An Act To Lower the Cost of Health Insurance
Maine Legislature, Session 123, LD 1047
Committee: Insurance and Financial Services
Sponsors: VAUGHAN
Amends: 24-A MRSA §2736-C, 24-A MRSA §2848, 24-A MRSA §2849-B, 24 MRSA §2317-B, 24 MRSA §2327, 24-A MRSA §2803-A, 24-A MRSA §2804, 24-A MRSA §280, 24-A MRSA §2805-A, 24-A MRSA §2806, 24-A MRSA §2807-A, 24-A MRSA §2808, 24-A MRSA §2808-C, 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, 24-A MRSA §4346, 24-A MRSA §6910, 24-A MRSA §6913, 24-A MRSA §4205, 5 MRSA §12004-I, 22 MRSA §1715, 22 MRSA §2061, 24-A MRSA §4204, 24-A MRSA §6203, 24-A MRSA §69

Legislative Document 
No. 1047 
H.P.765 
House of Representatives, March 6, 2007 
An Act To Lower the Cost of Health Insurance 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative VAUGHAN of Durham. 
PnnteJ on rel.:yde-J paper 
I!/~ 
/h.1J?tU~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 24-A MRSA §2736-C, sub-§l,~, as enacted by PL 1993, c. 477, Pt. 
C, § 1 and as affected by Pt. F, § 1, is repealed. 
Sec. A-2. 24-A MRS A §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 commuAity rate rates and any formulas and factors used to adjust that rate 
those rates with the superintendent prior to issuance of any individual health plan. 
Sec. A-3. 24-A MRSA §2736-C, sub-§2,~, as enacted by PL 1993, c. 477, Pt. 
C, § 1 and as affected by Pt. F, § 1, is repealed. 
Sec. A-4. 24-A MRSA §2736-C, sub-§2, ~-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 premium 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, ~, as amended by PL 2001, c. 410, 
Pt. A, §2 and as affected by § 10, is repealed.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 1, 2008 may close its 
individual book of business sold prior to April 1, 2008 and may establish a separate 
community rate for individuals applying for coverage under an individual health plan 
after April 1, 2008. 
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 as affected by Pt. F, § 1, is repealed. 
Sec. A-9. 24-A MRSA §2736-C, sub-§3, ~, as enacted by PL 1999, c. 256, Pt. 
D, § 1, is amended to read: 
D. 
NotwithstaAdiAg paragraph A, carriers 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. 
I 
Sec. A-IO. 24-A MRSA §2736-C, sub-§6, ~A, as amended by PL 1995, c. 332, 
Pt. K, § I, is further amended to read: 
A. Each carrier must actively market individual health plan coverage, iACllidiAg aAY 
staAdardized plaAs defiAed plirsliaAt to slibsectioA 8, to individuals in this State. 
Sec. A-It. 24-A MRSA §2736-C, sub-§8, as amended by PL 1999, c. 256, Pt. 
0, §2, is further amended to read: 
8. Authority of the superintendent. The superintendent may by rule define one or 
more standardized individual health plans that FAttSt may be offered by all carriers 
offering individual health plans in the State, other than carriers offering only CHAMPUS 
supplemental coverage. 
II 
Sec. A-12. 2il-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 slibsectioA 3, paragrapH A; subsection 6, paragraph A~ 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 2 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 
I 
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-13. 24-A MRSA §2848, sub-§l-B, ~A, 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, 29 United States Code, 
S 
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, 10 United States Code, Chapter 55; 
(6) A medical care program of the federal Indian Health Care Improvement Act, 
United States Code, Section 1601 or of a tribal organization; 
(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 plan as defined in federal regulations authorized by the 
federal Public Health Service Act, Section 2701(c)(l)(I), as amended by Public 
Law 1 04-1 91 ; 6f 
(10) A health benefit plan under Section 5(e) of the Peace Corps Act, 22 United 
States Code, Section 2504(e}.~ 
(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, ~A, as amended by PL 2001, c. 258, 
Pt. E, §7, is further amended to read: 
A. That person was covered under afl ifldividual or ~ group contract or policy issued 
by any nonprofit hospital or medical service organization, insurer, 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 ~ 
Ull For purposes of this 
section, the individual or group policy under which the person is seeking coverage is 
the "succeeding policy." 
