2003 Legislation
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HOUSE BILL NO. 306 – Health insurance provider/reporting

HOUSE BILL NO. 306

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H0306......................................................by STATE AFFAIRS
HEALTH INSURANCE PROVIDERS - Amends existing law to clarify that all
entities providing health insurance in Idaho are subject to the reporting
requirements relating to annual assessments levied by the Small Employer
Reinsurance Program and the Individual High Risk Reinsurance Pool.
                                                                        
02/26    House intro - 1st rdg - to printing
02/27    Rpt prt - to Bus
03/06    Rpt out - rec d/p - to 2nd rdg
03/07    2nd rdg - to 3rd rdg
03/11    3rd rdg - PASSED - 68-0-2
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter,
      Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow,
      Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
      Field(18), Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet,
      Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst(Wallace),
      Martinez, McGeachin, McKague, Meyer, Miller, Mitchell, Moyle,
      Naccarato, Nielsen, Raybould, Ridinger, Ring, Ringo, Roberts,
      Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen,
      Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Tilman, Trail,
      Wills, Mr. Speaker
      NAYS -- None
      Absent and excused -- Black, Wood
    Floor Sponsor - Deal
    Title apvd - to Senate
03/12    Senate intro - 1st rdg - to Com/HuRes
03/26    Rpt out - rec d/p - to 2nd rdg
03/27    2nd rdg - to 3rd rdg
04/01    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett(Roberts),
      Burtenshaw, Calabretta, Cameron, Compton, Darrington, Davis, Gannon,
      Geddes, Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge,
      Malepeai, Marley, McKenzie, McWilliams, Noble, Noh, Pearce,
      Richardson, Schroeder, Sorensen, Stegner, Stennett, Sweet, Werk,
      Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Cameron
    Title apvd - to House
04/02    To enrol
04/03    Rpt enrol - Sp signed
04/04    Pres signed
04/07    To Governor
04/08    Governor signed
         Session Law Chapter 267
         Effective: 04/08/03

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 306
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO HEALTH INSURANCE, THE SMALL EMPLOYER REINSURANCE PROGRAM  AND  THE
  3        HIGH  RISK REINSURANCE POOL; AMENDING SECTION 41-4703, IDAHO CODE, TO FUR-
  4        THER DEFINE THE TERM "CARRIER"; AMENDING SECTION 41-4711, IDAHO  CODE,  TO
  5        PROVIDE  THAT  ALL CARRIERS SHALL BE SUBJECT TO THE SMALL EMPLOYER CARRIER
  6        REINSURANCE PROGRAM, TO REVISE PROCEDURES AND TO CLARIFY THAT  ALL  AUTHO-
  7        RIZED  HEALTH  INSURERS ARE SUBJECT TO THE REPORTING REQUIREMENTS RELATING
  8        TO THE ASSESSMENT PROCESS  IN  THE  SMALL  EMPLOYER  REINSURANCE  PROGRAM;
  9        AMENDING   SECTION  41-5501,  IDAHO  CODE,  TO  FURTHER  DEFINE  THE  TERM
 10        "CARRIER"; AND AMENDING SECTION 41-5505, IDAHO CODE, TO PROVIDE  THAT  ANY
 11        INDIVIDUAL  CARRIER  ISSUING AN INDIVIDUAL BASIC, STANDARD, CATASTROPHIC A
 12        OR CATASTROPHIC B HEALTH BENEFIT PLAN SHALL BE REINSURED BY THE INDIVIDUAL
 13        HIGH RISK REINSURANCE POOL TO THE LEVEL OF COVERAGE PROVIDED IN  THE  PLAN
 14        AND  SHALL BE LIABLE TO THE POOL OR THE REINSURANCE PREMIUM; AND DECLARING
 15        AN EMERGENCY.
                                                                        
 16    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 17        SECTION 1.  That Section 41-4703, Idaho Code, be, and the same  is  hereby
 18    amended to read as follows:
                                                                        
 19        41-4703.  DEFINITIONS. As used in this chapter:
 20        (1)  "Actuarial  certification"  means  a written statement by a member of
 21    the American academy of actuaries or other individual acceptable to the direc-
 22    tor that a small employer carrier is in compliance with the provisions of sec-
 23    tion 41-4706, Idaho Code, based upon the person's examination and including  a
 24    review  of  the  appropriate records and the actuarial assumptions and methods
 25    used by the small employer carrier in establishing premium rates for  applica-
 26    ble health benefit plans.
 27        (2)  "Affiliate"  or  "affiliated" means any entity or person who directly
 28    or indirectly through one (1) or more  intermediaries,  controls  or  is  con-
 29    trolled by, or is under common control with, a specified entity or person.
 30        (3)  "Agent"  means  a  producer  as  defined in section 41-1003(9), Idaho
 31    Code.
 32        (4)  "Base premium rate" means, for each class of business as to a  rating
 33    period,  the lowest premium rate charged or that could have been charged under
 34    a rating system for that class of business by the small  employer  carrier  to
 35    small  employers  with  similar  case characteristics for health benefit plans
 36    with the same or similar coverage.
 37        (5)  "Board" means the board of directors of the small  employer  reinsur-
 38    ance  program and the individual high risk reinsurance pool as provided for in
 39    section 41-5502, Idaho Code.
 40        (6)  "Carrier" means any entity that provides, or is  authorized  to  pro-
 41    vide,  health  insurance in this state. For the purposes of this chapter, car-
 42    rier includes an insurance company, a hospital or professional service  corpo-
 43    ration,  a  fraternal benefit society, a health  maintenance organization, any
                                                                        
