AT ADVOCATE

Newsletter of the National Assistive Technology Advocacy Project
A Project of Neighborhood Legal Services, Inc.
295 Main Street, Ste. 495 Buffalo, New York 14203 (716) 847-0650
(716) 847-0227 FAX (716) 847-1322 TDD e-mail: nls01@sprynet.com Web Page: http://www.nls.org
Supported by the National Institute on Disability and Rehabilitation Research,
U.S. Department of Education, Through a Subcontract with United Cerebral Palsy Associations.


Volume III     Issue 2                                             February/March 1998
Copyright 1998, Neighborhood Legal Services, Inc.

In this issue......

PRIVATE INSURANCE & AT PART I                                 COBRA
Introduction                                                                             Conclusion
Will the Insurance Policy Pay for AT?                                      SPECIAL FEATURES:
Make Sure You Obtain the Actual Policy                                 AT Court Watch I (DeSario)
Who is Covered by the Policy?                                                AT Court Watch II (Glick)
Preexisting Condition Clauses & Portability
& Accountability Act of 1996

PRIVATE INSURANCE CONTRACTS
AND ASSISTIVE TECHNOLOGY: PART I

INTRODUCTION

     In previous articles we detailed the availability of assistive technology (AT) funding through agencies of federal or state government. This two-part article addresses the availability of funds for AT from private insurance companies. The focus will be health insurance through traditional individual/family policies and through Health Maintenance Organizations (HMO) policies. We will not discuss an additional type of private insurance known as the Medicare Supplement, a policy designed to fill the gap in benefits for those individuals receiving Medicare.

     Although this two-part article will be comprehensive, we will not discuss every facet of insurance law. We will present a practical guide to understanding insurance policies and how they can be used to fund AT. We will also discuss some very important federal laws governing health insurance. We will not attempt to summarize the insurance law of any individual states. State laws governing insurance can be very important, however, and readers are urged to consult with your state statutes, regulations and case law governing insurance.

     The present article will focus on one primary issue -- who is covered by the policy? Our discussion will then branch into two sub-topics: the use of preexisting conditions clauses to limit coverage and the right to continued coverage after a lay off or job termination.

     Part II will appear in our April - May 1998 issue. It will discuss two additional issues: 1) whether a particular item of AT is covered by the insurance contract and 2) if so, whether the item will be considered medically necessary for the individual. The article will then discuss the options available to appeal adverse decisions, both administratively and through the courts.
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WILL THE INSURANCE POLICY
PAY FOR AT?
A THREE-STEP ANALYSIS

     This article uses the terms insurance "contract" and insurance "policy" interchangeably. To determine whether an individual is entitled to an AT device, such as a power wheelchair, one must address three issues:

1. Is the child or adult in question covered by the insurance policy?
2. Is the item being sought one that is covered by the policy?
3. Is the item being sought medically necessary?

If the answer to each questions is yes, the insurance policy will pay for the AT device, subject to any policy limits, co-payments or deductibles.

     The remainder of this article will focus on the various contractual, legal and practical issues raised by the first of these three questions. Before we go into that analysis, however, we need to distinguish between the insurance contract and other documents which summarize its contents.
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MAKE SURE YOU OBTAIN THE
ACTUAL INSURANCE CONTRACT

     It is important to distinguish between the actual insurance policy or contract and any other document which describes its provisions. In our experience, many individuals possess a document which they refer to as their contract which is actually something else. Often the document is called by a name such as "Employee's Health Benefit Handbook." Most likely this document is not the insurance contract, but is a summary written in plain English for the employee's or beneficiary's convenience.

     The actual health insurance contract is likely to be a much larger document and is likely to be written in more technical language. Typically, it will contain language on the title page describing it as the health insurance contract or policy. It is the contract and not some other summary of its provisions that will be the basis for determining whether the individual and his or her family members receive specific benefits through the health insurance policy.

     It is also important to obtain copies of any amendments, riders and supplemental policies for which the individual or employer is paying. As we will note in Part II, the provisions covering AT will typically appear in a major medical rider.
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WHO IS COVERED BY THE POLICY?

     This analysis is usually very easy. An individual policy covers one person, a family policy also covers the spouse and other dependents, typically the children. In many cases, however, we must look further to determine whether the particular individual, the medical condition or the benefit sought is covered by the contract. Most of these issues will be resolved by reference to the contract language. Other issues will be resolved by reference to various state and federal laws.

