No. 31062 (Amendment): R590-131. Accident and Health Coordination of Benefits Rule

DAR File No.: 31062
Filed: 03/14/2008, 04:37
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Due to an improper filing and going beyond the last possible effective date for the amendment that was published in the November 15, 2007, Bulletin under DAR No. 30640 (which lapsed), in this amendment the department has combined the changes filed originally on 11/01/2007 for DAR No. 30640 and those changes made as a result of the comment period and hearing held 12/05/2007. This rule is being changed to adopt the revisions made to the National Association of Insurance Commissioners (NAIC) Model Regulation 120, "Coordination of Benefits Model Regulation". The model allows for uniformity throughout the United States when coordinating benefits in insurance policies. This will reduce cost to both insurers and insureds and provide greater efficiency in claims processing. The changes also provide insurers scenarios to help them better understand coordination rules. Some of these changes have been requested by the industry.

Summary of the rule or change:

The amendment makes grammatical corrections and updates code and rule citations. Section R590-131-2 specifies that it applies to all accident and health insurers, and that the purpose of the rule is to establish coordination of benefits. Section R590-131-3 makes revisions to the definition of "allowable Expense" to address high deductible health plans, and to the definition of "Custodial"; definitions are added for "Group Type Contract", "High Deductible Health Plan", "Child", "Closed Panel Plan", and "Conforming Plan"; clarifications have been made regarding health care that is provided under a contractual agreement; and benefits are being excluded from coordination if an insured does not comply with a plan's provisions. Section R590-131-4 is changed to clarify that insurers may not use a coordination of benefits (COB) provision to deny coverage when benefits under another plan do not exist. Section R590-131-5 explains how primary and secondary plans are to coordinate coverage for the insured. Section R590-131-6 adds a provision to coordinate when a court decree does not address health care expenses or coverage; provides for coordination when a child is receiving coverage from a guardian; requires the plans to share expenses equally if a rule does not address the insured situation; requires that if insurers do not come to an agreement within 30 days regarding a claim they must pay the claim in equal shares; and adds a coordination rule for COBRA policies. Section R590-131-8 changes the word "complying" to "conforming" in compliance with Section 31A-26-301.6. Section R590-131-9 adds fictitious scenarios at the request of insurers to demonstrate the coordination rules. Section R590-131-10 provides for an effective date on existing contracts. Section R590-131-13 updates the enforcement date of the rule.

State statutory or constitutional authorization for this rule:

Sections 31A-2-201 and 31A-22-619

Anticipated cost or savings to:

the state budget:

Each accident and health insurer will be required to file an endorsement form with the department which will be reviewed pursuant to Section 31A-21-201. Currently there are approximately 450 insurers affected by this rule. This will not create a change in the department's revenue. No new employees will be needed to handle these filings.

local governments:

Since the rule deals solely with the relationship between the department, their licensees and their consumers, this rule will have no fiscal impact on local governments.

small businesses and persons other than businesses:

Some people will be affected if their coordination policy changes. For the most part, consumers should not be affected since the rule sets guidelines on which insurer or policy is primary and secondary.

Compliance costs for affected persons:

Carriers will need to file an endorsement form with the department to change their existing plans to comply with changes in this rule. They will incur a fee to submit their form electronically for a charge of $15 per filing depending upon which filing provider is used. Currently there are around 450 health insurers that these changes will affect. There should be no additional mailing costs for an insurer because Section R590-131-10 delays the effective date for current contracts so carriers can mail the endorsement with the insured's renewal statement. The one coordination situation that will see a significant change is when there is a dispute over which insurer pays what in a claim. If there is no agreement after 30 days, they are required to pay equal amounts.

Comments by the department head on the fiscal impact the rule may have on businesses:

The fiscal impact on insurers should be offset by the efficiency in COB claims processing. D. Kent Michie, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/01/2008

This rule may become effective on:

05/08/2008

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-131. Accident and Health Coordination of Benefits Rule.

R590-131-2. Purpose and Applicability.

A. The purpose of this rule is to:

[A. permit, but not require, plans to include a coordination of benefits, or COB, provision;

B. establish an order of priority in which plans pay their COB claims;

C. provide the authority for the orderly transfer of information needed to pay COB claims promptly;

D.]1. establish a uniform order of benefit determination under which plans pay coordination of benefit claims;

2. reduce duplication of benefits by permitting a reduction of the benefits paid by a plan when the plan, pursuant to this rule, does not have to pay its benefits first; and

[ E. reduce COB claims payment delays; and

F. make all contracts that contain a COB provision consistent with this rule.

] 3. provide greater efficiency in the processing of claims when a person is covered under more than one plan.

