Second Regular Session Sixty-fifth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 06-0145.01 Christy Chase SENATE BILL 06-036 SENATE SPONSORSHIP Hagedorn, HOUSE SPONSORSHIP (None), Senate Committees House Committees Health and Human Services A BILL FOR AN ACT Concerning the types of health benefit plans required to be offered by small employer carriers to small employers in the state. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Interim Committee on Health Insurance. Eliminates the requirement that small employer carriers offer a standard health benefit plan to small employers in the state. Adds an additional benefit design option to the basic health benefit plan required to be offered by small employer carriers, allowing carriers to offer a basic health benefit plan with the same or similar benefit design as is available to a medical assistance recipient enrolled with a managed care organization under the statewide managed care system. Makes conforming amendments. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. 10-16-105 (5) (g), (7.2), (7.3) (a), (7.3) (c) (I), (7.3) (f), and (7.3) (g), the introductory portion to 10-16-105 (7.3) (i), and 10-16-105 (7.5) (b) and (11), Colorado Revised Statutes, are amended to read: 10-16-105. Small group sickness and accident insurance - guaranteed issue - mandated provisions for basic health benefit plans - rules. (5) Each small group sickness and accident insurer or other entity shall make reasonable disclosure in solicitation and sales materials provided to small employers the following information in a form and manner prescribed by the commissioner and upon request of any such small employer shall provide such information in detail: (g) (I) That the small employer purchasing any health benefit plan other than a basic plan pursuant to subparagraph (I) or (III) of paragraph (b) of subsection (7.2) of this section, must pay for all of the mandated benefits pursuant to section 10-16-104 and that these mandates include mandatory, nonwaivable coverages for newborn, maternity, pregnancy, childbirth, complications from pregnancy and childbirth, therapies for congenital defects and birth abnormalities, low-dose mammography, mental illness, biologically-based mental illness, the availability of alcoholism treatment, the availability of hospice care, prostate cancer screening, child health supervision, hospitalization and general anesthesia for dental procedures for dependent children, diabetes, and prosthetic devices. (II) That a small employer purchasing a basic health benefit plan as described in subparagraph (I) or (III) of paragraph (b) of subsection (7.2) of this section is waiving coverage for low-dose mammography screening, mental illness, prostate screening, hospitalization and general anesthesia for dental procedures for children, the availability of treatment for alcoholism, and the availability of hospice care. (7.2) The commissioner shall promulgate rules to implement a basic health benefit plan and a standard health benefit plan to be offered by each small employer carrier as a condition of transacting business in this state. The commissioner shall survey small group carriers to determine the range of health benefit plans available annually. The commissioner shall implement a basic plan that approximates the lowest level of coverage offered in small group health benefit plans. and shall implement a standard plan that approximates the average level of coverage offered in small group health benefit plans In determining such levels of coverage, the commissioner shall consider such factors such as coinsurance, copayments, deductibles, out-of-pocket maximums, and covered benefits. The commissioner shall amend the rules to implement the basic and standard plans health benefit plans no more frequently than once every two years. Such The rules shall be in conformity with the provisions of article 4 of title 24, C.R.S., and shall incorporate the following basic health benefit plan designs: (a) The standard health benefit plan shall reflect the benefit design of common plan offerings in the small group market and may reflect a plan design that has a deductible amount of two thousand five hundred dollars for which the covered person is responsible after the first one thousand dollars of coverage has been provided by an employer in a manner similar to a personal care account; and (b) (I) A basic health benefit plan may reflect a basic health benefit plan that does not include coverage pursuant to the mandatory coverage provisions of section 10-16-104 (4), (5), (8), (9), (10), and (12); (II) A basic health benefit plan may reflect a health benefit plan that is a high deductible health plan that would qualify for a health savings account pursuant to 26 U.S.C. sec. 223; except that a carrier may apply deductible amounts for mandatory health benefits for mammography, prostate screening, child supervision services, or prosthetic devices pursuant to section 10-16-104 (4), (10), (11), and (14) if such mandatory benefits are not considered by the federal department of treasury to be preventive or to have an acceptable deductible amount; or (III) A basic health benefit plan may reflect a basic health benefit plan that does not include coverage pursuant to the mandatory coverage provisions of section 10-16-104 (4), (5), (8), (9), (10), and (12) and is a high deductible plan that would qualify for a health savings account pursuant to 26 U.S.C. sec. 223; except that a carrier may apply deductible amounts for mandatory health benefits for mammography, prostate screening, child supervision services, or prosthetic devices pursuant to section 10-16-104 (4), (10), (11), and (14) if such mandatory benefits are not considered by the federal department of treasury to be preventive or to have an acceptable deductible amount; or (IV) A basic health benefit plan with the same or similar benefit design as is available to a medical assistance recipient enrolled with a managed care organization under the statewide managed care system in subpart 2 of