As Introduced

126th General Assembly Regular Session 2005-2006

S. B. No. 5

Senator Hottinger 

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A BILL

To amend sections 1731.03, 1751.12, 3924.01, 3924.02,

1

3924.06, 3924.08, 3924.09, 3924.10, 3924.11,

2

3924.14, and 3924.73 and to enact sections 3923.81

3

and 3924.15 of the Revised Code to permit small

4

employers to offer health care plans without

5

benefits otherwise required by statute, to provide

6

for the operation of health savings accounts

7

consistent with federal laws, and to limit the

8

amount of copayments and deductibles paid by

9

persons insured by health benefit plans.

10

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That sections 1731.03, 1751.12, 3924.01, 3924.02,	11
3924.06, 3924.08, 3924.09, 3924.10, 3924.11, 3924.14, and 3924.73	12
be amended and sections 3923.81 and 3924.15 of the Revised Code be	13
enacted to read as follows:	14

Sec. 1731.03.  (A) A small employer health care alliance may	15
do any of the following:	16

(1) Negotiate and enter into agreements with one or more	17
insurers for the insurers to offer and provide one or more health	18
benefit plans to small employers for their employees and retirees,	19
and the dependents and members of the families of such employees	20
and retirees, which coverage may be made available to enrolled	21
small employers without regard to industrial, rating, or other	22
classifications among the enrolled small employers under an	23
alliance program, except as otherwise provided under the alliance	24
program, and for the alliance to perform, or contract with others	25
for the performance of, functions under or with respect to the	26
alliance program;	27

(2) Contract with another alliance for the inclusion of the	28
small employer members of one in the alliance program of the	29
other;	30

(3) Provide or cause to be provided to small employers	31
information concerning the availability, coverage, benefits,	32
premiums, and other information regarding an alliance program and	33
promote the alliance program;	34

(4) Provide, or contract with others to provide, enrollment,	35
record keeping, information, premium billing, collection and	36
transmittal, and other services under an alliance program;	37

(5) Receive reports and information from the insurer and	38
negotiate and enter into agreements with respect to inspection and	39
audit of the books and records of the insurer;	40

(6) Provide services to and on behalf of an alliance program	41
sponsored by another alliance, including entering into an	42
agreement described in division (B) of section 1731.01 of the	43
Revised Code on behalf of the other alliance;	44

(7) If it is a nonprofit corporation created under Chapter	45
1702. of the Revised Code, exercise all powers and authority of	46
such corporations under the laws of the state, or, if otherwise	47
constituted, exercise such powers and authority as apply to it	48
under the applicable laws, and its articles, regulations,	49
constitution, bylaws, or other relevant governing instruments.	50

(B) A small employer health care alliance is not and shall	51
not be regarded for any purpose of law as an insurer, an offeror	52
or seller of any insurance, a partner of or joint venturer with	53
any insurer, an agent of, or solicitor for an agent of, or	54
representative of, an insurer or an offeror or seller of any	55
insurance, an adjuster of claims, or a third-party administrator,	56
and will not be liable under or by reason of any insurance	57
coverage or other health benefit plan provided or not provided by	58
any insurer or by reason of any conditions or restrictions on	59
eligibility or benefits under an alliance program or any insurance	60
or other health benefit plan provided under an alliance program or	61
by reason of the application of those conditions or restrictions.	62

(C) The promotion of an alliance program by an alliance or by	63
an insurer is not and shall not be regarded for any purpose of law	64
as the offer, solicitation, or sale of insurance.	65

(D)(1) No alliance shall adopt, impose, or enforce medical	66
underwriting rules for the purpose of determining whether an	67
alliance member is eligible to purchase a policy, contract, or	68
plan of health insurance or health benefits from any insurer in	69
connection with the alliance health care program.	70

(2) No alliance shall reject any applicant for membership in	71
the alliance based on the health status of the applicant's	72
employees or their dependents.	73

(3) A violation of division (D)(1) or (2) of this section is	74
deemed to be an unfair and deceptive act or practice in the	75
business of insurance under sections 3901.19 to 3901.26 of the	76
Revised Code.	77

(4) Nothing in division (D)(1) or (2) of this section shall	78
be construed as inhibiting or preventing an alliance from	79
adopting, imposing, and enforcing rules, conditions, limitations,	80
or restrictions that are based on factors other than the health	81
status of employees or their dependents for the purpose of	82
determining whether a small employer is eligible to become a	83
member of the alliance. Division (D)(1) of this section does not	84
apply to an insurer that sells health coverage to an alliance	85
member under an alliance health care program.	86

(E) Health benefit plans offered and sold to alliance members	87
that are small employers as defined in section 3924.01 of the	88
Revised Code are subject to sections 3924.01 to 3924.143924.15 of	89
the Revised Code.	90

(F) Any person who represents an alliance in bargaining or	91
negotiating a health benefit plan with an insurer shall disclose	92
to the governing board of the alliance any direct or indirect	93
financial relationship the person has or had during the past two	94
years with the insurer.	95

Sec. 1751.12.  (A)(1) No contractual periodic prepayment and	96
no premium rate for nongroup and conversion policies for health	97
care services, or any amendment to them, may be used by any health	98
insuring corporation at any time until the contractual periodic	99
prepayment and premium rate, or amendment, have been filed with	100
the superintendent of insurance, and shall not be effective until	101
the expiration of sixty days after their filing unless the	102
superintendent sooner gives approval. The filing shall be	103
accompanied by an actuarial certification in the form prescribed	104
by the superintendent. The superintendent shall disapprove the	105
filing, if the superintendent determines within the sixty-day	106
period that the contractual periodic prepayment or premium rate,	107
or amendment, is not in accordance with sound actuarial principles	108
or is not reasonably related to the applicable coverage and	109
characteristics of the applicable class of enrollees. The	110
superintendent shall notify the health insuring corporation of the	111
disapproval, and it shall thereafter be unlawful for the health	112
insuring corporation to use the contractual periodic prepayment or	113
premium rate, or amendment.	114

