MAIN HEADQUARTERS: One Empire Drive / Rensselaer, New York 12144 / (518) 431-7600 / fax (518) 431-7915 / www.hanys.org

WASHINGTON, D.C. OFFICE: 499 South Capitol Street SW, Suite 405 / Washington, D.C. 20003 / (202) 488-1272 / fax (202) 488-1274 

2010 BOARD OF TRUSTEES

OFFICERS

Chairman 

JOSEPH QUAGLIATA • Oceanside 

Chairman-Elect 

HERBERT PARDES, M.D. • New York 

Secretary 

JOSEPH MCDONALD • Buffalo 

Treasurer 

LINDA BRADY, M.D. • Buffalo 

Immediate Past Chairman 

DAVID KRUCZLNICKI • Glens Falls 

Past Chairmen 

MICHAEL DOWLING • Great Neck 

STEVEN GOLDSTEIN • Rochester 

STANLEY BREZENOFF • New York 

. 

FORMER CHAIRS

GLADYS GEORGE, ESQ. • New York 

JON SCHANDLER • White Plains 

JOHN SPICER • New Rochelle

CLASS OF 2010

C. WILLIAM BROWN • Rochester 

THOMAS CARMAN • Watertown 

JOAN CONBOY • Little Falls 

SAMUEL DANIEL, M.D. • New York 

WENDY GOLDSTEIN • Brooklyn 

JAMES HARDEN • Rockville Centre 

ANNETTE LEAHY • Newark 

JOEL SELIGMAN • Mount Kisco 

WILLIAM STRECK, M.D. • Cooperstown 

BETSY WRIGHT • Jamestown

CLASS OF 2011

ALLAN ATZROTT • Newburgh 

JAMES BARBA, J.D. • Albany 

CHARLES FAHD II • Massena 

LINDA FARCHIONE • Canandaigua 

ELI FELDMAN • Brooklyn 

DAVID FELTON • Hamilton 

RICHARD HAWKS • Canandaigua 

RONALD KRAWIEC • Warsaw 

D. ROBERT MACKENZIE, M.D. • Ithaca 

JEFFREY MENKES • New York 

STEPHEN MILLS • Flushing 

GINO PAZZAGLINI • Troy 

JAMES REED, M.D. • Troy 

CLASS OF 2012

PAMELA BRIER • Brooklyn 

SCOTT COOPER, M.D. • Bronx 

ANDREW LITT, M.D. • New York 

ALAN MORSE, J.D.,Ph.D. • New York 

STEPHENS MUNDY • New York 

THOMAS OCKERS • Patchogue 

THEODORE PASINSKI • Syracuse 

DAVID ROSEN • Jamaica 

SARAH SCHERMERHORN • Schenectady 

December 17, 2010 

The Honorable Kathleen Sebelius 

Secretary 

U.S. Department of Health and Human Services 

200 Independence Avenue, SW 

Washington, DC 20201 

RE: OCIIO-9991-IFC2, Amendment to the Interim Final Rule 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 Secretary Sebelius: 

The Healthcare Association of New York State (HANYS), representing more than 

550 non-profit and public hospitals, nursing homes, home care agencies, and other 

health care organizations throughout New York, submits these comments in response 

to the Department of Health and Human Services’ (HHS) publication of an 

amendment to the Interim Final Rule for Group Health Plans and Health Insurance 

Coverage Relating to Status as a Grandfathered Health Plan Under the Patient

Protection and Affordable Care Act and related requests for comments. 

The Act and the interim final rule refer to existing health plans and health insurance 

coverage as “grandfathered” health plans. Grandfathered health plan status may be 

seen as advantageous to payers and plan sponsors because such plans are exempted 

from many of the coverage mandates codified in the Public Health Service Act, such 

as the premium rating rule (§ 2701), guaranteed availability of coverage (§ 2702), 

guaranteed renewability of coverage (§ 2703), prohibition of discrimination based on 

health status (§ 2705), and coverage of preventive services (§ 2713). 

The interim final rule, published June 17, 2010, listed changes that would result in 

the cessation of grandfathered health plan status. Those changes, identified in 

paragraph (g)(1) of Title 45, Code of Federal Regulations 147.140, relate to the 

elimination of benefits, increase in a percentage cost-sharing requirement, increase 

in a fixed amount cost-sharing requirement, increase in a fixed amount copayment, 

decrease in contribution rate by employers and employee organizations, and changes 

in annual limits. 

In an August 13, 2010 comment letter (attached), HANYS commended HHS for the 

careful drafting of the interim final rule for group health plans and health insurance 

Proud to serve New York State’s 

Not-For-Profit Hospitals, Health Systems, 

and Continuing Care Providers

Daniel Sisto, President
MAIN HEADQUARTERS: One Empire Drive / Rensselaer, New York 12144 / (518) 431-7600 / fax (518) 431-7915 / www.hanys.org

WASHINGTON, D.C. OFFICE: 499 South Capitol Street SW, Suite 405 / Washington, D.C. 20003 / (202) 488-1272 / fax (202) 488-1274 

The Honorable Kathleen Sebelius Page 2 

December 17, 2010 

coverage to preserve the right of individuals to maintain their health coverage as it existed on March 

23, 2010. At that time, HANYS also expressed concern that changes in a provider network can 

negatively impact patient choice and access to care. 

