Chapter 082

2007 -- H 6079 SUBSTITUTE B

Enacted 06/22/07





     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

covered patients;

      (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

participating providers;

      (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

plan accreditation;

     (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

physician practices.

      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 and,

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

tobacco use.

     (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

merged market.

     (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

general public.

     (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

following section:


     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.



LC01798/SUB B