An Act To Protect Health Insurance Consumers
Maine Legislature, Session 122, LD 1935
Committee Amendment CA_A-HA_K_H1116 (House)
Amends: 24-A MRSA §1909, 24-A MRSA §2736-C, 24-A MRSA §2808-B, 24-A MRSA §2839-B, 24-A MRSA §6913

HOUSE AMENDMENT" /(" to COMMITTEE AMENDMENT "A" to S.P. 736, 
L.D. 1935, Bill, "An Act To Protect Health Insurance Consumers" 
Amend the amendment by striking out the substitute title and 
replacing it with the following: 
'An Act To Protect Health Insurance Consumers and To Modify the 
Savinqs Offset Payment' 
Further amend the amendment by striking out all of Part A 
and Part B and inserting in their place the following: 
'Sec. 1. 24·A MRSA §1906, sub·§12 is enacted to read: 
12. 
An 
administrator must provide 
a 
notice to covereq 
individuals of each plan sponsor, 
health care service plan, 
health maintenance organization or insurer for which it adjusts 
or 
settles 
claims 
regarding 
savings 
associated 
with 
Dirigo 
Health, established in chapter 87. 
Dirigo Health shall pr~L~ 
and provide to each administrator a copy of the notice. 
For 
calendar year 2006, 
the notice must be mailed no later than 
September 30, 2006. 
A. 
The notice must contain, at a minimum, the amount of the 
aggregate measurable cost savings as determined pursuant to 
section 6913, SUbsection 1. 
Page I-LR2809(17) 
HOUSE AMENDMENT 
ft." 
~ 
HOUSE AMENDMENT ,,~, to COMMITTEE AMENDMENT "A" to S. P . 736, L . D. 
1935 
B. 
Any notice or information by an administrator to covered 
individuals, in whatever manner conveyed, regarding Dirigo 
Health 
savings 
other 
than 
the notice 
reguired 
in this 
subsection must be deemed a violation of the laws governing 
trade practices and frauds in chapter 23. 
C. 
An 
administrator 
who 
fails 
to 
provide 
the 
notice 
reguired in this subsection is subject to a fine of $200 for 
each covered individual who would have received such notice 
but for the failure to provide it or who receives a notice 
that 
fails 
to 
comply 
with 
the 
reguirements 
of 
this 
subsection. 
Sec. 2. 24-A MRSA §1909, sub-§ll is enacted to read: 
11. 
No amount of the savings offset payment. as established 
under section 6913. paid by an administrator mQY be paid out of 
charges. contributions or premiums made by or on behalf of a plan 
sponsor. 
health 
care 
service 
plan, 
health 
maintenance 
organization or insurer to the administrator. 
If at any time the 
superintendent has reason to believe that the payment of funds by 
the administrator for the savings offset payment would frustrate 
the purposes of this subsection, the superintendent shall conduct 
an investigation and. upon determination of a violation of this 
subsection. shall reguire the administrator to return the funds 
to the plan. 
Upon application by an administrator. 
if the 
superintendent has reason to believe that the funds available to 
pay 
the 
savings 
offset 
payment 
mQY 
not 
be 
adeguate, 
the 
superintendent shall cause a hearing to be held to determine the 
amount and sources of funds available to the administrator to pay 
the sayings offset payment and what relief is available. 
Sec. 3. 24-A MRSA §2736-C, sub-§2, V, as enacted by PL 2003, 
c. 469, Pt. E, §12, is amended to read: 
F. 
A carrier that adjusts its rate shall account for sHe 
saviB~s--&f.f-5et.-~-e~ any recovery in SHas the savings 
offset 
payment 
in its 
experience 
consistent with 
this 
section and section 6913. but the carrier may not adjust its 
rate to reflect the savings offset payment amount paid by 
the carrier. 
(1) 
A carrier must provide a notice to insured policy 
holders and certificate holders in accordance with this 
paragraph. 
Dirigo Health. established in chapter 87, 
shall prepare and provide to each carrier a copy of the 
notice. 
For calendar year 2006, the notice must be 
mailed no later than September 30. 2006. 
HOUSE AMENDMENT 
.. 
fib-
~ 
HOUSE AMENDMENT "I(" to COMMITTEE AMENDMENT "A" to S.P. 736, L.D . 
1935 
( a l 
The noti ce mus t 
contain, at a minimum, the 
amount of the aggregate measurable cost savings as 
determined pursuant to section 6913, subsection 1. 
(b) 
Any notice or information by a carrier to 
insured policy holders and certificate holders, in 
whatever manner conveyed, regarding Dirigo Health 
savings other than the notice required in this 
subparagraph must be deemed 
a violation of the 
laws 
governing 
trade 
practices 
and 
frauds 
in 
chapter 23. 
