HEALTH INSURANCE; INSURANCE (GENERAL); LEGISLATION;

INSURANCE - HEALTH;

You asked a summary of major insurance legislation passed last session and a discussion of issues that may come up next session.

SUMMARY

Last session, the legislature passed bills (1) expanding state employee health plan to cover small employers, (2) requiring Preferred Provider Networks to be licensed by the insurance commissioner (3) allowing medical savings accounts to be sold in the state, (4) requiring group health insurance plans to give people an option to continue their group coverage at their own expense if they quit their job, take a leave of absence, or reduce their hours because they become eligible to receive Social Security benefits, and (5) generally prohibiting tiered ratings.

Next session, it is likely that the Insurance Committee will consider bills to address the rising cost and availability of medical malpractice insurance for health care providers and institutions. It is also possible that the committee will consider bills dealing with terrorism insurance, owner-controlled insurance programs, and various mandates for health insurance coverage.

Expanding State Employee Health Plan Coverage to Small Employers

PA 03-149 adds employees of small employers to the list of those for whom the comptroller, with the attorney general and the insurance commissioner's approval, is authorized to arrange group hospital, medical, and surgical health insurance under the state employee health plan. Under the act, a small employer can, on average, have no more than 50 employees, at least half of whom must be employed in the state.

The act requires (1) any coverage arranged for small employers to continue to be underwritten according to the small employer community rating law and (2) small employers to comply with the same state employee plan participation requirements that apply to employees of community action agencies, nonprofit corporations, and municipalities.

Preferred Provider Networks

PA 03-169 requires the insurance commissioner to license preferred provider networks (networks), instead of receive an annual informational filing from them. It limits the definition of a network to entities that pay claims for delivering health care services; accept the financial risk for that delivery; and establish, operate, or maintain an arrangement or contract with health care providers relating to (1) the health care services they provide and (2) the compensation they receive for such services. Networks include health care services covered under a self-insured employee welfare benefit plan established under federal law. They exclude managed care organizations (MCOs), workers' compensation preferred provider organizations, individual practice associations, and physician hospital associations whose primary function is to contract with insurers and provide services to providers.

The act establishes (1) minimum net worth, financial solvency, and other financial requirements for networks; (2) mandatory contract provisions between networks and MCOs, including contractual obligations that MCOs must satisfy; (3) procedures for network enrollees to lodge complaints, and (4) protections for enrollees and providers who disclose certain violations.

The act (1) prohibits MCOs contracting with networks, and networks and their providers, from seeking compensation from or having any recourse against network enrollees for the payment of benefits and (2) specifies that MCOs contracting with networks are ultimately responsible for health care services.

Medical Savings Accounts

PA 03-78 exempts high-deductible health insurance policies used to establish federally qualified medical savings accounts from the $ 50 maximum home health care deductible required in certain health insurance policies, thus allowing such policies to be sold in the state. The act applies to individual and group policies that pay (1) basic hospital expenses, (2) basic medical-surgical expenses, (3) major medical expenses, (4) accident-only expenses, (5) hospital or medical expenses, (6) limited benefit expenses, and (7) hospital and medical expenses covered by HMOs.

Group Health Insurance for Early Retirees

PA 03-77 requires group health insurance plans to give people an option to continue their group coverage at their own expense if they quit their job, take a leave of absence, or reduce their hours because they become eligible to receive Social Security benefits. This coverage must be available to the employee and his dependents until he becomes eligible for Medicare. Under federal law, people can retire with a reduced Social Security benefit at age 62, but are not eligible for Medicare until age 65 unless they are disabled.

LAST SESSION

Prohibition on Tiered Ratings

PA 03-119 prohibits, with one exception, insurers, fraternal benefit societies, hospital and medical service corporations, HMOs, and other entities from (1) moving an insured from a standard underwriting classification to a substandard underwriting classification after the policy is issued or (2) increasing an insured's premium because of his claims experience or health status. The act authorizes an insurer to increase premium for an insured's underwriting classification only when the entire underwriting classification is subject to the increase because of underwriting classification's claim experience or health status as a whole.

The act also broadens coverage for certain employees by requiring group policies offered by employers to satisfy all benefit requirements, instead of the 10 benefits specified under prior law. The new benefit requirements apply to a covered employee group where 51% of the employees are employed in Connecticut.

NEXT SESSION

Medical Malpractice

The Insurance Committee will likely consider bills to address the rising cost and availability of medical malpractice insurance for health care providers and institutions. This committee, as well as the Public Health and Judiciary committees will consider such things as damage caps; enhanced Insurance Department oversight and control; the incidence, reporting, and prevention of medical errors; health care quality; and other insurance, tort, and health reforms that might affect the availability and cost of malpractice insurance.

Terrorism Insurance

Last session, the committee passed a bill that would have required the insurance commissioner to (1) study terrorism coverage under the state's Standard Fire Insurance Policy, (2) determine the implications of excluding terrorism coverage under the policy for personal or commercial risk insurance or both, (3) examine the definition of terrorism under the federal Terrorism Risk Insurance Act of 2002 and (4) decide whether, in her opinion, the definition should apply to policies issued in Connecticut. It is likely that a similar bill will be considered next session.

Owner Controlled Insurance Programs

In an owner controlled insurance program (OCIPs), the owner of a building, highway, or other projects obtains insurance for all of the contractors and subcontractors working on the project as a way of reducing the project’s cost. Generally this will include liability and workers’ compensation coverage, and may include other types of coverage. Such programs have been used in connection with UConn 2000 and Adriaen’s Landing, but have raised concerns among contractors. Last session, legislation was introduced to bar state agencies from requiring OCIPs for public works contracts, and the issue may reappear this year. OLR report 2003-R-0732 provides additional information on OCIPs.

Health Insurance Coverage Mandates

In most years there are proposals to require health insurers to cover various treatments or tests. For example, last session bills were passed by one chamber to require coverage of ovarian cancer screening, medically necessary formula foods, and medical nutrition therapy services. It is possible that similar bills will be introduced next session.

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