part 1 of article 4 of title 26, C.R.S. (c) Notwithstanding any provision of law to the contrary, a small employer carrier may offer and a small employer may accept or reject coverage for employees' domestic partners and their dependents under a standard or basic health benefit plan. (7.3) (a) Except as otherwise provided in this subsection (7.3), effective January 1, 1995 January 1, 2007, every small employer carrier shall, as a condition of transacting business in this state with small employers, actively offer to such small employers the choice of a basic health benefit plan. or a standard health benefit plan Effective July 1, 1997 January 1, 2007, every small employer carrier shall also offer to small employers a choice of all the other small group plans the carrier markets in Colorado; except that this requirement shall not apply to a health benefit plan offered by a carrier if such plan is made available in the small group market only through one or more bona fide association plans and except as provided in paragraph (i) of this subsection (7.3). (c) (I) A small employer carrier shall issue a basic health benefit plan, or a standard health benefit plan, except as provided in paragraph (i) of this subsection (7.3), to any eligible small employer that applies for such health benefit plan and agrees to make the required premium payments and to satisfy the other reasonable provisions of the health benefit plan that are consistent with this article. A small employer carrier shall also issue any of its other small employer plans to any small employer that applies for such a plan; except that this requirement shall not apply to a business group of one where the business group of one does not meet the carrier's normal and actuarially based underwriting criteria. The requirements of this paragraph (c) shall not apply to a health benefit plan offered by a carrier if such plan is made available in the small group market only through one or more bona fide association plans. (f) Basic and standard health benefit plans offered by a small employer carrier shall be subject to the certification requirements of section 10-16-107.2. (g) The commissioner may, at any time after providing notice and an opportunity for a hearing to a small employer carrier, disapprove the continued use by the small employer carrier of the basic health benefit plan and the standard health benefit plan on the grounds that such plans do plan does not meet the requirements of this article. (i) In lieu of accepting applications from and guarantee issuing the a basic and standard plans health benefit plan to business groups of one year round, small employer carriers may limit their issuance of coverage as provided in this paragraph (i). A small employer carrier may establish open enrollment periods for guarantee issued basic or standard health benefit plan applications from business groups of one for a period of thirty-one days following the birth date of the person qualifying as a business group of one. A small employer carrier may establish annual open enrollment periods for business groups of one for thirty-one days following the birth date of the applicant and may limit issuance of a basic health benefit plan and a standard health benefit plan to such thirty-one-day period. Carrier marketing and sales materials for business groups of one shall clearly disclose the open enrollment period. If a person qualifying as a business group of one applies for coverage under a plan other than the basic or standard health benefit plan, and if the business group of one is denied coverage as provided by law, then the small employer carrier shall offer the business group of one a choice of coverage under the basic or standard health benefit plan during the applicant's appropriate open enrollment period. A small employer carrier shall accept applications from business groups of one for a basic or standard health benefit plan through the thirty-first day after the birth date of the person qualifying as a business group of one. The date upon receipt of the signed application and the applicant's birth date shall be used in determining whether the thirty-one day open enrollment applies to a particular person qualifying as a business group of one. Eligible dependents of such person may also be covered at the same time as the applicant. Small employer carriers that use open enrollment periods shall also accept applications from business groups of one and issue a basic or standard health benefit plan as provided by law if such applications are submitted within thirty-one days of any one of the following events: (7.5) (b) A small employer carrier shall not modify a basic health benefit plan or a standard health benefit plan with respect to a small employer or any eligible employee or dependent through a rider, endorsement, or otherwise, if the effect of such modification is to restrict or exclude coverage for certain diseases or medical conditions that are otherwise covered by such plan. (11) The requirements contained in this section for small employer carriers to issue basic and standard health benefit plans shall terminate July 1, 2006, unless the general assembly acts by bill to extend such requirements beyond said date after conducting the review required in section 10-16-120. SECTION 2. 10-3-1104 (1) (v), Colorado Revised Statutes, is amended to read: 10-3-1104. Unfair methods of competition and unfair or deceptive acts or practices. (1) The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance: (v) Failure to comply with all provisions of section 10-16-108.5 concerning fair marketing of basic and standard health benefit plans, and section 10-16-105 concerning guaranteed issue of basic and standard health benefit plans; SECTION 3. 