Montana Administrative Register Notice 6-188 No. 9   05/13/2010    
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In the matter of the amendment of ARM 6.6.1906, and the adoption of New Rules I through VI, pertaining to the administration of a new risk pool by Comprehensive Health Care Association and Plan










TO:  All Concerned Persons


            1.  On June 2, 2010, at 10:30 a.m., the State Auditor and Commissioner of Insurance will hold a public hearing in the lower level DLI R&A conference room of the State Auditor's Office, 840 Helena Ave., Helena, Montana, to consider the proposed amendment and adoption of the above-stated rules.


            2.  The State Auditor and Commissioner of Insurance will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice.  If you require an accommodation, contact the department no later than 5:00 p.m., May 26, 2010, to advise us of the nature of the accommodation that you need.  Please contact Darla Sautter, State Auditor's Office, 840 Helena Avenue, Helena, MT, 59601; telephone (406) 444-2726; TDD (406) 444-3246; fax (406) 444-3497; or e-mail dsautter@mt.gov.


            3.  The rule as proposed to be amended provides as follows, stricken matter interlined, new matter underlined:


            6.6.1906  OPERATING RULES FOR THE ASSOCIATION  (1)  For the purpose of carrying out the provisions and purposes of Title 33, chapter 22, part 15, MCA, Ccomprehensive Hhealth Aassociation and Pplan, the commissioner adopts and incorporates by reference the bylaws of the Montana Ccomprehensive Hhealth Aassociation (MCHA), adopted on July 22, 1987, amended on August 1, 2000, and approved by the commissioner on December 27, 2000, and the operating rules of Montana the MCHA, adopted on June 21, 2004, and approved by the commissioner on July 29, 2004 August 22, 2006.  A copy of the bylaws and operating rules is available for inspection at the office of the Commissioner of Insurance, 840 Helena Avenue, Helena, Montana.

            (2)  The bylaws and operating rules of the MCHA will also apply to the Montana Affordable Care Plan (MACP) risk pool, unless those rules conflict with the Administrative Rules of Montana (ARM) contained in this part, or the Patient Protection and Affordable Care Act (Public Law 111-148).


            AUTH:  33-22-1502, MCA

            IMP:  33-22-1502, 33-22-1503, MCA


STATEMENT OF REASONABLE NECESSITY:  The amendments to this rule are necessary to update the adoption dates for the plan of operation, and to specify that the operating rules and bylaws also govern the new risk pool to the extent that they do not conflict with these administrative rules.


            4.  The new rules as proposed to be adopted provide as follows:


            NEW RULE I  ESTABLISHING THE MONTANA AFFORDABLE CARE PLAN          (1)  In order to provide immediate access to insurance for uninsured individuals in Montana with a preexisting condition, as described in H.R. 3590, the Patient Protection and Affordable Care Act (PPACA) Section 1101 (Public Law 111-148), the commissioner, or the MCHA with the commissioner's approval, may contract with the U.S. Department of Health and Human Services to establish a new temporary high risk pool plan, "the Montana Affordable Care Plan" (MACP), that will provide coverage for individuals who meet the eligibility criteria established in PPACA.

            (2)  The MACP will begin accepting applications for coverage on July 1, 2010.

            (3)  Coverage for the MACP must be provided by a risk pool that is administered and maintained separate and apart from the risk pools for the association plan, including the premium assistance plan (traditional high risk pool), and the association portability plan (portability pool), as defined in 33-22-1501, MCA. Commingling of funds between the existing MCHA pools and the MACP pool is not allowed.

            (4)  The funding for the MACP high risk pool will consist of money awarded by contract or grant from the federal government and premiums paid by the covered individuals in the MACP.  No money from the state of Montana or assessments paid by the association members pursuant to 33-22-1513, MCA, may be used to fund the MACP.

            (5)  Claims and administrative expenses for the covered individuals in the MACP must be paid solely from the MACP temporary high risk pool.


            AUTH:  33-22-1502, MCA

            IMP:  33-22-1502, 33-22-1503, MCA


            NEW RULE II  ELIGIBILITY REQUIREMENTS FOR THE MACP HIGH RISK POOL PLAN  (1)  "Federally defined PPACA high risk pool individual" or "MACP eligible," means an individual who:

            (a)  is a citizen, or national, of the United States, or is lawfully present in the United States in accordance with the applicable provisions of PPACA;

            (b)  has not been covered under creditable coverage as defined in 33-22-140, MCA (2009), during the six month period prior to the date on which such individual is applying for coverage under the MACP;

            (c)  is a Montana resident; and

            (d)  has a preexisting condition.

            (2)  A preexisting condition that triggers eligibility for the MACP pool is defined as:

            (a)  complying with 33-22-1501(7)(a)(iii)(A) and (B), MCA; or

            (b)  a medical condition identified as a "presumptive condition" by the MCHA; or

            (c)  as otherwise defined by the U.S. Secretary of Health and Human Services.


