17:48E-26. Experience rating

a. A group contract, covering at least two employees or members, may provide for the adjustment of the rate of premium of insurance based on past or projected experience, and may include those claim costs and utilization trend factors which the health service corporation deems necessary in its discretion. No health service corporation shall use any form of experience rating plan until it shall have filed with the commissioner the formulas to be used and the classes or groups to which they are to apply. The commissioner may disapprove the formulas or classes at any time if he finds that the rates produced thereby are excessive, inadequate or unfairly discriminatory or that the formulas or classes are such as to prejudice the interests of persons who are eligible for coverage under contracts with the health service corporation which are not subject to experience rating.

b. Except for those rating formulas applicable to groups the employees or members of which are located in more than one state and which are underwritten in participation with other corporations of other states, no rating formula shall be approved by the commissioner, unless it provides that the experience rated groups will be assessed a reasonable charge for all individual contracts. This assessment will continue to apply as long as any reduced payment rate calculated and approved for the purpose of this subsection applies to the corporation pursuant to the provisions of subparagraph (2) of subsection b. of section 18 of P.L. 1971, c. 136 (C. 26:2H-18). A rating formula may provide for the allowance of an equitable discount in the event that the policyholder agrees to perform certain administrative and record keeping functions in connection with the routine maintenance of the group account.

c. Nothing in this section shall preclude a health service corporation from incorporating in the rating formulas those claim cost and utilization trend factors which it deems necessary in its discretion, so long as the rates produced are self-supporting and the formulas for classes do not prejudice the interests of persons who are eligible for coverage under contracts with the health service corporation which are not subject to experience rating.

d. Notwithstanding the provisions of subsection c. of this section, a health service corporation may increase rates for hospitalization benefits under all individual or group contracts issued by the corporation which are not experience rated at any time following an increase in hospital payment rates by the Hospital Rate Setting Commission established pursuant to section 5 of P.L. 1978, c. 83 (C. 26:2H-4.1). The contract rate increases permitted pursuant to this subsection shall reflect the increases in hospital payment rates which are not reflected or anticipated in the contract rates for the increases and which are not offset by savings in other benefit provisions under the contract. Beginning 180 days following the effective date of this act and at the end of every calendar quarter thereafter, a health service corporation shall file notice with the commissioner, in a form approved by the commissioner, of any proposed change in its rates for coverage under individual contracts issued by the corporation. Unless the rates are disapproved by the commissioner on or before the day the rates are to become effective, which shall be no later than 20 days following the filing, they shall be deemed to be approved. In his discretion, the commissioner may waive the 20 day period, or any portion thereof.

P.L. 1985, c. 236, s. 26; amended by P.L. 1988, c. 71, s. 4.