230-RICR-20-30-2
230-RICR-20-30-2. Coordination of Benefits (formerly Insurance Regulation 48) (version Amendment, 08/12/2014 to 08/25/2018)
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Reg. # 48
State of Rhode Island and Providence Plantations
DEPARTMENT OF BUSINESS REGULATION
Division of Insurance
1511 Pontiac Avenue
Cranston, RI 02920
INSURANCE REGULATION 48
COORDINATION OF BENEFITS
Table of Contents
Section 1
Authority
Section 2
Purpose
Section 3
Definitions
Section 4
Applicability and Scope
Section 5
Model COB Contract Provisions
Section 6
Rules for Coordination of Benefits
Section 7
Procedure to be followed by Secondary Plan To Calculate Benefits and
Pay a Claim
Section 8
Notice to Covered Persons
Section 9
Miscellaneous Provisions
Section 10
Effective Date for Existing Contracts
Appendix A
Model COB Contract Provisions
Appendix B
Consumer Explanatory Booklet
Section 1
Authority
This regulation is adopted and promulgated by the Rhode Island Department of
Business Regulation pursuant to R.I. Gen. Laws §§ 27-20.6-6.
Section 2
Purpose
A.
This regulation applies to all plans that are issued on or after the effective date of
this regulation. The purpose of this Regulation is to:
(1)
Establish a uniform order of benefit determination under which plans pay
their claims;
(2)
Reduce duplication of benefits by permitting a reduction of the benefits to
be paid by plans that,, pursuant to rules established by this Regulation, do
not have to pay their benefits first; and
(3)
Provide greater efficiency in the processing of claims when a person is
covered under more than one plan.
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B.
In order to accomplish the goals of this regulation the Department or the Office of
Health Insurance Commissioner may require licensees to use a standardized
process and form, including manual and electronic formats, to increase the
accuracy of coverage information when multiple carriers are involved.
Section 3
Definitions
The following words and terms, when used in this Regulation, shall have the
following meanings unless the context clearly indicates otherwise:
A.
Allowable Expense.
(1)
"Allowable Expense" except as set forth below or where a statute requires
a different definition, means any health care expense, including
coinsurance or co-payments and without reduction for any applicable
deductible, that is covered in full or in part by any of the plans covering
the person.
(2)
If a plan is advised by a covered person that all plans covering the person
are high-deductible health plans and the person intends to contribute to a
health savings account established in accordance with Section 223 of the
Internal Revenue Code of 1986, the primary high-deductible health plan’s
deductible is not an allowable expense, except for any health care expense
incurred that may not be subject to the deductible as described in Section
223(c)(2)(C) of the Internal Revenue Code of 1986.
(3)
An expense or a portion of an expense that is not covered by any of the
plans is not an allowable expense.
(4)
Any expense that a provider by law or in accordance with a contractual
agreement is prohibited from charging a covered person is not an
allowable expense.
(5)
The following are examples of expenses that are not allowable expenses:
(a)
If a person is confined in a private hospital room, the difference
between the cost of a semi-private room in the hospital and the
private room is not an allowable expense, unless one of the plans
provides coverage for private hospital room expenses.
(b)
If a person is covered by two (2) or more plans that compute their
benefit payments on the basis of usual and customary fees or
relative value schedule reimbursement or other similar
reimbursement methodology, any amount charged by the provider
in excess of the highest of the negotiated fees is not an allowable
expense.
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(c)
If a person is covered by two (2) or more plans that provide
benefits or services on the basis of negotiated fees, any amount in
excess of the highest of the negotiated fees is not an allowable
expense.
(d)
If a person is covered by one plan that calculates its benefits or
services on the basis of usual and customary fees or relative value
schedule reimbursement or other similar reimbursement
methodology and another plan that provides its benefits or services
on the basis of negotiated fees, the primary plan’s payment
arrangement shall be the allowable expense for all plans.
However, if the provider has contracted with the secondary plan to
provide the benefit or service for a specific negotiated fee or
payment amount that is different than the primary plan’s payment
arrangement and if the provider’s contract permits, that negotiated
fee or payment shall be the allowable expense used by the
secondary plan to determine its benefits.
(6)
The definition of “allowable expense” may exclude certain types of
coverage or benefits such as dental care, vision care, prescription drug or
hearing aids. A plan that limits the application of COB to certain
coverages or benefits may limit the definition of allowable expense in its
contract to expenses that are similar to the expenses that it provides.
When COB is restricted to specific coverages or benefits in a contract, the
definition of allowable expense shall include similar expenses to which
COB applies.
(7)
When a plan provides benefits in the form of services, the reasonable cash
value of each service will be considered an allowable expense and a
benefit paid.
(8)
The amount of the reduction may be excluded from allowable expense
when a covered person’s benefits are reduced under a primary plan:
(a)
Because the covered person does not comply with the plan
provisions concerning second surgical opinions or precertification
of admissions or services: or
(b)
Because the covered person has a lower benefit because the
covered person did not use a preferred provider.
B.
“Birthday” refers only to month and day in a calendar year and does not include
the year in which the individual is born.
