62410 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

1 26 CFR 54.9811–1, 29 CFR 2590.711, 45 CFR 

146.130. 

2 45 CFR 148.170. 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[TD 9427] 

RIN 1545–BG82 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AA63 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

45 CFR Parts 144, 146, and 148 

RIN 0938–AI17 

Final Rules for Group Health Plans and 

Health Insurance Issuers Under the 

Newborns’ and Mothers’ Health 

Protection Act 

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: Final rules. 

SUMMARY: This document contains final 

rules for group health plans and health 

insurance issuers concerning hospital 

lengths of stay for mothers and 

newborns following childbirth, 

pursuant to the Newborns’ and Mothers’ 

Health Protection Act of 1996 and the 

Taxpayer Relief Act of 1997. 

DATES: Effective Date: These final 

regulations are effective December 19, 

2008. 

Applicability Dates: Group market 

rules. These final regulations for the 

group market apply to group health 

plans and group health insurance 

issuers for plan years beginning on or 

after January 1, 2009. 

Individual market rules. These final 

regulations for the individual market 

apply with respect to health insurance 

coverage offered, sold, issued, renewed, 

in effect, or operated in the individual 

market on or after January 1, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Amy Turner or Beth Baum, Employee 

Benefits Security Administration, 

Department of Labor, at (202) 693–8335; 

Russ Weinheimer, Internal Revenue 

Service, Department of the Treasury, at 

(202) 622–6080; or Adam Shaw, Centers 

for Medicare & Medicaid Services, 

Department of Health and Human 

Services, at (877) 267–2323 extension 

61091. 

Customer service information: 

Individuals interested in obtaining 

copies of Department of Labor 

publications concerning health care 

laws may request copies by calling the 

EBSA Toll-Free Hotline at 1–866–444– 

EBSA (3272) or may request a copy of 

CMS’s publication entitled ‘‘Protecting 

Your Health Insurance Coverage’’ by 

calling 1–800–633–4227. These 

regulations as well as other information 

on the Newborns’ and Mothers’ Health 

Protection Act and other health care 

laws are also available on the 

Department of Labor’s Web site (http:// 

www.dol.gov/ebsa), including the 

interactive web pages, Health Elaws. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Newborns’ and Mothers’ Health 

Protection Act of 1996 (Newborns’ Act), 

Public Law 104–204, was enacted on 

September 26, 1996. The rules 

contained in this document implement 

changes made to the Employee 

Retirement Income Security Act of 1974 

(ERISA) and the Public Health Service 

Act (PHS Act) made by the Newborns’ 

Act, and parallel changes to the Internal 

Revenue Code of 1986 (Code) enacted as 

part of the Taxpayer Relief Act of 1997 

(TRA ’97). The Newborns’ Act was 

enacted to provide protections for 

mothers and their newborn children 

with regard to hospital lengths of stay 

following childbirth. Interim final rules 

implementing the group and individual 

market provisions of the Newborns’ Act 

were published in the Federal Register 

on October 27, 1998 (63 FR 57546) (the 

interim final rules). 

These regulations being published 

today in the Federal Register finalize 

the interim final rules. The final 

regulations implementing the group 

market provisions of the Newborns’ Act 

are issued jointly by the Secretaries of 

the Treasury, Labor, and HHS.1 The 

individual market final regulations are 

issued solely by HHS.2

II. Overview of the Regulations 

Section 9811 of the Code, section 711 

of ERISA, and sections 2704 and 2751 

of the PHS Act (the Newborns’ Act 

provisions) provide a general rule under 

which a group health plan and a health 

insurance issuer may not restrict 

mothers’ and newborns’ benefits for a 

hospital length of stay in connection 

with childbirth to less than 48 hours 

following a vaginal delivery or 96 hours 

following a delivery by cesarean section. 

The interim final rule— 

• Provided that the attending 

provider makes the determination that 

an admission is in connection with 

childbirth; 

• Determined when the hospital stay 

begins for purposes of application of the 

general rule; 

• Provided an exception to the 48- 

hour (or 96-hour) general rule if the 

attending provider decides, in 

consultation with the mother, to 

discharge the mother or her newborn 

earlier; 

• Clarified the application of 

authorization and precertification 

requirements with respect to the 48- 

hour (or 96-hour) stay; 

• Explained the application of benefit 

restrictions and cost-sharing rules with 

respect to the 48-hour (or 96-hour) stay; 

• Clarified the prohibitions with 

respect to a plan or issuer offering 

mothers incentives or disincentives to 

encourage less than the 48-hour (or 96- 

hour) stay; 

• Clarified the prohibitions against 

incentives and penalties with respect to 

attending providers; and 

• Included the statutory notice 

provisions under ERISA and the PHS 

Act. In general, these final regulations 

do not change the interim final rules. 

However, the text of these final 

regulations incorporates a clarifying 

statement from the preamble of the 

interim final rules that the definition of 

attending provider does not include a 

plan, hospital, managed care 

organization, or other issuer. The text 

also makes a small clarification with 

respect to state law applicability. 

In addition, these final regulations 

make minor clarifications to the notice 

requirements for nonfederal 

governmental plans. The interim final 

rules specified that the notice of postchildbirth hospitalization benefits must 

be included in the plan document that 

described plan benefits to participants 

and beneficiaries. These final 

regulations specify that any notice a 

nonfederal governmental plan must 

provide under these regulations can be 

included either in the plan document 

that describes benefits, or in the type of 

document the plan generally uses to 

inform participants and beneficiaries of 

plan benefit changes. These final 

regulations also specify that any time a 

plan distributes one or both of these 

documents after providing the initial 

notice, the applicable statement must 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62411 

3Broad classes of examples include fee-forservice, capitation, productivity-based salary, 

incentive contracting, blended systems, prospective 

versus post-service payment, etc. See e.g., Theory 

and Practice in the Design of Physician Payment 

Incentives, James C. Robinson (University of 

California, Berkley), The Milbank Quarterly, Vol. 

79, No. 2, 2001; Regulation of Managed Care 

Incentive Payments to Physicians, Stephen Latham 

(Boston University School of Law), 22 Am. J.L. & 

Med. 399; Blended Payment Methods in Physician 

Organizations Under Managed Care, James C. 

Robinson, JAMA 1999;282:1258–1263; The 

Alignment and Blending of Payment Incentives 

Within Physician Organizations, JC Robinson, SM 

Shortell, R Li, LP Casalino, T Rundall, Health 

Services Research Vol 39, Issue 5, pages 1589–1606, 

Oct. 2004. 

appear in one or both of these 

documents. 

Hospital Length of Stay 

The interim final rules and these final 

regulations provide that when a delivery 

occurs in the hospital, the stay begins at 

the time of delivery (or, in the case of 

multiple births, at the time of the last 

delivery) rather than at the time of 

admission or onset of labor. Also, the 

interim final rules and these final 

regulations provide that when a delivery 

occurs outside of the hospital, the stay 

begins at the time the mother or 

newborn is admitted (rather than at the 

time of delivery). 

Some comments expressed concern 

that this rule somehow required birthing 

centers or other non-hospital facilities to 

extend the right to stay to more than 24 

hours. These comments noted that such 

extended stays may violate local 

regulations or otherwise conflict with 

the operations of such facilities. The 

statute and these final regulations do 

not require hospitals or other facilities 

to provide particular lengths of stay, but 

instead require group health plans and 

health insurance issuers to provide 

benefits for particular hospital lengths 

of stay. 

A comment recommended that if a 

delivery was planned for outside of a 

hospital, any following admission in 

response to complications resulting 

from that delivery should be excluded 

from the provisions providing for 

particular lengths of stay. These final 

regulations do not distinguish between 

a delivery that was planned for outside 

of the hospital and other deliveries 

occurring outside of a hospital. 

Definition of Attending Provider 

The mandatory coverage period 

provisions are not violated if the 

attending provider, in consultation with 

the mother, decides to discharge the 

mother or newborn earlier. Under the 

interim final rules and these final 

regulations, the attending provider is 

defined by a functional analysis of state 

licensure rules and the actual 

performance of care. Under this 

definition, the attending provider is 

restricted to an individual who is 

licensed under applicable state law to 

provide maternal or pediatric care and 

who is directly responsible for 

providing such care to a mother or 

newborn child. While the preamble to 

the interim final rules noted that this 

definition could include a nurse 

midwife or physician assistant, the 

regulation itself does not provide a list 

of titles or positions that qualify as 

attending providers. 

Some comments requested that 

additional titles, such as pediatric nurse 

practitioners, or nurse practitioners, be 

specifically mentioned in the definition. 

While positions with these titles may 

meet the definition in many cases, as 

noted above, the language of the 

regulation takes a functional approach 

and does not provide a list of titles or 

positions that qualify as attending 

providers. This functional approach is 

more useful in addressing who the 

attending provider is on an ongoing 

basis, as specific position titles and 

responsibilities may vary from location 

to location as well as over time. 

It was also suggested that the text of 

the final regulations incorporate a 

clarifying statement from the preamble 

of the interim final rules that the 

definition of attending provider does 

not include a plan, hospital, managed 

care organization, or other issuer. These 

final regulations adopt this suggestion. 

Compensation of Attending Provider 

Several comments addressed the 

provisions in the interim final rules that 

relate to the compensation of physicians 

and other attending providers. These 

provisions prohibit plans and issuers 

from penalizing attending providers 

who provide care in accordance with 

the regulations, and prohibit plans and 

issuers from inducing attending 

providers to provide care in a manner 

that is inconsistent with the regulations. 

At the same time, the statute specifies 

that plans and issuers are still free to 

negotiate with attending providers the 

level and type of compensation for care 

furnished in accordance with the 

regulations. 

The comments requested greater 

specificity in the final regulations for 

distinguishing between the types of 

compensation arrangements that are 

permissible under the negotiation 

provision and those that are 

impermissible under the prohibitions 

against penalties and inducements. One 

comment suggested that it is clear that 

a bonus arrangement for obstetricians 

and gynecologists contingent on the 

percentage of discharges within 24 

hours would not be permitted. The 

comment requested confirmation that 

arrangements with a more general focus 

would be permitted, such as a global 

payment for prenatal care and 

childbirth, or a bonus for a multispecialty group including obstetricians 

and gynecologists based on the 

utilization for all patients served by the 

group. Another comment expressed a 

concern about whether capitated 

arrangements are consistent with the 

hospital length-of-stay requirements. 

The Departments devoted 

considerable resources over a sustained 

period of time to develop rules that 

provide greater specificity for 

distinguishing between negotiated 

compensation arrangements that would 

give attending providers an incentive to 

deliver health care services efficiently 

and arrangements that could give 

providers an incentive to discharge 

patients in contravention of the statute 

and regulations. The great variety, 

complexity, and mutability of such 

arrangements 3 would have required 

extensive rules that at best were likely 

to impose heavy administrative costs 

and yet were still of only marginal value 

in clarifying what arrangements would 

be permissible. For this reason, the rules 

on compensation arrangements for 

attending providers are adopted 

unchanged from the interim final rules. 

The final regulations do not attempt 

to provide guidance on this issue 

through examples. Certainly the bonus 

arrangement described in one comment, 

based on the percentage of discharges 

within 24 hours, violates the prohibition 

against providing inducements for early 

discharge. Such an example is not 

included in the final regulations to 

avoid the inference that anything less 

blatant would be permissible. Examples 

of less blatant arrangements could be 

similarly misleading, whether the 

conclusion was that the arrangement 

was permissible or impermissible, since 

there are bound to be differences 

between arrangements that would have 

been described in the regulations and 

any actual arrangement for an attending 

provider, and in some cases even minor 

differences could change the result. 

Authorization and Precertification 

The interim final rules and these final 

regulations provide, under paragraph 

(a), that a group health plan or a health 

insurance issuer may not require a 

physician or other health care provider 

to obtain authorization from the plan or 

issuer to prescribe a hospital length of 

stay that is subject to the general rule. 

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62412 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

4 In order to avoid imposing an impermissible 

preexisting condition exclusion, plans and group 

health insurance issuers that require individuals to 

notify the plan or issuer of pregnancy within a 

certain amount of time (for example, within the first 

trimester) must waive or modify the notice 

requirement for individuals who enroll in the plan 

after the time notice was required. This also applies 

to individual market issuers with respect to 

federally eligible individuals they are required to 

enroll. 

Under paragraph (b) of the interim 

final rules and these final regulations, a 

plan or issuer may not restrict benefits 

for part of a stay that is subject to the 

general rule in a way that is less 

favorable than a prior portion of the 

stay. An example in the interim final 

rules and these final regulations 

illustrates that a plan or issuer is 

precluded from requiring a covered 

individual to obtain precertification for 

any portion of a hospital stay that is 

subject to the general rule if 

precertification is not required for any 

preceding portion of the stay. However, 

the interim final rules do not prevent a 

plan or issuer from requiring 

precertification for any portion of a stay 

after 48 hours (or 96 hours), or from 

requiring precertification for an entire 

stay. 

Under paragraph (c) of the interim 

final rules and these final regulations, a 

plan or issuer may not increase an 

individual’s coinsurance for any later 

portion of a 48-hour (or 96-hour) 

hospital stay. An example in the interim 

final rules and these final regulations 

illustrates that plans and issuers may 

vary cost-sharing in certain 

circumstances, provided the costsharing rate is consistent throughout the 

48-hour (or 96-hour) hospital length of 

stay. 

One comment asked whether less 

favorable cost sharing for the 48-hour 

(or 96-hour) stay can be applied to 

covered individuals who fail to give 

advance notice or notice upon 

admission for the services or providers 

related to the stay, if such a penalty 

applies in other hospitalization 

situations. This issue was addressed in 

Example 2 of paragraph (c)(3) of the 

interim final rules. This example is 

repeated in the final regulations and 

illustrates that a plan may require 

advance notice for services or providers 

related to hospital length of stay in 

connection with childbirth, in order for 

a covered individual to obtain more 

favorable cost sharing under the plan or 

coverage. Such requirements may not be 

used to deny an individual benefits for 

any portion of the 48-hour (or 96-hour) 

stay based on a determination of 

medical necessity or appropriateness. 

Any variance in cost-sharing related to 

compliance with a plan’s or an issuer’s 

advance notice requirements must be 

applied consistently throughout the 48- 

hour (or 96-hour) stay. Under the 

principles set forth in the rule and 

illustrated in this example, a plan or 

issuer could generally apply less 

favorable cost sharing towards the 

hospital length of stay in connection 

with childbirth of an individual who 

failed to satisfy the plan’s advance 

notice requirements, to the extent 

permissible under the preexisting 

condition rules in 26 CFR 54.9801–3, 29 

CFR 2590.701–3, and 45 CFR 146.111 

and 148.120.4

Notice Requirements under ERISA and 

the PHS Act 

This section of the final regulations 

addresses the Newborns’ Act notice 

requirements under ERISA and the PHS 

Act. The interim final rules, and these 

final regulations, contain different 

notice provisions for ERISA-covered 

group health plans, nonfederal 

governmental plans, and health 

insurance issuers in the individual 

market. ERISA-covered group health 

plans are required to comply with the 

ERISA notice regulations, whether 

insured or self-insured. Nonfederal 

governmental plans and health 

insurance issuers in the individual 

market are required to comply with the 

PHS Act notice regulations. Because 

there are fundamental differences 

between the types of entities regulated 

under ERISA as compared to the PHS 

Act, and in the structure of the two acts, 

the notice requirements in the ERISA 

regulations and PHS Act regulations 

differ. 

Notice Requirements under ERISA. 

The interim final rules and these final 

regulations require group health plans 

that are subject to ERISA to comply with 

summary plan description (SPD) 

disclosure requirements at 29 CFR 

2520.102–3(u). The SPD rules generally 

require that participants and 

beneficiaries in a group health plan be 

furnished an SPD to apprise them of 

their rights and obligations. The rules 

also prescribe the content of the SPD 

and the manner and timing in which 

participants and beneficiaries are to be 

notified of any material modification to 

the terms of the plan or any change in 

the information required to be included 

in the SPD. 

In November 2000, the Department of 

Labor finalized the SPD content 

regulation (65 FR 70241) requiring that 

all group health plans (including 

insured plans not subject to the federal 

Newborns’ Act) provide language in the 

SPD that describes the federal or state 

law requirements applicable to the plan 

or any health insurance coverage offered 

under the plan relating to hospital 

lengths of stay in connection with 

childbirth for the mother or newborn 

child. If federal law applies in some 

areas in which the plan operates and 

state law applies in other areas, the SPD 

should describe the different areas and 

the federal or state law requirements 

applicable in each. Model language for 

plans subject to the federal Newborns’ 

Act’s requirements is included in the 

SPD content regulation. This change 

became applicable as of the first day of 

the second plan year beginning on or 

after January 22, 2001. 

Some comments asked for 

clarification about whether the notice 

can be provided through electronic 

media, as an alternative to traditional 

paper disclosure. Under ERISA, the 

notice can be provided through 

electronic media if the plan complies 

with ERISA’s electronic disclosure rules 

in 29 CFR 2520.104b–1. 

