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2020 Regular Session
SENATE BILL NO. 148
BY SENATOR TALBOT
INSURERS. Provides relative to the Louisiana Health Reinsurance Association. (gov sig)
1 AN ACT
2 To enact Part II of Chapter 20 of Title 22 of the Louisiana Revised Statutes of 1950, to be
3 comprised of R.S. 22:2472 through 2483, and to repeal R.S. 22:1641(1)(j); relative
4 to the Louisiana Health Reinsurance Association; to provide for creation; to provide
5 for membership; to provide for assessments; to provide for capacity to sue; to
6 provide for domicile; to provide for definitions; to provide for examination by the
7 commissioner of insurance; to provide for immunity for members and employees;
8 and to provide for related matters.
9 Be it enacted by the Legislature of Louisiana:
10 Section 1. Part II of Chapter 20 of Title 22 of the Louisiana Revised Statutes of
11 1950, comprised of R.S. 22:2472 through 2483 is hereby enacted to read as follows:
12 §2472. Purpose of Part
13 A. The individual health insurance market meets a vital need for the
14 state's residents who do not have access to employer-sponsored health insurance
15 or other forms of healthcare coverage. Health insurance in the individual
16 market is often the last line of defense against the risk of bankruptcy for sick
17 individuals. Premium rates in the individual market have continued to rise
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1 significantly, forcing some Louisiana consumers to exit the federal health
2 insurance market and risk having no health insurance coverage. Additionally,
3 the number of health insurers doing business in the individual market has
4 declined dramatically.
5 B. The purpose of this Part is to create a means of stabilizing the
6 individual health insurance market through state-based reinsurance in order
7 to lower premiums, increase enrollment of consumers in the individual market,
8 increase the number of health insurers doing business in the individual market,
9 and slow the continued health insurance premium rate increase.
10 §2473. Definitions
11 As used in this Part:
12 (1) "Association member" means any of the following:
13 (a) A health insurance issuer that has a certificate of authority to
14 transact the business of health and accident insurance in this state.
15 (b) A health maintenance organization as defined in R.S. 22:242.
16 (c) A third-party administrator as defined in R.S. 22:1641.
17 (d) A group self-insurer as defined in R.S. 22:452.
18 (2) "Group market" means the large group market as defined in R.S.
19 22:1091 and the small group market which offers small group coverage as
20 defined in R.S. 22:1091, when the applicable coverage constitutes major medical
21 insurance.
22 (3) "Individual market" means the term defined in R.S. 22:1091, when
23 the applicable coverage constitutes major medical insurance.
24 (4) "Major medical insurance" means any of the following:
25 (a) Insurance coverage consisting of medical care paid for directly
26 through insurance or reimbursement, or otherwise, and including items and
27 services paid for as medical care under a hospital or medical service policy or
28 certificate, hospital, or medical service plan contract, preferred provider
29 organization, health maintenance organization contract, or any contract or
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1 policy issued by a health insurance issuer. Although not exclusive, if any
2 particular form of health plan coverage is subject to the requirements of Title
3 XXVII of the federal Public Health Service Act relating to guaranteed
4 availability and guaranteed renewability, or if a particular form of health plan
5 coverage is subject to the requirements of federal law, or is considered
6 minimum essential coverage as defined in Section 5000A of the Internal
7 Revenue Code, then the health plan constitutes "major medical insurance".
8 (b) The same or similar coverage defined in Subparagraph (a) of this
9 Paragraph when the services are administered by a third-party administrator
10 on behalf of a plan that is not fully insured by a health insurance issuer, health
11 maintenance organization, or group self-insurer. For purposes of third-party
12 administrators, "major medical insurance" shall not include the provision of
13 pharmacy benefits by a third-party administrator or by a health insurance
14 issuer or health maintenance organization when the pharmacy benefits
15 provisions do not include comprehensive coverage.
