PROPOSED RULES
INSURANCE COMMISSIONER
Original Notice.
Preproposal statement of inquiry was filed as WSR 00-12-085.
Title of Rule: These rules set standards for the mandatory offering of prescription drug benefits and maternity care under individual health plans and set conforming standards for similar benefits under group plans.
Purpose: Various provisions of the insurance code prohibit discrimination against insurance consumers. E2SSB 6067 requires prescription drug benefits and maternity coverage to be included in individual health plans. These rules provide guidance in the design and offering of these benefits by prohibiting unfair discrimination. In addition, standards for such benefits are extended to group plans to ensure uniform treatment of such benefits in all health plans.
Statutory Authority for Adoption: RCW 48.02.060, 48.20.450, 48.20.460, 48.30.010, 48.44.020, 48.44.022, 48.44.023, 48.44.050, 48.44.080, 48.46.030, 48.46.060, 48.46.064, 48.46.066, 48.46.200, 48.46.243, 48.92.140.
Statute Being Implemented: ESSB 6067 and RCW 48.43.041, 48.44.020, and 48.46.060.
Summary: Prescription drug benefits required for individual health plans under E2SSB 6067 and offered in group health plans may not be designed to discriminate on the basis [of] sex, race, marital status, national origin, or the presence of any sensory, mental, or physical disability. Maternity benefits required for individual health plans under E2SSB 6067 and offered in group health plans may not exclude pregnancy related services and may not limit coverage in a manner that is not [no information supplied by agency].
Reasons Supporting Proposal: Various provisions of the insurance code prohibit discrimination against insurance consumers. E2SSB 6067 requires prescription drug benefits and maternity coverage to be included in individual health plans. These rules provide guidance in the design and offering of these benefits by prohibiting unfair discrimination. In addition, standards for such benefits are extended to group plans to ensure uniform treatment of such benefits in all health plans.
Name of Agency Personnel Responsible for Drafting and Implementation: William J. Hagens, P.O. Box 40255, Olympia, WA, (360) 586-5597; and Enforcement: Carol Sureau, P.O. Box 40259, Olympia, WA (360) 407-0048.
Name of Proponent: Deborah Senn, Insurance Commissioner, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: Health carriers offering or issuing an individual or group health plan providing coverage for maternity services cannot exclude medically necessary consultations, examinations, radiology, laboratory, anesthesia, hospitalization and medical care for pregnancy-related health conditions. Carriers may not impose limitations on maternity coverage that are not imposed for other health services. Health carriers offering or issuing prescription drug benefits in the group market cannot discriminate in the development of drug formularies on the basis of sex, race, marital status, national origin, or the presence of any sensory, mental, or physical disability, nor may a carrier develop a drug formulary in a manner which has the effect of excluding health conditions that the carrier is otherwise prohibited by law from excluding. This requirement would specifically require carriers to cover prescription contraceptives; since, to exclude such contraceptives would be impermissible sex discrimination. Together these rules are intended to prevent unfair discrimination and in particular, discrimination against women.
Proposal does not change existing rules.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Is the rule required by federal law or federal regulation? This rule is not required by federal law or regulation.
What industry is affected by the proposed rule? The industry codes affected by the proposed rules include Hospital and Medical Service Plans, industry code #6324 and health plans offered by Accident and Health Insurers, industry code #6321. In Washington, hospital and medical service plans are called health care service contractors (HCSCs) and health maintenance organizations (HMOs).
List the specific parts of the proposed rule which may impose a cost to business: The rule as proposed has four new sections:
Proposed WAC 284-43-821 Maternity benefits in individual plans, this proposed section restates and clarifies the recently enacted RCW 48.43.041 regarding cost-sharing requirements. This does not mandate a benefit but merely clarifies services that are included when medically necessary in a maternity benefit. Since these services are only to be provided when medically necessary and only when the carrier offers a maternity benefit, it is unlikely that the subsection will actually incur any costs. It is believed that carriers already provide these medically necessary services when they provide a maternity benefit. In some instances, a maternity benefit that did not provide the medically necessary services might be considered deceptive or illusory.
Proposed WAC 284-43-822 Nondiscrimination in prescription drug benefits in individual plans, discrimination is prohibited in the insurance code (for examples, see RCW 48.30.300 and with respect to AIDs specifically WAC 284-90-010). This section clarifies the application of this concept in regards to the prescription drug benefit. It also clarifies the application of cost-sharing agreements. It is not anticipated that costs will result since carriers are not currently allowed to discriminate and the proposed rule allows for cost sharing to the same extent as other covered prescriptions.
