Chapter 406

2004 -- S 3103 SUBSTITUTE A AS AMENDED

Enacted 07/05/04

A N A C T

RELATING TO HEALTH INSURANCE -- THE RHODE ISLAND HEALTH CARE REFORM ACT OF 2004 -- HEALTH INSURANCE REGULATION

Introduced By: Senators Tassoni, Roberts, Sheehan, Gibbs, and Perry

Date Introduced: May 11, 2004

It is enacted by the General Assembly as follows:

SECTION 1. Chapter 27-18.6 of the General Laws entitled "Large Group Health

Insurance Coverage" is hereby amended by adding thereto the following section:

27-18.6-11. Health plan loss information. – (1) To ensure maximum competition in the

purchase of group health insurance, all employers with at least one hundred (100) employees

enrolled in their group health plan shall be entitled to receive their health plan loss information

upon request and without charge. No contract between any health insurance carrier, third-party

administrator, employer group, or pool of employers shall abridge this right in any manner. For

purposes of this section, "health plan loss information" shall mean: (a) aggregate total cost figures

for four (4) separate categories of medical claims covered by the employer's group health plan:

physician, hospital, prescription drug, and miscellaneous; and (b) that were incurred for the

twelve (12) month period paid through the fourteen (14) months which end within the sixty (60)

day period prior to the date of the request. "Health plan loss information" shall not include any

information: (a) pertaining to specific medical diagnoses, treatments or drugs; or (b) that

identifies or reasonably could lead to the identity of any individuals covered under the group

health plan; or (c) that is defined as protected or confidential health information under state or

federal laws.

(2) Upon written request from any employer with one hundred (100) or more employees

enrolled in its group health plan, every health insurance carrier shall provide that employer’s

health plan loss information within thirty (30) calendar days of receipt of the request. An

employer shall not be entitled by this section to more than two (2) health plan loss information

requests in any twelve (12) month period, however, nothing shall prohibit a carrier from fulfilling

more frequent requests on a mutually agreed upon basis.

(3) If an employer requests health plan loss information from an insurance agent or other

authorized representative, the agent or authorized representative shall transmit the request to the

health insurance carrier within four (4) working days.

SECTION 2. Sections 27-50-5 and 27-50-7 of the General Laws in Chapter 27-50

entitled "Small Employer Health Insurance Availability Act" are hereby amended to read as

follows:

27-50-5. Restrictions relating to premium rates. -- (a) Premium rates for health benefit

plans subject to this chapter are subject to the following provisions:

(1) Subject to subdivision (2) of this subsection, a small employer carrier shall develop

its rates based on an adjusted community rate and may only vary the adjusted community rate for:

(i) Age;

(ii) Gender; and

(iii) Family composition.

(2) ~~Until October 1, 2004, a~~ A small employer carrier who as of June 1, 2000, varied

rates by health status may vary the adjusted community rates for health status by ten percent

(10%), provided that the resulting rates comply with the other requirements of this section,

including subdivision (5) of this subsection. ~~After October 1, 2004, no small employer carrier~~

~~may vary the adjusted community rate based on health status.~~

(3) The adjustment for age in paragraph (1)(i) of this subsection may not use age

brackets smaller than five (5) year increments and these shall begin with age thirty (30) and end

with age sixty-five (65).

(4) The small employer carriers are permitted to develop separate rates for individuals

age sixty-five (65) or older for coverage for which Medicare is the primary payer and coverage

for which Medicare is not the primary payer. Both rates are subject to the requirements of this

subsection.

(5) For each health benefit plan offered by a carrier, the highest premium rate for each

family composition type shall not exceed four (4) times the premium rate that could be charged to

a small employer with the lowest premium rate for that family composition.

(6) Premium rates for bona fide associations except for the Rhode Island Builders'

Association whose membership is limited to those who are actively involved in supporting the

construction industry in Rhode Island shall comply with the requirements of section 27-50-5.

(b) The premium charged for a health benefit plan may not be adjusted more frequently

than annually except that the rates may be changed to reflect:

(1) Changes to the enrollment of the small employer;

(2) Changes to the family composition of the employee; or

(3) Changes to the health benefit plan requested by the small employer.

section.