16 (c) Any coverage, although not exclusively dispositive as to whether it
17 constitutes "major medical insurance," for which the association member paid
18 reinsurance contributions under the Transitional Reinsurance Program
19 established pursuant to Section 1341 of Public Law 111-148.
20 (d) "Major medical insurance" shall not mean any of the following:
21 (i) Coverage provided under a contract of Medicare Advantage,
22 Medicare Supplement, or Medicare Part D.
23 (ii) The Louisiana Medicaid Program.
24 (iii) Coverage offered by the Office of Group Benefits for retirees.
25 (5) "Marketplace" means the health insurance marketplace or
26 insurance exchange established pursuant to 42 U.S.C. 18031.
27 §2474. Louisiana Health Reinsurance Association
28 A. There is hereby created a nonprofit entity to be known as the
29 Louisiana Health Reinsurance Association whose legal domicile shall be in the
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1 parish of East Baton Rouge. All members of the association shall be and remain
2 members of the association as a condition of their authority to transact business
3 in this state. The association shall perform its functions as authorized by this
4 Part and through its bylaws and plan of operations.
5 B. The association shall be under the supervision of the commissioner
6 as authorized in R.S. 22:2478. The association shall provide any records
7 concerning its operations, budget, and management upon request of the
8 commissioner.
9 C.(1)(a) Notwithstanding any other provision of law to the contrary, the
10 association shall not be deemed a department, unit, agency, instrumentality,
11 commission, or board of the state for any purpose unless specifically set forth
12 in this Part and except as otherwise provided in this Part shall not be subject to
13 laws governing departments, units, agencies, instrumentalities, commissions, or
14 boards of the state.
15 (b) All debts, claims, obligations, and liabilities of the association,
16 whenever incurred, shall be the debts, claims, obligations, and liabilities of the
17 association only and not of the state or its agencies, instrumentalities, officers,
18 or employees.
19 (c) The association shall be subject to the provisions of R.S. 24:513 et
20 seq. regarding audits by the legislative auditor.
21 (d) The form established by the commissioner pursuant to R.S. 22:2064
22 for the financial report of the Louisiana Insurance Guaranty Association shall
23 determine the association's accounting method and basis of financial reporting
24 for all purposes, notwithstanding any other provision of law to the contrary.
25 (2) Notwithstanding the provisions of Paragraph (1) of this Subsection,
26 the association shall be subject to the provisions of the Public Records Law, R.S.
27 44:1 et seq., and the Open Meetings Law, R.S. 42:11 et seq.
28 §2475. Board of directors
29 A. The board of directors of the association shall consist of seven
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1 members. One director shall be a resident of this state appointed by the
2 commissioner. The other six directors shall serve terms as established in the
3 bylaws. These six directors shall be elected as follows:
4 (1) One person chosen by association members who provided major
5 medical insurance coverage in the individual market for at least the two
6 preceding years, starting in the year 2018 in this state, or who have been
7 certified by the marketplace to offer individual coverage in this state through
8 the marketplace and have undertaken overt acts to do so in the upcoming plan
9 year at the time of election.
10 (2) One person chosen by association members who provided major
11 medical insurance in the group market for at least the two preceding years
12 starting in 2018 in this state.
13 (3) One person chosen by association members who are third-party
14 administrators and group self-insurers in this state, but who do not possess
15 certificates of authority as health insurance issuers or health maintenance
16 organizations.
17 (4) One person chosen by association members who are health
18 maintenance organizations in this state, and who provide major medical
19 insurance in both the individual and group markets in this state.
20 (5) One person chosen by association members who are domestic
21 nonprofit mutual insurers exclusively engaged in the business of providing
22 health, hospital service, medical, or surgical benefits in this state.
