PRINTER'S NO. 3455
No. 2624 Session of 1992
INTRODUCED BY REINARD, CLARK, JOHNSON, DEMPSEY, FARGO, TRELLO,
MICOZZIE, STEELMAN, BELFANTI, CARLSON, M. N. WRIGHT, HECKLER,
HERMAN, NAHILL, HARLEY, SAURMAN, GANNON, CLYMER, WOGAN,
JOSEPHS, MAIALE, McCALL, STABACK, SEMMEL, BUTKOVITZ, KENNEY,
D. W. SNYDER, KING, McHUGH, E. Z. TAYLOR, PETRONE AND
MARSICO, MAY 4, 1992
REFERRED TO COMMITTEE ON AGING AND YOUTH, MAY 4, 1992
AN ACT
1 Establishing the Partnership for Long-Term Care Program to be
2 administered by the Department of Public Welfare; providing
3 for long-term care insurance and for the protection of
4 certain assets; providing for coordination with the Medicaid
5 program; providing for additional duties of the Insurance
6 Department in relation to the precertification of certain
7 policies offered by private insurers; and providing for
8 additional duties of the Department of Aging.
9 TABLE OF CONTENTS
10 Chapter 1. Preliminary Provisions
11 Section 101. Short title.
12 Section 102. Definitions.
13 Chapter 3. Long-Term Care Program
14 Section 301. Definitions.
15 Section 302. Establishment.
16 Section 303. General description of program.
17 Section 304. Protection of resources and income.
18 Section 305. Regulations.
19 Section 306. Department of Aging.
1 Section 307. Acceptance of funding.
2 Chapter 5. Insurance Provisions
3 Section 501. Definitions.
4 Section 502. Criteria for precertification in general.
5 Section 503. Specific conditions for precertification.
6 Section 504. Insurer documentation and reporting.
7 Section 505. Maintaining auditing information.
8 Section 506. Reporting on asset protection.
9 Section 507. Service summary.
10 Section 508. Plan of action.
11 Section 509. Auditing and correcting deficiencies in insurer
12 recordkeeping.
13 Chapter 11. Miscellaneous Provisions
14 Section 1101. Severability.
15 Section 1102. Repeals.
16 Section 1103. Effective date.
17 The General Assembly of the Commonwealth of Pennsylvania
18 hereby enacts as follows:
19 CHAPTER 1
20 PRELIMINARY PROVISIONS
21 Section 101. Short title.
22 This act shall be known and may be cited as the Long-Term
23 Care Act.
24 Section 102. Definitions.
25 The following words and phrases when used in this act shall
26 have the meanings given to them in this section unless the
27 context clearly indicates otherwise:
28 "Activities of daily living (ADL's)." Includes each of the
29 following items: dressing, bathing, eating, feeding, toileting
30 and transferring from bed to chair. In each instance, an ADL
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1 deficiency is determined by reference to the need for human
2 assistance in performing that activity.
3 "Asset protection." The right extended by this act to
4 persons purchasing precertified long-term care insurance
5 policies to retain amounts of assets equal to the sum of
6 qualifying insurance payments made on their behalf in
7 determining eligibility for the Medicaid program.
8 "Authorized agent." Includes a guardian, conservator or any
9 other person designated in writing to the insurance company.
10 "Coordination, assessment and monitoring agency" or "CAM
11 agency." An agency approved as such by the Department of Public
12 Welfare.
13 "Family member." A person's husband, wife, natural parent,
14 child or sibling, adopted child or parent, stepparent,
15 stepchild, stepbrother, stepsister, father-in-law, mother-in-
16 law, son-in-law, daughter-in-law, brother-in-law, sister-in-law,
17 grandparent or grandchild.
18 "Folstein mini-mental state examination." A method for
19 clinicians to grade the cognitive state of patients.
20 "Insured event." For the purposes of determining asset
21 protection for a privately insured individual, any one of the
22 following criteria must be satisfied:
23 (1) the individual has a documented need for substantial
24 human assistance or supervision with two or more of the
25 following activities of daily living: dressing, bathing,
26 eating, feeding, toileting and transferring;
27 (2) the individual has been assessed using the mental
28 status questionnaire and has failed to answer correctly at
29 least seven of the ten questions on the test; or
30 (3) the individual exhibits specific behavior problems
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1 requiring daily supervision, including, but not limited to,
2 wandering, abusive or assaultive behavior, poor judgment or
3 uncooperativeness which poses a danger to self or others and
4 extreme or bizarre personal hygiene habits, and has either
5 taken the MSQ and failed to answer correctly at least four
6 questions or has taken the Folstein mini-mental state
7 examination and achieved a score of 23 or lower.
8 "Long-term care insurance policy." An insurance policy
9 authorized for sale by the Insurance Department under this act
10 and the regulations promulgated hereunder.
11 "Mental status questionnaire (MSQ)." The short portable
12 questionnaire comprised of ten questions.
13 "Plan of care." A written individualized plan of community
14 services, including, but not limited to, community-based
15 services, which specifies the type and frequency of all services
16 required to maintain the individual in the community, the
17 service providers and the cost of services, regardless of
18 whether or not there is an actual charge for the service.
