,C a Sin rely yours,

, -- ,C

"t""

The Honorable Joe T. San Agustin '7 Speaker, Twenty-Fi rst Guam Legislature fL,* 155 Hesler Street ,4

,

Agana, Guam 9691 0 /

Dear Mr. Speaker:

Transmitted herewith is Bill No. 889 which I have signed into law this date as

Public Law 21-123.

Sin rely yours, a 5 . a

Attachment

JOSEPH F. ADA Governor

t??, cjggj;

TWENTY-FIRST GUAM LEGISLATURE 1992 (SECOND) Regular Session

CERTIF'ICATION OF PASSAGE OF AN ACT TO THE GOVERNOR

This is to cerhfy that Substitute Bill No. 889 (LS), "AN ACT TO ADD A NEW CHAPTER VII, §§43700 THROUGH 43710, TO TITLE XXXIX OF THE GOVERNMENT CODE, ESTABLISHING MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS," was on the 10th day of July, 1992, duly and regularly passed. A n A

v Speaker Attested:

Senator and Legislative Secretary -------------------------*-------------------------------------------------------

This Act was received by the Governor this /&day of at $*=SS

Jdy , 1992, - o'clock P . M .

b w * % u e t u i r / Assistant Staff Officer

Governor's Office APRROVED:

$/+s .R JOSEPH F. ADA

I Governor of Guam

Date: JUL z i, 1552 PublicLaw No. 71,,,,


Bill No. 889 (LS) Substitute Bill by Committee on Ways and Means and further substituted on the floor

Introduced by: C.T.C. Gutierrez E. P. Arriola D. L. G. Shimizu J. P. Aguon M. Z. Bordallo H. D. Dierking P. C. Lujan G. Mailloux D. Parkinson J. T. San Agustin F. R. Santos J. G. Bamba A. C. Blaz D. F. Brooks E. R. DueAas E. M. Espaldon M. D. A. Manibusan M. J. Reidy M. C. Ruth T. V. C. Tanaka A. R. Unpingco

AN ACT TO ADD A NEW CHAPTER VII, 5543700 THROUGH 43710, TO TITLE XXXIX OF THE GOVERNMENT CODE, ESTABLISHING MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS.

BE IT ENACTED BY THE PEOPLE OF THE TERRITORY OF GUAM:

1 Section 1. A new Chapter VII is added to Title XXXIX of the

2 Government Code to read:

3 "Chapter VII

4 93700. Definitions. (a) "Applicant" means:

5 (1) In the case of an individual Medicare supplement

6 policy, the person who seeks to contract for insurance

7 benefits, and

8 (2) In the case of a group Medicare supplement

9 policy, the proposed certificate holder.

10 (b) "Certificate" means, for the purposes of this Chapter,

1 1 any certificate delivered or issued for delivery in Guam under a

1 2 group Medicare supplement policy.

1 3 (c) "Certificate Form" means, the form on which the

1 4 certificate is delivered or issued for delivery by the issuer.

1 5 (d) "Issuer" includes insurance companies, fraternal benefit

societies, health care service plans, health maintenance

organizations, and any other entity delivering or issuing for

delivery in Guam Medicare supplement policies or certificates.

(e) f'Medicare" means the "Health Insurance for the Aged

Act," Title XVIII of the Social Security Amendments of 1965, as

then constituted or later amended.

(0 "Medicare Supplement Policy" means a group or

individual policy of acadent and sickness insurance or a subscriber

contract of hospital and medical service associations or health

maintenance organizations, other than a policy issued pursuant to

contract under Section 1876 or Section 1833 of the Federal Social

Security Act (42 U.S.C. Section 1395 et. seq.), or an issued policy

under a demonstration project authorized pursuant to

amendments to the Federal Social Security Act, which is

advertised, marketed or designed primarily as a supplement to

reimbursements under Medicare for the hospital, medical or

surgical expenses of persons eligble for Medicare.

(g) "Policy Form" means the form on which the policy is

delivered or issued for delivery by the issuer.

p3701. Applicability and scope. (a) Except as otherwise

specifically provided in $43703, this Chapter shall apply to:

(1) All Medicare supplement policies delivered or

issued for delivery in Guam on or after the effective date

hereof, and

(2) All certificates issued under group Medicare

supplement policies, which certificates have been delivered

or issued for delivery in Guam.

(b) This Chapter shall not apply to a policy of one (1) or

more employers or labor organizations, or of the trustees of a

fund established by one (1) or more employers or labor

organizations, or combination thereof, for employees or former

employees or a combination thereof, or for members or former

members, or a combination thereof, of the labor organizations.

(c) The provisions of this Chapter are not intended to

prohibit or apply to insurance policies or health care benefit plans,

including group conversion policies, provided to Medicare eligible

persons which policies are not marketed or held to be Medicare

supplement policies or benefit plans.

s43702 Standards for policy provisions and authority to

promulgate regulations. (a) No Medicare supplement policy or

certificate in force in Guam shall contain benefits that duplicate

benefits provided by Medicare.

(b) Notwithstanding any other provision of law, a

Medicare supplement policy or certificate shall not exclude or

limit benefits for loss incurred more than six (6) months from the

effective date of coverage because it involved a preexisting

condition. The policy or certificate shall not define a preexisting

condition more restrictively than a condition for which medical

advice was given or treatment was recommended by or received

from a physiaan within six (6) months before the effective date of

coverage.

