Text: HSB00606 Text: HSB00608 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Section 1. NEW SECTION. 509C.1 HEALTH INSURANCE
1 2 PURCHASING COOPERATIVES – LEGISLATIVE INTENT.
1 3 1. The purpose of authorizing the creation of privately
1 4 established and operated health insurance purchasing
1 5 cooperatives, subject to regulation by the insurance division,
1 6 is to improve the quality, access, and affordability of health
1 7 care by more effectively representing the interests of buyers
1 8 and consumers and creating a value-conscious market.
1 9 2. Health insurance purchasing cooperatives are intended
1 10 to effectively organize buyers of insurance, risk management,
1 11 and health care services to negotiate price and quality with
1 12 sellers of insurance, risk management, and health care
1 13 services, whether the sellers are organized as insurance
1 14 companies, health maintenance organizations, or other legally
1 15 permissible structures.
1 16 Sec. 2. NEW SECTION. 509C.2 DEFINITIONS.
1 17 As used in this chapter, unless the context otherwise
1 18 requires:
1 19 1. "Adjusted community rating" means a method used to
1 20 develop a carrier's premiums which spreads financial risk
1 21 across a large population and allows adjustments only for
1 22 certain demographic factors and family composition as provided
1 23 by state law for insurance carriers providing services to the
1 24 same consumer or as otherwise approved by the commissioner to
1 25 accommodate the unique characteristics of a health insurance
1 26 purchasing cooperative.
1 27 2. "Administrator" means a person or organization charged
1 28 with overseeing the day-to-day operations of a health
1 29 insurance purchasing cooperative.
1 30 3. "Business plan" means the plan of operation of the
1 31 health insurance purchasing cooperative.
1 32 4. "Carrier" means any entity that provides health benefit
1 33 plans in this state. "Carrier" includes an insurance company,
1 34 a hospital or medical service corporation, a fraternal benefit
1 35 society, a health maintenance organization, an organized
2 1 delivery system, and any other entity providing a plan of
2 2 health insurance or health benefits subject to state
2 3 regulation.
2 4 5. "Commissioner" means the commissioner of insurance.
2 5 6. "Division" means the insurance division of the
2 6 department of commerce.
2 7 7. "Health insurance purchasing cooperative" means a group
2 8 of individuals, a group of employers and employees, or a
2 9 combination of individuals and employers and employees who
2 10 join together to purchase health insurance or health care
2 11 benefits.
2 12 8. "Organized delivery system" means a plan authorized
2 13 under 1993 Iowa Acts, chapter 158, and licensed by the
2 14 department of public health.
2 15 9. "Service territory" means any of the following:
2 16 a. A regional health insurance purchasing cooperative as
2 17 identified by the commissioner shall serve a defined regional
2 18 market and shall at a minimum include the surrounding rural
2 19 market of any city included in the regional health insurance
2 20 purchasing cooperative.
2 21 b. A statewide health insurance purchasing cooperative as
2 22 identified by the commissioner shall offer service throughout
2 23 the state. A statewide health insurance purchasing
2 24 cooperative may establish regional service areas, governance,
2 25 and negotiations, provided those structures conform to the
2 26 provisions of paragraph "a".
2 27 10. "Small employer" means a small employer as defined in
2 28 section 513B.2
2 29 11. "Sponsor" means an employer, group of employers, or
2 30 private agent authorized under this chapter to facilitate the
2 31 purchase of insurance and health care services for
2 32 participating employers and employees.
2 33 Sec. 3. NEW SECTION. 509C.3 APPLICABILITY – SCOPE.
2 34 1. This chapter shall apply to all health insurance
2 35 purchasing cooperatives operating in this state. However,
3 1 this chapter shall not apply to any other health insurance or
3 2 health care marketing, distribution, or purchasing mechanism
3 3 otherwise permitted by law.
3 4 2. A health insurance purchasing cooperative under this
3 5 chapter is exempt from any law in this state relating to the
3 6 creation of groups for the purchase of insurance, any
3 7 prohibition of group purchasing, and any law that
3 8 discriminates against a purchasing group or its members. An
3 9 insurer is exempt from any law of the state that prohibits
3 10 providing or offering to provide, to a purchasing group or its
3 11 members, advantages based upon their loss and expense
3 12 experience not afforded to other persons with respect to
3 13 rates, policy forms, coverage, or other matters. A purchasing
3 14 group is subject to all other applicable laws of this state
3 15 including chapter 522B.
3 16 3. An entity not approved by the division as a health
3 17 insurance purchasing cooperative and engaged in the purchase,
3 18 sale, marketing, or distribution of health insurance or health
3 19 care plans shall not hold itself out as a health insurance
3 20 purchasing cooperative, purchasing cooperative, or otherwise
3 21 use a confusingly similar name or marketing materials; and a
3 22 nonapproved entity that does so is in violation of this
3 23 chapter and is subject to penalties under chapter 507B. This
3 24 provision is not intended to restrict the activities of a
3 25 purchasing coalition of self-funded employers that are covered
3 26 by the federal Employee Retirement Income Security Act of
3 27 1974, as codified at 29 U.S.C. } 1001 et seq., and are engaged
3 28 in the purchase of health care from providers on a non-risk-
3 29 bearing basis.
