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Effective: September 1, 2010 |
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15.10.05.05ar3 - Determining Cost Effectiveness (Archive) |
Archived: September 1, 2012 |
Follow these instructions to review and approve or deny payment of certain insurance premiums. Also see Cost Effective Insurance Review - Worker Steps (DHS-2841E).
Forms Used in Cost Effective Determination.
Premiums that May be Reimbursable.
Exclusion from Enrollment in a Managed Care Organization (MCO).
Forms Used in the Cost Effective Determination
Use these forms as needed in the process of determining cost effectiveness:
l Cost Effective Insurance Information - Employer or Insurance Company (DHS-2841). Use this form to request insurance information from an employer or insurer. First send the form to the client, who must sign it to allow a release of information from the employer or insurance company to DHS. By signing this form the client also agrees to use any medical savings accounts to pay deductibles and co-insurance for high-deductible plans. The client may submit the form directly to their employer. Once complete, the employer or client may submit the form to the agency.
l Cost Effective Insurance Calculation (DHS-2841A). Use this form to determine if the insurance policy is cost effective by comparing pro-rated premiums and deductibles to the Age/Basic Capitation Chart (the chart is on the form and can be computed on-line).
l Cost Effective Insurance Prorating Premium and Deductible Amounts. (DHS-2841D). This form is a companion form to the Cost Effective Insurance Calculation form (DHS-2841A). Use this form if needed to calculate pro-rated premiums and deductibles to include on the DHS-2841A.
l Cost Effective Insurance Referral - Applicant/Enrollee (DHS-2841B). Use this form to determine cost effectiveness using actual health care expenses if the policy was not cost effective using the calculation completed on the DHS-2841A. Send this form to the client.
l Cost Effective Insurance Determination (DHS-2841C). The Benefit Recovery Section (BRS) completes this form if it makes the cost effective determination. BRS completes and sends this form to the worker, who takes action based on the BRS finding.
Because the following policies are not considered cost effective, deny payment of insurance premiums for the following types of insurance policies:
l Minnesota Comprehensive Health Association (MCHA) policies.
n Minnesota statute prohibits MA from paying MCHA premiums.
n MA enrollees may carry MCHA coverage at their own expense but are not required to do so as a condition of eligibility.
l Limited Medical Benefit Plans offered by small group employers. These policies or plans cap annual benefits at low amounts (such as $1,000 or $4,000) and are typically not licensed as health insurance in Minnesota.
l High-deductible health plans with an associated Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), Medical Savings Account (MSA), Flexible Spending Arrangement (FSA), or Voluntary Employees' Beneficiary Association (VEBA) account.
Exception: A high-deductible health plan may be determined cost effective if the policyholder agrees to reduce the deductible or co-insurance by using funds in the HSA, MSA, HRA, FSA, VEBA or similar Medical Expense Account funded by an employer and the policy meets all other cost effective requirements. See Premiums that May be Reimbursable. Clients agree to use these funds when they sign the Cost Effective Insurance Information Employer or Insurance Company Form (DHS-2841). Highlight that information for the client when obtaining the client's signature in that area of the form or explain the requirement to the client. At renewal, require documentation that the client has used funds in these accounts to pay any deductibles and co-insurance. Process the renewal and approve eligibility if the client meets all MA requirements except for failure to use the funds to pay deductibles or co-insurance. Refer the case to BRS for review if you determine that funds were not used as required.
l Medicare Supplement (also known as Medigap) policies for clients who are eligible for MA and Medicare.
Note: MA and Medicare eligible clients may request suspension of a Medicare supplement policy for up to 24 months if they plan to re-enroll in the policy after they no longer qualify for MA.
m The suspension allows the person to re-enroll in the policy without reapplying if MA ends during the suspension.
m The policyholder must request the suspension from the insurer within 90 days of the effective date of MA enrollment.
l Medicare Part C (Medicare Advantage) products, with or without prescription drug coverage, for people age 65 or older.
l Medicare Part B premiums for MA-EPD enrollees with income greater than 200% FPG. Do not count spousal income in this calculation.
