0001| AN ACT | 0002| RELATING TO INSURANCE; AMENDING AND ENACTING CERTAIN PROVISIONS OF | 0003| THE HEALTH INSURANCE ALLIANCE ACT; AMENDING AND ENACTING SECTIONS | 0004| OF THE NMSA 1978; REPEALING A SECTION OF LAWS 1994. | 0005| | 0006| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: Section 1. Section 59A-54-12 NMSA 1978 (being Laws 1987, Chapter 154, Section 12, | 0007| as amended) is amended to read: | 0008| "59A-54-12. ELIGIBILITY--POLICY PROVISIONS.-- | 0009| A. Except as provided in Subsection I of this section, a person is eligible for a | 0010| pool policy only if on the effective date of coverage or renewal of coverage the person is a New | 0011| Mexico resident and: | 0012| (1) is not eligible as an insured or covered dependent for any health plan | 0013| that provides coverage for comprehensive major medical or comprehensive physician and | 0014| hospital services; | 0015| (2) is only eligible for a health plan that is offered at a rate higher than | 0016| that available from the pool; | 0017| (3) has been rejected for coverage for comprehensive major medical or | 0018| comprehensive physician and hospital services; or | 0019| (4) is only eligible for a health plan with a rider, waiver or restrictive | 0020| provision for that particular individual based on a specific condition. | 0021| B. Coverage under a pool policy is in excess of and shall not duplicate coverage | 0022| under any other form of health insurance. | 0023| C. A pool policy shall provide that coverage of a dependent unmarried person | 0024| terminates when the person becomes nineteen years of age or, if the person is enrolled full time | 0025| in an accredited educational institution, when he becomes twenty-five years of age. The policy | 0001| shall also provide in substance that attainment of the limiting age does not operate to terminate | 0002| coverage when the person is and continues to be: | 0003| (1) incapable of self-sustaining employment by reason of mental | 0004| retardation or physical handicap; and | 0005| (2) primarily dependent for support and maintenance upon the person in | 0006| whose name the contract is issued. | 0007| Proof of incapacity and dependency shall be furnished to the insurer within one hundred | 0008| twenty days of attainment of the limiting age and subsequently as required by the insurer but not | 0009| more frequently than annually after the two-year period following attainment of the limiting age. | 0010| D. A pool policy that provides coverage for a family member of the person in | 0011| whose name the contract is issued shall, as to the coverage of the family member or the | 0012| individual in whose name the contract was issued, provide that the health insurance benefits | 0013| applicable for children are payable with respect to a newly born child of the family member or | 0014| the person in whose name the contract is issued from the moment of coverage of injury or | 0015| illness, including the necessary care and treatment of medically diagnosed congenital defects and | 0016| birth abnormalities. If payment of a specific premium is required to provide coverage for the | 0017| child, the contract may require that notification of the birth of a child and payment of the | 0018| required premium shall be furnished to the carrier within thirty-one days after the date of birth in | 0019| order to have the coverage continued beyond the thirty-one day period. | 0020| E. A pool policy may contain provisions under which coverage is excluded | 0021| during a six-month period following the effective date of coverage as to a given individual for | 0022| pre-existing conditions, as long as either of the following exists: | 0023| (1) the condition has manifested itself within a period of six months | 0024| before the effective date of coverage in such a manner as would cause an ordinarily prudent | 0025| person to seek diagnoses or treatment; or | 0001| (2) medical advice or treatment was recommended or received within a | 0002| period of six months before the effective date of coverage. | 0003| F. The pre-existing condition exclusions described in Subsection E of this section | 0004| shall be waived to the extent to which similar exclusions have been satisfied under any prior | 0005| health insurance coverage that was involuntarily terminated, if the application for pool coverage | 0006| is made not later than thirty-one days following the involuntary termination. In that case, | 0007| coverage in the pool shall be effective from the date on which the prior coverage was terminated. | 0008| This subsection does not prohibit pre-existing conditions coverage in a pool policy that is more | 0009| favorable to the insured than that specified in this subsection. | 0010| G. An individual is not eligible for coverage by the pool if: | 0011| (1) he is, at the time of application, eligible for medicare or medicaid, | 0012| which would provide coverage for amounts in excess of limited policies such as dread disease, | 0013| cancer policies or hospital indemnity policies; | 0014| (2) he has terminated coverage by the pool within the past twelve months; | 0015| or | 0016| (3) he is an inmate of a public institution or is eligible for public | 0017| programs for which medical care is provided. | 0018| H. Any person whose health insurance coverage from a qualified state health | 0019| policy with similar coverage is terminated because of nonresidency in another state may apply | 0020| for coverage under the pool. If the coverage is applied for within thirty-one days after that | 0021| termination and if premiums are paid for the entire coverage period, the effective date of the | 0022| coverage shall be the date of termination of the previous coverage. | 0023| I. A person's eligibility for a policy issued under the Health Insurance Alliance | 0024| Act shall not preclude a person from remaining on a pool policy, and a self-employed person | 0025| who qualifies for an approved health plan under the Health Insurance Alliance Act by using a | 0001| dependent as the second employee may choose a pool policy in lieu of the health plan under that | 0002| act." | 0003| Section 2. Section 59A-56-2 NMSA 1978 (being Laws 1994, Chapter 75, Section 2) is | 0004| amended to read: | 0005| "59A-56-2. PURPOSE.