(1)
The definitions in this subsection apply throughout this section
unless the context clearly requires otherwise.
(a) "Claims" means the cost to the health maintenance
organization of health care services, as defined in RCW 48.43.005, provided to an enrollee or paid to or on behalf of the
enrollee in accordance with the terms of a health benefit plan,
as defined in RCW 48.43.005. This includes capitation payments
or other similar payments made to providers for the purpose of
paying for health care services for an enrollee.
(b) "Claims reserves" means: (i) The liability for claims
which have been reported but not paid; (ii) the liability for
claims which have not been reported but which may reasonably be
expected; (iii) active life reserves; and (iv) additional claims
reserves whether for a specific liability purpose or not.
(c) "Declination rate" for a health maintenance organization
means the percentage of the total number of applicants for
individual health benefit plans received by that health
maintenance organization in the aggregate in the applicable year
which are not accepted for enrollment by that health maintenance
organization based on the results of the standard health
questionnaire administered pursuant to RCW 48.43.018(2)(a).
(d) "Earned premiums" means premiums, as defined in RCW 48.43.005, plus any rate credits or recoupments less any refunds,
for the applicable period, whether received before, during, or
after the applicable period.
(e) "Incurred claims expense" means claims paid during the
applicable period plus any increase, or less any decrease, in the
claims reserves.
(f) "Loss ratio" means incurred claims expense as a
percentage of earned premiums.
(g) "Reserves" means: (i) Active life reserves; and (ii)
additional reserves whether for a specific liability purpose or
not.
(2) A health maintenance organization must file supporting
documentation of its method of determining the rates charged for
its individual agreements. At a minimum, the health maintenance
organization must provide the following supporting documentation:
(a) A description of the health maintenance organization's
rate-making methodology;
(b) An actuarially determined estimate of incurred claims
which includes the experience data, assumptions, and
justifications of the health maintenance organization's
projection;
(c) The percentage of premium attributable in aggregate for
nonclaims expenses used to determine the adjusted community rates
charged; and
(d) A certification by a member of the American academy of
actuaries, or other person approved by the commissioner, that the
adjusted community rate charged can be reasonably expected to
result in a loss ratio that meets or exceeds the loss ratio
standard of seventy-four percent, minus the premium tax rate
applicable to the carrier's individual health benefit plans under
RCW 48.14.0201.
(3) By the last day of May each year any health maintenance
organization issuing or renewing individual health benefit plans
in this state during the preceding calendar year shall file for
review by the commissioner supporting documentation of its actual
loss ratio and its actual declination rate for its individual
health benefit plans offered or renewed in the state in aggregate
for the preceding calendar year. The filing shall include
aggregate earned premiums, aggregate incurred claims, and a
certification by a member of the American academy of actuaries,
or other person approved by the commissioner, that the actual
loss ratio has been calculated in accordance with accepted
actuarial principles.
(a) At the expiration of a thirty-day period beginning with
the date the filing is received by the commissioner, the filing
shall be deemed approved unless prior thereto the commissioner
contests the calculation of the actual loss ratio.
(b) If the commissioner contests the calculation of the
actual loss ratio, the commissioner shall state in writing the
grounds for contesting the calculation to the health maintenance
organization.
(c) Any dispute regarding the calculation of the actual loss
ratio shall, upon written demand of either the commissioner or
the health maintenance organization, be submitted to hearing
under chapters 48.04 and 34.05 RCW.
(4) If the actual loss ratio for the preceding calendar year
is less than the loss ratio standard established in subsection
(5) of this section, a remittance is due and the following shall
apply:
(a) The health maintenance organization shall calculate a
percentage of premium to be remitted to the Washington state
health insurance pool by subtracting the actual loss ratio for
the preceding year from the loss ratio established in subsection
(5) of this section.
(b) The remittance to the Washington state health insurance
pool is the percentage calculated in (a) of this subsection,
multiplied by the premium earned from each enrollee in the
previous calendar year. Interest shall be added to the
remittance due at a five percent annual rate calculated from the
end of the calendar year for which the remittance is due to the
date the remittance is made.
(c) All remittances shall be aggregated and such amounts
shall be remitted to the Washington state high risk pool to be
used as directed by the pool board of directors.
(d) Any remittance required to be issued under this section
shall be issued within thirty days after the actual loss ratio is
deemed approved under subsection (3)(a) of this section or the
determination by an administrative law judge under subsection
(3)(c) of this section.
(5) The loss ratio applicable to this section shall be the
percentage set forth in the following schedule that correlates to
the health maintenance organization's actual declination rate in
the preceding year, minus the premium tax rate applicable to the
health maintenance organization's individual health benefit plans
under RCW 48.14.0201.
| Actual Declination Rate | Loss Ratio |
| Under Six Percent (6%) | Seventy-Four Percent (74%) |
| Six Percent (6%) or more (but less than Seven Percent) | Seventy-Five Percent (75%) |
| Seven Percent (7%) or more (but less than Eight Percent) | Seventy-Six Percent (76%) |
| Eight Percent (8%) or more | Seventy-Seven Percent (77%) |
[2008 c 303 § 6; 2001 c 196 § 12; 2000 c 79 § 32.]
NOTES:
Effective date -- 2001 c 196: See note following RCW 48.20.025.
Effective date -- Severability -- 2000 c 79: See notes following RCW 48.04.010.
Authority to review rates -- 2008 c 303: RCW 48.43.0121.