December 17, 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

Attn: OCIIO-9991-IFC2

RE: Amendment to the 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

To Whom It May Concern:

The U.S. Chamber of Commerce (the “Chamber”) is submitting these comments in response to

the Amendment to the 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 (“Amendment”), which were published in the Federal Register on

November 17, 2010.1The Amendment modifies paragraph (a)(1) of the 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 (“Grandfathered Plan IFRs” or

“IFRs”), which were published in the Federal Register on June 17, 2010.2 As with other

guidance under these Acts, the Amendment to the IFRs was published jointly by the Department

of the Treasury, the Department of Labor and the Department of Health and Human Services (the

“Departments”).

3

1 Amendment to the 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, 75 Fed. Reg. 34,538–70 (June

17, 2010) (to be codified at 26 C.F.R. pts. 54 & 602; 29 C.F.R. pt. 2590; 45 C.F.R. pt. 147) [hereinafter Amendment

to the Grandfathered Plan IFRs].

2 Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the

Patient Protection and Affordable Care Act, 75 Fed. Reg. 34,538–70 (June 17, 2010) (to be codified at 26 C.F.R. pts.

54 & 602; 29 C.F.R. pt. 2590; 45 C.F.R. pt. 147) [hereinafter Grandfathered Plan IFRs].

3

Pursuant to the request in the IFRs, the Chamber is submitting these comments to one of the Departments - The

Department of Health and Human Services, with the understanding that these comments will be shared with the

Department of Labor and the Department of Treasury, as well.
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This Amendment provides guidance pursuant to the statutory language of the Patient Protection

and Affordable Care Act (the “Affordable Care Act”) and the Health Care and Education

Reconciliation Act (the “Reconciliation Act”).

The Chamber is the world's largest business federation, representing the interests of more than

three million businesses and organizations of every size, sector and region, with substantial

membership in all 50 states. These comments have been developed with the input of member

companies with an interest in improving the health care system.

The Chamber recognizes the very difficult undertaking by the Departments in connection with

the original Grandfathered Plan IFRs and in remedying the unintended consequences associated

with it. We applaud the Departments’ efforts to reconsider the IFRs and take corrective

measures to address critical impediments highlighted by public comments. In fact, the Chamber

specifically highlighted this issue in our comments, stressing that linking a change of issuers or

carriers with a loss of grandfathered plan status “creates a situation in which fully insured plans

must choose between paying increased premiums without shopping for alternative coverage, or

losing grandfathered plan status. It eliminates the downward pressure on costs that results from

the ability of businesses to consider switching insurers.”4

While we appreciate this critical revision5and applaud the Departments for issuing this

Amendment, we have several practical concerns. Although the change in policy is appropriate,

we reiterate a critical concern with the Grandfathered Plan IFRs: even as amended, the IFRs far

exceed the statutory language that authorizes their very promulgation. Secondly, the

Amendment’s prospective effective date of this change will make it meaningless for many plans.

Finally, the Amendment contains a documentation requirement6that is not fully explained,

raising numerous operational questions.

4 U.S. Chamber of Commerce Comments to 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,

75 Fed. Reg. 34,538-70 (June 17, 2010) (to be codified at 26, C.F.R. pts. 54 & 602; 29 C.F.R. pt. 2590; 45 C.F.R. pt.

147) on page 8 “All plans should be permitted to change policies and issuers. This change is necessary to ensure that

plan fiduciaries can continue to discharge their duties under ERISA; the primary focus must continue to be on the

benefits provided to participants. Locking employers and consumers into staying with policy issuers in order to

maintain grandfathered status is inconsistent with the clear support of Congress and the Administration for

grandfathered plan status. Instead, this creates a situation in which plans must choose between paying increased

premiums without shopping for alternative coverage, or losing grandfathered plan status. It eliminates the

downward pressure on costs that results from the ability of businesses to consider switching insurers. Insured plans

should not be treated any differently than self-insured plans; the identity of the policy issuer (insurance company) is

no more important to most participants than the identity of the third party administrator (TPA) in a self-insured plan.

Similarly, the financial structure of a plan should not affect grandfathered status. Coverage, as experienced by the

enrollee and participant, may be identical regardless of whether the plan is insured or self-insured. The direct

impact on the consumer is negligible and, in fact, in many instances, these types of changes are necessary to

preserve the ability of individuals to keep the plan they have, if they want to.”

