THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY STACK, FONTANA, COSTA, BREWSTER AND WASHINGTON, APRIL 25, 2011

REFERRED TO BANKING AND INSURANCE, APRIL 25, 2011  

AN ACT

Establishing the Pennsylvania Health Insurance Exchange;

imposing duties on the Insurance Department; and providing

for powers and duties of the exchange, for health benefit

plan certification, for funding and publication of costs and

for regulations.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the American

Health Benefit Exchange Act.

Section 2.  Purpose and intent.

The purpose of this act is to provide for the establishment

of an American health benefit exchange to facilitate the

purchase and sale of qualified health plans in the individual

market in this Commonwealth and to provide for the establishment

of a Small Business Health Options Program to assist qualified

small employers in this Commonwealth in facilitating the

enrollment of their employees in qualified health plans offered

in the small group market.

Section 3.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Commissioner."  The Insurance Commissioner of the

Commonwealth.

"Department."  The Insurance Department of the Commonwealth.

"Educated health care consumer."  An individual who is

knowledgeable about the health care system and has background or

experience in making informed decisions regarding health,

medical and scientific matters.

"Exchange."  The Pennsylvania Health Insurance Exchange

established under section 4.

"Federal act."  The Patient Protection and Affordable Care

Act (Public Law 111-148, 124 Stat. 119) and regulations or

guidance issued thereunder.

"Health benefit plan."

(1)  A policy, contract, certificate or agreement offered

or issued by a carrier to provide, deliver, arrange for, pay

for or reimburse the costs of health care services.

(2)  The term does not include:

(i)  coverage only for accident or disability income

insurance or a combination thereof;

(ii)  coverage issued as a supplement to liability

insurance;

(iii)  liability insurance, including general

liability insurance and automobile liability insurance;

(iv)  workers' compensation or similar insurance;

(v)  automobile medical payment insurance;

(vi)  credit-only insurance;

(vii)  coverage for on-site medical clinics; or

(viii)  other similar insurance coverage specified in

Federal regulations issued under the Health Insurance

Portability and Accountability Act of 1996 (Public Law

104-191, 110 Stat. 1936) under which benefits for medical

care are secondary or incidental to other insurance

benefits.

(3)  The term does not include the following benefits if

provided under a separate policy, certificate or contract of

insurance or otherwise not an integral part of the plan:

(i)  limited scope dental or vision benefits;

(ii)  benefits for long-term care, nursing home care,

home health care, community-based care, or any

combination thereof; or

(iii)  other similar, limited benefits specified in

Federal regulations issued under the Health Insurance

Portability and Accountability Act of 1996.

(4)  The term does not include the following benefits if

the benefits are provided under a separate policy,

certificate or contract of insurance, there is no

coordination between the provision of the benefits and an

exclusion of benefits under a group health plan maintained by

the same plan sponsor, and the benefits are paid for an event

without regard to whether benefits are provided for the event

under a group health plan maintained by the same plan

sponsor:

(i)  coverage only for a specified disease or

illness; or

(ii)  hospital indemnity or other fixed indemnity

insurance.

(5)  The term does not include the following if offered

as a separate policy, certificate or contract of insurance:

(i)  Medicare supplemental health insurance as

defined under section 1882(g)(1) of the Social Security

Act (49 Stat. 620, 42 U.S.C. § 301 et seq.);

(ii)  coverage supplemental to the coverage provided

under 10 U.S.C. Ch. 55 (relating to medical and dental

care); or

(iii)  similar supplemental coverage provided to

coverage under a group health plan.

"Health carrier" or "carrier."  An entity subject to 40

Pa.C.S. Ch. 61 (relating to hospital plan corporations) or 63

(relating to professional health services plan corporations) or

other insurance laws and regulations of this Commonwealth, or

subject to the jurisdiction of the commissioner, that contracts

or offers to contract to provide, deliver, arrange for, pay for

or reimburse the costs of health care services, including a

sickness and accident insurance company, a health maintenance

organization, a nonprofit hospital and health service

corporation, hospital plan corporation, professional health

services plan corporation or any other entity providing a plan

of health insurance, health benefits or health services.

