Proposed Regulations
STATE CORPORATION COMMISSION
REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with §96.14:4.1 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency which by the Constitution is expressly granted any of the powers of a court of record.
Title of Regulation: 14VAC 5-170-10 et seq. Rules Governing Minimum Standards for Medicare Supplement Policies (amending 14VAC 5-170-20, 14VAC 5-170-30, 14VAC 5-170-70, 14VAC 5-170-90, 14VAC 5-170-105, 14VAC 5-170-120, 14VAC 5-170-130, 14VAC 5-170-150, and 14VAC 5-170-180; adding Appendix D).
Statutory Authority: §§12.1-13 and 38.2-223 of the Code of Virginia.
Summary:
The proposed amendments incorporate changes required by federal law pursuant to the Ticket to Work and Work Incentives Improvement Act of 1999 and the Balanced Budget Refinement Act of 1999. Other changes include additional requirements for attained age rated policies, further describe the approval process for Medicare select policies, and specify that actuarial certifications may be required in the review of the proposed rated changes. Changes are also included to reflect the 2001 deductible and copayment amounts under Medicare.
Agency contact: Ann Colley, Bureau of Insurance, State Corporation Commission, 1300 E. Main Street, 6th Floor, Richmond, VA 23219; Mailing Address: P.O. Box 1157, Richmond, VA 23218; telephone (804) 371-9813, e-mail .
AT RICHMOND, MAY 22, 2001
COMMONWEALTH OF VIRGINIA
At the relation of the
STATE CORPORATION COMMISSION
CASE NO. INS010083
Ex Parte: In the matter of
Adopting Revisions to the Rules
Governing Minimum Standards for
Medicare Supplement Policies
ORDER TO TAKE NOTICE
WHEREAS, §12.1-13 of the Code of Virginia provides that the Commission shall have the power to promulgate rules and regulations in the enforcement and administration of all laws within its jurisdiction, and §38.2-223 of the Code of Virginia provides that the Commission may issue any rules and regulations necessary or appropriate for the administration and enforcement of Title 38.2 of the Code of Virginia;
WHEREAS, the rules and regulations issued by the Commission pursuant to §38.2-223 of the Code of Virginia are set forth in Title 14 of the Virginia Administrative Code;
WHEREAS, the Bureau of Insurance has submitted to the Commission proposed revisions to Chapter 170 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Minimum Standards for Medicare Supplement Policies," which amend the rules at 14VAC 5-170-20, 14VAC 5-170-30, 14VAC 5-170-70, 14VAC 5-170-90, 14VAC 5-170-105, 14VAC 5-170-120, 14VAC 5-170-130, 14VAC 5-170-150, and 14VAC 5-170-180;
WHEREAS, the proposed revisions reflect changes required by federal law pursuant to the Ticket to Work and Work Incentives Improvement Act of 1999 and the Balanced Budget Refinement Act of 1999;
WHEREAS, the proposed revisions also include changes which provide additional requirements for attained age rated policies, further describe the approval process for Medicare Select policies, and specify that actuarial certifications may be required in the review of proposed rate changes; and
WHEREAS, the Commission is of the opinion that the proposed revisions should be considered for adoption with a proposed effective date of September 1, 2001;
THEREFORE, IT IS ORDERED THAT:
(1)The proposed revisions to the "Rules Governing Minimum Standards for Medicare Supplement Policies," which amend the rules at 14VAC 5-170-20, 14VAC 5-170-30, 14VAC 5-170-70, 14VAC 5-170-90, 14VAC 5-170-105, 14VAC 5-170-120, 14VAC 5-170-130, 14VAC 5-170-150, and 14VAC 5-170-180 be attached hereto and made a part hereof;
(2)All interested persons who desire to comment in support of or in opposition to, or to request a hearing to oppose the adoption of, the proposed revisions shall file such comments or hearing request on or before June 26, 2001, in writing with the Clerk of the Commission, Document Control Center, P.O. Box2118, Richmond, Virginia 23218 and shall refer to Case No. INS010083;
(3)If no written request for a hearing on the proposed revisions is filed on or before June 26, 2001, the Commission, upon consideration of any comments submitted in support of or in opposition to the proposed revisions, may adopt the revisions proposed by the Bureau of Insurance;
(4)AN ATTESTED COPY hereof, together with a copy of the proposed revisions, shall be sent by the Clerk of the Commission to the Bureau of Insurance in care of Deputy Commissioner GeraldA. Milsky, who forthwith shall give further notice of the proposed adoption of the revisions to the rules by mailing a copy of this Order, together with a draft of the proposed revisions, to all insurers, health services plans, and health maintenance organizations licensed to write Medicare supplement insurance in the Commonwealth of Virginia; and by forwarding a copy of this Order, together with a draft of the proposed revisions, to the Virginia Registrar of Regulations for appropriate publication in the Virginia Register of Regulations; and
(5)The Bureau of Insurance shall file with the Clerk of the Commission an affidavit of compliance with the notice requirements of paragraph (4) above.
