New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The office of General Counsel issued the following informal opinion on May 15, 2001, representing the position of the New York State Insurance Department.

Re: External Appeals

Issue:

Is a health plan required to furnish notice of availability of an external appeal if the subscriber’s coverage had terminated between submission of an internal appeal and rendition of a determination on that appeal?

Conclusion:

Yes, if the policy or contract were subject to the New York Insurance Law. However, since the inquirer’s organization’s contracts are not subject to review by this Department, the question should be addressed to the Department of Health.

Facts:

The inquirer’s organization is a Prepaid Health Service Plan holding a Certificate of Authority from the Commissioner of Health pursuant to New York Public Health Law § 4403-a (McKinney 2001) and has issued a contract to an individual whose medical benefits are provided by Medicaid.

On March 12, 2001, the organization notified the subscriber in question that it would not pay for a procedure because of a "lack of medical necessity". On March 20, 2001, the subscriber pursued an internal appeal pursuant to New York Public Health Law § 4904 (McKinney 2001). On March 31, 2001, the subscriber lost his or her Medicaid eligibility and was, therefore, terminated as a subscriber.

The inquirer seeks this Department’s confirmation, that because the former subscriber would no longer be entitled to benefits from the organization, there is no need to notify the former subscriber of the availability of an external appeal pursuant to New York Public Health Law § 4910 (McKinney 2001).

Analysis:

Since the organization, as a PHSP, is governed by the New York Public Health Law, the inquiry should be directed to that agency. Since, however, New York Public Health Law Article 49 (McKinney 2001) is substantially similar to New York Insurance Law Article 49 (McKinney 2001), this Department’s views may be instructive.

The inquirer relies upon a provision in the regulations of the Department of Health, N.Y. Comp. R. & Regs. tit. 10, § 98-2.9(i) (2001), which is identical to this Department’s Regulation, N.Y. Comp. R. & Regs. tit. 11, § 410.9(i) (2001), and provides:

In the event an adverse determination is overturned on external appeal, or in the event that the health care plan reverses a denial which is the subject of external appeal, the health care plan shall provide, arrange to provide or make payment for the health care service(s) which is the basis of the external appeal to the enrollee to the extent that such health care service(s) is provided while the enrollee has coverage with the health care plan. Nothing herein shall be construed to require the health care plan to provide any health care services to an individual who is no longer an enrollee of that health care plan at the time of an external appeal agent's reversal of a health care plan's utilization review denial. (emphasis added)

It is the belief of this Department, subject to confirmation by the Department of Health, that, since Medicaid eligibility may be restored, there is no assurance that the former subscriber would not again be a subscriber when the external appeal is finally determined.

In addition, were the contract one that was subject to this Department’s review in accordance with New York Public Health Law § 4406 (McKinney 2001), the provisions of N.Y. Comp. R. & Regs. tit. 11, § 52.17(a)(15) (2001) might require a continued payment, notwithstanding termination of the contract. That provision provides, in pertinent part:

Termination of a policy … shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period while the policy was in force may be predicated upon the continuous total disability of the insured, or limited to the extent of the benefit period, if any, or payment of the maximum benefit. If no specific benefit period is provided, an extended benefit period of at least 12 months must be included in the contract. A loss shall commence when a medical service, whether or not covered by the policy, is rendered for the condition causing the total disability.

While this Department cannot provide an authoritative interpretation of a Regulation of the Department of Health, since the provision in question is identical to one in an Insurance Department Regulation, the above should be instructive.

For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.