No. 43055 (New Rule): Rule R590-277. Managed Care Health Benefit Plan Contract Standards

(New Rule)

DAR File No.: 43055
Filed: 07/02/2018 04:40:59 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being adopted as a result of H.B. 336 passed during the 2017 General Session. The effective date for applicable provisions had a delayed effective date of 01/01/2018.

Summary of the rule or change:

This rule adopts key definitions to be used in contracts; prohibits contract limitations or exclusions except for those stated in this rule; provides for rights for a spouse or child in the event of contract termination; requires certain benefits for transplants, requires notification when premiums are being revised; requires coverage to be offered without regard to health status; includes required provisions to be included in contracts; and restricts the manner in which premium rates are calculated.

Statutory or constitutional authorization for this rule:

Section 31A-2-201
Section 31A-23a-402
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 be 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 costs 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 costs or savings to persons other than small businesses, businesses or local government entities.

Compliance costs for affected persons:

There are no anticipated compliance costs for affected persons. 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.

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:

08/14/2018

This rule may become effective on:

08/21/2018

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 new rule is not expected to have any fiscal impacts on large businesses' revenues or expenditures, because this rule merely 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.

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 Contract Standards.

R590-277-1. Authority.

This rule is promulgated by the commissioner pursuant to Sections 31A-2-201, 31A-2-202, 31A-23a-402, 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.

R590-277-3. Definitions.

(1) "Accident", "accidental injury", and "accidental means" shall be defined to employ result language and shall not include words that establish an accidental means test or use words such as external, violent, visible wounds, or similar words of description or characterization.

(a) The definition shall not be more restrictive than the following: "injury" or "injuries" means accidental bodily injury sustained by the insured person that is the direct cause of the condition for which benefits are provided, independent of disease or bodily infirmity or any other cause and that occurs while the insurance is in force.

(b) The definition may exclude injuries for which benefits are paid under worker's compensation, any employer's liability or similar law, or a motor vehicle no-fault policy.

(2) "Complications of pregnancy" means a disease or condition which is distinct from pregnancy but is adversely affected or caused by pregnancy and not associated with a normal pregnancy.

(a) "Complications of pregnancy" includes acute nephritis, nephrosis, cardiac decompensation, ectopic pregnancy which is terminated, a spontaneous termination of pregnancy when a viable birth is not possible, puerperal infection, eclampsia, pre-eclampsia and toxemia.

(b) Complications of pregnancy does not include false labor, occasional spotting, doctor prescribed rest during the period of pregnancy, morning sickness, and conditions of comparable severity associated with management of a difficult pregnancy.

(3)(a) "Cosmetic surgery" or "reconstructive surgery" means any surgical procedure performed primarily to improve physical appearance.

(b) Cosmetic surgery or reconstructive surgery does not include surgery, which is necessary:

(i) to correct damage caused by injury or sickness;

(ii) for reconstructive treatment following medically necessary surgery;

(iii) to provide or restore normal bodily function; or

(iv) to correct a congenital disorder that has resulted in a functional defect.

(4) "Experimental or Investigational Treatment" means medical treatment, services, supplies, medications, drugs, or other methods of therapy or medical practices, which are not accepted as a valid course of treatment by the Utah Medical Association, the U.S. Food and Drug Administration, the American Medical Association, or the Surgeon General.

(5) "Health care professional" means an individual to the extent that the individual is defined to be a health care professional under Title 26, Chapter 46.

(6) "Health care provider" means a health care provider as defined in Section 78B-3-403 who:

(a) is practicing within the scope of the provider's license; and

(b) has agreed either directly or indirectly, by contract or any other arrangement with an insurer to render health care or professional services to insureds.

(7) "Hospital" means a facility that is licensed and operating within the scope of such license. This definition may not preclude the requirement of medical necessity of hospital confinement or other treatment.

(8)(a) "Medical necessity" means health care services or products that a prudent health care professional would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms in a manner that is:

(i) in accordance with generally accepted standards of medical practice in the United States;

(ii) clinically appropriate in terms of type, frequency, extent, site, and duration;

(iii) not primarily for the convenience of the patient, physician, or other health care provider; and

(iv) covered under the policy.

(b) When a medical question-of-fact exists, medical necessity shall include the most appropriate available supply or level of service for the individual in question, considering potential benefits and harms to the individual, and known to be effective.

(i) For interventions not yet in widespread use, the effectiveness shall be based on scientific evidence.

(ii) For established interventions, the effectiveness shall be based on:

(A) scientific evidence;

(B) professional standards; and

(9) "Mental health" means benefits for services and items with respect to mental health conditions defined under the terms of the applicable plan or health insurance coverage, in accordance with applicable federal and state law, and consistent with generally recognized standards of current medical practice.

(10) "Physician" may be defined by including words such as qualified physician or licensed physician. The use of such terms requires an insurer to recognize and to accept, to the extent of its obligation under the policy, all providers of medical care and treatment when such services are within the scope of the provider's licensed authority and are provided pursuant to applicable laws.

(11)(a) "Scientific evidence" means:

(i) scientific studies published in or accepted for publication by medical journals that meet nationally recognized requirements for scientific manuscripts and that submit most of their published articles for review by experts who are not part of the editorial staff; or

(ii) findings, studies or research conducted by or under the auspices of federal government agencies and nationally recognized federal research institutes.

(b) Scientific evidence shall not include published peer-reviewed literature sponsored to a significant extent by a pharmaceutical manufacturing company or medical device manufacturer or a single study without other supportable studies.

(12) "Sickness" means illness, disease, or disorder of an insured person.

