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Regular Session, 2012
SENATE BILL NO. 207
BY SENATOR MORRISH
HEALTH/ACC INSURANCE. Provides for review of health coverage premium rates.
(8/1/12)
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) "Excepted benefits" means benefits under one or more of the17 SB NO. 207
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following:1
(a) Benefits not subject to requirements: 2
(i) Coverage only for accident or disability income insurance, or any3
combination.4
(ii) Coverage issued as a supplement to liability insurance.5
(iii) Liability insurance, including general liability insurance and6
automobile liability insurance.7
(iv) Workers' compensation or similar insurance.8
(v) Automobile medical payment insurance.9
(vi) Credit-only insurance.10
(vii) Coverage for on-site medical clinics.11
(viii) Other similar insurance coverage, specified in regulations issued by12
the commissioner under the Administrative Procedure Act, under which13
benefits for medical care are secondary or incidental to other insurance14
benefits.15
(b) Benefits not subject to requirements if offered separately:16
(i) Limited scope dental or vision benefits.17
(ii) Benefits for long-term care, nursing home care, home health care,18
community-based care, or any combination thereof. 19
(iii) Such other similar, limited benefits as specified in reasonable20
regulations issued by the commissioner.21
(c) Benefits not subject to requirements if offered as independent, non-22
coordinated benefits:23
(i) Coverage only for a specified disease or illness.24
(ii) Hospital indemnity or other fixed indemnity insurance.25
(d) Benefits not subject to requirements if offered as a separate26
insurance policy:27
(i) Medicare supplemental health insurance as defined under Section28
1882(g)(1) of the Social Security Act.29 SB NO. 207
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(ii) Insurance coverage supplemental to military health benefits.1
(iii) Similar supplemental coverage provided under a group health2
benefit plan.3
(4) "Excessive" in relation to premiums means the premium charged for4
the health insurance coverage is considered to be unreasonably high in relation5
to the benefits provided under the product. In determining whether the6
premium rate is unreasonably high in relation to the benefits provided, the7
department shall consider:8
(a) Whether the premium rate results in a projected medical loss ratio9
below the federal medical loss ratio standard in the applicable market to which10
the premium rate applies, after accounting for any adjustments allowable under11
federal law.12
(b) Whether one or more of the assumptions on which the premium rate13
is based is not supported by substantial evidence.14
(c) Whether the choice of assumptions or combination of assumptions on15
which the premium rate is based is unreasonable.16
(5) "Grandfathered health plan" has the same meaning as that in 4517
C.F.R. 147.140.18
(6) "Health insurance issuer" means any entity that offers health19
insurance coverage through a policy or certificate of insurance or subscriber20
agreement subject to state law that regulates the business of insurance. "Health21
insurance issuer" shall include a health maintenance organization, as defined22
and licensed pursuant to Subpart I of Part I of Chapter 2 of this Title.23
(7) "Individual health insurance coverage" or "individual policy" means24
health insurance coverage offered to individuals in the individual market, or25
through an association.26
(8) "Product" means a package of benefits with a discrete set of rating27
and pricing methodologies including health care services paid for under any28
plan, policy, subscriber agreement, or certificate of insurance offered in the29 SB NO. 207
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state. Products, for the purposes of this Section, shall not include excepted1
benefits plans, high deductible health plans, or grandfathered plans.2
(9) "Rate increase" means an increase of the rates for a product,3
including a premium volume-weighted average increase for all insureds for the4
aggregate rate changes during the twelve-month period preceding the proposed5
rate increase effective date.6
(10) "Reasonable rate increase" means a rate increase subject to review7
that, following review, meets specified criteria.8
(11) "Small group market" means the market in which small group9
coverage is issued as currently defined in R.S. 22:1061. "Small group" or10
"small employer" means any person, firm, corporation, partnership, trust, or11
association actively engaged in business which has employed an average of at12
least one but not more than fifty employees, and beginning on January 1, 2014,13
at least one but not more than one hundred employees, on business days during14
the preceding calendar year or plan year and that employs at least one employee15