     At what age does the coverage of a child end? This will vary from policy to policy. Typical provisions for family coverage provide that a child is covered until age 18 or 19, or through age 22 or even age 25 if the child is a full-time college student. Often, coverage is extended indefinitely if the adult child has a disability. In our experience, disability is defined in terms similar to the definition of disability in the Social Security or Supplemental Security Income (SSI) programs. Because few people thoroughly review their health insurance policies, many are unaware that potential insurance policy coverage for AT may exist for an adult child with a disability who is well into his or her 20s or 30s.
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PREEXISTING CONDITION CLAUSES AND THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996

Use of Preexisting Conditions Clauses

     Many policies contain provisions which, as a practical matter, result in certain individuals being uninsured for all purposes or with respect to certain conditions or items covered by the policy. Unless otherwise limited by law, these provisions are legal and will serve to limit who and what is covered. You must read the policy carefully to determine whether these limitations exist. Since persons who need AT often have longstanding disabilities, a preexisting conditions clause can present a major barrier to obtaining AT.

     A typical provision, traditionally found in many policies, creates a 10 or 12 month waiting period for coverage of conditions which existed prior to the first month of coverage. Typically, the purpose is to eliminate coverage for a preexisting pregnancy. Other provisions may totally exclude coverage for any preexisting condition. Here, the purpose is to avoid high-cost beneficiaries. Although some of these provisions are still legal, their use in group health insurance plans has been limited by the federal Health Insurance Portability and Accountability Act.

HIPAA: Governing Law and Regulations

     The Health Insurance Portability and Accountability Act (HIPAA) of 1996 is also known as the Kennedy-Kassebaum law. It applies to plan years beginning after June 30, 1997. The law is codified in two places with nearly identical language. See 29 U.S.C. 1181 et seq. (Labor Law provisions); 26 U.S.C. 9801 et seq. (Internal Revenue Code provisions). Implementing interim regulations appear in three places with nearly identical language. See 62 Fed. Reg. 16894 (April 8, 1997) and 31669 (June 10, 1997); 26 C.F.R. 54.9801-1T et seq. (IRS regulations); 29 C.F.R. 2590.701-1 et seq. (Dept. of Labor regulations); 45 C.F.R. 144.01 et seq. (Health Care Financing Administration regulations). Unless otherwise noted, all references are to the Labor Law or the Department of Labor regulations. HIPAA applies to group health plans and health insurance issuers offering group plans. 29 C.F.R. 2590.701-1. Its major impact is the elimination of most preexisting condition exclusions in group health insurance plans.

Preexisting Condition Exclusions,
Waiting Periods, Affiliation Periods

     It is important to distinguish a period of exclusion due to a preexisting condition and a waiting period or affiliation period. A preexisting condition exclusion "means a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the first day of coverage ...." Id. 2590.701-2. A waiting period is "the period that must pass before an employee or dependent is eligible to enroll under the terms of a group health plan." Id. If a waiting period applies equally to all potential beneficiaries, it is permitted under HIPAA. An affiliation period is "a period of time that must expire before health insurance coverage provided by an HMO becomes effective, and during which the HMO is not required to provide benefits." Id. An affiliation period is legal under HIPAA as an alternative to a preexisting condition exclusion. Id. 2590.701-7.

HIPAA’s "Six-Month Look-Back Rule"

     "A preexisting condition exclusion must relate to a condition (whether physical or mental), regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending with the enrollment date." Id. 2590.701-3(a)(1)(i). If there is no advice, diagnosis, care or treatment recommended or received within the 6-month look-back period, the preexisting exclusion will not be legal. The applicability of this rule is best understood by looking at the four examples contained in the DOL regulations [following 2590.701-3(a)(1)(i)(c)], three of which are reproduced here verbatim:

"Example 1. (i) Individual A is treated for a medical condition 7 months before the enrollment date in Employer R's group health plan. As part of such treatment, A's physician recommends that a follow-up examination be given 2 months later. Despite this recommendation, A does not receive a follow-up examination and no other medical advice, diagnosis, care, or treatment for that condition is recommended to A or received by A during the 6-month period ending on A's enrollment date in Employer R's plan.

(ii) In this Example 1, Employer R's plan may not impose a preexisting condition exclusion period with respect to the condition for which A received treatment 7 months prior to the enrollment date.

Example 2. (i) Same facts as Example 1, except that Employer R's plan learns of the condition and attaches a rider to A's policy excluding coverage for the condition. Three months after enrollment, A's condition recurs, and Employer R's plan denies payment under the rider.