(c) The commissioner shall adopt reasonable regulations to

establish specific standards for policy provisions of Medicare

supplement poliaes and certificates. Such standards shall be in

addition to and in accordance with applicable laws of Guam. No

requirement of the Insurance Code relating to minimum required

policy benefits, other than the minimum standards contained in

this Chapter, shall apply to Medicare supplement poliaes and

certificates. The standards may cover, but not be limited to:

(1) Terms of renewability;

(2) Initial and subsequent conditions of eligibility;

(3) Nonduplication of coverage;

(4) Probationary periods;

(5) Benefit limitations, exceptions and reductions;

(6) Elimination periods;

(7) Requirements for replacement;

(8) Recurrent conditions; and

(9) Definitions of t e n .

(d) The commissioner shall adopt reasonable regulations to

establish minimum standards for benefits, claims payment,

marketing practices and compensation arrangements and

reporting practices, for Medicare supplement policies and

certificates.

(e) The commissioner may adopt from time to time such

reasonable regulations as are necessary to conform Medicare

supplement policies and certificates to the requirements of

Federal law and regulations promulgated thereunder, including

but not limited to:

(1) Requiring refunds or credits if the policies or

certificates do not meet loss ratio requirements;

(2) Establishing a uniform methodology for

calculating and reporting loss ratios;

(3) Assuring public access to policies, premiums and

loss ratio information of issuers of Medicare supplement

insurance;

(4) Establishing a process for approving or

disapproving policy forms and certificate forms and

proposed premium increases;

(5) Establishing a policy for holding public hearings

prior to approval of premium increases; and

(6) Establishing standards for Medicare Select

poliaes and certificates.

(0 The commissioner may adopt reasonable regulations

that speafy prohibited policy provisions not otherwise specifically

authorized by statute which, in the opinion of the commissioner,

are unjust, .unfair or unfairly discriminatory to any person insured

or proposed to be insured under a Medicare supplement policy or

certificate.

#3703. Loss ratio standards. Medicare supplement poliaes

shall return to policyholders benefits which are reasonable in

relation to the premium charged. The commissioner shall issue

reasonable regulations to establish minimum standards for loss

ratios of Medicare supplement policies on the basis of incurred

claims experience, or incurred health care expenses where

coverage is provided by a health maintenance organization on a

senrice rather than reimbursement basis, and earned premiums in

accordance with accepted actuarial principles and practices.

943704. Disclosure standards. (a) In order to provide for

full and fair disclosure in the sale of Medicare supplement

policies, no Medicare supplement policy or certificate shall be

delivered in Guam unless an outline of coverage is delivered to

the applicant at the time application is made.

(b) The commissioner shall prescribe the format and

content of the outline of coverage required by subsection (a) of this

section. For purposes of this section, "format" means style,

arrangements and overall appearance, including such items as the

size, color and prominence of type and arrangement of text and

captions. Such outline of coverage shall include:

(1) A description of the principal benefits and

coverage provided in the policy;

'(2) A statement of the renewal provisions, including

any reservation by the issuer of a right to change premiums;

and disclosure of the existence of any automatic renewal

premium increases based on the policyholder's age.

(3) A statement that the outline of coverage is a

summary of the policy issued or applied for and that the

policy should be consulted to determine governing

contractual provisions.

(c) The commissioner may prescribe by regulation a

standard fonn and the contents of an informational brochure for

persons eligible for Medicare, which is intended to improve the

buyer's ability to select the most appropriate coverage and

improve the buyer's understanding of Medicare. Except in the

case of direct response insurance policies, the commissioner may

require by regulation that the informational brochure be provided

to any prospective insureds eligible for Medicare concurrently

with delivery of the outline of coverage. With respect to direct

response insurance policies, the commissioner may require by

regulation that the prescribed brochure be provided upon request

to any prospective insureds eligible for Medicare, but in no event

later than the time of pclicy delivery.

(d) The commissioner may adopt regulations for captions

or notice requirements determined to be in the public interest and

designed to inform prospective insureds that particular insurance

coverages are not Medicare supplement coverages, for all

accident axid sickness insurance policies sold to persons eligible for

Medicare by reason of age, other than:

(1) Medicare supplement poliaes;

(2) Disability income policies;

(3) Basic, catastrophic or major medical expense

policies; or

(4) Single premium, nonrenewable policies.

(e) The commissioner may adopt reasonable regulations to

govern the full and fair disclosure of the information in

connection with the replacement of accident and sickness policies,

subscriber contracts or certificates by persons eligible for

Medicare.

93705. Notice of free examination. Medicare supplement

poliaes and certificates shall have a notice prominently printed on

the first page of the policy or certificate or attached thereto

stating in substance that the applicant shall have the right to

return the policy or certificate within thrty (30) days of its delivery

and to have the premium refunded if, after examination of the

policy or certificate, the applicant is not satisfied for any reason.

Any refund made pursuant to this section shall be paid directly to

the applicant by the issuer in a timely maxrer.

w3706. Filing requirements for advertising. Every issuer of

Medicare supplement insurance policies or certificates in Guam

shall provide a copy of any Medicare supplement advertisement

intended for use in Guam whether through written, radio, or

television medium to the commissioner for review or approval by

the commissioner to the extent it may be required under law.

543707. Administrative procedures. Regulations adopted

pursuant to this Chapter shall be subject to the provisions of

543036 of the Government Code relating to the adoption and

promulgation of rules and regulations.