--The purpose of the Health Insurance Alliance Act is to provide | 0006| increased access to voluntary health insurance coverage in New Mexico. An additional purpose | 0007| of the Health Insurance Alliance Act is to provide for the development of plans for health | 0008| insurance coverage for children, small employers and individuals." | 0009| Section 3. Section 59A-56-3 NMSA 1978 (being Laws 1994, Chapter 75, Section 3) is | 0010| amended to read: | 0011| "59A-56-3. DEFINITIONS.--As used in the Health Insurance Alliance Act: | 0012| A. "alliance" means the New Mexico health insurance alliance; | 0013| B. "approved health plan" means any arrangement for the provision of health | 0014| insurance offered through and approved by the alliance; | 0015| C. "board" means the board of directors of the alliance; | 0016| D. "child" means a dependent unmarried individual who is less than nineteen | 0017| years of age or an unmarried individual who is enrolled full time in an accredited educational | 0018| institution until the individual becomes twenty-five years of age; | 0019| E. "department" means the department of insurance; | 0020| F. "director" means an individual who serves on the board; | 0021| G. "earned premiums" means premiums paid or due during a calendar year for | 0022| coverage under an approved health plan less any unearned premiums at the end of that calendar | 0023| year plus any unearned premiums from the end of the immediately preceding calendar year; | 0024| H. "eligible expenses" means the allowable charges for a health care service | 0025| covered under an approved health plan; | 0001| I. "gross earned premiums" means premiums paid or due during a calender year | 0002| for all health insurance written in the state less any unearned premiums at the end of that | 0003| calendar year plus any unearned premiums from the end of the immediately preceding calendar | 0004| year; | 0005| J. "health care service" means a service or product furnished an individual for the | 0006| purpose of preventing, alleviating, curing or healing human illness or injury and includes | 0007| services and products incidental to furnishing the described services or products; | 0008| K. "health insurance" means "health" insurance as defined in Section 59A-7-3 | 0009| NMSA 1978; any hospital and medical expense-incurred policy, including medicare supplement | 0010| insurance; nonprofit health care plan service contract; health maintenance organization | 0011| subscriber contract; short-term, accident, fixed indemnity, specified disease policy, long-term | 0012| care or disability income insurance contracts and limited health benefit or credit health | 0013| insurance; coverage for health care services under uninsured arrangements of group or group-type contracts, including employer self-insured, cost-plus or other benefits methodologies not | 0014| involving insurance or not subject to New Mexico premium taxes; coverage for health care | 0015| services under group-type contracts that are not available to the general public and can be | 0016| obtained only because of connection with a particular organization or group; or coverage by | 0017| medicare or other governmental programs providing health care services; but "health insurance" | 0018| does not include insurance issued pursuant to provisions of the Workers' Compensation Act or | 0019| similar law, automobile medical payment insurance or provisions by which benefits are payable | 0020| with or without regard to fault that are required by law to be contained in any liability insurance | 0021| policy; | 0022| L. "health maintenance organization" means a health maintenance organization | 0023| as defined by Subsection M of Section 59A-46-2 NMSA 1978; | 0024| M. "incurred claims" means claims paid during a calendar year plus claims | 0025| incurred in the calendar year and paid prior to April 1 of the succeeding year, less claims | 0001| incurred previous to the current calendar year and paid prior to April 1 of the current year; | 0002| N. "insured" means a small employer or its employee and an individual covered | 0003| by an approved health plan, a former employee of a small employer who is covered by an | 0004| approved health plan through conversion or an individual covered by an approved health plan | 0005| that allows individual enrollment; | 0006| O. "medicare" means coverage under both Parts A and B of Title 18 of the | 0007| federal Social Security Act; | 0008| P. "member" means a member of the alliance; | 0009| Q. "nonprofit health care plan" means a "health care plan" as defined in | 0010| Subsection K of Section 59A-47-3 NMSA 1978; | 0011| R. "premiums" means the premiums received for coverage under an approved | 0012| health plan during a calendar year; | 0013| S. "small employer" means a person that is a resident of this state, has employees | 0014| at least fifty percent of whom are residents of this state, is actively engaged in business and that | 0015| on at least fifty percent of its working days during the preceding calendar year employed no | 0016| fewer than two and no more than fifty eligible employees; provided that: (1) in | 0017| determining the number of eligible employees, the spouse or dependent of an employee may, at | 0018| the employer's discretion, be counted as a separate employee; and | 0019| (2) companies that are eligible to file a combined tax return or a | 0020| consolidated tax return for purposes of state income taxation shall be considered one employer; | 0021| T. "superintendent" means the superintendent of insurance; | 0022| U. "total premiums" means the total premiums for business written in the state | 0023| received during a calendar year; and | 0024| V. "unearned premiums" means the portion of a premium previously paid for | 0025| which the coverage period is in the future." | 0001| Section 4. Section 59A-56-4 NMSA 1978 (being Laws 1994, Chapter 75, Section 4) is | 0002| amended to read: | 0003| "59A-56-4. ALLIANCE CREATED--BOARD CREATED.