As Passed by the Senate

126th General Assembly Regular Session 2005-2006

Am. Sub. S. B. No. 5

Senators Hottinger, Harris 

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A BILL

To amend sections 1731.01, 1731.03, 1731.04, 1731.09,

1

3924.04, and 3924.06 and to enact sections 3923.81

2

and 3961.01 to 3961.09 of the Revised Code to

3

regulate discount medical plan organizations

4

concerning provider agreements and marketing,

5

disclosure, cancellation, and refund requirements;

6

to make changes to the Small Employer Health Care

7

Alliances Law and the Small Employer Health

8

Benefit Plans Law; and to limit the amount of

9

copayments and deductibles paid by persons insured

10

by health benefit plans.

11

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

Section 1.  That sections 1731.01, 1731.03, 1731.04, 1731.09,	12
3924.04, and 3924.06 be amended and sections 3923.81, 3961.01,	13
3961.02, 3961.03, 3961.04, 3961.05, 3961.06, 3961.07, 3961.08, and	14
3961.09 of the Revised Code be enacted to read as follows:	15

Sec. 1731.01.  As used in this chapter:

16

(A) "Alliance" or "small employer health care alliance" means	17
an existing or newly created organization that has been granted a	18
certificate of authority by the superintendent of insurance under	19
section 1731.021 of the Revised Code and that is either of the	20
following:	21

(1) A chamber of commerce, trade association, professional	22
organization, or any other organization that has all of the	23
following characteristics:	24

(a) Is a nonprofit corporation or association;

25

(b) Has members that include or are exclusively small	26
employers;	27

(c) Sponsors or is part of a program to assist such small	28
employer members to obtain coverage for their employees under one	29
or more health benefit plans;	30

(d) Except as provided in division (A)(1)(e) of this section,	31
is not directly or indirectly controlled, through voting	32
membership, representation on its governing board, or otherwise,	33
by any insurance company, person, firm, or corporation that sells	34
insurance, any provider, or by persons who are officers, trustees,	35
or directors of such enterprises, or by any combination of such	36
enterprises or persons.	37

(e) Division (A)(1)(d) of this section does not apply to an	38
organization that is comprised of members who are either insurance	39
agents or providers, that is controlled by the organization's	40
members or by the organization itself, and that elects to offer	41
health insurance exclusively to any or all of the following:	42

(i) Employees and retirees of the organization;

43

(ii) Insurance agents and providers that are members of the	44
organization;	45

(iii) Employees and retirees of the agents or providers	46
specified in division (A)(1)(e)(ii) of this section;	47

(iv) Families and dependents of the employees, providers,	48
agents, and retirees specified in divisions (A)(1)(e)(i),	49
(A)(1)(e)(ii), and (A)(1)(e)(iii) of this section.	50

(2) A nonprofit corporation controlled by one or more	51
organizations described in division (A)(1) of this section.	52

(B) "Alliance program" or "alliance health care program"	53
means a program sponsored by a small employer health care alliance	54
that assists small employer members of such small employer health	55
care alliance or any other small employer health care alliance to	56
obtain coverage for their employees under one or more health	57
benefit plans, and that includes at least one agreement between a	58
small employer health care alliance and an insurer that contains	59
the insurer's agreement to offer and sell one or more health	60
benefit plans to such small employers and contains all of the	61
other features required under section 1731.04 of the Revised Code.	62

(C) "Eligible employees, retirees, their dependents, and	63
members of their families," as used together or separately, means	64
the active employees of a small employer, or retired former	65
employees of a small employer or predecessor firm or organization,	66
their dependents or members of their families, who are eligible	67
for coverage under the terms of the applicable alliance program.	68

(D) "Enrolled small employer" or "enrolled employer" means a	69
small employer that has obtained coverage for its eligible	70
employees from an insurer under an alliance program.	71

(E) "Health benefit plan" means any hospital or medical	72
expense policy of insurance or a health care plan provided by an	73
insurer, including a health insuring corporation plan, provided by	74
or through an insurer, or any combination thereof. "Health benefit	75
plan" does not include any of the following:	76

(1) A policy covering only accident, credit, dental,	77
disability income, long-term care, hospital indemnity, medicare	78
supplement, specified disease, or vision care, except where any of	79
the foregoing is offered as an addition, indorsement, or rider to	80
a health benefit plan;	81

(2) Coverage issued as a supplement to liability insurance,	82
insurance arising out of a workers' compensation or similar law,	83
automobile medical-payment insurance, or insurance under which	84
benefits are payable with or without regard to fault and which is	85
statutorily required to be contained in any liability insurance	86
policy or equivalent self-insurance;	87

(3) Coverage issued by a health insuring corporation	88
authorized to offer supplemental health care services only.	89

(F) "Insurer" means an insurance company authorized to do the	90
business of sickness and accident insurance in this state or, for	91
the purposes of this chapter, a health insuring corporation	92
authorized to issue health care plans in this state.	93

(G) "Participants" or "beneficiaries" means those eligible	94
employees, retirees, their dependents, and members of their	95
families who are covered by health benefit plans provided by an	96
insurer to enrolled small employers under an alliance program.	97

(H) "Provider" means a hospital, urgent care facility,	98
nursing home, physician, podiatrist, dentist, pharmacist,	99
chiropractor, certified registered nurse anesthetist, dietitian,	100
or other health care provider licensed by this state, or group of	101
such health care providers.	102

(I) "Qualified alliance program" means an alliance program	103
under which health care benefits are provided to twoone thousand	104
five hundred or more participants.	105

(J) "Small employer," regardless of its definition in any	106
other chapter of the Revised Code, in this chapter means an	107
employer that employs no more than onefive hundred fifty	108
full-time employees, at least a majority of whom are employed at	109
locations within this state.	110

(1) For this purpose:

111

(a) Each entity that is controlled by, controls, or is under	112
common control with, one or more other entities shall, together	113
with such other entities, be considered to be a single employer.	114

(b) "Full-time employee" means a person who normally works at	115
least twenty-five hours per week and at least forty weeks per year	116
for the employer.	117