C.
“Claim” means a request that benefits of a plan be provided or paid. The benefits
claimed may be in the form of:
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(1)
Services (including supplies);
(2)
Payment for all or a portion of the expenses incurred;
(3)
A combination of (1) and (2) above; or
(4)
An indemnification.
D.
“Closed panel plan” means a plan that provides health benefits to covered persons
primarily in the form of services through a panel of providers that have contracted
with or are employed by the plan, and that excludes benefits for services provided
by other providers, except in cases of emergency or referral by a panel member.
E.
“Consolidated Omnibus Budget Reconciliation Act of 1985” or “COBRA” means
coverage provided under a right of continuation pursuant to federal law.
F.
“Coordination of benefits” or “COB” means a provision establishing an order in
which plans pay their claims, and permitting secondary plans to reduce their
benefits so that the combined benefits of all plans do not exceed total allowable
expenses.
G.
“Custodial parent” means:
(1)
The parent awarded custody of a child by a court decree: or
(2)
In the absence of a court decree, the parent with whom the child resides
more than one half of the calendar year without regard to any temporary
visitation.
H.
(1)
“Group-type contract” means a contract that is not available to the general
public and is obtained and maintained only because of membership in or a
connection with a particular organization or group, including blanket
coverage.
(2)
“Group-type contract” does not include an individually underwritten and
issued guaranteed renewable policy even if the policy is purchased
through payroll deduction at a premium savings to the insured since the
insured would have the right to maintain or renew the policy
independently of continued employment with the employer.
I.
“High-deductible health plan” has the meaning given the term under Section 223
of the Internal Revenue Code of 1986, as amended by the Medicare Prescription
Drug, Improvement and Modernization Act of 2003.
J.
(1)
“Hospital Indemnity Benefits” means benefits not related to expenses
incurred.
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(2)
“Hospital indemnity benefits” does not include reimbursement-type
benefits even if they are designed or administered to give the insured the
right to elect indemnity-type benefits at the time of claim.
K.
(1)
"Plan" means a form of coverage with which coordination is allowed.
Separate parts of a plan for members of a group that are provided through
alternative contracts that are intended to be part of a coordinated package
of benefits are considered one plan and there is no COB among the
separate parts of the plan.
(2)
If a plan coordinates benefits, its contract shall state the types of coverage
that will be considered in applying the COB provision of that contract.
Whether the contract uses the term “plan” or some other term such as
“program,” the contractual definition may be no broader than the
definition of “plan” in this subsection. The definition shown in the Model
COB Provision, in Appendix A is an example..
(3)
“Plan” includes:
(a)
Group insurance and subscriber contracts;
(b)
Uninsured arrangements of group or group-type coverage;
(c)
Group or group-type coverage through closed panel plans;
(d)
Group-type contracts.
(e)
The medical care components of long-term care contracts, such as
skilled nursing care;
(f)
The medical benefits coverage in automobile "no fault" and
traditional automobile "fault" type contracts;
(g)
Medicare or other governmental benefits, as permitted by law,
except as provided in (4)(l) below. That part of the definition of
plan may be limited to the hospital, medical and surgical benefits
of the governmental program; and
(h)
Group and nongroup insurance contracts and subscriber contracts
that pay or reimburse for the cost of dental care.
(4)
“Plan” does not include:
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(a)
Hospital indemnity benefits or other group or group-type fixed indemnity
coverage;
(b)
Accident only coverage;
(c)
Specified disease or specified accident coverage;
(d)
Limited benefit health coverage.
(e)
School accident-type coverages. These contracts cover students for
accidents only, including athletic injuries, either on a twenty four (24)
hour basis or on a "to and from school" basis; and
(f)
Benefits provided in long-term care insurance policies for non-medical
services, for example, personal care, adult day care, homemaker services,
assistance with activities of daily living, respite care and custodial care or
for contracts that pay a fixed daily benefit without regard to expenses
incurred or the receipt of services;
(g)
Medicare supplement policies;
(h)
A State plan under Medicaid, and shall not include a plan (such as the
Catastrophic Health Insurance Plan benefits provided pursuant to R.I. Gen.
Laws §§ 42-62-5 through 42-62-8) when, by law, its benefits are in excess
of those of any private insurance plan or other non-governmental plan.
(i)
A governmental plan, which, by law, provides benefits that are in excess
of those of any private insurance plan or other non-governmental plan.
L.
“Policyholder” means the primary insured named in a nongroup insurance policy.
M.
“Primary Plan” means a plan whose benefits for a person's health care coverage
must be determined without taking the existence of any other plan into
consideration. A plan is a Primary Plan if :
(1)
The Plan either has no order of benefit determination rules, or it’s rules
differ from those permitted by this regulation; or
(2)
All plans that cover the person use the order of benefit determination rules
required by this regulation, and under those rules the plan determines its
benefits first.
N.
“Secondary Plan” means a plan which is not a Primary Plan.
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Section 4
Applicability and Scope
This regulation applies to all plans that are issued on or after the effective date of
this regulation which is October 1, 1990.
