S.F. 2230 Section 1. Section 505.8, Code Supplement 2011, is amended 1 by adding the following new subsection: 2 NEW SUBSECTION . 6A. The commissioner shall establish 3 a bureau, to be known as the “health insurance and cost 4 containment bureau” , as provided in section 505.20. 5 Sec. 2. NEW SECTION . 505.20 Health insurance and cost 6 containment bureau —— advisory board. 7 1. a. The commissioner shall establish a bureau, to be 8 known as the “health insurance and cost containment bureau” , for 9 the purpose of creating methodologies to hold health carriers 10 accountable for the fair treatment of health care providers and 11 developing affordability standards for health carriers that 12 direct carriers to promote improved accessibility, quality, and 13 affordability of health care. 14 b. The commissioner shall employ professional and clerical 15 staff to carry out the purposes and functions of the bureau. 16 c. The commissioner shall adopt rules under chapter 17A, in 17 collaboration with the health insurance and cost containment 18 advisory board, to administer and implement the purposes and 19 functions of the bureau. 20 2. a. A health insurance and cost containment advisory 21 board is created to assist the commissioner in carrying out 22 the purposes of the bureau. The advisory board shall consist 23 of seven voting members and seven nonvoting members. The 24 voting members shall be appointed by the governor, subject to 25 confirmation by the senate. The governor shall designate one 26 voting member as chairperson and one as vice chairperson. 27 b. The voting members of the advisory board shall be 28 appointed by the governor as follows: 29 (1) Two persons who represent the interests of small 30 business from nominations made to the governor by nationally 31 recognized groups that represent the interests of small 32 business. 33 (2) Two persons who represent the interests of consumers 34 from nominations made to the governor by nationally recognized 35 -1- LSB 5004SS (2) 84 pf/nh 1/ 13

S.F. 2230 groups that represent the interests of consumers. 1 (3) One person who is an insurance producer licensed under 2 chapter 522B. 3 (4) One person who is a health care actuary or economist 4 with expertise in health insurance. 5 (5) One person who is a health care provider. 6 c. The nonvoting members are as follows: 7 (1) The commissioner of insurance or the commissioner’s 8 designee. 9 (2) The director of human services or the director’s 10 designee. 11 (3) The director of public health or the director’s 12 designee. 13 (4) Four members of the general assembly, one appointed 14 by the speaker of the house of representatives, one appointed 15 by the minority leader of the house of representatives, 16 one appointed by the majority leader of the senate, and one 17 appointed by the minority leader of the senate. 18 d. Meetings of the advisory board shall be held at the call 19 of the chairperson or upon the request of at least two voting 20 members. Four voting members shall constitute a quorum and the 21 affirmative vote of four voting members shall be necessary for 22 any action taken by the advisory board. 23 e. The voting members of the advisory board shall be 24 appointed for staggered terms of three years within sixty days 25 after the effective date of this Act and by December 15 of 26 each year thereafter. The initial terms of the voting members 27 of the advisory board shall be staggered at the discretion 28 of the governor. A voting member of the board is eligible 29 for reappointment. The governor shall fill a vacancy on the 30 board in the same manner as the original appointment for the 31 remainder of the term. 32 f. Voting members of the advisory board may be reimbursed 33 from the moneys collected from assessment fees for the 34 administration of the bureau and the advisory board pursuant 35 -2- LSB 5004SS (2) 84 pf/nh 2/ 13

S.F. 2230 to subsection 7, for actual and necessary expenses incurred in 1 the performance of their duties, but shall not be otherwise 2 compensated for their services. 3 g. It shall be the duty of the advisory board to assist the 4 bureau in carrying out the purposes and functions of the bureau 5 by making recommendations for the creation of methodologies 6 that hold health carriers in the state accountable for the fair 7 treatment of health care providers and developing affordability 8 standards for health carriers that direct such carriers to 9 promote improved accessibility, quality, and affordability of 10 health care. The advisory board shall also offer input to the 11 commissioner regarding proposed rules, the operation of the 12 bureau, and any other topics relevant to administering and 13 implementing the purposes and functions of the bureau. 14 3. a. Health care affordability efforts shall initially 15 focus on the primary care level of care in an effort to create a 16 stronger primary care system and greater supply of more highly 17 compensated primary care providers by targeting more funding to 18 primary care. 19 b. Beginning on December 31, 2013, and each year thereafter, 20 each health carrier shall report to the bureau, in a format 21 and including information as required by the commissioner by 22 rule, the carrier’s proportion of medical expense paid for 23 primary care for the previous twelve months and the proportion 24 of medical expense to be allocated to primary care for the 25 succeeding twelve months beginning on January 1, 2014, and each 26 year thereafter. The proportion of medical expense paid for 27 primary care shall increase by at least one percentage point 28 per year for five years beginning on January 1, 2014. 29 c. Each health carrier shall submit a plan to the bureau 30 each year in a format and including information as required by 31 the commissioner by rule, that demonstrates how the increase in 32 spending for primary care will be accomplished. The increase 33 in spending for primary care shall be accomplished without 34 contributing to an increase in premiums. 35 -3- LSB 5004SS (2) 84 pf/nh 3/ 13

