72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
SA to A-Eng. HB 2987
LC 2963/HB 2987-A6
SENATE AMENDMENTS TO
A-ENGROSSED HOUSE BILL 2987
By COMMITTEE ON HEALTH POLICY
June 26
On page 1 of the printed A-engrossed bill, delete lines 4
through 25 and delete pages 2 through 13 and insert:
' { + SECTION 1. + } { + Sections 2 and 3 of this 2003 Act
are added to and made a part of ORS chapter 743. + }
' { + SECTION 2. + } { + (1) Notwithstanding ORS 743.766
(2), if an individual is accepted for coverage under an
individual health benefit plan, the carrier may impose a waiver
of coverage for one or more preexisting conditions identified by
the carrier at the time the individual is enrolled for the first
time in the individual health benefit plan if the following
requirements are met:
' (a) Each preexisting condition must be identified on an
addendum to the individual health benefit plan and must include
the appropriate disease code from the International
Classification of Diseases, Ninth Revision, Clinical
Modification, including the disease category and a written
description of the condition;
' (b) Each addendum to the individual health benefit plan must
be limited to the specific disease code identified in paragraph
(a) of this subsection and may not be extended to include any
other disease code or secondary condition that might be directly
or indirectly related to the preexisting condition; and
' (c) Each addendum to the individual health benefit plan must
be agreed to in writing by both parties before or on the
effective date of coverage.
' (2) The carrier may not impose a waiver of coverage under
subsection (1) of this section that is less than six months or
greater than 24 months following the individual's effective date
of coverage.
' (3) If an individual is accepted for coverage under an
individual health benefit plan and the carrier imposes a waiver
of coverage under subsection (1) of this section, the individual
is eligible to apply for coverage under the Oregon Medical
Insurance Pool. + }
' { + SECTION 3. + } { + Each carrier offering individual
health benefit plans or small employer health benefit plans shall
submit to the Director of the Department of Consumer and Business
Services any information requested by the director for the
purpose of assessing the impact on the health insurance
marketplace of section 2 of this 2003 Act and the amendments to
ORS 743.737 and 746.600 by sections 4 and 5 of this 2003 Act. + }
' { + SECTION 4. + } ORS 743.737 is amended to read:
' 743.737. Health benefit plans covering small employers shall
be subject to the following provisions:
' (1) A preexisting conditions provision in a small employer
health benefit plan shall apply only to a condition for which
medical advice, diagnosis, care or treatment was recommended or
received during the six-month period immediately preceding the
enrollment date of an enrollee or late enrollee. As used in this
section, the enrollment date of an enrollee shall be the earlier
of the effective date of coverage or the first day of any
required group eligibility waiting period and the enrollment date
of a late enrollee shall be the effective date of coverage.
' (2) A preexisting conditions provision in a small employer
health benefit plan shall terminate its effect as follows:
' (a) For an enrollee, not later than the first of the
following dates:
' (A) Six months following the enrollee's effective date of
coverage; or
' (B) Ten months following the start of any required group
eligibility waiting period.
' (b) For a late enrollee, not later than 12 months following
the late enrollee's effective date of coverage.
' (3) In applying a preexisting conditions provision to an
enrollee or late enrollee, except as provided in this subsection,
all small employer health benefit plans shall reduce the duration
of the provision by an amount equal to the enrollee's or late
enrollee's aggregate periods of creditable coverage if the most
recent period of creditable coverage is ongoing or ended within
63 days of the enrollment date in the new small employer health
benefit plan. The crediting of prior coverage in accordance with
this subsection shall be applied without regard to the specific
benefits covered during the prior period. This subsection does
not preclude, within a small employer health benefit plan,
application of:
' (a) An affiliation period that does not exceed two months for
an enrollee or three months for a late enrollee; or
' (b) An exclusion period for specified covered services, as
established by the Health Insurance Reform Advisory Committee,
applicable to all individuals enrolling for the first time in the
small employer health benefit plan.
' (4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision
for up to 12 months. If both an exclusion from coverage period
and a preexisting conditions provision are applicable to a late
enrollee, the combined period shall not exceed 12 months.
' (5) Each small employer health benefit plan shall be
renewable with respect to all eligible enrollees at the option of
the policyholder, small employer or contract holder except:
' (a) For nonpayment of the required premiums by the
policyholder, small employer or contract holder.
' (b) For fraud or misrepresentation of the policyholder, small
employer or contract holder or, with respect to coverage of
individual enrollees, the enrollees or their representatives.
' (c) When the number of enrollees covered under the plan is
less than the number or percentage of enrollees required by
participation requirements under the plan.
' (d) For noncompliance with the small employer carrier's
employer contribution requirements under the health benefit plan.
' (e) When the carrier discontinues offering or renewing, or
offering and renewing, all of its small employer health benefit
plans in this state or in a specified service area within this
state. In order to discontinue plans under this paragraph, the
carrier:
' (A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all
policyholders covered by the plans;
' (B) May not cancel coverage under the plans for 180 days
after the date of the notice required under subparagraph (A) of
this paragraph if coverage is discontinued in the entire state
or, except as provided in subparagraph (C) of this paragraph, in
a specified service area;
' (C) May not cancel coverage under the plans for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in a specified service area
because of an inability to reach an agreement with the health
care providers or organization of health care providers to
provide services under the plans within the service area; and
' (D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the
small employer market in this state or in the specified service
area.