Some comments requested that the 

rules require plans to provide 

information to patients and providers 

regarding who has legal oversight with 

respect to the Newborns’ Act and who 

to contact in the event of a violation. 

However, this concern is already 

addressed by current regulation. Under 

29 CFR 2520.102–3(t)(1) of the SPD 

content rules, ERISA plans are required 

to provide a statement of ERISA rights 

in the SPD. Among other things, this 

provision requires ERISA-covered plans 

to provide information on the 

enforcement of a participant or 

beneficiary’s rights and who to contact 

if there are any questions about the 

plan. 

Notice Requirements under the PHS 

Act. Nonfederal governmental plans. 

The Newborns’ Act requires nonfederal 

governmental plans to comply with the 

Newborns’ Act notice requirements 

under section 711(d) of ERISA as if 

section 711(d) applied to such plans. 

The interim final rules and these final 

regulations require plans that are subject 

to the federal Newborns’ Act 

requirements to provide a notice with 

specific language describing the federal 

requirements. Under the interim final 

rules and these final regulations, if 

federal law applies in some areas in 

which the plan operates and state law 

applies in others, the plan must provide 

the appropriate notice to each 

participant and beneficiary who is 

covered by federal law. 

Several comments on the interim final 

rules objected that specific language was 

required for the disclosure statement, 

and suggested that the regulation 

instead should have provided 

guidelines for plans to base their own 

language on (such as language that 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62413 

5HHS has the responsibility to enforce the federal 

Newborns’ Act with regard to issuers in states that 

do not have one of the three types of state laws 

described in the Newborns’ Act. As of the 

publication of these final regulations, the only state 

in which HHS is enforcing the Newborns’ Act with 

respect to issuers is Wisconsin. 

comports with the Department of 

Labor’s sample language). However, 

requiring specific language ensures the 

substantive adequacy of the notices. 

Additionally, because many plans 

presumably have already incorporated 

that mandatory language into their 

documents since the effective date of 

the interim final rules, continuing to 

require that language is the simplest 

approach. 

As in the interim final rules, these 

final regulations require nonfederal 

governmental plans to provide notice 

not later than 60 days after the first day 

of the plan year following the effective 

date, regardless of whether the plan had 

already provided notice under the 

Department of Labor standards. This 

takes into account the fundamental 

differences between the nonfederal 

governmental plans regulated under the 

PHS Act and the types of entities 

regulated under ERISA. However, with 

respect to the requirement that notice be 

provided within that 60-day period, the 

final regulations include an exception 

for plans with regard to participants and 

beneficiaries for whom the plan has 

already provided notices in accordance 

with the interim final regulations that 

are consistent with these final 

regulations (such as self-insured 

nonfederal governmental plans that are 

subject to the federal Newborns’ Act 

requirements and that have already 

provided such notices). 

Health insurance issuers in the 

individual market. The Newborns’ Act 

requires health insurance issuers in the 

individual market to comply with the 

Newborns’ Act notice requirements 

under section 711(d) of ERISA as if 

section 711(d) applied to such issuers. 

Thus, the interim final rules and these 

final regulations require individual 

market health insurance issuers that 

provide benefits for hospital lengths of 

stay in connection with childbirth to 

include, in the insurance contract, a 

rider, or equivalent amendment to the 

contract, specific language that notifies 

policyholders of their rights under the 

Newborns’ Act. The interim final rules 

and these final regulations also require 

such issuers to provide this notice not 

later than a specific time frame that is 

within a few months after the effective 

date of the regulations. 

Several comments on the interim final 

rules objected that specific language was 

required for the disclosure statement 

and suggested instead there should be 

guidelines for issuers to base their own 

language on. However, requiring 

specific language ensures the 

substantive adequacy of the notices. 

Additionally, because issuers 

presumably have already incorporated 

that language into their documents since 

the effective date of the interim final 

rules, continuing to require that same 

language is the simplest approach. 

These final regulations retain the 

notice exception in the interim final 

rules for issuers that are subject only to 

state insurance law requirements 

regarding hospital lengths of stay 

following childbirth. 

Applicability in States 

The statute and the interim final rules 

include an exception to the Newborns’ 

Act requirements for health insurance 

coverage in certain states. Specifically, 

the Newborns’ Act and the interim final 

rules do not apply with respect to health 

insurance coverage if there is a state law 

that meets any of the criteria 5 that 

follow: 

• The state law requires health 

insurance coverage to provide at least a 

48-hour (or 96-hour) hospital length of 

stay in connection with childbirth; 

• The state law requires health 

insurance coverage to provide for 

maternity and pediatric care in 

accordance with guidelines established 

by the American College of 

Obstetricians and Gynecologists, the 

American Academy of Pediatrics, or any 

other established professional medical 

association; or 

• The state law requires that 

decisions regarding the appropriate 

hospital length of stay in connection 

with childbirth be left to the attending 

provider in consultation with the 

mother. The interim final rules and 

these final regulations clarify that state 

laws that require the decision to be 

made by the attending provider with the 

consent of the mother satisfy this 

criterion. 

Although this exception applies with 

respect to insured group health plans, it 

does not apply with respect to a group 

health plan to the extent the plan 

provides benefits for hospital lengths of 

stay in connection with childbirth other 

than through health insurance coverage. 

Accordingly, self-insured plans in all 

states generally are required to comply 

with the federal requirements (except 

those nonfederal governmental plans 

that have opted out of the PHS Act 

requirements). 

These final regulations repeat the 

statute and the interim final rules with 

one clarification. With respect to the 

second criterion above (professional 

guidelines), the statute only addresses 

the period following a vaginal delivery 

or a caesarean section. Accordingly, 

although guidelines issued by 

professional medical associations such 

as the American College of Obstetricians 

and Gynecologists (ACOG) cover a 

spectrum of care both before and after 

childbirth, the only relevant guidelines 

for this purpose are those pertaining to 

care following childbirth. Therefore, the 

final rules include an express 

clarification that State law need only 

require coverage in accordance with 

professional guidelines that deal with 

care following childbirth. Guidelines 

relating to other issues are not relevant 

for this purpose. 

One comment to the interim final 

rules supported the criteria used in 

those rules for determining whether the 

federal Newborns’ Act applies in a given 

state. However, another comment 

objected to the fact that issuers in states 

that have enacted one of the three types 

of state laws described in the federal 

Newborns’ Act would arguably be 

exempt from several of the federal Act’s 

requirements, such as the prohibitions 

on offering incentives to providers to 

induce them to provide care in a 

manner inconsistent with the Act. This 

comment asked us to reconsider 

whether the regulations should provide 

such a broad exception from the federal 

Act’s requirements in such states. The 

statutory language does not require state 

law to include all the federal provisions, 

such as the anti-incentive provisions, in 

order for health insurance coverage in 

that state to be excepted from the federal 

requirements. In light of this flexibility, 

these final regulations retain the 

exception from the interim final rules. 

Applicability Date 

These final rules apply to group 

health plans, and health insurance 

issuers offering group health insurance 

coverage, for plan years beginning on or 

after January 1, 2009. The final rules for 

the individual market apply with 

respect to health insurance coverage 

offered, sold, issued, renewed, in effect, 

or operated in the individual market on 

or after January 1, 2009. Until the 

applicability date for this regulation, 

plans and issuers are required to 

continue to comply with the 

corresponding sections of the 

regulations previously published in the 

Federal Register (63 FR 57546) and 

other applicable regulations. 

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62414 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

6The Newborns’ Act still requires that insured 

plans disclose a notice outlining participants’ rights 

regarding hospital lengths of stay related to 

childbirth. Nonetheless, final regulations related to 

that notice were published separately (see 65 FR 

70266, Nov. 21, 2000) and so those costs are not 

included herein. 

7The vast majority of this cost is attributable to 

the impact of the statute. ($14 million is the upper 

bound cost attributable to the exercise of regulatory 

discretion.) Moreover, there are no increased costs 

attributable to any new exercise of regulatory 

discretion in the final rule. Instead, the final rule 

repeats the interpretations of the interim final rule. 

Any increased costs over the 1998 estimate in the 

interim final rules are attributable to economic 

factors, such as increased cost of care (from 1996 

to 2007 dollars), increased number of births, and 

increased number of participants and beneficiaries 

covered by self-insured plans to which the 

regulations apply. 

III. Economic Impact and Paperwork 

Burden 

Summary—Department of Labor and 

Department of Health and Human 

Services 

The Newborns’ Act provisions 

generally prohibit group health plans 

and group health insurance issuers from 

limiting hospital lengths of stay in 

connection with childbirth to less than 

48 hours for vaginal deliveries and 96 

hours for cesarean sections and from 

requiring a health care practitioner to 

obtain preauthorization for such stays. 

For insured coverage, the Newborns’ 

Act allows any state law, meeting one of 

three criteria, to take its place. The 

Departments have crafted these 

regulations to secure the Act’s 

protections in as economically efficient 

a manner as possible, and believe that 

the economic benefits of the regulations 

justify their costs.6

The primary economic benefits 

associated with securing these 

minimum lengths of stay derive from 

the reduction in complications linked to 

premature discharge of mothers and 

newborns. Complications that are easily 

treated and readily identifiable, like 

excessive bleeding and infection in new 

mothers and dehydration and 

hyperbilirubinemia in their newborns, 

are common causes for readmission 

following a premature discharge. These 

complications and the subsequent 

readmissions are expensive and cause 

avoidable suffering for mothers and 

their newborns. 

By eliminating the need to obtain 

preauthorization for affected stays, the 

Act provides affected individuals with 

increased access to the health care 

system. Increased access fosters timelier 

and fuller medical care, better health 

outcomes, and improved quality of life. 

This is especially true for certain 

individuals affected by the Newborns’ 

Act provisions. For example, lowerincome individuals, when denied 

coverage for the full length of stay, are 

more likely to forego care for financial 

reasons. When adverse health outcomes 

result, costs for the individual and the 

plan are high. For these individuals 

especially, this requirement is more 

likely to mean receiving timely, quality 

postnatal care, and living healthier 

lives. 

Any mandate to increase the richness 

of health benefits, however, adds to the 

cost of health coverage. Plans can 

mitigate costs by increasing cost-sharing 

or by reducing non-mandated benefits. 

This in turn shifts the economic burden 

of the regulation to plan participants, 

and may induce some employers and 

employees, as well as those in the 

individual insurance market, to drop 

coverage. The cost of enacting federal 

minimum stay regulation is estimated to 

fall between $139 and $279 million 

annually.7 However, as this constitutes 

a small fraction of one percent of total 

health care expenditures, it would most 

likely be a small, possibly negligible, 

factor in most employers’ decisions to 

offer health coverage and individuals’ 

decisions to enroll. 

While the interim final regulations 

clarified several provisions within the 

statute, this action serves primarily to 

provide the certainty associated with a 

final rule for the regulated community, 

as well as update the cost of the 

regulation, adjusting for changes in the 

landscape of the community. Because 

these regulations are being published 

several years after the Newborns’ Act’s 

passage and minimal interpretation of 

the statutory language was required, the 

regulatory implementation costs should 

be negligible. Costs of the final 

regulation are detailed below in the 

section entitled ‘‘Unified Analysis of 

Costs and Benefits.’’ Benefits of the 

regulation are also discussed in that 

section at length, although because the 

benefits primarily involve quality of life 

improvements, the Departments have 

not attempted to quantify them. They 

do, however, believe them to be 

sufficiently large so as to justify the cost 

of the regulation. 

Executive Order 12866—Department of 

Labor and Department of Health and 

Human Services 

Under Executive Order 12866, the 

Departments must determine whether a 

regulatory action is ‘‘significant’’ and 

therefore subject to the requirements of 

the Executive Order and subject to 

review by the Office of Management and 

Budget (OMB). Under section 3(f), the 

order defines a ‘‘significant regulatory 

action’’ as an action that is likely to 

result in a rule (1) having an annual 

effect on the economy of $100 million 

or more, or adversely and materially 

affecting a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

state, local or tribal governments or 

communities (also referred to as 

‘‘economically significant’’); (2) creating 

serious inconsistency or otherwise 

interfering with an action taken or 

planned by another agency; (3) 

materially altering the budgetary 

impacts of entitlement grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or (4) 

raising novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

Pursuant to the terms of the Executive 

Order, it has been determined that this 

action is ‘‘economically significant’’ and 

is subject to OMB review under Section 

3(f) of the Executive Order. Consistent 

with the Executive Order, the 

Departments have assessed the costs 

and benefits of this action. The 

Departments’ assessment, and the 

analysis underlying the assessment, is 

detailed below. The Departments 

performed a comprehensive, unified 

analysis to estimate the costs and 

benefits attributable to the regulations 

for purposes of compliance with 

Executive Order 12866, the Regulatory 

Flexibility Act, and the Paperwork 

Reduction Act. 

These final regulations are needed to 

provide certainty for the affected 

community, as well as clarify the 

economic burden that the Newborns’ 

Act will place on health plans and their 

participants. The Departments believe 

that this regulation’s benefits will justify 

its costs. This belief is grounded in the 

assessment of costs and benefits that is 

summarized earlier and detailed below. 

Regulatory Flexibility Act—Department 

of Labor and Department of Health and 

Human Services 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.) and 

likely to have a significant economic 

impact on a substantial number of small 

entities. Unless an agency certifies that 

a final rule will not have a significant 

economic impact on a substantial 

number of small entities, section 604 of 

the RFA requires that the agency present 

a final regulatory flexibility analysis 

(FRFA) at the time of the publication of 

the notice of final rulemaking describing 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62415 

8 Departments’ estimates using the 2005 Medical 

Expenditures Panel Survey Household Component 

(MEPS–HC), the 2006 Medical Expenditures Panel 

Survey Insurance Component (MEPS–IC) and the 

National Centers for Disease Control and Prevention 

(CDC) National Hospital Discharge Survey: 2005 

Annual Summary with Detailed Diagnosis and 

Procedure Data determined that of participants 

affected by the regulation, 11 percent were enrolled 

in small plans. Costs born by small plans were 11 

percent of all costs. 

9Estimates are based on the 2006 MEPS–IC. It 

should be noted, however, that the Pregnancy 

Discrimination Act of 1978 allows firms with less 

than 15 employees that offer health insurance to 

exclude maternity care. The 2000 Mercer/Foster 

Higgins National Survey of Employer Sponsored 

Health Plans found that 7 percent of firms with 10– 

24 employees did not offer such benefits, but the 

survey did not examine smaller firms. Rough 

estimates by the Departments suggest that the share 

of firms with 9 or fewer employees that offer health 

benefits but exclude maternity benefits is 21 

percent. As the cost of these benefits rises, this 

share is likely to increase which, while having a 

small effect on the number of participants affected 

by the regulation, might significantly decrease the 

number of small plans affected by the regulation. 

10Nonfederal governmental plans can opt-out of 

these requirements and it was assumed that those 

States that had rules in place that supplanted the 

Newborns’ Act (that is, all States except one) 

would. 

the impact of the rule on small entities. 

Small entities include small businesses, 

organizations, and governmental 

jurisdictions. 

Because the 1998 rules were issued as 

interim final rules and not as a notice 

of proposed rulemaking, the RFA did 

not apply and the Departments were not 

required to either certify that the rule 

would not have a significant impact on 

a substantial number of small entities or 

conduct a regulatory flexibility analysis. 

The Departments nonetheless crafted 

those regulations in careful 

consideration of effects on small 

entities, and conducted an analysis of 

the likely impact of the rules on small 

entities. This analysis was detailed in 

the preamble to the interim final rule. 

For purposes of this discussion, the 

Departments consider a small entity to 

be an employee benefit plan with fewer 

than 100 participants. Pursuant to the 

authority of section 104(a)(3) of ERISA, 

the Department of Labor has previously 

issued at 29 CFR 2520.104–20, 

2520.104–21, 2520.104–41, 2520.104–46 

and 2520.104b–10, certain simplified 

reporting provisions and limited 

exemptions from reporting and 

disclosure requirements for small plans, 

including unfunded or insured welfare 

plans covering fewer than 100 

participants and which satisfy certain 

other requirements. 

Further, while some small plans are 

maintained by large employers, most are 

maintained by small employers. Both 

small and large plans may enlist small 

third party service providers to perform 

administrative functions, but it is 

generally understood that third party 

service providers shift their costs to 

their plan clients in the form of fees. 

Thus, the Departments believe that 

assessing the impact of this final rule on 

small plans is an appropriate substitute 

for evaluating the effect on small 

entities. The definition of small entity 

considered appropriate for this purpose 

differs, however, from a definition of 

small business based on size standards 

promulgated by the Small Business 

Administration (SBA) (13 CFR 121.201) 

pursuant to the Small Business Act (5 

U.S.C. 631 et seq.). The Department of 

Labor solicited comments on the use of 

this standard for evaluating the impact 

of the proposed regulations on small 

entities. No comments were received 

with respect to this standard. 

