Session Laws

CHAPTER 297 AN ACT INCREASING THE AFFORDABILITY AND ACCESSIBILITY OF HEALTH INSURANCE IN THE COMMONWEALTH.

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Whereas, The deferred operation of this act would tend to defeat its purpose, which is to immediately increase access to health insurance in the commonwealth, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 2B of chapter 175 of the General Laws, as appearing in the 1994 Official Edition, is hereby amended by adding the following paragraph:-

4. To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six M and any regulations promulgated thereunder, the provisions of said chapter one hundred and seventy-six M and any such regulations shall govern the terms, conditions, rates and all other matters concerning any policy form that is within the definition of a guaranteed issue health plan in said chapter one hundred and seventy-six M.

SECTION 2. Section 108 of said chapter 175, as amended by section 2 of chapter 8 of the acts of 1996, is hereby further amended by adding the following paragraph:-

12. To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six M and any regulations promulgated thereunder, the provisions of said chapter one hundred and seventy-six M and any such regulations shall govern the terms, conditions, rates and all other matters concerning any policy form that is within the definition of a guaranteed issue health plan in said chapter one hundred and seventy-six M.

SECTION 3. Section 193F of said chapter 175, as appearing in the 1994 Official Edition, is hereby amended by adding the following paragraph:-

To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six M and any regulations promulgated thereunder, the provisions of said chapter one hundred and seventy-six M and any such regulations shall govern the terms, conditions, rates and all other matters concerning any policy form that is within the definition of a guaranteed issue health plan in said chapter one hundred and seventy-six M.

SECTION 4. Section 193G of said chapter 175, as so appearing, is hereby amended by adding the following paragraph:-

SECTION 5. Section 193H of said chapter 175, as so appearing, is hereby amended by adding the following paragraph:-

SECTION 6. Section 6 of chapter 176A of the General Laws, as appearing in the 1994 Official Edition, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

Nongroup contracts, except contracts providing supplemental coverage to medicare subject to the provisions of chapter one hundred and seventy-six K, issued and rates charged by nonprofit hospital service corporations to its subscribers for hospital care and reimbursement for other health services shall be subject to the provisions of chapter one hundred and seventy-six M, and any regulations promulgated thereunder.

SECTION 7. The second paragraph of said section 6 of said chapter 176A, as so appearing, is hereby amended by striking out the first sentence.

SECTION 8. Said second paragraph of said section 6 of said chapter 176A, as so appearing, is hereby further amended by striking out the third, fourth, fifth and sixth sentences.

SECTION 9. Said section 6 of said chapter 176A, as so appearing, is hereby further amended by striking out the third to eighth paragraphs, inclusive.

SECTION 10. Said chapter 176A is hereby amended by striking out section 8, as so appearing, and inserting in place thereof the following section:-

Section 8. No contract between the subscriber and the corporation shall be issued or delivered in the commonwealth which provides full room and board benefits in an extended care facility for other than the period of hospitalization coverage provided, or which provides benefits for any service which is not medically necessary. No contract between the subscriber and the corporation shall be issued or delivered in the commonwealth unless it contains in substance the following provisions:

(a) A statement of the hospital services and reimbursement for other health services to be furnished by the corporation or its participating hospitals and the period during which they will be furnished, and, if any hospital services are excluded, a statement of such exception.

(b) A statement of the period of grace which will be allowed for making any payment due from the subscriber under its contract, which in any event shall not be less than ten days.

(c) A provision that the subscriber or any person claiming under a subscriber's contract shall have a period of at least two years from the time the cause of action arises to bring suit thereon.

(d) A provision that any child who is mentally or physically incapable of earning his own living, who is covered under the membership of his parent as a member of a family group, shall be covered under the membership of his parent as a member of such family group so long as he continues to be mentally or physically incapable of earning his own living, without any limitation as to age, subject however, to such rules and regulations, premiums or additional premiums as the commissioner of insurance may approve.

(e) A statement that within fifteen days after the receipt by the corporation of notice by a subscriber, or someone acting on his behalf, that such subscriber or a covered dependent of such subscriber has received services for which the subscriber is entitled to direct payment of benefits under a contract, the corporation shall furnish the subscriber such forms as are usually furnished by it to establish a subscriber's entitlement to such benefits; and that within forty-five days after the receipt by the corporation of completed forms for such benefits, the corporation will (i) make payments for such benefits, (ii) notify the subscriber in writing of the reason or reasons for nonpayment, or (iii) notify the subscriber in writing of what additional information or documentation is necessary to establish entitlement to such benefits. If the nonprofit hospital service corporation fails to comply with the provisions of this paragraph for any claims relating to dental services, said corporation shall pay, in additional to any benefits which inure to such subscriber or provider, interest on such benefits which shall accrue beginning forty-five days after the corporation's receipt of notice of claim at the rate of one and one-half percent per month, not to exceed eighteen percent per year. The provisions of this paragraph relating to interest payments shall not apply to a claim which a nonprofit hospital service corporation is investigating because of suspected fraud.

(f) To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six K and any regulations promulgated thereunder, medicare supplement insurance and medicare select insurance plans as defined in said chapter one hundred and seventy-six K shall be subject to the provisions of said chapter one hundred and seventy-six K and any regulations promulgated thereunder.

(g) To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six M and any regulations promulgated thereunder, any nongroup plan that is within the definition of a guaranteed issue health plan in said chapter one hundred and seventy-six M shall be subject to the provisions of said chapter one hundred and seventy-six M and any regulations promulgated thereunder.

SECTION 11. Section nine of said chapter one hundred and seventy-six A is hereby repealed.

SECTION 12. The first paragraph of section 10 of said chapter 176A of the General Laws, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The contracts and rates under such plan shall be subject to subsequent disapproval by the commissioner if he or she finds that the basis fails to preclude individual selection.

SECTION 13. The second paragraph of section 4 of chapter 176B of the Generals Laws, as so appearing, is hereby amended by striking out the second sentence.

SECTION 14. Said second paragraph of said section 4 of said chapter 176B, as so appearing, is hereby further amended by striking out the fourth sentence.

SECTION 15. Said second paragraph of said section 4 of said chapter 176B, as so appearing, is hereby further amended by adding the following sentence:- Nongroup agreements, except contracts providing supplemental coverage to medicare or other governmental programs that are subject to the provisions of chapter one hundred and seventy-six K, shall be subject to the provisions of chapter one hundred and seventy-six M and any regulations promulgated thereunder.

SECTION 16. Said section 4 of said chapter 176B, as so appearing, is hereby further amended by striking out, in line 74, the words "approving or."

SECTION 17. Said section 4 of said chapter 176B is hereby further amended by adding the following paragraph:-

To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six M and any regulations promulgated thereunder, any nongroup plan that is within the definition of a guaranteed issue health plan in said chapter one hundred and seventy-six M shall be subject to the provisions of said chapter one hundred and seventy-six M and any regulations promulgated thereunder.

SECTION 18. Said chapter 176B is hereby further amended by striking out section 6, as so appearing, and inserting in place thereof the following section:-

Section 6. No subscription certificate shall be issued unless it contains in substance the following provisions:

(a) A statement of the medical service to be paid for by the corporation, and if any medical service is excepted, a statement of such exception.

(b) A statement of the duration of the agreement and of the terms and conditions upon which it may be extended, renewed, revised, canceled or otherwise terminated.

(c) A statement that any child who is mentally or physically incapable of earning his own living who is eligible for services by membership of his parent under a family contract shall be eligible under the membership of his parent as a member of such family contract so long as he continues to be mentally or physically incapable of earning his own living, without any limitation as to age, subject, however, to such rules and regulations, premiums or additional premiums as the commissioner of insurance may approve.

(d) A statement that within fifteen days after receipt by the corporation of notice by a subscriber, or someone acting on his behalf, that such subscriber or a covered dependent of such subscriber has received services for which the subscriber is entitled to direct payment of benefits under a subscription certificate, the corporation shall furnish the subscriber such forms as are usually furnished by it to establish a subscriber entitlement to such benefits; and that within forty-five days after the receipt by the corporation of completed forms for such benefits, the corporation shall (i) make payment for such benefits, (ii) notify the subscriber in writing of the reason or reasons for nonpayment, or (iii) notify the subscriber in writing what additional information or documentation is necessary to establish entitlement to such benefits.

(e) A statement, in the case of any subscription certificates providing supplemental coverage to Medicare or other governmental programs, that no participating physician or other participating provider of health services shall charge to, or collect from, a subscriber of a covered dependent any amount in excess of the maximum allowable compensation determined by the governmental agency administering such program as the basis for the government's payment thereunder to such participating physician or other participating provider of health services.

