AN ACT MAKING REVISIONS TO THE INSURANCE STATUTES.

This bill makes a number of substantive and technical revisions to the insurance statutes. It (1) increases the time the insurance commissioner has to hear and decide contested cases related to denied licenses, rates, or forms; (2) allows an insurer to invest in its affiliates, subject to the same limitations and requirements that apply to investments in subsidiaries; (3) requires self-insured governmental health plans to provide information regarding a plan under which an appeal is made within five business days of receiving a request; and (4) requires a licensed practitioner of the healing arts, instead of the medical arts, to certify a utilization review company's decision following an appeal to not authorize an admission, service, procedure, or extended hospital stay.

EFFECTIVE DATE: October 1, 2006, except for the self-insured governmental health plan provision and a technical change, which are effective upon passage.

Current law requires the commissioner to (1) hold a hearing within 20 days of receiving a request from a person or insurer aggrieved by an order or decision of hers and (2) render a decision within 15 days of the hearing. The bill increases the timeframes to 30 days in which to hold a hearing and 45 days to issue her decision.

By law, and unchanged by the bill, an insurer may invest in one or more of its subsidiaries, subject to certain limitations and requirements. The bill allows an insurer to invest in its affiliates, subject to the same limitations and requirements that apply to investments in subsidiaries.

The bill allows an insurer to invest in the common stock, preferred stock, debt obligations, or other securities of one or more of its affiliates in an amount up to the lesser of 10% of the insurer's assets or 50% of its surplus if, after the investment, the insurer's surplus is reasonable in relation to its outstanding liabilities and adequate for its financial needs.

Investments in domestic and out-of-state insurance company affiliates are not included in calculating the amount of the investments, but the following items must be:

1. the total amount spent and obligations assumed in the acquisition or formation of an affiliate, including organization expenses and contributions to capital and surplus and

2. all amounts spent in acquiring additional common or preferred stock, debt obligations, and other securities and contributions to the capital and surplus of an affiliate after its acquisition or formation.

Insurers may invest any amount in the common or preferred stock, debt obligations, and other securities of one or more affiliates engaged or exclusively organized to engage in the ownership and management of the insurer's investment, if the affiliate agrees to limit its investments so that they will not cause the insurer's total investments to exceed the investment limitations specified. “Total investment of the insurer” includes (1) any direct investments made by the insurer in assets and (2) the insurer's proportionate share of an investment by an affiliate, which must be calculated by multiplying the amount of the affiliate's investment by the parent insurer's percentage ownership of it.

With the insurance commissioner's approval, an insurer may invest a greater amount in the common or preferred stock, debt obligations, or other securities of one or more affiliates if, after such investment, the insurer's surplus is reasonable in relation to its outstanding liabilities and adequate for its financial needs.

In determining an insurer's financial condition, its investments in affiliates must be valued using a method (1) approved by the commissioner and (2) consistent with procedures established by the National Association of Insurance Commissioners.

By law, and unchanged by the bill, an insurer or managed care organization (MCO) must provide the insurance commissioner, an enrollee, or a provider with certain appeal-related information within five business days of receiving a request. Failure to do so subjects the insurer or MCO to a fine of $ 100 for each day of violation. The information includes written verification that the plan is fully insured, self-insured, or otherwise funded.

If the plan is fully insured, current law requires the insurer or MCO to also send: (1) written certification to the commissioner or designated review entity that the benefit or service appealed is covered; (2) written certification that the policy or contract is accessible electronically, along with clear and simple instructions on how to access it; or (3) a copy of the entire policy or contract between the enrollee and the MCO. Under the bill, the insurer or MCO must also send this information if the plan is a self-insured governmental health plan, but with respect to forwarding a copy of the contract, an MCO must notify the plan sponsor, who must send or direct the MCO to send the copy. (The bill does not similarly require an insurer to notify the plan sponsor. )

Under the bill, the MCO's failure to notify the plan sponsor within the five-business-day period or before the 30-day appeal period ends, whichever is later as determined by the commissioner, (1) creates a presumption that the benefit or service is a covered benefit for purposes of accepting the appeal for full review and (2) entitles the commissioner to require the MCO to reimburse the Insurance Department for appeal-related expenses. The presumption established does not create or authorize benefits or services exceeding those in the enrollee's policy or contract. By law, and unchanged by the bill, an insurer's or MCO's failure to provide information within the specified timeframes also creates the presumption and permits the commissioner to require the insurer or MCO to reimburse the department for appeal-related expenses.

Current law requires a utilization review company to have a licensed practitioner of the medical arts to certify appeal determinations to not certify an admission, service, procedure, or extended hospital stay. The bill instead requires a licensed practitioner of the healing arts certify the determination. Connecticut statutes define the practice of “healing arts” as the practice of medicine, chiropractic, podiatry, natureopathy, and optometry.

Yea

Nay

(03/16/2006)