(c) An employer will be treated as having onefive hundred	118
fifty or fewer full-time employees on any day if, during the prior	119
calendar year or any twelve consecutive months during the	120
twenty-four full months immediately preceding that day, the mean	121
number of full-time employees employed by the employer does not	122
exceed onefive hundred fifty.	123

(2) An employer that qualifies as a small employer for	124
purposes of becoming an enrolled small employer continues to be	125
treated as a small employer for purposes of this chapter until	126
such time as it fails to meet the conditions described in division	127
(J)(1) of this section for any period of thirty-six consecutive	128
months after first becoming an enrolled small employer, unless	129
earlier disqualified under the terms of the alliance program.	130

Sec. 1731.03.  (A) A small employer health care alliance may	131
do any of the following:	132

(1) Negotiate and enter into agreements with one or more	133
insurers for the insurers to offer and provide one or more health	134
benefit plans to small employers for their employees and retirees,	135
and the dependents and members of the families of such employees	136
and retirees, which coverage may be made available to enrolled	137
small employers without regard to industrial, rating, or other	138
classifications among the enrolled small employers under an	139
alliance program, except as otherwise provided under the alliance	140
program, and for the alliance to perform, or contract with others	141
for the performance of, functions under or with respect to the	142
alliance program;	143

(2) Contract with another alliance for the inclusion of the	144
small employer members of one in the alliance program of the	145
other;	146

(3) Provide or cause to be provided to small employers	147
information concerning the availability, coverage, benefits,	148
premiums, and other information regarding an alliance program and	149
promote the alliance program;	150

(4) Provide, or contract with others to provide, enrollment,	151
record keeping, information, premium billing, collection and	152
transmittal, and other services under an alliance program;	153

(5) Receive reports and information from the insurer and	154
negotiate and enter into agreements with respect to inspection and	155
audit of the books and records of the insurer;	156

(6) Provide services to and on behalf of an alliance program	157
sponsored by another alliance, including entering into an	158
agreement described in division (B) of section 1731.01 of the	159
Revised Code on behalf of the other alliance;	160

(7) If it is a nonprofit corporation created under Chapter	161
1702. of the Revised Code, exercise all powers and authority of	162
such corporations under the laws of the state, or, if otherwise	163
constituted, exercise such powers and authority as apply to it	164
under the applicable laws, and its articles, regulations,	165
constitution, bylaws, or other relevant governing instruments.	166

(B) A small employer health care alliance is not and shall	167
not be regarded for any purpose of law as an insurer, an offeror	168
or seller of any insurance, a partner of or joint venturer with	169
any insurer, an agent of, or solicitor for an agent of, or	170
representative of, an insurer or an offeror or seller of any	171
insurance, an adjuster of claims, or a third-party administrator,	172
and will not be liable under or by reason of any insurance	173
coverage or other health benefit plan provided or not provided by	174
any insurer or by reason of any conditions or restrictions on	175
eligibility or benefits under an alliance program or any insurance	176
or other health benefit plan provided under an alliance program or	177
by reason of the application of those conditions or restrictions.	178

(C) The promotion of an alliance program by an alliance or by	179
an insurer is not and shall not be regarded for any purpose of law	180
as the offer, solicitation, or sale of insurance.	181

(D)(1) No alliance shall adopt, impose, or enforce medical	182
underwriting rules or underwriting rules requiring a small	183
employer to have more than a minimum number of employees for the	184
purpose of determining whether an alliance member is eligible to	185
purchase a policy, contract, or plan of health insurance or health	186
benefits from any insurer in connection with the alliance health	187
care program.	188

(2) No alliance shall reject any applicant for membership in	189
the alliance based on the health status of the applicant's	190
employees or their dependents or because the small employer does	191
not have more than a minimum number of employees.	192

(3) A violation of division (D)(1) or (2) of this section is	193
deemed to be an unfair and deceptive act or practice in the	194
business of insurance under sections 3901.19 to 3901.26 of the	195
Revised Code.	196

(4) Nothing in division (D)(1) or (2) of this section shall	197
be construed as inhibiting or preventing an alliance from	198
adopting, imposing, and enforcing rules, conditions, limitations,	199
or restrictions that are based on factors other than the health	200
status of employees or their dependents or the size of the small	201
employer for the purpose of determining whether a small employer	202
is eligible to become a member of the alliance. Division (D)(1) of	203
this section does not apply to an insurer that sells health	204
coverage to an alliance member under an alliance health care	205
program.	206

(E) HealthExcept as otherwise specified in section 1731.09	207
of the Revised Code, health benefit plans offered and sold to	208
alliance members that are small employers as defined in section	209
3924.01 of the Revised Code are subject to sections 3924.01 to	210
3924.14 of the Revised Code.	211

(F) Any person who represents an alliance in bargaining or	212
negotiating a health benefit plan with an insurer shall disclose	213
to the governing board of the alliance any direct or indirect	214
financial relationship the person has or had during the past two	215
years with the insurer.	216

Sec. 1731.04.  (A) An agreement between an alliance and an	217
insurer referred to in division (B) of section 1731.01 of the	218
Revised Code shall contain at least the following:	219

(1) A provision requiring the insurer to offer and sell to	220
small employers served or to be served by an alliance one or more	221
health benefit plan options for coverage of their eligible	222
employees and the eligible dependents and members of the families	223
of the eligible employees and, if applicable, such members'	224
eligible retirees and the eligible dependents and members of the	225
families of the retirees, subject to such conditions and	226
restrictions as may be set forth or incorporated into the	227
agreement;	228

(2) A brief description of each type of health benefit plan	229
option that is to be so offered and the conditions for the	230
modification, continuation, and termination of the coverage and	231
benefits thereunder;	232

(3) A statement of the eligibility requirements that an	233
employee or retiree must meet in order for the employee or retiree	234
to be eligible to obtain and retain coverage under any health	235
benefit plan option so offered and, if one of such requirements is	236
that an employee must regularly work for a minimum number of hours	237
per week, a statement of such minimum number of hours, which	238
minimum shall not exceed seventeen and one-halftwenty-five hours	239
per week;	240

(4) A description of any pre-existing condition and waiting	241
period rules;	242

(5) A statement of the premium rates or other charges that	243
apply to each health benefit plan option or a formula or method of	244
determining the rates or charges;	245

