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HOUSE BILL NO. 136
INTRODUCED BY C. WILLIAMS
BY REQUEST OF THE STATE AUDITOR
AN ACT DECREASING THE LOOKBACK PERIOD FOR PREEXISTING CONDITION EXCLUSIONS; PROVIDING FOR INFLATIONARY ADJUSTMENTS FOR CERTAIN SPECIFIED BENEFITS; GRANTING EXPLICIT AUTHORITY TO BORROW MONEY TO THE COMPREHENSIVE HEALTH ASSOCIATION; SUBSTITUTING ANNUAL ASSESSMENTS FOR FISCAL YEAREND ASSESSMENTS; PROVIDING VOTING AUTHORITY FOR THE PUBLIC INTEREST MEMBER OF THE COMPREHENSIVE HEALTH ASSOCIATION BOARD; ALLOWING THE COMMISSIONER OF INSURANCE TO REMOVE BOARD MEMBERS OF THE COMPREHENSIVE HEALTH ASSOCIATION BOARD THAT DO NOT ACTIVELY PARTICIPATE IN THE AFFAIRS OF THE BOARD; PROVIDING A NOTIFICATION REQUIREMENT FOR HEALTH MAINTENANCE ORGANIZATIONS; REQUIRING THE COMMISSIONER OF INSURANCE TO INCLUDE THE PREMIUM VOLUME OF AFFILIATES WHEN DETERMINING BOARD MEMBERSHIP FOR THE COMPREHENSIVE HEALTH ASSOCIATION; AMENDING SECTIONS 33-22-1501, 33-22-1503, 33-22-1504, 33-22-1513, 33-22-1515, 33-22-1516, AND 33-22-1521, MCA; AND PROVIDING AN EFFECTIVE DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 33-22-1501, MCA, is amended to read:
"33-22-1501. Definitions. As used in this part, the following definitions apply:
(1) "Association" means the comprehensive health association created by 33-22-1503.
(2) "Association plan" means a policy of insurance coverage that is offered by the association and that is certified by the association as required by 33-22-1521.
(3) "Association plan premium" means the charge determined pursuant to 33-22-1512 for membership in the association plan based on the benefits provided in 33-22-1521.
(4) "Association portability plan" means a policy of insurance coverage that is offered by the association to a federally defined eligible individual.
(5) "Association portability plan premium" means the charge determined by the association and approved by the commissioner for an association portability plan.
(6) "Block of business" means a separate risk pool grouping of covered individuals, enrollees, and dependents as defined by rules of the commissioner.
(7) "Eligible person" means an individual who:
(a) is a resident of this state and applies for coverage under the association plan;
(b) unless the individual's eligibility is waived by the association, has, within 6 months prior to the date of application,
been rejected for disability insurance or health service benefits by at least two insurers, societies, or health service
corporations or has had a restrictive rider or preexisting conditions limitation, which limitation is required by at least two
insurers, societies, or health service corporations,
which that has the effect of substantially reducing coverage from that
received by a person considered a standard risk; and
(c) is not eligible for any other form of disability insurance or health service benefits.
(8) "Federally defined eligible individual" means a person who is an individual enrolling in the association portability plan:
(a) for whom, as of the date on which the individual seeks coverage under the association portability plan, the aggregate of the periods of creditable coverage is 18 months or more and whose most recent prior creditable coverage was under a group health plan, governmental plan, or church plan;
(b) who does not have other health insurance coverage;
(c) who is not eligible for coverage under:
(i) a group health plan;
(ii) Title XVIII, part A or B, of the Social Security Act, 42 U.S.C. 1395c through 1395i-4 or 42 U.S.C. 1395j through 1395w-4; or
(iii) a state plan under Title XIX of the Social Security Act, 42 U.S.C. 1396a through 1396u, or a successor program;
(d) for whom the most recent coverage was not terminated for factors relating to nonpayment of premiums or fraud;
(e) who, if offered the option of continuation coverage under a COBRA continuation provision or under a similar state program, elected that coverage; and
(f) who has exhausted continuation coverage under the COBRA continuation provision or program described in subsection (8)(e) if the individual elected the continuation coverage described in subsection (8)(e).