S.F. 2230 4. Each health carrier shall support the implementation 1 of the medical home system as developed and implemented by 2 the department of public health and the medical home system 3 advisory council pursuant to sections 135.157, 135.158, and 4 135.159, by implementing the phase of the medical home system 5 pursuant to section 135.159, subsection 11, that involves 6 insurers and self-insured companies in making the medical 7 home system available to individuals with private health care 8 coverage. The health insurance and cost containment advisory 9 board shall work collaboratively with the medical home system 10 advisory council to implement this phase. In addition to the 11 reimbursement methodologies and incentives for participation 12 in the medical home system described in section 135.159, 13 subsection 8, the advisory board and the medical home system 14 advisory council shall review additional payment and system 15 reforms to support the expanded implementation of the medical 16 home system including but not limited to all of the following: 17 a. Rewarding high-quality, low-cost providers. 18 b. Creating participant incentives to receive care from 19 high-quality, low-cost providers. 20 c. Fostering collaboration among providers to reduce cost 21 shifting from one part of the health care continuum to another. 22 d. Creating incentives for providing health care in the 23 least restrictive, most appropriate setting. 24 e. Creating incentives to promote diversity in the size, 25 geographic location, and accessibility of practices designated 26 as medical homes throughout the state. 27 5. Each health carrier shall demonstrate by December 31, 28 2013, implementation of incentives consistent with the efforts 29 of the department of public health and the electronic health 30 information advisory council and executive committee pursuant 31 to section 135.156 to promote adoption of electronic health 32 records by health care providers at all levels of the health 33 care continuum. Health carriers shall submit a report to 34 the bureau by December 31, 2014, concerning the incentive 35 -4- LSB 5004SS (2) 84 pf/nh 4/ 13

S.F. 2230 programs that have been implemented in a format and including 1 information as required by the commissioner by rule. 2 6. Each health carrier shall participate in efforts 3 regarding comprehensive delivery system reform, including 4 payment reform, in coordination with other payers and health 5 care providers. 6 a. As an initial step to inform such efforts, the bureau 7 and advisory board shall develop a plan to implement an 8 all-payer claims database by December 31, 2013, to provide 9 for the collection and analysis of claims data from multiple 10 payers of health care delivered at all levels including but not 11 limited to primary care, specialist care, outpatient surgery, 12 inpatient stays, laboratory testing, and pharmacy data. The 13 plan shall provide for development and implementation of a 14 database that complies with any applicable requirements of the 15 federal Act and that most effectively and efficiently provides 16 data to determine health care utilization patterns and rates; 17 identify gaps in prevention and health promotion services; 18 evaluate access to care; assist with benefit design and 19 planning; analyze statewide and local health care expenditures 20 by provider, employer, and geography; inform the development 21 of payment systems for providers; and establish clinical 22 guidelines related to quality, safety, and continuity of care. 23 The bureau shall submit the plan to the general assembly by 24 December 31, 2012, including statutory changes necessary to 25 collect and use such data, a standard means of collecting 26 the data, an implementation and maintenance schedule, and a 27 proposed budget and financing options for the database. 28 b. The bureau and advisory board shall also recommend a 29 provider payment system plan to reform the health care provider 30 payment system beyond primary care providers, including but 31 not limited to specialty care, hospital, and long-term care 32 providers, as an effective way to promote coordination of care, 33 lower costs, and improve quality. 34 7. a. Funding to operate the bureau and the advisory board 35 -5- LSB 5004SS (2) 84 pf/nh 5/ 13

