BEFORE THE STATE AUDITOR AND COMMISSIONER OF INSURANCE
OF THE STATE OF MONTANA
In the matter of the amendment of ARM 6.6.1906, and the adoption of New Rules I through VI (ARM 6.6.1907, 6.6.1908, 6.6.1910, 6.6.1911, 6.6.1913, and 6.6.1914), pertaining to the administration of a new risk pool by Comprehensive Health Care Association and Plan
NOTICE OF AMENDMENT AND ADOPTION
TO: All Concerned Persons
1. On May 13, 2010, the State Auditor and Commissioner of Insurance published MAR Notice No. 6-188 regarding a notice of public hearing on the proposed amendment and adoption of the above-stated rules at page 1132 of the 2010 Montana Administrative Register, issue number 9.
2. On June 2, 2010, at 10:30 a.m., the State Auditor and Commissioner of Insurance held a public hearing to consider the proposed amendment and adoption of the above-stated rules. The hearing was attended by members of the public.
3. The department has amended ARM 6.6.1906 exactly as proposed and adopted New Rules II (6.6.1908), IV (6.6.1911), V (6.6.1913), and VI (6.6.1914) exactly as proposed.
4. The department has adopted New Rules I (6.6.1907), and III (6.6.1910) as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:
NEW RULE I (6.6.1907) ESTABLISHING THE MONTANA AFFORDABLE CARE PLAN (1) through (3) remain as proposed.
(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, the lead carrier, or assessments paid by the association members pursuant to 33-22-1513, MCA, may be used to fund the MACP.
(5) remains as proposed.
NEW RULE III (6.6.1910) ENROLLMENT CAPS AND OTHER FUNDING LIMITATIONS (1) remains as proposed.
(2) The MCHA board
and the lead carrier are is responsible for setting an appropriate reserve for incurred but not reported claims, and for monitoring the financial condition of the MACP pool. The lead carrier is responsible for giving complete and accurate financial and claims payment information, including, but not limited to, appropriate financial projections and a projection of incurred but not reported claims, as required by the board to enable it to set appropriate reserves. 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) through (4)(b)(i) remain as proposed.
(A) pay the same rates as other similarly situated individuals covered under that association plan;
(B) through (C)(ii) remain as proposed.
(5) Any federal grant money that is left in reserve after the MACP terminates coverage and all claims have been paid will revert to the federal government. Any premium money that remains in reserve for the MACP after all final claims and other final expenses have been paid will be paid out in the following manner, as allocated by the board and the commissioner:
(a) to the MCHA association plan, if MCAP members have been transferred to that plan as a result of a closure of the MCAP for solvency reasons; and/or
(b) to individual premium payers on a pro rata basis, who were covered by the MACP at the time it closed.
5. The department has thoroughly considered two written comments received by mail and e-mail. There were no comments made at the hearing. A summary of the comments received and the department's responses are as follows:
COMMENT 1: Blue Cross Blue Shield of Montana (BCBSMT) recommended that the second sentence in New Rule I (ARM 6.6.1907(4)) be amended to clarify that no funding from the lead carrier may be used to fund the MACP.
RESPONSE 1: The department has made that change.
COMMENT 2: BCBSMT stated that the lead carrier acts as the claims administrator and does not have authority to make decisions on behalf of the MCHA or the MACP pool. Therefore, that commenter recommended that the term "lead carrier" be removed from the first sentence of New Rule III (ARM 6.6.1910(2)), which currently states that "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."
RESPONSE 2: The department has removed the term "lead carrier" from that sentence, but has added a sentence that clarifies that the lead carrier is responsible for giving complete financial and claims payment information necessary for setting appropriate reserves, including, but not limited to, appropriate financial projections and a projection of incurred but not reported claims.
COMMENT 3: BCBSMT stated that New Rule III (ARM 6.6.1910(4)(b)(i)(A)), which provides as follows: "If termination of coverage is approved, covered individuals will receive:[…] (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;"
should be amended to add the term, "similarly situated" before the word "individuals" in (A).
RESPONSE 3: The department has made that change.
COMMENT 4: The commenter from the Montana Logging Association stated that the rules should address the issue of what will happen to any money left in reserves after the MACP ends in 2014.
RESPONSE 4: The federal funding allocated to the Montana pool can only be drawn down as needed to pay claims and other necessary expenses. Any federal money that is "left over" when this coverage ends will revert to the federal government. However, the department has added language to New Rule III (ARM 6.6.1910) indicating what will happen to any premium money that might be left in reserves after all claims and other expenses are paid, and the MACP terminates coverage (see ARM 6.6.1910(5)). The department has no reason to anticipate any serious problem with "surplus" funding. The loss ratio for this program is projected to exceed the premium collected.