To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six K and any regulations promulgated thereunder, medicare supplement insurance and medicare select insurance plans as defined in said chapter one hundred and seventy-six K shall be subject to the provisions of said chapter one hundred and seventy-six K and any regulations promulgated thereunder.

SECTION 19. Section 16 of chapter 176G of the General Laws, as so appearing, is hereby amended by adding the following paragraph:-

To the extent that this section is inconsistent with the provisions of chapter one hundred and seventy-six M and any regulations promulgated thereunder, any nongroup health maintenance contract that is within the definition of a guaranteed issue health plan in said chapter one hundred and seventy-six M shall be governed by the provisions of said chapter one hundred and seventy-six M and any regulations promulgated thereunder.

SECTION 20. Section 9 of chapter 176I of the General Laws, as so appearing, is hereby amended by inserting after the first sentence the following sentence:- To the extent that this section is inconsistent with the provisions of one hundred and seventy-six M and any regulations promulgated thereunder, any nongroup health plan under a preferred provider arrangement that is within the definition of a guaranteed issue health plan in said chapter one hundred and seventy-six M shall be governed by the provisions of said chapter one hundred and seventy-six M and any regulations promulgated thereunder.

SECTION 21. Section 1 of chapter 176J of the General Laws, as so appearing, is hereby amended by striking out the definition of "Association group policy".

SECTION 22. Said section 1 of said chapter 176J, as so appearing, is hereby further amended by striking out, in line 39, the word ", sex".

SECTION 23. Said section 1 of said chapter 176J, as so appearing, is hereby further amended by striking out, in lines 59 and 62, the word "twenty-five" and inserting in place thereof, in each instance, the word:- fifty.

SECTION 24. Said section 1 of said chapter 176J, as so appearing, is hereby further amended by striking out, in line 91, the word ", gender".

SECTION 25. Section 2 of said chapter 176J, as so appearing, is hereby amended by striking out, in line 1, the word "(a) Except" and inserting in place thereof the word:- Except,- and by striking out paragraphs (b) to (e), inclusive.

SECTION 26. Section 3 of said chapter 176J, as so appearing, is hereby amended by adding the following three paragraphs:-

No carrier shall vary any premium rate on the basis of sex or gender in any health plan issued or renewed on or after August fifteenth, nineteen hundred and ninety-six.

A carrier who, as of August fifteenth, nineteen hundred and ninety-six, pursuant to paragraph (1) of subsection (a) charged group base premium rates to any group from among twenty-six to no more than fifty eligible employees eligible employees as defined in section one of this statute that were more than two times the group base premium rate charged by that carrier to any group from among twenty-six to no more than fifty eligible employees eligible employees with the lowest group base premium rate for that rate basis type within that class of business may establish a phase-out adjustment for all groups that were charged more than two times such group base premium rate. No carrier may vary its rates by more than such phase-out adjustment or the amount by which it varied its rates due to those factors on August fifteenth, nineteen hundred and ninety-six, whichever is less. Between December first, nineteen hundred and ninety-six and November thirtieth, nineteen hundred and ninety-seven, inclusive, the group base premium rate charged by a carrier to any eligible small business from among twenty-six to no more than fifty eligible employees under this section shall not exceed four times the group base premium rate charged by that carrier to an eligible small business from among twenty-six to no more than fifty eligible employees under this section with the lowest group premium rate for that rate basis type within that class of business. Between December first, nineteen hundred and ninety-seven and November thirtieth nineteen hundred and ninety-eight, inclusive, the group base rate charged by a carrier to any eligible small business from among twenty-six to no more than fifty eligible employees under this section shall not exceed three times the group base premium rate charged by that carrier to an eligible small business from among twenty-six to no more than fifty eligible employees under this section with the lowest group premium rate for that rate basis type within that class of business. Between December first, nineteen hundred and ninety-eight and November thirtieth, nineteen hundred and ninety-nine, the group base rate charged by a carrier to any eligible small business from among twenty-six to no more than fifty eligible employees under this section shall not exceed two times the group base premium rate charged by that carrier to an eligible small business from among twenty-six to no more than fifty eligible employees under this section with the lowest group premium rate for that rate basis type within that class of business. If a carrier chooses to establish a phase-out rate adjustment, every group business from among twenty-six to no more than fifty eligible employees that was charged a group base premium rate that was more than two times the group base premium rate charged by that carrier to the group business from among twenty-six to no more than fifty eligible employees with the lowest group base premium rate for that rate basis type within that class of business on August fifteenth, nineteen hundred and ninety-six shall be subject to a phase-out rate adjustment; provided, however, that no carrier shall apply a phase-out rate adjustment to any other group business from among twenty-six to no more than fifty eligible employees employees. For every health benefit plan issued or renewed on or after December first, nineteen hundred and ninety-nine, the group base premium rates charged by a carrier to each group business from among twenty-six to no more than fifty eligible employees during a rating period shall not exceed one and one-half times the group base premium rate charged to the group business from among twenty-six to no more than fifty eligible employees with the lowest group base premium rate. No phase-out adjustments shall be permitted after November thirtieth, nineteen hundred and ninety-nine.

Effective December first, nineteen hundred and ninety-nine, group base premium rates charged by a carrier to an eligible small business shall not exceed one-and-one-half times the group base premium rate which could be charged by that carrier to an eligible small business under this chapter with the lowest group premium rate for that rate basis type within that class of business.

SECTION 27. Section 7 of said chapter 176J, as appearing in the 1994 Official Edition, is hereby amended by inserting after the word "chapter", in line 20, the following words:- and a statement of the number of eligible employees and eligible dependents, as of the close of the preceding calendar year, who purchase a health benefit plan from the carrier.

SECTION 28. Said chapter 176J is hereby further amended by adding the following section:-

Section 9. (a) Subject to the limitations set forth in this section, every carrier shall offer continuation coverage under a health benefit plan issued under this chapter to any qualified beneficiary who would lose coverage under that health benefit plan as the result of a qualifying event and who makes a written election for continued coverage under the health plan within the election period.

(b) For purposes of this section, the words "continuation coverage" shall mean coverage under the health benefit plan which meets the following requirements:

(1) The coverage shall consist of coverage which, as of the time the coverage is being provided, is identical to the coverage provided under the health benefit plan to similarly situated beneficiaries with respect to whom a qualifying event has not occurred. If coverage under the health benefit plan is modified for any group of similarly situated beneficiaries, the coverage shall also be modified in the same manner for all individuals who are qualified beneficiaries under the health benefit plan pursuant to this subsection in connection with such group.

(2) The coverage shall extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following:

(i) in the case of a qualifying event described in clause (ii) of subsection (f), except as provided in clause (ii), the date which is eighteen months after the date of the qualifying event;

(ii) if a qualifying event, other than a qualifying event described in clause (vi) of said subsection (f) occurs during the eighteen months after the date of a qualifying event described in said clause (ii) of said subsection on (f), the date which is thirty-six months after the date of the qualifying event described in said (ii);

(iii) in the case of a qualifying event described in clause (vi) of said subsection (f) relating to bankruptcy proceedings, the date of the death of the former employee or qualified beneficiary described in paragraph (ii) of subsection (k) or in the case of the surviving spouse or dependent children of the former employee, thirty-six months after the date of the death of the covered employee;

(iv) in the case of a qualifying event not described in clause (ii) or (vi) of subsection (f), the date which is thirty-six months after the date of the qualifying event;

(v) in the case of a qualified beneficiary who is determined, under title II or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in said clause (ii) of said subsection (f) any reference in clause (i) or (ii) of this subsection to eighteen months with respect to such event is deemed a reference to twenty-nine months, but only if the qualified beneficiary has provided notice of such determination pursuant to paragraph (2) of subsection (j) before the end of such eighteen months;

(vi) in the case of an event described in clause (iv) of subsection (f), without regard to whether such event is a qualifying event, the period of coverage for qualified beneficiaries other than the former employee for such event or any subsequent qualifying event shall not terminate before the close of the thirty-six month period beginning on the date the covered employee becomes entitled to benefits under Title XVIII of the Social Security Act;

(vii) the date on which the carrier ceases to provide a health benefit plan to other similarly situated eligible employees of the eligible small business which formerly employed the qualified beneficiary;

(viii) the date on which coverage ceases under the plan by reason of a failure to make timely payment of any premium required under the plan with respect to the qualified beneficiary. Unless otherwise specified in this section, the payment of any premium shall be considered to be timely if made within thirty days after the date due or within such longer period as applies to or under the plan;

(ix) the date on which the qualified beneficiary first becomes, after the date of the election, (A) covered under any other health benefit plan as an employee or otherwise, which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary, or (B) in the case of a qualified beneficiary other than a qualified beneficiary described in paragraph (ii) of subsection (k) entitled to benefits under Title XVIII of the Social Security Act; or

(x) in the case of a qualified beneficiary who is disabled at the time of a qualifying event described in clause (ii) of subsection (f), the month that begins more than thirty days after the date of the final determination under Title II or XVI of the Social Security Act that the qualified beneficiary is no longer disabled.

