The purpose of this bulletin is to bring to the attention of all Vermont private payers, including but not limited to licensed health care insurers and their delegates, their obligation to reimburse providers for less restrictive and less expensive alternatives to hospitalization for treatment of mental health and substance abuse conditions.
Maternity Coverage Regulation #89-1 applies to all policies of health insurance issued to Vermonters, and generally provides that maternity coverage be a part of all health insurance policies on a non-discriminatory basis. Such coverage is also subject to Bulletin #96, issued on September 27, 1989.
Concerns have been raised by consumers, providers, and legislators that Vermont health insurers may be using utilization review criteria in determining whether to approve or deny health services to their insureds that may require the discharge of new mothers and their newborns from health care facilities shortly after birth, and that the use of such criteria may jeopardize the health of the mothers as well as the newborns if applied against the advice of the health care provider treating the mother. The Legislature has asked the Department to prepare “[g]uidelines for postpartum care” that “shall allow health care providers to determine the appropriate length of postpartum hospital stay based on relevant factors including the complexity of the delivery, whether the delivery was vaginal or caesarian, the clinical condition of the infant and the mother, their social situation and available community support services.” P.A. No. 180 (1996 Vt., Adj. Sess.), Sec. 40(a)(2).
The Department has contracted with the Vermont Program for Quality in Health Care, Inc., which issued a set of recommendations for a maternity stays guideline on January 2, 1997. The Commissioner has adopted the recommendations in full, and accordingly expects all health insurers offering maternity coverage in Vermont shall use the attached Maternity Stays Guideline, which are incorporated herein by reference, in deciding when to authorize or deny requested health care services relating to postpartum care.
Please contact Steve Kappel at (802) 828-2900 if you have any questions.
COMPLIANCE WITH VERMONT’S MANDATORY GROUP HEALTH INSURANCE CONTINUATION STATUTE
Recently, both the state and the federal governments enacted laws providing for the continuation of group health insurance benefits to terminated employees. The Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) was signed by President Reagan on April 7, 1986. The federal law (copy attached) only applies to employers with twenty or more employees (on a typical business day during the preceding calendar year). The scope of the Vermont law, which applies to group insurance contracts is somewhat more broad than COBRA because it impacts on virtually all employers (by virtue of their insurance contracts, including self-insurers), even those employers with less than twenty employees.
Since the minimum standards for group health insurance benefits continuation set forth in COBRA are “generally” more stringent than Vermont’s law, employers with twenty or more employees should be primarily concerned with COBRA. In most instances (but not all), compliance with COBRA means that the requirements set forth in the Vermont statute have also been met. Correspondingly, employers with less than twenty employees are not covered by COBRA. Thus, they need only comply with Vermont law.
The following explanation will describe the operation and the nature of Vermont’s statute. The operation of COBRA will be discussed only to the extent necessary to explain compliance with Vermont law. It is worth noting, however, that COBRA is a complicated statute which amends the Internal Revenue Code, ERISA and the Public Health Service Act. Furthermore, the respective federal agencies charged with administration of the various provisions of COBRA have not yet promulgated regulations construing the statutory language. Thus, it is not possible to specify with absolute certainty how COBRA will be applied. Nonetheless, with these disclaimers in mind, the Department will touch upon the application of COBRA as it affects or relates to the Vermont law. [We have also attached, for informational purposes only, descriptive matter produced by the National Association of Insurance Commissioners outlining the major coverage provisions of COBRA. See Appendix A.]
The Vermont statute regulates group health insurance policies by providing covered persons (e.g. employees) and certain dependents with a right to continue group health insurance policies (at the “group rate”) after termination of employment. 8 V.S.A. Section 8090a(a). After providing this coverage, the legislature describes the situations in which the right to continued coverage does not attach. 8 V.S.A. Section 8090a(b). The question has been raised whether this statutory right can be modified by a collective bargaining agreement. The answer is no. The statute provides a benefit which exists outside the terms of an employment contract. That is not to say, however, that an employment contract cannot be fashioned which provides more extensive coverage. The statute simply sets a minimum standard. The law also requires that notice of the statutory continuation privilege be included in each certificate (or other evidence) of coverage given to employees.
Assuming a person who is entitled to continue a group health insurance policy decides to exercise the option, written notice to the employer, the group agent (contractor), or insurer activates the continuation provision. 8 V.S.A. Section 4090b. If the covered employee is deceased, the employer should be notified within sixty days. The notification period is reduced to thirty days in the case of terminated employees.
