0001| SENATE BILL 7 | 0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - FIRST SPECIAL | 0003| SESSION, 1996 | 0004| INTRODUCED BY | 0005| EMMIT M. JENNINGS | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO MEDICAL INSURANCE COVERAGE; ALLEVIATING ADDITIONAL | 0013| BURDENS PLACED ON THE MEDICAID PROGRAM AND THE STATE'S | 0014| RESPONSIBILITY UNDER THAT PROGRAM; AMENDING AND ENACTING | 0015| SECTIONS OF THE NMSA 1978; REPEALING A SECTION OF LAWS 1994. | 0016| | 0017| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0018| Section 1. Section 59A-56-2 NMSA 1978 (being Laws 1994, | 0019| Chapter 75, Section 2) is amended to read: | 0020| "59A-56-2. PURPOSE OF ACT.--The purpose of the Health | 0021| Insurance Alliance Act is to provide increased access to | 0022| voluntary health insurance coverage in New Mexico. An | 0023| additional purpose of the Health Insurance Alliance Act is to | 0024| provide for the development of plans for health insurance | 0025| coverage for children, small employers and individuals. To the | 0001| extent that the Health Insurance Alliance Act continues to | 0002| provide increased access to voluntary health insurance coverage, | 0003| another purpose of the Health Insurance Alliance Act is to | 0004| alleviate increased burdens placed on the medicaid program and | 0005| to alleviate the responsibility of the human services department | 0006| to make additional medicaid expenditures for those persons who | 0007| may be forced to become medicaid eligible instead of being able | 0008| to enroll in the health insurance alliance." | 0009| Section 2. Section 59A-54-12 NMSA 1978 (being Laws 1987, | 0010| Chapter 154, Section 12, as amended) is amended to read: | 0011| "59A-54-12. ELIGIBILITY--POLICY PROVISIONS.-- | 0012| A. Except as provided in Subsection I of this | 0013| section, a person is eligible for a pool policy only if on the | 0014| effective date of coverage or renewal of coverage the person is | 0015| a New Mexico resident and: | 0016| (1) is not eligible as an insured or covered | 0017| dependent for any health plan that provides coverage for | 0018| comprehensive major medical or comprehensive physician and | 0019| hospital services; | 0020| (2) is only eligible for a health plan that is | 0021| offered at a rate higher than that available from the pool; | 0022| (3) has been rejected for coverage for | 0023| comprehensive major medical or comprehensive physician and | 0024| hospital services; or | 0025| (4) is only eligible for a health plan with a | 0001| rider, waiver or restrictive provision for that particular | 0002| individual based on a specific condition. | 0003| B. Coverage under a pool policy is in excess of and | 0004| shall not duplicate coverage under any other form of health | 0005| insurance. | 0006| C. A pool policy shall provide that coverage of a | 0007| dependent unmarried person terminates when the person becomes | 0008| nineteen years of age or, if the person is enrolled full time in | 0009| an accredited educational institution, when he becomes twenty-five years of age. The policy shall also provide in substance | 0010| that attainment of the limiting age does not operate to | 0011| terminate coverage when the person is and continues to be: | 0012| (1) incapable of self-sustaining employment by | 0013| reason of mental retardation or physical handicap; and | 0014| (2) primarily dependent for support and | 0015| maintenance upon the person in whose name the contract is | 0016| issued. | 0017| Proof of incapacity and dependency shall be furnished to | 0018| the insurer within one hundred twenty days of attainment of the | 0019| limiting age and subsequently as required by the insurer but not | 0020| more frequently than annually after the two-year period | 0021| following attainment of the limiting age. | 0022| D. A pool policy that provides coverage for a family | 0023| member of the person in whose name the contract is issued shall, | 0024| as to the coverage of the family member or the individual in | 0025| whose name the contract was issued, provide that the health | 0001| insurance benefits applicable for children are payable with | 0002| respect to a newly born child of the family member or the person | 0003| in whose name the contract is issued from the moment of coverage | 0004| of injury or illness, including the necessary care and treatment | 0005| of medically diagnosed congenital defects and birth | 0006| abnormalities. If payment of a specific premium is required to | 0007| provide coverage for the child, the contract may require that | 0008| notification of the birth of a child and payment of the required | 0009| premium shall be furnished to the carrier within thirty-one days | 0010| after the date of birth in order to have the coverage continued | 0011| beyond the thirty-one day period. | 0012| E. A pool policy may contain provisions under which | 0013| coverage is excluded during a six-month period following the | 0014| effective date of coverage as to a given individual for pre-existing conditions, as long as either of the following exists: | 0015| (1) the condition has manifested itself within | 0016| a period of six months before the effective date of coverage in | 0017| such a manner as would cause an ordinarily prudent person to | 0018| seek diagnoses or treatment; or | 0019| (2) medical advice or treatment was recommended | 0020| or received within a period of six months before the effective | 0021| date of coverage. | 0022| F. The pre-existing condition exclusions described | 0023| in Subsection E of this section shall be waived to the extent to | 0024| which similar exclusions have been satisfied under any prior | 0025| health insurance coverage that was involuntarily terminated, if | 0001| the application for pool coverage is made not later than thirty-one days following the involuntary termination. In that case, | 0002| coverage in the pool shall be effective from the date on which | 0003| the prior coverage was terminated. This subsection does not | 0004| prohibit pre-existing conditions coverage in a pool policy that | 0005| is more favorable to the insured than that specified in this | 0006| subsection. | 0007| G. An individual is not eligible for coverage by the | 0008| pool if: | 0009| (1) he is, at the time of application, eligible | 0010| for medicare or medicaid, which would provide coverage for | 0011| amounts in excess of limited policies such as dread disease, | 0012| cancer policies or hospital indemnity policies; | 0013| (2) he has terminated coverage by the pool | 0014| within the past twelve months; or | 0015| (3) he is an inmate of a public institution or | 0016| is eligible for public programs for which medical care is | 0017| provided. | 0018| H. Any person whose health insurance coverage from a | 0019| qualified state health policy with similar coverage is | 0020| terminated because of nonresidency in another state may apply | 0021| for coverage under the pool. If the coverage is applied for | 0022| within thirty-one days after that termination and if premiums | 0023| are paid for the entire coverage period, the effective date of | 0024| the coverage shall be the date of termination of the previous | 0025| coverage. | 0001| I. A person's eligibility for a policy issued under | 0002| the Health Insurance Alliance Act shall not preclude a person | 0003| from remaining on a pool policy, and a self-employed person who | 0004| qualifies for an approved health plan under the Health Insurance | 0005| Alliance Act by using a dependent as the second employee may | 0006| choose a pool policy in lieu of the health plan under that act." | 0007| Section 3. Section 59A-56-3 NMSA 1978 (being Laws 1994, | 0008| Chapter 75, Section 3) is amended to read: | 0009| "59A-56-3. DEFINITIONS.--As used in the Health Insurance | 0010| Alliance Act: | 0011| A. "alliance" means the New Mexico health insurance | 0012| alliance; | 0013| B. "approved health plan" means any arrangement for | 0014| the provision of health insurance offered through and approved | 0015| by the alliance; | 0016| C. "board" means the board of directors of the | 0017| alliance; | 0018| D. "child" means a dependent unmarried individual | 0019| who is less than nineteen years of age or an unmarried | 0020| individual who is enrolled full time in an accredited | 0021| educational institution until the individual becomes twenty-five | 0022| years of age; | 0023| E. "department" means the department of insurance; | 0024| F. "director" means an individual who serves on the | 0025| board; | 0001| G. "earned premiums" means premiums paid or due | 0002| during a calendar year for coverage under an approved health | 0003| plan less any unearned premiums at the end of that calendar year | 0004| plus any unearned premiums from the end of the immediately | 0005| preceding calendar year; | 0006| H. "eligible expenses" means the allowable charges | 0007| for a health care service covered under an approved health plan; | 0008| I. "gross earned premiums" means premiums paid or | 0009| due during a calender year for all health insurance written in | 0010| the state less any unearned premiums at the end of that calendar | 0011| year plus any unearned premiums from the end of the immediately | 0012| preceding calendar year; | 0013| J. "health care service" means a service or product | 0014| furnished an individual for the purpose of preventing, | 0015| alleviating, curing or healing human illness or injury and | 0016| includes services and products incidental to furnishing the | 0017| described services or products; | 0018| K. "health insurance" means "health" insurance as | 0019| defined in Section 59A-7-3 NMSA 1978; any hospital and medical | 0020| expense-incurred policy, including medicare supplement | 0021| insurance; nonprofit health care plan service contract; health | 0022| maintenance organization subscriber contract; short-term, | 0023| accident, fixed indemnity, specified disease policy, long-term | 0024| care or disability income insurance contracts and limited health | 0025| benefit or credit health insurance; coverage for health care | 0001| services under uninsured arrangements of group or group-type | 0002| contracts, including employer self-insured, cost-plus or other | 0003| benefits methodologies not involving insurance or not subject to | 0004| New Mexico premium taxes; coverage for health care services | 0005| under group-type contracts that are not available to the general | 0006| public and can be obtained only because of connection with a | 0007| particular organization or group; or coverage by medicare or | 0008| other governmental programs providing health care services; but | 0009| "health insurance" does not include insurance issued pursuant to | 0010| provisions of the Workers' Compensation Act or similar law, | 0011| automobile medical payment insurance or provisions by which | 0012| benefits are payable with or without regard to fault that are | 0013| required by law to be contained in any liability insurance | 0014| policy; | 0015| L. "health maintenance organization" means a health | 0016| maintenance organization as defined by Subsection M of Section | 0017| 59A-46-2 NMSA 1978; | 0018| M. "incurred claims" means claims paid during a | 0019| calendar year plus claims incurred in the calendar year and paid | 0020| prior to April 1 of the succeeding year, less claims incurred | 0021| previous to the current calendar year and paid prior to April 1 | 0022| of the current year; | 0023| N. "insured" means a small employer or its employee | 0024| and an individual covered by an approved health plan, a former | 0025| employee of a small employer who is covered by an approved | 0001| health plan through conversion or an individual covered by an | 0002| approved health plan that allows individual enrollment; | 0003| O. "medicare" means coverage under both Parts A and | 0004| B of Title 18 of the federal Social Security Act; | 0005| P. "member" means a member of the alliance; | 0006| Q. "nonprofit health care plan" means a "health care | 0007| plan" as defined in Subsection K of Section 59A-47-3 NMSA 1978; | 0008| R. "premiums" means the premiums received for | 0009| coverage under an approved health plan during a calendar year; | 0010| S. "small employer" means a person that is a | 0011| resident of this state, has employees at least fifty percent of | 0012| whom are residents of this state, is actively engaged in | 0013| business and that on at least fifty percent of its working days | 0014| during the preceding calendar year employed no fewer than two | 0015| and no more than fifty eligible employees; provided that: (1) in determining the number of eligible employees, | 0016| the spouse or dependent of an employee may, at the employer's | 0017| discretion, be counted as a separate employee; and | 0018| (2) companies that are eligible to file a | 0019| combined tax return or a consolidated tax return for purposes of | 0020| state income taxation shall be considered one employer; | 0021| T. "superintendent" means the superintendent of | 0022| insurance; | 0023| U. "total premiums" means the total premiums for | 0024| business written in the state received during a calendar year; | 0025| and | 0001| V. "unearned premiums" means the portion of a | 0002| premium previously paid for which the coverage period is in the | 0003| future." | 0004| Section 4. Section 59A-56-4 NMSA 1978 (being Laws 1994, | 0005| Chapter 75, Section 4) is amended to read: | 0006| "59A-56-4. ALLIANCE CREATED--BOARD CREATED.