20 CSR 400-3.400 - Model Rule to Implement Transitional Requirements for the Conversion of Medicare Supplement Insurance Benefits and Premiums to Conform to Repeal of Medicare Catastrophic Coverage Act

PURPOSE: This rule assures the orderly implementation and conversion of Medicare supplement insurance benefits, coverage and premiums due to changes in the federal Medicare program.

(1) This rule shall apply to all Medicare supplement coverage delivered or issued for delivery in this state. The provisions of this rule shall have precedence over the provisions of any other regulation of this state to the extent necessary to assure that-

(A) Benefits do not duplicate benefits payable by Medicare;

(B) Benefits are adjusted to reflect changes in Medicare benefits;

(C) Applicants receive adequate notice and disclosure of changes in their Medicare supplement coverage; and

(D) Appropriate premium adjustments are made in a timely manner.

(2) Definitions. For the purposes of this rule-

(A) Applicant means-

1. In the case of an individual Medicare supplement policy or contract, the person who seeks to contract for insurance benefits; and

2. In the case of a group Medicare supplement policy or contract, the proposed certificate holder;

(B) Certificate means any certificate issued under a group Medicare supplement policy which has been delivered or issued for delivery in this state; and

(C) Medicare supplement policy means a group or individual policy of accident and health insurance, or a subscriber contract of health service corporations, which is advertised, marketed or designed primarily to supplement coverage for hospital, medical or surgical expenses incurred by an insured person which are not covered by Medicare. This term does not include:

1. A policy or contract of one (1) or more employers or labor organizations, or of the trustees of a fund established by one (1) or more employers or labor organizations, or a combination of them for employees or former employees or a combination of them, or for members or former members or a combination of them of the labor organization;

2. A policy or contact of any professional, trade or occupational association for its members, former or retired members or a combination of them if the association-

A. Is composed of individuals all of whom are actively engaged in the same profession, trade or occupation;

B. Has been maintained in good faith for purposes other than obtaining insurance; and

C. Has been in existence for at least two (2) years prior to the date of its initial offering of the policy or plan to its members; or

3. Individual policies or contracts issued pursuant to a conversion privilege under a policy or contract of group or individual insurance when the group or individual policy or contract includes provisions which are inconsistent with the requirements of sections 376.850-376.885, RSMo nor to Medicare supplement policies being issued to employees or members as additions to franchise plans in existence on July 1, 1982.

(3) Benefit Conversion Requirements.

(A) Effective January 1, 1990 no Medicare supplement insurance policy, contract or certificate in force in this state shall contain benefits which duplicate benefits provided by Medicare.

(B) Benefits eliminated by operation of the Medicare Catastrophic Coverage Act of 1988 transition provisions shall be restored.

(C) For Medicare supplement policies subject to the minimum standards adopted by the states pursuant to Medicare Catastrophic Coverage Act of 1988, the minimum benefits shall be-

1. Coverage of Part A Medicare-eligible expenses for hospitalization to the extent not covered by Medicare from the sixty-first day through the ninetieth day in any Medicare benefit period;

2. Coverage for either all or none of the Medicare Part A inpatient hospital deductible amount;

3. Coverage for Part A Medicare-eligible expenses incurred as daily hospital charges during use of Medicare's lifetime hospital inpatient reserve days;

4. Upon exhaustion of all Medicare hospital inpatient coverage including the lifetime reserve days, coverage of ninety percent (90%) of all Medicare Part A eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional three hundred sixty-five (365) days;

5. Coverage under Medicare Part A for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations or already paid for under Part B;

6. Coverage for coinsurance amount of Medicare-eligible expenses under Part B regardless of hospital confinement, subject to a maximum calendar year out-of-pocket amount equal to the Medicare Part B deductible (seventy-five dollars ($75)); and

7. Effective January 1, 1990 coverage under Medicare Part B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations), unless replaced in accordance with federal regulations or already paid for under Part A, subject to the Medicare deductible amount.

(D) General Requirements.

1. No later than January 31, 1990, every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits to a resident of this state shall notify its policyholders, contract holders and certificate holders of modifications it has made to Medicare supplement insurance policies or contracts. This notice shall be in the format prescribed in Appendix A.

A. The notice shall include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement insurance policy or contract.

B. The notice shall inform each covered person as to when any premium adjustment due to changes in Medicare benefits will be effective.

C. The notice of benefit modifications and any premium adjustments shall be in outline form and in clear and simple terms so as to facilitate comprehension.

D. The notice shall not contain or be accompanied by any solicitation.

2. No modifications to an existing Medicare supplement contract or policy shall be made at the time of or in connection with the notice requirements of this regulation except to the extent necessary to accomplish the purpose of this regulation.

(4) Form and Rate Filing Requirements.