An important distinction between the Vermont statute and COBRA is the length of their respective continuation periods. See 8 V.S.A. Section 4090c. Under Vermont law, there is a six (6) month continuation period, while COBRA extends group health insurance benefits for a minimum of eighteen (18) months. Thus, COBRA provides more extensive coverage in terms of length of the continuation period. A question has been asked whether Vermont’s six month period tacks on or is added to the eighteen month federal continuation period. (i.e., a month term is simply the minimum period prescribed by Vermont legislators. For employers subject to COBRA, the state period is satisfied at the end of the first six months under the COBRA (18 month) continuation period.
The Vermont continuation period expires after six months, however, a right or entitlement to a subsequent conversion policy is provided under 8 V.S.A. Section 4090d which the employee or dependent may exercise. Bases for termination of the continuation period before the end of six months include: 1) failure of a covered person to make timely payment of his/her contribution; 2) the covered person is covered or is eligible for coverage under Medicare; or 3) the group policy is terminated (in this case, the covered person is entitled to coverage under any replacement policy). This last item may present some problems for the insurer processing a replacement policy since covered persons are entitled to the same level of benefits provided by the prior policy. Specifically, the law states: “the minimum level of benefits payable under the prior group policy shall be the applicable level of benefits of the prior group policy…” The statute does allow a reduction in the level of benefits to the extent benefits were paid or are payable under the prior policy. If a person had, for example, a million dollar lifetime policy and twenty thousand in benefits had already been paid out to this person, then the minimum conversion policy level of benefits would be $980,000. That figure controls even if the lifetime maximum coverage under the replacement group health insurance plan is reduced, for example, to $500,000.
The Vermont law also requires that covered persons be provided with an opportunity to convert his/her group health insurance policy to an individual or a personal health insurance policy without evidence of insurability. 8 V.S.A. Section 4090d. The terms and conditions for exercising this right are specified by the statute. 8 V.S.A. Section 4090e. Basically, written application for conversion must be made at least 30 days before the end of the six month continuation period. The first premium payment must also be made before that date. The premium for converted policies is determined on a nongroup basis. One exception occurs when such a premium is for coverage of “qualified dependents” (widows and orphans). In that instance, the premium is limited to 102 percent of the group rate.
Employers covered by COBRA are impacted, albeit indirectly, by Vermont’s conversion provisions (the word “indirectly” is used because the Vermont statute regulates insurance/self-insurance contracts, not employers). COBRA does not have any language concerning conversion. Thus, under the applicable federal statutes, the insurance coverage automatically ends when the continuation period expires. Accordingly, it is appropriate to give special attention to the Vermont law in the conversion area since it impacts on all employers.
The Vermont law allows the insurer to modify some components of converted policies. See 8 V.S.A. Section 4090e. Nevertheless, the law also requires the insurer to provide certain options to individuals exercising their conversion rights. 8 V.S.A. Section 4090g. Basically, the statute requires insurers to offer lesser levels of coverage at lower rates. The Commissioner of Banking and Insurance (“Commissioner”) has discretion to adopt rules describing the lesser types of coverage which may be offered under this law. The Commissioner has not promulgated any rules concerning “lesser coverage” options and may not be doing so pending the forthcoming recommendations of the “Health Insurance Summer Study Committee of the Legislature.”
While there are differences between COBRA and the Vermont statute, as stated above, in many cases compliance with COBRA will also satisfy the requirements of applicable Vermont laws. Although a conclusive analysis of COBRA is not yet possible, there does not appear to be any statutory sections which are directly or substantially inconsistent with Vermont’s continuation law. As such, knowledge of and compliance with 8 V.S.A. Section 4090 is of vital importance to affected employers and insurers.
It has come to the attention of this Department that some insurers writing health insurance coverage in Vermont are not paying benefits under the medical expense portion of the contract for Temporomandibular Joint Disorders.
We wish to point out that the Vermont Supreme Court has ruled that this condition does not fall within the standard health policy exclusion for “dental care and treatment,” even though the work may be performed by a dentist. (The case, Melanie A. Simpson vs. State Mutual Life Assurance Company of America, is numbered 145-77 and the decision was rendered on December 6, 1977.)
We, therefore, expect that all insurers writing health insurance policies or contracts, which are/were subject to the same or an equivalent exclusion in Vermont will honor claims for the treatment of this condition; and, will review any claims which were denied for the treatment of this condition for the purpose of paying any incorrect denials.
An updated guideline for the filing of rates, forms, and rules in the State of Vermont :
1. Number of copies required: One copy of the filing material is required, with an extra copy of the transmittal letter for return to the company. This also applies to single filings involving more than one company within a group. As before, the content of multi-company filings must be identical.
2. Filing revisions: Any revision to a filing, including effective date and other corrections, must be treated as a new filing, complete with the appropriate fiche and fee.
3. Fiche and filing fees: Each filing must be accompanied by a fiche and the appropriate filing fee, or it will be disapproved and returned as an incomplete filing, without further review. All fiche must have a descriptive title on it’s top border.
