HIPAA & Non-confinement provision

[Guest Lorna Pate]

Under HIPAA, it is my understanding that if an individual is confined in a hospital on the effective date of insurance coverage, a carrier could not exclude or not pay for that hospitalization based on health status discrimination. For example, individual goes into hospital on February 1, becomes effective with health plan on March 1, is discharged from hospital on April 15. Individual has a commercial POS plan (non-HMO). Who is responsible for paying for the hospitalization? Must the previous carrier pay for the entire hospitalization? Generally, I have seen new insurance carriers delay coverage until after the hospital discharge (this goes against HIPAA), therefore the previous ins. carrier pays for the hospital bill. However, in my example, the person becomes effective with a new ins. carrier midway through the hospitalization. For billing purposes, a hospital is not going to bill one insurance carrier for services rendered from Feb. 1 to Februray 28 and bill the new ins. carrier from March 1 through April 15. How does your company handle a situation such as this. Any guidance is greatly appreciated.

[Linda]

I have had this issue too. It was discussed at the ABA welfare benefits conference last fall and at the time the panel (which I believe included both IRS and DOL people) did not have any answers. In fact, it looked like they had not heard the issue before.

It is my nuderstanding that insurers treat the entire bill as incurred on the first day of a hospitalization, for newly enrolled individuals and for individuals leaving coverage. So, while it seems inconsistant with HIPAA, at least an individual switching from one policy to another is not left with an upaid bill. If an insurer had a newly enrolled individual with no prior coverage, I think it might have to figure out a way to split the bill based on the effective date of coverage.

It would be good if we did get a rule on this so it would be handled on a consistant basis.

[jeanine]

Our insured product plans have to be approved by the Ohio Department of Insurance. We have contract language that states that if you are hospitalized at the time coverage should take effect, coverage is effective immediately (to comply with HIPAA) but any previous insurance coverage is responsible for care until discharge. The reverse is also stated so that we are responsible even if you obtain other coverage for the hospital stay not to exceed 365 days. If the other coverage becomes exhausted before discharge, we then start paying. I'm not sure if this is Ohio law or not but it seems to me we had some help from ODI in getting this language straightened out.

[Linda]

Jeanine, so if a person is confined on the effective date of coverage but does not have prior coverage (and assuming no preexisting condition limitation), would you figure out which part of the hospital bill is properly attributable to the period after the new coverage became effective?

[jeanine]

In theory,that is what we would do. I'm not sure how the split in the bill would actually work though. However, all of our plans have a preexisting condition exclusion. Assuming no coverage at the time of hospitalization, the only way this condition could be covered is if there was a prior coverage no more than 63 days and there was enough creditable coverage for the pre-ex time. (I believe it is 6 months). In any case we would not cover the entire stay.