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Regular Session, 2014
SENATE BILL NO. 328
BY SENATOR GARY SMITH
INSURANCE COMMISSIONER. Provides relative to insurance rate review and approval.
(gov sig)
AN ACT1
To amend and reenact R.S. 22:972, Subpart D of Part III of Chapter 4 of Title 22 of the2
Louisiana Revised Statutes of 1950, comprised of R.S. 22:1091 through 1099, and3
R.S. 44:4.1(B)(11), and to enact R.S. 22:821(B)(36), relative to health insurance rate4
review and approval; to provide for definitions; to provide for rate filings and rate5
increases; to provide relative to form approval; to provide relative to rating factors,6
risk pools, and individual market plan and calendar year requirements; to provide7
with respect to review and subsequent approval or disapproval of proposed rate8
filings and rate changes; to provide for fees; to provide for exceptions to the Public9
Records Law; to provide for implementation and enforcement; to provide for the10
frequency of rate increase limitations; to provide relative to the prohibition of11
discrimination in rates due to severe disability; and to provide for related matters.12
Be it enacted by the Legislature of Louisiana:13
Section 1. R.S. 22:972 and Subpart D of Part III of Chapter 4 of Title 22 of the14
Louisiana Revised Statutes of 1950, comprised of R.S. 22:1091 through 1099 are hereby15
amended and reenacted and R.S. 22:821(B)(36) is hereby enacted to read as follows:16
§821. Fees17 SB NO. 328
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* * *1
B. The following fees and licenses shall be collected in advance by the2
commissioner of insurance:3
* * *4
(36) Fee for rate filings for health insurance issuers5
(a) New rate filings $100.006
(b) Rate changes $150.007
* * *8
§972. Approval and disapproval of forms; filing of rates9
A. No policy or subscriber agreement of a health and accident insurance10
issuer, hereafter including a health maintenance organization, shall be delivered11
or issued for delivery in this state, nor shall any endorsement, rider, or application12
which becomes a part of any such policy, which may include a certificate, be used13
in connection therewith until a copy of the form and of the premium rates and of the14
classifications of risks pertaining thereto have been filed with the commissioner of15
insurance; nor shall any such department. No policy, subscriber agreement,16
endorsement, rider, or application, hereinafter referred to as a policy or17
subscriber agreement, shall be used until the expiration of forty-five sixty days18
after the form has been filed unless the commissioner of insurance department gives19
his its written approval prior thereto. The commissioner of insurance shall notify in20
writing the insurer which has filed any such form if it does not comply with the21
provisions of this Subpart, specifying the reasons for his opinion; and it shall22
thereafter be unlawful for such insurer to issue such form in this state. Written23
notification shall be provided to the health insurance issuer specifying the24
reasons a policy form or subscriber agreement does not comply with the25
provisions of this Subpart. It shall be unlawful for any health insurance issuer26
to issue any form in this state not previously submitted to and approved by the27
department. An aggrieved party affected by the commissioner's department's28
decision, act, or order in reference to a policy form or subscriber agreement may29 SB NO. 328
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demand a hearing in accordance with Chapter 12 of this Title, R.S. 22:2191 et seq.1
B. After providing twenty days' notice, to the commissioner of health2
insurance issuer, the department may withdraw his its approval of any such policy3
form or subscriber agreement on any of the grounds stated in this Section R.S.4
22:862. It shall be unlawful for the insurer health insurance issuer to issue such5
policy form or subscriber agreement or use it in connection with any policy or6
subscriber agreement after the effective date of such withdrawal of approval. An7
aggrieved party affected by the commissioner's department's decision, act, or order8
in reference to a policy form or subscriber agreement may demand a hearing in9
accordance with Chapter 12 of this Title, R.S. 22:2191 et seq.10
C. The commissioner of insurance department shall not disapprove or11
withdraw approval of any such policy form or subscriber agreement on the ground12
that its provisions do not comply with R.S. 22:975 or on the ground that it is not13
printed in uniform type if it shall be shown that the rights of the insured , or the14
beneficiary, or the subscriber under the policy or subscriber agreement as a whole15
are not less favorable than the rights provided by R.S. 22:975 and that the provisions16
or type size used in the policy or subscriber agreement are required in the state,17
district, or territory of the United States in which the insurer health insurance issuer18
is organized, anything in this Subpart to the contrary notwithstanding.19
D. All references to rates in this Section are to be controlled by Subpart20
D of this Part, R.S. 22:1091 through 1099.21
* * *22
SUBPART D. RATES RATE REVIEW AND APPROVAL23
§1091. Health insurance plans subject to rate limitations review and approval24
A. The provisions of R.S. 22:1091 through 1095 this Subpart shall apply to25
any health benefit plan which provides coverage to a small employer except the26
following: in the small group market or individual market including any policy27
or subscriber agreement, covering residents of this state. The provisions of this28
Section shall apply regardless of where such policy or subscriber agreement was29 SB NO. 328
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issued or issued for delivery in this state and shall include any employer,1
association, or trustee of a fund established by an employer, association, or trust2
for multiple associations who shall be deemed the policyholder, covering one or3
more employees of such employer, one or more members or employees of4
members of such association or multiple associations, for the benefit of persons5
other than the employer, the association, or the multiple associations, as well as6
their officers or trustees. The provisions of this Subpart shall not apply to the7
following, unless specifically provided for:8
(1) An Archer medical savings account that meets all requirements of Section9
220 of the Internal Revenue Code of 1986.10
(2) A health savings account that meets all requirements of Section 223 of the11
Internal Revenue Code of 1986.12
(3) Excepted benefit or limited benefits as defined in this Title.13
B. Notwithstanding any law to the contrary, the following terms shall be14
defined as follows As used in this Subpart, the following terms shall have the15
meanings ascribed to them in this Section:16
(1) "Actuarial certification" means a written statement by a member of the17
American Academy of Actuaries that a small employer carrier is in compliance with18
the provisions of R.S. 22:1092 that a health insurance issuer is in compliance19
