PENNSYLVANIA BUDGET ISSUE

Governor Tom Corbett proposed “a budget grounded in difficult realities but framed in the optimism that we are solving our problems” on February 7.  In all, the Budget flat lines spending at $27.14 billion.  State workforce trimming continues with 647 employees lost, mostly due to attrition, compared to 1,500 last year.  Although the cuts were not as draconian as in the current fiscal year, most programs and departments were ‘trimmed’ with certain exceptions. Corrections Department for example was kept at $1.867 billion.  Education actually saw a modest $329 million increase to $9.923 billion despite some programs losing dollars (Libraries -5%; community colleges -3.8%).  Subsidies to Penn State, Pitt, and Temple took sizeable hits of 28.2%, 30% and 30% respectively.  Business received both ups and downs.  The phase-out of the Capital Stock & Franchise Tax continued but several key DCED programs lost ground as did Job Training Programs within the Department of Education.

The Rainy Day Fund is depleted with a balance of only $61,000.  The Corbett Budget does not anticipate any replenishment of the Fund for FY 2012-13.

Details on the Budget proposal may be obtained from http://www.portal.state.pa.us/portal/server.pt/community/current_and_proposed_commonwealth_budgets/4566 .  Of particular value is the Power Point on that page to walk one through the budget changes.

Following are areas of interest to the Insurance Community:

ATTORNEY GENERAL

-          Attorney General’s Office funding for General Government Operations decreased 5% to $1.865 million.  This funds the efforts of the AG to combat insurance fraud.

AGRICULTURE

-          Crop Insurance Premium Subsidy Program which had funding eliminated last year remains at zero dollars.  This also costs PA Federal matching dollars.

ENVIRONMENTAL PROTECTION

-          Mine Subsidence Insurance is funded by a special fund administered by the Department of Environmental Protection (DEP).  It receives premiums and pays claims.  Per 2002 legislation, it is marketed by insurance agents who do receive a first year commission.  For FY 2012-13, it anticipates $6.861 million in premiums and interest received and claims and administration costs at $5.622 million.

HEALTH

-          PA Health Care Cost Containment Council (PHC4) loses its independent status and is absorbed under the jurisdiction of the Department of Health

-          Patient Safety Trust Fund was established by MCARE’s Act 13 of 2002 for the purpose of independent review of medical facilities which will result in ensuring patient safety and reducing medical errors.  Administered by the Department of Health, it expects to see its balance increase in FY 2012-13 to $7.181 million, up from $5.121 million.

INSURANCE

-          Insurance Department takes a three-percent cut in General Government Operations at $17.947 million and loses 20 job slots.  This does not include MCARE which is funded by assessments from health care providers or CHIP which is a separate program administered by the Insurance Department.

-          CHIP program funding increases to $101.6 million but CHIP Administration is cut by $1.167 million.

-          The Medicare Availability & Reduction of Error (MCARE) Fund was established by Act 13 of 2002 and is administered by the Insurance Department as a middle tier of medical malpractice insurance funded by annual assessments to health care providers.  It expects to take in $205.7 million in receipts and spend $190.341 million in medical malpractice claims and administration.  NOTE: This picture may change should the state lose its appeal from a decision requiring repayment to MCARE of $801 million that was diverted to the General Fund under former Governor Rendell.

-          Underground Storage Tank Indemnification Fund (USTIF), an insurance program administered by the Insurance Department is expected to receive $63.9 million in receipts from gasoline taxes, tank capacity fees, and investments but is estimated to spend $80.5 million.

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LABOR & INDUSTRY/WORKERS’ COMPENSATION

-          L&I funding decreases by only 1.7% to $70.5 million but it will lose 31 positions.

-          State Workers’ Insurance Fund (SWIF) is not part of the General Fund.  As the WC insurer of last resort, it is expected to take in $ 325 million in premiums and interest but spend $ 328.3 million.

-          Workers’ Compensation Funds appear to be in decent fiscal condition. The WC Security Fund (payment of benefits to individuals who are insured by an insolvent carrier) is expected to have $625 million at the end of the 2012-13 FY, up from $614.364 million.  The WC Supersedeas Fund (reimburses insurers for payments made by them to WC claimants who are later determined to be ineligible) expects to have $1.845 million at the end of the 2012-13 FY, up from $1.090 million.  The third WC Fund, the WC Administration Fund which finances L&I’s administration of the Workers’ Compensation Act is expected to decrease slightly with $87.851 million at the end of 2012-13 versus the $90.9 million for FY 2011-12.

PUBLIC WELFARE

Medicaid spending or “the insurance entitlement program” provides benefits to 12% of PA’s population and is a major part of the Department of Public Welfare budget which in turn comprises 38.8% of the total state budget of $27.14 billion.  Long-term care is a huge part of the DPW budget.

-          DPW State-funded share of LTC under Medicaid is $741.484 million.  It compares with an additional $2.034 billion coming from the Federal Government for this purpose.

-          Tobacco Settlement supplies $161.765 million towards Medicaid LTC.

-          $88 million comes from DPW’s line item for long-term care managed care.

-          Medicaid transportation is funded at $74.8 million state and $71.926 million Federal, some of which may fund those receiving long-term care services under Medicaid.

OTHER BUDGET ITEMS TO NOTE…Insurance Liquidation Fund invests assets of insolvent carriers so as to pay claims and is expected to have a balance of $66.784 million at the end of FY 2012-13, up from $68.349 million…The independent Insurance Fraud Prevention Authority (IFPA) is funded by the insurance companies at $12 million…The Tobacco Settlement Fund (also called Master Agreement) would redirect monies spent on health research to help fund the state’s share of Medicaid spending for long-term care…Cooperative Extension and Penn State’s Agricultural Research $47 million programs would, under Corbett’s proposal, be funded by the gambling-generated Horse Race Development Fund.  For some reason, some of the equine interests are unhappy about this idea.

NON-BUDGET ITEM…Yes, there is other news.  The U.S. House voted 267-159 to repeal the CLASS Act, part of President Obama’s Patient Protection Affordable Care Act.  PA Republicans voted for repeal while Democratic Representatives voted against.  Details: www.thomas.gov  Look up HR1173.

POLITICS AND REAPPORTIONMENT

The 2012 election season is or will soon be in disarray for state legislative candidates thanks to a PA Supreme Court January 25 ruling that invalidated Reapportionment Commission-drawn boundary lines for House and Senate districts.  It is uncertain as to what district lines will be used this election cycle since nominating petitions are already circulating based on the NEW district lines.  New congressional district lines are unaffected by the ruling.  In addition, special elections for unexpired terms for open House seats are at risk since constitutionally they would have had to have been in the new district boundaries, not the old.  Side note: in one of those districts former Rep. Chelsea Wagner (D-Allegheny) decided to resign her post in the General Assembly after all despite early indications to the contrary because the new district would have been a Lehigh Valley vote, not a Pittsburgh vote where her district had been before reapportionment.

Other state political news:

-          House Majority Leader Mike Turzai (R-Allegheny) will not run for Congress.  In that district, there is a hot contest between two Democratic incumbents, Mark Critz and Jason Altmire.

-          Senator John Pippy (R-Allegheny) has decided not to stand for re-election.

