Alabama 2025 Regular Session

Alabama House Bill HB401 Compare Versions

Only one version of the bill is available at this time.

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1	1	HB401INTRODUCED
2	2	Page 0
3	3	HB401
4	4	5FURM33-1
5	5	By Representative Rigsby
6	6	RFD: Insurance
7	7	First Read: 06-Mar-25
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12	12	5 5FURM33-1 02/19/2025 JC (L)lg 2024-3194
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14	14	First Read: 06-Mar-25
15	15	SYNOPSIS:
16	16	The law does not currently regulate how insurers
17	17	that cover dental care spend the premiums received from
18	18	individuals and groups that contract for dental care
19	19	payment or reimbursement.
20	20	This bill would require dental insurers to spend
21	21	at least 85 percent of the premiums they receive on
22	22	customer claims. Dental insurers that fail to spend at
23	23	least 85 percent of premiums on claims would be
24	24	required to refund the excess premiums retained to
25	25	policyholders.
26	26	This bill would further require dental insurers
27	27	to report certain income and expense information to the
28	28	Commissioner of Insurance on an annual basis, and make
29	29	it available to the public.
30	30	This bill would also require the Commissioner of
31	31	Insurance to disallow proposed rate increases by dental
32	32	insurers that exceed the consumer price index for
33	33	dental services, and would provide an opportunity for a
34	34	hearing if the insurer seeks to reverse the
35	35	commissioner's decision.
36	36	A BILL
37	37	TO BE ENTITLED
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67	67	TO BE ENTITLED
68	68	AN ACT
69	69	Relating to dental insurance; to establish a medical
70	70	loss ratio as a percentage of premiums collected by an
71	71	insurer; to require reporting of the insurer's claims expenses
72	72	and income information for compliance with the medical loss
73	73	ratio; to require an insurer to give a rebate to enrollees if
74	74	payments on claims are below the medical loss ratio; to
75	75	provide for disclosure of insurer financial information; to
76	76	prohibit excessive increases in premiums; and to amend
77	77	Sections 10A-20-6.16 and 27-21A-23, Code of Alabama 1975, to
78	78	make conforming changes.
79	79	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
80	80	Section 1. (a) For the purposes of this section, the
81	81	following terms have the following meanings:
82	82	(1) COMMISSIONER. The Commissioner of Insurance.
83	83	(2) DENTAL BENEFIT PLAN. Any stand-alone individual or
84	84	group plan, policy, or contract issued, delivered, or renewed
85	85	in this state which is limited to paying or reimbursing the
86	86	costs of dental care services.
87	87	(3) DENTAL CARE SERVICES. Any services furnished to an
88	88	individual for the purpose of preventing, managing,
89	89	alleviating, curing, or healing dental illness or injury as
90	90	indicated by codes used for payment or reimbursement by the
91	91	insurer.
92	92	(4) HEALTH BENEFIT PLAN. a. Any individual or group
93	93	plan, policy, or contract issued, delivered, or renewed in
94	94	this state that, in addition to paying or reimbursing for
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124	124	this state that, in addition to paying or reimbursing for
125	125	hospitalization, physician care, treatment, surgery, therapy,
126	126	drugs, equipment, and other medical expenses, also includes
127	127	coverage for some dental care services.
128	128	b. The term does not include accident-only, specified
129	129	disease, individual hospital indemnity, credit, Medicare
130	130	supplement, long-term care, disability income, or other
131	131	limited benefit health insurance policies, or coverage issued
132	132	as supplemental to liability insurance, workers' compensation,
133	133	or automobile medical payment insurance.
134	134	(5) INSURER. A person as defined in Section 27-1-2,
135	135	Code of Alabama 1975, which issues, delivers, or renews a
136	136	dental benefit plan or a health benefit plan.
137	137	(6) MEDICAL LOSS RATIO. The percentage of premiums
138	138	collected by an insurer from policyholders or subscribers
139	139	which the insurer spends on dental care services for patients.
140	140	(7) REPORTING YEAR. A calendar year.
141	141	(b)(1) The minimum medical loss ratio for dental
142	142	benefit plans and health benefit plans in this state shall be
143	143	85 percent, to be calculated pursuant to subdivisions (2)
144	144	through (4).
145	145	(2) The percentage is a fraction of which the numerator
146	146	is the aggregated claims paid for dental care services by the
147	147	insurer in a reporting year, and the denominator is the amount
148	148	of all premiums collected by the insurer in a reporting year.