(2) No contractual periodic prepayment for group policies for	115
health care services shall be used until the contractual periodic	116
prepayment has been filed with the superintendent. The filing	117
shall be accompanied by an actuarial certification in the form	118
prescribed by the superintendent. The superintendent may reject a	119
filing made under division (A)(2) of this section at any time,	120
with at least thirty days' written notice to a health insuring	121
corporation, if the contractual periodic prepayment is not in	122
accordance with sound actuarial principles or is not reasonably	123
related to the applicable coverage and characteristics of the	124
applicable class of enrollees.	125

(3) At any time, the superintendent, upon at least thirty	126
days' written notice to a health insuring corporation, may	127
withdraw the approval given under division (A)(1) of this section,	128
deemed or actual, of any contractual periodic prepayment or	129
premium rate, or amendment, based on information that either of	130
the following applies:	131

(a) The contractual periodic prepayment or premium rate, or	132
amendment, is not in accordance with sound actuarial principles.	133

(b) The contractual periodic prepayment or premium rate, or	134
amendment, is not reasonably related to the applicable coverage	135
and characteristics of the applicable class of enrollees.	136

(4) Any disapproval under division (A)(1) of this section,	137
any rejection of a filing made under division (A)(2) of this	138
section, or any withdrawal of approval under division (A)(3) of	139
this section, shall be effected by a written notice, which shall	140
state the specific basis for the disapproval, rejection, or	141
withdrawal and shall be issued in accordance with Chapter 119. of	142
the Revised Code.	143

(B) Notwithstanding division (A) of this section, a health	144
insuring corporation may use a contractual periodic prepayment or	145
premium rate for policies used for the coverage of beneficiaries	146
enrolled in Title XVIII of the "Social Security Act," 49 Stat. 620	147
(1935), 42 U.S.C.A. 301, as amended, pursuant to a medicare risk	148
contract or medicare cost contract, or for policies used for the	149
coverage of beneficiaries enrolled in the federal employees health	150
benefits program pursuant to 5 U.S.C.A. 8905, or for policies used	151
for the coverage of beneficiaries enrolled in Title XIX of the	152
"Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 301, as	153
amended, known as the medical assistance program or medicaid,	154
provided by the department of job and family services under	155
Chapter 5111. of the Revised Code, or for policies used for the	156
coverage of beneficiaries under any other federal health care	157
program regulated by a federal regulatory body, or for policies	158
used for the coverage of beneficiaries under any contract covering	159
officers or employees of the state that has been entered into by	160
the department of administrative services, if both of the	161
following apply:	162

(1) The contractual periodic prepayment or premium rate has	163
been approved by the United States department of health and human	164
services, the United States office of personnel management, the	165
department of job and family services, or the department of	166
administrative services.	167

(2) The contractual periodic prepayment or premium rate is	168
filed with the superintendent prior to use and is accompanied by	169
documentation of approval from the United States department of	170
health and human services, the United States office of personnel	171
management, the department of job and family services, or the	172
department of administrative services.	173

(C) The administrative expense portion of all contractual	174
periodic prepayment or premium rate filings submitted to the	175
superintendent for review must reflect the actual cost of	176
administering the product. The superintendent may require that the	177
administrative expense portion of the filings be itemized and	178
supported.	179

(D)(1) Copayments must be reasonable and must not be a	180
barrier to the necessary utilization of services by enrollees.	181

(2) A health insuring corporation, in order to ensure that	182
copayments are reasonable and not a barrier to the necessary	183
utilization of basic health care services by enrollees, may do one	184
of the following:	185

(a) Impose copayment charges on any single covered basic	186
health care service that does not exceed forty per cent of the	187
average cost to the health insuring corporation of providing the	188
service;	189

(b) Impose copayment charges that annually do not exceed	190
twenty per cent of the total annual cost to the health insuring	191
corporation of providing all covered basic health care services,	192
including physician office visits, urgent care services, and	193
emergency health services, when aggregated as to all persons	194
covered under the filed product in question. In addition, annual	195
copayment charges as to each enrollee shall not exceed twenty per	196
cent of the total annual cost to the health insuring corporation	197
of providing all covered basic health care services, including	198
physician office visits, urgent care services, and emergency	199
health services, as to such enrollee. The total annual cost of	200
providing a health care service is the cost to the health insuring	201
corporation of providing the health care service to its enrollees	202
as reduced by any applicable provider discount.	203

(3) To ensure that copayments are reasonable and not a	204
barrier to the utilization of basic health care services, a health	205
insuring corporation may not impose, in any contract year, on any	206
subscriber or enrollee, copayments that exceed two hundred per	207
cent of the average annual premium rate to subscribers or	208
enrollees.	209

(E) A health insuring corporation shall not impose lifetime	210
maximums on basic health care services. However, a health insuring	211
corporation may establish a benefit limit for inpatient hospital	212
services that are provided pursuant to a policy, contract,	213
certificate, or agreement for supplemental health care services.	214

(F) A health insuring corporation may require that an	215
enrollee pay an annual deductible that does not exceed one	216
thousand dollars per enrollee or two thousand dollars per family.	217
The, except that:	218

