S 1304 Session 110 (1993-1994)
S 1304 General Bill, By T.W. Mitchell
A Bill to enact the "South Carolina Health Insurance Plan" which establishes a
mechanism to ensure the availability of health insurance coverage to those
citizens of this State who are not otherwise able to obtain such coverage.
03/29/94 Senate Introduced and read first time SJ-5
03/29/94 Senate Referred to Committee on Banking and Insurance SJ-5
A BILL
TO ENACT THE "SOUTH CAROLINA HEALTH
INSURANCE PLAN" WHICH ESTABLISHES A
MECHANISM TO ENSURE THE AVAILABILITY OF HEALTH
INSURANCE COVERAGE TO THOSE CITIZENS OF THIS STATE
WHO ARE NOT OTHERWISE ABLE TO OBTAIN SUCH
COVERAGE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. (A) Existing law does not establish a health
coverage program to provide health insurance to residents of this State
who are not otherwise able to obtain health insurance.
(B) Uninsurable residents of this State, left to face the cost of
major medical care without health insurance coverage, must look to
publicly-funded programs in the event of severe illness or injury,
thereby placing a burden on the resources of the State.
(C) Insurance is a business which affects the public interest and
which has been and continues to be subject to regulation in the public
interest in this state; this State's interest in the regulation of insurance
is effectuated by the provisions of Title 38 of the 1976 Code of Laws
and is affirmed in the McCarran-Ferguson Act, 15 U.S.C. 1011 et seq.
(D) It is the purpose and intent of the General Assembly to
establish a mechanism to ensure the availability of health insurance
coverage to those citizens of this State who, because of health
conditions, cannot secure such coverage.
SECTION 2. For the purposes of this act:
(A) "Ambulatory surgical facility" means the same as
that term is defined in Section 44-7-130(2) of the 1976 Code of Laws.
(B) "Board" means the board of directors of the plan.
(C) "Commissioner" means the Chief Insurance
Commissioner of South Carolina. (D) "Department"
means the South Carolina Department of Insurance.
(E) "Dependent" means a resident spouse or resident
unmarried child under the age of nineteen years, a child who is a
student under
the age of twenty-three years and who is financially dependent upon
the parent, or a child of any age who is disabled and dependent upon
the parent.
(F) "Health insurance" means any hospital and medical
expense incurred policy, nonprofit health service plan contract, health
maintenance organization subscriber contract, or any other health care
plan or arrangement that pays for or furnishes medical or health care
services whether by insurance or otherwise. The term does not
include short term, accident, dental-only, vision-only, fixed indemnity,
limited benefit or credit insurance, coverage issued as a supplement to
liability insurance, insurance arising out of workers' compensation or
similar law, automobile medical-payment insurance, or insurance under
which benefits are payable with or without regard to fault and which
is required by statute to be contained in any liability insurance policy
or equivalent self-insurance.
(G) "Health care provider" means a person licensed by
this State to provide health care or professional services or any
professional corporation, as a health care provider, authorized to form
under the laws of this State, or such a person licensed by the
appropriate law of another state.
(H) "Hospital" means the same as that term is defined
in Section 44-7-130(12) of the 1976 Code of Laws.
(I) "Insurance arrangement" means any plan, program,
contract, or any other arrangement under which one or more natural
or juridical persons provide to their employees or participant, whether
directly or indirectly, health care services or benefits other than
through an insurer. The term also incudes a "self-insurer"
as defined in this section.
(J) "Insured" means any natural person domiciled in
this State, other than a member of the plan who is eligible to receive
benefits from any insurer or insurance arrangement as defined in this
section.
(K) "Insurer" means any entity that provides health
insurance in this State. For the purposes of this act, insurer includes
an insurance company, a prepaid hospital or medical care plan, a
fraternal benefit society, a health maintenance organization, and any
other entity providing a plan of health insurance or health benefits
subject to state insurance regulation.
(L) "Medicare" means coverage under both Parts A and
B of Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.,
as amended.
(M) "Physician" means the same as that term is defined
and used in Chapter 47 of Title 40 of the 1976 Code of Laws.
(N) "Plan" means the South Carolina Health Insurance
Plan as created in Section 3 of this act.
(O) "Plan of operation" means the articles, bylaws, and
operating rules and procedures adopted by the board pursuant to
Section 3 of this act.
(P) "Public Program" means any public assistance
program which provides funding for health care services rendered by
a health care provider.
(Q) "Private pay patient" means a natural person who
is not covered by any policy or plan of insurance or by a self-insurer
or whose charges for injury or illness are not compensable by his
employer or other insurer or insurance arrangement.