The Departments believe that the final 

regulation will not have a significant 

economic impact on a substantial 

number of small entities. The direct 

costs of restricting short stay policies is 

estimated to fall between $15 million 

and $31 million for small plans which 

amount to a per-participant cost of 

between nine and nineteen dollars for 

those plans affected, or a small fraction 

of one percent of total small plan 

expenditures.8

The Departments estimate that prior 

to the Act, 115,000 small plans with 1.6 

million participants would have 

restricted lengths of stay in connection 

with childbirth or required 

preauthorization for such stays.9 While 

this represents just 5 percent of all small 

plans, the Departments believe it may 

represent a substantial number of small 

entities. 

Paperwork Reduction Act—Department 

of Labor and Department of Health and 

Human Services 

1. Department of Labor 

These rules contain no new 

information collection requirements that 

are subject to review and approval by 

OMB under the Paperwork Reduction 

Act of 1995 (Pub. L. 104–13, 44 U.S.C. 

Chapter 35). The Department of Labor 

reported the information collection 

burdens associated with the Newborns’ 

Act in the interim rules (Interim Rules 

Amending ERISA Disclosure 

Requirements for Group Health Plans) 

implementing section 711(d) of ERISA 

that were published in the Federal 

Register on April 8, 1997 (62 FR 16979). 

OMB approved the information 

collection under OMB Control Number 

1210–0039, expiring on March 31, 2010. 

2. Department of Health and Human 

Services 

These rules contain no new 

information collection requirements that 

are subject to review and approval by 

OMB under the Paperwork Reduction 

Act of 1995 (Pub. L. 104–13, 44 U.S.C. 

Chapter 35). HHS reported the 

information collection burdens 

associated with the Newborns’ Act in 

the interim rules (Information 

Collection Requirements Referenced in 

HIPAA for the Group Market, 

Supporting Regulations 45 CFR 146), 

published in the Federal Register on 

April 8, 1997. These collection 

requirements were approved under 

OMB Control Number 0938–0702, 

expiring on August 31, 2009. 

Special Analyses—Department of the 

Treasury 

Notwithstanding the determinations 

of the Departments of Labor and of 

Health and Human Services, for 

purposes of the Department of the 

Treasury it has been determined that 

this Treasury decision is not a 

significant regulatory action. Therefore, 

a regulatory assessment is not required. 

It has also been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these Treasury regulations, and, 

because these regulations do not impose 

a collection of information on small 

entities, a Regulatory Flexibility 

Analysis under the Regulatory 

Flexibility Act (5 U.S.C. chapter 6) is 

not required. Pursuant to section 7805(f) 

of the Code, the notice of proposed 

rulemaking preceding these regulations 

was submitted to the Small Business 

Administration for comment on its 

impact on small business. 

Congressional Review Act 

These regulations are subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.) and have been 

transmitted to Congress and the 

Comptroller General for review. These 

regulations, however, are considered a 

‘‘major rule,’’ as that term is defined in 

5 U.S.C. 804, because they are likely to 

result in an annual effect on the 

economy of $100 million or more. 

Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), as well as Executive Order 

12875, these regulations do not include 

any federal mandate that may result in 

expenditures by state, local, or tribal 

governments,10 however, they include 

mandates which may impose an annual 

burden of $100 million or more on the 

private sector, updated annually for 

inflation. After applying the most 

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62416 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

11The Newborns’ Act was incorporated into the 

administrative framework established by HIPAA. 

12The federal requirements concerning hospital 

lengths of stay in connection with childbirth do not 

apply with respect to health insurance coverage if 

state law requires (1) such coverage to provide for 

at least a 48-hour hospital length of stay following 

a vaginal delivery and at least a 96-hour length of 

stay following a delivery by cesarean section, (2) 

such coverage to provide for maternity and 

pediatric care in accordance with guidelines 

established by the American College of 

Obstetricians and Gynecologists, the American 

Academy of Pediatrics, or other established 

professional medical associations, or (3) in 

connection with such coverage for maternity care, 

that the hospital length of stay for such care is left 

to the decision of (or is required to be made by) the 

attending provider in consultation with the mother. 

current gross domestic product implicit 

price deflator in 2008, that threshold is 

approximately $130 million. 

Federalism Statement Under Executive 

Order 13132—Department of Labor and 

Department of Health and Human 

Services 

Executive Order 13132 outlines 

fundamental principles of federalism. It 

requires adherence to specific criteria by 

federal agencies in formulating and 

implementing policies that have 

‘‘substantial direct effects’’ on the 

States, the relationship between the 

national government and States, or on 

the distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

these federalism implications must 

consult with State and local officials, 

and describe the extent of their 

consultation and the nature of the 

concerns of State and local officials in 

the preamble to the regulation. 

In the Departments’ view, these final 

regulations have federalism 

implications because they may have 

substantial direct effects on the States, 

the relationship between the national 

government and States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. However, in the 

Departments’ view, the federalism 

implications of these final regulations 

are substantially mitigated because, 

with respect to health insurance issuers, 

all but one of the States have 

requirements that prescribe benefits for 

hospital lengths of stay in connection 

with childbirth that satisfy the 

Newborns’ Act hospital length of stay 

requirements. 

In general, through section 514, 

ERISA supersedes State laws to the 

extent that they relate to any covered 

employee benefit plan, but preserves 

State laws that regulate insurance. At 

the same time, however, ERISA 

prohibits States from regulating a plan 

as an insurance company. HIPAA added 

a new section to ERISA (as well as to the 

PHS Act and the Code) narrowly 

preempting State requirements for 

issuers of group health insurance 

coverage.11 HIPAA’s conference report 

states that the conferees intended only 

the narrowest preemption of State laws 

with regard to health insurance issuers. 

H.R. Conf. Rep. No. 736, 104th Cong. 2d 

Session 205 (1996). 

The Newborns’ Act also added a new 

section to ERISA (and to the PHS Act 

and the Code) which provides that the 

federal requirements applicable to group 

health plans and health insurance 

issuers concerning hospital lengths of 

stay for mothers and newborns 

following childbirth do not apply if 

State law meets one or more of three 

specific criteria in the statute.12 The 

accompanying conference report states 

that it is the intent of the conferees that 

States may impose more favorable 

requirements for the treatment of 

maternity coverage under health 

insurance coverage than required by the 

Newborns’ Act. H.R. Conf. Rep. No. 

104–812, 104th Cong. 2d Session 88 

(1996). 

Guidance conveying the Newborns’ 

Act hospital length of stay requirements 

was published in the Federal Register 

on October 27, 1998 (63 FR 57546). 

These final regulations clarify and 

implement the statute’s minimum 

standards and do not significantly 

reduce the discretion given the States by 

the statute. Moreover, the Departments 

understand that all but one State have 

requirements that prescribe benefits for 

hospital lengths of stay in connection 

with childbirth that satisfy the 

Newborns’ Act requirements. 

The Newborns’ Act modified HIPAA’s 

framework to provide that the States 

have primary responsibility for 

enforcement of the provisions of the 

Newborns’ Act as they pertain to 

issuers, but that the Secretary of Health 

and Human Services must enforce any 

provision that a State fails to 

substantially enforce. To date, CMS 

enforces the Newborns’ Act hospital 

length of stay requirements in only one 

State. When exercising its responsibility 

to enforce the Newborns’ Act 

provisions, CMS works cooperatively 

with the State for the purpose of 

addressing the State’s concerns and 

avoiding conflicts with the exercise of 

State authority. CMS has developed 

procedures to implement its 

enforcement responsibilities, and to 

afford the States the maximum 

opportunity to enforce the Newborns’ 

Act requirements in the first instance. 

CMS procedures address the handling of 

reports that States may not be enforcing 

the Newborns’ Act requirements, and 

the mechanism for allocating 

responsibility between the States and 

CMS. In compliance with Executive 

Order 13132’s requirement that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policymaking discretion of the 

States, the Department of Labor and 

CMS have consulted and worked 

cooperatively with affected State and 

local officials. 

For example, the Departments sought 

and received input from State insurance 

regulators and the National Association 

of Insurance Commissioners (NAIC). 

The NAIC is a non-profit corporation 

established by the insurance 

commissioners of the 50 States, the 

District of Columbia, and the four U.S. 

territories. In most States the insurance 

commissioner is appointed by the 

governor; in approximately 14 States, 

the insurance commissioner is an 

elected official. Among other activities, 

it provides a forum for the development 

of uniform policy when uniformity is 

appropriate. Its members meet, discuss 

and offer solutions to mutual problems. 

The NAIC sponsors quarterly meetings 

to provide a forum for the exchange of 

ideas and in-depth consideration of 

insurance issues by regulators, industry 

representatives and consumers. CMS 

and Department of Labor staff have 

consistently attended these quarterly 

meetings to listen to the views of the 

State insurance departments. 

In addition, the Departments 

informally consulted with the NAIC in 

developing the interim final regulations. 

Through the NAIC, the Departments 

sought and received the input of State 

insurance departments regarding 

preemption of State laws, applicability 

of the Newborns’ Act provisions, and 

certain insurance industry definitions 

(e.g., attending provider). In general, 

these final regulations do not change the 

interim final rules. Significantly, the 

Departments received only eleven 

formal comment letters on the interim 

final regulation, none of which were 

from or on behalf of the NAIC or any of 

the States. 

The Departments have also 

cooperated with the States in several 

ongoing outreach initiatives, through 

which information is shared among 

federal regulators, State regulators and 

the regulated community. In particular, 

the Department of Labor has established 

a Health Benefits Education Campaign 

with more than 70 partners, including 

CMS, NAIC and many business and 

consumer groups. CMS has sponsored 

conferences with the States—the 

Consumer Outreach and Advocacy 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62417 

13 Departments’ estimate based on the 2005 

MEPS–HC and the 2005 CDC Survey. 

14The CDC reported that of the 4.0 million births 

in 2005, 2.2 million, or 55.0 percent of those 

newborns were categorized as without any illness 

or risk-related diagnosis (e.g. jaundice, respiratory 

distress, disorders relating to short gestation and 

low birth weight). No data are available on whether 

health of newborns varies by mothers’ insurance 

status, although insured mothers are more likely to 

receive prenatal care and this would be expected to 

positively affect the share of ‘‘healthy’’ births (see 

Susan Egerter et al., ‘‘Timing of Insurance Coverage 

and Use of Prenatal Care Among Low-Income 

Women,’’ American Journal of Public Health, v. 

92(3): 423–427). 

15 Julie A. Gazmararian & Jeffrey Koplan found in, 

‘‘Length-of-Stay After Delivery: Managed Care 

versus Fee for Service,’’ Health Affairs, v. 15(4): 74– 

80, that 35.9 percent of enrollees in commercial 

plans were discharged within one day after delivery 

compared to 57.7 percent from commercial HMOs. 

The shares of individuals enrolled in HMOs at selfinsured and fully-insured plans were taken from the 

2007 Kaiser Family Foundation’s Survey of 

Employer Sponsored Insurance. 

16The number of women age 10–54 with private 

insurance was estimated using the 2005 MEPS–HC. 

Fertility rates for different age brackets were taken 

from the 2005 CDC National Hospital Discharge 

Survey and were interacted with the number of 

privately insured women to ascertain the number of 

births by insured women. This was then interacted 

with the share of infants that were born healthy, as 

reported in the 2005 CDC report, to determine the 

number of healthy births to privately-insured 

women. 

To restrict the number of privately insured 

women having healthy births to those with ESI, the 

share of all privately insured women, age 10–54, 

that had ESI was taken from the 2007 March CPS 

and interacted with the above number. To then 

discern the number of births that would be covered 

by the regulation, the 2006 MEPS–IC was used to 

ascertain the share of employees in ESI that were 

in self-insured plans that had maternal coverage. 

This number was further interacted by the share of 

employees in the share of those employees in HMO 

versus non-HMO health plans as provided by the 

2007 Kaiser Family Foundation’s Employer Health 

Benefits Survey. 

Interacting all of these numbers results in the 

328,000 number cited in the text. 

17Based on 1995 discharge rates, approximately 

94 percent of the 328,000 births required one 

additional day to meet the maximum period 

outlined by the statute; 6 percent required two 

additional days. 

18The Congressional Budget Office (CBO) 

analyzed Senate proposal S. 969, which was an 

earlier version of the Newborns’ Act. CBO estimated 

900,000 insured births had stays shorter than the 

minimum specified in the bill, which would result 

in 400,000 additional inpatient days and an 

additional 200,000 additional out-patient visits at 

an annual cost of $360 million in 2007 dollars (or 

$800 for each additional day of inpatient care; $200 

for outpatient care). The Departments’ estimate is 

significantly less, primarily due to: (1) A large 

number of states either clarifying existing policies 

for short-stay deliveries or enacting new ones which 

supersede the federal statute for all but self-insured 

plans; and (2) the CBO estimates included costs for 

Continued 

conferences in March 1999 and June 

2000, and the Implementation and 

Enforcement of HIPAA National StateFederal Conferences in August 1999, 

2000, 2001, 2002, and 2003. 

Furthermore, both the Department of 

Labor and CMS Web sites offer links to 

important State Web sites and other 

resources, facilitating coordination 

between the State and federal regulators 

and the regulated community. 

Throughout the process of developing 

these regulations, to the extent feasible 

within the specific preemption 

provisions of HIPAA and the Newborns’ 

Act, the Departments have attempted to 

balance the States’ interests in 

regulating health insurance issuers, and 

Congress’ intent to provide uniform 

minimum protections to consumers in 

every State. By doing so, it is the 

Departments’ view that they have 

complied with the requirements of 

Executive Order 13132. 

Pursuant to the requirements set forth 

in Section 8(a) of Executive Order 

13132, and by the signatures affixed to 

these final regulations, the Departments 

certify that the Employee Benefits 

Security Administration and the Centers 

for Medicare & Medicaid Services have 

complied with the requirements of 

Executive Order 13132 for the attached 

Final Regulations for Group Health 

Plans and Health Insurance Issuers 

Under the Newborns’ and Mothers’ 

Health Protection Act (RIN 1210–AA63 

and RIN 0938–AI17), in a meaningful 

and timely manner. 

Unified Analysis of Costs and Benefits 

1. Introduction 

The Newborns’ Act’s provisions 

generally prohibit group health plans 

and health insurance issuers from: (1) 

Limiting hospital lengths of stay in 

connection with childbirth to less than 

48 hours for vaginal deliveries and 96 

hours for cesarean sections, and (2) 

requiring preauthorization for the 48/96 

hour stays. The primary effect and 

intent of the provision is to reduce 

postpartum complications associated 

with premature discharge. 

These regulations draw on the 

Departments’ authority to clarify and 

interpret the Newborns’ Act’s statutory 

provisions in order to secure the 

protections intended by Congress for 

newborns and mothers. The 

Departments crafted them to satisfy this 

mandate in as economically efficient a 

manner as possible, and believe that the 

economic benefits of the regulations 

justify their costs. This conclusion takes 

into account both the effect of the 

statute and the impact of the discretion 

exercised in the regulations. 

This regulation is needed to clarify 

and interpret the Newborns’ Act 

provisions under section 711 of ERISA, 

sections 2704 and 2751 of the PHS Act, 

and section 9811 of the Internal 

Revenue Code and to ensure that group 

health plans and health insurance 

issuers subject to these rules do not 

impermissibly restrict benefits or 

require preauthorization for 48-hour or 

96-hour hospital lengths of stay in 

connection with childbirth. 

2. Costs and Benefits of the Statute 

The Departments provide qualitative 

assessments of the nature of the costs 

and benefits that are expected to derive 

from the statutory provisions of the 

Newborns’ Act. In addition, the 

Departments provide summaries of any 

credible, empirical estimates of these 

effects that are available. 

In order to determine how many plan 

participants could benefit from the 

Newborns’ Act provision, the 

Departments considered the estimated 

2.8 million births in 2005 by women 

with private health insurance.13 Of 

these, approximately 55.0 percent are 

assumed to be normal, healthy 

deliveries, and therefore eligible for 

early discharge.14 Because legislation 

has been passed in every state but 

Wisconsin, the Departments limited 

their analysis to participants in selfinsured group health plans throughout 

the country and all health plans within 

Wisconsin. Finally, because Health 

Maintenance Organizations (HMOs) 

have traditionally had more aggressive 

short-stay policies, the share of workers 

enrolled in HMOs versus commercial 

plans was taken into account as were 

the share of those plans with short-stay 

policies.15

Based on these assumptions, 

approximately 328,000 births or roughly 

22 percent of healthy births by privately 

insured women would be affected by 

the provision.16 If each woman then 

stayed the maximum period outlined in 

the statute, approximately 348,000 

additional days of hospital care would 

be required.17 Assuming hospitals 

charge $800 per day for postpartum 

care, the annual cost of the provision 

would be $279 million: $1.7 million of 

which would be attributable to the 

individual market in Wisconsin; the 

remaining $276.9 million would be 

attributable to the group market in 

Wisconsin and self-funded plans 

throughout the country. However, 

because the statute does not require a 

48- or 96-hour stay, but instead gives the 

decision-making authority to the 

attending physician in consultation 

with the mother, it is expected that not 

all of these births will result in 

additional hospital time. If only one-half 

of affected mothers had their stays 

extended by the full amount, the annual 

cost of the provision would be $139 

million, less than $1 million of which 

would be attributable to the individual 

market of Wisconsin.18

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62418 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

follow-up visits, a requirement that was dropped 

from the federal statute. 

