Implementing health insurance reform, providing an exemption from emergency rule procedures, and granting rule-making authority

The bill provides that the additional requirements under the bill with which insurers must comply apply to grandfathered health plans only with respect to those requirements that apply to grandfathered health plans under PPACA.

Current law requires health insurers to cover emergency services without prior authorization, breast reconstruction after a mastectomy, dependent coverage of a student while on a medically necessary leave of absence, and colorectal screening.

These coverage provisions are consistent with, and therefore duplicative of, the relevant PPACA requirements and are not repealed in the bill. Current law also requires health insurers to provide coverage of a dependent up to age 27, or up to any age if the dependent is a student and had to leave school previously because he or she was called to active duty in the armed forces. PPACA requires coverage of a dependent up to age 26 and has no additional requirement related to a student previously called to active duty. Because of this inconsistency, the current law dependent coverage provision is repealed in the bill. The bill specifies that, if PPACA is found by a final decision of a federal court of competent jurisdiction to be unconstitutional in its entirety and unenforceable in this state, after all appeals have been exhausted or the time for appeal has expired insurers are exempt from the PPACA coverage requirements incorporated into the bill, with the exception of the provision related to dependent coverage. Thus, if PPACA were found unconstitutional, in addition to the dependent coverage requirement, insurers would be subject to the coverage requirements in current law that are consistent with PPACA and that have not been repealed in the bill.

Under current law, a health insurer must have an internal grievance procedure and an independent review procedure whereby an insured person may appeal certain types of coverage denials to an independent review organization. The statutes set out criteria for both procedures and provide for certification of independent review organizations by the commissioner of insurance (commissioner).

The bill repeals these provisions and requires the commissioner to establish standards by rule for both internal and external appeals that are consistent with requirements under PPACA. The requirements for internal appeals apply to all group and individual health insurance policies, grandfathered health plans, policies providing limited-scope dental or vision benefits, and hospital or fixed indemnity policies. The requirements for external appeals apply to all group and individual health insurance policies, grandfathered health plans, hospital or fixed indemnity policies, and Medicare supplement or replacement polices, excluding Medicare advantage plans. An independent review organization performing external appeals must be certified by the commissioner, who may revoke, suspend, or limit the certification or refuse to recertify under specified conditions. An independent review organization must have a quality assurance mechanism to ensure timely and independent reviews and may charge reasonable fees, which must be approved by the commissioner. The commissioner has authority to examine and audit an independent review organization's books and records. A decision of an independent review organization is binding on the insured and the insurer. An independent review organization is immune from any liability that may result from an independent review determination, and an insurer is not liable for any damages attributable to actions taken in compliance with an independent review organization determination.

Under current law, rates for insurance must be filed with the commissioner within 30 days after they become effective, and the commissioner may disapprove a rate after it has been filed. Certain types of insurance, including group and blanket accident and sickness insurance, are exempt from the rating requirement provisions, including the requirement to file rates. The bill provides that, beginning on September 1, 2011, group health insurance offered to employers with not more than 50 employees (small employer health insurance) and group and blanket accident and sickness insurance offered in the individual market are not exempt from the rating requirement provisions. In addition, the bill requires that rates for individual health insurance, small employer health insurance, and group and blanket accident and sickness insurance offered in the individual market be filed with the commissioner before, rather than after, they become effective.