4. Stamped self addressed envelopes: As before, all life and health filings must be accompanied by two stamped, self addressed envelopes. One will be used to acknowledge receipt of the filing and assign a filing number, and the other will be for our ensuing response. This requirement also applies to all interim correspondence requiring a response from this Department.
If this requirement is not complied with, you may not receive a response from this Department.
5. Status checks: As per Bulletin 91, please do not contact this Department regarding the status of a filing until at least 45 days after your mailing date. For telephone status checks, you must have the filing number assigned by this Department: otherwise, the request must be in mailed to us, with a stamped, self-addressed envelope.
6. Referenced material: All referenced material is required to be included with each filing.
As of July 30, 1993, I have approved two common approved two common health care plans, pursuant to Title 8 V.S.A. § 4080a and Regulation 91-4b. The two plans are entitled “Act 52 Insurance Plan I” and “Act 52 Insurance Plan II.” The plans share identical benefits, but have different deductibles and out-of-pocket limits. Small group carriers must make these two plans available to consumers no later than February 1, 1994. Questions or concerns regarding the filing of rates and forms for these two plans should be addressed to Lyle Moulton, Senior Health Analyst. Registered small group carriers should follow the guidelines set forth in Regulation 91-4a for the approval of community rates and rating methodology.
Some insurers are not aware of the requirements of Section 4090e(c) of Title 8. Paragraph (c) was amended by adding the third sentence effective July 1, 1986.
Section 4090e(b) states the premium for converted policies, is determined on a nongroup basis. The exception for ‘qualified dependents’ (widows and orphans) is mentioned in paragraph (c). In that instance, the premium is limited to 102 percent of the group rate. [The reference to 102 percent for qualified beneficiaries was inadvertently omitted by the National Insurance Law Service (NILS) in its Vermont Insurance Laws edition.]1
The second sentence of paragraph (c) gives the insurer the option of covering dependents under one policy or separate policies. This does not allow the insurer to refuse to provide coverage requested by a dependent.
The last sentence used the words ‘qualified beneficiaries.’ This is intended to apply to spouses and their dependents who were covered under the group policy.
Please review your rating manuals and submit a copy of the page relating to these rates to the attention of Lyle Moulton, Health Analyst.
On October 1, 1989, the Maternity Coverage Regulation #89-1 becomes effective for all new policies of health insurance written in Vermont. The Regulation also applies to existing business becoming effective on policy anniversary dates.
The Regulation generally provides that maternity coverage shall be made part of all health insurance policies on a non-discriminatory basis. A number of insurers have maternity endorsements which were previously reviewed and approved by the Department. These endorsements may be used by insurers to meet the coverage requirement. For insures who do not have an approved filing, maternity coverage nonetheless applies to new policies after October 1, 1989 and to existing policies on anniversary dates.
If an insurer has a filed maternity endorsement but it does not provide coverage equal to coverage provided for any other condition, it cannot be used to satisfy the demands of this Regulation.
If an insurer does not have an approved maternity endorsement which provides coverage equal to coverage provided for any other condition or if their forms do not provide maternity coverage as any other medical condition, they should make filings with the Department as soon as possible so that their forms are in compliance with the Regulation.
In an effort to provide a smooth transition and to assist insurers into coming into compliance with this Regulation, insurers may continue to use existing forms under the following circumstances:
(1) The Department is notified in writing within thirty (30) days of your use of existing forms.
(2) You state that you will deem existing forms to include the maternity coverage required by the Regulation.
(3) You notify your existing insureds in writing within thirty (30) days that their policy forms will not include coverage for maternity conditions as any other condition.
(4) You make a filing to bring your forms into compliance by November 15, 1989.
Insurers may charge existing rates for maternity coverage provided the premiums charges for men and women are identical. Since existing rates may provide to be excessive given the cost-spreading aspect of the Regulation, the Department will review rates charged for maternity coverage and may, if evidence warrants, require rate reductions. All maternity rates must be filed for approval prior to November 15, 1989 even if this Department has granted approval of those rates previously. Companies will be required to justify rates charged for maternity coverage.
Please contact Roger L. Lever at 802-828-3301, if you have any questions.
RECENT STATUTORY AND REGULATORY CHANGES - HEALTH INSURANCE
September 20, 1989
The attached is a brief summary of the major points of laws relating to health insurance passed during the 1989 Vermont legislative session and recent regulations. The entire text of the law or regulation should be consulted to insure compliance.
This regulation requires that all health insurance policies (except specified disease, accident only, and disability income) issued or renewed after October 1, 1989 provide maternity coverage. Maternity coverage means the payment of benefits to insureds for medical expenses resulting from pregnancy, childbirth, prenatal care, and related conditions and complications. This coverage shall be subject to the same deductibles, durational limits, and co-insurance factors as other conditions, illnesses or accidents covered by the policy or contract. Rates and forms required to comply with this new regulation must be filed and approved prior to use.
