Employee Benefits Alert
Agencies Issue Guidance on Required Coverage for Preventive Health Care without Cost-Sharing
On July 14, the Departments of the Treasury ("Treasury"), Labor ("DOL") and Health and Human Services ("HHS") jointly issued an interim final rule (the "IFR") implementing the requirement under the Patient Protection and Affordable Care Act ("PPACA") that group health plans and health insurance issuers provide coverage for preventive health services without cost-sharing. This latest installment in the "initial wave" of agency guidance under the health care reform legislation was accompanied by a White House conference call on the evening of July 14, in which senior officials fielded a variety of questions about the new rules. The IFR is expected to be published in the Federal Register some time during the week of July 19.
The IFR implements section 2713 of the Public Health Service Act ("PHSA"), as enacted by PPACA, which requires group health plans and health insurance issuers offering individual and group health insurance coverage to, at a minimum, provide coverage -- without imposing any cost-sharing requirements -- for certain categories of "preventive health services." This requirement is generally effective with respect to the first plan year (policy year for individual health insurance policies) that begins on or after September 23, 2010, i.e., January 1, 2011 for calendar-year plans and policies. It does not apply to "grandfathered" plans, however. Please see our previous alert on grandfathered plans, in the July 8, 2010 Focus On Employee Benefits.
Scope of Covered Preventive Health Services
There are four categories of items and services that qualify as "preventive," for which coverage must be provided without cost-sharing, namely:
1. Evidence-based items or services that have in effect a rating of "A" or "B" in the current recommendations of the United States Preventive Service Task Force ("PSTF"). Examples include certain specified types of screenings for high blood pressure, cholesterol, colorectal cancer, and diabetes, as well as counseling for tobacco use, alcohol misuse, and obesity.
2. Routine immunizations for children, adolescents, and adults that are currently recommended for a specific individual by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention ("ACIP"). These immunizations are broken out into four schedules, based on a person’s age.
3. Evidence-informed preventive care and screenings for infants, children, and adolescents provided for in comprehensive guidelines supported by the Health Resources and Services Administration ("HRSA"). These guidelines are published in two charts: (1) the Periodicity Schedule of the Bright Futures Recommendations for Pediatric Preventive Health Care, available at http://brightfutures.aap.org/pdfs/AAP%20Bright%20Futures%20Periodicity%20Sched%20101107.pdf, and (2) the Uniform Panel of the Secretary’s Advisory Committee on Heritable Disorders in Newborns and Children. The guidelines included in the second chart went into effect on May 21, 2010, and therefore, plans and issuers are not required to provide coverage without cost-sharing for the services described therein until the first plan year that begins on or after May 21, 2011 (see "Timing to Provide Coverage for Preventive Services" below).
4. Evidence-informed preventive care and screenings for women, provided for in comprehensive guidelines supported by HRSA (and not otherwise addressed in the PSTF’s recommendations under #1, above). These guidelines are currently being developed, and HHS expects to issue them by August 1, 2011.
If a recommendation or guideline for a preventive health service in one of these four categories does not specify the frequency, method, treatment, or setting in which the item or service must be provided, the plan or insurer may use "reasonable medical management techniques" to apply any coverage limitations to that item or service. In addition, a plan or health insurance coverage may impose cost-sharing requirements with respect to any coverage provided for preventive health services not contained in one of the four categories described above.
Out-of-Network Preventive Health Services
One of the major open issues that had been surrounding these provisions since the enactment of PPACA was whether (and the extent to which) a plan or insurance coverage with a network of providers would need to cover preventive health services obtained from out-of-network providers. The IFR clarifies that a plan or insurer need not provide any coverage for such out-of-network items and services. If the plan or insurer does provide coverage for out-of-network preventive health services, it may impose cost-sharing requirements with respect to those services.
Cost-Sharing with respect to Office Visits and Treatment
The IFR provides helpful guidance regarding situations in which cost-sharing requirements -- including copayments, deductibles, and coinsurance -- may and may not be imposed for covered preventive health services provided during an office visit. The following three scenarios are described:
1. Where a covered preventive health service is billed separately -- e.g., lab work for a cholesterol screening conducted during an office visit, if the office visit is not, itself, for preventive health services and the lab work is billed separately -- the plan or insurer may impose cost-sharing requirements for the office visit (but not for the preventive health service).
2. Where a covered preventive health service is not billed separately from an office visit, and the primary purpose for the office visit was to obtain the preventive health service, the plan or insurer may not impose cost-sharing requirements with respect to the office visit.
3. Where a covered preventive health service is not billed separately from an office visit, but the preventive health service was not "the primary purpose" for the office visit, then the plan or insurer may impose cost-sharing requirements with respect to the office visit (including the preventive health service).
In addition, the IFR provides an example that clarifies that a plan or insurer may impose cost-sharing requirements for any "treatment" that results from a preventive health service, such as a screening, provided that the treatment, itself, is not a covered preventive health service.