' (f) When the carrier discontinues offering and renewing a
small employer health benefit plan in a specified service area
within this state because of an inability to reach an agreement
with the health care providers or organization of health care
providers to provide services under the plan within the service
area. In order to discontinue a plan under this paragraph, the
carrier:
' (A) Must give notice to the director and to all policyholders
covered by the plan;
' (B) May not cancel coverage under the plan for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph; and
' (C) Must offer in writing to each small employer covered by
the plan, all other small employer health benefit plans that the
carrier offers in the specified service area. The carrier shall
issue any such plans pursuant to the provisions of ORS 743.733 to
743.737. The carrier shall offer the plans at least 90 days prior
to discontinuation.
' (g) When the carrier discontinues offering or renewing, or
offering and renewing, a health benefit plan for all small
employers in this state or in a specified service area within
this state, other than a plan discontinued under paragraph (f) of
this subsection. With respect to plans that are being
discontinued, the carrier must:
' (A) Offer in writing to each small employer covered by the
plan, all health benefit plans that the carrier offers in the
specified service area.
' (B) Issue any such plans pursuant to the provisions of ORS
743.733 to 743.737.
' (C) Offer the plans at least 90 days prior to
discontinuation.
' (D) Act uniformly without regard to the claims experience of
the affected policyholders or the health status of any current or
prospective enrollee.
' (h) When the director orders the carrier to discontinue
coverage in accordance with procedures specified or approved by
the director upon finding that the continuation of the coverage
would:
' (A) Not be in the best interests of the enrollees; or
' (B) Impair the carrier's ability to meet contractual
obligations.
' (i) When, in the case of a small employer health benefit plan
that delivers covered services through a specified network of
health care providers, there is no longer any enrollee who lives,
resides or works in the service area of the provider network.
' (j) When, in the case of a health benefit plan that is
offered in the small employer market only through one or more
bona fide associations, the membership of an employer in the
association ceases and the termination of coverage is not related
to the health status of any enrollee.
' (k) For misuse of a provider network provision. As used in
this paragraph, 'misuse of a provider network provision' means a
disruptive, unruly or abusive action taken by an enrollee that
threatens the physical health or well-being of health care staff
and seriously impairs the ability of the carrier or its
participating providers to provide services to an enrollee. An
enrollee under this paragraph retains the rights of an enrollee
under ORS 743.804.
' (L) A small employer carrier may modify a small employer
health benefit plan at the time of coverage renewal. The
modification is not a discontinuation of the plan under
paragraphs (e) and (g) of this subsection.
' (6) Notwithstanding any provision of subsection (5) of this
section to the contrary, any small employer carrier health
benefit plan subject to the provisions of ORS 743.733 to 743.737
may be rescinded by a small employer carrier for fraud, material
misrepresentation or concealment by a small employer and the
coverage of an enrollee may be rescinded for fraud, material
misrepresentation or concealment by the enrollee.
' (7) A small employer carrier may continue to enforce
reasonable employer participation and contribution requirements
on small employers applying for coverage. However, participation
and contribution requirements shall be applied uniformly among
all small employer groups with the same number of eligible
employees applying for coverage or receiving coverage from the
small employer carrier. In determining minimum participation
requirements, a carrier shall count only those employees who are
not covered by an existing group health benefit plan, Medicaid,
Medicare, CHAMPUS, Indian Health Service or a publicly sponsored
or subsidized health plan, including but not limited to the
Oregon Health Plan.
' (8) Premium rates for small employer health benefit plans
subject to ORS 743.733 to 743.737 shall be subject to the
following provisions:
' (a) Each small employer carrier issuing health benefit plans
to small employers must file its geographic average rate for a
rating period with the director on or before March 15 of each
year.
' (b)(A) The premium rates charged during a rating period for
health benefit plans issued to small employers { - shall - }
{ + may + } not vary from the geographic average rate by more
than the following:
' { - (i) 50 percent on October 1, 1996; and - }
' { - (ii) - } { + (i) + } 33 percent on { + or after + }
October 1, 1999 { + ; and
' (ii) 43 percent on or after July 1, 2004 + }.
' (B) The variations in premium rates described in subparagraph
(A) of this paragraph shall be based solely on differences in the
ages of participating employees, except that the premium rate may
be adjusted to reflect the provision of benefits not required to
be covered by the basic health benefit plan and differences in
family composition. In addition:
' (i) A small employer carrier shall apply uniformly the
carrier's schedule of age adjustments for small employer groups
as approved by the director; and
' (ii) Except as otherwise provided in this section, the
premium rate established for a health benefit plan by a small
employer carrier shall apply uniformly to all employees of the
small employer enrolled in that plan.
' (c) The variation in premium rates between different small
employer health benefit plans offered by a small employer carrier
must be based solely on objective differences in plan design or
coverage and must not include differences based on the risk
characteristics of groups assumed to select a particular health
benefit plan.
' (d) A small employer carrier may not increase the rates of a
health benefit plan issued to a small employer more than once in
a 12-month period. Annual rate increases shall be effective on
the plan anniversary date of the health benefit plan issued to a
small employer. The percentage increase in the premium rate
charged to a small employer for a new rating period may not
exceed the sum of the following:
' (A) The percentage change in the geographic average rate
measured from the first day of the prior rating period to the
first day of the new period; and
' (B) Any adjustment attributable to changes in age, except an
additional adjustment may be made to reflect the provision of
benefits not required to be covered by the basic health benefit
plan and differences in family composition.
' (e) Premium rates for health benefit plans shall comply with
the requirements of this section.
