Interim no more, ACA insurance reforms promoted

A final rule governing grandfathered health plans, preexisting condition exclusions, lifetime and annual dollar limits on benefits, rescissions, coverage of dependent children to age 26, internal claims and appeal and external review processes, and patient protections under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) has been issued by the Departments of Labor, Treasury, and Health and Human Services; no major changes to a previous interim final rule (75 FR 34538, June 17, 2010) nor to the interim final rule as interpreted under current guidance were made. The final rule has an effective date of January 19, 2016, and an applicability date for group health plans and health insurance issuers beginning on the first day of the first plan year (or, in the individual market, the first day of the first policy year) beginning on or after January 1, 2017.

Existing plans. Under the ACA, a number of insurance reforms were required to have effective dates within six months of enactment of the law. As a result, federal departments that share responsibilities to oversee the group health plans and insurers subject to the ACA’s reforms (Labor, Health and Human Services, and Treasury) issued interim final (Labor and HHS) or temporary and proposed (Treasury) rules to implement the newly established requirements.

Section 1251 of the ACA provides that certain group health plans and health insurance coverage existing as of March 23, 2010, are only subject to certain provisions of the ACA for as long as they maintain that status as grandfathered health plans under the applicable regulations. Interim final regulations established that a group health plan or coverage does not relinquish its grandfather status merely because one or more (or even all) individuals enrolled on March 23, 2010, cease to be covered, provided that the plan or group health insurance coverage has continuously covered at least one person (although not necessarily the same person) at all times since March 23, 2010.

Under the final regulations, determination of grandfather status applies separately with respect to each benefit package and incorporates the clarifications issued in a document titled “Affordable Care Act Implementation FAQs Part II.” As outlined in the FAQ, if a group health plan offers three benefit package options—a PPO (preferred provider organization), a POS (point of service) arrangement, and an HMO (health maintenance organization)—the PPO, POS arrangement, and the HMO are treated as separate benefit packages. Similarly, under the final regulations, if any benefit package ceases grandfather status, it will not affect the grandfather status of the other benefit packages.

Existing plans and annual limits. In addition, the final rule retains unchanged provisions in the interim final rule addressing instances when changes in annual limits on a plan might change grandfathered status. Under the final rule, a plan will not lose grandfathered status if it has a fixed-dollar cost-sharing requirement determined on a percentage of compensation formula as long as the formula is not changed. Although the final rule does not address the issue, the preface to the final rule does note that the imposition of wellness programs, and in particular penalties imposed by wellness programs, may threaten grandfathered status.

Grandfathered status is not threatened if a plan moves a brand-name version of a drug that has become generic to a higher cost-sharing tier. If an individual plan had an option as of March 2010 allowing the policy holder to accept higher cost-sharing in exchange for a lower premium, the policy holder can exercise that option after that date without the coverage losing grandfathered status. Finally, if a change is made in a plan that would cause it to lose grandfathered status, the change can be reversed and grandfathered status protected as long as the reversal is accomplished before the change became effective, but not afterwards.

Preexisting conditions. The ACA prohibits the imposition of preexisting condition exclusions on enrollees under 19 years of age, except in grandfathered individual plans; this prohibition was extended to all enrollees in 2014. In the final rule, the Departments clarified that the prohibition does not bar a plan or insurer from excluding all benefits for a condition if it does so regardless of when the condition arose, although other provisions of the ACA like the essential health benefits requirements may preclude such exclusion.

Lifetime and annual dollar limits. The ACA, originally and through implementing regulations, also prohibits plans and insurers from imposing lifetime limits on coverage and annual limits on coverage for essential health benefits (EHB). The lifetime prohibition is applicable to all group health plans, including grandfathered plans. The annual limit prohibition does not apply to individual grandfathered plans. The final rule allows plans and insurers not subject to EHB requirements to pick among any of the EHB benchmarks that apply in any of the 50 states or the District of Columbia or the three largest federal employee health benefit program plans available nationally.

Rescissions. The final rule implements the ACA’s rescission prohibition on insurers, aimed at stopping the potential insurer practice of accepting enrollees with minimal verification but then rescinding enrollment when substantial claims were submitted. However, the rescission prohibition does not apply to retroactive cancellation of coverage where there is an error or delay in record keeping. The prohibition also does not apply where an individual voluntarily requests retroactive cancellation of a plan or an exchange requests cancellation.

Coverage of adult children. After issuance interim final regulations, the Departments released Affordable Care Act Implementation FAQs Parts I and V to address various requests for clarifications regarding coverage of dependent children under age 26. The final rule clarifies that plans and insurers must cover all children under age 26 regardless of financial dependency or shared residence with the enrollee, student status, employment or marital status. Most notably, adult children under age 26 must be covered even though they do not live in a plan’s service area. Plans and insurers, however, are not required to cover out-of-network services for adult children.

The final rule’s preamble recognizes that adult children must often leave home for education and employment, so the protection of the rule would be undermined if they had to remain in the same area as their covered parents.

Appeals process. The ACA provided for internal and external appeal rights in all insurance markets for non-grandfathered plans and the interim final rule implemented these requirements, including a number of provisions governing internal appeals, with additional requirements applicable only to individual plans. The final rule adopts these requirements and clarifies that if a plan relies on new or additional evidence or a new rationale in making a final adverse internal decision, the plan or insurer must automatically provide this evidence or rationale to the enrollee without requiring a request, and must give the enrollee a reasonable opportunity to respond.

The final rule also discourages charging of filing fees to claimants. States that are required by state law to charge a filing fee are allowed to do so not exceeding $25, which must be refunded to claimants if the plan decision is reversed and which must be waived if payment would be a hardship. The fee cannot be charged if the total filing fee would exceed $75 for a year for a single claimant.

Additional patient protections. The final rule clarifies that if a health plan or insurer requires or provides for the designation of a primary care provider, the plan or insurer must allow a plan enrollee to designate any available in-network primary care provider. The regulations do not define primary care provider, as that is determined under the terms of the plan and state law.

In addition, women may also seek care from an obstetrician or gynecologist without authorization and obstetricians and gynecologists must be treated as primary care providers for purposes of ordering and authorizing services. The final rule does, however, allow health plans and insurers to require plan participants and beneficiaries to use in-network groups within certain geographic limits when selecting a primary care provision.

SOURCE: 80 FR 72192, November 18, 2015.

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