S.F. 2230 shall come from federal and private grants and from assessment 1 fees charged to health carriers. The commissioner shall charge 2 an assessment fee to all health carriers in this state, as 3 necessary to support the activities and operations of the 4 bureau and the advisory board as provided under this section. 5 No state funding shall be appropriated or allocated for the 6 operation or administration of the bureau or the advisory 7 board. The assessment shall provide for the sharing of bureau 8 and advisory board expenses on an equitable and proportionate 9 basis among health carriers in the state as provided in this 10 subsection. 11 b. Following the close of each calendar year, the 12 commissioner shall determine the expenses for operation and 13 administration of the bureau and the advisory board. The 14 expenses incurred shall be assessed by the commissioner to 15 all health carriers in proportion to their respective shares 16 of total health insurance premiums or payments for subscriber 17 contracts received in Iowa during the second preceding calendar 18 year, or with paid losses in the year, coinciding with or 19 ending during the calendar year or on any other equitable basis 20 as provided by rule. In sharing expenses, the commissioner 21 may abate or defer in any part the assessment of a health 22 carrier, if, in the opinion of the commissioner, payment of the 23 assessment would endanger the ability of the health carrier to 24 fulfill its contractual obligations. The commissioner may also 25 provide for an initial or interim assessment against health 26 carriers if necessary to assure the financial capability of 27 the commissioner to meet the incurred or estimated operating 28 expenses of the bureau and the advisory board until the next 29 calendar year is completed. 30 c. For purposes of this subsection, “total health insurance 31 premiums” and “payments for subscriber contracts” include, 32 without limitation, premiums or other amounts paid to or 33 received by a health carrier for individual and group health 34 plan care coverage provided under any chapter of the Code or 35 -6- LSB 5004SS (2) 84 pf/nh 6/ 13

S.F. 2230 Acts, and “paid losses” includes, without limitation, claims 1 paid by a health carrier operating on a self-funded basis for 2 individual and group health plan care coverage provided under 3 any chapter of the Code or Acts. For purposes of calculating 4 and conducting the assessment, the commissioner shall have 5 the express authority to require health carriers to report on 6 an annual basis each health carrier’s total health insurance 7 premiums and payments for subscriber contracts and paid losses. 8 A health carrier is liable for its share of the assessment 9 calculated in accordance with this subsection regardless of 10 whether it participates in the individual insurance market. 11 8. The commissioner shall keep an accurate accounting of 12 all activities, receipts, and expenditures of the bureau and 13 advisory board and annually submit to the governor, the general 14 assembly, and the public, a report concerning such accounting. 15 9. The bureau and the advisory board shall coordinate their 16 activities with the Iowa Medicaid enterprise of the department 17 of human services, the department of revenue, the department of 18 public health, and the insurance division of the department of 19 commerce to ensure that the state fulfills the requirements of 20 the federal Act and to ensure that in the event that a health 21 insurance exchange is established in the state, the functions 22 and activities of the bureau and the advisory board can be 23 seamlessly integrated into the exchange. 24 10. As used in this section, unless the context otherwise 25 requires: 26 a. “Advisory board” means the health insurance and cost 27 containment advisory board. 28 b. “Bureau” means the health insurance and cost containment 29 bureau. 30 c. “Commissioner” means the commissioner of insurance. 31 d. “Federal Act” means the federal Patient Protection and 32 Affordable Care Act, Pub. L. No. 111-148, as amended by the 33 federal Health Care and Education Reconciliation Act of 2010, 34 Pub. L. No. 111-152, and any amendments thereto, or regulations 35 -7- LSB 5004SS (2) 84 pf/nh 7/ 13

