S T A T E O F N E W Y O R K
________________________________________________________________________
4688
2009-2010 Regular Sessions
I N A S S E M B L Y
February 5, 2009
___________
Introduced by M. of A. MORELLE, LANCMAN, CYMBROWITZ, PERRY, KOON, ALES-
SI, GALEF, STIRPE, SCHIMEL, CHRISTENSEN, MAISEL, DelMONTE, EDDINGTON,
GREENE, CUSICK, SEMINERIO, LUPARDO, GABRYSZAK, TITONE, PHEFFER --
Multi-Sponsored by -- M. of A. BENJAMIN, BING, MAGNARELLI, WEISENBERG
-- read once and referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to premium rates for
health insurance; to amend the insurance law and the public health
law, in relation to coverage of services of participating providers;
and to amend the insurance law, in relation to the fair and equitable
settlement of claims for health care and payments for health services
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. This act shall be known and may be cited as the "health
insurance premium integrity act".
S 2. Subsection (e) of section 3231 of the insurance law, as added by
chapter 501 of the laws of 1992, is amended to read as follows:
(e) (1) DEFINITIONS. FOR PURPOSES OF THIS SUBSECTION: (A) "POLICY
FORM" SHALL MEAN A POLICY OR POLICIES AND ASSOCIATED RIDERS WHOSE EXPE-
RIENCE HAS BEEN POOLED IN ORDER TO DETERMINE RATES FOR EACH POLICY AND
EACH RIDER;
(B) "LOSS RATIO" SHALL MEAN THE RATIO OF DIRECT CLAIMS INCURRED FOR
THE REPORTING CALENDAR YEAR TO DIRECT PREMIUMS EARNED FOR THE SAME
REPORTING CALENDAR YEAR, EXPRESSED AS A PERCENTAGE;
(C) "DIRECT CLAIMS INCURRED" SHALL MEAN CLAIMS PAID DURING THE REPORT-
ING CALENDAR YEAR PLUS THE UNPAID CLAIMS RESERVE AT THE END OF THE
REPORTING CALENDAR YEAR AND CALCULATED CONSISTENT WITH SUBPARAGRAPH (C)
OF PARAGRAPH THREE OF THIS SUBSECTION;
(D) "DIRECT PREMIUMS EARNED" SHALL MEAN PREMIUMS WRITTEN DURING THE
REPORTING CALENDAR YEAR PLUS THE UNEARNED PREMIUMS AT THE BEGINNING OF
THE YEAR LESS THE UNEARNED PREMIUMS AT THE END OF THE YEAR, EXCLUSIVE OF
REINSURANCE ASSUMED OR CEDED; AND
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD07620-01-9
A. 4688 2
(E) "SMALL GROUP" SHALL MEAN A GROUP POLICY THAT IS SUBJECT TO THE
REQUIREMENTS OF THIS SECTION.
(2) An insurer desiring to increase or decrease premiums after April
first, nineteen hundred ninety-three for any policy form subject to this
section shall submit a rate filing or application to the superintendent.
The superintendent shall determine whether the filing or application
shall become effective as filed, shall become effective as modified, or
shall be disapproved.
[(2)] (3) (A) Beginning October first, nineteen hundred ninety-four,
as an alternate procedure to the requirements of paragraph [one] TWO of
this subsection, an insurer desiring to increase or decrease premiums
for any policy form subject to this section may instead submit a rate
filing or application to the superintendent and such application or
filing shall be deemed approved, provided that (i) the anticipated mini-
mum loss ratio [for a policy form] shall not be less than seventy-five
percent of the premium FOR AN INDIVIDUAL HEALTH INSURANCE POLICY AND NOT
LESS THAN EIGHTY PERCENT OF THE PREMIUM FOR A SMALL GROUP HEALTH INSUR-
ANCE POLICY, and (ii) the insurer submits, as part of such filing, a
certification by a member of the American Academy of Actuaries or other
individual acceptable to the superintendent that the insurer is in
compliance with the provisions of this paragraph, based upon that
person's examination, including a review of the appropriate records and
of the actuarial assumptions and methods used by the insurer in estab-
lishing premium rates for policy forms subject to this section. SUCH
CERTIFICATION SHALL AFFIRM THAT THE RATE FILING OR APPLICATION SUBMITTED
TO THE SUPERINTENDENT PURSUANT TO THIS SUBSECTION WAS PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACTUARIAL PRINCIPLES AND THIS
SECTION. THE INSURER SHALL, AT THE REQUEST OF THE SUPERINTENDENT,
PROVIDE ADDITIONAL UNDERLYING ACTUARIAL DOCUMENTATION TO SUPPORT THE
RATE FILING OR APPLICATION. PROVIDED, HOWEVER, THE REQUEST FOR SUCH
INFORMATION SHALL NOT PRECLUDE THE NEW PREMIUM RATE FROM GOING INTO
EFFECT.