-- | 0004| A. The "New Mexico health insurance alliance" is created as a nonprofit public | 0005| corporation for the purpose of providing increased access to health insurance in the state. All | 0006| insurance companies authorized to transact health insurance business in this state, nonprofit | 0007| health care plans, health maintenance organizations and self-insurers not subject to federal | 0008| preemption shall organize and be members of the alliance as a condition of their authority to | 0009| offer health insurance in this state, except for an insurance company that is licensed under the | 0010| Prepaid Dental Plan Law or a company that is solely engaged in the sale of dental insurance and | 0011| is licensed under a provision of the Insurance Code. The alliance is not a governmental agency | 0012| for any purpose. | 0013| B. The alliance shall be governed by a board of directors constituted pursuant to | 0014| the provisions of this section. The board is a governmental entity for purposes of the Tort | 0015| Claims Act, but the board shall not be considered a governmental entity for any other purpose. | 0016| C. The superintendent shall, within sixty days after March 4, 1994, give notice to | 0017| all members of the time and place for the initial organizational meeting of the alliance. Each | 0018| member shall be entitled to one vote in person or by proxy at the organizational meeting. | 0019| D. The alliance shall operate subject to the supervision and approval of the | 0020| board. The board shall consist of: | 0021| (1) five directors, elected by the members, who shall be officers or | 0022| employees of members and shall consist of one representative of a nonprofit health care plan, | 0023| two representatives of health maintenance organizations and two representatives of other types | 0024| of members; | 0025| (2) five directors, appointed by the governor, who shall be officers, | 0001| general partners or proprietors of small employers who, after the term of the initial | 0002| appointments, are covered by approved health plans; | 0003| (3) four directors appointed by the governor, who shall be employees of | 0004| small employers, and who, after the term of the initial appointments, are employees of small | 0005| employers covered by approved health plans; and | 0006| (4) the superintendent or his designee, who shall be a nonvoting member | 0007| except when his vote is necessary to break a tie. | 0008| E. The superintendent shall serve as chair of the board unless he declines, in | 0009| which event he shall appoint the chair. | 0010| F. The directors elected by the members shall be elected for initial terms of three | 0011| years or less, staggered so that the term of at least one director expires on June 30 of each year. | 0012| The directors appointed by the governor shall be appointed for initial terms of three years or | 0013| less, staggered so that the term of at least one director expires on June 30 of each year. | 0014| Following the initial terms, directors shall be elected or appointed for terms of three years. A | 0015| director whose term has expired shall continue to serve until his successor is elected or | 0016| appointed. | 0017| G. Whenever a vacancy on the board occurs, the electing or appointing authority | 0018| of the director's position that is vacant shall fill the vacancy by electing or appointing an | 0019| individual to serve the balance of the unexpired term; provided, when a vacancy occurs in one of | 0020| the director's positions elected by the members, the superintendent is authorized to appoint a | 0021| temporary replacement director until the next scheduled election of directors elected by the | 0022| members is held. The individual elected or appointed to fill a vacancy shall meet the | 0023| requirements for initial election or appointment to that position. | 0024| H. Directors may be reimbursed by the alliance as provided in the Per Diem and | 0025| Mileage Act in the same manner and amounts as nonsalaried public officers, but shall receive no | 0001| other compensation, perquisite or allowance from the alliance." | 0002| Section 5. Section 59A-56-5 NMSA 1978 (being Laws 1994, Chapter 75, Section 5) is | 0003| amended to read: | 0004| "59A-56-5. PLAN OF OPERATION.-- | 0005| A. The board shall submit a plan of operation to the superintendent and any | 0006| amendments to the plan necessary or suitable to assure the fair, reasonable and equitable | 0007| administration of the alliance. | 0008| B. The superintendent shall, after notice and hearing, approve the plan of | 0009| operation if it is determined to assure the fair, reasonable and equitable administration of the | 0010| alliance. The plan of operation shall become effective upon written approval of the | 0011| superintendent consistent with the date on which health insurance coverage through the alliance | 0012| pursuant to the provisions of the Health Insurance Alliance Act is made available. A plan of | 0013| operation adopted by the superintendent shall continue in force until modified by him or | 0014| superseded by a subsequent plan of operation submitted by the board and approved by the | 0015| superintendent. | 0016| C. The plan of operation shall: | 0017| (1) establish procedures for the handling and accounting of assets of the | 0018| alliance; | 0019| (2) establish regular times and places for meetings of the board; | 0020| (3) establish procedures for records to be kept of all financial transactions | 0021| and for annual fiscal reporting to the superintendent; | 0022| (4) establish the amount of and the method for collecting assessments | 0023| pursuant to Section 59A-56-11 NMSA 1978; | 0024| (5) establish a program to publicize the existence of the alliance, the | 0025| approved health plans, the eligibility requirements and procedures for enrollment in an approved | 0001| health plan and to maintain public awareness of the alliance; | 0002| (6) establish penalties for nonpayment of assessments by members; | 0003| (7) establish procedures for alternative dispute resolution of disputes | 0004| between members and insureds; and | 0005| (8) contain additional provisions necessary and proper for the execution | 0006| of the powers and duties of the alliance." | 0007| Section 6. Section 59A-56-6 NMSA 1978 (being Laws 1994, Chapter 75, Section 6) is | 0008| amended to read: | 0009| "59A-56-6. BOARD--POWERS AND DUTIES.