SB 325: "An Act relating to state health insurance."
00SENATE BILL NO. 325 01 "An Act relating to state health insurance." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 21.36.095(e) is amended to read: 04 (e) In this section, "insurer" includes 05 (1) an insurer, as defined in AS 21.90.900; 06 (2) a group health plan, as defined in 29 U.S.C. 1167(l) (Employee 07 Retirement Income Security Act of 1974); 08 (3) a health maintenance organization, as defined in AS 21.86.900; 09 (4) a hospital service corporation or medical service corporation, as 10 defined in AS 21.87.330; 11 (5) a plan administrator [WRITING CARRIER], as defined in 12 AS 21.55.500; and 13 (6) an entity offering a service benefit plan, as referred to in 42 U.S.C. 14 1396g.
01 * Sec. 2. AS 21.55.020 is repealed and reenacted to read: 02 Sec. 21.55.020. BOARD OF DIRECTORS; ORGANIZATION. (a) The board 03 of directors of the association shall be made up of seven individuals. Five board 04 members shall be selected by association members, subject to approval by the director 05 of the division of insurance, and two board members shall be consumers selected by 06 the director of the division of insurance. The director or the director's designee shall 07 serve as a nonvoting ex officio member of the board. A member of the board serves 08 for a term of three years and may be reappointed to an unlimited number of terms. 09 The term of a board member shall continue until a successor is appointed. 10 (b) In approving members of the board, the director shall consider, among 11 other things, whether all types of participating members are fairly represented. 12 (c) In determining voting rights at association meetings, an association member 13 is entitled to vote in person or by proxy. The vote shall be a weighted vote based 14 upon the association member's premiums for health insurance for major medical 15 coverage on an expense incurred basis, or the association member's subscriber fees, 16 derived from or on behalf of state residents in the previous calendar year, as 17 determined by the director. In determining voting rights at board meetings, a board 18 member is entitled to one vote in person or by proxy. 19 (d) A member of the board may be reimbursed from the association for 20 expenses incurred as a result of board activities, but may not otherwise be 21 compensated for services by the association. The costs of conducting meetings of the 22 association and its board of directors shall be the responsibility of the members of the 23 association. 24 (e) The board shall study and prepare a report at least once every three years 25 on the effectiveness of this chapter. The report must include an analysis of the 26 effectiveness of this chapter in promoting rate stability, product availability, and 27 affordability of coverage. The report may contain recommendations for legislative or 28 other regulatory action. The board shall notify the legislature that the report is 29 available. 30 (f) In this section, "board" means the board of directors of the association. 31 * Sec. 3. AS 21.55.100(a) is amended to read:
01 (a) The association shall make available to residents who are high risks an 02 individual state plan of health insurance. The association shall offer at least one plan 03 related to the deductible, copayment, and calendar year maximums [THREE 04 ALTERNATIVES RELATED TO DEDUCTIBLES AS] described in AS 21.55.120 and 05 may offer additional deductible, copayment, and calendar year maximum 06 alternatives as approved by the director. 