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[Federal Register Volume 77, Number 30 (Tuesday, February 14, 2012)]
[Rules and Regulations]
[Pages 8706-8709]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3230]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

DEPARTMENT OF HEALTH AND HUMAN SERVICES

[CMS-9982-FN]

45 CFR Part 147

Summary of Benefits and Coverage and Uniform Glossary--Templates, 
Instructions, and Related Materials; and Guidance for Compliance

AGENCIES: Internal Revenue Service, Department of the Treasury; 
Employee Benefits Security Administration, Department of Labor; Centers 
for Medicare & Medicaid Services, Department of Health and Human 
Services.

ACTION: Guidance for compliance and notice of availability of 
templates, instructions, and related materials.

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SUMMARY: The Departments of Health and Human Services, Labor, and the 
Treasury are simultaneously publishing in the Federal Register this 
guidance document and final regulations under the Patient Protection 
and Affordable Care Act to implement the disclosure for group health 
plans and health insurance issuers of the summary of benefits and 
coverage (SBC), notice of modifications, and the uniform glossary. This 
guidance document provides guidance for compliance with section 2715 of 
the Public Health Service Act and the Departments' final regulations, 
including a template for the SBC, instructions, sample language, a 
guide for coverage example calculations, and the uniform glossary.

FOR FURTHER INFORMATION CONTACT: Amy Turner or Heather Raeburn, 
Employee Benefits Security Administration, Department of Labor, at 
(202) 693-8335; Karen Levin, Internal Revenue Service, Department of 
the Treasury, at (202) 622-6080; Jennifer Libster or Padma Shah, 
Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, at (301) 492-4222.
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (http://www.dol.gov/ebsa). In addition, information from HHS on private health 
insurance for consumers can be found on the Centers for Medicare & 
Medicaid Services (CMS) Web site (http://www.cms.hhs.gov/HealthInsReformforConsume/01_Overview.asp) and information on health 
reform can be found at http://www.healthcare.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction

    The Departments of Health and Human Services (HHS), Labor, and the 
Treasury (the Departments) are taking a phased approach to issuing 
regulations and guidance implementing the revised Public Health Service 
Act (PHS Act) sections 2701 through 2719A and related provisions of the 
Patient Protection and Affordable Care Act (Affordable Care Act).\1\ 
Section 2715 of the PHS Act directs the Departments to develop 
standards for use by a group health plan and a health insurance issuer 
in compiling and providing a summary of benefits and coverage (SBC) 
that ``accurately describes the benefits and coverage under the 
applicable plan or coverage.'' Section 2715 of the PHS Act also directs 
the Departments to provide for the development of ``standards for the 
definitions of terms used in health insurance coverage.'' The statute 
directs the Departments, in developing such standards, to ``consult 
with the National Association of Insurance Commissioners'' (referred to 
in this guidance document as the ``NAIC''), ``a working group composed 
of representatives of health insurance-related consumer advocacy 
organizations, health insurance issuers, health care professionals, 
patient advocates including those representing individuals with limited 
English proficiency, and other qualified individuals.''
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    \1\ The Affordable Care Act also adds section 715(a)(1) to the 
Employee Retirement Income Security Act (ERISA) and section 
9815(a)(1) to the Internal Revenue Code (the Code) to incorporate 
the provisions of part A of title XXVII of the PHS Act into ERISA 
and the Code, and make them applicable to group health plans, and 
health insurance issuers providing health insurance coverage in 
connection with group health plans.
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    After consultation with the NAIC,\2\ on August 22, 2011, the 
Departments published proposed regulations to implement PHS Act section 
2715,\3\ as well as a companion document that proposed an SBC template 
(with instructions, sample language, and a guide for coverage examples 
calculations to be used in completing the SBC template) and a uniform 
glossary.\4\ HHS also published on its Web site (at http://cciio.cms.gov, and accessible via hyperlink from www.dol.gov/ebsa/healthreform) the coding and pricing information necessary to perform 
calculations for the three proposed coverage examples. Comments were 
solicited on these materials.
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    \2\ A summary of the NAIC's work can be found at 76 FR 52476-77, 
August 22, 2011.
    \3\ 76 FR 52442, August 22, 2011.
    \4\ 76 FR 52475, August 22, 2011.
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    Final regulations under PHS Act section 2715 are being published 
elsewhere in this issue of the Federal Register (final regulations). 
This guidance document provides guidance for compliance with PHS Act 
section 2715 and the final regulations, including information on how to 
obtain the SBC template (with instructions and sample language for 
completing the template) and the uniform glossary. These items are 
displayed at www.dol.gov/ebsa/healthreform and www.cciio.cms.gov.