-- | 0010| A. The board shall have the general powers and authority granted to insurance | 0011| companies licensed to transact health insurance business under the laws of this state. | 0012| B. The board: | 0013| (1) may enter into contracts to carry out the provisions of the Health | 0014| Insurance Alliance Act, including, with the approval of the superintendent, contracting with | 0015| similar alliances of other states for the joint performance of common administrative functions or | 0016| with persons or other organizations for the performance of administrative functions; | 0017| (2) may sue and be sued; | 0018| (3) may conduct periodic audits of the members to assure the general | 0019| accuracy of the financial data submitted to the alliance; | 0020| (4) shall establish maximum rate schedules, allowable rate adjustments, | 0021| administrative allowances, reinsurance premiums and agent referral, servicing fees or | 0022| commissions subject to applicable provisions in the Insurance Code. In determining the initial | 0023| year's rate for health insurance, the only rating factors that may be used are age, gender, | 0024| geographic area of the place of employment and smoking practices. In any year's rate, the | 0025| difference in rates in any one age group that may be charged on the basis of a person's gender | 0001| shall not exceed another person's rates in the age group by more than twenty percent of the lower | 0002| rate, and no person's rate shall exceed the rate of any other person with similar family | 0003| composition by more than two hundred fifty percent of the lower rate, except that the rates for | 0004| children under the age of nineteen may be lower than the bottom rates in the two hundred fifty | 0005| percent band. The rating factor restrictions shall not prohibit a member from offering rates that | 0006| differ depending upon family composition; | 0007| (5) may direct a member to issue policies or certificates of coverage of | 0008| health insurance in accordance with the requirements of the Health Insurance Alliance Act; | 0009| (6) shall establish procedures for alternative dispute resolution of disputes | 0010| between members and insureds; | 0011| (7) shall cause the alliance to have an annual audit of its operations by an | 0012| independent certified public accountant; | 0013| (8) shall conduct all board meetings as if it were subject to the provisions | 0014| of the Open Meetings Act; | 0015| (9) shall draft one or more sample health insurance policies that are the | 0016| prototype documents for the members; | 0017| (10) shall determine the design criteria to be met for an approved health | 0018| plan; | 0019| (11) shall review each proposed approved health plan to determine if it | 0020| meets the alliance designed criteria and, if it does meet the criteria, approve the plan, but the | 0021| board shall not permit more than one approved health plan per member for each set of plan | 0022| design criteria; | 0023| (12) shall review annually each approved health plan to determine if it | 0024| still qualifies as an approved health plan based on the alliance designed criteria and, if the plan is | 0025| no longer approved, arrange for the transfer of the insureds covered under the formerly approved | 0001| plan to an approved health plan; | 0002| (13) may terminate an approved health plan not operating as required by | 0003| the board; | 0004| (14) shall terminate an approved health plan if timely claim payments are | 0005| not made pursuant to the plan; and | 0006| (15) shall engage in significant marketing activities, including a program | 0007| of media advertising, to inform small employers and eligible individuals of the existence of the | 0008| alliance, its purpose and the health insurance available or potentially available through the | 0009| alliance. | 0010| C. The alliance is subject to and responsible for examination by the | 0011| superintendent. No later than March 1 of each year, the board shall submit to the superintendent | 0012| an audited financial report for the preceding calendar year in a form approved by the | 0013| superintendent." | 0014| Section 7. Section 59A-56-8 NMSA 1978 (being Laws 1994, Chapter 75, Section 8) is | 0015| amended to read: | 0016| "59A-56-8. APPROVED HEALTH PLAN.-- | 0017| A. An approved health plan shall conform to the alliance's approved health plan | 0018| design criteria. The board may allow more than one plan design for approved health plans. A | 0019| member may provide one approved health plan for each plan design approved by the board. | 0020| B. The board shall designate plan designs for standard approved health plans. | 0021| The board may designate plan designs for an approved health plan that provides catastrophic | 0022| coverage or other benefit plan designs. | 0023| C. Each approved health plan shall offer a premium that is no greater than ten | 0024| percent over and no less than ten percent under the average of the standard rate index for plans | 0025| with the same characteristics. | 0001| D. Any member that provides or offers to renew a group health insurance | 0002| contract providing health insurance benefits to employees of the state, a county, a municipality | 0003| or a school district for which public funds are contributed shall offer at least one approved health | 0004| plan to small employers; provided, however, if a member does not offer anywhere in the United | 0005| States a plan that meets substantially the design criteria of an approved health plan, the member | 0006| shall not be required to offer an approved health plan. | 0007| E. If a plan design approved by the board is not offered by any member already | 0008| offering an approved health plan, but a member offers a substantially similar plan design outside | 0009| the alliance, the board may require the member to offer that plan design as an approved health | 0010| plan through the alliance. | 0011| F. An approved health plan shall be offered for at least five consecutive years | 0012| following the date last required in accordance with Subsection D of this section or after notifying | 0013| the board of its future withdrawal if not required in accordance with Subsection D of this section | 0014| unless: | 0015| (1) the member substitutes another approved health plan for the plan | 0016| withdrawn; or | 0017| (2) the board allows the plan to be withdrawn because it imposes a | 0018| serious hardship upon the member. | 0019| G. No member shall be required to offer an approved health plan if the member | 0020| notifies the superintendent in writing that it will no longer offer health insurance, life insurance | 0021| or annuities in the state, except for renewal of existing contracts, provided that: | 0022| (1) the member does not offer or provide health insurance, life insurance | 0023| or annuities for a period of five years from the date of notification to the superintendent to any | 0024| person in the state who is not covered by the member through a health insurance policy in effect | 0025| on the date of the notification; and | 0001| (2) with respect to health or life insurance policies or annuities in effect | 0002| on the date of notification to the superintendent, the member continues to comply with all | 0003| applicable laws and regulations governing the provision of insurance in this state, including the | 0004| payment of applicable taxes, fees and assessments." | 0005| Section 8. Section 59A-56-9 NMSA 1978 (being Laws 1994, Chapter 75, Section 9) is | 0006| amended to read: | 0007| "59A-56-9. REINSURANCE.