(B) Each calendar year, an insurer shall return, in the form of aggre-
gate benefits for each policy form filed pursuant to the alternate
procedure set forth in this paragraph at least seventy-five percent of
the aggregate premiums collected for the INDIVIDUAL HEALTH INSURANCE
policy form during that calendar year, OR EIGHTY PERCENT OF THE AGGRE-
GATE PREMIUMS COLLECTED FOR A SMALL GROUP HEALTH INSURANCE POLICY FORM
DURING THAT CALENDAR YEAR. IF AN INSURER HAS POOLED THE EXPERIENCE OF
POLICIES AND/OR RIDERS TO DETERMINE THE PREMIUM RATES, IN ACCORDANCE
WITH APPLICABLE LAW, THE INSURER SHALL CALCULATE THE LOSS RATIOS IN
ACCORDANCE WITH THE MANNER IN WHICH IT ESTABLISHED THE PREMIUM RATES.
Insurers shall annually report, no later than [May] AUGUST first of each
year, the loss ratio calculated pursuant to this paragraph for each such
policy form for the previous calendar year. In each case where the loss
ratio for a policy form fails to comply with the seventy-five percent
loss ratio requirement FOR AN INDIVIDUAL HEALTH INSURANCE POLICY, OR THE
EIGHTY PERCENT MINIMUM LOSS RATIO REQUIREMENT FOR A SMALL GROUP HEALTH
INSURANCE POLICY, AS SET FORTH IN THIS PARAGRAPH, the insurer shall
issue a dividend or credit against future premiums for all policy hold-
ers with that policy form in an amount sufficient to assure that the
aggregate benefits paid in the previous calendar year plus the amount of
the dividends and credits shall equal seventy-five percent of the aggre-
gate premiums collected for [the] AN INDIVIDUAL HEALTH INSURANCE policy
form AND EIGHTY PERCENT OF THE AGGREGATE PREMIUM COLLECTED FOR A SMALL
GROUP HEALTH INSURANCE POLICY FORM in the previous calendar year. The
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dividend or credit shall be issued to each policy which was in effect as
of December thirty-first of the applicable year [and remains in effect
as of the date the dividend or credit is issued]. All dividends and
credits must be distributed by September thirtieth of the year following
the calendar year in which the loss ratio requirements were not satis-
fied. AN INSURER SHALL MAKE A REASONABLE EFFORT TO IDENTIFY THE CURRENT
ADDRESS OF THOSE POLICY HOLDERS WHO ARE NO LONGER POLICY HOLDERS WHEN
THE DIVIDEND OR CREDIT IS ISSUED. The annual report required by this
paragraph shall include an insurer's calculation of the dividends and
credits, as well as an explanation of the insurer's plan to issue divi-
dends or credits. The instructions and format for calculating and
reporting loss ratios and issuing dividends or credits shall be speci-
fied by the superintendent by regulation. Such regulations shall
include provisions for the distribution of a dividend or credit in the
event of cancellation or termination by a policy holder.
(C) DIRECT CLAIMS INCURRED FOR USE IN TESTING LOSS RATIO COMPLIANCE
UNDER THIS PARAGRAPH SHALL BE CALCULATED AS FOLLOWS: (I) THE CLAIMS PAID
DURING THE REPORTING CALENDAR YEAR; PLUS (II) CAPITATION PAYMENTS PAID
FOR SERVICES TO BE RENDERED DURING THE REPORTING CALENDAR YEAR; PLUS
(III) THE UNPAID CLAIM RESERVE AT THE END OF THE REPORTING CALENDAR YEAR
WHICH SHALL BE CALCULATED AS THE SUM OF CLAIMS PAID FROM JANUARY FIRST
THROUGH JUNE FIRST OF THE YEAR FOLLOWING THE REPORTING CALENDAR YEAR ON
CLAIMS INCURRED IN THE REPORTING CALENDAR YEAR OR PRIOR YEARS, PLUS THE
UNPAID CLAIMS RESERVE AS OF JUNE FIRST OF THE YEAR FOLLOWING THE REPORT-
ING CALENDAR YEAR ON CLAIMS INCURRED IN THE REPORTING CALENDAR YEAR OR
PRIOR YEARS DETERMINED FROM CLAIMS PAYMENTS THROUGH JUNE FIRST OF THE
YEAR FOLLOWING THE REPORTING CALENDAR YEAR; MINUS (IV) THE UNPAID CLAIM
RESERVE AT THE BEGINNING OF THE REPORTING CALENDAR YEAR WHICH SHALL BE
CALCULATED AS THE SUM OF THE CLAIMS PAID FROM JANUARY FIRST THROUGH JUNE
FIRST OF THE REPORTING CALENDAR YEAR ON CLAIMS INCURRED PRIOR TO THE
REPORTING CALENDAR YEAR, PLUS THE UNPAID CLAIMS RESERVE AS OF JUNE FIRST
OF THE REPORTING CALENDAR YEAR ON CLAIMS INCURRED PRIOR TO THE REPORTING
CALENDAR YEAR DETERMINED FROM CLAIM PAYMENTS THROUGH JUNE FIRST OF THE
REPORTING YEAR; PLUS OR MINUS (V) THE EFFECTS FOR THE REPORTING YEAR OF
THE MARKET STABILIZATION POOLS; MINUS (VI) THE EFFECTS FOR THE REPORTING
YEAR OF THE STOP-LOSS POOLS. NOTHING IN THIS SECTION SHALL BE CONSTRUED
TO PROHIBIT THE SUPERINTENDENT FROM REVIEWING CLAIMS DATA BEYOND JUNE
FIRST.
