Section 31: Health Plan Premium Allocation Regulation

(a) Notwithstanding any general or special law to the contrary, the commissioner may approve health insurance policies submitted to the division of insurance for the purpose of being provided to eligible individuals or eligible small businesses. These health insurance policies shall be subject to this chapter and may include networks that differ from those of a health plan's overall network. The commissioner shall adopt regulations regarding eligibility criteria. These eligibility criteria shall require that health insurance policies that exclude mandated benefits shall only be offered to small businesses which did not provide health insurance to its employees as of April 1, 1992. These eligibility criteria shall also provide that small businesses shall not have any health insurance policies that exclude mandated benefits for more than a 5–year period.

(b) Notwithstanding any general or special law to the contrary, the commissioner shall require carriers offering health benefit plans to eligible small businesses and eligible individuals to submit information as required by the commissioner, which shall include the current and projected medical loss ratio for plans, the components of projected administrative expenses, and financial information, including, but not limited to: (i) underwriting, auditing, actuarial, financial analysis, treasury and investment expenses; (ii) marketing and sales expenses, including, but not limited to, advertising, member relations, member enrollment and all expenses associated with producers, brokers and benefit consultants; (iii) claims operations expenses, including, but not limited to, adjudication, appeals, settlements and expenses associated with paying claims; (iv) medical administration expenses, including, but not limited to, disease management, utilization review and medical management; (v) network operations expenses, including, but not limited to, contracting, hospital and physician relations and medical policy procedures; (vi) charitable expenses, including, but not limited to, contributions to tax-exempt foundations and community benefits; (vii) state premium taxes; (viii) board, bureau and association fees; (ix) depreciation; and (x) miscellaneous expenses described in detail by expense, including any expense not included in clauses (i) to (ix), inclusive.

(c) Notwithstanding any general or special law to the contrary, the commissioner may require carriers offering small group health insurance plans, including carriers licensed under chapters 175, 176A, 176B or 176G, to file all changes to small group product base rates and to small group rating factors at least 90 days before their proposed effective date. The commissioner shall disapprove any proposed changes to base rates that are excessive, inadequate or unreasonable in relation to the benefits charged. The commissioner shall disapprove any change to small group rating factors that is discriminatory or not actuarially sound. Any rates of reimbursement included in the rate filing materials submitted for review by the division shall be deemed confidential and exempt from the definition of public records in clause Twenty-sixth of section 7 of chapter 4. The commissioner shall adopt regulations to carry out this section.

(d) If a proposed base rate change has been disapproved: (1) A carrier shall communicate to all employers and individuals covered under a small group product that the proposed increase has been disapproved and is subject to a hearing at the division of insurance. (2) The commissioner shall conduct a public hearing and shall advertise it in newspapers in Boston, Brockton, Fall River, Pittsfield, Springfield, Worcester, New Bedford and Lowell, or shall notify such newspapers of the hearing. (3) The attorney general may intervene in a public hearing or other proceeding under this subsection and may require additional information as the attorney general consider necessary to ensure compliance with this subsection.

(e) If the commissioner disapproves the rate submitted by a carrier the commissioner shall notify the carrier in writing no later than 45 days prior to the proposed effective date of the carrier's rate. The carrier may submit a request for hearing with the division of insurance within 10 days of such notice of disapproval. The division must schedule a hearing within 15 days of receipt. The commissioner shall issue a written decision within 30 days after the conclusion of the hearing. The carrier may not implement the disapproved rates, or changes at any time unless the commissioner reverses the disapproval after a hearing or unless a court vacates the commissioner's decision.

Summary: 
Starting October 1, 2012, a carrier’s base rate changes will no longer be presumptively disapproved based on administrative expenses, surplus or Medical Loss Ratio (MLR).  The Division of Insurance (DOI), however, will continue to have authority to disapprove a carrier’s proposed change to base rates that are excessive, inadequate or unreasonable. If a proposed rate has been disapproved, a health plan issuer must inform all employees and individuals covered under the small group product that the proposed rate has been disapproved.

The DOI Commissioner must hold a public hearing if a proposed base rate has been presumptively disapproved, at which the Attorney General may intervene. The DOI must notify carriers of a disapproved rate at least 45 days before the proposed effective date. Within 10 days, the carrier may request a hearing, which must be scheduled within 15 days and a decision must be issued within 30 days after the hearing.