3 30 Sec. 4. NEW SECTION. 509C.4 DIVISION DUTIES –
3 31 APPLICATION – FILING – LICENSE – AUDITS AND EXAMINATIONS.
3 32 1. The division shall regulate the establishment and
3 33 conduct of a health insurance purchasing cooperative as set
3 34 forth in this chapter.
3 35 2. A health insurance purchasing cooperative shall not
4 1 operate in the state without an approved business plan and
4 2 without obtaining a license from the division. An application
4 3 for a license shall be completed and signed by an authorized
4 4 representative of the health insurance purchasing cooperative
4 5 sponsor and proposed health insurance purchasing cooperative
4 6 administrator, if applicable. The completed application for a
4 7 license shall be verified and filed with the division. An
4 8 application shall not be deemed to be filed until all
4 9 information necessary to properly process the application has
4 10 been received by the commissioner. Upon filing, the division
4 11 shall make its determination concerning the application and
4 12 shall provide notice of the determination to the health
4 13 insurance purchasing cooperative. If the application is
4 14 approved, a copy of the approved license shall be provided to
4 15 the health insurance purchasing cooperative sponsor. The
4 16 license shall serve as the health insurance purchasing
4 17 cooperative's authorization to operate until the yearly
4 18 renewal date. Any request for an amendment to the license
4 19 shall be filed in the same manner as the application and
4 20 approved by the commissioner before the change proposed by the
4 21 amendment is effective.
4 22 3. A health insurance purchasing cooperative applying for
4 23 a license or a renewal of a license or operating in the state
4 24 shall file with the division all of the following information
4 25 or documents:
4 26 a. A business plan for approval by the commissioner.
4 27 b. Quarterly financial statements and annual reports on
4 28 forms approved by the commissioner.
4 29 Financial statements and annual reports submitted shall
4 30 provide evidence that allows the commissioner to ensure that
4 31 the health insurance purchasing cooperative is operating in a
4 32 fiscally sound fashion; is not a risk-bearing entity; has
4 33 sound financial controls and money management; and has
4 34 procedures in place to prevent mismanagement or
4 35 misappropriation of funds either through neglect or
5 1 malfeasance.
5 2 c. Reports of any proposed changes in policy or operations
5 3 that constitute material changes in the business plan that was
5 4 the basis of licensure or a renewal of licensure.
5 5 d. Any other information deemed relevant by the
5 6 commissioner.
5 7 4. Failure to provide requested information is a basis for
5 8 denial, suspension, or revocation of a license.
5 9 5. Financial and performance audits or examinations of the
5 10 health insurance purchasing cooperative shall be conducted on
5 11 a regular basis by the commissioner. Failure by a cooperative
5 12 to meet minimum standards in a financial or performance audit
5 13 or examination shall be the basis for license denial,
5 14 suspension, or revocation, or other action to protect
5 15 consumers. The commissioner may impose conditions on
5 16 licensure including, but not limited to, the removal and
5 17 replacement of managerial or marketing staff or contractors to
5 18 remedy compliance or performance problems.
5 19 6. Failure of a health insurance purchasing cooperative to
5 20 comply with the business plan approved by the commissioner may
5 21 constitute a basis for suspension or revocation of the
5 22 cooperative's license.
5 23 7. A cooperative shall submit a request for approval to
5 24 the commissioner on the same basis as the original business
5 25 plan prior to making changes in policy or operations that
5 26 constitute material changes in the business plan.
5 27 Sec. 5. NEW SECTION. 509C.5 FIDELITY BOND – LETTER OF
5 28 CREDIT.
5 29 A health insurance purchasing cooperative shall maintain in
5 30 force a fidelity bond on administrators, employees, and
5 31 officers in an amount not less than one million dollars or
5 32 such greater sum as may be prescribed by the commissioner.
5 33 The fidelity bond shall be in the form prescribed by the
5 34 commissioner. If a health insurance purchasing cooperative
5 35 employs a contract administrator, the administrator shall
6 1 maintain a two hundred fifty thousand dollar letter of credit
6 2 for the term of the contract payable to the health insurance
6 3 purchasing cooperative sponsor. The letter of credit shall be
6 4 in addition to the fidelity bond.
6 5 Sec. 6. NEW SECTION. 509C.6 ANNUAL REPORT.
6 6 The commissioner shall submit an annual report to the
6 7 general assembly no later than February 1 of each year. The
6 8 report shall include a description of the operations of all
6 9 health insurance purchasing cooperatives, and a review of the
6 10 success of health insurance purchasing cooperatives in
6 11 improving the quality, access, or affordability of health
6 12 insurance. The commissioner may require health insurance
6 13 purchasing cooperatives to provide information in a uniform
6 14 format for use in preparing this report and for other public
6 15 purposes.
6 16 Sec. 7. NEW SECTION. 509C.7 BUSINESS PLAN.
6 17 A health insurance purchasing cooperative shall not receive
6 18 a license unless the business plan of the health insurance
6 19 purchasing cooperative has been reviewed and approved by the
6 20 commissioner. The business plan submitted for approval shall
6 21 include but is not limited to the following information:
6 22 1. The specific steps the health insurance purchasing
6 23 cooperative sponsor plans to take to advance cost control,
6 24 quality improvement, and improve access to health insurance or
6 25 health care services. The business plan shall affirmatively
6 26 demonstrate that the health insurance purchasing cooperative
6 27 will reduce cost, improve quality, and improve access to
6 28 health insurance or health care services. The business plan
6 29 shall affirmatively demonstrate that the health insurance
6 30 purchasing cooperative has the technical expertise and
6 31 physical capacity to serve as a significant group of buyers
6 32 not currently being served by a health insurance purchasing
6 33 cooperative. "Significant" means a group of buyers that
6 34 constitutes at least ten percent of the population within the
6 35 proposed service territory.
