PA 16-213—sSB 368

Insurance and Real Estate Committee

Public Health Committee

AN ACT CONCERNING THE INSURANCE DEPARTMENT'S MARKET CONDUCT AUTHORITY AND DATA CALL CONFIDENTIALITY, AUTHORIZING MULTISTATE HEALTH CARE CENTERS IN CONNECTICUT, ELIMINATING A HEALTH CARRIER UTILIZATION REVIEW REPORT FILING REQUIREMENT, AND CONCERNING LICENSURE OF SINGLE PURPOSE DENTAL HEALTH CARE CENTERS

SUMMARY: This act makes changes to the insurance statute on market conduct examinations ( 1). By law, the insurance commissioner must examine regulated entities (i. e. , insurers, HMOs, third-party administrators, and fraternal benefit societies doing business in Connecticut) to determine their compliance with applicable state laws and regulations. The commissioner appoints examiners to perform the examinations. Specifically, the act:

1. allows the commissioner to conduct examinations in accordance with the National Association of Insurance Commissioners' (NAIC) Market Regulation Handbook;

2. immunizes from liability examiners or people providing information in support of an examination for acts performed in good faith;

3. makes examination workpapers confidential;

4. allows the commissioner to share examination reports or results with insurance regulatory officials, law enforcement officials, and government agencies; and

5. clarifies when domestic regulated entities are required to pay examination expenses.

Additionally, the act allows the Insurance Department to (1) authorize health care centers organized outside of Connecticut (i. e. , foreign HMOs) to do business in Connecticut ( 3-16) and (2) license HMOs that offer only dental services ( 20-24). It generally subjects foreign HMOs and dental-only HMOs to the same laws that apply to domestic HMOs, with certain exceptions. It adds dental hygienists to the definition of “healing arts” for purposes of the HMO statutes ( 20).

The act also (1) authorizes Insurance Department data calls ( 2), (2) eliminates the need for health carriers (e. g. , insurers, HMOs, and other entities issuing health benefit plans) to report utilization review data to the department separate from their annual managed care reports ( 17-19), and (3) makes technical and conforming changes.

EFFECTIVE DATE: July 1, 2016, except the market conduct examination and data call provisions are effective October 1, 2016, and the dental-only HMO provisions are effective July 1, 2017.

1 — MARKET CONDUCT EXAMINATIONS

Immunity

The act immunizes from liability (1) the commissioner, her authorized representatives, and appointed examiners for statements made or conduct performed in good faith during an examination and (2) anyone who, in good faith and without intent to defraud or deceive, gives the above people information in support of an examination. It does not abrogate or modify any common law or statutory privilege or immunity the commissioner, her representatives, or appointed examiners enjoy.

Confidentiality

Under the act, examination workpapers, recorded information, documents, and copies of these are confidential and not subject to subpoena. The act prohibits anyone, including the commissioner, from making such information public, but it allows her to give NAIC access to the information, if NAIC agrees in writing to keep it confidential.

The act allows the commissioner to share examination reports, preliminary reports, or their results with insurance regulatory officials, law enforcement officials, and government agencies if the recipient agrees in writing to keep the information confidential. (In practice, the Insurance Department makes final examination reports publicly available on its website. )

Examination Expenses

By law, the entity being examined must pay the examination expenses, except for domestic insurers or HMOs. However, domestic entities examined outside the state must pay the examiners' travel and maintenance expenses.

The act specifies that domestic insurers and HMOs assessed to pay for the expenses of the Insurance Department and Office of Healthcare Advocate do not have to pay the examination expenses (i. e. , salaries, fringe benefits, and travel and maintenance costs) of the department's examination personnel. However, domestic insurers and HMOs examined outside of the state must pay for the examiners' travel and maintenance expenses.

2 — DATA CALLS

The act explicitly authorizes the insurance commissioner to issue “data calls” to regulated entities and exempts response data from disclosure under the Freedom of Information Act.

