50 F Street, NW, Suite 600 

 Washington, D.C. 20001 

 202.628.9320 • Fax 202.628.9244 

 www.businessgrouphealth.org 

 Creative Health Benefits Solutions for Today, Strong Policy for Tomorrow

August 16, 2010 

The Honorable Hilda L. Solis 

Secretary 

U.S. Department of Labor 

Employee Benefits Security Administration 

Office of Health Plan Standards and Compliance Assistance 

Attention: RIN 1210–AB42 

200 Constitution Avenue, N.W. 

Room N–5653 

Washington, DC 20210 

The Honorable Kathleen Sebelius 

Secretary 

U.S. Department of Health and Human Services 

Office of Consumer Information and Insurance Oversight 

Attention: OCIIO–9991–IFC 

Hubert H. Humphrey Building 

200 Independence Avenue, S.W. 

Room 445G 

Washington, DC 20201 

The Honorable Timothy F. Geithner 

Secretary 

U.S. Department of the Treasury 

Attention: REG–118412–10 

Internal Revenue Service 

1111 Constitution Avenue, N.W. 

Room 5205 

Washington, DC 20224 

Re: 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 

(Affordable Care Act) 

Dear Secretaries Solis, Sebelius, and Geithner: 

The National Business Group on Health appreciates the opportunity to comment on the proposed 

Interim Final Rules relating to grandfathered status of plans in existence on March 23, 2010, the 

date of enactment of the historic Patient Protection and Affordable Care Act of 2010 (The 

Affordable Care Act). We commend your efforts to implement the rules for maintaining 

grandfathered status, which is intended to assure that employers may continue to offer and 
2

employees may continue to be covered by plans they had before the law’s enactment. The intent 

of our comments is to enhance that assurance for both employees and employers, so that plans 

that wish to maintain grandfathered status can easily do so. Our employer members are very 

concerned about the current “triggers” that could significantly inhibit employer plans as a source 

of innovations to help our country move toward more affordable, sustainable, effective and 

efficient health care. 

The National Business Group on Health represents approximately 294, primarily large, 

employers (including 64 of the Fortune 100) who voluntarily provide health benefits and other 

health programs to over 50 million American employees, retirees, and their families. 

The National Business Group on Health’s concerns include: 

1) The rules may inhibit plan changes that enhance the quality, affordability (both to 

employers and employees) and value of employer-sponsored benefits; 

2) By outlining six very specific “triggers”, any of which by themselves could result in 

the loss of grandfathered status, the proposed rules overlook the possibility that plan 

changes in the aggregate may maintain or even increase the overall value of plan benefits; 

3) Changes beyond the control of plans, particularly in those areas such as changes in 

formularies and provider networks (areas that the Departments requested comment on to 

potentially add to the list of additional plan changes) may “trigger” the loss of 

grandfathered status through no decision or fault of plans; 

4) The Departments have not made it clear that plan changes required to comply with 

other laws, such as the Mental Health Parity and Addictions Equity Act of 2008 

(MHPAEA), will not by themselves “trigger” the loss of grandfathered status; 

5) The Departments have not made it clear that plans may drop outmoded treatments 

without jeopardizing grandfathered status; 

6) Because of the above concerns and our recommended solutions, we recommend that 

the Departments not consider adding any additional “triggers” based on specific plan 

changes; and 

7) Employers need flexibility to keep up with rapidly rising costs and changing 

conditions and needs. If the Departments allowed actuarial equivalence, to maintain 

grandfathered status, employers could continue providing comprehensive, quality health 

benefit plans, while remaining affordable to employers and employees. 

The Departments Should Permit Plan Changes that Are Proven to Enhance the Value of 

Employer-Sponsored Health Benefits without Jeopardizing Grandfathered Plan Status

Recommendation: The Departments should continue to permit plans to consider and 

adopt proven, evidence-based plan changes that enhance the quality and value of 
3

employer-sponsored benefits without jeopardizing grandfathered status, so that employer 

plans can continue to be a source of innovative solutions. 

Early each year, employers who sponsor health plans for employees routinely review and 

consider many changes to plans, taking into consideration a multitude of data and criteria, 

including quality, financial, economic, labor market, business and government requirements, 

before settling on plan changes for the coming year. Employers’ ultimate goal is to maintain 

health benefits packages and options that help attract and retain talent, boost employee health 

and productivity, and remain affordable. 

