[Title 45 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2024 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 45
Public Welfare
________________________
Parts 140 to 199
Revised as of October 1, 2024
Containing a codification of documents of general
applicability and future effect
As of October 1, 2024
Published by the Office of the Federal National
Archives and Records Administration as a Special
Edition of the Federal Register
[[Page ii]]
U.S. GOVERNMENT OFFICIAL EDITION NOTICE
Legal Status and Use of Seals and Logos
The seal of the National Archives and Records Administration
(NARA) authenticates the Code of Federal Regulations (CFR) as
the official codification of Federal regulations established
under the Federal Register Act. Under the provisions of 44
U.S.C. 1507, the contents of the CFR, a special edition of the
Federal Register, shall be judicially noticed. The CFR is
prima facie evidence of the original documents published in
the Federal Register (44 U.S.C. 1510).
It is prohibited to use NARA's official seal and the stylized Code
of Federal Regulations logo on any republication of this
material without the express, written permission of the
Archivist of the United States or the Archivist's designee.
Any person using NARA's official seals and logos in a manner
inconsistent with the provisions of 36 CFR part 1200 is
subject to the penalties specified in 18 U.S.C. 506, 701, and
1017.
Use of ISBN Prefix
This is the Official U.S. Government edition of this publication
and is herein identified to certify its authenticity. Use of
the 0-16 ISBN prefix is for U.S. Government Publishing Office
Official Editions only. The Superintendent of Documents of the
U.S. Government Publishing Office requests that any reprinted
edition clearly be labeled as a copy of the authentic work
with a new ISBN.
U . S . G O V E R N M E N T P U B L I S H I N G O F F I C E
------------------------------------------------------------------
U.S. Superintendent of Documents Washington, DC
20402-0001
http://bookstore.gpo.gov
Phone: toll-free (866) 512-1800; DC area (202) 512-1800
[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 45:
SUBTITLE A--Department of Health and Human Services 3
Finding Aids:
Table of CFR Titles and Chapters........................ 835
Alphabetical List of Agencies Appearing in the CFR...... 855
List of CFR Sections Affected........................... 865
[[Page iv]]
----------------------------
Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 45 CFR 144.101
refers to title 45, part
144, section 101.
----------------------------
[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
issues of the Federal Register. These two publications must be used
together to determine the latest version of any given rule.
To determine whether a Code volume has been amended since its
revision date (in this case, October 1, 2024), consult the ``List of CFR
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative
List of Parts Affected,'' which appears in the Reader Aids section of
the daily Federal Register. These two lists will identify the Federal
Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
Register since the last revision of that volume of the Code. Source
citations for the regulations are referred to by volume number and page
number of the Federal Register and date of publication. Publication
dates and effective dates are usually not the same and care must be
exercised by the user in determining the actual effective date. In
instances where the effective date is beyond the cut-off date for the
Code a note has been inserted to reflect the future effective date. In
those instances where a regulation published in the Federal Register
states a date certain for expiration, an appropriate note will be
inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
amendments to existing regulations in the CFR. These OMB numbers are
placed as close as possible to the applicable recordkeeping or reporting
requirements.
PAST PROVISIONS OF THE CODE
Provisions of the Code that are no longer in force and effect as of
the revision date stated on the cover of each volume are not carried.
Code users may find the text of provisions in effect on any given date
in the past by using the appropriate List of CFR Sections Affected
(LSA). For the convenience of the reader, a ``List of CFR Sections
Affected'' is published at the end of each CFR volume. For changes to
the Code prior to the LSA listings at the end of the volume, consult
previous annual editions of the LSA. For changes to the Code prior to
2001, consult the List of CFR Sections Affected compilations, published
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.
``[RESERVED]'' TERMINOLOGY
The term ``[Reserved]'' is used as a place holder within the Code of
Federal Regulations. An agency may add regulatory information at a
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used
editorially to indicate that a portion of the CFR was left vacant and
not dropped in error.
INCORPORATION BY REFERENCE
What is incorporation by reference? Incorporation by reference was
established by statute and allows Federal agencies to meet the
requirement to publish regulations in the Federal Register by referring
to materials already published elsewhere. For an incorporation to be
valid, the Director of the Federal Register must approve it. The legal
effect of incorporation by reference is that the material is treated as
if it were published in full in the Federal Register (5 U.S.C. 552(a)).
This material, like any other properly issued regulation, has the force
of law.
What is a proper incorporation by reference? The Director of the
Federal Register will approve an incorporation by reference only when
the requirements of 1 CFR part 51 are met. Some of the elements on which
approval is based are:
(a) The incorporation will substantially reduce the volume of
material published in the Federal Register.
(b) The matter incorporated is in fact available to the extent
necessary to afford fairness and uniformity in the administrative
process.
(c) The incorporating document is drafted and submitted for
publication in accordance with 1 CFR part 51.
What if the material incorporated by reference cannot be found? If
you have any problem locating or obtaining a copy of material listed as
an approved incorporation by reference, please contact the agency that
issued the regulation containing that incorporation. If, after
contacting the agency, you find the material is not available, please
notify the Director of the Federal Register, National Archives and
Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001,
or call 202-741-6010.
CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Authorities
and Rules. A list of CFR titles, chapters, subchapters, and parts and an
alphabetical list of agencies publishing in the CFR are also included in
this volume.
An index to the text of ``Title 3--The President'' is carried within
that volume.
[[Page vii]]
The Federal Register Index is issued monthly in cumulative form.
This index is based on a consolidation of the ``Contents'' entries in
the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
REPUBLICATION OF MATERIAL
There are no restrictions on the republication of material appearing
in the Code of Federal Regulations.
INQUIRIES
For a legal interpretation or explanation of any regulation in this
volume, contact the issuing agency. The issuing agency's name appears at
the top of odd-numbered pages.
For inquiries concerning CFR reference assistance, call 202-741-6000
or write to the Director, Office of the Federal Register, National
Archives and Records Administration, 8601 Adelphi Road, College Park, MD
20740-6001 or e-mail [email protected].
SALES
The Government Publishing Office (GPO) processes all sales and
distribution of the CFR. For payment by credit card, call toll-free,
866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or
fax your order to 202-512-2104, 24 hours a day. For payment by check,
write to: US Government Publishing Office - New Orders, P.O. Box 979050,
St. Louis, MO 63197-9000.
ELECTRONIC SERVICES
The full text of the Code of Federal Regulations, the LSA (List of
CFR Sections Affected), The United States Government Manual, the Federal
Register, Public Laws, Public Papers of the Presidents of the United
States, Compilation of Presidential Documents and the Privacy Act
Compilation are available in electronic format via www.govinfo.gov. For
more information, contact the GPO Customer Contact Center, U.S.
Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-
free). E-mail, [email protected].
The Office of the Federal Register also offers a free service on the
National Archives and Records Administration's (NARA) website for public
law numbers, Federal Register finding aids, and related information.
Connect to NARA's website at www.archives.gov/federal-register.
The eCFR is a regularly updated, unofficial editorial compilation of
CFR material and Federal Register amendments, produced by the Office of
the Federal Register and the Government Publishing Office. It is
available at www.ecfr.gov.
Oliver A. Potts,
Director,
Office of the Federal Register
October 1, 2024
[[Page ix]]
THIS TITLE
Title 45--Public Welfare is composed of five volumes. The parts in
these volumes are arranged in the following order: Parts 1-139, 140-199,
200-499, 500-1199, and 1200 to end. Volumes one and two (parts 1-139 and
parts 140-199) contain all current regulations issued under Subtitle A--
Department of Health and Human Services. Volumes three through five
contain all current regulations issued under Subtitle B--Regulations
Relating to Public Welfare. Volume three (parts 200-499) contains all
current regulations issued under Chapter II--Office of Family Assistance
(Assistance Programs), Administration for Children and Families,
Department of Health and Human Services, Chapter III--Office of Child
Support Services, Administration of Families and Services, Department of
Health and Human Services, and Chapter IV--Office of Refugee
Resettlement, Administration for Children and Families, Department of
Health and Human Services. Volume four (parts 500-1199) contains all
current regulations issued under Chapter V--Foreign Claims Settlement
Commission of the United States, Department of Justice, Chapter VI--
National Science Foundation, Chapter VII--Commission on Civil Rights,
Chapter VIII--Office of Personnel Management, Chapter IX--Denali
Commission, Chapter X--Office of Community Services, Administration for
Children and Families, Department of Health and Human Services, and
Chapter XI--National Foundation on the Arts and the Humanities. Volume
five (part 1200 to end) contains all current regulations issued under
Chapter XII--Corporation for National and Community Service, Chapter
XIII--Administration for Children and Families, Department of Health and
Human Services, Chapter XVI--Legal Services Corporation, Chapter XVII--
National Commission on Libraries and Information Science, Chapter
XVIII--Harry S. Truman Scholarship Foundation, Chapter XXI--Commission
of Fine Arts, Chapter XXIII--Arctic Research Commission, Chapter XXIV--
James Madison Memorial Fellowship Foundation, and Chapter XXV--
Corporation for National and Community Service. The contents of these
volumes represent all of the current regulations codified under this
title of the CFR as of October 1, 2024.
