Legislature(2015 - 2016)BARNES 124
03/28/2016 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB308 | |
| HB372 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 308 | TELECONFERENCED | |
| *+ | HB 372 | TELECONFERENCED | |
| += | HB 214 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 372-OMNIBUS INSURANCE
3:55:06 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 372, "An Act relating to insurance; relating to
expenses for insurance examinations; relating to regulations for
insurance utilization review, benefits determination, health
care insurance grievance resolution procedures, independent
review of adverse determinations or final adverse
determinations, independent review organizations, and continuing
education providers; relating to required provisions for health
care insurance contracts and policies, including health care
provider choice; establishing civil penalties for insurers for
failure to provide requested records; amending the definition of
'wet marine and transportation' insurance; amending provisions
on limited licenses to include crop insurance; relating to
third-party administrator notification requirements; relating to
certification filing by reinsurance intermediary brokers;
relating to rate filings, delivery of insurance policies or
endorsements; relating to refunds of variable life insurance
policies and variable annuities; establishing limitations on
issuance of long- term care insurance; relating to requirements
for group health insurance policies; amending the definition of
'group health insurance'; relating to motor vehicle service
contracts; relating to notice requirements for meetings of
stockholders or members of a domestic insurer; establishing a
definition of 'bona fide association'; relating to requirements
and penalties for committing a fraudulent or criminal insurance
act; updating criteria for examinations; relating to rate filing
deviations; establishing civil penalties for certain wilful
violations; and providing for an effective date."
3:55:13 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community & Economic Development, introduced HB 372,
the omnibus insurance bill for the Division of Insurance, which
relates to the following issues: addresses key federal
preemptions brought about by the Patient Protection and
Affordable Care Act of 2010 (PPACA); provides modernization and
updates to existing law; amends the cost of market conduct
examinations; addresses modernized recordkeeping requirements;
requires the designation of one compliance officer in certain
circumstances; clarifies continuing education requirements;
modernizes existing law pertaining to licensing; clarifies the
payment of certain fees; clarifies associations; amends existing
law dealing with criminal fraud and associated fines and
penalties; provides filing efficiencies; allows for
endorsements to be posted on a web site; clarifies the value of
a variable life or variable annuity refund; modernizes existing
law related to group life insurance.
MS. WING-HEIER paraphrased the following sectional analysis for
HB 372: [original punctuation provided]
Sec. 1 AS 21.06.120(a) Examination of insurers
· Subsection (a) is amended to reflect the correct
references to the handbooks used throughout the
country for financial and market conduct examinations.
Both publications are published by the National
Association of Insurance Commissioners (NAIC).
Formerly, the term "Examiners' Handbook" was a
sufficient description as both the financial
examination and market conduct examination handbooks
used the term in their title. Now, however, the
"Market Conduct Examiners Handbook" is no longer
published and is part of the "Market Regulation
Handbook".
Sec. 2 AS 21.06.140(f) Conduct of examination
· Subsection (f) is amended to reflect the correct
references to the handbooks used throughout the
country for financial and market conduct examinations.
Both publications are published by the National
Association of Insurance Commissioners. Formerly, the
term "Examiners' Handbook" was a sufficient
description as both the financial examination and
market conduct examination handbooks used the term in
their title. Now, however, the "Market Conduct
Examiners Handbook" is no longer published and is part
of the "Market Regulation Handbook".
Sec. 3 AS 21.06.160(a) Examination expense
· Subsection (a) is amended to exclude managing general
agents, third-party administrators, reinsurance
intermediary managers, motor vehicle service contract
providers, and surplus lines brokers from the
requirements of paying for division personnel and
overhead costs relating to an examination; such
entities would still be required to pay for the
division's "out-of-pocket" expenses including travel
expenses and for compensation of a contract examiner,
however, the entities could apply for a waiver from
the director based on financial hardship
3:59:57 PM
REPRESENTATIVE JOSEPHSON asked for a description of an
examination conducted by the division.
MS. WING-HEIER explained that personnel from the division will
go to a brokerage firm and examine its books to confirm it is in
compliance with [Alaska Statutes Title 21], and then the
division bills the firm for its expenses; however, some firms
and agents are very small, independent offices in the state, and
the examination costs including travel and days of work could be
more than the firm's annual income, thus the division stopped
the examinations. Since the affected firms and agents are
already paying the division for licensure, the bill allows the
division to make an examination, and not bill for the salaries
of division personnel.
CHAIR OLSON surmised the division would conduct an examination
immediately if illegal activity was suspected.
MS. WING-HEIER indicated yes.
REPRESENTATIVE JOSEPHSON inquired as to lost revenue for the
state.