Proposed WAC 284-43-823 Maternity benefits in group plans, this section provides parallel language to the medically necessary clarifications in proposed WAC 284-43-821.
Proposed WAC 284-43-824 Nondiscrimination in prescription drug benefits in group plans, this section provides parallel language to the nondiscrimination clarifications in proposed WAC 284-43-821.
What percentage of the industries in the four-digit standard industrial classification will be affected by the rule? The proposed rule would affect 100% of the health plans subject to regulation by the Insurance Commissioner.
Will the rule impose a disproportionately higher economic burden on small businesses within the four-digit classification? The OIC does not believe that any of the regulated entities impacted by these rules are small businesses for the purposes of chapter 19.85 RCW. Nevertheless, the commissioner is committed to keeping costs proportionate for the smaller carriers. The proposed rules do not impose disproportionately higher costs on smaller carriers.
Can mitigation be used to reduce the economic impact of the rule on small businesses and still meet the objectives of the proposed rule? The rule does not include any mitigatory tactics to reduce the specific anticipated costs to small business. The mitigatory measures considered in this rule making apply equally to all carriers. The commissioner encourages any suggestions that can accomplish the goals in a more cost-efficient manner and encourages dialogue with all carriers.
What steps will the commissioner take to reduce the costs of the rule on small businesses? The rule-drafting process will continue and small businesses are invited to comment on any proposed section of the rule and offer suggestions or alternatives. The rule drafters will continue to discuss the proposed rules with industry representatives to discuss methods to reduce any potential costs on smaller carriers. Additionally, the commissioner will provide technical assistance to aid all carriers in understanding and implementing the new rules.
Which mitigation techniques have been considered and incorporated into the proposed rule? The rules are being proposed as early as possible and with a delayed effective date to enable industry to comment on the proposal and have adequate time to prepare any systemic changes necessary to comply with the rules and laws. The rule drafters will continue to discuss the proposed rules with industry representatives to discuss methods to reduce any potential costs.
Which mitigation techniques were considered for incorporation into the proposed rule but were rejected, and why? No mitigation techniques were considered for incorporation and then rejected.
Briefly describe the reporting, record-keeping, and other compliance requirements of the proposed rule: There are no new reporting or record-keeping requirements. Carriers must provide medically necessary services in connection to a maternity benefit if they offer such a benefit that should not expand the benefits currently offered. Carriers cannot discriminate. Carriers are allowed to use the cost sharing arrangements allowed by RCW 48.43.041. These provisions should not create substantive costs due to the rule.
List the kinds of professional services that a small business is likely to need in order to comply with the reporting, record-keeping, and other compliance requirements of the proposed rule: It is not apparent that the rules will occasion the need for any additional staffing or professional services. If carriers or small carriers believe that additional staffing or services are needed due to these rules (and not the underlying statutes), they are encouraged to cite the section that would require the staffing and recommend methods to ameliorate the need if at all possible.
The commissioner will seek to provide whatever technical assistance is necessary to enable any carriers, including the smaller carriers to understand and implement the rule.
Analyze the cost of compliance including, specifically: Cost of equipment: There is no anticipated additional cost of equipment.
Cost of supplies: There is no anticipated cost of supplies attributable to the rule. The disclosure provisions are required by statute.
Cost of labor: It is not anticipated that the rule will be responsible for additional cost of labor. There are always costs associated with reading and comprehending any rule changes but it is believed that these costs are nominal. The OIC does not expect that any additional staff will be required as a result of this rule.
Cost of increased administration: There is no significant anticipated increased cost of administration attributable to the rules. There are no additional filings required. No parallel administrative systems are required to track plans or benefits. The rules should not alter arrangements established in statute and current practice.
Compare the cost of compliance for small business with the cost of compliance for the largest business in the same four-digit classification: The cost of compliance for small business will be proportional for all carriers, large and small. As noted, costs, if any, are traceable to the underlying laws, not these rules. The rules drafters will consider any suggested alternatives that accomplish the goals of the rules while mitigating the costs of compliance, particularly those costs incurred by small businesses.
Have businesses that will be affected been asked what the economic impact will be? The rule drafters have been in on-going discussions with affected carriers regarding implementation since the passage of the law. The rule drafters will continue to discuss the proposed rules with industry representatives to ascertain methods to reduce any potential costs.
