Administrative History Effective date: Regulations .01 — .09 , Appendixes A—C adopted as an emergency provision effective July 1, 1982 (9:13 Md. R. 1340); adopted permanently effective October 1, 1982 (9:17 Md. R. 1707) Regulation .01 amended, Regulations .02 — .09 and Appendices A—C repealed, and new Regulations .02 —.14 and Appendices A—C adopted as an emergency provision effective July 25, 1989 (16:16 Md. R. 1738); emergency status extended at 16:26 Md. R. 2782 and 17:5 Md. R. 633; emergency status expired July 20, 1990 Regulation .01 amended, Regulations .02 — .09 and Appendices A—C repealed, and new Regulations .02 —.21 adopted effective July 23, 1990 (17:14 Md. R. 1757) Regulation .06E adopted effective November 11, 1991 (18:22 Md. R. 2396) Regulation .07E adopted effective November 11, 1991 (18:22 Md. R. 2396) Regulation .16 amended effective November 11, 1991 (18:22 Md. R. 2396) —————— Chapter recodified from COMAR 09.30.59 to COMAR 31.10.05 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .03 amended effective January 1, 2006 (32:18 Md. R. 1522) Regulation .07 amended effective January 1, 2006 (32:18 Md. R. 1522) Regulation .09 amended effective January 1, 2006 (32:18 Md. R. 1522) Regulation .11 amended effective January 1, 2006 (32:18 Md. R. 1522) Regulations .12—.21 repealed effective January 1, 2006 (32:18 Md. R. 1522) Authority Insurance Article, §2-109 and Title 15, Subtitle 9; Health-General Article, §§19-705 and 19-706; Annotated Code of Maryland

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.01 Purpose. The purpose of this chapter is to provide for the reasonable standardization of coverage and simplification of terms and benefits of Medicare supplement policies, to facilitate public understanding and comparison of these policies, to eliminate policy provisions which may be misleading or confusing in connection with the purchase of the policies or with the settlement of claims, and to provide for full disclosures in the sale of health insurance coverages to persons eligible for Medicare by reason of age.

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.02 Authority. This chapter is issued pursuant to the authority given the Insurance Commissioner under Insurance Article, §2-109 and TItle 15, Subtitle 9, and Health-General Article, §§19-705 and 19-706, Annotated Code of Maryland.

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.03 Applicability and Scope. Except as otherwise specifically provided, this chapter applies to all: A. Medicare supplement policies and subscriber contracts delivered or issued for delivery in this State before July 1, 1992; and B. Certificates issued under group Medicare supplement policies or subscriber contracts if the certificates were delivered or issued for delivery in this State before July 1, 1992.

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.04 Definitions. A. Whenever used in this chapter or in a Medicare supplement policy subject to these regulations, or in any advertisement soliciting a Medicare supplement policy, the following terms shall have the meanings indicated. B. Terms Defined. (1) "Applicant" means, in the case of: (a) An individual Medicare supplement policy or subscriber contract, the person who seeks to contract for insurance benefits; and (b) A group Medicare supplement policy or subscriber contract, the proposed certificate holder. (2) "Certificate" means any certificate issued under a group Medicare supplement policy or contract which has been delivered or issued for delivery in this State, including any individual certificate issued by a nonprofit health service plan or by a health maintenance organization. (3) "Direct response solicitation" means solicitation of individuals or groups through the mail or by mass media advertising, including both print and broadcast advertising. (4) "Health care expenses" means expenses of health maintenance organizations associated with the delivery of health care services which are analogous to incurred losses of insurers. These expenses do not include: (a) Home office and overhead costs; (b) Advertising costs; (c) Commissions and other acquisition costs; (d) Taxes; (e) Capital costs; (f) Administrative costs; or (g) Claims processing costs. (5) "Health insurance" means insurance coverage as defined in Insurance Article, §1-101(q), Annotated Code of Maryland . (6) "Individual policy" means: (a) Individually issued policies and certificates; and (b) Certificates issued under group policies as a result of the direct response solicitation. (7) "Low-dose mammography" means X-ray examination of the breast using dedicated equipment including an X-ray tube, filter, compression device, screens, films, and cassettes specifically for mammography with average radiation exposure to deliver less than 1 rad mid-breast, two views per breast. (8) "Medicaid" means the Maryland Medical Assistance Program or any similar program provided by the State in which the insured person resides. (9) "Medicare" means the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended. (10) "Medicare eligible expenses" means health care expenses of the kinds covered by Medicare to the extent these services are considered reasonable under Medicare rules and regulations. (11) Medicare Supplement Policy. (a) "Medicare supplement policy" means an individual or group policy, subscriber contract, or certificate of health insurance primarily designed, advertised, marketed, or otherwise purported to be a supplement to reimbursements under Medicare for the hospital, medical, surgical, nursing, or related expenses of persons eligible for Medicare by reason of age. (b) "Medicare supplement policy" does not include benefits offered by a health maintenance organization or other direct service organization in connection with a contract with the United States Health Care Financing Administration. (12) "Medigap policy" means a Medicare supplement policy. (13) "Policy and subscriber contracts", whenever they appear in these regulations, include "certificate" unless the context indicates otherwise.