                                           2
                                                                        
  1    entity providing health insurance coverage or benefits to  residents  of  this
  2    state  as certificate holders under a group policy issued or delivered outside
  3    of this state, and any other entity providing a plan of  health  insurance  or
  4    health benefits subject to state insurance regulation.
  5        (7)  "Case  characteristics"  means demographic or other objective charac-
  6    teristics of a small employer that are considered by the small  employer  car-
  7    rier  in  the  determination of premium rates for the small employer, provided
  8    that claim experience, health  status and duration of coverage  shall  not  be
  9    case characteristics for the purposes of this chapter.
 10        (8)  "Catastrophic  health benefit plan" means a higher limit health bene-
 11    fit plan developed pursuant to section 41-4712, Idaho Code.
 12        (9)  "Class of business" means all or a separate grouping of small employ-
 13    ers established pursuant to section 41-4705, Idaho Code.
 14        (10) "Control"  shall  be  defined  in  the  same  manner  as  in  section
 15    41-3801(2), Idaho Code.
 16        (11) "Dependent" means a spouse, an unmarried child under the age of nine-
 17    teen (19) years, an unmarried child who is a full-time student under  the  age
 18    of  twenty-three  (23) years and who is financially dependent upon the parent,
 19    and an unmarried child of any age who is medically certified as  disabled  and
 20    dependent upon the parent.
 21        (12) "Director"  means  the director of the department of insurance of the
 22    state of Idaho.
 23        (13) "Eligible employee" means an employee who works on a full-time  basis
 24    and  has  a  normal  work  week  of thirty (30) or more hours or, by agreement
 25    between the employer and the carrier, an employee who  works   between  twenty
 26    (20)  and  thirty  (30) hours per week. The term includes a sole proprietor, a
 27    partner of a partnership, and an independent contractor, if the  sole  propri-
 28    etor,  partner  or  independent  contractor is included as an employee under a
 29    health benefit plan of a small employer, but does not include an employee  who
 30    works on a part-time, temporary, seasonal or substitute basis. The term eligi-
 31    ble  employee  may include public officers and public employees without regard
 32    to the number of hours worked when designated by a small employer.
 33        (14) "Established geographic service area" means  a  geographic  area,  as
 34    approved  by  the director and based on the carrier's certificate of authority
 35    to transact insurance in this state, within which the carrier is authorized to
 36    provide coverage.
 37        (15) "Health benefit plan" means any hospital or medical policy or certif-
 38    icate, any subscriber contract provided by a hospital or professional  service
 39    corporation,  or managed care organization subscriber contract. Health benefit
 40    plan does not include policies or certificates of insurance for specific  dis-
 41    ease,  hospital  confinement indemnity, accident-only, credit, dental, vision,
 42    medicare supplement, long-term care, or disability income  insurance,  student
 43    health  benefits  only coverage issued as a supplement to liability insurance,
 44    worker's compensation or similar insurance, automobile medical payment  insur-
 45    ance  or  nonrenewable  short-term coverage issues for a period of twelve (12)
 46    months or less.
 47        (16) "Index rate" means, for each class of business as to a rating  period
 48    for  small employers with similar case characteristics, the arithmetic average
 49    of the applicable base premium rate  and  the  corresponding  highest  premium
 50    rate.
 51        (17) "Late  enrollee" means an eligible employee or dependent who requests
 52    enrollment in a health benefit plan of a small employer following the  initial
 53    enrollment  period during which the individual is entitled to enroll under the
 54    terms of the health benefit plan, provided that the initial enrollment  period
 55    is  a  period  of  at least thirty (30) days. However, an eligible employee or
                                                                        
