SENATE JUDICIARY COMMITTEE SUBSTITUTE FOR
SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR
SENATE BILL 208 AND SENATE BILL 499
50th legislature - STATE OF NEW MEXICO - first session, 2011
AN ACT
RELATING TO HEALTH INSURANCE; AMENDING AND ENACTING SECTIONS OF THE NEW MEXICO INSURANCE CODE TO PROVIDE NEW STANDARDS IN REVIEW OF FILINGS OF HEALTH INSURANCE RATES; PROVIDING FOR ADMINISTRATIVE HEARINGS AND APPEAL TO THE SUPREME COURT OF DETERMINATIONS IN HEALTH INSURANCE AND HEALTH CARE PLAN RATE MATTERS; PROVIDING FOR RULEMAKING BY THE SUPERINTENDENT OF INSURANCE; PROVIDING FOR POOLING OF CLOSED BLOCKS OF BUSINESS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 59A-4-15 NMSA 1978 (being Laws 1984, Chapter 127, Section 59, as amended) is amended to read:
"59A-4-15. HEARINGS--IN GENERAL.--
A. The superintendent may hold a hearing, without request by others, for any purpose within the scope of the Insurance Code.
B. The superintendent shall hold a hearing:
(1) if required by any other provision of the Insurance Code; or
(2) upon written request for a hearing by a person aggrieved by any act, threatened act or failure of the superintendent to act or by any report, rule, regulation or order of the superintendent, other than an order for the holding of a hearing or order on hearing or pursuant to such an order on a hearing of which such person had notice.
C. The request for a hearing shall briefly state the respects in which the applicant is so aggrieved, the relief to be sought and the grounds to be relied upon as basis for relief.
D. If the superintendent finds that the request is made in good faith, that the applicant would be so aggrieved if the stated grounds are established and that such grounds otherwise justify the hearing, the superintendent shall commence the hearing within [ninety] thirty days after filing of the request, unless postponed by mutual consent. No postponement shall be later than ninety days after the filing of the request.
E. Pending the hearing and decision [thereon], the superintendent may suspend or postpone the effective date of the action as to which the hearing is requested. If upon request the superintendent refuses to grant [such] the suspension or postponement, the person requesting the hearing may apply no later than twenty days from the superintendent's refusal to the district court of Santa Fe county for a stay of the superintendent's action or proposed action pending the hearing and the superintendent's order [thereon].
F. Except as otherwise expressly provided, this section does not apply to hearings relative to matters arising under Chapter 59A, Article 17 NMSA 1978.
G. The superintendent may appoint a hearing officer to preside over hearings on reconsideration of rate filings. The hearing officer shall provide the superintendent with a recommended decision on the matter assigned to the hearing officer, including findings of fact and conclusions of law."
SECTION 2. Section 59A-18-12 NMSA 1978 (being Laws 1984, Chapter 127, Section 342, as amended) is amended to read:
"59A-18-12. FILING OF FORMS AND CLASSIFICATIONS--REVIEW OF EFFECT UPON INSURED.--
A. An insurance policy, health care plan or annuity contract shall not be delivered or issued for delivery in this state, nor shall an assumption certificate, endorsement, rider or application that becomes a part of a policy or health care plan be used, until a copy of the form and the classification of risks pertaining to the policy [have] or health care plan has been filed with the superintendent. Except for a filing for health insurance or health care plan rates, a filing shall be made at least sixty days before its proposed effective date. A filing made pursuant to this section shall not become effective nor shall it be used until approved by the superintendent pursuant to Section 59A-18-14 NMSA 1978, at which time it may be used. A filing related to health insurance or health care plan or rates shall be subject to the provisions of Section 5 of this 2011 act. A filing for any kind of insurance other than life insurance, health care plans or health insurance, as defined in the Insurance Rate Regulation Law, shall be deemed to meet the requirements of Chapter 59A, Article 18 NMSA 1978 to become effective unless disapproved pursuant to Section 59A-18-14 NMSA 1978 by the superintendent before the expiration of the waiting period or an extension of the waiting period; provided, that:
(1) this subsection shall not apply as to policies, contracts, endorsements or riders of unique and special character not for general use or offering but designed and used solely as to a particular insured or risk;
(2) if the superintendent has exempted a person or a class of persons or a market segment from a part or all of the provisions of the Insurance Rate Regulation Law pursuant to Subsection C of Section 59A-17-2 NMSA 1978, the superintendent also may exempt by rule that person, class of persons or market segment from a part or all of the provisions of this subsection;
(3) an insurer subject to the Insurance Rate Regulation Law may authorize an advisory organization to file policy forms, endorsements and other contract language and related attachment rules on its behalf. Reference filings shall be made prior to their use or by other methods the superintendent may allow by rule; and
(4) the superintendent may, by rule, exempt various lines and kinds of commercial insurance, as defined in the Insurance Rate Regulation Law, from some or all of the requirements of this subsection.