(1) A health insuring corporation may impose higher	219
deductibles for federally qualified high deductible health plans	220
that are linked to health savings accounts;	221

(2) The superintendent may adopt rules definingallowing	222
different annual deductible amounts for plans with an	223
employer-sponsoreda medical savings account, health reimbursement	224
arrangement, or flexible spending account, or similar account.	225

(G) If a health insuring corporation applies a deductible to	226
coverage, the deductible shall not apply to preventive health care	227
services required by division (A)(7) of section 1751.01 of the	228
Revised Code except when required to qualify as a high deductible	229
health plan under federal law.	230

(H) As used in this section, "health savings account" and	231
"high deductible health plan" have the same meaning as in section	232
223 of the "Internal Revenue Code of 1986," 100 Stat. 2085, 26	233
U.S.C.A. 1, as amended.	234

Sec. 3923.81.  (A) If a person is covered by a health benefit	235
plan issued by a sickness and accident insurer, health insuring	236
corporation, or multiple employer welfare arrangement that	237
includes copayment, deductible, or cost-sharing requirements and	238
the person is required to pay for health care costs out-of-pocket	239
or with funds from a savings account, the amount the person is	240
required to pay to a health care provider or pharmacy shall not	241
exceed the amount the sickness and accident insurer, health	242
insuring corporation, or multiple employer welfare arrangement	243
would pay under applicable reimbursement rates. This division does	244
not preclude a person from reaching an agreement with a health	245
care provider or pharmacy on terms that are more favorable to the	246
person than reimbursement rates that otherwise would apply.	247

(B) Within seven days after receiving a written request from	248
a person covered by a health benefit plan issued by the sickness	249
and accident insurer, health insuring corporation, or multiple	250
employer welfare arrangement, the sickness and accident insurer,	251
health insuring corporation, or multiple employer welfare	252
arrangement shall provide the person with information about any	253
applicable reimbursement rates that affect the person's required	254
out-of-pocket payments or payments from a savings account.	255

(C) As used in this section:

256

(1) "Health benefit plan" means any policy of sickness and	257
accident insurance or any policy, contract, or agreement covering	258
one or more "basic health care services," "supplemental health	259
care services," or "specialty health care services," as defined in	260
section 1751.01 of the Revised Code, offered or provided by a	261
health insuring corporation or by a sickness and accident insurer	262
or multiple employer welfare arrangement.	263

(2) "Reimbursement rates" means any rates that apply to a	264
payment made by a sickness and accident insurer, health insuring	265
corporation, or multiple employer welfare arrangement for charges	266
covered by a health benefit plan.	267

(3) "Savings account" includes health savings accounts,	268
health reimbursement arrangements, flexible savings accounts,	269
medical savings accounts, and similar accounts and arrangements.	270

Sec. 3924.01.  As used in sections 3924.01 to 3924.143924.15	271
of the Revised Code:	272

(A) "Actuarial certification" means a written statement	273
prepared by a member of the American academy of actuaries, or by	274
any other person acceptable to the superintendent of insurance,	275
that states that, based upon the person's examination, a carrier	276
offering health benefit plans to small employers is in compliance	277
with sections 3924.01 to 3924.143924.15 of the Revised Code.	278
"Actuarial certification" shall include a review of the	279
appropriate records of, and the actuarial assumptions and methods	280
used by, the carrier relative to establishing premium rates for	281
the health benefit plans.	282

(B) "Adjusted average market premium price" means the average	283
market premium price as determined by the board of directors of	284
the Ohio health reinsurance program either on the basis of the	285
arithmetic mean of all carriers' premium rates for an OHC plan	286
sold to groups with similar case characteristics by all carriers	287
selling OHC plans in the state, or on any other equitable basis	288
determined by the board.	289

(C) "Base premium rate" means, as to any health benefit plan	290
that is issued by a carrier and that covers at least two but no	291
more than fifty employees of a small employer, the lowest premium	292
rate for a new or existing business prescribed by the carrier for	293
the same or similar coverage under a plan or arrangement covering	294
any small employer with similar case characteristics.	295

(D) "Carrier" means any sickness and accident insurance	296
company or health insuring corporation authorized to issue health	297
benefit plans in this state or a MEWA. A sickness and accident	298
insurance company that owns or operates a health insuring	299
corporation, either as a separate corporation or as a line of	300
business, shall be considered as a separate carrier from that	301
health insuring corporation for purposes of sections 3924.01 to	302
3924.143924.15 of the Revised Code.	303

(E) "Case characteristics" means, with respect to a small	304
employer, the geographic area in which the employees work; the age	305
and sex of the individual employees and their dependents; the	306
appropriate industry classification as determined by the carrier;	307
the number of employees and dependents; and such other objective	308
criteria as may be established by the carrier. "Case	309
characteristics" does not include claims experience, health	310
status, or duration of coverage from the date of issue.	311

(F) "Dependent" means the spouse or child of an eligible	312
employee, subject to applicable terms of the health benefits plan	313
covering the employee.	314

(G) "Eligible employee" means an employee who works a normal	315
work week of twenty-five or more hours. "Eligible employee" does	316
not include a temporary or substitute employee, or a seasonal	317
employee who works only part of the calendar year on the basis of	318
natural or suitable times or circumstances.	319

