and managed care entity may be terminated; a provision that provides for 26 discretionary termination by either party must apply equitably to both parties; 27 (4) provides that, in the event of a dispute between the parties to the 28 contract, a fair, prompt, and mutual dispute resolution process must be used; at a 29 minimum, the process must provide 30 (A) for an initial meeting at which all parties are present or 31 represented by individuals with authority regarding the matters in dispute; the 01 meeting shall be held within 10 working days after the plan receives written 02 notice of the dispute or gives written notice to the provider, unless the parties 03 otherwise agree in writing to a different schedule; 04 (B) that if, within 30 days following the initial meeting, the 05 parties have not resolved the dispute, the dispute shall be submitted to 06 mediation directed by a mediator who is mutually agreeable to the parties and 07 who is not regularly under contract to or employed by either of the parties; 08 each party shall bear its proportionate share of the cost of mediation, including 09 the mediator fees; 10 (C) that if, after a period of 60 days following commencement 11 of mediation, the parties are unable to resolve the dispute, either party may 12 seek other relief allowed by law; 13 (D) that the parties shall agree to negotiate in good faith in the 14 initial meeting and in mediation; 15 (5) states that a health care provider may not be penalized or the health 16 care provider's contract terminated by the managed care entity because the health care 17 provider acts as an advocate for a covered person in seeking appropriate, medically 18 necessary medical [HEALTH] care services; 19 (6) protects the ability of a health care provider to communicate openly 20 with a covered person about all appropriate diagnostic testing and treatment options; 21 and 22 (7) defines words in a clear and concise manner. 23  * Sec. 4. AS 21.07.010(b) is amended to read: 24 (b) A contract between a participating health care provider and a managed 25 care entity that offers a [GROUP] managed care plan may not contain a provision that 26 (1) has as its predominant purpose the creation of direct financial 27 incentives to the health care provider for withholding covered medical [HEALTH] 28 care services that are medically necessary; nothing in this paragraph shall be construed 29 to prohibit a contract between a participating health care provider and a managed care 30 entity from containing incentives for efficient management of the utilization and cost 31 of covered medical [HEALTH] care services; 01 (2) requires the provider to contract for all products that are currently 02 offered or that may be offered in the future by the managed care entity; or 03 (3) requires the health care provider to be compensated for medical 04 [HEALTH] care services performed at the same rate as the health care provider has 05 contracted with another managed care entity. 06  * Sec. 5. AS 21.07.020 is amended to read: 07 Sec. 21.07.020. Required contract provisions for [GROUP] managed care  08 plans. A [GROUP] managed care plan must contain 09 (1) a provision that preauthorization for a covered medical procedure 10 on the basis of medical necessity may not be retroactively denied unless the 11 preauthorization is based on materially incomplete or inaccurate information provided 12 by or on behalf of the provider; 13 (2) a provision for emergency room services if any coverage is 14 provided for treatment of a medical emergency; 15 (3) a provision that covered medical [HEALTH] care services be 16 reasonably available in the community in which a covered person resides or that, if 17 referrals are required by the plan, adequate referrals outside the community be 18 available if the medical [HEALTH] care service is not available in the community; 19 (4) a provision that any utilization review decision 20 (A) must be made within 72 hours after receiving the request 21 for preapproval for nonemergency situations; for emergency situations, 22 utilization review decisions for care following emergency services must be 23 made as soon as is practicable but in any event not [NO] later than 24 hours 24 after receiving the request for preapproval or for coverage determination; and 25 (B) to deny, reduce, or terminate a health care benefit or to 26 deny payment for a medical [HEALTH] care service because that service is 27 not medically necessary shall be made by an employee or agent of the 28 managed care entity who is a licensed health care provider; 29 (5) a provision that provides for an internal appeal mechanism for a 30 covered person who disagrees with a utilization review decision made by a managed 31 care entity; except as provided under (6) of this section, this appeal mechanism must 01 provide for a written decision 02 (A) from the managed care entity within 18 working days after 03 the date written notice of an appeal is received; and 04 (B) on the appeal by an employee or agent of the managed care 05 entity who holds the same professional license as the health care provider who 06 is treating the covered person; 07 (6) a provision that provides for an internal appeal mechanism for a 08 covered person who disagrees with a utilization review decision made by a managed 09 care entity in any case in which delay would, in the written opinion of the treating 10 provider, jeopardize the covered person's life or materially jeopardize the covered 11 person's health; the managed care entity shall 12 (A) decide an appeal described in this paragraph within 72 13 hours after receiving the appeal; and 14 (B) provide for a written decision on the appeal by an 15 employee or agent of the managed care entity who holds the same professional 16 license as the health care provider who is treating the covered person; 17 (7) a provision that discloses the existence of the right to an external 18 appeal of a utilization review decision made by a managed care entity; the external 19 appeal shall be as conducted in accordance with AS 21.07.050; 20 (8) a provision that discloses covered benefits, optional supplemental 21 benefits, and benefits relating to and restrictions on nonparticipating provider services; 22 (9) a provision that describes the preapproval requirements and 23 whether clinical trials or experimental or investigational treatment are covered; 24 (10) a provision describing a mechanism for assignment of benefits for 25 health care providers and payment of benefits; 26 (11) a provision describing availability of prescription medications or a 27 formulary guide, and whether medications not listed are excluded; if a formulary guide 28 is made available, the guide must be updated annually; and 29 (12) a provision describing available translation or interpreter services, 30 including audiotape or braille information. 31  * Sec. 6. AS 21.07.030 is amended to read: 01 Sec. 21.07.030. Choice of health care provider. (a) If a managed care entity 02 offers a managed care [GROUP HEALTH] plan that provides for coverage of 03 medical [HEALTH] care services only if the services are furnished through a network 04 of health care providers that have entered into a contract with the managed care entity, 05 the managed care entity shall also offer a non-network option to covered persons 06 [ENROLLEES] at initial enrollment, as provided under (c) of this section. The non- 07 network option may require that a covered person pay a higher deductible, copayment, 08 or premium for the plan if the higher deductible, copayment, or premium results from 09 increased costs caused by the use of a non-network provider. The managed care entity 10 shall provide an actuarial demonstration of the increased costs to the director at the 11 director's request. If the increased costs are not justified, the director shall require the 12 managed care entity to recalculate the appropriate costs allowed and resubmit the 13 appropriate deductible, copayment, or premium to the director. This subsection does 14 not apply to a covered person [AN ENROLLEE] who is offered non-network 15 coverage through another managed care [GROUP HEALTH] plan or through another 16 managed care entity [IN THE GROUP MARKET]. 17 (b) The amount of any additional premium charged by the managed care entity 18 for the additional cost of the creation and maintenance of the option described in (a) of 19 this section and the amount of any additional cost sharing imposed under this option 20 shall be paid by the covered person [ENROLLEE] unless it is paid by an [THE] 21 employer or other person through agreement with the managed care entity. 22 (c) A covered person [AN ENROLLEE] may make a change to the medical 23 [HEALTH] care coverage option provided under this section only during a time period 24 determined by the managed care entity. The time period described in this subsection 25 must occur at least annually and last for at least 15 working days. 26 (d) If a managed care entity that offers a [GROUP] managed care plan 27 requires or provides for a designation by a covered person [AN ENROLLEE] of a 28 participating primary care provider, the managed care entity shall permit the covered  29 person [ENROLLEE] to designate any participating primary care provider that is 30 available to accept the covered person [ENROLLEE]. 