"Qualified dental plan."  A limited scope dental plan that:

(1)  Is licensed to offer dental coverage in this

Commonwealth.

(2)  Is limited to dental health benefits.

(3)  Does not substantially duplicate the benefits

typically offered by health benefit plans without dental

coverage.

(4)  Includes, at a minimum, the essential pediatric

dental benefits prescribed by the secretary under section

1302(b)(1)(J) of the Federal act and other minimum dental

benefits as the exchange or the secretary may specify by

regulation.

"Qualified employer."  A small employer that elects to make

its full-time employees eligible for one or more qualified

health plans and qualified dental plans offered through the SHOP

exchange and, at the option of the employer, some or all of its

part-time employees provided the employer:

(1)  has its principal place of business in this

Commonwealth and elects to provide coverage through the

exchange to its eligible employees, wherever employed; or

(2)  elects to provide coverage through the SHOP exchange

to its eligible employees who are principally employed in

this Commonwealth.

"Qualified health plan."  A health benefit plan that has been

certified as meeting the criteria for certification described in

section 1311(c) of the Federal act and section 7.

"Qualified individual."  An individual, including a minor,

who:

(1)  Seeks to enroll in a qualified health plan or

qualified dental plan offered to individuals through the

exchange.

(2)  Resides in this Commonwealth.

(3)  At the time of enrollment, is not incarcerated,

other than incarceration pending the disposition of charges.

(4)  Is reasonably expected to be, for the entire period

for which enrollment is sought, a citizen or national of the

United States or an alien lawfully present in the United

States. 

"Secretary."  The Secretary of the United States Department

of Health and Human Services.

"SHOP exchange."  The Small Business Health Options Program

that the exchange is required to establish under section 6(a)

(12).

"Small employer."  An employer that employed an average of

not more than 50 employees during the preceding calendar year,

subject to the following:

(1)  All persons treated as a single employer under

subsection (b), (c), (m) or (o) of section 414 of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §

1 et seq.) shall be treated as a single employer.

(2)  An employer and a predecessor employer shall be

treated as a single employer.

(3)  All employees shall be counted, including part-time

employees and employees who are not eligible for coverage

through the employer.

(4)  If an employer was not in existence throughout the

preceding calendar year, the determination of whether that

employer is a small employer shall be based on the average

number of employees that is reasonably expected that employer

will employ on business days in the current calendar year.

(5)  An employer that makes enrollment in qualified

health plans available to its employees through the SHOP

exchange and would cease to be a small employer by reason of

an increase in the number of its employees, shall continue to

be treated as a small employer for purposes of this act as

long as it continuously makes enrollment through the SHOP

program available to its employees.

Section 4.  Pennsylvania Health Insurance Exchange.

(a)  Establishment.--The Pennsylvania Health Insurance

Exchange is established.

(b)  Membership.--The exchange shall consist of the following

members:

(1)  Three members of the general public appointed by the

Governor.

(2)  Two members of the Senate appointed by the Majority

Leader of the Senate.

(3)  Two members of the Senate appointed by the Minority

Leader of the Senate.

(4)  Two members of the House of Representatives

appointed by the Majority Leader of the House of

Representatives.

(5)  Two members of the House of Representatives

appointed by the Minority Leader of the House of

Representatives.

(6)  The Secretary of the Budget.

(7)  The Secretary of Health.

(8)  The Secretary of Public Welfare.

(9)  The Insurance Commissioner.

(c)  Chairperson.--The Governor shall appoint a chairperson

of the exchange from one of the three gubernatorial appointees.

A member appointed under subsection (b)(2), (3), (4) or (5) may

appoint a designee to attend meetings on the member's behalf.

(d)  Qualifications.--The members of the exchange must be 21

years of age or older, citizens of the United States and

residents of this Commonwealth.