B. This rule applies to all accident and health insurance plans issued on or after the effective date of this rule.

 

R590-131-3. Definitions.

For the purposes of this rule, the commissioner adopts the definitions in Sections 31A-1-301 and 31A-30-103, and the following:

A. "Allowable Expense" means[:] any health care expense, including coinsurance or copayments and without reduction for any applicable deductible, that is covered in full or in part by any of the plans covering the person.

1.[ The amount on which a plan would base its benefit payment for covered services in the absence of any other coverage.

2. When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered as both an allowable expense and a benefit paid.

3. The difference between the cost of a private hospital room and the cost of a semi-private hospital room is not considered an allowable expense under the above definition unless the patient's stay in a private hospital room is medically necessary in terms of generally accepted medical practice.

4. When COB is restricted in its use to a specific coverage in a contract, for example, major medical or dental, the definition of allowable expense must include the corresponding expenses or services to which COB applies.] If an insurer is advised by a covered person that all plans covering the person are high-deductible health plans and the person intends to contribute to a health savings account established in accordance with Section 223 of the Internal Revenue Code of 1986, the primary high-deductible health plan's deductible is not an allowable expense, except for any health care expense incurred that may not be subject to the deductible as described in Section 223(c)(2)(C) of the Internal Revenue Code of 1986.

2. An expense or a portion of an expense that is not covered by any of the plans is not an allowable expense.

3. Any expense that a provider, by law or in accordance with a contractual agreement, is prohibited from charging a covered person is not an allowable expense.

4. The following are examples of expenses that are not allowable expenses:

a. If a person is confined in a private hospital room, the difference between the cost of a semi-private room in the hospital and the private room is not an allowable expense, unless one of the plans provides coverage for private hospital room expenses.

b. If a person is covered by two or more plans that compute their benefit payments on the basis of usual and customary fees or relative value schedule reimbursement or other similar reimbursement methodology, any amount charged by the provider in excess of the highest reimbursement amount for a specified benefit is not an allowable expense.

c. If a person is covered by two or more plans that provide benefits or services on the basis of negotiated fees, any amount in excess of the highest of the negotiated fees is not an allowable expense.

d. If a person is covered by one plan that calculates its benefits or services on the basis of usual and customary fees, relative value schedule reimbursement, or other similar reimbursement methodology and another plan that provides its benefits or services on the basis of negotiated fees, the primary plan's payment arrangement shall be the allowable expense for all plans. However, if the provider has contracted with the secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the primary plan's payment arrangement and if the provider's contract permits, that negotiated fee or payment shall be the allowable expense used by the secondary plan to determine its benefits.

e. The definition of "allowable expense" may exclude certain types of coverage or benefits such as dental care, vision care, or hearing aids.

i. A plan that limits the application of COB to certain coverages or benefits may limit the definition of allowable expense in its contract to expenses that are similar to the expenses that it provides.

ii. When COB is restricted to specific coverages or benefits in a contract, the definition of allowable expense shall include similar expenses to which COB applies.

f. When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered an allowable expense and a benefit paid.

g. The amount of the reduction may be excluded from allowable expense when a covered person's benefits are reduced under a primary plan because the covered person does not comply with the plan provisions concerning second surgical opinions or pre-certification of admissions or services.

B. "Birthday" refers only to month and day in a calendar year[,] and does not include the year in which the person was born.

C. "Child" means a:

1. child as defined in Section 78-45-2; or

2. dependent child that is provided coverage pursuant to Sections 31A-22-610, 610.5 and 611.

D. "Claim" means a request that benefits of a plan be provided or paid. The benefits claimed may be in the form of:

1. services (including supplies);

2. payment for all or a portion of the expenses incurred;

3. a combination of (1) and (2) above; or

4. an indemnification.

E. "Closed Panel Plan" means a plan that provides health benefits to covered persons primarily in the form of services through a panel of providers that have contracted with or are employed by a plan, and that excludes benefits for services provided by other providers, except in the cases of emergency or referral by a panel member.

F. "Conforming Plan" means a plan that is subject to this rule.

G.[D.] "Continuation Coverage" means coverage provided under right of continuation pursuant to the federal (COBRA) law, Utah mini-COBRA, or a[the] state extension law. For the purposes of this rule, a person's eligibility status will maintain the same classification under continuation coverage.