For this volume, Ann Worley was Chief Editor, aided by Tess Waroich.
The Code of Federal Regulations publication program is under the
direction of John Hyrum Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 45--PUBLIC WELFARE
(This book contains parts 140 to 199)
--------------------------------------------------------------------
Part
SUBTITLE A--Department of Health and Human Services......... 144
[[Page 3]]
SUBTITLE A--Department of Health and Human Services
--------------------------------------------------------------------
Editorial Note: Nomenclature changes to subtitle A appear at 66 FR
39452, July 31, 2001.
SUBCHAPTER B--REQUIREMENTS RELATING TO HEALTH CARE ACCESS
Part Page
140-143
[Reserved]
144 Requirements relating to health insurance
coverage................................ 5
145
[Reserved]
146 Requirements for the group health insurance
market.................................. 15
147 Health insurance reform requirements for the
group and individual health insurance
markets................................. 136
148 Requirements for the individual health
insurance market........................ 212
149 Surprise billing and transparency
requirements............................ 232
150 CMS enforcement in group and individual
insurance markets....................... 297
151
[Reserved]
152 Pre-existing condition insurance plan
program................................. 313
153 Standards related to reinsurance, risk
corridors, and HHS risk adjustment under
the Affordable Care Act................. 320
154 Health insurance issuer rate increases:
disclosure and review requirements...... 351
155 Exchange establishment standards and other
related standards under the Affordable
Care Act................................ 358
156 Health insurance issuer standards under the
Affordable Care Act, including standards
related to exchanges.................... 505
157 Employer interactions with exchanges and
shop participation...................... 593
158 Issuer use of premium revenue: reporting and
rebate requirements..................... 595
[[Page 4]]
159 Health care reform insurance web portal..... 624
SUBCHAPTER C--ADMINISTRATIVE DATA STANDARDS AND RELATED REQUIREMENTS
160 General administrative requirements......... 626
162 Administrative requirements................. 652
163
[Reserved]
164 Security and privacy........................ 671
165-169
[Reserved]
SUBCHAPTER D--HEALTH INFORMATION TECHNOLOGY
170 Health information technology standards,
implementation specifications, and
certification criteria and certification
programs for health information
technology.............................. 735
171 Information blocking........................ 803
172-179
[Reserved]
SUBCHAPTER E--PRICE TRANSPARENCY
180 Hospital price transparency................. 818
181
[Reserved]
182 Price transparency for COVID-19 diagnostic
tests................................... 827
183
[Reserved]
184 Pharmacy Benefit Manager standards under the
Affordable Care Act..................... 830
185-199
[Reserved]
[[Page 5]]
SUBCHAPTER B_REQUIREMENTS RELATING TO HEALTH CARE ACCESS
PARTS 140 143 [RESERVED]
PART 144_REQUIREMENTS RELATING TO HEALTH INSURANCE
COVERAGE--Table of Contents
Subpart A_General Provisions
Sec.
144.101 Basis and purpose.
144.102 Scope and applicability.
144.103 Definitions.
Subpart B_Qualified State Long-Term Care Insurance Partnerships:
Reporting Requirements for Insurers
144.200 Basis.
144.202 Definitions.
144.204 Applicability of regulations.
144.206 Reporting requirements.
144.208 Deadlines for submission of reports.
144.210 Form and manner of reports.
144.212 Confidentiality of information.
144.214 Notifications of noncompliance with reporting requirements.
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, 300gg-92, and
300gg-111 through 300gg-139, as amended.
Source: 62 FR 16955, Apr. 8, 1997, unless otherwise noted.
Subpart A_General Provisions
Sec. 144.101 Basis and purpose.
(a) Part 146 of this subchapter implements requirements of Title
XXVII of the Public Health Service Act (PHS Act, 42 U.S.C. 300gg, et
seq.) that apply to group health plans and group health insurance
issuers.
(b) Part 147 of this subchapter implements the provisions of the
Patient Protection and Affordable Care Act that apply to both group
health plans and health insurance issuers in the Group and Individual
Markets.
(c) Part 148 of this subchapter implements Individual Health
Insurance Market requirements of the PHS Act. Its purpose is to improve
access to individual health insurance coverage for certain individuals
who previously had group coverage, guarantee the renewability of all
health insurance coverage in the individual market, and provide certain
protections for mothers and newborns with respect to coverage for
hospital stays in connection with childbirth, and to provide certain
protections for patients who elect breast reconstruction in connection
with a mastectomy.
(d) Part 149 of this subchapter implements the provisions of parts D
and E of title XXVII of the PHS Act that apply to group health plans,
health insurance issuers in the group and individual markets, health
care providers and facilities, and providers of air ambulance services.
(e) Part 150 of this subchapter implements the enforcement
provisions of sections 2723 and 2761 of the PHS Act with respect to the
following:
(1) States that fail to substantially enforce one or more provisions
of part 146 concerning group health insurance, one or more provisions of
part 147 concerning group or individual health insurance, or the
requirements of part 148 of this subchapter concerning individual health
insurance.
(2) Insurance issuers in States described in paragraph (d)(1) of
this section.
(3) Group health plans that are non-Federal governmental plans.
(f) Sections 2791 and 2792 of the PHS Act define terms used in the
regulations in this subchapter and provide the basis for issuing these
regulations.
[64 FR 45795, Aug. 20, 1999, as amended at 74 FR 51688, Oct. 7, 2009; 75
FR 27137, May 13, 2010; 78 FR 13435, Feb. 27, 2013; 86 FR 36970, July
13, 2021]
Sec. 144.102 Scope and applicability.
(a) For purposes of 45 CFR parts 144 through 149, all health
insurance coverage is generally divided into two markets--the group
market and the individual market. The group market is further divided
into the large group market and the small group market.
(b) The protections afforded under 45 CFR parts 144 through 149 to
individuals and employers (and other sponsors
[[Page 6]]
of health insurance offered in connection with a group health plan) are
determined by whether the coverage involved is obtained in the small
group market, the large group market, or the individual market.
(c) Coverage that is provided to associations, but not related to
employment, and sold to individuals is not considered group coverage
under 45 CFR parts 144 through 149. If the coverage is offered to an
association member other than in connection with a group health plan,
the coverage is considered individual health insurance coverage for
purposes of 45 CFR parts 144 through 149. The coverage is considered
coverage in the individual market, regardless of whether it is
considered group coverage under state law. If the health insurance
coverage is offered in connection with a group health plan as defined at
45 CFR 144.103, it is considered group health insurance coverage for
purposes of 45 CFR parts 144 through 149.
(d) Provisions relating to CMS enforcement of parts 146, 147, 148,
and 149 are contained in part 150 of this subchapter.
[86 FR 36970, July 13, 2021]
Sec. 144.103 Definitions.
For purposes of parts 146 (group market), 147 (group and individual
market), 148 (individual market), 149 (surprise billing and
transparency), and 150 (enforcement) of this subchapter, the following
definitions apply unless otherwise provided:
Affiliation period means a period of time that must expire before
health insurance coverage provided by an HMO becomes effective, and
during which the HMO is not required to provide benefits.
Applicable State authority means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official or
officials designated by the State to enforce the requirements of 45 CFR
parts 146 and 148 for the State involved with respect to the issuer.
Beneficiary has the meaning given the term under section 3(8) of the
Employee Retirement Income Security Act of 1974 (ERISA), which states,
``a person designated by a participant, or by the terms of an employee
benefit plan, who is or may become entitled to a benefit'' under the
plan.
Bona fide association means, with respect to health insurance
coverage offered in a State, an association that meets the following
conditions:
(1) Has been actively in existence for at least 5 years.
(2) Has been formed and maintained in good faith for purposes other
than obtaining insurance.
(3) Does not condition membership in the association on any health
status-related factor relating to an individual (including an employee
of an employer or a dependent of any employee).
(4) Makes health insurance coverage offered through the association
available to all members regardless of any health status-related factor
relating to the members (or individuals eligible for coverage through a
member).
(5) Does not make health insurance coverage offered through the
association available other than in connection with a member of the
association.
(6) Meets any additional requirements that may be imposed under
State law.
