Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-128 - GROUP COORDINATION OF BENEFITS (COB) › Appendix A - Model COB Contract Provisions

Current through Register Vol. 42, No. 9, June 28, 2024
COORDINATION OF THIS CONTRACT'S BENEFITS WITH OTHER
				BENEFITS
The Coordination of Benefits (COB) provision applies when a
				person has health care coverage under more than one Plan. Plan is defined
				below.
The order of benefit determination rules govern the order in
				which each Plan will pay a claim for benefits. The Plan that pays first is
				called the Primary plan. The Primary plan must pay benefits in accordance with
				its policy terms without regard to the possibility that another Plan may cover
				some expenses. The Plan that pays after the Primary plan is the Secondary plan.
				The Secondary plan may reduce the benefits it pays so that payments from all
				Plans does not exceed 100% of the total Allowable expense.
DEFINITIONS.
A. A Plan is any of the following that provides benefits or
				services for medical or dental care or treatment. If separate contracts are
				used to provide coordinated coverage for members of a group, the separate
				contracts are considered parts of the same plan and there is no COB among those
				separate contracts.
(1) Plan includes: group insurance contracts, group health
				maintenance organization (HMO) contracts, group closed panel plans or other
				forms of group or group-type coverage (whether insured or uninsured); medical
				care components of group long-term care contracts, such as skilled nursing
				care; medical benefits under group or individual automobile contracts; and
				Medicare or any other federal governmental plan, as permitted by law.
(2) Plan does not include: hospital indemnity coverage or other
				fixed indemnity coverage; accident only coverage; specified disease or
				specified accident coverage; limited benefit health coverage, as defined by
				state law; school accident type coverage; benefits for non-medical components
				of long-term care policies; Medicare supplement policies; Medicaid policies;
				coverage under other federal governmental plans, unless permitted by law; or
				non-group or individual health or medical reimbursement contracts.
Each contract for coverage under (1) or (2) is a separate Plan.
				If a Plan has two parts and COB rules apply only to one of the two, each of the
				parts is treated as a separate Plan.
B. This plan means, in a COB provision, the part of the
				contract providing the health care benefits to which the COB provision applies
				and which may be reduced because of the benefits of other plans. Any other part
				of the contract providing health care benefits is separate from this plan. A
				contract may apply one COB provision to certain benefits, such as dental
				benefits, coordinating only with similar benefits, and may apply another COB
				provision to coordinate other benefits.
C. The order of benefit determination rules determine whether
				This plan is a Primary plan or Secondary plan when the person has health care
				coverage under more than one Plan.
When This plan is primary, it determines payment for its
				benefits first before those of any other Plan without considering any other
				Plan's benefits. When This plan is secondary, it determines its benefits after
				those of another Plan and may reduce the benefits it pays so that all Plan
				benefits do not exceed 100% of the total Allowable expense.
D. Allowable expense is a health care expense, including
				deductibles, coinsurance and copayments, that is covered at least in part by
				any Plan covering the person. When a Plan provides benefits in the form of
				services, the reasonable cash value of each service will be considered an
				Allowable expense and a benefit paid. An expense that is not covered by any
				Plan covering the person is not an Allowable expense. In addition, any expense
				that a provider by law or in accordance with a contractual agreement is
				prohibited from charging a covered person is not an Allowable expense.
The following are examples of expenses that are not Allowable
				expenses:
(1) The difference between the cost of a semi-private hospital
				room and a private hospital room is not an Allowable expense, unless one of the
				Plans provides coverage for private hospital room expenses.
(2) If a person is covered by 2 or more Plans that compute
				their benefit payments on the basis of usual and customary fees or relative
				value schedule reimbursement methodology or other similar reimbursement
				methodology, any amount in excess of the highest reimbursement amount for a
				specific benefit is not an Allowable expense.
(3) If a person is covered by 2 or more Plans that provide
				benefits or services on the basis of negotiated fees, an amount in excess of
				the highest of the negotiated fees is not an Allowable expense.
(4) If a person is covered by one Plan that calculates its
				benefits or services on the basis of usual and customary fees or relative value
				schedule reimbursement methodology or other similar reimbursement methodology
				and another Plan that provides its benefits or services on the basis of
				negotiated fees, the Primary plan's payment arrangement shall be the Allowable
				expense for all Plans. However, if the provider has contracted with the
				Secondary plan to provide the benefit or service for a specific negotiated fee
				or payment amount that is different than the Primary plan's payment arrangement
				and if the provider's contract permits, the negotiated fee or payment shall be
				the Allowable expense used by the Secondary plan to determine its
				benefits.
