STATUTORY REFERENCE: Sections
3103, 3201, 3221, 4303 and 4308 of the Insurance Law
Chapter 748 of the Laws of 2006, commonly referred to as Timothy’s Law, became
effective on January 1, 2007. The law amends Sections 3221 and 4303 of the Insurance Law
to require coverage for inpatient and outpatient mental health services. This circular
letter is intended to provide guidance to insurers licensed to write accident and health
insurance ("insurers"), Article 43 corporations and HMOs to facilitate the
development and submission of policy forms and rates needed to implement the law, and to
summarize the coverage that is required by Timothy’s Law.
Because there
was less than two weeks between the bill having been signed into law and the law’s
effective date, the Department recognizes the difficulty for insurers, Article 43
corporations and HMOs to timely prepare and submit policy forms and premium rates for
prior approval under Sections 3201 or 4308 of the Insurance Law and offers the following
procedures for implementation of Timothy’s Law. Insurers, Article 43 corporations and
HMOs are expected, pursuant to Section 3103 of the Insurance Law, to administer their
contracts consistently with Timothy’s Law and provide all of the benefits required
under that law for any contract issued, renewed, modified, altered or amended on or after
January 1, 2007.
Implementation Procedures
Notice To Affected Parties
Although the
Department recognizes the difficulty in making timely submissions of the policy forms and
premium rates, policyholders, certificateholders and members should be made generally
aware of the impact of Timothy’s Law on their coverage as soon as possible.
Therefore, pursuant to the Thirty-Eighth Amendment to Regulation 62 (11 NYCRR 52), no
later than February 15, 2007, every insurer, Article 43 corporation and HMO must send
notification to all affected group and school blanket policyholders and certificateholders
or members informing them of the enactment of Timothy’s Law. If permitted by the
group contract, an insurer, Article 43 corporation or HMO may provide notices to the group
policyholder for distribution to the individual certificateholders and members. However,
the insurer, Article 43 corporation or HMO shall nonetheless be responsible for ensuring
that the notice is provided. In addition, an Article 43 corporation must provide notice to
policyholders of individual contracts covering inpatient hospital care. The notice must
describe the key features of the mental health benefits that are required under the new
law. The notice must state that a formal contract and/or certificate amendment will be
forthcoming that will explain the new benefits in greater detail. The notice must also
specify a toll-free customer service telephone number that members may use to contact the
company with any questions regarding their mental health coverage. Since there may be
premium adjustments on policies currently in effect, the notice should advise the
policyholders that their premiums may be adjusted. To assist companies in developing their
notices, a model notice directed to certificateholders and members is attached hereto as
Attachment 1.
Policy Form and Rate Submissions
The
implementation of Timothy's Law will result in premium rate adjustments on many of the
affected contracts. Some contractholders may see an increase in premiums for the
additional coverage provided, while other contractholders, such as small employers, may
see rate reductions due to the State subsidy that will fully cover the cost to small
employers for the new mandated mental health benefits. Each insurer, Article 43
corporation and HMO should review its policy forms and rate manuals for mental health
coverage to determine if a policy form and/or rate submission will be necessary to comply
with Timothy’s Law. If an insurer, Article 43 corporation or HMO does not have the
applicable rates on file for the benefits that must be provided under Timothy's Law, rate
filings must be made in accordance with Sections 3201(c)(3) and 4308(b) of the Insurance
Law. The actuarial memorandum and rate manual pages comprising the rate submission should
include the information set forth in Attachment 2. Failure to submit conforming policy
form and rate submissions by March 15, 2007 will subject the insurer to appropriate
disciplinary action.
To facilitate
the prompt and efficient review and approval of the formal policy form and rate
submissions, the submission should contain a cover letter that clearly identifies the
submission as a "Timothy’s Law" submission and identifies the contracts to
which the submission shall apply, as well as an explanation of how the submission changes
the existing mental health benefit. For filers using the System for Electronic Rate and
Form Filing (SERFF): when creating a SERFF filing, please enter "Timothy’s
Law" prominently in the field entitled "Filing Description."
Contract
amendments and the premium rates associated with the benefit changes should be directed to
Charles Rapacciuolo, Assistant Deputy Superintendent and Chief, Health Bureau, New York
Insurance Department, One Commerce Plaza, Albany, NY 12257. For those submitting files through SERFF, use the website https:/login.serff.com.
