LOSS RATIOS AND REFUND OF PREMIUMS.

SEC. 4355. LOSS RATIOS AND REFUND OF PREMIUMS. (a) In General.—Section 1882 (42 U.S.C. 1395ss) is further amended— 104 STAT. 1388–133 (1) in subsection (c), by amending paragraph (2) to read as follows: “(2) meets the requirements of subsection (r);”; (2) by striking the sentence following subsection (c)(4); and (3) by adding at the end the following new subsection: “(r) (1) A medicare supplemental policy may not be issued or sold in any State unless— “(A) the policy can be expected (as estimated for the entire period for which rates are computed to provide coverage, on the basis of incurred claims experience and earned premiums for such periods and in accordance with a uniform methodology, including uniform reporting standards, developed by the National Association of Insurance Commissioners 2727So in original. Probably should be “Commissioners),”., to return to policyholders in the form of aggregate benefits provided under the policy, at least 75 percent of the aggregate amount of premiums collected in the case of group policies and at least 65 percent in the case of individual policies; and “(B) the issuer of the policy provides for the issuance of a proportional refund, or a credit against future premiums of a proportional amount, based on the premium paid and in accordance with paragraph (2), of the amount of premiums received necessary to assure that the ratio of aggregate benefits provided to the aggregate premiums collected (net of such refunds or credits) complies with the expectation required under subparagraph (A). For purposes of applying subparagraph (A) only, policies issued as a result of solicitations of individuals through the mails or by mass media advertising (including both print and broadcast advertising) shall be deemed to be individual policies. “(2) (A) Paragraph (1)(B) shall be applied with respect to each type of policy by policy number. Paragraph (1)(B) shall not apply to a policy with respect to the first 2 years in which it is in effect. The Comptroller General, in consultation with the National Association of Insurance Commissioners, shall submit to Congress a report containing recommendations on adjustments in the percentages under paragraph (1)(A) that may be appropriate in order to apply paragraph (1)(B) to the first 2 years in which policies are effective. “(B) A refund or credit required under paragraph (1)(B) shall be made to each policyholder insured under the applicable policy as of the last day of the year involved. “(C) Such a refund or credit shall include interest from the end of the policy year involved until the date of the refund or credit at a rate as specified by the Secretary for this purpose from time to time which is not less than the average rate of interest for 13-week Treasury notes. “(D) For purposes of this paragraph and paragraph (1)(B), refunds or credits against premiums due shall be made, with respect to a policy year, not later than the third quarter of the succeeding policy year. “(3) The provisions of this subsection do not preempt a State from requiring a higher percentage than that specified in paragraph (1)(A). “(4) The Secretary shall submit in February of each year (beginning with 1993) a report to the Committees on Energy and Commerce and Ways and Means of the House of Representatives and the Committee on Finance of the Senate on loss-ratios under medicare supplemental policies and the use of sanctions, such as a required 104 STAT. 1388–134rebate or credit or the disllowance2828So in original. Probably should be “disallowance”. of premium increases, for policies that fail to meet the requirements of this subsection (relating to loss-ratios). Such report shall include a list of the policies that failed to comply with such loss-ratio requirements or other requirements of this section. (5) (A) The Comptroller General shall periodically, not less often than once every 3 years, perform audits with respect to the compliance of medicare supplemental policies with the loss ratio requirements of this subsection and shall report the results of such audits to the State involved and to the Secretary. “(B) The Secretary may independently perform such compliance audits. “(6) (A) A person who issues a policy in violation of the loss ratio requirements of this subsection is subject to a civil money penalty of not to exceed $25,000 for each such violation. The provisions of section 1128A (other than the first sentence of subsection (a) and other than subsection (b.)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). “(B) Each issuer of a policy subject to the requirements of paragraph (1)(B) shall be liable to policy holders for credits required under such paragraph”. (b) Assuring Access to Loss Ratio Information.—Section 1882(b)(l)(C) (42 U.S.C. 1395ss(b)(D(C)) is amended by striking the semicolon at the end and inserting a comma and the following: “and that a copy of each such policy, the most recent premium for each such policy, and a listing of the ratio of benefits provided to premiums collected for the most recent 3-year period for each such policy issued or sold in the State is maintained and made available to interested persons;”. (c) Implementation of Process to Approve Premium In-creases.— Section 1882(b)(D (42 U.S.C. 1395ss(b)(D) is further amended— (1) by striking “and” at the end of subparagraph (E); (2) by adding “and” at the end of subparagraph (D; (3) by adding at the end thereof the following new subparagraph: “(G) provides for a process for approving or disapproving proposed premium increases with respect to such policies, and establishes a policy for the holding of public hearings prior to approval of a premium increase,”. (d) Effective Date.—-The amendments made by this section shall apply to policies sold or issued more than 1 year after the date of the enactment of this Act.