(9) "Health service corporation" means a corporation operating pursuant to Title 33, chapter 30, and offering or selling contracts of disability insurance.
(10) "Insurance arrangement" means any plan, program, contract, or other arrangement to the extent not exempt from inclusion by virtue of the provisions of the federal Employee Retirement Income Security Act of 1974 under which one or more employers, unions, or other organizations provide to their employees or members, either directly or indirectly through a trust of a third-party administrator, health care services or benefits other than through an insurer.
(11) "Insurer" means a company operating pursuant to Title 33, chapter 2 or 3, and offering or selling policies or contracts of disability insurance, as provided in Title 33, chapter 22.
(12) "Lead carrier" means the licensed administrator or insurer selected by the association to administer the association plan.
(13) "Medicare" means coverage under both parts A and B of Title XVIII of the Social Security Act, 42 U.S.C. 1395, et seq., as amended.
(14) "Preexisting condition" means any condition for which an applicant for coverage under the association plan has
received medical attention during the
5 3 years immediately preceding the filing of an application.
(15) "Society" means a fraternal benefit society operating pursuant to Title 33, chapter 7, and offering or selling certificates of disability insurance."
Section 2. Section 33-22-1503, MCA, is amended to read:
"33-22-1503. Comprehensive health association -- mandatory membership. (1) There is established a nonprofit legal entity, to be known as the Montana comprehensive health association, with participating membership consisting of all insurers, insurance arrangements, societies, and health service corporations licensed or authorized to do business in this state. The association is exempt from taxation under the laws of this state, and all property owned by the association is exempt from taxation.
(2) All participating members shall maintain their membership in the association as a condition for writing health care benefits policies or contracts in this state. The association shall submit its articles, bylaws, and operating rules to the commissioner for approval.
(3) The association may:
(a) exercise the powers granted to insurers under the laws of this state;
(b) sue or be sued;
(c) borrow money;
(c)(d) enter into contracts with insurers, administrators, similar associations in other states, or other persons for the
performance of administrative functions; (d)(e) establish administrative and accounting procedures for the operation of the association; (e)(f) provide for the reinsuring of risks incurred as a result of issuing the coverages required by members of the
association; (f)(g) provide for the administration by the association of policies that are reinsured pursuant to subsection (3) (e)(f); and (g)(h) issue additional types of health insurance policies to provide optional coverage, including medicare supplemental
Section 3. Section 33-22-1504, MCA, is amended to read:
"33-22-1504. Association board of directors -- organization. (1) There is a board of directors of the association, consisting of eight individuals:
(a) one from each of the five participating members of the association with the highest annual premium volume of disability insurance contracts or health service corporation contracts, derived from or on behalf of residents in the previous calendar year, as determined by the commissioner;
(b) two members at large who must be participating members of the association, appointed by the commissioner; and
(c) a member at large, appointed by the commissioner to represent the public interest
, who shall serve in an advisory
(2) The public interest board member is entitled to one board vote. Each of the seven board members representing the association members is entitled to a weighted average vote, in person or by proxy, based on the association member's annual Montana premium volume. However, a board member may not have more than 50% of the vote.
(3) Members of the board may be reimbursed from the money of the association for expenses incurred by them because of their service as board members but may not otherwise be compensated by the association for their services. The costs of conducting the meetings of the association and its board of directors must be borne by participating members of the association in accordance with 33-22-1513.
(4) The commissioner may replace a board member if the commissioner determines that the board member is not actively participating in the affairs of the board or if the participating member does not appoint a board representative within a reasonable time period. A board member appointed under subsection (1)(a) must be replaced by a participating member of the association with the next highest annual Montana premium volume of disability insurance contracts, health maintenance organization health care service agreements, or health service corporation contracts, derived from or on behalf of residents in the previous calendar year, as determined by the commissioner.