-- | 0008| A. A member offering an approved health plan shall be reinsured for certain | 0009| losses by the alliance. Within six months following the end of each calendar year in which the | 0010| member offering the approved health plan paid more in incurred claims, plus the member's | 0011| reinsurance premium pursuant to Subsection B of this section, than eighty-five percent of earned | 0012| premiums received by the member on all approved health plans issued by the member, the | 0013| member shall receive from the alliance the excess amount for the calendar year by which the | 0014| incurred claims and reinsurance premium exceeded eighty-five percent of the earned premiums | 0015| received by the alliance or its administrator. | 0016| B. The alliance shall withhold from all premiums that it receives a reinsurance | 0017| premium as established by the board. The reinsurance premium shall not exceed five percent of | 0018| premiums paid in the first year of coverage and shall not exceed ten percent of premiums for | 0019| renewal years. In determining the reinsurance premium for a particular calendar year, the board | 0020| shall set the reinsurance premium at a rate that will recover the total reinsurance loss for the | 0021| preceding year over a reasonable number of years in accordance with sound actuarial principles." | 0022| Section 9. Section 59A-56-10 NMSA 1978 (being Laws 1994, Chapter 75, Section 10) | 0023| is amended to read: | 0024| "59A-56-10. ADMINISTRATION.--The alliance shall deduct from premiums collected | 0025| for approved health plans an administrative charge as set by the board. The administrative | 0001| charge shall be determined before the beginning of each calendar year. The maximum | 0002| administrative charge the alliance may charge is ten percent of premiums in the first year and | 0003| five percent of premiums in renewal years." | 0004| Section 10. Section 59A-56-11 NMSA 1978 (being Laws 1994, Chapter 75, Section 11) | 0005| is amended to read: | 0006| "59A-56-11. ASSESSMENTS.-- | 0007| A. After the completion of each calendar year, the alliance shall assess all its | 0008| members for the net reinsurance loss in the previous calendar year and for the net administrative | 0009| loss that occurred in the previous calendar year, taking into account investment income for the | 0010| period and other appropriate gains and losses using the following definitions: | 0011| (1) net reinsurance losses shall be the amount determined for the | 0012| previous calendar year in accordance with Subsection A of Section 59A-56-9 NMSA 1978 for | 0013| all members offering an approved health plan reduced by reinsurance premiums charged by the | 0014| alliance in the previous calendar year; and | 0015| (2) net administrative losses shall be the administrative expenses incurred | 0016| by the alliance in the previous calendar year and projected for the current calendar year less the | 0017| sum of administrative allowances received by the alliance and any legislative appropriation for | 0018| the period, but, in the event of an administrative gain, net administrative losses for the purpose | 0019| of assessments shall be considered zero, and the gain shall be carried forward to the | 0020| administrative fund for the next calendar year as an additional allowance. | 0021| B. The assessment for each member shall be determined by multiplying the total | 0022| losses of the alliance's operation, as defined in Subsection A of this section, by a fraction, the | 0023| numerator of which is an amount equal to that member's total premiums, or the equivalent, | 0024| exclusive of premiums received by the member for an approved health plan for health insurance | 0025| written in the state during the preceding calendar year and the denominator of which equals the | 0001| total premiums of all health insurance written in the state during the preceding calendar year | 0002| exclusive of premiums for approved health plans; provided that total premiums shall not include | 0003| payments by the secretary of human services pursuant to a contract issued under Section 1876 of | 0004| the federal Social Security Act, total premiums exempted by the federal Employee Retirement | 0005| Income Security Act of 1974 or federal government programs. | 0006| C. If assessments exceed actual reinsurance losses and administrative losses of | 0007| the alliance, the excess shall be held at interest by the board to offset future losses. | 0008| D. To enable the board to properly determine the net reinsurance amount and its | 0009| responsibility for reinsurance to each member: | 0010| (1) by April 15 of each year, each member offering an approved health | 0011| plan shall submit a listing of all incurred claims for the previous year; and | 0012| (2) by April 15 of each year, each member shall submit a report that | 0013| includes the total earned premiums received during the prior year less the total earned premiums | 0014| exempted by federal government programs. | 0015| E. The alliance shall notify each member of the amount of its assessment due by | 0016| May 15 of each year. The assessment shall be paid by the member by June 15 of each year. | 0017| F. The proportion of participation of each member in the alliance shall be | 0018| determined annually by the board, based on annual statements filed by each member and other | 0019| reports deemed necessary by the board. Any deficit incurred by the alliance shall be recouped | 0020| by assessments apportioned among the members pursuant to the formula provided in Subsection | 0021| B of this section; provided that the assessment paid for any member shall be allowed as a credit | 0022| on the future premium tax return for that member, with the credit limited to fifty percent of the | 0023| premium tax due the first year the assessment is imposed; forty percent the second year; and | 0024| thirty percent the third and all subsequent years. | 0025| G. The board may defer, in whole or in part, the payment of an assessment of a | 0001| member if, in the opinion of the board, after