Section 5
Model COB Contract Provisions
A.
Appendix A contains a model COB provision for use in Secondary Plan contracts.
That use is subject to the provisions of subsections B, C and D below and to the
provisions of Section 6 of this regulation.
B.
Appendix B is a plain language description of the COB process that explains to
the covered person how Secondary Plans will implement coordination of benefits.
It is not intended to replace or change the provisions that are set forth in the
contract. Its purpose is to explain the process by which the two (2) or more plans
will pay for or provide benefits.
C.
The COB provision contained in Appendix A and the plan language explanation
in Appendix B do not have to use the specific words and format shown in
Appendix A. Changes may be made to fit the language and style of the rest of the
group contract or to reflect the differences among plans that provide services, that
pay benefits for expenses incurred, and that indemnify. No substantive changes
are permitted.
D.
A COB provision may not be used that permits a plan to reduce its benefits on the
basis that:
(1)
Another plan exists and the covered person did not enroll in that plan;
(2)
A person is or could have been covered under another plan, except with
respect to Part B of Medicare; or
(3)
A person has elected an option under another plan providing a lower level
of benefits than another option that could have been elected.
E.
No plan may contain a provision that its benefits are "always -excess" or "always
secondary" to any plan as defined in this Regulation, except in accordance with
the rules permitted by this Regulation.
F.
Under the terms of a closed panel plan, benefits are not payable if the covered
person does not use the services of a closed panel provider. In most instances,
COB does not occur if a covered person is enrolled in two (2) or more closed
panel plans and obtains services from a provider in one of the closed panel plans
because the other closed panel plan (the one whose providers were not used) has
no liability. However, COB may occur during the plan year when the covered
person receives emergency services that would have been covered by both plans.
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Then the secondary plan shall use the provision of Section 7 of this regulation to
determine the amount it should pay for the benefit.
G.
No plan may use a COB provision, or any other provision that allows it to reduce
its benefits with respect to any other coverage its insured may have that does not
meet the definition of plan under Section 3(K) of this regulation.
Section 6
Rules for Coordination of Benefits
When a person is covered by two (2) or more plans, the rules for determining the
order of benefit payments are as follows:
A.
(1)
The Primary Plan shall pay or provide its benefits as if the Secondary Plan
or Plans did not exist
(2)
If the primary plan is a closed panel plan and the secondary plan is not a
closed panel plan, the secondary plan shall pay or provide benefits as if it
were the primary plan when a covered person uses a non-panel provider,
except for emergency services or authorized referrals that are paid or
provided by the primary plan.
(3)
When multiple contracts providing coordinated coverage are treated as a
single plan under this regulation, this section applies only to the plan as a
whole, and coordination among the component contracts is governed by
the terms of the contracts. If more than one carrier pays or provides
benefits under the plan, the carrier designated as primary within the plan
shall be responsible for the plan’s compliance with this regulation.
(4)
If a person is covered by more than one secondary plan, the order of
benefit determination rules of this regulation decide the order in which
secondary plans benefits are determined in relation to each other. Each
secondary plan shall take into consideration the benefits of the primary
plan or plans and the benefits of any other plan, which, under the rules of
this regulation, has its benefits determined before those of that secondary
plan.
B.
(1)
Except as provided in Paragraph (2), a plan that does not contain order of
benefit determination provisions that are consistent with this regulation is
always the primary plan unless the provisions of both plans, regardless of
the provisions of this paragraph, state that the complying plan is primary.
(2)
Coverage that is obtained by virtue of membership in a group and
designed to supplement a part of a basic package of benefits may provide
that the supplementary coverage shall be excess to any other parts of the
plan provided by the contract holder. Examples of these types of
situations are major medical coverages that are superimposed over base
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plan hospital and surgical benefits, and insurance type coverages that are
written in connection with a closed panel plan to provide out-of-network
benefits.
C.
A plan may take into consideration the benefits paid or provided by another plan
only when, under the rules of this regulation, it is secondary to that other plan.
D.
Order of Benefit Determination
Each Plan determines its order of benefits using the first of the following rules
that applies:
(1)
Non-Dependent or Dependent
(a)
Subject to Subparagraph (b) of this paragraph, the plan that covers
the person other than as a dependent, for example as an employee,
member, subscriber, policyholder or retiree, is the primary plan
and the plan that covers the person as a dependent is the secondary
plan.
(b)
(i)
If the person is a Medicare beneficiary, and, as a result of
the provisions of Title XVIII of the Social Security Act and
implementing regulations, Medicare is:
(I)
Secondary to the plan covering the person as a
dependent; and
(II)
Primary to the plan covering the person as other
than a dependent (e.g. a retired employee),
(ii)
Then the order of benefits is reversed so that the plan
covering the person as an employee, member, subscriber,
policyholder or retiree is the secondary plan and the other
plan covering the person as a dependent is the primary
plan.
(2)
Dependent Child Covered Under More Than One Plan
Unless there is a court decree stating otherwise, plans covering a dependent child
shall determine the order of benefits as follows:
(a)
For a dependent child whose parents are married or are living
together, whether or not they have ever been married-:
(i)
The plan of the parent whose birthday falls earlier
in the calendar year is the primary plan; or
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(ii)
If both parents have the same birthday the plan that has
covered the parent longest is the primary plan.