(e)  Initial appointments.--Initial appointments to the

exchange shall be made within 30 days of the effective date of

this section, subject to the following:

(1)  Gubernatorial appointees initially appointed under

subsection (b)(1) shall serve initial terms of two, three and

four years, respectively, as designated by the Governor at

the time of appointment and until their successors are

appointed and qualified.

(2)  Legislative appointees initially appointed under

subsection (b)(2), (3), (4) or (5) shall serve until the

third Tuesday in January 2012 and until their successors are

appointed and qualified.

(f)  Terms of office.--Upon the expiration of a term of a

member appointed under subsection (b), the following shall

apply:

(1)  The term of office of a gubernatorial appointee

shall be three years and until a successor is appointed and

qualified.

(2)  The term of office of a legislative appointee shall

be two years and until a successor is appointed and

qualified.

(3)  A legislative appointee shall serve no more than

three full consecutive terms.

(4)  A gubernatorial appointee shall serve no more than

two full consecutive terms.

(g)  Vacancies.--Appointments to fill vacancies shall be made

within 60 days of the creation of the vacancy. Members who are

appointed to fill vacancies may continue to serve on the

exchange as follows:

(1)  A member appointed to fill a vacancy under

subsection (f)(1) may serve two full terms following the

expiration of the term related to the vacancy.

(2)  A member appointed to fill a vacancy under

subsection (f)(2) may serve three full terms following the

expiration of the term related to the vacancy.

(h)  Reimbursement for expenses.--Members of the exchange may

be reimbursed for reasonable expenses for their attendance at

exchange meetings as well as any committee meetings.

(i)  Meetings.--The exchange shall hold meetings as often as

necessary but no less than on a quarterly basis. The first

meeting of the exchange shall be held within 60 days of the

effective date of this section.

(j)  Quorum.--For the purpose of conducting exchange

business, a quorum shall be at least one more than half the

number of exchange members.

(k)  Qualified majority vote.--A majority of members of the

exchange present at a meeting constitute a qualified majority

vote.

Section 5.  General requirements.

(a)  Deadline.--The exchange shall make qualified health

plans and qualified dental plans available to qualified

individuals and qualified employers beginning on or before

January 1, 2014.

(b)  Prohibition.--The exchange shall not make available any

health benefit plan that is not a qualified health plan.

(c)  Additional prohibition.--Neither the exchange nor a

carrier offering health benefit plans through the exchange may

charge an individual a fee or penalty for termination of

coverage if the individual enrolls in another type of minimum

essential coverage because the individual has become newly

eligible for that coverage or because the individual's employer-

sponsored coverage has become affordable under the standards of

section 36B(c)(2)(C) of the Internal Revenue Code of 1986.

Section 6.  Powers and duties of exchange.

(a)  Duties.--The exchange shall:

(1)  Facilitate the purchase and sale of qualified health

plans and qualified dental plans.

(2)  Provide for the establishment of a SHOP exchange,

separate from the activities of the exchange related to the

individual market and that is designed to assist qualified

small employers in this Commonwealth in facilitating the

enrollment of their employees in qualified health plans and

qualified dental plans.

(3)  Meet the requirements of this act and any

regulations implemented under this act.

(4)  Implement procedures for the certification,

recertification and decertification, consistent with

guidelines developed by the secretary under section 1311(c)

of the Federal act and section 7, of health benefit plans as

qualified health plans and qualified dental plans.

(5)  Provide for the operation of a toll-free telephone

hotline to respond to requests for assistance.

(6)  Provide for enrollment periods, as determined by the

secretary under section 1311(c)(6) of the Federal act.

(7)  Maintain an Internet website through which enrollees

and prospective enrollees of qualified health plans may

obtain standardized comparative information on the qualified

health plans and qualified dental plans.

(8)  Assign a rating to each qualified health plan and

qualified dental plan offered through the exchange in

accordance with the criteria developed by the secretary under

section 1311(c)(3) of the Federal act and determine each

qualified health plan's level of coverage in accordance with

regulations issued by the secretary under section 1302(d)(2)

(A) of the Federal act.

(9)  Use a standardized format for presenting health

benefit options in the exchange, including the use of the

uniform outline of coverage established under section 2715 of

the Public Health Service Act (58 Stat. 682, 42 U.S.C. § 201

et seq.).