The group or ifldiyidual contract or policy, uninsured 
I 
II 
• 
employee benefit plan or governmental program that previously covered the person is 
the "prior contract or policy"; and 
Sec. A-IS. 24-A MRSA c. 54 is enacted to read: 
CHAPTER 54 
COMPREHENSIVE 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. Definitions 
As used in this chapter, unless the context otherwise indicates, the following tenns 
have the following meanings. 
1. Association. "Association" means the Comprehensive Health Insurance Risk 
Pool Association established in section 3903. 
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 Refonn 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 oreanization. "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, vision, 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 arising out of workers' 
compensation or similar law; automobile medical payment insurance; or insurance under 
which benefits are payable with or without regard to fault and that is statutorily required 
to be contained in any liability insurance policy or equivalent self-insurance. 
8. Medicare. "Medicare" means coverage under both Parts A and B of Title XVIII 
of the federal Social Security Act, 42 United States Code, Section 1395 et seq., as 
amended. 
9. Plan. "Plan" means the health insurance plan adopted by the board pursuant to 
this chapter. 
10. Producer. "Producer" means a person who is licensed to sell health insurance in 
this State. 
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; or 
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 of2002. 
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. 
• 
§3903. 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 11 members appointed as follows: 
(1) Six members appointed by the superintendent: 2 members chosen from the 
general public and who are not associated with the medical profession, a hospital 
II 
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) Five members appointed 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, 2 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 
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 operation in accordance with 
the requirements of this chapter and submit its articles, bylaws and operating rules to the 
superintendent for approval. If the board fails to adopt the plan of operation and suitable 
.1!rticles and bylaws within 90 days after the appointment of the board, the superintendent 
s hll 11_ adopt !]lJes _to effectuate the requirements of this chapter and those rules remain in 
effect uT}til superseded by a plan of o]2eration and articles and bylaws submitted by the 
3S 
hoard and approved by the superintendent. ~~des_~QQpted by the superintendent pursuant 
to this subsection are routine technical rules as defined.J.!! Title 5, chapter 375, subchapter 
£~-'-~ 
4. Immunity, _ A board member is not liable and is immune from suit at law or 
£illiliyior any conduct performed in good faith that is within the scope of the board's 
jurisdiction, 
§3904. 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. 
§3905. 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 3906; 
D. Collect the assessments provided in section 3907. 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 3903, 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 provisions 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 administrative functions; 
I 
C. Sue or be sued, and may take legal actions necessary or proper to recover or 
collect assessments due the association; 
D. Take legal actions necessary to avoid the payment of improper claims against the 
association or the coverage provided by or through the association, to recover any 
amounts erroneously or 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 association; 
E. Establish, and modify from time to time as appropriate, rates, rate schedules, rate 
adjustments, expense allowances, producers' referral fees, claim reserve formulas and 
any other actuarial function appropriate to the operation of the association 10 
II 
accordance with section 3909; 
F. Issue policies of insurance in accordance with the requirements of this chapter; 
G. Appoint appropriate legal, actuarial and other committees as necessary to provide 
technical assistance in the operation of the plan, policy and other contract design and 
any other function within the authority of the association; 
H. Borrow money to effect the purposes of the association. Notes or other evidence 
of indebtedness of the association not in default must be legal investments for 
I 8 
insurers and may be carried as admitted assets; 
I. Establish rules, conditions and procedures for reinsuring risks of member insurers 
desiring to issue in their own names plan coverage to individuals otherwise eligible 
I 
for plan coverage; 
J. 
Prepare and distribute application forms and enrollment instruction forms to 
producers and to the general public; 
K. Provide for reinsurance of risks incurred by the association. The provision of 
reinsurance may not subject the association to any of the capital or surplus 
requirements, if any, otherwise applicable to reinsurers; 
L. Issue additional types of health insurance policies to provide optional coverage, 
including Medicare supplement health insurance; 
M. Provide for and employ cost-containment measures and requirements, including, 
but not limited to, preadmission screening, 2nd surgical opinion, concurrent 
I 
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. 
