An Act To Reduce Maine's Health Insurance Rates and Expand Consumer Choice _Reference to the Committee on Insurance and Financial Services suggested and ordered printed.
Maine Legislature, Session 122, LD 1496
Committee: Insurance and Financial Services
Sponsors: GLYNN, BISHOP, BRYANT-DESCHENES, CRESSEY, FLETCHER, LINDELL, NUTTING, SHIELDS, VAUGHAN, DAVIS, SNOWE-MELLO, TURNER, WESTON, ANNIS, AUSTIN, BERUBE, BIERMAN, BOWEN, BOWLES, BROWN, CEBRA, CLOUGH, CROSTHWAITE, CURLEY, CURTIS, DAIGLE, DA VIS, DUPREY, EDGECOMB, EMERY, FITTS, HALL, HAMPER, HANLEY, HOTHAM, JODREY, JOY, KAELIN, LANSLEY, LEWIN, MAREAN, MOORE, MOULTON, NASS, OTT, PINKHAM, PLUMMER, RECTOR, RICHARDSON, ROBINSON, ROSEN, SEAVEY, SHERMAN, STEDMAN, SYKES, TARDY, THOMAS, ANDREWS, CLUKEY, COURTNEY, DOW, PLOWMAN, WOODCOCK
Amends: 24-A MRSA §2736-C, 24-A MRSA §2849-B, 22 MRSA §3161, 24 MRSA §2317-B, 24 MRSA §2327, 24-A MRSA §2803-A, 24-A MRSA §2804, 24-A MRSA §2805, 24-A MRSA §2805-A, 24-A MRSA §2807-A, 24-A MRSA §2, 24-A MRSA §2850-B, 24-A MRSA §4202-A, 24-A MRSA §4207, 24-A MRSA §4210, 24-A MRSA §4212, 24-A MRSA §4222-B, 24-A MRSA §4346, 24-A MRSA §6603, 24-A MRSA §6913, 24-A MRSA §4205, 36 MRSA §5122, 5 MRSA §12004-I, 22 MRSA §1708, 22 MRSA §1715, 22 MRSA §2061, 24-A MRSA §4204, 24-A MRSA §6203, 24-A MRSA §6951, 24-A MRSA §6952, 38 MRSA §1310-X

Legislative Document 
No. 1496 
H.P.1053 
House of Representatives, March 28, 2005 
An Act To Reduce Maine's Health Insurance Rates and Expand 
Consumer Choice 
_Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative GLYNN of South Portland. 
111~ 
1J7.1lldC~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: BISHOP of Boothbay, BRYANT-DESCHENES of Turner, 
CRESSEY of Cornish, FLETCHER of Winslow, LINDELL of Frankfort, NUTTING of 
Oakland, SHIELDS of Auburn, VAUGHAN of Durham, Senators: DAVIS of Piscataquis, 
SNOWE-MELLO of Androscoggin, TURNER of Cumberland, Senator WESTON of Waldo 
and Representatives: ANNIS of Dover-Foxcroft, AUSTIN of Gray, BERUBE of Lisbon, 
BIERMAN of Sorrento, BOWEN of Rockport, BOWLES of Sanford, BROWN of South 
Berwick, CEBRA of Naples, CLOUGH of Scarborough, CROSTHWAITE of Ellsworth, 
CURLEY of Scarborough, CURTIS of Madison, DAIGLE of Arundel, DAVIS of Falmouth, 
DA VIS of Augusta, DUPREY of Hampden, EDGECOMB of Caribou, EMERY of Cutler, 
FITTS of Pittsfield, HALL of Holden, HAMPER of Oxford, HANLEY of Paris, HOTHAM of 
Dixfield, JODREY of Bethel, JOY of Crystal, KAELIN of Winterport, LANSLEY of Sabattus, 
LEWIN of Eliot, MAREAN of Hollis, McCORMICK of West Gardiner, McFADDEN of 
Dennysville, McKANE of Newcastle, McKENNEY of Cumberland, McLEOD of Lee, 
MOORE of Standish, MOULTON of York, NASS of Acton, OTT of York, PINKHAM of 
Lexington Township, PLUMMER of Windham, RECTOR of Thomaston, RICHARDSON of 
Carmel, RICHARDSON of Skowhegan, RICHARDSON of Warren, ROBINSON of 
Raymond, ROSEN of Bucksport, SEAVEY of Kennebunkport, SHERMAN of Hodgdon, 
STEDMAN of Hartland, SYKES of Harrison, TARDY of Newport, THOMAS of Ripley, 
Senators: ANDREWS of York, CLUKEY of Aroostook, COURTNEY of York, DOW of 
Lincoln, N ASS of York, PLOWMAN of Penobscot, ROSEN of Hancock, SA V AGE of Knox, 
WOODCOCK of Franklin. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 24-A MRSA §2736-C, sub-§I, ,B, as enacted by PL 
1993, c. 477, Pt. C, §1 and affected by Pt. F, §1, is repealed. 
Sec. A-2. 24-A MRSA §2736-C, sub-§2, ,A, as 
amended by PL 
1993, c. 547, §3, is further amended to read: 
A. 
A carrier 
issuing 
an 
individual 
health plan after 
December 1, 
1993 must file the carrier's eeFRFR\iRi-tY--Fat:e 
rates and any formulas and factors used to adjust that rate 
with the superintendent prior to issuance of any individual 
health plan. 
Sec. A-3. 24-A MRSA §2736-C, sub-§2, ,B, as enacted by PL 
1993, c. 477, Pt. C, §1 and affected by Pt. F, §1, is repealed. 
Sec. A-4. 24-A MRSA §2736-C, sub-§2, 'B-1 is enacted to read: 
B 1. A carrier may not vary the premium rate due to the 
claims experience or policy duration of the individual. A 
carrier may vary the premiwn rate based on health status, 
age, gender and tobacco use. A change in the premium rate is 
not permitted on the basis of changes in health status after 
the policy is issued. Renewal of an individual health plan 
is guaranteed pursuant to section 2850-B. 
Sec. A-S. 24-A MRSA §2736-C, sub-§2, ,D, as amended by PL 
2001, c. 410, Pt. A, §2 and affected by §10, is repealed. 
Sec. A-6. 24-A MRSA §2736-C, sub-§2"G is enacted to read: 
G. 
A carrier that offered individual health plans prior to 
April It 2006 may close its individual book of business sold 
prior 
to 
April 
It 
2006 
and 
may 
establish 
a 
separate 
community rate for individuals applying for coverage under 
an individual health plan after April It 2006. 
Sec. A-7. 24-A MRSA §2736-C, sub-§3, ,A, as corrected by RR 
2001, c. 1, §30, is repealed. 
Sec. A-8. 24-A MRSA §2736-C, sub-§3, ,C, as enacted by PL 
1993, c. 477, Pt. C, §1 and affected by Pt. F, §1, is repealed. 
Sec. A-9. 24-A MRSA §2736-C, sub-§3, ,D, as enacted by PL 
1999, c. 256, Pt. D, §l, is amended to read: 
D. 
~etwitAstaBaiB~-~~~~r-eaFFieFs 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. A-IO. 24-A MRSA §2736-C, sub-§6, ,A, as amended by PL 
1995, c. 332, Pt. K, §l, is further amended to read: 
A. 
Each carrier must actively market individual health plan 
coverageT-~~~~~~-staBaa~aiBea-~~~~~-paFsaaBt 
te-sabseetieB-8 T to individuals in this State. 
Sec. A-II. 24-A MRSA §2736-C, sub-§8, as amended by PL 1999, 
c. 256, Pt. D, §2, is further amended to read: 
8. 
Authority of superintendent. 
The superintendent may by 
rule define one or more standardized individual health plans that 
mast !JlQ.Y be offered by 
a~~ carriers offering individual health 
plans in the State, other than carriers offering only CHAMPUS 
supplemental coverage. 
Sec. A-12. 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 
may exempt a group health insurance policy or group nonprofit 
hospital or medical service corporation contract issued to an 
association group, organized pursuant to section 2805-A, from the 
requirements 
of 
sabseetieB--~ .... --~r-ag-r-aph---Af 
subsection 
6, 
paragraph Af 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 insurance 
agents 
or 
brokers 
to 
market 
association 
memberships, 
accept 
applications for memberships or enroll members, except when 
the association is an association of insurance agents or 
brokers organized under section 2805-A; 
G. 
Insurance is provided 
as 
an 
incidental benefit 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 
H. 
Granting 
an 
exemption 
to 
the 
association 
does 
not 
conflict with the purposes of this section. 
