1. (a) If an insurer chooses to include a coordination of benefits (COB) provision, "allowable expense" shall have the definition given in §3.3503 of this title (relating to Definitions).
2. (b) Notwithstanding the definition of "allowable expense," items of expense under coverages such as dental care, vision care, prescription drug, or hearing-aid programs may be excluded from the definition of "allowable expense." A plan which provides benefits only for any such items of expense may limit its definition of "allowable expenses" to like items of expense.
3. (c) When a plan provides benefits in the form of service, the reasonable cash value of each service will be considered as both an "allowable expense" and a benefit paid.
4. (d) The difference between the cost of a private hospital room and the cost of a semi-private hospital room is not considered an "allowable expense" under this section unless the covered person's stay in a private hospital room is medically necessary in terms of generally accepted medical practice.
5. (e) When COB is restricted in its use to specific coverage in a contract (for example, major medical or dental), the definition of "allowable expense" must include the corresponding expenses or services to which COB applies.

6. (f) When benefits are reduced under a primary plan because a covered person does not comply with the plan provisions, the amount of such reduction will not be considered an "allowable expense." Examples of such provisions are those related to second surgical opinions or precertification of admissions or services.

   1. (1) Only benefit reductions based upon provisions similar in purpose to those described in this subsection and which are contained in the primary plan may be excluded from "allowable expenses."
   2. (2) This provision shall not be used by a secondary plan to refuse to pay benefits because an HMO member has elected to have health care services provided by a non-HMO provider and the HMO, pursuant to its contract, is not obligated to pay for providing those services.
   3. (3) This section does not allow a secondary plan to exclude expenses that are applied towards the satisfaction of the deductible, copayments, or coinsurance amounts required by the primary plan, except for the benefit reductions expressly described in this section.

Source Note:The provisions of this §3.3504 adopted to be effective June 3, 1994, 19 TexReg 3938.