Chapter 1731: SMALL EMPLOYER HEALTH CARE ALLIANCES

1731.01 Small employer health care alliance definitions.

As used in this chapter:

(A) "Alliance" or "small employer health care alliance" means an existing or newly created organization that has been granted a certificate of authority by the superintendent of insurance under section 1731.021 of the Revised Code and that is either of the following:

(1) A chamber of commerce, trade association, professional organization, or any other organization that has all of the following characteristics:

(a) Is a nonprofit corporation or association;

(b) Has members that include or are exclusively small employers;

(c) Sponsors or is part of a program to assist such small employer members to obtain coverage for their employees under one or more health benefit plans;

(d) Except as provided in division (A)(1)(e) of this section, is not directly or indirectly controlled, through voting membership, representation on its governing board, or otherwise, by any insurance company, person, firm, or corporation that sells insurance, any provider, or by persons who are officers, trustees, or directors of such enterprises, or by any combination of such enterprises or persons.

(e) Division (A)(1)(d) of this section does not apply to an organization that is comprised of members who are either insurance agents or providers, that is controlled by the organization's members or by the organization itself, and that elects to offer health insurance exclusively to any or all of the following:

(i) Employees and retirees of the organization;

(ii) Insurance agents and providers that are members of the organization;

(iii) Employees and retirees of the agents or providers specified in division (A)(1)(e)(ii) of this section;

(iv) Families and dependents of the employees, providers, agents, and retirees specified in divisions (A)(1)(e)(i), (A)(1)(e)(ii), and (A)(1)(e)(iii) of this section.

(2) A nonprofit corporation controlled by one or more organizations described in division (A)(1) of this section.

(B) "Alliance program" or "alliance health care program" means a program sponsored by a small employer health care alliance that assists small employer members of such small employer health care alliance or any other small employer health care alliance to obtain coverage for their employees under one or more health benefit plans, and that includes at least one agreement between a small employer health care alliance and an insurer that contains the insurer's agreement to offer and sell one or more health benefit plans to such small employers and contains all of the other features required under section 1731.04 of the Revised Code.

(C) "Eligible employees, retirees, their dependents, and members of their families," as used together or separately, means the active employees of a small employer, or retired former employees of a small employer or predecessor firm or organization, their dependents or members of their families, who are eligible for coverage under the terms of the applicable alliance program.

(D) "Enrolled small employer" or "enrolled employer" means a small employer that has obtained coverage for its eligible employees from an insurer under an alliance program.

(E) "Health benefit plan" means any hospital or medical expense policy of insurance or a health care plan provided by an insurer, including a health insuring corporation plan, provided by or through an insurer, or any combination thereof. "Health benefit plan" does not include any of the following:

(1) A policy covering only accident, credit, dental, disability income, long-term care, hospital indemnity, medicare supplement, specified disease, or vision care, except where any of the foregoing is offered as an addition, indorsement, or rider to a health benefit plan;

(2) Coverage issued as a supplement to liability insurance, insurance arising out of a workers' compensation or similar law, automobile medical-payment insurance, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance;

(3) Coverage issued by a health insuring corporation authorized to offer supplemental health care services only.

(F) "Insurer" means an insurance company authorized to do the business of sickness and accident insurance in this state or, for the purposes of this chapter, a health insuring corporation authorized to issue health care plans in this state.

(G) "Participants" or "beneficiaries" means those eligible employees, retirees, their dependents, and members of their families who are covered by health benefit plans provided by an insurer to enrolled small employers under an alliance program.

(H) "Provider" means a hospital, urgent care facility, nursing home, physician, podiatrist, dentist, pharmacist, chiropractor, certified registered nurse anesthetist, dietitian, or other health care provider licensed by this state, or group of such health care providers.

(I) "Qualified alliance program" means an alliance program under which health care benefits are provided to one thousand or more participants.

(J) "Small employer," regardless of its definition in any other chapter of the Revised Code, in this chapter means an employer that employs no more than five hundred full-time employees, at least a majority of whom are employed at locations within this state.

