Subchapter T. MINIMUM STANDARDS FOR MEDICARE SUPPLEMENT POLICIES

28 TAC §§3.3306, 3.3308, 3.3312

The Texas Department of Insurance proposes amendments to §§3.3306, 3.3308 and 3.3312 concerning minimum benefit standards for issuers of Medicare supplement policies and guaranteed issuance of Medicare supplement policies to eligible beneficiaries. The amendments are necessary to implement changes made to the Social Security Act (Act) by Medicare, Medicaid, and State Children´s Health Insurance Program Benefits Improvement and Protection Act of 2000 (BIPA) and subsequent changes made to the National Association of Insurance Commissioners (NAIC) Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act. The Model Regulation was accepted by the Centers for Medicare and Medicaid Services (CMS), as it is the agency that administers Medicare. The proposed amendment to §3.3306(1)(G)(ii) requires Medicare supplement policies and certificates to include provisions that allow benefits and premiums to be suspended for any period that may be provided by federal regulations. Proposed amendments to §§3.3306(2)(E) and 3.3308 clarify that the copayment amount for hospital outpatient services paid under the prospective payment system is a basic core benefit. The proposed amendment to §3.3306(3)(I)(ii)(II) corrects a misspelling. As the federal government has changed the name of the agency that governs Medicare supplement policies from Health Care Financing Administration to the Centers for Medicare and Medicaid Services, this name change is reflected in the proposed amendment to §3.3308(a)(6).

The proposed amendments to §3.3312 include changing the language of subsection (a)(1) to use the wording of the Act "seek to enroll"; however, the change does not affect the meaning of that paragraph. Proposed amendments to subsection (b)(2)(A) and (B) are necessary to delete language that is no longer applicable due to BIPA changes. The proposed amendments to subsection (b)(3) and (5) clarify that the subparagraphs refer to the Act and to reflect a change in the language used by the Act relating to Medicare cost versus risk. Proposed amendments to subsection (b)(5) and (6) change the wording from "PACE program" to "PACE provider" to distinguish that the enrollee enrolls with an entity that provides services rather than the program that oversees the entity that provides the services. Proposed paragraphs (1)(A) and (2) through (5) of subsection (d) explain guaranteed issue periods for individuals under certain scenarios in compliance with changes in federal law (BIPA). As allowed by federal law and as suggested by the NAIC and supported by CMS paragraph (1)(A) is proposed to provide greater protection by delaying the guaranteed issue time period to the later of the date of termination of coverage or notice of termination (or denial of a claim because of such termination). Corresponding changes are also proposed to paragraph (1)(B) inasmuch as existing §3.3312(b)(1) previously extended protections for guaranteed issuance beyond those required by federal law. Subsection (e) is proposed in compliance with federal law and explains interrupted trial periods to an enrollee during these periods.

As the accepted changes to the NAIC Model Regulation affected guaranteed issue time periods, proposed amendments to §21.2107 are published elsewhere in this issue of the Texas Register.

Ana Smith-Daley, deputy commissioner, Life/Health Division, has determined that for each year of the first five years the proposal will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Smith-Daley has also determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposal will be an increase in the understanding of requirements and benefits of Medicare supplement policies, guaranteed issue by Medicare supplement issuers and extended Medicare supplement access for interrupted trial periods. With the exception of the proposed amendment to §3.3312(d)(1) which only delays the guaranteed issue time period for individuals losing their employee welfare benefit plan, any cost to persons required to comply with the proposed amendments is the result of federal enactment of BIPA, and not as the result of the enforcement or administration of the proposed amendments. The department believes that the cost associated with the delayed guaranteed issue time period for individuals losing their employee welfare benefit would be limited to the cost of notifying employees and agents as the rule does not require extension of coverage to an individual who would not otherwise be entitled to coverage. Medicare Supplement issuers could notify their employees and agents through regular in-house training, newsletters, flyers or announcements, either electronically or hard copy. The department estimates that if an issuer were to notify affected employees and agents via U.S. postal service regular mail, the cost associated would be no more than $0.40 per employee or agent which includes cost for postage and printing a one page document. The actual cost will depend on the methods of notification and on the number of employees or agents the issuers must notify. It is the department´s position that the proposed amendments will not have an adverse economic effect on small businesses or micro-businesses. Because the requirements of this rule are mandated by underlying federal statute, and considering the underlying state and federal statutes' purposes, it is neither legal nor feasible to waive or modify the requirements of the amendments for small and micro-businesses, as doing so would result in a disparate effect on persons affected by these proposed amendments.

