S 279 Session 111 (1995-1996)
S 0279 General Bill, By T.W. Mitchell and Washington
A BILL TO ENACT THE "SOUTH CAROLINA HEALTH INSURANCE PLAN" WHICH ESTABLISHES A
MECHANISM TO ENSURE THE AVAILABILITY OF HEALTH INSURANCE COVERAGE TO THOSE
CITIZENS OF THIS STATE WHO ARE NOT OTHERWISE ABLE TO OBTAIN SUCH COVERAGE.
11/14/94 Senate Prefiled
11/14/94 Senate Referred to Committee on Banking and Insurance
01/10/95 Senate Introduced and read first time SJ-118
01/10/95 Senate Referred to Committee on Banking and Insurance SJ-118
A BILL
TO ENACT THE "SOUTH CAROLINA HEALTH
INSURANCE PLAN" WHICH ESTABLISHES A
MECHANISM TO ENSURE THE AVAILABILITY OF HEALTH
INSURANCE COVERAGE TO THOSE CITIZENS OF THIS
STATE WHO ARE NOT OTHERWISE ABLE TO OBTAIN
SUCH COVERAGE.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. (A) Existing law does not establish a health
coverage program to provide health insurance to residents of this
State who are not otherwise able to obtain health insurance.
(B) Uninsurable residents of this State, left to face the cost of
major medical care without health insurance coverage, must look to
publicly-funded programs in the event of severe illness or injury,
thereby placing a burden on the resources of the State.
(C) Insurance is a business which affects the public interest and
which has been and continues to be subject to regulation in the
public interest in this State; this state's interest in the regulation of
insurance is effectuated by the provisions of Title 38 of the 1976
Code of Laws and is affirmed in the McCarran-Ferguson Act, 15
U.S.C. 1011 et seq.
(D) It is the purpose and intent of the General Assembly to
establish a mechanism to ensure the availability of health insurance
coverage to those citizens of this State who, because of health
conditions, cannot secure such coverage.
SECTION 2. For the purposes of this act:
(A) "Ambulatory surgical facility" means the same
as that term is defined in Section 44-7-130(2) of the 1976 Code of
Laws.
(B) "Board" means the board of directors of the
plan.
(C) "Commissioner" means the Chief Insurance
Commissioner of South Carolina.
(D) "Department" means the South Carolina
Department of Insurance.
(E) "Dependent" means a resident spouse or resident
unmarried child under the age of nineteen years, a child who is a
student under
the age of twenty-three years and who is financially dependent upon
the parent, or a child of any age who is disabled and dependent
upon the parent.
(F) "Health insurance" means any hospital and
medical expense incurred policy, nonprofit health service plan
contract, health maintenance organization subscriber contract, or any
other health care plan or arrangement that pays for or furnishes
medical or health care services whether by insurance or otherwise.
The term does not include short term, accident, dental-only,
vision-only, fixed indemnity, limited benefit or credit insurance,
coverage issued as a supplement to liability insurance, insurance
arising out of workers' compensation or similar law, automobile
medical-payment insurance, or insurance under which benefits are
payable with or without regard to fault and which is required by
statute to be contained in any liability insurance policy or equivalent
self-insurance.
(G) "Health care provider" means a person licensed
by this State to provide health care or professional services or any
professional corporation, as a health care provider, authorized to
form under the laws of this State, or such a person licensed by the
appropriate law of another state.
(H) "Hospital" means the same as that term is
defined in Section 44-7-130(12) of the 1976 Code of Laws.
(I) "Insurance arrangement" means any plan,
program, contract, or any other arrangement under which one or
more natural or juridical persons provide to their employees or
participant, whether directly or indirectly, health care services or
benefits other than through an insurer. The term also incudes a
"self-insurer" as defined in this section.
(J) "Insured" means any natural person domiciled in
this State, other than a member of the plan who is eligible to
receive benefits from any insurer or insurance arrangement as
defined in this section.
(K) "Insurer" means any entity that provides health
insurance in this State. For the purposes of this act, insurer
includes an insurance company, a prepaid hospital or medical care
plan, a fraternal benefit society, a health maintenance organization,
and any other entity providing a plan of health insurance or health
benefits subject to state insurance regulation.
(L) "Medicare" means coverage under both Parts A
and B of Title XVIII of the Social Security Act, 42 U.S.C. 1395 et
seq., as amended.
(M) "Physician" means the same as that term is
defined and used in Chapter 47 of Title 40 of the 1976 Code of
Laws.
(N) "Plan" means the South Carolina Health
Insurance Plan as created in Section 3 of this act.