(c) The carrier may require payment of a premium for any period of continuation coverage, except that such premium shall not exceed one hundred and two percent of the applicable premium for such period, and may, at the election of the payor, be made in monthly installments. The carrier may require that such payments and related communications be made indirectly through the former employer or through an intermediary. In no event may the carrier require the payment of any premium before the day which is forty-five days after the day on which the qualified beneficiary made the initial election for continuation coverage. In the case of an individual described in clause (v) of paragraph (2) of subsection (b) such individual after eighteenth months of the continued coverage described in clause (i) or (ii) of said paragraph (2) of said subsection (b) shall pay one hundred and fifty percent for the allowable coverage thereafter.

(d) The coverage may not be conditioned upon, or discriminated on the basis of lack of, evidence of insurability.

(e) In the case of a qualified beneficiary whose period of continuation coverage expires under said paragraph (2) of said subsection (b), the carrier shall, during the one hundred-eighty day period ending on such expiration date, provide to the qualified beneficiary the option of enrollment under a conversion nongroup health plan otherwise generally available through the carrier to similarly situated beneficiaries.

(f) For purposes of this section, the words "qualifying event" shall mean, with respect to any eligible employee, any of the following events which, but for the continuation coverage required under this section, would result in the loss of coverage of a qualified beneficiary -

(i) the death of the eligible employee;

(ii) the termination, other than by reason of such employee's gross misconduct, or reduction of hours, of the eligible employee's employment;

(iii) the divorce or legal separation of the eligible employee from the employee's spouse;

(iv) the eligible employee becoming entitled to benefits under title XVIII of the Social Security Act;

(v) a dependent child ceasing to be a dependent child under the generally applicable requirements of the health benefit plan;

(vi) a proceeding in a case under Title 11, United States Code, commencing on or after July first, nineteen hundred and eighty-six, with respect to the employer from whose employment the eligible employee retired at any time.

In the case of an event described in clause (vi), a loss of coverage shall include a substantial elimination of coverage with respect to a qualified beneficiary described in paragraph (ii) of subsection (k) within one year before or after the date of commencement of the proceeding.

(g) For purposes of this section the words "applicable premium" shall mean, with respect to any period of continuation coverage of qualified beneficiaries, the premium for the health benefit plan for such period of coverage for similarly situated beneficiaries with respect to whom a qualifying event has not occurred, without regard to whether such cost is paid by the employer or employee. The determination of any applicable premium shall be made for a period of twelve months and shall be made before the beginning of such period.

(h) For purposes of this section the words "election period" shall mean the period which (i) begins not later than the date on which coverage terminates under the health benefit plan by reason of a qualifying event, (ii) is of at least sixty days' duration, and (iii) ends not earlier than sixty days after the later of (A) the date described in clause (i), or (B) in the case of any qualified beneficiary who receives notice under paragraph (3) of subsection (j), the date of such notice.

(i) Except as otherwise specified in an election, any election of continuation coverage by a qualified beneficiary described in paragraph (i) of subsection (k) shall be deemed to include an election of continuation coverage on behalf of any other qualified beneficiary who would lose coverage under the health benefit plan by reason of the qualifying event. If there is a choice among types of coverage under the plan, each qualified beneficiary shall be entitled to make a separate selection among such types of coverage.

(j)(1) The carrier shall provide, at the time of commencement of coverage under the health benefit plan, written notice to each eligible employee and spouse of the employee, if any, of the rights provided under this section.

(2) Each eligible employee or qualified beneficiary is responsible for notifying the carrier of the occurrence of any qualifying event described in clause (iii) or (v) of subsection (f) within sixty days after the date of the qualifying event and each qualified beneficiary who is determined, under Title II or XVI of the Social Security Act, to have been disabled at the time of a qualifying event described in clause (ii) of subsection (f) is responsible for notifying the carrier of such determination within sixty days after the date of the determination and for notifying the carrier within thirty days of the date of any final determination under such title or titles that the qualified beneficiary is no longer disabled.

(3) The carrier shall notify (A) in the case of a qualifying event described in clause (i), (ii), (iv), or (vi) of subsection (f) of which the carrier has actual knowledge, any qualified beneficiary with respect to such event, and (B) in the case of a qualifying event described in clause (iii) or (v) of subsection (f) where the eligible employee notifies the carrier paragraph (2) of this subsection, any qualified beneficiary with respect to such event, of such beneficiary's rights under this subsection.

(4) For purposes of paragraph (3) any notification shall be made within fourteen days of the date on which the carrier obtains actual knowledge of the qualifying event, and any such notification to an individual who is a qualified beneficiary as the spouse of the eligible employee shall be treated as notification to all other qualified beneficiaries residing with such spouse at the time such notification is made.

(5) The carrier may require that all notices required by this subsection be issued to qualified beneficiaries by the eligible small business or by an intermediary.

(k)(i) For purposes of this section, the words "qualified beneficiary" shall mean, with respect to a eligible employee under a health benefit plan, any other individual who, on the day before the qualifying event for that employee, is a beneficiary under the plan as the spouse of the eligible employee or as the dependent child of the employee; provided, however, that in the case of a qualifying event described in clause (ii) of subsection (f), the words "qualified beneficiary" shall also include the eligible employee.

(ii) In the case of a qualifying event described in subsection (f)(vi), the words "qualified beneficiary" shall include an eligible employee who had retired on or before the date of substantial elimination of coverage and any other individual who, on the day before such qualifying event, is a beneficiary under the plan as the spouse of the eligible employee, as the dependent child of the eligible employee or as the surviving spouse of the eligible employee.

(iii) The provisions of this section shall not apply to any health benefit plan issued to an eligible small business with only one eligible employee or with greater than nineteen eligible employees.

(l) In any circumstance in which more extensive coverage than that provided by this section is required pursuant to any provision of the General Laws or any law of the United States, the health benefit plan shall satisfy such other provision insofar as it requires more extensive coverage.

SECTION 29. The General Laws are hereby amended by inserting after chapter 176L the following chapter: `tuc CHAPTER 176M. NONGROUP HEALTH INSURANCE.

Section 1. As used in this chapter the following words shall unless the context clearly requires otherwise have the following meanings:-

"Actuarial opinion", a signed written statement by a member of the American Academy of Actuaries based upon the person's examination, including a review of the appropriate records, of the actuarial assumptions and methods utilized by the carrier in establishing premium rates for guaranteed issue health plans.

"Average composite rate", the average of the composite rates filed by the carriers as calculated by the commissioner of insurance pursuant to the provisions of section five.

"Base premium rate", the midpoint rate within a modified community rate band for each rate basis type of each guaranteed issue health plan of a carrier.

"Carrier", an insurer licensed or otherwise authorized to transact accident and health insurance under chapter one hundred and seventy-five; a nonprofit hospital service corporation organized under chapter one hundred and seventy-six A, a nonprofit medical service corporation organized under chapter one hundred and seventy-six B; a health maintenance organization organized under chapter one hundred and seventy-six G; and an insured health plan that includes a preferred provider arrangement organized under chapter one hundred and seventy-six I. For the purposes of this chapter, carriers that are affiliated companies shall be treated as one carrier; provided, however, that a carrier shall offer a guaranteed issue health plan in every geographic area served by one or more of its affiliates. Joint marketing ventures between carriers shall not constitute an affiliation.

"Conversion nongroup health plan", a nongroup health plan issued by a carrier to a former employee or member or the dependents, including a spouse of said former employee or member, pursuant to the terms of a group policy, contract, or agreement with said former employee's former employer, or through a trust; provided, however, that this definition shall not include a group policy, contract, or agreement issued to any natural person eligible for continued group coverage under section four thousand nine hundred and eighty B of the Internal Revenue Code of 1986, as amended, under sections six hundred and one to six hundred and eight, inclusive, of the Employee Retirement Income Security act of 1974, as amended, under sections two thousand two hundred and one to two thousand two hundred and eight, inclusive, of the Public Health Service Act, as amended, or under section nine of chapter one hundred and seventy-six J.

"Closed plan", a nongroup health plan sold by a carrier to a natural person for said natural person and his dependents, before September first, nineteen hundred and ninety-seven or such postponed effective date as the commissioner may order pursuant to subsection (b) of section three.