To be considered, written comments on the proposal must be submitted no later than 5:00 P.M. on February 25`, 2002 to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Diane Moellenberg, Chief Director, Regulatory Development, Mail Code 107-2A, P. O. Box 149104, Austin, Texas 78714-9104. A request for public hearing on the proposal should be submitted separately to the Office of the Chief Clerk.

The amendments are proposed under Insurance Code Article 3.74 and §36.001. Article 3.74, §2(c) requires the department to issue reasonable rules to establish specific standards for provisions of Medicare supplement policies and standards for facilitating comparison among the Medicare supplement products of the insurer or entity offering such Medicare supplement products. Article 3.74, §3 mandates the department to issue reasonable rules to establish minimum standards for benefits and claim payments under Medicare supplement policies. Article 3.74, §5(b) requires the department to prescribe the format and content of the disclosure which outlines Medicare supplement policy coverage. Article 3.74, §§2(f) and 5(f) mandate that the rules shall be at least equal to those required by federal law, regulations, and standards adopted under 42 U.S.C. §1395ss. Article 3.74, §10 provides that the department shall adopt rules in accordance with the federal law applicable to the regulation of Medicare supplement insurance coverage that are necessary for the state to obtain or retain certification as a state with an approved regulatory program under §1882 Social Security Act (42 U.S.C. §1395ss). Section 36.001 authorizes the Commissioner to adopt rules for the conduct and execution of the powers of the department as authorized by statute.

The following article is affected by this proposal: Insurance Code, Article 3.74

§3.3306. Minimum Benefit Standards. No insurance policy, subscriber contract, certificate, or evidence of coverage may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy unless the policy, contract, certificate, or evidence of coverage meets the applicable standards in paragraphs (1) - (3) of this section. These are minimum standards and do not preclude the inclusion of other provisions or benefits which are not inconsistent with these standards.

(1) General standards. The following standards apply to Medicare supplement policies and are in addition to all other requirements of this subchapter, the Insurance Code, Article 3.74, and any other applicable law.

(A) - (F) (No change.)

(G) 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 certificate holder for the period (not to exceed 24 months) in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of such policy or certificate within 90 days after the date the individual becomes entitled to such assistance.

(i) (No change.)

(ii) Each Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended (for any [ the] period that may be provided by federal regulation) at the request of the policyholder or certificate holder if the policyholder or certificate holder is entitled to benefits under section 226(b) of the Social Security Act and is covered under a group health plan (as defined in section 1862(b)(1)(A)(v) of the Social Security Act). If suspension occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy or certificate shall be automatically reinstated (effective as of the date of loss of coverage) if the policyholder or certificate holder 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.

(iii) (No change.)

(2) Standards for the basic (core) benefits common to all benefit plans. Every issuer shall make available a policy or certificate including only the basic "core" package of benefits described in subparagraphs (A) - (E) of this paragraph 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. The basic core benefits shall consist of the following:

(A) - (D) (No change.)

(E) coverage for the coinsurance amount (or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount) of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible.

(3) Standards for Additional Benefits. The additional benefits as uniformly defined in subparagraphs (A) - (K) of this paragraph shall be included in Medicare Supplement Benefit Plans "B" through "J" only as provided in paragraph (5)(A) - (I) of this section.

(A) - (H) (No change.)

