1.This Act may be cited as
Health Care Choice Act of
2011
.
2.Congress finds the following:
(1)The application of
numerous and significant variations in State law impacts the ability of
insurers to offer, and individuals to obtain, affordable individual health
insurance coverage, thereby impeding commerce in individual health insurance
coverage.
(2)Individual health
insurance coverage is increasingly offered through the Internet, other
electronic means, and by mail, all of which are inherently part of interstate
commerce.
(3)In response to
these issues, it is appropriate to encourage increased efficiency in the
offering of individual health insurance coverage through a collaborative
approach by the States in regulating this coverage.
(4)The establishment
of risk-retention groups has provided a successful model for the sale of
insurance across State lines, as the acts establishing those groups allow
insurance to be sold in multiple States but regulated by a single State.
3.Cooperative
governing of individual health insurance coverage
(a)Title XXVII of the Public
Health Service Act (42 U.S.C. 300gg et seq.) is amended by adding at
the end the following new part:
DCooperative
Governing of Individual Health Insurance Coverage
2795.In this part:
(1)The term primary State means, with respect to
individual health insurance coverage offered by a health insurance issuer, the
State designated by the issuer as the State whose covered laws shall govern the
health insurance issuer in the sale of such coverage under this part. An
issuer, with respect to a particular policy, may only designate one such State
as its primary State with respect to all such coverage it offers. Such an
issuer may not change the designated primary State with respect to individual
health insurance coverage once the policy is issued, except that such a change
may be made upon renewal of the policy. With respect to such designated State,
the issuer is deemed to be doing business in that State.
(2)The term secondary State means, with respect
to individual health insurance coverage offered by a health insurance issuer,
any State that is not the primary State. In the case of a health insurance
issuer that is selling a policy in, or to a resident of, a secondary State, the
issuer is deemed to be doing business in that secondary State.
(3)The term health insurance issuer has the
meaning given such term in section 2791(b)(2), except that such an issuer must
be licensed in the primary State and be qualified to sell individual health
insurance coverage in that State.
(4)Individual
health insurance coverageThe term individual health
insurance coverage means health insurance coverage offered in the
individual market, as defined in section 2791(e)(1).
(5)Applicable state
authorityThe term applicable State authority means,
with respect to a health insurance issuer in a State, the State insurance
commissioner or official or officials designated by the State to enforce the
requirements of this title for the State with respect to the issuer.
(6)Hazardous
financial conditionThe term hazardous financial
condition means that, based on its present or reasonably anticipated
financial condition, a health insurance issuer is unlikely to be able—
(A)to meet
obligations to policyholders with respect to known claims and reasonably
anticipated claims; or
(B)to pay other
obligations in the normal course of business.
(7)
(A)The term covered laws means the laws, rules,
regulations, agreements, and orders governing the insurance business pertaining
to—
(i)individual health
insurance coverage issued by a health insurance issuer;
(ii)the offer, sale,
rating (including medical underwriting), renewal, and issuance of individual
health insurance coverage to an individual;
(iii)the provision to
an individual in relation to individual health insurance coverage of health
care and insurance related services;
(iv)the provision to
an individual in relation to individual health insurance coverage of
management, operations, and investment activities of a health insurance issuer;
and
(v)the provision to
an individual in relation to individual health insurance coverage of loss
control and claims administration for a health insurance issuer with respect to
liability for which the issuer provides insurance.
(B)Such
term does not include any law, rule, regulation, agreement, or order governing
the use of care or cost management techniques, including any requirement
related to provider contracting, network access or adequacy, health care data
collection, or quality assurance.
(8)The
term State means the 50 States and includes the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the
Northern Mariana Islands.
(9)Unfair claims
settlement practicesThe term unfair claims settlement
practices means only the following practices:
(A)Knowingly
misrepresenting to claimants and insured individuals relevant facts or policy
provisions relating to coverage at issue.
(B)Failing to
acknowledge with reasonable promptness pertinent communications with respect to
claims arising under policies.
(C)Failing to adopt
and implement reasonable standards for the prompt investigation and settlement
of claims arising under policies.
(D)Failing to
effectuate prompt, fair, and equitable settlement of claims submitted in which
liability has become reasonably clear.
(E)Refusing to pay
claims without conducting a reasonable investigation.
(F)Failing to affirm
or deny coverage of claims within a reasonable period of time after having
completed an investigation related to those claims.
(G)A pattern or
practice of compelling insured individuals or their beneficiaries to institute
suits to recover amounts due under its policies by offering substantially less
than the amounts ultimately recovered in suits brought by them.