(ii) In this Example 2, the rider is a preexisting condition exclusion and Employer R's plan may not impose a preexisting condition exclusion with respect to the condition for which A received treatment 7 months prior to the enrollment date.

Example 3. (i) Individual B has asthma and is treated for that condition several times during the 6-month period before B's enrollment date in Employer S's plan. The plan imposes a 12-month preexisting condition exclusion. B has no prior creditable coverage to reduce the exclusion period. Three months after the enrollment date, B begins coverage under Employer S's plan. Two months later, B is hospitalized for asthma.

(ii) In this Example 3, Employer S's plan may exclude payment for the hospital stay and the physician services associated with this illness because the care is related to a medical condition for which treatment was received by B during the 6-month period before the enrollment date."

Maximum Length of
Preexisting Condition Exclusion:
the "12-Month Look-Forward Rule";
Reduction of Period Through "Creditable Coverage"

     "A preexisting condition exclusion is not permitted to extend for more than 12 months (18 months in the case of a late enrollee) after the enrollment date." Id. 2590.701-3(a)(1)(ii). For example, using an enrollment date of August 1, 1998, the maximum preexisting exclusion under the 12-month look-forward rule would be through July 31, 1999. A "late enrollee" is a person who either enrolls after the earliest date on which coverage can become effective or after a special enrollment date established for that individual. Id. 2590.701-3(a)(2)(iii).

      "The period of any preexisting condition exclusion that would otherwise apply to an individual under a group health plan is reduced by the number of days of creditable coverage the individual has as of the enrollment date ...." Id. 2590.701-3(a)(1)(iii). The "enrollment date" is the "first day of coverage or, if there is a waiting period, the first day of the waiting period." Id. 2590.701-3(a)(2).

     What qualifies as "creditable coverage"? It includes a very wide range of public and privately funded health coverage, including any of the following [id. 2590.701-4(a)(1)]:

     In order to count past coverage as creditable coverage, there must be no "significant break" in coverage. This is defined as a break of 63 consecutive days. 29 C.F.R. 2590.701-4(b)(2). Neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage. The applicability of this rule is best understood by looking at the eight examples contained in the DOL regulations [following 2590.701-4(b)(2)(iv)], several of which are reproduced here verbatim:

"Example 1. (i) Individual A works for Employer P and has creditable coverage under Employer P's plan for 18 months before A's employment terminates. A is hired by Employer Q, and enrolls in Employer Q's group health plan, 64 days after the last date of coverage under Employer P's plan. Employer Q's plan has a 12-month preexisting condition exclusion period.

(ii) In this Example 1, because A had a break in coverage of 63 days, Employer Q's plan may disregard A's prior coverage and A may be subject to a 12-month preexisting condition exclusion period.

Example 2. (i) Same facts as Example 1, except that A is hired by Employer Q, and enrolls in Employer Q's plan, on the 63rd day after the last date of coverage under Employer P's plan.

(ii) In this Example 2, A has a break in coverage of 62 days. Because A's break in coverage is not a significant break in coverage, Employer Q's plan must count A's prior creditable coverage for purposes of reducing the plan's preexisting condition exclusion period as it applies to A.

Example 3. (i) Same facts as Example 1, except that Employer Q's plan provides benefits through an insurance policy that, as required by applicable State insurance laws, defines a significant break in coverage as 90 days.

(ii) In this Example 3, the issuer that provides group health insurance to Employer Q's plan must count A's period of creditable coverage prior to the 63-day break.

Example 4. (i) Same facts as Example 3, except that Employer Q's plan is a self-insured plan, and, thus, is not subject to State insurance laws.

(ii) In this Example 4, the plan is not governed by the longer break rules under State insurance law and A's previous coverage may be disregarded.

Example 5. (i) Individual B begins employment with Employer R 45 days after terminating coverage under a prior group health plan. Employer R's plan has a 30-day waiting period before coverage begins. B enrolls in Employer R's plan when first eligible.

(ii) In this Example 5, B does not have a significant break in coverage for purposes of determining whether B's prior coverage must be counted by Employer R's plan. B has only a 44-day break in coverage because the 30-day waiting period is not taken into account in determining a significant break in coverage."

Preexisting Condition Exclusions Barred for
Newborns, Adopted Children and Pregnancy

     HIPAA disallows preexisting condition exclusions in three instances [29 C.F.R. 2590.701-3(b)]:

Newborns: It prohibits exclusion of newborns, who would otherwise be covered by the policy, so long as the child is covered by some form of creditable coverage within 30 days of birth.

