75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
 
SMRA to A-Eng. HB 2194
 
LC 789/HB 2194-AMR5
 
                     SENATE MINORITY REPORT
                          AMENDMENTS TO
                   A-ENGROSSED HOUSE BILL 2194
 
                             June 5
 
President Courtney:
  A minority of your Committee on Health Care and Veterans'
Affairs, to whom was referred A-engrossed House Bill 2194, having
had the same under consideration, respectfully reports it back
with the recommendation that it do pass with the following
amendments:
 
  On page 1 of the printed A-engrossed bill, line 2, after the
semicolon insert 'creating new provisions; and' and delete ' and'
and insert a comma.
  In line 3, before the period insert ', 735.650, 735.756,
744.704 and 744.714'.
  After line 4, insert:
  '  { +  SECTION 1. + }  { + Section 2 of this 2009 Act is added
to and made a part of the Insurance Code. + }
  '  { +  SECTION 2. + }  { +  ' Covered life' means a
subscriber, policyholder, certificate holder, spouse, dependent
child or any other individual insured under an insurance policy
or whose benefits are administered by a third party
administrator. + } ' .
  In line 5, delete '1' and insert '3'.
  On page 2, line 19, after the period insert ' ' Reinsurer '
includes an insurer providing insurance against the risk of
economic loss.'.
  After line 24, insert:
  ' (11) 'Third party administrator' means any person required to
obtain a license pursuant to ORS 744.702.'.
  In line 25, delete '2' and insert '4'.
  On page 3, line 3, after 'assessments' delete the rest of the
line and insert 'from insurers and reinsurers;'.
  In line 14, delete 'from among insurers'.
  Delete lines 26 through 45 and delete page 4.
  On page 5, delete lines 1 through 3 and insert:
  '  { +  SECTION 5. + } ORS 735.610, as amended by section 4 of
this 2009 Act, is amended to read:
  ' 735.610. (1) There is created in the Department of Consumer
and Business Services the Oregon Medical Insurance Pool Board.
The board shall establish the Oregon Medical Insurance Pool and
otherwise carry out the responsibilities of the board under ORS
735.600 to 735.650.
  ' (2) The board shall consist of nine individuals, eight of
whom shall be appointed by the Director of the Department of
Consumer and Business Services. The director or the director's
designee shall be the ninth member of the board. The chair of the
board shall be elected from among the members of the board. The
board shall at all times, to the extent possible, include at
least one representative of a domestic insurance company licensed
to transact health insurance, one representative of a domestic
not-for-profit health care service contractor, one representative
of a health maintenance organization, one representative of
reinsurers and two members of the general public who are not
associated with the medical profession, a hospital or an insurer.
A majority of the voting members of the board constitutes a
quorum for the transaction of business. An act by a majority of a
quorum is an official act of the board.
  ' (3) The director may fill any vacancy on the board by
appointment.
  ' (4) The board shall have the general powers and authority
granted under the laws of this state to insurance companies with
a certificate of authority to transact health insurance and the
specific authority to:
  ' (a) Enter into such contracts as are necessary or proper to
carry out the provisions and purposes of ORS 735.600 to 735.650
including the authority to enter into contracts with similar
pools of other states for the joint performance of common
administrative functions, or with persons or other organizations
for the performance of administrative functions;
  ' (b) Recover any assessments from insurers { + , + }
 { - and - }  reinsurers  { +  and third party
administrators + };
  ' (c) Take such legal action as is necessary to avoid the
payment of improper claims against the pool or the coverage
provided by or through the pool;
  ' (d) Establish appropriate rates, rate schedules, rate
adjustments, expense allowances, insurance producers' referral
fees, claim reserves or formulas and perform any other actuarial
function appropriate to the operation of the pool. Rates may not
be unreasonable in relation to the coverage provided, the risk
experience and expenses of providing the coverage. Rates and rate
schedules may be adjusted for appropriate risk factors such as
age and area variation in claim costs and shall take into
consideration appropriate risk factors in accordance with
established actuarial and underwriting practices;
  ' (e) Issue policies of insurance in accordance with the
requirements of ORS 735.600 to 735.650;
  ' (f) Appoint appropriate actuarial and other committees as
necessary to provide technical assistance in the operation of the
pool, policy and other contract design, and any other function
within the authority of the board;
  ' (g) Seek advances to effect the purposes of the pool; and
  ' (h) Establish rules, conditions and procedures for reinsuring
risks under ORS 735.600 to 735.650.
