https://fdms.erulemaking.net/.../component/submitterInfoCoverPage?Call=Print&PrintId=0900006480b32533&Comment=true[8/17/2010 1:32:19 PM]

PUBLIC SUBMISSION

As of: August 17, 2010

Received: August 16, 2010

Status: Pending_Post

Tracking No. 80b32533

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-0063

Comment on FR Doc # 2010-14488

Submitter Information

Name: Patricia Smith

Organization: Alliance of Community Health Plans

General Comment

The Alliance of Community Health Plans (ACHP) is pleased to submit comments in response to the Interim Final

Rule with Comment (IFR) on Section 1251 of the Patient Protection and Affordable Care Act (PPACA, P.L. 111-

148). Section 1251 specifies that certain plans or coverage existing as of the date

of enactment (March 23, 2010) are only subject to certain provisions of the Act. These plans, which may be either

insured or self-insured group health plans or health insurance coverage purchased from health insurers by

individuals or groups, are referred to as grandfathered health plans. 

ACHP is a national leadership organization representing community-based and regional health plans and provider

organizations that collectively provide health care and coverage for approximately 18 million Americans,

predominantly in the individual and small and mid-sized group markets. ACHP members also have a significant

presence in the Medicare Advantage market and some contract with their states to provide coverage to Medicaid

beneficiaries. Our members are not-for-profit health plans or subsidiaries of not-for-profit health systems.

Member plans share longstanding commitments to their communities, close partnerships with providers, and

substantial investments in the innovative approaches and infrastructure necessary to provide health care that is

coordinated, affordable and high quality

Attachments

HHS-OS-2010-0015-DRAFT-0063.1: Comment on FR Doc # 2010-14488
August 16, 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 

Re: OCIIO-9991-IFC – 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 

Dear Director Angoff: 

The Alliance of Community Health Plans (ACHP) is pleased to submit comments in response to the 

Interim Final Rule with Comment (IFR) on Section 1251 of the Patient Protection and Affordable Care 

Act (PPACA, P.L. 111-148). Section 1251 specifies that certain plans or coverage existing as of the date 

of enactment (March 23, 2010) are only subject to certain provisions of the Act. These plans, which 

may be either insured or self-insured group health plans or health insurance coverage purchased from 

health insurers by individuals or groups, are referred to as grandfathered health plans. 

ACHP is a national leadership organization representing community-based and regional health plans and 

provider organizations that collectively provide health care and coverage for approximately 18 million 

Americans, predominantly in the individual and small and mid-sized group markets. ACHP members 

also have a significant presence in the Medicare Advantage market and some contract with their states to 

provide coverage to Medicaid beneficiaries. Our members are not-for-profit health plans or subsidiaries 

of not-for-profit health systems. Member plans share longstanding commitments to their communities, 

close partnerships with providers, and substantial investments in the innovative approaches and 

infrastructure necessary to provide health care that is coordinated, affordable and high quality. 

ACHP appreciates the challenges presented to the Departments in implementing Section 1251. The 

regulations must reflect the intent of Congress in writing PPACA to ensure that Americans who are 

satisfied with their existing coverage are able to retain it, while also reflecting the intent to spread 

important reforms in the private insurance market. In the regulations for grandfathered plan status, as 

well as in other regulations, the Department should strive to provide bright lines that promote 

understanding and consistent implementation and facilitate interactions among health plans, employers 

and other plan sponsors, and consumers. At the same time, the Department should establish a process 

for the consideration of exceptions that do not fit the norm. 

Maintenance of Grandfathered Plan Status 

The Interim Final Rule sets forth a number of criteria that will be used to determine whether a health 

plan maintains or loses grandfathered status. These criteria are expressed in terms of changes that 

directly affect enrollees – i.e., elimination of benefits to diagnose or treat a particular condition, 

increases in cost-sharing requirements, increases in fixed amount copayments, decreases in employer or 
Page 2 of 4 

employee organization contribution rate, and changes in annual or lifetime limits. ACHP believes that 

the impact on enrollees of changes related to benefits, as determined by the thresholds established in the 

IFR – rather than changes that relate to plan administration or source of funding – should guide 

decisions on grandfathered status. 

Accordingly, we recommend that a plan should not lose grandfathered status simply because a new 

policy, certificate, or contract has been issued, or technical changes made to an employer’s plan 

certificate. Our member plans typically re-issue policies, certificates, and contracts in the ordinary 

course of business, often on an annual basis. If these actions have no significant impact on member 

benefits – that is, they stay within the thresholds established in the IFR – then these administrative 

changes should not trigger loss of grandfathered status. 

Similarly, we encourage the Department to reconsider whether an employer plan that changes insurance 

carriers, while retaining the same level of benefits, should lose grandfathered status. The potential loss 

of grandfathered status if an employer changes carriers may well act as a disincentive for employers to 

search for and contract with another carrier that would provide the same or better benefits or service but 

at lower cost. Allowing employers to maintain grandfathered status if they are only switching carriers 

but maintaining benefits would likely spur competition among carriers for that business, leading to the 

possibility of an overall reduction in costs. As above, we think the assessment should turn on the impact 

on employee benefits determined according to the thresholds set forth in the IFR, not the administrative 

or funding arrangements of the plan. 