                                           3
                                                                        
  1    dependent shall not be considered a late enrollee if:
  2        (a)  The individual meets each of the following:
  3             (i)   The individual was covered under qualifying  previous  coverage
  4             at the time of the initial enrollment;
  5             (ii)  The individual lost coverage under qualifying previous coverage
  6             as  a  result  of  termination  of  employment or eligibility, or the
  7             involuntary termination of the qualifying previous coverage; and
  8             (iii) The individual requests  enrollment  within  thirty  (30)  days
  9             after termination of the qualifying previous coverage.
 10        (b)  The  individual  is  employed  by  an  employer which offers multiple
 11        health benefit plans and the individual elects a different plan during  an
 12        open enrollment period.
 13        (c)  A  court  has  ordered  coverage be provided for a spouse or minor or
 14        dependent child under a covered employee's health benefit plan and request
 15        for enrollment is made within thirty (30) days after issuance of the court
 16        order.
 17        (d)  The individual first becomes eligible.
 18        (e)  If an individual seeks to enroll a dependent during the  first  sixty
 19        (60)  days  of  eligibility,  the  coverage  of the dependent shall become
 20        effective:
 21             (i)   In the case of marriage, not later than the first  day  of  the
 22             first  month  beginning  after  the  date  the  completed request for
 23             enrollment is received;
 24             (ii)  In the case of a dependent's birth, as  of  the  date  of  such
 25             birth; or
 26             (iii) In  the  case  of a dependent's adoption or placement for adop-
 27             tion, the date of such adoption or placement for adoption.
 28        (18) "New business premium rate" means, for each class of business as to a
 29    rating period, the lowest premium rate charged or offered or which could  have
 30    been  charged or offered by the small employer carrier to small employers with
 31    similar case characteristics for newly issued health benefit  plans  with  the
 32    same or similar coverage.
 33        (19) "Plan of operation" means the plan of operation of the program estab-
 34    lished pursuant to section 41-4711, Idaho Code.
 35        (20) "Plan year" means the year that is designated as the plan year in the
 36    plan document of a group health benefit plan, except that if the plan document
 37    does  not designate a plan year or if there is no plan document, the year plan
 38    is:
 39        (a)  The deductible/limit year used under the plan;
 40        (b)  If the plan does not impose deductibles or limits on a yearly  basis,
 41        then the plan year is the policy year;
 42        (c)  If  the  plan does not impose deductibles or limits on a yearly basis
 43        or the insurance policy is not renewed on an annual basis, then  the  plan
 44        year is the employer's taxable year; or
 45        (d)  In any other case, the plan year is the calendar year.
 46        (21) "Premium"  means  all  moneys  paid  by a small employer and eligible
 47    employees as a condition of receiving coverage from a small employer  carrier,
 48    including  any  fees or other contributions associated with the health benefit
 49    plan.
 50        (22) "Program" means the Idaho small employer reinsurance program  created
 51    in section 41-4711, Idaho Code.
 52        (23) "Qualifying  previous  coverage"  and  "qualifying existing coverage"
 53    mean benefits or coverage provided under:
 54        (a)  Medicare  or  medicaid,  civilian  health  and  medical  program  for
 55        uniformed services (CHAMPUS), the Indian health service program,  a  state
                                                                        
                                           4
                                                                        
  1        health  benefit risk pool or any other similar publicly sponsored program;
  2        or
  3        (b)  Any other group or individual health insurance policy or health bene-
  4        fit arrangement whether or  not  subject  to  the  state  insurance  laws,
  5        including coverage provided by a health maintenance organization, hospital
  6        or  professional service corporation, or a fraternal benefit society, that
  7        provides benefits similar to or exceeding benefits    provided  under  the
  8        basic health benefit plan.
  9        (24) "Rating  period"  means  the  calendar period for which premium rates
 10    established by a small employer carrier are assumed to be in effect.
 11        (25) "Reinsuring carrier" means a small employer carrier participating  in
 12    the reinsurance program pursuant to section 41-4711, Idaho Code.
 13        (26) "Restricted  network provision" means any provision of a health bene-
 14    fit plan that conditions the payment of benefits, in whole or in part, on  the
 15    use  of health care providers that have entered into a contractual arrangement
 16    with the carrier to provide health care services to covered individuals.
 17        (27) "Risk-assuming carrier" means a small employer carrier whose applica-
 18    tion is approved by the director pursuant to section 41-4710, Idaho Code.
 19        (28) "Small employer" means any person, firm, corporation, partnership  or
 20    association  that  is actively engaged in business that employed an average of
 21    at least two (2) but no more than fifty (50) eligible  employees  on  business
 22    days  during the preceding calendar year and that employs at least two (2) but
 23    no more than fifty (50) eligible employees on the first day of the plan  year,
 24    the  majority  of whom were and are employed within this state. In determining
 25    the number of eligible employees, companies that are affiliated companies,  or
 26    that  are  eligible  to file a combined tax return for purposes of state taxa-
 27    tion, shall be considered one (1) employer.
 28        (29) "Small employer basic health benefit plan" means a lower cost  health
 29    benefit plan developed pursuant to section 41-4712, Idaho Code.
 30        (30) "Small  employer  carrier" means a carrier that offers health benefit
 31    plans covering eligible employees of one (1) or more small employers  in  this
 32    state.
 33        (31) "Small  employer  catastrophic  health  benefit  plan" means a higher
 34    limit health benefit plan developed pursuant to section 41-4712, Idaho Code.
 35        (32) "Small employer standard health benefit plan" means a health  benefit
 36    plan developed pursuant to section 41-4712, Idaho Code.
                                                                        
