|Date:||October 17, 2006|
|To:||Insurers Writing Medigap Policies in Wisconsin|
|From:||Jorge Gomez, Commissioner of Insurance|
|Subject:||Disclosure of Creditable Coverage Status|
This bulletin applies to all health insurers that have offered and have in effect Medicare supplement and Medicare select policies, referred to as Medigap policies.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) added a new prescription drug program to Medicare. Under the MMA, Medigap insurers providing prescription drug coverage to Medicare beneficiaries are required to disclose whether the coverage is creditable prescription drug coverage. The OCI drafted a Bulletin dated September 23, 2005 regarding notice of creditable coverage status that Medigap insurers were required to provide to policyholders in preparation for the initial enrollment period for Part D, which began on November 15, 2005 and extended through May 15, 2006. This Bulletin addresses notices regarding the creditable coverage status of Medigap coverage required on or after May 15, 2006.
The Centers for Medicare and Medicaid Services (CMS) has drafted sample creditable coverage and non-creditable coverage notice language that Medigap insurers can, but are not required to, use when providing creditable coverage status to their policyholders regarding the outpatient prescription drug coverage included in their policies. Medigap insurers are required to provide notice of creditable coverage status each year prior to November 15 of that year. The Model Creditable Coverage Disclosure Notice and Model Non-Creditable Coverage Disclosure Notice are available on CMS's Website at: http://www.cms.hhs.gov/CreditableCoverage/10_CCafterFeb15.asp#TopOfPage.
Wisconsin is one of the states that received a waiver of the federal standardization requirements required by the Omnibus Budget Reconciliation Act (OBRA) of 1990, which required that Medigap policies comply with standardized benefit packages. Wisconsin as a waived state offers to Medicare beneficiaries Medigap policies with core benefits and optional riders. Wisconsin does not offer the standardized Medigap policies referred to as Medicare supplement Plans A - J. Wisconsin does have Medicare supplement and Medicare select cost-sharing policies that meet the requirements of Medicare supplement Plans K and L.
The OCI has determined that Medigap insurers can utilize CMS's model disclosure notice language for their policyholders, even through Wisconsin is a waived state. Insurers may include in their cover letters to policyholders clarifying information that applies to Wisconsin Medigap policyholders.
Insurers are not required to file for approval a copy of the creditable coverage, the non-creditable coverage notice nor the cover letter sent to existing Medigap policyholders.
Overview of Wisconsin Medigap Policies Issued Prior to January 1, 2006
All Medigap policies issued to Wisconsin policyholders beginning September 1, 1994, have been required to include a catastrophic outpatient prescription drug benefit. The catastrophic outpatient drug benefit provides coverage for at least 80% of the charges for outpatient prescription drugs after a drug deductible of no more than $6,250 per calendar year.
Medigap policies offered in Wisconsin have been required to provide coverage for equipment and supplies for the treatment of diabetes. [s. 632.895 (6), Wis. Stat., and s. Ins 3.39 (5) (c) 13, Wis. Adm. Code] Coverage under the diabetes mandate includes prescription medication, insulin and medical supplies associated with the injection of insulin. As these items duplicate coverage under Medicare Part D, they may not be covered under Medigap policies for individuals enrolled in Medicare prescription drug plans nor in Medigap policies issued or offered after December 31, 2005. In addition, Wisconsin's home care mandate requires coverage of prescription medication when part of the home care treatment plan. [s. 632.895 (1) and (2), Wis. Stat., and s. Ins 3.39 (5) (c) 5, Wis. Adm. Code]
Beginning January 1, 1992, Medigap insurers were required to offer to Wisconsin applicants an optional outpatient prescription drug rider. The optional outpatient prescription drug benefit provides coverage of at least 50% of the charges for outpatient prescription drugs after a deductible of no greater than $250 per year to a maximum of at least $3,000 in benefits received by the insured per year.
Wisconsin Medigap insurers also have in effect policies issued in the 1970s and 1980s that include outpatient prescription drug benefits. These policies include policy forms designated as Medicare supplement 1, 2 or 3, and pre-standardized policies. Policies designated as Medicare supplement 1 policies include outpatient prescription drug coverage at 75% of covered expenses. Some of the pre-standardized policy forms may also include outpatient prescription drug coverage. It appears that Medigap insurers with policyholders covered by Medicare supplement 1 policies would meet CMS's definition of creditable coverage. Some of the pre-standardized policies with prescription drug benefits may meet CMS's definition of creditable coverage. Medigap insurers with Medicare supplement 1 should send the notice regarding creditable coverage to these policyholders.
