Current Shareware 1994 January/SHAR194.ISO/textfile/hsaleg.zip/LEGIS.11

Text File | 1993-10-27 | 31KB | 581 lines

Health Security Act
Title XI
TITLE XI_TRANSITIONAL INSURANCE REFORM


table of contents of title


Sec._11001._Imposition of requirements.
Sec._11002._Enforcement.
Sec._11003._Requirements relating to preserving current coverage.
Sec._11004._Restrictions on premium increases during transition.
Sec._11005._Requirements relating to portability.
Sec._11006._Requirements limiting reduction of benefits.
Sec._11007._National transitional health insurance risk pool.
Sec._11008._Definitions.
Sec._11009._Termination.

SEC. 11001. IMPOSITION OF REQUIREMENTS.
__(a) In General._The Secretary and the Secretary of Labor shall
apply the provisions of this title to assure, to the extent
possible, the maintenance of current health care coverage and
benefits during the period between the enactment of the Health
Security Act and the dates its provisions are implemented in the
various States.
__(b) Enforcement._
__(1) Health insurance plans._The Secretary shall enforce the
requirements of this title with respect to health insurance
plans. The Secretary shall promulgate regulations to carry out
the requirements under this title health insurance plans. The
Secretary shall promulgate regulations with respect to section
11004 within 90 days after the date of the enactment of this Act.
__(2) Self-insured plans._The Secretary of Labor shall enforce
the requirements of this title with respect to self-insured
plans. Such Secretary shall promulgate regulations to carry out
the requirements under this title as they relate to self-funded
plans.
__(3) Arrangements with states._The Secretary and the Secretary
of Labor may enter into arrangements with a State to enforce the
requirements of this title with respect to health insurance plans
and self-insured plans issued or sold, or established and
maintained, in the State.
__(c) Preemption._The requirements of this title do not preempt
any State law unless State law directly conflicts with such
requirements. The provision of additional protections under State
law shall not be considered to directly conflict with such
requirements. The Secretary (or, in the case of a self-insured
plan, the Secretary of Labor) may issue letter determinations
with respect to whether this Act preempts a provision of State
law.
__(d) Interim Final Regulations._Section 1911 shall apply to
regulations issued to carry out this title. The Secretary may
consult with States and the National Association of Insurance
Commissioners in issuing regulations and guidelines under this
title.
__(e) Construction._The provisions of this title shall be
construed in a manner that assures, to the greatest extent
practicable, continuity of health benefits under health benefit
plans in effect on the effective date of this Act.
__(f) Special Rules for Acquisitions and Transfers._The Secretary
may issue regulations regarding the application of this title in
the case of health insurance plans (or groups of such plans)
which are transferred from one insurer to another insurer through
assumption, acquisition, or otherwise.


SEC. 11002. ENFORCEMENT.
__(a) In General._Any health insurer or health benefit plan
sponsor that violates a requirement of this title shall be
subject to civil money penalties of not more than $25,000 for
each such violation.  The provisions of section 1128A of the
Social Security Act (other than subsections (a) and (b)) shall
apply to civil money penalties under this subparagraph in the
same manner as they apply to a penalty or proceeding under
section 1128A(a) of such Act.
__(b) Equitable Remedies._
__(1) In general._A civil action may be brought by the applicable
Secretary_
__(A) to enjoin any act or practice which violates any provision
of this title, or
__(B) to obtain other appropriate equitable relief (i) to redress
such violations, or (ii) to enforce any provision of this title,
including, in the case of a wrongful termination of (or refusal
to renew) coverage, reinstating coverage effective as of the date
of the violation.
SEC. 11003. REQUIREMENTS RELATING TO PRESERVING CURRENT COVERAGE.
__(a) Prohibition of Termination._
__(1) Group health insurance plans._Each health insurer that
provides a group health insurance plan may not terminate (or fail
to renew) coverage for any covered employee if the employer of
the employee continues the plan, except in the case of_
__(A) nonpayment of required premiums,
__(B) fraud, or
__(C) misrepresentation of a material fact relating to an
application for coverage or claim for benefits.
