The Departments of Labor, Health and Human Services and the Treasury (collectively, the Departments) recently finalized a series of interim rules that were issued shortly after the enactment of the Affordable Care Act (ACA). The rules address various issues, such as grandfathered plans, preexisting condition exclusions, internal and external appeals, rescissions, lifetime and annual dollar limits, access to emergency care and dependent coverage. While there are no significant changes to the interim rules, the final rules do clarify and incorporate guidance issued by the Departments over the last few years. The following are some of the issues addressed in the final regulations:
- Grandfathered status is determined separately as to each “benefit package.” For example, if a group health plan offers a PPO and HMO, then each is treated as a separate “benefit package” such that if one loses grandfathered status it does not affect the status of the other.
- Plan sponsors must include a statement that the plan is grandfathered and provide contact information in any benefit summaries provided by the plan. Model language is available but is not required to be used in order to comply with the disclosure requirement.
- Grandfathered status will be lost if a plan eliminates “substantially all benefits” needed to diagnose or treat a particular condition but the Departments declined to provide a bright line rule as to what is “substantially all benefits.”
- Increases in copayments above the allowable threshold for one type of service will cause the plan to lose grandfathered status even if copayments for other services are not increased.
- If changes are made to a plan mid-year that causes a loss of grandfathered status, then the loss is effective immediately. Once grandfathered status is lost, there is no way to cure or reverse the loss.
Preexisting Condition Exclusions
- A plan may exclude all benefits for a condition from the plan regardless of when the condition arose without violating the preexisting condition exclusion prohibition. However, other Federal or State law may separately prohibit certain benefit exclusions.
Lifetime and Annual Dollar Limits
- Lifetime and annual dollar limits on essential health benefits are prohibited regardless of whether such benefits are provided in or out-of-network.
- Health Reimbursement Arrangements (HRAs) for active employees must be “integrated” with other group health coverage in order to comply with the dollar limit prohibition but it cannot be “integrated” with individual coverage.
- Rescission is permissible if a covered individual commits fraud or makes an intentional misrepresentation of material fact. The Departments declined to define “material fact.”
- COBRA coverage may be terminated retroactively if premiums are not paid on time.
- Rescissions are subject to internal appeals and external review for non-grandfathered plans and coverage must remain effective pending the outcome of the internal appeal.
Coverage of Dependent Children to Age 26
- Eligibility restrictions that require individuals to work, live or reside in a service area cannot be applied to dependent children up to age 26. Plans and issuers are not, however, required to cover out-of-network services.
Appeals and Review
- If new or additional evidence is considered, relied upon on generated by the plan or issuer in connection with a claim, then it must be provided automatically to the claimant without charge and the claimant must have a reasonable opportunity to respond.
- List of adverse benefit determinations involving medical judgment expanded to include (1) determinations of whether a participant is entitled to a reasonable alternative standard for a reward under a wellness program, and (2) whether a plan complies with the non-quantitative treatment limitation requirements of the Mental Health Parity and Addiction Equity Act.
Choice of Primary Care Provider
- The Departments declined to define primary care provider. Instead, the terms of the plan and state law will determine who is a primary care provider.
- A plan or issuer must allow any doctor specializing in pediatrics, including a subspecialist, who is in-network to be designated as a primary care provider for a child.
- Reasonable and appropriate geographic limitations on doctors selected as participating primary care providers is permissible.
- Balance billing for emergency care is not prohibited but the Departments may consider doing so in the future.
- Emergency services coverage is not limited to treatment received within a set time frame, for example, within 24 hours of the emergency.
The final regulations are effective for plans years beginning on or after January 1, 2017.