' { + (f) A small employer carrier may apply a participation
credit of five percent to the rates determined under paragraph
(b) of this subsection for a small employer if all eligible
employees enroll in the health benefit plan. If a carrier applies
a participation credit under this paragraph, the carrier must
apply the credit to each small employer that qualifies. + }
' (9) In connection with the offering for sale of any health
benefit plan to a small employer, each small employer carrier
shall make a reasonable disclosure as part of its solicitation
and sales materials of:
' (a) The full array of health benefit plans that are offered
to small employers by the carrier;
' (b) The authority of the carrier to adjust rates, and the
extent to which the carrier will consider age, family composition
and geographic factors in establishing and adjusting rates;
' (c) Provisions relating to renewability of policies and
contracts; and
' (d) Provisions affecting any preexisting conditions
provision.
' (10)(a) Each small employer carrier shall maintain at its
principal place of business a complete and detailed description
of its rating practices and renewal underwriting practices,
including information and documentation that demonstrate that its
rating methods and practices are based upon commonly accepted
actuarial practices and are in accordance with sound actuarial
principles.
' (b) Each small employer carrier shall file with the director
annually on or before March 15 an actuarial certification that
the carrier is in compliance with ORS 743.733 to 743.737 and that
the rating methods of the small employer carrier are actuarially
sound. Each such certification shall be in a uniform form and
manner and shall contain such information as specified by the
director. A copy of such certification shall be retained by the
small employer carrier at its principal place of business.
' (c) A small employer carrier shall make the information and
documentation described in paragraph (a) of this subsection
available to the director upon request. Except in cases of
violations of ORS 743.733 to 743.737, the information shall be
considered proprietary and trade secret information and shall not
be subject to disclosure by the director to persons outside the
Department of Consumer and Business Services except as agreed to
by the small employer carrier or as ordered by a court of
competent jurisdiction.
' (11) A small employer carrier shall not provide any financial
or other incentive to any agent that would encourage such agent
to market and sell health benefit plans of the carrier to small
employer groups based on a small employer group's anticipated
claims experience.
' (12) For purposes of this section, the date a small employer
health benefit plan is continued shall be the anniversary date of
the first issuance of the health benefit plan.
' (13) A small employer carrier must include a provision that
offers coverage to all eligible employees and to all dependents
to the extent the employer chooses to offer coverage to
dependents.
' (14) All small employer health benefit plans shall contain
special enrollment periods during which eligible employees and
dependents may enroll for coverage, as provided in 42 U.S.C.
300gg as amended and in effect on July 1, 1997.
' (15) All small employer health benefit plans must include the
benefit provisions of the federal Women's Health and Cancer
Rights Act of 1998, P.L. 105-277.
' { + SECTION 5. + } ORS 746.600 is amended to read:
' 746.600. As used in ORS 746.600 to 746.690 and 750.055:
' (1) 'Adverse underwriting decision' means, except as provided
in subsection (2) of this section, any of the following actions
with respect to insurance transactions involving insurance
coverage which is individually underwritten:
' (a) A declination of insurance coverage.
' (b) A termination of insurance coverage.
' (c) Failure of an agent to apply for insurance coverage with
a specific insurer which the agent represents and which is
requested by an applicant.
' (d) In the case of life or health insurance coverage, an
offer to insure at higher than standard rates.
' { + (e) In the case of individual health insurance
coverage, an offer to insure the applicant under a health benefit
plan that imposes a waiver of coverage for one or more
preexisting conditions for a period of time that is greater than
six months and less than 24 months following the applicant's
effective date of coverage. + }
' { - (e) - } { + (f) + } In the case of other kinds of
insurance coverage:
' (A) Placement by an insurer or agent of a risk with a
residual market mechanism, an unauthorized insurer or an insurer
which specializes in substandard risks.
' (B) The charging of a higher rate on the basis of information
which differs from that which the applicant or policyholder
furnished.
' (2) 'Adverse underwriting decision' does not include the
following actions, but the insurer or agent responsible for the
occurrence of the action shall nevertheless provide the applicant
or policyholder with the specific reason or reasons for the
occurrence:
' (a) The termination of an individual policy form on a class
or statewide basis.
' (b) A declination of insurance coverage solely because the
coverage is not available on a class or statewide basis.
' (c) The rescission of a policy.
' (3) 'Affiliate of' a specified person or 'person affiliated
with' a specified person means a person who directly, or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person
specified.
' (4) 'Agent' means a person licensed by the Director of the
Department of Consumer and Business Services as a resident or
nonresident insurance agent.
' (5) 'Applicant' means a person who seeks to contract for
insurance coverage, other than a person seeking group insurance
coverage which is not individually underwritten.
' (6) 'Consumer report' means any written, oral or other
communication of information bearing on a natural person's
creditworthiness, credit standing, credit capacity, character,
general reputation, personal characteristics or mode of living
which is used or expected to be used in connection with an
insurance transaction.
' (7) 'Consumer reporting agency' means a person who:
' (a) Regularly engages, in whole or in part, in assembling or
preparing consumer reports for a monetary fee;
' (b) Obtains information primarily from sources other than
insurers; and
' (c) Furnishes consumer reports to other persons.
' (8) 'Control' means, and the terms 'controlled by' or ' under
common control with' refer to, the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract other than a
commercial contract for goods or nonmanagement services, or
otherwise, unless the power of the person is the result of a
corporate office held in, or an official position held with, the
controlled person.
' (9) 'Declination of insurance coverage' means a denial, in
whole or in part, by an insurer or agent of requested insurance
coverage.
