Authorizes Governors of nonparticipating States to request that the Secretary establish a Federal Employees' Health Benefit Program alliance for part or all of such State.
Provides for State certification of small group health plan purchasing alliances, including interstate alliances. Sets forth a governance structure and requirements for such alliances, including marketing area and conflict of interest rules. Prohibits such alliances from involvement in the licensing of health plan issuers, assumption of financial risk on behalf of members of such alliance, or for-profit operations.
Provides for a limited preemption of otherwise restrictive State laws concerning groups organizing to purchase health insurance and premium rate reductions.
Treats such alliances as employee welfare benefit plans under the Employee Retirement Income Security Act of 1974 for enforcement purposes.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2035 Introduced in Senate (IS)]
107th CONGRESS
2d Session
S. 2035
To provide for the establishment of health plan purchasing alliances.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 20, 2002
Mr. Jeffords (for himself, Mrs. Clinton, and Ms. Snowe) introduced the
following bill; which was read twice and referred to the Committee on
Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To provide for the establishment of health plan purchasing alliances.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Health Plan Purchasing Alliance Act
of 2002''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Health plan purchasing alliance.--The term ``health
plan purchasing alliance'' means employer groups that, on a
voluntary basis and in accordance with this section, form an
alliance for the purpose of purchasing insurance plans offered
by health insurance plan issuers.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(3) Small employer group.--The term ``small employer
group'' means all employees employed by the same employer. The
maximum number of employees in the small employer group shall
be defined by the health care purchasing alliance.
(4) State.--The term ``State'' means the 50 States, the
District of Columbia, and the Commonwealth of Puerto Rico.
SEC. 3. GRANT PROGRAM FOR STATE-BASED ESTABLISHMENT OF ALLIANCES.
(a) Program Establishment.--The Secretary may establish a program
to award grants to eligible entities, including States, to facilitate
the development and establishment, in accordance with this Act, of
State-based or State-directed health plan purchasing alliances to
afford greater access to, and lower costs of, health benefits for small
employer groups and individuals.
(b) Eligible Entities.--To be eligible to receive a grant under
subsection (a), an entity shall--
(1) be--
(A) a State agency;
(B) a nonprofit entity organized for the purpose of
establishing a health plan purchasing alliance; or
(C) a for-profit cooperative organization whose
profits are shared on a pro-rata basis among the
members of the cooperative;
(2) prepare and submit to the Secretary an application, at
such time, in such manner, and containing such information and
assurances as the Secretary may require (including evidence of
compliance with applicable requirements of this Act);
(3) provide documentation to the Secretary of a
determination by the Governor of the State involved that the
proposed project is in the best interests of the State; and
(4) otherwise comply with the provisions of subsections (b)
through (f) of section 5.
(c) Use of Funds.--
(1) In general.--Except as provided in paragraph (2), funds
made available under a grant under this section may be used by
the grantee to pay the costs associated with the development of
a health plan purchasing alliance, the provision of technical
assistance concerning the alliance, and the capitalization of
the alliance.
(2) Exception.--Funds made available under a grant under
this section may not be used for the operating costs of the
health plan purchasing alliance after the date that is 6 months
after the date on which the alliance began operations.
(d) Authorization of Appropriations.--There is authorized to be
appropriated to carry out the program under subsection (a), $50,000,000
for each of the fiscal years 2002 through 2006.
(e) Duration.--The period of a grant under this section shall not
exceed 30 months.
SEC. 4. FEHBP ALLIANCES.
(a) Governors' Option.--The Governor of a State that elects not to
apply for a grant under section 3, or not to provide the documentation
described in section 3(b)(3), may, with respect to the entire State or
to a geographic region of the State, request that the Secretary
establish an FEHBP alliance in coordination with the Federal Employees'
Health Benefit Program under chapter 89 of title 5, United States Code.