19The Departments’ estimate is based on the 

Office of the Actuary at the Centers for Medicare & 

Medicaid Services (CMS) projected measure of total 

personal health expenditures by private health 

insurance in 2007. 

20The share of all births that are cesarean rose 

from 20.7 percent in 1996 to an estimated 31.3 

percent in 2005 (CDC (2005). ‘‘National Hospital 

Discharge Survey’’ Vital and Health Statistics, 

Series 13 (162)). A study by Health Grades Inc. 

found a 36.6 percent increase in the number of 

‘‘patient choice’’ cesarean sections between 2001 

and 2003. 

21Most research comparing complication rates of 

cesarean to vaginal births focus on those women 

who previously had a cesarean section, as 

insufficient data are available to compare initial 

vaginal versus initial elected cesarean deliveries. As 

such, it is difficult to discern how the medically 

advisable stay of an elected cesarean section 

compares to that of an uncomplicated vaginal birth. 

However, there is much agreement that emergency 

cesarean sections, which typically follow a lengthy 

labor, are far more dangerous to mother and child 

than the elected variety. Given the Newborns’ Act’s 

prescribed 96-hour stays for cesarean births when 

elected cesareans comprised a smaller share of all 

cesareans, it would be reasonable to expect that the 

stays for elected cesareans may fall over time. 

22For more information on health choices of 

lower-income individuals, see: Trude, Sally (2003). 

‘‘Patient Cost Sharing: How Much is Too Much,’’ 

Health System Change Issue Brief, no. 72 

(December). 

23For more detailed information, see: O’Brien, 

Ellen (2003). ‘‘Employer Benefits from Workers’ 

Health Insurance,’’ Milbank Quarterly, Vol. 1 No. 1. 

O’Brien provides an extensive analysis of the 

literature on benefits accruing to employers from 

offering health benefits and the costs to employers 

of unhealthy employees, as well as information on 

studies demonstrating that poor health may be 

related to lower productivity. In particular, she 

discusses studies that have examined the effects on 

workplace productivity of specific health 

conditions and shows that poor health reduces 

workers’ productivity at work, and that effective 

health care treatments can reduce productivity 

losses and may even pay for themselves in terms 

of increased productivity. 

24Research on the benefits of longer stays has 

been somewhat mixed. Some studies show shortstays to be correlated with decreased follow-up care 

and increased re-hospitalization, particularly for 

low-income families, which will ultimately increase 

societal costs (for further discussion, see: Galbraith, 

Alison A. et al. (2003) ‘‘Newborn Early Discharge 

Revisited: Are California Newborns Receiving 

Recommended Postnatal Services?’’ Pediatrics, vol. 

111 (2): p. 364–371; Lock, Michael & Joel G. Ray. 

(1999) ‘‘Higher Neonatal Morbidity after Routine 

Hospital Discharge: Are We Sending Newborns 

Home Too Early?’’ Canadian Medical Association 

Journal, vol. 161 (3): p. 249–253; Malkin, Jesse D. 

et al. (2003) ‘‘Postpartum Length of Stay and 

Newborn Health: A Cost-Effectiveness Analysis,’’ 

Pediatrics, vol. 111 (4): p. 316–322). 

Since the statutes have been in place, other 

studies have argued that higher re-hospitalization 

rates found in short-stay newborns are due to more 

frequent post-stay evaluations in the four days 

following birth, considered the critical window for 

ascertaining newborn health, as mandated in health 

plans. Once new regulations were passed extending 

stays, health plans reduced their follow-up care 

policies and newborns were less likely to be 

examined in the days following discharge. This 

could result in an increase in costs. (For further 

discussion, see: Hyman, David A. (2001) ‘‘What 

Lessons Should We Learn from Drive-Through 

Deliveries?’’ Pediatrics, vol. 107 (2): 406–408; 

Madden, Jeanne M. et al. (2002) ‘‘Effects of a Law 

Against Early Postpartum Discharges on Newborn 

Follow-up, Adverse Events, and HMO 

Expenditures,’’ New England Journal of Medicine, 

vol. 347 (25): p. 2031–2038; Madden, Jeanne M. et 

al. (2004) ‘‘Length-of-Stay Policies and 

Ascertainment of Postdischarge Problems in 

Newborns,’’ Pediatrics, vol. 113 (1): p. 42–49.) 

The Departments believe, however, that because 

most of the complications of newborns manifest 

themselves within the immediate 48 hours 

following birth, special protection much be given to 

that period. Moreover, since the decision to 

discharge the patients will be made by the doctor, 

in consultation with the mother, many of the 

concerns posed by those who oppose extended 

stays will be factored into that decision. As such, 

the Departments believe that the Newborns’ Act 

will improve the health and welfare of mothers and 

newborns. 

25The voluntary nature of the employment-based 

health benefit system in conjunction with the open 

and dynamic character of labor markets make 

explicit as well as implicit negotiations on 

compensation a key determinant of the prevalence 

of employee benefits coverage. It is likely that 80% 

to 100% of the cost of employee benefits is borne 

by workers through reduced wages (See for 

example: Jonathan Gruber and Alan B. Krueger, 

‘‘The Incidence of Mandated Employer-Provided 

Insurance: Lessons from Workers Compensation 

Insurance,’’ Tax Policy and Economy (1991); 

Jonathan Gruber, ‘‘The Incidence of Mandated 

Maternity Benefits,’’ American Economic Review, 

Vol. 84 (June 1994), pp. 622–641; Lawrence H. 

Summers, ‘‘Some Simple Economics of Mandated 

Benefits,’’ American Economic Review, Vol. 79, No. 

2 (May 1989); Louise Sheiner, ‘‘Health Care Costs, 

Wages, and Aging,’’ Federal Reserve Board of 

Governors working paper, April 1999; and Edward 

Montgomery, Kathryn Shaw, and Mary Ellen 

Benedict, ‘‘Pensions and Wages: An Hedonic Price 

Theory Approach,’’ International Economic Review, 

Vol. 33, No. 1, Feb. 1992). The prevalence of 

benefits is therefore largely dependent on the 

efficacy of this exchange. If workers perceive that 

there is the potential for inappropriate denial of 

benefits they will discount their value to adjust for 

this risk. This discount drives a wedge in the 

compensation negotiation, limiting its efficiency. 

With workers unwilling to bear the full cost of the 

benefit, fewer benefits will be provided. The extent 

to which workers perceive a federal regulation 

supported by enforcement authority to improve the 

security and quality of benefits, the differential 

between the employers’ costs and workers’ 

willingness to accept wage offsets is minimized. 

While the Departments estimate that 

the cost of the NMHPA is as much as 

$279 million annually, health plans are 

estimated to have spent more than $775 

billion in 2007 to cover approximately 

201.7 million privately insured 

individuals.19 Therefore, the upper 

estimate of the costs under the 

Newborns’ Act’s provisions represent a 

very small fraction of one percent of 

total health plan expenditures. 

Moreover, the cost of this provision is 

likely to decline in the future, despite 

increases in overall health care 

spending. Since the statute was passed, 

there has been a significant increase in 

the number of cesarean births, 

compared to vaginal births. While 

traditionally cesarean births are 

associated with higher risk, an 

increasing number of women are now 

electing to have the procedure.20

Women who elect to have a cesarean 

would presumably have a lower risk 

than those for whom the procedure is 

required and therefore may not require 

the prescribed 96-hour recovery period 

detailed in the statute.21 If this trend 

continues, the burden of this statute 

should lessen. 

The primary statutory economic 

benefits associated with the Newborns’ 

Act’s provisions derive from an increase 

in access to health plan coverage for 

postpartum care and monitoring of 

mothers and their newborns. 

Individuals without coverage for this 

care and monitoring are less likely to 

remain in the hospital for fear of 

incurring expenses that must be paid for 

‘out-of-pocket.’ Lower-income 

individuals are more likely to forego 

care not covered by their insurance. 

Foregoing this care and monitoring 

increases the risk of adverse health 

outcomes, which in turn generates 

higher medical costs. Much of these 

costs may be shifted to public funding 

sources (and therefore to taxpayers) or 

to other payers.22

Foregoing appropriate care can also 

negatively affect the quality of life. 

Improved access to health coverage for 

mothers and newborns will lead to more 

appropriate medical care and 

monitoring, better health outcomes, and 

improved quality of life.23 Denied 

coverage, individuals must choose 

whether to pay for the extra day(s) in 

the hospital and potentially suffer 

economic hardship or forego the care 

and monitoring, creating a risk of an 

adverse health outcome. Gaining 

coverage will sometimes mean receiving 

high quality care and living healthier 

lives.24

The provisions of the Newborns’ Act 

and its regulation generally apply to 

both group health plans and health 

insurance issuers. While the costs of the 

Newborns’ Act are substantial, 

economic theory predicts that issuers 

will pass their costs of compliance back 

to plans, and that plans may shift some 

or all of issuers’ and their own costs of 

compliance to participants either 

through increases in premiums, 

increased cost-sharing, or reducing the 

richness of non-mandated health 

benefits.25

While 74 million individuals are 

enrolled in group or private health 

plans, only 15 million individuals are 

enrolled in plans that had policies 

affected by the Newborns’ Act. Of these, 

only 328,000 individuals are expected 

to be annually directly impacted and 

receive additional coverage they were 

previously denied or restricted for 48 or 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62419 

26The total cost of the regulation was calculated 

by estimating the number of additional days in the 

hospital that short-stay deliveries would require 

under the statute. This number was then multiplied 

by $800, to reflect the per day hospitalization cost 

of a mother (this was a CBO number indexed to 

2007 dollars). Having calculated the total cost of the 

regulation at $279 million (and a lower bound of 

$139 million), these numbers were then divided by 

the number of participants in affected health plans 

(a total of 15 million) to get an upper ($19) and 

lower bound ($9) of the per-participant cost of the 

regulation. 

27 Departments’ estimate based on the CDC’s 2005 

Survey, Tables 37 and 42. The Departments looked 

at the share of stays that would be labeled ‘‘short’’ 

for both mothers and newborns in 1995 (before any 

part of the statute was enforced) and found that the 

share of newborns with a ‘‘short stay’’ was 5 percent 

higher. It was therefore assumed that starting the 

clock at the birth of a child would increase the 

number of ‘‘short stays’’ by 5 percent. 

96-hour hospital stays following 

childbirth. Though these benefits are 

received by a small number of plan 

enrollees, the costs are distributed 

broadly among all plan participants. As 

a result, the cost of the Newborns’ Act 

per individual enrollee is expected to be 

minimal—between 9 and 19 dollars per 

person for those enrolled in affected 

plans.26 While it is possible that some 

enrollees on the margin will decline 

coverage in response to cost increases, 

the number of those acting in such a 

manner is expected to be negligible. As 

such, the benefits of this statute are 

believed to justify its costs. 

3. Costs and Benefits of the Rules 

Applicable to the Newborns’ Act 

The interim final rule clarified when 

a stay begins under the Newborns’ Act. 

Prior to this, private health plans could 

use the expectant mother’s admittance 

time to determine the required stay, an 

assumption that consistently reduced 

the number of women experiencing 

stays less than those prescribed by the 

statute by 5 percent.27 By clarifying this 

assumption in the interim final rule, the 

number of stays that would have been 

shorter than 48/96 hours increased by 

approximately 16,000 for all plans, and 

by approximately 2,000 for small plans. 

This in turn raised the direct costs to 

health plans by 5 percent (from $265 to 

$279 million for the upper bound for all 

plans and from $29 to $31 million for 

small plans). However, because it can 

take several hours for certain conditions 

to present themselves, such as jaundice 

and dehydration, the additional hours of 

hospital supervision—gained by 

generally not using an expectant 

mother’s admittance time as the start of 

a stay—can be critical. Therefore, the 

benefits of this clarification should 

justify this additional cost. 

The regulation also defines that for 

births occurring outside of a hospital, 

stays begin once the mother or newborn 

is admitted as a hospital inpatient in 

connection with childbirth, as defined 

by the attending provider. The 

Departments lack any firm basis for 

quantifying the number of individuals 

likely to be affected by this provision, 

and therefore are unable to quantify the 

increase in costs and benefits. However, 

given the special and narrow 

circumstances to which this provision 

applies, costs and benefits are expected 

to be small. 

Statutory Authority 

The Department of the Treasury final 

rule is adopted pursuant to the authority 

contained in sections 7805 and 9833 of 

the Code (26 U.S.C. 7805, 9833). 

The Department of Labor final rule is 

adopted pursuant to the authority 

contained in 29 U.S.C. 1027, 1059, 1135, 

1161–1168, 1169, 1181–1183, 1181 note, 

1185, 1185a, 1185b, 1191, 1191a, 1191b, 

and 1191c, sec. 101(g), Public Law 104– 

191, 110 Stat. 1936; sec. 401(b), Public 

Law 105–200, 112 Stat. 645 (42 U.S.C. 

651 note); Secretary of Labor’s Order 1– 

2003, 68 FR 5374 (Feb. 3, 2003). 

The Department of Heath and Human 

Services final rule is adopted pursuant 

to the authority contained in sections 

2701 through 2763, 2791, and 2792 of 

the PHS Act (42 U.S.C. 300gg through 

300gg–63, 300gg–91, and 300gg–92), as 

amended by Public Law 104–191, 110 

Stat. 1936, Public Law 104–204, 110 

Stat. 2935 and Public Law 105–277, 112 

Stat. 2681–436. 

Accounting Statement 

In accordance with OMB Circular 

A–4 (available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), in the table below, we 

have prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of this final rule. This table 

provides our best estimate for the 

annual costs associated with enacting 

the federal minimum stay final 

regulation. 

ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, CY2008 

[In millions] 

Category 

Cost estimates 

Low High 

Annualized Monetized Costs ........................................................................................................................................... $139.30 $278.50 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 146 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, State regulation of health 

insurance. 

45 CFR Part 148 

Administrative practice and 

procedure, Health care, Health 

insurance, Penalties, Reporting and 

recordkeeping requirements. 

Adoption of Amendments to the 

Regulations 

Internal Revenue Service 

26 CFR Chapter I 

■ Accordingly, 26 CFR Part 54 is 

amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for part 54 is amended by adding an 

entry for § 54.9811–1 in numerical order 

and by removing the entry for 

§ 54.9811–1T to read in part as follows: 

Authority: 26 U.S.C. 7805 * * * 

Section 54.9811–1 also issued under 26 

U.S.C. 9833. * * * 

§ 54.9801–1 [Amended] 

■ Par. 2. Section 54.9801–1(a) is 

amended by removing the language 

‘‘54.9811–1T’’ and adding ‘‘54.9811–1’’ 

in its place. 

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62420 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

§ 54.9801–2 [Amended] 

■ Par. 3. In § 54.9801–2, the 

introductory paragraph before the 

definitions is amended by removing the 

language ‘‘54.9811–1T’’ and adding 

‘‘54.9811–1’’ in its place. 

■ Par. 4. Section 54.9811–1 is added to 

read as follows: 

§ 54.9811–1 Standards relating to benefits 

for mothers and newborns. 

(a) Hospital length of stay—(1) 

General rule. Except as provided in 

paragraph (a)(5) of this section, a group 

health plan that provides benefits for a 

hospital length of stay in connection 

with childbirth for a mother or her 

newborn may not restrict benefits for 

the stay to less than— 

(i) 48 hours following a vaginal 

delivery; or 

(ii) 96 hours following a delivery by 

cesarean section. 

(2) When stay begins—(i) Delivery in 

a hospital. If delivery occurs in a 

hospital, the hospital length of stay for 

the mother or newborn child begins at 

the time of delivery (or in the case of 

multiple births, at the time of the last 

delivery). 

(ii) Delivery outside a hospital. If 

delivery occurs outside a hospital, the 

hospital length of stay begins at the time 

the mother or newborn is admitted as a 

hospital inpatient in connection with 

childbirth. The determination of 

whether an admission is in connection 

with childbirth is a medical decision to 

be made by the attending provider. 

(3) Examples. The rules of paragraphs 

(a)(1) and (2) of this section are 

illustrated by the following examples. In 

each example, the group health plan 

provides benefits for hospital lengths of 

stay in connection with childbirth and 

is subject to the requirements of this 

section, as follows: 

Example 1. (i) Facts. A pregnant woman 

covered under a group health plan goes into 

labor and is admitted to the hospital at 10 

p.m. on June 11. She gives birth by vaginal 

delivery at 6 a.m. on June 12. 

(ii) Conclusion. In this Example 1, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 6 a.m. on June 14. 