(10)  In accordance with section 1413 of the Federal act,

inform individuals of eligibility requirements for the

Medicaid program under Title XIX of the Social Security Act

(49 Stat. 620, 42 U.S.C. § 301 et seq.), the Children's

Health Insurance Program under Title XXI of the Social

Security Act or an applicable State or local public program

and, if, through screening of the application, the exchange

determines an individual is eligible for a program, enroll

the individual in the program.

(11)  Establish and make available by electronic means a

calculator to determine the actual cost of coverage after

application of any premium tax credit under section 36B of

the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 1 et seq.) and any cost-sharing reduction under

section 1402 of the Federal act.

(12)  Establish a SHOP exchange through which qualified

employers may access coverage for their employees, which

shall enable a qualified employer to specify a level of

coverage so its employees may enroll in a qualified health

plan and qualified dental plan offered through the SHOP

exchange at the specified level of coverage.

(13)  Subject to section 1411 of the Federal act, grant a

certification attesting that, for purposes of the individual

responsibility penalty under section 5000A of the Internal

Revenue Code of 1986, an individual is exempt from the

individual responsibility requirement or from the penalty

imposed by that section because:

(i)  there is no affordable qualified health plan

available through the exchange or the individual's

employer covering the individual; or

(ii)  the individual meets the requirements for

another exemption from the individual responsibility

requirement or penalty.

(14)  Transfer the following to the United States

Secretary of the Treasury:

(i)  A list of the individuals who are issued a

certification under paragraph (13), including the name

and taxpayer identification number of each individual.

(ii)  The name and taxpayer identification number of

each individual who was an employee of an employer but

who was determined to be eligible for the premium tax

credit under section 36B of the Internal Revenue Code of

1986 because:

(A)  the employer did not provide minimum

essential health benefits coverage; or

(B)  the employer provided the minimum essential

health benefits coverage, but it was determined under

section 36B(c)(2)(C) of the Internal Revenue Code of

1986 to either be unaffordable to the employee or not

provide the required minimum actuarial value.

(iii)  The name and taxpayer identification number

of:

(A)  Each individual who notifies the exchange

under section 1411(b)(4) of the Federal act that the

individual has changed employers.

(B)  Each individual who ceases coverage under a

qualified health plan during a plan year and the

effective date of that cessation.

(15)  Provide to each employer the name of each employee

of the employer described in paragraph (14)(ii) who ceases

coverage under a qualified health plan during a plan year and

the effective date of the cessation.

(16)  Perform duties required of the exchange by the

secretary or the United States Secretary of the Treasury

related to determining eligibility for premium tax credits,

reduced cost-sharing or individual responsibility requirement

exemptions.

(17)  Select entities qualified to serve as navigators in

accordance with section 1311(i) of the Federal act and award

grants to enable navigators to:

(i)  Conduct public education activities to raise

awareness of the availability of qualified health plans.

(ii)  Distribute fair and impartial information

concerning enrollment in qualified health plans, and the

availability of premium tax credits under section 36B of

the Internal Revenue Code of 1986 and cost-sharing

reductions under section 1402 of the Federal act.

(iii)  Facilitate enrollment in qualified health

plans.

(iv)  Provide referrals to an applicable office of

health insurance consumer assistance or health insurance

ombudsman established under section 2793 of the Public

Health Service Act, or other appropriate State agency,

for an enrollee with a grievance, complaint or question

regarding the enrollee's health benefit plan, coverage or

a determination under the plan or coverage.

(v)  Provide information in a manner that is

culturally and linguistically appropriate to the needs of

the population being served by the exchange.

(18)  Review the rate of premium growth within and

outside the exchange and consider the information in

developing recommendations on whether to continue limiting

qualified employer status to small employers.

(19)  Credit the amount of a free choice voucher to the

monthly premium of the plan in which a qualified employee is

enrolled, in accordance with section 10108 of the Federal

act, and collect the amount credited from the offering

employer.