"Commissioner", the commissioner of the division of insurance.

"Composite rate", the average per member per month premium rate for each type of guaranteed issue plan.

"Eligible dependent", the spouse or children of an eligible individual, subject to the applicable terms of the health plan covering such individuals.

"Eligible individual", a natural person who is a resident of the commonwealth and who meets all of the following criteria: (1) the individual does not have access to a health plan through such individual's employer, either because the employer does not offer a health plan or because the employee does not meet the eligibility criteria under such benefit plan including the criteria for an eligible employee set forth in chapter one hundred and seventy-six J; (2) the individual does not have access to a self insured or self-funded employer group health plan; (3) no portion of the premium for such individual's health plan, whether issued on a group or nongroup basis, is paid directly or indirectly by such individual's employer; (4) such individual is not eligible for coverage as a dependent through a health plan in which such individual's spouse or parent or guardian is enrolled or eligible to be enrolled; (5) such individual is not or is no longer eligible for continued group coverage under section four thousand nine hundred and eighty B of the Internal Revenue Code of 1986, as amended, under sections six hundred and one to six hundred and eight, inclusive, of the Employee Retirement Income Security act of 1974, as amended, under sections two thousand two hundred and one to two thousand two hundred and eight, inclusive, of the Public Health Service Act, as amended, or under section nine of chapter one hundred and seventy-six J; (6) such individual is not self-employed; and (7) such individual is not enrolled in health benefits funded and administered by any other state or federal government program, including but not limited, medicare and medicaid. For the purpose of subsection (2), the words "self-funded employer group health plan" shall include a fully insured multiple employer welfare arrangement as defined in sections three and five hundred and fourteen of the employee retirement income security act of 1974, 29 USC 1002 and 1144, as amended. For the purposes of clauses (1) and (2), an individual shall not be considered to be enrolled in or eligible for a health plan through his employer if the individual is presently subject to a waiting period under the plan offered by his employer; provided, however, that after said waiting period has expired said individual shall no longer be considered to be an eligible individual and a carrier may refuse to renew a guaranteed issue health plan issued to said individual.

"Financial impairment", a condition in which, as determined by the commissioner, the applicant is, or if subjected to the provisions of this chapter could reasonably be expected to be, insolvent, or otherwise in an unsound financial condition such as to render its further transactions of business hazardous to the public or its policyholders or members, or compelled to compromise or attempt to compromise with its creditors or claimants on the grounds that it is financially unable to pay its claims.

"Guaranteed issue health plans", guaranteed issue managed care plans, guaranteed issue preferred provider plans and guaranteed issue medical plans.

"Guaranteed issue managed care plan", a nongroup health plan plan, including a conversion nongroup health plan issued or renewed by a carrier, pursuant to chapter one hundred and seventy-six G, to any eligible individual for said individual or his or her eligible dependents regardless of health status or claims experience, subject to the exclusions set forth in this chapter, that provides the benefits specified in subsection (c) of section two. A carrier may establish no more than one guaranteed issue managed care plan.

"Guaranteed issue medical plan", a nongroup health plan plan including a conversion nongroup health plan, issued or renewed by a carrier pursuant to either chapter one hundred and seventy-five, one hundred seventy-six A or chapter one hundred and seventy-six B to any eligible individual for said individual or his or her eligible dependents regardless of health status or claims experience, subject to the limitations set forth in this chapter, that provides the benefits specified in subsection (c) of section two. A carrier may establish no more than one guaranteed issue medical plan.

"Guaranteed issue preferred provider plans", a nongroup health plan including a conversion nongroup health plan, issued or renewed by a carrier pursuant to chapter one hundred and seventy-six I to any eligible individual for said individual or his or her eligible dependents regardless of health status or claims experience, subject to the limitations set forth in this chapter, that provides the benefits set forth in subsection (c) of said section two. A carrier may establish no more than one guaranteed issue preferred provider plan.

"Health plan", any individual, general, blanket, or group policy of health, accident or sickness insurance issued by an insurer required to be licensed under chapter one hundred and seventy-five; a hospital service plan issued by a nonprofit hospital service corporation under chapter one hundred and seventy-six A; a medical service plan issued by a nonprofit hospital service corporation under chapter one hundred and seventy-six B; a health maintenance contract issued by a health maintenance organization under chapter one hundred and seventy-six G; and an insured health plan that includes a preferred provider arrangement under chapter one hundred and seventy-six I. The words "health plan" shall not include accident only, credit, dental or disability income insurance, coverage issued as a supplement to liability insurance, insurance arising out of a worker's compensation law or similar law, automobile medical payment insurance, insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in a liability insurance policy or equivalent self insurance, long term care only insurance, or any policy subject to the provisions of chapter one hundred and seventy-six K. The commissioner may by regulation define other health coverage as a health plan for the purposes of this chapter.

"Intermediary", a chamber of commerce, trade association, or other organization formed for purposes other than obtaining insurance, as determined by the commissioner, which offers as a service to its members the option of purchasing a health plan.

"Member", any and all individuals enrolled in a health plan.

"Modified community rate", a rate resulting from a rating methodology in which the premium for all persons within the same rate basis type who are covered under a guaranteed issue health plan is the same without regard to health status; provided, however, that premiums may vary due to age or geographic area for each rate basis type as permitted by this chapter.

"Nongroup health plan", any health plan, issued, renewed or delivered within or without the commonwealth to a natural person who is a resident of the commonwealth, including a certificate issued to an eligible natural person which evidences coverage under a policy or contract issued to a trust or association, for said natural person and his dependents, including said person's spouse; provided, however, that a health plan issued, renewed or delivered within or without the commonwealth to a natural person who is enrolled in a qualifying student health insurance program pursuant to section eighteen of chapter fifteen A shall not be considered a nongroup health plan for the purposes of this chapter and shall be governed by the provisions of said chapter fifteen A and the regulations promulgated thereunder.

"Pre-existing condition provision", a health plan provision which excludes coverage for charges or expenses following the effective date of coverage for a condition, including pregnancy, which existed prior to the effective date of coverage.

"Qualifying health plan", any (i) blanket or general policy of medical, surgical or hospital insurance described in subdivision (A), (C), or (D) of section one hundred and ten of chapter one hundred and seventy-five; (ii) policy of accident or sickness insurance as described in section one hundred and eight of chapter one hundred and seventy-five which provides hospital or surgical expense coverage; (iii) nongroup or group hospital medical service plan issued by a nonprofit hospital or medical service corporation under chapters one hundred and seventy-six A and one hundred and seventy-six B; (iv) nongroup or group health maintenance contract issued by a health maintenance organization under chapter one hundred and seventy-six G; (v) insured group health plan that includes a preferred provider arrangement under chapter one hundred and seventy-six I; (vi) self insured or self-funded employer group health plan; (vii) health coverage provided to persons serving in the armed forces of the United States; or (viii) medical assistance provided under chapter one hundred and eighteen E; or (ix) any plan administered directly or indirectly by the department under chapter one hundred and eighteen F. The commissioner may by regulation define other health coverage as a qualifying health plan for the purposes of this chapter.

"Rating factor", characteristics including, but not limited to age, sex, geography, actual or expected health condition, medical history, claims history, or duration of coverage.

"Rate basis type", each category of individual or family composition for which separate rates are charged for a guaranteed issue health plan as determined by the carrier.

"Rating period", the period for which premium rates established by carrier are in effect, as determined by the carrier.

"Resident", a natural person living in the commonwealth; provided, however, that the confinement of a person in a nursing home, hospital or other institution shall not by itself be sufficient to qualify such person as a resident.

"Standard benefits plans", a set of benefits to be determined pursuant to the provisions of section two which sets a minimum level of benefits to be provided in each guaranteed issue managed care plan, guaranteed issue medical plan and guaranteed issue preferred provider plan on an actuarially equivalent basis.

"Subscriber", an eligible individual who has enrolled alone, or with his or her eligible dependents, in a guaranteed issue health plan.

"Waiting period", a period immediately subsequent to the effective date of a person's coverage under a guaranteed issue health plan during which the plan does not pay for some or all hospital or medical expenses.

Section 2. (a) Any nongroup health plan offered, sold, issued, delivered, made effective, or renewed by any carrier to any resident of the commonwealth on or after the August fifteenth, nineteen hundred and ninety-six of the chapter shall comply with the provisions of this chapter; provided, however, that the issue, renewal or delivery of a conversion nongroup health plan shall not obligate the carrier to otherwise issue, renew or deliver a nongroup health plan to any person to whom it does not have such an obligation pursuant to a group policy, contract or agreement with an employer or through a trust.