14VAC 517020. Applicability and scope.
A. Except as otherwise specifically provided in 14VAC 517060, 14VAC 5170110, 14VAC 5170120, 14VAC 5170150 and 14VAC 5170200, this chapter shall apply to:
1. All Medicare supplement policies delivered or issued for delivery in this Commonwealth on or after April 26, 1999September 1, 2001; and
2. All certificates issued under group Medicare supplement policies for which certificates have been delivered or issued for delivery in this Commonwealth.
B. This chapter shall not apply to a policy or contract of one or more employers or labor organizations, or of the trustees of a fund established by one or more employers or labor organizations, or combination thereof, for employees or former employees, or a combination thereof, or for members or former members, or a combination thereof, of the labor organizations.
14VAC 517030. Definitions.
For purposes of this chapter (14VAC 517010 et seq.):
"Applicant" means:
1. In the case of an individual Medicare supplement policy, the person who seeks to contract for insurance benefits; and
2. In the case of a group Medicare supplement policy, the proposed certificateholder.
“Attained age rating” means a premium structure under which premiums are based on the covered individual’s age at the time of application of the policy or certificate, and for which premiums increase based on the covered individual’s increase in age during the life of the policy or certificate.
"Bankruptcy" means when a Medicare+Choice organization that is not an issuer has filed, or has had filed against it, a petition for declaration of bankruptcy and has ceased doing business in this Commonwealth.
"Certificate" means any certificate delivered or issued for delivery in this Commonwealth under a group Medicare supplement policy.
"Certificate form" means the form on which the certificate is delivered or issued for delivery by the issuer.
“Community rating” means a premium structure under which premium rates are the same for all covered individuals of all ages in a given area.
"Continuous period of creditable coverage" means the period during which an individual was covered by creditable coverage, if during the period of the coverage the individual did not have a break in coverage greater than 63 days.
"Creditable coverage" means, with respect to an individual, coverage of the individual provided under any of the following:
1. A group health plan;
2. Health insurance coverage;
3. Part A or Part B of Title XVIII of the Social Security Act of 1935 (Medicare) (42 USC §1395 et seq.);
4. Title XIX of the Social Security Act of 1935 (Medicaid) (42 USC §1396 et seq.), other than coverage consisting solely of benefits under §1928;
5. Chapter 55 of Title 10 of the United States Code (CHAMPUS) (10 USC §§1071 1107);
6. A medical care program of the Indian Health Service or of a tribal organization;
7. A state health benefits risk pool;
8. A health plan offered under the Federal Employees Health Benefits Act of 1959 (5 USC §§89018914);
9. A public health plan as defined in federal regulation; and
10. A health benefit plan under §5(e) of the Peace Corps Act of 1961 (22 USC §2504(e)).
"Creditable coverage" shall not include one or more, or any combination of, the following:
1. Coverage only for accident or disability income insurance, or any combination thereof;
2. Coverage issued as a supplement to liability insurance;
3. Liability insurance, including general liability insurance and automobile liability insurance;
4. Workers' compensation or similar insurance;
5. Automobile medical expense insurance;
6. Creditonly insurance;
7. Coverage for onsite medical clinics; and
8. Other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.
"Creditable coverage" shall not include the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan:
1. Limited scope dental or vision benefits;
2. Benefits for longterm care, nursing home care, home health care, communitybased care or any combination thereof; and
3. Such other similar, limited benefits as are specified in federal regulations.
"Creditable coverage" shall not include the following benefits if offered as independent, noncoordinated benefits:
1. Coverage only for a specified disease or illness; and
2. Hospital indemnity or other fixed indemnity insurance.
"Creditable coverage" shall not include the following if it is offered as a separate policy, certificate or contract of insurance:
1. Medicare supplement health insurance as defined under §1882(g)(1) of the Social Security Act of 1935 (42 USC §1395ss);
2. Coverage supplemental to the coverage provided under Chapter 55 of Title 10 of the United States Code (10 USC §§1071 1107); and
3. Similar supplemental coverage provided to coverage under a group health plan.
"Employee welfare benefit plan" means a plan, fund or program of employee benefits as defined in the Employee Retirement Income Security Act of 1974 (29 USC §1002).
"Insolvency" means when an issuer, duly licensed to transact an insurance business in this Commonwealth in accordance with the provisions of Chapter 10, 41, 42 or 43, respectively, of Title 38.2 of the Code of Virginia, is determined to be insolvent and placed under a final order of liquidation by a court of competent jurisdiction.
“Issue age rating” means a premium structure based upon the covered individual’s age at the time of purchase of the policy or certificate. Under an issue age rating structure, premiums do not increase due to the covered individual’s increase in age during the life of the policy or certificate.
