40-2209h. Same; rating; transfer of small employer from one business class to another, limitations; suspension of business class and rate limitations.
40-2209h
40-2209h. Same; rating; transfer of small employerfrom one business class to another, limitations; suspension of business classand rate limitations.From and after January 1, 1993: (a) Premium rates applicable to Kansasresidents for health benefit plans subject to this act shall be subject to thefollowing provisions:
(1) The index rate for a rating period for any class of business shall notexceed the index rate for any other class of business by more than 20%.
(2) For a class of business, the premium rates charged during a ratingperiod to small employers with similar case characteristics for the same orsimilar coverage, or the rates that could be charged to such employers underthe rating system for that class of business, shall not vary from the indexrate by more than 25% of the index rate.
(3) The percentage increase in the premium rate charged to a small employerfor a new rating period may not exceed the sum of the following:
(A) The percentage change in the new business premium rate measured from thefirst day of the prior rating period to the first day of the new rating period.In the case of a health benefit plan into which the small employer carrier isno longer enrolling new small employers, the small employer carrier shall usethe percentage change in the base premium rate, if such change does not exceed,on a percentage basis, the change in the new business premium rate for the mostsimilar health benefit plan into which the small employer carrier is activelyenrolling new small employers;
(B) any adjustment, not to exceed 15% annually andadjusted pro rata for rating periods of less than one year, due to the claimexperience, healthstatus or duration of coverage of the employees or dependents of the smallemployer as determined from the small employer carrier's rate manual for theclass of business; and
(C) any adjustment due to change in coverage or change in the casecharacteristics of the small employer, as determined from the small employercarrier's rate manual for the class of business.
(4) Adjustments in rates for claim experience, health status and duration ofcoverage shall not be charged to individual employees or dependents. Any suchadjustment shall be applied uniformly to the rates charged for all employeesand dependents of the small employer.
(5) A small employer carrier may utilize industry as a case characteristicin establishing premium rates, if the highest rate factor associatedwith any industry classification does not exceed the lowest rate factorassociated with any industry classification by more than 30%for each yearuntil the earlier of the first acquisition of coverage from a small employercarrier which did not previously provide coverage to that small employer or thefirst renewal date on or after December 31, 1996,and 15% each year thereafter.
(6) A premium rate for a rating period may exceed the ranges setforthin paragraphs (1) and (2)until the earlier of the first acquisition of coverage from a small employercarrier which did not previously provide coverage to that small employer or thefirst renewal date on or after December 31, 1996.If premium rates for a small employer covered by a small employer carrierprior to January 1, 1993, are below the lowest range as set forth in paragraphs(1) and (2), such small employer carrier must at least increase that smallemployer's rates commencing with renewals on or after December 31, 1995, toequally distribute the needed increase to get that small employer's rateswithin the range over the renewal opportunities remaining so that the smallemployer's renewal rates on or after December 31, 1999, would be within theranges.In such case, the percentage increase in the premium ratecharged to a small employer for a new rating period shall not exceed the sum ofthe following:
(A) The percentage change in the new business premium rate measured from thefirst day of the prior rating period to the first day of the new rating period.In the case of a health benefit plan into which the small employer carrier isno longer enrolling new small employers, the small employer carrier shall usethe percentage change in the base premium rate, if such change doesnot exceed, on a percentage basis, the change in the new business premium ratefor the most similar health benefit plan into which the small employer carrieris actively enrolling new small employers.
(B) Any adjustment due to change in coverage or change in the casecharacteristics of the small employer, as determined from the carrier's ratemanual for the class of business.
(7) (A) Small employer carriers shall apply rating factors, including casecharacteristics, consistently with respect to all small employers in a class ofbusiness. Rating factors shall produce premiums for identical groups whichdiffer only by amounts attributable to plan design and do not reflectdifferences due to the nature of the groups assumed to select particular healthbenefit plans.
(B) A small employer carrier shall treat all health benefit plans issued orrenewed in a class of business in the same calendar month as having the samerating period.
(8) For the purposes of this subsection, a health benefit plan that utilizesa restricted provider network shall not be considered similar coverage to ahealth benefit plan that does not utilize such a network, if utilization of therestricted provider network results in substantial differences in claims costs.
(9) A small employer carrier shall not use case characteristics, other thanage, gender, industry, geographic area, family composition, and group sizewithout prior approval of the commissioner.
(10) The commissioner may establish regulations to implement the provisionsof this section and to assure that rating practices used by small employercarriers are consistent with the purposes of this act, including:
(A) Assuring that differences in rates charged for health benefit plansby small employer carriers are reasonable and reflect objective differences inplan design, not including differences due to the nature of the groups assumedto select particular health benefit plans; and
(B) prescribing the manner in which case characteristics may be used bysmall employer carriers.
(b) A small employer carrier shall not transfer a small employerinvoluntarily into or out of a class of business. A small employer carriershall not offer to transfer a small employer into or out of a class of businessunless such offer is made to transfer all small employers in the class ofbusiness without regard to case characteristics, claim experience, healthstatus or duration of coverage.
(c) The commissioner may suspend for a specified period the application ofsubsection (a)(1) as to the premium rates applicable to one or more smallemployers included within a class of business of a small employer carrier forone or more rating periods upon a filing by the small employer carrier and afinding by the commissioner either that the suspension is reasonable in lightof the financial condition of the small employer carrier or that thesuspension would enhance the efficiency and fairness of the marketplace forsmall employer health insurance.
(d) Upon written application of the group policyholders, the commissionermay suspend the application of K.S.A. 40-2209g and 40-2209h and amendmentsthereto to any group whose fundamental structure or composition wouldotherwise be adversely affected.
History: L. 1992, ch. 200, § 7;L. 1994, ch. 355, § 7;L. 1995, ch. 183, § 8; July 1.