 37        SECTION  2.  That  Section 41-4711, Idaho Code, be, and the same is hereby
 38    amended to read as follows:
                                                                        
 39        41-4711.  SMALL EMPLOYER CARRIER REINSURANCE PROGRAM. (1)  All  reinsuring
 40    carriers shall be subject to the provisions of this section.
 41        (2)  There is hereby created an independent public body corporate and pol-
 42    itic  to  be known as the Idaho small employer health reinsurance program. The
 43    program will perform an essential governmental function  in  the  exercise  of
 44    powers  conferred upon it in this act and any assessments imposed or collected
 45    pursuant to the operation of the program shall at all times be free from taxa-
 46    tion of every kind.
 47        (3)  The program shall operate subject to the supervision and  control  of
 48    the board established in section 41-5502, Idaho Code.
 49        (4)  Each  small  employer  carrier  shall make a filing with the director
 50    containing the carrier's earned health insurance premium derived  from  health
 51    benefit  plans  delivered  or  issued  for delivery to small employers in this
 52    state in the previous calendar year.
 53        (5)  The board shall submit to the director a plan of operation and there-
                                                                        
                                           5
                                                                        
  1    after any amendments thereto necessary or suitable to assure the fair, reason-
  2    able and equitable administration of the  program.  The  director  may,  after
  3    notice  and hearing,  approve the plan of operation if the director determines
  4    it to be suitable to assure the fair, reasonable and equitable  administration
  5    of  the  program, and to provide for the sharing of program gains or losses on
  6    an equitable and proportionate basis in accordance with the provisions of this
  7    section. The plan of operation shall become effective upon written approval by
  8    the director.
  9        (6)  If the board fails to submit a suitable plan of operation, the direc-
 10    tor shall, after notice and hearing, adopt and promulgate a temporary plan  of
 11    operation.  The  director shall approve the plan of operation submitted by the
 12    board, or adopt a temporary plan of operation if the board fails to  submit  a
 13    suitable  plan. The director shall amend or rescind any plan adopted under the
 14    provisions of this subsection at the time a plan of operation is submitted  by
 15    the board and approved by the director.
 16        (7)  The plan of operation shall:
 17        (a)  Establish  procedures  for  handling and accounting of program assets
 18        and moneys and for an annual fiscal reporting to the director;
 19        (b)  Establish procedures for selecting an administrator, which  shall  be
 20        properly  licensed  in this state, and setting forth the powers and duties
 21        of the administrator;
 22        (c)  Establish procedures for reinsuring risks in accordance with the pro-
 23        visions of this section;
 24        (d)  Establish procedures for collecting assessments from reinsuring  car-
 25        riers  to fund claims and administrative expenses incurred or estimated to
 26        be incurred by the program; and
 27        (e)  Provide for any additional matters necessary for  the  implementation
 28        and administration of the program.
 29        (8)  The program shall have the general powers and authority granted under
 30    the laws of this state to insurance companies and health maintenance organiza-
 31    tions  licensed to transact business, except the power to issue health benefit
 32    plans directly to either groups or individuals. In addition thereto, the  pro-
 33    gram shall have the specific authority to:
 34        (a)  Enter into contracts as are necessary or proper to carry out the pro-
 35        visions  and  purposes  of this chapter, including the authority, with the
 36        approval of the director, to enter into contracts with similar programs of
 37        other states for the joint performance of common functions or with persons
 38        or other organizations for the performance of administrative functions;
 39        (b)  Sue or be sued, including  taking  any  legal  actions  necessary  or
 40        proper  to  recover  any  assessments  and penalties for, on behalf of, or
 41        against the program or any reinsuring carriers;
 42        (c)  Take any legal action necessary to  avoid  the  payment  of  improper
 43        claims against the program;
 44        (d)  Define the health benefit plans, which plans shall allow coordination
 45        of benefits, for which reinsurance will be provided, and to issue reinsur-
 46        ance policies, in accordance with the requirements of this chapter;
 47        (e)  Establish rules, conditions and procedures for reinsuring risks under
 48        the  program,  including  board  broad  discretion to operate separate the
 49        small employer and individual reinsurance pools program;
 50        (f)  Establish actuarial functions as appropriate for the operation of the
 51        program;
 52        (g)  Assess carriers in accordance with the provisions of subsection  (12)
 53        of  this  section,  and to make advance interim assessments of carriers as
 54        may be reasonable and  necessary for organizational and interim  operating
 55        expenses. Any interim assessments shall be credited as offsets against any
                                                                        