7 1 2. The scope of health insurance purchasing cooperative
7 2 services that will be offered in the service territory and the
7 3 resources and expertise that will be used by the health
7 4 insurance purchasing cooperative sponsor to implement and
7 5 administer the plan. The health insurance purchasing
7 6 cooperative, as a condition of licensure, must demonstrate the
7 7 technical and physical capacity to serve a significant group
7 8 of buyers over a wide territory, encompassing at minimum a
7 9 regional health care center and its associated rural market.
7 10 The health insurance purchasing cooperative, as a condition of
7 11 licensure, must demonstrate the technical and physical
7 12 capacity to provide equal service quality throughout the
7 13 entire health insurance purchasing cooperative service
7 14 territory.
7 15 3. The corporate charter, bylaws, and other business
7 16 operation documents of the health insurance purchasing
7 17 cooperative. As a condition of licensure, the health
7 18 insurance purchasing cooperative must demonstrate to the
7 19 satisfaction of the commissioner that its corporate governance
7 20 makes it an appropriate and effective representative of
7 21 buyers' interests within the service territory. A health
7 22 insurance purchasing cooperative shall be more than a
7 23 marketing or distribution channel for a single product or the
7 24 products of a single carrier. A health insurance purchasing
7 25 cooperative, as a condition of licensure, must organize and
7 26 facilitate competition between multiple insurers or health
7 27 care providers.
7 28 4. A list of officers and directors of the health
7 29 insurance purchasing cooperative and of the contract
7 30 administrator, if one is employed, and personal biographical
7 31 information or firm descriptions for each person named. The
7 32 officers, directors, or contract administrator of a health
7 33 insurance purchasing cooperative shall not have a prior record
7 34 of administrative, civil, or criminal violations within any
7 35 financial service industry. The personal biographical
8 1 information and firm descriptions submitted shall demonstrate
8 2 by clear and convincing evidence that the persons involved in
8 3 the health insurance purchasing cooperative have the
8 4 expertise, experience, and character to effectively and
8 5 professionally represent buyers in a fiduciary capacity.
8 6 5. Information concerning procedures for accounting,
8 7 deposit, collection, handling, and transfer of moneys.
8 8 Because the health insurance purchasing cooperative may handle
8 9 payments or accounting, the health insurance purchasing
8 10 cooperative shall affirmatively demonstrate the presence of
8 11 adequate financial controls to the satisfaction of the
8 12 commissioner as a condition of licensure. Failure to have
8 13 adequate controls or to follow approved procedures may
8 14 constitute the basis for denial, suspension, or revocation of
8 15 licensure.
8 16 6. The market segments and participants to which the
8 17 health insurance purchasing cooperative will be marketing.
8 18 The health insurance purchasing cooperative shall demonstrate
8 19 to the satisfaction of the commissioner that the cooperative
8 20 will extend health insurance purchasing services to a
8 21 significant group of buyers not currently served by a health
8 22 insurance purchasing cooperative. Failure to achieve this
8 23 result may constitute the basis for denial of an application
8 24 to renew a license of a health insurance purchasing
8 25 cooperative.
8 26 7. Disclosure of any preexisting oral or written
8 27 agreements. Failure to disclose a preexisting oral or written
8 28 agreement may constitute the basis for denial or revocation of
8 29 a license.
8 30 8. Basis and methodology for plan evolution and education
8 31 of participants. A health insurance purchasing cooperative
8 32 shall include details concerning how it will cooperate to
8 33 establish a common basis and methodology for evaluation of
8 34 plans offered and education of participants to facilitate
8 35 informed choices between plans.
9 1 9. Any other information required by the commissioner to
9 2 verify that the health insurance purchasing cooperative is
9 3 qualified to operate in this state.
9 4 Sec. 8. NEW SECTION. 509C.8 PARTICIPANTS.
9 5 1. A health insurance purchasing cooperative may offer
9 6 services to any of the following participants:
9 7 a. Individuals.
9 8 b. A small employer as defined in section 513B.2.
9 9 c. A business with more than fifty employees.
9 10 d. An association and its members.
9 11 e. The state or a local government unit.
9 12 f. Any other purchaser on a voluntary basis.
9 13 2. Underwriting standards shall be no more restrictive
9 14 than those required for small group health insurance under
9 15 chapter 513B.
9 16 3. A health insurance purchasing cooperative's business
9 17 plan may impose conditions or limitations on members, allowing
9 18 the health insurance purchasing cooperative to protect against
9 19 adverse selection. A health insurance purchasing cooperative
9 20 shall accept all entities within its chosen market segment in
9 21 accordance with the regulations governing marketing of
9 22 insurance to that market segment, including but not limited to
9 23 individual, small group, or large group market segments.
