https://fdms.erulemaking.net/.../component/submitterInfoCoverPage?Call=Print&PrintId=0900006480b2f393&Comment=true[8/13/2010 3:42:04 PM]

PUBLIC SUBMISSION

As of: August 13, 2010

Received: August 12, 2010

Status: Pending_Post

Tracking No. 80b2f393

Comments Due: August 16, 2010

Submission Type: Web

Docket: HHS-OS-2010-0015

Group Health Plans and Health Insurance Coverage: Interim Final Rules for Relating to Status as a Grandfathered

Health Plan under the Patient Protection and Affordable Care Act

Comment On: HHS-OS-2010-0015-0001

Group Health Plans and Health Insurance Coverage: Interim Final Rules for Relating to Status as a Grandfathered

Health Plan under the Patient Protection and Affordable Care Act

Document: HHS-OS-2010-0015-DRAFT-0027

Comment on FR Doc # 2010-14488

Submitter Information

Name: Jennifer Boyer

Organization: WellPoint, Inc.

General Comment

Dear Secretary Sebelius: 

WellPoint, Inc. (WellPoint) appreciates this opportunity to respond to the “Interim Final Rules for Group Health

Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan under the Patient

Protection and Affordable Care Act,” published on May 5, 2010. We share the goal of the Department of Health

and Human Services (HHS) of preserving coverage for our members who like what they have today. Thus, we

offer suggestions to ensure that the regulations promote continuity of coverage for our members, particularly

during this time of transition to the new requirements under the Affordable Care Act (ACA). 

WellPoint is the largest publicly traded commercial health benefits company in terms of membership in the United

States with 33.8 million medical members at March 31 2010, and 1.1 million Medicare enrollees. WellPoint is an

independent licensee of the Blue Cross Blue Shield Association and serves its members as the Blue Cross licensee

for California; the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky,

Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (as Blue

Cross Blue Shield in 10 New York City metropolitan counties and as Blue Cross or Blue Cross Blue Shield in

selected upstate counties only), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.), and

Wisconsin; and UniCare Life and Health nationwide. 

WellPoint appreciates this opportunity to offer our suggestions to help ensure that consumers who like the health

insurance coverage they have today are able to keep it. Should you have any questions or wish to discuss our

comments further, please contact Jennifer Boyer at 202-628-7831 or Jennifer.Boyer@WellPoint.com. 

Sincerely,

Elizabeth P. Hall

Vice President, Public Policy

Attachments

HHS-OS-2010-0015-DRAFT-0027.1: Comment on FR Doc # 2010-14488
 655 15th Street, NW Elizabeth P. Hall 

 Suite 425 Vice President 

 Washington, DC 20005 Public Policy 

 

 

 

Submitted via Federal eRulemaking Portal: www.regulations.gov

 

August 12, 2010 

The Honorable Kathleen Sebelius 

Secretary 

U.S. Department of Health and Human Services 

200 Independence Avenue, S.W. 

Washington, DC 20201 

ATTENTION: OCIIO-9991-IFC 

RE: Group Health Plans and Health Insurance Coverage Relating to Status as a 

Grandfathered Health Plan 

Dear Secretary Sebelius: 

WellPoint, Inc. (WellPoint) appreciates this opportunity to respond to the “Interim Final Rules for 

Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered 

Health Plan under the Patient Protection and Affordable Care Act,” published on May 5, 2010. 

We share the goal of the Department of Health and Human Services (HHS) of preserving 

coverage for our members who like what they have today. Thus, we offer suggestions to ensure 

that the regulations promote continuity of coverage for our members, particularly during this time 

of transition to the new requirements under the Affordable Care Act (ACA). 

WellPoint is the largest publicly traded commercial health benefits company in terms of 

membership in the United States with 33.8 million medical members at March 31 2010, and 1.1 

million Medicare enrollees. WellPoint is an independent licensee of the Blue Cross Blue Shield 

Association and serves its members as the Blue Cross licensee for California; the Blue Cross 

and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, 

Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York 

(as Blue Cross Blue Shield in 10 New York City metropolitan counties and as Blue Cross or 

Blue Cross Blue Shield in selected upstate counties only), Ohio, Virginia (excluding the Northern 

Virginia suburbs of Washington, D.C.), and Wisconsin; and UniCare Life and Health nationwide. 