23 (6) One licensed insurance producer, with an accident and health line
24 of authority, primarily and actively engaged in the sale, solicitation, and
25 negotiation of major medical insurance in this state, chosen by the Independent
26 Insurance Agents and Brokers of Louisiana, the Louisiana Association of Health
27 Underwriters, the Louisiana chapter of the National Association of Insurance
28 and Financial Advisors, Health Agents for America, Inc., and Professional
29 Insurance Agents of Louisiana.
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1 B. A vacancy on the board shall be filled for the remainder of an
2 unexpired term in the same manner as the board seat was filled pursuant to this
3 Section. In the event two or more board seats are vacant, the commissioner may
4 appoint interim board members for terms not to exceed sixty calendar days.
5 C. Elections for board members shall be held every four years, which
6 period shall commence to run following the election of a majority of board
7 members in the calendar year 2021, except that the association bylaws may
8 stagger the terms of the first slate of board members elected after the enactment
9 of this Part in order to prevent all board seats from being vacant at the same
10 time.
11 D. Members of the board may be reimbursed from the assets of the
12 association for reasonable expenses incurred by them as members of the board
13 of directors. The members of the board shall not otherwise be compensated by
14 the association for their services.
15 E. The board of directors shall have the authority to adopt bylaws and
16 a plan of operation and to decide all matters on behalf of the association.
17 §2476. Powers and duties of the association
18 A. The association may require association members to furnish any data
19 or information necessary for the levying of a fee assessed by the commissioner
20 upon the recommendation of the association, and, if necessary and with the
21 approval of the commissioner, the association may examine any association
22 member for that purpose. The association may, with the approval of the
23 commissioner, examine any association member's books and records, if that
24 association member makes any claim for reinsurance payments from the
25 association.
26 B. The association, through the board of directors, shall formally advise
27 the commissioner, at least annually, as to the need and the amount of any fee
28 assessments to be levied pursuant to R.S. 22:2477, and to file suit against any
29 association member that fails to pay the fee assessment.
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1 C. The association may negotiate, apply for, receive, and expend any
2 pass-through or other funding under a state innovation waiver pursuant to
3 Section 1332 of Public Law 111-148, and any other grant or funding made
4 available by the state or federal government for the purposes of stabilizing the
5 individual health insurance market and health insurance rates, reinsurance, or
6 similar efforts to improve access and reduce pricing for health insurance.
7 D. The association may do any of the following:
8 (1) Enter into any contracts as are necessary or proper to implement this
9 Part.
10 (2) Sue or be sued, including taking any legal actions necessary to
11 recover unpaid fee assessments and to settle claims or potential claims against
12 it.
13 (3)(a) Borrow money to effect the purposes of this Part.
14 (b) Any notes or other evidence of indebtedness of the association not in
15 default shall be legal investments for domestic insurers and may be carried as
16 admitted assets.
17 (4) Employ or retain any persons necessary to handle the financial and
18 legal transactions of the association and to perform any other functions
19 necessary and proper pursuant to this Part.
20 (5) Take any legal action necessary to avoid payment or recover
21 payment of improper claims.
22 (6) Join other associations or organizations of similar purposes to
23 further the purposes of the association.
24 (7) Adopt bylaws and a plan of operations to carry out the functions,
25 organization, and administration of the association and to collect any
26 assessment levied by the association.
27 (8) Refer any association member to the commissioner for sanctions if
28 the association member has refused to pay any fee assessment or has refused to
29 furnish data or information as required by this Section.
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1 E. Venue in a suit against the association shall be in the Nineteenth
2 Judicial District Court, and the association shall not be required to furnish any
3 appeal bond in cases or controversies that relate to a cause of action arising
4 under this Part.
5 §2477. Fee assessments
6 A.(1) For the purposes of providing the funds necessary to carry out the
7 powers and duties of the association pursuant to this Part, the board of
8 directors shall formally advise the commissioner of the frequency and amount
9 of any fee assessment. Upon determination that the advice of the board is
10 reasonable and necessary to carry out the purpose of this Part, the
11 commissioner shall promulgate the fee assessment as a constitutional officer
12 pursuant to Article VII, Section 2.1(B) of the Constitution of Louisiana.