(D) (I) ANY INSURER THAT VIOLATES THE PROVISIONS OF THIS SECTION
INCLUDING, BUT NOT LIMITED TO, ANY FAILURE TO PROVIDE A DIVIDEND OR
CREDIT TO SUBSCRIBERS AS REQUIRED BY SUBPARAGRAPH (B) OF THIS PARAGRAPH,
SHALL BE SUBJECT TO THE MAXIMUM PENALTIES PROVIDED IN THIS CHAPTER.
(II) IN ADDITION TO THE PENALTIES OTHERWISE IMPOSED PURSUANT TO THIS
CHAPTER, WHERE AN INSURER ELECTING TO ADJUST PREMIUMS PURSUANT TO THE
ALTERNATE PROCEDURE SET FORTH IN SUBPARAGRAPH (A) OF THIS PARAGRAPH, IS
DETERMINED BY THE SUPERINTENDENT TO HAVE, IN A MANNER IN VIOLATION OF
THE PROVISIONS OF THIS SECTION, MATERIALLY MISREPRESENTED THE LOSS
RATIOS REQUIRED BY SUBPARAGRAPHS (A) AND (B) OF THIS PARAGRAPH IN TWO
CONSECUTIVE FILINGS, AND IF, AT ANY TIME DURING A THREE YEAR PERIOD IN
WHICH SUCH MATERIAL VIOLATIONS OCCURRED, THE INSURER FAILED TO PROVIDE A
DIVIDEND OR CREDIT AS REQUIRED BY SUBPARAGRAPH (B) OF THIS PARAGRAPH,
SUCH INSURER SHALL BE PRESUMED TO BE SUBSTANTIALLY NONCOMPLIANT WITH THE
REQUIREMENTS OF THIS PARAGRAPH AND THE SUPERINTENDENT SHALL, AFTER A
NOTICE AND A HEARING, HAVE THE AUTHORITY TO PROHIBIT SAID INSURER FROM
ADJUSTING PREMIUMS PURSUANT TO THE ALTERNATE PROCEDURE FOR THE AFFECTED
POLICY FORMS FOR A PERIOD OF UP TO THREE YEARS, COMMENCING WITH THE
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SUPERINTENDENT'S NOTICE OF SUCH DETERMINATION. THIS PROHIBITION SHALL BE
IN ADDITION TO ANY OTHER PENALTIES THAT THE SUPERINTENDENT MAY IMPOSE
PURSUANT TO THIS CHAPTER.
(E) THE ALTERNATE PROCEDURE SET FORTH IN THIS PARAGRAPH SHALL NOT BE
AVAILABLE TO ADJUST NEWLY-APPROVED PREMIUM RATES OR RATES RECENTLY
ADJUSTED THROUGH THE PRIOR APPROVAL PROCESS UNTIL THE EARLIER OF (I) THE
DEVELOPMENT OF SUFFICIENT ACTUAL CLAIMS EXPERIENCE TO JUSTIFY THE
REQUESTED ADJUSTMENT, AS CERTIFIED BY A MEMBER OF THE AMERICAN ACADEMY
OF ACTUARIES OR OTHER INDIVIDUAL ACCEPTABLE TO THE SUPERINTENDENT, OR
(II) TWELVE MONTHS FROM THE PRIOR APPROVAL. PROVIDED HOWEVER, NOTHING IN
THIS SUBPARAGRAPH SHALL BE CONSTRUED TO PROHIBIT AN INSURER FROM UTILIZ-
ING THE ALTERNATE PROCEDURE TO ADJUST RATES ON A POLICY WHERE THE RATES
FOR A RIDER TO THAT POLICY HAVE NOT BEEN IN EFFECT FOR TWELVE MONTHS.
S 3. Subsections (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j)
of section 4308 of the insurance law are relettered subsections (b),
(c), (d), (e), (f), (g), (h), (i), (j) and (k) and a new subsection (a)
is added to read as follows:
(A) DEFINITIONS. FOR PURPOSES OF THIS SECTION:
(1) "CONTRACT FORM" SHALL MEAN A CONTRACT OR CONTRACTS AND ASSOCIATED
RIDERS WHOSE EXPERIENCE HAS BEEN POOLED IN ORDER TO DETERMINE RATES FOR
EACH CONTRACT AND EACH RIDER;
(2) "LOSS RATIO" SHALL MEAN THE RATIO OF DIRECT CLAIMS INCURRED FOR
THE REPORTING CALENDAR YEAR TO DIRECT PREMIUMS EARNED FOR THE SAME
REPORTING CALENDAR YEAR, EXPRESSED AS A PERCENTAGE;
(3) "DIRECT CLAIMS INCURRED" SHALL MEAN CLAIMS PAID DURING THE REPORT-
ING CALENDAR YEAR PLUS THE UNPAID CLAIMS RESERVE AT THE END OF THE
REPORTING CALENDAR YEAR AND CALCULATED CONSISTENT WITH PARAGRAPH FOUR OF
SUBSECTION (I) OF THIS SECTION;
(4) "DIRECT PREMIUMS EARNED" SHALL MEAN PREMIUMS WRITTEN DURING THE
REPORTING CALENDAR YEAR PLUS THE UNEARNED PREMIUMS AT THE BEGINNING OF
THE YEAR LESS THE UNEARNED PREMIUMS AT THE END OF THE YEAR, EXCLUSIVE OF
REINSURANCE ASSUMED OR CEDED; AND
(5) "SMALL GROUP" SHALL MEAN A GROUP CONTRACT THAT IS SUBJECT TO THE
REQUIREMENTS OF SECTION FOUR THOUSAND THREE HUNDRED SEVENTEEN OF THIS
ARTICLE.
