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S.B. 9

             1     

COMPREHENSIVE HEALTH INSURANCE POOL

             2     
AMENDMENTS

             3     
2003 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Gene Davis

             6      This act modifies the Comprehensive Health Insurance Pool Act. The act amends
             7      definitions. The act amends the number of board members required for a quorum, the
             8      powers of the board, and the duties of the pool administrator. The act amends eligibility
             9      for the pool and the application of preexisting conditions in order to be in compliance
             10      with federal law and to incorporate provisions of the Primary Care Network waiver for
             11      the state Medicaid program. The act amends provisions related to copays, deductibles,
             12      and cancellations of coverage. The act amends the frequency with which premiums may
             13      be adjusted. The act amends benefit reduction and immunity provisions. The act makes
             14      technical changes.
             15      This act affects sections of Utah Code Annotated 1953 as follows:
             16      AMENDS:
             17          31A-29-103, as last amended by Chapters 9 and 116, Laws of Utah 2001
             18          31A-29-104, as last amended by Chapter 176, Laws of Utah 2002
             19          31A-29-106, as enacted by Chapter 232, Laws of Utah 1990
             20          31A-29-107, as enacted by Chapter 232, Laws of Utah 1990
             21          31A-29-109, as enacted by Chapter 232, Laws of Utah 1990
             22          31A-29-110, as enacted by Chapter 232, Laws of Utah 1990
             23          31A-29-111, as last amended by Chapter 114, Laws of Utah 2000
             24          31A-29-112, as last amended by Chapter 265, Laws of Utah 1997
             25          31A-29-113, as last amended by Chapter 308, Laws of Utah 2002
             26          31A-29-114, as enacted by Chapter 232, Laws of Utah 1990
             27          31A-29-115, as repealed and reenacted by Chapter 265, Laws of Utah 1997



             28          31A-29-117, as last amended by Chapter 116, Laws of Utah 2001
             29          31A-29-119, as enacted by Chapter 232, Laws of Utah 1990
             30          31A-29-120, as last amended by Chapter 265, Laws of Utah 1997
             31          31A-29-122, as enacted by Chapter 232, Laws of Utah 1990
             32      Be it enacted by the Legislature of the state of Utah:
             33          Section 1. Section 31A-29-103 is amended to read:
             34           31A-29-103. Definitions.
             35          As used in this chapter:
             36          (1) "Board" means the board of directors of the pool created in Section 31A-29-104 .
             37          (2) (a) "Creditable coverage" has the same meaning as provided in the Health Insurance
             38      Portability and Accountability Act, Pub. L. No. 104-191, 110 Stat.1956, Sec. 2701(c)(1) and 45
             39      C.F.R. Sec. 146.11(a)(1);
             40          (b) "Creditable coverage" does not include a period of time in which there is a
             41      significant break in coverage as described in the Health Insurance Portability and
             42      Accountability Act, Pub. L. No. 104-191, 110 Stat. 1956, Sec. 2701(c)(2).
             43          (3) "Enrollee" means an individual who has met the eligibility requirements of the pool
             44      and is covered by a pool policy under this chapter.
             45          [(2)] (4) "Health care facility" means any entity providing health care services which is
             46      licensed under Title 26, Chapter 21.
             47          [(3)] (5) "Health care provider" has the same meaning as provided in Section 78-14-3 .
             48          [(4)] (6) "Health care services" means any service or product used in furnishing to any
             49      individual medical care or hospitalization, or incidental to furnishing medical care or
             50      hospitalization, and any other service or product furnished for the purpose of preventing,
             51      alleviating, curing, or healing human illness or injury.
             52          [(5)] (7) (a) "Health insurance" means any:
             53          (i) hospital and medical expense-incurred policy;
             54          (ii) nonprofit health care service plan contract; [and] or
             55          (iii) health maintenance organization subscriber contract.
             56          (b) "Health insurance" does not [include] mean:
             57          (i) any insurance arising out of the Workers' Compensation Act or similar law[,];
             58          (ii) automobile medical payment insurance[,]; or