  ' (5) Each member of the board is entitled to compensation and
expenses as provided in ORS 292.495.
  ' (6) The director shall adopt rules, as provided under ORS
chapter 183, implementing policies recommended by the board for
the purpose of carrying out ORS 735.600 to 735.650.
  ' (7) In consultation with the board, the director shall employ
such staff and consultants as may be necessary for the purpose of
carrying out responsibilities under ORS 735.600 to 735.650.
  '  { +  SECTION 6. + } ORS 735.614 is amended to read:
  ' 735.614. (1) If the Oregon Medical Insurance Pool Board
determines at any time that funds in the Oregon Medical Insurance
Pool Account are or will become insufficient for  { + timely + }
payment of expenses of the pool   { - in a timely manner - } ,
the board shall determine the amount of funds needed and shall
impose   { - and collect assessments against insurers, as
provided in this section, in the amount of the funds determined
to be needed. - }   { + upon and collect from insurers and
reinsurers assessments calculated in accordance with subsection
(2) of this section. + }
  ' (2)   { - Each insurer's assessment shall be determined by
multiplying the total amount to be assessed by a fraction, the
numerator of which equals the number of Oregon insureds and
certificate holders insured or reinsured by each insurer, and the
denominator of which equals the total of all Oregon insureds and
certificate holders insured or reinsured by all insurers, all
determined as of March 31 each year. - }   { + The board shall
calculate the assessment of each insurer and reinsurer based on
the total amount needed to ensure timely payment of pool
expenses. The board will assess each insurer and reinsurer based
on its fractional share of all covered lives in Oregon as of
March 31 each year. + }
  ' (3)   { - The board shall ensure that each insured and
certificate holder is counted only once with respect to any
assessment. For that purpose, the board shall require each
insurer that obtains reinsurance for its insureds and certificate
holders to include in its count of insureds and certificate
holders all insureds and certificate holders whose coverage is
reinsured in whole or part. The board shall allow an insurer who
is a reinsurer to exclude from its number of insureds those that
have been counted by the primary insurer or the primary reinsurer
for the purpose of determining its assessment under this
subsection. - }   { + With respect to an assessment, the board
shall count each covered life only once. For that purpose, the
board shall obtain counts from:
  ' (a) An insurer of each covered life under all fully or less
than fully insured employee health benefit plans of the insurer;
  ' (b) A third party administrator of each covered life under a
self-insurance plan using the third party administrator; and
  ' (c) A reinsurer of each covered life reinsured under
self-insurance plans that do not use a third party administrator.
  ' (4) If an individual is covered under a self-insurance plan
that does not use a third party administrator or the board cannot
identify a third party administrator for the plan, and the
individual is reinsured by a reinsurer, the board shall assess
the reinsurer for that individual. + }
  '  { - (4) - }   { + (5) + } Each insurer  { + or reinsurer + }
shall pay its assessment   { - as required by the board. - }
 { + under this section.  Insureds under the following types of
coverage, as defined by rule by the board, are excluded in the
calculation of the assessment:
  ' (a) Medicaid;
  ' (b) State Children's Health Insurance Program;
  ' (c) Medicare;
  ' (d) Disability income insurance;
  ' (e) Hospital only insurance;
  ' (f) Dental insurance;
  ' (g) Vision only insurance;
  ' (h) Accident only insurance;
  ' (i) Automobile insurance;
  ' (j) Specific disease insurance;
  ' (k) Medical supplemental plans;
  ' (L) TRICARE;
  ' (m) CHAMPUS;
  ' (n) Prescription drug only plans;
  ' (o) Long term care insurance; and
  ' (p) Federal Employees Health Benefits Program. + }
  '  { - (5) - }  { +  (6) + } If assessments exceed the amounts
actually needed, the excess shall be held and invested and, with
the earnings and interest, used by the board to offset future net
losses or to reduce pool premiums. For purposes of this
subsection, 'future net losses' includes reserves for claims
incurred but not reported.