' (10) 'Individual':
' (a) Means, for purposes of ORS 746.600 to 746.690 and
750.055, except as provided in paragraph (b) of this subsection,
a natural person who:
' (A) In the case of life or health insurance, is a past,
present or proposed principal insured or certificate holder;
' (B) In the case of other kinds of insurance, is a past,
present or proposed named insured or certificate holder;
' (C) Is a past, present or proposed policyowner;
' (D) Is a past or present applicant;
' (E) Is a past or present claimant; or
' (F) Derived, derives or is proposed to derive insurance
coverage under an insurance policy or certificate which is
subject to ORS 746.600 to 746.690 and 750.055.
' (b) Comprises, for purposes of ORS 746.620, 746.630 and
746.665, and for purposes of terms defined in this section as
those terms are used in ORS 746.620, 746.630 and 746.665, the
following categories of natural persons:
' (A) 'Consumer,' which means an individual, or the
individual's representative, who seeks to obtain, obtains or has
obtained an insurance product or service from a licensee that is
to be used primarily for personal, family or household purposes,
and about whom the licensee has personal information.
' (B) 'Customer,' which means a consumer who has a continuing
relationship with a licensee under which the licensee provides
one or more insurance products or services to the consumer that
are to be used primarily for personal, family or household
purposes.
' (11) 'Institutional source' means a person or governmental
entity which provides information about an individual to an
insurer, agent or insurance-support organization, other than:
' (a) An agent;
' (b) The individual who is the subject of the information; or
' (c) A natural person acting in a personal capacity rather
than in a business or professional capacity.
' (12) 'Insurance-support organization' means, except as
provided in subsection (13) of this section, a person who
regularly engages, in whole or in part, in assembling or
collecting information about natural persons for the primary
purpose of providing the information to an insurer or agent for
insurance transactions, including:
' (a) The furnishing of consumer reports to an insurer or agent
for use in connection with insurance transactions; and
' (b) The collection of personal information from insurers,
agents or other insurance-support organizations for the purpose
of detecting or preventing fraud, material misrepresentation or
material nondisclosure in connection with insurance underwriting
or insurance claim activity.
' (13) 'Insurance-support organization' does not include
insurers, agents, governmental institutions, medical care
institutions or medical professionals.
' (14) 'Insurance transaction' means any transaction involving
insurance primarily for personal, family or household needs
rather than business or professional needs and which entails:
' (a) The determination of an individual's eligibility for an
insurance coverage, benefit or payment; or
' (b) The servicing of an insurance application, policy or
certificate.
' (15) 'Insurer,' as defined in ORS 731.106, includes every
person engaged in the business of entering into policies of
insurance.
' (16) 'Investigative consumer report' means a consumer report,
or portion of a consumer report, for which information about a
natural person's character, general reputation, personal
characteristics or mode of living is obtained through personal
interviews with the person's neighbors, friends, associates,
acquaintances or others who may have knowledge concerning such
items of information.
' (17) 'Licensee' means an insurer, agent or other person
authorized or required to be authorized, or licensed or required
to be licensed, pursuant to the Insurance Code.
' (18) 'Medical care institution' means a facility or
institution which is licensed to provide health care services to
natural persons, and includes but is not limited to health
maintenance organizations, home health agencies, hospitals,
medical clinics, public health agencies, rehabilitation agencies
and skilled nursing facilities.
' (19) 'Medical professional' means a person licensed or
certified to provide health care services to natural persons, and
includes but is not limited to chiropractors, clinical
dieticians, clinical psychologists, dentists, naturopaths,
nurses, occupational therapists, optometrists, pharmacists,
physical therapists, physicians, podiatrists, psychiatric social
workers and speech therapists.
' (20) 'Medical record information' means personal information
except age or gender, whether oral or recorded in any form or
medium, created by or derived from a health care provider or the
consumer that relates to:
' (a) The past, present or future physical, mental or
behavioral health or condition of an individual;
' (b) The provision of health care to an individual; or
' (c) Payment for the provision of health care to an
individual.
' (21) 'Nonaffiliated third party' means any person except:
' (a) An affiliate of a licensee;
' (b) A person that is employed jointly by a licensee and by a
person that is not an affiliate of the licensee; and
' (c) As designated by the director by rule.
' (22) 'Personal information' means information which is
identifiable with an individual, which is gathered in connection
with an insurance transaction and from which information
judgments can be made about the individual's character, habits,
avocations, finances, occupations, general reputation, credit,
health or any other personal characteristics. 'Personal
information' includes an individual's name and address, an
individual's policy number or similar form of access code for the
individual's policy and ' medical record information' but does
not include 'privileged information' except for privileged
information which has been disclosed in violation of ORS 746.665.
'Personal information' does not include information that a
licensee has a reasonable basis to believe is lawfully made
available to the general public from federal, state or local
government records, widely distributed media or disclosures to
the public that are required by federal, state or local law.
' (23) 'Policyholder' means a person who:
' (a) In the case of individual policies of life or health
insurance, is a current policyowner;
' (b) In the case of individual policies of other kinds of
insurance, is currently a named insured; or
' (c) In the case of group policies of insurance under which
coverage is individually underwritten, is a current certificate
holder.
' (24) 'Pretext interview' means an interview wherein the
interviewer, in an attempt to obtain information about a natural
person, does one or more of the following:
' (a) Pretends to be someone the interviewer is not.
' (b) Pretends to represent a person the interviewer is not in
fact representing.
' (c) Misrepresents the true purpose of the interview.
