Second Substitute H.B. 188

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Wed, Mar 4, 2009 at 4:47 PM by rday. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Thu, Mar 5, 2009 at 3:45 PM by rday. -->

Senator Gregory S. Bell proposes the following substitute bill:

1 HEALTH SYSTEM REFORM - INSURANCE
2 MARKET
3 2009 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: David Clark
6 Senate Sponsor: Gregory S. Bell
7 Cosponsors:
8 Roger E. Barrus
9 Ron Bigelow
10 Bradley M. DawBrad L. Dee
Ben C. Ferry
Kevin S. Garn
Bradley G. LastDavid Litvack
Merlynn T. Newbold
Patrick Painter 11
12 LONG TITLE
13 General Description:
14 This bill amends the Insurance Code and the Governor's Office of Economic
15 Development Code to expand access to the health insurance market, increase market
16 flexibility, and provide greater transparency in the health insurance market.
17 Highlighted Provisions:
18 This bill:
19 . prohibits balanced billing by certain health care providers in certain circumstances;
20 . revises the basic benefit plan used for consumer comparison of health benefit
21 products;
22 . requires the Insurance Department to include in its annual market report a summary
23 of the types of plans sold through the Internet portal, including market penetration
24 of mandate lite products;
25 . allows insurers to offer lower cost health insurance products that do not include
26 certain state mandates in the individual market, the small employer group market,

27 and in the conversion market;
28 . creates the Utah NetCare Plan, a low cost health benefit plan as an alternative to
29 current federal COBRA, state mini-COBRA, and conversion products;
30 . requires health insurance brokers and producers to disclose their commissions and
31 compensation to their customers prior to selling a health benefit plan;
32 . modifies the number and type of products an insurer must offer in the small
33 employer group market and the individual market;
34 . establishes a defined contribution arrangement market available on the Internet
35 portal, which:
36 . beginning January 1, 2010 is available to small employer groups;
37 . offers a range of health benefit plan choices to an employer's eligible
38 employees;
39 . beginning January 1, 2012, is available to eligible large employer groups; and
40 . beginning January 1, 2012, will offer a wider range of choices of health benefit
41 plans to employees;
42 . establishes a board within the Insurance Department that is given the responsibility
43 to develop a risk adjustment mechanism that will apportion risk among the insurers
44 participating in the Internet portal defined contribution market to protect insurers
45 from adverse risk selection;
46 . requires insurers who offer health benefit plans on the Internet portal to provide
47 greater transparency and disclose information about the plan benefits, provider
48 networks, wellness programs, claim payment practices, and solvency ratings;
49 . establishes a process for a consumer to compare health plan features on the Internet
50 portal and to enroll in a health benefit plan from the Internet portal;
51 . requires the Office of Consumer Health Services to convene insurers and health care
52 providers to monitor and report to the Health Reform Task Force and to the
53 Business and Labor Interim Committee regarding progress towards expanding
54 access to the defined contribution market, greater choice in the market, and payment
55 reform demonstration projects;
56 . establishes limited rulemaking authority for the Office of Consumer Health Services
57 to:

58 . assist employers and insurance carriers with interacting with the Internet portal;
59 and
60 . facilitate the receipt and payment of health plan premium payments from
61 multiple sources;
62 . authorizes the Office of Consumer Health Services to establish a fee to cover the
63 transaction cost associated with the Internet portal functions such as sending and
64 processing an application or processing multiple premium payment sources; and
65 . re-authorizes the Health Reform Task Force for one year.
66 Monies Appropriated in this Bill:
67 None
68 Other Special Clauses:
69 This bill provides an immediate effective date.
70 This bill repeals the Health Reform Task Force on December 30, 2009.
71 Utah Code Sections Affected:
72 AMENDS:
73 31A-8-501, as last amended by Laws of Utah 2004, Chapters 90, 229, and 367
74 31A-22-613.5, as last amended by Laws of Utah 2008, Chapters 241 and 345
75 31A-22-617, as last amended by Laws of Utah 2008, Chapter 3
76 31A-22-722, as last amended by Laws of Utah 2006, Chapter 188
77 31A-22-723, as last amended by Laws of Utah 2008, Chapters 241 and 250
78 31A-23a-401, as last amended by Laws of Utah 2007, Chapter 307
79 31A-23a-501, as renumbered and amended by Laws of Utah 2003, Chapter 298
80 31A-30-102, as last amended by Laws of Utah 2008, Chapter 345
81 31A-30-103, as last amended by Laws of Utah 2007, Chapter 307
82 31A-30-104, as last amended by Laws of Utah 2004, Chapter 108
83 31A-30-107, as last amended by Laws of Utah 2004, Chapter 329
84 31A-30-109, as last amended by Laws of Utah 1997, Chapter 265
85 31A-30-112, as last amended by Laws of Utah 2008, Chapter 345
86 63M-1-2504, as enacted by Laws of Utah 2008, Chapter 383
87 ENACTS:
88 31A-22-618.5, Utah Code Annotated 1953

89 31A-22-724, Utah Code Annotated 1953
90 31A-30-201, Utah Code Annotated 1953
91 31A-30-202, Utah Code Annotated 1953
92 31A-30-203, Utah Code Annotated 1953
93 31A-30-204, Utah Code Annotated 1953
94 31A-30-205, Utah Code Annotated 1953
95 31A-30-206, Utah Code Annotated 1953
96 31A-30-207, Utah Code Annotated 1953
97 31A-30-208, Utah Code Annotated 1953
98 31A-42-101, Utah Code Annotated 1953
99 31A-42-102, Utah Code Annotated 1953
100 31A-42-103, Utah Code Annotated 1953
101 31A-42-201, Utah Code Annotated 1953
102 31A-42-202, Utah Code Annotated 1953
103 31A-42-203, Utah Code Annotated 1953
104 31A-42-204, Utah Code Annotated 1953
105 63M-1-2506, Utah Code Annotated 1953
106 Uncodified Material Affected:
107 ENACTS UNCODIFIED MATERIAL
108
109 Be it enacted by the Legislature of the state of Utah:
110 Section 1. Section 31A-8-501 is amended to read:
111 31A-8-501. Access to health care providers.
112 (1) As used in this section:
113 (a) "Class of health care provider" means a health care provider or a health care facility
114 regulated by the state within the same professional, trade, occupational, or certification
115 category established under Title 58, Occupations and Professions, or within the same facility
116 licensure category established under Title 26, Chapter 21, Health Care Facility Licensing and
117 Inspection Act.
118 (b) "Covered health care services" or "covered services" means health care services for
119 which an enrollee is entitled to receive under the terms of a health maintenance organization

120 contract.
121 (c) "Credentialed staff member" means a health care provider with active staff
122 privileges at an independent hospital or federally qualified health center.
123 (d) "Federally qualified health center" means as defined in the Social Security Act, 42
124 U.S.C. Sec. 1395x.
125 (e) "Independent hospital" means a general acute hospital or a critical access hospital
126 that:
127 (i) is either:
128 (A) located 20 miles or more from any other general acute hospital or critical access
129 hospital; or
130 (B) licensed as of January 1, 2004;
131 (ii) is licensed pursuant to Title 26, Chapter 21, Health Care Facility Licensing and
132 Inspection Act; and
133 (iii) is controlled by a board of directors of which 51% or more reside in the county
134 where the hospital is located and:
135 (A) the board of directors is ultimately responsible for the policy and financial
136 decisions of the hospital; or
137 (B) the hospital is licensed for 60 or fewer beds and is not owned, in whole or in part,
138 by an entity that owns or controls a health maintenance organization if the hospital is a
139 contracting facility of the organization.
140 (f) "Noncontracting provider" means an independent hospital, federally qualified health
141 center, or credentialed staff member who has not contracted with a health maintenance
142 organization to provide health care services to enrollees of the organization.
143 (2) Except for a health maintenance organization which is under the common
144 ownership or control of an entity with a hospital located within ten paved road miles of an
145 independent hospital, a health maintenance organization shall pay for covered health care
146 services rendered to an enrollee by an independent hospital, a credentialed staff member at an
147 independent hospital, or a credentialed staff member at his local practice location if:
148 (a) the enrollee:
149 (i) lives or resides within 30 paved road miles of the independent hospital; or
150 (ii) if Subsection (2)(a)(i) does not apply, lives or resides in closer proximity to the

151 independent hospital than a contracting hospital;
152 (b) the independent hospital is located prior to December 31, 2000 in a county with a
153 population density of less than 100 people per square mile, or the independent hospital is
154 located in a county with a population density of less than 30 people per square mile; and
155 (c) the enrollee has complied with the prior authorization and utilization review
156 requirements otherwise required by the health maintenance organization contract.
157 (3) A health maintenance organization shall pay for covered health care services
158 rendered to an enrollee at a federally qualified health center if:
159 (a) the enrollee:
160 (i) lives or resides within 30 paved road miles of the federally qualified health center;
161 or
162 (ii) if Subsection (3)(a)(i) does not apply, lives or resides in closer proximity to the
163 federally qualified health center than a contracting provider;
164 (b) the federally qualified health center is located in a county with a population density
165 of less than 30 people per square mile; and
166 (c) the enrollee has complied with the prior authorization and utilization review
167 requirements otherwise required by the health maintenance organization contract.
168 (4) (a) A health maintenance organization shall reimburse a noncontracting provider or
169 the enrollee for covered services rendered pursuant to Subsection (2) a like dollar amount as it
170 pays to contracting providers under a noncapitated arrangement for comparable services.
171 (b) A health maintenance organization shall reimburse a federally qualified health
172 center or the enrollee for covered services rendered pursuant to Subsection (3) a like amount as
173 paid by the health maintenance organization under a noncapitated arrangement for comparable
174 services to a contracting provider in the same class of health care providers as the provider who
175 rendered the service.
176 (5) (a) A noncontracting independent hospital may not balance bill a patient when the
177 health maintenance organization reimburses a noncontracting independent hospital or an
178 enrollee in accordance with Subsection (4)(a).
179 (b) A noncontracting federally qualified health center may not balance bill a patient
180 when the federally qualified health center or the enrollee receives reimbursement in accordance
181 with Subsection (4)(b).

