An Act To Create a High-risk Pool in the Health Insurance Market
Maine Legislature, Session 122, LD 0394
Committee: Insurance and Financial Services
Sponsors: McKANE, WESTON, AUSTIN, BISHOP, GLYNN, LINDELL, RICHARDSON, SHIELDS, VAUGHAN, SNOWE-MELLO
Amends: 24-A MRSA §2736-C

Legislative Document 
No. 394 
H.P.296 
House of Representatives, January 25,2005 
An Act To Create a High-risk Pool in the Health Insurance Market 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative McKANE of Newcastle. 
Cosponsored by Senator WESTON of Waldo and 
7r/~ 
1J7.11bc~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: AUSTIN of Gray, BISHOP of Boothbay, GLYNN of South Portland, 
LINDELL of Frankfort, RICHARDSON of Warren, SHIELDS of Auburn, VAUGHAN of 
Durham, Senator: SNOWE-MELLO of Androscoggin. 
Printed on rel.:ycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §2736-C, sub-§2, 1fB, as enacted by PL 1993, 
c. 477, Pt. C, §1 and affected by Pt. F, §1, is amended to read: 
B. 
A carrier may not vary the premium rate due to the 
gender, 
aeal~a-~~a~QST claims experience or policy duration 
of the individual. 
A carrier may vary the premium rate 
based 
on 
health 
~tatus, 
age 
and 
tobacco 
use 
only 
as 
permitted in paragraph D. 
Sec. 2. 24-A MRSA §2736-C, sub-§2, 1fC, as amended by PL 2001, 
c. 410, Pt. A, §1 and affected by §10, is further amended to read: 
c. 
A carrier may vary the premium rate due to 
sme*iA~ 
s~a~~s-aAa family membership. 
~ae-~~~~~-~~-aaeF~ 
~Qles-~e~~iB~-~~~~~~~~~~~~~-F~aF4i~-~a~e 
aiseeQA~s-~-eA-~~~~--~~~~r--RQle~-~~-FQ~SQaA~ 
~e-~hi~-~~~~~-Fe~~iAe-~e€RAi€al-~~€£-~~~~A&G-iA 
~i~le-9T-eaaF~e~-6+9T-sQbeaaF~eF-II-AT 
Sec. 3. 24-A MRSA §2736-C, sub-§2, 1fD, as amended by PL 2001, 
c. 410, Pt. A, §2 and affected by §10, is further amended to read: 
D. 
A carrier may vary the premium rate due to age, health 
status, occup2.t.ion or industry aAaL geographic area eA±Y 
QAae~--~~--~ellewiB~---~~--~--wi~aia--~~--±is~ea 
Fe~eeA~a~e--baA~s and tobacco 
use in accordance with the 
following limitations. 
(1) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between December 1, 1993 and 
July 14, 1994, the premium rate may not deviate above 
or below the community rate filed by the carrier by 
more than 50'l-0. 
( 2 ) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State between July 15, 1994 and July 
14, 
1995, the premium rate may not deviate above or 
below the community rate filed by the carrier by more 
than 33°'0. 
(3) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State after July 15, 
1995, 
the 
premium 
rate 
may 
not 
deviate 
above 
or 
below 
the 
community rate filed by the carrier by more than 20~. 
(4) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State after February It 2006, the 
maximum rate differential from the community rate filed 
by the carrier for age as determined by ratio is 4 to 
one. 
The limitation does 
not apply for determining 
rates for an attained age of less than 19 or more than 
years. 
(5) 
For all policies, contracts or certificates that 
are executed, delivered, issued for delivery, continued 
or renewed in this State after February 1, 2006, the 
maximum rate differential from the community rate filed 
by the carrier for health status as determined by ratio 
is 1. 5 to one and the maximum rate differential for 
tobacco use as determined by ratio is 1.5 to one. 
Rate 
var iations based on health status do not apply to rate 
variations based on an insured's status as a tobacco 
user. 
(6) 
A variation in rate is not permitted on the basis 
of changes in health status after a policy, contract or 
certificate is issued or renewed. 
Sec. 4. 24-A MRSA §2736-C, sub-§2, 1fG is enacted to read: 
G. 
A carrier that offered individual health plans prior to 
February It 2006 may close its individual book of business 
sold prior to February 1, 2006 and may establish a separate 
community rate for individuals applying for coverage under 
an individual health plan after February 1, 2006. 
Sec. 5. 24-A MRSA §2736-C, sub-§3, 1fA, 
as corrected by 
RR 
2001, c. 1, §30, is repealed. 
Sec. 6. 24-A MRSA §2736-C, sub-§3, 1fC, as enacted by PL 1993, 
c. 477, Pt. C, §1 and affected by Pt. F, §1, is repealed. 
Sec. 7. 24-A MRSA §2736-C. sub-§3. 1fD, as enacted by PL 1999, 
c. 256, Pt. D, §1, is amended to read: 
D. 
NetwitB6taHeiH~-~~~~r-eaFFieF6 Carriers offering 
supplemental coverage for the Civilian Health and Medical 
Program 
for 
the 
Uniformed 
Services, 
CHAMPUS, 
are 
not 
required 
to 
issue 
this 
coverage 
if 
the 
applicant 
for 
insurance does not have CHAMPUS coverage. 
Sec.8. 24-A MRSA §2736-C, sub-§3"E is enacted to read: 
E. 
An individual may not be denied health insurance due to 
age or gender. 
This 
paragraph may not be construed to 
reguire a carrier to actively market health insurance to an 
individual 65 years of age or older. 
Sec. 9. 24-A MRSA §2736-C. sub-§9. as enacted by PL 1995, c. 
570, §7, is amended to read: 
9. 
Exemption for certain associations. 