This Bulletin includes as Attachment A CMS's Creditable Coverage Simplified Determination. This Bulletin includes as Attachment B CMS's Updated Guidance effective May 15, 2006, regarding the timing of creditable coverage disclosure from Medigap insurers to policyholders.
This Bulletin applies to notice of creditable coverage status provided by Medigap insurers to the Medicare beneficiaries on or after May 15, 2006.
Updated September 15, 2006
Creditable Coverage Simplified Determination
This document is an update of the Simplified Determination of Creditable Coverage Status which was released on September 15, 2006 in the Creditable Coverage Guidance.
Benefit Designs for Simplified Determination of Creditable Coverage Status
If an entity is not an employer or union that is applying for the retiree drug subsidy, it can use the simplified determination of creditable coverage status annually to determine whether its prescription drug plan's coverage is creditable or not. The plan will be determined to be creditable if the plan prescription drug plan design meets all four of the following standards. However, the standards listed under 4(a) and 4(b) may not be used if the entity's plan has prescription drug benefits that are integrated with benefits other than prescription drug coverage (i.e. Medical, Dental, etc.). Integrated plans must satisfy the standard in 4(c).
A prescription drug plan is deemed to be creditable if it:
|1)||Provides coverage for brand and generic prescriptions;|
|2)||Provides reasonable access to retail providers and, optionally, for mail order coverage;|
|3)||The plan is designed to pay on average at least 60% of participants' prescription drug expenses; and|
|4)||Satisfies at least one of the following:|
|a)||The prescription drug coverage has no annual benefit maximum benefit or a maximum annual benefit payable by the plan of at least $25,000, or|
|b)||The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare eligible individual.|
|c)||For entities that have integrated health coverage, the integrated health plan has no more than a $250 deductible per year, has no annual benefit maximum or a maximum annual benefit payable by the plan of at least $25,000 and has no less than a $1,000,000 lifetime combined benefit maximum.|
Integrated Plan - An integrated plan is any plan of benefits that is offered to a Medicare eligible individual where the prescription drug benefit is combined with other coverage offered by the entity (i.e., medical, dental, vision, etc.) and the plan has all of the following plan provisions:
|1)||a combined plan year deductible for all benefits under the plan,|
|2)||a combined annual benefit maximum for all benefits under the plan, and|
|3)||a combined lifetime benefit maximum for all benefits under the plan.|
A prescription drug plan that meets the above parameters is considered an integrated plan for the purpose of using the simplified method and would have to meet steps 1, 2, 3 and 4(c) of the simplified method If it does not meet all of the criteria, then it is not considered to be an integrated plan and would have to meet steps 1, 2, 3 and either 4(a) or 4(b).
NOTE: If the entity can not use the Simplified Determination method stated above to determine the creditable coverage status of the prescription drug plan offered to Medicare eligible individuals, then the entity must make an actuarial determination annually of whether the expected amount of paid claims under the entity's prescription drug coverage is at least as much as the expected amount of paid claims under the standard Medicare prescription drug benefit.
CMS CREDITABLE COVERAGE UPDATED GUIDANCE (Effective May 15, 2006)
Timing of Creditable Coverage Disclosure from Entity to Beneficiaries
The regulation at 42 CFR §423.56(f) specifies the times when creditable coverage disclosures must be made to Part D eligible individuals. At a minimum, disclosure must be made at the following times:
- Prior to the Medicare Part D Annual Coordinated Election Period (ACEP) - beginning November 15th through December 31st of each year;
- Prior to an individual's Initial Enrollment Period (IEP) for Part D, as described under 423.38(a);
- Prior to the effective date of coverage for any Medicare eligible individual that joins the plan;
- Whenever the entity no longer offers prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable; and
- upon a beneficiary's request.1
If the creditable coverage disclosure notice is provided to all plan participants annually, CMS will consider items 1 and 2 to be met.
This guidance clarifies that "prior to" means that the beneficiary must have been provided the Disclosure Notice within the past twelve months.
1Unlike some entities such as group health plans, Medigap issuers do not cover individuals until after they are enrolled in Medicare. Moreover, as of January 1, 2006, Medigap issuers cannot offer for sale any policies with prescription drug coverage. Therefore, only situations 1, 4 and 5 apply to Medigap issuers.