Revision: Jan. 4, 2010, midnight
SB 408 – AS INTRODUCED
SENATE BILL 408
This bill establishes a law governing purchasing alliances which may be formed for the purposes of purchasing health insurance.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [
in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT relative to purchasing alliances.
Be it Enacted by the Senate and House of Representatives in General Court convened:
420-L:1 Purpose. The purpose of this chapter is to:
I. Increase the affordability, efficiency, and fairness of health insurance coverage for employers by setting standards for the licensure and oversight of purchasing alliances through which employers and their employees may purchase health coverage.
II. Allow employers and their employees to obtain better value in purchasing health insurance by consolidating purchasing responsibilities and resources, thereby increasing purchasing expertise and reducing the administrative cost of health plan contracting, enrollment, premium collection, and payment for multiple employers.
III. Foster competition based on value.
420-L:2 Definitions. In this chapter:
I. “Commissioner” means the insurance commissioner.
II. “Eligible dependents” means “eligible dependents” as defined in RSA 420-G:2, V.
III. “Eligible employee” means “eligible employee” as defined in RSA 420-G:2, VI.
IV. “Employee enrollee” means an eligible employee, self-employed individual, or an eligible dependent of an eligible employee who is enrolled in a health benefit plan offered through an alliance by a participating carrier.
V. “Health benefit plan” means “health coverage” as defined in RSA 420-G:2, IX.
VI. “Health carrier” or “carrier” means “health carrier” as defined in RSA 420-G:2, VIII.
VII. “Member employer” means an employer who enrolls in an alliance.
VIII. “Participating carrier” means a carrier that contracts with the alliance.
IX. “Purchasing alliance” or “alliance” means a non-risk bearing corporation or other entity licensed pursuant to RSA 420-G:10-a that provides health insurance coverage to member employers and their employees.
X. “Qualified purchasing alliance” means a purchasing alliance that has obtained certification from the commissioner under RSA 420-L:13 as a qualified purchasing alliance with authority to operate in the same manner as a qualified association trust pursuant to RSA 420-G:10.
XI. “Small employer” means “small employer” as defined in RSA 420-G:2, XVI.
420-L:3 Jurisdiction of the Commissioner; Penalties.
I. The commissioner shall regulate the establishment and conduct of purchasing alliances.
II. No person or entity, other than a qualified association trust, shall market, sell, offer, or arrange the sale of one or more health benefit plans to 2 or more employers or their eligible employees without first being licensed by the commissioner pursuant to this chapter.
III. A person or entity, not licensed by the commissioner as a purchasing alliance and engaged in the purchase, sale, marketing, or distribution of health insurance or heath care benefit plans shall not hold itself out as a health insurance purchasing alliance, health insurance purchasing cooperative, or a health insurance purchasing association.
420-L:4 Purchasing Alliance Application and Licensing. To obtain authority to operate as a purchasing alliance, an application shall be completed and filed with the commissioner by an authorized representative of the corporation or other entity established to operate as a purchasing alliance. An application shall not be deemed filed until all information necessary to properly process the application has been received by the commissioner. Upon filing, the commissioner shall make a determination concerning the application and shall provide notice of the determination to the applicant. If approved, a copy of a license shall be provided to the purchasing alliance. The license shall serve as authorization to operate pursuant to this chapter.
420-L:5 Preparation of a Business Plan and Other Required Documents.
I. The application for a purchasing alliance shall include a business plan containing the following information:
(a) A detailed, written plan of operations explaining how the applicant intends to fulfill the purposes and requirements of this chapter;
(b) The specific steps that the alliance will use to increase affordability, efficiency, and fairness of health insurance coverage;
(c) The specific steps that the alliance will use to allow employers and their employees to obtain better value in purchasing health insurance;
(d) The scope of services to be offered and the resources and expertise to be used to implement and administer those services;
(e) A provision requiring that any coverage procured by the alliance shall require that the members of the alliance be notified directly by the insurer of cancellation due to nonpayment of premium;
(f) The personal biographical information and descriptions of the officers of the alliance;
(g) A written statement demonstrating that those involved in the operation of the alliance have the expertise and experience to effectively and professionally represent employers and their eligible employees; and
(h) An affirmative demonstration that financial controls are in place as a condition of licensure.
II. In addition to the business plan, each applicant shall file with the commissioner the following information or documents:
(a) A plan that affirmatively demonstrates that the alliance has the technical expertise and capacity to serve a significant group of employers and their eligible employees;
(b) A plan that demonstrates that the alliance has the technical capacity to provide service quality;
(c) The applicant’s articles of incorporation, bylaws, or other formation and business operation documents;
(d) A list of officers and directors of the applicant and the contract administrator, if one is employed, and personal biographical information or firm descriptions for each;
(e) Evidence of security and prudence in the accounting, deposit, collection, handling, and transfer of moneys; and
(f) A description of the service area in which the alliance will be marketing and offering services.