(H) "Health benefit plan" means any hospital or medical	320
expense policy or certificate or any health plan provided by a	321
carrier, that is delivered, issued for delivery, renewed, or used	322
in this state on or after the date occurring six months after	323
November 24, 1995. "Health benefit plan" does not include policies	324
covering only accident, credit, dental, disability income,	325
long-term care, hospital indemnity, medicare supplement, specified	326
disease, or vision care; coverage under a	327
one-time-limited-duration policy of no longer than six months;	328
coverage issued as a supplement to liability insurance; insurance	329
arising out of a workers' compensation or similar law; automobile	330
medical-payment insurance; or insurance under which benefits are	331
payable with or without regard to fault and which is statutorily	332
required to be contained in any liability insurance policy or	333
equivalent self-insurance.	334

(I) "Late enrollee" means an eligible employee or dependent	335
who enrolls in a small employer's health benefit plan other than	336
during the first period in which the employee or dependent is	337
eligible to enroll under the plan or during a special enrollment	338
period described in section 2701(f) of the "Health Insurance	339
Portability and Accountability Act of 1996," Pub. L. No. 104-191,	340
110 Stat. 1955, 42 U.S.C.A. 300gg, as amended.	341

(J) "MEWA" means any "multiple employer welfare arrangement"	342
as defined in section 3 of the "Federal Employee Retirement Income	343
Security Act of 1974," 88 Stat. 832, 29 U.S.C.A. 1001, as amended,	344
except for any arrangement which is fully insured as defined in	345
division (b)(6)(D) of section 514 of that act.	346

(K) "Midpoint rate" means, for small employers with similar	347
case characteristics and plan designs and as determined by the	348
applicable carrier for a rating period, the arithmetic average of	349
the applicable base premium rate and the corresponding highest	350
premium rate.	351

(L) "Pre-existing conditions provision" means a policy	352
provision that excludes or limits coverage for charges or expenses	353
incurred during a specified period following the insured's	354
enrollment date as to a condition for which medical advice,	355
diagnosis, care, or treatment was recommended or received during a	356
specified period immediately preceding the enrollment date.	357
Genetic information shall not be treated as such a condition in	358
the absence of a diagnosis of the condition related to such	359
information.	360

For purposes of this division, "enrollment date" means, with	361
respect to an individual covered under a group health benefit	362
plan, the date of enrollment of the individual in the plan or, if	363
earlier, the first day of the waiting period for such enrollment.	364

(M) "Service waiting period" means the period of time after	365
employment begins before an employee is eligible to be covered for	366
benefits under the terms of any applicable health benefit plan	367
offered by the small employer.	368

(N)(1) "Small employer" means, in connection with a group	369
health benefit plan and with respect to a calendar year and a plan	370
year, an employer who employed an average of at least two but no	371
more than fifty eligible employees on business days during the	372
preceding calendar year and who employs at least two employees on	373
the first day of the plan year.	374

(2) For purposes of division (N)(1) of this section, all	375
persons treated as a single employer under subsection (b), (c),	376
(m), or (o) of section 414 of the "Internal Revenue Code of 1986,"	377
100 Stat. 2085, 26 U.S.C.A. 1, as amended, shall be considered one	378
employer. In the case of an employer that was not in existence	379
throughout the preceding calendar year, the determination of	380
whether the employer is a small or large employer shall be based	381
on the average number of eligible employees that it is reasonably	382
expected the employer will employ on business days in the current	383
calendar year. Any reference in division (N) of this section to an	384
"employer" includes any predecessor of the employer. Except as	385
otherwise specifically provided, provisions of sections 3924.01 to	386
3924.143924.15 of the Revised Code that apply to a small employer	387
that has a health benefit plan shall continue to apply until the	388
plan anniversary following the date the employer no longer meets	389
the requirements of this division.	390

(O) "OHC plan" means an Ohio health care plan, which is the	391
basic, standard, or carrier reimbursement plan for small employers	392
and individuals established by the board in accordance with	393
section 3924.10 of the Revised Code.	394

Sec. 3924.02.  (A) An individual or group health benefit plan	395
is subject to sections 3924.01 to 3924.143924.15 of the Revised	396
Code if it provides health care benefits covering at least two but	397
no more than fifty employees of a small employer, and if it meets	398
either of the following conditions:	399

(1) Any portion of the premium or benefits is paid by a small	400
employer, or any covered individual is reimbursed, whether through	401
wage adjustments or otherwise, by a small employer for any portion	402
of the premium.	403

(2) The health benefit plan is treated by the employer or any	404
of the covered individuals as part of a plan or program for	405
purposes of section 106 or 162 of the "Internal Revenue Code of	406
1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.	407

(B) Notwithstanding division (A) of this section, divisions	408
(D), (E)(2), (F), and (G) of section 3924.03 of the Revised Code	409
and section 3924.04 of the Revised Code do not apply to health	410
benefit policies that are not sold to owners of small businesses	411
as an employment benefit plan. Such policies shall clearly state	412
that they are not being sold as an employment benefit plan and	413
that the owner of the business is not responsible, either directly	414
or indirectly, for paying the premium or benefits.	415

(C) Every health benefit plan offered or delivered by a	416
carrier, other than a health insuring corporation, to a small	417
employer is subject to sections 3923.23, 3923.231, 3923.232,	418
3923.233, and 3923.234 of the Revised Code and any other provision	419
of the Revised Code that requires the reimbursement, utilization,	420
or consideration of a specific category of a licensed or certified	421
health care practitioner, except flexible health benefit plans	422
offered in accordance with section 3924.15 of the Revised Code.	423

(D) Except as expressly provided in sections 3924.01 to	424
3924.143924.15 of the Revised Code, no health benefit plan	425
offered to a small employer is subject to any of the following:	426