H.[E.] "Coordination of Benefits" or "COB" means a provision establishing an order in which plans pay their coordination of benefit claims, and permitting secondary plans to reduce their benefits so that the combined benefits of all plans do not exceed total allowable expenses[the process of determining which of two or more accident and health insurance policies, or other policies specifically included in this rule, covering a loss or claim, will have the primary responsibility to pay the loss or claim, and also the manner and extent to which the other policies shall pay or contribute].

I.[F.] "Custodial Parent" means:[ the parent awarded custody of a child by a court decree. In the absence of a court decree, the parent with whom the child resides more than one half of the calendar year without regard to any temporary visitation is the custodial parent.]

1. the legal custodial parent or physical custodial parent as awarded by a court decree; or

2. in the absence of a court decree, the parent with whom the child resides more than one half of the calendar year without regard to any temporary visitation.

J. "Group-type contract" means a contract that is not available to the general public and is obtained and maintained only because of membership in or a connection with a particular organization or group, including blanket coverage.

K. "High-deductible Health Plan" has the meaning given the term under Section 223 of the Internal Revenue Code of 1986, as amended by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

L.[G.] "Hospital Indemnity Benefits" means benefits not related to expenses incurred. The term does not include reimbursement-type benefits even if they are designed or administered to give the insured the right to elect indemnity-type benefits at the time of claim.

M.[H.] ["Noncomplying Plan"]"Non-conforming Plan" means a plan that is not subject to this rule[Rule].

N.[I.] "Plan" means a form of coverage with which coordination is allowed.

1. Separate parts of a plan that are provided through alternative contracts that are intended to be part of a coordinated package of benefits are considered one plan and there is no COB among the separate parts of the plan.

2. If a plan coordinates benefits, its contract shall state the types of coverage that will be considered in applying the COB provision of that contract.

3. Whether a plan's contract uses the term "plan" or some other term such as "program," the contractual definition may be no broader than the definition of "plan."

4. Plan shall include:

a. individual and group accident and health insurance contracts and subscriber contracts except as provided by R590-131-3.L.5;

b. uninsured arrangements of group or group-type coverage;

c. coverage through closed panel plans;

d. group-type contracts;

e. medical care components of long-term care contracts, such as skilled nursing care; and

f. Medicare or other governmental benefits, as permitted by law.

5. Plan shall not include:

a. hospital indemnity coverage benefits or other fixed indemnity coverage;

b. accident only coverage;

c. specified disease or specified accident coverage;

d. limited benefit health coverage, as defined in Rule R590-126;

e. school accident-type coverages that cover students for accidents only, including athletic injuries, either on a twenty-four-hour basis or on a "to and from school" basis;

f. benefits provided in long-term care insurance policies for non-medical services, for example, personal care, adult day care, homemaker services, assistance with activities of daily living, respite care and custodial care or for contracts that pay a fixed daily benefit without regard to expenses incurred or the receipt of services;

g. Medicare supplement policies;

h. a state plan under Medicaid; or

i. a governmental plan, which, by law, provides benefits that are in excess of those of any private insurance plan or other non-governmental plan[ The definition of plan in the contract must state the types of coverage, which will be considered in applying the COB provision of that contract.

1. This rule uses the term plan. However, a contract may, instead, use "Program" or some other term.

2. Plan shall include:

a. individual, group, or HMO health insurance contracts providing hospital expense or medical surgical expense benefits, except those explicitly excluded under Subsection R590-131-3.I.3.;

b. group, group-type, and individual automobile "no-fault" medical payment contracts, after statutory PIP limit 31A-22-306 through 309; and

c. Medicare or other governmental benefits, except as provided in Subsection R590-131-3.I.3.f. below. That part of the definition of plan may be limited to the hospital, medical, and surgical benefits of the governmental program.

3. Plan shall not include:

a. hospital indemnity coverage;

b. disability income protection coverage;

c. accident only coverage;

d. specified disease or specified accident coverage;

e. nursing home and long-term care coverage;

f. a state plan under Medicaid, and shall not include a law or plan when, by state or federal law, its benefits are in excess of those of any private insurance plan or other non-governmental plan; and

g. Medicare supplement policies].

O.[J.] "Primary Plan" means a plan whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration[first according to R590-131-4 B]. A plan is a primary plan if[ either of the following conditions is true]:

1. the plan has no order of benefit determination;

2. its rules differ from those permitted by this rule; or

3. all plans which cover the person use the order of benefit determination provisions of this rule and under those requirements the plan determines its benefits first.