Example 2. (i) Facts. A woman covered 

under a group health plan gives birth at home 

by vaginal delivery. After the delivery, the 

woman begins bleeding excessively in 

connection with the childbirth and is 

admitted to the hospital for treatment of the 

excessive bleeding at 7 p.m. on October 1. 

(ii) Conclusion. In this Example 2, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 7 p.m. on October 3. 

Example 3. (i) Facts. A woman covered 

under a group health plan gives birth by 

vaginal delivery at home. The child later 

develops pneumonia and is admitted to the 

hospital. The attending provider determines 

that the admission is not in connection with 

childbirth. 

(ii) Conclusion. In this Example 3, the 

hospital length-of-stay requirements of this 

section do not apply to the child’s admission 

to the hospital because the admission is not 

in connection with childbirth. 

(4) Authorization not required—(i) In 

general. A plan may not require that a 

physician or other health care provider 

obtain authorization from the plan, or 

from a health insurance issuer offering 

health insurance coverage under the 

plan, for prescribing the hospital length 

of stay specified in paragraph (a)(1) of 

this section. (See also paragraphs (b)(2) 

and (c)(3) of this section for rules and 

examples regarding other authorization 

and certain notice requirements.) 

(ii) Example. The rule of this 

paragraph (a)(4) is illustrated by the 

following example: 

Example. (i) Facts. In the case of a delivery 

by cesarean section, a group health plan 

subject to the requirements of this section 

automatically provides benefits for any 

hospital length of stay of up to 72 hours. For 

any longer stay, the plan requires an 

attending provider to complete a certificate of 

medical necessity. The plan then makes a 

determination, based on the certificate of 

medical necessity, whether a longer stay is 

medically necessary. 

(ii) Conclusion. In this Example, the 

requirement that an attending provider 

complete a certificate of medical necessity to 

obtain authorization for the period between 

72 hours and 96 hours following a delivery 

by cesarean section is prohibited by this 

paragraph (a)(4). 

(5) Exceptions—(i) Discharge of 

mother. If a decision to discharge a 

mother earlier than the period specified 

in paragraph (a)(1) of this section is 

made by an attending provider, in 

consultation with the mother, the 

requirements of paragraph (a)(1) of this 

section do not apply for any period after 

the discharge. 

(ii) Discharge of newborn. If a 

decision to discharge a newborn child 

earlier than the period specified in 

paragraph (a)(1) of this section is made 

by an attending provider, in 

consultation with the mother (or the 

newborn’s authorized representative), 

the requirements of paragraph (a)(1) of 

this section do not apply for any period 

after the discharge. 

(iii) Attending provider defined. For 

purposes of this section, attending 

provider means an individual who is 

licensed under applicable state law to 

provide maternity or pediatric care and 

who is directly responsible for 

providing maternity or pediatric care to 

a mother or newborn child. Therefore, a 

plan, hospital, managed care 

organization, or other issuer is not an 

attending provider. 

(iv) Example. The rules of this 

paragraph (a)(5) are illustrated by the 

following example: 

Example. (i) Facts. A pregnant woman 

covered under a group health plan subject to 

the requirements of this section goes into 

labor and is admitted to a hospital. She gives 

birth by cesarean section. On the third day 

after the delivery, the attending provider for 

the mother consults with the mother, and the 

attending provider for the newborn consults 

with the mother regarding the newborn. The 

attending providers authorize the early 

discharge of both the mother and the 

newborn. Both are discharged approximately 

72 hours after the delivery. The plan pays for 

the 72-hour hospital stays. 

(ii) Conclusion. In this Example, the 

requirements of this paragraph (a) have been 

satisfied with respect to the mother and the 

newborn. If either is readmitted, the hospital 

stay for the readmission is not subject to this 

section. 

(b) Prohibitions—(1) With respect to 

mothers—(i) In general. A group health 

plan may not— 

(A) Deny a mother or her newborn 

child eligibility or continued eligibility 

to enroll or renew coverage under the 

terms of the plan solely to avoid the 

requirements of this section; or 

(B) Provide payments (including 

payments-in-kind) or rebates to a 

mother to encourage her to accept less 

than the minimum protections available 

under this section. 

(ii) Examples. The rules of this 

paragraph (b)(1) are illustrated by the 

following examples. In each example, 

the group health plan is subject to the 

requirements of this section, as follows: 

Example 1. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay following a vaginal 

delivery. If a mother and newborn covered 

under the plan are discharged within 24 

hours after the delivery, the plan will waive 

the copayment and deductible. 

(ii) Conclusion. In this Example 1, because 

waiver of the copayment and deductible is in 

the nature of a rebate that the mother would 

not receive if she and her newborn remained 

in the hospital, it is prohibited by this 

paragraph (b)(1). (In addition, the plan 

violates paragraph (b)(2) of this section 

because, in effect, no copayment or 

deductible is required for the first portion of 

the stay and a double copayment and a 

deductible are required for the second 

portion of the stay.) 

Example 2. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay following a vaginal 

delivery. In the event that a mother and her 

newborn are discharged earlier than 48 hours 

and the discharges occur after consultation 

with the mother in accordance with the 

requirements of paragraph (a)(5) of this 

section, the plan provides for a follow-up 

visit by a nurse within 48 hours after the 

discharges to provide certain services that the 

mother and her newborn would otherwise 

receive in the hospital. 

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(ii) Conclusion. In this Example 2, because 

the follow-up visit does not provide any 

services beyond what the mother and her 

newborn would receive in the hospital, 

coverage for the follow-up visit is not 

prohibited by this paragraph (b)(1). 

(2) With respect to benefit 

restrictions—(i) In general. Subject to 

paragraph (c)(3) of this section, a group 

health plan may not restrict the benefits 

for any portion of a hospital length of 

stay specified in paragraph (a) of this 

section in a manner that is less favorable 

than the benefits provided for any 

preceding portion of the stay. 

(ii) Example. The rules of this 

paragraph (b)(2) are illustrated by the 

following example: 

Example. (i) Facts. A group health plan 

subject to the requirements of this section 

provides benefits for hospital lengths of stay 

in connection with childbirth. In the case of 

a delivery by cesarean section, the plan 

automatically pays for the first 48 hours. 

With respect to each succeeding 24-hour 

period, the participant or beneficiary must 

call the plan to obtain precertification from 

a utilization reviewer, who determines if an 

additional 24-hour period is medically 

necessary. If this approval is not obtained, 

the plan will not provide benefits for any 

succeeding 24-hour period. 

(ii) Conclusion. In this Example, the 

requirement to obtain precertification for the 

two 24-hour periods immediately following 

the initial 48-hour stay is prohibited by this 

paragraph (b)(2) because benefits for the 

latter part of the stay are restricted in a 

manner that is less favorable than benefits for 

a preceding portion of the stay. (However, 

this section does not prohibit a plan from 

requiring precertification for any period after 

the first 96 hours.) In addition, the 

requirement to obtain precertification from 

the plan based on medical necessity for a 

hospital length of stay within the 96-hour 

period would also violate paragraph (a) of 

this section. 

(3) With respect to attending 

providers. A group health plan may not 

directly or indirectly— 

(i) Penalize (for example, take 

disciplinary action against or retaliate 

against), or otherwise reduce or limit the 

compensation of, an attending provider 

because the provider furnished care to 

a participant or beneficiary in 

accordance with this section; or 

(ii) Provide monetary or other 

incentives to an attending provider to 

induce the provider to furnish care to a 

participant or beneficiary in a manner 

inconsistent with this section, including 

providing any incentive that could 

induce an attending provider to 

discharge a mother or newborn earlier 

than 48 hours (or 96 hours) after 

delivery. 

(c) Construction. With respect to this 

section, the following rules of 

construction apply: 

(1) Hospital stays not mandatory. This 

section does not require a mother to— 

(i) Give birth in a hospital; or 

(ii) Stay in the hospital for a fixed 

period of time following the birth of her 

child. 

(2) Hospital stay benefits not 

mandated. This section does not apply 

to any group health plan that does not 

provide benefits for hospital lengths of 

stay in connection with childbirth for a 

mother or her newborn child. 

(3) Cost-sharing rules—(i) In general. 

This section does not prevent a group 

health plan from imposing deductibles, 

coinsurance, or other cost-sharing in 

relation to benefits for hospital lengths 

of stay in connection with childbirth for 

a mother or a newborn under the plan 

or coverage, except that the coinsurance 

or other cost-sharing for any portion of 

the hospital length of stay specified in 

paragraph (a) of this section may not be 

greater than that for any preceding 

portion of the stay. 

(ii) Examples. The rules of this 

paragraph (c)(3) are illustrated by the 

following examples. In each example, 

the group health plan is subject to the 

requirements of this section, as follows: 

Example 1. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay in connection with 

vaginal deliveries. The plan covers 80 

percent of the cost of the stay for the first 24- 

hour period and 50 percent of the cost of the 

stay for the second 24-hour period. Thus, the 

coinsurance paid by the patient increases 

from 20 percent to 50 percent after 24 hours. 

(ii) Conclusion. In this Example 1, the plan 

violates the rules of this paragraph (c)(3) 

because coinsurance for the second 24-hour 

period of the 48-hour stay is greater than that 

for the preceding portion of the stay. (In 

addition, the plan also violates the similar 

rule in paragraph (b)(2) of this section.) 

Example 2. (i) Facts. A group health plan 

generally covers 70 percent of the cost of a 

hospital length of stay in connection with 

childbirth. However, the plan will cover 80 

percent of the cost of the stay if the 

participant or beneficiary notifies the plan of 

the pregnancy in advance of admission and 

uses whatever hospital the plan may 

designate. 

(ii) Conclusion. In this Example 2, the plan 

does not violate the rules of this paragraph 

(c)(3) because the level of benefits provided 

(70 percent or 80 percent) is consistent 

throughout the 48-hour (or 96-hour) hospital 

length of stay required under paragraph (a) of 

this section. (In addition, the plan does not 

violate the rules in paragraph (a)(4) or (b)(2) 

of this section.) 

(4) Compensation of attending 

provider. This section does not prevent 

a group health plan from negotiating 

with an attending provider the level and 

type of compensation for care furnished 

in accordance with this section 

(including paragraph (b) of this section). 

(d) Notice requirement. See 29 CFR 

2520.102–3(u) for rules relating to a 

disclosure requirement imposed under 

section 711(d) of ERISA (29 U.S.C. 1181) 

on certain group health plans that 

provide benefits for hospital lengths of 

stay in connection with childbirth. 

(e) Applicability in certain states—(1) 

Health insurance coverage. The 

requirements of section 9811 and this 

section do not apply with respect to 

health insurance coverage offered in 

connection with a group health plan if 

there is a state law regulating the 

coverage that meets any of the following 

criteria: 

(i) The state law requires the coverage 

to provide for at least a 48-hour hospital 

length of stay following a vaginal 

delivery and at least a 96-hour hospital 

length of stay following a delivery by 

cesarean section. 

(ii) The state law requires the 

coverage to provide for maternity and 

pediatric care in accordance with 

guidelines that relate to care following 

childbirth established by the American 

College of Obstetricians and 

Gynecologists, the American Academy 

of Pediatrics, or any other established 

professional medical association. 

(iii) The state law requires, in 

connection with the coverage for 

maternity care, that the hospital length 

of stay for such care is left to the 

decision of (or is required to be made 

by) the attending provider in 

consultation with the mother. State laws 

that require the decision to be made by 

the attending provider with the consent 

of the mother satisfy the criterion of this 

paragraph (e)(1)(iii). 

(2) Group health plans—(i) Fullyinsured plans. For a group health plan 

that provides benefits solely through 

health insurance coverage, if the state 

law regulating the health insurance 

coverage meets any of the criteria in 

paragraph (e)(1) of this section, then the 

requirements of section 9811 and this 

section do not apply. 

(ii) Self-insured plans. For a group 

health plan that provides all benefits for 

hospital lengths of stay in connection 

with childbirth other than through 

health insurance coverage, the 

requirements of section 9811 and this 

section apply. 

(iii) Partially-insured plans. For a 

group health plan that provides some 

benefits through health insurance 

coverage, if the state law regulating the 

health insurance coverage meets any of 

the criteria in paragraph (e)(1) of this 

section, then the requirements of section 

9811 and this section apply only to the 

extent the plan provides benefits for 

hospital lengths of stay in connection 

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62422 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

with childbirth other than through 

health insurance coverage. 

(3) Preemption provisions under 

section 731(a) of ERISA. See 29 CFR 

2590.711(e)(3) for a rule providing that 

the preemption provisions contained in 

section 731(a)(1) of ERISA and 29 CFR 

2590.731(a) do not supersede a state law 

if the state law is described in paragraph 

(e)(1) of 29 CFR 2590.711 (which is 

substantially similar to paragraph (e)(1) 

of this section). 

(4) Examples. The rules of this 

paragraph (e) are illustrated by the 

following examples: 

Example 1. (i) Facts. A group health plan 

buys group health insurance coverage in a 

state that requires that the coverage provide 

for at least a 48-hour hospital length of stay 

following a vaginal delivery and at least a 96- 

hour hospital length of stay following a 

delivery by cesarean section. 

(ii) Conclusion. In this Example 1, the 

coverage is subject to state law, and the 

requirements of section 9811 and this section 

do not apply. 

Example 2. (i) Facts. A self-insured group 

health plan covers hospital lengths of stay in 

connection with childbirth in a state that 

requires health insurance coverage to provide 

for maternity and pediatric care in 

accordance with guidelines that relate to care 

following childbirth established by the 

American College of Obstetricians and 

Gynecologists and the American Academy of 

Pediatrics. 

(ii) Conclusion. In this Example 2, even 

though the state law satisfies the criterion of 

paragraph (e)(1)(ii) of this section, because 

the plan provides benefits for hospital 

lengths of stay in connection with childbirth 

other than through health insurance 

coverage, the plan is subject to the 

requirements of section 9811 and this 

section. 

(f) Effective/applicability date. This 

section applies to group health plans for 

plan years beginning on or after January 

1, 2009. 

§ 54.9811–1T [Removed] 

■ Par. 5. Section 54.9811–1T is 

removed. 

§ 54.9831–1 [Amended] 

■ Par. 6. Section 54.9831–1(b) is 

amended by removing the language 

‘‘54.9811–1T’’ and adding ‘‘54.9811–1’’ 

in its place. 

Approved: September 23, 2008. 

Linda E. Stiff, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Eric Solomon, 

Assistant Secretary of the Treasury (Tax 

Policy). 

Employee Benefits Security 

Administration 

29 CFR Chapter XXV 

■ For the reasons set forth above, 29 

CFR Part 2590 is amended as follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 1. The authority citation for Part 2590 

continues to read as follows: 

Authority: 29 U.S.C. 1027, 1059, 1135, 

1161–1168, 1169, 1181–1183, 1181 note, 

1185, 1185a, 1185b, 1191, 1191a, 1191b, and 

1191c, sec. 101(g), Public Law 104–191, 110 

Stat. 1936; sec. 401(b), Public Law 105–200, 

112 Stat. 645 (42 U.S.C. 651 note); Secretary 

of Labor’s Order 1–2003, 68 FR 5374 (Feb. 3, 

2003). 

■ 2. Section 2590.711 is revised to read 

as follows: 

§ 2590.711 Standards relating to benefits 

for mothers and newborns. 

(a) Hospital length of stay—(1) 

General rule. Except as provided in 

paragraph (a)(5) of this section, a group 

health plan, or a health insurance issuer 

offering group health insurance 

coverage, that provides benefits for a 

hospital length of stay in connection 

with childbirth for a mother or her 

newborn may not restrict benefits for 

the stay to less than— 

(i) 48 hours following a vaginal 

delivery; or 

(ii) 96 hours following a delivery by 

cesarean section. 

(2) When stay begins—(i) Delivery in 

a hospital. If delivery occurs in a 

hospital, the hospital length of stay for 

the mother or newborn child begins at 

the time of delivery (or in the case of 

multiple births, at the time of the last 

delivery). 

(ii) Delivery outside a hospital. If 

delivery occurs outside a hospital, the 

hospital length of stay begins at the time 

the mother or newborn is admitted as a 

hospital inpatient in connection with 

childbirth. The determination of 

whether an admission is in connection 

with childbirth is a medical decision to 

be made by the attending provider. 

(3) Examples. The rules of paragraphs 

(a)(1) and (2) of this section are 

illustrated by the following examples. In 

each example, the group health plan 

provides benefits for hospital lengths of 

stay in connection with childbirth and 

is subject to the requirements of this 

section, as follows: 

Example 1. (i) Facts. A pregnant woman 

covered under a group health plan goes into 

labor and is admitted to the hospital at 10 

p.m. on June 11. She gives birth by vaginal 

delivery at 6 a.m. on June 12. 

(ii) Conclusion. In this Example 1, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 6 a.m. on June 14. 