Summary of Benefit Requirements under Timothy’s Law
Definitions
Active
treatment is defined as treatment furnished in connection with inpatient confinement
for mental, nervous, or emotional disorders or ailments that meet the standards prescribed
pursuant to the regulations of the commissioner of mental health.
Biologically
based mental illness is defined as a mental, nervous, or emotional disorder caused by
a biological disorder of the brain which results in a clinically significant,
psychological syndrome or pattern that substantially limits the functioning of the person
with the illness. Under the law, the following disorders satisfy the definition of
biologically based mental illness: schizophrenia/psychotic disorders; major depression;
bipolar disorder; delusional disorders; panic disorder; obsessive compulsive disorders,
anorexia and bulimia.
Children with
serious emotional disturbances is defined as those persons under the age of eighteen
years who have a diagnosis of attention deficit disorders, disruptive behavior disorders,
or pervasive development disorders and one or more of the following: serious suicidal
symptoms or other life-threatening self-destructive behaviors; significant psychotic
symptoms (hallucinations, delusion, bizarre behaviors); behavior caused by emotional
disturbances that placed the child at risk of causing personal injury or significant
property damage; or behavior caused by emotional disturbances that placed the child at
substantial risk of removal from the household.
Coverage Requirements
A group or school blanket health insurance policy issued pursuant to
Section 3221 of the Insurance Law that provides coverage for inpatient hospital care must
include coverage for no less than thirty days of active treatment per calendar year in a
hospital defined by Section 1.03(10) of the Mental Hygiene Law and no less than twenty
days of active treatment per calendar year for outpatient care in a facility issued an
operating certificate by the commissioner of mental health, a facility operated by the
office of mental health, a psychiatrist or psychologist, or a professional corporation or
university faculty practice corporation.
A group or school blanket health insurance policy issued pursuant to
Section 3221 of the Insurance Law that provides coverage for inpatient hospital care must
include coverage comparable to the medical coverage under the policy for adults and
children with biologically based mental illness and children with serious emotional
disturbances, except where the policy is issued to a small group (a group with fifty or
fewer employees).
A group health insurance policy issued to a small group (a group with
fifty or fewer employees) pursuant to Section 3221 of the Insurance Law that provides
coverage for inpatient hospital care must make available, and if requested by the group
purchaser, provide coverage comparable to the medical coverage under the policy for adults
and children with biologically based mental illness and children with serious emotional
disturbances.
A hospital service corporation or a health service corporation that
provides coverage for inpatient hospital care must include coverage for no less than
thirty days of active treatment per calendar year in a hospital defined by Section
1.03(10) of the Mental Hygiene Law and no less than twenty days of active treatment per
calendar year for outpatient care in a facility issued an operating certificate by the
commissioner of mental health or a facility operated by the office of mental health. This
requirement applies to group, group remittance and individual subscriber contracts, but
not to school blanket contracts.
A hospital service corporation or a health service corporation that
provides inpatient hospital care must include coverage comparable to the medical coverage
under the policy for adults and children with biologically based mental illness and
children with serious emotional disturbances, except when the coverage is issued to a
small group (a group with fifty or fewer employees). This requirement applies to all
group, group remittance and individual subscriber contracts, but not to school blanket
contracts.
A hospital service corporation or a health service corporation that
provides inpatient hospital care to a small group (a group with fifty or fewer employees)
must make available, and if requested by the group purchaser, coverage comparable to the
medical coverage under the policy for adults and children with biologically based mental
illness and children with serious emotional disturbances.
A medical expense indemnity corporation or a health service
corporation that provides coverage for physician services must include coverage for no
less than twenty days of active treatment for outpatient care provided by a licensed
psychiatrist or psychologist, a licensed clinical social worker, or professional
corporation or university practice corporation. If the corporation would also be required
to include coverage for twenty days of active treatment by virtue of it providing
inpatient care, then the aggregate outpatient benefit is twenty days per calendar year.
This requirement applies to all group, group remittance and individual subscriber
contracts, but not to school blanket contracts.
A medical expense indemnity corporation or a health service
corporation that provides coverage for physician services must include coverage comparable
to the medical coverage under the policy for adults and children with biologically based
mental illness and children with serious emotional disturbances, except when the coverage
is issued to a small group (a group with fifty or fewer employees). This requirement
applies to all group, group remittance and individual subscriber contracts but not to
school blanket contracts.
A medical expense indemnity corporation or a health service
corporation that provides coverage for physician services to a small group (a group with
fifty or fewer employees) must make available, and, if requested by the group purchaser,
provide coverage comparable to the medical coverage under the policy for adults and
children with biologically based mental illness and children with serious emotional
disturbances.
