February 5, 2003, Introduced by Rep. Stewart and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 501, 503, 2059, 2212b, 2213, 2403, 2406,
2418, 2420, 3406f, 3539, 5104, and 7705 (MCL 500.501, 500.503,
500.2059, 500.2212b, 500.2213, 500.2403, 500.2406, 500.2418,
500.2420, 500.3406f, 500.3539, 500.5104, and 500.7705), sections
501 and 503 as added by 2001 PA 24, section 2059 as amended by
1986 PA 253, section 2212b as amended by 2000 PA 486, section
2213 as amended by 2002 PA 707, sections 2403, 2406, 2418, and
2420 as amended by 1993 PA 200, section 3406f as added by 1996 PA
517, section 3539 as added by 2000 PA 252, section 5104 as
amended by 1999 PA 211, and section 7705 as amended by 1996 PA
548, and by adding chapters 36A and 37; and to repeal acts and
parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 501. (1) This chapter applies to the treatment of
2 nonpublic personal financial information about individuals who
3 obtain or are claimants or beneficiaries of products or services
4 primarily for personal, family, or household purposes from
5 licensees whether through an individual or group plan. This
6 chapter does not apply to information about companies or about
7 individuals who obtain products or services for business,
8 commercial, or agricultural purposes.
9 (2) This chapter does not modify, limit, or supersede any
10 provision of section 1243.
11 (3) This chapter does not modify, limit, or supersede statute
12 or rules governing the confidentiality or privacy of individually
13 identifiable health and medical information, including, but not
14 limited to, all of the following:
15 (a) Section 2157 of the revised judicature act of 1961, 1961
16 PA 236, MCL 600.2157.
17 (b) Section 1750 750
of the mental health code, 1974
18 PA 258, MCL 330.1750.
19 (c) The public health code, 1978 PA 368, MCL 333.1101 to
20 333.25211.
21 (d) Section 406
of the nonprofit health care corporation
22 reform act, 1980 PA
350, MCL 550.1406.
23 (d) (e) Sections
410 and 492A 492a of the Michigan penal
24 code, 1931 PA 328, MCL 750.410 and 750.492a.
25 (e) (f) Section
13 of the freedom of information act, 1976
26 PA 442, MCL 15.243.
27 (f) (g) Section
34 of the third party administrator act,
1 1984 PA 218, MCL 550.934.
2 Sec. 503. As used in this chapter:
3 (a) "Affiliate" means any company that controls, is
4 controlled by, or is under common control with another company.
5 (b) "Annual notice" means the privacy notice required in
6 section 513.
7 (c) "Clear and conspicuous" means that a notice is reasonably
8 understandable and designed to call attention to the nature and
9 significance of the information in the notice.
10 (d) "Collect" means to obtain information that the licensee
11 organizes or can retrieve by the name of an individual or by
12 identifying number, symbol, or other identifying particular
13 assigned to the individual, irrespective of the source of the
14 underlying information.
15 (e) "Company" means any corporation, limited liability
16 company, business trust, general or limited partnership,
17 association, sole proprietorship, or similar organization.
18 (f) "Consumer" means an individual, or the individual's legal
19 representative, who seeks to obtain, obtains, or has obtained an
20 insurance product or service from a licensee that is to be used
21 primarily for personal, family, or household purposes. As used
22 in this chapter:
23 (i) "Consumer" includes, but is not limited to, all of the
24 following:
25 (A) An individual who provides nonpublic personal information
26 to a licensee in connection with obtaining or seeking to obtain
27 financial, investment, or economic advisory services relating to
1 an insurance product or service. An individual is a consumer
2 under this subparagraph regardless of whether the licensee
3 establishes an ongoing advisory relationship.
4 (B) An applicant for insurance prior to the inception of
5 insurance coverage.
6 (C) An individual that a licensee discloses nonpublic,
7 personal financial information about to a nonaffiliated third
8 party other than as permitted under sections 535, 537, and 539,
9 if the individual is any of the following:
10 (I) A beneficiary of a life insurance policy underwritten by
11 the licensee.
12 (II) A claimant under an insurance policy issued by the
13 licensee.
14 (III) An insured under an insurance policy or an annuitant
15 under an annuity issued by the licensee.
16 (IV) A mortgagor of a mortgage covered under a mortgage
17 insurance policy.
18 (ii) So long as the licensee provides the initial, annual,
19 and revised notices under this chapter to the plan sponsor, group
20 or blanket insurance policyholders, and group annuity contract
21 holder and does not disclose to a nonaffiliated third party
22 nonpublic personal financial information other than as permitted
23 under sections 535, 537, and 539, "consumer" does not include an
24 individual solely because he or she meets 1 of the following:
25 (A) Is a participant or a beneficiary of an employee benefit
26 plan that the licensee administers or sponsors or for which the
27 licensee acts as a trustee, insurer, or fiduciary.
1 (B) Is covered under a group or blanket insurance policy or
2 group annuity contract issued by the licensee.
3 (iii) "Consumer" does not include an individual solely
4 because he or she meets 1 of the following:
5 (A) Is a beneficiary of a trust for which the licensee is a
6 trustee.
7 (B) Has designated the licensee as trustee for a trust.
8 (g) "Consumer reporting agency" has the same meaning as in
9 section 603(f) of the federal
fair credit reporting act, title
10 VI of the consumer credit protection act, Public Law 90-321, 15
11 U.S.C. 1681a.
12 (h) "Customer" means a consumer who has a customer
13 relationship with a licensee. However, customer does not include
14 an individual solely because he or she meets 1 of the following:
15 (i) Is a participant or a beneficiary of an employee benefit
16 plan that the licensee administers or sponsors or for which the
17 licensee acts as a trustee, insurer, or fiduciary.
18 (ii) Is covered under a group or blanket insurance policy or
19 group annuity contract issued by the licensee.
20 (iii) Is a beneficiary or claimant under a policy of
21 insurance.
22 (i) "Customer relationship" means a continuing relationship
23 between a consumer and a licensee under which the licensee
24 provides 1 or more insurance products or services to the consumer
25 that are to be used primarily for personal, family, or household
26 purposes.
27 (j) "Initial notice" means the privacy notice required in
1 section 507.
2 (k) "Insurance product or service" means any product or
3 service that is offered by a licensee pursuant to the insurance
4 laws of this state or pursuant to a federal insurance program.
5 Insurance service includes a licensee's evaluation, brokerage, or
6 distribution of information that the licensee collects in
7 connection with a request or an application from a consumer for
8 an insurance product or service.
9 (l) "Licensee" means a licensed insurer or producer, and
10 other persons licensed or required to be licensed, authorized or
11 required to be authorized, registered or required to be
12 registered, or holding or required to hold a certificate of
13 authority under this act. Licensee includes, except as otherwise
14 provided, a nonprofit
health care corporation operating pursuant
15 to the nonprofit
health care corporation reform act, 1980 PA 350,
16 MCL 550.1101 to
550.1704, and a nonprofit dental
care
17 corporation operating pursuant to 1963 PA 125, MCL 550.351 to
18 550.373. Licensee includes an unauthorized insurer who places
19 business through a licensed surplus line agent or broker in this
20 state, but only for the surplus line placements placed under
21 chapter 19. Licensee does not include any of the following:
22 (i) A nonprofit health care corporation for member
personal
23 data and information
otherwise protected under section 406 of the
24 nonprofit health care
corporation reform act, 1980 PA 350,
25 MCL 550.1406.
26 (i) (ii) The
Michigan life and health guaranty association
27 and the property and casualty guaranty association.
1 (ii) (iii) The
Michigan automobile insurance placement
2 facility, the Michigan worker's compensation placement facility,
3 and the assigned claims facility created under section 3171.
4 However, servicing carriers for these facilities are licensees.
5 (m) "Nonaffiliated third party" means any person except a
6 licensee's affiliate or a person employed jointly by a licensee
7 and any company that is not the licensee's affiliate.
8 Nonaffiliated third party includes the other company that jointly
9 employs a person with a licensee. Nonaffiliated third party also
10 includes any company that is an affiliate solely by virtue of the
11 direct or indirect ownership or control of the company by the
12 licensee or its affiliate in conducting merchant banking or
13 investment banking activities of the type described in section
14 4(k)(4)(H) of the bank holding company act of 1956, chapter 240,
15 70 Stat. 135, 12 U.S.C. 1843, or insurance company investment
16 activities of the type described in section 4(k)(4)(I) of the
17 bank holding company act of 1956, chapter 240, 70 Stat. 135, 12
18 U.S.C. 1843.
19 (n) "Nonpublic personal financial information" means
20 personally identifiable financial information and any list,
21 description, or other grouping of consumers and publicly
22 available information pertaining to them that is derived using
23 any personally identifiable financial information that is not
24 publicly available. Nonpublic personal financial information
25 does not include any of the following:
26 (i) Health and medical information otherwise protected by
27 state or federal law.
1 (ii) Publicly available information.
2 (iii) Any list, description, or other grouping of consumers
3 and publicly available information pertaining to them that is
4 derived without using any personally identifiable financial
5 information that is not publicly available.
6 (o) "Opt out" means a direction by the consumer that the
7 licensee not disclose nonpublic personal financial information
8 about that consumer to a nonaffiliated third party, other than as
9 permitted by sections 535, 537, and 539.
10 (p) "Personally identifiable financial information" means any
11 of the following:
12 (i) Information a consumer provides to a licensee to obtain
13 an insurance product or service from the licensee.
14 (ii) Information about a consumer resulting from any
15 transaction involving an insurance product or service between a
16 licensee and a consumer.
17 (iii) Information the licensee otherwise obtains about a
18 consumer in connection with providing an insurance product or
19 service to that consumer.
20 (q) "Producer" means a person required to be licensed under
21 this act to sell, solicit, or negotiate insurance.
22 (r) "Publicly available information" means any information
23 that a licensee has a reasonable basis to believe is lawfully
24 made available to the general public from federal, state, or
25 local government records by wide distribution by the media or by
26 disclosures to the general public that are required to be made by
27 federal, state, or local law. A licensee has a reasonable basis
1 to believe that information is lawfully made available to the
2 general public if both of the following apply:
3 (i) The licensee has taken steps to determine that the
4 information is of the type that is available to the general
5 public.
6 (ii) If an individual can direct that the information not be
7 made available to the general public, that the licensee's
8 consumer has not directed that the information not be made
9 available to the general public.
10 (s) "Revised notice" means the privacy notice required in
11 section 525.
12 Sec. 2059. (1) No
A person shall not maintain or operate
13 any office in this state for the transaction of the business of
14 insurance, except as
provided for in this code act, or use the
15 name of any insurer, fictitious or otherwise, in conducting or
16 advertising any business not related or connected with the
17 business of insurance as governed by the provisions of this
18 code act except as otherwise provided in subsection
(2).
19 (2) Subsection (1) shall not be construed to prohibit an
20 agent licensed under chapter 12 from marketing or transacting any
21 of the following:
22 (a) Subject to the health benefit agent act, health care
23 coverage provided by a health
care corporation regulated
24 pursuant to the
nonprofit health care corporation reform act, Act
25 No. 350 of the Public
Acts of 1980, being sections 550.1101 to
26 550.1704 of the
Michigan Compiled Laws nonprofit
health insurer
27 under chapter 37.
1 (b) Subject to the health benefit agent act, health care
2 coverage provided by a health maintenance organization regulated
3 pursuant to part 210
of the public health code, Act No. 368 of
4 the Public Acts of
1978, being sections 333.21001 to 333.21098 of
5 the Michigan Compiled
Laws under chapter 35.
6 (c) Subject to the health benefit agent act, dental care
7 coverage provided by a dental care corporation regulated pursuant
8 to Act No. 125 of the
Public Acts of 1963, being sections
9 550.351 to 550.373 of
the Michigan Compiled Laws 1963
PA 125,
10 MCL 550.351 to 550.373.
11 (d) Administrative services of a third party administrator
12 regulated pursuant to the
third party administrator act, Act
13 No. 218 of the Public
Acts of 1984, being sections 550.901 to
14 550.962 of the
Michigan Compiled Laws 1984 PA
218, MCL 550.901
15 to 550.960.
16 Sec. 2212b. (1) This section applies to a policy or
17 certificate issued under section 3405 or 3631, to a certificate
18 issued under chapter 37, and to a health maintenance organization
19 contract.
20 (2) If participation between a primary care physician and an
21 insurer terminates, the physician may provide written notice of
22 this termination within 15 days after the physician becomes aware
23 of the termination to each insured who has chosen the physician
24 as his or her primary care physician. If an insured is in an
25 ongoing course of treatment with any other physician that is
26 participating with the insurer and the participation between the
27 physician and the insurer terminates, the physician may provide
1 written notice of this termination to the insured within 15 days
2 after the physician becomes aware of the termination. The
3 notices under this subsection may also describe the procedure for
4 continuing care under subsections (3) and (4).
5 (3) If participation between an insured's current physician
6 and an insurer terminates, the insurer shall permit the insured
7 to continue an ongoing course of treatment with that physician as
8 follows:
9 (a) For 90 days from the date of notice to the insured by the
10 physician of the physician's termination with the insurer.
11 (b) If the insured is in her second or third trimester of
12 pregnancy at the time of the physician's termination, through
13 postpartum care directly related to the pregnancy.
14 (c) If the insured is determined to be terminally ill prior
15 to a physician's termination or knowledge of the termination and
16 the physician was treating the terminal illness before the date
17 of termination or knowledge of the termination, for the remainder
18 of the insured's life for care directly related to the treatment
19 of the terminal illness.
20 (4) Subsection (3) applies only if the physician agrees to
21 all of the following:
22 (a) To continue to accept as payment in full reimbursement
23 from the insurer at the rates applicable prior to the
24 termination.
25 (b) To adhere to the insurer's standards for maintaining
26 quality health care and to provide to the insurer necessary
27 medical information related to the care.
1 (c) To otherwise adhere to the insurer's policies and
2 procedures, including, but not limited to, those concerning
3 utilization review, referrals, preauthorizations, and treatment
4 plans.
5 (5) An insurer shall provide written notice to each
6 participating physician that if participation between the
7 physician and the insurer terminates, the physician may do both
8 of the following:
9 (a) Notify the insurer's insureds under the care of the
10 physician of the termination if the physician does so within 15
11 days after the physician becomes aware of the termination.
12 (b) Include in the notice under subdivision (a) a description
13 of the procedures for continuing care under subsections (3) and
14 (4).
15 (6) This section does not create an obligation for an insurer
16 to provide to an insured coverage beyond the maximum coverage
17 limits permitted by the insurer's policy or certificate with the
18 insured. This section does not create an obligation for an
19 insurer to expand who may be a primary care physician under a
20 policy or certificate.
21 (7) As used in this section:
22 (a) "Physician" means an allopathic physician, osteopathic
23 physician, or podiatric physician.
24 (b)
"Terminal illness" means that term as defined in section
25 5653 of the public
health code, 1978 PA 368, MCL 333.5653.
26 (b) (c) "Terminates"
or "termination" includes the
27 nonrenewal, expiration, or ending for any reason of a
1 participation agreement or contract between a physician and an
2 insurer, but does not include a termination by the insurer for
3 failure to meet applicable quality standards or for fraud.
4 Sec. 2213. (1) Except as otherwise provided in subsection
5 (4), each insurer and health maintenance organization shall
6 establish an internal formal grievance procedure for approval by
7 the commissioner for persons covered under a policy, certificate,
8 or contract issued under
chapter 34, 35, or 36, or 37 that
9 includes all of the following:
10 (a) Provides for a designated person responsible for
11 administering the grievance system.
12 (b) Provides a designated person or telephone number for
13 receiving complaints.
14 (c) Ensures full investigation of a complaint.
15 (d) Provides for timely notification in plain English to the
16 insured or enrollee as to the progress of an investigation.
17 (e) Provides an insured or enrollee the right to appear
18 before the board of directors or designated committee or the
19 right to a managerial-level conference to present a grievance.
20 (f) Provides for notification in plain English to the insured
21 or enrollee of the results of the insurer's or health maintenance
22 organization's investigation and for advisement of the insured's
23 or enrollee's right to review the grievance by the commissioner
24 or by an independent review organization under the patient's
25 right to independent review act, 2000 PA 251, MCL 550.1901 to
26 550.1929.
27 (g) Provides summary data on the number and types of
1 complaints and grievances filed. Beginning April 15, 2001, this
2 summary data for the prior calendar year shall be filed annually
3 with the commissioner on forms provided by the commissioner.
4 (h) Provides for periodic management and governing body
5 review of the data to assure that appropriate actions have been
6 taken.
7 (i) Provides for copies of all complaints and responses to be
8 available at the principal office of the insurer or health
9 maintenance organization for inspection by the commissioner for 2
10 years following the year the complaint was filed.