Example 2. (i) Facts. A woman covered 

under a group health plan gives birth at home 

by vaginal delivery. After the delivery, the 

woman begins bleeding excessively in 

connection with the childbirth and is 

admitted to the hospital for treatment of the 

excessive bleeding at 7 p.m. on October 1. 

(ii) Conclusion. In this Example 2, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 7 p.m. on October 3. 

Example 3. (i) Facts. A woman covered 

under a group health plan gives birth by 

vaginal delivery at home. The child later 

develops pneumonia and is admitted to the 

hospital. The attending provider determines 

that the admission is not in connection with 

childbirth. 

(ii) Conclusion. In this Example 3, the 

hospital length-of-stay requirements of this 

section do not apply to the child’s admission 

to the hospital because the admission is not 

in connection with childbirth. 

(4) Authorization not required—(i) In 

general. A plan or issuer is prohibited 

from requiring that a physician or other 

health care provider obtain 

authorization from the plan or issuer for 

prescribing the hospital length of stay 

specified in paragraph (a)(1) of this 

section. (See also paragraphs (b)(2) and 

(c)(3) of this section for rules and 

examples regarding other authorization 

and certain notice requirements.) 

(ii) Example. The rule of this 

paragraph (a)(4) is illustrated by the 

following example: 

Example. (i) Facts. In the case of a delivery 

by cesarean section, a group health plan 

subject to the requirements of this section 

automatically provides benefits for any 

hospital length of stay of up to 72 hours. For 

any longer stay, the plan requires an 

attending provider to complete a certificate of 

medical necessity. The plan then makes a 

determination, based on the certificate of 

medical necessity, whether a longer stay is 

medically necessary. 

(ii) Conclusion. In this Example, the 

requirement that an attending provider 

complete a certificate of medical necessity to 

obtain authorization for the period between 

72 hours and 96 hours following a delivery 

by cesarean section is prohibited by this 

paragraph (a)(4). 

(5) Exceptions—(i) Discharge of 

mother. If a decision to discharge a 

mother earlier than the period specified 

in paragraph (a)(1) of this section is 

made by an attending provider, in 

consultation with the mother, the 

requirements of paragraph (a)(1) of this 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62423 

section do not apply for any period after 

the discharge. 

(ii) Discharge of newborn. If a 

decision to discharge a newborn child 

earlier than the period specified in 

paragraph (a)(1) of this section is made 

by an attending provider, in 

consultation with the mother (or the 

newborn’s authorized representative), 

the requirements of paragraph (a)(1) of 

this section do not apply for any period 

after the discharge. 

(iii) Attending provider defined. For 

purposes of this section, attending 

provider means an individual who is 

licensed under applicable state law to 

provide maternity or pediatric care and 

who is directly responsible for 

providing maternity or pediatric care to 

a mother or newborn child. Therefore, a 

plan, hospital, managed care 

organization, or other issuer is not an 

attending provider. 

(iv) Example. The rules of this 

paragraph (a)(5) are illustrated by the 

following example: 

Example. (i) Facts. A pregnant woman 

covered under a group health plan subject to 

the requirements of this section goes into 

labor and is admitted to a hospital. She gives 

birth by cesarean section. On the third day 

after the delivery, the attending provider for 

the mother consults with the mother, and the 

attending provider for the newborn consults 

with the mother regarding the newborn. The 

attending providers authorize the early 

discharge of both the mother and the 

newborn. Both are discharged approximately 

72 hours after the delivery. The plan pays for 

the 72-hour hospital stays. 

(ii) Conclusion. In this Example, the 

requirements of this paragraph (a) have been 

satisfied with respect to the mother and the 

newborn. If either is readmitted, the hospital 

stay for the readmission is not subject to this 

section. 

(b) Prohibitions—(1) With respect to 

mothers—(i) In general. A group health 

plan, and a health insurance issuer 

offering group health insurance 

coverage, may not— 

(A) Deny a mother or her newborn 

child eligibility or continued eligibility 

to enroll or renew coverage under the 

terms of the plan solely to avoid the 

requirements of this section; or 

(B) Provide payments (including 

payments-in-kind) or rebates to a 

mother to encourage her to accept less 

than the minimum protections available 

under this section. 

(ii) Examples. The rules of this 

paragraph (b)(1) are illustrated by the 

following examples. In each example, 

the group health plan is subject to the 

requirements of this section, as follows: 

Example 1. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay following a vaginal 

delivery. If a mother and newborn covered 

under the plan are discharged within 24 

hours after the delivery, the plan will waive 

the copayment and deductible. 

(ii) Conclusion. In this Example 1, because 

waiver of the copayment and deductible is in 

the nature of a rebate that the mother would 

not receive if she and her newborn remained 

in the hospital, it is prohibited by this 

paragraph (b)(1). (In addition, the plan 

violates paragraph (b)(2) of this section 

because, in effect, no copayment or 

deductible is required for the first portion of 

the stay and a double copayment and a 

deductible are required for the second 

portion of the stay.) 

Example 2. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay following a vaginal 

delivery. In the event that a mother and her 

newborn are discharged earlier than 48 hours 

and the discharges occur after consultation 

with the mother in accordance with the 

requirements of paragraph (a)(5) of this 

section, the plan provides for a follow-up 

visit by a nurse within 48 hours after the 

discharges to provide certain services that the 

mother and her newborn would otherwise 

receive in the hospital. 

(ii) Conclusion. In this Example 2, because 

the follow-up visit does not provide any 

services beyond what the mother and her 

newborn would receive in the hospital, 

coverage for the follow-up visit is not 

prohibited by this paragraph (b)(1). 

(2) With respect to benefit 

restrictions—(i) In general. Subject to 

paragraph (c)(3) of this section, a group 

health plan, and a health insurance 

issuer offering group health insurance 

coverage, may not restrict the benefits 

for any portion of a hospital length of 

stay specified in paragraph (a) of this 

section in a manner that is less favorable 

than the benefits provided for any 

preceding portion of the stay. 

(ii) Example. The rules of this 

paragraph (b)(2) are illustrated by the 

following example: 

Example. (i) Facts. A group health plan 

subject to the requirements of this section 

provides benefits for hospital lengths of stay 

in connection with childbirth. In the case of 

a delivery by cesarean section, the plan 

automatically pays for the first 48 hours. 

With respect to each succeeding 24-hour 

period, the participant or beneficiary must 

call the plan to obtain precertification from 

a utilization reviewer, who determines if an 

additional 24-hour period is medically 

necessary. If this approval is not obtained, 

the plan will not provide benefits for any 

succeeding 24-hour period. 

(ii) Conclusion. In this Example, the 

requirement to obtain precertification for the 

two 24-hour periods immediately following 

the initial 48-hour stay is prohibited by this 

paragraph (b)(2) because benefits for the 

latter part of the stay are restricted in a 

manner that is less favorable than benefits for 

a preceding portion of the stay. (However, 

this section does not prohibit a plan from 

requiring precertification for any period after 

the first 96 hours.) In addition, the 

requirement to obtain precertification from 

the plan based on medical necessity for a 

hospital length of stay within the 96-hour 

period would also violate paragraph (a) of 

this section. 

(3) With respect to attending 

providers. A group health plan, and a 

health insurance issuer offering group 

health insurance coverage, may not 

directly or indirectly— 

(i) Penalize (for example, take 

disciplinary action against or retaliate 

against), or otherwise reduce or limit the 

compensation of, an attending provider 

because the provider furnished care to 

a participant or beneficiary in 

accordance with this section; or 

(ii) Provide monetary or other 

incentives to an attending provider to 

induce the provider to furnish care to a 

participant or beneficiary in a manner 

inconsistent with this section, including 

providing any incentive that could 

induce an attending provider to 

discharge a mother or newborn earlier 

than 48 hours (or 96 hours) after 

delivery. 

(c) Construction. With respect to this 

section, the following rules of 

construction apply: 

(1) Hospital stays not mandatory. This 

section does not require a mother to— 

(i) Give birth in a hospital; or 

(ii) Stay in the hospital for a fixed 

period of time following the birth of her 

child. 

(2) Hospital stay benefits not 

mandated. This section does not apply 

to any group health plan, or any group 

health insurance coverage, that does not 

provide benefits for hospital lengths of 

stay in connection with childbirth for a 

mother or her newborn child. 

(3) Cost-sharing rules—(i) In general. 

This section does not prevent a group 

health plan or a health insurance issuer 

offering group health insurance 

coverage from imposing deductibles, 

coinsurance, or other cost-sharing in 

relation to benefits for hospital lengths 

of stay in connection with childbirth for 

a mother or a newborn under the plan 

or coverage, except that the coinsurance 

or other cost-sharing for any portion of 

the hospital length of stay specified in 

paragraph (a) of this section may not be 

greater than that for any preceding 

portion of the stay. 

(ii) Examples. The rules of this 

paragraph (c)(3) are illustrated by the 

following examples. In each example, 

the group health plan is subject to the 

requirements of this section, as follows: 

Example 1. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay in connection with 

vaginal deliveries. The plan covers 80 

percent of the cost of the stay for the first 24- 

hour period and 50 percent of the cost of the 

stay for the second 24-hour period. Thus, the 

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62424 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

coinsurance paid by the patient increases 

from 20 percent to 50 percent after 24 hours. 

(ii) Conclusion. In this Example 1, the plan 

violates the rules of this paragraph (c)(3) 

because coinsurance for the second 24-hour 

period of the 48-hour stay is greater than that 

for the preceding portion of the stay. (In 

addition, the plan also violates the similar 

rule in paragraph (b)(2) of this section.) 

Example 2. (i) Facts. A group health plan 

generally covers 70 percent of the cost of a 

hospital length of stay in connection with 

childbirth. However, the plan will cover 80 

percent of the cost of the stay if the 

participant or beneficiary notifies the plan of 

the pregnancy in advance of admission and 

uses whatever hospital the plan may 

designate. 

(ii) Conclusion. In this Example 2, the plan 

does not violate the rules of this paragraph 

(c)(3) because the level of benefits provided 

(70 percent or 80 percent) is consistent 

throughout the 48-hour (or 96-hour) hospital 

length of stay required under paragraph (a) of 

this section. (In addition, the plan does not 

violate the rules in paragraph (a)(4) or (b)(2) 

of this section.) 

(4) Compensation of attending 

provider. This section does not prevent 

a group health plan or a health 

insurance issuer offering group health 

insurance coverage from negotiating 

with an attending provider the level and 

type of compensation for care furnished 

in accordance with this section 

(including paragraph (b) of this section). 

(d) Notice requirement. See 29 CFR 

2520.102–3(u) (relating to the disclosure 

requirement under section 711(d) of the 

Act). 

(e) Applicability in certain states—(1) 

Health insurance coverage. The 

requirements of section 711 of the Act 

and this section do not apply with 

respect to health insurance coverage 

offered in connection with a group 

health plan if there is a state law 

regulating the coverage that meets any 

of the following criteria: 

(i) The state law requires the coverage 

to provide for at least a 48-hour hospital 

length of stay following a vaginal 

delivery and at least a 96-hour hospital 

length of stay following a delivery by 

cesarean section. 

(ii) The state law requires the 

coverage to provide for maternity and 

pediatric care in accordance with 

guidelines that relate to care following 

childbirth established by the American 

College of Obstetricians and 

Gynecologists, the American Academy 

of Pediatrics, or any other established 

professional medical association. 

(iii) The state law requires, in 

connection with the coverage for 

maternity care, that the hospital length 

of stay for such care is left to the 

decision of (or is required to be made 

by) the attending provider in 

consultation with the mother. State laws 

that require the decision to be made by 

the attending provider with the consent 

of the mother satisfy the criterion of this 

paragraph (e)(1)(iii). 

(2) Group health plans—(i) Fullyinsured plans. For a group health plan 

that provides benefits solely through 

health insurance coverage, if the state 

law regulating the health insurance 

coverage meets any of the criteria in 

paragraph (e)(1) of this section, then the 

requirements of section 711 of the Act 

and this section do not apply. 

(ii) Self-insured plans. For a group 

health plan that provides all benefits for 

hospital lengths of stay in connection 

with childbirth other than through 

health insurance coverage, the 

requirements of section 711 of the Act 

and this section apply. 

(iii) Partially-insured plans. For a 

group health plan that provides some 

benefits through health insurance 

coverage, if the state law regulating the 

health insurance coverage meets any of 

the criteria in paragraph (e)(1) of this 

section, then the requirements of section 

711 of the Act and this section apply 

only to the extent the plan provides 

benefits for hospital lengths of stay in 

connection with childbirth other than 

through health insurance coverage. 

(3) Relation to section 731(a) of the 

Act. The preemption provisions 

contained in section 731(a)(1) of the Act 

and Sec. 2590.731(a) do not supersede 

a state law described in paragraph (e)(1) 

of this section. 

(4) Examples. The rules of this 

paragraph (e) are illustrated by the 

following examples: 

Example 1. (i) Facts. A group health plan 

buys group health insurance coverage in a 

state that requires that the coverage provide 

for at least a 48-hour hospital length of stay 

following a vaginal delivery and at least a 96- 

hour hospital length of stay following a 

delivery by cesarean section. 

(ii) Conclusion. In this Example 1, the 

coverage is subject to state law, and the 

requirements of section 711 of the Act and 

this section do not apply. 

Example 2. (i) Facts. A self-insured group 

health plan covers hospital lengths of stay in 

connection with childbirth in a state that 

requires health insurance coverage to provide 

for maternity and pediatric care in 

accordance with guidelines that relate to care 

following childbirth established by the 

American College of Obstetricians and 

Gynecologists and the American Academy of 

Pediatrics. 

(ii) Conclusion. In this Example 2, even 

though the state law satisfies the criterion of 

paragraph (e)(1)(ii) of this section, because 

the plan provides benefits for hospital 

lengths of stay in connection with childbirth 

other than through health insurance 

coverage, the plan is subject to the 

requirements of section 711 of the Act and 

this section. 

(f) Applicability date. This section 

applies to group health plans, and 

health insurance issuers offering group 

health insurance coverage, for plan 

years beginning on or after January 1, 

2009. 

Signed at Washington, DC this 2nd day of 

October, 2008. 

Bradford P. Campbell, 

Assistant Secretary, Employee Benefits 

Security Administration, U.S. Department of 

Labor. 

Adoption of Amendments to the 

Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR SUBTITLE A, SUBCHAPTER B 

■ 45 CFR subtitle A, subchapter B, is 

amended as set forth below: 

PART 146—REQUIREMENTS FOR THE 

GROUP HEALTH INSURANCE 

MARKET 

■ 1. The authority citation for part 146 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the PHS Act (42 U.S.C. 300gg 

through 300gg–63, 300gg–91, and 300gg–92). 

■ 2. Section 146.130 is revised to read 

as follows: 

§ 146.130 Standards relating to benefits 

for mothers and newborns. 

(a) Hospital length of stay—(1) 

General rule. Except as provided in 

paragraph (a)(5) of this section, a group 

health plan, or a health insurance issuer 

offering group health insurance 

coverage, that provides benefits for a 

hospital length of stay in connection 

with childbirth for a mother or her 

newborn may not restrict benefits for 

the stay to less than— 

(i) 48 hours following a vaginal 

delivery; or 

(ii) 96 hours following a delivery by 

cesarean section. 

(2) When stay begins—(i) Delivery in 

a hospital. If delivery occurs in a 

hospital, the hospital length of stay for 

the mother or newborn child begins at 

the time of delivery (or in the case of 

multiple births, at the time of the last 

delivery). 

(ii) Delivery outside a hospital. If 

delivery occurs outside a hospital, the 

hospital length of stay begins at the time 

the mother or newborn is admitted as a 

hospital inpatient in connection with 

childbirth. The determination of 

whether an admission is in connection 

with childbirth is a medical decision to 

be made by the attending provider. 

(3) Examples. The rules of paragraphs 

(a)(1) and (2) of this section are 

illustrated by the following examples. In 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62425 

each example, the group health plan 

provides benefits for hospital lengths of 

stay in connection with childbirth and 

is subject to the requirements of this 

section, as follows: 

Example 1. (i) Facts. A pregnant woman 

covered under a group health plan goes into 

labor and is admitted to the hospital at 10 

p.m. on June 11. She gives birth by vaginal 

delivery at 6 a.m. on June 12. 

(ii) Conclusion. In this Example 1, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 6 a.m. on June 14. 

Example 2. (i) Facts. A woman covered 

under a group health plan gives birth at home 

by vaginal delivery. After the delivery, the 

woman begins bleeding excessively in 

connection with the childbirth and is 

admitted to the hospital for treatment of the 

excessive bleeding at 7 p.m. on October 1. 

(ii) Conclusion. In this Example 2, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 7 p.m. on October 3. 

Example 3. (i) Facts. A woman covered 

under a group health plan gives birth by 

vaginal delivery at home. The child later 

develops pneumonia and is admitted to the 

hospital. The attending provider determines 

that the admission is not in connection with 

childbirth. 

(ii) Conclusion. In this Example 3, the 

hospital length-of-stay requirements of this 

section do not apply to the child’s admission 

to the hospital because the admission is not 

in connection with childbirth. 

