Health Insurance Benefit Coverage Law Summaries

Alabama's mandated health care law is located in the Code of Alabama at Title 27, Chapters 1, 3A, 19, 20A, 45 and 46; and at Title 36, Chapter 29. Coordination of benefits provisions are located in the Alabama Insurance Department Regulation No. 56.

Definitions

"Utilization review" is a system for prospective and concurrent review of the necessity and appropriateness in the allocation of health care resources and services given or proposed to be given to an individual within Alabama. Utilization review does not include elective requests for clarification of coverage (Title 27, Chapter 3A, Sec. 3).

"Utilization review agent" is any person or entity, including the state, performing utilization review, except: an agency of the federal government; an agent acting on behalf of the federal government, but only to the extent that the agent is providing services to the federal government; a hospital's internal quality assurance program; an employee of a utilization review agent; or health maintenance organizations licensed and regulated by the state to the extent of providing utilization review to their own members (Title 27, Chapter 3A, Sec. 3).

What the employer must do

Alabama does not require employers to provide health insurance for their employees. However, if an employer does provide insurance, it must be aware of specific coverage required to be included in health insurance policies and contracts. This coverage is summarized below.

Mental health coverage. --Each group health benefit plan must offer to provide, at a minimum, the following additional benefits for a person suffering from a mental or nervous condition: inpatient services; day treatment services; outpatient services (Sec. 4, H. 677, L. 2000, effective January 1, 2001).

All group health benefit plans must offer to provide, at a minimum, additional benefits for a person receiving medical treatment for any of the following mental illnesses diagnosed by an appropriately licensed provider (Sec. 5, H. 677, L. 2000, effective January 1, 2001):

(1) schizophrenia, schizophrenia form disorder, schizo affective disorder;

(2) bipolar disorder;

(3) panic disorder;

(4) obsessive-compulsive disorder;

(5) major depressive disorder;

(6) anxiety disorders;

(7) mood disorders;

(8) any condition or disorder involving mental illness, excluding alcohol and substance abuse, that falls under any of the diagnostic categories listed in the mental disorders section of the International Classification of Disease.

All group health benefit plans, policies, contracts and certificates executed, delivered, issued for delivery, continued or renewed in Alabama on or after January 1, 2001, must offer, at the time of proposal, sale or renewal of a policy subject to this law, to provide additional mental health benefits that meet the requirements of this law (Sec. 5, H. 677, L. 2000, effective January 1, 2001).

The group health benefit plan must offer to provide benefits for the treatment and diagnosis of mental illnesses under terms and conditions that are no less extensive than the benefits provided for medical treatment for physical illnesses (Sec. 5, H. 677, L. 2000, effective January 1, 2001).

This law does not apply to group health benefit plans covering employers with 50 or fewer employees, whether group policy is issued to the employer, to an association, to a multiple-employer trust or to another entity (Sec. 5, H. 677, L. 2000, effective January 1, 2001).

A group health benefit plan, policy or contract that provides coverage for the services to be offered pursuant to this law may contain provisions for maximum benefits and coinsurance and limitations, deductibles, exclusions and utilization review protocols to the extent that these provisions are not inconsistent with the requirements of this law (Sec. 6, H. 677, L. 2000, effective January 1, 2001).

When a group or blanket hospital or medical expense insurance policy or hospital or medical service contract issued for delivery in Alabama provides for the reimbursement of health or health-related services that include mental health services, and such services are within the lawful scope of practice of a duly qualified psychiatrist or psychologist, the insured or other person entitled to benefits under such policy or contract is entitled to reimbursement for outpatient services, and inpatient services if requested by the attending physician, performed by a duly qualified psychiatrist or psychologist, notwithstanding any provisions of the policy or contract to the contrary (Sec. 27-1-18).

Dependent care coverage. --All individual and group health insurance policies providing coverage on an expense-incurred basis and individual and group service or indemnity type contracts issued by a nonprofit service corporation that provide coverage for a family member of the insured or subscriber must, as to such family members' coverage, also provide that the health insurance benefits applicable for children will be payable with respect to a newly born child of the insured or subscriber from the moment of birth (Sec. 27-19-38).