9 24 4. A health insurance purchasing cooperative may allow
9 25 persons to participate who reside outside the state or region
9 26 who elect to join for the benefit of representation and
9 27 participation in health insurance or health care benefits only
9 28 when the nonresident employer of the person employs persons
9 29 within the state or region or the person is required to have
9 30 coverage in the state or region due to specific circumstances.
9 31 Sec. 9. NEW SECTION. 509C.9 PRODUCT OFFERINGS –
9 32 EXEMPTIONS.
9 33 1. A health insurance purchasing cooperative shall offer
9 34 at least one indemnity plan which provides the unrestricted
9 35 choice of a physician. However, the indemnity plan may
10 1 require an appropriate utilization review, preauthorization of
10 2 treatments, or other reasonable cost and utilization oversight
10 3 of the indemnity plan.
10 4 2. All small employer group carriers participating in a
10 5 health insurance purchasing cooperative shall offer a basic
10 6 and a standard benefit plan.
10 7 3. A health insurance purchasing cooperative is not
10 8 required to but may offer an employer-choice managed health
10 9 care plan. A health insurance purchasing cooperative may also
10 10 offer more than one indemnity plan.
10 11 4. A health insurance purchasing cooperative shall not
10 12 offer insurance from a risk retention group not chartered in
10 13 the state or from a carrier not admitted in the state.
10 14 5. A health insurance purchasing cooperative shall retain
10 15 agents who are licensed pursuant to the laws of this state if
10 16 the health insurance purchasing cooperative markets the
10 17 products of the health insurance purchasing cooperative
10 18 through sales agents or representatives. Alternatively, if
10 19 the health insurance purchasing cooperative does not use sales
10 20 agents or representatives, the health insurance purchasing
10 21 cooperative shall demonstrate, to the satisfaction of the
10 22 commissioner, that the alternative will provide consumer
10 23 service to participants that meets the same standards as that
10 24 required of sales agents.
10 25 6. A participating health plan is not required to be
10 26 offered outside of the health insurance purchasing cooperative
10 27 but may be offered through other distribution or marketing
10 28 channels. An entity shall not be licensed as a health
10 29 insurance purchasing cooperative if the entity offers only one
10 30 health plan or the products of only one carrier or related
10 31 carriers.
10 32 Sec. 10. NEW SECTION. 509C.10 INSURANCE RISK.
10 33 A health insurance purchasing cooperative shall not bear
10 34 insurance risk. A health insurance purchasing cooperative
10 35 shall facilitate the purchase of insurance and health care
11 1 services. Provisions for participants of the health insurance
11 2 purchasing cooperative to retain risk through deductibles,
11 3 retention levels, or partial or complete self-funding shall be
11 4 disclosed to the participants and shall be subject to approval
11 5 by the commissioner prior to their implementation to ensure
11 6 that risk is not borne by the health insurance purchasing
11 7 cooperative.
11 8 Sec. 11. NEW SECTION. 509C.11 RATES.
11 9 1. A carrier shall use rate restrictions and regulations
11 10 applicable to each market segment to be served by the health
11 11 insurance purchasing cooperative.
11 12 2. A health insurance purchasing cooperative may collect a
11 13 different premium from participants of the health insurance
11 14 purchasing cooperative than the carrier collects from persons
11 15 that do not participate in a health insurance purchasing
11 16 cooperative.
11 17 Sec. 12. NEW SECTION. 509C.12 ELECTION – DISCLOSURE AND
11 18 CONFIDENTIALITY.
11 19 1. A health insurance purchasing cooperative may elect to
11 20 preclude a participant who leaves the health insurance
11 21 purchasing cooperative from returning to the health insurance
11 22 purchasing cooperative to purchase health insurance or health
11 23 care benefits for a period of time. However, a health
11 24 insurance purchasing cooperative shall not use this provision
11 25 to discriminate against high-risk participants.
11 26 2. Subject to review and approval by the commissioner, a
11 27 health insurance purchasing cooperative may restrict access to
11 28 information in its possession that is essential to the
11 29 operation of the health insurance purchasing cooperative.
11 30 Restriction of access to information shall be allowed for the
11 31 following reasons:
11 32 a. To induce voluntary participation in the health
11 33 insurance purchasing cooperative.
11 34 b. To protect the privacy of participants.
11 35 c. To protect the negotiating strategy of the health
12 1 insurance purchasing cooperative from disclosure to
12 2 contractors or competitors.
12 3 d. To protect proprietary information in like
12 4 circumstances as those that are applicable to carriers.
12 5 Sec. 13. NEW SECTION. 509C.13 STRUCTURE – MERGER AND
12 6 CONSOLIDATION.
12 7 1. A health insurance purchasing cooperative shall be a
12 8 legal entity that operates on behalf of its sponsor or
12 9 participants.
12 10 2. A health insurance purchasing cooperative shall
12 11 disclose its total administrative cost in its annual report to
12 12 the commissioner in the same manner and on the same basis as
12 13 carriers.
12 14 3. Any change in control, a merger, or an acquisition of a
12 15 health insurance purchasing cooperative is subject to the
12 16 prior review and approval of the commissioner on the same
12 17 terms as a change in control, a merger, or an acquisition of
12 18 an Iowa domestic insurance company.
12 19 Sec. 14. NEW SECTION. 509C.14 CONFLICT OF INTEREST.