An HMO must provide coverage for no less than thirty days of active
treatment per calendar year in a hospital defined by Section 1.03(10) of the Mental
Hygiene Law and no less than twenty days of active treatment per calendar year for
outpatient care in a facility issued an operating certificate by the commissioner of
mental health, a facility operated by the office of mental health, a psychiatrist or
psychologist, a licensed clinical social worker, or a professional corporation or
university faculty practice corporation. This requirement does not apply to either the
standardized direct payment contracts issued pursuant to Sections 4321 and 4322 of the
Insurance Law or to the Healthy New York program.
An HMO must provide coverage comparable to the medical coverage under
the policy for adults and children with biologically based mental illness and children
with serious emotional disturbances, except when the coverage is issued to a small group
(a group with fifty or fewer employees). This requirement does not apply to either the
standardized direct payment contracts issued pursuant to Sections 4321 and 4322 of the
Insurance Law or to the Healthy New York program.
An HMO that provides coverage to a small group (a group with fifty or
fewer employees) must make available, and if requested by the group purchaser, provide
coverage comparable to the medical coverage under the policy for adults and children with
biologically based mental illness and children with serious emotional disturbances. This
requirement does not apply to the Healthy New York program.
Exceptions to Timothy’s Law
Timothy’s
Law does not apply to:
individuals who are incarcerated, confined or committed to a local
correctional facility or prison, or a custodial facility for youth operated by the office
of children and family services;
services solely because such services are ordered by a court; or
services determined to be cosmetic on the grounds that changing or
improving an individual’s appearance is justified by the individual’s mental
health needs.
Utilization Review
Benefits
provided under Timothy’s Law may be subject to the general utilization review
requirements that apply to other benefits under the contract. However, section one of the
legislation requires that such utilization review requirements be applied "in a
consistent fashion to all services covered by such contracts." Thus, benefits
provided under Timothy’s Law shall not be subject to additional utilization review
requirements other than those that apply to other benefits under the contract.
Cost Sharing
Benefits
provided under Timothy’s Law may be subject to appropriate annual deductibles and
coinsurance, provided that the deductible and coinsurance are consistent with those
imposed on other benefits within the policy. Under a policy offering both in- and
out-of-network coverage, the deductibles and coinsurance for Timothy’s Law benefits
accessed in-network must be consistent with the in-network deductibles and coinsurance for
other benefits accessed in-network. The deductibles and coinsurance for Timothy’s Law
benefits accessed out-of-network must be consistent with the out-of-network deductibles
and coinsurance for other benefits accessed out-of-network.
Network Requirements
Benefits
provided under Timothy’s Law may be subject to the same network limitations as
generally applicable to the other benefits provided under the contract.
Contact Information
Any questions
regarding the premium rates may be directed to Satya N. Pabuwal, FSA, MAAA, Chief Actuary,
Health Bureau, New York Insurance Department, One Commerce Plaza, Albany, NY 12257 or by
e-mail to spabuwal@ins.state.ny.us or to K. Gloria Dee, FSA, MAAA, CFA, Supervising Actuary, Health Bureau, New
York Insurance Department, One Commerce Plaza, Albany, NY 12257 or by email to kdee@ins.state.ny.us
Any other
questions on this Circular Letter may be directed to Thomas Fusco, Associate Insurance
Attorney, Health Bureau, New York Insurance Department, Walter J. Mahoney Office Building,
65 Court Street, Room 7, Buffalo, NY 14202 or by e-mail to tfusco@ins.state.ny.us.
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Very Truly Yours,
______________________
Charles Rapacciuolo
Assistant Deputy Superintendent and Chief,
Health Bureau
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Attachment 1
Sample Notice for Timothy’s Law
On December 22,
2006, legislation known as "Timothy’s Law" was signed into law. It changes
the coverage requirements for the diagnosis and treatment of mental, nervous or emotional
disorders under most group health insurance policies and contracts.
Timothy’s
Law took effect on January 1, 2007 and applies to all policies and contracts issued or
renewed on or after that date. Because of the very short time frame between when the law
was signed and when it took effect, we are not able to develop the necessary formal
amendments to your contract or certificate of coverage at this time. We are working on the
amendments now and will get them to you as soon as they are ready. However, if your
contract or certificate is one that is subject to Timothy’s Law, you may be entitled
to benefits right now even without formal change to your contract or certificate. The
purpose of this notice is to briefly describe Timothy’s Law and to explain how you
can find out if the law applies to you.