HEARING UPDATES

• The House Insurance Committee hearing on SB 338 (Vance-R-Cumberland) that was originally scheduled for January 26 was cancelled and is rescheduled for February 9.
• February 16 remains the date for a House Insurance Committee hearing on HB 717 (Matzie-D-Allegheny) that would establish a Consumer Advocate for Health Insurance based in the Department of Community & Economic Development.

NAHU CAPITOL CONFERENCE REPORT

The National Association of Health Underwriters (NAHU)’s annual Washington, DC Capitol Conference ended with major developments on insurance agents’ quest to have agent compensation removed from calculations of the Patient Protection Affordable Care Act (PPACA) Medical Loss Ratio (MLR).  First, congressional visits landed 11 more sponsors to HR 1206 as of 1/27/12 including two more from Pennsylvania, Republicans Glenn Thompson and Patrick Meehan.  This brings the PA sponsorship up to 12, a majority of the 19-person House delegation.  HR 1206 has 160 House sponsors.  Another development is the promise to introduce a similar bill in the Senate by Democratic Senator Mary Landrieu (LA).

HHS Director of the Center for Consumer Information and Insurance Oversight Steve Larsen stated that HHS would not consider exempting agent compensation from MLR.

Another presenter of note was Speaker of the House John Boehner (R-OH).  Coming the morning after the President’s State of the Union speech, Boehner said that President Obama had changed into the “Great Divider” which as a campaign theme does not help the country.  He also pointed to Senate inaction as an obstacle to constructive legislation since the House had passed 30 economic development bills, only three of which had been taken up by the Democratic-controlled U.S. Senate.

HOUSE COMMITTEE MOVES RBC BILL

On January 24, the House Insurance Committee moved House Bill 2134 (Micozzie-R-Delaware) to strengthen the Insurance Department’s tools in analyzing insurance company solvency.  It  provides a “trend test” to better gauge insurer solvency in the life and health market.  This legislation gives the Insurance Department an additional monitoring tool and helps the state maintain its NAIC accreditation as being equipped to evaluate company solvency.

REGULATORY UPDATE

• On January 28, the PA Bulletin published a list of eligible Surplus Lines Insurers.  This replaces in its entirety the list published on January 4, 2011.  Details: www.pabulletn.com
• Philadelphia-United Fire Insurance Company, a domestic stock property insurance company, has submitted an application for approval to surrender its Insurance Department Certificate of Authority.
• Per PA Compensation Rating Bureau Circular 1594 issued January 10, the U.S Department of Labor wants to transit away from hard copy submissions of form LS 570 from insurers reporting coverage under the Longshoreman and Harbor Workers Compensation Act.  This is not finalized.  Details: www.pcrb.com

INSURANCE DEPARTMENT TO HOLD BRIEFINGS ON EXCHANGE IN PA

Next week the PA Insurance Department is holding briefings on the Corbett Administration’s approach to establishing Health Insurance Exchanges in Pennsylvania.  Briefings will be held separately for legislative staffs and stakeholder groups such as PAHU and the PA Chamber.  Expected in the presentations will be an overview and background as well as discussing enabling legislation that might be proposed by the Administration.  This announcement comes on the heels of the Insurance Department’s seeking of $33 million implementation money from HHS, a move that evoked some controversy from conservatives who regarded it as a de facto endorsement of the Patient Protection Affordable Care Act (PPACA).  The counter to this was the argument that PA has until 1/1/13 to pass Exchange legislation or HHS will impose its version on the Commonwealth.

2011 ENFORCEMENT ACTIONS LISTED

On January 25, the PA Insurance Department reported that in 2011, it closed 334 enforcement actions and market conduct exams, issued 141 orders and adjudications, collected $900,000-plus in fines and recovered more than $3.2 million in restitution for consumers.  Some specific outcomes:

-          37 individual producer licenses were revoked or surrendered

-          57 licensees were placed on probation

-          16 waivers were granted from section 1033 of the Federal Violent Crimes Act which prohibits anyone with a criminal past from working in the insurance industry

Examples of what caused the department to take action were using unapproved insurance contracts, misappropriating insurance premium dollars, forging or altering signatures on applications, failing to disclose prior felony and misdemeanor convictions, selling unlicensed health plans, and lying on license applications or renewal forms.  Details: www.insurance.pa.gov .

ITEMS TO WATCH IN HARRISBURG…On January 20, Rep. Marguerite Quinn (R-Bucks) introduced House Bill 2135 which would permit electronics vendors to have a limited lines license to sell, solicit or negotiate coverage for portable electronic devices.  It follows House Bill 20 sponsored by Rep. Katherine Watson (R-Bucks) which would allow staff at self service storage units to sell, solicit and negotiate property policies for the storage unit contents.  Both representatives are members of the House insurance Committee.

SPARKS NOTE: The SPARKS Club is holding two seminars on disaster March 27 in Monroeville and March 28 in Grantville.  The class is pending Insurance Department approval for six credits and will focus on disaster strategies undertaken by agencies and their clients.  It will also examine endorsement language issues (E&O?) for earthquake, storms, flood, hail, etc.  Details: www.sparksclub.com

HOUSE CLEARS NURSING HOME TORT REFORM BILL

A bill sponsored by Rep. Glenn Grell (R-Cumberland) which limits punitive damage awards in civil liability cases against nursing care facilities passed the PA House January 18 by a 103-89 vote.  House Bill 1907 limits such awards to 200 percent of the compensatory award and now goes to the Senate for consideration.  An exception to this legal limitation would be in cases where there was clear intentional misconduct.

INSURANCE COMMITTEE HOLDS DENTIST INSURANCE HEARING

On January 26, the House Insurance Committee will hold a hearing on Senate Bill 338 (Vance-R-Cumberland) to mandate that dentists purchase medical malpractice liability insurance as doctors and hospitals do now.  The PA Dental Association supports the legislation.

SOLVENCY BILL ON HOUSE INSURANCE AGENDA

A voting meeting of the House Insurance Committee January 25 will consider House Bill 2134 (Micozzie-R-Delaware) to provide a “trend test” to better gauge insurer solvency in the life and health market.  This legislation gives the Insurance Department an additional monitoring tool and helps the state maintain its NAIC accreditation as being equipped to evaluate company solvency.

POLITICS

• U.S. Representative and former PA House member Todd Platts (R-19) is not running again, citing a promise to abide by term limits.  Already announcing is PA House Member Scott Perry (R-York).  According to media reports, Senator Mike Waugh (R-York) is also regarded as a possible candidate.  The person who opposed Platts in the last congressional primary, Mike Smeltzer, head of the Manufacturers Association of South Central PA, has not given an indication as to his 2012 plans.
• Rep. Chesea Wagner (D-Allegheny) apparently decided to resign after all.  Earlier, she had reportedly wanted to keep her legislative seat in Harrisburg and her new Allegheny County post after it became clear that the special election to replace her would take place in the Lehigh Valley and not in Pittsburgh.

CLASS REPEAL MOVES FORWARD

An attempt to repeal PPACA’s Community Living Assistance Services and Supports Act (CLASS) moved a step closer with this last week’s 23-13 vote by the US House Ways and Means Committee for HR 1173.   CLASS was PPACA’s employer-based long-term care program which ran into actuarial trouble when it became apparent that CLASS could not sustain itself because of adverse selection.  Earlier, the Obama administration backed off from implementation but the legal authority still exists.  Joining the majority to repeal was Ways & Means Committee member Rep. Jim Gerlach from southeast PA.  In addition, five PA congressmen are sponsoring the bill. They are Reps. Mike Kelly, Tim Murphy, Glenn Thompson, Tom Marino and Bill Shuster.

