DAR File No. 44181

Insurance, Administration

Rule R590-283

Defrayal of State-Required Benefits

Notice of Proposed Rule

(New Rule)

DAR File No.: 44181
Filed: 11/01/2019 02:53:28 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Federal law requires that if a state mandates new benefits on the Patient Protection and Affordable Care Act (PPACA) plans that are in excess of the essential health benefits established on January 1, 2012, the cost to fund those benefits must be defrayed by the state. This rule establishes a method to pay for those benefits in general, and in particular for the autism Applied Behavior Analysis (ABA) therapy benefit that was determined to be a new state-mandated benefit.

Summary of the rule or change:

Carriers must make appropriate changes to federal templates to ensure they are not double paid for state-mandated benefits. Carriers must provide data to the Department of Insurance (Department) so that the Department can estimate the amount defrayable for state-mandated benefits. The state will pay for state-mandated benefits based on the average cost of those benefits per affected person per month.

Statutory or constitutional authorization for this rule:

• Subsection 31A-30-118(4)

This rule or change incorporates by reference the following material:

• Adds Adaptive Behavior Services/Applied Behavior Analysis (ABA) Billing Standard, published by Utah Health Information Network, 05/15/2018

Anticipated cost or savings to:

the state budget:

The only state-mandated benefit currently required to be defrayed is for autism ABA therapy in the individual market. Carriers have provided estimates of the cost of ABA therapy for the whole market that range between $700,000 and $20,000,000 (with the most probable estimates between $700,000 and $2,800,000).

local governments:

There is no anticipated cost or savings to the local governments. This rule deals with the relationship between state government and health insurers in the state.

small businesses:

There is no anticipated cost or savings to small businesses. This rule deals with the relationship between state government and health insurers in the state, all of which are large businesses.

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

Individual market participants will see a small decrease in their premiums (ranging from 0.003% to 2.1% depending on the carrier). Carriers participating in the individual market have reduced their premiums in recognition of the state defraying the cost of the ABA therapy.

Compliance costs for affected persons:

Carriers participating in the individual market will have negligible reporting costs because they need to submit claims to the state periodically to receive payment.

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

I. WHETHER A FISCAL IMPACT TO BUSINESS IS EXPECTED AS A RESULT OF THE PROPOSED RULE AND, IF SO, A DESCRIPTION OF WHY: Yes. Insurance carriers participating in the individual market were required to reduce premiums by the amount they expect to receive from the state defrayal of autism benefits. They expect to receive roughly an equivalent amount from the state. II. AN ESTIMATE OF THE TOTAL NUMBER OF BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: There are five businesses in the state that will be impacted by this rule. All of these businesses are non-small businesses. III. AN ESTIMATE OF THE SMALL BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: None. IV. A DESCRIPTION OF THE SOURCES OF COST OR SAVINGS AS WELL AS THE EXPECTED NET SAVINGS OR COST TO BUSINESS ESTABLISHMENTS AND SMALL BUSINESS ESTABLISHMENTS AS A RESULT OF THE PROPOSED RULE OVER A ONE-YEAR PERIOD, IDENTIFYING ONE-TIME AND ONGOING COSTS: Carriers in the individual market have reduced their premiums by about $1,800,000 in anticipation of receiving approximately that amount back from the state in defrayal payments. Carriers will recognize some costs in the form of interest discounting because the defrayal payments are paid in arrears. V. DEPARTMENT HEAD'S COMMENTS ON THE ANALYSIS: The above analysis represents the Department's best estimate of the fiscal impact that this rule may have on businesses.

Todd E. Kiser, Commissioner

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

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at sgooch@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:

12/16/2019

This rule may become effective on:

12/23/2019

Authorized by:

Steve Gooch, Information Specialist

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs	FY 2020	FY 2021	FY 2022
State Government	$1,800,000	$1,900,000	$2,000,000
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Person	$0	$0	$0
Total Fiscal Costs:	$1,800,000	$1,900,000	$2,000,000
Fiscal Benefits
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$1,800,000	$1,900,000	$2,000,000
Other Persons	$0	$0	$0
Total Fiscal Benefits:	$1,800,000	$1,900,000	$2,000,000
Net Fiscal Benefits:	$0	$0	$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non-Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non-Small Businesses

There will be a net zero impact to the 5 affected non-small businesses as a result of this rule. The affected non-small businesses are insurance carriers that participate on the individual market. They were required to reduce their premiums by the amount they expect to receive from the state defrayal of autism benefits. These 5 carriers have reduced their premiums by $1,800,000 on aggregate. The state will be paying approximately this amount back to the carriers to defray their costs for covering autism claims.

 

The head of the Insurance Department, Todd E. Kiser, has reviewed and approved this fiscal analysis.

 

**"Non-small business" means a business employing 50 or more persons; "small business" means a business employing fewer than 50 persons.

 

 

R590. Insurance, Administration.

R590-283. Defrayal of State-Required Benefits.

R590-283-1. Authority.

This rule is promulgated by the commissioner pursuant to Subsections 31A-2-201(3)(a) and 31A-30-118(4).

 

R590-283-2. Purpose and Scope.

(1) The purpose of this rule is to establish the method and timing of defraying the cost of a state-required benefit enacted on or after January 1, 2012 that is subject to 45 CFR 155.170 of the Patient Protection and Affordable Care Act.

