0001| AN ACT | 0002| RELATING TO MEDICAL INSURANCE COVERAGE; ALLEVIATING ADDITIONAL | 0003| BURDENS PLACED ON THE MEDICAID PROGRAM AND THE STATE'S | 0004| RESPONSIBILITY UNDER THAT PROGRAM; AMENDING AND ENACTING SECTIONS | 0005| OF THE NMSA 1978; REPEALING A SECTION OF LAWS 1994; DECLARING AN | 0006| EMERGENCY. | 0007| | 0008| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: Section 1. Section 59A-56-2 NMSA 1978 (being Laws 1994, Chapter 75, Section 2) is | 0009| amended to read: | 0010| "59A-56-2. PURPOSE OF ACT.--The purpose of the Health Insurance Alliance Act is | 0011| to provide increased access to voluntary health insurance coverage in New Mexico. An | 0012| additional purpose of the Health Insurance Alliance Act is to provide for the development of | 0013| plans for health insurance coverage for children, small employers and individuals. To the extent | 0014| that the Health Insurance Alliance Act continues to provide increased access to voluntary health | 0015| insurance coverage, another purpose of the Health Insurance Alliance Act is to alleviate | 0016| increased burdens placed on the medicaid program and to alleviate the responsibility of the | 0017| human services department to make additional medicaid expenditures for those persons who may | 0018| be forced to become medicaid eligible instead of being able to enroll in the health insurance | 0019| alliance." | 0020| Section 2. Section 59A-54-12 NMSA 1978 (being Laws 1987, Chapter 154, Section 12, | 0021| as amended) is amended to read: | 0022| "59A-54-12. ELIGIBILITY--POLICY PROVISIONS.-- | 0023| A. Except as provided in Subsection I of this section, a person is eligible for a | 0024| pool policy only if on the effective date of coverage or renewal of coverage the person is a New | 0025| Mexico resident and: | 0001| (1) is not eligible as an insured or covered dependent for any health plan | 0002| that provides coverage for comprehensive major medical or comprehensive physician and | 0003| hospital services; | 0004| (2) is only eligible for a health plan that is offered at a rate higher than | 0005| that available from the pool; | 0006| (3) has been rejected for coverage for comprehensive major medical or | 0007| comprehensive physician and hospital services; or | 0008| (4) is only eligible for a health plan with a rider, waiver or restrictive | 0009| provision for that particular individual based on a specific condition. | 0010| B. Coverage under a pool policy is in excess of and shall not duplicate coverage | 0011| under any other form of health insurance. | 0012| C. A pool policy shall provide that coverage of a dependent unmarried person | 0013| terminates when the person becomes nineteen years of age or, if the person is enrolled full time | 0014| in an accredited educational institution, when he becomes twenty-five years of age. The policy | 0015| shall also provide in substance that attainment of the limiting age does not operate to terminate | 0016| coverage when the person is and continues to be: | 0017| (1) incapable of self-sustaining employment by reason of mental | 0018| retardation or physical handicap; and | 0019| (2) primarily dependent for support and maintenance upon the person in | 0020| whose name the contract is issued. | 0021| Proof of incapacity and dependency shall be furnished to the insurer within one hundred | 0022| twenty days of attainment of the limiting age and subsequently as required by the insurer but not | 0023| more frequently than annually after the two-year period following attainment of the limiting age. | 0024| D. A pool policy that provides coverage for a family member of the person in | 0025| whose name the contract is issued shall, as to the coverage of the family member or the | 0001| individual in whose name the contract was issued, provide that the health insurance benefits | 0002| applicable for children are payable with respect to a newly born child of the family member or | 0003| the person in whose name the contract is issued from the moment of coverage of injury or | 0004| illness, including the necessary care and treatment of medically diagnosed congenital defects and | 0005| birth abnormalities. If payment of a specific premium is required to provide coverage for the | 0006| child, the contract may require that notification of the birth of a child and payment of the | 0007| required premium shall be furnished to the carrier within thirty-one days after the date of birth in | 0008| order to have the coverage continued beyond the thirty-one day period. | 0009| E. A pool policy may contain provisions under which coverage is excluded | 0010| during a six-month period following the effective date of coverage as to a given individual for | 0011| pre-existing conditions, as long as either of the following exists: | 0012| (1) the condition has manifested itself within a period of six months | 0013| before the effective date of coverage in such a manner as would cause an ordinarily prudent | 0014| person to seek diagnoses or treatment; or | 0015| (2) medical advice or treatment was recommended or received within a | 0016| period of six months before the effective date of coverage. | 0017| F. The pre-existing condition exclusions described in Subsection E of this section | 0018| shall be waived to the extent to which similar exclusions have been satisfied under any prior | 0019| health insurance coverage that was involuntarily terminated, if the application for pool coverage | 0020| is made not later than thirty-one days following the involuntary termination. In that case, | 0021| coverage in the pool shall be effective from the date on which the prior coverage was terminated. | 0022| This subsection does not prohibit pre-existing conditions coverage in a pool policy that is more | 0023| favorable to the insured than that specified in this subsection. | 0024| G. An individual is not eligible for coverage by the pool if: | 0025| (1) he is, at the time of application, eligible for medicare or medicaid, | 0001| which would provide coverage for amounts in excess of limited policies such as dread disease, | 0002| cancer policies or hospital indemnity policies; | 0003| (2) he has terminated coverage by the pool within the past twelve months; | 0004| or | 0005| (3) he is an inmate of a public institution or is eligible for public | 0006| programs for which medical care is provided. | 0007| H. Any person whose health insurance coverage from a qualified state health | 0008| policy with similar coverage is terminated because of nonresidency in another state may apply | 0009| for coverage under the pool. If the coverage is applied for within thirty-one days after that | 0010| termination and if premiums are paid for the entire coverage period, the effective date of the | 0011| coverage shall be the date of termination of the previous coverage. | 0012| I. A person's eligibility for a policy issued under the Health Insurance Alliance | 0013| Act shall not preclude a person from remaining on a pool policy, and a self-employed person | 0014| who qualifies for an approved health plan under the Health Insurance Alliance Act by using a | 0015| dependent as the second employee may choose a pool policy in lieu of the health plan under that | 0016| act." | 0017| Section 3. Section 59A-56-3 NMSA 1978 (being Laws 1994, Chapter 75, Section 3) is | 0018| amended to read: | 0019| "59A-56-3. DEFINITIONS.