Sec. A-I3. 24-A MRS A §2848, sub-§I-B, 1fA, as amended by PL 
1999, c. 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 XVIII 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'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 medical 
care program of 
the 
federal 
Health Care 
Improvement Act, 
United States 
Section 1601 or of a tribal organization; 
Indian 
Code, 
(7) 
A state health benefits risk pool; 
(8) 
A health plan offered under the federal Employees 
Health Benefits Amendments Act, 5 United States Code, 
Chapter 89; 
(9) 
A 
public 
health 
regulations authorized 
Service 
Act, 
Section 
Public Law 104-191; 9F 
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 coverage offered by the Comprehensive 
Health 
Insurance 
Risk 
Pool 
Association pursuant 
to 
chapter 54. 
Sec. A-14. 24-A MRSA §2849-B, sub-§2, 1rA, as amended by PL 
2001, c. 258, Pt. E, §7, is further amended to read: 
A. 
That person was covered under aR-~~~~~-9F g 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 {lQ}~. For purposes of this section, the individual 
or group policy under which the person is seeking coverage 
is 
the 
"succeeding 
policy." 
The 
group 
9F---i~€I.-iv-iEl\:ia± 
contract 
or 
policy, 
uninsured 
employee 
benefit plan or 
governmental program that previously covered the person is 
the "prior contract or policy"; and 
Sec. A-15. 24-A MRSA c. 54 is enacted to read: 
CHAPTER 54 
CQlPRf!!I1m1jIVE HEALTH INSURANCE RISK 
POOL ASSOCIATION 
§3901. 
Short title 
This chapter may be known and cited as "the Comprehensive 
Health Insurance Risk Pool Association Act. " 
§3902. 
Purpose 
It is the purpose of this chapter to establish a mechanism 
to spread among all inSurers doing business 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 
for 
federal 
trade 
adjustment 
assistance 
or 
for 
pension 
benefit 
guarantee 
corporation assistance, 
as provided by the federal Trade 
Adjustment Assistance Reform Act of 2002. 
For the purposes of this chapter, 
"covered person" 
does not 
include a dependent of a covered person. 
4. 
Dependent. 
"Dependent" 
means 
a 
resident 
spouse, 
a 
resident unmarried child under 19 years of age, a child who is a 
student under 23 years of age and who is financially dependent 
upon the parent or 
a 
child of any age 
who 
is disabled and 
dependent upon the parent. 
5. 
Health maintenance organization. 
"Health maintenance 
organization" 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 health 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 health benefits 
subject 
to 
state 
insurance 
regulation 
and 
a 
reinsurer 
that 
reinsures health insurance in this State. 
7. 
Medical insurance. 
"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 accidental injury, specified 
disease, hospital indemnity, dental, 
v~s~on, disability income, 
Medicare 
supplement, 
long-term care or other limited benefit 
health 
insurance 
or 
credit 
insurance: 
coverage 
issued 
as 
a 
supplement 
to 
liability insurance: 
insurance 
ar~s~ng 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 reguired to be 
contained 
in 
any 
liability 
insurance 
policy 
or 
eguivalent 
self-insurance. 
8. 
Medicare. 
"Medicare" means coverage under both Parts A 
~d B of Title XVIII of the federal Social Security Act. 
United States Code, Section 1395 et seg., 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. 
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 1996; 
ru: 
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 assistance, as provided by the 
federal Trade Adjustment Assistance Reform Act of 2002. 
12. 
Reinsurer. 
"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" 
includes 
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 
established. 
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 10 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; 
one 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 
(2) 
Four members aPQQinted by the member insurers, at 
least 2 of whom are domestic insurers and at least one 
of whom is a 3rd-party administrator. 
B. 
Members of the board serve for 3-year terms, except that 
of those members initially appointed by the superintendent, 
members serve for a term of one year, 2 members for a term 
of 2 years and 2 members for a term of 3 years and of those 
members 
initially appointed by the 
member 
insurers, 
one 
member serves for a term of one year, one member serves for 
a 
term of 2 years and 2 members serve for 
a 
term of 3 
years. 
The appointing authority shall designate the period 
of 
service 
of 
each 
initial 
appointee 
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 
them as members but may not otherwise be compensated for 
their services. 
3. 
Plan of operation. 
The board shall adopt a plan of 
Q~eration in accQrdance with the reguirements of this chapter and 
submit 
its 
articles, 
bylaws 
and 
o~eratinq 
rules 
to 
the 
superintendent for approval. 
If the board fails to adopt the 
plan 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 
super intendent pursuant to this subsection are routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
4. 
Inununity. 
A board member is not liable and is immune 
from suit at law or egui ty 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 
producers; or the superintendent for any action or omission in 
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 powers of association 
1. 
Duties. 
The association shall: 
A. 
Establish administrative and accounting procedures for 
the operation of the association: 
B. 
Establish 
procedures 
under 
which 
applicants 
and 
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 
.ll.Q2l. 
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, subsection 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 equal in amount for all insurers but may not exceed 
$500 per insurer for all such assessments. 
Assessments are 
due and payable within 30 days of receipt of the assessment 
notice by the insurer: 
E. 
Require that all policy forms issued by the association 
conform to standard forms developed 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 requirements for the 
plan and the procedures for enrollment in the plan and to 
maintain public awareness of the plan. 
2. 
Powers. 
The association may: 
A. 
Exercise powers granted to insurers under the laws of 
this State; 
B. 
Enter into contracts as necessary or proper to carry out 
the 
prov~s~ons and purposes of this chapter and may, with 
the approval of the superintendent, 
enter into contracts 
with similar organizations of other states for the joint 
performance 
of 
common 
administrative 
functions 
or 
with 
persons 
or 
other 
organizations 
for 
the 
performance 
of 
£dministrative 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 
impl'oper 
claims against the association or 
the coverage 
provided by or through the association, 
to 
recover 
any 
amounts erroneously or improperly 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 
~iation; 
~-,-----Establish, and modify from time to time as appropriate, 
~es, rate schedules, rate adjustments, expense allowances, 
~ucers' referral fees. 
claim reserve formulas 
and any 
~ 
actuarial function appropriate to the operation of the 
association in accordance with section 3910; 
F. 
Issue policies of insurance 
in accordance with the 
~irements of this chapter; 
G. 
Appoint 
appropriate 
legal. 
actuarial 
and 
other 
committees as necessary to 
the operation of the plan. 
provide technical assistance in 
policy and other contract design 
and 
any 
other 
function 
within 
the 
authority 
of 
the 
£llQciation; 
H. 
Borrow money to effect the purposes of the association. 
~.s or other evidence of indebtedness of the association 
~.in default must be legal investments for insurers and 
~pe carried as admitted assets; 
I. 
Establish 
reinsuring risks 
their 
own 
names 
eligible for plan 
rules. 
conditions 
of member insurers 
plan 
coverage 
to 
coverage; 
and 
procedures 
for 
desiring to issue in 
individuals 
otherwise 
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 
establishing 
or 
contracting 
with 
preferred 
provider 
organizations, health maintenance organizations 
and other 
limited network provider arrangements: 
O. 
Apply 
for 
funds 
or 
grants 
from 
public 
or 
private 
sources, 
including federal 
grants 
provided 
to qualified 
high-risk pools: and 
P. 
Develop a plan to subsidize low-income individuals and 
submit that plan to the joint standing committee of the 
Legislature having jurisdiction over insurance matters no 
later than February L 
2006. 
The joint standing committee 
of 
the 
Legislature 
having 
jurisdiction 
over 
insurance 
matters may report out legislation to the Second Regular 
Session of the 
122nd Legislature to 
implement the plan 
submitted by the association. 
3. 
Additional dUties and poyers. 
The superintendent may, 
by rule, establish additional powers and duties of the board and 
may adopt such 
r~les as au necessary and proper to implement 
this chapter. 
Rules adopted pursuant to this subsection are 
routine technical rules as defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
4. 
Review for solvency. 
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 insufficient to support enrollment of additional 
persons, the superintendent may order the association to increase 
its 
assessments 
or 
increase 
its 
premium 
rates. 
If 
the 
superintendent 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 report. 
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 
Page ll-LR0541(1) 
solvency of the association and the administrative expenses of 
the plan. 
6. 
Audit. 
The association must be audited at least every 3 
years. 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 criteria 
established by the board, including: 
A. 
The 
insurer's proven ability to handle 
large group 
accident and health insurance; 
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, incluQ.ing the 
current plan administrator, to submit biQ.s to serve as the plan 
administrator for the succeeQ.ing 3 year period. 
The boarQ. shall 
select the plan administrator for the succeeding perioQ. at least 
months prior to the ending of the 3-year period. 
3. 
Duties of plan administrator. 
The plan aQ.ministrator 
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 establisheQ. by the 
board to each proQ.ucer 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 
proQ.ucers. 
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 boardr 
D. 
Perform all necessary functions to ensure timely payment 
of benefits to covered persons under the plan, including: 
(1) 
Making 
available 
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) 
Eyaluating 
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. 
P~nt to plan administrator. 
The plan administrator 
selected pursuant 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. 
