17 (1) IN GENERAL.-A carrier may not impose (or require an employer to impose through a waiting period for coverage under a health benefit policy or similar requirement) a limitation or exclusion of benefits under a small employer health benefit plan relating to treatment of a condition based on the fact that the condition pre-existed the effectiveness of the policy if— (A) the condition relates to a condition that did not exist within 6 months before the date of coverage under the plan, or (B) the limitation or exclusion extends over more than 12 months after the date of coverage under the plan. (2) PREVIOUS SATISFACTION OF PRE-EXISTING CONDITION REQUIREMENT.— (A) IN GENERAL.-In addition, each carrier shall waive any period applicable to a preexisting condition for similar benefits with respect to an individual to the extent that the individual was covered for the condition under a small employer health benefit plan that was in effect before the date of the enrollment under the carrier's plan. 18 (B) CONTINUOUS COVERAGE REQUIRED.— Subparagraph (A) shall no longer apply if there is a continuous period of more than 60 days on which the individual was not covered under an employer health benefit plan. (b) LIMITS ON PREMIUMS. (1) LIMIT ON VARIATION OF INDEX RATES BE TWEEN BLOCKS OF BUSINESS. (A) IN GENERAL.-As a standard under section 102, the index rate for a rating period for any block of business of a small employer carrier may not exceed the index rate for any other block of business by more than 20 per cent. (B) EXCEPTIONS.-Subparagraph shall not apply to a block of business if— (A) (i) the block is one for which the carrier does not reject, and never has rejected, small employers included within the definition of employers eligible for the block of business or otherwise eligible employees and dependents who enroll on a timely basis, based upon their claim experience or health status, 19 (ii) the carrier does not involuntarily ferred, a health benefit plan into or out of (ii) the block of business is currently (2) LIMIT ON VARIATION OF PREMIUM RATES WITHIN A BLOCK OF BUSINESS.-For a block of business of a small employer carrier, as a standard ness, shall not vary from the index rate by more (3) LIMIT ON PERMISSIBLE RATE VARI- demography, and industry and plan design. (4) LIMIT ON TRANSFER OF EMPLOYERS AMONG BLOCKS OF BUSINESS.-As a standard under 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 20 section 102, a small employer carrier may not invol untarily transfer a small employer into or out of a block of business. A small employer carrier may not offer to transfer a small employer into or out of a block of business unless such offer is made to trans fer all small employers in the block of business without regard to demographic characteristics, claim experience, health status, or duration since issue. (5) DEFINITIONS.-In this subsection: (A) BASE PREMIUM RATE. The term "base premium rate" means, for each block of business for each rating period, the lowest pre mium rate charged or which could have been charged under a rating system for that block of business by the small employer carrier to small employers with similar demographic or other relevant characteristics (not relating to claims experience, health status, or duration of coverage) for health benefit plans with the same or similar coverage. 23 24 222 (B) BLOCK OF BUSINESS.-The term "block of business" means, with respect to a carrier, all (or a distinct group of) small em ployers as shown on the records of the carrier. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 21 (C) RULES FOR ESTABLISHING BLOCKS OF BUSINESS. For purposes of subparagraph (B)— (i) a carrier may establish, subject to clause (ii), a distinct group of small employers on the basis that the applicable health benefit plans either (I) are marketed and sold through individuals and organizations which are not participating in the marketing or sale of other distinct groups of small employers for the carrier, (II) have been acquired from another carrier as a distinct group, or (III) are provided through an association with membership of not less than 100 small employers which has been formed for purposes other than obtaining insurance; (ii) a carrier may not establish more than 2 groupings under each block of business because the carrier uses managed-care techniques which are expected to produce |