(4) Authorization not required—(i) In 

general. A plan or issuer is prohibited 

from requiring that a physician or other 

health care provider obtain 

authorization from the plan or issuer for 

prescribing the hospital length of stay 

specified in paragraph (a)(1) of this 

section. (See also paragraphs (b)(2) and 

(c)(3) of this section for rules and 

examples regarding other authorization 

and certain notice requirements.) 

(ii) Example. The rule of this 

paragraph (a)(4) is illustrated by the 

following example: 

Example. (i) Facts. In the case of a delivery 

by cesarean section, a group health plan 

subject to the requirements of this section 

automatically provides benefits for any 

hospital length of stay of up to 72 hours. For 

any longer stay, the plan requires an 

attending provider to complete a certificate of 

medical necessity. The plan then makes a 

determination, based on the certificate of 

medical necessity, whether a longer stay is 

medically necessary. 

(ii) Conclusion. In this Example, the 

requirement that an attending provider 

complete a certificate of medical necessity to 

obtain authorization for the period between 

72 hours and 96 hours following a delivery 

by cesarean section is prohibited by this 

paragraph (a)(4). 

(5) Exceptions—(i) Discharge of 

mother. If a decision to discharge a 

mother earlier than the period specified 

in paragraph (a)(1) of this section is 

made by an attending provider, in 

consultation with the mother, the 

requirements of paragraph (a)(1) of this 

section do not apply for any period after 

the discharge. 

(ii) Discharge of newborn. If a 

decision to discharge a newborn child 

earlier than the period specified in 

paragraph (a)(1) of this section is made 

by an attending provider, in 

consultation with the mother (or the 

newborn’s authorized representative), 

the requirements of paragraph (a)(1) of 

this section do not apply for any period 

after the discharge. 

(iii) Attending provider defined. For 

purposes of this section, attending 

provider means an individual who is 

licensed under applicable state law to 

provide maternity or pediatric care and 

who is directly responsible for 

providing maternity or pediatric care to 

a mother or newborn child. Therefore, a 

plan, hospital, managed care 

organization, or other issuer is not an 

attending provider. 

(iv) Example. The rules of this 

paragraph (a)(5) are illustrated by the 

following example: 

Example. (i) Facts. A pregnant woman 

covered under a group health plan subject to 

the requirements of this section goes into 

labor and is admitted to a hospital. She gives 

birth by cesarean section. On the third day 

after the delivery, the attending provider for 

the mother consults with the mother, and the 

attending provider for the newborn consults 

with the mother regarding the newborn. The 

attending providers authorize the early 

discharge of both the mother and the 

newborn. Both are discharged approximately 

72 hours after the delivery. The plan pays for 

the 72-hour hospital stays. 

(ii) Conclusion. In this Example, the 

requirements of this paragraph (a) have been 

satisfied with respect to the mother and the 

newborn. If either is readmitted, the hospital 

stay for the readmission is not subject to this 

section. 

(b) Prohibitions—(1) With respect to 

mothers—(i) In general. A group health 

plan, and a health insurance issuer 

offering group health insurance 

coverage, may not— 

(A) Deny a mother or her newborn 

child eligibility or continued eligibility 

to enroll or renew coverage under the 

terms of the plan solely to avoid the 

requirements of this section; or 

(B) Provide payments (including 

payments-in-kind) or rebates to a 

mother to encourage her to accept less 

than the minimum protections available 

under this section. 

(ii) Examples. The rules of this 

paragraph (b)(1) are illustrated by the 

following examples. In each example, 

the group health plan is subject to the 

requirements of this section, as follows: 

Example 1. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay following a vaginal 

delivery. If a mother and newborn covered 

under the plan are discharged within 24 

hours after the delivery, the plan will waive 

the copayment and deductible. 

(ii) Conclusion. In this Example 1, because 

waiver of the copayment and deductible is in 

the nature of a rebate that the mother would 

not receive if she and her newborn remained 

in the hospital, it is prohibited by this 

paragraph (b)(1). (In addition, the plan 

violates paragraph (b)(2) of this section 

because, in effect, no copayment or 

deductible is required for the first portion of 

the stay and a double copayment and a 

deductible are required for the second 

portion of the stay.) 

Example 2. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay following a vaginal 

delivery. In the event that a mother and her 

newborn are discharged earlier than 48 hours 

and the discharges occur after consultation 

with the mother in accordance with the 

requirements of paragraph (a)(5) of this 

section, the plan provides for a follow-up 

visit by a nurse within 48 hours after the 

discharges to provide certain services that the 

mother and her newborn would otherwise 

receive in the hospital. 

(ii) Conclusion. In this Example 2, because 

the follow-up visit does not provide any 

services beyond what the mother and her 

newborn would receive in the hospital, 

coverage for the follow-up visit is not 

prohibited by this paragraph (b)(1). 

(2) With respect to benefit 

restrictions—(i) In general. Subject to 

paragraph (c)(3) of this section, a group 

health plan, and a health insurance 

issuer offering group health insurance 

coverage, may not restrict the benefits 

for any portion of a hospital length of 

stay specified in paragraph (a) of this 

section in a manner that is less favorable 

than the benefits provided for any 

preceding portion of the stay. 

(ii) Example. The rules of this 

paragraph (b)(2) are illustrated by the 

following example: 

Example. (i) Facts. A group health plan 

subject to the requirements of this section 

provides benefits for hospital lengths of stay 

in connection with childbirth. In the case of 

a delivery by cesarean section, the plan 

automatically pays for the first 48 hours. 

With respect to each succeeding 24-hour 

period, the participant or beneficiary must 

call the plan to obtain precertification from 

a utilization reviewer, who determines if an 

additional 24-hour period is medically 

necessary. If this approval is not obtained, 

the plan will not provide benefits for any 

succeeding 24-hour period. 

(ii) Conclusion. In this Example, the 

requirement to obtain precertification for the 

two 24-hour periods immediately following 

the initial 48-hour stay is prohibited by this 

paragraph (b)(2) because benefits for the 

latter part of the stay are restricted in a 

manner that is less favorable than benefits for 

a preceding portion of the stay. (However, 

this section does not prohibit a plan from 

requiring precertification for any period after 

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62426 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

the first 96 hours.) In addition, the 

requirement to obtain precertification from 

the plan based on medical necessity for a 

hospital length of stay within the 96-hour 

period would also violate paragraph (a) of 

this section. 

(3) With respect to attending 

providers. A group health plan, and a 

health insurance issuer offering group 

health insurance coverage, may not 

directly or indirectly— 

(i) Penalize (for example, take 

disciplinary action against or retaliate 

against), or otherwise reduce or limit the 

compensation of, an attending provider 

because the provider furnished care to 

a participant or beneficiary in 

accordance with this section; or 

(ii) Provide monetary or other 

incentives to an attending provider to 

induce the provider to furnish care to a 

participant or beneficiary in a manner 

inconsistent with this section, including 

providing any incentive that could 

induce an attending provider to 

discharge a mother or newborn earlier 

than 48 hours (or 96 hours) after 

delivery. 

(c) Construction. With respect to this 

section, the following rules of 

construction apply: 

(1) Hospital stays not mandatory. This 

section does not require a mother to— 

(i) Give birth in a hospital; or 

(ii) Stay in the hospital for a fixed 

period of time following the birth of her 

child. 

(2) Hospital stay benefits not 

mandated. This section does not apply 

to any group health plan, or any group 

health insurance coverage, that does not 

provide benefits for hospital lengths of 

stay in connection with childbirth for a 

mother or her newborn child. 

(3) Cost-sharing rules—(i) In general. 

This section does not prevent a group 

health plan or a health insurance issuer 

offering group health insurance 

coverage from imposing deductibles, 

coinsurance, or other cost-sharing in 

relation to benefits for hospital lengths 

of stay in connection with childbirth for 

a mother or a newborn under the plan 

or coverage, except that the coinsurance 

or other cost-sharing for any portion of 

the hospital length of stay specified in 

paragraph (a) of this section may not be 

greater than that for any preceding 

portion of the stay. 

(ii) Examples. The rules of this 

paragraph (c)(3) are illustrated by the 

following examples. In each example, 

the group health plan is subject to the 

requirements of this section, as follows: 

Example 1. (i) Facts. A group health plan 

provides benefits for at least a 48-hour 

hospital length of stay in connection with 

vaginal deliveries. The plan covers 80 

percent of the cost of the stay for the first 24- 

hour period and 50 percent of the cost of the 

stay for the second 24-hour period. Thus, the 

coinsurance paid by the patient increases 

from 20 percent to 50 percent after 24 hours. 

(ii) Conclusion. In this Example 1, the plan 

violates the rules of this paragraph (c)(3) 

because coinsurance for the second 24-hour 

period of the 48-hour stay is greater than that 

for the preceding portion of the stay. (In 

addition, the plan also violates the similar 

rule in paragraph (b)(2) of this section.) 

Example 2. (i) Facts. A group health plan 

generally covers 70 percent of the cost of a 

hospital length of stay in connection with 

childbirth. However, the plan will cover 

80 percent of the cost of the stay if the 

participant or beneficiary notifies the plan of 

the pregnancy in advance of admission and 

uses whatever hospital the plan may 

designate. 

(ii) Conclusion. In this Example 2, the plan 

does not violate the rules of this paragraph 

(c)(3) because the level of benefits provided 

(70 percent or 80 percent) is consistent 

throughout the 48-hour (or 96-hour) hospital 

length of stay required under paragraph (a) of 

this section. (In addition, the plan does not 

violate the rules in paragraph (a)(4) or (b)(2) 

of this section.) 

(4) Compensation of attending 

provider. This section does not prevent 

a group health plan or a health 

insurance issuer offering group health 

insurance coverage from negotiating 

with an attending provider the level and 

type of compensation for care furnished 

in accordance with this section 

(including paragraph (b) of this section). 

(d) Notice requirement. Except as 

provided in paragraph (d)(4) of this 

section, a group health plan that 

provides benefits for hospital lengths of 

stay in connection with childbirth must 

meet the following requirements: 

(1) Required statement. The plan 

document that provides a description of 

plan benefits to participants and 

beneficiaries, or that notifies 

participants and beneficiaries of plan 

benefit changes, must disclose 

information that notifies participants 

and beneficiaries of their rights under 

this section. 

(2) Disclosure notice. To meet the 

disclosure requirement set forth in 

paragraph (d)(1) of this section, the 

following disclosure notice must be 

used: 

Statement of Rights Under the Newborns’ 

and Mothers’ Health Protection Act 

Under federal law, group health plans and 

health insurance issuers offering group 

health insurance coverage generally may not 

restrict benefits for any hospital length of 

stay in connection with childbirth for the 

mother or newborn child to less than 48 

hours following a vaginal delivery, or less 

than 96 hours following a delivery by 

cesarean section. However, the plan or issuer 

may pay for a shorter stay if the attending 

provider (e.g., your physician, nurse 

midwife, or physician assistant), after 

consultation with the mother, discharges the 

mother or newborn earlier. 

Also, under federal law, plans and issuers 

may not set the level of benefits or out-ofpocket costs so that any later portion of the 

48-hour (or 96-hour) stay is treated in a 

manner less favorable to the mother or 

newborn than any earlier portion of the stay. 

In addition, a plan or issuer may not, under 

federal law, require that a physician or other 

health care provider obtain authorization for 

prescribing a length of stay of up to 48 hours 

(or 96 hours). However, to use certain 

providers or facilities, or to reduce your outof-pocket costs, you may be required to 

obtain precertification. For information on 

precertification, contact your plan 

administrator. 

(3) Timing of disclosure. The 

disclosure notice in paragraph (d)(2) of 

this section shall be furnished to each 

participant covered under a group 

health plan, and each beneficiary 

receiving benefits under a group health 

plan, not later than 60 days after the 

first day of the first plan year beginning 

on or after January 1, 2009. Each time 

a plan distributes one or both of the 

documents described in paragraph (d)(1) 

to participants and beneficiaries after 

providing this initial notice, the 

disclosure notice in paragraph (d)(2) 

must appear in at least one of those 

documents. 

(4) Exceptions. The requirements of 

this paragraph (d) do not apply in the 

following situations. 

(i) Self-insured plans that have 

already provided notice. If benefits for 

hospital lengths of stay in connection 

with childbirth are not provided 

through health insurance coverage, and 

the group health plan has already 

provided an initial notice that complies 

with paragraphs (d)(1) and (d)(2) of this 

section, the group health plan is not 

automatically required to provide 

another such notice to participants and 

beneficiaries who have been provided 

with the initial notice. However, 

following the effective date of these 

regulations, whenever such a plan 

provides one or both of the documents 

described in paragraph (d)(1) of this 

section to participants and beneficiaries, 

the disclosure notice in paragraph (d)(2) 

of this section must appear in at least 

one of those documents. 

(ii) Self-insured plans that have 

elected exemption from this section. If 

benefits for hospital lengths of stay in 

connection with childbirth are not 

provided through health insurance 

coverage, and the group health plan has 

made the election described in 

§ 146.180 to be exempted from the 

requirements of this section, the group 

health plan is not subject to this 

paragraph (d). 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62427 

(iii) Insured plans. If benefits for 

hospital lengths of stay in connection 

with childbirth are provided through 

health insurance coverage, and the 

coverage is regulated under a State law 

described in paragraph (e) of this 

section, the group health plan is not 

subject to this paragraph (d). 

(e) Applicability in certain states—(1) 

Health insurance coverage. The 

requirements of section 2704 of the PHS 

Act and this section do not apply with 

respect to health insurance coverage 

offered in connection with a group 

health plan if there is a state law 

regulating the coverage that meets any 

of the following criteria: 

(i) The state law requires the coverage 

to provide for at least a 48-hour hospital 

length of stay following a vaginal 

delivery and at least a 96-hour hospital 

length of stay following a delivery by 

cesarean section. 

(ii) The state law requires the 

coverage to provide for maternity and 

pediatric care in accordance with 

guidelines that relate to care following 

childbirth established by the American 

College of Obstetricians and 

Gynecologists, the American Academy 

of Pediatrics, or any other established 

professional medical association. 

(iii) The state law requires, in 

connection with the coverage for 

maternity care, that the hospital length 

of stay for such care is left to the 

decision of (or is required to be made 

by) the attending provider in 

consultation with the mother. State laws 

that require the decision to be made by 

the attending provider with the consent 

of the mother satisfy the criterion of this 

paragraph (e)(1)(iii). 

(2) Group health plans—(i) Fullyinsured plans. For a group health plan 

that provides benefits solely through 

health insurance coverage, if the state 

law regulating the health insurance 

coverage meets any of the criteria in 

paragraph (e)(1) of this section, then the 

requirements of section 2704 of the PHS 

Act and this section do not apply. 

(ii) Self-insured plans. For a group 

health plan that provides all benefits for 

hospital lengths of stay in connection 

with childbirth other than through 

health insurance coverage, the 

requirements of section 2704 of the PHS 

Act and this section apply. 

(iii) Partially-insured plans. For a 

group health plan that provides some 

benefits through health insurance 

coverage, if the state law regulating the 

health insurance coverage meets any of 

the criteria in paragraph (e)(1) of this 

section, then the requirements of section 

2704 of the PHS Act and this section 

apply only to the extent the plan 

provides benefits for hospital lengths of 

stay in connection with childbirth other 

than through health insurance coverage. 

(3) Relation to section 2723(a) of the 

PHS Act. The preemption provisions 

contained in section 2723(a)(1) of the 

PHS Act and § 146.143(a) do not 

supersede a state law described in 

paragraph (e)(1) of this section. 

(4) Examples. The rules of this 

paragraph (e) are illustrated by the 

following examples: 

Example 1. (i) Facts. A group health plan 

buys group health insurance coverage in a 

state that requires that the coverage provide 

for at least a 48-hour hospital length of stay 

following a vaginal delivery and at least a 96- 

hour hospital length of stay following a 

delivery by cesarean section. 

(ii) Conclusion. In this Example 1, the 

coverage is subject to state law, and the 

requirements of section 2704 of the PHS Act 

and this section do not apply. 

Example 2. (i) Facts. A self-insured group 

health plan covers hospital lengths of stay in 

connection with childbirth in a state that 

requires health insurance coverage to provide 

for maternity and pediatric care in 

accordance with guidelines that relate to care 

following childbirth established by the 

American College of Obstetricians and 

Gynecologists and the American Academy of 

Pediatrics. 

(ii) Conclusion. In this Example 2, even 

though the state law satisfies the criterion of 

paragraph (e)(1)(ii) of this section, because 

the plan provides benefits for hospital 

lengths of stay in connection with childbirth 

other than through health insurance 

coverage, the plan is subject to the 

requirements of section 2704 of the PHS Act 

and this section. 

(f) Applicability date. Section 2704 of 

the PHS Act applies to group health 

plans, and health insurance issuers 

offering group health insurance 

coverage, for plan years beginning on or 

after January 1, 1998. This section 

applies to group health plans, and 

health insurance issuers offering group 

health insurance coverage, for plan 

years beginning on or after January 1, 

2009. 