-- | 0007| A. The "New Mexico health insurance alliance" is | 0008| created as a nonprofit public corporation for the purpose of | 0009| providing increased access to health insurance in the state. | 0010| All insurance companies authorized to transact health insurance | 0011| business in this state, nonprofit health care plans, health | 0012| maintenance organizations and self-insurers not subject to | 0013| federal preemption shall organize and be members of the alliance | 0014| as a condition of their authority to offer health insurance in | 0015| this state, except for an insurance company that is licensed | 0016| under the Prepaid Dental Plan Law or a company that is solely | 0017| engaged in the sale of dental insurance and is licensed under a | 0018| provision of the Insurance Code. The alliance is not a | 0019| governmental agency for any purpose. | 0020| B. The alliance shall be governed by a board of | 0021| directors constituted pursuant to the provisions of this | 0022| section. The board is a governmental entity for purposes of the | 0023| Tort Claims Act, but the board shall not be considered a | 0024| governmental entity for any other purpose. | 0025| C. The superintendent shall, within sixty days after | 0001| March 4, 1994, give notice to all members of the time and place | 0002| for the initial organizational meeting of the alliance. Each | 0003| member shall be entitled to one vote in person or by proxy at | 0004| the organizational meeting. | 0005| D. The alliance shall operate subject to the | 0006| supervision and approval of the board. The board shall consist | 0007| of: | 0008| (1) five directors, elected by the members, who | 0009| shall be officers or employees of members and shall consist of | 0010| one representative of a nonprofit health care plan, two | 0011| representatives of health maintenance organizations and two | 0012| representatives of other types of members; | 0013| (2) five directors, appointed by the governor, | 0014| who shall be officers, general partners or proprietors of small | 0015| employers who, after the term of the initial appointments, are | 0016| covered by approved health plans; | 0017| (3) four directors appointed by the governor, | 0018| who shall be employees of small employers, and who, after the | 0019| term of the initial appointments, are employees of small | 0020| employers covered by approved health plans; and | 0021| (4) the superintendent or his designee, who | 0022| shall be a nonvoting member except when his vote is necessary to | 0023| break a tie. | 0024| E. The superintendent shall serve as chair of the | 0025| board unless he declines, in which event he shall appoint the | 0001| chair. | 0002| F. The directors elected by the members shall be | 0003| elected for initial terms of three years or less, staggered so | 0004| that the term of at least one director expires on June 30 of | 0005| each year. The directors appointed by the governor shall be | 0006| appointed for initial terms of three years or less, staggered so | 0007| that the term of at least one director expires on June 30 of | 0008| each year. Following the initial terms, directors shall be | 0009| elected or appointed for terms of three years. A director | 0010| whose term has expired shall continue to serve until his | 0011| successor is elected or appointed. | 0012| G. Whenever a vacancy on the board occurs, the | 0013| electing or appointing authority of the director's position that | 0014| is vacant shall fill the vacancy by electing or appointing an | 0015| individual to serve the balance of the unexpired term; provided, | 0016| when a vacancy occurs in one of the director's positions elected | 0017| by the members, the superintendent is authorized to appoint a | 0018| temporary replacement director until the next scheduled election | 0019| of directors elected by the members is held. The individual | 0020| elected or appointed to fill a vacancy shall meet the | 0021| requirements for initial election or appointment to that | 0022| position. | 0023| H. Directors may be reimbursed by the alliance as | 0024| provided in the Per Diem and Mileage Act in the same manner and | 0025| amounts as nonsalaried public officers, but shall receive no | 0001| other compensation, perquisite or allowance from the alliance." | 0002| Section 5. Section 59A-56-5 NMSA 1978 (being Laws 1994, | 0003| Chapter 75, Section 5) is amended to read: | 0004| "59A-56-5. PLAN OF OPERATION.-- | 0005| A. The board shall submit a plan of operation to the | 0006| superintendent and any amendments to the plan necessary or | 0007| suitable to assure the fair, reasonable and equitable | 0008| administration of the alliance. | 0009| B. The superintendent shall, after notice and | 0010| hearing, approve the plan of operation if it is determined to | 0011| assure the fair, reasonable and equitable administration of the | 0012| alliance. The plan of operation shall become effective upon | 0013| written approval of the superintendent consistent with the date | 0014| on which health insurance coverage through the alliance pursuant | 0015| to the provisions of the Health Insurance Alliance Act is made | 0016| available. A plan of operation adopted by the superintendent | 0017| shall continue in force until modified by him or superseded by a | 0018| subsequent plan of operation submitted by the board and approved | 0019| by the superintendent. | 0020| C. The plan of operation shall: | 0021| (1) establish procedures for the handling and | 0022| accounting of assets of the alliance; | 0023| (2) establish regular times and places for | 0024| meetings of the board; | 0025| (3) establish procedures for records to be kept | 0001| of all financial transactions and for annual fiscal reporting to | 0002| the superintendent; | 0003| (4) establish the amount of and the method for | 0004| collecting assessments pursuant to Section 59A-56-11 NMSA 1978; | 0005| (5) establish a program to publicize the | 0006| existence of the alliance, the approved health plans, the | 0007| eligibility requirements and procedures for enrollment in an | 0008| approved health plan and to maintain public awareness of the | 0009| alliance; | 0010| (6) establish penalties for nonpayment of | 0011| assessments by members; | 0012| (7) establish procedures for alternative | 0013| dispute resolution of disputes between members and insureds; and | 0014| (8) contain additional provisions necessary and | 0015| proper for the execution of the powers and duties of the | 0016| alliance." | 0017| Section 6. Section 59A-56-6 NMSA 1978 (being Laws 1994, | 0018| Chapter 75, Section 6) is amended to read: | 0019| "59A-56-6. BOARD--POWERS AND DUTIES.-- | 0020| A. The board shall have the general powers and | 0021| authority granted to insurance companies licensed to transact | 0022| health insurance business under the laws of this state. | 0023| B. The board: | 0024| (1) may enter into contracts to carry out the | 0025| provisions of the Health Insurance Alliance Act, including, with | 0001| the approval of the superintendent, contracting with similar | 0002| alliances of other states for the joint performance of common | 0003| administrative functions or with persons or other organizations | 0004| for the performance of administrative functions; | 0005| (2) may sue and be sued; | 0006| (3) may conduct periodic audits of the members | 0007| to assure the general accuracy of the financial data submitted | 0008| to the alliance; | 0009| (4) shall establish maximum rate schedules, | 0010| allowable rate adjustments, administrative allowances, | 0011| reinsurance premiums and agent referral, servicing fees or | 0012| commissions subject to applicable provisions in the Insurance | 0013| Code. In determining the initial year's rate for health | 0014| insurance, the only rating factors that may be used are age, | 0015| gender, geographic area of the place of employment and smoking | 0016| practices. In any year's rate, the difference in rates in any | 0017| one age group that may be charged on the basis of a person's | 0018| gender shall not exceed another person's rates in the age group | 0019| by more than twenty percent of the lower rate, and no person's | 0020| rate shall exceed the rate of any other person with similar | 0021| family composition by more than two hundred fifty percent of the | 0022| lower rate, except that the rates for children under the age of | 0023| nineteen may be lower than the bottom rates in the two hundred | 0024| fifty percent band. The rating factor restrictions shall not | 0025| prohibit a member from offering rates that differ depending upon | 0001| family composition; | 0002| (5) may direct a member to issue policies or | 0003| certificates of coverage of health insurance in accordance with | 0004| the requirements of the Health Insurance Alliance Act; | 0005| (6) shall establish procedures for alternative | 0006| dispute resolution of disputes between members and insureds; | 0007| (7) shall cause the alliance to have an annual | 0008| audit of its operations by an independent certified public | 0009| accountant; | 0010| (8) shall conduct all board meetings as if it | 0011| were subject to the provisions of the Open Meetings Act; | 0012| (9) shall draft one or more sample health | 0013| insurance policies that are the prototype documents for the | 0014| members; | 0015| (10) shall determine the design criteria to be | 0016| met for an approved health plan; | 0017| (11) shall review each proposed approved health | 0018| plan to determine if it meets the alliance designed criteria | 0019| and, if it does meet the criteria, approve the plan, but the | 0020| board shall not permit more than one approved health plan per | 0021| member for each set of plan design criteria; | 0022| (12) shall review annually each approved health | 0023| plan to determine if it still qualifies as an approved health | 0024| plan based on the alliance designed criteria and, if the plan is | 0025| no longer approved, arrange for the transfer of the insureds | 0001| covered under the formerly approved plan to an approved health | 0002| plan; | 0003| (13) may terminate an approved health plan not | 0004| operating as required by the board; | 0005| (14) shall terminate an approved health plan if | 0006| timely claim payments are not made pursuant to the plan; and | 0007| (15) shall engage in significant marketing | 0008| activities, including a program of media advertising, to inform | 0009| small employers and eligible individuals of the existence of the | 0010| alliance, its purpose and the health insurance available or | 0011| potentially available through the alliance. | 0012| C. The alliance is subject to and responsible for | 0013| examination by the superintendent. No later than March 1 of | 0014| each year, the board shall submit to the superintendent an | 0015| audited financial report for the preceding calendar year in a | 0016| form approved by the superintendent." | 0017| Section 7. Section 59A-56-8 NMSA 1978 (being Laws 1994, | 0018| Chapter 75, Section 8) is amended to read: | 0019| "59A-56-8. APPROVED HEALTH PLAN.-- | 0020| A. An approved health plan shall conform to the | 0021| alliance's approved health plan design criteria. The board may | 0022| allow more than one plan design for approved health plans. A | 0023| member may provide one approved health plan for each plan design | 0024| approved by the board. | 0025| B. The board shall designate plan designs for | 0001| standard approved health plans. The board may designate plan | 0002| designs for an approved health plan that provides catastrophic | 0003| coverage or other benefit plan designs. | 0004| C. Each approved health plan shall offer a premium | 0005| that is no greater than ten percent over and no less than ten | 0006| percent under the average of the standard rate index for plans | 0007| with the same characteristics. | 0008| D. Any member that provides or offers to renew a | 0009| group health insurance contract providing health insurance | 0010| benefits to employees of the state, a county, a municipality or | 0011| a school district for which public funds are contributed shall | 0012| offer at least one approved health plan to small employers; | 0013| provided, however, if a member does not offer anywhere in the | 0014| United States a plan that meets substantially the design | 0015| criteria of an approved health plan, the member shall not be | 0016| required to offer an approved health plan. | 0017| E. If a plan design approved by the board is not | 0018| offered by any member already offering an approved health plan, | 0019| but a member offers a substantially similar plan design outside | 0020| the alliance, the board may require the member to offer that | 0021| plan design as an approved health plan through the alliance. | 0022| F. An approved health plan shall be offered for at | 0023| least five consecutive years following the date last required in | 0024| accordance with Subsection D of this section or after notifying | 0025| the board of its future withdrawal if not required in accordance | 0001| with Subsection D of this section unless: | 0002| (1) the member substitutes another approved | 0003| health plan for the plan withdrawn; or | 0004| (2) the board allows the plan to be withdrawn | 0005| because it imposes a serious hardship upon the member. | 0006| G. No member shall be required to offer an approved | 0007| health plan if the member notifies the superintendent in writing | 0008| that it will no longer offer health insurance, life insurance or | 0009| annuities in the state, except for renewal of existing | 0010| contracts, provided that: | 0011| (1) the member does not offer or provide health | 0012| insurance, life insurance or annuities for a period of five | 0013| years from the date of notification to the superintendent to any | 0014| person in the state who is not covered by the member through a | 0015| health insurance policy in effect on the date of the | 0016| notification; and | 0017| (2) with respect to health or life insurance | 0018| policies or annuities in effect on the date of notification to | 0019| the superintendent, the member continues to comply with all | 0020| applicable laws and regulations governing the provision of | 0021| insurance in this state, including the payment of applicable | 0022| taxes, fees and assessments." | 0023| Section 8. Section 59A-56-9 NMSA 1978 (being Laws 1994, | 0024| Chapter 75, Section 9) is amended to read: | 0025| "59A-56-9. REINSURANCE.-- | 0001| A. A member offering an approved health plan shall | 0002| be reinsured for certain losses by the alliance. Within six | 0003| months following the end of each calendar year in which the | 0004| member offering the approved health plan paid more in incurred | 0005| claims, plus the member's reinsurance premium pursuant to | 0006| Subsection B of this section, than eighty-five percent of earned | 0007| premiums received by the member on all approved health plans | 0008| issued by the member, the member shall receive from the alliance | 0009| the excess amount for the calendar year by which the incurred | 0010| claims and reinsurance premium exceeded eighty-five percent of | 0011| the earned premiums received by the alliance or its | 0012| administrator. | 0013| B. The alliance shall withhold from all premiums | 0014| that it receives a reinsurance premium as established by the | 0015| board. The reinsurance premium shall not exceed five percent of | 0016| premiums paid in the first year of coverage and shall not exceed | 0017| ten percent of premiums for renewal years. In determining the | 0018| reinsurance premium for a particular calendar year, the board | 0019| shall set the reinsurance premium at a rate that will recover | 0020| the total reinsurance loss for the preceding year over a | 0021| reasonable number of years in accordance with sound actuarial | 0022| principles." | 0023| Section 9. Section 59A-56-10 NMSA 1978 (being Laws 1994, | 0024| Chapter 75, Section 10) is amended to read: | 0025| "59A-56-10. ADMINISTRATION.