Example:
Steve receives MA-EPD and Medicare Part B. His income is over 200% FPG. Steve is not eligible for QMB or SLMB because household income exceeds the limits for those programs.
Action:
Do not refer Steve’s Medicare Part B premium for a cost effective review because his income is over 200% FPG.
l For people age 65 and over who are MA and Medicare eligible, group health insurance products, such as those offered by employers, unions or retiree plans that either:
n Do not include prescription drug coverage.
n Include prescription drug coverage that is not considered creditable drug coverage.
l Long-term care and hospital indemnity policies that provide cash payments for each day in a hospital or nursing facility and the client is not currently collecting benefits.
Note: Benefits paid by these policies are third party liability and must be used first to cover the cost of medical care.
Premiums That May be Reimbursable
Premiums may be reimbursable for other health care coverage offered through an employer or group, individual plan or retiree plan. This includes premiums for dental or vision coverage or long-term care (LTC) premiums a client is required to pay during an elimination period.
l Use the Cost Effective Insurance Referral - Employer or Insurance Company (DHS-2841) to obtain necessary information about the other health care coverage.
Note: Do not approve payment of premiums if the policy is identified as a Limited Benefit Policy on the Employer Form.
l Complete the Cost Effective Insurance Calculation (DHS-2841A) for people eligible for MA covered by the policy or plan. Also complete the Cost Effective Insurance Prorating Premium and Deductible Amounts form (DHS-2841D), which is a companion form to the Cost Effective Insurance Calculation form (DHS-2841A). Use the calculation on the DHS-2841D to complete the information on DHS-2841A. Use pro-rated premium and deductible amounts if not everyone covered by the policy is also eligible for MA.
Exception: If a household member is not currently enrolled in MA, include their portion of the premium in the prorated premium if:
m Their enrollment in the insurance is a condition of the MA client’s enrollment in the insurance.
m The non-active MA person was not enrolled in the insurance at the time of health care application.
m The insurance remains cost effective for the MA client even if the premium for both the client and the non-active person is paid.
Example:
Jin, his wife Sun and their daughter Ji Yeon apply for health care. Jin and Sun are ineligible for MA due to excess income. Ji Yeon is eligible for MA. Jin has access to health care insurance through his employer but has not signed up for it. Jin has the following insurance choices:
r employee-only coverage.
r employee and spouse coverage.
r employee and children coverage.
r employee and family coverage.
Jin must purchase the insurance for himself in order to get insurance for Ji Yeon.
Action:
Determine whether the insurance is cost effective for Ji Yeon. When completing DHS-2841D, use the premium amount for ”employee and children coverage.” Since Jin must enroll in the coverage for Ji Yeon to enroll and he was not enrolled in the insurance at the time of application for health care, include Jin’s portion of the premium in the pro-rated premium (use the premium amount in line 8 on DHS-2841D). If the insurance is cost effective, pay both Ji Yeon and Jin’s portion of the premium.
Example:
Sawyer and his pregnant wife Juliet are enrolled in Sawyer’s employer’s health care insurance plan. Juliet and Sawyer apply for health care. Juliet is eligible for MA. Sawyer is ineligible for MA. Sawyer has the choice of employee-only coverage or employee and dependent coverage.
Action:
Determine whether the insurance is cost effective for Juliet. Do not include Sawyer’s portion of the premium in the prorated premium even though Sawyer must enroll in the coverage in order for Juliet to enroll, because he was enrolled in the insurance when he applied for health care (use the premium amount in line 7 on DHS-2841D). If the insurance is cost effective, pay Julia’s portion of the premium. Do not pay Sawyer’s portion of the premium.
Use DHS-2841A to determine if the policy is cost effective.