MS. WING-HEIER restated that the firms are already paying for a
license to support the division, thus the division is recouping
its cost. She continued paraphrasing the sectional analysis for
HB 372, as follows: [original punctuation provided]
Sec. 4 AS 21.07.005 Utilization review and benefit
determination, grievance procedures, and external
review
· A new section, AS 21.07.005 provides authority for
the director to adopt regulations relating to
utilization review and benefit determinations;
grievance procedures; external review requirements for
health care insurance; and registration and regulation
of independent review organizations including the
establishment of fees. These regulations are necessary
to make Alaska's laws consistent with national
standards and federal law. The regulations will be
based on model laws developed by the National
Association of Insurance Commissioners.
REPRESENTATIVE JOSEPHSON inquired as to whether the threat of
federal preemption was that the state was not performing its
utilization review.
MS. WING-HEIER answered that the state has been performing its
external review under federal law, not under state law. She
continued paraphrasing the sectional analysis for HB 372, as
follows: [original punctuation provided]
Sec. 5 AS 21.07.010(a) Patient and health care
provider protection
· Subsection (a) is amended to require that contracts
between a participating health care provider and a
health care insurer include a provision that clearly
states that the health care provider will adhere to
the health care insurer's policies and procedures
regarding referrals and obtaining prior authorization
and providing services under a treatment plan approved
by the health care insurer. Non-substantive drafting
convention changes are also made.
Sec. 6 AS 21.07.020 Required contract provisions for
health care insurance policy
· AS 21.07.020 is amended to revise and update the
provisions that must be included in a health insurance
policy and to comply with federal law.
4:05:15 PM
REPRESENTATIVE JOSEPHSON asked for a description of the repealed
language in proposed Section 6.
MS. WING-HEIER said the repealed language will be put into
regulations. She continued paraphrasing the sectional analysis
for HB 372, as follows: [original punctuation provided]
Sec. 7 AS 21.07.030(d) Choice of health care provider
· Subsection (d) is amended to require a health care
insurer to permit a covered person to designate a
pediatrician where the insurer offers a health care
policy that requires or provides for a designation by
the covered person of a participating primary care
provider.
Sec. 8 AS 21.07.030(e) Choice of health care provider
· Subsection (e) is amended to recognize an exception
to the subsection's requirements due to a new
subsection (h).
Sec. 9 AS 21.07.030(h) Choice of health care provider
· New subsection (h) prohibits a health care insurer
that offers a health care insurance policy that
provides coverage for obstetric and gynecologic care
and that requires designation by a covered person of a
participating primary care provider from requiring
authorization or referral for a female patient to
receive obstetric gynecological care from a
participating provider. A health care insurer shall
treat authorizations by an obstetrics and gynecology
specialist as the authorization of the primary care
provider.
Sec. 10 AS 21.07.250(3) Definitions
· Paragraph (3) is repealed and reenacted to define
"emergency services" to mean medical care services or
items furnished or required to evaluate and treat an
emergency medical condition.
Sec. 11 AS 21.07.250(14) Definitions
· Paragraph (14) is repealed and reenacted to define
"utilization review" to mean a set of techniques
designed to monitor the use of, or evaluate the
clinical necessity, appropriateness, efficacy, or
efficiency of, health care services, procedures, or
settings; techniques may include ambulatory review,
prospective review, second opinion certification,
concurrent review, case management, discharge
planning, or retrospective review.
Sec. 12 AS 21.07.250(15) Definitions
· New paragraph (15) defines " emergency medical
condition" to mean the sudden and, at the time,
unexpected onset of a medical condition or illness
that requires immediate medical attention and where
failure to provide immediate medical attention would
result in (A) the placing of the person's health in
serious jeopardy; (B) a serious impairment to bodily
functions; or (C) a serious dysfunction of any bodily
organ or part.
Sec. 13 AS 21.09.320(b) Maintenance Records
· Subsection (b) is amended to require that an insurer,
to meet the requirements of AS 21.09.320(a), shall
keep records as required by the maintenance records
requirements of the insurer's domicile jurisdiction.
Sec. 14 AS 21.09.320(c) and (d) Maintenance of records
· New subsection (c) requires the insurer not later
than 10 business days after the date of the request to
provide the records to the director or make the
records available for inspection and copying. The
records inspected or examined under this subsection
are confidential but may be used by the director in a
proceeding against the insurer.
· New subsection (d) provides that failure of the
insurer to provide the information required by this
section may result in a civil penalty of up to $1,000
for each violation and, an additional civil penalty of
up to $50 for each day the information requested is
not provided.