  '  { - (6) - }  { +  (7) + }   { - Each insurer's proportion of
participation in the pool shall be determined by the board - }
 { +  The board shall determine the fractional share for each
insurer and reinsurer of all covered lives in Oregon + } based on
annual statements and other reports deemed necessary by the board
and filed by the insurer  { + or reinsurer + } with the
board { +  or with the Department of Consumer and Business
Services + }. The board may use any reasonable method of
estimating the number of   { - insureds and certificate holders
of an insurer - }  { +  covered lives + } if the specific number
is unknown.   { - With respect to insurers that are reinsurers,
the board may use any reasonable method of estimating the number
of persons insured by each reinsurer. - }
  '  { - (7) - }  { +  (8) + } The board may abate or defer, in
whole or in part, the assessment   { - of an insurer if, in the
opinion of the board, - }   { + calculated under subsection (2)
of this section if the board determines that + } payment of the
assessment would endanger the ability of the insurer  { + or
reinsurer + } to fulfill   { - the insurer's - }  { +  its + }
contractual obligations. In the event an assessment   { - against
an insurer - }  is abated or deferred in whole or in part { +
under this subsection + }, the amount by which the assessment is
abated or deferred may be assessed against the other
 { - insurers in a manner consistent with the basis for
assessments set forth in this section. - }  { +  insurers and
reinsurers subject to the assessment in a manner consistent with
subsection (2) of this section. + } The insurer  { +  or
reinsurer + } receiving the abatement or deferment shall remain
liable to the board for the deficiency for four years.
  '  { - (8) - }  { +  (9) + } The board shall abate or defer
assessments authorized by this section if a court orders that
assessments cannot be made applicable to reinsurers. However, if
a court orders that assessments cannot be made applicable to
reinsurers, the board may continue to assess insurers to the end
of the biennium in which the determination is made.
  '  { - (9) - }  { +  (10) + } Subject to the approval of the
Director of the Department of Consumer and Business Services, the
board may develop a program for adjusting the assessment of an
insurer   { - in the individual health benefits market based on
that insurer's contribution to reducing the - }   { + or
reinsurer based on the contribution of that insurer or reinsurer
to reducing the demand for + } enrollment in the Oregon Medical
Insurance Pool. When developing the program, the board may
consider, but is not limited to, the following factors:
  ' (a) The   { - insurer's - }  level of participation { +  of
the insurer or reinsurer + };
  ' (b) Level of health benefit plan coverage offered; and
  ' (c) Assumption of risk in the individual health benefits
market.
  '  { +  SECTION 7. + } ORS 735.614, as amended by section 6 of
this 2009 Act, is amended to read:
  ' 735.614. (1) If the Oregon Medical Insurance Pool Board
determines at any time that funds in the Oregon Medical Insurance
Pool Account are or will become insufficient for timely payment
of expenses of the pool, the board shall determine the amount of
funds needed and shall impose upon and collect from
insurers { + , + }
  { - and - }  reinsurers { +  and third party administrators + }
assessments calculated in accordance with subsection (2) of this
section.
  ' (2) The board shall calculate the assessment of each
insurer { + , + }   { - and - }  reinsurer { +  and third party
administrator + } based on the total amount needed to ensure
timely payment of pool expenses.  The board will assess each
insurer { + , + }   { - and - }  reinsurer { +  and third party
administrator + } based on its fractional share of all covered
lives in Oregon as of March 31 each year.
  ' (3) With respect to an assessment, the board shall count each
covered life only once. For that purpose, the board shall obtain
counts from:
  ' (a) An insurer of each covered life under all fully or less
than fully insured employee health benefit plans of the insurer;
  ' (b) A third party administrator of each covered life under a
self-insurance plan using the third party administrator; and
 
  ' (c) A reinsurer of each covered life reinsured under
self-insurance plans that do not use a third party administrator.
  ' (4) If an individual is covered under a self-insurance plan
that does not use a third party administrator or the board cannot
identify a third party administrator for the plan, and the
individual is reinsured by a reinsurer, the board shall assess
the reinsurer for that individual.