--The alliance shall deduct | 0001| from premiums collected for approved health plans an | 0002| administrative charge as set by the board. The administrative | 0003| charge shall be determined before the beginning of each calendar | 0004| year. The maximum administrative charge the alliance may charge | 0005| is ten percent of premiums in the first year and five percent of | 0006| premiums in renewal years." | 0007| Section 10. Section 59A-56-11 NMSA 1978 (being Laws 1994, | 0008| Chapter 75, Section 11) is amended to read: | 0009| "59A-56-11. ASSESSMENTS.-- | 0010| A. After the completion of each calendar year, the | 0011| alliance shall assess all its members for the net reinsurance | 0012| loss in the previous calendar year and for the net | 0013| administrative loss that occurred in the previous calendar year, | 0014| taking into account investment income for the period and other | 0015| appropriate gains and losses using the following definitions: | 0016| (1) net reinsurance losses shall be the amount | 0017| determined for the previous calendar year in accordance with | 0018| Subsection A of Section 59A-56-9 NMSA 1978 for all members | 0019| offering an approved health plan reduced by reinsurance premiums | 0020| charged by the alliance in the previous calendar year; and | 0021| (2) net administrative losses shall be the | 0022| administrative expenses incurred by the alliance in the previous | 0023| calendar year and projected for the current calendar year less | 0024| the sum of administrative allowances received by the alliance | 0025| and any legislative appropriation for the period, but, in the | 0001| event of an administrative gain, net administrative losses for | 0002| the purpose of assessments shall be considered zero, and the | 0003| gain shall be carried forward to the administrative fund for the | 0004| next calendar year as an additional allowance. | 0005| B. The assessment for each member shall be | 0006| determined by multiplying the total losses of the alliance's | 0007| operation, as defined in Subsection A of this section, by a | 0008| fraction, the numerator of which is an amount equal to that | 0009| member's total premiums, or the equivalent, exclusive of | 0010| premiums received by the member for an approved health plan for | 0011| health insurance written in the state during the preceding | 0012| calendar year and the denominator of which equals the total | 0013| premiums of all health insurance written in the state during the | 0014| preceding calendar year exclusive of premiums for approved | 0015| health plans; provided that total premiums shall not include | 0016| payments by the secretary of human services pursuant to a | 0017| contract issued under Section 1876 of the federal Social | 0018| Security Act, total premiums exempted by the federal Employee | 0019| Retirement Income Security Act of 1974 or federal government | 0020| programs. | 0021| C. If assessments exceed actual reinsurance losses | 0022| and administrative losses of the alliance, the excess shall be | 0023| held at interest by the board to offset future losses. | 0024| D. To enable the board to properly determine the net | 0025| reinsurance amount and its responsibility for reinsurance to | 0001| each member: | 0002| (1) by April 15 of each year, each member | 0003| offering an approved health plan shall submit a listing of all | 0004| incurred claims for the previous year; and | 0005| (2) by April 15 of each year, each member shall | 0006| submit a report that includes the total earned premiums received | 0007| during the prior year less the total earned premiums exempted by | 0008| federal government programs. | 0009| E. The alliance shall notify each member of the | 0010| amount of its assessment due by May 15 of each year. The | 0011| assessment shall be paid by the member by June 15 of each year. | 0012| F. The proportion of participation of each member in | 0013| the alliance shall be determined annually by the board, based on | 0014| annual statements filed by each member and other reports deemed | 0015| necessary by the board. Any deficit incurred by the alliance | 0016| shall be recouped by assessments apportioned among the members | 0017| pursuant to the formula provided in Subsection B of this | 0018| section; provided that the assessment paid for any member shall | 0019| be allowed as a credit on the future premium tax return for that | 0020| member, with the credit limited to fifty percent of the premium | 0021| tax due the first year the assessment is imposed; forty percent | 0022| the second year; and thirty percent the third and all subsequent | 0023| years. | 0024| G. The board may defer, in whole or in part, the | 0025| payment of an assessment of a member if, in the opinion of the | 0001| board, after approval of the superintendent, payment of the | 0002| assessment would endanger the ability of the member to fulfill | 0003| its contractual obligations. In the event payment of an | 0004| assessment against a member is deferred, the amount deferred may | 0005| be assessed against the other members in a manner consistent | 0006| with the basis for assessments set forth in Subsection A of this | 0007| section. The member receiving the deferment shall pay the | 0008| assessment in full plus interest at the prevailing rate as | 0009| determined by regulation of the superintendent within four years | 0010| from the date payment is deferred. After four years but within | 0011| five years of the date of the deferment, the board may sue to | 0012| recover the amount of the deferred payment plus interest and | 0013| costs. Board actions to recover deferred payments brought after | 0014| five years of the date of deferment are barred. Any amount | 0015| received shall be deducted from future assessments or reimbursed | 0016| pro rata to the members paying the deferred assessment. | 0017| H. In addition to the assessments provided in this | 0018| section for reinsurance and administrative losses, the board may | 0019| impose on all members annually an assessment not to exceed two | 0020| hundred dollars ($200) for the board to hire consultants and | 0021| plan and develop alliance programs. This additional | 0022| assessment shall be allowed as a credit on the next premium tax | 0023| due for the member." | 0024| Section 11. Section 59A-56-13 NMSA 1978 (being Laws 1994, | 0025| Chapter 75, Section 13) is amended to read: | 0001| "59A-56-13. ALLIANCE ADMINISTRATOR.-- | 0002| A. The board may select an alliance administrator | 0003| through a competitive request for proposal process. The board | 0004| shall evaluate proposals based on criteria established by the | 0005| board that shall include: | 0006| (1) proven ability to administer health | 0007| insurance programs; | 0008| (2) an estimate of total charges for | 0009| administering the alliance for the proposed contract period; and | 0010| (3) ability to administer the alliance in a | 0011| cost-efficient manner. | 0012| B. The alliance administrator contract shall be for | 0013| a period up to four years, subject to annual renegotiation of | 0014| the fees and services, and shall provide for cancellation of the | 0015| contract for cause, termination of the alliance by the | 0016| legislature or the combining of the alliance with a governmental | 0017| body. | 0018| C. At least one year prior to the expiration of an | 0019| alliance administrator contract, the board may invite all | 0020| interested parties, including the current administrator, to | 0021| submit proposals to serve as alliance administrator for a | 0022| succeeding contract period. Selection of the administrator for | 0023| a succeeding contract period shall be made at least six months | 0024| prior to the expiration of the current contract. | 0025| D. The alliance administrator shall: | 0001| (1) take applications for an approved health | 0002| plan from small employers or a referring agent; | 0003| (2) establish a premium billing procedure for | 0004| collection of premiums from insureds. Billings shall be made on | 0005| a periodic basis, not less than monthly, as determined by the | 0006| board; | 0007| (3) pay the member that offers an approved | 0008| health plan the net premium due after deduction of reinsurance | 0009| and administrative allowances; | 0010| (4) provide the member with any changes in the | 0011| status of insureds; | 0012| (5) perform all necessary functions to assure | 0013| that each member is providing timely payment of benefits to | 0014| individuals covered under an approved health plan, including: | 0015| (a) making information available to | 0016| insureds relating to the proper manner of submitting a claim for | 0017| benefits to the member offering the approved health plan and | 0018| distributing forms on which submissions shall be made; and | 0019| (b) making information available on | 0020| approved health plan benefits and rates to insureds; | 0021| (6) submit regular reports to the board | 0022| regarding the operation of the alliance, the frequency, content | 0023| and form of which shall be determined by the board; | 0024| (7) following the close of each fiscal year, | 0025| determine premiums of members, the expense of administration and | 0001| the paid and incurred health care service charges for the year | 0002| and report this information to the board and the superintendent | 0003| on a form prescribed by the superintendent; and | 0004| (8) establish the premiums for reinsurance and | 0005| the administrative charges, subject to approval of the board." | 0006| Section 12. Section 59A-56-14 NMSA 1978 (being Laws 1994, | 0007| Chapter 75, Section 14) is amended to read: | 0008| "59A-56-14. ELIGIBILITY--GUARANTEED ISSUE--PLAN | 0009| PROVISIONS.-- | 0010| A. A small employer is eligible for an approved | 0011| health plan if on the effective date of coverage or renewal: | 0012| (1) at least fifty percent of its eligible | 0013| employees not otherwise insured elect to be covered under the | 0014| approved health plan; | 0015| (2) the small employer has not terminated | 0016| coverage with an approved health plan within three years of the | 0017| date of application for coverage except to change to another | 0018| approved health plan; and | 0019| (3) the small employer does not offer other | 0020| general group health insurance coverage to its employees. For | 0021| the purposes of this paragraph, general group health insurance | 0022| coverage excludes coverage providing only a specific limited | 0023| form of health insurance such as accident or disability income | 0024| insurance coverage or a specific health care service such as | 0025| dental care. | 0001| B. An approved health plan shall provide coverage | 0002| for a child. The policy shall also provide in substance that | 0003| attainment of the limiting age by an unmarried dependent | 0004| individual does not operate to terminate coverage when the | 0005| individual continues to be incapable of self-sustaining | 0006| employment by reason of developmental disability or physical | 0007| handicap and the individual is primarily dependent for support | 0008| and maintenance upon the employee. Proof of incapacity and | 0009| dependency shall be furnished to the alliance and the member | 0010| that offered the approved health plan within one hundred twenty | 0011| days of attainment of the limiting age. The board may require | 0012| subsequent proof annually after a two-year period following | 0013| attainment of the limiting age. | 0014| C. An approved health plan shall provide that the | 0015| health insurance benefits applicable for eligible dependents are | 0016| payable with respect to a newly born child of the family member | 0017| or the individual in whose name the contract is issued from the | 0018| moment of birth, including the necessary care and treatment of | 0019| medically diagnosed congenital defects and birth abnormalities. | 0020| If payment of a specific premium is required to provide coverage | 0021| for the child, the contract may require that notification of the | 0022| birth of a child and payment of the required premium shall be | 0023| furnished to the member within thirty-one days after the date of | 0024| birth in order to have the coverage from birth. An approved | 0025| health plan shall provide that the health insurance benefits | 0001| applicable for eligible dependents are payable for an adopted | 0002| child in accordance with the provisions of Section 59A-22-34.1 | 0003| NMSA 1978. | 0004| D. Except as provided in Subsections E, G and H of | 0005| this section, an approved health plan may contain provisions | 0006| under which coverage is excluded during a six-month period | 0007| following the effective date of coverage of an individual for | 0008| preexisting conditions, as long as either of the following | 0009| exists: | 0010| (1) the condition has manifested itself within | 0011| a period of six months before the effective date of coverage in | 0012| such a manner as would cause an ordinarily prudent person to | 0013| seek diagnosis or treatment; or | 0014| (2) medical advice or treatment was recommended | 0015| or received within a period of six months before the effective | 0016| date of coverage. | 0017| E. The preexisting condition exclusions described in | 0018| Subsection D of this section shall be waived to the extent to | 0019| which similar exclusions have been satisfied under any prior | 0020| health insurance coverage if the application for health | 0021| insurance through the alliance is made not later than thirty-one | 0022| days following the termination of the prior coverage. In that | 0023| case, coverage through the alliance shall be effective from the | 0024| date