5Amendment to the Grandfathered Plan IFRs, 75 Fed. Reg. at 70,121(to be codified at §147.140 (a)(1)(i)) “Subject

to the limitation set forth in paragraph (a)(1)(ii) of this section, a group health plan (and any health insurance

coverage offered in connection with the group health plan) does not cease to be a grandfathered health plan merely

because the plan (or its sponsor) enters into a new policy, certificate, or contract of insurance after March 23, 2010

(for example, a plan enters into a new issuer or a new policy is issued with an existing issuer).”

6 Amendment to the Grandfathered Plan IFRs, 75 Fed. Reg. at 70,122 (to be codified at §147.140(a)(3)(ii)) “To

maintain status as a grandfathered health plan, a group health plan that enters into a new policy, certificate or
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Prospective Effective Date Renders Amendment Meaningless

For many employers the policy change contained in the Amended IFR comes too late and

provides little solace. Due to the interim final rule issued by the Departments in June 2010,

many employers were forced to weigh the cost of losing Grandfathered Plan status vs. the

additional cost of staying with the same issuer. Many of our members, due to the initial IFR,

were essentially forced to forego the opportunity to contract with another carrier (something that

would have permitted them to minimize premium increases) in order to retain Grandfathered

Plan Status. Additionally, many employers (unable to afford the increase in premiums

demanded by their current carrier) had to switch insurers, thereby causing their plans to lose

Grandfathered Plan status.

We appreciate the Departments’ recognition that this dilemma should not have been forced on

plan sponsors. Further, we applaud the Departments for understanding how this restriction

undercut the ability of employers to comparison shop in an effort to find the best deal for

employees. However, we respectfully request that this laudable and critical policy correction the

Departments are making be retroactive. While we appreciate the operational difficulties in

applying this rule retroactively, we believe that the Departments should create a grace period to

permit employers to break newly entered plan agreements, if they so choose. Employers should

have the option, given this Amendment and its significant affect, to retain (or renegotiate) an

arrangement with their previous insurance carrier and to retain grandfathered plan status.

Alternatively, those employers who would like to contract with a new carrier (and under the

Amendment would now be permitted to retain grandfathered plan status if they did so) should

also have the opportunity to renegotiate coverage with a new carrier and retain grandfathered

plan status. Even though we disagree and respectfully dispute the statutory basis for the other

requirements contained in the original Grandfathered Plan IFRs7, in this scenario to advance the

amendment’s policy improvement until others are made, employers retaining grandfathered plan

status would still be required to offer coverage that complies with the original Grandfathered

Plan IFRs requirements listed in (g)(1).8

Amended IFR Continues to Far Exceeds Statutory Language

The Affordable Care Act contains a very simple grandfathered plan rule essentially legislating

the Administration’s promise: “[n]othing in the Act shall be construed to require that an

individual terminate coverage...in which such individual was enrolled on the date of

enactment.”9The provision specifies that the majority of the health insurance market reforms

shall not apply to grandfathered plans and allows new family members and new employees to

enroll in grandfathered plans.

contract of insurance must provide to the new health insurance issuer (and the new health insurance issuer must

require) documentation of plan terms...under the prior health coverage sufficient to determine whether a change

causing a cessation of grandfathered health plan status...has occurred.”

7

Grandfathered Plan IFRs,75 Fed. Reg. at 34,568 (to be codified at §147.140(g)(1).

8 Grandfathered Plan IFRs,75 Fed. Reg. at 34,568 (to be codified at §147.140(g)(1).

9

Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 1251(a), 124 Stat. 119 (2010), amended by

Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, § 2301(a), 124 Stat. 1029 (2010).
Page 4 of 5

Neither Section 1251, nor any other provision of the Affordable Care Act, discusses the loss of

grandfathered plan status. In fact, the Amendment to the Grandfathered Plan IFR tacitly

concedes that only the IFR (not the statute) specifies what would cause a plan to lose

grandfathered plan status.10

In previous legislative reforms, when Congress intended grandfathered status to be terminable,

that intention was clearly stated in the law. Significantly, before the Affordable Care Act and the

Reconciliation Act were passed, other health reform legislation considered by Congress

included far more prescriptive grandfathering provisions and limited the duration of

grandfathered plan status to a definitive period of time. This approach was specifically rejected

by Congress.

