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June 23, 2010

HRB 7 - Patient’s Bill of Rights

Released June 23, 2010I Download as a PDF

June 23, 2010 -- On June 22, 2010, the Departments of Health and Human Services, Labor and Treasury (“Agencies”) issued another round of interim final regulations, implementing certain aspects of the health care reform law.  The regulations, curiously known as the “Patient’s Bill of Rights,” address such matters as the ban on annual and lifetime limits, preexisting condition exclusions, and rescissions, as well as some consumer protections, such as choice of primary care provider and emergency room access.  Following are highlights from these regulations.

Ban on Annual and Lifetime Limits

Generally, both grandfathered and non-grandfathered plans will no longer be able to impose annual and lifetime limits on essential benefits.  The regulations confirm that it is permissible for plans to impose limitations on non-essential benefits. “Essential benefits” has not yet been fully defined; but would include certain coverage for specific categories of benefits, meet certain cost-sharing requirements, and provide a certain level of benefits as provided in a “typical employer-sponsored plan.” 

The regulations set out a transition period for annual limits.  From now until January 1, 2014, the following schedule applies to annual limits on the dollar value of benefits:

  • $750,000 for plan years between 9/23/2010 and 9/23/2011;
  • $1,250,000 for plan years between 9/23/2011 and 9/23/2012; and
  • $2,000,000 for plan years between 9/23/2012 and 1/1/2014.

The regulations set out several examples explaining how the annual limits (phase-in) can be satisfied.  Of particular note, the regulations provide that if a grandfathered group health plan currently provides a higher limit, for example, in the plan year beginning between 9/23/2010 and 9/23/2011 that is greater than $750,000, and subsequently lowers the limit, the grandfathered health plan status may be lost.

There is indication in the preamble that temporary relief from the annual limitation restrictions will be made available for limited medical plans (“mini-med” plans).  The process for applying for such relief has not yet been established.  The suggestion in the regulations, though, is that beginning in 2014, the “no annual limit” will apply, without regard to the nature of the plan.  This question remains open to future guidance.

Special Enrollment Period for Individuals Whose Coverage is Dropped

For individuals whose coverage has dropped due to reaching the plan’s lifetime limit, a special enrollment opportunity must be made available. The affected individual must be allowed to enroll in any of the benefit packages offered by the employer, as long as he/she meets the eligibility criteria.  This enrollment period must be for a minimum of 30 days. 
 

The individual must be given notice of the open enrollment opportunity; such notice may be included with other enrollment materials that a plan distributes to employees, provided the statement is prominent.  The notice and enrollment opportunity must be provided beginning no later than the first day of the first plan year beginning on or after September 23, 2010; coverage must take effect no later than the first day of the first plan year beginning on or after September 23, 2010.

Applicability and Effective Date 

These rules apply to both grandfathered and non-grandfathered health plans.  The rules do not apply to account-based plans, such as flexible medical spending arrangements, health savings accounts, medical savings account, or health reimbursement arrangements that are part of a comprehensive group health plan.

These provisions become effective for plan years beginning on or after September 23, 2010; this means January 1, 2011 for calendar year plans.

Ban on Preexisting Condition Exclusions

For plan years beginning on or after September 23, 2010, a preexisting condition exclusion (PCE) cannot be imposed upon children under the age of 19.  For plan years beginning on or after January 1, 2014, PCEs cannot be imposed on anyone. 

This provision applies to all individual policies, as well as to grandfathered and non-grandfathered group health plans.  Plan exclusions can still be imposed; however, the imposition of a new exclusion may cause a plan to lose grandfathered status.

Ban on Plan Rescission

Effective for plan years beginning on or after September 23, 2010, except for fraud or intentional misrepresentation, grandfathered and non-grandfathered plans can no longer rescind coverage due to unintentional or inadvertent errors.

