https://fdms.erulemaking.net/...component/submitterInfoCoverPage?Call=Print&PrintId=0900006480b3055a&Comment=true[8/16/2010 12:18:46 PM]

PUBLIC SUBMISSION

As of: August 16, 2010

Received: August 13, 2010

Status: Pending_Post

Tracking No. 80b3055a

Comments Due: August 16, 2010

Submission Type: Web

Docket: HHS-OS-2010-0015

Group Health Plans and Health Insurance Coverage: Interim Final Rules for Relating to Status as a Grandfathered

Health Plan under the Patient Protection and Affordable Care Act

Comment On: HHS-OS-2010-0015-0001

Group Health Plans and Health Insurance Coverage: Interim Final Rules for Relating to Status as a Grandfathered

Health Plan under the Patient Protection and Affordable Care Act

Document: HHS-OS-2010-0015-DRAFT-0045

Comment on FR Doc # 2010-14488

Submitter Information

Name: Erin Reidy

Organization: ACS CAN

General Comment

Summary of ACS CAN Recommendations

By grandfathering certain group health plans and health coverage, Congress created a significant exemption from

the insurance market reforms and consumer protections mandated by the Patient Protection and Affordable Care

Act (“PPACA”). ACS CAN supports reasonable, well-defined limits to the scope of the grandfathering protection to

ensure that consumers are not denied the benefits of the PPACA reforms and to avoid the potential for confusion

among consumers in the health insurance marketplace. ACS CAN believes the Interim Rules take a meaningful

stride toward this objective. However, as set forth in greater detail below, ACS CAN also believes that, in a

number of areas, the Interim Rules do not adequately address several key areas of concern.

Attachments

HHS-OS-2010-0015-DRAFT-0045.1: Comment on FR Doc # 2010-14488
 

August 13, 2010 

By Mail

U.S. Department of Labor 

Office of Health Plan Standards 

 and Compliance Assistance 

Employee Benefits Security Administration 

Room N-5653 

Attn: RIN1210-AB42 

200 Constitution Avenue NW 

Washington, DC 20210 

Office of Consumer Information and Insurance Oversight 

Department of Health and Human Services 

Attn: OCIIO-9991-IFC 

P.O. Box 8016 

Baltimore, MD 21244-1850 

Internal Revenue Service 

CC:PA:LPD:PR (Reg-118412-10) 

Room 5205 

P.O. Box 7604 

Ben Franklin Station 

Washington DC 20004 

To whom it may concern: 

The American Cancer Society Cancer Action Network (“ACS CAN”) is the advocacy 

affiliate of the American Cancer Society (the “Society”). The Society is a nationwide, 

community-based, voluntary health organization dedicated to eliminating cancer as 

a major health problem by preventing cancer, saving lives, and diminishing suffering 

from cancer, through research, education, advocacy, and service. The American 

Cancer Society, operating through its national office and 13 chartered, geographic 

division affiliates throughout the United States is the largest voluntary health 

organization in the United States. 

ACS CAN appreciates the opportunity to provide comments to the U.S. Department 

of Labor, the Department of Health and Human Services and the Internal Revenue 

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Service (the “Departments”) on 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 (“the “Interim Rules”) as 

published in the Federal Register on June 17, 2010. For convenience, references to 

“plan” herein are intended to include both employer-sponsored group health plans 

and individual and group coverage obtained in the insurance market and references 

to “participant” include both employees covered by a group health plan and other 

individuals who obtain individual or group coverage in the insurance market. 

The regulation, on the whole, is well constructed, and ACS CAN applauds the 

careful and thoughtful balancing of interests that is represented in this interim 

regulation. Although we are very supportive of the “immediate” insurance reforms in 

the law, we recognize and respect the commitment that Congress made in allowing 

people to keep their existing plans. We also recognize that there is great variation 

among existing plans, and for some of them, complying almost immediately with the 

new reforms would result in dramatic premium increases or plan termination, neither 

of which is desirable. Overall, the interim regulation is a constructive compromise 

that advances reform without creating unacceptable disruption of the markets. 

Summary of ACS CAN Recommendations

By grandfathering certain group health plans and health coverage, Congress 

created a significant exemption from the insurance market reforms and consumer 

protections mandated by the Patient Protection and Affordable Care Act (“PPACA”). 

