The Departments of Health and Human Services, Labor and Treasury recently provided additional guidance on the insurance market reform provisions of the Affordable Care Act. The information is provided in question-and-answer format, and covers common questions about grandfathered health plans, dental and vision benefits, rescissions, and preventive health services.

With respect to grandfathered health plans, the FAQs explain, among other things, that the only changes that would trigger the loss of grandfathered status for plans in place as of March 23, 2010 are the six specific health plan changes identified in the grandfathered plan interim final regulations. In addition, the FAQs note that the grandfathered plan analysis applies on a benefit-package-by-benefit-package basis. Therefore, if an HMO forfeits its grandfathered status, it would not affect the status of the provider’s other insurance options such as PPOs or a POS arrangement. Another FAQ explains that if an employer plan sponsor raises the co-payment level for a category of services by an amount that exceeds the regulatory standard, the plan will lose its grandfathered status even if it retains the co-payment level for other categories of services.

The interim final grandfather regulations did not address their application to wellness programs sponsored by group health plans. The FAQs explain that group health plans may continue to provide incentives for wellness by providing premium discounts or additional benefits to reward healthy behaviors by participants or beneficiaries, by rewarding high quality providers, and by incorporating evidence-based treatments (treatments that have been determined to be effective based on research and established scientific standards) into benefit plans. However, penalties (such as cost-sharing surcharges) may implicate the health plan changes that trigger a loss of grandfathered status and “should be examined carefully.” While other provisions contained in the Affordable Care Act provide additional flexibility to reward participants and beneficiaries in group health plans for meeting standards related to a health factor, certain wellness plan structures may run afoul of the grandfather regulation limitations.

As for dental and vision benefits, the guidance states that if dental or vision benefits are structured as excepted benefits under HIPAA, they are exempt from the Affordable Care Act’s market reforms. In response to a question about whether exceptions to the statutory prohibition of insurance coverage rescission are limited to instances of fraudulent or intentional misrepresentations about prior medical history, the FAQs clarify other situations in which coverage may be rescinded and provide helpful guidance regarding retroactive terminations of coverage “in the normal course of business.” The Departments do not consider the retroactive elimination of coverage back to the date of termination of employment, due to delay in administrative record-keeping, to be a rescission.

As to coverage for preventive health services, the interim final regulations provide that if a recommendation or guideline for a recommended preventive health service does not specify the frequency, method, treatment, or setting for the provision of that service, the plan or issuer can use reasonable medical management techniques (which generally limit or exclude benefits based on medical necessity or medical appropriateness using prior authorization requirements, concurrent review, or similar practices) to determine any coverage limitations under the plan. The FAQs further explain that “to the extent not specified in a recommendation or guidance, a plan or issuer may rely on the relevant evidence base and these established techniques” to make this determination.

Finally, the FAQ guidance clarifies that compliance with the Affordable Care Act requirements for policies in the individual market sold on or after September 23, 2010 are not effective on a date other than the date that coverage begins.

This entry was written by Ilyse Schuman.

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