(O) "Plan of operation" means the articles, bylaws,
and operating rules and procedures adopted by the board pursuant
to Section 3 of this act.
(P) "Public Program" means any public assistance
program which provides funding for health care services rendered
by a health care provider.
(Q) "Private pay patient" means a natural person
who is not covered by any policy or plan of insurance or by a
self-insurer or whose charges for injury or illness are not
compensable by his employer or other insurer or insurance
arrangement.
(R) "Self-insurer" means a natural or juridical person
which provides health care services or reimbursement for all or any
part of the costs of health care for its employees or participants in
this State other than an insurer.
SECTION 3. (A) There is hereby established the South
Carolina Health Insurance Plan.
(B) The plan shall operate subject to the supervision and control
of the board. The board shall consist of the commissioner or his
designee who shall serve as an ex officio member of the board and
shall be its chairman, and thirteen members appointed by the
Governor. At least two board members must be individuals or the
parent, spouse, or child of individuals, reasonably expected to
qualify for coverage by the plan. At least two board members must
be representatives of insurers. At least two board members must be
representatives of self-insurers. A majority of the board must be
composed of individuals who are not representatives of insurers,
health care providers, or self-insurers.
(C) The initial board members must be appointed as follows:
five members to serve a term of two years; four members to serve a
term of four years; and four members to serve a term of six years.
Successor board members shall serve for a term of three years. A
board member's term shall continue until his successor is appointed
and qualifies for office.
(D) Vacancies on the board shall be filled by the Governor in
the same manner as original appointment. Board members may be
removed by the Governor for cause.
(E) Board members shall not be compensated in their capacity
as board members but must be reimbursed for reasonable expenses
incurred in the necessary performance of their duties, including
mileage, subsistence, and per diem as allowed by law for members
of state boards, committees, and commissions.
(F) The board shall submit the commissioner a plan of operation
for the plan and any amendments necessary or suitable to assure the
fair, reasonable, and equitable administration of the plan. The
commissioner shall approve the plan of operation, provided such is
determined to be suitable to assure the fair, reasonable, and
equitable administration of the plan. The plan of operation shall
become effective upon approval in writing by the commissioner. If
the board fails to submit a suitable plan of operation within one
hundred eighty days after its appointment or at any time fails to
submit suitable amendments to the plan, the commissioner shall
adopt and promulgate such reasonable regulations as are necessary
and advisable to effectuate the provisions of this section. Such
regulations shall continue in force until modified by the
commissioner or superseded by a plan of operation submitted by the
board and approved by the commissioner.
(G) The plan of operation shall:
(1) establish procedures for operation of the plan;
(2) establish procedures for selecting an administrator in
accordance with Section 7 of this act;
(3) establish procedures to create a fund, under management
of the board, for administrative expenses;
(4) establish procedures for the handling, accounting, and
auditing of assets, monies, and claims of the plan and plan
administrator;
(5) develop and implement a program to publicize the
existence of the plan, the eligibility requirements, and procedures
for enrollment; and to maintain public awareness of the plan;
(6) establish procedures under which applicants and
participants may have grievances reviewed by a grievance
committee appointed by the board. The grievances must be
reported to the board after completion of the review. The board
shall retain all written complaints regarding the plan for at least
three years;
(7) provide for other matters as may be necessary and proper
for the execution of the board's powers, duties, and obligations
under this act.
(H) The plan shall have the general powers and authority
granted under the laws of this State to health insurers and, in
addition, the specific authority to:
(1) enter into contracts as are necessary or proper to carry out
the provisions and purposes of this act, including the authority, with
the approval of the commissioner, to enter into contracts with
similar plans of other states for the joint performance of common
administrative functions, or with persons or other organization for
the performance of administrative functions;
(2) sue or be sued, including taking any legal action
necessary or proper to recover or collect assessments due the plan;
(3) take such legal action as necessary to:
(a) avoid the payment of improper claims against the plan
or the coverage provided by or through the plan;
(b) recover any amounts erroneously or improperly paid by
the plan;
(c) recover any amounts paid by the plan as a result of
mistake of fact or law; or
(d) recover other amounts due the plan;
(4) establish, and modify from time to time as appropriate,
rates, rate schedules, rate adjustments, expense allowances, agents'
referral fees, claim reserve formulas, and any other actuarial
function appropriate to the operation of the plan. Rates and rate
schedules may be adjusted for appropriate factors such as age, sex,
and geographic variation in claim cost and shall take into
consideration appropriate factors in accordance with established
actuarial and underwriting practices;
(5) issue policies of insurance in accordance with the
requirements of this act;
(6) appoint appropriate legal, actuarial, and other committees
as necessary to provide technical assistance in the operation of the
plan, policy, and other contract design, and any other function
within the authority of the plan;
(7) borrow money to effect the purposes of the plan. Any
notes or other evidence of indebtedness of the plan not in default
shall be legal investments for insurance and may be carried as
admitted assets;
(8) establish rules, conditions, and procedures for reinsuring
risks of participating insurers desiring to issue plan coverages in
their own name. Provision of reinsurance does not subject the plan
to any of the capital or surplus requirements, if any, otherwise
applicable to reinsurers.