(b) Operation of Program.--The Secretary, to the extent the
Secretary considers appropriate, upon receipt of a request pursuant to
subsection (a), and with the concurrence of the Director of the Office
of Personnel Management (referred to in this section as the
``Director''), may use funds available under this section to establish
a State-based FEHBP alliance in accordance with the provisions of this
Act and in coordination with the Federal Employees' Health Benefit
Program.
(c) Powers of FEHBP Alliance.--A State-based FEHBP alliance
established under this section may--
(1) use the name of the Federal Employees' Health Benefit
Program plan in its marketing activities;
(2) require that a health plan issuer that participates in
the Federal Employees' Health Benefit Program and that offers
health benefit coverage to purchasers in the private sector
also offer the same health benefit coverage to eligible
individuals and to the small employer groups that are
participating in the State-based FEHBP alliance, at prices that
are negotiated with the alliance;
(3) request that the Director terminate the participation
of any health plan issuer in the Federal Employees' Health
Benefit Program if the Director determines that such issuer has
failed to comply with the requirements imposed on the issuer
under paragraph (2) (and the Director may consider such a
failure sufficient grounds for termination); and
(4) negotiate with health plan issuers not participating in
the Federal Employees' Health Benefit Program for the provision
of health benefits coverage in the small group market.
(d) Separate Rating.--Health plans offered through a State-based
FEHBP alliance and individuals purchasing coverage through such an
alliance shall be considered as separate groups and be distinct from
any group of plans or Federal employees participating in the Federal
Employees' Health Benefit Program.
SEC. 5. PRIVATE HEALTH PLAN PURCHASING ALLIANCES.
(a) Certification.--
(1) Requirement.--If small employer groups or a group of
individuals and small employer groups, that desire to form, on
a voluntary basis, a health plan purchasing alliance in
accordance with this section, appropriately notifies the State
and the Secretary of such desire, the State, upon a
determination that such group meets the requirements of this
section and any other requirements established by State law,
shall certify the group as a health plan purchasing alliance.
The State shall make a determination of whether such group
meets the requirements of this section in a timely fashion and
shall oversee the operations of such alliance in order to
ensure continued compliance with the requirements of this
section. Each such alliance shall be registered with the
Secretary.
(2) State refusal to certify.--
(A) In general.--If a State fails to implement a
program for certifying health plan purchasing alliances
in accordance with the standards under this section,
the Secretary shall certify and oversee the operations
of such alliances in such State.
(B) Exception.--The Secretary shall not certify a
health plan purchasing alliance described in this
section if, upon the submission of an application by
the State to the Secretary, the Secretary determines
that under a State law in effect on the date of
enactment of this Act, all small employers or
individuals have a means readily available that
ensures--
(i) that individuals and employees have a
choice of multiple, unaffiliated health plan
issuers;
(ii) that health plan coverage is subject
to State premium rating requirements that are
not based on the factors described in
subsection (e)(3), that such requirements
ensure a fair rating in a manner so that
premiums shall be reasonable relative to rates,
and that such requirements contain a mandatory
minimum loss ratio; and
(iii) that comparative health plan
materials are disseminated consistent with
subsection (d)(1)(D);
and that otherwise meets the objectives of this Act.
(3) Interstate alliances.--For purposes of this section, a
health plan purchasing alliance operating in more than one
State shall be certified by the State in which the alliance is
domiciled. Each plan and alliance shall be qualified and
certified in each State in which it operates. States may enter
into alliance agreements for the purpose of overseeing the
operation of such alliances. For purposes of this subsection,
an alliance shall be considered to be domiciled in the State in
which most of the members of the alliance reside.
(b) Board of Directors.--
(1) In general.--Each health plan purchasing alliance shall
be governed by a Board of Directors that shall be responsible
for ensuring the performance of the duties of the alliance
under this section. The Board shall be composed of a broad
cross-section of representatives of the employers, employees,
and individuals participating in the alliance. Employer groups
participating in a health care purchasing alliance should be
represented on the Board by both employers and employees.