543708. Penalties. In addition to any other applicable

penalties for violations of the Insurance Code, the commissioner

may require issuers violating any provision of this Chapter or

regulations promulgated pursuant to this Chapter to cease

marketing any Medicare supplement policy or certificate in Guam

which is related directly or indirectly to a violation or may require

such issuer to take such actions as are necessary to comply with

the provisions of this Chapter or both.

1 w3709. Severability. If any provision of this Chapter or the

2 application thereof to any person or circumstances is for any

3 reason held to be invalid, the remainder of the Chapter and the

4 application of such provision to other persons or circumstances

5 shall not be affected thereby."

6 Section 2 Effective date. The Act shall be effective upon

. 7 enactment.

TWENTY-RRST GUAM LEGISLATURE 1991 (FIRST) Regular Session

Date: 7 /' ' / VOTING SHEET f I

TANAKA. Thomas V.C. j@w4' , 1 I

Resolution No. Question:

I 1 v"* ; UNPINGCO. Antonio R .

ABSENT/ O ~ D U ' R I N G

ROLL

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M a !i!amKi

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bK2 1

AGUON. J ohn P. I

W O L A . Elizabeth P. 1 t/' I

BAMBA. J. George i I

BLAZ. Anthonv C. ' i /

I

I I tie@+''

BORDALLO. Madeleine 2.

BSPALDON. -to M.

GUTIERREZ. Carl T.C.

LUJAN. P&r C.

MAILLOUX. Gordon

MANIBUSAN. Marilyn D.A.

PARKINSON. Don

REIDY. Michael J.

PUTH. Marda C.

SAN AGUSTIN. Joe T, ,

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SANTOS. Francisco R . 1 Lr" !

SHIMTZU. David L.G. 1 I

BROOKS, Doris F. d l

PIERKING. H e r w t a . . D.

DUENAS. Edward R .

II /

F - Twenty-First Legislature 155 Hesler Street Chairman, Comm~ttee Pacific Arcade on Ways & Means

Agana, Guam 96910 Telephone: (671) 472-3407/8/9 Vice-chairman, Commit tee

FAX: (671) 477-3161 on Tourism & Transportation

CARL T. C. GUTIERREZ Senator

July 3,1992

Honorable Speaker Joe T. San Agustin Speaker, Twenty-First Guam Legislature 155 Hesler St. Agana, Guam 96910

Dear Mr. Speaker:

The Committee on Ways & Means wishes to report out its findings on BILL NO. 889 "AN ACT TO ADD A NEW CHAPTER VII, SECTIONS 43700 THROUGH 43710 OF THE GOVERNMENT CODE, RELATIVE TO MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS." to the full Legislature with the recommendation to do Pass as Substituted by the Committee on Ways and Means.

The Committee Voting Record is as follows:

T o PASS: 14 NOT TO PASS: 0 ABSTENTIONS: 0 INACTIVE FILE: 0

Copies of the Committee Report and all pertinent documents are attached for

your information.

Sincerely,

~ A k f , T. C GUTIERREZ Chairman, Committee on Ways & Means

Twenty-First Guam Legislature Committee on Ways & Means

VOTING SWTfiSBT BILL NO.

889

AN ACT TO ADD A NEW CHAPTER VII, SECTIONS 43700 THROUGH 43710 OF THE GOVERNMENT CODE, RELATIVE TO MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS.

TO PASS -

NOT ABSTAIN TO PLACE IN TO PASS INACTIVE FILE

Y

Senator Carl ?r. C. GUTIERREZ

Senator Herminia D. D I E ~ K I N G

, \ J

Senator John P. UON Member

1

II Senator ,ElizabetfrP. A R w L q

Member Y Senator Doris F. BROOKS

Senator ~ a r # y n MANIBUSAN Member

. b / Senator Don PARKINSON

u-, h I/

Senator David SHIMIZU Member \

\ i I

L

Speaker Toe T. SAN AGUSTIN

COMMITTEE ON WAYS AND MEANS COMMITTEE REPORT ON

BILL NO. 889


PURPOSE AND ESSENTIAL ELEMENTS

Bill No. 889 was introduced at the request of the Department of Revenue and Taxation because they had been advised that there is a requirement of the Omnibus Budget Reconciliation Act of 1990 (OBRA '90). The basic concept is that the Federal Government wants to regulate the practice of supplemental medical policies for the basic medicare policy. The Medicare Supplement Insurance Minimum Standards Model Act has been circulated throughout the states to be model legslation for indicating that the state regulates supplemental insurance coverage for the Medicare program to the satisfaction of the federal standards.

Since Guam does not have code sections which are similar to that contained in the Model Act, Bill No. 889 was introduced to enact the Model Act for Guam.

The Model Act contains definitions, and defines the scope of the Act, the standards for policy provisions and authority to promulgate regulations, loss ratio standards, disclosure standards, notice of free examination, filing requirements for advertising, administratrive procedures, and penalties. There are extensive rules and regulations which accompany the Model Act and are the standards by which medical policies can be reviewed in order to determine if they are in compliance with federal requirements as a supplemental insurance to the Medicare program.

PUBLIC HEARING

The Committee on Ways and Means conducted a public hearing on Monday, June 29, 1992 at 9:00 a.m. in the Legislative Public Hearing Room to gather testimony on Bill No. 889. Present at the hearing were Senator Carl T.C. Gutierrez, Chairman of the Committee, who conducted the hearing, being joined by Speaker J.T. San Agustin.