on which the prior coverage was terminated. This | 0025| subsection does not prohibit preexisting conditions coverage in | 0001| an approved health plan that is more favorable to the covered | 0002| individual than that specified in this subsection. | 0003| F. An individual is not eligible for coverage by the | 0004| alliance if he: | 0005| (1) is eligible for medicare; provided, | 0006| however, if an individual has health insurance coverage from an | 0007| employer whose group includes twenty or more individuals, an | 0008| individual eligible for medicare who continues to be employed | 0009| may choose to be covered through an approved health plan; | 0010| (2) has voluntarily terminated health insurance | 0011| issued through the alliance within the past twelve months unless | 0012| it was due to a change in employment; or | 0013| (3) is an inmate of a public institution. | 0014| G. The alliance shall provide for an open enrollment | 0015| period of sixty days from the initial offering of an approved | 0016| health plan. Individuals enrolled during the open enrollment | 0017| period shall not be subject to the preexisting conditions | 0018| limitation. | 0019| H. If an insured covered by an approved health plan | 0020| switches to another approved health plan that provides increased | 0021| or additional benefits such as lower deductible or co-payment | 0022| requirements, the member offering the approved health plan with | 0023| increased or additional benefits may require the six-month | 0024| period for preexisting conditions provided in Subsection D of | 0025| this section to be satisfied prior to receipt of the additional | 0001| benefits. | 0002| I. An approved health plan shall provide for a | 0003| thirty-day reinstatement period from the end of a grace period | 0004| provided by the approved health plan, requiring payments of all | 0005| back premiums plus a penalty of five percent of the annualized | 0006| premium. Any claims incurred between the date through which | 0007| premiums have been paid and the date of reinstatement are not | 0008| covered unless covered by the conditions of the approved health | 0009| plan." | 0010| Section 13. Section 59A-56-17 NMSA 1978 (being Laws 1994, | 0011| Chapter 75, Section 17) is amended to read: | 0012| "59A-56-17. BENEFITS.-- | 0013| A. An approved health plan shall pay for medically | 0014| necessary eligible expenses that exceed the deductible, co-payment and co-insurance amounts applicable under the provisions | 0015| of Section 59A-56-18 NMSA 1978 and are not otherwise limited or | 0016| excluded. The Health Insurance Alliance Act does not prohibit | 0017| the board from approving additional types of health plan designs | 0018| with similar cost-benefit structures or other types of health | 0019| plan designs. An approved health plan for small employers | 0020| shall, at a minimum, reflect the levels of health insurance | 0021| coverage generally available in New Mexico for small employer | 0022| group policies, but an approved health plan for small employers | 0023| may also offer health plan designs that are not generally | 0024| available in New Mexico for small employer group policies. | 0025| B. The board may design and require an approved | 0001| health plan to contain cost-containment measures and | 0002| requirements, including managed care, pre-admission | 0003| certification, concurrent inpatient review and the use of fee | 0004| schedules for health care providers, including the diagnosis-related grouping system and the resource-based relative value | 0005| system." | 0006| Section 14. Section 59A-56-18 NMSA 1978 (being Laws 1994, | 0007| Chapter 75, Section 18) is amended to read: | 0008| "59A-56-18. DEDUCTIBLES--CO-INSURANCE--MAXIMUM OUT-OF-POCKET PAYMENTS.-- | 0009| A. Subject to the limitations provided in Subsection | 0010| C of this section, an approved health plan offered through the | 0011| alliance may impose a deductible on a per-person calendar year | 0012| basis. Approved health plans offered by health maintenance | 0013| organizations shall provide equivalent cost-benefit structures. | 0014| The board may authorize deductibles in other amounts and | 0015| equivalent cost-benefit structures. | 0016| B. Subject to the limitations provided in Subsection | 0017| C of this section, a mandatory co-insurance requirement for an | 0018| approved health plan may be imposed as a percentage of eligible | 0019| expenses in excess of a deductible. Health maintenance | 0020| organizations shall impose equivalent cost-benefit structures. | 0021| C. The maximum aggregate out-of-pocket payments for | 0022| eligible expenses by the covered individual shall be determined | 0023| by the board." | 0024| Section 15. Section 59A-56-19 NMSA 1978 (being Laws 1994, | 0025| Chapter 75, Section 19) is amended to read: | 0001| "59A-56-19. DEPENDENT FAMILY MEMBER REQUIRED COVERAGE--SMALL EMPLOYER RESPONSIBILITY.-- | 0002| A. A small employer shall collect or make a payroll | 0003| deduction from the compensation of an employee for the portion | 0004| of the approved health plan cost the employee is responsible for | 0005| paying. The small employer may contribute to the cost of that | 0006| plan on behalf of the employee. | 0007| B. A small employer shall make available to | 0008| dependent family members of an employee covered by an approved | 0009| health plan the same approved health plan. The small employer | 0010| may contribute to the cost of family coverage. | 0011| C. All premiums collected, deducted from the | 0012| compensation of employees or paid on their behalf by the small | 0013| employer shall be promptly remitted to the alliance." | 0014| Section 16. Section 59A-56-20 NMSA 1978 (being Laws 1994, | 0015| Chapter 75, Section 20) is amended to read: | 0016| "59A-56-20. RENEWABILITY.-- | 0017| A. An approved health plan shall contain provisions | 0018| under which the member offering the plan is obligated to renew | 0019| the health insurance if premiums are paid until the day the plan | 0020| is replaced by another plan or the small employer terminates | 0021| coverage. An individual covered by health insurance under an | 0022| approved health plan may retain coverage until he becomes | 0023| eligible for medicare as the primary coverage, except that in a | 0024| family policy coverage under an approved health plan shall | 0025| continue for any person in the family who is not eligible for | 0001| medicare. | 0002| B. If an approved health plan ceases to exist, the | 0003| alliance shall provide an alternate approved health plan. | 0004| C. An approved health plan shall provide covered | 0005| individuals the right to continue health insurance coverage | 0006| through an approved health plan as individual health insurance | 0007| provided by the same member upon the death of the employee or | 0008| upon the divorce, annulment or dissolution of marriage or legal | 0009| separation of the spouse from the employee or by termination of | 0010| employment by electing to do so within a period of time | 0011| specified in the health insurance, provided that the employee | 0012| was covered under an approved health plan while employed for at | 0013| least six consecutive months. The individual may be charged an | 0014| additional administrative charge for the individual health | 0015| insurance. | 0016| D. The right to continue health insurance coverage | 0017| provided in this section terminates if the covered individual | 0018| resides outside the United States for more than six consecutive | 0019| months." | 0020| Section 17. Section 59A-56-21 NMSA 1978 (being Laws 1994, | 0021| Chapter 75, Section 21) is amended to read: | 0022| "59A-56-21. REGULATIONS.--The superintendent shall: | 0023| A. adopt regulations that provide for disclosure by | 0024| members of the availability of health insurance from the | 0025| alliance; and | 0001| B. adopt regulations to carry out the provisions of | 0002| the Health Insurance Alliance Act." | 0003| Section 18. Section 59A-56-23 NMSA 1978 (being Laws 1994, | 0004| Chapter 75, Section 23) is amended to read: | 0005| "59A-56-23. RATES--STANDARD RISK RATE--EXPERIENCE RATING | 0006| PROHIBITED.-- | 0007| A. The alliance shall determine a standard risk rate | 0008| index by actuarially calculating the average index rates that | 0009| the insurer has filed under the requirements of the Small Group | 0010| Rate and Renewability Act with the benefits similar to the | 0011| alliance's standard approved health plan. A standard risk rate | 0012| based on age and other appropriate demographic characteristics | 0013| may be used. No standard risk rate shall be more than ten | 0014| percent higher or ten percent lower than the average index rate. | 0015| In determining the standard risk rate, the alliance shall | 0016| consider the benefits provided by the approved health plan. | 0017| B. Experience rating is not allowed other than for | 0018| reinsurance purposes. | 0019| C. All rates and rate schedules shall be submitted | 0020| to the superintendent for approval prior to use." | 0021| Section 19. Section 59A-56-24 NMSA 1978 (being Laws 1994, | 0022| Chapter 75, Section 24) is amended to read: | 0023| "59A-56-24. BENEFIT PAYMENTS REDUCTION.-- | 0024| A. An approved health plan shall be the last payer | 0025| of benefits whenever any other benefit is available. Benefits | 0001| otherwise payable under the approved health plan shall be | 0002| reduced by all amounts paid or payable through any other health | 0003| insurance and by all hospital and medical expense benefits paid | 0004| or payable under any workers' compensation coverage, automobile | 0005| medical payment or liability insurance, whether provided on the | 0006| basis of fault or no-fault, and by any hospital or medical | 0007| benefits paid or payable under or provided pursuant to any state | 0008| or federal program, excluding medicaid. | 0009| B. The administrator or the alliance shall have a | 0010| cause of action against any person covered by an approved health | 0011| plan for the recovery of the amount of benefits paid that are | 0012| not for eligible expenses. Benefits due from the approved | 0013| health plan may be reduced or refused as a set-off against any | 0014| amount recoverable under this section." | 0015| Section 20. TEMPORARY PROVISION--REPORT.--The department | 0016| of insurance and the New Mexico health insurance alliance shall | 0017| prepare and publish a report to the legislature and the governor | 0018| by October 1 of each year, beginning on October 1, 1996 on the | 0019| alliance programs and recommendations to facilitate | 0020| participation in the alliance programs. The report shall | 0021| include a director's report from members and insured | 0022| representatives that reflects comments made by members and | 0023| insureds regarding the alliance for each year the directors are | 0024| required to report to the legislature and the governor. | 0025| Section 21. Laws 1994, Chapter 75, Section 35 is amended | 0001| to read: | 0002| "Section 35. DELAYED REPEAL.--The Health Insurance | 0003| Alliance Act is repealed June 30, 2003." | 0004|  | 0005| | 0006| FORTY-SECOND LEGISLATURE | 0007| FIRST SPECIAL SESSION, 1996 | 0008| | 0009| | 0010| March 20, 1996 | 0011| | 0012| Mr. President: | 0013| | 0014| Your FINANCE COMMITTEE, to whom has been referred | 0015| | 0016| SENATE BILL 7 | 0017| | 0018| has had it under consideration and reports same with | 0019| recommendation that it DO NOT PASS, but that | 0020| | 0021| SENATE FINANCE COMMITTEE SUBSTITUTE | 0022| FOR SENATE BILL 7 | 0023| | 0024| DO PASS. | 0025| Respectfully submitted, | 0001| | 0002| | 0003| | 0004| __________________________________ | 0005| Ben D. Altamirano, Chairman | 0006| | 0007| | 0008| Adopted_______________________ Not Adopted_______________________ | 0009| (Chief Clerk) (Chief Clerk) | 0010| | 0011| | 0012| Date ________________________ | 0013| | 0014| | 0015| The roll call vote was 11 For 0 Against | 0016| Yes: 11 | 0017| No: 0 | 0018| Excused: Aragon, Ingle | 0019| Absent: None | 0020| | 0021| | 0022| S0007FC1 | 0023| SENATE FINANCE COMMITTEE SUBSTITUTE FOR | 0024| SENATE BILL 7 | 0025| 42nd legislature - STATE OF NEW MEXICO - first special session, 1996 | 0001| | 0002| | 0003| | 0004| | 0005| | 0006| | 0007| | 0008| AN ACT | 0009| RELATING TO MEDICAL INSURANCE COVERAGE; ALLEVIATING ADDITIONAL | 0010| BURDENS PLACED ON THE MEDICAID PROGRAM AND THE STATE'S RESPONSIBILITY | 0011| UNDER THAT PROGRAM; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978; | 0012| REPEALING A SECTION OF LAWS 1994; DECLARING AN EMERGENCY. | 0013| | 0014| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0015| Section 1. Section 59A-56-2 NMSA 1978 (being Laws 1994, Chapter | 0016| 75, Section 2) is amended to read: | 0017| "59A-56-2. PURPOSE OF ACT.--The purpose of the Health | 0018| Insurance Alliance Act is to provide increased access to voluntary | 0019| health insurance coverage in New Mexico [The initial purpose is to | 0020| improve access to health insurance coverage for small employers on a | 0021| voluntary basis]. An additional purpose of the Health Insurance | 0022| Alliance Act is to provide for the development of [a plan] plans | 0023| for [expanded] health insurance coverage [to include uninsured | 0024| children, other employer groups] for children, small employers and | 0025| individuals. To the extent that the Health Insurance Alliance Act | 0001| continues to provide increased access to voluntary health | 0002| insurance coverage, another purpose of the Health Insurance | 0003| Alliance Act is to alleviate increased burdens placed on the | 0004| medicaid program and to alleviate the responsibility of the | 0005| human services department to make additional medicaid | 0006| expenditures for those persons who may be forced to become | 0007| medicaid eligible instead of being able to enroll in the health | 0008| insurance alliance." | 0009| Section 2. Section 59A-54-12 NMSA 1978 (being Laws 1987, | 0010| Chapter 154, Section 12, as amended) is amended to read: | 0011| "59A-54-12. ELIGIBILITY--POLICY PROVISIONS.