(A) As soon as practicable, but no longer than forty-five (45) days after the effective date of the Medicare benefit changes, every insurer, health care service plan or other entity providing Medicare supplement insurance or contracts in this state shall file with the Department of Insurance, in accordance with the applicable filing procedures of this state-

1. Appropriate premium adjustments necessary to produce loss ratios as originally anticipated for the applicable policies or contracts. Supporting documents as necessary to justify the adjustment shall accompany the filing; and

2. Any appropriate riders, endorsements or policy forms needed to accomplish the Medicare supplement insurance modifications necessary to eliminate benefit duplications with Medicare and to provide the benefits required by section (3). These riders, endorsements or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or contract.

(B) Upon satisfying the filing and approval requirements of this state, every insurer, health care service plan or other entity providing Medicare supplement insurance in this state shall provide each covered person with any rider, endorsement or policy form necessary to make the adjustments outlined in section (4).

(C) Any premium adjustments shall produce an expected loss ratio under the policy or contract as will conform with minimum loss ratio standards for Medicare supplement policies and shall result in an expected loss ratio at least as great as that originally anticipated by the insurer, health care service plan or other entity for the Medicare supplement insurance policies or contracts. Premium adjustments may be calculated for the period commencing with Medicare benefits changes.

(5) Offer of Reinstitution of Coverage.

(A) Except as provided in subsection (5)(B), in the case of an individual who had in effect, as of December 31, 1988, a Medicare supplemental policy with an insurer (as a policyholder or, in the case of a group policy, as a certificate holder) and the individual terminated coverage under this policy before the date of the enactment of the repeal of the Medicare Catastrophic Coverage Act of 1988, the insurer shall-

1. Provide written notice no earlier thandecember 15, 1989 and no later than January 30, 1990 to the policyholder or certificate holder (at the most recent available address) of the offer described in this rule; and

2. Offer the individual, during a period of at least sixty (60) days beginning not later than February 1, 1990, reinstitution of coverage (with coverage effective as of January 1, 1990) under terms which-

A. Do not provide for any waiting period with respect to treatment of preexisting conditions;

B. Provide for coverage which is substantially equivalent to coverage in effect before the date of the termination; and

C. Provide for classification of premiums which are at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage never terminated.

(B) An insurer is not required to make the offer under paragraph (5)(A)2. in the case of an individual who is a policyholder or certificate holder in another Medicare supplement policy as of January 1, 1990 if the individual is not subject to a waiting period with respect to treatment of a preexisting condition under the other policy.

(6) Requirements for New Policies and Certificates.

(A) Effective January 1, 1990 no Medicare supplement insurance policy, contract or certificate shall be delivered or issued for delivery in this state which provides benefits which duplicate benefits provided by Medicare. No medicare supplement insurance policy, contract or certificate shall provide less benefits than those required under the existing Medicare Supplement Insurance Minimum Standards Model Act or Regulation except where duplication of Medicare benefits would result and except as required by transition provisions.

(B) General Requirements.

1. Within ninety (90) days of April 16, 1990, every insurer, health care service plan or other entity required to file its policies or contracts with this state shall file new Medicare supplement insurance policies or contracts which eliminate any duplication of Medicare supplement benefits with benefits provided by Medicare, which adjust minimum required benefits to changes in Medicare benefits and which provide a clear description of the policy or contract benefit.

2. The filing required under paragraph (6)(B)1. shall provide for loss ratios which are in compliance with all minimum standards.

3. Every applicant for a Medicare supplement insurance policy, contract or certificate shall be provided with an outline of coverage which simplifies and accurately describes benefits provided by Medicare and policy or contract benefits along with benefit limitations.

(7) Filing Requirements for Advertising. Every insurer, health service plan or other entity providing Medicare supplement insurance or benefits in this state shall provide a copy of any advertisement intended for use in this state whether through written, radio or television medium to the director of insurance of this state for review or approval by the director to the extent it may be required under state law. This advertisement shall comply with all applicable laws of this state.

(8) Buyer's Guide. No insurer, health care service plan or other entity shall make use of or otherwise disseminate any buyer's guide or informational brochure which does not accurately outline current Medicare benefits and which has not been adopted by the director.

(9) Separability. If any provision of this rule or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of that provision to other persons or circumstances shall not be affected by it.

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Notes

20 CSR 400-3.400

AUTHORITY: sections 374.045 and 376.850-376.890, RSMo (1986).* This rule was previously filed as 4 CSR 190-14.620. Emergency rule filed Dec. 22, 1989, effective Jan. 1, 1990, expired April 15, 1990. Original rule filed Jan. 17, 1990, effective April 16, 1990.

The secretary of state has determined that the publication of this rule in its entirety would be unduly cumbersome or expensive. The entire text of the material referenced has been filed with the secretary of state. This material may be found at the Office of the Secretary of State or at the headquarters of the agency and is available to any interested person at a cost established by state law.

*Original authority: 374.045, RSMo (1967); 376.850, RSMo (1981), amended 1989; 376-376.864, RSMo (1989), amended 1992; 376.869-376.874, RSMo (1989), amended 1990, 1992; 376.879-376.889, RSMo (1989), amended 1992; and 376.890, RSMo (1981), amended 1988.