182 [(5)] (6) A noncontracting provider may only refer an enrollee to another
183 noncontracting provider so as to obligate the enrollee's health maintenance organization to pay
184 for the resulting services if:
185 (a) the noncontracting provider making the referral or the enrollee has received prior
186 authorization from the organization for the referral; or
187 (b) the practice location of the noncontracting provider to whom the referral is made:
188 (i) is located in a county with a population density of less than 25 people per square
189 mile; and
190 (ii) is within 30 paved road miles of:
191 (A) the place where the enrollee lives or resides; or
192 (B) the independent hospital or federally qualified health center at which the enrollee
193 may receive covered services pursuant to Subsection (2) or (3).
194 [(6)] (7) Notwithstanding this section, a health maintenance organization may contract
195 directly with an independent hospital, federally qualified health center, or credentialed staff
196 member.
197 [(7)] (8) (a) A health maintenance organization that violates any provision of this
198 section is subject to sanctions as determined by the commissioner in accordance with Section
199 31A-2-308 .
200 (b) Violations of this section include:
201 (i) failing to provide the notice required by Subsection [(7)] (8)(d) by placing the notice
202 in any health maintenance organization's provider list that is supplied to enrollees, including
203 any website maintained by the health maintenance organization;
204 (ii) failing to provide notice of an enrolles's rights under this section when:
205 (A) an enrollee makes personal contact with the health maintenance organization by
206 telephone, electronic transaction, or in person; and
207 (B) the enrollee inquires about his rights to access an independent hospital or federally
208 qualified health center; and
209 (iii) refusing to reprocess or reconsider a claim, initially denied by the health
210 maintenance organization, when the provisions of this section apply to the claim.
211 (c) The commissioner shall, pursuant to Chapter 2, Part 2, Duties and Powers of
212 Commissioner:

213 (i) adopt rules as necessary to implement this section;
214 (ii) identify in rule:
215 (A) the counties with a population density of less than 100 people per square mile;
216 (B) independent hospitals as defined in Subsection (1)(e); and
217 (C) federally qualified health centers as defined in Subsection (1)(d).
218 (d) (i) A health maintenance organization shall:
219 (A) use the information developed by the commissioner under Subsection [(7)] (8)(c)
220 to identify the rural counties, independent hospitals, and federally qualified health centers that
221 are located in the health maintenance organization's service area; and
222 (B) include the providers identified under Subsection [(7)] (8)(d)(i)(A) in the notice
223 required in Subsection [(7)] (8)(d)(ii).
224 (ii) The health maintenance organization shall provide the following notice, in bold
225 type, to enrollees as specified under Subsection [(7)] (8)(b)(i), and shall keep the notice
226 current:
227 "You may be entitled to coverage for health care services from the following non-HMO
228 contracted providers if you live or reside within 30 paved road miles of the listed providers, or
229 if you live or reside in closer proximity to the listed providers than to your HMO contracted
230 providers:
231 This list may change periodically, please check on our website or call for verification.
232 Please be advised that if you choose a noncontracted provider you will be responsible for any
233 charges not covered by your health insurance plan.
234 If you have questions concerning your rights to see a provider on this list you may
235 contact your health maintenance organization at ________. If the HMO does not resolve your
236 problem, you may contact the Office of Consumer Health Assistance in the Insurance
237 Department, toll free."
238 (e) A person whose interests are affected by an alleged violation of this section may
239 contact the Office of Consumer Health Assistance and request assistance, or file a complaint as
240 provided in Section 31A-2-216 .
241 Section 2. Section 31A-22-613.5 is amended to read:
242 31A-22-613.5. Price and value comparisons of health insurance -- Basic Health
243 Care Plan.

244 (1) (a) Except as provided in Subsection (1)(b), this section applies to all health
245 insurance policies and health maintenance organization contracts.
246 (b) Subsection [(3)] (2) applies to:
247 (i) all health insurance policies and health maintenance organization contracts; and
248 (ii) coverage offered to state employees under Subsection 49-20-202 (1)(a).
249 [(2) The commissioner shall adopt a Basic Health Care Plan consistent with this
250 section to be offered under the open enrollment provisions of Chapter 30, Individual, Small
251 Employer, and Group Health Insurance Act.]
252 [(3)] (2) (a) The commissioner shall promote informed consumer behavior and
253 responsible health insurance and health plans by requiring an insurer issuing health insurance
254 policies or health maintenance organization contracts to provide to all enrollees, prior to
255 enrollment in the health benefit plan or health insurance policy, written disclosure of:
256 (i) restrictions or limitations on prescription drugs and biologics including the use of a
257 formulary and generic substitution;
258 (ii) coverage limits under the plan; and
259 (iii) any limitation or exclusion of coverage including:
260 (A) a limitation or exclusion for a secondary medical condition related to a limitation
261 or exclusion from coverage; and
262 (B) beginning July 1, 2009, easily understood examples of a limitation or exclusion of
263 coverage for a secondary medical condition.
264 (b) In addition to the requirements of Subsections [(3)] (2)(a), (d), and (e) an insurer
265 described in Subsection [(3)] (2)(a) shall file the written disclosure required by this Subsection
266 [(3)] (2) to the commissioner:
267 (i) upon commencement of operations in the state; and
268 (ii) anytime the insurer amends any of the following described in Subsection [(3)(a)]
269 (2):
270 (A) treatment policies;
271 (B) practice standards;
272 (C) restrictions;
273 (D) coverage limits of the insurer's health benefit plan or health insurance policy; or
274 (E) limitations or exclusions of coverage including a limitation or exclusion for a

275 secondary medical condition related to a limitation or exclusion of the insurer's health
276 insurance plan.
277 (c) The commissioner may adopt rules to implement the disclosure requirements of this
278 Subsection [(3)] (2), taking into account:
279 (i) business confidentiality of the insurer;
280 (ii) definitions of terms;
281 (iii) the method of disclosure to enrollees; and
282 (iv) limitations and exclusions.
283 (d) If under Subsection [(3)] (2)(a)(i) a formulary is used, the insurer shall make
284 available to prospective enrollees and maintain evidence of the fact of the disclosure of:
285 (i) the drugs included;
286 (ii) the patented drugs not included;
287 (iii) any conditions that exist as a precedent to coverage; and
288 (iv) any exclusion from coverage for secondary medical conditions that may result
289 from the use of an excluded drug.
290 [(e) Before December 1, 2008, insurers subject to this Subsection (3) shall report to the
291 Legislature's Health and Human Services Interim Committee and Business and Labor Interim
292 Committee, either collectively or independently regarding insurer efforts to inform enrollees of
293 any limitation of coverage or exclusion for a secondary medical condition when an enrollee, or
294 someone on the enrollee's behalf, contacts the insurer for pre-authorization of a procedure or
295 use of a drug that is excluded or limited from coverage.]
296 [(f)] (e) (i) The department shall develop examples of limitations or exclusions of a
297 secondary medical condition that an insurer may use under Subsection [(3)] (2)(a)(iii).
298 (ii) Examples of a limitation or exclusion of coverage provided under Subsection [(3)]
299 (2)(a)(iii) or otherwise are for illustrative purposes only, and the failure of a particular fact
300 situation to fall within the description of an example does not, by itself, support a finding of
301 coverage.
302 (3) An insurer who offers a health care plan under Chapter 30, Individual, Small
303 Employer, and Group Health Insurance Act, shall:
304 (a) until January 1, 2010, offer the basic health care plan described in Subsection (4)
305 subject to the open enrollment provisions of Chapter 30, Individual, Small Employer, and

306 Group Health Insurance Act; and
307 (b) beginning January 1, 2010, offer a basic health care plan subject to the open
308 enrollment provisions of Chapter 30, Individual, Small Employer, and Group Health Insurance
309 Act, that:
310 (i) is a federally qualified high deductible health plan;
311 (ii) has the lowest deductible that qualifies under a federally qualified high deductible
312 health plan, as adjusted by federal law; and
313 (iii) does not exceed an annual out of pocket maximum equal to three times the amount
314 of the annual deductible.
315 (4) [The] Until January 1, 2010 the Basic Health Care Plan [adopted by the
316 commissioner] under this section shall provide for:
317 (a) a lifetime maximum benefit per person not [to exceed] less than $1,000,000;
318 (b) an annual maximum benefit per person not less than $250,000;
319 (c) an out-of-pocket maximum of cost-sharing features:
320 (i) including:
321 (A) a deductible;
322 (B) a copayment; and
323 (C) coinsurance;
324 (ii) not to exceed $5,000 per person; and
325 (iii) for family coverage, not to exceed three times the per person out-of-pocket
326 maximum provided in Subsection (4)(c)(ii);
327 (d) in relation to its cost-sharing features:
328 (i) a deductible of:
329 (A) not less than [$1,500] $1,000 per person for major medical expenses; and
330 (B) for family coverage, not to exceed three times the per person deductible for major
331 medical expenses under Subsection (4)(d)(i)(A); and
332 (ii) (A) a copayment of not less than:
333 (I) $25 per visit for office services; and
334 (II) $150 per visit to an emergency room; or
335 (B) coinsurance of not less than:
336 (I) 20% per visit for office services; and

337 (II) 20% per visit for an emergency room; and
338 (e) in relation to cost-sharing features for prescription drugs:
339 (i) (A) a deductible not to exceed $1,000 per person; and
340 (B) for family coverage, not to exceed three times the per person deductible provided
341 in Subsection (4)(e)(i)(A); and
342 (ii) (A) a copayment of not less than:
343 (I) the lesser of the cost of the prescription drug or $15 for the lowest level of cost for
344 prescription drugs;
345 (II) the lesser of the cost of the prescription drug or $25 for the second level of cost for
346 prescription drugs; and
347 (III) the lesser of the cost of the prescription drug or $35 for the highest level of cost
348 for prescription drugs; or
349 (B) coinsurance of not less than:
350 (I) the lesser of the cost of the prescription drug or 25% for the lowest level of cost for
351 prescription drugs;
352 (II) the lesser of the cost of the prescription drug or 40% for the second level of cost for
353 prescription drugs; and
354 (III) the lesser of the cost of the prescription drug or 60% for the highest level of cost
355 for prescription drugs.
356 (5) The department shall include in its yearly insurance market report information
357 about:
358 (a) the types of health benefit plans sold on the Internet portal created in Section
359 63M-1-2504 ;
360 (b) the number of insurers participating in the defined contribution market on the
361 Internet portal;
362 (c) the number of employers and covered lives in the defined contribution market; and
363 (d) the number of lives covered by health benefit plans that do not include state
364 mandates as permitted by Subsection 31A-30-109 (2).
365 (6) The commissioner may request information from an insurer to verify the
366 information submitted by the insurer to the Internet portal under Subsection 63M-1-2506 (4).
367 Section 3. Section 31A-22-617 is amended to read:

368 31A-22-617. Preferred provider contract provisions.
369 Health insurance policies may provide for insureds to receive services or
370 reimbursement under the policies in accordance with preferred health care provider contracts as
371 follows:
372 (1) Subject to restrictions under this section, any insurer or third party administrator
373 may enter into contracts with health care providers as defined in Section 78B-3-403 under
374 which the health care providers agree to supply services, at prices specified in the contracts, to
375 persons insured by an insurer.
376 (a) (i) A health care provider contract may require the health care provider to accept the
377 specified payment as payment in full, relinquishing the right to collect additional amounts from
378 the insured person.
379 (ii) In any dispute involving a provider's claim for reimbursement, the same shall be
380 determined in accordance with applicable law, the provider contract, the subscriber contract,
381 and the insurer's written payment policies in effect at the time services were rendered.
382 (iii) If the parties are unable to resolve their dispute, the matter shall be subject to
383 binding arbitration by a jointly selected arbitrator. Each party is to bear its own expense except
384 the cost of the jointly selected arbitrator shall be equally shared. This Subsection (1)(a)(iii)
385 does not apply to the claim of a general acute hospital to the extent it is inconsistent with the
386 hospital's provider agreement.
387 (iv) An organization may not penalize a provider solely for pursuing a claims dispute
388 or otherwise demanding payment for a sum believed owing.
389 (v) If an insurer permits another entity with which it does not share common ownership
390 or control to use or otherwise lease one or more of the organization's networks of participating
391 providers, the organization shall ensure, at a minimum, that the entity pays participating
392 providers in accordance with the same fee schedule and general payment policies as the
393 organization would for that network.
394 (b) The insurance contract may reward the insured for selection of preferred health care
395 providers by:
396 (i) reducing premium rates;
397 (ii) reducing deductibles;
398 (iii) coinsurance;