-- | 0012| A. [A] Except as provided in Subsection I of this | 0013| section, a person is eligible for a pool policy only if on the | 0014| effective date of coverage or renewal of coverage the person is | 0015| a New Mexico resident and: | 0016| (1) is not eligible as an insured or covered | 0017| dependent for any health plan that provides coverage for | 0018| comprehensive major medical or comprehensive physician and | 0019| hospital services; | 0020| (2) is only eligible for a health plan that is | 0021| offered at a rate higher than that available from the pool; | 0022| (3) has been rejected for coverage for | 0023| comprehensive major medical or comprehensive physician and | 0024| hospital services; or | 0025| (4) is only eligible for a health plan with a | 0001| rider, waiver or restrictive provision for that particular | 0002| individual based on a specific condition. | 0003| B. Coverage under a pool policy is in excess of and | 0004| shall not duplicate coverage under any other form of health | 0005| insurance. | 0006| C. A pool policy shall provide that coverage of a | 0007| dependent unmarried person terminates when the person becomes | 0008| nineteen years of age or, if the person is enrolled full time in an | 0009| accredited educational institution, when he becomes twenty-five | 0010| years of age. The policy shall also provide in substance that | 0011| attainment of the limiting age does not operate to terminate | 0012| coverage when the person is and continues to be: | 0013| (1) incapable of self-sustaining employment by | 0014| reason of mental retardation or physical handicap; and | 0015| (2) primarily dependent for support and maintenance | 0016| upon the person in whose name the contract is issued. | 0017| Proof of incapacity and dependency shall be furnished to the | 0018| insurer within one hundred twenty days of attainment of the | 0019| limiting age and subsequently as required by the insurer but not | 0020| more frequently than annually after the two-year period following | 0021| attainment of the limiting age. | 0022| D. A pool policy that provides coverage for a family | 0023| member of the person in whose name the contract is issued shall, as | 0024| to the coverage of the family member or the individual in whose | 0025| name the contract was issued, provide that the health insurance | 0001| benefits applicable for children are payable with respect to a | 0002| newly born child of the family member or the person in whose name | 0003| the contract is issued from the moment of coverage of injury or | 0004| illness, including the necessary care and treatment of medically | 0005| diagnosed congenital defects and birth abnormalities. If payment | 0006| of a specific premium is required to provide coverage for the | 0007| child, the contract may require that notification of the birth of a | 0008| child and payment of the required premium shall be furnished to the | 0009| carrier within thirty-one days after the date of birth in order to | 0010| have the coverage continued beyond the thirty-one day period. | 0011| E. A pool policy may contain provisions under which | 0012| coverage is excluded during a six-month period following the | 0013| effective date of coverage as to a given individual for pre-existing conditions, as long as either of the following exists: | 0014| (1) the condition has manifested itself within a | 0015| period of six months before the effective date of coverage in such | 0016| a manner as would cause an ordinarily prudent person to seek | 0017| diagnoses or treatment; or | 0018| (2) medical advice or treatment was recommended or | 0019| received within a period of six months before the effective date of | 0020| coverage. | 0021| F. The pre-existing condition exclusions described in | 0022| Subsection E of this section shall be waived to the extent to which | 0023| similar exclusions have been satisfied under any prior health | 0024| insurance coverage [which] that was involuntarily terminated, | 0025| if the application for pool coverage is made not later than thirty-one days following the involuntary termination. In that case, | 0001| coverage in the pool shall be effective from the date on which the | 0002| prior coverage was terminated. This subsection does not prohibit | 0003| pre-existing conditions coverage in a pool policy that is more | 0004| favorable to the insured than that specified in this subsection. | 0005| G. An individual is not eligible for coverage by the pool | 0006| if: | 0007| (1) he is, at the time of application, eligible for | 0008| medicare or medicaid, which would provide coverage for amounts in | 0009| excess of limited policies such as dread disease, cancer policies | 0010| or hospital indemnity policies; | 0011| (2) he has terminated coverage by the pool within | 0012| the past twelve months; or | 0013| (3) he is an inmate of a public institution or is | 0014| eligible for public programs for which medical care is provided. | 0015| H. Any person whose health insurance coverage from a | 0016| qualified state health policy with similar coverage is terminated | 0017| because of nonresidency in another state may apply for coverage | 0018| under the pool. If the coverage is applied for within thirty-one | 0019| days after that termination and if premiums are paid for the entire | 0020| coverage period, the effective date of the coverage shall be the | 0021| date of termination of the previous coverage. | 0022| I. A person's eligibility for a policy issued under the | 0023| Health Insurance Alliance Act shall not preclude a person from | 0024| remaining on a pool policy, and a self-employed person who | 0025| qualifies for an approved health plan under the Health Insurance | 0001| Alliance Act by using a dependent as the second employee may choose | 0002| a pool policy in lieu of the health plan under that act." | 0003| Section 3. Section 59A-56-3 NMSA 1978 (being Laws 1994, | 0004| Chapter 75, Section 3) is amended to read: | 0005| "59A-56-3. DEFINITIONS.--As used in the Health Insurance | 0006| Alliance Act: | 0007| A. "alliance" means the New Mexico health insurance | 0008| alliance; | 0009| B. "approved health plan" means any arrangement for the | 0010| provision of health insurance offered through and approved by the | 0011| alliance [by which insureds have access to health insurance]; | 0012| C. "board" means the board of directors of the alliance; | 0013| D. "child" means a dependent unmarried individual who is | 0014| less than nineteen years of age or an unmarried individual who is | 0015| enrolled full time in an accredited educational institution until | 0016| the individual becomes twenty-five years of age; | 0017| E. "department" means the department of insurance; | 0018| [D.] F. "director" means an individual who serves on | 0019| the board; | 0020| [E.] G. "earned premiums" means premiums paid or due | 0021| during [the] a calendar year for coverage under an approved | 0022| health plan less any unearned premiums at the end of that calendar | 0023| year plus any unearned premiums from the end of the [previous] | 0024| immediately preceding calendar year; | 0025| [F.] H. "eligible expenses" [are] means the | 0001| allowable charges for a health care service [and items for which | 0002| benefits are extended] covered under an approved health plan; | 0003| I. "gross earned premiums" means premiums paid or due | 0004| during a calender year for all health insurance written in the | 0005| state less any unearned premiums at the end of that calendar year | 0006| plus any unearned premiums from the end of the immediately | 0007| preceding calendar year; | 0008| [G.] J. "health care service" means a service or | 0009| product furnished an individual [or incidental to the furnishing | 0010| of the service or product] for the purpose of preventing, | 0011| alleviating, curing or healing human illness or injury and | 0012| includes services and products incidental to furnishing the | 0013| described services or products; | 0014| [H.] K. "health insurance" means "health" insurance | 0015| as defined in Section 59A-7-3 NMSA 1978; any hospital and medical | 0016| expense-incurred policy, including medicare supplement insurance; | 0017| nonprofit health care [service] plan service contract; health | 0018| maintenance organization subscriber contract; short-term, accident, | 0019| fixed indemnity, specified disease policy, long-term care or | 0020| disability income insurance contracts and limited health benefit | 0021| or credit health insurance; coverage for health care services | 0022| under uninsured arrangements of group or group-type contracts, | 0023| including employer self-insured, cost-plus or other benefits | 0024| methodologies not involving insurance or not subject to New Mexico | 0025| premium taxes; coverage for health care services under group-type | 0001| contracts that are not available to the general public and can be | 0002| obtained only because of connection with a particular organization | 0003| or group; or coverage by medicare or other governmental [benefits; | 0004| or "health insurance" as defined by Section 59A-7-3 NMSA 1978] | 0005| programs providing health care services; but "health insurance" | 0006| does not include insurance [arising out of] issued pursuant to | 0007| provisions of the Workers' Compensation Act or similar law, | 0008| automobile medical payment insurance or [insurance under] | 0009| provisions by which benefits are payable with or without regard | 0010| to fault [and] that [is] are required by law to be contained | 0011| in any liability insurance policy; | 0012| [I.] L. "health maintenance organization" means a | 0013| health maintenance organization as defined by Subsection M of | 0014| Section 59A-46-2 NMSA 1978; | 0015| [J.] M. "incurred claims" means claims paid during a | 0016| calendar year plus claims incurred in the calendar year and paid | 0017| prior to April 1 of the succeeding year, less claims incurred | 0018| previous to the current calendar year and paid prior to April 1 of | 0019| the current year; | 0020| [K.] N. "insured" means a small employer or its | 0021| employee and an individual covered by an approved health plan, | 0022| [or an individual] a former employee of a small employer who is | 0023| covered by an approved health plan through conversion or an | 0024| individual covered by an approved health plan that allows | 0025| individual enrollment; | 0001| [L.] O. "medicare" means coverage under both Parts A | 0002| and B of Title 18 of the federal Social Security Act; | 0003| [M.] P. "member" means [an insurance company | 0004| authorized to transact health insurance business in this state, a | 0005| nonprofit health care plan, a health maintenance organization or | 0006| self-insurers not subject to federal preemption, but does not | 0007| include an insurance company that is licensed under the Prepaid | 0008| Dental Plan Law or a company that is solely engaged in the sale of | 0009| dental insurance and is licensed under a provision of the Insurance | 0010| Code] a member of the alliance; | 0011| Q. "nonprofit health care plan" means a "health care | 0012| plan" as defined in Subsection K of Section 59A-47-3 NMSA 1978; | 0013| R. "premiums" means the premiums received for coverage | 0014| under an approved health plan during a calendar year; | 0015| [N.] S. "small employer" means a person that is a | 0016| resident of this state, has employees at least fifty percent of | 0017| whom are residents of this state, is actively engaged in business | 0018| and that on at least fifty percent of its working days during the | 0019| preceding calendar year employed no [less] fewer than two and | 0020| no more than fifty eligible employees; provided that: (1) in determining the number of eligible | 0021| employees, the spouse or dependent of an employee may, at the | 0022| employer's discretion, be counted as a separate employee; and | 0023| (2) companies that are [affiliated companies or | 0024| that are] eligible to file a combined tax return or a | 0025| consolidated tax return for purposes of state income taxation | 0001| shall be considered one employer; [and | 0002| O.] T. "superintendent" means the superintendent of | 0003| insurance; | 0004| U. "total premiums" means the total premiums for | 0005| business written in the state received during a calendar year; and | 0006| V. "unearned premiums" means the portion of a premium | 0007| previously paid for which the coverage period is in the future." | 0008| Section 4. Section 59A-56-4 NMSA 1978 (being Laws 1994, | 0009| Chapter 75, Section 4) is amended to read: | 0010| "59A-56-4. ALLIANCE CREATED--BOARD CREATED.