S. 648 2
and/or medical coverage offered by the insurer to individuals or small
groups in this state. Once accepted for coverage, an individual or small
group cannot be terminated by the insurer due to claims experience.
Termination of an individual or small group shall be based only on one
or more of the reasons set forth in subsection (g) of section three
thousand two hundred sixteen or subsection (p) of section three thousand
two hundred twenty-one of this article. Group hospital and/or medical
coverage, including medicare supplemental insurance, obtained through an
out-of-state trust covering a group of fifty or fewer employees or
participating persons who are residents of this state must be community
rated regardless of the situs of delivery of the policy. Notwithstanding
any other provisions of law, the underwriting of such policy may involve
no more than the imposition of a pre-existing condition limitation as
permitted by this article, and once accepted for coverage, an individual
or small group cannot be terminated due to claims experience. Termi-
nation of an individual or small group shall be based only on one or
more of the reasons set forth in subsection (p) of section three thou-
sand two hundred twenty-one of this article. For the purposes of this
section, "community rated" means a rating methodology in which the
premium for all persons covered by a policy or contract form is the same
based on the experience of the entire pool of risks covered by that
policy or contract form without regard to age, sex, health status or
occupation.
(b) Nothing herein shall prohibit the use of premium rate structures
to establish different premium rates for individuals as opposed to fami-
ly units [or separate community rates for individuals as opposed to
small groups. If an insurer is required to issue a contract to individ-
ual proprietors pursuant to subsection (i) of this section, such policy
shall be subject to subsection (a) of this section].
S 2. Subsections (a) and (b) of section 4317 of the insurance law,
subsection (a) as amended by chapter 661 of the laws of 1997 and
subsection (b) as amended by chapter 557 of the laws of 2002, are
amended to read as follows:
(a) No individual health insurance contract and no group health insur-
ance contract covering [between two and] A GROUP OF fifty OR FEWER
employees or members of the group exclusive of spouses and dependents,
including contracts for which the premiums are paid by a remitting agent
for a group, hereinafter referred to as a small group, providing hospi-
tal and/or medical benefits, including Medicare supplemental insurance,
shall be issued in this state unless such contract is community rated
and, notwithstanding any other provisions of law, the underwriting of
such contract involves no more than the imposition of a pre-existing
condition limitation as permitted by this article. Any individual, and
dependents of such individual, and any small group, including all
employees or group members and dependents of employees or members,
applying for individual or small group health insurance coverage must be
accepted at all times throughout the year for any hospital and/or
medical coverage, including Medicare supplemental insurance, offered by
the corporation to individuals or small groups in this state. Once
accepted for coverage, an individual or small group cannot be terminated
by the insurer due to claims experience. Termination of coverage for
individuals or small groups may be based only on one or more of the
reasons set forth in subsection (c) of section four thousand three
hundred four or subsection (j) of section four thousand three hundred
five of this article. For the purposes of this section, "community
rated" means a rating methodology in which the premium for all persons
S. 648 3
covered by a policy or contract form is the same, based on the experi-
ence of the entire pool of risks covered by that policy or contract form
without regard to age, sex, health status or occupation.
(b) Nothing herein shall prohibit the use of premium rate structures
to establish different premium rates for individuals as opposed to fami-
ly units [or separate community rates for individuals as opposed to
small groups. If a corporation is required to issue a contract to indi-
vidual proprietors pursuant to subsection (f) of this section, such
contract shall be subject to the requirements of subsection (a) of this
section].
S 3. The closing paragraph of subsection (c) of section 3233 of the
insurance law is REPEALED and two new subsections (d) and (e) are added
to read as follows:
(D) (1) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER OR ANY OTHER
PROVISION OF LAW, ON OR BEFORE OCTOBER FIRST, TWO THOUSAND ELEVEN, THE
SUPERINTENDENT SHALL PROMULGATE REGULATIONS TO ENSURE AN ORDERLY IMPLE-
MENTATION AND ONGOING OPERATION OF THE OPEN ENROLLMENT AND COMMUNITY
RATING REQUIRED BY SECTIONS THREE THOUSAND TWO HUNDRED THIRTY-ONE AND
FOUR THOUSAND THREE HUNDRED SEVENTEEN OF THIS CHAPTER, AS AMENDED BY THE
CHAPTER OF THE LAWS OF TWO THOUSAND NINE THAT ADDED THIS SUBSECTION,
INCLUDING PROVISIONS DESIGNED TO ENCOURAGE INSURERS TO REMAIN IN OR
ENTER THE SMALL GROUP HEALTH INSURANCE MARKET. SUCH REGULATIONS SHALL
APPLY TO ALL INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS SUBJECT TO
COMMUNITY RATING. SUCH REGULATIONS SHALL BE DESIGNED TO PROMOTE AN
INSURANCE MARKETPLACE WHERE PREMIUMS DO NOT UNDULY FLUCTUATE, INSURERS
AND HEALTH MAINTENANCE ORGANIZATIONS ARE REASONABLY PROTECTED AGAINST
UNEXPECTED, SIGNIFICANT SHIFTS IN THE NUMBER OF PERSONS INSURED, AND
OTHER MARKET STABILITY FEATURES DEEMED APPROPRIATE BY THE SUPERINTEN-
DENT. SUCH REGULATIONS SHALL NOT REQUIRE ANY INSURER OR HEALTH MAINTE-
NANCE ORGANIZATION SUBJECT TO THIS SECTION, OR ANY SUBSIDIARY OR
CONTROLLED PERSON OF A HOLDING COMPANY OF SUCH INSURER OR HEALTH MAINTE-
NANCE ORGANIZATION, TO ENTER, CONTINUE TO CONDUCT OR WITHDRAW FROM ANY
LINE OF BUSINESS AS A CONDITION OF ENTERING, CONTINUING IN OR WITHDRAW-
ING FROM ANY OTHER LINE OF BUSINESS.