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.05 Policy Definitions and Terms. A. An insurance policy, subscriber contract, or certificate may not be advertised, marketed, solicited, or issued for delivery in this State as a Medicare supplement policy unless it contains definitions or terms which conform to the requirements of this regulation, or definitions which are more favorable to the insured person or certificate holder. B. Terms To Be Defined in the Policy. (1) Accident. (a) "Accident", "accidental injury", or "accidental means" shall be defined to employ "result" language and may not include words which establish an accidental means test or use words such as "external, violent, and accidental means", "visible contusion or wound", or words of similar import, description, or characterization. (b) The definition may not be more restrictive than the following: "Injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance coverage is in force." (c) The definition may additionally provide that injuries do not include injuries for which benefits are provided or available to the insured under any workers' compensation, occupational disease, employer's liability, or similar law, or to the extent permitted by law, to benefits provided or available under any motor vehicle no-fault plan. (2) "Benefit period" or "Medicare benefit period" may not be defined in a manner more restrictive than as defined in the Medicare program. (3) "Convalescent nursing home", "extended care facility", or "skilled nursing facility" shall be defined in relation to its status, facilities, and available services. The following apply: (a) The definition may not be more restrictive than one requiring that the home or facility: (i) Be operated pursuant to law; (ii) Be approved for payment of Medicare benefits or be qualified to receive that approval; (iii) Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician; (iv) Provide continuous 24-hour-a-day nursing service by or under the supervision of a registered graduate professional nurse (R.N.); and (v) Maintain a daily medical record of each patient. (b) The definition of the home or facility may provide that the term does not include: (i) A home, facility, or part of a home or facility used primarily for rest; (ii) A home or facility for the aged or for the care of drug addicts or alcoholics; or (iii) A home or facility primarily used for the care and treatment of mental diseases or disorders, or for custodial or educational care. (4) "Hospital" shall be defined in relation to its status, facilities, and available services, or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals. The definition of the term "hospital": (a) May not be more restrictive than one requiring that the hospital: (i) Be an institution operated pursuant to law, (ii) Be primarily and continuously engaged in providing or operating, either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic, and major surgical facilities for the medical care and treatment of sick or injured persons on an inpatient basis, for which a charge is made, and (iii) Provide 24-hour nursing service by or under the supervision of registered graduate professional nurses (R.N.'s); (b) May provide that the term does not include: (i) Convalescent homes, convalescent rest or nursing facilities, (ii) Facilities primarily affording custodial, educational, or rehabilitative care, (iii) Facilities for the aged, drug addicts or alcoholics, military, veterans' or soldiers' home, or any hospital contracted for or operated by any national government or national governmental agency for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis when legal liability exists for charges made to the individual for these services. (5) "Medicare" shall be defined in the policy substantially either as: (a) "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended"; or (b) "Title I, Part 1 of Public Law 89-97, as enacted by the 89th Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes of that Act." (6) "Medicare eligible expenses" shall be defined in the policy as health care expenses of the kind covered by Medicare, to the extent recognized as reasonable by Medicare. The insurer may modify the definition to provide that payments under the policy will be conditioned on less restrictive payment conditions, including determinations of medical necessity, than the conditions applicable to medical claims. (7) "Mental or nervous disorders" may be defined in a manner which includes neurosis, psychoneurosis, psychopathy, psychosis, and mental and emotional disease or disorder of any kind. (8) "Nurse" may be defined to include a registered graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), a licensed nurse anesthetist, or a licensed vocational nurse (L.V.N.). The use of the words "nurse" or "trained nurse" without further qualification will require the insurer to recognize the services of any individual qualified under applicable statutes or regulations provided the nurse is acting within the lawful scope of practice of the nurse's license. (9) "Physician" shall be defined to include a licensed physician or any duly licensed provider of medical care and treatment when the services to be performed are within the lawful scope of practice of the provider. (10) "Sickness" shall be defined so as to be not more restrictive than a sickness or disease of an insured person which first manifests itself after the effective date of the insurance and while the insurance is in force. The insurer may modify the definition to exclude sickness or disease for which benefits are provided under any workers' compensation, occupational disease, employer's liability, or similar law.