COMMENT 5: BCBSMT states that the language in New Rule III (4)(b)(i)(C) and (ii) should be eliminated. That language provides that, if coverage in the MACP is terminated prematurely for solvency reasons, the individuals covered under the MACP will be allowed to move to the MCHA association plan and will be:
"(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."
BCBSMT argues that these provisions conflict with New Rule I which states that no assessment money from association members will be used to fund the MACP. It believes that giving credit for out-of-pocket expenses incurred in the calendar year under MACP coverage and waiving a preexisting exclusionary period would cost the association money.
BCBSMT further argues that these requirements "discriminate against members who are covered (or individuals applying for coverage) under the other association plans, who are not coming from the MACP."
RESPONSE 5: The department disagrees. Should the MACP be terminated early for solvency reasons, the financial effect on the MCHA is anticipated to be minimal or nonexistent. Further, it is important to note that MCHA board members and other interested parties reviewed these rules in draft form and then again after the rules were published. The MCHA board as a whole did not raise these issues.
The plans operated by the MCHA consist of many different categories of eligible individuals, all of whom have different eligibility requirements and often different preexisting condition exclusion periods ["preexisting periods"]. For instance, a TAA-eligible individual has no preexisting period, and federal and state law requires only three months of prior creditable coverage. Other federally eligible individuals must have 18 months of prior creditable coverage in order to be eligible for the same coverage (portability). The MCHA board has decided that persons eligible for the premium assistance program will have a four-month preexisting condition exclusionary period, even though other members of the traditional association plan [traditional plan] have a 12-month preexisting period. Other members of the traditional plan who qualify because their individual health insurance premiums were too high have no preexisting period, if they have 12 months qualifying previous coverage with no more than a 30-day break in coverage.
The MACP eligible individuals have certain eligibility requirements that no other individuals insured by the MCHA have to meet, such as proof of citizenship and no prior insurance for at least six months. The federal law created this new class of eligible individuals and also mandated that no preexisting period be imposed on them. In the unlikely event that MACP terminates for solvency reasons, these individuals may receive only 30 days notice, while other privately insured individuals, including those in the other association plans, may be required by law to receive 180 days notice. The reality is the vast majority of the individuals who might transfer to the association plan in the event of a premature closure of the MACP would have at least 12 months of prior coverage in any event and would be legally entitled to a waiver of the preexisting period under existing law. [33-22-242, MCA] Therefore, the fiscal impact on the association would be minimal. Currently, if a private health insurer in the individual market becomes insolvent or withdraws from the market, those individuals are allowed to enter the MCHA plan, if they meet one of the eligibility requirements, with no preexisting periods, or at least full credit for all their prior coverage.
Furthermore, the board and the commissioner will be monitoring solvency closely. In the unlikely event that a premature closure for solvency reasons occurs, the closure of the pool may be timed to coincide with the end of the calendar year.
The claims for the MACP, including the incurred but not reported claims, will not be transferred to the other MCHA plans. Once the individuals formerly covered by the MACP transfer to the traditional plan, their premiums and new claims would be included in the loss calculations going forward. Furthermore, their premiums would increase to the level of the other participants of the traditional plan, and any remaining premium dollars left after run out of the MACP claims may be transferred to the MCHA. Also, these individuals are "uninsurable" like the other members of the MCHA traditional plan. The protections proposed in this rule, which BCBSMT seeks to eliminate, were designed to protect these individuals if they had to face loss of coverage with only 30 days notice. Therefore, the department disagrees that the costs and expenses of the MACP would be transferred to the MCHA.
With regard to the out-of-pocket expenses, the federal rules for eligibility for the MACP, restated in these rules, require that the maximum out-of-pocket expenses for this class of eligible individuals be restricted to $5950 per calendar year. When coverage is transferred to the traditional plan, those individuals will be subject to the maximum out-of-pocket expenses applicable to the new plan they chose. Again, the rule requiring credit for previously paid out-of-pocket expenses for that calendar year will help smooth the transition for these individuals because of the extremely limited notice they may receive. Enrollment in the MACP will be capped, and the number of individuals who choose to transfer may be small. In most cases, termination of coverage could be timed with the end of a calendar year, and the financial effect on the MCHA for this one-time credit would be minimal or nonexistent.
Accordingly, the department will not remove the provisions of New Rule III (6.6.1910(4)(b)(i)(C) and (ii)).
/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 June 14, 2010.