Timing to Provide Coverage for Preventive Health Services
The Federal government maintains updated lists and charts describing all of the applicable recommendations and guidelines that qualify as "preventive" health services, as well information regarding the date that each such item and service became effective, at https://www.healthcare.gov/preventive-care-benefits.
Group health plans and health insurers must provide coverage, without imposing cost-sharing requirements, for each applicable item and service specified in these lists and charts, for plan years that begin on or after the later of (1) September 23, 2010, or (2) one year after the recommendation or guideline relating to the specific item or service becomes effective. For example, certain screenings for depression in adolescents have been PSTF-recommended preventive health services (with an A or B rating) since March 30, 2009, and therefore must be covered without cost-sharing for the first plan year beginning on or after September 23, 2010 (i.e., January 1, 2011 for calendar-year plans). Screenings and counseling for childhood obesity, on the other hand, have only been PSTF-recommended preventive health services (with an A or B rating) since January 31, 2010, and therefore do not need to be covered without cost-sharing until the first plan year beginning on or after January 31, 2011 (i.e., January 1, 2012 for calendar-year plans).
The IFR clarifies that a plan or insurer need not continue to provide coverage for any preventive health services that have been removed from the applicable lists and charts. Please note, however, that certain other legal requirements may apply if a plan or insurer drops or modifies coverage (or cost-sharing requirements) for a formerly-listed preventive health service. For example, such a coverage or cost-sharing modification may constitute a "material modification" under PHSA section 2715(d)(4), for which 60 days advance notice must be provided to enrollees.
Plans should visit the government’s website provided above, at least once per year, to determine which additional preventive health services must be covered without cost-sharing for the following plan year, and which services are no longer required to be covered without cost-sharing. Insurers having policies with plan (policy) years starting at different times throughout the year may need to review the website on a more frequent basis.
More Guidance: Agencies Issue Rules on Preexisting Condition Exclusions, Lifetime and Annual Limits, Recissions, and Patient Protections
On June 28, 2010, the Departments of the Treasury, DOL and HHS (collectively "the agencies") published interim final regulations ("IFR") on several more provisions under PPACA, as amended by the Heath Care and Education Reconciliation Act of 2010 ("HCERA"). 75 Fed. Reg. 37188 (June 28, 2010). The new rules provide guidance on PPACA’s amendments to the PHSA relating to preexisting condition exclusions, lifetime and annual limits, rescissions and other patient protections relating to choice of providers and emergency care.
The following provides a brief summary of the regulations.
PHSA section 2704 - Prohibition on Preexisting Condition Exclusions
PHSA section 2704 prohibits group health plans -- self-funded and fully-insured -- or health care policies (in the case of individual coverage) from imposing preexisting condition exclusions for plan or policy years beginning on or after January 1, 2014. Two exceptions apply: (1) For enrollees who are under 19 years of age, the prohibition on preexisting condition exclusions is effective for plan or policy years beginning on or after September 23, 2010, and (2) the prohibition does not apply to grandfathered individual policies. Grandfathered group health plans that are fully insured or self-funded must comply with this provision.
PHSA section 2704 amends the HIPAA rules relating to preexisting conditions, which generally define a preexisting condition exclusion as a limitation or exclusion of benefits relating to a condition based on the fact that the condition was present before the date of enrollment for the coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received before that date. Under the amended definition, a preexisting condition includes not just an exclusion of coverage for a specific benefit, but a complete exclusion from a group health plan or coverage (i.e., a denial of coverage), if the exclusion is based on a preexisting condition. Until 2014, when the provision is fully effective, the current HIPAA rules continue in force.
The IFR does not preclude a plan from excluding from coverage a particular benefit if the exclusion applies regardless of when the condition arose relative to the effective date of coverage.
PHSA section 2711 - Lifetime and Annual Limits
PHSA section 2711 generally prohibits a group health plan and health policy (in the case of individual coverage) from imposing lifetime or annual limits on the dollar value of "essential health benefits" for plan or policy years beginning on or after September 23, 2010, although "restricted annual limits" may be imposed for plan years beginning on or after January 1, 2014. The restriction on lifetime limits applies to all group health plans and health policies whether or not the plans or policies qualify as grandfathered. The restriction on annual limits applies to all group health plans, including grandfathered plans, and new or non-grandfathered individual health insurance policies. The restriction on annual limits does not apply to grandfathered individual health insurance policies, however.
The IFR addresses limits on the "dollar value" of benefits. The IFR does not address non-dollar utilization limits, so that pending further clarification, it appears that plans may still limit, for example, the number of visits a participant may make to a doctor’s office, or generally other non-dollar utilization limits.
PPACA allows the Secretary to permit "restricted annual limits" on essential benefits prior to January 1, 2014. The IFR adopts a three-year phased in approach to restricted annual limits, under which annual limits on the dollar value of essential benefits may not be less than the following amounts:
- $750,000 for plan or policy years beginning on or after September 23, 2010, but before September 23, 2011;
- $1.25 million for plan or policy years beginning on or after September 23, 2011, but before September 23, 2012;
- $2 million for plan or policy years beginning on or after September 23, 2012, but before September 23, 2014.