ACS CAN supports reasonable, well-defined limits to the scope of the 

grandfathering protection to ensure that consumers are not denied the benefits of 

the PPACA reforms and to avoid the potential for confusion among consumers in the 

health insurance marketplace. ACS CAN believes the Interim Rules take a 

meaningful stride toward this objective. However, as set forth in greater detail 

below, ACS CAN also believes that, in a number of areas, the Interim Rules do not 

adequately address several key areas of concern. 

Enhanced Disclosure. A key concern for ACS CAN is that participants will fail 

understand the significance of a plan’s grandfathered status and will be unable to 

adequately evaluate the effect of post-March 23, 2010 plan changes on such status. 

Accordingly, ACS CAN recommends that the model disclosure be enhanced to 

provide participants with (I) a more comprehensive explanation of grandfathered 

plan status, (ii) information on the triggers that can result in a cessation of such 

status, (ii) a complete listing of the specific PPACA reforms that are inapplicable to 

the plan by virtue of its status, and (iv) access to a formal process for obtaining a 

determination on a plan’s status from the appropriate government agency. 

Oversight. The Interim Rules establish a largely self-regulating regime for 

compliance with the grandfathering exemption. However, this approach may 

encourage misuse and abuse of the exemption to the serious detriment of 

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participants. To correct this deficiency, ACS CAN recommends that the Interim 

Rules incorporate (i) a requirement for initial reporting to the appropriate agency of 

grandfathered status followed by annual reporting to confirm such status, (ii) annual 

disclosure updates to participants and (iii) a process for participants to request a 

determination regarding the status of their plan. 

Elimination of Benefits. The Interim Rules properly treat the elimination of certain 

benefits under a plan as an event resulting in the cessation of grandfathered status. 

However, ACS CAN recommends that this trigger be revised to create greater 

certainty for plans and participants regarding the circumstances when the 

elimination of a specific diagnostic technique or treatment will be treated as the 

elimination of a benefit. 

Change in Plan Design, Physician Network or Formulary. In response to the 

specific request for comment in the Interim Rules release, ACS CAN recommends 

that, in certain clearly defined circumstances, changes in plan design, physician 

networks or plan formulary result in the cessation of the grandfathering exemption. 

ACS CAN’s specific recommendations follow below. 

Discussion

Comprehensive Disclosure Requirements for Grandfathered Plans. A claim of 

grandfathered plan status has significant consequences for the participants who 

receive coverage under the plan. Not only are participants in a grandfathered plan 

unable to take advantage of significant PPACA protections, they may have only a 

limited opportunity to obtain alternative coverage, particularly if their current 

coverage derives from their employment. In the absence of comprehensive 

disclosure requirements, the potential for consumer confusion about the status of 

their coverage under the grandfather rule is enhanced, and the opportunities are 

increased for unscrupulous parties to take advantage of an exemption to which they 

are not entitled. For these reasons, ACS CAN believes that, in several key respects, 

the disclosure requirements under the Interim Rules for plans or policies claiming 

grandfathered status are inadequate. Specifically, we are concerned that the model 

disclosure fails to provide consumers with (i) an adequate explanation of the 

requirements for, and the significance of, grandfathered status, (ii) information 

regarding the actions that could lead to a cessation of grandfathered status and (iii) 

a clear picture of which PPACA protections apply and which do not apply to the plan 

or policy. 

To correct these deficiencies, the model disclosure notice for grandfathered plans 

should be revised to incorporate the following: 

 State that grandfathered status is limited to coverage under a plan or 

policy that was in effect on March 23, 2010. 

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 State that grandfathered status may continue indefinitely unless the 

issuer decides to forego such status or changes to the plan result in a 

cessation of grandfathered status under applicable regulations. 

 State that grandfathered status is not affected by a renewal of 

coverage, the enrollment of new employees or the addition of new 

dependents. 

 Enumerate the specific PPACA requirements that the plan is electing 

not to comply with because it is a grandfathered plan. 

 State that a covered individual is entitled upon reasonable notice to 

inspect and copy the documents upon which the issuer relies to 

establish grandfathered status. 

 Provide notice of the opportunity to obtain a determination from the 

appropriate government agency regarding the grandfathered status of 

the plan (see below) and/or file a complaint relating to the plan’s claim 

of grandfathered status. 