(b)(1) As a condition of doing business in the commonwealth, a carrier that offers health benefit plans to qualified small businesses, as defined by chapter one hundred and seventy-six J, shall participate in the nongroup health insurance market. A carrier shall be exempt from this requirement if, as of the close of the preceding calendar year, it has fewer than five thousand eligible employees and eligible dependents, as defined by chapter one hundred and seventy-six J, enrolled in health benefit plans offered to qualified small businesses.

(2) A carrier subject to licensure under chapter one hundred and seventy-six G, that, as of the close of the preceding calendar year, has five thousand or more eligible employees and eligible dependents, as defined by chapter one hundred and seventy-six J, enrolled in health benefit plans offered to qualified small businesses, shall be considered to be participating in the nongroup health insurance market only if it offers for sale to any eligible individual a guaranteed issue managed care plan, subject to the exceptions set forth in this chapter.

(3) A carrier subject to licensure under chapter one hundred and seventy-five, one hundred and seventy-six A or one hundred and seventy-six B, that as of the close of the preceding calendar year, has a total of five thousand or more eligible employees and eligible dependents, as defined in chapter one hundred and seventy-six J, enrolled in health benefit plans offered to qualified small businesses shall be considered to be participating in the nongroup health insurance market only if it offers for sale to any eligible individual a guaranteed issue medical plan, subject to the exceptions set forth in this chapter. For purposes of this section, neither an eligible employee, nor an eligible dependent, shall be considered to be enrolled in a health benefit plan subject to licensure under chapter one hundred and seventy-five if said health benefit plan is issued to said eligible employee or eligible dependent as a supplement to a health benefit plan subject to licensure under chapter one hundred and seventy-six G.

(4) A carrier that is required, pursuant to subsection (3), to offer for sale to any eligible individual a guaranteed issue medical plan may instead offer for sale to any eligible individual a guaranteed issue preferred provider plan, subject to the exceptions set forth in this chapter; provided, however, that nothing in this chapter shall prohibit a carrier from offering both a guaranteed issue medical plan and a guaranteed issue preferred provider plan should it so choose.

(c) Notwithstanding the requirements of section four and section twenty-two of chapter seven and section twenty-seven B and section twenty-nine A of chapter twenty-nine, no later than sixty days after August fifteenth, nineteen hundred and ninety-six, the executive office for administration and finance shall contract with a total of three contractors, including a certified employee health benefits plan specialist, an associate in risk management or licensed life and health insurance advisor. One of the three contractors hired shall be an actuary, who shall be a member of the American Academy of Actuaries. The contractors hired shall be members in good standing of their respective local or national accrediting bodies, shall specialize in health care, and shall not be employees of any licensed carrier or the commonwealth.

(1) Said contractors shall develop recommendations consistent with this section relative to the benefits to be provided by, and the cost-sharing requirements of, the standard guaranteed issue managed care plan, the standard guaranteed issue managed care plan with a point of service option, the standard guaranteed issue medical plan, and the standard guaranteed issue preferred provider plan. Said recommendations shall be based upon the prototype for small group plans under chapter one hundred and seventy-six J, modified to provide for a co-payment for outpatient benefits which is no greater than three-fifths of the co-payment applicable to the small group prototype. The standard plans shall include at least the following medically necessary services: reasonably comprehensive physician services, inpatient and outpatient hospital services, emergency health services, the full range of effective clinical preventive care, and prescription drugs administered on an outpatient basis. For each thirty day supply of generic prescription drugs, a guaranteed issue health plan shall require a twenty dollar co-payment. For each thirty day supply of brand name prescription drugs, a guaranteed issue health plan shall require a twenty-five dollar co-payment. Any insured individual who incurs fifty co-payments for prescription drugs in a calendar year shall not be required to make any additional co-payments for prescription drugs in that calendar year. Each health plan that provides for the purchase of prescription drugs by mail order shall provide a financial incentive to insured individuals who purchase their drugs by mail order. Each of the standard guaranteed issue health plans shall be reasonably actuarially equivalent to each other. The contractors shall report their recommendations, upon which at least two of them shall agree, to the nongroup health insurance advisory board no later than thirty days after their hire.

(2) After due consideration of the recommendations of the contractors, and no later than fourteen days after the submission of said recommendations, said board shall make final recommendations, upon which a majority of the members shall agree and which are consistent with the standards established in paragraph (4), to the commissioner relative to the benefits to be provided by, and the cost sharing requirements of, the standard guarantee issue health plans. The commissioner shall, no later than fourteen days after the submission of the board's recommendations, either approve or disapprove said recommendations. The commissioner shall not modify the recommendations of said board. If the commissioner does not approve the recommendations of said board, said board shall, after consulting with the contractors, submit new recommendations, upon which a majority of the members agree and which are consistent with the standards established in paragraph (4), to the commissioner no later than fourteen days following his decision to disapprove the standard benefit plans.

(3) Said board shall review the benefits to be provided by, and the cost sharing requirements of, the standard guaranteed issue health plans on an annual basis. In making its recommendations, the board shall ensure that actuarial equivalence is maintained between the standard guaranteed issue plans. Said board shall make pertinent recommendations to the commissioner who shall approve or disapprove said recommendations within fourteen days. The commissioner shall then take the appropriate steps to ensure the implementation of the standard benefits plans.

(4) A carrier may establish as its guaranteed issue managed care, guaranteed issue medical, or guaranteed issue preferred provider plan a plan with additional benefits or lower cost-sharing requirements than those contained in the standard plans defined by the commissioner pursuant to subsection (a); provided, however, that any such enhanced plan includes the benefits contained in the comparable type of standard plan, that the carrier establishes only one form, whether standard or enhanced, of each type of managed care, medical, or preferred provider guaranteed issue plan or plans that it offers; and provided, further, that such enhanced plan or plans shall be subject to all of the requirements of this chapter applicable to guaranteed issue health plans. A federally qualified health plan provided by a health maintenance organization which provides, at a minimum, the benefits contained in the comparable type of standard plan, including prescription drugs, and is the only form, whether standard or enhanced, which the health maintenance organization offers shall be deemed to meet the requirements of this section. The commissioner may prohibit a carrier from offering an enhanced plan if he finds that the design of the plan may have the effect of discouraging enrollment by eligible individuals.

(5) As of the first day of the first open enrollment period specified in paragraph (3) of subsection (b), a carrier shall not issue any health plan to an eligible individual other than a guaranteed issue health plan; provided, however, that a carrier may renew a closed plan for a period of no more than three years, and in such case, be subject to the provisions of subsection (a) of section five. Notwithstanding the foregoing, any such closed plan shall not be subject to the provisions of section four, except that no carrier shall, during the three-year period, add any new factor to the rating methodology applicable to its closed plan on August fifteenth, nineteen hundred and ninety-six. A carrier shall permit a subscriber of a closed plan to enroll in a guaranteed issue health plan at any time during the three year renewal period.

(6) All carriers with closed plans shall continue to enroll individuals in said closed plans until September first, nineteen hundred and ninety-seven or such postponed effective date as the commissioner may order pursuant to subsection (b) of section three.

Section 3. (a) No carrier shall exclude any eligible individual or eligible dependent on the basis of age, occupation, actual or expected health condition, claims experience, or medical condition of such person, nor impose any pre-existing condition provision or waiting period in any guaranteed issue health plan; provided, however that the issue, renewal or delivery of a conversion nongroup health plan shall not obligate the carrier to otherwise issue, renew or deliver a nongroup health plan to any person to whom it does not have such an obligation pursuant to a group policy, contract or agreement with an employer or through a trust.

(b) In the first year following August fifteenth, nineteen hundred and ninety-six, the carrier shall enroll eligible individuals into guaranteed issue health plans during an open enrollment period commencing June first and ending July thirty-first with coverage to become effective September first. The commissioner may postpone said open enrollment period and effective date of coverage should a substantial number of carriers, due to substantial administrative delay, be unable to enroll eligible individuals into a guaranteed issue health plan during the open enrollment period commencing June first and ending July thirty-first; provided, however, that any carrier that is unable to enroll eligible individuals into a guaranteed issue health plan during the open enrollment period beginning June first and ending July thirty-first, for reasons other than substantial administrative delay, may be subject to a fine of one thousand dollars for every day in which it is unable to enroll such eligible individuals in said guaranteed issue health plan and any other penalties available under this chapter. In every year thereafter, a carrier shall enroll eligible individuals into guaranteed issue health plans during an open-enrollment period commencing September first and ending October thirty-first of each year, with coverage to become effective the following December first.