S 4. Paragraph 1 of subsection (h) of section 4308 of the insurance
law, as added by chapter 504 of the laws of 1995 and such subsection as
relettered by section three of this act, is amended to read as follows:
(1) Beginning January first, nineteen hundred ninety-six, as an alter-
nate procedure to the requirements of subsection [(c)] (D) of this
section, a corporation subject to the provisions of this article desir-
ing to increase or decrease premiums for any contract subject to this
section may instead submit a rate filing or application to the super-
intendent and such application or filing shall be deemed approved,
provided that (A) the anticipated incurred loss ratio for a contract
form shall not be less than eighty-five percent for individual direct
payment contracts or [seventy-five] EIGHTY percent for small group and
small group remittance contracts, nor, except in the case of individual
direct payment contracts with a loss ratio of greater than one hundred
five percent during nineteen hundred ninety-four, shall the loss ratio
for any direct payment, group or group remittance contract be more than
one hundred five percent of the anticipated earned premium, and (B) the
corporation submits, as part of such filing, a certification by a member
of the American Academy of Actuaries or other individual acceptable to
the superintendent that [that] THE corporation is in compliance with the
provisions of this subsection, based upon that person's examination,
A. 4688 5
including a review of the appropriate records and of the actuarial
assumptions and methods used by the corporation in establishing premium
rates for contracts subject to this section. [For purposes of this
section, a small group is any group whose contract is subject to the
requirements of section forty-three hundred seventeen of this article.]
SUCH CERTIFICATION SHALL AFFIRM THAT THE RATE FILING OR APPLICATION
SUBMITTED TO THE SUPERINTENDENT PURSUANT TO THIS SUBSECTION WAS PREPARED
IN ACCORDANCE WITH GENERALLY ACCEPTED ACTUARIAL PRINCIPLES AND THIS
SECTION. THE INSURER SHALL, AT THE REQUEST OF THE SUPERINTENDENT,
PROVIDE ADDITIONAL UNDERLYING ACTUARIAL DOCUMENTATION TO SUPPORT THE
RATE FILING OR APPLICATION PROVIDED, HOWEVER, THE REQUEST FOR SUCH
INFORMATION SHALL NOT PRECLUDE THE PREMIUM RATE FROM GOING INTO EFFECT.
S 5. Subsection (i) of section 4308 of the insurance law, as added by
chapter 504 of the laws of 1995 and as relettered by section three of
this act, is amended to read as follows:
(i) (1) Each calendar year, a corporation subject to the provisions of
this article shall return, in the form of aggregate benefits incurred
for each contract form filed pursuant to the alternate procedure set
forth in subsection [(g)] (H) of this section, at least eighty-five
percent for individual direct payment contracts or [seventy-five] EIGHTY
percent for small group and small group remittance contracts, but,
except in the case of individual direct payment contracts with a loss
ratio of greater than one hundred five percent in nineteen hundred nine-
ty-four, for any direct payment, group or group remittance contract, not
in excess of one hundred five percent of the aggregate premiums earned
for the contract form during that calendar year. IF A CORPORATION HAS
POOLED THE EXPERIENCE OF CONTRACTS AND/OR RIDERS TO DETERMINE THE PREMI-
UM RATES IN ACCORDANCE WITH APPLICABLE LAW, THE CORPORATION SHALL CALCU-
LATE THE LOSS RATIOS IN ACCORDANCE WITH THE MANNER IN WHICH IT ESTAB-
LISHED THE PREMIUM RATES. Corporations subject to the provisions of this
article shall annually report, no later than [May] AUGUST first of each
year, the loss ratio calculated pursuant to this subsection for each
such contract form for the previous calendar year.
