August 27, 2010

Submitted via Federal Rulemaking Portal: http://www.regulations.gov 

Office of Consumer Information and Insurance Oversight

Department of Health and Human Services

Room 445-G, Hubert H. Humphrey Building

200 Independence Avenue, SW

Washington, DC 20201.

RE: OCIIO-9994-IFC: Interim final rules: Patient Protection and Affordable Care 

Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and 

Patient Protections

Dear Sir/Madam:

On behalf of the National Restaurant Association, we appreciate the opportunity to 

submit our comments on the interim final regulations (“the Regulations”) published 

under the requirements of the Patient Protections and Affordable Care Act (“PPACA”)

implementing rules on preexisting condition exclusions, lifetime and annual limits, 

rescissions, and patient protections.

Before delving into the substance of our comments, we will provide some background 

information to place into context the reasons why our industry needs flexibility, 

particularly during the transition years, to minimize the negative impact these changes 

could have on our members and millions of their employees. To facilitate review, we 

will address the first three areas of the Regulations in the order that they appear, i.e., 

exclusions, limits, and rescissions. 

However, we would like to emphasize the importance to our membership of the rules 

dealing with restrictions on annual limits. Finally, we decline to comment on patient

protections because we do not have enough information to analyze whether the lower

cost-sharing program for emergency services will induce much higher usage of out-ofnetwork emergency services.
Office of Consumer Information and Insurance Oversight – August 27, 2010 Page 2

Re: OCIIO-9994-IFC

THE RESTAURANT INDUSTRY PROVIDES HEALTHCARE THROUGH DIVERSE PROGRAMS 

AND NEEDS FLEXIBILITY TO COVER A LARGER PROPORTION OF ITS WORKFORCE

The National Restaurant Association is the leading business association for the restaurant 

and food service industry. Our mission is to help our members establish customer 

loyalty, build rewarding careers, and achieve financial success. The industry is 

comprised of 945,000 restaurant and foodservice outlets employing 12.7 million people 

who serve 130 million guests daily. Despite being an industry of predominately small 

businesses, the restaurant industry is the nation’s second-largest private-sector employer. 

The restaurant and food service industry is unique for several reasons. First and 

foremost, small businesses dominate the industry–with more than seven out of 10 eating 

and drinking establishments being single-unit operators. We employ a high proportion of 

part-time, seasonal, and temporary workers. Many of them, together with those workers 

that are in an eligibility waiting period, are part of the 1.4 million workers nationwide 

that have group healthcare coverage under limited benefit plans because they are 

ineligible for coverage under the employer’s regular group healthcare plan.

Our workforce is typically young, with nearly half under the age of 25. We also have a 

high average workforce turnover rate relative to other industries–a 75 percent average 

turnover rate in 2008 compared to 49 percent for the overall private sector. In addition, 

the business model of the restaurant industry produces relatively low profit margins of 4 

to 6 percent before taxes, with labor costs being one of the most significant line items for 

a restaurant.

Staying competitive in recruiting and retaining employees is vital to the restaurant 

industry. Restaurateurs want to continue to provide healthcare coverage to their 

employees and flexibility is essential to design such coverage to meet the needs of their 

employees and the business. Current coverage offerings have been crafted to strike and 

maintain that balance. 

THE RULES ON PROHIBITION OF PREEXISTING CONDITION EXCLUSIONS PROVIDE 

NEEDED AND HELPFUL CLARIFICATION

It is helpful that the definition of a preexisting condition will remain the same as what is 

provided in the Health Insurance Portability and Account Act of 1996 (“HIPAA”), Pub. 

L. 104-191. This brings stability to the industry. In particular, we welcome the 

explanation making clear that, as under HIPAA, group healthcare plans may still exclude 

benefits for a condition generally, provided that the exclusion applies regardless of when 

the condition arose. 

STRICT ENFORCEMENT, PRIOR TO THE DEFINING OF THE TERMS “ESSENTIAL HEALTH 

BENEFITS,” ON ALLOWED ANNUAL LIMITS COULD BECOME A TRAP FOR THE UNWARY 

Before discussing some ideas on providing employers the flexibility needed to cover the 

largest amount of workers possible, a discussion on the need for clarification of the terms 
Office of Consumer Information and Insurance Oversight – August 27, 2010 Page 3

Re: OCIIO-9994-IFC

“essential health benefits” is needed. Specifically, Section 2711 of the Public Health 

Service Act (“PHSA”), as added by PPACA, allows for annual limits to be established 

for non-essential health benefits. 

Regretfully, as acknowledged by the Departments, the definition of “essential health

benefits” found in the Regulations merely cross-reference back to the relevant section in 

PPACA (Section 1302(b)). In complete circular fashion, Section 1302(b) of PPACA lists 

only “general categories” and calls for regulations to define the meaning of “essential 

health benefits.”

We appreciate that the Regulations call for the Departments, in enforcement actions prior 

to the issuance of rules defining the terms, to “take into account good faith efforts to 

comply with a reasonable interpretation of ‘essential health benefits.’” At that point, this 

can become a trap for even the most vigilant employer, particularly if the Departments 

decide to take “into consideration the benefits provided under a typical employer plan” to 

decide whether an employer’s efforts were done in good faith. (See Section 1302(b)(2) 

of PPACA.) 

When the definition finally comes out, the Departments would have the benefit of a 

survey of employer-sponsored coverage, so they can ensure that the scope of the essential 

health benefits is equal to the scope of benefits provided under a typical employer plan, 

as required by Section 1302(b)(2) of PPACA. However, employers acting now in good 

faith to comply with the law would have no such luxury in trying to decide what are and 

what are not “essential health benefits.” Thus, we call for the outmost restraint and 

latitude in enforcement for plan years before the issuance of regulations defining the 

terms “essential health benefits.”