(2) PRIOR TO ADOPTING SUCH REGULATIONS, THE SUPERINTENDENT SHALL
CONVENE A TECHNICAL ADVISORY COMMITTEE, ON OR BEFORE FEBRUARY FIRST, TWO
THOUSAND TEN, TO PROVIDE ADVICE AND RECOMMENDATIONS TO THE SUPERINTEN-
DENT ON ISSUES INCLUDING, BUT NOT LIMITED TO, VOLUNTARY REINSURANCE,
POOLING, RISK SHARING, THE ESTABLISHMENT OF A HIGH RISK OR HIGH COST
MEDICAL CONDITIONS POOL, THE MODERATION OF INITIAL COMMUNITY RATES AS
COMPARED TO PRIOR RATES, OR PREMIUM STABILIZATION METHODS. THE TECHNICAL
ADVISORY COMMITTEE SHALL BE COMPRISED OF NINE MEMBERS, ONE OF WHOM SHALL
BE THE SUPERINTENDENT OR HIS OR HER DESIGNEE. THE SUPERINTENDENT OR HIS
OR HER DESIGNEE SHALL CHAIR THE COMMITTEE AND SHALL APPOINT TWO OTHER
MEMBERS TO THE COMMITTEE. THE TEMPORARY PRESIDENT OF THE SENATE AND THE
SPEAKER OF THE ASSEMBLY SHALL EACH APPOINT THREE MEMBERS TO THE COMMIT-
TEE. THE APPOINTEES SHALL BE REPRESENTATIVES OF COMMERCIAL HEALTH
INSURERS, NOT-FOR-PROFIT HEALTH INSURERS, HEALTH MAINTENANCE ORGANIZA-
TIONS AND PURCHASERS OF INSURANCE AND SHALL BE NAMED NO LATER THAN JANU-
ARY FIRST, TWO THOUSAND TEN. IN ADDITION, THE SUPERINTENDENT MAY OBTAIN
THE SERVICES OF AN ACTUARY WITH EXPERIENCE RELATING TO PREMIUM RATES AND
MARKET STABILIZATION FOR SMALL GROUP HEALTH INSURANCE.
(3) (A) SUCH REGULATIONS MAY INCLUDE REINSURANCE OR A POOLING PROCESS
INVOLVING INSURER CONTRIBUTIONS TO, OR RECEIPTS FROM, A FUND WHICH SHALL
BE DESIGNED TO SHARE THE RISK OF OR EQUALIZE HIGH COST CLAIMS, CLAIMS OF
HIGH COST PERSONS, COST VARIATIONS AMONG INSURERS AND HEALTH MAINTENANCE
S. 648 4
ORGANIZATIONS BASED UPON DEMOGRAPHIC FACTORS OF THE PERSONS INSURED
WHICH CORRELATE WITH SUCH COST VARIATIONS DESIGNED TO PROTECT INSURERS
FROM DISPROPORTIONATE ADVERSE RISKS OF OFFERING COVERAGE TO ALL APPLI-
CANTS; PROVIDED THAT SUCH REGULATIONS SHALL RELATE ONLY TO RISK SHARING
AMONG INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS AND SHALL NOT CREATE
DIFFERENCES IN COMMUNITY RATES CHARGED BY A SINGLE INSURER BECAUSE A
SMALL GROUP'S COVERAGE HAS BEEN REINSURED OR POOLED, AND NEITHER THE
SMALL EMPLOYER NOR THE EMPLOYEE SHALL HAVE REASON TO KNOW THAT THEIR
COVERAGE HAS BEEN REINSURED OR POOLED PURSUANT TO SUCH REGULATIONS.
(B) SUCH REGULATIONS MAY SPECIFY THE AGGREGATE TOTAL CONTRIBUTIONS BY
HEALTH MAINTENANCE ORGANIZATIONS AND INSURERS BASED UPON SPECIFIED
MEDICAL CONDITIONS, WHICH MAY BE INCREASED BY THE AGGREGATE TOTAL AMOUNT
OF SAVINGS RESULTING FROM DECREASED CONTRIBUTIONS CALCULATED PURSUANT TO
REGULATIONS BASED UPON DEMOGRAPHIC FACTORS.
(C) SUCH REGULATIONS MAY INCLUDE A REINSURANCE OR A POOLING PROCESS
INVOLVING INSURER AND HEALTH MAINTENANCE ORGANIZATION CONTRIBUTIONS TO,
OR RECEIPTS FROM, A FUND WHICH SHALL BE DESIGNED TO SHARE THE RISK OF OR
EQUALIZE HIGH COST CLAIMS OR THE CLAIMS OF HIGH COST PERSONS; PROVIDED
THAT SUCH REGULATIONS SHALL RELATE ONLY TO RISK SHARING AMONG INSURERS
AND HEALTH MAINTENANCE ORGANIZATIONS AND SHALL NOT CREATE DIFFERENCES IN
COMMUNITY RATES CHARGED BY A SINGLE INSURER OR HEALTH MAINTENANCE ORGAN-
IZATION BECAUSE A SMALL GROUP'S COVERAGE HAS BEEN REINSURED OR POOLED,
AND NEITHER THE INDIVIDUAL NOR THE SMALL EMPLOYER NOR THE EMPLOYEE SHALL
HAVE REASON TO KNOW THAT THEIR COVERAGE HAS BEEN REINSURED OR POOLED
PURSUANT TO SUCH REGULATIONS. SUCH REGULATIONS MAY ALSO INCLUDE OTHER
MECHANISMS DESIGNED TO SHARE RISKS OR PREVENT UNDUE VARIATIONS IN INSUR-
ER AND HEALTH MAINTENANCE ORGANIZATION CLAIM COSTS WHICH ARE NOT RELATED
TO EXPECTED DIFFERENCES IN INSURER AND HEALTH MAINTENANCE ORGANIZATION
COSTS BASED UPON COMPETITION, INNOVATION AND EFFICIENCY OF OPERATION.