(1) A carrier shall enroll an eligible individual into a guaranteed issue health plan at a time outside the open enrollment period if all of the following conditions are met: (i) such individual did not meet the definition of an eligible individual during the previous open enrollment period and now meets that definition and (ii) such individual requests guaranteed issue coverage within thirty days of the event which caused him to meet the definition of an eligible individual. Coverage shall become effective within thirty days of the date of application, subject to reasonable verification of eligibility pursuant to paragraph (d) of section four.

(2) A carrier may enroll eligible individuals into guaranteed issue health plans outside of the open enrollment period; provided however, that the terms and conditions that apply outside of the open enrollment period are identical to the terms and conditions that apply during the open enrollment period. Coverage shall become effective within thirty days of the date of application, subject to reasonable verification of eligibility pursuant to said paragraph (d) of said section four.

(c) Carriers may utilize intermediaries, as defined in section one, to offer guaranteed issue health plans to eligible individuals. Fees charged by such intermediaries shall be reasonable and shall not serve as a barrier to the purchase of insurance under this chapter.

Section 4. (a) Premiums charged to eligible individuals for guaranteed issue health plans issued or renewed after August fifteenth, nineteen hundred and ninety-six, shall satisfy the requirements of this section.

(1) Each carrier shall establish a base premium rate for each rate basis type within each class of business it offers. The premium charged to any eligible purchaser shall be limited to the base premium rate multiplied by the factors specified in paragraphs (2), (3), and (4).

(2) A carrier may a establish premium rate adjustment based upon the age of insured individuals. Such an adjustment shall be known as the age rate adjustment. Between December first, nineteen hundred and ninety-six and November thirtieth, nineteen hundred and ninety-nine, a carrier may establish an age rate adjustment, the value of which shall range from sixty-seven one-hundredths to one and thirty-three one-hundredths. If a carrier chooses to establish age rate adjustments, the premium charged to every individual enrolled in a guaranteed issue health plan shall be subject to the applicable age rate adjustment. As of December first nineteen hundred and ninety-nine, the base premium rate multiplied by the age rate adjustment as applied to an eligible individual for a rate basis type with a class of business of a carrier shall range from eighty one hundredths to one-hundred and twenty one-hundredths. If a carrier chooses to establish age rate adjustments, the premium charged to every individual enrolled in a guaranteed issue health plan shall be subject to the applicable age rate adjustment.

(3) The commissioner shall annually establish not fewer than five distinct regions of the state for the purpose of area rate adjustments. A carrier may establish an area rate adjustment for each different region, the value of which shall range from eighty one-hundredths to one hundred and twenty one-hundredths. If a carrier chooses to establish area rate adjustments, the premium charged for a guaranteed issue health plan to each eligible individual who resides within each geographic area shall be subject to the applicable area rate adjustment.

(4) The premium rate charged by a carrier to each individual on the date the individual's nongroup health policy is issued or renewed shall be the base premium rate charged for that rate basis type, multiplied by the age rate adjustment, multiplied by the area rate adjustment, multiplied by the benefits level rate adjustment, as may be applicable pursuant to this section.

(b) No carrier shall knowingly issue a guaranteed issue nongroup health plan to any individual other than an eligible individual. A carrier may renew a health plan previously issued to an individual who is not an eligible individual only if said individual either was insured under said plan as of August fifteenth, nineteen hundred and ninety-six or was insured as of August fifteenth, nineteen hundred and ninety-six under a health plan issued by said carrier and said plan is no longer offered by the carrier.

(c) A carrier shall not be required to issue or renew a nongroup health plan to any eligible individual if the carrier can demonstrate that: (1) the acceptance of applications would create for the carrier a condition of financial impairment, and the carrier demonstrates the same to the commissioner; (2) the eligible individual does not meet a health maintenance organization's requirements regarding residence or employment within the health maintenance organization's approved service area; or (3) within an area, a health maintenance organization reasonably anticipates and demonstrates to the satisfaction of the commissioner that it will not have the capacity in its network of providers to deliver services adequately to the individual because of its obligation to existing contract holders and enrollees; provided, however, that such a health maintenance organization shall not offer coverage in the applicable area to any new applicants for group or nongroup coverage until the later of ninety days after each such refusal or the date on which the health maintenance organization notifies the commissioner that it has regained capacity to deliver services to eligible individuals.

(d) A carrier shall not be required to issue or renew a health plan to an eligible individual if (1) the individual failed to pay the required premium for any health plan on a timely basis, or (2) the individual committed fraud, or misrepresented whether he qualifies or continues to qualify as an eligible individual, or (3) the individual failed to comply in a material way with the provisions of the health plan, the member contract, or the subscriber agreement, or (4) the individual failed to comply with the carrier's reasonable request for information provided in the application for coverage or renewal under a guaranteed issue health plan; provided, however, that in cases of nonpayment, the carrier shall provide the individual with a period of grace of no less than sixty days from the date that a premium payment is due. At the beginning of such period of grace, the carrier shall provide the individual with notice regarding the period of grace informing him of the last date on which payment may be made to prevent forfeiture.

(e) A carrier that decides to terminate coverage for all eligible individuals enrolled in a specific guaranteed issue health plan shall notify the commissioner and individuals enrolled in the specific guaranteed issue health plan no later than ninety days prior to the beginning of the next open enrollment period that it is terminating coverage under that guaranteed issue health plan. Such carrier shall continue to provide coverage to those eligible individuals covered as of the date of the notice of intent to terminate coverage for ninety days after the conclusion of the open enrollment period, or until all of such carrier's enrollees in that guaranteed issue health plan are transferred to other guaranteed issue health plans, whichever occurs first. A carrier may not terminate a guaranteed issue health plan if such termination would cause the carrier to violate subsection (b) of section two. A carrier who terminates a guaranteed issue health plan pursuant to this subsection shall not issue any guaranteed issue health plan for a period of five years; provided, however, that the commissioner, in his discretion, may allow a carrier to re-enter the nongroup market sooner.

Section 5. (a) No later than seventy-five days after the commissioner has approved the standard benefits plan, each carrier shall file its initial rates for its newly offered guaranteed issue health plans to be effective as of September first nineteen hundred and ninety-seven or on another date as required under subsection (b) of section three. No later than May first of each year thereafter, every carrier shall file its rates for each of its guaranteed issue health plans to be effective on December first of that year. The rates contained in a carrier's initial filing shall include the composite rate and also the rate for each rate basis type. Said filing shall include a memorandum signed by an actuary certifying that the rates have been developed in accordance with the rate bands and multipliers contained in subsection (a) of section four and are reasonable in relation to the benefits provided. Said filing shall also include a comparison of current and proposed rates listing premium cost components stated as a percentage of premium, including but not limited to the cost of prescription drugs administered on an outpatient basis. Said filing shall also include for each nongroup health plan included in the filing the actual loss ratio for the previous year, the loss ratio for the current year and the projected loss ratio for the year for which the rate is being filed. A loss ratio shall be defined as the ratio of the incurred costs for hospital, medical or other health care services for the relevant period to the premium earned for that same period for each nongroup health plan. Said filing shall also include a copy of the carrier's annual report. In its initial filing after August fifteenth, nineteen hundred and ninety-six the carrier shall also file information regarding its nongroup health plan rates, if it offered any such plan, during the year prior to August fifteenth, nineteen hundred and ninety-six, including the total number of insureds, the total number of policies issued and the number of policies issued within each rate basis type of each policy. A copy of said filing shall also be submitted to the nongroup health insurance advisory board. Said board may include information from carrier filings in its annual consumer's guide.

(b) No later than forty-five days after the date upon which the carriers are required to submit their initial filing of the rates for a newly offered guaranteed issue health plan following August fifteenth, nineteen hundred and ninety-six under subsection (a) and no later than June fifteenth of each year thereafter, the commissioner shall determine the average composite rate for each type of guaranteed issue health plan, adjusted in a consistent manner to be prescribed by the commissioner for geographic differences in health care costs, age and differences in benefit levels as permitted pursuant to subsection (d) of section two. The commissioner shall determine if the composite rate filed by each carrier for each type of guaranteed issue health plan, adjusted in the same consistent manner, exceeds the average adjusted composite rate for that type of guaranteed issue health plan by more than two standard deviations. Carriers shall submit data reasonably necessary to substantiate the adjustments made. For purposes of this chapter, standard deviation shall be defined as the square root of the average of the squares of the differences between each adjusted composite rate and the average adjusted composite rate. The commissioner shall also examine the design of the benefits of each nongroup health plan to determine if it complies with applicable laws and regulations and to determine whether its design may have the effect of minimizing the number of eligible individuals who will enroll in said plan. The commissioner shall also determine for average rate of policies in effect as of August fifteenth, nineteen hundred and ninety-six. The commissioner shall report this average rate to the board created under section seven.