399 (iv) other copayments; or
400 (v) any other reasonable manner.
401 (c) If the insurer is a managed care organization, as defined in Subsection
402 31A-27a-403 (1)(f):
403 (i) the insurance contract and the health care provider contract shall provide that in the
404 event the managed care organization becomes insolvent, the rehabilitator or liquidator may:
405 (A) require the health care provider to continue to provide health care services under
406 the contract until the earlier of:
407 (I) 90 days after the date of the filing of a petition for rehabilitation or the petition for
408 liquidation; or
409 (II) the date the term of the contract ends; and
410 (B) subject to Subsection (1)(c)(v), reduce the fees the provider is otherwise entitled to
411 receive from the managed care organization during the time period described in Subsection
412 (1)(c)(i)(A);
413 (ii) the provider is required to:
414 (A) accept the reduced payment under Subsection (1)(c)(i)(B) as payment in full; and
415 (B) relinquish the right to collect additional amounts from the insolvent managed care
416 organization's enrollee, as defined in Subsection 31A-27a-403 (1)(b);
417 (iii) if the contract between the health care provider and the managed care organization
418 has not been reduced to writing, or the contract fails to contain the language required by
419 Subsection (1)(c)(i), the provider may not collect or attempt to collect from the enrollee:
420 (A) sums owed by the insolvent managed care organization; or
421 (B) the amount of the regular fee reduction authorized under Subsection (1)(c)(i)(B);
422 (iv) the following may not bill or maintain any action at law against an enrollee to
423 collect sums owed by the insolvent managed care organization or the amount of the regular fee
424 reduction authorized under Subsection (1)(c)(i)(B):
425 (A) a provider;
426 (B) an agent;
427 (C) a trustee; or
428 (D) an assignee of a person described in Subsections (1)(c)(iv)(A) through (C); and
429 (v) notwithstanding Subsection (1)(c)(i):

430 (A) a rehabilitator or liquidator may not reduce a fee by less than 75% of the provider's
431 regular fee set forth in the contract; and
432 (B) the enrollee shall continue to pay the copayments, deductibles, and other payments
433 for services received from the provider that the enrollee was required to pay before the filing
434 of:
435 (I) a petition for rehabilitation; or
436 (II) a petition for liquidation.
437 (2) (a) Subject to Subsections (2)(b) through (2)(f), an insurer using preferred health
438 care provider contracts shall pay for the services of health care providers not under the contract,
439 unless the illnesses or injuries treated by the health care provider are not within the scope of the
440 insurance contract. As used in this section, "class of health care providers" means all health
441 care providers licensed or licensed and certified by the state within the same professional,
442 trade, occupational, or facility licensure or licensure and certification category established
443 pursuant to Titles 26, Utah Health Code and 58, Occupations and Professions.
444 (b) [When] (i) Until July 1, 2012, when the insured receives services from a health
445 care provider not under contract, the insurer shall reimburse the insured for at least 75% of the
446 average amount paid by the insurer for comparable services of preferred health care providers
447 who are members of the same class of health care providers.
448 (ii) Notwithstanding Subsection (2)(b)(i), an insurer may offer a health plan that
449 complies with the provisions of Subsection 31A-22-618.5 (3).
450 (iii) The commissioner may adopt a rule dealing with the determination of what
451 constitutes 75% of the average amount paid by the insurer under Subsection (2)(b)(i) for
452 comparable services of preferred health care providers who are members of the same class of
453 health care providers.
454 (c) When reimbursing for services of health care providers not under contract, the
455 insurer may make direct payment to the insured.
456 (d) Notwithstanding Subsection (2)(b), an insurer using preferred health care provider
457 contracts may impose a deductible on coverage of health care providers not under contract.
458 (e) When selecting health care providers with whom to contract under Subsection (1),
459 an insurer may not unfairly discriminate between classes of health care providers, but may
460 discriminate within a class of health care providers, subject to Subsection (7).

461 (f) For purposes of this section, unfair discrimination between classes of health care
462 providers shall include:
463 (i) refusal to contract with class members in reasonable proportion to the number of
464 insureds covered by the insurer and the expected demand for services from class members; and
465 (ii) refusal to cover procedures for one class of providers that are:
466 (A) commonly utilized by members of the class of health care providers for the
467 treatment of illnesses, injuries, or conditions;
468 (B) otherwise covered by the insurer; and
469 (C) within the scope of practice of the class of health care providers.
470 (3) Before the insured consents to the insurance contract, the insurer shall fully disclose
471 to the insured that it has entered into preferred health care provider contracts. The insurer shall
472 provide sufficient detail on the preferred health care provider contracts to permit the insured to
473 agree to the terms of the insurance contract. The insurer shall provide at least the following
474 information:
475 (a) a list of the health care providers under contract and if requested their business
476 locations and specialties;
477 (b) a description of the insured benefits, including any deductibles, coinsurance, or
478 other copayments;
479 (c) a description of the quality assurance program required under Subsection (4); and
480 (d) a description of the adverse benefit determination procedures required under
481 Subsection (5).
482 (4) (a) An insurer using preferred health care provider contracts shall maintain a quality
483 assurance program for assuring that the care provided by the health care providers under
484 contract meets prevailing standards in the state.
485 (b) The commissioner in consultation with the executive director of the Department of
486 Health may designate qualified persons to perform an audit of the quality assurance program.
487 The auditors shall have full access to all records of the organization and its health care
488 providers, including medical records of individual patients.
489 (c) The information contained in the medical records of individual patients shall
490 remain confidential. All information, interviews, reports, statements, memoranda, or other data
491 furnished for purposes of the audit and any findings or conclusions of the auditors are

492 privileged. The information is not subject to discovery, use, or receipt in evidence in any legal
493 proceeding except hearings before the commissioner concerning alleged violations of this
494 section.
495 (5) An insurer using preferred health care provider contracts shall provide a reasonable
496 procedure for resolving complaints and adverse benefit determinations initiated by the insureds
497 and health care providers.
498 (6) An insurer may not contract with a health care provider for treatment of illness or
499 injury unless the health care provider is licensed to perform that treatment.
500 (7) (a) A health care provider or insurer may not discriminate against a preferred health
501 care provider for agreeing to a contract under Subsection (1).
502 (b) Any health care provider licensed to treat any illness or injury within the scope of
503 the health care provider's practice, who is willing and able to meet the terms and conditions
504 established by the insurer for designation as a preferred health care provider, shall be able to
505 apply for and receive the designation as a preferred health care provider. Contract terms and
506 conditions may include reasonable limitations on the number of designated preferred health
507 care providers based upon substantial objective and economic grounds, or expected use of
508 particular services based upon prior provider-patient profiles.
509 (8) Upon the written request of a provider excluded from a provider contract, the
510 commissioner may hold a hearing to determine if the insurer's exclusion of the provider is
511 based on the criteria set forth in Subsection (7)(b).
512 (9) Insurers are subject to the provisions of Sections 31A-22-613.5 , 31A-22-614.5 , and
513 31A-22-618 .
514 (10) Nothing in this section is to be construed as to require an insurer to offer a certain
515 benefit or service as part of a health benefit plan.
516 (11) This section does not apply to catastrophic mental health coverage provided in
517 accordance with Section 31A-22-625 .
518 Section 4. Section 31A-22-618.5 is enacted to read:
519 31A-22-618.5. Health plan offerings.
520 (1) The purpose of this section is to increase the range of health benefit plans available
521 in the small group, small employer group, large group, and individual insurance markets.
522 (2) A health maintenance organization that is subject to Chapter 8, Health Maintenance

523 Organizations and Limited Health Plans:
524 (a) shall offer to potential purchasers at least one health benefit plan that is subject to
525 the requirements of Chapter 8, Health Maintenance Organizations and Limited Health Plans;
526 and
527 (b) may offer to a potential purchaser one or more health benefit plans that:
528 (i) are not subject to one or more of the following:
529 (A) the limitations on insured indemnity benefits in Subsection 31A-8-105 (4);
530 (B) the limitation on point of service products in Subsections 31A-8-408 (3) through
531 (6);
532 (C) except as provided in Subsection (2)(b)(ii), basic health care services as defined in
533 Section 31A-8-101 ; or
534 (D) coverage mandates enacted after January 1, 2009 that are not required by federal
535 law S. , provided that the insurer offers one plan under Subsection (2)(a) that covers the
535a mandate enacted after January 1, 2009 .S ; and
536 (ii) when offering a health plan under this section, provide coverage for an emergency
537 medical condition as required by Section 31A-22-627 as follows:
538 (A) within the organization's service area, covered services shall include health care
539 services from non-affiliated providers when medically necessary to stabilize an emergency
540 medical condition; and
541 (B) outside the organization's service area, covered services shall include medically
542 necessary health care services for the treatment of an emergency medical condition that are
543 immediately required while the enrollee is outside the geographic limits of the organization's
544 service area.
545 (3) An insurer that offers a health benefit plan that is not subject to Chapter 8, Health
546 Maintenance Organizations and Limited Health Plans:
547 (a) notwithstanding Subsection 31A-22-617 (2), may offer a health benefit plan that
548 groups providers into the following reimbursement levels:
549 (i) tier one contracted providers;
550 (ii) tier two contracted providers who the insurer must reimburse at least 75% of tier
551 one providers; and
552 (iii) one or more tiers of non-contracted providers; and
553 (b) may offer a health benefit plan that is not subject to Subsection 31A-22-617 (9) and

554 Section 31A-22-618 ;
555 (c) beginning July 1, 2012 may offer products under Subsection (3)(a) that S. :
555a (i) .S are not
556 subject to Subsection 31A-22-617 (2); and
556a S. (ii) are subject to the reimbursement requirements in Section 31A-8-501; .S
557 (d) when offering a health plan under this Subsection (3), shall provide coverage of
558 emergency care services as required by Section 31A-22-627 by providing coverage at a
559 reimbursement level of at least 75% of tier one providers S. ; and
559a (e) are not subject to coverage mandates enacted after January 1, 2009 that are not
559b required by federal law, provided that an insurer offers one plan that covers a mandate
559c enacted after January 1, 2009 .S .
560 (4) Section 31A-8-106 does not prohibit the offer of a health benefit plan under
561 Subsection (2)(b).
562 (5) (a) Any difference in price between a health benefit plan offered under Subsections
563 (2)(a) and (b) shall be based on actuarially sound data.
564 (b) Any difference in price between a health benefit plan offered under Subsections
565 (3)(a) and (b) shall be based on actuarially sound data.
566 (6) Nothing in this section limits the number of health benefit plans that an insurer may
567 offer.
568 Section 5. Section 31A-22-722 is amended to read:
569 31A-22-722. Utah mini-COBRA benefits for employer group coverage.
570 (1) An insured has the right to extend the employee's coverage under the current
571 employer's group policy for a period of [six] 12 months, except as provided in Subsection (2).
572 The right to extend coverage includes:
573 (a) voluntary termination;
574 (b) involuntary termination;
575 (c) retirement;
576 (d) death;
577 (e) divorce or legal separation;
578 (f) loss of dependent status;
579 (g) sabbatical;
580 (h) any disability;
581 (i) leave of absence; or
582 (j) reduction of hours.
583 (2) (a) Notwithstanding the provisions of Subsection (1), an employee does not have
584 the right to extend coverage under the current employer's group policy if the employee:

585 (i) failed to pay any required individual contribution;
586 (ii) acquires other group coverage covering all preexisting conditions including
587 maternity, if the coverage exists;
588 (iii) performed an act or practice that constitutes fraud in connection with the coverage;
589 (iv) made an intentional misrepresentation of material fact under the terms of the
590 coverage;
591 (v) was terminated for gross misconduct;
592 (vi) has not been continuously covered under the current employer's group policy for a
593 period of [six] three months immediately prior to the termination of the policy due to the events
594 set forth in Subsection (1); [or]
595 (vii) is eligible for any extension of coverage required by federal law[.]; or
596 (viii) elected alternative coverage under Section 31A-22-724 .
597 (b) The right to extend coverage under Subsection (1) applies to any spouse or
598 dependent coverages, including a surviving spouse or dependents whose coverage under the
599 policy terminates by reason of the death of the employee or member.
600 (3) (a) The employer shall provide written notification of the right to extend group
601 coverage and the payment amounts required for extension of coverage, including the manner,
602 place, and time in which the payments shall be made to:
603 (i) the terminated insured;
604 (ii) the ex-spouse; or
605 (iii) if Subsection (2)(b) applies:
606 (A) to a surviving spouse; and
607 (B) the guardian of surviving dependents, if different from a surviving spouse.
608 (b) The notification shall be sent first class mail within 30 days after the termination
609 date of the group coverage to:
610 (i) the terminated insured's home address as shown on the records of the employer;
611 (ii) the address of the surviving spouse, if different from the insured's address and if
612 shown on the records of the employer;
613 (iii) the guardian of any dependents address, if different from the insured's address, and
614 if shown on the records of the employer; and
615 (iv) the address of the ex-spouse, if shown on the records of the employer.

616 (4) The insurer shall provide the employee, spouse, or any eligible dependent the
617 opportunity to extend the group coverage at the payment amount stated in [this] Subsection
618 [(3)] (5) if:
619 (a) the employer policyholder does not provide the terminated insured the written
620 notification required by Subsection (3)(a); and
621 (b) the employee or other individual eligible for extension contacts the insurer within
622 60 days of coverage termination.
623 (5) The premium amount for extended group coverage may not exceed 102% of the
624 group rate in effect for a group member, including an employer's contribution, if any, for a
625 group insurance policy.
626 (6) Except as provided in this Subsection (6), the coverage extends without
627 interruption for [six] 12 months and may not terminate if the terminated insured or, with
628 respect to a minor, the parent or guardian of the terminated insured:
629 (a) elects to extend group coverage within 60 days of losing group coverage; and
630 (b) tenders the amount required to the employer or insurer.
631 (7) The insured's coverage may be terminated prior to [six] 12 months if the terminated
632 insured:
633 (a) establishes residence outside of this state;
634 (b) moves out of the insurer's service area;
635 (c) fails to pay premiums or contributions in accordance with the terms of the policy,
636 including any timeliness requirements;
637 (d) performs an act or practice that constitutes fraud in connection with the coverage;
638 (e) makes an intentional misrepresentation of material fact under the terms of the
639 coverage;
640 (f) becomes eligible for similar coverage under another group policy; or
641 (g) employer's coverage is terminated, except as provided in Subsection (8).
642 (8) If the current employer coverage is terminated and the employer replaces coverage
643 with similar coverage under another group policy, without interruption, the terminated insured,
644 spouse, or the surviving spouse and guardian of dependents if Subsection (2)(b) applies, have
645 the right to obtain extension of coverage under the replacement group policy:
646 (a) for the balance of the period the terminated insured would have extended coverage

647 under the replaced group policy; and
648 (b) if the terminated insured is otherwise eligible for extension of coverage.
649 (9) (a) Within 30 days of the insured's exhaustion of extension of coverage, the
650 employer shall provide the terminated insured and the ex-spouse, or, in the case of the death of
651 the insured, the surviving spouse, or guardian of any dependents, written notification of the
652 right to an individual conversion policy under Section 31A-22-723 .
653 (b) The notification required by Subsection (9)(a):
654 (i) shall be sent first class mail to:
655 (A) the insured's last-known address as shown on the records of the employer;
656 (B) the address of the surviving spouse, if different from the insured's address, and if
657 shown on the records of the employer;
658 (C) the guardian of any dependents last known address as shown on the records of the
659 employer, if different from the address of the surviving spouse; and
660 (D) the address of the ex-spouse as shown on the records of the employer, if
661 applicable; and
662 (ii) shall contain the name, address, and telephone number of the insurer that will
663 provide the conversion coverage.
664 Section 6. Section 31A-22-723 is amended to read:
665 31A-22-723. Group and blanket conversion coverage.
666 (1) Notwithstanding Subsection 31A-1-103 (3)(f), and except as provided in Subsection
667 (3), all policies of accident and health insurance offered on a group basis under this title, or
668 Title 49, Chapter 20, Public Employees' Benefit and Insurance Program Act, shall provide that
669 a person whose insurance under the group policy has been terminated is entitled to choose a
670 converted individual policy [of similar accident and health insurance] in accordance with this
671 section and Section 31A-22-724 .
672 (2) A person who has lost group coverage may elect conversion coverage with the
673 insurer that provided prior group coverage if the person:
674 (a) has been continuously covered for a period of [six] three months by the group
675 policy or the group's preceding policies immediately prior to termination;
676 (b) has exhausted either:
677 (i) Utah mini-COBRA coverage as required in Section 31A-22-722 [or];

678 (ii) federal COBRA coverage; or
679 (iii) alternative coverage under Section 31A-22-724 ;
680 (c) has not acquired or is not covered under any other group coverage that covers all
681 preexisting conditions, including maternity, if the coverage exists; and
682 (d) resides in the insurer's service area.
683 (3) This section does not apply if the person's prior group coverage:
684 (a) is a stand alone policy that only provides one of the following:
685 (i) catastrophic benefits;
686 (ii) aggregate stop loss benefits;
687 (iii) specific stop loss benefits;
688 (iv) benefits for specific diseases;
689 (v) accidental injuries only;
690 (vi) dental; or
691 (vii) vision;
692 (b) is an income replacement policy;
693 (c) was terminated because the insured:
694 (i) failed to pay any required individual contribution;
695 (ii) performed an act or practice that constitutes fraud in connection with the coverage;
696 or
697 (iii) made intentional misrepresentation of material fact under the terms of coverage; or
698 (d) was terminated pursuant to Subsection 31A-8-402.3 (2)(a), 31A-22-721 (2)(a), or
699 31A-30-107 (2)(a).
700 (4) (a) The employer shall provide written notification of the right to an individual
701 conversion policy within 30 days of the insured's termination of coverage to:
702 (i) the terminated insured;
703 (ii) the ex-spouse; or
704 (iii) in the case of the death of the insured:
705 (A) the surviving spouse; and
706 (B) the guardian of any dependents, if different from a surviving spouse.
707 (b) The notification required by Subsection (4)(a) shall:
708 (i) be sent by first class mail;

709 (ii) contain the name, address, and telephone number of the insurer that will provide
710 the conversion coverage; and
711 (iii) be sent to the insured's last-known address as shown on the records of the
712 employer of:
713 (A) the insured;
714 (B) the ex-spouse; and
715 (C) if the policy terminates by reason of the death of the insured to:
716 (I) the surviving spouse; and
717 (II) the guardian of any dependents, if different from a surviving spouse.
718 (5) (a) An insurer is not required to issue a converted policy which provides benefits in
719 excess of those provided under the group policy from which conversion is made.
720 (b) Except as provided in Subsection (5)(c), if the conversion is made from a health
721 benefit plan, the employee or member [must] shall be offered:
722 (i) at least the basic benefit plan as provided in Section 31A-22-613.5 through
723 December 31, 2009; and
724 (ii) beginning January 1, 2010, only the alternative coverage as provided in Section
725 31A-22-724 (1)(a).
726 (c) If the benefit levels required under Subsection (5)(b) exceed the benefit levels
727 provided under the group policy, the conversion policy may offer benefits which are
728 substantially similar to those provided under the group policy.
729 (6) Written application for the converted policy shall be made and the first premium
730 paid to the insurer no later than 60 days after termination of the group accident and health
731 insurance.
732 (7) The converted policy shall be issued without evidence of insurability.
733 (8) (a) The initial premium for the converted policy for the first 12 months and
734 subsequent renewal premiums shall be determined in accordance with premium rates
735 applicable to age, class of risk of the person, and the type and amount of insurance provided.
736 (b) The initial premium for the first 12 months may not be raised based on pregnancy
737 of a covered insured.
738 (c) The premium for converted policies shall be payable monthly or quarterly as
739 required by the insurer for the policy form and plan selected, unless another mode or premium

740 payment is mutually agreed upon.
741 (9) The converted policy becomes effective at the time the insurance under the group
742 policy terminates.
743 (10) (a) A newly issued converted policy covers the employee or the member and must
744 also cover all dependents covered by the group policy at the date of termination of the group
745 coverage.
746 (b) The only dependents that may be added after the policy has been issued are children
747 and dependents as required by Section 31A-22-610 and Subsections 31A-22-610.5 (6) and (7).
748 (c) At the option of the insurer, a separate converted policy may be issued to cover any
749 dependent.
750 (11) (a) To the extent the group policy provided maternity benefits, the conversion
751 policy shall provide maternity benefits equal to the lesser of the maternity benefits of the group
752 policy or the conversion policy until termination of a pregnancy that exists on the date of
753 conversion if one of the following is pregnant on the date of the conversion:
754 (i) the insured;
755 (ii) a spouse of the insured; or
756 (iii) a dependent of the insured.
757 (b) The requirements of this Subsection (11) do not apply to a pregnancy that occurs
758 after the date of conversion.
759 (12) Except as provided in this Subsection (12), a converted policy is renewable with
760 respect to all individuals or dependents at the option of the insured. An insured may be
761 terminated from a converted policy for the following reasons:
762 (a) a dependent is no longer eligible under the policy;
763 (b) for a network plan, if the individual no longer lives, resides, or works in:
764 (i) the insured's service area; or
765 (ii) the area for which the covered carrier is authorized to do business;
766 (c) the individual fails to pay premiums or contributions in accordance with the terms
767 of the converted policy, including any timeliness requirements;
768 (d) the individual performs an act or practice that constitutes fraud in connection with
769 the coverage;
770 (e) the individual makes an intentional misrepresentation of material fact under the

