HF 3985

as introduced - 91st Legislature (2019 - 2020) Posted on 03/02/2020 02:03pm

A bill for an act
relating to insurance; clarifying that when determining rates a health carrier must
not consider health care claims of nonresidents; amending Minnesota Statutes
2018, section 62A.021, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, section 62A.021, subdivision 1, is amended to read:

Subdivision 1.

Loss ratio standards.

(a) Notwithstanding section 62A.02, subdivision
3, relating to loss ratios, and except as otherwise authorized by section 62A.02, subdivision
3a, for individual policies or certificates, health care policies or certificates shall not be
delivered or issued for delivery to an individual or to a small employer as defined in section
62L.02, unless the policies or certificates can be expected, as estimated for the entire period
for which rates are computed to provide coverage, to return to Minnesota policyholders and
certificate holders in the form of aggregate benefits not including anticipated refunds or
credits, provided under the policies or certificates, (1) at least 75 percent of the aggregate
amount of premiums earned in the case of policies issued in the small employer market, as
defined in section 62L.02, subdivision 27, calculated on an aggregate basis; and (2) at least
65 percent of the aggregate amount of premiums earned in the case of each policy form or
certificate form issued in the individual market; calculated on the basis of incurred claims
experience or incurred health care expenses where coverage is provided by a health
maintenance organization on a service rather than reimbursement basis and earned premiums
for the period and according to accepted actuarial principles and practices. Assessments by
the reinsurance association created in chapter 62L and all types of taxes, surcharges, or
assessments created by Laws 1992, chapter 549, or created on or after April 23, 1992, are
included in the calculation of incurred claims experience or incurred health care expenses.
The applicable percentage for policies and certificates issued in the small employer market,
as defined in section 62L.02, increases by one percentage point on July 1 of each year,
beginning on July 1, 1994, until an 82 percent loss ratio is reached on July 1, 2000. The
applicable percentage for policy forms and certificate forms issued in the individual market
increases by one percentage point on July 1 of each year, beginning on July 1, 1994, until
a 72 percent loss ratio is reached on July 1, 2000. A health carrier that enters a market after
July 1, 1993, does not start at the beginning of the phase-in schedule and must instead
comply with the loss ratio requirements applicable to other health carriers in that market
for each time period. Premiums earned and claims incurred in markets other than the small
employer and individual markets are not relevant for purposes of this section.

(b) All filings of rates and rating schedules shall demonstrate that actual expected claims
in relation to premiums comply with the requirements of this section when combined with
actual experience to date. new text begin When determining rates, a health carrier must not consider health
care claims or costs of nonresidents. new text end Filings of rate revisions shall also demonstrate that the
anticipated loss ratio over the entire future period for which the revised rates are computed
to provide coverage can be expected to meet the appropriate loss ratio standards, and
aggregate loss ratio from inception of the policy form or certificate form shall equal or
exceed the appropriate loss ratio standards.

(c) A health carrier that issues health care policies and certificates to individuals or to
small employers, as defined in section 62L.02, in this state shall file annually its rates, rating
schedule, and supporting documentation including ratios of incurred losses to earned
premiums by policy form or certificate form duration for approval by the commissioner
according to the filing requirements and procedures prescribed by the commissioner. The
supporting documentation shall also demonstrate in accordance with actuarial standards of
practice using reasonable assumptions that the appropriate loss ratio standards can be
expected to be met over the entire period for which rates are computed. The demonstration
shall exclude active life reserves. If the data submitted does not confirm that the health
carrier has satisfied the loss ratio requirements of this section, the commissioner shall notify
the health carrier in writing of the deficiency. The health carrier shall have 30 days from
the date of the commissioner's notice to file amended rates that comply with this section.
If the health carrier fails to file amended rates within the prescribed time, the commissioner
shall order that the health carrier's filed rates for the nonconforming policy form or certificate
form be reduced to an amount that would have resulted in a loss ratio that complied with
this section had it been in effect for the reporting period of the supplement. The health
carrier's failure to file amended rates within the specified time or the issuance of the
commissioner's order amending the rates does not preclude the health carrier from filing an
amendment of its rates at a later time. The commissioner shall annually make the submitted
data available to the public at a cost not to exceed the cost of copying. The data must be
compiled in a form useful for consumers who wish to compare premium charges and loss
ratios.

(d) Each sale of a policy or certificate that does not comply with the loss ratio
requirements of this section is an unfair or deceptive act or practice in the business of
insurance and is subject to the penalties in sections 72A.17 to 72A.32.

(e)(1) For purposes of this section, health care policies issued as a result of solicitations
of individuals through the mail or mass media advertising, including both print and broadcast
advertising, shall be treated as individual policies.

(2) For purposes of this section, (i) "health care policy" or "health care certificate" is a
health plan as defined in section 62A.011; and (ii) "health carrier" has the meaning given
in section 62A.011 and includes all health carriers delivering or issuing for delivery health
care policies or certificates in this state or offering these policies or certificates to residents
of this state.

(f) The loss ratio phase-in as described in paragraph (a) does not apply to individual
policies and small employer policies issued by a health plan company that is assessed less
than three percent of the total annual amount assessed by the Minnesota Comprehensive
Health Association. These policies must meet a 68 percent loss ratio for individual policies,
a 71 percent loss ratio for small employer policies with fewer than ten employees, and a 75
percent loss ratio for all other small employer policies.

(g) Notwithstanding paragraphs (a) and (f), the loss ratio shall be 60 percent for a health
plan as defined in section 62A.011, offered by an insurance company licensed under chapter
60A that is assessed less than ten percent of the total annual amount assessed by the
Minnesota Comprehensive Health Association. For purposes of the percentage calculation
of the association's assessments, an insurance company's assessments include those of its
affiliates.

(h) The commissioners of commerce and health shall each annually issue a public report
listing, by health plan company, the actual loss ratios experienced in the individual and
small employer markets in this state by the health plan companies that the commissioners
respectively regulate. The commissioners shall coordinate release of these reports so as to
release them as a joint report or as separate reports issued the same day. The report or reports
shall be released no later than June 1 for loss ratios experienced for the preceding calendar
year. Health plan companies shall provide to the commissioners any information requested
by the commissioners for purposes of this paragraph.