11 (j) That when an adverse determination is made, a written
12 statement in plain English containing the reasons for the adverse
13 determination is provided to the insured or enrollee along with
14 written notifications as required under the patient's right to
15 independent review act, 2000 PA 251, MCL 550.1901 to 550.1929.
16 (k) That a final determination will be made in writing by the
17 insurer or health maintenance organization not later than 35
18 calendar days after a formal grievance is submitted in writing by
19 the insured or enrollee. The timing for the 35-calendar-day
20 period may be tolled, however, for any period of time the insured
21 or enrollee is permitted to take under the grievance procedure
22 and for a period of time that shall not exceed 10 business days
23 if the insurer or health maintenance organization has not
24 received requested information from a health care facility or
25 health professional.
26 (l) That a determination will be made by the insurer or
27 health maintenance organization not later than 72 hours after
1 receipt of an expedited grievance. Within 10 days after receipt
2 of a determination, the insured or enrollee may request a
3 determination of the matter by the commissioner or his or her
4 designee or by an independent review organization under the
5 patient's right to independent review act, 2000 PA 251,
6 MCL 550.1901 to 550.1929. If the determination by the insurer or
7 health maintenance organization is made orally, the insurer or
8 health maintenance organization shall provide a written
9 confirmation of the determination to the insured or enrollee not
10 later than 2 business days after the oral determination. An
11 expedited grievance under this subdivision applies if a grievance
12 is submitted and a physician, orally or in writing, substantiates
13 that the time frame for a grievance under subdivision (k) would
14 seriously jeopardize the life or health of the insured or
15 enrollee or would jeopardize the insured's or enrollee's ability
16 to regain maximum function.
17 (m) That the insured or enrollee has the right to a
18 determination of the matter by the commissioner or his or her
19 designee or by an independent review organization under the
20 patient's right to independent review act, 2000 PA 251,
21 MCL 550.1901 to 550.1929.
22 (2) An insured or enrollee may authorize in writing any
23 person, including, but not limited to, a physician, to act on his
24 or her behalf at any stage in a grievance proceeding under this
25 section.
26 (3) This section does not apply to a provider's complaint
27 concerning claims payment, handling, or reimbursement for health
1 care services.
2 (4) This section does not apply to a policy, certificate,
3 care, coverage, or insurance listed in section 5(2) of the
4 patient's right to independent review act, 2000 PA 251,
5 MCL 550.1905, as not being subject to the patient's right to
6 independent review act, 2000 PA 251, MCL 550.1901 to 550.1929.
7 (5) As used in this section:
8 (a) "Adverse determination" means a determination that an
9 admission, availability of care, continued stay, or other health
10 care service has been reviewed and denied, reduced, or
11 terminated. Failure to respond in a timely manner to a request
12 for a determination constitutes an adverse determination.
13 (b) "Grievance" means a complaint on behalf of an insured or
14 enrollee submitted by an insured or enrollee concerning any of
15 the following:
16 (i) The availability, delivery, or quality of health care
17 services, including a complaint regarding an adverse
18 determination made pursuant to utilization review.
19 (ii) Benefits or claims payment, handling, or reimbursement
20 for health care services.
21 (iii) Matters pertaining to the contractual relationship
22 between an insured or enrollee and the insurer or health
23 maintenance organization.
24 Sec. 2403. (1) All rates shall be made in accordance with
25 this section and all of the following:
26 (a) Due consideration shall be given to past and prospective
27 loss experience within and outside this state; to catastrophe
1 hazards; to a reasonable margin for underwriting profit and
2 contingencies; to dividends, savings, or unabsorbed premium
3 deposits allowed or returned by insurers to their policyholders,
4 members, or subscribers; to past and prospective expenses, both
5 countrywide and those specially applicable to this state; to
6 underwriting practice, judgment, and to all other relevant
7 factors within and outside this state. For worker's compensation
8 insurance, in determining the reasonableness of the margin for
9 underwriting profit and contingencies, consideration shall be
10 given to all after-tax investment profit or loss from unearned
11 premium and loss reserves attributable to worker's compensation
12 insurance, as well as the factors used to determine the amount of
13 reserves. For all other kinds of insurance to which this chapter
14 applies, all factors to which due consideration is given under
15 this subdivision shall be treated in a manner consistent with the
16 laws of this state that existed on December 28, 1981.
17 (b) The systems of expense provisions included in the rates
18 for use by any insurer or group of insurers may differ from those
19 of other insurers or groups of insurers to reflect the
20 requirements of the operating methods of the insurer or group
21 with respect to any kind of insurance, or with respect to any
22 subdivision or combination thereof for which subdivision or
23 combination separate expense provisions are applicable.
24 (c) Risks may be grouped by classifications for the
25 establishment of rates and minimum premiums. Classification
26 rates may be modified to produce rates for individual risks in
27 accordance with rating plans that measure variations in hazards,
1 expense provisions, or both. The rating plans may measure any
2 differences among risks that may have a probable effect upon
3 losses or expenses as provided for in subdivision (a).
4 (d) Rates shall not be excessive, inadequate, or unfairly
5 discriminatory. A rate shall not be held to be excessive unless
6 the rate is unreasonably high for the insurance coverage provided
7 and a reasonable degree of competition does not exist with
8 respect to the classification, kind, or type of risks to which
9 the rate is applicable. Except as otherwise provided in this
10 subdivision, a rate shall not be held to be inadequate unless the
11 rate is unreasonably low for the insurance coverage provided and
12 the continued use of the rate endangers the solvency of the
13 insurer; or unless the rate is unreasonably low for the insurance
14 coverage provided and the use of the rate has or will have the
15 effect of destroying competition among insurers, creating a
16 monopoly, or causing a kind of insurance to be unavailable to a
17 significant number of applicants who are in good faith entitled
18 to procure the insurance through ordinary methods. For
19 commercial liability insurance a rate shall not be held to be
20 inadequate unless the rate, after consideration of investment
21 income and marketing programs and underwriting programs, is
22 unreasonably low for the insurance coverage provided and is
23 insufficient to sustain projected losses and expenses; or unless
24 the rate is unreasonably low for the insurance coverage provided
25 and the use of the rate has or will have the effect of destroying
26 competition among insurers, creating a monopoly, or causing a
27 kind of insurance to be unavailable to a significant number of
1 applicants who are in good faith entitled to procure the
2 insurance through ordinary methods. As used in this subdivision,
3 "commercial liability insurance" means insurance that provides
4 indemnification for commercial, industrial, professional, or
5 business liabilities. For worker's compensation insurance
6 provided by an insurer
that is controlled by a nonprofit health
7 care corporation
formed pursuant to the nonprofit health care
8 corporation reform
act, Act No. 350 of the Public Acts of 1980,
9 being sections
550.1101 to 550.1704 of the Michigan Compiled
10 Laws nonprofit health insurer regulated under chapter
37, a rate
11 shall not be held to be inadequate unless the rate is
12 unreasonably low for the insurance coverage provided. A rate for
13 a coverage is unfairly discriminatory in relation to another rate
14 for the same coverage, if the differential between the rates is
15 not reasonably justified by differences in losses, expenses, or
16 both, or by differences in the uncertainty of loss for the
17 individuals or risks to which the rates apply. A reasonable
18 justification shall be supported by a reasonable classification
19 system; by sound actuarial principles when applicable; and by
20 actual and credible loss and expense statistics or, in the case
21 of new coverages and classifications, by reasonably anticipated
22 loss and expense experience. A rate is not unfairly
23 discriminatory because the rate reflects differences in expenses
24 for individuals or risks with similar anticipated losses, or
25 because the rate reflects differences in losses for individuals
26 or risks with similar expenses. Rates are not unfairly
27 discriminatory if they are averaged broadly among persons insured
1 on a group, franchise, blanket policy, or similar basis.
2 (2) Except to the extent necessary to meet the provisions of
3 subsection (1)(d), uniformity among insurers in any matters
4 within the scope of this section is neither required nor
5 prohibited.
6 Sec. 2406. (1) Except for worker's compensation insurance,
7 every insurer shall file with the commissioner every manual of
8 classification, every manual of rules and rates, every rating
9 plan, and every modification of any of the foregoing that it
10 proposes to use. Every such filing shall state the proposed
11 effective date thereof
of the filing and shall indicate the
12 character and extent of the coverage contemplated. If a filing
13 is not accompanied by the information upon which the insurer
14 supports the filing, and the commissioner does not have
15 sufficient information to determine whether the filing meets the
16 requirements of this chapter, the commissioner shall within 10
17 days of the filing give written notice to the insurer to furnish
18 the information upon which it supports the filing. The
19 information furnished in support of a filing may include the
20 experience or judgment of the insurer or rating organization
21 making the filing, its interpretation of any statistical data it
22 relies upon, the experience of other insurers or rating
23 organizations, or any other relevant factors. A filing and any
24 supporting information shall be open to public inspection after
25 the filing becomes effective.
26 (2) Except for worker's compensation insurance, an insurer
27 may satisfy its obligation to make such filings by becoming a
1 member of, or a subscriber to, a licensed rating organization
2 that makes such filings, and by filing with the commissioner a
3 copy of its authorization of the rating organization to make such
4 filings on its behalf. Nothing contained in this chapter shall
5 be construed as requiring any insurer to become a member of or a
6 subscriber to any rating organization.
7 (3) For worker's compensation insurance in this state the
8 insurer shall file with the commissioner all rates and rating
9 systems. Every insurer that insures worker's compensation in
10 this state on the effective date of this subsection shall file
11 the rates not later than the effective date of this subsection.
12 (4) Except as provided in subsection (3) and as otherwise
13 provided in this subsection, the rates and rating systems for
14 worker's compensation insurance shall be filed not later than the
15 date the rates and rating systems are to be effective. However,
16 if the insurer providing worker's compensation insurance is
17 controlled by a nonprofit
health care corporation formed
18 pursuant to the
nonprofit health care corporation reform act, Act
19 No. 350 of the Public
Acts of 1980, being sections 550.1101 to
20 550.1704 of the
Michigan Compiled Laws nonprofit
health insurer
21 regulated under chapter 37, the rates and rating systems that it
22 proposes to use shall be filed with the commissioner not less
23 than 45 days before the effective date of the filing. These
24 filings shall be considered to meet the requirements of this
25 chapter unless and until the commissioner disapproves a filing
26 pursuant to section 2418 or 2420.
27 (5) Each filing under subsections (3) and (4) shall be
1 accompanied by a certification by the insurer that, to the best
2 of its information and belief, the filing conforms to the
3 requirements of this chapter.
4 Sec. 2418. If at any time after approval of any filing
5 either by act or order of the commissioner or by operation of
6 law, or before approval of a filing made by a worker's
7 compensation insurer
controlled by a nonprofit health care
8 corporation formed
pursuant to the nonprofit health care
9 corporation reform
act, Act No. 350 of the Public Acts of 1980,
10 being sections
550.1101 to 550.1704 of the Michigan Compiled
11 Laws nonprofit health insurer regulated under chapter
37, the
12 commissioner finds that a filing does not meet the requirements
13 of this chapter, the commissioner shall, after a hearing held
14 upon not less than 10 days' written notice, specifying the
15 matters to be considered at the hearing, to every insurer and
16 rating organization that made the filing, issue an order
17 specifying in what respects the commissioner finds that the
18 filing fails to meet the requirements of this chapter, and
19 stating for a filing that has gone into effect when, within a
20 reasonable period thereafter, that filing shall be considered no
21 longer effective. Copies of the order shall be sent to every
22 such insurer and rating organization. The order shall not affect
23 any contract or policy made or issued prior to the expiration of
24 the period set forth in the order.
25 Sec. 2420. (1) Any person or organization aggrieved with
26 respect to any filing that is in effect may apply in writing to
27 the commissioner for a hearing on the filing. The application
1 shall specify the grounds to be relied upon by the applicant. If
2 the commissioner finds that the application is made in good
3 faith, that the applicant would be so aggrieved if his or her
4 grounds are established, and that the grounds otherwise justify
5 holding a hearing, the commissioner shall, within 30 days after
6 receipt of the application, hold a hearing upon not less than 10
7 days' written notice to the applicant and to every insurer and
8 rating organization that made the filing.
9 (2) If, after a hearing under subsection (1), the
10 commissioner finds that the filing does not meet the requirements
11 of this chapter, the commissioner shall issue an order specifying
12 in what respects he or she finds that the filing fails to meet
13 the requirements of this chapter, and stating when, within a
14 reasonable period thereafter, the filing shall be considered no
15 longer effective. Copies of the order shall be sent to the
16 applicant and to every insurer and rating organization. The
17 order shall not affect any contract or policy made or issued
18 prior to the expiration of the period set forth in the order.
19 (3) Upon receipt of a rate or rating system filing by an
20 insurer providing worker's compensation insurance that is
21 controlled by a nonprofit
health care corporation formed
22 pursuant to the
nonprofit health care corporation act, Act
23 No. 350 of the Public
Acts of 1980, being sections 550.1101 to
24 550.1704 of the
Michigan Compiled Laws nonprofit
health insurer
25 regulated under chapter 37, the commissioner shall immediately
26 notify each person of the filing who has requested in writing
27 notice of the filing within the 2 years immediately preceding the
1 filing. Notice to the person shall identify the location, time,
2 and place where a copy of the filing will be open to public
3 inspection and copying. The filing shall become effective on the
4 filing's proposed effective date unless stayed or disapproved by
5 the commissioner. An aggrieved person, which shall include any
6 insurer transacting worker's compensation insurance in this state
7 and any person acting on behalf of 1 or more such insurers, who
8 claims a rate in the filing is inadequate is entitled to a
9 contested case hearing pursuant to the administrative procedures
10 act of 1969, Act No.
306 of the Public Acts of 1969, being
11 sections 24.201 to
24.328 of the Michigan Compiled Laws 1969
PA
12 306, MCL 24.201 to 24.328. The request for this hearing shall be
13 filed with the commissioner within 30 days of the date of the
14 filing alleged to contain inadequate rates and shall state the
15 grounds upon which a rate contained in the filing is alleged to
16 be inadequate. The notice of hearing shall be served upon the
17 insurer and shall state the time and place of the hearing and the
18 grounds upon which the rate is alleged to be inadequate. Unless
19 mutually agreed upon by the commissioner, the insurer, and the
20 aggrieved person, the hearing shall occur not less than 15 days
21 or more than 30 days after notice is served. Within 10 days of
22 receipt of the request for hearing, the commissioner shall issue
23 an order staying the use of any rate alleged to be inadequate and
24 with respect to which, on the basis of affidavits and pleadings
25 submitted by the aggrieved person and the insurer, it appears
26 likely that the aggrieved person will prevail in the hearing.
27 The nonprevailing party shall have the right to an interlocutory
1 appeal to circuit court of the commissioner's decision granting
2 or denying the stay, and the court shall review de novo the
3 commissioner's decision.
4 (4) An insurer or rating organization shall not use this
5 section to obtain a hearing with the commissioner on the
6 insurer's or rating organization's own filing.
7 Sec. 3406f. (1) An insurer may exclude or limit coverage
8 for a condition as follows:
9 (a) For an individual covered under an individual policy or
10 certificate or any other policy or certificate not covered under
11 subdivision (b), or
(c), only if the exclusion or limitation
12 relates to a condition for which medical advice, diagnosis, care,
13 or treatment was recommended or received within 6 months before
14 enrollment and the exclusion or limitation does not extend for
15 more than 12 months after the effective date of the policy or
16 certificate.
17 (b) For an
individual covered under a group policy or
18 certificate covering 2
to 50 individuals, only if the exclusion
19 or limitation relates
to a condition for which medical advice,
20 diagnosis, care, or
treatment was recommended or received within
21 6 months before
enrollment and the exclusion or limitation does
22 not extend for more
than 12 months after the effective date of
23 the policy or
certificate.
24 (b) (c) For
an individual covered under a group policy or
25 certificate covering 100
or more than 50 individuals eligible
26 employees, only if the exclusion or limitation relates to a
27 condition for which medical advice, diagnosis, care, or treatment
1 was recommended or received within 6 months before enrollment and
2 the exclusion or limitation does not extend for more than 6
3 months after the effective date of the policy or certificate.
4 (2) As used in this
section: , "group"
5 (a) "Eligible employee" means that term as defined in section
6 3663.
7 (b) "Group" means a group health plan as defined in section
8 2791(a)(1) and (2) of part C of title XXVII of the public health
9 service act, chapter 373, 110 Stat. 1972, 42 U.S.C. 300gg-91, and
10 includes government plans that are not federal government plans.