B. A workers' compensation insurance policy covering a risk arising from the employment of a worker performing work for an employer in New Mexico when that employer is not domiciled in New Mexico shall not be issued or become effective, nor shall any endorsement or rider covering such a risk be issued or become effective, until a copy of the form and the classification of risks pertaining thereto have been filed with the superintendent.
C. An insured, a beneficiary or, in the public interest of the state, the attorney general, may in writing request the insurer to review the manner in which its filing has been applied as to insurance or health care plan afforded the insured, the beneficiary, or the attorney general. If the insurer fails to make a review and grant appropriate relief within thirty days after the request is received, the insured, the beneficiary or the attorney general may file a written complaint and request for a hearing with the superintendent stating grounds relied upon. If the complaint charges a violation of the Insurance Code and the superintendent finds that the complaint was made in good faith and that the insured, the beneficiary or the attorney general would be aggrieved if the violation is proved, the superintendent shall hold a hearing, with notice to the insured, the beneficiary or the attorney general and insurer stating the grounds of complaint. If upon the hearing the superintendent finds the complaint justified, the superintendent shall order the insurer to correct the matter complained of within a reasonable time specified but not less than twenty days after a copy of the order was mailed to or served upon the insurer.
D. All filings submitted pursuant to this section shall be filed electronically. The superintendent may designate an entity to receive the electronic filings submitted pursuant to this section."
SECTION 3. Section 59A-18-13 NMSA 1978 (being Laws 1984, Chapter 127, Section 343, as amended) is amended to read:
"59A-18-13. APPROVAL OR DISAPPROVAL OF HEALTH INSURANCE FORMS.--
A. With policy, endorsement, rider and application forms and classification of risks filed by the insurer with the superintendent under Section 59A-18-12 NMSA 1978 as to health insurance and health care plans, the insurer shall also file with the superintendent its [premium] rates applicable to such health insurance forms. An insurer shall not use any [such] form [or premium] that has not been approved by the superintendent or that is not in effect in accordance with Section 59A-18-14 NMSA 1978.
[B. An increase in a health insurance premium shall not be effective without sixty days' written notice to the policyholder.
C.] B. All filings submitted pursuant to this section shall be filed electronically. The superintendent may designate an entity to receive the electronic filings submitted pursuant to this section."
SECTION 4. Section 59A-18-14 NMSA 1978 (being Laws 1984, Chapter 127, Section 344, as amended) is amended to read:
"59A-18-14. GROUNDS, PROCEDURE FOR DISAPPROVAL.--
A. The superintendent shall review any filing, except any filing by a health insurance issuer for a change in rate, made pursuant to Section 59A-18-12 or 59A-18-13 NMSA 1978 within sixty days of the filing date. The superintendent shall approve any form [or rate] if [he] the superintendent finds that it complies with the Insurance Code and shall disapprove any form, classification of risks or rate only on [any] one or more of the following grounds:
(1) if the form is in any respect in violation of or does not comply with the Insurance Code;
(2) if the form contains, or incorporates by reference where such incorporation is otherwise permissible, any inconsistent, ambiguous or misleading clauses or exceptions and conditions [which] that deceptively affect the risk purported to be assumed in the general coverage of the contract, or [which encourages] that encourage misrepresentation of the policy or its benefits;
(3) if the benefits offered are unreasonably restricted in relation to the premium charged;
(4) if the form has [any] a title, heading or other indication of its provisions [which] that is misleading or if the form is printed in such type or manner of reproduction as to be difficult to read; or
(5) if purchase of the form is being solicited by advertising, communication or dissemination of information [which] that is deceptive or misleading.
B. If the superintendent disapproves any [such] form during the sixty-day review period, [he] the superintendent shall give the insurer written notice of the disapproval, stating the grounds [therefor] for the disapproval.
C. After expiration of the sixty-day review period referred to in Subsection A of this section [59A-18-13 NMSA 1978] or at any time after having approved a form, the superintendent may, after a hearing thereon, disapprove a form or withdraw a previous approval on any of the grounds stated in Subsection A of this section. The superintendent's order issued on such hearing shall state the grounds for disapproval or withdrawal of previous approval and the date, not less than twenty days after the date of the order, when disapproval or withdrawal of approval shall become effective.
D. Any filing for a rate by a health insurance issuer shall be reviewed pursuant to the provisions of Section 6 of this 2011 act."
SECTION 5. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] HEALTH INSURANCE--HEALTH CARE PLAN RATES FILING REQUIREMENTS.--
A. All health insurance or health care plan rates filed by an insurer with the superintendent pursuant to Section 59A-18-12 NMSA 1978 shall include all related forms.