(5) The commissioner shall include the applicable premium volume of all affiliates, as defined in 33-2-1101, in making the determination required by subsection (1)(a) or (4)."
Section 4. Section 33-22-1513, MCA, is amended to read:
"33-22-1513. Operation of association plan and association portability plans. (1) Upon acceptance by the lead carrier under 33-22-1516, an eligible person may enroll in the association plan by payment of the association plan premium to the lead carrier.
(2) Upon application by a federally defined eligible individual to the lead carrier for an association portability plan, the association may not:
(a) decline to offer an association portability plan; or
(b) impose a preexisting condition exclusion with respect to an individual's association portability plan coverage if application for association portability plan coverage is made within 63 days following termination of the applicant's most recent prior creditable coverage.
(3) Not less than 88% of the association plan premiums paid to the lead carrier may be used to pay claims and not more than 12% may be used for payment of the lead carrier's direct and indirect expenses as specified in 33-22-1514.
(4) Any income in excess of the costs incurred by the association in providing reinsurance or administrative services must be held at interest and used by the association to offset past and future losses due to claims expenses of the association plan and the association portability plan or be allocated to reduce association plan premiums.
(5) (a) Each participating member of the association shall share the losses due to claims expenses of the association plan and the association portability plan for plans issued or approved for issuance by the association and shall share in the operating and administrative expenses incurred or estimated to be incurred by the association incident to the conduct of its affairs. Claims expenses of the association plan and the association portability plan that exceed the premium payments allocated to the payment of benefits are the liability of the association members. Association members shall share in the claims expenses of the association plan and the association portability plan and operating and administrative expenses of the association in an amount equal to the ratio of the association member's total disability insurance premium received from or on behalf of Montana residents divided by the total disability insurance premium received by all association members from or on behalf of Montana residents as determined by the commissioner.
(b) For purposes of this subsection (5), "total disability insurance premium" does not include premiums received from disability income insurance, credit disability insurance, disability waiver insurance, or life insurance.
(6) The association shall make an annual determination of each association member's liability, if any, and may make an
fiscal yearend assessment if necessary. Assessments related to the operation and expenses of the association plan
must be determined and levied separately from assessments related to the operation and expenses of the association
portability plan. The association may also, subject to the approval of the commissioner, provide for interim assessments
against the association members as may be necessary to ensure the financial capability of the association in meeting the
incurred or estimated claims expenses of the association plan and the association portability plan and operating and
administrative expenses of the association until the association's next annual fiscal yearend assessment. Payment of an
assessment is due within 30 days of receipt by an association member of a written notice of a fiscal yearend annual or
interim assessment. Failure by a contributing member to tender to the association the assessment within 30 days is grounds
for termination of membership. An association member that ceases to do disability insurance business within the state
remains liable for assessments through the calendar year during which disability insurance business ceased. The association
may decline to levy an assessment against an association member if the assessment, as determined pursuant to this section,
would not exceed $10.
(7) Any annual
fiscal yearend or interim assessment relating to the operation and expenses of the association plan levied
against an association member may be offset, in an amount equal to the assessment paid to the association, against the
premium tax payable by that association member pursuant to 33-2-705 for the year in which the annual fiscal yearend or
interim assessment is levied. The insurance commissioner shall report to the office of budget and program planning, as a
part of the information required by 17-7-111, the total amount of premium tax offset claimed by association members
during the preceding biennium. Assessments relating to the operation and expenses of the association portability plan and
levied against an association member may not be offset against the premium tax payable by that association member."