                                           6
                                                                        
  1        regular assessments due following the close of the fiscal year;
  2        (h)  Appoint  appropriate  legal, actuarial and other committees as neces-
  3        sary to provide technical assistance in the operation of the program, pol-
  4        icy and other contract design, and any other function within the authority
  5        of the program;
  6        (i)  Borrow money to effect the purposes of  the  program.  Any  notes  or
  7        other  evidence  of  indebtedness  of  the program not in default shall be
  8        legal investments for carriers and may be carried as admitted assets.
  9        (9)  A reinsuring carrier may reinsure with the program as provided for in
 10    this subsection:
 11        (a)  With respect to a small  employer  basic,  standard  or  catastrophic
 12        health benefit plan, the program shall reinsure the level of coverage pro-
 13        vided  and,  with respect to other plans, the program shall reinsure up to
 14        the level of coverage provided in a small employer basic, standard or cat-
 15        astrophic health benefit plan.
 16        (b)  A small employer carrier may reinsure an entire employer group within
 17        sixty (60) days of the commencement of the group's coverage under a health
 18        benefit plan.
 19        (c)  A reinsuring small employer carrier may reinsure an eligible employee
 20        or dependent within a period of sixty (60) days following the commencement
 21        of the coverage with the small employer.  A  newly  eligible  employee  or
 22        dependent  of  the  reinsured small employer may be reinsured within sixty
 23        (60) days of the commencement  of  his  coverage.  Newborn  dependents  of
 24        insureds are not eligible for reinsurance unless a parent is already rein-
 25        sured.
 26        (d)  (i)   The  program  shall  not  reimburse  a  reinsuring carrier with
 27             respect to the claims of a reinsured employee or dependent until  the
 28             carrier  has incurred an initial level of claims for such employee or
 29             dependent of five thousand dollars ($5,000) in a  calendar  year  for
 30             benefits  covered by the program. In addition, the reinsuring carrier
 31             shall be responsible for ten percent (10%) of the next fifty thousand
 32             dollars ($50,000) of benefit payments during a calendar year and  the
 33             program shall reinsure the remainder.
 34             (ii)  The  board  annually may adjust the initial level of claims and
 35             the maximum limit to be retained by the carrier to reflect  increases
 36             in  costs and utilization within the standard market for health bene-
 37             fit plans within the state. The adjustment shall not be less than the
 38             annual change in the medical component of the "Consumer  Price  Index
 39             for  All Urban Consumers" of the department of labor, bureau of labor
 40             statistics, unless the board proposes and  the  director  approves  a
 41             lower adjustment factor.
 42        (e)  A  reinsuring  carrier may terminate reinsurance with the program for
 43        one (1) or more of the reinsured employees or dependents on  any  anniver-
 44        sary of the health benefit plan.
 45        (f)  A reinsuring carrier shall apply all managed care and claims handling
 46        techniques, including utilization review, individual case management, pre-
 47        ferred  provider  provisions, and other managed care provisions or methods
 48        of operation consistently with respect to reinsured and nonreinsured busi-
 49        ness.
 50        (10) (a) The board, as part of the plan of operation,  shall  establish  a
 51        methodology for determining premium rates to be charged by the program for
 52        reinsuring small employers pursuant to this section. The methodology shall
 53        include  a  system for classification of small employers that reflects the
 54        types of case characteristics commonly used  by small employer carriers in
 55        the state. The methodology shall provide for the development of base rein-
                                                                        