(R) "Self-insurer" means a natural or juridical person
which provides health care services or reimbursement for all or any
part of the costs of health care for its employees or participants in this
State other than an insurer.
SECTION 3. (A) There is hereby established the South Carolina
Health Insurance Plan.
(B) The plan shall operate subject to the supervision and control
of the board. The board shall consist of the commissioner or his
designee who shall serve as an ex officio member of the board and
shall be its chairman, and thirteen members appointed by the
Governor. At least two board members must be individuals or the
parent, spouse, or child of individuals, reasonably expected to qualify
for coverage by the plan. At least two board members must be
representatives of insurers. At least two board members must be
representatives of self-insurers. A majority of the board must be
composed of individuals who are not representatives of insurers, health
care providers, or self-insurers.
(C) The initial board members must be appointed as follows: five
members to serve a term of two years; four members to serve a term
of four years; and four members to serve a term of six years.
Successor board members shall serve for a term of three years. A
board member's term shall continue until his successor is appointed
and qualifies for office.
(D) Vacancies on the board shall be filled by the Governor in the
same manner as original appointment. Board members may be
removed by the Governor for cause.
(E) Board members shall not be compensated in their capacity as
board members but must be reimbursed for reasonable expenses
incurred in the necessary performance of their duties, including
mileage, subsistence, and per diem as allowed by law for members of
state boards, committees, and commissions.
(F) The board shall submit the commissioner a plan of operation
for the plan and any amendments necessary or suitable to assure the
fair, reasonable, and equitable administration of the plan. The
commissioner shall approve the plan of operation, provided such is
determined to be suitable to assure the fair, reasonable, and equitable
administration of the plan. The plan of operation shall become
effective upon approval in writing by the commissioner. If the board
fails to submit a suitable plan of operation within one hundred eighty
days after its appointment or at any time fails to submit suitable
amendments to the plan, the commissioner shall adopt and promulgate
such reasonable regulations as are necessary and advisable to
effectuate the provisions of this section. Such regulations shall
continue in force until modified by the commissioner or superseded by
a plan of operation submitted by the board and approved by the
commissioner.
(G) The plan of operation shall:
(1) establish procedures for operation of the plan;
(2) establish procedures for selecting an administrator in
accordance with Section 7 of this act;
(3) establish procedures to create a fund, under management of
the board, for administrative expenses;
(4) establish procedures for the handling, accounting, and
auditing of assets, monies, and claims of the plan and plan
administrator;
(5) develop and implement a program to publicize the existence
of the plan, the eligibility requirements, and procedures for enrollment;
and to maintain public awareness of the plan;
(6) establish procedures under which applicants and participants
may have grievances reviewed by a grievance committee appointed by
the board. The grievances must be reported to the board after
completion of the review. The board shall retain all written
complaints regarding the plan for at least three years;
(7) provide for other matters as may be necessary and proper for
the execution of the board's powers, duties, and obligations under this
act.
(H) The plan shall have the general powers and authority granted
under the laws of this State to health insurers and, in addition, the
specific authority to:
(1) enter into contracts as are necessary or proper to carry out
the provisions and purposes of this act, including the authority, with
the approval of the commissioner, to enter into contracts with similar
plans of other states for the joint performance of common
administrative functions, or with persons or other organization for the
performance of administrative functions;
(2) sue or be sued, including taking any legal action necessary
or proper to recover or collect assessments due the plan;
(3) take such legal action as necessary to:
(a) avoid the payment of improper claims against the plan or
the coverage provided by or through the plan;
(b) recover any amounts erroneously or improperly paid by
the plan;
(c) recover any amounts paid by the plan as a result of
mistake of fact or law; or
(d) recover other amounts due the plan.
(4) establish, and modify from time to time as appropriate, rates,
rate schedules, rate adjustments, expense allowances, agents' referral
fees, claim reserve formulas, and any other actuarial function
appropriate to the operation of the plan. Rates and rate schedules may
be adjusted for appropriate factors such as age, sex, and geographic
variation in claim cost and shall take into consideration appropriate
factors in accordance with established actuarial and underwriting
practices;
(5) issue policies of insurance in accordance with the
requirements of this act;
(6) appoint appropriate legal, actuarial, and other committees as
necessary to provide technical assistance in the operation of the plan,
policy, and other contract design, and any other function within the
authority of the plan;
(7) borrow money to effect the purposes of the plan. Any notes
or other evidence of indebtedness of the plan not in default shall be
legal investments for insurance and may be carried as admitted assets;
(8) establish rules, conditions, and procedures for reinsuring
risks of participating insurers desiring to issue plan coverages in their
own name. Provision of reinsurance does not subject the plan to any
of the capital or surplus requirements, if any, otherwise applicable to
reinsurers.