The superintendent 
'12 
may exempt a group health insurance policy or group nonprofit 
hospi tal or medical service corporation contract issued to an 
association group, organized pursuant to section 2805-A, from the 
requirements 
of 
sl:i9seetoiaa---tl ... ----p-a-r-ag-r-aph---AT 
subsection 
6, 
paragraph AT and subsection 8 if: 
A. 
Issuance and renewal of coverage under the policy or 
contract is guaranteed to all members of the association who 
are residents of this State and to their dependents; 
B. 
Rates for the association comply with the premium rate 
requirements 
of 
subsection 
or 
are 
established 
on 
a 
nationwide basis and substantially comply with the purposes 
of this section, except that exempted associations may be 
rated separately from the carrier's other individual health 
plans, if any; 
C. 
The 
group's 
anticipated 
loss 
ratio, 
as 
defined 
in 
subsection 5, is at least 75%; 
D. 
The association's membership criteria do 
not include 
age, health status, medical utilization history or any other 
factor with a similar purpose or effect; 
E. 
The association's group health plan is not marketed to 
the general public; 
F. 
The 
association does 
not 
allow 
brokers 
to 
market 
association 
applications for memberships or enroll 
the association is an associ'ation of 
brokers organized under section 2805-A; 
insurance 
agents 
or 
memberships, 
accept 
members, except when 
insurance agents or 
G. 
Insurance 
is 
provided 
as 
an 
incidental 
benefiL 
of 
association membership 
and 
the 
primary 
purposes 
of 
the 
association do not include group buying or mass marketing of 
insurance or other goods and services; and 
c. 
H. 
Granting 
an 
exemption 
to 
the 
association 
does 
not 
conflict with the purposes of this section. 
Sec. 10. 24·A MRSA §2848, sub.§I·B, 1rA, as amended by PL 1999, 
256, Pt. L, §2, is further amended to read: 
A. 
"Federally creditable coverage" means health benefits or 
coverage provided under any of the following: 
(1) 
An employee welfare benefit plan as defined in 
Section 3(1) of the federal Employee Retirement Income 
Security Act of 1974, 
United States Code, Section 
1001, 
or 
a 
plan that would be 
an employee welfare 
benefit 
plan 
but 
for 
the 
"governmental 
plan" 
or 
"nonelecting 
church 
plan" 
exceptions, 
if 
the 
plan 
provides medical care as defined in subsection 2-A, and 
includes items and services paid for as medical care 
directly 
or 
through 
insurance, 
reimbursement 
or 
otherwise; 
(2) 
Benefits 
consisting 
of 
medical 
care 
provided 
directly, 
through 
insurance 
or 
reimbursement 
and 
including items and services paid for as medical care 
under a policy, contract or certificate offered by a 
carrier; 
(3) 
Part A or Part B of Title XVII I 
of the Social 
Security Act, Medicare; 
(4) 
Title XIX of the Social Security Act, Medicaid, 
other than coverage consisting solely of benefits under 
Section 1928 of the Social Security Act or 
a state 
children I s health insurance program under Title XXI of 
the Social Security Act; 
(5) 
The Civilian Health and Medical Program for the 
Uniformed Services, 
CHAMPUS, 
United States 
Code, 
Chapter 55; 
(6) 
A 
Health 
medical 
care 
program 
Care 
Improvement Act, 
of 
the 
federal 
Uni ted States 
Section 1601 or of a tribal organization; 
(7) 
A state health benefits risk pool; 
Indian 
Code, 
(8) 
A health plan offered under the federal Employees 
Heal th Benefits Amendments Act, 
United States Code, 
Chapter 89; 
(9) 
A public 
health 
regulations authorized 
Service 
Act, 
Section 
Public Law 104-191; e~ 
plan 
as 
defined 
in 
federal 
by the federal Public Health 
2701(c)(I)(I), 
as 
amended 
by 
(10) 
A health benefit plan under Section 5(e) of the 
Peace 
Corps 
Act, 
United 
States 
Code, 
Section 
2504(e) ... ..LQ£ 
( 11) 
Insurance 
Health 
Insurance 
chapter 54. 
coverage offered by the 
Risk 
Pool 
Association 
Comprehensive 
pursuant 
to 
Sec. 11. 24·A MRSA §2849·B, sub·§2. ~A, as amended by PL 2001, 
i6 
"20 
c. 258, Pt. E, §7, is further amended to read: 
A. 
That person was covered under aB-~~~~~-e~ ~ group 
contract or policy issued by 
any nonprofit hospital or 
medical service organization, insurerT or health maintenance 
organization, or was covered under 
an uninsured employee 
benefit plan that provides 
payment 
for 
health 
services 
received by employees and their dependents or a governmental 
program, 
including, 
but not limited to, 
those listed in 
section 2848, subsection I-B, paragraph A, subparagraphs (3) 
to (10). 
For purposes of this section, the" iBaiviabla± or 
group policy under which "the person is seeking coverage is 
the "succeeding policy." 
The group 
e~-~-fltl-iv-iabla± contract 
or policy, uninsured employee benefit plan or governmental 
program that previously covered the person is the "prior 
contract or policy"; and 
Sec. 12. 24·A MRSA c. 54 is enacted to read: 
CHAPTER 54 
CC»IPREBElfS:IJlJLIU;~Ta---..I1fSURANCE RI SK 
POOL ASSOCIATION 
§3901. 
Short tit1e 
This chapter may be known and cited as "the Comprehensive 
Health Insurance Risk Pool Association Act." 
§3902. 
Purpo~~ 
It is tlliL..purpose of this 
c:ha.,Qt~to establish a mechanism 
to spread among all insurers 
qQ.L~siness in this State the 
cost of providing health and accident insurance coverage to those 
residents of this State who because of health conditions consume 
unusually 
large 
amounts 
of 
health 
care 
and 
to 
ensure 
a 
competitive insurance market. 
§3903. 
Definitions 
As 
used 
in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Association. 
