SB 872
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 872 (Senator Feldman, et al.)
Finance Health and Government Operations
Health Insurance - Consumer Protections
This emergency bill establishes, in a new subtitle, the consumer protection provisions of
the federal Patient Protection and Affordable Care Act (ACA) that are currently specified
through cross-references in Maryland law; it also establishes nondiscrimination provisions.
The bill generally applies to any health benefit plan offered in the small group, individual,
or large group markets and specifies exceptions for grandfathered plans. The
Insurance Commissioner is authorized to enforce these provisions and must adopt specified
regulations. The bill expresses legislative intent and includes a reporting requirement.
Fiscal Summary
State Effect: The bill primarily codifies existing federal law. The bill’s additional
requirements (new responsibilities for the Insurance Commissioner, enforcement of
nondiscrimination provisions by the Maryland Commission on Civil Rights (MCCR), and
a reporting requirement) can be handled with existing resources. Revenues are not affected.
Local Effect: None.
Small Business Effect: None.
 Analysis
Bill Summary:
Prohibition Against Discrimination
A carrier is prohibited from refusing, withholding, or denying coverage under a health
benefit plan to, or otherwise discriminating against, any individual on the grounds of race,
sex, color, creed, national origin, marital status, sexual orientation, age, gender identity, or
disability. MCCR must enforce these provisions.
These prohibitions do not apply to limitations or restrictions related to age or marital status
that are specifically authorized or required under the Insurance Article to limit or restrict
eligibility for insurance coverage or benefits.
Preexisting Conditions and Prohibition on Health Factors as a Condition of Eligibility
A carrier is prohibited from (1) excluding or limiting benefits because a health condition
was present before the effective date of coverage or (2) denying coverage because a health
condition was present before or on the date of denial. This prohibition applies whether or
not (1) any medical advice, diagnosis, care, or treatment was recommended or received for
the condition or (2) the health condition was identified as a result of either a pre-enrollment
questionnaire or physical examination given to an individual or a review of records relating
to the pre-enrollment period. This prohibition applies to all plans, except for individual
grandfathered plans.
A carrier may not establish rules for eligibility for enrollment into a health benefit plan
based on specified health status-related factors such as health condition, claims experience,
or receipt of health care. A carrier may not require an individual, as a condition of
enrollment or continued enrollment, to pay a premium or contribution greater than that of
a similarly situated individual on the basis of any health status-related factor.
Rating Factors and Ratios
The bill codifies permissible rating factors, authorizing a carrier to determine a premium
rate based on (1) age; (2) geography; (3) whether the plan covers an individual or family;
and (4) tobacco use. A premium rate based on age may not vary by a ratio of more than
3 to 1 for individuals aged 21 and older and must include one-year age bands for individuals
aged 21 through 63 and a single age band for individuals aged 64 and older. For individuals
younger than age 21, a premium rate based on age must be actuarially justified, consistent
with the uniform age rating curve, and include one-year age bands for individuals younger
than age 15 and one-year age bands for individuals aged 15 through 19. A premium rate
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based on tobacco use may not vary by a ratio of more than 1.5 to 1. These provisions apply
only to a carrier offering an individual or small group plan.
Coverage of Children Up to Age 26
A carrier that offers a health benefit plan (including a grandfathered plan) that provides for
dependent coverage of a child must continue to make that coverage available until the child
is 26 years of age.
Access to Preventive Services without Cost-sharing Requirements
A carrier may not impose any cost-sharing requirements for specified (1) evidence-based
items or services; (2) immunizations; (3) evidence-informed preventive care and
screenings for infants, children, and adolescents; (4) preventive care and screenings for
women; and (5) contraceptive coverage for women.
Prohibition on Lifetime or Annual Limits
A carrier that offers a health benefit plan, including a grandfathered plan, may not establish
lifetime limits or annual limits on the dollar value of benefits for any insured individual.
Waiting Periods for Group Plans
A carrier that offers a group plan, including a grandfathered plan, may not apply a waiting
period of more than 90 days before coverage takes effect for an individual who is eligible
to be covered under the plan.
Designation of Primary Care Providers
If a carrier requires or provides for the designation of a primary care provider, the carrier
must allow each insured to designate any participating primary care provider (or
pediatrician for a child) if the provider is available to accept the insured individual.
Access to Obstetrical and Gynecological Care
A carrier must treat the provision of obstetrical and gynecological care and the ordering of
related items and services as care authorized by the insured individual’s primary care
provider. A carrier may not require authorization or a referral for obstetrical and
gynecological care by a participating obstetrician/gynecologist.
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Emergency Services
If a carrier provides coverage for emergency services in an emergency department of a
hospital or freestanding medical facility, the carrier may not require an insured to obtain
prior authorization and must provide coverage regardless of whether the provider
furnishing the emergency services contracts with the carrier. If the provider does not
contract with the carrier, the carrier (1) may not impose any limitation on coverage that is
more restrictive than services furnished by a contracted provider; (2) may only impose the
same cost-sharing requirement that would apply for a contracted provider; and (3) must
reimburse the provider at a specified rate.