31 (e) Except as provided in this subsection, a managed care entity that offers a 01 [GROUP] managed care plan shall permit a covered person [AN ENROLLEE] to 02 receive medically necessary or appropriate specialty care, subject to appropriate 03 referral procedures, from any qualified participating health care provider that is 04 available to accept the individual for medical care. This subsection does not apply to 05 specialty care if the managed care entity clearly informs covered persons 06 [ENROLLEES] of the limitations on choice of participating health care providers with 07 respect to medical care. In this subsection, 08 (1) "appropriate referral procedures" means procedures for referring 09 patients to other health care providers as set out in the applicable member contract and 10 as described under (a) of this section; 11 (2) "specialty care" means care provided by a health care provider with 12 training and experience in treating a particular injury, illness, or condition. 13 (f) If a contract between a health care provider and a managed care entity is 14 terminated, a covered person may continue to be treated by that health care provider as 15 provided in this subsection. If a covered person is pregnant or being actively treated by 16 a provider on the date of the termination of the contract between that provider and the 17 managed care entity, the covered person may continue to receive medical [HEALTH] 18 care services from that provider as provided in this subsection, and the contract 19 between the managed care entity and the provider shall remain in force with respect to 20 the continuing treatment. The covered person shall be treated for the purposes of 21 benefit determination or claim payment as if the provider were still under contract 22 with the managed care entity. However, treatment is required to continue only while 23 the [GROUP] managed care plan remains in effect and 24 (1) for the period that is the longest of the following: 25 (A) the end of the current plan year; 26 (B) up to 90 days after the termination date, if the event 27 triggering the right to continuing treatment is part of an ongoing course of 28 treatment; [OR] 29 (C) through completion of postpartum care, if the covered 30 person is pregnant on the date of termination; or 31 (2) until the end of the medically necessary treatment for the condition, 01 disease, illness, or injury if the person has a terminal condition, disease, illness, or 02 injury; in this paragraph, "terminal" means a life expectancy of less than one year. 03 (g) The requirements of this section do not apply to medical [HEALTH] care 04 services covered by Medicaid. 05  * Sec. 7. AS 21.07.040(c) is amended to read: 06 (c) Nothing in this section may be construed to prohibit the exchange of 07 medical information between and among health care providers of an applicant or a 08 person currently or formerly covered by a managed care plan for purposes of 09 providing medical [HEALTH] care services. 10  * Sec. 8. AS 21.07.050(a) is amended to read: 11 (a) A managed care entity offering a managed care plan [GROUP HEALTH 12 INSURANCE COVERAGE] shall provide for an external appeal process that meets 13 the requirements of this section in the case of an externally appealable decision for 14 which a timely appeal is made in writing either by the managed care entity or by the 15 covered person [ENROLLEE]. 16  * Sec. 9. AS 21.07.050(c) is amended to read: 17 (c) Except as provided in this subsection, the external appeal process shall be 18 conducted under a contract between the managed care entity and one or more external 19 appeal agencies that have qualified under AS 21.07.060. The managed care entity shall 20 provide 21 (1) that the selection process among external appeal agencies 22 qualifying under AS 21.07.060 does not create any incentives for external appeal 23 agencies to make a decision in a biased manner; 24 (2) for auditing a sample of decisions by external appeal agencies to 25 ensure [ASSURE] that decisions are not made in a biased manner; and 26 (3) that all costs of the process, except those incurred by the covered  27 person [ENROLLEE] or treating professional in support of the appeal, shall be paid 28 by the managed care entity and not by the covered person [ENROLLEE]. 29  * Sec. 10. AS 21.07.050(d) is amended to read: 30 (d) An external appeal process must include at least the following: 31 (1) a fair, de novo determination based on coverage provided by the 01 plan and by applying terms as defined by the plan; however, nothing in this paragraph 02 may be construed as providing for coverage of items and services for which benefits 03 are excluded under the plan or coverage; 04 (2) an external appeal agency shall determine whether the managed 05 care entity's decision is (A) in accordance with the medical needs of the patient 06 involved, as determined by the managed care entity, taking into account, as of the time 07 of the managed care entity's decision, the patient's medical needs and any relevant and 08 reliable evidence the agency obtains under (3) of this subsection, and (B) in 09 accordance with the scope of the covered benefits under the plan; if the agency 10 determines the decision complies with this paragraph, the agency shall affirm the 11 decision, and, to the extent that the agency determines the decision is not in 12 accordance with this paragraph, the agency shall reverse or modify the decision; 13 (3) the external appeal agency shall include among the evidence taken 14 into consideration 15 (A) the decision made by the managed care entity upon internal 16 appeal under AS 21.07.020 and any guidelines or standards used by the 17 managed care entity in reaching a decision; 18 (B) any personal health and medical information supplied with 19 respect to the individual whose denial of claim for benefits has been appealed; 20 (C) the opinion of the individual's treating physician or health 21 care provider; and 22 (D) the [GROUP] managed care plan; 23 (4) the external appeal agency may also take into consideration the 24 following evidence: 25 (A) the results of studies that meet professionally recognized 26 standards of validity and replicability or that have been published in peer- 27 reviewed journals; 28 (B) the results of professional consensus conferences 29 conducted or financed in whole or in part by one or more government 30 agencies; 31 (C) practice and treatment guidelines prepared or financed in 01 whole or in part by government agencies; 02 (D) government-issued coverage and treatment policies; 03 (E) generally accepted principles of professional medical 04 practice; 05 (F) to the extent that the agency determines it to be free of any 06 conflict of interest, the opinions of individuals who are qualified as experts in 07 one or more fields of health care that are directly related to the matters under 08 appeal; 09 (G) to the extent that the agency determines it to be free of any 10 conflict of interest, the results of peer reviews conducted by the managed care 11 entity involved; 12 (H) the community standard of care; and 13 (I) anomalous utilization patterns; 14 (5) an external appeal agency shall determine 15 (A) whether a denial of a claim for benefits is an externally 16 appealable decision; 17 (B) whether an externally appealable decision involves an 18 expedited appeal; and 19 (C) for purposes of initiating an external review, whether the 20 internal appeal process has been completed; 21 (6) a party to an externally appealable decision may submit evidence 22 related to the issues in dispute; 23 (7) the managed care entity involved shall provide the external appeal 24 agency with access to information and to provisions of the plan or health insurance 25 coverage relating to the matter of the externally appealable decision, as determined by 26 the external appeal agency; and 27 (8) a determination by the external appeal agency on the decision must 28 (A) be made orally or in writing and, if it is made orally, shall 29 be supplied to the parties in writing as soon as possible; 30 (B) be made in accordance with the medical exigencies of the 31 case involved, but in no event later than 21 working days after the appeal is 01 filed, or, in the case of an expedited appeal, 72 hours after the time of 02 requesting an external appeal of the managed care entity's decision; 03 (C) state, in layperson's language, the basis for the 04 determination, including, if relevant, any basis in the terms or conditions of the 05 plan or coverage; and 06 (D) inform the covered person [ENROLLEE] of the 07 individual's rights, including any time limits, to seek further review by the 08 courts of the external appeal determination. 