"Association" 
means 
the 
Comprehensive 
Health Insurance Risk Pool Association established in section 
2. 
Board. 
"Board" means the board of directors of the 
association. 
3. 
Covered person. 
"Covered person" means an individual 
resident of this State who: 
A. 
Is eligible to receive benefits from an insurer; 
B. 
Is 
eligible 
for 
benefits 
under 
the 
federal 
Health 
Insurance Portability and Accountability Act of 1996; or 
C. 
Has 
been 
certified 
as 
eligible 
adjustment 
assistance 
or 
for 
pension 
corporation assistance, 
as provided by 
Adjustment Assistance Reform Act of 2002. 
for 
federal 
trade 
benefit 
guarantee 
the federal Trade 
For the purposes of this chapter, 
"covered person" does 
not 
include a dependent of a covered person. 
4. 
Depe_~4eJ;lt. 
"De~~d_ent" means 
resident unmarried child under 19 years of 
student under 23 years of age and who is 
~pon the parent or 
a 
child of any age 
dependent upon the parent. 
a 
resident 
SPOUS~q 
age, a child who is a 
financially dependent 
who is disabled and 
5. 
Health maintenance organization. 
"Health maintenance 
9rganization" means an organization authorized under chapter 56 
to operate a health maintenance organization in this State. 
6. 
Insurer. 
"Insurer" means an entity that is authorized 
to write medical insurance or that provides medical insurance in 
this State. For the purposes of this chapter, "insurer" includes 
an insurance company, 
a nonprofit hospital and medical service 
organization, a fraternal benefit society, a heal th maintenance 
organization, a self-insurance arrangement that provides health 
care benefits in this State to the extent allowed under the 
federal 
Employee 
Retirement 
Income 
Security 
Act 
of 
1974, 
a 
3rd-party administrator, a multiple-employer welfare arrangement, 
another entity providing medical insurance or 
subject 
to 
state 
insurance 
regulation 
and 
a 
reinsures health insurance in this State. 
health benefits 
reinsurer 
that 
7. 
Medical insJ1rance. 
"Medical insurance" means a hospital 
and 
medical 
expense-incurred 
POlicy, 
nonprofit 
hospital 
and 
medical service plan, health maintenance organization subscriber 
contract or other health care plan or arrangement that pays for 
or furnishes medical or health care services whether by insurance 
or otherwise, whether sold as 
an individual or group policy. 
"Medical insurance" does not include accJdental injury, 
specifi~Q 
disease, hospital indemnity, dental, vislon, disabili ty income, 
Medicare 
supplement, 
long-term 
CqJ:lL or other 
limited benefit 
health 
insurance 
or 
credit 
insurance: 
coverage 
issued 
as 
a 
supplement 
to 
liability 
insuranc~nsurance 
arisi~ out 
of 
workers' compensation or similar law; automobile medical payment 
insurance; or insurance under which benefits are payable with or 
without regard to fault and that is statutorily required to be 
contained 
in 
any 
liability 
insurance 
policy 
or 
equivalent 
self-insurance. 
8. 
Medicare. 
"MedicQr~e9-!t~.Qy~r<;!qe under both Parts A 
and 
B of Title XV;!: I I 
of the federal Social Security Act, 
United States Code, Section 1395 et seq., as amended. 
9. 
Plan. 
"Plan" means the health insurance plan adopted by 
the board pursuant to. this chapter. 
10. 
Producer. 
"Producer" means a person who is licensed to 
sell health insurance in this State. 
34. 
11. 
Resident. 
"Resident" means an individual who: 
A. 
Is legally located in the United States and has been 
legally 
domiciled 
in 
this 
State 
for 
a 
period 
to 
be 
established by the board, not to exceed one year, subject to 
the approval of the superintendent; 
B. 
Is legally domiciled in this State on 
the date of 
application to the plan and is eligible for enrollment in 
the risk pool under this chapter as a result of the federal 
Health Insurance Portability and Accountability Act of 199QJ 
C. 
Is legally domiciled in this State on 
the date of 
application to the plan and has been certified as eligible 
for 
federal 
trade 
adjustment 
assistance 
or 
for 
pension 
benefit guarantee corporation aS5istance, as provided by the 
federal Trade Adjustment Assistance Reform Act of 2002. 
.. 
.. 
12. 
Rei~-yrer. 
"Reinsurer" means an insurer from whom a 
person 
providing 
health 
insurance 
for 
a 
resident 
procures 
insurance for itself with the insurer with respect to all or part 
of 
the 
medical 
insurance 
risk 
of 
the 
person. 
"Reinsurer" 
jncludes 
an 
insurer 
that 
provides 
employee 
benefits 
excess 
insurance. 
13. 
Third-party administrator. 
"Third-party administrator" 
means any entity that is paying or processing medical insurance 
claims for any resident. 
§3904. 
Comprehensive Health Insurance Risk Pool Association 
1. 
Risk 
pool 
establi_~_Q. 
The 
Comprehensive 
Health 
Insurance Risk Pool Association is established as a nonprofit 
legal entity. 
As a condition of doing business, an insurer that 
has sold medical insurance within the previous 12 months or is 
actively marketing a medical insurance policy in this State must 
participate in the association. 
2. 
Board of directors. 
The association is governed by a 
board of directors in accordance with the following. 
A. 
The board consists of 9 members appointed as follows: 
(1) 
Six members appointed by the superintendent: 
members chosen from the general public and who are not 
associated with the medical profession, a hospital or 
an insurer; 2 members who represent medical providers; 
QDe member who represents a statewide organization that 
represents 
small 
businesses 
and 
that 
receives 
a 
majority of its funding from small businesses located 
in 
this 
State; 
and 
one 
member 
who 
represents 
producers. 
A 
board 
member 
appointed 
by 
the 
superintendent 
may 
be 
removed 
at 
any 
time 
without 
cause; and 
~) Three members appointed by the member insurers, at 
least 2 of whom are domestic insurers. 
