The Office of General Counsel issued the following opinion on November 5, 2004, representing the position of the New York State Insurance Department.
Re: Congenital Anomalies of a Dependent Child, Coverage by Health Insurance
Are there any generally recognized standards utilized by the Insurance Department in determining whether and how an insurer should cover the treatment of a congenital anomaly of an insured dependent child?
There are no generally recognized standards that are utilized by the Insurance Department concerning treatment for a congenital dental condition. The insurer or Health Maintenance Organization, however, is required to follow the procedures established in New York Insurance Law Article 49 (McKinney 2000) or New York Public Health Law Article 49 (McKinney 2002).
Since this was a general inquiry, no facts were furnished.
New York Insurance Law §§ 3216(a)(3) (McKinney 2000 and 2004 Supplement), regulating individual policies of commercial insurers, 4235(e) (McKinney 2000 and 2004), regulating group policies of commercial insurers, 4304(d)(1) (McKinney 2000 and 2004 Supplement), regulating individual contracts of not-for-profit insurers and all Health Maintenance Organizations, and 4305(c)(1) (McKinney 2000 and 2004 Supplement), regulating group contracts of not-for-profit insurers and all HMOs, all authorize coverage of dependent children.
N.Y. Comp. Codes R. & Regs. Tit. 11, Part 52 (2002), Regulation 62, was promulgated in accordance with a legislative directive, codified in New York Insurance Law § 174-a (McKinney 1972), since recodified as New York Insurance Law § 3217 (McKinney 2000), to establish minimum standards "for the form, content and sale of accident and health insurance policies." Allowable exclusions in such policies and contracts are set forth in N.Y. Comp. Codes R. & Regs. Tit, 11, § 52.16(c) (2002):
No policy shall limit or exclude coverage by type of illness, accident, treatment or medical condition, except as follows: (1) preexisting conditions or diseases . . .except for congenital anomalies of a covered dependent child . . .
. . .
(5) cosmetic surgery, except that cosmetic surgery shall not include reconstructive surgery when such service is incidental to or follows surgery resulting from trauma, infection or other diseases of the involved part, and reconstructive surgery because of congenital disease or anomaly of a covered dependent child which has resulted in a functional defect;
. . .
(9) dental care or treatment, except for such care or treatment due to accidental injury to sound natural teeth within 12 months of the accident and except for dental care or treatment necessary due to congenital disease or anomaly;
The present exception for congenital anomalies was added to the original allowance of pre-existing conditions as an acceptable exclusion, N.Y. Comp. Codes R. & Regs. Tit. 11, § 52.16(c)(1) on November 1, 1972, soon after the initial promulgation of Regulation 62.
The next amendment to Regulation 62 with respect to congenital anomalies was made on September 1, 1975, when the existing unconditional allowance of an exclusion for cosmetic surgery, N.Y. Comp. Codes R. & Regs. Tit. 11, § 52.16(c)(5), was modified to its present language.
When the amendment to N.Y. Comp. Codes R. & Regs. Tit. 11, § 52.16(c)(9) was first proposed, in response to a particular consumer complaint, this Department indicated, N.Y. State Reg. July 21, 1999, p. 9:
Certain congenital conditions, such as ectodermal dysplasia, result in an array of health problems involving the teeth, mouth and jaws, (including a failure to grow teeth) that can require surgical intervention and/or use of dentures. It was brought to the attention of the Insurance Department that while some insurance carriers were providing coverage for the treatments under the penumbra of reconstructive surgery or prosthetic appliances, others were denying the services as uncovered dental care. To bring consistency in the application of the dental exclusion, the clarification suggested by this amendment is needed.
Any costs imposed on regulated parties as a result of this amendment will be minimal as it involves only clarification of existing optional insurance policy provisions.
In response to a comment from an insurance industry trade group, that the proposed amendment would eviscerate the dental exclusion, the Department indicated its intention in the Assessment of Public Comment upon promulgation of the amendment, N.Y. State Reg. December 8, 1999, p. 3:
The revision to the regulation is intended to strike a reasonable balance between allowing an insurer unfettered discretion to deny coverage for necessary dental care or treatment due to congenital disease or anomaly and obligating an insurer to cover each and every condition which can be identified as a congenital disease or anomaly. The revision to the regulation uses the term necessary. The inclusion of the term necessary should allow an insurer to provide coverage for only those services deemed medically necessary. The industry group acknowledged that the use of a medical necessity test is possible in making coverage determinations under the revised exclusion. In addition, any health insurance contract binds an insurer to provide coverage only for services of the type stated in the contract and any regulation affecting the contract, including this regulation, should be reasonably interpreted in such a fashion.
While whether a particular service is appropriate is a question involving medical necessity, the issue of whether a condition is congenital is not such a question. Accordingly, if the insured believes that the insurer is in error in denying the congenital nature of the condition, the insured would not have the right to both internal utilization review, New York Insurance Law § 4904 (McKinney 2000) (insurers other than Health Maintenance Organizations) and New York Public Health Law § 4904 (McKinney 2002) (HMOs), and external review, New York Insurance Law § 4910 (McKinney 2000) and New York Public Health Law § 4910 (McKinney 2002).
As to the appropriateness of the treatment however, New York Insurance Law Article 49 or New York Public Health Law Article 49 would be applicable. Both New York Insurance Law § 4900(j) (McKinney 2000) and New York Public Health Law § 4900(10) (McKinney 2002) define:
Utilization review plan means: (1) a description of the process for developing the written clinical review criteria; (2) a description of the types of written clinical information which the plan might consider in its clinical review, including but not limited to, a set of specific written clinical review criteria; (3) a description of practice guidelines and standards used by a utilization review agent in carrying out a determination of medical necessity; (4) the procedures for scheduled review and evaluation of the written clinical review criteria; and (5) a description of the qualifications and experience of the health care professionals who developed the criteria, who are responsible for periodic evaluation of the criteria and of the health care professionals or others who use the written clinical review criteria in the process of utilization review.
Both the Insurance Department and the Health Department would expect the insurer or HMO to utilize generally acceptable medical standards in any determination of the appropriateness of treatment, both in the original determination and in utilization review.
For further information you may contact Principal Attorney Alan Rachlin at the New York City office.