19 "Policyholder." The certificateholder of a group long-term
20 care insurance policy or a precertified group long-term care
21 insurance policy as well as the owner of an individual long-term
22 care insurance policy or a precertified individual long-term
23 care insurance policy.
24 "Precertified long-term care insurance policy" or
25 "precertified policy." A long-term care insurance policy issued
26 for delivery to any resident of this Commonwealth which is
27 designed to provide, within the terms and conditions of the
28 policy, contract or certificate, benefits on an expense-
29 incurred, indemnity or prepaid basis for necessary care or
30 treatment of an injury, illness or loss of functional capacity
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1 provided by a certified or licensed health care provider in a
2 setting other than an acute care hospital, for at least one year
3 and is precertified for sale to Commonwealth residents by the
4 Insurance Department under this act.
5 "Service summary." A written summary prepared by an insurer
6 for an individual policyholder which identifies the specific
7 precertified policy, the total benefits paid for services
8 rendered to date and the amount qualifying for asset protection.
9 CHAPTER 3
10 LONG-TERM CARE PROGRAM
11 Section 301. Definitions.
12 The following words and phrases when used in this chapter
13 shall have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Department." The Department of Public Welfare of the
16 Commonwealth.
17 Section 302. Establishment.
18 There is hereby established the Long-Term Care Program to be
19 administered by the Department of Public Welfare with the
20 assistance of the Insurance Department.
21 Section 303. General description of program.
22 Under the program, private insurance and Medicaid funds shall
23 be combined to finance long-term care. Under this program, an
24 individual may purchase a precertified long-term care insurance
25 policy in an amount commensurate with his assets.
26 Notwithstanding any provision of law, the resources of an
27 individual, to the extent those resources are equal to the
28 amount of long-term care insurance benefit payments as provided
29 in section 304, shall not be considered by the department in a
30 determination of any of the following:
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1 (1) His eligibility for Medicaid.
2 (2) The amount of any Medicaid payment.
3 (3) Any subsequent recovery by the Commonwealth of a
4 payment for medical services.
5 Section 304. Protection of resources and income.
6 The department shall appropriate amendments to its Medicaid
7 regulations and Commonwealth plan to allow protection of
8 resources and income pursuant to section 303. This protection
9 shall be provided, to the extent approved by the Federal Health
10 Care Financing Administration, for any purchaser of a
11 precertified long-term care policy delivered, issued for
12 delivery or renewed on or after January 1, 1993. The department
13 shall count insurance benefit payments toward resource exclusion
14 to the extent the payments are for any of the following:
15 (1) Services Medicaid approves or covers for its
16 recipients.
17 (2) The lower of the actual charge and the amount paid
18 by the insurance company.
19 (3) Nursing home care or formal services delivered to
20 insureds in the community.
21 (4) Services provided after the individual meets the
22 coverage requirements for long-term care benefits established
23 by the department.
24 Section 305. Regulations.
25 (a) General rule.--The department shall, in the manner
26 provided by law, promulgate the regulations necessary to carry
27 out this chapter. These shall include all of the following:
28 (1) Regulations amending existing Medicaid regulations
29 and the State Plan to accomplish the resource protection
30 purposes of this chapter.
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1 (2) Regulations relating to determining eligibility of
2 applicants for Medicaid and the coverage requirements for
3 long-term care benefits.
4 (3) Any other regulations necessary to carry out this
5 chapter.
6 (b) Inapplicability of certain laws.--The act of June 25,
7 1982 (P.L.633, No.181), known as the Regulatory Review Act,
8 shall not apply to the promulgation of any regulations of the
9 department as described in this section.
10 Section 306. Department of Aging.
11 The Department of Aging shall establish an outreach program
12 to educate consumers as to the following:
13 (1) The need for long-term care.
14 (2) Mechanisms for financing this care.
15 (3) The availability of long-term care insurance.
16 (4) The asset protection provided under this act.
17 The Department of Aging shall provide public information to
18 assist individuals in choosing appropriate insurance coverage.
19 Section 307. Acceptance of funding.
20 The department shall seek and may accept the foundation and
21 other private source funding and such Federal approvals
22 necessary to carry out the purposes of this act. Each year, on
23 January 1, the department shall report to the General Assembly
24 on the progress of the program. This report shall include the
25 following:
26 (1) The success in implementing the public and private
27 partnership.
28 (2) The number of policies precertified.
29 (3) The number, age and financial circumstances of
30 individuals purchasing precertified policies.
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1 (4) The number of individuals seeking consumer
2 information services.
3 (5) The extent and type of benefits paid under
4 precertified policies that could count toward Medicaid
5 resource protection.
6 (6) Estimates of impact on present and future Medicaid
7 expenditures.
8 (7) Cost-effectiveness of the program.
9 (8) A determination regarding the appropriateness of
10 continuing the program.
11 CHAPTER 5
12 INSURANCE PROVISIONS
13 Section 501. Definitions.
14 The following words and phrases when used in this chapter
15 shall have the meanings given to them in this section unless the
16 context clearly indicates otherwise:
17 "Commissioner." The Insurance Commissioner of the
18 Commonwealth.
19 "Department." The Insurance Department of the Commonwealth.