771 terms of the coverage; or
772 (f) coverage is terminated uniformly without regard to any health status-related factor
773 relating to any covered individual.
774 (13) Conditions pertaining to health may not be used as a basis for classification under
775 this section.
776 Section 7. Section 31A-22-724 is enacted to read:
777 31A-22-724. Offer of alternative coverage -- Utah NetCare Plan.
778 (1) For purposes of this section, "alternative coverage" means:
779 (a) the high deductible or low deductible Utah NetCare Plan described in Subsection
780 (2) for conversion policies offered under Section 31A-22-723 ; and
781 (b) the high deductible and low deductible Utah NetCare Plans described in Subsection
782 (2) as an alternative to COBRA and mini-COBRA policies offered under Section 31A-22-722 .
783 (2) The Utah NetCare Plans shall include:
784 (a) healthy lifestyle and wellness incentives;
785 (b) the benefits described in this Subsection (2) or at least the actuarial equivalent of
786 the benefits described in this Subsection (2);
787 (c) a lifetime maximum benefit per person of not less than $1 million;
788 (d) an annual maximum benefit per person of not less than $250,000;
789 (e) the following deductibles:
790 (i) for the low deductible plans:
791 (A) $2,000 for an individual plan;
792 (B) $4,000 for a two party plan; and
793 (C) $6,000 for a family plan;
794 (ii) for the high deductible plans:
795 (A) $4,000 for an individual plan;
796 (B) $8,000 for a two party plan; and
797 (C) $12,000 for a family plan;
798 (f) the following out-of-pocket maximum costs, including deductibles, copayments,
799 and coinsurance:
800 (i) for the low deductible plans:
801 (A) $5,000 for an individual plan;

802 (B) $10,000 for a two party plan; and
803 (C) $15,000 for a family plan; and
804 (ii) for the high deductible plan:
805 (A) $10,000 for an individual plan;
806 (B) $20,000 for a two party plan; and
807 (C) $30,000 for a family plan;
808 (g) the following benefits before applying any deductible requirements and in
809 accordance with IRC Section 223:
810 (i) all well child exams and immunizations up to age five, with no annual maximum;
811 (ii) preventive care up to a $500 annual maximum;
812 (iii) primary care and specialist and urgent care not covered under Subsection (2)(g)(i)
813 or (ii) up to a $300 annual maximum; and
814 (iv) supplemental accident coverage up to a $500 annual maximum;
815 (h) the following copayments for each exam:
816 (i) $15 for preventive care and well child exams;
817 (ii) $25 for primary care; and
818 (iii) $50 for urgent care and specialist care;
819 (i) a $200 copayment for emergency room visits after applying the deductible;
820 (j) no more than a 30% coinsurance after deductible for covered plan benefits for
821 hospital services, maternity, laboratory work, x-rays, radiology, outpatient surgery services,
822 injectable medications not otherwise covered under a pharmacy benefit, durable medical
823 equipment, ambulance services, in-patient mental health services, and out-patient mental health
824 services; and
825 (k) the following cost-sharing features for prescription drugs:
826 (i) up to a $15 copayment for generic drugs;
827 (ii) up to a 50% coinsurance for name brand drugs; and
828 (iii) may include formularies and preferred drug lists.
829 (3) The Utah NetCare Plans may exclude:
830 (a) the benefit mandates described in Subsections 31A-22-618.5 (2)(b) and (3)(b); and
831 (b) unless required by federal law, mandated coverage required by the following
832 sections and related administrative rules:

833 (i) Section 31A-22-610.1 , Adoption indemnity benefits;
834 (ii) Section 31A-22-623 , Inborn metabolic errors;
835 (iii) Section 31A-22-624 , Primary care physicians;
836 (iv) Section 31A-22-626 , Coverage of diabetes;
837 (v) Section 31A-22-628 , Standing referral to a specialist; and
838 (vi) coverage mandates enacted after January 1, 2009 that are not required by federal
839 law.
840 (4) (a) Beginning January 1, 2010, and except as provided in Subsection (5), a person
841 may elect alternative coverage under this section if the person:
842 (i) is eligible for continuation of employer group coverage under federal COBRA laws;
843 (ii) is eligible for continuation of employer group coverage under state mini-COBRA
844 under Section 31A-22-722 ; or
845 (iii) is eligible for a conversion to an individual plan after the exhaustion of benefits
846 under:
847 (A) alternative coverage elected in place of federal COBRA; or
848 (B) state mini-COBRA under Section 31A-22-722 .
849 (b) The right to extend coverage under Subsection (4)(a) applies to any spouse or
850 dependent coverages, including a surviving spouse or dependent whose coverage under the
851 policy terminates by reason of the death of the employee or member.
852 (5) If a person elects federal COBRA coverage, or state mini-COBRA coverage under
853 Section 31A-22-722 , the person is not eligible to elect alternative coverage under this section
854 until the person is eligible to convert coverage to an individual policy under the provisions of
855 Section 31A-22-723 and Subsection (1)(a).
856 (6) (a) If the alternative coverage is selected as an alternative to COBRA or
857 mini-COBRA under Section 31A-22-722 , the provisions of Section 31A-22-722 apply to the
858 alternative coverage.
859 (b) If the alternative coverage is selected as a conversion policy under Section
860 31A-22-723 , the provisions of Section 31A-22-723 apply.
861 (7) (a) An insurer subject to Sections 31A-22-722 through 31A-22-724 shall, prior to
862 September 1, 2009, file an alternative coverage policy with the department in accordance with
863 Sections 31A-21-201 and 31A-21-201.1 .

864 (b) The department shall, by November 1, 2009, adopt administrative rules in
865 accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to develop a
866 model letter for employers to use to notify an employee of the employee's options for
867 alternative coverage.
868 Section 8. Section 31A-23a-401 is amended to read:
869 31A-23a-401. Disclosure of conflicting interests.
870 (1) (a) Except as provided under Subsection (1)(b):
871 (i) a licensee under this chapter may not act in the same or any directly related
872 transaction as:
873 (A) a producer for the insured or consultant; and
874 (B) producer for the insurer; and
875 (ii) a producer for the insured or consultant may not recommend or encourage the
876 purchase of insurance from or through an insurer or other producer:
877 (A) of which the producer for the insured or consultant or producer for the insured's or
878 consultant's spouse is an owner, executive, or employee; or
879 (B) to which the producer for the insured or consultant has the type of relation that a
880 material benefit would accrue to the producer for the insured or consultant or spouse as a result
881 of the purchase.
882 (b) Subsection (1)(a) does not apply if the following three conditions are met:
883 (i) Prior to performing the consulting services, the producer for the insured or
884 consultant shall disclose to the client, prominently, in writing:
885 (A) the producer for the insured's or consultant's interest as a producer for the insurer,
886 or the relationship to an insurer or other producer; and
887 (B) that as a result of those interests, the producer for the insured's or the consultant's
888 recommendations should be given appropriate scrutiny.
889 (ii) The producer for the insured's or consultant's fee shall be agreed upon, in writing,
890 after the disclosure required under Subsection (1)(b)(i), but before performing the requested
891 services.
892 (iii) Any report resulting from requested services shall contain a copy of the disclosure
893 made under Subsection (1)(b)(i).
894 (2) A licensee under this chapter may not act as to the same client as both a producer

895 for the insurer and a producer for the insured without the client's prior written consent based on
896 full disclosure.
897 (3) Whenever a person applies for insurance coverage through a producer for the
898 insured, the producer for the insured shall disclose to the applicant, in writing, that the producer
899 for the insured is not the producer for the insurer or the potential insurer. This disclosure shall
900 also inform the applicant that the applicant likely does not have the benefit of an insurer being
901 financially responsible for the conduct of the producer for the insured.
902 (4) If a licensee is subject to both this section and Subsection 31A-23a-501 (4), the
903 licensee shall provide the disclosure required under each statute.
904 Section 9. Section 31A-23a-501 is amended to read:
905 31A-23a-501. Licensee compensation.
906 (1) As used in this section:
907 (a) "Commission compensation" includes funds paid to or credited for the benefit of a
908 licensee from:
909 (i) commission amounts deducted from insurance premiums on insurance sold by or
910 placed through the licensee; or
911 (ii) commission amounts received from an insurer or another licensee as a result of the
912 sale or placement of insurance.
913 (b) (i) "Compensation from an insurer or third party administrator" means
914 commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options,
915 gifts, prizes, or any other form of valuable consideration:
916 (A) whether or not payable pursuant to a written agreement; and
917 (B) received from:
918 (I) an insurer; or
919 (II) a third party to the transaction for the sale or placement of insurance.
920 (ii) "Compensation from an insurer or third party administrator" does not mean
921 compensation from a customer that is:
922 (A) a fee or pass-through costs as provided in Subsection (1)(e); or
923 (B) a fee or amount collected by or paid to the producer that does not exceed an
924 amount established by the commissioner by administrative rule.
925 (c) (i) "Customer" means:

926 (A) the person signing the application or submission for insurance; or
927 (B) the authorized representative of the insured actually negotiating the placement of
928 insurance with the producer.
929 (ii) "Customer" does not mean a person who is a participant or beneficiary of:
930 (A) an employee benefit plan; or
931 (B) a group or blanket insurance policy or group annuity contract sold, solicited, or
932 negotiated by the producer or affiliate.
933 [(b)] (d) (i) "Noncommission compensation" includes all funds paid to or credited for
934 the benefit of a licensee other than commission compensation.
935 (ii) "Noncommission compensation" does not include charges for pass-through costs
936 incurred by the licensee in connection with obtaining, placing, or servicing an insurance policy.
937 [(c)] (e) "Pass-through costs" include:
938 (i) costs for copying documents to be submitted to the insurer; and
939 (ii) bank costs for processing cash or credit card payments.
940 (2) A licensee may receive from an insured or from a person purchasing an insurance
941 policy, noncommission compensation if the noncommission compensation is stated on a
942 separate, written disclosure.
943 (a) The disclosure required by this Subsection (2) shall:
944 (i) include the signature of the insured or prospective insured acknowledging the
945 noncommission compensation;
946 (ii) clearly specify the amount or extent of the noncommission compensation; and
947 (iii) be provided to the insured or prospective insured before the performance of the
948 service.
949 (b) Noncommission compensation shall be:
950 (i) limited to actual or reasonable expenses incurred for services; and
951 (ii) uniformly applied to all insureds or prospective insureds in a class or classes of
952 business or for a specific service or services.
953 (c) A copy of the signed disclosure required by this Subsection (2) must be maintained
954 by any licensee who collects or receives the noncommission compensation or any portion
955 [thereof] of the noncommission compensation.
956 (d) All accounting records relating to noncommission compensation shall be