(b)
For a dependent child whose parents are separated or divorced or
are not living together, whether or not they have ever been
married:(i)
If there is no court decree allocating responsibility
for the child’s health care expenses or health care coverage, the
order of benefits for the child are as follows:
(I)
The plan covering the custodial parent;
(II)
The plan covering the custodial parent’s spouse;
(III)
The plan covering the non-custodial parent; and
then
(IV)
The plan covering the non-custodial parent’s
spouse.
(ii)
If a court decree states that one of the parents is responsible
for the health care expenses or health care coverage of the
child, and the entity obligated to pay or provide the benefits
of the plan of that parent has actual knowledge of those
terms, that plan is primary. If the parent with responsibility
has no health care coverage for the dependent child’s health
care expenses, but that parent’s spouse does, that parent’s
spouse’s plan is the primary plan. This paragraph does not
apply with respect to any plan year during which benefits
are paid or provided before the entity has knowledge of the
court decree provision;
(iii)
If a court decree states that both parents are responsible for
the dependent child’s health care expenses or health care
coverage, the provisions of Subparagraph (a) of this
paragraph shall determine the order of benefits;
(iv)
If a court decree states that the parents have joint
custody, without stating that one of the parents is
responsible for the health care expenses or health
care coverage of the dependent child, the provisions
of Subparagraph (a) of this paragraph shall
determine the order of benefits.
(c)
For a dependent child covered under more than one plan of
individuals who are not the parents of the child, the order of
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benefits shall be determined, as applicable, under Subparagraph (a)
or (b) of this paragraph as if those individuals were parents of the
child.
(d)
(i)
For a dependent child who has coverage under either or
both parents’ plans and also has his or her own coverage as
a dependent under a spouse’s plan, the rule in paragraph (5)
applies.
(ii)
In the event the dependent child’s coverage under the
spouse’s plan began on the same date as the dependent
child’s coverage under either or both parents’ plans, the
order of benefits shall be determined by applying the
birthday rule in subparagraph (a) to the dependent child’s
parent(s) and the dependent’s spouse.
(3)
Active Employee or Retired or Laid-Off Employee
(a)
The plan that covers a person as an active employee who is, neither
laid off nor retired (or as that employee's dependent) is the primary
plan. The plan covering that same person as a retired or laid-off
employee or as a dependent of a retired or laid-off employee is the
secondary plan.
(b)
If the other plan does not have this rule, and as a result, the plans
do not agree on the order of benefits, this rule is ignored.
(c)
This rule does not apply if the rule in Paragraph (1) can determine
the order of benefits.
(4)
COBRA or State Continuation Coverage
(a)
If a person whose coverage is provided pursuant to COBRA or
under a right of continuation pursuant to state or other federal law
is covered under another plan, the plan covering the person as an
employee, member, subscriber or retiree or covering the person as
a dependent of an employee, member, subscriber or retiree is the
primary plan and the plan covering that same person pursuant to
COBRA or under a right of continuation pursuant to state or other
federal law is the secondary plan.
(b)
If the other plan does not have this rule, and if, as a result, the
plans do not agree on the order of benefits, this rule is ignored.
(c)
This rule does not apply if the rule in Paragraph (1) can determine
the order of benefits.
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(5)
Longer or Shorter Length of Coverage.
(a)
If the preceeding rules do not determine the order of benefits, the
plan that covered the person longer is the primary plan and the plan
that covered the person for the shorter period of time is the
secondary plan.
(b)
To determine the length of time a person has been covered under a
plan, two successive plans shall be treated as one if the covered
person was eligible under the second plan within twenty four (24)
hours after coverage from the first plan ended.
(c)
The start of a new plan does not include:
(i)
A change in the amount or scope of a plan's benefits;
(ii)
A change in the entity which pays, provides or administers
the plan's benefits; or
(iii)
A change from one type of plan to another (such as, from a
single employer plan to that of a multiple employer plan).
(d)
The person’s length of time covered under a plan is measured from
the person’s first date of coverage under that plan. If that date is
not readily available, the date the person first became a member of
the group shall be used as the date from which to determine the
length of time the person’s coverage under the present plan has
been in force.
(6)
If none of the preceding rules determines the order of benefits, the
allowable expenses shall be shared equally between the plans.
Section 7
Procedure to be followed by Secondary Plan to Calculate Benefits and
Pay a Claim
In determining the amount to be paid by the secondary plan on a claim, should the
plan wish to coordinate benefits, the secondary plan shall calculate the benefits it would
have paid on the claim in the absence of other health care coverage and apply that
calculated amount to any allowable expense under its plan that is unpaid by the primary
plan. The secondary plan may reduce its payment by the amount so that, when combined
with the amount paid by the primary plan, the total benefits paid or provided by all plans
for the claim do not exceed 100 percent of the total allowable expense for that claim. In
addition, the secondary plan shall credit to its plan deductible any amounts it would have
credited to its deductible in the absence of other health care coverage.