149	149	(3)a. The aggregated claims paid by the insurer for
150	150	dental care services shall be calculated by:
151	151	1. Adding the amount paid or reimbursed on claims for
152	152	dental care services; then
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182	182	dental care services; then
183	183	2. Adding the amount of reserves and liabilities for
184	184	claims received during the reporting year but unpaid or not
185	185	reimbursed within three months after the end of the reporting
186	186	year; then
187	187	3. Subtracting any amount expended for dental care
188	188	services that was recovered due to overpayment or utilization
189	189	management.
190	190	b. The amount of all premiums collected by the insurer
191	191	shall be calculated by:
192	192	1. Including the total amount of money received from
193	193	policyholders or subscribers as a condition of receiving
194	194	coverage for dental care services; then
195	195	2. Subtracting payments for federal and state taxes,
196	196	licensing, and regulatory fees; then
197	197	3. Including any net addition or subtraction resulting
198	198	from payments or receipts for risk adjustment, risk corridors,
199	199	or reinsurance.
200	200	(4) The insurer's overhead expenses, to include all of
201	201	the following components, shall be excluded from the
202	202	calculations made under subdivision (3):
203	203	a. Financial administration expenses, including
204	204	underwriting, auditing, actuarial analyses, treasury, and
205	205	investment expenses.
206	206	b. Marketing, sales, and distribution expenses,
207	207	including advertising; group, policyholder, or subscriber
208	208	enrollment and relations, regardless of whether these
209	209	activities are performed by the carrier or outsourced to a
210	210	third-party vendor.
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240	240	third-party vendor.
241	241	c. Distribution expenses, including commissions, and
242	242	relations with agents, producers, brokers, and benefit
243	243	consultants.
244	244	d. Claims operation expenses, including adjudication,
245	245	appeals, settlements, claims payment processing, and costs
246	246	directly related to upgrades in health information technology
247	247	that are designed primarily or solely to improve claims
248	248	payment capabilities or to meet regulatory requirements for
249	249	processing claims.
250	250	e. Dental administration expenses, including activities
251	251	related to care and disease management, utilization review,
252	252	dental management, network development, secondary network
253	253	savings, administrative fees, claims processing, utilization
254	254	management, fraud prevention activities, and provider
255	255	credentialing expenses, regardless of whether these activities
256	256	are performed by the carrier or outsourced to a third-party
257	257	vendor.
258	258	f. Provider expenses, such as consultants for
259	259	professional or administrative services that do not represent
260	260	compensation or reimbursement for covered services provided to
261	261	an enrollee.
262	262	g. Expenses incurred for developing and executing
263	263	provider contracts, including fees associated with
264	264	establishing or managing a provider network, and fees paid to
265	265	vendors, costs of stop-loss coverage or reinsurance, direct
266	266	sales salaries, workforce salaries and benefits, agents and
267	267	broker fees and commissions, and general and administrative
268	268	expenses.
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298	298	expenses.
299	299	h. Network operational expenses, including contracting,
300	300	dentist relations, and dental policy procedures.
301	301	i. Charitable expenses, including any contributions to
302	302	tax-exempt foundations and community benefits.
303	303	j. Industry association expenses, including membership
304	304	activities.
305	305	k. Employee and personnel expenses, including payroll,
306	306	recruitment, and human resources.
307	307	l. Physical plant expenses, including construction,
308	308	leasing, maintenance, cleaning, furniture, and equipment.
309	309	m. Third-party vendor and professional contractor
310	310	expenses, including related services or goods required under
311	311	paragraphs a. through l.
312	312	(c)(1) No later than March 31, an insurer shall file a
313	313	report with the commissioner which shall include all of the
314	314	following information for the previous reporting year:
315	315	a. All dental care services and products offered by the
316	316	insurer, identifying each individual and group dental benefit
317	317	plan or health benefit plan, with the number of individuals
318	318	enrolled under each plan.
319	319	b. Gross income, including gross premiums collected by
320	320	the insurer.
321	321	c. Medical loss ratio.
322	322	d. The aggregated claims paid by the insurer for dental
323	323	care services, including each amount required under
324	324	subparagraphs (b)(3)a.1. through 3.
325	325	e. The amount of premiums collected by the insurer,
326	326	including each amount required under subparagraphs (b)(3)b.1.
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356	356	including each amount required under subparagraphs (b)(3)b.1.
357	357	through 3.
358	358	f. Overhead expenses, presenting each amount required
359	359	under paragraphs (b)(4)a. through m.
360	360	g. Realized capital gains and losses.
361	361	h. Net income.
