Overview:

Non-grandfathered group and individual health plans, including insured and self-insured plans, will be required to cover certain recommended preventive services for women, effective for plan years beginning on or after August 1, 2012 (January 1, 2013 for calendar year plans).  The services must be provided without any cost sharing.  A limited exemption for certain religious employers is offered with regard to contraceptives.

Recommended Preventive Services

On July 14, 2010, the Departments of Labor, Treasury and Health and Human Services issued interim final rules describing the recommended  preventative services that must be provided by non-grandfathered health plans pursuant to Section 2713 of the Public Health Services Act.  These interim final rules were effective January 1, 2011 for calendar year plans and required non-grandfathered health plans to provide coverage for recommended preventative services without any cost sharing requirements, including counseling to reduce alcohol and tobacco abuse, screenings for diabetes, high blood pressure, cervical cancer and hepatitis B, certain immunizations and preventive care for children.

A recently issued amendment to the interim final rules expands the definition of recommended preventive services to include the following services for women:

Click here to view table

INSIGHT:  Although the regulations indicate the preventive services are to be provided “with respect to women,” many of the preventive services outlined affect both sexes.  This appears to mean that, for example, men who seek counseling for domestic violence may be subject to cost sharing for the services provided, but women who seek the same service cannot be subject to cost sharing.

Certain Religious Employers Exempt

Group health plans sponsored by certain religious employers, and group health insurance coverage in connection with such plans, are exempt from the requirement to cover contraceptive services.  A religious employer is one that:

  1. has the teaching of religious values as its purpose;
  2. primarily employs persons who share its religious tenets;
  3. primarily serves persons who share its religious tenets; and
  4. is a non-profit organization under Internal Revenue Code section 6033(a)(1) and section    6033(a)(3)(A)(i) or (iii). 

According to the HHS website and the preamble to the regulations, this definition of religious employer is modeled after the most common exemption used in 28 states that already require insurance companies to cover contraception.

INSIGHT:  A religious employer that provides social services to persons not of the same religious tenets or performs mission work may have a difficult time satisfying the requirement that it “primarily” serves persons who share its religious tenets.  The regulations provide no guidance on the meaning of “primarily.” 

Cost Sharing and Cost Control

Generally, if a recommended preventive service is provided in-network, a non-grandfathered plan cannot impose a cost sharing requirement on the service.  Cost sharing may be imposed on recommended preventive services performed outside the network.  A plan may also impose cost sharing requirements on treatments that are not a recommended preventive service, even if the treatment is a result of a recommended preventive service.  For example, an HIV screening is a recommended preventive service, but treatment of HIV is not.  Cost sharing includes, co-payments, coinsurance and deductibles.

The rules provide three examples of how cost sharing may be imposed on office visits.

  1. If a recommended preventive service is billed separately from an office visit, the plan may impose cost sharing on the office visit.
  2. If a recommended preventive service is not billed separately from the office visit and the primary reason for the office visit is the delivery of a recommended preventive service, the plan may not impose cost sharing on the office visit or the recommended preventive service.
  3. If a recommended preventive service is not billed separately from the office visit and the primary reason for the office visit is not the delivery of a recommended preventive service, the plan may impose cost sharing on the entire office visit, including the recommended preventive service.

INSIGHT:  If a doctor intends to avoid any revenue loss on office visit fees resulting from these new cost sharing requirements, it appears he or she could simply revise the office billing system to bill each office visit separately from any other recommended preventive service provided.

Plans retain the flexibility to control costs and promote efficient delivery of care by the use of reasonable medical management techniques to determine the frequency, method, treatment, or setting for a recommended preventive service to the extent not specified by the interim final rules.  For example, a plan may impose cost sharing for branded drugs if a generic version is available and just as effective and safe.

Questions/Issues Remain

Prescription Required - The new rules appear to require a prescription for a recommended  preventive service to be covered at no cost to the participant.  This would exclude from coverage all FDA-approved over-the-counter medicine and contraceptives obtained without a prescription.  In addition, the cost of renting a breast pump and nursing related supplies must be covered, if prescribed, but it is not clear if the cost to purchase a breast pump and related supplies would be covered.

Religious Employer Exemption -  As discussed above, religious groups have expressed concern that church affiliated associations will have difficulty satisfying the exemption from coverage of  contraceptive preventive services.  HHS is accepting comments on the definition of religious employer until September 30, 2011.  We would be glad to assist you in submitting your comments.

Mini-Med Plans with annual dollar limit waivers - Generally, a “mini-med plan” is a medical plan that has a low maximum annual benefit amount for a plan year.  For example, the maximum benefit payable from the plan may be as low as $3,500.  The low maximum benefit amount allows the employer to charge substantially lower monthly premiums so employees who may not otherwise be able to afford health insurance can afford at least a minimum amount of coverage.  The required coverage of the recommended preventive services, at no cost to the employee, could present significant cost increases for these plans and possibly cause employers to re-evaluate providing the plans at all.

Plan Sponsor Next Steps 

Review Plan Design - Plan sponsors will need to review their plan design with insurance providers and the delivery of services with vendors to determine what changes, if any, will be necessary.  Additionally, the preamble to the regulations notes that state laws are not superseded by health care reform, so any additional requirements of state law remain in place.

Cost Analysis - Self-insured plan sponsors may want plan vendors to review benefit data and provide an estimate as to the potential cost increase due to the required coverage of the recommended preventive services at no cost to the employee.