Emergency Rules Regarding Insurance

On March 30, 2020, the Commissioner of Insurance amended Emergency Rule 40, which declares a moratorium on policy cancellations and nonrenewals for policyholders in the state during the COVID-19 outbreak. The emergency rule is effective from March 12, 2020 (the date of the original emergency rule) until May 12, 2020. It applies to all authorized insurers operating in the state, as well as approved unauthorized insurers, eligible unauthorized insurers, and domestic surplus lines insurers. It also applies to TPAs, HMOs and PBMs, and any and all other insurance entities licensed by the state.

The emergency rule:

  • Permits insurers to issue notices of cancellation for nonpayment of premiums but they cannot cancel until after the emergency rule expires. Exceptions exist when an insured requests cancellation in writing.
  • Suspends the conditions for the renewal of insurance until the emergency rule expires, so that the insurance remains in full effect during that time.
  • Exempts policies issued on or after March 12, 2020, from the emergency rule.
  • Suspends claim notification procedures.
  • Allows insurers to offset claim payments with delinquent premiums.
  • Suspends physician credentialing for licensed physicians until the expiration of this rule.
  • Suspends or defers rates that were to take effect after this rule.
  • Requires the option for the continuation of coverage for policyholders.

On April 1, 2020, the Commissioner issued Emergency Rule 41, relating to the surge in patient transfers between health care facilities in order to maximize beds and supplies available to treat COVID-19 patients. The rule applies to all HMOs, MCOs, PPOs, PBMs and TPAs acting on behalf of an HMO, MCO, PPO, and any and all other insurance related entities licensed by the commissioner or doing business in the state, as well as their insureds, policyholders, members, subscribers, enrollees and certificate holders. The rule is effective from March 31, 2020, through May 12, 2020.

To facilitate necessary transfers between health care facilities, the emergency rule:

  • Waives network adequacy requirements for specialist and primary care provider-to-insured ratios and nonemergency access where daily inpatient bed occupancy at acute care hospitals exceed 85%.
  • Prohibits insurers from imposing prior authorization, utilization, medical necessity or any related review requirements on the transfer of patients from an acute care hospital to a step-down facility.
  • Requires insurers to cover the remainder of the inpatient stay needed after the transfer from an acute care hospital to a step-down facility under terms and at a cost sharing rate no less favorable to the insured than those that would have applied had the insured remained at the acute care hospital.

The rules are primarily directed at insurers. However, employers should also be aware of these developments.

Emergency Rule 40 »
Emergency Rule 41 »