with the provisions of this Subpart, based upon the person's actuary's20
examination, including a review of the appropriate records and of the actuarial21
assumptions and methods utilized by the carrier health insurance issuer in22
establishing premium rates for applicable health benefit plans.23
(2) "Base premium rate" means, for each class of business as to a rating24
period, the lowest premium rate charged or which could have been charged under a25
rating system for that class of business, by the small employer carrier to small26
employers with similar case characteristics for health benefit plans with the same or27
similar coverage.28
(3) "Carrier" means an insurance company, including a health maintenance29 SB NO. 328
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organization as defined and licensed to engage in the business of insurance under1
Subpart I of Part I of Chapter 2 of this Title, which is licensed or authorized to issue2
individual, group, or family group health insurance coverage for delivery in this3
state.4
(4) "Case characteristics" mean demographic or other relevant characteristics5
of a small employer, as determined by a small employer carrier, which are6
considered by the carrier in the determination of premium rates for the small7
employer. Claim experience, health status and duration of coverage since issue are8
not case characteristics for the purposes of this Section.9
(2) "Excessive" means the rate charged for the health insurance10
coverage causes the premium or premiums charged for the health insurance11
coverage to be unreasonably high in relation to the benefits provided under the12
particular product. In determining whether the rate is unreasonably high in13
relation to the benefits provided, the department shall consider each of the14
following:15
(a) Whether the rate results in a projected medical loss ratio below the16
federal medical loss ratio standard in the applicable market to which the rate17
applies, after accounting for any adjustments allowable under federal law.18
(b) Whether one or more of the assumptions on which the rate is based19
is not supported by substantial evidence.20
(c) Whether the choice of assumptions or combination of assumptions on21
which the rate is based is unreasonable.22
(5) "Class of business" means all or a distinct grouping of small employers23
as shown on the records of the small employer carrier.24
(a) A distinct grouping may only be established by the small employer carrier25
on the basis that the applicable health benefit plans:26
(i) Are marketed and sold through individuals and organizations which are27
not participating in the marketing or sale of other distinct groupings of small28
employers for such small employer carrier;29 SB NO. 328
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(ii) Have been acquired from another small employer carrier as a distinct1
grouping of plans; or2
(iii) Are provided through an association with membership of not less than3
twenty-five small employers which has been formed for purposes other than4
obtaining insurance.5
(b) A small employer carrier may establish no more than two additional6
groupings under each of the items in Subparagraph (a) of Paragraph (5) of this7
Subsection on the basis of underwriting criteria which are expected to produce8
substantial variation in the health care costs.9
(c) The commissioner may approve the establishment of additional distinct10
groupings upon application to the commissioner and a finding by the commissioner11
that such action would enhance the efficiency and fairness of the small employer12
insurance marketplace.13
(3) "Federal review threshold" means any rate increase that results in14
a ten percent or greater rate increase, or such other threshold as required by15
federal law, regulation, directive, or guidance by the United States Department16
of Health and Human Services, or any rate that, when combined with all rate17
increases and decreases during the previous twelve-month period, would result18
in an aggregate ten percent or greater rate increase. For reporting purposes,19
the federal threshold shall mean any rate increase above zero percent or such20
other threshold as required by federal law, regulation, directive, or guidance by21
the United States Department of Health and Human Services. The reporting22
format shall be in a standardized form as prescribed by federal law, regulation,23
directive, or guidance by the United States Department of Health and Human24
Services.25
(4) "Grandfathered health plan coverage" has the same meaning as that26
in 45 C.F.R. 147.140 or other subsequently adopted federal law, rule, regulation,27
directive, or guidance.28
(6)(5) "Health benefit plan", "plan", "benefit", or "health insurance29 SB NO. 328
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coverage" means benefits services consisting of medical care, provided directly,1
through insurance or reimbursement, or otherwise, and including items and services2
paid for as medical care, under any hospital or medical service policy or certificate,3
hospital or medical service plan contract, preferred provider organization, or health4
maintenance organization contract offered by a health insurance issuer. However,5
a "health benefit plan" shall not include limited benefit and supplemental health6
insurance; coverage issued as a supplement to liability insurance; workers'7
compensation or similar insurance; or automobile medical-payment insurance.8
However, excepted benefits are not included as a "health benefit plan".9
(6) "Health insurance issuer" means any entity that offers health10
insurance coverage through a policy, certificate of insurance, or subscriber11
agreement subject to state law that regulates the business of insurance. A12
"health insurance issuer" shall include a health maintenance organization, as13
defined and licensed pursuant to Subpart I of Part I of Chapter 2 of this Title.14
(7) "Health savings accounts" are means those accounts for medical expenses15
authorized by 26 USC U.S.C. 220 et seq.16
(8) "High deductible health plan" means a high deductible health plan or17
policy that is qualified to be used in conjunction with a health savings account,18
medical savings account, or other similar program authorized by 26 USC U.S.C. 22019
et seq.20
(9) "Index rate" means for each class of business for small employers with21
similar case characteristics the arithmetic average of the applicable base premium22
rate and the corresponding highest premium rate.23
(10) "Medical savings account policy" means a high deductible health plan24
which is qualified to be used in conjunction with a medical savings account as25
provided in 26 USC 220 et seq.26
(11) "New business premium rate" means, for each class of business as to a27
rating period, the premium rate charged or offered by the small employer carrier to28
small employers with similar case characteristics for newly issued health benefits29 SB NO. 328
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plans with the same or similar coverage.1