(c) If a filing is the carrier's initial filing for a newly offered guaranteed issue health plan and if the adjusted composite rate for said plan exceeds the average adjusted composite rate for such type of plan by more than two standard deviations then the filing shall be subject to further review pursuant to subsection (e). No later than forty-five days after the date upon which the carriers are required to submit their initial filing of the rates for a newly offered guaranteed issue health plan after August fifteenth, nineteen hundred and ninety-six under subsection (a) and no later than June fifteenth of each year thereafter, the commissioner shall notify such carrier in writing that the filing is subject to further review pursuant to said subsection (e). No filing shall be subject to further review pursuant to said subsection (e) unless the commissioner has sent the notice required under this subsection within forty-five days of the date that the carriers are required to submit their rates under subsection (a) in the first year or by said June fifteenth of each year thereafter.

(d) In the case of a filing for an existing guaranteed issue health plan, if the adjusted composite rate for said plan exceeds the average adjusted composite rate for such type of plan by more than two standard deviations and the proposed composite rate also exceeds one hundred and ten percent of the carrier's current composite rate for such plan, then no later than said June fifteenth of each year, the commissioner shall notify such carrier in writing that the filing is subject to further review pursuant to subsection (e). No filing shall be subject to further review pursuant to said subsection (e) unless the commissioner has sent the required notice on or before said June fifteenth.

(e) If a carrier's rate filing for a guaranteed issue health plan is subject to further review pursuant to subsection (c) or (d), then the commissioner shall give the carrier twenty-one days to submit additional evidence that shows either that the rate filed is reasonable in relation to the benefits provided, or that its adjusted composite rate would not have exceeded the average adjusted composite rate for that type of guaranteed issue health plan by more than two standard deviations if its adjusted composite rate had been further adjusted for the case mix of persons insured in that carrier's nongroup health plans in operation as of August fifteenth, nineteen hundred and ninety-six, whom the carrier anticipates will be covered in its guaranteed issue health plan during the period of the proposed rates. The case mix adjustment shall be based upon the diagnosis related group grouper selected by the division of health care finance and policy established under section thirty-two of chapter six A and associated diagnosis related group weights calculated from Massachusetts data, and shall measure the differential case mix compared to the case mix of all privately insured persons discharged from hospitals from the commonwealth, as determined by said division of health care finance and policy. The commissioner shall have the authority to review and make any necessary changes to this methodology to ensure that the methodology used is consistent with the most current knowledge and methodologies used for such purposes. The commissioner shall have the authority to request that the carrier submit additional information reasonably necessary to make his determination. The commissioner shall have the authority to conduct an informational public hearing if he deems it reasonably necessary to make his determination. No later than ten days after the commissioner has received further information from the carrier, the commissioner shall make a written determination (1) as to whether the adjusted composite rate filed, further adjusted for case mix if the carrier so proposes, would not have exceeded the average adjusted composite rate for that type of guaranteed issue health plan by more than two standard deviations or (2) in the case of an adjusted composited rate that exceeds the average adjusted composite rate by more than two standard deviations either because the rate, although further adjusted for case mix would still have exceeded the two standard deviation test or because the carrier dose not propose an adjustment for case mix, as to whether the rate filed is reasonable in relation to the benefits provided. If the commissioner determines either that the adjusted composite rate, further adjusted for case mix, would not have exceeded the average adjusted composite rate for that type of guaranteed issue health plan by more than two standard deviations under clause (1) of the preceding sentence or that the rate is reasonable under clause (2) of the preceding sentence, he shall notify the carrier that the rate is approved. If the commissioner determines that the adjusted composite rate or that rate further adjusted for case mix, if the carrier so proposes, would have exceeded the average adjusted composite rate for that type of guaranteed issue health plan by more than two standard deviations and that the rate is not reasonable, he shall notify the carrier that the rate is disapproved and that the carrier has the right to request an adjudicatory hearing pursuant to chapter thirty A within twenty-one days of the commissioner's decision. Said hearing shall be conducted within thirty days of the carrier's request. The commissioner shall issue a written decision within thirty days of the conclusion of the hearing. The rate shall be effective not earlier than thirty days subsequent to the commissioner's written decision. A carrier aggrieved by said written decision may, within twenty days of said decision, file a petition in the supreme judicial court for Suffolk county for a review of such decision. Review by the supreme judicial court on the merits shall be limited to the record of the proceedings before the commissioner and shall be based upon the standards set forth in paragraph (7) of section fourteen of chapter thirty A.

(f) A carrier whose rate filing is subject to further review or who has exercised its right to an administrative hearing shall, for purposes of section two, be deemed to be offering guaranteed issue health plans and shall be allowed to continue to offer health benefit plans to eligible small businesses, provided that it is exercising good faith in its participation in said further review or hearing.

(g) A carrier whose initial rate filing is subject to further review or who has exercised its right to a hearing may implement an interim composite rate no greater than the average proposed composite rate, provided that it is exercising good faith in its participation in said further review or hearing.

(h) The commissioner shall promulgate regulations to enforce this section.

(i) Nothing in this section shall be construed to limit the commissioner's authority to disapprove rates pursuant to chapter one hundred and seventy-five, one hundred and seventy-six A, one hundred and seventy-six B, one hundred and seventy-six G, or one hundred and seventy-six I.

Section 6. Subject to an agreement to participate by five or more carriers, there is hereby established a nonprofit entity to be known as the Massachusetts Nongroup Health Reinsurance Plan. All carriers issuing health plans to eligible individuals on or after August fifteenth, nineteen hundred and ninety-six, shall not be required to be members of said reinsurance plan.

Such plan shall be prepared and administered by a governing committee appointed by the governor, consisting of five members representing nongroup health insurers participating in the plan. At least one member of the governing committee shall be a small business domestic health insurer. The governing committee shall be responsible for the hiring of the employees of the plan. The initial appointment of two of the members shall be for a term of three years. The initial appointment of two of the members shall be for a term of two years. The initial appointment of one of the members shall be for a term of one year. All appointments thereafter shall be for a term of three years.

The governing committee shall submit to the commissioner a plan of operation. The commissioner shall, after notice and hearing, approve or disapprove the plan of operation. Subsequent amendments to such plan shall be deemed approved in writing by the commissioner if not expressly disapproved in writing by the commissioner within thirty days from the date of the filing of such amendments. The plan shall not reimburse a carrier with respect to the claims of a reinsured individual or dependent in any calendar year until the carrier has paid five thousand dollars in benefits in a calendar year for benefits otherwise covered by the plan. The governing body may increase said dollar amount upon the approval of the commissioner.

Meetings of the governing committee of the plan shall be conducted in accordance with the provisions of section eleven A of chapter thirty A.

Premium rates charged for coverage reinsured by the plan shall be established as follows or as the commissioner may direct, in consultation with the governing committee: five times the adjusted average base market premium rate established by the program for that classification or group with similar characteristics and coverage, with respect to an eligible individual or his dependents, minus a ceding expense determined by the reinsurance program.

To control the size of the population of the plan, the plan shall annually provide for territorial and classification credits for those companies voluntarily writing nongroup health insurance within those territories or classifications that would otherwise be disproportionately represented in the plan. The size of the credits shall be such as to enhance the prospects that no classification or territory is disproportionately represented in the plan.

Following the close of each fiscal year, the governing committee shall determine the premiums charged for reinsurance coverage, the reinsurance plan expenses for administration, and the incurred losses, if any, for the year, taking into account investment income and other appropriate gains and losses. Any net loss for the year shall be recouped by assessment of the members. Said assessments shall be apportioned in proportion to said members' respective shares of the total premiums earned in the commonwealth from guaranteed issue health plans. Such assessments shall not exceed five percent of such premiums from such health plans. If the assessments level is inadequate, the governing committee may adjust reinsurance thresholds, retention levels or consider other forms of reinsurance.

SECTION 30. The General Laws are hereby further amended by inserting after chapter 176M the following chapter:- `tuc CHAPTER 176N. PORTABILITY OF HEALTH INSURANCE.

Section 1. As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings:-

"Commissioner", the commissioner of the division of insurance.

"Emergency services", covered services provided after the sudden onset of a medical condition manifesting itself by acute symptoms, including severe pain, which are severe enough that the lack of immediate medical attention could reasonably be expected to result in: (i) placing the patient's health in serious jeopardy; (ii) serious impairment of bodily functions; or (iii) serious dysfunction of any bodily organ or part.

