Last week we summarized issues addressed in the recent FAQs related to grandfather status and dependent child coverage issues. This week we will address other issues addressed in the recent FAQs.
A FAQ confirms that the six changes resulting in the loss of grandfathered status listed in the Interim Final Regulations on grandfathered status are the only such changes that result in loss of grandfathered status. Another FAQ includes guidance on what is a benefit package for grandfathering purposes. It provides generally that in the case of a plan with three options – a PPO, POS arrangement and HMO – it is permissible to treat the three options as separate benefit packages for grandfathering purposes.
A third FAQ finds that a category of benefits (e.g., primary care benefits) cannot be treated as its own option in order to try to prevent a change in cost sharing within that one category from affecting the grandfathered status of the other categories. A fourth FAQ explains how the restriction on employer contribution rate changes applies where an employer restructures its tiers of coverage (e.g., family coverage replaced by self plus one, self plus two, etc.).
PPACA provides that a group health plan or health insurance issuer offering coverage to individual or group health plans may not rescind coverage with respect to an enrollee except where the individual has performed an act or practice that constitutes fraud or makes an intentional misrepresentation of a material fact, as prohibited by the terms of the plan or coverage. An example in the Interim Final Rule on rescissions and other patient protection issues (see 75 Fed. Reg. 37188 (June 28, 2010)) indicates that it is not permissible to retroactively terminate coverage where an employee transferred from full-time to part-time status and was no longer eligible for the health plan.
In contrast, a FAQ provides helpful guidance allowing a plan to terminate coverage retroactive to the date of employment termination where the plan has a monthly review process under which it detects and makes corrections. This suggests that it may be possible to use a monthly review and correction process like the one in the FAQ in other circumstances, and appears to put a gloss on the example in the Interim Final Rule.
The Interim Final Rule on the PPACA preventive service requirements provides that a plan or insurer may use "reasonable medical management techniques" to determine the frequency, method, treatment, or setting for a recommended preventive service to the extent such information is not specified in the applicable recommendation or guideline.
A FAQ notes that reasonable medical management techniques generally limit or exclude benefits based on medical necessity using prior authorization requirements. The FAQ suggests medical management may be the only way to deal with a preventive service that does not have a published limit on frequency or setting. It is not clear the extent to which a plan could have other frequency limits that the sponsor believes are justified in a manner similar to medical management.
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You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html
Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C. She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare. She represents employers designing health plans as well as insurers designing new products. Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.
Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.
PLEASE NOTE: This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.