(12) "Rating period" means the calendar period for which premium rates2
established by a small employer carrier are assumed to be in effect, as determined3
by the small employer carrier.4
(9) "Inadequate" means rates for a particular product are clearly5
insufficient to sustain projected losses and expenses, or the use of such rates.6
(13)(10) "Index rate" means the average rate resulting from the7
estimated combined claims experience for all Essential Health Benefits, as8
defined pursuant to section 1302(b) of the Patient Protection and Affordable9
Care Act, Pub. L. 111-148, of all non-transitional and non-grandfathered health10
plan coverage within a health insurance issuer's single, state-wide risk pool in11
the individual market and within a health insurance issuer's single, state-wide12
risk pool in the small group market, with a separate index rate being calculated13
for each market. Health insurance issuers may make any market-wide and14
plan- or product-specific adjustments to an index rate as permitted or as15
required by federal law, rules, or regulations.16
(11) "Individual health insurance coverage" or "individual policy"17
means health insurance coverage offered to individuals in the individual market18
or through an association.19
(12) "Individual market" means the market for health insurance20
coverage offered to individuals other than in connection with a group health21
plan.22
(13) "Insured" includes any policyholder, including a dependent,23
enrollee, subscriber, or member, who is covered through any policy or24
subscriber agreement offered by a health insurance issuer.25
(14) "Large group" or "large employer" means, in connection with a26
group health plan with respect to a calendar year and a plan year, an employer27
who employed an average of at least fifty-one employees on business days28
during the preceding calendar year and who employs at least two employees on29 SB NO. 328
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the first day of the plan year, and beginning on January 1, 2014, an employer1
who employed an average of at least one hundred one employees on business2
days during the preceding calendar year and who employs at least two3
employees on the first day of the plan year.4
(15) "Large group market" means the health insurance market under5
which individuals obtain health insurance coverage directly or through any6
arrangement on behalf of themselves and their dependents through a group7
health plan maintained by a large employer.8
(16) "Medical loss ratio" means the ratio of expected incurred benefits9
to expected earned premium over the time period of coverage, subject to the10
requirements of federal law, regulation, or rule.11
(17) "New rate filing" means a rate filing for any particular product12
which has not been issued or delivered in this state.13
(18) "Particular product" means a basic insurance policy form,14
certificate, or subscriber agreement delineating the terms, provisions, and15
conditions of a specific type of coverage or benefit under a particular type of16
contract with a discrete set of rating and pricing methodologies that a health17
insurance issuer offers in the state.18
(19) "Rate" means the rate initially filed or filed as a result of19
determination of rates by a health insurance issuer for a particular product.20
(20) "Rate change" means the rates for any health insurance issuer for21
a particular product differ from the rates on file with the department, including22
but not limited to any change in any current rating factor, periodic23
recalculation of experience, change in rate calculation methodology, change in24
benefits, or change in the trend or other rating assumptions.25
(21) "Rate Filing Justification" means the document filed by a health26
insurance issuer with the department for all rate filings required under this27
Subpart. The contents of the Rate Filing Justification document and forms shall28
be governed and established by 45 C.F.R. 154.200 et seq., or through subsequent29 SB NO. 328
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federal law, rule, regulation, directive, or guidance issued by the United States1
Department of Health and Human Services.2
(22) "Rate increase" means any increase of the rates for a particular3
product. When referring to federal review thresholds, "rate increase" includes4
a premium volume-weighted average increase for all insureds for the aggregate5
rate changes during the twelve-month period preceding the proposed rate6
increase effective date.7
(23) "Rating period" means the calendar period for which premium8
rates established by a health insurance issuer are in effect.9
(24) "Small group" or "small employer" means any person, firm,10
corporation, partnership, trust, or association actively engaged in business which,11
on at least fifty percent of its working days during the preceding year, employed no12
less than three nor more than thirty-five eligible employees, the majority of whom13
were employed within this state, and is not formed primarily for purposes of buying14
health insurance, and in which a bona fide employer-employee relationship exists.15
In determining the number of eligible employees, companies which are affiliated16
companies or which are eligible to file a combined tax return for purposes of state17
taxation shall be considered one employer. An employer group of one shall be18
considered individual insurance under this Section. has employed an average of at19
least one but not more than fifty employees on business days during the20
preceding calendar year and who employs at least one employee on the first day21
of the plan year, and beginning on January 1, 2014, an employer who employed22
an average of at least one but not more than one hundred employees, on23
business days during the preceding calendar year and who employs at least one24
employee on the first day of the plan year. "Small group or small employer"25
shall include coverage sold to small groups or small employers through26
associations or through a blanket policy. For purposes of rate calculation by a27
health insurance issuer, a small employer group consisting of one employee shall28
be rated within a health insurance issuer's individual market risk pool, unless29 SB NO. 328
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that health insurance issuer only provides employer coverage and thus only has1
a small group market risk pool.2
(25) "Unfairly discriminatory" means rates that result in premium3
differences between insureds within similar risk categories that do not4
reasonably correspond to differences in expected costs. When applied to rates5
charged, "unfairly discriminatory" shall refer to any rate charged by small6
group or individual health insurance issuers in violation of R.S. 22:1095.7
(26) "Unified Rate Review Template" means the document filed by a8
health insurance issuer with the department for all rate filings required under9
this Subpart. The contents of the Unified Rate Review Template document and10
forms shall be governed and established by 45 C.F.R. 154.200 et seq., or through11