Summary of Benefits and Coverage
A carrier must compile and provide to consumers a summary of benefits and coverage
explanation that accurately describes the benefits and coverage under the applicable health
benefit plan and complies with specified standards or regulations. The summary must be
presented in a specified manner and include specified information. These provisions apply
to all health benefit plans, including grandfathered and nongrandfathered plans.
Each carrier must also provide a summary of benefits and coverage explanation (which
may be in paper or electronic form) that complies with specified standards to applicants
and insureds, as specified. A carrier must provide notice of any material modification in
the terms of the plan or coverage at least 60 days before the effective date of the
modification.
The Maryland Insurance Administration (MIA) must levy a fine of up to $1,000 against a
carrier that willfully fails to provide information under these requirements.
Medical Loss Ratio and Premium Rebates
The minimum acceptable medical loss ratio (MLR) is 85% for the large group market and
80% for the small group and individual markets. The Commissioner may set higher MLRs
in regulation. Each carrier must comply with specified requirements for calculating MLRs
and related reporting and rebate requirements.
Catastrophic Plans
A carrier may offer a catastrophic plan in the individual market only to individuals who
are younger than age 30 before the beginning of the plan year or who hold a specified
hardship exemption. A catastrophic plan must require a specified deductible.
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Limitations on Cost Sharing for Essential Health Benefits
Each carrier must comply with annual limitations on cost sharing for essential health
benefits (EHBs) covered under health benefit plans, including any regulations adopted by
the Commissioner.
Prescription Drug Essential Health Benefits
Individual and small group plans must be considered to provide prescription drug EHB
coverage only if the plan complies with specified federal regulations or regulations adopted
by the Commissioner.
Prohibition on Policy Rescissions
The bill prohibits a carrier from rescinding the coverage under a health benefit plan, with
specified exceptions such as fraud. A carrier that rescinds coverage must comply with
regulations adopted by the Commissioner. These provisions apply to all health benefit
plans, including grandfathered and nongrandfathered plans.
Responsibilities of the Insurance Commissioner
The Commissioner must, to the extent necessary, adopt regulations that (1) establish
criteria that a health benefit plan must meet to be considered a grandfathered plan;
(2) establish criteria that a health benefit plan must meet to be considered a plan that covers
EHBs; (3) establish standards for the summary of benefits and coverage; (4) define
“medical loss ratio” and establish requirements for calculating MLRs and related reporting
and rebate requirements; (5) establish annual limitations on cost sharing; (6) establish
criteria to determine if an individual or small group plan provides prescription drug EHB
coverage; and (7) establish requirements that a carrier must comply with to rescind
coverage. Generally, regulations must be consistent with specified federal regulations and
rules as of December 1, 2019.
Responsibilities of the Maryland Health Benefit Exchange
To the extent necessary, the Maryland Health Benefit Exchange (MHBE) must adopt
regulations that establish a process for issuing hardship and affordability exemptions,
consistent with specified federal regulations and rules as of December 1, 2019.
Reporting Requirement
MIA, the Health Education and Advocacy Unit (HEAU) of the Office of the Attorney
General, and MHBE must (1) monitor federal statutes and regulations to determine whether
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provisions of the ACA or corresponding regulations are repealed or amended to the benefit
or detriment of Maryland consumers and (2) by December 31 each year until 2024, submit
a specified joint report to the Senate Finance Committee and the House Health and
Government Operations Committee.
Intent of the General Assembly
The bill expresses legislative intent that the bill’s changes, including moving specified
insurance provisions within the Insurance Article and supplementing cross-references to
the ACA with the codification of specific statutory language, further implement the
continuing intent of the General Assembly to ensure that Maryland residents benefit from
the consumer protections.
Current Law:
Federal Patient Protection and Affordable Care Act
The ACA requires nongrandfathered health plans to cover 10 EHBs, which include items
and services in the following categories: (1) ambulatory patient services; (2) emergency
services; (3) hospitalization; (4) maternity and newborn care; (5) mental health and
substance use disorder services; including behavioral health treatment; (6) prescription
drugs; (7) rehabilitative and habilitative services and devices; (8) laboratory services;
(9) preventive and wellness services and chronic disease management; and (10) pediatric
services, including dental and vision care.