on the first day of the plan year. "Small group" or "small employer" shall16
include coverage sold to small groups or small employers through associations17
or through a blanket policy. An employer group of one shall be considered18
individual insurance under this Section.19
(12) "Unfairly discriminatory" means premium rates that result in20
premium differences between insureds within similar risk categories that do not21
reasonably correspond to differences in expected costs. When applied to22
premium rates charged, "unfairly discriminatory" shall refer to any premium23
rate charged by a small group or individual health insurance issuer in violation24
of R.S. 22:1095.25
(13) "Unjustified" means a premium rate for which a health insurance26
issuer has provided data or documentation to the department in connection with27
premium rates for a product that is incomplete, inadequate, or otherwise does28
not provide a basis upon which the reasonableness of a premium rate may be29 SB NO. 207
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determined or is otherwise inadequate insofar as the premium rate charged is1
clearly insufficient to sustain projected losses and expenses.2
(14) "Unreasonable rate increase" means a rate increase subject to3
review that, following review, fails to meet specified criteria. "Unreasonable"4
means any rate increase that contains a provision or provisions that:5
(a) Are excessive.6
(b) Are unfairly discriminatory.7
(c) Are unjustified.8
(d) Do not comply with R.S. 22:1095 or federal law.9
B. For each product in the individual market and the small group10
market, whenever a health insurance issuer proposes a rate increase that meets11
or exceeds ten percent of the rate implemented, the issuer shall file with the12
commissioner information related to any proposed increase in base premium.13
To determine the requirement to file, the issuer shall apply current criteria and14
methodology promulgated by DHHS.15
C.(1) For each rate increase subject to review according to the16
provisions of Subsection B of this Section, a health insurance issuer shall file17
with the commissioner, no later than one hundred twenty days in advance of the18
anticipated effective date of the increase, a preliminary justification for each19
product affected by the increase.20
(2) The preliminary justification shall consist of the following Parts:21
(a) Part I shall be a rate increase summary, consisting of the following22
detailed information:23
(i) Historical and projected claims experience.24
(ii) Trend projections related to utilization and service or unit costs.25
(iii) Any claims assumptions related to benefit changes.26
(iv) Allocation of the overall rate increase to claims and non-claims costs.27
(v) Per enrollee per month allocation of current and projected premium.28
(vi) Current loss ratio and projected loss ratio.29 SB NO. 207
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(vii) Three-year history of rate increases for the product associated with1
the rate increase.2
(viii) Employee and executive compensation data from the health3
insurance issuer's annual financial statements.4
(b) Part II shall be a be a written description justifying the rate increase,5
including a simple, brief narrative describing the data and assumptions used to6
develop the rate increase, and consisting of the following information:7
(i) The rating methodology.8
(ii) An explanation of the most significant factors causing the increase,9
including a brief description of the relevant claims and non-claims expense10
increases reported in the rate increase summary.11
(iii) A brief description of the policies' overall experience, including12
historical and projected expenses, and loss ratios.13
(c) Part III shall consist of the following information:14
(i) A description of the type of policy, benefits, renewability, general15
marketing method, and age limits.16
(ii) The scope and reason for the rate increase.17
(iii) The average annual premium per policy, before and after the rate18
increase.19
(iv) The past experience and any other alternative or additional data20
used.21
(v) A description of how the rate increase was determined, including the22
general description and source of each assumption used.23
(vi) The cumulative loss ratio and a description of how it was calculated.24
(vii) The projected future loss ratio and a description of how it was25
calculated.26
(viii) The projected lifetime loss ratio that combines cumulative and27
future experience and a description of how it was calculated, including28
historical data beginning with the effective date of this Section.29 SB NO. 207
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(ix) The federal medical loss ratio standard in the applicable market to1
which the rate increase applies, accounting for any adjustments allowable under2
federal law.3
(x) If the projected future loss ratio is less than the applicable federal4