(H)A pattern or
practice of attempting to settle or settling claims for less than the amount
that a reasonable person would believe the insured individual or his or her
beneficiary was entitled by reference to written or printed advertising
material accompanying or made part of an application.
(I)Attempting to
settle or settling claims on the basis of an application that was materially
altered without notice to, or knowledge or consent of, the insured.
(J)Failing to provide
forms necessary to present claims within 15 calendar days of a requests with
reasonable explanations regarding their use.
(K)Attempting to
cancel a policy in less time than that prescribed in the policy or by the law
of the primary State.
(10)The term fraud and abuse means an act or
omission committed by a person who, knowingly and with intent to defraud,
commits, or conceals any material information concerning, one or more of the
following:
(A)Presenting,
causing to be presented or preparing with knowledge or belief that it will be
presented to or by an insurer, a reinsurer, broker or its agent, false
information as part of, in support of or concerning a fact material to one or
more of the following:
(i)An
application for the issuance or renewal of an insurance policy or reinsurance
contract.
(ii)The rating of an
insurance policy or reinsurance contract.
(iii)A claim for
payment or benefit pursuant to an insurance policy or reinsurance
contract.
(iv)Premiums paid on
an insurance policy or reinsurance contract.
(v)Payments made in
accordance with the terms of an insurance policy or reinsurance
contract.
(vi)A
document filed with the commissioner or the chief insurance regulatory official
of another jurisdiction.
(vii)The financial
condition of an insurer or reinsurer.
(viii)The formation,
acquisition, merger, reconsolidation, dissolution or withdrawal from one or
more lines of insurance or reinsurance in all or part of a State by an insurer
or reinsurer.
(ix)The issuance of
written evidence of insurance.
(x)The reinstatement
of an insurance policy.
(B)Solicitation or
acceptance of new or renewal insurance risks on behalf of an insurer reinsurer
or other person engaged in the business of insurance by a person who knows or
should know that the insurer or other person responsible for the risk is
insolvent at the time of the transaction.
(C)Transaction of the
business of insurance in violation of laws requiring a license, certificate of
authority or other legal authority for the transaction of the business of
insurance.
(D)Attempt to commit,
aiding or abetting in the commission of, or conspiracy to commit the acts or
omissions specified in this paragraph.
2796.
(a)The covered laws of the primary State shall apply to
individual health insurance coverage offered by a health insurance issuer in
the primary State and in any secondary State, but only if the coverage and
issuer comply with the conditions of this section with respect to the offering
of coverage in any secondary State.
(b)Exemptions From
Covered Laws in a Secondary StateExcept as provided in this
section, a health insurance issuer with respect to its offer, sale, rating
(including medical underwriting), renewal, and issuance of individual health
insurance coverage in any secondary State is exempt from any covered laws of
the secondary State (and any rules, regulations, agreements, or orders sought
or issued by such State under or related to such covered laws) to the extent
that such laws would—
(1)make unlawful, or
regulate, directly or indirectly, the operation of the health insurance issuer
operating in the secondary State, except that any secondary State may require
such an issuer—
(A)to pay, on a
nondiscriminatory basis, applicable premium and other taxes (including high
risk pool assessments) which are levied on insurers and surplus lines insurers,
brokers, or policyholders under the laws of the State;
(B)to register with
and designate the State insurance commissioner as its agent solely for the
purpose of receiving service of legal documents or process;
(C)to submit to an
examination of its financial condition by the State insurance commissioner in
any State in which the issuer is doing business to determine the issuer’s
financial condition, if—
(i)the State
insurance commissioner of the primary State has not done an examination within
the period recommended by the National Association of Insurance Commissioners;
and
(ii)any such
examination is conducted in accordance with the examiners’ handbook of the
National Association of Insurance Commissioners and is coordinated to avoid
unjustified duplication and unjustified repetition;
(D)to comply with a
lawful order issued—
(i)in
a delinquency proceeding commenced by the State insurance commissioner if there
has been a finding of financial impairment under subparagraph (C); or
(ii)in a voluntary
dissolution proceeding;
(E)to comply with an
injunction issued by a court of competent jurisdiction, upon a petition by the
State insurance commissioner alleging that the issuer is in hazardous financial
condition;
(F)to participate, on
a nondiscriminatory basis, in any insurance insolvency guaranty association or
similar association to which a health insurance issuer in the State is required
to belong;
(G)to comply with any
State law regarding fraud and abuse (as defined in section 2795(10)), except
that if the State seeks an injunction regarding the conduct described in this
subparagraph, such injunction must be obtained from a court of competent
jurisdiction;
(H)to comply with any
State law regarding unfair claims settlement practices (as defined in section
2795(9)); or
(I)to comply with the
applicable requirements for independent review under section 2798 with respect
to coverage offered in the State;
(2)require any
individual health insurance coverage issued by the issuer to be countersigned
by an insurance agent or broker residing in that Secondary State; or
(3)otherwise
discriminate against the issuer issuing insurance in both the primary State and
in any secondary State.