(d) Small employer carriers shall apply rating factors consistently with respect to all

small employers. Rating factors shall produce premiums for identical groups that differ only by

the amounts attributable to plan design and do not reflect differences due to the nature of the

groups assumed to select particular health benefit plans. Nothing in this section shall be construed

to prevent a group health plan and a health insurance carrier offering health insurance coverage

from establishing premium discounts or rebates or modifying otherwise applicable copayments or

deductibles in return for adherence to programs of health promotion and disease prevention,

including those included in affordable health benefit plans, provided that the resulting rates

comply with the other requirements of this section, including subdivision (a)(5) of this section.

The calculation of premium discounts, rebates, or modifications to otherwise applicable

copayments or deductibles for affordable health benefit plans shall be made in a manner

consistent with accepted actuarial standards and based on actual or reasonably anticipated small

employer claims experience. As used in the preceding sentence, "accepted actuarial standards"

includes actuarially appropriate use of relevant data from outside the claims experience of small

employers covered by affordable health plans, including, but not limited to, experience derived

from the large group market, as this term is defined in section 27-18.6-2(20).

(e) For the purposes of this section, a health benefit plan that contains a restricted

network provision shall not be considered similar coverage to a health benefit plan that does not

contain such a provision, provided that the restriction of benefits to network providers results in

substantial differences in claim costs.

(f) The director may establish regulations to implement the provisions of this section and

to assure that rating practices used by small employer carriers are consistent with the purposes of

this chapter, including regulations that assure that differences in rates charged for health benefit

plans by small employer carriers are reasonable and reflect objective differences in plan design or

coverage (not including differences due to the nature of the groups assumed to select particular

health benefit plans or separate claim experience for individual health benefit plans).

(g) In connection with the offering for sale of any health benefit plan to a small

employer, a small employer carrier shall make a reasonable disclosure, as part of its solicitation

and sales materials, of all of the following:

(1) The provisions of the health benefit plan concerning the small employer carrier's

right to change premium rates and the factors, other than claim experience, that affect changes in

premium rates;

(2) The provisions relating to renewability of policies and contracts;

(3) The provisions relating to any preexisting condition provision; and

(4) A listing of and descriptive information, including benefits and premiums, about all

benefit plans for which the small employer is qualified.

(h) (1) Each small employer carrier shall maintain at its principal place of business a

complete and detailed description of its rating practices and renewal underwriting practices,

including information and documentation that demonstrate that its rating methods and practices

are based upon commonly accepted actuarial assumptions and are in accordance with sound

actuarial principles.

(2) Each small employer carrier shall file with the director annually on or before March

15 an actuarial certification certifying that the carrier is in compliance with this chapter and that

the rating methods of the small employer carrier are actuarially sound. The certification shall be

in a form and manner, and shall contain the information, specified by the director. A copy of the

certification shall be retained by the small employer carrier at its principal place of business.

(3) A small employer carrier shall make the information and documentation described in

subdivision (1) of this subsection available to the director upon request. Except in cases of

violations of this chapter, the information shall be considered proprietary and trade secret

information and shall not be subject to disclosure by the director to persons outside of the

department except as agreed to by the small employer carrier or as ordered by a court of

competent jurisdiction.

(i) The requirements of this section apply to all health benefit plans issued or renewed on

or after October 1, 2000.

27-50-7. Availability of coverage. -- (a) Until October 1, 2004, for purposes of this

section, "small employer" includes any person, firm, corporation, partnership, association, or

political subdivision that is actively engaged in business that on at least fifty percent (50%) of its

working days during the preceding calendar quarter, employed a combination of no more than

fifty (50) and no less than two (2) eligible employees and part-time employees, the majority of

whom were employed within this state, and is not formed primarily for purposes of buying health

insurance and in which a bona fide employer-employee relationship exists. After October 1, 2004,

for the purposes of this section, "small employer" has the meaning used in section 27-50-3( ll ).

