SENATE BILL 89
50th legislature - STATE OF NEW MEXICO - first session, 2011
INTRODUCED BY
George K. Munoz
AN ACT
RELATING TO HEALTH INSURANCE; ENACTING THE PRIVATE HEALTH INSURANCE PURCHASING COOPERATIVE ACT; PROVIDING FOR THE CREATION OF HEALTH INSURANCE PURCHASING COOPERATIVES AMONG EMPLOYERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 13 of this act may be cited as the "Private Health Insurance Purchasing Cooperative Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Private Health Insurance Purchasing Cooperative Act:
A. "board of directors" means the board of directors elected by a cooperative;
B. "carrier" means a person that provides health insurance or a health benefit plan in this state and includes a licensed insurance company, a licensed fraternal benefit society, a prepaid hospital or medical service plan, a health maintenance organization, a nonprofit health care organization, a multiple employer welfare arrangement or any other person providing health insurance or a health benefit plan to a small or large employer subject to state insurance regulation;
C. "cooperative" means a private health insurance purchasing cooperative established pursuant to the Private Health Insurance Purchasing Cooperative Act;
D. "expanded service area" means any area larger than one county in which a cooperative offers coverage;
E. "health benefit plan" means an employee welfare benefit plan as defined in Section 3(1) of the federal Employee Retirement Income Security Act of 1974 to the extent that the plan provides medical care and includes items and services paid for as medical care to employees or their dependents as defined under the terms of the plan directly or through insurance, reimbursement or otherwise;
F. "large employer" means a person that does business in this state, that has employees of whom at least fifty percent are residents of this state, that is actively engaged in business and that, on at least fifty percent of its working days during either of the two preceding calendar years, employed no fewer than fifty-one eligible employees; provided that:
(1) in determining the number of eligible employees, the spouse or dependent of an employee may, at the employer's discretion, be counted as a separate employee;
(2) companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state income taxation shall be considered one employer; and
(3) in the case of an employer that was not in existence throughout a preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of employees that the employer reasonably expects to employ on working days in the current calendar year;
G. "small employer" means a person actively engaged in business that, on at least fifty percent of its working days during either of the two preceding years, employed no less than two and no more than fifty eligible employees; provided that:
(1) in determining the number of eligible employees, the spouse or dependent of an employee may, at the employer's discretion, be counted as a separate employee;
(2) companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state income taxation shall be considered one employer; and
(3) in the case of an employer that was not in existence throughout a preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of employees that the employer reasonably expects to employ on working days in the current calendar year; and
H. "superintendent" means the superintendent of insurance of the insurance division of the public regulation commission.
SECTION 3. [NEW MATERIAL] PRIVATE HEALTH INSURANCE COOPERATIVES--INCORPORATION--FILING WITH SUPERINTENDENT.--
A. A person may form a cooperative to purchase employer health benefit plans. A cooperative shall be organized as a nonprofit corporation and has the rights and duties provided by the Nonprofit Corporation Act.
B. Two or more small employers may form a cooperative to purchase health benefit plans pursuant to the Small Group Rate and Renewability Act.
C. Two or more large employers, or any combination of large employers and small employers, may purchase group health benefit plans pursuant to Chapter 59A, Article 23 NMSA 1978.
D. On receipt of a certificate of incorporation or certificate of authority from the public regulation commission, the cooperative shall file written notice of the receipt of the certificate and a copy of the cooperative's organizational documents with the superintendent.
E. Annually, the board of directors shall file with the superintendent a statement of all amounts collected and expenses incurred for each of the preceding three years.
F. A carrier shall not form, or be a member of, a cooperative. A carrier may associate with a sponsoring entity, such as a business association, chamber of commerce or other organization representing employers or serving an analogous function, to assist the sponsoring entity in forming a cooperative.
