JOURNAL OF THE SENATE
SEVENTY-EIGHTH LEGISLATIVE ASSEMBLY
FIRST DAY
STATE OF SOUTH DAKOTA
Senate Chamber, Pierre
Thursday, June 26, 2003
BE IT REMEMBERED, That on the twenty-sixth day of June, A.D., two thousand three,
at the hour of ten o'clock meridian, being the hour and day named by the Honorable M. Michael
Rounds, Governor of the State of South Dakota, for the convening of the Legislature in Special
Session, the Senate of the State of South Dakota was called to order by Lieutenant Governor
Dennis Daugaard in the Senate Chamber in the Capitol, in the City of Pierre, the seat of our
government.
The following prayer was offered by the Chaplain, Reverend Mr. Roger Heidt, Ss. Peter
and Paul Catholic Church:
Gracious and Merciful God:
We begin our day in thanksgiving,
Thanksgiving for moisture that has nourished our land,
Thanksgiving for living in a free and open society,
Thanksgiving for the men and women serving in state government,
Thanksgiving for the care and concern shown to those in need,
Thanksgiving for the gift of life You have given each of us.
We pray for our women and men in the Armed Forces,
We pray for this legislative body, as it gathers today,
We pray for the citizens of South Dakota,
We pray for guidance, wisdom, courage and integrity,
We pray that through this day, we are open to Your presence; in the people we meet, in our
actions, in our thoughts, and in our words. In Jesus' name, Amen.
The Pledge of Allegiance to the flag of the United States was given by all present.
I, CHRIS NELSON, Secretary of State of the state of South Dakota, do hereby certify that
the following members, having been duly elected to the Senate at the general election held on
November 5, 2002, are hereby certified as members of the Senate of the 2003-2004 Legislative
Sessions:
District No. 1 Day, Marshall and Roberts Counties
Paul N. Symens, Amherst
District No. 2 Brown and Spink Counties
H. Paul Dennert, Columbia
District No. 3 Brown and McPherson Counties
Duane Sutton, Aberdeen
District No. 4 Brookings, Deuel, Grant and Moody Counties
Larry Diedrich, Elkton
District No. 5 Codington County
Lee Schoenbeck, Watertown
District No. 6 Beadle, Clark, Codington, Hamlin and Kingsbury Counties
Brock L. Greenfield, Clark
District No. 7 Brookings County
Arnold M. Brown, Brookings
District No. 8 Lake, Miner, Moody and Sanborn Counties
Dan Sutton, Flandreau
District No. 9 Minnehaha County
Thomas A. Dempster, Sioux Falls
District No. 10 Lincoln and Minnehaha Counties
Gene G. Abdallah, Sioux Falls
District No. 12 Lincoln and Minnehaha Counties
William F. Earley, Sioux Falls
District No. 13 Minnehaha County
Dick Kelly, Sioux Falls
District No. 14 Minnehaha County
David L. Knudson, Sioux Falls
District No. 15 Minnehaha County
Gil Koetzle, Sioux Falls
District No. 16 Lincoln and Union Counties
Kenneth D. Albers, Canton
District No. 17 Clay and Turner Counties
John J. Reedy, Vermillion
District No. 18 Yankton County
Garry A. Moore, Yankton
District No. 19 Bon Homme, Douglas, Hutchinson and Turner Counties
Frank J. Kloucek, Scotland
District No. 20 Aurora and Davison Counties
Ed Olson, Mitchell
District No. 21 Brule, Buffalo, Charles Mix and Gregory Counties
Sam Nachtigal, Platte
District No. 22 Hand, Jerauld and Beadle Counties
Robert N. Duxbury, Wessington
District No. 23 Campbell, Edmunds, Faulk, Hyde, McPherson, Potter and Walworth Counties
Jay Duenwald, Hoven
District No. 24 Hughes, Stanley and Sully Counties
Patricia de Hueck, Pierre
District No. 25 Hanson, McCook and Minnehaha Counties
Clarence Kooistra, Garretson
District No. 26 Bennett, Haakon, Jackson, Jones, Lyman, Mellette and Tripp Counties
John Koskan, Wood
District No. 28 Butte, Corson, Dewey, Harding, Meade, Perkins and Ziebach Counties
Eric H. Bogue, Dupree
District No. 29 Butte and Meade Counties
Marguerite Kleven, Sturgis
District No. 30 Custer, Fall River and Pennington Counties
Drue J. Vitter, Hill City
District No. 31 Lawrence County
Jerry Apa, Lead
District No. 32 Pennington County
Arlene Ham, Rapid City
District No. 33 Meade and Pennington Counties
J.P. Duniphan, Rapid City
District No. 34 Pennington County
Royal "Mac" McCracken, Rapid City
District No. 35 Pennington County
William Napoli, Rapid City
I further certify that the following have been appointed by the Honorable M. Michael
Rounds, Governor of the State of South Dakota:
District No. 11 Lincoln and Minnehaha Counties
Michael V. Jaspers, Sioux Falls, appointed January 10, 2003, to fill the
unexpired term of Mitch Richter who will not be taking the oath of office.
District No. 27 Bennett, Shannon and Todd Counties
Michael S. LaPointe, Mission, appointed January 10, 2003, to fill the
unexpired term of Richard "Dick" Hagen who died prior to taking office.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed the Great Seal of
the state of South Dakota, this 17th day of June, 2003.
(SEAL)
Chris Nelson
Secretary of State
Roll Call: All members present except Sens. Nachtigal and Symens who were excused.