TESTIMONY

Mr. John Camacho, Regulatory Administrator for the Department of Revenue and Taxation' regarding insurance matters, testified in favor of the passage of Bill No. 889. He read a written statement by Director Joaquin G. Blaz, Insurance Commissioner, regarding the bill. The written testimony indicated that the Federal Government has enacted Medicare Supplement Insurance Minimum Standards to protect elderly and retired workers and the reason for these minimum standards is to weed out or eliminate health insurance policies that provide unnecessary and duplicate coverage. In other words, whatever medicare covers in terms of hospitalization and medical benefits should not be covered by other health insurance to avoid duplications and unnecessary expense on the part of elderly and retired people. Director Blaz' testimony indicates that there is a deadline of July 30,1992 by which a statute must be passed, or otherwise any health insurance policy which is used to supplement medicare and is marketed and is issued on Guam by insurance companies, health maintenance organizations and health care providers must be forwarded to the Secretary of Health and Human Services for processing, review, and approval. An enactment of this legislation would make this process unnecessary because the insurance policies would be reviewed locally according to local law.

Director Blaz' testimony indicated a few technical corrections needed to the bill which was reviewed by the Health Care Financing Administration, by Ms. Gertrude Saunders.

Dr. Leticia V. Espaldon, Director of the Department of Public Health and Social Services, provided written testimony in favor of

the bill. This testimony indicates that the government subsidizes Medicare part B insurance by the Department of Public Health and Social Services for all medicaid recipients who are eligible to participate in the Medicare part B insurance. The testimony indicates that passage of the bill would set the standards by which other insurance companies should operate assuring the needed protection of the subscribers.

During the oral presentation, Speaker San Agustin questioned Mr. Camacho concerning various aspects of how this bill is applicable and what is the exact situation necessitating its urgent passage at this time. Speaker San Agustin also questioned Mr. Camacho whether Guam could enact regulations which would hold a higher standard of coverage than that required in the mainland due to the high cost of health insurance on Guam and Mr. Camacho indicated that that point could be looked into. Speaker San Agustin was concerned that the payments for supplemental coverage be high enough so that better care could be provided for the elderly and persons eligible for the Medicare program. Mr. Camacho pointed out that many elderly persons on Guam are not even aware of the Medicare program and that they are eligible for it. Speaker San Agustin pointed out that many retirees of the government of Guam have government of Guam insurance and also Medicare. Speaker San Agustin indicated that the Department of Revenue and Taxation could enforce its standards in conjunction with the Department of Public Health and Social Services and the health planning agencies. He compared the raising of standards with a Hawaii program called the Hawaii Relative Value Scale. Mr. Camacho indicated that he would like to place this issue before the health providers during the next round of negotiations for health insurance with health providers. This would be coming up in August, 1992.

COMMITTEE RECOMMENDATION

The Committee on Ways and Means, after due consideration of the testimony offered in support of Bill No. 889, recommends that Bill No. 889 be reported out to the full Legislature to do pass as substituted.


Bill No. 889 Substitute Bill by Committee on Ways and Means

Introduced bv: C.T.C. Gutierrez J

i . ' 4 ~ - 4 ~ 7 -

, 0

AN ACT TO ADD A NEW CHAPTER V11, S & e ' * THROUGH 43710 OF THE GOVERNMENT CODE, RELATIVE TO MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS.

BE IT ENACTED BY PEOPLE OF THE TERRITORY OF GUAM:

Section 1. A new Chapter VII is added to the Government Code to read:

"Chapter VII

Section 43700 . Definitions. (a) "Applicant" means:

(1) in the case of an individual Medicare supplement policy, the

person who seeks to contract for insurance benefitsfand

(2) in the case of a group Medicare supplement policy, the proposed

certificateholder.

(b) "Certificate" means, for the purposes of this Chapter, any certificate

delivered or issued for delivery in Guam under a group Medicare

supplement policy.

(c) "Certificate Form" means, the form on which the certificate is


(d) "Issuer" includes insurance companies, fraternal benefit societies,

health care service plans, health maintenance organizations,and any

other entity delivering or issuing for delivery in Guam Medicare

supplement policies or certificates.

(e) "Medicare" means the "Health Insurance for the Aged Act," Title XVIII

of the Social Security Amendments of 1965, as then constituted or later

amended.

1 (f) "Medicare Supplement Policy" means a group or individual policy of

2 accident and sickness insurance or a subscriber contract of hospital and

3 medical service associations or health maintenance organizations,

4 other than a policy issued pursuant to contract under Section 1876 or

5 Section 1833 of the Federal Social Security Act (42 U.S.C. Section 1395 et.

6 seq.), or an issued policy under a demonstration project authorized

7 pursuant to amendments to the federal Social Security Act, which is

8 advertised, marketed or designed primarily as a supplement to

9 reimbursements under Medicare for the hospital, medical or surgical

1 0 expenses of persons eligible for Medicare.

11 (g) "Policy Form" means the form on which the policy is delivered or

1 2 issued for delivery by the issuer.

1 3 Section 43701. Applicabilityandscope. (a) Except as otherwise

1 4 specifically provided in Section 43703, this Chapter shall apply to:

1 5 (1) All Medicare supplement policies delivered or issued for delivery

1 6 in Guam on or after the effective date hereof, and

1 7 (2) All certificates issued under group Medicare supplement policies,

1 8 which certificates have been delivered or issued for delivery in

1 9 Guam.

2 0 (b) This Chapter shall not apply to a policy of one (1) or more employers or

2 1 labor organizations, or of the trustees of a fund established by one (1) or

2 2 more employers or labor organizations, or combination thereof, for

2 3 employees or former employees or a combination thereof, or for

2 4 members or former members, or a combination thereof, of the labor

2 5 organizations.

