Issued and entered November 27, 2002 by Frank M. Fitzgerald, Commissioner

ORDER

I
PROCEDURAL BACKGROUND

On May 21, 2002, Petitioner, XXXXXXXXXX filed a request for an external review with the Commissioner of Financial and Insurance Services under the Patient’s Right to Independent Review Act, MCL 550.1901, et seq. After a review of the material submitted, the Commissioner accepted the request.

The Commissioner assigned the case to Permedion, an independent review organization (IRO). The Commissioner directed Permedion to obtain the opinion and recommendation of a medical expert. Permedion completed its review on June 18, 2002. However, upon further review, the Commissioner determined the case does not involve issues of medical necessity or clinical review criteria. The Commissioner acknowledges the IRO’s medical conclusions, however those conclusions are not germane to the issue of Humana’s contractual liability.

II
FACTUAL BACKGROUND

XXXXXXXXX is a two year-old boy who lives in XXXXX with his parents, XXXX and XXXXXXXXXX. On April 22, 2001, while visiting his grandmother, XXXX began to experience difficulty breathing and was taken to XXXXXXXXXX hospital in XXXXXX. Initially, he did not respond to treatment. The emergency room physician recommended that he be admitted to the hospital and did not feel that XXXX could be safely moved to a different hospital. XXXXX remained hospitalized until April 25, when his condition improved enough to allow him to be discharged.

Humana insured XXXXX under a group insurance policy issued to his father’s employer. The policy contained a preferred provider organization provision. Under this provision, benefits are paid at a higher level if a “preferred provider” approved by the insurer furnishes medical services. For hospital and physician services, reimbursement (after deductible and co-insurance) is 100% with a preferred provider and 60% with a non-preferred provider. XXXX hospital is not a preferred provider under the policy in question.

Humana has paid for the cost of Petitioner’s illness at the non-preferred provider rate of 60%.

III
ISSUE

Petitioner believes Humana should cover the hospital and physician services at the level specified for preferred providers. Respondent asserts that it has correctly applied the policy language by paying benefits at the non-preferred provider rate.

The Commissioner must determine whether Humana complied with the terms of its certificate of insurance and Michigan law when it paid Petitioner’s hospital and physician services at the non-preferred provider rate.

IV
ANALYSIS

Petitioner’s certificate of insurance contains two provisions relevant to this discussion: “Schedule of Medical Benefits” (pages 3-13) and “Preferred Provider Organization Provisions” (pages 33-35). The Schedule of Medical Benefits describes the benefits payable for various services:

Calendar Year Deductible:

$250 per Covered Person when You see a Preferred Provider
$250 per Covered Person when You see a Non-Preferred Provider

HOSPITAL SERVICES
Inpatient Care

• Semi-Private Room
• Intensive Care Unit
• Operating Room
• Ancillary Services

PREFERRED PROVIDER BENEFITS: 100% to Coinsurance limit after Deductible

NON-PREFERRED PROVIDER BENEFITS: 60% to Coinsurance limit after Deductible

PHYSICIAN SERVICES

• Hospital visits
• Anesthesiologist
• Surgeon
• Assistant Surgeon paid at 20% of the Covered Expense for the Surgery

PREFERRED PROVIDER BENEFITS: 100% to Coinsurance limit after Deductible

NON-PREFERRED PROVIDER BENEFITS: 60% to Coinsurance limit after Deductible

EMERGENCY CARE

• Emergency Room

PREFERRED PROVIDER BENEFITS: 100% to Coinsurance limit after Deductible

NON-PREFERRED PROVIDER BENEFITS: 60% to Coinsurance limit after Deductible

• Emergency Room visit by the physician

PREFERRED PROVIDER BENEFITS: 100% to Coinsurance limit after Deductible

NON-PREFERRED PROVIDER BENEFITS: 60% to Coinsurance limit after Deductible

The Preferred Provider Organization Provisions describes how benefits are paid in emergency situations:

If You are traveling or need emergency care and are unable to access care from Your PPO provider, benefits will be paid at the Non-Preferred Provider level.

In the present case, Petitioner sought emergency treatment at a facility that was not a member of the preferred provider network. The practice of paying a lesser benefit level for emergency treatment at a nonparticipating facility is consistent with the insurance contract and is not prohibited by state law.

V
ORDER

The final adverse determination of Humana is upheld. Humana is liable for Petitioner’s son’s hospital stay from April 22, 2001 to April 25, 2001 at the non-preferred provider benefit level.

This is a final decision of an administrative agency. Under MCL 550.1915 any person aggrieved by this Order may seek judicial review no later than sixty days from the date of this Order in the Circuit Court for the county where the covered person resides or in the Circuit Court of Ingham County. A copy of the petition for judicial review should be sent to the Commissioner of Financial and Insurance Services, Health Plans Division, Post Office Box 30220, Lansing, MI 48909-7720.