Page l3-LR054l(1) 
§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. 
J 0 
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 emp1oy~ 
lfi 
3. 
Determination of assessment. 
The 
board 
shall 
make 
reasonable efforts to ensure that each covered person is counted 
only once with respect to an assessment. 
For that purpose, the 
board shall require each insurer that obtains excess or stop loss 
insurance 
to 
include 
in its 
count 
of 
covered 
persons 
all 
individuals 
whose 
coverage is insured, 
in whole or in part, 
through excess or stop loss coverage. 
The board shall allow a 
reinsurer to exclude from its number of covered persons those who 
have 
been counted by the primary insurer 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 reports determined to be necessary by the board. 
The 
board may use any reasonable method of estimating the number of 
covered persons of an insurer if the specific number is unknown. 
4. 
Excess funds. 
If asses~ments and other receipts by the 
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 
subsection, "future losses" includes reserves for claims incurred 
but not reported. 
5. 
Failure to 
pay assessment. 
The 
superintendent 
may 
suspend or revoke, after 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 
super intendent may levy a penalty on any member insurer that 
fails 
to 
pay 
an 
assessment 
when 
due. 
In 
addition, 
the 
superintendent may use 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 the plan as set out in section 3910, subsections 
and 2. 
The plan becomes effective October L 
2005. 
Policies 
Qffered 
through 
the 
association must 
be 
available 
for 
sale 
April 1, 2006. 
The 
association 
shall 
directly 
insure 
the 
coverage provided by the plan, and the policies must be issued 
through the plan administrator. 
§3910. 
Requirements for coverage 
1. 
Coverage offered. 
The plan must offer in an annually 
renewable policy the coverage specified in this section for each 
eligible person. 
If 
a 
covered person is 
also eligible 
for 
Medicare coverage, the plan may not payor reimburse any person 
for expenses paid by Medicare. 
A person whose health insurance 
~verage is involuntarily terminated for any reason other than 
nonpayment of premium may apply for coverage under the plan. 
If 
such coverage is applieg 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 expense 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 issueg by the plan, its schedule of benefits and exclusions 
ang other limitations, which the board may amend from time to 
time 
subject 
to 
the 
approval 
of 
the 
superintendent. 
In 
establishing 
the 
plan 
coverage, 
the 
boarg 
shall 
take 
into 
consideration the levels of health insurance provided in the 
State ang medical economic factors as determineg 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 schegules 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 
establisheg 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% to a maximum of 150% 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 
.as.sociation must comply with all relevant reguirements of this 
Ti tIe 
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 
~Qciation must 
be 
considered excess 
coverage, 
and benefits 
otherwise payable under association coverage must be reduced by 
~mounts paid or payable through any other health insurance 
and by all hospital and medical expense benefits paid or payable 
J.illQeJ 
any short-term, accident. dental-only, vision-only, fixed 
.inQ,emnity, 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. 
Recoyery of claims paid. 
An amount paid or payable by 
Medicare 
or 
any 
other 
governmental 
program 
or 
any 
other 
insurance, 
or 
self-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 
J;:!1e benefits are otherwise not covered. 
Benefits due from the 
Q;?sociation may be reduced or refused as a setoff against any 
~~\IllOunt recoverable under this subsection. 
§39ll. 
Eligibility for coverage 
1. 
Eligibility; application for coverage. 
A resident is 
~~Jigible for coverage under the plan if the resident provides 
evidence of rejection, 
a 
reguirement of restrictive riders, 
a 
rate 
increase 
or 
a 
preexisting 
conditions 
limitation 
on 
a 
!;l1,lalified plan, the effect of which is to substantially reduce 
coverage from that received by a person considered a 
standard 
risk by at least one member insurer within 6 months of the date 
of the certificate, or if the resident meets other eligibility 
reguirements adopted by rule by the superintendent that are not 
inconsistent with this chapter 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 subsection are routine technical rules 
as defined in Title 5, chapter 375, subchapter 2-A. 
2. 
Change of domicile. 
The board shall develop standards 
for eligibility for coverage by the association for a natural 
person who changes domicile to this State and who at the time 
domicile 
is 
established 
in 
this 
State 
is 
insured 
by 
an 
organization similar to the association. 
The eligible maximum 
lifetime benefits for that covered person may not exceed the 
lifetime benefits available 
through the association less 
any 
benefits 
received 
from 
a 
similar organization in the 
former 
domiciliary state. 
.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: 
( 1) 
A covered person may maintain other coverage for 
the 
period 
of 
time 
the 
person 
is 
satisfying 
a 
preexisting 
condition 
waiting 
period 
under 
a 
plan 
policy; and 
(2) 
A covered person may maintain plan coverage for 
the 
period 
of 
time 
the 
person 
is 
satisfying 
a 
preexisting 
condition 
waiting 
period 
under 
another 
heal th 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. 
The 
person is 
an 
inmate 
or 
resident 
of 
a 
public 
institution: or 
F. 
The person's premiums are paid for or reimbursed under 
any government-sponsored program or by any government agency 
or health care provider, except as an otherwise gualifying 
full-time employee, or dependent thereof, of a government 
agency or health care provider. 
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 reguires 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 association 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 collective 
action reguired by this chapter may not be the basis of any legal 
action or criminal or civil liability or oenalty 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 April 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 It 1993 and April It 2006 
and 
th~ policy that was sold has been continuously renewed 
by the covered person and the carrier has closed its book of 
business for individual health plans sold between December 
1, 1993 and April 1, 2006; and 
B. The member insurer is able to determine through the use 
of 
individual health statements, 
claims 
history or 
any 
reasonable means that at the time the person applied for 
insurance coverage with 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 
dystrophy, 
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. 
3. 
Repeal. 
This section is repealed April 1, 2010. 
Sec. A-16. 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. A-17. Effective date. 
That section of this Part that 
repeals the Maine Revised Statutes, Title 24-A, section 2736-C, 
subsection 3, paragraph C takes effect January 1, 2006. 
Those 
sections of this Part that repeal Title 24-A, section 2736-C, 
subsection 
1, 
paragraph 
B; 
section 
2736-C, 
subsection 
2, 
paragraphs Band 0; section 2736-C, subsection 3, paragraphs A 
and 0; and section 2736-C, subsection 9 take effect April 1, 2006. 
PARTB 
Sec. B-1. 22 MRSA §3161, sub-§5, ,A, as enacted by PL 2001, c. 
677, §1, is repealed and the following enacted in its place: 
A. 
Works on a full time basis, with a normal work week of 
hours 
or more. 
"Eligible employee" 
includes 
a 
sole 
proprietor, 
a partner of a partnership or an independent 
contractor, but does not include employees who work on a 
temporary or substitute basis. 
An employer may elect to 
treat as eligible employees part-time employees who work a 
normal work week of 10 hours or more as long as at least one 
employee works a normal work week of 30 hours or more. 
An 
employer may elect to treat as eligible employees who retire 
from the employer's employment; 
Sec. B-2. 24 MRSA §2317-B, sub-§14-A is enacted to read: 
14-A. 
Title 
24-A. 
section 
2808-C. 
Small 
group 
health 
plans. Title 24-A, section 2808-C; 
Sec. B-3. 24 MRSA §2317-B, sub-§15, as enacted by PL 1999, c. 
256, Pt. M, §10, is repealed. 
Sec. B-4. 24 MRSA §2327, as amended by PL 2003, c. 469, Pt. 
E, §1, is further amended to read: 
§2327. 
Group rates 
A 
group 
health 
care 
contract 
may 
not 
be 
issued 
by 
a 
nonprofit hospital or medical service organization in this State 
until a copy of the group rates to be used in calculating the 
premium for 
these contracts has been filed for informational 
purposes with the superintendent. 
The filing must include the 
base rates and a description of any procedures to be used to 
adjust 
the 
base 
rates 
to reflect factors 
including but not 
limited to age, gender, health status, claims experience, group 
size and coverage of dependents. 
Notwithstanding this section, 
rates 
for 
group 
Medicare 
supplement, 
nursing 
home 
care 
or 
long-term care contracts and for certain group contracts included 
within the definition of "individual health plan" in Title 24-A, 
section 
2736-C, 
subsection 1, 
paragraph 
C must 
be 
filed in 
accordance with section 2321 and rates for small group health 
plans as defined by Title 24-A, section 68Q8-8 2808 C must be 
filed in accordance with that section. 
Sec. B-5. 24-A MRSA §2803-A, sub-§4, as amended by PL 2001, c. 
410, Pt. B, §2, is further amended to read: 
4. 
Exception. 
An insurer is 
loss information described in this 
eligible for 
small group coverage 
2808-C. 
not required to provide the 
section for a group that is 
pursuant to section 68Q8-8 
Sec. B-6. 24-A MRSA §2804, sub-§3, as amended by PL 1999, c. 