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Section 8
Notice to Covered Persons
A plan, other than automobile contracts defined in § 3(K)(3)(f), shall, in its
explanation of benefits provided to covered persons, include the following language: “If
you are covered by more than one health benefit plan, you should file all your claims
with each plan.”
Section 9
Miscellaneous Provisions
A.
A Secondary Plan which provides benefits in the form of services may recover
the reasonable cash value of the services from the Primary Plan, to the extent that
benefits for the services are covered by the Primary Plan and have not already
been paid or provided by the Primary Plan. Nothing in this provision shall be
interpreted to require a plan to reimburse a covered person in cash for the value of
services provided by a plan which provides benefits in the form of services.
B.
(1)
A plan with order of benefit determination rules that comply with this
regulation (Complying Plan) may coordinate its benefits with a plan which
is "excess" or "always secondary" or that uses order of benefit
determination rules that are inconsistent with those contained in this
regulation (Noncomplying Plan) on the following basis:
(a)
If the Complying Plan is the Primary Plan, it shall pay or provide
its benefits first;
(b)
If the Complying Plan is the Secondary Plan, it shall pay or
provide its benefits first, but the amount of the benefits payable
shall be determined as if the Complying Plan were the Secondary
Plan. In such a situation, the payment shall be the limit of the
Complying Plan's liability; and
(c)
If the Noncomplying Plan does not provide the information needed
by the Complying Plan to determine its benefits within a
reasonable time after it is requested to do so, the Complying Plan
shall assume that the benefits of the Noncomplying Plan are
identical to its own, and shall pay its benefits accordingly. If,
within two (2) years of payment, the complying plan receives
information as to the actual benefits of the non-complying plan, it
shall adjust payments accordingly.
(2)
If the Noncomplying Plan reduces its benefits so that the covered person
receives less in benefits than he or she would have received had the
Complying Plan paid or provided its benefits as the Secondary Plan and
the Noncomplying Plan paid or provided its benefits as the Primary Plan,
and governing State law allows the right of subrogation set forth below,
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then the Complying Plan shall advance to or on behalf of the covered
person an amount equal to the difference.
(3)
In no event shall the Complying Plan advance more than the
Complying Plan would have paid had it been the Primary Plan less any
amount it previously paid for the same expense or service. In
consideration of such advance, the Complying Plan shall be subrogated to
all rights of covered person against the Noncomplying Plan. Such
advance by the Complying Plan shall also be without prejudice to any
claim it may have against the Noncomplying Plan in the absence of
subrogation.
C.
.COB differs from subrogation. Provisions for one may be included in
health care benefits contracts without compelling the inclusion or exclusion of the
other.
D.
If the plans cannot agree on the order of benefits within thirty (30) calendar days
after the plans have received all of the information needed to pay the claim, the
plans shall immediately pay the claim in equal shares and determine their relative
liabilities following payment, except that no plan shall be required to pay more
than it would have paid had it been the primary plan.
Section 10
Effective Date for Existing Contracts
A.
A contract that provides health care benefits and that was issued before the
effective date of this regulation shall be brought into compliance with this
regulation by
(1) The later of:
(a)
The next anniversary date or renewal date of the contract; or
(b)
Twelve months (12) following June 1, 2014.
(2)
The expiration of any applicable collectively bargained contract pursuant
to which it was written.
B.
For the transition period between the adoption of this regulation and the
timeframe for which plans are to be in compliance pursuant to Subsection A, a
plan that is subject to the prior COB requirements shall not be considered a non-
complying plan by a plan subject to the new COB requirements and if there is a
conflict between the prior COB requirements under the prior regulation and the
new COB requirements under the amended regulation, the prior COB
requirements shall apply.
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FORMER REGULATION; Part X of Regulation XXIII effective October 9, 1978
EFFECTIVE DATE:
October 1, 1990
AMENDED:
None
REFILED:
December 19, 2001
AMENDED:
August 12, 2014
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APPENDIX A
MODEL COB CONTRACT PROVISIONS
COORDINATION OF THIS CONTRACT'S BENEFITS
WITH OTHER BENEFITS
This Coordination of Benefits ("COB") provision applies to This Plan when an employee
or the employee's covered dependent person has health care coverage under more than
one Plan. Plan is defined below.
The order of benefit determination rules govern the order in which each Plan will
pay a claim for benefits. The Plan that pays first is called the Primary
plan. The Primary plan must pay benefits in accordance with its policy
terms without regard to the possibility that another Plan may cover some
expenses. The Plan that pays after the Primary plan is the Secondary
plan. The Secondary plan may reduce the benefits it pays so that
payments from all Plans do not exceed 100% of the total Allowable
expense.
DEFINITIONS
A.
A Plan is any of the following that provides benefits or services for medical or
dental care or treatment. If separate contracts are used to provide coordinated
coverage for members of a group, the separate contracts are considered parts of
the same plan and there is no COB among those separate contracts.