(1) Any law that would inhibit any carrier from contracting	427
with providers or groups of providers with respect to health care	428
services or benefits;	429

(2) Any law that would impose any restriction on the ability	430
to negotiate with providers regarding the level or method of	431
reimbursing care or services provided under the health benefit	432
plan;	433

(3) Any law that would require any carrier to either include	434
a specific provider or class of provider when contracting for	435
health care services or benefits, or to exclude any class of	436
provider that is generally authorized by statute to provide such	437
care.	438

Sec. 3924.06.  Compliance with the underwriting and rating	439
requirements contained in sections 3924.01 to 3924.143924.15 of	440
the Revised Code shall be demonstrated through actuarial	441
certification. Carriers offering health benefit plans to small	442
employers shall file annually with the superintendent of insurance	443
an actuarial certification stating that the underwriting and	444
rating methods of the carrier do all of the following:	445

(A) Comply with accepted actuarial practices;

446

(B) Are uniformly applied to health benefit plans covering	447
small employers;	448

(C) Comply with the applicable provisions of sections 3924.01	449
to 3924.143924.15 of the Revised Code.	450

Sec. 3924.08.  (A) The board of directors of the Ohio health	451
reinsurance program shall consist of nine appointed members who	452
shall serve staggered terms as determined by the initial board for	453
its members and by the plan of operation of the program for	454
members of subsequent boards. Within thirty days after April 14,	455
1993, the members of the board shall be appointed, as follows:	456

(1) The chairperson of the senate committee having	457
jurisdiction over insurance shall appoint the following members:	458

(a) Two member carriers that are small employer carriers;

459

(b) One member carrier that is a health insuring corporation	460
predominantly in the small employer market;	461

(c) One representative of providers of health care.

462

(2) The chairperson of the committee in the house of	463
representatives having jurisdiction over insurance shall appoint	464
the following members:	465

(a) One member carrier that is a small employer carrier;

466

(b) One member carrier whose principal health insurance	467
business is in the large employer market;	468

(c) One representative of an employer with fifty or fewer	469
employees;	470

(d) One representative of consumers in this state.

471

(3) The superintendent of insurance shall appoint a	472
representative of a member carrier operating in the small employer	473
market who is a fellow of the society of actuaries.	474

The superintendent, a member of the house of representatives	475
appointed by the speaker of the house of representatives, and a	476
member of the senate appointed by the president of the senate,	477
shall be ex-officio members of the board. The membership of all	478
boards subsequent to the initial board shall reflect the	479
distribution described in division (A) of this section.	480

The chairperson of the initial board and each subsequent	481
board shall represent a small employer member carrier and shall be	482
elected by a majority of the voting members of the board. Each	483
chairperson shall serve for the maximum duration established in	484
the plan of operation.	485

(B) Within one hundred eighty days after the appointment of	486
the initial board, the board shall establish a plan of operation	487
and, thereafter, any amendments to the plan that are necessary or	488
suitable, to assure the fair, reasonable, and equitable	489
administration of the program. The board shall, immediately upon	490
adoption, provide to the superintendent copies of the plan of	491
operation and all subsequent amendments to it.	492

(C) The plan of operation shall establish rules, conditions,	493
and procedures for all of the following:	494

(1) The handling and accounting of assets and moneys of the	495
program and for an annual fiscal reporting to the superintendent;	496

(2) Filling vacancies on the board;

497

(3) Selecting an administrator of the program, and setting	498
forth the powers and duties of the administrator. The	499
administrator may be a carrier as defined in section 3924.01 of	500
the Revised Code or a person licensed as an administrator under	501
Chapter 3959. of the Revised Code, or the board may, in its sole	502
discretion, choose to serve as administrator of the program.	503

(4) Reinsuring risks in accordance with sections 3924.07 to	504
3924.143924.15 of the Revised Code;	505

(5) Collecting assessments subject to section 3924.13 of the	506
Revised Code from all members to provide for claims reinsured by	507
the program and for administrative expenses incurred or estimated	508
to be incurred during the period for which the assessment is made;	509

(6) Providing protection for carriers from the financial risk	510
associated with small employers that present poor credit risks;	511

(7) Establishing standards for the coverage of small	512
employers that have a high turnover of employees;	513

(8) Establishing an appeals process for carriers to seek	514
relief when a carrier has experienced an unfair share of	515
administrative and credit risks;	516

(9) Establishing the adjusted average market premium prices	517
for use by the OHC plans for individuals, for groups of two to	518
twenty-five employees, and for groups of twenty-six to fifty	519
employees that are offered in the state;	520

(10) Establishing participation standards at issue and	521
renewal for reinsured cases;	522

(11) Reinsuring risks and collecting assessments in	523
accordance with division (G) of section 3924.11 of the Revised	524
Code;	525

(12) Any additional matters as determined by the board.