SECTION 4. [NEW MATERIAL] POWERS AND DUTIES OF A COOPERATIVE.--
A. A cooperative shall:
(1) arrange for small or large employer health benefit plan coverage for small or large employer groups that participate in the cooperative by contracting with carriers pursuant to the Small Group Rate and Renewability Act or Chapter 59A, Article 23 NMSA 1978 in accordance with Section 3 of the Private Health Insurance Purchasing Cooperative Act;
(2) collect premiums to cover the cost of:
(a) small or large employer health benefit plan coverage purchased through the cooperative; and
(b) the cooperative's administrative expenses;
(3) establish administrative and accounting procedures for the operation of the cooperative;
(4) establish procedures under which an applicant for or participant in health benefit plan coverage issued through the cooperative may have a grievance reviewed by an impartial person;
(5) contract with carriers to provide services to small or large employers covered through the cooperative; and
(6) develop and implement a plan to maintain public awareness of the cooperative and publicize the eligibility requirements for, and the procedures for enrollment in, health benefit plan coverage through the cooperative.
B. A cooperative may:
(1) contract with agents to market health benefit plan coverage issued through the cooperative;
(2) contract with a carrier or third-party administrator to provide administrative services to the cooperative;
(3) negotiate the premiums paid by its members; and
(4) offer other ancillary products and services to its members that are customarily offered in conjunction with health benefit plans.
C. A cooperative shall comply with:
(1) federal laws applicable to cooperatives and health benefit plans offered through cooperatives to the extent required by state law or rules adopted by the superintendent; and
(2) state laws applicable to cooperatives and health benefit plans offered through cooperatives.
D. To be eligible to exercise the authority granted under Paragraph (1) of Subsection A of this section, a cooperative shall have at least ten participating employers.
SECTION 5. [NEW MATERIAL] SPECIAL PROVISIONS RELATING TO COOPERATIVES.--
A. To participate as a member of a cooperative, an employer shall be a small or large employer. The membership of a cooperative may consist of only small employers, only large employers or both small and large employers. Notwithstanding the provisions of Subsections B and C of this section, a cooperative may restrict membership to small and large employers within a single industry grouping as defined by the most recent edition of the United States census bureau's North American Industry Classification System.
B. The type of group that may be covered by a group health benefit plan issued through a cooperative is not limited.
C. A cooperative:
(1) shall allow a small employer to join a cooperative consisting of only small employers or both small and large employers and enroll in health benefit plan coverage; and
(2) may allow a large employer to join a cooperative and enroll in health benefit plan coverage.
D. A cooperative consisting of only small employers or both small and large employers shall allow any small employer to join the cooperative and enroll in the cooperative's health benefit plan coverage during the initial enrollment and annual open enrollment periods.
E. A sponsoring entity of a cooperative may inform the members of the entity about the cooperative and the health benefit plans offered by the cooperative. A carrier shall issue health benefit plan coverage for the cooperative through a licensed agent marketing the coverage in accordance with the provisions of the Private Health Insurance Purchasing Cooperative Act.
F. The superintendent shall promulgate rules that govern the manner in which an employer may terminate, because of a financial hardship affecting the employer, participation in a cooperative.
G. An employer's participation in a cooperative is voluntary, but an employer electing to participate in a cooperative shall commit to purchasing health benefit plan coverage through the cooperative for two years, except as provided by Subsection F of this section.
H. A carrier issuing coverage to a cooperative:
(1) shall use a standard presentation form that the superintendent prescribes by rule to market health benefit plan coverage through the cooperative;
(2) may contract to provide health benefit plan coverage with only one cooperative in any county, except that a carrier may contract with additional cooperatives if it is providing health benefit plan coverage in an expanded service area;
(3) shall allow enrollment in health benefit plan coverage in compliance with Subsection C of this section and with the carrier's agreement with the cooperative;
(4) is exempt from the premium tax collected pursuant to Chapter 59A, Article 6 NMSA 1978 with respect to the premiums or revenues received for coverage provided to each uninsured employee or dependent as defined by the superintendent in accordance with Subsection I of this section; and
(5) shall maintain documentation to be provided by cooperatives to ensure compliance with rules that the superintendent has promulgated pursuant to Subsection I of this section regarding uninsured employees or dependents.