(cl 
A carrier who fails to provide the notice 
required in this subparagraph is subject to a fine 
of 
$200 
for 
each 
insured 
policy 
holder 
and 
certificate holder who would have received such 
notice but for the failure to provide it or who 
recei ves a notice that fails to comply with the 
requirements of this subparagraph. 
Sec. 4. 24-A MRSA §2808-B, sub-§2-B, 1JD, as enacted by PL 
2003, c. 469, Pt. E, §16, is amended to read: 
D. 
A carrier that adjusts its rate shall account for t;ae 
saviB~6-~~~-~~-e~ any recovery of t;aat; the 
savings 
offset 
payment 
in its 
experience 
consistent 
with 
this 
section and section 6913, but the carrier may not adjust its 
rate to reflect the savings offset payment amount I?aid by 
the carrier. 
(1) 
A carrier must provide a notice to insured policy 
holders and certificate holders in accordance with this 
subI?aragreI?h. 
Dirigo Health, established in chaI?ter 
87, shall prepare and I?rovide to each carrier a copy of 
the notice. 
For calendar year 2006. the notice must be 
mailed no later than September 30. 2006. 
(al 
The notice must contain, at a minimum. the 
amount of the aggregate measurable cost savings as 
determined pursuant to section 6913. subsection 1. 
(b) 
Any notice or information by a carrier to 
insured policy holders and certificate holders, in 
whatever manner conveyed, regarding Dirigo Health 
savings other than the notice required in this 
subparagraph must be deemed a violation of the 
laws 
governing 
trade 
practices 
and 
frauds 
in 
chapter 23. 
HOUSE AMENDMENT 
• t;;,. 
~. 
HOUSE AMENDMENT "~,, to COMMITTEE AMENDMENT "A" to S.P. 736, L.D . 
1935 
(c) 
A carrier who fails to provide the notice 
required in this subparagraph is subject to a fine 
of 
$200 
for 
each 
insured 
policy 
holder 
and 
certificate holder who would have received such 
notice but for the failure to provide it or who 
receives a notice that fails to comply with the 
requirements of this subparagraph. 
Sec. 5. 24-A MRSA §2839-B, sub-§2, as enacted by PL 2003, c. 
469, Pt. E, §17, is amended to read: 
2. 
Annual filing. 
Every carrier offering group health 
insurance specified in subsection 1 shall annually file with the 
superintendent on or before April 30th a certification signed by 
a member in good standing of the American Academy of Actuaries or 
a successor organization that the carrier I s rating methods and 
practices are in accordance with generally accepted actuarial 
principles 
and 
with 
the 
applicable 
actuarial 
standards 
of 
practice as promulgated by an actuarial standards board. 
The 
filing must certify that the carrier has not included in its 
experience any savings offset payments paid in accordance with 
section 6913. 
The filing must also certify that, the carrier has 
included 
in its 
experience 
any 
saviR'!Js--9EEs'et=--paYFReRt=s--9F 
recovery of t=h9se savings offset payments consistent with section 
6913. The filing also must state the number of policyholders, 
certificate holders 
and dependents, 
as 
of the close of the 
preceding calendar year, enrolled in large group health insurance 
plans offered by the carrier. A filing and supporting information 
are public records except as provided by Title 1, section 402, 
subsection 3. 
A. 
A carrier must provide 
a 
notice to insured policy 
holders 
and certificate holders in accordance with this 
paragraph. 
Dirigo Health, established in chapter 87, shall 
prepare and provide to each carrier a copy of the notice. 
For calendar year 2006, the notice must be mailed no later 
than September 30, 2006. 
(1) 
The notice must contain, at a minimum, the amount 
of the aggregate measurable cost savings as determined 
pursuant to section 6913, subsection 1. 
(2) 
Any notice or information by a carrier to insured 
policy holders and certificate holders, 
in whatever 
manner conveyed, regarding Dirigo Health savings other 
than the notice required in this paragraph must be 
Q,eemed 
a 
violation 
of 
the 
laws 
governing 
trade 
practices and frauQ,s in chapter 23. 
HOUSE AMENDMENT 
fl." 
~ 
HOUSE AMENDMENT "K" to COMMITTEE AMENDMENT "A" to S.P. 736, L.D. 
1935 
(3) 
A carrier who fails to provide the notice required 
in this paragraph is subject to a fine of $200 for each 
insured policy holder and certificate holder who would 
have 
received 
such notice but for 
the failure 
to 
provide it or who 
receives 
a notice that fails to 
comply with the requirements of this paragraph. 