-- | 0011| A. The "New Mexico health insurance alliance" is created | 0012| as a nonprofit [independent] public corporation for the purpose | 0013| of providing increased access to health insurance in the state. | 0014| All insurance companies authorized to transact health insurance | 0015| business in this state, nonprofit health care plans, health | 0016| maintenance organizations and self-insurers not subject to federal | 0017| preemption shall organize and be members of the alliance as a | 0018| condition of their authority to offer health insurance in this | 0019| 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 | 0021| sale of dental insurance and is licensed under a provision of the | 0022| Insurance Code. The alliance [shall] is not [be considered] | 0023| a governmental agency for any purpose. | 0024| B. The [board of directors of the New Mexico health | 0025| insurance] alliance [is created] shall be governed by a board | 0001| of directors constituted pursuant to the provisions of this | 0002| section. The board is a governmental entity for purposes of the | 0003| Tort Claims Act, but the board shall not be considered a | 0004| governmental entity for any other purpose. | 0005| C. The superintendent shall, within sixty days after | 0006| [the effective date of the Health Insurance Alliance Act] March | 0007| 4, 1994, give notice to all members of the time and place for the | 0008| initial organizational meeting of the alliance. Each member shall | 0009| be entitled to one vote in person or by proxy at the organizational | 0010| meeting. | 0011| D. The alliance shall operate subject to the supervision | 0012| and approval of the board. The board shall consist of: | 0013| (1) five directors, [appointed] elected by the | 0014| members, who shall be officers or employees of members and shall | 0015| consist of one representative of a nonprofit health care plan, two | 0016| representatives of health maintenance organizations and two | 0017| representatives of other types of members; | 0018| (2) five directors, appointed by the governor, who | 0019| shall be officers, general partners or proprietors of small | 0020| employers [and] who, after the term of the initial appointments, | 0021| are covered by approved health plans; | 0022| (3) four directors appointed by the governor, who | 0023| shall be employees of small employers, and who, after the term of | 0024| the initial appointments, are employees of small employers covered | 0025| by approved health plans; and | 0001| (4) the superintendent or his designee, [The | 0002| superintendent] who shall be a nonvoting member except when his | 0003| vote is necessary to break a tie. | 0004| E. The superintendent shall serve as chair of the board | 0005| unless he declines, in which event he shall appoint the chair. | 0006| F. The directors [appointed] elected by the members | 0007| shall be [appointed] elected for initial terms of three years | 0008| or less, staggered so that the term of at least one director | 0009| [shall expire] expires on June 30 of each year. The directors | 0010| appointed by the governor shall be appointed for initial terms of | 0011| three years or less, staggered so that the term of at least one | 0012| director [shall expire] expires on June 30 of each year. | 0013| Following the initial terms, directors shall be elected or | 0014| appointed for terms of three years. [If the members fail to make | 0015| the initial appointments within sixty days following the first | 0016| organizational meeting, the superintendent shall make those | 0017| appointments.] A director whose term has expired shall continue | 0018| to serve until his successor is elected or appointed. | 0019| G. Whenever a vacancy on the board occurs, the | 0020| electing or appointing authority of [that director] the | 0021| director's position that is vacant shall fill the vacancy by | 0022| electing or appointing an individual to serve the balance of the | 0023| unexpired term; provided, when a vacancy occurs in one of the | 0024| director's positions elected by the members, the superintendent is | 0025| authorized to appoint a temporary replacement director until the | 0001| next scheduled election of directors elected by the members is | 0002| held. The individual elected or appointed to fill a vacancy | 0003| shall meet the requirements for initial election or appointment | 0004| to that position. | 0005| H. Directors may be reimbursed by the alliance as | 0006| provided in the Per Diem and Mileage Act in the same manner and | 0007| amounts as nonsalaried public officers, but shall receive no other | 0008| compensation, perquisite or allowance from the alliance." | 0009| Section 5. Section 59A-56-5 NMSA 1978 (being Laws 1994, | 0010| Chapter 75, Section 5) is amended to read: | 0011| "59A-56-5. PLAN OF OPERATION.-- | 0012| A. The board shall submit a plan of operation to the | 0013| superintendent and any amendments to the plan necessary or suitable | 0014| to assure the fair, reasonable and equitable administration of the | 0015| alliance. | 0016| B. The superintendent shall, after notice and hearing, | 0017| approve the plan of operation if it is determined to assure the | 0018| fair, reasonable and equitable administration of the alliance. The | 0019| plan of operation shall become effective upon written approval of | 0020| the superintendent consistent with the date on which health | 0021| insurance coverage through the alliance pursuant to the provisions | 0022| of the Health Insurance Alliance Act is made available. [If the | 0023| board fails to submit a plan of operation within one hundred eighty | 0024| days after the appointment of the board, the superintendent shall, | 0025| after notice and hearing, adopt and promulgate a plan of | 0001| operation.] A plan of operation adopted by the superintendent | 0002| shall continue in force until modified by him or superseded by a | 0003| subsequent plan of operation submitted by the board and approved by | 0004| the superintendent. | 0005| C. The plan of operation shall: | 0006| (1) establish procedures for the handling and | 0007| accounting of assets of the alliance; | 0008| (2) establish regular times and places for meetings | 0009| of the board; | 0010| (3) establish procedures for records to be kept of | 0011| all financial transactions and for annual fiscal reporting to the | 0012| superintendent; | 0013| (4) establish the amount of and the method for | 0014| collecting assessments pursuant to Section [11 of the Health | 0015| Insurance Alliance Act] 59A-56-11 NMSA 1978; | 0016| (5) establish a program to publicize the existence | 0017| of the alliance, the approved health plans, the eligibility | 0018| requirements and procedures for enrollment in an approved health | 0019| plan and to maintain public awareness of the alliance; | 0020| (6) establish penalties for [noncollection] | 0021| nonpayment of assessments [from] by members; | 0022| (7) establish procedures for alternative dispute | 0023| resolution of disputes between members and insureds; and | 0024| (8) contain additional provisions necessary and | 0025| proper for the execution of the powers and duties of the alliance." | 0001| Section 6. Section 59A-56-6 NMSA 1978 (being Laws 1994, | 0002| Chapter 75, Section 6) is amended to read: | 0003| "59A-56-6. BOARD--POWERS AND DUTIES.-- | 0004| A. The board shall have the general powers and authority | 0005| granted to insurance companies licensed to transact health | 0006| insurance business under the laws of this state. | 0007| B. The board: | 0008| (1) may enter into contracts to carry out the | 0009| provisions of the Health Insurance Alliance Act, including, with | 0010| the approval of the superintendent, contracting with similar | 0011| alliances of other states for the joint performance of common | 0012| administrative functions or with persons or other organizations for | 0013| the performance of administrative functions; | 0014| (2) may sue and be sued; | 0015| (3) may conduct periodic audits of the members to | 0016| assure the general accuracy of the financial data submitted to the | 0017| alliance; | 0018| (4) shall establish maximum rate schedules, | 0019| allowable rate adjustments, administrative allowances, reinsurance | 0020| premiums and agent referral, [and] servicing fees [and any | 0021| other actuarial functions appropriate to the operation of the | 0022| alliance, but within the limits established] or commissions | 0023| subject to applicable provisions in the Insurance Code. In | 0024| determining the initial year's rate for health insurance, the only | 0025| rating factors that may be used are age, gender, geographic area of | 0001| the place of employment and smoking practices. In any year's rate, | 0002| the difference in rates in any one age group that may be charged on | 0003| the basis of a person's gender shall not exceed another person's | 0004| rates in the age group by more than twenty percent of the lower | 0005| rate, and no person's rate shall exceed the rate of any other | 0006| person with similar family composition by more than two hundred | 0007| fifty percent of the lower rate, except that the rates for children | 0008| under the age of nineteen may be lower than the bottom rates in the | 0009| two hundred fifty percent band. The rating factor restrictions | 0010| shall not prohibit a member from offering rates that differ | 0011| depending upon family composition; | 0012| (5) may direct a member to issue policies or | 0013| certificates of coverage of health insurance in accordance with the | 0014| requirements of the Health Insurance Alliance Act; | 0015| (6) shall establish procedures for alternative | 0016| dispute resolution of disputes between members and insureds; | 0017| (7) shall cause the alliance to have an annual audit | 0018| of its operations by an independent certified public accountant; | 0019| (8) shall conduct all board meetings as if it were | 0020| [an agency] subject to the provisions of the Open Meetings Act; | 0021| (9) shall draft one or more sample health | 0022| insurance policies that are the prototype documents for the | 0023| members; | 0024| (10) shall determine the design criteria to be met | 0025| for an approved health plan; | 0001| (11) shall review each proposed approved health plan | 0002| to determine if it meets the alliance designed criteria and, if it | 0003| does meet the criteria, approve the plan [provided that], but | 0004| the board shall not permit more than one approved health plan per | 0005| member for each set of plan design criteria; | 0006| (12) shall review annually each approved health plan | 0007| to determine if it still qualifies as an approved health plan based | 0008| on the alliance designed criteria and, if the plan is no longer | 0009| approved, arrange for the transfer of the insureds covered under | 0010| the formerly approved plan to an approved health plan; | 0011| (13) may terminate an approved health plan not | 0012| operating as required by the board; | 0013| (14) shall terminate an approved health plan if | 0014| timely claim payments are not made pursuant to the plan; and | 0015| (15) shall engage in significant marketing | 0016| activities, including a program of media advertising, to inform | 0017| small employers and eligible individuals of the existence of the | 0018| alliance, its purpose and the health insurance available or | 0019| potentially available through the alliance. | 0020| C. The alliance is subject to and responsible for | 0021| examination by the superintendent. No later than March 1 of each | 0022| year, the board shall submit to the superintendent an audited | 0023| financial report for the preceding calendar year in a form approved | 0024| by the superintendent." | 0025| Section 7. Section 59A-56-8 NMSA 1978 (being Laws 1994, | 0001| Chapter 75, Section 8) is amended to read: | 0002| "59A-56-8. APPROVED HEALTH PLAN [OR SERVICE].-- | 0003| A. An approved health plan shall conform to the | 0004| alliance's approved health plan design criteria. The board may | 0005| allow more than one plan design for approved health plans. A | 0006| member may provide one approved health plan for each plan design | 0007| approved by the board. | 0008| B. The board shall designate plan designs for standard | 0009| approved health plans. The board may designate plan designs for an | 0010| approved health plan that provides catastrophic coverage or other | 0011| benefit plan designs. | 0012| [B. The] C. Each approved health plan shall offer a | 0013| premium that is no greater than [fifteen] ten percent over and | 0014| no less than [fifteen] ten percent under the average of the | 0015| standard rate index for plans with the same characteristics. | 0016| [C.] D. Any member that [submits a bid for] | 0017| provides or offers to [provide or renews] renew a group health | 0018| insurance contract providing health insurance benefits to employees | 0019| of the state, a county, a municipality or a school district for | 0020| which public funds are contributed shall offer at least one | 0021| approved health plan to small employers; provided, however, if a | 0022| member does not offer anywhere in the United States a plan that | 0023| meets substantially the design criteria of an approved health plan, | 0024| the member shall not be required to offer an approved health plan. | 0025| E. If a plan design approved by the board is not offered | 0001| by any member already offering an approved health plan, but a | 0002| member offers a substantially similar plan design outside the | 0003| alliance, the board may require the member to offer that plan | 0004| design as an approved health plan through the alliance. | 0005| F. An approved health plan shall be offered for at least | 0006| five consecutive years following the date last required in | 0007| accordance with Subsection D of this section or after notifying the | 0008| board of its future withdrawal if not required in accordance with | 0009| Subsection D of this section unless: | 0010| (1) the member substitutes another approved health | 0011| plan for the plan withdrawn; or | 0012| (2) the board allows the plan to be withdrawn | 0013| because it imposes a serious hardship upon the member. | 0014| G. No member shall be required to offer an approved | 0015| health plan if the member notifies the superintendent in writing | 0016| that it will no longer offer health insurance, life insurance or | 0017| annuities in the state, except for renewal of existing contracts, | 0018| provided that: | 0019| (1) the member does not offer or provide health | 0020| insurance, life insurance or annuities for a period of five years | 0021| from the date of notification to the superintendent to any person | 0022| in the state who is not covered by the member through a health | 0023| insurance policy in effect on the date of the notification; and | 0024| (2) with respect to health or life insurance | 0025| policies or annuities in effect on the date of notification to the | 0001| superintendent, the member continues to comply with all applicable | 0002| laws and regulations governing the provision of insurance in this | 0003| state, including the payment of applicable taxes, fees and | 0004| assessments." | 0005| Section 8. Section 59A-56-9 NMSA 1978 (being Laws 1994, | 0006| Chapter 75, Section 9) is amended to read: | 0007| "59A-56-9. REINSURANCE.-- | 0008| A. [Any] A member offering an approved health plan | 0009| [to small employers] shall be reinsured for certain losses by the | 0010| alliance. Within six months following the end of each calendar | 0011| year in which the member offering the approved health plan paid | 0012| more in incurred claims [than], plus the member's reinsurance | 0013| premium pursuant to Subsection B of this section, than eighty-five | 0014| percent of earned premiums received by the member [received in | 0015| gross earned premiums] on all approved health plans issued by the | 0016| member, [combined] the member shall receive from the alliance the | 0017| excess amount for the calendar year by which the incurred claims | 0018| and reinsurance premium exceeded eighty-five percent of the | 0019| [gross] earned premiums received by the alliance or its | 0020| administrator. | 0021| B. The alliance shall withhold from all premiums that it | 0022| receives a reinsurance premium as established by the board. The | 0023| reinsurance premium shall not exceed five percent of premiums paid | 0024| [by insured groups] in [their] the first year of coverage and | 0025| shall not exceed ten percent of [such] premiums for renewal | 0001| years. In determining the reinsurance premium for a particular | 0002| calendar year, the board shall set the reinsurance premium at a | 0003| rate that will recover the total reinsurance loss for the preceding | 0004| year over a reasonable number of years in accordance with sound | 0005| actuarial principles." | 0006| Section 9. Section 59A-56-10 NMSA 1978 (being Laws 1994, | 0007| Chapter 75, Section 10) is amended to read: | 0008| "59A-56-10. ADMINISTRATION.