III. Material changes in the operations or the business plan shall not take effect without approval from the commissioner.
IV. The commissioner shall conduct financial and performance audits or examinations of an alliance on a regular basis. The commissioner shall require audited financial statements from an alliance. The costs of examinations or audits shall be paid by the alliance.
V. A purchasing alliance shall submit an annual report no later than April 1 of each year that includes quarterly financial statements that show:
(a) The alliance is operating in a sound financial fashion;
(b) The alliance is not a risk-bearing entity; and
(c) The alliance is utilizing sound financial controls and money management.
420-L:6 Revocation of License and Insolvency.
I. The following intentional acts shall constitute grounds for denial, non-renewal, suspension, or revocation of an application or existing license, following notice and an opportunity for hearing:
(a) Failure to comply with the provisions of RSA 420-G;
(b) Failure to comply with the business plan filed and approved by the commissioner;
(c) Failure to maintain adequate financial controls;
(d) Failure to extend alliance health benefit plan coverage to eligible employees;
(e) Failure to comply with a lawful order of the commissioner;
(f) Engaging in an unfair or deceptive act or practice;
(g) Filing any necessary form, including the application form, with the commissioner that contains false or materially incorrect information or omissions; or
(h) Misappropriation, conversion, illegal withholding, or refusal to pay over upon proper demand any moneys that belong to a person or participating carrier and that have been entrusted to the alliance in its fiduciary capacity.
II. The commissioner shall require the removal and replacement of managerial or marketing staff or third party contractors if necessary to remedy compliance or performance problems.
III. In the event the alliance becomes insolvent, the commissioner shall place the alliance in receivership if necessary to protect the interests of alliance enrollees.
420-L:7 Powers and Duties of Purchasing Alliances; Restrictions on Purchasing Alliances.
I. A purchasing alliance shall:
(a) Offer health benefit plans that are available to all member employers;
(b) Establish administrative and accounting procedures for operating the alliance, for providing services to member employers and enrollees, and for preparing an annual budget;
(c) Develop standard enrollment procedures for enrolling employers and their eligible employees and dependents;
(d) Establish procedures for open enrollment periods;
(e) Establish conditions of participation for small employers that conform to the requirements of RSA 420-G and include, but are not limited to, the following:
(1) Assurances that the member employer is an employer group and is not formed for the purpose of securing health benefits coverage; and
(2) Prepayment of premiums or other mechanisms to assure that payment will be made for coverage;
(f) Establish membership criteria that allow any employer to participate in the alliance or that limit participation to employers that are members of or affiliated with an association, trade group, or other entity that has been in existence for at least 10 years and was established and maintained for purposes other than the provision of health coverage;
(g) Provide that each eligible employee is permitted to enroll in any health benefit plan offered by any participating carrier so long as the health benefit plan provides coverage where he or she works or lives;
(h) Establish conditions of participation for participating carriers;
(i) Develop and make available a list of objective criteria that shall be met by a participating carrier offering coverage to alliance members;
(j) Establish conditions of participation for agents or brokers;
(k) Provide to alliance members clear, standardized information on the health benefit plan including information on:
(3) Enrollee costs;
(5) Patient satisfaction;
(6) Enrollment; and
(7) Grievance procedures and rights and responsibilities;
(l) Transmit enrollment and eligibility information to participating carriers on a timely basis;
(m) Specify in contracts with participating carriers how all premiums shall be transmitted and the frequency of that transmission and how penalties and grace periods on late payments of premiums shall be calculated;
(n) Have a fiduciary duty with respect to all moneys received or owed to it to assure payments of its obligations and a full accounting to its members and the commissioner; and
(o) Submit to the commissioner quarterly financial statements, annual reports, and proposed material changes in the policy and/or operations or the business plan.