09  * Sec. 11. AS 21.07.050(h) is amended to read: 10 (h) In this section, "externally appealable decision" 11 (1) means 12 (A) a denial of a claim for benefits that is based in whole or in 13 part on a decision that the item or service is not medically necessary or 14 appropriate or is investigational or experimental, or in which the decision as to 15 whether a benefit is covered involves a medical judgment; or 16 (B) a denial that is based on a failure to meet an applicable 17 deadline for internal appeal under AS 21.07.020; 18 (2) does not include a decision based on specific exclusions or express 19 limitations on the amount, duration, or scope of coverage that do not involve medical 20 judgment, or a decision regarding whether an individual is a participant, beneficiary, 21 or other covered person [ENROLLEE] under the plan or coverage. 22  * Sec. 12. AS 21.07.060(a) is amended to read: 23 (a) An external appeal agency qualifies to consider external appeals if, with 24 respect to a managed care [GROUP HEALTH] plan, the agency is certified by a 25 qualified private standard-setting organization approved by the director or by a health 26 insurer operating in this state as meeting the requirements imposed under (b) of this 27 section. 28  * Sec. 13. AS 21.07.060(b) is amended to read: 29 (b) An external appeal agency is qualified to consider appeals of managed  30 care [GROUP HEALTH] plan health care decisions if the agency meets the following 31 requirements: 01 (1) the agency meets the independence requirements of this section; 02 (2) the agency conducts external appeal activities through a panel of 03 two clinical peers, unless otherwise agreed to by both parties; and 04 (3) the agency has sufficient medical, legal, and other expertise and 05 sufficient staffing to conduct external appeal activities for the managed care entity on 06 a timely basis consistent with this chapter. 07  * Sec. 14. AS 21.07.060(d) is amended to read: 08 (d) In this section, "related party" means 09 (1) with respect to 10 (A) a managed care [GROUP HEALTH] plan [OR HEALTH 11 INSURANCE COVERAGE OFFERED IN CONNECTION WITH A PLAN], 12 the plan or the insurer offering the coverage; or 13 (B) individual health insurance coverage, the insurer offering 14 the coverage, or any plan sponsor, fiduciary, officer, director, or management 15 employee of the plan or issuer; 16 (2) the health care professional that provided the health care involved 17 in the coverage decision; 18 (3) the institution at which the health care involved in the coverage 19 decision is provided; 20 (4) the manufacturer of any drug or other item that was included in the 21 health care involved in the coverage decision; 22 (5) the covered person; or 23 (6) any other party that, under the regulations that the director may 24 prescribe, is determined by the director to have a substantial interest in the coverage 25 decision. 26  * Sec. 15. AS 21.07.080 is amended to read: 27 Sec. 21.07.080. Religious nonmedical providers. This chapter may not be 28 construed to 29 (1) restrict or limit the right of a managed care entity to include 30 [HEALTH CARE] services provided by a religious nonmedical provider as medical 31 [HEALTH] care services covered by the managed care plan; 01 (2) require a managed care entity, when determining coverage for 02 [HEALTH CARE] services provided by a religious nonmedical provider, to 03 (A) apply medically based eligibility standards; 04 (B) use health care providers to determine access by a covered 05 person; 06 (C) use health care providers in making a decision on an 07 internal or external appeal; or 08 (D) require a covered person to be examined by a health care 09 provider as a condition of coverage; or 10 (3) require a managed care plan to exclude coverage for [HEALTH 11 CARE] services provided by a religious nonmedical provider because the religious 12 nonmedical provider is not providing medical or other data required from a health care 13 provider if the medical or other data is inconsistent with the religious nonmedical 14 treatment or nursing care being provided. 15  * Sec. 16. AS 21.07.250(1) is amended to read: 16 (1) "clinical peer" means a health care provider who is licensed to 17 provide the same or similar medical [HEALTH] care services and who is trained in 18 the specialty or subspecialty applicable to the medical [HEALTH] care services that 19 are provided; 20  * Sec. 17. AS 21.07.250(3) is amended to read: 21 (3) "emergency room services" means medical [HEALTH] care 22 services provided by a hospital or other emergency facility after the sudden onset of a 23 medical condition that manifests itself by symptoms of sufficient severity, including 24 severe pain, that the absence of immediate medical attention would reasonably be 25 expected by a prudent person who possesses an average knowledge of health and 26 medicine to result in 27 (A) the placing of the person's health in serious jeopardy; 28 (B) a serious impairment to bodily functions; or 29 (C) a serious dysfunction of a bodily organ or part; 30  * Sec. 18. AS 21.07.250(5) is amended to read: 31 (5) "health care provider" means a person licensed in this state or 01 another state of the United States to provide medical [HEALTH] care services; 02  * Sec. 19. AS 21.07.250(10) is amended to read: 03 (10) "managed care entity" means an insurer, a hospital or medical 04 service corporation, a health maintenance organization, an employer or employee 05 health care organization, a managed care contractor that operates a [GROUP] 06 managed care plan, or a person who has a financial interest in medical [HEALTH] 07 care services provided to an individual; 08  * Sec. 20. AS 21.07.250(12) is amended to read: 09 (12) "participating health care provider" means a health care provider 10 who has entered into an agreement with a managed care entity to provide services or 11 supplies to a patient covered by a [GROUP] managed care plan; 12  * Sec. 21. AS 21.07.250(13) is amended to read: 13 (13) "primary care provider" means a health care provider who 14 provides general medical [HEALTH] care services and does not specialize in treating 15 a single injury, illness, or condition or who provides obstetrical, gynecological, or 16 pediatric medical [HEALTH] care services; 17  * Sec. 22. AS 21.07.250(15) is amended to read: 18 (15) "religious nonmedical provider" means a person who [DOES 19 NOT PROVIDE MEDICAL CARE, BUT WHO] provides only religious nonmedical 20 treatment or nursing care for an illness or injury; 21  * Sec. 23. AS 21.07.250(16) is amended to read: 22 (16) "utilization review" means a system of reviewing the medical 23 necessity, appropriateness, or quality of medical [HEALTH] care services and 24 supplies provided under a [GROUP] managed care plan using specified guidelines, 25 including preadmission certification, the application of practice guidelines, continued 26 stay review, discharge planning, preauthorization of ambulatory procedures, and 27 retrospective review; 28  * Sec. 24. AS 21.07.250 is amended by adding new paragraphs to read: 29 (18) "managed care plan" or "plan" means an individual or group 30 health insurance plan operated by a managed care entity; 31 (19) "medical care" has the meaning given in AS 21.90.900. 01  * Sec. 25. AS 21.09 is amended by adding a new section to read: 02 Sec. 21.09.207. Statement of actuarial opinion and supporting  03 documentation. (a) An insurer authorized to write property, casualty, surety, marine, 04 wet marine, transportation, or mortgage guaranty insurance shall file annually with the 05 director a statement of actuarial opinion, unless the insurer is exempt or otherwise not 06 required to file an opinion in the insurer's state of domicile. The statement of actuarial 07 opinion must 08 (1) be issued by an actuary appointed by the insurer; 09 (2) follow, for a given year, the reporting format and requirements 10 specified in the annual financial statement instructions most recently approved by the 11 National Association of Insurance Commissioners; and 12 (3) be supplemented with additional information as may be required by 13 the director. 14 (b) A domestic insurer that is required to file a statement under (a) of this 15 section shall file annually with the director an actuarial opinion summary written by 16 the insurer's appointed actuary. A foreign insurer that is required to file a statement 17 under (a) of this section shall, on written request of the director, file an actuarial 18 opinion summary with the director. The actuarial opinion summary must follow, for a 19 given year, the reporting format and requirements specified in the annual financial 20 statement instructions most recently approved by the National Association of 21 Insurance Commissioners and must be supplemented with additional information as 22 required by the director. 23 (c) An insurer that is required to file a statement under (a) of this section shall 24 prepare an actuarial report and work papers to support each statement of actuarial 25 opinion as required by the annual financial statement instructions most recently 26 approved by the National Association of Insurance Commissioners. If an insurer fails 27 to provide a supporting actuarial report or work papers at the request of the director, or 28 the director determines that the supporting actuarial report or work papers provided by 29 the insurer are incomplete or otherwise unacceptable to the director, the director may 30 engage a qualified actuary at the expense of the insurer to review the statement of 31 actuarial opinion and the basis for the statement and to prepare the supporting actuarial 01 report or work papers. 