A data call is commonly understood to mean a request or directive for regulated entities to provide the Insurance Department with information, usually within a certain timeframe, for analysis and potential regulatory action. Existing law already authorizes the commissioner to conduct investigations into any matter arising under the insurance statutes (CGS 38a-16).

3-16 — FOREIGN HMOS

The act generally subjects foreign HMOs to the same laws that currently apply to domestic HMOs, with certain exceptions. But it does not require foreign HMOs to pay a health and welfare fee or public health fee, which domestic HMOs must pay ( 8-9). These fees are used to pay for certain Department of Public Health programs, including a vaccination program, needle and syringe exchange program, and breast and cervical cancer detection and treatment program.

The act also applies certain existing HMO and insurance laws to domestic HMOs only, as shown in Table 1.

Table 1: Other Existing Laws Applying Only to Domestic HMOs under the Act

CGS

Act

Description

38a-178

4

Requires an HMO organized under Connecticut law to include on its certificate of incorporation or other organizational document a list of other jurisdictions in which it is authorized to do business

38a-179

5

Requires a nonprofit, nonstock, domestic HMO to vest management of its affairs in a board of directors

Requires other types of domestic HMOs to follow applicable state laws

38a-186

6

Addresses how a nonprofit, nonstock, domestic HMO must dispose of its property if the HMO terminates

Prohibits certain stock transactions and mergers unless the parties comply with existing laws governing a change of control

38a-14(h)

10

Requires the insurance commissioner to examine domestic HMOs at least once every five years

38a-55

15

Prohibits a domestic HMO from encumbering its assets to secure debt without the commissioner's written consent

38a-59

16

Addresses how a domestic HMO with capital stock may amend its certificate of incorporation for a name change

Additionally, the act specifies that all HMOs, foreign or domestic, are subject to CGS 38a-58a, the law governing how a company can transfer its state of domicile to or from Connecticut ( 7). The act also allows the insurance commissioner to prohibit a foreign HMO from doing business in Connecticut if permission to transact business in its state or country of domicile has been refused to a domestic HMO ( 11).

17-19 — UTILIZATION REVIEW REPORT

The act eliminates a requirement that health carriers annually, by March 1, file a utilization review report with the insurance commissioner. Health carriers must already report similar utilization review information in their annual managed care reports due May 1 to the commissioner (CGS 38a-478c).

20-24 — DENTAL-ONLY HMOS

The act generally subjects a dental-only HMO to the same requirements as other HMOs. However, it specifies that a dental-only HMO does not have to conduct certain activities that the law allows a medical HMO to perform (see below). Additionally, the law requires that one-fourth of a nonprofit HMO's board of directors be healing arts practitioners. The act requires instead that one-fourth of the board members of a nonprofit dental-only HMO be in dental or related fields.

HMO Activities

By law and unchanged by the act, an HMO may (1) establish, maintain, and operate health care facilities and (2) provide health care using its own properly licensed employees or under agreement with a licensed hospital, hospital or medical service corporation, clinic, or health care provider.

Under existing law, an HMO also must enter into agreements with a government agency or health care provider for personnel training; establish, operate, and maintain medical service centers or clinics for education and research purposes; market and administer health care plans; contract with Connecticut-licensed insurers; offer out-of-area or emergency services; and provide health services not included in the health care plan on a fee-for-service basis. The act specifies that a dental-only HMO does not have to perform these activities.

Healing Arts Definition

The act adds dental hygienists to the list of professions defined as “healing arts” in the HMO statutes. Various HMO statutes refer to the healing arts, including those containing provisions on:

1. training of personnel under the direction of people licensed to practice a healing art (CGS 38a-176 & 38a-177),

2. requiring certain representation of healing arts practitioners on a nonprofit HMO's board of directors (CGS 38a-179), and

3. allowing (a) healing arts practitioners to be employed by and participate in an HMO and (b) patients to choose healing arts practitioners in the HMO (CGS 38a-180).

Under existing law, “healing arts” professionals include doctors, surgeons, chiropractors, naturopaths, podiatrists, physician assistants, nurses, dentists, optometrists, opticians, psychologists, and pharmacists.

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