11 (3) This section applies only to an insurer that delivers,
12 issues for delivery, or renews in this state an expense-incurred
13 hospital, medical, or surgical policy or certificate. This
14 section does not apply to any policy or certificate that provides
15 coverage for specific diseases or accidents only, or to any
16 hospital indemnity, medicare supplement, long-term care,
17 disability income, or 1-time limited duration policy or
18 certificate of no longer than 6 months.
19 (4) The
commissioner and the director of community health
20 shall examine the
issue of crediting prior continuous health care
21 coverage to reduce the
period of time imposed by preexisting
22 condition limitations
or exclusions under subsection (1)(a), (b),
23 and (c) and shall
report to the governor and the senate and the
24 house of
representatives standing committees on insurance and
25 health policy issues
by May 15, 1997. The report shall include
26 the commissioner's and
director's findings and shall propose
27 alternative mechanisms
or a combination of mechanisms to credit
1 prior continuous
health care coverage towards the period of time
2 imposed by a
preexisting condition limitation or exclusion. The
3 report shall address
at a minimum all of the following:
4 (a) Cost of
crediting prior continuous health care
5 coverages.
6 (b) Period of
lapse or break in coverage, if any, permitted
7 in a prior health care
coverage.
8 (c) Types and
scope of prior health care coverages that are
9 permitted to be
credited.
10 (d) Any exceptions
or exclusions to crediting prior health
11 care coverage.
12 (e) Uniform method
of certifying periods of prior creditable
13 coverage.
14 Sec. 3539. (1) For an individual covered under a nongroup
15 contract or under a contract not covered under subsection (2), a
16 health maintenance organization may exclude or limit coverage for
17 a condition only if the exclusion or limitation relates to a
18 condition for which medical advice, diagnosis, care, or treatment
19 was recommended or received within 6 months before enrollment and
20 the exclusion or limitation does not extend for more than 6
21 months after the effective date of the health maintenance
22 contract.
23 (2) A health maintenance organization shall not exclude or
24 limit coverage for a preexisting condition for an individual
25 covered under a group contract.
26 (3) Except as provided in subsection (5), a health
27 maintenance organization that has issued a nongroup contract
1 shall renew or continue in force the contract at the option of
2 the individual.
3 (4) Except as provided in subsection (5), a health
4 maintenance organization that has issued a group contract shall
5 renew or continue in force the contract at the option of the
6 sponsor of the plan.
7 (5) Guaranteed renewal is not required in cases of fraud,
8 intentional misrepresentation of material fact, lack of payment,
9 if the health maintenance organization no longer offers that
10 particular type of coverage in the market, or if the individual
11 or group moves outside the service area.
12 (6) As used in this
section, "group" means a group of 2 100
13 or more subscribers eligible
employees as defined in section
14 3663.
15 CHAPTER 36A
16 SMALL EMPLOYER HEALTH INSURANCE
17 Sec. 3663. As used in this chapter:
18 (a) "Actuarial certification" means a written statement
19 signed by a member of the American academy of actuaries or other
20 individual acceptable to the commissioner that a small employer
21 carrier is in compliance with the provisions of section 3667
22 based upon the person's examination and including a review of the
23 appropriate records and actuarial assumptions and methods used by
24 the carrier in establishing premium rates for applicable health
25 benefit plans.
26 (b) "Adjusted community rating" means a method used to
27 develop a carrier's premium that spreads financial risk in
1 accordance with the requirements in section 3667.
2 (c) "Affiliation period" means a period of time required by a
3 small employer carrier that must expire before health insurance
4 coverage becomes effective.
5 (d) "Carrier" means an entity subject to the insurance laws
6 and regulations of this state, or subject to the jurisdiction of
7 the commissioner, that contracts or offers to contract to
8 provide, deliver, arrange for, pay for, or reimburse any of the
9 costs of health care services, including a sickness and accident
10 insurance company, a health maintenance organization, a nonprofit
11 health insurer, or any other entity providing a plan of health
12 insurance, health benefits, or health services.
13 (e) "COBRA" means the consolidated omnibus budget
14 reconciliation act of 1985, Public Law 99-272, 100 Stat. 82.
15 (f) "Creditable coverage" means, with respect to an
16 individual, health benefits or coverage provided under any of the
17 following:
18 (i) A group health plan including coverage provided to an
19 eligible sole proprietor.
20 (ii) A health benefit plan.
21 (iii) Part A or part B of title XVIII of the social security
22 act, chapter 531, 49 Stat. 620, 42 U.S.C. 1395c to 1395i and
23 1395i-2 to 1395i-5, and 42 U.S.C. 1395j to 1395t, 1395u to 1395w,
24 and 1395w-2 to 1395w-4.
25 (iv) Title XIX of the social security act, chapter 531, 49
26 Stat. 620, 42 U.S.C. 1396 to 1396r-6 and 1396r-8 to 1396v, other
27 than coverage consisting solely of benefits under section 1929 of
1 title XIX of the social security act, 42 U.S.C. 1396t.
2 (v) Chapter 55 of title 10 of the United States Code, 10
3 U.S.C. 1071 to 1110. For purposes of chapter 55 of title 10 of
4 the United States Code, 10 U.S.C. 1071 to 1110, "uniformed
5 services" means the armed forces and the commissioned corps of
6 the national oceanic and atmospheric administration and of the
7 public health service.
8 (vi) A medical care program of the Indian health service or
9 of a tribal organization.
10 (vii) A state health benefits risk pool.
11 (viii) A health plan offered under the employees health
12 benefits program, chapter 89 of title 5 of the United States
13 Code, 5 U.S.C. 8901 to 8914.
14 (ix) A public health plan, which for purposes of this chapter
15 means a plan established or maintained by a state, county, or
16 other political subdivision of a state that provides health
17 insurance coverage to individuals enrolled in the plan.
18 (x) A health benefit plan under section 5(e) of title I of
19 the peace corps act, Public Law 87-293, 22 U.S.C. 2504.
20 (g) "Eligible employee" means an employee who works on a
21 full-time basis with a normal workweek of 30 or more hours.
22 Eligible employee includes an employee who works on a full-time
23 basis with a normal workweek of anywhere between at least 17.5
24 and 30 hours, if an employer so chooses and if this eligibility
25 criterion is applied uniformly among all of the employer's
26 employees and without regard to health status-related factors.
27 Persons covered under a health benefit plan pursuant to COBRA are
1 not eligible employees for purposes of minimum participation
2 requirements pursuant to section 3679.
3 (h) "Eligible sole proprietor" means a person who is a sole
4 proprietor, sole shareholder, or partner in a trade or business
5 through which the sole proprietor attempts to earn taxable income
6 and for which he or she has filed the appropriate internal
7 revenue service form 1040, schedule c or f, for the previous
8 taxable year; who is a resident of this state on the date of
9 enrollment; and who is actively employed in the operation of the
10 business, working at least 30 hours per week, at least 6 months
11 out of the calendar year.
12 (i) "Enrollment date" means the date on which the group
13 contract goes into effect.
14 (j) "Established geographic service area" means a geographic
15 area, as approved by the commissioner and based on the carrier's
16 certificate of authority to transact insurance in this state,
17 within which the carrier is authorized to provide coverage.
18 (k) "Family composition" means any of the following:
19 (i) Enrollee.
20 (ii) Enrollee, spouse, and children.
21 (iii) Enrollee and spouse.
22 (iv) Enrollee and children.
23 (v) Child only.
24 (l) "Genetic information" means information about genes, gene
25 products, and inherited characteristics that may derive from the
26 individual or a family member. This includes information
27 regarding carrier status and information derived from laboratory
1 tests that identify mutations in specific genes or chromosomes,
2 physical medical examinations, family histories, and direct
3 analysis of genes or chromosomes.
4 (m) "Geographic area" is an area established by the small
5 group carrier and approved by the commissioner and used for
6 adjusting the rates for a health benefit plan.
7 (n) "Group health plan" means an employee welfare benefit
8 plan as defined in section 3(1) of subtitle A of title I of the
9 employee retirement income security act of 1974, Public Law
10 93-406, 29 U.S.C. 1002, to the extent that the plan provides
11 medical care and including items and services paid for as medical
12 care to employees or their dependents as defined under the terms
13 of the plan directly or through insurance, reimbursement, or
14 otherwise. As used in this chapter, all of the following apply
15 to the term group health plan:
16 (i) Any plan, fund, or program that would not be, but for
17 section 2721(e) of subpart 4 of part A of title XXVII of the
18 public health service act, chapter 373, 110 Stat. 1967, 42
19 U.S.C. 300gg-21, an employee welfare benefit plan and that is
20 established or maintained by a partnership, to the extent that
21 the plan, fund, or program provides medical care, including items
22 and services paid for as medical care, to present or former
23 partners in the partnership, or to their dependents, as defined
24 under the terms of the plan, fund, or program, directly or
25 through insurance, reimbursement or otherwise, shall be treated,
26 subject to subparagraph (ii), as an employee welfare benefit plan
27 that is a group health plan.
1 (ii) For a group health plan, the term "employer" also
2 includes the partnership in relation to any partner.
3 (iii) For a group health plan, the term "participant" also
4 includes an individual who is, or may become, eligible to receive
5 a benefit under the plan, or the individual's beneficiary who is,
6 or may become, eligible to receive a benefit under the plan, if
7 in connection with a group health plan maintained by a
8 partnership, the individual is a partner in relation to the
9 partnership or in connection with a group health plan maintained
10 by a self-employed individual, under which 1 or more employees
11 are participants, the individual is the self-employed
12 individual.
13 (o) "Health benefit plan" means a policy, contract,
14 certificate, or agreement offered by a carrier to provide,
15 deliver, arrange for, pay for, or reimburse any of the costs of
16 health care services. Except as otherwise specifically exempted
17 in this definition, health benefit plan includes short-term and
18 catastrophic health insurance policies, and a policy that pays on
19 a cost-incurred basis. Health benefit plan does not include any
20 of the following:
21 (i) Accident-only, credit-only, or disability income
22 insurance; coverage issued as a supplement to liability
23 insurance; liability insurance, including general liability
24 insurance and automobile liability insurance; worker's
25 compensation or similar insurance; automobile medical payment
26 insurance; coverage for on-site medical clinics; and other
27 similar insurance coverage, specified in federal regulations
1 issued pursuant to the health insurance portability and
2 accountability act of 1996, Public Law 104-191, 110 Stat. 1936,
3 under which benefits for medical care are secondary or incidental
4 to other insurance benefits.
5 (ii) If provided under a separate policy, certificate, or
6 contract of insurance or are otherwise not an integral part of a
7 plan: limited benefit health insurance; limited scope dental or
8 visions benefits; benefits for long-term care, nursing home care,
9 home health care, community-based care, or any combination
10 thereof; or other similar, limited benefits specified in federal
11 regulations issued pursuant to the health insurance portability
12 and accountability act of 1996, Public Law 104-191, 110
13 Stat. 1936.
14 (iii) If the benefits are provided under a separate policy,
15 certificate, or contract of insurance, there is no coordination
16 between the provision of the benefits and any exclusion of
17 benefits under any group health plan maintained by the same plan
18 sponsor, and the benefits are paid with respect to an event
19 without regard to whether benefits are provided with respect to
20 such an event under any group health plan maintained by the same
21 plan sponsor: coverage only for a specified disease or illness
22 or hospital indemnity or other fixed indemnity insurance.
23 (iv) If offered as a separate policy, certificate, or
24 contract of insurance: medicare supplemental policy as defined
25 under section 1882(g)(1) of title XVIII of the social security
26 act, 42 U.S.C. 1395ss; coverage supplemental to the coverage
27 provided under chapter 55 of title 10 of the United States Code,
1 10 U.S.C. 1071 to 1110; or similar supplemental coverage provided
2 to coverage under a group health plan.
3 (p) "Health status-related factor" means any of the
4 following:
5 (i) Health status.
6 (ii) Medical condition, including both physical and mental
7 illnesses.
8 (iii) Claims experience.
9 (iv) Receipt of health care.
10 (v) Medical history.
11 (vi) Genetic information.
12 (vii) Evidence of insurability, including conditions arising
13 out of acts of domestic violence.
14 (viii) Disability.
15 (q) "Late enrollee" means an eligible employee or dependent
16 who requests enrollment in a health benefit plan of a small
17 employer following the initial enrollment period during which the
18 individual is entitled to enroll under the terms of the health
19 benefit plan, provided that the initial enrollment period is a
20 period of at least 30 days. Late enrollee does not include an
21 eligible employee or dependent who meets any of the following:
22 (i) The individual was covered under creditable coverage at
23 the time of the initial enrollment; lost coverage under
24 creditable coverage as a result of cessation of employer
25 contribution, termination of employment or eligibility, reduction
26 in the number of hours of employment, involuntary termination of
27 creditable coverage, or death of a spouse, divorce, or legal
1 separation; and the individual requests enrollment within 30 days
2 after termination of the creditable coverage or the change in
3 conditions that gave rise to the termination of coverage.
4 (ii) If, where provided for in contract or where otherwise
5 provided in state law, the individual enrolls during the
6 specified bona fide open enrollment period.
7 (iii) If the individual is employed by an employer that
8 offers multiple health benefit plans and the individual elects a
9 different plan during an open enrollment period.
10 (iv) If a court has ordered coverage be provided for a spouse
11 or minor or dependent child under a covered employee's health
12 benefit plan and a request for enrollment is made within 30 days
13 after issuance of the court order.
14 (v) If the individual changes status from not being an
15 eligible employee to becoming an eligible employee and requests
16 enrollment within 30 days after the change in status.
17 (vi) If the individual had coverage under a continuation
18 provision under the consolidated omnibus budget reconciliation
19 act of 1985, Public Law 99-272, 100 Stat. 82, and the coverage
20 under that provision has been exhausted.
21 (vii) If the individual meets the requirements for special
22 enrollment pursuant to section 3677.
23 (r) "Limited benefit health insurance" means that form of
24 coverage that pays stated predetermined amounts for specific
25 services or treatments or pays a stated predetermined amount per
26 day or confinement for 1 or more named conditions, named
27 diseases, or accidental injury.
1 (s) "Medical care" means amounts paid for the diagnosis,
2 care, mitigation, treatment, or prevention of disease, or amounts
3 paid for the purpose of affecting any structure or function of
4 the body; transportation primarily for and essential to this
5 care; and insurance covering this care.
6 (t) "Medicare" means title XVIII of the social security act,
7 chapter 531, 49 Stat. 620, 42 U.S.C. 1395 to 1395b 1395b-2,
8 1395b-6 to 1395b-7, 1395c to 1395i, 1395i-2 to 1395i-5, 1395j to
9 1395t, 1395u to 1395w, 1395w-2 to 1395w-4, 1395w-21 to 1395w-28,
10 1395x to 1395yy, and 1395bbb to 1395ggg.
11 (u) "Plan sponsor" means that term as defined under section
12 3(16)(b) of subtitle A of title I of the employee retirement
13 income security act of 1974, Public Law 93-406, 29 U.S.C. 1002.
14 (v) "Preexisting condition" means a condition, regardless of
15 the cause of the condition, for which medical advice, diagnosis,
16 care, or treatment was recommended or received during the 6
17 months preceding the enrollment date of the coverage.
18 Preexisting condition does not include a condition for which
19 medical advice, diagnosis, care, or treatment was recommended or
20 received for the first time while the covered person held
21 creditable coverage and that was a covered benefit under the
22 plan, provided that the prior creditable coverage was continuous
23 to a date not more than 90 days before the enrollment date of the
24 new coverage. Genetic information shall not be treated as a
25 condition for which a preexisting condition exclusion may be
26 imposed in the absence of a diagnosis of the condition related to
27 the information.
1 (w) "Premium" means all money paid by a small employer,
2 eligible employees, or eligible persons as a condition of
3 receiving coverage from a carrier subject to this chapter,
4 including any fees or other contributions associated with the
5 health benefit plan.
6 (x) "Producer" or "insurance producer" means that term as
7 defined in section 1201.
8 (y) "Restricted network provision" means any provision of a
9 health benefit plan that conditions the payment of benefits, in
10 whole or in part, on the use of health care providers that have
11 entered into a contractual arrangement with the carrier to
12 provide health care services to covered individuals.
13 (z) "Small employer" means any person that is actively
14 engaged in business that on at least 50% of its working days
15 during the preceding calendar year employed no more than 99
16 eligible employees, the majority of whom were employed within
17 this state; is not formed primarily for purposes of buying health
18 insurance; and in which a bona fide employer-employee
19 relationship exists. In determining the number of eligible
20 employees, companies that are affiliated companies, or that are
21 eligible to file a combined tax return for purposes of taxation
22 by this state, shall be considered 1 employer. After the
23 issuance of a health benefit plan to a small employer and for the
24 purpose of determining continued eligibility, the size of a small
25 employer shall be determined annually. Except as otherwise
26 specifically provided, provisions of this chapter that apply to a
27 small employer shall continue to apply at least until the plan
1 anniversary following the date the small employer no longer meets
2 the requirements of the definition of small employer. Small
3 employer includes an eligible sole proprietor. Small employer
4 includes any person that is actively engaged in business that on
5 at least 50% of its working days during the preceding calendar
6 quarter employed a combination of no more than 99 eligible
7 employees and part-time employees, the majority of whom were
8 employed within this state; is not formed primarily for purposes
9 of buying health insurance; and in which a bona fide
10 employer-employee relationship exists.
