SB 341-1_ Filed 04/26/2003, 11:27
Adopted 4/26/2003

CONFERENCE COMMITTEE REPORT

DIGEST FOR ESB 341



Citations Affected: IC 27-4-1-4 ; IC 27-8.

Synopsis: Health insurance waivers. Conference committee report for ESB 341. Provides that: (1) an individual policy of accident and sickness insurance; or (2) a group policy of accident and sickness insurance under which a certificate of coverage is issued through a two year demonstration project by an insurer to an individual member of a non-employer based association or discretionary group; that is issued after June 30, 2003, and before July 1, 2005, may contain a waiver of coverage for a specified condition under certain circumstances. Specifies that an offer of coverage under a policy that includes a waiver does not preclude eligibility for a comprehensive health insurance association policy. Requires reporting by insurers to the department of insurance and requires the department of insurance to perform interviews of certificate holders, compile information, and report to the legislative council and general assembly. (This conference committee report: Removes a provision requiring the law of another state in which an association group or discretionary group policy that covers an Indiana resident is issued to have a law containing certain Indiana provisions. Requires the commissioner of the department of insurance to: (1) establish a two year demonstration project through which three accident and sickness insurers may each issue 1,500 certificates of coverage containing a waiver to a member of an association or a discretionary group; and (2) perform interviews of certificate holders, compile information, and report to the legislative council.)

Effective: Upon passage; July 1, 2003.



Text Box

Adopted Rejected


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CONFERENCE COMMITTEE REPORT

MR. SPEAKER:
    Your Conference Committee appointed to confer with a like committee from the Senate upon Engrossed House Amendments to Engrossed Senate Bill No. 341 respectfully reports that said two committees have conferred and agreed as follows to wit:

    that the Senate recede from its dissent from all House amendments and that the Senate now concur in all House amendments to the bill and that the bill be further amended as follows:

    Delete everything after the enacting clause and insert the following:

SOURCE: IC 27-4-1-4; (03)CC034102.1. -->     SECTION 1. IC 27-4-1-4 , AS AMENDED BY P.L.130-2002, SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 4. The following are hereby defined as unfair methods of competition and unfair and deceptive acts and practices in the business of insurance:
        (1) Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, or statement:
            (A) misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon;
            (B) making any false or misleading statement as to the dividends or share of surplus previously paid on similar policies;
            (C) making any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates;
            (D) using any name or title of any policy or class of policies misrepresenting the true nature thereof; or
            (E) making any misrepresentation to any policyholder insured in any company for the purpose of inducing or tending to induce

such policyholder to lapse, forfeit, or surrender his insurance.
        (2) Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to any person in the conduct of his insurance business, which is untrue, deceptive, or misleading.
        (3) Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of any oral or written statement or any pamphlet, circular, article, or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance.
        (4) Entering into any agreement to commit, or individually or by a concerted action committing any act of boycott, coercion, or intimidation resulting or tending to result in unreasonable restraint of, or a monopoly in, the business of insurance.
        (5) Filing with any supervisory or other public official, or making, publishing, disseminating, circulating, or delivering to any person, or placing before the public, or causing directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of financial condition of an insurer with intent to deceive. Making any false entry in any book, report, or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to which such insurer is required by law to report, or which has authority by law to examine into its condition or into any of its affairs, or, with like intent, willfully omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report, or statement of such insurer.
        (6) Issuing or delivering or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance.
        (7) Making or permitting any of the following:
            (A) Unfair discrimination between individuals of the same class and equal expectation of life in the rates or assessments charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract; however, in determining the class, consideration may be given to the nature of the risk, plan of insurance, the actual or expected expense of conducting the business, or any other relevant factor.