P.[K.] "Secondary Plan" means [a]any plan, which is not a primary plan.[ If a person is covered by more than one secondary plan, the order of benefit determination rules of this rule decides the order in which their benefits are determined in relation to each other. The benefits of each secondary plan may take into consideration the benefits of the primary plan or plans and the benefits of any other plan, which, under the provisions of this rule, has its benefits determined before those of that secondary plan.]

Q. "Separated" means married persons who are legally separated.

 

R590-131-4. COB Contract Provisions.

A. A COB provision may not be used that permits a plan to reduce its benefits on the basis that:

1. another plan exists and the covered person did not enroll in that plan;

2. a person is or could have been covered under another plan; or

3. a person has elected an option under another plan providing a lower level of benefits than another option that could have been elected.

B. Under the terms of a closed panel plan, benefits are not payable if the covered person does not use the services of a closed panel provider for either plan.

1. In most instances, COB does not occur if a covered person is enrolled in two or more closed panel plans and obtains services from a provider in one of the closed panel plans. The closed panel plan whose providers were not used, has no liability.

2. COB may occur during the plan year when the covered person receives services from a provider who is on each closed panel, or emergency services that would have been covered by both plans. The secondary plan shall use the provisions of R590-131-7 to determine the amount it should pay for the benefit.

C. No plan may use a COB provision, or any other provision that allows it to reduce its benefits with respect to any other coverage its insured may have that does not meet the definition of a plan under R590-131-3.

 

R590-131-5. Rules for Coordination of Benefits.

When a person is covered by two or more plans, the rules for determining the order of benefit payments are as follows:

A. [General Rules:

1. ]The primary plan shall[must] pay or provide its benefits as if the secondary plans or plan did not exist.[ A primary plan may not deny payment or a benefit on the grounds that a claim was not timely submitted if the claim was timely submitted to one or more secondary plans and was submitted to the primary plan within 36 months of the date of service. A plan that does not include a coordination of benefits provision may not take the benefits of another plan into account when it determines its benefits.

2. A secondary plan may take the benefits of another plan into account only when, under these rules, it is secondary to that other plan.]

B. If the primary plan is a closed panel plan and the secondary plan is not a closed panel plan, the secondary plan shall pay or provide benefits as if it were the primary plan when a covered person uses a non-panel provider, except for emergency services or authorized referrals that are paid or provided by the primary plan.

C. When multiple contracts providing coordinated coverage are treated as a single plan under this rule, this section applies only to the plan as a whole, and coordination among the component contracts is governed by the terms of the contracts. If more than one insurer pays or provides benefits under the plan, the insurer designated as primary within the plan shall be responsible for the plan's compliance with this rule.

D. If a person is covered by more than one secondary plan, benefits are determined using the rules in R590-131-6. Each secondary plan shall take into considerations the benefits of the primary plan or plans and the benefits of any other plan, which, under the rules of this rule, has its benefits determined before those of the secondary plan.

E.1. Except as provided in R590-131-5.E.b., a plan that does not contain order of benefit determination provisions that are consistent with this regulation is always the primary plan unless the provisions of both plans, regardless of the provisions of this subsection, state that the complying plan is primary.

2. Coverage that is obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance type coverages that are written in connection with a closed panel plan to provide out-of-network benefits.

 

R590-131-6. Determining Order of Benefits.

Each plan determines its order of benefits using the first of the following rules that apply:

A. Non-dependent or Dependent.[1.]

The [benefits of the ]plan that[, which] covers the person other than[as an employee, member or subscriber, that is, other than] as a dependent, such as an employee, member, policyholder retiree or subscriber, is the primary plan and[are determined before those of] the plan that covers[which cover] the person as a dependent is the secondary plan.

B. Child Covered Under More Than One Plan.[2. Dependent Child/Parents Married or Living Together.]

Unless there is a court decree stating otherwise, plans covering a child shall determine the order of benefits as follows:

1. For a[The rules for the order of benefits for a dependent] child whose[when the] parents are married or living together if they have never been married:[are as follows.]

a. The [benefits of the ]plan of the parent whose birthday falls earlier in the calendar year is the primary plan; or[ are determined before those of the plan of the parent whose birthday falls later in the year.]

b. If both parents have the same birthday,[ the benefits of] the plan that has[, which] covered the parent longest is the primary plan.[longer, are determined before those of the plan which covered the other parent for a shorter period of time.

c. If the other plan, R590-131-3.I.2b, does not have the rule described in R590-131-4.B.1, .2 and .3, but instead has a rule based upon another order, and if, as a result, the coordinating plans do not agree on the order of benefits, the rule of the other plan will determine the order of benefits.