(13) "Substance use disorder" means benefits with respect to services and items for substance use disorders as defined under the terms of the plan or health insurance coverage and in accordance with state and federal law.

(14)(a) "Total disability" shall mean an individual who:

(i) is not engaged in employment or occupation for which they are or have become qualified by reason of education, training or experience; and

(ii) is unable to perform all of the substantial and material duties of their regular occupation.

(b) The definition of total disability in a policy may use words of similar import.

(d) The definition may not exclude benefits based on the individual's:

(i) ability to engage in any employment or occupation for wage or profit;

(ii) inability to perform any occupation whatsoever, any occupational duty, or any and every duty of his occupation; or

(iii) inability to engage in any training or rehabilitation program.

(15)(a) "Usual and customary" shall mean the most common charge for similar services, medicines or supplies within the area in which the charge is incurred.

(b) In determining whether a charge is usual and customary, an insurer shall consider one or more of the following factors:

(i) the level of skill, extent of training, and experience required to perform the procedure or service;

(ii) the length of time required to perform the procedure or services as compared to the length of time required to perform other similar services;

(iii) the severity or nature of the illness or injury being treated;

(iv) the amount charged for the same or comparable services, medicines or supplies in the locality; the amount charged for the same or comparable services, medicines or supplies in other parts of the country;

(v) the cost to the provider of providing the service, medicine or supply; and

(vi) other factors determined by the insurer to be appropriate.

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 shall 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) aviation;

(f) axillary hyperhidrosis;

(g) 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;

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

(i) charges for appointments scheduled and not kept;

(j) chiropractic care;

(k) complementary and alternative medicine;

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

(m) cosmetic surgery; reversal, revision, repair, complications, or treatment related to a non-covered cosmetic surgery. This exclusions 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;

(n) custodial care;

(o) dental care or treatment;

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

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

(r) experimental and/or investigational services;

(s) felony, riot or insurrection, when the insured is a voluntary participant;

(t) 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;

(u) 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;

(v) gene therapy;

(w) genetic testing;

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

(y) illegal activities, limited to losses related directly to the insured's voluntary participation where the insured has been found guilty of an illegal activity;

(z) infertility services;

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

(bb) injury as a result of a motor vehicle, to the extent the health benefit plan's 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;

(cc) nuclear release;

(dd) refractive eye surgery;

(ee) rehabilitation 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;

(ff) respite care;

(gg) rest cures;

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

(ii) services rendered by employees of hospitals, laboratories or other institutions;

(jj) services performed by the covered person's parent, spouse or child;

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

(ll) shipping and handling;

(mm) telephone/electronic consultations;

(nn) territorial limitations outside the United States;

(oo) terrorism, including acts of terrorism;

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

(qq) transportation, except medically necessary ambulance services;

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

(ss) others as may be approved by the commissioner.

(3) Commissioner authority. Policy provisions precluded in this section shall not be construed as a limitation on the authority of the commissioner to prohibit other policy provisions that in the opinion of the commissioner are unjust, unfair or unfairly discriminatory to the policyholder, beneficiary or a person insured 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.

(a) A policy 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 insured, other than for nonpayment of premium.

(b) A policy shall provide that in the event of the insured'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, 31A-22-618.7, and 31A-22-618.8.

(4) Transplant donor coverage. A policy providing coverage for the recipient in a transplant operation shall also provide reimbursement of any medical expenses of a live donor, after benefits for the recipient's own expenses have been paid.

(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) 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) R590-277-5(6) does not apply to an employer sponsored health benefit plan.

(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 state law and effective on a uniform basis among all individuals in the health benefit plan;

(d) must renew or continue coverage at the option of the policyholder, subject to Subsections 31A-22-618.6 and 618.7.

R590-277-6. Required Provisions.

(1) A policy and certificate shall include a renewal, continuation or nonrenewal provision. The provision shall be appropriately captioned, shall appear on the first page of the policy or certificate, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the policy is issued and for which it may be renewed.

(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, any 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, any 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.

(5) Conversion privilege.

(a) If a policy or certificate contains a conversion privilege, it shall comply, in substance, with the following: The caption of the provision shall read "Conversion Privilege" or words of similar import.

(b) The provision shall indicate the persons eligible for conversion, the circumstances applicable to the conversion privilege, including any limitations on the conversion, and the person by whom the conversion privilege may be exercised.

(c) The provision shall specify the benefits to be provided on conversion or may state that the converted coverage will be as provided on a policy form then being used by the insurer for that purpose.

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:

(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;

TABLE
UTAH AGE CURVE

     Age Band   Slope Factor     Age Band   Slope Factor
     0-20          0.793           43          1.616
       21          1.000           44          1.681
       22          1.050           45          1.748
       23          1.113           46          1.818
       24          1.191           47          1.891
       25          1.298           48          1.966
       26          1.363           49          2.045
       27          1.390           50          2.127
       28          1.390           51          2.212
       29          1.390           52          2.300
       30          1.390           53          2.392
       31          1.390           54          2.488
       32          1.390           55          2.588
       33          1.390           56          2.691
       34          1.390           57          2.799
       35          1.390           58          2.911
       36          1.390           59          2.691
       37          1.404           60          3.000
       38          1.425           61          3.000
       39          1.450           62          3.000
       40          1.479           63          3.000
       41          1.516           64          3.000
       42          1.562           65          3.000

(d) family composition; and

(e) tobacco use, except that the rate shall not vary by more than 1.5 to 1.

(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 which the contract 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 45 days after the effective date of this rule.

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, managed care health benefits

Date of Enactment or Last Substantive Amendment: 2018

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