             59          (iii) insurance under which benefits are payable with or without regard to fault and
             60      which is required by law to be contained in any liability insurance policy.
             61          [(6)] (8) "Health maintenance organization" has the same meaning as provided in
             62      Section 31A-8-101 .
             63          [(7)] (9) "Health plan" means any arrangement by which [a person] an individual,
             64      including a dependent or spouse, covered or making application to be covered under the pool
             65      has access to hospital and medical benefits or reimbursement including group or individual
             66      insurance or subscriber contract; coverage through a health maintenance organization, preferred
             67      provider prepayment, group practice, or individual practice plan; coverage under an uninsured
             68      arrangement of group or group-type contracts including employer self-insured, cost-plus, or
             69      other benefits methodologies not involving insurance; coverage under a group type contract
             70      which is not available to the general public and can be obtained only because of connection
             71      with a particular organization or group; and coverage by Medicare or other governmental
             72      benefit. The term includes coverage through health insurance.
             73          [(8) "Insured" means an individual resident of this state who is eligible to receive
             74      benefits from any insurer, health maintenance organization, or other health plan.]
             75          (10) "HIPAA" means the Health Insurance Portability and Accountability Act, Pub. L.
             76      No. 104-191, 110 Stat.1962.
             77          (11) "HIPAA eligible" means an individual who is eligible under the provisions of the
             78      Health Insurance Portability and Accountability Act, Pub. L. No. 104-191, 110 Stat. 1979, Sec.
             79      2741(b).
             80          [(9)] (12) "Insurer" means an insurance company authorized to transact accident and
             81      health insurance business in this state, health maintenance organization, and a self-insurer not
             82      subject to federal preemption.
             83          [(10)] (13) "Medicaid" means coverage under Title XIX of the Social Security Act, 42
             84      U.S.C. Sec. 1396 et seq., as amended.
             85          [(11)] (14) "Medicare" means coverage under both Part A and B of Title XVIII of the
             86      Social Security Act, 42 U.S.C. 1395 et seq., as amended.
             87          [(12)] (15) "Plan of operation" means the plan developed by the board in accordance
             88      with Section 31A-29-105 and includes the articles, bylaws, and operating rules adopted by the
             89      board under Section 31A-29-106 .


             90          [(13)] (16) "Pool" means the Utah Comprehensive Health Insurance Pool created in
             91      Section 31A-29-104 .
             92          [(14)] (17) "Pool fund" means the Comprehensive Health Insurance Pool Enterprise
             93      Fund created in Section 31A-29-120 .
             94          [(15)] (18) "Pool policy" means [an] a health insurance policy issued under this
             95      chapter.
             96          (19) "Preexisting condition" means a condition, regardless of the cause of the
             97      condition, for which medical advice, diagnosis, care, or treatment was recommended or
             98      received within the six-month period immediately prior to the enrollment date.
             99          (20) "Resident" or "residency" means an individual who is domiciled in this state as
             100      defined in Section 23-13-2 .
             101          [(16)] (21) "Third-party administrator" has the same meaning as provided in Section
             102      31A-1-301 .
             103          Section 2. Section 31A-29-104 is amended to read:
             104           31A-29-104. Creation of pool -- Board of directors -- Appointment -- Terms --
             105      Quorum -- Plan preparation.
             106          (1) There is created the "Utah Comprehensive Health Insurance Pool," a nonprofit
             107      entity within the Insurance Department.
             108          (2) The pool shall be under the direction of a board of directors composed of 11
             109      members.
             110          (a) The governor shall appoint the directors with the consent of the Senate as follows:
             111          (i) two representatives of health insurance companies or health service organizations;
             112          (ii) one representative of a health maintenance organization;
             113          (iii) one physician;
             114          (iv) one representative of hospitals;
             115          (v) one representative of the general public who is reasonably expected to qualify for
             116      coverage under the pool;
             117          (vi) one parent or spouse of such an individual;
             118          (vii) one representative of the general public; and
             119          (viii) one representative of employers.
             120          (b) The board shall also include:


             121          (i) the commissioner or his designee; and
             122          (ii) the executive director of the Department of Health or his designee.
             123          (3) (a) Except as required by Subsection (3)(b), as terms of current board members
             124      expire, the governor shall appoint each new member or reappointed member to a four-year
             125      term.
             126          (b) Notwithstanding the requirements of Subsection (3)(a), the governor shall, at the
             127      time of appointment or reappointment, adjust the length of terms to ensure that the terms of
             128      board members are staggered so that approximately half of the board is appointed every two
             129      years.
             130          (4) When a vacancy occurs in the membership for any reason, the replacement shall be
             131      appointed for the unexpired term in the same manner as the original appointment was made.
             132          (5) (a) (i) Members who are not government employees shall receive no compensation
             133      or benefits for their services, but may receive per diem and expenses incurred in the
             134      performance of the member's official duties at the rates established by the Division of Finance
             135      under Sections 63A-3-106 and 63A-3-107 from the Pool Fund.
             136          (ii) Members may decline to receive per diem and expenses for their service.
             137          (b) (i) State government officer and employee members who do not receive salary, per
             138      diem, or expenses from their agency for their service may receive per diem and expenses
             139      incurred in the performance of their official duties from the pool at the rates established by the
             140      Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             141          (ii) A state government member who is a member because of their state government
             142      position may not receive per diem or expenses for their service.
             143          (iii) State government officer and employee members may decline to receive per diem
             144      and expenses for their service.
             145          (6) The board shall elect annually a chair and vice chair from its membership.
             146          (7) [Seven] Six board members are a quorum for the transaction of business.
             147          (8) The action of a majority of the members of the quorum is the action of the board.
             148          (9) The board shall submit a plan of operation to the commissioner no later than
             149      January 1, 1991.
             150          (10) The sale of policies under this chapter shall commence on July 1, 1991, or as soon
             151      thereafter as adequate funding for the coverage is available as determined by the commissioner.