"Health plan", any general, blanket, group or nongroup policy of health, accident and sickness insurance issued by an insurer licensed under chapter one hundred and seventy-five; a group or nongroup hospital service plan issued by a nonprofit hospital service corporation under chapter one hundred and seventy-six A; a group or nongroup medical service plan issued by a nonprofit hospital service corporation under chapter one hundred and seventy-six B; a group or nongroup health maintenance contract issued by a health maintenance organization under chapter one hundred and seventy-six G; or an insured health plan which includes a preferred provider arrangement organized under one hundred and seventy-six I which is issued for delivery in the commonwealth. The words "health plan" shall not include accident only, credit, dental or disability income insurance, coverage issued as a supplement to liability insurance, insurance arising out of a worker's compensation or similar law, automobile medical payment insurance, insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in a liability insurance policy or equivalent self-insurance, long term care only insurance, or any group blanket or general policy which provides supplemental coverage to medicare or other governmental programs.

"Late enrollee", an eligible employee or dependent who requests enrollment in a group health plan or insurance arrangement after the plan initial enrollment period, their initial eligibility date provided under the terms of the plan or arrangement or the group's annual open enrollment period; provided, however, that an insured shall not be considered a late enrollee if the request for enrollment to the insurer is made within thirty days after termination of coverage provided under another health insurance plan or arrangement where such coverage has ceased to due to the termination of the spouse's employment or death of the spouse.

"Out of state health plan", any general, blanket, group or nongroup policy of health, accident and sickness insurance issued by an insurer meeting the requirements for licensure under chapter one hundred and seventy-five; a group hospital service plan issued by a nonprofit hospital service corporation under chapter one hundred and seventy-six A; a group medical service plan issued by a nonprofit hospital service corporation under chapter one hundred and seventy-six B; a group health maintenance contact issued by a health maintenance organization meeting the requirements for licensure under chapter one hundred and seventy-six G; or a preferred provider arrangement meeting the requirements for licensing under chapter one hundred and seventy-six I which (i) is delivered or issued for delivery outside the commonwealth and (ii) covers any resident of the commonwealth.

"Qualifying health plan", (i) any blanket or general policy of medical, surgical or hospital insurance described in subsection (A), (B) or (D) of section one hundred and ten of chapter one hundred and seventy-five; (ii) any policy of accident or sickness insurance as described in section one hundred and eight of chapter one hundred and seventy-five which provides hospital or surgical expense coverage; (iii) any nongroup medical, surgical or hospital insurance as described in chapter one hundred and seventy-five; (iv) any nongroup or group hospital or medical service plan issued by a nonprofit hospital or medical service corporation under chapters one hundred and seventy-six A and one hundred and seventy-six B; (v) any nongroup health maintenance contract issued by a health maintenance organization under chapter one hundred and seventy-six G; (vi) any self insured or self-funded employer group health plan; (vii) any health coverage provided to persons serving in the armed forces of the United States; or (viii) medicare or medical assistance provided under chapter one hundred and eighteen E. The commissioner may, by regulation, define other health coverage as a qualifying health plan for the purposes of this chapter.

"Waiting period", a specified period immediately subsequent to the effective date of an eligible insured's coverage under the health plan or out of state health plan during which the plan does not pay for some or all medical expenses.

Section 2. No health plan shall:

(a) exclude any eligible insured on the basis of any actual or expected health condition of such person;

(b) contain pre-existing conditions provisions that exclude coverage for a period beyond six months following the individual's effective date of coverage. Pre-existing condition provisions may only relate to (1) conditions which had, during the six months immediately preceding the effective date of coverage, manifested themselves in such a manner as would cause an ordinarily prudent person to seek medical advice, diagnosis, care or treatment or for which medical advice, diagnosis, care or treatment was recommend or received or (2) a pregnancy existing on the effective date of coverage. In determining whether a pre-existing condition provision applies to an eligible insured, all health plans shall credit the time such person was under a previous qualifying health plan if the previous coverage was continuous to a date not more than thirty days prior to the effective date of the new coverage, exclusive of any applicable service waiting period under such new coverage, and if the previous qualifying health plan coverage was reasonably actuarially equivalent to the new coverage;

(c) provide for a waiting period of more than six months beyond the eligible insured's effective date of coverage under the health plan. If a health plan includes a waiting period, emergency services shall be covered during the waiting period. In applying a waiting period to an eligible insured, all health plans shall credit the time such person was covered under a previous qualifying health plan if such person experiences only a temporary interruption in coverage; or

(d) exclude late enrollees from coverage for more than twelve months from the date of the application for coverage of any late enrollee.

(e) In any circumstance in which more extensive coverage than that provided by clauses (a) to (d) is required by any other provision of the General Laws or any law of the United States, the health benefit plan shall satisfy such other provision insofar as it requires more extensive coverage.

Section 3. All out of state health plans shall apply the provisions of section two to any and all residents of the commonwealth who are eligible insureds under such plan.

Section 4. The commissioner shall promulgate regulations, pursuant to chapter thirty A, to enforce the provisions of this chapter.

Section 31. There is hereby established within the executive office of administration and finance a board to be known as the nongroup health insurance advisory board, consisting of: the commissioner of insurance or his designee; the secretary of health and human services or his designee; two members to be appointed by the attorney general, both of whom shall represent consumers but shall not be members of the same consumer organization; and five members to be appointed by the governor, one of whom shall represent a nonprofit hospital service corporation, one of whom shall represent a commercial insurance company, one of whom shall represent health maintenance organizations not affiliated with a hospital service corporation, one of whom shall represent small business organizations, one of whom shall represent small business intermediaries; provided however, that appointments by the governor and the attorney general shall be made on or before October fifteenth, nineteen hundred and ninety-six. The initial appointment of three of the members shall be for a term of three years. The initial appointment of three of the members including the two members appointed by the attorney general shall be for a term of two years. The initial appointment of three of the members shall be for a term of one year. All appointments thereafter shall be for a term of three years.

Said board shall advise the division of insurance on issues relating to nongroup and small group insurance reform including, but not limited to the contents of the standard benefits plan designed pursuant to section two and the following: (a) the development of a consumer guide on nongroup products to be published annually, which shall include at least the name of the product and the carrier, the anticipated premium rate, and the anticipated percent of premium to be expended for medical care; (b) the effect of small group and nongroup reform on the number of uninsured individuals in the commonwealth; (c) the presence, of market practices which impede or promote access to health insurance; (d) the affordability of and any possible need for purchasing assistance for selected groups of buyers, such as part-time workers; (e) the development of a set of no less than five indicators to serve as a measure of premium rates which may include a statement as to whether the average rate has met or exceeded the threshold established in subsection (b) of section five of chapter one hundred and seventy-six M of the General Laws; and (f) the effectiveness of the rate review process established under said chapter one hundred and seventy-six M. Said board shall make recommendations to the commissioner of insurance and the chairs of the joint committee on insurance at least annually and at such other times as it deems necessary.

SECTION 32. The committee on insurance is hereby authorized to make an investigation and study with all interested parties regarding the effectiveness of a single billing system to be utilized by all health insurers which conduct business in the commonwealth.

The committee shall report to the clerk of the house of representatives and the clerk of the senate any recommendations and legislation, if any on or before June thirtieth, nineteen hundred and ninety-seven.

SECTION 33. Notwithstanding the provisions of section four and section twenty-two of chapter seven and section twenty-seven B and section twenty-nine A of chapter twenty-nine of the General Laws, no later than sixty days after August fifteenth, nineteen hundred and ninety-six, the executive office for administration and finance is hereby authorized to expend, without further appropriation, from the General Fund an amount up to forty-five thousand dollars for the reasonable expenses of contracting an actuary and two additional contractors including an associate in risk management, certified employee health benefits specialist or a life and health insurance advisor for the purpose of designing standard benefits plans in accordance with section two of chapter one hundred and seventy-six M of the General Laws. The contractors hired shall be members in good standing of their respective local or national accrediting bodies, shall specialize in health care, and shall not be employees of any licensed carrier or the commonwealth. The General Fund shall be reimbursed for the amount of said expenditure by making an assessment upon all carriers filing rates for guaranteed issue health plans during the first year this chapter is effective. The secretary shall devise an equitable method of allocating said assessment among said carriers.

SECTION 34. This act shall take effect as of August fifteenth, nineteen hundred and ninety-six.

Approved August 9, 1996.

Session Laws

Acts

1996

CHAPTER 297 AN ACT INCREASING THE AFFORDABILITY AND ACCESSIBILITY OF HEALTH INSURANCE IN THE COMMONWEALTH.

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