3. 
Additional duties and powers. 
The superintendent may, by rule, establish 
additional powers and duties of the board and may adopt such rules as are necessary and 
proper to implement this chapter. Rules adopted pursuant to this subsection are routine 
technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
4. Review for solvency. The superintendent shall review the association at least 
every 3 years to determine its solvency. Ifthe 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 solvency ofthe 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. 
§3906. Selection of plan administrator 
1. Selection of plan administrator. The board shall select an insurer or 3rd-partv 
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 oftotal charges for administering the plan. 
2. Contract with plan administrator. The plan administrator selected pursuant to 
subsection 1 serves for a period of 3 years pursuant to a contract with the association. At 
least one year prior to the expiration of that 3-year period of service, the board shall invite 
all insurers, including the current plan administrator, to submit bids to serve as the plan 
administrator for the succeeding 3-year period. 
The board shall select the plan 
administrator for the succeeding period at least 6 months prior to the ending of the 3-year 
period. 
3. Duties of plan administrator. The plan administrator selected pursuant to 
subsection 1 shall: 
A. Perform all eligibility and administrative claims-payment functions relating to the 
plan; 
B. Pay a producer's referral fee as established by the board to each producer that 
refers an applicant to the plan, if the applicant's application is accepted. The selling 
or marketing of the plan is not limited to the plan administrator or its producers. The 
plan administrator shall pay the referral fees from funds received as premiums for the 
plan; 
C. Establish a premium billing procedure for collection of premiums from insured 
persons. Billings must be made periodically as determined by the board; 
D. Perform all necessary functions to ensure timely payment of benefits to covered 
persons under the plan, including: 
(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 m~de; 
(2) Evaluating the eligibility of each claim for payment under the plan; and 
(3) Notifying each claimant within 45 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 
frequency, content and form ofthe 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. Payment 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 subsectio!l, 
"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 tl}e bid specifications. 
§3907. 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 
lime aJl.d for such amounts as the board finds necessary. Assessments are due not les~ 
than 30 days after written notice to the member insurers and accrue interest at ·12%~r 
annum on and after the due date. 
2. Maximum assessment. Each insurer must be assessed by the board an amount 
not to exceed $2 per covered person insured or reinsured by each insurer per month for 
medical insurance. An insurer may not be assessed on policies or contracts insuring 
federal or state employees. 
3. Determination of assessment. The board shall make reasonable efforts to ensure 
that each covered person is counted only once with respect to an assessment. F or 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 assessments 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 pav 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 superintendent 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. 
§3908. Availability to coverage 
The association shall offer a choice of 2 or more coverage options through the plan as 
set out in section 3909, subsections I and 2. The plan becomes effective October 1, 2007. 
Policies offered through the association must be available for sale April I, 2008. The 
association shall directly insure the coverage provided by the plan, and the policies must 
be issued through the plan administrator. 
§3909. 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 coverage is involuntarily 
terminated for any reason other than nonpayment of premium may apply for coverage 
under the plan. If such coverage is applied for within 90 days after the involuntary 
termination and if premiums are paid for the entire period of coverage, the effective date 
of the coverage is the date of termination of the previous coverage. 
Page II - 123LR06'77(OIH 
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 issued by the plan, its schedule of benefits and exclusions and 
other limitations, which the board may amend from time to time subject to the approval 
of the superintendent. In establishing the plan coverage, the board shall take into 
consideration the levels of health insurance provided in the State and medical economic 
factors as determined appropriate. 
3. Rates. Rates for coverage issued by the association must meet the requirements 
of this subsection. 
A. 
Rates may not be unreasonable in relation to the benefits provided, the risk 
experience and the reasonable expenses of providing the coverage. 
B. Rate schedules must comply with section 2736-C and are subject to approval by 
the superintendent. 
C. Subject to approval by the superintendent, standard risk rates for coverage issued 
by the association must be established by the association using reasonable actuarial 
techniques and must reflect anticipated experiences and expenses of such coverage 
for standard risks. The premium for the standard risk rates must range from a 
minimum of 125% 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 association must comply 
with all relevant requirements of this Title applicable to individual health insurance, 
including requirements for mandated coverage for specific health care services and 
specific diseases and for certain providers of health care services. 