Sec. 6. 24·A MRSA §6913, sub-§l, 1JA, as enacted by PL 2005, c. 
400, Pt. A, §10, is amended to read: 
A. 
After an opportunity for a hearing conducted pursuant to 
Title 
5, 
chapter 
375, 
subchapter 
4, 
the 
board 
shall 
determine annually not later than April 1st the aggregate 
measurable 
cost 
savings 
contained 
in 
Public 
Law 
2003, 
chapter 469, including but not limited to any reduction or 
avoidance of bad debt and charity care costs to health care 
providers in this State as a result of the operation of 
Dirigo Health and any increased MaineCare enrollment due to 
an expansion in MaineCare eligibility occurring after June 
30, 2004, and any further cost savings initiatives adopted 
and approved by the board for plan years beginning on or 
after January 1, 2007. 
Sec. 7. 24-A MRSA §6913, sub-§2, as repealed and replaced by 
PL 2005, c. 400, Pt. A, §ll, is amended to read: 
2. 
Determination of savinqs offset amount. The board shall 
determine annually a savings offset amount to be paid by health 
insurance carriers, employee benefit excess insurance carriers 
and 
3rd-party 
administrators, 
not 
including 
carriers 
and 
3rd-party 
administrators 
with 
respect 
to 
accidental 
injury, 
specified disease, hospital indemnity, dental, vision, disability 
income, 
long-term care, Medicare 
supplement or other limited 
benefit health insurance. 
The board shall determine the savings 
offset amount in accordance with the following: 
A. 
Not later than April of each year, 
the board 
prospectively determine the savings offset amount 
applied during each l2-month calendar year period; 
shall 
to be 
B. To determine the savings offset amount, the board shall 
use the criteria and reports described in subsections 7 and 
8; 
C. The savings offset amount must reflect and may not exceed 
aggregate measurable cost savings, 
as determined by the 
board pursuant to subsection 1; and 
D. The savings offset amount calculation is limited to the 
amount of funds necessary to provide subsidies pursuant to 
HOUSE AMENDMENT 
.,to-
~: 
HOUSE AMENDMENT ,,~, to COMMITTEE AMENDMENT "A" to S.P. 736, L.D . 
1935 
section 
6912 
and 
to 
support 
the 
Maine 
Quality 
Forum 
established in section 6951 and may not include general 
administrative expenses of Dirigo Health, except for general 
administrative expenses of the Maine Quality Forum. 
~he-~~~~~-am9QR~-~~~~~-~he-~~-~-aeeeFeaRee 
w ~~h- -t..a.i~~:i,.o.n. -~s - -t..Qe.- -d&t~j,.n..,i.ng- -~ae toe F- .f.~- -i-nG-l-us-:i,.o.n. -e ~ 
saviR~s-~~~-~~~-4R-~~-t:h~~h-~~€-~~~-Feview 
9y-~he-9QFeaQ ... 
Sec. 8. 24-A MRSA §6913, sub-§9, as enacted by PL 2003, c. 
469, Pt. A, §8, is amended to read: 
9. 
Demonstration of recovery of savinqs offset payments. 
As provided in sections 2736-C, 
2808-B and 2839-B, the claims 
experience used to determine any filed premiums or rating formula 
may not reflect the savings offset payment amount determined in 
accordance with subsection 2, but must reasonably reflect, in 
accordance with accepted actuarial standards, known changes and 
e~~set:s-iR recovery of savings offset payments by the carrier to 
health care providers in this State, including any reduction or 
avoidance of bad debt and charity care costs to health care 
providers in this State as a result of the opetation of Dirigo 
Health and 
any increased enrollment 
due 
to 
an expansion in 
MaineCare eligibility occurring after June 30, 2004 as determined 
by the board consistent with subsection 1. 
Sec. 9. Fixed savings offset payment for plan years beginning 
January 1, 2006 to December 31, 2006. 
Notwithstanding the Maine 
Revised Statutes, Title 24-A, section 6913, subsection 1 to 3, 
the savings offset payment for plan years beginning January I, 
2006 to December 31, 2006 must equal a total of $35,000,000 for 
all health 
insurance 
carriers, 
3rd-party 
administrators 
and 
employee 
benefit excess 
insurance carriers. 
For 
plan years 
beginning January 1, 
2006 to December 31, 
2006, the Board of 
Directors of Dirigo Health shall disregard the savings offset 
amount 
calculation set forth 
in Title 
24-A, 
section 
6913, 
subsection 2. 