' (d) Refuses upon request to identify the interviewer.
' (25) 'Privileged information' means information which is
identifiable with an individual and which:
' (a) Relates to a claim for insurance benefits or a civil or
criminal proceeding involving the individual; and
' (b) Is collected in connection with or in reasonable
anticipation of a claim for insurance benefits or a civil or
criminal proceeding involving the individual.
' (26) 'Residual market mechanism' means an association,
organization or other entity involved in the insuring of risks
under ORS 735.005 to 735.145, 737.312 or other provisions of the
Insurance Code relating to insurance applicants who are unable to
procure insurance through normal insurance markets.
' (27) 'Termination of insurance coverage' or 'termination of
an insurance policy' means either a cancellation or a nonrenewal
of an insurance policy, in whole or in part, for any reason other
than the failure of a premium to be paid as required by the
policy.
' { + SECTION 6. + } ORS 743.737, as amended by section 4 of
this 2003 Act, is amended to read:
' 743.737. Health benefit plans covering small employers shall
be subject to the following provisions:
' (1) A preexisting conditions provision in a small employer
health benefit plan shall apply only to a condition for which
medical advice, diagnosis, care or treatment was recommended or
received during the six-month period immediately preceding the
enrollment date of an enrollee or late enrollee. As used in this
section, the enrollment date of an enrollee shall be the earlier
of the effective date of coverage or the first day of any
required group eligibility waiting period and the enrollment date
of a late enrollee shall be the effective date of coverage.
' (2) A preexisting conditions provision in a small employer
health benefit plan shall terminate its effect as follows:
' (a) For an enrollee, not later than the first of the
following dates:
' (A) Six months following the enrollee's effective date of
coverage; or
' (B) Ten months following the start of any required group
eligibility waiting period.
' (b) For a late enrollee, not later than 12 months following
the late enrollee's effective date of coverage.
' (3) In applying a preexisting conditions provision to an
enrollee or late enrollee, except as provided in this subsection,
all small employer health benefit plans shall reduce the duration
of the provision by an amount equal to the enrollee's or late
enrollee's aggregate periods of creditable coverage if the most
recent period of creditable coverage is ongoing or ended within
63 days of the enrollment date in the new small employer health
benefit plan. The crediting of prior coverage in accordance with
this subsection shall be applied without regard to the specific
benefits covered during the prior period. This subsection does
not preclude, within a small employer health benefit plan,
application of:
' (a) An affiliation period that does not exceed two months for
an enrollee or three months for a late enrollee; or
' (b) An exclusion period for specified covered services, as
established by the Health Insurance Reform Advisory Committee,
applicable to all individuals enrolling for the first time in the
small employer health benefit plan.
' (4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision
for up to 12 months. If both an exclusion from coverage period
and a preexisting conditions provision are applicable to a late
enrollee, the combined period shall not exceed 12 months.
' (5) Each small employer health benefit plan shall be
renewable with respect to all eligible enrollees at the option of
the policyholder, small employer or contract holder except:
' (a) For nonpayment of the required premiums by the
policyholder, small employer or contract holder.
' (b) For fraud or misrepresentation of the policyholder, small
employer or contract holder or, with respect to coverage of
individual enrollees, the enrollees or their representatives.
' (c) When the number of enrollees covered under the plan is
less than the number or percentage of enrollees required by
participation requirements under the plan.
' (d) For noncompliance with the small employer carrier's
employer contribution requirements under the health benefit plan.
' (e) When the carrier discontinues offering or renewing, or
offering and renewing, all of its small employer health benefit
plans in this state or in a specified service area within this
state. In order to discontinue plans under this paragraph, the
carrier:
' (A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all
policyholders covered by the plans;
' (B) May not cancel coverage under the plans for 180 days
after the date of the notice required under subparagraph (A) of
this paragraph if coverage is discontinued in the entire state
or, except as provided in subparagraph (C) of this paragraph, in
a specified service area;
' (C) May not cancel coverage under the plans for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph if coverage is discontinued in a specified service area
because of an inability to reach an agreement with the health
care providers or organization of health care providers to
provide services under the plans within the service area; and
' (D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the
small employer market in this state or in the specified service
area.
' (f) When the carrier discontinues offering and renewing a
small employer health benefit plan in a specified service area
within this state because of an inability to reach an agreement
with the health care providers or organization of health care
providers to provide services under the plan within the service
area. In order to discontinue a plan under this paragraph, the
carrier:
' (A) Must give notice to the director and to all policyholders
covered by the plan;
' (B) May not cancel coverage under the plan for 90 days after
the date of the notice required under subparagraph (A) of this
paragraph; and
' (C) Must offer in writing to each small employer covered by
the plan, all other small employer health benefit plans that the
carrier offers in the specified service area. The carrier shall
issue any such plans pursuant to the provisions of ORS 743.733 to
743.737. The carrier shall offer the plans at least 90 days prior
to discontinuation.
' (g) When the carrier discontinues offering or renewing, or
offering and renewing, a health benefit plan for all small
employers in this state or in a specified service area within
this state, other than a plan discontinued under paragraph (f) of
this subsection. With respect to plans that are being
discontinued, the carrier must:
' (A) Offer in writing to each small employer covered by the
plan, all health benefit plans that the carrier offers in the
specified service area.
' (B) Issue any such plans pursuant to the provisions of ORS
743.733 to 743.737.
' (C) Offer the plans at least 90 days prior to
discontinuation.
' (D) Act uniformly without regard to the claims experience of
the affected policyholders or the health status of any current or
prospective enrollee.