5. Other sources primary. The association must be payer of last resort of benefits 
whenever any other benefit or source of 3rd-party payment is available. The coverage 
provided by the association must be considered excess coverage, and benefits otherwise 
payable under association coverage must be reduced by all amounts paid or payable 
through any other health insurance and by all hospital and medical expense benefits paid 
or payable under any short-term, accident, dental-only, vision-only, fixed indemnity, 
limited benefit or credit insurance; coverage issued as a supplement to liability insurance; 
workers' compensation coverage; automobile medical payment; or liability insurance, 
whether or not provided on the basis of fault, and by any hospital or medical benefits paid 
or payable by any insurer or insurance arrangement or any hospital or medical benefits 
paid or payable under or provided pursuant to any state or federal law or program. 
6. Recovery 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 the benefits 
are otherwise not covered. Benefits due from the association may be reduced or refused 
as a setoff against any amount recoverable under this subsection. 
§3910. Eligibility for coverage 
1. Eligibility; application for coverage. A resident is eligible for coverage under 
the plan if the resident provides evidence of rejection, a requirement of restrictive riders, 
a rate increase or a preexisting conditions limitation on a qualified 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 requirements adopted by rule by the 
superintendent that are not inconsistent with this chapter and that evidence that a person 
II 
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 eligibilitv 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 applicaton. 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 I. 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 
required to provide the evidence specified in subsection I. 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 health 
insurance policy intended to replace the plan policy; 
B. The person is determined eligible for health care benefits under the MaineCare 
program pursuant to Title 22; 
C. The person previously terminated plan coverage, unless 12 months have elapsed 
since the person's last termination; 
I 
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 qualifying full-time employee, or dependent thereof, of a government 
agency or health care provider. 
5. Termination of coveraee. 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; 
II 
C. On the date state law requires cancellation of the policy; or 
D. At the option of the association, 30 days after the association makes any inquiry 
concerning the person's eligibility or place of residence to which the person does not 
wlY., 
The coverage of any person who ceases to meet the eligibility requirements 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. 
§3911. 
Actions aeainst 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 required by this chapter may not be the basis of any legal 
action or criminal or civil liability or penalty against the association or a member insurer. 
§3912. 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 
I 
made by a covered person after April I, 2008 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 I, 1993 and April I, 2008 and the 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 I, 1993 and April I, 
2008; 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, 2012. 
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. 
Comprehensive Health Insurance Risk Pool Association 
subsidy program. The board of directors of the Comprehensive Health Insurance Risk 
Pool Association shall develop a plan to subsidize low-income individuals as authorized 
under the Maine Revised Statutes, Title 24-A, section 3905, subsection 2, paragraph P. 
The board shall submit that plan to the Joint Standing Committee on Insurance and 
Financial Services no later than February 1, 2008. The Joint Standing Committee on 
Insurance and Financial Services may submit legislation to the Second Regular Session of 
the 123rd Legislature to implement the plan submitted by the association. 
Sec. A-I8. 
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, 2008. Those sections of this Part that repeal Title 24-A, section 2736-C, 
subsection 1, paragraph B; section 2736-C, subsection 2, paragraphs Band D; and section 
2736-C, subsection 3, paragraph A take effect April 1, 2008. Those sections of this Part 
that amend section 2736-C, subsection 3, paragraph D and subsection 9 take effect April 
1,2008. 
PART B 
Sec. B-1. 22 MRS A §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 30 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 2S0S-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, 
§ 1 0, is repealed. 
Sec. B-4. 24 MRSA §2327, as amended by PL 2003, c. 469, Pt. E, §1, is further 
II 
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 2808 B 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 not required to provide the loss information described in 
this section for a group that is eligible for small group coverage pursuant to section 2-8{}8-
B 2808-C. 
Sec. B-6. 24-A MRSA §2804, sub-§3, as amended by PL 1999, c. 256, Pt. G, § 1, 
is further amended to read: 
3. 
Except as provided in section 2736-C, section 2808 B 2808-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-7. 24-A MRSA §280S, 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, section 2808 B 2808-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. 