--As used in the Health Insurance Alliance Act: | 0020| A. "alliance" means the New Mexico health insurance alliance; | 0021| B. "approved health plan" means any arrangement for the provision of health | 0022| insurance offered through and approved by the alliance; | 0023| C. "board" means the board of directors of the alliance; | 0024| D. "child" means a dependent unmarried individual who is less than nineteen | 0025| years of age or an unmarried individual who is enrolled full time in an accredited educational | 0001| institution until the individual becomes | 0002| twenty-five years of age; | 0003| E. "department" means the department of insurance; | 0004| F. "director" means an individual who serves on the board; | 0005| G. "earned premiums" means premiums paid or due during a calendar year for | 0006| coverage under an approved health plan less any unearned premiums at the end of that calendar | 0007| year plus any unearned premiums from the end of the immediately preceding calendar year; | 0008| H. "eligible expenses" means the allowable charges for a health care service | 0009| covered under an approved health plan; | 0010| I. "gross earned premiums" means premiums paid or due during a calender year | 0011| for all health insurance written in the state less any unearned premiums at the end of that | 0012| calendar year plus any unearned premiums from the end of the immediately preceding calendar | 0013| year; | 0014| J. "health care service" means a service or product furnished an individual for the | 0015| purpose of preventing, alleviating, curing or healing human illness or injury and includes | 0016| services and products incidental to furnishing the described services or products; | 0017| K. "health insurance" means "health" insurance as defined in Section 59A-7-3 | 0018| NMSA 1978; any hospital and medical expense-incurred policy, including medicare supplement | 0019| insurance; nonprofit health care plan service contract; health maintenance organization | 0020| subscriber contract; short-term, accident, fixed indemnity, specified disease policy, long-term | 0021| care or disability income insurance contracts and limited health benefit or credit health | 0022| insurance; coverage for health care services under uninsured arrangements of group or | 0023| group-type contracts, including employer self-insured, cost-plus or other benefits methodologies | 0024| not involving insurance or not subject to New Mexico premium taxes; coverage for health care | 0025| services under group-type contracts that are not available to the general public and can be | 0001| obtained only because of connection with a particular organization or group; or coverage by | 0002| medicare or other governmental programs providing health care services; but "health insurance" | 0003| does not include insurance issued pursuant to provisions of the Workers' Compensation Act or | 0004| similar law, automobile medical payment insurance or provisions by which benefits are payable | 0005| with or without regard to fault that are required by law to be contained in any liability insurance | 0006| policy; | 0007| L. "health maintenance organization" means a health maintenance organization | 0008| as defined by Subsection M of Section 59A-46-2 NMSA 1978; | 0009| M. "incurred claims" means claims paid during a calendar year plus claims | 0010| incurred in the calendar year and paid prior to April 1 of the succeeding year, less claims | 0011| incurred previous to the current calendar year and paid prior to April 1 of the current year; | 0012| N. "insured" means a small employer or its employee and an individual covered | 0013| by an approved health plan, a former employee of a small employer who is covered by an | 0014| approved health plan through conversion or an individual covered by an approved health plan | 0015| that allows individual enrollment; | 0016| O. "medicare" means coverage under both Parts A and B of Title 18 of the | 0017| federal Social Security Act; | 0018| P. "member" means a member of the alliance; | 0019| Q. "nonprofit health care plan" means a "health care plan" as defined in | 0020| Subsection K of Section 59A-47-3 NMSA 1978; | 0021| R. "premiums" means the premiums received for coverage under an approved | 0022| health plan during a calendar year; | 0023| S. "small employer" means a person that is a resident of this state, has employees | 0024| at least fifty percent of whom are residents of this state, is actively engaged in business and that | 0025| on at least fifty percent of its working days during the preceding calendar year employed no | 0001| fewer than two and no more than fifty eligible employees; provided that: (1) in | 0002| determining the number of eligible employees, the spouse or dependent of an employee may, at | 0003| the employer's discretion, be counted as a separate employee; and | 0004| (2) companies that are eligible to file a combined tax return or a | 0005| consolidated tax return for purposes of state income taxation shall be considered one employer; | 0006| T. "superintendent" means the superintendent of insurance; | 0007| U. "total premiums" means the total premiums for business written in the state | 0008| received during a calendar year; and | 0009| V. "unearned premiums" means the portion of a premium previously paid for | 0010| which the coverage period is in the future." | 0011| Section 4. Section 59A-56-4 NMSA 1978 (being Laws 1994, Chapter 75, Section 4) is | 0012| amended to read: | 0013| "59A-56-4. ALLIANCE CREATED--BOARD CREATED.