                                           7
                                                                        
  1        surance premium rates, subject to the approval of the director, and  shall
  2        be  set  at  levels which reasonably approximate gross premiums charged to
  3        small employers by small employer carriers for health benefit  plans  with
  4        benefits  similar to the standard health benefit plan, adjusted to reflect
  5        retention levels required under the provisions of this chapter.
  6        (b)  Premiums for the program shall be as established by the board.
  7        (c)  The board periodically shall review the methodology established under
  8        the provisions of paragraph (10)(a) of this section, including the  system
  9        of  classification  and  any  rating factors, to assure that it reasonably
 10        reflects the claims experience of  the  program.  The  board  may  propose
 11        changes  to  the methodology which shall be subject to the approval of the
 12        director.
 13        (d)  The board may consider adjustments to the premium  rates  charged  by
 14        the  program  to reflect the use of effective cost containment and managed
 15        care arrangements.
 16        (11) If a health benefit plan for a small employer  is  entirely  or  par-
 17    tially  reinsured  with the program, the premium charged to the small employer
 18    for any rating period for the coverage  issued  shall  meet  the  requirements
 19    relating to premium rates set forth in section 41-4706, Idaho Code.
 20        (12) (a) Prior  to  March  1  of  each year, the board shall determine and
 21        report to the director the program net  loss  for  the  previous  calendar
 22        year,  including administrative expenses and incurred losses for the year,
 23        taking into account investment income  and  other  appropriate  gains  and
 24        losses.
 25        (b)  Any  net loss for the year shall be recouped by assessments of carri-
 26        ers.
 27        (c)  (i)   For the assessment of March 1, 1995, and prior to  March  1  of
 28             each  succeeding  year,  the  board shall determine and file with the
 29             director an estimate of the assessments needed  to  fund  the  losses
 30             incurred by the program in the previous calendar year.
 31             (ii)  The  individual  assessments shall be determined by multiplying
 32             net losses, if net earnings are negative, as  defined  by  subsection
 33             (12)(a)  of this section, by a fraction, the numerator of which shall
 34             be the carrier's total premiums earned in the preceding calendar year
 35             from all health benefit plans and policies or certificates of  insur-
 36             ance for specific disease, and hospital confinement indemnity in this
 37             state  as reported in the carrier's annual report pursuant to subsec-
 38             tion (16) of this section, and the denominator of which shall be  the
 39             total  premiums earned in the preceding calendar year from all health
 40             benefit plans and policies or certificates of insurance for  specific
 41             disease and hospital confinement indemnity in this state.
 42        (d)  If  assessments exceed net losses of the program, the excess shall be
 43        held at interest and used by the board  to  offset  future  losses  or  to
 44        reduce  program  premiums.  As  used  in  this  paragraph, "future losses"
 45        includes reserves for incurred but not reported claims.
 46        (e)  Each reinsuring carrier's  proportion  of  the  assessment  shall  be
 47        determined  annually  by  the  board  based on annual statements and other
 48        reports deemed necessary by the board and filed by the reinsuring carriers
 49        with the board or with the director.
 50        (f)  The plan of operation shall provide for the imposition of an interest
 51        penalty for late payment of assessments.
 52        (g)  A reinsuring carrier may seek from the director a deferment from  all
 53        or part of an assessment imposed by the board. The director may defer  all
 54        or  part  of the assessment of a reinsuring carrier if the director deter-
 55        mines that the payment of the assessment would place the  reinsuring  car-
                                                                        
                                           8
                                                                        
  1        rier  in a financially impaired condition. If all or part of an assessment
  2        against a reinsuring carrier is deferred  the  amount  deferred  shall  be
  3        assessed  against  the other participating carriers in a manner consistent
  4        with the basis for assessment set forth in this subsection. The reinsuring
  5        carrier receiving the deferment shall remain liable to the program for the
  6        amount deferred and shall be prohibited from reinsuring  any  groups  with
  7        the program until such time as it pays the assessments.
  8        (13) (a) Neither  the participation in the program as reinsuring carriers,
  9        the establishment of rates, forms or procedures, nor any  other  joint  or
 10        collective  action  required under the provisions of this chapter shall be
 11        the basis of any legal action, criminal or  civil  liability,  or  penalty
 12        against  the  program  or any of its reinsuring carriers either jointly or
 13        separately.
 14        (b)  Neither the board nor its employees shall be liable for  any  obliga-
 15        tions  of the program. No member or employee of the board shall be liable,
 16        and no cause of action of any nature may arise against them, for  any  act
 17        or  omission  related  to the performance of their powers and duties under
 18        this chapter, unless such act or omission constitutes  willful  or  wanton
 19        misconduct. The board may provide for indemnification of, and legal repre-
 20        sentation for, its members and employees.
 21        (14) The  board, as part of the plan of operation, shall develop standards
 22    setting forth the manner and levels of compensation to be paid to  agents  for
 23    the  sale  of  small  employer basic, standard and catastrophic health benefit
 24    plans. In establishing such standards, the board shall take into consideration
 25    the need to assure the broad availability of coverages, the objectives of  the
 26    program,  the  time  and  effort expended in placing the coverage, the need to
 27    provide ongoing service to the small employer, the levels of compensation cur-
 28    rently used in the industry and the overall costs of coverage to small employ-
 29    ers selecting these plans.
 30        (15) The program shall be exempt from any and all taxes.
 31        (16) Each carrier shall file with the director, in a form and manner to be
 32    prescribed by the director, an annual report. The report shall state the  num-
 33    ber of resident persons insured under the carrier's health benefit plan.
 34        (17) If  a  reinsuring  small  employer  carrier  attempts  to reinsure or
 35    reinsures an entire employer group,  an  employee,  or  a  dependent  of  such
 36    employee that, immediately prior to the commencement of such coverage, it cov-
 37    ered  under a health benefit plan, the board shall assess all costs and losses
 38    incurred by the program for claims and  administrative  expenses  relating  to
 39    such group, employee or dependent of such employee only to the said reinsuring
 40    small employer carrier.
 41        (18) Subsection  (17)  of this section shall apply to assessments made for
 42    the 1994 calendar year and each year thereafter.
                                                                        