256, Pt. G, §l, is further amended to read: 
3. 
Except as provided in section 2736-C, 
2808-C 
and chapter 36, 
an insurer may exclude 
coverage 
on 
any 
person 
as 
to 
whom 
evidence 
insurability is not satisfactory to the insurer. 
section 68g8-8 
or limit the 
of 
individual 
Sec. B-7. 24-A MRSA §2805, sub-§3, as amended by PL 1999, c. 
256, Pt. G, §2, is further amended to read: 
3. 
Except as provided in section 2736-C, 
2808-C 
and chapter 
36, 
an insurer may 
exclude 
coverage 
on 
any 
person 
as 
to 
whom 
evidence 
insurability is not satisfactory to the insurer. 
section 68g8-8 
or limit the 
of 
individual 
Sec. B-8. 24-A MRSA §2805-A, sub-§4, as amended by PL 1999, c. 
256, Pt. G, §3, is further amended to read: 
4. 
Except as provided in section 2736-C, 
2808-C 
and chapter 
36, 
an insurer may 
exclude 
coverage 
on 
any 
person 
as 
to 
whom 
evidence 
insurability is not satisfactory to the insurer. 
section 68g8-8 
or limit the 
of 
individual 
Sec. B-9. 24-A MRS A §2806, sub-§3, as amended by PL 1999, c. 
256, Pt. G, §4, is further amended to read: 
3. 
Except as provided in section 2736-C, 
section 68g8-8 
2£08-C 
and chapter 36, 
an insurer may exclude or limit the 
coverage 
on 
any 
person 
as 
to 
whom 
evidence 
of 
individual 
insurability is not satisfactory to the insurer. 
Sec. B-I0. 24-A MRSA §2807-A, sub-§3, as amended by PL 1999, 
c. 256, Pt. G, §5, is further amended to read: 
3. 
Except as 
2808-C 
and chapter 
provided in section 2736-C, 
section 68g8-8 
36, 
an insurer may exclude or limit the 
coverage 
on 
any 
member 
as 
to 
whom 
evidence 
of 
individual 
insurability is not satisfactory to the insurer. 
Sec. B-ll. 24-A MRSA §2S0S-B, as amended by PL 2003, c. 469, 
Pt. E, §§14 to 16, is repealed. 
Sec. B·12. 24-A MRSA §2S0S-C is enacted to read: 
§28Q8-C. 
Small group health plans 
1. 
Purpose. 
The purpose of this section is to promote the 
availability of health insurance coverage to small employers, to 
prevent abusive rating practices, to reguire disclosure of rating 
practices to purchasers of small group health plans, to establish 
standards for continuity of coverage 
for small employers and 
their 
covered 
employees 
and 
to 
improve 
the 
efficiency 
and 
fairness of the small group market. 
2. 
Definitions. 
As 
used 
in this 
section, 
unless 
the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"Actuarial certification" means a written statement by a 
member 
of 
the 
American 
Academy 
of 
Actuaries 
or 
other 
individual acceptable to the superintendent that a carrier 
offering small group health plans is in compliance with the 
provisions of subsection 4 based on the person's examination 
and review of the carrier's appropriate records 
and the 
actuar ial assumptions and methods used by the carrier to 
establish premium rates for its small group health plans. 
B. 
"Base premium rate" means, for each class of business as 
to a rating period, the lowest premium rate charged or which 
could have been charged under a rating system for that class 
of business by a small group carrier to small employers with 
similar case characteristics for health plans with the same 
or similar coverage. 
C. 
"Carr ier" 
means 
any 
insurance 
company, 
nonprofit 
hospital 
and 
medical 
service 
organization 
or 
health 
maintenance organization authorized to issue small 
group 
health plans 
in this State. 
For 
the 
purposes 
of this 
section, carriers that are affiliated companies or that are 
eligible to file consolidated tax returns are treated as one 
carrier and any restrictions or limitations imposed by this 
section apply as if all small group health plans delivered 
or issued for delivery in this State by affiliated carriers 
were issued by one carrier. 
For purposes of this section, 
health maintenance organizations are treated as 
separate 
organizations 
from 
affiliated 
insurance 
companies 
and 
nonprofit hospital and medical service organizations. 
D. 
"Case 
characteristics" 
means 
demographic 
or 
other 
relevant characteristics of a small employer as determined 
by a carrier that are considered by the carrier in the 
determination of the premium rates for the small employer. 
"Case characteristics" does not include claims experience, 
health status or duration of coverage. 
E. 
"Class of business" means all or a distinct grouping of 
small employers in accordance with this paragraph to whom 
the 
carrier 
provides 
coverage 
as 
demonstrated 
by 
the 
carrier's records: 
(1) 
A distinct grouping may only be established by the 
small employer carrier on the basis that the applicable 
health benefit plans; 
(a) 
Are marketed and sold through individuals and 
organizations that are not participating in the 
marketing or sale of other distinct groupings of 
small employers for the carrier; 
(b) 
Have been acg:uired from another carrier as a 
distinct grouping of plans; 
(c) 
Are 
provided 
through 
an 
association with 
membership of not less than 
small employers 
that 
has 
been 
formed 
for 
purposes 
other 
than 
obtaining insurance; or 
(d) 
Are in a class of business that meets the 
reg:uirements 
for 
exception 
to 
the 
restrictions 
related to premium rates provided in subsection 4. 
(2) 
A carrier may establish no more than 2 additional 
groupings 
under 
subparagraph 
(1) 
on 
the 
basis 
of 
underwriting criteria that 
are 
expected 
to 
produce 
substantial variation in the health care costs. 
(3) 
The superintendent may approve the establishment 
of additional distinct groupings upon application to 
the superintendent and a finding by the superintendent 
that 
such 
action 
would 
enhance 
the 
efficiency 
and 
fairness of the small group health plan market. 
F. 
"Index rate" means, for each class of business for small 
employers with similar case characteristics, the arithmetic 
average 
of 
the 
applicable 
base 
premium 
rate 
and 
the 
corresponding highest premium rate. 
G. 
"Late enrollee" means an eligible employee or dependent 
who 
reguests 
enrollment 
in 
a 
small 
group 
health 
plan 
following 
the 
initial 
m1n1mum 
3D-day 
enrollment 
period 
provided 
under 
the 
terms 
of 
the 
plan, 
except 
that 
an 
eligible employee or dependent is not considered a 
late 
enrollee if the eligible employee or dependent meets the 
reguirements of section 2849-8, subsection 3, paragraph A, 
8, C-I or D. 
H. 
"New business premium rate" means, 
for each class of 
business as to a rating period, the premium rate charged or 
offered by the carrier to small employers with similar case 
characteristics for newly issued health benefit plans with 
the same or similar coverage. 
I. 
"Rating period" means the calendar period for which the 
premium rates established by a carrier are assumed to be in 
effect as determined by the carrier. 
J. 
"Small employer" means any person, firm, corporation, 
partnership or 
association actively 
engaged 
in business 
that, 
on at least 
50% 
of its working 
days 
during 
the 
preceding year, employed no more than 50 eligible employees 
and at least 2 eligible employees. In determining the number 
of 
eligible 
employees, 
companies 
that 
are 
affiliated 
companies or that are eligible to file a combined tax return 
for 
purposes 
of state taxation must 
be 
considered 
one 
employer. 
K. 
"Small group health plan" means any hospital and medical 
expense-incurred policy; health, hospital or medical service 
corporation 
plan 
contract; 
or 
health 
maintenance 
organization 
subscriber 
contract 
covering 
an 
eligible 
group. 
"Small group health plan" 
does 
not 
include 
the 
following types of insurance: 
(1) 
Accident; 
(2) 
Credit; 
(3 ) 
Di sabili ty; 
(4) 
Long-term care or nursing home care; 
(5) 
Medicare supplement; 
(6) 
Specified disease; 
(7) 
Dental or vision; 
(8) 
Coverage 
issued 
as 
a 
supplement 
to 
liability 
insurance; 
(9) 
Workers' compensation; 
(10) 
Automobile medical payment; or 
(11) 
Insurance under which benefits are payable with 
or 
without 
regard 
to 
fault 
and 
that 
is 
reguired 
statutorily to be contained in any liability insurance 
policy or eguivalent self-insurance. 
3. 
Small group health plans subject to this section. 
The 
following small group health plans are subject to this section. 
A. 
Exc~mt a,§ 
prQvided in this parggraph, 
thi§ 
section 
ap];!.ue~ 
tQ 
any 
~mgll 
gJ;:QuP 
hgglj;h 
plan 
that 
provides 
S;;Qverage tQ Qne Qr mQr~ emplQyee§ Qf a, 
~ma,ll gmplQy~r. 
B. 
This sgction does not apply to individual health plans 
thgt gre subject to section 2736-C. 
4. 
Premium rates. 