(9) employ and fix the compensation of employees. Such
employees may be paid on a warrant issued by the State Treasurer
pursuant to a payroll voucher certified by the board and drawn against
appropriations or trust funds held by the State Treasurer;
(10) prepare and distribute certificate of eligibility forms and
enrollment instruction forms to insurance producers and to the general
public;
(11) provide for reinsurance of risks incurred by the plan;
(12) provide for and employ cost containment measurers and
requirements including, but not limited to, preadmission screening,
second surgical opinion, concurrent utilization review, and individual
case management for the purpose of making the benefit plan more cost
effective;
(13) design, utilize, contract, or otherwise arrange for the delivery
of cost-effective health care services, including establishing or
contracting with preferred provider organizations, health maintenance
organizations, and other limited network provider arrangements;
(14) adopt bylaws, policies, and procedures as may be necessary
or convenient for the implementation of this act and the operation of
the plan.
(I) The board shall make an annual report to the Governor which
also must be filed with the General Assembly. The report shall
summarize the activities of the plan in the preceding calendar year,
including the net written and earned premiums, plan enrollment, the
expense of administration, and the paid and incurred losses.
(J) Neither the board nor its employees are liable for any
obligations of the plan. No member or employee of the board is
liable, and no cause of action of any nature may arise against them,
for any act or omission related to the performance of their powers and
duties under this act, unless such act or omission constitutes wilful or
wanton misconduct. The board may provide in its bylaws or rules for
indemnification of, and legal representation for, its members and
employees.
SECTION 4. The commissioner may, by regulation, establish
additional powers and duties of the board and may promulgate such
regulations as are necessary and proper to implement this act.
SECTION 5. (A) Any natural person who has been domiciled in
this State for six consecutive months is eligible for plan coverage if
evidence is provided of:
(1) a notice of rejection or refusal to issue substantially similar
insurance for health reasons by two insurers; or
(2) a refusal by two insurers to issue insurance except at a rate
exceeding the plan rate.
A rejection or refusal by an insurer offering only stoploss, excess
of loss, or reinsurance coverage with respect to the applicant is not
sufficient evidence under this subsection.
(B) The board shall promulgate a list of medical or health
conditions for which a person is eligible for plan coverage without
applying for health insurance pursuant to subsection (A). A person
who can demonstrate the existence or history of any medical or health
conditions on the list promulgated by the board is not required to
provide the evidence specified in subsection (A). The list is effective
on the first day of the operation of the plan and may be amended from
time to time as may be appropriate.
(C) Each resident dependent of a person who is eligible for plan
coverage is also eligible for plan coverage.
(D) A person is not eligible for coverage under the plan if the
person has or obtains health insurance coverage substantially similar
to or more comprehensive than a plan policy, or would be eligible to
have coverage if the person elected to obtain it.
SECTION 6. (A) Except as provided in subsection (B), it shall
constitute an unfair trade practice for the purposes of Chapter 57 of
Title 38 of the 1976 Code of Laws for an insurer, insurance agent,
insurance broker, or third-party administrator to refer an individual
employee to the plan, or arrange for an individual employee to apply
to the plan, for the purpose of separating that employee from group
health insurance coverage provided in connection with the employees'
employment.
(B) The provisions of subsection (A) do not apply with respect to
health insurance coverage provided to groups with fewer than twenty-five employees.
SECTION 7. (A) The board shall select a plan administrator
through a competitive bidding process to administer the plan. The
board shall evaluate bids submitted based on criteria established by the
board which shall include:
(1) the plan administrator's proven ability to handle health
insurance coverage to individuals;
(2) the efficiency and timeliness of the plan administrator's
claim processing procedures;
(3) an estimate of total charges for administering the plan;
(4) the plan administrator's ability to apply effective cost
containment programs and procedures and to administer the plan in a
cost-efficient manner; and
(5) the financial condition and stability of the plan
administrator.
(B) (1) The plan administrator shall serve for a period specified
in the contract between the plan and the plan administrator subject to
removal for cause and subject to any terms, conditions, and limitations
of the contract between the plan and the plan administrator.
(2) At least one year before the expiration of each period of
service by a plan administrator, the plan administrator shall submit
bids to serve as the plan administrator. Selection of the plan
administrator for the succeeding period must be made at least six
months before the end of the current period.