(20)  Consult with stakeholders relevant to carrying out

the activities required under this act, including:

(i)  Educated health care consumers who are enrollees

in qualified health plans.

(ii)  Individuals and entities with experience in

facilitating enrollment in qualified health plans.

(iii)  Representatives of small businesses and self-

employed individuals.

(iv)  The medical assistance program within the

Department of Public Welfare.

(v)  Advocates for enrolling hard to reach

populations.

(21)  Meet the following financial integrity

requirements:

(i)  Keep an accurate accounting of activities,

receipts and expenditures and annually submit to the

secretary, the Governor, the commissioner and the General

Assembly a report concerning the accountings.

(ii)  Fully cooperate with an investigation conducted

by the secretary under the secretary's authority under

the Federal act and allow the secretary, in coordination

with the Inspector General of the United States

Department of Health and Human Services, to:

(A)  Investigate the affairs of the exchange.

(B)  Examine the properties and records of the

exchange.

(C)  Require periodic reports in relation to the

activities undertaken by the exchange.

(iii)  In carrying out its activities under this act,

not use funds intended for the administrative and

operational expenses of the exchange for staff retreats,

promotional giveaways, excessive executive compensation

or promotion of Federal or State legislative and

regulatory modifications.

(b)  Contracting.--

(1)  The exchange may contract with an eligible entity

for any of its functions described in this act. An eligible

entity includes, but is not limited to, the Department of

Public Welfare or an entity that has experience in individual

and small group health insurance.

(2)  For purposes of this subsection, a health carrier or

an affiliate of a health carrier is not an eligible entity.

(c)  Information-sharing agreements.--The exchange may enter

into information-sharing agreements with Federal and State

agencies and other State exchanges to carry out its

responsibilities under this act provided the agreements include

adequate protections with respect to the confidentiality of the

information to be shared and comply with Federal and State laws

and regulations.

Section 7.  Health benefit plan certification.

(a)  Permissible certification.--The department may certify a

health benefit plan as a qualified health plan if:

(1)  The plan provides the essential health benefits

package described in section 1302(a) of the Federal act,

except that the plan is not required to provide essential

benefits that duplicate the minimum benefits of qualified

dental plans as provided in subsection (d), if:

(i)  The exchange has determined that at least one

qualified dental plan is available to supplement the

plan's coverage.

(ii)  The carrier makes prominent disclosure at the

time it offers the plan, in a form approved by the

exchange, that the plan does not provide the full range

of essential pediatric benefits and that qualified dental

plans providing those benefits and other dental benefits

not covered by the plan are offered through the exchange.

(2)  The premium rates and contract language have been

approved by the commissioner.

(3)  The plan provides at least a bronze level of

coverage, unless the plan is certified as a qualified

catastrophic plan, meets the requirements of the Federal act

for catastrophic plans and will only be offered to

individuals eligible for catastrophic coverage.

(4)  The plan's cost-sharing requirements do not exceed

the limits established under section 1302(c)(1) of the

Federal act and if the plan is offered through the SHOP

exchange, the plan's deductible does not exceed the limits

established under section 1302(c)(2) of the Federal act.

(5)  The health carrier offering the plan:

(i)  Is licensed and in good standing to offer health

insurance coverage in this Commonwealth.

(ii)  Offers at least one qualified health plan in

the silver level and at least one plan in the gold level

through each component of the exchange in which the

carrier participates, where "component" refers to the

SHOP exchange and the exchange for individual coverage.

(iii)  Charges the same premium rate for each

qualified health plan without regard to whether the plan

is offered through the exchange and without regard to

whether the plan is offered directly from the carrier or

through an insurance producer.

(iv)  Does not charge cancellation fees or penalties

in violation of section 5(d).

(v)  Complies with the regulations developed by the

secretary under section 1311(d) of the Federal act and

other requirements as the exchange may establish.

(6)  The plan meets the requirements of certification as

promulgated by regulation by the secretary under section

1311(c)(1) of the Federal act and by the exchange under

section 9.