            (B) Unfair discrimination between individuals of the same class involving essentially the same hazards in the amount of premium, policy fees, assessments, or rates charged or made for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever; however, in determining the class, consideration may be given to the nature of the risk, the plan of insurance, the actual or expected expense of conducting the business, or any other relevant factor.
            (C) Excessive or inadequate charges for premiums, policy fees, assessments, or rates, or making or permitting any unfair discrimination between persons of the same class involving essentially the same hazards, in the amount of premiums, policy fees, assessments, or rates charged or made for:
                (i) policies or contracts of reinsurance or joint reinsurance, or abstract and title insurance;
                (ii) policies or contracts of insurance against loss or damage to aircraft, or against liability arising out of the ownership, maintenance, or use of any aircraft, or of vessels or craft, their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured under marine, as distinguished from inland marine, insurance; or
                (iii) policies or contracts of any other kind or kinds of insurance whatsoever.
        However, nothing contained in clause (C) shall be construed to apply to any of the kinds of insurance referred to in clauses (A) and (B) nor to reinsurance in relation to such kinds of insurance. Nothing in clause (A), (B), or (C) shall be construed as making or permitting any excessive, inadequate, or unfairly discriminatory charge or rate or any charge or rate determined by the department or commissioner to meet the requirements of any other insurance rate regulatory law of this state.
        (8) Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract or policy of insurance of any kind or kinds whatsoever, including but not in limitation, life annuities, or agreement as to such contract or policy other than as plainly expressed in such contract or policy issued thereon, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance, or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends, savings, or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract or policy; or giving, or selling, or purchasing or offering to give, sell, or purchase as inducement to such insurance or annuity or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, limited liability company, or partnership, or any dividends, savings, or profits accrued thereon, or anything of value whatsoever not specified in the contract. Nothing in this subdivision and subdivision (7) shall be construed as including within the definition of discrimination or

rebates any of the following practices:
            (A) Paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, so long as any such bonuses or abatement of premiums are fair and equitable to policyholders and for the best interests of the company and its policyholders.
            (B) In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense.
            (C) Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first year or of any subsequent year of insurance thereunder, which may be made retroactive only for such policy year.
            (D) Paying by an insurer or agent thereof duly licensed as such under the laws of this state of money, commission, or brokerage, or giving or allowing by an insurer or such licensed agent thereof anything of value, for or on account of the solicitation or negotiation of policies or other contracts of any kind or kinds, to a broker, agent, or solicitor duly licensed under the laws of this state, but such broker, agent, or solicitor receiving such consideration shall not pay, give, or allow credit for such consideration as received in whole or in part, directly or indirectly, to the insured by way of rebate.
        (9) Requiring, as a condition precedent to loaning money upon the security of a mortgage upon real property, that the owner of the property to whom the money is to be loaned negotiate any policy of insurance covering such real property through a particular insurance agent or broker or brokers. However, this subdivision shall not prevent the exercise by any lender of its or his right to approve or disapprove of the insurance company selected by the borrower to underwrite the insurance.
        (10) Entering into any contract, combination in the form of a trust or otherwise, or conspiracy in restraint of commerce in the business of insurance.
        (11) Monopolizing or attempting to monopolize or combining or conspiring with any other person or persons to monopolize any part of commerce in the business of insurance. However, participation as a member, director, or officer in the activities of any nonprofit organization of agents or other workers in the insurance business shall not be interpreted, in itself, to constitute a combination in restraint of trade or as combining to create a monopoly as provided in this subdivision and subdivision (10). The enumeration in this chapter of specific unfair methods of competition and unfair or deceptive acts and practices in the business of insurance is not exclusive or restrictive or intended to limit the powers of the commissioner or department or of any court of review under section 8 of this chapter.
        (12) Requiring as a condition precedent to the sale of real or

personal property under any contract of sale, conditional sales contract, or other similar instrument or upon the security of a chattel mortgage, that the buyer of such property negotiate any policy of insurance covering such property through a particular insurance company, agent, or broker or brokers. However, this subdivision shall not prevent the exercise by any seller of such property or the one making a loan thereon, of his, her, or its right to approve or disapprove of the insurance company selected by the buyer to underwrite the insurance.
        (13) Issuing, offering, or participating in a plan to issue or offer, any policy or certificate of insurance of any kind or character as an inducement to the purchase of any property, real, personal, or mixed, or services of any kind, where a charge to the insured is not made for and on account of such policy or certificate of insurance. However, this subdivision shall not apply to any of the following:
            (A) Insurance issued to credit unions or members of credit unions in connection with the purchase of shares in such credit unions.
            (B) Insurance employed as a means of guaranteeing the performance of goods and designed to benefit the purchasers or users of such goods.
            (C) Title insurance.
            (D) Insurance written in connection with an indebtedness and intended as a means of repaying such indebtedness in the event of the death or disability of the insured.
            (E) Insurance provided by or through motorists service clubs or associations.
            (F) Insurance that is provided to the purchaser or holder of an air transportation ticket and that:
                (i) insures against death or nonfatal injury that occurs during the flight to which the ticket relates;
                (ii) insures against personal injury or property damage that occurs during travel to or from the airport in a common carrier immediately before or after the flight;
                (iii) insures against baggage loss during the flight to which the ticket relates; or
                (iv) insures against a flight cancellation to which the ticket relates.
        (14) Refusing, because of the for-profit status of a hospital or medical facility, to make payments otherwise required to be made under a contract or policy of insurance for charges incurred by an insured in such a for-profit hospital or other for-profit medical facility licensed by the state department of health.
        (15) Refusing to insure an individual, refusing to continue to issue insurance to an individual, limiting the amount, extent, or kind of coverage available to an individual, or charging an individual a different rate for the same coverage, solely because of that individual's blindness or partial blindness, except where the refusal, limitation, or rate differential is based on sound actuarial principles or is related to actual or reasonably anticipated experience.