             152          Section 3. Section 31A-29-106 is amended to read:
             153           31A-29-106. Powers of board.
             154          (1) The board shall have the general powers and authority granted under the laws of
             155      this state to insurance companies licensed to transact health care insurance business. In
             156      addition, the board shall have the specific authority to:
             157          [(1)] (a) enter into contracts to carry out the provisions and purposes of this chapter,
             158      including, with the approval of the commissioner, contracts with:
             159          [(a)] (i) similar pools of other states for the joint performance of common
             160      administrative functions; or
             161          [(b)] (ii) persons or other organizations for the performance of administrative
             162      functions;
             163          [(2)] (b) sue or be sued, including taking such legal action necessary to avoid the
             164      payment of improper claims against the pool or the coverage provided through the pool;
             165          [(3)] (c) establish appropriate rates, rate schedules, rate adjustments, expense
             166      allowances, agents' referral fees, claim reserve formulas, and any other actuarial function
             167      appropriate to the operation of the pool;
             168          [(4)] (d) issue policies of insurance in accordance with the requirements of this chapter;
             169          [(5)] (e) retain an executive director and appropriate legal, actuarial, and other
             170      personnel as necessary to provide technical assistance in the operations of the pool;
             171          [(6)] (f) establish rules, conditions, and procedures for reinsuring risks under this
             172      chapter;
             173          [(7)] (g) cause the pool to have an annual audit of its operations by the state auditor;
             174          [(8)] (h) coordinate with the Department of Health in seeking to obtain from the
             175      [United States Health Care Financing Administration] Centers for Medicare and Medicaid
             176      Services, or other appropriate office or agency of government, all appropriate waivers,
             177      authority, and permission needed to coordinate the coverage available from the pool with
             178      coverage available under Medicaid, either before or after Medicaid coverage, or as a
             179      conversion option upon completion of Medicaid eligibility, without the necessity for
             180      requalification by the [insured] enrollee;
             181          [(9)] (i) provide for and employ cost containment measures and requirements including
             182      preadmission certification, concurrent inpatient review, and individual case management for


             183      the purpose of making the pool more cost-effective;
             184          [(10)] (j) offer pool coverage through contracts with health maintenance organizations,
             185      preferred provider organizations, and other managed care systems that will manage costs while
             186      maintaining quality care;
             187          [(11)] (k) establish annual limits on benefits payable under the pool to or on behalf of
             188      any [person] enrollee;
             189          [(12)] (l) exclude from coverage under the pool specific benefits, medical conditions,
             190      and procedures for the purpose of protecting the financial viability of the pool;
             191          [(13)] (m) administer the Pool Fund; [and]
             192          [(14)] (n) make rules in accordance with Title 63, Chapter 46a, Utah Administrative
             193      Rulemaking Act, to implement this chapter[.]; and
             194          (o) adopt, trademark, and copyright a trade name for the pool for use in marketing and
             195      publicizing the pool and its products.
             196          (2) (a) The board shall prepare and submit an annual report to the Legislature which
             197      shall include:
             198          (i) the net premiums anticipated;
             199          (ii) actuarial projections of payments required of the pool;
             200          (iii) the expenses of administration; and
             201          (iv) the anticipated reserves or losses of the pool.
             202          (b) The budget for operation of the pool is subject to the approval of the board.
             203          (c) The administrative budget of the board and the commissioner under this chapter
             204      shall comply with the requirements of Title 63, Chapter 38, Budgetary Procedures Act, and is
             205      subject to review and approval by the Legislature.
             206          Section 4. Section 31A-29-107 is amended to read:
             207           31A-29-107. Powers of commissioner.
             208          (1) The commissioner shall, after notice and hearing, approve the plan of operation if
             209      [he] the commissioner determines that the plan will assure the fair, reasonable, and equitable
             210      administration of the pool.
             211          (2) The plan shall be effective upon the commissioner's written approval.
             212          (3) If the board fails to submit a proposed plan of operation by January 1, 1991, or any
             213      time thereafter fails to submit proposed amendments to the plan of operation within a


             214      reasonable time after requested by the commissioner, the commissioner shall, after notice and
             215      hearing, adopt such rules as necessary to effectuate the provisions of this chapter.
             216          (4) Rules promulgated by the commissioner shall continue in force until modified by
             217      him or until superseded by a subsequent plan of operation submitted by the board and approved
             218      by the commissioner.
             219          (5) The commissioner may designate an executive secretary from the department to
             220      provide administrative assistance to the board in carrying out its responsibilities.
             221          [(6) (a) The board shall prepare and submit annually to the Legislature a budget
             222      forecast for operation of the pool which shall include:]
             223          [(i) the net premiums anticipated;]
             224          [(ii) actuarial projections of payments required of the pool;]
             225          [(iii) the expenses of administration; and]
             226          [(iv) the anticipated reserves or losses of the pool.]
             227          [(b) The budget for operation of the pool is subject to the approval of the board.]
             228          [(c) The administrative budget of the board and the commission under this chapter
             229      shall comply with the requirements of Title 63, Chapter 38, Budgetary Procedures Act, and is
             230      subject to review and approval by the Legislature.]
             231          Section 5. Section 31A-29-109 is amended to read:
             232           31A-29-109. Policy forms.
             233          [(1)] All policy forms issued by the pool shall conform in substance to forms
             234      developed by the board and shall be filed with the commissioner before they are issued.
             235          [(2) The pool may not issue a pool policy to any person, who on the effective date of
             236      the coverage applied for, has coverage substantially equivalent to a pool policy either as an
             237      insured or a covered dependent, or who would be eligible for that coverage if he elected to
             238      obtain it.]
             239          Section 6. Section 31A-29-110 is amended to read:
             240           31A-29-110. Pool administrator -- Selection -- Powers.
             241          (1) The board shall select a pool administrator in accordance with Title 63, Chapter 56,
             242      Utah Procurement Code. The board shall evaluate bids based on criteria established by the
             243      board, which shall include:
             244          (a) ability to manage medical expenses;