THE REGULATIONS MAY SEGREGATE ANY REINSURANCE, POOLING OR OTHER PROCESS
AMONG VARIOUS GEOGRAPHIC REGIONS OF THE STATE.
(D) IN ORDER TO PROMULGATE RULES AND REGULATIONS TO IMPLEMENT THE
PROVISIONS OF THIS SUBSECTION IN AN ORDERLY MANNER THAT HELPS TO
INCREASE THE AVAILABILITY OF HEALTH INSURANCE TO ALL MEMBERS OF THE
SMALL GROUP MARKET, INCLUDING THOSE PERSONS THAT ARE CURRENTLY PLACED IN
THE INDIVIDUAL OR DIRECT PAY MARKET, THE TECHNICAL ADVISORY COMMITTEE
SHALL MAKE RECOMMENDATIONS TO:
(I) FORMULATE, DEVELOP, AND IMPLEMENT A PROGRAM OR METHODOLOGY TO
ESTABLISH A HIGH RISK OR HIGH COST MEDICAL CONDITIONS POOL AND SMALL
GROUP STOP LOSS FUND TO REIMBURSE NINETY PERCENT OF ALL BONA FIDE CLAIMS
ABOVE SEVENTY-FIVE THOUSAND DOLLARS PAID BY HEALTH MAINTENANCE ORGANIZA-
TIONS AND INSURERS IN A CALENDAR YEAR FOR ANY MEMBER OR INSURED COVERED
IN THE NEW SMALL GROUP MARKET ESTABLISHED PURSUANT TO THE PROVISIONS OF
THE CHAPTER OF THE LAWS OF TWO THOUSAND NINE THAT ADDED THIS SUBSECTION.
ALL APPROVED CLAIMS PAID ON BEHALF OF MEMBERS OR INSUREDS COVERED IN THE
NEW SMALL GROUP MARKET BY HEALTH MAINTENANCE ORGANIZATIONS AND INSURERS
THAT ARE ABOVE THE SEVENTY-FIVE THOUSAND DOLLAR THRESHOLD SHALL BE REIM-
BURSABLE, AS FUNDS ARE MADE AVAILABLE, FROM THE STOP LOSS FUNDS ESTAB-
LISHED PURSUANT TO SECTION FOUR THOUSAND THREE HUNDRED TWENTY-SEVEN OF
THIS CHAPTER, THE STOP LOSS FUNDS ESTABLISHED PURSUANT TO SECTIONS FOUR
THOUSAND THREE HUNDRED TWENTY-ONE-A AND FOUR THOUSAND THREE HUNDRED
TWENTY-TWO-A OF THIS CHAPTER.
(II) COORDINATE THE ISSUANCE OF NEW SMALL GROUP POLICIES OR CONTRACTS
ISSUED AND RATED PURSUANT TO THIS CHAPTER WITH CONTRACTS ISSUED PURSUANT
TO SECTION FOUR THOUSAND THREE HUNDRED TWENTY-SIX OF THIS CHAPTER.
S. 648 5
(III) DEVELOP A MECHANISM TO SHIFT ALL PERSONS COVERED BY INDIVIDUAL
CONTRACTS OR POLICIES PAID ON A DIRECT PAYMENT BASIS ISSUED PURSUANT TO
THIS ARTICLE AND SECTIONS FOUR THOUSAND THREE HUNDRED FOUR, FOUR THOU-
SAND THREE HUNDRED TWENTY-ONE AND FOUR THOUSAND THREE HUNDRED TWENTY-TWO
OF THIS CHAPTER TO THE NEW SMALL GROUP MARKET BY JANUARY FIRST, TWO
THOUSAND SEVENTEEN.
(IV) DETERMINE WHETHER OR NOT CONTRACTS ISSUED PURSUANT TO SECTIONS
FOUR THOUSAND THREE HUNDRED TWENTY-ONE AND FOUR THOUSAND THREE HUNDRED
TWENTY-TWO OF THIS CHAPTER WILL CONTINUE TO BE NEEDED AND ISSUED TO
ADEQUATELY SATISFY THE INSURANCE COVERAGE REQUIREMENTS OF ALL SEGMENTS
OF THIS STATE'S POPULATION. FURTHER, THE COMMITTEE SHALL MAKE RECOMMEN-
DATIONS TO THE GOVERNOR, TEMPORARY PRESIDENT OF THE SENATE AND SPEAKER
OF THE ASSEMBLY BY JULY FIRST, TWO THOUSAND TWELVE ON THE ADVISABILITY
OF REPEALING SECTIONS FOUR THOUSAND THREE HUNDRED FOUR, FOUR THOUSAND
THREE HUNDRED TWENTY-ONE AND FOUR THOUSAND THREE HUNDRED TWENTY-TWO OF
THIS CHAPTER AND PROHIBITING THE ISSUANCE OF NEW DIRECT PAY CONTRACTS OR
POLICIES TO ANY MEMBERS OR INSUREDS AFTER JANUARY FIRST, TWO THOUSAND
THIRTEEN OR PERMITTING ALL INDIVIDUALS THAT HAVE INDIVIDUAL DIRECT PAY
CONTRACTS OR POLICIES ISSUED PURSUANT TO THIS ARTICLE AND SECTIONS FOUR
THOUSAND THREE HUNDRED FOUR, FOUR THOUSAND THREE HUNDRED TWENTY-ONE AND
FOUR THOUSAND THREE HUNDRED TWENTY-TWO OF THIS CHAPTER BEFORE JANUARY
FIRST, TWO THOUSAND THIRTEEN TO CONTINUE TO RENEW OR RETAIN SUCH
CONTRACTS OR POLICIES AFTER JANUARY FIRST, TWO THOUSAND THIRTEEN.