02 (d) An actuarial report, actuarial opinion summary, or work paper provided in 03 support of a statement of actuarial opinion and any other information provided by an 04 insurer to the director in connection with the statement of actuarial opinion, the 05 actuarial opinion summary, or the actuarial report issued under this section is 06 confidential; however, nothing in this section limits the director's authority to release 07 the documents to a national professional organization that disciplines actuaries that is 08 recognized by the director, as long as the material is required for the purpose of 09 professional disciplinary proceedings and the national professional organization 10 establishes procedures satisfactory to the director for preserving the confidentiality of 11 the documents. 12 (e) In this section, 13 (1) "appointed actuary" means a qualified actuary who is appointed or 14 retained by a company to provide a statement of actuarial opinion and the related 15 actuarial opinion summary, actuarial report, and work papers; 16 (2) "qualified actuary" means a member in good standing of the 17 (A) Casualty Actuarial Society; or 18 (B) American Academy of Actuaries who has been approved as 19 qualified for signing casualty loss reserve opinions by the Casualty Practice 20 Council of the American Academy of Actuaries. 21  * Sec. 26. AS 21.27.020(c) is amended to read: 22 (c) To qualify for issuance or renewal of a license as a firm insurance 23 producer, a firm managing general agent, a firm reinsurance intermediary broker, a 24 firm reinsurance intermediary manager, a firm surplus lines broker, or a firm 25 independent adjuster, an applicant or licensee shall 26 (1) comply with (b)(4) and (5) of this section; 27 (2) maintain a lawfully established place of business in this state, 28 except when licensed as a nonresident under AS 21.27.270; 29 (3) [DISCLOSE TO THE DIRECTOR ALL OWNERS, OFFICERS, 30 DIRECTORS, OR PARTNERS OF THE FIRM; 31 (4)] designate one or more compliance officers for the firm; 01 (4) [(5)] provide to the director documents necessary to verify the 02 information contained in or made in connection with the application; and 03 (5) [(6)] notify the director, in writing, within 30 days of a change in 04 the firm's compliance officer or of the termination of employment of an individual in 05 the firm licensee. 06  * Sec. 27. AS 21.27.020(g) is amended to read: 07 (g) The director shall establish a continuing education advisory committee. 08 The committee consists of one representative from the division of insurance, one life 09 and health insurance representative, [ONE LIMITED LINES INSURANCE 10 REPRESENTATIVE,] one property and casualty insurance representative, and one 11 independent insurance adjuster representative. Each committee representative from the 12 insurance industry must possess a valid, current insurance license issued in this state 13 for the field to be represented. 14  * Sec. 28. AS 21.27.040 is amended by adding a new subsection to read: 15 (f) If, through inaction, an applicant fails to complete the application process, 16 the applicant's application filed with the director under (a) of this section is considered 17 withdrawn. The withdrawal becomes effective 120 days after the filing of the 18 application. If the director has initiated administrative action with respect to an 19 application, withdrawal becomes effective at the time and on the conditions required 20 by an order issued under this chapter. 21  * Sec. 29. AS 21.27.620(a) is amended to read: 22 (a) An insurer may not transact business with a managing general agent unless 23 (1) the insurer holds a certificate of authority in this state; 24 (2) the managing general agent is licensed under this chapter or has  25 filed a certification with the director certifying that [, WHEN] the managing 26 general agent is operating only for a foreign insurer and [,] is licensed by its resident 27 insurance regulator in a state that the director has determined has enacted provisions 28 substantially similar to those contained in this chapter and the state is accredited by the 29 National Association of Insurance Commissioners; 30 (3) a written contract is in effect between the parties that establishes 31 the responsibilities of each party, indicates both party's share of responsibility for a 01 particular function, and specifies the division of responsibilities; 02 (4) a written contract between an insurer and a managing general agent 03 contains the following provisions: 04 (A) the insurer may terminate the contract for cause upon 05 written notice sent by certified mail to the managing general agent and may 06 suspend the underwriting authority of the managing general agent during a 07 dispute regarding the cause for termination; 08 (B) the managing general agent shall render accounts to the 09 insurer detailing all transactions and remit all money due under the contract to 10 the insurer at least monthly; 11 (C) all money collected for the account of an insurer shall be 12 held by the managing general agent as a fiduciary; 13 (D) all payments on behalf of the insurer shall be held by the 14 managing general agent as a fiduciary; 15 (E) the managing general agent may not retain more than three 16 months' [MONTHS] estimated claims payments and allocated loss adjustment 17 expenses; 18 (F) the managing general agent shall maintain separate records 19 for each insurer in a form usable by the insurer; the insurer or its authorized 20 representative shall have the right to audit and the right to copy all accounts 21 and records related to the insurer's business; the director, in addition to 22 authority granted in this title, shall have access to all books, bank accounts, and 23 records of the managing general agent in a form usable to the director; 24 (G) the contract may not be assigned in whole or in part by the 25 managing general agent; 26 (H) if the contract permits the managing general agent to do 27 underwriting, the contract must include the following: 28 (i) the managing general agent's maximum annual 29 premium volume; 30 (ii) the rating system and basis of the rates to be 31 charged; 01 (iii) the types of risks that may be written; 02 (iv) maximum limits of liability; 03 (v) applicable exclusions; 04 (vi) territorial limitations; 05 (vii) policy cancellation provisions; 06 (viii) the maximum policy term; and 07 (ix) that the insurer shall have the right to cancel or not 08 renew a policy of insurance subject to applicable state law; 09 (I) if the contract permits the managing general agent to settle 10 claims on behalf of the insurer, the contract must include the following: 11 (i) written settlement authority must be provided by the 12 insurer and may be terminated for cause upon the insurer's written 13 notice sent by certified mail to the managing general agent or upon the 14 termination of the contract, but the insurer may suspend the settlement 15 authority during a dispute regarding the cause of termination; 16 (ii) claims shall be reported to the insurer within 30 17 days; 18 (iii) a copy of the claim file shall be sent to the insurer 19 upon request or as soon as it becomes known that the claim has the 20 potential to exceed an amount determined by the director or exceeds the 21 limit set by the insurer, whichever is less, involves a coverage dispute, 22 may exceed the managing general agent's claims settlement authority, 23 is open for more than six months, involves extra contractual 24 allegations, or is closed by payment in excess of an amount set by the 25 director or an amount set by the insurer, whichever is less; 26 (iv) each party shall comply with unfair claims 27 settlement statutes and regulations; 28 (v) transmission of electronic data at least monthly if 29 electronic claim files are in existence; and 30 (vi) claim files shall be the property of both the insurer 31 and managing general agent; upon an order of liquidation of the 01 insurer, the files shall become the sole property of the insurer or the 02 insurer's estate; the managing general agent shall have reasonable 03 access to and the right to copy the files on a timely basis; 04 (J) if the contract provides for sharing of interim profits by the 05 managing general agent and the managing general agent has the authority to 06 determine the amount of the interim profits by establishing loss reserves, by 07 controlling claim payments, or in any other manner, interim profits may not be 08 paid to the managing general agent until 09 (i) one year after they are earned for property insurance 10 business and five years after they are earned on casualty business; 11 (ii) a later period established by the director for 12 specified kinds or classes of insurance; and 13 (iii) not until the profits have been verified under (d) of 14 this section; 15 (K) [IF] the insurer shall provide [IS DOMICILED IN THIS 16 STATE OR THE MANAGING GENERAL AGENT HAS A PLACE OF 17 BUSINESS IN THIS STATE,] a copy of the