             245          (b) proven ability to handle accident and health insurance;
             246          (c) efficiency of claim paying procedures;
             247          (d) marketing and underwriting;
             248          (e) proven ability for managed care and quality assurance;
             249          (f) provider contracting and discounts;
             250          (g) pharmacy benefit management;
             251          [(d)] (h) an estimate of total charges for administering the pool; and
             252          [(e)] (i) ability to administer the pool in a cost-efficient manner.
             253          (2) A pool administrator may be:
             254          (a) a health insurer;
             255          (b) a health maintenance organization;
             256          (c) a third-party administrator; or
             257          (d) any person or entity which has demonstrated ability to meet the criteria in
             258      Subsection (1).
             259          (3) (a) The pool administrator shall serve for a period of three years subject to removal
             260      for cause and subject to the terms, conditions, and limitations of the contract between the board
             261      and the administrator.
             262          (b) At least one year prior to the expiration of each three-year period of service by the
             263      pool administrator, the board shall invite all interested parties, including the current pool
             264      administrator, to submit bids to serve as the pool administrator for the succeeding three-year
             265      period.
             266          (c) Selection of the pool administrator for a succeeding period shall be made at least
             267      six months prior to the expiration of a three-year period of service by the pool administrator.
             268          (4) The pool administrator is responsible for all operational functions of the pool and
             269      shall:
             270          (a) have access to all nonpatient specific experience data, statistics, treatment criteria,
             271      and guidelines compiled or adopted by the Medicaid program, the Public Employees Health
             272      Plan, the Department of Health, or the Insurance Department, and which are not otherwise
             273      declared by statute to be confidential;
             274          (b) perform all marketing, eligibility, enrollment, member agreements, and
             275      administrative claim payment functions relating to the pool;


             276          (c) establish, administer, and operate a monthly premium billing procedure for
             277      collection of premiums from [insured persons] enrollees;
             278          (d) perform all necessary functions to assure timely payment of benefits to [persons
             279      covered under the pool] enrollees, including:
             280          (i) making information available relating to the proper manner of submitting a claim
             281      for benefits to the pool administrator and distributing forms upon which submission shall be
             282      made; and
             283          (ii) evaluating the eligibility of each claim for payment by the pool;
             284          (e) submit regular reports to the board regarding the operation of the pool, the
             285      frequency, content, and form of which reports shall be determined by the board;
             286          (f) following the close of each calendar year, determine net written and earned
             287      premiums, the expense of administration, and the paid and incurred losses for the year and
             288      submit a report of this information to the board, the commissioner, and the Division of Finance
             289      on a form prescribed by the commissioner; and
             290          (g) be paid as provided in the plan of operation for expenses incurred in the
             291      performance of the pool administrator's services.
             292          Section 7. Section 31A-29-111 is amended to read:
             293           31A-29-111. Eligibility -- Limitations.
             294          (1) (a) Except as provided in Subsection (1)(b), [a person] an individual is eligible for
             295      pool coverage if the individual:
             296          (i) [(A) the person] pays the established premium; [and]
             297          [(B)] (ii) is a resident of this state; [or] and
             298          (iii) meets the health underwriting criteria under Subsection (4)(a).
             299          [(ii) is a dependent child 25 years of age or less of a person described in Subsection
             300      (1)(a)(i).]
             301          (b) Notwithstanding Subsection (1)(a), [a person] an individual is not eligible for pool
             302      coverage if one of the following conditions apply:
             303          (i) at the time of application, the [person] individual is eligible for health care benefits
             304      under Medicaid or Medicare, except as provided in Section 31A-29-112 ;
             305          (ii) the [person] individual has terminated coverage in the pool, unless:
             306          (A) 12 months have elapsed since the termination date; or