957 maintained by the person described in Subsection (2)(c) in a manner that facilitates an audit.
958 (3) (a) A licensee may receive noncommission compensation when acting as a producer
959 for the insured in connection with the actual sale or placement of insurance if:
960 (i) the producer and the insured have agreed on the producer's noncommission
961 compensation; and
962 (ii) the producer has disclosed to the insured the existence and source of any other
963 compensation that accrues to the producer as a result of the transaction.
964 (b) The disclosure required by this Subsection (3) shall:
965 (i) include the signature of the insured or prospective insured acknowledging the
966 noncommission compensation;
967 (ii) clearly specify the amount or extent of the noncommission compensation and the
968 existence and source of any other compensation; and
969 (iii) be provided to the insured or prospective insured before the performance of the
970 service.
971 (c) The following additional noncommission compensation is authorized:
972 (i) compensation received by a producer of a compensated corporate surety who under
973 procedures approved by a rule or order of the commissioner is paid by surety bond principal
974 debtors for extra services;
975 (ii) compensation received by an insurance producer who is also licensed as a public
976 adjuster under Section 31A-26-203 , for services performed for an insured in connection with a
977 claim adjustment, so long as the producer does not receive or is not promised compensation for
978 aiding in the claim adjustment prior to the occurrence of the claim;
979 (iii) compensation received by a consultant as a consulting fee, provided the consultant
980 complies with the requirements of Section 31A-23a-401 ; or
981 (iv) other compensation arrangements approved by the commissioner after a finding
982 that they do not violate Section 31A-23a-401 and are not harmful to the public.
983 (4) (a) For purposes of this Subsection (4), "producer" includes:
984 (i) a producer;
985 (ii) an affiliate of a producer; or
986 (iii) a consultant.
987 (b) Beginning January 1, 2010, in addition to any other disclosures required by this

988 section, a producer may not accept or receive any compensation from an insurer or third party
989 administrator for the placement of S. [ health care insurance ] a health benefit plan, other than a
989a hospital confinement indemnity policy, .S unless prior to the customer's purchase
990 S. [ of health care insurance ] the health benefit plan .S the producer:
991 (i) except as provided in Subsection (4)(c), discloses in writing to the customer that the
992 producer will receive compensation from the insurer or third party administrator for the
993 placement of insurance, including the amount or type of compensation known to the producer
994 at the time of the disclosure; and
995 (ii) except as provided in Subsection (4)(c):
996 (A) obtains the customer's signed acknowledgment that the disclosure under
997 Subsection (4)(b)(i) was made to the customer; or
998 (B) certifies to the insurer that the disclosure required by Subsection (4)(b)(i) was made
999 to the customer.
1000 (c) If the compensation to the producer from an insurer or third party administrator is
1001 for the renewal of health care insurance, once the producer has made an initial disclosure that
1002 complies with Subsection (4)(b), the producer does not have to disclose compensation received
1003 for the subsequent yearly renewals in accordance with Subsection (4)(b) until the renewal
1004 period immediately following 36 months after the initial disclosure.
1005 (d) (i) A copy of the signed acknowledgment required by Subsection (4)(b) must be
1006 maintained by the licensee who collects or receives any part of the compensation from an
1007 insurer or third party administrator in a manner that facilitates an audit.
1008 (ii) The standard application developed in accordance with Section 31A-22-635 shall
1009 include a place for a producer to provide the disclosure required by Subsection (4), and if
1010 completed, shall satisfy the requirement of Subsection (4)(d)(i).
1011 (e) Subsection (4)(b)(ii) does not apply to:
1012 (i) a person licensed as a producer who acts only as an intermediary between an insurer
1013 and the customer's producer, including a managing general agent; or
1014 (ii) the placement of insurance in a secondary or residual market.
1015 [(4)] (5) This section does not alter the right of any licensee to recover from an insured
1016 the amount of any premium due for insurance effected by or through that licensee or to charge
1017 a reasonable rate of interest upon past-due accounts.
1018 [(5)] (6) This section does not apply to bail bond producers or bail enforcement agents

1019 as defined in Section 31A-35-102 .
1020 Section 10. Section 31A-30-102 is amended to read:
1021 Part 1. Individual and Small Employer Group
1022 31A-30-102. Purpose statement.
1023 The purpose of this chapter is to:
1024 (1) prevent abusive rating practices;
1025 (2) require disclosure of rating practices to purchasers;
1026 (3) establish rules regarding:
1027 (a) a universal individual and small group application; and
1028 (b) renewability of coverage;
1029 (4) improve the overall fairness and efficiency of the individual and small group
1030 insurance market; [and]
1031 (5) provide increased access for individuals and small employers to health insurance[.];
1032 and
1033 (6) provide an employer with the opportunity to establish a defined contribution
1034 arrangement for an employee to purchase a health benefit plan through the Internet portal
1035 created by Section 63M-1-2504 .
1036 Section 11. Section 31A-30-103 is amended to read:
1037 31A-30-103. Definitions.
1038 As used in this chapter:
1039 (1) "Actuarial certification" means a written statement by a member of the American
1040 Academy of Actuaries or other individual approved by the commissioner that a covered carrier
1041 is in compliance with Section 31A-30-106 , based upon the examination of the covered carrier,
1042 including review of the appropriate records and of the actuarial assumptions and methods used
1043 by the covered carrier in establishing premium rates for applicable health benefit plans.
1044 (2) "Affiliate" or "affiliated" means any entity or person who directly or indirectly
1045 through one or more intermediaries, controls or is controlled by, or is under common control
1046 with, a specified entity or person.
1047 (3) "Base premium rate" means, for each class of business as to a rating period, the
1048 lowest premium rate charged or that could have been charged under a rating system for that
1049 class of business by the covered carrier to covered insureds with similar case characteristics for

1050 health benefit plans with the same or similar coverage.
1051 (4) "Basic coverage" means the coverage provided in the Basic Health Care Plan under
1052 [Subsection] Section 31A-22-613.5 [(2)].
1053 (5) "Carrier" means any person or entity that provides health insurance in this state
1054 including:
1055 (a) an insurance company;
1056 (b) a prepaid hospital or medical care plan;
1057 (c) a health maintenance organization;
1058 (d) a multiple employer welfare arrangement; and
1059 (e) any other person or entity providing a health insurance plan under this title.
1060 (6) (a) Except as provided in Subsection (6)(b), "case characteristics" means
1061 demographic or other objective characteristics of a covered insured that are considered by the
1062 carrier in determining premium rates for the covered insured.
1063 (b) "Case characteristics" do not include:
1064 (i) duration of coverage since the policy was issued;
1065 (ii) claim experience; and
1066 (iii) health status.
1067 (7) "Class of business" means all or a separate grouping of covered insureds
1068 established under Section 31A-30-105 .
1069 (8) "Conversion policy" means a policy providing coverage under the conversion
1070 provisions required in Chapter 22, Part 7, Group Accident and Health Insurance.
1071 (9) "Covered carrier" means any individual carrier or small employer carrier subject to
1072 this chapter.
1073 (10) "Covered individual" means any individual who is covered under a health benefit
1074 plan subject to this chapter.
1075 (11) "Covered insureds" means small employers and individuals who are issued a
1076 health benefit plan that is subject to this chapter.
1077 (12) "Dependent" means an individual to the extent that the individual is defined to be
1078 a dependent by:
1079 (a) the health benefit plan covering the covered individual; and
1080 (b) Chapter 22, Part 6, Accident and Health Insurance.

1081 (13) "Established geographic service area" means a geographical area approved by the
1082 commissioner within which the carrier is authorized to provide coverage.
1083 (14) "Index rate" means, for each class of business as to a rating period for covered
1084 insureds with similar case characteristics, the arithmetic average of the applicable base
1085 premium rate and the corresponding highest premium rate.
1086 (15) "Individual carrier" means a carrier that provides coverage on an individual basis
1087 through a health benefit plan regardless of whether:
1088 (a) coverage is offered through:
1089 (i) an association;
1090 (ii) a trust;
1091 (iii) a discretionary group; or
1092 (iv) other similar groups; or
1093 (b) the policy or contract is situated out-of-state.
1094 (16) "Individual conversion policy" means a conversion policy issued to:
1095 (a) an individual; or
1096 (b) an individual with a family.
1097 (17) "Individual coverage count" means the number of natural persons covered under a
1098 carrier's health benefit products that are individual policies.
1099 (18) "Individual enrollment cap" means the percentage set by the commissioner in
1100 accordance with Section 31A-30-110 .
1101 (19) "New business premium rate" means, for each class of business as to a rating
1102 period, the lowest premium rate charged or offered, or that could have been charged or offered,
1103 by the carrier to covered insureds with similar case characteristics for newly issued health
1104 benefit plans with the same or similar coverage.
1105 (20) "Plan year" means the year that is designated as the plan year in the plan document
1106 of a group health plan, except that if the plan document does not designate a plan year or if
1107 there is not a plan document, the plan year is:
1108 (a) the deductible or limit year used under the plan;
1109 (b) if the plan does not impose a deductible or limit on a yearly basis, the policy year;
1110 (c) if the plan does not impose a deductible or limit on a yearly basis and either the
1111 plan is not insured or the insurance policy is not renewed on an annual basis, the employer's

1112 taxable year; or
1113 (d) in any case not described in Subsections (20)(a) through (c), the calendar year.
1114 (21) "Preexisting condition" is as defined in Section 31A-1-301 .
1115 (22) "Premium" means all monies paid by covered insureds and covered individuals as
1116 a condition of receiving coverage from a covered carrier, including any fees or other
1117 contributions associated with the health benefit plan.
1118 (23) (a) "Rating period" means the calendar period for which premium rates
1119 established by a covered carrier are assumed to be in effect, as determined by the carrier.
1120 (b) A covered carrier may not have:
1121 (i) more than one rating period in any calendar month; and
1122 (ii) no more than 12 rating periods in any calendar year.
1123 (24) "Resident" means an individual who has resided in this state for at least 12
1124 consecutive months immediately preceding the date of application.
1125 (25) "Short-term limited duration insurance" means a health benefit product that:
1126 (a) is not renewable; and
1127 (b) has an expiration date specified in the contract that is less than 364 days after the
1128 date the plan became effective.
1129 (26) "Small employer carrier" means a carrier that provides health benefit plans
1130 covering eligible employees of one or more small employers in this state, regardless of
1131 whether:
1132 (a) coverage is offered through:
1133 (i) an association;
1134 (ii) a trust;
1135 (iii) a discretionary group; or
1136 (iv) other similar grouping; or
1137 (b) the policy or contract is situated out-of-state.
1138 (27) "Uninsurable" means an individual who:
1139 (a) is eligible for the Comprehensive Health Insurance Pool coverage under the
1140 underwriting criteria established in Subsection 31A-29-111 (5); or
1141 (b) (i) is issued a certificate for coverage under Subsection 31A-30-108 (3); and
1142 (ii) has a condition of health that does not meet consistently applied underwriting

1143 criteria as established by the commissioner in accordance with Subsections 31A-30-106 (1)(i)
1144 and (j) for which coverage the applicant is applying.
1145 (28) "Uninsurable percentage" for a given calendar year equals UC/CI where, for
1146 purposes of this formula:
1147 (a) "CI" means the carrier's individual coverage count as of December 31 of the
1148 preceding year; and
1149 (b) "UC" means the number of uninsurable individuals who were issued an individual
1150 policy on or after July 1, 1997.
1151 Section 12. Section 31A-30-104 is amended to read:
1152 31A-30-104. Applicability and scope.
1153 (1) This chapter applies to any:
1154 (a) health benefit plan that provides coverage to:
1155 (i) individuals;
1156 (ii) small employers; or
1157 (iii) both Subsections (1)(a)(i) and (ii); or
1158 (b) individual conversion policy for purposes of Sections 31A-30-106.5 and
1159 31A-30-107.5 .
1160 (2) This chapter applies to a health benefit plan that provides coverage to small
1161 employers or individuals regardless of:
1162 (a) whether the contract is issued to:
1163 (i) an association;
1164 (ii) a trust;
1165 (iii) a discretionary group; or
1166 (iv) other similar grouping; or
1167 (b) the situs of delivery of the policy or contract.
1168 (3) This chapter does not apply to:
1169 (a) a large employer health benefit plan, except as specifically provided in Part 2,
1170 Defined Contribution Arrangements;
1171 (b) short-term limited duration health insurance; or
1172 (c) federally funded or partially funded programs.
1173 (4) (a) Except as provided in Subsection (4)(b), for the purposes of this chapter:

1174 (i) carriers that are affiliated companies or that are eligible to file a consolidated tax
1175 return shall be treated as one carrier; and
1176 (ii) any restrictions or limitations imposed by this chapter shall apply as if all health
1177 benefit plans delivered or issued for delivery to covered insureds in this state by the affiliated
1178 carriers were issued by one carrier.
1179 (b) Upon a finding of the commissioner, an affiliated carrier that is a health
1180 maintenance organization having a certificate of authority under this title may be considered to
1181 be a separate carrier for the purposes of this chapter.
1182 (c) Unless otherwise authorized by the commissioner or by Chapter 42, Defined
1183 Contribution Risk Adjuster Act, a covered carrier may not enter into one or more ceding
1184 arrangements with respect to health benefit plans delivered or issued for delivery to covered
1185 insureds in this state if the ceding arrangements would result in less than 50% of the insurance
1186 obligation or risk for the health benefit plans being retained by the ceding carrier.
1187 (d) Section 31A-22-1201 applies if a covered carrier cedes or assumes all of the
1188 insurance obligation or risk with respect to one or more health benefit plans delivered or issued
1189 for delivery to covered insureds in this state.
1190 (5) (a) A Taft Hartley trust created in accordance with Section 302(c)(5) of the Federal
1191 Labor Management Relations Act, or a carrier with the written authorization of such a trust,
1192 may make a written request to the commissioner for a waiver from the application of any of the
1193 provisions of Subsection 31A-30-106 (1) with respect to a health benefit plan provided to the
1194 trust.
1195 (b) The commissioner may grant a trust or carrier described in Subsection (5)(a) a
1196 waiver if the commissioner finds that application with respect to the trust would:
1197 (i) have a substantial adverse effect on the participants and beneficiaries of the trust;
1198 and
1199 (ii) require significant modifications to one or more collective bargaining arrangements
1200 under which the trust is established or maintained.
1201 (c) A waiver granted under this Subsection (5) may not apply to an individual if the
1202 person participates in a Taft Hartley trust as an associate member of any employee
1203 organization.
1204 (6) Sections 31A-30-106 , 31A-30-106.5 , 31A-30-106.7 , 31A-30-107 , 31A-30-108 , and

1205 31A-30-111 apply to:
1206 (a) any insurer engaging in the business of insurance related to the risk of a small
1207 employer for medical, surgical, hospital, or ancillary health care expenses of the small
1208 employer's employees provided as an employee benefit; and
1209 (b) any contract of an insurer, other than a workers' compensation policy, related to the
1210 risk of a small employer for medical, surgical, hospital, or ancillary health care expenses of the
1211 small employer's employees provided as an employee benefit.
1212 (7) The commissioner may make rules requiring that the marketing practices be
1213 consistent with this chapter for:
1214 (a) a small employer carrier;
1215 (b) a small employer carrier's agent;
1216 (c) an insurance producer; and
1217 (d) an insurance consultant.
1218 Section 13. Section 31A-30-107 is amended to read:
1219 31A-30-107. Renewal -- Limitations -- Exclusions -- Discontinuance and
1220 nonrenewal.
1221 (1) Except as otherwise provided in this section, a small employer health benefit plan is
1222 renewable and continues in force:
1223 (a) with respect to all eligible employees and dependents; and
1224 (b) at the option of the plan sponsor.
1225 (2) A small employer health benefit plan may be discontinued or nonrenewed:
1226 (a) for a network plan, if:
1227 (i) there is no longer any enrollee under the group health plan who lives, resides, or
1228 works in:
1229 (A) the service area of the covered carrier; or
1230 (B) the area for which the covered carrier is authorized to do business; and
1231 (ii) in the case of the small employer market, the small employer carrier applies the
1232 same criteria the small employer carrier would apply in denying enrollment in the plan under
1233 Subsection 31A-30-108 (7); or
1234 (b) for coverage made available in the small or large employer market only through an
1235 association, if:

1236 (i) the employer's membership in the association ceases; and
1237 (ii) the coverage is terminated uniformly without regard to any health status-related
1238 factor relating to any covered individual.
1239 (3) A small employer health benefit plan may be discontinued if:
1240 (a) a condition described in Subsection (2) exists;
1241 (b) except as prohibited by Section 31A-30-206 , the plan sponsor fails to pay
1242 premiums or contributions in accordance with the terms of the contract;
1243 (c) the plan sponsor:
1244 (i) performs an act or practice that constitutes fraud; or
1245 (ii) makes an intentional misrepresentation of material fact under the terms of the
1246 coverage;
1247 (d) the covered carrier:
1248 (i) elects to discontinue offering a particular small employer health benefit product
1249 delivered or issued for delivery in this state; and
1250 (ii) (A) provides notice of the discontinuation in writing:
1251 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
1252 (II) at least 90 days before the date the coverage will be discontinued;
1253 (B) provides notice of the discontinuation in writing:
1254 (I) to the commissioner; and
1255 (II) at least three working days prior to the date the notice is sent to the affected plan
1256 sponsors, employees, and dependents of the plan sponsors or employees;
1257 (C) offers to each plan sponsor, on a guaranteed issue basis, the option to purchase all
1258 other small employer health benefit products currently being offered by the small employer
1259 carrier in the market; and
1260 (D) in exercising the option to discontinue that product and in offering the option of
1261 coverage in this section, acts uniformly without regard to:
1262 (I) the claims experience of a plan sponsor;
1263 (II) any health status-related factor relating to any covered participant or beneficiary; or
1264 (III) any health status-related factor relating to any new participant or beneficiary who
1265 may become eligible for the coverage; or
1266 (e) the covered carrier:

1267 (i) elects to discontinue all of the covered carrier's small employer health benefit plans
1268 in:
1269 (A) the small employer market;
1270 (B) the large employer market; or
1271 (C) both the small employer and large employer markets; and
1272 (ii) (A) provides notice of the discontinuation in writing:
1273 (I) to each plan sponsor, employee, or dependent of a plan sponsor or an employee; and
1274 (II) at least 180 days before the date the coverage will be discontinued;
1275 (B) provides notice of the discontinuation in writing:
1276 (I) to the commissioner in each state in which an affected insured individual is known
1277 to reside; and
1278 (II) at least 30 working days prior to the date the notice is sent to the affected plan
1279 sponsors, employees, and the dependents of the plan sponsors or employees;
1280 (C) discontinues and nonrenews all plans issued or delivered for issuance in the
1281 market; and
1282 (D) provides a plan of orderly withdrawal as required by Section 31A-4-115 .
1283 (4) A small employer health benefit plan may be discontinued or nonrenewed:
1284 (a) if a condition described in Subsection (2) exists; or
1285 (b) except as prohibited by Section 31A-30-206 , for noncompliance with the insurer's
1286 employer contribution requirements.
1287 (5) A small employer health benefit plan may be nonrenewed:
1288 (a) if a condition described in Subsection (2) exists; or
1289 (b) except as prohibited by Section 31A-30-206 , for noncompliance with the insurer's
1290 minimum participation requirements.
1291 (6) (a) Except as provided in Subsection (6)(d), an eligible employee may be
1292 discontinued if after issuance of coverage the eligible employee:
1293 (i) engages in an act or practice that constitutes fraud in connection with the coverage;
1294 or
1295 (ii) makes an intentional misrepresentation of material fact in connection with the
1296 coverage.
1297 (b) An eligible employee that is discontinued under Subsection (6)(a) may reenroll:

1298 (i) 12 months after the date of discontinuance; and
1299 (ii) if the plan sponsor's coverage is in effect at the time the eligible employee applies
1300 to reenroll.
1301 (c) At the time the eligible employee's coverage is discontinued under Subsection
1302 (6)(a), the covered carrier shall notify the eligible employee of the right to reenroll when
1303 coverage is discontinued.
1304 (d) An eligible employee may not be discontinued under this Subsection (6) because of
1305 a fraud or misrepresentation that relates to health status.
1306 (7) For purposes of this section, a reference to "plan sponsor" includes a reference to
1307 the employer:
1308 (a) with respect to coverage provided to an employer member of the association; and
1309 (b) if the small employer health benefit plan is made available by a covered carrier in
1310 the employer market only through:
1311 (i) an association;
1312 (ii) a trust; or
1313 (iii) a discretionary group.
1314 (8) A covered carrier may modify a small employer health benefit plan only:
1315 (a) at the time of coverage renewal; and
1316 (b) if the modification is effective uniformly among all plans with that product.
1317 Section 14. Section 31A-30-109 is amended to read:
1318 31A-30-109. Health benefit plan choices.
1319 (1) An individual carrier who offers individual coverage pursuant to Section
1320 31A-30-108 :
1321 (a) shall offer in the individual market under this chapter:
1322 (i) a choice of coverage that is at least equal to or greater than basic coverage[.]; and
1323 (ii) beginning January 1, 2010, the Utah NetCare Plan described in Subsection
1324 31A-22-724 (2); and
1325 (b) may offer a choice of coverage that:
1326 (i) costs less than or equal to the plan described in Subsection (1)(a)(ii); and
1327 (ii) excludes some or all of the mandates described in Subsection 31A-22-724 (3).
1328 (2) Beginning January 1, 2010, a small employer group carrier who offers small

1329 employer group coverage pursuant to Section 31A-30-108 :
1330 (a) shall offer in the small employer group market under this part:
1331 (i) a choice of coverage that is at least equal to or greater than basic coverage; and
1332 (ii) coverage under the Utah NetCare Plan described in Section 31A-22-724 ; and
1333 (b) may offer in the small employer group market under this part, a choice of coverage
1334 that:
1335 (i) costs less than or equal to the coverage in Subsection (2)(a); and
1336 (ii) excludes some or all of the mandates described in Subsection 31A-22-724 (3).
1337 (3) Nothing in this section limits the number of health benefit plans an insurer may
1338 offer.
1339 Section 15. Section 31A-30-112 is amended to read:
1340 31A-30-112. Employee participation levels.
1341 (1) (a) Except as provided in Subsection (2) and Section 31A-30-206 , a requirement
1342 used by a covered carrier in determining whether to provide coverage to a small employer,
1343 including a requirement for minimum participation of eligible employees and minimum
1344 employer contributions, shall be applied uniformly among all small employers with the same
1345 number of eligible employees applying for coverage or receiving coverage from the covered
1346 carrier.
1347 (b) In addition to applying Subsection 31A-1-301 (121), a covered carrier may require
1348 that a small employer have a minimum of two eligible employees to meet participation
1349 requirements.
1350 (2) A covered carrier may not increase a requirement for minimum employee
1351 participation or a requirement for minimum employer contribution applicable to a small
1352 employer at any time after the small employer is accepted for coverage.
1353 Section 16. Section 31A-30-201 is enacted to read:
1354 Part 2. Defined Contribution Arrangements
1355 31A-30-201. Title.
1356 This part is known as "Defined Contribution Arrangements."
1357 Section 17. Section 31A-30-202 is enacted to read:
1358 31A-30-202. Definitions.
1359 For purposes of this part:

1360 (1) "Defined contribution arrangement" means a defined contribution arrangement
1361 employer group health benefit plan that:
1362 (a) complies with this part; and
1363 (b) is sold through the Internet portal in accordance with Title 63M, Chapter 1, Part 25,
1364 Health System Reform Act.
1365 (2) "Health reimbursement arrangement" means an employer provided health
1366 reimbursement arrangement in which reimbursements for medical care expenses are excluded
1367 from an employee's gross income under the Internal Revenue Code.
1368 (3) "Producer" is as defined in Subsection 31A-23a-501 (4)(a).
1369 (4) "Section 125 Cafeteria plan" means a flexible spending arrangement that qualifies
1370 under Section 125, Internal Revenue Code which permits an employee to contribute pre-tax
1371 dollars to a health benefit plan.
1372 (5) "Small employer" is defined in Section 31A-1-301 .
1373 Section 18. Section 31A-30-203 is enacted to read:
1374 31A-30-203. Eligibility for defined contribution arrangement market --
1375 Enrollment.
1376 (1) (a) Beginning January 1, 2010, and during the open enrollment period described in
1377 Section 31A-30-208 , an eligible small employer may choose to participate in a defined
1378 contribution arrangement.
1379 (b) Beginning January 1, 2012, and during the open enrollment period described in
1380 Section 31A-30-208 , an eligible large employer may choose to participate in a defined
1381 contribution arrangement.
1382 (c) Defined contribution arrangement health benefit plans are employer group health
1383 plans individually selected by an employee of an employer.
1384 (2) (a) Participating insurers:
1385 (i) shall offer to accept all eligible employees of an employer described in Subsection
1386 (1), and their dependents at the same level of benefits as anyone else who has the same health
1387 benefit plan in the defined contribution arrangement market; and
1388 (ii) may not impose a premium surcharge under Section 31A-30-106.7 in the defined
1389 contribution market.
1390 (b) A participating insurer may:

1391 (i) request an employer to submit a copy of the employer's quarterly wage list to
1392 determine whether the employees for whom coverage is provided or requested are bona fide
1393 employees of the employer; and
1394 (ii) deny or terminate coverage if the employer refuses to provide documentation
1395 requested under Subsection (2)(b)(i).
1396 Section 19. Section 31A-30-204 is enacted to read:
1397 31A-30-204. Employer responsibilities -- Defined contribution arrangements.
1398 (1) (a) (i) An employer described in Subsection 31A-30-203 (1) that chooses to
1399 participate in a defined contribution arrangement may not offer a major medical health benefit
1400 plan that is not a part of the defined contribution arrangement to an employee.
1401 (ii) Subsection (1)(a)(i) does not prohibit the offer of supplemental or limited benefit
1402 policies such as dental or vision coverage, or other types of federally qualified savings accounts
1403 for health care expenses.
1404 (b) (i) To the extent permitted by the risk adjustment plan adopted under Section
1405 31A-42-202 , the employer reserves the right to determine:
1406 (A) the criteria for employee eligibility, enrollment, and participation in the employer's
1407 health benefit plan; and
1408 (B) the amount of the employer's contribution to that plan.
1409 (ii) The determinations made under Subsection (1)(b) may only be changed during
1410 periods of open enrollment.
1411 (2) An employer that chooses to establish a defined contribution arrangement to
1412 provide a health benefit plan for its employees shall:
1413 (a) establish a mechanism for its employees to use pre-tax dollars to purchase a health
1414 benefit plan from the defined contribution arrangement market on the Internet portal created in
1415 Section 63M-1-2504 , which may include:
1416 (i) a health reimbursement arrangement;
1417 (ii) a Section 125 Cafeteria plan; or
1418 (iii) another plan or arrangement similar to Subsection (2)(a)(i) or (ii) which is
1419 excluded or deducted from gross income under the Internal Revenue Code;
1420 (b) by November 10 of the open enrollment period:
1421 (i) inform each employee of the health benefit plan the employer has selected as the

1422 default health benefit plan for the employer group;
1423 (ii) offer each employee a choice of any of the health benefit plans available through
1424 the defined contribution arrangement market on the Internet portal; and
1425 (iii) notify the employee that the employee will be enrolled in the default health benefit
1426 plan selected by the employer and payroll deductions initiated for premium payments, unless
1427 the employee, prior to November 25 of the open enrollment period:
1428 (A) notifies the employer that the employee has selected a different health benefit plan
1429 available through the defined contribution arrangement in the Internet portal;
1430 (B) provides proof of coverage from another health benefit plan; or
1431 (C) specifically declines coverage in a health benefit plan.
1432 (3) An employer shall enroll an employee in the default health benefit plan selected by
1433 the employer if the employee does not make one of the choices described in Subsection
1434 (2)(b)(ii) prior to November 25 of the open enrollment period.
1435 (4) The employer's notice to the employee under Subsection (2)(b)(iii) shall inform the
1436 employee that the failure to act under Subsections (2)(b)(iii)(A) through (C) is considered an
1437 affirmative election under pre-tax payroll deductions for the employer to begin payroll
1438 deductions for health benefit plan premiums.
1439 Section 20. Section 31A-30-205 is enacted to read:
1440 31A-30-205. Health benefit plans offered in the defined contribution market.
1441 (1) An insurer who chooses to offer a health benefit plan in the defined contribution
1442 market must offer the following:
1443 (a) one health benefit plan that:
1444 (i) is a federally qualified high deductible health plan;
1445 (ii) has the lowest deductible permitted for a federally qualified high deductible health
1446 plan as adjusted by federal law; and
1447 (iii) does not exceed annual out-of-pocket maximum equal to three times the amount of
1448 the annual deductible; and
1449 (b) one health benefit plan with benefits that have an actuarial value at least 15%
1450 greater that the plan described in Subsection (1)(a).
1451 (2) The provisions of Subsection (1) do not limit the number of health benefit plans an
1452 insurer may offer in the defined contribution market. An insurer who offers the health benefit

1453 plans required by Subsection (1) may also offer any other health benefit plan in the defined
1454 contribution market if the health benefit plan provides benefits that are actuarially richer than
1455 the benefits required in Subsection (1)(a).
1456 Section 21. Section 31A-30-206 is enacted to read:
1457 31A-30-206. Minimum participation and contribution levels -- Premium
1458 payments.
1459 An insurer who offers a health benefit plan for which an employer has established a
1460 defined contribution arrangement under the provisions of this part:
1461 (1) shall not:
1462 (a) establish an employer minimum contribution level for the health benefit plan
1463 premium under Section 31A-30-112 , or any other law; or
1464 (b) discontinue or non-renew a policy under Subsection 31A-30-107 (4) for failure to
1465 maintain a minimum employer contribution level;
1466 (2) shall accept premium payments for an enrollee from multiple sources through the
1467 Internet portal, including:
1468 (a) government assistance programs;
1469 (b) contributions from a Section 125 Cafeteria plan, a health reimbursement
1470 arrangement, or other qualified mechanism for pre-tax payments established by any employer
1471 of the enrollee;
1472 (c) contributions from a Section 125 Cafeteria plan, a health reimbursement
1473 arrangement, or other qualified mechanism for pre-tax payments established by an employer of
1474 a spouse or dependent of the enrollee; and
1475 (d) contributions from private sources of premium assistance; and
1476 (3) may require, as a condition of coverage, a minimum participation level for eligible
1477 employees of an employer, which for purposes of the defined contribution arrangement market
1478 may not exceed 75% participation.
1479 Section 22. Section 31A-30-207 is enacted to read:
1480 31A-30-207. Rating and underwriting restrictions for defined contribution
1481 market.
1482 (1) The rating and underwriting restrictions for the defined contribution market shall be
1483 established in accordance with the plan adopted under Chapter 42, Defined Contribution Risk

1484 Adjuster Act, and shall apply to employers who participate in the defined contribution
1485 arrangement market.
1486 (2) All insurers who participate in the defined contribution market must participate in
1487 the risk adjuster mechanism developed under Chapter 42, Defined Contribution Risk Adjuster
1488 Act.
1489 Section 23. Section 31A-30-208 is enacted to read:
1490 31A-30-208. Enrollment Periods for the Defined Contribution Market.
1491 (1) From November 1 to November 30 of each year an insurer offering a product in the
1492 defined contribution market shall administer an open enrollment period for plans effective
1493 January 1 following the November open enrollment period, during which an eligible employee
1494 may enroll in a health benefit plan offered through the defined contribution market and may not
1495 be declined coverage.
1496 (2) (a) Except as provided in Subsection (4), the period of open enrollment is the time
1497 in which an insurer may:
1498 (i) enter or exit the defined contribution market;
1499 (ii) offer new or modify existing products in the defined contribution market; or
1500 (iii) withdraw products from the defined contribution market.
1501 (b) Ninety days prior to an open enrollment period under Subsection (1), an insurer
1502 shall notify the Internet portal and the risk adjuster board created in Chapter 42, Defined
1503 Contribution Risk Adjuster Act, regarding any of the events described in Subsection (2)(a).
1504 (3) An eligible employee may enroll in a health benefit plan offered in the defined
1505 contribution market and may not be declined coverage, at a time other than the annual open
1506 enrollment period for any of the circumstances recognized as permissible under federal tax law,
1507 provided the individual does so within 63 days of the permissible circumstance.
1508 (4) When an insurer elects to participate in the defined contribution market, the insurer
1509 shall participate in the defined contribution market for no less than two years.
1510 Section 24. Section 31A-42-101 is enacted to read:
1511 CHAPTER 42. DEFINED CONTRIBUTION RISK ADJUSTER ACT
1512 Part 1. General Provisions
1513 31A-42-101. Title.
1514 This chapter is known as the "Defined Contribution Risk Adjuster Act."

1515 Section 25. Section 31A-42-102 is enacted to read:
1516 31A-42-102. Definitions.
1517 As used in this chapter:
1518 (1) "Board" means the board of directors of the Utah Defined Contribution Risk
1519 Adjuster created in Section 31A-42-201 .
1520 (2) "Risk adjuster" means the defined contribution risk adjustment mechanism created
1521 in Section 31A-42-201 .
1522 Section 26. Section 31A-42-103 is enacted to read:
1523 31A-42-103. Applicability and scope.
1524 This chapter applies to a carrier as defined in Section 31A-30-103 who offers a health
1525 benefit plan in a defined contribution arrangement under Chapter 30, Part 2, Defined
1526 Contribution Arrangements.
1527 Section 27. Section 31A-42-201 is enacted to read:
1528 Part 2. Creation of Risk Adjuster Mechanism
1529 31A-42-201. Creation of defined contribution market risk adjuster mechanism --
1530 &nb