  ' (5) Each insurer { + , + }   { - or - }  reinsurer  { + and
third party administrator + } shall pay its assessment under this
section.  Insureds under the following types of coverage, as
defined by rule by the board, are excluded in the calculation of
the assessment:
  ' (a) Medicaid;
  ' (b) State Children's Health Insurance Program;
  ' (c) Medicare;
  ' (d) Disability income insurance;
  ' (e) Hospital only insurance;
  ' (f) Dental insurance;
  ' (g) Vision only insurance;
  ' (h) Accident only insurance;
  ' (i) Automobile insurance;
  ' (j) Specific disease insurance;
  ' (k) Medical supplemental plans;
  ' (L) TRICARE;
  ' (m) CHAMPUS;
  ' (n) Prescription drug only plans;
  ' (o) Long term care insurance; and
  ' (p) Federal Employees Health Benefits Program.
  ' (6) If assessments exceed the amounts actually needed, the
excess shall be held and invested and, with the earnings and
interest, used by the board to offset future net losses or to
reduce pool premiums. For purposes of this subsection, 'future
net losses' includes reserves for claims incurred but not
reported.
  ' (7) The board shall determine the fractional share for each
insurer { + , + }   { - and - }  reinsurer { +  and third party
administrator + } of all covered lives in Oregon based on annual
statements and other reports deemed necessary by the board and
filed by the insurer { + , + }
  { - or - }  reinsurer { +  or third party administrator + }
with the board or with the Department of Consumer and Business
Services. The board may use any reasonable method of estimating
the number of covered lives if the specific number is unknown.
  ' (8) The board may abate or defer, in whole or in part, the
assessment calculated under subsection (2) of this section if the
board determines that payment of the assessment would endanger
the ability of the insurer { + , + }   { - or - }  reinsurer { +
or third party administrator + } to fulfill its contractual
obligations. In the event an assessment is abated or deferred in
whole or in part under this subsection, the amount by which the
assessment is abated or deferred may be assessed against the
other insurers { + , + }   { - and - } reinsurers { +  and third
party administrators + } subject to the assessment in a manner
consistent with subsection (2) of this section. The
insurer { + , + }   { - or - }  reinsurer { +  or third party
administrator + } receiving the abatement or deferment shall
remain liable to the board for the deficiency for four years.
  ' (9)   { - The board shall abate or defer assessments
authorized by this section if a court orders that assessments
cannot be made applicable to reinsurers. However, if a court
orders that assessments cannot be made applicable to reinsurers,
the board may continue to assess insurers to the end of the
biennium in which the determination is made. - }  { +  If a court
finds that an assessment imposed on a third party administrator
is in violation of federal or state law, the board shall abate or
defer the assessment imposed upon the third party administrator
but may continue to impose and collect assessments on insurers,
reinsurers and other third party administrators. + }
  ' (10) Subject to the approval of the Director of the
Department of Consumer and Business Services, the board may
develop a program for adjusting the assessment of an
insurer { + , + }   { - or - } reinsurer { +  or third party
administrator + } based on the contribution of that
insurer { + , + }   { - or - }  reinsurer  { + or third party
administrator + } to reducing the demand for enrollment in the
Oregon Medical Insurance Pool. When developing the program, the
board may consider, but is not limited to, the following factors:
  ' (a) The level of participation of the insurer { + , + }
 { - or - } reinsurer { +  or third party administrator + };
  ' (b) Level of health benefit plan coverage offered; and
  ' (c) Assumption of risk in the individual health benefits
market.'.
  In line 4, delete '4' and insert '8'.
  In line 45, delete '5' and insert '9'.