S.F. 2230 or guidance issued under those Acts. 1 e. “Health care provider” means a physician who is licensed 2 under chapter 148, or a person who is licensed as a physician 3 assistant under chapter 148C or as an advanced registered nurse 4 practitioner. 5 f. “Health carrier” means an entity subject to the insurance 6 laws and rules of this state, or subject to the jurisdiction 7 of the commissioner, that contracts or offers to contract to 8 provide, deliver, arrange for, pay for, or reimburse any of 9 the costs of health care services, including an insurance 10 company offering sickness and accident plans, a health 11 maintenance organization, a nonprofit hospital or health 12 service corporation, or any other entity providing a plan of 13 health insurance, health benefits, or health services. 14 g. (1) “Health insurance” means benefits consisting 15 of health care provided directly, through insurance or 16 reimbursement, or otherwise, and including items and services 17 paid for as health care under a hospital or health service 18 policy or certificate, hospital or health service plan 19 contract, or health maintenance organization contract offered 20 by a carrier. 21 (2) “Health insurance” does not include any of the 22 following: 23 (a) Coverage for accident-only or disability income 24 insurance. 25 (b) Coverage issued as a supplement to liability insurance. 26 (c) Liability insurance, including general liability 27 insurance and automobile liability insurance. 28 (d) Workers’ compensation or similar insurance. 29 (e) Automobile medical-payment insurance. 30 (f) Credit-only insurance. 31 (g) Coverage for on-site medical clinic care. 32 (h) Other similar insurance coverage, specified in 33 federal regulations, under which benefits for medical care 34 are secondary or incidental to other insurance coverage or 35 -8- LSB 5004SS (2) 84 pf/nh 8/ 13

S.F. 2230 benefits. 1 (3) “Health insurance” does not include benefits provided 2 under a separate policy as follows: 3 (a) Limited scope dental or vision benefits. 4 (b) Benefits for long-term care, nursing home care, home 5 health care, or community-based care. 6 (c) Any other similar limited benefits as provided by rule 7 of the commissioner. 8 (4) “Health insurance” does not include benefits offered as 9 independent noncoordinated benefits as follows: 10 (a) Coverage only for a specified disease or illness. 11 (b) A hospital indemnity or other fixed indemnity 12 insurance. 13 (5) “Health insurance” does not include Medicare 14 supplemental health insurance as defined under section 15 1882(g)(1) of the federal Social Security Act, coverage 16 supplemental to the coverage provided under 10 U.S.C. ch. 55, 17 or similar supplemental coverage provided to coverage under 18 group health insurance coverage. 19 (6) “Group health insurance coverage” means health insurance 20 offered in connection with a group health plan. 21 Sec. 3. NEW SECTION . 513B.16 Premium rate increases —— 22 public hearing and comment. 23 1. All health insurance carriers licensed to do business 24 in the state under this chapter shall immediately notify the 25 commissioner and policyholders of any proposed rate increase 26 exceeding the average annual health spending growth rate stated 27 in the most recent national health expenditure projection 28 published by the centers for Medicare and Medicaid services of 29 the United States department of health and human services, at 30 least ninety days prior to the effective date of the increase. 31 Such notice shall specify the rate increase proposed that is 32 applicable to each policyholder and shall include ranking and 33 quantification of those factors that are responsible for the 34 amount of the rate increase proposed. The notice shall include 35 -9- LSB 5004SS (2) 84 pf/nh 9/ 13

S.F. 2230 information about how the policyholder can contact the consumer 1 advocate for assistance. 2 2. The commissioner shall hold a public hearing at least 3 thirty days before the proposed rate increase is to take 4 effect. 5 3. The consumer advocate shall solicit public comments on 6 each proposed health insurance rate increase if the increase 7 exceeds the average annual health spending growth rate as 8 provided in subsection 1, and shall post without delay during 9 the normal business hours of the division, all comments 10 received on the insurance division’s internet site prior to the 11 effective date of the increase. 12 4. The consumer advocate shall present the public 13 testimony, if any, and public comments received, for 14 consideration by the commissioner prior to the effective date 15 of the increase. 16 EXPLANATION 17 This bill relates to health care cost containment measures. 18 The bill requires the commissioner of insurance to establish 19 a health insurance and cost containment bureau within 20 the insurance division which is responsible for creating 21 methodologies to hold health carriers accountable for the fair 22 treatment of health care providers and developing affordability 23 standards for health insurance carriers that direct carriers 24 to promote improved accessibility, quality, and affordability 25 of health care. 26 A health insurance and cost containment advisory board 27 is also created to assist the commissioner of insurance in 28 carrying out the purposes of the new bureau. The advisory 29 board is comprised of seven voting members appointed by the 30 governor, subject to confirmation by the senate, and seven 31 nonvoting members. The members shall be appointed within 60 32 days after the effective date of the bill. The voting members 33 are to represent small business, consumers, and insurance 34 producers, and shall include a health care actuary or economist 35 -10- LSB 5004SS (2) 84 pf/nh 10/ 13