B. 
Members of the boa,rd serve for 3-year terms, except that 
of those members initially appointed by the superintendent, 
one member serves for a term of one year, 2 members for a 
term of 2 years and one member for a term of 3 years and of 
those members 
j,lli ti9_11y appointed by the member 
insurer~ 
one member serves for a term of one year, one member serves 
~or a term of 2 years and one member serves for a term of 3 
years. 
The appointing authority shall designate the period 
of 
service 
of 
each 
initial 
a~ointee at 
the 
time 
of 
appointment. 
C. 
The board shall elect one of its members as chair. 
D. 
Board 
members 
may 
be 
reimbursed 
from 
funds 
of 
the 
association for actual and necessary expenses incurred by 
.thgm as members but may not otherwise be compensated for 
their services. 
3. 
Plan of operation. 
The board shall adopt a plan of 
operation in accordance with the reguirements of this chapter and 
submit 
its 
articles, 
bylaws 
and 
operating 
rules 
to 
the 
superintendent for approval. 
If the board fails to adopt the 
l?l9n of operation and suitable articles and bylaws within 90 days 
after the appointment of the board, 
the superintendent shall 
adopt rules to effectuate the reguirements of this chapter and 
those rules 
remain in effect until superseded by 
a 
plan of 
operation and articles and bylaws submitted by the board and 
approved 
by 
the 
superintendent. 
Rules 
adopted 
by 
the 
superintendent pursuant to this subsection are routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
4. 
IImlunity. 
A board member is not liable and is immune 
from suit at law or eguity for any conduct performed in good 
faith that is within the scope of the board's jurisdiction. 
§3905. 
Liability and indemnification 
1. 
Liability. 
The board and its employees may not be held 
liable for any obligations of the association. 
A cause of action 
may not arise against the association; the board, its agents or 
its employees; 
a 
member 
insurer or its agents, 
employees or 
p-roducers; or the superintendent for any action or omission 
~n 
the performance of powers and duties pursuant to this chapter. 
2. 
Indemnification. 
The board may provide in its bylaws or 
rules for indemnification of, and legal representation for, its 
members and employees. 
§3906. 
Duties and povers of associatio.n 
. 1.. Duties. 
The association shall: 
A. 
Establish administrative and accounting procedures for 
the operation of the association; 
B . 
Est ab li sh 
pro ~~-"s,------,u",n",-d"",..e-"t_----"w,-,h....,~,,-· c"'"h""-_-"a"'p,....p"-'l"'-"'-i.><c-"'a~n..,t"-'s"--_a"'-'-'n""'d 
participants in the plan may have grievances reviewed by an 
impartial body and reported to the board; 
C. 
Select a plan administrator in accordance with section 
22..Q.1.l. 
D. 
Collect the assessments provided in section 3908. 
The 
level 
of 
payments 
must 
be 
established 
by 
the 
board. 
Assessments 
must 
be 
collected pursuant 
to 
the 
plan of 
operation approved by the board and adopted pursuant to 
section 3904, sy.bsection 3. 
In addition to the collection 
of 
such 
assessments, 
the 
association 
shall 
collect 
an 
organizational assessment or assessments from all insurers 
as necessary to provide for expenses that have been incurred 
or are estimated to be incurred prior to receipt of the 
;first calendar year assessments. Organizational assessments 
must be egual in amount for all insurers but may not exceed 
$500 per insurer for all such assessments. 
Assessments are 
due and payabl_e within 30 days of receipt of the assessment 
notice by the insurer; 
E. 
Reguire that all policy forms issued by the association 
conform to sta~9ard forms 
devel~ed by the association. 
The 
forms must be approved by the superintendent and must comply 
with this Title; and 
F. 
Develop 
and 
implement 
a 
program 
to 
publicize 
the 
existence of the plan, the eligibility reguirements for the 
plan and the procedures for enrollment in the plan and to 
maintain public awareness of the plan. 
2. 
Powers. 
The association may: 
~ExeJ'_cise powers __ gJ'anJ;.~ __ to insurers under the laws of 
this State; 
B. 
Enter into contracts as necessary or proper to carry out 
the provisions and purposes of this chapter and may, with 
the approval of the superintendent, enter into contracts 
wi th similar organizations of other states for the joint 
performance 
of 
common 
administrative 
functions 
or 
with 
persons 
or 
other 
organizations 
for 
the 
performance 
of 
administrative functions; 
C. 
Sue or be sued, and may take legal actions necessary or 
proper to recover or collect assessments due the association; 
D. 
Take legal actions necessary to avoid the payment of 
improper 
claims 
against 
the association or 
the 
coverage 
provided by or 
through 
the 
association, 
to 
recover 
any 
amounts erroneously or---.i!llproperly paid by the association, 
to recover amounts paid by the association as a result of 
mistake of fact or law or to recover other amounts due the 
association; 
E. 
Establish, and modify from time to time as appropriate, 
rates, rate schedules, rate adjustments, expense allowances, 
producers' 
referral fees, 
claim reserve formulas 
and any 
other actuarial function appropriate to the operation of the 
association in accordance with section 3910; 
F. 
Issue policies of 
insurance in accordance 
with the 
requirements of this chapter; 
G. 
Appoint 
appropriate 
legal, 
actuarial 
and 
other 
committees as necessary to provide technical assistance in 
the operation of the plan, policy and other contract design 
and 
any 
other 
function 
wi thin 
the 
authori ty 
of 
the 
association; 
H. 
Borrow money to effect the purposes of the association. 
Notes or other evidence of indebtedness of the association 
not in default must be legal investments for insurers and 
may be carried as admitted assets; 
I. 
Establish 
rules, 
conditions 
and 
procedures 
for 
reinsuring risks of member insurers desiring to issue in 
their 
own 
names 
plan 
coverage 
to 
individuals 
otherwise 
eligible for plan coverage; 
J. 
