Current Status Bill Number:
279Type of Legislation: General Bill GBIntroducing Body: SenateIntroduced Date: 19950110Primary Sponsor: MitchellAll Sponsors: Mitchell, WashingtonDrafted Document Number: RES9502.TWMResiding Body: SenateCurrent Committee: Banking and Insurance Committee 02 SBISubject: Health Insurance Plan
Body Date Action Description Com Leg Involved ______ ________ _______________________________________ _______ ____________ Senate 19950110 Introduced, read first time, 02 SBI referred to Committee Senate 19941114 Prefiled, referred to Committee 02 SBIView additional legislative information at the LPITS web site.
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.