OBIT NOTE FOR JACK LOSH…Reported in the January 22 Patriot-News is the passing of pre-licensing instructor icon Jack Losh.  For decades, he was a fixture in the training conducted by the former Independent Agents of PA.  The Big I thought so much of him that they named their educational award after him.  We’ll miss you Jack.

MEDICAL RECORDS FEE SCHEDULE ANNOUNCED

On January 21 the PA Bulletin re-published the PA Department of Health’s list of what fees might be charged by health care providers to those seeking copies of medical records.  Exempted from this fee schedule are insurers who are trying to validate charges in settlement of an insurance claim (except for Workers’ Compensation).  A request from a Social Security or any Federal or state financial needs based program or for a district attorney have a flat fee.  X-ray film is not covered by this Notice since it “is not susceptible to photostatic reproduction.” The DOH originally published this schedule December 3, 2011 but it turns out there was a typographical error and so the list was re-released.

Schedule of charges is as follows:

- Pages 1-20                                        not to exceed $1.39 per page

- Pages 21-60                                      not to exceed $1.03 per page

- Pages 61 and above                          not to exceed 34 cents per page

- Microfilm per page charge               $2.04

- Flat fee re Social security claim        $26.12

- Flat fee for records sought by DA     $20.62

In addition to these fees, charges for postage, shipping and delivery may be imposed.

DEPARTMENT ISSUES EXCHANGE RATIONALE

On January 19, the PA Insurance Department issued a statement from Commissioner Consedine that spells out the rationale for the Corbett Administration’s seeking of a $33 million grant from the US Department of Health & Human Services when PA is seeking an unconstitutional ruling from the US Supreme Court against the Patient Protection Affordable Care Act (PPACA).  The document restates the Corbett view that the Federal law is unconstitutional but unless repealed or knocked down by the Supreme Court, it is still the law of the land and Pennsylvania must still have legislation in place January 1, 2013 establishing a state Health Insurance Exchange or HHS will impose its own Exchange on the Commonwealth.

NFIP OFFERS WEBINARS

Three Webinars will be offered this coming week by the National Flood Insurance Program (NFIP).  Topic for January 24 is FEMA Mapping Changes.  Advanced Flood Training is offered January 26 as is Elevation Rating. Details:  http://www.fema.gov/business/nfip/a_wshop.shtm  NOTE: In-agency Flood Insurance CE is offered by PHILLIPS ASSOCIATES.

CROP INSURANCE LOSSES LISTED BY COUNTY

On January 17 USDA Risk Management Agency (RMA) issued a county by county loss statement for Crop Insurance payouts for 2011.  Eight PA counties had RMA crop indemnities exceeding one million dollars (figures slightly rounded): Franklin $7 million; Berks $2.7 million; Blair $1.9 million; Huntingdon $1.5 million; Adams $1.3 million; Lancaster and Lebanon $1.2 million each; and Schuylkill with $1.1 million.  Posting close to the $1 million mark was Bedford County at $900,000.  Most counties sustained claims ranging from $100,000 to $600,000.  Three counties had no indemnities for Crop Insurance (Forest, Pike, and Cameron).  Details:  http://www.rma.usda.gov/data/indemnity/2011/11712table.pdf . These numbers may become important after Governor Corbett releases his Budget proposal for FY 2012-13 which would likely NOT resurrect the PA Crop Insurance Premium Subsidy Program

MARYLAND EXCHANGE NOTE

According to Insurance & Financial Advisor of January 6, 2012, , Executive Director of Maryland Health Benefit Exchange Rebecca Pierce told lawmakers that agents and brokers should sell the exchange products and serve as Navigators since duplicating services with unlicensed navigators would be expensive and inefficient.

TORT BILL ON HOUSE CALENDAR

A bill addressing tort reform issues is on the House calendar when the General assembly reconvenes this week.  House Bill 1976 (Cutler-R-Lancaster) would require that trials involving damages take place in the counties where the event allegedly occurred.  This is designed to reduce the practice of trial attorneys seeking to move the trial to jurisdictions known for high jury awards. A similar approach was taken with medical malpractice lawsuits and the result was a 50% drop in new medical malpractices cases going to Philadelphia courts.  Allegheny County saw a one-third drop.

BUDGET HEARING SCHEDULE SET

Budget hearings by the House and Senate Appropriations Committees start in February after Governor Corbett’s February 7 address to the General Assembly… (www.legis.state.pa.us for a full schedule)

Agency                                               Date/Time/House/Senate

Aging                                                   2/29 3:00 House; 2/21 3:00

Agriculture                                           2/28 9:30 House; 2/28 1:00 Senate

Attorney General                                 2/22 9:00 House; 2/15 1:00

Auditor General                                   2/22 11:00; 2/15 9:30

Community Economic Dev.                3/1 1:00 House; 2/27 3:00 Senate

Conservation & Nat. Resources           2/28 10:30 House; 2/16 3:00 Senate

Environmental Protection                    2/28 1:00 House; 2/22 9:30 Senate

Health                                                  2/29 1:30; 2/21 1:00

Insurance                                             2/27 3:00; 2/14 3:00

Labor & Industry                                 3/1 10:00 House; 2/23 3:00 Senate

Transportation                                     2/29 9:30 House; 2/22 1:00 Senate

COMMITTEE WORK

• On January 26, the House Insurance Committee holds a hearing on Senate Bill 388 (Vance-R-Cumberland) on dental liability insurance.
• It is confirmed that the House Insurance Committee will have a hearing Feb. 16 on House Bill 717 (Matzie-D-Allegheny) which would establish an Office of Consumer Advocate for Health Insurance to be housed in the Department of Community & Economic Development. (DCED)

NAIC CLOSES LIFE COMMENTS BY JANUARY 30

The National Association of Insurance Commissioners announced January 13 that the cut-off date for public comment on the new Draft Framework that outlines an approach for evaluating the reserves for a category of life insurance products.  The purpose of the Draft Framework is to develop a uniform interpretation regarding existing reserving requirements for universal life with secondary guidance and term universal life products.  Comments should be addressed to Dan Schelp at dschelp@naic.org or 816/783-8027.

HHS STRIKES AGAIN re RATES

On January 12, HHS again hit a health insurer doing business in Pennsylvania for seeking a rate increase exceeding ten percent.  Trustmark Life Insurance Company, a division of Trustmark Companies in Lakeforest, Illinois, was attacked for its “excessive” increase of 13 percent and was told to “rescind the rates, issue refunds to consumers or publically explain their refusal to do so.”  HHS was using its authority granted by the Patient Protection & Affordable Care Act (PPACA) in reviewing insurer rate increases despite Pennsylvania’s passage of Act 134 of 2011 (SB 1336) restoring rate review authority to the state’s Insurance Department.  Trustmark markets health products in five states: Alabama, Arizona, PA, Virginia and Wyoming.  Earlier, HHS slammed a Mennonite insurance company, Everence, for a ten-percent increase for PA small groups and the company refused to back down despite HHS condemnation.