(1) For this purpose:

(a) Each entity that is controlled by, controls, or is under common control with, one or more other entities shall, together with such other entities, be considered to be a single employer.

(b) "Full-time employee" means a person who normally works at least twenty-five hours per week and at least forty weeks per year for the employer.

(c) An employer will be treated as having five hundred or fewer full-time employees on any day if, during the prior calendar year or any twelve consecutive months during the twenty-four full months immediately preceding that day, the mean number of full-time employees employed by the employer does not exceed five hundred .

(2) An employer that qualifies as a small employer for purposes of becoming an enrolled small employer continues to be treated as a small employer for purposes of this chapter until such time as it fails to meet the conditions described in division (J)(1) of this section for any period of thirty-six consecutive months after first becoming an enrolled small employer, unless earlier disqualified under the terms of the alliance program.

Cite as R.C. § 1731.01

Effective Date: 10-29-2003; 03-23-2007

1731.02 Encouraging alliances of small employers to obtain health benefit plans.

(A) It is determined and declared that the provision of health care to employees and retirees in this state and to their dependents and families is of paramount public importance to the economic and general welfare of the people of the state, that rising costs of health care have made it difficult for small employers to provide for health care benefits, that the creation of alliances of small employers to bargain with insurers better assures the obtaining of adequate coverage and benefits under health benefit plans at affordable costs and that the larger the number of employees and other covered persons under such alliance, the more certain is the achievement of those objectives, and that it is the public policy and a public purpose of the state to encourage alliances of small employers to obtain health benefit plans, and to permit flexibility in the coverage and benefits thereunder and encourage substantial size in such alliances, in order to enhance strength in bargaining and economies of scale and thereby achieve broader coverage and benefit options at reduced costs.

(B) The provisions and authority under and benefits provided by this chapter shall be liberally construed and applied toward the achievement of the public objectives set forth in division (A) of this section.

(C) The provisions and authority provided by this chapter are in addition to and not in derogation of other authority under law and do not reflect adversely on any existing or future health benefit organization, program, or arrangement for the benefit of more than one employer that is established under other authority. Any such organization, program, or arrangement that fits the definitions of "small employer health care alliance" and "alliance program," respectively, in section 1731.01 of the Revised Code and otherwise conforms to the applicable conditions and provisions of this chapter is entitled to all applicable benefits under this chapter.

Cite as R.C. § 1731.02

Effective Date: 01-14-1993

1731.021 Obtaining certificate of authority from superintendent of insurance.

(A) No organization, on or after July 1, 1996, shall sponsor an alliance health care program without first obtaining a certificate of authority from the superintendent of insurance.

(B) Application for a certificate of authority to sponsor an alliance program shall be made by an organization in writing and in the form prescribed by the superintendent.

(C) The superintendent shall, within ninety days after receipt of an application filed pursuant to division (B) of this section, do either of the following:

(1) Grant a certificate of authority to the applicant if the superintendent determines that the applicant is in compliance with this chapter and any rules adopted thereunder.

(2) Deny the application for a certificate of authority if the superintendent determines that the applicant is not in compliance with this chapter or any rules adopted thereunder. A notice of the denial shall be mailed to the applicant within thirty days after the superintendent makes the determination. The notice shall specify the reasons for the denial and shall state that the applicant may request a hearing within thirty days after the date the notice was mailed.

(D) A certificate of authority granted under this section shall remain in effect through the thirtieth day of June following the date it was granted.

(E) The superintendent shall, at least sixty days prior to the expiration of a certificate of authority, provide notice to the organization of the need for filing a renewal application.

(F) A certificate of authority may be renewed for the ensuing twelve-month period commencing on the first day of July by an organization's filing an application in accordance with division (B) of this section. The superintendent shall renew the certificate of authority if the superintendent determines that the applicant meets the standards set forth in division (C) of this section for an initial certificate.

(G) No insurer or organization shall use the term "alliance," "small employer health care alliance," "alliance program," "alliance health care program," or any other similar term with respect to a health benefit program unless the organization that sponsors the program has been granted a certificate of authority under this section.