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.06 Prohibited Policy Provisions. A. Waivers may not be included in or attached to a Medicare supplement policy if the effect of the waivers is to exclude, limit, or reduce coverage or benefits for specifically named or described diseases or physical conditions. B. A Medicare supplement policy or subscriber contract may not be advertised, solicited, or issued for delivery in this State as a Medicare supplement policy or subscriber contract if the policy or contract limits or excludes coverage by type of illness, accident, treatment, or medical condition, except for the following, provided however, that if any of the following limitations or exclusions are contained in a Medicare supplement policy, the limitation or exclusion may not be more restrictive than that applicable to the Medicare program: (1) Foot care in connection with corns, calluses, flat feet, fallen arches, weak feet, chronic foot strain, or symptomatic complaints of the feet; (2) Mental or emotional disorders, alcoholism, and drug addiction; (3) Illness, treatment, or medical condition arising out of: (a) War or act of war (whether declared or undeclared), participation in a felony, riot or insurrection, service in the armed forces or auxiliary units, (b) Suicide while sane or insane, attempted suicide, or intentionally self-inflicted injury, or (c) Aviation or air travel other than as a fare-paying passenger on a regularly scheduled airline or on a group-chartered plane; (4) Cosmetic surgery, but this exclusion may not apply to reconstructive surgery when the surgery is incidental to or follows surgery resulting from trauma, infection, or diseases of the involved part; (5) Care in connection with the detection and correction by manual or mechanical means of structural imbalance, distortion, or subluxation in the human body for purposes of removing nerve interference and their effects, if the interference is the result of or related to distortion, misalignment or subluxation of, or in, the vertebral column; (6) Treatment provided in a federal government hospital, benefits provided under Medicare or other governmental program (except Medicaid), any workers' compensation, employer's liability or occupational disease or similar law, or any motor vehicle no-fault or similar law; (7) Services rendered by, and separately billed by, the employees of hospitals, laboratories, or other institutions; (8) Services performed by a member of the covered person's immediate family, and services for which no charge is normally made in the absence of insurance; (9) Dental care or treatment; (10) Eyeglasses, hearing aids, and examination for their prescription or fitting; (11) Rest cures, custodial care, transportation, and routine physical examinations; (12) Territorial limitations outside the United States; and (13) Coverage of any expense to the extent of any benefit available to the insured under Medicare. C. The terms "Medicare supplement", "Medigap", and words of similar import may not be used in connection with the advertisement, solicitation, or policy description or title unless the policy is issued in compliance with these regulations. D. A Medicare supplement policy, contract, or certificate in force in this State may not include benefits which duplicate benefits provided by Medicare. E. An insurer may not deny, reduce, or condition coverage or apply an increased premium rating to an applicant for a Medicare supplement policy by reason of the applicant's health status, claims experience, medical condition, or use of medical care if the applicant applies for the Medicare supplement policy within the first 6 months after becoming eligible for Medicare by reason of age. However, the insurer may include a provision with regard to preexisting conditions which complies with Regulation .07B(1) of this chapter .