-- | 0014| A. The "New Mexico health insurance alliance" is created as a nonprofit public | 0015| corporation for the purpose of providing increased access to health insurance in the state. All | 0016| insurance companies authorized to transact health insurance business in this state, nonprofit | 0017| health care plans, health maintenance organizations and self-insurers not subject to federal | 0018| preemption shall organize and be members of the alliance as a condition of their authority to | 0019| offer health insurance in this state, except for an insurance company that is licensed under the | 0020| Prepaid Dental Plan Law or a company that is solely engaged in the sale of dental insurance and | 0021| is licensed under a provision of the Insurance Code. The alliance is not a governmental agency | 0022| for any purpose. | 0023| B. The alliance shall be governed by a board of directors constituted pursuant to | 0024| the provisions of this section. The board is a governmental entity for purposes of the Tort | 0025| Claims Act, but the board shall not be considered a governmental entity for any other purpose. | 0001| C. The superintendent shall, within sixty days after March 4, 1994, give notice to | 0002| all members of the time and place for the initial organizational meeting of the alliance. Each | 0003| member shall be entitled to one vote in person or by proxy at the organizational meeting. | 0004| D. The alliance shall operate subject to the supervision and approval of the | 0005| board. The board shall consist of: | 0006| (1) five directors, elected by the members, who shall be officers or | 0007| employees of members and shall consist of one representative of a nonprofit health care plan, | 0008| two representatives of health maintenance organizations and two representatives of other types | 0009| of members; | 0010| (2) five directors, appointed by the governor, who shall be officers, | 0011| general partners or proprietors of small employers who, after the term of the initial | 0012| appointments, are covered by approved health plans; | 0013| (3) four directors appointed by the governor, who shall be employees of | 0014| small employers, and who, after the term of the initial appointments, are employees of small | 0015| employers covered by approved health plans; and | 0016| (4) the superintendent or his designee, who shall be a nonvoting member | 0017| except when his vote is necessary to break a tie. | 0018| E. The superintendent shall serve as chair of the board unless he declines, in | 0019| which event he shall appoint the chair. | 0020| F. The directors elected by the members shall be elected for initial terms of three | 0021| years or less, staggered so that the term of at least one director expires on June 30 of each year. | 0022| The directors appointed by the governor shall be appointed for initial terms of three years or | 0023| less, staggered so that the term of at least one director expires on June 30 of each year. | 0024| Following the initial terms, directors shall be elected or appointed for terms of three years. A | 0025| director whose term has expired shall continue to serve until his successor is elected or | 0001| appointed. | 0002| G. Whenever a vacancy on the board occurs, the electing or appointing authority | 0003| of the director's position that is vacant shall fill the vacancy by electing or appointing an | 0004| individual to serve the balance of the unexpired term; provided, when a vacancy occurs in one of | 0005| the director's positions elected by the members, the superintendent is authorized to appoint a | 0006| temporary replacement director until the next scheduled election of directors elected by the | 0007| members is held. The individual elected or appointed to fill a vacancy shall meet the | 0008| requirements for initial election or appointment to that position. | 0009| H. Directors may be reimbursed by the alliance as provided in the Per Diem and | 0010| Mileage Act in the same manner and amounts as nonsalaried public officers, but shall receive no | 0011| other compensation, perquisite or allowance from the alliance." | 0012| Section 5. Section 59A-56-5 NMSA 1978 (being Laws 1994, Chapter 75, Section 5) is | 0013| amended to read: | 0014| "59A-56-5. PLAN OF OPERATION.-- | 0015| A. The board shall submit a plan of operation to the superintendent and any | 0016| amendments to the plan necessary or suitable to assure the fair, reasonable and equitable | 0017| administration of the alliance. | 0018| B. The superintendent shall, after notice and hearing, approve the plan of | 0019| operation if it is determined to assure the fair, reasonable and equitable administration of the | 0020| alliance. The plan of operation shall become effective upon written approval of the | 0021| superintendent consistent with the date on which health insurance coverage through the alliance | 0022| pursuant to the provisions of the Health Insurance Alliance Act is made available. A plan of | 0023| operation adopted by the superintendent shall continue in force until modified by him or | 0024| superseded by a subsequent plan of operation submitted by the board and approved by the | 0025| superintendent. | 0001| C. The plan of operation shall: | 0002| (1) establish procedures for the handling and accounting of assets of the | 0003| alliance; | 0004| (2) establish regular times and places for meetings of the board; | 0005| (3) establish procedures for records to be kept of all financial transactions | 0006| and for annual fiscal reporting to the superintendent; | 0007| (4) establish the amount of and the method for collecting assessments | 0008| pursuant to Section 59A-56-11 NMSA 1978; | 0009| (5) establish a program to publicize the existence of the alliance, the | 0010| approved health plans, the eligibility requirements and procedures for enrollment in an approved | 0011| health plan and to maintain public awareness of the alliance; | 0012| (6) establish penalties for nonpayment of assessments by members; | 0013| (7) establish procedures for alternative dispute resolution of disputes | 0014| between members and insureds; and | 0015| (8) contain additional provisions necessary and proper for the execution | 0016| of the powers and duties of the alliance." | 0017| Section 6. Section 59A-56-6 NMSA 1978 (being Laws 1994, Chapter 75, Section 6) is | 0018| amended to read: | 0019| "59A-56-6. BOARD--POWERS AND DUTIES.