Cite as R.C. § 1731.021

Effective Date: 11-24-1995

1731.03 Small employer health care alliance powers.

(A) A small employer health care alliance may do any of the following:

(1) Negotiate and enter into agreements with one or more insurers for the insurers to offer and provide one or more health benefit plans to small employers for their employees and retirees, and the dependents and members of the families of such employees and retirees, which coverage may be made available to enrolled small employers without regard to industrial, rating, or other classifications among the enrolled small employers under an alliance program, except as otherwise provided under the alliance program, and for the alliance to perform, or contract with others for the performance of, functions under or with respect to the alliance program;

(2) Contract with another alliance for the inclusion of the small employer members of one in the alliance program of the other;

(3) Provide or cause to be provided to small employers information concerning the availability, coverage, benefits, premiums, and other information regarding an alliance program and promote the alliance program;

(4) Provide, or contract with others to provide, enrollment, record keeping, information, premium billing, collection and transmittal, and other services under an alliance program;

(5) Receive reports and information from the insurer and negotiate and enter into agreements with respect to inspection and audit of the books and records of the insurer;

(6) Provide services to and on behalf of an alliance program sponsored by another alliance, including entering into an agreement described in division (B) of section 1731.01 of the Revised Code on behalf of the other alliance;

(7) If it is a nonprofit corporation created under Chapter 1702. of the Revised Code, exercise all powers and authority of such corporations under the laws of the state, or, if otherwise constituted, exercise such powers and authority as apply to it under the applicable laws, and its articles, regulations, constitution, bylaws, or other relevant governing instruments.

(B) A small employer health care alliance is not and shall not be regarded for any purpose of law as an insurer, an offeror or seller of any insurance, a partner of or joint venturer with any insurer, an agent of, or solicitor for an agent of, or representative of, an insurer or an offeror or seller of any insurance, an adjuster of claims, or a third-party administrator, and will not be liable under or by reason of any insurance coverage or other health benefit plan provided or not provided by any insurer or by reason of any conditions or restrictions on eligibility or benefits under an alliance program or any insurance or other health benefit plan provided under an alliance program or by reason of the application of those conditions or restrictions.

(C) The promotion of an alliance program by an alliance or by an insurer is not and shall not be regarded for any purpose of law as the offer, solicitation, or sale of insurance.

(D)

(1) No alliance shall adopt, impose, or enforce medical underwriting rules or underwriting rules requiring a small employer to have more than a minimum number of employees for the purpose of determining whether an alliance member is eligible to purchase a policy, contract, or plan of health insurance or health benefits from any insurer in connection with the alliance health care program.

(2) No alliance shall reject any applicant for membership in the alliance based on the health status of the applicant's employees or their dependents or because the small employer does not have more than a minimum number of employees.

(3) A violation of division (D)(1) or (2) of this section is deemed to be an unfair and deceptive act or practice in the business of insurance under sections 3901.19 to 3901.26 of the Revised Code.

(4) Nothing in division (D)(1) or (2) of this section shall be construed as inhibiting or preventing an alliance from adopting, imposing, and enforcing rules, conditions, limitations, or restrictions that are based on factors other than the health status of employees or their dependents or the size of the small employer for the purpose of determining whether a small employer is eligible to become a member of the alliance. Division (D)(1) of this section does not apply to an insurer that sells health coverage to an alliance member under an alliance health care program.

(E) Except as otherwise specified in section 1731.09 of the Revised Code, health benefit plans offered and sold to alliance members that are small employers as defined in section 3924.01 of the Revised Code are subject to sections 3924.01 to 3924.14 of the Revised Code.

(F) Any person who represents an alliance in bargaining or negotiating a health benefit plan with an insurer shall disclose to the governing board of the alliance any direct or indirect financial relationship the person has or had during the past two years with the insurer.