Adopted children: It prohibits the exclusion of an adopted child (i.e., one adopted or placed for adoption before age 18) who is covered under creditable coverage within 30 days of the adoption or placement for adoption.

Pregnancy: Neither a group health plan nor a health insurance issuer offering group health insurance may impose a preexisting condition exclusion relating to pregnancy.

The "Certificate of Creditable Coverage"

     The HIPAA regulations envision that a person will establish past creditable coverage by producing a certificate or certificates. Generally, the entity providing the past creditable coverage has an obligation to provide a "certificate of creditable coverage." See 29 C.F.R. 2590.701-5(a)(1)(i), regarding obligations of group health plans and health insurance issuers offering group health insurance. See id. 2590.701-5(a)(6)(i) & (ii), regarding other entities referred to above (e.g., Medicare, Medicaid, etc.).

HIPAA's Anti-Discrimination Provisions

     Under HIPAA, a health insurance issuer offering group health insurance coverage is prohibited from discriminating. It may not establish rules for plan eligibility based on any of the following health status factors in relation to the individual or a dependent [id. 2590.702]:

COBRA:
THE RIGHT TO CONTINUED COVERAGE
AFTER A LAY OFF OR JOB TERMINATION

     The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), 29 U.S.C. 1161 et seq., applies to employers who customarily employed 20 or more employees on a typical business day in the preceding calendar year. COBRA provides an option for continuing insurance coverage for employees and their dependents after a lay off or job termination.

     Under COBRA, the employee or dependent has a minimum of 60 days to elect continued coverage. Id. 1165. The employee or dependent is generally entitled to continued coverage, at their own expense, for a period of 18 months following the termination. In some cases, COBRA coverage can extend for a longer period of time. 1162. COBRA limits the premium to 102 per cent of the group rate paid by the former employer and permits payment in monthly installments. Id. 1162(3)(A) and (B). COBRA does not, however, apply to employees who are terminated as a result of gross misconduct. Id . 1163(2).

     COBRA protects individuals during the period they are between jobs or awaiting Medicare eligibility. It protects an employee's spouse and dependent children when they lose eligibility under the group health plan as a result of the employee's death, entitlement to Medicare, termination of employment or reduction of work hours. Id. 1163, 1167(3). COBRA also protects a spouse in the event of divorce or legal separation and protects dependent children who lose their right to coverage as dependants because they get older or marry. Id. 1163(3) & (5).

     The 18 months of continued coverage is extended to 29 months for individuals who are determined to be disabled under the Social Security or Supplemental Security Income programs when employment is terminated or when continuation coverage begins. To extend coverage to 29 months, the employee must provide notice of his or her disability before the 18 month continuation period expires. Id. 1162(2)(A).
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CONCLUSION

     Part I of this two-part article has primarily addressed the issues related to whether a particular individual will be covered by a health insurance policy. When a person is covered by the policy, the Health Insurance Portability and Accountability Act of 1996 greatly limits the use of preexisting conditions clauses to limit coverage of longstanding conditions when a person changes jobs and changes insurance plans. When a person loses a job and loses the right to insurance coverage as an employee benefit, both HIPAA and COBRA provide extensive protection, allowing the employee and his or her dependants to opt for continued coverage to bridge the gap while the individual is either between jobs or awaiting Medicare eligibility.

     Part II, which will appear in the April-May issue of AT Advocate, will explore two additional issues that will determine whether a particular AT device will be funded -- whether the item in question is covered by the policy, and whether the item in question is medically necessary. We will then discuss appeal options available when a claim is denied, both administrative and through the courts. As we will point out in Part II, many advocates have had considerable success in getting insurance companies to reverse the original denial and award funding for AT devices.
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AT COURT WATCH I

Second Circuit Holds that Connecticut’s Medicaid Program Can Limit
Availability of AT to Items Which Appear on Exclusive List

     On February 24, 1998, the U.S. Court of Appeals for the Second Circuit dealt a significant blow to persons who are seeking AT under the Connecticut Medicaid program’s category of durable medical equipment (DME). The Second Circuit appears to be giving Medicaid programs in the Second Circuit states of Connecticut, New York and Vermont the green light to exclude items from Medicaid coverage if : 1) the item does not meet the traditional definition many states use for DME because the item is not "primarily medical in nature" ; or 2) the item would only be needed for a very select number of Medicaid recipients. In so holding, the court sanctioned Connecticut’s use of an exclusive list for DME.