The term, “rescission” refers to a cancellation or discontinuance of coverage that has retroactive effect.   For example, a cancellation that treats a policy as void from the time of the individual’s or group’s enrollment, or a cancellation that voids benefits paid up to a year before the cancellation. A cancellation or discontinuance of coverage is not a rescission if the cancellation or discontinuance of coverage has a prospective effect; or is effective retroactively, due to failure to timely pay required premiums or contributions towards the cost of coverage.

The regulations include several examples.  Of particular note, the regulations explain that if an individual moves from an eligible class (full-time employee) to an ineligible class (part-time status) but is inadvertently left on the plan, the insurer cannot rescind coverage, assuming the error was inadvertent. 

Plans must provide at least 30 days advance written notice to each participant who would be affected before coverage may be rescinded.

Patient Protections

Choice of Health Care Provider

The law requires that if a plan requires designation of a primary care provider (PCP), a participant must be allowed to designate a participating in-network PCP, who is available to accept him/her.  The regulations provide that pediatricians can be designated as a child’s PCP. 

Direct Access to OB/GYN Services

Plans must provide direct access to OB/GYN providers, without prior authorization or a referral from the individual’s PCP.  Plans may require the OB/GYN provider to agree or adhere to the plan’s policies and procedures relating to referrals, obtaining prior authorization, and providing services, pursuant to a treatment plan. 

Model Notice of the Right to Designate Providers and Right of Access to OB/GYN Services

If a plan requires designation of a PCP, the plan must notify participants of their rights to designate a pediatrician as their PCP, if they choose to do so.  The following model language can be used to satisfy the notice requirement:

[Name of group health plan or health insurance issuer] generally [requires/allows] the designation of a primary care provider. You have the right to designate any primary care provider who participates in our network and who is available to accept you or your family members. [If the plan or health insurance coverage designates a primary care provider automatically, insert: Until you make this designation, [name of group health plan or health insurance issuer] designates one for you.] For information on how to select a primary care provider, and for a list of the participating primary care providers, contact the [plan administrator or issuer] at [insert contact information].

For designation of a pediatrician as a PCP, add the following language to the model notice above:

For children, you may designate a pediatrician as the primary care provider.

For plans that provide coverage for OB/GYN services, add the following language to the model notice above:

You do not need prior authorization from [name of group health plan or issuer] or from any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from a health care professional in our network who specializes in obstetrics or gynecology. The health care professional, however, may be required to comply with certain procedures, including obtaining prior authorization for certain services, following a pre-approved treatment plan, or procedures for making referrals. For a list of participating health care professionals who specialize in obstetrics or gynecology, contact the [plan administrator or issuer] at [insert contact information].

Access to Emergency Room Services

If a group health plan provides coverage for services rendered in a hospital emergency room, then the plan must also cover emergency services without the need for any prior authorization determination, even if the emergency services are provided on an out-of-network basis, and without regard to whether the health care provider furnishing the emergency services is a participating network provider.

If the emergency services are provided out of network, plans cannot impose any administrative requirement, or limitation on coverage, that is more restrictive than the requirements or limitations that apply to in-network emergency services received from in-network providers.  Any cost-sharing requirement, such as co-pays or coinsurance, imposed for out-of-network emergency services cannot be greater than any cost-sharing requirements imposed for in-network emergency services. However, the individual may be required to pay, in addition to the in-network cost sharing, the excess of the amount the out-of-network provider charges over the amount the plan is required to pay. Other out-of-network cost sharing, such as deductibles or out-of-pocket limits, may apply.

Applicability and Effective Date 

The right to designate a primary care physician, and the right to access OB/GYN and emergency room services, applies to non-grandfathered group health plans.  These provisions become effective for plan years beginning on or after September 23, 2010; this means January 1, 2011 for calendar year plans.

These regulations have been issued as interim final regulations.  There is a comment period of 60 days, expected to close around August 27, 2010.  Based on comments received, these regulations could be later modified.

 

Author:  Karen R. McLeese, Esq.

 

About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.

 

 

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations.

This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

 

 

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