20 Section 502. Criteria for precertification in general.
21 The department shall only precertify long-term care insurance
22 policies which:
23 (1) alert the purchaser to the availability of consumer
24 information and public education provided by the Department
25 of Aging under section 306;
26 (2) offer the option of home-based and community-based
27 services in lieu of nursing home care;
28 (3) in all home care plans, offer case management
29 services approved by the Department of Public Welfare;
30 (4) offer automatic inflation protection or optional
19920H2624B3455 - 8 -
1 periodic per diem upgrades until the insured begins to
2 receive long-term care benefits;
3 (5) provide for the keeping of records and an
4 explanation of benefit reports on insurance payments which
5 count toward Medicaid resource exclusion; and
6 (6) provide the management information and reports
7 necessary to document the extent of Medicaid resource
8 protection offered and to evaluate the Long-Term Care
9 Program.
10 No policy shall be precertified if it requires prior
11 hospitalization or a prior stay in a nursing home as a condition
12 of providing benefits.
13 Section 503. Specific conditions for precertification.
14 (a) Conditions enumerated.--No long-term care insurance
15 policy may be advertised, solicited or issued for delivery in
16 this Commonwealth as a precertified long-term care policy which
17 does not meet the minimum standards set forth in this section.
18 These are minimum standards and do not preclude the inclusion of
19 other provisions or benefits which are not inconsistent with
20 these standards. The following standards apply to precertified
21 long-term care policies as defined in this act and are in
22 addition to all other requirements of this act. Each company
23 seeking precertification for its long-term care insurance
24 product must:
25 (1) Notify the department in writing as to the method it
26 will use to alert the consumer, prior to any purchase, of the
27 availability of consumer information and public education
28 which is provided by the Department of Aging.
29 (2) Offer the option of or include a provision for home-
30 based and community-based services with a minimum benefit of
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1 one year at issue, in addition to nursing home care. Home-
2 based and community-based services shall include, but not be
3 limited to, medical services provided in the home such as
4 skilled nursing care, physical, occupational, respiratory and
5 speech therapy, other therapeutic services, home health aide
6 services and support services which shall include, but not be
7 limited to, homemaker and adult day-care health services. All
8 home care plans shall include case management services
9 delivered by a coordination, assessment and monitoring
10 agency, approved by the Department of Public Welfare or by a
11 home health care agency approved by the Department of Public
12 Welfare. Case management service shall include, but not be
13 limited to, the development of a comprehensive individualized
14 assessment and care plan and, as needed, coordination of
15 appropriate services and the monitoring of the delivery of
16 those services.
17 (3) Provide a provision for inflation protection which
18 satisfies at least one of the following criteria:
19 (i) The policy covers at least 70% of actual or
20 reasonable charges, where reasonable is defined as not
21 less than 90% of the average private pay rate for that
22 service based on a listing of actual or allowable rates
23 that will be inflated or updated annually by the
24 Department of Public Welfare, and does not include a
25 maximum specified daily indemnity amount or daily limit.
26 (ii) The policy provides for automatic increases in
27 the per diem dollar level, with or without related
28 increases in premiums, in accordance with the Consumer
29 Price Index or at a rate not less than 5% each year over
30 the previous year for each year that the contract is in
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1 force. Premiums shall be based on the age of the
2 policyholder at the time of the issuance of the
3 precertified policy.
4 (iii) The policy provides, on a guaranteed issue
5 basis at premiums based on the age of the policyholder at
6 the time of the issuance of the precertified policy,
7 periodic per diem upgrades which, unless the insured
8 takes positive action to decline them, automatically
9 increase the level of daily coverage to meet or exceed
10 the minimum inflation-adjusted daily benefit, defined as
11 the amount or amounts derived by taking the minimum daily
12 benefits for nursing home care and, where applicable,
13 home-based and community-based services at the time of
14 purchase as specified in paragraph (4) and inflating them
15 by the Consumer Price Index of 5% each year over the
16 previous year for each year that the contract is in
17 force. The schedule of minimum per diem dollar amounts
18 shall be updated and maintained at the department. A
19 precertified policy containing this inflation protection
20 provision will remain precertified as long as the
21 insured's daily benefit amount automatically equals or
22 exceeds the minimum inflation-adjusted daily benefit. The
23 insurer will notify those policyholders choosing the
24 upgrade option when the upgrades automatically are taking
25 effect and what the increased premium, if any, will be.
26 The insurer will also provide to the policyholder at the
27 time of the upgrade the opportunity to decline the
28 upgrade. In addition, the insurer shall notify the
29 policyholder that his insurance policy will lose its
30 precertification at the time the insured's daily benefit
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1 amount is less than the minimum inflation-adjusted daily
2 benefit.
3 (4) At a minimum, issue a product which provides a
4 nursing home benefit of at least $80 a day if issued in 1993
5 or 1994; $84 a day if issued in 1995; $88 a day if issued in
6 1996; $92.50 a day if issued in 1997; and $97 a day if issued
7 in 1998. No policy need pay for care in excess of the actual
8 charges. In addition, those policies issued with home-based
9 and community-based services must provide a home-based and
10 community-based benefit of at least $40 a day if issued in
11 1993 or 1994; $42 a day if issued in 1995; $44 a day if
12 issued in 1996; $46.25 a day if issued in 1997; and $48.50 a
13 day if issued in 1999. No policy need pay for care in excess
14 of the actual charges. Policies issued on an expense-incurred
15 basis shall provide benefits which are equal to at least 70%
16 of the actual or reasonable charges incurred by the insured.
