Response to Request for Comments Regarding Sections 2704, 2711,2712 and 2719A of the Public Health Service Act

Prior to Rule‐making

Submitted to the Department of Health and Human Services, Department of Treasury, and Department of Labor

Submitted by a FL‐based Health Plan

Through the Federal eRulemaking Portal

Brief Background on Submitting Health Plan

The health plan making this submission is a FL‐based Health Maintenance Organization with over 40,000 covered lives.  

Its large group and individual products are impacted by the health reform act changes.  The preponderance of its

covered lives is individual policyholders.  Many of the benefit designs of the insurer are individual products with very low

monthly premiums to attract individuals with very limited means who would otherwise be uninsured as they exceed

Federal Poverty Income Thresholds for government programs.  For example our comprehensive HMO coverage for

children product is set as $75 per month per child.  Our other individual comprehensive HMO coverage begins at $90 per

month per individual.   

Section 2704

The comments on the interim regulations indicate that PPACA Section 2704 goes beyond HIPPA in that it not only bans

an exclusion of coverage of specific benefits associated with a preexisting condition in the case of an enrollee, but a

complete exclusion from such plan or coverage, if that exclusion is based on a preexisting condition.  We are unsure

what this means.  Since guaranteed issue is part of another section of PPACA and not effective until 2014, we do not

believe the intent of the act was to impact the underwriting process for individual policies at this time.  Depending on

the interpretation of the regulation, this well could impact the underwriting processes for insurers offering individual

policies.  Will the departments be issuing additional guidance on what constitutes exclusion from a plan based on a

preexisting condition under PPACA and how that is or is not different from guaranteed issue? Implementing the

regulation as is if were a guaranteed issue for children under age 19 will have major repercussions in the marketplace

through 2014 and could lead to some insurers declining to participate in issuing coverage for this age group.  Further,

since grandfathered individual health plans are exempt from the provision, is it the case that neither the ban on denying

coverage due solely to a preexisting condition nor establishing a preexisting condition exclusion applies. We ask because

new dependents may join a grandfathered individual plan.

The interim final regulations do not change the HIPAA rule that an exclusion of benefits for a condition under a plan or

policy is not a preexisting condition exclusion if the exclusion applies regardless of when the condition arose relative to

the effective date of coverage.  To confirm, if our individual policies exclude pregnancy coverage universally for a certain

period of time or entirely, this is allowable as long as we do not exclude enrollment of a female in the plan simply

because she is pregnant? Even if this is allowable under Section 2704, will the departments view an exclusion of

pregnancy coverage for a period of time as a disallowable waiting period as of 2014 pursuant to Section 2708?

Section 2711  

The interim final regulations guidance is clear.  We appreciate the departments attempt to address the issue of allowing

annual limits for policies beginning after 9/23/10 by having plans employ good faith efforts before regulations for

1302(b) are established.  Plans are in the process of amending policies and rates with state insurance regulators for

implementation beginning 9/23/10.

We think some consideration should be made to allowing somewhat lower annual limits before 1/1/14.  We do support

the concept of a phaseout given the underlying law.  

We understand that both lifetime and annual limits can be placed on non‐essential benefits.  We view this as applying to

all grandfathered (group and individual) and all non‐grandfathered (group and individual) plans.  The annual limit on
essential benefits applies to all non‐grandfathered plans and group grandfathered plans.  Thus, as we see it for non‐

grandfathered plans and group grandfathered plans you can set an annual limit on essential benefits and then separate

annual and lifetime limits on non‐essential benefits.  We interpret the statute and regulations as to say these non‐

essential benefit limits can be on various benefit categories and do not have to be overall aggregate limits.  However, on

grandfathered individual policies, there is some confusion.  Grandfathered individual policies can have annual limits

within certain parameters per the interim final regulations pertaining to Section 1251.  We view this annual limit as

being on all benefits (as is customary in most plans).  Would the grandfathered individual plan still be free to establish

subset lifetime and annual limits on non‐essential benefits?  Or, would the annual limit then apply only to essential

benefits?

With regard to a grandfathered group plan, Section 2711’s provision with regard to annual limits is applicable.  This

would imply that a $750,000 annual limit is the most a grandfathered group plan could impose as of policies beginning

on or after 9/23/10.  However, the interim final regulations published with regard to Section 1251 indicate various

possible limits for annual limits that would not jeopardize the grandfather status.  In some regard, the two interim final

regulations would appear to conflict.  Isn’t it the case, however, that if a grandfather plan could impose a higher than

$750,000 annual limit pursuant to the Section 1251 regulations that it still cannot impose one higher than $750,000

because Section 2711 in fact applies to grandfathered group plans.

With regard to annual limits for what the departments term as “limited benefit plans” and “mini‐med plans,”, the

interim final regulations note that the HHS Secretary may waive the restrictions on annual limits if compliance with the

interim final regulations would result in either: (1) a “significant” decrease in access or benefits or (2) a “significant”

increase in premiums. The preamble indicates that HHS will be issuing guidance “regarding the scope and process for

applying a waiver” in the near future.  We feel strongly that annual limits should be waived prior to 1/1/14 for such

plans.  The products we offer pursuant to a state pilot program offer preventive coverage only for those up to 300% of

the federal poverty level.  These plans generally have low annual limits (below $100,000) but provide important health

care coverage for people of limited means but above the threshold for government programs.  These premiums often

are below $50 per month. While they generally do not include inpatient coverage, they do provide comprehensive

access to preventive and other health care services.  Significantly increasing such annual limits beyond established limits

would increase premiums and likely lead to the erosion of such vital coverage in the marketplace through 2014.

Further, do all the PPACA provisions apply to such plans and similar products?  Also, if an insurer offers a state pilot

program meant to encourage low‐cost insurance alternatives, would this product be subject to the grandfather vs. non‐

grandfather rules and the various PPACA mandates in general?

  

In separate comments on Section 1251, we have made suggestions on the treatment of annual limits for grandfather

plans.

Section 2712

The interim final regulations guidance is clear.  The distinction between cancellation and rescission is critical.  Further,

the ability to cancel a policy retroactively for non‐payment of premiums or cost‐sharing is important.

Section 2719A

The interim final regulations provide that, in the case of out of network emergency care, a health plan may not impose

any administrative requirement or limitation on coverage that is more restrictive than the requirements or limitations

that apply to emergency services received from in‐network providers.  We believe that this proposal may need to be

amended for the following reasons:

 Network group and individual products often serve limited geographic areas.  In the case of out of network

emergency care, we require a member or someone on the member’s behalf to contact the health plan when a

member can be transferred to a participating provider.  In general, this is when the person has been stabilized, is

no longer in an emergent situation, and when transfer does not risk significant and unreasonable risk to the
patient. Further, coverage through an out of network provider is not a covered benefit when the emergency has

ceased.  Thus, notification and the need for a transfer are important and are clearly spelled out in our contracts

with groups and individuals.  We believe this practice is critical to cost control and should not be deemed an

additional administrative requirement because the emergency situation has concluded.

 Because network plans do not have relationships with providers in and outside of a plan’s service area, we make

it incumbent on the covered person to furnish, at the member’s expense if there is one, complete medical and

administrative records and itemized bills for out of network emergency care that was undertaken.  Again, we do

not believe this should be deemed an additional administrative requirement because the emergency situation

has concluded and it is the member’s responsibility to facilitate payment for such non‐network providers.  We

believe it was not the intent of PPACA to bar this type of requirement on the individual, especially since balance

billing is permitted.  Indeed, the coordination by the member will help ensure a quick resolution to outstanding

claims by the out of network providers and appropriate balance billing, if any.