approval of the superintendent, payment of the | 0002| assessment would endanger the ability of the member to fulfill its contractual obligations. In the | 0003| event payment of an assessment against a member is deferred, the amount deferred may be | 0004| assessed against the other members in a manner consistent with the basis for assessments set | 0005| forth in Subsection A of this section. The member receiving the deferment shall pay the | 0006| assessment in full plus interest at the prevailing rate as determined by regulation of the | 0007| superintendent within four years from the date payment is deferred. After four years but within | 0008| five years of the date of the deferment, the board may sue to recover the amount of the deferred | 0009| payment plus interest and costs. Board actions to recover deferred payments brought after five | 0010| years of the date of deferment are barred. Any amount received shall be deducted from future | 0011| assessments or reimbursed pro rata to the members paying the deferred assessment. | 0012| H. In addition to the assessments provided in this section for reinsurance and | 0013| administrative losses, the board may impose on all members annually an assessment not to | 0014| exceed two hundred dollars ($200) for the board to hire consultants and plan and develop | 0015| alliance programs. This additional | 0016| assessment shall be allowed as a credit on the next premium tax due for the member." | 0017| Section 11. Section 59A-56-13 NMSA 1978 (being Laws 1994, Chapter 75, Section 13) | 0018| is amended to read: | 0019| "59A-56-13. ALLIANCE ADMINISTRATOR.-- | 0020| A. The board may select an alliance administrator through a competitive request | 0021| for proposal process. The board shall evaluate proposals based on criteria established by the | 0022| board that shall include: | 0023| (1) proven ability to administer health insurance programs; | 0024| (2) an estimate of total charges for administering the alliance for the | 0025| proposed contract period; and | 0001| (3) ability to administer the alliance in a cost-efficient manner. | 0002| B. The alliance administrator contract shall be for a period up to four years, | 0003| subject to annual renegotiation of the fees and services, and shall provide for cancellation of the | 0004| contract for cause, termination of the alliance by the legislature or the combining of the alliance | 0005| with a governmental body. | 0006| C. At least one year prior to the expiration of an alliance administrator contract, | 0007| the board may invite all interested parties, including the current administrator, to submit | 0008| proposals to serve as alliance administrator for a succeeding contract period. Selection of the | 0009| administrator for a succeeding contract period shall be made at least six months prior to the | 0010| expiration of the current contract. | 0011| D. The alliance administrator shall: | 0012| (1) take applications for an approved health plan from small employers or | 0013| a referring agent; | 0014| (2) establish a premium billing procedure for collection of premiums | 0015| from insureds. Billings shall be made on a periodic basis, not less than monthly, as determined | 0016| by the board; | 0017| (3) pay the member that offers an approved health plan the net premium | 0018| due after deduction of reinsurance and administrative allowances; | 0019| (4) provide the member with any changes in the status of insureds; | 0020| (5) perform all necessary functions to assure that each member is | 0021| providing timely payment of benefits to individuals covered under an approved health plan, | 0022| including: | 0023| (a) making information available to insureds relating to the proper | 0024| manner of submitting a claim for benefits to the member offering the approved health plan and | 0025| distributing forms on which submissions shall be made; and | 0001| (b) making information available on approved health plan benefits | 0002| and rates to insureds; | 0003| (6) submit regular reports to the board regarding the operation of the | 0004| alliance, the frequency, content and form of which shall be determined by the board; | 0005| (7) following the close of each fiscal year, determine premiums of | 0006| members, the expense of administration and the paid and incurred health care service charges for | 0007| the year and report this information to the board and the superintendent on a form prescribed by | 0008| the superintendent; and | 0009| (8) establish the premiums for reinsurance and the administrative charges, | 0010| subject to approval of the board." | 0011| Section 12. Section 59A-56-14 NMSA 1978 (being Laws 1994, Chapter 75, Section 14) | 0012| is amended to read: | 0013| "59A-56-14. ELIGIBILITY--GUARANTEED ISSUE--PLAN PROVISIONS.-- | 0014| A. A small employer is eligible for an approved health plan if on the effective | 0015| date of coverage or renewal: | 0016| (1) at least fifty percent of its eligible employees not otherwise insured | 0017| elect to be covered under the approved health plan; | 0018| (2) the small employer has not terminated coverage with an approved | 0019| health plan within three years of the date of application for coverage except to change to another | 0020| approved health plan; and | 0021| (3) the small employer does not offer other general group health | 0022| insurance coverage to its employees. For the purposes of this paragraph, general group health | 0023| insurance coverage excludes coverage providing only a specific limited form of health insurance | 0024| such as accident or disability income insurance coverage or a specific health care service such as | 0025| dental care. | 0001| B. An approved health plan shall provide coverage for a child. The policy shall | 0002| also provide in substance that attainment of the limiting age by an unmarried dependent | 0003| individual does not operate to terminate coverage when the individual continues to be incapable | 0004| of self-sustaining employment by reason of developmental disability or physical handicap and | 0005| the individual is primarily dependent for support and maintenance upon the employee. Proof of | 0006| incapacity and dependency shall be furnished to the alliance and the member that offered the | 0007| approved health plan within one hundred twenty days of attainment of the limiting age. The | 0008| board may require subsequent proof annually after a two-year period following attainment of the | 0009| limiting age. | 0010| C. An approved health plan shall provide that the health insurance benefits | 0011| applicable for eligible dependents are payable with respect to a newly born child of the family | 0012| member or the individual in whose name the contract is issued from the moment of birth, | 0013| including the necessary care and treatment of medically diagnosed congenital defects and birth | 0014| abnormalities. If payment of a specific premium is required to provide coverage for the child, | 0015| the contract may require that notification of the birth of a child and payment of the required | 0016| premium shall be furnished to the member within thirty-one days after the date of birth in order | 0017| to have the coverage from birth. An approved health plan shall provide that the health insurance | 0018| benefits applicable for eligible dependents are payable for an adopted child in accordance with | 0019| the provisions of Section 59A-22-34.1 NMSA 1978. | 0020| D. Except as provided in Subsections E, G and H of this section, an approved | 0021| health plan may contain provisions under which coverage is excluded during a six-month period | 0022| following the effective date of coverage of an individual for preexisting conditions, as long as | 0023| either of the following exists: | 0024| (1) the condition has manifested itself within a period of six months | 0025| before the effective date of coverage in such a manner as would cause an ordinarily prudent | 0001| person to seek diagnosis or treatment; or | 0002| (2) medical advice or treatment was recommended or received within a | 0003| period of six months before the effective date of coverage. | 0004| E. The preexisting condition exclusions described in Subsection D of this section | 0005| shall be waived to the extent to which similar exclusions have been satisfied under any prior | 0006| health insurance coverage if the application for health insurance through the alliance is made not | 0007| later than thirty-one days following the termination of the prior coverage. In that case, coverage | 0008| through the alliance shall be effective from the date on which the prior coverage was terminated. | 0009| This subsection does not prohibit preexisting conditions coverage in an approved health plan that | 0010| is more favorable to the covered individual than that specified in this subsection. | 0011| F. An individual is not eligible for coverage by the alliance if he: | 0012| (1) is eligible for medicare; provided, however, if an individual has health | 0013| insurance coverage from an employer whose group includes twenty or more individuals, an | 0014| individual eligible for medicare who continues to be employed may choose to be covered | 0015| through an approved health plan; | 0016| (2) has voluntarily terminated health insurance issued through the alliance | 0017| within the past twelve months unless it was due to a change in employment; or | 0018| (3) is an inmate of a public institution. | 0019| G. The alliance shall provide for an open enrollment period of sixty days from | 0020| the initial offering of an approved health plan. Individuals enrolled during the open enrollment | 0021| period shall not be subject to the preexisting conditions limitation. | 0022| H. If an insured covered by an approved health plan switches to another | 0023| approved health plan that provides increased or additional benefits such as lower deductible or | 0024| co-payment requirements, the member offering the approved health plan with increased or | 0025| additional benefits may require the six-month period for preexisting conditions provided in | 0001| Subsection D of this section to be satisfied prior to receipt of the additional benefits. | 0002| I. An approved health plan shall provide for a thirty-day reinstatement period | 0003| from the end of a grace period provided by the approved health plan, requiring payments of all | 0004| back premiums plus a penalty of five percent of the annualized premium. Any claims incurred | 0005| between the date through which premiums have been paid and the date of reinstatement are not | 0006| covered unless covered by the conditions of the approved health plan." | 0007| Section 13. Section 59A-56-17 NMSA 1978 (being Laws 1994, Chapter 75, Section 17) | 0008| is amended to read: | 0009| "59A-56-17. BENEFITS.-- | 0010| A. An approved health plan shall pay for medically necessary eligible expenses | 0011| that exceed the deductible, co-payment and co-insurance amounts applicable under the | 0012| provisions of Section 59A-56-18 NMSA 1978 and are not otherwise limited or excluded. The | 0013| Health Insurance Alliance Act does not prohibit the board from approving additional types of | 0014| health plan designs with similar cost-benefit structures or other types of health plan designs. An | 0015| approved health plan for small employers shall, at a minimum, reflect the levels of health | 0016| insurance coverage generally available in New Mexico for small employer group policies, but an | 0017| approved health plan for small employers may also offer health plan designs that are not | 0018| generally available in New Mexico for small employer group policies. | 0019| B. The board may design and require an approved health plan to contain cost-containment measures and requirements, including managed care, pre-admission certification, | 0020| concurrent inpatient review and the use of fee schedules for health care providers, including the | 0021| diagnosis-related grouping system and the resource-based relative value system." | 0022| Section 14. Section 59A-56-18 NMSA 1978 (being Laws 1994, Chapter 75, Section 18) | 0023| is amended to read: | 0024| "59A-56-18. DEDUCTIBLES--CO-INSURANCE--MAXIMUM OUT-OF-POCKET | 0025| PAYMENTS.-- | 0001| A. Subject to the limitations provided in Subsection C of this section, an | 0002| approved health plan offered through the alliance may impose a deductible on a per-person | 0003| calendar year basis. Approved health plans offered by health maintenance organizations shall | 0004| provide equivalent cost-benefit structures. The board may authorize deductibles in other | 0005| amounts and equivalent cost-benefit structures. | 0006| B. Subject to the limitations provided in Subsection C of this section, a | 0007| mandatory co-insurance requirement for an approved health plan may be imposed as a | 0008| percentage of eligible expenses in excess of a deductible. Health maintenance organizations | 0009| shall impose equivalent cost-benefit structures. | 0010| C. The maximum aggregate out-of-pocket payments for eligible expenses by the | 0011| covered individual shall be determined by the board." | 0012| Section 15. Section 59A-56-19 NMSA 1978 (being Laws 1994, Chapter 75, Section 19) | 0013| is amended to read: | 0014| "59A-56-19. DEPENDENT FAMILY MEMBER REQUIRED COVERAGE--SMALL | 0015| EMPLOYER RESPONSIBILITY.