The savings offset payment established pursuant to 
this section must 
be 
paid in accordance with the 
schedule 
established in Title 24-A, section 6913, subsection 3, paragraph 
F. 
No later than 90 days after the effective date of this Act, 
all health insurance carriers shall file amended rate filings 
with the Superintendent of Insurance in accordance with this 
section. 
The savings offset payment set forth in this section 
applies retroactively to any savings offset payment that has been 
assessed and paid pursuant to Title 24-A, section 6913 for plan 
years beginning January 1, 2006. 
No later than 30 days following 
the effective date of this Act, Dirigo Health shall issue refunds 
of, 
or 
credits 
for, 
any 
amounts 
HOUSE AMENDMENT 
.. " 
~: 
HOUSE AMENDMENT .. J(. to COMMITTEE AMENDMENT .. A" to S. P . 736, L . D . 
1935 
collected in excess 
of 
the 
limitations 
established 1n this 
section. 
Sec. 
10. 
Appropriations 
and 
allocations. 
appropriations and allocations are made. 
The 
PROFESSIOR'AL AND FIIlARCIAL REGULATIOlf, DEPARTMENT OF 
Bureau of Insurance 
0092 
following 
Ini tiati ve: 
Allocates funds for the costs of implementing the 
3rd-party administrator provisions of the Dirigo Health Program 
savings offset payment. 
OTHER SPECIAL REvENUE FUNDS 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
SUMMARY 
2005-06 
$0 
$0 
2006-07 
$50,000 
$50,000' 
This 
amendment 
makes 
the following 
changes to the 
laws 
governing Dirigo Health. 
1. 
It prohibits insurance carriers from including the costs 
of the savings offset payment used to support the Dirigo Health 
Program in health insurance premium rates. 
2. 
It prohibits administrators from passing the costs of 
the savings offset payment to covered individuals. 
It gives the 
Superintendent of Insurance authority to provide relief to those 
administrators 
that 
demonstrate 
the 
funds 
available 
are 
inadequate. 
3. 
It requires health insurance carriers and administrators 
to notify insureds of the savings attributable to the Dirigo 
Health Program and Public Law 2003, chapter 469. 
4. 
It clarifies that aggregate measurable cost savings are 
not limited to bad debt and charity care but rather include all 
cost savings initiatives contained in Public Law 2003, chapter 
and further cost savings initiatives adopted and approved by 
the Board of Directors of Dirigo Health. 
HOUSE AMENDMENT 
~~. 
~~ 
HOUSE AMENDMENT "I<" to COMMITTEE AMENDMENT "A" to S.P. 736, L.D. 
1935 
5. 
It establishes a 
fixed amount of $35,000,000 as the 
savings offset payment for plan years beginning January 1, 2006 
to December 31, 2006. 
FISCAL NOTE REQUIRED 
(See attached) 
SP~:~~:~e:~:~~ --
TOWN: 
Falmouth 
HOUSE AMENDMENT 
Approved: 05121106 ~ae. 
LD 1935 
LR 2809(17) 
An Act To Protect Health Insurance Consumers 
Fiscal Note for House Amendment "K" to Committee Amendment ,,!}, 
Sponsor: Rep. Brautigam 
Net Cost (Savings) 
General Fund 
Appropriations/Allocations 
General Fund 
Other Special Revenue Funds 
Other Funds 
Revenue 
Other Funds 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
2005-06 
$0 
$0 
$0 
$0 
$0 
2006-07 
($6,130) 
($6,130) 
$49,500 
$12,900,000 
$12,000,000 
Projections 
2007-08 
$0 
$0 
$0 
$0 
$0 
Projections 
2008-09 
$0 
$0 
$0 
$0 
$0 
The numbers above reflect the incremental difference between this amendment and the Committee Amendment. 
Assumes this amendment's proposed 2006 savings offset payment (SOP) of $35 million would increase Dirigo Health 
program revenue by 12 million over the Committee Amendment's proposed $23 million, 2006 SOP. 
By prohibiting third party administrators from passing on the savings offset payment (SOP), this amendment could 
result in saving to the State Employee Health Plan from the $2.9 million budgeted to pay for the SOP for FY 2006-07. 
The General Fund share of these savings would be approximately $1.2 million. The amendment provides for a review 
process that may still allow the third party administrator to pass on these costs. 
Assumes the Bureau of Insurance in the Department of Professional and Financial Regulation will require an 
additional Other Special Revenue Funds allocation of $50,000 for the additional costs related to the third party 
administrator provisions of this amendment. The allocation is needed for the costs of contracted external expertise the 
Bureau anticipates it will need. 
LR2809(17) - Fiscal Note - Page 1 of 1