526

Sec. 3924.09.  The Ohio health reinsurance program shall have	527
the general powers and authority granted under the laws of the	528
state to insurance companies licensed to transact sickness and	529
accident insurance, except the power to issue insurance. The board	530
of directors of the program also shall have the specific authority	531
to do all of the following:	532

(A) Enter into contracts as are necessary or proper to carry	533
out the provisions and purposes of sections 3924.07 to 3924.14	534
3924.15 of the Revised Code, including the authority to enter into	535
contracts with similar programs of other states for the joint	536
performance of common functions, or with persons or other	537
organizations for the performance of administrative functions;	538

(B) Sue or be sued, including taking any legal actions	539
necessary or proper for recovery of any assessments for, on behalf	540
of, or against any program or board member;	541

(C) Take such legal action as is necessary to avoid the	542
payment of improper claims against the program;	543

(D) Design the OHC plans which, when offered by a carrier,	544
are eligible for reinsurance and issue reinsurance policies in	545
accordance with the requirements of sections 3924.07 to 3924.14	546
3924.15 of the Revised Code;	547

(E) Establish rules, conditions, and procedures pertaining to	548
the reinsurance of members' risks by the program;	549

(F) Establish appropriate rates, rate schedules, rate	550
adjustments, rate classifications, and any other actuarial	551
functions appropriate to the operation of the program;	552

(G) Assess members in accordance with division (G) of section	553
3924.11 and the provisions of section 3924.13 of the Revised Code,	554
and make such advance interim assessments as may be reasonable and	555
necessary for organizational and interim operating expenses. Any	556
interim assessments shall be credited as offsets against any	557
regular assessments due following the close of the calendar year.	558

(H) Appoint members to appropriate legal, actuarial, and	559
other committees if necessary to provide technical assistance with	560
respect to the operation of the program, policy and other contract	561
design, and any other function within the authority of the	562
program;	563

(I) Borrow money to effect the purposes of the program. Any	564
notes or other evidence of indebtedness of the program not in	565
default shall be legal investments for carriers and may be carried	566
as admitted assets.	567

(J) Reinsure risks, collect assessments, and otherwise carry	568
out its duties under division (G) of section 3924.11 of the	569
Revised Code;	570

(K) Study the operation of the Ohio health reinsurance	571
program and the open enrollment reinsurance program and, based on	572
its findings, make legislative recommendations to the general	573
assembly for improvements in the effectiveness, operation, and	574
integrity of the programs;	575

(L) Design a basic and standard plan for purposes of sections	576
1751.16, 3923.122, and 3923.581 of the Revised Code.	577

Sec. 3924.10.  (A) The board of directors of the Ohio health	578
reinsurance program shall design the OHC basic, standard, and	579
carrier reimbursement plans which, when offered by a carrier, are	580
eligible for reinsurance under the program. The board shall	581
establish the form and level of coverage to be made available by	582
carriers in their OHC plans. In designing the plans the board	583
shall also establish benefit levels, deductibles, coinsurance	584
factors, exclusions, and limitations for the plans. The forms and	585
levels of coverage established by the board shall specify which	586
components of health benefit plans offered by a carrier may be	587
reinsured. The OHC plans are subject to division (C) of section	588
3924.02 of the Revised Code and to the provisions in Chapters	589
1751., 1753., 3923., and any other chapter of the Revised Code	590
that require coverage or the offer of coverage of a health care	591
service or benefit, except that the board may design plans that	592
are flexible health benefit plans consistent with section 3924.15	593
of the Revised Code.	594

(B) The board shall adopt the OHC plans within one hundred	595
eighty days after the effective date of this amendmentMarch 22,	596
1999. The plans may include cost containment features including	597
any of the following:	598

(1) Utilization review of health care services, including	599
review of the medical necessity of hospital and physician	600
services;	601

(2) Case management benefit alternatives;

602

(3) Selective contracting with hospitals, physicians, and	603
other health care providers;	604

(4) Reasonable benefit differentials applicable to	605
participating and nonparticipating providers;	606

(5) Employee assistance program options that provide	607
preventive and early intervention mental health and substance	608
abuse services;	609

(6) Other provisions for the cost-effective management of the	610
plans.	611

(C) OHC plans established for use by health insuring	612
corporations shall be consistent with the basic method of	613
operation of such corporations.	614

(D) Each carrier shall certify to the superintendent of	615
insurance, in the form and manner prescribed by the	616
superintendent, that the OHC plans filed by the carrier are in	617
substantial compliance with the provisions of the board OHC plans.	618
Upon receipt by the superintendent of the certification, the	619
carrier may use the certified plans.	620

(E) Each carrier shall, on and after sixty days after the	621
date that the program becomes operational and as a condition of	622
transacting business in this state, renew coverage provided to any	623
individual or group under its OHC plans.	624

Sec. 3924.11.  Any member of the Ohio health reinsurance	625
program may reinsure small employer groups or individuals in	626
accordance with the following conditions and limitations:	627

(A) A small employer group or individual may be reinsured	628
within sixty days after the commencement of the group's or	629
individual's coverage under the plan.	630

(B)(1) The carrier may reinsure either the entire eligible	631
group or any eligible individual, in accordance with the premium	632
rates established in section 3924.12 of the Revised Code, upon	633
commencement of the coverage.	634

(2) The carrier may reinsure an eligible employee, or the	635
dependents of an eligible employee, who were previously excluded	636
from group coverage for medical reasons, and shall reinsure such	637
employees or dependents within sixty days after the carrier is	638
required to include them in the group coverage.	639

(C) With respect to an OHC plan, the program shall reinsure	640
the level of coverage provided.	641

(D) With respect to other plans issued to small employers,	642
the program shall reinsure the level of coverage provided up to,	643
but not exceeding, the level of coverage provided in an OHC	644
carrier reimbursement plan. In the coverage provided to small	645
employers, carriers shall be required to use high-cost care	646
management, hospital precertification techniques, and other cost	647
containment mechanisms established by the program.	648

(E) A carrier may not reinsure existing business, except	649
pursuant to division (A) of this section.	650

