SUBPART D. RATE REVIEW

§1091. Health insurance plans subject to rate review

            A. The provisions of this Subpart shall apply to any health benefit plan which provides coverage in the small group market or individual market, including any policy or subscriber agreement covering residents of this state. The provisions of this Section shall apply regardless of where such policy or subscriber agreement was issued or issued for delivery in this state and shall include any employer, association, or trustee of a fund established by an employer, association, or trust for multiple associations who shall be deemed the policyholder, covering one or more employees of such employer, one or more members or employees of members of such association or multiple associations, for the benefit of persons other than the employer, the association, or the multiple associations, as well as their officers or trustees. The provisions of this Subpart shall not apply to the following, unless specifically provided for:

            (1) An Archer medical savings account that meets all requirements of Section 220 of the Internal Revenue Code of 1986.

            (2) A health savings account that meets all requirements of Section 223 of the Internal Revenue Code of 1986.

            (3) Excepted benefit or limited benefits as defined in this Title.

            B. As used in this Subpart, the following terms shall have the meanings ascribed to them in this Section:

            (1) "Actuarial certification" means a written statement by a member of the American Academy of Actuaries that a health insurance issuer is in compliance with the provisions of this Subpart, based upon the actuary's examination, including a review of the appropriate records and of the actuarial assumptions and methods utilized by the health insurance issuer in establishing rates for applicable health benefit plans.

            (2) "Excessive" means the rate charged for the health insurance coverage causes the premium or premiums charged for the health insurance coverage to be unreasonably high in relation to the benefits provided under the particular product. In determining whether the rate is unreasonably high in relation to the benefits provided, the department shall consider each of the following:

            (a) Whether the rate results in a projected medical loss ratio below the federal medical loss ratio standard in the applicable market to which the rate applies, after accounting for any adjustments allowable under federal law.

            (b) Whether one or more of the assumptions on which the rate is based is not supported by substantial evidence.

            (c) Whether the choice of assumptions or combination of assumptions on which the rate is based is unreasonable.

            (3) "Federal review threshold" means any rate increase that results in a ten percent or greater rate increase, or such other threshold as required by federal law or regulation or any rate that, when combined with all rate increases and decreases during the previous twelve-month period, would result in an aggregate ten percent or greater rate increase. For reporting purposes, the federal threshold shall mean any rate increase above zero percent or such other threshold as required by federal law or regulation.

            (4) "Grandfathered health plan coverage" has the same meaning as that in 45 CFR 147.140 or other subsequently adopted federal law, rule, regulation, directive, or guidance.

            (5) "Health benefit plan", "plan", "benefit", or "health insurance coverage" means services consisting of medical care, provided directly, through insurance or reimbursement, or otherwise, and including items and services paid for as medical care under any hospital or medical service policy or certificate, hospital or medical service plan contract, preferred provider organization, or health maintenance organization contract offered by a health insurance issuer. However, excepted benefits as defined in R.S. 22:1061(3)(a) are not included as a "health benefit plan".

            (6) "Health insurance issuer" means any entity that offers health insurance coverage through a policy, certificate of insurance, or subscriber agreement subject to state law that regulates the business of insurance. A "health insurance issuer" shall include a health maintenance organization, as defined and licensed pursuant to Subpart I of Part I of Chapter 2 of this Title.

            (7) "Health savings accounts" means those accounts for medical expenses authorized by 26 U.S.C. 220 et seq.

            (8) "Inadequate" means rates for a particular product are clearly insufficient to sustain projected losses and expenses, or the use of such rates.

            (9) "Index rate" means the average rate resulting from the estimated combined claims experience for all Essential Health Benefits, pursuant to 42 U.S.C. 18022, Section 1302(b) of the Patient Protection and Affordable Care Act, of all nontransitional and nongrandfathered health plan coverage within a health insurance issuer's single, statewide risk pool in the individual market and within a health insurance issuer's single, statewide risk pool in the small group market, with a separate index rate being calculated for each market. Health insurance issuers may make any market-wide and plan- or product-specific adjustments to an index rate as permitted or as required by federal law, rules, or regulations. In the event this rate cannot be determined by reference to 42 U.S.C. 18022, Section 1302(b) of the Patient Protection and Affordable Care Act, the commissioner of insurance shall promulgate rules pursuant to the Administrative Procedure Act, R.S. 49:950 et seq., to define a substantially similar alternative.