The coverage for newly born children must consist of coverage of injury or sickness, including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities, but need not include benefits for routine well-baby care (Sec. 27-19-38).

Substance abuse coverage: Alcoholism. --No group, blanket, franchise or association health insurance policy providing coverage on an expense-incurred basis, nor group, blanket, franchise or association service or indemnity type contract issued by a nonprofit corporation, nor group-type self insurance plan providing protection, insurance or indemnity against hospital, medical or surgical expenses, nor health maintenance organization plan may be issued, delivered, executed or renewed in Alabama, or approved for issuance or renewal in Alabama by the Commissioner of Insurance, unless such policy, contract or plan, at the option of the policyholder or sponsor, provides benefits to any insured, subscriber or other person covered under the policy, contract or plan for expenses incurred in connection with the treatment of alcoholism when such treatment is prescribed by a duly licensed doctor of medicine (Sec. 27-20A-2).

The benefits to be offered include inpatient or residential treatment rendered to the insured, subscriber or other person covered, at a state-licensed hospital or at a short-term residential alcoholism treatment facility or detoxification facility duly licensed or certified as such by the Alabama Board of Health or the Alabama Mental Health Board. Benefits must also include outpatient treatment rendered to the insured, subscriber or other person covered, by a duly licensed doctor of medicine or by an alcoholism treatment facility duly licensed or certified as such by the Alabama Board of Health or the Alabama Mental Health Board (Sec. 27-20A-3).

When benefits for the treatment of alcoholism are provided, the benefits must provide for a minimum of 30 days of inpatient treatment or its equivalent per calendar year with the equivalency to be computed based on a formula that equates two days of treatment in a short-term residential alcoholism treatment facility to one day of inpatient treatment and that equates three sessions of outpatient treatment by a licensed doctor of medicine or an alcoholism treatment facility to one day of inpatient treatment (Sec. 27-20A-4).

Coordination of benefits. --An employer or the insurer, managed care plan, or third-party administrator that manages a health benefit plan for an employer may share the payment of expenses with another benefit plan sponsored by another employer, with the government through Medicare benefits, or with another type of insurance company through automobile or homeowners' insurance (subrogation). To determine which plan has primary responsibility for payment, coordination of benefits (COB) language specifies the order of benefit payments. Preserving cost management initiatives, such as deductibles and coinsurance, is known as maintenance of benefits. The National Association of Insurance Commissioners (NAIC) has established model guidelines for COB which many states apply to insurance companies, HMOs, or other health care benefit providers. Self-insured employee benefit plans are not required to adopt coordination of benefits language, however, most self-insured health plans do specify how they will coordinate benefit payments with other plans.

The following types of plans may specify how benefits will be coordinated: group insurance, group subscriber contracts, uninsured arrangements of group or group-type coverages, group or group-type coverage through an HMO, and other prepayment, group practice, and individual practice plans, group-type contracts available to a membership in a particular organization or group if the individual does not have a right to maintain or renew the policy independent of continued employment with an employer, group or group-type excess hospital indemnity benefits exceeding $100 per day, group or group-type or individual "no fault " and "fault" contracts, or Medicare or other governmental benefits.

A plan does not include: individual or family insurance or subscriber contracts, individual HMO coverage, individual or family coverage through prepayment, group practice, or individual practice plans, group or group-type hospital indemnity benefits of $100 per day or less, school accident-type coverages, or a state plan under Medicaid (Alabama Insurance Dept. Regulation No. 56, as authorized by Alabama Insurance Code Sec. 27-2-17).

