SB 556 - This act established the Missouri health insurance exchange, the "Direct Payment Stop Loss Fund", requires proof of insurance to be filed by certain individuals and employers, and allows the director of revenue to establish escrow accounts for unpaid medical claims .
DEFINITIONS - The act sets forth the definitions that govern Sections 376.1600 to 376.1642 (Missouri Health Insurance Exchange)(Section 276.1600).
ESTABLISHMENT OF THE MISSOURI HEALTH INSURANCE EXCHANGE - This act creates and establishes the Missouri Health Insurance Exchange through which eligible individuals and employer-groups can purchase health insurance. The exchange is created as a body corporate for the purpose of facilitating the availability, choice and adoption of private health insurance plans to eligible individuals and groups. The exchange will serve as a point of entry to determine eligibility to receive health plan benefits for Missouri residents, employers located in Missouri and their employees, students attending institutions of higher learning, and all other eligible individuals seeking to obtain health insurance coverage (Section 376.1603).
MISSOURI HEALTH INSURANCE EXCHANGE BOARD - The exchange will be administered by an exchange board. The exchange board shall be comprised of 9 members (director of Department of Insurance, Commissioner of the Office of Administration, director of Department of Health and Senior Services, and 6 members appointed by the Governor. The members shall annually elect a chair and vice-chair (Section 376.1606).
EXCHANGE DIRECTOR - The board shall appoint an exchange director who shall serve at the pleasure of the board. The exchange director shall be responsible for administering all of the exchange's activities and contracts and supervising all of the exchange's staff. The exchange director will receive compensation as established by the board (Section 376.1606.5).
POWERS OF THE EXCHANGE BOARD - The exchange board is authorized and empowered to:
(1) Administer all of the exchange's activities and contracts;
(2) Establish procedures for operations of the exchange;
(3) Prepare an annual budget for the exchange;
(4) Enter into contracts with public or private entities to carry out the duties of the exchange, including contracts to administer applications, eligibility verification, enrollment, and premium payments for specific groups or populations. No organization that enters into a contract with the exchange shall be a carrier that offers plans through the exchange. The exchange shall not have the authority to enter into contracts with healthcare providers;
(5) Take any legal action necessary or proper on behalf of the exchange;
(6) Hire or contract with appropriate legal, actuarial, administrative personnel, and other advisors to provide technical assistance in the management and operation of the exchange;
(7) Establish and execute a line of credit, and establish one or more cash and investment accounts to carry out the duties of the exchange;
(8) Establish and collect administrative fees from carriers based on the number of persons covered by the plans or plans offered through the exchange by the carrier sufficient to fund the costs of administering the exchange;
(9) Apply for grants from public and private entities;
(10) Contract with sponsoring employers of participating employer-subsidized plans to act as the plan's administrator;
(11) Establish procedures for the enrollment of eligible individuals, groups and other enrollees; and
(12) Establish and manage a system for collecting premium payments made by, or on behalf of, individuals obtaining health insurance coverage through the exchange, including any premium payments made by enrollees, employers, or other organizations and any premium subsidies, and transmitting such payments to the chosen plans (Section 376.1609).
DUTIES OF EXCHANGE DIRECTOR - The act sets forth the various duties the exchange director must carry out. For instance, the exchange director shall provide information on the exchange to applicants, enroll eligible individuals, create application forms, establish a website in which individuals can examine health insurance options, and publicize the existence of the exchange (Section 376.1612).
SERVICE CENTER - The act requires the exchange director to establish and administer at least one service center to provide information to applicants (Section 376.1615).
OPERATING EXPENSES OF THE EXCHANGE - All operating expenses of the exchange shall be paid from funds collected by or on behalf of the exchange. The accounts of the exchange are special fund accounts and the money in the accounts are not part of the general revenue fund of Missouri. The state may not provide general fund appropriations to the exchange and the obligations of the pool are not a debt of the state or a pledge of its credit. The assets of the exchange shall be exempt from taxation by the state and local government (Section 376.1618).
PARTICIPATION OF PLANS IN THE EXCHANGE - The exchange will offer to participating individuals only plans that have been certified by the director of the Department of Insurance. To be able to offer a plan through the exchange, a carrier must be licensed to issue health insurance in Missouri and be in good standing with the Department of Insurance.
Prior to the exchange's initial open enrollment period, the board shall establish the types of health benefit plans that carriers must offer through the exchange. The development of the plan designs shall be based upon recommendations made by advisory committee composed of a carrier representative that issues individual policies, a carrier representative that issues plans to small employers, an actuary, and three experts who are experienced in designing health benefit plans. The advisory committee shall recommend the types of coverage options and the number of plan designs to be offered through the exchange. Each carrier may offer any of the following types of plans through the exchange:
(1) Consumer-driven health benefit plans (high deductible policies coupled with HSAs or a health reimbursement arrangement;
(2) A limited mandate policy, and
(3) An enriched plan similar to a plan offered to state employees or other similar quality.