17 Expense-incurred policies need not meet the minimum daily
18 benefit levels described in this paragraph.
19 (5) Use applications to be signed by the applicant which
20 indicate that he:
21 (i) received a general description of this act and
22 related regulations as prepared by the Department of
23 Aging, including that department's toll-free number; and
24 (ii) agrees to the release of information by the
25 insurer to the Commonwealth as may be needed to evaluate
26 this act and document a claim for Medicaid resource
27 protection. This release shall be in the following
28 format:
29 I hereby agree to the release of my insurance
30 records pertaining to this long-term care policy
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1 by the (insert insurance company name) to the
2 Commonwealth of Pennsylvania for the purpose of
3 documenting a claim for asset protection under
4 the State Medicaid program, evaluating the Long-
5 Term Care Act and meeting Medicaid audit
6 requirements.
7 I understand that my records will be used for no
8 purpose other than those stated above and will be
9 kept strictly confidential by the Commonwealth of
10 Pennsylvania.
11 ............................
12 (Signature of Applicant(s))
13 (iii) Received a description regarding mandatory
14 inflation protection that shall be in the following
15 format:
16 NOTICE TO APPLICANT REGARDING
17 MANDATORY INFLATION PROTECTION
18 In order for this long-term care policy to remain
19 precertified by the Commonwealth and qualify to
20 provide asset protection for the State Medicaid
21 program, daily coverage benefits must meet or
22 exceed standards established by the Commonwealth.
23 Depending on the option you choose to
24 automatically inflate daily coverage benefits,
25 premiums may rise over the life of the policy
26 contract. The insurance company will provide you
27 with a graphic comparison showing the differences
28 in premiums and benefits, over at least a 20-year
29 period, between a policy that increases benefits
30 over the policy period and a policy that does not
19920H2624B3455 - 13 -
1 increase benefits. Failure to maintain the
2 required daily coverage benefits will result in
3 the policy losing its precertification status and
4 no longer being allowed to provide asset
5 protection. It is the insurance company's
6 responsibility to automatically inflate daily
7 coverage benefit levels in order to maintain
8 precertification; it is your responsibility to
9 make premium payments in order to maintain
10 precertification.
11 (iv) Received a graphic comparison showing the
12 difference in premiums and benefits, over at least a 20-
13 year period, between a policy that increases benefits
14 over the policy period and a policy that does not
15 increase benefits.
16 (6) All sales involving replacement shall be reported to
17 the commissioner by the replacing insurer within 30 days of
18 the effective date of the newly issued policy or certificate.
19 The report shall include the name and address of the insured,
20 the name of the company whose policy is being replaced and
21 the name of the agent replacing the coverage. For sales
22 involving replacement by an insurer other than a direct
23 response insurer, this report shall also include a comparison
24 of the coverage issued with that being replaced, including a
25 comparison of the premiums and an explanation of how the
26 replacement was beneficial to the insured. If a long-term
27 care policy, whether it be precertified or not, replaces a
28 precertified long-term care insurance policy, the replacing
29 insurer shall waive any time periods applicable to
30 preexisting conditions, waiting periods, elimination periods
19920H2624B3455 - 14 -
1 and probationary periods in the new long-term care policy to
2 the extent such time was spent under the original policy.
3 (7) Issue a product which shall include a provision
4 which allows for a 30-day period within which coverage may be
5 canceled by the applicant by delivering or mailing the
6 evidence of coverage to the insurer or the agent through whom
7 it was effected for a full refund of any premium that was
8 paid. The policy shall have a notice prominently printed on
9 the first page of the policy or certificate or attached
10 thereto stating in substance that the policyholder or
11 certificateholder shall have the right to return the policy
12 or certificate to the insurer or its agent for cancellation
13 within 30 days of its delivery and to have the premium
14 refunded if, after examination of the policy or certificate,
15 the insured person is not satisfied for any reason.
16 (8) Agree to provide to each individual who is denied a
17 precertified long-term care insurance policy, a survey
18 produced by the Commonwealth which the individual would, at
19 his option, complete and return to the department.
20 (9) Issue a product which does not require prior
21 hospitalization or a prior stay in a nursing home as a
22 condition of providing benefits.
23 (10) Provide assurances to the department that no agent
24 will be authorized to market, sell, solicit or otherwise
25 contact any person for the purpose of marketing a
26 precertified long-term care insurance policy unless the agent
27 has completed seven hours of training on long-term care
28 insurance in general and this act specifically. These
29 assurances shall be in the form of a document signed by the
30 agent and a representative of the company attesting to the
19920H2624B3455 - 15 -
1 completion of the required training by the agent and
2 submitted to the department.