2 6 (c) The provisions of this Chapter are not intended to prohibit or apply to

2 7 insurance policies or health care benefit plans, including group

2 8 conversion policies, provided to Medicare eligible persons which 2

1 policies are not marketed or held to be Medicare supplement policies or

2 benefit plans.

3 Section 43702. Standards for Policy Provisions and Authority to

4 Promulgate Regulations. (a) No Medicare supplement policy or certificate

5 in force in Guam shall contain benefits that duplicate benefits provided by Medicare.

6 (b) Notwithstanding any other provision of law, a Medicare supplement

7 policy or certificate shall not exclude or limit benefits for loss incurred

8 more than six (6) months from the effective date of coverage because it

9 involved a preexisting condition. The policy or certificate shall not

1 0 define a preexisting condition more restrictively than a condition for

11 which medical advice was given or treatment was recommended by or

1 2 received from a physician within six (6) months before the effective

1 3 date of coverage.

1 4 (c) The commissioner shall adopt reasonable regulations to establish

1 5 specific standards for policy provisions of Medicare supplement

1 6 policies and certificates. Such standards shall be in addition to and in

1 7 accordance with applicable laws of Guam. No requirement of the

1 8 Insurance Code relating to minimum required policy benefits, other

1 9 than the minimum standards contained in this Chapter shall apply to

2 0 Medicare supplement policies and certificates. The standards may

2 1 cover, but not be limited to:

2 2 (1) Terms of renewability;

2 3 (2 ) Initial and subsequent conditions of eligibility;

2 4 (3) Nonduplication of coverage;

2 5 (4) Probationary periods;

26 (5) Benefit limitations, exceptions and reductions;

2 7 . (6) Elimination periods;

2 8 (7) Requirements for replacement;

(8) Recurrent conditions; and

(9) Definitions of terms.

(d) The commissioner shall adopt reasonable regulations to establish

minimum standards for benefits, claims payment, marketing practices

and compensation arrangements and reporting practices, for Medicare

supplement policies and certificates.

(e) The commissioner may adopt from the time to time, such reasonable

regulations as are necessary to conform Medicare supplement policies

and certificates to the requirements of federal law and regulations

promulgated thereunder, including but not limited to:

(1) Requiring refunds or credits if the policies or certificates do not

meet loss ratio requirements;

(2) Establishing a uniform methodology for calculating and reporting

loss ratios;

(3) Assuring public access to policies, premiums and loss ratio

information of issuers of Medicare supplement insurance;

(4) Establishing a process for approving or disapproving policy forms

and certificate forms and proposed premium increases;

(5) Establishing a policy for holding public hearings prior to approval

of premium increases; and

(6) Establishing standards for Medicare Select policies and certificates.

(0 The commissioner may adopt reasonable regulations that specify

prohibited policy provisions not otherwise specifically authorized by

statute which, in the opinion of the commissioner, are unjust, unfair

or unfairly discriminatory to any person insured or proposed to be

insured under a Medicare supplement policy or certificate.

Section 43703. Loss Ratio Standards. Medicare supplement policies

28 shall return to policyholders benefits which are reasonable in relation to the 4

premium charged. The commissioner shall issue reasonable regulations to establish

minimum standards for loss ratios of Medicare supplement policies on the basis of

incurred claims experience, or incurred health care expenses where coverage is

provided by a health maintenance organization on a service rather than

reimbursement basis, and earned premiums in accordance with accepted actuarial

principles and practices.

Section 43704. Disclosure Standards. (a) In order to provide for

full and fair disclosure in the sale of Medicare supplement policies, no Medicare

supplement policy or certificate shall be delivered in Guam unless an outline of

coverage is delivered to the applicant at the time application is made.

(b) The commissioner shall prescribe the format and content of the

outline of coverage required by Subsection (a) of this Section. For

purposes of this Section, "format" means style, arrangements and

overall appearance, including such items as the size, color and

prominence of type and arrangement of text and captions. Such

outline of coverage shall include:

(1) A description of the principal benefits and coverage provided in

the policy;

(2) A statement of the renewal provisions, including any reservation

by the issuer of a right to change premiums; and disclosure of the

existence of any automatic renewal premium increases based on

the policyholder's age.

(3) A statement that the outline of coverage is a summary of the

policy issued or applied for and that the policy should be consulted

to determine governing contractual provisions.

(c) The commissioner may prescribe by regulation a standard form and the

contents of an informational brochure for persons eligible for

Medicare, which is intended to improve the buyer's ability to select the 5

most appropriate coverage and improve the buyer's understanding of

Medicare. Except in the case of direct response insurance policies, the

commissioner may require by regulation that the informational

brochure be provided to any prospective insureds eligible for Medicare

concurrently with delivery of the outline of coverage. With respect to

direct response insurance policies, the commissioner may require by

regulation that the prescribed brochure be provided upon request to

any prospective insureds eligible for Medicare, but in no event later

than the time of policy delivery.

(d) The commissioner may adopt regulations for captions or notice

requirements, determined to be in the public interest and designed to

inform prospective insureds that particular insurance coverages are

not Medicare supplement coverages, for all accident and sickness

insurance policies sold to persons eligible for Medicare by reason of age,

other than:

(1) Medicare supplement policies;


(3) Basic, catastrophic or major medical expense policies; or


(e) The commissioner may adopt reasonable regulations to govern the full

and fair disclosure of the information in connection with the

replacement of accident and sickness policies, subscriber contracts or

certificates by persons eligible for Medicare.

