Title 3 . Commerce, Community, and Economic Development

Chapter 26 . Miscellaneous

Section 110. Additional standards for prompt, fair, and equitable settlements of health claims

3 AAC 26.110. Additional standards for prompt, fair, and equitable settlements of health claims

(a) A person that provides coverage in this state for health care services or supplies on an expense incurred basis for which benefits are based on an amount that is less than the actual amount billed for the health care services or supplies shall

(1) maintain or use a statistically credible profile of covered health care services and supplies on which to base payment; the profile must

(A) be updated at least every six months;

(B) contain billed charges for services performed not more than one year before the date of the most recent profile; and

(C) contain billed charges for each geographical area in which a claimant might receive treatment or, if statistically credible data for a particular service or supply item in a certain geographical area is unavailable, contain a sufficient number of billed charges for that service or supply item from another geographical area so that a reliable basis is established;

(2) determine the final payment for a covered service or supply based on an amount that

(A) reflects the general cost differences between the geographical area where the service was performed and the other geographical areas used in establishing the statistically credible profile under (1) of this subsection; the adjustment may be based on the Consumer Price Index, the medical care component of the Consumer Price Index, or another reasonable basis stated in writing; and

(B) is equal to or greater than the 80th percentile of charges under (1) of this subsection for the health care services or supplies;

(3) provide with any claim payment an explanation of the basis of payments in clear and simple terms, including explanation of any adjustments made under (2)(A) of this subsection, and document the explanation provided in the claim file; and

(4) provide an explanation in the health insurance policy of the basis of payments, including any payments for which a covered individual may be responsible and include on any schedule or summary of benefits page accompanying the policy

(A) the percentile used to determine final payment under (2)(B) of this subsection; and

(B) a statement regarding whether the covered individual is responsible for any amount billed for a health care service or supply item that exceeds the amount of final payment.

(b) This section does not apply to workers' compensation claims.

(c) If a person who is required to include a coordination of benefits provision under AS 21.42.205 provides coverage on a secondary basis,

(1) absent evidence of fraud, the secondary insurer must accept the primary insurer's precertification, utilization review, or other managed care requirement determination and may not deny, delay, or reduce benefits under its policy for a covered person who has met the primary insurer's precertification, utilization review, or other managed care requirement; and

(2) the secondary insurer must calculate its covered benefits at no greater cost to the covered person than if the health care services were obtained from the secondary insurer's participating provider if

(A) the secondary policy provides benefits through a provider network but the primary insurer's policy does not provide coverage through a provider network;

(B) both the primary policy and the secondary policy provide benefits through provider networks but the covered person obtains health care services from a provider that is in the provider network of the primary insurer but not the provider network of the secondary insurer; or

(C) both the primary policy and the secondary policy provide benefits through provider networks but the covered person obtains health care services from a provider that is not part of the provider network of the primary insurer or the secondary insurer because no provider in the primary insurer's provider network is able to meet the particular health need of the covered person.

History: Eff. 5/6/89, Register 110; am 4/20/97, Register 142; am 1/2/98, Register 145; am 9/15/2004, Register 171

Authority: AS 21.06.090

AS 21.36.125

AS 21.36.350

AS 21.42.205