All medicare supplement policies issued or renewed after September 11, 1989 shall meet the minimum standards for medicare supplements outlined in this regulation. This regulation supersedes the medicare supplement coverage requirements outlined in Regulation 80-1 and is designed to make certain these policies supplement the medicare coverage under the new federal catastrophic coverage act. The regulation is based closely on the NAIC model endorsed by Health Care Financing Administration.
1. Regulation of Out-of-State Groups; New Group Definition - S.204, Act No. 106
Under this law, forms and rates for certificates based on policies covering over 25 Vermont residents issued outside Vermont must be filed and approved by the Department. This requirement is effective for all new business on September 1, 1989. For existing business, the law provides that forms and rates must be filed for approval according to the following schedule:
For coverage existing on September 1, 1989 which is renewed on a policy anniversary date between September 1, 1989 and December 31, 1989, the filing requirement shall take effect one year after such anniversary date;
For coverage existing on September 1, 1989 which is renewed between December 31, 1989 and December 31, 1990, the filing requirement shall take effect on the date of renewal;
For coverage existing on September 1, 1989 other than coverage described above, the filing requirement shall take effect on December 31, 1990.
The law also clarifies the definition of those groups and associations which are permitted to purchase health insurance policies for individuals and requires all insurance companies covering over 25 Vermont residents to be licensed in the state.
2. Transfer Statute for Group Insurance Policies - H.287, Act No. 113
This law, effective on July 1, 1989, requires insurers who take over group coverage from another insurer to cover all risks insured by the prior carrier. It also sets up required notice procedures for termination of group coverage, cancellation procedures for nonpayment of premium, and continuing coverage provisions for up to a year for totally disabled individuals after termination of group coverage.
3. Mental Health Providers - H.350, Act No. 43
This statute, effective July 1, 1989, requires insurers to recognize “certified mental health professionals” as eligible mental health services providers under 8 V.S.A. § 4089. The effect is to include certain certified mental health counselors and certified clinical social workers in the group of providers eligible for reimbursement of mental health benefits.
4. Inclusion of Part-time Employees - H.279, Act No. 34
This statute, effective July 1, 1989, requires insurers to make coverage available to employers for all employees who work 17½ hours or more per week. The law does not require the employer to provide or contribute to such coverage.
5. Long-Term Care Insurance - H.256, Act No. 70
This statute, effective July 1, 1989, requires all long term care insurance policies provided to Vermont residents, even if issued in another state, to be approved by the Commissioner. It is based on the NAIC model and requires that all policies meet certain disclosure requirements and provide minimum benefits such as elimination of hospital stay prerequisites, inflation protection, and mandatory home health care coverage.
Companies are expected to comply with the requirements of these laws and regulations on their effective dates. If there are specific questions concerning these changes, or companies or agents need more information or copies of the laws or regulations, please write Roger Lever, Health Analyst, Department of Banking and Insurance, 120 State Street, Montpelier, VT 05602.
HEALTH INSURANCE POLICIES FOR SOLE PROPRIETORS AND PARTNERS
June 14, 1989
In 1988, the Vermont legislature enacted a law which makes workers’ compensation insurance available to sole proprietors and partners. See 21 V.S.A., Chapter 9. The purpose of the legislation is not to mandate coverage. Rather, the legislature merely provided certain self-employed individuals with an opportunity to obtain such coverage.
The Department is aware that certain health insurers have policies which exclude coverage when an individual is eligible for workers’ compensation coverage and an injury or a condition requiring treatment is work-related. Those policy provisions should not apply to sole proprietors and partners who, by virtue of 21 V.S.A., Chapter 9, are eligible for workers’ compensation coverage. Application of the workers’ compensation exclusion in that manner would, in effect, convert the optional aspect of this statute into a mandate.
Health insurance policies which contain a workers’ compensation exclusion that is applied to sole proprietors or partners violate 8 V.S.A., Section 4724, the state’s unfair trade practices statute. The application of the exclusion in such a manner constitutes the sale of a facially unsuitable insurance policy (8 V.S.A., Section 4724(16)). In addition, the application of the exclusion to policyholders may also violate the prohibition against the misrepresentation of products (8 V.S.A., Section 4724(13).
Accordingly, the Commissioner advises that the application of a workers’ compensation exclusion by health insurers, including health maintenance organizations and non-profit medical and hospital service corporations, to sole proprietors and partners merely eligible for workers’ compensation insurance coverage will be deemed a violation of 8 V.S.A., Section 4724.
Please contact Thomas Prindiville, Insurance Analysis Chief or John Liebenow, Senior Insurance Analyst at (802) 828-3301 if you have any questions.