subsequent federal law, rule, regulation, directive, or guidance issued by the12
United States Department of Health and Human Services.13
(27) "Unjustified" means a rate for which a health insurance issuer has14
provided data or documentation to the department in connection with rates for15
a particular product that is incomplete, inadequate, or otherwise does not16
provide a basis upon which the reasonableness of the rate may be determined17
or is otherwise inadequate insofar as the rate charged is clearly insufficient to18
sustain projected losses and expenses.19
(28) "Unreasonable" means any rate that contains a provision or20
provisions that are any of the following:21
(a) Excessive.22
(b) Unfairly discriminatory.23
(c) Unjustified.24
(d) Otherwise not in compliance with the provisions of this Title, or with25
other provisions of law.26
(14) "Small employer carrier" means any carrier which offers health benefit27
plans covering the employees of a small employer.28
C. Group and individual high deductible health plans are excluded from the29 SB NO. 328
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provisions of R.S. 22:1091 through 1095.1
§1092. Restrictions relating to premium rates; health Health insurance issuers; rate2
filings and rate increases3
A. Premium rates for group health benefit plans subject to R.S. 22:10914
through 1094 shall be subject to the following provisions:5
(1) The index rate for a rating period for any class of business shall not6
exceed the index rate for any other class of business by more than twenty percent.7
(2) For a class of business, the premium rates charged during a rating period8
to any employer with similar case characteristics for the same or similar coverage,9
or the rates which could be charged to such employer under the rating system for that10
class of business, whether new coverage or renewal coverage, shall not vary from the11
index rate by more than thirty-three percent of the index rate.12
(3) The percentage increase in the premium rate charged to a small employer13
for a new rating period may not exceed the sum of the following:14
(a) The percentage change in the new business premium rate measured from15
the first day of the prior rating period to the first day of the new rating period. In the16
case of a class of business for which the small employer carrier is not issuing new17
policies, the carrier shall use the percentage change in the base premium rate.18
(b) An adjustment, not to exceed twenty percent annually and adjusted pro19
rata for rating periods of less than one year, due to one or a combination of the20
following: claim experience, health status, or duration of coverage of the employees21
or dependents of the small employer as determined from the carrier's rate manual for22
the class of business.23
(c) Any adjustment due to change in coverage or change in the case24
characteristics of the small employer as determined from the carrier's rate manual for25
the class of business.26
B. Nothing in this Section is intended to affect the use by a small employer27
carrier of legitimate rating factors other than claim experience, health status, or28
duration of coverage in the determination of premium rates. Small employer carriers29 SB NO. 328
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shall apply rating factors, including case characteristics, consistently with respect to1
all small employers in a class of business.2
C. A small employer carrier shall not involuntarily transfer a small employer3
into or out of a class of business. A small employer carrier shall not offer to transfer4
a small employer into or out of a class of business unless such offer is made to5
transfer all small employers in the class of business without regard to case6
characteristics, claim experience, health status or duration since issue.7
A. Every health insurance issuer shall file with the department every8
proposed rate to be used in connection with all of its particular products. Every9
such filing shall clearly state the date of the filing, the proposed rate, and the10
effective date of the proposed rate. All filings for rate increases pursuant to the11
federal review threshold and reporting threshold shall be in accordance with12
any and all federal requirements. All rate filings required by this Subpart shall13
be made in accordance with the following:14
(1) Rate filings shall be made no less than one hundred five days in15
advance of the proposed effective date unless otherwise waived by the16
department.17
(2) All health insurance issuers assuming, merging, or acquiring blocks18
of business shall be considered as proposing new rates.19
(3) The commissioner may set the date upon which index rates in a20
market are not subject to revision by an issuer.21
B. All proposed rate filings shall include:22
(1) A completed Unified Rate Review Template, a Rate Filing23
Justification, and all rating tables used by the health insurance issuer in the24
formation of the proposed rates.25
(2) Any other information, documents, or data requested by the26
department or by the United States Department of Health and Human Services.27
C. When a rate filing made pursuant to this Subpart is not accompanied28
by the information upon which the health insurance issuer supports the rate29 SB NO. 328
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filing, with the result that the department does not have sufficient information1
to determine whether the rate filing meets the requirements of this Subpart, the2
department may require the health insurance issuer to refile the information3
upon which it supports its filing. The time period provided in this Section shall4
begin anew and commence as of the date the proper information is furnished to5
the department.6
D. All proposed rate filings shall be reviewed for compliance with R.S.7
22:1095. Any proposed rate filing that is not in compliance with R.S. 22:10958
shall not be approved.9
E. Each rate filing shall be reviewed by the department to determine10
whether such filing is reasonable and compliant with this Subpart.11
F. The department shall consider the following criteria to determine12
whether a rate is unreasonable:13
(1) Whether the rate is excessive.14
(2) Whether the rate is unfairly discriminatory.15
(3) Whether the rate is unjustified.16
(4) Whether the rate does not otherwise comply with the provisions of17
this Title or with other provisions of law.18
G. The review of any proposed rate may take into consideration the19
following nonexhaustive list of factors and any other factors established by rule,20
regulation, directive, or guidance by the department or by the United States21
Department of Health and Human Services, to the extent applicable, to22
determine whether the filing under review is unreasonable:23
(1) The impact of medical trend changes by major service categories.24
(2) The impact of utilization changes by major service categories.25
(3) The impact of cost-sharing changes by major service categories.26
(4) The impact of benefit changes.27
(5) The impact of changes in an insured's risk profile.28