11 (aa) "Small employer carrier" means a carrier that issues or
12 offers to issue health benefit plans covering eligible employees
13 of 1 or more small employers pursuant to this chapter, regardless
14 of whether coverage is offered through an association or trust or
15 whether the policy or contract is situated out of state.
16 (bb) "Waiting period" means, with respect to a group health
17 plan and an individual who is a potential enrollee in the plan,
18 the period that must pass with respect to the individual before
19 the individual is eligible to be covered for benefits under the
20 terms of the plan. For purposes of calculating periods of
21 creditable coverage pursuant to section 3674, a waiting period
22 shall not be considered a gap in coverage.
23 Sec. 3665. This chapter applies to any health benefit plan
24 that provides coverage to the employees of a small employer in
25 this state if any of the following are met:
26 (a) A portion of the premium or benefits is paid by or on
27 behalf of the small employer.
1 (b) An eligible employee or dependent is reimbursed, whether
2 through wage adjustments or otherwise, by or on behalf of the
3 small employer for a portion of the premium.
4 (c) The health benefit plan is treated by the employer or any
5 of the eligible employees or dependents as part of a plan or
6 program for the purposes of section 106, 125, or 162 of the
7 internal revenue code of 1986.
8 (d) The health benefit plan is marketed to individual
9 employees through an employer.
10 Sec. 3667. (1) Premium rates for health benefit plans
11 subject to this chapter are subject to all of the following:
12 (a) The small employer carrier shall develop its rates based
13 on an adjusted community rate and may only vary the adjusted
14 community rate for geographic area, family composition, and age.
15 (b) The adjustment for age pursuant to subdivision (a) shall
16 not use age brackets smaller than 5-year increments. The age
17 brackets shall not begin before age 20 and shall end with age
18 65.
19 (c) A small employer carrier may charge the lowest allowable
20 adult rate for child only coverage.
21 (d) A small employer carrier may develop separate rates for
22 individuals age 65 or older for coverage for which medicare is
23 the primary payer and coverage for which medicare is not the
24 primary payer. Both rates are otherwise subject to this
25 subsection.
26 (e) Effective 5 years after the effective date of this
27 chapter, the adjustments for age pursuant to subdivision (a)
1 shall not result in a rate per enrollee for the health benefit
2 plan of more than 200% of the lowest rate for all adult age
3 groups. During the first 2 years after the effective date of
4 this chapter, the permitted rates for any age group shall be no
5 more than 400% of the lowest rate for all adult age groups, and
6 effective 2 years after the effective date of this chapter, the
7 permitted rates for any age group shall be no more than 300% of
8 the lowest rate for all adult age groups.
9 (2) The premium charged for a health benefit plan shall not
10 be adjusted more frequently than annually except that the rates
11 may be changed to reflect changes to the enrollment of the small
12 employer, changes to the family composition of the employee or
13 eligible person, or changes to the health benefit plan requested
14 by the small employer.
15 (3) Rating factors shall produce premiums for identical
16 groups that differ only by the amounts attributable to health
17 plan design and do not reflect differences due to the nature of
18 the groups assumed to select particular health benefit plans.
19 Sec. 3669. In connection with the offering for sale of a
20 health benefit plan to a small employer, a small employer carrier
21 shall make a reasonable disclosure, as part of its solicitation
22 and sales materials, of all of the following:
23 (a) The provisions of the health benefit plan concerning the
24 small employer carrier's right to change premium rates and the
25 factors, other than claim experience, that affect changes in
26 premium rates.
27 (b) The provisions relating to renewability of policies and
1 contracts.
2 (c) The provisions relating to any preexisting condition
3 provision.
4 (d) A listing of, and descriptive information including
5 benefits and premiums about, all benefit plans for which the
6 small employer is qualified.
7 Sec. 3671. (1) Each small employer carrier shall maintain
8 at its principal place of business a complete and detailed
9 description of its rating practices and renewal underwriting
10 practices, including information and documentation that
11 demonstrate that its rating methods and practices are based upon
12 commonly accepted actuarial assumptions and are in accordance
13 with sound actuarial principles.
14 (2) Each small employer carrier that is not required to file
15 small group rates for approval by the commissioner shall file
16 with the commissioner annually on or before March 15 an actuarial
17 certification certifying that the carrier is in compliance with
18 this chapter and that the rating methods of the small employer
19 carrier are actuarially sound. The certification shall be in a
20 form and manner, and shall contain such information, as specified
21 by the commissioner. A copy of the certification shall be
22 retained by the small employer carrier at its principal place of
23 business.
24 Sec. 3673. A small employer carrier shall renew small
25 employer health benefit plans as provided in sections 2213b and
26 3539 except that a small employer carrier may nonrenew a small
27 employer health benefit plan for either of the following:
1 (a) Noncompliance with the carrier's minimum participation
2 requirements.
3 (b) Noncompliance with the carrier's employer contribution
4 requirements.
5 Sec. 3674. A period of creditable coverage shall not be
6 counted for enrollment of an individual under a group health plan
7 if, after this period and before the enrollment date, there was a
8 90-day period during all of which the individual was not covered
9 under any creditable coverage.
10 Sec. 3675. (1) Every small employer carrier shall, as a
11 condition of transacting business in this state with small
12 employers, actively offer to small employers all health benefit
13 plans it actively markets to small employers in this state. A
14 small employer carrier shall be considered to be actively
15 marketing a health benefit plan if it offers that plan to a small
16 employer not currently receiving a health benefit plan from that
17 small employer carrier. A small employer carrier shall issue any
18 health benefit plan to any eligible small employer that applies
19 for the plan and agrees to make the required premium payments and
20 to satisfy the other reasonable provisions of the health benefit
21 plan not inconsistent with this chapter. A small employer
22 carrier shall not offer or sell to small employers a health
23 benefit plan that excludes or limits coverage for a preexisting
24 condition except as otherwise provided in subsection (3).
25 (2) A small employer carrier is not required to issue a
26 health benefit plan to an eligible sole proprietor who is covered
27 by, or is eligible for coverage under, a health benefit plan
1 offered by an employer.
2 (3) A small employer carrier may offer and sell a health
3 benefit plan to an eligible sole proprietor that excludes or
4 limits coverage for a preexisting condition as provided in this
5 subsection. A health benefit plan covering an eligible sole
6 proprietor shall not deny, exclude, or limit benefits for a
7 covered individual for losses incurred more than 6 months
8 following the enrollment date of the individual's coverage due to
9 a preexisting condition, or the first date of the waiting period
10 for enrollment if that date is earlier than the enrollment date.
11 A health benefit plan shall not define a preexisting condition
12 more restrictively than as defined in section 3663.
13 (4) A small employer carrier shall reduce the period of any
14 preexisting condition exclusion allowed under subsection (3)
15 without regard to the specific benefits covered during the period
16 of creditable coverage by the aggregate of the period of
17 creditable coverage, provided that the last period of creditable
18 coverage ended on a date not more than 90 days before the
19 enrollment date of new coverage. The aggregate period of
20 creditable coverage shall not include any waiting period or
21 affiliation period for the effective date of the new coverage
22 applied by the employer or the carrier, or for the normal
23 application and enrollment process following employment or other
24 triggering event for eligibility.
25 (5) If applied uniformly to all employees of the small
26 employer and without regard to any health status-related factor,
27 a small employer carrier may impose for health plans offered to
1 all small employers other than sole proprietors an affiliation
2 period that does not exceed 60 days for new entrants and does not
3 exceed 90 days for late enrollees and for which the carrier
4 charges no premiums and the coverage issued is not effective.
5 (6) A small employer carrier shall not offer or sell to small
6 employers a health benefit plan that contains a waiting period
7 applicable to new enrollees or late enrollees.
8 (7) A health benefit plan offered to a small employer by a
9 small employer carrier shall provide for the acceptance of late
10 enrollees subject to this chapter.
11 (8) A small employer carrier shall not impose a preexisting
12 condition exclusion that relates to pregnancy as a preexisting
13 condition or with regard to a child who is covered under any
14 creditable coverage within 30 days of birth, adoption, or
15 placement for adoption, provided that the child does not
16 experience a significant break in coverage and provided that the
17 child was adopted or placed for adoption before attaining 18
18 years of age.
19 (9) A small employer carrier shall not impose a preexisting
20 condition exclusion for a condition for which medical advice,
21 diagnosis, care, or treatment was recommended or received for the
22 first time while the covered person held creditable coverage, and
23 the medical advice, diagnosis, care, or treatment was a covered
24 benefit under the plan, provided that the creditable coverage was
25 continuous to a date not more than 90 days before the enrollment
26 date of the new coverage.
27 Sec. 3677. (1) A small employer carrier shall permit an
1 employee or a dependent of the employee, who is eligible, but not
2 enrolled, to enroll for coverage under the terms of the small
3 employer group health plan during a special enrollment period if
4 all of the following apply:
5 (a) The employee or dependent was covered under a group
6 health plan or had coverage under a health benefit plan at the
7 time coverage was previously offered to the employee or
8 dependent.
9 (b) The employee stated in writing at the time coverage was
10 previously offered that coverage under a group health plan or
11 other health benefit plan was the reason for declining
12 enrollment, but only if the plan sponsor or carrier, if
13 applicable, required such a statement at the time coverage was
14 previously offered and provided notice to the employee of the
15 requirement and the consequences of the requirement at that
16 time.
17 (c) The employee's or dependent's coverage described in
18 subdivision (a) was either under a COBRA continuation provision
19 and that coverage has been exhausted or was not under a COBRA
20 continuation provision and that other coverage has been
21 terminated as a result of loss of eligibility for coverage,
22 including because of a legal separation, divorce, death,
23 termination of employment, or reduction in the number of hours of
24 employment or employer contributions toward that other coverage
25 have been terminated. In either case, under the terms of the
26 group health plan, the employee must request enrollment not later
27 than 30 days after the date of exhaustion of coverage or
1 termination of coverage or employer contribution. If an employee
2 requests enrollment pursuant to this subdivision, the enrollment
3 is effective not later than the first day of the first calendar
4 month beginning after the date the completed request for
5 enrollment is received.
6 (2) A small employer carrier that makes dependent coverage
7 available under a group health plan shall provide for a dependent
8 special enrollment period during which the person may be enrolled
9 under the group health plan as a dependent of the individual or,
10 if not otherwise enrolled, the individual may be enrolled under
11 the group health plan and, in the case of the birth or adoption
12 of a child, the spouse of the individual may be enrolled as a
13 dependent of the individual if the spouse is otherwise eligible
14 for coverage. This subsection applies only if both of the
15 following occur:
16 (a) The individual is a participant under the health benefit
17 plan or has met any affiliation period applicable to becoming a
18 participant under the plan and is eligible to be enrolled under
19 the plan, but for a failure to enroll during a previous
20 enrollment period.
21 (b) The person becomes a dependent of the individual through
22 marriage, birth, or adoption or placement for adoption.
23 (3) The dependent special enrollment period under subsection
24 (2) for individuals shall be a period of not less than 30 days
25 and begins on the later of the date dependent coverage is made
26 available or the date of the marriage, birth, or adoption or
27 placement for adoption. If an individual seeks to enroll a
1 dependent during the first 30 days of the dependent special
2 enrollment period under subsection (2), the coverage of the
3 dependent shall be effective as follows:
4 (a) For marriage, not later than the first day of the first
5 month beginning after the date the completed request for
6 enrollment is received.
7 (b) For a dependent's birth, as of the date of birth.
8 (c) For a dependent's adoption or placement for adoption,
9 the date of the adoption or placement for adoption.
10 Sec. 3679. (1) Except as provided in this section,
11 requirements used by a small employer carrier in determining
12 whether to provide coverage to a small employer shall be applied
13 uniformly among all small employers applying for coverage or
14 receiving coverage from the small employer carrier.
15 (2) A small employer carrier shall not require a minimum
16 participation level greater than 100% of eligible employees
17 working for groups of 3 or fewer employees or greater than 75% of
18 eligible employees working for groups with more than 3
19 employees.
20 (3) In applying minimum participation requirements with
21 respect to a small employer, a small employer carrier shall not
22 consider employees or dependents who have creditable coverage in
23 determining whether the applicable percentage of participation is
24 met. In applying minimum participation requirements with respect
25 to a small employer, a small employer carrier shall only consider
26 those employees who do not have other group coverage available
27 through their spouse or employees who have selected another
1 health benefit plan offered by their employer if the employer
2 allows employees the choice of more than 1 health benefit plan.
3 (4) A small employer carrier shall not increase any
4 requirement for minimum employee participation or modify any
5 requirement for minimum employer contribution applicable to a
6 small employer at any time after the small employer has been
7 accepted for coverage.
8 Sec. 3681. (1) If a small employer carrier offers coverage
9 to a small employer, the small employer carrier shall offer
10 coverage to all of the eligible employees of a small employer and
11 their dependents who apply for enrollment during the period in
12 which the employee first becomes eligible to enroll under the
13 terms of the plan. A small employer carrier shall not offer
14 coverage to only certain individuals or dependents in a small
15 employer group or to only part of the group.
16 (2) A small employer carrier shall not place any restriction
17 in regard to any health status-related factor on an eligible
18 employee or dependent with respect to enrollment or plan
19 participation.
20 (3) Except as permitted under section 3675(3), a small
21 employer carrier shall not modify a health benefit plan for a
22 small employer or any eligible employee or dependent, through
23 riders or endorsements, or otherwise, that restrict or exclude
24 coverage or benefits for specific diseases, medical conditions,
25 or services otherwise covered by the plan.
26 Sec. 3683. (1) A small employer carrier is not required to
27 offer coverage to a small employer if the small employer is not
1 physically located in the carrier's established geographic
2 service area. A small employer carrier shall apply this
3 subsection uniformly to all small employers without regard to the
4 claims experience of a small employer and its employees and their
5 dependents or any health status-related factor relating to such
6 employees and their dependents.
7 (2) A small employer carrier is not required to provide
8 coverage to small employers if for any period of time the
9 commissioner determines the small employer carrier does not have
10 the financial reserves necessary to underwrite additional
11 coverage and the small employer carrier is applying this
12 subsection uniformly to all small employers in the small group
13 market, consistent with applicable state law, and without regard
14 to the claims experience of a small employer and its employees
15 and their dependents or any health status-related factor relating
16 to such employees and their dependents. A small employer carrier
17 that denies coverage under this subsection shall not offer
18 coverage in the small group market for the later of a period of
19 180 days after the date the coverage is denied or until the small
20 employer carrier has demonstrated to the commissioner that it has
21 sufficient financial reserves to underwrite additional coverage.
22 (3) A small employer carrier is not required to provide new
23 coverage to small employers if the small employer carrier elects
24 not to offer new coverage to small employers in this state.
25 However, a small employer carrier that elects not to offer new
26 coverage to small employers under this subsection remains subject
27 to sections 2213b and 3539. A small employer carrier that elects
1 not to offer new coverage to small employers shall provide notice
2 of its election to the commissioner and shall not write new
3 business in the small employer market in this state for a period
4 of 5 years beginning on the date the carrier ceased offering new
5 coverage in this state.
6 Sec. 3687. (1) A small employer carrier shall provide
7 written certification of creditable coverage to individuals as
8 follows:
9 (a) At the time an individual ceases to be covered under the
10 health benefit plan or otherwise becomes covered under a COBRA
11 continuation provision.
12 (b) For an individual who becomes covered under a COBRA
13 continuation provision, at the time the individual ceases to be
14 covered under that provision.
15 (c) At the time a request is made on behalf of an individual
16 if the request is made not later than 24 months after the date of
17 cessation of coverage described in subdivision (a) or (b),
18 whichever is later.
19 (2) A small employer carrier may provide the certification of
20 creditable coverage required under subsection (1)(a) at a time
21 consistent with notices required under any applicable COBRA
22 continuation provision.
23 (3) The certificate of creditable coverage required to be
24 provided under subsection (1) shall contain both of the
25 following:
26 (a) Written certification of the period of creditable
27 coverage of the individual under the health benefit plan and the
1 coverage, if any, under the applicable COBRA continuation
2 provision.
3 (b) The waiting period, if any, and, if applicable,
4 affiliation period imposed with respect to the individual for any
5 coverage under the health benefit plan.
