Private Health Insurers

Adds new definition of “Health Status Adjusted Total Medical Expense” within the Division of Health Care Finance and Policy (DHCFP) statute. This definition relates to health care payer reporting requirements. The Division of Insurance (DOI) and DHCFP will determine uniform methodologies for calculating and reporting insurer medical loss ratios, health status adjusted total medical expenses, hospital costs and expenses, and relative prices paid by insurers to providers. These agencies will collect and publicly report this information.

Adds new definition of “Relative Prices” within the Division of Health Care Finance and Policy (DHCFP) statute.
 
This definition relates to provider reimbursement rates. The Division of Insurance (DOI) and DHCFP will determine uniform methodologies for calculating and reporting insurer medical loss ratios, health status adjusted total medical expenses, hospital costs and expenses, and relative prices paid by insurers to providers. DOI and DHCFP will collect and publicly report this information.

Adds to existing Division of Health Care Finance and Policy (DHCFP) payer data submission requirements by including health status adjusted total medical expenses (TME) by provider group, relative prices paid to every health care provider in the payer’s network by type of provider, and hospital inpatient and outpatient costs. Payers must report each of the three new data categories according to a uniform methodology determined by DHCFP.  Hospitals must report to DHCFP inpatient and outpatient costs, including direct and indirect costs, according to a uniform methodology. 

Modifies definition of unfair or deceptive insurance acts to include health plan insurance contracts that base reimbursement rates to a health care provider by reference to the price paid, or the average of prices paid, to that provider from any other plan. In addition, an insurer may not refuse to negotiate with a provider based on that provider’s other contracts, type of license, or affiliation with other health plans.

In general, an insurance company must not falsely advertise or misrepresent the nature of an insurance policy or its benefits, discriminate between similarly situated individuals in determining benefits eligibility, engage in unfair claim settlement practices, or fail to maintain a record of grievances.

Modifies the definition of unfair or deceptive insurance practices by including insurers that arrange for an employee to apply for individual health insurance coverage for the purpose of then excluding that employee from an employer-sponsored health plan, for which the employee is eligible, to reduce costs for other individuals in the employer-sponsored health plan.

Requires that the age rate adjustment factor, used by health plans to calculate rates for eligible individuals and small groups, be applied on a year to year basis in order to more evenly distribute the rate of increase. In addition to age, an insurer may also calculate rates based on an individual’s or small group’s business industry, participation rate of members, wellness program discount, and tobacco use. The maximum premium rate offered to members cannot exceed 2 times the lowest premium rate offered to members within a particular class of business.

Establishes circumstances under which an insurance carrier may deny enrollment or cancel a health benefit plan even though individuals or small groups remain eligible for the plan. Once a carrier has closed the health benefit plan to new individuals and small groups, the carrier may cancel and discontinue benefits of the health benefit plan to all members.  The cancellation, however, is not effective until the enrolled individual’s or small group’s next enrollment anniversary.

In general, a carrier may discontinue a health benefit plan for an eligible individual or small business if a member repeatedly fails to pay premiums, has committed fraud or misrepresented eligibility status, has failed to comply with specific plan provisions, has voluntary ceased coverage, or has failed to comply with carrier’s requests for information that the carrier deems necessary to verify the application for coverage under a plan.

The Commissioner of the Division of Insurance will oversee and regulate insurance carrier denials and cancellations.

Requires that carriers offering health benefit plans for individuals or small groups report to the Division of Insurance (DOI) the current and projected Medical Loss Ratio (MLR) for health plans, projected administrative expenses, and other specific financial information.

Requires that carriers file changes to small group base rates 90 days prior to effective date. The DOI Commissioner must disapprove changes that are excessive, inadequate or unreasonable in relation to the benefits charged. Base rates filed by a carrier shall be presumptively disapproved as excessive if:

• Administrative expenses increase by more than the most recent percentage increase in the New England medical CPI; or

• A carrier’s contribution to surplus exceeds 1.9% (or 2.5% for carrier’s with a Risk Based Capital Ratio below 300% for four consecutive quarters); or

• The aggregate MLR for all small group plans is less than 88%.  

If a carrier’s rates are disapproved solely for failing to meet the MLR threshold, the rates will not be presumptively disapproved if the projected MLR increases by at least 1% over the MLR for the previous 12 months.  At the end of the year covered by the filing, if the MLR is less than the 88% threshold, carriers must issue refunds equal to the amount of premium above that which is necessary to achieve an MLR of 88%.

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.

Increases the required minimum Medical Loss Ratio (established in Section 29) from 88% to 90% effective October 1, 2011 to September 30, 2012.

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.

Requires selective or tiered network plan to be offered by all health plans that provide coverage through a closed network of health care providers to at least 5,000 individuals, employees, and dependents in the individual and small group maket. The plan must offer enrollees in at least one geographic area at least one selective or tiered provider network plan at a premium rate that is at least 12% lower than a plan with comparable benefits but without a selective network of providers.

