SLS 12RS-573 ORIGINAL
Page 1 of 7
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Regular Session, 2012
SENATE BILL NO. 207
BY SENATOR MORRISH
HEALTH/ACC INSURANCE. Provides for review of health coverage premium rates. (see
Act)
AN ACT1
To enact R.S. 22:1098, relative to review of health coverage premium rates; to provide for2
definitions; to enact requirements that meet the provisions of effective rate review3
as defined by the U.S. Department of Health and Human Services; to provide for4
information to be filed by health insurance issuers; to provide for review of filed5
information by the commissioner of insurance; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 22:1098 is hereby enacted to read as follows:8
ยง1098. Review of health insurance premium rates9
A. Definitions. As used in this Section, the following terms shall have the10
following meanings unless another meaning is clearly required by context:11
(1) "Commissioner" means the commissioner of insurance.12
(2) "Department of Health and Human Services" or "DHHS" means the13
U.S. Department of Health and Human Services or its sub-agencies, the Centers14
for Medicare and Medicaid Services, and the Center for Consumer Information15
and Insurance Oversight, or a successor organization of any of these agencies.16
(3) "Health insurance issuer" means any entity that offers health17 SB NO. 207
SLS 12RS-573 ORIGINAL
Page 2 of 7
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
insurance coverage through a policy or certificate of insurance subject to state1
law that regulates the business of insurance. "Health insurance issuer" shall2
include a health maintenance organization, as defined in R.S. 22:242.3
(4) "Individual market" means the market in which health insurance is4
issued directly to a natural person and not through a group.5
(5) "Product" means a package of benefits with a discrete set of rating6
and pricing methodologies including health care services paid for under any7
plan, policy, or certificate of insurance offered in the state.8
(6) "Rate increase" means an increase in the premium rates of a specific9
product in the individual or small group market.10
(7) "Reasonable rate increase" means a rate increase subject to review11
that, following review, meets specified criteria.12
(8) "Small group market" means the market in which small group13
coverage is issued as currently defined in R.S. 22:1061.14
(9) "Unreasonable rate increase" means a rate increase subject to review15
that, following review, fails to meet specified criteria.16
B. For each product in the individual market and the small group17
market, whenever a health insurance issuer is required to file a rate increase18
with the Department of Health and Human Services, the issuer shall file with19
the commissioner information related to any proposed increase in base20
premium. To determine the requirement to file, the issuer shall apply current21
criteria and methodology promulgated by DHHS.22
C.(1) For each rate increase subject to review according to the23
provisions of Subsection B of this Section, a health insurance issuer shall file24
with the commissioner, no later than one hundred twenty days in advance of the25
anticipated effective date of the increase, a preliminary justification for each26
product affected by the increase.27
(2) The preliminary justification shall consist of the following Parts:28
(a) Part I shall be the standard format required by DHHS and consisting29 SB NO. 207
SLS 12RS-573 ORIGINAL
Page 3 of 7
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
of the following detailed information:1
(i) Historical and projected claims experience.2
(ii) Trend projections related to utilization and service or unit costs.3
(iii) Any claims assumptions related to benefit changes.4
(iv) Allocation of the overall rate increase to claims and nonclaims costs.5
(v) Per enrollee per month allocation of current and projected premium.6
(vi) Current loss ratio and projected loss ratio.7
(vii) Three-year history of rate increases for the product associated with8
the rate increase.9
(viii) Employee and executive compensation data from the health10
insurance issuer's annual financial statements.11
(b) Part II shall be a simple, brief narrative describing the data and12
assumptions used to develop the rate increase, and consisting of the following13
information:14
(i) The rating methodology.15
(ii) The most significant factors causing the increase and a brief16
description of the policies' overall experience.17
(c) Part III shall consist of the following information:18
(i) A description of the type of policy, benefits, renewability, general19
marketing method, and age limits.20
(ii) The scope and reason for the rate increase.21
(iii) The average annual premium per policy, before and after the rate22
increase.23
(iv) The past experience and any other alternative or additional data24
used.25
(v) A description of how the rate increase was determined, including the26
general description and source of each assumption used.27
(vi) The cumulative loss ratio and a description of how it was calculated.28
(vii) The projected future loss ratio and a description of how it was29 SB NO. 207
SLS 12RS-573 ORIGINAL
Page 4 of 7
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
calculated.1
(viii) The projected lifetime loss ratio that combines cumulative and2
future experience and a description of how it was calculated, including3
historical data beginning with the effective date of this Section.4
(ix) The federal medical loss ratio standard in the applicable market to5
which the rate increase applies, accounting for any adjustments allowable under6
federal law.7
(x) If the projected future loss ratio is less than the applicable federal8
medical loss ratio, a justification for this outcome.9
(3) In its filing of information described in this Section, a health10
insurance issuer may indicate to the commissioner that the issuer considers11
certain information required pursuant to Paragraph C(2) of this Section12
confidential according to Louisiana public records law.13
D.(1) The commissioner shall ensure that the information received from14
a health insurance issuer in accordance with the provisions of Paragraphs C(1)15
and (2) of this Section are made available to the public on a department of16
insurance website.17
(2) Within forty-five days of receipt of a filing from a health insurance18
