August 16,2010 

HEALTH SYSTEM 

Mr. Jay Angoff, Director 

Office of Consumer Information & Insurance Oversight 

Department of Health & Human Services 

Attention: OCIIO-9991-IFC 

P.O. Box 8016 

Baltimore, MD 21244-1850 

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 AfSordable Care Act 

(PPACA) 

Dear Mr. Angoff, 

Thank you for the opportunity to provide comments on the interim final rule for Grandfathered 

Health Plans. 

I am writing on behalf of Adventist Health System, which operates 27 hospitals in lo states. Our 

flagship hospital, Florida Hospital in Orlando, is the nation's largest Medicare provider. Our 

comments follow. 

I. Language clarification for the Definition of a Qualified Health Plan: The 

language in Section 1 (Background, page 34539) is unclear as to whether this rule applies 

to self-insured group health plans. In one section, it states that it "includes both insured 

and self- insured group health plans.'' At the bottom of the same column, a footnote says, 

"The term 'health plan' does not include self-insured group health plans." 

Overall, our reading of the Act leads us to conclude that self-insured plans are excluded 

generally from the definition of a Qualified ~ealfh Plan. 

Subpart D, Part I (b) (1) (B), expressly excludes self-insured plans from the 

definition of a Qualified Health Plan. 

Self-insured plans are subject to certain fees but this does not necessarily mean 

that they are subject to the Affordable Act in its entirety. 

Sections 1253 and 1254 call for a study and annual reporting on self-insured 

health plans; this implies that a decision on regulating these plans under the 

PPACA remains an open issue. Because CMS appears to have significant latitude 

in their rule making, it would appear judicious to wait for the studies on selfinsured plans before making them subject to the grandfathering provisions that 

may be most appropriate for market-based plans. 

2. Changes in Treatment Modalities: A provision in Section F (Maintenance of 

Grandfathered Status, page 34543) states that the elimination of all or substantially all 

benefits for diagnosing and treating a particular condition would cause a plan to lose its 

grandfathering status. 

It is unclear if the elimination of a particular modality of treatment would trigger 

this provision. For example, if a plan covered Radiation Therapy, IMRT, and 
Proton Beam for prostate cancer but eliminated Proton Beam coverage (only), 

would that trigger the other provisions relating to grandfathered status? 

What will govern coverage decisions based upon clinical or Comparative 

Effectiveness Research? 

Will all such changes become de- grandfathering events? 

3. Increases in Cost-Sharing: Section F (referencing Paragraph (g) of 26 CFR 54.9815- 

i25iT et. Al) states that any percentage increases in cost sharing (such as coinsurance) 

will cause a plan to be de-grandfathered. While this concept may be warranted and there 

may be data to support it, Section F does not include the reasoning for it. Further, it is 

possible that these economic times may spur percentage cost share changes. We believe 

that this rule - to be consistent with other criteria for grandfathering -should not be an 

all-or-nothing proposition. 

4. Economic Indicators: Many of the parameters for what will and will not be permitted 

are to be based on 2008-2009 studies. We are not sure that these studies are necessarily 

reflective of the behavior of insurance companies and employers in response to the 

2009-2010 recessions. 

The assumption on p. 34551 (item b) is that economic conditions will improve in 

2011 - and put less pressure on employers to reduce their contributions. We 

believe this may be overly optimistic. Even when the economy improves, 

employers will be regrouping and looking to reduce operating expenses. 

We suggest a less sanguine view of the future - or at least a temporizing of 

criteria - until there is a better sense of what is happening economically. 

Otherwise, as proposed in this rule, many more plans than estimated will be 

forced to give up their grandfathered status. This could lead to more people 

losing their existing plans. 

5. The Department has invited comments on a variety of areas that could affect 

grandfathering status: 

A. Changes in health structure: This section addresses changes from health 

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

product. We do not believe that such changes per se would be a degrandfathering event. However, any structural changes in coverage and financial 

exposure to the enrollee - consistent with the provisions in the interim or final 

rule - would certainly be relevant. 

B. Changes-in a plan's provider network: A change in and.of its serf should* 

not be a triggering event. Concerns should arise if the change created material . impacts on access and the use of out-of-n:twork providers - and increased 

enrollee costs. 

o The impact of changes would vary based upon the capacity of physicians and 

outpatient services, but it would seem that a decrement in 10% of primary 

care and 5% of specialists would warrant consideration for de-grandfathering. 

o An increase in out-of-network claims could be a way of measuring the impact 

of a change. If a network change created a 5-10% volume increase in out-ofnetwork claims - which always results in the enrollee paying more - there 

would be sufficient reason to say that there was a plan change. 

C. Changes in formulary: Formulary changes are very dynamic. Drugs come off 

patent, generics become available, and what were prescription drugs become 

OTC medications. 
o As long as a plan did not change the formulary to exclude types of drugs that 

were available to treat a specific condition, e.g., drugs to treat allergies, then 

the plan has not significantly changed. 

o The exception would be in psychotropic medications. If a formulary included 

Atypical Psychotropic Medications (APM) but dropped their coverage, this 

would be a material change in coverage. While APMs are more expensive, 

they have demonstrably fewer side effects and result in significantly higher 

compliance. Dropping these drugs from a formulary would be tantamount to 

reducing coverage for severely mentally ill individuals. 

D. Other substantial changes to overall benefit design: This subject area 

will require much more consideration before it is incorporated into a rule. Benefit 

design must be an evolving area, especially in the area of public policy and 

Comparative Effectiveness Research. 

o Benefits design may substantially change in order to reflect the development 

of sounder public policy. For example, the PPACA places greater emphasis on 

prevention and primary care rather than interventional care. As this becomes 

a proven concept in terms of better outcomes and reduced utilization, plans 

will need to change to encourage or reward this enlightened approach. It 

would not seem fair to take away the grandfathered status because than made 

substantive changes that are in the best interest of the enrollees. 

o Evidenced-based medicine and Comparative Effectiveness Research should 

be the determining factors in all instances. 

Again, we appreciate the opportunity to comment, and thank you for your attention to 

our suggestions. 

Please feel free to contact me at 407-303-1607 or rich.morrison@flhosp.org with any 

questions or comments. ---- -.------ m.-.".eE% 

Respectfully, 

Richard E. Morrison 

Corporate Vice President 

cc: Donald L. Jernigan, President & CEO