-- | 0020| A. The board shall have the general powers and authority granted to insurance | 0021| companies licensed to transact health insurance business under the laws of this state. | 0022| B. The board: | 0023| (1) may enter into contracts to carry out the provisions of the Health | 0024| Insurance Alliance Act, including, with the approval of the superintendent, contracting with | 0025| similar alliances of other states for the joint performance of common administrative functions or | 0001| with persons or other organizations for the performance of administrative functions; | 0002| (2) may sue and be sued; | 0003| (3) may conduct periodic audits of the members to assure the general | 0004| accuracy of the financial data submitted to the alliance; | 0005| (4) shall establish maximum rate schedules, allowable rate adjustments, | 0006| administrative allowances, reinsurance premiums and agent referral, servicing fees or | 0007| commissions subject to applicable provisions in the Insurance Code. In determining the initial | 0008| year's rate for health insurance, the only rating factors that may be used are age, gender, | 0009| geographic area of the place of employment and smoking practices. In any year's rate, the | 0010| difference in rates in any one age group that may be charged on the basis of a person's gender | 0011| shall not exceed another person's rates in the age group by more than twenty percent of the lower | 0012| rate, and no person's rate shall exceed the rate of any other person with similar family | 0013| composition by more than two hundred fifty percent of the lower rate, except that the rates for | 0014| children under the age of nineteen may be lower than the bottom rates in the two hundred fifty | 0015| percent band. The rating factor restrictions shall not prohibit a member from offering rates that | 0016| differ depending upon family composition; | 0017| (5) may direct a member to issue policies or certificates of coverage of | 0018| health insurance in accordance with the requirements of the Health Insurance Alliance Act; | 0019| (6) shall establish procedures for alternative dispute resolution of disputes | 0020| between members and insureds; | 0021| (7) shall cause the alliance to have an annual audit of its operations by an | 0022| independent certified public accountant; | 0023| (8) shall conduct all board meetings as if it were subject to the provisions | 0024| of the Open Meetings Act; | 0025| (9) shall draft one or more sample health insurance policies that are the | 0001| prototype documents for the members; | 0002| (10) shall determine the design criteria to be met for an approved health | 0003| plan; | 0004| (11) shall review each proposed approved health plan to determine if it | 0005| meets the alliance designed criteria and, if it does meet the criteria, approve the plan, but the | 0006| board shall not permit more than one approved health plan per member for each set of plan | 0007| design criteria; | 0008| (12) shall review annually each approved health plan to determine if it | 0009| still qualifies as an approved health plan based on the alliance designed criteria and, if the plan is | 0010| no longer approved, arrange for the transfer of the insureds covered under the formerly approved | 0011| plan to an approved health plan; | 0012| (13) may terminate an approved health plan not operating as required by | 0013| the board; | 0014| (14) shall terminate an approved health plan if timely claim payments are | 0015| not made pursuant to the plan; and | 0016| (15) shall engage in significant marketing activities, including a program | 0017| of media advertising, to inform small employers and eligible individuals of the existence of the | 0018| alliance, its purpose and the health insurance available or potentially available through the | 0019| alliance. | 0020| C. The alliance is subject to and responsible for examination by the | 0021| superintendent. No later than March 1 of each year, the board shall submit to the superintendent | 0022| an audited financial report for the preceding calendar year in a form approved by the | 0023| superintendent." | 0024| Section 7. Section 59A-56-8 NMSA 1978 (being Laws 1994, Chapter 75, Section 8) is | 0025| amended to read: | 0001| "59A-56-8. APPROVED HEALTH PLAN.-- | 0002| A. An approved health plan shall conform to the alliance's approved health plan | 0003| design criteria. The board may allow more than one plan design for approved health plans. A | 0004| member may provide one approved health plan for each plan design approved by the board. | 0005| B. The board shall designate plan designs for standard approved health plans. | 0006| The board may designate plan designs for an approved health plan that provides catastrophic | 0007| coverage or other benefit plan designs. | 0008| C. Each approved health plan shall offer a premium that is no greater than ten | 0009| percent over and no less than ten percent under the average of the standard rate index for plans | 0010| with the same characteristics. | 0011| D. Any member that provides or offers to renew a group health insurance | 0012| contract providing health insurance benefits to employees of the state, a county, a municipality | 0013| or a school district for which public funds are contributed shall offer at least one approved health | 0014| plan to small employers; provided, however, if a member does not offer anywhere in the United | 0015| States a plan that meets substantially the design criteria of an approved health plan, the member | 0016| shall not be required to offer an approved health plan. | 0017| E. If a plan design approved by the board is not offered by any member already | 0018| offering an approved health plan, but a member offers a substantially similar plan design outside | 0019| the alliance, the board may require the member to offer that plan design as an approved health | 0020| plan through the alliance. | 0021| F. An approved health plan shall be offered for at least five consecutive years | 0022| following the date last required in accordance with Subsection D of this section or after notifying | 0023| the board of its future withdrawal if not required in accordance with Subsection D of this section | 0024| unless: | 0025| (1) the member substitutes another approved health plan for the plan | 0001| withdrawn; or | 0002| (2) the board allows the plan to be withdrawn because it imposes a | 0003| serious hardship upon the member. | 0004| G. No member shall be required to offer an approved health plan if the member | 0005| notifies the superintendent in writing that it will no longer offer health insurance, life insurance | 0006| or annuities in the state, except for renewal of existing contracts, provided that: | 0007| (1) the member does not offer or provide health insurance, life insurance | 0008| or annuities for a period of five years from the date of notification to the superintendent to any | 0009| person in the state who is not covered by the member through a health insurance policy in effect | 0010| on the date of the notification; and | 0011| (2) with respect to health or life insurance policies or annuities in effect | 0012| on the date of notification to the superintendent, the member continues to comply with all | 0013| applicable laws and regulations governing the provision of insurance in this state, including the | 0014| payment of applicable taxes, fees and assessments." | 0015| Section 8. Section 59A-56-9 NMSA 1978 (being Laws 1994, Chapter 75, Section 9) is | 0016| amended to read: | 0017| "59A-56-9. REINSURANCE.