The rules outlining the parameters beyond which plans lose grandfathered status mean that, for 

the first time, as employers consider their annual, routine plan changes, those wishing to 

maintain grandfathered status must take a significant number of tools off the table and only 

consider a narrower set of plan changes. This represents a sea change from the past where 

employers could consider any plan changes that fostered the goals for the coming year. This 

ability to consider any and all changes, made possible in large part by the Employee Retirement 

Income Security Act (ERISA), means that employer plans have adopted and initiated innovative 

practices to improve employees’ wellness, address chronic diseases, reward high performing 

health care providers and many other vitally important strategies that directly translate into better 

health care for employees and their families. Many of these same programs have also “bent the 

cost curve” and helped employer plans lower their overall trend in health care costs. 

Unfortunately, the unintended consequences of the proposed rules may also mean that plans 

wishing to maintain grandfathered status may no longer consider some of these innovations if 

they would jeopardize grandfathered plan status. For example, plans may no longer consider 

adding HIPAA-allowed wellness incentives such as premium discounts, which studies have 

shown significantly increase participation, for targeted wellness activities such as exercise and 

weight management, if they fear that the overall employee premium impact may “trigger” the 

loss of grandfathered status because of its potential to change relative premium contributions 

beyond the 5 percentage points permitted in the Interim Final Rules. Furthermore, the rules limit 

of a $5 copayment differential (plus medical inflation from March 23, 2010) prohibits employers 

from providing virtually any incentive for employees to use higher value provider networks. In 

another example, plans may no longer consider adding new consumer-directed plans, which by 

definition would be non-grandfathered, if it would “trigger” the loss of grandfathered status of 

their other previously offered options even though it would be voluntary and employees may still 

select the other plans. Moreover, with significant upfront employer contributions and generous 

preventive coverage, consumer-directed plans help employees better access health care services. 

In addition, the introduction of new pharmacy benefits such as mandatory mail order or 

mandatory generics to lower both employers’ and employees’ costs would also “trigger” the loss 

of plans’ grandfathered status. All of these examples raise significant uncertainties—if and how 

wellness incentives would be factored into the “triggers” (we recommend that they do not) and 

the effect of adding new plan options or benefits on the status of existing options that may leave 

many innovations off the table and reduce the ability of employer-sponsored plans to be forces 

for promoting more effective and efficient health care delivery. 
4

The Departments Should Consider an Aggregate Standard as a “Trigger” instead of the 

Six Individual “Triggers”

Recommendation: We believe that an aggregate standard would better serve the intent to 

preserve current plan options for employers and employees who prefer to maintain them. 

We recommend a standard whereby plans could make changes but maintain their 

grandfathered status as long as the actuarial value of the plan does not change beyond 5%. 

Recommendation: We do not recommend that the Departments add any additional plan 

changes that would “trigger” the loss of grandfathered status and strongly recommend 

reconsidering the Interim Final Rules, which currently are too inflexible and will stifle 

innovation. 

Unfortunately, with the current draft of the rules, plan changes that go beyond the permitted 

parameters of a single “trigger” would cause plans to lose grandfathered status. Using this 

approach can mean that even if employers increase overall percentage plan contributions but 

shift from copayments to coinsurance for example, possibly for even just one service, they may 

lose grandfathered status. Similarly, employer plans shifting from copayments to coinsurance 

but maintaining the same estimated percentage employee cost-sharing would lose grandfathered 

status as well. We do not believe that this individual approach, without looking at the overall 

totality of the effect of plan changes, best serves the intent of the law. 

The Departments Should Exempt Plan Changes not under Plan Control from Jeopardizing 

Grandfathered Status

Recommendation: Plan changes that arise because of, or as adjustments to, market 

conditions or other factors beyond plan control should not jeopardize grandfathered plan 

status. 

The Departments ask for comment on what other changes including changes in plan structure, 

provider networks, prescription drug formularies, and other substantial changes in benefits 

should “trigger” the loss of grandfathered status. We are concerned that a number of changes in 

these areas may not be under plans’ control (discussed here) or they include employers’ efforts to 

improve health care quality, such as adopting centers of excellence, mandatory use of generics or 

incentives for using high performance provider networks (discussed above) and should be 

permitted without loss of grandfathered status. 