B. An insurer shall not use a rate without prior approval of the superintendent pursuant to Section 6 of this 2011 act and compliance with the provisions of that act.
C. Upon making a filing pursuant to Subsection A of this section, an insurer shall provide written notice to policyholders and beneficiaries potentially affected by the insurer's filing. The language of the notice shall meet the minimum language simplification standards in the Policy Language Simplification Law. The insurer shall provide, at a minimum, the following in its notice:
(1) a summary of the rates, including any percentage changes in the rates;
(2) a summary of all related form changes;
(3) an explanation of form and rate changes; and
(4) the policyholder or beneficiary rights under the Insurance Code, including the right to comment on the filing for the thirty days following the posting on the division's web site as required by Subsection D of this section.
D. Within twelve days of the filing, the superintendent shall make available on the division's web site in language that shall meet the minimum language simplification standards in the Policy Language Simplification Law the following information provided by the insurer that relates to each block of business included in the filing:
(1) the information required by Subsection C of this section;
(2) the proposed rates;
(3) a brief description of how the revised rates were determined, including the general description and source of each assumption used;
(4) the expected medical loss ratio and, for blocks of business in existence for at least three years, the medical loss ratio for the three years preceding the date of filing, accompanied by supporting information as to how the blocks of business will meet the requirements for medical loss ratio in state and federal law;
(5) if medical costs, including utilization and compensation rates, are alleged to justify a rate increase, the filing shall identify in the aggregate the types of expenditures in those categories that support the premium rate increase in the geographic area covered;
(6) for blocks of business in existence for at least three years, premium revenues, claims history, losses and reserves for the three years preceding the date of filing, accompanied by supporting documentation; and
(7) whether the insurer has ceased to actively offer or sell to new applicants a block of business for which it seeks a rate increase.
E. Regarding an insurer's overall insurance operations in the state for the three years preceding the date of filing, the superintendent shall make available on the division's web site, at a minimum, the following information that the insurer provides:
(1) a list detailing which blocks of business are open and which are closed to new enrollment;
(2) reserves and surpluses for all product lines sold in the state and a reasonable estimate of the expected reserves and surpluses; and
(3) changes in total medical and administrative costs over the previous three years.
F. The superintendent shall post a link on the division's web site to the most recent annual financial statement and actuarial memorandum that the insurer has filed with the division.
G. Notwithstanding any other provision of this section, upon request by an insurer, the superintendent may exempt from disclosure any part of the filing that the superintendent determines to contain proprietary information and that would, if disclosed, harm competition. Pending the superintendent's determination under this subsection, the superintendent shall not disclose the part of a filing that is the subject of an insurer's request.
H. On the date that the superintendent posts a filing pursuant to Subsection D of this section, the superintendent shall open a thirty-day public comment period for policyholders and the general public, during which the policyholders and the general public may make comments online or in writing. The superintendent shall post on the division's web site in a manner easily accessible to the public all comments made during the thirty-day public comment period.
I. All filings submitted pursuant to this section shall be filed electronically. The superintendent may designate an entity to receive the electronic filings submitted pursuant to this section."
SECTION 6. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] HEALTH INSURANCE FILINGS--GROUNDS AND PROCEDURE FOR APPROVAL OR DISAPPROVAL.--
A. The superintendent shall issue a final order within sixty days of the filing date for health insurance filings made on rates. The superintendent shall consider any public comment made pursuant to Subsection H of Section 5 of this 2011 act. The superintendent shall issue findings and shall approve any rates on the following grounds:
(1) the proposed rate is in compliance with federal law and the Insurance Code;
(2) the proposed rate does not contain, or incorporate by reference, any inconsistent, ambiguous or misleading clause, exception or condition that deceptively affects the risk purported to be assumed in the general coverage of the contract, or that encourages misrepresentation of the policy or its benefits;
(3) the proposed rate is actuarially sound and is supported by the actuarial memorandum submitted;
(4) the proposed rate is reasonable, not excessive or inadequate and not unfairly discriminatory; and
(5) the proposed rate is based upon administrative expenses that are permitted by federal and state law.
B. In order to determine whether the proposed rates are reasonable, actuarially sound and based on reasonable administrative expenses, the superintendent shall consider, at a minimum:
(1) the financial position of the insurer's insurance operations in the state, including surplus and reserves as reported in the latest three years' financial statements filed by the insurer;
(2) information provided to the superintendent for calculation of the amount of the insurer's direct services reimbursement pursuant to Section 59A-22-50, 59A-23C-10, 59A-46-51 or 59A-47-46 NMSA 1978;
(3) any anticipated change in the number of enrollees if the proposed rate is approved;
(4) changes to covered benefits or health benefit plan design;
(5) the insurer's compliance with all federal and state requirements for pooling risk and for participation in risk adjustment programs in effect under federal and state law; and
(6) the reliability and accuracy of the information provided in order to assure a meaningful review.