(7)  The exchange determines that making the plan

available through the exchange is in the interest of

qualified individuals and qualified employers in this

Commonwealth.

(b)  Prohibitions.--The department shall not exclude a health

benefit plan:

(1)  on the basis that the plan is a fee-for-service

plan;

(2)  through the imposition of premium price controls by

the department; or

(3)  on the basis that the health benefit plan provides

treatments necessary to prevent patients' deaths in

circumstances the exchange determines are inappropriate or

too costly.

(c)  Requirements.--The exchange shall require each health

carrier seeking certification of a plan as a qualified health

plan to:

(1)  Subject to the act of December 18, 1996 (P.L.1066,

No.159), known as the Accident and Health Filing Reform Act,

submit a justification for a premium increase before

implementation of the increase. The carrier shall prominently

post the information on its publicly available Internet

website. The exchange shall take the information, along with

the information and the recommendations provided to the

exchange by the commissioner under section 2794(b) of the

Public Health Service Act (58 Stat. 682, 42 U.S.C. § 201 et

seq.), into consideration when determining whether to allow

the carrier to make plans available through the exchange.

(2)  (i)  Make available to the public, in the format

described in subparagraph (ii), and submit to the

exchange, the secretary and the commissioner, accurate

and timely disclosure of the following:

(A)  Claims payment policies and practices.

(B)  Periodic financial disclosures.

(C)  Data on enrollment.

(D)  Data on disenrollment.

(E)  Data on the number of claims that are

denied.

(F)  Data on rating practices.

(G)  Information on cost-sharing and payments

with respect to any out-of-network coverage.

(H)  Information on enrollee and participant

rights under Title I of the Federal act.

(I)  Other information as determined appropriate

by the secretary.

(ii)  The information required in subparagraph (i)

shall be provided in plain language, as that term is

defined in section 1311(e)(3)(B) of the Federal act.

(3)  Permit individuals to learn, in a timely manner upon

the request of the individual, the amount of cost-sharing,

including deductibles, copayments and coinsurance, under the

individual's plan or coverage that the individual would be

responsible for paying with respect to the furnishing of a

specific item or service by a participating provider. At a

minimum, the information shall be made available to the

individual through an Internet website and through other

means for individuals without access to the Internet.

(d)  Applicability to qualified dental plans.--

(1)  The provisions of this act that are applicable to

qualified health plans shall also apply to the extent

relevant to qualified dental plans except as modified in

accordance with the provisions of paragraph (2) or by

regulations adopted by the exchange.

(2)  Where either of the following occurs:

(i)  a health carrier and a dental carrier jointly

offer a comprehensive plan of dental and other benefits

through the exchange in which the dental benefits are

provided by the dental carrier and the other benefits are

provided by the health carrier; or

(ii)  a health carrier includes dental benefits as

part of a qualified health plan through the exchange,

the dental benefits shall be priced separately and made

available for purchase separately at the same price.

Section 8.  Funding and publication of costs.

(a)  Funding.--The exchange may charge assessments or user

fees to health carriers or otherwise may generate funding

necessary to support its operations provided under this act.

(b)  Publication of costs.--The exchange shall publish the

average costs of licensing, regulatory fees and other payments

required by the exchange and the administrative costs of the

exchange on a publicly available Internet website to educate

consumers on the costs. The information shall include

information on money lost to waste, fraud and abuse.

Section 9.  Regulations.

The exchange and the department may individually or jointly

promulgate regulations to implement the provisions of this act.

Regulations promulgated under this section shall not conflict

with or prevent the application of regulations promulgated by

the secretary under Subtitle D of Title I of the Federal act.

Section 10.  Relation to other laws.

Nothing in this act and no action taken by the exchange under

this act shall be construed to preempt or supersede the

authority of the department and the commissioner to regulate the

business if insured within this Commonwealth. Except as

expressly provided to the contrary in this act, health carriers

offering qualified health plans in this Commonwealth shall

comply with the applicable insurance laws and regulations of

this Commonwealth and orders issued by the department or

commissioner.

Section 11.  Effective date.

This act shall take effect in 180 days.