Insurance, Administration

Rule R590-192

Unfair Accident and Health Claims Settlement Practices

Notice of Proposed Rule

(Amendment)

DAR File No.: 35103
Filed: 08/01/2011 04:58:40 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of these amendments is to make changes proposed by members of the insurance industry in a hearing held 06/09/2011, during the comment period for an amendment to this rule published in the May 15, 2011, Bulletin under DAR No. 34769, and additional changes from the federal government.

Summary of the rule or change:

The proposed amendments to this rule are as follows: in Section R590-192-1 clarifies that the term "title" means Title 31A, of the insurance code; in Section R590-192-4 the term "Policy" is being deleted since it is no longer needed; revised the "Adverse benefit determination" definition to conform to definition in the federal Affordable Care Act of 2010; exempted grandfather plans from three requirements; clarified when continued coverage must be provided; urgent care claims require a benefit decision within 72 hours; and the enforcement date is changed to the date the amendments go into effect.

State statutory or constitutional authorization for this rule:

• Section 31A-4-116
• Section 31A-22-629
• Section 31A-2-201
• Section 31A-2-203

Anticipated cost or savings to:

the state budget:

The amendments to this rule will have no fiscal impact on the department since it will require no additional filings or change in the department's workload or change in expenditures or revenues. The amendments are for clarification, as well as procedural and formatting changes.

local governments:

This rule will have no fiscal impact on local government. It only affects insurance companies licensed in Utah and their relationship with their insureds and claimants who have claims against them.

small businesses:

There is no difference in the effect of this rule on large or small businesses. The changes allow a grandfather plan to be exempt from three requirements, which is a cost benefit to the insurer who does not need to make these changes. There is a cost savings because diagnostic and treatment codes only need to be provided when requested. There is a cost saving because continued coverage only needs to be provided for ongoing course of treatment.

persons other than small businesses, businesses, or local governmental entities:

Grandfather plans allow people to keep their existing coverage, which may be at a lower cost than a plan that must comply with the rule.

Compliance costs for affected persons:

There is no difference in the effect of this rule on large or small businesses. The changes allow a grandfather plan to be exempt from three requirements, which is a cost benefit to the insurer who does not need to make these changes. There is a cost savings because diagnostic and treatment codes only need to be provided when requested. There is a cost saving because continued coverage only needs to be provided for ongoing course of treatment.

Comments by the department head on the fiscal impact the rule may have on businesses:

The changes provide cost savings to insurers.

Neal T. Gooch, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@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:

09/14/2011

Interested persons may attend a public hearing regarding this rule:

• 09/08/2011 09:00 AM, State Office Building, 450 N State, Room 3112, Salt Lake City, UT

This rule may become effective on:

09/21/2011

Authorized by:

Jilene Whitby, Information Specialist

R590. Insurance, Administration.

R590-192. Unfair Accident and Health Claims Settlement Practices[ Rule].

R590-192-1. Authority.

This rule is promulgated pursuant to Subsections 31A-2-201(1) and 31A-2-201(3)(a) in which the commissioner is empowered to administer and enforce [this title]Title 31A and to make rules to implement the provisions of [this title]Title 31A. Further authority to provide for timely settlement of claims is provided by Subsection 31A-26-301(1). Matters relating to proof and notice of loss are promulgated pursuant to Section 31A-26-301 and Subsection 31A-21-312(5). Authority to promulgate rules defining unfair claims settlement practices or acts is provided in Subsection 31A-26-303(4). The authority to require a timely, accurate, and complete response to the commissioner is provided by Subsection s 31A-2-202(4) and (6).

 

R590-192-4. Definitions.

For the purpose of this rule the commissioner adopts the definitions as set forth in Section 31A-1-301, 29 CFR 2560.503-1(m), and the following:

(1)(a) "Adverse benefit determination" means, for an accident and health insurance policy other than a health benefit plan, any of the following: a denial, reduction, or termination of, or a failure to provide or make payment, in whole or in part, for a benefit, including any such denial, reduction, termination, or failure to provide or make payment that is based on a determination of [a participant's or beneficiary's]an insured's eligibility to participate in a plan, and including, with respect to group health plans, a denial, reduction, or termination of or failure to provide or make payment, in whole or in part, for a benefit resulting from the application of any utilization review, as well as a failure to cover an item or service for which benefits are otherwise experimental or investigational or not medically necessary or appropriate; and

(b)(i) "Adverse benefit determination" means, for a health benefit plan[, that]:

(A) based on the insurer's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit, the:

([A]I) denial of a benefit;

([B]II) reduction of a benefit;

([C]III) termination of a benefit; or

([D]IV) failure to provide or make payment, in whole or part, for a benefit; or

([E]B) rescission of coverage.