How did the commissioner involve small business in the development of the proposed rule? All affected carriers were notified of the beginning of formal rule making by the CR-101, which was mailed to impacted and interested parties in June and posted on the commissioner's website. Comments were solicited in the CR-101.
How and when were affected small businesses advised of the proposed rule? As noted above, the CR-101 for this rule was filed on June 6, 2000. It was mailed to affected and interested parties and posted on the commissioner's website.
A copy of the statement may be obtained by writing to Kacy Brandeberry, P.O. Box 40255, Olympia, Washington 98504-0255, phone (360) 664-3784, fax (360) 664-2782.
Hearing Location: Senate Hearing Room 4, John Cherberg Building, 14th and Water, Olympia, Washington, on December 27, 2000, at 10:00 a.m.
Assistance for Persons with Disabilities: Contact Lori Villaflores by December 26, 2000, TDD (360) 407-0409.
Submit Written Comments to: Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, e-mail KacyB@oic.wa.gov, fax (360) 664-2782, by December 26, 2000.
Date of Intended Adoption: December 28, 2000.
November 22, 2000
William J. Hagens
Deputy Insurance Commissioner
Health Policy
OTS-4516.2
NEW SECTION
WAC 284-43-821
Maternity benefits in individual plans.
(1) Health carriers offering or issuing an individual health plan providing coverage for maternity services shall not exclude medically necessary consultations, examinations, radiology, laboratory, anesthesia, hospitalization and medical care for pregnancy-related services including pregnancy diagnosis; pregnancy prevention; sterilization; therapeutic and voluntary termination of pregnancy; miscarriage; prenatal, delivery and postpartum care; complications of pregnancy; breast feeding; and prenatal testing when medically necessary for the detection of congenital and heritable disorders.
(2) A carrier may not impose benefit waiting periods, limitations, or restrictions on maternity services that are not required for other covered services. A carrier may require cost sharing, such as copayments or deductibles, to the extent that such requirements are imposed for other covered services.
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(1) No health carrier offering or issuing prescription drug benefits in the individual market may discriminate in the development of drug formularies on the basis of sex, race, marital status, national origin, or the presence of any sensory, mental, or physical disability, nor may a carrier develop a drug formulary in a manner which has the effect of excluding health conditions that the carrier is otherwise prohibited by law from excluding.
For example:
(a) Health carriers may not design their health formulary to exclude all drugs for the treatment of AIDS.
(b) Health carriers may not exclude FDA-approved prescription contraceptive drugs and devices. Health carriers are not prohibited from excluding nonprescription drugs and devices, or using closed formularies, provided, however, such formularies shall include oral, implant and injectable contraceptive drugs, intrauterine devices and prescription barrier methods.
(2) A carrier may require cost sharing, such as copayments or deductibles, to the extent that such requirements are imposed for other covered prescriptions.
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(1) Health carriers offering or issuing a group health plan providing coverage for maternity services shall not exclude medically necessary consultations, examinations, radiology, laboratory, anesthesia, hospitalization and medical care for pregnancy-related services including pregnancy diagnosis; pregnancy prevention; sterilization; therapeutic and voluntary termination of pregnancy; miscarriage; prenatal, delivery and postpartum care; complications of pregnancy; breast feeding; and prenatal testing when medically necessary for the detection of congenital and heritable disorders.
(2) A carrier may not impose benefit waiting periods, limitations, or restrictions on maternity services that are not required for other covered services. A carrier may require cost sharing, such as copayments or deductibles, to the extent that such requirements are imposed for other covered services
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(1) No health carrier offering or issuing prescription drug benefits in the group market may discriminate in the development of drug formularies on the basis of sex, race, marital status, national origin, or the presence of any sensory, mental, or physical disability, nor may a carrier develop a drug formulary in a manner which has the effect of excluding health conditions that the carrier is otherwise prohibited by law from excluding.
For example:
(a) Health carriers may not design their health formulary to exclude all drugs for the treatment of AIDS.
(b) Health carriers may not exclude FDA-approved prescription contraceptive drugs and devices. Health carriers are not prohibited from excluding nonprescription drugs and devices, or using closed formularies, provided, however, such formularies shall include oral, implant and injectable contraceptive drugs, intrauterine devices and prescription barrier methods.
(2) A carrier may require cost sharing, such as copayments or deductibles, to the extent that such requirements are imposed for other covered prescriptions.
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