Order of benefits. --The following priority applies when coordinating health benefit payments (Alabama Insurance Dept. Regulation No. 56):

(1) Employee/Dependent: Benefits will be paid first by a health benefit plan, HMO, or health insurance policy that covers the individual as an employee, subscriber, or member before a plan or policy that covers the individual as a dependent;

(2) Dependent Child/Birthday Rule: For a dependent child whose parents are not separated or divorced and who is covered by two health benefit plans, HMOs, or health insurance policies, benefits will be paid first by the plan that covers the parent whose birthday month and day is earlier in the calendar year. If both parents have the same birthday, benefits will be paid first by the plan that covered a parent for a longer period of time. If only one plan specifies the birthday rule and the other plan specifies priority based on the gender of the parent, benefits will be paid first according to the order of benefits specified in the plan without the birthday rule;

(3) Dependent Child/Divorced or Separated Parents: For a dependent child whose parents are separated or divorced and who is covered by two health benefit plans, HMOs, or health insurance policies, benefits will be paid first by the plan that covers the custodial parent, second by the plan of the spouse of the custodial parent, and third by the plan of the noncustodial parent. If a court decree states that one of the parents is responsible for health care expenses of the child, benefits will be paid first by the plan of that parent;

(4) Active/Inactive Employee: Benefits will be paid first by a health benefit plan, HMO, or health insurance policy that covers the individual as an employee who is neither laid off or retired or as that person's dependent before a plan or policy that covers the individual as a laid-off or retired employee or dependent. If only one of the two plans specifies this rule, this standard is ignored;

(5) Longer/Shorter Length of Coverage: Benefits will be paid first by a health benefit plan, HMO, or health insurance policy that has covered the individual as an employee, subscriber, or member for a longer period of time before a plan or policy that covered the individual for a shorter period of time; and

(6) Excess Benefits: A complying plan may coordinate its benefits with a plan that is "excess" or "always secondary" or that uses an order of benefit determination provision that is inconsistent with that contained in this rule (called a noncomplying plan), on the following basis: if the complying plan is the primary plan, it must pay or provide its benefits on a primary basis. If the complying plan is the secondary plan, it must still pay or provide its benefits first, as the secondary plan. In such a situation, such payment is the limit of the complying plan's liability, except if the noncomplying plan does not provide the information needed by the complying plan to determine its benefits within a reasonable time after it is requested to do so, the complying plan may assume that the benefits of the noncomplying plan are identical to its own and pay its benefits accordingly. The complying plan must adjust any payments it makes based on such assumption when information becomes available about the actual benefits of the noncomplying plan. If the noncomplying plan pays less in benefits than it would have if the noncomplying plan paid or provided its benefits as the primary plan, the complying plan must advance an amount equal to such difference.

Maintenance of benefits. --A plan that pays benefits on a secondary basis may reduce benefits payable so long as the total benefits paid does not exceed allowable expenses (Alabama Insurance Dept. Regulation No. 56).

Medicare coordination. --A group contract may not reduce benefits if a person is or could be covered under another plan, except for Part B of Medicare (Alabama Insurance Dept. Regulation No. 56).

Providers: Chiropractors. --Any contract or policy of insurance or any plan or agreement for health services providing for reimbursement or payment for health services performed by a medical doctor or physician or upon the certification of a medical doctor, surgeon, osteopath or physician, must also reimburse or pay for such health services performed by a chiropractor, as long as the health services performed by the chiropractor are within the scope of his or her license and he or she is duly licensed by the state of Alabama (Sec. 27-1-10).

Dentists and dental hygienists. --Whenever the terms "physician" and/or "doctor" are used in any policy of health or accident insurance issued in Alabama or in any contract for the provision of health care, services or benefits issued by any health, medical or other service corporation existing under, and by virtue of any laws of Alabama, said terms include within their meaning licensed dentists and dental hygienists in respect to any care, services, procedures or benefits covered by said policy or contract that such persons are licensed to perform (Sec. 27-1-11).

Podiatrists. --When any contract of health insurance or any plan or agreement for health services provides for the reimbursement or payment for services within the scope of a podiatrist's professional license, such policy is construed to include payment to a podiatrist who has performed such procedures (Sec. 27-1-15).