  On page 7, after line 17, insert:
  '  { +  SECTION 10. + } ORS 735.650 is amended to read:
  ' 735.650. (1) The following provisions of the Insurance Code
shall apply to the pool to the extent applicable and not
inconsistent with the express provisions of ORS 735.600 to
735.650: ORS 731.004 to 731.022, 731.052 to 731.146, 731.162,
731.216 to 731.328, 742.023, 742.028, 742.046, 742.051, 742.056,
743.024, 743.027, 743.028, 743.041, 743.050, 743.100 to 743.106,
743.402, 743.801, 743.803, 743.804, 743.806, 743.807, 743.808,
743.811, 743.814, 743.817, 743.819, 743.821, 743.823, 743.827,
743.829, 743.834, 743.837, 743.839, 743.845, 743A.084, 743A.090,
 { +  744.702, 744.704, 744.724, 744.738, + } 746.005 to 746.370,
746.600, 746.605, 746.607, 746.608, 746.610, 746.615, 746.625,
746.635, 746.650, 746.655, 746.660, 746.668, 746.670, 746.675,
746.680 and 746.690.
  ' (2) For the purposes of this section only, the pool shall be
deemed an insurer, pool coverage shall be deemed individual
health insurance and pool coverage contracts shall be deemed
policies.
  '  { +  SECTION 11. + } ORS 744.704 is amended to read:
  ' 744.704. (1) The following persons are exempt from the
licensing requirement for third party administrators in ORS
744.702 and from all other provisions of ORS 744.700 to 744.740
applicable to third party administrators:
  ' (a) A person licensed under ORS 744.002 as an adjuster, whose
activities are limited to adjustment of claims and whose
activities do not include the activities of a third party
administrator.
  ' (b) A person licensed as an insurance producer as required by
ORS 744.053 and authorized to transact life or health insurance
in this state, whose activities are limited exclusively to the
sale of insurance and whose activities do not include the
activities of a third party administrator.
  ' (c) An employer acting as a third party administrator on
behalf of:
  ' (A) Its employees;
  ' (B) The employees of one or more subsidiary or affiliated
corporations of the employer; or
  ' (C) The employees of one or more persons with a dealership,
franchise, distributorship or other similar arrangement with the
employers.
  ' (d) A union, or an affiliate thereof, acting as a third party
administrator on behalf of its members.
  ' (e) An insurer that is authorized to transact insurance in
this state with respect to a policy issued and delivered in and
pursuant to the laws of this state or another state.
 
 
  ' (f) A creditor acting on behalf of its debtors with respect
to insurance covering a debt between the creditor and its
debtors.
  ' (g) A trust and the trustees, agents and employees of the
trust, when acting pursuant to the trust, if the trust is
established in conformity with 29 U.S.C. 186.
  ' (h) A trust exempt from taxation under section 501(a) of the
Internal Revenue Code, its trustees and employees acting pursuant
to the trust, or a voluntary employees beneficiary association
described in section 501(c) of the Internal Revenue Code, its
agents and employees and a custodian and the custodian's agents
and employees acting pursuant to a custodian account meeting the
requirements of section 401(f) of the Internal Revenue Code.
  ' (i) A financial institution that is subject to supervision or
examination by federal or state financial institution regulatory
authorities, or a mortgage lender, to the extent the financial
institution or mortgage lender collects and remits premiums to
licensed insurance producers or authorized insurers in connection
with loan payments.
  ' (j) A company that issues credit cards and advances for and
collects premiums or charges from its credit card holders who
have authorized collection. The exemption under this paragraph
applies only if the company does not adjust or settle claims.
  ' (k) A person who adjusts or settles claims in the normal
course of practice or employment as an attorney at law. The
exemption under this subsection applies only if the person does
not collect charges or premiums in connection with life insurance
or health insurance coverage.
  '  { - (L) A person who acts solely as an administrator of one
or more bona fide employee benefit plans established by an
employer or an employee organization, or both, for which the
Insurance Code is preempted pursuant to the Employee Retirement
Income Security Act of 1974. A person to whom this paragraph
applies must comply with the requirements of ORS 744.714. - }
  '  { - (m) - }  { +  (L) + } The Oregon Medical Insurance Pool
Board, established under ORS 735.600 to 735.650, and the
administering insurer or insurers for the board, for services
provided pursuant to ORS 735.600 to 735.650.
  '  { - (n) - }  { +  (m) + } An entity or association owned by
or composed of like employers who administer partially or fully
self-insured plans for employees of the employers or association
members.