        (16) Committing or performing, with such frequency as to indicate a general practice, unfair claim settlement practices (as defined in section 4.5 of this chapter).
        (17) Between policy renewal dates, unilaterally canceling an individual's coverage under an individual or group health insurance policy solely because of the individual's medical or physical condition.
        (18) Using a policy form or rider that would permit a cancellation of coverage as described in subdivision (17).
        (19) Violating IC 27-1-22-25 or IC 27-1-22-26 concerning motor vehicle insurance rates.
        (20) Violating IC 27-8-21-2 concerning advertisements referring to interest rate guarantees.
        (21) Violating IC 27-8-24.3 concerning insurance and health plan coverage for victims of abuse.
        (22) Violating IC 27-8-26 concerning genetic screening or testing.
        (23) Violating IC 27-1-15.6-3 (b) concerning licensure of insurance producers.
        (24) Violating IC 27-1-38 concerning depository institutions.
         (25) Violating IC 27-8-5-2.5 (e) through IC 27-8-5-2.5 (j) or IC 27-8-5-19.2.
SOURCE: IC 27-8-5-2.5; (03)CC034102.2. -->     SECTION 2. IC 27-8-5-2.5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 2.5. (a) As used in this section, the term "policy of accident and sickness insurance" does not include the following:
        (1) Accident only, credit, dental, vision, Medicare supplement, long term care, or disability income insurance.
        (2) Coverage issued as a supplement to liability insurance.
        (3) Automobile medical payment insurance.
        (4) A specified disease policy issued as an individual policy.
        (5) A limited benefit health insurance policy issued as an individual policy.
        (6) A short term insurance plan that:
            (A) may not be renewed; and
            (B) has a duration of not more than six (6) months.
        (7) A policy that provides a stipulated daily, weekly, or monthly payment to an insured during hospital confinement, without regard to the actual expense of the confinement.
        (8) Worker's compensation or similar insurance.
        (9) A student health insurance policy.
    (b) The benefits provided by an individual policy of accident and sickness insurance may not be excluded, limited, or denied for more than twelve (12) months after the effective date of the coverage because of a preexisting condition of the individual.
    (c) An individual policy of accident and sickness insurance may not define a preexisting condition, a rider, or an endorsement more restrictively than as:
        (1) a condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment during the twelve (12) months immediately preceding the effective date of enrollment in the plan;
        (2) a condition for which medical advice, diagnosis, care, or treatment was recommended or received during the twelve (12) months immediately preceding the effective date of enrollment in the plan; or
        (3) a pregnancy existing on the effective date of enrollment in the plan.
    (d) An insurer shall reduce the period allowed for a preexisting condition exclusion described in subsection (b) by the amount of time the individual has continuously served under a preexisting condition clause for a policy of accident and sickness insurance issued under IC 27-8-15 if the individual applies for a policy under this chapter not more than thirty (30) days after coverage under a policy of accident and sickness insurance issued under IC 27-8-15 expires.
     (e) This subsection applies to a policy that is issued after June 30, 2003, and before July 1, 2005. Notwithstanding subsections (b) and (c), an individual policy of accident and sickness insurance may contain a waiver of coverage for a specified condition and complications directly related to the specified condition if:
        (1) the period for which the exemption would be in effect does not exceed two (2) years; and
        (2) all of the following conditions are met:
            (A) The insurer provides to the applicant before issuance of the policy a written notice explaining the waiver of coverage for the specified condition and complications directly related to the specified condition, including a specific description of each condition, complication, service, and treatment for which coverage is being waived.
            (B) The:
                (i) offer of coverage; and
                (ii) policy;
            include the waiver in a separate section stating in bold print that the applicant is receiving coverage with an exception for the waived condition and specifying each related condition, complication, service, and treatment for which coverage is waived.
            (C) The:
                (i) offer of coverage; and
                (ii) policy;
            do not include more than two (2) waivers per individual.
            (D) The waiver period is concurrent with and not in addition to any applicable preexisting condition limitation or exclusionary period.
            (E) The insurer agrees to:
                (i) review the underwriting basis for the waiver upon request one (1) time per year; and
                (ii) remove the waiver if the insurer determines that evidence of insurability is satisfactory.
            (F) The insurer discloses to the applicant that the applicant may decline the offer of coverage and apply for a policy issued by the Indiana comprehensive health insurance association under IC 27-8-10.
            (G) The waiver of coverage does not apply to coverage required under state law.
            (H) An insurance benefit card issued by the insurer to the applicant includes a telephone number for verification of coverage waived.
The insurer shall require an applicant to initial the written notice provided under subdivision (2)(A) and the waiver included in the offer of coverage and in the policy under subdivision (2)(B) to acknowledge acceptance of the waiver of coverage. An offer of coverage under a policy that includes a waiver under this subsection does not preclude eligibility for an Indiana comprehensive health insurance association policy under IC 27-8-10-5.1. This subsection expires July 1, 2007.
    (f) This subsection applies to a policy that is issued after June 30, 2003, and before July 1, 2005. An insurer shall not, on the basis of a waiver contained in a policy as provided in subsection (e), deny coverage for any condition, complication, service, or treatment that is not specified as required in the:
        (1) written notice under subsection (e)(2)(A); and
        (2) offer of coverage and policy under subsection (e)(2)(B).
This subsection expires July 1, 2007.
    (g) This subsection applies to a policy that is issued after June 30, 2003, and before July 1, 2005. An individual who is covered under a policy that includes a waiver under subsection (e) may directly appeal a denial of coverage based on the waiver by filing a request for an external grievance review under IC 27-8-29 without pursuing a grievance under IC 27-8-28. This subsection expires July 1, 2007.
    (h) This subsection applies to a policy that is issued after June 30, 2003, and before July 1, 2005. Notwithstanding subsection (e), an individual policy of accident and sickness insurance may not contain a waiver of coverage for:
        (1) a mental health condition; or
        (2) a developmental disability.
This subsection expires July 1, 2007.
    (i) This subsection applies to a policy that is issued after June 30, 2003, and before July 1, 2005. A waiver under this section may be applied to a policy of accident and sickness insurance only at the time the policy is issued. This subsection expires July 1, 2007.
    (j) This subsection applies to a policy that is issued after June 30, 2003, and before July 1, 2005. An insurer or insurance producer shall not use this section to circumvent the guaranteed access and availability provisions of this chapter, IC 27-8-15 , or the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191). This subsection expires July 1, 2007.
    (k) This subsection applies to a policy that is issued after June 30, 2003, and before July 1, 2005. A pattern or practice of violations of subsections (e) through (j) is an unfair method of competition or an unfair and deceptive act and practice in the business of insurance under IC 27-4-1-4. This subsection expires July 1, 2007.