(V) DEVELOP PROGRAMS OR METHODOLOGIES TO ENSURE THAT APPROPRIATE
MEDICAL CARE SHALL BE PROVIDED FOR ALL PERSONS PLACED IN A HIGH RISK OR
HIGH COST MEDICAL CONDITIONS POOL. SUCH PROGRAM OR METHODOLOGY SHALL
ENSURE THAT SUCH PERSONS RECEIVE APPROPRIATE AND COST EFFECTIVE MEDICAL
CARE AND THAT THE LEVEL AND UTILIZATION OF BENEFITS PROVIDED FOR UNDER
SUCH CONTRACTS OR POLICIES ARE ADEQUATE TO ADDRESS THE SERIOUS OR CHRON-
IC MEDICAL CONDITIONS FACED BY SUCH PERSONS.
(E)(I) THE ADVISORY COMMITTEE SHALL BE DEEMED TO BE A PUBLIC BODY FOR
THE PURPOSES SET FORTH IN THE OPEN MEETINGS LAW, AS SET FORTH IN ARTICLE
SEVEN OF THE PUBLIC OFFICERS LAW. ALL COMMITTEE MEETINGS SHALL BE
CONDUCTED ONLY AFTER FOURTEEN DAYS PRIOR PUBLIC NOTICE HAS BEEN GIVEN TO
THE NEWS MEDIA GENERALLY AND PUBLISHED IN THREE STATEWIDE NEWSPAPERS OF
GENERAL CIRCULATION, IN SUCH TRADE, INDUSTRY OR PROFESSIONAL PUBLICA-
TIONS AS THE ADVISORY COMMITTEE SHALL DESIGNATE, AND IN THE STATE REGIS-
TER.
(II) THE ADVISORY COMMITTEE SHALL ISSUE A REPORT THAT CONTAINS ITS
FINDINGS AND RECOMMENDATIONS AS PROVIDED FOR PURSUANT TO THIS SUBSECTION
TO THE GOVERNOR, TEMPORARY PRESIDENT OF THE SENATE AND SPEAKER OF THE
ASSEMBLY BY JANUARY FIRST, TWO THOUSAND ELEVEN.
(III) THE SUPERINTENDENT IN PROMULGATING RULES AND REGULATIONS TO
IMPLEMENT THE PROVISIONS OF THIS SUBSECTION AND THE SMALL GROUP STOP
LOSS FUND, MUST RELY ON THE FINDINGS AND RECOMMENDATIONS CONTAINED IN
THE ADVISORY COMMITTEE'S REPORT, UNLESS HE OR SHE FINDS ON THE RECORD
THAT SUCH RECOMMENDATIONS WOULD DESTABILIZE THE HEALTH INSURANCE MARKET,
INSTIGATE SUBSTANTIAL INCREASES IN PREMIUM RATES OR SUBJECT INSURERS AND
HEALTH MAINTENANCE INSURERS TO UNACCEPTABLE LOSS RATIOS OVER THE
INITIAL TWO YEAR PERIOD OF TIME.
(IV) THE SUPERINTENDENT, IN PROMULGATING RULES AND REGULATIONS TO
IMPLEMENT THE PROVISIONS OF THIS SUBSECTION, SHALL CONDUCT AT LEAST
THREE SEPARATE PUBLIC HEARINGS (NOTICE WHEREOF SHALL BE GIVEN AS
PROVIDED IN ITEM (I) OF THIS SUBPARAGRAPH) IN DIFFERENT PARTS OF THE
STATE ACCEPT PUBLIC COMMENT ON THE COMMITTEE'S REPORT AND THE PROPOSED
RULEMAKING SUBMITTED BY THE SUPERINTENDENT TO THE STATE REGISTER TO
S. 648 6
IMPLEMENT THE PROVISIONS OF THIS SUBSECTION, IN ADDITION TO MEETING THE
REQUIREMENTS OF THE STATE ADMINISTRATIVE PROCEDURE ACT; PROVIDED THAT
THERE NEED BE NO DUPLICATION OF PERFORMANCE IN COMPLYING WITH THE
PROVISIONS OF THIS ITEM AND THOSE OF THE STATE ADMINISTRATIVE PROCEDURE
ACT.
(E) THE PROVISIONS OF THIS ARTICLE AND SECTIONS FOUR THOUSAND THREE
HUNDRED FOUR, FOUR THOUSAND THREE HUNDRED TWENTY-ONE AND FOUR THOUSAND
THREE HUNDRED TWENTY-TWO OF THIS CHAPTER AND ALL INDIVIDUAL CONTRACTS OR
POLICIES PAID ON A DIRECT PAYMENT BASIS ISSUED PURSUANT TO THIS CHAPTER
SHALL REMAIN IN EFFECT ON AND AFTER JANUARY FIRST, TWO THOUSAND THIR-
TEEN; PROVIDED, HOWEVER, THAT, AFTER JANUARY FIRST, TWO THOUSAND THIR-
TEEN, NO ADDITIONAL NEW CONTRACTS OR POLICIES MAY BE ISSUED TO INDIVID-
UALS THAT DID NOT SUBSCRIBE TO SUCH CONTRACTS OR POLICIES PRIOR TO
DECEMBER THIRTY-FIRST, TWO THOUSAND TWELVE. ALL INDIVIDUAL CONTRACTS OR
POLICIES IN FORCE PURSUANT TO THIS ARTICLE, OR SECTIONS FOUR THOUSAND
THREE HUNDRED FOUR, FOUR THOUSAND THREE HUNDRED TWENTY-ONE AND FOUR
THOUSAND THREE HUNDRED TWENTY-TWO OF THIS CHAPTER AFTER DECEMBER THIR-
TY-FIRST, TWO THOUSAND TWELVE SHALL CONTINUE TO BE COMMUNITY RATED WITH
OTHER GROUPS OF ONE AS PROVIDED FOR BY SECTIONS THREE THOUSAND TWO
HUNDRED THIRTY-ONE AND FOUR THOUSAND THREE HUNDRED SEVENTEEN OF THIS
CHAPTER AS SAID SECTIONS THREE THOUSAND TWO HUNDRED THIRTY-ONE AND FOUR
THOUSAND THREE HUNDRED SEVENTEEN WERE IN EFFECT PRIOR TO THE EFFECTIVE
DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND NINE THAT ADDED THIS
SUBSECTION. HOLDERS OF ALL SUCH CONTRACTS OR POLICIES SHALL HAVE THE
RIGHT TO RENEW AND CONTINUE THEIR CONTRACTS OR POLICIES UNDER THE SAME
TERMS AND CONDITIONS UNTIL JANUARY FIRST, TWO THOUSAND SEVENTEEN.