Cite as R.C. § 1731.03

Effective Date: 10-29-2003; 03-23-2007

1731.04 Provisions of agreement between alliance and insurer.

(A) An agreement between an alliance and an insurer referred to in division (B) of section 1731.01 of the Revised Code shall contain at least the following:

(1) A provision requiring the insurer to offer and sell to small employers served or to be served by an alliance one or more health benefit plan options for coverage of their eligible employees and the eligible dependents and members of the families of the eligible employees and, if applicable, such members' eligible retirees and the eligible dependents and members of the families of the retirees, subject to such conditions and restrictions as may be set forth or incorporated into the agreement;

(2) A brief description of each type of health benefit plan option that is to be so offered and the conditions for the modification, continuation, and termination of the coverage and benefits thereunder;

(3) A statement of the eligibility requirements that an employee or retiree must meet in order for the employee or retiree to be eligible to obtain and retain coverage under any health benefit plan option so offered and, if one of such requirements is that an employee must regularly work for a minimum number of hours per week, a statement of such minimum number of hours, which minimum shall not exceed twenty-five hours per week;

(4) A description of any pre-existing condition and waiting period rules;

(5) A statement of the premium rates or other charges that apply to each health benefit plan option or a formula or method of determining the rates or charges;

(6) A provision prescribing the minimum employer contribution toward premiums or other charges required in order to permit a small employer to obtain coverage under a health benefit plan option offered under an alliance program;

(7) A provision requiring that each health benefit plan under the alliance program must provide for the continuation of coverage of participants of an enrolled small employer so long as the small employer determines that such person is a qualified beneficiary entitled to such coverage pursuant to Part 6 of Title I of the "Federal Employee Retirement Income Security Act of 1974," 88 Stat. 832, 29 U.S.C.A. 1001 , and the laws of this state, and regulations or rulings interpreting such provisions. Such coverage provided by the insurer under the plan to participants shall comply with the "Federal Employee Retirement Income Security Act of 1974" and the relevant statutes, regulations, and rulings interpreting that act, including provisions regarding types of coverage to be provided, apportionments of limitations on coverage, apportionments of deductibles, and the rights of qualified beneficiaries to elect coverage options relating to types of coverage and otherwise.

(B) An agreement between an alliance and an insurer referred to in division (B) of section 1731.01 of the Revised Code may contain provisions relating to, but not limited to, any of the following:

(1) The application and enrollment process for a small employer and related provisions pertaining to historical experience, health statements, and underwriting standards;

(2) The minimum number of those employees eligible to be participants that are required to participate in order to permit a small employer to obtain coverage under a health benefit plan option offered under the alliance program, which may vary with the number of employees or those eligible to be participants in respect of the small employer;

(3) A procedure for allowing an enrolled small employer to change from one plan option to another under the alliance program, subject to qualifying by size or otherwise under the alliance program;

(4) The application of any risk-related pooling or grouping programs and related premiums, conditions, reviews, and alternatives offered by the insurer;

(5) The availability of a medicare supplement coverage option for eligible participants who are covered by Parts A and B of medicare, Title XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 301 ;

(6) Relevant experience periods, enrollment periods, and contract periods;

(7) Effective dates for coverage of eligible participants;

(8) Conditions under which denial or withdrawal of coverage of participants or small employers and their employees may occur by reason of falsification or misrepresentation of material facts or criminal conduct toward the insurer, small employer, or alliance under the program;

(9) Premium rate structures, which may be uniform or make provision for age-specific rates, differentials based on number of participants of an enrolled small employer, products and plan options selected, and other factors, rate adjustments based on consumer price indices, utilization, or other relevant factors, notification of rate adjustments, and arbitration;

(10) Any responsibilities of the alliance for billing, collection, and transmittal of premiums;

(11) Inclusion under the alliance program of small employers that are members of other organizations described in division (A)(1) of section 1731.01 of the Revised Code that contract with the alliance for this purpose, and conditions pertaining to those small employer members and to their employees and retirees, and dependents and family members of those employees or retirees, as applicable under the alliance program;

(12) The agreement of the insurer to offer and sell one or more health benefit plans to small employer members of another small employer health care alliance that contracts with the alliance for this purpose;

(13) Use of the health benefit plan options of the insurer in the alliance program and use of the names of the alliance and the insurer;

(14) Indemnification from claims and liability by reason of acts or omissions of others;

(15) Ownership, use, availability, and maintenance of confidentiality of data and records relating to the alliance program;

(16) Utilization reports to be provided to the alliance by the insurer;

(17) Such other provisions as may be agreed upon by the alliance and the insurer to better provide for the articulation, promotion, financing, and operation of the alliance program or a health benefit plan under the program in furtherance of the public purposes stated in section 1731.02 of the Revised Code.