(6) A provision prescribing the minimum employer contribution	246
toward premiums or other charges required in order to permit a	247
small employer to obtain coverage under a health benefit plan	248
option offered under an alliance program;	249

(7) A provision requiring that each health benefit plan under	250
the alliance program must provide for the continuation of coverage	251
of participants of an enrolled small employer so long as the small	252
employer determines that such person is a qualified beneficiary	253
entitled to such coverage pursuant to Part 6 of Title I of the	254
"Federal Employee Retirement Income Security Act of 1974," 88	255
Stat. 832, 29 U.S.C.A. 1001, and the laws of this state, and	256
regulations or rulings interpreting such provisions. Such coverage	257
provided by the insurer under the plan to participants shall	258
comply with the "Federal Employee Retirement Income Security Act	259
of 1974" and the relevant statutes, regulations, and rulings	260
interpreting that act, including provisions regarding types of	261
coverage to be provided, apportionments of limitations on	262
coverage, apportionments of deductibles, and the rights of	263
qualified beneficiaries to elect coverage options relating to	264
types of coverage and otherwise.	265

(B) An agreement between an alliance and an insurer referred	266
to in division (B) of section 1731.01 of the Revised Code may	267
contain provisions relating to, but not limited to, any of the	268
following:	269

(1) The application and enrollment process for a small	270
employer and related provisions pertaining to historical	271
experience, health statements, and underwriting standards;	272

(2) The minimum number of those employees eligible to be	273
participants that are required to participate in order to permit a	274
small employer to obtain coverage under a health benefit plan	275
option offered under the alliance program, which may vary with the	276
number of employees or those eligible to be participants in	277
respect of the small employer;	278

(3) A procedure for allowing an enrolled small employer to	279
change from one plan option to another under the alliance program,	280
subject to qualifying by size or otherwise under the alliance	281
program;	282

(4) The application of any risk-related pooling or grouping	283
programs and related premiums, conditions, reviews, and	284
alternatives offered by the insurer;	285

(5) The availability of a medicare supplement coverage option	286
for eligible participants who are covered by Parts A and B of	287
medicare, Title XVIII of the "Social Security Act," 49 Stat. 620	288
(1935), 42 U.S.C.A. 301;	289

(6) Relevant experience periods, enrollment periods, and	290
contract periods;	291

(7) Effective dates for coverage of eligible participants;

292

(8) Conditions under which denial or withdrawal of coverage	293
of participants or small employers and their employees may occur	294
by reason of falsification or misrepresentation of material facts	295
or criminal conduct toward the insurer, small employer, or	296
alliance under the program;	297

(9) Premium rate structures, which may be uniform or make	298
provision for age-specific rates, differentials based on number of	299
participants of an enrolled small employer, products and plan	300
options selected, and other factors, rate adjustments based on	301
consumer price indices, utilization, or other relevant factors,	302
notification of rate adjustments, and arbitration;	303

(10) Any responsibilities of the alliance for billing,	304
collection, and transmittal of premiums;	305

(11) Inclusion under the alliance program of small employers	306
that are members of other organizations described in division	307
(A)(1) of section 1731.01 of the Revised Code that contract with	308
the alliance for this purpose, and conditions pertaining to those	309
small employer members and to their employees and retirees, and	310
dependents and family members of those employees or retirees, as	311
applicable under the alliance program;	312

(12) The agreement of the insurer to offer and sell one or	313
more health benefit plans to small employer members of another	314
small employer health care alliance that contracts with the	315
alliance for this purpose;	316

(13) Use of the health benefit plan options of the insurer in	317
the alliance program and use of the names of the alliance and the	318
insurer;	319

(14) Indemnification from claims and liability by reason of	320
acts or omissions of others;	321

(15) OnwershipOwnership, use, availability, and maintenance	322
of confidentiality of data and records relating to the alliance	323
program;	324

(16) Utilization reports to be provided to the alliance by	325
the insurer;	326

(17) Such other provisions as may be agreed upon by the	327
alliance and the insurer to better provide for the articulation,	328
promotion, financing, and operation of the alliance program or a	329
health benefit plan under the program in furtherance of the public	330
purposes stated in section 1731.02 of the Revised Code.	331

(C) Neither an alliance program nor an agreement between an	332
alliance and an insurer is itself a policy or contract of	333
insurance, or a certificate, indorsement, rider, or application	334
forming any part of a policy, contract, or certificate of	335
insurance. Chapters 3905., 3933., and 3959. of the Revised Code do	336
not apply to an alliance program or to an agreement between an	337
alliance and an insurer thereunder, as such, or to the functions	338
of the alliance under an alliance program.	339

Sec. 1731.09. (A) Nothing contained in this chapter is	340
intended to or shall inhibit or prevent the application of the	341
provisions of Chapter 3924. of the Revised Code to any health	342
benefit plan or insurer to which they would otherwise apply in the	343
absence of this chapter, except as otherwise specified in	344
divisions (B) and (C) of this section or unless such application	345
conflicts with the provisions of section 1731.05 of the Revised	346
Code.	347

(B) An insurer may establish one or more separate classes of	348
business solely comprised of one or more alliances. All of the	349
following shall apply to health plans covering small employers in	350
each class of business established pursuant to this division:	351

(1) The premium rate limitations set forth in section 3924.04	352
of the Revised Code apply to each class of business separate and	353
apart from the insurer's other business;	354

(2) For purposes of applying sections 3924.01 to 3924.14 of	355
the Revised Code to a class of business, the base premium rate and	356
midpoint rate shall be determined with respect to each class of	357
business separate and apart from the insurer's other business.	358

(3) The midpoint rate for a class of business shall not	359
exceed the midpoint rate for any other class of business or the	360
insurer's non-alliance business by more than fifteen per cent.	361

(4) The insurer annually shall file with the superintendent	362
of insurance an actuarial certification consistent with section	363
3924.06 of the Revised Code for each class of business	364
demonstrating that the underwriting and rating methods of the	365
insurer do all of the following:	366

(a) Comply with accepted actuarial practices;

367

(b) Are uniformly applied to health benefit plans covering	368
small employers within the class of business;	369

(c) Comply with the applicable provisions of this section and	370
sections 3924.01 to 3924.14 of the Revised Code.	371