[[Page 8707]]

II. Guidance

A. Documents Authorized for the First Year of Applicability

    This guidance document authorizes an SBC template (with 
instructions, samples, and a guide for coverage example calculations to 
be used in completing the SBC template), and the uniform glossary, to 
comply with the disclosure requirements of PHS Act section 2715, 
pursuant to paragraph (a)(3) of the final regulations.\5\ These 
documents are authorized with respect to group health plan coverage and 
group and individual health insurance coverage for SBCs and uniform 
glossaries provided with respect to coverage beginning before January 
1, 2014 (referred to in this guidance document as ``the first year of 
applicability'').
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    \5\ This guidance makes references to various paragraphs of the 
final regulations. The final regulations are codified at 26 CFR 
54.9815-2715, 29 CFR 2590.715-2715, and 45 CFR 147.200. However, for 
simplicity, this guidance refers only to the relevant paragraph of 
the three regulations instead of using three parallel, full 
citations.
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    The materials described in this guidance document are authorized by 
the Departments for the first year of applicability only; the 
Departments intend to issue updated materials for later years. 
Specifically, these documents do not provide language to comply with 
paragraph (a)(2)(i)(G) of the final regulations, requiring a statement 
in the SBC about whether a plan or coverage provides minimum essential 
coverage and whether the plan's or coverage's share of the total 
allowed costs of benefits provided under the plan or coverage meets 
applicable minimum value requirements, because the final regulations do 
not require this material to be included in the first year of 
applicability. In addition, the Departments recognize that, beginning 
January 1, 2014, new market reforms \6\ will take effect, which are 
expected to prompt additional changes to the SBC (for example, annual 
limits will no longer be permissible).
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    \6\ See Subpart I of Part A of Title XXVII of the PHS Act.
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    Finally, the documents described in this guidance document contain 
information for two coverage examples--having a baby (normal delivery) 
and managing type 2 diabetes (routine maintenance of a well-controlled 
condition). This approach differs from the documents published in 
connection with the proposed regulations, which included three coverage 
examples (relating to having a baby (normal delivery), breast cancer, 
and diabetes). The Departments received many comments asserting that 
the necessary calculations for the coverage examples would be costly 
and complicated. Commenters asked the Departments to add flexibility in 
use of the coverage examples and expressed concerns about misleading 
consumers about the costs of the health care services associated with 
the coverage examples. The Departments also received a number of 
comments that expressed concern about the high variability in treatment 
plans for patients with breast cancer and diabetes. Therefore, the 
Departments have modified the coverage examples requirements and will 
continue to evaluate these coverage examples, as well as others 
suggested by commenters.\7\ Consumer testing performed on behalf of the 
NAIC \8\ demonstrated that the coverage examples facilitated 
individuals' understanding of the benefits and limitations of a plan or 
policy and helped them make more informed choices about their options. 
Such testing also showed that individuals were able to comprehend that 
the examples were only illustrative. Additionally, while some plans 
provide useful coverage calculators to their enrollees to help them 
make health care decisions, they are not uniform across all plans and 
most are not available to shoppers, making it difficult for consumers 
to make coverage comparisons. Future guidance will add coverage 
examples and make other changes (including those described above) for 
SBCs required to be provided after the first year of applicability.
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    \7\ Examples suggested by comments included prostate cancer, 
colorectal cancer, hypertension, heart attack, stroke, major 
depression, and chronic kidney disease, among others.
    \8\ A summary of the focus group testing done by America's 
Health Insurance Plans is available at: http://www.naic.org/documents/committees_b_consumer_information_101012_ahip_focus_group_summary.pdf, a summary of the focus group testing done 
by Consumers Union on the coverage examples is available at: http://prescriptionforchange.org/wordpress/wp-content/uploads/2011/08/A_New_Way_of_Comparing_Health_Insurance.pdf.
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    In addition to the materials described in this guidance document, 
HHS is providing (at http://cciio.cms.gov, also accessible via 
hyperlink from www.dol.gov/ebsa/healthreform) the specific information 
necessary to simulate benefits covered under the plan or policy for the 
coverage example portion of the SBC (including relevant medical items 
and services, dates of service, billing codes, and allowed charges), 
pursuant to paragraph (a)(2)(ii) of the final regulations. This 
information must be used for SBCs provided during the first year of 
applicability. Future guidance will make changes to this information 
for SBCs required to be provided after the first year of applicability.