12 20 1. Health care providers or insurers that offer competing
12 21 products within the same service territory shall not
12 22 participate in a health insurance purchasing cooperative as
12 23 sponsors. A health insurance purchasing cooperative sponsor
12 24 employing a health insurance purchasing cooperative
12 25 administrator that offers competing products within the same
12 26 service territory shall demonstrate to the satisfaction of the
12 27 commissioner what precautions have been taken to protect the
12 28 health insurance purchasing cooperative from unfair
12 29 competition or disclosure of proprietary information by the
12 30 administrator.
12 31 2. A health insurance purchasing cooperative sponsor shall
12 32 not be an employee of, be affiliated with, or be a subsidiary
12 33 of a health care provider or insurer that offers competing
12 34 products within the same service territory.
12 35 3. The employees of a health care provider or insurer may
13 1 receive services through a health insurance purchasing
13 2 cooperative. The health care provider or insurer that is a
13 3 participant in a health insurance purchasing cooperative may
13 4 vote in corporate governance elections of officers and
13 5 directors. However, a health care provider or insurer or an
13 6 employee of a health care provider or insurer shall not serve
13 7 as an officer of a health insurance purchasing cooperative. A
13 8 health care provider or insurer or the employee of a health
13 9 care provider or insurer may be a director of a health
13 10 insurance purchasing cooperative or a health insurance
13 11 purchasing cooperative sponsor, but such persons shall not
13 12 constitute a majority of the governing board or body of a
13 13 health insurance purchasing cooperative or a health insurance
13 14 purchasing cooperative sponsor.
13 15 4. Compensation payable to a health insurance purchasing
13 16 cooperative's sponsor, administrator, or agents shall not vary
13 17 based upon the plan selected by participating members.
13 18 Sec. 15. NEW SECTION. 509C.15 NONDISCRIMINATION AND
13 19 RETALIATORY PROTECTIONS.
13 20 An insurer shall not discriminate against or take
13 21 retaliatory action against a participant employer, employee,
13 22 agent, sponsor, or administrator of a health insurance
13 23 purchasing cooperative. A health insurance purchasing
13 24 cooperative shall not discriminate against or take retaliatory
13 25 actions against an insurer or agent for activities relating to
13 26 the health insurance purchasing cooperative.
13 27 Sec. 16. NEW SECTION. 509C.16 ANNUAL HEALTH INSURANCE OR
13 28 HEALTH CARE BENEFITS PLAN SELECTION.
13 29 A person who desires to participate in a health insurance
13 30 purchasing cooperative shall join when the plan is first
13 31 offered to the person or at the time of the annual opportunity
13 32 to enroll or to change health insurance or health care
13 33 benefits. A health insurance purchasing cooperative shall
13 34 offer participants an opportunity at least once annually to
13 35 change health insurance or health care benefits. A health
14 1 insurance purchasing cooperative shall determine whether a
14 2 change in health insurance or health care benefits may be made
14 3 by the individual employees of an employer participant or by
14 4 the employer participant on behalf of the employer's
14 5 employees. A health insurance purchasing cooperative shall
14 6 provide pertinent available information to participants and to
14 7 potential participants, including cost and quality of risk
14 8 management services on health insurance and health care
14 9 benefits offered to assist the participants in making an
14 10 informed decision in the selection of health insurance or
14 11 health care benefits.
14 12 Sec. 17. NEW SECTION. 509C.17 LICENSE SUBJECT TO
14 13 CONDITIONS – WAIVERS.
14 14 1. The commissioner may limit the number of health
14 15 insurance purchasing cooperative licenses issued within a
14 16 geographic service territory. A health insurance purchasing
14 17 cooperative applying for a license shall demonstrate to the
14 18 commissioner that it is probable that the health insurance
14 19 purchasing cooperative will be successful in representing a
14 20 substantial share of the purchasers within the proposed
14 21 service territory and that it is likely the health insurance
14 22 purchasing cooperative will represent substantial shares of
14 23 the purchasers that are not already served by existing health
14 24 insurance purchasing cooperatives within the same service
14 25 territory. The commissioner may refuse to renew a license or
14 26 impose conditions on the license of a health insurance
14 27 purchasing cooperative that has failed in actual operations to
14 28 achieve these results during the term of the license.
14 29 2. Existing health insurance purchasing cooperatives may
14 30 present evidence to the commissioner concerning the
14 31 anticipated impact of licensing a new health insurance
14 32 purchasing cooperative within their geographic service
14 33 territory to resist the issuance of an additional licensee.
14 34 Evidence presented by an existing health insurance purchasing
14 35 cooperative shall include but is not limited to evidence that
15 1 a new health insurance purchasing cooperative will use risk
15 2 selection against an existing health insurance purchasing
15 3 cooperative and that a new health insurance purchasing
15 4 cooperative will adversely dilute the market leverage of an
15 5 existing health insurance purchasing cooperative. The
15 6 commissioner shall provide notice to existing health insurance
15 7 purchasing cooperatives that an applicant has applied for a
15 8 license to operate within their geographic service territory.
15 9 Existing health insurance purchasing cooperatives shall file
15 10 notice with the commissioner of intent to submit evidence in
15 11 resistance to a licensing application within ten days of
15 12 receipt of notice of such application. Existing health
15 13 insurance purchasing cooperatives may request a hearing with
15 14 the commissioner or submit evidence in writing.
