BEFORE THE STATE AUDITOR AND COMMISSIONER OF INSURANCE
OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On October 28, 2010, the State Auditor and Commissioner of Insurance published MAR Notice No. 6-189 regarding the public hearing on the proposed amendment and adoption of the above-stated rules at page 2426 of the 2010 Montana Administrative Register, issue number 20.
2. On November 17, 2010, the State Auditor and Commissioner of Insurance held a public hearing to consider the proposed amendment and adoption of the above-stated rules.
3. The commissioner has amended ARM 6.6.2401, 6.6.2402, 6.6.2404, and 6.6.2405 exactly as proposed.
4. The commissioner has amended ARM 6.6.2403 as proposed, but with the following changes, stricken material interlined, new matter underlined.
6.6.2403 DEFINITIONS (1) through (11)(b)(iv) remain as proposed.
(v) the medical care components of long-term care contracts, such as skilled nursing care;
(vi) first party medical payment coverage in automobile insurance; and
(vi) remains as proposed, but is renumbered (vii).
(c) through (c)(vii) remain as proposed.
(viii) a state plan under Medicaid;
(ix) a governmental plan, which, by law, provides benefits that are in excess of those of any private insurance plan or other nongovernmental plan; or
(x) third party automobile liability coverage, and uninsured and underinsured motorist coverage.
(12) through (14) remain as proposed.
AUTH: 33-1-313, MCA
IMP: 33-15-304, 33-18-201, 33-22-225, 33-22-226, 33-22-502, MCA
5. The commissioner has adopted New Rule I (ARM 6.6.2406), New Rule II (ARM 6.6.2407), New Rule III (ARM 6.6.2408), New Rule IV (ARM 6.6.2410), and New Rule V (ARM 6.6.2411) exactly as proposed.
6. Effective date: These rules apply to policies, certificates or membership contracts issued or renewed after January 1, 2011.
7. The commissioner has thoroughly considered the comments and testimony received. A summary of the comments received and the commissioner's responses are as follows:
Comment NO. 1: Several commenters requested that the department adopt the original language from the NAIC model regarding the definition of "plan."
RESPONSE NO.1: There were two differences between the model language and the language proposed by the department. First, the subsection referring to "the medical care components of long-term care contracts, such as skilled nursing care" was left out of the first notice proposing adoption of new coordination of benefit rules. This was an inadvertent error that occurred during editing. That language has been restored to the definition of "plan" in the rule adoption notice.
In addition, the first notice of these rules did not adopt the following language: "The medical benefits coverage in automobile "no fault" and traditional automobile "fault" type contracts." This language is not applicable because Montana law does not recognize the concept of "fault" and "no fault" in automobile liability insurance in the same way that certain other states do. Furthermore, Montana has a subrogation law that requires that an injured party be "made whole." [Mont. Code Ann. Section 33-22-1602 and 33-30-1102.] The Montana Supreme Court recently further clarified this law in Blue Cross and Blue Shield of Montana, Inc. v. Montana State Auditor, 2009 MT 318, 352 Mont. 423, 218 P.3d 475 (2009). If a health insurer is allowed to force the automobile third party liability coverage to pay medical bills first, pursuant to the coordination of benefit rules, the "made whole" provisions of the above-referenced statute and Supreme Court case, could be subverted.
However, the department recognizes that these concerns do not apply in the same manner to coverage known as "first party automobile medical payments." Therefore, in its rule adoption notice, "first party automobile medical payment coverage" has been added to the definition of "plan." Third party automobile liability coverage and uninsured and underinsured motorist coverage are specifically excluded from the definition of "plan."
The department cannot adopt a rule that conflicts with Montana statute and case law.
COMMENT NO. 2: Another commenter requested that the insurers be given more time to comply with the new rules.
RESPONSE NO. 2: No other insurer made that request and most insurers expressed a concern that the rules be updated to reflect the most recent version of the NAIC model as quickly as possible. In addition, the applicability provisions of the new rules state that they do not apply until the "next anniversary date, renewal date, or plan year of the contract." Many health insurance contracts renew on January 1, so these rules would not apply until the next 12-month renewal date because the forms for January 1 renewals were required to be submitted for approval 60 days prior to that date. In addition, the adoption notice includes an effective date provision that specifies that the new rules apply to policies issued or renewed after January 1, 2011.
/s/ Christina L. Goe /s/ Robert W. Moon
Christina L. Goe Robert W. Moon
Rule Reviewer Deputy Insurance Commissioner
Certified to the Secretary of State December 13, 2010.