13 (2) No fee assessment shall be in excess of two dollars and fifty cents per
14 member per month for each person covered by major medical insurance as
15 provided for in this Section.
16 (3) Fee assessments shall be due no sooner than ninety days after
17 promulgation by the commissioner in the Louisiana Register provided the
18 promulgation has no due date stated and shall accrue interest at ten percent per
19 annum on and after the due date.
20 (4) The fee assessments shall be paid to the association to carry out the
21 purpose of this Part.
22 B. The board of directors may defer, in whole or in part, the fee
23 assessment of any association member if, in the opinion of the board, payment
24 of the assessment would endanger the ability of the association member to fulfill
25 contractual obligations. In the event a fee assessment is deferred, the amount by
26 which the fee assessment is deferred may be assessed against the other
27 association members in a manner consistent with the basis for fee assessments
28 as provided for in this Section and as consistent with the association's bylaws.
29 Fee assessments that are deferred shall be paid according to a plan approved by
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1 the board, without interest, once the condition that was the cause of the
2 deferment is rectified.
3 C. Association members may incorporate costs imposed by the fee
4 assessment into their rating assumptions and rate setting mechanisms.
5 D.(1) An association member that wishes to protest all or part of a fee
6 assessment shall pay when due the amount of the fee assessment as set forth in
7 the notice promulgated by the commissioner. The payment shall be available to
8 meet association obligations during the pendency of the protest or any
9 subsequent appeal. Payment shall be accompanied by a statement in writing
10 that the payment is made under protest and setting forth a brief statement of
11 the grounds for the protest.
12 (2) Within sixty days following the payment of a fee assessment under
13 protest by an association member, the association shall notify the association
14 member in writing of the association's determination with respect to the protest
15 unless the association notifies the association member that additional time is
16 required to resolve the issues raised by the protest.
17 (3) Within thirty days after the final decision has been made, the
18 association shall notify the protesting association member in writing of the final
19 decision. Within sixty days of receipt of notice of the final decision, the
20 protesting association member may appeal that final action to the
21 commissioner.
22 (4) If the protest or appeal on the fee assessment is upheld by the
23 commissioner, the amount paid in error or excess shall be returned to the
24 association member. Interest on a refund due a protesting member shall be paid
25 at the rate actually earned by the association.
26 E.(1) The commissioner may set the fee assessment, upon the formal
27 advice of the board, on a per-member per-month basis, which may be calculated
28 based upon the association member's prior calendar or plan year's population
29 or reasonable estimates of the association member's current or impending
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1 calendar or plan year population. The per-member per-month population of an
2 association member should reflect the total number of human beings for whom
3 the association member provided major medical insurance or similar coverage,
4 as defined in this Part.
5 (2) The association may determine whether health plan coverage offered
6 by an association member constitutes major medical insurance as defined in this
7 Part.
8 F. In the event that the association has unexpended funds from a fee
9 assessment, the association shall maintain the funds to reduce future fee
10 assessments or to finance the operations of the association.
11 G. The commissioner may revoke a fee assessment previously
12 promulgated pursuant to his authority in the event that a portion of the fee
13 assessment or all of it would be unnecessary due to the availability of an
14 alternate source of funding for the objectives of this Part.
15 §2478. Powers of the commissioner
16 In addition to the duties and powers enumerated elsewhere in this Part
17 and in other provisions of law, the commissioner may do any of the following:
18 (1) Sanction any association member that fails to fulfill lawfully imposed
19 obligations pursuant to this Part, which failure shall constitute an unfair trade
20 practice, in the manner authorized in R.S. 22:1969.
21 (2) Suspend or revoke, after compliance with R.S. 49:961, the authority
22 of any association member to transact business in this state if the association
23 member fails to pay a fee assessment or fails to comply with the bylaws or plan
24 of operations. The commissioner may also levy a fee or fine on any association
25 member not to exceed ten percent of the unpaid assessment.