POLITICS & RETIREMENTS

• State Senator John Rafferty (R-Montgomery) has suspended his campaign for the Republican nomination for Attorney General.
• State Rep. Mario Scavello (R-Monroe) announced that he is seeking the GOP nomination for State Senator in the new Monroe county district created by reapportionment.
• Rep. Larry Curry (D-Montgomery) is retiring at the end of this legislative session as is Democratic Rep.  Dante Santoni (Berks).
• Senator Stewart Greenleaf (R-Montgomery) was a candidate for President in the New Hampshire primary.
• New Allegheny County Chelsea Wagner says she has no plans to relinquish her PA House seat per PoliticsPA after receiving word that a special election to fill her seat would have to be held in Allentown where reapportionment moved her legislative district from Pittsburgh.  She will keep her legislator salary but forgo the county salary for Controller.
• Arguments for the eleven lawsuits challenging the new reapportionment maps will be heard by the PA Supreme Court on January 23, one day before the first day nominating petitions may be circulated.

NAIC ADDS DI TO INTERSTATE COMPACT LIST

On January 11, the National Association of Insurance Commissioners (NAIC) announced that individual disability income (DI) insurance policies are included in the product mix addressed by the Interstate Insurance Product Regulation Commission.  This means that a DI product approved in one Compact state, if approved by the Commission, could be sold in the other Compact states without prior approval from each separate regulator.  Seen as a way to speed product to market, the concept was advanced by former PA Insurance Commissioner Diane Koken and of course, Pennsylvania is a part of the Commission.  NAIC is offering webinars January 25, February 2 and February 8.  Details: www.insurancecompact.org.   In addition, there is a new Filing Information Notice to assist companies wanting to submit their DI products for compact approval.

Per the Milliman Interstate Compact Survey report released January 10, the number of insurers utilizing the Compact is 132, a 78% increase from 2009.

MARKET NOTES

• Rough Notes magazine profiled two Pennsylvania agencies in its January 2012 issue.  First is The Seltzer Group from Orwigsville, PA as a candidate for the 2011 Agency of the Year.  Second is Pittsburgh’s Seubert & Associates in an article ‘Taking Control of Health Risks Pays Off’.
• The Bureau of Labor Statistics says that the U.S. insurance industry added 3,300 jobs in December 2011.  This puts it about on a par with April 2011 and 0.39% above December 2010.  November’s job picture was virtually unchanged with the insurance industry losing 100 jobs.
• In 2012, the National Insurance Crime Bureau (NICB) marks its 100^th year of fighting insurance fraud.
• According to Insurance & Financial Advisor January 6, Maryland’s Health Benefit Exchange wants to build on the expertise of Maryland’s agents and brokers as it develops the Navigators in MD.

SESSION DAYS FOR 1^st QUARTER 2012

Session days through March are:

January: 17, 18, 23, 24, 25 (both House and Senate)

February: 6, 7, 8 (both House and Senate); 13, 14, 15 (House)

March: 5, 6, 7 (Senate), 12, 13, 14 26, 27, 28 (both House and Senate)

Governor Corbett delivers his Budget proposal for FY 2012-13 on February 7.  Legislative appropriations hearings on the proposed State Budget take place in February and March.

CORBETT FREEZES BUDGET

On January 4, Governor Corbett announced a freeze in spending in the State Budget in many categories and reduced expenditures on average by three percent because state revenues simply have not met expectations.  December’s shortfall was 5.9 percent off projections with $2.3 billion in revenues, or $141.5 million less than anticipated.  This followed Budget numbers for November showing $1.719 billion with $63.3 million (3.5%) below the estimate. The year-to-date shortfall through November 30 was $486.8 million or 4.0% below expectations.  The only areas where tax revenues exceeded estimates in December were inheritance taxes which garnered $100,000 over estimate (although the YTD is 4.4% below) and taxes on cigarettes, gambling, beer and alcohol which were $2.6 million over estimates in December and 1.3% above for the fiscal year thus far.

The Insurance Department lost $555,000 in general government operations because of Governor Corbett’s decision to now be $17.9 million but did not lose any CHIP program funding ($97.365 million).

Others losing 3 percent in general operating monies were the Governor’s and Lt. Governor’s and other Executive Offices, the General Assembly, the State Judiciary, Health Department, Labor & Industry, Agriculture, DCED, Conservation & Natural Resources, Corrections, Education (although not to Pupil Transportation or Libraries or Basic Education Funding) , DEP, Public Welfare, Revenue, State, and PennDOT.  State Police lost one percent as did the Probation and Parole Board.  Spared from the budget knife were PA Emergency Management Agency, Environmental Hearing Board, and Office. of the Treasurer.  Sure to generate political fire are five-percent cuts to State System of Higher Education, Head Start Supplemental Assistance, and the state-affiliated schools of Penn State, University of Pittsburgh, Temple and Lincoln Universities.

IRS ISSUES W2 PPACA NOTICE

The Internal Revenue Service issued Notice 2012-9 regarding employer obligations to report benefits on employees’ W-2s in 2013 for calendar year 2012.  The IRS says that the aggregate value of health benefits will include the cost of coverage provided under hospital indemnity or other fixed indemnity insurance or cost of coverage only for a specified disease such as cancer insurance.  Not included are costs of supplemental health benefits that employees pay for with after-tax dollars.  The Patient Protection Affordable Care Act (PPACA) specified that W-2s contain aggregate cost of health benefits for 2011 but the IRS made it voluntary for this last year.  A link to the IRS Notice appears below.

http://www.irs.gov/pub/irs-drop/n-12-09.pdf

HOUSE INSURANCE COMMITTEE MAY CONVENE OCA HEARING

On February 16, the House Insurance Committee may schedule a hearing on legislation that would establish an Office of Consumer Advocate (OCA) for Health Insurance.  HB 717 (Matzie-D-Allegheny) would establish the OCA as a watchdog office within the Department of Community & Economic Development (DCED) to assist consumers if they feel unfairly or illegally treated by a health insurance company or health insurance producer.  While similar legislation has been sponsored for years, the bill is somewhat more noteworthy because of PPACA’s requirement that each state establish an ombudsman for health insurance consumers, something which Pennsylvania has not done.  The bill has 26 sponsors, 24 of which are Democrats.  In the Rendell Administration, the Office of Consumer Liaison was established within the Insurance Department as an alternative to creating a new government entity.  It is unclear as to what the Corbett Administration will do relative to the PPACA mandate.  Funding for OCA would come from grant applications to HHS under PPACA.  The bill gives OCA these powers:

- to represent interests of consumers as a party or represent an interest of consumers before the Insurance Department

- represent consumers in court or before an agency or regulatory body as deemed appropriate by the OCA

PAHU’s position is that HB 717 is unnecessary given the Insurance Department’s traditional responsibilities to protect insurance consumers.  Rather than create a new office, PAHU holds that the Department should receive adequate funding and staff in the Budget to better meet this need.

POLITICAL UPDATE

Two members of the PA Senate announced that they will not seek re-election next year.  They are Mary Jo White (R-Venango) and Jane Earll (R-Erie).  Senator White chairs the Senate Environmental Resources & Energy Committee.  Senator Earll chairs the Senate Community, Economic & Recreational Development Committee and is a member of the Senate Banking & Insurance Committee.

