40-2119. Same; Kansas health insurance association, membership, board of directors; plan of operation, approval of commissioner; powers and duties of association; reinsurance program for medicare supp
40-2119
40-2119. Same; Kansas health insurance association,membership, board of directors; plan of operation, approval of commissioner;powers and duties of association; reinsurance program for medicare supplementpolicies.(a) There is hereby created a nonprofit legal entity to beknown as the Kansas health insurance association. All insurers and insurancearrangements providing health care benefits in this state shall bemembers of the association. The association shall operate under a plan ofoperationestablished and approved under subsection (b) of this section and shallexercise its powers through a board of directors established under thissection.
(b) (1) The board of directors of the association shall be selected bymembers of the association subject to the approval of the commissioner. Toselect the initialboard of directors, and to initially organize the association, the commissionershallgive notice to all members in this state of the time and place of theorganizational meeting. In determining voting rights at the organizationalmeeting, each member shall be entitled to one vote in person or by proxy. Ifthe board of directors is not selected within 60 days after the organizationalmeeting, the commissioner shall appoint the initial board. In approving orselecting members of the board, the commissioner shall consider, among otherthings, whether all members are fairly represented.Members of the board may be reimbursed from the moneys of the plan for expensesincurred by them as members of the board of directors but shall not otherwisebe compensated by the plan for their services.
(2) The board shall submit to the commissioner a plan of operation for theassociation and any amendments thereto necessary or suitable to assure thefair,reasonable and equitable administration of the plan. The plan of operationshall become effective upon approval in writing by the commissioner consistentwith the date on which the coverage under this act must be made available. Thecommissioner shall, after notice and hearing, approve the plan of operation ifit is determined to be suitable to assure the fair, reasonable andequitable administration of the plan and provides for the sharing ofassociation losses on an equitable proportionate basis among the members of theassociation. If the board fails to submit a suitable plan of operation within180days after its appointment, or at any time thereafter fails to submit suitableamendments to the plan of operation, the commissioner shall, after notice andhearing, adoptand promulgate such reasonable rules and regulations as are necessary oradvisable to effectuate the provisions of this section.Such rules and regulations shall continue in force until modified by thecommissioner or superseded by a plan of operation submitted by the board andapproved by thecommissioner. The plan of operation shall, in addition to requirementsenumerated elsewhere in this act:
(A) Establish procedures for the handling and accounting of assets andmoneys of the plan;
(B) select an administering carrier in accordance with K.S.A.40-2120, and amendments thereto;
(C) establish procedures for the collection of assessments from all membersto provide for claims paid under the plan and for administrative expensesincurred or estimated to be incurred during the period for which the assessmentis made. The level of payments shall be established by the board pursuant toK.S.A. 40-2121, and amendments thereto. Assessments shall be due andpayable within 30 daysofreceipt of theassessment notice;
(D) establish appropriate cost control measures, including but not limitedto, preadmission review, case management, utilization review and exclusions andlimitations with respect to treatment and services under the plan; and
(E) develop and implement a program to publicize the existence of the plan,the eligibility requirements and procedures for enrollment and to maintainpublic awareness of the plan.
(F) Establish benefit levels, lifetime maximum benefits, and othercoverage and eligibility parameters, and establish such other requirements andprocedures as are necessary to assure the availability of a benefit program orprograms conforming with the requirements of a qualified high risk pool as setforth in section 111 of Public Law 104-191 and amendments thereto.
(c) The association shall have the general powers and authority enumeratedby thissubsection in accordance with the plan of operation approved by thecommissioner under subsection (b). The association shall have the generalpowers and authority granted under the laws of this state to insurers licensedto transact the kind of health service or insurance included under K.S.A.40-2123, and amendments thereto, and in addition thereto, the specificauthority and duty to:
(1) Enter into contracts as are necessary or proper to carry out theprovisions and purposes of this act, including the authority, with the approvalof the commissioner, to enter into contracts with similar plans of other statesfor the joint performance of common administrative functions, or with personsor other organizations for the performance of administrative functions;
(2) sue or be sued, including taking any legal actions necessary or properfor recovery of any assessments for, on behalf of, or against participatingmembers;
(3) take such legal action as necessary to avoid the payment of improperclaims against the association or the coverage provided by or through the plan;
(4) establish appropriate rates, rate schedules, rate adjustments, expenseallowances, agents' referral fees, claim reserve formulas and any otheractuarial function appropriate to the operation of the plan. During the firsttwo years of operation of the plan, rates shall be established in an amountthatis estimated by the board to cover all claims that may be made against the planand the expenses of operating the plan. In following years, rates for coverageshall be reasonable in terms of the benefits provided, the risk experience andexpenses of providing the coverage, except that such rates shall not exceed150% of the average premium rate charged for similar coverage in the privatemarket. Rates and rate schedules may be adjustedfor appropriate risk factors such as age, sex and geographic location in claimscosts and shall take into consideration appropriate risk factors in accordancewith established actuarial and underwriting practices, however particularhealth conditions or illnesses shall not constitute appropriate risk factors;
(5) assess members of the association in accordance with the provisions ofK.S.A. 40-2121, and amendments thereto;
(6) design the policies of insurance to be offered by theplan which shall cover at least the expenses enumerated in subsection (b) ofK.S.A. 40-2123, andamendments thereto,but with suchlimitations and optional benefit levels as the plan prescribes;
(7) issue policies of insurance in accordance with the requirements of thisact; and
(8) appoint from among members appropriate legal, actuarial and othercommittees as necessary to provide technical assistance in the operation of theplan, policy and other contract design, and any other function within theauthority of the association.
(d) The association shall administer a reinsurance program for medicaresupplement policies issued to Kansas residents who are eligible for medicare byreason of disability. All medicare supplement insurers issuing or renewingmedicare supplement policiesin this state shall be participants in suchreinsurance program. (1) On or before May 1, 2000, and each year thereafter,each issuer of a medicare supplement policy in the state shall provide to theassociation a calendar year accounting of the medicare supplement policiesdelivered or issued for delivery in the state andcovering persons eligible for medicare by reason of disability who are underage 65. (2) The accounting for medicare supplement policies covering personseligible by reason of disability and under age 65 shall include the totalnumber of such persons covered, the total premium earned on such persons, andthe total claims expense incurred with respect to such persons during such yearas paid through March 31, without estimates for incurred but not reportedclaims. (3) The association shall use such reports to develop the assessmentrequired under subsection (d) of K.S.A. 40-2121, and amendmentsthereto.
History: L. 1992, ch. 209, § 3;L. 1996, ch. 98, § 1;L. 1997, ch. 190, § 8;L. 1999, ch. 106, § 2; July 1.