(5) The amount of any benefit reduction by the Primary plan
				because a covered person has failed to comply with the Plan provisions is not
				an Allowable expense. Examples of these types of plan provisions include second
				surgical opinions, precertification of admissions, and preferred provider
				arrangements.
E. Closed panel plan is a Plan that provides health care
				benefits to covered persons primarily in the form of services through a panel
				of providers that have contracted with or are employed by the Plan, and that
				excludes coverage for services provided by other providers, except in cases of
				emergency or referral by a panel member.
F. Custodial parent is the parent awarded custody by a court
				decree or, in the absence of a court decree, is the parent with whom the child
				resides more than one half of the calendar year excluding any temporary
				visitation.
ORDER OF BENEFIT DETERMINATION RULES.
When a person is covered by two or more Plans, the rules for
				determining the order of benefit payments are as follows:
A. The Primary plan pays or provides its benefits according to
				its terms of coverage and without regard to the benefits of under any other
				Plan.
B. (1) Except as provided in Paragraph (2), a Plan that does
				not contain a coordination of benefits provision that is consistent with this
				chapter is always primary unless the provisions of both Plans state that the
				complying plan is primary.
(2) Coverage that is obtained by virtue of membership in a
				group that is designed to supplement a part of a basic package of benefits and
				provides that this supplementary coverage shall be excess to any other parts of
				the Plan provided by the contract holder. Examples of these types of situations
				are major medical coverages that are superimposed over base plan hospital and
				surgical benefits, and insurance type coverages that are written in connection
				with a Closed panel plan to provide out-of-network benefits.
C. A Plan may consider the benefits paid or provided by another
				Plan in calculating payment of its benefits only when it is secondary to that
				other Plan.
D. Each Plan determines its order of benefits using the first
				of the following rules that apply:
(1) Non-Dependent or Dependent. The Plan that covers the person
				other than as a dependent, for example as an employee, member, policyholder,
				subscriber or retiree is the Primary plan and the Plan that covers the person
				as a dependent is the Secondary plan. However, if the person is a Medicare
				beneficiary and, as a result of federal law, Medicare is secondary to the Plan
				covering the person as a dependent; and primary to the Plan covering the person
				as other than a dependent (e.g. a retired employee); then the order of benefits
				between the two Plans is reversed so that the Plan covering the person as an
				employee, member, policyholder, subscriber or retiree is the Secondary plan and
				the other Plan is the Primary plan.
(2) Dependent Child Covered Under More Than One Plan. Unless
				there is a court decree stating otherwise, when a dependent child is covered by
				more than one Plan the order of benefits is determined as follows:
(a) For a dependent child whose parents are married or are
				living together, whether or not they have ever been married:
* The Plan of the parent whose birthday falls earlier in the
				calendar year is the Primary plan; or
* If both parents have the same birthday, the Plan that has
				covered the parent the longest is the Primary plan.
(b) For a dependent child whose parents are divorced or
				separated or not living together, whether or not they have ever been
				married:
(i) If a court decree states that one of the parents is
				responsible for the dependent child's health care expenses or health care
				coverage and the Plan of that parent has actual knowledge of those terms, that
				Plan is primary. This rule applies to plan years commencing after the Plan is
				given notice of the court decree;
(ii) If a court decree states that both parents are responsible
				for the dependent child's health care expenses or health care coverage, the
				provisions of Subparagraph (a) above shall determine the order of
				benefits;
(iii) If a court decree states that the parents have joint
				custody without specifying that one parent has responsibility for the health
				care expenses or health care coverage of the dependent child, the provisions of
				Subparagraph (a) above shall determine the order of benefits; or
(iv) If there is no court decree allocating responsibility for
				the dependent child's health care expenses or health care coverage, the order
				of benefits for the child are as follows:
* The Plan covering the Custodial parent;
* The Plan covering the spouse of the Custodial parent;
* The Plan covering the non-custodial parent; and then
* The Plan covering the spouse of the non-custodial
				parent.