            AUTH:  33-22-1502, MCA

            IMP:  33-22-1502, 33-22-1503, MCA


            NEW RULE III  ENROLLMENT CAPS AND OTHER FUNDING LIMITATIONS            (1)  The MCHA board, relying on the advice of a qualified actuary, may propose that the commissioner limit enrollment in the MACP to a specified number of covered individuals.  The commissioner shall approve or disapprove the proposed enrollment cap.

            (2)  The MCHA board and the lead carrier are responsible for setting an appropriate reserve for incurred but not reported claims, and for monitoring the financial condition of the MACP pool.  The board shall submit a financial report for the MACP to the commissioner once every quarter, or more often if necessary, or if requested by the commissioner.  The first quarterly report must be submitted on October 31, 2010.

            (3)  If applications for the MACP exceed an enrollment cap set by the commissioner, the MCHA shall create a waiting list for eligible individuals.  The date of the application will determine an individual's place on the waiting list.

            (4)  If actuarial projections indicate that current claims, and incurred but not reported claims, threaten to exceed available revenue for the MACP pool, and if no additional federal funding is forthcoming, the board may recommend that the commissioner dissolve the MACP pool and terminate all coverage issued through that pool.  The commissioner shall approve or disapprove the termination of coverage in the MACP pool.  If termination of coverage is approved, covered individuals will receive:

            (a)  a 30 day notice of cancellation; and

            (b)  an opportunity to enroll in one of the association plans, with no break in coverage.

            (i)  Individuals who move to an association plan will:

            (A)  pay the same rates as other individuals covered under that association plan;

            (B)  be allowed to choose any benefit design currently offered in the traditional high risk pool; and

            (C)  be given full credit for any annual out-of-pocket expenses already met in the MACP.

            (ii)  No preexisting condition exclusions will be applied to individuals from the MACP who transfer to an association plan because their coverage was terminated under the provisions of this rule.


            AUTH:  33-22-1502, MCA

            IMP:  33-22-1502, 33-22-1503, MCA


            NEW RULE IV  MACP BENEFIT PLAN AND RATES  (1)  The board shall choose an existing benefit design from the association plans or the association portability plans, make any necessary modifications in order to comply with PPACA Section 1101(c)(2), and submit the MACP to the commissioner, who will approve or disapprove the plans.

            (2)  In order to facilitate enrollment, the board may amend its application for insurance coverage to comply with PPACA and these rules, and use the same application for all three risk pools.

            (3)  The rates for the MACP shall be established at a standard rate for a standard population.  In order to determine that rate, the board shall follow the procedure described in 33-22-1512(1), MCA, for determining the "average premium rate," with no additional mark-up and apply the rating rules described in PPACA Section 1101(c)(2)(C) and (D).  The board shall submit its rate recommendation for the MACP to the commissioner, who will approve or disapprove the rates.


            AUTH:  33-22-1502, MCA

            IMP:  33-22-1502, 33-22-1503, MCA


            NEW RULE V  LEAD CARRIER CONTRACT  (1)  The board may, with the approval of the commissioner, choose to amend the existing lead carrier contract to include the provision of administrative services for the MACP.  Payment for those administrative services may not exceed any cap on administrative fees imposed by the Secretary of the U.S. Department of Health and Human Services.


            AUTH:  33-22-1502, MCA

            IMP:  33-22-1502, 33-22-1503, MCA


            NEW RULE VI  FRAUD, DUMPING AND RECISSION  (1)  The provisions of 33-1-1202, 33-18-214, and 33-22-1518, MCA, apply to persons who misrepresent their own eligibility status, the eligibility status of any other individual, or who advise another person to misrepresent the eligibility status of any individual.

            (2)  Rescission of coverage under 33-15-403, MCA, may occur, but only if there was a misrepresentation as to eligibility status on an application that is fraudulent or proven to be an intentional misrepresentation of material fact.

            (3)  The board, with the approval of the commissioner, may require a reasonable amount of information from applicants in order to verify eligibility status.


            AUTH:  33-22-1502, MCA

            IMP:  33-22-1502, 33-22-1503 MCA


STATEMENT OF REASONABLE NECESSITY:  The U.S. Department of Health and Human Services has requested that the state insurance departments and the high risk pools in those states take on the responsibility of administering a new temporary high risk pool, described in and funded by the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148.  The Montana Comprehensive Health Association (MCHA) has the authority "to exercise the powers granted to insurers under the laws of this state," which would include entering into a contract to administer a risk pool offering health care coverage to eligible individuals.  The commissioner has the authority to adopt rules to "carry out the provisions of this part Comprehensive Health Association and Plan," which would include any new activities that the MCHA proposes to engage in.