(F) If an employer group is covered under a plan other than	651
an OHC carrier reimbursement plan and the carrier chooses to	652
reinsure the group subsequent to the initial coverage period, or	653
if a new individual joins the group and the carrier wants to	654
reinsure that individual, the carrier shall not force the employer	655
to change to an OHC carrier reimbursement plan. The carrier shall	656
allow the employer to maintain the same benefit plan and reinsure	657
only that portion of the plan that is consistent with an OHC	658
carrier reimbursement plan.	659

(G) With respect to coverage provided to an individual	660
acquired under section 3923.58 or a federally eligible individual	661
acquired under section 3923.581 of the Revised Code, the following	662
conditions and limitations apply:	663

(1) Within sixty days after the commencement of the initial	664
coverage, any carrier may reinsure coverage of such an individual	665
with the open enrollment reinsurance program in accordance with	666
division (G) of this section. Premium rates charged for coverage	667
reinsured by the program shall be established in accordance with	668
section 3924.12 of the Revised Code.	669

(2) The board of directors of the Ohio health reinsurance	670
program shall establish the open enrollment reinsurance fund for	671
coverage provided under section 3923.58 of the Revised Code and,	672
with respect to federally eligible individuals, coverage provided	673
under section 3923.581 of the Revised Code. The fund shall be	674
maintained separately from any reinsurance fund established for	675
Ohio health care plans issued pursuant to sections 3924.07 to	676
3924.143924.15 of the Revised Code. The board shall calculate, on	677
a retrospective basis, the amount needed for maintenance of the	678
open enrollment reinsurance fund and, on the basis of that	679
calculation, shall determine the amount to be assessed each	680
carrier that is required to provide open enrollment coverage.	681

Assessments shall be apportioned by the board among all	682
carriers participating in the open enrollment reinsurance program	683
in proportion to their respective shares of the total premiums,	684
net of reinsurance premiums paid by a carrier for open enrollment	685
coverage and net of reinsurance premiums paid by the carrier for	686
all other individual health benefit plans, earned in this state	687
from all health benefit plans covering individuals that are issued	688
by all such carriers during the calendar year coinciding with or	689
ending during the fiscal year of the open enrollment program, or	690
on any other equitable basis reflecting coverage of individuals in	691
this state as may be provided in the plan of operation adopted by	692
the board. In no event shall the assessment of any carrier under	693
this section exceed, on an annual basis, three per cent of its	694
Ohio premiums for health benefit plans covering individuals as	695
reported on its most recent annual statement filed with the	696
superintendent of insurance.	697

The board shall submit its determination of the amount of the	698
assessment to the superintendent for review of the accuracy of the	699
calculation of the assessment. Upon approval by the	700
superintendent, each carrier shall, within thirty days after	701
receipt of the notice of assessment, submit the assessment to the	702
board for purposes of the open enrollment reinsurance fund.	703

(3) If the assessments made and collected pursuant to	704
division (G)(2) of this section are not sufficient to pay the	705
claims reinsured under division (G) of this section and the	706
allocated administrative expenses, incurred or estimated to be	707
incurred during the period for which the assessment was made, the	708
secretary of the board shall immediately notify the	709
superintendent, and the superintendent shall suspend the operation	710
of open enrollment under section 3923.58 of the Revised Code and,	711
with respect to federally eligible individuals, under section	712
3923.581 of the Revised Code until the board has collected in	713
subsequent years through assessments made pursuant to division	714
(G)(2) of this section an amount sufficient to pay such claims and	715
administrative expenses.	716

(4)(a) Any carrier that is subject to open enrollment under	717
section 3923.58 of the Revised Code may elect not to participate	718
in the open enrollment reinsurance program under division (G) of	719
this section by filing an application with the superintendent and	720
obtaining the superintendent's approval. In determining whether to	721
approve an application, the superintendent shall consider whether	722
the carrier meets all of the following standards:	723

(i) Demonstration by the carrier of a substantial and	724
established market presence;	725

(ii) Demonstrated experience in the individual market and	726
history of rating and underwriting individual plans;	727

(iii) Commitment to comply with the requirements of section	728
3923.58 of the Revised Code;	729

(iv) Financial ability to assume and manage the risk of	730
enrolling open enrollment individuals without the need for, or	731
protection of, reinsurance.	732

(b) A carrier whose application for nonparticipation has been	733
rejected by the superintendent may appeal the decision in	734
accordance with Chapter 119. of the Revised Code. A carrier that	735
has received approval of the superintendent not to participate in	736
the open enrollment reinsurance program shall, on or before the	737
first day of December, annually certify to the superintendent that	738
it continues to meet the standards described in division (G)(4)(a)	739
of this section.	740

(c) In any year subsequent to the year in which its	741
application not to participate has been approved, a carrier may	742
elect to participate in the open enrollment reinsurance program by	743
giving notice to the superintendent and board on or before the	744
thirty-first day of December. If, after a period of	745
nonparticipation, a carrier elects to participate in the open	746
enrollment reinsurance program, the carrier retains the risks it	747
assumed during the period when it was not participating.	748

(d) The superintendent may, at any time, authorize a carrier	749
to modify an election not to participate if the risk from the	750
carrier's open enrollment business jeopardizes the financial	751
condition of the carrier. If the superintendent authorizes the	752
carrier to again participate in the open enrollment reinsurance	753
program, the carrier shall retain the risks it assumed during the	754
period of nonparticipation.	755

(5)(a) The open enrollment reinsurance program shall be	756
operated separately from the Ohio health reinsurance program.	757

(b) A carrier's election to participate in the open	758
enrollment reinsurance program under division (G) of this section	759
shall not be construed as an election to participate in the Ohio	760
health reinsurance program under section 3924.07 of the Revised	761
Code.	762