contract to [MUST BE FILED 18 WITH AND APPROVED BY] the director within [AT LEAST] 30 days after  19 entering into a contract with a [BEFORE THE] managing general agent 20 [TRANSACTS BUSINESS ON BEHALF OF THE INSURER; IF THE 21 INSURER IS NOT DOMICILED IN THIS STATE OR THE MANAGING 22 GENERAL AGENT TRANSACTS BUSINESS RELATIVE TO A SUBJECT 23 RESIDENT, LOCATED, OR TO BE PERFORMED IN THIS STATE FROM 24 A PLACE OF BUSINESS NOT PHYSICALLY LOCATED IN THIS STATE, 25 A COPY OF THE CONTRACT REQUIRED IN THIS SECTION MUST BE 26 FILED WITH AND APPROVED BY THE DIRECTOR AT LEAST 30 27 DAYS BEFORE THE MANAGING GENERAL AGENT TRANSACTS 28 BUSINESS ON BEHALF OF THE INSURER IN THIS STATE OR 29 RELATIVE TO A SUBJECT RESIDENT, LOCATED, OR TO BE 30 PERFORMED IN THIS STATE IF THE INSURER OR THE MANAGING 31 GENERAL AGENT ARE DOMICILED IN A STATE NOT ACCREDITED 01 BY THE NATIONAL ASSOCIATION OF INSURANCE 02 COMMISSIONERS]; and 03 (L) [IF THE CONTRACT IS NOT REQUIRED TO BE 04 APPROVED IN ADVANCE BY THE DIRECTOR,] the insurer shall provide 05 written notification to the director within 30 days of the [ENTRY INTO OR] 06 termination of a contract with a managing general agent [; THE NOTICE 07 MUST INCLUDE A STATEMENT OF DUTIES TO BE PERFORMED BY 08 THE MANAGING GENERAL AGENT ON BEHALF OF THE INSURER, 09 THE KINDS AND CLASSES OF INSURANCE FOR WHICH THE 10 MANAGING GENERAL AGENT HAS AUTHORIZATION TO ACT, AND 11 OTHER INFORMATION REQUIRED BY THE DIRECTOR]. 12  * Sec. 30. AS 21.27.650(a) is amended to read: 13 (a) An insurer may not transact business with a third-party administrator 14 unless 15 (1) the insurer holds a certificate of authority in this state if required 16 under this title; 17 (2) the third-party administrator is registered under this chapter or the 18 third-party administrator has filed a certification with the director certifying that the 19 third-party administrator is operating only for a foreign insurer other than a self- 20 funded multiple employer welfare arrangement regulated under AS 21.85 and is 21 registered as a third-party administrator by the third-party administrator's resident 22 insurance regulator in a state that the director has determined has enacted provisions 23 substantially similar to those contained in AS 21.27.630 - 21.27.650 and that is 24 accredited by the National Association of Insurance Commissioners; 25 (3) the third-party administrator provides the director on January 1, 26 April 1, July 1, and October 1 of each year 27 (A) a list of persons who supervise or have responsibility  28 over personnel performing administrative functions, including claims  29 administration and payment, marketing administrative functions,  30 premium accounting, premium billing, coverage verification,  31 underwriting, or certificate issuance [CURRENT EMPLOYEES, 01 IDENTIFYING THOSE TRANSACTING BUSINESS IN THIS STATE OR] 02 upon a subject resident, located, or to be performed in this state; 03 (B) a list of current insurers under contract; and 04 (C) other information the director may require; 05 (4) a written contract is in effect between the parties that establishes 06 the responsibilities of each party, indicates both parties' share of responsibility for a 07 particular function, and specifies the division of responsibilities; 08 (5) there is in effect a written contract between the insurer and third- 09 party administrator that contains the following provisions: 10 (A) the insurer may terminate the contract for cause upon 11 written notice sent by certified mail to the third-party administrator and may 12 suspend the underwriting authority of the third-party administrator during a 13 dispute regarding the cause for termination; but the insurer must fulfill all 14 lawful obligations with respect to policies affected by the written agreement, 15 regardless of any dispute between the insurer and the third-party administrator; 16 (B) the third-party administrator shall render accounts to the 17 insurer detailing all transactions and remit all money due under the contract to 18 the insurer at least monthly; 19 (C) all money collected for the account of an insurer shall be 20 held by the third-party administrator as a fiduciary; 21 (D) all payments on behalf of the insurer shall be held by the 22 third-party administrator as a fiduciary; 23 (E) the third-party administrator may not retain more than three 24 months' [MONTHS] estimated claims payments and allocated loss adjustment 25 expenses; 26 (F) the third-party administrator shall maintain separate records 27 for each insurer in a form usable by the insurer; the insurer or its authorized 28 representative shall have the right to audit and the right to copy all accounts 29 and records related to the insurer's business; the director, in addition to other 30 authority granted in this title, shall have access to all books, bank accounts, and 31 records of the third-party administrator in a form usable to the director; any 01 trade secrets contained in books and records reviewed by the director, 02 including the identity and addresses of policyholders and certificate holders, 03 shall be kept confidential, except that the director may use the information in a 04 proceeding instituted against the third-party administrator or the insurer; 05 (G) the contract may not be assigned in whole or in part by the 06 third-party administrator; 07 (H) if the contract permits the third-party administrator to do 08 underwriting, the contract must include the following: 09 (i) the third-party administrator's maximum annual 10 premium volume; 11 (ii) the rating system and basis of the rates to be 12 charged; 13 (iii) the types of risks that may be written; 14 (iv) maximum limits of liability; 15 (v) applicable exclusions; 16 (vi) territorial limitations; 17 (vii) policy cancellation provisions; 18 (viii) the maximum policy term; and 19 (ix) that the insurer shall have the right to cancel or not 20 renew a policy of insurance subject to applicable state law; 21 (I) if the contract permits the third-party administrator to 22 administer claims on behalf of the insurer, the contract must include the 23 following: 24 (i) written settlement authority must be provided by the 25 insurer and may be terminated for cause upon the insurer's written 26 notice sent by certified mail to the third-party administrator or upon the 27 termination of the contract, but the insurer may suspend the settlement 28 authority during a dispute regarding the cause of termination; 29 (ii) claims shall be reported to the insurer within 30 30 days; 31 (iii) a copy of the claim file shall be sent to the insurer 01 upon request or as soon as it becomes known that the claim has the 02 potential to exceed an amount determined by the director or exceeds the 03 limit set by the insurer, whichever is less, involves a coverage dispute, 04 may exceed the third-party administrator's claims settlement authority, 05 is open for more than six months, involves extra contractual 06 allegations, or is closed by payment in excess of an amount set by the 07 director or an amount set by the insurer, whichever is less; 08 (iv) each party to the contract shall comply with unfair 09 claims settlement statutes and regulations; 10 (v) transmission of electronic data must occur at least 11 monthly if electronic claim files are in existence; and 12 (vi) claim files shall be the sole property of the insurer; 13 upon an order of liquidation of the insurer, the third-party administrator 14 shall have reasonable access to and the right to copy the files on a 15 timely basis; and 16 (J) the contract may not provide for commissions, fees, or 17 charges contingent upon savings obtained in the adjustment, settlement, and 18 payment of losses covered by the insurer's obligations; but a third-party 19 administrator may receive performance-based compensation for providing 20 hospital or other auditing services or may receive compensation based on 21 premiums or charges collected or the number of claims paid or processed. 22  * Sec. 31. AS 21.34.050 is repealed and reenacted to read: 23 Sec. 21.34.050. Listing eligible surplus lines insurers. (a) In addition to 24 meeting the requirements of AS 21.34.040, a nonadmitted insurer shall be considered 25 an eligible surplus lines insurer if it pays fees required by regulation and appears on 26 the most recent list of eligible surplus lines insurers published by the director. The list 27 is to be published at least semi-annually by 28 (1) posting the list on the division's Internet website; and 29 (2) providing a copy of the list to a person on request to the division. 30 (b) Nothing in this section requires the director to place or maintain the name 31 of a nonadmitted insurer on the list of eligible surplus lines insurers. 01 (c) A nonadmitted insurer shall be removed from the list of eligible surplus 02 lines insurers if the nonadmitted insurer fails to pay, before July 1 of each year, the fee 03 authorized under this section or fails to meet the requirement under AS 21.34.040(d). 