Section 43705. Notice of Free Examination. Medicare supplement

policies and certificates shall have a notice prominently printed on the first page of

the policy or certificate or attached thereto stating in substance that the applicant

shall have the right to return the policy or certificate within thirty (30) days of its

delivery and to have.the premium refunded if, after examination of the policy or 6

certificate, the applicant is not satisfied for any reason. Any refund made pursuant

to this section shall be paid directly to the applicant by the issuer in a timely manner.

Section 43706. Filing Requirements for Advertising. Every issuer of

Medicare supplement insurance policies or certificates in Guam shall provide a copy

of any Medicare supplement advertisement intended for use in Guam whether

through written, radio, or television medium to the commissioner for review or

approval by the commissioner to the extent it may be required under law.

Section 43707. AdministrativeProcedures. Regulations adopted

pursuant to this Chapter shall be subject to the provisions of Section 43036 of the

Government Code relating to the adoption and promulgation of rules and

regulations.

Section 43708. Penalties. In addition to any other applicable penalties

for violations of the Insurance Code, the commissioner may require issuers

violating any provision of this Chapter or regulations promulgated pursuant to this

Chapter to cease marketing any Medicare supplement policy or certificate in Guam

which is related directly or indirectly to a violation or may require such issuer to

take such actions as are necessary to comply with the provisions of this Chapter or

both.

Section 43709. Severability. If any provision of this Chapter or the

application thereof to any person or circumstances is for any reason held to be

invalid, the remainder of the Chapter and the application of such provision to other

persons or circumstances shall not be affected thereby.

Section 43710. Effective Date. The Chapter shall be effective upon

enactment."


Bill No.

Introduced by: C.T.C. Gutierrez


BE IT ENACTED BY PEOPLE OF THE TERRITORY OF GUAM:


"Chapter VII



person who seeks to contract for insurance benefits,and

(2) in the case of a group Medicare supplement policy, the proposed

certificateholder.



supplement policy.







(el "Medicare" means the "Health Insurance for the Aged Act," Title XVIII


amended.

1 (0 "Medicare Supplement Policy" means a group or individual policy of



4 other than a policy issued pursuant to amendments to the federal

5 Social Security Act, which is advertised, marketed or designed

primarily as a supplement to reimbursements under Medicare for the

hospital, medical or surgical expenses of persons eligible for Medicare.

(g) "Policy Form: means the form on which the policy is delivered or

issued for delivery by the issuer.

Section 43701. Applicability and Scope. (a) Except as otherwise

specifically provided in Section 43703, this Chapter shall apply to:

(1) All Medicare supplement policies delivered or issued for delivery

in Guam on or after the effective date hereof, and

(2 ) All certificates issued under group Medicare supplement policies,

which certificates have been delivered or issued for delivery in

Guam.

Cb) This Chapter shall not apply to a policy of one (1) or more employers or



20 employees or former employees or a combination thereof, or for


2 2 organizations.


insurance policies or health care benefit plans, including group

conversion policies, provided to Medicare eligible persons which

2 6 policies are not marketed or held to be Medicare supplement policies or

2 7 benefit plans.








8 define a preexisting condition more restrictively than a condition for


1 0 received from a physician within six ( 6 ) months before the effective








18 Medicare supplement policies and certificates. The standards may



2 1 (2) Initial and subsequent conditions of eligibility;



2 4 (5) Benefit limitations, exceptions and reductions;

2 5 (6) Elimination periods;

2 6 (7) Requirements for replacement;

2 7 (8) Recurrent conditions; and

2 8 (9) Definitions of terms.












loss ratios;





( 5 ) Establishing a policy for holding public hearings prior to approval









shall return to policyholders benefits which are reasonable in relation to the


minimum standards for loss ratios of Medicare supplement policies on the basis of 4









Cb) The commissioner shall prescribe the format and content of the






(1) A description of the principal benefits and coverage provided in

the policy;










Medicare, which is intended to improve the buyer's ability to select the


Medicare. Except in the case of direct response insurance policies, the 5













other than:


(2 ) Disability income policies;



(el The commissioner may adopt reasonable regulations to govern the full








delivery and to have the premium refunded if, after examination of the policy or


to this section shall be paid directly to the applicant by the issuer in a timely manner. 6






Section 43707. Administrative Procedures. Regulations adopted



regulations.







both.






enactment."

. .

DEPARTMENT OF PUBLIC HEALTH AND SOCIAL SERVICES GOVERNMENT OF G U A M

P 0 BOX 2816 AGANA. GUAM 96910

-; : ,.. , . . < I f , - . I I , : J 1. 1 9 , t i . . 1. ' , : 1.1 1 3 . 2 " i 4 n c t 'f 0 f...; -.-I $1 f . ;

-8 r - 2 $3 .,/ ii? 1.' 1-1 1\7 ,,? f? i: , , I - I : . t I - , : ; I I I.. -. . FJ I,.? 1.d \,.-. .?, 17 t. e Y" 1 c' '- "" ' ->- I:. ; .> 11.i p *, F; c? j. .:< I:. i. .-: 63 1i7.1 : < L ! F ~ ~ ~ E I T I E . ; . - ~ ~ In.?:.i-~i-:7nre Pllr\1%1.:,!y

5; j: .:I. r2 ,.:i 3. y-- 1j.5 b I

JOSEPH F. ADA Guamor

FRANK F. BLAS

GOVERNMENT OF GUAM JOAQUIN G. BLAZ Dir#tor. V.M. COFICEPCION, ~.plty DWW

Honorable Car l T . C. Gut ie r rez Chairman, Committee o n Ways and Means

Twenty-F i rs t Guam Leg is la ture Agana, Guam 96910

Dear Mr . Chairman:

M y name i s JOAQUIN G. BLAZ, I am t h e D i rec to r of Revenue and Taxation.

