May 17, 1983
CIRCULAR LETTER NO. 9, 1983
TO: ALL SELF-INSURERS AND INSURERS LICENSED TO WRITE AUTOMOBILE INSURANCE IN NEW YORK STATE
RE: INTERIM CLAIM AND PREMIUM BILLING PROCEDURES DURING PENDENCY OF LITIGATION CHALLENGING FEDERAL RULE (48 FED. REG. 14,802) WHICH DENIES MEDICARE PAYMENTS TO NO-FAULT APPLICANTS
The federal Medicare Program (Title XVIII of the Social Security Act, 42 U.S.C. ss 1395, et seq.) provides hospital insurance and supplementary medical insurance protection to the aged and disabled.
Section 953 of the Omnibus Reconciliation Act of 1980 amended the Medicare statute to provide that Medicare payments "may not be made with respect to any item or service to the extent that payment has been made, or can reasonably be expected to be made (as determined in accordance with regulations), with respect to such item or service, ... under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance." 42 U.S.C. § 1395y (b) (1) (emphasis added).
The Health Care Financing Administration (HCFA) on April 5, 1983 published a Final Rule at 48 Fed. Reg. 14,802 which purports to implement § 953 of the Omnibus Reconciliation Act of 1980. The Final Rule provides that payment of Medicare benefits "... may not be made for services covered under an automobile medical or no-fault insurance policy or plan even though State law or the insurance policy or plan states that its benefits are secondary to Medicare's or otherwise excludes or limits its payments if the injured party is also entitled to Medicare benefits."
The final Rule became effective on May 5, 1983 and applies to services that are furnished on or after June 6, 1983 as a result of accidents that occurred on or after December 5, 1980.
The Superintendent of Insurance and the Attorney General plan to commence an action on behalf of the people of the State of New York to have the Final Rule declared illegal. Other States and interested parties are expected to intervene. During the pendency of the litigation payments to applicants and health providers by no-fault insurers and self-insurers should not be delayed, interrupted or withheld.
1. For accidents which occurred prior to December 5, 1980, there are no changes in claim procedures- Medicare is still primary.
2. For accidents which occurred on and after December 5, 1980 and for which health services were provided prior to June 6, 1983, there are also no changes in claim procedures - Medicare is still primary.
3. For accidents on and after December 5, 1980 for which health services are provided on or after June 6, 1983, during the pendency of the litigation, all no-fault insurers and self-insurers shall process and pay claims of motor vehicle accident victims otherwise eligible for Medicare as if Medicare did not exist. Charges for and payments of such claims shall be made in accordance with the fee schedules promulgated pursuant to Section 678 of the Insurance Law.
Insurers and self-insurers may wish to formally advise HCFA that payments on behalf of Medicare eligibles are being made contingent upon the outcome of the litigation and that reimbursement will be expected if the litigation is successful. The Department takes no position on the legal obligations of HCFA.
PREMIUM BILLING PROCEDURES
In accordance with Circular Letter 13 (1977) insurers filed rating rules which, in substance, granted a 40% discount to Medicare eligibles. During the pendency of the litigation insurers shall elect to uniformly follow one of the procedures below with respect to the discount for all of their voluntary and assigned risk business:
1. Insurers may bill all Medicare eligibles without granting the Medicare discount, provided that with the billing a clear explanation is furnished the insured, which describes the reason for the provisional elimination of the discount and states that the insurer will return or credit the additional payment if the litigation is successful. A premium billing which reflects the provisional elimination of the Medicare discount may be rendered for outstanding policies on a pro rata basis from June 6, 1983 to termination of the policy and thereafter; OR insurers may choose to reflect elimination of the discount on new and renewal business only. Insurers which elect to render pro rata billings may select a non-discriminatory dollar threshold below which they will not bill.
2. Alternatively, insurers may choose not to eliminate the Medicare discount during the pendency of the litigation. In such case, insurers must notify their insureds that, should the litigation fail to overturn the Final Rule, insureds will be billed retroactively to June 6, 1983 for the amount of the Medicare discount applied to their policies.
RATES AND RATING RULE FILINGS
Insurers should not file any proposed change in rates or rating rules relating to the Medicare offset, since it is the Department's position that the procedures herein described do not involve a change in rates or rating rules and hence do not require the prior approval of the Department. Insurers may thus send supplementary information to their underwriters or producers without Department approval, to implement or explain the substance of this Circular Letter.
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Insurers shall convey the substance of this Circular Letter to all claims and other personnel responsible for its implementation.
Insurers shall acknowledge receipt of this Circular Letter and advise the Department which of the alternative billing procedures specified above they will follow. Replies should be sent before June 15, 1983 to:
Sandra M. Siegel
State of New York Insurance Department
2 World Trade Center
New York, NY 10047
Very truly yours,
JAMES P. CORCORAN
Superintendent of Insurance