(5) An insurer shall apply sections 3924.01 to 3924.14 of the	372
Revised Code to the insurer's non-alliance business and coverage	373
sold through alliances not established as a separate class of	374
business.	375

(6) An insurer shall file with the superintendent a	376
notification identifying any alliance or alliances to be treated	377
as a separate class of business at least sixty days prior to the	378
date the rates for that class of business take effect.	379

(7) Any application for a certificate of authority filed	380
pursuant to section 1731.021 of the Revised Code shall include a	381
disclosure as to whether the alliance will be underwritten or	382
rated as part of a separate class of business.	383

(C) As used in this section:

384

(1) "Class of business" means a group of small employers, as	385
defined in section 3924.01 of the Revised Code, that are enrolled	386
employers in one or more alliances.	387

(2) "Actuarial certification," "base premium rate," and	388
"midpoint rate" have the same meanings as in section 3924.01 of	389
the Revised Code.	390

Sec. 3923.81.  (A) If a person is covered by a health benefit	391
plan issued by a sickness and accident insurer, health insuring	392
corporation, or multiple employer welfare arrangement and the	393
person is required to pay for health care costs out-of-pocket or	394
with funds from a savings account, the amount the person is	395
required to pay to a health care provider or pharmacy shall not	396
exceed the amount the sickness and accident insurer, health	397
insuring corporation, or multiple employer welfare arrangement	398
would pay under applicable reimbursement rates negotiated with the	399
provider or pharmacy. This division does not preclude a person	400
from reaching an agreement with a health care provider or pharmacy	401
on terms that are more favorable to the person than negotiated	402
reimbursement rates that otherwise would apply as long as the	403
claim submitted reflects the alternative amount negotiated, except	404
that a health care provider or pharmacy shall not waive all or	405
part of a copay or deductible if prohibited by any other provision	406
of the Revised Code. The requirements of this division do not	407
apply to amounts owed to a provider or pharmacy with whom the	408
sickness and accident insurer, health insuring corporation, or	409
multiple employer welfare arrangement has no applicable negotiated	410
reimbursement rate.	411

(B) Each sickness and accident insurer, health insuring	412
corporation, or multiple employer welfare arrangement shall	413
establish and maintain a system whereby a person covered by a	414
health benefit plan may obtain information regarding potential out	415
of pocket costs for services provided by in-network providers.	416

(C) As used in this section:

417

(1) "Health benefit plan" means any policy of sickness and	418
accident insurance or any policy, contract, or agreement covering	419
one or more "basic health care services," "supplemental health	420
care services," or "specialty health care services," as defined in	421
section 1751.01 of the Revised Code, offered or provided by a	422
health insuring corporation or by a sickness and accident insurer	423
or multiple employer welfare arrangement.	424

(2) "Reimbursement rates" means any rates that apply to a	425
payment made by a sickness and accident insurer, health insuring	426
corporation, or multiple employer welfare arrangement for charges	427
covered by a health benefit plan.	428

(3) "Savings account" includes health savings accounts,	429
health reimbursement arrangements, flexible savings accounts,	430
medical savings accounts, and similar accounts and arrangements.	431

Sec. 3924.04.  (A)(1) With respect to any health benefit plan	432
of a carrier and except as otherwise provided in division	433
divisions (A)(2) and (3) of this section, the premium rates	434
charged or offered for a rating period for the same or similar	435
coverage under a health benefit plan covering any small employer	436
with similar case characteristics shall not vary from the	437
applicable midpoint rate by more than thirty-fiveforty per cent	438
of the midpoint rate, as to all health benefit plans issued on or	439
after the effective date of this section.	440

(2) A carrier may apply a low claims discount not to exceed	441
five per cent of the midpoint rate to small employers with	442
favorable claims experience. A premium rate for a rating period	443
may fall outside the range set forth in division (A) of this	444
section as the result of a low claims discount.	445

(3) If the premium rates charged or offered for the same or	446
similar coverage under a health benefit plan covering any small	447
employer with similar case characteristics, as determined by the	448
carrier, exceeds the applicable midpointpremium rate by more than	449
thirty-five pointslimitations described in divisions (A)(1) and	450
(2) of this section, any increase in premium rates for a new	451
rating period shall not exceed the sum of both of the following:	452

(a) Any percentage change in the base premium rate measured	453
from the first day of the prior rating period to the first day of	454
the new rating period;	455

(b) Any adjustment due to change in case characteristics or	456
plan design of the small employer, as determined by the carrier.	457

(3) With respect to any health benefit plan of a carrier that	458
is delivered or issued for delivery prior to the effective date of	459
this section, a premium rate for a rating period may exceed the	460
ranges set forth in divisions (A)(1) and (2) of this section for	461
the eighteen-month period immediately following the effective date	462
of this section. The percentage increase in the premium rate	463
charged to a small employer for a new rating period, however,	464
shall not exceed the sum of the following:	465

(a) Any percentage change in the base premium rate measured	466
from the first day of the prior rating period to the first day of	467
the new rating period;	468

(b) Any adjustment due to a change in case characteristics or	469
plan design of the small employer, as determined by the carrier.	470

(4) For purposes of this section, a small employer carrier	471
shall treat all health benefit plans issued or renewed in the same	472
calendar month as having the same rating period.	473

(B) If a carrier utilizes industry as a case characteristic	474
in establishing premium rates, the rate factor associated with any	475
industry classification shall not vary by more than fifteen per	476
cent from the arithmetic average of the rate factors associated	477
with all industry classifications.	478

(C) Subject to divisions (A) and (B) of this section, any	479
increase in premium rates for a new rating period shall not exceed	480
any percentage change in the base premium rate measured from the	481
first day of the prior rating period to the first day of the new	482
rating period plus fifteen per cent, adjusted on a pro rata basis	483
for rating periods greater or less than one year, of the base	484
premium rate for the new rating period and any adjustments due to	485
a change in case characteristics or plan design of the small	486
employer, as determined by the carrier.	487

(D) The superintendent of insurance may adopt rules in	488
accordance with Chapter 119. of the Revised Code that set forth	489
alternative methods of calculating the premium rates required	490
under this section, which methods result in premium rates that are	491
consistent with, and meet the applicable requirements of, this	492
section. A carrier that utilizes any such method of calculation is	493
deemed to be in compliance with this section.	494

