H.B. 80 Enrolled

1

HEALTH INSURANCE AMENDMENTS
2 2007 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: James A. Dunnigan
5 Senate Sponsor: Gene Davis
6
7 LONG TITLE
8 General Description:
9 This bill amends the Comprehensive Health Insurance Pool Act.
10 Highlighted Provisions:
11 This bill:
12 . makes technical amendments to the definition of insurer;
13 . deletes obsolete language;
14 . amends the lifetime benefit maximum; and
15 . amends eligibility for the high risk pool.
16 Monies Appropriated in this Bill:
17 None
18 Other Special Clauses:
19 None
20 Utah Code Sections Affected:
21 AMENDS:
22 31A-29-103, as last amended by Chapter 78, Laws of Utah 2005
23 31A-29-104, as last amended by Chapter 2, Laws of Utah 2004
24 31A-29-110, as last amended by Chapter 78, Laws of Utah 2005
25 31A-29-111, as last amended by Chapter 78, Laws of Utah 2005
26 31A-29-113, as last amended by Chapter 78, Laws of Utah 2005
27 31A-29-117, as last amended by Chapter 168, Laws of Utah 2003
28 31A-29-119, as last amended by Chapter 168, Laws of Utah 2003
29

30 Be it enacted by the Legislature of the state of Utah:
31 Section 1. Section 31A-29-103 is amended to read:
32 31A-29-103. Definitions.
33 As used in this chapter:
34 (1) "Board" means the board of directors of the pool created in Section 31A-29-104 .
35 (2) (a) "Creditable coverage" has the same meaning as provided in Section 31A-1-301 .
36 (b) "Creditable coverage" does not include a period of time in which there is a
37 significant break in coverage, as defined in Section 31A-1-301 .
38 (3) "Domicile" means the place where an individual has a fixed and permanent home
39 and principal establishment:
40 (a) to which the individual, if absent, intends to return; and
41 (b) in which the individual, and the individual's family voluntarily reside, not for a
42 special or temporary purpose, but with the intention of making a permanent home.
43 (4) "Enrollee" means an individual who has met the eligibility requirements of the pool
44 and is covered by a pool policy under this chapter.
45 (5) "Health care facility" means any entity providing health care services which is
46 licensed under Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act.
47 (6) "Health care provider" has the same meaning as provided in Section 78-14-3 .
48 (7) "Health care services" means:
49 (a) any service or product:
50 (i) used in furnishing to any individual medical care or hospitalization; or
51 (ii) incidental to furnishing medical care or hospitalization; and
52 (b) any other service or product furnished for the purpose of preventing, alleviating,
53 curing, or healing human illness or injury.
54 (8) (a) "Health insurance" means any:
55 (i) hospital and medical expense-incurred policy;
56 (ii) nonprofit health care service plan contract; or
57 (iii) health maintenance organization subscriber contract.

58 (b) "Health insurance" does not mean:
59 (i) any insurance arising out of Title 34A, Chapter 2 or 3, or similar law;
60 (ii) automobile medical payment insurance; or
61 (iii) insurance under which benefits are payable with or without regard to fault and
62 which is required by law to be contained in any liability insurance policy.
63 (9) "Health maintenance organization" has the same meaning as provided in Section
64 31A-8-101 .
65 (10) (a) "Health plan" means any arrangement by which an individual, including a
66 dependent or spouse, covered or making application to be covered under the pool has:
67 (i) access to hospital and medical benefits or reimbursement including group or
68 individual insurance or subscriber contract;
69 (ii) coverage through:
70 (A) a health maintenance organization;
71 (B) a preferred provider prepayment;
72 (C) group practice; or
73 (D) individual practice plan;
74 (iii) coverage under an uninsured arrangement of group or group-type contracts
75 including employer self-insured, cost-plus, or other benefits methodologies not involving
76 insurance;
77 (iv) coverage under a group type contract which is not available to the general public
78 and can be obtained only because of connection with a particular organization or group; and
79 (v) coverage by Medicare or other governmental benefit.
80 (b) "Health plan" includes coverage through health insurance.
81 (11) "HIPAA" means the Health Insurance Portability and Accountability Act of 1996,
82 Pub. L. 104-191, 110 Stat. 1936.
83 (12) "HIPAA eligible" means an individual who is eligible under the provisions of the
84 Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, 110 Stat. 1936.
85 (13) "Insurer" means:

86 (a) an insurance company authorized to transact accident and health insurance business
87 in this state;
88 (b) a health maintenance organization; [and] or
89 (c) a self-insurer not subject to federal preemption.
90 (14) "Medicaid" means coverage under Title XIX of the Social Security Act, 42 U.S.C.
91 Sec. 1396 et seq., as amended.
92 (15) "Medicare" means coverage under both Part A and B of Title XVIII of the Social
93 Security Act, 42 U.S.C. 1395 et seq., as amended.
94 (16) "Plan of operation" means the plan developed by the board in accordance with
95 Section 31A-29-105 and includes the articles, bylaws, and operating rules adopted by the board
96 under Section 31A-29-106 .
97 (17) "Pool" means the Utah Comprehensive Health Insurance Pool created in Section
98 31A-29-104 .
99 (18) "Pool fund" means the Comprehensive Health Insurance Pool Enterprise Fund
100 created in Section 31A-29-120 .
101 (19) "Pool policy" means a health insurance policy issued under this chapter.
102 (20) "Preexisting condition" has the same meaning as defined in Section 31A-1-301 .
103 (21) (a) "Resident" or "residency" means a person who is domiciled in this state.
104 (b) A resident retains residency if that resident leaves this state:
105 (i) to serve in the armed forces of the United States; or
106 (ii) for religious or educational purposes.
107 (22) "Third-party administrator" has the same meaning as provided in Section
108 31A-1-301 .
109 Section 2. Section 31A-29-104 is amended to read:
110 31A-29-104. Creation of pool -- Board of directors -- Appointment -- Terms --
111 Quorum -- Plan preparation.
112 (1) There is created the "Utah Comprehensive Health Insurance Pool," a nonprofit
113 entity within the Insurance Department.

114 (2) The pool shall be under the direction of a board of directors composed of 12
115 members.
116 (a) The governor shall appoint ten of the directors with the consent of the Senate as
117 follows:
118 (i) two representatives of health insurance companies or health service organizations;
119 (ii) one representative of a health maintenance organization;
120 (iii) one physician;
121 (iv) one representative of hospitals;
122 (v) one representative of the general public who is reasonably expected to qualify for
123 coverage under the pool;
124 (vi) one parent or spouse of such an individual;
125 (vii) one representative of the general public;
126 (viii) one representative of employers; and
127 (ix) one licensed producer with an accident and health line of authority.
128 (b) The board shall also include:
129 (i) the commissioner or the commissioner's designee; and
130 (ii) the executive director of the Department of Health or the executive director's
131 designee.
132 (3) (a) Except as required by Subsection (3)(b), as terms of current board members
133 expire, the governor shall appoint each new member or reappointed member to a four-year
134 term.
135 (b) Notwithstanding the requirements of Subsection (3)(a), the governor shall, at the
136 time of appointment or reappointment, adjust the length of terms to ensure that the terms of
137 board members are staggered so that approximately half of the board is appointed every two
138 years.
139 (4) When a vacancy occurs in the membership for any reason, the replacement shall be
140 appointed for the unexpired term in the same manner as the original appointment was made.
141 (5) (a) (i) Members who are not government employees shall receive no compensation

142 or benefits for their services, but may receive per diem and expenses incurred in the
143 performance of the member's official duties at the rates established by the Division of Finance
144 under Sections 63A-3-106 and 63A-3-107 from the Pool Fund.
145 (ii) Members may decline to receive per diem and expenses for their service.
146 (b) (i) State government officer and employee members who do not receive salary, per
147 diem, or expenses from their agency for their service may receive per diem and expenses
148 incurred in the performance of their official duties from the pool at the rates established by the
149 Division of Finance under Sections 63A-3-106 and 63A-3-107 .
150 (ii) A state government member who is a member because of their state government
151 position may not receive per diem or expenses for their service.
152 (iii) State government officer and employee members may decline to receive per diem
153 and expenses for their service.
154 (6) The board shall elect annually a chair and vice chair from its membership.
155 (7) Six board members are a quorum for the transaction of business.
156 (8) The action of a majority of the members of the quorum is the action of the board.
157 [(9) The board shall submit a plan of operation to the commissioner no later than
158 January 1, 1991.]
159 [(10) The sale of policies under this chapter shall commence on July 1, 1991, or as
160 soon thereafter as adequate funding for the coverage is available as determined by the
161 commissioner.]
162 Section 3. Section 31A-29-110 is amended to read:
163 31A-29-110. Pool administrator -- Selection -- Powers.
164 (1) The board shall select a pool administrator in accordance with Title 63, Chapter 56,
165 Utah Procurement Code. The board shall evaluate bids based on criteria established by the
166 board, which shall include:
167 (a) ability to manage medical expenses;
168 (b) proven ability to handle accident and health insurance;
169 (c) efficiency of claim paying procedures;