SOURCE: IC 27-8-5-16.5; (03)CC034102.3. -->     SECTION 3. IC 27-8-5-16.5 , AS AMENDED BY P.L.96-2002,

SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 16.5. (a) As used in this section, "delivery state" means any state other than Indiana in which a policy is delivered or issued for delivery.
    (b) Except as provided in subsection (c), (d), or (e), a certificate may not be issued to a resident of Indiana pursuant to a group policy that is delivered or issued for delivery in a state other than Indiana.
    (c) A certificate may be issued to a resident of Indiana pursuant to a group policy not described in subsection (d) that is delivered or issued for delivery in a state other than Indiana if:
        (1) the delivery state has a law substantially similar to section 16 of this chapter;
        (2) the delivery state has approved the group policy; and
        (3) the policy or the certificate contains provisions that are:
            (A) substantially similar to the provisions required by:
                (i) section 19 of this chapter;
                (ii) section 21 of this chapter; and
                (iii) IC 27-8-5.6 ; and
            (B) consistent with the requirements set forth in:
                (i) section 24 of this chapter;
                (ii) IC 27-8-6 ;
                (iii) IC 27-8-14 ;
                (iv) IC 27-8-23 ;
                (v) 760 IAC 1-38.1; and
                (vi) 760 IAC 1-39.
    (d) A certificate may be issued to a resident of Indiana under an association group policy, a discretionary group policy, or a trust group policy that is delivered or issued for delivery in a state other than Indiana if:
        (1) the delivery state has a law substantially similar to section 16 of this chapter;
        (2) the delivery state has approved the group policy; and
        (3) the policy or the certificate contains provisions that are:
            (A) substantially similar to the provisions required by:
                (i) section 19 of this chapter;
                (ii) section 19.2 of this chapter if the policy or certificate contains a waiver of coverage;
                (iii)
section 21 of this chapter; and
                (iii) (iv) IC 27-8-5.6 ; and
            (B) consistent with the requirements set forth in:
                (i) section 15.6 of this chapter;
                (ii) section 24 of this chapter;
                (iii) section 26 of this chapter;
                (iv) IC 27-8-6 ;
                (v) IC 27-8-14 ;
                (vi) IC 27-8-14.1 ;
                (vii) IC 27-8-14.5 ;
                (viii) IC 27-8-14.7 ;
                (ix) IC 27-8-14.8 ;
                (x) IC 27-8-20 ;
                (xi) IC 27-8-23 ;