The Department has invited comments on what other changes, if any, should cause loss of grandfathered 

status. Possibilities include: (1) changes to plan structure (such as switching from a health 

reimbursement arrangement to major medical coverage or from an insured product to a self-insured 

product); (2) changes in a network plan’s provider network, and if so, what magnitude of changes would 

have to be made; (3) changes to a prescription drug formulary, and if so, what magnitude of changes 

would have to be made; or (4) any other substantial change to the overall benefit design. 

We offer the following comments on these questions: 

Changes in a plan’s provider network – ACHP believes that routine changes in a plan’s provider 

network to add new providers, drop providers who have failed to meet plan contracting requirements or 

drop providers who fail to meet plan quality standards should not trigger loss of grandfather status. Nor 

should routine changes to update the provider network to reflect the movement of providers in and out 

of a plan’s service area. We believe that the only reason why a network change should result in the loss 

of grandfathered plan status is if the change significantly reduces timely and appropriate access to plan 

providers or significantly reduces the value/quality of plan benefits. We also believe that any regulation 

in this area should establish a process that allows plans the opportunity to demonstrate that the network 

change was necessary due to extenuating circumstances. 

Changes to plan structure – As noted above, given the intent of the President and lawmakers to 

preserve coverage that was available as of March 23, 2010, ACHP believes that the major test for 

retaining grandfathered plan status is that the benefits provided by that coverage continue as is and do 

not erode over time. Changes in plan structure or funding should not cause loss of grandfathered status if 

benefit changes remain within the thresholds established by the IFR. For example, an employer plan that 

shifts from a high deductible health plan with an HRA to the same high deductible plan with a health 
Page 3 of 4 

savings account should not lose its grandfathered status so long as enrollees are kept whole in terms of 

their benefits (including the amount of employer contributions to their tax-favored accounts) under the 

thresholds set out in the IFR. We also believe that a change from fully-funded to self-funded coverage 

should be considered an administrative change and not trigger loss of grandfathered status if benefit 

changes are within the thresholds. 

Changes to a plan’s prescription drug formulary – ACHP believes that plans should retain the 

flexibility to make changes to their formularies without losing grandfathered status because such 

changes are warranted for reasons of clinical effectiveness, patient safety, and keeping formularies 

current with the availability of new products, both branded and generic. If the Departments decide, 

however, to include formulary changes as a reason for a plan’s loss of grandfathered plan status, we urge 

that these changes be limited to those that result in reducing the generosity (actuarial value) of the drug 

benefit for the plan’s participants, beneficiaries or subscribers. Changes to improve quality, the 

effectiveness of the plan’s drug benefit, or the safety of its covered drugs, however, should not trigger 

loss of grandfather status. For example, formulary changes to enable a plan to remove a drug that is 

determined by the Food and Drug Administration to be unsafe or because a generic alternative has 

become available should not trigger a change in status. Additional exceptions may also be warranted 

because a plan might want to move one or more types of medication from a lower to a higher costsharing tier or vice versa as a way of encouraging use of the more clinically effective alternative. On the 

other hand, elimination of coverage for all branded drugs would constitute a significant change that 

merits loss of grandfather status. 

Definition of Grandfathered Health Plan Coverage—Model Language for Disclosure Requirement 

Under the IFR, a plan or health insurance coverage must include a statement, in any plan materials 

provided to participants or beneficiaries (in the individual market, primary subscribers), describing the 

benefits provided under the plan or health insurance coverage, and stating that the plan or health 

insurance coverage believes that it is a grandfathered health plan within the meaning of section 1251 of 

the ACA. The plan must provide contact information for questions and complaints. Model language is 

provided that can be used to satisfy this disclosure requirement. Comments are invited on possible 

improvements to the model language of grandfathered health plan status. 

ACHP appreciates the intent of the Departments in including the model language, which is not included 

in the statute, and recognizes the model language is not a requirement. We believe, however, that the 

notice, as presented in the Model language, is more likely to confuse individuals with fully-insured and 

self-funded coverage. It is the employers who choose to retain grandfathered status, not the members. 

Notifying members that their coverage is grandfathered will likely lead members to call their health plan 

to inquire what this means, when the member should really be talking with their employer. The model 

language should better explain the employer’s involvement in making that decision. Further, there are 

two different situations that may confront enrollees in employment-based plans. If the employer offers 

only one option, and retains grandfathered status, the notice to the employee would reflect that. 

However, if the employer offers multiple options, some of which are grandfathered and some of which 

are not, the notice to the enrollees in the grandfathered plans would presumably be different to reflect 

the options available. 
Page 4 of 4 

Additionally, the Model notice states that being grandfathered means the member’s coverage may not 

include, for example, preventive health services without cost sharing. Many of our member’s plans, 

however, already are leaders in covering preventive health services without cost sharing. Thus, the 

notice may cause enrollees’ unwarranted concerns. If plans are to be required to notify members that 

their covered is grandfathered and to state what benefits or protections they might not have because of 

that status, health plans should be able to customize the notice. 

Thank you for your consideration of our views. Please let me know if you have any questions about 

these recommendations or require additional information. 

Sincerely, 

Patricia P. Smith 

President & CEO