No. 43427 (Change in Proposed Rule): Rule R590-277. Managed Care Health Benefit Plan Policy Standards

DAR File No.: 43427
Filed: 04/15/2019 03:58:05 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being amended as a result of H.B. 336, Health Reform Amendments, passed during the 2017 General Session. The effective date for the applicable provisions in this rule have a delayed effective date of January 1, 2020. These changes revise the previously filed language for illegal activities in Section R590-277-4.

Summary of the rule or change:

This revision clarifies that an insurer may only exclude coverage for an insured's participation in an illegal activity if the insured is found guilty in a criminal proceeding, or liable in a civil proceeding. (EDITOR'S NOTE: The original proposed new rule upon which this change in proposed rule (CPR) was based was published in the January 1, 2019, issue of the Utah State Bulletin, on page 33. Underlining in the rule below indicates text that has been added since the publication of the proposed new rule mentioned above; strike-out indicates text that has been deleted. You must view the CPR and the proposed new rule together to understand all of the changes that will be enforceable should the agency make this rule effective.)

Statutory or constitutional authorization for this rule:

Subsection 31A-2-201(3)(a)
Subsection 31A-23a-402(8)
Section 31A-45-103
Section 31A-2-202
Section 31A-23a-412

Anticipated cost or savings to:

the state budget:

There is no anticipated cost or savings to the state budget. This rule adopts standards that are currently required under an administrative rule that applies not only to managed care contracts, but also other types of health insurance contracts.

local governments:

There is no anticipated cost or savings to local governments. If a local government plan offered their employees a self-funded health plan, this rule would not apply. If a local government plan offered their employees a fully insured health plan, it is not anticipated that there will additional costs or savings. This rule adopts standards that are currently required under an administrative rule that applies not only to managed care contracts, but also other types of health insurance contracts.

small businesses:

There is no anticipated cost or savings to small businesses. This rule adopts standards that are currently required under an administrative rule that applies not only to managed care contracts, but also other types of contracts.

persons other than small businesses, businesses, or local governmental entities:

There is no anticipated cost or savings to persons other than small businesses, businesses, or local government entities. Other than revisions to the illegal activities provision, this rule adopts standards that are currently required under an administrative rule that applies not only to managed care contracts, but also other types of contracts. All but one insurer reported no concerns with the changes to the illegal activities provision. That insurer provided only one example in which they currently were experiencing a loss of approximately $150,000. However, this loss is not applicable under this rule. It is for a self-funded plan, which is exempt from state law. Additionally, the insurer would have the ability to bring civil lawsuit in the situation to exclude the $150,000 claim, thereby completely avoiding payment of any claim, and having no cost impact under these rule changes.

Compliance costs for affected persons:

There are no anticipated compliance costs for affected persons. The revisions to this rule are being filed timely so that affected persons are able to incorporate them into their annual filing process.

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

After conducting a thorough analysis, it was determined that this proposed rule will not result in a fiscal impact to businesses.

Todd E. Kiser, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office 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:

Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at sgooch@utah.gov

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:

05/31/2019

This rule may become effective on:

06/07/2019

Authorized by:

Steve Gooch, Information Specialist

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2019

FY 2020

FY 2021

State Government

Local Government

Small Businesses

Non-Small Businesses

Other Person

Total Fiscal Costs:

Fiscal Benefits

State Government

Local Government

Small Businesses

Non-Small Businesses

Other Persons

Total Fiscal Benefits:

Net Fiscal Benefits:

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non-Small Businesses are described in Appendix 2.

Appendix 2: Regulatory Impact to Non-Small Businesses

This change in proposed rule is not expected to have any fiscal impacts on non-small businesses revenues or expenditures, because its main purpose is to clarify that an insurer may only exclude coverage for an insured's participation in an illegal activity if the insured is found guilty in a criminal proceeding, or liable in a civil proceeding. Other than the revision to the illegal activities provision, this rule adopts standards that are currently required under an administrative rule that applies not only to managed care contracts, but also other types of contracts.