(I) Preventive Medical Care Benefit or Services--Coverage for the preventive health services described in clauses (i) - (iv) of this subparagraph. Coverage for preventive medical care benefits or services shall be for the actual charges up to 100% of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) codes, to a maximum of $120 annually under this benefit. This benefit shall not include payment for any procedure covered by Medicare:

(i) (No change.)

(ii) any one or a combination of the following preventive screening tests or preventive services, the frequency of which is considered medically appropriate:

(I) (No change.)

(II) dipstick urinalysis for hematuria, bacteriuria, and proteinuria [ proteinauria];

(III) - (VI) (No change)

(iii) - (iv) (No change.)

(J) - (K) (No change.)

(4) - (5) (No change.)

§3.3308. Required Disclosure Provisions.

(a) General rules.

(1) ­ (5) (No change.)

(6) Issuers of accident and sickness policies, certificates, or subscriber contracts which provide hospital or medical expense coverage on an expense incurred or indemnity basis, to a person(s) eligible for Medicare shall provide to those applicants a Guide to Health Insurance for People with Medicare in the form developed jointly by the National Association of Insurance Commissioners and the Centers for Medicare and Medicaid Services [ Health Care Financing Administration] of the United States Department of Health and Human Services in no smaller than 12-point type.

(A) ­ (D) (No change.)

(7) (No change.)

(b) (No change.)

(1) ­ (2) (No change.)

(c) Form for outline of coverage. In providing outlines of coverage to applicants pursuant to the requirements of subsection (b)(1) of this section, insurers shall use a form which complies with the requirements of this subsection. The outline of coverage must contain each of the following four parts in the following order: a cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the issuer. The outline of coverage shall be in the language and format prescribed in paragraphs (1) and (2) of this subsection in no less than 12-point type.

(1) (No change.)

(2) The items in subparagraphs (A) ­ (C) of this paragraph shall be included in the outline of coverage in addition to the items specified in the plan-specific outline-of-coverage forms.

(A) - (C) (No change.)

(D) The outline of coverage for Medicare Select policies or certificates shall include information regarding grievance procedures which meet the requirements of §3.3325(m) of this title (relating to Medicare Select Policies, Certificates and Plans of Operation).

( graphic's for section 3.3308(c)(2)(D) contact ChiefClerk@tdi.texas.gov )

(d) Notice requirements.

(1) ­ (3) (No change.)

§3.3312. Guaranteed Issue for Eligible Persons.

(a) Guaranteed issue.

(1) Eligible persons are those individuals described in subsection (b) of this section who seek to enroll under the Medicare supplement policy during the period specified in [ subject to] subsection (d) of this section, [ apply to enroll under the policy not later than 63 days after the date of the termination of enrollment described in subsection (b) of this section,] and who submit evidence of the date of termination or disenrollment with the application for a Medicare supplement policy.

(2) (No change.)

(b) Eligible Persons. An eligible person is an individual described in any of the following paragraphs:

(1) (No change.)

(2) The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan under Part C of Medicare, and any of the following circumstances apply, or the individual is 65 years of age or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under section 1894 of the Social Security Act, and there are circumstances similar to the following that would permit discontinuance of the individual's enrollment with such provider if such individual were enrolled in a Medicare+Choice plan:

(A) The certification of the organization or plan has been terminated [ , or the organization or plan has notified the individual of an impending termination of such certification]; or

(B) The organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides [ or has notified the individual of an impending termination or discontinuance of such plan];

(C) - (E) (No change.)

(3) The individual is enrolled with an entity listed in subparagraphs (A) - (D) of this paragraph and enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under paragraph (2) of this subsection:

(A) An eligible organization under a contract under section 1876 of the Social Security Act (Medicare [ risk or] cost);

(B) (No change.)

(C) An organization under an agreement under section 1833(a)(1)(A) of the Social Security Act (health care prepayment plan); or

(D) (No change.)

(4) (No change.)

