Bulletin 1997 - 13 , Senate Bill 204

Issued by the Kansas Insurance Department, Kathleen Sebelius, Commissioner

September l6, 1997

To: All Companies Authorized to Transact Accident and Health

Insurance Business in the State of Kansas

From: Kathleen Sebelius

Commissioner of Insurance

Re: 1997 Senate Bill 204

The Insurance Department has received a number of inquiries from the insurance industry concerning 1997 Senate Bill 204. The legislation implemented the provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and the Patient Protection Act. This Bulletin is intended to respond to some of the issues raised by insurance carriers.

HIPAA Questions (1997 SB 204; Sections 1 through 15):

(1.) Is it allowable to surcharge late enrollees?

No, there is no change in current law which prohibits insurers from imposing an additional premium on late enrollees. However, the new legislation does permit insurers to exclude late enrollees except during open enrollment. (Section 1; KSA 40-2209 (A)(2) and Section 3; KSA 40-2209f(c)).

(2.) Can insurers set participation and contribution limits on groups?

Yes. Senate Bill 204 did not change the current law. (Section 1; KSA 40-2209 (C)).

(3.) If a company has two different medical service enrollment areas can the company develop separate distinct products for small employer groups in the two different service areas?

Yes. A company may offer two distinct products using different networks in different areas within the state.

(4.) If one of an insurer's groups has asked the insurance company to not supply certificates of prior creditable coverage, will the insurer be held harmless if they fail to provide the information? Do we need to include a provision in our contract with the employer?

If an employer group wants to send out the certificates, the insurer may choose to contract with them to assume that function. However, the law requires that the insurance company has the responsibility for seeing that the certificates are sent out. The Department will take enforcement action against the insurance company and not the employer if the law is not followed. (Section 1; KSA 40-2209(B)).

(5.) Can insureds be charged for a certificate of prior coverage? What is a reasonable time period for the certificates to be issued?

Carriers can not charge for certificates issued the individuals. The Department is considering regulations which will specify how long a company has to issue a certificate after a request is made and would welcome comments. One option the Department is considering is to specify that certificates must be provided within the same time period as required to send out COBRA notices to individuals after a qualifying event.

(6.) Do carriers have to issue written certificates or can they provide that information to the individual's new group carrier by telephone?

Insurers are required to issue written certificates which indicate how long the person was covered under the prior plan (including any COBRA or state continuation coverage). (Section 1; KSA 40-2209(B)).

(7.) If a company decides to withdraw from the group or individual market, can they keep existing business and just discontinue new business?

If a carrier withdraws from the small group market, they must also discontinue existing small employer groups on the anniversary date of that policy. If a company withdraws from the large group or individual market, they can keep existing policies in force and not offer any new policies. (Section 1; KSA 40-2209(D)).

(8.) Is a company required to guarantee issue all of its group products to small employer groups?

No. Insurers are permitted to develop separate products for the small employer group and large group market. Carriers must offer to any small employer, all products that they are actively marketing in the small group market. The Department will continue to monitor the small employer group market to make certain carriers are providing small employers with full access to their products. (New Section 6 (a)).

(9.) Does the medical savings account provision in Section 15 of S.B. 204 require carriers to provide mental health and substance abuse benefits on the same level as medical and surgical benefits?

Yes, the statute provides that once the deductible is paid on the high deductible policy, purchased in conjunction with a medical savings account, "the outpatient costs of treatment of the insured for alcoholism, drug abuse and nervous or mental conditions shall be paid on the same level they are provided for a medical condition." (Section 15; KSA 40-2,105(g)).

(10.) Can an insurance company marketing individual insurance policies amend the Important Consumer Notice included in Bulletin 1997-11?

Yes, the notice may be changed as long as the revised notice language is sent to the Insurance Department for review.

(11.) Do companies have to file rate information with the Insurance Department to demonstrate that the cost of providing the same dollar limits on mental health benefits and coverage for physical illnesses will exceed one percent?