Prepare and distribute application forms and enrollment 
instruction forms to producers and to the general public; 
K. 
Provide 
for 
reinsurance 
of 
risks 
incurred 
by 
the 
association. The provision of reinsurance may 
not subject 
the 
association 
to 
any 
of 
the 
capital 
or 
surplus 
requirements. if any. otherwise applicable to reinsurers; 
L. 
Issue additional types of health insurance policies to 
provide 
optional 
coverage, 
including Medicare 
supplement 
health insurance; 
M. 
Provide for 
and employ cost-containment measures 
and 
requirements, including, but not limited to, preadmission 
screening, 
2nd 
surgical 
opinion. 
concurrent 
utilization 
review and individual case management for the purpose of 
making the benefit plan more cost-effective; 
N. 
Design, 
use, 
contract or 
otherwise 
arrange 
for 
the 
delivery of cost-effective health care services, including 
~e~s~t~a~b~l=i~s~h~i~n~g~ __ ~o~r~ __ ~c~o~n~t~.racting 
with 
preferred 
provider 
Page ll-LR0516(1) 
.. 
.. 
organizations, 
health maintenance organizations 
and other 
limited network provider arrangements; and 
O. ___ 
A.ru.>ly 
for 
f!A.~o.s 
or 
gr~I),.t_s 
sources, 
including 
federal 
grants 
high-risk pools. 
from 
public 
provided 
to 
or 
private 
gualified 
3. 
Additio~al d_~~i~~~A...powers. 
The superintendent may, 
by rule, establish additional powers and duties of the board and 
may adopt such rules as are necessary and proper to implement 
this chapter. 
Rules 
adopted pursuant to this subsection are 
routine technical 
rules 
as de! ined in Ti tIe 5, 
chapter 
375, 
subchapter 2-A. 
4. 
Review for solv.@.cy:. 
The superintendent shall review 
the 
association 
at 
least 
every 
years 
to 
determine 
its 
solvency. 
If the superintendent determines that the funds of the 
association are insufticient to support enrollment of additional 
persons, the superintendent may order the association to increase 
its 
assessments 
or 
increase 
its 
premium 
rates. 
If 
the 
super intendent determines that the funds of the association are 
insufficient to support the enrollment of additional persons and 
that the cap of assessments in section 3908 is too low to support 
the enrollment of additional persons, 
the 
superintendent 
may 
order the association to charge assessments in excess of the cap 
for a period not to exceed 12 months. 
5. 
Annual repgrt. 
The association shall report annually to 
the 
joint 
standing 
committee 
of 
the 
Legislature 
having 
jurisdiction over health insurance matters by March 15th. 
The 
report 
must 
include 
information 
on 
the 
benefits 
and 
rate 
structure of coverage offered by the association, the financial 
solvency of the association and the administrative expenses of 
the plan. 
6. 
Audit. 
The association must be audited at least every 3 
~ars. A copy of the audit must be provided to the superintendent 
and to the joint standing committee of the Legislature having 
jurisdiction over health insurance matters. 
§3907. 
Selection of plan administrator 
1. 
Selection of plan administrator. 
The board shall select 
an 
insurer or 
3rd-party administrator, 
through 
a 
competitive 
bidding 
process, 
to 
administer 
the 
plan. 
The 
board 
shall 
evaluate bids submitted under this subsection based on cr iter ia 
established by the board, including: 
A. 
The 
insurer's proven ability to 
handle 
large group 
accident and health insurance: 
Page l2-LR0516(l) 
B. 
The 
efficiency 
of 
the 
insurer's 
claims-paying 
procedures; and 
c. 
An estimate of total charges for administering the plan. 
2. 
Contract 
with 
plan 
administrator. 
The 
plan 
administrator selected pursuant to subsection 
serves 
for 
a 
period of 3 years pursuant to a contract with the association. 
At least one year prior to the expiration of that 3-year period 
of service, the board shall invite all insurers, including the 
current plan administrator, to submit bids to serve as the plan 
administrator for the succeeding 3-year period. 
The board shall 
select the plan administrator for the succeeding period at least 
months prior to the ending of the 3-year period. 
3. 
Duties of plan administrator. 
The plan administrator 
selected pursuant to subsection 1 shall: 
A. 
Perform 
all 
eligibility 
and 
administrative 
claims-payment functions relating to the plan; 
B. 
Pay 
a 
producer's referral fee 
as established by the 
board to each producer that refers an applicant to the plan, 
if the applicant's application is accepted. 
The selling or 
marketing 
of 
the 
plan 
is 
not 
limited 
to 
the 
plan 
administrator 
or its producers. 
The 
plan 
administrator 
shall pay the referral fees from funds received as premiums 
for the plan; 
c. 
Establish a premium billing procedure for collection of 
premiums 
from 
insured 
persons. 
Billings 
must 
be 
made 
periodically as determined by the board; 
D. 
Perform all necessary functions to ensure timely payment 
of benefits to covered persons under the plan, including: 
-"(-=I'-')L-_-,--M."a,,-,k-,-,~,,,"· n-=g_-,a",-"vailable 
information 
relating 
to 
the 
proper manner of submitting a claim for benefits under 
the plan and distributing forms upon which submissions 
must be made: 
(2) 
Evaluating 
the eligibility of 
each 
claim 
for 
payment under the plan; and 
(3) 
Notifying 
each 
claimant 
within 
days 
after 
receiving a properly completed and executed proof of 
loss whether the claim is accepted, rejected or subject 
to compromise. 
The board shall establish reasonable 
reimbursement amounts for any services covered under 
the benefit plans; 
E. 
Submit 
regular 
reports 
to 
the 
board 
regarding 
the 
operation of the plan. 
The freguency, content and form of 
the reports must be as determined by the board; 
F. 