I. The superintendent shall promulgate rules that define "uninsured employee or dependent" for purposes of Paragraph (4) of Subsection H of this section.
J. Notwithstanding any other state or federal law, and except as provided by Subsection O of this section, a health benefit plan issued by a carrier to provide coverage with a cooperative is not subject to a state law or rule that:
(1) relates to a particular illness, disease or treatment; or
(2) regulates the differences in rates applicable to services provided within a health benefit plan network or outside the network.
K. The superintendent shall promulgate rules to implement the exemption authorized by Subsection J of this section.
L. A cooperative may offer more than one health benefit plan, but each plan offered shall be made available to all employees covered by the cooperative.
M. A carrier may, with notice to the superintendent, provide health benefit plan coverage to an expanded service area that includes the entire state. A carrier may apply for approval of an expanded service area that consists of less than the entire state by filing with the superintendent an application, in a form and manner prescribed by the superintendent, at least sixty days before the date the carrier issues coverage to the cooperative in the expanded service area. At the expiration of sixty days after the date of receipt by the insurance division of the public regulation commission of a filed application, the application is considered approved by the insurance division unless, before that date, the application was either affirmatively approved or disapproved by written order of the superintendent. The superintendent, after notice and opportunity for hearing, may rescind an approval granted to a carrier pursuant to this subsection if the superintendent finds that the carrier has failed to market fairly to all eligible employers in the state or the expanded service area.
N. The provisions of this section do not limit or restrict a small or large employer's access to health benefit plans pursuant to the New Mexico Insurance Code.
O. A health benefit plan provided through a cooperative shall provide coverage for diabetes equipment, supplies and services.
P. A cooperative consisting only of small employers is not required to allow a small employer to join the cooperative if:
(1) the cooperative has elected to restrict membership in the cooperative in accordance with this subsection and Subsection Q of this section; and
(2) after the small employer has joined the cooperative, the total number of eligible employees employed on business days during the preceding calendar year by all small employers participating in the cooperative would exceed fifty.
Q. A cooperative shall make the election described by Subsection P of this section at the time the cooperative is initially formed. Evidence of the election shall be filed in writing with the superintendent in the form and at the time prescribed by rules the superintendent has promulgated.
SECTION 6. [NEW MATERIAL] VOLUNTARY PARTICIPATION BY CARRIER IN A COOPERATIVE.--A carrier may elect not to participate in a cooperative. The carrier may elect to participate in one or more cooperatives and may select the cooperatives in which the carrier will participate.
SECTION 7. [NEW MATERIAL] SELF-INSURED OR SELF-FUNDED PLAN PROHIBITED.--A cooperative shall not self-insure or self-fund any health benefit plan or portion of a plan.
SECTION 8. [NEW MATERIAL] REQUIREMENTS APPLICABLE TO CARRIERS WITH WHICH A COOPERATIVE MAY CONTRACT.--A cooperative may contract only with a carrier that demonstrates that the carrier:
A. is in good standing with the insurance division of the public regulation commission;
B. has the capacity to administer health benefit plans;
C. is able to monitor and evaluate the quality and cost-effectiveness of care and applicable procedures;
D. is able to conduct utilization management and establish applicable procedures and policies;
E. is able to ensure that enrollees have adequate access to health care providers, including adequate numbers and types of providers;
F. has a satisfactory grievance procedure and is able to respond to enrollees' calls, questions and complaints; and
G. has financial capacity, either through satisfying financial solvency standards that the superintendent shall set or through appropriate reinsurance or other risk-sharing mechanisms.