Church plan means a Church plan within the meaning of section 3(33)
of ERISA.
COBRA definitions:
(1) COBRA means Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(2) COBRA continuation coverage means coverage, under a group health
plan, that satisfies an applicable COBRA continuation provision.
(3) COBRA continuation provision means sections 601-608 of the
Employee Retirement Income Security Act, section 4980B of the Internal
Revenue Code of 1986 (other than paragraph (f)(1) of such section 4980B
insofar as it relates to pediatric vaccines), or Title XXII of the PHS
Act.
(4) Continuation coverage means coverage under a COBRA continuation
provision or a similar State program. Coverage provided by a plan that
is subject to a COBRA continuation provision or similar State program,
but that does not satisfy all the requirements of that provision or
program, will be deemed to be continuation coverage if it allows an
individual to elect
[[Page 7]]
to continue coverage for a period of at least 18 months. Continuation
coverage does not include coverage under a conversion policy required to
be offered to an individual upon exhaustion of continuation coverage,
nor does it include continuation coverage under the Federal Employees
Health Benefits Program.
(5) Exhaustion of COBRA continuation coverage means that an
individual's COBRA continuation coverage ceases for any reason other
than either failure of the individual to pay premiums on a timely basis,
or for cause (such as making a fraudulent claim or an intentional
misrepresentation of a material fact in connection with the plan). An
individual is considered to have exhausted COBRA continuation coverage
if such coverage ceases--
(i) Due to the failure of the employer or other responsible entity
to remit premiums on a timely basis;
(ii) When the individual no longer resides, lives, or works in the
service area of an HMO or similar program (whether or not within the
choice of the individual) and there is no other COBRA continuation
coverage available to the individual; or
(iii) When the individual incurs a claim that would meet or exceed a
lifetime limit on all benefits and there is no other COBRA continuation
coverage available to the individual.
(6) Exhaustion of continuation coverage means that an individual's
continuation coverage ceases for any reason other than either failure of
the individual to pay premiums on a timely basis, or for cause (such as
making a fraudulent claim or an intentional misrepresentation of a
material fact in connection with the plan). An individual is considered
to have exhausted continuation coverage if--
(i) Coverage ceases due to the failure of the employer or other
responsible entity to remit premiums on a timely basis;
(ii) When the individual no longer resides, lives or works in a
service area of an HMO or similar program (whether or not within the
choice of the individual) and there is no other continuation coverage
available to the individual; or
(iii) When the individual incurs a claim that would meet or exceed a
lifetime limit on all benefits and there is no other continuation
coverage available to the individual.
Condition means a medical condition.
Creditable coverage has the meaning given the term in 45 CFR
146.113(a).
Dependent means any individual who is or may become eligible for
coverage under the terms of a group health plan because of a
relationship to a participant.
Eligible individual, for purposes of--
(1) The group market provisions in 45 CFR part 146, subpart E, is
defined in 45 CFR 146.150(b); and
(2) The individual market provisions in 45 CFR part 148, is defined
in 45 CFR 148.103.
Employee has the meaning given the term under section 3(6) of ERISA,
which states, ``any individual employed by an employer.''
Employer has the meaning given the term under section 3(5) of ERISA,
which states, ``any person acting directly as an employer, or indirectly
in the interest of an employer, in relation to an employee benefit plan;
and includes a group or association of employers acting for an employer
in such capacity.''
Enroll means to become covered for benefits under a group health
plan (that is, when coverage becomes effective), without regard to when
the individual may have completed or filed any forms that are required
in order to become covered under the plan. For this purpose, an
individual who has health coverage under a group health plan is enrolled
in the plan regardless of whether the individual elects coverage, the
individual is a dependent who becomes covered as a result of an election
by a participant, or the individual becomes covered without an election.
Enrollment date means the first day of coverage or, if there is a
waiting period, the first day of the waiting period. If an individual
receiving benefits under a group health plan changes benefit packages,
or if the plan changes group health insurance issuers, the individual's
enrollment date does not change.
[[Page 8]]
ERISA stands for the Employee Retirement Income Security Act of
1974, as amended (29 U.S.C. 1001 et seq.).
Excepted benefits, consistent for purposes of the--
(1) Group market provisions in 45 CFR part 146, subpart D, is
defined in 45 CFR 146.145(b); and
(2) Individual market provisions in 45 CFR part 148, is defined in
45 CFR 148.220.
Federal governmental plan means a governmental plan established or
maintained for its employees by the Government of the United States or
by any agency or instrumentality of such Government.
First day of coverage means, in the case of an individual covered
for benefits under a group health plan, the first day of coverage under
the plan and, in the case of an individual covered by health insurance
coverage in the individual market, the first day of coverage under the
policy or contract.
Genetic information has the meaning specified in Sec. 146.122(a) of
this subchapter.
Governmental plan means a governmental plan within the meaning of
section 3(32) of ERISA.
Group health insurance coverage means health insurance coverage
offered in connection with a group health plan. Individual health
insurance coverage reimbursed by the arrangements described in 29 CFR
2510.3-1(l) is not offered in connection with a group health plan, and
is not group health insurance coverage, provided all the conditions in
29 CFR 2510.3-1(l) are satisfied.
Group health plan or plan means a group health plan within the
meaning of 45 CFR 146.145(a).
Group market means the market for health insurance coverage offered
in connection with a group health plan.
Health insurance coverage means benefits consisting of medical care
(provided directly, through insurance or reimbursement, or otherwise)
under any hospital or medical service policy or certificate, hospital or
medical service plan contract, or HMO contract offered by a health
insurance issuer. Health insurance coverage includes group health
insurance coverage, individual health insurance coverage, and short-
term, limited-duration insurance.
Health insurance issuer or issuer means an insurance company,
insurance service, or insurance organization (including an HMO) that is
required to be licensed to engage in the business of insurance in a
State and that is subject to State law that regulates insurance (within
the meaning of section 514(b)(2) of ERISA). This term does not include a
group health plan.
Health maintenance organization or HMO means--
(1) A Federally qualified health maintenance organization (as
defined in section 1301(a) of the PHS Act);
(2) An organization recognized under State law as a health
maintenance organization; or
(3) A similar organization regulated under State law for solvency in
the same manner and to the same extent as such a health maintenance
organization.
Health status-related factor is any factor identified as a health
factor in 45 CFR 146.121(a).
Individual health insurance coverage means health insurance coverage
offered to individuals in the individual market, but does not include
short-term, limited-duration insurance. Individual health insurance
coverage can include dependent coverage.
Individual market means the market for health insurance coverage
offered to individuals other than in connection with a group health
plan, or other than coverage offered pursuant to a contract between the
health insurance issuer with the Medicaid, Children's Health Insurance
Program, or Basic Health programs.
Internal Revenue Code means the Internal Revenue Code of 1986, as
amended (Title 26, United States Code).
Issuer means a health insurance issuer.
Large employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least 51 employees on business days during the preceding
calendar year and who employs at least 1 employee on the first day of
the plan year. A State may elect to define large employer by
substituting ``101 employees'' for ``51 employees.'' In the case of an
employer that was not in existence throughout
[[Page 9]]
the preceding calendar year, the determination of whether the employer
is a large employer is based on the average number of employees that it
is reasonably expected the employer will employ on business days in the
current calendar year.
Large group market means the health insurance market under which
individuals obtain health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents) through a
group health plan maintained by a large employer.
Late enrollee means an individual whose enrollment in a plan is a
late enrollment.
Late enrollment means enrollment of an individual under a group
health plan other than on the earliest date on which coverage can become
effective for the individual under the terms of the plan; or through
special enrollment. (For rules relating to special enrollment and
limited open enrollment, see Sec. Sec. 146.117 and 147.104 of this
subchapter.) If an individual ceases to be eligible for coverage under a
plan, and then subsequently becomes eligible for coverage under the
plan, only the individual's most recent period of eligibility is taken
into account in determining whether the individual is a late enrollee
under the plan with respect to the most recent period of coverage.
Similar rules apply if an individual again becomes eligible for coverage
following a suspension of coverage that applied generally under the
plan.
Medical care means amounts paid for--
(1) The diagnosis, cure, mitigation, treatment, or prevention of
disease, or amounts paid for the purpose of affecting any structure or
function of the body;
(2) Transportation primarily for and essential to medical care
referred to in paragraph (1) of this definition; and
(3) Insurance covering medical care referred to in paragraphs (1)
and (2) of this definition.
Medical condition or condition means any condition, whether physical
or mental, including, but not limited to, any condition resulting from
illness, injury (whether or not the injury is accidental), pregnancy, or
congenital malformation. However, genetic information is not a
condition.