Note: Complete the calculation with a combined total of medical, dental and vision premiums; use deductible amounts for the medical policy only. However, if that results in the premiums not being cost effective, consider them in order of priority by first subtracting the vision premium and then the dental premium.
l Add the pro-rated Premium (Column B) + Pro-rated Deductible Amounts (Column C).
l Compare this amount to the Capitation by Age amounts (Column A - total for MA eligibles listed).
n If B + C is less than A, approve for Cost Effective premium reimbursement.
n If B + C is greater than A, continue to Medical Expense Review by looking at actual health care expenses. See Health Care Expense Review.
Example:
Joan receives health, vision and dental insurance from her employer. Her vision and dental insurance is separate from her health insurance. Her health insurance premium is $55 per month, her vision premium is $10 per month and her dental premium is $12 per month. She has a $250 annual deductible for health insurance, a $75 annual deductible for her vision insurance and a $50 annual deductible for her dental insurance.
Action:
Complete the cost effective calculation using the combined total of monthly medical, dental, and vision premiums and deductible amount for the medical policy only: $55 + $10 + $12 + ($250/12). However, if this results in the premiums not being cost effective, remove the vision premium (leaving medical and dental premiums and medical deductible only) and recalculate cost effectiveness: $55 + $12 + ($250/12). If the combined dental and medical premium is not cost effective, remove the dental coverage and use only the medical coverage for the cost effective determination: $55 + ($250/12).
Review the health care expenses paid by the policy to determine if the coverage is cost effective if the policy is not determined cost effective using the Cost Effective Insurance Calculation (DHS-2841A). Follow these steps:
1. Send the Cost Effective Insurance Referral - Applicant/Enrollee (DHS-2841B) to the client.
2. Review copies of Explanation of Benefits (EOBs) for a 12-month period, or the period EOBs are available if less than 12 months.
n Approve for cost effective premium reimbursement if benefits paid by the policy are more than two times the cost of the pro-rated premium for the same period.
n If the benefits paid by the policy are not more than two times the cost of the pro-rated premium for the same period, fax the following information to the DHS Benefit Recovery Section (BRS) at (651) 431-7431.
m Cost Effective Insurance Information Employer or Insurance Company (DHS-2841).
m Cost Effective Insurance Calculation (DHS-2841A).
m Cost Effective Insurance Referral Applicant/Enrollee (DHS-2841B).
m Health insurance policy summary of benefits and any other relevant information.
m Copies of Explanation of Benefits (EOBs).
m LTC insurance policy information that is currently paying benefits or in the elimination period.
Example:
Galinda is age 23 and has health care coverage through her employer. She pays a monthly premium of $175 a month and her annual deductible is $1,000. Galinda provided EOBs received from health care plan. The EOBs indicate her health care coverage has paid medical expenses of at least $4,300 during the past 12 months.
Action:
Galinda’s health care coverage is cost effective because her annual covered medical expenses are greater than two times the cost of her annual premium.
1. Galinda’s annual covered medical expenses total $4,300.
2. Galinda pays an annual premium total of $2,100 ($175 X 12).
3. Galinda’s annual covered medical expenses are at least twice that of her annual premium. Her annual covered medical expenses must be at least $4,200.
Exclusion from Enrollment in a Managed Care Organization (MCO)
Exclude clients in the following categories from participation in managed care enrollment. These clients will receive health care through traditional fee-for-service (FFS).
l MA eligible clients with private health care coverage that has been determined cost effective.
Note: Exclude MA enrollees from managed care during the cost effective determination. If current MA enrollees gain access to health insurance that may be cost effective, continue managed care during the determination process. Disenroll them from managed care upon determining that the coverage is cost effective.
l MA eligible clients with non-cost effective private health care coverage through a Health Maintenance Organization (HMO) licensed under Minnesota Statutes §62D. These people may enroll on a voluntary basis if they select the same MCO as their private HMO.
For additional cost effective coverage information see the following sections:
l Cost Effective Health Care Coverage - MA.
l Medicare Cost Effective Requirements.