Following the close of each calendar year, determine net 
premiums, 
reinsurance premiums less administrative expense 
allowance, the expense of administration pertaining to the 
reinsurance operations of the association and the incurred 
losses of the year, 
and report this information to the 
superintendent; and 
G. 
Pay claims expenses from the premium payments received 
from or on behalf of covered persons under the plan. 
If the 
payments 
by 
the 
plan 
administrator 
for 
claims 
expenses 
exceed the portion of premiums allocated by the board for 
payment of claims expenses, the board shall provide the plan 
administrator with additional funds for payment of claims 
expenses. 
4. 
Pa,ment to plan administrator. 
The plan administrator 
selected pur"suant to subsection 1 must be paid, as provided in 
the contract of the association, for its direct and indirect 
expenses incurred in the performance of its services. As used in 
this subsection, 
"direct and indirect expenses" includes that 
portion of the audited administrative costs, printing expenses, 
claims 
administration expenses, 
management 
expenses, 
building 
overhead expenses and other actual operating and administrative 
expenses of the plan administrator that are approved by the board 
as allocable to the administration of the plan and included in 
the bid specifications. 
§3908. 
Assessments against insurers 
1. 
Assessments. 
For the purpose of providing the funds 
necessary to carry out the powers and duties of the association, 
the board shall assess member insurers at such a time and for 
such amounts as the board finds necessary. 
Assessments are due 
not less than 30 days after written notice to the member insurers 
and accrue interest at 12% per annum on and after the due date. 
2. 
Maximum assessment. 
Each insurer must be assessed by 
the board an amount not to exceed $2 per covered person insured 
or reinsured by each insurer per month for medical insurance. 
An 
insurer may not be assessed on policies or contracts insuring 
federal or state employees. 
3. 
Dete~ination of assessment. 
The 
board 
shall 
make 
reasonable efforts to ensure that each covered person is counted 
only once with respl'lct to an assl:Lssment. 
For that purpose, the 
board shall r~~_LrJ.L~ach~nsur~u;:_~t.J~9.t obtains e~cess or s_toP----1-oss 
insurance 
to 
include 
in 
its 
count 
of 
covered 
persons 
all 
individuals whose 
coveraq~~nsur~in whole or in part, 
through excess or stop loss coverage. 
The board shall allow a 
reinsurer to eKclude from its number of covered persons those who 
have been counted by 
the -pxj,IDarY-in-surer or 
by 
the primary 
reinsurer or primary excess or stop loss insurer for the purpose 
of determining its assessment under this subsection. 
The board 
may verify each insurer' s assessment based on annual statements 
and other re-ports de_t.erm,Lned J;.g~EL_necessary by the boa_rd. 
Th,~ 
board may use any reasonable method of estimating the number of 
covered persons of an insurer if the specific number is unknown. 
4. 
ExceJiJi_fmtg:;. 
If 
a~~~S.-Q!!te.-nts and other receipts 
.l:>Y..--tb.~ 
association, board or plan administrator exceed the actual losses 
and administrative expenses of the plan, the board shall hold the 
excess 
as interest and may 
use those excess funds 
to offset 
future 
losses 
or 
to 
reduce 
plan 
premiums. 
As 
used 
in this 
subs~ction, "future losses" includes reserves for claims incurred 
but not reported. 
5. 
Failure 
to 
pay 
as~~s~~ent. 
The 
superintendent 
may 
suspend or 
revo~_lter notice and hearing, the certificate of 
authority to transact insurance in this State of 
any 
member 
insurer that fails to pay an assessment. 
As an alternative, the 
superintendent may levy 
a penalty on any member 
insurer that 
fails 
to 
pay 
an 
assessment 
when 
due. 
In 
addition, 
the 
superintendent may uQe any power granted to the superintendent by 
this Title to collect any unpaid assessment. 
§3909. 
Availability of coverage 
The association shall offer a choice of 2 or more coverage 
options through tlliL.J;?lan as set out in section 3910, subsections 
and 2. 
The plan becomes effective October 1, 2005. 
Policies 
offered 
through 
the 
association 
must 
be 
available 
for 
sale 
February 1, 
2006. 
The 
association shall directly insure the 
coverage provided by the plan, and the policies must be issued 
through the plan administrator. 
§3910. 
Reguirem~nts for cQverQgg 
1. 
COV~~j~,9~_CLt:.-t:.-eJ"e.9~~1 a~_muQlc--.9f fer 
in_~a_nJ1Jl~LJ,y 
renewable policy the coverage specified in this section for each 
eligible person. 
If 
a 
co~ere~son is 
also 
eligible 
for 
Medicare coverage, the -Plan may not payor reimburse any 
perso~ 
for expenses paid by Medicare. 
A person whose health insurance 
Page l5-LR0516(1) 
.., 
coverage is involuntarily terminated for any reason other than 
nonpayment of premium may apply for coverage under the plan. 
If 
§uch coverage is applied for within 90, days after the involuntary 
termination and if premiums are paid for the entire period of 
coverage, 
the effective date of the coverage is the date of 
termination of the previous coverage. 
2. 
Major medical 
e~ense coverage. 
The plan must offer 
major medical expense coverage to every covered person who is not 
eligible for Medicare. 
The board shall establish the coverage to 
be issued by the plan, its schedule of benefits and exclusions 
and other limitations, whiGh the board may amend from time to 
time 
subject 
to 
the 
appr'oval 
of 
the 
superintendent. 
In 
establishing 
the 
plan 
coverage, 
the 
board 
shall 
take 
into 
consideration the levels of health insurance provided in the 
State and medical economic factors as determined appropriate. 
3. 
Rates. 
Rates for coverage issued by the association 
must meet the requirements of this subsection. 
A. 
Rates 
may 
not 
be 
unreasonable 
in relation to 
the 
benefits provided, the risk experience and the reasonable 
expenses of providing the coverage. 