NUMBERS, NUMBERS

• FEMA reports that disaster assistance of grants and loans to Pennsylvanians following Hurricane Irene and Tropical Storm Lee totaled more than $383.4 million.
• RE Workers Compensation, per a January 7 Notice from the PA Department of Labor & Industry, the Statewide Average Weekly Wage is $888.00 per week for injuries occurring on or after January 1, 2012.

PA DEPARTMENTS ISSUE NOTICE REGARDING HHS AND PPACA

Published in the December 31, 2011 PA Bulletin was a joint Notice from the PA Insurance Department and the PA Health Department regarding HHS’ external reviews allowed by the Patient Protection Affordable Care Act (PPACA).  Specifically, the Notice says that unless there is an explicit replacement by Federal law, Act 68 (Article XXI of the Insurance Company Law) remains in effect.  Examples where authority will be retained by the Department are: complaints, network adequacy, prompt payment of health claims, contract review, and credentialing.   Adverse benefit discrimination is dealt with by the US Department of Health & Human Services under PPACA.

The Insurance Department does however require from health insurers by January 31, 2012 a certification that policy language changes re review processes comply with PPACA.

 REMINDER…Insurance agencies and companies are invited to have PHILLIPS ASSOCIATES provide your in-house Continuing Education.  It is time well spent considering that staff does not need to travel and can still put out ‘brush fires’ during breaks and during a lunch period.  It is also economical and will not represent a strain on resources.  Insurers combine this CE with their own product updates to agents during their company agent meetings.  NOTE: Part of an agency’s subscription to Producer Plus includes two hours of free in-house CE.  Go to www.vphillipsassoc.com for a listing of courses or call 717/732-7255 for more information.

BAKER TO INTRODUCE EXCHANGE LEGISLATION

Rep. Matt Baker (R-Bradford) is planning to introduce Health Insurance Exchange shortly after the New Year.  It establishes a regulatory framework within the PA Insurance Department to meet the requirements of the Patient Protection Affordable Care Act (PPACA).  It falls more in line with the Utah Model where the Exchange acts as a facilitator to help people find coverage in the private sector.  Those seeking an Exchange insurance product would be required to utilize a licensed insurance producer and Navigator responsibilities would be limited to distributing general information but not advising regarding the particular aspects of the Exchange unless there would be an insurance license.  Baker chairs the House Health Committee.  PAHU strongly favors the Baker approach and is launching a grass roots campaign during the legislative recess to help gain sponsors for the legislation.  The Corbett Administration is still working on its own Exchange proposal with language expected by mid-January.

NFIP GETS ANOTHER LIFELINE

The National Flood Insurance Program (NFIP) received a short-term extension of its authority to offer flood insurance due to the signing of the FY 2012 Omnibus Appropriations bill by President Obama on December 23.  The program is functional through May 31, 2012 and Congress will again have to address the issue then.

CHANGES FOR THE NEW YEAR

• Teen driving means more supervised driving (from 50 to 65 hours) including nighttime driving (10 hours) and driving in adverse weather conditions (5 hours).  Except for family members, there is a new restriction on the number of passengers.
• No more texting behind the wheel.
• Under Unemployment Compensation legislation, a claimant must actively search for work in order to be eligible for benefits.  For benefit years beginning on or after January 1, receipt of severance pay will cut into a person’s UC benefits.
• Mileage rates for 2012 per IRS Notice 2012-1 are 55.5 cents per mile for business miles driven, 23 cents per mile for moving or medical purposes and 14 cents per mile may be counted for miles driven in service of charitable organizations.
• On January 1, the PA Turnpike is penalizing those preferring to pay with cash instead of EZ Pass.  Cash customers will pay ten percent more. The Turnpike doesn’t like cash?

REGULATORY UPDATE

• The comment period has expired for the PA Banking Department’s proposed regulation on continuing education under the Debt Management Services Act.  This CE is required for all credit counselors, supervisors, and managers.  Text of the rule is found in the PA Bulletin December 3, 2011.  (www.pabulletin.com)
• Torus National Title Insurance Company has filed an application to acquire First Sealord Surety, a PA casualty insurance company.
• The Title Insurance Rating Bureau has filed a request for the Insurance Department to approve an overall 7.0% increase which will take effect March 1, 2012.

AN OPEN LETTER FROM PHILLIPS ASSOCIATES

Dear Professional Colleague:

PHILLIPS ASSOCIATES began on April 1, 1999.  In October 2002, we expanded our services to agencies and these have been expanded several times since then.  My letter to you is simply to ask that you take advantage of what my firm has to offer.  Please also check some of these services out at our web site www.vphillipsassoc.com or call me at 717/346-1063.  My email is xenobun@aol.com.

Continuing Education

There are over 70 PHILLIPS ASSOCIATES courses approved by the PA Insurance Department to help your producers and CSRs meet their Continuing Education requirements.  Why not have us teach your people in-house?  They (and you) will save time and money AND they won’t be away from the office!.

Speaking to Groups

Dozens of speeches and CE presentations are given each year to organizations such as various I Days, NAIW or NAIFA chapters, etc. on a range of topics from Insurance Legislative Updates to the Patient Protection Affordable Care Act (PPACA), the massive federal health care law (125 talks in 2011).  Many presentations are also approved for one and two-credits of CE.  Many nonprofit speeches are given pro bono or in trade.  PHILLIPS ASSOCIATES has also been a CE resource for insurance companies as part of their agent meetings.

PRODUCER PLUS and Agency Services

These are available on a subscription basis and offer many benefits including in-house CE, access to legal counsel specializing in insurance, and assistance in the regulatory realm.  These are limited to twenty agencies per year to make sure that subscribers receive as much individual attention that they need.

LEG REG REVIEW

A free member service if you are a member of the Pennsylvania Association of Health Underwriters or Manufacturers Association of South Central PA and available by subscription for $100 per year otherwise.

Lobbying and Advocacy

NOT meant to take away from any association’s lobbying value to its members, PHILLIPS ASSOCIATES has done some “boutique” advocacy for special needs or tightly focused projects.

I look forward to hearing from you as to how my firm can be a resource to yours.  Best wishes for the New Year.

Vince Phillips

SENATE WINDS UP 2011

The Senate will reconvene January 3, 2012 and by recessing for the holidays, puts pressure on the House to concur with the Senate-approved reapportionment plan.  The House is in session until December 22.

DEPARTMENT GETS CHRISTMAS RATE PRESENT

The PA House passed Senate Bill 1336 (D. White-R-Indiana) restoring rate review authority to the PA Insurance Department.  With a vote of 190-1 (Rep. Josh Shapiro-D-Montgomery being the dissenting vote), this concurrence means that SB 1336 goes to Governor Corbett for his signature.  The bill requires prior approval for small group health insurance rate increases of ten percent or more and requires that such filing take place 45 days prior to the effective date.  Rate increases of less than 10% must still be filed with the Department 45 days before the effective date even though the Department does not have to approve them.  A link to the legislation appears below:

http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2011&sessInd=0&billBody=S&billTyp=B&billNbr=1336&pn=1839

UPMC-HIGHMARK BILLS ADVANCE

Two bills addressing the contract dispute between Highmark and UPMC have advanced in their respective chambers.  House Bill 2052 (Vulakovich-R-Westmoreland) passed the House December 15 186-6.  Senate Bill 1358 (D. White-R-Indiana) went through the Senate Banking & Insurance Committee.  HB 2052 mandates mediation and possible arbitration.  SB 1358 extends a cooling off period that the Insurance Department may impose from six months to three years.