S.F. 2230 with expertise in health insurance and a health care provider. 1 The nonvoting members are the commissioner of insurance, the 2 director of human services, and the director of public health, 3 or their designees, and four members of the general assembly 4 appointed by majority and minority leaders in the house of 5 representatives and the senate. 6 Health care affordability efforts must initially focus on 7 primary care to create a stronger primary care system and 8 a greater supply of more highly compensated primary care 9 providers by targeting more funding to primary care. Beginning 10 on December 31, 2013, and each year thereafter, each health 11 insurance carrier in the state is required to report to the 12 bureau the carrier’s proportion of medical expense paid for 13 primary care for the previous 12 months and the proportion 14 of medical expense to be allocated to primary care for the 15 succeeding 12 months beginning on January 1, 2014, and each 16 year thereafter. The proportion of medical expense paid for 17 primary care must increase by at least one percentage point 18 per year for five years beginning on January 1, 2014. Health 19 insurance carriers are also required to submit a plan that 20 demonstrates how the increase in spending for primary care 21 will be accomplished without contributing to an increase in 22 premiums. 23 Health insurance carriers are required to support the 24 implementation of the phase of the medical home system as 25 developed and implemented by the department of public health 26 that involves making the medical home system available 27 to individuals with private health care coverage. The 28 advisory board shall collaborate with the medical home 29 system advisory council to implement this phase and to review 30 additional payment and system reforms to support the expanded 31 implementation of the medical home system. 32 Health insurance carriers are required to demonstrate by 33 December 31, 2013, implementation of incentives consistent 34 with the efforts of the department of public health and the 35 -11- LSB 5004SS (2) 84 pf/nh 11/ 13

S.F. 2230 electronic health information advisory council and executive 1 committee to promote adoption of electronic health records 2 by health care providers at all levels of the health care 3 continuum. Health carriers shall submit a report to the bureau 4 by December 31, 2014, concerning the incentive programs that 5 have been implemented. 6 Health insurance carriers are required to participate in 7 efforts to achieve comprehensive system reform, including 8 payment reform, in coordination with other payers and health 9 care providers. To inform such efforts, the health insurance 10 and cost containment bureau and advisory board shall develop a 11 plan to implement an all-payer claims database by December 31, 12 2013, that provides for the collection and analysis of claims 13 data from multiple payers of health care delivered at all 14 levels. The planned database shall comply with all applicable 15 requirements of the federal Patient Protection and Affordable 16 Care Act. The bureau shall submit the plan to the general 17 assembly by December 31, 2012. The bureau and the advisory 18 board shall also recommend a provider payment system plan to 19 reform the health care provider payment system beyond primary 20 care providers. 21 Funding to operate the new bureau and advisory board shall 22 come from federal and private grants and from assessment fees 23 charged to health insurance carriers as provided in the bill. 24 No state funding shall be appropriated for the operation or 25 administration of the bureau or the advisory board. 26 The commissioner is required to keep an accurate accounting 27 of all activities, receipts, and expenditures of the bureau and 28 advisory board and annually submit a report of such accounting 29 to the governor, the general assembly, and the public. 30 The bureau and the advisory board shall coordinate their 31 activities with the Iowa Medicaid enterprise of the department 32 of human services, the department of revenue, the department 33 of public health, and the insurance division of the department 34 of commerce to ensure that the state fulfills the requirements 35 -12- LSB 5004SS (2) 84 pf/nh 12/ 13

S.F. 2230 of the federal Patient Protection and Affordable Care Act and 1 to ensure that in the event a health insurance exchange is 2 established in the state, the functions and activities of the 3 bureau and the advisory board can be seamlessly integrated into 4 the exchange. 5 The bill also requires that all health insurance carriers 6 licensed in the state to provide health insurance to small 7 employers with two to 50 employees must immediately notify 8 the commissioner and policyholders of any proposed rate 9 increase exceeding the average annual health spending growth 10 rate stated in the most recent national health expenditure 11 projection published by the centers for Medicare and Medicaid 12 services of the United States department of health and human 13 services, at least 90 days prior to the effective date of the 14 increase. The notice must specify the rate increase applicable 15 to each policyholder and rank and quantify the factors that are 16 responsible for the amount of the rate increase proposed. The 17 commissioner is required to hold a public hearing at least 30 18 days before a proposed rate increase is to take effect. The 19 consumer advocate must solicit public comments on each proposed 20 small employer health insurance rate increase and post the 21 comments on the insurance division’s internet site. 22 -13- LSB 5004SS (2) 84 pf/nh 13/ 13