-- | 0018| A. A member offering an approved health plan shall be reinsured for certain | 0019| losses by the alliance. Within six months following the end of each calendar year in which the | 0020| member offering the approved health plan paid more in incurred claims, plus the member's | 0021| reinsurance premium pursuant to Subsection B of this section, than eighty-five percent of earned | 0022| premiums received by the member on all approved health plans issued by the member, the | 0023| member shall receive from the alliance the excess amount for the calendar year by which the | 0024| incurred claims and reinsurance premium exceeded eighty-five percent of the earned premiums | 0025| received by the alliance or its administrator. | 0001| B. The alliance shall withhold from all premiums that it receives a reinsurance | 0002| premium as established by the board. The reinsurance premium shall not exceed five percent of | 0003| premiums paid in the first year of coverage and shall not exceed ten percent of premiums for | 0004| renewal years. In determining the reinsurance premium for a particular calendar year, the board | 0005| shall set the reinsurance premium at a rate that will recover the total reinsurance loss for the | 0006| preceding year over a reasonable number of years in accordance with sound actuarial principles." | 0007| Section 9. Section 59A-56-10 NMSA 1978 (being Laws 1994, Chapter 75, Section 10) | 0008| is amended to read: | 0009| "59A-56-10. ADMINISTRATION.--The alliance shall deduct from premiums collected | 0010| for approved health plans an administrative charge as set by the board. The administrative | 0011| charge shall be determined before the beginning of each calendar year. The maximum | 0012| administrative charge the alliance may charge is ten percent of premiums in the first year and | 0013| five percent of premiums in renewal years." | 0014| Section 10. Section 59A-56-11 NMSA 1978 (being Laws 1994, Chapter 75, Section 11) | 0015| is amended to read: | 0016| "59A-56-11. ASSESSMENTS.-- | 0017| A. After the completion of each calendar year, the alliance shall assess all its | 0018| members for the net reinsurance loss in the previous calendar year and for the net administrative | 0019| loss that occurred in the previous calendar year, taking into account investment income for the | 0020| period and other appropriate gains and losses using the following definitions: | 0021| (1) net reinsurance losses shall be the amount determined for the | 0022| previous calendar year in accordance with Subsection A of Section 59A-56-9 NMSA 1978 for | 0023| all members offering an approved health plan reduced by reinsurance premiums charged by the | 0024| alliance in the previous calendar year; and | 0025| (2) net administrative losses shall be the administrative expenses incurred | 0001| by the alliance in the previous calendar year and projected for the current calendar year less the | 0002| sum of administrative allowances received by the alliance and any legislative appropriation for | 0003| the period, but, in the event of an administrative gain, net administrative losses for the purpose | 0004| of assessments shall be considered zero, and the gain shall be carried forward to the | 0005| administrative fund for the next calendar year as an additional allowance. | 0006| B. The assessment for each member shall be determined by multiplying the total | 0007| losses of the alliance's operation, as defined in Subsection A of this section, by a fraction, the | 0008| numerator of which is an amount equal to that member's total premiums, or the equivalent, | 0009| exclusive of premiums received by the member for an approved health plan for health insurance | 0010| written in the state during the preceding calendar year and the denominator of which equals the | 0011| total premiums of all health insurance written in the state during the preceding calendar year | 0012| exclusive of premiums for approved health plans; provided that total premiums shall not include | 0013| payments by the secretary of human services pursuant to a contract issued under Section 1876 of | 0014| the federal Social Security Act, total premiums exempted by the federal Employee Retirement | 0015| Income Security Act of 1974 or federal government programs. | 0016| C. If assessments exceed actual reinsurance losses and administrative losses of | 0017| the alliance, the excess shall be held at interest by the board to offset future losses. | 0018| D. To enable the board to properly determine the net reinsurance amount and its | 0019| responsibility for reinsurance to each member: | 0020| (1) by April 15 of each year, each member offering an approved health | 0021| plan shall submit a listing of all incurred claims for the previous year; and | 0022| (2) by April 15 of each year, each member shall submit a report that | 0023| includes the total earned premiums received during the prior year less the total earned premiums | 0024| exempted by federal government programs. | 0025| E. The alliance shall notify each member of the amount of its assessment due by | 0001| May 15 of each year. The assessment shall be paid by the member by June 15 of each year. | 0002| F. The proportion of participation of each member in the alliance shall be | 0003| determined annually by the board, based on annual statements filed by each member and other | 0004| reports deemed necessary by the board. Any deficit incurred by the alliance shall be recouped | 0005| by assessments apportioned among the members pursuant to the formula provided in Subsection | 0006| B of this section; provided that the assessment paid for any member shall be allowed as a credit | 0007| on the future premium tax return for that member, with the credit limited to fifty percent of the | 0008| premium tax due the first year the assessment is imposed; forty percent