6 (4) To the extent medical care under a group health plan
7 consists of group health insurance coverage, the plan has
8 satisfied the certification requirement under subsection (1) if
9 the health carrier offering the coverage provides for
10 certification in accordance with subsection (1).
11 (5) If an individual enrolls in a group health plan that uses
12 the alternative method of counting creditable coverage pursuant
13 to section 3675 and the individual provides a certificate of
14 coverage that was provided to the individual pursuant to
15 subsection (1), on request of the group health plan, the entity
16 that issued the certification to the individual shall promptly
17 disclose to the group health plan information on the classes and
18 categories of health benefits available under the entity's health
19 benefit plan. The entity providing this information may charge
20 the requesting group health plan the reasonable cost of
21 disclosing the information.
22 Sec. 3689. (1) Subject to section 3675(1) and (2), each
23 small employer carrier shall actively market all health benefit
24 plans sold by the carrier to eligible small employers in the
25 state.
26 (2) Except as provided in subsection (3), a small employer
27 carrier or producer shall not, directly or indirectly, do any of
1 the following:
2 (a) Encourage or direct small employers or individuals to
3 refrain from filing an application for coverage with the small
4 employer carrier because of any health status-related factor,
5 industry, occupation, or geographic location of the small
6 employer or individual.
7 (b) Encourage or direct small employers or individuals to
8 seek coverage from another carrier because of any health
9 status-related factor, industry, occupation, or geographic
10 location of the small employer or individual.
11 (3) Subsection (2) does not apply with respect to information
12 provided by a small employer carrier or producer to a small
13 employer regarding the established geographic service area or a
14 restricted network provision of a small employer carrier.
15 (4) A small employer carrier shall not, directly or
16 indirectly, enter into any contract, agreement, or arrangement
17 with a producer that provides for or results in the compensation
18 paid to a producer for the sale of a health benefit plan to be
19 varied because of any initial or renewal health status-related
20 factor, industry, occupation, or geographic location of the small
21 employer or individual. This subsection does not apply to a
22 compensation arrangement that provides compensation to a producer
23 on the basis of percentage of premium, provided that the
24 percentage does not vary because of any health status-related
25 factor, industry, occupation, or geographic area of the small
26 employer or individual.
27 (5) A small employer carrier shall not terminate, fail to
1 renew, or limit its contract or agreement of representation with
2 a producer for any reason related to an initial or renewal health
3 status-related factor, occupation, or geographic location of the
4 small employers or individuals placed by the producer with the
5 small employer carrier.
6 (6) A small employer carrier or producer may not induce or
7 otherwise encourage a small employer to separate or otherwise
8 exclude an employee or dependent from health coverage or benefits
9 provided in connection with the employee's employment.
10 (7) Denial by a small employer carrier of an application for
11 coverage from a small employer or individual shall be in writing
12 and shall state the reason or reasons for the denial.
13 (8) The commissioner may establish regulations setting forth
14 additional standards to provide for the fair marketing and broad
15 availability of health benefit plans to small employers in this
16 state.
17 (9) A small employer carrier shall not enter into a
18 "noncompete" agreement with any person.
19 (10) If a small employer carrier enters into a contract,
20 agreement, or other arrangement with a third party administrator
21 to provide administrative, marketing, or other services related
22 to the offering of health benefit plans to small employers in
23 this state, the third party administrator is subject to this
24 chapter as if it were a small employer carrier.
25 Sec. 3691. The commissioner may require small employer
26 carriers, as a condition of transacting business with small
27 employers in this state after the effective date of this chapter,
1 to reissue a health benefit plan to any small employer whose
2 health benefit plan has been terminated or not renewed by the
3 carrier on or after January 1, 2003. The commissioner may
4 prescribe, for the reissue of coverage, those terms the
5 commissioner finds are reasonable and necessary to provide
6 continuity of coverage to small employers.
7 Sec. 3692. A violation of this chapter by a small employer
8 carrier or a producer is an unfair trade practice under chapter
9 20.
10 CHAPTER 37
11 NONPROFIT HEALTH INSURER
12 PART 1
13 Sec. 3701. As used in this chapter:
14 (a) "Bargaining representative" means a representative
15 designated or selected by a majority of employees for the
16 purposes of collective bargaining in respect to rates of pay,
17 wages, hours of employment, or other conditions of employment
18 relative to the employees represented.
19 (b) "Certificate" means a contract between a nonprofit health
20 insurer and a subscriber or a group of subscribers under which
21 health care benefits are provided to members. A certificate
22 includes the employer agreement or group agreement and any
23 approved riders amending the certificate.
24 (c) "Collective bargaining agreement" means an agreement
25 entered into between the employer and the bargaining
26 representative of its employees, and includes those agreements
27 entered into on behalf of groups of employers with the bargaining
1 representative of their employees pursuant to the national labor
2 relations act, chapter 372, 49 Stat. 449, 29 U.S.C. 151 to 158
3 and 159 to 169, under 1939 PA 176, MCL 423.1 to 423.30, or under
4 1947 PA 336, MCL 423.201 to 423.217.
5 (d) "Health care benefit" means the right under a certificate
6 to have payment made by a nonprofit health insurer for a
7 specified health care service, regardless of whether or not the
8 payment is made pursuant to an administrative services only or
9 cost-plus arrangement.
10 (e) "Health care provider" means a health facility or person
11 licensed, certified, or authorized to deliver health care
12 services in accordance with state law.
13 (f) "Health care services" means services provided, ordered,
14 or prescribed by a health care provider, including health and
15 rehabilitative services and medical supplies, medical and
16 rehabilitative services and medical supplies, medical prosthetics
17 and devices, and medical services ancillary or incidental to the
18 provision of those services.
19 (g) "Medium/large subscriber group" means an underwritten
20 group of 100 or more subscribers.
21 (h) "Medicaid" means title XIX of the social security act,
22 chapter 531, 49 Stat. 620, 42 U.S.C. 1396 to 1396r-6 and 1396r-8
23 to 1396v.
24 (i) "Medicare" means title XVIII of the social security act,
25 chapter 531, 49 Stat. 620, 42 U.S.C. 1395 to 1395b, 1395b-2,
26 1395b-6 to 1395b-7, 1395c to 1395i, 1395i-2 to 1395i-5, 1395j to
27 1395t, 1395u to 1395w, 1395w-2 to 1395w-4, 1395w-21 to 1395w-28,
1 1395x to 1395yy, and 1395bbb to 1395ggg.
2 (j) "Member" means a subscriber, a dependent of a subscriber,
3 or any other individual entitled to receive health care benefits
4 under a nongroup or group certificate.
5 (k) "Nongroup subscriber" means an individual subscriber who
6 is not enrolled as a subscriber through any subscriber group.
7 (l) "Participating contract" means an agreement, contract, or
8 other arrangement, including a prudent purchaser agreement, under
9 which a health care provider agrees to accept the approved amount
10 as determined by the nonprofit health insurer as payment in full
11 for the rendering of health care services covered under a
12 certificate.
13 (m) "Participating provider" means a health care provider
14 that has entered into a participating contract with a nonprofit
15 health insurer.
16 (n) "Personal data" means a document incorporating medical or
17 surgical history, care, treatment, or service; or any similar
18 record, including an automated or computer accessible record,
19 relative to a member, which is maintained or stored by a
20 nonprofit health insurer.
21 (o) "Proposed rate" means any of the following:
22 (i) A proposed increase or decrease in the rates to be
23 charged to nongroup subscribers.
24 (ii) For group subscribers, any proposed changes in the
25 methodology or definitions of any rating system, formula,
26 component, or factor subject to prior approval by the
27 commissioner.
1 (iii) A proposed increase or decrease in deductible amounts
2 or coinsurance percentages.
3 (iv) A proposed extension of benefits, additional benefits,
4 or a reduction or limitation in benefits.
5 (v) A review pursuant to section 3753(2).
6 (p) "Self-insured group" means a group whose contract with a
7 nonprofit health insurer consists solely of an administrative
8 services or cost-plus arrangement authorized under this chapter.
9 (q) "Small subscriber group" means an underwritten group of
10 fewer than 100 subscribers.
11 (r) "Subscriber" means an individual who contracts for health
12 care benefits, either individually or through a group, with a
13 nonprofit health insurer. Subscriber includes an individual
14 whose contract contains an administrative services only or
15 cost-plus arrangement.
16 Sec. 3702. (1) Each nonprofit health care corporation
17 operating under former 1980 PA 350 on the effective date of this
18 chapter shall become a nonprofit health insurer subject to this
19 chapter without formal reorganization under this chapter, and
20 shall be considered to exist under this act. However, within 120
21 days following the effective date of this chapter, the nonprofit
22 health insurer shall amend its articles of incorporation and
23 bylaws to conform to the requirements of this chapter, subject to
24 legal review by the attorney general and certification of the
25 commissioner as provided in subsection (2) and shall obtain from
26 the commissioner a new certificate of authority.
27 (2) Relative to the changes required by this chapter,
1 amendments to the articles and bylaws and a written description
2 of the board restructuring shall be submitted to the attorney
3 general for legal review and to the commissioner for approval.
4 If the attorney general finds that the amendments and
5 restructuring conform to all statutory requirements, and that
6 they comply with this chapter and ensure fair and equitable
7 representation of the subscribers of the nonprofit health
8 insurer, the attorney general shall certify these findings to the
9 commissioner. In reviewing the amendments and description of the
10 board restructuring, the attorney general may consult with the
11 board of directors, officers, or employees of a nonprofit health
12 insurer and with any other individual or organization.
13 (3) If the commissioner approves the amendments and
14 restructuring, the commissioner shall certify his or her approval
15 to the board. The approved amendments and restructuring shall
16 take effect 10 days after the certification. If the commissioner
17 disapproves all or any part of the amendments or restructuring,
18 or both, the commissioner shall return the disapproved amendments
19 or the written description of the restructuring, or both, to the
20 board with a written statement stating the reasons for the
21 disapproval and any recommendations for change the commissioner
22 suggests.
23 (4) If the amendments, written description of restructuring,
24 or both, required by this chapter are not submitted to the
25 attorney general and the commissioner within 120 days after the
26 effective date of this chapter, or if the amendments, written
27 description, or both, are disapproved as provided in this
1 section, the commissioner and the attorney general shall, and the
2 nonprofit health insurer may, seek judicial remedies as provided
3 for by law in the Ingham county circuit court.
4 (5) If a nonprofit health insurer fails to comply with this
5 section, the commissioner may issue an order suspending the right
6 and privilege of the nonprofit health insurer to sell or issue
7 new certificates until this section has been fully complied
8 with.
9 (6) The corporate existence of each nonprofit health insurer
10 operating in this state shall be considered to be extended, and
11 its powers in all other respects undiminished, during the 120-day
12 implementation period prescribed in subsection (1).
13 Sec. 3703. (1) All of the provisions of this act that apply
14 to a domestic disability mutual insurer apply to a nonprofit
15 health insurer under this chapter unless specifically excluded or
16 otherwise specifically provided for in this chapter.
17 (2) Sections 411 and 901 and chapter 77 do not apply to a
18 nonprofit health insurer.
19 (3) In order to ascertain the interests of senior citizens
20 regarding the provision of medicare supplemental coverage and to
21 ascertain the interests of senior citizens regarding the
22 administration of the medicare program when acting as fiscal
23 intermediary in this state, a nonprofit health insurer shall
24 consult with the office of services to the aging and with senior
25 citizens' organizations in this state.
26 Sec. 3704. (1) A nonprofit health insurer subject to this
27 chapter is declared to be a charitable and benevolent
1 institution, and its funds and property are exempt from taxation
2 by this state or any political subdivision of this state.
3 (2) A person shall not act as a nonprofit health insurer or
4 issue a certificate except as authorized by and pursuant to a
5 certificate of authority granted to the person by the
6 commissioner pursuant to this chapter.
7 Sec. 3705. (1) A nonprofit health insurer, in addition to
8 the requirements of this chapter, shall subscribe to articles of
9 incorporation that shall contain the purposes of the nonprofit
10 health insurer, which shall be:
11 (a) To provide health care benefits.
12 (b) To secure for all of the people of this state who apply
13 for a certificate the opportunity for access to coverage for
14 health care services at a fair and reasonable price.
15 (c) To assure for nongroup and group subscribers reasonable
16 access to, and reasonable cost and quality of, health care
17 services.
18 (d) To offer supplemental coverage to all medicare enrollees
19 as provided in chapter 38.
20 (e) To engage in activity otherwise authorized by this act,
21 within the purposes for which nonprofit health insurers may be
22 organized under this chapter.
23 (2) By action of its board of directors, a nonprofit health
24 insurer may integrate into a single instrument the provisions of
25 its articles of incorporation. Any amendment or restatement of
26 the articles are subject to legal review by the attorney general
27 and approval by the commissioner.
1 Sec. 3707. (1) A nonprofit health insurer wishing to
2 maintain a certificate of authority in this state after the
3 effective date of this chapter shall possess and maintain
4 unimpaired surplus in an amount determined adequate by the
5 commissioner to comply with section 403. The commissioner shall
6 take into account the risk-based capital requirements as
7 developed by the national association of insurance commissioners
8 in order to determine adequate compliance with section 403.
9 (2) If a nonprofit health insurer files a risk-based capital
10 report that indicates that its surplus is less than the amount
11 determined adequate by the commissioner under subsection (1), the
12 nonprofit health insurer shall prepare and submit a plan for
13 remedying the deficiency in accordance with risk-based capital
14 requirements adopted by the commissioner. Among the remedies
15 that a nonprofit health insurer may employ are planwide viability
16 contributions to surplus by subscribers.
17 (3) If contributions for planwide viability under subsection
18 (2) are employed, those contributions shall be made in accordance
19 with the following:
20 (a) If the nonprofit health insurer's surplus is less than
21 200% but more than 150% of the authorized control level under
22 risk-based capital requirements, the maximum contribution rate
23 shall be 0.5% of the rate charged to subscribers for the benefits
24 provided.
25 (b) If the nonprofit health insurer's surplus is 150% or less
26 than the authorized control level under risk-based capital
27 requirements, the maximum contribution rate shall be 1% of the
1 rate charged to subscribers for the benefits provided.
2 (c) The actual contribution rate charged is subject to the
3 commissioner's approval.
4 (4) As used in subsection (3), "authorized control level"
5 means the number determined under the risk-based capital formula
6 in accordance with the instructions developed by the national
7 association of insurance commissioners and adopted by the
8 commissioner.
9 Sec. 3709. (1) The funds and property of a nonprofit health
10 insurer shall be acquired, held, and disposed of only for the
11 lawful purposes of the nonprofit health insurer and for the
12 benefit of the nonprofit health insurer's subscribers as a
13 whole. A nonprofit health insurer shall only transact such
14 business, receive, collect, and disburse such money, and acquire,
15 hold, protect, and convey such property, as are properly within
16 the scope of the purposes of the nonprofit health insurer as
17 provided in section 3705(1), for the benefit of the nonprofit
18 health insurer subscribers as a whole, and consistent with this
19 chapter.
20 (2) A nonprofit health insurer shall not market or transact,
21 as provided in sections 402a and 402b, any type of insurance
22 described in chapter 6. This subsection does not prohibit the
23 provision of prepaid health care benefits.
24 Sec. 3711. A nonprofit health insurer, subject to any
25 limitation provided in this act, in any other statute of this
26 state, or in its articles of incorporation, may do any or all of
27 the following:
1 (a) With the commissioner's approval, borrow money and issue
2 its promissory note, surplus note, or bond for the repayment of
3 the borrowed money with interest.
4 (b) With the commissioner's approval, participate with others
5 in any joint venture with respect to any transaction that the
6 nonprofit health insurer would have the power to conduct by
7 itself.
8 Sec. 3713. A nonprofit health insurer shall not do any of
9 the following:
10 (a) Take any action to change its nonprofit status.
11 (b) Dissolve, merge, consolidate, mutualize, or take any
12 other action that results in a change in direct or indirect
13 control of the nonprofit health insurer or sell, transfer, lease,
14 exchange, option, or convey assets that results in a change in
15 direct or indirect control of the nonprofit health insurer.
16 PART 2
17 Sec. 3720. Chapter 52 applies to a nonprofit health insurer
18 except as otherwise provided in this chapter.
19 Sec. 3721. (1) The board of directors of a nonprofit health
20 care corporation operating pursuant to former 1980 PA 350 shall
21 become the board of directors for a nonprofit health insurer
22 under this chapter subject to all of the following:
23 (a) The terms of all provider board members serving pursuant
24 to section 301(3) of former 1980 PA 350 shall end on the
25 effective date of this chapter.
26 (b) All board members whose terms expire in April of 2003
27 shall not be reappointed or replaced.