--The alliance shall deduct from | 0009| premiums collected for approved health plans an administrative | 0010| charge as set by the board. The administrative charge shall be | 0011| determined before the beginning of each calendar year. The maximum | 0012| administrative charge the alliance may charge is ten percent of | 0013| [gross] premiums [from a small employer] in the first year and | 0014| five percent of [gross] premiums in renewal years." | 0015| Section 10. Section 59A-56-11 NMSA 1978 (being Laws 1994, | 0016| Chapter 75, Section 11) is amended to read: | 0017| "59A-56-11. ASSESSMENTS.-- | 0018| A. After the completion of each calendar year, the | 0019| alliance shall assess all its members for the [total] net | 0020| reinsurance loss in the previous calendar year and for the net | 0021| administrative loss that occurred in the previous calendar year, | 0022| taking into account investment income for the period and other | 0023| appropriate gains and losses using the following definitions: | 0024| (1) net reinsurance losses shall be the | 0025| [reinsurance incurred claims against the alliance for the previous | 0001| calendar year reduced by the reinsurance earned] amount | 0002| determined for the previous calendar year in accordance with | 0003| Subsection A of Section 59A-56-9 NMSA 1978 for all members offering | 0004| an approved health plan reduced by reinsurance premiums charged by | 0005| the alliance in the previous calendar year; and | 0006| (2) net administrative losses shall be the | 0007| administrative expenses incurred by the alliance in the previous | 0008| calendar year and projected for the current calendar year less | 0009| the sum of administrative allowances [earned] received by the | 0010| alliance and any legislative appropriation for the period, but, in | 0011| the event of an administrative gain, net administrative losses for | 0012| the purpose of assessments shall be considered zero, and the gain | 0013| shall be carried forward to the administrative fund for the next | 0014| calendar year as an additional allowance. | 0015| B. The assessment for each member shall be determined by | 0016| multiplying the total losses of the alliance's operation, as | 0017| defined in Subsection A of this section, by a fraction, the | 0018| numerator of which [equals] is an amount equal to that member's | 0019| total [premium] premiums, or [its] the equivalent, | 0020| exclusive of premiums received by the member for an approved | 0021| health plan for health insurance written in the state during the | 0022| preceding calendar year and the denominator of which equals the | 0023| total premiums of all health insurance [premiums] written in | 0024| the state during the preceding calendar year exclusive of premiums | 0025| for approved health plans; provided that [premium income] total | 0001| premiums shall not include payments by the secretary of human | 0002| services pursuant to a contract issued under Section 1876 of the | 0003| federal Social Security Act, [and shall not include premium | 0004| income] total premiums exempted by the federal Employee | 0005| Retirement Income Security Act of 1974 or [other] federal | 0006| government programs. | 0007| C. If assessments exceed actual reinsurance losses and | 0008| administrative losses of the alliance, the excess shall be held at | 0009| interest by the board to offset future losses. | 0010| D. To enable the board to properly determine the net | 0011| reinsurance amount and its responsibility for reinsurance to each | 0012| member: | 0013| (1) by April 15 of each year, each member offering | 0014| an approved health plan shall submit a listing of all incurred | 0015| claims [or health charges of each approved health plan for the | 0016| previous year, including all claims or health charges incurred in | 0017| the previous year and paid prior to April 1 of the current year. | 0018| From this amount shall be subtracted and identified by list all | 0019| incurred claims or health charges of each approved health plan paid | 0020| in the previous year's months of January, February and March | 0021| incurred prior to] for the previous year; and | 0022| (2) by April 15 of each year, each member shall | 0023| submit a report that includes the total [amount of all] earned | 0024| premiums received during the prior year less [any earned premium] | 0025| the total earned premiums exempted by federal government | 0001| programs. | 0002| E. The alliance shall notify [members] each member of | 0003| the amount of [the] its assessment due by May 15 of each year. | 0004| The assessment shall be paid by the member by June 15 of each year. | 0005| F. The proportion of participation of each member in the | 0006| alliance shall be determined annually by the board, based on annual | 0007| statements filed by each member and other reports deemed necessary | 0008| by the board. Any deficit incurred by the alliance shall be | 0009| recouped by assessments apportioned among the members pursuant to | 0010| the formula provided in Subsection B of this section; provided that | 0011| the assessment paid for any member shall be allowed as a credit on | 0012| the future premium tax return for that member, with the credit | 0013| limited to fifty percent of the premium tax due the first year | 0014| the assessment is imposed; forty percent the second year; and | 0015| thirty percent the third and all subsequent years. | 0016| G. The board may [abate or] defer, in whole or in part, | 0017| the payment of an assessment of a member if, in the opinion of | 0018| the board, after approval of the superintendent, payment of the | 0019| assessment would endanger the ability of the member to fulfill its | 0020| contractual obligations. In the event payment of an assessment | 0021| against a member is [abated or] deferred, the amount [by which | 0022| such assessment is abated or] deferred may be assessed against the | 0023| other members in a manner consistent with the basis for assessments | 0024| set forth in Subsection A of this section. [The member receiving | 0025| the abatement or deferment shall remain liable to the alliance for | 0001| the deficiency for four years including interest at the prevailing | 0002| rate as determined by regulation of the superintendent. The board | 0003| may sue to recover the abatement or deferment plus interest and | 0004| costs.] The member receiving the deferment shall pay the | 0005| assessment in full plus interest at the prevailing rate as | 0006| determined by regulation of the superintendent within four years | 0007| from the date payment is deferred. After four years but within | 0008| five years of the date of the deferment, the board may sue to | 0009| recover the amount of the deferred payment plus interest and costs. | 0010| Board actions to recover deferred payments brought after five years | 0011| of the date of deferment are barred. Any amount received shall be | 0012| deducted from future assessments or reimbursed pro rata to the | 0013| members paying the deferred assessment. | 0014| H. In addition to the assessments provided in this | 0015| section for reinsurance and administrative losses, the board may | 0016| impose on all members annually an assessment not to exceed two | 0017| hundred dollars ($200) for the board to hire consultants and plan | 0018| and develop alliance programs. This additional assessment shall be | 0019| allowed as a credit on the next premium tax due for the member." | 0020| Section 11. Section 59A-56-13 NMSA 1978 (being Laws 1994, | 0021| Chapter 75, Section 13) is amended to read: | 0022| "59A-56-13. ALLIANCE ADMINISTRATOR.-- | 0023| A. The board may select an alliance administrator through | 0024| a competitive request for proposal process. The board shall | 0025| evaluate proposals based on criteria established by the board that | 0001| shall include: | 0002| (1) proven ability to [handle accident and] | 0003| administer health insurance programs; | 0004| (2) an estimate of total charges for administering | 0005| the alliance for the proposed contract period; and | 0006| (3) ability to administer the alliance in a cost-efficient manner. | 0007| B. The alliance administrator contract shall be for a | 0008| period up to four years, subject to annual renegotiation of the | 0009| fees and services, and shall provide for cancellation of the | 0010| contract for cause, termination of the alliance by the legislature | 0011| or the combining of the alliance with a governmental body. | 0012| C. At least one year prior to the expiration of [each | 0013| four-year period of service by the] an alliance administrator | 0014| contract, the board [shall] may invite all interested | 0015| parties, including the current administrator, to submit [bids] | 0016| proposals to serve as alliance administrator for [up to] a | 0017| succeeding [four-year] contract period. Selection of the | 0018| administrator for a succeeding contract period shall be made at | 0019| least six months prior to the expiration of the current contract. | 0020| D. The alliance administrator shall: | 0021| (1) take applications for an approved health plan | 0022| from small employers or a referring agent; | 0023| (2) establish a premium billing procedure for | 0024| collection of premiums from insureds. Billings shall be made on a | 0025| periodic basis, not less than monthly, as determined by the board; | 0001| (3) pay the member that offers an approved health | 0002| plan the net premium due after deduction of reinsurance and | 0003| administrative allowances; | 0004| (4) provide the member with any changes in the | 0005| status of insureds; | 0006| (5) perform all necessary functions to assure that | 0007| each member is providing timely payment of benefits to individuals | 0008| covered under an approved health plan, including: | 0009| (a) making information available to insureds | 0010| relating to the proper manner of submitting a claim for benefits to | 0011| the member offering the approved health plan and distributing forms | 0012| on which submissions shall be made; and | 0013| (b) making information available on approved | 0014| health plan benefits and rates to insureds; | 0015| (6) submit regular reports to the board regarding | 0016| the operation of the alliance, the frequency, content and form of | 0017| which shall be determined by the board; | 0018| (7) following the close of each fiscal year, | 0019| determine [net written] premiums of members, the expense of | 0020| administration and the paid and incurred [losses] health care | 0021| service charges for the year and report this information to the | 0022| board and the superintendent on a form prescribed by the | 0023| superintendent; and | 0024| (8) establish the premiums for reinsurance and the | 0025| administrative charges, subject to approval of the board." | 0001| Section 12. Section 59A-56-14 NMSA 1978 (being Laws 1994, | 0002| Chapter 75, Section 14) is amended to read: | 0003| "59A-56-14. ELIGIBILITY--GUARANTEED ISSUE--PLAN | 0004| PROVISIONS.-- | 0005| A. A small employer is eligible for an approved health | 0006| plan if on the effective date of coverage or renewal: | 0007| (1) at least fifty percent of its eligible | 0008| employees not otherwise insured elect to be covered under the | 0009| approved health plan; [and] | 0010| (2) the small employer has not terminated coverage | 0011| with an approved health plan within three years of the date of | 0012| application for coverage except to change to another approved | 0013| health plan; and | 0014| (3) the small employer does not offer other general | 0015| group health insurance coverage to its employees. For the purposes | 0016| of this paragraph, general group health insurance coverage excludes | 0017| coverage providing only a specific limited form of health insurance | 0018| such as accident or disability income insurance coverage or a | 0019| specific health care service such as dental care. | 0020| B. An approved health plan shall provide [that coverage | 0021| of a dependent unmarried individual terminates when the individual | 0022| becomes nineteen years of age or, if the individual is enrolled | 0023| full time in an accredited educational institution, when the | 0024| individual becomes twenty-five years of age] coverage for a | 0025| child. The policy shall also provide in substance that attainment | 0001| of the limiting age by an unmarried dependent individual does not | 0002| operate to terminate coverage when the individual continues to be | 0003| incapable of self-sustaining employment by reason of [mental | 0004| retardation] developmental disability or physical handicap and | 0005| the individual is primarily dependent for support and maintenance | 0006| upon the employee. Proof of incapacity and dependency shall be | 0007| furnished to the alliance and the member that offered the approved | 0008| health plan within one hundred twenty days of attainment of the | 0009| limiting age. The board may require subsequent proof annually | 0010| after a two-year period following attainment of the limiting age. | 0011| C. An approved health plan shall provide that the health | 0012| insurance benefits applicable for eligible dependents are payable | 0013| with respect to a newly born child of the family member or the | 0014| individual in whose name the contract is issued from the moment of | 0015| birth, including the necessary care and treatment of medically | 0016| diagnosed congenital defects and birth abnormalities. If payment | 0017| of a specific premium is required to provide coverage for the | 0018| child, the contract may require that notification of the birth of a | 0019| child and payment of the required premium shall be furnished to the | 0020| member within thirty-one days after the date of birth in order to | 0021| have the coverage from birth. An approved health