The restricted annual limits are minimums and plans are free to adopt higher annual limits or eliminate annual limits prior to January 1, 2014.
The regulations do not define "essential health benefits," but until further guidance is issued, an essential benefit includes the following benefits as listed in PPACA section 1302(b):
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care.
Until further guidance is released, the agencies will take into account good faith efforts to comply with a reasonable interpretation of the term "essential health benefit."
Annual or lifetime limit restrictions do not apply to health FSAs, MSAs, HSAs or HRAs integrated with a group health plan that otherwise complies with the annual and lifetime limit prohibition. They also do not apply to retiree-only HRAs, though the status of stand-alone HRAs is unclear. The agencies are requesting comments on the application of section 2711 to stand-alone HRAs that are not retiree-only.
Certain benefit plans, including limited benefit plans such as mini-meds, can seek a waiver if compliance with the regulations will result in a significant decrease in access to benefits or a significant increase in premiums. HHS intends to issue future guidance regarding the scope and process for applying for a waiver.
Group health plans and issuers must notify individuals that have reached lifetime limits and are otherwise still eligible to participate in the group health plan or other coverage on the effective date of the regulations that the lifetime limit no longer applies.
PHSA Section 2712 - Prohibition on Rescission
PHSA section 2712 provides that a group health plan or health policy (in the case of individual coverage) cannot rescind coverage except in the case of fraud or an intentional misrepresentation of a material fact. Where permissible, rescissions can only occur if the participant or group is given 30-days notice. These rules apply to all rescissions in the group health plan, whether insured or self-funded, and to coverage in the individual market.
The regulations build on already-existing HIPAA protections regarding cancellations of coverage, which allow cancellations of coverage for specific enumerated reasons such as non-payment of premiums, fraud or intentional misrepresentation of material fact, or withdrawal of a product or withdrawal of an issuer from the market.
The regulations define "rescission" to mean retroactive cancellation, and not prospective cancellations, since other rules and guidance exists to address prospective cancellations. Moreover, the regulations only set a floor, and more protective State or local laws are not preempted. Cancellations with a retroactive effect for failure to pay premiums also do not fall within the definition of "rescission."
PHSA Section 2719(A) - Patient Protection of Provider Choice and Emergency Services
A. Choice of Health Care Professional.
PHSA section 2719(A) sets forth three new provisions relating to choice of professional health care provider that apply only to plans or health insurance coverage that has a network of providers. None of these provisions apply to grandfather plans.
Primary Care Provider: In the case of a plan or other arrangement that requires that a participant or policy holder choose a primary care physician, the covered person must be allowed to choose from any participating provider that is available to accept the participant, beneficiary, or enrollee.
Pediatrician: If the plan requires the designation of a primary care provider for a child, the plan or issuer must permit the designation of a physician (allopathic or osteopathic) who specializes in pediatrics if the provider is in the network and is available to accept the child. All other terms of the plan or policy apply including any exclusions with respect to pediatric coverage.
OB/GYN: If the plan provides coverage for obstetrical or gynecological care and requires the designation of a primary care provider, the plan or issuer cannot require preauthorization before a woman seeks services in this area from an in-network OB/GYN provider.
Notice Requirements: The plans or health insurance issuer must provide a notice informing the participant or enrollee of the terms of coverage complying with these regulations.
B. Emergency Services.
A group health plan -- insured or self-funded -- or health insurance coverage that provides benefits for services in the emergency department of a hospital must not require a covered individual to obtain prior authorization for emergency services, even if the emergency services are provided out of network. The plan or policy cannot impose cost-sharing or co-payment requirements for out of network services that exceed cost-sharing or co-payment requirements if the services had been provided in network, though the individual may be required to pay any balance remaining after the plan or policy has paid.
The IFR provides three methods for calculating payments for out of network providers. Plans must pay the greatest of:
- The negotiated in-network rate (if there is more than one negotiated rate for the service, the median of those amounts);
- The amount calculated using the same method the plan generally uses for out of network services, such as usual, customary and reasonable amount, unreduced by any out-of-network cost sharing; or
- The amount payable under Medicare, excluding any in-network copayment or coinsurance.
Plans may impose cost-sharing other than copayments and coinsurance, such as deductible or out-of-pocket maximums that generally apply to out of network services.
An emergency service means a medical screening examination that is within the capability of a hospital emergency department, including ancillary services routinely available in hospital emergency departments to evaluate an emergency condition, and further examination and treatment necessary to stabilize the patient, as required under section 1867 of the Social Security Act. The definition of "emergency conditions" is based on the prudent man standard and the EMTALA provisions in section 1867(e)(1)(A) of the Social Security Act.
For more information, please contact:
Fred Oliphant, firstname.lastname@example.org, 202-626-5834
Anthony Shelley, email@example.com, 202-626-5924
Garrett Fenton, firstname.lastname@example.org, 202-626-5562