            (10) "Individual health insurance coverage" or "individual policy" means health insurance coverage offered to individuals in the individual market or through an association.

            (11) "Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan.

            (12) "Insured" includes any policyholder, including a dependent, enrollee, subscriber, or member, who is covered through any policy or subscriber agreement offered by a health insurance issuer.

            (13) "Large group" or "large employer" means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least fifty-one employees on business days during the preceding calendar year and who employs at least two employees on the first day of the plan year.

            (14) "Large group market" means the health insurance market under which individuals obtain health insurance coverage directly or through any arrangement on behalf of themselves and their dependents through a group health plan maintained by a large employer.

            (15) "Medical loss ratio" means the ratio of expected incurred benefits to expected earned premium over the time period of coverage, subject to the requirements of federal law, regulation, or rule.

            (16) "New rate filing" means a rate filing for any particular product which has not been issued or delivered in this state.

            (17) "Particular product" means a basic insurance policy form, certificate, or subscriber agreement delineating the terms, provisions, and conditions of a specific type of coverage or benefit under a particular type of contract with a discrete set of rating and pricing methodologies that a health insurance issuer offers in the state.

            (18) "Rate" means the rate initially filed or filed as a result of determination of rates by a health insurance issuer for a particular product.

            (19) "Rate change" means the rates for any health insurance issuer for a particular product differ from the rates on file with the department, including but not limited to any change in any current rating factor, periodic recalculation of experience, change in rate calculation methodology, change in benefits, or change in the trend or other rating assumptions.

            (20) "Rate increase" means any increase of the rates for a particular product. When referring to federal review thresholds, "rate increase" includes a premium volume-weighted average increase for all insureds for the aggregate rate changes during the twelve-month period preceding the proposed rate increase effective date.

            (21) "Rating period" means the calendar period for which rates established by a health insurance issuer are in effect.

            (22) "Small group" or "small employer" means any person, firm, corporation, partnership, trust, or association actively engaged in business which has employed an average of at least one but not more than fifty employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. "Small group" or "small employer" shall include coverage sold to small groups or small employers through associations or through a blanket policy. For purposes of rate calculation by a health insurance issuer, a small employer group consisting of one employee shall be rated within a health insurance issuer's individual market risk pool, unless that health insurance issuer provides only employer coverage and thus has only a small group market risk pool.

            (23) "Unfairly discriminatory" means rates that result in premium differences between insureds within similar risk categories that do not reasonably correspond to differences in expected costs. When applied to rates charged, "unfairly discriminatory" shall refer to any rate charged by small group or individual health insurance issuers in violation of R.S. 22:1095.

            (24) "Unjustified" means a rate for which a health insurance issuer has provided data or documentation to the department in connection with rates for a particular product that is incomplete, inadequate, or otherwise does not provide a basis upon which the reasonableness of the rate may be determined or is otherwise inadequate insofar as the rate charged is clearly insufficient to sustain projected losses and expenses.

            (25) "Unreasonable" means any rate that contains a provision or provisions that are any of the following:

            (a) Excessive.

            (b) Unfairly discriminatory.

            (c) Unjustified.

            (d) Otherwise not in compliance with the provisions of this Title, or with other provisions of law.

            Acts 1991, No. 777, §2, eff. Sept. 30, 1992; Acts 1993, No. 54, §1; Acts 2001, No. 272, §1, eff. Jan. 1, 2002; Acts 2003, No. 659, §1; Acts 2004, No. 663, §1; Redesignated from R.S. 22:228.1 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 93, §1; Acts 2014, No. 718, §1, eff. June 18, 2014; Acts 2016, No. 32, §1; Acts 2020, No. 36, §1.