Filed Under:Health Insurance, Individual Health

PPACA: Agencies Release Core Regulations

The Obama administration has unveiled interim final regulations it will use to implement the rescission, preexisting condition exclusion, benefits maximum and patient protection provisions in the new federal health laws.

The Internal Revenue Service, an arm of the U.S. Treasury Department, and the Employee Benefits Security Administration, an arm of the U.S. Labor Department, worked to put out the 196-page batch of interim final rules and guidance together with the new Office of Consumer Information and Insurance Oversight (OCIIO), an arm of the U.S. Department of Health and Human Services.

The Affordable Care Act (ACA) - the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act - created the OCIIO, and it also created the rescission provisions and other provisions that led to the development of the interim final rules.

The IRS also is proposing to adopt the same batch of rules as permanent regulations.

Final drafts of the interim final rules and the IRS notice of proposed rulemaking are now available on the Office of the Federal Register website.

The rules are due to appear in the Federal Register June 28. Agencies sometimes change documents between the time they appear on the Federal Register office website and the time they officially appear in the Federal Register.

Comments on the interim final rules will be due 60 days after the day of official publication in the Federal Register, and comments on the IRS proposed rules will be due 90 days after the publication date.

Many of the group plan and group insurance rules will apply for plan years beginning on or after Sept. 23, and others will apply for plan years beginning on or after Jan. 1, 2014.

Similarly, many of the rules that affect individual health insurance will apply for policy years beginning on or after Sept. 23, and some will apply for policy years beginning on or after Jan. 1, 2014.

Some ACA opponents hope to keep many of its provisions from taking effect by fighting the new requirements in court. The American Center for Law and Justice, Atlanta, has filed a suit against implementation in the U.S. District Court in the District of Columbia.

BENEFITS MAXIMUMS

The ACA provisions banning lifetime benefits caps will take effect Sept. 23, and provisions restricting use of annual caps will take effect that same date. A ban on annual benefits caps is set to take effect Jan. 1, 2014.

Grandfathered individual policies are exempted from this provision, officials note.

"The statute provides that, with respect to benefits that are not essential health benefits, a plan or issuer may impose annual or lifetime per-individual dollar limits on specific covered benefits," officials say.

The regulations describing "essential health benefits" have not been issued, officials say.

"For plan years (in the individual market, policy years) beginning before the issuance of regulations defining 'essential health benefits,' for purposes of enforcement, the Departments will take into account good faith efforts to comply with a reasonable interpretation of the term 'essential health benefits,'" officials say. "For this purpose, a plan or issuer must apply the definition of essential health benefits consistently. For example, a plan could not both apply a lifetime limit to a particular benefit - thus taking the position that it was not an essential health benefit - and at the same time treat that particular benefit as an essential health benefit for purposes of applying the restricted annual limit."

Between Sept. 23 and Jan. 2014, group plans and individual health insurers can "establish a restricted annual limit on the dollar value of essential health benefits," officials say.

To avoid the possibility of big premium increases, federal agencies will phase the annual limits in over 3 years.

Starting Sept. 23, the annual limits must be at least $750,000. The minimum annual limit will increase to $1.25 million Sept. 23, 2011, and to $2 million Sept. 23, 2012.

The new ACA annual maximum rules do not apply to health savings accounts or to health reimbursement arrangements, officials say.

MINI MED PLANS

The federal agencies are making special allowances for limited benefit "mini med plans."

To keep members of those plans from suffering a severe impact, "these interim final regulations provide for the secretary of Health and Human Services to establish a program under which the requirements relating to restricted annual limits may be waived if compliance with these interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums," officials say.

HHS officials will put out limited-benefit plan guidance "in the near future," officials say.

PREEXISTING CONDITION EXCLUSIONS

The ACA preexisting conditions exclusions provisions will prohibit group plans and individual issuers from imposing preexisting condition exclusions after Jan. 1, 2014; those provisions take effect for enrollees under age 19 for plan years beginning on or after Sept. 23.

Until the ACA provisions take effect, the rules included in the Health Insurance Portability and Accountability Act (HIPAA) of 1996 continue to apply, officials say in a preamble to the proposed regulations.

"These interim final regulations do not change the HIPAA rule that an exclusion of benefits for a condition under a plan or policy is not a preexisting condition exclusion if the exclusion applies regardless of when the condition arose relative to the effective date of coverage," officials say.

RESCISSION BAN

ACA bans on group health plan and individual health policy rescissions, except in cases involving fraud or intentional misrepresentation of a material fact, are set to take effect Sept. 23.

Under the current standard, carriers can rescind coverage in cases involving unintentional misrepresentations of material facts, officials say.

The new ACA rescission standard "applies to all rescissions, whether in the group or individual insurance market, and whether insured or self-insured coverage," officials say. "These rules also apply regardless of any contestability period that may otherwise apply."

Starting with policy years beginning on or after Jan. 1, 2014, ACA provisions will ban health carrier discrimination based on health status, and those changes "will reduce the likelihood of rescissions," officials predict.

State anti-rescission laws apply if the state laws are tougher than the federal standard, officials say.

PATIENT PROTECTION PROVISIONS

Some ACA provisions require health plans to give enrollees easier access to certain types of providers, such as gynecologists, and in-network-level emergency services, without imposing prior authorization requirements.

"The emergency services must be provided without regard to any other term or condition of the plan or health insurance coverage other than the exclusion or coordination of benefits, an affiliation or waiting period ... or applicable cost-sharing requirements," officials say.

THE PRESIDENT: WE'RE NOT OUT TO PUNISH INSURERS

President Obama said today in the White House that he has just spoken to the chief executive officers of some of the largest U.S. health carriers and some state insurance commissioners to talk about implementing the ACA provisions.

A year ago, everyone, including insurers recognized "that finally something needed to be done about America's broken health care system," Obama said, according to a written version of his remarks. "One thing was clear to everybody: We couldn't keep traveling down the same road."

The new ACA regulations and the rest of the health system change process is "not punitive," Obama said. "It's not meant to punish insurance companies. They provide a critical service. They employ large numbers of Americans. And in fact, once this reform is fully implemented a few years from now, America's private insurance companies have the opportunity to prosper from the opportunity to compete for tens of millions of new customers. We want them to take advantage of that competition."

But consumers need protection from problems with the current system, such as discrimination against children with preexisting conditions and efforts to rescind policies issued to women with breast cancer, Obama said.

"I'm pleased to say that some insurance companies have already stopped these practices," Obama said.

Some have "questioned whether insurance companies might find a loophole in the new law and continue to discriminate against children with preexisting conditions," Obama said. "And to their credit, when we called the insurance companies to provide coverage to our most vulnerable Americans, the industry agreed. Those were the right things to do for their consumers, their customers -- the American people. And I applaud industry for that. And we're going to hold industry to that standard, a standard in which industry can still thrive but Americans are getting a fair shake."

Similarly, some insurers have tried to increase rates a great deal before new restrictions take effect, but at least one carrier withdrew a large rate increase when asked about it, Obama said.

"There are genuine cost-drivers that are not caused by insurance companies," Obama said.

But "we've got to make sure that this new law is not being used as an excuse to simply drive up costs," Obama said. "So what we do is make sure that the Affordable Care Act gives us new tools to promote competition, transparency and better deals for consumers. The CEOs here today need to know that they're going to be required to publicly justify unreasonable premium increases on your websites, as well as the law's new website -- healthcare.gov. As we set up the exchanges, we'll be watching closely, and we'll fully support states if they exercise their review authority to keep excessively expensive plans out of their insurance exchanges."

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