10-16-102 (7) and (43), Colorado Revised Statutes, are amended to read: 10-16-102. Definitions. As used in this article, unless the context otherwise requires: (7) "Capped employees" means the number of employees and dependents with health problems at the time the plan of which such employees are a part was issued who are in small groups covered by the carrier where the small employer group would have failed the carrier's normal and actuarially based small group underwriting criteria specifically because of the health status of those employees with health problems at the time the plan was issued, but who were issued basic or standard health benefit plan coverage as required under section 10-16-105 (7.3) (c) regardless of the health status of the group. "Capped employees" only includes employees and dependents covered by a small employer group health benefit plan of a carrier at the time the carrier proposes to suspend its duty to issue basic or standard health benefit plan coverage as required under section 10-16-105 (7.3) (c). (43) "Standard health benefit plan" means a health benefit plan developed pursuant to section 10-16-105 (7.2). SECTION 4. 10-16-104 (11) (a) and (15), Colorado Revised Statutes, are amended to read: 10-16-104. Mandatory coverage provisions. (11) Child health supervision services. (a) For purposes of this subsection (11), unless the context otherwise requires, "child health supervision services" means those preventive services and immunizations required to be provided in a basic and standard health benefit plans plan pursuant to section 10-16-105 (7.2), to dependent children up to age thirteen. Such services shall be provided by a physician or pursuant to a physician's supervision or by a primary health care provider who is a physician's assistant or registered nurse who has additional training in child health assessment and who is working in collaboration with a physician. (15) Notwithstanding any provision to the contrary, a small employer may purchase health benefit coverage that does not include the coverage for benefits pursuant to subsections (4), (5), (8), (9), (10), and (12) of this section through a basic health benefit plan pursuant to section 10-16-105 (7.2) (b) (I) and (7.2) (b) (III). SECTION 5. 10-16-105.2 (1) (c) (I) (D), Colorado Revised Statutes, is amended to read: 10-16-105.2. Small employer health insurance availability program. (1) (c) (I) The provisions of this article concerning small employer carriers and small group plans shall not apply to an individual health benefit plan newly issued to a business group of one that includes only a self-employed person who has no employees, or a sole proprietor who is not offering or sponsoring health care coverage to his or her employees, together with the dependents of such a self-employed person or sole proprietor if, pursuant to rules adopted by the commissioner, all of the following conditions are met: (D) As part of its application form, an individual carrier requires a business group of one self-employed person purchasing an individual health benefit plan pursuant to this subparagraph (I) to read and sign a disclosure form stating that, by purchasing an individual policy instead of a small group policy, such person gives up what would otherwise be his or her right to purchase a business group of one standard, basic or other health benefit plan from a small employer carrier for a period of three years after the date the individual health benefit plan is purchased, unless a small employer carrier voluntarily permits such person to purchase a business group of one policy within such three-year period. The disclosure form shall also briefly describe the factors used to set rates for the individual policy being purchased in comparison with the factors used to set rates for a business group of one small group policy. The individual carrier shall provide to the business group of one self-employed applicant a copy of the health benefit plan description form for the Colorado standard health benefit plan in addition to the description form for the individual plan being marketed. The disclosure form may be included within any other certification form that the carrier uses for the plan. The division of insurance shall make available a standard plan description form to individual carriers upon request. SECTION 6. 10-16-108 (1) (d) (I), (4) (a), and (4) (b) and the introductory portion to 10-16-108 (4) (c), Colorado Revised Statutes, are amended to read: 10-16-108. Conversion and continuation privileges. (1) Group sickness and accident insurance - conversion privileges. (d) (I) A converted policy issued upon the exercise of the conversion privilege of paragraph (c) of this subsection (1) shall offer a choice of a basic or standard health benefit plan. (4) Special provisions for small group health benefit plans. (a) Effective January 1, 1995, each small employer carrier shall, upon termination of a group policy by the carrier or employer for reasons other than replacement with another group policy or fraud and abuse in procuring and utilizing coverage, offer to any individual the choice of a basic or standard health benefit plan. except as provided in paragraph (b) of this subsection (4). Reasons for termination include, but are not limited to, the group no longer meeting participation requirements, cancellation due to nonpayment of premiums, or the policyholder exercising the right to cancel. (b) If the group's original plan had benefits which were significantly less generous in most respects than the standard plan as determined by the commissioner, the carrier is only required to offer the basic health benefit plan to such group or individual. If an individual is eligible for continuation coverage or conversion coverage pursuant to this section 10-16-108 or is eligible for continuation coverage under federal law, then the provisions of paragraph (a) of this subsection (4) and this paragraph (b) shall not apply to such an individual. (c) Each small employer carrier shall offer the choice of a basic or standard health benefit plan to any individual who loses nexus to existing small group coverage; except that: SECTION 7. 