' (h) When the director orders the carrier to discontinue
coverage in accordance with procedures specified or approved by
the director upon finding that the continuation of the coverage
would:
' (A) Not be in the best interests of the enrollees; or
' (B) Impair the carrier's ability to meet contractual
obligations.
' (i) When, in the case of a small employer health benefit plan
that delivers covered services through a specified network of
health care providers, there is no longer any enrollee who lives,
resides or works in the service area of the provider network.
' (j) When, in the case of a health benefit plan that is
offered in the small employer market only through one or more
bona fide associations, the membership of an employer in the
association ceases and the termination of coverage is not related
to the health status of any enrollee.
' (k) For misuse of a provider network provision. As used in
this paragraph, 'misuse of a provider network provision' means a
disruptive, unruly or abusive action taken by an enrollee that
threatens the physical health or well-being of health care staff
and seriously impairs the ability of the carrier or its
participating providers to provide services to an enrollee. An
enrollee under this paragraph retains the rights of an enrollee
under ORS 743.804.
' (L) A small employer carrier may modify a small employer
health benefit plan at the time of coverage renewal. The
modification is not a discontinuation of the plan under
paragraphs (e) and (g) of this subsection.
' (6) Notwithstanding any provision of subsection (5) of this
section to the contrary, any small employer carrier health
benefit plan subject to the provisions of ORS 743.733 to 743.737
may be rescinded by a small employer carrier for fraud, material
misrepresentation or concealment by a small employer and the
coverage of an enrollee may be rescinded for fraud, material
misrepresentation or concealment by the enrollee.
' (7) A small employer carrier may continue to enforce
reasonable employer participation and contribution requirements
on small employers applying for coverage. However, participation
and contribution requirements shall be applied uniformly among
all small employer groups with the same number of eligible
employees applying for coverage or receiving coverage from the
small employer carrier. In determining minimum participation
requirements, a carrier shall count only those employees who are
not covered by an existing group health benefit plan, Medicaid,
Medicare, CHAMPUS, Indian Health Service or a publicly sponsored
or subsidized health plan, including but not limited to the
Oregon Health Plan.
' (8) Premium rates for small employer health benefit plans
subject to ORS 743.733 to 743.737 shall be subject to the
following provisions:
' (a) Each small employer carrier issuing health benefit plans
to small employers must file its geographic average rate for a
rating period with the director on or before March 15 of each
year.
' (b)(A) The premium rates charged during a rating period for
health benefit plans issued to small employers may not vary from
the geographic average rate by more than the following:
' { + (i) 50 percent on October 1, 1996; and + }
' { - (i) - } { + (ii) + } 33 percent on { - or after - }
October 1, 1999 { + . + } { - ; and - }
' { - (ii) 43 percent on or after July 1, 2004. - }
' (B) The variations in premium rates described in subparagraph
(A) of this paragraph shall be based solely on differences in the
ages of participating employees, except that the premium rate may
be adjusted to reflect the provision of benefits not required to
be covered by the basic health benefit plan and differences in
family composition. In addition:
' (i) A small employer carrier shall apply uniformly the
carrier's schedule of age adjustments for small employer groups
as approved by the director; and
' (ii) Except as otherwise provided in this section, the
premium rate established for a health benefit plan by a small
employer carrier shall apply uniformly to all employees of the
small employer enrolled in that plan.
' (c) The variation in premium rates between different small
employer health benefit plans offered by a small employer carrier
must be based solely on objective differences in plan design or
coverage and must not include differences based on the risk
characteristics of groups assumed to select a particular health
benefit plan.
' (d) A small employer carrier may not increase the rates of a
health benefit plan issued to a small employer more than once in
a 12-month period. Annual rate increases shall be effective on
the plan anniversary date of the health benefit plan issued to a
small employer. The percentage increase in the premium rate
charged to a small employer for a new rating period may not
exceed the sum of the following:
' (A) The percentage change in the geographic average rate
measured from the first day of the prior rating period to the
first day of the new period; and
' (B) Any adjustment attributable to changes in age, except an
additional adjustment may be made to reflect the provision of
benefits not required to be covered by the basic health benefit
plan and differences in family composition.
' (e) Premium rates for health benefit plans shall comply with
the requirements of this section.
' { - (f) A small employer carrier may apply a participation
credit of five percent to the rates determined under paragraph
(b) of this subsection for a small employer if all eligible
employees enroll in the health benefit plan. If a carrier applies
a participation credit under this paragraph, the carrier must
apply the credit to each small employer that qualifies. - }
' (9) In connection with the offering for sale of any health
benefit plan to a small employer, each small employer carrier
shall make a reasonable disclosure as part of its solicitation
and sales materials of:
' (a) The full array of health benefit plans that are offered
to small employers by the carrier;
' (b) The authority of the carrier to adjust rates, and the
extent to which the carrier will consider age, family composition
and geographic factors in establishing and adjusting rates;
' (c) Provisions relating to renewability of policies and
contracts; and
' (d) Provisions affecting any preexisting conditions
provision.
' (10)(a) Each small employer carrier shall maintain at its
principal place of business a complete and detailed description
of its rating practices and renewal underwriting practices,
including information and documentation that demonstrate that its
rating methods and practices are based upon commonly accepted
actuarial practices and are in accordance with sound actuarial
principles.