the second year; and | 0009| thirty percent the third and all subsequent years. | 0010| G. The board may defer, in whole or in part, the payment of an assessment of a | 0011| member if, in the opinion of the board, after approval of the superintendent, payment of the | 0012| assessment would endanger the ability of the member to fulfill its contractual obligations. In the | 0013| event payment of an assessment against a member is deferred, the amount deferred may be | 0014| assessed against the other members in a manner consistent with the basis for assessments set | 0015| forth in Subsection A of this section. The member receiving the deferment shall pay the | 0016| assessment in full plus interest at the prevailing rate as determined by regulation of the | 0017| superintendent within four years from the date payment is deferred. After four years but within | 0018| five years of the date of the deferment, the board may sue to recover the amount of the deferred | 0019| payment plus interest and costs. Board actions to recover deferred payments brought after five | 0020| years of the date of deferment are barred. Any amount received shall be deducted from future | 0021| assessments or reimbursed pro rata to the members paying the deferred assessment. | 0022| H. In addition to the assessments provided in this section for reinsurance and | 0023| administrative losses, the board may impose on all members annually an assessment not to | 0024| exceed two hundred dollars ($200) for the board to hire consultants and plan and develop | 0025| alliance programs. This additional assessment shall be allowed as a credit on the next premium | 0001| tax due for the member." | 0002| Section 11. Section 59A-56-13 NMSA 1978 (being Laws 1994, Chapter 75, Section 13) | 0003| is amended to read: | 0004| "59A-56-13. ALLIANCE ADMINISTRATOR.-- | 0005| A. The board may select an alliance administrator through a competitive request | 0006| for proposal process. The board shall evaluate proposals based on criteria established by the | 0007| board that shall include: | 0008| (1) proven ability to administer health insurance programs; | 0009| (2) an estimate of total charges for administering the alliance for the | 0010| proposed contract period; and | 0011| (3) ability to administer the alliance in a cost-efficient manner. | 0012| B. The alliance administrator contract shall be for a period up to four years, | 0013| subject to annual renegotiation of the fees and services, and shall provide for cancellation of the | 0014| contract for cause, termination of the alliance by the legislature or the combining of the alliance | 0015| with a governmental body. | 0016| C. At least one year prior to the expiration of an alliance administrator contract, | 0017| the board may invite all interested parties, including the current administrator, to submit | 0018| proposals to serve as alliance administrator for a succeeding contract period. Selection of the | 0019| administrator for a succeeding contract period shall be made at least six months prior to the | 0020| expiration of the current contract. | 0021| D. The alliance administrator shall: | 0022| (1) take applications for an approved health plan from small employers or | 0023| a referring agent; | 0024| (2) establish a premium billing procedure for collection of premiums | 0025| from insureds. Billings shall be made on a periodic basis, not less than monthly, as determined | 0001| by the board; | 0002| (3) pay the member that offers an approved health plan the net premium | 0003| due after deduction of reinsurance and administrative allowances; | 0004| (4) provide the member with any changes in the status of insureds; | 0005| (5) perform all necessary functions to assure that each member is | 0006| providing timely payment of benefits to individuals covered under an approved health plan, | 0007| including: | 0008| (a) making information available to insureds relating to the proper | 0009| manner of submitting a claim for benefits to the member offering the approved health plan and | 0010| distributing forms on which submissions shall be made; and | 0011| (b) making information available on approved health plan benefits | 0012| and rates to insureds; | 0013| (6) submit regular reports to the board regarding the operation of the | 0014| alliance, the frequency, content and form of which shall be determined by the board; | 0015| (7) following the close of each fiscal year, determine premiums of | 0016| members, the expense of administration and the paid and incurred health care service charges for | 0017| the year and report this information to the board and the superintendent on a form prescribed by | 0018| the superintendent; and | 0019| (8) establish the premiums for reinsurance and the administrative charges, | 0020| subject to approval of the board." | 0021| Section 12. Section 59A-56-14 NMSA 1978 (being Laws 1994, Chapter 75, Section 14) | 0022| is amended to read: | 0023| "59A-56-14. ELIGIBILITY--GUARANTEED ISSUE--PLAN | 0024| PROVISIONS.-- | 0025| A. A small employer is eligible for an approved health plan if on the effective | 0001| date of coverage or renewal: | 0002| (1) at least fifty percent of its eligible employees not otherwise insured | 0003| elect to be covered under the approved health plan; | 0004| (2) the small employer has not terminated coverage with an approved | 0005| health plan within three years of the date of application for coverage except to change to another | 0006| approved health plan; and | 0007| (3) the small employer does not offer other general group health | 0008| insurance coverage to its employees. For the purposes of this paragraph, general group health | 0009| insurance coverage excludes coverage providing only a specific limited form of health insurance | 0010| such as accident or disability income insurance coverage or a specific health care service such as | 0011| dental care. | 0012| B. An approved health plan shall provide coverage for a child. The policy shall | 0013| also provide in substance that attainment of the limiting age by an unmarried dependent | 0014| individual does not operate to terminate coverage when the individual continues to be incapable | 0015| of self-sustaining employment by reason of developmental disability or physical handicap and | 0016| the individual is primarily dependent for support and maintenance upon the employee. Proof of | 0017| incapacity and dependency shall be furnished to the alliance and the member that offered the | 0018| approved health plan within one hundred twenty days