All plans offered by a carrier shall be for a term of at least one year, and may be automatically renewed in the absence of a notice of termination by the plan or notice by the director that the plan is no longer certified as eligible to be offered through the exchange. Each plan certified by the director shall contain a detailed description of benefits offered, including maximums, limitations, exclusions, and other benefit limits. Carriers shall offer plans through the exchange at rates based upon age, geography, health lifestyle considerations and family composition that are actuarially sound. The act requires carriers to notify the director before discontinuing a plan.
The exchange shall begin offering health benefit plans beginning January 1, 2009 (Section 376.1621).
ELIGIBLE INDIVIDUALS - The act provides that "eligible individuals may receive coverage through the exchange. Eligible individuals are:
(1) Missouri residents;
(2) Non-Missouri residents who work at least 20 hours in a Missouri business that does not offer its workers group health insurance;
(3) Individuals enrolled in, or is eligible to enroll in, a participating employer-subsidized plan;
(4) Self-employed individuals whose principal place of business is in Missouri;
(5) Full-time students attending a Missouri institution of higher education; or
(6) Qualified dependents (Section 376.1624).
ENROLLMENT AND COVERAGE SELECTION - Participating individuals will be able to obtain or change coverage under a participating plan during an annual open season or upon the occurrence of a qualifying event (e.g. marriage, divorce, death of a spouse, birth, adoption, change in employment, etc.). The act requires the exchange to administer an open enrollment season every year (Section 376.1627).
UNDERWRITING AND GUARANTEED ISSUE COVERAGE - The act provides for guaranteed issue of coverage at standard rates to all persons enrolled in the exchange as part of a participating employer-group and to individuals with 18 or more months prior creditable coverage. Under the act, issue of coverage through the exchange is guaranteed at standard rates to those joining it as part of an employer group and to individual enrollees with 18 months of creditable or more of creditable coverage.
GROUP - Individuals who enroll in the exchange as part of a participating employer subsidized plan will be able to obtain coverage at standard rates, regardless of previous coverage (Section 376.1630(8)).
NONGROUP - During the open regular open season, individuals who enroll in the exchange directly as individuals will be able to obtain coverage at the plan's standard rates if the individuals have at least 18 months of coverage. The plan cannot impose any waiting periods or coverage exclusions or deny coverage to such individuals (Section 376.1630(1) and (2)).
Individuals with less than 18 months of prior creditable coverage are also guaranteed issued coverage, but the health care plan may elect certain rating surcharges and/or pre-existing exclusions until such time the individuals have obtained 18+ months of creditable coverage through the exchange. Individual enrollees with 2 to 17 months of prior creditable coverage may be charged premiums of up to 125% of the standard rate. An individual with less than 2 months of prior creditable coverage may be charged premiums of up to 150% of the standard rate. As to preexisting conditions, the plan may impose one or more preexisting condition provisions, for a period not to exceed 12 months, reduced by the number of months of creditable coverage (Section 376.1630(3) and (4)).
The guaranteed issue provisions only apply during the specified election periods (annual open season and whenever an individual's change of status triggers an ERISA right to switch coverage).
Under the act, an individual shall be able to enroll at the standard rates without preexisting condition provisions if the individual becomes a participating individual due to:
(1) Enrollment in a participating employer-subsidized plan;
(2) Qualification as a federal health coverage tax credit eligible individual; or
(3) Becoming a newly qualified dependent of another participating individual through birth, adoption, or court ordered custody or legal guardianship (Section 376.1630).
PORTABILITY AND CONTINUATION OF COVERAGE - Under the act, any participating individual may continue to participate in the exchange for as long as he or she remains an eligible individual, regardless of any change in employment, family status, health status, age, membership in any organization, or other circumstances that does not affect the individual's ability to participate in the exchange. Any non-resident participating individual who ceases to be eligible to participate in the exchange by reason of a qualifying event (e.g. employment termination, divorce, loss of dependent status, etc.) will be permitted to continue participation in the exchange for up to 36 months, on the same terms as other participating individuals, regardless of the loss of eligibility (Section 376.1633).
PARTICIPATING EMPLOYER PLANS (EMPLOYER GROUPS) - Any employer may enter into an agreement with the exchange to be the sponsor of a participating employer-subsidized plan. Under such an arrangement, the exchange director shall become the plan's administrator for the employer's group health plan.
The employer reserves the right to offer supplemental benefits (vision care, dental care, long-term care, etc.), but the exchange director shall not be the plan administrator for any such supplemental plans or benefits. Under the act, the employer retains the right to determine the criteria for eligibility, enrollment, and participation in the participating employer-subsidized plan and the terms and amounts of the employer's contributions to that plan. Under the terms of the arrangement, the employer must participate in a cafeteria plan under 26 U.S.C. §125 (Section 376.1636).