__(2) Individual health insurance plans._Each health insurer that
provides coverage to a covered individual under an individual
health insurance plan may not terminate (or fail to renew)
coverage for such individual (or a covered dependent), except in
the case of_
__(A) nonpayment of required premiums,
__(B) fraud, or
__(C) misrepresentation of a material fact relating to an
application for coverage or claim for benefits.



__(2) Effective date of title._
__(A) In general._This subsection shall take effect on the
effective date of this title and shall apply to coverage on or
after such date.
__(B) Definition._Except as otherwise provided, in this title the
term ``effective date of this title'' means the date of the
enactment of this Act.
__(b) Acceptance of New Members in a Group Health Insurance
Plan._
__(1) In general._In the case of a health insurer that provides a
group health insurance plan that is in effect on the effective
date of this title, the insurer is required_
__(A) to accept all individuals, and their eligible dependents,
who become full-time employees (as defined in section
1901(b)(2)(C)) of an employer covered after such effective date;
__(B) to establish and apply premium rates that are consistent
with section 11004(b); and
__(C) to limit the application of pre-existing condition
restrictions in accordance with section 11005.
__(2) Consistent application of rules relating to dependents and
waiting periods._In this subsection, the term ``eligible
dependent'', with respect to a group health insurance plan, has
the meaning provided under the plan as of the date of
introduction of the Health Security Act or, in the case of a plan
not established as of such date, as of the date of establishment
of the plan.
SEC. 11004. RESTRICTIONS ON PREMIUM INCREASES DURING TRANSITION.
__(a) Division of Health Insurance Plans by Sector._For purposes
of this section, each health insurer shall divide its health
insurance business into the following 3 sectors:
__(1) Health insurance for groups with at least 100 covered lives
(in this section referred to as the ``large group sector'')
__(2) Health insurance for groups with fewer than 100 covered
lives (in this section referred as the ``small group sector'').
__(3) Health insurance for individuals, and not for groups (in
this section referred to as the ``individual sector'').


__(b) Premium Changes to Reflect Changes in Group or Individual
Characteristics or Terms of Coverage._
__(1) Application._The provisions of this subsection shall apply
to changes in premiums that reflect_
__(A) changes in the number of individuals covered under a plan;
__(B) changes in the group or individual characteristics
(including age, gender, family composition or geographic area but
not including health status, claims experience or duration of
coverage under the plan) of individuals covered under a plan;
__(C) changes in the level of benefits (including changes to in
cost-sharing) under the plan; and
__(D) changes in any material terms and conditions of the health
insurance plan (other than factors related to health status,
claims experience and duration).
__(2) Specification of reference rate for each sector._Each
health insurer shall calculate a reference rate for each such
sector. The reference rate for a sector shall be calculated so
that, if it were applied using the rate factors specified under
paragraph (3), the average premium rate for individuals and
groups in that sector would approximate the average premium rate
charged individuals and groups in the sector as of the effective
date of this title.
__(3) Single set of rate factors within each sector._
__(A) In general._Each health insurer shall develop for each
sector a single set of rate factors which will be used to
calculate any changes in premium that relate to the reasons
described in subparagraphs (B) through (D) of paragraph (1).
__(B) Standards._Such rate factors_
__(i) shall relate to reasonable and objective differences in
demographic characteristics, in the design and in levels of
coverage, and in other terms and conditions of a contract,
__(ii) shall not relate to expected health status, claims
experience, or duration of coverage of the one or more groups or
individuals, and
__(iii) shall comply with regulations established under
subsection (f).
__(4) Computation of Premium Changes._
__(A) In general._Changes in premium rates that relate to the
reasons described in paragraph (1) shall be calculated using the
rate factors developed pursuant to paragraph (3).
__(B) Application to changes in number of covered individuals._In
the case of a change in premium rates related to the reason
described in paragraph (1)(A), the change in premium rates shall
be calculated to reflect, with respect to the enrollees who
enroll or disenroll in a health insurance plan, the sum of the
products, for such individuals, of the reference rate (determined
under paragraph (2)) and the rate factors (specified under
paragraph (3)) applicable to such enrollees.
