OLR Bill Analysis
AN ACT MAKING REVISIONS TO THE CHARTER OAK HEALTH PLAN.
This bill makes several changes in the law governing the Charter Oak Health Plan (COHP), a health insurance program established in 2007 and scheduled to be operational on July 1, 2008. Specifically, it:
1. eliminates the minimum amount of time that program participants must be uninsured to qualify (“crowd-out”),
2. requires COHP to include comprehensive mental health coverage that is consistent with the state's mental health parity law as it applies to group health insurance plans,
3. requires any insurer that participates in COHP to have internal and external appeals processes that are consistent with the state's insurance laws,
4. requires the entities authorized to participate in COHP to be licensed by the Insurance Department if any state law requires the licensure,
5. exempts certain preferred provider networks from the law's minimum reserve requirements,
6. requires the state comptroller to contract with an independent actuary to determine COHP's feasibility and sustainability, and
7. requires reports on COHP's implementation.
The bill makes a technical, conforming change.
EFFECTIVE DATE: July 1, 2008
ELIMINATION OF CROWD OUT
The bill eliminates the requirement that an individual be uninsured for at least six months before he or she can qualify for COHP benefits. It retains the requirement that the individual is uninsured and ineligible for “other publicly funded” health insurance plans (e. g. , Medicaid).
MENTAL HEALTH PARITY
The bill requires the Department of Social Services (DSS) commissioner to ensure that the plan includes comprehensive mental health coverage, which must be consistent with the state's mental health parity law as it pertains to group health insurance plans.
Under the parity law, no group insurance policy can establish any terms, conditions, or benefits that place a greater financial burden on an insured person for accessing services to diagnose or treat “mental or nervous” conditions than it would for medical, surgical, or other physical health conditions (see BACKGROUND).
By law, each insurer that participates in COHP must provide an internal grievance process that plan members can use when they have been denied coverage. By law, the person denied coverage can request, and the insurer must provide, a review of the coverage denial. The bill requires this process to be consistent with the law governing utilization review companies, which includes notification standards and time frames (see BACKGROUND).
The bill also requires COHP to have an external appeals process that is consistent with the process prescribed in the managed care law. That law allows an enrollee in a managed care plan who has exhausted the plan's internal review process to appeal to the insurance commissioner any denial of a claim, either based on medical necessity or a determination not to certify an admission, services, procedure, or extension of stay. An enrollee must file an external appeal within 60 days of receiving a final denial.
The bill requires the COHP insurer to comply with the law's notification and other requirements of the external appeals process (see BACKGROUND).
LICENSURE REQUIRED; RESERVE FUND EXEMPTION
The law permits the DSS commissioner to contract with HMOs, a consortium of federally qualified health centers (FQHC), other community-based health care providers that are state-funded, or other consortia of health care providers to provide services to COHP enrollees. The commissioner must certify them to participate in the plan, in accordance with any criteria he establishes, including minimum reserve fund requirements. The bill requires these entities to have an Insurance Department license if any state law requires such.
The bill specifies that the law governing preferred provider networks that requires the networks to (1) have a minimum net worth and (2) maintain a reserve fund used exclusively to pay any outstanding amounts due to providers does not apply to a state-funded FQHC consortium that provides services only to recipients of programs that DSS administers (see BACKGROUND). (DSS currently administers the State Administered General Assistance (SAGA) program through a contract with an FQHC consortium. )
COMPTROLLER—ACTUARIAL ANALYSES OF CHARTER OAK
The bill requires the comptroller to contract with an independent actuary to analyze the feasibility and sustainability of the COHP. The initial analysis must be completed no later than 30 days before the plan is implemented and semiannually thereafter.
The bill requires the actuary to report his or her findings and make recommendations related to COHP's design, pricing, and sustainability, to the Human Services Committee and DSS.
The bill also requires DSS to submit monthly reports to the Medicaid Managed Care Council on COHP and its implementation, which must include information on costs and care utilization.
And it requires each participating health care entity to report the following to the Human Services Committee and DSS at least quarterly: (1) member enrollment for each month in the quarter; (2) service utilization by category, individual members, and age cohorts; and (3) financial data on expenditures, which must include, at a minimum, subcontractor capitation payments and medical expenses by service category.
PA 07-2, June Special Session, established COHP, and permitted DSS to enter into contracts to provide comprehensive health care for the uninsured. The act allows DSS to charge cost sharing, as well as establish a $ 1 million lifetime benefit. And it provides premium assistance for individuals with incomes less than 300% of the federal poverty level (currently $ 52,800 for a family of three).
The commissioner must determine minimum requirements for COHP benefits' amount, duration, and scope, which cannot include a pre-existing condition exclusion. It is effective on July 1, 2008.
DSS issued a request for proposals earlier this year.
Mental Health Parity (CGS § 38a-514)
The law defines “mental or nervous conditions” as mental disorders, as used in the American Psychiatric Association's most recent Diagnostic and Statistical Manual of Mental Disorders, DSM-IV-TR (fourth edition, text revision). It specifically excludes (1) mental retardation; (2) learning, motor skills, communication, and caffeine-related disorders; (3) relational problems; and (4) additional conditions not otherwise defined as mental disorders in the DSM-IV-TR.
The law permits, based on certain conditions, coverage for services provided by psychologists, social workers, marital and family therapists, alcohol and drug counselors, and residential treatment facilities.
Utilization Review Companies-Internal Appeals (CGS § 38a-266c)
The law establishes minimum standards for companies that perform utilization review on behalf of insurers. For example, it requires the companies to notify providers and enrollees, in writing, within two business days of receiving all of the information necessary to complete their review. It requires determinations not to certify admissions, services, procedures, or extended stays to include, in writing, the principal reasons for the denial, and the procedures to initiate an internal appeal and an appeal to the insurance commissioner. And it requires final determinations to include, in writing, the principal reasons for the denial, a statement that all internal appeal mechanisms have been exhausted, and a copy of the application and procedures for filing appeals with the insurance commissioner.
External Appeals (CGS § 38a-478n)
The law gives enrollees who have exhausted the internal appeals process provided by managed care plans, insurers, or preferred provider utilization review companies the right to appeal to the insurance commissioner. They must file a written request no later than 60 days after receiving the denial notice, and pay a $ 25 filing fee, which is refunded if they win their appeal. And it prescribes timeframes for responding to requests for information from the commissioner. The commissioner assigns the appeals to a review entity.
Preferred Provider Network (PPN) Minimum Reserve Requirements (CGS § 38a-479aa)
Preferred provider networks (PPNs), which are not managed care organizations, (1) pay claims for health care service delivery; (2) accept financial risk for the delivery; and (3) establish, operate, or maintain arrangements or contracts with providers. They are subject to Insurance Department regulation. By law, each PPN must maintain a minimum net worth of either (1) the greater of $ 250,000 or 8% of annual expenditures or (2) an amount the insurance commissioner prescribes. In addition, they must maintain or arrange for a letter of credit, bond, surety, reinsurance, reserve, or other financial security that the commissioner approves for the exclusive use of paying any outstanding amounts owed participating providers in the event of insolvency or nonpayment. At a minimum, this must be the greater of (1) an amount sufficient to pay providers for two months, (2) the actual outstanding amount owed providers, or (3) an amount the commissioner determines. This amount can be credited against the minimum net worth requirement.
sHB 5618 (File 338), reported by the Human Services Committee, mandates that any contracts that DSS enters into to purchase insurance for Medicaid and HUSKY recipients be separate and independent from any contract for providing health care services under COHP.
Human Services Committee
Joint Favorable Substitute Change of Reference