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.07 Minimum Benefit Standards. A. A health insurance policy, contract, or certificate may not be advertised, marketed, solicited, or issued for delivery in this State as a Medicare supplement policy or as a Medigap policy unless it meets the following general and minimum standards and unless the insurer and its agents adhere to the requirements of the Maryland statutes and regulations regarding the sale of Medicare supplement policies. The minimum standards do not preclude the provision of additional benefits which are not inconsistent with these requirements and the use of other provisions which are more favorable to the insured or the policyholder. Whenever a policy is referred to in these regulations, it shall include a certificate. B. General Standards. (1) A Medicare supplement policy may not deny a claim for losses incurred more than 6 months after the effective date of coverage for a preexisting condition. The policy may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within 6 months before the effective date of coverage. (2) A Medicare supplement policy may not provide benefits for losses resulting from sickness on a different basis than benefits provided for losses resulting from accidents. (3) Automatic Changes to Correspond to Changes in Medicare. (a) A Medicare supplement policy shall provide that benefits designed to cover deductibles or coinsurance amounts under Medicare will be changed automatically to coincide with any corresponding changes in the applicable Medicare deductible and copayment amounts. (b) The insurer shall reserve the right to adjust premiums under the policy for the changes described in §B(3)(a) of this regulation . (c) Proposed premium adjustments shall be submitted for approval by the Commissioner in accordance with the requirements of COMAR 31.10.01 and with other applicable regulations and statutes. (4) Guaranteed Renewability. (a) A Medicare supplement policy which provides coverage for an insured and spouse shall provide, except in the event of nonpayment of premium, continuation of coverage on the: (i) Insured if coverage for the spouse is terminated; and (ii) Spouse if coverage for the insured is terminated. (b) Except in the event of nonpayment of premium, or as authorized by the Commissioner, an insurer may not cancel or nonrenew a Medicare supplement policy or certificate. (5) Extension of Benefits. (a) Termination of a Medicare supplement policy shall be without prejudice to any continuous loss which began while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. (b) Receipt of Medicare Part D benefits may not be considered in determining a continuous loss. (6) If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this regulation. (7) Termination by a Group Policyholder. (a) If a group Medicare supplement policy is terminated by the group policyholder and not replaced as provided in §B(9) of this regulation , the insurer shall offer certificate holders an individual Medicare supplement policy. (b) The insurer shall offer the certificate holders described in §B(7)(a) of this regulation at least the following choices: (i) An individual Medicare supplement policy which provides for continuation of the benefits contained in the group policy; and (ii) An individual Medicare supplement policy which provides only those benefits which are required to meet the minimum standards of these regulations. (8) If membership in a group is terminated, the insurer shall: (a) Offer the certificate holder the conversion rights described in §B(7) of this regulation ; or (b) At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy. (9) If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced. C. Minimum Required Benefits. (1) A Medicare supplement policy shall provide at least the following minimum benefits: (a) Coverage of Medicare Part A eligible expenses for the initial Medicare deductible for hospitalization in any Medicare benefit period; (b) Coverage of Medicare Part A eligible expenses for hospitalization to the extent not covered by Medicare for the 61st day through the 90th day in any Medicare benefit period; (c) Coverage of Medicare Part A eligible expenses incurred as daily hospital charges to the extent not covered by Medicare during use of Medicare's lifetime hospital inpatient reserve days; (d) Upon exhaustion of all Medicare inpatient hospital coverage, including the lifetime reserve days, coverage of 90 percent of all Medicare Part A eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional 365 days; (e) Coverage for the coinsurance amount of Medicare eligible expenses under Medicare Part B regardless of hospital confinement; (f) Coverage under Medicare Part A for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells as defined under federal regulations, in any calendar year unless replaced in accordance with federal regulations or already paid for under Medicare Part B; (g) Coverage under Medicare Part B for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, in any calendar year unless replaced in accordance with federal regulations or already paid for under Part A, subject to the Medicare Part B deductible amount; and (h) Coverage for up to $100 in each calendar year for an annual screening by low-dose mammography for the presence of occult breast cancer. (2) Each insurer issuing a Medicare supplement policy shall include in the policy, or offer as an option, coverage of the initial annual deductible for Medicare eligible expenses under Medicare Part B. (3) Payment of benefits by insurers for Medicare eligible expenses may be conditioned upon the same or less restrictive payment conditions, including determinations of medical necessity, as are applicable to medical claims. D. An insurer shall restore any benefits which were eliminated from a Medicare supplement policy by operation of the Medicare Catastrophic Coverage Act of 1988. E. A Medicare supplement policy shall provide for suspension of policy benefits and premiums for up to 24 months if the covered person is receiving benefits under Medicaid.

