August 12, 2010 

Office of Consumer Information and Insurance Oversight 

Department of Health and Human Services 

Attention: OCIIO-9991-IFC 

P.O. Box 8016 

Baltimore, Maryland 21244-1850 

Office of Health Plan Standards and Compliance Assistance 

Employee Benefits Security Administration 

U.S. Department of Labor 

200 Constitution Avenue NW 

Washington, DC 20210 

Attention: RIN1210-AB42 

Internal Revenue Service 

P.O. Box 7604 Ben Franklin Station 

Washington, DC 20044 

Attention: REG-118412-10 

RE: File Code OCIIO-9991-IFC/RIN 1210-AB42/REG-118412-10. 

Submitted electronically to: http://www.regulations.gov

To Whom It May Concern: 

The Center for Medicare Advocacy, Inc. is a national non-profit organization that 

advocates on behalf of older people and people with disabilities for access to 

comprehensive, fair, and affordable health care. We file these comments to the interim 

final rules published in the Federal Register concerning grandfathered health plans. 75 

Fed. Reg. 34537 (June 17, 2010). Overall, we support the approach the Departments have 

taken to implement the provisions of the Affordable Care Act concerning grandfathered 

status for health plans that were in existence on March 23, 2010. . 

Model language to satisfy the disclosure requirement: The interim final rules include 

model language that can be used to satisfy the disclosure requirement. Based on our 

experience with Medicare Advantage and Medicare prescription drug plans, we believe 

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that model language is necessary to ensure that health insurance plans and plan sponsors 

provide all of the information that is required of them. Further, it has been our experience 

in the context of Medicare that model notices need to be clear, thorough, and written in 

language that is easily understandable. We therefore suggest that the model notice: 

 Explain what is meant by grandfathered status, including that grandfathered 

status applies to plans that were in effect on March 23, 2010; that status does 

not change because a plan is renewed or covers new employees or family 

members. 

 Explain both the provisions of the Affordable Care Act that apply and the 

provisions that that do not apply to grandfathered plans. 

 Describe the right of a covered individual to inspect and copy documents that 

establish grandfather status. 

 Explain the reasons why a plan may lose grandfathered status. 

Clarification to regulations defining changes that result in a loss of grandfather 

status: The interim final rules identify circumstances under which a change in plan 

benefit structure or cost-sharing would result in a loss of grandfathered status. We 

suggest the following clarifications. 

Changes to Annual Benefit-Specific Limits: Under the interim final regulations, a 

plan would lose its grandfathered status if it makes certain changes to annual and lifetime 

dollar limits. We suggest that the final rules clarify how changes to limits imposed on 

specific benefits would affect grandfather status. Specifically, a plan that did not have an 

annual or lifetime limit on all benefits on March 23, 2010 should lose grandfather status 

if it imposes a new annual or lifetime limit on a specific benefit, such as prescription drug 

coverage or therapy services. Similarly, plans that had an annual or lifetime limit should 

lose grandfather status, even though they do not change the dollar amounts, if they 

impose a new, specific limit on a particular item or service. Finally, plans that lower 

their annual and/or lifetime limits should lose grandfather status, as lowering a limit is in 

direct contravention of the intent of the Affordable Care Act.. 

 

Changes in Availability and Cost of Out-of-Network Coverage: We suggest that 

the final rule be clarified to ensure that changes to both in-network and out-of-network 

cost-sharing amounts be evaluated by the standards included in the interim final rule. 

Loss of a point-of-service option under an HMO should be considered a significant 

change that would result in loss of grandfather status. 

Comments on other changes that may result in a loss of grandfather status: The 

interim final regulations invite comments on the impact of other changes to health plans. 

Again, given our experience working with Medicare Advantage and Medicare 

prescription drug plans, we believe that certain changes to plan design, physician 

networks or plan formularies can result in such a fundamental change to a plan or 

insurance policy that grandfather status should be lost. 

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Plan Structure: Plans should automatically lose grandfathered status when they 

change from a PPO to an HMO or vice versa. The structures of these plans are so 

different that plan participants would have to familiarize themselves with a whole new set 

of rules to determine coverage and provider access after such a change was effectuated. 

We also believe that plans that go from being fully insured to self-insured should lose 

grandfathered status. Such a change could result in a substantial restructuring of the 

benefits that are provided as plan sponsors would no longer have to follow state-law 

mandates. 

Provider Network: Physicians, hospitals and other providers may decide to leave 

or join a plan’s network based on their own business decisions. Some of the business 

decisions reflect the quality of the health plan, including the restrictions the plan imposes 

on covering services that are ordered and the promptness with which the plan issues 

payment. When changes in provider networks become significant, they should result in a 

loss of grandfathered status. Significant changes would include a plan/insurer dropping a 

significant portion of providers in a given geographic area from its network (including 

the primary hospital in the area serving a significant portion of all hospital inpatient days 

in the area); a plan/insurer reducing the number of total network providers; or a 

plan/insurer substantially reducing the number of in-network providers in a particular 

specialty or subspecialty. 

Drug Formulary: Plan formularies change as a result of new drugs being added to 

the market; generic versions of drugs becoming available; and drugs being removed for 

safety reasons. Such changes, in most circumstances, may not involve significant 

changes to the plan benefit package. When the structure of the formulary changes, 

however, the change becomes fundamental and should result in a loss of grandfathered 

status. Such structural changes include going from an open to a closed formulary; adding 

formulary tiers, including a “specialty tier” for high cost drugs; restricting network 

pharmacies; and increasing the uses of utilization management tools such as prior 

authorization, quantity limits, and step therapy. Significant increases in out-of-pocket 

costs for drug coverage, including the addition of or increase in deductibles and increased 

co-payment amounts, should be treated the same as significant increases in cost-sharing 

for other benefits under the plan. Thus, a plan that shifts more cost-sharing to its 

participants would lose grandfather status. 

Need for oversight of grandfathered plans: The interim final regulations rely primarily 

on plan self-regulation of grandfather status. Because self-regulation can lead to 

misapplication of standards and, in a few instances, fraudulent activity, we believe that 

greater oversight by the Departments is required. Plans should be required to submit an 

initial certification of grandfather status to an appropriate government agency and an 

annual itemized report that describes plan changes and recertifies grandfather status. 

Plan participants should receive an updated initial disclosure notice as part of the annual 

notice of changes in plan benefits that they receive. 

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Thank you for the opportunity to submit comments. We look forward to working with 

you to implement these and other provisions of the Affordable Care Act. 

Sincerely, 

Vicki Gottlich 

Senior Policy Attorney 

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