Administrative Rules of the State of Montana

BEFORE THE COMMISSIONER OF SECURITIES AND INSURANCE

MONTANA STATE AUDITOR

In the matter of the adoption of New Rule I, the amendment of ARM 6.6.503, 6.6.504, 6.6.506, 6.6.507A, 6.6.507B, 6.6.507C, 6.6.507E, 6.6.508, 6.6.508A, 6.6.509, 6.6.510, 6.6.517, 6.6.519, 6.6.521, and 6.6.526, and the repeal of 6.6.511 and 6.6.511A pertaining to Medicare supplement insurance

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NOTICE OF ADOPTION, AMENDMENT, AND REPEAL

TO: All Concerned Persons

1. On September 22, 2017, the Commissioner of Securities and Insurance, Montana State Auditor, published MAR Notice No. 6-237 pertaining to the public hearing on the proposed adoption, amendment, and repeal of the above-stated rules at page 1542 of the 2017 Montana Administrative Register, Issue Number 18.

2. The department has adopted the following rule, but with the following changes to the original proposal, stricken matter interlined, new matter underlined:

6.6.507F (NEW RULE I) Standard Medicare Supplement Benefit Plans for 2020 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery to Individuals Newly Eligible for Medicare on or After January 1, 2020 (1) The ~~Medicare Prescription Drug, Improvement, and Modernization Act of 2003~~ Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) requires that the following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state to individuals newly eligible for Medicare on or after January 1, 2020. No policy or certificate that provides coverage of the Medicare part B deductible may be advertised, solicited, delivered, or issued for delivery in this state as a Medicare supplement policy or certificate to individuals newly eligible for Medicare on or after January 1, 2020. All policies must comply with the following benefit standards. Benefit plan standards applicable to Medicare supplement policies and certificates issued to individuals eligible for Medicare before January 1, 2020, remain subject to the requirements of the appropriate rules of this subchapter.

(2) through (6) remain as proposed.

3. The department has amended the following rules as proposed: ARM 6.6.503, 6.6.504, 6.6.506, 6.6.521, and 6.6.526.

4. The department has repealed the following rules as proposed: ARM 6.6.511 and 6.6.511A.

5. After consideration of the comments received, the department amends the following rules as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:

6.6.507A STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 1990 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED FOR DELIVERY ON OR AFTER JULY 1993, AND WITH AN EFFECTIVE DATE FOR COVERAGE PRIOR TO JUNE 1, 2010 (1) through (5)(g)(i) remain as proposed.

(ii) The annual High Deductible Plan F deductible must consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement Plan F policy, and must be in addition to any other specific benefit deductibles. The annual High Deductible Plan F deductible will be $1500.00 for 1998 and 1999, ~~and~~ must be based on the calendar year, and~~. It~~ will be adjusted annually thereafter by the secretary to reflect the change in the consumer price index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.00.

(h) through (l)(i) remain as proposed.

(ii) The annual High Deductible Plan J deductible must consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement Plan J policy, and must be in addition to any other specific benefit deductibles. The annual deductible will be $1500.00 for 1998 and 1999, ~~and~~ must be based on a calendar year, and~~. It~~ will be adjusted annually thereafter by the secretary to reflect the change in the consumer price index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.00.

(6) through (7) remain as proposed.

6.6.507B OPEN ENROLLMENT (1) and (2) remain as proposed.

(a) If an applicant qualifies under ARM 6.6.507B(1)~~(a) or (b)~~, submits an application during either time period referenced in (1) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition; and

(b) If the applicant qualifies under ARM 6.6.507B(1)~~(a) or (b)~~, and submits an application during either time period referenced in (1) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The secretary shall specify the manner of the reduction under this rule.

(3) remains as proposed.

6.6.507C GUARANTEED ISSUE FOR ELIGIBLE PERSONS (1) through (3)(c)(ii) remain as proposed.

(d) for an individual described in (2)(b), (d)(iii), ~~(d)(iv),~~ (e), or (f) who disenrolls voluntarily, begins on the date that is 60 days before the effective date of the disenrollment and ends on the date that is 63 days after the effective date;

(e) through (6)(b) remain as proposed.

6.6.507E STANDARD MEDICARE SUPPLEMENT BENEFIT PLANS FOR 2010 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN POLICIES OR CERTIFICATES ISSUED WITH AN EFFECTIVE DATE FOR COVERAGE ON OR AFTER JUNE 1, 2010 (1) through (8) remain as proposed.

