AB
AFSCME

We Make America Happen

Gerald W. MeEntee
President

Lee A. Saunders
Secretary-Treasurer
Vice Presidents

Ken Allen
Portland, OR

Henry L Bayer
Chicogo, Ik

George Boncoraglio
‘New York, NY

‘Anthony Caso
Boston, MA

Greg Devereux
‘Olympia. WA

Danny Donohue
Albany, NY

David R. Filan
‘Horrisburg, PA

Michael Fox
Horrsburg, PA

Albere Garrett
Detroit, MI

Raglan George Jr
Now York, NY

Sherryl Gorden
Trenton, NY

Lakesha Harrison
‘cklend, CA

Danny J. Homan
Des Moines, 14

Salvatore Luciano
New Britain, CT

John A. Lyall
Worthington, OH

Roberta Lynch
Chicago, I.

Glenard S. Middleton Si,
Boltimore, MD

Gary Mitchell
‘Madison, WI

Veronica Montgomery-Costa
‘NewYork, NY’

Doug Moore
San Diego, CA

Henry Nicholas
Philadelphia,

Eddie L. Parks
Westervitle, OH

Randy Perreira
Honolulu, HI

George E. Popyack.
‘Oakland, CA

Grog Powell
‘Austin,TX

Laura Reyes
San Diego, CA

die Rodriguez
NewYork, NY

Lawrence A. Roehrig
Lansing, Ml

Joseph P Rugola
Columbus, OFF

Kathy J. Sackenan
Pomona, CA

Bliot Seide
South St Poul, MN

May €, Sullivan
‘Albany, NY

Braullo Torres
‘San Juan, PR

David Warrick
Indianapolis, IN

Jeanette D. Wynn
Tallahassee, FL

on 415.10
710

August 13, 2010

Office of Consumer Information and Insurance Oversight
Department of Health and Human Services

Attention: OCIIO-9991-IFC

P.O, Box 8016

Baltimore, MD 21244-1850

Submitted electronically via www.regulations.gov

Dear Sir or Madam:

Tam writing on behalf of the American Federation of State, County & Municipal
Employees (AFSCME), a union of 1.6 million active members and retirees throughout the
United States. AFSCME appreciates this opportunity to comment on the Interim Final Rule
implementing the provision regarding the grandfathered status of health plans and health
insurance coverage under the Patient Protection and Affordable Care Act (PPACA).

AFSCME has fought to improve our health care system for decades and through the
tremendous energy and commitment of our members, activists and leaders all over the country
we played an important role in the passage of the PPACA. Because our members have fought
and sacrificed for their health benefits coverage won at the bargaining table, one of our main
health care reform objectives was to maintain and improve existing health coverage. We
believe that these regulations help to address this goal. We commend the agencies for
developing regulations that strike a balance between preserving an individual’s right to keep
their current health plan while ensuring all will benefit from some of the most important
provisions in PPACA that will improve access to quality health care coverage. We strongly
support many of the rules defining changes that would cause a plan to lose grandfather status.

However, there are a few areas we believe need strengthening and/or clarification in
order to safeguard participants from eroding coverage.

Elimination of benefits

Under this rule, the “elimination of all or substantially all benefits to diagnose or treat
a particular condition causes a group health plan or health insurance coverage to cease to be a
grandfathered health plan.” While the rule specifies that this elimination refers to that of “any
necessary element to diagnose or treat a condition,” we feel that this creates ambiguity when
determining whether or not the element in question is “necessary” for diagnosis or treatment.
We recommend that the regulations be modified to state that the elimination of any current
benefit utilized to diagnose or treat a condition will cause the plan to lose grandfather status.
However, based upon credible evidence, plans should be permitted to eliminate techniques or
treatments that have been proven to be less effective or produce clinical results similar to other
techniques or treatment but at higher cost. A system such as that provided for in the rule
implementing the coverage of preventive services under the PPACA could be utilized where
plans are not required to cover or waive cost-sharing requirements for items/services no longer
recommended by the U.S. Preventive Services Task Force, CDC Advisory Committee or the
Health Resources and Services Administration.