No. However, the company needs to maintain a file which documents the one percent rate impact. Companies must also file with the Insurance Department the rating methodology they will use to calculate the cost of providing that benefit. (New Section 13).

(12.) Once a group has optioned out of the mental health coverage requirement, does the carrier have to annually document the potential one percent rate impact?

The carrier must maintain a file, updated annually, concerning the rate impact. (New Section 13).

(13.) For community rated pools (Associations or Consortiums), may the rate determination be made based on the total pool?

Yes. For individual employer groups which are rated on a community rated basis, the rate determination for the one percent rate impact may be based on the total pool. (New Section 13).

(14.) Are the new mental health benefit provisions implemented on the rate anniversary of the group?

Yes, the new mental health benefits are to be implemented on the first rating anniversary date for the group after January 1, 1998. (New Section 13).

(15.) Can carriers compute the one percent premium rate impact for nervous and mental coverage prospectively, or does it have to be done retrospectively?

Carriers may compute the rate impact using either prospective or retrospective means. (New Section 13).

Patient Protection Act Issues (1997 SB 204; Sections 16 through 23):

(1.) If it is determined by a health benefit plan that a condition did not require immediate medical attention and would not have resulted in serious impairment of bodily functions or serious dysfunction of a bodily organ or part, or would not have placed a person's health in serious jeopardy, would we be required to cover the services rendered to treat such condition?

The legislation requires that reimbursement for emergency medical treatment is triggered from the symptoms reported by the insured as recorded by the attending provider. If those symptoms are characteristic of an emergency medical condition, as defined in the law, the treatment must be paid for. (New Sections 17 and 18).

(2.) Does Senate Bill 204 restrict how copayments can be structured? Can companies have different copayments for emergency room treatment provided by out of network providers?

It is acceptable to vary the copayment for the treatment of emergency medical conditions at an out of network provider so long as the payment differential does not restrict access to emergency services. However, plans may not be amended to change the benefits to add an additional penalty which would add to the total of out-of-pocket expense. The Department will closely monitor the charges imposed by carriers for out of network emergency services to make certain they do not discourage or otherwise limit enrollees from obtaining emergency medical services. (New Sections 17 and 18).

(3.) Do carriers have to provide coverage for services received at a Minor Emergency Center ("MEC") at the same level as those provided in a hospital emergency room? A more specific question, could a carrier require a different copayment amount for services received at an MEC than for services received in a hospital emergency room?

Coverage must be provided if the symptoms presented by the insured and recorded by the attending provider indicate that an emergency medical condition exists regardless of where those services are provided. If the emergency medical services are provided in a MEC, payment must be made by the insurance company. (New Sections 17 and 18).

(4.) Where can a person receive emergency medical services?

A person can receive emergency medical services and stabilization from any provider which is defined in the law as a physician, hospital or other person which is licensed, accredited or certified to perform specified health care services. (New Sections 17 and 18).

(5.) The copay for a doctor's visit is $30 and the copay for emergency room treatment is $50. Which copay will an insured pay if the medical condition is considered an emergency and services are received in the doctor's office?

The copay that an insured pays shall be the copay for the place the service was provided. If the emergency services were provided in a doctor's office, the $30 copay would apply as defined in the contract. (New Sections 17 and 18).

(6.) If a company requires additional information from an insured to process an emergency room claim, is this considered a formal grievance?

No. If the carrier is just requesting additional information to determine whether a claim should be paid, it is not a grievance. A grievance is when the insured, or someone on their behalf, makes a formal complaint to the carrier. (New Sections 17 and 18).

(7.) Does the information required by Section 21 of Senate Bill 204 include the phone numbers and hours of availability for specialists or only for those of the primary care provider network? Does the availability of a provider mean that the provider is accepting new patients or does it mean the office hours of the provider?

Carriers must provide a listing of all participating providers (including specialists), their business addresses and telephone numbers, whether the provider is accepting new patients and any limitations on the insured's choice of provider. (New Section 21; See also: KSA 1996 Supp. 40-3209 (a)(2)).

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