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I 

August 26, 2010 

The Honorable Kathleen Sebelius 

Secretary 

Department of Health and Human Services 

200 Independence Avenue, SW 

Washington, DC 20201 

Dear Secretary Sebelius: 

On behalf ofour nation's employers, we are writing to share our recommendations on issues 

raised by the interim final regulations relating to the implementation of the "Patient Protection 

and Affordable Care Act" (PPACA). 

We strongly support the implementation of health reform in a way that is both workable and also 

meets the health care needs of working families. As representatives of stakeholders that provide 

health coverage to 120 million Americans, we have a major stake in promoting a high quality, 

affordable health care system. The economic health ofour nation-and the ability of employers 

to create new jobs and advance a strong economic recovery-is directly related to the decisions 

the Administration is making on the implementation of key legislative provisions ofPPACA. 

To avoid disruptions in coverage and to prevent sharp increases in health care costs, we urge you 

to consider our recommendations on the following key issues: 

• 	 Grandfathered Health Plans: As promised repeatedly by the Administration and articulated in 

the PPACA itself, the grand fathered health plan provisions must preserve the ability of 

individual consumers and employers to maintain their existing health insurance coverage. 

This can be accomplished in several ways. As stated in the statute, the promise that "nothing 

shall be construed to require an individual [to] terminate coverage ... in which such 

individual was enrolled on [March 23, 2010]" can be achieved by: (1) ensuring that the 

benchmark for permissible cost-sharing changes is closely aligned with rising medical costs; 

(2) allowing prescription drug formularies to be modified, without impacting the 

grandfathered status of plans, to account for advances in medical knowledge and research; 

and (3) allowing routine administrative changes to provider networks on a regular basis, 

without affecting the grandfathered status of plans, to expand the network, improve quality, 

and address other provider changes. More broadly, as the regulations themselves state, the 

grandfathering rules must provide significant flexibility to employers to continue existing 

coverage options that are working well for their workforces. 

While we agree with the Administration's objective of stability, the approach taken by the 

statute and at least the broad goals ofthe regUlations, the details of implementation and 

interpretation threaten to frustrate the overall goal of greater stability. As the regulation itself 

notes, a majority of grandfathered plans will no longer enjoy that status after three years. 

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• 	 Restrictions on Annual Benefit Limits and Limited Benefit Plans: We appreciate that the 

interim final regulations have created an opportunity for limited benefit plans (sometimes 

also known as "mini-med" plans) to seek a waiver from the phased-in restrictions on annual 

benefit limits. We encourage you to allow this waiver to endure until 2014 (when annual 

benefit limits are entirely prohibited), provided that no major cha!1ge is made to the plan 

receiving that waiver in the interim period. 

• 	 Pre-existing Condition Exclusions for Children: We appreciate that PPACA provides special 

protections for children under age 19 with pre-existing conditions. To ensure that this 

important reform provision is implemented in a way that advances the general goals of 

reform, we support the clarification issued by the Administration regarding structured 

enrollment periods. Prior to this clarification, issued at the end ofJuly, the regulations 

appeared to create a perverse incentive for some families, especially those who are young 

and healthy, to wait until they experience medical problems to purchase coverage. This 

outcome would have increased premiums for other families purchasing coverage. While we 

applaud the recent clarification issued to address this concern, we request that this additional 

requirement be included in the final regulations, when they are issued. A structured 

enrollment process is critical to encourage people to buy coverage during a specific 

enrollment period and not wait until they are sick. 

• 	 Access to Emergency Services: It is important to ensure that the PPACA consumer 

protection provisions do not create unintended consequences or higher costs for health plan 

enrollees. If payment rates to non-participating emergency room providers are consistently 

higher than payment rates for providers in a health plan network, this creates an incentive for 

emergency room providers to stop contracting with health plans and decline to participate in 

provider networks. This will increase costs for consumers and employers. Instead, capping 

the out of network reimbursements paid to emergency providers might be one means of 

addressing this. Additionally, we strongly believe that patients should be protected from 

balance billing by out-of-network emergency room providers. Patients should not be subject 

to exorbitant costs or billing disputes ifthey are forced to seek emergency room care from 

out-of-network providers while traveling or in other circumstances. 

• 	 Medical Loss Ratios: The medical loss ratio (MLR) requirements should be structured to 

encourage investments in quality improvement initiatives that promote the delivery of high 

quality care based on the latest available evidence. To accomplish this goal, regulators 

should define "activities that improve health care quality" using the framework and criteria 

established by the Institute of Medicine and the Agency for Healthcare Research and Quality. 

It is the primary goal ofthese entities to promote high quality health 'care for consumers. 

Additionally, a transition plan is needed to ensure that existing coverage options are not 

disrupted as we move from the existing state MLR requirements to the new federal MLR 

standards. 
As HHS develops the final regulations in the coming weeks and months, we urge you to address 

these and other issues with the overarching goals of avoiding disruptions in existing coverage, 

promoting affordable coverage for working families and employers, and establishing workable 

regulatory structures in the early years ofthe reform process. The manner in which these issues 

are addressed will have a significant impact on the success ofthe major health reforms in 2014 

and beyond. 

Thank you for considering our recommendations on these important issues . 

. Sincerely, 

American Business Council 

National Association of Manufacturers 

National Retai I Federation 

U.S. Chamber ofCommerce