Enhanced Compliance Oversight for Grandfathered Plans. While ACS CAN 

appreciates the policy rationale underlying the decision to grandfather certain health 

insurance plans and coverage, it is essential that grandfathered plan exemption not 

be misused or misapplied in a way that undermines the integrity of the PPACA 

reforms. As currently structured, the initial and ongoing process of determining 

grandfathered status is largely self-regulating and, ACS CAN believes, highly 

susceptible to abuse. ACS CAN recommends that the following additional 

measures be considered to ensure compliance and to provide a sound basis for 

adequate oversight through the agency audit and enforcement process: 

 Plans claiming grandfathered status should be required to make an 

initial certification of such status with an appropriate government 

agency. The initial certification should be followed by an annual 

reporting requirement that would itemize plan changes during the year 

and require recertification that the plan remains grandfathered or has 

given up grandfathered status. The reporting requirements could easily 

be incorporated as an item on existing reporting obligations such as the 

Form 5500. Absent this kind of detailed periodic reporting, it will be 

very difficult for the agencies charged with oversight of grandfathered 

plans to detect possible misuse or abuse of the exemption. 

 Plans should be required to provide participants with an annual update 

to the initial disclosure notice that (i) if applicable, renews the plan’s 

claim to exempt status, (ii) provides an itemization of changes to the 

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plan since the prior notice and (iii) provides participants with an 

explanation as to why those changes do not cause the plan to cease its 

grandfathered status. 

 The model disclosure notice should reference a process whereby 

participants who question the grandfathered status of their plan can 

obtain a formal determination from the appropriate regulatory agency 

regarding whether the plan is grandfathered or otherwise contest the 

plan’s claim to grandfathered status. This process would include an 

opportunity for the plan to respond to the participant’s claims and detail 

the reasons why it is grandfathered. This process could be structured 

along the lines of the similar process already in place at the Internal 

Revenue Service that allow workers to obtain a classification of their 

status as common law employees or the process that provides an 

opportunity for participant comment when a tax-qualified retirement 

plan seeks a determination letter from the Internal Revenue Service. 

Elimination of Benefits Triggering a Cessation of Grandfathering. Under the 

Interim Rules, the “elimination of all or substantially all benefits to diagnose or treat a 

particular condition causes a group health plan or health insurance coverage to 

cease to be a grandfathered health plan.” The Interim Rules go on to clarify that the 

“elimination of benefits for any necessary element to diagnose or treat a condition is 

considered the elimination of all or substantially all benefits to diagnose or treat a 

particular condition.” While ACS CAN believes this approach is consistent with the 

limited scope of the grandfathering exemption, it creates substantial uncertainty for 

both plans and participants by failing to establish a bright line test for circumstances 

where a reduction in benefits triggers a cessation of grandfathering. This standard 

is likely to create substantial questions for plans and participants alike regarding 

whether a particular element of a diagnostic technique or treatment is a necessary

element of the technique or treatment. This standard also appears to 

inappropriately shift the burden to the participant to demonstrate that a particular 

element of a diagnostic technique or treatment is a “necessary” element of the 

technique or treatment. Accordingly, ACS CAN recommends that the regulations 

establish a rebuttable presumption that the elimination of benefits for any diagnostic 

technique or any treatment for which benefits was available under the plan on 

March 23, 2010 causes the plan to cease to be a grandfathered health plan, unless 

the change is consistent with existing (including recently revised) practice 

guidelines. Under this approach, the presumption could be rebutted by specific, 

credible evidence that the prior technique or treatment for which benefits are no 

longer available has been superseded by a new or different technique or treatment 

that (i) is generally regarded as an advance in diagnosis or treatment, (ii) is 

substantially as effective as the prior or treatment or (iii) provides a similar clinical 

result at a reduced cost. 

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Request for Comments

The Departments have requested comment on whether changes to (i) plan 

structure, (iii) a network plan’s provider network or (iii) a prescription drug formulary 

or any other substantial changes to plan design should cause a cessation of 

grandfathered health plan status. Our recommendations in these areas follow 

below. 