Network plan means health insurance coverage of a health insurance
issuer under which the financing and delivery of medical care (including
items and services paid for as medical care) are provided, in whole or
in part, through a defined set of providers under contract with the
issuer.
Non-Federal governmental plan means a governmental plan that is not
a Federal governmental plan.
Participant has the meaning given the term under section 3(7) of
ERISA, which States, ``any employee or former employee of an employer,
or any member or former member of an employee organization, who is or
may become eligible to receive a benefit of any type from an employee
benefit plan which covers employees of such employer or members of such
organization, or whose beneficiaries may be eligible to receive any such
benefit.''
PHS Act stands for the Public Health Service Act (42 U.S.C. 201 et
seq.).
Placement, or being placed, for adoption means the assumption and
retention of a legal obligation for total or partial support of a child
by a person with whom the child has been placed in anticipation of the
child's adoption. The child's placement for adoption with such person
ends upon the termination of such legal obligation.
Plan means, with respect to a product, the pairing of the health
insurance coverage benefits under the product with a particular cost-
sharing structure, provider network, and service area. The product
comprises all plans offered with those characteristics and the
combination of the service areas for all plans offered within a product
constitutes the total service area of the product. With respect to a
plan that has been modified at the time of coverage renewal consistent
with Sec. 147.106 of this subchapter--
(1) The plan will be considered to be the same plan if it:
(i) Has the same cost-sharing structure as before the modification,
or any variation in cost sharing is solely related to changes in cost or
utilization of medical care, or is to maintain the
[[Page 10]]
same metal tier level described in sections 1302(d) and (e) of the
Affordable Care Act;
(ii) Continues to cover a majority of the same service area; and
(iii) Continues to cover a majority of the same provider network.
For this purpose, the plan's provider network on the first day of the
plan year is compared with the plan's provider network on the first day
of the preceding plan year (as applicable).
(2) The plan will not fail to be treated as the same plan to the
extent the modification(s) are made uniformly and solely pursuant to
applicable Federal and State requirements if--
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement;
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) A State may permit greater changes to the cost-sharing
structure, or designate a lower threshold for maintenance of the same
provider network or service area for a plan to still be considered the
same plan.
Plan sponsor has the meaning given the term under section 3(16)(B)
of ERISA, which states, ``(i) the employer in the case of an employee
benefit plan established or maintained by a single employer, (ii) the
employee organization in the case of a plan established or maintained by
an employee organization, or (iii) in the case of a plan established or
maintained by two or more employers or jointly by one or more employers
and one or more employee organizations, the association, committee,
joint board of trustees, or other similar group of representatives of
the parties who establish or maintain the plan.''
Plan year means the year that is designated as the plan year in the
plan document of a group health plan, except that if the plan document
does not designate a plan year or if there is no plan document, the plan
year is--
(1) The deductible or limit year used under the plan;
(2) If the plan does not impose deductibles or limits on a yearly
basis, then the plan year is the policy year;
(3) If the plan does not impose deductibles or limits on a yearly
basis, and either the plan is not insured or the insurance policy is not
renewed on an annual basis, then the plan year is the employer's taxable
year; or
(4) In any other case, the plan year is the calendar year.
Policy year means, with respect to--
(1) A grandfathered health plan offered in the individual health
insurance market and student health insurance coverage, the 12-month
period that is designated as the policy year in the policy documents of
the health insurance coverage. If there is no designation of a policy
year in the policy document (or no such policy document is available),
then the policy year is the deductible or limit year used under the
coverage. If deductibles or other limits are not imposed on a yearly
basis, the policy year is the calendar year.
(2) A non-grandfathered health plan offered in the individual health
insurance market, or in a market in which the State has merged the
individual and small group risk pools, for coverage issued or renewed
beginning January 1, 2014, a calendar year for which health insurance
coverage provides coverage for health benefits.
Preexisting condition exclusion means a limitation or exclusion of
benefits (including a denial of coverage) based on the fact that the
condition was present before the effective date of coverage (or if
coverage is denied, the date of the denial) under a group health plan or
group or individual health insurance coverage (or other coverage
provided to Federally eligible individuals pursuant to 45 CFR part 148),
whether or not any medical advice, diagnosis, care, or treatment was
recommended or received before that day. A preexisting condition
exclusion includes any limitation or exclusion of benefits (including a
denial of coverage) applicable to an individual as a result of
information relating to an individual's health status before the
individual's effective date of coverage (or if coverage is denied, the
date of the denial) under a group health plan, or group or individual
health insurance coverage (or other coverage provided to Federally
eligible individuals pursuant to 45 CFR part 148), such as a condition
identified
[[Page 11]]
as a result of a pre-enrollment questionnaire or physical examination
given to the individual, or review of medical records relating to the
pre-enrollment period.
Product means a discrete package of health insurance coverage
benefits that are offered using a particular product network type (such
as health maintenance organization, preferred provider organization,
exclusive provider organization, point of service, or indemnity) within
a service area. In the case of a product that has been modified,
transferred, or replaced, the resulting new product will be considered
to be the same as the modified, transferred, or replaced product if the
changes to the modified, transferred, or replaced product meet the
standards of Sec. 146.152(f), Sec. 147.106(e), or Sec. 148.122(g) of
this subchapter (relating to uniform modification of coverage), as
applicable.
Public health plan has the meaning given the term in 45 CFR
146.113(a)(1)(ix).
Short-term, limited-duration insurance means health insurance
coverage provided pursuant to a policy, certificate, or contract of
insurance with an issuer that meets the conditions of paragraph (1) of
this definition.
(1) Short-term, limited-duration insurance means health insurance
coverage provided pursuant to a policy, certificate, or contract of
insurance with an issuer that:
(i) Has an expiration date specified in the policy, certificate, or
contract of insurance that is no more than 3 months after the original
effective date of the policy, certificate, or contract of insurance, and
taking into account any renewals or extensions, has a duration no longer
than 4 months in total. For purposes of this paragraph (1)(i), a renewal
or extension includes the term of a new short-term, limited-duration
insurance policy, certificate, or contract of insurance issued by the
same issuer, or if the issuer is a member of a controlled group, any
other issuer that is a member of such controlled group, to the same
policyholder within the 12-month period beginning on the original
effective date of the initial policy, certificate, or contract of
insurance; and
(ii) Displays prominently on the first page (in either paper or
electronic form, including on a website) of the policy, certificate, or
contract of insurance, and in any marketing, application, and enrollment
materials (including reenrollment materials) provided to individuals at
or before the time an individual has the opportunity to enroll (or
reenroll) in the coverage, in at least 14-point font, the language in
the following notice:
[[Page 12]]
[GRAPHIC] [TIFF OMITTED] TR03AP24.064
(2) For purposes of paragraph (1)(i) of this definition, the term
``controlled group'' means any group treated as a single employer under
section 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of
1986, as amended.
(3) If any provision of this definition is held to be invalid or
unenforceable by its terms, or as applied to any entity or circumstance,
or stayed pending further agency action, the provision shall be
construed so as to continue to give the maximum effect to the provision
permitted by law, along with other provisions not found invalid or
unenforceable, including as applied to entities not similarly situated
or to dissimilar circumstances, unless such holding is that the
provision is invalid
[[Page 13]]
and unenforceable in all circumstances, in which event the provision
shall be severable from the remainder of the definition and shall not
affect the remainder thereof.
Significant break in coverage has the meaning given the term in 45
CFR 146.113(b)(2)(iii).
Small employer means, in connection with a group health plan with
respect to a calendar year and a plan year, an employer who employed an
average of at least 1 but not more than 50 employees on business days
during the preceding calendar year and who employs at least 1 employee
on the first day of the plan year. A State may elect to define small
employer by substituting ``100 employees'' for ``50 employees.'' In the
case of an employer that was not in existence throughout the preceding
calendar year, the determination of whether the employer is a small
employer is based on the average number of employees that it is
reasonably expected the employer will employ on business days in the
current calendar year.
Small group market means the health insurance market under which
individuals obtain health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents) through a
group health plan maintained by a small employer.
Special enrollment means enrollment in a group health plan or group
health insurance coverage under the rights described in 45 CFR 146.117.
State means each of the 50 States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana
Islands; except that for purposes of part 147, the term does not include
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern
Mariana Islands.
State health benefits risk pool has the meaning given the term in 45
CFR Sec. 146.113(a)(1)(vii).
Student health insurance coverage has the meaning given the term in
Sec. 147.145.