PRODUCER COMMISSIONS - The act allows insurance producers to apply to the exchange on behalf of an employer seeking to sponsor a participating employer plan through the exchange. If the exchange enrolls individuals eligible for benefits under the terms of that participating employer plan, then the participating plan chosen by the individual shall pay the insurance producer that applied to the exchange on behalf of that employer the commission provided for by the act. Under the act, the director must determine the amount of the standard commission paid to licensed insurance producers and other qualified entities for enrolling eligible individuals in the exchange. The amount of the commission shall be in an amount the director determines to be reasonable, based on commissions that are paid in the relevant market and other factors the director deems relevant (Section 376.1638).
DIRECT PAYMENT STOP LOSS FUND - The act establishes the "Direct Payment Stop Loss Fund", to be administered by the director or the Department of Insurance. The direct payment stop loss fund shall be a fund from which carriers offering participating plans through the Missouri health insurance exchange may receive reimbursement, to the extent of funds available therefore, for claims paid by such carriers for participating individuals covered under the exchange. Commencing January 1, 2009, carriers offering participating plans through the exchange shall be eligible to receive reimbursement from the direct payment stop loss fund for 70% of claims paid between $50,000 and $100,000 in a calendar year for any participating individual covered under a participating plan issued through the exchange.
Claims shall be reported and funds shall be distributed on a calendar year basis. Claims shall be eligible for reimbursement only for the calendar year in which the claims are paid. Once claims paid on behalf of a participating individual reach or exceed $100,000 in a given calendar year, no further claims paid on behalf of such participating individual in such calendar year shall be eligible for reimbursement. Claims paid within a calendar year shall be determined by the date of payment rather than date of service or date the claim was incurred. No participating carrier shall delay or defer payment of a claim solely for the purpose of causing the date of payment to fall into a subsequent calendar year. Participating carriers shall not be entitled to any reimbursement on behalf of a participating individual if the claims paid on behalf of that member in a given calendar year do not, in the aggregate, reach the applicable claims threshold. Additionally, claims paid on behalf of a covered member that exceed the claims corridor in a given calendar year shall not be eligible for reimbursement from the fund.
In the event that the total amount requested for reimbursement by all carriers for a calendar year exceeds funds available for distribution for claims paid by all carriers during that same calendar year, the director shall provide for the pro-rata distribution of the available funds. Each carrier shall be eligible to receive only such proportionate amount of the available funds as the individual carrier's total eligible claims paid bears to the total eligible claims paid by all carriers.
In the event that funds available for distribution for claims paid by all carriers during a calendar year exceeds the total amount requested for reimbursement by all carriers during that same calendar year, any excess funds shall be carried forward and will not affect monies appropriated for the direct payment stop loss fund in the next calendar year.
The act allows the director to obtain the services of an organization to administer the direct payment stop loss fund. The director shall establish guidelines for the submission of proposals by organizations for the purposes of administering the fund. The director shall make a determination whether to approve, disapprove or recommend modification to the proposal of an applicant to administer the fund. An organization approved to administer the fund shall submit reports to the director in such form and at times as may be required by the director in order to facilitate evaluation and ensure orderly operation of the fund, including, but not limited to an annual report of the affairs and operations of the fund, such report to be delivered to the director, the house budget committee chair, and the Senate Appropriations committee chair.
If the director deems it appropriate for the proper administration of the direct payment stop loss fund, the administrator of the fund, on behalf of and with the prior approval of the director, shall be authorized to purchase stop loss insurance and/or reinsurance from an insurance company licensed to write such type of insurance in this state.
Under the act, the director must submit an annual report to the General Assembly evaluating the effectiveness of the direct stop loss fund. The report shall include any recommendations that the director deems relevant. The report, however, shall contain recommendations whether the reinsurance threshold or attachment point delineated in this section shall be lowered and the reinsurance corridor be expanded to lower premium costs and assist carriers with combating adverse selection or whether the threshold should be increased in order to protect the solvency of the fund (Section 376.1642).
STATEMENT OF COVERAGE FORM - This act requires all Missouri employers to annually file with the director of Department of Insurance a form for each employee indicating the health insurance coverage status of the employee and his or her dependants. Similar requirements are made of self-employed individuals and the Department of Social Services with respect to individuals covered under governmental programs (Section 376.1850).
PERSONAL RESPONSIBILITY - The act also requires persons between the ages of 18 to 65 to offer proof of their ability to pay for medical care. They can either show proof of insurance as required in the statement of coverage provision or show proof of financial responsibility by presenting a bond in the amount of $10,000 to the Department of Revenue or establishing an escrow account with the department in the same amount. If the director of the Department of Revenue received information that a person has failed to pay a hospital or other medical claim, the director shall establish an escrow account in the person's name and shall deposit in the account all moneys that be payable from the state (overpayment of taxes, etc.) to that person. Alternatively, the director can obtain an order of attachment on the person's wages. The director may disburse moneys from the escrow account to pay for medical claims when the individual is not in compliance with the act. The act further provides that any judgment payable by an individual to a health care provider for charges during a period that the individual failed to maintain financial responsibility shall include an order permitting the attachment of the person's wages to satisfy the judgment. The act allows health care providers to file a claim with the director through an administrative process to receive moneys from the escrow account or to seek a garnishment action (Section 376.1852).