(2) In each case where the loss ratio for a contract form fails to
comply with the eighty-five percent minimum loss ratio requirement for
individual direct payment contracts, or the [seventy-five] EIGHTY
percent minimum loss ratio requirement for small group and small group
remittance contracts, as set forth in paragraph one of this subsection,
the corporation shall issue a dividend or credit against future premiums
for all contract holders with that contract form in an amount sufficient
to assure that the aggregate benefits incurred in the previous calendar
year plus the amount of the dividends and credits shall equal no less
than eighty-five percent for individual direct payment contracts, or
[seventy-five] EIGHTY percent for small group and small group remittance
contracts, of the aggregate premiums earned for the contract form in the
previous calendar year. The dividend or credit shall be issued to each
contract that was in effect as of December thirty-first of the applica-
ble year [and remains in effect as of the date the dividend or credit is
issued]. All dividends and credits must be distributed by September
thirtieth of the year following the calendar year in which the loss
ratio requirements were not satisfied. A CORPORATION SHALL MAKE A
REASONABLE EFFORT TO IDENTIFY THE CURRENT ADDRESS OF THOSE CONTRACT
HOLDERS WHO ARE NO LONGER CONTRACT HOLDERS WHEN THE DIVIDEND OR CREDIT
IS ISSUED. The annual report required by paragraph one of this
subsection shall include a corporation's calculation of the dividends
and credits, as well as an explanation of the corporation's plan to
A. 4688 6
issue dividends or credits. The instructions and format for calculating
and reporting loss ratios and issuing dividends or credits shall be
specified by the superintendent by regulation. Such regulations shall
include provisions for the distribution of a dividend or credit in the
event of cancellation or termination by a contract holder or subscriber.
(3) In each case where the loss ratio for a contract form fails to
comply with the one hundred five percent maximum loss ratio requirement
of paragraph one of this subsection, the corporation shall institute a
premium rate increase in an amount sufficient to assure that the aggre-
gate benefits incurred in the previous calendar year shall equal no more
than one hundred five percent of the sum of the aggregate premiums
earned for the contract form in the previous calendar year and the
aggregate premium rate increase. The rate increase shall be applied to
each contract that was in effect as of December thirty-first of the
applicable year and remains in effect as of the date the rate increase
is imposed. All rate increases must be imposed by September thirtieth of
the year following the calendar year in which the loss ratio require-
ments were not satisfied. The annual report required by paragraph one of
this subsection shall include a corporation's calculation of the premium
rate increase, as well as an explanation of the corporation's plan to
implement the rate increase. The instructions and format for calculating
and reporting loss ratios and implementing rate increases shall be spec-
ified by the superintendent by regulation.
(4) DIRECT CLAIMS INCURRED FOR USE IN TESTING LOSS RATIO COMPLIANCE
UNDER THIS SUBSECTION SHALL BE CALCULATED AS FOLLOWS: (I) THE CLAIMS
PAID DURING THE REPORTING CALENDAR YEAR; PLUS (II) CAPITATION PAYMENTS
PAID FOR SERVICES TO BE RENDERED DURING THE REPORTING CALENDAR YEAR;
PLUS (III) THE UNPAID CLAIM RESERVE AT THE END OF THE REPORTING CALENDAR
YEAR WHICH SHALL BE CALCULATED AS THE SUM OF CLAIMS PAID FROM JANUARY
FIRST THROUGH JUNE FIRST OF THE YEAR FOLLOWING THE REPORTING CALENDAR
YEAR ON CLAIMS INCURRED IN THE REPORTING CALENDAR YEAR OR PRIOR YEARS,
PLUS THE UNPAID CLAIMS RESERVE AS OF JUNE FIRST OF THE YEAR FOLLOWING
THE REPORTING CALENDAR YEAR ON CLAIMS INCURRED IN THE REPORTING CALENDAR
YEAR OR PRIOR YEARS DETERMINED FROM CLAIMS PAYMENTS THROUGH JUNE FIRST
OF THE YEAR FOLLOWING THE REPORTING CALENDAR YEAR; MINUS (IV) THE UNPAID
CLAIM RESERVE AT THE BEGINNING OF THE REPORTING CALENDAR YEAR WHICH
SHALL BE CALCULATED AS THE SUM OF THE CLAIMS PAID FROM JANUARY FIRST
THROUGH JUNE FIRST OF THE REPORTING CALENDAR YEAR ON CLAIMS INCURRED
PRIOR TO THE REPORTING CALENDAR YEAR, PLUS THE UNPAID CLAIMS RESERVE AS
OF JUNE FIRST OF THE REPORTING CALENDAR YEAR ON CLAIMS INCURRED PRIOR TO
THE REPORTING CALENDAR YEAR DETERMINED FROM CLAIM PAYMENTS THROUGH JUNE
FIRST OF THE REPORTING YEAR; PLUS OR MINUS (V) THE EFFECTS FOR THE
REPORTING YEAR OF THE MARKET STABILIZATION POOLS; MINUS (VI) THE EFFECTS
FOR THE REPORTING YEAR OF THE STOP-LOSS POOLS. NOTHING IN THIS SECTION
SHALL BE CONSTRUED TO PROHIBIT THE SUPERINTENDENT FROM REVIEWING CLAIMS
DATA BEYOND JUNE FIRST.
S 6. Section 4308 of the insurance law is amended by adding two new
subsections (l) and (m) to read as follows:
(1) (I) ANY INSURER THAT VIOLATES THE PROVISIONS OF THIS SECTION
INCLUDING, BUT NOT LIMITED TO, ANY FAILURE TO PROVIDE A DIVIDEND OR
CREDIT TO SUBSCRIBERS AS REQUIRED BY SUBSECTION (I) OF THIS SECTION,
SHALL BE SUBJECT TO THE MAXIMUM PENALTIES PROVIDED IN THIS CHAPTER.
