HHS finalizes changes to rules on Summaries of Benefits and Coverage

Changes to regulations implementing disclosure requirements under Public Health Service Act (PHS Act) Sec. 2715 have been finalized by the Department of Health and Human Services (HHS), the IRS, and the Department of Labor (DOL). The changes, which relate to summaries of benefits and coverage (SBCs) and the uniform glossary for group health plans and health insurance coverage in the group and individual markets, are designed to help plans and individuals better understand their health coverage and gain a better understanding of other coverage options for comparison. The final rules were published in the June 17 Federal Register (see Text: HHS, IRS, DOL, final rule, summary of benefits and coverage and uniform glossary).

Background. Disclosure requirements of PHS Act Sec. 2715, as added by the Patient Protection and Affordable Care Act (ACA), requires the DOL, HHS, and IRS to develop standards for use by group health plans and health insurance issuers in compiling and providing an SBC that “accurately describes the benefits and coverage under the applicable plan or coverage.” It also calls for the “development of standards for the definitions of terms used in health insurance coverage.”

As such, all three departments issued proposed regulations on December 30, 2014, along with new proposed SBC templates, instructions, an updated uniform glossary, and other materials. The final versions of the new template and associated documents are not being issued right now, and are expected to be finalized by January 2016. They would apply to coverage renewing or beginning on the first day of the first plan year beginning on or after January 1, 2017. The final regulations are effective August 16, 2015.

The final regulations generally adopt the 2014 proposed provisions, with some clarifications, including the applicability dates, except that for disclosures to individuals and dependents in the individual market, the requirements apply to health insurance issuers with respect to SBCs issued for coverage that begins on or after January 1, 2016. Until the applicability date, plans and issuers must continue to comply with previously-issued 2012 final regulations.

Abortion services disclosures. A key provision contained in the final regulations involves the requirement of ACA Sec. 1303(b)(3)(A) and HHS Reg. Sec. 156.280(f), that qualified health plan (QHP) issuers offering coverage that includes abortion services for which public funding is prohibited through the individual Marketplace notify consumers of such coverage at the time of enrollment. The final regulations require these QHPs to disclose on the SBC whether non-excepted abortion services as well as excepted abortion services (for which public funding is permitted) are covered or excluded. Because, as stated above, updated templates and instruction guides with guidance on wording and placement of this disclosure on the SBC are not yet finalized, QHP issuers in the individual Marketplace may use any reasonable wording and placement of the disclosure either on the SBC, or in a cover letter or other separate notice provided with the SBC.

Online access required. The PHS Act requires issuers to include an internet address where a copy of an individual coverage policy or group certificate of coverage can be reviewed and obtained, and the final regulations state that these must be easily available to individuals, plan sponsors, and participants and beneficiaries shopping for coverage prior to submitting an application.

Issuers are permitted, for the group market only, to satisfy this requirement for plan sponsors shopping for coverage by posting a sample group certificate of coverage for each applicable product. This is because an actual “certificate of coverage” is not available until after a plan sponsor has negotiated coverage terms with an issuer. However, after the certificate is executed, it also must be easily available via the Internet to both plan sponsors and participants and beneficiaries.

Prevention of unnecessary duplication. The final regulations add two additional provisions to the 2012 regulations in order to streamline provision of the SBC and to avoid unnecessary duplication with respect to group health coverage. First, where an entity is required to provide an SBC for an individual has entered into a binding contract with another party to do so, the requirement to provide an SBC will be satisfied under the following three conditions:

• if the entity monitors performance under the contract;
• if the entity has knowledge of noncompliance with regard to the provision of the SBC and has the information necessary to correct it and does so as soon as practicable; and
• if the entity knows the SBC is not being provided in a manner that satisfies the provisions of the final regulations and does not have information necessary to correct the noncompliance, but it communicates with affected participants and beneficiaries and begins taking significant steps as soon as practicable to avoid future violations.

“Carve-out” arrangements. Second, for a group health plan that uses two or more insurance products provided by separate issuers, the group health plan administrator is responsible for providing complete SBCs with respect to the plan, and it may contract with one of its issuers to perform this function. The HHS, IRS, and DOL have clarified that, absent such a contract, the issuer has no obligation to provide coverage information for benefits that it does not insure.

The final regulations also codify a previously-issued safe harbor on these so-called “carve-out” arrangements which permitted the provision of multiple partial SBCs if certain conditions are satisfied. Plan administrators may also synthesize the information into a single SBC.

Uniform glossary required. Finally, the regulations stipulate that group health plans and issuers must provide participants and beneficiaries with a uniform glossary containing uniform definitions of a long list of health-related and medical terms including the following: allowed amount, appeal, balance billing, co-insurance, complications of pregnancy, co-payment, deductible, emergency medical condition, excluded services, habilitation services, hospice services, in-network co-insurance, in network co-payment, medically necessary, non-preferred provider, out-of-pocket limit, preferred provider, premium, primary care physician, primary care provider, rehabilitation services, skilled nursing care, specialist, usual customary and reasonable (UCR), and urgent care.

The uniform glossary must be made available by a plan or issuer upon request, in either paper or electronic form (as requested), within seven business days.
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