 43        SECTION 3.  That Section 41-5501, Idaho Code, be, and the same  is  hereby
 44    amended to read as follows:
                                                                        
 45        41-5501.  DEFINITIONS. As used in this chapter:
 46        (1)  "Agent"  means  a  producer  as  defined in section 41-1003(9), Idaho
 47    Code.
 48        (2)  "Board" means the board of directors of the Idaho high risk  individ-
 49    ual  reinsurance pool established in this chapter and the Idaho small employer
 50    reinsurance program established in section 41-4711, Idaho Code.
 51        (3)  "Carrier" means any entity that provides, or is  authorized  to  pro-
 52    vide,  health  insurance  in this state. For purposes of this chapter, carrier
 53    includes an insurance company, any other entity providing reinsurance  includ-
                                                                        
                                           9
                                                                        
  1    ing  excess or stop loss coverage, a hospital or professional service corpora-
  2    tion, a fraternal benefit society, a managed  care  organization,  any  entity
  3    providing  health insurance coverage or benefits to residents of this state as
  4    certificate holders under a group policy issued or delivered outside  of  this
  5    state,  and  any  other  entity providing a plan of health insurance or health
  6    benefits subject to state insurance regulation.
  7        (4)  "Dependent" means a spouse, an unmarried child under the age of nine-
  8    teen (19) years, an unmarried child who is a full-time student under  the  age
  9    of  twenty-three  (23) years and who is financially dependent upon the parent,
 10    and an unmarried child of any age who is medically certified as  disabled  and
 11    dependent upon the parent.
 12        (5)  "Director"  means  the director of the department of insurance of the
 13    state of Idaho.
 14        (6)  "Eligible individual" means an Idaho resident individual or dependent
 15    of an Idaho resident who is under the age of sixty-five  (65)  years,  is  not
 16    eligible  for  coverage  under  a group health plan, part A or part B of title
 17    XVIII of the social security act (medicare), or a state plan under  title  XIX
 18    (medicaid) or any successor program, and who does not have other health insur-
 19    ance  coverage.  Coverage  under  a  basic,  standard, catastrophic A or cata-
 20    strophic B health benefit plan shall not be available to any individual who is
 21    covered under other health insurance coverage. For purposes of  this  chapter,
 22    to  be  eligible,  an  individual  must  also meet the requirements of section
 23    41-5510, Idaho Code.
 24        (7)  "Health benefit plan" means any hospital or medical policy or certif-
 25    icate, any subscriber contract provided by a hospital or professional  service
 26    corporation,  or  health  maintenance organization subscriber contract. Health
 27    benefit plan does not include policies or certificates of insurance  for  spe-
 28    cific  disease, hospital confinement indemnity, accident-only, credit, dental,
 29    vision, medicare supplement, long-term care, or disability  income  insurance,
 30    student  health  benefits  only,  coverage issued as a supplement to liability
 31    insurance, worker's compensation or similar insurance, automobile medical pay-
 32    ment insurance, or nonrenewable short-term coverage issued  for  a  period  of
 33    twelve (12) months or less.
 34        (8)  "Individual basic health benefit plan" means a lower cost health ben-
 35    efit plan developed pursuant to section 41-5511, Idaho Code.
 36        (9)  "Individual carrier" means a carrier that offers health benefit plans
 37    covering eligible individuals and their dependents.
 38        (10) "Individual  catastrophic A health benefit plan" means a higher limit
 39    health benefit plan developed pursuant to section 41-5511, Idaho Code.
 40        (11) "Individual catastrophic B health benefit plan" means a health  bene-
 41    fit  plan  offering  limits  higher  than a catastrophic A health benefit plan
 42    developed pursuant to section 41-5511, Idaho Code.
 43        (12) "Individual standard health benefit plan" means a health benefit plan
 44    developed pursuant to section 41-5511, Idaho Code.
 45        (13) "Plan" or "pool plan" means the  individual  basic,  standard,  cata-
 46    strophic  A  or  catastrophic  B plan established pursuant to section 41-5511,
 47    Idaho Code.
 48        (14) "Plan of operation" means the plan of  operation  of  the  individual
 49    high risk reinsurance pool established pursuant to this chapter.
 50        (15) "Pool" means the Idaho high risk reinsurance pool.
 51        (16) "Premium" means all moneys paid by an individual and eligible depend-
 52    ents  as  a condition of receiving coverage from a carrier, including any fees
 53    or other contributions associated with the health benefit plan.
 54        (17) "Qualifying previous coverage"  and  "qualifying  existing  coverage"
 55    mean benefits or coverage provided under:
                                                                        