(2) This rule applies to any health benefit plan that:

(a) is a qualified health plan;

(b) is offered on the exchange in the individual or small group market;

(c) has an effective date of coverage on or after January 1, 2020; and

(d) offers a state-required benefit in excess of the Utah Essential Health Benefits Package.

(3) A health benefit plan offering a state-required benefit that is offered exclusively off-exchange is not eligible for defrayal of state mandated benefits.

 

R590-283-3. Definitions.

For the purposes of this rule, the commissioner adopts the definitions of Sections 31A-1-301, 31A-30-103, and Rule R590-266, and the following definitions:

(1) "EHB" means essential health benefits.

(2) "Exchange" means the federal exchange, www.healthcare.gov, that makes qualified health plans available to qualified individuals or employers.

(3) "Qualified health plan" means a qualified health plan as defined in 45 CFR 155.20.

(4) "State-required benefit" means a benefit required by the state on or after January 1, 2012, other than for purposes of compliance with federal requirements, that is in excess of the Utah Essential Health Benefits Package.

 

R590-283-4. Unified Rate Review Template (URRT), Rate Data Template (RDT), and Plans and Benefits Template (PBT) Modifications.

A carrier who is eligible to receive defrayal for a state-required benefit shall modify the federal rate filing template as follows:

(1) a carrier shall exclude the amount the state will defray from the rates submitted on both the URRT, as well as the RDT;

(2) a carrier shall indicate in the rate filing's actuarial memorandum:

(a) whether or not the carrier anticipates a defrayal from the state for the cost of an eligible state-required benefit;

(b) that the cost of the state-required benefit is not included in the premiums; and

(c) detail regarding the amount the carrier expects to receive from the state for defrayal of the state-required benefit.

(3) a carrier shall not factor the state-required benefits into the calculation for the "EHB Percent of Total Premium" field on the PBT, a carrier should treat the state-required benefit as if it does not exist for purposes of this field, so that the state-required benefits are excluded from the total premium from which the EHB percent of premium is calculated; and

(4) a carrier shall indicate in the "Benefits Information" field on the PBT that they cover the state-required benefits, marking the state-required benefit as "Not EHB" as the "EHB Variance Reason."

 

R590-283-5. Defrayal of State-Required Benefits.

(1) A carrier seeking a state-required benefit defrayal shall, on or before April 30th of each year, starting on April 30, 2021, submit to the commissioner a request that includes the following information:

(a) the state-required benefit for which defrayal is sought;

(b) the count of individuals who received services for the state-required benefit during the preceding calendar year; and

(c) the amount incurred and paid by the carrier for the state-required benefit during the preceding calendar year.

(2)(a) The defrayal payments shall be based on an aggregate of the data received under Subsection (1) from all carriers.

(b) The defrayal payment to a carrier is calculated based on the sum of the total defrayable costs incurred across all carriers divided by the sum of the total count of individuals receiving defrayable services across all carriers. The result will be multiplied by the sum of the count of individuals receiving defrayable services for each carrier.

(3) Requests shall be submitted via the System for Electronic Rate and Form Filings, SERFF.

(4) State-required defrayal payments are paid in arrears for the prior calendar year.

(5) If legislative funding is less than the total amount of requested defrayals, all defrayal payments will be prorated. A carrier may include an adjustment to the next pricing year's rates to account for a legislative funding deficit. Any adjustment shall be clearly delineated in the actuarial memorandum.

 

R590-283-6. Reporting.

(1) This rule incorporates by reference the Utah Health Information Network's, UHIN, "Adaptive Behavior Services / Applied Behavior Analysis (ABA) Billing Standard" version 3.1. The standard is available on the Department's website at https://insurance.utah.gov or on UHIN's website at https://uhin.org.

(2) A carrier shall use the UHIN "Adaptive Behavior Services / Applied Behavior Analysis (ABA) Billing Standard" version 3.1 to identify and report claims subject to defrayal under R590-283-5(1)(c) and this section.

(3) For the commissioner to project defrayal costs, a carrier anticipating a defrayal payment shall submit to the commissioner:

(a) on or before April 15th of each year, starting on April 15, 2020:

(i) the state-required benefit for which defrayal is sought;

(ii) the count of individuals who received services for the state-required benefit during the current calendar year; and

(iii) the amount incurred and paid by the carrier for the state-required benefit during the current calendar year.

(b) on or before November 15th of each year, starting on November 15, 2020:

(i) the state-required benefit for which defrayal is sought;

(ii) the count of individuals who received services for the state-required benefit during the current calendar year; and

(iii) the amount incurred and paid by the carrier for the state-required benefit during the current calendar year.

(c) Reports shall be submitted via the System for Electronic Rate and Form Filings, SERFF.

 

R590-283-7. Claims Auditing.

The commissioner may audit:

(1) a carrier's claims that are subject to defrayal; and

(2) a carrier's process for determining which claims are subject to defrayal.

 

R590-283-8. Penalties.

A person found to be in violation of this rule shall be subject to penalties as provided under Section 31A-2-308.

 

R590-283-9. Enforcement Date.

The commissioner will begin enforcing the provisions of this rule for applicable policies issued or renewed on or after January 1, 2020.

 

R590-283-10. Severability.

If any provision of this rule or its application to any person or situation is held to be invalid, that invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.

 

KEY: insurance

Date of Enactment or Last Substantive Amendment: 2019

Authorizing, and Implemented or Interpreted Law: 31A-30-118(4)