HHS CLAIMS STATE BENEFIT FLEXIBILITY IN EXCHANGES

On December 16, the Department of Health & Human Services announced that it would permit states to tailor the minimum essential benefit provision of the Patient Protection Affordable Care Act (PPACA) to their own state experience.  The bulletin says that states may choose an existing plan as a model.  It might be one of the three largest small group plans in the state, one of the three largest state employee health plans, one of the three largest federal employee health plan options, or the largest HMO plan offered in the state’s own commercial market.  The minimum essential benefits become the benefits package for the state Health Insurance Exchanges.  The HHS move resulted from a series of regional hearings on essential health benefits including one in Philadelphia in November where PAHU testified and recommendations by the Institutes of Medicine (IOM) to model PPACA benefits after existing coverage rather than creating a new HHS standard.

HHS said that public comments are solicited and are due January 31, 2012 to essentialHealthBenefits@cms.hhs.gov .

REGULATORY UPDATE

• The Coal Mine Compensation Rating Bureau has requested a 17% loss cost reduction to Workers’ Compensation. If approved by the Insurance Department, the filing would take effect April 1, 2012.
• Independent Regulatory Review Commission (IRRC) published its meeting schedule December 17.  Early 2012 dates are January 12; February 26, March 15, April 5 and April 19.  The full schedule was published in the December 17, 2011 PA Bulletin (www.pabulletin.com )

FEDERAL HHS UPDATE

• HHS claims that 2.5 million young adults are now insured because of PPACA’s mandate that those under 26 can be covered under their parents’ plan as a dependent.  Unclear from the announcement was how many had some other type of insurance before or could have purchased an individual plan.
• Per a Federal Register December 13 notice, the Early Retiree Reinsurance $5 billion PPACA program is effectively over with its monies expended.  Originally, the program was to have lasted until 2014.  It had subsidized claims based on Medicare schedules to health plans claims between $15,000-90,000 as a way to keep insurance for retirees younger than 65 years of age when they could qualify for Medicare.  Details:

http://www.gpo.gov/fdsys/pkg/FR-2011-12-13/pdf/2011-31920.pdf

BAD NEWS: PHILLY IS NUMBER ONE

Philadelphia has been named the Number One Judicial Hellhole of America per a listing presented by Americans for Tort Reform December 15.  This recognition was based on “ litigation tourism encouraged by some judges…plaintiff-friendly law, a reputation for high plaintiff win rate and generous awards (which)…contribute to Philadelphia’s status as a venue of choice.”  Other top rankings in order are: California; West Virginia;  South Florida; Madison and St. Clair Counties, Illinois; NYC and Albany, New York; Clark County, Nevada; and McLean County, Illinois.  This is the second year for Philadelphia being ranked worst in the nation.

HOUSE COMMITTEE CLEARS MANDATED BENEFITS BILL

House Bill 272 (Hess-R-Bedford) mandates health insurance coverage for Lyme’s disease, citing tick-borne ailments as a major problem in Pennsylvania with the Commonwealth having the highest incident rate in the Nation in 2009.  On December 14, HB 272 moved through the House Human Services Committee.  The bill is opposed by the insurance industry.  Covered treatments include long-term prescriptions for antibiotics.  REQUEST FOR INFORMATION: Do most plans offer this coverage as a standard benefit?  Please email your reply to xenobun@aol.com .

TORT REFORM PROPOSAL CONTINUES MOVEMENT

House Bill 1976 (Cutler-R-Lancaster) is being readied for final House passage after being reported out of the House Appropriations Committee December 12.  Introduced in November, this legislation requires that lawsuits be tried in the county where the cause of the lawsuit occurred or in the home county of the plaintiff.  This is similar to a legal reform almost a decade ago addressing medical malpractice lawsuits.  Its purpose is to discourage venue-shopping where cases are moved to jurisdictions where juries might be more sympathetic to pain and suffering lawsuits.  On December 5, HB 1976 moved through the House Judiciary Committee.  On December 7, the full House amended it and HB 1976 was re-referred to the House Appropriations Committee.

PHILLIPS ASSOCIATES wishes everyone a very happy holiday.  2011 has been a good year and we would like to express heartfelt appreciation for your subscribing to Leg Reg Review, receiving agency services through the Producer Plus program, hosting in-house Continuing Education, attending a CE class, letting us lobby for you and by commenting on articles you read in the Leg Reg Review.  Most of all, we value your friendship.  Many thanks!

HOUSE INSURANCE COMMITTEE TO DO RATE REVIEW

This week the House Insurance Committee plans to take up Senate Bill 1336 (D. White-R-Indiana), a measure restoring to PA Insurance Department the authority to review health insurer rate increases of ten percent or more.  This bill and a separate House bill, HB 1983 sponsored by Insurance Committee Chair Nick Micozzie (R-Delaware), were introduced to address a provision of the Patient Protection Affordable Care Act (PPACA) which gives HHS the right to review health insurer premium increases of ten percent or more.  HHS cited Everence Insurance Company for excessive premium increases in Pennsylvania when it increased rates by 12% after two years of no rate hikes.  Everence provides health insurance to members of Mennonite congregations.

The meeting will also consider HB 2052 (Vulakovich-R-Allegheny) providing for contracts between a Hospital Plan Corporation and a hospital.

AUTO MINIMUMS SUBJECT OF SENATE HEARING

For perhaps the first time since Act 6 was passed in 1990, the issue of auto insurance minimums is receiving attention.  A Senate Banking & Insurance Committee hearing on SB 1339 showed contrasting views between companies and the Insurance Department versus the Insurance Agents & Brokers of PA (IA&B) and the trial lawyers.  The legislation would double auto minimums from bodily injury $15,000 per person to $30,000, bodily injury per accident $30,000 to $60,000 and $5,000 property damage to $10,000.  (15/30/5 to 30/60/10).  The Department argued that 30/60/10 would disrupt the auto insurance market and force people into being uninsured for financial reasons.  It cited PA as having one of the lowest uninsured driver rates in the nation at seven percent, attributed to the affordability of the minimums.  The Insurance Federation echoed those beliefs saying that premiums would increase for one million Pennsylvanians and hit lower income drivers hardest. Property Casualty Insurers of America (PCI) submitted a written statement also opposing the bill.

IA&B countered by pointing to statistics on actual damages, saying that someone choosing the minimums is underinsured and refuting the statement that increasing minimum coverage would boost premiums significantly.  Also testifying in favor of SB 1336 was PA Association for Justice formerly known as the PA trial lawyers.  This group said that higher minimums allows for fairer awards to injured parties.  (NOTE: The bill does not address tort election options.)

ABORTION EXCHANGE BILL MOVES

A bill prohibiting Health Insurance Exchange coverage for abortions passed the House Health Committee December 5 and was re-referred to the House Appropriations Committee.  There is a companion bill, Senate Bill 3 (D. White-R-Indiana) which passed the Senate, was moved through the House Insurance Committee but was tabled in October.

TORT REFORM PROPOSAL GAINS TRACTION

House Bill 1976 (Cutler-R-Lancaster) is moving.  Introduced in November, this legislation requires that lawsuits be tried in the county where the cause of the lawsuit occurred or in the home county of the plaintiff.  This is similar to a legal reform almost a decade ago addressing medical malpractice lawsuits.  Its purpose is to discourage venue-shopping where cases are moved to jurisdictions where juries might be more sympathetic to pain and suffering lawsuits.  On December 5, HB 1976 moved through the House Judiciary Committee.  On December 7, the full House amended it and HB 1976 was re-referred to the House Appropriations Committee.