(9) Standardized Medicare Supplement Plan M shall include only the basic (core) benefit as defined in ARM 6.6.507D(4)(a), plus 50% of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country, as defined in ARM 6.6.507D(4)(b)(ii), (iii), and (vi), respectively.

(10) Standardized Medicare Supplement Plan N shall include only the basic (core) benefit as defined in ARM 6.6.507D(4)(a), plus 100% of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country, as defined in ARM 6.6.507D(4)(b)(i), (iii), and (vi), respectively, with copayments in the following amounts:

(a) through (11) remain as proposed.

6.6.508 LOSS RATIO STANDARDS AND REFUND OR CREDIT OF PREMIUM (1) remains as proposed.

(2) For purposes of (1), the ~~The~~ loss ratio must be calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for the period and in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by a health maintenance organization must not include:

(a) through (3) remain as proposed.

(4) The experience used to calculate an expected loss ratio must be the separate experience of any plan. However, if there is more than one Plan H, I, or J because of the requirements of the MMA, the experience of each plan issued before September 9, 2005, and of each H, I, or J Plan ~~of any type~~ issued on or after September 9, 2005, must be combined for the purpose of determining the expected loss ratio. The experience must also be provided separately for each of these plans for the department's records.

(5) Policy forms or plans utilizing solicitations of individuals through the mails or by mass media advertising (including print, broadcast, and electronic advertising) on or before December 8, 2017, must be regarded as group policies for purposes of rate increase filings. This does not change the yearly benchmark filing required by (7). For policy forms or plans using advertising after December 8, 2017, the loss ratios required by this rule do not change regardless of any advertising methods used.

(6) through (7)(a) remain as proposed, but are renumbered (5) through (6)(a).

(b) if, on the basis of the experience as reported, the benchmark ration since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation (see ARM 6.6.524) must be done on a statewide basis for each type in a standard Medicare Supplement Benefit Plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded;

(8) and (9) remain as proposed, but are renumbered (7) and (8).

(9)~~(10)~~ As required by (9), an An issuer must make such premium adjustments necessary to produce an expected loss ratio under the policy or certificate to conform with minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for the Medicare supplement policies or certificates. No premium adjustment which would modify the loss ratio experience under the policy, other than the adjustments described in this rule, should be made with respect to a policy at any time other than upon its renewal date or anniversary date. Any premium adjustment filings must include all necessary supporting documents to justify the adjustment.

(11) and (12) remain as proposed, but are renumbered (10) and (11).

6.6.508A FILING AND APPROVAL OF POLICIES AND CERTIFICATES AND PREMIUM RATES (1) through (7) remain as proposed.

(8) An issuer has the option of offering Medicare supplement policies ~~plans~~ on an attained age basis, issue age basis, or a dual rating basis. Only one of those rating methodologies ~~methodology~~ may be chosen per Medicare supplement benefit policy form ~~plan~~, except as provided in (4)(a).

(a) and (b) remain as proposed.

(9) As a one-time exception to (5), between [the adoption of this amendment] and July 1, 2018, issuers may discontinue currently existing plans and re-file the same plan for the sole purpose of applying the individual or group loss ratio to rate filings regardless of advertising methods, as set forth in ARM 6.6.508(1) and (5). All other details of the re-filed plan must remain the same.

6.6.509 REQUIRED DISCLOSURE PROVISIONS (1) through (9) remain as proposed.

(10) The CSI adopts and incorporates by reference the National Association of Insurance Commissioners (NAIC) Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act, (MDL-651), page 651-53 through page 651-104, which was last adopted in the 1st quarter of 2017, and is available online at http://www.naic.org/prod_serv_model_laws.htm. Specifically, those pages of the NAIC MDL-651 set forth benefit charts, disclosures to insureds, and outlines of coverage for 2010 or 2020 Medicare supplement plans, as applicable, that must be included in the outline of coverage provided to the consumer in the same order as set forth in NAIC MDL-651. Copies of the NAIC MDL-651 are also available for public inspection at the Office of the Commissioner of Securities and Insurance, Montana State Auditor, Legal Department, 840 Helena Avenue, Helena, Montana 59601. Persons obtaining a copy of these forms must pay the cost of providing such copies.

(11) and (12) remain as proposed.

6.6.510 REQUIREMENTS FOR APPLICATION FORMS AND REPLACEMENT COVERAGE (1) Application forms must include the following questions designed to elicit information as to whether, as of the date of application, the applicant currently has Medicare supplement, Medicare advantage, Medicaid coverage, or another health policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and producer containing such questions and statements as the following may be used. ~~Application forms must use the following statements and questions in substantially the same format as follows:~~

(STATEMENTS)

(1) You do not need more than one Medicare supplement policy.