MOTIONS AND RESOLUTIONS
STATE AFFAIRS (9)
REPORTS OF JOINT-SELECT COMMITTEES
MR. PRESIDENT:
Your Joint-Select Committee appointed on joint rules respectfully reports that it has had
under consideration the joint rules and recommends that the joint rules of the Seventy-eighth
Legislative Session be adopted with the following exceptions:
Whereas Article III, Section 9 of the South Dakota Constitution provides that the
Legislature shall determine the rules of its proceedings, your Joint-Select Committee appointed
for the purpose of preparing rules for the Special Session respectfully reports that the rules of
the regular session of the Seventy-eighth Legislative Session be made the rules of the Senate and
House during the Special Session with the following exceptions and that such printing of the
rules in the journal be dispensed with:
Special Rule No. 1: Notwithstanding any other rule, the presiding officer may dispense
with the referral of a bill or resolution to a standing committee and refer a bill or resolution to
a special committee. All bills or resolutions referred to a special committee may be reported out
at any time and immediately acted upon by the members and considered for a second reading.
Special Rule No. 2: None of the deadlines in regard to bill or resolution introduction and
hearing shall apply to the Special Session. The Governor, with committee sponsorship, or any
legislator may introduce, at any time during this Special Session, any bill or resolution germane
to the proclamation.
Special Rule No. 3: The presiding officers of the House and the Senate may appoint the
officers and employees for the respective bodies as they deem necessary to carry out the
activities of the respective houses.
Special Rule No. 4: All restrictions dealing with legislative counsel or agents entering the
floor of the House or Senate shall be suspended during this Special Session and access to the
floor of the House and Senate shall be governed by decisions of the presiding officer.
Special Rule No. 5: No rules dealing with a call of the house shall apply to the Special
Session, except that the attendance of any member who has answered the initial roll call each
day may be compelled by the presiding officer.
Special Rule No. 6: No rules, including, but not limited to, Rule 5-17 and Rule 7-7, dealing
with required delivery of bills and placement of bills or resolutions on the calendar, shall apply
to the Special Session; and the placement of bills or resolutions on the calendar for second
reading shall be determined by a majority vote of the members-present.
Special Rule No. 7: Rules dealing with the order of business shall prevail, provided,
however, that the order of business may be changed by a majority vote of the members-elect,
thereby bringing up any item of action by such vote. The proclamation calling the Legislature
into Special Session shall govern the consideration of all bills and resolutions and the body shall
determine the germaneness of a given bill and resolution to the proclamation.
Special Rule No. 8: Rules dealing with fiscal notes shall not apply to the Special Session.
Special Rule No. 9: No rules dealing with the printing and distribution of bills or
resolutions shall apply to the Special Session, and the Legislative Research Council and
Secretary of State shall provide photocopies of bills introduced to the public and legislative
agents.
Special Rule No. 10: At the conclusion of the Special Session, the Chief Clerk of the
House and the Secretary of the Senate shall review the journal prepared and make the necessary
corrections and provide the contract printer with the corrected journal for distribution to those
who subscribed to journals during the regular Seventy-eighth Legislative Session.
Special Rule No. 11: Notwithstanding Joint Rule 11-1, House Rule H4-1, and Senate Rule
S5-1, a majority of the members-elect of either house may suspend, adopt, or amend any of the
rules.
Respectfully submitted, Respectfully submitted,
Matthew Michels Eric Bogue
Bill Peterson Arnold Brown
Mel Olson Garry Moore
House Committee Senate Committee
Also MR. PRESIDENT:
Your Joint-Select Committee appointed for the purpose of fixing the compensation of the
elective and appointive officers and employees of the House and Senate for the Special Session
of the Seventy-eighth Legislative Session, pursuant to SDCL 2-5-8, respectfully reports that a
salary schedule for the elective and appointive officers and employees has been developed and
filed with the Director of the Legislative Research Council and the State Auditor.
Respectfully submitted, Respectfully submitted,
Matthew Michels Arnold Brown
Bill Peterson Eric Bogue
Mel Olson Garry Moore
House Committee Senate Committee
CONSIDERATION OF REPORTS OF JOINT-SELECT COMMITTEES
MESSAGES FROM THE HOUSE
Respectfully,
Karen Gerdes, Chief Clerk
RECESS
The Senate reconvened at 11:47 a.m., the President presiding.
FIRST READING OF SENATE BILLS AND JOINT RESOLUTIONS
RECESS
The Senate reconvened at 3:00 p.m., the President presiding.
RECESS
RECESS
RECESS
RECESS
The Senate reconvened at 6:45 p.m., the President presiding.
President Pro tempore Brown appointed the following employees for the Special Session
of the Seventy-eighth Legislative Session:
Interns: Cody Byrum and Garrett Bruening
Pages: Jessica Page and Sara Daugaard
The oath of office was administered to the following employees by President Daugaard and
the same were subscribed to and placed on file in the office of the Secretary of State:
Interns: Cody Byrum and Garrett Bruening
Pages: Jessica Page and Sara Daugaard
MESSAGES FROM THE HOUSE
Respectfully,
Karen Gerdes, Chief Clerk
REPORTS OF STANDING COMMITTEES
On page
2,
line 24 of the printed bill,
after "
pool
"
insert ". Such contract with an
administrator shall be designed to become effective".
On page
3
,
line 4,
after "
members
"
insert ", one of which shall be an employee,".