Sec. 15 AS 21.12.090(b) Marine, wet marine, and
transportation insurance defined
· Subsection (b) is amended to define "wet marine and
transportation" insurance as that part of marine
insurance that includes only (1) insurance on vessels,
crafts, and hulls, and insurance of interests in or
with relation to vessels, crafts, and hulls; (2)
insurance of marine builder's risks, marine war risks,
and contracts of marine protection and indemnity
insurance; (3) insurance of freights and disbursements
pertaining to a subject of insurance coming within
this section; or (4) insurance of personal property
and interests in personal property, in the course of
exportation from or importation into any country, and
in the course of transportation coastwise or on inland
waters, including transportation by land, water, or
air from point of origin to final destination, in
respect to , appertaining to, or in connection with,
any and all risks or perils of navigation, transit, or
transportation, and while being prepared for and while
awaiting shipment, and during delays, storage,
transshipment, or reshipment incident thereto. The
amendment corrects a drafting error that required all
four of the paragraphs to be met to meet the
definition.
Sec. 16 AS 21.27.020(c) General qualifications for
license
· Paragraph (c)(3) is amended to provide that a firm
insurance producer, firm managing general agent, firm
intermediary broker, firm reinsurance intermediary
manager, firm surplus lines broker or firm independent
adjuster applicant or license in designating one or
more compliance officers for the firm may only
designate one compliance officer for each class of
authority. A non-substantive drafting convention
change is also made to paragraph (c)(5).
Sec. 17 AS 21.27.020(f) General qualifications for
license
· Subsection (f) is amended to make clear the authority
of the director to adopt regulations establishing
additional education or experience requirements for
continuing education providers.
Sec. 18 AS 21.27.025(a) Required notice of licensee
· Subsection (a) is amended to require a licensee to
report to the director in writing any administrative
action taken against the licensee by a financial
industry regulatory authority sanction or arbitration
proceeding. Non-substantive drafting conventions
changes are also made.
Sec. 19 AS 21.27.150(a) Limited licenses
· Subsection (a) is amended to give the director
authority to issue a crop insurance limited producer
license. Non-substantive drafting conventions changes
are also made.
Sec. 20 AS 21.27.380(a) License renewal, lapse, and
reinstatement
· Subsection (a) is amended to make non-substantive
changes to conform the language to State Based Systems
(SBS), an electronic system owned by the National
Association of Insurance Commissioners for use by
state regulators in support of insurance regulatory
functions. SBS enables the division to more
efficiently and effectively process license
applications, renewals, inquiries, complaints,
enforcement actions and other functions while
remaining compliant with national uniformity
initiatives.
Sec. 21 AS 21.27.380(b) License renewal, lapse, and
reinstatement
· Subsection (b) is amended to make non-substantive
changes to conform the language to SBS.
Sec. 22 AS 21.27.380(d) License renewal, lapse, and
reinstatement
· Subsection (d) is amended to make non-substantive
changes to conform the language to SBS.
Sec. 23 AS 21.27.640(b) Third-party administrator
qualifications
· Subsection (b) is amended to require a third-party
administrator registrant to notify the director not
later than 30 days after the final disposition of an
administrative action taken against the registrant by
a governmental agency of another state, by a
governmental agency of another jurisdiction, or by a
financial industry regulatory authority sanction or
arbitration proceeding. The registrant must also
submit to the director documents relating to the final
disposition. A non-substantive drafting convention
change is also made.
Sec. 24 AS 21.27.650(r) Operating requirements for
third-party administrators
· New subsection (r) requires insurers to review its
books and records quarterly to determine whether a
person or insurance producer has acted as the
insurer's third-party administrator. If the insurer so
finds, the insurer must notify the person or insurance
producer and the director. The insurer and the person
or insurance producer must then fully comply with AS
21.27 not later than 30 days after notification.
Sec. 25 AS 21.27.690(b) Operating requirements for
reinsurance intermediary brokers; actions for loss
· Subsection (b) is amended to add the requirement that
an insurer may not use a nonresident reinsurance
intermediary broker who is not licensed under this
chapter unless the reinsurance intermediary broker has
filed a certification with the director that the
reinsurance intermediary broker is operating only for
a foreign insurer. Subsection (b) is also amended to
add the requirement that a domestic insurer may not
use an alien reinsurance intermediary broker unless
the alien reinsurance intermediary broker has filed a
certification with the director that the reinsurance
intermediary broker is operating only for a domestic
insurer.
Sec. 26 AS 21.34.035(b) Health care insurance
· Subsection (b) is amended to change references from a
repealed statute (AS 21.87.190) to the correct
references of AS 21.51.405 and AS 21.54.015.
Sec. 27 AS 21.34.050(a) Listing eligible surplus lines
insurers
· Subsection (a) is amended to remove the authority of
the director to adopt a regulation to charge fees to
eligible nonadmitted insurers. This amendment is
necessary to meet the requirements of the federal
Nonadmitted and Reinsurance Reform Act of 2010 (NRRA).
The division has not been charging this fee since 2011
due to this federal law.
Sec. 28 AS 21.34.050(c) Listing eligible surplus lines
insurers · Subsection (c) is amended to remove
references to fees charged to eligible nonadmitted
insurers.