S 4. Subparagraph (O) of paragraph 4 of subsection (j) of section 4301
of the insurance law, as added by section 8 of part A of chapter 1 of
the laws of 2002, is amended to read as follows:
(O) Notwithstanding any other provision of law, the board shall direct
that such proceeds of the public asset are disbursed in accordance with
direction from the director of the division of the budget and trans-
ferred to the credit of the tobacco control and insurance initiatives
pool, or its successor to be used for the exclusive purposes provided
therein, AND TO THE STOP LOSS FUNDS ESTABLISHED PURSUANT TO SUBSECTION
(D) OF SECTION THREE THOUSAND TWO HUNDRED THIRTY-THREE OF THIS CHAPTER
AND SECTION FOUR THOUSAND THREE HUNDRED TWENTY-SEVEN OF THIS ARTICLE.
S 5. Section 4321-a of the insurance law, as added by chapter 1 of the
laws of 1999, paragraph 2 of subsection (e) as amended by chapter 419 of
the laws of 2000, is amended to read as follows:
S 4321-a. Fund for standardized individual enrollee direct payment
contracts. (a) The superintendent shall establish a fund from which
health maintenance organizations may receive reimbursement, to the
extent of funds available therefor, for claims paid by such health main-
tenance organizations for members covered under standardized individual
enrollee direct payment contracts issued pursuant to section four thou-
sand three hundred twenty-one of this article AND FOR ALL SMALL GROUP
POLICES OR CONTRACTS ISSUED AFTER JANUARY FIRST, TWO THOUSAND TWELVE.
The fund established by the superintendent pursuant to this section
shall be known as the direct payment stop loss fund. Commencing in
calendar year two thousand, health maintenance organizations shall be
eligible to receive reimbursement from the direct payment stop loss fund
for ninety percent of claims paid between twenty thousand and one
hundred thousand dollars in a calendar year for any member covered under
a contract issued pursuant to section four thousand three hundred twen-
ty-one of this article AND FOR ALL SMALL GROUP POLICIES OR CONTRACTS
S. 648 7
ISSUED AFTER JANUARY FIRST, TWO THOUSAND TWELVE. For the purposes of
this section, claims shall include health care claims paid by a health
maintenance organization on behalf of a covered member pursuant to such
standardized direct payment contracts OR A SMALL GROUP POLICY OR
CONTRACT.
(b) The superintendent shall promulgate regulations setting forth
procedures for the operation of the direct payment stop loss fund AND
THE SMALL GROUP STOP LOSS FUND ESTABLISHED PURSUANT TO SUBSECTION (D) OF
SECTION THREE THOUSAND TWO HUNDRED THIRTY-THREE OF THIS CHAPTER and the
distribution of monies therefrom.
(c) 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 member reach or exceed one hundred thousand dollars in a
given calendar year, no further claims paid on behalf of such member in
such calendar year shall be eligible for reimbursement.
(d) Each health maintenance organization shall submit a request for
reimbursement from the stop loss fund on a form prescribed by the super-
intendent. Such request for reimbursement shall be submitted no later
than April first following the end of the calendar year for which the
reimbursement request is being made. The superintendent may require
health maintenance organizations to submit such claims data in
connection with the reimbursement request as he OR SHE deems necessary
to enable him OR HER to distribute monies and oversee the operation of
the direct payment stop loss fund AND THE SMALL GROUP STOP LOSS FUND.
The superintendent may require that such data be submitted on a per
member, aggregate and/or categorical basis.
(e) The superintendent shall calculate the total claims reimbursement
amount for all health maintenance organizations for the calendar year
for which claims are being reported.
(1) In the event that the total amount requested for reimbursement by
all health maintenance organizations for a calendar year exceeds funds
available for distribution for claims paid by all health maintenance
organizations during that same calendar year, the superintendent shall
provide for the pro-rata distribution of the available funds. Each
health maintenance organization shall be eligible to receive only such
proportionate amount of the available funds as the individual health
maintenance organization's total eligible claims paid bears to the total
eligible claims paid by all health maintenance organizations.
(2) In the event that (A) funds available for distribution for claims
paid by all health maintenance organizations during a calendar year
exceeds the total amount requested for reimbursement by all health main-
tenance organizations during that same calendar year, and (B) the total
amount requested for reimbursement by all health maintenance organiza-
tions from the direct payment out-of-plan stop loss fund exceeds the
amount available for distribution from such fund, then any excess funds
shall be reallocated for distribution to the direct payment out-of-plan
stop loss fund AND THE SMALL GROUP STOP LOSS FUND. Otherwise, such
excess funds shall be carried forward and will not affect monies appro-
priated for the direct payment stop loss fund in the next calendar year.
(f) Upon the request of the superintendent, each health maintenance
organization shall be required to furnish such data as the superinten-
dent deems necessary to oversee the operation of the direct payment stop
loss fund. Such data shall be furnished in a form prescribed by the
superintendent.