(ii) "Adverse benefit determination" includes:

(A) denial, reduction, termination, or failure to provide or make payment[, or rescission] that is based on a determination of an insured's eligibility to participate in a health benefit plan;

(B) failure to provide or make payment, in whole or part, for a benefit resulting from the application of a utilization review; and

([iii]C) failure to cover an item or service for which benefits are otherwise provided because it is determined to be:

([A]I) experimental;

([B]II) investigational; or

([C]III) not medically necessary or appropriate.

(2) "Claim File" means any record either in its original form or as recorded by any process which can accurately and reliably reproduce the original material regarding the claim, its investigation, adjustment and settlement.

(3) "Claim Representative" means any individual, corporation, association, organization, partnership, or other legal entity authorized to represent an insurer with respect to a claim, whether or not licensed within the State of Utah to do so.

(4) "Claimant" means an insured, or legal representative of the insured, including a member of the insured's immediate family designated by the insured, making a claim under a policy.

(5) "Ongoing" or "Concurrent care" decision means an insurer has approved an ongoing course of treatment to be provided over a period of time or number of treatments.

(6) "Days" means calendar days.

(7) "Documentation" means a document, record, or other information that is considered relevant to a claimant's claim because such document, record, or other information:

(a) was relied upon in making the benefit determination;

(b) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; and

(c) in the case of an insurer providing disability income benefits, constitutes a statement of policy or guidance with respect to the insurer concerning the denied treatment option or benefit for the [claimant's]insured's diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.

(8) "General business practice" means a pattern of conduct.

(9) "Investigation" means all activities of an insurer directly or indirectly related to the determination of liabilities under coverage afforded by an insurance policy.

(10) "Medical necessity" means:

(a) health care services or product 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 contract; and

(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 an intervention not yet in widespread use, the effectiveness shall be based on scientific evidence.

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

(A) scientific evidence;

(B) professional standards; and

(C) expert opinion.

(11) "Notice of Loss" means that notice which is in accordance with policy provisions and insurer practices. Such notice shall include any notification, whether in writing or other means, which reasonably apprizes the insurer of the existence of or facts relating to a claim.

(12) ["Policy" includes a certificate issued under a group insurance contract.

(13)] "Pre-service claim" means any claim for a benefit under an accident and health policy with respect to which the terms of the plan condition receipt of the benefit, in whole or in part, on approval of the benefit in advance of obtaining medical care.

(1[4]3) "Post-service claim" means any claim for a benefit that is not a pre-service claim or urgent care claim.

(1[5]4) "Scientific evidence" is:

(a)(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.

(1[6]5) "Urgent care claim" means any claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care determination:

(a) could seriously jeopardize the life or health of the insured or the ability of the insured to regain maximum function; or

(b) in the opinion of a physician with knowledge of the [claimant's]insured's medical condition, would subject the [claimant]insured to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.

 

R590-192-7. Notice of Loss.

(1) Notice of loss to an insurer, if required, shall be considered timely if made according to the terms of the policy, subject to the definitions and provisions of this rule.

(2) Notice of loss may be given to the insurer or its claim representative unless the insurer clearly directs otherwise by means of policy provisions or a separate written notice mailed or delivered to the [insured]claimant.

(3) Subject to policy provisions, a requirement of any notice of loss may be waived by any authorized claim representative of the insurer.

(4) The general business practice of the insurer when accepting a notice of loss or notice of claim shall be consistent for all policyholders in accordance with the terms of the policy.

 

R590-192-8. Notification.

(1) The insurer shall provide notification of the benefit determination to the claimant which includes:

(a) the specific reason or reasons for the benefit determination, adverse or not;

(b) reference to the specific plan provisions on which the benefit determination is based;

(c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(d) a description of the insurer's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring civil action.

(2) For a health benefit plan, except for a grandfathered health benefit plan as defined in 45 CFR 147.140, [the notification] a notice of adverse benefit determination shall provide:

(a) starting with the plan year that begins on or after July 1, 2011:

(i) sufficient information to identify the claim involved, including the date of service, the health care provider, and the claim amount, if applicable; and

(ii) notification of assistance available at the Utah Insurance Department, Office of Consumer Health Assistance, Suite 3110, State Office Building, Salt Lake City UT 84114; and

(b) starting with the plan year that begins on or after January 1, 2012:

(i) the availability, upon request, of the diagnosis code and treatment code with the corresponding meaning for each; and

(ii) the content in a culturally and linguistically appropriate manner as required by 45 CFR 147.136 (e).

(3) An insurer and the insurer's claim representative, in the case of a failure by a claimant [or an authorized representative of a claimant] to follow the individual or group health plan's procedures for filing a pre-service claim, shall notify the claimant[ or representative], of the failure and provide the proper procedures to be followed in filing a claim for benefits. This notification shall be provided to the claimant [or authorized representative, as appropriate,] as soon as possible, but not later than five days, or 24 hours for a claim involving urgent care, following the failure. Notification may be oral, unless written notification is requested by the claimant[ or authorized representative].

