§ 27-50-5 - Restrictions relating to premium rates.
SECTION 27-50-5
§ 27-50-5 Restrictions relating to premiumrates. – (a) Premium rates for health benefit plans subject to this chapter are subjectto the following provisions:
(1) Subject to subdivision (2) of this subsection, a smallemployer carrier shall develop its rates based on an adjusted community rateand may only vary the adjusted community rate for:
(i) Age;
(ii) Gender; and
(iii) Family composition;
(2) The adjustment for age in paragraph (1)(i) of thissubsection may not use age brackets smaller than five (5) year increments andthese shall begin with age thirty (30) and end with age sixty-five (65).
(3) The small employer carriers are permitted to developseparate rates for individuals age sixty-five (65) or older for coverage forwhich Medicare is the primary payer and coverage for which Medicare is not theprimary payer. Both rates are subject to the requirements of this subsection.
(4) For each health benefit plan offered by a carrier, thehighest premium rate for each family composition type shall not exceed four (4)times the premium rate that could be charged to a small employer with thelowest premium rate for that family composition.
(5) Premium rates for bona fide associations except for theRhode Island Builders' Association whose membership is limited to those who areactively involved in supporting the construction industry in Rhode Island shallcomply with the requirements of § 27-50-5.
(6) For a small employer group renewing its health insurancewith the same small employer carrier which provided it small employer healthinsurance in the prior year, the combined adjustment factor for age and genderfor that small employer group will not exceed one hundred twenty percent (120%)of the combined adjustment factor for age and gender for that small employergroup in the prior rate year.
(b) The premium charged for a health benefit plan may not beadjusted more frequently than annually except that the rates may be changed toreflect:
(1) Changes to the enrollment of the small employer;
(2) Changes to the family composition of the employee; or
(3) Changes to the health benefit plan requested by the smallemployer.
(c) Premium rates for health benefit plans shall comply withthe requirements of this section.
(d) Small employer carriers shall apply rating factorsconsistently with respect to all small employers. Rating factors shall producepremiums for identical groups that differ only by the amounts attributable toplan design and do not reflect differences due to the nature of the groupsassumed to select particular health benefit plans. Two groups that areotherwise identical, but which have different prior year rate factors may,however, have rating factors that produce premiums that differ because of therequirements of subdivision 27-50-5(a)(6). Nothing in this section shall beconstrued to prevent a group health plan and a health insurance carrieroffering health insurance coverage from establishing premium discounts orrebates or modifying otherwise applicable copayments or deductibles in returnfor adherence to programs of health promotion and disease prevention, includingthose included in affordable health benefit plans, provided that the resultingrates comply with the other requirements of this section, including subdivision(a)(5) of this section.
The calculation of premium discounts, rebates, ormodifications to otherwise applicable copayments or deductibles for affordablehealth benefit plans shall be made in a manner consistent with acceptedactuarial standards and based on actual or reasonably anticipated smallemployer claims experience. As used in the preceding sentence, "acceptedactuarial standards" includes actuarially appropriate use of relevant data fromoutside the claims experience of small employers covered by affordable healthplans, including, but not limited to, experience derived from the large groupmarket, as this term is defined in § 27-18.6-2(19).
(e) For the purposes of this section, a health benefit planthat contains a restricted network provision shall not be considered similarcoverage to a health benefit plan that does not contain such a provision,provided that the restriction of benefits to network providers results insubstantial differences in claim costs.
(f) The health insurance commissioner may establishregulations to implement the provisions of this section and to assure thatrating practices used by small employer carriers are consistent with thepurposes of this chapter, including regulations that assure that differences inrates charged for health benefit plans by small employer carriers arereasonable and reflect objective differences in plan design or coverage (notincluding differences due to the nature of the groups assumed to selectparticular health benefit plans or separate claim experience for individualhealth benefit plans) and to ensure that small employer groups with oneeligible subscriber are notified of rates for health benefit plans in theindividual market.
(g) In connection with the offering for sale of any healthbenefit plan to a small employer, a small employer carrier shall make areasonable disclosure, as part of its solicitation and sales materials, of allof the following:
(1) The provisions of the health benefit plan concerning thesmall employer carrier's right to change premium rates and the factors, otherthan claim experience, that affect changes in premium rates;
(2) The provisions relating to renewability of policies andcontracts;
(3) The provisions relating to any preexisting conditionprovision; and
(4) A listing of and descriptive information, includingbenefits and premiums, about all benefit plans for which the small employer isqualified.
(h) Each small employer carrier shall maintain at itsprincipal place of business a complete and detailed description of its ratingpractices and renewal underwriting practices, including information anddocumentation that demonstrate that its rating methods and practices are basedupon commonly accepted actuarial assumptions and are in accordance with soundactuarial principles.
(2) Each small employer carrier shall file with thecommissioner annually on or before March 15 an actuarial certificationcertifying that the carrier is in compliance with this chapter and that therating methods of the small employer carrier are actuarially sound. Thecertification shall be in a form and manner, and shall contain the information,specified by the commissioner. A copy of the certification shall be retained bythe small employer carrier at its principal place of business.
(3) A small employer carrier shall make the information anddocumentation described in subdivision (1) of this subsection available to thecommissioner upon request. Except in cases of violations of this chapter, theinformation shall be considered proprietary and trade secret information andshall not be subject to disclosure by the director to persons outside of thedepartment except as agreed to by the small employer carrier or as ordered by acourt of competent jurisdiction.
(4) For the wellness health benefit plan described in §27-50-10, the rates proposed to be charged and the plan design to be offered byany carrier shall be filed by the carrier at the office of the commissioner noless than thirty (30) days prior to their proposed date of use. The carriershall be required to establish that the rates proposed to be charged and theplan design to be offered are consistent with the proper conduct of itsbusiness and with the interest of the public. The commissioner may approve,disapprove, or modify the rates and/or approve or disapprove the plan designproposed to be offered by the carrier. Any disapproval by the commissioner of aplan design proposed to be offered shall be based upon a determination that theplan design is not consistent with the criteria established pursuant tosubsection 27-50-10(b).
(i) The requirements of this section apply to all healthbenefit plans issued or renewed on or after October 1, 2000.