HAR §16-12-6.4. Standards for claims payment

(a) An issuer shall comply with Section 1882(c)(3) of the Social Security Act (as enacted by Section 4081(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1987 (OBRA) 1987, Pub. L. No. 100-203) by: (1) Accepting a notice from a Medicare carrier on dually assigned claims submitted by participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on the basis of the information contained in that notice; §16-12-7 12-71 (2) Notifying the participating physician or supplier and the beneficiary of the payment determination; (3) Paying the participating physician or supplier directly; (4) Furnishing, at the time of enrollment, each enrollee with a card listing the policy name, number, and a central mailing address to which notices from a Medicare carrier may be sent; (5) Paying user fees for claim notices that are transmitted electronically or otherwise; and (6) Providing to the Secretary of Health and Human Services, at least annually, a central mailing address to which all claims may be sent by Medicare carriers. (b) Compliance with the requirements set forth in subsection (a) shall be certified on the Medicare supplement insurance experience reporting form. [Eff and comp 10/28/89; comp 12/27/90; am and comp 9/3/92; am, ren §16-12-6.4 and comp 7/6/99; comp 10/15/01; comp 12/9/02; comp 10/8/05; comp 9/25/09; am and comp 8/1/19] (Auth: HRS §§431:2-201, 431:10A-304, 431:10A-305) (Imp: HRS §§431:2-201, 431:10A-304, 431:10A-305) §16-12-7 Loss ratio standards and refund or credit of premium. (a) The following provisions of this subsection establish loss ratio standards: (1) (A) A Medicare supplement policy form or certificate form shall not be delivered or issued for delivery unless the policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregate benefits (not including anticipated refunds or §16-12-7 12-72 credits) provided under the policy form or certificate form: (i) At least 75 per cent of the aggregate amount of premiums earned in the case of group policies; or (ii) At least 65 per cent of the aggregate amount of premiums earned in the case of individual policies; (B) Calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for the period and in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by a health maintenance organization shall not include: (i) Home office and overhead costs; (ii) Advertising costs; (iii) Commissions and other acquisition costs; (iv) Taxes; (v) Capital costs; (vi) Administrative costs; and (vii) Claims processing costs. (2) All filings of rates and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards. §16-12-7 12-73 (3) For purposes of applying subparagraph (a)(1)(A) of this section and paragraph (c)(3) of section 16-12-7.3 only, group policies issued as a result of solicitations of individuals through the mails or by mass media advertising (including both print and broadcast advertising) shall be deemed to be group policies. (4) For policies issued prior to September 3, 1992, expected claims in relation to premiums shall meet: (A) The originally filed anticipated loss ratio when combined with the actual experience since inception; (B) The appropriate loss ratio requirement from clauses (a)(1)(A)(i) and (ii) when combined with actual experience beginning with the effective date of this section; and (C) The appropriate loss ratio requirement from clauses (a)(1)(A)(i) and (ii) over the entire future period for which the rates are computed to provide coverage. (b) The following provisions of this subsection apply to refund or credit calculations: (1) An issuer shall collect and file with the commissioner by May 31 of each year the data contained in the applicable reporting form contained in Appendix A (Exhibit D (revised 2019)), located at the end of this chapter, which is made a part of this section, for each type in a standard Medicare supplement benefit plan. (2) If on the basis of the experience as reported the benchmark ratio since inception (ratio 1) (Exhibit E (revised 2019)) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation shall be done on a statewide basis for each type in a standard Medicare §16-12-7 12-74 supplement benefit plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded. (3) For the purposes of this section, policies or certificates issued prior to September 3, 1992, the issuer shall make the refund or credit calculation separately for all individual policies (including all group policies subject to an individual loss ratio standard when issued) combined and all other group policies combined for experience after the effective date of this section. The first report shall be due by May 31, 1999. (4) A refund or credit shall be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the Secretary of Health and Human Services, but in no event shall it be less than the average rate of interest for thirteen-week Treasury notes. A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based. (c) Annual filing of rates. An issuer of Medicare supplement policies and certificates issued before or after the effective date of this chapter in this State shall file annually its rates, rating schedule, and supporting documentation including ratios of incurred losses to earned premiums by policy duration for approval by the commissioner in accordance with the filing requirements and procedures prescribed by the commissioner. The supporting documentation shall also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards can be expected to be met over the entire period for §16-12-7 12-75 which rates are computed. The demonstration shall exclude active life reserves. An expected third-year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than three years. As soon as practicable, but prior to the effective date of enhancements in Medicare benefits, every issuer of Medicare supplement policies or certificates in this State shall file with the commissioner, in accordance with the applicable filing procedures of this State: (1) (A) Appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or certificates. The supporting documents necessary to justify the adjustment shall accompany the filing. (B) An issuer shall make the premium adjustments as are necessary to produce an expected loss ratio under the policy or certificate as will conform with minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for