(9) employ and fix the compensation of employees. Such
employees may be paid on a warrant issued by the State Treasurer
pursuant to a payroll voucher certified by the board and drawn
against appropriations or trust funds held by the State Treasurer;
(10) prepare and distribute certificate of eligibility forms and
enrollment instruction forms to insurance producers and to the
general public;
(11) provide for reinsurance of risks incurred by the plan;
(12) provide for and employ cost containment measurers and
requirements including, but not limited to, preadmission screening,
second surgical opinion, concurrent utilization review, and
individual case management for the purpose of making the benefit
plan more cost effective;
(13) design, utilize, contract, or otherwise arrange for the
delivery of cost-effective health care services, including establishing
or contracting with preferred provider organizations, health
maintenance organizations, and other limited network provider
arrangements;
(14) adopt bylaws, policies, and procedures as may be
necessary or convenient for the implementation of this act and the
operation of the plan.
(I) The board shall make an annual report to the Governor
which also must be filed with the General Assembly. The report
shall summarize the activities of the plan in the preceding calendar
year, including the net written and earned premiums, plan
enrollment, the expense of administration, and the paid and incurred
losses.
(J) Neither the board nor its employees are liable for any
obligations of the plan. No member or employee of the board is
liable, and no cause of action of any nature may arise against them,
for any act or omission related to the performance of their powers
and duties under this act, unless such act or omission constitutes
wilful or wanton misconduct. The board may provide in its bylaws
or rules for indemnification of, and legal representation for, its
members and employees.
SECTION 4. The commissioner may, by regulation, establish
additional powers and duties of the board and may promulgate such
regulations as are necessary and proper to implement this act.
SECTION 5. (A) Any natural person who has been domiciled
in this State for six consecutive months is eligible for plan coverage
if evidence is provided of:
(1) a notice of rejection or refusal to issue substantially
similar insurance for health reasons by two insurers; or
(2) a refusal by two insurers to issue insurance except at a
rate exceeding the plan rate.
A rejection or refusal by an insurer offering only stoploss, excess
of loss, or reinsurance coverage with respect to the applicant is not
sufficient evidence under this subsection.
(B) The board shall promulgate a list of medical or health
conditions for which a person is eligible for plan coverage without
applying for health insurance pursuant to subsection (A). A person
who can demonstrate the existence or history of any medical or
health conditions on the list promulgated by the board is not
required to provide the evidence specified in subsection (A). The
list is effective on the first day of the operation of the plan and may
be amended from time to time as may be appropriate.
(C) Each resident dependent of a person who is eligible for plan
coverage is also eligible for plan coverage.
(D) A person is not eligible for coverage under the plan if the
person has or obtains health insurance coverage substantially similar
to or more comprehensive than a plan policy, or would be eligible
to have coverage if the person elected to obtain it.
SECTION 6. (A) Except as provided in subsection (B), it shall
constitute an unfair trade practice for the purposes of Chapter 57 of
Title 38 of the 1976 Code of Laws for an insurer, insurance agent,
insurance broker, or third-party administrator to refer an individual
employee to the plan, or arrange for an individual employee to
apply to the plan, for the purpose of separating that employee from
group health insurance coverage provided in connection with the
employees' employment.
(B) The provisions of subsection (A) do not apply with respect
to health insurance coverage provided to groups with fewer than
twenty-five employees.
SECTION 7. (A) The board shall select a plan administrator
through a competitive bidding process to administer the plan. The
board shall evaluate bids submitted based on criteria established by
the board which shall include:
(1) the plan administrator's proven ability to handle health
insurance coverage to individuals;
(2) the efficiency and timeliness of the plan administrator's
claim processing procedures;
(3) an estimate of total charges for administering the plan;
(4) the plan administrator's ability to apply effective cost
containment programs and procedures and to administer the plan in
a cost-efficient manner; and
(5) the financial condition and stability of the plan
administrator.
(B) (1) The plan administrator shall serve for a period specified
in the contract between the plan and the plan administrator subject
to removal for cause and subject to any terms, conditions, and
limitations of the contract between the plan and the plan
administrator.