(II) IN ADDITION TO THE PENALTIES OTHERWISE IMPOSED PURSUANT TO THIS
CHAPTER, WHERE AN INSURER ELECTING TO ADJUST PREMIUMS PURSUANT TO THE
ALTERNATE PROCEDURE SET FORTH IN SUBSECTION (H) OF THIS SECTION, IS
DETERMINED BY THE SUPERINTENDENT TO HAVE, IN A MANNER IN VIOLATION OF
A. 4688 7
THE PROVISIONS OF THIS SECTION, MATERIALLY MISREPRESENTED THE LOSS
RATIOS REQUIRED BY SUBSECTIONS (H) AND (I) OF THIS SECTION IN TWO
CONSECUTIVE FILINGS, AND IF, AT ANY TIME DURING A THREE YEAR PERIOD IN
WHICH SUCH MATERIAL VIOLATIONS OCCURRED, THE INSURER FAILED TO PROVIDE A
DIVIDEND OR CREDIT AS REQUIRED BY SUBSECTION (I) OF THIS SECTION, SUCH
INSURER SHALL BE PRESUMED TO BE SUBSTANTIALLY NONCOMPLIANT WITH THE
REQUIREMENTS OF THIS PARAGRAPH AND THE SUPERINTENDENT SHALL, AFTER A
NOTICE AND A HEARING, HAVE THE AUTHORITY TO PROHIBIT SAID INSURER FROM
ADJUSTING PREMIUMS PURSUANT TO THE ALTERNATE PROCEDURE FOR THE AFFECTED
POLICY FORMS FOR A PERIOD OF UP TO THREE YEARS, COMMENCING WITH THE
SUPERINTENDENT'S NOTICE OF SUCH DETERMINATION. THIS PROHIBITION SHALL BE
IN ADDITION TO ANY OTHER PENALTIES THAT THE SUPERINTENDENT MAY IMPOSE
PURSUANT TO THIS CHAPTER.
(M) THE ALTERNATE PROCEDURE SET FORTH IN SUBSECTION (H) OF THIS
SECTION SHALL NOT BE AVAILABLE TO ADJUST NEWLY-APPROVED PREMIUM RATES OR
RATES RECENTLY ADJUSTED THROUGH THE PRIOR APPROVAL PROCESS UNTIL THE
EARLIER OF (I) THE DEVELOPMENT OF SUFFICIENT ACTUAL CLAIMS EXPERIENCE TO
JUSTIFY THE REQUESTED ADJUSTMENT, AS CERTIFIED BY A MEMBER OF THE AMERI-
CAN ACADEMY OF ACTUARIES OR OTHER INDIVIDUAL ACCEPTABLE TO THE SUPER-
INTENDENT, OR (II) TWELVE MONTHS FROM THE PRIOR APPROVAL. PROVIDED
HOWEVER, NOTHING IN THIS SUBSECTION SHALL BE CONSTRUED TO PROHIBIT AN
INSURER FROM UTILIZING THE ALTERNATE PROCEDURE TO ADJUST RATES ON A
POLICY WHERE THE RATES FOR A RIDER TO THAT POLICY HAVE NOT BEEN IN
EFFECT FOR TWELVE MONTHS.
S 7. Subsection (g) of section 4308 of the insurance law, as added by
chapter 501 of the laws of 1992 and as relettered by section three of
this act, is amended to read as follows:
(g) The results of any audit conducted pursuant to subsections [(d)]
(E) and [(e)] (F) of this section shall be provided to the corporation
and each member of its board of directors. The superintendent shall
have the authority to direct the corporation in writing to implement any
recommendations resulting from the audit that the superintendent finds
to be necessary and reasonable; provided, however, that the superinten-
dent shall first consider any written response submitted by the corpo-
ration or the board of directors prior to making such finding. Upon any
application for a rate adjustment by the corporation, the superintendent
shall review the corporation's compliance with the directions and recom-
mendations made previously by the superintendent, as a result of the
most recently completed management or financial audit and shall include
such findings in any written decision concerning such application.
S 8. Paragraph 1 of subsection (i) and subsections (j) and (k) of
section 4308 of the insurance law, as added by chapter 504 of the laws
of 1995 and such subsections as relettered by section three of this act,
are amended to read as follows:
(1) Each calendar year, a corporation subject to the provisions of
this article shall return, in the form of aggregate benefits incurred
for each contract form filed pursuant to the alternate procedure set
forth in subsection [(g)] (H) of this section, at least eighty-five
percent for individual direct payment contracts or [seventy-five] EIGHTY
percent for small group and small group remittance contracts, but,
except in the case of individual direct payment contracts with a loss
ratio of greater than one hundred five percent in nineteen hundred nine-
ty-four, for any direct payment, group or group remittance contract, not
in excess of one hundred five percent of the aggregate premiums earned
for the contract form during that calendar year. IF A CORPORATION HAS
POOLED THE EXPERIENCE OF CONTRACTS AND/OR RIDERS TO DETERMINE THE PREMI-
A. 4688 8
UM RATES IN ACCORDANCE WITH APPLICABLE LAW, THE CORPORATION SHALL CALCU-
LATE THE LOSS RATIOS IN ACCORDANCE WITH THE MANNER IN WHICH IT ESTAB-
LISHED THE PREMIUM RATES. Corporations subject to the provisions of this
article shall annually report, no later than [May] AUGUST first of each
year, the loss ratio calculated pursuant to this subsection for each
such contract form for the previous calendar year.