                (xii) IC 27-8-24.3 ;
                (xiii) IC 27-8-26 ;
                (xiv) IC 27-8-28 ;
                (xv) IC 27-8-29 ;
                (xvi) 760 IAC 1-38.1; and
                (xvii) 760 IAC 1-39.
    (e) A certificate may be issued to a resident of Indiana pursuant to a group policy that is delivered or issued for delivery in a state other than Indiana if the commissioner determines that the policy pursuant to which the certificate is issued meets the requirements set forth in section 17(a) of this chapter.
    (f) This section does not affect any other provision of Indiana law governing the terms or benefits of coverage provided to a resident of Indiana under any certificate or policy of insurance.
SOURCE: IC 27-8-5-19.2; (03)CC034102.4. -->     SECTION 4. IC 27-8-5-19.2 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 19.2. (a) This section applies to an association or a discretionary group policy of accident and sickness insurance:
        (1) under which a certificate of coverage is issued after June 30, 2003, and before July 1, 2005, by the insurers selected under subsection (c) to an individual member of the association or discretionary group;
        (2) under which a member of the association or discretionary group is individually underwritten; and
        (3) that is not employer based.
    (b) Notwithstanding section 19 of this chapter, the commissioner appointed under IC 27-1-1-2 shall, not later than July 1, 2003, establish a two (2) year demonstration project to evaluate
the value of preexisting condition exclusion waivers to consumers of policies described in subsection (a). The demonstration project established under this subsection must allow the insurers selected under subsection (c) to issue a policy described in subsection (a) that contains a waiver of coverage described in subsection (e) only if the requirements of this section are met.
    (c) The commissioner shall select three (3) insurers (as defined in IC 27-1-2-3 ) that meet the following requirements to participate in the demonstration project described in subsection (b):
        (1) The insurer has previously offered in Indiana an individually underwritten policy described in subsection (a) with a preexisting condition exclusion waiver.
        (2) The insurer has a previously documented program for administering a policy described in subdivision (1) that includes consumer safeguards to:
            (A) provide prior written notice of conditions subject to the waiver;
            (B) limit the number of waivers per individual;
            (C) limit the period during which a waiver may be in effect; and
            (D) provide for full benefits upon the expiration of the waiver.
    (d) The insurers selected under subsection (c):
        (1) may each issue not more than one thousand five hundred (1,500) certificates of coverage containing a waiver under this section; and
        (2) shall bear all costs of the demonstration project established under this section, including any research, analysis, and reporting related to the demonstration project.
    (e) Notwithstanding section 19 of this chapter, a policy described in subsection (a) may contain a waiver of coverage for a specified condition and complications directly related to the specified condition if:
        (1) the period for which the exemption would be in effect does not exceed two (2) years; and
        (2) all of the following conditions are met:
            (A) The insurer provides to the applicant before issuance of the policy a written notice explaining the waiver of coverage for the specified condition and complications directly related to the specified condition, including a specific description of each condition, complication, service, and treatment for which coverage is being waived.
            (B) The:
                (i) offer of coverage; and
                (ii) certificate of coverage;
            include the waiver in a separate section stating in bold print that the applicant is receiving coverage with an exception for the waived condition and specifying each related condition, complication, service, and treatment for which coverage is waived.
            (C) The:
                (i) offer of coverage; and
                (ii) certificate of coverage;
            do not include more than two (2) waivers per individual.
            (D) The waiver period is concurrent with and not in addition to any applicable preexisting condition limitation or exclusionary period.
            (E) The insurer agrees to:
                (i) review the underwriting basis for the waiver upon request one (1) time per year; and
                (ii) remove the waiver if the insurer determines that evidence of insurability is satisfactory.
            (F) The insurer discloses to the applicant that the applicant may decline the offer of coverage, and any individual to whom the waiver would have applied may apply for a policy issued by the Indiana comprehensive health insurance association under IC 27-8-10.
            (G) The waiver of coverage does not apply to coverage required under state law.
            (H) An insurance benefit card issued by the insurer to the applicant includes a telephone number for verification of coverage waived.
    (f) The insurer shall require an applicant to initial the written