B. Appearance

    The Departments' 2011 proposed regulations would have required that 
a group health plan and a health insurance issuer provide an SBC as a 
stand-alone document. This requirement was eliminated with respect to 
group health plan coverage in the final regulations (as discussed more 
fully in the preamble to the final regulations). Instead, the final 
regulations provide for the Secretaries to issue guidance for the form 
of the SBC. Consistent with the authority set forth in paragraph (a)(3) 
of the final regulations, with respect to group health plan coverage, 
the Departments authorize the SBC to be provided either as a stand-
alone document or in combination with other summary materials (for 
example, a summary plan description), if the SBC information is intact 
and prominently displayed at the beginning of the materials (such as 
immediately after the Table of Contents in a summary plan description). 
For health insurance coverage provided in the individual market, the 
SBC must be provided as a stand-alone document. The Departments will 
review and monitor SBCs provided as part of other plan materials and 
may modify their guidance as to appearance for SBCs required to be 
provided after the first year of applicability in response to plan and 
issuer practices.
    The NAIC stated in its December 2010 transmittal letter that the 
NAIC working group intentionally designed the layout and color of the 
SBC template. The Departments noted in the document published 
contemporaneously with the proposed regulations, however, that color 
printing may be costly and proposed that a plan or issuer would be 
compliant with the requirement to provide the SBC if it used either the 
color version as recommended by the NAIC or the grayscale version. The 
Departments are retaining that approach in this guidance document, and 
will allow the SBC to be provided either in color or grayscale.

C. Special Rule

    For group health plans and health insurance issuers in the group 
and individual markets, use of the full SBC template authorized by this 
guidance document is required, including for the first year of 
applicability. To the extent a plan's terms that are required to be 
described in the SBC template cannot

[[Page 8708]]

reasonably be described in a manner consistent with the template and 
instructions, the plan or issuer must accurately describe the relevant 
plan terms while using its best efforts to do so in a manner that is 
still consistent with the instructions and template format as 
reasonably possible. Such situations may occur, for example, if a plan 
provides a different structure for provider network tiers or drug tiers 
than is contemplated by the template and these instructions, if a plan 
provides different benefits based on facility type (such as hospital 
inpatient versus non-hospital inpatient), in a case where a plan is 
denoting the effects of a related health flexible spending arrangement 
or a health reimbursement arrangement, or if a plan provides different 
cost sharing based on participation in a wellness program. The 
Departments intend to update the template instructions for SBCs 
required to be provided after the first year of applicability. Whether 
the need for a special rule becomes moot in light of additional 
instructions, or whether the need continues to exist, will be addressed 
in future guidance.