(1)
Plan includes: group insurance contracts, health maintenance organization
(HMO) contracts, closed panel plans or other forms of group or group-
type coverage (whether insured or uninsured) ; medical care components
of long-term care contracts, such as skilled nursing care; medical benefits
under group or individual automobile contracts; and Medicare or any other
federal governmental plan, as permitted by law.
(2)
Plan does not include: hospital indemnity coverage or other fixed
indemnity coverage; accident only coverage; specified disease or specified
accident coverage; limited benefit health coverage, as defined by state
law; school accident type coverage; benefits for non-medical components
of long-term care policies; Medicare supplement policies; Medicaid
policies; or coverage under other federal governmental plans, unless
permitted by law.
Each contract for coverage under (1) or (2) is a separate ””Plan.” If a “Plan” has
two parts and COB rules apply only to one of the two, each of the parts is a
separate ”Plan.”
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B.
This Plan means, in a COB provision, the part of the group contract providing
the health care benefits to which the COB provision applies and which may be
reduced because of the benefits of other plans. Any other part of the contract
providing health care benefits is separate from this plan. A contract may apply
one COB provision to certain benefits, such as dental benefits, coordinating only
with similar benefits, and may apply another COB provision to coordinate other
benefits.
C.
The order of benefit determination rules determine whether This Plan is a
Primary Plan or Secondary Plan when the person has health care coverage
under more than one Plan.
When This Plan is primary, it determines payment for its benefits first before
those of any other “Plan” without considering any other Plan's benefits.
WhenThis Plan is Secondary, it determines it’s benefits after those of another
Plan and may reduce the benefits it pays so that all Plan benefits do not exceed
100% of the total Allowable expense.
D.
Allowable Expense is a health care expense thatis covered at least in part by any
Plan covering the person. . When a Plan provides benefits in the form of services,
the reasonable cash value of each service will be considered an Allowable
expense and a benefit paid. An expense that is not covered by any Plan covering
the person is not an Allowable expense. In addition, any expense that a provider
by law or in accordance with a contractual agreement is prohibited from charging
a covered person is not an Allowable expense.
The following are examples of expenses that are not Allowable expenses:
(1)
The difference between the cost of a semi-private hospital room and a
private hospital room is not considered an Allowable Expense unless one
of the Plans provides coverage for private hospital room expenses.
(2)
If a person is covered by 2 or more Plans that compute their benefit
payments on the basis of usual and customary fees or relative value
schedule reimbursement methodology or other similar reimbursement
methodology, any amount in excess of the highest reimbursement amount
for a specific benefit is not an Allowable expense.
(3)
If a person is covered by 2 or more Plans that provide benefits or services
on the basis of negotiated fees, an amount in excess of the highest of the
negotiated fees is not an Allowable expense.
(4)
If a person is covered by one Plan that calculates its benefits or services
on the basis of usual and customary fees or relative value schedule
reimbursement methodology or other similar reimbursement methodology
and another Plan that provides its benefits or services on the basis of
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negotiated fees, the Primary plan’s payment arrangement shall be the
Allowable expense for all Plans. However, if the provider has contracted
with the Secondary plan to provide the benefit or service for a specific
negotiated fee or payment amount that is different than the Primary
plan’s payment arrangement and if the provider’s contract permits, the
negotiated fee or payment shall be the Allowable expense used by the
Secondary plan to determine its benefits.
(5)
The amount of any benefit reduction by the Primary plan because a
covered person has failed to comply with the Plan provisions is not an
Allowable expense. Examples of these types of plan provisions include
second surgical opinions, precertification of admissions, and preferred
provider arrangements.
E.
Closed panel plan is a Plan that provides health care benefits to covered persons
primarily in the form of services through a panel of providers that have contracted
with or are employed by the Plan, and that excludes coverage for services
provided by other providers, except in the cases of emergency or referral by a
panel member.
F.
Custodial parent is the parent awarded custody by a court decree or, in the
absence of a court decree, is the parent with whom the child resides more than one
half of the calendar year excluding any temporary visitation.
ORDER OF BENEFIT DETERMINATION RULES
When a person is covered by two or more “Plans,” the rules for determining the order of
benefit payments are as follows:
A.
The Primary plan pays or provides its benefits according to its terms of coverage
and without regard to the benefits of any other Plan.
B.
(1)
Except as provided in Paragraph (2), a Plan that does not contain a
coordination of benefits provision that is consistent with this regulation is
always primary unless the provisions of both Plans state that the
complying plan is primary.
(2)
Coverage that is obtained by virtue of membership in a group that is
designed to supplement a part of a basic package of benefits and provides
that this supplementary coverage shall be excess to any other parts of the
Plan provided by the contract holder. Examples of these types of
situations are major medical coverages that are superimposed over base
plan hospital and surgical benefits, and insurance type coverages that are
written in connection with a Closed panel plan to provide out-of-network
benefits.
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C.
A Plan may consider the benefits paid or provided by another Plan in calculating
payment of its benefits only when it is secondary to that other Plan.
D.