Our specific comments on the interim final rule (IFR) are below. 
Changes Causing Cessation of Grandfathered Status 

WellPoint appreciates that HHS has afforded employers and health insurance issuers some 

flexibility in maintaining grandfathered status. Plans must balance continuity of benefit design 

with consumers’ desire to curb the rising costs of health care. Employers and individuals, in 

seeking to limit or reduce annual premiums, often elect to increase cost sharing or make other 

benefit changes. An increasing number of employers are waiving cost sharing to encourage the 

use of certain benefits and services, while raising cost sharing to discourage inappropriate 

utilization of other benefits and services. While the IFR recognizes these issues and permits 

limited changes, WellPoint encourages HHS to consider affording plans greater flexibility in 

making changes without loss of grandfathered status. The magnitude of changes permitted 

under the rule falls far short of the actual changes employers and individuals commonly elect 

today. From an actuarial standpoint, the changes permitted would allow members to buy down 

only one to two percent of premium. This minimal impact could hinder efforts of employers and 

members to control costs. In addition, we seek clarification that the regulation allows for a 

member in the individual market to revert to a plan that has grandfathered status if that member 

did not understand the impact of choosing another plan. Permitting such flexibility seems 

prudent, reasonable and in the spirit of the ACA. 

Additionally, we offer the following specific recommendations with respect to maintenance of 

plans’ grandfathered status. 

Benefit Carve Outs

The IFR limits the changes that a health insurance plan or issuer may make while retaining 

grandfathered status of the plan or coverage. However, in certain cases, it is not clear how the 

rule defines a “plan” or “health insurance coverage.” Increasingly, health plans carve out certain 

benefits, such as pharmacy or mental health benefits, from the major medical benefits. In many 

cases, these benefits are designed and managed separately by different administrators or 

vendors. For instance, an employer may contract with three separate entities for administration 

of a health plan: a health insurance company, a pharmacy benefit manager, and a behavioral 

health manager. In these cases, because the health insurance company has a contract for the 

medical benefits only, it will have no knowledge of or control over the benefit design decisions 

made by the PBM or behavioral health manager. It can only ensure compliance with 

grandfathered status requirements with respect to the medical benefits. Thus, where carve outs 

exist, each benefit package (i.e., medical and any carve outs) should be treated separately and 

distinctly for the purposes of determining compliance with grandfathered status. For example, if 

the PBM increased cost sharing for the pharmacy benefit beyond what is permissible, that 

change would not, in and of itself, result in the loss of grandfathered status for the medical 

benefit plan. 

Changes in the Course of Business

Health insurance issuers and health plans make many changes in the day-to-day course of 

business that are meaningful in promoting patient safety and quality care, but that do not have a 

material effect on benefit design. For example, health insurers make changes to medical policy 

as new evidence is available about the safety and efficacy of treatments, and revise formularies 

when new products such as drugs with improved risk profiles or more affordable generic 

alternatives become available. Insurers also regularly modify provider networks to expand 

access and affordability, ensure inclusion of high quality providers, and address changes (e.g., 

providers moving in and out of the area). While the IFR did not include these changes among 
those that would result in cessation of grandfathered status, HHS did specifically request 

comments on whether they should be taken into consideration. WellPoint strongly recommends 

that these types of changes do not result in the loss of a plan’s grandfathered status. 

Maintenance of Employer Contribution to Premium

The IFR specifies that a reduction in an employer’s contribution toward employee health 

insurance of more than 5 percentage points (if based on cost) or 5 percent (if based on a 

formula) would result in a loss of grandfathered status for that plan. Unlike the other changes 

that would negate grandfathered status, such as higher-than-permitted increases in cost 

sharing, health insurance issuers do not control and would not necessarily have knowledge of 

changes to an employer’s contribution to premium. As a result, a health insurance issuer could 

unknowingly operate a grandfathered plan that is not in compliance with this regulation. 

WellPoint suggests that HHS permit issuers to rely on the representations of group plans as to 

their compliance with this requirement. Health insurance issuers may contractually require the 

group health plans they insure to provide advance notice of any change that would adversely 

affect continued grandfathered status, but the health insurance issuers cannot otherwise 

reasonably police the actions taken by groups nor should they be responsible for those actions 

where a notice of change was not provided. 

Addition of New Employees to Grandfathered Plans 

The regulation permits group health plans that are grandfathered plans to enroll new employees 

(whether newly hired or newly enrolled) and maintain grandfathered status. WellPoint requests 

that HHS clarify that this continuation of grandfathered status also applies to association health 

plans that add new employers, and by extension new employees, to their plan. Association 

health plans are offered to groups comprised of multiple employers that are members of an 

association. Generally, employees of the member employers are eligible to enroll in the 

association health plan. Employers may newly join the association over time as new companies 

are formed, or employers’ circumstances change. The decision to join the association itself may 

be unrelated to the availability of health insurance benefits. Employers and their employees new 

to an association should be treated as new employees in a firm are treated under this rule. That 

is, they should be permitted to enroll in a grandfathered health plan without causing it to lose its 

grandfathered status. 