S. 648 8
(g) The superintendent may obtain the services of an organization to
administer the direct payment stop loss fund. The superintendent shall
establish guidelines for the submission of proposals by organizations
for the purposes of administering the fund. The superintendent shall
make a determination whether to approve, disapprove or recommend modifi-
cation to the proposal of an applicant to administer the fund. An organ-
ization approved to administer the fund shall submit reports to the
superintendent in such form and at times as may be required by the
superintendent 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 superintendent and to the chairs of the senate finance committee and
assembly ways and means committee. An organization approved to adminis-
ter the fund shall maintain records in a form prescribed by the super-
intendent and which shall be available for inspection by or at the
request of the superintendent. The superintendent shall determine the
amount of compensation to be allocated to an approved organization as
payment for fund administration. Compensation shall be payable from the
direct payment stop loss fund. An organization approved to administer
the fund may be removed by the superintendent and must cooperate in the
orderly transition of services to another approved organization or to
the superintendent.
(h) If the superintendent deems it appropriate for the proper adminis-
tration of the direct payment stop loss fund, the administrator of the
fund, on behalf of and with the prior approval of the superintendent,
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. Such stop loss insurance and/or reinsurance may be purchased
to the extent of funds available therefor within such funds which are
available for purposes of the stop loss fund.
(I) AS INDIVIDUALS TRANSFER FROM THE STANDARDIZED INDIVIDUAL ENROLLEE
DIRECT PAYMENT CONTRACTS TO THE SMALL GROUP MARKET, AN ACTUARIALLY
APPROPRIATE AMOUNT, AS DETERMINED BY THE SUPERINTENDENT, SHALL BE TRANS-
FERRED FROM THE DIRECT PAYMENT STOP LOSS FUND TO THE SMALL GROUP STOP
LOSS FUND.
S 6. Section 4322-a of the insurance law, as added by chapter 1 of the
laws of 1999, paragraph 2 of subsection (e) as amended by chapter 419 of
the laws of 2000, is amended to read as follows:
S 4322-a. Fund for standardized individual enrollee direct payment
contracts which provide out-of-plan benefits. (a) The superintendent
shall establish a fund from which health maintenance organizations may
receive reimbursement, to the extent of funds available therefor, for
claims paid by such health maintenance organizations for members covered
under standardized individual enrollee direct payment contracts which
provide out-of-plan benefits issued pursuant to section four thousand
three hundred twenty-two of this article AND FOR ALL SMALL GROUP POLI-
CIES OR CONTRACTS ISSUED AFTER JANUARY FIRST, TWO THOUSAND TWELVE. The
fund established by the superintendent pursuant to this section shall be
known as "the direct payment out-of-plan stop loss fund". Commencing in
calendar year two thousand, health maintenance organizations shall be
eligible to receive reimbursement from the direct payment out-of-plan
stop loss fund for ninety percent of claims paid between twenty thousand
and one hundred thousand dollars in a calendar year for any member
covered under a contract issued pursuant to section four thousand three
hundred twenty-two of this article AND FOR ALL SMALL GROUP POLICIES OR
CONTRACTS ISSUED AFTER JANUARY FIRST, TWO THOUSAND TWELVE. For the
S. 648 9
purposes of this section, claims shall include health care claims paid
by a health maintenance organization on behalf of a covered member
pursuant to contracts issued pursuant to section four thousand three
hundred twenty-two of this article OR A SMALL GROUP POLICY OR CONTRACT.
(b) The superintendent shall promulgate regulations that set forth
procedures for the operation of the direct payment out-of-plan stop loss
fund AND THE SMALL GROUP STOP LOSS FUND ESTABLISHED PURSUANT TO
SUBSECTION (D) OF SECTION THREE THOUSAND TWO HUNDRED THIRTY-THREE OF
THIS CHAPTER and the distribution of monies therefrom.
(c) 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 member reach or exceed one hundred thousand dollars in a
given calendar year, no further claims paid on behalf of such member in
that calendar year shall be eligible for reimbursement.
(d) Each health maintenance organization shall submit a request for
reimbursement from the stop loss fund on a form prescribed by the super-
intendent. Such request for reimbursement shall be submitted no later
than April first following the end of the calendar year for which the
reimbursement request is being made. The superintendent may require
health maintenance organizations to submit such claims data in
connection with the reimbursement request as he OR SHE deems necessary
to enable him OR HER to distribute monies and oversee the operation of
the direct payment out-of-plan stop loss fund AND THE SMALL GROUP STOP
LOSS FUND. The superintendent may require that such data be submitted
on a per member, aggregate and/or categorical basis.
(e) The superintendent shall calculate the total claims reimbursement
amount for all health maintenance organizations for the calendar year
for which claims are being reported.
(1) In the event that the total amount requested for reimbursement by
all health maintenance organizations for a calendar year exceeds funds
available for distribution for claims paid by all health maintenance
organizations during that same calendar year, the superintendent shall
provide for the pro-rata distribution of the available funds. Each
health maintenance organization shall be eligible to receive only such
proportionate amount of the available funds as the individual health
maintenance organization's total eligible claims bears to the total
eligible claims paid by all health maintenance organizations.
(2) In the event that (A) funds available for distribution for claims
paid by all health maintenance organizations during a calendar year
exceeds the total amount requested for reimbursement by all health main-
tenance organizations during that same calendar year, and (B) the total
amount requested for reimbursement by all health maintenance organiza-
tions from the direct payment stop loss fund exceeds the amount avail-
able for distribution from such fund, then any excess funds shall be
reallocated for distribution to the direct payment stop loss fund AND
THE SMALL GROUP STOP LOSS FUND. Otherwise, such excess funds shall be
carried forward and shall not affect the monies appropriated for the
direct payment out-of-plan stop loss fund in the next calendar year.
(f) Upon the request of the superintendent, each health maintenance
organization shall be required to furnish such data as the superinten-
dent deems necessary to oversee the operation of the direct payment
out-of-plan stop loss fund. Such data shall be furnished in a form
prescribed by the superintendent.