             307          (B) the [person] individual demonstrates that [continuous other] creditable coverage
             308      has been involuntarily terminated for any reason other than nonpayment of premium;
             309          (iii) the pool has paid the maximum lifetime benefit to or on behalf of the [person]
             310      individual;
             311          (iv) the [person] individual is an inmate of a public institution;
             312          (v) the [person] individual is eligible for other public programs for which medical care
             313      is provided;
             314          (vi) the [person's] individual's health condition does not meet the criteria established
             315      under Subsection (4);
             316          (vii) the [person] individual is an eligible employee, a dependant of an eligible
             317      employee, or a member of an employer group that offers health insurance or a self-insurance
             318      arrangement to all its eligible employees, dependants, or members; [or]
             319          (viii) at the time the pool coverage is applied for, the individual has coverage
             320      substantially equivalent to a pool policy, as established by the board in administrative rule,
             321      either as an insured or a covered dependant, or the individual would be eligible for the
             322      substantially equivalent coverage if the individual elected to obtain the coverage; or
             323          [(viii)] (ix) at the time of application, the [person] individual:
             324          (A) is not [eligible for coverage that is subject to the Health Insurance Portability and
             325      Accountability Act, P.L. 104-91, 110 Stat. 1962] HIPAA eligible; and
             326          (B) has not resided in Utah for at least 12 consecutive months preceding the date of
             327      application.
             328          (2) (a) Notwithstanding Subsection (1)(b)[(viii)](ix), if otherwise eligible under
             329      Subsection (1), [a person] an individual whose health insurance coverage from a state health
             330      risk pool with similar coverage is terminated because of nonresidency in another state may
             331      apply for coverage under the pool subject to the conditions of Subsections (1)(b)(i) through
             332      (vii).
             333          (b) (i) Coverage sought under Subsection (2)(a) shall be applied for within 63 days after
             334      the termination date of the previous risk pool coverage.
             335          (ii) If premiums are paid for the entire coverage period under the previous risk pool
             336      with similar coverage, the effective date of [the pool's] this state's pool coverage shall be the
             337      date of termination of the previous risk pool coverage.


             338          (iii) If premiums are not paid back to the previous risk pool termination date, then the
             339      effective date will be determined by the pool administrator in accordance with the date of
             340      application.
             341          (c) The waiting period of [a person] an individual with a preexisting condition applying
             342      for coverage under this chapter shall be waived [if]:
             343          (i) to the extent to which the waiting period was satisfied under a similar plan from
             344      another state; and
             345          (ii) if the other state's benefit limitation was not reached.
             346          (3) If an eligible [person] individual applies for pool coverage within 30 days of being
             347      denied coverage by an individual carrier, the effective date for pool coverage shall be [set at]
             348      no later than the first day of the month following the date of submission of the completed
             349      insurance application to the carrier.
             350          (4) (a) The board shall establish and adjust, as necessary, health underwriting criteria
             351      based on:
             352          (i) health condition; and
             353          (ii) expected claims so that the expected claims are anticipated to remain within
             354      available funding.
             355          (b) The [commissioner] board may contract with one or more providers under Title 63,
             356      Chapter 56, Utah Procurement Code, to develop underwriting criteria under Subsection (4)(a).
             357          (c) If [a person] an individual is denied coverage by the pool under the criteria
             358      established in Subsection (4)(a), the pool shall issue a certificate of insurability to the
             359      [applicant] individual for coverage under Subsection 31A-30-108 (3).
             360          Section 8. Section 31A-29-112 is amended to read:
             361           31A-29-112. Medicaid recipients.
             362          (1) If authorized by federal statutes or rules, [a person] an individual receiving
             363      Medicaid benefits may continue to receive those benefits while satisfying the preexisting
             364      condition requirements established by Section 31A-29-113 and the terms of the pool policy
             365      issued under this chapter.
             366          (2) If allowed by federal statute, federal regulation, state statute, or rule, the
             367      Department of Health shall allocate premiums paid to the pool by [a person] an individual
             368      receiving Medicaid benefits to that [person's] individual's spenddown for purposes of the


             369      Medicaid [no-grant] program.
             370          (3) (a) If [a person] an individual continues to receive Medicaid benefits after the
             371      requirements for a preexisting condition are satisfied, the pool administrator may not issue [an
             372      insurance] a pool policy or allow that [person] individual to receive any benefit from the pool.
             373          (b) If [a person] an individual continues to receive Medicaid benefits when the
             374      requirements for a preexisting condition are satisfied, the pool administrator shall give any
             375      premiums collected by it during the preexisting conditions period to the Medicaid program.
             376          (4) (a) If [any person is covered by a pool policy and] an enrollee becomes eligible to
             377      receive Medicaid benefits, [that person's] the enrollee's coverage by the pool terminates as of
             378      the effective date of [the receipt of] Medicaid [benefits] coverage.
             379          (b) The pool administrator shall:
             380          (i) include a provision in the [insurance] pool policy requiring [a person covered by a
             381      pool policy] an enrollee to provide written notice to the pool administration if [he] the enrollee
             382      becomes covered by Medicaid; and
             383          (ii) terminate [a person's] an enrollee's coverage by the pool as of the effective date of
             384      the [person's receipt of] enrollee's Medicaid [benefits] coverage when the pool administrator
             385      becomes aware that the [person] enrollee is covered by Medicaid.
             386          (5) If [a person] an individual terminates coverage under Medicaid and applies for
             387      coverage under a pool policy within 45 days after terminating the coverage, the [person]
             388      individual may begin coverage under a pool policy as of the date that Medicaid coverage
             389      terminated, if [a person] an individual meets the other eligibility requirements of the chapter
             390      and pays the required premium.
             391          (6) [If a person's eligibility for Medicaid requires a spenddown, as defined in rule, that
             392      exceeds the premium for a pool policy, that person shall be] Notwithstanding the provision of
             393      Subsection 31A-29-111 (1)(b)(i), an individual is eligible for coverage by the pool if the
             394      [remaining] requirements of Section 31A-29-111 are met[.] and if:
             395          (a) the individual's eligibility for Medicaid requires a spenddown, as defined by rule,
             396      that exceeds the premium for a pool policy; or
             397          (b) the individual is eligible for the Primary Care Network program administered by
             398      the Department of Health.
             399          Section 9. Section 31A-29-113 is amended to read:


             400           31A-29-113. Benefits -- Additional types of pool insurance -- Preexisting
             401      conditions -- Waiver -- Maximum benefits.
             402          (1) (a) The pool policy shall pay for eligible medical expenses rendered or furnished
             403      for the diagnoses or treatment of illness or injury that:
             404          (i) exceed the deductible and copayment amounts applicable under Section
             405      31A-29-114 ; and
             406          (ii) are not otherwise limited or excluded.
             407          (b) Eligible medical expenses are the allowed charges established by the board for the
             408      health care services and items rendered during times for which benefits are extended under the
             409      pool policy.
             410          (2) The coverage to be issued by the pool, its schedule of benefits, exclusions, and
             411      other limitations shall be established by the board.
             412          (3) The commissioner shall approve the benefit package developed by the board to
             413      ensure its compliance with this chapter.
             414          (4) The pool shall offer at least one benefit plan through a managed care program as
             415      authorized under Section 31A-29-106 .
             416          (5) This chapter may not be construed to prohibit the pool from issuing additional types
             417      of [health insurance] pool policies with different types of benefits which in the opinion of the
             418      board may be of benefit to the citizens of Utah.
             419          (6) The board shall design and require an administrator to employ cost containment
             420      measures and requirements including preadmission certification and concurrent inpatient
             421      review for the purpose of making the pool more cost effective. The provisions of Sections
             422      31A-22-617 and 31A-22-618 [of this title] do not apply to coverage issued under this chapter.
             423          (7) (a) A pool policy may contain provisions under which coverage for a preexisting
             424      condition is excluded during a six-month period following the effective date of plan coverage
             425      [as to] for a given individual [for a preexisting condition, as long as either of the following
             426      exists:].
             427          [(a) the condition has manifested itself within a period of six months before the
             428      effective date of coverage in such a manner as would cause an ordinary, prudent person to seek
             429      diagnosis or treatment; or]
             430          [(b) medical advice or treatment was recommended or received for the condition


             431      within a period of six months before the effective date of coverage.]
             432          (b) Subsection (7)(a) does not apply to a HIPAA eligible individual.
             433          (8) A pool policy may exclude coverage for pregnancies for ten months following the
             434      effective date of coverage, unless the individual is HIPAA eligible [to receive credit for
             435      previous coverage under the Health Insurance Portability and Accountability Act, P. L. 104-91,
             436      110 Stat. 1962].
             437          [(9) (a) For individuals changing from individual health insurance, as defined in
             438      Subsection 31A-29-103 (5), to the health insurance pool, the preexisting condition exclusion
             439      described in Subsection (7) shall be waived to the extent to which similar exclusions have been
             440      satisfied under any prior health insurance coverage:]
             441          [(i) which was involuntarily terminated, other than for nonpayment of premium, if the
             442      application for pool coverage is made not later than 63 days following the involuntary
             443      termination; or]
             444          [(ii) whose premium rate exceeds the rate of the pool for equal or lesser benefits.]
             445          [(b) If Subsection (9)(a) applies, coverage in the pool shall be effective from the date
             446      on which the prior coverage was terminated.]
             447          [(10)] (9) (a) The pool [may not apply any] will waive the preexisting condition
             448      exclusion [to] described in Subsection (7)(a) for an individual that is changing [group] health
             449      coverage to the [health insurance] pool, to the extent to which similar exclusions have been
             450      satisfied under any prior health insurance coverage if:
             451          (i) the individual applies not later than 63 days following the date of involuntary
             452      termination, other than for nonpayment of premiums, from [group] health coverage; or
             453          [(ii) the individual has at least 18 months of creditable coverage as of the date the
             454      individual seeks coverage from:]
             455          [(A) the health insurance pool; or]
             456          [(B) an individual health plan;]
             457          [(iii) the individual's most recent prior creditable coverage was under:]
             458          [(A) a group health plan;]
             459          [(B) a government plan; or]
             460          [(C) a church plan;]
             461          [(iv) the individual is not eligible for coverage under:]


