NAIC Adopts Model Controlling Use Of Discretionary Clauses
A model act that would control an insurers ability to use discretionary clauses in health insurance contracts was adopted after a final round of heated arguments among state insurance commissioners.
The contentious Prohibition on the Use of Discretionary Clauses Model Act was fully adopted by the National Association of Insurance Commissioners at its summer meeting here.
Earlier debate had pitted health insurers against consumer advocates. Lobbying prior to the debate had included letters to state governors and legislators, according to an interview.
The newly adopted model act prohibits the use of discretionary clauses in health insurance contracts that would allow insurers to deny claims. The model act affects fully insured employer sponsored health plans, not self-insured employer sponsored health plans.
The model barely got out of executive session and required a roll call vote before being adopted in plenary by the full NAIC body. A motion to delay a vote on the model was defeated in executive by a scant 7-6 vote. In a vote to move it out of executive session, the motion carried unanimously with Ohio abstaining. In a plenary vote, the model was passed 44-5 with one abstention from Texas.
In presenting the work of the ERISA working group, Maryland Commissioner Steve Larsen, who chairs the parent Health Insurance and Managed Care Committee, noted that the model will not conflict with ERISA and should not increase litigation because health insurance carriers will be making the best decisions.
There has been no evidence to suggest that prohibiting discretionary clauses will increase costs, Larsen said.
Costs are a “standard issue of concern that they [industry] raise,” he said of insurers. “There is not one shred of evidence of how it will increase costs. The industry is a good lobbyist and knows that there is a hot button called health care costs.”