04 However, the director may reinstate a nonadmitted insurer on the list of eligible 05 surplus lines insurers if 06 (1) the nonadmitted insurer inadvertently failed to pay the fee or meet 07 the requirement under AS 21.34.040(d); 08 (2) the nonadmitted insurer has remedied the reason for removal from 09 the list; and 10 (3) the nonadmitted insurer pays a late fee as established by regulation. 11  * Sec. 32. AS 21.36 is amended by adding a new section to read: 12 Sec. 21.36.128. Prompt payment of health care insurance claims. (a) A 13 health care insurer shall pay or deny indemnities under a health care insurance policy, 14 whether or not services were provided by a participating provider, within 30 calendar 15 days after the insurer or a third-party administrator under contract with the insurer 16 receives a clean claim. 17 (b) If a health care insurer does not pay or denies a health care insurance 18 claim, the insurer shall give notice to the covered person, or to the provider of the 19 medical care services or supplies if the claim was assigned or if the covered person 20 elected direct payment under AS 21.51.120(a)(2) or AS 21.54.020(a), of the basis for 21 denial or the specific information that is needed for the insurer to adjudicate the claim. 22 The health care insurer shall provide the notice required under this subsection within 23 30 calendar days after the insurer or third-party administrator under contract with the 24 insurer receives the claim. 25 (c) If a health care insurer does not provide the notice as required under (b) of 26 this section, the claim is presumed a clean claim, and interest shall accrue at a rate of 27 15 percent annually beginning on the day following the day that the notice was due 28 and continues to accrue until the date that the claim is paid. 29 (d) If a health care insurer provides the notice required under (b) of this 30 section and requests specific information that is needed to adjudicate the claim, the 31 insurer shall pay the claim not later than 15 calendar days after receipt of the 01 information specified in the notice or within 30 days after receipt of the claim. If a 02 health care insurer does not pay the claim within the time period required under this 03 subsection, the claim is presumed to be a clean claim, interest at a rate of 15 percent 04 accrues, and interest continues to accrue until the date the claim is paid. 05 (e) For purposes of (c) and (d) of this section, if only a portion of a claim is 06 covered under the terms of the insurance policy, interest accrues based only on the 07 portion of the claim that is covered. 08 (f) For the purposes of this section, a claim is considered paid on the day 09 payment is mailed or transmitted electronically. 10 (g) If interest is accrued on a claim under (c) or (d) of this section, a health 11 care insurer may not include the amount of interest accrued in calculating an 12 applicable limit on benefits payable to a covered person or other person claiming 13 payments under the health insurance policy. 14 (h) A health care insurer is not required to pay interest due as a result of the 15 application of (c) or (d) of this section if the amount of the interest is $1 or less. 16 (i) In this section, 17 (1) "clean claim" means a claim that does not have a defect or 18 impropriety, including a lack of any required substantiating documentation, or a 19 particular circumstance requiring special treatment that prevents timely payment of the 20 claim; 21 (2) "health care insurer" has the meaning given in AS 21.54.500. 22  * Sec. 33. AS 21.36.260 is amended to read: 23 Sec. 21.36.260. Proof and method of mailing notice. If a notice is required 24 from an insurer under this chapter, the insurer shall 25 (1) mail the notice by first class mail to the last known address of the 26 insured [;] and 27 [(2)] obtain a certificate of mailing from the United States [U.S.] 28 Postal Service; or  29 (2) transmit the notice by electronic means, to the last known  30 electronic address of the intended recipient, if the insurer can obtain an  31 electronic confirmation of receipt by the intended recipient. 01  * Sec. 34. AS 21.45.305(b) is amended to read: 02 (b) In the case of contracts issued on or after the operative date of this section 03 as defined in (k) of this section, no contract of annuity, except as stated in (a) of this 04 section, may be delivered or issued for delivery in this state unless it contains in 05 substance the following provisions, or corresponding provisions that, in the opinion of 06 the director, are at least as favorable to the contract holder, upon cessation of payment 07 of considerations under the contract: (1) that, upon cessation of payment of 08 considerations under a contract or upon the written request of the contract holder, 09 the company will grant a paid-up annuity benefit on a plan stipulated in the contract of 10 the [SUCH] value [AS IS] specified in (d) - (g) and (i) of this section; (2) if a contract 11 provides for a lump sum settlement at maturity, or at any other time, that, upon 12 surrender of the contract at or before the commencement of any annuity payments, the 13 company will pay, in lieu of any paid-up annuity benefit, a cash surrender benefit of 14 the [SUCH] amount [AS IS] specified in (d), (e), (g) and (i) of this section; the 15 company may [SHALL] reserve the right to defer the payment of that cash surrender 16 benefit for a period not to exceed [OF] six months after demand for the payment with 17 surrender of the contract after making a written request that addresses the  18 necessity and equitableness to all contract holders of the deferral and after  19 receiving written approval by the director; (3) a statement of the mortality table, if 20 any, and interest rates used in calculating any minimum paid-up annuity, cash 21 surrender, or death benefits that are guaranteed under the contract, together with 22 sufficient information to determine the amounts of those benefits; (4) a statement that 23 any paid-up annuity, cash surrender, or death benefits that may be available under the 24 contract are not less than the minimum benefits required by any statute of the state in 25 which the contract is delivered and an explanation of the manner in which those 26 benefits are altered by the existence of any additional amounts credited by the 27 company to the contract, any indebtedness to the company on the contract, or any 28 prior withdrawals from or partial surrenders of the contract. Notwithstanding the 29 requirements of this subsection, any deferred annuity contract may provide that, if no 30 considerations have been received under a contract for a period of two full years and 31 the portion of the paid-up annuity benefit at maturity on the plan stipulated in the 01 contract arising from considerations paid before that period would be less than $20 02 monthly, the company may, at its option, terminate the contract by payment in cash of 03 the then present value of the [SUCH] portion of the paid-up annuity benefit, 04 calculated on the basis of the mortality table, if any, and interest rate specified in the 05 contract for determining the paid-up annuity benefit, and by that payment shall be 06 relieved of any further obligation under the contract. 07  * Sec. 35. AS 21.45.305(e) is amended to read: 08 (e) For contracts that [WHICH] provide cash surrender benefits, the [SUCH] 09 cash surrender benefits available before maturity may not be less than the present 10 value as of the date of surrender of that portion of the maturity value of the paid-up 11 annuity benefit that [WHICH] would be provided under the contract at maturity 12 arising from considerations paid before the time of cash surrender reduced by the 13 amount appropriate to reflect any prior withdrawals from or partial surrenders of the 14 contract. The present value shall be calculated on the basis of an interest rate not more 15 than one percent higher than the interest rate specified in the contract for accumulating 16 [THE NET] considerations to determine the maturity value, unless a higher rate is  17 approved by the director under AS 21.42.120, decreased by the amount of any 18 indebtedness to the company on the contract, including interest due and accrued, and 19 increased by any existing additional amounts credited by the company to the contract. 20 In no event may any cash surrender benefit be less than the minimum nonforfeiture 21 amount at that time. The death benefit under those [SUCH] contracts shall be at least 22 equal to the cash surrender benefit. 23  * Sec. 36. AS 21.45.305(g) is repealed and reenacted to read: 24 (g) For the purpose of determining the benefits calculated under (e) and (f) of 25 this section, 26 (1) the maturity date shall be the latest date for which election is 27 permitted by the contract, but not later than the anniversary of the contract next 28 following the annuitant's 70th birthday or the 10th anniversary of the contract, 29 whichever is later; 30 (2) a surrender charge may not be imposed on or past the maturity date 31 of the contract, except that, for annuity contracts with one or more renewable 01 guaranteed periods, a new surrender charge schedule may be imposed for each new 02 guaranteed period if 03 (A) the surrender charge is zero at the end of each guaranteed 04 period and remains zero for at least 30 days; 05 (B) the contract provides for continuation of the contract 06 without surrender charges, unless the contract holder specifically elects a new 07 guaranteed period with a new surrender charge schedule; and 08 (C) the renewal period does not exceed 10 years and the 09 maturity date complies with (1) of this subsection; 10 (3) a contract that provides for flexible considerations may have 11 separate surrender charge schedules associated with each consideration; for purposes 12 of determining the maturity date, the 10th anniversary of the contract is determined 13 separately for each consideration. 