I 
Sec. 8-8. 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, section 2808 B 2808-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. 8-9. 24-A MRSA §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 2808 B 2808-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. 8-10. 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 provided in section 2736-C, section 2808 B 2808-C and chapter 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. 8-11. 24-A MRSA §2808, sub-§4, as amended by PL 1999, c. 256, Pt. G, 
§6, is further amended to read: 
4. 
Except as provided in section 2736-C, section 2808 B 2808-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. 8-12. 24-A MRS A §2808-8, as amended by PL 2005, c. 121, Pt. E, §§1 and 
2, is repealed. 
Sec. 8-13. 24-A MRSA §2808-C is enacted to read: 
§2S0S-c' Small group health plans 
1. 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 3 based on the person's examination and review of the carrier's appropriate 
records and the actuarial 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 that 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. "Carrier" 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 
I 
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 
I 5 
accordance with this paragraph to whom the carrier provides coverage as 
demonstrated by the carrier's records. 
C I) A distinct grouping may only be established by the small employer carrier on 
the basis that the applicable health benefit plans: 
Ca) 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; 
Cb) Have been acquired from another carrier as a distinct grouping of plans; 
(c) Are provided through an association with membership of not less than 50 
small employers that has been formed for purposes other than obtaining 
Insurance; or 
(d) Are in a class of business that meets the requirements for exception to the 
restrictions related to premium rates provided in subsection 3. 
(2) 
A carrier may establish no more than 2 additional groupings under 
subparagraph C 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 requests 
enrollment in a small group health plan following the initial minimum 30-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 
I 
dependent meets the requirements of section 2849-B, subsection 3, paragraph A..J!., 
C-IorD. 
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 
II 
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: 
(I) Accident; 
(2) Credit; 
(3) Disability; 
(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 required statutorily to be contained in any liability insurance policy or 
equivalent self-insurance. 
2. Small group health plans subject to this section. The following small group 
health plans are subject to this section. 
A. Except as provided in paragraph B, this section applies to any small group health 
plan that provides coverage to one or more employees of a small employer. 
B. This section does not apply to individual health plans that are subject to section 
2736-C. 
1 
" 
3. Premium rates. Premium rates for small group health plans are subject to the 
following provisions. 
A. The index rate for a rating period for any class of business may not exceed the 
index rate for any other class of business by more than 20%. This paragraph does not 
apply to a class of business 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 for the class of business or otherwise eligible employees and 
dependents who enroll on a timely basis, based upon their claims experience or 
health status; 
(2) 
The carrier does not involuntarily transfer, and never has involuntarily 
transferred, 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 class 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 under the 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 rate; 
(2) An adjustment, not to exceed 15% annually and adjusted pro rata for rating 
periods of less than one year, due to the claims 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 
and 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: 
(1) 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 rating factors, 
including case characteristics, 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, health status or duration of coverage since the first date of coverage. 
4. Coverage for late enrollees. In providing coverage to late enrollees, small group 
health plan carriers are allowed to exclude or limit coverage for a late enrollee subject to 
the limitations set forth in section 2849-B, subsection 3. 
5. 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 group or subgroup must be 
offered to all eligible groups that meet the carrier's minimum participation 
requirements, which may not exceed 75%, to all eligible employees and thei~ 
dependents in those groups. In determining compliance with minimum participation 
requirements, eligible employees and their dependents that have existing health care 
coverage may not be considered in the calculation. If an employee declines coverage 
because the employee has other coverage, 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 iive~J~sid~ 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 adequatelv to 
additional enrollees within all or a designated part of its service area because 
of its obligations to existing enrollees; and 
(b) The carrier is applying this provision uniformly to individuals and groups 
without regard 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 180 days after the date of the first den iat of 
coverage. 
6. Disclosure of rating practices and renewability provisions. Each small grou12 
carrier shall disclose the following in the sales and marketing materials providedtg smcill 
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 coverage 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. 
7. 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 
underwriting 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 1 st 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 superintendent. The information may not be disclosed except as agreed to by the 
carrier or as ordered by a court of competent jurisdiction. 
