PRINTER'S NO. 580
No. 503 Session of 2001
INTRODUCED BY DENT, HUGHES, HOLL, O'PAKE, BRIGHTBILL, D. WHITE,
LOGAN, MADIGAN, KUKOVICH, MOWERY, PICCOLA, CONTI, TOMLINSON,
HELFRICK, GERLACH, WENGER, ROBBINS, RHOADES, LEMMOND,
LAVALLE, MURPHY, WAGNER, FUMO, STOUT, CORMAN, COSTA,
THOMPSON, TARTAGLIONE, SCHWARTZ, WAUGH, SCARNATI AND
JUBELIRER, FEBRUARY 27, 2001
REFERRED TO BANKING AND INSURANCE, FEBRUARY 27, 2001
AN ACT
1 Establishing the adult basic coverage insurance program; and
2 imposing powers and duties on the Insurance Department.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Health
7 Investment Insurance Act.
8 Section 2. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Benefit package." Insurance coverage which provides the
13 benefits set forth in section 3(f)(2) for eligible adults.
14 "Contractor." An insurer or other entity or its subsidiaries
15 operating under 40 Pa.C.S. Ch. 61 (relating to hospital plan
16 corporations) or 63 (relating to professional health services
1 plan corporations), or both.
2 "Department." The Insurance Department of the Commonwealth.
3 "Eligible adult." A low-income adult who meets all of the
4 following:
5 (1) Legally resides within the United States.
6 (2) Has been domiciled in this Commonwealth for at least
7 90 days prior to enrollment.
8 (3) Is not covered by a health insurance plan, a self-
9 insurance plan or a self-funded plan.
10 (4) Has not been covered by a health insurance plan, a
11 self-insurance plan or a self-funded plan during the three
12 months immediately preceding the determination of
13 eligibility, except when one of the following apply:
14 (i) The low-income adult is eligible to receive
15 benefits pursuant to the act of December 5, 1936 (2nd
16 Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment
17 Compensation Law.
18 (ii) The low-income adult was covered under one of
19 the above plans, but at the time of application for
20 coverage is no longer employed and is ineligible to
21 receive benefits pursuant to the Unemployment
22 Compensation Law.
23 (iii) The low-income adult is the spouse of a person
24 who meets either of the exceptions set forth in
25 subparagraph (i) or (ii) and both the eligible adult and
26 the spouse are low-income and applying for coverage.
27 (5) Is ineligible for medical assistance or Medicare.
28 "Fund." The Tobacco Settlement Fund established by the act
29 of (P.L. , No. ), known as the Health Investment
30 Act.
20010S0503B0580 - 2 -
1 "Hospital." A hospital as defined and licensed under the act
2 of July 19, 1979 (P.L.130, No.48), known as the Health Care
3 Facilities Act.
4 "Insurer." An insurance company, association, reciprocal,
5 health maintenance organization, fraternal benefit society or a
6 risk-bearing preferred provider organization that offers health
7 care benefits and is subject to regulation under the act of May
8 17, 1921 (P.L.682, No.284), known as The Insurance Company Law
9 of 1921, or the act of December 29, 1972 (P.L.1701, No.364),
10 known as the Health Maintenance Organization Act.
11 "Low-income adult." An individual who is between 19 and 64
12 years of age and whose household income is less than 200% of the
13 Federal poverty level at the time of eligibility determination.
14 "Medical assistance." The State program of medical
15 assistance established under the act of June 13, 1967 (P.L.31,
16 No.21), known as the Public Welfare Code.
17 "Medicare." The Federal program established under Title
18 XVIII of the Social Security Act (49 Stat. 620, 42 U.S.C. § 1395
19 et seq.).
20 "Monthly income." The monthly income of an individual as
21 determined by the Department of Public Welfare when applying the
22 income deductions applicable in determining eligibility for
23 Medicare cost-sharing in accordance with 42 U.S.C. §
24 1396a(a)(10)(E).
25 "Offeror." An insurer that submits a proposal in response to
26 the department's request for proposals issued pursuant to
27 section 3(f).