(6) The impact of any overestimate or underestimate of medical trend for29 SB NO. 328
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prior year periods related to the rate increase, if applicable.1
(7) The impact of changes in reserve needs.2
(8) The impact of changes in administrative costs related to programs3
that improve health care quality.4
(9) The impact of changes in other administrative costs.5
(10) The impact of changes in applicable taxes or licensing or regulatory6
fees.7
(11) Medical loss ratio.8
(12) The financial performance of the health insurance issuer, including9
capital and surplus levels.10
H. Within fifteen days of submission of any proposed rate increase which11
meets or exceeds the federal review threshold, the department shall publish on12
its website Parts I, II, and III of each Rate Filing Justification, except the13
portions which are deemed proprietary information by the commissioner, or14
any other documents or forms as otherwise required by federal law, rule, or15
regulation to maintain an effective rate review program. After publication, the16
public shall have thirty days to submit comments.17
I. The commissioner shall disapprove a proposed rate filing if he finds18
the rate is unreasonable. The department shall notify the health insurance19
issuer in writing whether it approves or disapproves a proposed rate filing. If20
the department disapproves a proposed rate filing, then the written notice shall21
clearly state the reasons why such proposed rate filing was disapproved.22
J. For any rate increase that meets or exceeds the federal review23
threshold, the department shall, upon request by the United States Department24
of Health and Human Services, provide its final determination with respect to25
unreasonableness to the Centers for Medicare and Medicaid Services in a26
manner and form prescribed along with a brief explanation of the final27
determination. The department shall post a notice of the final determination28
on its website.29 SB NO. 328
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K. A health insurance issuer may implement a proposed new rate filing1
approved by the department upon approval and may implement proposed rate2
increases no sooner than forty-five days after the written approval in order for3
the insured to be notified pursuant to R.S. 22:1093. Any rate filing approved4
by the department shall be implemented during the policy or plan year5
indicated in the filing. Any rate or rates not implemented within ninety days of6
notice of approval shall be void, and any health insurance issuer seeking to7
implement the rate or rates thereafter shall be required to file a new rate filing8
in compliance with this Subpart.9
L. Any aggrieved health insurance issuer may within thirty days file a10
petition with the Nineteenth Judicial District Court seeking a de novo judicial11
review.12
M. Rate filings made by health insurance issuers under this Section shall13
be subject to the Public Records Law, R.S. 44:1 et seq., and the restrictions on14
health information under R.S. 22:42.1. The department shall publish for public15
comment a summary of the rate increases and written justification of the same,16
which do not constitute proprietary or trade secret information.17
§1092.1. Grandfathered health coverage; rating practices18
The rating practices and rating methods and the rating restrictions19
imposed by law upon grandfathered health coverage in the individual market20
and small group market that are extant on the day that this Section takes effect,21
including the restrictions on rate increases and required notices for such22
increases, shall remain binding upon such grandfathered health coverage. Such23
grandfathered coverage is exempt from the provisions of this Subpart, unless24
specifically provided for otherwise.25
§1093. Disclosure of rating practices and renewability provisions for insureds26
A. Each carrier health insurance issuer shall make reasonable disclosure in27
solicitation and sales materials provided to small employers insureds of the28
following:29 SB NO. 328
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(1) The extent to which premium rates for a specific small employer are1
established or adjusted due to the claim experience, health status or duration of2
coverage of the employees or dependents of the small employer.3
(2) The provisions concerning the carrier's right to change premium rates and4
the factors, including case characteristics, which affect changes in premium rates .5
(3) A description of the class of business in which the small employer is or6
will be included, including the applicable grouping of plans.7
(4) The provisions relating to renewability of coverage.8
B. Each carrier health insurance issuer shall provide its insureds with a9
written notice and reasonable explanation and justification, including the10
contributing factors for the rate increase, of for any rate increase no less than11
forty-five days prior to the effective date of such increase. Such explanation shall12
indicate the contributing factors resulting in an increased premium, which may13
include but not be limited to experience, medical cost, and demographic factors.14
§1094. Maintenance of records for the department15
A. Each small employer carrier health insurance issuer shall maintain at its16
principal place of business a complete and detailed description of its rating practices17
and renewal underwriting description of its rating practices and renewal underwriting18
practices, including information and documentation which demonstrate that its rating19
methods and practices are based upon commonly accepted actuarial assumptions and20
are in accordance with sound actuarial principles and the rules and regulations of21
the department.22
B. Each small employer carrier health insurance issuer shall file each March23
first with the commissioner department an actuarial certification that the carrier24
health insurance issuer is in compliance with this Section Subpart and that the25
rating methods of the carrier health insurance issuer are actuarially sound. A copy26
of such certification shall be retained by the carrier health insurance issuer at its27
principal place of business.28
C. A small employer carrier health insurance issuer shall make the29 SB NO. 328
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information and documentation described in Subsection A of this Section available1
to the commissioner department for inspection upon request. The information2
shall be considered proprietary and trade secret information, and shall not be subject3
to disclosure by the commissioner department to persons outside of the department4
except as agreed to by the carrier health insurance issuer or as ordered by a court5
of competent jurisdiction, and shall not be subject to disclosure under the Public6
Records Law.7
§1095. Modified community rating; health insurance premiums; compliance with8
rules and regulationsRating factors; risk pools; individual market9
plan and calendar year requirement10