Title I of the ACA provides numerous market reforms and consumer protections that have
been adopted in Maryland law by reference, including:
 dependent coverage up to the age of 26;
 preexisting condition exclusions;
 prohibition on policy rescissions;
 provisions regarding wellness and prevention programs;
 prohibition on annual or lifetime limits on the dollar value of benefits;
 prohibition on excessive waiting periods in the large group market;
 requirements relating to choice of health care professional and patient access to
obstetrical and gynecological care;
 emergency services coverage requirements;
 standards for summaries of benefits and coverage explanations;
 minimum loss ratio requirements and premium rebate guidelines;
 annual limitations on cost sharing;
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 availability of child only plans;
 minimum benefit requirements for catastrophic plans;
 prohibition on discriminatory premium rates;
 coverage for individuals participating in clinical trials;
 contract requirements for stand-alone dental plans;
 guaranteed availability and renewability of coverage; and
 prescription drug benefit requirements.
Individual Market Consumer Protections
In the individual market, State law requires guaranteed issuance (§ 15-1316 of the
Insurance Article) and renewability (§ 15-1309 of the Insurance Article). However, there
is no blanket prohibition on preexisting condition exclusions. Thus, carriers may exclude
preexisting conditions from coverage. Furthermore, while a carrier may not deny or refuse
to renew coverage because of claims experience or a health-related status, a carrier can
charge higher premiums based on health status.
Small Group Market Consumer Protections
In the small group market, State law requires guaranteed issuance (§§ 15-1208.1,
15-1208.2, 15-1209, and 15-1210 of the Insurance Article) and renewability (§ 15-1212 of
the Insurance Article). State law also provides for community rating and limits adjustment
of small group rates to certain factors such as age, geography, and family composition
(§ 15-1205 of the Insurance Article). However, as in the individual market, there is no
blanket prohibition on preexisting condition exclusions. Thus, carriers may exclude
preexisting conditions from coverage. Furthermore, carriers may charge higher premiums
based on health status for certain plans within certain parameters for a limited period of
time.
Large Group Market Consumer Protections
In the large group market, State law requires guaranteed issuance (§§ 15-1406 and 15-1410
of the Insurance Article). State law also prohibits eligibility rules based on any health
status-related factor (§ 15-1406 of the Insurance Article) and prohibits a carrier from
charging an individual a premium that is greater than a similarly situated individual based
on any health status-related factor (§ 15-1407 of the Insurance Article). However, as in the
individual and small group markets, there is no blanket prohibition on preexisting condition
exclusions. Thus, carriers may exclude preexisting conditions from coverage or impose
waiting periods.
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Nondiscrimination Provisions
The ACA provides two sets of nondiscrimination provisions: (1) health status-related
factors; and (2) civil rights (race, color, national origin, sex, disability, and age). Maryland
law covers health status but is silent on civil rights.
Background:
Consumer Protection Workgroup
Chapters 417 and 418 of 2019 required the Maryland Health Insurance Coverage
Protection Commission to establish a workgroup to (1) monitor the appeal of the decision
of the U.S. District Court for the Northern District of Texas in Texas v. United States
regarding the ACA and the implications of the decision for the State; (2) monitor federal
enforcement of the ACA; and (3) determine the most effective manner of ensuring that
Maryland consumers can obtain and retain quality health insurance, independent of any
action or inaction on the part of the federal government or any changes to federal law or its
interpretation. The workgroup included representatives from MIA, HEAU, carriers, the
Maryland Hospital Association, and consumer advocates. The workgroup met four times
during the 2019 interim. The workgroup reviewed Senate Bill 868/House Bill 697 of 2019
(as those bills were introduced) and, after considering several drafts and comments, made
recommendations for legislation for the 2020 session. This bill generally implements those
recommendations.
Legal Challenge to the Patient Protection and Affordable Care Act
On December 18, 2019, the Fifth Circuit Court of Appeals affirmed the U.S. District Court
for the Northern District of Texas’ determination that the ACA’s individual mandate is
no longer considered a tax because the penalty for the mandate was reduced to $0 in the
Tax Cuts and Jobs Act of 2017 (and, therefore, that the U.S. Congress does not have
constitutional authority to enforce the mandate). However, the circuit court did not affirm
the district court’s determination that the individual mandate is not severable from the other
provisions in the ACA. Instead, the circuit court remanded the severability issue to the
district court and advised the district court to “employ a finer toothed comb” in determining
which portions of the ACA are inseverable. California Attorney General Xavier Becerra,
who has led the defense of the ACA after the U.S. Department of Justice declined to do so,
has appealed the circuit court’s decision to the U.S. Supreme Court. The Supreme Court
denied the request to expedite its decision about whether to take the case and will instead
decide whether to review the case according to its regular timeframe. If the court does take
the case, it may not be argued or decided until 2021.
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 Additional Information
Prior Introductions: SB 868 and HB 697 of 2019, as introduced, contained similar
provisions. Those bills were significantly amended and enacted as Chapters 417 and 418
of 2019, which required the review that resulted in recommendations for this legislation.
Designated Cross File: HB 959 (Delegate Pendergrass, et al.) - Health and Government
Operations.
Information Source(s): Office of the Attorney General; Department of Budge