(g) The superintendent may obtain the services of an organization to
administer the direct payment out-of-plan stop loss fund. The super-
S. 648 10
intendent shall establish guidelines for the submission of proposals by
organizations for the purposes of administering the fund. The super-
intendent 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 superintendent in such form and at times as may be
required by the superintendent 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 superintendent and to the chairs of the senate
finance committee and assembly ways and means committee. An organization
approved to administer the fund shall maintain records in a form
prescribed by the superintendent and which shall be available for
inspection by or at the request of the superintendent. The superinten-
dent shall determine the amount of compensation to be allocated to an
approved organization as payment for fund administration. Compensation
shall be payable from the direct payment out-of-plan stop loss fund. An
organization approved to administer the fund may be removed by the
superintendent and must cooperate in the orderly transition of services
to another approved organization or to the superintendent.
(h) If the superintendent deems it appropriate for the proper adminis-
tration of the direct payment out-of-plan stop loss fund, the adminis-
trator of the fund, on behalf of and with the prior approval of the
superintendent, 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. Such stop loss insurance and/or reinsurance
may be purchased to the extent of funds available therefor within such
funds which are available for purposes of the stop loss fund.
(I) AS INDIVIDUALS TRANSFER FROM THE STANDARDIZED INDIVIDUAL ENROLLEE
DIRECT PAYMENT CONTRACTS WHICH PROVIDE OUT-OF-PLAN BENEFITS TO THE SMALL
GROUP MARKET, AN ACTUARIALLY APPROPRIATE AMOUNT, AS DETERMINED BY THE
SUPERINTENDENT, SHALL BE TRANSFERRED FROM THE DIRECT PAYMENT OUT-OF-PLAN
STOP LOSS FUND TO THE SMALL GROUP STOP LOSS FUND.
S 7. The section heading and subsections (a), (b), (c), (d), (e), (f),
(h), (i), (q) and (r) of section 4327 of the insurance law, as added by
chapter 1 of the laws of 1999, subsection (h) as amended by chapter 419
of the laws of 2000, are amended to read as follows:
Stop loss funds for standardized health insurance contracts issued to
qualifying small employers and qualifying individuals AND THE SMALL
GROUP MARKET. (a) The superintendent shall establish a fund from which
health maintenance organizations, corporations or insurers may receive
reimbursement, to the extent of funds available therefor, for claims
paid by such health maintenance organizations, corporations or insurers
for members covered under qualifying group health insurance contracts
issued pursuant to section THREE THOUSAND TWO HUNDRED THIRTY-ONE OF THIS
CHAPTER AND SECTIONS FOUR THOUSAND THREE HUNDRED SEVENTEEN AND four
thousand three hundred twenty-six of this article. This fund shall be
known as the "small employer stop loss fund". The superintendent shall
establish a separate and distinct fund from which health maintenance
organizations, corporations or insurers may receive reimbursement, to
the extent of funds available therefor, for claims paid by such health
maintenance organizations, corporations or insurers for members covered
under qualifying individual health insurance contracts issued pursuant
to section four thousand three hundred twenty-six of this article. This
fund shall be known as the "qualifying individual stop loss fund".
S. 648 11
(b) Commencing on January first, two thousand one, health maintenance
organizations, corporations or insurers shall be eligible to receive
reimbursement for ninety percent of claims paid between thirty thousand
and one hundred thousand dollars in a calendar year for any member
covered under a standardized contract issued pursuant to section four
thousand three hundred twenty-six of this article OR A CONTRACT OR POLI-
CY ISSUED PURSUANT TO SECTION THREE THOUSAND TWO HUNDRED THIRTY-ONE OF
THIS CHAPTER OR SECTION FOUR THOUSAND THREE HUNDRED SEVENTEEN OF THIS
ARTICLE, PURSUANT TO REGULATIONS PROMULGATED PURSUANT TO SUBSECTION (D)
OF SECTION THREE THOUSAND TWO HUNDRED THIRTY-THREE OF THIS CHAPTER.
Claims paid for members covered under qualifying group health insurance
contracts shall be reimbursable from the small employer stop loss fund.
Claims paid for members covered under qualifying individual health
insurance contracts shall be reimbursable from the qualifying individual
stop loss fund; PROVIDED, HOWEVER, THAT THE SUPERINTENDENT, IN CONSULTA-
TION WITH THE DIRECTOR OF THE BUDGET, MAY TRANSFER AN ACTUARIALLY APPRO-
PRIATE AMOUNT OF FUNDS FROM THE SMALL EMPLOYER STOP LOSS FUND AND THE
QUALIFYING INDIVIDUAL STOP LOSS FUND TO ESTABLISH THE SMALL GROUP STOP
LOSS FUND ESTABLISHED PURSUANT TO SUBSECTION (D) OF SECTION THREE THOU-
SAND TWO HUNDRED THIRTY-THREE OF THIS CHAPTER. For the purposes of this
section, claims shall include health care claims paid by a health main-
tenance organization on behalf of a covered member pursuant to such
standardized contracts.
(c) The superintendent shall promulgate regulations that set forth
procedures for the operation of the small employer stop loss fund [and],
the qualifying individual stop loss fund, AND THE SMALL GROUP STOP LOSS
FUND ESTABLISHED PURSUANT TO SUBSECTION (D) OF SECTION THREE THOUSAND
TWO HUNDRED THIRTY-THREE OF THIS CHAPTER and distribution of monies
therefrom.
(d) The small employer stop loss fund shall operate separately from
the qualifying individual stop loss fund. Except as specified in
subsection (b) of this section with respect to calendar year two thou-
sand one, the level of stop loss coverage for the qualifying group
health insurance contracts and the qualifying individual health insur-
ance contracts need not be the same. The two stop loss funds need not be
structured or operated in the same manner, except as specified in this
section. The monies available for distribution from the stop loss funds
may be reallocated between the small employer stop loss fund [and], the
qualifying individual stop loss fund, AND THE SMALL GROUP STOP LOSS FUND
ESTABLISHED PURSUANT TO SUBSECTION (D) OF SECTION THREE THOUSAND TWO
HUNDRED THIRTY-THREE OF THIS CHAPTER if the superintendent determines
that such reallocation is warranted due to enrollment trends.