On page
4
,
after line 1, insert:
"The board shall file a report with the Legislature each year on or before January first,
which shall include information regarding the operation of the risk pool, such as assessments,
numbers of enrollees, claims, expenses, and premiums."
On page
4
,
line 7,
after "
of
"
insert "this".
On page
5
,
line 9,
after "
claim
"
insert "to the risk pool".
On page
5
,
line 21,
before "
Any
"
insert "An enrollee shall notify any health care provider
or any provider of pharmacy goods or services prior to receiving goods or services or as soon
as reasonably possible that the enrollee is qualified to receive comprehensive coverage under
the risk pool."
On page
5
,
line 21,
after "
provider
"
insert "or provider of pharmacy goods or services".
On page
5
,
line 23,
after "
Each
"
insert "health care".
On page
6
,
line 1,
after "
delivered.
"
insert "Each provider of pharmacy goods or services
shall be reimbursed at one hundred fifteen percent of South Dakota's medicaid reimbursement
for any goods or services provided."
On page
6
,
line 6,
after "
coverage.
"
insert "However, the provider may bill the enrollee for
noncovered services."
On page
6
,
line 7,
delete "
director
"
and insert "board".
On page
6
,
line 9,
delete "
director
"
and insert "board".
On page
6
,
line 10,
delete "
the board and
"
.
On page
7
,
line 3,
delete "
may not be more than
"
and insert "shall be".
On page
7
,
line 5,
delete "
insurance policies
"
and insert "benefit plans".
On page
7
,
line 18,
delete "
premiums
"
and insert "assessments".
On page
8
,
line 9,
delete "
insurance policies
"
and insert "benefit plans".
On page
11
,
line 16,
delete "
coverage equivalent to a plan
"
and insert "creditable coverage
as defined in
§
58-17-69".
On page
11
,
line 17,
delete "
created by this Act
"
.
On page
12
,
line 1,
after "
government,
"
insert "TRICARE,".
On page
12
,
line 20,
after "
provide
"
insert "individual".
On page
12,
line 18 of the printed bill,
after "
aggrieved by
"
insert "a determination or
administrative action made pursuant to".
On page
3,
line 7 of the printed bill,
after "
employers
"
insert "as well as one state senator
appointed by the president pro tempore of the Senate and one state representative appointed by
the speaker of the House of Representatives".
On page
3
,
line 7,
after "
appoint the
"
insert "nonlegislative".
On page
3,
line 6 of the printed bill,
after "
facilities,
"
insert "self-insurers,".
On page
7,
line 17 of the printed bill,
delete "
until July 2005
"
.
On page
16,
line 14 of the printed bill,
delete "
may
"
and insert "
shall
".
On page
2
,
line 22 of the printed bill,
after "
Health,
"
insert "and".
On page
2,
line 22,
delete "
, and other agencies as
"
and insert "and two other persons
appointed".
On page
2
,
line 23,
delete "
determined
"
.
On page
9,
line 7 of the printed bill,
delete "
director
"
and insert "board".
On page
9
,
line 8,
delete "
director
"
and insert "board".
On page
9
,
line 9,
delete "
director
"
and insert "board".
On page
9
,
line 14,
delete "
abatement or
"
.
On page
9
,
line 15,
delete "
for four years
"
.
And that as so amended said bill do pass.
Respectfully submitted,
Eric H. Bogue, Chair
CONSIDERATION OF REPORTS OF COMMITTEES
FIRST READING OF SENATE BILLS AND JOINT RESOLUTIONS
SB 3
Introduced by:
Senators Kloucek, Dennert, Koetzle, Moore, and Reedy and
Representatives Lange, Bradford, Gassman, and Sigdestad
FOR AN ACT ENTITLED, An Act to
establish a comprehensive health association to
provide health insurance coverage to eligible persons, to provide an appropriation therefor, and
to declare an emergency.
Was read the first time and referred to the Committee on State Affairs.
SECOND READING OF SENATE BILLS AND JOINT RESOLUTIONS
Sen. Kloucek moved that SB 2 be further amended as follows:
On the printed bill, delete everything after the enacting clause and insert:
"Section 1. Terms used in this Act mean:
(1) "Association," the comprehensive health association established by section 2 of this
Act;
(2) "Association policy," any individual or group policy issued by the association that
provides the coverage specified in this Act;
(3) "Carrier," any person that provides health insurance in the state, including an
insurance company, a prepaid hospital or medical service plan, a health maintenance
organization, a multiple employer welfare arrangement, a carrier providing excess or
stop loss coverage to a self funded employer, and any other entity providing a plan
of health insurance or health benefits subject to state insurance regulation. The term,
carrier, does not include health insurance for coverages that are not health benefit
plans issued by insurance companies, prepaid hospital or medical service plans, or
health maintenance organizations. The term, carrier, includes any health benefit plan
issued through an association or trust. The term, health benefit plan, as used in this
Act is as defined in subdivision 58-17-66(9);
(4) "Director," the director of the Division of Insurance;
(5) "Health care facility," any health care facility licensed pursuant to chapter 34-12;
(6) "Health insurance," as defined in
§
58-9-3;
(7) "Insured," any individual who is provided qualified comprehensive health insurance
under an association policy, which may include dependents and other covered
persons;
(8) "Medicaid," the federal-state assistance program established under Title XIX of the
Social Security Act;
(9) "Medicare," the federal government health insurance program established under Title
XVIII of the Social Security Act;
(10) "Policy," any contract, policy, or plan of health insurance;
(11) "Policy year," any consecutive twelve-month period during which a policy provides
or obligates the carrier to provide health insurance.