II. A purchasing alliance may:
(a) Receive, review, and act on grievances against participating carriers by member employers or enrollees;
(b) Require participating carriers to maintain health care data;
(c) Maintain a trust account or accounts for deposit of all moneys received and collected for the operation of the alliance;
(d) Establish procedures and mechanisms for billing and collection of premiums from member employers, including collection of any share of the premium paid by employee enrollees;
(e) Review information and recommendations from consumers, employers, participating carriers, or health care providers and other sources, and issue periodic reports or recommendations to the commissioner to improve the delivery of health services and the purchasing of health coverage;
(f) Develop model contracts that describe for potential contractors the requirements of the alliance and provide a copy of the contract to interested carriers;
(g) Place into its contracts between the alliance and member employers the following:
(1) A provision stating that, for administrative purposes, the alliance shall be the policyholder or contract holder of the health benefit plan on behalf of member employers, their eligible employees, and eligible dependents; and
(2) A provision stating that the participating carrier shall issue a certificate of coverage, or equivalent document, specifying the essential features of the health benefit plan’s coverage to each enrolled eligible employee;
(h) Undertake any activity necessary to administer the alliance, including marketing and publicizing the alliance, and assuring that participating carriers, contractors, participating employers, and enrollees are in compliance with alliance requirements;
(i) Establish contracts with participating carriers to provide health coverage to alliance members;
(j) Establish contracts with employer members;
(k) Contract with qualified, independent third parties for services necessary to carry out the powers and duties of the alliance;
(l) Appoint advisory committees, as necessary, to provide technical assistance in the operation of the program and in carrying out the purposes of this chapter;
(m) Assess member employers a fee for costs incurred or anticipated in connection with the operation of the alliance;
(n) Require as a condition of membership that employers include a minimum percentage of employees in coverage purchased through the alliance;
(o) Reject or allow a carrier to reject an employer from membership or drop or allow a carrier to drop a member employer if the member fails to pay premiums or engages in fraud or material misrepresentation in connection with a health benefit plan purchased through the alliance;
(p) Contract with licensed insurance agents or brokers to market and service coverage made available through the alliance to its members. Compensation for agents and brokers shall not vary based on the actual or expected health status or medical utilization of the group to which coverage is sold;
(q) Define a set of standardized requirements that the alliance shall use to purchase insurance from a carrier;
(r) Require that member employers and their eligible employees continue to pay administrative fees that are part of the contract with the alliance if a member employer or enrollee cancels prior to completion of a contract period or membership period established by the alliance;
(s) Negotiate the premium rates charged for coverage offered through the alliance and, for small employer members, ensure that rates are consistent with the rating restrictions contained in RSA 420-G;
(t) Request such information from participating carriers as is necessary to carry out the powers and duties of this chapter;
(u) Sue or be sued, including taking action necessary for securing legal remedies on behalf of the alliance, member employers, or enrollees;
(v) Apply for loans or loan guarantees from the New Hampshire business finance authority for the purpose of funding startup costs;
(w) Receive and accept loans, grants, funds, or anything of value from a public or private entity including:
(1) Employer premiums;
(2) Employer participation fees;
(3) Employer late fees;
(4) Employer reinstatement fees;
(5) Agent and broker fees paid by the employer;
(6) Interest earned on accounts;
(7) Funds paid by the participating carriers for a pooled marketing effort;
(8) Public sector and private sector grants, gifts, loans, or donations; or
(9) Other lawful sources;
(x) Receive and accept contributions of property, labor, or any other thing of value;
(y) Expend funds to pay:
(1) Participating carriers under their contracts;
(2) Third parties for services provided under contract;
(3) Employer billing adjustments;
(4) Agent and broker fees;
(5) The alliance’s administrative expenses; and
(6) All other expenditures duly authorized by the board;
(z) Exercise all powers reasonably necessary to carry out the powers granted and duties imposed under this chapter; and
(aa) Enter into all other contracts as are necessary to carry out the powers and duties of the alliance.
III. A purchasing alliance shall not:
(a) Purchase health care services directly, assume risk for the cost or provision of health care services, or otherwise contract with health care providers for the provision of health care services to enrollees.
(b) Exclude from membership in the alliance an employer, eligible employee, or eligible dependent of an eligible employee who meets the alliance’s membership criteria and who agrees to pay fees for membership and the premium for health coverage through the alliance and who abides by the bylaws and rules of the alliance.
(c) As a condition of membership, require an employer, eligible employee, or eligible dependent to subscribe to limited health coverage or non-health coverage related products or services.
(d) Engage in any act or practice that results in the selection of member employers and enrollees based on industry type, experience, gender, family status, education, health status, income, employer size, or other factors related to the risk profile of the group.
(e) Require or take any action inconsistent or in conflict with state laws or regulations.
420-L:8 Contracts with Participating Carriers. The contracts entered into by the alliance shall:
I. Establish performance standards for specific contractual elements;
II. Set liquidated damages for breach of the contract;
III. Require the insurer to notify the member employers of cancellation of the policy;
IV. Require the member employers in the event of cancellation to arrange for continuation coverage for their employees to the extent provided under federal and state law; and
V. Contain a provision stating that if after timely receipt of the premium payment from the employer, the alliance fails to make the premium payment to the insurer, with the result that coverage is terminated, that the alliance shall be liable for benefits to the same extent as the insurer or carrier would have been liable if coverage had not been terminated.
420-L:9 Requirements for Participating Carriers.
