Health Care Reform. Guidance on PPACA Annual Dollar Limit Waivers, Provider Nondiscrimination, Clinical Trials and Transparency Reporting.

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1 Health Care Reform Guidance on PPACA Annual Dollar Limit Waivers, Provider Nondiscrimination, Clinical Trials and Transparency Reporting Summary The Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (collectively, the Departments ) issued four new Frequently Asked Questions (FAQs), each addressing a discrete issue under the Patient Protection and Affordable Care Act (PPACA). This is the 15th set of PPACA-implementing FAQs since the health care reform law was enacted in March As with the previously issued FAQs, these FAQs respond to questions from interested stakeholders and are intended to help them understand the law. Key Action Items should review these FAQs to ensure their group health plans and policies are in compliance with the various PPACA provisions addressed in this guidance. that previously received annual dollar limit waivers with respect to their limited benefit or mini-med plans may not change their plan or policy year in order to extend the expiration date of their waivers. of non-grandfathered group health plans must prepare to comply with the provider nondiscrimination provision and the coverage for individuals participating in approved clinical trials mandate, even in the absence of interpretive regulations. Timing The provider nondiscrimination provision and the coverage for individuals participating in approved clinical trials mandate become effective, without implementing regulations, for non-grandfathered plan years beginning on or after January 1, The transparency in coverage reporting and disclosure requirements for public exchangebased qualified health plans (QHPs) and non-exchange employer group health plans will not be required until Annual Dollar Limit Waiver Expiration Date Change in Plan or Policy Year The PPACA generally prohibits group health plans (insured or self-insured, and regardless of grandfathered status) from imposing lifetime or annual dollar limits on essential health benefits (EHBs), effective for plan or policy years beginning on or after September 23, 2010 (PHSA Section 2711, which is incorporated into ERISA Section 715 and IRC Section 9815). However, the PPACA allows group health plans to impose restricted annual dollar limits on EHBs for plan or policy years beginning before January 1, 2014 (e.g., $2 million annual limit on EHBs for plan or policy years beginning on or after September 23, 2012, but before January 1, 2014). No annual dollar limits on EHBs are permitted for plan or policy years beginning on or after January 1, Prior to the enactment of the PPACA, many employers offered limited benefit plans or mini-med plans to certain classes of employees (e.g., part-time or seasonal workers) Health Care Reform Bulletin May 2013 I 1

2 that contained annual dollar limits that otherwise would have violated the PPACA s prohibitions and restrictions on annual dollar limits. In recognition of this fairly common plan design, HHS established a transitional program under which compliance with the restricted annual dollar limits could be temporarily waived until plan or policy years beginning on or after January 1, 2014, if the plan or issuer demonstrated to HHS that their current annual dollar limits are necessary to prevent a significant decrease in access to benefits or a significant increase in premiums. Presumably, it has come to the Departments attention that some group health plans and/or issuers may be seeking to change their limited benefit or mini-med plan or policy year as a means to extend the waiver as far into 2014 as possible. In light of this, the first FAQ states that a group health plan or issuer that was granted a waiver from the annual dollar limit requirement by HHS may not change its plan or policy year in order to extend the expiration date of the waiver. The FAQ notes that HHS approved annual dollar limit waivers for the plan or policy year in effect when the plan or issuer applied for the waiver, and furthermore, HHS extended waivers based on the date of the plan or policy year in effect when the initial waiver application was submitted. As a result, waiver recipients that change their plan or policy years will not extend the expiration date of their waivers. For example, if a waiver approval letter states that a waiver is granted for a January 1, 2013 plan or policy year, the waiver will expire on December 31, 2013, regardless of whether the group health plan or issuer later amends its plan or policy year. Thus, such a plan or issuer could not extend its waiver expiration date by changing its plan or policy year to December 1, 2013 through November 30, That said, waiver recipients may terminate the waiver at any time prior to its approved expiration date. Provider Nondiscrimination PHSA Section 2706(a) (which is incorporated into ERISA health plans (both insured and self-insured) for plan or policy years beginning on or after January 1, 2014, states: A group health plan and health insurance issuer may not discriminate with respect to participation under the plan or policy against any health care provider that is acting within the scope of that provider s license or certification under applicable state law. This section does not require that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer. Nothing in this section prevents a group health plan, an issuer or HHS from establishing varying reimbursement rates based on quality or performance measures. The Departments note that similar language is included in Social Security Act Section 1852(b)(2) and implementing HHS regulations, which applies to Medicare Advantage plans. The second FAQ states that the Departments will not be issuing interpretive regulations regarding this provider nondiscrimination provision prior to January 1, 2014, or in the near future, as the Departments view this requirement as being self-implementing. The FAQ states that until any further guidance is issued, group health plans and health insurance issuers are expected to implement the provider nondiscrimination requirements using a good faith, reasonable interpretation of the law. The FAQ notes that to the extent an item or service is a covered benefit under the plan, and consistent with the plan s reasonable medical management techniques with respect to the frequency, method, treatment or setting for an item or service, a plan or issuer is prohibited from discriminating against a provider based on the provider s license or certification, as long as the provider is acting within the scope of the provider s license or certification under applicable state law. Health Care Reform Bulletin May 2013 I 2