28 "Preexisting condition." A disease or physical condition for
29 which medical advice or treatment has been received prior to the
30 effective date of coverage.
20010S0503B0580 - 3 -
1 "Program." The adult basic coverage insurance program
2 established in section 3.
3 Section 3. Adult basic coverage insurance program.
4 (a) Program establishment.--There is established in the
5 department an adult basic coverage insurance program. Fund
6 appropriations to the department for the program shall be used
7 for contracts to provide basic health care insurance for
8 eligible adults and outreach activities. The department shall,
9 to the greatest extent practicable, ensure that all eligible
10 adults in this Commonwealth have access to the program
11 established in this section.
12 (b) Eligible adult responsibilities.--An eligible adult
13 seeking to purchase adult basic coverage insurance shall:
14 (1) Submit an application to the department.
15 (2) Pay to the department or its contractor an amount of
16 $30 per month of coverage. Beginning January 1, 2003, the
17 monthly payment amount shall be adjusted based on the annual
18 change in the Consumer Price Index for the preceding year.
19 Notification of any change in the monthly payment amount
20 shall be provided to eligible adults participating in the
21 program.
22 (3) Be responsible for any required copayments for
23 health care services rendered under the benefit package in
24 subsection (f)(2).
25 (4) Notify the department or its contractor of any
26 change in the eligible adult's income.
27 (c) Purchase of insurance.--An eligible adult's payment to
28 the department or its contractor under subsection (b)(2) shall
29 be used to purchase the benefit package and shall be received in
30 a timely manner. The appropriations for the program shall be
20010S0503B0580 - 4 -
1 used by the department to pay the difference between the cost of
2 the benefit package and the eligible adult's payment.
3 Subsidization of the benefit package is contingent upon the
4 amount of the appropriations to the program and limited to
5 eligible adults in compliance with subsection (b). Nothing under
6 this section shall constitute an entitlement derived from the
7 Commonwealth or a claim on any funds of the Commonwealth.
8 (d) Potential waiting list.--The department shall maintain a
9 waiting list of eligible adults who have applied for adult basic
10 coverage insurance but who are not enrolled due to insufficient
11 appropriations. An eligible adult on the waiting list may
12 purchase the benefit package at the department's cost.
13 (e) Department responsibilities.--The department shall:
14 (1) Administer the adult basic coverage insurance
15 program on a Statewide basis.
16 (2) Enter into contracts for health care insurance in
17 accordance with 62 Pa.C.S. (relating to procurement). The
18 department may award contracts on a multiple award basis.
19 (3) Conduct monitoring, oversight and audits of executed
20 contracts for enforcement purposes.
21 (4) Annually redetermine the eligibility of individuals
22 receiving subsidization of the benefit package.
23 (5) In consultation with appropriate Commonwealth
24 agencies, monitor, review and evaluate the insurer; benefit
25 package for the adequacy, accessibility and availability of
26 the services required under subsection (f).
27 (6) In consultation with appropriate Commonwealth
28 agencies, establish and coordinate the development,
29 implementation and supervision of an outreach plan.
30 (7) Report on an annual basis to the General Assembly
20010S0503B0580 - 5 -
1 regarding the number of eligible adults purchasing the adult
2 basic coverage insurance, with a geographic distribution; the
3 insurers participating in the program; the scope of the
4 services being provided, the level of outreach; the cost of
5 the insurance; and the amount an eligible adult contributes
6 toward the insurance, including any copayments and
7 adjustments due to the Consumer Price Index adjustment factor
8 under subsection (b)(2).
9 (f) Request for proposals.--In accordance with subsection
10 (e)(2), the department shall issue a request for proposals for
11 the adult basic coverage insurance. The request shall require:
12 (1) An offeror to assure that if selected as a
13 contractor it will do all of the following:
14 (i) Ensure that eligible adults have access to
15 primary health care physicians and nurse practitioners.
16 (ii) Contract with qualified, cost-effective
17 providers, which may include primary health care
18 physicians, nurse practitioners, clinics and health
19 maintenance organizations, to provide health care for
20 eligible adults in a manner that best manages the costs
21 of the services and utilizes other appropriate medical
22 cost-management methods.