07 * Sec. 4. AS 21.55.100(d) is amended to read: 08 (d) The association may make available to residents who are high risks 09 coverage through a health maintenance organization or other managed care 10 arrangement if [AS] approved by the director. Deductible, copayment, and calendar 11 year maximum limits provided through an organization or arrangement are not 12 subject to the limits described in AS 21.55.120, but the limits must be approved 13 by the director. 14 * Sec. 5. AS 21.55.120(a) is amended to read: 15 (a) A state plan other than a Medicare supplement plan may require 16 deductibles of not less than [$200 A PERSON,] $500 a person as determined by the 17 board and approved by the director [, OR $1,000 A PERSON]. The amount of the 18 deductible may not be greater when a service is rendered on an outpatient basis than 19 when that service is offered on an inpatient basis. Expenses incurred during the last 20 three months of a calendar year and actually applied to an individual's deductible for 21 that year shall also be applied to that individual's deductible in the following calendar 22 year. [THE $200 MAXIMUM, THE $500 MAXIMUM, AND THE $1,000 23 MAXIMUM MAY BE ADJUSTED YEARLY TO CORRESPOND WITH THE 24 CHANGE IN THE MEDICAL CARE COMPONENT OF THE CONSUMER PRICE 25 INDEX, AS ADJUSTED BY THE DIRECTOR. THE BASE YEAR FOR THE 26 COMPUTATION SHALL BE THE FIRST FULL CALENDAR YEAR OF 27 OPERATION OF THE ASSOCIATION.] 28 * Sec. 6. AS 21.55.120(b) is amended to read: 29 (b) A state plan other than a Medicare supplement plan must [SHALL] require 30 a maximum copayment of 40 [20] percent for charges for all types of health care in 31 excess of the deductible and 50 percent for services described in AS 21.55.110(3) in
01 excess of the deductible. 02 * Sec. 7. AS 21.55.120(c) is amended to read: 03 (c) The [EXCEPT AS PROVIDED IN (e) OF THIS SECTION, THE] sum of 04 the deductible and copayments required in any calendar year under a plan may not 05 exceed a maximum limit of five times the deductible as determined by the board 06 and approved by the director [$2,000 PER COVERED INDIVIDUAL]. Covered 07 expenses incurred after the applicable maximum limit has been reached shall be paid 08 at the rate of 100 percent of usual, customary, reasonable, or prevailing charges, except 09 that expenses incurred for treatment of mental and nervous conditions shall be paid at 10 the rate of 50 percent. [THE $2,000 MAXIMUM SHALL BE ADJUSTED YEARLY 11 TO CORRESPOND WITH THE CHANGE IN THE MEDICAL CARE COMPONENT 12 OF THE CONSUMER PRICE INDEX AS ADJUSTED BY THE DIRECTOR.] 13 * Sec. 8. AS 21.55.130(c) is amended to read: 14 (c) A state plan issued to a person whose previous subscriber contract, health 15 policy, or Medicare supplement policy was involuntarily terminated shall credit the 16 time covered under the previous contract or policy toward an exclusion for preexisting 17 conditions under the state plan if the previous contract or policy had a similar 18 preexisting condition exclusion and the person applies for a state plan within 31 days 19 after termination of the previous contract or policy. If a person covered by this 20 subsection is accepted by the plan administrator [WRITING CARRIER] and pays a 21 specified premium for retroactive coverage, the state plan is effective retroactively to 22 the date that the person's previous contract or policy terminated. 23 * Sec. 9. AS 21.55.150 is amended to read: 24 Sec. 21.55.150. STATE PLAN PREMIUMS. (a) The association may not 25 charge a rate for coverage issued by or through the association that is [EXCESSIVE, 26 INADEQUATE, OR] unfairly discriminatory. Premium rates shall be submitted to 27 the director for approval before use. 28 (b) The association may [SHALL] use separate scales of premium rates based 29 on age and geographic location of the insured. The association may use separate scales 30 of premium rates based on other factors, including use or nonuse of tobacco, if 31 approved by the director.