A. Each small group and individual health and accident insurer shall maintain11
at its principal place of business a complete and detailed description of its rating12
practices and a renewal underwriting description of its rating practices and renewal13
underwriting practices, including information and documentation which demonstrate14
that its rating methods and practices are in full and complete compliance with the15
rules and regulations promulgated by the Department of Insurance for a modified16
community rating system for health insurance premiums.17
B.(1) The Department of Insurance shall promulgate regulations no later than18
January 1, 1994, that provide criteria for the community rating of premiums for any19
hospital, health, or medical expense insurance policy, hospital or medical service20
contract, health and accident policy or plan, or any other insurance contract of this21
type, that is small group or individually written.22
(2)(a) The regulations shall place limitations upon the following classification23
factors used by any insurer or group in the rating of individuals and their dependents24
for premiums:25
(i) Medical underwriting and screening.26
(ii) Experience and health history rating.27
(iii) Tier rating.28
(iv) Durational rating.29 SB NO. 328
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(b) The premiums charged shall not deviate according to the classification1
factors in Subparagraph (a) of this Paragraph by more than plus or minus thirty-three2
percent for individual health insurance policies or subscriber agreements. In no event3
shall the increase in premiums for a small employer group policy vary from the4
index rate by plus or minus thirty-three percent.5
(3) The following classification factors may be used by any small group or6
individual insurance carrier in the rating of individuals and their dependents for7
premiums:8
(a) Age.9
(b) Gender.10
(c) Industry.11
(d) Geographic area.12
(e) Family composition.13
(f) Group size.14
(g) Tobacco usage.15
(h) Plan of benefits.16
(i) Other factors approved by the Department of Insurance.17
C. Any small group and individual insurance carrier that varies rates by18
health status, claims experience, duration, or any other factor in conflict with the19
regulations promulgated by the Department of Insurance shall establish a phase-out20
rate adjustment as of the first renewal date on or after January 1, 2002, for each21
entity insured by the carrier in order to come into compliance with this Section22
pursuant to the regulations promulgated by the Department of Insurance.23
D. The provisions of this Section shall not apply to limited benefit health24
insurance policies or contracts.25
A. Health insurance issuers may vary premiums with respect to a26
particular insured's health benefit plan, whether new or upon renewal, in the27
individual or small group market due only to one or more of the following28
factors:29 SB NO. 328
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(1) The number of persons such product or coverage covers, whether an1
individual or family.2
(2) Geographic rating area, as established in accordance with this3
Section.4
(3) Age, except that such variation shall be no more than three-to-one for5
adults.6
(4) Tobacco use as defined in 45 C.F.R. 147.102 or any subsequent7
federal law, except that such rate shall not vary by more than one- and one-half-8
to-one.9
B. Every health insurance issuer in this state shall maintain a single,10
separate, and distinct risk pool for the individual market and a single, separate,11
and distinct risk pool for the small group market. Health insurance issuers of12
student health plans shall maintain a single, separate, and distinct risk pool for13
student health plans.14
C. To the extent that they are applied to coverage issued to members15
within a family under a small group plan, the ratings variations permitted16
under Paragraphs (A)(3) and (4) of this Section shall be attributed to each17
member to whom those factors apply and the factors may be applied only as18
permitted by federal law.19
D. Beginning on January 1, 2015, every health insurance policy in the20
individual market shall be based upon a calendar year with coverage21
commencing on January first of each year. Any exceptions or modifications of22
any kind to the calendar year requirement through rule, regulation, directive,23
or guidance by the United States Department of Health and Human Services24
shall also apply to health insurance issuers under this Section.25
E. The department shall determine the geographic rating area or areas26
in this state by rule, regulation, bulletin, or any other mechanism made27
available by law.28
F. Any rate proposed to be used by a health insurance issuer shall be29 SB NO. 328
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submitted and controlled by this Subpart.1
§1096. Health and accident insurers; rate increases Regulations; preemption2
Health and accident insurers shall not increase their premium rates during the3
initial twelve months of coverage and not more than once in any six-month period4
following the initial twelve-month period, for any policy, rider, or amendment issued5
in or for residents of the state, no matter the date of commencement or renewal of the6
insurance coverage except that no health insurance issuer or health maintenance7
organization issuing group or individual policies or subscriber agreements shall8
increase its premium rates or reduce the covered benefits under the policy or9
subscriber agreement after the commencement of the minimum one-hundred-eighty-10
day period described in R.S. 22:1068(C)(2)(a)(i) or 1074(C)(2)(a)(i). This Section11
does not affect increases in the premium amount due to the addition of a newly12
covered person or a change in age or geographic location of an individual insured or13
policyholder or an increase in the policy benefit level.14
A. The commissioner may promulgate such rules and regulations as may15
be necessary and proper to carry out the provisions of this Subpart. Such rules16
and regulations shall be promulgated and adopted in accordance with the17
Administrative Procedure Act.18
B. If at any time a provision of this Subpart is in conflict with federal law19
or with regulations promulgated pursuant to federal law, such provision shall20
be preempted only to the extent necessary to avoid direct conflict with federal21
law or regulations. The commissioner shall subsequently administer and22
enforce the provisions of this Subpart in a manner that conforms to federal law23
or regulations. If necessary to preserve the department's regulatory authority24
or if necessary to effectively enforce the provisions of this Part, the25
commissioner may promulgate rules or regulations to that effect and may issue26
directives or bulletins on a provisional basis before such rules or regulations27
take effect. Such provisional basis for the issuance of directives or bulletins28
under this Section shall not exceed a period of one year.29 SB NO. 328
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words in boldface type and underscored are additions.