Establishing the Montana Affordable Care Plan (MACP) is reasonable and necessary because it will be locally administered in Montana and thereby best serve the interests of Montana consumers.  These proposed administrative rules are necessary for the establishment of a new temporary Montana high risk pool.  Once established under Montana law, the MACP will be able to access the funding that has been allocated to Montana by the federal government to service the claims of this new class of federally eligible individuals.  In order to obtain available federal funding, the new temporary high risk pool must be ready to enroll individuals by July 1, 2010.  If the state does not act to set up a mechanism to serve eligible Montanans by May 30, 2010, the federal government will establish a federal mechanism to cover those individuals.


A Montana temporary high risk pool will better serve the consumers of this state by allowing them access to: (1) the best discounts from a Montana network of providers; and (2) the expertise of the MCHA board that has 25 years of experience in managing the claims of a large group of high risk individuals.  During those 25 years, the MCHA board has developed many mechanisms to provide effective claims cost management, including a disease management program for people with chronic conditions and those facing a serious health crisis, a pharmacy benefit program that effectively manages prescription drug costs, and first-dollar preventative benefits.  Effective management of the funding available for this program is critical to making it a success for the Montanans that it will serve. The partnership of the MCHA board and the Office of the Commissioner of Securities and Insurance will establish the foundation for that success.  These rules are reasonably necessary to authorize the formation of the MACP, so that it will provide Montanans who are currently "uninsured and uninsurable" with the best opportunity for affordable care until the health insurance exchanges are operational in 2014.


New Rule I allows the MCHA to operate the new risk pool (the MACP), with the approval of the commissioner, for the benefit of the individuals described in PPACA.   This rule clarifies that the funding for the MACP is limited to the federal money allocated to Montana for the purpose of operating the new risk pool and the premiums collected from the individuals covered under the MACP.  It specifies that no state money and no assessment dollars collected from association member companies can be used for this program.  The funding for MACP cannot be commingled with any existing reserves from the other MCHA high risk pools. This rule is reasonably necessary to protect the state of Montana and the association by clearly prohibiting the use of state funding and association member funding to pay for expenses generated by the new risk pool.


New Rule II is reasonably necessary because it adopts the eligibility criteria established in PPACA.  In order to receive federal funding, the states must agree to cover only individuals meeting the eligibility criteria set forth in PPACA in the new temporary high risk pools.  New Rule II also defines what is meant by "preexisting condition" for eligibility.  Clearly defined eligibility criteria must be in place before opening the MACP for enrollment.


New Rule III gives the commissioner the authority to cap enrollment in the MACP, or even terminate coverage in the event that funding is depleted before the plan ends in 2014.  This rule is reasonably necessary to ensure that enrollment does not exceed the federal funding available to cover excess losses in the plan.  The board is charged with monitoring the financial solvency of the pool, and alerting the commissioner before the MACP incurs claims that it does not have the ability to pay.  New Rule III is also necessary to provide individuals covered in the MACP with an opportunity to have continuous coverage in the traditional high risk pool, if the MACP terminates coverage.


New Rule IV is reasonably necessary to allow the board to modify the application form, policy form, and rates for the existing association plans to meet the minimum requirements for the MACP established by PPACA.


New Rule V is reasonably necessary because it allows the board, with the approval of the commissioner, to amend the existing lead carrier contract to provide services for the MACP.  Since the new pool must start up on July 1, 2010, there is not enough time to seek new bids from other third party administrators.  In addition, the MCHA board completed a request for proposals for a lead carrier in 2009.


New Rule VI is reasonably necessary to advise prospective applicants, producers, and employers that existing laws regarding unfair referrals to the high risk pool, fraud, and rescission also apply to the MACP.  This will deter individuals who do not meet all eligibility criteria from applying for the MACP or misrepresenting their eligibility status.  PPACA has similar provisions regarding fraud and unfair referral to the plan.


            5.  Concerned persons may submit their data, views, or arguments concerning the proposed actions either orally or in writing at the hearing.  Written data, views, or arguments may also be submitted to Christina L. Goe, General Counsel, State Auditor's Office, 840 Helena Ave., Helena, MT, 59601; telephone (406) 444-2040; fax (406) 444-3497; or e-mail cgoe@mt.gov, and must be received no later than 5:00 p.m., June 10, 2010.


            6.  Christina L. Goe, General Counsel, has been designated to preside over and conduct this hearing.


            7.  The department maintains a list of concerned persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request that includes the name and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices.  Such written request may be mailed or delivered to Darla Sautter, State Auditor's Office, 840 Helena Ave., Helena, Montana, 59601; telephone (406) 444-2726; fax (406) 444-3497; or e-mail dsautter@mt.gov or may be made by completing a request form at any rules hearing held by the department.


            8.  An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register.  The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.


            9.  The bill sponsor for HB817, 1985, was Les Kitelsman, Billings, MT.  After completing an online White Pages search, and checking the Legislative Roster maintained by the Secretary of State's office, no contact information was found.


/s/  Christina L. Goe                                      /s/  Robert W. Moon                         

Christina L. Goe                                            Robert W. Moon

Rule Reviewer                                               Deputy Insurance Commissioner


            Certified to the Secretary of State May 3, 2010.


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