  '  { - (o) - }  { +  (n) + } A trust established by a
cooperative body formed between cities, counties, districts or
other political subdivisions of this state, or between any
combination of such entities, and the trustees, agents and
employees acting pursuant to the trust.
  '  { - (p) - }  { +  (o) + } Any person designated by the
Director of the Department of Consumer and Business Services by
rule.
  ' (2) A third party administrator is not required to be
licensed as a third party administrator in this state if the
following conditions are met:
  ' (a) The third party administrator has its principal place of
business in another state;
  ' (b) The third party administrator is not soliciting business
as a third party administrator in this state; and
  ' (c) In the case of any group policy or plan of insurance
serviced by the third party administrator, the lesser of five
percent or 100 certificate holders reside in this state.
  '  { +  SECTION 12. + } ORS 735.756 is amended to read:
  ' 735.756. (1) Of payments made to the Family Health Insurance
Assistance Program by the Department of Human Services under ORS
735.754 (4), the department shall determine:
  ' (a) The portion of a subsidy of a subsidized member that is
from the General Fund; and
  ' (b) The portion of other costs that is from the General Fund.
  ' (2) The department shall bill the program for the amounts
determined under subsection (1) of this section. The program
shall forward the bill for the amount determined under subsection
(1)(b) of this section to the Oregon Medical Insurance Pool
Board.
  ' (3) The board shall:
  ' (a) Determine the amount of funds needed for the payment of
other costs under subsection (1)(b) of this section; and
  ' (b) Impose and collect assessments in that amount against
insurers, using the methodology described in ORS 735.614 (2),
 { - (6) and (9) - }  { +  (7) and (10) + }.
  ' (4) The board shall pay the program for the amounts
determined under subsection (1)(b) of this section.
  ' (5) The program shall forward to the department the amounts
determined under subsection (1) of this section.
  ' (6) ORS 735.614 (3),   { - (4), (5), (7) and (8) - }  { +
(5), (6), (8) and (9) + } applies to assessments collected under
this section.
  '  { +  SECTION 13. + } ORS 744.714 is amended to read:
  ' 744.714. A person who is exempt from the requirement of a
license as a third party administrator under   { - ORS 744.704
because the person acts solely as an administrator of one or more
bona fide employee benefit plans established by an employer or an
employee organization, or both, for which the Insurance Code is
preempted pursuant to the Employee Retirement Income Security Act
of 1974, - }   { + ORS 744.702 + } shall register with the
Director of the Department of Consumer and Business Services
annually, verifying the status of the person as qualifying for
the exemption.
  '  { +  SECTION 14. + }  { + (1) Jurisdiction is conferred on
the Supreme Court to determine in the manner provided by this
section whether the provisions of this 2009 Act are preempted by
federal law or violate any constitutional provision, including
but not limited to impairment of the obligation of contracts
under section 21, Article I of the Oregon Constitution, or clause
1, section 10, Article I of the United States Constitution.
  ' (2) A person who is adversely affected by this 2009 Act or
who will be adversely affected by this 2009 Act may institute a
proceeding for review by filing with the Supreme Court a petition
that meets the following requirements:
  ' (a) The petition must be filed within 60 days after the
effective date of this 2009 Act or, with respect to the
amendments to ORS 735.610 and 735.614 by sections 5 and 7 of this
2009 Act, on or before March 1, 2010.
  ' (b) The petition must include the following:
  ' (A) A statement of the basis of the challenge; and
  ' (B) A statement and supporting affidavit showing how the
petitioner is adversely affected.
  ' (3) The petitioner shall serve a copy of the petition by
registered or certified mail upon the Department of Consumer and
Business Services, the Attorney General and the Governor.
  ' (4) Proceedings for review under this section shall be
expedited and given priority over all other matters before the
Supreme Court.
  ' (5) In the event the Supreme Court determines that there are
factual issues in the petition, the Supreme Court may appoint a
special master to hear evidence and to prepare recommended
findings of fact. + }
  '  { +  SECTION 15. + }  { + The amendments to ORS 735.610 and
735.614 by sections 5 and 7 of this 2009 Act become operative on
January 1, 2011. + } ' .
 
                         /sJeff Kruse
                           Senator
 
                         /sFrank Morse
                           Senator
                         ----------