Travel insurance means insurance coverage for personal risks
incident to planned travel, which may include, but is not limited to,
interruption or cancellation of trip or event, loss of baggage or
personal effects, damages to accommodations or rental vehicles, and
sickness, accident, disability, or death occurring during travel,
provided that the health benefits are not offered on a stand-alone basis
and are incidental to other coverage. For this purpose, the term travel
insurance does not include major medical plans that provide
comprehensive medical protection for travelers with trips lasting 6
months or longer, including, for example, those working overseas as an
expatriate or military personnel being deployed.
Waiting period has the meaning given the term in 45 CFR 147.116(b).
[69 FR 78781, Dec. 30, 2004]
Editorial Note: For Federal Register citations affecting Sec.
144.103, see the List of CFR Sections Affected, which appears in the
Finding Aids section of the printed volume and at www.govinfo.gov.
Subpart B_Qualified State Long-Term Care Insurance Partnerships:
Reporting Requirements for Insurers
Source: 73 FR 76968, Dec. 18, 2008, unless otherwise noted.
Sec. 144.200 Basis.
This subpart implements--
(a) Section 1917(b)(1)(C) (iii)(VI) of the Social Security Act,
(Act) which requires the issuer of a long-term care insurance policy
issued under a qualified State long-term care insurance partnership to
provide specified regular reports to the Secretary.
(b) Section 1917(b)(1)(C)(v) of the Act, which specifies that the
regulations of the Secretary under section 1917(b)(1)(C)(iii)(VI) of the
Act shall be promulgated after consultation with the National
Association of Insurance Commissioners, issuers of long-term care
insurance policies, States with experience with long-term care insurance
partnership plans, other States, and representatives of consumers of
long-term care insurance policies, and shall specify the type and format
of the data to be reported and the frequency with which such reports are
to be made. This section of the statute also provides that the Secretary
provide copies of the reports to the States involved.
[[Page 14]]
Sec. 144.202 Definitions.
As used in this subpart--
Partnership qualified policy refers to a qualified long-term care
insurance policy issued under a qualified State long-term care insurance
partnership.
Qualified long-term care insurance policy means an insurance policy
that has been determined by a State insurance commissioner to meet the
requirements of sections 1917(b)(1)(C)(iii)(I) through (IV) and
1917(b)(5) of the Act. It includes a certificate issued under a group
insurance contract.
Qualified State long-term care insurance partnership means an
approved Medicaid State plan amendment that provides for the disregard
of any assets or resources in an amount equal to the insurance benefit
payments that are made to or on behalf of an individual who is a
beneficiary under a long-term care insurance policy that has been
determined by a State insurance commissioner to meet the requirements of
section 1917(b)(1)(C)(iii) of the Act.
Sec. 144.204 Applicability of regulations.
The regulations contained in this subpart for reporting data apply
only to those insurers that have issued qualified long-term care
insurance policies to individuals under a qualified State long-term care
insurance partnership. They do not apply to the reporting of data by
insurers for States with a Medicaid State plan amendment that
established a long-term care partnership on or before May 14, 1993.
Sec. 144.206 Reporting requirements.
(a) General requirement. Any insurer that sells a qualified long-
term care insurance policy under a qualified State long-term care
insurance partnership must submit, in accordance with the requirements
of this section, data on insured individuals, policyholders, and
claimants who have active partnership qualified policies or certificates
for a reporting period.
(b) Specific requirements. Insurers of qualified long-term care
insurance policies must submit the following data to the Secretary by
the deadlines specified in paragraph (c) of this section:
(1) Registry of active individual and group partnership qualified
policies or certificates. (i) Insurers must submit data on--
(A) Any insured individual who held an active partnership qualified
policy or certificate at any point during a reporting period, even if
the policy or certificate was subsequently cancelled, lost partnership
qualified status, or otherwise terminated during the reporting period;
and
(B) All active group long-term care partnership qualified insurance
policies, even if the identity of the individual policy/certificate
holder is unavailable.
(ii) The data required under paragraph (b)(1)(i) of this section
must cover a 6-month reporting period of January through June 30 or July
1 through December 31 of each year; and
(iii) The data must include, but are not limited to--
(A) Current identifying information on the insured individual;
(B) The name of the insurance company and issuing State;
(C) The effective date and terms of coverage under the policy.
(D) The annual premium.
(E) The coverage period.
(F) Other information, as specified by the Secretary in ``State
Long-Term Care Partnership Insurer Reporting Requirements.''
(2) Claims paid under partnership qualified policies or
certificates. Insurers must submit data on all partnership qualified
policies or certificates for which the insurer paid at least one claim
during the reporting period. This includes data for employer-paid core
plans and buy-up plans without individual insured data. The data must--
(i) Cover a quarterly reporting period of 3 months;
(ii) Include, but are not limited to--
(A) Current identifying information on the insured individual;
(B) The type and cash amount of the benefits paid during the
reporting period and lifetime to date;
(C) Remaining lifetime benefits;
(D) Other information, as specified by the Secretary in ``State
Long-Term Care Partnership Insurer Reporting Requirements.''
[[Page 15]]
Sec. 144.208 Deadlines for submission of reports.
(a) Transition provision for insurers who have issued or exchanged a
qualified partnership policy prior to the effective date of these
regulations.
The first reports required for these insurers will be the reports
that pertain to the reporting period that begins no more than 120 days
after the effective date of the final regulations.
(b) All reports on the registry of qualified long-term care
insurance policies issued to individuals or individuals under group
coverage specified in Sec. 144.206(b)(1)(ii) must be submitted within
30 days of the end of the 6-month reporting period.
(c) All reports on the claims paid under qualified long-term care
insurance policies issued to individual and individuals under group
coverage specified in Sec. 144.206(b)(2)(i) must be submitted within 30
days of the end of the 3-month quarterly reporting period.
Sec. 144.210 Form and manner of reports.
All reports specified in Sec. 144.206 must be submitted in the form
and manner specified by the Secretary.
Sec. 144.212 Confidentiality of information.
Data collected and reported under the requirements of this subpart
are subject to the confidentiality of information requirements specified
in regulations under 42 CFR part 401, subpart B, and 45 CFR part 5,
subpart F.
Sec. 144.214 Notifications of noncompliance with reporting requirements.
If an insurer of a qualified long-term care insurance policy does
not submit the required reports by the due dates specified in this
subpart, the Secretary notifies the appropriate State insurance
commissioner within 45 days after the deadline for submission of the
information and data specified in Sec. 144.208.
PART 145 [RESERVED]
PART 146_REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET
--Table of Contents
Subpart A_General Provisions
Sec.
146.101 Basis and scope.
Subpart B_Requirements Relating to Access and Renewability of Coverage,
and Limitations on Preexisting Condition Exclusion Periods
146.111 Preexisting condition exclusions.
146.113 Rules relating to creditable coverage.
146.115 Certification and disclosure of previous coverage.
146.117 Special enrollment periods.
146.119 HMO affiliation period as an alternative to a preexisting
condition exclusion.
146.120 Interaction with the Family and Medical Leave Act. [Reserved]
146.121 Prohibiting discrimination against participants and
beneficiaries based on a health factor.
146.122 Additional requirements prohibiting discrimination based on
genetic information.
146.123 Special rule allowing integration of Health Reimbursement
Arrangements (HRAs) and other account-based group health plans
with individual health insurance coverage and Medicare and
prohibiting discrimination in HRAs and other account-based
group health plans.
146.125 Applicability dates.
Subpart C_Requirements Related to Benefits
146.130 Standards relating to benefits for mothers and newborns.
146.136 Parity in mental health and substance use disorder benefits.
146.137 Nonquantitative treatment limitation comparative analysis
requirements.
Subpart D_Preemption and Special Rules
146.143 Preemption; State flexibility; construction.
146.145 Special rules relating to group health plans.
Subpart E_Provisions Applicable to Only Health Insurance Issuers
146.150 Guaranteed availability of coverage for employers in the small
group market.
146.152 Guaranteed renewability of coverage for employers in the group
market.
146.160 Disclosure of information.
[[Page 16]]
Subpart F_Exclusion of Plans and Enforcement
146.180 Treatment of non-Federal governmental plans.
Authority: 42 U.S.C. 300gg-1 through 300gg-5, 300gg-11 through
300gg-23, 300gg-91, and 300gg-92.
Source: 62 FR 16958, Apr. 8, 1997, unless otherwise noted.
Subpart A_General Provisions
Sec. 146.101 Basis and scope.
(a) Statutory basis. This part implements the Group Market
requirements of the PHS Act. Its purpose is to improve access to group
health insurance coverage, to guarantee the renewability of all coverage
in the group market, and to provide certain protections for mothers and
newborns with respect to coverage for hospital stays in connection with
childbirth. Sections 2791 and 2792 of the PHS Act define terms used in
the regulations in this subchapter and provide the basis for issuing
these regulations, respectively.