The Division of Insurance (DOI) will determine network adequacy based on listed factors. Carriers may reclassify provider tiers or determine participation in selective or tiered network plans once per calendar year but may add providers or move them to a lower cost tier at any time. Carriers must provide 30 days notice prior to reclassification of providers. Each health plan must report on its website information about the tiered or selective plan and on providers participating in the plan. The DOI must report annually to the legislature on utilization trends of individuals and groups in these plans.

Section 32 is effective during 2011, and is replaced by Section 33, which expands Section 32 to include methods a health plan may use to achieve cost savings within the selective or tiered plan.

Expands Section 32 to include methods that a health plan may use to achieve cost savings within the selective or tiered plan available to the individual and small business market, such as excluding from a tiered or selective network those providers with similar or lower quality based on the standard quality measure set and higher health status adjusted total medical expense or relative price, or by increasing member cost sharing for non-emergency services rendered by those providers.

The Division of Insurance must establish regulations requiring uniform reporting of tiering information, including a detailed description of the methodology used to determine how providers were tiered, at least 90 days before any tiered network becomes effective.

Requires any insurance carrier that has a combined total of at least 5,000 eligible individuals, employees, and dependents, and wishes to continue offering health plans in the individual and small group market, to file a plan with each group purchasing cooperative if the group purchasing cooperative requests such health plan proposal for its next plan year. Any health plan option offered to a cooperative must include all state mandated benefits, and must apply the same preexisting coverage limitations, waiting periods, open enrollment periods and rating rules as applied to small groups outside the cooperative.

Amended to allow a carrier to seek approval from the Commissioner of the Division of Insurance (DOI) to discontinue a closed guarantee issue health plan pursuant to DOI regulations. Prior to this amendment, a carrier could only discontinue a closed guarantee issue health plan if the number of subscribers in the plan was less than 25% of the plan’s 2004 subscriber total. Furthermore, no carrier may deny coverage to, impose any pre-existing condition exclusion, or impose any waiting period on an individual or dependent who is eligible for a guaranteed issue health plan.

The Bureau of Managed Care within the Division of Insurance (DOI) is directed to require, as a condition of accreditation, that carriers adopt uniform standards and methodologies for credentialing health care providers. Also, any carrier that contracts with a third party administrator must ensure that the third party complies with the standards. By way of background, the Bureau of Managed Care within DOI determines standards and procedures for accreditation of health insurance carriers. The Bureau must consult with the Division of Health Care Finance and Policy, the Department of Public Health, the Group Insurance Commission, the Centers for Medicare and Medicaid Services, and each health insurance carrier to develop the standards.

Adds to the information insurers must provide to consumers to include the location, specialty, and methods of compensation or reimbursement for each provider in a plan’s network, a provider’s price relativity, health status adjusted total medical expense, and quality performance based on measures from the Standard Quality Measure Set standards developed by the Department of Public Health. The information specific to each provider in a carrier’s network must be provided on a health insurance carrier’s website, to at least one plan member per subscriber household, and to each prospective insured upon request.

Prohibits certain contracting practices between insurance carriers and health care providers including the following: provisions that guarantee a health care provider the right to participate in a select network or tiered network plan; requirements that all members of a provider group be included in the same tier in a tiered network plan or all be included in a select network plan; requiring provider participation in a new select or tiered network plan without granting providers the right to opt out of the new plans; requiring or permitting carriers or providers to alter contracts based on agreements with other carriers and providers; and requiring or permitting carriers to make supplemental payments without first publicly disclosing the amount and purpose of each such supplemental payment to the Insurance Commissioner.

Requires insurance carriers, including third party administrators of insurance plans, to report information to the Division of Insurance (DOI) on premiums earned, membership, medical loss ratio, and other detailed financial information associated with business operations. Carriers must annually report this information to DOI each April 1st to avoid a late penalty and may subsequently be subject to an audit. Information collected under this provision will be available to the public, and DOI must issue an annual report of information collected under this provision to the legislature. Any carrier that reports a risk-based capital ratio over 700% must participate in a public hearing to determine what portion of excess funds will go toward reducing the costs of health benefit plans or for health care quality improvement.

DOI may develop procedures to carry out the requirements of this section, including requiring the registration of third party administrators and standardizing reporting criteria, after consulting with state and federal agencies and affected carriers to ensure that regulations are not duplicative.

Instructs the Division of Insurance (DOI), in consultation with the Division of Health Care Finance and Policy, to establish regulations directing health insurance carriers to calculate and report medical loss ratios of health benefit plans. The regulations must provide definitions for carriers to distinguish between medical claims expenditures and administrative cost expenditures. Before adopting final regulations, DOI must consult with designated stakeholders.

Instructs the Division of Health Care Finance and Policy (DHCFP), in consultation with the Division of Insurance, to establish regulations directing health insurance carriers to calculate and report health status adjusted total medical expenses for provider groups determined by zip code. In the regulations, DHCFP must specify a uniform method for calculating total medical expenses among each provider group, determine which non-claim related payments must be included in the calculations, account for health status and number of patients within each group, and specify reporting requirements.