§1097. Discrimination in rates or failure to provide coverage because of severe1
disability or sickle cell trait prohibited2
A. No insurance company shall charge unfair discriminatory premiums,3
policy fees, or rates for, or refuse to provide any policy or contract of life insurance,4
life annuity, or policy containing disability coverage for a person solely because the5
applicant therefor has a severe disability, unless the rate differential is based on6
sound actuarial principles or is related to actual experience. No insurance company7
shall unfairly discriminate in the payments of dividends, other benefits payable under8
a policy, or in any of the terms and conditions of such policy or contract solely9
because the owner of the policy or contract has a severe disability.10
B. As used in this Section"Severe severe disability" , as used in this Section,11
means any disease of, or injury to, the spinal cord resulting in permanent and total12
disability, amputation of any extremity that requires prosthesis, permanent visual13
acuity of twenty/two hundred or worse in the better eye with the best correction, or14
a peripheral field so contracted that the widest diameter of such field subtends an15
angular distance no greater than twenty degrees, total deafness, inability to hear a16
normal conversation or use a telephone without the aid of an assistive device, or17
persons who have any developmental disabilities disability, including but not18
limited to autism, cerebral palsy, epilepsy, mental retardation, and other neurological19
impairments.20
C. Nothing in this Section shall be construed as requiring an insurance21
company to provide insurance coverage against a severe disability which the22
applicant or policyholder has already sustained.23
D. No insurance company shall charge unfair discriminatory premiums,24
policy fees, or rates for, or refuse to provide any policy , subscriber agreement, or25
contract of life insurance, life annuity, or policy containing disability coverage for26
a person solely because the applicant therefor has sickle cell trait. No insurance27
company shall unfairly discriminate in the payments of dividends, other benefits28
payable under a policy, or in any of the terms and conditions of such policy or29 SB NO. 328
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contract solely because the insured of the policy of or contract has sickle cell trait.1
Nothing in this Subsection shall prohibit waiting periods, pre-existing conditions, or2
dreaded disease rider exclusions, or any combination thereof, if they do not unfairly3
discriminate as may be permitted by federal law.4
§1098. Frequency of rate increase; limitations5
A. The following rate increase limitations shall apply to all health benefit6
plans, limited benefits, and excepted benefits:7
(1) Health insurance issuers of limited benefits and excepted benefits8
policies shall not increase rates during the initial twelve months of coverage,9
and may not do so more than once in any six-month period following the initial10
twelve-month period.11
(2) Health insurance issuers shall not increase rates for policies or plans12
in the individual market during the plan year. Rate increases for policies or13
plans in the individual market may only occur upon renewal or upon14
commencement of the policy or plan year.15
(3) Rates for policies or plans in the small group market shall not16
increase during the initial twelve months of coverage unless such increases were17
previously filed, reviewed, and approved in conformity with this Subpart at the18
commencement of the policy or plan and the increases are implemented on a19
quarterly basis.20
(4) A health insurance issuer may, for good cause, seek the21
commissioner's approval for a rate change during the initial twelve months of22
coverage. The approval, if granted, shall require the recalculation of the23
issuer's risk pool.24
B. No health insurance issuer issuing policies or subscriber agreements25
shall increase its rates or reduce the covered benefits under the policy or26
subscriber agreement after the commencement of the minimum one hundred27
eighty-day period following the notice of the discontinuation of offering all28
health insurance coverage as described in R.S. 22:1068(C)(2)(a)(i) or29 SB NO. 328
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1074(C)(2)(a)(i).1
C. This Section shall not affect increases in the premium amount due to2
any change required for compliance with the addition of a newly covered person3
or policy benefit level, or such changes necessary to comply with R.S. 22:10954
or other state or federal law, regulation, or rule.5
§1099. Enforcement6
A. Whenever the commissioner has reason to believe that any health7
insurance issuer is not in compliance with any of the provisions of this Subpart8
excluding disapproval by the commissioner as provided in R.S. 22:1092(C) and9
(G), he shall notify such health insurance issuer. Upon such notice, the10
commissioner may, in addition to the penalties in Subsection C of this Section,11
issue and cause to be served upon such health insurance issuer an order12
requiring the health insurance issuer to cease and desist from any violation.13
B. Any health insurance issuer who violates a cease and desist order14
issued by the commissioner pursuant to this Subpart while such order is in15
effect shall be subject to one or more of the following at the commissioner's16
discretion:17
(1) A monetary penalty of not more than twenty-five thousand dollars for18
each act or violation and every day the health insurance issuer is not in19
compliance with the cease and desist order, not to exceed an aggregate of two20
hundred fifty thousand dollars for any six-month period.21
(2) Suspension or revocation of the health insurance issuer's certificate22
of authority to operate in this state.23
(3) Injunctive relief from the district court of the district in which the24
violation may have occurred or in the Nineteenth Judicial District Court.25
C. As a penalty for violating this Subpart, the commissioner may refuse26
to renew, or may suspend or revoke the certificate of authority of any health27
insurance issuer, or in lieu of suspension or revocation of a certificate of28
authority, the commissioner may levy a monetary penalty of not more than one29 SB NO. 328
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words in boldface type and underscored are additions.