I. To qualify as a participating carrier, a carrier shall demonstrate the following characteristics:
(a) That it is licensed and in good standing with the insurance department;
(b) That it has the ability to administer health coverage, to provide adequate service, and to comply with all contractual requirements of the alliance;
(c) That it has the ability to provide enrollees with access to covered services;
(d) That it has the ability to provide coverage for enrollees in any service area in which the carrier plans to participate through the alliance;
(e) That it has the ability to arrange and pay for quality health care services;
(f) That it has the ability to provide standard data required by the alliance, in a manner prescribed by the alliance, including information on:
(1) Plan performance;
(2) Enrollee satisfaction;
(3) Provider payment and incentive structures; and
(4) Such other data requirements prescribed by the alliance;
(g) That it has the ability to meet quality of care standards established by government and industry authorities; and
(h) That it is financially strong and has competent management.
II. Participating carriers that contract with or employ health care providers shall have the ability to accomplish the following in a manner satisfactory to the alliance:
(a) Review and report on the cost and quality of care covered;
(b) Review and report on the appropriateness of care covered; and
(c) Provide accessible health care services.
III. Each participating carrier shall:
(a) Meet the standards established by the alliance pursuant to this chapter;
(b) Provide data and information as required by the alliance;
(c) Comply with all laws and rules regarding underwriting, rating, claims handling, sales, solicitation, licensing, fair marketing, unfair trade practices, the provisions of this chapter, and other applicable state statutes;
(d) Enroll and terminate individuals in the manner specified by the alliance; and
(e) Comply with other requirements established by the alliance pursuant to this chapter.
IV. Nothing in this chapter shall prohibit participating carriers from contracting with particular health care providers or types, classes, or categories of health care providers, or setting reimbursement methodology.
V. In the event that the participating carrier elects to terminate its contract with the alliance, the participating carrier shall:
(a) Provide advance notice of its decision to the alliance; and
(b) Provide notice of the decision at least 180 days prior to the non-renewal of health coverage to the member employers and employee enrollees.
420-L:10 Marketing Health Benefit Plans.
I. The alliance shall establish marketing standards for use by participating carriers.
II. Any marketing, advertisement, or educational material for health coverage sold through the alliance shall be approved by the alliance prior to its use.
III. The alliance shall make approved marketing materials available to member employers in an efficient and standardized manner. These materials shall include, but not be limited to, an accurate summary of benefit plans, rates, cost, and accreditation information relating to the offerings of the participating carrier.
IV. This section shall not be construed to prohibit or to compel the alliance or a participating carrier from using the services of an agent or broker.
420-L:11 Conflict of Interest. No officer or board member or director or contract administrator of a purchasing alliance or members of their households may be employed by, be a consultant for, be a member of the board of directors of, or be affiliated with, or otherwise be a representative of a carrier or other insurer. This section shall not preclude an officer or board member or director or contract administrator of a purchasing alliance from purchasing health coverage through the alliance.
420-L:12 Purchasing Alliance Distinguished From Multiple Employer Welfare Arrangement. Purchasing alliances shall not be risk bearing entities, and shall not enter into a self-insured arrangement.
420-L:13 Qualified Purchasing Alliance. A purchasing alliance that has a minimum of 3,000 enrollees may elect to obtain certification from the commissioner as a qualified purchasing alliance. To obtain certification, a purchasing alliance shall demonstrate:
I. Either that it is open to all employers without discrimination or, if participation is based on membership in or an affiliation with an association, trade group, or other entity, that the entity has been in existence for at least 10 years and was established and maintained for purposes other than the provision of health coverage; and
II. That the health benefit plan or plans offered to its members and the provider payment policies associated with those plans will promote more cost effective use of health care services by providing a better alignment of financial incentives with:
(a) Health care quality improvement and efficiency; and
(b) Health promotion and disease prevention.
2 Insurance; Qualified Associated Trust. Amend RSA 420-G:10 to read as follows:
420-G:10 Qualified Association Trust and Qualified Purchasing Alliance.
(a) Comply with the rating restrictions outlined in RSA 420-G:4 for all small employer members with 50 or fewer employees based upon the association’s or alliance’s group experience, except that for a qualified association trust, no rating factor shall be utilized without the express written consent of the association.
(b) Offer all eligible members, as defined under the applicable trust or other documents, coverage and rates on a guaranteed issue and renewable basis.
(c) Comply with the regulations concerning medical underwriting in RSA 420-G:5.
(d) Comply with the preexisting conditions provision of RSA 420-G:7.
II. Nothing in this chapter shall be interpreted to limit the size of employers who may participate in coverage with a qualified association trust or a qualified purchasing alliance.
3 Repeal. The following are repealed:
I. RSA 420-G:2, XIV-a, relative to definition of purchasing alliance.
II. RSA 420-G:10-a, III and IV, relative to purchasing alliances.
4 Effective Date. This act shall take effect 60 days after its passage.