3. Dependent Child/Parents Separated, Divorced or Not Living Together. If two or more plans cover a person as a dependent child of parents divorced, separated or not living together, benefits for the child are determined in the following order:

a. first, the plan of the custodial parent of the child;

b. then, the plan of the spouse of the custodial parent of the child;

c. the plan of the non-custodial parent; and

d. finally, the plan of spouse of the non-custodial parent.]

2. For a child whose parents are divorced or separated or are not living together if they have never been married:

a.i. If a[the specific terms of a] court decree states[state] that one of the parents is responsible for the child's health care expenses or health care[insurance] coverage, the responsible parent's[and the plan of that parent has actual knowledge of those terms, that] plan is primary.

ii. If the parent with responsibility has no health care coverage for the child's health care[ services or] expenses, but the[that parent's] spouse of the responsible parent does have health care coverage for the child's health care expenses, the responsible parent's spouse's plan is the[spouse's plan is ] primary plan.[ This subparagraph shall not apply with respect to any claim determination period or plan year during which benefits are paid or provided before the entity has actual knowledge.]

b.[ii.] If [the specific terms of ]a court decree states[state] that both[the parents have joint custody, without stating that one of the] parents are[is] responsible for the child's health care expenses or health care[insurance] coverage[ of the child and the child's residency is split between the parents], the provisions of R590-131-6.B.1. shall determine the order of benefits[ benefit determination rules outlined in Subsection R590-131-4 B.2. Dependent Child/Parents Married or Living Together shall apply. This subparagraph shall not apply with respect to any claim determination period or plan year during which benefits are paid or provided before the entity has actual knowledge].

c. If a court decree states that the parents have joint custody without stating that one parent has responsibility for the health care expenses or health care coverage of the child the provisions of R590-131-6.B.1. shall determine the order of benefits, or

d.[iii.] If there is no court decree allocating responsibility for the child's health care[ services or] expenses or health care coverage, the order of benefits for the child are as follows[ benefit determination among the plans of the parents and the parents' spouses, if any, is]:

i.[A.] the plan covering[of] the custodial parent;

ii.[B.] the plan covering[of] the custodial parent's spouse[ of the custodial parent];

iii.[C.] the plan covering[of] the non-custodial parent; and then

iv.[D.] the plan covering[of the spouse of] the non-custodial parent's spouse[parent].

e. For a child covered under more than one plan, and one or more of the plans provides coverage for individuals who are not the parents of the child, such as a guardian, the order of benefits shall be determined under R590-131-6.B.1. or 2. as if those individuals were parents of the child.

C.[4.] Active, Retired, or Laid-Off Employee[/Inactive Employee, Member or Subscriber].

1. The[ benefits of a] plan that[, which] covers a person as an active employee who is neither laid off, nor retired, nor a dependent of an active employee, is the primary plan[, member, and subscriber, are determined before those of a plan, which cover that person as an inactive employee, member, or subscriber]. The plan covering that same person as a retired or laid-off employee or as a dependent of a retired or laid-off employee is the secondary plan.

2. If the other plan does not have this rule, and[ if, as a result,] the plans do not agree on the order of benefits, this rule[provision] is ignored.

3. This Subsection does not apply if the rule in Subsection 6.A. can determine the order of benefits.

D. COBRA or State Continuation Coverage.

1. If a person whose coverage is provided pursuant to COBRA or under a right of continuation pursuant to state or other federal law is covered under another plan, the plan covering the person as a employee, member, subscriber or retiree or covering the person as a dependent of an employee, member, subscriber or retiree is the primary plan and the plan covering that same person pursuant to COBRA or under a right of continuation pursuant to state or other federal law is the secondary plan.

2. If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored.

3. This rule does not apply if the rule in R590-131-6.A. can determine the order of benefits.

E.[5.] Longer or [/]Shorter Length of Coverage.

1. If the preceding[none of the above] rules do not determine the order of benefits, the[ benefits of the] plan that covered the person for the longer period of time is the primary plan and the plan that covered the person for the shorter period of time is the secondary plan[which covered an employee, member, or subscriber longer are determined before those of the plan which covered that person for the shorter term].

2.a. To determine the length of time a person has been covered under a plan, two successive plans shall be treated as one if the claimant was eligible under the second within 24 hours after coverage under the first plan ended.

b. The start of a new plan does not include:

i. a change in the amount or scope of a plan's benefits;

ii. a change in the entity that[which] pays, provides or administers the plan's benefits; or

iii. a change from one type of plan to another, such as, from a single employer plan to [that of ]a multiple employer plan.

c. The person's[claimant's] length of time covered under a plan is measured from the person's[claimant's] first date of coverage under that plan. If that date is not readily available, the date the person[claimant] first became a member of the group shall be used as the date from which to determine the length of time the person's[claimant's] coverage under the present plan has been in force.