plan shall | 0022| provide that the health insurance benefits applicable for eligible | 0023| dependents are payable for an adopted child in accordance with the | 0024| provisions of Section 59A-22-34.1 NMSA 1978. | 0025| D. Except as provided in Subsections E, [and] G and H | 0001| of this section, an approved health plan may contain provisions | 0002| under which coverage is excluded during a six-month period | 0003| following the effective date of coverage of an individual for | 0004| preexisting conditions, as long as either of the following exists: | 0005| (1) the condition has manifested itself within a | 0006| period of six months before the effective date of coverage in such | 0007| a manner as would cause an ordinarily prudent person to seek | 0008| diagnosis or treatment; or | 0009| (2) medical advice or treatment was recommended or | 0010| received within a period of six months before the effective date of | 0011| coverage. | 0012| E. The preexisting condition exclusions described in | 0013| Subsection D of this section shall be waived to the extent to which | 0014| similar exclusions have been satisfied under any prior health | 0015| insurance coverage if the application for health insurance through | 0016| the alliance is made not later than thirty-one days following the | 0017| termination of the prior coverage. In that case, coverage through | 0018| the alliance shall be effective from the date on which the prior | 0019| coverage was terminated. This subsection does not prohibit | 0020| preexisting conditions coverage in an approved health plan that is | 0021| more favorable to the [insured] covered individual than that | 0022| specified in this subsection. | 0023| F. An individual is not eligible for coverage by the | 0024| alliance if he: | 0025| (1) [he] is [at the time of application] eligible | 0001| for medicare; provided, however, if an individual has health | 0002| insurance coverage from an employer whose group includes twenty or | 0003| more individuals, an individual eligible for medicare who continues | 0004| to be employed may choose to be covered through an approved health | 0005| plan; | 0006| (2) [he] has voluntarily terminated health | 0007| insurance issued through the alliance within the past twelve months | 0008| unless it was due to a change in employment; or | 0009| (3) [he] is an inmate of a public institution [or | 0010| is eligible for public programs, other than state-funded programs, | 0011| for which medical care is provided]. | 0012| G. The alliance shall provide for an open enrollment | 0013| period of sixty days from the initial offering of an approved | 0014| health plan. Individuals enrolled during the open enrollment | 0015| period shall not be subject to the preexisting conditions | 0016| limitation. | 0017| H. If an insured covered by an approved health plan | 0018| switches to another approved health plan that provides increased or | 0019| additional benefits such as lower deductible or co-payment | 0020| requirements, the member offering the approved health plan with | 0021| increased or additional benefits may require the six-month period | 0022| for preexisting conditions provided in Subsection D of this section | 0023| to be satisfied prior to receipt of the additional benefits. | 0024| I. An approved health plan shall provide for a thirty-day reinstatement period from the end of a grace period provided by | 0025| the approved health plan, requiring payments of all back premiums | 0001| plus a penalty of five percent of the annualized premium. Any | 0002| claims incurred between the date through which premiums have been | 0003| paid and the date of reinstatement are not covered unless covered | 0004| by the conditions of the approved health plan." | 0005| Section 13. Section 59A-56-17 NMSA 1978 (being Laws 1994, | 0006| Chapter 75, Section 17) is amended to read: | 0007| "59A-56-17. BENEFITS.-- | 0008| A. An approved health plan [issued through the | 0009| alliance] shall pay for [or provide] medically necessary | 0010| eligible expenses that exceed the deductible, co-payment and co-insurance amounts applicable under the provisions of Section [18 | 0011| of the Health Insurance Alliance Act] 59A-56-18 NMSA 1978 and | 0012| are not otherwise limited or excluded. The Health Insurance | 0013| Alliance Act does not prohibit the board from approving additional | 0014| types of health plan designs with similar cost-benefit structures | 0015| or other types of health plan designs. An approved health plan | 0016| for small employers shall, at a minimum, reflect the levels of | 0017| health insurance coverage generally available in New Mexico for | 0018| small employer group policies, but an approved health plan for | 0019| small employers may also offer health plan designs that are not | 0020| generally available in New Mexico for small employer group | 0021| policies. | 0022| B. The board may design and require an approved health | 0023| plan to contain cost-containment measures and requirements, | 0024| including managed care, pre-admission certification, [and] | 0025| concurrent inpatient review and the use of fee schedules for | 0001| health care providers, including the diagnosis-related grouping | 0002| system and the resource-based relative value system." | 0003| Section 14. Section 59A-56-18 NMSA 1978 (being Laws 1994, | 0004| Chapter 75, Section 18) is amended to read: | 0005| "59A-56-18. DEDUCTIBLES--CO-INSURANCE--MAXIMUM OUT-OF-POCKET | 0006| PAYMENTS.-- | 0007| A. Subject to the limitations provided in Subsection C of | 0008| this section, an approved health plan offered through the alliance | 0009| may impose a deductible on a per-person calendar year basis. [A | 0010| deductible plan of five hundred dollars ($500) shall initially be | 0011| offered.] Approved health plans offered by health maintenance | 0012| [organization plans] organizations shall provide equivalent | 0013| cost-benefit structures. The board may authorize deductibles in | 0014| other amounts and equivalent cost-benefit structures. [The | 0015| deductible shall be applied to the first five hundred dollars | 0016| ($500) or any other amount determined as deductible by the board of | 0017| eligible expenses incurred by the covered individual.] | 0018| B. Subject to the limitations provided in Subsection C of | 0019| this section, a mandatory co-insurance requirement [shall] for | 0020| an approved health plan may be imposed [at an average not to | 0021| exceed thirty percent] as a percentage of eligible expenses in | 0022| excess of [the mandatory] a deductible. Health maintenance | 0023| organizations shall impose equivalent cost-benefit structures. | 0024| C. The maximum aggregate out-of-pocket payments for | 0025| eligible expenses [or health care services] by the covered | 0001| individual shall be determined by the board." | 0002| Section 15. Section 59A-56-19 NMSA 1978 (being Laws 1994, | 0003| Chapter 75, Section 19) is amended to read: | 0004| "59A-56-19. DEPENDENT FAMILY MEMBER REQUIRED COVERAGE--SMALL | 0005| EMPLOYER RESPONSIBILITY.-- | 0006| A. A small employer [may] shall collect or make a | 0007| payroll deduction from the compensation of an employee for the | 0008| portion of the approved health plan cost the employee is | 0009| responsible for paying. The small employer may contribute to the | 0010| cost of that plan on behalf of the employee. | 0011| B. A small employer shall make available to dependent | 0012| family members of an employee covered by an approved health plan | 0013| the same approved health plan. The small employer may contribute | 0014| to the cost of [group] family coverage. | 0015| C. All premiums collected, deducted from the compensation | 0016| of employees or paid on their behalf by the small employer shall be | 0017| promptly remitted to the alliance." | 0018| Section 16. Section 59A-56-20 NMSA 1978 (being Laws 1994, | 0019| Chapter 75, Section 20) is amended to read: | 0020| "59A-56-20. RENEWABILITY.-- | 0021| A. An approved health plan shall contain provisions under | 0022| which the member offering the plan is obligated to renew the health | 0023| insurance if premiums are paid until the day the plan is replaced | 0024| by another plan or the small employer terminates coverage. An | 0025| individual covered by health insurance under an approved health | 0001| plan may retain coverage until he [first] becomes eligible for | 0002| medicare as the primary coverage, except that in a family policy | 0003| [the age of the younger family member shall be used to continue | 0004| the coverage and as the basis for eligibility] coverage under an | 0005| approved health plan shall continue for any person in the family | 0006| who is not eligible for medicare. | 0007| B. If an approved health plan ceases to exist, the | 0008| alliance shall provide an alternate approved health plan. | 0009| C. An approved health plan shall provide covered | 0010| individuals the right to continue health insurance coverage through | 0011| an approved health plan as individual health insurance provided | 0012| by the same member upon the death of the employee or upon the | 0013| divorce, annulment or dissolution of marriage or legal separation | 0014| of the spouse from the employee or by termination of employment by | 0015| electing to do so within a period of time specified in the health | 0016| insurance, provided that the employee was covered under an | 0017| approved health plan while employed for at least six consecutive | 0018| months. The individual may be charged an additional | 0019| administrative charge for the individual health insurance. | 0020| D. The right to continue health insurance coverage | 0021| provided in this section terminates if the covered individual | 0022| resides outside the United States for more than six consecutive | 0023| months." | 0024| Section 17. Section 59A-56-21 NMSA 1978 (being Laws 1994, | 0025| Chapter 75, Section 21) is amended to read: | 0001| "59A-56-21. [RULES] REGULATIONS.--The superintendent | 0002| shall: | 0003| A. adopt [rules] regulations that provide for | 0004| disclosure by members of the availability of health insurance from | 0005| the alliance; and | 0006| B. adopt [rules] regulations to carry out the | 0007| provisions of the Health Insurance Alliance Act." | 0008| Section 18. Section 59A-56-23 NMSA 1978 (being Laws 1994, | 0009| Chapter 75, Section 23) is amended to read: | 0010| "59A-56-23. RATES--STANDARD RISK RATE--EXPERIENCE RATING | 0011| PROHIBITED.-- | 0012| A. The alliance shall determine a standard risk rate | 0013| index by actuarially calculating the average index rates that the | 0014| insurer has filed under the requirements of the Small Group Rate | 0015| and Renewability Act with the benefits similar to the alliance's | 0016| standard approved health plan. A standard risk rate based on age | 0017| and other appropriate demographic characteristics may be used. No | 0018| standard risk rate shall be more than [fifteen] ten percent | 0019| higher or [fifteen] ten percent lower than the average index | 0020| rate. In determining the standard risk rate, the alliance shall | 0021| consider the benefits provided by the approved health plan. | 0022| B. Experience rating is not allowed other than for | 0023| reinsurance purposes. | 0024| C. All rates and rate schedules shall be submitted to the | 0025| superintendent for approval prior to use." | 0001| Section 19. Section 59A-56-24 NMSA 1978 (being Laws 1994, | 0002| Chapter 75, Section 24) is amended to read: | 0003| "59A-56-24. BENEFIT PAYMENTS REDUCTION.-- | 0004| A. An approved health plan shall be the last payer of | 0005| benefits whenever any other benefit is available. Benefits | 0006| otherwise payable under the approved health plan shall be reduced | 0007| by all amounts paid or payable through any other health insurance | 0008| and by all hospital and medical expense benefits paid or payable | 0009| under any workers' compensation coverage, automobile medical | 0010| payment or liability insurance, whether provided on the basis of | 0011| fault or no-fault, and by any hospital or medical benefits paid or | 0012| payable under or provided pursuant to any state or federal [law] | 0013| program, excluding medicaid. | 0014| B. The administrator or the alliance shall have a cause | 0015| of action against any person covered by an approved health plan for | 0016| the recovery of the amount of benefits paid that are not for | 0017| [covered] eligible expenses. Benefits due from the approved | 0018| health plan may be reduced or refused as a set-off against any | 0019| amount recoverable under this section." | 0020| Section 20. TEMPORARY PROVISION--REPORT.--The department of | 0021| insurance and the New Mexico health insurance alliance shall | 0022| prepare and publish a report to the legislature and the governor by | 0023| October 1 of each year beginning on October 1, 1996 on the alliance | 0024| programs and recommendations to facilitate participation in the | 0025| alliance programs. The report shall include a director's report | 0001| from members and insured representatives that reflects comments | 0002| made by members and insureds regarding the alliance for each year | 0003| the directors are required to report to the legislature and the | 0004| governor. | 0005| Section 21. REPEAL.--Laws 1994, Chapter 75, Section 35 is | 0006| repealed. | 0007| Section 22. EMERGENCY.--It is necessary for the public peace, | 0008| health and safety that this act take effect immediately. | 0009|  | 0010| State of New Mexico | 0011| House of Representatives | 0012| | 0013| FORTY-SECOND LEGISLATURE | 0014| FIRST SPECIAL SESSION,1996 | 0015| | 0016| | 0017| March 21, 1996 | 0018| | 0019| | 0020| Mr. Speaker: | 0021| | 0022| Your APPROPRIATIONS AND FINANCE COMMITTEE, to | 0023| whom has been referred | 0024| | 0025| SENATE FINANCE COMMITTEE SUBSTITUTE | 0001| FOR SENATE BILL 7 | 0002| | 0003| has had it under consideration and reports same with | 0004| recommendation that it DO PASS. | 0005| | 0006| Respectfully submitted, | 0007| | 0008| | 0009| | 0010| | 0011| Max Coll, Chairman | 0012| | 0013| | 0014| Adopted Not Adopted | 0015| | 0016| (Chief Clerk) (Chief Clerk) | 0017| | 0018| Date | 0019| | 0020| The roll call vote was 12 For 6 Against | 0021| Yes: 12 | 0022| No: Bird, Buffett, Knowles, Reyes, Townsend, Wallace | 0023| Excused: None | 0024| Absent: None | 0025| | 0001| | 0002| | 0003| S0007AF1 |