14  * Sec. 37. AS 21.51.120(a) is amended to read: 15 (a) A health insurance policy delivered or issued for delivery must contain the 16 following provisions: 17 (1) indemnity for loss of life shall be paid according to the beneficiary 18 designation and payment provisions contained in the policy that are effective at the 19 time of payment; if a beneficiary has not been designated, indemnity shall be paid to 20 the estate of the insured; accrued indemnities unpaid at the insured's death shall be 21 paid to either the beneficiary or the estate, at the option of the insurer; all other 22 indemnities shall be paid to the insured; 23 (2) the insurer may, and upon written request of the insured shall, 24 [WITHIN 30 WORKING DAYS AFTER RECEIVING A PROOF OF LOSS 25 STATEMENT,] pay indemnities for hospital, nursing, medical, dental, or surgical 26 services directly to the provider of the services; an insurer who pays indemnities to an 27 insured, after the insured has given the insurer written notice in the proof of loss 28 statement of an election of direct payment of indemnities to the provider of the 29 services, shall also pay indemnities to the provider of the services; this paragraph does 30 not require that services be provided by a particular hospital or person; 31 (3) a covered person may revoke an election of direct payment of 01 indemnities made under this subsection by giving written notice of the revocation to 02 the insurer and to the provider of the services; the written notice of revocation given to 03 the insurer must certify that the covered person has given written notice of revocation 04 to the provider of the services; revocation of an election of direct payment is not 05 effective until the notice of revocation is received by the insurer and the provider of 06 the services; 07 (4) the right of the insured to request payment of indemnities for 08 hospital, nursing, medical, dental, or surgical services directly to the provider of the 09 services or to another person may be transferred to a person who is not the insured by 10 a qualified domestic relations order; rights under the qualified domestic relations order 11 do not take effect until the order is received by the insurer; in this paragraph, 12 "qualified domestic relations order" means an order or judgment in a divorce or 13 dissolution action under AS 25.24 that designates a person to determine to whom 14 indemnities for a named beneficiary should be paid under a health insurance policy. 15  * Sec. 38. AS 21.54.020 is repealed and reenacted to read: 16 Sec. 21.54.020. Direct payment to providers. (a) On the written request of a 17 covered person, a health care insurer shall pay amounts due under a health insurance 18 policy directly to the provider of medical care services. A health insurance policy may 19 not contain a provision that requires services be provided by a particular hospital or 20 person, except as applicable to a managed care plan under AS 21.07 or a health 21 maintenance organization under AS 21.86. If a health care insurer makes a claim 22 payment to the covered person after the covered person has given written notice 23 electing direct payment to the provider of the service, the health care insurer shall also 24 pay that amount to the provider of the service. 25 (b) A covered person may revoke an election of direct claim payment made 26 under (a) of this section by giving written notice of the revocation to the health care 27 insurer and to the provider of the service. The written notice of revocation to the 28 health care insurer must certify that the covered person has given written notice of 29 revocation to the provider of the service. Revocation of direct claim payment is not 30 effective until the later of the date the health care insurer received the notice of 31 revocation or the date the provider of the service received the revocation. 01 (c) The right of the covered person to request payment of indemnities under a 02 blanket health insurance policy directly to the provider of the services or to another 03 person may be transferred by a qualified domestic relations order to a person who is 04 not the covered person. Rights under the qualified domestic relations order do not take 05 effect until the order is received by the health care insurer. In this subsection, 06 "qualified domestic relations order" means an order or judgment in a divorce or 07 dissolution action under AS 25.24 that designates a person to determine to whom 08 indemnities for a covered person should be paid under a health insurance policy. 09 (d) This section does not prohibit a health care insurer from recovering an 10 amount mistakenly paid to a provider or a covered person. 11  * Sec. 39. AS 21.54 is amended by adding a new section to read: 12 Sec. 21.54.151. Mental health benefits. (a) Except as provided in (d) of this 13 section, a health care insurance plan sold in the large employer group market that 14 provides both medical and surgical benefits and mental health benefits shall meet the 15 following requirements: 16 (1) if the plan does not include an aggregate lifetime limit on 17 substantially all medical and surgical benefits, the plan may not provide for an 18 aggregate lifetime limit on mental health benefits; 19 (2) if the plan includes an aggregate lifetime limit on substantially all 20 medical and surgical benefits, the plan must 21 (A) include the mental health benefits within the aggregate 22 lifetime limit and may not distinguish in the application of the limit between 23 medical and surgical benefits and mental health benefits; or 24 (B) provide an aggregate lifetime limit for mental health 25 benefits that is not less than the aggregate lifetime limit for medical and 26 surgical benefits; 27 (3) if the plan includes different aggregate lifetime limits or none on 28 different categories of medical and surgical benefits, the plan must provide for 29 aggregate lifetime limits on mental health benefits consistent with federal law; 30 (4) if the plan does not include an annual limit on substantially all 31 medical and surgical benefits, the plan may not provide for an annual limit on mental 01 health benefits; 02 (5) if the plan includes an annual limit on substantially all medical and 03 surgical benefits, the plan must 04 (A) include the mental health benefits with the annual limit and 05 may not distinguish in the application of the limit between medical and 06 surgical benefits and mental health benefits; or 07 (B) provide an annual limit for mental health benefits that is 08 not less than the annual limit for medical and surgical benefits; and 09 (6) if the plan includes different annual limits or none on different 10 categories of medical and surgical benefits, the plan must provide for annual limits on 11 mental health benefits consistent with federal law. 12 (b) Except as provided otherwise in this title, a health care insurance plan is 13 not required to provide mental health benefits. 14 (c) Except as otherwise provided in this title, this section does not affect the 15 terms and conditions relating to the amount, duration, or scope of mental health 16 benefits under a health care insurance plan that provides mental health benefits, 17 including cost sharing, limits on the number of visits or days of coverage, and 18 requirements relating to medical necessity. 19 (d) This section does not apply if application of this section would result in an 20 increase in the cost under the health care insurance plan of at least one percent. 