notice provided under subsection (e)(2)(A) and the waiver included in the offer of coverage and in the certificate of coverage under subsection (e)(2)(B) to acknowledge acceptance of the waiver of coverage.
    (g) An insurer shall not, on the basis of a waiver contained in a policy as provided in this section, deny coverage for any condition, complication, service, or treatment that is not specified as required in the:
        (1) written notice under subsection (e)(2)(A); and
        (2) offer of coverage and certificate of coverage under subsection (e)(2)(B).
    (h) An individual who is covered under a policy that includes a waiver under this section may directly appeal a denial of coverage based on the waiver by filing a request for an external grievance review under IC 27-8-29 without pursuing a grievance under IC 27-8-28.
    (i) An offer of coverage under a policy that includes a waiver under this section does not preclude eligibility for an Indiana comprehensive health insurance association policy under IC 27-8-10-5.1.
    (j) Notwithstanding subsection (e), a policy described in subsection (a) may not contain a waiver of coverage for:
        (1) a mental health condition; or
        (2) a developmental disability.
    (k) A waiver under this section may be applied to a certificate of coverage of accident and sickness insurance only at the time the certificate is issued.
    (l) An insurer or insurance producer shall not use this section to circumvent the guaranteed access and availability provisions of this chapter, IC 27-8-15 , or the federal Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191).
    (m) A pattern or practice of violations of this section is an unfair method of competition or an unfair and deceptive act and practice in the business of insurance under IC 27-4-1-4.
    (n) This section expires July 1, 2007.

SOURCE: IC 27-8-10-5.1; (03)CC034102.5. -->     SECTION 5. IC 27-8-10-5.1 , AS AMENDED BY P.L.233-1999, SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 5.1. (a) Except as provided in subsections (b) and (c), a person is not eligible for an association policy if, at the effective date of coverage, the person has or is eligible for coverage under any insurance plan that equals or exceeds the minimum requirements for accident and sickness insurance policies issued in Indiana as set forth in IC 27. However, an offer of coverage described in IC 27-8-5-2.5 (e) or IC 27-8-5-19.2 (e) does not affect an individual's eligibility for an association policy under this subsection. Coverage under any association policy is in excess of, and may not duplicate, coverage under any other form of health insurance.
    (b) Except as provided in IC 27-13-16-4 , a person is eligible for an association policy upon a showing that:
        (1) the person has been rejected by one (1) carrier for coverage under any insurance plan that equals or exceeds the minimum

requirements for accident and sickness insurance policies issued in Indiana, as set forth in IC 27, without material underwriting restrictions;
        (2) an insurer has refused to issue insurance except at a rate exceeding the association plan rate; or
        (3) the person is a federally eligible individual.
For the purposes of this subsection, eligibility for Medicare coverage does not disqualify a person who is less than sixty-five (65) years of age from eligibility for an association policy.
    (c) The board of directors may establish procedures that would permit:
        (1) an association policy to be issued to persons who are covered by a group insurance arrangement when that person or a dependent's health condition is such that the group's coverage is in jeopardy of termination or material rate increases because of that person's or dependent's medical claims experience; and
        (2) an association policy to be issued without any limitation on preexisting conditions to a person who is covered by a health insurance arrangement when that person's coverage is scheduled to terminate for any reason beyond the person's control.
    (d) An association policy must provide that coverage of a dependent unmarried child terminates when the child becomes nineteen (19) years of age (or twenty-five (25) years of age if the child is enrolled full-time in an accredited educational institution). The policy must also provide in substance that attainment of the limiting age does not operate to terminate a dependent unmarried child's coverage while the dependent is and continues to be both:
        (1) incapable of self-sustaining employment by reason of mental retardation or mental or physical disability; and
        (2) chiefly dependent upon the person in whose name the contract is issued for support and maintenance.
However, proof of such incapacity and dependency must be furnished to the carrier within one hundred twenty (120) days of the child's attainment of the limiting age, and subsequently as may be required by the carrier, but not more frequently than annually after the two (2) year period following the child's attainment of the limiting age.
    (e) An association policy that provides coverage for a family member of the person in whose name the contract is issued must, as to the family member's coverage, also provide that the health insurance benefits applicable for children are payable with respect to a newly born child of the person in whose name the contract is issued from the moment of birth. The coverage for newly born children must consist of coverage of injury or illness, including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities. If payment of a specific premium is required to provide coverage for the child, the contract may require that notification of the birth of a child and payment of the required premium must be furnished to the carrier within thirty-one (31) days after the date of birth in order to have the coverage continued beyond the thirty-one (31) day period.
    (f) Except as provided in subsection (g), an association policy may contain provisions under which coverage is excluded during a period