"Issuer" includes insurance companies, fraternal benefit societies, corporations licensed pursuant to Chapter 42 of Title 38.2 of the Code of Virginia to offer health services plans, health maintenance organizations, and any other entity delivering or issuing for delivery in this Commonwealth Medicare supplement policies or certificates.
"Medicare" means the "Health Insurance for the Aged Act," Title XVIII of the Social Security Amendments of 1965 (Public Law 8997, 79 Stat. 286 (July 30, 1965)), as then constituted or later amended.
"Medicare+Choice plan" means a plan of coverage for health benefits under Medicare Part C as defined in §1859, Title IV, Subtitle A, Chapter 1 of Public Law 10533(42 USC §1395w-28(b)(1) of the Social Security Act, and includes:
1. Coordinated care plans which provide health care services, including but not limited to health maintenance organization plans (with or without a pointofservice option), plans offered by providersponsored organizations, and preferred provider organization plans;
2. Medical savings account plans coupled with a contribution into a Medicare+Choice medical savings account; and
3. Medicare+Choice private feeforservice plans.
"Medicare supplement policy" means a group or individual policy of accident and sickness insurance or a subscriber contract of health service plans or health maintenance organizations, other than a policy issued pursuant to a contract under §1876 of the federal Social Security Act of 1935 (42 USC §1395 et seq.) or an issued policy under a demonstration project specified in 42 USC §1395ss(g)(1), which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare.
"Policy form" means the form on which the policy is delivered or issued for delivery by the issuer.
"Secretary" means the Secretary of the United States Department of Health and Human Services.
14VAC 517070. Benefit standards for policies or certificates issued or delivered on or after July 30, 1992.
A. The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this Commonwealth on or after July 30, 1992. No policy or certificate may be advertised, solicited, delivered or issued for delivery in this Commonwealth as a Medicare supplement policy or certificate unless it complies with these benefit standards.
B. The following standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this chapter.
1. A Medicare supplement policy or certificate shall not exclude or limit benefits for a loss incurred more than six months from the effective date of coverage because it involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage.
2. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.
3. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and copayment percentage factors. Premiums may be modified to correspond with such changes provided that loss ratios are being met.
4. No Medicare supplement policy or certificate shall provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium.
5. Each Medicare supplement policy shall be guaranteed renewable.
a. The issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual.
b. The issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.
c. If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under subdivision 5 e of this subsection, the issuer shall offer certificateholders an individual Medicare supplement policy which (at the option of the certificateholder):
(1) Provides for continuation of the benefits contained in the group policy; or
(2) Provides for benefits that otherwise meet the requirements of this subsection.
d. If an individual is a certificateholder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:
(1) Offer the certificateholder the conversion opportunity described in subdivision 5 c of this subsection; or
(2) At the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy.
e. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.
6. Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits.
7. a. A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificateholder for the period (not to exceed 24 months) in which the policyholder or certificateholder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act of 1935 (42 USC §1396 et seq.), but only if the policyholder or certificateholder notifies the issuer of such policy or certificate within 90 days after the date the individual becomes entitled to such assistance.
b. If such suspension occurs and if the policyholder or certificateholder loses entitlement to such medical assistance, the policy or certificate shall be automatically reinstituted (effective as of the date of termination of such entitlement) as of the termination of entitlement if the policyholder or certificateholder provides notice of loss of entitlement within 90 days after the date of loss and pays the premium attributable to the period, effective as of the date of termination of such entitlement.
c. Each Medicare supplement policy or certificate shall provide that benefits and premiums under the policy shall be suspended (for the period provided by federal regulation) at the request of the policyholder if the policyholder or certificateholder is entitled to benefits under §226 (b) of the Social Security Act (42 USC §426) and is covered under a group health plan (as defined in §1862(b)(1)(A)(v) of the Social Security Act (42 USC §1395y)). If suspension occurs and if the policyholder or certificateholder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss of coverage) if the policyholder or certificateholder provides notice of loss of coverage within 90 days after the date of such loss and pays the premium attributable to the period, effective as of the date of termination of entitlement.
c.d. Reinstitution of such coverages:
(1) Shall not provide for any waiting period with respect to treatment of preexisting conditions;
(2) Shall provide for coverage which is substantially equivalent to coverage in effect before the date of such suspension; and
(3) Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificateholder as the premium classification terms that would have applied to the policyholder or certificateholder had the coverage not been suspended.
C. Standards for basic (core) benefits common to all benefit plans. Every issuer shall make available a policy or certificate including only the following basic core package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic core package, but not in lieu of it.
1. Coverage of Part A Medicare Eligible Expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;
2. Coverage of Part A Medicare Eligible Expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;
3. Upon exhaustion of the Medicare hospital inpatient coverage including the lifetime reserve days, coverage of the Medicare Part A eligible expenses for hospitalization paid at the Diagnostic Related Group (DRG) day outlier per diem or other appropriate standard of payment, subject to a lifetime maximum benefit of an additional 365 days;