D. Language

    PHS Act section 2715 requires group health plans and health 
insurance issuers to provide the SBC in a culturally and linguistically 
appropriate manner. Paragraph (a)(5) of the final regulations provides 
that a plan or issuer satisfies this requirement by following the rules 
for providing claims and appeals notices in a culturally and 
linguistically appropriate manner under PHS Act section 2719, and 
paragraph (e) of its implementing regulations, as applied to the 
SBC.\9\ Under those rules, plans and issuers must provide notices in a 
culturally and linguistically appropriate manner when 10 percent or 
more of the population residing in the claimant's county are literate 
only in the same non-English language, as determined based on American 
Community Survey data published by the United States Census Bureau. At 
the time of publication of this guidance document, 255 U.S. counties 
(78 of which are in Puerto Rico) meet this threshold. The overwhelming 
majority of these are Spanish; however, Chinese, Tagalog, and Navajo 
are present in a few counties, affecting five states (specifically, 
Alaska, Arizona, California, New Mexico, and Utah).\10\
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    \9\ See 75 FR 43330 (July 23, 2010), as amended by 76 FR 37208 
(June 24, 2011).
    \10\ The Departments publish guidance on their Web site with a 
list of the counties that meet this threshold. This information is 
available at www.dol.gov/ebsa/healthreform and http://cciio.cms.gov/.
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    To help plans and issuers meet the language requirements of 
paragraph (a)(5) of the final regulations, as requested by commenters, 
HHS will provide (at http://cciio.cms.gov, also accessible via 
hyperlink from www.dol.gov/ebsa/healthreform) written translations of 
the SBC template, sample language, and uniform glossary in Spanish, 
Tagalog, Chinese, and Navajo. HHS may also make these materials 
available in other languages to facilitate voluntary distribution of 
SBCs to other individuals with limited English proficiency.

III. Templates, Instructions, and Related Materials

    As stated above, this guidance document authorizes documents to 
comply with the disclosure requirements of PHS Act section 2715, 
pursuant to paragraph (a)(3) of the final regulations. The Departments 
received comments in response to the previous guidance and proposed 
templates, instructions, and related materials.\11\ These comments 
addressed specific issues related to the SBC template, instructions, 
samples, and the uniform glossary. After consideration of these 
comments, the Departments are announcing the availability of the 
following documents, available at http://cciio.cms.gov and www.dol.gov/ebsa/healthreform ebsa/healthreform:
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    \11\ 76 FR 52475 (August 22, 2011).
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    1. SBC template. The document is available in modifiable format (MS 
Word), as suggested by commenters for ease of use.
    2. Sample completed SBC. This document was completed using 
information for sample health coverage and provides a general 
illustration of a completed SBC.
    3. Instructions. For assistance in completing the SBC template, 
separate instructions are available for group health coverage and for 
individual health insurance coverage.
    4. Why This Matters language. The SBC instructions include language 
that must be used when completing the ``Why This Matters'' column on 
the first page of the SBC template. Two language options are provided 
depending on whether the answer in the applicable row is ``yes'' or 
``no'', according to the terms of the plan or coverage.
    5. Coverage examples. This guidance document, together with 
information provided in Microsoft Excel format by HHS at http://cciio.cms.gov and accessible via hyperlink from www.dol.gov/ebsa/healthreform), provides all the information necessary to perform the 
coverage example calculations.
    6. Uniform glossary. The uniform glossary of health coverage and 
medical terms may not be modified by plans or issuers.
    In revising the proposed template, instructions, and other 
materials, the Departments made several changes that were suggested in 
comments. Some of these changes were made at the request of self-
insured plans, which commented that terminology in the SBC template was 
appropriate only for insured coverage. For example, terms such as 
``policy'' and ``insurer'' have been changed to ``coverage'' and 
``plan'', respectively. In addition, because rights to continue 
coverage vary based on many factors (including plan size, whether the 
plan is insured or self-insured, and State law), the description of 
rights to continue coverage has been modified to reference Federal and 
State protections more generally and include contact information for 
questions. Additionally, the data element in the proposed template 
labeled as ``Policy Period'' has been revised to be labeled as 
``Coverage Period.'' The instructions for this data element have also 
been updated, to allow for situations in which there is no known end 
date to the coverage period when the SBC is prepared, and for 
situations in which an updated SBC is being provided to satisfy the 
requirements of paragraph (b) of the final regulations, relating to 
notice of a modification. The Departments also revised the disclaimer 
language at the beginning of the uniform glossary, to make clear that 
the glossary is intended to be educational in nature and that the 
definitions contained in the glossary may not be the same as the 
definitions used by a particular plan or issuer.
    Certain changes were also made to the SBC template and instructions 
for completing the template to conform to changes made in the final 
regulations. The final regulations eliminated premiums from the 
required content for the SBC document. Therefore, the row for 
communicating premium information has been removed from the SBC 
template document and the instructions for completing this section have 
also been removed. Additionally, language was added to the instructions 
to address expatriate plans and policies. Specifically, the new 
instruction allows an expatriate plan or policy to include a reference 
on the SBC template in the ``Other Covered Services'' box regarding 
where to find information about coverage provided outside of the United 
States.
    Additional flexibility was also added to the instructions for 
completing the

