2007 -- H 6079 SUBSTITUTE B
A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT
Introduced By: Representatives Kennedy, Mumford, and Gablinske
Date Introduced: March 01, 2007
It is enacted by the General Assembly as follows:
SECTION 1. Sections 42-14.5-3 of the General Laws in Chapter 42-14.5 entitled "The
Rhode Island Health Care Reform Act of 2004 - Health Insurance Oversight" is hereby amended
to read as follows:
42-14.5-3. Powers and duties. [Effective July 1, 2007.][Contingent effective date; see
notes under section 42-14.5-1.] -- The health insurance commissioner shall have the following
powers and duties:
(a) To conduct an annual public meeting or meetings, separate and distinct from rate
hearings pursuant to section 42-62-13, regarding the rates, services and operations of insurers
licensed to provide health insurance in the state the effects of such rates, services and operations
on consumers, medical care providers and patients, and the market environment in which such
insurers operate. Notice of not less than ten (10) days of said hearing(s) shall go to the general
assembly, the governor, the Rhode Island medical society, the Hospital Association of Rhode
Island, the director of health, and the attorney general. Public notice shall be posted on the
department's web site and given in the newspaper of general circulation, and to any entity in
writing requesting notice.
(b) To make recommendations to the governor and the joint legislative committee on
health care oversight regarding health care insurance and the regulations, rates, services,
administrative expenses, reserve requirements, and operations of insurers providing health
insurance in the state, and to prepare or comment on, upon the request of the co-chairs of the joint
committee on health care oversight or upon the request of the governor, draft legislation to
improve the regulation of health insurance. In making such recommendations, the commissioner
shall recognize that it is the intent of the legislature that the maximum disclosure be provided
regarding the reasonableness of individual administrative expenditures as well as total
administrative costs. The commissioner shall also make recommendations on the levels of
reserves including consideration of: targeted reserve levels; trends in the increase or decrease of
reserve levels; and insurer plans for distributing excess reserves.
(c) To establish a consumer/business/labor/medical advisory council to obtain
information and present concerns of consumers, business and medical providers affected by
health insurance decisions. The council shall be involved in the planning and conduct of the
public meeting in accordance with subsection (a) above. The advisory council shall assist in the
design of an insurance complaint process to ensure that small businesses whom experience
extraordinary rate increases in a given year could request and receive a formal review by the
department. The advisory council shall assess views of the health provider community relative to
insurance rates of reimbursement, billing and reimbursement procedures, and the insurers' role in
promoting efficient and high quality health care. The advisory council shall issue an annual report
of findings and recommendations to the governor and the joint legislative committee on health
care oversight. The advisory council is to be diverse in interests and shall include representatives
of community consumer organizations; small businesses, other than those involved in the sale of
insurance products; and hospital, medical, and other health provider organizations. Such
representatives shall be nominated by their respective organizations. The advisory council shall
be co-chaired by the health insurance commissioner and a community consumer organization or
small business member to be elected by the full advisory council.
(d) To establish and provide guidance and assistance to a subcommittee ("The
Professional Provider-Health Plan Work Group") of the advisory council created pursuant to
subsection (c) above, composed of health care providers and Rhode Island licensed health plans.
This subcommittee shall develop a plan to implement the following activities:
(i) By January 1, 2006, a method whereby health plans shall disclose to contracted
providers the fee schedules used to provide payment to those providers for services rendered to
(ii) By April 1, 2006, a standardized provider application and credentials verification
process, for the purpose of verifying professional qualifications of participating health care
(iii) By September 1, 2006, a uniform health plan claim form to be utilized by
(iv) By March 15, 2007, a report to the legislature on proposed methods for health
maintenance organizations as defined by section 27-41-1, and nonprofit hospital or medical
service corporations as defined by chapters 27-19 and 27-20, to make facility-specific data and
other medical service-specific data available in reasonably consistent formats to patients
regarding quality and costs. This information would help consumers make informed choices
regarding the facilities and/or clinicians or physician practices at which to seek care. Among the
items considered would be the unique health services and other public goods provided by
facilities and/or clinicians or physician practices in establishing the most appropriate cost
(v) By December 1, 2006, contractual disclosure to participating providers of the
mechanisms for resolving health plan/provider disputes; and
(vi) By February 1, 2007, a uniform process for confirming in real time patient insurance
enrollment status, benefits coverage, including co-pays and deductibles.