RESTAURANTS AND OTHER EMPLOYERS NEED FLEXIBILITY IN THE PHASE-IN YEARS 

TO BE ABLE TO PROVIDE HEALTHCARE COVERAGE TO MORE WORKERS

As mentioned earlier, we employ a high proportion of part-time, seasonal, and temporary 

workers. Many of them, together with those workers that are in an eligibility waiting 

period, are part of the 1.4 million workers nationwide that have group healthcare 

coverage under limited benefit, also known as “mini-med,” plans. We understand that 

beginning in 2014 other options will become available. 

However, until 2014, these workers would not be able to either take advantage of federal 

subsidies found in the Exchanges or have guaranteed issuance of coverage in the 

individual market. Thus, in the interim, it is important to continue to be able to offer 

mini-med plans for part-time, seasonal, and temporary workers, as well as for those 

workers that are in an eligibility waiting period, to make sure a larger number of workers 

have at least some type of meaningful health insurance.

Section 2711(a)(2) of the Public Health Service Act (“PHSA”), as added by PPACA, 

calls on the Secretary to “ensure that access to needed services is made available with a 

minimal impact on premiums.” This requirement applies specifically to any regulation 

defining what “restricted annual limits” may be imposed in the years preceding January 
Office of Consumer Information and Insurance Oversight – August 27, 2010 Page 4

Re: OCIIO-9994-IFC

1, 2014, when annual dollar limits are no longer allowed. The Regulations phased 

approach for restricted annual limits would have a direct impact on limited benefit plans.

We expect that under the outline phased approach found in the Regulatons, without 

proper relief, mini-med plans would either no longer be offered or lead to a significant 

increase in premiums. Thus, as it pertains to the mini-med plans and the workers they 

cover, without proper relief, the annual limit restrictions found in the Regulations would 

infringe both the spirit and the letter of the law.

Clearly, the Regulations seem to acknowledge as much by providing for the Secretary of 

Health and Human Services (“HHS”) to establish a program under which the minimum 

annual limit requirement could be waived if compliance “would result in a significant 

decrease in access to benefits or significant increase in premiums.” However, the waiver 

does not seem to be guaranteed and it involves a yet unspecified process.

It is questionable how many employers would attempt to avail themselves of the waiver 

process, particularly depending on the level of complexity and likelihood of success. In 

order to protect the healthcare coverage of workers in mini-med programs until other 

options become available in 2014, we would like to recommend that a blanket waiver on 

annual limit restrictions be given to limited benefit plans—at least for part-time, seasonal, 

and temporary workers, as well as workers that are in an eligibility waiting period.

Providing a blanket waiver for limited benefit plans until 2014 would be in full harmony

with both the spirit and the letter of the law by ensuring that access to needed services is 

made available and with a minimal impact on premiums. (See Section 2711(a)(2) of 

PHSA.) We appreciate that the Departments recognize that these plans currently serve 

those who may not have other options. If some of these plans were eliminated before 

2014 because of the annual limit restrictions, they would leave some of the most 

vulnerable members of our workforce, and their dependents, with no healthcare coverage.

In the alternative, if the Departments move forward with its proposal to have the 

Secretary of HHS create a case-by-case waiver program. We would urge the Secretary to 

craft a procedure that is fast and easy to utilize by employers. Likewise, we would ask 

the Secretary to permit providers or plan administrators to apply for the waiver on the

employer’s behalf. These entities often offer the same plans to multiple employers and 

should also be allowed to apply for the waiver once on behalf of all their employer 

customers. This would also ease the administrative burden of the waiver. 

WITH REGARD TO RESCISSIONS, THE DEPARTMENTS MUST BE VIGILANT OF THE 

NUMBER OF APPLICANTS MISREPRESENTING THEIR HEALTH STATUS

We are concerned that the Departments state in the Regulations a willingness to both 

track attempts to circumvent the rescission rules and issue future regulations to ensure 

more due process before an individual loses health coverage, but no mention of being 

vigilant for any increase in the number of applicants misrepresenting their health status. 
Office of Consumer Information and Insurance Oversight – August 27, 2010 Page 5

Re: OCIIO-9994-IFC

This is important because an increase in misrepresentations could lead to increase 

premiums for the group as a whole. The Departments acknowledge in their economic 

analysis that they are “unable to precisely estimate an overall or average premium impact 

from this provision.” This uncertainty should suggest to the Departments the need to be 

vigilant of abuses on both sides of the equation.

Finally, the example provided in the Regulations forbidding an employer to rescind 

coverage that was only provided due to an employer error or carrier mistake seems 

draconian. Employers are diligent in monitoring their employee eligibility for health plan 

coverage, but errors will happen. An opportunity to fix such errors retroactively should 

be provided, at least within a reasonable time period. 

CONCLUSION

Thank you again for the opportunity to share our views on the Regulations. We urge you 

to seriously consider our recommendations, particularly as they pertain to limited benefit 

plans. We support the general principles of health reform and our recommendations 

would help prevent some meaningful coverage from disappearing, due to unintended 

consequences.

We look forward to working with you and your staff as we move forward on our common 

goal of creating an affordable and reasonable health care system. 

Sincerely,

Angelo I. Amador, Esq. Michelle Reinke

Vice President Senior Policy Analyst

Labor and Workforce Policy Labor and Workforce Policy