8. Discretion of superintendent. The superintendent may suspend all or any part of 
subsection 3 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. 
9. 
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, 2009. 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-14. 24-A MRS A §2850-B, sub-§2, ~C, as enacted by PL 1997, c. 445, 
§30 and as affected by §32, is amended to read: 
C. 
"Large group market" means groups not subject to section 2736-C or 2808 B 
2808-C. 
Sec. B-15. 24-A MRSA §2850-B, sub-§2, ~, as enacted by PL 1997, c. 445, 
§30 and as affected by §32, is amended to read: 
D. 
"Small group market" means groups subject to section 2808 B 2808-C. 
Sec. B-16. 24-A MRSA §2850-B, sub-§3, ~G, 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: 
( I) In the large group market: 
(a) The carrier must provide notice to the policyholder and to the insureds at 
least 90 days before termination; 
(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 
2808 B 2808-C; 
(b) The superintendent shaU must find that the replacement is in the best 
interests of the policyholders; and 
(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 shaU must 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. 8-17. 24-A MRSA §2850-B, sub-§4,~, as amended by PL 2001, c. 258, 
Pt. E, § 11, is further amended to read: 
B. 
Carriers that cease to write new small group business continue to be governed by 
section 2808 B 2808-C with respect to small group contracts in force and their 
renewal or replacement contracts. 
Sec. B-18. 24-A MRSA §4202-A, sub-§10,~, 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 
S 
" 
IS 
2S 
3S 
to an eligible group subject to the eomml:lAit), rating requirements of section 2808 B 
2S0S-C; 
Sec. 8-19. 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, 2808 B 2S0S-C or 2S39, whichever is applicable. 
Sec. 8-20. 24-A MRSA §4210, sub-§1, 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 2808 B 2S0S-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. 8-21. 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 eommI:lAit), rating law are applicable, as 
provided by section 2736-C, subsection 3, paragraph B aAd sectioA 2808 B, 
sl:lbsectioA 4, paragraph B; or 
Sec. 8-22. 24-A MRSA §4222-8, sub-§3, as enacted by PL 1995, c. 332, Pt. 0, 
§S, is amended to read: 
3. 
The requirements of sections 2736-C and 2808 B, eommI:lAit), ratiAg law, 2S0S-C 
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. 8-23. 24-A MRSA §4346, sub-§l, ~, as enacted by PL 2001, c. 70S, §3, 
is amended to read: 
D. 
"Eligible employee" or "employee" means an individual who: 
(1) Meets the defiAitioA of "eligible employee" set forth iA sectioA 2808 B, 
sl:lbsectioA I, paragraph C Works on a full-time basis, with a normal work week 
of 30 hours or more. "Eligible employee" includes a sole proprietor, a partner of 
a partnership or an independent contractor, but does not include employees who 
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work on a temporary or substitute basis. An employer may elect to treat~ 
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 501(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-24. 24-A MRSA §4346, sub-§l, ~G, as enacted by PL 2001, c. 708, §3, 
is amended to read: 
G. 
"Small employer" means an eligible group as defined has the same meaning as 
in section 2808 B 2808-C, subsection 1, paragraph 9 I. 
Sec. B-25. 24-A MRS A §6603, sub-§l,~, as amended by PL 2001, 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 2808 B 2808-C with regard to rating practices, coverage for late enrollees and 
guaranteed renewal. An arrangement may not provide health care benefits that do not 
meet or exceed the requirements for mandated benefits applicable to comparable 
insured plans. 
Sec. B-26. 24-A MRSA §6910, sub-§4,~, as amended by PL 2005, c. 400, Pt. 
C, §8, is further amended to read: 
B. 
Dirigo Health shall contract with eligible businesses seeking assistance from 
Dirigo Health in arranging for health benefits coverage by the Dirigo Health Program 
for their employees and dependents as set out in this paragraph. 
(I) 
Dirigo Health may establish contract and other reporting forms and 
procedures necessary for the efficient administration of contracts. 