             462          [(A) a group health plan;]
             463          [(B) Part A or Part B of Title XVIII of the Social Security Act; or]
             464          [(C) a state plan under Title XIX of the Social Security Act;]
             465          [(v) the individual does not have other health insurance coverage;]
             466          [(vi) the individual's most recent coverage was not terminated because of:]
             467          [(A) nonpayment of premiums; or]
             468          [(B) fraud;]
             469          [(vii) the individual has been offered the option of continuing coverage under:]
             470          [(A) a continuation provision; or]
             471          [(B) a similar state extension program; and]
             472          [(viii)] (ii) the individual's premium rate exceeds the rate of the pool for equal or lesser
             473      coverage provided that the application for pool coverage is made no later than 63 days
             474      following the termination from the prior health insurance coverage.
             475          (b) In accordance with Subsections (7)(b) and (8), the pool may not apply a preexisting
             476      condition exclusion if the individual is HIPAA eligible.
             477          [(b)] (c) If Subsection [(10)(a)] (9) applies, coverage in the pool shall be effective from
             478      the date on which the prior coverage was terminated.
             479          [(11) The board shall establish a policy allowing for the waiver of the preexisting
             480      condition exclusion set forth in Subsection (7) for coverage of medically necessary outpatient
             481      medical care.]
             482          [(12) Benefits available under the pool may not exceed $1,000,000 paid to or on behalf
             483      of any person.]
             484          (10) Covered benefits available from the pool may not exceed a $1,000,000 lifetime
             485      maximum, which includes a per enrollee calendar year maximum established by the board.
             486          Section 10. Section 31A-29-114 is amended to read:
             487           31A-29-114. Deductibles -- Copayments.
             488          (1) (a) Subject to the [limitation] limits provided in Subsection (3), a pool policy shall
             489      impose a deductible on a per calendar year basis.
             490          (b) Deductible plans of $500 and $1,000 shall initially be offered. Other deductible
             491      plans may be offered by the pool.
             492          (c) The deductible [must be] is applied to [the first $500 or $1,000] all of the eligible


             493      medical expenses as defined in Section 31A-29-113 , incurred by the [insured] enrollee until the
             494      deductible has been satisfied. There are no benefits payable before the deductible has been
             495      satisfied.
             496          [(d) No more than three deductibles under the pool policy per family may be applied.]
             497          (d) The pool may offer separate deductibles for prescription benefits.
             498          (2) (a) Subject to the [limitations] limits provided in Subsection (3), a mandatory
             499      [copayment] coinsurance requirement shall be imposed at the rate of at least 20% of eligible
             500      medical expenses in excess of the mandatory deductible.
             501          (b) Any coinsurance imposed under this Subsection (2) shall be designated in the pool
             502      policy.
             503          (3) Except as provided in Subsection (4), the maximum aggregate out-of-pocket
             504      payments for eligible medical expenses incurred by the [insured] enrollee in the form of
             505      deductibles and coinsurance may not exceed:
             506          (a) $1,500 per individual [or $2,500 per family] per [policy] calendar year for the $500
             507      deductible plan[. For the $1,000 deductible plan, the maximum aggregate out-of-pocket
             508      payments for eligible expenses by the insured in the form of deductibles and coinsurance may
             509      not exceed $2,000 per individual or $3,000 per family per policy year.];
             510          (b) $2,000 per individual per calendar year for the $1,000 deductible plan; or
             511          (c) if other deductible plans are offered by the pool, an amount per individual will be
             512      established by the board.
             513          (4) (a) [Notwithstanding] When the enrollee has incurred the maximum aggregate
             514      out-of-pocket payments under Subsection (3), the board may establish a [copayment]
             515      coinsurance requirement to be imposed on eligible medical expenses in excess of the maximum
             516      aggregate out-of-pocket expense limits set forth in Subsection (3). [Such copayment
             517      requirement]
             518          (b) The circumstances in which the coinsurance authorized by this Subsection (4) may
             519      be imposed shall be designated in the pool policy.
             520          (c) The coinsurance authorized by this Subsection (4) may be imposed at a rate not to
             521      exceed 5% of eligible medical expenses.
             522          (5) The limits on maximum aggregate out-of-pocket payments for eligible medical
             523      expenses incurred by the enrollee in the form of deductibles and coinsurance under this section


             524      shall not include out-of-pocket payments for prescription benefits.
             525          Section 11. Section 31A-29-115 is amended to read:
             526           31A-29-115. Cancellation -- Notice.
             527          (1) (a) On the date of renewal, the pool may cancel [a person's] an enrollee's policy if:
             528          (i) the [person's] enrollee's health condition does not meet the criteria established in
             529      Subsection 31A-29-111 (4);
             530          (ii) the pool has provided written notice to the [person's] enrollee's last-known address
             531      no less than 60 days before cancellation; and
             532          (iii) at least one individual carrier has not reached the individual enrollment cap
             533      established in Section 31A-30-110 .
             534          (b) The pool shall issue a certificate of insurability to [a person] an enrollee whose
             535      policy is cancelled under Subsection (1)(a) for coverage under Subsection 31A-30-108 (3) if the
             536      requirements of Subsection 31A-29-111 (4) are met.
             537          (2) The pool may cancel [a person's] an enrollee's policy at any time if:
             538          [(a) the person establishes a residency outside of Utah for three consecutive months;
             539      and]
             540          [(b)] (a) the pool has provided written notice to the [person's] enrollee's last-known
             541      address no less than 15 days before cancellation[.]; and
             542          (b) (i) the enrollee establishes a residency outside of Utah for three consecutive
             543      months;
             544          (ii) there is nonpayment of premiums; or
             545          (iii) the pool determines that the enrollee does not meet the eligibility requirements set
             546      forth in Section 31A-29-111 , in which case:
             547          (A) the policy may be retroactively terminated for the period of time in which the
             548      enrollee was not eligible;
             549          (B) retroactive termination may not exceed three years; and
             550          (C) the board's remedy under this Subsection (2)(b) shall be a cause of action against
             551      the enrollee for benefits paid during the period of ineligibility in accordance with Subsection
             552      31A-29-119 (3).
             553          Section 12. Section 31A-29-117 is amended to read:
             554           31A-29-117. Premium rates.