__(C) Application of other factors._
__(i) In general._In the case of a change in premium rates
related to a reason described in subparagraph (B), (C), or (D) of
paragraph (1), the change in premium rates with respect to each
health insurance plan in each sector shall reflect the rate
factors specified under paragraph (3) applicable to the reason as
applied to the current premium charged for the health insurance
plan. Such rate factors shall be applied in a manner so that the
resulting adjustment, to the extent possible, reflects the
premium that would have been charged under the plan if the reason
for the change in premium had existed at the time that the
current premium rate was calculated.
__(ii) No reflection of change in health status._In applying the
rate factors under this subparagraph, the adjustment shall not
reflect any change in the health status, claims experience or
duration of coverage with respect to any employer or individual
covered under the plan.
__(5) Limitation on application._This subsection shall only
apply_
__(A) to changes in premiums occurring on or after the date of
the enactment of this Act to groups and individuals covered as of
such date, and
__(B) with respect to groups and individuals subsequently
covered, to changes in premiums subsequent to such coverage.
__(6) Application to community-rated plans._Nothing in this
subsection shall require the application of rate factors related
to individual or group characteristics with respect to
community-rated plans.
__(c) Limitations on Changes in Premiums Related to Increases in
Health Care Costs and Utilization._
__(1) Application._The provisions of this subsection shall apply
to changes in premiums that reflect increases in health care
costs and utilization.
__(2) Equal increase for all plans in all sectors._
__(A) In general._Subject to subparagraph (B), the annual
percentage increase in premiums by a health insurer for health
insurance plans in the individual sector, small group sector, and
large group sector, to the extent such increase reflect increases
in health care costs and utilization, shall be the same for all
such plans in those sectors.
__(B) Special rule for large group sector._The annual percentage
increase in premiums by a health insurer for health insurance
plans in the large group sector may vary among such plans based
on the claims experience of such employer (to the extent the
experience is credible), so long as the weighted average of such
increases for all such plans in the sector complies with the
requirement of subparagraph (A).
__(C) Geographic application._Subparagraphs (A) and (B)_
__(i) may be applied on a national level, or
__(ii) may vary based on geographic area, but only if (I) such
areas are sufficiently large to provide credible data on which to
calculate the variation and (II) the variation is due to
reasonable factors related to the objective differences among
such areas in costs and utilization of health services.
__(D) Exceptions to accommodate state rate reform
efforts._Subparagraphs (A) and (B) shall not apply, in accordance
with guidelines of the Secretary, to the extent necessary to
permit a State to narrow the variations in premiums among health
insurance plans offered by health insurers to similarly situated
groups or individuals within a sector.
__(E) Exception for rates subject to prior
approval._Subparagraphs (A) and (B) shall not apply to premiums
that are subject to prior approval by a State insurance
commissioner (or similar official) and are approved by such
official.
__(F) Other reasons specified by the secretary._The Secretary may
specify through regulations such other exceptions to the
provisions of this subsection as the Secretary determines are
required to enhance stability of the health insurance market and
continued availability of coverage.
__(3) Even application throughout a year._In applying the
provisions of this subsection to health insurance plans that are
renewed in different months of a year, the annual percentage
increase shall be applied in a consistent, even manner so that
any variations in the rate of increase applied in consecutive
months are even and continuous during the year.
__(4) Petition for exception._A health insurer may petition the
Secretary (or a State acting under a contract with the Secretary
under section 11001(b)(3)) for an exception from the application
of the provisions of this subsection. The Secretary may approve
such an exception if_
__(A) the health insurer demonstrates that the application of
this subsection would threaten the financial viability of the
insurer, and
__(B) the health insurer offers an alternative method for
increasing premiums that is not substantially discriminatory to
any sector or to any group or individual covered by a health
insurance plan offered by the insurer.
__(d) Prior Approval for Certain Rate Increases._
__(1) In general._If the percentage increase in the premium rate
for the individual and small group sector exceeds a percentage
specified by the Secretary under paragraph (2), annualized over
any 12-month period, the increase shall not take effect unless
the Secretary (or a State acting under a contract with the
Secretary under section 11001(b)(3)) has approved the increase.
__(2) Percentage._The Secretary shall specify, for each 12-month
period beginning after the date of the enactment of this Act, a
percentage that will apply under paragraph (1). Such percentage
shall be determined taking into consideration the rate of
increase in health care costs and utilization, previous trends in
health insurance premiums, and the conditions in the health
insurance market. Within 30 days after the date of the enactment
of this Act, the Secretary shall first specify a percentage under
this paragraph.