     In our August-September 1997 issue of AT Advocate, we reported on the District Court decision in DeSario v. Thomas, 963 F.Supp. 120 (D.Conn. 1997). DeSario is a class action challenging two Connecticut Medicaid regulations: one permits the state to deny coverage for any items of DME not listed on the state's DME fee schedule; the other excludes specific pieces of DME from coverage, including air conditioners, air purifiers and room humidifiers.

     The District Court held that plaintiffs had satisfied preliminary injunction criteria by showing a likelihood of success on the merits with respect to two specific claims. First, it held that the state's use of an exclusive DME list "violates federal Medicaid law because it improperly limits the amount, duration, and scope of medically necessary durable medical equipment." 963 F.Supp. at 130; see 42 C.F.R. 440.230(a). The court was careful to point out that plaintiffs did not establish a likelihood of success on the merits of its claim that the use of a list is unlawful per se, suggesting that the use of a list would be valid under federal regulations so long as there are reasonably available procedures for seeking either modifications or exceptions to the list. 963 F.Supp. at 131-132.

     The District Court also held that the state's categorical exclusion of coverage for air conditioners, air purifiers and room humidifiers, without considering medical necessity, violates federal Medicaid law. The court was again careful to point out that it was not holding that a state could not, in an appropriate case, make the decision that certain items of DME are never medically necessary.

     On appeal, the three-judge panel set aside the District Court decision and sanctioned the use of an exclusive list. Because of limitations of space, we will not discuss the DeSario holding further in this issue.

    Counsel for the plaintiffs [Sheldon V. Taubman and Shelley A. White of New Haven Legal Assistance] have indicated their intention to petition for rehearing en banc (i.e., before the full Second Circuit). Attorney Lew Golinker of Ithaca, New York is spearheading an effort to file an amicus curiae (i.e., friend of the court) brief in connection with the rehearing petition to point out the devastating impact of the decision issued by the three-judge panel.

[As this is written, the Second Circuit’s decision is not yet on Westlaw. Copies of the decision can be obtained from the AT Advocacy Project by calling Vivian at 716-847-0655 ext. 271. Our Resource Library also contains copies of the plaintiffs’ briefs that were filed in the Second Circuit.]
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AT COURT WATCH II

Wisconsin State Court Rules Against Medicaid’s Use of $5,000 Limit
for Funding Augmentative Communication Devices

     Wisconsin’s Medicaid program limits funding for augmentative communication devices to $5,000 per 10 year life expectancy. The plaintiff sought a DynaVox 2 with a cost totaling $6,634. Medicaid approved only $5,000 toward the device, refusing to authorize a color upgrade, fold down mount and buddy switch.

     On appeal, the Milwaukee County Circuit Court in Glick v. Wisconsin Dept. of Health and Human Services (Feb. 23, 1998), reversed an agency decision and ordered Medicaid funding for the entire device. The court ruled that: 1) the ACD met the federal definition of "rehabilitative services" per 42 C.F.R. 440.130(d); 2) the $5,000 which the Medicaid program is willing to provide is not "sufficient in amount, duration and scope to reasonably achieve its purpose" [see 42 C.F.R. 440.230]; 3) the requirement that the plaintiff pay for components exceeding the $5,000 limit violates 42 U.S.C. 1396o(b), as it illegally requires that the beneficiary share in the cost of the ACD. Congratulations to attorney, Monica Murphy, of the Wisconsin protection and advocacy program!

[Copies of the decision and the briefs filed for plaintiff can be obtained by calling Vivian at 716-847-0655 ext. 271.]

The National Assistive Technology Resource Library

     We have designed a word-searchable digest, using computer technology, to store and retrieve hearing decisions, pleadings, briefs and other documents from our resource library. Please send us your hearing decisions, briefs and other documents involving AT.

Please send information to:             TEL: (716) 847-0650              Handsnet: HN0627
Attn.: Vivian Cosentino                       FAX: (716) 847-0227            e-mail: nls01@sprynet.com
Neighborhood Legal Services, Inc.    TDD: (716) 847-1322
Ellicott Square Building                       Web Page: http://www.nls.org
295 Main Street, Rm 495
Buffalo, NY 14203ternative format, please let us know.

The AT Advocacy Project
will provide nationwide services to PAAT projects including technical assistance to advocates wanting to access funding for assistive technology for individuals with disabilities.

In future issues....

- Private Insurance Funding of AT Part II
- Medicaid Funding of AT in Nursing Homes
- AT Funding through the Americans with Disabilities Act (ADA)

NOTE: The AT Advocate is now issued bi-monthly