Section 2. There is established a nonprofit corporation known as the Comprehensive Health
Insurance Association, which shall assure that health insurance, as provided for in this Act, is
made available to each eligible South Dakota resident who applies to the association for
coverage. Any carrier providing health insurance or health care services in South Dakota shall
be a member of the association. The association shall operate under a plan of operation
established and approved pursuant to this Act and shall exercise its powers through a board of
directors established pursuant to this Act.
Section 3. The board of directors of the association shall consist of nine individuals who are
representative of categories of members of the association, health care providers, consumers
who have purchased or are likely to purchase coverage from the association, insurance
producers, small employers, and the director, who shall be a nonvoting ex-officio member. In
the initial and in each successor board, three members shall be representative of and elected by
qualified writers of group health insurance, two members shall be representative of and elected
by qualified writers of individual health insurance, one member shall be representative of the
health care provider community and shall be appointed by the director, one member shall be
representative of consumers covered through the high risk pool and shall be appointed by the
director, one member shall be a representative of insurance producers and shall be appointed
by the director, and one member shall be a representative of small employers and shall be
appointed by the director. There shall be no more than one member representing any one
qualified writer or its affiliate.
Members of the board may be reimbursed from the moneys of the association for expenses
incurred by them as members, but may not be otherwise compensated by the association for
their services.
Section 4. The board shall submit to the director a proposed plan of operation for the
association and any amendments necessary or suitable to assure the fair, reasonable, and
equitable administration of the association. If the board fails to submit a proposed plan of
operation within one hundred eighty days after the appointment of the board of directors, or if
at any later time the board fails to submit suitable amendments to the plan, the director shall
proceed with the rule-making process as required by this section. The plan of operation, whether
based upon a proposal from the board or the director, shall be established by rules promulgated
pursuant to chapter 1-26 and shall consider whether the proposed plan of operation is suitable
to assure the fair, reasonable, and equitable administration of the association, and provides for
the sharing of association losses, if any, on an equitable and proportionate basis among the
member carriers. In addition to other requirements, the plan of operation shall provide for all
of the following:
(1) The handling and accounting of assets and moneys of the association;
(2) The amount and method of reimbursing members of the board;
(3) Regular times and places for meetings of the board of directors;
(4) Records to be kept of all financial transactions, and the annual fiscal reporting to the
director;
(5) Procedures for selecting the board of directors and submitting the selections to the
director for approval;
(6) Procedures for assessing the members in proportion to the number of persons they
cover through primary, excess, and stop loss insurance in this state;
(7) The periodic advertising of the general availability of health insurance coverage from
the association;
(8) Additional provisions necessary or proper for the execution of the powers and duties
of the association.
Section 5. The plan of operation may provide that the powers and duties of the association
may be delegated. A delegation under this section takes effect only upon the approval of both
the board of directors and the director. The director may not approve a delegation unless the
protections afforded to the insureds are substantially equivalent to or greater than those provided
under this Act.
Section 6. The association has the general powers and authority enumerated by this Act and
executed in accordance with the plan of operation approved by the director. The association has
the general powers and authority granted under the laws of this state to carriers licensed to issue
health insurance. In addition, the association may do any of the following:
(1) Enter into contracts as necessary or proper to carry out this Act;
(2) Sue or be sued, including taking any legal action necessary or proper for recovery of
any assessments for, on behalf of, or against participating carriers;
(3) Borrow money to effectuate the purposes of this Act;
(4) Take legal action necessary to avoid the payment of improper claims against the
association or the coverage provided by or through the association;
(5) Establish or utilize a medical review committee to determine the reasonably
appropriate level and extent of health care services in each instance;
(6) Establish appropriate rates, scales of rates, rate classifications, and rating
adjustments, which rates may not be unreasonable in relation to the coverage
provided and the reasonable operations expenses of the association;
(7) Pool risks among members;
(8) Issue association policies on an indemnity, network, or provision of service basis and
may design, utilize, contract, or otherwise arrange for the delivery of cost effective
health care services, including establishing or contracting with preferred provider
organizations, health maintenance organizations, and other limited network provider
arrangements in providing the coverage required by this Act;
(9) Administer separate pools, separate accounts, or other plans or arrangements
considered appropriate for separate members or groups of members;
(10) Operate and administer any combination of plans, pools, or other mechanisms
considered appropriate to best accomplish the fair and equitable operation of the
association;
(11) Appoint from among members appropriate legal, actuarial, and other committees as
necessary to provide technical assistance in the operation of the association, policy,
and other contract design, and any other functions within the authority of the
association;
(12) Hire independent consultants as necessary;
(13) Include in its policies a provision providing for subrogation rights by the association
in a case in which the association pays expenses on behalf of an individual who is
injured or suffers a disease under circumstances creating a liability upon another
person to pay damages to the extent of the expenses paid by the association, but only
to the extent the damages exceed the policy deductible and coinsurance amounts paid
by the insured. The association may waive its subrogation rights if it determines that
the exercise of the rights would be impractical, uneconomical, or would create a
hardship on the insured.
Section 7. The board of directors shall select a plan administrator based on criteria
established by the board which shall include:
(1) The plan administrator's proven ability to handle health insurance coverage to
individuals;
(2) The efficiency and timeliness of the plan administrator's claim processing
procedures;
(3) An estimate of total charges for administering the plan;
(4) The plan administrator's ability to apply effective cost containment programs and
procedures and to administer the plan in a cost efficient manner; and
(5) The financial condition and stability of the plan administrator.