C. No final order shall be issued until after the close of the public comment period pursuant to Subsection H of Section 5 of this 2011 act.
D. In rate filings for which the superintendent holds a hearing on reconsideration pursuant to Section 59A-4-15 NMSA 1978, the superintendent shall issue a final order within sixty days of the hearing.
E. A final order of the superintendent under this section may be appealed to the commission pursuant to the provisions of Section 7 of this 2011 act within twenty days."
SECTION 7. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] REVIEW OF HEALTH INSURANCE OR PLAN RATES--APPEAL--COMMISSION--HEARING--HEARING EXAMINER--FINDINGS.--
A. A hearing conducted pursuant to an appeal to the public regulation commission filed following a final order of the superintendent under Section 6 of this 2011 act shall be a hearing conducted:
(1) within forty days after the date a request for appeal was filed;
(2) in accordance with Sections 8-8-16 through 8-8-18 NMSA 1978;
(3) by a hearing examiner that the commission appoints pursuant to Section 8-8-14 NMSA 1978; and
(4) as a hearing on the record as a whole.
B. On appeal, the commission shall set aside the superintendent's final order and remand the matter to the superintendent only if:
(1) after evaluation of the record of evidence as a whole, it finds that the superintendent's decision was not based on substantial evidence as to whether the proposed rates are reasonable, actuarially sound and based on reasonable administrative expenses;
(2) it finds that the superintendent's decision was arbitrary, capricious or an abuse of discretion; or
(3) it finds that the superintendent's decision is otherwise not in accordance with law.
C. The commission shall render a decision within ninety days of a hearing held pursuant to this section."
SECTION 8. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] REVIEW OF HEALTH INSURANCE OR PLAN RATES--APPEAL TO SUPREME COURT FROM COMMISSION.--
A. In a matter arising from an order of the commission on appeal pursuant to Section 7 of this 2011 act, an aggrieved party may appeal to the supreme court.
B. The supreme court shall consider the commission's order on appeal and reverse the commission's order on appeal only if the supreme court determines:
(1) after evaluation of the record of evidence as a whole, that the superintendent's decision was not based on substantial evidence as to whether the proposed rates are reasonable, actuarially sound and based on reasonable administrative expenses;
(2) that the commission's decision was arbitrary, capricious or an abuse of discretion; or
(3) that the commission's decision on appeal is otherwise not in accordance with law."
SECTION 9. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] POOLING OF CLOSED BLOCKS OF BUSINESS.--For the purpose of determining the rate of any policy within a closed block of business, the superintendent may require an insurer to pool the experience of a closed block of business with all appropriate blocks of business that are not closed in accordance with Section 59A-18-13.1 NMSA 1978. An insurer shall not apply a rate penalty or surcharge beyond that which reflects the experience of a pool combined in accordance with this section."
SECTION 10. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] CLOSED BLOCK OF BUSINESS.--As used in Chapter 59A, Article 18 NMSA 1978, "closed block of business" means a policy or group of policies that division rules identify as closed because an insurer no longer markets or sells the policy or group of policies or because the policy's or group of policies' enrollment has decreased."
SECTION 11. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] "BLOCK OF BUSINESS" DEFINED.--As used in Chapter 59A, Article 18 NMSA 1978, "block of business" means a particular policy or pool that provides health insurance, that an insurer issues to one or more individuals and that includes distinct benefits, services and terms."
SECTION 12. A new section of Chapter 59A, Article 18 NMSA 1978 is enacted to read:
"[NEW MATERIAL] HEALTH INSURANCE OR HEALTH PLAN FORM AND RATE FILINGS--SUPERINTENDENT--RULEMAKING--COMPLIANCE WITH FEDERAL LAW.--The superintendent shall adopt rules:
A. to define terms used regarding forms, rates, reviews and blocks of business that an insurer or health care plan submits in filing matters;
B. to govern any additional filing requirements the superintendent deems appropriate;
C. to provide notice of hearings and the grounds on which the hearings have been requested;
D. to meet criteria for review in accordance with federal law; and
E. that the superintendent deems appropriate to carry out the provisions of Chapter 59A, Article 18 NMSA 1978."
SECTION 13. Section 59A-4-20 NMSA 1978 (being Laws 1984, Chapter 127, Section 67, as amended) is amended to read:
"59A-4-20. APPEAL TO COURT.--
A. Except in matters arising from Sections 6 and 7 of this 2011 act, a party may appeal from an order of the superintendent made after an informal hearing or an administrative hearing. The appeal shall be taken to the district court pursuant to the provisions of Section 39-3-1.1 NMSA 1978.
B. This section shall not apply as to matters arising pursuant to Chapter 59A, Article 17 NMSA 1978."
SECTION 14. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2012.
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