PEOPLE

• Senator Jeffrey Piccola (R-Dauphin) is not running for re-election.  The horseshoe shape of his redrawn district in reapportionment raised criticism that he was trying to protect himself from Harrisburgers because of his legislation putting the Capitol City’s finances in the hands of the state, something he vigorously denied.
• Senator Dominic Pileggi (R-Delaware) said that he is NOT running for the Republican nomination for U.S. Senator against incumbent Democrat Bob Casey, Jr.
• Veteran lawmaker and House Democratic Caucus Administrator Ron Buxton will not stand for re-election.  He has served the people of Harrisburg in the General Assembly since 1993.
• Tom Creighton (R-Lancaster) is also not running again.

HHS IS BUSY, BUSY WITH RULES AND GUIDANCE ON PPACA

• As mentioned in last week’s Leg Reg Review, HHS issued its final rule on the Medical Loss Ratio (MLR) December 6.  The Rule addresses such areas as mini-med plans and how insurer rebates must be handled if the health carrier violated the PPACA MLR standard.  HHS chose to ignore the express wishes of the National Association of Insurance Commissioners November 22 which voted for a resolution that would exempt insurance agent compensation from being included in the MLR calculation.  The result means that agents will continue to be squeezed as insurers cut discretionary areas of expense.  A link to the Rule follows:

HHS Final Rule on Medical Loss Ratio Requirements

Department of Health and Human Services,

• HHS will publish comments and rules relative to the PPACA CO-OP program on December 13 in the Federal Register.  The Consumer Operated and Oriented Plan is a type of non-profit Exchange mandated by PPACA for each state.

http://www.federalregister.gov/articles/2011/12/13/2011-31864/patient-protection-and-affordable-care-act-establishment-of-consumer-operated-and-oriented-plan

• HHS issued a new set of Q and As on how the Federal Government sees the Health Exchanges that will be operational in 2014.  The link follows:

http://cciio.cms.gov/resources/files/Files2/11282011/exchange_q_and_a.pdf.pdf

INDUSTRY NOTE: Northumberland-based Keystone Insurers Group has again made the Insurance Journal list in the Top 50 Personal Lines Leaders in independent insurance agency production.  Keystone Insurers Group finished second in the nation.  In October, the Insurance Journal published a list of Commercial Lines Leaders.  Keystone was fifth on the list.  Other PA agencies in the Commercial Lines Leaders list were The Graham Company from Philadelphia and the Insurance Alliance of Central PA, Inc. in Camp Hill.  The 2011 Personal Lines and Commercial Lines Leaders list are based on 2010 personal lines numbers.

FEDERAL NEWS TAKES SPOTLIGHT THIS WEEK: HHS IGNORES NAIC AGENT RESOLUTION

The Department of Human Services (HHS) will publish in the December 7 Federal Register final Medical Loss Ratio rules which do not include exempting agent compensation from the MLR calculation.  On November 22, the National Association of Insurance Commissioners voted for the resolution urging HHS to take compensation out of the calculation.

Following are two links relative to the HHS release.

• Technical Release on Fiduciary Requirements for Handling Medical Loss Ratio (MLR) Rebates, available at http://www.dol.gov/ebsa/newsroom/tr11-04.html
• HHS Final Rule on Medical Loss Ratio Requirements for Issuers, available at http://www.dol.gov/ebsa/pdf/tr11-04regulation.pdf   or at www.hhs.gov.

In response to requests, following is the NAIC vote and a link to the resolution’s text.   A ‘pro’ vote supported the insurance agents.  The resolution can be read here and the NAIC’s statement on the resolution can be found here.  The roll call is as follows:

Voting to approve: Alabama, Alaska, Arkansas, Delaware, Florida, Georgia, Idaho, Indiana, Kentucky, Louisiana, Michigan, Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Wyoming and American Samoan Islands.

Opposed: Arizona, California, Colorado, Connecticut, District of Columbia, Hawaii, Illinois, Kansas, Maryland, Massachusetts, Minnesota, Missouri, New York, Oregon, Rhode Island, Vermont, Washington, West Virginia, the Northern Mariana Islands and Puerto Rico. Abstentions: Maine, Montana, South Dakota, Texas and Virginia.  Not present or not voting were Iowa (for procedural reasons), Guam, New Mexico, the U.S. Virgin Islands and Wisconsin.

NEW EXCHANGE GUIDANCE ISSUED The Federal Center for Consumer Information and Insurance Oversight (aka HHS’s exchange office) has posted new guidance about state-based exchange implementation.  This follows last week’s announcement by the Corbett Administration that it would seek a Pennsylvania Exchange instead of letting HHS implement one on PA resident.  Although a specific legislative proposal has not been made, go to www.PAHealthOptions.com. The web site also has links to all of the testimony from the three Insurance Department hearings back in August.

WELLNESS GRANT DETAILS BEGINNING TO EMERGE The Patient Protection Affordable Care Act (PPACA) specified that a 200 million dollar grant program for businesses under 100 employees who establish an employee wellness program would be in effect October 2010.  Now, finally, HHS’ Centers for Disease Control issued an announcement that they will be hosting webinars.  The purpose is to get input as to the parameters of what that wellness program should be.  The process to identify and certify employers will occur after the webinars and be decided by February 2, 2012.  http://images.magnetmail.net/images/clients/NAHU_2/attach/FR.pdf

LABOR DEPARTMENT ISSUES FAQs ON MENTAL PARITY AND BENEFIT SUMMARY

The final rule under PPACA requiring health care insurers and group health plans to make available to consumers a standardized four-page summary of the benefits and coverage for each plan they offer will be released “as soon as possible,” according to a set of frequently asked questions.  Along with information about the summary of benefits and coverage, DOL, HHS, and IRS posted several FAQs addressing the implementation of the Mental Health Parity and Addiction Equity Act of 2008. In February 2010, DOL, HHS, and Treasury published interim final rules implementing the 2008 mental health parity law, which requires group health plans to treat medical and mental health benefits equally. The FAQs are on the Department of Labor’s website at: http://www.dol.gov/ebsa/faqs/faq-aca7.html . There is some doubt as to whether the March deadline for the benefits summary can be met via the rule-making process.

PEOPLE

• It’s formal: Former Representative and strong fiscal conservative Sam Rohrer (R-Berks) has thrown his hat into the ring for the Republican nomination for U.S. Senate against Democratic incumbent Bob Casey, Jr.  Besides being a former legislator, Rohrer ran against Governor Corbett in the 2010 primary.
• It’s formal: Senator John Rafferty (R-Montgomery) is seeking the Republican nomination for Attorney General in next year’s election.
• It’s maybe formal: Senate Majority Leader Dominic Pileggi (R-Delaware) may also be running for the Republican Senate nomination.
• Rep. Jennifer Mann (D-Lehigh) has announced that she will not stand for re-election after this term.