If you are
covered under a policy or contract issued to a small group (that is, a group with 50 or
fewer eligible employees), your benefits could include coverage for the diagnosis and
treatment of mental, nervous or emotional disorders for up to thirty days of inpatient
care and twenty days of outpatient care. These benefits have to be provided comparable to
other benefits under your contract or certificate. The deductibles, copayments or
coinsurance applied to the "Timothy’s Law" benefits may be no greater than
those applied to other benefits under the contract.
If you are
covered under a policy or contract issued to a large group (that is, a group with more
than 50 eligible employees), your benefits could include coverage for the thirty days of
inpatient care and the twenty days of outpatient care mentioned above as well as benefits
comparable to other health benefits under the contract or certificate to treat adults and
children with biologically based conditions such as schizophrenia/psychotic disorder,
major depression, bipolar disorder, delusional disorders, panic disorder, obsessive
compulsive disorder, bulimia and anorexia. You might also have benefits to treat children
with serious emotional disturbances comparable to other benefits under the contract or
certificate. Any deductible, copayments or coinsurance applied to the "Timothy’s
Law" benefits may be no greater than those applied to other benefits under the
contract.
You can find out
if you have "Timothy’s Law" benefits or have your questions about
"Timothy’s Law" answered by calling us at [ insert toll-free telephone
number].
Attachment 2
The rate filings
for Timothy’s Law must include an actuarial memorandum and revised rate manual pages
as described below.
A.
Actuarial Memorandum
1. Detailed description of any existing benefit and the new benefit,
including applicable copayment, deductible, and coinsurance amounts.
2. Detailed explanation and justification of the derivation
of rates, including the methods and assumptions used, the underlying experience data used
and modifications made thereto, the utilization frequencies, the average cost, and the net
claims cost for the calculation of the premium rates. These calculations must be shown
separately for each segment of business as set forth in 2.a and 2.b below, and separately
for the new and existing benefit, the 30/20 benefit, the Biologically Based Mental Illness
benefit, and the Children with Serious Emotional Disturbances benefit, in the format shown
below:
a. Small Group
Mental health benefits built into the existing premium rates, if any.
The rates associated with the removal of the existing benefit that overlaps the 30/20
mandated benefits should be expressed as a negative premium.
30/20 mandated benefit expressed as net per member per month (PMPM). The Department plans
on using the net PMPM as the basis for determining the amount of reimbursement under the
subsidy mechanism.
The policy form number(s) for which the 30/20 benefit is mandated should be identified and
the total number of small groups and covered lives should also be provided.
Biologically Based Mental Illness coverage on a make-available basis.
Children with Serious Emotional Disturbances coverage on a
make-available basis.
b. Large Group, school blanket (written by commercial insurers)
and, as applicable, individual, contracts issued by Article 43 corporations:
Mental health benefits built into the existing premium rates, if any.
30/20 benefit.
Biologically Based Mental Illness coverage.
Children with Serious Emotional Disturbances coverage.
c. If the net PMPM is based on a capitated cost, please provide a copy
of the relevant page(s) from the capitation agreement to show the capitation.
d.The breakdown of the non-claims expense component into administrative
expenses, commissions, contribution to statutory reserve and surplus, etc.
e. The expected loss ratio.
f. Actuarial certification, separately for Small Group, and Large
Group and for school blanket (written by commercial insurers) and, as applicable,
individual coverage issued by Article 43 corporations.
B. Rate Manual
1. Numbered rate manual pages with a description of benefits and
premium rates separately for Small Group, and Large Group and for school blanket (written
by commercial insurers) and, as applicable, individual coverage issued by Article 43
corporations.
2. Timothy’s Law may require benefit changes for policies that are
issued or renewed in 2007 prior to the Department’s approval of requested rate
increases for such policy forms. Insurers, Article 43 corporations and HMOs may, at their
option and consistent with the terms of their contracts, implement the full annual impact
for the policy year of the requested rate increase on a pro rata basis over the months
remaining between the Department’s approval date and the next renewal date. If this
option is elected by an insurer, Article 43 corporation or HMO, it shall be clearly
described in the rate manual pages set forth in B.1., above.
3. Timothy’s Law may result in a premium reduction under small
group policies issued or renewed in 2007 because of the required state subsidy of the
mandated benefits. If premiums are reduced, then insurers, Article 43 corporations and
HMOs must provide a full premium credit or refund to affected small groups for the amount
of the approved premium reduction measured from the renewal date or issue date.
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