(C) Neither an alliance program nor an agreement between an alliance and an insurer is itself a policy or contract of insurance, or a certificate, indorsement, rider, or application forming any part of a policy, contract, or certificate of insurance. Chapters 3905., 3933., and 3959. of the Revised Code do not apply to an alliance program or to an agreement between an alliance and an insurer thereunder, as such, or to the functions of the alliance under an alliance program.

Cite as R.C. § 1731.04

Effective Date: 01-14-1993; 03-23-2007

1731.05 Insurers submitting proposals to alliance.

If a qualified alliance, or an alliance that, based upon evidence of interest satisfactory to the superintendent of insurance, will be a qualified alliance within a reasonable time, submits a request for a proposal on a health benefit plan to at least three insurers and does not receive at least one reasonably responsive proposal within ninety days from the date the last such request is submitted, the superintendent, at the request of such alliance, may require that insurers offer proposals to such alliance for health benefit plans for the small employers within such alliance. Such proposals shall include such coverage and benefits for such premiums, as shall take into account the functions provided by the alliance and the economies of scale, and have other terms and provisions as are approved by the superintendent, consistent with the purposes and standards set forth in section 1731.02 of the Revised Code. In making the determination as to which insurers shall be asked to submit proposals under this section, the superintendent shall apply the standards set forth in division (G)(4)(a) of section 3924.11 of the Revised Code. Any insurer that does not submit a proposal when required to do so by the superintendent hereunder, shall be deemed to be in violation of section 3901.20 of the Revised Code and shall be subject to all of the provisions of section 3901.22 of the Revised Code, including division (D)(1) of section 3901.22 of the Revised Code as if it provided that the superintendent may suspend or revoke an insurer's license to engage in the business of insurance.

Nothing in this section shall be construed as requiring an insurer to enter into an agreement with an alliance under contractual terms that are not acceptable to the insurer or to authorize the superintendent to require an insurer to enter into an agreement with an alliance under contractual terms that are not acceptable to the insurer.

This section applies beginning eighteen months after its effective date.

Cite as R.C. § 1731.05

Effective Date: 01-14-1993

1731.06 Applying other laws.

(A) No health benefit plan offered or provided by an insurer to a small employer under a qualified alliance program is subject to any law that does any of the following:

(1) Inhibits the insurer from selectively contracting with providers or groups of providers with respect to health care service or benefits;

(2) Imposes any restrictions on the ability of the insurer to negotiate with providers regarding the level or method of reimbursing for care or services;

(3) Requires the insurer either to include a specific provider or class of providers, or to exclude any class of providers that are generally authorized by law to provide such care, in connection with health care services or benefits under such health benefit plan;

(4) Limits the financial incentives that a health benefit plan may require a beneficiary to pay when a nonplan provider is used on a nonemergency basis;

(5) Prohibits utilization review of any or all treatments and conditions;

(6) Requires the use of specified standards of health care practice in such reviews or requires the disclosure of the specific criteria used in such reviews;

(7) Requires payments to providers for the expenses of responding to utilization review requests;

(8) Imposes liability for delays in performing such review.

(B) Notwithstanding division (A) of this section, every health benefit plan offered or provided by an insurer, other than a health insuring corporation, to a small employer under a qualified alliance program is subject to sections 3923.23 , 3923.231 , 3923.232 , 3923.233 , and 3923.234 of the Revised Code and any other provision of the Revised Code that requires the reimbursement, utilization, or consideration of a specific category of licensed or certified health care practitioner.

