On March 16, 2012, the Department of Health and Human Services published a final rule regarding student health plans, an advanced notice of proposed rulemaking explaining how it intends to handle coverage of contraception services, and a notice regarding the early retiree reinsurance program.  This blog post addresses these issuances.  Separate blog posts will address other rules also released on March 16 addressing the implementation of the Affordable Care Act’s (ACA) reinsurance, risk adjustment, and risk corridor provisions and eligibility determinations under the ACA’s 2014 Medicaid expansions.

Contraception And Self-Insured Religious Employers

The advanced notice of proposed rulemaking (issued jointly by HHS and the Department of Labor and Department of the Treasury) addresses the intensely controversial issue of how contraceptives will be covered by employer-sponsored health plans.  The ACA requires group health plans and issuers of group and individual health insurance coverage (including self-insured plans) to cover preventive services and to do so without cost sharing.  Included in preventive services are women’s preventive services as determined under guidelines issued August 1, 2011, by the Health Resources and Services Administration.  HRSA determined, based on a recommendation of the Institute of Medicine, that contraceptive services should be included.  These services must be provided as of August 1, 2012.

Guidance for implementing the HRSA guidelines,  however, contained two exceptions.  First, religious employers — defined as employers that have the inculcation of religious values as their purpose; primarily employ and serve persons who share their religious tenets; and are non-profit churches, integrated auxiliaries, and conventions or religious orders — need not cover contraceptives.  This exemption covers, apparently, not just churches, but certain church institutions that have a strong religious orientation, like primary schools.

The second exception gives other nonprofit employers, such as religiously-affiliated universities and hospitals, until August 1, 2013 to come into compliance with the rule.  This grace period was intended to give the administration time to figure out how to accommodate these entities.

The problem is on its face intractable.  On the one hand, the Institute of Medicine concluded that contraceptive services were important for the health of both women and their children.  On the other, some religious groups in the United States, notably the Catholic Church, believe that contraception is wrong.  Moreover, contraception coverage has become a hot button political issue, with opponents of the administration accusing it of carrying on a “war on religion” while women’s groups have urged the administration to stand firm for women’s health.

The ANPRM asks for comments as to how to solve this conundrum and suggests several answers.  The ANPRM begins by clarifying that only contraception is at issue.  HHS does not intend to allow employers or insurers to pick and choose what provisions of the ACA they will comply with and which they prefer not to.  The exception that the proposed rule will recognize will also only apply to group health plans sponsored by religious organizations.  HHS asks for advice as to how to define this term, and does not completely rule out the possibility of it applying to for-profit organizations.  The category will include a larger group than the “religious employers” already covered by the initial exception.   The new exception, however, will not apply to secular employers, no matter how strong their religious convictions may be.

As to insured groups, HHS has already indicated its proposed solution.  An insurer that insures a religious organization’s employees will have to cover contraceptives from its own resources without cost sharing.  There is evidence that contraception reduces the cost of covered services such as maternity or sterilization, and, HHS reasons, insurers should be able to cover the cost of contraception through their own resources.  The insurer must notify plan members that coverage is available and cover contraception without cost sharing.

The problem has been how to provide services to self-insured religious organization plans.  The ANPRM proposes three possible solutions, and asks for more.  First, it notes that most self-insured plans are administered by third party administrators.  One possibility, therefore, is that a plan administrator could cover the cost of contraceptive services out of its own resources—fees that it receives for providing disease management or drug rebates, for example.  A second possibility would be to give the TPO a rebate or discount on the fees it would otherwise owe for the ACA reinsurance program.  A third possibility would be to require multi-state plans offered by the exchanges through the Office of Personnel Management to cover contraceptive services for religious organization plans.

The latter two proposals would effectively use public funds to provide the coverage, and also would not be available until 2014.  But this Gordian knot somehow must be cut, and no solution will be perfect.  The agencies, of course, would welcome any proposed solutions that improve on these.

Student Health Plans

The student health plan rule finalizes a proposal made over a year ago, discussed here.  Student health plans cover between 1.1 and 1.5 million students at about 2000 colleges and universities.  They have often been criticized for delivering skimpy benefits and low value.  Section 1560(c) of the ACA, however, explicitly provided that the reform law should not be interpreted to prohibit student health plans.

The final rule attempts to continue to recognize the unique features of insured student health plans while otherwise requiring them otherwise to comply with the ACA. It defines insured student health plans as individual insurance plans, subject to the ACA provisions governing individual plans.  It recognizes, however, that self-insured student health plans (which cover about 200,000 students) are not subject to the ACA. Self-insured plans are, therefore, unregulated if they are not regulated by state law (although they will not qualify as coverage for the minimum coverage requirement as of 2014.)  The rule also recognizes that some plans may be exempt from ACA coverage as “short-term, limited duration” coverage, such as plans covering overseas study for a single term, but concludes that most student plans do not qualify for this exception, since they can cover extended periods of study.

The rule, however, modifies or delays the application of several ACA requirements with respect to student health plans.  First, student health plans are only subject to reduced annual dollar limits prior to 2014, $100,000 of minimum coverage for policy years beginning between July 1, 2012 and September 23, 2012, and $500,000 for policy years beginning between September 23, 2012 and January 1, 2014, after which annual dollar limits disappear.

Second, fees charged universities for student health services will not be considered to be cost-sharing for purposes of the ACA prohibition against cost-sharing for preventive services.  Religious universities will also not need to cover contraception as a preventive service without cost-sharing until August of 2013, and will thereafter be subject to the same accommodation as religious organizations that offer employee health plans. Student health plans may also not limit students to student health services as their sole source of covered services.

Third, student health plans must give their enrollees notice as to the respect in which student coverage differs from individual coverage fully subject to the ACA.  The notice must also inform them of their right to get coverage under their parents’ policy up to age 26.

Finally, the rule provides that the medical loss ratio requirements of the ACA apply to student health plans, but subject to some modifications.  First, insurers can aggregate their business at the national level rather than at the state level for calculating their MLR.  Second, the MLR provision does not apply until 2013, and for 2013 insurers can multiply their incurred claims and quality improvement activities by 1.15 to achieve the 80 percent target before paying rebates, effectively reducing the target to 70 percent, even before applying other adjustments.

The Early Retiree Reinsurance Program

The Early Retiree Reinsurance Program notice simply states that employers do not need to use the funds they receive under the program during the plan year in which they are received, but must use them as soon as possible, but no later than December 31, 2014.  The funds must be used to reduce health benefit costs, either for the employer or employee.