Section 5. Section 33-22-1515, MCA, is amended to read:
"33-22-1515. Solicitation of eligible persons. (1) The association, pursuant to a plan approved by the commissioner, shall disseminate appropriate information to the residents of this state regarding the existence of the association plan and the means of enrollment. Means of communication may include use of the press, radio, and television, as well as publication in appropriate state offices and publications.
(2) The association shall devise and implement means of maintaining public awareness of this part and shall administer this part in a manner that facilitates public participation in the association plan.
(3) All licensed disability insurance producers may engage in the selling or marketing of the association plan. The lead carrier shall pay an insurance producer's referral fee of at least $25 to each licensed disability insurance producer who refers an applicant to the association plan, if the applicant is accepted. The amount of the referral fee must be set by the board of directors of the association and is subject to the approval of the commissioner. The referral fees must be paid by the lead carrier from money received as premiums for the association plan.
(4) An insurer, society, health maintenance organization, or health service corporation that rejects or applies
underwriting restrictions to an applicant for disability insurance shall notify the applicant of the existence of the association
plan, requirements for being accepted in
it the association plan, and the procedure for applying to it the association plan."
Section 6. Section 33-22-1516, MCA, is amended to read:
"33-22-1516. Enrollment by eligible person. (1) The association plan must be open for enrollment by eligible persons. An eligible person may enroll in the plan by submission of a certificate of eligibility to the lead carrier. The certificate must provide:
(a) the name, address, and age of the applicant and length of the applicant's residence in this state;
(b) the name, address, and age of spouse and children, if any, if they are to be insured;
(c) written evidence that the person fulfills all of the elements of an eligible person, as defined in 33-22-1501; and
(d) a designation of coverage desired.
(2) Within 30 days of receipt of the certificate, the lead carrier shall either reject the application for failing to comply with the requirements of subsection (1) or forward the eligible person a notice of acceptance and billing information. Insurance is effective on the first of the month following acceptance.
(3) An eligible person may not purchase more than one policy from the association plan.
(4) A person who obtains coverage under the association plan may not be covered for any preexisting condition during
the first 12 months of coverage under the association plan if the person was diagnosed or treated for that condition during
5 3 years immediately preceding the filing of an application. The association may not apply a preexisting condition
exclusion to coverage under the association portability plan if application for association portability plan coverage is made
within 63 days following termination of the applicant's most recent prior creditable coverage. The association shall waive
any time period applicable to a preexisting condition exclusion for the period of time that any other eligible individual was
covered under the following types of coverage if the coverage was continuous to a date not more than 30 days prior to
submission of an application for coverage under the association plan:
(a) an individual health insurance policy that includes coverage by an insurance company, a fraternal benefit society, a health service corporation, or a health maintenance organization that provides benefits similar to or exceeding the benefits provided by the association plan; or
(b) an employer-based health insurance benefit arrangement that provides benefits similar to or exceeding the benefits provided by the association plan."
Section 7. Section 33-22-1521, MCA, is amended to read:
"33-22-1521. Association plan -- minimum benefits. A plan of health coverage must be certified as an association plan if it otherwise meets the requirements of Title 33, chapters 15, 22 (excepting part 7), and 30, and other laws of this state, whether or not the policy is issued in this state, and meets or exceeds the following minimum standards:
(1) (a) The minimum benefits for an insured must, subject to the other provisions of this section, be equal to at least 50% of the covered expenses required by this section in excess of an annual deductible that does not exceed $1,000 per person. The coverage must include a limitation of $5,000 per person on the total annual out-of-pocket expenses for services covered under this section. Coverage must be subject to a maximum lifetime benefit, but the maximums may not be less than $100,000.
(b) One association plan must be offered with coverage for 80% of the covered expenses provided in this section in excess of an annual deductible that does not exceed $1,000 per person. This association plan must provide a maximum lifetime benefit of at least $500,000.
(c) Covered expenses for plans under subsection (1)(a) and (1)(b) must be paid as specified in provider contracts or, in the absence of a provider contract, at the prevailing charge in the state where the service is provided.