(j) The alternate procedure described in subsections [(g) and] (h) AND
(I) of this section shall apply to individual direct payment contracts
issued pursuant to sections four thousand three hundred twenty-one and
four thousand three hundred twenty-two of this article on and after
January first, nineteen hundred ninety-seven.
(k) The eighty-five percent minimum loss ratio for individual direct
payment contracts described in subsections [(g) and] (h) AND (I) of this
section shall be reduced to eighty-two and one-half percent as of Janu-
ary first, nineteen hundred ninety-seven and shall be further reduced to
eighty percent as of January first, nineteen hundred ninety-eight and
thereafter. The refund or credit requirements for failure to meet mini-
mum loss ratios will continue, but at these reduced percentages.
S 9. Subsection (i) of section 3216 of the insurance law is amended by
adding a new paragraph 26 to read as follows:
(26)(A) NO MANAGED CARE HEALTH INSURANCE POLICY THAT PROVIDES COVERAGE
FOR HOSPITAL, MEDICAL OR SURGICAL CARE SHALL PROVIDE THAT SERVICES OF A
PARTICIPATING HOSPITAL WILL BE COVERED AS OUT-OF-NETWORK SERVICES SOLELY
ON THE BASIS THAT THE ADMITTING PHYSICIAN OR TREATING PHYSICIAN IS NOT A
PARTICIPATING PROVIDER.
(B) NO MANAGED CARE HEALTH INSURANCE POLICY THAT PROVIDES COVERAGE FOR
HOSPITAL, MEDICAL OR SURGICAL CARE SHALL PROVIDE THAT SERVICES OF A
PARTICIPATING PHYSICIAN WILL BE COVERED AS OUT-OF-NETWORK SERVICES SOLE-
LY ON THE BASIS THAT THE SERVICES ARE RENDERED IN A NON-PARTICIPATING
HOSPITAL.
(C) FOR PURPOSES OF THIS PARAGRAPH, A "MANAGED CARE HEALTH INSURANCE
POLICY" IS A POLICY THAT REQUIRES THAT SERVICES BE PROVIDED BY A PROVID-
ER PARTICIPATING IN THE INSURER'S NETWORK IN ORDER FOR THE INSURED TO
RECEIVE THE MAXIMUM LEVEL OF REIMBURSEMENT UNDER THE POLICY.
S 10. Subsection (k) of section 3221 of the insurance law is amended
by adding a new paragraph 15 to read as follows:
(15)(A) NO GROUP OR BLANKET MANAGED CARE HEALTH INSURANCE POLICY THAT
PROVIDES COVERAGE FOR HOSPITAL, MEDICAL OR SURGICAL CARE SHALL PROVIDE
THAT SERVICES OF A PARTICIPATING HOSPITAL WILL BE COVERED AS OUT-OF-NET-
WORK SERVICES SOLELY ON THE BASIS THAT THE ADMITTING PHYSICIAN OR TREAT-
ING PHYSICIAN IS NOT A PARTICIPATING PROVIDER.
(B) NO GROUP OR BLANKET MANAGED CARE HEALTH INSURANCE POLICY THAT
PROVIDES COVERAGE FOR HOSPITAL, MEDICAL OR SURGICAL CARE SHALL PROVIDE
THAT SERVICES OF A PARTICIPATING PHYSICIAN WILL BE COVERED AS
OUT-OF-NETWORK SERVICES SOLELY ON THE BASIS THAT THE SERVICES ARE
RENDERED IN A NON-PARTICIPATING HOSPITAL.
(C) FOR PURPOSES OF THIS PARAGRAPH, A "MANAGED CARE HEALTH INSURANCE
POLICY" IS A POLICY THAT REQUIRES THAT SERVICES BE PROVIDED BY A PROVID-
ER PARTICIPATING IN THE INSURER'S NETWORK IN ORDER FOR THE INSURED TO
RECEIVE THE MAXIMUM LEVEL OF REIMBURSEMENT UNDER THE POLICY.
S 11. Section 4303 of the insurance law is amended by adding a new
subsection (ff) to read as follows:
(FF) (1) NO MANAGED CARE CONTRACT ISSUED BY A HEALTH SERVICE CORPO-
RATION, HOSPITAL SERVICE CORPORATION OR MEDICAL EXPENSE INDEMNITY CORPO-
RATION THAT PROVIDES COVERAGE FOR HOSPITAL, MEDICAL OR SURGICAL CARE
SHALL PROVIDE THAT SERVICES OF A PARTICIPATING HOSPITAL WILL BE COVERED
A. 4688 9
AS OUT-OF-NETWORK SERVICES SOLELY ON THE BASIS THAT THE ADMITTING PHYSI-
CIAN OR TREATING PHYSICIAN IS NOT A PARTICIPATING PROVIDER.