thousand dollars for each act or violation, not to exceed an aggregate of two1
hundred fifty thousand dollars.2
D. An aggrieved party affected by the commissioner's decision, act, or3
order may demand a hearing in accordance with Chapter 12 of this Title, R.S.4
22:2191 et seq., except as otherwise provided by this Subpart. If a health5
insurance issuer has demanded a timely hearing, the penalty, fine, or order by6
the commissioner shall not be imposed until such time as the Division of7
Administrative Law makes a finding that the penalty, fine, or order is8
warranted in a hearing held in the manner provided in Chapter 12 of this Title.9
Section 2. R.S. 44:4.1(B)(11) is hereby amended and reenacted to read as follows:10
§4.1. Exceptions11
* * *12
B. The legislature further recognizes that there exist exceptions, exemptions,13
and limitations to the laws pertaining to public records throughout the revised14
statutes and codes of this state. Therefore, the following exceptions, exemptions, and15
limitations are hereby continued in effect by incorporation into this Chapter by16
citation:17
* * *18
(11) R.S. 22:2, 14, 42.1, 88, 244, 461, 572, 572.1, 574, 618, 706, 732, 752,19
771, 1092, 1094, 1203, 1460, 1466, 1546, 1644, 1656, 1723, 1927, 1929, 1983, 1984,20
2036, 230321
* * *22
Section 3. The provisions of this Act shall become effective upon signature by the23
governor or, if not signed by the governor, upon expiration of the time for bills to become24
law without signature by the governor, as provided by Article III, Section 18 of the25
Constitution of Louisiana. If vetoed by the governor and subsequently approved by the26
legislature, this Act shall become effective on the day following such approval.27 SB NO. 328
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Gary Smith (SB 328)
Proposed law requires the commissioner of insurance to collect a $100 fee for new rate
filings for insurance issuers and $150 for rate changes.
Present law provides for approval and disapproval of health and accident insurance forms
and policies by the commissioner of insurance.
Proposed law retains present law and increases the time for the use of forms from 45 days
to 60 days after filing. Requires written notification to be provided to the health insurance
issuer specifying the reasons a policy form or subscriber agreement does not comply with
the provisions of proposed law. Provides that it shall be unlawful for any health insurance
issuer to issue any form not previously submitted to and approved by the department.
Present law provides rate limitations for health benefit plans for small employers and
individuals. Provides for rating factors and sets allowable percentages of annual increases.
Requires each small group and individual health and accident insurer to make reasonable
disclosure of rates to small employers and provides required content of each disclosure.
Provides that when a rate increase occurs, the insurer shall provide a reasonable explanation
of the increase. Also requires each insurer to maintain records of its rating practices and to
certify to the commissioner that it is in compliance with the rating requirements. Prohibits
health and accident insurers from increasing their premiums except as provided in present
law. Excludes group and individual high deductible health plans from the rate limitations
and requirements.
Proposed law makes rate review and approval requirements applicable to health benefit plans
which provide coverage in the small group and individual markets. Requires each health
benefit plan to file a copy of its rates with all insurance policy forms. Provides that the
commissioner shall review rates and may only disapprove proposed rate increases that meet
the statutory definition of unreasonable in proposed law. Provides for risk pools. Limits
variations on health insurance premiums to variations based on whether the insured is an
individual or member of a family group, the age of the insured, geographic region, and
whether the insured uses tobacco products. Prohibits insurers from using the health status
of the insured in the calculation of rates. Provides for fees for proposed rate filings and rate
changes. Lists and identifies those benefits not subject to the requirements. Additionally,
subjects HMOs and any entity that offers health insurance coverage through a policy,
certificate, or subscriber agreement to proposed rating law. Requires rate filings with the
department, made under certain time lines, subject to certain filing fees, and containing
required information in prescribed, standardized formats. Requires any such filings
containing rate increases beyond a specific threshold to be published for public comment.
Exempts certain information submitted in required filings from the Public Records Law.
Proposed law exempts limited benefits plans from proposed law rating restrictions.
Proposed law requires the rating practices and rating methods, and the rating restrictions
imposed by law upon grandfathered health coverage in the individual market and small
group market that exist when proposed law takes effect, including the restrictions on rate
increases and required notices for such increases, to remain binding upon such grandfathered
health coverage.
Present law allows health insurers to create and maintain separate risk pools through closed
blocks of business or classes of business. SB NO. 328
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words in boldface type and underscored are additions.
Proposed law prohibits the maintenance of separate risk pools. Requires all health insurance
issuers to maintain a single, state-wide risk pool in each of the following markets: small
group, individual, and student health plans.
Proposed law provides that the commissioner may issue penalties or cease-and-desist orders
if he determines that any health insurance issuer is not in compliance with the rate review
provisions. Provides monetary penalties for violations of cease-and-desist orders.
Authorizes the commissioner to revoke, suspend, or nonrenew a certificate of authority of
any health insurance issuer for noncompliance. Permits any aggrieved health insurance
issuer the opportunity to seek judicial review of certain decisions by the commissioner.
Proposed law, beginning January 1, 2015, requires every individual health insurance policy
or plan year to be for a period of one year, and to commence on January first of that year.
Prohibits any rate increases in the individual market during the course of the policy or plan
year. Requires health insurance issuers to file an actuarial certification that such issuers use
actuarially sound methods and are in compliance with applicable laws.
Present law prohibits unfair discrimination in rates or failure to provide life, life annuity, or
disability coverage because of severe disability or sickle cell trait.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 22:972 and 1091 through 1097 and R.S. 44:4.1(B)(11); adds R.S.
22:821(B)(36), 1092.1,1098, and 1099)