(d) The board may authorize other association plans, including managed care plans as defined in 33-36-103.
(2) Covered expenses for plans offered under subsections (1)(a) and (1)(b) must be
the usual and customary charges for
the following medically necessary services and articles when prescribed by a physician or other licensed health care
professional and when designated in the contract:
(a) hospital services;
(b) professional services for the diagnosis or treatment of injuries, illness, or conditions, other than dental;
(c) use of radium or other radioactive materials;
(f) diagnostic x-rays and laboratory tests, except as specifically provided in subsection (3);
(g) services of a physical therapist;
(h) transportation provided by licensed ambulance service to the nearest facility qualified to treat the condition;
(i) oral surgery for the gums and tissues of the mouth when not performed in connection with the extraction or repair of teeth or in connection with TMJ;
(j) rental or purchase of durable medical equipment, which must be reimbursed after the deductible has been met at the rate of 50%, up to a maximum of $1,000;
(k) prosthetics, other than dental;
(l) services of a licensed home health agency, up to a maximum of 180 visits per year;
(m) drugs requiring a physician's prescription that are approved for use in human beings in the manner prescribed by the United States food and drug administration, covered at 50% of the expense, up to an annual maximum of $1,000;
(n) medically necessary, nonexperimental transplants of the kidney, pancreas, heart, heart/lung, lungs, liver, cornea, and high-dose chemotherapy bone marrow transplantation, limited to a lifetime maximum of $150,000, with an additional benefit not to exceed $10,000 for expenses associated with the donor;
(o) pregnancy, including complications of pregnancy;
(p) newborn infant coverage, as required by 33-22-301;
(s) outpatient rehabilitation therapy;
(t) foot care for diabetics;
(u) services of a convalescent home, as an alternative to hospital services, limited to a maximum of 60 days per year; and
(v) travel, other than transportation by a licensed ambulance service, to the nearest facility qualified to treat the patients medical condition when approved in advance by the insurer.
(3) (a) Covered expenses for the services or articles specified in this section do not include:
(i) home and office calls, except as specifically provided in subsection (2);
(ii) rental or purchase of durable medical equipment, except as specifically provided in subsection (2);
(iii) the first $20 of diagnostic x-ray and laboratory charges in each 14-day period;
(iv) oral surgery, except as specifically provided in subsection (2);
(v) that part of a charge for services or articles that exceeds the prevailing charge in the
locality state where the service
is provided; or
(vi) care that is primarily for custodial or domiciliary purposes that would not qualify as eligible services under medicare.
(b) Covered expenses for the services or articles specified in this section do not include charges for:
(i) care or for any injury or disease arising out of an injury in the course of employment and subject to a workers' compensation or similar law, for which benefits are payable under another policy of disability insurance or medicare;
(ii) treatment for cosmetic purposes other than surgery for the repair or treatment of an injury or congenital bodily defect to restore normal bodily functions;
(iii) travel other than transportation provided by a licensed ambulance service to the nearest facility qualified to treat the condition, except as provided by subsection (2);
(iv) confinement in a private room to the extent that it is in excess of the institution's charge for its most common semiprivate room, unless the private room is prescribed as medically necessary by a physician;
(v) services or articles the provision of which is not within the scope of authorized practice of the institution or individual rendering the services or articles;
(vi) room and board for a nonemergency admission on Friday or Saturday;
(vii) routine well baby care;
(viii) complications to a newborn, unless no other source of coverage is available;
(ix) reversal of sterilization;
(x) abortion, unless the life of the mother would be endangered if the fetus were carried to term;
(xi) weight modification or modification of the body to improve the mental or emotional well-being of an insured;
(xii) artificial insemination or treatment for infertility; or
(xiii) breast augmentation or reduction."
Section 8. Effective date. [This act] is effective July 1, 1999.
- END -
Latest Version of HB 136 (HB0136.ENR)
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