There is hereby created the Alabama Health Insurance Plan which shall, as a high risk pool in the State of Alabama, provide health insurance coverage to eligible individuals as an alternative to federal oversight required in the Health Insurance Portability and Accountability Act of 1996 (H.R. 3103), also known as the Kassebaum-Kennedy Act.
The plan shall have the general powers and authority granted under the laws of this state to health insurers and in addition thereto, the specific authority to do all of the following:
(1) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this article, including the authority, with the approval of the commissioner, to enter into contracts with similar plans of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions.
(2) Sue or be sued, including taking any legal actions necessary or proper to recover or collect assessments due the plan.
(3) Take legal action as necessary to do any of the following:
a. To avoid the payment of improper claims against the plan or the coverage provided by or through the plan.
b. To recover any amounts erroneously or improperly paid by the plan.
c. To recover any amounts paid by the plan as a result of mistake of fact or law.
d. To recover other amounts due the plan.
(4) Establish, and modify from time to time as appropriate, rates, rate schedules, rate adjustments, expense allowances, claim reserve formulas, and any other actuarial function appropriate to the operation of the plan. Rates and rate schedules may be adjusted for appropriate factors such as age, sex, and geographic variation in claim cost and shall take into consideration appropriate factors in accordance with established actuarial and underwriting practices.
(5) Issue policies of insurance in accordance with the requirements of this article and regulations issued pursuant thereto.
(6) 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 pool.
(7) Borrow money to effect the purposes of the plan. Any notes or other evidence of indebtedness of the plan not in default shall be legal investments for insurers and may be carried as admitted assets.
(8) Establish rules, conditions, and procedures for participating insurers desiring to issue plan coverages in their own name.
(9) Employ and fix the compensation of employees.
(10) Prepare and distribute certificate of eligibility forms and enrollment instruction forms to the general public.
(11) Provide for reinsurance of risks incurred by the plan.
(12) Issue additional types of health insurance policies to provide optional coverages.
(13) Provide for and employ cost containment measures and requirements including, but not limited to, preadmission screening, second surgical opinion, concurrent utilization review, and individual case management for the purpose of making the benefit plan more cost effective.
(14) Design, utilize, 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.
(15) Adopt bylaws, policies, and procedures as may be necessary or convenient for the implementation of this article and the operation of the plan.
There is hereby created the Alabama Small Employer Allocation Program which shall promote the availability of health insurance coverage to small employers regardless of their health status or claims experience, to prevent abusive rating practices, to prevent segmentation of the health insurance market based upon health risk, to spread health insurance risk more broadly, to require disclosure of rating practices to purchasers, to establish rules regarding renewability of coverage, to limit use of preexisting conditions exclusions, and to improve the overall fairness and efficiency of the small group health insurance market.
(a) The Commissioner of Insurance shall, by regulation, establish the conditions, restrictions, requirements, and plan of operation of the Alabama Small Employer Allocation Program consistent with the requirements of the Health Insurance Portability and Accountability Act of 1996 and any and all federal regulations adopted pursuant thereto, which plan benefits shall be inclusive of the provisions of Sections 27-1-10 and 27-19-39. The program shall be patterned after the Small Employer Health Insurance Availability models developed by the National Association of Insurance Commissioners.
(b) All insurers that offer health benefit plans to small employers in this state on and after August 1, 1997, shall be required to meet the requirements of the program as a condition of authority to transact business in this state.
(c) For the purposes of this article, a 'small employer' means any person, firm, corporation, partnership, association, political subdivision, or self-employed individual that is actively engaged in business that, on at least 50 percent of its working days during the preceding calendar quarter, employed no less than two and no more than 50 eligible employees, with a normal work week of 30 or more hours, the majority of whom were employed within this state, and is not formed primarily for purposes of buying health insurance and in which a bona fide employer-employee relationship exists. 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 taxation by this state, shall be considered one employer.
(a) The commissioner shall, by regulation, establish additional powers and duties of the plan and may adopt such rules as are necessary and proper to implement this article. For the purpose of this section, the term 'insurer' means any entity covered by the Health Insurance Portability Act, including, but not limited to, as the terms are defined in the Health Insurance Portability Act, a health insurance issuer, a health maintenance organization and, notwithstanding Section 10-4-115, any health benefit plan. In the case of a self-funded health benefit plan operating through a third party administrator, the third party administrator shall be the insurer for the purpose of this section. The commissioner may, by regulation, define health insurance premiums consistent with the purpose of this section.
(b) The regulations shall set forth coverage eligibility criteria consistent with the requirements of Health Insurance Portability and Accountability Act of 1996 and any and all federal regulations adopted pursuant thereto, establish the criteria for the evaluation of any plan administrator selected through the competitive bid process to administer the plan, and establish the guidelines for the funding of the plan, including the establishment of premium rate schedules and the authority to assess participating insurers based upon their health insurance premiums written in this state.
(c) Each participating insurer may offset any applicable premium taxes otherwise payable in respect of health insurance premiums paid to them by the amount of any assessments in respect of premiums paid in the same calendar year as the assessment. If the participating insurer is not subject to premium taxes on health insurance premiums it receives, the assessment made under this subsection may be reduced by the premium taxes which would otherwise have been payable had it been so subject.
The commissioner shall consult with the State Board of Health on all aspects related to the provision of medical services under the Alabama Health Insurance Plan and the Alabama Small Employer Allocation Program established under this chapter. All regulations, bylaws, policies, guidelines or directives issued by the commissioner applicable to the Alabama Health Insurance Plan and the Alabama Small Employer Allocation Program pertaining to the delivery of medical services, including, but not limited to, those items specified in subdivisions (8), (13), (14), (15) of Section 27-52-2 and Section 27-52-4, shall be promulgated with the concurrence of the State Board of Health.
The plan shall offer health care coverage consistent with major medical expense coverage to every eligible person who is not eligible for Medicare. The coverage to be issued by the plan, its schedule of benefits, exclusions, and other limitations shall be established by the plan, which plan benefits shall be inclusive of the provisions of Sections 27-1-10 and 27-19-39, and subject to the approval of the commissioner.
Neither the establishment of rates, forms, or procedures nor any other joint or collective action required by this article shall be the basis of any legal action, criminal or civil liability, or penalty against the plan.
The plan established pursuant to this article shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions. If the Commissioner of Insurance enters into a contract with one or more third parties to provide any or all of the services in the operation of the plan, this exemption shall not extend to said third parties except as to the tax on the premiums collected through the plan and any fees required for the filing of forms, rates and other reports with the Commissioner of Insurance as may be specifically related to the plan.