Section 8. The plan administrator shall serve for a period specified in the contract between
the plan and the plan administrator subject to removal for cause and subject to any terms,
conditions, and limitations of the contract between the plan and the plan administrator. At least
one year prior to the expiration of each period of service by a plan administrator, the board shall
invite eligible entities, including the current plan administrator to submit bids to serve as the
plan administrator. Selection of the plan administrator for the succeeding period shall be made
at least six months prior to the end of the current period. The plan administrator shall perform
such functions relating to the plan as may be assigned to it, including:
(1) Determination of eligibility;
(2) Payment of claims;
(3) Establishment of a premium billing procedure for collection of premium from
persons covered under the plan; and
(4) Other necessary functions to assure timely payment of benefits to covered persons
under the plan.
The plan administrator shall submit regular reports to the board regarding the operation of
the plan. The frequency, content, and form of the report shall be specified in the contract
between the board and the plan administrator. Following the close of each calendar year, the
plan administrator shall determine net written and earned premiums, the expense of
administration, and the paid and incurred losses for the year and report this information to the
board and the division on a form prescribed by the director. The plan administrator shall be paid
as provided in the contract between the plan and the plan administrator.
Section 9. Rates for coverages issued by the association may not be unreasonable in relation
to the benefits provided, the risk experience, and the reasonable expenses of providing coverage.
Case characteristics as allowed pursuant to
§
58-17-74 may be used in establishing rates for
those insured through the association. Rates shall take into consideration the extra morbidity and
administration expenses, if any, for risks insured in the association. The rates for a given
classification for those that qualify for coverage pursuant to
§
58-17-85 or whose coverage
immediately prior to coverage through the association was a policy issued pursuant to
§
58-17-
85 may not be more than one hundred fifty percent of the average in-force premium or payment
rate for that classification charged by the three carriers with the largest individual health
insurance premium or payment volume in the state during the preceding calendar year. In
determining the average rate of the three largest individual health carriers, the rates or payments
charged by the carriers shall be actuarially adjusted to determine the rate or payment that would
have been charged for benefits similar to those issued by the association.
Section 10. Following the close of each calendar year, the board shall determine the net
premiums and payments, the expenses of administration, and the incurred losses of the
association for the year. The board shall certify the amount of any net loss for the preceding
calendar year. In sharing losses, the board may abate or defer in any part the assessment of a
member, if, in the opinion of the board, payment of the assessment would endanger the ability
of the member to fulfill its contractual obligations. The board may also provide for an initial or
interim assessment against members of the association if necessary to assure the financial
capability of the association to meet the incurred or estimated claims expenses or operating
expenses of the association until the next calendar year is completed. Net gains shall be held at
interest to offset future losses or allocated to reduce future premiums.
Assessment of health carriers and excess or stop loss carriers shall be based upon the
number of persons they cover through primary, excess, and stop loss insurance in this state and
shall be as follows:
(1) For the purposes of this section, the term, participating carrier, includes all carriers
as defined in section 1 of this Act;
(2) In addition to the powers enumerated in this Act, the board, on behalf and under the
direction of the director may assess participating carriers in accordance with the
provisions of this section, and make advance interim assessments as may be
reasonable and necessary for the association's organizational and interim operating
expenses;
(3) Following the close of each fiscal year, the administrator shall determine the net
premiums (premiums less reasonable administrative expense allowances), the
expenses of administration, and the incurred losses for the year, taking into account
investment income and other appropriate gains and losses. The deficit incurred by the
association shall be recouped by assessments apportioned under this section by the
board among participating carriers and from other sources as may be allowed under
law;
(4) Each participating carrier's assessment shall be determined by multiplying the total
assessment of all participating carriers as determined in subdivision (2) by a fraction,
the numerator of which equals the number of individuals in this state covered under
health insurance policies, including by way of excess or stop loss coverage, by each
participating carrier, and the denominator of which equals the total number of all
individuals in this state covered under health insurance policies, including by way of
excess or stop loss coverage, by all participating carriers, all determined as of the end
of the prior calendar year;
(5) The board shall make reasonable efforts designed to ensure that each insured
individual is counted only once with respect to any assessment. For that purpose, the
board shall require each participating carrier that obtains excess or stop loss
insurance to include in its count of insured individuals all individuals whose
coverage is reinsured, including by way of excess or stop loss coverage, in whole or
part. The board shall allow a participating carrier who is an excess or stop loss carrier
to exclude from its number of insured individuals those who have been counted by
the primary carrier or by the primary reinsurer or primary excess or stop loss carrier
for the purpose of determining its assessment under this section;
(6) Each participating carrier's assessment shall be determined by the board based on
annual statements and other reports deemed to be necessary by the board and filed
by the participating carrier with the board. The board may use any reasonable method
of estimating the number of insureds of a participating carrier if the specific number
is unknown. With respect to participating carriers that are excess or stop loss carriers,
the board may use any reasonable method of estimating the number of persons
insured by each reinsurer or excess or stop loss carrier;
(7) A participating carrier may petition the director for an abatement or deferment of all
or part of an assessment imposed by the board. The director may abate or defer, in
whole or in part, the assessment if, in the opinion of the director, payment of the
assessment would endanger the ability of the participating carrier to fulfill its
contractual obligations. If an assessment against a participating carrier is abated or
deferred in whole or in part, the amount by which the assessment is abated or
deferred may be assessed against the other participating carriers in a manner
consistent with the basis for assessments set forth in this section. The participating
carrier receiving such abatement or deferment shall remain liable to the association
for the deficiency for four years.