(2) If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverages.

(3) You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy.

(4) If, after purchasing this policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy must be suspended if requested during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming eligible for Medicaid. Upon receipt of timely notice, the issuer must either return to the policyholder or certificateholder that portion of the premium attributable to the period of Medicaid eligibility or provide coverage to the end of the term for which premiums were paid, at the option of the insured, subject to adjustment for paid claims. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstated if requested within 90 days of losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare part D while your policy was suspended, the reinstated policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

(5) If you are eligible for and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based group health plan, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstated if requested within 90 days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare part D while your policy was suspended, the reinstated policy will not have prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of suspension.

(6) Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low-Income Medicare Beneficiary (SLMB).

(QUESTIONS)

If you lost or are losing other health insurance coverage and received a notice from your prior insurer saying you were eligible for guaranteed issue of a Medicare supplement policy, or that you had certain rights to buy such a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your prior insurer with your application. PLEASE ANSWER ALL QUESTIONS.

[Please mark Yes or No below with an ″X″]

To the best of your knowledge:

(1)(a) Did you turn age 65 in the last 6 months?

YES _____ NO _____

(b) Did you enroll in Medicare Part B in the last 6 months?

YES _____ NO _____

~~(d) Did you enroll in Medicare Part C in the last 6 months?~~

~~YES _____ NO _____~~

~~(e) If yes, what is the effective date? ___________~~

~~(f) Did you enroll in Medicare Part D in the last 6 months?~~

~~YES _____ NO _____~~

~~(g) If yes, what is the effective date? ____________~~

Are you covered for medical assistance through the state Medicaid program?

[NOTE TO APPLICANT: If you are participating in a ″spend-down″ program and have not met your ″share of cost,″ please answer NO to this question.]

YES _____ NO _____

If yes,

Will Medicaid pay your premiums for this Medicare supplement policy?

YES _____ NO _____

(b) Do you receive any benefits from Medicaid other than payments toward your Medicare Part B premium?

YES _____ NO _____

(3)(a) If you had coverage from any Medicare plan other than original Medicare within the past 63 days (for example, a Medicare advantage plan, or a Medicare HMO or PPO), fill in your start and end dates below. If you are still covered under this plan, leave ″END″ blank.

Start / / End / /

(b) If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy?

YES _____ NO _____

(d) Did you drop a Medicare supplement policy to enroll in the Medicare plan?

YES _____ NO _____

(4)(a) Do you have another Medicare supplement policy in force?

YES _____ NO _____

(b) If so, with what company, and what plan do you have [optional for direct mailers]?

_____________________________________________________________

YES _____ NO _____

(5) Have you had coverage under any other health insurance within the past 63 days? (For example, an employer, union, or individual plan.)

YES _____ NO _____

(a) If so, with what company and what kind of policy?

__________________________________________________________________________________________________________________________________________________________________________________________

(b) What are your dates of coverage under the other policy?

Start / / End / /

(If you are still covered under the other policy, leave ″end″ blank.)

[End Statements and Questions Form]

(2) through (6) remain as proposed.

6.6.517 PERMITTED COMPENSATION ARRANGEMENTS (1) through (4) remain as proposed.

(5) As part of the annual filing under ARM 6.6.508~~(6)~~(7), the entity providing Medicare supplement policies shall provide copies of commission schedules.

(a) and (b) remain as proposed.

6.6.519 STANDARDS FOR MARKETING (1) through (2) remain as proposed.

(3) ~~The terms "medigap" and "medicare wrap-around" must not be used.~~ The terms "medicare supplement," “medigap,” “medicare wrap-around,” ~~and~~ "medicare select," and words of similar import must not be used unless the policy or certificate is issued in compliance with applicable administrative rules and statutes.

6. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:

COMMENT No. 1: UnitedHealthcare requested that we remove the first sentence of ARM 6.6.519(3) prohibiting the use of the term “medigap.” The commenter noted that this requirement is not in the model rules from the National Association of Insurance Commissioners (NAIC), it is costly to require national forms to adhere to this state-specific requirement, and the federal government officially uses the term “medigap” in the Social Security Act.

RESPONSE No. 1: The CSI agrees with this comment, and has changed ARM 6.6.519(3) to more closely follow the NAIC model rule, and allow use of the terms “medigap” and “medicare wrap-around.”