In addition, the IFR does not address employers who will offer both grandfathered and nongrandfathered plans. For example, an employer offers a single plan option today that is a 

grandfathered plan, but in 2011 desires to add a new plan option that will not be grandfathered. 

At some point in the future, the employer wishes to cancel the non-grandfathered plan, for 

instance due to low take-up or because the insurer is discontinuing the product. The closure of 

the non-grandfathered plan would shift enrollees from the non-grandfathered plan into the 

grandfathered plan. WellPoint would like to confirm that in this and similar situations, the 

grandfathered plan is able to retain its grandfathered status (assuming it is otherwise compliant 

with cost sharing and other requirements in the IFR). 

Merger or Consolidation Between Health Insurance Issuers

The regulation does not appear to permit continued grandfathered status for benefit plans of a 

merged or dissolved insurer in the event of a corporate merger or consolidation. By way of 

example, a holding company owns two insurance companies in the same state, one is an 

indemnity company (Company A) and one is an HMO (Company B). The holding company 
desires to merge Company B into Company A. After the merger, Company A will issue both 

indemnity and HMO plans. All plans will be identical to the plans sold prior to the merger; the 

only difference is the insurance license under which the HMO plans will be issued and the 

identification of the issuer in the HMO plans. Another example is where a holding company 

owns two HMOs and desires to merge the HMOs together or form a new HMO into which the 

legacy HMOs will be merged. Afterwards, the surviving (or new) HMO will issue the exact same 

HMO plans as were issued prior to the merger or consolidation. For either example, WellPoint 

believes that continued grandfathered status should exist. Despite the fact a “new” insurer is 

issuing the plans of the merged or dissolved “old” entity, provided that the benefits, cost sharing, 

and fundamental operations of the “old” issuer and plan are maintained, the “old” plans now 

issued by the surviving or “new” entity should continue to have grandfathered status. 

Transitional Rules

Currently, the regulation includes as grandfathered plans those plans that made changes on or 

before March 23, 2010, even if changes were effective after that date. Other plans that adopted 

changes after March 23, but prior to the issuance of the regulation, are permitted to revoke 

those changes at the start of the next plan year to be considered grandfathered. This narrow 

transition window does not adequately reflect the lead time that plans need to make changes for 

the start of a new plan year. 

For instance, WellPoint issued renewals in June for plan years beginning in late August and 

early September. Prior to that issuance, our staff engaged in significant preparation and 

actuarial analysis to arrive at a benefit package that met our members’ needs. As currently 

proposed, these plans would not be eligible for grandfathered status if any of the changes went 

beyond what is permitted under this rule. However, it would not have been feasible for WellPoint 

to delay making changes to and issuing renewals for these plans until after the release of the 

regulations in mid-June. And at the time of release of the regulations, we had to move forward 

with the planned changes. 

Adding further complexity is the concurrent implementation of benefit changes to comply with 

federal mental health parity requirements which were effective July 1, 2010. The Department of 

Labor issued an IFR in February, but later modified some of the requirements in guidance 

released on July 1. As a result, we made changes to plans with renewal dates between July 1 

and September 22 that, while necessary to comply with mental health parity requirements, may 

result in the loss of grandfathered status. 

We recommend that HHS expand the transition period during which plans would be eligible for 

grandfathered status to include plans that made changes through at least September 22, 2010. 

For individual insurance, enrollees would be considered enrolled in a grandfathered plan if they 

enrolled prior to September 23, 2010. For groups, plans would be considered grandfathered 

based on the benefits in place for plan years starting prior to September 23, 2010. 

Disclosure of Grandfathered Status

To maintain grandfathered status, plans must include a statement, in any plan materials 

provided to a participant describing the benefits provided under the plan, that the plan is a 

grandfathered plan. WellPoint recommends that HHS provide greater specificity of the plan 

materials in which the disclosure notice must be included. It would not be practical, feasible, or 

cost-effective to include the statement in each and every communication between the plan and 

the member (e.g., in every EOB, on the ID card), and we do not believe that this was the 
Department’s intent, especially in light of the cost implementation assessment HHS provided in 

the IFR. However, we share the Department’s goal of ensuring that members are aware of the 

grandfathered status of their plan and what that means. We suggest that HHS clarify that that 

the disclosure must be made at least annually and must be included in a prominent position, in 

large font, on the legal documents (i.e., contract or member certificate) for group policies and in 

an annual communication with individual policyholders. 

*** 

WellPoint appreciates this opportunity to offer our suggestions to help ensure that consumers 

who like the health insurance coverage they have today are able to keep it. Should you have 

any questions or wish to discuss our comments further, please contact Jennifer Boyer at 202-

628-7831 or Jennifer.Boyer@WellPoint.com. 

Sincerely, 

Elizabeth P. Hall 

Vice President, Public Policy