Premium rates for small group health 
plans gre §ubject to the follQwing provisions. 
A. 
Thg index rgte for grating periQd for any class of 
busine§s may not exceed the index rate for any Qther class 
of business by mQre than 20%. 
This para,gJ;:aph dQgs not apply 
tQ a class of busine§§ if any of the following apply: 
(1) 
The class of business is one for which the carrier 
does 
not 
reject. 
and 
never 
has 
rejected, 
small 
employers included within the carrier's definition of 
employers 
eligible 
fQr 
the 
clgsS 
of 
business 
or 
otherwise eligible employees and dependents who enroll 
on a timely basis, based upon their claims experience 
or health status; 
(2) 
Thg carrier doe§ not involuntarily transfer, and 
never has involuntarily transferrgd, 
a health benefit 
plan into or out of the class of business; and 
(3) 
The class of business is available for purchase. 
B. 
For a clas§ of business, the premium rate charged during 
a 
rating 
period 
to 
small 
employers 
with 
similar 
case 
characteristics for the same or similar coverage, 
or the 
rates that could be charged to such employers 
undeL_~he 
rating system for that class of business, may not vary from 
the index rate by more than 25% of the index rate. 
C. 
The percentage increase in the premium rate charged to a 
small employer for a new rating period may not exceed the 
sum of the following: 
(I) 
The percentage change in the new business premium 
rate measured from the first day of the prior rating 
period to the first day of the new rating period. In 
the case of a class of business for which the small 
group carrier is not issuing new policies, the carrier 
shall use the percentage change in the base premium 
~ 
(2) 
An 
adjustment, 
not to exceed 15% 
annually and 
adjusted pro rata for rating periods of less than one 
year, 
due to the claim experience, health status or 
duration of coverage or the employees or dependents of 
the small employer as determined from the carrier's 
rate manual for the class of business; and 
(3) 
Any adjustment due to change in coverage or change 
in the case characteristics of the small employer as 
determined from the carrier's rate manual for the class 
of business. 
D. 
In the case of health benefit plans issued prior to the 
effective date of this section, a premium rate for a rating 
period may exceed the ranges described in paragraphs A or B 
for a period of 5 years following the effective date of this 
section. 
In 
that 
case, 
the 
percentage 
increase 
in 
the 
premium rate charged to a small employer in such a class of 
business for a new rating period may not exceed the sum of 
the following: 
(I) 
The percentage change in the new business premium 
rate measured from the first day of the prior rating 
period to the first day of the new rating period. In 
the case of a class of business for which the small 
group carrier is not issuing new policies, the carrier 
shall use the percentage change in the base premium 
rate; and 
(2) 
Any adjustment due to change in coverage or change 
in the case characteristics of the small employer as 
determined from the carrier's rate manual for the class 
of business. 
E. 
This section is not intended to affect the use by a 
small group carrier of legitimate rating factors other than 
claims experience, health status or duration of coverage in 
the determination of premium rates. 
A small group carrier 
shall apply 
ratin~ctorsL-includi_llli- cC),se ~har:pcteristic_sL 
consistently with respect to all small employers in a class 
of business. 
F. 
A small group carrier may not transfer a small employer 
involuntarily into or out of a class of business. A small 
group carrier may not transfer a small employer into or out 
of a class of business unless such offer is made to transfer 
all small employers in the class of business without regard 
to any changes in case characteristics, claims experience, 
heal th status or duration of coverage since t:.he first date 
of coverage. 
5. 
Coverage for late enrollees. 
In providing coverage to 
late enrollees, small group health plan carriers are allowed to 
excJ.yde or limit coverage for 
a late enrollee subject to the 
limitations set forth in section 2849-B, subsection 3. 
6. 
Guaranteed issuance and guaranteed renewal. 
Carriers 
providing 
small 
group 
health plans 
must 
meet 
the 
following 
requirements on issuance and renewal. 
A. 
Any small group health plan offered to 
any eligible 
groyp or subgroup must be offered to all eligible groups 
tnat meet tbe carrier' $ minimum part.i,cipation reguirements, 
which may not exceed 75%, 
to all eligible employees 
and 
their dependents in those groups. 
In determining compliance 
with minimum participation requirements, eligible employees 
and their dependents that have existing health care coverag~ 
may not be considered in the calculation. 
If an employee 
declines coverage because the employee has other coverage-L 
any dependents of that employee who are not eligible under 
the 
employee's other 
coverage 
are eligible for 
coverage 
under the small group health plan. 
B. 
A carrier may deny coverage under a managed care plan, 
as defined by section 4301-A: 
(1) 
To 
employers 
who 
have 
no 
employees 
who 
live, 
reside or work within the approved service area of the 
plan; and 
(2) 
To employers if the carrier has demonstrated to 
the superintendent's satisfaction that: 
(a) 
The carrier does not have the capacity to 
deliver 
services 
adequately 
to 
additional 
enrollees wi thin all or a designated part of its 
service 
area 
because 
of 
its 
obligations 
to 
existing enrollees; and 
(b) 
The 
carrier 
is 
applying 
this 
provisioIJ 
uniformly to individuals and groups without rega~d 
to any health-related factor. 
A carrier that denies coverage in accordance with this 
subparagraph may not enroll individuals residing within 
the service area subject to denial of coverage, 
or 
groups or subgroups within that area for a period of 
days after the date of the first denial of coverage. 
. 
Disclosure 
of 
rating 
practices 
and 
reneyability 
provisions. 
Each 
small 
group 
carrier 
shall 
disclose 
the 
following in the sales and marketing materials provided to small 
employers: 
A. 
The extent to which premium rates for a specific small 
employer 
are established or adjusted due 
to 
the 
claims 
experience, health status or duration of coyerage of the 
employees and dependents of the small employer; 
B. 
The ability of the carrier to change premium rates and 
rating factors, 
including case characteristics, 
that may 
affect changes in premium rates; 
C. 
A description of the class of business in which the 
small 
employer 
is 
or 
will 
be 
included, 
including 
the 
applicable grouping of plans; and 
D. 
The small employer's rights regarding renewal of the 
small group health plan. 
8. 
Maintenance of records. 
A 
small group carrier shall 
maintain at its principal place 
of business 
a 
complete 
and 
detailed 
description 
of 
its 
rating 
practices 
and 
renewal 
underwr iting practices, including information and documentation 
that demonstrate that its rating methods and practices are based 
upon 
commonly 
accepted 
actuarial 
assumptions 
and 
are 
in 
accordance with sound actuarial principles. On or before March 
1st annually, 
a carrier shall file with the superintendent an 
actuarial certification that the carrier is in compliance with 
this section and that the rating methods of the carrier are 
actuarially sound. 
A copy of the certification must be retained 
by the carrier at its principal place of business. 
A carrier 
shall also make the information and documentation required in 
this subsection available to the superintendent upon request. 
The information provided to the superintendent pursuant to this 
subsection is proprietary and must be kept confidential by the 
super intendent. The information may not be disclosed except as 
agreed to by the carrier or as ordered by a court of competent 
jurisdiction. 
9. 
Discretion of superintendent. 
The superintendent may 
suspend all or any part of subsection 4 as to the premium rates 
applicable to one or more small employers for one or more rating 
periods upon a filing by the small group carrier and a finding by 
the superintendent that either the suspension is reasonable in 
light of the financial condition of the carrier or that the 
suspension would enhance 
the efficiency and fairness 
of 
the 
marketplace for small group health plans. 
10. 
Applicability. 
This section applies to all small group 
health 
plan 
policies, 
contracts 
and 
certificates 
executed, 
delivered, 
issued for delivery, 
continued or renewed in this 
State on or after January 1, 2007. 
For purposes of this section, 
all contracts are deemed to be renewed no later than the next 
yearly anniversary of the contract date. 
Sec. B·13. 24·A MRSA §2850·B, sub·§2, 1fC, as enacted by PL 
1997, c. 445, §30 and affected by §32, is amended to read: 
C. 
"Large group market" means groups not subject to section 
2736-C or 6808-9 2S08-C. 
Sec. B·14. 24·A MRSA §2850·B, sub-§2, 1fD, as enacted by PL 
1997, c. 445, §30 and affected by §32, is amended to read: 
D. 
"Small group market" means groups subject to section 
6898-8 280S-C. 
Sec. B·15. 24·A MRSA §2850-B, sub·§3, 1fG, as amended by PL 
2003, c. 428, Pt. A, §1, is further amended to read: 
G. 