I am submi t t ing my test imony in favor of B i l l No. 889 ent i t led :

"AN ACT TO ADD A NEW CHAPTER V I I SECTIONS 43700 THROUGH 43710 OF THE GOVERNMENT CODE, RELATIVE TO MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDSn.

T h e Federal Government, t h r o u g h the Omnibus Budge t Reconcil iation A c t o f 1990 (OBRA '90) enacted medicare supplement insurance minimum standards t o p ro tec t t he e lde r l y a n d r e t i r e d workers. T h e aim o f these minimum standards i s to weed o u t o r eliminate hea l th insurance policies tha t p r o v i d e unnecessary and dup l ica te coverage.

T o i l lust rate, please r e f e r t o Plan B. I f a r e t i r e d employee i s hospitalized, Medicare pays f o r semi-pr ivate room and board, general n u r s i n g a n d misce- l laneous services a n d suppl ies f o r t he f i r s t s i x t y (60) days o f hospital izat ion, except fo r a deduct ib le o f $628.00. T h e medicare pat ien t pays f o r t h e $628.00.

Fo r the n e x t 61st t h r o u g h 90th day o f hospital izat ion, medicare pays a l l except $157.00 a day . T h i s amount o f $157.00 a day and the $628.00 deduct ib le should b e covered b y medicare supplement insurance so t h a t t h e e lder ly and r e t i r e d employees would no t b e conf ronted w i th a hospi ta l bill t ha t would wipe o u t t h e i r savings o r make them medically indigent .

Whatever medicare covers in terms o f hospi ta l izat ion and medical benefi ts, should no t be covered by any o the r hea l th insurance t o avoid dup l ica t ion and unnecessary expense o n t h e p a r t o f t h e e lde r l y and r e t i r e d people.

855 West Marine Drive Agana, Guam 96910 Tel: (671) 477-5101 Fax: (671) 472-2643

OBRA '90 prov ides t h a t by July, 1992 t h e Of f ice o f Guam Insurance Comm- issioner cannot process, rev iew and approve pol ic ies and ra tes for medicare supplement insurance unless t h e Twen ty -F i r s t Guam Leg is la ture approves legislat ion adopt ing minimum standards f o r t h e regu la t ion o f these types o f insurance policies. If no s ta tu te i s passed b y Ju ly , 1992, a l l medicare supplement insurance pol ic ies marketed and issued in Guam b y insurance companies, heal th maintenance organizat ions and hea l th care p r o v i d e r s must be fo rwarded t o the Secretary o f Health and Human Services fo r processing, review and approval .

Most states have adopted legislat ion o r regulat ions re la t i ng to medicare supplement insurance based o n the model d r a f t e d b y National Association o f Insurance Commissioners o r NAIC. I respect fu l l y advocate f o r t he immediate passage o f t h i s bill.

Sincerely,

NOTE : \ \

A copy o f Bi l l No. 889 was provided to the Health Care Financing Administration for their review. We were instructed b y telephone o f June 25, 1992 by Ms. Gertrude Saunders to correct §43700(f), L i n e 4 a n d (g) Line8, page2. It should read

Line 4

"Pursuant to a contract under Section 1876 o r Section 1833 o f the Federal Social Security Act (42 U.S. C. Section 1395 et. seq.) o r an issued policy under a demonstration project authorized pursuant to amendments to the Federal Social Security Act."

Line 8

"Policy Form" - use quotation mark after form and not colon:

P U N A

MEDICARE (PART I)-MEDICAL SERVIC-PER CALENDAR YEAR

'One- you - m n bJW SlOO of Modlun-Approved amounts CovQmd services wnlcn are notea w ~ t h an aster~sk), ywr hrt 6 DaduCtlbk will hiva k.cr mt @f amr year

I

SERVICES I MEDICAREPAYS PLAN PAYS YOU PAY I I I

MEDICAL EXPENSES- IN OR OUT Of THE HOSPITAL

I AND OUTPATIENT HOSPITAL TREATMENT. such P h ~ i - 1 clans Y W I S ~ ~ . np8trmt and

I outpUmt nY6C.LUldrugccd / wmcu ard m. phyuc.l

and s v n t m , diagnostic tests. dumb& med1C8l .qulprrrmt.

I Flrst $1 W o' Med~can Approved Amounts •

/ Remamder of M e d ~ u m ~ p p r o w -nu

/ Part 3 Ex- Charges (w MecI~cm APPfWW A f t ~ u n t l )

t 1 BLOOD F~nt 3 prnU NOXI s 100 of Modam A p p M

Amounts • Reniamder of Mod lun ApproMd

Amounts

I / CLINICAL LABOAAW

SERWCES-8LOOD TESTS FOR OlAaNOSTlC SERVICES

SIOO (Pan B Deoucttbce)