1 (c) By June 30, 2003, the board of directors shall submit a
2 plan to the commissioner detailing how it will reduce the size of
3 the board by December 31, 2003 to 13 members including the chief
4 executive officer. The plan shall be consistent with the
5 requirements of this part and shall provide that an individual
6 shall not serve more than 2 consecutive terms on the board. If a
7 plan is not submitted by June 30, 2003, then the commissioner,
8 after consultation with the board of directors, shall formulate
9 and place into effect a plan consistent with this part. The plan
10 submitted by the board of directors shall be considered to meet
11 the requirements of this part if it is not disapproved by written
12 order of the commissioner on or before October 1, 2003. As part
13 of a disapproval order, the commissioner shall notify the board
14 of directors in what respect all or any part of the plan
15 submitted by the board of directors fails to meet the
16 requirements of this part. Not later than 30 days after the date
17 of the disapproval order, the board of directors shall submit a
18 revised plan that meets the requirements of this part. If the
19 board of directors fails to submit a revised plan or if the
20 submitted revised plan does not meet the requirements of this
21 part, as determined by the commissioner, then the commissioner
22 shall immediately formulate and place into effect a plan
23 consistent with this part.
24 (2) Effective January 1, 2004, the board of directors of a
25 nonprofit health insurer shall consist of 13 members as follows:
26 (a) Three public members appointed by the governor with the
27 advice and consent of the senate, at least 1 of whom shall be 62
1 years of age or older, and who shall represent the public
2 interest in the charitable and benevolent mission of the
3 nonprofit health insurer.
4 (b) One member representing nongroup subscribers.
5 (c) Two members representing self-insured groups.
6 (d) Three members representing small subscriber groups.
7 (e) Three members representing medium/large subscriber
8 groups.
9 (f) The chief executive officer of the nonprofit health
10 insurer.
11 (3) The method of selection of the directors, other than the
12 directors who are representatives of the public, shall be
13 specified in the bylaws. The method for filling vacancies in the
14 offices of directors, other than the directors who are
15 representatives of the public, shall be provided in the bylaws.
16 The term of office of any director except the term of office of
17 the director under subsection (2)(f) shall not exceed 3 years,
18 and at least 1/3 of the members of the board, excluding the
19 director under subsection (2)(f), shall be selected each year.
20 The bylaws shall provide that all members of the board shall be
21 reimbursed only for all reasonable and necessary expenses
22 incurred in carrying out their duties under this chapter and
23 shall not receive any compensation for services to the nonprofit
24 health insurer as director.
25 (4) The method of selection of each category of subscribers
26 entitled to representation on the board shall maximize subscriber
27 participation to the extent reasonably practicable. This
1 subsection permits, but does not require, the statewide election
2 of a director. The method of selection neither permits nor
3 requires nomination, endorsement, approval, or confirmation of a
4 candidate or director by the board of directors or the management
5 of the nonprofit health insurer, or by any member or members of
6 the board of directors or the management of the nonprofit health
7 insurer. This subsection does not limit the rights of any
8 director or employee or officer of the nonprofit health insurer
9 to participate in the selection process in his or her capacity as
10 a subscriber, to the same extent as any other subscriber may
11 participate.
12 (5) A director shall not be an employee, agent, officer, or
13 director of an insurance company writing disability insurance
14 inside or outside this state.
15 Sec. 3722. (1) The board of directors may establish
16 advisory councils and, unless otherwise provided in the articles
17 of incorporation or bylaws, committees it considers necessary to
18 perform its duties. With respect to board committees, the bylaws
19 shall include provisions regarding all of the following:
20 (a) Provisions that assure that the membership of each
21 committee provides for representation of all of the components of
22 directors, as defined in the bylaws, to the greatest extent
23 practicable.
24 (b) Provisions regarding emergency meetings of the nonprofit
25 health insurer executive committee, and action by that committee
26 on behalf of the board in cases of emergency, as defined in and
27 authorized by the bylaws.
1 (2) The board of directors shall establish a provider
2 advisory council by not later than 90 days after the effective
3 date of this chapter. The provider advisory council shall
4 consist of not more than 12 members who shall fairly represent
5 the classes of health care providers with whom the nonprofit
6 health insurer contracts for services.
7 (3) The provider advisory council established under
8 subsection (2) shall provide advice to the board of directors on
9 matters concerning the impact of board policies on health care
10 providers, including, but not limited to, participating
11 contracts, coverage for medical services, billing and payment
12 procedures and practices, and subscriber access to an appropriate
13 number and mix of health care providers in this state.
14 (4) Except as otherwise provided in subsection (1)(b), a
15 council or committee established under this section shall act in
16 an advisory capacity to the board of directors. Except as
17 otherwise provided in subsection (1)(b), the board of directors
18 shall meet and approve a council or committee recommendation
19 before it can be implemented. The minutes of all meetings of
20 councils and committees established under this section shall be
21 given to the members of the board of directors and shall be
22 included in the minutes of the board of directors' meetings.
23 Sec. 3723. (1) The board of directors shall adopt initial
24 bylaws and may amend or repeal those bylaws or adopt new bylaws,
25 subject to legal review by the attorney general and prior
26 approval by the commissioner. The bylaws may contain any
27 provision for the regulation and management of the affairs of the
1 nonprofit health insurer not inconsistent with the articles of
2 incorporation, this act, or any other applicable provision of
3 law.
4 (2) The initial bylaws, and any new bylaws, amendments, or
5 repealers shall be submitted to the attorney general for legal
6 review and for approval by the commissioner. The commissioner
7 shall approve the initial bylaws, new bylaws, amendments, or
8 repealers if the commissioner determines that they comply with
9 this act.
10 (3) If the commissioner disapproves all or any part of the
11 initial bylaws, new bylaws, amendments, or repealers, he or she
12 shall return them to the board with a written statement stating
13 the reasons for the disapproval and any recommendations for
14 change that he or she may wish to suggest, not later than 30 days
15 following their receipt. Bylaws, amendments, and repealers not
16 returned to the nonprofit health insurer within this 30-day
17 period are considered to comply with this chapter and are
18 considered approved.
19 Sec. 3724. (1) Regular or special meetings of the board of
20 directors or a board committee shall be held within this state.
21 With respect to regular or special meetings of the board or a
22 board committee, the bylaws shall include provisions regarding
23 all of the following:
24 (a) The minimum number of regular meetings to be held each
25 year.
26 (b) The publication and advance distribution of an agenda,
27 including provisions respecting the time and place of the meeting
1 and the business to be conducted. Notice of meetings and the
2 agenda for the meeting shall be posted on the nonprofit health
3 insurer's website as soon as practical after publication or
4 dissemination under this subdivision.
5 (c) The voting procedures to be used. The use of proxies or
6 round-robins shall not be allowed.
7 (2) Notice of a regular meeting shall be given at least 15
8 days before the meeting and notice of a special meeting shall be
9 given at least 24 hours before the meeting. All meetings shall
10 be open to the public except as otherwise provided in
11 section 3725(2).
12 (3) Unless otherwise restricted by the articles of
13 incorporation or bylaws, a member of the board or of a board
14 committee may participate in a meeting by means of conference
15 telephone or similar communications equipment by means of which
16 all individuals participating in the meeting can hear each
17 other. Participation in a meeting pursuant to this subsection
18 constitutes presence in person at the meeting.
19 (4) A majority of board members then in office, or of the
20 members of a board committee, constitutes a quorum for the
21 transaction of business, unless the articles or bylaws provide
22 for a larger number. The vote of the majority of members present
23 at a meeting at which a quorum is present constitutes the action
24 of the board or of the committee, unless the vote of a larger
25 number is required by this chapter, the articles, or the bylaws.
26 The following actions shall require the vote of not less than a
27 majority of the members of the board then in office:
1 (a) Adoption of bylaws, amendments to bylaws, or repealers of
2 bylaws.
3 (b) Adoption of articles of incorporation, amendments to
4 articles, or repealers of articles.
5 (c) Adoption of compensation for officers of the nonprofit
6 health insurer.
7 (5) The bylaws shall provide that a record roll call vote
8 shall be taken at the request of any board member. The vote of
9 each member during a record roll call vote shall be recorded in
10 the minutes.
11 Sec. 3725. (1) A nonprofit health insurer shall keep
12 accurate books and records of account and complete and detailed
13 minutes of the proceedings of the board of directors and board
14 committees. The books, records, and minutes may be in written
15 form or in any other form capable of being converted into written
16 form within a reasonable time and shall be made available
17 electronically in a form prescribed by the commissioner. One
18 copy of the minutes or draft minutes from each meeting of the
19 board of directors shall be transmitted to the commissioner
20 within 15 days after the meeting was held. Upon request, a
21 subscriber shall receive, within 15 days after receipt of the
22 request, a copy of the minutes or draft minutes of 1 or more
23 meetings of the board or board committee and may be charged not
24 more than the reasonable cost of copying and postage.
25 (2) Minutes shall be kept and need not be disclosed, except
26 to the commissioner, for those portions of meetings that are held
27 for the following purposes:
1 (a) To consider the hiring, promotion, dismissal,
2 suspension, or discipline of an employee.
3 (b) To consider the purchase, lease, or sale of real
4 property.
5 (c) For strategy and negotiation sessions connected with the
6 negotiations of a collective bargaining agreement when either
7 party requests a closed meeting.
8 (d) For trial or settlement strategy sessions in connection
9 with specific contemplated or pending litigation. If these
10 sessions are with respect to litigation to which the commissioner
11 or the attorney general is a party, minutes regarding these
12 sessions are not subject to examination and free access by the
13 commissioner.
14 (e) To consider medical records of an individual.
15 (f) To consider the acquisition or disposal of certificates
16 of stock, bonds, certificates of indebtedness, and other
17 intangibles in which the nonprofit health insurer may invest
18 funds under this chapter, if the information regarding proposed
19 acquisition or disposal may affect the price paid or received.
20 (g) To consider provider appeals when the provider has
21 requested a closed hearing.
22 (h) To discuss marketing strategy with regard to a
23 particular customer or limited group of customers, or to discuss
24 a new or changed benefit, the premature disclosure of which would
25 have an adverse impact on the nonprofit health insurer.
26 (i) To consider the removal of a director from the board
27 when the director requests a closed hearing.
1 (3) The date and time of preparation and existence of the
2 minutes described in subsection (2), the contents of which shall
3 not be disclosable except to the commissioner, shall be noted in
4 the minutes required to be kept under subsection (1). Once
5 action is taken by the board to implement a consideration or
6 discussion described in subsection (2)(b), (f), (g), or (h), once
7 a collective bargaining agreement is reached as described in
8 subsection (2)(c), once litigation is no longer pending as
9 described in subsection (2)(d), or once a closed hearing is
10 concluded as described in subsection (2)(i), and upon the request
11 of the director to whom the hearing pertained, the minutes
12 relating to the consideration, discussion, or strategy session
13 shall be published and disseminated with the next succeeding set
14 of minutes published and disseminated under subsection (1).
15 Sec. 3726. The board shall establish a compensation plan
16 for executive and senior level management of the nonprofit health
17 insurer, including any bonus plan tied to performance of the
18 nonprofit health insurer, which shall be filed with and approved
19 by the commissioner before it becomes effective. The
20 commissioner shall be notified of any bonus issued to an
21 executive or senior level member of management of the nonprofit
22 health insurer within 10 days of issuance of the bonus. The
23 board shall identify in the compensation plan, subject to the
24 commissioner's approval, those executive and senior level
25 management positions covered under the compensation plan.
26 Sec. 3727. (1) A contract or other transaction between a
27 nonprofit health insurer and 1 or more of its directors or
1 officers, or between a nonprofit health insurer and any other
2 corporation, firm, or association of any type or kind in which 1
3 or more of its directors or officers are directors or officers,
4 or are otherwise interested, is not void or voidable solely
5 because of this common directorship, officership, or interest, or
6 solely because the directors are present at the meeting of the
7 board that authorizes or approves the contract or transaction, if
8 all of the following conditions are satisfied:
9 (a) The contract or other transaction is fair and reasonable
10 to the nonprofit health insurer when it is authorized, approved,
11 or ratified.
12 (b) The material facts as to the officer's or director's
13 relationship or interest and as to the contract or transaction
14 are disclosed or known to the board, and the board authorizes,
15 approves, or ratifies the contract or transaction by a vote
16 sufficient for the purpose. The conditions of this subdivision
17 shall be considered satisfied only if the officer or director has
18 announced the potential conflict before the vote, the minutes of
19 the meeting reflect that announcement, and the officer or
20 director abstained from the vote.
21 (2) If the validity of a contract described in subsection
22 (1) is questioned, the burden of establishing its validity on the
23 grounds prescribed is upon the director, officer, corporation,
24 firm, or association asserting its validity.
25 (3) Common or interested directors shall not be counted in
26 determining the presence of a quorum at a board meeting at the
27 time a contract or transaction described in subsection (1) is
1 authorized, approved, or ratified.
2 (4) The bylaws of a nonprofit health insurer may include
3 provisions regarding conflict of interest that are more stringent
4 than this section.
5 PART 3
6 Sec. 3731. (1) A nonprofit health insurer established,
7 maintained, or operating in this state shall offer health care
8 benefits to all residents of this state, and may offer other
9 health care benefits as the insurer specifies with the approval
10 of the commissioner.
11 (2) A nonprofit health insurer may limit the health care
12 benefits that it will furnish, except as provided in this act,
13 and may divide the health care benefits that it elects to furnish
14 into classes or kinds.
15 (3) A nonprofit health insurer shall not do any of the
16 following:
17 (a) Refuse to issue or continue a certificate to 1 or more
18 residents of this state, except while the individual, based on a
19 transaction or occurrence involving a nonprofit health insurer,
20 is serving a sentence arising out of a charge of fraud, is
21 satisfying a civil judgment, or is making restitution pursuant to
22 a voluntary payment agreement between the nonprofit health
23 insurer and the individual.
24 (b) Refuse to continue in effect a certificate with 1 or more
25 residents of this state, other than for failure to pay amounts
26 due for a certificate, except as allowed for refusal to issue a
27 certificate under subdivision (a).
1 (c) Limit the coverage available under a certificate, without
2 the prior approval of the commissioner, unless the limitation is
3 as a result of: an agreement with the person paying for the
4 coverage; an agreement with the individual designated by the
5 persons paying for or contracting for the coverage; or a
6 collective bargaining agreement.
7 (4) A nonprofit health insurer has the right to status as a
8 party in interest, whether by intervention or otherwise, in any
9 judicial, quasi-judicial, or administrative agency proceeding in
10 this state for the purpose of enforcing any rights it may have
11 for reimbursement of payments made or advanced for health care
12 services on behalf of 1 or more of its subscribers or members.
13 (5) A nonprofit health insurer shall not limit or deny
14 coverage to a subscriber or limit or deny reimbursement to a
15 provider on the ground that services were rendered while the
16 subscriber was in a health care facility operated by this state
17 or a political subdivision of this state. A nonprofit health
18 insurer shall not limit or deny participation status to a health
19 care facility on the ground that the health care facility is
20 operated by this state or a political subdivision of this state,
21 if the facility meets the standards set by the nonprofit health
22 insurer for all other facilities of that type,
23 government-operated or otherwise. To qualify for participation
24 and reimbursement, a facility shall, at a minimum, meet all of
25 the following requirements, which shall apply to all similar
26 facilities:
27 (a) Be accredited by the joint commission on accreditation of
1 hospitals.
2 (b) Meet the certification standards of the medicare program
3 and the medicaid program.
4 (c) Meet all statutory requirements for certificate of need.
5 (d) Follow generally accepted accounting principles and
6 practices.
7 (e) Have a community advisory board.
8 (f) Have a program of utilization and peer review to assure
9 that patient care is appropriate and at an acute level.
10 (g) Designate that portion of the facility that is to be used
11 for acute care.
12 Sec. 3732. (1) A nonprofit health insurer delivering,
13 issuing for delivery, or renewing in this state a medium/large
14 subscriber group certificate shall furnish to a payor, within 30
15 days after receiving a written request therefore and upon payment
16 of a reasonable charge, all of the following information by
17 coverage component for the certificate incurred during the
18 immediately preceding 24-month period:
19 (a) Total number of individuals covered.
20 (b) Total number of claims.
21 (c) Total dollar amount of claims.
22 (d) Amount paid or allocated to providers on a per individual
23 basis not included in subdivisions (a) to (c).
24 (e) All pertinent information used by the nonprofit health
25 insurer to make its rates for that group. This subdivision does
26 not require the release of any information otherwise exempt from
27 disclosure under this chapter. The commissioner shall determine
1 not less often than annually what is pertinent information under
2 this subdivision.