(b) Scope. A group health plan or health insurance issuer offering
group health insurance coverage may provide greater rights to
participants and beneficiaries than those set forth in this part.
(1) Subpart B. Subpart B of this part sets forth minimum
requirements for group health plans and group health insurance issuers
offering group health insurance coverage concerning certain consumer
protections of the Health Insurance Portability and Accountability Act
(HIPAA), as amended, including special enrollment periods, prohibiting
discrimination against participants and beneficiaries based on a health
factor, and additional requirements prohibiting discrimination against
participants and beneficiaries based on genetic information.
(2) Subpart C. Subpart C of this part sets forth the requirements
that apply to plans and issuers with respect to coverage for hospital
stays in connection with childbirth. It also sets forth the regulations
governing parity between medical/surgical benefits and mental health
benefits in group health plans and health insurance coverage offered by
issuers in connection with a group health plan.
(3) Subpart D. Subpart D of this part sets forth exceptions to the
requirements of subpart B for certain plans and certain types of
benefits.
(4) Subpart E. Subpart E of this part implements requirements
relating to group health plans and issuers in the Group Health Insurance
Market.
(5) Subpart F. Subpart F of this part addresses the treatment of
non-Federal governmental plans, and sets forth enforcement procedures.
[62 FR 16958, Apr. 8, 1997, as amended at 63 FR 57559, Oct. 27, 1998; 71
FR 75046, Dec. 13, 2006; 74 FR 51688, Oct. 7, 2009, as amended at 75 FR
27138, May 13, 2010; 79 FR 10313, Feb. 24, 2014]
Subpart B_Requirements Relating to Access and Renewability of Coverage,
and Limitations on Preexisting Condition Exclusion Periods
Sec. 146.111 Preexisting condition exclusions.
(a) Preexisting condition exclusion defined--(1) A preexisting
condition exclusion means a preexisting condition exclusion within the
meaning of Sec. 144.103 of this subchapter.
(2) Examples. The rules of this paragraph (a)(1) are illustrated by
the following examples:
Example 1 --(i) Facts. A group health plan provides benefits solely
through an insurance policy offered by Issuer S. At the expiration of
the policy, the plan switches coverage to a policy offered by Issuer T.
Issuer T's policy excludes benefits for any prosthesis if the body part
was lost before the effective date of coverage under the policy.
(ii) Conclusion. In this Example 1, the exclusion of benefits for
any prosthesis if the body part was lost before the effective date of
coverage is a preexisting condition exclusion because it operates to
exclude benefits for a condition based on the fact that the condition
was present before the effective date of coverage under the policy. The
exclusion of benefits, therefore, is prohibited.
Example 2 --(i) Facts. A group health plan provides coverage for
cosmetic surgery in cases of accidental injury, but only if the injury
occurred while the individual was covered under the plan.
(ii) Conclusion. In this Example 2, the plan provision excluding
cosmetic surgery benefits for individuals injured before enrolling
[[Page 17]]
in the plan is a preexisting condition exclusion because it operates to
exclude benefits relating to a condition based on the fact that the
condition was present before the effective date of coverage. The plan
provision, therefore, is prohibited.
Example 3 --(i) Facts. A group health plan provides coverage for the
treatment of diabetes, generally not subject to any requirement to
obtain an approval for a treatment plan. However, if an individual was
diagnosed with diabetes before the effective date of coverage under the
plan, diabetes coverage is subject to a requirement to obtain approval
of a treatment plan in advance.
(ii) Conclusion. In this Example 3, the requirement to obtain
advance approval of a treatment plan is a preexisting condition
exclusion because it limits benefits for a condition based on the fact
that the condition was present before the effective date of coverage.
The plan provision, therefore, is prohibited.
Example 4 --(i) Facts. A group health plan provides coverage for
three infertility treatments. The plan counts against the three-
treatment limit benefits provided under prior health coverage.
(ii) Conclusion. In this Example 4, counting benefits for a specific
condition provided under prior health coverage against a treatment limit
for that condition is a preexisting condition exclusion because it
operates to limit benefits for a condition based on the fact that the
condition was present before the effective date of coverage. The plan
provision, therefore, is prohibited.
Example 5 --(i) Facts. When an individual's coverage begins under a
group health plan, the individual generally becomes eligible for all
benefits. However, benefits for pregnancy are not available until the
individual has been covered under the plan for 12 months.
(ii) Conclusion. In this Example 5, the requirement to be covered
under the plan for 12 months to be eligible for pregnancy benefits is a
subterfuge for a preexisting condition exclusion because it is designed
to exclude benefits for a condition (pregnancy) that arose before the
effective date of coverage. The plan provision, therefore, is
prohibited.
Example 6 --(i) Facts. A group health plan provides coverage for
medically necessary items and services, generally including treatment of
heart conditions. However, the plan does not cover those same items and
services when used for treatment of congenital heart conditions.
(ii) Conclusion. In this Example 6, the exclusion of coverage for
treatment of congenital heart conditions is a preexisting condition
exclusion because it operates to exclude benefits relating to a
condition based on the fact that the condition was present before the
effective date of coverage. The plan provision, therefore, is
prohibited.
Example 7 --(i) Facts. A group health plan generally provides
coverage for medically necessary items and services. However, the plan
excludes coverage for the treatment of cleft palate.
(ii) Conclusion. In this Example 7, the exclusion of coverage for
treatment of cleft palate is not a preexisting condition exclusion
because the exclusion applies regardless of when the condition arose
relative to the effective date of coverage. The plan provision,
therefore, is not prohibited. (But see 45 CFR 147.150, which may require
coverage of cleft palate as an essential health benefit for health
insurance coverage in the individual or small group market, depending on
the essential health benefits benchmark plan as defined in Sec. 156.20
of this subchapter).
Example 8 --(i) Facts. A group health plan provides coverage for
treatment of cleft palate, but only if the individual being treated has
been continuously covered under the plan from the date of birth.
(ii) Conclusion. In this Example 8, the exclusion of coverage for
treatment of cleft palate for individuals who have not been covered
under the plan from the date of birth operates to exclude benefits in
relation to a condition based on the fact that the condition was present
before the effective date of coverage. The plan provision, therefore, is
prohibited.
(b) General rules. See Sec. 147.108 of this subchapter for rules
prohibiting the imposition of a preexisting condition exclusion.
[69 FR 78783, Dec. 30, 2004, as amended at 75 FR 37235, June 28, 2010;
79 FR 10313, Feb. 24, 2014; 80 FR 72274, Nov. 18, 2015]
Sec. 146.113 Rules relating to creditable coverage.
(a) General rules--(1) Creditable coverage. For purposes of this
section, except as provided in paragraph (a)(2) of this section, the
term creditable coverage means coverage of an individual under any of
the following:
(i) A group health plan as defined in Sec. 146.145(a).
(ii) Health insurance coverage as defined in Sec. 144.103 of this
chapter (whether or not the entity offering the coverage is subject to
the requirements of this part and 45 CFR part 148 and without regard to
whether the coverage is offered in the group market, the individual
market, or otherwise).
(iii) Part A or B of Title XVIII of the Social Security Act
(Medicare).
(iv) Title XIX of the Social Security Act (Medicaid), other than
coverage consisting solely of benefits under section 1928 of the Social
Security Act
[[Page 18]]
(the program for distribution of pediatric vaccines).
(v) Title 10 U.S.C. Chapter 55 (medical and dental care for members
and certain former members of the uniformed services, and for their
dependents; for purposes of Title 10 U.S.C. Chapter 55, uniformed
services means the armed forces and the Commissioned Corps of the
National Oceanic and Atmospheric Administration and of the Public Health
Service).
(vi) A medical care program of the Indian Health Service or of a
tribal organization.
(vii) A State health benefits risk pool. For purposes of this
section, a State health benefits risk pool means--
(A) An organization qualifying under section 501(c)(26) of the
Internal Revenue Code;
(B) A qualified high risk pool described in section 2744(c)(2) of
the PHS Act; or
(C) Any other arrangement sponsored by a State, the membership
composition of which is specified by the State and which is established
and maintained primarily to provide health coverage for individuals who
are residents of such State and who, by reason of the existence or
history of a medical condition--
(1) Are unable to acquire medical care coverage for such condition
through insurance or from an HMO, or
(2) Are able to acquire such coverage only at a rate which is
substantially in excess of the rate for such coverage through the
membership organization.
(viii) A health plan offered under Title 5 U.S.C. Chapter 89 (the
Federal Employees Health Benefits Program).