170 (d) marketing and underwriting;
171 (e) proven ability for managed care and quality assurance;
172 (f) provider contracting and discounts;
173 (g) pharmacy benefit management;
174 (h) an estimate of total charges for administering the pool; and
175 (i) ability to administer the pool in a cost-efficient manner.
176 (2) A pool administrator may be:
177 (a) a health insurer;
178 (b) a health maintenance organization;
179 (c) a third-party administrator; or
180 (d) any person or entity which has demonstrated ability to meet the criteria in
181 Subsection (1).
182 (3) (a) The pool administrator shall serve for a period of three years, with two one-year
183 extension options, subject to the terms, conditions, and limitations of the contract between the
184 board and the administrator.
185 (b) At least one year prior to the expiration of the contract between the board and the
186 pool administrator, the board shall invite all interested parties, including the current pool
187 administrator, to submit bids to serve as the pool administrator.
188 (c) Selection of the pool administrator for a succeeding period shall be made at least
189 six months prior to the expiration of [a three-year] the period of service [by the pool
190 administrator] under Subsection (3)(a).
191 (4) The pool administrator is responsible for all operational functions of the pool and
192 shall:
193 (a) have access to all nonpatient specific experience data, statistics, treatment criteria,
194 and guidelines compiled or adopted by the Medicaid program, the Public Employees Health
195 Plan, the Department of Health, or the Insurance Department, and which are not otherwise
196 declared by statute to be confidential;
197 (b) perform all marketing, eligibility, enrollment, member agreements, and

198 administrative claim payment functions relating to the pool;
199 (c) establish, administer, and operate a monthly premium billing procedure for
200 collection of premiums from enrollees;
201 (d) perform all necessary functions to assure timely payment of benefits to enrollees,
202 including:
203 (i) making information available relating to the proper manner of submitting a claim
204 for benefits to the pool administrator and distributing forms upon which submission shall be
205 made; and
206 (ii) evaluating the eligibility of each claim for payment by the pool;
207 (e) submit regular reports to the board regarding the operation of the pool, the
208 frequency, content, and form of which reports shall be determined by the board;
209 (f) following the close of each calendar year, determine net written and earned
210 premiums, the expense of administration, and the paid and incurred losses for the year and
211 submit a report of this information to the board, the commissioner, and the Division of Finance
212 on a form prescribed by the commissioner; and
213 (g) be paid as provided in the plan of operation for expenses incurred in the
214 performance of the pool administrator's services.
215 Section 4. Section 31A-29-111 is amended to read:
216 31A-29-111. Eligibility -- Limitations.
217 (1) (a) Except as provided in [Subsections] Subsection (1)(b) [and (2)], an individual
218 who is not HIPAA eligible is eligible for pool coverage if the individual:
219 (i) pays the established premium;
220 (ii) is a resident of this state; and
221 (iii) meets the health underwriting criteria under Subsection (5)(a).
222 (b) Notwithstanding Subsection (1)(a), an individual who is not HIPAA eligible is not
223 eligible for pool coverage if one or more of the following conditions apply:
224 (i) the individual is eligible for health care benefits under Medicaid or Medicare,
225 except as provided in Section 31A-29-112 ;

226 (ii) the individual has terminated coverage in the pool, unless:
227 (A) 12 months have elapsed since the termination date; or
228 (B) the individual demonstrates that creditable coverage has been involuntarily
229 terminated for any reason other than nonpayment of premium;
230 (iii) the pool has paid the maximum lifetime benefit to or on behalf of the individual;
231 (iv) the individual is an inmate of a public institution;
232 (v) the individual is eligible for a public health plan, as defined in federal regulations
233 adopted pursuant to 42 U.S.C. 300gg;
234 (vi) the individual's health condition does not meet the criteria established under
235 Subsection (5);
236 (vii) the individual is eligible for coverage under an employer group that offers health
237 insurance or a self-insurance arrangement to its eligible employees, dependents, or members as:
238 (A) an eligible employee;
239 (B) a dependent of an eligible employee; or
240 (C) a member;
241 (viii) the individual:
242 (A) has coverage substantially equivalent to a pool policy, as established by the board
243 in administrative rule, either as an insured or a covered dependent; or
244 (B) would be eligible for the substantially equivalent coverage if the individual elected
245 to obtain the coverage; [or]
246 (ix) at the time of application, the individual has not resided in Utah for at least 12
247 consecutive months preceding the date of application[.]; or
248 (x) the individual's employer pays any part of the individual's health insurance
249 premium, either as an insured or a dependent, for pool coverage.
250 (2) (a) Except as provided in [Subsections] Subsection [(1) and] (2)(b), an individual
251 who is HIPAA eligible is eligible for pool coverage if the individual:
252 (i) pays the established premium; and
253 (ii) is a resident of this state.