F. If none of the above rules determine the primary plan, the allowable expenses shall be shared equally between the plans.

G. If the plans cannot agree on the order of benefits within 30 calendar days after the plans have received all of the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan shall be required to pay more than it would have paid had it been the primary plan.

 

R590-131-7[5]. Procedure to be Followed by Secondary Plan to Calculate Benefits and Pay a Claim.

A. In determining the amount to be paid by the secondary plan on a claim, the secondary plan shall calculate the benefits, should the secondary plan wish to coordinate benefits, it would have paid on the claim in the absence of other health care coverage and apply that calculated amount to any allowable expense under its plan that is unpaid by the primary plan.[When it is determined, pursuant to Section R590-131-4 that the plan is a secondary plan, benefits may be reduced as follows:

1. when one of the plans has contracted for discounted provider fees, the secondary plan may limit payment to any copayments and deductibles owed by the insured after payment by the primary plan; or

2. if none of the plans have contracted for discounted provider fees, the secondary plan may reduce its benefits so that total benefits paid or provided by all plans for a covered service are not more than the highest allowable expense of any of the plans for that service.]

B. The secondary plan may reduce its payment amount so that when combined with the amount paid by the primary plan, the total benefits paid or provided by all plans for the claim do not exceed 100% of the total allowable expense for that claim.[must calculate the amount of benefits it would normally pay in the absence of coordination, including the application of credits to any policy maximums, and apply the payable amount to unpaid covered charges owed by the insured member after benefits have been paid by the primary plan. This amount must include deductibles, coinsurance and copays left owing by the insured member. The secondary plan can use its own deductibles, coinsurance and copays to figure the amount it would have paid in the absence of coordination, and a secondary plan is not required to pay a higher amount than what they would have paid in the absence of coordination. A secondary plan shall only apply its own deductibles, coinsurance and copays to the total allowable expenses, not to the amount left owing after payment by any primary plans.

Insurers must coordinate with plans listed under Subsection R590-131.3.I.2.b. with the same provisions under Subsection R590-131.5.B.]

C. The secondary plan shall credit to its plan deductible any amounts it would have credited to its deductible in the absence of other health care coverage.[Nothing in this rule is intended to require a secondary plan to make payment for any service that is not covered as a benefit by the secondary plan.]

 

R590-131-8.[6.] Miscellaneous Provisions.

A. Reasonable Cash Value of Services.

1. A secondary plan which provides benefits in the form of services may recover the reasonable cash value of providing the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan.

2. Nothing in this provision may be interpreted to require a plan to reimburse a covered person in cash for the value of services provided by a plan, which provides benefits in the form of services.

B. Excess and Other [Nonconforming ]Provisions.

1. No policy[,] or plan[ as defined by this rule,] subject to this rule may contain a provision that its benefits are "excess" or "always secondary" to any other plan or policy.

2. A plan with COB[order of benefit determination] rules which comply with these rules[this rule], which is called a conforming[complying] plan, may coordinate[ its] benefits with a plan which is "excess" or "always secondary" or which uses COB[order of benefit determination] rules[ which are] inconsistent with[ those contained in] this rule, which is called a non-conforming[noncomplying] plan, on the following basis:

a. if the conforming[complying] plan is the primary plan, it shall pay or provide its benefits on a primary basis;

b. [if the complying plan is the secondary plan, it shall pay or provide its benefits first, but the amount of the benefits payable shall be determined as ]if the conforming[complying] plan is[were] the secondary plan, it shall pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the conforming plan were the secondary plan. In such a situation, the[such] payment shall be the limit of the conforming[complying] plan's liability; and

c. if the non-conforming[noncomplying] plan does not provide the information needed by the conforming[complying] plan to determine its benefits within a reasonable time after it is requested to do so, the conforming[complying] plan shall assume that the benefits of the non-conforming[noncomplying] plan are identical to its own[,] and shall pay its benefits accordingly. If within three years of payment, the conforming plan receives information as to the actual benefits of the non-conforming plan, it[ However, the complying plan] shall adjust any payments accordingly[it makes based on such assumption whenever information becomes available as to the actual benefits of the noncomplying plan].

d.i.[3.] If the non-conforming[noncomplying] plan reduces its benefits so that the covered person[employee, subscriber, or member] receives less in benefits than the covered person[he or she] would have received had the conforming[complying] plan paid or provided its benefits as the secondary plan, and the non-conforming[noncomplying] plan paid or provided its benefits as the primary plan[ and governing state law allows the right of subrogation set forth below], then the conforming[complying] plan shall advance to the covered person, or on behalf of the covered person,[employee, subscriber, or member] an amount equal to such difference.

ii.[a.] In no event shall[may] the conforming[complying] plan advance more than the conforming[complying] plan would have paid had it been the primary plan, less any amount it had previously paid.

iii.[b.] In consideration of such advance, the conforming[complying] plan shall be subrogated to all rights of the covered person[employee, subscriber, or member] against the non-conforming[noncomplying] plan in the absence of subrogation.