[[Page 8709]]

SBC template. The instructions specify that, to the extent a plan's 
terms that are required to be described in the SBC template cannot 
reasonably be described in a manner consistent with the template and 
instructions, the plan or issuer must accurately describe the relevant 
plan terms while using its best efforts to do so in a manner that is 
still as consistent with the instructions and template format as 
reasonably possible.
    The Departments also reduced the number of coverage examples 
required for SBCs issued during the first year of applicability to two 
examples, having a baby (normal delivery) and managing type 2 diabetes 
(routine maintenance of a well-controlled condition). The breast cancer 
example has been removed from the template and HHS will be providing 
treatment and reimbursement information only to complete the coverage 
examples relating to having a baby and managing diabetes. Additionally, 
the Departments modified some of the language to clarify that the 
coverage examples are not intended to demonstrate costs for an actual, 
specific person (for example the ``You Pay'' language was changed to 
``Patient Pays'').
    Modifications were also made to the benefits scenarios. First, the 
underlying benefits scenarios were modified to more accurately reflect 
current accepted standards of care. For example, the proposed maternity 
scenario included two ultrasounds during the early stages of pregnancy, 
which is not necessary for a routine pregnancy, so the final scenario 
includes one ultrasound at 20 weeks. In addition, the final maternity 
scenario no longer includes some services that are clinically 
appropriate, but not clinically required, such as circumcision. In the 
proposed diabetes scenario, the metformin dosage was 1000 mg twice 
daily, which may not be appropriate for well-controlled type 2 
diabetes. The final scenario now states that metformin dosage is 500 mg 
twice daily. In addition, the proposed diabetes scenario included two 
podiatrist office visits, which has been reduced to one annual visit, 
which is clinically appropriate for well-controlled type 2 diabetes. 
The pricing data in both scenarios (allowed amounts) has been refined 
to more closely reflect reimbursement rates in the private health 
insurance markets. The benefits scenario has also been updated to 
reflect correct coding practices, and HHS is now providing both ICD-9 
and ICD-10 codes for the maternity scenario, in anticipation of the 
October 1, 2013 transition to ICD-10.

IV. Paperwork Reduction Act

    According to the Paperwork Reduction Act of 1995 (Pub. L. 104-13) 
(PRA), no persons are required to respond to a collection of 
information unless such collection displays a valid OMB control number. 
The Departments note that a Federal agency cannot conduct or sponsor a 
collection of information unless it is approved by OMB under the PRA, 
and displays a currently valid OMB control number, and the public is 
not required to respond to a collection of information unless it 
displays a currently valid OMB control number. See 44 U.S.C. 3507. 
Also, notwithstanding any other provisions of law, no person shall be 
subject to penalty for failing to comply with a collection of 
information if the collection of information does not display a 
currently valid OMB control number. See 44 U.S.C. 3512.
    This document relates to the information collection request (ICR) 
contained in final regulations titled ``Summary of Benefits and 
Coverage and the Uniform Glossary,'' which is published elsewhere in 
this issue of the Federal Register. For a discussion of the hour and 
cost burden associated with the ICR, please see those final 
regulations.

Steven T. Miller,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
    Signed this 7th day of February 2012.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: February 6, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: February 6, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-3230 Filed 2-9-12; 11:15 am]
BILLING CODE 4830-01-P; 4120-01-P
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