the Medicare supplement policies or certificates. No premium adjustment which would modify the loss ratio experience under the policy other than the adjustments described herein shall be made with respect to a policy at any time other than upon its renewal date or anniversary date. (C) If an issuer fails to make premium adjustments acceptable to the commissioner, the commissioner may order premium adjustments, refunds, or premium credits deemed necessary to §16-12-7 12-76 achieve the loss ratio required by this section. (2) Any appropriate riders, endorsements, or policy forms needed to accomplish the Medicare supplement policy or certificate modifications necessary to eliminate benefit duplications with Medicare. The riders, endorsements, or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or certificate. (3) An issuer shall file a certification signed by a qualified actuary stating that premium rates meet the minimum benefit and loss ratio standards required in article 10A of chapter 431, HRS, and this chapter. In determining the accuracy of any certification, the commissioner may require the issuer to submit any additional information. (d) Public hearings. The commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form issued before or after the effective date of this chapter if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard. The determination of compliance is made without consideration of any refund or credit for the reporting period. Public notice of the hearing shall be furnished in a manner as provided by law. [Eff 5/17/82; am and comp 10/28/89; am and comp 12/27/90; am and comp 9/3/92; am and comp 7/6/99; am and comp 10/15/01; comp 12/9/02; am and comp 10/8/05; am and comp 9/25/09; am and comp 8/1/19] (Auth: HRS §§431:2-201, 431:10A-304, 431:10A-305, 431:10A-306) (Imp: HRS §§431:2-201, 431:10A-304, 431:10A-305, 431:10A-306) §16-12-7.3 12-77 §16-12-7.3 Filing and approval of policies and certificates and premium rates. (a) An issuer shall not deliver or issue for delivery a policy or certificate to a resident of this State unless the policy form or certificate form has been filed with and approved by the commissioner in accordance with filing requirements and procedures prescribed by the commissioner. (b) An issuer shall file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 only with the commissioner in the state in which the policy or certificate was issued. (c) An issuer shall not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule, and supporting documentation have been filed with and approved by the commissioner in accordance with the filing requirements and procedures prescribed by the commissioner. (d) (1) Except as provided in paragraph (2) of this subsection, an issuer shall not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan. (2) An issuer may offer, with the approval of the commissioner, up to four additional policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases: (A) The inclusion of new or innovative benefits; (B) The addition of either direct response or agent marketing methods; (C) The addition of either guaranteed issue or underwritten coverage; and (D) The offering of coverage to individuals eligible for Medicare by reason of disability. §16-12-7.3 12-78 (3) For the purposes of this section, a "type" means an individual policy, a group policy, an individual Medicare Select policy, or a group Medicare Select policy. (e) (1) Except as provided in subparagraph (A), an issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this section that has been approved by the commissioner. A policy form or certificate form shall not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous twelve months. (A) An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the commissioner in writing its decision at least thirty days prior to discontinuing the availability of the form of the policy or certificate. After receipt of the notice by the commissioner, the issuer shall no longer offer for sale the policy form or certificate form in this State. (B) An issuer that discontinues the availability of a policy form or certificate form pursuant to subparagraph (A) shall not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for a period of five years after the issuer provides notice to the commissioner of the discontinuance. The period of discontinuance may be reduced if the commissioner determines that a shorter period is appropriate. (2) The sale or other transfer of Medicare supplement business to another issuer shall §16-12-7.3 12-79 be considered a discontinuance for the purposes of this subsection. (3) A change in the rating structure or methodology shall be considered a discontinuance under paragraph (1) unless the issuer complies with the following requirements: (A) The issuer provides an actuarial memorandum, in a form and manner prescribed by the commissioner, describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates; and (B) The issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The commissioner may approve a change to the differential which is in the public interest. (f) (1) Except as provided in paragraph (2), the experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in section 16-12-7. (2) Forms assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation. (g) An issuer shall not present for filing or approval a rate structure for its Medicare supplement policies or certificates issued after the effective date of the amendment of this regulation based upon a structure or methodology with any groupings of attained ages greater than one year. The ratio §16-12-7.3 12-80 between rates for successive ages shall increase smoothly as age increases. (h) An issuer shall file a certification signed by an officer of the issuer stating that the contract, policy, or certificate meets the minimum benefit standards required in article 10A of chapter 431, HRS, and this chapter. In determining the accuracy of any certification, the commissioner may require the issuer to submit any additional information. [Eff and comp 10/28/89; am and comp 12/27/90; am and comp 9/3/92; am and comp 7/6/99; comp 10/15/01; comp 12/9/02; am and comp 10/8/05; comp 9/25/09; am and comp 8/1/19] (Auth: HRS §§431:2-201, 431:10A-304, 431:10A-305, 431:10A-309) (Imp: HRS §§431:2-201, 431:10A-304, 431:10A-305, 431:10A-309)