SECTION 9. [NEW MATERIAL] COOPERATIVE NOT INSURER--AGENTS.--
A. A cooperative is not a carrier or an insurer, and an employee of the cooperative shall not be required to be licensed as an agent or broker pursuant to the provisions of the New Mexico Insurance Code. This exemption from licensure includes a cooperative that acts to provide information about and to solicit membership in the cooperative.
B. An agent used and compensated by a cooperative may market the products and services sponsored by the cooperative without being appointed by each carrier participating in the cooperative. The agent shall not market any other product or service of a participating carrier that is not sponsored by the cooperative unless the agent has been appointed by that carrier.
SECTION 10. [NEW MATERIAL] COOPERATIVE ADMINISTRATORS.--
A. A board of directors may select a cooperative administrator through a competitive request for proposals process. The cooperative administrator shall be licensed as an agent or broker pursuant to the New Mexico Insurance Code. The board of directors shall evaluate proposals based on criteria established by the board of directors that shall include:
(1) proven ability to administer health insurance programs;
(2) an estimate of total charges for administering the cooperative for the proposed contract period; and
(3) ability to administer the cooperative in a cost-efficient manner.
B. The cooperative administrator contract shall be for a period up to four years, subject to annual renegotiation of the fees and services, and shall provide for cancellation of the contract for cause or due to termination of the cooperative.
C. At least one year prior to the expiration of a cooperative administrator contract, the board of directors may invite all interested parties, including the current administrator, to submit proposals to serve as administrator for a succeeding contract period. Selection of the administrator for a succeeding contract period shall be made at least six months prior to the expiration of the current contract.
D. The board of directors may require carriers issuing policies through the cooperative to perform, subject to the oversight of the board of directors, any or all of the administrative functions of the cooperative related to enrollment, billing or other activity that members regularly perform in the normal course of business. Carriers shall be required to submit regular reports to the board of directors of such activities, as specified by the board of directors. Carriers performing such functions shall not be entitled to receive any portion of the administrative assessment or any other payment from the cooperative for performing these services.
SECTION 11. [NEW MATERIAL] IMMUNITY.--
A. A cooperative, a member of the board of directors, an executive director of a cooperative or an employee or agent of the cooperative is not liable for:
(1) an act performed in good faith in the execution of duties in connection with the cooperative; or
(2) an independent action of a carrier or a person that provides health care services under a health benefit plan.
B. A cooperative, a member of the board of directors, the executive director of a cooperative or an employee or agent of the cooperative is not liable for failure to arrange for coverage of any particular illness, disease or health condition.
SECTION 12. [NEW MATERIAL] STATUS AS EMPLOYER.--
A. A small employer health coalition that otherwise meets the description of a small employer is considered a single small employer for all purposes pursuant to the Private Health Insurance Purchasing Cooperative Act.
B. A cooperative that is composed of only small employers, only large employers, or both small and large employers is considered a single employer pursuant to the Private Health Insurance Purchasing Cooperative Act.
C. A cooperative that is composed only of small employers and that has made the election described by Paragraph (1) of Subsection P of Section 5 of the Private Health Insurance Purchasing Cooperative Act shall be treated in the same manner as a small employer for the purposes of that act, including for the purposes of any provision relating to premium rates and issuance and renewal of health benefit plan coverage.
D. A cooperative that is composed only of small employers and that has not made an election pursuant to Paragraph (1) of Subsection P of Section 5 of the Private Health Insurance Purchasing Cooperative Act in accordance with Subsection Q of that section, or a cooperative that is composed of both small and large employers, may be treated in the same manner as a large employer for the purposes of that act, including for the purposes of any provision relating to premium rates and issuance and renewal of health benefit plan coverage.
E. A cooperative shall have sole authority to make benefit elections and perform other administrative functions pursuant to the Private Health Insurance Purchasing Cooperative Act for the cooperative's participating employers.
F. Any other cooperative formed pursuant to the Private Health Insurance Purchasing Cooperative Act is considered an employer solely for the purposes of benefit elections pursuant to that act.