C. [Allowable Expense. A term such as "usual and customary," "usual and prevailing," or "reasonable and customary," may be substituted for the term "necessary, reasonable and customary." Terms such as "medical care" or "dental care" may be substituted for "health care" to describe the coverages to which the COB provisions apply.]If the plans cannot agree on the order of benefits within thirty calendar days after the plans have received all of the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan shall be required to pay more than it would have paid had it been the primary plans.

D. Subrogation.

[The ]COB [concept ]clearly differs from[ that of] subrogation. Provisions for one may be included in health care benefit[benefits] contracts without compelling the inclusion or exclusion of the other.

E. Right To Receive and Release Needed Information. Certain facts are needed to apply these COB rules. An insurer has the right to decide which facts it needs. It may obtain[get] needed facts from or give them to any other organization or person. An insurer need not tell[,] or obtain[get the] consent from [of, ]any person to do this. To facilitate cooperation with insurers; guidelines for medical privacy issues are provided under U.A.R R590-206, and Title V of Gramm-Leach-Bliley Act of 1999. Each person claiming benefits under a plan shall give the insurer any facts it needs to pay the claim.

F. [Facility of Payment. A payment made under another plan may include an amount, which should have been paid under the plan. If it does, the insurer may pay that amount to the organization, which made that payment. That amount will then be treated as though it were a benefit paid under the plan. The insurer will not have to pay that amount again. The term "payment made" includes providing benefits in the form of services, in which case "payment made" means reasonable cash value of the benefits provided in the form of services.

G. ]Right of Recovery.

1. If the amount of the payments made by an insurer is more than it should have paid under the provisions of this rule, subject to 31A-26-301.6, it may recover the excess paid from one or more of the following, if they were paid by the insurer:

a.[1.] an[The insurer may recover from:

a. The] insured;[ it has paid. However, reversals of payments made due to issues related to coordination of benefits are limited to a time period of 18 months from the date a payment is made unless the reversal is due to fraudulent acts, fraudulent statements, or material misrepresentation by the insured. It is the insurers responsibility to see that the proper adjustments between insurers and providers are made.]

b. a[The] non-contracted provider;[ it has paid. It is the insurers responsibility to see that the proper adjustments between insurers and providers are made. However, reversals of payments made due to issues related to coordination of benefits are limited to a time period of 36 months from the date a payment is made unless the reversal is due to fraudulent acts, fraudulent statements, or material misrepresentation by the insured.]

c. a[The] contracted provider;[providers it has paid. Subject to 31A-26-301.6(15)(a)(ii), it is the insurers responsibility to see that the proper adjustments between insurers and providers are made.]

d.[2.] other[The insurer may recover from] insurance companies;[.] or

e.[3. The insurer may recover from] other organizations.

2. Reversals of payments made due to issues related to this rule are limited to the time period stated in Section 31A-26-301.6, except as provided in Section 31A-21-313.

3. It is the insurer's responsibility to see that the proper adjustments between insurers and providers are made.

[H. The "amount of the payments made" includes the reasonable cash value of any benefits provided in the form of services.

I. A plan, whether primary or secondary, may not be required to pay a greater total benefit than would have been required had there been no other plan.

J. Exception to claim payment guidelines and timetables expressed under 31A-26-301.5(2)(b) and R590-192-7, for coordination of benefit claims are allowed by the secondary plan:

1. if the secondary plan has proof that they are the secondary plan; and

2. for only as long as a submitted claim is without an explanation of benefits from the primary plan.]

G. Notice to Covered Persons. A plan shall, in its explanation of benefits provided to covered persons, include the following language: "If you are covered by more than one health benefit plan, you should file all your claims with each plan."

H. If otherwise covered benefits are due to a loss subject to Section 31A-22-306, then an accident and health insurer may exclude benefits covered by personal injury protection described in Subsection 31A-22-307(1)(a), up to the:

1. personal injury protection benefit provided by motor vehicle insurance; or

2. minimum amount required by Section 31A-22-307, if motor vehicle insurance is not in effect.