The head of the Insurance Department, Todd E. Kiser, has reviewed and approved this fiscal analysis.

R590. Insurance Administration.

R590-277. Managed Care Health Benefit Plan Policy Standards.

R590-277-1. Authority.

This rule is promulgated by the commissioner pursuant to Subsections 31A-2-201(3)(a), 31A-2-202, 31A-23a-402(8), 31A-23a-412, and 31A-45-103.

R590-277-2. Purpose and Scope.

(1) The purpose of this rule is to provide reasonable standardization and simplification of terms and coverages of a managed care health benefit plan policy in order to:

(a) facilitate public understanding and comparison;

(b) prohibit provisions which may be misleading or confusing in connection either with the purchase of such coverages or with the settlement of claims; and

(2) This rule applies to any health benefit plan issued by a managed care organization to an individual or group, including policies issued to an association, trust, discretionary group, or other similar group.

(3) This rule does not apply to short-term limited duration health insurance that complies with both R590-85, Individual Accident and Health Insurance and Individual and Group Medicare Supplement rates, and R590-126, Accident and Health Insurance Standards.

R590-277-3. Definitions.

The definitions in Sections 31A-1-301, 31A-22-625, 31A-30-103 and 31A-45-102, and Rules R590-126, R590-192, R590-261 and R590-266, shall apply for the purposes of this rule.

R590-277-4. Prohibited Policy Provisions.

(1) A health benefit plan may not impose any preexisting condition limitation or exclusion provisions.

(2) Limitations or exclusions. Unless otherwise required by law, a policy may not limit or exclude coverage or benefits by type of illness, accident, treatment, or medical condition, except as follows:

(a) abortion;

(b) acupuncture and acupressure services;

(c) administrative charges for completing insurance forms, duplication services, interest, finance charges, or other administrative charges;

(d) administrative exams and services;

(e) applied behavioral analysis therapy, except as required by Section 31A-22-642;

(f) aviation;

(g) axillary hyperhidrosis;

(h) benefits provided under:

(i) Medicare or other governmental program, except Medicaid;

(ii) state or federal worker's compensation; or

(iii) employer's liability or occupational disease law;

(i) fitness training, exercise equipment, or membership fees to a spa or health club;

(j) charges for appointments scheduled and not kept;

(k) chiropractic care;

(l) complementary and alternative medicine;

(m) corrective lenses, and examination for the prescription or fitting thereof, except lens implant following cataract surgery and as required by R590-266;

(n) cosmetic surgery; reversal, revision, repair, complications, or treatment related to a non-covered cosmetic surgery. This exclusion does not apply to reconstructive surgery when the service is incidental to or follows surgery resulting from trauma, infection or other diseases of the involved party; or reconstructive surgery because of congenital disease or anomaly of a covered dependent child that has resulted in a functional defect;

(o) custodial care;

(p) dental care or treatment;

(q) dietary products, except as required by R590-194;

(r) educational and nutritional training, except as required by R590-200;

(s) experimental or investigational services;

(t) expenses before coverage begins or after coverage ends;

(u) felony, riot or insurrection, when it has been determined the covered person was a voluntary participant;

(v) foot care in connection with corns, calluses, flat feet, fallen arches, weak feet, chronic foot strain or symptomatic complaints of the feet, including orthotics. The exclusion of routine foot care does not apply to cutting or removal of corns, calluses, or nails when provided to a person who has a systemic disease, such as diabetes with peripheral neuropathy or circulatory insufficiency, of such severity that unskilled performance of the procedure would be hazardous;

(w) gastric or intestinal bypass services including lap banding, gastric stapling, and other similar procedures to facilitate weight loss; the reversal, or revision of such procedures; or services required for the treatment of complications from such procedures;

(x) gender reassignment, except as required by Section 1557 of the Patient Protection and Affordable Care Act;

(y) gene therapy;

(z) genetic testing;