(2) Limitation on compensation.--A health plan purchasing
alliance may not provide compensation to members of the Board
of Directors. The alliance may provide reimbursements to such
members for the reasonable and necessary expenses incurred by
the members in the performance of their duties as members of
the Board.
(c) Membership and Marketing Area.--
(1) Membership.--A health plan purchasing alliance shall
establish limits on the maximum size of an employer, as
determined by its number of employees, that may become a member
of the alliance, and may determine whether to permit
individuals to become members. Upon the establishment of such
membership criteria, the alliance shall, except as provided in
paragraph (2), accept all employers, employees, and individuals
residing within the area served by the alliance who meet such
requirements as members on a first-come, first-served basis, or
on another basis established by the State to ensure equitable
access to the alliance. The purchasing alliance shall not
discriminate or deny membership on the basis of health status,
age, race, sex, occupation, or insurability.
(2) Marketing area.--A State may establish rules regarding
the geographic area that must be served by health plan
purchasing alliances to ensure that alliances do not
discriminate on the basis of the health status or insurability
of the populations that reside in the area served. A State may
not use such rules to limit arbitrarily the number of health
plan purchasing alliances.
(d) Duties and Responsibilities.--
(1) In general.--A health plan purchasing alliance shall--
(A) objectively evaluate potential health plan
issuers and enter into agreements with multiple,
unaffiliated health plan issuers, except that the
requirement of this subparagraph shall not apply in
regions (such as remote or frontier areas) in which
compliance with such requirement is not possible;
(B) enter into agreements with employers and
individuals who become members of the alliance;
(C) participate in any program of risk-adjustment
or reinsurance, or any similar program, that is
established by the State;
(D) prepare and disseminate comparative health plan
materials (including information about cost, quality,
benefits, and other information determined necessary by
the State to permit a comparison of all health plans
offered through the alliance to small employers,
employees, and individuals);
(E) broadly solicit and actively market to all
eligible employers and individuals residing within the
service area;
(F) act as an ombudsman for group health plan or
individual health plan enrollees; and
(G) offer to all employers, employees, and
individuals participating in the health purchasing
alliance an open enrollment period of at least 30 days
per calendar year.
(2) Permissible activities.--A health plan purchasing
alliance may perform such other functions as necessary to
further the purposes of this Act, including--
(A) collecting and distributing premiums and
performing other administrative functions;
(B) collecting and analyzing surveys of enrollee
satisfaction or grievances;
(C) charging membership fee to enrollees (such fees
may not be based on health status) and charging
participation fees to alliance health plan issuers; and
(D) negotiating with health care providers and
health plan issuers.
(e) Limitations on Alliance Activities.--A health plan purchasing
alliance shall not--
(1) perform any activity relating to the licensing of
health plan issuers;
(2) assume financial risk directly or indirectly on behalf
of members of a health plan purchasing alliance relating to any
group health plan or individual health plan;
(3) establish eligibility, enrollment, or premium
contribution requirements for participants or beneficiaries in
all health plans based on health status, medical condition,
claims experience, receipt of health care, medical history,
evidence of insurability, genetic information, or disability;
(4) operate on a for-profit or other basis where the legal
structure of the alliance permits profits to be made and not
returned to the members of the alliance; or
(5) perform any other activities that conflict or are
inconsistent with the performance of its duties under this Act.
(f) Conflict of Interest.--
(1) Prohibition.--No individual, partnership, or
corporation shall serve on the board of a health plan
purchasing alliance, be employed by such an alliance, receive
compensation from such an alliance, or initiate or finance such
an alliance if such individual, partnership, or corporation--
(A) fails to discharge the duties and
responsibilities of such individual, partnership or
corporation in a manner that is solely in the interest
of the alliance and the members of the alliance; or
(B) derives personal financial benefit (other than
in the form of ordinary compensation received) from the
sale of, or has a financial interest in health plans or
related financial entities, services or products sold
by or distributed through that alliance.