(c)Clear and
Conspicuous DisclosureA health insurance issuer shall provide
the following notice, in 12-point bold type, in any insurance coverage offered
in a secondary State under this part by such a health insurance issuer and at
renewal of the policy, with the 5 blank spaces therein being appropriately
filled with the name of the health insurance issuer, the name of primary State,
the name of the secondary State, the name of the secondary State, and the name
of the secondary State, respectively, for the coverage concerned:
Notice
This
policy is issued by _____and is governed by the laws and regulations of the
State of _____, and it has met all the laws of that State as determined by that
State’s Department of Insurance. This policy may be less expensive than others
because it is not subject to all of the insurance laws and regulations of the
State of _____, including coverage of some services or benefits mandated by the
law of the State of _____. Additionally, this policy is not subject to all of
the consumer protection laws or restrictions on rate changes of the State of
_____. As with all insurance products, before purchasing this policy, you
should carefully review the policy and determine what health care services the
policy covers and what benefits it provides, including any exclusions,
limitations, or conditions for such services or
benefits.
.
(d)Prohibition on
Certain Reclassifications and Premium Increases
(1)For purposes of this section, a health insurance issuer
that provides individual health insurance coverage to an individual under this
part in a primary or secondary State may not upon renewal—
(A)move or reclassify
the individual insured under the health insurance coverage from the class such
individual is in at the time of issue of the contract based on the
health-status related factors of the individual; or
(B)increase the
premiums assessed the individual for such coverage based on a health
status-related factor or change of a health status-related factor or the past
or prospective claim experience of the insured individual.
(2)Nothing
in paragraph (1) shall be construed to prohibit a health insurance
issuer—
(A)from terminating
or discontinuing coverage or a class of coverage in accordance with subsections
(b) and (c) of section 2742;
(B)from raising
premium rates for all policy holders within a class based on claims
experience;
(C)from changing
premiums or offering discounted premiums to individuals who engage in wellness
activities at intervals prescribed by the issuer, if such premium changes or
incentives—
(i)are disclosed to
the consumer in the insurance contract;
(ii)are based on
specific wellness activities that are not applicable to all individuals;
and
(iii)are not
obtainable by all individuals to whom coverage is offered;
(D)from reinstating
lapsed coverage; or
(E)from retroactively
adjusting the rates charged an insured individual if the initial rates were set
based on material misrepresentation by the individual at the time of
issue.
(e)Prior Offering
of Policy in Primary StateA health insurance issuer may not
offer for sale individual health insurance coverage in a secondary State unless
that coverage is currently offered for sale in the primary State.
(f)Licensing of
Agents or Brokers for Health Insurance IssuersAny State may
require that a person acting, or offering to act, as an agent or broker for a
health insurance issuer with respect to the offering of individual health
insurance coverage obtain a license from that State, with commissions or other
compensation subject to the provisions of the laws of that State, except that a
State may not impose any qualification or requirement which discriminates
against a nonresident agent or broker.
(g)Documents for
Submission to State Insurance CommissionerEach health insurance
issuer issuing individual health insurance coverage in both primary and
secondary States shall submit—
(1)to the insurance
commissioner of each State in which it intends to offer such coverage, before
it may offer individual health insurance coverage in such State—
(A)a copy of the plan
of operation or feasibility study or any similar statement of the policy being
offered and its coverage (which shall include the name of its primary State and
its principal place of business);
(B)written notice of
any change in its designation of its primary State; and
(C)written notice
from the issuer of the issuer’s compliance with all the laws of the primary
State; and
(2)to the insurance
commissioner of each secondary State in which it offers individual health
insurance coverage, a copy of the issuer’s quarterly financial statement
submitted to the primary State, which statement shall be certified by an
independent public accountant and contain a statement of opinion on loss and
loss adjustment expense reserves made by—
(A)a member of the
American Academy of Actuaries; or
(B)a qualified loss
reserve specialist.