(e) Claims shall be reported and funds shall be distributed from the
small employer stop loss fund [and], from the qualifying individual stop
loss fund, AND THE SMALL GROUP STOP LOSS FUND ESTABLISHED PURSUANT TO
SUBSECTION (D) OF SECTION THREE THOUSAND TWO HUNDRED THIRTY-THREE OF
THIS CHAPTER 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 covered member reach or exceed one
hundred thousand dollars in a given calendar year, no further claims
paid on behalf of such member in that calendar year shall be eligible
for reimbursement.
(f) Each health maintenance organization, corporation or insurer shall
submit a request for reimbursement from each of the stop loss funds on
forms prescribed by the superintendent. Each of the requests for
reimbursement shall be submitted no later than April first following the
S. 648 12
end of the calendar year for which the reimbursement requests are being
made. The superintendent may require health maintenance organizations,
corporations or insurers to submit such claims data in connection with
the reimbursement requests as he OR SHE deems necessary to enable him OR
HER to distribute monies and oversee the operation of the small employer
and qualifying individual stop loss funds AND THE SMALL GROUP STOP LOSS
FUND ESTABLISHED PURSUANT TO SUBSECTION (D) OF SECTION THREE THOUSAND
TWO HUNDRED THIRTY-THREE OF THIS CHAPTER. The superintendent may
require that such data be submitted on a per member, aggregate and/or
categorical basis. Data shall be reported separately for qualifying
group health insurance contracts [and], qualifying individual health
insurance contracts issued pursuant to section four thousand three
hundred twenty-six of this article, AND SMALL GROUP CONTRACTS OR POLI-
CIES ISSUED PURSUANT TO SECTION THREE THOUSAND TWO HUNDRED THIRTY-ONE OF
THIS CHAPTER AND SECTION FOUR THOUSAND SEVENTEEN OF THIS ARTICLE.
(h) Upon the request of the superintendent, each health maintenance
organization shall be required to furnish such data as the superinten-
dent deems necessary to oversee the operation of the small employer and
qualifying individual stop loss funds AND THE SMALL GROUP STOP LOSS FUND
ESTABLISHED PURSUANT TO SUBSECTION (D) OF SECTION THREE THOUSAND TWO
HUNDRED THIRTY-THREE OF THIS CHAPTER. Such data shall be furnished in a
form prescribed by the superintendent. Each health maintenance organiza-
tion, corporation or insurer shall provide the superintendent with
monthly reports of the total enrollment under the qualifying group
health insurance contracts and the qualifying individual health insur-
ance contracts issued pursuant to section four thousand three hundred
twenty-six of this article. The reports shall be in a form prescribed by
the superintendent.
(i) The superintendent shall separately estimate the per member annual
cost of total claims reimbursement from each OF THE THREE stop loss
[fund for qualifying individual health insurance contracts and for qual-
ifying group health insurance contracts] FUNDS based upon available data
and appropriate actuarial assumptions. Upon request, each health mainte-
nance organization, corporation or insurer shall furnish to the super-
intendent claims experience data for use in such estimations.
(q) The superintendent may obtain the services of an organization to
administer the stop loss funds established by this section AND THE SMALL
GROUP STOP LOSS FUND ESTABLISHED PURSUANT TO SUBSECTION (D) OF SECTION
THREE THOUSAND TWO HUNDRED THIRTY-THREE OF THIS CHAPTER. If the super-
intendent deems it appropriate, he or she may utilize a separate organ-
ization for administration of the small employer stop loss fund [and],
the qualifying individual stop loss fund, AND THE SMALL GROUP STOP LOSS
FUND ESTABLISHED PURSUANT TO SUBSECTION (D) OF SECTION THREE THOUSAND
TWO HUNDRED THIRTY-THREE OF THIS CHAPTER. The superintendent shall
establish guidelines for the submission of proposals by organizations
for the purposes of administering the funds. The superintendent shall
make a determination whether to approve, disapprove or recommend modifi-
cation to the proposal of an applicant to administer the funds. An
organization approved to administer the funds shall submit reports to
the superintendent in such form and at times as may be required by the
superintendent in order to facilitate evaluation and ensure orderly
operation of the funds, including, but not limited to, an annual report
of the affairs and operations of the fund, such report to be delivered
to the superintendent and to the chairs of the senate finance committee
and the assembly ways and means committee. An organization approved to
administer the funds shall maintain records in a form prescribed by the
S. 648 13
superintendent and which shall be available for inspection by or at the
request of the superintendent. The superintendent shall determine the
amount of compensation to be allocated to an approved organization as
payment for fund administration. Compensation shall be payable from the
stop loss coverage funds. An organization approved to administer the
funds may be removed by the superintendent and must cooperate in the
orderly transition of services to another approved organization or to
the superintendent.
(r) If the superintendent deems it appropriate for the proper adminis-
tration of the small employer stop loss fund [and/or], the qualifying
individual stop loss fund, OR THE SMALL GROUP STOP LOSS FUND ESTABLISHED
PURSUANT TO SUBSECTION (D) OF SECTION THREE THOUSAND TWO HUNDRED THIR-
TY-THREE OF THIS CHAPTER, the administrator of the fund, on behalf of
and with the prior approval of the superintendent, 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. Such
stop loss insurance and/or reinsurance may be purchased to the extent of
funds available therefor within such funds which are available for
purposes of the stop loss funds established by this section.
S 8. This act shall take effect immediately; provided that sections
one and two of this act shall take effect on January 1, 2012; and
provided further that the superintendent of insurance is authorized and
directed to promulgate rules and regulations to implement the provisions
of this act, which rules and regulations must be adopted and filed with
the secretary of state by October 1, 2011. This act shall apply to all
policies and contracts of health insurance issued, renewed, modified,
altered or amended on or after January 1, 2012.