Change in Plan Structure. Under the current structure of the Interim Rules, it is 

likely that a material change in plan structure will result in the cessation of the 

grandfathering exemption through the application of an otherwise applicable trigger 

such as the one applicable to changes in copayments and deductibles. However, 

some changes are so fundamental, such as when a PPO model plan becomes an 

HMO plan, that cessation of grandfathered status should be automatic. In addition, 

it may be appropriate to apply a higher level of scrutiny to plans that undergo a 

material structural change, such as a change from insured to self-insured, in a 

manner similar to the kind of heightened scrutiny applicable under the Interim Rules 

to a grandfathered plan involved in a corporate transaction, i.e., a general anti-abuse 

rule should apply that results in a cessation of grandfathered status where the 

principal purpose of the change in plan structure is to avoid the cessation of 

grandfathered status or otherwise manipulate grandfathered status to the detriment 

of the participants. Finally, any change in eligibility for a plan--for example, 

increasing the hours of work required to be eligible for coverage--should trigger the 

cessation of grandfathered status. 

Change in Plan Provider Network. The demographics of plan’s provider network 

are often integral to the participant’s ability to effectively utilize the plan’s benefits. 

Accordingly, there are clearly circumstances where a material change in a network 

plan’s plan provider network should trigger a cessation of the grandfathering 

exemptions. While recognizing the inherent difficulty of drawing workable lines in 

this area, ACS CAN believes that it is possible for the regulations to highlight by way 

of example certain events that constitute a material change to the plan and, 

therefore, should trigger a cessation of grandfathering. These events could include 

the following: (i) a greater than 25 percent change in the number of network 

providers in a particular specialty; (ii) a greater than 25 percent change in the overall 

number of network providers; (iii) the elimination from the network of any hospital 

utilized by greater than 25 percent of plan participants; (iv) a greater than 25 percent 

change in the number of providers included in a geographic area previously 

identified by the plan to participants as an area served by the plan; (v) elimination of 

all previously covered providers of a certain class or specialty unless there such 

providers are no longer practicing in the service area. HHS may also want to 

consider an exception for those plans operating in rural areas and other areas with 

small provider networks. 

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Change in Prescription Drug Formulary. As with a provider network, a plan’s 

prescription drug formulary, and the rules relating to a participant’s use of the 

formulary, is an essential feature of plan benefits. A material change in either the 

structure or content of a plan’s formulary represents a material change in the plan 

and, therefore, should result in a cessation of grandfathering. In developing an 

appropriate trigger relating to a plan’s formulary, ACS CAN recommends that, as an 

initial matter, the Departments focus on changes in the overall structure of the 

formulary rather than changes in the specific content of the formulary. These 

changes should include the following: (i) any change in the tier structure, such as 

changing from a co-pay to coinsurance or increases in cost-sharing for any tier; (ii) 

moving a class of drugs to a more expensive tier; (iii) increases in co-pays that 

exceed medical inflation plus 15 percentage points; (iv) moving a drug from 

prescription coverage to a medical benefit or vice versa such that a patient is left 

with significantly greater out of pocket costs; (v) imposing pre-authorization for any 

tier where there previously was no requirement; (vi) restrictions on or the elimination 

of a patients appeals process regarding a plan’s formulary; (vii) elimination of a drug 

or class of drugs for which there are no appropriate alternatives on the formulary; 

(ix) movement of a drug or class of drugs to a higher copayment tier when there is 

no appropriate alternative drug (i.e., generic) and (vi) a reduction in the total number 

of drugs covered beyond a certain threshold with exceptions for generic drugs. We 

believe this approach parallels other requirements in this regulation and is consistent 

with the intent of the grandfathering exemption. 

Conclusion

ACS CAN believes that it is critical to the success of the PPACA that the benefit of 

its consumer protections and insurance market reforms be available to the American 

public as rapidly and as widely as possible. While recognizing both the practical and 

policy rationales for providing limited grandfathering protection to certain plans, the 

exemption should not be expanded in a way that undermines the national imperative 

of health care reform. ACS CAN applauds the Departments for crafting regulations 

that, as a general matter, are consistent with this objective. We hope the 

Departments will consider our recommended changes and additions, which are 

intended to provide participants with greater clarity and certainty as they seek to 

understand both the complexities of the grandfather rule and its context in the larger 

picture of the PPACA reforms. 

Sincerely, 

Christopher W. Hansen 

President 

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