26 (3) Authorize the association to apply for a state innovation waiver
27 pursuant to Section 1332 of Public Law 111-148.
28 §2479. Interim powers of the commissioner
29 A. Immediately following the establishment of the association and prior
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1 to the election of the board of directors, the commissioner shall manage the
2 operations of the association.
3 B. The commissioner shall house and staff the association in the office
4 of health, life, and annuity within the Department of Insurance until an initial
5 fee assessment is levied to finance the association's administrative costs and the
6 association is capable of carrying out its functions and duties.
7 C. The commissioner may levy the initial fee assessment without the
8 formal advice of the board if the board fails to do so by June 1, 2021.
9 D. The commissioner may adopt interim bylaws and an interim plan of
10 operations until the board adopts permanent bylaws and a permanent plan of
11 operations.
12 §2480. Examination of the association
13 The association shall be subject to financial examination by the
14 commissioner. The board of directors shall submit to the commissioner, not
15 more than one hundred twenty days after the end of the fiscal year of the
16 association, an annual financial report in a form approved by the commissioner
17 and a report of its activities during the same year.
18 §2481. Immunity
19 There shall be no liability on the part of, and no cause of action of any
20 kind whatsoever shall arise against, any association member or its agents or
21 employees, any member of the board of directors, or the commissioner or his
22 representatives, for any action or omission in the performance of the
23 responsibilities and duties pursuant to this Part. Immunity shall extend to the
24 participation in any organization of one or more other state associations of
25 similar purposes and to any such organization and its agents or employees.
26 §2482. Effect of fee assessment on rates
27 Any association member required to pay a fee assessment pursuant to
28 this Part may, if the association member has not accounted for the fee
29 assessment in the association member's rate assumptions or contracted terms
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1 for any calendar or plan year, increase premiums, or administrative fees in the
2 case of a third-party administrator, during the plan or policy year in direct
3 proportion of the cost of the fee assessment to the association member.
4 §2483. Application
5 Notwithstanding any other provision of law to the contrary, the
6 provisions of this Part shall not apply to the Office of Group Benefits.
7 Section 2. R.S. 22:1641(1)(j) is hereby repealed.
8 Section 3. This Act shall become effective upon signature by the governor or, if not
9 signed by the governor, upon expiration of the time for bills to become law without signature
10 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
11 vetoed by the governor and subsequently approved by the legislature, this Act shall become
12 effective on the day following such approval.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl B. Cooper.
DIGEST
SB 148 Original 2020 Regular Session Talbot
Proposed law creates the Louisiana Health Reinsurance Association as an association of
health insurance issuers, health maintenance organizations, group self-insurers, and third-
party administrators who are subject to a fee assessment promulgated by the commissioner
to provide for a state-based reinsurance fund the individual health insurance market.
Proposed law provides for the association's functions and regulations subject to the
commissioner and present law. Provides that the association shall not be deemed a
department, unit, agency, instrumentality, commission, or board of the state for any purpose
unless specifically set forth in proposed law.
Proposed law provides for the establishment of a seven-member board of directors. Provides
that one member shall be a resident of this state appointed by the commissioner, and six
members shall serve terms as established by the bylaws.
Proposed law provides for the powers and duties of the association including the ability to
advise the commissioner of the fee assessments necessary to carry out the purpose of the
association.
Proposed law establishes the powers of the commissioner with regard to the function of the
association. Provides for the commissioner to direct the operations of the association
immediately following the establishment of the association and prior to the election of the
board of directors.
Proposed law provides immunity from liability for any association member or its agents or
employees, members of the board of directors, or the commissioner or his representatives,
for any action or omission by them in the performance of their responsibilities and duties.
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Proposed law excludes the Office of Group Benefits from proposed law.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds R.S. 22:2472-2483; repeals R.S. 22:1641(1)(j))
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