of three (3) months following the effective date of coverage as to a given covered individual for preexisting conditions, as long as medical advice or treatment was recommended or received within a period of three (3) months before the effective date of coverage. This subsection may not be construed to prohibit preexisting condition provisions in an insurance policy that are more favorable to the insured.
    (g) If a person applies for an association policy within six (6) months after termination of the person's coverage under a health insurance arrangement and the person meets the eligibility requirements of subsection (b), then an association policy may not contain provisions under which:
        (1) coverage as to a given individual is delayed to a date after the effective date or excluded from the policy; or
        (2) coverage as to a given condition is denied;
on the basis of a preexisting health condition. This subsection may not be construed to prohibit preexisting condition provisions in an insurance policy that are more favorable to the insured.
    (h) For purposes of this section, coverage under a health insurance arrangement includes, but is not limited to, coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985.

SOURCE: IC 27-8-29-6; (03)CC034102.6. -->     SECTION 6. IC 27-8-29-6 , AS ADDED BY P.L.203-2001, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 6. As used in this chapter, "external grievance" means the independent review under this chapter of a:
         (1) grievance filed under IC 27-8-28 ; or
        (2) denial of coverage based on a waiver described in IC 27-8-5-2.5 or IC 27-8-5-19.2.

SOURCE: IC 27-8-29-12; (03)CC034102.7. -->     SECTION 7. IC 27-8-29-12 , AS ADDED BY P.L.203-2001, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 12. An insurer shall establish and maintain an external grievance procedure for the resolution of external grievances regarding:
        (1) an adverse determination of appropriateness;
        (2) an adverse determination of medical necessity; or
        (3) a determination that a proposed service is experimental or investigational; or
        (4) a denial of coverage based on a waiver described in IC 27-8-5-2.5 or IC 27-8-5-19.2 ;

made by an insurer or an agent of an insurer regarding a service proposed by the treating health care provider.
SOURCE: IC 27-8-29-13; (03)CC034102.8. -->     SECTION 8. IC 27-8-29-13 , AS AMENDED BY P.L.1-2002, SECTION 118, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 13. (a) An external grievance procedure established under section 12 of this chapter must:
        (1) allow a covered individual or a covered individual's representative to file a written request with the insurer for an external grievance review of the insurer's:
             (A) appeal resolution under IC 27-8-28-17 ; or
            (B) denial of coverage based on a waiver described in IC 27-8-5-2.5 or IC 27-8-5-19.2 ;
        
not more than forty-five (45) days after the covered individual is

notified of the resolution; and
        (2) provide for:
            (A) an expedited external grievance review for a grievance related to an illness, a disease, a condition, an injury, or a disability if the time frame for a standard review would seriously jeopardize the covered individual's:
                (i) life or health; or
                (ii) ability to reach and maintain maximum function; or
            (B) a standard external grievance review for a grievance not described in clause (A).
A covered individual may file not more than one (1) external grievance of an insurer's appeal resolution under this chapter.
    (b) Subject to the requirements of subsection (d), when a request is filed under subsection (a), the insurer shall:
        (1) select a different independent review organization for each external grievance filed under this chapter from the list of independent review organizations that are certified by the department under section 19 of this chapter; and
        (2) rotate the choice of an independent review organization among all certified independent review organizations before repeating a selection.
    (c) The independent review organization chosen under subsection (b) shall assign a medical review professional who is board certified in the applicable specialty for resolution of an external grievance.
    (d) The independent review organization and the medical review professional conducting the external review under this chapter may not have a material professional, familial, financial, or other affiliation with any of the following:
        (1) The insurer.
        (2) Any officer, director, or management employee of the insurer.
        (3) The health care provider or the health care provider's medical group that is proposing the service.
        (4) The facility at which the service would be provided.
        (5) The development or manufacture of the principal drug, device, procedure, or other therapy that is proposed for use by the treating health care provider.
        (6) The covered individual requesting the external grievance review.
However, the medical review professional may have an affiliation under which the medical review professional provides health care services to covered individuals of the insurer and may have an affiliation that is limited to staff privileges at the health facility, if the affiliation is disclosed to the covered individual and the insurer before commencing the review and neither the covered individual nor the insurer objects.
    (e) A covered individual may be required to pay not more than twenty-five dollars ($25) shall not pay any of the costs associated with the services of an independent review organization under this chapter. All additional costs must be paid by the insurer.