(2) At least one year before the expiration of each period of
service by a plan administrator, the plan administrator shall submit
bids to serve as the plan administrator. Selection of the plan
administrator for the succeeding period must be made at least six
months before the end of the current period.
(C) The plan administrator shall perform such functions relating
to the plan as may be assigned to it, including:
(1) determination of eligibility;
(2) payment of claims;
(3) establishment of a premium billing procedure for
collection of premiums from persons covered under the plan; and
(4) other necessary functions to assure timely payment of
benefits to covered persons under the plan.
(D) The plan administrator shall submit regular reports to the
board regarding the operation of the plan. The frequency, content,
and form of the reports must be specified in the contract between
the board and the plan administrator.
(E) Following the close of each calendar year, the plan
administrator shall determine net written and earned premiums, the
expense of administration, and the paid and incurred losses for the
year and report this information to the board and the department on
a form prescribed by the commissioner.
(F) The plan administrator must be paid as provided in the
contract between the plan and the plan administrator.
SECTION 8. (A) (1) The plan shall establish premium rates
for plan coverage as provided in subitem (2). Separate schedules of
premium rates based on age, sex, and geographical location may
apply for individual risks.
(2) The plan shall determine a standard risk rate by
considering the premium rates charged by other insurers offering
health insurance actuarial techniques and shall reflect anticipated
experience and expenses for such coverage. Initial rates for plan
coverage shall not be less than 150 percent of rates established as
applicable for individual standard risks. Subject to the limits
provided in this subitem, subsequent rates must be established to
provide fully for the expected costs of claims, including recovery of
prior losses, expense of operation, investment income of claim
reserves, and any other cost factors subject to the limitations
described in this section. In no event shall plan rates exceed 200
percent of rates applicable to individual standard risks.
(B) (1) The deficit incurred by the plan must be subsidized by
the State through the service charge provided for in this subsection.
The board shall operate the plan in a manner so that the estimated
cost of providing health insurance during any fiscal year will not
exceed total income the plan expects to receive from policy
premiums and service charges provided for in this subsection.
After determining the amount of funds available to it for a fiscal
year, the board shall estimate the number of new policies it believes
the plan has the financial capacity to insure during that year so that
costs do not exceed income. The board shall take steps necessary
to assure that plan enrollment does not exceed the number of
residents it has estimated it has the financial capacity to insure.
(2) (a) Each patient, except a private pay patient, a patient
covered by Medicare, one who is covered by any other public
program that is directly subsidized by the federal government, one
who is covered by the State Employees Group Benefits Program, or
one who is covered by an insolvent insurer, who is admitted to a
hospital for treatment must be assessed a service charge of two
dollars for each day, or portion thereof, during which the patient is
confined as an inpatient in that facility. For purposes of this section
only, "hospital" does not include any hospital operated
by the State or any hospital created or operated by the Department
of Veterans Affairs or other agency of the United States of
America. Each hospital in which a patient is confined shall
calculate the total service charge due for that service charge in the
bill for services rendered to the patient. The service charge must be
collected as provided in sub-subitem (c).
(b) Each patient, except a private pay patient, a patient
covered by Medicare, a patient covered by any other public
program that is directly subsidized by the federal government, one
who is covered by the State Employees Group Benefits Program, or
one covered by an insolvent insurer, who is admitted to an
ambulatory surgical facility or to a hospital for outpatient
ambulatory surgical care must be assessed a service charge of one
dollar for each admission to that facility. The service charge must
be included in the bill for services or supplies, or both, rendered to
the patient by the ambulatory surgical facility or hospital.
(c) Each hospital and ambulatory surgical facility shall
collect the service charges assessed under this section. In the event
that no payment is made by or on behalf of the patient for services
rendered, the fee assessed under this section must be waived. Each
hospital and ambulatory surgical facility shall remit to the plan for
each reporting period, as established in the plan of operation,
charges collected during that reporting period in accordance with
the reporting and remittance procedures by the board. Failure to
pay within sixty days after the end of the reporting period shall
cause the hospital or ambulatory surgical facility to be liable to the
plan for an amount determined by the board, not to exceed $500,
plus interest. Any hospital or ambulatory surgical facility found to
have failed to pay according to this section on three or more
occasions during a six-month period is liable for an amount
determined by the board, not less than $500 and not to exceed
$1,500 per failure, together with attorney's fees, interest, and court
costs.
SECTION 9. The plan shall offer health care coverage
consistent with major medical expense coverage to every eligible
person who is not eligible for Medicare. The coverage to be issued
by the plan, its schedule of benefits, exclusions, and other
limitations must be established by the board.
SECTION 10. This act takes effect one hundred eighty days after
approval by the Governor.
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