of attainment of the limiting age. The | 0019| board may require subsequent proof annually after a two-year period following attainment of the | 0020| limiting age. | 0021| C. An approved health plan shall provide that the health insurance benefits | 0022| applicable for eligible dependents are payable with respect to a newly born child of the family | 0023| member or the individual in whose name the contract is issued from the moment of birth, | 0024| including the necessary care and treatment of medically diagnosed congenital defects and birth | 0025| abnormalities. If payment of a specific premium is required to provide coverage for the child, | 0001| the contract may require that notification of the birth of a child and payment of the required | 0002| premium shall be furnished to the member within thirty-one days after the date of birth in order | 0003| to have the coverage from birth. An approved health plan shall provide that the health insurance | 0004| benefits applicable for eligible dependents are payable for an adopted child in accordance with | 0005| the provisions of Section 59A-22-34.1 NMSA 1978. | 0006| D. Except as provided in Subsections E, G and H of this section, an approved | 0007| health plan may contain provisions under which coverage is excluded during a six-month period | 0008| following the effective date of coverage of an individual for pre-existing conditions, as long as | 0009| either of the following exists: | 0010| (1) the condition has manifested itself within a period of six months | 0011| before the effective date of coverage in such a manner as would cause an ordinarily prudent | 0012| person to seek diagnosis or treatment; or | 0013| (2) medical advice or treatment was recommended or received within a | 0014| period of six months before the effective date of coverage. | 0015| E. The pre-existing condition exclusions described in Subsection D of this | 0016| section shall be waived to the extent to which similar exclusions have been satisfied under any | 0017| prior health insurance coverage if the application for health insurance through the alliance is | 0018| made not later than thirty-one days following the termination of the prior coverage. In that case, | 0019| coverage through the alliance shall be effective from the date on which the prior coverage was | 0020| terminated. This subsection does not prohibit pre-existing conditions coverage in an approved | 0021| health plan that is more favorable to the covered individual than that specified in this subsection. | 0022| F. An individual is not eligible for coverage by the alliance if he: | 0023| (1) is eligible for medicare; provided, however, if an individual has health | 0024| insurance coverage from an employer whose group includes twenty or more individuals, an | 0025| individual eligible for medicare who continues to be employed may choose to be covered | 0001| through an approved health plan; | 0002| (2) has voluntarily terminated health insurance issued through the alliance | 0003| within the past twelve months unless it was due to a change in employment; or | 0004| (3) is an inmate of a public institution. | 0005| G. The alliance shall provide for an open enrollment period of sixty days from | 0006| the initial offering of an approved health plan. Individuals enrolled during the open enrollment | 0007| period shall not be subject to the pre-existing conditions limitation. | 0008| H. If an insured covered by an approved health plan switches to another | 0009| approved health plan that provides increased or additional benefits such as lower deductible or | 0010| co-payment requirements, the member offering the approved health plan with increased or | 0011| additional benefits may require the six-month period for pre-existing conditions provided in | 0012| Subsection D of this section to be satisfied prior to receipt of the additional benefits. | 0013| I. An approved health plan shall provide for a thirty-day reinstatement period | 0014| from the end of a grace period provided by the approved health plan, requiring payments of all | 0015| back premiums plus a penalty of five percent of the annualized premium. Any claims incurred | 0016| between the date through which premiums have been paid and the date of reinstatement are not | 0017| covered unless covered by the conditions of the approved health plan." | 0018| Section 13. Section 59A-56-17 NMSA 1978 (being Laws 1994, Chapter 75, Section 17) | 0019| is amended to read: | 0020| "59A-56-17. BENEFITS.-- | 0021| A. An approved health plan shall pay for medically necessary eligible expenses | 0022| that exceed the deductible, co-payment and co-insurance amounts applicable under the | 0023| provisions of Section 59A-56-18 NMSA 1978 and are not otherwise limited or excluded. The | 0024| Health Insurance Alliance Act does not prohibit the board from approving additional types of | 0025| health plan designs with similar cost-benefit structures or other types of health plan designs. An | 0001| approved health plan for small employers shall, at a minimum, reflect the levels of health | 0002| insurance coverage generally available in New Mexico for small employer group policies, but an | 0003| approved health plan for small employers may also offer health plan designs that are not | 0004| generally available in New Mexico for small employer group policies. | 0005| B. The board may design and require an approved health plan to contain cost-containment measures and requirements, including managed care, pre-admission certification, | 0006| concurrent inpatient review and the use of fee schedules for health care providers, including the | 0007| diagnosis-related grouping system and the resource-based relative value system." | 0008| Section 14. Section 59A-56-18 NMSA 1978 (being Laws 1994, Chapter 75, Section 18) | 0009| is amended to read: | 0010| "59A-56-18. DEDUCTIBLES--CO-INSURANCE--MAXIMUM OUT-OF-POCKET | 0011| PAYMENTS.-- | 0012| A. Subject to the limitations provided in Subsection C of this section, an | 0013| approved health plan offered through the alliance may impose a deductible on a per-person | 0014| calendar year basis. Approved health plans offered by health maintenance organizations shall | 0015| provide equivalent cost-benefit structures. The board may authorize deductibles in other | 0016| amounts and equivalent cost-benefit structures. | 0017| B. Subject to the limitations provided in Subsection C of this section, a | 0018| mandatory co-insurance requirement for an approved health plan may be imposed as a | 0019| percentage of eligible expenses in excess of a deductible. Health maintenance organizations | 0020| shall impose equivalent cost-benefit structures. | 0021| C. The maximum aggregate out-of-pocket payments for eligible expenses by the | 0022| covered individual shall be determined by the board." | 0023| Section 15. Section 59A-56-19 NMSA 1978 (being Laws 1994, Chapter 75, Section 19) | 0024| is amended to read: | 0025| "59A-56-19. DEPENDENT FAMILY MEMBER REQUIRED COVERAGE--SMALL | 0001| EMPLOYER RESPONSIBILITY.