SOURCE: IC 27-8-29-15; (03)CC034102.9. -->     SECTION 9. IC 27-8-29-15 , AS ADDED BY P.L.203-2001, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

JULY 1, 2003]: Sec. 15. (a) An independent review organization shall:
        (1) for an expedited external grievance filed under section 13(a)(2)(A) of this chapter, within three (3) business days after the external grievance is filed; or
        (2) for a standard appeal filed under section 13(a)(2)(B) of this chapter, within fifteen (15) business days after the appeal is filed;
make a determination to uphold or reverse the insurer's appeal resolution under IC 27-8-28-17 based on information gathered from the covered individual or the covered individual's designee, the insurer, and the treating health care provider, and any additional information that the independent review organization considers necessary and appropriate.
    (b) When making the determination under this section, the independent review organization shall apply:
        (1) standards of decision making that are based on objective clinical evidence; and
        (2) the terms of the covered individual's accident and sickness insurance policy.
    (c) In an external grievance described in section 12(4) of this chapter, the insurer bears the burden of proving that the insurer properly denied coverage for a condition, complication, service, or treatment because the condition, complication, service, or treatment is directly related to a condition for which coverage has been waived under IC 27-8-5-2.5 or IC 27-8-5-19.2.
    (d)
The independent review organization shall notify the insurer and the covered individual of the determination made under this section:
        (1) for an expedited external grievance filed under section 13(a)(2)(A) of this chapter, within twenty-four (24) hours after making the determination; and
        (2) for a standard external grievance filed under section 13(a)(2)(B) of this chapter, within seventy-two (72) hours after making the determination.

SOURCE: ; (03)CC034102.10. -->     SECTION 10. [EFFECTIVE JULY 1, 2003] (a) An insurer that issues a policy of accident and sickness insurance that contains a waiver under IC 27-8-5-2.5 (e) or IC 27-8-5-19.2 , both as added by this act, shall submit to the commissioner of the department of insurance the following information for the reporting periods specified under subsection (b) on a form prescribed by the commissioner:
        (1) The number of policies that the insurer issued with a waiver.
        (2) A list of specified conditions that the insurer waived.
        (3) The number of waivers issued for each specified condition listed under subdivision (2).
        (4) The number of waivers issued categorized by the period of time for which coverage of a specified condition was waived.
        (5) The number of applicants who were denied insurance coverage by the insurer because of a specified condition.
        (6) The number of:
            (A) complaints; and
            (B) requests for external grievance review;
        filed in relation to a waiver.
    (b) An insurer shall submit the information required under subsection (a) as follows:
        (1) Not later than August 1, 2004, for the reporting period July 1, 2003, through June 30, 2004.
        (2) Not later than August 1, 2005, for the reporting period July 1, 2004, through June 30, 2005.
        (3) Not later than August 1, 2006, for the reporting period July 1, 2005, through June 30, 2006.
        (4) Not later than August 1, 2007, for the reporting period July 1, 2006, through June 30, 2007.
    (c) The commissioner of the department of insurance shall forward the information submitted:
        (1) under subsection (b)(1) not later than November 1, 2004;
        (2) under subsection (b)(2) not later than November 1, 2005;
        (3) under subsection (b)(3) not later than November 1, 2006; and
        (4) under subsection (b)(4) not later than November 1, 2007;
to the legislative council.
    (d) The commissioner of the department of insurance shall compile the information submitted under subsection (b) and, not later than November 1 of each year, report the information to the legislative council and each member of the general assembly.
    (e) The commissioner of the department of insurance shall after June 30 of each year beginning in 2004 perform written or oral interviews with every available certificate holder of a certificate of coverage issued under IC 27-8-5-19.2 , as added by this act, and compile the results of the interviews and report the results to the legislative council:
        (1) for the period beginning July 1, 2003, and ending June 30, 2004, not later than November 1, 2004;
        (2) for the period beginning July 1, 2004, and ending June 30, 2005, not later than November 1, 2005;
        (3) for the period beginning July 1, 2005, and ending June 30, 2006, not later than November 1, 2006; and
        (4) for the period beginning July 1, 2006, and ending June 30, 2007, not later than November 1, 2007.
All costs related to this subsection must be borne by the insurers selected under IC 27-8-5-19.2 , as added by this act.
    (f) This SECTION expires June 30, 2008.

SOURCE: ; (03)CC034102.11. -->     SECTION 11. An emergency is declared for this act.
    (Reference is to ESB 341 as reprinted April 11, 2003.)




Conference Committee Report

on

Engrossed Senate Bill 341



Text Box

S

igned by:

    ____________________________    ____________________________
    Senator MillerRepresentative Fry
    Chairperson

    ____________________________    ____________________________
    Senator SipesRepresentative Ripley

    Senate Conferees    House Conferees


CC034102/DI 97
2003