3 (11) Issue a product which, in the event the policy is
4 about to lapse, offers the insured the option to switch their
5 coverage to a shorter period of care. The offering must
6 include an option covering a period of care less than or
7 equal to two years but no less than three months. This option
8 need only be offered one time. Premiums shall be based on the
9 age of the policyholder at the time of the issuance of the
10 original precertified policy.
11 (12) Issue a product which in the event a policyholder
12 lapses a precertified policy and retains a nonforfeiture
13 benefit, the policy will maintain its precertification status
14 only so long as the minimum inflation-adjusted daily
15 benefits, as defined in paragraph (3) are met or exceeded or
16 the policy pays at least 70% of actual or reasonable charges,
17 and the total period of covered care is no less than three
18 months for the life of the policy. If at any point while in a
19 nonforfeiture benefit the above criteria are not met, the
20 policy will lose its precertification status.
21 (13) Issue a product which defines the phrase "one
22 period of confinement" as meaning consecutive days of
23 confinement; it shall be deemed to include successive periods
24 of confinement which are due to the same or related cause and
25 are not separated by at least 90 days during which the
26 insured is not confined for either skilled nursing care,
27 custodial, intermediate care or home-based and community-
28 based care.
29 (b) Additional conditions.--
30 (1) Long-term care insurance policies that qualify for
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1 precertification will be required to include a statement on
2 the front page of the policy in bold type and in contrasting
3 color to the effect that the policy has been precertified and
4 provides Medicaid asset protection under this act.
5 (2) Conversely, long-term care insurance policies that
6 do not meet precertification standards must include a
7 statement on the front page of the policy in bold type and in
8 contrasting color to the effect that the policy does not
9 qualify for Medicaid asset protection.
10 (3) Long-term care insurance policies in force at the
11 effective date of this act may be amended to qualify for
12 precertification by fulfilling all precertification
13 requirements.
14 (c) Rules and regulations.--The department may, in the
15 manner provided by law, promulgate the rules and regulations it
16 deems desirable to carry out this chapter, consistent with the
17 purposes of this act.
18 Section 504. Insurer documentation and reporting.
19 (a) Scope of section.--Unless otherwise noted, the
20 requirements of this section refer to insurer documentation and
21 reporting requirements for precertified policies.
22 (b) Registering new insureds.--Each insurer shall maintain a
23 registry and submit to the department a report on a quarterly
24 basis that will include the following information on all
25 individuals who purchased a precertified policy during that
26 quarter:
27 (1) Name, address, date of birth, sex, telephone number
28 and Social Security number.
29 (2) Date and type of policy purchased, nursing home only
30 or nursing home and home care, and any applicable elimination
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1 period.
2 (3) Maximum daily benefits for institutional and
3 noninstitutional services covered by the policy.
4 (4) Maximum length of time and/or maximum dollar amounts
5 for which the policyholder is covered.
6 (5) Options and riders available on the precertified
7 policy in force.
8 (6) Method of inflation protection is in force.
9 (c) Reporting on persons who changed their policies.--Each
10 insurer shall submit to the department a report on an annual
11 basis which includes a list of names, addresses, telephone
12 numbers and Social Security numbers of all persons who changed
13 their coverage during the year, the date the coverage was
14 changed and a description of the new policies as described in
15 subsection (b)(2), (3), (4), (5) and (6).
16 (d) Reporting on persons who dropped their policies.--Each
17 insurer shall submit to the department a report on an annual
18 basis which includes a list of names, addresses, telephone
19 numbers and Social Security numbers of all persons who dropped
20 their policies during the year, the date the policies were
21 dropped and the reasons they were dropped.
22 (e) Reporting on persons who were assessed for long-term
23 care.--Each insurer shall submit to the department a report on a
24 quarterly basis which includes a list of names, addresses,
25 telephone numbers and Social Security numbers of all persons who
26 applied for and were assessed for long-term care benefits, the
27 date the assessment took place and the following information
28 regarding the findings of the assessment:
29 (1) Who performed the assessment and whether the
30 individual was found eligible for long-term care services
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1 according to the terms of the policy and according to the
2 Commonwealth's definition of the insured event.
3 (2) The following items drawn from the individual's
4 assessment:
5 (i) the number of activities of daily living items
6 for which the insured needs human assistance;
7 (ii) the number of incorrect responses made by the
8 insured on the MSQ or insured's score on the Folstein
9 mini-mental test; and
10 (iii) indication of whether the individual exhibits
11 a behavior problem requiring daily supervision.
12 (f) Reporting service delivery.--Each insurer shall submit
13 to the department a report on a quarterly basis which includes
14 the names, addresses, telephone numbers and Social Security
15 numbers of all insured persons who received long-term care
16 services during the quarter and, in addition, the following
17 information regarding those services, on a month-by-month basis
18 during the quarter:
19 (1) The total amount paid by the insurer during the
20 month and a cumulative total.
21 (2) The portion of those payments made by the insurer
22 that count toward asset protection and a cumulative total.
23 (3) The expenditures made by the insurer to or in behalf
24 of the insured during the month for the following services:
25 (i) nursing home;
26 (ii) home health services; and
27 (iii) community-based services.
28 (g) Reporting aggregate information.--Each insurer shall
29 report to the department on a quarterly basis the following
30 aggregate information:
19920H2624B3455 - 19 -
1 (1) The number of applications received during the
2 quarter.