medical loss ratio, a justification for this outcome.5
(3) In its filing of information described in this Section, a health6
insurance issuer may indicate to the commissioner that the issuer considers7
certain information required pursuant to Paragraph C(2) of this Section8
confidential according to Louisiana public records law.9
D.(1) The commissioner shall ensure that the information received from10
a health insurance issuer in accordance with the provisions of Paragraphs C(1)11
and (2) of this Section are made available to the public on a Department of12
Insurance website.13
(2) Within sixty days of receipt of a filing from a health insurance issuer,14
the commissioner shall evaluate the proposed rate increase, make a15
determination whether the rate increase is a reasonable rate increase or an16
unreasonable rate increase based on sound actuarial principles, and notify the17
health insurance issuer of the determination.18
(3) The commissioner's review of a proposed rate increase shall include19
an examination of:20
(a) The reasonableness of the assumptions used by the health insurance21
issuer to develop the proposed rate increase, and the validity of the historical22
data underlying the assumptions.23
(b) The health insurance issuer's data related to past projections and24
actual experience.25
(4) In his evaluation of a proposed rate increase, the commissioner shall26
consider the following factors to the extent applicable:27
(a) Medical trend changes by major service categories.28
(b) Utilization changes by major service categories.29 SB NO. 207
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(c) Cost-sharing changes by major service categories.1
(d) Benefit changes.2
(e) Changes in enrollee risk profile.3
(f) Impact of overestimate or underestimate of medical trend in previous4
years on the current rate.5
(g) Reserve needs.6
(h) Administrative costs related to programs that improve health care7
quality.8
(i) Other administrative costs related to programs that improve health9
care quality.10
(j) Applicable taxes and licensing or regulatory fees.11
(k) The medical loss ratio.12
(l) The health insurance issuer's risk-based capital status and surplus13
relative to national standards.14
(5) The commissioner shall use the following criteria to determine15
whether a rate increase is an unreasonable rate increase or is otherwise16
unlawful:17
(a) To determine whether a rate increase is excessive, he shall consider18
whether the increase would cause the premium to be unreasonably high in19
relation to benefits, including consideration of the following:20
(i) Whether a rate increase would result in a projected medical loss ratio21
below the applicable federal standard.22
(ii) Whether one or more of the assumptions used by the health23
insurance issuer is not supported by substantial evidence.24
(iii) Whether the choice of assumptions or combination thereof is25
unreasonable.26
(b) To determine whether a rate increase is an unjustified rate increase,27
he shall consider whether data or documentation provided by the health28
insurance issuer is incomplete, inadequate, or otherwise does not provide a basis29 SB NO. 207
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to determine whether the increase is a reasonable increase.1
(c) To determine whether a rate increase is unfairly discriminatory, he2
shall consider whether the proposed increase would result in premium3
differences between enrollees with similar risks that are not permitted under4
state law or do not reasonably correspond to expected differences in costs.5
(d) The commissioner shall consider R.S. 22:1095 and any applicable6
federal rating restrictions to determine whether rating increases are compliant7
with state and federal law.8
(6) Within fifteen days of submission of any proposed rate increase which9
meets or exceeds the federal review threshold, the department shall publish a10
summary consistent with Part I and Part II of the rate increase information11
provided by the health insurance issuer on the department's website. After12
publication, the public shall have thirty days to submit comments to the13
department regarding the proposed rate increase.14
(7) The commissioner shall, in accordance with Louisiana public records15
law, refrain from releasing information provided by a health insurance issuer16
pursuant to the provisions of Paragraph C(2)(c) of this Section that the issuer17
has indicated is confidential.18
(8) A proposed rate increase shall be deemed to have been reasonable19
after the sixtieth day following the date of filing with the commissioner if notice20
is not received by the health insurance issuer from the commissioner regarding21
a final determination with respect to the reasonableness of the filing.22
E. Within fifteen days of receipt of the determination by the23
commissioner that a proposed rate increase is an unreasonable rate increase, a24