254 (b) Notwithstanding [Subsections] Subsection [(1) and] (2)(a), a HIPAA eligible
255 individual is not eligible for pool coverage if one or more of the following conditions apply:
256 (i) the individual is eligible for health care benefits under Medicaid or Medicare,
257 except as provided in Section 31A-29-112 ;
258 (ii) the individual is eligible for a public health plan, as defined in federal regulations
259 adopted pursuant to 42 U.S.C. 300gg;
260 (iii) the individual is covered under any other health insurance;
261 (iv) the individual is eligible for coverage under an employer group that offers health
262 insurance or self-insurance arrangements to its eligible employees, dependents, or members as:
263 (A) an eligible employee;
264 (B) a dependent of an eligible employee; or
265 (C) a member;
266 (v) the pool has paid the maximum lifetime benefit to or on behalf of the individual;
267 [or]
268 (vi) the individual is an inmate of a public institution[.]; or
269 (vii) the individual's employer pays any part of the individual's health insurance
270 premium, either as an insured or a dependent, for pool coverage.
271 (3) (a) Notwithstanding Subsection (1)(b)(ix), if otherwise eligible under Subsection
272 (1)(a), an individual whose health insurance coverage from a state high risk pool with similar
273 coverage is terminated because of nonresidency in another state is eligible for coverage under
274 the pool subject to the conditions of Subsections (1)(b)(i) through (viii).
275 (b) Coverage sought under Subsection (3)(a) shall be applied for within 63 days after
276 the termination date of the previous high risk pool coverage.
277 (c) The effective date of this state's pool coverage shall be the date of termination of
278 the previous high risk pool coverage.
279 (d) The waiting period of an individual with a preexisting condition applying for
280 coverage under this chapter shall be waived:
281 (i) to the extent to which the waiting period was satisfied under a similar plan from

282 another state; and
283 (ii) if the other state's benefit limitation was not reached.
284 (4) (a) If an eligible individual applies for pool coverage within 30 days of being
285 denied coverage by an individual carrier, the effective date for pool coverage shall be no later
286 than the first day of the month following the date of submission of the completed insurance
287 application to the carrier.
288 (b) Notwithstanding Subsection (4)(a), for individuals eligible for coverage under
289 Subsection (3), the effective date shall be the date of termination of the previous high risk pool
290 coverage.
291 (5) (a) The board shall establish and adjust, as necessary, health underwriting criteria
292 based on:
293 (i) health condition; and
294 (ii) expected claims so that the expected claims are anticipated to remain within
295 available funding.
296 (b) The board, with approval of the commissioner, may contract with one or more
297 providers under Title 63, Chapter 56, Utah Procurement Code, to develop underwriting criteria
298 under Subsection (5)(a).
299 (c) If an individual is denied coverage by the pool under the criteria established in
300 Subsection (5)(a), the pool shall issue a certificate of insurability to the individual for coverage
301 under Subsection 31A-30-108 (3).
302 Section 5. Section 31A-29-113 is amended to read:
303 31A-29-113. Benefits -- Additional types of pool insurance -- Preexisting
304 conditions -- Waiver -- Maximum benefits.
305 (1) (a) The pool policy shall pay for eligible medical expenses rendered or furnished
306 for the diagnoses or treatment of illness or injury that:
307 (i) exceed the deductible and copayment amounts applicable under Section
308 31A-29-114 ; and
309 (ii) are not otherwise limited or excluded.