We now comment on the amendment to the interim final rule that allows fully-insured group health 

plans to change insurers, policies, certificates, or contracts of insurance without ceasing to be a 

grandfathered health plan, provided that the standards set forth under paragraph (g)(1) of the interim 

final regulations are still met. This raises several additional concerns.

Provider contract terms are insurer-specific and frequently contain financial assumptions about the 

valuation of the contract, such as anticipated case mix and the numbers of admissions that are likely 

to occur. Because the amendment to the interim final rule allows grandfathered health plans to 

switch insurers without losing their grandfathered status, an insurer that has a less favorable contract 

with a provider could theoretically assume the obligations of the insurer that it is replacing, on less 

favorable terms to the provider. 

Moreover, unless we are misunderstanding the impact of the new amendment, allowing fully-insured 

group health plans to change insurers, policies, certificates, or contracts of insurance may also have 

the unintended consequence of limiting the provider network available to members of the group 

insofar as the “new” plan may have a more limited panel than the plan it is replacing and thus may 

effectively negate the right of individuals to maintain their health coverage as it existed on March 23, 

2010. 

For the above reasons, HANYS recommends that more direction be provided to limit the ability of 

fully-insured group health plans to make changes to insurers, policies, certificates, or contracts of 

insurance that result in substantial changes to contracts with hospitals or to panels of participating 

providers, while retaining grandfathered health plan status. 

HANYS hopes that these comments are useful to HHS as it considers drafting additional 

implementation guidance related to what changes can cause a group health plan to lose its 

grandfathered status. If you have any questions about our comments, please contact Jeffrey Gold, 

Vice President, Managed Care and Special Counsel, at (518) 431-7730. 

Sincerely, 

Daniel Sisto 

President 

DS:dd 

Enclosure 
MAIN HEADQUARTERS: One Empire Drive / Rensselaer, New York 12144 / (518) 431-7600 / fax (518) 431-7915 / www.hanys.org

WASHINGTON, D.C. OFFICE: 499 South Capitol Street SW, Suite 405 / Washington, D.C. 20003 / (202) 488-1272 / fax (202) 488-1274 

2010 BOARD OF TRUSTEES

OFFICERS

Chairman 

JOSEPH QUAGLIATA • Oceanside 

Chairman-Elect 

HERBERT PARDES, M.D. • New York 

Secretary 

JOSEPH MCDONALD • Buffalo 

Treasurer 

LINDA BRADY, M.D. • Buffalo 

Immediate Past Chairman 

DAVID KRUCZLNICKI • Glens Falls 

Past Chairmen 

MICHAEL DOWLING • Great Neck 

STEVEN GOLDSTEIN • Rochester 

STANLEY BREZENOFF • New York 

. 

FORMER CHAIRS

GLADYS GEORGE, ESQ. • New York 

JON SCHANDLER • White Plains 

JOHN SPICER • New Rochelle

CLASS OF 2010

C. WILLIAM BROWN • Rochester 

THOMAS CARMAN • Watertown 

JOAN CONBOY • Little Falls 

SAMUEL DANIEL, M.D. • New York 

WENDY GOLDSTEIN • Brooklyn 

JAMES HARDEN • Rockville Centre 

ANNETTE LEAHY • Newark 

JOEL SELIGMAN • Mount Kisco 

WILLIAM STRECK, M.D. • Cooperstown 

BETSY WRIGHT • Jamestown

CLASS OF 2011

ALLAN ATZROTT • Newburgh 

JAMES BARBA, J.D. • Albany 

CHARLES FAHD II • Massena 

LINDA FARCHIONE • Canandaigua 

ELI FELDMAN • Brooklyn 

DAVID FELTON • Hamilton 

RICHARD HAWKS • Canandaigua 

RONALD KRAWIEC • Warsaw 

D. ROBERT MACKENZIE, M.D. • Ithaca 

JEFFREY MENKES • New York 

STEPHEN MILLS • Flushing 

GINO PAZZAGLINI • Troy 

JAMES REED, M.D. • Troy 

CLASS OF 2012

PAMELA BRIER • Brooklyn 

SCOTT COOPER, M.D. • Bronx 

ANDREW LITT, M.D. • New York 

ALAN MORSE, J.D.,Ph.D. • New York 

STEPHENS MUNDY • New York 

THOMAS OCKERS • Patchogue 

THEODORE PASINSKI • Syracuse 

DAVID ROSEN • Jamaica 

SARAH SCHERMERHORN • Schenectady 

August 13, 2010 

The Honorable Kathleen Sebelius 

Secretary 

U.S. Department of Health and Human Services 

200 Independence Avenue, SW 

Washington, DC 20201 

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 Secretary Sebelius: 

The Healthcare Association of New York State (HANYS), representing more 

than 550 non-profit and public hospitals, nursing homes, home care agencies, and 

other health care organizations, submits these comments in response to the 

Department of Health and Human Services’ (HHS) publication of 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 and related requests for comments. 