(b) (1) Every small employer carrier shall, as a condition of transacting business in this

state with small employers, actively offer to small employers all health benefit plans it actively

markets to small employers in this state including at least two (2) health benefit plans. One health

benefit plan offered by each small employer carrier shall be a standard health benefit plan, and

one plan shall be an economy health benefit plan. A small employer carrier shall be considered to

be actively marketing a health benefit plan if it offers that plan to any small employer not

currently receiving a health benefit plan from the small employer carrier.

(2) Subject to subdivision (1) of this subsection, a small employer carrier shall issue any

health benefit plan to any eligible small employer that applies for that plan and agrees to make the

required premium payments and to satisfy the other reasonable provisions of the health benefit

plan not inconsistent with this chapter. However, no carrier is required to issue a health benefit

plan to any self-employed individual who is covered by, or is eligible for coverage under, a health

benefit plan offered by an employer.

prescribed by the director, the health benefit plans to be used by the carrier. A health benefit plan

filed pursuant to this subdivision may be used by a small employer carrier beginning thirty (30)

days after it is filed unless the director disapproves its use.

(2) The director may at any time may, after providing notice and an opportunity for a

hearing to the small employer carrier, disapprove the continued use by a small employer carrier of

a health benefit plan on the grounds that the plan does not meet the requirements of this chapter.

(d) Health benefit plans covering small employers shall comply with the following

provisions:

(1) A health benefit plan shall not deny, exclude, or limit benefits for a covered

individual for losses incurred more than six (6) months following the enrollment date of the

individual's coverage due to a preexisting condition, or the first date of the waiting period for

enrollment if that date is earlier than the enrollment date. A health benefit plan shall not define a

preexisting condition more restrictively than as defined in section 27-50-3.

(2) (i) Except as provided in subdivision (3) of this subsection, a small employer carrier

shall reduce the period of any preexisting condition exclusion by the aggregate of the periods of

creditable coverage without regard to the specific benefits covered during the period of creditable

coverage, provided that the last period of creditable coverage ended on a date not more than

ninety (90) days prior to the enrollment date of new coverage.

(ii) The aggregate period of creditable coverage does not include any waiting period or

affiliation period for the effective date of the new coverage applied by the employer or the carrier,

or for the normal application and enrollment process following employment or other triggering

event for eligibility.

(iii) A carrier that does not use preexisting condition limitations in any of its health

benefit plans may impose an affiliation period that:

(A) Does not exceed sixty (60) days for new entrants and not to exceed ninety (90) days

for late enrollees;

(B) During which the carrier charges no premiums and the coverage issued is not

effective; and

(iv) This section does not preclude application of any waiting period applicable to all

new enrollees under the health benefit plan, provided that any carrier-imposed waiting period is

no longer than sixty (60) days.

(3) (i) Instead of as provided in paragraph (2)(i) of this subsection, a small employer

carrier may elect to reduce the period of any preexisting condition exclusion based on coverage of

benefits within each of several classes or categories of benefits specified in federal regulations.

(ii) A small employer electing to reduce the period of any preexisting condition

exclusion using the alternative method described in paragraph (i) of this subdivision shall:

(A) Make the election on a uniform basis for all enrollees; and

(B) Count a period of creditable coverage with respect to any class or category of

benefits if any level of benefits is covered within the class or category.

(iii) A small employer carrier electing to reduce the period of any preexisting condition

exclusion using the alternative method described under paragraph (i) of this subdivision shall:

(A) Prominently state that the election has been made in any disclosure statements

concerning coverage under the health benefit plan to each enrollee at the time of enrollment under

the plan and to each small employer at the time of the offer or sale of the coverage; and

(B) Include in the disclosure statements the effect of the election.

(4) (i) A health benefit plan shall accept late enrollees, but may exclude coverage for late

enrollees for preexisting conditions for a period not to exceed twelve (12) months.

(ii) A small employer carrier shall reduce the period of any preexisting condition

exclusion pursuant to subdivision (2) or (3) of this subsection.