__(e) Documentation of Compliance._
__(1) Period for conformance._Effective 1 year after the date of
the enactment of this Act, the premium for each policy shall be
conformed in a manner that complies with the provisions of this
section.
__(2) Methodology._Each health insurer shall document the
methodology used in applying subsections (b) and (c) with respect
to each sector (and each applicable health plan). Such
documentation shall be sufficient to permit the auditing of the
application of such methodology to determine if such application
was consistent with such subsections.
__(3) Certification._For each 6-month period in which this
section is effective, each health insurer shall file a
certification with the Secretary (or with a State with which the
Secretary has entered into an arrangement under section
11001(b)(3)) that the insurer is in compliance with such
requirements.
__(f) Regulations._The Secretary shall establish regulations to
carry out this section. Such regulations may include guidelines
relating to the permissible variation that results from the use
of demographic or other characteristics in the development of
rate factors. Such guidelines may be based on the guidelines
currently used by States in applying rate limitations under State
insurance regulations.
__(g) Effective Period._This section shall apply to premium
increases occurring during the period beginning on the date of
the enactment of this Act and ending, for a health insurance plan
provided in a State, on the first day of the State's first year.
SEC. 11005. REQUIREMENTS RELATING TO PORTABILITY.
__(a) Treatment of Preexisting Condition Exclusions._
__(1) In general._Subject to the succeeding provisions of this
subsection, a group health benefit plan may exclude coverage with
respect to services related to treatment of a preexisting
condition, but the period of such exclusion may not exceed 6
months. The exclusion of coverage shall not apply to services
furnished to newborns or in the case of a plan that did not apply
such exclusions as of the effective date of this title.
__(2)  Crediting of previous coverage._
__(A) In general._A group health benefit plan shall provide that
if an individual covered under such plan is in a period of
continuous coverage (as defined in subparagraph (B)(i)) with
respect to particular services as of the date of initial coverage
under such plan, any period of exclusion of coverage with respect
to a preexisting condition for such services or type of services
shall be reduced by 1 month for each month in the period of
continuous coverage.
__(B) Definitions._As used in this paragraph:
__(i) Period of continuous coverage._The term ``period of
continuous coverage'' means, with respect to particular services,
the period beginning on the date an individual is enrolled under
a group or individual health benefit plan, self-insured plan, the
medicare program, a State medicaid plan, or other health benefit
arrangement which provides benefits with respect to such services
and ends on the date the individual is not so enrolled for a
continuous period of more than 3 months.
__(ii) Preexisting condition._The term ``preexisting condition''
means, with respect to coverage under a health benefits plan, a
condition which has been diagnosed or treated during the 6-month
period ending on the day before the first date of such coverage
(without regard to any waiting period).
__(b) Waiting Periods._A self-insured plan, and an employer with
respect to a group health insurance plan, may not discriminate
among employees in the establishment of a waiting period before
making health insurance coverage available based on the health
status, claims experience, receipt of health care, medical
history, or lack of evidence of insurability, of the employee or
the employee's dependents.
SEC. 11006. REQUIREMENTS LIMITING REDUCTION OF BENEFITS.
__(a) In General._A self-insured sponsor may not make a
modification of benefits described in subsection (b).
__(b) Modification of Benefits Described._
__(1) In general._A modification of benefits described in this
subsection is any reduction or limitation in coverage, effected
on or after the effective date of this title, with respect to any
medical condition or course of treatment for which the
anticipated cost is likely to exceed $5,000 in any 12-month
period.
__(2) Treatment of termination._A modification of benefits
includes the termination of a plan if the sponsor, within a
period establishes a substitute plan that reflects the reduction
or limitation described in paragraph (1).
__(c) Remedy._Any modification made in violation of this section
shall not be effective and the self-insured sponsor shall
continue to provide benefits as though the modification
(described in subsection (b)) had not occurred.
SEC. 11007. NATIONAL TRANSITIONAL HEALTH INSURANCE RISK POOL.
__(a) Establishment._In order to assure access to health
insurance during the transition, the Secretary is authorized to
establish a National Transitional Health Insurance Risk Pool (in
this section referred to as the ``national risk pool'') in
accordance with this section.