3 (2) The number of persons denied a policy by reason for
4 denial. Reasons for denial to be specified include:
5 (i) application was incomplete;
6 (ii) age was not in allowable range;
7 (iii) medical or health reasons; or
8 (iv) other reasons not included in subparagraphs (i)
9 or (ii).
10 (3) The number of policies purchased during the quarter
11 that included both nursing home care and home health and
12 community-based services.
13 (4) The number of policies purchased during the quarter
14 that included nursing home care only.
15 (5) The number of policyholders who dropped their
16 policies during the quarter by reason.
17 (6) The number of policies in effect at the end of the
18 quarter.
19 Section 505. Maintaining auditing information.
20 (a) General rule.--Each insurer shall maintain information
21 as stipulated in subsection (b) on all policyholders who have
22 ever received any benefit under the policy. This information
23 shall be updated at least quarterly, but this requirement for
24 updating shall not require the conduct of any assessment,
25 reassessment or other evaluation of the policyholder's condition
26 which is not otherwise required by Federal or State law or
27 regulation. When a policyholder who has received any benefit
28 dies or lapses his policy for any other reason, the insurer must
29 retain the stipulated information for at least five years after
30 the time when the policy ceases to be in force. At the time the
19920H2624B3455 - 20 -
1 policy ceases to be in force, the insurer shall notify the
2 policyholder of his right to request his service records as
3 stipulated in subsection (b). The insurer shall also, upon
4 request, provide the policyholder and the policyholder's
5 authorized agent, if any, with a complete copy of the insurer's
6 service records as required in subsection (b). These records
7 shall be provided to the policyholder and policyholder's
8 authorized agent, if any, within 60 days of the request. The
9 insurer shall enclose with the records a statement advising the
10 former policyholder that it is in his interests to retain the
11 records if he may ever wish to establish eligibility for
12 Medicaid.
13 (b) Description of records.--The records required to be
14 maintained, as described in subsection (a), shall include the
15 following:
16 (1) Evidence that the insured event has taken place. The
17 occurrence of the insured event may be documented in any of
18 the following ways:
19 (i) By CAM agency staff, as part of the initial
20 assessment of the client or as part of a subsequent
21 reassessment.
22 (ii) By an assessment conducted by the Department of
23 Public Welfare.
24 (iii) By an assessment of a resident of a skilled
25 nursing facility (SNF) or intermediate care facility
26 (ICF) as required by section 1919(b)(3) of the Social
27 Security Act (Public Law 74-271, 42 U.S.C. § 301 et
28 seq.).
29 (iv) For persons for whom subparagraphs (i) through
30 (iii) are not available or do not provide the required
19920H2624B3455 - 21 -
1 information, by an assessment carried out by or under the
2 supervision of a physician or a registered nurse which is
3 substantially comparable to any of the methods in
4 subparagraphs (i) through (iii). These assessments must
5 be based on direct observations and interviews in
6 conjunction with a medical record review. The physician
7 or registered nurse carrying out or supervising the
8 assessment must sign and certify the completion of the
9 assessment. Each individual who completes a portion of
10 the assessment shall sign and certify as to the accuracy
11 of that portion of the assessment.
12 (2) Description of services provided under the policy as
13 follows:
14 (i) The name, address, phone number and license
15 number, if applicable, of providers.
16 (ii) The amount, date and nature, indicating whether
17 and under which category the service qualifies for asset
18 protection, of services provided.
19 (iii) The dollar amounts paid by the insurer,
20 whether on an indemnity, expense-incurred or other basis.
21 (iv) The charges of the service providers, including
22 copies of invoices for all services counting toward asset
23 protection.
24 (v) Identification of the CAM agency, if applicable,
25 and copies of all assessments and reassessments.
26 (3) In order for home health or community-based services
27 to qualify for asset protection, they must be in accord with
28 a plan of care drawn up by a CAM agency. If the policyholder
29 has received any benefits delivered as part of a plan of
30 care, the insurer must retain all of the following:
19920H2624B3455 - 22 -
1 (i) A copy of the original plan of care.
2 (ii) Copies of the reviews of the plan of care
3 required by the Department of Public Welfare.
4 (iii) Copies of any changes made in the plan of
5 care. The plan of care must document that the changes are
6 required by changes in the client's medical situation,
7 cognitive abilities, behavioral abilities or the
8 availability of social supports. The services shall count
9 toward asset protection after the CAM agency adds the
10 documented need for and description of the new services
11 to the plan of care. In cases when the service must begin
12 before the revisions to the plan of care are made, the
13 new services will only count toward asset protection if
14 the revisions to the plan of care are made within ten
15 business days of the commencement of the new services.
16 Insurers must maintain initial assessments and subsequent
17 reassessments as part of insured event documentation.
18 Section 506. Reporting on asset protection.
19 (a) General rule.--Each insurer shall send an asset
20 protection report at least quarterly to each policyholder who
21 has received any benefits since the last asset protection report
22 sent to the policyholder. Each asset protection report shall
23 include the following information:
24 (1) The amount of asset protection for which the
25 policyholder had qualified prior to the quarter covered by
26 the report.