3 Importantly, this provider nondiscrimination provision does not require plans or issuers to accept all types of providers into a network (that is, this provision is not a federal any willing provider law, which, at the state level, generally requires that specified categories of health care providers must be permitted to join a health plan network if the provider is willing to accept the financial and other terms of participation). Furthermore, this provision does not govern provider reimbursement rates, which may be subject to quality, performance or market standards and considerations. Without further guidance, it is expected that plan sponsors and issuers may have questions about this provision that, unfortunately, may remain unanswered. Coverage for Individuals Participating in Approved Clinical Trials PHSA Section 2709 (which is incorporated into ERISA health plans (both insured and self-insured) for plan or policy years beginning on or after January 1, 2014, states that if a group health plan or health insurance issuer provides coverage to a qualified individual, then such plan or issuer: May not deny the individual participation in an approved clinical trial with respect to the treatment of cancer or another life-threatening disease or condition May not deny (or limit or impose additional conditions on) the coverage of routine patient costs for items and services furnished in connection with participation in the trial May not discriminate against the individual on the basis of the individual s participation in such trial A qualified individual is a participant or beneficiary in a group health plan who is eligible to participate in an approved clinical trial according to the trial protocol with respect to the treatment of cancer or another life-threatening disease or condition, and either (i) the referring health care professional is a participating health care provider and has concluded that the individual s participation in such trial would be appropriate, or (ii) the participant or beneficiary provides medical and scientific information establishing that the individual s participation in such trial would be appropriate. An approved clinical trial means a phase I, II, III or IV clinical trial that is conducted in relation to the prevention, detection, or treatment of cancer or other life-threatening disease or condition, and is either (i) a federally funded or approved study or investigation, (ii) a study or investigation conducted under an investigational new drug application reviewed by the Food and Drug Administration, or (iii) a study or investigation that is a drug trial exempt from having such an investigational new drug application. Finally, routine patient costs include all items and services consistent with the coverage provided in the plan that are typically covered for a qualified individual who is not enrolled in a clinical trial. However, routine patient costs do not include (i) the investigational item, device or service itself, (ii) items and services that are provided solely to satisfy data collection and analysis needs, and that are not used in the direct clinical management of the patient, or (iii) a service that is clearly inconsistent with widely accepted and established standards of care for a particular diagnosis. Therefore, the PPACA does not require group health plans to cover the costs of the approved clinical trial itself, but rather just the routine patient costs (e.g., laboratory services) associated with the clinical trial. The third FAQ states that the Departments will not be issuing interpretive regulations regarding the coverage for individuals participating in approved clinical trials prior to January 1, 2014, or in the near future, as the Departments also view this requirement as being self-implementing. The FAQ states that, until any further guidance is issued, group health plans and health insurance issuers are expected to implement the requirement for coverage for individuals Health Care Reform Bulletin May 2013 I 3

4 participating in approved clinical trials using a good faith, reasonable interpretation of the law. Without further guidance, it is expected that plan sponsors and issuers may have questions about this provision that, unfortunately, may remain unanswered. Transparency in Coverage Reporting and Disclosure Under PPACA Section 1311(e)(3), health insurance issuers seeking certification as a qualified health plan (QHP) must make accurate and timely disclosures of certain information to the appropriate exchanges, HHS and the state insurance commissioner, and make it available to the public. Such information includes (i) claim-payment policies and practices, (ii) periodic financial disclosures, (iii) data on enrollment, (iv) data on disenrollment, (v) data on the number of claims that are denied, (vi) data on rating practices, (vii) information on cost sharing and payments with respect to any out-of-network coverage, and (viii) information on enrollee and participant rights under Title I of the PPACA. This required information must be provided in plain language, such that the intended audience, including individuals with limited English proficiency, can readily understand and use the information because the language is concise, well organized and follows other best practices of plain-language writing. To that end, HHS and the DOL are required to jointly develop and issue guidance on best practices of plain-language writing. In addition, a QHP issuer must make available the amount of enrollee cost sharing (including deductibles, copayments and coinsurance) under the individual s plan that the individual would be responsible for paying, with respect to the furnishing of a specific item or service by a participating provider in a timely manner, upon the request of the individual. At a minimum, such information must be made available through an Internet website and other means for individuals without access to the Internet. PHSA Section 2715A (which is incorporated into ERISA health plans (both insured and self-insured) requires group health plans and health insurance issuers to comply with the transparency in coverage reporting and disclosure requirements of the PPACA Section 1311(e)(3) described above, except that a group health plan that is not offered through an exchange (e.g., a self-insured group health plan or large insured group health plan) is only required to submit the information required to HHS and the state insurance commissioner and make such information available to the public. The fourth and final FAQ clarifies that the effective date for QHPs and group health plans to comply with the transparency in coverage reporting and disclosure requirements has been delayed until at least The Departments conclude that because QHP issuers will not have some of the data necessary for reporting under this requirement until during or after the first year of operation of their QHPs (e.g., QHP enrollment and disenrollment), QHP issuers will be required to begin submitting transparency in coverage information only after QHPs have been certified as QHPs for one calendar year. Similarly, because PHSA Section 2715A simply extends the above-referenced transparency in coverage provisions to non-exchange group health plans, the Departments clarify that those requirements will be effective for non-exchange group health plans no sooner than when the reporting and disclosure requirements apply to QHPs. The Departments will coordinate regulatory guidance on the transparency in coverage standards for coverage offered inside and outside of the exchanges. Reference: Frequently Asked Questions (FAQs) Health Care Reform Bulletin May 2013 I 4

5 About Towers Watson Towers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of benefits, talent management, rewards, and risk and capital management. For more information on this Health Care Reform Bulletin, visit. Health Care Reform Bulletin May 2013 I 5