COMMENT No. 2: Blue Cross Blue Shield of Montana (BCBSMT) and America’s Health Insurance Plans (AHIP) requested that the CSI remove its proposed language in ARM 6.6.508(5) and 6.6.508A(9), which would have applied a bifurcated approach to loss ratio standards based on the methods used to advertise individual Medicare supplement plans. Both commenters stated that the Montana legislature removed similar language from 33-22-906(1), MCA, in 2017, and advocated that the CSI should simply do the same. Both commenters also noted several issues with closing existing plans and reissuing them, as the proposed regulation would allow.

RESPONSE No. 2: The CSI agrees with this comment, and has removed proposed ARM 6.6.508(5) and 6.6.508A(9). The CSI will apply the individual or group loss ratio standards to existing and future Medicare supplement plans regardless of advertising methods used to market those plans.

COMMENT No. 3: Commenter AHIP identified a typo in the original ARM 6.6.508(7)(b), which used “ration” instead of “ratio.”

RESPONSE No. 3: The CSI agrees with this comment, and has fixed the typo.

COMMENT No. 4: Commenter AHIP agreed that New Rule I is necessary to implement MACRA, and emphasized that similarity with the NAIC model “ensure[s] that the appropriate modifications are incorporated fully and reflect[s] a standard of continuity across the nation, which is beneficial for carriers and consumers alike.”

RESPONSE No. 4: The CSI agrees with this comment, and has strived to implement the regulatory changes required by MACRA in a consistent manner.

COMMENT No. 5: Commenter AHIP requested that the CSI remove four questions from the application form outlined in ARM 6.6.510 which are not in the NAIC model. The commenter argued that the questions about Medicare Part C are redundant, the questions about Medicare Part D are superfluous, and both questions could lead to consumer confusion.

RESPONSE No. 5: The CSI agrees with this comment, and has removed those specific questions from the application form in ARM 6.6.510.

COMMENT No. 6: Commenter BCBSMT expressed uncertainty on how subsections (1) and (6) of New Rule I should be applied, and requested that the CSI include additional language to clarify any uncertainty.

RESPONSE No. 6: The CSI is unwilling to add any Montana-specific language to New Rule I, for the reasons outlined by AHIP in Comment No. 4. The CSI will work with BCBSMT to address any uncertainty in application of these new rules prior to January 1, 2020.

COMMENT No. 7: Commenter BCBSMT also noted in proposed New Rule I that the CSI incorrectly cited to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 instead of MACRA.

RESPONSE No. 7: The CSI agrees with this comment, and changed the citation to the correct federal act.

COMMENT No. 8: Commenter BCBSMT argued that subsection (5) of New Rule I is unnecessary, because its provisions do not apply to Montana and some of the language is already stated in subsection (1).

RESPONSE No. 8: While the CSI agrees with the observations by BCBSMT, the CSI is not willing to modify the NAIC model language contained in New Rule I, for the reasons outlined by AHIP in Comment No. 4.

COMMENT No. 9: Commenter BCBSMT requested that the CSI modify ARM 6.6.507C(5) to address questions of guaranteed issue of coverage for 2020 plans.

RESPONSE No. 9: The CSI disagrees with this comment. The CSI believes New Rule I answers all questions of guaranteed issue after January 1, 2020. If this is not the case, the CSI will work with BCBSMT to address any uncertainty in application of these new rules prior to January 1, 2020.

COMMENT No. 10: Commenter BCBSMT took issue with the CSI’s statement of reasonable necessity for the proposed amendments to ARM 6.6.507C as being “wholly non-substantive.” Specifically, BCBSMT noted that the amendments extended the open enrollment period by 60 days for insureds who enrolled because of materially misrepresented policy provisions.

RESPONSE No. 10: The CSI agrees with this comment. It was not the CSI’s intent to mischaracterize any amendments in the statement of reasonable necessity; therefore, that additional 60-day enrollment period has been removed from the adopted rule.

COMMENT No. 11: Commenter BCBSMT notes that there is no proposed new rule corresponding to ARM 6.6.507 and 6.6.507D outlining benefit standards for 2020 plans. The commenter requests clarification whether this omission was intentional or whether a new rule will be proposed in the future.

RESPONSE No. 11: The answer to this question is contained in the NAIC guidance on its proposed rule changes to implement MACRA. No new rule corresponding to ARM 6.6.507 or 6.6.507D is contemplated by the NAIC or the CSI. The CSI believes that the terms of ARM 6.6.507D, unless modified by New Rule I, will continue to apply to 2020 plans.