27 (2) The total benefits paid by the insurer for services
28 rendered during the quarter.
29 (3) A statement of the amount of benefits paid by the
30 insurer for services rendered during the quarter which
19920H2624B3455 - 23 -
1 qualify for asset protection.
2 (4) A summary total of the amount paid to date under the
3 policy which qualifies for asset protection.
4 (b) Audit.--Asset protection reports shall be subject to
5 audit by the Department of Public Welfare under the same
6 requirements as specified in section 508(a)(2), which covers the
7 records in section 505.
8 Section 507. Service summary.
9 Each insurer shall prepare a service summary at the client's
10 request specifically for the purpose of the policyholder
11 applying for Medicaid. Also the insurer shall prepare a service
12 summary when the policyholder has exhausted his benefits under
13 the policy or when the policy ceases to be in force for a reason
14 other than the death of the policyholder, whichever occurs
15 first. The service summary shall identify the specific
16 precertified policy, the total benefits paid for services
17 rendered to date and the amount qualifying for asset protection.
18 This service summary is separate and in addition to the
19 information requirement described in section 505.
20 Section 508. Plan of action.
21 (a) Contents of plan.--Each insurer shall, prior to
22 precertification by the Insurance Department, submit to the
23 Department of Public Welfare a plan for complying with the
24 information maintenance and documentation requirements set forth
25 in this chapter. No policy shall be precertified until the
26 Department of Public Welfare has approved the insurer's
27 documentation plan for the policy. The documentation plan shall
28 include the following:
29 (1) The location where records will be kept. Records
30 required for purposes of this act must be available at one
19920H2624B3455 - 24 -
1 location, which shall be easily available to staff of the
2 Department of Public Welfare and the Insurance Department.
3 (2) The insurer shall agree to give the Department of
4 Public Welfare access to all information described in section
5 505 on an aggregate basis for all policyholders and on an
6 individual basis for all policyholders who have ever received
7 any benefits. Access to information on persons who have not
8 applied for Medicaid is required in order for the Department
9 of Public Welfare to determine if an insurer's system for
10 documenting asset protection is functioning correctly. The
11 Department of Public Welfare shall have the final decision
12 concerning the frequency of access to the data and the size
13 of samples for auditing or other purposes.
14 (3) The name, job title, address and telephone number of
15 the person primarily responsible for the maintenance of the
16 information required and acting as liaison with the
17 Department of Public Welfare concerning the information.
18 (4) Methods for determining when insurance benefits
19 qualify for asset protection, including documentation of the
20 insured event, description of services, documentation of
21 charges and benefits paid and documentation of plans of care
22 when required.
23 (5) Description of manual and electronic systems which
24 will be used in maintaining the required information.
25 (6) Information which will be retained which is needed
26 to comply with these regulations.
27 (7) Copies of forms and descriptions of standard
28 procedures for maintaining and reporting the information
29 required. In the event that all or part of the data will be
30 provided in computer-readable form, the specific medium such
19920H2624B3455 - 25 -
1 as tape, diskette, etc., will be specified in addition to a
2 description of the relevant file.
3 (b) Action by agencies.--When the Department of Public
4 Welfare determines that a plan of action is adequate, it shall
5 advise the Insurance Department and the insurer of that fact in
6 writing. If the Department of Public Welfare determines that
7 there are shortcomings in a plan of action, it shall advise the
8 Insurance Department and the insurer of those shortcomings in
9 writing and shall cooperate with the insurer in efforts to
10 resolve the matter.
11 Section 509. Auditing and correcting deficiencies in insurer
12 recordkeeping.
13 The following represent instances of insurer deficiency,
14 procedures for resolution, asset protection determinations and
15 required penalties:
16 (1) Within one year of the first time that any
17 policyholder of a particular company's policy has met the
18 criteria for the insured event, and as often as the
19 Department of Public Welfare deems necessary thereafter, the
20 Department of Public Welfare shall conduct a systems audit of
21 that company's records. The insurer shall be responsible for
22 advising the Department of Public Welfare when this one-year
23 period has begun. The Department of Public Welfare shall
24 promptly inform each insurer of inaccuracies and other
25 potential problems discovered in its systems audits and shall
26 cooperate with insurers in efforts to correct any problems in
27 the insurer's methods of operation.
28 (2) The Department of Public Welfare shall periodically
29 audit a sample of individual applications to Medicaid of
30 persons who have qualified for asset protection. The
19920H2624B3455 - 26 -
1 Department of Public Welfare shall have the final decision
2 concerning sample sizes and other auditing methods. The
3 Department of Public Welfare shall promptly advise insurers
4 of any problems discovered and shall cooperate with insurers
5 in efforts to correct any problems in the insurer's methods
6 of operation. The Department of Public Welfare shall also
7 notify the insurer of any obligations described in this
8 subsection to hold clients harmless.
9 (i) The Department of Public Welfare may enter into
10 voluntary arrangements with offerors of precertified
11 long-term care insurance policies under which the
12 Department of Public Welfare would issue binding
13 determinations as to whether or not services qualify for
14 asset protection.