Each Plan determines its order of benefits using the first of the following rules
that apply:
(1)
Non-Dependent or Dependent. The Plan that covers the person other than
as a dependent, for example as an employee, member, policyholder,
subscriber or retiree is the Primary plan and the Plan that covers the
person as a dependent is the Secondary plan. However, if the person is a
Medicare beneficiary and, as a result of federal law, Medicare is
secondary to the Plan covering the person as a dependent; and primary to
the Plan covering the person as other than a dependent (e.g. a retired
employee); then the order of benefits between the two Plans is reversed so
that the Plan covering the person as an employee, member, policyholder,
subscriber or retiree is the Secondary plan and the other Plan is the
Primary plan.
(2)
Dependent Child Covered Under More Than One Plan. Unless there is a
court decree stating otherwise, when a dependent child is covered by more
than one “Plan” the order of benefits is determined as follows:
(a)
For a dependent child whose parents are married or are living
together whether or not they have ever been married:
(i)
The Plan of the parent whose birthday falls earlier in the
calendar year is the Primary plan; or
(ii)
If both parents have the same birthday the Plan that has
covered the parent longest is the Primary plan.
(b)
For a dependent child whose parents are divorced or separated or
not living together, whether or not they have ever been married:
(i)
If a court decree states that one of the parents is responsible
for the health care expenses or health care coverage of the
dependent child, and the Plan of that parent has actual
knowledge of those terms, that Plan is primary. This rule
applies to plan years commencing after the Plan is given
notice of the court decree;
(ii)
If a court decree states that both parents are responsible for
the dependent child’s health care expenses or health care
coverage, the provisions of Subparagraph (a) above shall
determine the order of benefits;
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(iii)
If a court decree states that the parents have joint custody
without specifying that one parent has responsibility for the
health care expenses or health care coverage of the
dependent child, the provisions of Subparagraph (a) above
shall determine the order of benefits; or
(iv)
If there is no court decree allocating responsibility for the
dependent child’s health care expenses or health care
coverage, the order of benefits for the child are as follows:
•
The Plan covering the Custodial Parent;
•
The Plan covering the spouse of the Custodial
Parent;
•
The Plan covering the non-custodial parent; and
then
•
The Plan covering the spouse of the non-custodial
parent.
(c)
For a dependent child covered under more than one Plan of
individuals who are the parents of the child, the provisions of
Subparagraph (a) or (b) above shall determine the order of benefits
as if those individuals were the parents of the child.
(3)
Active Employee or Retired or Laid-off Employee. The Plan that covers a
person as an active employee, that is, an employee who is neither laid off
nor retired, is the Primary plan. The Plan covering that same person as a
retired or laid-off employee is the Secondary plan. The same would hold
true if a person is a dependent of an active employee and that same person
is a dependent of a retired or laid-off employee. If the other Plan does not
have this rule, and if, as a result, the plans do not agree on the order of
benefits, this Rule is ignored. This rule does not apply if the rule labeled
D(1) can determine the order of benefits.
(4)
COBRA or State Continuation Coverage. If a person whose coverage is
provided pursuant to COBRA or under a right of continuation provided by
state or other federal law is covered under another Plan, the Plan covering
the person as an employee, member, subscriber or retiree or covering the
person as a dependent of an employee, member, subscriber or retiree is the
Primary plan and the COBRA or state or other federal continuation
coverage is the Secondary plan. If the other Plan does not have this rule,
and as a result, the Plans do not agree on the order of benefits, this rule is
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ignored. This rule does not apply if the rule labeled D(1) can determine the
order of benefits.
(5)
Longer or Shorter Length of Coverage. The Plan that covered the person
as an employee, member, policyholder, subscriber or retiree longer is the
Primary plan and the Plan that covered the person the shorter period of
time is the Secondary plan.
(6)
If the preceding rules do not determine the order of benefits, the
Allowable expenses shall be shared equally between the Plans meeting
the definition of Plan. In addition, This plan will not pay more than it
would have paid had it been the Primary plan.
EFFECT ON THE BENEFITS OF “THIS PLAN”
A.
When This plan is secondary, it may reduce its benefits so that the total benefits
paid or provided by all Plans during a plan year are not more than the total
Allowable expenses. In determining the amount to be paid for any claim, the
Secondary plan will calculate the benefits it would have paid in the absence of
other health care coverage and apply that calculated amount to any allowable
expense under its Plan that is unpaid by the Primary plan. The Secondary plan
may then reduce its payment by the amount so that, when combined with the
amount paid by the primary plan, the total benefits paid or provided by all Plans
for the claim do not exceed the total Allowable expense for the claim. In addition,
the Secondary plan shall credit to its plan deductible any amounts it would have
credited to its deductible in the absence of other health care coverage.
B.
If a covered person is enrolled in two or more Closed panel plans and if, for any
reason, including the provision of service by a non-panel provider, benefits are
not payable by one Closed panel plan, COB shall not apply between the Plan
and other Closed panel plans.