                                           10
                                                                        
  1        (a)  Medicare  or  medicaid,  civilian  health  and  medical  program  for
  2        uniformed  services  (CHAMPUS), the Indian health service program, a state
  3        health benefit risk pool, or any other similar publicly sponsored program;
  4        or
  5        (b)  Any group or individual health insurance  policy  or  health  benefit
  6        arrangement  whether or not subject to the state insurance laws, including
  7        coverage provided by a managed care organization, hospital or professional
  8        service corporation, or a fraternal benefit society, that  provides  bene-
  9        fits similar to or exceeding benefits provided under the basic health ben-
 10        efit plan.
 11        (18) "Reinsurance  premium" means the premium set by the board pursuant to
 12    section 41-5506, Idaho Code, to be paid by  a  reinsuring  carrier  for  plans
 13    issued under the pool.
 14        (19) "Reinsuring  carrier" means a carrier participating in the individual
 15    high risk reinsurance pool established by this chapter.
 16        (20) "Restricted network provision" means any provision of a health  bene-
 17    fit  plan that conditions the payment of benefits, in whole or in part, on the
 18    use of health care providers that have entered into a contractual  arrangement
 19    with the carrier to provide health care services to covered individuals.
                                                                        
 20        SECTION  4.  That  Section 41-5505, Idaho Code, be, and the same is hereby
 21    amended to read as follows:
                                                                        
 22        41-5505.  REINSURANCE. (1) Any individual carrier  issuing  an  individual
 23    basic, standard, catastrophic A, or catastrophic B health benefit plan as pro-
 24    vided  in  this  chapter shall receive reinsurance be reinsured by the pool to
 25    the level of coverage provided in the plan and shall be liable to the pool for
 26    the reinsurance premium.
 27        (2)  (a) The pool shall not reimburse a reinsuring carrier with respect to
 28        the claims of a reinsured individual or dependent until  the  carrier  has
 29        incurred  an  initial  level of claims for such individual or dependent of
 30        five thousand dollars ($5,000) in a calendar year for benefits covered  by
 31        the pool. In addition, the reinsuring carrier shall be responsible for ten
 32        percent  (10%) of the next twenty-five thousand dollars ($25,000) of bene-
 33        fit payments during a calendar  year  and  the  pool  shall  reinsure  the
 34        remainder.
 35        (b)  The  board  annually  may  adjust the initial level of claims and the
 36        maximum limit to be retained by the carrier to reflect increases in  costs
 37        and utilization within the standard market for health benefit plans within
 38        the  state. The adjustment shall not be less than the annual change in the
 39        medical component of the "Consumer Price Index for All Urban Consumers" of
 40        the department of labor, bureau of labor statistics, unless the board pro-
 41        poses and the director approves a lower adjustment factor.
 42        (3)  A reinsuring carrier shall apply all managed care and claims handling
 43    techniques, including utilization review,  individual  case  management,  pre-
 44    ferred  provider  provisions,  and other managed care provisions or methods of
 45    operation consistently with respect to reinsured and nonreinsured business.
 46        (4)  Each carrier shall make a filing with  the  director  containing  the
 47    carrier's  earned  health  insurance premium derived from health benefit plans
 48    delivered or issued for delivery in this state in the previous calendar year.
 49        (5)  Each carrier shall file with the director, in a form and manner to be
 50    prescribed by the director, an annual report. The report shall state the  num-
 51    ber  of  resident  persons insured under the carrier's health benefit plan, or
 52    through excess or stop loss coverage.
                                                                        
                                           11
                                                                        
  1        SECTION 5.  An emergency existing  therefor,  which  emergency  is  hereby
  2    declared to exist, this act shall be in full force and effect on and after its
  3    passage and approval.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 13050
The purpose of this bill is to clarify that all entities
providing health insurance in Idaho are subject to the reporting
requirements relating to annual assessments levied by the Small
Employer Reinsurance Program and the Individual High Risk
Reinsurance Pool.  This conforms to what has been the actual
practice of the Program since its inception.  This bill also
clarifies that for all individuals covered by the High Risk Pool
benefit plans, carriers shall receive reinsurance coverage and
must pay reinsurance premium to the Pool.
                          FISCAL IMPACT
There is no fiscal impact on the state general fund.






Contact
Name: Rep. Bill Deal 
      Sen. Dean Cameron
Phone: 208/332-1000
Hyatt Erstad 208/343-8899
Bart W. Harwood 208/395-8500
 

STATEMENT OF PURPOSE/FISCAL NOTE     H 306