Free Health Care: Regs Delineate No-Cost Preventive Services

The health care reform law specifies that new group health plans and grandfathered plans that lose their status must provide certain preventive services at no cost to employees and their dependents.  Grandfathered plans may provide these services without losing their status.  Interim final regulations, effective for plan years beginning on or after September 23, 2010, implement this provision. 

Preventive Services Covered 

Examples of preventive items and services include annual flu shots, cholesterol screenings, and PAP smears.  Preventive items and services are identified as recommendations or guidelines coming from three separate entities — the U.S. Preventive Services Task Force (Task Force), recommendations or guidelines from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention (Advisory Committee), and recommendations or guidelines from the Health Resources and Services Administration (HRSA). 

The regs don't list all the recommended preventive items and services that must be covered.  Instead, group plans must surf to the Department of Health and Human Service's (HHS) website for the current list. 

Click here to go to the website.

Cost-Sharing Mechanisms 

The regs set up a three-tiered model for determining whether patients are responsible for cost-sharing (i.e., co-payments or co-insurance) when they visit the office of an in-network provider.  Those who see out-of-network providers may be required to pay full cost-sharing.  The regs put a premium on employees specifying the reason for their office visit when they make their appointments. 

• If a recommended preventive service is billed separately from the office visit (or is tracked separately as individual encounter data), plans may impose cost-sharing on the office visit only.
  
  

• If a recommended preventive service isn't billed separately from the office visit (or isn't tracked separately as individual encounter data) and the primary purpose of the employee's office visit is to receive the recommended preventive service, plans may not impose cost-sharing on the office visit.
  
  

• If a recommended preventive service isn't billed separately from an office visit (or isn't tracked separately as individual encounter data), and the primary purpose of the employee's office visit isn't to receive the recommended preventive service, the plan may impose cost-sharing on the office visit. 

If a recommended preventive service doesn't specify the frequency, method, treatment, or setting for the provision of that service, the regs allow plans to use reasonable medical management techniques to determine any coverage limitations.  Plans may provide preventive services in addition to the services that are recommended by the three entities, and may impose cost-sharing at their discretion.  In addition, a treatment that results from a recommended preventive service can be subject to cost-sharing if the treatment isn't itself a recommended preventive service. 

Effective Dates 

The regs state that recommended preventive services must be provided by the later of plan years beginning on or after September 23, 2010, or one year after the date the recommendation or guideline is issued.  So recommendations and guidelines issued before September 23, 2009, must be provided for plan years beginning on or after September 23, 2010 (January 1, 2011, for calendar year plans).  However, to prevent plans from having to surf to the HHS's website more than once a year, for purposes of determining the one-year deadline, the regs set out this schedule:

• A recommendation or guideline from the Task Force is considered issued on the last day of the month in which it publishes or releases the recommendation.
  
  

• A recommendation or guideline from the Advisory Committee is considered issued on the date on which it is adopted by the Director of the Centers for Disease Control and Prevention.
  
  

• A recommendation or guideline from the HRSA is considered issued on the date on which it is accepted by the HRSA administrator, or if applicable, adopted by the Secretary of the HHS. 

Click here to read the regs.

 Interim Final Regs Establish Health Claim Appeals Procedure

The health care reform law requires all new insured and self-insured group health plans and grandfathered plans that lose their status to provide employees and their beneficiaries with an effective process for appealing adverse benefit decisions.  Grandfathered plans may implement these provisions without losing their status.  Interim final regs, which become effective for plan years beginning on or after September 23, 2010 (January 1, 2011, for calendar year plans), explain this provision. 

Internal Claims And Appeals Processes 

Regardless of whether they're covered under ERISA, group plans and health insurers offering group coverage must now comply with ERISA's current claims procedures for adverse benefit determinations, plus these six new elements as added by the regs. 

• Broader reach.  The regs broaden the current ERISA claims procedures to include rescissions of coverage as an adverse benefit determination. 
  
  

• Notification of urgent care claims.  The regs require that plans notify employees of a favorable or adverse benefit determination as soon as possible, taking into account medical exigencies, but not later than 24 hours after the plan receives the claim, unless the employee fails to provide sufficient information to determine whether, or to what extent, benefits are covered or payable.  Heads up: The current ERISA claims procedure generally requires a determination not later than 72 hours after the plan receives the claim. 
  
  

• Full and fair review.  Plans must allow employees to review their claim files and present evidence and testimony as part of the internal claims and appeals process.  In addition to complying with the current ERISA claims procedure, plans must provide employees, free of charge, with any new or additional evidence considered, relied upon, or generated by the plan in connection with the claim.  This documentation must be provided as soon as possible, and sufficiently in advance of the date on which the notice of final internal adverse benefit determination is required to be provided, to give employees a reasonable opportunity to respond.  Additionally, before a plan can issue a final internal adverse benefit determination based on new or additional rationale, employees must be provided, free of charge, with the rationale.  The rationale must be provided as soon as possible, and sufficiently in advance of the date on which the notice of final internal adverse benefit determination is required to be provided, to give employees a reasonable opportunity to respond prior to that date. 
  
  

• Conflicts of interest.  In addition to the current ERISA claims procedure, plans must ensure that claims are adjudicated in a manner designed to ensure the decision-maker's independence and impartiality.  Accordingly, a plan's decisions regarding hiring, compensation, termination, promotion, etc., can't be based on the likelihood that the decision-maker will support a denial of benefits. 
  