(aa) hearing aids, and examination for the prescription or fitting thereof;

(bb)(i) a loss directly related to [~~an illegal~~]the insured's voluntary participation in an activity[ ~~when it has been determined the covered person voluntarily committed the illegal activity. This exclusion does not apply to~~] where the insured:

([i]A) [~~an exclusion prohibited by the nondiscrimination provisions of the Health Insurance Portability and Accountability Act~~]is found guilty of an illegal activity in a criminal proceeding; or

([ii]B) [a loss resulting from the covered person being under the influence of alcohol, unless it has been determined the loss is directly related to and a result of the covered person illegally operating a motor vehicle under the influence of alcohol, as determined under 41-6a-502. If the loss occurs in a state other than Utah, the determination shall be made under the laws of such jurisdiction]is found liable for the activity in a civil proceeding.

(ii) A guilty finding includes a plea of guilty, a no contest plea, and a plea in abeyance;

(cc) infertility services;

(dd) mental health and substance use disorder services, except as required by Section 31A-22-625 and R590-266;

(ee) injury as a result of a motor vehicle, to the extent the covered person is required by law to have no-fault coverage. The exclusion applies only to charges up to the minimum coverage required by law, whether or not such coverage is in effect;

(ff) nuclear release;

(gg) refractive eye surgery;

(hh) rehabilitation or habilitative therapy services, such as physical, speech, and occupational, except as required to correct an impairment caused by a covered accident or illness, or as required by R590-266;

(ii) respite care;

(jj) rest cures;

(kk) service in the armed forces or units auxiliary to it;

(ll) services that are not medically necessary;

(mm) services performed by the covered person's parent, spouse, sibling or child, including a step or in-law relationship;

(nn) services for which no charge is normally made in the absence of insurance;

(oo) services in connection with a prearranged surrogacy agreement where the covered person relinquishes a baby and receives payment or other compensation arising out of such services. This exclusion does not apply to services for the baby;

(pp) sexual dysfunction procedures, equipment and drugs;

(qq) shipping and handling;

(rr) telephone/electronic consultations;

(ss) territorial limitations outside the United States;

(tt) terrorism, including acts of terrorism;

(uu) transplants, except as required by R590-266;

(vv) transportation, except medically necessary ambulance services;

(ww) war or act of war, whether declared or undeclared; or

(xx) others that in the opinion of the commissioner are not inequitable, misleading, deceptive, obscure, unjust, unfair or unfairly discriminatory to the policyholder, beneficiary or covered person under the policy.

R590-277-5. General Requirements.

(1) Policy definitions. No policy subject to this rule may contain definitions respecting the matters defined in R590-277-3 unless such definitions comply with the requirements of that section.

(2) Rights of spouse and dependents. Except for an employer sponsored health plan, a policy;

(a) may not provide for termination of coverage of the spouse or a dependent solely because of the occurrence of an event specified for termination of coverage of the policyholder, other than for nonpayment of premium; and

(b) shall provide that in the event of the policyholder's death the spouse of the insured shall become the insured.

(3) Cancellation, renewability, and termination. A policy cancellation, renewability and termination provision shall comply with Sections 31A-22-618.6 or 31A-22-618.7.

(4) Transplant donor coverage. A policy providing coverage for the recipient in a transplant operation shall also provide reimbursement of any medically necessary transplant expenses of a live donor.

(5) Notice of premium change. A notice of change in premium shall be given no fewer than 45 days before the renewal date.

(6)(a) Except as provided in Subsection (b), a completed application shall be made part of the policy. A copy of the completed application shall be provided to the applicant prior to, or upon delivery, of the policy.

(b) Subsection (6)(a) does not apply to:

(i) an employer sponsored health benefit plan; or

(ii) an individual policy where application was effectuated directly through heathcare.gov.