(c) For a dependent child covered under more than one Plan of
				individuals who are the parents of the child, the provisions of Subparagraph
				(a) or (b) above shall determine the order of benefits as if those individuals
				were the parents of the child.
(3) Active Employee or Retired or Laid-off Employee. The Plan
				that covers a person as an active employee, that is, an employee who is neither
				laid off nor retired, is the Primary plan. The Plan covering that same person
				as a retired or laid-off employee is the Secondary plan. The same would hold
				true if a person is a dependent of an active employee and that same person is a
				dependent of a retired or laid-off employee.
If the other Plan does not have this rule, and as a result, the
				Plans do not agree on the order of benefits, this rule is ignored. This rule
				does not apply if the rule labeled D(l) can determine the order of
				benefits.
(4) COBRA or State Continuation Coverage. If a person whose
				coverage is provided pursuant to COBRA or under a right of continuation
				provided by state or other federal law is covered under another Plan, the Plan
				covering the person as an employee, member, subscriber or retiree or covering
				the person as a dependent of an employee, member, subscriber or retiree is the
				Primary plan and the COBRA or state or other federal continuation coverage is
				the Secondary plan. If the other Plan does not have this rule, and as a result,
				the Plans do not agree on the order of benefits, this rule is ignored. This
				rule does not apply if the rule labeled D (1) can determine the order of
				benefits.
(5) Longer or Shorter Length of Coverage. The Plan that covered
				the person as an employee, member, policyholder, subscriber or retiree longer
				is the Primary plan and the Plan that covered the person the shorter period of
				time is the Secondary plan.
(6) If the preceding rules do not determine the order of
				benefits, the Allowable expenses shall be shared equally between the Plans
				meeting the definition of Plan. In addition, This plan will not pay more than
				it would have paid had it been the Primary plan.
EFFECT ON THE BENEFITS OF THIS PLAN.
A. When This plan is secondary, it may reduce its benefits so
				that the total benefits paid or provided by all Plans during a plan year are
				not more than the total Allowable expenses. In determining the amount to be
				paid for any claim, the Secondary plan will calculate the benefits it would
				have paid in the absence of other health care coverage and apply that
				calculated amount to any Allowable expense under its Plan that is unpaid by the
				Primary plan. The Secondary plan may then reduce its payment by the amount so
				that, when combined with the amount paid by the Primary plan, the total
				benefits paid or provided by all Plans for the claim do not exceed the total
				Allowable expense for that claim. In addition, the Secondary plan shall credit
				to its plan deductible any amounts it would have credited to its deductible in
				the absence of other health care coverage.
B. If a covered person is enrolled in two or more Closed panel
				plans and if, for any reason, including the provision of service by a non-panel
				provider, benefits are not payable by one Closed panel plan, COB shall not
				apply between that Plan and other Closed panel plans.
RIGHT TO RECEIVE AND RELEASE NEEDED
				INFORMATION.
Certain facts about health care coverage and services are
				needed to apply these COB rules and to determine benefits payable under This
				plan and other Plans. [Organization responsibility for COB administration] may
				get the facts it needs from or give them to other organizations or persons for
				the purpose of applying these rules and determining benefits payable under This
				plan and other Plans covering the person claiming benefits. [Organization
				responsibility for COB administration] need not tell, or get the consent of,
				any person to do this. Each person claiming benefits under This plan must give
				[Organization responsibility for COB administration] any facts it needs to
				apply those rules and determine benefits payable.
FACILITY OF PAYMENT.
A payment made under another Plan may include an amount that
				should have been paid under This plan. If it does, [Organization responsibility
				for COB administration] may pay that amount to the organization that made that
				payment. That amount will then be treated as though it were a benefit paid
				under This plan. [Organization responsibility for COB administration] will not
				have to pay that amount again. The term "payment made" includes providing
				benefits in the form of services, in which case "payment made" means the
				reasonable cash value of the benefits provided in the form of services.
RIGHT OF RECOVERY.
If the amount of the payments made by [Organization
				responsibility for COB administration] is more than it should have paid under
				this COB provision, it may recover the excess from one or more of the persons
				it has paid or for whom it has paid; or any other person or organization that
				may be responsible for the benefits or services provided for the covered
				person. The "amount of the payments made" includes the reasonable cash value of
				any benefits provided in the form of services.
Author:
Commissioner of Insurance
Statutory Authority:
Code of Ala.
				  1975
, §
										27-2-17