The amount appropriated in section 33 of this Act shall be used for the establishment and
operation of the association prior to making any assessment of participating carriers and any
available federal funding for the establishment or operation of the association shall be used to
the extent possible prior to making any assessment of participating carriers. Assessments made
of any carrier shall be allowed as a credit on the premium tax return of that carrier.
Section 11. The association shall conduct periodic audits to assure the general accuracy of
the financial data submitted to the association, and the association shall have an annual audit
of its operations made by an independent certified public accountant.
Section 12. The association and the board are subject to examination by the director. Not
later than April thirtieth of each year, the board of directors shall submit to the director a
financial report for the preceding calendar year in a form approved by the director.
Section 13. Any policy form issued by the association shall be filed with and approved by
the director before its use.
Section 14. The association is exempt from payment of all fees and all taxes levied by this
state or any of its political subdivisions.
Section 15. If the association policy contains a network feature, the negotiated fee will be
the limit of the amount paid and the provider shall be subject to subdivision 58-17C-14(2) for
any amounts due from the individual insured. The benefits to be contained in the association
policy shall be established by the board and be subject to the approval of the director. The
association policy shall be designed to provide comprehensive coverage consistent with major
medical coverage currently being offered in the individual health insurance market. The
coverage and benefits for association policies may not be altered by any other state law without
specific reference to this Act indicating a legislative intent to add or delete from the coverage
provided pursuant to this Act. Any association policy shall cover biologically-based mental
illnesses on the same basis as other covered illnesses.
Section 16. The association policy shall include disease management programs that contain
cost containment mechanisms. If the insured does not enroll and participate in the applicable
cost containment activities, the insured is responsible for fifty percent of the eligible expenses
for related services after the deductible is met, and there is no maximum out-of-pocket
coinsurance amount.
Section 17. The association policy shall provide pharmacy benefits. In addition to any other
deductibles and coinsurance amounts, the insured shall pay a twenty-five percent coinsurance
for each prescription up to the maximum out-of-pocket coinsurance amount of fifteen hundred
dollars. If an intervention or cost containment mechanism is refused without a verifiable medical
reason, the insured shall pay a fifty percent coinsurance amount and only twenty-five percent
of the coinsurance applies toward the maximum out-of-pocket coinsurance amount for
pharmacy benefits.
Section 18. Each association policy shall offer the following plan-year benefit maximums:
(1) Thirty days coverage for inpatient alcoholism and substance abuse treatment;
(2) Two thousand dollars for outpatient alcoholism and substance abuse treatment; and
(3) Nine hundred dollars for up to thirty outpatient mental health visits for qualified
conditions that are not biologically-based.
Section 19. Except as otherwise provided in this Act, a person is not eligible for an
association policy if the person, on the effective date of coverage, has or will have coverage as
an insured or covered dependent under any insurance plan that has coverage equivalent to an
association policy; is eligible for benefits under chapter 28-6 at the time of application; has
terminated coverage provided by the association within the past twelve months; is an inmate of
any public institution or is eligible for public programs for which medical care is provided; or
has his or her premiums paid for or reimbursed under any government sponsored program or
by any government agency or health care provider, except as an otherwise qualifying full-time
employee, or dependent thereof, of a government agency or health care provider. Coverage
under an association policy is in excess of, and may not duplicate, coverage under any other
form of health insurance, employee/employer welfare plan, medical coverage under any
homeowner's or motorized vehicle insurance, no-fault automobile, service or payment received
under the laws of any national, state, or local government, or CHAMPUS. This section does not
apply to those persons meeting provisions pursuant to chapter 28-13.
Association coverage terminates for any person on the date that if such circumstance had
been present at the time of application, the person would have been ineligible for association
coverage. Association coverage may also be terminated for nonpayment of premiums.
Section 20. An association policy shall provide that coverage of a dependent unmarried
person terminates when the person becomes nineteen years of age or, if the person is enrolled
full time in an accredited educational institution, terminates at twenty-five years of age. The
policy shall also provide in substance that attainment of the limiting age does not operate to
terminate coverage when the person is and continues to be both of the following:
(1) Incapable of self-sustaining employment by reason of mental retardation or physical
disability; and
(2) Primarily dependent for support and maintenance upon the person in whose name the
contract is issued.
Proof of incapacity and dependency shall be furnished to the administrator within one
hundred twenty days of the person's attainment of the limiting age, and subsequently as may be
required by the association's procedures, but not more frequently than annually after the two-
year period following the person's attainment of the limiting age.
Section 21. The board may not change the rates for association policies except on a class
basis with a clear disclosure in the policy of the board's right to do so and upon approval of the
director.
Section 22. An association policy shall provide that upon the death of the individual in
whose name the policy is issued, every other individual then covered under the contract may
elect, within a period specified in the policy, to continue coverage under the same or a different
policy until such time as the person would have ceased to be entitled to coverage had the
individual in whose name the policy was issued lived.
Section 23. The director shall prescribe the format as prescribed by section 26 of this Act
for disclosure by carriers of the availability of insurance coverage from the association.
Section 24. None of the following may be the basis of any legal civil action, or criminal
liability against the board, association, or members of them, either jointly or separately: the
participation by carriers or members in the association, the establishment of rates, forms, or
procedures for coverage issued by the association, serving or carrying out the functions as a
member of the board, or any joint or collective action required by this Act. Any person
aggrieved by this Act may request a contested case hearing pursuant to chapter 1-26, which
constitutes the person's sole remedy.
