An Act To Modify the Calculation and Implementation Date of Savings Offset Payments under the Dirigo Health Act
Maine Legislature, Session 122, LD 1577
Committee: Insurance and Financial Services
Sponsors: SULLIVAN
Amends: 24-A MRSA §691

Legislative Document 
No.1S77 
S.P. 555 
In Senate, April 26, 2005 
An Act To Modify the Calculation and Implementation Date of 
Savings Offset Payments under the Dirigo Health Act 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed . 
Presented by Senator SULLIVAN of York. 
Printed on recycled paper 
JOY J. O'BRIEN 
Secretary of the Senate 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §691J, sub-§§2, 3 and 6, as enacted by PL 
2003, c. 469, Pt. A, §8, are amended to read: 
2. 
Savings offset payments. 
For the purpose of providing 
the funds necessary to provide subsidies pursuant to section 6912 
and 
support 
the Maine 
Quality 
Forum established pursuant 
to 
subchapter 2, the board shall establish a savings offset amount 
to be paid by health insurance carriers, employee benefit excess 
insurance carriers and third-party administrators, not including 
carriers 
and 
third-party 
administrators 
with 
respect 
to 
accidental injury, specified disease, hospital indemnity, dental, 
v~s~on, disability, income, 
long-term care, Medicare supplement 
or other limited benefit health insurance, annually at a rate 
that may not exceed savings resulting from decreasing rates of 
growth in the State's health care spending and in bad debt and 
charity care costs. 
Payment of the savings offset amount m1::lst 
may 
not 
begin ~ 
months 
after 
Dirigo 
Health 
begins 
providing health insurance coverage. The savings offset payment 
amount, as determined by the board, is the determining factor for 
inclusion of savings offset payments in premiums through rate 
setting review by the bureau. Savings offset payments must be 
made quarterly and are due not less than 30 days after written 
notice to the health insurance carriers, employee benefit excess 
insurance carriers and third-party administrators and must accrue 
interest at 12~ per annum on or after the due date. 
3. 
Maximum 
savings offset payments 
on health insurance 
carriers and employee benefit excess insurance carriers. 
Each 
health insurance carrier and employee benefit excess insurance 
carrier m1::lst ~ 
pay a 
savings offset in an amount not to 
exceed 4. O~ of annual health insurance pl'emi1::lms paid claims and 
employee 
benefit 
excess 
insurance 
pr::effii1::lffiS 
paid 
claims 
on 
policies issued pursuant to the laws of this State that insure 
residents of this State. 
The savings offset payment may not 
exceed savings resulting from decreasing rates of growth in the 
State's health care spending and bad debt and charity care costs. 
The savings offset payment applies to premiums paid on or after 
J1::l~y--1T--aQQe January 1, 
2006. 
Savings offset 
payments 
must 
reflect 
aggregate 
measurable 
cost 
savings, 
including 
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 enrollment due to an expansion 
in MaineCare eligibility occurring after 
June 
30, 
2004, 
as 
determined by the board consistent with subsection 1. 
A health 
insurance carrier and employee benefit excess insurance carrier 
may not be required to pay a savings offset payment on policies 
or contracts insuring federal employees. 
Page l-LRI479(1) 
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6. 
Savings offset payments through reductions in growth in 
State's health care spending and bad debt and charity care. 
On 
an annual basis no later than Apf'il August of each year, the 
board shall prospectively determine the savings offset to be 
applied during each 12-month period. 
To make its determination, 
the 
board 
shall 
use 
the criteria and 
reports 
described 
1& 
subsections 7 and 8. Annual offset payments must be reconciled to 
determine whether 
unused payments 
may 
be 
returned to health 
insurance carriers, employee benefit excess insurance carriers 
and third-party administrators according to a formula developed 
by the board. Savings offset payments must be used solely to fund 
the subsidies authorized by section 6912 and to support the Maine 
Quality Forum established in subchapter 
and may not exceed 
savings 
from reductions in growth of the State's health care 
spending and bad debt and charity care . 
SUMMARY 
This bill clarifies 
and 
makes 
changes 
to the date 
the 
savings 
offset 
payment 
determination 
is 
made 
and 
the 
dates 
payments may begin under the Dirigo Health Act. 
The changes 
reflect the delay in the implementation of the Dirigo health 
plan. 
In addition, 
the bill changes the basis for computing 
savings offset payments 
from 
premiums 
to paid claims. 
This 
change puts the calculation of the savings offset payments on an 
equal footing with likely payments from self-insured plans .