3 (2) Information furnished under subsection (1) shall not
4 disclose personal data that may reveal the identity of a covered
5 individual. Information furnished under subsection (1) shall be
6 collected and provided to a payor based on the group the payor
7 sponsors.
8 (3) As used in this section:
9 (a) "Coverage component" includes, but is not limited to,
10 in-patient and out-patient facility coverage, professional
11 provider coverage, and pharmacy coverage.
12 (b) "Payor" means the purchaser of group coverage whether the
13 purchase is made directly from the nonprofit health insurer or is
14 made through a third party administrator, an agency, or another
15 entity.
16 Sec. 3733. (1) If a group or nongroup certificate of a
17 nonprofit health insurer provides for health care benefits for a
18 health care service and if that service was legally performed,
19 those benefits or reimbursement for the provision of the service
20 shall not be denied because the service was rendered by a
21 dentist.
22 (2) As used in this section, "dentist" means an individual
23 licensed under part 166 of the public health code, 1978 PA 368,
24 MCL 333.16601 to 333.16648.
25 (3) This section applies to certificates issued or renewed on
26 or after the effective date of this section and applies
27 notwithstanding any certificate provision to the contrary.
1 Sec. 3734. (1) Subject to subsections (2) and (3), if a
2 nonprofit health insurer group or nongroup certificate provides
3 for health care benefits for services performed by a physician's
4 assistant, those benefits or reimbursement for those benefits at
5 the prevailing rate shall not be denied if the services were
6 performed by a physician's assistant acting within the scope of
7 his or her license and if the following are met:
8 (a) If the services were performed by a physician's assistant
9 working for a physician or facility specializing in a particular
10 area of medicine, a physician that specializes in that area of
11 medicine was physically present on the premises when the
12 physician's assistant performed the services.
13 (b) If the services were performed by a physician's assistant
14 working for a physician or facility engaging in general family
15 practice, a physician need not have been physically present on
16 the premises when the physician's assistant performed the
17 services so long as a consulting physician is within 150 miles or
18 3 hours' commute to where the services are performed.
19 (2) This section applies to a physician's assistant who
20 performs services in any of the following:
21 (a) A county with a population of 25,000 or less.
22 (b) A certified rural health clinic.
23 (c) A health professional shortage area.
24 (3) For purposes of subsection (1), a physician supervising a
25 physician's assistant shall do so from within Michigan or from a
26 state bordering Michigan.
27 (4) As used in this section:
1 (a) "Health professional shortage area" means that term as
2 defined in section 332(a)(1) of subpart II of part D of title III
3 of the public health service act, chapter 373, 90 Stat. 2270, 42
4 U.S.C. 254e.
5 (b) "Physician's assistant" means an individual licensed as a
6 physician's assistant under article 15 of the public health code,
7 1978 PA 368, MCL 333.16101 to 333.18838.
8 (c) "Rural health clinic" means a rural health clinic as
9 defined under section 1861 of part D of title XVIII of the social
10 security act, 42 U.S.C. 1395x, and certified to participate in
11 medicaid and medicare.
12 Sec. 3735. (1) A health care provider who has reason to
13 believe that a nonprofit health insurer has violated section
14 2005a, 2006, 2024, or 2026 concerning that health care provider
15 is entitled to a private informal managerial-level conference
16 with the nonprofit health insurer and to a review before the
17 commissioner if the conference fails to resolve the dispute.
18 (2) A nonprofit health insurer shall establish reasonable
19 internal procedures to provide a health care provider with a
20 private informal managerial-level conference as provided in
21 subsection (1). These procedures shall provide for all of the
22 following:
23 (a) That the nonprofit health insurer shall make a final
24 written determination not later than 35 calendar days after a
25 grievance is submitted in writing by the health care provider.
26 The timing for the 35-calendar-day period may be tolled, however,
27 for any period of time the provider is permitted to take under
1 the grievance procedure.
2 (b) A method of providing the health care provider, upon
3 request and payment of a reasonable copying charge, with
4 information pertinent to the matter in dispute.
5 (c) A method for resolving the dispute promptly and
6 informally, while protecting the interests of both the health
7 care provider and the nonprofit health insurer. The method under
8 this subdivision shall include at least all of the following:
9 (i) That the nonprofit health insurer shall hold a private
10 informal managerial-level conference under this section within a
11 reasonably accessible distance from the Michigan address of the
12 health care provider and at a time reasonably convenient to the
13 health care provider or the health care provider's agent or
14 representative. At the request of the health care provider, the
15 conference shall be held by telephone.
16 (ii) That not later than 20 days after the conference, the
17 nonprofit health insurer shall provide the health care provider
18 with all of the following:
19 (A) The nonprofit health insurer's proposed resolution.
20 (B) The facts, with supporting documentation, upon which the
21 proposed resolution is based.
22 (C) The specific section or sections of the law, certificate,
23 contract, or other written policy or document upon which the
24 proposed resolution is based.
25 (D) A statement explaining the health care provider's right
26 to appeal the matter to the commissioner within 120 days after
27 receipt of the nonprofit health insurer's final determination.
1 (E) A statement describing the status of the claim involved.
2 (3) A nonprofit health insurer shall do all of the
3 following:
4 (a) At the time of a refusal to pay a claim made by a health
5 care provider, the nonprofit health insurer shall provide in
6 writing to the health care provider a clear, concise, and
7 specific explanation of all the reasons for the refusal. This
8 notice shall notify the health care provider of his or her right
9 to a private informal managerial-level conference if the health
10 care provider believes the refusal to be in violation of section
11 2005a, 2006, 2024, or 2026.
12 (b) In addition to the notice required in subdivision (a), at
13 least annually provide notice to each health care provider with
14 whom the nonprofit health insurer has contact of the health care
15 provider's right to a private informal managerial-level
16 conference under this section. The notice shall reasonably
17 inform health care providers of their rights under this section.
18 (4) If the nonprofit health insurer fails to provide a
19 conference and a final determination within 35 days after a
20 request by a health care provider, or if the health care provider
21 disagrees with the proposed resolution of the nonprofit health
22 insurer after completion of the conference, the health care
23 provider is entitled to a determination of the matter by the
24 commissioner. To be entitled to a determination by the
25 commissioner under this subsection, the health care provider
26 shall file a written request with the commissioner not later than
27 120 days after the date of the final determination, 120 days
1 after the completion of the conference, or 120 days after the
2 expiration of the initial 35 days, as applicable. The
3 commissioner may extend this 120-day time limit if he or she
4 believes there is just cause to do so.
5 (5) If either the nonprofit health insurer or a health care
6 provider disagrees with a determination of the commissioner under
7 this section, the commissioner, if requested to do so by either
8 party, shall proceed to hear the matter as a contested case under
9 the administrative procedures act of 1969, 1969 PA 306,
10 MCL 24.201 to 24.328. The commissioner shall notify the
11 nonprofit health insurer and health care provider in his or her
12 determination under this section of the right to a contested case
13 hearing. To be entitled to a contested case hearing under this
14 subsection, the person requesting the contested case hearing
15 shall file a written request with the commissioner on or before
16 the expiration of 60 days after the date of the determination.
17 Sec. 3736. (1) A nonprofit health insurer shall, in order
18 to ensure the confidentiality of records containing personal data
19 that may be associated with identifiable members, use reasonable
20 care to secure these records from unauthorized access and to
21 collect only personal data necessary for the proper review and
22 payment of claims. Except as is necessary for claims
23 adjudication, claims verification, or when required by law, a
24 nonprofit health insurer shall not disclose records containing
25 personal data that may be associated with an identifiable member,
26 or personal information concerning a member, to a person other
27 than the member, without the prior and specific informed consent
1 of the member to whom the data or information pertains. The
2 member's consent shall be in writing. Except when a disclosure
3 is made to the commissioner or another governmental agency, a
4 court, or any other governmental entity, a nonprofit health
5 insurer shall make a disclosure for which prior and specific
6 informed consent is not required upon the condition that the
7 person to whom the disclosure is made protect and use the
8 disclosed data or information only in the manner authorized by
9 the nonprofit health insurer under subsection (2). If a member
10 has authorized the release of personal data to a specific person,
11 a nonprofit health insurer shall make a disclosure to that person
12 upon the condition that the person shall not release the data to
13 a third person unless the member executes in writing another
14 prior and specific informed consent authorizing the additional
15 release. This subsection does not preclude either of the
16 following:
17 (a) The release of information to a member, pertaining to
18 that member, by telephone, if the identity of the member is
19 verified.
20 (b) A representative of a subscriber group, upon request of
21 a member of that subscriber group, or an elected official, upon
22 request of a constituent, from assisting the individual in
23 resolving a claim.
24 (2) The board of directors of a nonprofit health insurer
25 shall establish and make public the policy of the nonprofit
26 health insurer regarding the protection of the privacy of members
27 and the confidentiality of personal data. The policy, at a
1 minimum, shall do all of the following:
2 (a) Provide for the nonprofit health insurer's implementation
3 of provisions in this act and other applicable law respecting
4 collection, security, use, release of, and access to personal
5 data.
6 (b) Identify the routine uses of personal data by the
7 nonprofit health insurer; prescribe the means by which members
8 will be notified regarding those uses; and provide for
9 notification regarding the actual release of personal data and
10 information that may be identified with, or that concern, a
11 member, upon specific request by that member. As used in this
12 subdivision, "routine use" means the ordinary use or release of
13 personal data compatible with the purpose for which the data were
14 collected.
15 (c) Assure that no person shall have access to personal data
16 except on the basis of a need to know.
17 (d) Establish the contractual or other conditions under which
18 the nonprofit health insurer will release personal data.
19 (e) Provide that enrollment applications and claim forms
20 developed by the nonprofit health insurer shall contain a
21 member's consent to the release of data and information that is
22 limited to the data and information necessary for the proper
23 review and payment of claims, and shall reasonably notify members
24 of their rights pursuant to the board's policy and applicable
25 law.
26 (f) Provide that applicants for new or renewed certificates
27 shall be advised that the nonprofit health insurer does not
1 require the use of the applicant's federal social security
2 account number and that, when applicable, another authority does
3 require use of the number.
4 (3) A nonprofit health insurer that violates this section is
5 guilty of a misdemeanor punishable by a fine of not more than
6 $1,000.00 for each violation.
7 (4) A member may bring a civil action for damages against a
8 nonprofit health insurer for a violation of this section and may
9 recover actual damages or $200.00, whichever is greater, together
10 with reasonable attorneys' fees and costs.
11 (5) This section does not limit access to records or enlarge
12 or diminish the investigative and examination powers of
13 governmental agencies, as provided for by law.
14 Sec. 3737. A civil action for negligence based upon, or
15 arising out of, the health care provider-patient relationship
16 shall not be maintained against a nonprofit health insurer.
17 Sec. 3738. (1) A nonprofit health insurer shall offer
18 benefits for the inpatient treatment of substance abuse by a
19 licensed allopathic physician or a licensed osteopathic physician
20 in a health care facility operated by this state or approved by
21 the department of community health for the hospitalization for,
22 or treatment of, substance abuse.
23 (2) Subject to subsection (3), a nonprofit health insurer may
24 enter into contracts with providers for the rendering of
25 inpatient substance abuse treatment by those providers.
26 (3) A contracting provider rendering inpatient substance
27 abuse treatment for patients other than adolescent patients shall
1 be a licensed hospital or a substance abuse service program
2 licensed under article 6 of the public health code, 1978 PA 368,
3 MCL 333.6101 to 333.6523, and shall meet the standards set by the
4 nonprofit health insurer for contracting health care facilities.
5 (4) In addition to the requirements of this section, a
6 nonprofit health insurer shall comply with sections 3425 and
7 3609a.
8 Sec. 3739. (1) A nonprofit health insurer shall offer or
9 include coverage, in all group and nongroup certificates, to
10 provide benefits for prosthetic devices to maintain or replace
11 the body part of an individual whose covered illness or injury
12 has required the removal of that body part. However,
13 certificates resulting from collective bargaining agreements are
14 exempt from this subsection. This coverage shall provide that
15 reasonable charges for medical care and attendance for an
16 individual fitted with a prosthetic device shall be covered
17 benefits after the individual's attending physician has certified
18 the medical necessity or desirability for a proposed course of
19 rehabilitative treatment.
20 (2) In all group and nongroup certificates, a nonprofit
21 health insurer shall provide benefits for prosthetic devices to
22 maintain or replace the body part of an individual who has
23 undergone a mastectomy. This coverage shall provide that
24 reasonable charges for medical care and attendance for an
25 individual who receives reconstructive surgery following a
26 mastectomy or who is fitted with a prosthetic device shall be
27 covered benefits after the individual's attending physician has
1 certified the medical necessity or desirability of a proposed
2 course of rehabilitative treatment. The cost and fitting of a
3 prosthetic device following a mastectomy is included within the
4 type of coverage intended by this subsection.
5 Sec. 3739a. (1) A nonprofit health insurer shall establish
6 and provide to members and participating providers a program to
7 prevent the onset of clinical diabetes. This program for
8 participating providers shall emphasize best practice guidelines
9 to prevent the onset of clinical diabetes and to treat diabetes,
10 including, but not limited to, diet, lifestyle, physical exercise
11 and fitness, and early diagnosis and treatment.
12 (2) A nonprofit health insurer shall regularly measure the
13 effectiveness of a program provided pursuant to subsection (1) by
14 regularly surveying group and nongroup members covered by the
15 certificate. By March 28, 2003, each nonprofit health insurer
16 shall prepare a report containing the results of the survey and
17 shall provide a copy of the report to the department of community
18 health.
19 (3) A nonprofit health insurer certificate shall provide
20 benefits in each group and nongroup certificate for the following
21 equipment, supplies, and educational training for the treatment
22 of diabetes, if determined to be medically necessary and
23 prescribed by an allopathic or osteopathic physician:
24 (a) Blood glucose monitors and blood glucose monitors for the
25 legally blind.
26 (b) Test strips for glucose monitors, visual reading and
27 urine testing strips, lancets, and spring-powered lancet
1 devices.
2 (c) Insulin.
3 (d) Syringes.
4 (e) Insulin pumps and medical supplies required for the use
5 of an insulin pump.
6 (f) Nonexperimental medication for controlling blood sugar.
7 (g) Diabetes self-management training to ensure that persons
8 with diabetes are trained as to the proper self-management and
9 treatment of their diabetic condition.
10 (4) A nonprofit health insurer certificate shall provide
11 benefits in each group and nongroup certificate for medically
12 necessary medications prescribed by an allopathic, osteopathic,
13 or podiatric physician and used in the treatment of foot
14 ailments, infections, and other medical conditions of the foot,
15 ankle, or nails associated with diabetes.
16 (5) Coverage under subsection (3) for diabetes
17 self-management training is subject to all of the following:
18 (a) Is limited to completion of a certified diabetes
19 education program upon occurrence of either of the following:
20 (i) If considered medically necessary upon the diagnosis of
21 diabetes by an allopathic or osteopathic physician who is
22 managing the patient's diabetic condition and if the services are
23 needed under a comprehensive plan of care to ensure therapy
24 compliance or to provide necessary skills and knowledge.
25 (ii) If an allopathic or osteopathic physician diagnoses a
26 significant change with long-term implications in the patient's
27 symptoms or conditions that necessitates changes in a patient's
1 self-management or a significant change in medical protocol or
2 treatment modalities.
3 (b) Shall be provided by a diabetes outpatient training
4 program certified to receive medicare or medicaid reimbursement
5 or certified by the department of community health. Training
6 provided under this subdivision shall be conducted in group
7 settings whenever practicable.
8 (6) Benefits under this section are not subject to dollar
9 limits, deductibles, or copayment provisions that are greater
10 than those for physical illness generally.
11 (7) As used in this section, "diabetes" includes all of the
12 following:
13 (a) Gestational diabetes.
14 (b) Insulin-dependent diabetes.
15 (c) Non-insulin-dependent diabetes.
16 PART 4
17 Sec. 3741. A nonprofit health insurer subject to this
18 chapter may enter into participating contracts with health care
19 providers as provided in this part.
20 Sec. 3742. (1) A nonprofit health insurer may enter into
21 participating contracts with or employ health care providers on
22 the basis of cost, quality, availability of services to the
23 membership, conformity to the administrative procedures of the
24 nonprofit health insurer, and other factors relevant to delivery
25 of economical, quality care, but shall not discriminate solely on
26 the basis of the class of health care providers to which the
27 health care provider belongs.
1 (2) A nonprofit health insurer shall enter into participating
2 contracts with health care providers through which covered health
3 care services are usually provided to members.
4 (3) A participating contract shall prohibit the participating
5 provider from seeking payment from a member for health care
6 services covered under the certificate, except that the
7 participating contract may allow participating providers to
8 collect deductibles and copayments directly from members.