15 15 3. The commissioner may impose risk adjustments between
15 16 health insurance purchasing cooperatives within a geographic
15 17 service area or between all health insurance purchasing
15 18 cooperatives within the state to ensure that competition is
15 19 based on service and effective cost and quality control and
15 20 not on risk selection.
15 21 4. The commissioner may impose additional conditions to
15 22 protect the interests of participating buyers and consumers,
15 23 to ensure fair and efficient conduct of health insurance
15 24 purchasing cooperative duties, and to protect health insurance
15 25 purchasing cooperatives from adverse selection by participants
15 26 or from bearing insurance risk.
15 27 5. The commissioner may impose additional conditions or
15 28 waive restrictions on a health insurance purchasing
15 29 cooperative for a specified period of time to facilitate
15 30 orderly market transition to reform upon a showing of
15 31 necessity by the applicant health insurance purchasing
15 32 cooperative or upon the commissioner's own initiative.
15 33 Sec. 18. NEW SECTION. 509C.18 PROCEDURES.
15 34 Actions by a health insurance purchasing cooperative before
15 35 the division or the commissioner shall conform to the
16 1 procedures set forth in the administrative rules of the
16 2 division.
16 3 Sec. 19. NEW SECTION. 509C.19 DATA COLLECTION – QUALITY
16 4 EVALUATION.
16 5 1. A health insurance purchasing cooperative shall conduct
16 6 a qualitative review of plans offered through the health
16 7 insurance purchasing cooperative in order to provide
16 8 participating employers and employees an accurate comparative
16 9 analysis of cost, quality, access, relative value, service,
16 10 and customer satisfaction. The division may require health
16 11 insurance purchasing cooperatives to cooperate in establishing
16 12 a common basis and methodology for plan evaluation and
16 13 participant education to facilitate informed choices between
16 14 plans by participants. A health insurance purchasing
16 15 cooperative shall detail in its proposed business plan the
16 16 methodologies and resources it intends to employ to satisfy
16 17 this requirement. A health insurance purchasing cooperative
16 18 shall produce an annual report card on the performance of
16 19 participating plans.
16 20 2. The commissioner may establish data reporting standards
16 21 to permit the objective evaluation of health insurance
16 22 purchasing cooperatives and their impact on health care costs,
16 23 quality, and access.
16 24 Sec. 20. NEW SECTION. 509C.20 EXAMINATION COSTS.
16 25 The commissioner shall conduct an audit or examination of a
16 26 health insurance purchasing cooperative and may require the
16 27 most recent audited financial statements from the
16 28 administrator, if applicable, and such other interim evidence
16 29 as the commissioner deems appropriate. Reasonable costs of
16 30 the examination or audit are to be paid by the health
16 31 insurance purchasing cooperative. The examination or audit
16 32 shall include, but not be limited to, premium collection,
16 33 marketing practices, and financial condition of the health
16 34 insurance purchasing cooperative.
16 35 Sec. 21. NEW SECTION. 509C.21 TRADE PRACTICES.
17 1 A health insurance purchasing cooperative shall be subject
17 2 to chapter 507B, relating to insurance trade practices.
17 3 Sec. 22. NEW SECTION. 509C.22 GROUNDS FOR DENIAL,
17 4 NONRENEWAL, SUSPENSION, OR REVOCATION OF CERTIFICATE.
17 5 1. Actions or failures to act on any of the following
17 6 constitute grounds for denial, nonrenewal, suspension, or
17 7 revocation of a health insurance purchasing cooperative's
17 8 license:
17 9 a. Failing to comply with any provisions of this chapter
17 10 or the rules adopted pursuant to this chapter.
17 11 b. Failure to comply with any lawful order of the
17 12 commissioner.
17 13 c. Committing an unfair or deceptive act or practice as
17 14 defined in chapter 507B.
17 15 d. Filing any necessary form with the division which
17 16 contains fraudulent information or omission.
17 17 e. Misappropriating, converting, illegally withholding, or
17 18 refusing to pay over upon proper demand any moneys that belong
17 19 to a person or health care carrier or any organized delivery
17 20 system or to which the health insurance purchasing cooperative
17 21 is otherwise not entitled and that have been entrusted to the
17 22 health insurance purchasing cooperative in its fiduciary
17 23 capacity.
17 24 f. Failing to demonstrate through clear and convincing
17 25 evidence that it will extend health insurance purchasing
17 26 cooperative services to a significant group of buyers not
17 27 currently being served by a health insurance purchasing
17 28 cooperative.
17 29 g. Failing to demonstrate through clear and convincing
17 30 evidence that it will reduce the cost, improve the quality,
17 31 and improve access to or choice of affordable health insurance
17 32 or health care services.
17 33 2. In addition, an application for a license to operate a
17 34 health insurance purchasing cooperative may be denied upon a
17 35 finding by the commissioner that a sufficient number of health
18 1 insurance purchasing cooperatives are licensed within a
18 2 geographic service territory and that an additional health
18 3 insurance purchasing cooperative would adversely affect
18 4 existing health insurance purchasing cooperatives.
18 5 Sec. 23. NEW SECTION. 509C.23 HEARING AND APPEAL.
18 6 Prior to denying an application for a license or an
18 7 application for renewal of a license or suspending or revoking
18 8 a license issued under this chapter, a license holder shall be
18 9 provided with written notice of the commissioner's decision
18 10 and provided an opportunity for a hearing and a right to
18 11 appeal.