310 (b) Eligible medical expenses are the allowed charges established by the board for the
311 health care services and items rendered during times for which benefits are extended under the
312 pool policy.
313 (2) The coverage to be issued by the pool, its schedule of benefits, exclusions, and
314 other limitations shall be established by the board.
315 (3) The commissioner shall approve the benefit package developed by the board to
316 ensure its compliance with this chapter.
317 (4) The pool shall offer at least one benefit plan through a managed care program as
318 authorized under Section 31A-29-106 .
319 (5) This chapter may not be construed to prohibit the pool from issuing additional types
320 of pool policies with different types of benefits which in the opinion of the board may be of
321 benefit to the citizens of Utah.
322 (6) (a) The board shall design and require an administrator to employ cost containment
323 measures and requirements including preadmission certification and concurrent inpatient
324 review for the purpose of making the pool more cost effective.
325 (b) Sections 31A-22-617 and 31A-22-618 do not apply to coverage issued under this
326 chapter.
327 (7) (a) A pool policy may contain provisions under which coverage for a preexisting
328 condition is excluded if:
329 (i) the exclusion relates to a condition, regardless of the cause of the condition, for
330 which medical advice, diagnosis, care, or treatment was recommended or received, from an
331 individual licensed or similarly authorized to provide such services under state law and
332 operating within the scope of practice authorized by state law, within the six-month period
333 ending on the effective date of plan coverage; and
334 (ii) except as provided in Subsection (8), the exclusion extends for a period no longer
335 than the six-month period following the effective date of plan coverage for a given individual.
336 (b) Subsection (7)(a) does not apply to a HIPAA eligible individual.
337 (8) (a) A pool policy may contain provisions under which coverage for a preexisting

338 pregnancy is excluded during a ten-month period following the effective date of plan coverage
339 for a given individual.
340 (b) Subsection (8)(a) does not apply to a HIPAA eligible individual.
341 (9) (a) The pool will waive the preexisting condition exclusion described in
342 Subsections (7)(a) and (8)(a) for an individual that is changing health coverage to the pool, to
343 the extent to which similar exclusions have been satisfied under any prior health insurance
344 coverage if the individual applies not later than 63 days following the date of involuntary
345 termination, other than for nonpayment of premiums, from health coverage.
346 (b) If this Subsection (9) applies, coverage in the pool shall be effective from the date
347 on which the prior coverage was terminated.
348 (10) Covered benefits available from the pool may not exceed a [$1,000,000]
349 $1,500,000 lifetime maximum, which includes a per enrollee calendar year maximum
350 established by the board.
351 Section 6. Section 31A-29-117 is amended to read:
352 31A-29-117. Premium rates.
353 (1) (a) Premium charges for coverage under the pool may not be unreasonable in
354 relation to:
355 (i) the benefits provided;
356 (ii) the risk experience; and
357 (iii) the reasonable expenses provided in the coverage.
358 (b) Separate schedules of premium rates based on age and other appropriate
359 demographic characteristics may apply for individual risks.
360 (2) [A small] Small employer [carrier] carriers, as defined in Section [ 31A-1-301 ]
361 31A-30-103 , shall annually inform the commissioner by [April] February 1 of the carrier's:
362 (a) small employer index premium rates as of [March] January 1 of the current and
363 preceding year; and
364 (b) average percentage change in the index premium rate as of [March] January 1, of
365 the current and preceding year.

366 (3) (a) Premium rates may be adjusted by the board on a biannual basis, for an effective
367 date of January 1 and July 1.
368 (b) In adjusting premium rates, the board shall:
369 (i) consider the average increase in small employer index rates for the five largest small
370 employer carriers submitted under Subsection (2); and
371 (ii) be subject to Subsection (1).
372 (4) The board may establish a premium scale based on income. The highest rate may
373 not exceed the expected claims and expenses for the individual.
374 (5) If an individual is HIPAA eligible, the maximum premium rate for that individual
375 may not exceed the amount permitted under HIPAA.
376 (6) All rates and rate schedules shall be submitted by the board to the commissioner for
377 approval.
378 Section 7. Section 31A-29-119 is amended to read:
379 31A-29-119. Benefit reduction.
380 (1) The pool shall be the last payer of benefits whenever any other benefit is available.
381 (2) Benefits otherwise payable under pool coverage shall be reduced by:
382 (a) all amounts paid or payable through any other health insurance or any limited health
383 benefit plan, including a self-insured plan;
384 (b) all hospital and medical expense benefits paid or payable under any workers'
385 compensation coverage, automobile medical payment, or liability insurance, whether provided
386 on the basis of fault or no-fault; and