' (b) Each small employer carrier shall file with the director
annually on or before March 15 an actuarial certification that
the carrier is in compliance with ORS 743.733 to 743.737 and that
the rating methods of the small employer carrier are actuarially
sound. Each such certification shall be in a uniform form and
manner and shall contain such information as specified by the
director. A copy of such certification shall be retained by the
small employer carrier at its principal place of business.
' (c) A small employer carrier shall make the information and
documentation described in paragraph (a) of this subsection
available to the director upon request. Except in cases of
violations of ORS 743.733 to 743.737, the information shall be
considered proprietary and trade secret information and shall not
be subject to disclosure by the director to persons outside the
Department of Consumer and Business Services except as agreed to
by the small employer carrier or as ordered by a court of
competent jurisdiction.
' (11) A small employer carrier shall not provide any financial
or other incentive to any agent that would encourage such agent
to market and sell health benefit plans of the carrier to small
employer groups based on a small employer group's anticipated
claims experience.
' (12) For purposes of this section, the date a small employer
health benefit plan is continued shall be the anniversary date of
the first issuance of the health benefit plan.
' (13) A small employer carrier must include a provision that
offers coverage to all eligible employees and to all dependents
to the extent the employer chooses to offer coverage to
dependents.
' (14) All small employer health benefit plans shall contain
special enrollment periods during which eligible employees and
dependents may enroll for coverage, as provided in 42 U.S.C.
300gg as amended and in effect on July 1, 1997.
' (15) All small employer health benefit plans must include the
benefit provisions of the federal Women's Health and Cancer
Rights Act of 1998, P.L. 105-277.
' { + SECTION 7. + } ORS 746.600, as amended by section 5 of
this 2003 Act, is amended to read:
' 746.600. As used in ORS 746.600 to 746.690 and 750.055:
' (1) 'Adverse underwriting decision' means, except as provided
in subsection (2) of this section, any of the following actions
with respect to insurance transactions involving insurance
coverage which is individually underwritten:
' (a) A declination of insurance coverage.
' (b) A termination of insurance coverage.
' (c) Failure of an agent to apply for insurance coverage with
a specific insurer which the agent represents and which is
requested by an applicant.
' (d) In the case of life or health insurance coverage, an
offer to insure at higher than standard rates.
' { - (e) In the case of individual health insurance coverage,
an offer to insure the applicant under a health benefit plan that
imposes a waiver of coverage for one or more preexisting
conditions for a period of time that is greater than six months
and less than 24 months following the applicant's effective date
of coverage. - }
' { - (f) - } { + (e) + } In the case of other kinds of
insurance coverage:
' (A) Placement by an insurer or agent of a risk with a
residual market mechanism, an unauthorized insurer or an insurer
which specializes in substandard risks.
' (B) The charging of a higher rate on the basis of information
which differs from that which the applicant or policyholder
furnished.
' (2) 'Adverse underwriting decision' does not include the
following actions, but the insurer or agent responsible for the
occurrence of the action shall nevertheless provide the applicant
or policyholder with the specific reason or reasons for the
occurrence:
' (a) The termination of an individual policy form on a class
or statewide basis.
' (b) A declination of insurance coverage solely because the
coverage is not available on a class or statewide basis.
' (c) The rescission of a policy.
' (3) 'Affiliate of' a specified person or 'person affiliated
with' a specified person means a person who directly, or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person
specified.
' (4) 'Agent' means a person licensed by the Director of the
Department of Consumer and Business Services as a resident or
nonresident insurance agent.
' (5) 'Applicant' means a person who seeks to contract for
insurance coverage, other than a person seeking group insurance
coverage which is not individually underwritten.
' (6) 'Consumer report' means any written, oral or other
communication of information bearing on a natural person's
creditworthiness, credit standing, credit capacity, character,
general reputation, personal characteristics or mode of living
which is used or expected to be used in connection with an
insurance transaction.
' (7) 'Consumer reporting agency' means a person who:
' (a) Regularly engages, in whole or in part, in assembling or
preparing consumer reports for a monetary fee;
' (b) Obtains information primarily from sources other than
insurers; and
' (c) Furnishes consumer reports to other persons.
' (8) 'Control' means, and the terms 'controlled by' or ' under
common control with' refer to, the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract other than a
commercial contract for goods or nonmanagement services, or
otherwise, unless the power of the person is the result of a
corporate office held in, or an official position held with, the
controlled person.
' (9) 'Declination of insurance coverage' means a denial, in
whole or in part, by an insurer or agent of requested insurance
coverage.
' (10) 'Individual':
' (a) Means, for purposes of ORS 746.600 to 746.690 and
750.055, except as provided in paragraph (b) of this subsection,
a natural person who:
' (A) In the case of life or health insurance, is a past,
present or proposed principal insured or certificate holder;
' (B) In the case of other kinds of insurance, is a past,
present or proposed named insured or certificate holder;
' (C) Is a past, present or proposed policyowner;
' (D) Is a past or present applicant;
' (E) Is a past or present claimant; or
' (F) Derived, derives or is proposed to derive insurance
coverage under an insurance policy or certificate which is
subject to ORS 746.600 to 746.690 and 750.055.
' (b) Comprises, for purposes of ORS 746.620, 746.630 and
746.665, and for purposes of terms defined in this section as
those terms are used in ORS 746.620, 746.630 and 746.665, the
following categories of natural persons:
' (A) 'Consumer,' which means an individual, or the
individual's representative, who seeks to obtain, obtains or has
obtained an insurance product or service from a licensee that is
to be used primarily for personal, family or household purposes,
and about whom the licensee has personal information.