(5) A small employer carrier shall not impose a preexisting condition exclusion:

(i) Relating to pregnancy as a preexisting condition; or

(ii) With regard to a child who is covered under any creditable coverage within thirty

(30) days of birth, adoption, or placement for adoption, provided that the child does not

experience a significant break in coverage, and provided that the child was adopted or placed for

adoption before attaining eighteen (18) years of age.

(6) A small employer carrier shall not impose a preexisting condition exclusion in the

case of a condition for which medical advice, diagnosis, care or treatment was recommended or

received for the first time while the covered person held creditable coverage, and the medical

advice, diagnosis, care or treatment was a covered benefit under the plan, provided that the

creditable coverage was continuous to a date not more than ninety (90) days prior to the

enrollment date of the new coverage.

(7) (i) A small employer carrier shall permit an employee or a dependent of the

employee, who is eligible, but not enrolled, to enroll for coverage under the terms of the group

health plan of the small employer during a special enrollment period if:

(A) The employee or dependent was covered under a group health plan or had coverage

under a health benefit plan at the time coverage was previously offered to the employee or

dependent;

(B) The employee stated in writing at the time coverage was previously offered that

coverage under a group health plan or other health benefit plan was the reason for declining

enrollment, but only if the plan sponsor or carrier, if applicable, required that statement at the

time coverage was previously offered and provided notice to the employee of the requirement and

the consequences of the requirement at that time;

paragraph:

(I) Was under a COBRA continuation provision and the coverage under this provision

has been exhausted; or

(II) Was not under a COBRA continuation provision and that other coverage has been

terminated as a result of loss of eligibility for coverage, including as a result of a legal separation,

divorce, death, termination of employment, or reduction in the number of hours of employment or

employer contributions towards that other coverage have been terminated; and

(D) Under terms of the group health plan, the employee requests enrollment not later

than thirty (30) days after the date of exhaustion of coverage described in item (C)(I) of this

paragraph or termination of coverage or employer contribution described in item (C)(II) of this

paragraph.

(ii) If an employee requests enrollment pursuant to subparagraph (i)(D) of this

subdivision, the enrollment is effective not later than the first day of the first calendar month

beginning after the date the completed request for enrollment is received.

(8) (i) A small employer carrier that makes coverage available under a group health plan

with respect to a dependent of an individual shall provide for a dependent special enrollment

period described in paragraph (ii) of this subdivision during which the person or, if not enrolled,

the individual may be enrolled under the group health plan as a dependent of the individual and,

in the case of the birth or adoption of a child, the spouse of the individual may be enrolled as a

dependent of the individual if the spouse is eligible for coverage if:

(A) The individual is a participant under the health benefit plan or has met any waiting

period applicable to becoming a participant under the plan and is eligible to be enrolled under the

plan, but for a failure to enroll during a previous enrollment period; and

(B) A person becomes a dependent of the individual through marriage, birth, or adoption

or placement for adoption.

(ii) The special enrollment period for individuals that meet the provisions of paragraph

(i) of this subdivision is a period of not less than thirty (30) days and begins on the later of:

(A) The date dependent coverage is made available; or

(B) The date of the marriage, birth, or adoption or placement for adoption described in

subparagraph (i)(B) of this subdivision.

(iii) If an individual seeks to enroll a dependent during the first thirty (30) days of the

dependent special enrollment period described under paragraph (ii) of this subdivision, the

coverage of the dependent is effective:

(A) In the case of marriage, not later than the first day of the first month beginning after

the date the completed request for enrollment is received;

(B) In the case of a dependent's birth, as of the date of birth; and

adoption or placement for adoption.

(9) (i) Except as provided in this subdivision, requirements used by a small employer

carrier in determining whether to provide coverage to a small employer, including requirements

for minimum participation of eligible employees and minimum employer contributions, shall be

applied uniformly among all small employers applying for coverage or receiving coverage from

the small employer carrier.

(ii) Except as provided in subsection (iii), herein ~~For~~ for health benefit plans issued or

renewed on or after October 1, 2000, a small employer carrier shall not require a minimum

participation level greater than:

(A) One hundred percent (100%) of eligible employees working for groups of ten (10) or

less employees; and

(B) Seventy-five percent (75%) of eligible employees working for groups with more

than ten (10) employees.