(E) If a carrier has established a separate class of business	495
for one or more small employer health care alliances in accordance	496
with section 1731.09 of the Revised Code, this section shall apply	497
in accordance with section 1731.09 of the Revised Code.	498

Sec. 3924.06. (A) Compliance with the underwriting and	499
rating requirements contained in sections 3924.01 to 3924.14 of	500
the Revised Code shall be demonstrated through actuarial	501
certification. Carriers offering health benefit plans to small	502
employers shall file annually with the superintendent of insurance	503
an actuarial certification stating that the underwriting and	504
rating methods of the carrier do all of the following:	505

(A)(1) Comply with accepted actuarial practices;

506

(B)(2) Are uniformly applied to health benefit plans covering	507
small employers;	508

(C)(3) Comply with the applicable provisions of sections	509
3924.01 to 3924.14 of the Revised Code.	510

(B) If a carrier has established a separate class of business	511
for one or more small employer health care alliances in accordance	512
with section 1731.09 of the Revised Code, this section shall apply	513
in accordance with section 1731.09 of the Revised Code.	514

Sec. 3961.01.  As used in sections 3961.01 to 3961.09 of the	515
Revised Code:	516

(A)(1) "Discount medical plan" means a business arrangement	517
or contract in which a person, in exchange for fees, dues,	518
charges, or other consideration, offers access to members to	519
providers of medical services and the right to receive discounted	520
medical services from those providers.	521

(2) "Discount medical plan" does not include any of the	522
following:	523

(a) A plan that does not require a membership or charge a fee	524
to use the plan's medical card;	525

(b) A plan that offers discounts for only pharmaceutical	526
supplies or prescription drugs, or both, and no other medical	527
services;	528

(c) A plan offered by a sickness and accident insurer that is	529
regulated under Title XXXIX of the Revised Code, a health insuring	530
corporation that is regulated under Title XVII of the Revised	531
Code, or an affiliate of such insurer or corporation if the	532
insurer, corporation, or affiliate discloses in writing in not	533
less than twelve-point type on any applications, advertisements,	534
marketing materials, and brochures describing the plan that the	535
plan is not insurance.	536

(B)(1) "Discount medical plan organization" or "organization"	537
means a person who does business in this state; offers to members	538
access to providers of medical services and the right to receive	539
discounted medical services from those providers; contracts with	540
providers, provider networks, or other discount medical plan	541
organizations to offer discounted medical services to members; and	542
determines the fee members pay to participate in the plan.	543

(2) "Discount medical plan organization" does not include a	544
sickness and accident insurer that is regulated under Title XXXIX	545
of the Revised Code or a health insuring corporation that is	546
regulated under Title XVII of the Revised Code.	547

(C) "Facility" means an institution where medical services	548
are performed, including, but not limited to, a hospital or other	549
licensed inpatient center; ambulatory surgical or treatment	550
center; skilled nursing center; residential treatment center;	551
rehabilitation center; diagnostic, laboratory, and imaging center;	552
and any other health care setting.	553

(D) "Health care professional" means a physician or other	554
health care provider who is licensed, accredited, certified, or	555
otherwise authorized to perform specified medical services within	556
the scope of the person's license, accreditation, certification,	557
or other authorization and performs medical services consistent	558
with the laws of this state.	559

(E)(1) "Marketer" means a person or entity who markets,	560
promotes, sells, or distributes a discount medical plan,	561
including, but not limited to, a private label entity that places	562
its name on and markets or distributes a discount medical plan	563
pursuant to a written agreement with a discount medical plan	564
organization described under section 3961.03 of the Revised Code.	565

(2) "Marketer" does not mean a sickness and accident insurer	566
that is regulated under Title XXXIX of the Revised Code, a health	567
insuring corporation that is regulated under Title XVII of the	568
Revised Code, or an affiliate of such insurer or corporation if	569
the insurer, corporation, or affiliate discloses in writing in not	570
less than twelve-point type on any applications, advertisements,	571
marketing materials, and brochures describing the plan that the	572
plan is not insurance.	573

(F) "Medical services" means any maintenance care of the	574
human body; preventative care for the human body; or care,	575
service, or treatment of an illness or dysfunction of, or injury	576
to, the human body. "Medical services" includes, but is not	577
limited to, physician care, inpatient care, hospital surgical	578
services, emergency services, ambulance services, dental care	579
services, vision care services, pharmaceutical supplies,	580
prescription drugs, mental health services, substance abuse	581
services, chiropractic services, podiatric services, laboratory	582
services, and medical equipment and supplies.	583

(G) "Member" means any individual who pays fees, dues,	584
charges, or other consideration to a discount medical plan	585
organization for access to providers of medical services and the	586
right to receive the benefits of a discount medical plan.	587

(H) "Person" means an individual, corporation, partnership,	588
association, joint venture, joint stock company, trust,	589
unincorporated organization, any similar entity, or any	590
combination of these entities.	591

(I) "Provider" means any health care professional or facility	592
that has contracted, directly or indirectly, with a discount	593
medical plan organization to offer discounted medical services to	594
members.	595

(J) "Provider agreement" means any agreement entered into	596
between a discount medical plan organization and a provider or	597
provider network to offer discounted medical services to members	598
as described in section 3961.02 of the Revised Code.	599

(K) "Provider network" means a person that negotiates,	600
directly or indirectly, with a discount medical plan organization	601
on behalf of more than one provider to offer discounted medical	602
services to members.	603

Sec. 3961.02.  (A) A discount medical plan organization shall	604
not offer to members, or advertise to prospective members,	605
discounted medical services unless the services are offered	606
pursuant to a provider agreement. A discount medical plan	607
organization may enter into a provider agreement directly with a	608
provider, indirectly through a provider network to which a	609
provider belongs, or through another discount medical plan	610
organization that contracts with providers directly or through a	611
provider network.	612

(B) A provider agreement between a discount medical plan	613
organization and a provider shall contain all of the following:	614

(1) A list of medical services and products offered at a	615
discount;	616

(2) The discounted rates for medical services or a fee	617
schedule that reflects the provider's discounted rates;	618