COMMENT No. 12: Commenter BCBSMT states that the CSI references the incorrect version of the NAIC model regulation (MDL-651) in ARM 6.6.509(10). Furthermore, the commenter requested that the CSI change the page numbers from the NAIC model regulation cited in the proposed rule, and include language that the outlines of coverage apply to 2010 and 2020 plans.

RESPONSE No. 12: The CSI disagrees with the first part of this comment. Incorporation of the most recent NAIC model (with its corresponding page numbers) into ARM 6.6.509(10) is within the CSI’s authority and is more efficient, since the 2017 model includes outline of coverage information for 2020 plans. The CSI does agree that a reference to both 2010 and 2020 plans in ARM 6.6.509(10) would be helpful to carriers, and such a reference has been included in the adopted rule.

COMMENT No. 13: Commenter BCBSMT requests inclusion of language to New Rule I to expressly reference 2020 plans, and to remove all use of the term “100%” as redundant.

RESPONSE No. 13: The CSI disagrees with this comment. The CSI is not willing to modify the NAIC model language for the reasons outlined by AHIP in Comment No. 4.

COMMENT No. 14: Commenter BCBSMT requests that the CSI include a definition for “2020 standardized Medicare supplement benefit plan,” “2020 standardized plan,” or “2020 plan” to ARM 6.6.504.

RESPONSE No. 14: The CSI disagrees with this comment. Those terms are not used in the substantive language of any proposed rule, and therefore the definition would be superfluous.

COMMENT No. 15: Commenter BCBSMT agreed with the CSI’s deletion of the last sentence in proposed subsection (8) of ARM 6.6.504. The commenter argued that these regulations only apply to Medicare supplement plans, not Medicare advantage (Part C) plans.

RESPONSE No. 15: The CSI agrees with this comment.

COMMENT No. 16: Commenter BCBSMT requested that the CSI modify ARM 6.6.507 to make it clear that the rule does not apply to pre-standardized Medicare supplement plans issued before July, 1993.

RESPONSE No. 16: The CSI notes that ARM 6.6.507 was originally enacted in 1981. Therefore the terms of the rule as it originally existed could be applied to plans prior to July, 1993.

COMMENT No. 17: Commenter BCBSMT requested non-substantive changes to 6.6.507A(5)(g)(ii) and (5)(l)(ii) to make their provisions more clear.

RESPONSE No. 17: The CSI agrees with this comment, and has modified ARM 6.6.507A(5)(g)(ii) and (5)(l)(ii) accordingly.

COMMENT No. 18: Commenter BCBSMT requested that the CSI remove redundant “new or innovative” language from ARM 6.6.507A(7).

RESPONSE No. 18: While the CSI agrees the language is redundant, the CSI is not willing to modify the NAIC model language, for the reasons outlined by AHIP in Comment No. 4.

COMMENT No. 19: Commenter BCBSMT noted that, given the proposed changes eliminating subsections (a) and (b) in ARM 6.6.507B(1), references to “(a) or (b)” in subsequent subsections should be deleted.

RESPONSE No. 19: The CSI agrees with this comment, and that language has been removed from the adopted rule.

COMMENT No. 20: Commenter BCBSMT requested the addition of a comma after the words “foreign country” in subsections (9) and (10) of ARM 6.6.507E, to provide clarity for the inserted language in the proposed rule.

RESPONSE No. 20: The CSI agrees with this comment, and has revised ARM 6.6.507E(9) and (10) accordingly.

COMMENT No. 21: Commenter BCBSMT requested that the phrase “For purposes of (1),” be included at the beginning of ARM 6.6.508(2) to clarify what subsection (2) applies to.

RESPONSE No. 21: The CSI agrees with this comment, and has revised ARM 6.6.508(2) accordingly.

COMMENT No. 22: Commenter BCBSMT pointed out that different phrases are used throughout these rules to describe “generally accepted actuarial principles and practices,” and argued that only one such term should be used.

RESPONSE No. 22: While the CSI agrees it is generally good practice to use the same phrase for the same legal concept when drafting rules, the CSI is not willing to modify the NAIC model language, for the reasons outlined by AHIP in Comment No. 4.

COMMENT No. 23: Commenter BCBSMT stated that ARM 6.6.508(2) as proposed is confusing, in that it is unclear what the phrases “earned premium for the period” and “in accordance with accepted actuarial principles and practices” apply to.