01 (c) The board shall determine standard risk premium rates by considering 02 the premium rates charged by members of the association offering, to residents 03 of the state, health insurance [THE FIVE MEMBERS OF THE ASSOCIATION 04 THAT INSURE, OR HAVE SUBSCRIBER CONTRACTS WITH, THE LARGEST 05 NUMBER OF INDIVIDUALS IN THE STATE UNDER PLANS WITH] benefits 06 substantially equivalent to benefits under the state plan [BENEFITS SHALL SUBMIT 07 TO THE ASSOCIATION AN ESTIMATE OF THE RATE THAT WOULD BE 08 ACTUARIALLY SOUND FOR A PERSON WHO IS A STANDARD RISK FOR 09 COVERAGE SUBSTANTIALLY EQUIVALENT TO THE STATE PLAN]. The 10 premium for a state plan may not exceed 200 percent of the standard risk premium 11 rates determined by the board [AVERAGE OF THOSE FIVE ESTIMATES]. 12 * Sec. 10. AS 21.55.200 is amended to read: 13 Sec. 21.55.200. SELECTION OF A PLAN ADMINISTRATOR [WRITING 14 CARRIERS]. The board [ASSOCIATION] shall develop bid specifications and select 15 a plan administrator through a competitive bidding process [FOR MEMBERS 16 THAT WISH TO BE SELECTED AS A WRITING CARRIER TO ADMINISTER A 17 STATE PLAN]. The selection of the plan administrator [WRITING CARRIER] 18 shall be based upon criteria including the plan administrator's [MEMBER'S] proven 19 ability to handle [A LARGE NUMBER OF] health insurance coverage for individuals 20 [CASES OR SUBSCRIBER CONTRACTS], efficient claim paying capacity, [AND] 21 the estimate of total charges for administering the plan, the plan administrator's 22 ability to apply effective cost containment programs and procedures, and to 23 administer the plan in a cost efficient manner, and the financial condition and 24 stability of the plan administrator. 25 * Sec. 11. AS 21.55.210 is repealed and reenacted to read: 26 Sec. 21.55.210. DUTIES OF PLAN ADMINISTRATORS. (a) The plan 27 administrator shall perform the administrative and claims payment functions required 28 by this section. The plan administrator shall provide these services for a period 29 specified in the contract between the association and the plan administrator subject to 30 removal for cause and subject to the terms, conditions, and limitations of the contract 31 between the association and the plan administrator. At least six months before the
01 expiration of each contract period, the board shall invite eligible entities, including the 02 plan administrator, to submit bids to serve as the plan administrator. The board shall 03 follow the provisions of this section in selecting a plan administrator for the 04 subsequent contract period. 05 (b) The plan administrator shall provide to all eligible persons enrolled in a 06 state plan an individual policy setting out a statement of the insurance protection to 07 which the person is entitled, with whom claims are to be filed, and to whom benefits 08 are payable. The policy must indicate that coverage was obtained through the 09 association. 10 (c) The plan administrator shall submit to the board and the director on a 11 quarterly basis a report on the operation of the state plans. Specific information to be 12 contained in the report shall be determined by the board and shall be specified in the 13 contract between the association and the plan administrator. 14 (d) Claims shall be paid by the plan administrator and must indicate that the 15 claim was paid under a state plan. A claim payment must include a telephone number 16 that can be used for inquiries regarding the claim. 17 (e) The plan administrator shall be reimbursed from the state plan premiums 18 received for its direct and indirect expenses for administering the plan. Direct and 19 indirect expenses must include a pro rata reimbursement for that portion of the plan 20 administrator's administrative, printing, claims administration, management, and 21 building overhead expenses that are assignable to the maintenance and administration 22 of the state plans. The board shall approve cost accounting methods to substantiate 23 the plan administrator's cost reports consistent with generally accepted accounting 24 principles. Direct and indirect expenses may not include costs directly related to the 25 original submission of bids before selection as the plan administrator. 26 (f) The plan administrator shall at all times when carrying out its duties under 27 this chapter be considered an agent of the association. 28 * Sec. 12. AS 21.55.220(a) is amended to read: 29 (a) Upon notification of eligibility under AS 21.55.320, a person may enroll 30 in a state plan by payment of the appropriate state plan premium to the plan 31 administrator [WRITING CARRIER].