When the carrier ceases offering a product and meets the 
following requirements: 
(1) 
In the large group market: 
(a) 
The 
carrier 
policyholder and to 
before termination; 
must 
provide 
notice 
to 
the 
the insureds at least 90 days 
(b) 
The carrier must offer to each policyholder 
the option to purchase any other product currently 
being offered in the large group market; and 
(c) 
In exercising the option to discontinue the 
product and in offering the option of coverage 
under division (b), the carrier must act uniformly 
without regard to the claims experience of the 
policyholders or the health status of the insureds 
or prospective insureds; 
(2) 
In the small group market: 
(a) 
The carrier shall replace the product with a 
product that complies with the 
requirements of 
this 
section, 
including 
renewability, 
and 
with 
section 6898-8 2808-C; 
(b) 
The 
superintendent 
shall 
find 
that 
replacement 
is 
in 
the 
best 
interests 
of 
policyholders; and 
the 
the 
(c) 
The 
carrier shall 
provide 
notice 
to 
the 
policyholder and to the insureds at least 90 days 
before replacement; or 
(3) 
In the individual market: 
(a) 
The carrier shall replace the product with a 
product that complies with the requirements of 
this 
section, 
including 
renewability, 
and 
with 
section 2736-C; 
(b) 
The 
superintendent 
shall 
find 
that 
the 
replacement 
is 
in 
the 
best 
interests 
of 
the 
policyholders; and 
(c) 
The 
carrier shall 
provide 
notice 
to 
the 
policyholder 
and, 
if 
a 
group 
policy, 
to 
the 
insureds at least 90 days before replacement; 
Sec. B-16. 24-A MRSA §2850-B, sub-§4, ,B, as amended by PL 
2001, c. 258, Pt. E, §ll, is further amended to read: 
B. 
Carriers that cease to write new small group business 
continue 
to 
be 
governed 
by 
section 
6898-8 
2808-C 
with 
respect to small group contracts in force and their renewal 
or replacement contracts. 
Sec. B-17. 24-A MRSA §4202-A, sub-§10, ,B, as amended by PL 
1993, c. 645, Pt. A, §5, is further amended to read: 
B. 
Is compensated, except for reasonable copayments, for 
basic health care services to enrolled participants solely 
on 
a 
predetermined periodic rate basis, except that the 
organization is not prohibited from having a provision in a 
group contract allowing an adjustment of premiums based upon 
the actual health services utilization of 
the enrollees 
covered under the contract, and except that such a contract 
may 
not 
be 
sold 
to 
an eligible group 
subject 
to 
the 
e9mmHBi~y rating requirements of section 6898-8 2808-C; 
Sec. B-18. 24-A MRSA §4207, sub-§5, as amended by PL 2003, c. 
469, Pt. E, §19, is further amended to read: 
5. 
A schedule or an amendment to a schedule of charge for 
enrollee health coverage for health care services may not be used 
by any health maintenance organization unless it complies with 
section 2736, &898-8 2808-C or 2839, whichever is applicable. 
Sec. B-19. 24-A MRSA §4210. sub-§I, as amended by PL 1995, c. 
332, Pt. 0, §4, is further amended to read: 
1. 
After 
a health maintenance organization has been in 
operation 24 months, it shall have 
an annual open enrollment 
period of at least one month during which it accepts enrollees up 
to the limits of its capacity, 
as determined by the health 
maintenance organization, in the order in which they apply for 
enrollment. 
To the extent not inconsistent with the requirements 
of chapter 36 and sections 2736-C and &898-8 2808-C as qualified 
by 
section 
4222-B, 
subsection 
3, 
a 
health 
maintenance 
organization may apply to the superintendent for authorization to 
impose 
such underwriting restrictions 
upon enrollment 
as 
are 
necessary 
to 
preserve 
its 
financial 
stability, 
to 
prevent 
excessive adverse selection by prospective enrollees or to avoid 
unreasonably high or unmarketable charges for enrollee coverage 
for health care services. 
The superintendent shall approve or 
deny the application within 10 
days of the receipt of that 
application from the health maintenance organization. 
Sec. B-20. 24-A MRSA §4212, sub-§2, ~C, as enacted by PL 1995, 
c. 332, Pt. 0, §6, is amended to read: 
C. 
When the provisions of the State's community rating law 
are applicable, as provided by section 2736-C, subsection 3, 
paragraph B aRe-seeE~eR-&gGg-8T-s~BseeE~eR-4T-Fata~taFR-8; or 
Sec. B-21. 24-A MRSA §4222-B, sub-§3, as enacted by PL 1995, 
c. 332, Pt. 0, §8, is amended to read: 
3. 
The requirements of sections 2736-C and &8g8-8 T 
2808-C 
eemm~Ri~y--r-a-t-i-ng.--lawT apply to health maintenance organizations, 
except that a health maintenance organization is not required to 
offer coverage or accept applications from an eligible group or 
individual located outside the health maintenance organization's 
approved service area. 
Sec. B-22. 24-A MRSA §4346, sub-§l, ~D, as enacted by PL 200L 
c. 708, §3, is amended to read: 
D. 
"Eligible employee" or "employee" means an individual 
who: 
( 1 ) 
Mee to s - -t-be- - .ee.f-i.ni -t.-i -E>4).- - e ~ - -'le-I-ig-i-b-le-- -empJ-ey-ee!'- - s e to 
~e~toa--ia--&&G&~a-~r-~~~-~7--~a£a~£aph--G 
Works on a full-time basis, with a normal work week of 
hours or more. 
"Eligible employee" includes a sole 
proprietor, 
a 
partner 
of 
a 
partnership 
or 
an 
independent contractor, but does not include employees 
who 
work 
on 
a 
temporary or 
substitute basis. 
An 
employer 
may elect 
to 
treat as eligible 
employees 
part-time employees who work a normal work week of 10 
hours or more as long as at least one employee works a 
normal work week of 30 hours or more. 
An employer may 
elect to treat as eligible employees 
employees 
who 
retire from the employer's employment; 
(2) Is a self-employed individual who: 
(a) Works and resides in the State; and 
(b) Is organized as a sole proprietorship or in 
any 
other 
legally 
recognized 
manner 
that 
a 
self-employed 
individual 
may 
organize, 
a 
substantial part of whose income derives from a 
trade or business through which the individual has 
attempted to earn taxable 
income, 
and 
who 
has 
filed 
the 
appropriate 
United 
States 
Internal 
Revenue 
Service 
form 
for 
the 
previous 
taxable 
year, 
and 
for 
whom 
a 
copy of 
the 
appropriate 
United States Internal 
Revenue 
Service 
form 
or 
forms and schedule has been filed with the plan or 
its administrator; or 
(3) Is a sole employee of a nonprofit organization that 
has been determined by the Internal Revenue Service to 
be 
exempt 
from 
taxation 
under 
the 
United 
States 
Internal Revenue Code, Section 50l(c)(3),(4) or (6) and 
who has a normal work week of at least 20 hours and is 
not covered under a public or private plan for health 
insurance or other health benefit arrangement. 
Sec. B-23. 24-A MRSA §4346, sub-§l, 1[G, as enacted by PL 200l, 
c. 708, §3, is amended to read: 
G. 
"Small employer" means an eligible group as defined in 
section 68Q8-S 2808-C, subsection 1 ~, paragraph Q ~. 
Sec. B-24. 24-A MRSA §6603, sub-§l, 1[H, as amended by PL 200l, 
c. 410, Pt. A, §9, is further amended to read: 
H. 
May issue only health care benefit plans that comply 
with the requirements of section 
68G8-~ 2808-C with regard 
to 
rating 
practices, 
coverage 
for 
late 
enrollees 
and 
guaranteed renewal. 
An arrangement may not provide health 
care benef i ts that do not meet or exceed the requi rements 
for mandated benefits applicable to comparable insured plans. 
Sec. B·25. 24·A MRSA §6910, sub·§4, ,B, as enacted by PL 2003, 
c. 469, Pt. A, §8, is amended to read: 
B. 
Dirigo Health shall contract with eligible businesses 
seeking 
assistance 
from 
Dirigo 
Health 
in 
arranging 
for 
health benefits 
coverage 
by Dirigo Health Insurance 
for 
their employees and dependents as set out in this paragraph. 
(1) 
Dirigo Health may establish contract 
reporting 
forms 
and 
procedures 
necessary 
efficient administration of contracts. 
and other 
for 
the 
(2) 
Dirigo 
participating 
cost of: 
Health 
shall 
collect 
payments 
from 
employers and plan enrollees to cover the 
(a) 
Dirigo 
Health 
employees and dependents 
determined by the board; 
Insurance 
for 
in contribution 
(b) 
Dirigo Health's quality assurance, 
management 
prevention, 
disease 
cost-containment programs; 
enrolled 
amounts 
disease 
and 
(c) 
Dirigo Health's administrative services; and 
(d) 
Other health promotion costs. 
(3) 
Dirigo Health shall establish the minimum required 
contribution levels, not to exceed 60°<., 
to be paid by 
employers toward the aggregate payment in subparagraph 
(2) and establish an equivalent minimum amount to be 
paid 
by 
employers 
or 
plan 
enrollees 
and 
their 
dependents who are enrolled in MaineCare. 