health insurance issuer shall notify the commissioner whether it intends to25
utilize the proposed rate increase or to refile. If the issuer's intent is to utilize26
the rate, the notice shall include the issuer's justification for such utilization of27
the rate.28
F. Any premium rate reviewed by the department shall be implemented29 SB NO. 207
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within ninety days of the proposed effective date documented in the filing. Any1
premium rate implemented following this date shall be void, and any health2
insurance issuer seeking to implement the rate thereafter shall be required to3
file a new rate filing in compliance with this Section.4
G. The requirements set forth in this Section shall not apply to excepted5
benefits, high deductible health plans, grandfathered plans, or to those benefits6
specifically excepted from review in R.S. 22:1091(A).7
H. The commissioner may promulgate such rules and regulations as may8
be necessary or proper to carry out the provisions of this Section. Such rules9
and regulations shall be promulgated and adopted in accordance with the10
Administrative Procedure Act, R.S. 49:950 et seq.11
Section 2. The provisions of this Act shall expire and be void after a final, non-12
appealable judgment by the United States Supreme Court that includes the merits of the13
provisions of Section 2794 of the Public Health Service Act and that rejects the validity of14
such provisions, together with any and all federal regulations promulgated in accordance15
therewith by any federal agency. The provisions of this Act shall become null and void16
immediately upon congressional repeal of Section 2794 of the Public Health Service Act.17
The original instrument was prepared by Cheryl Horne. The following digest,
which does not constitute a part of the legislative instrument, was prepared
by Michelle Broussard-Johnson.
DIGEST
Morrish (SB 207)
Proposed law requires a health insurance issuer to file information related to any proposed
increase in base premium with 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
specific information to be included in the preliminary justification. Requires the
commissioner to ensure that the information received from the health insurance issuer be
made available to the public on the Department of Insurance website.
Proposed law requires the commissioner to evaluate the proposed rate increase within 60
days of receipt of a filing by a health insurance issuer. Further provides information that
shall be included in the commissioner's review of the proposed rate, as well as the criteria
the commissioner shall use to determine whether a rate increase is excessive, unjustified, or
unfairly discriminatory. Specifies that if the issuer does not receive a final determination
within 60 days, the proposed rate increase shall be deemed reasonable.
Proposed law requires a summary of the rate increase information submitted by the SB NO. 207
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insurance issuer to be published on the department's website within 15 days of the
submission. Specifies that the public shall have 30 days after publication to submit
comments. Prohibits the commissioner from releasing information provided by the health
insurance issuer that the issuer has indicated is confidential.
Proposed law requires an approved rate increase to be implemented within 90 days of the
effective date documented in the issuer's filing. Provides that if the rate is implemented
more than 90 days after approval, the rate shall be void.
Proposed law provides that proposed law shall expire and become void after a final,
nonappealable judgment by the US Supreme Court that includes the merits of the provisions
of Section 2794 of the Public Health Service Act and that rejects the validity of such
provisions, together with any and all federal regulations promulgated in accordance
therewith by any federal agency. Additionally provides that proposed law shall become null
and void immediately upon congressional repeal of Section 2794 of the Public Health
Service Act.
Effective August 1, 2012.
(Adds R.S. 22:1098)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill.
1. Provides for additional definitions.
2. Increases the time allowed for the commissioner to evaluate the proposed
rate increase from 45 days to 60 days.
3. Requires a summary of the rate increase information submitted by the
insurance issuer to be published on the department's website within 15 days
of the submission. Specifies that the public shall have 30 days after
publication to submit comments.
4. Requires an approved rate increase to be implemented within 90 days of the
effective date documented in the issuer's filing. Provide that if the rate is
implemented more than 90 days after approval, the rate shall be void.
5. Revises the effective date language.
Senate Floor Amendments to engrossed bill
1. Technical changes made.