RESPONSE No. 23: The CSI disagrees with this comment. The changes to ARM 6.6.508(2) are to make the rule adhere more closely to the NAIC model regulations, and the CSI is not willing to modify the NAIC model language, for the reasons outlined by AHIP in Comment No. 4. The CSI will work with BCBSMT to address any uncertainty in application of this model language.

COMMENT No. 24: Commenter BCBSMT suggested that the word “appropriate” in ARM 6.6.508(3) should be changed to “applicable.”

RESPONSE No. 24: The CSI disagrees with this comment. In context, the word “appropriate” means legally appropriate, which is the same as “applicable.” In addition, the CSI is not willing to modify the NAIC model language, for the reasons outlined by AHIP in Comment No. 4.

COMMENT No. 25: Commenter BCBSMT requested clarification of the phrase “of any type” in ARM 6.6.508(4).

RESPONSE No. 25: The CSI agrees that this language is confusing, and has removed it from the adopted rule.

COMMENT No. 26: Commenter BCBSMT stated that subsections (9), (10), and (11) of proposed ARM 6.6.508 are intended to work together, and should be revised to expressly indicate this. The commenter also noted that subsection (9)(a) and (10) may be redundant.

RESPONSE No. 26: The CSI agrees that proposed subsections (9), (10), and (11) of ARM 6.6.508 are designed to work together, which is why they are part of the same rule and numerically next to each other. Proposed subsections (10) and (11) used to be part of subsection (9), but were moved to their own subsections for clarity and to follow Montana rule drafting procedures. The CSI has added language to proposed subsection (10) to make this more clear. The CSI disagrees that proposed subsection (10) is redundant, as it contains requirements and limitations on the rate increases required by subsection (9).

COMMENT No. 27: Commenter BCBSMT requested that an effective date should be substituted for the phrase “issued before or after the effective date of this rule” in proposed ARM 6.6.508(12).

RESPONSE No. 27: The CSI disagrees that adding a date to proposed ARM 6.6.508(12) is necessary, given that the effective dates at the bottom of the rule, and particularly given that the language taken from the NAIC model rule is “before or after the effective date.”

COMMENT No. 28: Commenter BCBSMT requested that additional language be added to subsections (4) and (5) of proposed ARM 6.6.508A to reference subsection (9).

RESPONSE No. 28: The CSI has removed proposed subsection (9), and therefore this comment is moot.

COMMENT No. 29: Commenter BCBSMT expressed confusion over the effect of proposed ARM 6.6.508A(8), and in particular whether dual-rating was actually allowed.

RESPONSE No. 29: The CSI agrees with this comment, and has modified ARM 6.6.508A(8) to make it clear that policies can be dual-rated, but that the issuer must pick one rating methodology (including dual-rated) for all policies sold under one policy form.

COMMENT No. 30: Commenter BCBSMT noted that the last sentence of ARM 6.6.510(1) conflicted with the second-to-last sentence, and requested clarification whether the form outlined in that subsection was required.

RESPONSE No. 30: The CSI agrees with this comment, and has removed the last sentence of ARM 6.6.510(1).

COMMENT No. 31: Commenter BCBSMT stated that ARM 6.6.517(5) cited to the incorrect subsection of ARM 6.6.508.

RESPONSE No. 31: The CSI agrees with this comment, and has corrected the citation in the adopted rule.

COMMENT No. 32: Commenter BCBSMT argued that the statement of reasonable necessity for ARM 6.6.517(5)(a) is inadequate. The commenter stated that there was no explanation how having a minimum commission of 3% ensures that plans are actively marketed. The commenter also stated that the CSI failed to provide any evidence “that such issuers are not currently actively marketing their Medicare supplement plans.”

RESPONSE No. 32: The CSI disagrees with this comment. Establishing a commission which is below reasonable is de facto evidence that issuers do not want consumer to enroll in the plan, and that the plan is not being actively marketed. Other evidence of “actively marketing” a plan will not help when a consumer goes to an insurance producer, who have greater incentive to sell plans with higher commission. The statement of reasonable necessity for this rule was valid and sufficient. Furthermore, the CSI is not required to show that this rule will “ensure active marketing of Medicare supplement plans.” This rule is simply designed to prevent one way issuers may try to avoid actively marketing their plans. If BCBSMT would care to submit additional regulatory requirements that will help ensure that plans are actively marketed in other respects, the CSI would consider adding to this rule.

/s/ Michael A. Kakuk /s/ Kris Hansen

Michael A. Kakuk Kris Hansen

Rule Reviewer Chief Counsel

Certified to the Secretary of State March 6, 2018.