Optometrists. --Whenever any policy of insurance or any medical service plan or hospital service contract or hospital and medical service contract provides for reimbursement for any visual service in Alabama that is within the lawful scope of practice of a duly licensed optometrist, the insured or other person entitled to benefits under such policy is entitled to reimbursement for such services, whether such services are performed by a duly licensed physician or by a duly licensed optometrist, whichever the insured selects, notwithstanding any provision to the contrary in any statute or in such policy, plan or contract. Duly licensed optometrists may participate in such policies, plans or contracts providing for visual services to the same extent as fully licensed physicians (Sec. 27-19-39).

Under the Access to Eye Care Act, an insurance policy, plan or contract providing for third-party payment or prepayment of health or medical expenses must include a provision for the payment to a licensed optometrist for each service that falls within the scope of the optometrist's license, if the policy, plan or contract pays for the same service when provided by any other provider for such services (Sec. 3, H. 474, L. 2001, effective August 1, 2001).

Nurse anesthetists. --Notwithstanding any other provision of law, when any contract or plan of health insurance, or any plan or agreement for health care services provides for the reimbursement or payment for services within the scope of practice of registered nurses who have passed or who are qualified to take the national certification examination for the specialty practice of nurse anesthetist as recognized by the Alabama Board of Nursing, then the insured, or any other person covered by the policy, plan, contract or certificate is entitled to reimbursement or payment for such services performed by the certified registered nurse anesthetist, and said nurse anesthetist is entitled to direct reimbursement by the insurer, unless the nurse anesthetist is employed by contract with a group practice of anesthesiologists or a hospital, in which case such services will be reimbursed through the employer (Sec. 27-46-1).

Preexisting conditions: State employees. --The state employees' health insurance plan may deny health benefit coverage because of preexisting conditions if medical consultation, advice, or treatment, including prescription drugs, was recommended or received within 12 months immediately before the effective date of coverage. Coverage will not be excluded due to preexisting conditions for longer than 12 months after the effective date (Title 36, Chapter 29, Article 1, Sec. 36-29-15).

Pharmaceutical services/prescription drugs. --While Alabama does not mandate that any type of benefits for pharmaceutical services, including without limitation, prescription drugs, be provided by a health insurance policy or an employee benefit plan, no health insurance policy or employee benefit plan that is delivered, renewed, issued for delivery, or otherwise contracted for in Alabama may (Secs. 27-45-3 and 27-45-5):

(1) prevent any person who is a party to or beneficiary of any such policy or plan from selecting the pharmacy or pharmacist of his or her choice to furnish the pharmaceutical services, including without limitation, prescription drugs, offered by said policy or plan or interfere with said selection, provided the pharmacy or pharmacist is licensed to furnish such pharmaceutical services in Alabama; or

(2) deny any pharmacy or pharmacist the right to participate as a contracting provider for such policy or plan, provided the pharmacist is licensed to furnish pharmaceutical services, including without limitation, prescription drugs offered by said policy or plan.

Each health benefit plan must apply the same coinsurance, copayment, deductible and quantity limit factors within the same employee group and other plan-sponsored group factors to all drug prescriptions filled by a pharmacy provider, whether by a retail provider or a mail service provider, provided the retail provider complies with the same terms, conditions, services and price as a mail service provider. A health benefit plan may not set a limit on the quantity of drugs that an enrollee may obtain at any one time with a prescription, unless the limit is applied uniformly to all pharmacy providers who comply with the same terms, conditions, services and price as mail service providers (Sec. 1, H. 111, L. 2000, effective October 1, 2000).

Mammograms. --Every health benefit plan that provides coverage for surgical services for a mastectomy must provide coverage for screening mammography as follows (Sec. 4, S. 17, L. 1997, effective October 1, 1997):

(1) for women ages 40 to 49, inclusive, a mammogram at least every two years or more frequently based on the recommendation of a woman's physician.

(2) for women age 50 or over, a mammogram every year or more frequently based on the recommendation of a woman's physician.

Colorectal cancer exams. --All group health benefit plans, policies, contracts, and certificates executed, delivered, issued for delivery, continued or renewed in Alabama on or after August 1, 2004, shall offer, at the time of proposal, sale, or renewal of a policy subject to this law, to include colorectal cancer examinations within the coverage. Such offer shall include colorectal cancer exams for covered persons who are 50 years of age or older, or for covered persons who are less than 50 years of age and at high risk for colorectal cancer (Sec. 2, S. 403, L. 2004, effective August 1, 2004).