issuer, the commissioner shall evaluate the proposed rate increase, make a19
determination whether the rate increase is a reasonable rate increase or an20
unreasonable rate increase based on sound actuarial principles, and notify the21
health insurance issuer of the determination.22
(3) The commissioner's review of a proposed rate increase shall include23
an examination of:24
(a) The reasonableness of the assumptions used by the health insurance25
issuer to develop the proposed rate increase, and the validity of the historical26
data underlying the assumptions.27
(b) The health insurance issuer's data related to past projections and28
actual experience.29 SB NO. 207
SLS 12RS-573 ORIGINAL
Page 5 of 7
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(4) In his evaluation of a proposed rate increase, the commissioner shall1
consider the following factors to the extent applicable:2
(a) Medical trend changes by major service categories.3
(b) Utilization changes by major service categories.4
(c) Cost-sharing changes by major service categories.5
(d) Benefit changes.6
(e) Changes in enrollee risk profile.7
(f) Impact of overestimate or underestimate of medical trend in previous8
years on the current rate.9
(g) Reserve needs.10
(h) Administrative costs related to programs that improve health care11
quality.12
(i) Other administrative costs.13
(j) Applicable taxes and licensing or regulatory fees.14
(k) The medical loss ratio.15
(l) The health insurance issuer's risk-based capital status relative to16
national standards.17
(5) The commissioner shall use the following criteria to determine18
whether a rate increase is excessive, unjustified, or unfairly discriminatory, and,19
therefore, an unreasonable rate increase:20
(a) Whether the increase would cause the premium to be unreasonably21
high in relation to benefits, including consideration of the following:22
(i) Whether a rate increase would result in a projected medical loss ratio23
below the applicable federal standard.24
(ii) Whether one or more of the assumptions used by the health25
insurance issuer is not supported by substantial evidence.26
(iii) Whether the choice of assumptions or combination thereof is27
unreasonable.28
(b) Whether data or documentation provided by the health insurance29 SB NO. 207
SLS 12RS-573 ORIGINAL
Page 6 of 7
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
issuer is incomplete, inadequate, or otherwise does not provide a basis to1
determine whether the increase is a reasonable increase.2
(c) Whether the proposed increase would result in premium differences3
between enrollees with similar risks that are not permitted under state law or4
do not reasonably correspond to expected differences in costs.5
(6) As part of the review of the proposed rate increase, the commissioner6
shall provide for a reasonable means for receipt and consideration of public7
input on the proposed increase.8
(7) The commissioner shall, in accordance with Louisiana public records9
law, refrain from releasing information provided by a health insurance issuer10
pursuant to the provisions of Paragraph C(2) of this Section that the issuer has11
indicated is confidential.12
(8) A proposed rate increase shall be deemed to have been reasonable if13
notice is not received by the health insurance issuer from the commissioner14
within forty-five days of the date of filing to the commissioner.15
E. Within fifteen days of receipt of the determination by the16
commissioner that a proposed rate increase is an unreasonable rate increase, a17
health insurance issuer shall notify the commissioner whether it intends to18
utilize the proposed rate increase or to refile. If the issuer's intent is to utilize19
the rate, the notice shall include the issuer's justification for such utilization of20
the rate.21
Section 2. The provisions of this Act shall be effective thirty days after a final, non-22
appealable judgment by the United States Supreme Court that includes the merits of the23
provisions of Section 2794 of the Public Health Service Act and that affirms the validity of24
such provisions, together with any and all federal regulations promulgated in accordance25
therewith by any federal agency. The provisions of this Act shall become null and void26
immediately upon congressional repeal of Section 2794 of the Public Health Service Act.27 SB NO. 207
SLS 12RS-573 ORIGINAL
Page 7 of 7
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Proposed law requires a health insurance issuer to file information related to any proposed
increase in base premium to the commissioner. Further requires the issuer to file with the
commissioner, no later than 120 days in advance of the anticipated effective date of the
increase, a preliminary justification for each product affected by the increase. Provides for
three separate parts of the preliminary justification. Requires the commissioner to ensure
that the information received from the health insurance issuer be made available to the
public on a department of insurance website.
Proposed law requires the commissioner to evaluate the proposed rate increase within 45
days of receipt of a filing by a health insurance issuer. Further provides information that the
commissioner's review of the proposed rate shall include as well as the criteria the
commissioner shall use to determine whether a rate increase is excessive, unjustified, or
unfairly discriminatory. Requires the commissioner to provide for reasonable means for
receipt and consideration of public input on the proposed increase. Prohibits the
commissioner from releasing information provided by the health insurance issuer that the
issuer has indicated is confidential.
Proposed law requires a health insurance issuer to notify the commissioner whether it
intends to utilize the proposed rate increase or to refile within 15 days of receipt of the
determination by the commissioner.
Effective 30 days after a final, non-appealable judgment by the United States Supreme Court
that includes the merits of the provisions of Section 2794 of the Public Health Service Act
and that affirms the validity of such provisions, together with any and all federal regulations
promulgated in accordance therewith by any federal agency. The provisions of this Act shall
become null and void immediately upon congressional repeal of Section 2794 of the Public
Health Service Act.
(Adds R.S. 22:1098)