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.08 Standards for Claims Payment. A. Each insurer providing Medicare supplement policies or contracts shall comply with all provisions of §4081 of the Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203), and with applicable rules and regulations issued under the Act by the Secretary of the federal Department of Health and Human Services. Some of the provisions of the Act require each insurer issuing Medicare supplement policies to: (1) Agree to accept claims notices as claims for benefits under the policies; (2) Agree to make payment determination based on the information provided in the notices; (3) Provide notices to participating providers and suppliers and to the beneficiaries concerning the payment determinations; (4) Provide payment directly to participating providers and suppliers; (5) Provide Medicare beneficiaries with the name and address of Medicare contracting carriers to which notices should be sent; and (6) Agree to pay usual fees. B. Each insurer shall certify on its Medicare supplement insurance experience reporting forms compliance with the requirements set forth in §A of this regulation .

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.09 Loss Ratio Standards. As soon as practicable, but before the effective date of Medicare benefit changes, each insurer issuing or delivering Medicare supplement policies or subscriber contracts in this State shall file with the Commissioner, in accordance with applicable filing procedures: A. Appropriate premium adjustments necessary to produce loss ratios as originally anticipated for the applicable policies or certificates. Supporting documents necessary to justify the proposed adjustments shall be included with the filing. The following apply: (1) Each insurer subject to the Medicare Supplement Act of Insurance Article, Annotated Code of Maryland , issuing or delivering Medicare supplement policies or contracts to residents of this State, shall make those premium adjustments which are necessary to produce an expected loss ratio under the policies or contracts which will conform with the minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums for the Medicare supplement policies or contracts. Premium adjustments shall be calculated for the period beginning with Medicare benefit changes. (2) Premium adjustments which would modify the loss ratio under the policies and contracts other than the adjustments described in this section may be made only on the renewal date or anniversary date of the policy or contract. B. Appropriate riders, endorsements, or policy forms, which shall be drafted to: (1) Accomplish Medicare supplement insurance modifications necessary to: (a) Eliminate benefit duplications with Medicare, and (b) Provide any additional benefits necessary to comply with State or federal statutes, rules, and regulations modifying minimum benefit requirements under Medicare supplement policies and contracts; (2) Provide a clear description of the Medicare supplement benefits to be provided by the policies or contracts.

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.10 Filing Requirements for Out-of-State Group Policies. A. Each insurer providing group Medicare supplement insurance benefits to a resident of this State under a group policy issued elsewhere shall file a copy of the master policy and any certificate used in this State in accordance with the filing requirements and procedures applicable to group Medicare supplement policies issued in this State. B. If the out-of-State group policy is issued to an employer having a home office in the state in which the policy is issued, the filing required by §A of this regulation shall be made not later than 30 days after the effective date of the certificate issued to any employee resident in this State.

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.11 Required Disclosure Provisions. A. General. (1) Medicare supplement policies shall contain a clearly worded provision regarding the right of the policyholder to renew or continue the policy. This provision shall be appropriately captioned and shall be printed on the first page of the policy. (2) Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured or exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured unless otherwise authorized by the Commissioner. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing, signed by the insured unless the benefits or coverage are required by the minimum standards for Medicare supplement insurance policies or are required by law. When a separate additional premium is charged for benefits provided in connection with riders or endorsements, the additional premium charge shall be stated in the policy. (3) A Medicare supplement policy which provides for the payment of benefits based on standards described as "usual and customary", "reasonable and customary", or words of similar import shall include a definition of these terms and an explanation of the terms in its accompanying outline of coverage. (4) If a Medicare supplement policy contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy and may be labeled as "preexisting condition limitations" or a title of similar import. (5) Medicare supplement policies or certificates shall have a notice prominently printed on the first page of the policy or certificate stating that the policyholder or certificate holder shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded. B. Notice Requirements. (1) As soon as practicable, but not later than 30 days before the annual effective date of any Medicare benefit changes, each insurer, including any health service plan, which provides Medicare supplement insurance or benefits to a resident of this State, shall notify its policyholders, contract holders, and certificate holders of modifications to be made to Medicare insurance policies or contracts in a manner approved by the Commissioner. In addition, the notice shall: (a) Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement insurance policy or contract; and (b) Inform each covered person as to when any premium adjustment is to be made by reason of changes in Medicare benefits. (2) The notices of benefit modifications and of any premium adjustments shall be in outline form and in clear and simple terms in order to facilitate comprehension. (3) The notices may not contain or be accompanied by any solicitation materials.

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Previous Chapter 04 Health Insurance — Plan of Withdrawal

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Next Chapter 06 Standards for Medicare Supplement Policies

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