10-16-108.5 (1) and (4), Colorado Revised Statutes, are amended to read: 10-16-108.5. Fair marketing standards. (1) Each small employer carrier shall actively market health benefit plan coverage, including the basic health benefit plan, and the standard health benefit plan, to eligible small employers in the state. If a small employer carrier denies coverage to a small employer on the basis of the health status or claims experience of the small employer or its employees or dependents, the carrier shall offer the small employer the opportunity to purchase a basic health benefit plan. or a standard health benefit plan. (4) A small employer carrier shall provide reasonable compensation, as provided under the plan of operation of the small employer health reinsurance program, to a producer, if any, for the sale of a basic or standard health benefit plan. SECTION 8. Repeal. 10-16-120, Colorado Revised Statutes, is repealed as follows: 10-16-120. Legislative review of requirements for guaranteed issue of basic and standard health benefit plans. (1) During the regular session of the general assembly in the year 2001, the legislative council of the general assembly shall conduct a review of the operation of requirements contained in section 10-16-105 for small employer carriers to issue basic and standard health benefit plans. Such review shall consider, but not be limited to, the effect of such requirement on the availability and affordability of health care coverage to residents of Colorado. As a result of the review required by this subsection (1), the legislative council may recommend to the general assembly any legislation determined to be necessary based on such review. (2) The requirements contained in section 10-16-105 for small employer carriers to issue basic and standard health benefit plans shall terminate July 1, 2006, unless the general assembly acts by bill to extend said requirements beyond July 1, 2006. SECTION 9. 10-16-902 (1) (c), Colorado Revised Statutes, is amended to read: 10-16-902. Authority to self-fund - pilot program - rules - fees - cash fund. (1) (c) A MEWA shall offer standard and a basic health benefit plans plan as defined in section 10-16-105 (7.2). SECTION 10. 10-16-1002 (6) (b), Colorado Revised Statutes, is amended to read: 10-16-1002. Definitions. As used in this part 10, unless the context otherwise requires: (6) (b) If, pursuant to section 10-16-1009 (3) (l), a cooperative provides coverage to individuals and allows individuals to join the cooperative, "member" may also include an individual and any dependent of such individual who is covered by a plan purchased through a cooperative, is eighteen years of age or older, and is not: (I) Eligible for other coverage with benefits substantially similar to those included in the basic and standard health benefit plans plan; and (II) A dependent of an individual who is eligible for other coverage with benefits substantially similar to those included in the basic and standard health benefit plans plan that cover covers that individual. SECTION 11. 10-16-1011 (1) (e), Colorado Revised Statutes, is amended to read: 10-16-1011. Requirements for waivered health care coverage cooperatives - rules. (1) The commissioner shall promulgate rules setting forth the application procedure for cooperatives seeking a waiver under this section that: (e) Require the cooperative to offer, at a minimum, the a basic and standard health benefit plans plan for employers with fifty or fewer employees that all participating carriers must offer. Other benefit plans and benefit packages may be established and offered by some or all carriers that contract with the cooperative, and such plans or packages may include a range of cost-sharing levels. Benefit packages may also include some variations for differences in delivery systems, such as health maintenance organizations, point-of-service plans, preferred provider plans, and fee-for-service plans. SECTION 12. 10-16-1014 (1) (b), Colorado Revised Statutes, is amended to read: 10-16-1014. Technical assistance to authorized cooperatives from the division of insurance. (1) Subject to available appropriations, the commissioner may provide technical assistance to any cooperative that: (b) Requires that employer members not self-insure for any benefits included in the cooperative's basic or standard health benefit plans plan; SECTION 13. 26-19-107 (1) (a) (I), Colorado Revised Statutes, is amended to read: 26-19-107. Duties of the department - schedule of services - premiums - copayments - subsidies. (1) In addition to any other duties pursuant to this article, the department shall have the following duties: (a) (I) To design, on or after April 21, 1998, and from time to time revise, a schedule of health care services included in the plan and to propose said schedule to the medical services board for approval or modification. The schedule of health care services as proposed by the department and approved by the medical services board shall include, but shall not be limited to, preventive care, physician services, prenatal care and postpartum care, inpatient and outpatient hospital services, prescription drugs and medications, and other services that may be medically necessary for the health of enrollees. The department shall design and revise this schedule of health care services included in the plan to be based upon the basic and standard health benefit plans plan defined in section 10-16-102 (4), and (42), C.R.S.; except that the department may modify the basic and the standard health benefit plans plan to meet specific federal requirements or to accommodate those changes necessary for a program designed specifically for children. SECTION 14. Effective date - applicability. (1) Except as provided in subsection (2) of this section, this act shall take effect January 1, 2007, and shall apply to basic health benefit plans offered on or after said date. (2) Section 10-16-105 (11), Colorado Revised Statutes, as amended in section 1 of this act, and section 8 of this act shall take effect July 1, 2006, and shall apply to health benefit plans issued by small employer carriers on or after said date. SECTION 15. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.