(3) A statement that the provider will not charge members	619
more than the discounted rates described in division (B)(2) of	620
this section.	621

(C) A provider agreement between a discount medical plan	622
organization and a provider network shall require the provider	623
network to do all of the following:	624

(1) Maintain an up-to-date list of the provider network's	625
contracted providers and supply that list to the discount medical	626
plan organization on a monthly basis;	627

(2) Have a written agreement with each provider who offers	628
discounted medical services that contains both of the following:	629

(a) The items listed in division (B) of this section;

630

(b) A grant of authority that allows the provider network to	631
contract with discount medical plan organizations on behalf of the	632
provider.	633

(D) A provider agreement between a discount medical plan	634
organization and another discount medical plan organization shall	635
require that the other discount medical plan organization have	636
provider agreements in place that comply with division (A) of this	637
section and division (B) or (C) of this section, as applicable.	638

(E) A discount medical plan organization shall keep for the	639
duration of the agreement a copy of each provider agreement into	640
which the organization has entered.	641

Sec. 3961.03. (A) Prior to a discount medical plan	642
organization allowing a marketer to market, promote, sell, or	643
distribute a discount medical plan, the organization shall enter	644
into a written agreement with the marketer. This agreement shall	645
prohibit the marketer from using or issuing any advertising,	646
marketing materials, brochures, or discount medical cards without	647
the organization's written approval.	648

(B) A discount medical plan organization is bound by and	649
responsible for a marketer's activities that are within the scope	650
of the marketer's agency relationship with the organization.	651

(C) A discount medical plan organization shall approve in	652
writing all advertisements, marketing materials, brochures, and	653
discount cards prior to a marketer using these materials to	654
market, promote, sell, or distribute the discount medical plan.	655

Sec. 3961.04.  (A) A discount medical plan organization or	656
marketer shall disclose all of the following information in	657
writing in not less than twelve-point type on the first content	658
page of any advertisements, marketing materials, or brochures made	659
available to the public relating to a discount medical plan and	660
with any enrollment forms:	661

(1) A statement that the discount medical plan is not	662
insurance;	663

(2) A statement that the range of discounts for medical	664
services offered under the discount medical plan will vary	665
depending on the type of provider and medical services;	666

(3) A statement that the discount medical plan is prohibited	667
from making members' payments to providers for medical services	668
received under the discount medical plan;	669

(4) A statement that the member is obligated to pay for all	670
discounted medical services received under the discount medical	671
plan;	672

(5) The discount medical plan organization's toll-free	673
telephone number and internet web site address that a member or	674
prospective member may use to obtain additional information about	675
and assistance with the discount medical plan and up-to-date lists	676
of providers participating in the discount medical plan.	677

(B) If a discount medical plan organization's or marketer's	678
initial contact with a prospective or new member is by telephone,	679
the organization or marketer shall disclose all of the information	680
listed in division (A) of this section orally in addition to	681
complying with the written disclosure requirements of that	682
division.	683

(C) In addition to the disclosures required under division	684
(A) of this section, a discount medical plan organization shall	685
provide to each prospective or new member a copy of the terms and	686
conditions of the discount medical plan in a written document at	687
the time of purchase. The document shall be clear and include all	688
of the following information:	689

(1) Name of the member;

690

(2) Benefits provided under the discount medical plan;

691

(3) Any processing fees and periodic charges associated with	692
the discount medical plan, including, but not limited to, if	693
applicable, the procedures for changing the mode of payment and	694
any accompanying additional charges;	695

(4) Any limitations, exclusions, or exceptions regarding the	696
receipt of discount medical plan benefits;	697

(5) Any waiting periods for certain medical services under	698
the discount medical plan;	699

(6) Procedures for obtaining discounts under the discount	700
medical plan, such as requiring members to contact the discount	701
medical plan organization to request that the organization make an	702
appointment with a provider on the member's behalf;	703

(7) Cancellation and refund rights described in section	704
3961.06 of the Revised Code;	705

(8) Membership renewal, termination, and cancellation terms	706
and conditions;	707

(9) Procedures for adding new family members to the discount	708
medical plan;	709

(10) Procedures for filing complaints under the discount	710
medical plan organization's complaint system and a statement	711
explaining that, if the member remains dissatisfied after	712
completing the organization's complaint system, the member may	713
contact the department of insurance;	714

(11) Name, mailing address, toll-free telephone number, and	715
electronic mail address of the discount medical plan organization	716
that a member may use to make inquiries about the discount medical	717
plan, send cancellation notices, and file complaints.	718

(D) A discount medical plan organization shall maintain on an	719
internet web site page an up-to-date list of the names and	720
addresses of the providers with which the organization has	721
contracted directly or indirectly through a provider network. The	722
organization's internet web site address shall be prominently	723
displayed on all of the organization's advertisements, marketing	724
materials, brochures, and discount medical plan cards.	725

(E) When a discount medical plan organization or marketer	726
sells a discount medical plan together with any other product, the	727
organization or marketer shall give to the member, in addition to	728
the other disclosures required under this section, a written	729
statement delineating the fees applicable only to the discount	730
medical plan.	731

Sec. 3961.05.  A discount medical plan organization shall not	732
do any of the following:	733

(A) Except when otherwise permitted in sections 3961.01 to	734
3961.09 of the Revised Code, as a disclaimer of any relationship	735
between discount medical plan benefits and insurance, or in a	736
description of an insurance product connected with a discount	737
medical plan, use the term "insurance" in the organization's	738
advertisements, marketing material, brochures, or discount medical	739
plan cards.	740

(B) Use in the organization's advertisements, marketing	741
material, brochures, or discount medical plan cards the terms	742
"health plan," "coverage," "benefits," "copay," "copayments,"	743
"deductible," "pre-existing conditions," "guaranteed issue,"	744
"premium," "PPO," "preferred provider organization," or any other	745
terms in a manner that could mislead a person into believing that	746
the discount medical plan is health insurance.	747

(C) Make misleading, deceptive, or fraudulent statements or	748
representations regarding the terms or benefits of the discount	749
medical plan, including, but not limited to, statements or	750
representations regarding discounts, range of discounts, or access	751
to those discounts offered under the discount medical plan.	752