HANYS commends HHS for carefully drafting the above referenced interim final 

rules for group health plans and health insurance coverage in accordance with 

Section 1251 of the Patient Protection and Affordable Care Act (PPACA), which 

preserves the right of individuals to maintain their existing health coverage as it 

existed on March 23, 2010. 

PPACA and these interim final rules refer to existing health plans and health 

insurance coverage as “grandfathered” health plans. Grandfathered health plan 

status may be seen as advantageous to payers because such plans are exempted 

from many of the coverage mandates codified in the Public Health Service Act 

(PHSA) such as premium rating rules (§ 2701 PHSA), guaranteed availability of 

coverage (§ 2702 PHSA), guaranteed renewability of coverage (§ 2703 PHSA), 

prohibition of discrimination based on health status (§ 2705 PHSA), and coverage 

of preventive services (§ 2713 PHSA). 

Proud to serve New York State’s 

Not-For-Profit Hospitals, Health Systems, 

and Continuing Care Providers

Daniel Sisto, President
MAIN HEADQUARTERS: One Empire Drive / Rensselaer, New York 12144 / (518) 431-7600 / fax (518) 431-7915 / www.hanys.org

WASHINGTON, D.C. OFFICE: 499 South Capitol Street SW, Suite 405 / Washington, D.C. 20003 / (202) 488-1272 / fax (202) 488-1274 

The Honorable Kathleen Sebelius Page 2 

August 13, 2010 

The interim final rules specify what changes to benefits packages, cost-sharing requirements, and 

employer contributions will cause a grandfathered health plan to lose its protected status. 

HANYS recognizes the numerous and complex factors that HHS had to consider when 

enumerating the specific standards contained in paragraph (g)(1) of 26 Code of Federal 

regulations (CFR) 54.9815-1251T, 29 CFR 2590.715-1251, and 45 CFR 147.140 to prevent

disruption to the existing health insurance marketplace. HANYS believes that the regulations 

attempt to strike the proper balance between preserving the ability of individuals to maintain 

their existing coverage with the dual goals of ensuring access to affordable essential coverage 

and improving the quality of coverage. 

However, HANYS is concerned that grandfathered health plan status will limit the reach of 

PPACA coverage mandates. Group health plans and health insurance coverage should not be 

able to seek refuge in grandfathered health plan status if the structure, provider network, 

prescription drug formulary, or overall benefit designs change. Therefore, as HHS offers further 

guidance on the termination of grandfathered health plan status, HANYS urges HHS to adopt 

rules so that changes to a plan’s structure, provider network, or prescription drug formulary will 

cause a plan to lose grandfathered status. 

With respect to plan structure, HANYS is very concerned about the disparate regulation of fully 

insured products and self-insured products. Self-insured products or so-called Employee 

Retirement Income Security Act (ERISA) plans, have long evaded state regulation and lack 

many of the consumer and provider protections that accompany insured products. Because 

ERISA plans are exempted from state regulation, HANYS recommends that a plan change 

from an insured product to a self-insured product results in termination of grandfathered 

health plan status so that these plans are subject to greater regulation under PPACA. 

In addition, HANYS is troubled by potential changes in provider networks that may result in 

fewer participating providers. Many employers and employees choose a group health plan or 

health insurance coverage based on the size of a network, the individual providers in that 

network, or even the admitting privileges that network physicians have with participating 

hospitals. Changes to provider networks that result in fewer participating providers can 

negatively impact patient choice and access to care. 

For these reasons, HANYS recommends that careful direction be provided to limit an 

insurer’s ability to shrink provider networks while retaining grandfathered health plan 

status. 
MAIN HEADQUARTERS: One Empire Drive / Rensselaer, New York 12144 / (518) 431-7600 / fax (518) 431-7915 / www.hanys.org

WASHINGTON, D.C. OFFICE: 499 South Capitol Street SW, Suite 405 / Washington, D.C. 20003 / (202) 488-1272 / fax (202) 488-1274 

The Honorable Kathleen Sebelius Page 3 

August 13, 2010 

HANYS believes that prescription drug formularies should be monitored for gaps in coverage. 

HANYS recommends that any changes to a grandfathered health plan’s prescription drug 

formulary that result in the elimination of an entire therapeutic class of drugs or 

substantially all drugs within a class should be looked at as suspect and possibly trigger 

revocation of grandfathered health plan status. 

However, the reasonable and calculated substitution of high-priced brand name drugs for older, 

lower-cost generic drugs should be allowed, provided that alternatives are made available to 

insured individuals when medically necessary to do so. 

HANYS hopes that these comments are useful to HHS as it considers drafting additional 

regulations on what changes to plan structure, provider networks, or prescription drug 

formularies should cause a plan to lose its grandfathered status. HANYS applauds HHS for its 

leading role in health care reform under the recently enacted PPACA and looks forward to 

working with HHS to implement new regulations to ensure affordable, quality health insurance 

for all. 

If you have questions about our comments, please contact Jeffrey Gold, Vice President, Managed 

Care and Special Counsel, at (518) 431-7730. 

Sincerely, 

Daniel Sisto 

President 

DS:dd