(7) A managed care organization offering a health benefit plan to an individual or small employer:

(a) shall offer coverage to all individuals and eligible employees on a guaranteed basis without regard to health status;

(b) may modify coverage at the time of renewal to the extent that such modification is consistent with federal and state law and effective on a uniform basis among all individuals in the health benefit plan; and

R590-277-6. Required Provisions.

(1) A policy and certificate shall include a renewal, continuation, and nonrenewal provision. The provision shall be appropriately captioned, appear on the first page of the policy and certificate, and clearly state the duration of coverage.

(2) Endorsement acceptance.

(a) Except for an endorsement by which the insurer effectuates a request made in writing by the policyholder or exercises a specifically reserved right under the policy, an endorsement added to a policy after date of issue or at reinstatement or renewal that reduces or eliminates benefits or coverage in the policy shall require signed acceptance by the policyholder.

(b) After the date of policy issue, an endorsement that increases benefits or coverage with a concurrent increase in premium during the policy term, must be agreed to in writing signed by the policyholder, except if the increased benefits or coverage is required by law.

(3) Additional premium. Where a separate additional premium is charged for benefits provided in connection with an endorsement, the premium charge shall be set forth in the policy or certificate.

(4) Benefit payment standard. A policy or certificate that provides for the payment of benefits based on standards described as usual and customary, reasonable and customary, or words of similar import, shall include a definition of the terms and an explanation of the terms in its accompanying outline of coverage or certificate.

R590-277-7. Restrictions Relating to Premium Rates.

(1) The premium charged shall not be adjusted more frequently than annually, except that the premium rates may be changed:

(a) to reflect changes to the enrollment;

(b) to reflect changes to the health benefit plan; or

(2) Premium rates may vary only with respect to the particular coverage involved on the basis of the following:

(a) whether the plan covers an individual or family:

(i) the total family premium shall include only the premiums for all covered family members over the age of twenty-one and the three oldest children under the age of twenty one; and

(ii) any rating variation on the basis of age or tobacco use must be applied separately to the portion of the premium attributable to each covered family member;

(b) geographic rating area, determined by the policyholder's primary address, as follows:

(i) Area 1, comprised of Cache and Rich counties;

(ii) Area 2, comprised of Box Elder, Morgan, and Weber counties;

(iii) Area 3, comprised of Davis, Salt Lake, Summit, Tooele, and Wasatch counties;

(iv) Area 4, comprised of Utah county;

(v) Area 5, comprised of Iron and Washington counties; and

(vi) Area 6, comprised of Beaver, Carbon, Daggett, Duchesne, Emery, Garfield, Grand, Juab, Kane, Millard, Piute, San Juan, Sanpete, Sevier, Uintah, and Wayne counties;

(c) age of each enrollee, as of the date of the policy issuance or renewal, in accordance with the Utah Individual and Small Employer Health Benefit Plan Age Curve; and

(d) tobacco rate factor, not greater than 1.5.

(3) R590-277-7(2) does not apply to:

(a) a large employer health benefit plan; or

(b) an individual or small employer health benefit plan issued prior to January 1, 2014 in which the policy rating complies with:

(i) Title 31A-30, Individual, Small Employer, and Group Health Insurance Act; and

(ii) Rule R590-167, Individual, Small Employer, and Group Health Benefit Plan Rule.

R590-277-8. Existing Policies.

A policy issued prior to the effective date of this rule shall be amended to comply with this rule on the first policy anniversary following the effective date of this rule.

R590-277-9. Penalties.

A person found to be in violation of this rule shall be subject to penalties as provided under Section 31A-2-308.

R590-277-10. Enforcement Date.

The commissioner will begin enforcing the provisions of this rule for policies issued or renewed on or after January 1, 2020.

R590-277-11. Severability.

If any provision or clause of this rule or its application to any person or situation is held invalid, that invalidity may not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.

KEY: insurance, health insurance

Date of Enactment or Last Substantive Amendment: 2019

Authorizing, and Implemented or Interpreted Law: 31A-45-103; 31A-2-201(3)(a); 31A-23a-402(8); 31A-23a-412; 31A-2-202