Section 25. Any carrier authorized to provide health care insurance or coverage for health
care services in this state shall provide notice and application for coverage under the association
for those individuals eligible pursuant to
§
58-17-85. An application for health insurance shall
be on forms prescribed by the board and made available to the carriers.
Section 26. That
§
58-17-68
be amended to read as follows:
58-17-68.
For purposes of
§
§
58-17-66 to 58-17-87, inclusive, the term, professional
association plan, means a health benefit plan offered through a professional association that
covers members of a professional association and their dependents, and not others, in this state
regardless of the situs of delivery of the policy or contract and which meets all the following
criteria:
(1)
Conforms with all the provisions of the rate requirements of
§
§
58-17-66 to
58-17-87, inclusive;
(2)
Provides renewability of coverage for the members and dependents of members of
the professional association that meets the renewability requirements of
§
§
58-17-66
to 58-17-87, inclusive;
(3)
Provides availability of coverage for the members and dependents of members of the
professional association
in conformance with the provisions of
§
58-17-85
without
regard to health status
; and
(4)
Is offered by a carrier that offers health benefit plan coverage to any professional
association seeking health benefit plan coverage from the carrier.
Section 27. That
§
58-17-85
be amended to read as follows:
58-17-85.
If a person has an aggregate of at least
twelve
eighteen
months of creditable
coverage
and
,
is a resident of this state,
the carrier shall accept such person for coverage under
a health benefit plan, which contains benefits which are equal to or exceed the benefits
contained in the basic plan that was approved and adopted by rule by the director pursuant to
chapter 1-26 and the maximum lifetime maximum benefit of the coverage is not less than one
million dollars if the person applies within sixty-three days of the date of losing prior creditable
coverage. In addition to the plan which equals or exceeds the basic coverage, the carrier shall
also offer to the eligible person, the individual standard plan as approved and adopted by rule
by the director or a plan with benefits that exceed the standard plan. No carrier is required to
issue further individual health benefit coverage under
§
§
58-17-68 to 58-17-87, inclusive, if the
individual health benefit plans issued to high-risk individuals constitute two percent or more of
that carrier's earned premium on an annual basis from individual health benefit plans covered
by
§
§
58-17-66 to 58-17-87, inclusive. Each carrier who meets the two percent earned premium
threshold shall report within thirty days to the director in a format prescribed by the director. If
the director determines that all carriers in the individual market have met the two percent
threshold, the threshold shall, upon order of the director, be expanded an additional two percent.
The threshold shall be expanded in additional two percent increments if all carriers in the
individual market meet the previous threshold. The director may promulgate rules pursuant to
chapter 1-26 to determine which individual policies may be used to determine the two percent
threshold, the procedures involved, and the applicable time frames. In making that
determination, the director shall develop a method designed to limit the number of high-risk
individuals to whom any one carrier may be required to issue coverage. No carrier is required
to provide coverage pursuant to this section if
and applies within sixty-three days of the date of
losing prior creditable coverage and is no longer eligible for that creditable coverage, the person
is eligible for coverage under the association policy as provided for in this Act if none of the
following apply
:
(1)
The applicant is eligible for continuation of coverage under an employer plan;
(2)
The applicant's creditable coverage is a conversion plan from an employer group
plan;
or
(3)
The person is covered or eligible to be covered under creditable coverage or lost
creditable coverage due to nonpayment of premiums
; or
(4)
The person loses coverage under a short term or limited duration plan
.
Any person who has exhausted continuation rights and who is eligible for conversion or
other individual or association coverage has the option of obtaining coverage pursuant to this
section or the conversion plan or other coverage. A person who is otherwise eligible for the
issuance of coverage pursuant to this section may not be required to show proof that coverage
was denied by another carrier.
For purposes of this section,
a carrier may require
the association shall require
reasonable
evidence that the prospective insured is a resident of this state. Factors that the
carrier
association
may consider include a driver's license, voter registration, and where the prospective
insured resides.
Section 28. That
§
58-17-86
be repealed.
58-17-86.
The director shall study and report on or before January 5, 1997, and on or before
January fifth of each subsequent year to the Legislature and Governor on the effectiveness of
§
§
58-17-66 to 58-17-87, inclusive. The report shall analyze the effectiveness of
§
§
58-17-66
to 58-17-87, inclusive, in promoting rate stability, product availability, and coverage
affordability. The report may contain recommendations for actions to improve the overall
effectiveness, efficiency, and fairness of the individual health insurance marketplace. The report
may contain recommendations for market conduct or other regulatory standards or action.
Section 29. That
§
58-17-80
be repealed.
58-17-80.
Each carrier shall file with the director annually, on or before March fifteenth, an
actuarial certification certifying that the carrier is in compliance with
§
§
58-17-66 to 58-17-87,
inclusive, and that the rating methods of the carrier are actuarially sound. The certification shall
be in a form and manner and shall contain such information as may be specified by the director
in rules promulgated pursuant to chapter 1-26. A copy of the certification shall be retained by
the carrier at its principal place of business.
Section 30. Effective July 1, 2003, carriers that have continuously and actively marketed
individual health benefit plans in this state since July 1, 1996, shall annually, on or before June
thirtieth, certify to the director, the earned premiums and paid claims during the preceding
calendar year on policies issued pursuant to
§
58-17-85. The director shall determine the total
amount of losses for the carriers that exceed ninety percent of earned premiums on such policies
during the preceding year and shall certify this amount which shall be added to the losses to be
assessed against members of the association as prescribed by section 10 of this Act. The board
shall assess all member carriers of the association for the certified losses on the same basis as
assessments would be made for other losses incurred by the association for the same period.