(ix) A public health plan. For purposes of this section, a public
health plan means any plan established or maintained by a State, the
U.S. government, a foreign country, or any political subdivision of a
State, the U.S. government, or a foreign country that provides health
coverage to individuals who are enrolled in the plan.
(x) A health benefit plan under section 5(e) of the Peace Corps Act
(22 U.S.C. 2504(e)).
(xi) Title XXI of the Social Security Act (State Children's Health
Insurance Program).
(2) Excluded coverage. Creditable coverage does not include coverage
of solely excepted benefits (described in Sec. 146.145).
(b) Counting creditable coverage rules superseded by prohibition on
preexisting condition exclusion. See Sec. 147.108 of this subchapter
for rules prohibiting the imposition of a preexisting condition
exclusion.
[69 FR 78788, Dec. 30, 2004, as amended at 79 FR 10314, Feb. 24, 2014]
Sec. 146.115 Certification and disclosure of previous coverage.
(a) In general. The rules for providing certificates of creditable
coverage and demonstrating creditable coverage have been superseded by
the prohibition on preexisting condition exclusions. See Sec. 147.108
of this subchapter for rules prohibiting the imposition of a preexisting
condition exclusion.
(b) Applicability. The provisions of this section apply beginning
December 31, 2014.
[79 FR 10314, Feb. 24, 2014]
Sec. 146.117 Special enrollment periods.
(a) Special enrollment for certain individuals who lose coverage--
(1) In general. A group health plan, and a health insurance issuer
offering health insurance coverage in connection with a group health
plan, is required to permit current employees and dependents (as defined
in Sec. 144.103 of this chapter) who are described in paragraph (a)(2)
of this section to enroll for coverage under the terms of the plan if
the conditions in paragraph (a)(3) of this section are satisfied. The
special enrollment rights under this paragraph (a) apply without regard
to the dates on which an individual would otherwise be able to enroll
under the plan.
(2) Individuals eligible for special enrollment--(i) When employee
loses coverage. A current employee and any dependents (including the
employee's spouse) each are eligible for special enrollment in any
benefit package under the plan (subject to plan eligibility rules
conditioning dependent enrollment on enrollment of the employee) if--
[[Page 19]]
(A) The employee and the dependents are otherwise eligible to enroll
in the benefit package;
(B) When coverage under the plan was previously offered, the
employee had coverage under any group health plan or health insurance
coverage; and
(C) The employee satisfies the conditions of paragraph (a)(3)(i),
(ii), or (iii) of this section and, if applicable, paragraph (a)(3)(iv)
of this section.
(ii) When dependent loses coverage. (A) A dependent of a current
employee (including the employee's spouse) and the employee each are
eligible for special enrollment in any benefit package under the plan
(subject to plan eligibility rules conditioning dependent enrollment on
enrollment of the employee) if--
(1) The dependent and the employee are otherwise eligible to enroll
in the benefit package;
(2) When coverage under the plan was previously offered, the
dependent had coverage under any group health plan or health insurance
coverage; and
(3) The dependent satisfies the conditions of paragraph (a)(3)(i),
(ii), or (iii) of this section and, if applicable, paragraph (a)(3)(iv)
of this section.
(B) However, the plan or issuer is not required to enroll any other
dependent unless that dependent satisfies the criteria of this paragraph
(a)(2)(ii), or the employee satisfies the criteria of paragraph
(a)(2)(i) of this section.
(iii) Examples. The rules of this paragraph (a)(2) are illustrated
by the following examples:
Example 1 --(i) Facts. Individual A works for Employer X. A, A's
spouse, and A's dependent children are eligible but not enrolled for
coverage under X's group health plan. A's spouse works for Employer Y
and at the time coverage was offered under X's plan, A was enrolled in
coverage under Y's plan. Then, A loses eligibility for coverage under
Y's plan.
(ii) Conclusion. In this Example 1, because A satisfies the
conditions for special enrollment under paragraph (a)(2)(i) of this
section, A, A's spouse, and A's dependent children are eligible for
special enrollment under X's plan.
Example 2 --(i) Facts. Individual A and A's spouse are eligible but
not enrolled for coverage under Group Health Plan P maintained by A's
employer. When A was first presented with an opportunity to enroll A and
A's spouse, they did not have other coverage. Later, A and A's spouse
enroll in Group Health Plan Q maintained by the employer of A's spouse.
During a subsequent open enrollment period in P, A and A's spouse did
not enroll because of their coverage under Q. They then lose eligibility
for coverage under Q.
(ii) Conclusion. In this Example 2, because A and A's spouse were
covered under Q when they did not enroll in P during open enrollment,
they satisfy the conditions for special enrollment under paragraphs
(a)(2)(i) and (ii) of this section. Consequently, A and A's spouse are
eligible for special enrollment under P.
Example 3 --(i) Facts. Individual B works for Employer X. B and B's
spouse are eligible but not enrolled for coverage under X's group health
plan. B's spouse works for Employer Y and at the time coverage was
offered under X's plan, B's spouse was enrolled in self-only coverage
under Y's group health plan. Then, B's spouse loses eligibility for
coverage under Y's plan.
(ii) Conclusion. In this Example 3, because B's spouse satisfies the
conditions for special enrollment under paragraph (a)(2)(ii) of this
section, both B and B's spouse are eligible for special enrollment under
X's plan.
Example 4 --(i) Facts. Individual A works for Employer X. X
maintains a group health plan with two benefit packages--an HMO option
and an indemnity option. Self-only and family coverage are available
under both options. A enrolls for self-only coverage in the HMO option.
A's spouse works for Employer Y and was enrolled for self-only coverage
under Y's plan at the time coverage was offered under X's plan. Then,
A's spouse loses coverage under Y's plan. A requests special enrollment
for A and A's spouse under the plan's indemnity option.
(ii) Conclusion. In this Example 4, because A's spouse satisfies the
conditions for special enrollment under paragraph (a)(2)(ii) of this
section, both A and A's spouse can enroll in either benefit package
under X's plan. Therefore, if A requests enrollment in accordance with
the requirements of this section, the plan must allow A and A's spouse
to enroll in the indemnity option.
(3) Conditions for special enrollment--(i) Loss of eligibility for
coverage. In the case of an employee or dependent who has coverage that
is not COBRA continuation coverage, the conditions of this paragraph
(a)(3)(i) are satisfied at the time the coverage is terminated as a
result of loss of eligibility (regardless of whether the individual is
eligible for or elects COBRA continuation coverage). Loss of eligibility
under this paragraph (a)(3)(i) does not include a loss due to the
failure of the employee or dependent to pay premiums on a
[[Page 20]]
timely basis or termination of coverage for cause (such as making a
fraudulent claim or an intentional misrepresentation of a material fact
in connection with the plan). Loss of eligibility for coverage under
this paragraph (a)(3)(i) includes (but is not limited to)--
(A) Loss of eligibility for coverage as a result of legal
separation, divorce, cessation of dependent status (such as attaining
the maximum age to be eligible as a dependent child under the plan),
death of an employee, termination of employment, reduction in the number
of hours of employment, and any loss of eligibility for coverage after a
period that is measured by reference to any of the foregoing;
(B) In the case of coverage offered through an HMO, or other
arrangement, in the individual market that does not provide benefits to
individuals who no longer reside, live, or work in a service area, loss
of coverage because an individual no longer resides, lives, or works in
the service area (whether or not within the choice of the individual);
(C) In the case of coverage offered through an HMO, or other
arrangement, in the group market that does not provide benefits to
individuals who no longer reside, live, or work in a service area, loss
of coverage because an individual no longer resides, lives, or works in
the service area (whether or not within the choice of the individual),
and no other benefit package is available to the individual; and
(D) A situation in which a plan no longer offers any benefits to the
class of similarly situated individuals (as described in Sec.
146.121(d)) that includes the individual.
(ii) Termination of employer contributions. In the case of an
employee or dependent who has coverage that is not COBRA continuation
coverage, the conditions of this paragraph (a)(3)(ii) are satisfied at
the time employer contributions towards the employee's or dependent's
coverage terminate. Employer contributions include contributions by any
current or former employer that was contributing to coverage for the
employee or dependent.
(iii) Exhaustion of COBRA continuation coverage. In the case of an
employee or dependent who has coverage that is COBRA continuation
coverage, the conditions of this paragraph (a)(3)(iii) are satisfied at
the time the COBRA continuation coverage is exhausted. For purposes of
this paragraph (a)(3)(iii), an individual who satisfies the conditions
for special enrollment of paragraph (a)(3)(i) of this section, does not
enroll, and instead elects and exhausts COBRA continuation coverage
satisfies the conditions of this paragraph (a)(3)(iii). (Exhaustion of
COBRA continuation coverage is defined in Sec. 144.103 of this
chapter.)
