Summary: A new series of 20 health care reform frequently asked questions (FAQs) published by the Departments of Labor, Health and Human Services (HHS), and Treasury last week clarify a variety of questions about health care reform compliance, including the out-of-pocket maximum requirement and numerous preventive service issues.

Affected Plans: Employer group health plans that have lost grandfathered status, whether insured or self-insured, will be affected by a new limit on total out-of-pocket (OOP) expenses beginning with the 2014 plan year. However, some plans will benefit from a relaxed OOP compliance standard under a transition rule for 2014. Separately, employer group health plans that have lost grandfathered status already must comply with the mandate to cover certain preventive services with no participant cost sharing, and most of the new FAQs address very specific issues raised in connection with those preventive services, including contraceptive and other preventive services for women.

Timing: Most of the new FAQs clarify ambiguities involving preventive services already mandated by the PPACA and are effective immediately with respect to non-grandfathered group health plans, whether self-insured or insured. The FAQs clarifying the new OOP maximum mandated by the PPACA take effect with the 2014 plan year of non-grandfathered group health plans, whether self-insured or insured.

Key Implications: Employers with non-grandfathered group health plans should review this new FAQ guidance to identify whether and how the OOP limit imposed by the PPACA will affect current cost-sharing plan design, as well as the need to coordinate the new OOP maximum among multiple claim payers serving the same plan. Plans will need to take into account all non-premium cost sharing under the new OOP maximum — including deductibles, copays and coinsurance — which may be different from the current plan design. This means some design and administration changes will be needed to almost all non-HDHP group health plan options for 2014 or 2015. Separately, the new FAQs underscore the sophisticated claim administration competencies that are needed to correctly administer the no-cost preventive service benefits now mandated by the PPACA. Employers should confirm that their third-party administrators (TPAs) or insurers are aware of and capable of administering the mandated preventive service benefits.

General Discussion and Observations: On February 20, 2013, the Departments of Labor, HHS and Treasury (collectively, the Departments) published 20 new FAQs regarding implementation of various provisions of the PPACA. These FAQs are the 12th in a series of FAQs dating back to 2010. While not formal regulations, the FAQs clarify issues raised by various stakeholders and convey this information more rapidly than the regulation-writing process allows. The latest set of 20 FAQs are at http://www.dol.gov/ebsa/healthreform/.

Below are brief summaries of the issues addressed in these new FAQs:

Plans that must comply with deductible limitations in 2014: Employer group health plans that are (i) self-insured or (ii) insured large group plans (generally more than 100 employees) will not be required to comply with a limit on annual deductibles of $2,000 for single coverage and $4,000 for family coverage. The Departments interpret the PPACA to require that only plans and insurers in the small group market are required to comply with the deductible limit beginning in 2014. The Departments plan to develop formal regulations reflecting this view and welcome public comments by April 22, 2013. The Departments confirm that until regulations are published, self-insured plans and insured large group plans can rely on the Departments' intention to apply the deductible limits on plans and insurers in the small group market.

Non-grandfathered plans must comply with the annual limitation on OOP maximums: Beginning generally with their 2014 plan year, non-grandfathered employer group health plans will need to comply with a single OOP maximum applicable to all coverage under the plan (e.g., medical, prescription drug and mental health and substance use disorder benefits). However, plans currently using multiple claim payers (e.g., medical TPA and separate pharmacy benefit manager [PBM]) will effectively have until the 2015 plan year to design a single OOP maximum and coordinate vendor arrangements under a special transition rule described below.

The Departments interpret the PPACA to require that all non-grandfathered group health plans must comply with the new annual limit on OOP expenses beginning with their 2014 plan year. The level of the new OOP maximums will be the same OOP dollar maximums that apply to HSA-qualifying high-deductible health plans in 2014. Those amounts are $6,250/single and $12,500/family in 2013 but will be indexed later this year to identify the 2014 amounts. Thus, for example, a group health plan that currently uses a single vendor to administer claims will need to implement a unified OOP maximum beginning with the 2014 plan year that aggregates all copays, coinsurance and deductibles across all categories of covered expenses under the plan for single coverage and for family coverage. This is because there appears to be no delayed compliance date offered for such single-vendor plans.