(2) Contracts with third parties.--Nothing in paragraph (1)
shall be construed to prohibit the board of directors of a
health plan purchasing alliance, or its officers, at the
initiative and under this direction of the board, from
contracting with third parties to provide administrative,
marketing, consultive, or other services to the alliance.
(g) Limited Preemption of Certain State Laws.--
(1) In general.--With respect to a health plan purchasing
alliance that meets the requirements of this section (including
an alliance under section 3), any State law that sets
restrictions on the organization of groups for the purpose of
purchasing health insurance, or that prohibits groups from
combining for that purpose, is preempted with respect to an
alliance that meets the requirements of this Act.
(2) Health plan issuers.--
(A) Rating.--Except as provided in subparagraph
(B), a health plan issuer offering a group health plan
or individual health plan through a health plan
purchasing alliance that meets the requirements of this
section (including an alliance under section 3) shall comply with all
State rating requirements that would otherwise apply if the health plan
were offered outside of the alliance.
(B) Premium rate exception.--A State law that
imposes premium rate requirements is preempted to the
extent that it would prohibit a health plan issuer from
reducing premium rates under an agreement with a health
plan purchasing alliance that meets the requirements of
this section (including an alliance under section 3) to
reflect savings derived from administrative costs,
marketing costs, profit margins, economies of scale, or
other factors, except that any such reduction in
premium rates may not be based on the health status,
demographic factors, industry type, duration, or other
indicators of health risk of the members of the
alliance.
(C) Benefits.--Except as provided in subparagraph
(D), a health plan issuer offering a health plan
through a health plan purchasing alliance (including an
alliance under section 3) shall comply with all State
mandated benefit laws that require the offering of any
services, category of care, or services of any class or
type of provider.
(D) Alternative benefit plan exception.--In those
States that have enacted laws authorizing the issuance
of alternative benefit plans to small employers, health
plan issuers may offer such alternative benefit plans
through a health plan purchasing alliance that meets
the requirements of this section (including an alliance
under section 3).
(3) Rule of construction.--Nothing in this Act shall be
construed to preempt a State law if such law prohibits the
variance of premium rates of employers, employees, or
individuals participating as members in a health purchasing
alliance in excess of the amount of such variations that would
be permitted under such State laws among individuals,
employers, and employees that are not participating in the
health purchasing alliance.
SEC. 6. RULES OF CONSTRUCTION.
Nothing in this Act shall be construed to--
(1) require that a State organize, operate, or otherwise
create health plan purchasing alliances;
(2) otherwise require the establishment of health plan
purchasing alliances;
(3) require individuals, plan sponsors, or employers to
purchase health insurance plans through a health plan
purchasing alliance;
(4) preempt a State from requiring licensure for
individuals who are involved in directly supplying advice or
selling health plans on behalf of a purchasing alliance;
(5) require that a health plan purchasing alliance be the
only type of purchasing arrangement permitted to operate in a
State;
(6) confer authority upon a State that the State would not
otherwise have to regulate health plan issuers or employee
health benefits plans;
(7) confer authority upon a State (or the Federal
Government) that the State (or Federal Government) would not
otherwise have to regulate group purchasing arrangements,
coalitions, association plans, or other similar entities that
do not desire to become a health plan purchasing alliance in
accordance with this section; or
(8) except as specifically provided otherwise in this
subsection, prevent the application of State laws and
regulations otherwise applicable to health plan issuers
offering group health plans or individual health plans through
a health plan purchasing alliance.
SEC. 7. ENFORCEMENT.
For purposes of enforcement only, the requirements of parts 4 and 5
of subtitle B of title I of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1101 et seq.) shall apply to a health plan
purchasing alliance certified by the Secretary under section 5(a)(2) of
this Act as if such alliance were an employee welfare benefit plan.
<all>
Introduced in Senate
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
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