American Federation of State, County and Municipal Employees, AFL-ClO
TEL (202) 429-1000 FAX (202) 429-1293 TDI (202) 659-0446 WEB wwwafscme.org 1625 L Street, NW, Washington, DC 20036-5687



August 13, 2010
Page 2

Changes in annual limits — addition or decrease

Although the regulations address and make clear that the imposition of a new overall annual limit
on the dollar value of benefits (or reduction in the dollar value of such a limit) will cause a plan to lose
grandfather status, quantitative limits on the scope or duration of treatment such as, the number of visits,
the frequency of treatment or the days of coverage are not addressed. We believe plans adding these
types of limits (or decreasing such limits) should cease to be grandfathered as well. The end result of
such quantitative limits is the same as actual dollar value limits — restriction of access to needed care.

Clarification of Term “Benefit Package”

We suggest that the Departments provide further clarification of the meaning of the term “benefit
package.” While this term is not defined in the regulations, the illustrative examples given appear to
suggest that more than the type of insurance arrangement (e.g. HMO, PPO) determines what may be
considered separate benefit packages. According to the McGraw-Hill Concise Dictionary of Modern
Medicine, benefits package is defined as “health insurance services covered by a health insurance contract
or plan and the financial terms of such coverage, including cost sharing and limitations on amounts of
services.” Because grandfathered status is determined on a benefit package by benefit package basis it is
important that this matter be clarified.

Other changes leading to loss of grandfather status

In addition, while the regulations address a variety of plan changes that will result in the loss of
grandfather status, the Departments specifically invited comments on whether other changes in a plan,
such as changes to plan structure, changes in provider network or changes to a prescription drug
formulary could trigger its loss. AFSCME believes substantial changes in networks and formularies, and
the implementation of changes such as pre-authorization for specialty care or the implementation of
“gatekeeper” features, should cause a plan to lose grandfathered status.

Changes to plan structure

We believe that the changes a participant experiences when the structure of a health plan is
altered — such as from an indemnity plan to a managed care plan or even within managed care plans such
as from a PPO to POS or HMO plan — are significant and should affect the plan’s grandfather status. This
type of change considerably restricts the participants’ access to facilities and providers that they have
depended upon and with whom they have built relationships.

However, a change in plan structure involving 'a move from an insured plan to a self-insured plan
that merely affects the financing of the coverage and not the participants’ benefits or access to providers
should not affect the plan’s grandfather status.

Changes in a network plan’s provider network

Like changes in plan structure, changes to a plan’s provider network can have significant and
sometimes deleterious effects on participants. Before passage of PPACA, President Obama made the
promise that “if you like your health plan, you can keep it.” What this means to most individuals is that
they will not be forced to change the physicians or facilities they have come to rely on. While small
changes in a provider network may be unavoidable, changes leading to the loss of providers and/or
facilities affecting more than ten percent of plan participants — with the last plan year prior to the passage
of PPACA deemed the base year - should be considered significant enough to result in the loss of a plan’s
grandfather status. This could be measured by conducting geoaccess reports and disruption analyses by a
plan when there is a change in provider networks or substantial change in the composition of a provider
network.



August 13, 2010
Page 3

Changes to a prescription drug formulary

Generally speaking, changes to prescription drug formularies should not cause the loss: of
grandfather status. Many of the changes in a plan’s drug formulary are as a result of the plan’s or PBM’s
pharmacy and therapeutics committee review of a medication’s safety and efficacy. These types of
changes, along with those required to maintain consistency with FDA guidelines should be considered
routine. However, significant changes to the formulary such as moving from an open formulary to a
closed formulary should mean the loss of grandfather status. In addition, changes to a formulary - other
than from a brand name drug to its generic substitute - for reasons other than safety or efficacy, for
example financial considerations such as rebates, that require plan participants to seek changes in
medication in order to maintain coverage at the current level of reimbursement (allowing for increases in
employee co-insurance or co-payment as described in the IFR) should lead to a loss of grandfathered
status.

According to the Kaiser Family Foundation, in 2007, 90 percent of seniors and 58 percent of
nonelderly adults relied on a prescription medicine on a regular basis. Further, the average number of
prescriptions per capita has been rising, totaling 12.6 in 2009. With so many people relying on
prescriptions, considerable changes in drug formularies could have a devastating impact not only on
participants’ physical health but also their financial well-being.

AFSCME appreciates the opportunity to comment on this interim final rule and looks forward to
continuing to work with the Department of Health and Human Services as the various provisions of
health care reform are implemented.

Respectfully submitted,

Aé

Steven Kreisberg
Director of Collective Barga
Health Care Policy

SK/bd