11 We continue to assert that the Grandfathered Plan IFRs, even as amended,

exceed the statutory language and are inconsistent with Congressional intent.

Determining the Continuation of Grandfathered Status

The Amendment to the Grandfathered Plan IFRs includes vague and incomplete language under

a documentation requirement.12 The Amendment to the IFRs simply states that documentation

“sufficient to make a determination as to whether a change causing cessation of grandfathered

plan status under paragraph (g)(1) has occurred”13 must be provided. However, there is no

further discussion of several critical questions:

 What entity will be responsible for making that determination?

 What criteria will be used as a basis for the decision?

 Will there be an opportunity to review or challenge this determination?

10 Amendment to Grandfathered Plan IFRs, 75 Fed. Reg. at 70,115 “[The statute] provides that certain plans or

coverage existing as of March 23, 2010 (the date of enactment of the Affordable Care Act) are subject to only

certain provisions of the Affordable Care Act. The statute and the interim final regulations refer to these plans or

health insurance coverage as grandfathered health plans. The statute and the interim final regulations provide that a

group health plan or group or individual health insurance coverage is a grandfathered health plan with respect to

individuals enrolled on March 23, 2010 regardless of whether an individual later renews the coverage. The interim

final regulations specify certain changes to a plan or coverage that would cause it to no longer be a grandfathered

health plan. In addition, the statute and the interim final regulations provide that a group health plan that provided

coverage on March 23, 2010 generally is also a grandfathered health plan with respect to new employees (whether

newly hired or newly enrolled) and their families that enroll in the grandfathered health plan after March 23, 2010.

11 See Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, H.R. 3962, 111th

Cong. §202(a)(1)–(3) (2010). As passed by the House of Representatives, H.R. 3962 designated that grandfathered

plan status would be lost for insured arrangements if: new enrollees (other than dependents of existing enrollees)

entered the plan; or if plan provisions “including benefits and cost-sharing” changed. Employment based plans

could only be grandfathered for a five year “grace period.” After five years, grandfathered plans would then be

required to “meet the same requirements as apply to a qualified health benefits plan under section 201, including the

essential benefit package requirement under Section 221.”

12 Amendment to Grandfathered Plan IFRs, 75 Fed. Reg. at 70,117 and 70,122. (to be codified at §147.140(a)(3)(ii)).

13 Ibid.
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 Will there be a cure opportunity to make changes after an adverse determination? (i.e. If a

new policy is not sufficient will a sponsor have the opportunity to revise the new policy

in order to retain grandfathered plan status?)14

 What will occur if the determination is made in error?

Details regarding the burden of proof in assessing whether a plan under a new carrier, policy or

issuer is sufficiently the same for the retention of grandfathered plan status must be more clearly

delineated. If an enrollee, or one of the Departments, maintains that a plan is no longer

grandfathered, the burden of proof should be on the party arguing against grandfathered status

and there should be a rebuttable presumption of grandfathered status.

CONCLUSION

We appreciate the opportunity to comment on the Amendment to the Grandfathered Plan IFRs

and applaud the Departments for considering our previous comments and for revising the

original IFR to reflect important policy priorities. We are happy to discuss any of our comments

informally, or by way of testimony in hearings conducted by the Departments. We support the

general principles of improving health care coverage and access and applaud the

Administration’s promise to the American people that nothing will require an existing plan to

terminate coverage. However, we remain troubled by some critical elements of the original

Interim Final Rules implementing the Grandfathered Status provisions. We look forward to

working with you to protect the fundamental goals of health reform that we jointly support.

Sincerely,

Randel K. Johnson Katie Mahoney

Senior Vice President, Director,

Labor, Immigration, & Employee Benefits Health Care Regulations

U.S. Chamber of Commerce U.S. Chamber of Commerce

14 There must also be a remediation opportunity for plan sponsors to: reverse a change that caused the loss of

grandfathered plan status. The determination process is unclear and plan sponsors must be afforded an opportunity

to correct changes which may have significant and long lasting ramifications.