-- | 0002| A. A small employer shall collect or make a payroll deduction from the | 0003| compensation of an employee for the portion of the approved health plan cost the employee is | 0004| responsible for paying. The small employer may contribute to the cost of that plan on behalf of | 0005| the employee. | 0006| B. A small employer shall make available to dependent family members of an | 0007| employee covered by an approved health plan the same approved health plan. The small | 0008| employer may contribute to the cost of family coverage. | 0009| C. All premiums collected, deducted from the compensation of employees or | 0010| paid on their behalf by the small employer shall be promptly remitted to the alliance." | 0011| Section 16. Section 59A-56-20 NMSA 1978 (being Laws 1994, Chapter 75, Section 20) | 0012| is amended to read: | 0013| "59A-56-20. RENEWABILITY.-- | 0014| A. An approved health plan shall contain provisions under which the member | 0015| offering the plan is obligated to renew the health insurance if premiums are paid until the day the | 0016| plan is replaced by another plan or the small employer terminates coverage. An individual | 0017| covered by health insurance under an approved health plan may retain coverage until he | 0018| becomes eligible for medicare as the primary coverage, except that in a family policy coverage | 0019| under an approved health plan shall continue for any person in the family who is not eligible for | 0020| medicare. | 0021| B. If an approved health plan ceases to exist, the alliance shall provide an | 0022| alternate approved health plan. | 0023| C. An approved health plan shall provide covered individuals the right to | 0024| continue health insurance coverage through an approved health plan as individual health | 0025| insurance provided by the same member upon the death of the employee or upon the divorce, | 0001| annulment or dissolution of marriage or legal separation of the spouse from the employee or by | 0002| termination of employment by electing to do so within a period of time specified in the health | 0003| insurance, provided that the employee was covered under an approved health plan while | 0004| employed for at least six consecutive months. The individual may be charged an additional | 0005| administrative charge for the individual health insurance. | 0006| D. The right to continue health insurance coverage provided in this section | 0007| terminates if the covered individual resides outside the United States for more than six | 0008| consecutive months." | 0009| Section 17. Section 59A-56-21 NMSA 1978 (being Laws 1994, Chapter 75, Section 21) | 0010| is amended to read: | 0011| "59A-56-21. REGULATIONS.--The superintendent shall: | 0012| A. adopt regulations that provide for disclosure by members of the availability of | 0013| health insurance from the alliance; and | 0014| B. adopt regulations to carry out the provisions of the Health Insurance Alliance | 0015| Act." | 0016| Section 18. Section 59A-56-23 NMSA 1978 (being Laws 1994, Chapter 75, Section 23) | 0017| is amended to read: | 0018| "59A-56-23. RATES--STANDARD RISK RATE--EXPERIENCE RATING | 0019| PROHIBITED.-- | 0020| A. The alliance shall determine a standard risk rate index by actuarially | 0021| calculating the average index rates that the insurer has filed under the requirements of the Small | 0022| Group Rate and Renewability Act with the benefits similar to the alliance's standard approved | 0023| health plan. A standard risk rate based on age and other appropriate demographic characteristics | 0024| may be used. No standard risk rate shall be more than ten percent higher or ten percent lower | 0025| than the average index rate. In determining the standard risk rate, the alliance shall consider the | 0001| benefits provided by the approved health plan. | 0002| B. Experience rating is not allowed other than for reinsurance purposes. | 0003| C. All rates and rate schedules shall be submitted to the superintendent for | 0004| approval prior to use." | 0005| Section 19. Section 59A-56-24 NMSA 1978 (being Laws 1994, Chapter 75, Section 24) | 0006| is amended to read: | 0007| "59A-56-24. BENEFIT PAYMENTS REDUCTION.-- | 0008| A. An approved health plan shall be the last payer of benefits whenever any other | 0009| benefit is available. Benefits otherwise payable under the approved health plan shall be reduced | 0010| by all amounts paid or payable through any other health insurance and by all hospital and | 0011| medical expense benefits paid or payable under any workers' compensation coverage, | 0012| automobile medical payment or liability insurance, whether provided on the basis of fault or no-fault, and by any hospital or medical benefits paid or payable under or provided pursuant to any | 0013| state or federal program, excluding medicaid. | 0014| B. The administrator or the alliance shall have a cause of action against any | 0015| person covered by an approved health plan for the recovery of the amount of benefits paid that | 0016| are not for eligible expenses. Benefits due from the approved health plan may be reduced or | 0017| refused as a set-off against any amount recoverable under this section." | 0018| Section 20. TEMPORARY PROVISION--REPORT.--The department of insurance and | 0019| the New Mexico health insurance alliance shall prepare and publish a report to the legislature | 0020| and the governor by October 1 of each year beginning on October 1, 1996 on the alliance | 0021| programs and recommendations to facilitate participation in the alliance programs. The report | 0022| shall include a director's report from members and insured representatives that reflects comments | 0023| made by members and insureds regarding the alliance for each year the directors are required to | 0024| report to the legislature and the governor. | 0025| Section 21. REPEAL.--Laws 1994, Chapter 75, Section 35 is repealed. | 0001| Section 22. EMERGENCY.--It is necessary for the public peace, health and safety | 0002| that this act take effect immediately. |