§ 6 — Massachusetts nongroup health reinsurance plan

Section 6. (a) There is hereby established a nonprofit entity to be known as the Massachusetts Nongroup Health Reinsurance Plan. Any carrier issuing or renewing a guaranteed issue health plan shall be a member of the plan.(b) The plan shall be prepared and administered by a five member governing committee to be appointed by the governor. Such appointees shall represent carriers selling nongroup health plans in the commonwealth, of which at least one appointee shall represent a foreign nongroup carrier. The initial appointment of two such appointees shall be for a term of three years. The initial appointment of two such appointees shall be for a term of two years. The initial appointment of the remaining appointee shall be for a term of one year. All appointments thereafter shall be for a term of three years. The governing committee shall be responsible for the hiring of any employees or contractors of the plan.(c) On or before January 1, 2001, the governing committee shall submit to the commissioner a plan of operation. The commissioner shall, after notice and hearing, approve, disapprove or modify the plan of operation. Subsequent amendments to the plan shall be deemed approved by the commissioner if not expressly disapproved in writing by the commissioner within 30 days from the date of the filing. The commissioner shall establish the plan of operation by March 1, 2001, if the governing committee does not propose such a plan.(d) Meetings of the governing committee of the plan shall be conducted in accordance with the provisions of section 11A1/2 of chapter 30A.(e) The plan shall not reimburse a carrier with respect to the claims of a reinsured individual or dependent in any calendar year until the carrier has paid an amount determined by the governing board and approved by the commissioner for benefits otherwise covered by the plan during the calendar year.(f) Premium rates charged for coverage reinsured by the plan shall be established by the governing committee and shall be subject to the approval of the commissioner.(g) Any member of the reinsurance plan may only reinsure the coverage of an eligible individual, or any eligible dependent of such an individual, who enrolls in a guaranteed issue health plan on or after November 1, 2001. The reinsurance plan shall reinsure the level of coverage provided by the guaranteed issue health plan.(h) Following the close of the fiscal year established in the plan of operation, the governing committee shall determine the premiums charged for reinsurance coverage, the reinsurance plan expenses for administration and the incurred losses, if any, for the fiscal year, taking into account investment income and other appropriate gains and losses. Any net loss for the year shall be recouped by assessment of the members which shall be apportioned in proportion to each such members' respective shares of the total premiums earned in the commonwealth from health plans, but in no event shall such assessments exceed 1 per cent of the premiums earned from such health plans.(i) If the assessment level is inadequate, the governing committee may adjust reinsurance thresholds, retention levels or consider other forms of reinsurance. The governing committee shall report annually to the commissioner and the joint committee on insurance on its experience, the effect of the reinsurance plan on nongroup rates and shall make recommendations, if necessary, relative to sustaining the viability of the reinsurance plan. The committee may enter into negotiations with plan members to resolve any deficit through reductions in future payment levels for reinsurance plans. Any such recommendations shall take into account the findings of an actuarial study to be undertaken after the first three years of the plan's operation to evaluate and measure the relative risks assumed by differing types of carriers. The study shall be conducted by three actuaries appointed by the commissioner, one of whom shall represent risk assuming carriers, one of whom shall represent reinsuring carriers and one of whom shall represent the commissioner.By no later than July 1, 2006, the governing committee shall establish a proposal to phase-out the operations of the plan and submit a copy of said proposal to the commissioner for approval. The proposal shall include a method for closing the plan by June 30, 2007. The governing committee shall execute the phase-out of the plan.