__(b) Administration._
__(1) In general._The Secretary may administer the national risk
pool through contracts with_
__(A) one or more existing State health insurance risk pools,
__(B) one or more private health insurers, or
__(C) such other contracts as the Secretary deems appropriate.
__(2) Coordination with state risk pools._The Secretary may enter
into such arrangements with existing State health insurance risk
pools to coordinate the coverage under such pools with the
coverage under the national risk pool. Such coordination may
address eligibility and funding of coverage for individuals
currently covered under State risk pools.
__(c) Eligibility for Coverage._The national risk pool shall
provide health insurance coverage to individuals who are unable
to secure health insurance coverage from private health insurers
because of their health status or condition (as determined in
accordance with rules and procedures specified by the Secretary).
__(d) Benefits._
__(1) In general._Benefits and terms of coverage provided through
the national risk pool shall include items and services,
conditions of coverage, and cost sharing (subject to
out-of-pocket limits on cost sharing) comparable to the benefits
and terms of coverage available in State health insurance risk
pools.
__(2) Payment rates._Payments under the national risk pool for
covered items and services shall be made at rates (specified by
the Secretary) based on payment rates for comparable items and
services under the medicare program. Providers who accept payment
from the national risk pool shall accept such payment as payment
in full for the service, other than for cost sharing provided
under the national risk pool.
__(e) Premiums._
__(1) In general._Premiums for coverage in the national risk pool
shall be set in a manner specified by the Secretary.
__(2) Variation._Such premiums shall vary based upon age, place
of residence, and other traditional underwriting factors other
than on the basis of health status or claims experience.
__(3) Limitation._The premiums charged individuals shall be set
at a level that is no less than 150 percent of the premiums that
the Secretary estimates would be charged to a population of
average risk for the covered benefits.
__(f) Treatment of Shortfalls._
__(1) Estimates._The Secretary shall estimate each year the
extent to which the total premiums collected under subsection (c)
in the year are insufficient to cover the expenses of the
national risk pool with respect to the year.
__(2) Temporary borrowing authority._The Secretary of the
Treasury is authorized to advance to the Secretary amounts
sufficient to cover the amount estimated under paragraph (1)
during the year before assessments are collected under paragraph
(3). The Secretary shall repay such amounts, with interest at a
rate specified by the Secretary of the Treasury, from the
assessments under paragraph (3).
__(3) Assessments._
__(A) In general._Each health benefit plan sponsor shall be
liable for an assessment in the amount specified in subparagraph
(C).
__(B) Amount._For each year for which amounts are advanced under
paragraph (2), the Secretary shall_
__(i) estimate the total amount of premiums (and premium
equivalents) for health benefits under health benefit plans for
the succeeding year, and
__(ii) calculate a percentage equal to (I) the total amounts
repayable by the Secretary to the Secretary of the Treasury under
paragraph (2) for the year, divided by the amount determined
under clause (i).
__(C) Assessment amount._The amount of an assessment for a
sponsor of a health benefit plan for a year shall be equal to the
percentage calculated under subparagraph (B)(ii) (or, if less,
\1/2\ of 1 percent) of the total amount of premiums (and premium
equivalents) for health benefits under the plan for the previous
year.
__(D) Self-insured plans._The amount of premiums (and premium
equivalents) under this paragraph shall be estimated_
__(i) by the Secretary for health insurance plans, and
__(ii) by the Secretary of Labor for self-insured plans.
Such estimates may be based on a methodology that requires plans
liable for assessment to file information with the applicable
Secretary.
SEC. 11008. DEFINITIONS.
__In this title:
__(1) Applicable secretary._The term ``applicable Secretary''
means_
__(A) the Secretary with respect to health insurance plans and
insurers, or
__(B) the Secretary of labor with respect to self-insured plans
and self-insured plan sponsors.
__(2) Covered employee._The term ``covered employee'' means an
employee (or dependent of such an employee) covered under a group
health benefits plan.
__(3) Covered individual._The ``covered individual'' means, with
respect to a health benefit plan, an individual insured,
enrolled, eligible for benefits, or otherwise covered under the
plan.
__(4) Group health benefits plan._The term ``group health
benefits plan'' means a group health insurance plan and a
self-insured plan.