The minimum 
required contribution level to be paid by employers 
must be prorated for employees that work less than the 
number of hours of a full-time equivalent employee as 
determined 
by 
the 
employer. 
Dirigo 
Health 
may 
establish a separate minimum contribution level to be 
paid by employers toward coverage for dependents of the 
employers' enrolled employees. 
(4) 
Dirigo 
Health 
shall 
require 
participating 
employers 
to 
certify that 
at 
least 
75% 
of 
their 
employees that work 30 hours or more per week and who 
do not have other creditable coverage are enrolled in 
Dirigo Health Insurance and that the employer group 
otherwise meets the minimum participation requirements 
spee~~~eQ-By-see~~eR-68Q8-8T-SQBSee~~eR-4T-paFa~Faps-A. 
(5) 
Dirigo Health shall reduce the payment amounts for 
plan enrollees eligible for 
a 
subsidy under section 
6912 
accordingly. 
Dirigo 
Health 
shall 
return 
any 
payments 
made 
by 
plan 
enrollees 
also 
enrolled 
in 
MaineCare to those enrollees. 
(6) 
Dirigo 
Health 
shall 
require 
participating 
employers to pass on any subsidy in section 6912 to the 
plan enrollee qualifying for the subsidy, 
up to the 
amount of payments made by the plan enrollee. 
(7) 
Dirigo Health may establish other criteria for 
participation. 
(8) 
Dirigo 
Health 
may 
limit 
the 
number 
of 
participating employers. 
Sec. B-26. 24-A MRSA §6913, sub-§9, as enacted by PL 2003, c. 
469, Pt. A, §8, is amended to read: 
9. 
Demonstration 
of offset. 
As 
provided 
in 
sections 
2736-C, 68G8-8 2808-C and 2839-8, the claims experience used to 
determine any filed premiums or rating formula must reasonably 
reflect, in accordance with accepted actuarial standards, known 
changes and offsets in 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 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. 
Sec. B-27. Effective date. 
This Part takes effect January 1, 
2007. 
PART C 
Sec. C-l. 24-A MRSA §4205. sub-§l. llC, as enacted by PL 1975, 
c. 503, is amended to read: 
C. 
The furnishing of health care services through providers 
wsies that are under contract with or employed by the health 
maintenance organization. 
A health maintenance organization 
may 
offer 
health 
plans 
that 
exceed 
the 
geographic 
accessibility guidelines imposed by the superintendent by 
Bureau of Insurance Rule Chapter 850 for specialty care and 
hospi tal 
services, 
except 
for 
emergency 
hospital 
and 
hospital 
maternity 
care, 
if 
the 
health 
maintenance 
organization offers and actively markets health plans that 
otherwise 
meet 
the 
standard 
geographic 
accessibility 
guidelines contained in Bureau of Insurance Rule Chapter 850; 
PARTD 
Sec. D-l. 24 MRSA c. 21, sub-c. II is enacted to read: 
SUBCHAPTER 11 
LIMITS ON NONECONOMIC DAMAGES 
§2991. 
Limits on noneconomic dama~ 
.l-t 
NonecQg,pmic 
gsmt."ge~_d~filled. 
For 
purpose_s 
of 
this 
subchapter. "noneconomic damages" means subjective, nonpecuniary 
damages 
arisi.ng---"u.QJlL pain, 
:i!JUering, 
inconvenience, 
physical 
impairment, disfigurement, mental anguish, emotional stress, loss 
of 
society and 
companionship, 
loss of 
consortium, 
injury to 
reputation, humiliation, other nonpecuniary damages and any other 
theory of damages such as fear of loss, illness or injury. 
2. 
Limitation. 
In an action for professional negligence as 
defined in section 2502, 
an award of noneconomic damages to a 
prevailing party may not exceed $250,000. 
If the trial of the 
action is by jury, the jury may not be informed of the 
dama~ 
award limitation established in this section. 
If the jury awards 
total damages in excess of $250,000, the court shall direct the 
jury to establish the 
portion of total 
damages 
awarded 
for 
noneconomic 
damages. 
If 
the 
portion 
awarded 
for 
noneconomic 
damages exceeds $250 ,_JLQQ-,---~_J;:Q\.,-rt shall reduce the award to 
$250,000 
unless 
the 
court 
orders 
a 
further 
reduction 
in 
accordance with subsection 3. 
3. 
Powers of court. 
This section may not be construed to 
eliminate or affect a court 0 s powers of additur and remi tti tur 
with regard to the award of all damages, except that the power of 
additur is limited with regard to noneconomic damages to the 
maximum amount established in subsection 2. 
4. 
Application. 
This section 
action in which a notice of claim 
effective date of this section. 
applies to all 
is filed on or 
causes of 
after the 
UHE 
Sec. E-l. 36 MRSA §5122, sub-§l, ,S, as corrected by RR 2003, 
c. 2, §117, is amended to read: 
S. 
For tax years beginning in 2003, 
2004 and 2005, the 
amount 
received 
from 
the National 
Health Service 
Corps 
Scholarship Program and the Armed Forces Health Professions 
Scholarship and Financial Assistance program to the extent 
excluded from federal gross income in accordance with the 
Code, Section 117; ~ 
Sec. E-2. 36 MRSA §5122, sub-§l, 1fV, as amended by PL 2003, c. 
705, §8, is further amended to read: 
V. 
For tax years beginning on or after January 1, 2003 and 
before January 1, 
2006, 
the amount claimed as 
a 
federal 
income adjustment for student loan interest under the Code, 
Section 62 
(a) (17), but only for interest paid after 60 
months from the start of the loan repayment periodf-aRe~ 
Sec. E-3. 36 MRSA §5122, sub-§l, ,W, as enacted by PL 2003, c. 
705, §9, is repealed. 
Sec. E-4. 36 MRSA §5122, sub-§2, ,Q, as corrected by RR 2003, 
c. 1, §38, is amended to read: 
Q. 
A fraction of any amount previously added back by the 
taxpayer 
to 
federal 
adjusted 
gross 
income 
pursuant 
to 
subsection 1, paragraph N. 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to all other 
property, 
for 
the 
taxable year 
immediately following the taxable year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 5
0'0 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year during the recovery period, the fraction 
is 
equal 
to 
" 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the Code, 
the term "recovery period" means 
the recovery 
period that would have been applicable to the property had 
Section 179 not been applied; aRe 
Sec. E-5. 36 MRSA §5122, sub-§2, 1fT, as amended by PL 2003, c. 
705, §12 and affected by §14, is further amended to read: 
T. 
For income tax years beginning on or after January 1, 
2002 
and before January 1, 
2004, 
an amount equal to the 
total premiums spent for long-term care insurance policies 
certified under Title 24-11., 
section 5075-11. as long as the 
amount subtracted is reduced by the long-term care premiums 
claimed as an itemized deduction pursuant to section 5125. 
For income tax years beginning on or after January 1, 2004, 
an amount equal to the total premiums spent for qualified 
long-term care insurance contracts certified under Title 
24-11., 
section 5075-11., 
as long as the amount subtracted is 
reduced by any amount claimed as a deduction for federal 
income tax purposes in accordance with the Code, 
Section 
162(1) 
and by the long-term care premiums claimed as 
an 
itemized deduction pursuant to section 5125T; and 
Sec. E-6. 36 MRSA §5122, sub-§2, ~U is enacted to read: 
U. 
For income tax years beginning on or after January 1, 
2006, an amount egual to the total premium paid for health 
insurance for the taxable year. 
PARTF 
Sec. F-l. 2 MRSA c. 5, as amended, is repealed. 
Sec. F-2. 5 MRSA §12004-I, sub-§31-A, as enacted by PL 2003, 
c. 469, Pt. B, §2, is repealed. 
Sec. F-3. 22 MRSA c. l03-A, as amended, is repealed. 
Sec. F-4. 22 MRSA §1708, sub-§3, ~D, as corrected by RR 2001, 
c. 2, Pt. A, §33, is amended to read: 
D. 
Ensure that any calculation of an occupancy percentage 
of reimbursement for 
the 
amount 
paid in 
or other basis for adjusting the rate 
nursing facility services 
to 
reduce 
response to a decrease in the number of residents in the 
facility or the percentage of the facility's occupied beds 
excludes all beds that the facility has removed from service 
for all or part of the relevant fiscal period iB-aeeeFeaBee 
w:i:t:a--&e<!-t-i-on--66~. 
If the excluded beds are converted to 
residential care beds 
or 
another program 
for 
which the 
department provides reimbursement, nothing in this paragraph 
precludes 
the 
department 
from 
including 
those 
beds 
for 
purposes 
of 
any 
occupancy 
standard 
applicable 
to 
the 
residential care or other program pursuant to duly adopted 
rules of the department; and 
Sec. F-5. 22 MRSA §1715, sub-§l, ,A, as corrected by RR 2001, 
c. 2, Pt. A, §34, is amended to read: 
A. 
