Report Title:
Managed Care Plans; Reserves; Rate Increase
Description:
Lowers maximum allowable reserves for managed care plans from 50% to 30%. Prohibits rate increases when plan's net worth exceeds 30% of annual health care expenditures and operating expenses, unless negative cash flow due to high reimbursements would present imminent danger. (SD1)
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THE SENATE |
S.B. NO. |
760 |
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TWENTY-THIRD LEGISLATURE, 2005 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO HEALTH INSURANCE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 431:14F-103, Hawaii Revised Statutes, is amended to read as follows:
"[[]§431:14F-103[]] Making of rates. (a) Rates shall not be excessive, inadequate, or unfairly discriminatory and shall be reasonable in relation to benefits provided.
(b) Except to the extent necessary to meet the provisions of subsection (a), uniformity among managed care plans in any matters within the scope of this section shall be neither required nor prohibited.
(c) The commissioner shall not approve increases in rates filed under section 431:14F-105 if a managed care plan's net worth exceeds thirty per cent of its annual health care expenditures and operating expenses, as reported on the most recent financial statement filed with the commissioner, except as provided in section in 431:14F-108(a)."
SECTION 2. Section 431:14F-106, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) If a managed care plan's net worth exceeds [fifty] thirty per cent of its annual health care expenditures and operating expenses as reported on the most recent financial statement filed with the commissioner, the excess moneys shall [either:
(1) Be returned to enrollees of the managed care plan; or
(2) Be] be applied to stabilize or reduce rates, charges, assessments, subscriptions, receipts, contributions, fees, or dues payable by the enrollees of the managed care plan.
(b) Excess moneys applied in accordance with subsection (a)[(2)] shall be reallocated among all lines of health insurance business sold by the managed care plan. Reallocation of moneys pursuant to this section may be delayed until the amount of moneys available to be reallocated exceeds $10,000,000. Nothing in this section shall prohibit a managed care plan from maintaining reserves above minimum requirements but below the maximum limit or from returning moneys to, or reducing moneys payable by, enrollees of the managed care plan prior to reaching the maximum limit."
SECTION 3. Section 431:14F-108, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) If within the waiting period or any extension of the waiting period as provided in section 431:14F-105, the commissioner finds that a filing does not meet the requirements of this article, the commissioner shall send to the managed care plan which made the filing, written notice of disapproval of the filing specifying in what respects the filing fails to meet the requirements of this article and stating that the filing shall not become effective. The commissioner shall not approve of a filing for a rate increase if a managed care plan's net worth exceeds thirty per cent of its annual health care expenditures and operating expenses, as reported on the most recent financial statement filed with the commissioner; provided that:
(1) The commissioner may approve of the filing if the commissioner is presented with evidence to believe that there is imminent danger that the managed care plan will sustain a negative cash flow due to a high amount of reimbursements under the plan in the next reporting period; and
(2) If the commissioner approves of the filing, the commissioner shall submit a report to the governor and legislature not less that twenty days prior to the convening of the next regular session of the legislature."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 2005.