01 * Sec. 13. AS 21.55.220(b) is amended to read: 02 (b) An employer that has in its employ one or more eligible persons enrolled 03 in a state plan may make all or a portion of a state plan premium payment directly to 04 the plan administrator [WRITING CARRIER]. 05 * Sec. 14. AS 21.55.220(d) is amended to read: 06 (d) The board [ASSOCIATION] shall make an annual determination of each 07 member's liability, if any, and may make an annual fiscal year end assessment if 08 necessary. The board [ASSOCIATION] may also, subject to the approval of the 09 director, provide for interim assessments against the members as may be necessary to 10 assure the financial capability of the association in meeting the incurred or estimated 11 claims expenses of the state plans and operating and administrative expenses of the 12 association until the association's next annual fiscal year end assessment. Payment of 13 an assessment is due within 30 days of receipt by a member of written notice of a 14 fiscal year end or interim assessment. Failure by a member to tender to the association 15 the assessment within 30 days shall be grounds for revocation of a member's certificate 16 of authority. A member that ceases to do health insurance business in the state, or 17 ceases to offer subscriber contracts in the state, due to revocation, suspension, or 18 voluntary surrender of its certificate of authority, remains liable for assessments 19 through the calendar year that the health insurance business ceased. The board 20 [ASSOCIATION] may decline to levy an assessment against a member if the 21 assessment would be minimal [NOT EXCEED $10]. Assessments paid by a member 22 are a general expense of the member. 23 * Sec. 15. AS 21.55.310 is amended to read: 24 Sec. 21.55.310. ENROLLMENT BY AN ELIGIBLE PERSON. A person may 25 enroll in a state plan by applying to the plan administrator [WRITING CARRIER]. 26 The application must include the following: 27 (1) name, address, age, and length of residency of the applicant; 28 (2) a designation of the plan desired, including deductible option 29 chosen; 30 (3) information relevant to whether the person is a high risk; and 31 (4) payment of the first premium.
01 * Sec. 16. AS 21.55.320 is amended to read: 02 Sec. 21.55.320. PLAN ADMINISTRATOR'S [WRITING CARRIER'S] 03 RESPONSE. Within 30 days after receiving the certificate described in AS 21.55.310, 04 the plan administrator [WRITING CARRIER] shall either reject the application for 05 failing to comply with the requirements of AS 21.55.300 and 21.55.310 or forward the 06 eligible person a notice of acceptance. 07 * Sec. 17. AS 21.55.330 is amended to read: 08 Sec. 21.55.330. EFFECTIVE DATE OF POLICIES. (a) Except as provided 09 in (b) of this section and AS 21.55.130(c), insurance under a state plan is effective 10 immediately upon receipt of the first [QUARTERLY] premium, and is retroactive to 11 the date of the application, if the applicant otherwise complies with the requirements 12 of this chapter. 13 (b) Insurance under a state plan is effective retroactively to the date that the 14 person's previous contract or policy terminated if the person 15 (1) applies for a state plan within 60 days after the previous contract 16 or policy terminated; 17 (2) is accepted by the plan administrator [WRITING CARRIER]; and 18 (3) pays a specified premium for the period of retroactive coverage. 19 * Sec. 18. AS 21.55.400 is amended to read: 20 Sec. 21.55.400. DUTIES OF DIRECTOR. The director may 21 (1) approve the selection of the plan administrator [WRITING 22 CARRIER] by the association and approve the association's contract with the plan 23 administrator [WRITING CARRIER], including the coverages and premiums to be 24 charged; 25 (2) contract with the federal government or another unit of government 26 to ensure coordination of the state plans with other governmental assistance programs; 27 (3) undertake directly or through contracts with other persons studies 28 or demonstration programs to develop awareness of the benefits of this chapter; and 29 (4) formulate general policy and adopt regulations that are reasonably 30 necessary to administer this chapter. 31 * Sec. 19. AS 21.55.410 is amended to read:
01 Sec. 21.55.410. STATE NOT LIABLE. The state is not liable for acts or 02 omissions of the association or a plan administrator [WRITING CARRIER] under 03 this chapter, nor is the state liable for payment of a claim under a state plan issued by 04 a plan administrator [WRITING CARRIER]. 05 * Sec. 20. AS 21.55.500(11) is amended to read: 06 (11) "state plan" means a policy of insurance offered by the association 07 through a plan administrator [WRITING CARRIER]; 08 * Sec. 21. AS 21.55.500(13) is amended to read: 09 (13) "plan administrator [WRITING CARRIER]" means the eligible 10 entity or entities [INSURER OR INSURERS] selected by the board 11 [ASSOCIATION] and approved by the director to administer a state plan. 12 * Sec. 22. AS 21.55.120(d) and 21.55.120(e) are repealed.