(D) Except for hospital services, have restrictions on access	753
to discount medical plan providers, including, but not limited to,	754
waiting and notification periods.	755

(E) Pay providers fees for medical services or collect or	756
accept money from a member to pay a provider for medical services	757
received under the discount medical plan.	758

Sec. 3961.06.  (A) A discount medical plan organization shall	759
permit members to cancel membership in a discount medical plan at	760
any time.	761

(B) If a member gives notice of cancellation within thirty	762
days after the date the member receives the written document	763
described in division (C) of section 3961.04 of the Revised Code	764
for the discount medical plan, the discount medical plan	765
organization, within thirty days of the member giving notice of	766
cancellation, shall fully refund any fees except for a nominal fee	767
associated with enrollment costs that shall not exceed thirty	768
dollars.	769

(C) A discount medical plan organization shall not charge or	770
collect a periodic fee after the member has returned to the	771
organization the member's discount medical plan card or given the	772
organization notice of cancellation.	773

(D) Cancellation of membership in a discount medical plan	774
occurs when the member gives notice of cancellation to the	775
discount medical plan organization or marketer by delivering the	776
notice by hand, depositing the notice in a mailbox if the notice	777
is properly addressed to the discount medical plan organization or	778
marketer and postage is prepaid, or sending an electronic message	779
to the discount medical plan organization's or marketer's	780
electronic message address.	781

(E) A discount medical plan organization shall make a pro	782
rata reimbursement of all periodic fees charged to a member, less	783
nominal fees associated with enrollment or discounts for annual	784
enrollment, if a discount medical plan organization cancels a	785
member's membership for any reason other than the member's failure	786
to pay fees or if a member cancels the member's membership after	787
the first thirty days of membership and the discount medical plan	788
organization charges periodic fees for more than one month.	789

Sec. 3961.07.  (A) The superintendent of insurance may	790
examine or investigate the business and affairs of a discount	791
medical plan organization as the superintendent deems appropriate	792
to protect the interests of the residents of this state.	793

(B) When examining or investigating a discount medical plan	794
organization pursuant to division (A) of this section, the	795
superintendent may do both of the following:	796

(1) Order a discount medical plan organization to produce any	797
records, files, advertising and solicitation materials, lists of	798
providers with which the organization contracted, lists of	799
members, provider agreements described in section 3961.02 of the	800
Revised Code, agreements between a marketer and discount medical	801
plan organization described in section 3961.03 of the Revised	802
Code, or other information;	803

(2) Take statements under oath to determine whether a	804
discount medical plan organization has violated or is violating	805
sections 3961.01 to 3961.08 of the Revised Code or is acting	806
contrary to the public interest.	807

(C)(1) All records and other information concerning a	808
discount medical plan organization obtained by the superintendent	809
or the superintendent's deputies, examiners, assistants, agents,	810
or other employees pursuant to division (B) of this section are	811
confidential and not public records as defined in section 149.43	812
of the Revised Code unless the organization is given notice and	813
opportunity for hearing pursuant to Chapter 119. of the Revised	814
Code concerning the records and other information obtained under	815
division (B) of this section. If no administrative action is	816
initiated with respect to a particular matter about which the	817
superintendent obtained records or other information under	818
division (B) of this section, the records and other information	819
shall remain confidential for three years after the file on the	820
matter is closed.	821

(2) The records and other information described in division	822
(C)(1) of this section shall remain confidential for all purposes	823
except where the superintendent or the superintendent's deputies,	824
examiners, assistants, agents, or other employees appropriately	825
take official action regarding the affairs of the discount medical	826
plan organization or marketer or in connection with actual or	827
potential criminal proceeding.	828

(D) Notwithstanding division (C) of this section, the	829
superintendent may do any of the following:	830

(1) Share records and other information obtained pursuant to	831
division (B) of this section with other persons employed by or	832
acting on behalf of the superintendent; local, state, federal, and	833
international regulatory and law enforcement agencies; local,	834
state, and federal prosecutors; and the national association of	835
insurance commissioners and its affiliates and subsidiaries if the	836
recipient agrees and has authority to agree to maintain the	837
confidential status of the records or other information;	838

(2) Disclose records and other information obtained pursuant	839
to division (B) of this section in furtherance of any regulatory	840
or legal action brought by or on behalf of the superintendent or	841
this state resulting from the exercise of the superintendent's	842
official duties.	843

(E) Notwithstanding divisions (C) and (D) of this section,	844
the superintendent may authorize the national association of	845
insurance commissioners and its affiliates and subsidiaries by	846
agreement to share confidential records and other information	847
obtained pursuant to division (B) of this section with local,	848
state, federal, and international regulatory and law enforcement	849
agencies and local, state, and federal prosecutors if the	850
recipient agrees and has authority to agree to maintain the	851
confidential status of the records and other information.	852

(F) Any applicable privilege or claim of confidentiality is	853
not waived as a result of sharing or disclosing information	854
pursuant to division (D)(1) or (E) of this section.	855

(G) Employees or agents of the department of insurance shall	856
not be required by any court in this state to testify in a civil	857
action if the testimony concerns any matter related to records or	858
other information considered confidential under this section.	859

(H) Nothing in this section shall be construed to limit the	860
superintendent's powers under section 3901.04 of the Revised Code.	861

Sec. 3961.08.  (A) No person shall fail to comply with	862
sections 3961.01 to 3961.09 of the Revised Code. If the	863
superintendent of insurance determines that any person has	864
violated sections 3961.01 to 3961.07 of the Revised Code, the	865
superintendent may take one or more of the following actions:	866

(1) Assess a civil penalty in an amount not to exceed	867
twenty-five thousand dollars per violation if the person knew or	868
should have known of the violation;	869

(2) Assess administrative costs to cover the expenses	870
incurred in the administrative action, including, but not limited	871
to, expenses incurred in the investigation and hearing process.	872
Costs collected under this division shall be paid into the state	873
treasury to the credit of the department of insurance operating	874
fund created in section 3901.021 of the Revised Code.	875

(3) Order corrective actions in lieu of or in addition to the	876
other penalties described in this section, including, but not	877
limited to, suspending civil penalties if a discount medical plan	878
organization complies with the terms of the corrective action	879
order;	880

(4) Order restitution to members.