Sec. 29 AS 21.34.180(a) Surplus lines tax · Subsection
(a) is amended to add "home state" to the subsection
to be consistent with the NRRA and previous amendments
to AS 21.34.
Sec. 30 AS 21.36.025(b) and (c) Unfair marketing
practices prohibited
· New subsection (b) provides that a person may not
sell a membership in an association or labor union for
the purpose of qualifying for an individual for group
insurance.
· New subsection (c) provides that a person that sells
a membership in an association may not offer group
insurance for purposes of selling memberships in an
association or labor union.
Sec. 31 AS 21.36.185 Maintenance of complaint handling
records
· This section is amended to account for differences in
recordkeeping requirements between this section and
those in the National Association of Insurance
Commissioners Health Carrier Grievance Procedure Model
Act which the director will be required to adopt under
section 4 of the bill
4:12:14 PM
REPRESENTATIVE LEDOUX questioned the necessity for Section 30.
MS. WING-HEIER explained that one cannot form a fictitious group
solely for the purpose of selling insurance; for example, the
National Rifle Association (NRA) has a group life insurance
product it can sell to its members, but the main purpose of the
NRA is not to sell insurance. This also applies to unions or
other associations in the state. In further response to
Representative LeDoux, she said PPACA is tough on associations
because it wants insurers to join the group or individual
insurance market. The state does not want the associations in
the state that have insurance programs to be disbanded, but the
bill does state that associations cannot be formed solely for
the purpose of selling insurance, or solicit members solely for
the same, to remain in compliance with PPACA. This is not a new
provision.
REPRESENTATIVE LEDOUX restated her question.
MS. WING-HEIER gave an example of the Sons of Norway approaching
a prospective member with an offer to sell insurance, which it
should not do, because they are not licensed as an insurance
company to sell insurance.
REPRESENTATIVE LEDOUX asked whether the provision only applies
to medical insurance.
MS. WING-HEIER opined this applies to medical insurance, and she
said she would confirm that it does not apply to life insurance.
She continued paraphrasing the sectional analysis for HB 372, as
follows: [original punctuation provided]
Sec. 32 AS 21.36.225(a) and (b) Notice of health
insurance coverage cancellation, coverage change, or
premium change
· Subsections (a) and (b) are amended by changing the
term "covered individual" to "policyholder" as the
intent of the provisions were not to require that
every covered person under, for example, a family
policy receives the notice. The intent is for the
primary insured to receive the notice and in the case
of a group for the policyholder to receive the notice.
Sec. 33 AS 21.36.360(b) Fraudulent or criminal
insurance acts
· Subsection (b) is amended to clarify that a
fraudulent insurance act is committed by a person who,
with intent to injure, defraud, or deceive knowingly
omits material information 1) when presenting to an
insurer a written or oral statement in support of a
claim for payment or other benefit under an insurance
policy or 2) when assisting or conspiring with another
to prepare or make a written or oral statement that is
submitted to an insurer in support of a claim or
benefit under an insurance policy.
· Subsection (b) is also amended by adding a new
paragraph (7) that would provide that a fraudulent
insurance act is committed by a person who, with
intent to injure, defraud, or deceive makes a written
or oral statement in response to an insurer's
inquiries related to another's claim for payment or
other benefit under an insurance policy, knowing the
statement contains false, incomplete, or misleading
information, or omits information concerning a matter
material to the claim. This statutory change is
intended to address the situation where a person
obtains insurance immediately after an accident (to
avoid arrest for driving without insurance) and then
claims he/she was insured at the time of the accident
when the other driver's insurer inquiries about the
person's coverage.
Sec. 34 AS 21.36.360(q) Fraudulent or criminal
insurance acts
· Subsection (q) is amended to provide for a class C
felony for a fraudulent insurance act that (1) falsely
makes, completes, or alters a certificate of insurance
or other document relating to insurance and (2)
knowingly possesses a forged certificate of insurance
or other document relating to insurance. The current
statute does not specify a penalty for these offences.
4:19:04 PM
REPRESENTATIVE COLVER asked whether the level of offense is
determined by the dollar amount of the infraction.
MS. WING-HEIER said the amount of the felony is found elsewhere
in the bill.
REPRESENTATIVE COLVER questioned how the division will determine
intent to defraud, as opposed to a mistake.
CHAIR OLSON suggested that only the person committing fraud has
liability.
MS. WING-HEIER explained that insurance brokers or agents issue
the certificates of insurance, thus unless the consumer modifies
the document, the consumer is not party to fraud.
REPRESENTATIVE COLVER then gave examples of a broker who failed
to renew a policy after receiving payment from a consumer, or a
broker who made an accounting error.
MS. WING-HEIER said that insurance agencies such as State Farm
are responsible for their agents; in a brokerage agreement, the
consumers would look to the broker's errors and omissions
insurance (E&O). In further response to Representative Colver,
she said brokers are not required to carry E&O insurance.