             555          (1) (a) Premium charges for coverage under the pool may not be unreasonable in
             556      relation to:
             557          (i) the benefits provided;
             558          (ii) the risk experience; and
             559          (iii) the reasonable expenses provided in the coverage.
             560          (b) Separate schedules of premium rates based on age and other appropriate
             561      demographic characteristics may apply for individual risks.
             562          (2) A small employer carrier, as defined in Section 31A-1-301 , shall annually inform
             563      the commissioner by April 1 of the carrier's:
             564          (a) small employer index premium rates as of March 1 of the current and preceding
             565      year; and
             566          (b) average percentage change in the index premium rate as of March 1, of the current
             567      and preceding year.
             568          (3) (a) Premium rates [in effect as of January 1, 1997, shall be adjusted on July 1,
             569      1997, and each following July 1 may be adjusted by the board] may be adjusted by the board on
             570      a biannual basis, for an effective date of January 1 and July 1.
             571          (b) In adjusting premium rates, the board shall:
             572          (i) consider the average increase in small employer index rates for the five largest small
             573      employer carriers submitted under Subsection (2); and
             574          (ii) be subject to Subsection (1).
             575          (4) The board may establish a premium scale based on income. The highest rate may
             576      not exceed the expected claims and expenses for the individual.
             577          (5) If [a person] an individual is [an] HIPAA eligible [individual as defined in the
             578      Health Insurance Portability and Accountability Act, P.L. 104-191, 110 Stat. 1979, Sec.
             579      2741(b)], the maximum premium rate for that [person] individual may not exceed the amount
             580      permitted under [P.L. 104-191, 110 Stat. 1986, Sec. 2744(c)(2)(B)] HIPAA.
             581          (6) All rates and rate schedules shall be submitted by the board to the commissioner for
             582      approval.
             583          Section 13. Section 31A-29-119 is amended to read:
             584           31A-29-119. Benefit reduction.
             585          (1) The pool shall be the last payer of benefits whenever any other benefit is available.


             586          (2) Benefits otherwise payable under pool coverage shall be reduced by:
             587          (a) all amounts paid or payable through any other health insurance or any limited health
             588      benefit plan, including a self-insured plan;
             589          (b) all hospital and medical expense benefits paid or payable under any workers'
             590      compensation coverage, automobile medical payment, or liability insurance, whether provided
             591      on the basis of fault or no-fault; and
             592          (c) any hospital or medical benefits paid or payable under or provided pursuant to any
             593      state or federal law program.
             594          (3) The pool administrator shall have a cause of action against an [insured] enrollee for
             595      the recovery of the amount of benefits paid which are not for covered expenses. Benefits due
             596      from the pool may be reduced or refused as a set-off against any amount recoverable under this
             597      Subsection (3).
             598          Section 14. Section 31A-29-120 is amended to read:
             599           31A-29-120. Enterprise fund.
             600          (1) There is created an enterprise fund known as the Comprehensive Health Insurance
             601      Pool Enterprise Fund.
             602          (2) The following funds shall be credited to the pool fund:
             603          (a) [$5,000,000 appropriated] appropriations from the General Fund [for Fiscal Year
             604      1997-98];
             605          (b) pool policy premium payments; and
             606          (c) all interest and dividends earned on the pool fund's assets.
             607          (3) All money received by the pool fund shall be deposited in compliance with Section
             608      51-4-1 and shall be held by the state treasurer and invested in accordance with Title 51,
             609      Chapter 7, State Money Management Act.
             610          (4) The pool fund shall comply with the accounting policies, procedures, and reporting
             611      requirements established by the Division of Finance.
             612          (5) The pool fund shall comply with Title 63A, Utah Administrative Services Code.
             613          Section 15. Section 31A-29-122 is amended to read:
             614           31A-29-122. Immunity.
             615          There is no liability on the part of and no cause of action of any nature may arise against
             616      any member of the board, the board's agents or employees, the executive director, the


             617      administrator or its agents or employees, or the commissioner for any action or omission by
             618      them in effecting the provisions of this chapter.




Legislative Review Note
    as of 10-24-02 12:53 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


Interim Committee Note
    as of 12-12-02 1:38 PM


The Health and Human Services Interim Committee recommended this bill.


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