Is either a direct provider of major ambulatory service, 
as defined in section 382, subsection 8-A, or is or has been 
required 
to 
obtain 
a 
certificate of 
need 
under 
former 
section 329 or former section 304 or 304-A; 
Sec. F-6. 22 MRSA §2061, sub-§2, as corrected by RR 2003, c. 
2, §71, is repealed. 
Sec. F-7. 24-A MRSA §4204, sub-§l, ,A, as amended by PL 2003, 
c. 510, Pt. A, §20, is repealed. 
Sec. F-8. 24-A MRSA §4204, sub-§2-A, ,A, as 
2003, c. 510, Pt. A, §21 and c. 689, Pt. B, §7, is 
amended by 
repealed. 
PL 
Sec. F-9. 24-A MRSA §6203, sub-§l, ,A, as amended by PL 2003, 
c. 510, Pt. A, §22, is repealed. 
Sec. F-I0. 24-A MRSA§6203, sub-§6, as amended by PL 2003, c. 
155, §1, is further amended to read: 
6. 
Provision of 
services 
to 
nonresidents. 
The 
final 
certificate of authority must state whether any skilled nursing 
facility that is part of a life-care community or a continuing 
care retirement community may provide services to persons who 
have not been bona fide residents of the 
community prior to 
admission to the skilled nursing facility. 
If the life-care 
communi ty or the continuing care retirement community admits to 
its skilled nursing facility only persons who have been bona fide 
residents of the community prior to admission to the skilled 
nursing 
facility, 
then 
the 
community 
is---e-K-eRlp-t---E-F<Hl\---t1le 
E1FevisieBs--G-E--~.,i-t-l-e--66T--Ghap-\;e-I'---lW----A-.--9\it is subject to the 
licensing provisions of Title 22, chapter 405, and is entitled to 
only one skilled nursing facility bed for every 4 residential 
units in the 
community. 
Any 
community exempted under 
former 
Title 22, chapter 103-A may admit nonresidents of the community 
to its skilled nursing facility only during the first 3 years of 
operation. 
For 
purposes 
of 
this 
subsection, 
a 
"bona 
fide 
resident" means a person who has been a resident of the community 
for a period of not less than 180 consecutive days immediately 
preceding 
admission 
to 
the 
nursing facility 
or 
has 
been 
a 
resident of the community for less than 180 consecutive days but 
who has been medically admitted to the nursing facility resulting 
from an illness or accident that occurred subsequent to residence 
in the community. 
Any community exempted under former Title 22, 
chapter 
103-A 
is 
not 
entitled 
to 
and 
may 
not 
seek 
any 
reimbursement or financial assistance under the MaineCare program 
from any state or federal agency and, 
as a 
consequence, that 
community must continue to provide nursing facility services to 
any person who has been admitted to the facility. 
Notwithstanding this subsection, a life-care community that holds 
a final certificate of authority from the superintendent and that 
was operational on November 
18, 
2002 
and that is barred from 
seeking reimbursement or financial assistance under the MaineCare 
program from 
a state or federal agency may continue to admit 
nonresidents of the community to its skilled nursing facility 
after its first 3 years of operation with the approval of the 
superintendent. 
A life-care community that admits nonresidents 
to 
its 
skilled 
nursing 
facility 
as 
permitted 
under 
this 
subsection may continue to admit nonresidents after its first 3 
years of operation only for 
such period as 
approved by the 
superintendent after the superintendent's consideration of the 
financial impact on the life-care community and the impact on the 
contractual rights of subscribers of the community. 
Sec. F-ll. 24-A MRSA §6951~ sub-§6, as enacted by PL 2003, c. 
469, Pt. A, §8, is amended to read: 
6. 
Technology 
assessment. 
The 
forum 
shall 
conduct 
technology assessment reviews to guide the use and distribution 
of 
new 
technologies 
in 
this 
State. 
~Re--fe£~m--sRall--make 
£ee9mmeRgati9Rs-~~-tRe-~~~~~~~-9E-~-F£9~£am-~--~it±e 
66T-eRaFte£-lG~-AT 
Sec. F-12. 24-A MRSA §6951, sub-§8, as enacted by PL 2003, c. 
469, Pt. A, §8, is repealed. 
Sec. F-13. 24-A MRSA §6952, sub-§7, ~D, as enacted by PL 2003, 
c. 469, Pt. A, §8, is amended to read: 
D. 
Make 
recommendations 
regarding quality assurance 
and 
quali ty improvement pr ior i ties E9I'- -i-n<l-l-u-s-i-on--iR--t-he-- ~tate 
Hea±tR-~laR-gese£iaeg-iR-~itle-6T-eRaFte£-§; and 
Sec. F-14. 38 MRSA §1310-X, sub-§4, ~A, as amended by PL 2003, 
c. 551, §17, is further amended to read: 
A. 
A commercial 
biomedical waste disposal or 
treatment 
facility, if at least 51'\, of the facility is owned by a 
licensed hospital or hospitals 
as--Qe~~BeQ--~B--~~~le--66T 
see~~9B-~~~-~-~-14-or a group of hospitals that are 
licensed 
under 
Title 
acting 
through 
a 
statewide 
association of Maine hospitals or a wholly owned affiliate 
of the association; and 
PART G 
Sec. G-l. MaineCare reimbursement rates. 
By January 1, 2006, 
the 
Department of Health and 
Human 
Services shall introduce 
legislation to adjust MaineCare reimbursement rates for health 
care 
providers 
that 
increases 
the 
rate 
to 
20'\, 
above 
the 
reimbursement rate in effect on January 1, 2005, except that the 
adjustment may not result in a reimbursement rate of more than 
100'l-o of the usual, 
customary and reasonable rate used by the 
health care provider. The legislation proposed by the department 
must 
include 
a 
provision 
to 
limit 
new 
enrollees 
into 
the 
MaineCare program at a level that will provide funding to pay for 
the increase in reimbursement rates. 
Sec. G-2. Department of Professional and Financial Regulation, 
Bureau of Insurance review of health insurance rate and form filing 
requirements. 
The 
Department 
of 
Professional 
and 
Financial 
Regulation, Bureau of Insurance shall review the State's health 
insurance 
rate 
and 
form 
filing 
requirements 
and 
make 
recommendations for changes in the requirements to reduce the 
costs and resources for insurers seeking regulatory approval of 
new health insurance products. 
In its review, the bureau shall 
identify the typical costs and resources for insurers seeking 
regulatory approval for new health insurance products in this 
State and, to the extent possible, compare those to the costs and 
resources for the regulatory approval of new health insurance 
products in other states. 
The bureau shall submit a report with 
its review and recommendations to the Joint Standing Committee on 
Insurance and Financial Services by January 16, 2006. 
The Joint 
Standing Committee 
on 
Insurance 
and Financial Services shall 
submit 
a 
bill 
to 
the 
Second 
Regular 
Session 
of 
the 
122nd 
Legislature based on the recommendations from the bureau's report. 
SUMMARY 
This bill does the following. 
Part A repeals the guaranteed 
law for 
individual health plans 
allows 
carriers 
to 
treat 
their 
issuance 
effective 
pre-2006 
and community rating 
April 1, 
2006 
and 
book 
of 
business 
separately from their post-2006 
book 
of business. 
It makes 
changes to the continuity of coverage laws to allow underwriting 
when someone switches carriers in the individual market. 
Part A 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 
150% 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. 
Part A also removes 
the requirement that 
standard and basic plans as defined in Bureau of 
Chapter 750 in the individual market. 
carr iers offer 
Insurance Rule 
Part B repeals the community rating law for small group 
heal th plans effective January 1, 2007 and enacts in its place 
provisions governing the rating of small group health plans based 
on 
a 
model 
act 
from 
the 
National 
Association 
of 
Insurance 
Commissioners. 
Part C allows a carrier to offer health plans that do not 
comply with geographic 
access 
standards if the carrier also 
offers health plans that comply with those access standards or 
offers a fee-for-service health plan. 
Part D imposes a $250,000 cap on noneconomic damages awarded 
in medical malpractice cases. 
Part E allows individuals a state income 
contributions to health savings accounts and 
toward health insurance premiums. 
tax deduction for 
for payments made 
Part F repeals the statutory provisions governing the State 
Health Plan and certificate of need. 
Part G requires the Department of Health and Human Services 
to submit legislation by January 1, 2006 to increase MaineCare 
reimbursement rates for health care providers by 20%. Part G also 
requires the Department of Professional and Financial Regulation, 
Bureau of Insurance to conduct a study of the State' s rate and 
form filing laws and make recommendations for changes to reduce 
the costs and resources expended by health insurance carriers 
seeking regulatory approval of new health insurance products.