(h)Power of Courts
To Enjoin ConductNothing in this section shall be construed to
affect the authority of any Federal or State court to enjoin—
(1)the solicitation
or sale of individual health insurance coverage by a health insurance issuer to
any person or group who is not eligible for such insurance; or
(2)the solicitation
or sale of individual health insurance coverage that violates the requirements
of the law of a secondary State which are described in subparagraphs (A)
through (H) of subsection (b)(1).
(i)Power of
Secondary States To Take Administrative ActionNothing in this
section shall be construed to affect the authority of any State to enjoin
conduct in violation of that State’s laws described in subsection
(b)(1).
(j)State Powers To
Enforce State Laws
(1)Subject to the provisions of subsection (b)(1)(G)
(relating to injunctions) and paragraph (2), nothing in this section shall be
construed to affect the authority of any State to make use of any of its powers
to enforce the laws of such State with respect to which a health insurance
issuer is not exempt under subsection (b).
(2)Courts of
competent jurisdictionIf a State seeks an injunction regarding
the conduct described in paragraphs (1) and (2) of subsection (h), such
injunction must be obtained from a Federal or State court of competent
jurisdiction.
(k)Nothing in this section shall affect the
authority of any State to bring action in any Federal or State court.
(l)Generally
Applicable LawsNothing in this section shall be construed to
affect the applicability of State laws generally applicable to persons or
corporations.
(m)Guaranteed
Availability of Coverage to HIPAA Eligible IndividualsTo the
extent that a health insurance issuer is offering coverage in a primary State
that does not accommodate residents of secondary States or does not provide a
working mechanism for residents of a secondary State, and the issuer is
offering coverage under this part in such secondary State which has not adopted
a qualified high risk pool as its acceptable alternative mechanism (as defined
in section 2744(c)(2)), the issuer shall, with respect to any individual health
insurance coverage offered in a secondary State under this part, comply with
the guaranteed availability requirements for eligible individuals in section
2741.
2797.Primary State
must meet Federal floor before issuer may sell into secondary
StatesA health insurance
issuer may not offer, sell, or issue individual health insurance coverage in a
secondary State if the State insurance commissioner does not use a risk-based
capital formula for the determination of capital and surplus requirements for
all health insurance issuers.
2798.Independent
external appeals procedures
(a)A health insurance issuer may not offer, sell, or
issue individual health insurance coverage in a secondary State under the
provisions of this title unless—
(1)both the secondary
State and the primary State have legislation or regulations in place
establishing an independent review process for individuals who are covered by
individual health insurance coverage, or
(2)in any case in
which the requirements of subparagraph (A) are not met with respect to the
either of such States, the issuer provides an independent review mechanism
substantially identical (as determined by the applicable State authority of
such State) to that prescribed in the Health Carrier External Review
Model Act
of the National Association of Insurance Commissioners for
all individuals who purchase insurance coverage under the terms of this part,
except that, under such mechanism, the review is conducted by an independent
medical reviewer, or a panel of such reviewers, with respect to whom the
requirements of subsection (b) are met.
(b)Qualifications
of Independent Medical ReviewersIn the case of any independent
review mechanism referred to in subsection (a)(2)—
(1)In referring a denial of a claim to an independent
medical reviewer, or to any panel of such reviewers, to conduct independent
medical review, the issuer shall ensure that—
(A)each independent
medical reviewer meets the qualifications described in paragraphs (2) and
(3);
(B)with respect to
each review, each reviewer meets the requirements of paragraph (4) and the
reviewer, or at least 1 reviewer on the panel, meets the requirements described
in paragraph (5); and
(C)compensation
provided by the issuer to each reviewer is consistent with paragraph
(6).
(2)Each independent medical reviewer shall be a physician
(allopathic or osteopathic) or health care professional who—
(A)is appropriately
credentialed or licensed in 1 or more States to deliver health care services;
and
(B)typically treats
the condition, makes the diagnosis, or provides the type of treatment under
review.
(3)
(A)Subject to subparagraph (B), each independent medical
reviewer in a case shall—
(i)not be a related
party (as defined in paragraph (7));
(ii)not have a
material familial, financial, or professional relationship with such a party;
and
(iii)not otherwise
have a conflict of interest with such a party (as determined under
regulations).