881

(B) Before imposing a penalty under division (A) of this	882
section, the superintendent shall give a discount medical plan	883
organization notice and opportunity for hearing as described in	884
Chapter 119. of the Revised Code to the extent that Chapter 119.	885
of the Revised Code does not conflict with any of the following	886
service requirements:	887

(1)(a) A notice of opportunity for hearing, a hearing	888
officer's findings and recommendations, or any order issued by the	889
superintendent under division (A) of this section shall be served	890
by certified mail, return receipt requested, to the last known	891
address of a discount medical plan organization. For purposes of	892
division (B) of this section, an organization's last known address	893
is the address listed on the organization's disclosures required	894
under section 3961.04 of the Revised Code.	895

(b) If the certified mail envelope described in division	896
(B)(1)(a) of this section is returned to the superintendent with	897
an endorsement showing that service was refused or that the	898
envelope was unclaimed, the notices, findings and recommendations,	899
and orders described in division (B)(1)(a) of this section and all	900
subsequent notices required under Chapter 119. of the Revised Code	901
may be served by ordinary mail to the discount medical plan	902
organization's last known address. The time period to request an	903
administrative hearing described in Chapter 119. of the Revised	904
Code shall begin to run from the date the ordinary mailing was	905
sent. A certificate of mailing shall evidence any mailings sent by	906
ordinary mail pursuant to this division and shall complete service	907
to the organization unless the ordinary mail envelope is returned	908
to the superintendent with an endorsement showing failure of	909
delivery.	910

(c) If service by ordinary mail as described in division	911
(B)(1)(b) of this section fails, the superintendent may publish a	912
summary of the substantive provisions of the notice, findings and	913
recommendations, or orders described in division (B)(1)(a) of this	914
section once a week for three consecutive weeks in a newspaper of	915
general circulation in the county of the discount medical plan	916
organization's last known address. The notice shall be considered	917
served on the date of the third publication.	918

(d) Any notice required to be served under Chapter 119. of	919
the Revised Code also shall be served upon the party's attorney by	920
ordinary mail if the party's attorney has entered an appearance in	921
the matter.	922

(e) In lieu of certified or ordinary mail or publication	923
notice as described in divisions (B)(1)(a), (b), and (c) of this	924
section, the superintendent may perfect service on a party by	925
personal delivery of the notice by the superintendent's designee.	926

(f) Notices regarding the scheduling of hearings and all	927
other notices not described in division (B)(1)(a) of this section	928
shall be sent by ordinary mail to the party and the party's	929
attorney.	930

(2) A subpoena or subpoena duces tecum from the	931
superintendent or the superintendent's designee or attorney to a	932
witness for appearance at a hearing, for the production of	933
documents or other evidence, or for taking testimony for use at a	934
hearing shall be served by certified mail, return receipt	935
requested. The subpoenas described in this division shall be	936
enforced in the manner described in section 119.09 of the Revised	937
Code. Nothing in this division shall be construed to limit the	938
superintendent's other statutory powers to issue subpoenas.	939

(C)(1) If a violation of sections 3961.01 to 3961.07 of the	940
Revised Code has caused, is causing, or is about to cause	941
substantial and material harm, the superintendent may issue a	942
cease-and-desist order requiring a person to cease and desist from	943
engaging in a violation.	944

(2) The superintendent shall, immediately after issuing an	945
order pursuant to division (C)(1) of this section, serve notice of	946
the order by certified mail, return receipt requested, or by any	947
other manner described in division (B) of this section to the	948
person subject to the order and all other persons involved in the	949
violation. The notice shall specify the particular act, omission,	950
practice, or transaction that is the subject of the order and set	951
a date, not more than fifteen days after the date the order was	952
issued, for a hearing on the continuation or revocation of the	953
order. The person subject to the order shall comply with the order	954
immediately upon receiving the order. After an order is issued	955
pursuant to division (C)(1) of this section, the superintendent	956
may publicize and notify all interested parties that a	957
cease-and-desist order was issued.	958

(3) Upon application by the person subject to the order and	959
for good cause, the superintendent may continue the hearing date	960
described in division (C)(2) of this section. Chapter 119. of the	961
Revised Code applies to the hearing on the order to the extent	962
that the chapter does not conflict with the procedures described	963
in this section. The superintendent shall, within fifteen days	964
after objections are submitted concerning the hearing officer's	965
report and recommendations, issue a final order either confirming	966
or revoking the cease-and-desist order described in division	967
(C)(1) of this section. The final order may be appealed as	968
described in section 119.12 of the Revised Code.	969

(4) The remedy described in division (C) of this section is	970
cumulative and concurrent with other remedies available under this	971
section.	972

(D) If the superintendent has reasonable cause to believe	973
that an order issued pursuant to this section has been violated in	974
whole or in part, the superintendent may request the attorney	975
general to commence any appropriate action against the violator.	976
In an action described in this division, a court may impose any of	977
the following penalties:	978

(1) A civil penalty of not more than twenty-five thousand	979
dollars per violation;	980

(2) Injunctive relief;

981

(3) Restitution;

982

(4) Any other appropriate relief.

983

(E) The superintendent shall deposit any penalties assessed	984
under division (A)(1) or (D) of this section into the state	985
treasury to the credit of the department of insurance operating	986
fund created in section 3901.021 of the Revised Code.	987

Sec. 3961.09.  The superintendent of insurance may adopt	988
rules in accordance with Chapter 119. of the Revised Code for	989
purposes of implementing sections 3961.01 to 3961.08 of the	990
Revised Code.	991

Section 2. That existing sections 1731.01, 1731.03, 1731.04,	992
1731.09, 3924.04, and 3924.06 of the Revised Code are hereby	993
repealed.	994

Section 3. Sections 1731.03, 1731.09, 3924.04, and 3924.06 of	995
the Revised Code, as amended by this act, take effect January 1,	996
2007. Section 3923.81 of the Revised Code, as enacted by this act,	997
takes effect on the effective date of this act; however, the	998
amendment of division (B) of that section does not apply to any	999
facts occurring before six months after the effective date of this	1000
act.	1001