$0

AH CorU 1 I I

S 0

ti w (mn B ~ ~ ~ c t b ~ e ) i , SO I

I I

$0 1 I

I I

PARTSALB

I

SO

eo%

SO

SO

SO

80%

1 0 0 %

'so 2096

SO

AU Casts

SO

20%

SO

I

I I I

SO I

HOME HEAlJH CARE MEDICARE APeFlOVED SERVICES

I - -~ad t - necessary rkllkd

1 cam serwces and med~cal , s u p p l l ~ 10046 -0urabk m e d ~ d equ~pmnt

/ F tnt $1 W of Med~can I Approvsd Amounts'

Remambcr of Medtcars

! I

I I

SO 1 SO Sl00 (Part 9 Deduct~bre) I I

I Approved Amounts 1 80% I / 20% SO

?4drare Supplement Insurance Regulat~on

P U N B

MEDICARE (PART A)-HOSPITAL SUNICES-PER B E N E M PERIOD

'A beneftt p e r ~ w mguis on the flnt day you m o w servsr u m moatlent n a hospttal and eMS after you have been out of the nosplul and haw not rece~ved skilled cam m any otmr t a ~ ~ l ~ t y tor 60 days tn a row

SERVICES MEDICAREPAYS 1 PUNPAYS I

YOU PAY

HOSPlTALlZATlON' Semtprtvate rn and board. general nursng and mts-

I ce l lanms ServICrs a M suppl~rs 1 Ftrst 60 days I 61st thru 90th day , 91 st day an4 attar*

-Whtk us- 60 l ~ f c t l m I reserve days 1 --Once I ~ f e t i m reserve days

am uwd.

I -Add1ttonrl365 days

I I -Beyond the MdltKwrrl

365 daVr I

I SKILLED NURSING fACtLrrY ' CARE' 1 You must meet ModlcusL

requ~mmmts. mdudmg havlng 1 ~ e e n m a n o r p l u l ~ a t * a s t 3 / days and entofwd a Modteam- a P p m d facil~ty withm 30 days

I atter First leaving 20 days tne hospital

21 st thru 100th day 1 101 st day and attrr I

BLOOD F~rst 3 pints AUdtttml am~unts

W8(PmA0.ducaM. ) $157 a day

S314adrry

100% of Modcan E i ~ g ~ b b Exp.ru#

$0

$0 SO $0

3 pnra SO

All but 5628 AII k r t s i n r dy

All but $314 a dry

$0

$0

All approved amounts All but $78.50 a dry SO

$0 10046

I

SO SO I

$0 I

, SO I

All I

I I SO Up to $78.50 a day AH costs

SO SO

Balance

I

HOSPICE CARE Avatlabre as I ;1 as your doctor certifies you ar ! termmally 111 and you elect to receive these services

All but very Iimlted coinsurance tor out- pattent arugs a d mpatimt respite cam

TWENTY-FIRST GUAM LEGISLATURE jw 6'92

1992 (SECOND) Regular Session

Introduced by: C.T.C. Gutie ez


BE IT ENACTED BY PEOPLE OF THE TERRZTORY OF GUAM:


"Chapter VII



person who seeks to contract for insurance benefitstand

(2) in the case of a group Medicare supplement policy, the proposed - certificateholder.



supplement policy.







(e) "Medicare" means the 'Wealth Insurance for the Aged Act," Title XVIII


amended.

1 (f) "Medicare Supplement Policy" means a group or individual policy of



4 other than a policy issued pursuant to amendments to the federal

5 Social Security Act, which is advertised, marketed or designed

6 primarily as a supplement to reimbursements under Medicare for the

7 hospital, medical or surgical expenses of persons eligible for Medicare.

8 (g) "Policy Form: means the form on which the policy is delivered or

9 issued for delivery by the issuer.

1 0 Section 43701. Applicability and Scope. (a) Except as otherwise

1 1 specifically provided in Section 43703, this Chapter shall apply to:

1 2 (1) All Medicare supplement policies delivered or issued for delivery

1 3 in Guam on or after the effective date hereof, and

1 4 (2) All certificates issued under group Medicare supplement policies,

1 5 which certificates have been delivered or issued for delivery in

1 6 Guam.

1 7 (b) This Chapter shall not apply to a policy of one (1) or more employers or



2 0 employees or former employees or a combination thereof, or for


2 2 organizations.


2 4 insurance policies or health care benefit plans, including group

2 5 conversion policies, provided to Medicare eligible persons which

2 6 policies are not marketed or held to be Medicare supplement policies or

2 7 benefit plans.








8 define a preexisting condition more restrictively than a condition for


1 0 received from a physician within six (6) months before the effective








1 8 Medicare supplement policies and certificates. The standards may



2 1 (2) Initial and subsequent conditions of eligibility;



2 4 (5) Benefit limitations, exceptions and reductions;

2 5 (6) Elimination periods;

26 (7) Requirements for replacement;

2 7 (8) Recurrent conditions; and

2 8 (9) Definitions of terms.












loss ratios;





(5) Establishing a policy for holding public hearings prior to approval









shall return to policyholders benefits which are reasonable in relation to the


minimum standards for loss ratios of Medicare supplement policies on the basis of 4









(b) The commissioner shall prescribe the format and content of the






(I) A description of the principal benefits and coverage provided in

the policy;










Medicare, which is intended to improve the buyer's ability to select the


Medicare. Except in the case of direct response insurance policies, the 5













other than:





(e) The commissioner may adopt reasonable regulations to govern the full








delivery and to have the premium refunded if, after examination of the policy or


to this section shall be paid directly to the applicant by the issuer in a timely manner. 6






Section 43707. Administrative Procedures. Regulations adopted



regulations.







both.






enactment."

Documents

,C a Sin rely yours,