REPRESENTATIVE COLVER suggested an agency would declare
bankruptcy in the instance of a large claim.
CHAIR OLSON noted that insurers would have a bond.
4:25:24 PM
REPRESENTATIVE LEDOUX surmised that brokers are agents of
insurance companies, therefore, the insurance company would be
liable.
MS. WING-HEIER clarified that an agent is an agent for an
insurance company, and a broker is independent and solicits bids
from independent insurance companies, and has "no right to bind
the insurance company to that client."
CHAIR OLSON added that they also need to have received money for
a premium.
REPRESENTATIVE LEDOUX opined that if money changed hands, and a
binder was issued, the binder would obligate the insurance
company.
MS. WING-HEIER said if a broker takes consumers' money and does
not have an agreement from an insurance company to accept the
risk - that is fraud.
REPRESENTATIVE COLVER asked whether a national insurance company
has a duty to pay the claims of an agent, even in the case of
consumer fraud.
4:28:02 PM
MS. WING-HEIER said the difference is an agent represents for
example, State Farm Insurance or Allstate, but a broker
represents a client, and in a manner similar to that of a real
estate broker, can show a client a variety policies.
REPRESENTATIVE COLVER suggested that if a mistake was made by
the agent, the company would have a duty to insure as
represented by the agent.
4:28:54 PM
MS. WING-HEIER said yes, in most cases. She continued
paraphrasing the sectional analysis for HB 372, as follows:
[original punctuation provided]
Sec. 35 AS 21.36.390(b) Notice to director
· Subsection (b) is amended to require an insurer or
licensee that has reason to believe that an insurance
producer with which it is doing business is involved
in violation of (1) AS 21.36.030 (Misrepresentation
and false advertising of insurance policies), (2) AS
21.36.050 (Twisting prohibited), and (3) AS 21.36.360
(Fraudulent or criminal acts), to immediately send to
the director a report disclosing the basis for that
belief and any other information that the director may
require.
Sec. 36 AS 21.39.040(a)(2) Rate filings
· Paragraph (a)(2) is amended to clarify what is an
acceptable effective date for a rate filing.
Sec. 37 AS 21.39.070(a) Deviations
· Subsection (a) is repealed and reenacted to allow the
division to consider a member's or subscriber's
application for a deviation from a rating
organization's class rates, schedules, rating plans,
or rules respecting a kind of insurance, or class of
risk with a kind of insurance, or combination as part
of the regular filing process without requiring a
formal order from the director. The amendment would
also eliminate the requirements that casualty
insurance deviations may only be a uniform percentage
deviation and that deviation application copies must
also be sent simultaneously to the rating
organization.
Sec. 38 AS 21.42.160(d) Contents of policies in
general
· Subsection (d) is amended to eliminate the
requirement that insurers print the year of adoption
on all forms submitted to the division.
Sec. 39 AS 21.42.250(c) Delivery or posting of policy;
notifications
· Subsection (c) is amended to expand the applicability
of the subsection to all lines of insurance rather
than to just property and casualty lines. The
subsection provides for an insurer providing a policy
or endorsement by posting the policy or endorsement on
the insurer's Internet website and clearly identifying
the posted policy or endorsement purchased by the
insured in the declaration page provided to the
insured.
Sec. 40 AS 21.45.020(d) Standards provisions required;
return and refund
· Subsection (d) is amended to correct drafting errors.
Sec. 41 AS 21.48.010(a) Group requirements for group
contracts
· Subsection (a) is amended to clarify what constitutes
a valid group for issuance of life insurance and gives
the director authority to add additional requirements
by regulation.
Sec. 42 AS 21.48.010(b) Group requirements for group
contracts
· Subsection (b) is amended to provide that this
section does not apply to certain specified life
insurance policies.
Sec. 43 AS 21.48.010(e) and (f) Group requirements for
group contracts
· New subsection (e) provides that a group life
insurance policy may be issued to a group that does
not meet one or more of the requirements under
subsection (a) if the director finds that issuance is
in the best interests of the public, results in
economies of acquisition or administration, and meets
other requirements established by regulation.
· New subsection (f) provides that the director must
approve the issuance of a group life insurance policy
under subsection (a) or (e) prior to issuance of a
policy by the insurer under subsection (a) or (e).
Sec. 44 AS 21.51.020 Scope, format of policy ·
Paragraph (3) is amended to allow a policy of health
insurance to cover children of a policyholder under a
specified age may not exceed 25 years. The amendment
is necessary to avoid conflict with federal law.
Sec. 45 AS 21.51.070(a) Reinstatement · Subsection (a)
is amended to provide for an exception to the
subsection for a policy offered or renewed in this
state on a health care exchange and subject to federal
regulation on reinstatement. The amendment is
necessary to avoid conflict with federal law.