RIGHT TO RECEIVE AND RELEASE NEEDED INFORMATION
Certain facts about health care coverage and services are needed to apply these COB
rules and to determine benefits payable under This plan and other Plans. [Organization
responsible for COB administration] has the right to decide which facts it needs. It may
get needed facts from or give them to any other organizations or persons for the purpose
of applying these rules and determining benefits payable under “This plan” and other
“Plans” covering the person claiming benefits. [Organization responsible for COB
administration] need not tell, or get the consent of, any person to do this. Each person
claiming benefits under This plan must give [Organization responsible for COB
administration ] any facts it needs to apply those rules and determine benefits payable.
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FACILITY OF PAYMENT
A payment made under another Plan may include an amount that should have been paid
under This Plan. If it does, [Organization responsible for COB administration ] may pay
that amount to the organization that made that payment. That amount will then be treated
as though it were a benefit paid under “This Plan”. [Organization responsible for COB
administration ] will not have to pay that amount again. The term "payment made"
includes providing benefits in the form of services, in which case "payment made" means
the reasonable cash value of the benefits provided in the form of services.
RIGHT OF RECOVERY
If the amount of the payments made by [Organization responsible for COB
administration ] is more than it should have paid under this COB provision, it may
recover the excess from one or more of the persons it has paid or for whom it has paid;
or any other person or organization that may be responsible for the benefits or services
provided for the covered person. The "amount of the payments made" includes the
reasonable cash value of any benefits provided in the form of services.
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APPENDIX B. CONSUMER EXPLANATORY BOOKLET
COORDINATION OF BENEFITS
IMPORTANT NOTICE
This is a summary of only a few of the provisions of your health plan
to help you understand coordination of benefits, which can be very
complicated. This is not a complete description of all of the
coordination rules and procedures, and does not change or replace
the
language
contained
in
your
insurance
contract,
which
determines your benefits.
Double Coverage
It is common for family members to be covered by more than one group health care
plan. This happens, for example, when a husband and wife both work and choose to have
family coverage through both employers.
When you are covered by more than one group health plan, state law permits your
insurers to follow a procedure called “coordination of benefits” to determine how much each
should pay when you have a claim. The goal is to make sure that the combined payments of
all plans do not add up to more than your covered health care expenses.
Coordination of benefits (COB) is complicated, and covers a wide variety of
circumstances. This is only an outline of some of the most common ones. If your situation is
not described, read your evidence of coverage or contact your state insurance department.
Primary or Secondary?
You will be asked to identify all the plans that cover members of your family. We
need this information to determine whether we are the “primary” or “secondary” benefit
payer. The primary plan always pays first when you have a claim.
Any plan that does not contain your state’s COB rules will always be primary.
When This Plan is Primary
If you or a family member are covered under another plan in addition to this one, we
will be primary when:
Your Own Expenses
•
The claim is for your own health care expenses, unless you are covered by
Medicare and both you and your spouse are retired.
Your Spouse’s Expenses
•
The claim is for your spouse, who is covered by Medicare, and you are not both
retired.
Your Child’s Expenses
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•
The claim is for the health care expenses of your child who is covered by this plan
and
•
You are married and your birthday is earlier in the year than your
spouse’s or you are living with another individual, regardless of whether
or not you have ever been married to that individual, and your birthday
is earlier than that other individual’s birthday. This is known as the
“birthday rule”;
or
•
You are separated or divorced and you have informed us of a court decree
that makes you responsible for the child’s health care expenses;
or
•
There is no court decree, but you have custody of the child.
Other Situations
We will be primary when any other provisions of state or federal law require us to be.
How We Pay Claims When We Are Primary
When we are the primary plan, we will pay the benefits in accordance with the terms
of your contract, just as if you had no other health care coverage under any other
plan.
How We Pay Claims When We Are Secondary
We will be secondary whenever the rules do not require us to be primary.
How We Pay Claims When We Are Secondary
When we are the secondary plan, we do not pay until after the primary plan has paid
its benefits. We will then pay part or all of the allowable expenses left unpaid, as
explained below. An “allowable expense” is a health care expense covered by one of
the plans, including copayments, coinsurance and deductibles.
•
If there is a difference between the amounts the plans allow, we will base our
payment on the higher amount. However, if the primary plan has a contract with
the provider, our combined payments will not be more than the amount called for
in our contract or the amount called for in the contract of the primary plan,
whichever is higher. Health maintenance organizations (HMOs) and preferred
provider organizations (PPOs) usually have contracts with their providers.
•
We will determine our payment by subtracting the amount the primary plan paid
from the amount we would have paid if we had been primary. We may reduce our
payment by any amount so that, when combined with the amount paid by the
primary plan, the total benefits paid do not exceed the total allowable expense for
your claim. We will credit any amount we would have paid in the absence of your
other health care coverage toward our own plan deductible.
•
If the primary plan covers similar kinds of health care expenses, but allows
expenses that we do not cover, we may pay for those expenses.
•
We will not pay an amount the primary plan did not cover because you did not
follow its rules and procedures. For example, if your plan has reduced its benefit
because you did not obtain pre-certification, as required by that plan, we will not
pay the amount of the reduction, because it is not an allowable expense.
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Questions About Coordination of Benefits?
Contact Your State Insurance Department
_____________________________