(vii) By December 1, 2007, a report to the legislature on the temporary credentialing of
providers seeking to participate in the plan's network and the impact of said activity on health
(viii) By February 1, 2008, a report to the legislature on the feasibility of occasional
contract renegotiations between plans and the providers in their networks.
(ix) By May 1, 2008, a report to the legislature reviewing impact of silent PPOs on
A report on the work of the subcommittee shall be submitted by the health insurance
commissioner to the joint legislative committee
on health care oversight on March 1, 2006
March 1, 2007
. ,and March 1, 2008.
(e) To enforce the provisions of Title 27 and Title 42 as set forth in section 42-14-5(d).
(f) There is hereby established the Rhode Island Affordable Health Plan Reinsurance
Fund. The fund shall be used to effectuate the provisions of sections 27-18.5-8 and 27-50-17.
(g) To examine and study the impact of changing the rating guidelines and/or merging the
individual health insurance market as defined in section 27-18.5 and the small employer health
insurance market as defined in chapter 27-50 in accordance with the following:
(i) The study shall forecast the likely rate increases required to effect the changes
recommended pursuant to the preceding subsection (g) in the direct pay market and small
employer health insurance market over the next five (5) years, based on the current rating
structure, and current products.
(ii) The study shall include examining the impact of merging the individual and small
employer markets on premiums charged to individuals and small employer groups.
(iii) The study shall include examining the impact on rates in each of the individual and
small employer health insurance markets and the number of insureds in the context of possible
changes to the rating guidelines used for small employer groups, including: community rating
principles; expanding small employer rate bands beyond the current range; increasing the
employer group size in the small group market; and/or adding rating factors for broker and/or
(iv) The study shall include examining the adequacy of current statutory and regulatory
oversight of the rating process and factors employed by the participants in the proposed new
(v) The study shall include assessment of possible reinsurance mechanisms and/or federal
high-risk pool structures and funding to support the health insurance market in Rhode Island by
reducing the risk of adverse selection and the incremental insurance premiums charged for this
risk, and/or by making health insurance affordable for a selected at-risk population.
(vi) The health insurance commissioner shall establish an insurance market merger task
force to assist with the study. The task force shall be chaired by the health insurance
commissioner and shall include, but not be limited to, representatives of the general assembly, the
business community, small employer carriers as defined in section 27-50.3, carriers offering
coverage in the individual market in Rhode Island, health insurance brokers and members of the
(vii) For the purposes of conducting this study, the commissioner may contract with an
outside organization with expertise in fiscal analysis of the private insurance market. In
conducting its study, the organization shall, to the extent possible, obtain and use actual health
plan data. Said data shall be subject to state and federal laws and regulations governing
confidentiality of health care and proprietary information.
(viii) The task force shall meet no later than October 1, 2007 and the commissioner shall
file a report with the speaker of the house of representatives and the president of the senate no
later than January 1, 2008.
SECTION 2. Chapter 42-14.5 of the General Laws entitled "The Rhode Island Health
Care Reform Act of 2004 - Health Insurance Oversight" is hereby amended by adding thereto the
42-14.5-4. Actuary and subject matter experts. – The health insurance commissioner
may contract with an actuary and/or other subject matter experts to assist him or her in
conducting the study required under subsection 42-14.5-3(g). The actuary or other expert shall
serve under the direction of the health insurance commissioner. Health insurance companies
doing business in this state, including, but not limited to, nonprofit hospital service corporations
and nonprofit medical service corporations established pursuant to chapters 27-19 and 27-20, and
health maintenance organizations established pursuant to chapter 27-41, shall be assessed
according to a schedule of their direct writing of health insurance in this state to pay for the
compensation of the actuary. The amount assessed to all health insurance companies doing
business in this state for the study conducted under subsection 42-14.5-3(g) shall not exceed a
total of one hundred thousand dollars ($100,000).
SECTION 3. This act shall take effect upon passage.