' (B) 'Customer,' which means a consumer who has a continuing
relationship with a licensee under which the licensee provides
one or more insurance products or services to the consumer that
are to be used primarily for personal, family or household
purposes.
' (11) 'Institutional source' means a person or governmental
entity which provides information about an individual to an
insurer, agent or insurance-support organization, other than:
' (a) An agent;
' (b) The individual who is the subject of the information; or
' (c) A natural person acting in a personal capacity rather
than in a business or professional capacity.
' (12) 'Insurance-support organization' means, except as
provided in subsection (13) of this section, a person who
regularly engages, in whole or in part, in assembling or
collecting information about natural persons for the primary
purpose of providing the information to an insurer or agent for
insurance transactions, including:
' (a) The furnishing of consumer reports to an insurer or agent
for use in connection with insurance transactions; and
' (b) The collection of personal information from insurers,
agents or other insurance-support organizations for the purpose
of detecting or preventing fraud, material misrepresentation or
material nondisclosure in connection with insurance underwriting
or insurance claim activity.
' (13) 'Insurance-support organization' does not include
insurers, agents, governmental institutions, medical care
institutions or medical professionals.
' (14) 'Insurance transaction' means any transaction involving
insurance primarily for personal, family or household needs
rather than business or professional needs and which entails:
' (a) The determination of an individual's eligibility for an
insurance coverage, benefit or payment; or
' (b) The servicing of an insurance application, policy or
certificate.
' (15) 'Insurer,' as defined in ORS 731.106, includes every
person engaged in the business of entering into policies of
insurance.
' (16) 'Investigative consumer report' means a consumer report,
or portion of a consumer report, for which information about a
natural person's character, general reputation, personal
characteristics or mode of living is obtained through personal
interviews with the person's neighbors, friends, associates,
acquaintances or others who may have knowledge concerning such
items of information.
' (17) 'Licensee' means an insurer, agent or other person
authorized or required to be authorized, or licensed or required
to be licensed, pursuant to the Insurance Code.
' (18) 'Medical care institution' means a facility or
institution which is licensed to provide health care services to
natural persons, and includes but is not limited to health
maintenance organizations, home health agencies, hospitals,
medical clinics, public health agencies, rehabilitation agencies
and skilled nursing facilities.
' (19) 'Medical professional' means a person licensed or
certified to provide health care services to natural persons, and
includes but is not limited to chiropractors, clinical
dieticians, clinical psychologists, dentists, naturopaths,
nurses, occupational therapists, optometrists, pharmacists,
physical therapists, physicians, podiatrists, psychiatric social
workers and speech therapists.
' (20) 'Medical record information' means personal information
except age or gender, whether oral or recorded in any form or
medium, created by or derived from a health care provider or the
consumer that relates to:
' (a) The past, present or future physical, mental or
behavioral health or condition of an individual;
' (b) The provision of health care to an individual; or
' (c) Payment for the provision of health care to an
individual.
' (21) 'Nonaffiliated third party' means any person except:
' (a) An affiliate of a licensee;
' (b) A person that is employed jointly by a licensee and by a
person that is not an affiliate of the licensee; and
' (c) As designated by the director by rule.
' (22) 'Personal information' means information which is
identifiable with an individual, which is gathered in connection
with an insurance transaction and from which information
judgments can be made about the individual's character, habits,
avocations, finances, occupations, general reputation, credit,
health or any other personal characteristics. 'Personal
information' includes an individual's name and address, an
individual's policy number or similar form of access code for the
individual's policy and ' medical record information' but does
not include 'privileged information' except for privileged
information which has been disclosed in violation of ORS 746.665.
'Personal information' does not include information that a
licensee has a reasonable basis to believe is lawfully made
available to the general public from federal, state or local
government records, widely distributed media or disclosures to
the public that are required by federal, state or local law.
' (23) 'Policyholder' means a person who:
' (a) In the case of individual policies of life or health
insurance, is a current policyowner;
' (b) In the case of individual policies of other kinds of
insurance, is currently a named insured; or
' (c) In the case of group policies of insurance under which
coverage is individually underwritten, is a current certificate
holder.
' (24) 'Pretext interview' means an interview wherein the
interviewer, in an attempt to obtain information about a natural
person, does one or more of the following:
' (a) Pretends to be someone the interviewer is not.
' (b) Pretends to represent a person the interviewer is not in
fact representing.
' (c) Misrepresents the true purpose of the interview.
' (d) Refuses upon request to identify the interviewer.
' (25) 'Privileged information' means information which is
identifiable with an individual and which:
' (a) Relates to a claim for insurance benefits or a civil or
criminal proceeding involving the individual; and
' (b) Is collected in connection with or in reasonable
anticipation of a claim for insurance benefits or a civil or
criminal proceeding involving the individual.
' (26) 'Residual market mechanism' means an association,
organization or other entity involved in the insuring of risks
under ORS 735.005 to 735.145, 737.312 or other provisions of the
Insurance Code relating to insurance applicants who are unable to
procure insurance through normal insurance markets.
' (27) 'Termination of insurance coverage' or 'termination of
an insurance policy' means either a cancellation or a nonrenewal
of an insurance policy, in whole or in part, for any reason other
than the failure of a premium to be paid as required by the
policy.
' { + SECTION 8. + } { + The amendments to ORS 743.737 and
746.600 by sections 6 and 7 of this 2003 Act become operative on
January 2, 2008. + }
' { + SECTION 9. + } { + Sections 2 and 3 of this 2003 Act
are repealed on January 2, 2008. + } ' .
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