SECTION 13. [NEW MATERIAL] CERTAIN ACTIONS BASED ON RISK CHARACTERISTICS OR HEALTH STATUS PROHIBITED.--A cooperative shall not limit, restrict or condition an employer's or employee's membership in a cooperative or choice among health benefit plans based on:
A. risk characteristics of a group or of any member of a group; or
B. health status related factors, duration of coverage or any similar characteristic related to the health status or experience of a group or of any member of a group.
SECTION 14. Section 59A-6-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 102, as amended) is amended to read:
"59A-6-2. PREMIUM TAX--HEALTH INSURANCE PREMIUM SURTAX.--
A. The premium tax provided for in this section shall apply as to the following taxpayers:
(1) each insurer authorized to transact insurance in New Mexico;
(2) each insurer formerly authorized to transact insurance in New Mexico and receiving premiums on policies remaining in force in New Mexico, except that this provision shall not apply as to an insurer that withdrew from New Mexico prior to March 26, 1955;
(3) each plan operating under provisions of Chapter 59A, Articles 46 through 49 NMSA 1978;
(4) each property bondsman, as that person is defined in Section 59A-51-2 NMSA 1978, as to any consideration received as security or surety for a bail bond in connection with a judicial proceeding, which consideration shall be considered "gross premiums" for the purposes of this section; and
(5) each unauthorized insurer that has assumed a contract or policy of insurance directly or indirectly from an authorized or formerly authorized insurer and is receiving premiums on such policies remaining in force in New Mexico, except that this provision shall not apply if a ceding insurer continues to pay the tax provided in this section as to such policy or contract.
B. Each such taxpayer shall pay in accordance with this subsection a premium tax of three and three-thousandths percent of the gross premiums and membership and policy fees received or written by it, as reported in Schedule T and supporting schedules of its annual financial statement on insurance or contracts covering risks within this state during the preceding calendar year, less all return premiums, including dividends paid or credited to policyholders or contract holders and premiums received for reinsurance on New Mexico risks.
C. In addition to the premium tax imposed pursuant to Subsection B of this section, each taxpayer described in Subsection A of this section that transacts health insurance in New Mexico or is a plan described in Chapter 59A, Article 46 or 47 NMSA 1978 shall pay a health insurance premium surtax of one percent of the gross health insurance premiums and membership and policy fees received by it on hospital and medical expense incurred insurance or contracts; nonprofit health care service plan contracts, excluding dental or vision only contracts; and health maintenance organization subscriber contracts covering health risks within this state during the preceding calendar year, less all return health insurance premiums, including dividends paid or credited to policyholders or contract holders and health insurance premiums received for reinsurance on New Mexico risks. Except as provided in this section, all references in the Insurance Code to the premium tax shall include both the premium tax and the health insurance premium surtax.
D. For each calendar quarter, an estimated payment of the premium tax and the health insurance premium surtax shall be made on April 15, July 15, October 15 and the following January 15. The estimated payments shall be equal to at least one-fourth of either the payment made during the previous calendar year or eighty percent of the actual payment due for the current calendar year, whichever is greater. The final adjustment for payments due for the prior year shall be made with the return, which shall be filed on April 15 of each year, at which time all taxes for that year are due. Dividends paid or credited to policyholders or contract holders and refunds, savings, savings coupons and similar returns or credits applied or credited to payment of premiums for existing, new or additional insurance shall, in the amount so used, constitute premiums subject to tax under this section for the year in which so applied or credited.
E. Exempted from the taxes imposed by this section are:
(1) premiums attributable to insurance or contracts purchased by the state or a political subdivision for the state's or political subdivision's active or retired employees; [and]
(2) payments received by a health maintenance organization from the federal secretary of health and human services pursuant to a contract issued under the provisions of 42 U.S.C. Section 1395 mm(g); and
(3) premiums paid by employers for employer health benefit plans pursuant to the Private Health Insurance Cooperative Act."
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