This is the eighth in a series of WorkCite articles concerning the recently enacted Patient Protection and Affordable Care Act and its companion bill, the Health Care and Education Reconciliation Act of 2010 (referred to collectively as the Act).
Under the Act, group health plans and insurers must cover certain preventive health services and eliminate cost-sharing requirements for such services. On July 14, 2010, the Treasury, Labor and Health and Human Services Departments (Departments) jointly issued interim final regulations (Regulations) relating to the coverage of preventive services under the Act.
Effective Date
The Regulations are effective for plan years beginning on or after September 23, 2010. Therefore, for calendar-year plans, this means January 1, 2011.
Plans and Issuers Affected by the Regulations
The Regulations generally apply to group health plans and health insurance issuers in the group and individual markets.
The regulations do not apply to grandfathered plans. To be a grandfathered health plan, a group health plan or individual coverage must have been in effect on March 23, 2010, the date of the Act’s enactment. The Act generally allows a grandfathered plan to continue its normal operations without losing its grandfathered status. New employees may enroll in a grandfathered group health plan, and current participants may reenroll or change coverage to add dependents to the health plan. Various types of changes in the benefits provided by a grandfathered plan can cause it to lose its grandfathered status.
Requirements of the Regulations
The Regulations require that applicable group health plans and health insurance issuers provide certain recommended preventive services without cost-sharing (e.g., copayment, coinsurance or deductibles). More specifically, the Regulations require coverage for four categories of preventive services:
- Evidence-based preventive services rated “A” or “B” in the current recommendations of the U.S. Preventive Services Task Force (Task Force). Examples include breast and colon cancer screenings, screenings for vitamin deficiencies during pregnancy, screenings for diabetes, high cholesterol and high blood pressure screening and tobacco cessation counseling. However, in response to the controversy arising last year as to the recommendations of the Task Force on mammography, the Act specifically provides that Task Force recommendations regarding breast cancer screening, mammography and prevention issued in 2009 are not to be considered current recommendations on this subject for purposes of any law. Therefore, the preamble to the Regulations indicates that the Task Force recommendations regarding breast cancer screening, mammography and prevention issued in 2002 will be considered current until new recommendations in this area are issued by the Task Force or appear in comprehensive guidelines supported by the Health Resources and Services Administration (HRSA) concerning preventive care and screenings for women.
- Routine immunizations for children, adolescents, and adults as recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention. These include routine childhood immunizations and periodic tetanus shots for adults.
- Evidence-informed preventive care and screenings for infants, children, and adolescents as recommended by the HRSA. These include regular pediatrician visits, vision and hearing screening, developmental assessments, immunizations and screening, and counseling to address obesity and help children maintain a healthy weight.
- Evidence-informed preventive care and screenings for women as recommended by the HRSA, with new guidelines expected to be issued by August 1, 2011.
For insured plans and policies, the requirements of the Regulations are in addition to any mandated benefits under applicable state insurance laws.
List of Recommendations and Guidelines
The complete list of recommendations and guidelines for services that are required to be covered under the Regulations can be found at the HealthCare.gov Implementation Center. This website will be updated on an ongoing basis and will contain the most current recommended preventive services. If the list is updated to add or change any of the recommended preventive services, the changes will be effective for plan years beginning on or after the date that is one year after the date that the change is issued.
While the recommendations and guidelines are accurately listed, the Regulations are not clear under what circumstances a service is preventive, as opposed to diagnostic or curative. We hope that the final Regulations will clarify this point.
Permitted Cost-Sharing under Regulations
The Regulations provide examples of when cost-sharing is permitted, such as:
- Preventive services delivered by an out-of-network provider.
- If a recommended preventive service is billed or tracked separately from an office visit, then a plan or issuer may impose cost-sharing requirements with respect to the office visit.
- If the recommended preventive service is not billed or tracked separately and the primary purpose of the office visit is not the delivery of such an item or service, then a plan or issuer may impose cost-sharing requirements with respect to the office visit.
However, where the preventive service is not billed separately from the office visit and the primary purpose of the visit is the delivery of the service, then there can be no cost-sharing for the office visit. We anticipate that many plan sponsors and issuers will require physicians to bill separately for each component of care, if they are not already doing so.
Many of the recommended preventive services include a recommendation regarding frequency, method, treatment or setting for the provision of that service. The Regulations clarify that if a recommended preventive service has no recommended frequency, method, treatment or setting for that particular service, the plan or issuer may use “reasonable medical management techniques” to determine coverage limitations.
Note: The Regulations provide that reasonable medical management techniques are to be developed by plan sponsors and insurers, and not by medical service providers. Therefore, plan sponsors and issuers that wish to place limits, for example, on the frequency of a covered service must first develop a reasonable medical management limit, and then communicate it to the plan administrator, participants and service providers.
Expected Benefits of Regulations
The Departments expect that there will be four types of benefits that result from the Regulations:
- Improved health as a result of reduced transmission, prevention or delayed onset, and earlier treatment of disease;
- Healthier workers and children will be more productive with fewer missed days of work or school;
- Some of the recommended preventive services will result in savings due to lower health care costs; and
- Cost of preventive services will be distributed more equitably across the broad insured population.
The degree of the Regulations’ success will depend in large part on changes to the participant and dependent communication process.
Estimates of Increases in Benefits and Premiums Associated with Implementing the Regulations
The Departments indicate in the preamble to the Regulations that they have attempted to estimate the increase in average benefits and premiums in the group health plan and individual market, as a result of eliminating cost-sharing and increasing covered services. Because the evidence base for current coverage and cost-sharing for preventive services in individual health insurance policies is weaker than for group health plans, estimation of the increase in average benefits and premiums in the individual market is highly uncertain. However, the Departments expect a similar, but larger effect in the individual market, because those policies generally have less generous benefits for preventive services than group health plans.
Consequently, the Departments have made the following estimates with regard to group health plans:
- A 0.6% increase in insurance benefits overall.
- A $4 per-person annual increase in insurance benefits from adding coverage for new services.
- Premium increases of approximately 1.5% on average for enrollees in non-grandfathered plans.
Penalties on the plan sponsor or issuer for failing to adhere to these new rules will be as much as $100 per day for each affected participant and beneficiary.
Next Steps
Plan sponsors should:
- Determine whether their plans are grandfathered, thereby eliminating the need to comply with the Regulations.
- If compliance will be required, determine whether the list of recommendations and guidelines for services in the Regulations require coverage of additional services that are not currently covered under the plan.
- Work with plan service providers to coordinate operational compliance.
- Update communications to participants and their dependents.
We will continue to issue updates on the Act as further guidance or information becomes available.
Visit the Healthcare Reform section for additional updates and resources.