(4) Disability income adverse benefit determinations must:

(a) if an internal rule, guideline, protocol, or other criterion was relied upon in making the adverse determination, provide either the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the claimant upon request; or

(b) if the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, provide either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the [claimant's]insured's medical circumstances, or a statement that such explanation will be provided free of charge upon request.

(5) Urgent care adverse benefit determination must:

(a) provide written or electronic notification to the claimant no later than three days after the oral notification; and

(b) provide a description of the expedited review process applicable to such claims.

 

R590-192-9. Minimum Standards for Claim Benefit Determination and Settlement.

(1) All benefit determination time limits begin once the insurer receives a claim, without regard to whether all necessary information was filed with the original claim. If the insurer requires an extension due to the claimant's failure to submit necessary information, the time for making a decision is [determined]tolled from the date the notice is sent to the claimant through:

(a) the date that the claimant provides the necessary information; or

(b) 48 hours after the end of the period afforded the claimant to provide the specified additional information.

(2) Urgent Care Claims:

(a) In a case of urgent care, an insurer shall notify the claimant of the insurer's benefit decision, adverse or not, as soon as possible, taking into account the medical exigencies of the situation, but no later than:

(i) [24]72 hours after the receipt of the claim for [all] health benefit plans , except for a grandfathered health benefit plan as defined in 45 CFR 147.140, starting with the plan year that begins on or after January 1, 2012; or

(ii) 72 hours after the receipt of the claim for all other accident and health coverage.

(b)(i) If the claimant does not provide sufficient information for the plan to make a decision, the plan must notify the claimant as soon as possible, but not later than 24 hours after receipt of the claim, of the specific information that is required. The claimant shall be given reasonable time, but not less than 48 hours, to provide that information.

(ii) The insurer must notify the claimant of the insurer's decision as soon as possible but not later than 48 hours after the earlier of the plan's receipt of the requested information or the end of the time given to the claimant to provide the information.

(3) Concurrent Care Decision:

(a) Reduction or termination of concurrent care:

(i) Any reduction in the course of treatment is considered an adverse benefit determination.

(ii) The insurer must give the claimant notice, with sufficient time to appeal that adverse benefit determination and sufficient time to receive a decision of the appeal before any reduction or termination of care occurs.

(b) Extension of concurrent care:

(i) A claimant may request an extension of treatment beyond what has already been approved.

(ii) If the request for an extension is made at least 24 hours before the end of the approved treatment, the insurer must notify the claimant of the insurer's decision as soon as possible but no later than 24 hours after receipt of the claim.

(iii) If the request for extension does not involve urgent care, the insurer must notify the claimant of the insurer's benefit decision using the response times for a post-service claim.

(4) Pre-Service Benefit Determination:

(a) An insurer must notify the claimant of the insurer's benefit decision within 15 days of receipt of the request for care.

(b) If the insurer is unable to make a decision within that time due to circumstances beyond the insurer's control, such as late receipt of medical records, it must notify the claimant before expiration of the original 15 days that it intends to extend the time and then the insurer may take as long as 15 additional days to reach a decision.

(c) If the extension is due to failure of the claimant to submit necessary information, the extension notice of delay must give specific information about what the claimant has to provide and the claimant must be given at least 45 days to submit the requested information.

(d) once the pre-service claim determination has been made and the medical care rendered, the actual claim filed for payment will be processed according to the time requirements of a post-service claim.

(5) Post-Service Claims:

(a) An insurer must notify the claimant of the insurer's benefit decision within 30 days of receipt of the request for claim.

(b) If the insurer is unable to make a decision within that time due to circumstances beyond the insurer's control, such as late receipt of medical records, it must notify the claimant before expiration of the original 30 days that it intends to extend the time and then the insurer may take as long as 15 additional days to reach a decision.

(c) If the extension is due to failure of the claimant to submit necessary information, the extension notice of delay must give specific information about what the claimant has to provide and the claimant must be given at least 45 days to submit the requested information.

(6) A health benefit plan is required to provide continued coverage for an ongoing course of treatment pending the outcome of an internal appeal.

(7) [An]Except for a grandfathered individual health benefit plan as defined in 45 CFR 147.140, an insurer offering an individual health benefit plan shall provide only one level of internal appeal before the final determination is made.

 

R590-192-14. Enforcement Date.

The commissioner will begin enforcing the revised provisions of this rule on [July 1, 2011]the effective date.

 

KEY: insurance law

Date of Enactment or Last Substantive Amendment: [June 30, ]2011

Notice of Continuation: June 25, 2009

Authorizing, and Implemented or Interpreted Law: 31A-1-301; 31A-2-201; 31A-2-204; 31A-2-308; 31A-21-312; 31A-26-303