15 (ii) Policyholders may submit requests for
16 information and advice through their insurer or CAM
17 agency. When the procedures described below are followed
18 in all material respects, the written determinations of
19 the Department of Public Welfare's designee concerning
20 whether services qualify for asset protection shall be
21 binding upon the Department of Public Welfare in all
22 subsequent actions, and the Department of Public Welfare
23 shall not make any assertion contradicting these
24 determinations in any action arising in this paragraph.
25 (A) All requests for determinations as to
26 whether or not services qualify for asset protection
27 shall be submitted to the Secretary of Public
28 Welfare's designee in writing. These requests may
29 include but are not limited to requests for
30 determinations in the following areas:
19920H2624B3455 - 27 -
1 (I) Whether the insured event has occurred
2 and has been adequately documented.
3 (II) Whether a care plan is required.
4 (III) Whether a revision of a care plan is
5 required.
6 (IV) Whether a service or services is in
7 accord with the care plan.
8 (V) Whether a service is of such a nature as
9 to qualify for asset protection as defined by the
10 department.
11 (VI) Whether the applicable amount is the
12 amount paid by the insurer or the amount charged
13 for the service.
14 (VII) Whether a provider or proposed
15 provider of service is a family member as defined
16 by the department.
17 (B) The Secretary of Public Welfare's designee
18 may require insurers and CAM agencies submitting
19 requests for determinations to provide all records
20 and other information necessary for making a
21 determination. These may include, but not necessarily
22 be limited to, assessments, care plans and invoices
23 for services rendered. The party providing the
24 records and other information shall be responsible
25 for their accuracy. If any records or other
26 information are later determined to be materially
27 inaccurate, the determination based on the inaccurate
28 information shall not be binding on the Department of
29 Public Welfare in subsequent actions. In the case of
30 a policyholder for whom a determination has been
19920H2624B3455 - 28 -
1 invalidated because information provided was
2 determined to be inaccurate, the provisions of this
3 subsection will apply in the same manner as for any
4 other policyholder.
5 (C) The Secretary of Public Welfare's designee
6 shall render a determination on each request in
7 writing. Each determination of the designee shall
8 state the reasons for the determination, including
9 the relevant facts, documentation of facts, statutes,
10 regulations and policies.
11 (D) A copy of all determinations of the designee
12 shall be kept on file at the Department of Public
13 Welfare, together with the related records and
14 information. The original of the determination shall
15 be sent to the insurer or the CAM agency who
16 originally requested it. The recipient of the
17 original determination shall be responsible for
18 notifying the policyholder or the policyholder's
19 authorized agent.
20 (3) When an audit or other review by the Department of
21 Public Welfare reveals deficiencies in the recordkeeping
22 procedures of an insurer, the Department of Public Welfare
23 shall so notify that insurer and establish a reasonable
24 deadline for correction. If an insurer fails to correct
25 deficiencies within a reasonable period of time, the
26 Department of Public Welfare will notify the Insurance
27 Department of the deficiencies.
28 (4) The commissioner shall reserve the right to remove
29 precertification status of long-term care insurance policies
30 when deemed necessary. If the Insurance Department removes
19920H2624B3455 - 29 -
1 precertification status from a long-term care insurance
2 policy, policyholders who purchased their policies while the
3 policy was precertified will retain their right to asset
4 protection. Policyholders who purchase their policies after
5 the removal of precertification status will have no right to
6 asset protection.
7 (5) If an insurer prepares a service summary which is
8 used in a Medicaid application for a policyholder and the
9 policyholder is found eligible for Medicaid, but after
10 receiving Medicaid services, the policyholder is found to be
11 ineligible for Medicaid solely by reason of errors in the
12 insurer's service summary or documentation of services, the
13 Department of Public Welfare may require the insurer to pay
14 for services counting toward asset protection required by the
15 policyholder until the insurer has paid an amount equal to
16 the amount of the insurer's errors; after which, the
17 policyholder, if otherwise eligible, shall qualify for
18 Medicaid coverage.
19 (6) If the Department of Public Welfare determines that
20 an insurer's records pertaining to a policyholder who has
21 received Medicaid benefits are in such condition that the
22 Department of Public Welfare cannot determine whether the
23 policyholder qualifies for asset protection, the Department
24 of Public Welfare may require the insurer to pay for services
25 counting toward asset protection required by the policyholder
26 until the insurer has paid an amount equal to the amount of
27 the insurer's errors; after which, the policyholder, if
28 otherwise eligible, shall qualify for Medicaid coverage.
29 (7) Compliance with paragraphs (5) and (6) is a
30 requirement for a policy to retain precertification.
19920H2624B3455 - 30 -
1 CHAPTER 11
2 MISCELLANEOUS PROVISIONS
3 Section 1101. Severability.
4 The provisions of this act are severable. If any provision of
5 this act or its application to any person or circumstance is
6 held invalid, the invalidity shall not affect other provisions
7 or applications of this act which can be given effect without
8 the invalid provision or application.
9 Section 1102. Repeals.
10 All acts and parts of acts are repealed insofar as they are
11 inconsistent with this act.
12 Section 1103. Effective date.
13 This act shall take effect in 60 days.
C17L40DGS/19920H2624B3455 - 31 -