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Bulletin No. 2005-01-INS
In the matter of
Medigap or Medicare Supplemental Coverage
of Outpatient Mental Health Services
Subject to the Mental Health Payment Reduction/
Issued and entered
this 21st day of January 2005
By Linda A. Watters
Through the complaint process, the Commissioner has learned that many insurers selling Medigap or Medicare Supplemental coverage under Chapter 38 of the Insurance Code (MCL 500.3801 to MCL 500.3861) or The Nonprofit Health Care Corporation Reform Act (MCL 550.1451 to MCL 550.1499a) may not be complying with federal law and regulations (42 U.S.C. 1395ss, 42 CFR 410.155) uniformly applicable to all such policies sold in Michigan when paying claims for outpatient mental health services subject to the mental health payment reduction. The Centers for Medicare and Medicaid Services (CMS) issued a Bulletin in December 2002, Transmittal No. 02-02, providing a history, explanation, and clear directions to Medicare Supplemental insurers on their obligation to pay "the" coinsurance amount for all Part B Medicare eligible expenses subject to the statutorily-mandated payment reduction.
The CMS bulletin is available at http://www.cms.hhs.gov/medigap and is attached to this Bulletin and incorporated herein.
For outpatient mental health services, the amount Medicare pays after application of the payment reduction equals fifty percent (50%) of the Medicare-allowed amount. The Medicare Supplemental insurer is obligated to pay the coinsurance amount, which is the remaining fifty percent (50%) of the Medicare-allowed amount. Thus, the amount Medicare pays for outpatient mental health services and the amount the Medicare Supplemental insurer pays usually will be exactly the same amount, and the two amounts together should equal the total Medicare-allowed amount, appearing on the Medicare summary of benefits. Examples of correct computation for payment of the coinsurance amount for outpatient mental health services are provided in the Code of Federal Regulations, 42 CFR 410.155.
Coverage for the coinsurance amount for Medicare Part B outpatient mental health services is part of the basic core package of benefits all Medicare Supplemental insurers must provide in Michigan (MCL 500.3807, MCL 550.1455) and throughout the country. The covered benefits in a Medicare Supplemental policy may not be more restrictive than covered benefits under Medicare. MCL 500.3823, MCL 550.1473.
The Commissioner has already required those Medicare Supplemental insurers whose incorrect payments came to light through consumer complaints to reprocess correctly all outpatient mental health claims received from December 2002 forward, to pay statutory interest of 12% per annum under MCL 500.2006 on all claims more than 60 days past due, and to file with OFIS a detailed accounting to establish proper payment under CMS Bulletin No. 02-02 of all outpatient mental health claims from December 2002 to the date of submission. The proof supplied identifies for each outpatient mental health claim: the patient, the provider, the date of submission of the claim, the claim amount, the Medicare-allowed amount, the amount Medicare paid, the amount the supplemental insurer paid, the date of payment, any additional payment due, the number of days of interest due, the amount of interest due, and the date of payment of the balance of the claim and interest to the patient, with numeric totals for each appropriate column.
Since the accounting supplied by one Medicare Supplemental insurer showed over 700 claims shorting the policyholder in each instance some portion or all of the mandated coverage, the Commissioner has concluded that she must act to require proof of compliance by all Michigan Medicare Supplemental insurers with the uniform federal and state coverage standards for payment of outpatient mental health claims for benefits. MCL 500.438, MCL 500.3861(4), MCL 550.1602.
Each insurer or nonprofit health care corporation selling Medicare Supplemental coverage in Michigan between December 1, 2002 and February 28, 2005 must:
- Review all outpatient mental health claims processed during the same time period for compliance with CMS Bulletin 02-02,
- Reprocess all claims incorrectly adjusted to pay the correct sum due, plus statutory interest of 12% per annum under MCL 500.2006 or MCL 550.1403,
- On or before March 15, 2005, file with the Product Review Unit of OFIS a detailed accounting establishing compliance with CMS Bulletin 02-02 and this OFIS bulletin, and
- After March 1, 2005, process in accordance with CMS Bulletin 02-02 all future claims for outpatient mental health benefits so long as the standards described in that bulletin remain in effect.
If the corporation or insurer's review of claims shows compliance with the CMS Bulletin, then the Medicare Supplemental insurer or nonprofit health care corporation need file with OFIS only an accounting for each Medicare Supplemental outpatient mental health claim submitted between December 1, 2002 and February 28, 2005 showing the date, patient, claim amount, Medicare-approved amount, date of payment, and amount paid by the insurer or nonprofit health care corporation. If the insurer or nonprofit health care corporation's review of claims shows failure to comply with the CMS bulletin standards, then the Medicare Supplemental insurer or nonprofit health care corporation must file a complete accounting including all information specified in paragraph five above of this bulletin.
After March 1, 2005, the Commissioner shall consider any failure by a Medicare Supplemental insurer or nonprofit health care corporation to pay an outpatient mental health claim in accordance with the standards of CMS Bulletin 02-02 a knowing or a persistent violation (MCL 500.2038 or MCL 550.1402) and shall pursue enforcement accordingly.
Any questions regarding this bulletin should be directed to:
Office of Financial and Insurance Services
Product Review Unit
611 West Ottawa
P.O. Box 30220
Lansing, MI 48909-7720
Phone: (517) 373-4948
Toll Free: (877) 999-6442
Linda A. Watters
Commissioner of Financial and Insurance Services