(iii) From October 1, 2004 until October 1, 2006, a small employer carrier shall not

require a minimum participation level greater than seventy-five percent (75%) of eligible

employees working for groups with ten (10) or less employees.

~~(iii)~~(iv) In applying minimum participation requirements with respect to a small

employer, a small employer carrier shall not consider employees or dependents who have

creditable coverage in determining whether the applicable percentage of participation is met.

~~(iv)~~(v) A small employer carrier shall not increase any requirement for minimum

employee participation or modify any requirement for minimum employer contribution applicable

to a small employer at any time after the small employer has been accepted for coverage.

(10) (i) If a small employer carrier offers coverage to a small employer, the small

employer carrier shall offer coverage to all of the eligible employees of a small employer and

their dependents who apply for enrollment during the period in which the employee first becomes

eligible to enroll under the terms of the plan. A small employer carrier shall not offer coverage to

only certain individuals or dependents in a small employer group or to only part of the group.

(ii) A small employer carrier shall not place any restriction in regard to any health status-

related factor on an eligible employee or dependent with respect to enrollment or plan

participation.

(iii) Except as permitted under subdivision (1) and (4) of this subsection, a small

employer carrier shall not modify a health benefit plan with respect to a small employer or any

eligible employee or dependent, through riders, endorsements, or otherwise, to restrict or exclude

coverage or benefits for specific diseases, medical conditions, or services covered by the plan.

(e) (1) Subject to subdivision (3) of this subsection, a small employer carrier is not

required to offer coverage or accept applications pursuant to subsection (b) of this section in the

case of the following:

(i) To a small employer, where the small employer does not have eligible individuals

who live, work, or reside in the established geographic service area for the network plan;

(ii) To an employee, when the employee does not live, work, or reside within the

carrier's established geographic service area; or

(iii) Within an area where the small employer carrier reasonably anticipates, and

demonstrates to the satisfaction of the director, that it will not have the capacity within its

established geographic service area to deliver services adequately to enrollees of any additional

groups because of its obligations to existing group policyholders and enrollees.

(2) A small employer carrier that cannot offer coverage pursuant to paragraph (1)(iii) of

this subsection may not offer coverage in the applicable area to new cases of employer groups

until the later of one hundred and eighty (180) days following each refusal or the date on which

the carrier notifies the director that it has regained capacity to deliver services to new employer

groups.

(3) A small employer carrier shall apply the provisions of this subsection uniformly to all

small employers without regard to the claims experience of a small employer and its employees

and their dependents or any health status-related factor relating to the employees and their

dependents.

(f) (1) A small employer carrier is not required to provide coverage to small employers

pursuant to subsection (b) of this section if:

(i) For any period of time the director determines the small employer carrier does not

have the financial reserves necessary to underwrite additional coverage; and

(ii) The small employer carrier is applying this subsection uniformly to all small

employers in the small group market in this state consistent with applicable state law and without

regard to the claims experience of a small employer and its employees and their dependents or

any health status-related factor relating to the employees and their dependents.

(2) A small employer carrier that denies coverage in accordance with subdivision (1) of

this subsection may not offer coverage in the small group market for the later of:

(i) A period of one hundred and eighty (180) days after the date the coverage is denied;

(ii) Until the small employer has demonstrated to the director that it has sufficient

financial reserves to underwrite additional coverage.

(g) (1) A small employer carrier is not required to provide coverage to small employers

pursuant to subsection (b) of this section if the small employer carrier elects not to offer new

coverage to small employers in this state.

(2) A small employer carrier that elects not to offer new coverage to small employers

under this subsection may be allowed, as determined by the director, to maintain its existing

policies in this state.

(3) A small employer carrier that elects not to offer new coverage to small employers

under subdivision (g)(1) shall provide at least one hundred and twenty (120) days notice of its

election to the director and is prohibited from writing new business in the small employer market

in this state for a period of five (5) years beginning on the date the carrier ceased offering new

coverage in this state.

SECTION 3. This act shall take effect on October 1, 2004.

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LC03376/SUB A/3

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