21  * Sec. 40. AS 21.56.120(a) is amended to read: 22 (a) A premium rate for a health care insurance plan subject to this chapter is 23 subject to the following provisions: 24 (1) the premium rate charged or offered during a rating period to small 25 employers with similar case characteristics as determined by the insurer for the same 26 or similar coverage may not vary from the applicable index rate by more than 35 27 percent of the applicable index rate; 28 (2) regarding a health care insurance plan issued before July 1, 1993, if 29 premium rates charged or offered for the same or similar coverage under a health care 30 insurance plan covering a small employer with similar case characteristics as 31 determined by the insurer exceeds the applicable index rate by more than 35 percent, 01 an increase in premium rates for a new rating period may not exceed the sum of 02 (A) a percentage change in the base premium rate measured 03 from the first day of the prior rating period to the first day of the new rating 04 period; plus 05 (B) adjustments due to changes in case characteristics or plan 06 design of the small employer, as determined by the insurer; 07 (3) the percentage increase in the premium rate charged to a small 08 employer for a new rating period may not exceed the sum of the following: 09 (A) the percentage change in the new business premium rate 10 measured from the first day of the prior rating period to the first day of the new 11 rating period; in the case of a health benefit plan into which the small employer 12 insurer is no longer enrolling new small employers, the small employer insurer 13 shall use the percentage change in the base premium rate, provided that the 14 change does not exceed, on a percentage basis, the change in the new business 15 premium rate for the most similar health care insurance plan into which the 16 small employer insurer is actively enrolling new small employers; 17 (B) any adjustment, not to exceed 15 percent annually and 18 adjusted pro rata for rating periods of less than one year, due to the claim 19 experience, health status, or duration of coverage of the employees or 20 dependents of the small employer as determined from the small employer 21 insurer's rate manual; and 22 (C) any adjustment due to change in coverage or change in the 23 case characteristics of the small employer, as determined from the small 24 employer insurer's rate manual; 25 (4) adjustments in rates for claim experience, health status, and 26 duration of coverage may not be charged to individual employees or dependents; any 27 adjustment must be applied uniformly to the rates charged for all employees and 28 dependents of the small employer; 29 (5) a premium rate for a health care insurance plan shall comply with 30 the requirements of this section [NOTWITHSTANDING AN ASSESSMENT PAID 31 OR PAYABLE BY SMALL EMPLOYER INSURERS UNDER AS 21.56.050(d)]; 01 (6) a small employer insurer may use industry as a case characteristic 02 in establishing premium rates, provided that the rate factor associated with an industry 03 classification may not vary by more than 15 percent from the arithmetic average of the 04 highest and lowest rate factors associated with all industry classifications; 05 (7) a small employer insurer shall 06 (A) apply rating factors, including case characteristics, 07 consistently with respect to all small employers; rating factors must produce 08 premiums for identical groups that differ only by amounts attributable to plan 09 design and do not reflect differences due to the nature of the groups assumed to 10 select particular health care insurance plans; and 11 (B) treat all health care insurance plans issued or renewed in 12 the same calendar month as having the same rating period; 13 (8) for the purposes of this subsection, a health care insurance plan that 14 contains a restricted provider network may not be considered similar coverage to a 15 health care insurance plan that does not use a restricted provider network if the 16 restriction of benefits to network providers results in substantial differences in claim 17 costs; 18 (9) a small employer insurer may not use case characteristics, other 19 than age, sex, industry, geographic area, family composition, and group size without 20 prior approval of the director. 21  * Sec. 41. AS 21.56.140(a) is amended to read: 22 (a) Except as provided under AS 21.56.160, a small employer insurer shall, as 23 a condition of transacting business in this state with small employers, offer to small 24 employers all health care insurance plans the small employer insurer actively markets 25 to small employers in this state, including a basic health care insurance plan and a 26 standard health care insurance plan approved by the director. 27  * Sec. 42. AS 21.56.140 is amended by adding a new subsection to read: 28 (i) The director may, by order, establish benefits, cost sharing levels, 29 exclusions, and limitations for the basic and standard health care insurance plans 30 offered under (a) of this section. 31  * Sec. 43. AS 21.66.480(8) is amended to read: 01 (8) "title insurance limited producer" means a person, firm, 02 association, trust, corporation, cooperative, joint-stock company, or other legal entity 03 authorized in writing by a title insurance company to solicit title insurance, collect 04 premiums, determine insurability in accordance with the underwriting rules and 05 standards prescribed by the title insurance company that the licensee represents, and 06 issue policies in its behalf [; HOWEVER, THE TERM "TITLE INSURANCE 07 LIMITED PRODUCER" DOES NOT INCLUDE OFFICERS AND SALARIED 08 EMPLOYEES OF A TITLE INSURANCE COMPANY]. 09  * Sec. 44. AS 21.90.900(17) is repealed and reenacted to read: 10 (17) "firm" means a corporation, association, partnership, limited 11 liability company, limited liability partnership, or other legal entity; 12  * Sec. 45. AS 21.90.900(29) is repealed and reenacted to read: 13 (29) "managing general agent" means a person who 14 (A) manages all or part of the insurance business of an insurer, 15 including the managing of a separate division, department, or underwriting 16 office; and 17 (B) acts as an agent for an insurer, whether known as a 18 managing general agent, manager, or other similar term, who, with or without 19 the authority, separately or together with affiliates, produces, directly or 20 indirectly, and underwrites an amount of gross direct written premium equal to 21 or more than five percent of the policyholder surplus as reported in the last 22 annual statement of the insurer in any one quarter or year together with the 23 following activity related to the business produced, adjusts or pays claims over 24 $10,000 a claim, or negotiates reinsurance on behalf of the insurer. 25  * Sec. 46. AS 25.24.160(b) is amended to read: 26 (b) If a judgment under this section distributes benefits to an alternate payee 27 under AS 14.25, AS 21.51.120(a), AS 21.54.020(c) [AS 21.54.020(g)], 21.54.050(c), 28 AS 22.25, AS 26.05.222 - 26.05.226, or AS 39.35, the judgment must meet the 29 requirements of a qualified domestic relations order under the definition of that phrase 30 that is applicable to those provisions. 31  * Sec. 47. AS 25.24.230(h) is amended to read: 01 (h) If a judgment under this section distributes benefits to an alternate payee 02 under AS 14.25, AS 21.51.120(a), AS 21.54.020(c) [AS 21.54.020(g)], 21.54.050(c), 03 AS 22.25, AS 26.05.222 - 26.05.226, or AS 39.35, the judgment must meet the 04 requirements of a qualified domestic relations order under the definition of that phrase 05 that is applicable to those provisions. 06  * Sec. 48. AS 21.07.250(4), 21.07.250(6); AS 21.27.900(10); AS 21.51.110; AS 21.56.010, 07 21.56.020, 21.56.030, 21.56.040, 21.56.050, 21.56.060, 21.56.070, 21.56.075, 21.56.080, 08 21.56.090, 21.56.100, 21.56.250(6), 21.56.250(9), 21.56.250(17), 21.56.250(19), 09 21.56.250(22), 21.56.250(24), and 21.56.250(25) are repealed. 10  * Sec. 49. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 APPLICABILITY. AS 21.45.305(g), as repealed and reenacted by sec. 36 of this Act, 13 applies to annuity contracts issued on or after January 1, 2007. 14  * Sec. 50. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 TRANSITION: SMALL EMPLOYER HEALTH REINSURANCE ASSOCIATION. 17 Notwithstanding the repeal of AS 21.56.010 - 21.56.100 by sec. 48 of this Act, the Small 18 Employer Health Reinsurance Association shall continue to exist and operate for purposes of 19 winding up the affairs of the association. The association shall be governed by the board of 20 directors as it existed on June 30, 2006, and shall operate according to former AS 21.56.010 - 21 21.56.100, as they read on June 30, 2006, except that, beginning July 1, 2006, the association 22 (1) may not assume reinsurance on any new small employer groups or eligible 23 employees or dependents of small employers; 24 (2) shall terminate reinsurance on each small employer group and each 25 eligible employee or dependent of a small employer covered by the association on the first 26 plan anniversary following July 1, 2006; 27 (3) shall continue to perform and carry out the provisions of former 28 AS 21.56.010 - 21.56.100 as they read on June 30, 2006, with respect to each small employer 29 group and eligible employee and dependent reinsured by the association until all 30 administrative expenses and losses are paid; 31 (4) shall refund to small employer insurers any money remaining after all 01 administrative expenses and losses are paid in the same proportion as the last assessment 02 imposed by the association on member insurers; 03 (5) shall submit a final accounting to the director of the division of insurance 04 for review and approval; and 05 (6) shall cease to operate on order of the director of the division of insurance 06 finding that the affairs of the association have been concluded. 07  * Sec. 51. Sections 26 - 31 of this Act take effect immediately under AS 01.10.070(c). 08  * Sec. 52. Sections 25, 36, and 48 of this Act take effect January 1, 2007. 09  * Sec. 53. Except as provided in secs. 51 and 52 of this Act, this Act takes effect July 1, 10 2006.