While the Departments recognize that employer plans may utilize multiple vendors to administer benefits (such as one TPA for major medical coverage, a separate PBM for prescription drug coverage and a separate managed behavioral health organization), the Departments indicate that in order to comply with the OOP maximum requirement "...these processes will need to be coordinated..., which may require new regular communications between service providers." Consequently, a transition rule will relax this requirement for some plans for their 2014 plan year if the plan currently uses multiple vendors.

Transition rule for 2014 for multiple-vendor plans: For the plan year that begins on or after January 1, 2014, if a group health plan (self-insured or insured) uses more than one service provider to administer benefits that are subject to the annual OOP limit, the Departments will consider the annual OOP limit to be satisfied if both of the following occur:

  • The plan complies with the maximum OOP requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage).
  • If the plan includes a separate OOP maximum that applies to nonmedical benefits (such as prescription drug coverage), that separate OOP maximum does not exceed $6,250 (or $12,500, indexed for 2014).

However, the Departments remind employers that in no case may a group health plan or an insurer impose an annual OOP maximum on all medical/surgical benefits and a separate annual out-of-pocket maximum on all mental health and substance use disorder benefits.

This OOP maximum requirement is part of the PPACA's group health plan mandates and insurance market reforms. A group health plan that fails to comply with any of these mandates or market reforms can subject the plan sponsor to excise taxes under IRC Section 4980D. Failure to comply with the OOP maximum requirement will not subject the employer to play-or-pay penalties.

Preventive services unavailable from network providers: If a group health plan's network does not include any providers that can provide a particular preventive service that is covered under the preventive service mandate, then the self-insured plan (or the insurer under an insured plan) must cover the item or service when performed by an out-of-network provider and not impose cost sharing with respect to the item or service. Interim final regulations issued under the preventive service mandate do not require a plan that has a network of providers to provide preventive services at no cost to participants by out-of-network providers, but this is conditional on enrollees being able to access the required preventive services from in-network providers.

Aspirin for certain men and women: Aspirin and other OTC recommended items and services must be covered without cost sharing only when prescribed by a health care provider.

Colonoscopy: If a colonoscopy is scheduled and performed as a screening procedure, a plan or insurer may not impose cost sharing for the cost of polyp removal during the colonoscopy.

Breast cancer susceptibility gene (BRCA) testing: The preventive service recommendation for genetic counseling and evaluation for routine BRCA testing includes the BRCA test itself.

Identifying high-risk populations: Clinical health care providers (not group health plans or insurers) will identify individuals who belong to a high-risk population for purposes of those U.S. Preventive Services Task Force (USPSTF) recommendations that apply to certain high-risk populations. Decisions regarding whether an individual is part of a high-risk population, and should therefore receive a specific preventive item or service identified for those at high risk, should be made by the attending provider.

Immunizations: Coverage is required for immunizations for routine use in children, adolescents and adults that have in effect a recommendation by the Advisory Committee on Immunization Practices (ACIP) for routine use. The vaccines must be covered without cost-sharing requirements when the service is delivered by an in-network provider. The ACIP makes routine immunization recommendations for children, adolescents and adults that are
population-based (e.g., age-based), risk-based (e.g., underlying medical conditions,
work-related or other special circumstances that increase risk of illness) or are catch-up recommendations. In some circumstances, the ACIP makes a recommendation that applies for certain individuals rather than an entire population. In these circumstances, health care providers should determine whether the vaccine should be administered, and if the vaccine is prescribed by a health care provider consistent with the ACIP recommendations, a plan or issuer is required to provide coverage for the vaccine without cost sharing. New ACIP recommendations will be required to be covered without cost sharing starting with the plan year (in the individual market, policy year) that begins on or after the date that is one year after the date the recommendation is issued. Plans or insurers with respect to a plan can determine annually what vaccines recommended by the ACIP must be covered by checking http://www.healthcare.gov/law/features/rights/preventive-care/index.html prior to the beginning of each plan year.

Women's preventive services and multiple visits for separate services: The regulations allow plans and insurers to use reasonable medical management techniques to determine the frequency, method, treatment or setting for a recommended preventive item or service, to the extent this information is not specified in a recommendation or guideline. Although the Health Resources and Services Administration (HRSA) Guidelines list services individually, nothing in the law or regulations requires that each service be provided in a separate visit. Efficient care delivery and the delivery of multiple prevention and screening services at a single visit is a reasonable medical management technique, permissible under the regulations. For example, HIV screening and counseling and sexually transmitted infection counseling could occur as part of a single well-woman visit.