NCOIL LEADERSHIP INCLUDES PENNSYLVANIA LAWMAKERS

The National Conference of Insurance Legislators (NCOIL), an association of state insurance legislators,  has several PA legislators in its leadership.  Heading NCOIL’s Health, Long-Term Care and Health Retirement Issues Committee is Senate Appropriations Committee Chairman Jake Corman (R-Centre.  Besides Corman, Representatives Bob Godshall (R-Montgomery), House Insurance Committee Minority Chairman Tony DeLuca (D-Allegheny) and Marguerite Quinn (R-Bucks) serve on NCOIL’s Executive Committee.

REGULATORY UPDATE

• Cigna Corporation has filed an application to acquire control of Bravo Health, a PA domiciled HMO.
• The PA Department of Health released a list December 3 of permissible charges that a health care facility or health care provider may charge when requested to supply medical records.  Exceptions are requests by insurers required to validate a claim (except for Workers’ Compensation) and flat fees from the facility or provider under the Social Security Act, Medicaid or from a district attorney.  Examples: Pages 1-20 $1.39 per page; 21-60 $1.03 per page; flat fee for SSA or Medicaid $26.12 etc.  HIPAA says that a “reasonable cost fee” including copying, postage and summarizing may be charged if the request is for a summary.  Questions: James T. Steele Jr. 717/783-2500

WORKERS COMP FILING TO INSURANCE DEPARTMENT

On November 29, the PA Compensation Rating Bureau (PCRB) submitted a filing for PA loss costs with a proposed date of April 1, 2012 if the Insurance Department approves.  This is found in Circular 1593, Filing C-361.  http://www.pcrb.com/shared/p_contents.htm . The filing proposes an overall average loss cost decrease of 5.66 percent.  One other PCRB note: Effective November 30, 2011, PCRB has entered into an agreement with the National Council on Compensation Insurance (NCCI) that allows PCRB to meet new Federal electronic reporting requirements re mine safety. Details: www.pcrb.com

NAIC CONSIDERS MLR ISSUE

On November 22, the National Association of Insurance Commissioners (NAIC) convened a teleconference to discuss and vote on a resolution seeking to exempt agent compensation from the company calculation of the Patient Protection Affordable Care Act (PPACA) Medical Loss Ratio (MLR).  Pennsylvania’s Insurance Department’s vote was for the resolution.  This was a milestone vote by the commissioners in favor of the agents’ position.  This was NAHU’s top regulatory priority.  Those wishing to send a thank you note may do so to:

Hon. Michael Consedine
PA Insurance Commissioner
1326 Strawberry Square
Harrisburg, PA 17120

CORBETT ADMINISTRATION TO PROPOSE EXCHANGE

After a considerable period, the Corbett Administration has decided to go ahead and propose legislation establishing a PA Health Insurance Exchange.  Exchanges are part of the Patient Protection Affordable Care Act (PPACA) and states must enact enabling legislation by January 1, 2013 or they will be placed into an HHS Exchange now being constructed at the national level.  Some speculation was that the Administration was waiting to see what direction the courts would take before initiating any action.  Another scenario is that the Insurance Department was researching and laying the groundwork for the legislation pending final approval from the Governor’s Office.  Thus far, the Department commissioned consulting firm KPMG to study the exchanges tried in other states and present analysis of various models.  This grant work was released November 21 and is available on an Insurance Department web site, www.PAHealthOptions.com. The web site also has links to all of the testimony from the three Insurance Department hearings back in August.

Right now, legislative language from the Insurance Department is not ready for final internal approval before being released.  In a related development, the Insurance Department is seeking a grant from HHS to help PA design software for an Exchange-type referral system.

NAHU EARLY BIRD EXPIRES DECEMBER 8

The Early Bird rate for those wishing to register for the Capitol Conference in Washington, DC January 23-25, 2012 need to contact the National Association of Health Underwriters at www.nahu.org . That web site also links to the hotel site (Hyatt Regency Washington on Capitol Hill).

LINDA BEBKO-JONES DIES

Former Representative Linda Bebko-Jones has passed away.  The former Erie legislator served for 14 years until her retirement in 2006.  Personal note: Linda was a passionate fighter for the little guy and a long-standing member of the House Insurance Committee.

HOUSE INSURANCE COMMITTEE PLANS HEARINGS

The House Insurance Committee scheduled two hearings for the last week of November.  First is a November 29 hearing on House Bill 1763 (Miccarelli-R-Delaware) on physician contracts with health insurers.  The bill would provider greater transparency regarding insurer fee schedules, spell out fee notification rules by carriers to health care providers, and give providers a 65-day window to protest from the original notification date of the change.  HB 1763 also promotes additional transparency in claims payment practices, requires that health care providers exhaust internal company appeals first in the event of a disputed payment and gives them a 90-day window to begin formal dispute procedures.

A second hearing takes place November 30 on House Bill 1561 (Cutler-R-Lancaster) on physician credentialing by health insurers.  HB 1561 would require health insurers to decide on a physician application for credentialing within 60 days.  It also establishes appeal procedures and what grounds the physician may seek an appeal from a health insurer rejection of a credentialing application.

FLOOD CLAIM UPDATE

• On November 23, FEMA announced that PA victims of Hurricane Irene and Tropical Storm Lee have been given extra time in order to file proofs of loss (FEMA Notice W-11120 November 22, 2011).  This 60-day extension is the second extension given by the Federal Emergency Management Agency.  The new date is January 23, 2012.  These losses are those that were experienced between August 26- September 4, 2011.  Details: James Sadler, NFIP Director of Claims (JamesSadler@dhs.gov) .
• FEMA and PEMA declared that certain private nonprofit organizations may be eligible for disaster assistance for losses suffered during Irene and Lee providing they meet qualifying conditions under the federal Public Assistance Program.  If approved, funding may be conditioned on the percent of the facility dedicated to public use.  Private nonprofit organizations must have suffered over $1,000,000 in damage.  Details: FEMA Release 4025-12 November 18, 2011 http://www.fema.gov/news/release.fema?id=59585

HHS SLAMS MENNONITE INSURER

On November 21, the Department of Health and Human Services hit a Mennonite health insurance plan for exceeding ten percent in seeking a rate approval.  Everence increased Pennsylvania small group rates by 12 percent effective October 1, the first increase in over two years.  HHS based its determination that the rate request was “unreasonably high” on the authority it assumed under the Patient Protection Affordable Care Act (PPACA).  The Goshen, Indiana-based insurer countered HHS’ charge by stating that its state experience data for Pennsylvania matched its national experience data for a two-year period.   PAHU issued a statement to some trade press saying that HHS clearly demonstrated why PA’s General Assembly needed to pass rate review authority by the PA Insurance Department (SB 1336 and HB 1983) to “try to keep HHS’ nose out of our business”.  PAHU also noted that Mennonites don’t have a history of ‘ripping each other off’ in trying to protect their church members and congregations.

GOVERNOR SIGNS BILLS INTO WITH SOME INSURANCE EFFECT

On November 22, Governor Corbett signed these bills into law as Acts 103 and 106 of 2011 respectively.

• House Bill 563 (Geist-R-Blair) creates an exemption from liability for a landowner who allows for the use of his/her land for an approved motorcycle safety program.
• Senate Bill 834 (Eichelberger-R-Blair) revises and updates bond or crime-fidelity insurance requirements for county officers and employees having responsibility for money or property.  Because of the involved nature of the legislation, a link follows:

http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2011&sessInd=0&billBody=S&billTyp=B&billNbr=0834&pn=1669