18 12 Sec. 24. NEW SECTION. 509C.24 SOLVENCY.
18 13 If a health insurance purchasing cooperative becomes
18 14 insolvent, the commissioner shall maintain jurisdiction of the
18 15 health insurance purchasing cooperative for purposes of
18 16 protecting the interests of the health insurance purchasing
18 17 cooperative's participants and health insurance carriers and
18 18 health benefit plans pursuant to the provisions of chapter
18 19 507C.
18 20 Sec. 25. NEW SECTION. 509C.25 RULES.
18 21 The commissioner may adopt rules as necessary to administer
18 22 this chapter.
18 23 Sec. 26. 1993 Iowa Acts, chapter 158, section 2, is
18 24 repealed.
18 25 EXPLANATION
18 26 This bill authorizes the insurance commissioner to create a
18 27 licensing procedure for establishing private health insurance
18 28 purchasing cooperatives. The bill defines a "health insurance
18 29 purchasing cooperative" (HIPC) as a group of individuals, a
18 30 group of employers and employees, or a group of individuals
18 31 and employers and employees who join together to purchase
18 32 health insurance or health care benefits. The bill exempts an
18 33 HIPC from any state laws relating to the creation of groups
18 34 for the purchase of insurance, any prohibition of group
18 35 purchasing or any law that discriminates against such a group
19 1 or its members or that prohibits offering special advantages
19 2 to a purchasing group or its members not available to other
19 3 persons with respect to rates, policy forms, coverage, or
19 4 other matters.
19 5 The bill requires the insurance division to regulate the
19 6 establishment and conduct of an HIPC by requiring an approved
19 7 license to operate, and requiring the filing of documents or
19 8 information with the insurance division, including an approved
19 9 business plan, quarterly financial statements and annual
19 10 reports, reports of material changes in the HIPC business plan
19 11 or operation, and any other information deemed pertinent by
19 12 the commissioner. The bill provides that the insurance
19 13 division shall conduct regular financial and performance
19 14 audits of the HIPC and that the HIPC's failure to meet minimum
19 15 standards may result in license denial, suspension, or
19 16 revocation or other actions to protect consumers.
19 17 The bill requires the HIPC to maintain a fidelity bond of
19 18 not less than $1,000,000 and an additional $250,000 letter of
19 19 credit if the HIPC employs a contract administrator.
19 20 The bill requires the insurance commissioner to submit an
19 21 annual report to the general assembly by February 1 concerning
19 22 the operation and success of any HIPCs in the state.
19 23 The bill requires the HIPC to submit its business plan,
19 24 including specific required information, to the commissioner
19 25 for review and approval before the HIPC can be licensed.
19 26 The bill allows an HIPC to offer services to individuals, a
19 27 small business as defined in Code chapter 513B, a business
19 28 with more than 50 employees, and association and its members,
19 29 the state or a local government unit, or any other purchaser
19 30 on a voluntary basis. An HIPC may impose conditions or
19 31 limitations on members leaving the HIPC and may provide
19 32 services to participants who are out of state or out of region
19 33 only when an employer of such participants has employees
19 34 within the state or region or an individual is required to
19 35 have coverage in the state or region due to specific
20 1 circumstances.
20 2 The bill requires HIPCs to offer at least one indemnity
20 3 plan that provides an unrestricted choice of a physician,
20 4 requires small employer group carriers in HIPCs to offer a
20 5 basic and standard benefit plan, and allows an HIPC to offer
20 6 an employer-choice managed health care plan. An HIPC cannot
20 7 offer insurance from a risk retention group not chartered in
20 8 the state and must retain agents who are licensed in Iowa, or
20 9 if no agents are used, must demonstrate to the commissioner
20 10 that an alternative can provide similar customer service. A
20 11 participating health plan is not required to be offered
20 12 outside of the HIPC but an entity cannot be licensed as an
20 13 HIPC if it offers only one health plan or the products of only
20 14 one carrier or related carriers.
20 15 The bill requires carriers to use rate restrictions and
20 16 regulations applicable to each market segment and to collect a
20 17 different premium within the HIPC than the carrier would
20 18 charge outside the HIPC.
20 19 The bill allows an HIPC to preclude participants who leave
20 20 the HIPC from returning but not to use such a provision to
20 21 discriminate against high-risk participants. The bill allows
20 22 an HIPC to provide restricted access to information in its
20 23 possession that is essential to its operation so long as such
20 24 confidentiality is an inducement for voluntary participation
20 25 in the program, protects participants' privacy, protects
20 26 negotiating strategy from disclosure to contractors or
20 27 competitors, or protects proprietary information under the
20 28 same circumstances as for insurance.
20 29 The bill provides that a health care provider or insurer
20 30 offering competing products within the same service area shall
20 31 not participate in an HIPC as a sponsor and an HIPC sponsor
20 32 that employs an HIPC administrator that offers competing
20 33 products within the same service territory must demonstrate to
20 34 the commissioner that precautions have been taken to protect
20 35 the HIPC from unfair competition or disclosure of proprietary
21 1 information. An HIPC sponsor shall not be an employee or be
21 2 affiliated with or a subsidiary of a health care provider or
21 3 insurer offering competing products within the same service
21 4 area.