23 (iii) Ensure that the individual applying for
24 coverage is an eligible adult. If a review of the
25 individual's application for coverage indicates that the
26 individual is not eligible for adult basic coverage
27 insurance but may be eligible for medical assistance, the
28 application for benefits and all accompanying
29 documentation shall be promptly transmitted to the
30 appropriate county assistance office for a determination
20010S0503B0580 - 6 -
1 of eligibility for medical assistance or other Federal,
2 State and local resources available to the individual.
3 (iv) Not prohibit enrollment based upon a
4 preexisting condition nor exclude a diagnosis or
5 treatment for the condition based on the condition's
6 preexistence.
7 (v) Provide the benefit package to eligible adults
8 consistent with the scope and duration requirements of
9 the request for proposals.
10 (vi) Provide an insurance identification card to
11 each eligible adult covered under a contract executed
12 under this section. The card shall not identify the
13 eligible adult as low income.
14 (vii) Require each primary care physician providing
15 primary care services under this section to make
16 necessary arrangements for admission to hospitals and for
17 necessary specialty care.
18 (2) A basic benefit package with scope and duration
19 determined by the department that includes:
20 (i) Preventive care.
21 (ii) Physician services.
22 (iii) Diagnosis and treatment of illness or injury,
23 including all medically necessary covered services
24 related to the diagnosis and treatment of sickness and
25 injury and other conditions provided on an ambulatory
26 basis, such as laboratory tests, x-rays, wound dressing
27 and casting to immobilize fractures.
28 (iv) Inpatient hospitalization.
29 (v) Outpatient hospital services.
30 (vi) Emergency accident and emergency medical care.
20010S0503B0580 - 7 -
1 (g) Proposals.--Upon publication of a request for proposals,
2 an entity and its subsidiaries that operate subject to the
3 provisions of 40 Pa.C.S. Ch. 61 (relating to hospital plan
4 corporations) or 63 (relating to professional health services
5 plan corporations), or both, shall submit a proposal to the
6 department to carry out the purposes of this section. Upon
7 publication of a request for proposals, an insurer doing
8 business in this Commonwealth may submit a proposal to the
9 department to carry out the purposes of this section.
10 (h) Reviewing, scoring and selection of proposals.--The
11 department shall review and score the proposals on the basis of
12 all of the requirements for the adult basic coverage insurance
13 program. The department may include such other criteria in the
14 request for proposals and in the scoring and selection of the
15 proposals that the department, in the exercise of its
16 administrative duties under this section, deems necessary;
17 however, the department shall:
18 (1) Select, to the greatest extent practicable, offerors
19 that contract with providers to provide health care services
20 on a cost-effective basis. The department shall select
21 offerors that use appropriate cost-management methods that
22 enable the program to provide coverage to the maximum number
23 of eligible adults and that, whenever possible, pursue and
24 utilize available public and private funds.
25 (2) Select, to the greatest extent practicable, only
26 offerors that comply with all procedures relating to
27 coordination of benefits as required by the department and
28 the Department of Public Welfare.
29 (3) Select offerors that limit administrative expenses
30 to no more than 7.5% of the amount of any contract. If after
20010S0503B0580 - 8 -
1 the first three full years of operation any contractor
2 presents documented evidence that administrative expenses are
3 in excess of 7.5% of the amount of the contract, the
4 department may make an additional payment, not to exceed 2.5%
5 of the amount of the contract, for future administrative
6 expenses to the contractor to the extent that the department
7 finds the expenses reasonable and necessary.
8 (i) Negotiations.--The department shall not negotiate a
9 contract for a period in excess of three years.
10 (j) Limitation.--In no case shall the total aggregate amount
11 of annual contracts entered into pursuant to this section exceed
12 the amount of the aggregate annual appropriations to the
13 department for the adult basic coverage insurance program.
14 Section 4. Effective date.
15 This act shall take effect July 1, 2001, or immediately,
16 whichever is later.
B12L40MSP/20010S0503B0580 - 9 -