Sec. 46 AS 21.51.405(b) Rate requirements; filings;
regulations
· Subsection (b) is amended to extend the waiting
period for the effective date for individual health
insurance rates from 45 days to 90 days to allow time
for review and approval of the rates while also
allowing sufficient time for insurers to provide the
required 45 days' notice of a change in premium.
Sec. 47 AS 21.51.500 Definitions
· New paragraph (4) defines "health care exchange" to
mean an American Health Benefit Exchange established
under 42 U.S.C. 18031.
Sec. 48 AS 21.53.068 Limitations related to producers
and third-party administrators
· This section is amended to correct a drafting error
by changing "compensates" to "does not compensate".
Sec. 49 AS 21.54.015(b) Rate requirements; filings;
regulations; health care insurance restrictions
· Subsection (b) is amended to correct the paragraph
citation to AS 21.54.060 due to amendments being made
to AS 21.54.060.
Sec. 50 AS 21.54.015(c) Rate requirements; filings;
regulations; health care insurance restrictions
· Subsection (c) is amended to extend the waiting
period for the effective date for large employer
health care insurance plan premium rates from 45 days
to 90 days to allow time for review and approval of
the rates while also allowing sufficient time for
insurers to provide the required 45 days' notice of a
change in premium.
Sec. 51 AS 21.54.060 Group health insurance defined
· Paragraph (2) is amended to clarify that associations
and labor unions issued group health insurance
policies under this section must be "bona fide
associations". A nonsubstantive drafting convention
change is also made.
· Paragraph (3) is amended to clarify that group health
insurance may be issued under a policy issued to the
trustees of a fund adopted or participated in by two
or more employers or by one or more labor unions or by
one or more employers and one or more labor unions or
by an association as defined in paragraph (2). The
requirement that the employers be in the same or
related industry is deleted with respect to trusts.
· Paragraph (5) is deleted and is replaced by the new
subsection (b) of AS 21.54.060.
Sec. 52 AS 21.54.060(b) and (c) Group health insurance
defined
· New subsection (b) provides that a group health
insurance policy may be issued to a group that does
not meet one or more of the requirements under AS
21.54.060(1)- (4) and (6) if the director finds that
issuance is in the best interests of the public,
results in economies of acquisition or administration,
and meets other requirements established by
regulation. This replaces the existing authority and
makes it consistent with the group life provision.
· New subsection (c) provides that an insurer must
submit a form filing that complies with AS 21.42.123
(Form filing subject to prior approval) and establish
that the group meets the requirements of subsection
(e) in order to issue a group health insurance policy
to a group under subsection (e). The director must
also affirmatively find that the group meets the
requirements of subsection (e) prior to the insurer
issuing a group health insurance policy under this
section.
Sec. 53 AS 21.54.500(4) Definitions
· Paragraph (4) repeals and reenacts the definition of
"bona fide association" to the meaning given in AS
21.97.900
Sec. 54 AS 21.56.110(a) Applicability
· Subsection (a) is amended to reconcile any conflicts
between AS 21.56 and federal law by adding the
language "except as prohibited by federal law."
Sec. 55 AS 21.56.120(e) Premium rate restrictions;
disclosures; reports; confidentiality
· Subsection (e) is amended to correct the paragraph
citation to AS 21.54.060 due to amendments being made
to AS 21.54.060.
Sec 56 AS 21.56.250(6) Definitions
· Paragraph (6) is amended to reflect the definition of
"bona fide association" has the meaning given in AS
21.97.900.
Sec. 57 AS 21.59.150(a) and (b) Provider license
renewal, lapse, reinstatement.
· Subsection (a) and (b) are amended to make non-
substantive changes to conform the language to State
Based Systems (SBS), an electronic system owned by the
National Association of Insurance Commissioners for
use by state regulators in support of insurance
regulatory functions. SBS enables the division to more
efficiently and effectively process license
applications, renewals, inquiries, complaints,
enforcement actions and other functions while
remaining compliant with national uniformity
initiatives.
Sec. 58 AS 21.59.170(a) Return and cancellation
· Subsection (a) is amended to correct a drafting error
by deleting the word "unearned". Non-substantive
drafting convention changes are also made.
Sec. 59 AS 21.59.170(b) Return and cancellation
· Subsection (b) is amended to correct a drafting error
by adding the word "unearned". Non-substantive
drafting convention changes are also made.
Sec. 60 AS 21.59.180(a) Provider's financial
responsibility
· Subsection (a) is amended to correct a drafting error
by deleting the words "a provider".