(C) The plan administrator shall perform such functions relating to
the plan as may be assigned to it, including:
(1) determination of eligibility;
(2) payment of claims;
(3) establishment of a premium billing procedure for collection
of premiums from persons covered under the plan; and
(4) other necessary functions to assure timely payment of
benefits to covered persons under the plan.
(D) The plan administrator shall submit regular reports to the board
regarding the operation of the plan. The frequency, content, and form
of the reports must be specified in the contract between the board and
the plan administrator.
(E) Following the close of each calendar year, the plan
administrator shall determine net written and earned premiums, the
expense of administration, and the paid and incurred losses for the
year and report this information to the board and the department on a
form prescribed by the commissioner.
(F) The plan administrator must be paid as provided in the contract
between the plan and the plan administrator.
SECTION 8. (A) (1) The plan shall establish premium rates for
plan coverage as provided in subitem (2). Separate schedules of
premium rates based on age, sex, and geographical location may apply
for individual risks.
(2) The plan shall determine a standard risk rate by considering
the premium rates charged by other insurers offering health insurance
actuarial techniques and shall reflect anticipated experience and
expenses for such coverage. Initial rates for plan coverage shall not
be less than 150 percent of rates established as applicable for
individual standard risks. Subject to the limits provided in this
subitem, subsequent rates must be established to provide fully for the
expected costs of claims, including recovery of prior losses, expense
of operation, investment income of claim reserves, and any other cost
factors subject to the limitations described in this section. In no event
shall plan rates exceed 200 percent of rates applicable to individual
standard risks.
(B) (1) The deficit incurred by the plan must be subsidized by the
State through the service charge provided for in this subsection. The
board shall operate the plan in a manner so that the estimated cost of
providing health insurance during any fiscal year will not exceed total
income the plan expects to receive from policy premiums and service
charges provided for in this subsection. After determining the amount
of funds available to it for a fiscal year, the board shall estimate the
number of new policies it believes the plan has the financial capacity
to insure during that year so that costs do not exceed income. The
board shall take steps necessary to assure that plan enrollment does not
exceed the number of residents it has estimated it has the financial
capacity to insure.
(2) (a) Each patient, except a private pay patient, a patient
covered by Medicare, one who is covered by any other public program
that is directly subsidized by the federal government, one who is
covered by the State Employees Group Benefits Program, or one who
is covered by an insolvent insurer, who is admitted to a hospital for
treatment must be assessed a service charge of two dollars for each
day, or portion thereof, during which the patient is confined as an
inpatient in that facility. For purposes of this section only,
"hospital" does not include any hospital operated by the
State or any hospital created or operated by the Department of
Veterans Affairs or other agency of the United States of America.
Each hospital in which a patient is confined shall calculate the total
service charge due for that service charge in the bill for services
rendered to the patient. The service charge must be collected as
provided in sub-subitem (c).
(b) Each patient, except a private pay patient, a patient
covered by Medicare, a patient covered by any other public program
that is directly subsidized by the federal government, one who is
covered by the State Employees Group Benefits Program, or one
covered by an insolvent insurer, who is admitted to an ambulatory
surgical facility or to a hospital for outpatient ambulatory surgical care
must be assessed a service charge of one dollar for each admission to
that facility. The service charge must be included in the bill for
services or supplies, or both, rendered to the patient by the ambulatory
surgical facility or hospital.
(c) Each hospital and ambulatory surgical facility shall collect
the service charges assessed under this section. In the event that no
payment is made by or on behalf of the patient for services rendered,
the fee assessed under this section must be waived. Each hospital and
ambulatory surgical facility shall remit to the plan for each reporting
period, as established in the plan of operation, charges collected during
that reporting period in accordance with the reporting and remittance
procedures by the board. Failure to pay within sixty days after the
end of the reporting period shall cause the hospital or ambulatory
surgical facility to be liable to the plan for an amount determined by
the board, not to exceed $500, plus interest. Any hospital or
ambulatory surgical facility found to have failed to pay according to
this section on three or more occasions during a six-month period is
liable for an amount determined by the board, not less than $500 and
not to exceed $1,500 per failure, together with attorney's fees, interest,
and court costs.
SECTION 9. The plan shall offer health care coverage consistent
with major medical expense coverage to every eligible person who is
not eligible for Medicare. The coverage to be issued by the plan, its
schedule of benefits, exclusions, and other limitations must be
established by the board.
SECTION 10. This act takes effect one hundred eighty days after
approval by the Governor.
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