(2) NO MANAGED CARE CONTRACT ISSUED BY A HEALTH SERVICE CORPORATION,
HOSPITAL SERVICE CORPORATION OR MEDICAL EXPENSE INDEMNITY CORPORATION
THAT PROVIDES COVERAGE FOR HOSPITAL, MEDICAL OR SURGICAL CARE SHALL
PROVIDE THAT SERVICES OF A PARTICIPATING PHYSICIAN WILL BE COVERED AS
OUT-OF-NETWORK SERVICES SOLELY ON THE BASIS THAT THE SERVICES ARE
RENDERED IN A NON-PARTICIPATING HOSPITAL.
(3) FOR PURPOSES OF THIS SUBSECTION, A "MANAGED CARE CONTRACT" IS A
CONTRACT THAT REQUIRES THAT SERVICES BE PROVIDED BY A PROVIDER PARTIC-
IPATING IN THE CORPORATION'S NETWORK IN ORDER FOR THE SUBSCRIBER TO
RECEIVE THE MAXIMUM LEVEL OF REIMBURSEMENT UNDER THE CONTRACT.
S 12. Subdivisions 3 and 4 of section 4406 of the public health law,
subdivision 3 as renumbered by chapter 538 of the laws of 1993, are
renumbered subdivisions 4 and 5 and a new subdivision 3 is added to read
as follows:
3. (A) NO CONTRACT ISSUED PURSUANT TO THIS SECTION SHALL PROVIDE THAT
SERVICES OF A PARTICIPATING HOSPITAL WILL BE COVERED AS OUT-OF-NETWORK
SERVICES SOLELY ON THE BASIS THAT THE ADMITTING PHYSICIAN OR TREATING
PHYSICIAN IS NOT A PARTICIPATING PROVIDER.
(B) NO CONTRACT ISSUED PURSUANT TO THIS SECTION SHALL PROVIDE THAT
SERVICES OF A PARTICIPATING PHYSICIAN WILL BE COVERED AS OUT-OF-NETWORK
SERVICES SOLELY ON THE BASIS THAT THE SERVICES ARE RENDERED IN A
NON-PARTICIPATING HOSPITAL.
S 13. Subsection (a) of section 3224-a of the insurance law, as
amended by chapter 666 of the laws of 1997, is amended to read as
follows:
(a) Except in a case where the obligation of an insurer or an organ-
ization or corporation licensed or certified pursuant to article forty-
three of this chapter or article forty-four of the public health law to
pay a claim submitted by a policyholder or person covered under such
policy or make a payment to a health care provider is not reasonably
clear, or when there is a reasonable basis supported by specific infor-
mation available for review by the superintendent that such claim or
bill for health care services rendered was submitted fraudulently, such
insurer or organization or corporation shall pay the claim to a policy-
holder or covered person or make a payment to a health care provider
WITHIN TWENTY-ONE DAYS OF RECEIPT OF A CLAIM OR BILL FOR SERVICES
RENDERED THAT IS SUBMITTED BY ELECTRONIC MEANS AND within forty-five
days of receipt of a claim or bill for services rendered THAT IS SUBMIT-
TED OTHER THAN BY ELECTRONIC MEANS, SUCH AS BY PAPER OR FACSIMILE.
S 14. The opening paragraph of subsection (b) of section 3224-a of the
insurance law, as amended by chapter 666 of the laws of 1997, is amended
to read as follows:
In a case where the obligation of an insurer or an organization or
corporation licensed or certified pursuant to article forty-three of
this chapter or article forty-four of the public health law to pay a
claim or make a payment for health care services rendered is not reason-
ably clear due to a good faith dispute regarding the eligibility of a
person for coverage, the liability of another insurer or corporation or
organization for all or part of the claim, the amount of the claim, the
benefits covered under a contract or agreement, or the manner in which
services were accessed or provided, an insurer or organization or corpo-
ration shall pay any undisputed portion of the claim in accordance with
this subsection and notify the policyholder, covered person or health
care provider in writing WITHIN FOURTEEN CALENDAR DAYS OF RECEIPT OF A
A. 4688 10
CLAIM SUBMITTED BY ELECTRONIC MEANS AND within thirty calendar days of
receipt of [the] A claim THAT IS SUBMITTED BY OTHER THAN ELECTRONIC
MEANS, SUCH AS BY PAPER OR FACSIMILE:
S 15. This act shall take effect immediately; provided, however, that:
(a) sections one through eight of this act shall take effect January
1, 2010 and shall apply to premium rate changes effective on and after
that date and to loss ratio reports required to be filed beginning in
2011;
(b) sections nine through twelve of this act shall take effect January
1, 2010 and shall apply to policies and contracts issued, renewed, modi-
fied, altered and amended on and after such effective date, provided,
further, that any policies and contracts to which sections nine through
twelve of this act apply and that were approved by the superintendent of
insurance shall be deemed to comply with all applicable laws and regu-
lations until January 1, 2010; and
(c) sections thirteen and fourteen of this act shall take effect Janu-
ary 1, 2010 and shall apply to claims transmitted and received on and
after such date.