-- | 0016| A. A small employer shall collect or make a payroll deduction from the | 0017| compensation of an employee for the portion of the approved health plan cost the employee is | 0018| responsible for paying. The small employer may contribute to the cost of that plan on behalf of | 0019| the employee. | 0020| B. A small employer shall make available to dependent family members of an | 0021| employee covered by an approved health plan the same approved health plan. The small | 0022| employer may contribute to the cost of family coverage. | 0023| C. All premiums collected, deducted from the compensation of employees or | 0024| paid on their behalf by the small employer shall be promptly remitted to the alliance." | 0025| Section 16. Section 59A-56-20 NMSA 1978 (being Laws 1994, Chapter 75, Section 20) | 0001| is amended to read: | 0002| "59A-56-20. RENEWABILITY.-- | 0003| A. An approved health plan shall contain provisions under which the member | 0004| offering the plan is obligated to renew the health insurance if premiums are paid until the day the | 0005| plan is replaced by another plan or the small employer terminates coverage. An individual | 0006| covered by health insurance under an approved health plan may retain coverage until he | 0007| becomes eligible for medicare as the primary coverage, except that in a family policy coverage | 0008| under an approved health plan shall continue for any person in the family who is not eligible for | 0009| medicare. | 0010| B. If an approved health plan ceases to exist, the alliance shall provide an | 0011| alternate approved health plan. | 0012| C. An approved health plan shall provide covered individuals the right to | 0013| continue health insurance coverage through an approved health plan as individual health | 0014| insurance provided by the same member upon the death of the employee or upon the divorce, | 0015| annulment or dissolution of marriage or legal separation of the spouse from the employee or by | 0016| termination of employment by electing to do so within a period of time specified in the health | 0017| insurance, provided that the employee was covered under an approved health plan while | 0018| employed for at least six consecutive months. The individual may be charged an additional | 0019| administrative charge for the individual health insurance. | 0020| D. The right to continue health insurance coverage provided in this section | 0021| terminates if the covered individual resides outside the United States for more than six | 0022| consecutive months." | 0023| Section 17. Section 59A-56-21 NMSA 1978 (being Laws 1994, Chapter 75, Section 21) | 0024| is amended to read: | 0025| "59A-56-21. REGULATIONS.--The superintendent shall: | 0001| A. adopt regulations that provide for disclosure by members of the availability of | 0002| health insurance from the alliance; and | 0003| B. adopt regulations to carry out the provisions of the Health Insurance Alliance | 0004| Act." | 0005| Section 18. Section 59A-56-23 NMSA 1978 (being Laws 1994, Chapter 75, Section 23) | 0006| is amended to read: | 0007| "59A-56-23. RATES--STANDARD RISK RATE--EXPERIENCE RATING | 0008| PROHIBITED.-- | 0009| A. The alliance shall determine a standard risk rate index by actuarially | 0010| calculating the average index rates that the insurer has filed under the requirements of the Small | 0011| Group Rate and Renewability Act with the benefits similar to the alliance's standard approved | 0012| health plan. A standard risk rate based on age and other appropriate demographic characteristics | 0013| may be used. No standard risk rate shall be more than ten percent higher or ten percent lower | 0014| than the average index rate. In determining the standard risk rate, the alliance shall consider the | 0015| benefits provided by the approved health plan. | 0016| B. Experience rating is not allowed other than for reinsurance purposes. | 0017| C. All rates and rate schedules shall be submitted to the superintendent for | 0018| approval prior to use." | 0019| Section 19. Section 59A-56-24 NMSA 1978 (being Laws 1994, Chapter 75, Section 24) | 0020| is amended to read: | 0021| "59A-56-24. BENEFIT PAYMENTS REDUCTION.-- | 0022| A. An approved health plan shall be the last payer of benefits whenever any other | 0023| benefit is available. Benefits otherwise payable under the approved health plan shall be reduced | 0024| by all amounts paid or payable through any other health insurance and by all hospital and | 0025| medical expense benefits paid or payable under any workers' compensation coverage, | 0001| automobile medical payment or liability insurance, whether provided on the basis of fault or no-fault, and by any hospital or medical benefits paid or payable under or provided pursuant to any | 0002| state or federal program, excluding medicaid. | 0003| B. The administrator or the alliance shall have a cause of action against any | 0004| person covered by an approved health plan for the recovery of the amount of benefits paid that | 0005| are not for eligible expenses. Benefits due from the approved health plan may be reduced or | 0006| refused as a set-off against any amount recoverable under this section." | 0007| Section 20. TEMPORARY PROVISION--REPORT.--The department of insurance and | 0008| the New Mexico health insurance alliance shall prepare and publish a report to the legislature | 0009| and the governor by October 1 of each year, begining on October 1, 1996 on the alliance | 0010| programs and recommendations to facilitate participation in the alliance programs. The report | 0011| shall include a director's report from members and insured representatives that reflects comments | 0012| made by members and insureds regarding the alliance for each year the directors are required to | 0013| report to the legislature and the governor. | 0014| Section 21. Laws 1994, Chapter 75, Section 35 is amended to read: | 0015| "Section 35. DELAYED REPEAL.--The Health Insurance Alliance Act is | 0016| repealed June 30, 2003." | 0017| |