362	362	i. Accumulated surplus.
363	363	j. Accumulated reserves.
364	364	k. Risk-based capital ratio, based on a formula
365	365	developed by the National Association of Insurance
366	366	Commissioners.
367	367	(2) The commissioner shall make available to the public
368	368	the information submitted by the insurer pursuant to
369	369	subdivision (1) by posting the information on the website of
370	370	the Department of Insurance of the State of Alabama.
371	371	(3)a. If the commissioner has reasonable cause to
372	372	believe that the information submitted by the insurer pursuant
373	373	to subdivision (1) is erroneous or false, the commissioner may
374	374	conduct an examination of the insurer to verify the
375	375	information submitted according to the procedures provided
376	376	under Article 1 of Chapter 2 of Title 27, Code of Alabama
377	377	1975.
378	378	b. The provisions of Article 1 of Chapter 2 of Title
379	379	27, Code of Alabama 1975, including confidentiality of
380	380	information, remedies, and procedures available to both the
381	381	commissioner and the insurer, shall govern an examination
382	382	conducted pursuant to paragraph a.
383	383	(d)(1) If the report required by subsection (c), as
384	384	submitted by the insurer or as adjusted by the commissioner
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414	414	submitted by the insurer or as adjusted by the commissioner
415	415	upon an examination as provided in that subsection, shows that
416	416	the medical loss ratio for the reporting year is less than 85
417	417	percent, the insurer shall refund the excess premium collected
418	418	to the covered individuals or groups as a rebate.
419	419	(2) The total amount of the rebate shall equal the
420	420	amount by which the medical loss ratio authorized by
421	421	subdivision (b)(1) exceeds the insurer's reported medical loss
422	422	ratio, multiplied by the amount of all premiums collected by
423	423	the insurer as calculated under paragraph (b)(3)b.
424	424	(3) Within 30 days of the calculation of the rebate,
425	425	the insurer shall notify all individuals and groups that were
426	426	covered under the applicable reporting year that they qualify
427	427	for the refund, which may be paid directly to the individuals
428	428	and groups or issued as a credit on the premium for the
429	429	subsequent reporting year.
430	430	(e)(1) Insurers shall file with the commissioner
431	431	proposed premium rates or any changes to rating factors that
432	432	are to take effect on January 1, on or before July 1 of the
433	433	preceding year.
434	434	(2)a. The commissioner shall disapprove: (i) any
435	435	proposed premium rates that are excessive, inadequate, or
436	436	unreasonable in relation to the dental care services provided
437	437	under the dental benefit plan or the health benefit plan; and
438	438	(ii) any proposed change to rating factors that is
439	439	discriminatory or actuarially unsound.
440	440	b. A proposed premium rate is presumptively excessive
441	441	if any of the following apply:
442	442	1. The premium rate adjustment increases by more than
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472	472	1. The premium rate adjustment increases by more than
473	473	the most recent calendar year's percentage increase in the
474	474	dental services consumer price index, U.S. city average.
475	475	2. The insurer's reported contribution to surplus
476	476	exceeds 1.9 percent.
477	477	3. The aggregate medical loss ratio for all plans
478	478	paying or reimbursing for dental care services offered by the
479	479	insurer is less than 85 percent.
480	480	(3) If the commissioner disapproves a submission made
481	481	pursuant to subdivision (1), the commissioner shall notify the
482	482	insurer no later than October 1, and the insurer may request a
483	483	hearing to reverse or modify the commissioner's decision,
484	484	which shall be conducted according to the notice, hearing, and
485	485	appeal procedures as provided under Article 1 of Chapter 2 of
486	486	Title 27, Code of Alabama 1975.
487	487	(4) For any hearing conducted pursuant to subdivision
488	488	(3) concerning a proposed premium rate increase, the following
489	489	requirements shall be met:
490	490	a. The insurer shall notify the policyholders or
491	491	subscribers who would be affected by the increase that it is
492	492	requesting a hearing to reverse or modify the commissioner's
493	493	decision.
494	494	b. Public notice pursuant to Section 27-2-29, Code of
495	495	Alabama 1975, shall also be given by the commissioner to the
496	496	policyholders or subscribers, as individuals whose pecuniary
497	497	interests are to be directly and immediately affected in case
498	498	of an order reversing or modifying the commissioner's
499	499	decision.
500	500	c. Opportunity shall be given by the commissioner for
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530	530	c. Opportunity shall be given by the commissioner for
531	531	at least three policyholders or subscribers to testify at the
532	532	hearing concerning the impact of reversing or modifying the
533	533	commissioner's decision, which testimony shall be made a part
534	534	of the record.