  

• Notice requirements.  Employees must receive notices that are culturally and linguistically appropriate, and the regs detail how this is to be done.  In addition to complying with the notice requirements of ERISA's current claims procedure, notices must include information sufficient to identify the claim involved: the date of service; the health care provider; the claim amount; the diagnosis code; the treatment code; the denial code; and the corresponding meaning of those codes.  Notices must describe the plan's standard, if any, that was used in denying the claim.  Notices of final internal adverse benefit determinations must include a discussion of the decision.  Plans must revise summary plan descriptions to include a description of available internal appeals and external review processes.  Finally, plans must disclose the contact information for any applicable office of health insurance consumer assistance or ombudsman.  The Department of Labor will issue model notices that can be used to satisfy all of these notice requirements. 
  
  

• Strict compliance.  If plans fail to strictly comply with all the requirements of the internal claims and appeals process with respect to a claim, the employee will be deemed to have exhausted the internal claims and appeals process, regardless of whether the plan substantially complied or whether the error was de minimis.  Employees can then take their claims to an external review process, where they stand a better chance of prevailing. 

In addition to the six new requirements, plans must continue coverage pending the outcome of an internal appeal.  Employees in urgent care situations or those receiving an ongoing treatment may be allowed to proceed with an expedited external review at the same time as the internal appeal process. 

External Review Process 

Under the regs, plans must be bound by an external reviewer's decision.  Currently, 44 states have some external review mechanism.  The regs will standardize those processes.  For plan years beginning before July 1, 2011, the regs also provide a transition period during which the federal government will work with those states to upgrade their review procedures.  For plans, including self-insured plans, that aren't subject to an existing external review process, a federal external review process will apply for plan years beginning on or after September 23, 2010.

Click here to read the regs.

 DOL Releases Health Care Reform Model Notices

The health care reform law requires the Department of Labor (DOL) to create several model notices.  The DOL has now met its statutory obligations.

Yours For The Clicking 

The following model notices, which the DOL has created in Microsoft Word, are now available.

• Dependents' coverage notice.  New group health plans (i.e., plans not in existence on March 23, 2010) must extend coverage to employees' adult children until they turn 26.  Grandfathered plans must extend coverage to employees' adult children if children don't qualify for their own group coverage.  Adult children have a 30-day special enrollment period during which they may re-enroll in their parents' group health plan.  The opportunity to re-enroll into the plan, including the written notice, must be provided to employees no later than the first day of the first plan year beginning on or after September 23, 2010 (January 1, 2011, for calendar year plans).  The notice may be included with other enrollment materials, provided it's prominent.
  
  

• Lifetime limit notice.  The health care reform law prohibits all plans, including grandfathered plans, from imposing lifetime limits on the value of essential benefits.  Employees who have reached their lifetime limits must be provided notice and an opportunity to re-enroll into the plan.  The opportunity to re-enroll into the plan, including the written notice, must be provided to employees no later than the first day of the first plan year beginning on or after September 23, 2010 (January 1, 2011, for calendar year plans).
  
  

• Patient protections notice.  New group plans that require participants to designate an in-network primary care physician, including pediatricians and gynecologists, must allow participants to choose any available in-network provider.  Women don't need referrals to see their in-network gynecologists.  The notice must be provided when the plan provides summary plan descriptions, and no later than the first day of the first plan year beginning on or after September 23, 2010 (January 1, 2011, for calendar year plans).
  
  

• Grandfathered plan notice.  Plans that were in existence on March 23, 2010, are exempt from many provisions of the health care reform law.  To maintain grandfathered status, plans must include in plan materials a model statement describing the benefits provided and that they believe they're grandfathered.  Note: You will have to expand the box to get the full text of the notice.

Click here for the model notices.

 Regs Clarify Timing Issues For Qualified Domestic Relations Orders 

Qualified domestic relations orders (QDROs), which are issued in the wake of divorce, direct plan administrators to divvy up an employee's pension assets, with some of those assets going to an alternate payee, usually the ex-spouse or children.  Final regulations implement a portion of the 2006 Pension Protection Act, and clarify timing issues in relation to QDROs.  These final regs became effective on August 9, 2010.

Benefits + Divorce = QDROs

The final regs note that a QDRO won't fail to be treated as a QDRO solely because it's issued after or revises another domestic relations order or QDRO.  For example, it's OK if a QDRO assigns benefits to an ex-spouse, and a subsequent QDRO assigns benefits that weren't assigned to the first ex to a second ex-spouse.  However, an order will fail to be considered a QDRO if previously assigned benefits are reassigned to a subsequent ex-spouse.

A QDRO issued after the employee's death is valid.  Also valid is a QDRO that's issued after an annuity's starting date, provided the QDRO simply reorders payments to which the employee would otherwise be entitled (e.g., 50% of a monthly annuity payment must be paid to an ex-spouse, instead of the retired employee receiving 100% of the payment).  There are two exceptions to this rule.

• A QDRO issued after the annuity starting date won't be considered a QDRO if it requires the plan to reannuitize the payments with a new annuity starting date, if reannuitization isn't authorized by the plan. 
  
  

• A QDRO issued after the annuity starting date won't be considered a QDRO if it requires the plan to provide a type or form of benefit, or any option, not otherwise provided for in the plan. 

Click here for the final regs.

 Ask The Experts 

Q. We have a 40-year-old employee who earns $360,000 a year ($30,000 a month).  She has elected to contribute a flat dollar amount of $1,375 a month into her 401(k) account (i.e., the 2010 pre-tax contribution maximum of $16,500).  Can she continue to make pre-tax contributions after September, when her year-to-date compensation will exceed $245,000 — the annual compensation limit for 2010?

A. Yes.  Plans aren't required to determine a participant's compensation for purposes of the annual compensation limit based on the earliest payments of compensation during the year.  Unless your plan's terms provide otherwise, the $16,500 pre-tax deferral limit is applied uniformly to the $245,000 compensation that the employee receives throughout the year, regardless of whether deferrals are expressed as a dollar amount or as a percentage of compensation in the employee's salary reduction agreement.