(B)Nothing
in subparagraph (A) shall be construed to—
(i)prohibit an
individual, solely on the basis of affiliation with the issuer, from serving as
an independent medical reviewer if—
(I)a non-affiliated
individual is not reasonably available;
(II)the affiliated
individual is not involved in the provision of items or services in the case
under review;
(III)the fact of such
an affiliation is disclosed to the issuer and the enrollee (or authorized
representative) and neither party objects; and
(IV)the affiliated
individual is not an employee of the issuer and does not provide services
exclusively or primarily to or on behalf of the issuer;
(ii)prohibit an
individual who has staff privileges at the institution where the treatment
involved takes place from serving as an independent medical reviewer merely on
the basis of such affiliation if the affiliation is disclosed to the issuer and
the enrollee (or authorized representative), and neither party objects;
or
(iii)prohibit receipt
of compensation by an independent medical reviewer from an entity if the
compensation is provided consistent with paragraph (6).
(4)Practicing
health care professional in same field
(A)In a case involving treatment, or the provision of items
or services—
(i)by
a physician, a reviewer shall be a practicing physician (allopathic or
osteopathic) of the same or similar specialty, as a physician who, acting
within the appropriate scope of practice within the State in which the service
is provided or rendered, typically treats the condition, makes the diagnosis,
or provides the type of treatment under review; or
(ii)by a
non-physician health care professional, the reviewer, or at least 1 member of
the review panel, shall be a practicing non-physician health care professional
of the same or similar specialty as the non-physician health care professional
who, acting within the appropriate scope of practice within the State in which
the service is provided or rendered, typically treats the condition, makes the
diagnosis, or provides the type of treatment under review.
(B)For purposes of this paragraph, the term
practicing means, with respect to an individual who is a physician
or other health care professional, that the individual provides health care
services to individual patients on average at least 2 days per week.
(5)In the case of an external review relating to a child,
a reviewer shall have expertise under paragraph (2) in pediatrics.
(6)Limitations on
reviewer compensationCompensation provided by the issuer to an
independent medical reviewer in connection with a review under this section
shall—
(A)not exceed a
reasonable level; and
(B)not be contingent
on the decision rendered by the reviewer.
(7)For purposes of this section, the term related
party means, with respect to a denial of a claim under a coverage
relating to an enrollee, any of the following:
(A)The issuer
involved, or any fiduciary, officer, director, or employee of the
issuer.
(B)The enrollee (or
authorized representative).
(C)The health care
professional that provides the items or services involved in the denial.
(D)The institution at
which the items or services (or treatment) involved in the denial are
provided.
(E)The manufacturer
of any drug or other item that is included in the items or services involved in
the denial.
(F)Any other party
determined under any regulations to have a substantial interest in the denial
involved.
(8)For
purposes of this subsection:
(A)The
term enrollee means, with respect to health insurance coverage
offered by a health insurance issuer, an individual enrolled with the issuer to
receive such coverage.
(B)The term health care professional means
an individual who is licensed, accredited, or certified under State law to
provide specified health care services and who is operating within the scope of
such licensure, accreditation, or certification.
2799.
(a)Subject to subsection (b), with respect to specific
individual health insurance coverage the primary State for such coverage has
sole jurisdiction to enforce the primary State’s covered laws in the primary
State and any secondary State.
(b)Secondary
State’s AuthorityNothing in subsection (a) shall be construed to
affect the authority of a secondary State to enforce its laws as set forth in
the exception specified in section 2796(b)(1).
(c)In reviewing action initiated by the applicable
secondary State authority, the court of competent jurisdiction shall apply the
covered laws of the primary State.
(d)Notice of
Compliance FailureIn the case of individual health insurance
coverage offered in a secondary State that fails to comply with the covered
laws of the primary State, the applicable State authority of the secondary
State may notify the applicable State authority of the primary
State.
.
(b)The amendment made by subsection (a) shall apply to
individual health insurance coverage offered, issued, or sold after the date
that is one year after the date of the enactment of this Act.
(c)GAO Ongoing
Study and Reports
(1)The
Comptroller General of the United States shall conduct an ongoing study
concerning the effect of the amendment made by subsection (a) on—
(A)the number of
uninsured and under-insured;
(B)the availability
and cost of health insurance policies for individuals with pre-existing medical
conditions;
(C)the availability
and cost of health insurance policies generally;
(D)the elimination or
reduction of different types of benefits under health insurance policies
offered in different States; and
(E)cases of fraud or
abuse relating to health insurance coverage offered under such amendment and
the resolution of such cases.
(2)The Comptroller General shall submit to Congress an
annual report, after the end of each of the 5 years following the effective
date of the amendment made by subsection (a), on the ongoing study conducted
under paragraph (1).
4.If any provision of the Act or the
application of such provision to any person or circumstance is held to be
unconstitutional, the remainder of this Act and the application of the
provisions of such to any other person or circumstance shall not be
affected.