Maternity benefits. --Every health benefit plan that provides maternity coverage must provide coverage for medically necessary inpatient care for a mother and her newly born child as determined by the woman's prenatal care physician, obstetrician-gynecologist, certified nurse midwife, or the child's attending pediatrician, and when consistent with the most recent version of the "Guidelines for Perinatal Care" prepared by the American Academy of Pediatrics and the American College of Obstetricians and Gynecologists (Sec. 2, Act 578, L. 1996).

Health benefit plans must inform female participants, enrollees, or beneficiaries of the inpatient maternity provisions in writing (Sec. 5, Act 578, L. 1996).

Domestic abuse. --No insurer may deny, refuse to issue, renew or reissue, cancel or otherwise terminate, restrict, or exclude coverage on an insurance policy or health benefit plan on the basis of an applicant's or insured's abuse status, or on the basis of any association, relationship, or assistance to a subject of abuse (Sec. 3, Act 595 (S. 348), L. 2000).

Utilization review: Certification of UR agents. --To promote delivery of quality health care in a cost-effective manner, assure that utilization review agents adhere to reasonable standards, foster coordination and cooperation between health care providers and utilization review agents, improve communication among all parties, and ensure that medical records are kept confidential, Alabama requires utilization review agents to be certified annually and adhere to minimum standards (Title 27, Chapter 3A, Secs. 1 --6). UR agents who have received accreditation by the Utilization Review Accreditation Commission (URAC) are exempt from paying a fee (Title 27, Chapter 3A, Sec. 5). Violations will be addressed by the Commissioner, who may order payment of a penalty fine or suspend or revoke the certification of the utilization review agent (Title 27, Chapter 3A, Sec. 6).

Standards for UR agents. --Utilization review agents must meet the following standards (Title 27, Chapter 3A, Sec. 5):

(1) mail or communicate a notification of a determination to the health care provider or other appropriate individual within two business days of receipt of all information needed to complete the review.

(2) determine the necessity or appropriateness of an admission, service, or procedure in accordance with a physician's guidelines or have a physician perform the review.

(3) include the principal reason for the determination and the procedures to initiate an appeal with any notification of denial of certification of an admission, service, or procedure.

(4) maintain and make available a written description of the appeal procedure by which the enrolled individual or the provider of record may seek review of a determination by the UR agent. The appeal procedure must provide that: (a) on appeal, all determinations not to certify an admission, service, or procedure as being necessary or appropriate will be made by a physician in the same or a similar general specialty as typically manages the medical condition, procedure or treatment under discussion as mutually deemed appropriate; (b) UR agents will complete the appeals determinations no later than 30 days from the date the appeal is filed and the receipt of all information needed; and (c) when an initial determination not to certify a health care service is made prior to or during an ongoing service requiring review, and the attending physician believes that the determination warrants immediate appeal, the attending physician will have an opportunity to appeal that determination over the telephone on an expedited basis. UR agents will complete the adjudication on an expedited basis within 48 hours of the date the appeal is filed and the receipt of all information necessary to complete the appeal. Expedited appeals that do not resolve a difference of opinion may be resubmitted through the standard appeal process.

(5) have staff available by toll-free telephone at least 40 hours per week during normal business hours.

(6) have a telephone system capable of accepting or recording incoming telephone calls during other than normal business hours and respond to these calls within two working days.

(7) protect the confidentiality of individual medical records.

(8) employ currently licensed physicians or psychologists to make UR determinations.

(9) allow a minimum of 24 hours after an emergency admission, service, or procedure for notification of the UR agent and request certification or continuing treatment for that condition.

Enforcement

The Commissioner of Insurance enforces Alabama's mandated health care law.

Who to contact

Contact the Commissioner of Insurance at 135 S. Union St., Montgomery, AL 36130-3351. Telephone: (334)269-3554. Fax: (334)240-3194.