21 5 The bill provides that employees of a health care provider
21 6 or insurer may receive services through an HIPC but a health
21 7 care provider, insurer, or employee of a health care provider
21 8 or insurer cannot serve as an officer of an HIPC. A health
21 9 care provider or insurer or an employee of the same may be a
21 10 director of an HIPC, but such persons shall not constitute a
21 11 majority of the governing board or body of an HIPC or HIPC
21 12 sponsor.
21 13 The bill provides that insurers shall not discriminate or
21 14 retaliate against a participant employer, employee, agent,
21 15 sponsor, or administrator of an HIPC and that an HIPC shall
21 16 not discriminate against or retaliate against an insurer or
21 17 agent for activities relating to HIPCs.
21 18 The bill provides that HIPCs must offer participants at
21 19 least an annual opportunity to change health insurance or
21 20 health care benefits and shall determine whether changes may
21 21 be made by individual employees of an employer participant or
21 22 by the employer participant on behalf of the employer's
21 23 employees. The HIPC is required to provide pertinent
21 24 information to assist the participants in making an informed
21 25 decision. The bill provides that a new participating buyer
21 26 must join when the plan is offered to them or at the annual
21 27 open enrollment.
21 28 The bill provides that the commissioner may limit the
21 29 number of HIPCs licensed within a geographic service territory
21 30 and must give notice to existing HIPCs of an application for a
21 31 new HIPC so that existing HIPCs may resist the application by
21 32 providing evidence of the anticipated impact of another
21 33 licensee. The bill also provides that the commissioner may
21 34 impose risk adjustments between HIPCs within a geographic
21 35 service territory or within the state to ensure competition
22 1 and effective cost and quality control and may impose
22 2 additional conditions on HIPCs to protect the interests of
22 3 participants and buyers, to ensure fair and efficient conduct
22 4 of HIPC duties, and to protect HIPCs from adverse selection or
22 5 bearing insurance risk, and may impose or waive additional
22 6 restrictions to facilitate orderly market transition to
22 7 reform.
22 8 The bill allows the commissioner to set forth pertinent
22 9 procedures relating to HIPCs by rule.
22 10 The bill requires HIPCs to conduct and provide qualitative
22 11 reviews of plans offered through the HIPC to participating
22 12 employers and employees that give an accurate comparative
22 13 analysis of cost, quality, access, relative value, service,
22 14 and customer satisfaction. The bill authorizes the insurance
22 15 division to require HIPCs to cooperate in establishing a
22 16 common basis and methodology for plan evaluation and customer
22 17 education to facilitate an informed choice between plans and
22 18 to establish data reporting standards to permit the objective
22 19 evaluation of HIPCs and their impact on health care costs,
22 20 quality, and access.
22 21 The bill provides that HIPCs are subject to the
22 22 requirements of Code chapter 507B concerning unfair
22 23 competition or unfair or deceptive acts or practices in the
22 24 business of insurance.
22 25 The bill sets forth the grounds that constitute a basis for
22 26 denial, nonrenewal, suspension, or revocation of an HIPC's
22 27 certificate following notice and an opportunity for hearing as
22 28 the following: failing to comply with any provisions of the
22 29 bill or rules adopted pursuant to those provisions; failing to
22 30 comply with any lawful order of the commissioner; committing
22 31 an unfair or deceptive act or practice as defined in Code
22 32 chapter 507B; filing a necessary form that contains either
22 33 fraudulent information or omission; misappropriating,
22 34 converting, illegally withholding, or refusing to pay over
22 35 moneys upon proper demand that belong to a person or health
23 1 care carrier or an organized delivery system or to which the
23 2 HIPC is not otherwise entitled and that have been entrusted to
23 3 the HIPC in its fiduciary capacity; failing to demonstrate
23 4 through clear and convincing evidence that the HIPC will
23 5 extend health insurance purchasing power to a significant
23 6 group of buyers not currently being served by an HIPC; or
23 7 failing to demonstrate through clear and convincing evidence
23 8 that the HIPC will reduce the cost, improve the quality, and
23 9 improve access to or choice of affordable health insurance or
23 10 health care services. The bill also allows the commissioner
23 11 to deny an HIPC's application for certification upon a finding
23 12 that a sufficient number of HIPCs are already licensed within
23 13 a geographic area and the licensing of an additional HIPC
23 14 would adversely affect the existing HIPCs.
23 15 The bill also provides that prior to denying an application
23 16 or renewal application, or suspending or revoking a
23 17 certificate issued under the provisions of the bill, a
23 18 certificate holder must be provided with written notice of the
23 19 commissioner's decision and an opportunity for a hearing and a
23 20 right to appeal.
23 21 The bill also provides that if an HIPC becomes insolvent,
23 22 the insurance division shall maintain jurisdiction of the HIPC
23 23 for purposes of protecting the interests of the HIPC's
23 24 participants, health insurance carriers, and health benefit
23 25 plans pursuant to the provisions of Code chapter 507C
23 26 concerning supervision, rehabilitation, and liquidation of
23 27 insurers.
23 28 The bill also repeals 1993 Iowa Acts, chapter 158, section
23 29 2, that directed the insurance commissioner to adopt rules and
23 30 a licensing procedure for establishing health insurance
23 31 purchasing cooperative projects.
23 32 LSB 5578HC 80
23 33 av/sh/8
Text: HSB00606 Text: HSB00608 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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