Sec. 61 AS 21.69.310(a) Meetings of stockholders or
members
· Subsection (a) is amended to remove the requirement
for stockholder or member meetings to be held in the
city or town of a company's principal office or place
of business in this state. The amended statute
reflects the reality of the Alaska domiciled insurers
and of the nationwide insurance industry. Of the seven
Alaska domestic insurers, one is a U.S. branch of a UK
company with central administration in the UK and two
other insurers are members of holding company systems
that are domiciled in other states and are centrally
administered there. This is common nationwide where
holding company systems have insurer members domiciled
in states other than where the holding company is
domiciled. Significant administrative functions are
often centralized at the holding company domiciled
location for the whole group. The amended statute also
accommodates three Alaska domestic insurers from the
difficulty of always having to hold stockholder or
member meetings at their principal office or place of
business. These insurers have board members that are
disbursed throughout the state and in other states.
Annual meetings are often held in locations other than
the principal office or place of business such as in
Anchorage where travel to and from is easiest, or
rotated to other areas of the state to make it more
convenient for members to attend the meetings and to
participate on the boards. These insurers are still
able to request approval of the director to hold these
meetings at a location that is not the principle
office or place of business.
Sec. 62 AS 21.69.310(c) Meetings of stockholders or
members
· Subsection (c) is amended to give the director
discretion to approve a date for an annual meeting
later than the first six months of each calendar year
upon a written request for approval for good cause.
The request for approval must be made at least 30 days
before the end of the six-month requirement. This
amendment reflects the fact that annual meetings of
Alaska insurers cannot always be held within the first
six months of the calendar year due to the wide
disbursement of board members and to the differing
requirements for the timing of annual meetings of
other states where holding companies with Alaska
insurers are domiciled.
Sec. 63 AS 21.69.390(b) Home office and records
· Subsection (b) is amended to delete the reference AS
21.69.390(d) as that subsection is being repealed for
the reasons as stated in Sec. 67 of this Bill
Analysis.
REPRESENTATIVE JOSEPHSON redirected attention to proposed
Section 61, and asked whether domestic insurers are based in
Alaska.
MS. WING-HEIER said yes. In further response to Representative
Josephson, she said domestic insurers have registered in Alaska,
but may have stockholders who live outside the state or outside
the U.S., thus the bill allows for stockholder meetings to be
held elsewhere. She provided several examples of domestic
insurers, and stated that the important point was for the state
to receive the required notice, attendance, and minutes of the
stockholders' meetings.
4:39:48 PM
REPRESENTATIVE HUGHES asked why the director of the division
seeks to approve the location of a stockholder meeting.
MS. WING-HEIER advised that if it is prudent for a company to
come to Alaska for an open meeting that the division could
attend, she would require it to do so.
REPRESENTATIVE LEDOUX inquired as to whether meetings can be
held telephonically.
MS. WING-HEIER said no. In further response to Representative
LeDoux - as to why telephonic meetings are not allowed - she
said she would research that question.
REPRESENTATIVE LEDOUX asked whether board of directors' meetings
could be telephonic.
4:42:29 PM
MS. WING-HEIER said board of directors meetings are not
addressed in proposed Section 61, and she would conduct
additional research.
4:43:27 PM
MS. WING-HEIER, in response to Representative Josephson, said
FFM is an acronym for the federally facilitated marketplace,
healthcare.gov. She continued paraphrasing the sectional
analysis for HB 372, as follows: [original punctuation provided]
Sec. 64 AS 21.85.500(5) Definitions
· Paragraph (5) is amended to change the definition of
"multiple employer welfare arrangement" to conform
with the meaning of the term as defined under 29
U.S.C. 1002.
Sec. 65 AS 21.97.020 General penalty
· The general penalty amounts are being updated to be
more consistent with other penalty provisions in AS 21
such as AS 21.27.440 and to provide a mechanism to use
under section four of the bill and for market conduct
enforcement. This section has not been updated for
over 30 years.
Sec. 66 AS 21.97.900(47) Definitions for title
· Amended to add a new paragraph (47) defines "bona
fide association".
Sec. 67 Repeals the following provisions: · AS
21.06.087 (Insurance report) Repeal of this section
removes the requirement that the division report
annually on the impacts of tort reforms enacted in
1997 (chapter 26, SLA 1997). This report has not been
updated since 2004. At this time, it would be
difficult to attribute observed changes in the market
to the tort reform legislation.
· AS 21.07.250(9) (Definitions) The definition of
"medical emergency" is repealed as it is being
replaced by the definition for "emergency medical
condition".
· AS 21.54.500(4) (Definitions) The definition of "bona
fide association" is no longer needed in this chapter
because an updated definition of the term has been
added to AS 21.97 by section 58 of the bill.
· AS 21.69.390(d) is outdated as books and records are
increasingly being maintained electronically and
access can be made remotely or on-site at the home
office of an insurer. The division also can access a
company's financial filings with the NAIC
electronically. AS 21.06.140 requires examinations of
domestic, foreign and Canadian insurers to be
conducted at an insurer's home office or at other
places where the records are kept, not at the
insurer's principal place of business in the state.
