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304.17A-095 Insurer issuing health benefit plan must file rates and charges -Commissioner's approval -- Policy forms -- Administrative regulations -Hearing.
(1)
(2)
(3)
(a)
Notwithstanding any other provisions of this chapter to the contrary, each
insurer that issues, delivers, or renews any health benefit plan to any
market segment other than a large group shall, before use thereof, file
with the commissioner its rates, fees, dues, and other charges paid by
insureds, members, enrollees, or subscribers. The insurer shall also
submit a copy of the filing to the Attorney General and shall comply with
the provisions of this section. The insurer shall adhere to its rates, fees,
dues, and other charges as filed with the commissioner. The insurer shall
submit a new filing to reflect any material change to the previously filed
and approved rate filing. For all other changes, the insurer shall submit an
amendment to a previously approved rate filing.
(b) Notwithstanding any other provisions of this chapter to the contrary, each
insurer that issues, delivers, or renews any health benefit plan to a large
group as defined in KRS 304.17A-005 shall file the rating methodology
with the commissioner and shall submit a copy of the filing to the Attorney
General.
(a) A rate filing under this section may be used by the insurer on and after
the date of filing with the commissioner prior to approval by the
commissioner. A rate filing shall be approved or disapproved by the
commissioner within sixty (60) days after the date of filing. Should sixty
(60) days expire after the commissioner receives the filing before
approval or disapproval of the filing, the filing shall be deemed approved.
(b) In the circumstances of a filing that has been deemed approved or has
been disapproved under paragraph (a) of this subsection, the
commissioner shall have the authority to order a retroactive reduction of
rates to a reasonable rate if the commissioner subsequently determines
that the filing contained misrepresentations or was based on fraudulent
information, and if after applying the factors in subsection (3) of this
section the commissioner determines that the rates were unreasonable. If
the commissioner seeks to order a retroactive reduction of rates and more
than one (1) year has passed since the date of the filing, the
commissioner shall consider the reasonableness of the rate over the
entire period during which the filing has been in effect.
In approving or disapproving a filing under this section, the commissioner shall
consider:
(a) Whether the benefits provided are reasonable in relation to the premium
or fee charged;
(b) Whether the fees paid to providers for the covered services are
reasonable in relation to the premium or fee charged;
(c) Previous premium rates or fees for the policies or contracts to which the
filing applies;
(d) The effect of the rate or rate increase on policyholders, enrollees, and
subscribers;
(e)
(4)
(5)
(6)
Whether the rates, fees, dues, or other charges are excessive,
inadequate, or unfairly discriminatory;
(f) The effect on the rates of any assessment made under KRS
304.17B-021; and
(g) Other factors as deemed relevant by the commissioner.
The rates for each policyholder shall be guaranteed for twelve (12) months at
the rate in effect on the date of issue or date of renewal.
At any time the commissioner, after a public hearing for which at least thirty
(30) days' notice has been given, may withdraw approval of rates or fees
previously approved under this section and may order an appropriate refund or
future premium credit to policyholders, enrollees, and subscribers if the
commissioner determines that the rates or fees previously approved are in
violation of this chapter.
Notwithstanding subsection (2) of this section, premium rates may be used
upon filing with the department of a policy form not previously used if the filing
is accompanied by the policy form filing and a minimum loss ratio guarantee.
Insurers may use the filing procedure specified in this subsection only if the
affected policy forms disclose the benefit of a minimum loss ratio guarantee.
An insurer may not elect to use the filing procedure in this subsection for a
policy form that does not contain the minimum loss ratio guarantee. If an
insurer elects to use the filing procedure in this subsection for a policy form or
forms, the insurer shall not use a filing of premium rates that does not provide a
minimum loss ratio guarantee for that policy form or forms.
(a) The minimum loss ratio shall be in writing and shall contain at least the
following:
1.
An actuarial memorandum specifying the expected loss ratio that
complies with the standards as set forth in this subsection;
2.
A statement certifying that all rates, fees, dues, and other charges
are not excessive, inadequate, or unfairly discriminatory;
3.
Detailed experience information concerning the policy forms;
4.
A step-by-step description of the process used to develop the
experience loss ratio, including demonstration with supporting data;
5.
A guarantee of a specific lifetime minimum loss ratio, that shall be
greater than or equal to the following, taking into consideration
adjustments for duration as set forth in administrative regulations
promulgated by the commissioner:
a.
Sixty-five percent (65%) for policies issued to individuals or for
certificates issued to members of an association that does not
offer coverage to small employers;
b.
Seventy percent (70%) for policies issued to small groups of
two (2) to ten (10) employees or for certificates issued to
members of an association that offers coverage to small
employers; and
c.
Seventy-five percent (75%) for policies issued to small groups
of eleven (11) to fifty (50) employees;
6.
(b)
(c)
(d)
(e)
(f)
(g)
(h)
A guarantee that the actual Kentucky loss ratio for the calendar year
in which the new rates take effect, and for each year thereafter until
new rates are filed, will meet or exceed the minimum loss ratio
standards referred to in subparagraph 5. of this paragraph, adjusted
for duration;
7.