(5) The individual was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under part C of Medicare, any eligible organization under a contract under section 1876 of the Social Security Act (Medicare [ risk or] cost), any similar organization operating under demonstration project authority, any PACE provider [ program] under section 1894 of the Social Security Act, [ an organization under an agreement under section 1833(a)(1)(A) (health care prepayment plan),] or a Medicare Select policy; and the subsequent enrollment is terminated by the individual during any period within the first 12 months of such subsequent enrollment (during which the individual is permitted to terminate such subsequent enrollment under section 1851(e) of the Social Security Act); or

(6) The individual, upon first becoming enrolled in Medicare part B for benefits at age 65 or older, enrolls in a Medicare+Choice plan under part C of Medicare, or with [ in] a PACE provider [ program] under section 1894 of the Social Security Act, and disenrolls from the plan or program no later than 12 months after the effective date of enrollment.

(c) (No change.)

(d) Guaranteed Issue Time Period(s).

(B) for a plan that is primary to the benefits under Medicare, the guaranteed issue period begins on the later of: (i) the date the individual receives a notice of termination or cessation of all health benefits (or if a notice is not received, the date the individual receives notice that a claim has been denied because of such termination or cessation); or (ii) the date the applicable coverage terminates or ceases; and ends sixty-three (63) days thereafter.

(2) In the case of an individual described in subsections (b)(2), (3), (5), or (6) of this section whose enrollment is terminated involuntarily, the guaranteed issue period begins on the date that the individual receives a notice of termination and ends 63 days after the date the applicable coverage is terminated;

(3) In the case of an individual described in subsection (b)(4)(A) of this section, the guaranteed issue period begins on the earlier of the date that the individual receives a notice of termination, a notice of the issuer´s bankruptcy or insolvency, or other such similar notice if any, and the date that the applicable coverage is terminated, and ends on the date that is 63 days after the date the coverage is terminated;

(4) In the case of an individual described in subsections (b)(2), (4)(B) and (C), (5), or (6) of this section, who disenrolls voluntarily, the guaranteed issue period begins on the date that is 60 days before the effective date of the disenrollment and ends on the date that is 63 days after the effective date of disenrollment; and

(5) In the case of an individual described in subsection (b) of this section, but not described in paragraphs (1) - (4) of this subsection, the guaranteed issue period begins on the effective date of disenrollment and ends on the date that is 63 days after the effective date of disenrollment.

[ Alternate Date for Termination of Enrollment. An individual described in paragraph (b)(2) of this section may elect to apply subsection (a) by substituting, for the date of termination of enrollment, the date on the letter which the individual was notified by the Medicare+Choice organization or PACE program of the impending termination or discontinuance of such plan or program it offers in the area in which the individual resides, but only if the individual disenrolls from the plan or program as a result of such notification. In the case of an individual making such an election, the issuer involved shall accept the application of the individual submitted before the date of termination of enrollment, but the coverage under subsection (a) of this section shall only become effective upon termination of enrollment under the plan or program involved.]

(e)Extended Medicare Supplement Access for Interrupted Trial Periods.

(1) In the case of an individual described in subsection (b)(5) of this section (or deemed to be so described, pursuant to this paragraph), whose enrollment with an organization or provider described in subsection (b)(5) is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls with another such organization or provider, the subsequent enrollment shall be deemed to be an initial enrollment as described in subsection (b)(5) of this section.

(2) In the case of an individual described in subsection (b)(6) of this section (or deemed to be so described, pursuant to this paragraph), whose enrollment with a plan or in a program described in subsection (b)(6) is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls with another such plan or program, the subsequent enrollment shall be deemed to be an initial enrollment as described in subsection (b)(6) of this section.

(3) For purposes of subsections (b)(5) and (6) of this section, no enrollment of an individual with an organization or provider described in subsection (b)(5), or with a plan or in a program described in subsection (b)(6), may be deemed to be an initial enrollment under this paragraph after the 2-year period beginning on the date on which the individual first enrolled with such an organization, provider, plan, or program.