The following are just a few examples of changes beyond plans’ control. Individual employer 

plans often do not have much leverage with some providers who may present contract terms that 

plans cannot afford or decline to participate in plan networks. Similarly, formularies constantly 

change as medications go off patent, generic competitors enter the market, and new brand 

medications come on the market. Formularies change to reflect changing market conditions. 

Recently a Pharmacy Benefit Manager (PBM) announced, but later rescinded, a decision that it 

would no longer be dealing with one drug store chain. Employer plans using that PBM would 

have been forced to either switch PBMs or keep the PBM but no longer permit plan participants 
5

to fill prescriptions through the affected chain drug stores. We do not believe that any of these 

changes beyond plan control should jeopardize grandfathered plan status. 

Additionally, if the Departments did adopt a trigger based on provider network changes, it would 

likely inhibit the ability for plans to negotiate lower rates for fear of triggering provider network 

changes, leading to uncontrollable premium increases. 

The Departments Should Clarify that Plan Changes to Comply with Other Laws Will not 

“Trigger” Loss of Grandfathered Status

Recommendation: The Departments Should clarify that compliance with another law does 

not jeopardize grandfathered status even if it results in “triggering” one of the six items in 

the interim final rules. 

The Mental Health Parity and Addiction Equity Act (MHPAEA) requires plans that voluntarily 

offer mental health and substance abuse treatment benefits to examine and potentially make 

changes in copayments, coinsurance and other factors that can affect some of the specific 

“triggers” in the proposed regulation. Though the Interim Final Rules clarify that grandfathered 

plans must comply with MHPAEA and other applicable laws, the proposed rules add unclear and 

potentially ambiguous language stating that they must comply “except to the extent supplanted 

by changes made by the Affordable Care Act.” For example, it is unclear whether plans 

adjusting copayments or coinsurance to comply with MHPAEA would remain grandfathered 

plans if the necessitated changes required plans to go beyond one of the specific “trigger” in the 

proposed rule. We believe that the intent of the PPACA is not to create a situation where in 

complying with one law, in this case the MHPAEA, plans unfairly lose grandfathered status. 

The Departments Should Clarify that Plans May Drop Outmoded Treatments Without 

Jeopardizing Grandfathered Status

Recommendation: The Departments should exempt plans from losing grandfathered 

status if they eliminate coverage for services or treatments recognized to be ineffective or 

outmoded by the relevant medical professional societies, the relevant federal government 

entities (Food and Drug Administration (FDA), National Institutes of Health (NIH), 

Centers for Disease Control (CDC), etc.) or the consensus of medical research. 

Recommendation: The Departments should exempt plans from losing grandfathered status 

if they eliminate coverage of services or treatments that are outmoded or underutilized 

services, which are not defined as “essential benefits”. 

As you know, medicine continues to evolve and researchers announce new clinical evidence 

daily, including new evidence about existing treatments. Plans strive to stay current as do 

providers by assuring that covered benefits match the latest clinical evidence. This raises 

potential concerns that plans may lose grandfathered status by “triggering” the prohibition on 

eliminating benefits to diagnose or treat specific conditions, particularly the elimination of 

benefits for any necessary elements to diagnose or treat the conditions. In some cases, people 
6

may find only one provider who claims that a particular service, test, or treatment is necessary 

even if the relevant medical professional society has reached a consensus that a particular service 

or treatment is not effective and is outmoded or peer-reviewed medical literature has reached the 

same conclusion. 

In addition, under the new law, the Secretary of Health and Human Services will define the 

“essential health benefits” for the exchange plans that are “equal to the scope of benefits 

provided under a typical employer plan”. Accordingly, plans should not lose their grandfathered 

status for eliminating underutilized services that the federal government itself does not recognize 

as “essential health benefits” for “qualified” health plans. 

Thank you, again, for the opportunity to provide comments and assist you in this vital work to 

drive reform in our health care delivery system and improve the health of our country. 

Please contact me or Steve Wojcik, Vice President of Public Policy, at 202.585.1812 if you have 

questions or would like to discuss this feedback in further detail. 

Sincerely, 

Helen Darling 

President 

cc: The Honorable Phyllis C. Borzi, Assistant Secretary, Employee Benefits and Security 

Administration 

 Mr. Jay Angoff, Director, Office of Consumer and Insurance Oversight 

 The Honorable Douglas H. Shulman, Commissioner, Internal Revenue Service 

 Ms. Nancy Ann DeParle, Director, White House Office of Health Reform