B. 
Rate schedules must comply with section 2736-C and are 
subject to approval by the superintendent. 
C. 
Subject to approval by the superintendent, standard risk 
rates 
for 
coverage 
issued 
by 
the 
association 
must 
be 
established by the association using reasonable actuarial 
techniques 
and 
must 
reflect anticipated experiences 
and 
expenses of such coverage for standard risks. The premium 
for the standard risk rates must range from a minimum of 
125°-0 to a maximum of 150°-0 of the weighted average of rates 
charged 
by 
those 
insurers 
and 
health 
maintenance 
organizations with individuals enrolled in similar medical 
insurance plans. 
4. 
Compliance with state law. 
Products offered by the 
association must comply with all relevant requirements of this 
Title 
applicable 
to 
individual 
health 
insurance, 
including 
requirements 
for 
mandated 
coverage 
for 
specific health 
care 
services 
and 
specific diseases 
and 
for 
certain providers 
of 
health care services. 
5. 
Other sources primary. 
The association must be payer of 
last resort of benefits whenever any other benefit or source of 
3rd-party payment is available. 
The coverage provided by the 
association must 
be 
considered excess 
coverage, 
and benefits 
otherwise payable under association coverage must be reduced by 
all amounts paid or payable through any other health insurance 
and by all ho~al and medical 
e~£f!nse benefits paid or payable 
under any short-term, accident, dental-only, vision-only, fixed 
indemnity, limited benefit or credit insurance; coverage issued 
as 
a 
supplement to liability insurance; 
workers' 
compensation 
coverage; 
automobile medical 
payment; 
or liability insurance, 
whether or not provided on 
the basis of fault. 
and by 
any 
hospital or medical benefits paid or payable by any insurer or 
insurance arrangement or any hospital or medical benefits paid or 
payable under or provided pursuant to any state or federal law or 
program. 
6. 
Recove~y of claims paid. 
An amount paid or payable by 
Medicare 
or 
any 
other 
governmental 
program 
or 
any 
other 
insurance, 
or 
salf-insurance maintained in lieu of otherwise 
statutorily required insurance, may not be made or recognized as 
a 
claim under 
such a 
policy or be recognized as or 
towards 
satisfaction of an applicable deductible or out-Of-pocket maximum 
or to reduce the limits of benefits available under the plan. 
The association has a cause of action against a covered person 
for 
the recovery of the 
amount of any benefits paid to the 
covered person that should not have been claimed or recognized as 
claims because of the provisions of this subsection or because 
the benefits are otherwise not covered. 
Benefits due from 
th~ 
association may be reduced or refused as a setoff against any 
amount recoverable under this subsection. 
§3911. 
Eligibility for coverage 
1. 
Eligibj.li.ty~pUc~ti(L~Q~<Lve~age. 
A resident is 
eligible for coverage under the plan if the resident provides 
evidence of rejection. 
a 
requirement of restrictive riders, 
a 
rate 
increase 
or 
a 
preexi~tiJl<L-~onditions limitation 
on 
_Q. 
qualified plan, the effect of which is to substantially reduce 
coverage from that received by a person considered a 
standarq 
risk by at least one member insurer within 6 months of the date 
of the certificate, or if the resident meets other eligibility 
requirements 
adopted.~ rule by the superintendent that are not 
inconsistent with this ch..slQter and that evidence that a person __ is 
unable to obtain coverage substantially similar to that which may 
be obtained by a person who is considered a standard risk. 
Rules 
adopted pursuant to this sU.bsection are routine technical rul.JU>. 
as defined in Title 5, chapter 375, subchapter 2-A. 
2. 
Change of d_omicile. 
The board shall develop standards 
for eligibiliJ:.Y for coverag£L-----.t1Y-_tl1e association for 
a natural 
person who changes domicile to this State and who at the time 
domic,ile 
is 
est..aJ~li~hed 
in 
this 
State 
is 
insured 
b~u 
organization similar to the association. 
The eligible maximum 
lifetime 
bene1;i~~hat covered----I;lerson may not exceed the 
lifetime benefits 
benefits 
received 
domiciliary state. 
available 
through the association less 
any 
from 
a 
similar organization in the 
former 
3. 
Eligibility 
without 
application. 
The 
board 
shall 
develop a list of medical or health conditions for which a person 
is 
eligible 
for 
plan 
coverage 
without 
applying 
for 
health 
insurance under subsection 1. 
A person who can demonstrate the 
existence or history of any medical or health conditions on the 
list developed by the board may not be reguired to provide the 
evidence specified in subsection 1. The board may amend the list 
from time to time as appropriate. 
4. 
Exclusions from eligibility. 
A person is not eligible 
for coverage under the plan if: 
A. 
The person has or obtains health insurance coverage 
substantially similar to or more comprehensive than a plan 
policy or would be eligible to have coverage if the person 
elected to obtain it, except that: 
11) 
A 
cov~ered person 
the 
period 
of 
time 
preexisting 
condition 
policy; and 
( 2 } 
A covered person 
the 
period 
of 
time 
preexisting 
condition 
may maintain other coverage for 
the 
person 
is 
satisfying 
a 
waiting 
period 
under 
a 
plan 
may maintain plan coverage for 
the 
person 
is 
satisfying 
a 
waiting 
period 
under 
another 
health insurance policy intended to replace the plan 
policy; 
B. 
The 
person is 
determined eligible 
for 
health 
care 
benefits under the MaineCare program pursuant to Title 22; 
C. 
The person previously terminated plan coverage, unless 
months have elapsed since the person's last termination; 
D. 
The person has met the lifetime maximum benefit amount 
under the plan of $3,000,000; 
E. 
Th~erson is 
an 
inmate 
or 
resident 
of 
a 
publLc 
institution; or 
F. 