__(5) Group health insurance plan._
__(A) In general._The term ``group health insurance plan'' means
a health insurance plan offered primarily to employers for the
purpose of providing health insurance to the employees (and
dependents) of the employer.
__(B) Inclusion of association plans and mewas._Such term
includes_
__(i) any arrangement in which coverage for health benefits is
offered to employers through an association, trust, or other
arrangement, and
__(ii) a multiple employer welfare arrangement (as defined in
section 3(40) of the Employee Retirement Income Security Act of
1974), whether funded through insurance or otherwise.
__(6) Health benefits plan._The term ``health benefits plan''
means health insurance plan and a self-insured health benefit
plan.
__(7) Health benefit plan sponsor._The term ``health benefit plan
sponsor'' means,  with respect to a health insurance plan or
self-insured plan, the insurer offering the plan or the
self-insured sponsor for the plan, respectively.
__(8) Health insurance plan._
__(A) In general._Except as provided in subparagraph (B), the
term ``health insurance plan'' means any contract of health
insurance, including any hospital or medical service policy or
certificate, any major medical policy or certificate, any
hospital or medical service plan contract, or health maintenance
organization subscriber contract offered by an insurer.
__(B) Exception._Such term does not include any of the following_
__(i) coverage only for accident, dental, vision, disability
income, or long-term care insurance, or any combination thereof,
__(ii) medicare supplemental health insurance,
__(iii) coverage issued as a supplement to liability insurance,
__(iv) worker's compensation or similar insurance, or
__(v) automobile medical-payment insurance,
or any combination thereof.
__(C) Stop loss insurance not covered._Such term does not include
any aggregate or specific stop-loss insurance or similar coverage
applicable to a self-insured plan. The Secretary may develop
rules determining the applicability of this subparagraph with
respect to minimum premium plans or other partially insured
plans.
__(9) Health insurer._The term ``health insurer'' means a
licensed insurance company, a prepaid hospital or medical service
plan, a health maintenance organization, or other entity
providing a plan of health insurance or health benefits with
respect to which the State insurance laws are not preempted under
section 514 of the Employee Retirement Income Security Act of
1974.
__(10) Individual health insurance plan._
__(A) In general._The term ``individual health insurance plan''
means any health insurance plan directly purchased by an
individual or offered primarily to individuals (including
families) for the purpose of permitting individuals (without
regard to an employer contribution) to purchase health insurance
coverage.
__(B) Inclusion of association plans._Such term includes any
arrangement in which coverage for health benefits is offered to
individuals through an association, trust, list-billing
arrangement, or other arrangement in which the individual
purchaser is primarily responsible for the payment of any premium
associated with the contract.
__(C) Treatment of certain association plans._In the case of a
health insurance plan sponsored by an association, trust, or
other arrangement that provides health insurance coverage both to
employers and to individuals, the plan shall be treated as_
__(i) a group health insurance plan with respect to such
employers, and
__(ii) an individual health insurance plan with respect to such
individuals.
__(11) Self-insured plan._The term ``self-insured plan'' means an
employee welfare benefit plan or other arrangement insofar as the
plan or arrangement provides benefits with respect to some or all
of the items and services included in the comprehensive benefit
package (as in effect as of January 1, 1995) that is funded in a
manner other than through the purchase of one or more health
insurance plans. such term shall not include a group health
insurance plan (as defined in paragraph (5)(B)(ii)).
__(12) Self-insured sponsor._The term ``self-insured sponsor''
includes,  with respect to a self-insured plan, any entity which
establishes or maintains the plan.
__(13) State commissioner of insurance._The term ``State
commissioner of insurance'' includes a State superintendent of
insurance.
SEC. 11009. TERMINATION.
__(a) Health Insurance Plans._The provisions of this title shall
not apply to a health insurance plan provided in a State on and
after the first day of the first year for the State.
__(b) Self-Insured Plans._The provisions of this title shall not
apply to a self-insured plan that_
__(1) is sponsored by a sponsor that is an eligible sponsor of a
corporate alliance (described in section 1311(b)(1)), as of the
effective date of the election under section 1312(c).
__(2) is sponsored by a sponsor that is not such an eligible
sponsor, with respect to individuals or groups in a State on and
after the first day of the first year for the State.