Sec. 3924.14.  Neither the participation as members of the	763
Ohio health reinsurance program or as members of the board of	764
directors of the program, the establishment of rates, forms, or	765
procedures for coverage issued by the program, nor any other joint	766
or collective action required by sections 3924.01 to 3924.14	767
3924.15 of the Revised Code, shall be the basis of any legal	768
action or any criminal or civil liability or penalty against the	769
program, the board, or any of its members either jointly or	770
separately.	771

Sec. 3924.15. (A) As used in this section:

772

(1) "Mandated health benefits" means any coverage, or	773
offering of coverage, required under the Revised Code or rules	774
adopted thereunder for the expenses of specified services,	775
treatments, screenings, conditions, diseases, medications and	776
drugs under a health benefit plan, and includes any required	777
coverage or offering of coverage for the reimbursement of the	778
services of a specific category of health care provider.	779

(2) "Flexible health benefit plan" means a health benefit	780
plan that does not provide one or more mandated health benefits.	781

(B) Any carrier offering a health benefit plan subject to	782
sections 3924.01 to 3924.15 of the Revised Code may offer a	783
flexible health benefit plan as an option, provided that the	784
carrier also offers a health benefit plan that includes all	785
mandated health benefits.	786

(C) In connection with the sale of a flexible health benefit	787
plan to a small employer, a carrier shall comply with all of the	788
following:	789

(1) The carrier shall provide a policyholder who is a small	790
employer with a written notice that lists each mandated health	791
benefit that is not included in the flexible health benefit plan.	792
The employer shall provide the notice to each employee	793
participating in the flexible health benefit plan.	794

(2) The carrier shall provide a policyholder with a written	795
notice that contains the following language in bold, twelve-point	796
type:	797

"NOTICE: THIS FLEXIBLE HEALTH BENEFIT PLAN DOES NOT PROVIDE	798
ONE OR MORE MANDATED HEALTH BENEFITS THAT NORMALLY MUST BE	799
INCLUDED IN A HEALTH BENEFIT PLAN UNDER OHIO LAW. THIS FLEXIBLE	800
HEALTH BENEFIT PLAN MAY PROVIDE MORE AFFORDABLE HEALTH INSURANCE	801
COVERAGE TO YOU, BUT AT THE SAME TIME, IT MAY PROVIDE YOU WITH	802
FEWER BENEFITS THAN NORMALLY ARE INCLUDED IN A HEALTH BENEFIT	803
PLAN."	804

(3) The carrier shall provide a policyholder with a statement	805
that the policyholder shall sign and return to the carrier,	806
acknowledging that the flexible health benefit plan being	807
purchased does not provide coverage for the mandated health	808
benefits listed on the form. The carrier shall maintain the	809
statement and make it available to the superintendent of insurance	810
upon request.	811

(D) This section does not affect the application of any of	812
the following state and federal laws, and rules and regulations	813
adopted thereunder:	814

(1) Any section of the Revised Code that requires a carrier	815
to cover or offer coverage to any specific category of individuals	816
or group, including, but not limited to, any section requiring	817
open enrollment, guaranteed issuance of coverage, continuation of	818
coverage, right to renewal, or an option for conversion with	819
respect to an individual or group;	820

(2) Any federal law or provision of the Revised Code enacted	821
to comply with a federal law, including, but not limited to, the	822
"Health Insurance Portability and Accountability Act of 1996," 110	823
Stat. 1955, 42 U.S.C.A. 300gg, as amended;	824

(3) Sections 3901.38 and 3901.381 to 3901.3814 of the Revised	825
Code;	826

(4) Sections 3902.11 to 3902.14 of the Revised Code;

827

(5) Sections 1751.77 to 1751.88 and 3923.66 to 3923.70 of the	828
Revised Code;	829

(6) Section 1753.21 of the Revised Code.

830

(E) The superintendent of insurance may adopt rules in	831
accordance with Chapter 119. of the Revised Code to implement this	832
section.	833

Sec. 3924.73.  (A) As used in this section:

834

(1) "Health care insurer" means any person legally engaged in	835
the business of providing sickness and accident insurance	836
contracts in this state, a health insuring corporation organized	837
under Chapter 1751. of the Revised Code, or any legal entity that	838
is self-insured and provides health care benefits to its employees	839
or members.	840

(2) "Small employer" has the same meaning as in section	841
3924.01 of the Revised Code.	842

(B)(1) Subject to division (B)(2) of this section, nothing in	843
sections 3924.61 to 3924.74 of the Revised Code shall be construed	844
to limit the rights, privileges, or protections of employees or	845
small employers under sections 3924.01 to 3924.143924.15 of the	846
Revised Code.	847

(2) If any account holder enrolls or applies to enroll in a	848
policy or contract offered by a health care insurer providing	849
sickness and accident coverage that is more comprehensive than,	850
and has a deductible amount that is less than, the coverage and	851
deductible amount of the policy under which the account holder	852
currently is enrolled, the health care insurer to which the	853
account holder applies may subject the account holder to the same	854
medical review, waiting periods, and underwriting requirements to	855
which the health care insurer generally subjects other enrollees	856
or applicants, unless the account holder enrolls or applies to	857
enroll during a designated period of open enrollment.	858

Section 2. That existing sections 1731.03, 1751.12, 3924.01,	859
3924.02, 3924.06, 3924.08, 3924.09, 3924.10, 3924.11, 3924.14, and	860
3924.73 of the Revised Code are hereby repealed.	861