Well-woman visits: The HRSA Guidelines recommend at least one annual well-woman preventive care visit for adult women to obtain the recommended preventive services that are age- and developmentally appropriate, including preconception and prenatal care. The guidelines recommend that well-woman visits include listed preventive services, as well as others referenced in the law. More than one well-woman visit, provided without cost sharing, may be needed to obtain all necessary recommended preventive services, depending on a woman's health status, health needs and other risk factors. If the clinician determines that a patient requires additional well-woman visits for this purpose, the additional visits must be provided without cost sharing and subject to reasonable medical management.

What health care providers need to know to conduct a screening and counseling for interpersonal and domestic violence: Screening may (1) consist of a few, brief, open-ended questions, or (2) be facilitated by the use of brochures, forms or other assessment tools, including chart prompts. One option is the five-question Abuse Assessment Screening Tool available here (page 22).

Counseling provides basic information, including how a patient's health concerns may relate to violence and referrals to local domestic violence support agencies when patients disclose abuse. Patient brochures, safety plans and provider educational tools, as well as training materials, are available through the HHS-funded Domestic Violence Resource Network, including the National Resource Center on Domestic Violence.

When the HPV DNA test should be administered: The HRSA Guidelines recommend high-risk HPV DNA testing for women with normal cytology results who are 30 years of age or older to occur no more frequently than every three years.

Annual HIV counseling and screening: The HRSA Guidelines recommend annual HIV counseling and screening for all sexually active women. The term "screening" in this context means actual testing for HIV.

Range of contraceptive methods covered by the mandate: A plan or insurer may not choose to cover only oral contraceptives. The HRSA Guidelines call for women's access to the full range of FDA-approved contraceptive methods including, but not limited to, barrier methods, hormonal methods and implanted devices, as well as patient education and counseling, as prescribed by a health care provider. Plans and insurers may use reasonable medical management techniques to control costs and promote efficient delivery of care. For example, plans may cover a generic drug without cost sharing and impose cost sharing for equivalent branded drugs. However, in these instances, a plan or issuer must accommodate any individual for whom the generic drug (or a brand-name drug) would be medically inappropriate, as determined by the individual's health care provider, by having a mechanism for waiving the otherwise applicable cost sharing for the branded or non-preferred brand version. This generic substitution approach is permissible for other pharmacy products, as long as the accommodation described above exists. If, however, a generic version is not available, or would not be medically appropriate for the patient as a prescribed brand-name contraceptive method (as determined by the attending provider, in consultation with the patient), then a plan or issuer must provide coverage for the brand-name drug, without cost sharing, subject to reasonable medical management.

Contraceptive methods that are generally available over the counter (OTC): Contraceptive methods that are generally available OTC, such as contraceptive sponges and spermicides, are only included in the preventive service mandate if the method is both FDA-approved and prescribed for a woman by her health care provider. The HRSA Guidelines do not include contraception for men.

Contraceptives and follow-up management: Services related to follow-up and management of side effects, counseling for continued adherence and device removal are included under the HRSA Guidelines, and are required to be covered without cost sharing, subject to reasonable medical management.

Intrauterine devices and implants: Intrauterine devices and implants are contraceptive methods under the HRSA Guidelines, and therefore required to be covered without cost sharing if approved by the FDA and prescribed for a woman by her health care provider, subject to reasonable medical management.

Breastfeeding counseling in the HRSA Guidelines: The HRSA Guidelines specifically include comprehensive prenatal and postnatal lactation support, counseling and equipment rental. Accordingly, the items and services described in the HRSA Guidelines are required to be covered without cost sharing, subject to reasonable medical management, which may include purchase instead of rental of equipment.

Paying certified lactation consultants: Reimbursement policy, such as for lactation consultants, is outside the scope of the HRSA Guidelines and the Departments' regulations.

Lactation counseling and breastfeeding equipment and supplies: Coverage of comprehensive lactation support and counseling, and costs of renting or purchasing breastfeeding equipment, extends for the duration of breastfeeding. Nonetheless, group health plans and insurers may use reasonable medical management techniques to determine the frequency, method, treatment or setting for a recommended preventive item or service, to the extent not specified in the recommendation or guideline.