PART 148—REQUIREMENTS FOR THE 

INDIVIDUAL HEALTH INSURANCE 

MARKET 

■ 3. The authority citation for part 148 

continues to read as follows: 

Authority: Secs. 2741 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

U.S.C. 300gg–41 through 300gg–63, 300gg– 

91, and 300gg–92). 

■ 4. Section 148.170 is revised to read 

as follows: 

§ 148.170 Standards relating to benefits 

for mothers and newborns. 

(a) Hospital length of stay—(1) 

General rule. Except as provided in 

paragraph (a)(5) of this section, an issuer 

offering health insurance coverage in 

the individual market that provides 

benefits for a hospital length of stay in 

connection with childbirth for a mother 

or her newborn may not restrict benefits 

for the stay to less than— 

(i) 48 hours following a vaginal 

delivery; or 

(ii) 96 hours following a delivery by 

cesarean section. 

(2) When stay begins—(i) Delivery in 

a hospital. If delivery occurs in a 

hospital, the hospital length of stay for 

the mother or newborn child begins at 

the time of delivery (or in the case of 

multiple births, at the time of the last 

delivery). 

(ii) Delivery outside a hospital. If 

delivery occurs outside a hospital, the 

hospital length of stay begins at the time 

the mother or newborn is admitted as a 

hospital inpatient in connection with 

childbirth. The determination of 

whether an admission is in connection 

with childbirth is a medical decision to 

be made by the attending provider. 

(3) Examples. The rules of paragraphs 

(a)(1) and (2) of this section are 

illustrated by the following examples. In 

each example, the issuer provides 

benefits for hospital lengths of stay in 

connection with childbirth and is 

subject to the requirements of this 

section, as follows: 

Example 1. (i) Facts. A pregnant woman 

covered under a policy issued in the 

individual market goes into labor and is 

admitted to the hospital at 10 p.m. on June 

11. She gives birth by vaginal delivery at 6 

a.m. on June 12. 

(ii) Conclusion. In this Example 1, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 6 a.m. on June 14. 

Example 2. (i) Facts. A woman covered 

under a policy issued in the individual 

market gives birth at home by vaginal 

delivery. After the delivery, the woman 

begins bleeding excessively in connection 

with the childbirth and is admitted to the 

hospital for treatment of the excessive 

bleeding at 7 p.m. on October 1. 

(ii) Conclusion. In this Example 2, the 48- 

hour period described in paragraph (a)(1)(i) 

of this section ends at 7 p.m. on October 3. 

Example 3. (i) Facts. A woman covered 

under a policy issued in the individual 

market gives birth by vaginal delivery at 

home. The child later develops pneumonia 

and is admitted to the hospital. The attending 

provider determines that the admission is not 

in connection with childbirth. 

(ii) Conclusion. In this Example 3, the 

hospital length-of-stay requirements of this 

section do not apply to the child’s admission 

to the hospital because the admission is not 

in connection with childbirth. 

(4) Authorization not required—(i) In 

general. An issuer is prohibited from 

requiring that a physician or other 

health care provider obtain 

authorization from the issuer for 

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62428 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 

prescribing the hospital length of stay 

specified in paragraph (a)(1) of this 

section. (See also paragraphs (b)(2) and 

(c)(3) of this section for rules and 

examples regarding other authorization 

and certain notice requirements.) 

(ii) Example. The rule of this 

paragraph (a)(4) is illustrated by the 

following example: 

Example. (i) Facts. In the case of a delivery 

by cesarean section, an issuer subject to the 

requirements of this section automatically 

provides benefits for any hospital length of 

stay of up to 72 hours. For any longer stay, 

the issuer requires an attending provider to 

complete a certificate of medical necessity. 

The issuer then makes a determination, based 

on the certificate of medical necessity, 

whether a longer stay is medically necessary. 

(ii) Conclusion. In this Example, the 

requirement that an attending provider 

complete a certificate of medical necessity to 

obtain authorization for the period between 

72 hours and 96 hours following a delivery 

by cesarean section is prohibited by this 

paragraph (a)(4). 

(5) Exceptions—(i) Discharge of 

mother. If a decision to discharge a 

mother earlier than the period specified 

in paragraph (a)(1) of this section is 

made by an attending provider, in 

consultation with the mother, the 

requirements of paragraph (a)(1) of this 

section do not apply for any period after 

the discharge. 

(ii) Discharge of newborn. If a 

decision to discharge a newborn child 

earlier than the period specified in 

paragraph (a)(1) of this section is made 

by an attending provider, in 

consultation with the mother (or the 

newborn’s authorized representative), 

the requirements of paragraph (a)(1) of 

this section do not apply for any period 

after the discharge. 

(iii) Attending provider defined. For 

purposes of this section, attending 

provider means an individual who is 

licensed under applicable state law to 

provide maternity or pediatric care and 

who is directly responsible for 

providing maternity or pediatric care to 

a mother or newborn child. Therefore, 

an issuer, plan, hospital, or managed 

care organization is not an attending 

provider. 

(iv) Example. The rules of this 

paragraph (a)(5) are illustrated by the 

following example: 

Example. (i) Facts. A pregnant woman 

covered under a policy offered by an issuer 

subject to the requirements of this section 

goes into labor and is admitted to a hospital. 

She gives birth by cesarean section. On the 

third day after the delivery, the attending 

provider for the mother consults with the 

mother, and the attending provider for the 

newborn consults with the mother regarding 

the newborn. The attending providers 

authorize the early discharge of both the 

mother and the newborn. Both are discharged 

approximately 72 hours after the delivery. 

The issuer pays for the 72-hour hospital 

stays. 

(ii) Conclusion. In this Example, the 

requirements of this paragraph (a) have been 

satisfied with respect to the mother and the 

newborn. If either is readmitted, the hospital 

stay for the readmission is not subject to this 

section. 

(b) Prohibitions—(1) With respect to 

mothers—(i) In general. An issuer 

subject to the requirements of this 

section may not— 

(A) Deny a mother or her newborn 

child eligibility or continued eligibility 

to enroll in or renew coverage solely to 

avoid the requirements of this section; 

or 

(B) Provide payments (including 

payments-in-kind) or rebates to a 

mother to encourage her to accept less 

than the minimum protections available 

under this section. 

(ii) Examples. The rules of this 

paragraph (b)(1) are illustrated by the 

following examples. In each example, 

the issuer is subject to the requirements 

of this section, as follows: 

Example 1. (i) Facts. An issuer provides 

benefits for at least a 48-hour hospital length 

of stay following a vaginal delivery. If a 

mother and newborn covered under a policy 

issued in the individual market are 

discharged within 24 hours after the delivery, 

the issuer will waive the copayment and 

deductible. 

(ii) Conclusion. In this Example 1, because 

waiver of the copayment and deductible is in 

the nature of a rebate that the mother would 

not receive if she and her newborn remained 

in the hospital, it is prohibited by this 

paragraph (b)(1). (In addition, the issuer 

violates paragraph (b)(2) of this section 

because, in effect, no copayment or 

deductible is required for the first portion of 

the stay and a double copayment and a 

deductible are required for the second 

portion of the stay.) 

Example 2. (i) Facts. An issuer provides 

benefits for at least a 48-hour hospital length 

of stay following a vaginal delivery. In the 

event that a mother and her newborn are 

discharged earlier than 48 hours and the 

discharges occur after consultation with the 

mother in accordance with the requirements 

of paragraph (a)(5) of this section, the issuer 

provides for a follow-up visit by a nurse 

within 48 hours after the discharges to 

provide certain services that the mother and 

her newborn would otherwise receive in the 

hospital. 

(ii) Conclusion. In this Example 2, because 

the follow-up visit does not provide any 

services beyond what the mother and her 

newborn would receive in the hospital, 

coverage for the follow-up visit is not 

prohibited by this paragraph (b)(1). 

(2) With respect to benefit 

restrictions—(i) In general. Subject to 

paragraph (c)(3) of this section, an issuer 

may not restrict the benefits for any 

portion of a hospital length of stay 

specified in paragraph (a) of this section 

in a manner that is less favorable than 

the benefits provided for any preceding 

portion of the stay. 

(ii) Example. The rules of this 

paragraph (b)(2) are illustrated by the 

following example: 

Example. (i) Facts. An issuer subject to the 

requirements of this section provides benefits 

for hospital lengths of stay in connection 

with childbirth. In the case of a delivery by 

cesarean section, the issuer automatically 

pays for the first 48 hours. With respect to 

each succeeding 24-hour period, the covered 

individual must call the issuer to obtain 

precertification from a utilization reviewer, 

who determines if an additional 24-hour 

period is medically necessary. If this 

approval is not obtained, the issuer will not 

provide benefits for any succeeding 24-hour 

period. 

(ii) Conclusion. In this Example, the 

requirement to obtain precertification for the 

two 24-hour periods immediately following 

the initial 48-hour stay is prohibited by this 

paragraph (b)(2) because benefits for the 

latter part of the stay are restricted in a 

manner that is less favorable than benefits for 

a preceding portion of the stay. (However, 

this section does not prohibit an issuer from 

requiring precertification for any period after 

the first 96 hours.) In addition, the 

requirement to obtain precertification from 

the issuer based on medical necessity for a 

hospital length of stay within the 96-hour 

period would also violate paragraph (a) of 

this section. 

(3) With respect to attending 

providers. An issuer may not directly or 

indirectly— 

(i) Penalize (for example, take 

disciplinary action against or retaliate 

against), or otherwise reduce or limit the 

compensation of, an attending provider 

because the provider furnished care to 

a covered individual in accordance with 

this section; or 

(ii) Provide monetary or other 

incentives to an attending provider to 

induce the provider to furnish care to a 

covered individual in a manner 

inconsistent with this section, including 

providing any incentive that could 

induce an attending provider to 

discharge a mother or newborn earlier 

than 48 hours (or 96 hours) after 

delivery. 

(c) Construction. With respect to this 

section, the following rules of 

construction apply: 

(1) Hospital stays not mandatory. This 

section does not require a mother to— 

(i) Give birth in a hospital; or 

(ii) Stay in the hospital for a fixed 

period of time following the birth of her 

child. 

(2) Hospital stay benefits not 

mandated. This section does not apply 

to any issuer that does not provide 

benefits for hospital lengths of stay in 

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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations 62429 

connection with childbirth for a mother 

or her newborn child. 

(3) Cost-sharing rules—(i) In general. 

This section does not prevent an issuer 

from imposing deductibles, 

coinsurance, or other cost-sharing in 

relation to benefits for hospital lengths 

of stay in connection with childbirth for 

a mother or a newborn under the 

coverage, except that the coinsurance or 

other cost-sharing for any portion of the 

hospital length of stay specified in 

paragraph (a) of this section may not be 

greater than that for any preceding 

portion of the stay. 

(ii) Examples. The rules of this 

paragraph (c)(3) are illustrated by the 

following examples. In each example, 

the issuer is subject to the requirements 

of this section, as follows: 

Example 1. (i) Facts. An issuer provides 

benefits for at least a 48-hour hospital length 

of stay in connection with vaginal deliveries. 

The issuer covers 80 percent of the cost of 

the stay for the first 24-hour period and 50 

percent of the cost of the stay for the second 

24-hour period. Thus, the coinsurance paid 

by the patient increases from 20 percent to 

50 percent after 24 hours. 

(ii) Conclusion. In this Example 1, the 

issuer violates the rules of this paragraph 

(c)(3) because coinsurance for the second 24- 

hour period of the 48-hour stay is greater 

than that for the preceding portion of the 

stay. (In addition, the issuer also violates the 

similar rule in paragraph (b)(2) of this 

section.) 

Example 2. (i) Facts. An issuer generally 

covers 70 percent of the cost of a hospital 

length of stay in connection with childbirth. 

However, the issuer will cover 80 percent of 

the cost of the stay if the covered individual 

notifies the issuer of the pregnancy in 

advance of admission and uses whatever 

hospital the issuer may designate. 

(ii) Conclusion. In this Example 2, the 

issuer does not violate the rules of this 

paragraph (c)(3) because the level of benefits 

provided (70 percent or 80 percent) is 

consistent throughout the 48-hour (or 96- 

hour) hospital length of stay required under 

paragraph (a) of this section. (In addition, the 

issuer does not violate the rules in paragraph 

(a)(4) or (b)(2) of this section.) 

(4) Compensation of attending 

provider. This section does not prevent 

an issuer from negotiating with an 

attending provider the level and type of 

compensation for care furnished in 

accordance with this section (including 

paragraph (b) of this section). 

(5) Applicability. This section applies 

to all health insurance coverage issued 

in the individual market, and is not 

limited in its application to coverage 

that is provided to eligible individuals 

as defined in section 2741(b) of the PHS 

Act. 

(d) Notice requirement. Except as 

provided in paragraph (d)(4) of this 

section, an issuer offering health 

insurance in the individual market must 

meet the following requirements with 

respect to benefits for hospital lengths of 

stay in connection with childbirth: 

(1) Required statement. The insurance 

contract must disclose information that 

notifies covered individuals of their 

rights under this section. 

(2) Disclosure notice. To meet the 

disclosure requirements set forth in 

paragraph (d)(1) of this section, the 

following disclosure notice must be 

used: 

Statement of Rights Under the Newborns’ 

and Mothers’ Health Protection Act 

Under federal law, health insurance issuers 

generally may not restrict benefits for any 

hospital length of stay in connection with 

childbirth for the mother or newborn child to 

less than 48 hours following a vaginal 

delivery, or less than 96 hours following a 

delivery by cesarean section. However, the 

issuer may pay for a shorter stay if the 

attending provider (e.g. , your physician, 

nurse midwife, or physician assistant), after 

consultation with the mother, discharges the 

mother or newborn earlier. 

Also, under federal law, issuers may not 

set the level of benefits or out-of-pocket costs 

so that any later portion of the 48-hour (or 

96-hour) stay is treated in a manner less 

favorable to the mother or newborn than any 

earlier portion of the stay. 

In addition, an issuer may not, under 

federal law, require that a physician or other 

health care provider obtain authorization for 

prescribing a length of stay of up to 48 hours 

(or 96 hours). However, to use certain 

providers or facilities, or to reduce your outof-pocket costs, you may be required to 

obtain precertification. For information on 

precertification, contact your issuer. 

(3) Timing of disclosure. The 

disclosure notice in paragraph (d)(2) of 

this section shall be furnished to the 

covered individuals in the form of a 

copy of the contract, or a rider (or 

equivalent amendment to the contract) 

no later than December 19, 2008. 

To the extent an issuer has already 

provided the disclosure notice in 

paragraph (d)(2) of this section to 

covered individuals, it need not provide 

another such notice by December 19, 

2008. 

(4) Exception. The requirements of 

this paragraph (d) do not apply with 

respect to coverage regulated under a 

state law described in paragraph (e) of 

this section. 

(e) Applicability in certain states—(1) 

Health insurance coverage. The 

requirements of section 2751 of the PHS 

Act and this section do not apply with 

respect to health insurance coverage in 

the individual market if there is a state 

law regulating the coverage that meets 

any of the following criteria: 

(i) The state law requires the coverage 

to provide for at least a 48-hour hospital 

length of stay following a vaginal 

delivery and at least a 96-hour hospital 

length of stay following a delivery by 

cesarean section. 

(ii) The state law requires the 

coverage to provide for maternity and 

pediatric care in accordance with 

guidelines that relate to care following 

childbirth established by the American 

College of Obstetricians and 

Gynecologists, the American Academy 

of Pediatrics, or any other established 

professional medical association. 

(iii) The state law requires, in 

connection with the coverage for 

maternity care, that the hospital length 

of stay for such care is left to the 

decision of (or is required to be made 

by) the attending provider in 

consultation with the mother. State laws 

that require the decision to be made by 

the attending provider with the consent 

of the mother satisfy the criterion of this 

paragraph (e)(1)(iii). 

(2) Relation to section 2762(a) of the 

PHS Act. The preemption provisions 

contained in section 2762(a) of the PHS 

Act and § 148.210(b) do not supersede a 

state law described in paragraph (e)(1) 

of this section. 

(f) Applicability date. Section 2751 of 

the PHS Act applies to health insurance 

coverage offered, sold, issued, renewed, 

in effect, or operated in the individual 

market on or after January 1, 1998. This 

section applies to health insurance 

coverage offered, sold, issued, renewed, 

in effect, or operated in the individual 

market on or after January 1, 2009. 

Dated: May 11, 2007. 

Leslie V. Norwalk, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Dated: October 30, 2007. 

Michael O. Leavitt, 

Secretary, Department of Health and Human 

Services. 

Editorial Note: This document was 

received in the Office of the Federal Register 

on October 14, 2008. 

[FR Doc. E8–24666 Filed 10–17–08; 8:45 am] 

BILLING CODE 4830–01–4510–29–4120–01–P 

mstockstill on PROD1PC66 with RULES2