Upon collection of these assessments from member carriers, the association shall reimburse
each individual carrier who qualified under the provisions of this section and who had losses
in excess of ninety percent of earned premiums certified by the director. The reimbursement for
each qualified carrier shall be in an amount equal to that carrier's actual losses in excess of
ninety percent of earned premiums for the reporting period.
Section 31. Carriers who discontinued actively marketing individual health benefit plans in
this state after July 1, 1996, and have current policies issued pursuant to
§
§
58-17-66 to 58-17-
87, inclusive, are eligible to receive reimbursement pursuant to section 30 of this Act if these
conditions are met:
(1) The carrier re-enters the individual health benefit plan market in this state no later
than July 1, 2005;
(2) The carrier has actively and continuously marketed individual health benefit plans
for a period of twenty-four months from the date of re-entry; and
(3) The carrier is actively marketing individual health benefit plans at the time the
pooling is calculated.
Section 32. That
§
58-17-82
be amended to read as follows:
58-17-82.
An individual health benefit plan subject to
§
§
58-17-66 to 58-17-87, inclusive,
is renewable with respect to any person or dependent at the option of the person, except in any
of the following cases:
(1)
The individual has failed to pay premiums or contributions in accordance with the
terms of the health insurance coverage or the insurer has not received timely
premium payments;
(2)
Fraud or intentional misrepresentation of material fact by the person;
(3)
In the case of a health insurance issuer that offers health insurance coverage in the
market through a network plan, there are no longer any enrollees in connection with
the plan who live, reside, or work in the service area of the issuer or in the area for
which the issuer is authorized to do business and the issuer would deny enrollment
with respect to the plan as provided for in
§
58-18B-37;
(4)
Election by the carrier not to renew all of its individual health benefit plans delivered
or issued for delivery to persons in the state. In such a case, the carrier shall provide
advance notice of its decision under this subdivision to the director in each state in
which it is licensed and provide notice of the decision not to renew coverage to all
affected individuals and to the director in each state in which an affected insured
individual is known to reside at least one hundred eighty days before the nonrenewal
of any individual health benefit plans by the carrier. Notice to the director under this
subdivision shall be provided at least three working days before the notice to the
affected individuals. In such instances, the director shall assist the affected persons
in finding replacement coverage;
(5)
In the case of health insurance coverage that is made available only through one or
more bona fide associations, the membership of an employer in the association (on
the basis of which the coverage is provided) ceases but only if the coverage is
terminated uniformly without regard to any health status-related factor relating to any
covered individual; or
(6)
The insured individual becomes eligible for medicare coverage under Title XVIII of
the Social Security Act, unless federal law requires that medicare coverage under
Title XVIII be excluded as a reason for renewability of coverage;
(7)
If the issuer decides to discontinue offering a particular type of individual health
insurance offered in the individual market, coverage of such type may be
discontinued if:
(a)
The issuer provides notice to each insured provided coverage of this type in
such market (and any participant and beneficiary covered under such
coverage) of the discontinuation at least ninety days prior to the date of the
discontinuation of the coverage;
(b)
The issuer offers to each insured provided coverage of this type in such
market, the option to purchase
all
any
other health insurance coverage
currently being offered by the issuer to an individual health plan in such
market; or
(c)
In exercising the option to discontinue coverage of this type and in offering the
option of coverage under subsection (b), the issuer acts uniformly without
regard to the claims experience of those insured or any health status-related
factor relating to any participant or beneficiary covered or any new participant
or beneficiary who may become eligible for such coverage.
Section 33. There is hereby appropriated from the budget reserve fund the sum of five
million dollars ($5,000,000), or so much thereof as may be necessary, to the board of directors
of the comprehensive health association for the establishment and operation of the association.
Section 34. The chair of the board of directors shall approve vouchers and the state auditor
shall draw warrants to pay expenditures authorized by this Act.
Section 35. Whereas, this Act is necessary for the immediate preservation of the public
peace, health, or safety, an emergency is hereby declared to exist, and this Act shall be in full
force and effect from and after its passage and approval."
MOTIONS AND RESOLUTIONS
Sen. Bogue moved that the rules be suspended, that referral and second reading of SB 3
be waived, that SB 3 be up for immediate consideration, and that SB 3 be tabled.
The question being on Sen. Bogue's motion that the rules be suspended, that referral and
second reading of SB 3 be waived, that SB 3 be up for immediate consideration, and that SB 3
be tabled.
And the roll being called:
Yeas 32, Nays 1, Excused 2, Absent 0
Yeas:
Abdallah; Albers; Apa; Bogue; Brown; de Hueck; Dempster; Dennert; Diedrich (Larry);
Duenwald; Duniphan; Duxbury; Earley; Greenfield; Ham; Jaspers; Kelly; Kleven; Knudson;
Koetzle; Kooistra; Koskan; LaPointe; McCracken; Moore; Napoli; Olson (Ed); Reedy;
Schoenbeck; Sutton (Dan); Sutton (Duane); Vitter
Nays:
Kloucek
Excused:
Nachtigal; Symens
So the motion having received an affirmative vote of a majority of the members-elect, the
President declared the motion carried.
FIRST READING OF HOUSE BILLS AND JOINT RESOLUTIONS