A guarantee that the actual Kentucky lifetime loss ratio shall meet or
exceed the minimum loss ratio standards referred to in
subparagraph 5. of this paragraph; and
8.
If the annual earned premium volume in Kentucky under the
particular policy form is less than two million five hundred thousand
dollars ($2,500,000), the minimum loss ratio guarantee shall be
based partially on the Kentucky earned premium and other
credibility factors as specified by the commissioner.
The actual Kentucky minimum loss ratio results for each year at issue
shall be independently audited at the insurer's expense and the audit
shall be filed with the commissioner not later than one hundred twenty
(120) days after the end of the year at issue. The audit shall demonstrate
the calculation of the actual Kentucky loss ratio in a manner prescribed as
set forth in administrative regulations promulgated by the commissioner.
The insurer shall refund premiums in the amount necessary to bring the
actual loss ratio up to the guaranteed minimum loss ratio.
A Kentucky policyholder affected by the guaranteed minimum loss ratio
shall receive a portion of the premium refund relative to the premium paid
by the policyholder. The refund shall be made to all Kentucky
policyholders insured under the applicable policy form during the year at
issue if the refund would equal ten dollars ($10) or more per policy. The
refund shall include statutory interest from July 1 of the year at issue until
the date of payment. Payment shall be made not later than one hundred
eighty (180) days after the end of the year at issue.
Premium refunds of less than ten dollars ($10) per insured shall be
aggregated by the insurer and paid to the Kentucky State Treasury.
None of the provisions of subsections (2) and (3) of this section shall
apply if premium rates are filed with the department and accompanied by
a minimum loss ratio guarantee that meets the requirements of this
subsection. Such filings shall be deemed approved. Each insurer paying a
risk assessment under KRS 304.17B-021 may include the amount of the
assessment in establishing premium rates filed with the commissioner
under this section. The insurer shall identify any assessment allocated.
The policy form filing of an insurer using the filing procedure with a
minimum loss ratio guarantee will disclose to the enrollee, member, or
subscriber as prescribed by the commissioner an explanation of the
lifetime loss ratio guarantee, and the actual loss ratio, and any
adjustments for duration.
The insurer who elects to use the filing procedure with a minimum loss
ratio guarantee shall notify all policyholders of the refund calculation, the
result of the refund calculation, the percent of premium on an aggregate
basis to be refunded if any, any amount of the refund attributed to the
(7)
(8)
payment of interests, and an explanation of amounts less than ten dollars
($10).
(i) Notwithstanding the provisions of this subsection, an insurer may amend
the policy forms used before March 31, 2005, or may amend the minimum
loss ratio guarantee on policy forms filed with the department and used by
the insurer prior to March 31, 2005, to provide for a minimum loss ratio
guarantee allowed under this subsection for policies issued, delivered, or
renewed on or after March 31, 2005.
The commissioner may by administrative regulation prescribe any additional
information related to rates, fees, dues, and other charges as they relate to the
factors set out in subsection (3) of this section that he or she deems necessary
and relevant to be included in the filings and the form of the filings required by
this section. When determining a loss ratio for the purposes of loss ratio
guarantee, the insurer shall divide the total of the claims incurred, plus
preferred provider organization expenses, case management and utilization
review expenses, plus reinsurance premiums less reinsurance recoveries by
the premiums earned less state and local premium taxes less other
assessments. For purposes of determining the loss ratio for any loss ratio
guarantee pursuant to this section, the commissioner may examine the
insurers expenses for preferred provider organization, case management,
utilization review, and reinsurance used by the insurer in calculating the loss
ratio guarantee for reasonableness. Only those expenses found to be
reasonable by the commissioner may be used by the insurer for determining
the loss ratio for purposes of any loss ratio guarantee.
(a) The commissioner shall hold a hearing upon written request by the
Attorney General. The written request shall be based upon one (1) or
more of the reasons set out in subsection (3) of this section and shall
state the applicable reasons.
(b) An insurer may request a hearing, pursuant to KRS 304.2-310, with
regard to any action taken by the commissioner under this section as to
the disapproval of rates or an order of a retroactive reduction of rates.
(c) The hearing shall be a public hearing conducted in accordance with KRS
304.2-310.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1212, effective July 15, 2010. -Amended 2005 Ky. Acts ch. 183, sec. 2, effective March 31, 2005. -- Amended
2004 Ky. Acts ch. 59, sec. 3, effective July 13, 2004. -- Amended 2002 Ky. Acts
ch. 351, sec. 3, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 476,
sec. 25, effective January 1, 2001; and 2000 Ky. Acts ch. 521, sec. 14, effective
July 14, 2000. -- Amended 1998 Ky. Acts ch. 496, sec. 9, effective April 10,
1998. -- Created 1996 Ky. Acts ch. 371, sec. 16, effective July 15, 1996.
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