(2) Dirigo Health shall collect payments from participating employers and plan 
enrollees to cover the cost of: 
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(a) The Dirigo Health Program for enrolled employees and dependents in 
contribution amounts determined by the board; 
(b) 
Dirigo Health's quality assurance, disease prevention, disease 
management and cost-containment programs; 
(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 the Dirigo Health Program and that 
the employer group otherwise meets the minimum participation requirements 
speeified by seetioA 2808 S, subseetioA 4, paragraph 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-27. 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, 2808 S 2808-C and 
2839-B, 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 I. 
Sec. B-28. Effective date. This Part takes effect January 1,2009. 
PARTC 
Sec. C-l. 24-A MRSA §4205, sub-§I, ~C, as enacted by PL 1975, c. 503, is 
amended to read: 
C. 
The furnishing of health care services through providers wfl.i.OO 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 hospital 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; 
PART D 
Sec. D-l. 2 MRSA c. 5, as amended, is repealed. 
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Sec. D-2. 5 MRSA §12004-I, sub-§31-A, as enacted by PL 2003, c. 469, Pt. B, 
§2, is repealed. 
Sec. D-3. 22 MRSA c. 103-A, as amended, is repealed. 
Sec. D-4. 22 MRSA § 1708, sub-§3, ~, as corrected by RR 200 I, c. 2, Pt. A, 
§33, is amended to read: 
D. 
Ensure that any calculation of an occupancy percentage or other basis for 
adjusting the rate of reimbursement for nursing facility services to reduce the amount 
paid in 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 in accordance with 
section 333. 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. D-5. 22 MRSA §1715, sub-§I, ~A, as corrected by RR 2001, c. 2, Pt. A, 
§34, is amended to read: 
I 
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. D-6. 22 MRSA §2061, sub-§2, as corrected by RR 2003, c. 2, §71, is 
repealed. 
Sec. D-7. 24-A MRSA §4204, sub-§I, ~A, as amended by PL 2003, c. 510, Pt. 
A, §20, is repealed. 
Sec. D-S. 24-A MRSA §4204, sub-§2-A, ~A, as amended by PL 2003, c. 510, 
Pt. A, §21 and c. 689, Pt. B, §7, is repealed. 
Sec. D-9. 24-A MRS A §6203, sub-§l, ~A, as amended by PL 2003, c. 510, Pt. 
A, §22, is repealed. 
Sec. D-IO. 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 community 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 
exempt from the provisioRs of Title 22, chapter 103 A, but 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. D-ll. 24-A MRSA §69S1, 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. The forum shall make 
recommeRdatioRs to the certificate of Reed program uRder Title 22, chapter 103 A. 
I 
Sec. D-12. 24-A MRSA §69S1, sub-§8, as enacted by PL 2003, c. 469, Pt. A, §8, 
is repealed. 
Sec. D-13. 24-A MRSA §69S2, sub-§7,~, as enacted by PL 2003, c. 469, Pt. 
A, §8, is amended to read: 
D. 
Make recommendations regarding quality assurance and quality improvement 
priorities for inclusion in the State Health Plan described in Title 2, chapter 5; and 
Sec. D-14. 38 MRS A §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 defined in Title 22, section 
328, subsection 14 or a group of hospitals that are licensed under Title 22 acting 
through a statewide association of Maine hospitals or a wholly owned affiliate of the 
association; and 
PART E 
Sec. E-l. 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, 2008. The Joint Standing Committee on Insurance and Financial Services 
shall submit a bill to the Second Regular Session of the 123rd Legislature based on the 
recommendations from the bureau's report. 
SUMMARY 
This bill does the following. 
Part A repeals the guaranteed issuance and community rating law for individual 
health plans effective April 1, 2008 and allows carriers to treat their pre-April 1, 2008 
book of business separately from their post-April 1, 2008 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 
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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 carriers offer standardized plans as defined 
in Bureau of Insurance Rule Chapter 750 in the individual market. 
Part B repeals the community rating law for small group health plans effective 
January 1, 2009 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 health maintenance organization to offer health plans that do not 
comply with geographic access standards if the health maintenance organization also 
offers health plans that comply with those access standards or offers a fee-for-service 
health plan. 
Part D repeals the statutory provisions governing the State Health Plan and certificate 
of need. 
Part E 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 . 
PClge 30 - 123LR06'i7(OI)-l