Rhode Island Healthcare funding law imposes a "per-insured-life" assessment, significantly changing business considerations for Rhode Island insurers
Insurers providing coverage for medical services for Rhode Island residents may soon find themselves subject to disproportionately large assessments as the unintended consequence of a legislative effort to lower the state's vaccine costs by facilitating bulk purchases. The Healthcare Services Funding Plan Act (the "Act"), signed into law by Governor Gina Raimondo on June 19, 2014, modified and expanded the Rhode Island Vaccine Assessment Program (RIVAP) by creating a new, expansive definition of "insurer" and altering the basis for assessments from direct written premium to the number of covered lives effective January 1, 2016.
Healthcare Services Funding Plan Act Changes Assessment Basis
The Act modifying the vaccine assessments was included as part of the much broader Rhode Island House Bill 7133 on Appropriations for the year 2015. Prior to the Act, insurers selling policies regulated by the chapters of the Insurance Code regarding accident and sickness, nonprofit hospital, nonprofit medical services, and health maintenance organizations were assessed a child and adult immunization assessment based on direct premium written in Rhode Island.
Now, under the Act, every insurer captured by the new, broader definition must pay a quarterly assessment based on the number of covered "contribution enrollees." The Act defines "contribution enrollee" as "an individual residing in Rhode Island, with respect to whom an insurer administers, provides, pays for, insures, or covers health care services," but exempts individuals whose healthcare services are paid or reimbursed by Medicare or other government programs. The broad language in the Act may be read to require every insurer or administrator with a policy covering "healthcare services" for any persons in Rhode Island to pay an assessment based on the number of such persons, even if the person is only covered for a limited duration.
Exemptions Exist, but Vague Language Needs Clarification
The statute specifically excludes nine types of insurance coverage, including "limited benefit health" and "other limited benefit policies," but these terms are not defined in the Act. The law also authorizes the Rhode Island Secretary of Health and Human Services to promulgate rules, regulations and procedures necessary for the proper administration of the law; no such clarifying rules have been issued to date. The Department of Insurance has primary regulatory authority over many of the insurers being assessed, but has not issued any guidance or bulletins regarding the RIVAP program.
Until Rhode Island legislators and regulators at the Departments of Health and Human Services or Insurance develop clarifying language to address the expansive definitions of "insurer" and "contribution enrollee" through legislation or regulations, insurers and administrators should be mindful to make all possible efforts to comply with the new law when providing coverage to consumers in Rhode Island.