I. Facility of Payment. A payment made under another plan may include an amount, which should have been paid under the plan. If it does, the insurer may pay that amount to the organization which made that payment. That amount will then be treated as though it were a benefit paid under the plan. The insurer will not have to pay that amount again. The term "payment made" includes providing benefits in the form of services, in which case "payment made" means reasonable cash value of the benefits provided in the form of services.

 

R590-131-9. COB Scenarios.

The following scenarios are provided to assist in demonstrating the use of the COB rule:

A. Parents Not Married, Living Together, No Court Decree. The order of benefits pursuant to R590-131-6.B.1. shall be:

1. the parent whose birthday falls earlier in the calendar year; then

2. the parent whose birthday falls later in the calendar year; or

3. if the parents have the same birthday, the plan that has covered the parent longest; then

4. the plan that has covered the parent the shortest.

B. Parents Divorced, Separated, Or Not Living Together.

1. The court decree gives joint custody with the father responsible for the child's health care expenses or health care coverage, and the father has health care coverage. The order of benefits pursuant to R590-131-6.B.2.a. shall be the:

a. natural father;

b. step-mother;

c. natural mother; then

d. step-father.

2. The court decree gives joint custody with father responsible for the child's health care expenses or health care coverage, the father does not have health care coverage, but his wife does. The order of benefits pursuant to R590-131-6.B.2.a. shall be the:

a. step-mother;

b. natural mother; then

c. step-father.

3. The court decree gives custody to the father and requires both parents to be responsible for health care expenses or coverage. The father's date of birth (DOB) 12/01, the step-mother's DOB 02/17, the mother's DOB 08/23, and the step-father's DOB 01/10. The order of benefits pursuant to R590-131-6.B.2.b. shall be the:

a. step-father;

b. step-mother;

c. natural mother; then

d. natural father.

4. A court decree awards joint custody and the father physical custody. The court decree does not address health care expenses or coverage. The father's DOB is 12/01, the step-mother's DOB is 02/17, the mother's DOB is 08/23, and the step-father's DOB is 01/10. The order of benefits pursuant to R590-131-6.B.2.c. shall be the:

a. step-father;

b. step-mother;

c. natural mother; then

d. natural-father.

5. A court decree awards joint custody and requires both parents to be responsible for health care expenses or coverage. The child lives with the mother 51% of the year. The father's DOB is 12/01, the step-mother's DOB is 02/17, the mother's DOB is 08/23, and the step-father's DOB is 01/10. The order of benefits pursuant to R590-131-6.B.2.b. shall be the:

a. step-father;

b. step-mother;

c. natural mother; then

d. natural father.

C. Parents Never Married.

1. The parents are not living together and no court decree exists. The order of benefits pursuant to R590-131-6.B.2.d shall be the;

a. plan covering the custodial parent;

b. plan covering the custodial parent's spouse;

c. plan covering the non-custodial parent; and then

d. plan covering the non-custodial parent's spouse.

2. The parents are not living together and the court decree awards custody to mother, but the decree does not address health care expenses or coverage. The order of benefits pursuant to R590-131-6.B.2.d. shall be the;

a. natural mother;

b. step-father;

c. natural father; then

d. step-mother.

D. Children No Longer Minors. A court decree orders that the natural father is to provide insurance for the minor children and custody is awarded to the natural mother. The dependents are age 18 and older. The order of benefits pursuant to R590-131-6.B.2.d shall be the:

1. natural mother;

2. step-father;

3. natural father; then

4. step-mother.

 

R590-131-10. Effective Date for Existing Contracts.

A. A contract that provides health care benefits issued before the effective date of this rule shall be brought into compliance with this rule no later than January 1, 2009.

 

R590-131-11[7]. Penalties.

Any insurer that[, which] fails to comply with the provisions of this rule, shall be subject to the forfeiture and penalty provisions of Section 31A-2-308.

 

R590-131-12[8]. Separability.

If any provision of this rule or the application of it to any person is for any reason held to be invalid, the remainder of the rule and the application of any provision to other persons or circumstances shall not be affected.

 

R590-131-13[9]. Enforcement Date.[Existing Contracts.]

The commissioner will begin enforcing the revised provisions of this rule January 1, 2009[45 days from the rule's effective date].

 

KEY: insurance law

Date of Enactment or Last Substantive Amendment: [August 22, 2002]2008

Notice of Continuation: October 31, 2007

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-21-307