Cite as R.C. § 1731.06

Effective Date: 06-04-1997

1731.07 Premiums exempt from taxation.

The premiums or other charges received by an insurer from or on behalf of an enrolled small employer and eligible employees or retirees under a health benefit plan provided by the insurer under a qualified alliance program shall not be considered "premiums received" or "premium rate payments received" for purposes of division (A) of section 5725.18 and division (A) of section 5729.03 of the Revised Code, and are exempt from any other tax or excise in this state.

Cite as R.C. § 1731.07

Effective Date: 06-30-1997

1731.08 Premiums fully deductible.

The premiums or other charges paid by an enrolled small employer to an insurer for health benefit plan coverage under a qualified alliance program are fully deductible in determining taxes payable by such small employer in this state on or measured by net income. Without limiting the foregoing:

(A) With respect to such a small employer that is subject to the income tax imposed by section 5747.02 of the Revised Code, such premiums are to be deducted in determining adjusted gross income under division (A) of section 5747.01 of the Revised Code to the extent such premiums are not allowable as a deduction in determining adjusted gross income for federal income tax purposes.

(B) With respect to such a small employer that is subject to the corporation franchise tax imposed by section 5733.06 of the Revised Code, such premiums are to be deducted in determining the small employer's net income under division (B) of section 5733.05 of the Revised Code to the extent such premiums are not allowable as a deduction in determining taxable income for federal income tax purposes.

(C) With respect to such a small employer that is subject to any income tax levied by a political subdivision or taxing district in this state, such premiums are to be deducted from taxable income or earnings to the extent not otherwise deductible in determining the amount of the tax.

Cite as R.C. § 1731.08

Effective Date: 01-14-1993

1731.09 Application of chapter 3924 - alliance business class.

(A) Nothing contained in this chapter is intended to or shall inhibit or prevent the application of the provisions of Chapter 3924. of the Revised Code to any health benefit plan or insurer to which they would otherwise apply in the absence of this chapter, except as otherwise specified in divisions (B) and (C) of this section or unless such application conflicts with the provisions of section 1731.05 of the Revised Code.

(B) An insurer may establish one or more separate classes of business solely comprised of one or more alliances. All of the following shall apply to health plans covering small employers in each class of business established pursuant to this division:

(1) The premium rate limitations set forth in section 3924.04 of the Revised Code apply to each class of business separate and apart from the insurer's other business;

(2) For purposes of applying sections 3924.01 to 3924.14 of the Revised Code to a class of business, the base premium rate and midpoint rate shall be determined with respect to each class of business separate and apart from the insurer's other business.

(3) The midpoint rate for a class of business shall not exceed the midpoint rate for any other class of business or the insurer's non-alliance business by more than fifteen per cent.

(4) The insurer annually shall file with the superintendent of insurance an actuarial certification consistent with section 3924.06 of the Revised Code for each class of business demonstrating that the underwriting and rating methods of the insurer do all of the following:

(a) Comply with accepted actuarial practices;

(b) Are uniformly applied to health benefit plans covering small employers within the class of business;

(c) Comply with the applicable provisions of this section and sections 3924.01 to 3924.14 of the Revised Code.

(5) An insurer shall apply sections 3924.01 to 3924.14 of the Revised Code to the insurer's non-alliance business and coverage sold through alliances not established as a separate class of business.

(6) An insurer shall file with the superintendent a notification identifying any alliance or alliances to be treated as a separate class of business at least sixty days prior to the date the rates for that class of business take effect.

(7) Any application for a certificate of authority filed pursuant to section 1731.021 of the Revised Code shall include a disclosure as to whether the alliance will be underwritten or rated as part of a separate class of business.

(C) As used in this section:

(1) "Class of business" means a group of small employers, as defined in section 3924.01 of the Revised Code, that are enrolled employers in one or more alliances.

(2) "Actuarial certification," "base premium rate," and "midpoint rate" have the same meanings as in section 3924.01 of the Revised Code.

Cite as R.C. § 1731.09

Effective Date: 01-14-1993; 03-23-2007