9 (4) A participating contract shall provide for all of the
10 following:
11 (a) That the participating provider meet and maintain
12 applicable licensure or certification requirements.
13 (b) For appropriate access by the nonprofit health insurer to
14 records or reports concerning service to its members.
15 (c) That the participating provider cooperate with the
16 nonprofit health insurer's quality assurance activities.
17 (d) For the reimbursement methodology that is used to pay the
18 participating provider.
19 (e) For a reasonable dispute resolution process.
20 (f) Procedures for the termination of the participating
21 contract.
22 (g) Procedures for amendments to the contract, including
23 notification to providers.
24 Sec. 3743. (1) A participating contract may cover all
25 members or may be a separate and individual contract on a per
26 claim basis, if, in entering into a separate and individual
27 contract on a per claim basis, the participating provider
1 certifies to the nonprofit health insurer:
2 (a) That the provider will accept the nonprofit health
3 insurer's approved amount as payment in full for health care
4 services rendered for the specified claim for the member
5 indicated.
6 (b) That the provider will accept the nonprofit health
7 insurer's approved amount as payment in full for all cases
8 involving the procedure specified, for the duration of the
9 calendar year. As used in this subdivision, provider does not
10 include a person licensed as a dentist under part 166 of the
11 public health code, 1978 PA 368, MCL 333.16601 to 333.16648.
12 (c) That the provider will not determine whether to
13 participate on a claim on the basis of the race, color, creed,
14 marital status, sex, national origin, residence, age, disability,
15 or lawful occupation of the member entitled to health care
16 benefits.
17 (2) A participating contract shall provide that the private
18 provider-patient relationship shall be maintained to the extent
19 provided for by law.
20 (3) A nonprofit health insurer shall provide to a member,
21 upon request, a current list of providers with whom the nonprofit
22 health insurer has entered into participating contracts.
23 Sec. 3744. A nonprofit health insurer shall submit to the
24 commissioner for approval standard participating contract formats
25 and any substantive changes to those participating contract
26 formats. The contract format or change is considered approved 30
27 days after filing with the commissioner unless approved or
1 disapproved within the 30 days. As used in this section,
2 "substantive changes to those participating contract formats"
3 means any change to a participating contract that alters the
4 method of payment to a health care provider, alters the risk, if
5 any, assumed by each party to the contract, or affects a
6 provision required by law.
7 Sec. 3745. (1) A nonprofit health insurer shall provide
8 evidence to the commissioner that it has executed participating
9 contracts with a sufficient number of health care providers to
10 enable the nonprofit health insurer to deliver health care
11 services covered under a certificate.
12 (2) A nonprofit health insurer shall establish and maintain
13 adequate participating contracts to ensure reasonable proximity
14 between participating providers and members for the delivery of
15 covered health care services. In determining whether a nonprofit
16 health insurer has complied with this subsection, the
17 commissioner shall give due consideration to the relative
18 availability of health care providers in a geographic area.
19 PART 5
20 Sec. 3751. Administrative costs for administrative services
21 and cost-plus arrangements shall be determined in accordance with
22 the administrative costs allocation methodology and definitions
23 filed and approved under this part and shall be expressed clearly
24 and accurately in the contracts establishing the arrangements, as
25 a percentage of costs rather than charges.
26 Sec. 3752. (1) Except as otherwise provided in subsection
27 (2), if a nonprofit health insurer wants to offer a new
1 certificate, change an existing certificate, or change a rate
2 charge, a copy of the proposed revised certificate or proposed
3 rate shall be filed with the commissioner and shall not take
4 effect until 60 days after the filing unless the commissioner
5 approves the change in writing before the expiration of the 60
6 days. The commissioner may subsequently disapprove any
7 certificate or rate change.
8 (2) The commissioner shall exempt from prior approval
9 certificates resulting from a collective bargaining agreement.
10 (3) The commissioner may disapprove, or approve with
11 modifications, a certificate and applicable rates under 1 or more
12 of the following circumstances:
13 (a) If the rate charged for the benefits provided is not
14 equitable, not adequate, or excessive, as defined in section
15 3756.
16 (b) If the certificate contains 1 or more provisions that
17 are unjust, unfair, inequitable, misleading, or deceptive or that
18 encourage misrepresentation of the coverage.
19 (4) The commissioner shall approve a certificate and
20 applicable proposed rates if all of the following conditions are
21 met:
22 (a) If the rate charged for the benefits provided is
23 equitable, adequate, and not excessive, as defined in section
24 3756.
25 (b) If the certificate does not contain any provision that
26 is unjust, unfair, inequitable, misleading, or deceptive or that
27 encourages misrepresentation of the coverage.
1 (5) The commissioner may disapprove a certificate and any
2 applicable proposed rates under this section by issuing a notice
3 of disapproval specifying how the filing fails to meet the
4 requirements of this chapter. The notice shall state that the
5 filing shall not become effective.
6 (6) The commissioner may approve, or approve with
7 modifications, a certificate and any applicable proposed rates
8 under this section by issuing a notice of approval or approval
9 with modifications. If the notice is of approval with
10 modifications, the notice shall specify what modifications in the
11 filing are required for approval under this chapter, and the
12 reasons for the modifications. The notice shall also state that
13 the filing shall become effective after the modifications are
14 made and approved by the commissioner.
15 (7) Upon request by a nonprofit health insurer, the
16 commissioner may allow certificates and rates to be implemented
17 before filing to allow implementation of a new certificate on the
18 date requested.
19 Sec. 3753. (1) The rates charged to nongroup subscribers
20 for each certificate shall be filed in accordance with section
21 3752. Annually, the commissioner shall approve, disapprove, or
22 modify and approve the proposed or existing rates for each
23 certificate subject to the standard that the rates must be
24 determined to be equitable, adequate, and not excessive, as
25 defined in section 3756. The burden of proof that rates to be
26 charged meet these standards is on the nonprofit health insurer
27 proposing to use the rates. The rates charged to nongroup
1 subscribers for each certificate shall be calculated on a
2 community rating basis and may only vary by benefit plan and
3 family composition. Rates shall not be based on age, health
4 status, gender, or geographic location.
5 (2) The methodology and definitions of each rating system,
6 formula, component, and factor used to calculate rates for group
7 subscribers for each certificate, including the methodology and
8 definitions used to calculate administrative costs for
9 administrative services only and cost-plus arrangements, shall be
10 filed in accordance with section 3752. The definition of a
11 group, including any clustering principles applied to nongroup
12 subscribers or small group subscribers for the purpose of group
13 formation, is subject to the prior approval of the commissioner.
14 The commissioner shall approve, disapprove, or modify and approve
15 the methodology and definitions of each rating system, formula,
16 component, and factor for each certificate subject to the
17 standard that the resulting rates for group subscribers must be
18 determined to be equitable, adequate, and not excessive, as
19 defined in section 3756. In addition, the commissioner may from
20 time to time review the records of the nonprofit health insurer
21 to determine proper application of a rating system, formula,
22 component, or factor for any group. The nonprofit health insurer
23 shall refile every 3 years for approval under this subsection of
24 the methodology and definitions of each rating system, formula,
25 component, and factor used to calculate rates for group
26 subscribers, including the methodology and definitions used to
27 calculate administrative costs for administrative services only
1 and cost-plus arrangements. The burden of proof that the
2 resulting rates to be charged meet these standards is on the
3 nonprofit health insurer proposing to use the rating system,
4 formula, component, or factor.
5 Sec. 3755. (1) A proposed rate shall not take effect until a
6 filing has been made with the commissioner and approved under
7 section 3752 or this section, as applicable, except as provided
8 in subsections (2) and (3).
9 (2) Upon request by a nonprofit health insurer, the
10 commissioner may allow rate adjustments to become effective
11 before approval, for federal or state mandated benefit changes.
12 However, a filing for these adjustments shall be submitted before
13 the effective date of the mandated benefit changes. If the
14 commissioner disapproves or modifies and approves the rates, an
15 adjustment shall be made retroactive to the effective date of the
16 mandated benefit changes or additions.
17 (3) Implementation before approval may be allowed if the
18 nonprofit health insurer is participating with 1 or more
19 nonprofit health insurers to underwrite a group whose employees
20 are located in several states. Upon request from the
21 commissioner, the nonprofit health insurer shall file with the
22 commissioner, and the commissioner shall examine, the financial
23 arrangement, formulae, and factors. If any are determined to be
24 unacceptable, the commissioner shall take appropriate action.
25 Sec. 3756. (1) A rate is not excessive if the rate is not
26 unreasonably high relative to the following elements,
27 individually or collectively: provision for anticipated benefit
1 costs; provision for administrative expense; provision for cost
2 transfers, if any; provision for a contribution to or from
3 surplus that is consistent with the attainment or maintenance of
4 unimpaired surplus as required by section 3707; and provision for
5 adjustments due to prior experience of groups, as defined in the
6 group rating system. A determination as to whether a rate is
7 excessive relative to these elements, individually or
8 collectively, shall be based on the following: reasonable
9 evaluations of recent claim experience; projected trends in claim
10 costs; the allocation of administrative expense budgets; and the
11 present and anticipated unimpaired surplus of the nonprofit
12 health insurer. To the extent that any of these elements are
13 considered excessive, the provision in the rates for these
14 elements shall be modified accordingly.
15 (2) The administrative expense budget of the nonprofit health
16 insurer must be reasonable, as determined by the commissioner
17 after examination of material and substantial administrative and
18 acquisition expense items.
19 (3) A rate is equitable if the rate can be compared to any
20 other rate offered by the nonprofit health insurer to its
21 subscribers, and the observed rate differences can be supported
22 by differences in anticipated benefit costs, administrative
23 expense cost, differences in risk, or any identified cost
24 transfer provisions.
25 (4) A rate is adequate if the rate is not unreasonably low
26 relative to the elements prescribed in subsection (1),
27 individually or collectively, based on reasonable evaluations of
1 recent claim experience, projected trends in claim costs, the
2 allocation of administrative expense budgets, and the present and
3 anticipated unimpaired surplus of the nonprofit health insurer.
4 (5) Except for identified cost transfers, each line of
5 business shall be self-sustaining over time. However, there may
6 be cost transfers for the benefit of senior citizens and
7 individual conversion subscribers. Cost transfers for the
8 benefit of senior citizens, in the aggregate, annually shall not
9 exceed 1% of the earned subscription income of the nonprofit
10 health insurer as reported in the most recent annual statement of
11 the nonprofit health insurer. Individual conversion subscribers
12 are those who have maintained coverage with the nonprofit health
13 insurer on an individual basis after leaving a subscriber group.
14 Sec. 3757. Any final order or decision made, issued, or
15 executed by the commissioner under this part after a hearing held
16 before the commissioner or his or her designee pursuant to the
17 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
18 24.328, is subject to review without leave by the circuit court
19 for Ingham county as provided in chapter 6 of the administrative
20 procedures act of 1969, 1969 PA 306, MCL 24.301 to 24.306.
21 Sec. 5104. (1) Subject to the requirements of this act
22 applicable to domestic stock insurers, domestic mutual insurers,
23 reciprocals or inter-insurance exchanges, and the further
24 requirements of this chapter, 13 or more persons may organize a
25 stock insurer or 20 or more persons may organize a mutual insurer
26 for the purpose of transacting any or all of the following kinds
27 of insurance: property, marine, inland navigation and
1 transportation, casualty, or fidelity and surety, all as defined
2 in chapter 6. Once organized and authorized, the acquiring
3 insurer is subject to all applicable provisions of this act.
4 (2) If the acquiring insurer is a domestic stock insurer
5 owned by a nonprofit
health care corporation formed pursuant to
6 the nonprofit health
care corporation reform act, 1980 PA 350,
7 MCL 550.1101 to
550.1704 nonprofit health insurer
regulated
8 under chapter 37, then for insurance products and services the
9 acquiring insurer under this chapter whether directly or
10 indirectly shall only transact worker's compensation insurance
11 and employer's liability insurance, transact disability insurance
12 limited to replacement of loss of earnings, and act as an
13 administrative services organization for an approved self-insured
14 worker's compensation plan or a disability insurance plan limited
15 to replacement of loss of earnings. This subsection does not
16 preclude the acquiring insurer from providing either directly or
17 indirectly noninsurance products and services as otherwise
18 provided by law.
19 Sec. 7705. As used in this chapter:
20 (a) "Account" means either of the 2 accounts created under
21 section 7706.
22 (b) "Association" means the Michigan life and health
23 insurance guaranty association created under section 7706.
24 (c) "Contractual obligation" means an obligation under
25 covered policies.
26 (d) "Covered policy" means a policy or contract or
27 certificate under a group policy or contract, or portion thereof,
1 for which coverage is provided under section 7704.
2 (e) "Health insurance" means disability insurance as defined
3 in section 606.
4 (f) "Impaired insurer" means a member insurer considered by
5 the commissioner after May 1, 1982, to be potentially unable to
6 fulfill the insurer's contractual obligations or is placed under
7 an order of rehabilitation or conservation by a court of
8 competent jurisdiction. Impaired insurer does not mean an
9 insolvent insurer.
10 (g) "Insolvent
insurer" means a member insurer which that
11 after May 1, 1982, becomes insolvent and is placed under an order
12 of liquidation, by a court of competent jurisdiction with a
13 finding of insolvency.
14 (h) "Member insurer" means a person authorized to transact a
15 kind of insurance or annuity business in this state for which
16 coverage is provided under section 7704 and includes an insurer
17 whose certificate of authority in this state may have been
18 suspended, revoked, not renewed, or voluntarily withdrawn.
19 Member insurer does not include the following:
20 (i) A fraternal benefit society.
21 (ii) A cooperative plan insurer authorized under chapter 64.
22 (iii) A health maintenance organization authorized or
23 licensed under part
210 of the public health code, Act No. 368 of
24 the Public Acts of
1978, being sections 333.21001 to 333.21098 of
25 the Michigan Compiled
Laws regulated under chapter 35.
26 (iv) A mandatory state pooling plan.
27 (v) A mutual assessment or any entity that operates on an
1 assessment basis.
2 (vi) A nonprofit dental care corporation operating under Act
3 No. 125 of the Public
Acts of 1963, being sections 550.351 to
4 550.373 of the Michigan
Compiled Laws 1963 PA 125, MCL
550.351
5 to 550.373.
6 (vii) A nonprofit health care corporation operating
under
7 the nonprofit health
care corporation reform act, Act No. 350 of
8 the Public Acts of
1980, being sections 550.1101 to 550.1704 of
9 the Michigan Compiled
Laws A nonprofit health insurer
regulated
10 under chapter 37.
11 (viii) An insurance exchange.
12 (ix) Any entity similar to the entities described in this
13 subdivision.
14 (i) "Moody's corporate bond yield average" means the monthly
15 average corporates as published by Moody's investors service,
16 inc., or a successor to that service.
17 (j) "Person" means an individual, corporation, partnership,
18 association, or voluntary organization.
19 (k) "Premiums" means amounts received in a calendar year on
20 covered policies or contracts less premiums, considerations, and
21 deposits returned and less dividends and experience credits. The
22 term "premiums" does not include an amount received for a policy
23 or contract, or a portion of a policy or contract for which
24 coverage is not provided under section 7704. However, accessible
25 premiums shall not be reduced on account of sections 7704(3)(c)
26 relating to interest limitations and 7704(4)(b), (c), and (d)
27 relating to limitations with respect to any 1 individual, any 1
1 participant, and any 1 contract holder. Premiums shall not
2 include a premium in excess of $5,000,000.00 on an unallocated
3 annuity contract not issued under a governmental retirement plan
4 established under section 401(k), 403(b), or 457 of the internal
5 revenue code of 1986.
, 26 U.S.C. 401, 403, and 457.
6 (l) "Resident" means a person who resides in this state at
7 the time a member insurer is determined to be an impaired or
8 insolvent insurer and to whom contractual obligations are owed.
9 A person shall be considered a resident of only 1 state, which in
10 the case of a person other than a natural person, shall be its
11 principal place of business.
12 (m) "Supplemental contract" means an agreement entered into
13 for the distribution of policy or contract proceeds.
14 (n) "Unallocated annuity contract" means an annuity contract
15 or group annuity certificate that is not issued to and owned by
16 an individual, except to the extent of an annuity benefit
17 guaranteed to an individual by an insurer under the contract or
18 certificate. The term shall also include, but not be limited to,
19 guaranteed investment contracts, deposit administration
20 contracts, and contracts qualified under section 403(b) of the
21 internal revenue code of
1986. , 26 U.S.C. 403.
22 Enacting section 1. This amendatory act applies to health
23 policies, certificates, or contracts issued or renewed on and
24 after the effective date of this amendatory act.
25 Enacting section 2. The nonprofit health care corporation
26 reform act, 1980 PA 350, MCL 550.1101 to 550.1704, is repealed.