Sec. 68 Repeals the following provisions
· AS 21.07.050 (External health care appeals) AS
21.07.060, (Qualifications of external appeal
agencies), AS 21.07.070 (Limitation on liability of
reviewers), AS 21.07.250(1), (2), and (7),
(Definitions). These provisions are no longer needed
due to Section 4 of the bill which requires the
director to adopt by regulation the National
Association of Insurance Commissioners model acts.
Sec. 69 Repeals the following provisions
· AS 21.27.115(8) crop insurance is removed as a line
of authority due to section 16 of the bill which
provides that crop insurance is a limited line of
authority consistent with national uniformity
licensing standards.
· AS 21.27.115(9) surety insurance is removed as a line
of authority to be consistent with national uniformity
licensing standards.
Sec. 70
· Provides for an uncodified new section outlining the
timing of when the director of insurance may adopt
regulations.
Sec. 71
· Provides for a revisor's instruction to change the
catch line of AS 21.27.380.
Sec. 72
· Provides that section 70 of the bill takes effect
immediately under AS 01.10.070(c).
Sec. 73
· Provides that section 68 of the bill takes effect
January 1, 2017.
Sec. 74
· Provides that AS 21.27.150(a)(9), enacted by section
19 of the bill, and section 69 of the bill take effect
March 1, 2017.
4:45:35 PM
CHAIR OLSON pointed out the bill has a zero fiscal note
attached.
REPRESENTATIVE HUGHES returned attention to proposed Section 4,
which said the regulations would be based on model laws
developed by the National Association of Insurance Commissioners
(NAIC), and questioned whether the regulations would not be
based on Alaska Statutes.
MS. WING-HEIER answered PPACA allows for three processes: a
utilization review, an internal review, and an external review
of claims presented. Subsequent to PPACA, the reviews have been
informally performed by the division. Many states did not agree
with the PPACA processes, and the NAIC produced three model
acts: the utilization review and benefit determination act; the
uniform health carrier external review act; health carrier
grievance procedure model act. The division proposes to place
the model acts in regulation, so they can be revised for
Alaskans as necessary.
REPRESENTATIVE HUGHES asked whether anything based on the three
model acts conflicts with Alaska state statutes.
MS. WING-HEIER said no.
REPRESENTATIVE COLVER clarified that the state would not
reference national standards in its regulations; in fact, if the
national standards change, the state regulations would not
automatically be affected.
MS. WING-HEIER agreed that the regulations would be "based on
what works for Alaskans, not a one-size-fits-all."
4:50:27 PM
CHAIR OLSON said the state has used model legislation from NAIC
six or seven times; model legislation helps consumers by
providing standardization and reciprocity with other states.
The division can rely on audits provided by other states because
they meet the same standards, thereby saving millions of
dollars. Standardized policies and insurance certificates are
helpful to those who do business in more than one state, and the
goal is to help those buying insurance.
MS. WING-HEIER added that since PPACA, various states have taken
the model regulations, statutes, and a combinations thereof.
REPRESENTATIVE HUGHES directed attention to the bill on page 4,
beginning on line 22, which read:
(2) clearly states that the health care provider will
adhere to the health care insurer's policies and
procedures, including procedures regarding referrals,
obtaining prior authorization, and providing services
under a treatment plan approved by the health care
insurer;
REPRESENTATIVE HUGHES expressed her concern about whether the
medical community would accept paragraph (2) because the health
care provider needs to determine the health care treatment plan,
and the insurance company should not dictate care.
MS. WING-HEIER observed that there are two parts to the
provision: the relationship between the provider and the
patient, and the relationship between the insurer and the
provider. Included in the regulations pertaining to grievance
procedures is "predetermination," so that a patient knows the
cost of a service and what insurance will pay. The network
provider has signed a contract with an insurer regarding the
fee, so a patient is informed of the cost, and can make a choice
of provider.
REPRESENTATIVE HUGHES restated her concern related to "providing
services under a treatment plan approved by the health care
insurer," because sometimes a health care provider needs to
suddenly change the approved plan, and this would tie their
hands.
CHAIR OLSON stated that the Alaska State Hospital and Nursing
Home Association (ASHNA), hospitals, and physicians have been
participating as stakeholders in the bill, and he assured the
committee that their opinions will be heard.
REPRESENTATIVE JOSEPHSON agreed with Representative Hughes'
concern and pointed out similar questions are raised on page 9,
beginning on line 17, which read:
(14) "utilization review" means a set of techniques
designed to monitor the use of, or evaluate the
clinical necessity, appropriateness, efficacy, or
efficiency of, health care services, procedures, or
settings; techniques may include ambulatory review,
prospective review, second opinion certification,
concurrent review, case management, discharge
planning, or retrospective review.
REPRESENTATIVE COLVER also agreed with Representative Hughes.
[HB 372 was held over.]