The person's premiums are paid for or reimbursed under 
any government-sponsored EXQgram or by any government agency 
or health care 
provide~except as an otherwise gualifying 
full-time employee, or dependent thereof, of a government 
agency or healtl) care provideh 
5. 
Termination of coverage. 
The coverage of any person 
ceases: 
A. 
On the date a person is no longer a resident; 
B. 
Upon the death of the covered person: 
c. 
On 
the date state law requires cancellation of the 
policy; or 
D. 
At the option of the association, 
days after the 
association 
makes 
any 
inguiry 
concerning 
the 
person's 
eligibility or place of residence to which the person does 
not reply. 
The coverage of any person who ceases to meet the eligibility 
reguirements of this section may be terminated immediately. 
6. 
Unfair trade practice. 
It constitutes an unfair trade 
practice 
for 
any 
insurer, 
producer, 
employer 
or 
3rd-party 
administrator to refer an individual employee or a dependent of 
an individual employee to the association, or to arrange for an 
individual employee or a dependent of an individual employee to 
apply to the plan, for the purpose of separating such an employee 
or 
dependent 
from 
a 
group 
health benefits 
plan provided in 
connection with the employee's employment. 
§3912. 
Actions against a~soci~ion or member insurers based upon 
joint or collective actions 
Participation 
in 
the 
association, 
the 
establishment 
of 
rates, 
forms 
or procedures 
or 
any other joint or 
collectiy~ 
action required by this chapter may not be the basis of any legal 
action or criminal or civil liability or penalty against the 
association or a member insurer. 
§3913. 
Reimbursement of member insurer 
1. 
Reimbursement. 
A member insurer may seek reimbursement 
from 
the association and the association shall reimburse 
the 
member insurer to the extent claims made by a 
covered person 
after February 1, 2006 exceed premiums paid on a calendar-year 
basis by the covered person to the member insurer for a covered 
person who meets the following criteria: 
A. The member insurer sold an individual health plan to the 
covered person between December 1, 1993 and February 1, 2006 
and the policy that was sold has been continuously renewed 
by the covered person; and 
B. The member insurer is able to determine through the use 
of 
individual health 
statements~laims history or 
any 
reasonable means that at the time the person applied for 
~nsurance_ cove_ra~i th the 
member 
insurer, 
the 
covered 
person 
was 
diagnosed with 
one 
of 
the 
following medical 
conditions: 
acquired 
immune 
deficiency 
syndrome, 
angina 
pectoris, 
ascites, 
chemical 
dependency 
cirrhosis 
of 
the 
liver, 
coronary occlusion, 
cystic 
fibrosis, 
Friedreich's 
ataxia, hemophilia, Hodgkin's disease, Huntington's chorea, 
juvenile diabetes, 
leukemia, 
metastatic cancer, 
motor 
or 
sensory 
aphasia, 
multiple 
sclerosis, 
muscular 
dystrop~ 
myasthenia gravis, 
myotonia, 
heart disease 
causing 
open 
heart 
surgery, 
Parkinson's 
disease, 
polycystic 
kidney, 
psychotic disorders, quadriplegia, stroke,· syringomyelia or 
Wilson's disease. 
2. Rules. 
The superintendent may adopt rules to facilitate 
payment to a carrier pursuant to this section. 
Rules adopted 
pursuant 
to 
this 
subsection 
are 
routine 
technical 
rules 
as 
defined in Title 5, chapter 375, subchapter 2-A. 
Sec. 13. Application for federal grant. 
Within 30 days of the 
effective date of this Act, the Superintendent of Insurance shall 
submit an application to the federal Department of Health and 
Human Services, Health Resources and Services Administration for 
a 
federal 
seed 
grant 
to 
support 
the 
creation 
and 
initial 
operation 
of 
the 
Comprehensive 
Health 
Insurance 
Risk 
Pool 
Association established in the 
Maine 
Revised Statutes, Title 
24-A, chapter 54. 
Sec. 14. 
Study of reinsurance. 
The 
Comprehensive 
Health 
Insurance Risk Pool Association established pursuant to the Maine 
Revised Statutes, Title 24-A, section 3904 shall conduct a study 
of the possibility of offering a reinsurance pool for the small 
group medical insurance market in order to spread the cost of 
high-riSk 
individuals 
for 
the 
small 
group 
medical 
insurance 
market. 
The study must address the cost of the reinsurance pool, 
potential 
funding 
mechanisms 
and 
the 
effectiveness 
of 
a 
reinsurance pool. 
The association may address any other issues 
regarding a reinsurance pool that it determines are relevant in 
the study. 
The association shall submit its report to the joint 
standing committee of the Legislature having jurisdiction over 
health insurance matters by March 1, 2007. 
Sec. 15. Effective date. 
Those sections 
the 
Maine 
Revised 
Statutes, 
Title 
subsection 3, 
paragraphs A and C and 
section 2736-C, subsection 3, paragraph 
effect October 1, 2005. 
of this Act that repeal 
24-A, 
section 
2736-C, 
that amend Title 24-A, 
D and subsection 9 take 
SUMMARY 
This bill creates the Comprehensive Health Insurance Risk 
Pool Association. The purpose of the association is to spread the 
cost of high-risk individuals among all health insurers. The bill 
funds the high-risk pool through an assessment on insurers. 
An 
individual insured through the high-risk pool may be charged a 
premium 
up 
to 
Qb 
of 
the 
average 
premium rates charged by 
carriers for similar health insurance plans. 
The bill requires 
the State to submit an application to the Federal Government for 
federal assistance to create a high-risk pool. 
The bill also broadens the community rating laws to allow 
carriers to vary premiums on the basis of age within a maximum 
rate differential on a ratio of 4 to one and on the basis of 
health status and tobacco use within a maximum rate differential 
on a ratio of 1.5 to one. The bill also removes the guaranteed 
issuance 
requirement 
for 
individual 
health 
plans, 
effective 
October 1, 2005.