535	535	(f) The commissioner shall adopt rules, forms, and
536	536	schedules necessary to implement and enforce this section.
537	537	Section 2. Sections 10A-20-6.16 and 27-21A-23, Code of
538	538	Alabama 1975, are amended to read as follows:
539	539	"§10A-20-6.16
540	540	(a) No statute of this state applying to insurance
541	541	companies shall be applicable to any corporation organized
542	542	under this article and amendments thereto or to any contract
543	543	made by the corporation; except the corporation shall be
544	544	subject to the following:
545	545	(1) The provisions regarding annual premium tax to be
546	546	paid by insurers on insurance premiums.
547	547	(2) Chapter 55 of Title 27.
548	548	(3) Article 2 and Article 3 of Chapter 19 of Title 27.
549	549	(4) Section 27-1-17.
550	550	(5) Chapter 56 of Title 27.
551	551	(6) Rules adopted by the Commissioner of Insurance
552	552	pursuant to Sections 27-7-43 and 27-7-44.
553	553	(7) Chapter 54 of Title 27.
554	554	(8) Chapter 57 of Title 27.
555	555	(9) Chapter 58 of Title 27.
556	556	(10) Chapter 59 of Title 27.
557	557	(11) Chapter 54A of Title 27.
558	558	(12) Chapter 12A of Title 27.
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588	588	(12) Chapter 12A of Title 27.
589	589	(13) Chapter 2B of Title 27.
590	590	(14) Chapter 29 of Title 27.
591	591	(15) Chapter 62 of Title 27.
592	592	(16) Chapter 63 of Title 27.
593	593	(17) Chapter 45A of Title 27.
594	594	(18) Section 1 of the act amending this section.
595	595	(b) The provisions in subsection (a) that require
596	596	specific types of coverage to be offered or provided shall not
597	597	apply when the corporation is administering a self-funded
598	598	benefit plan or similar plan, fund, or program that it does
599	599	not insure."
600	600	"§27-21A-23
601	601	(a) Except as otherwise provided in this chapter,
602	602	provisions of the insurance law and provisions of health care
603	603	service plan laws shall not be applicable to any health
604	604	maintenance organization granted a certificate of authority
605	605	under this chapter. This provision shall not apply to an
606	606	insurer or health care service plan licensed and regulated
607	607	pursuant to the insurance law or the health care service plan
608	608	laws of this state except with respect to its health
609	609	maintenance organization activities authorized and regulated
610	610	pursuant to this chapter.
611	611	(b) Solicitation of enrollees by a health maintenance
612	612	organization granted a certificate of authority shall not be
613	613	construed to violate any provision of law relating to
614	614	solicitation or advertising by health professionals.
615	615	(c) Any health maintenance organization authorized
616	616	under this chapter shall not be deemed to be practicing
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646	646	under this chapter shall not be deemed to be practicing
647	647	medicine and shall be exempt from the provisions of Section
648	648	34-24-310, et seq., relating to the practice of medicine.
649	649	(d) No person participating in the arrangements of a
650	650	health maintenance organization other than the actual provider
651	651	of health care services or supplies directly to enrollees and
652	652	their families shall be liable for negligence, misfeasance,
653	653	nonfeasance, or malpractice in connection with the furnishing
654	654	of such services and supplies.
655	655	(e) Nothing in this chapter shall be construed in any
656	656	way to repeal or conflict with any provision of the
657	657	certificate of need law.
658	658	(f) Notwithstanding the provisions of subsection (a), a
659	659	health maintenance organization shall be subject to all of the
660	660	following:
661	661	(1) Section 27-1-17.
662	662	(2) Chapter 56.
663	663	(3) Chapter 54.
664	664	(4) Chapter 57.
665	665	(5) Chapter 58.
666	666	(6) Chapter 59.
667	667	(7) Rules adopted by the Commissioner of Insurance
668	668	pursuant to Sections 27-7-43 and 27-7-44.
669	669	(8) Chapter 12A.
670	670	(9) Chapter 54A.
671	671	(10) Chapter 2B.
672	672	(11) Chapter 29.
673	673	(12) Chapter 62.
674	674	(13) Chapter 63.
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704	704	(13) Chapter 63.
705	705	(14) Chapter 45A
706	706	(15) Section 1 of the act amending this section ."
707	707	Section 3. This act shall become effective on October
708	708	1, 2025.
709	709	337
710	710	338
711	711	339
712	712	340