(iv) Written statement. A plan may require an employee declining
coverage (for the employee or any dependent of the employee) to state in
writing whether the coverage is being declined due to other health
coverage only if, at or before the time the employee declines coverage,
the employee is provided with notice of the requirement to provide the
statement (and the consequences of the employee's failure to provide the
statement). If a plan requires such a statement, and an employee does
not provide it, the plan is not required to provide special enrollment
to the employee or any dependent of the employee under this paragraph
(a)(3). A plan must treat an employee as having satisfied the plan
requirement permitted under this paragraph (a)(3)(iv) if the employee
provides a written statement that coverage was being declined because
the employee or dependent had other coverage; a plan cannot require
anything more for the employee to satisfy the plan's requirement to
provide a written statement. (For example, the plan cannot require that
the statement be notarized.)
(v) The rules of this paragraph (a)(3) are illustrated by the
following examples:
Example 1. (i) Facts. Individual D enrolls in a group health plan
maintained by Employer Y. At the time D enrolls, Y pays 70 percent of
the cost of employee coverage and D pays the rest. Y announces that
beginning January 1, Y will no longer make employer contributions
towards the coverage. Employees may maintain coverage, however, if they
pay the total cost of the coverage.
(ii) Conclusion. In this Example 1, employer contributions towards
D's coverage ceased on January 1 and the conditions of paragraph
(a)(3)(ii) of this section are satisfied on this
[[Page 21]]
date (regardless of whether D elects to pay the total cost and continue
coverage under Y's plan).
Example 2. (i) Facts. A group health plan provides coverage through
two options--Option 1 and Option 2. Employees can enroll in either
option only within 30 days of hire or on January 1 of each year.
Employee A is eligible for both options and enrolls in Option 1.
Effective July 1 the plan terminates coverage under Option 1 and the
plan does not create an immediate open enrollment opportunity into
Option 2.
(ii) Conclusion. In this Example 2, A has experienced a loss of
eligibility for coverage that satisfies paragraph (a)(3)(i) of this
section, and has satisfied the other conditions for special enrollment
under paragraph (a)(2)(i) of this section. Therefore, if A satisfies the
other conditions of this paragraph (a), the plan must permit A to enroll
in Option 2 as a special enrollee. (A may also be eligible to enroll in
another group health plan, such as a plan maintained by the employer of
A's spouse, as a special enrollee.) The outcome would be the same if
Option 1 was terminated by an issuer and the plan made no other coverage
available to A.
Example 3. (i) Facts. Individual C is covered under a group health
plan maintained by Employer X. While covered under X's plan, C was
eligible for but did not enroll in a plan maintained by Employer Z, the
employer of C's spouse. C terminates employment with X and loses
eligibility for coverage under X's plan. C has a special enrollment
right to enroll in Z's plan, but C instead elects COBRA continuation
coverage under X's plan. C exhausts COBRA continuation coverage under
X's plan and requests special enrollment in Z's plan.
(ii) Conclusion. In this Example 3, C has satisfied the conditions
for special enrollment under paragraph (a)(3)(iii) of this section, and
has satisfied the other conditions for special enrollment under
paragraph (a)(2)(i) of this section. The special enrollment right that C
had into Z's plan immediately after the loss of eligibility for coverage
under X's plan was an offer of coverage under Z's plan. When C later
exhausts COBRA coverage under X's plan, C has a second special
enrollment right in Z's plan.
(4) Applying for special enrollment and effective date of coverage.
(i) A plan or issuer must allow an employee a period of at least 30 days
after an event described in paragraph (a)(3) of this section to request
enrollment (for the employee or the employee's dependent).
(ii) Coverage must begin no later than the first day of the first
calendar month beginning after the date the plan or issuer receives the
request for special enrollment.
(b) Special enrollment with respect to certain dependent
beneficiaries--(1) General. A group health plan, and a health insurance
issuer offering health insurance coverage in connection with a group
health plan, that makes coverage available with respect to dependents is
required to permit individuals described in paragraph (b)(2) of this
section to be enrolled for coverage in a benefit package under the terms
of the plan. Paragraph (b)(3) of this section describes the required
special enrollment period and the date by which coverage must begin. The
special enrollment rights under this paragraph (b) apply without regard
to the dates on which an individual would otherwise be able to enroll
under the plan.
(2) Individuals eligible for special enrollment. An individual is
described in this paragraph (b)(2) if the individual is otherwise
eligible for coverage in a benefit package under the plan and if the
individual is described in paragraph (b)(2)(i), (ii), (iii), (iv), (v),
or (vi) of this section.
(i) Current employee only. A current employee is described in this
paragraph (b)(2)(i) if a person becomes a dependent of the individual
through marriage, birth, adoption, or placement for adoption.
(ii) Spouse of a participant only. An individual is described in
this paragraph (b)(2)(ii) if either--
(A) The individual becomes the spouse of a participant; or
(B) The individual is a spouse of a participant and a child becomes
a dependent of the participant through birth, adoption, or placement for
adoption.
(iii) Current employee and spouse. A current employee and an
individual who is or becomes a spouse of such an employee, are described
in this paragraph (b)(2)(iii) if either--
(A) The employee and the spouse become married; or
(B) The employee and spouse are married and a child becomes a
dependent of the employee through birth, adoption, or placement for
adoption.
(iv) Dependent of a participant only. An individual is described in
this paragraph (b)(2)(iv) if the individual is a dependent (as defined
in Sec. 144.103 of this
[[Page 22]]
chapter) of a participant and the individual has become a dependent of
the participant through marriage, birth, adoption, or placement for
adoption.
(v) Current employee and a new dependent. A current employee and an
individual who is a dependent of the employee, are described in this
paragraph (b)(2)(v) if the individual becomes a dependent of the
employee through marriage, birth, adoption, or placement for adoption.
(vi) Current employee, spouse, and a new dependent. A current
employee, the employee's spouse, and the employee's dependent are
described in this paragraph (b)(2)(vi) if the dependent becomes a
dependent of the employee through marriage, birth, adoption, or
placement for adoption.
(3) Applying for special enrollment and effective date of coverage--
(i) Request. A plan or issuer must allow an individual a period of at
least 30 days after the date of the marriage, birth, adoption, or
placement for adoption (or, if dependent coverage is not generally made
available at the time of the marriage, birth, adoption, or placement for
adoption, a period of at least 30 days after the date the plan makes
dependent coverage generally available) to request enrollment (for the
individual or the individual's dependent).
(ii) Reasonable procedures for special enrollment. [Reserved]
(iii) Date coverage must begin--(A) Marriage. In the case of
marriage, coverage must begin no later than the first day of the first
calendar month beginning after the date the plan or issuer receives the
request for special enrollment.
(B) Birth, adoption, or placement for adoption. Coverage must begin
in the case of a dependent's birth on the date of birth and in the case
of a dependent's adoption or placement for adoption no later than the
date of such adoption or placement for adoption (or, if dependent
coverage is not made generally available at the time of the birth,
adoption, or placement for adoption, the date the plan makes dependent
coverage available).
(4) Examples. The rules of this paragraph (b) are illustrated by the
following examples:
Example 1. (i) Facts. An employer maintains a group health plan that
offers all employees employee-only coverage, employee-plus-spouse
coverage, or family coverage. Under the terms of the plan, any employee
may elect to enroll when first hired (with coverage beginning on the
date of hire) or during an annual open enrollment period held each
December (with coverage beginning the following January 1). Employee A
is hired on September 3. A is married to B, and they have no children.
On March 15 in the following year a child C is born to A and B. Before
that date, A and B have not been enrolled in the plan.
(ii) Conclusion. In this Example 1, the conditions for special
enrollment of an employee with a spouse and new dependent under
paragraph (b)(2)(vi) of this section are satisfied. If A satisfies the
conditions of paragraph (b)(3) of this section for requesting enrollment
timely, the plan will satisfy this paragraph (b) if it allows A to
enroll either with employee-only coverage, with employee-plus-spouse
coverage (for A and B), or with family coverage (for A, B, and C). The
plan must allow whatever coverage is chosen to begin on March 15, the
date of C's birth.
Example 2. (i) Facts. Individual D works for Employer X. X maintains
a group health plan with two benefit packages--an HMO option and an
indemnity option. Self-only and family coverage are available under both
options. D enrolls for self-only coverage in the HMO option. Then, a
child, E, is placed for adoption with D. Within 30 days of the placement
of E for adoption, D requests enrollment for D and E under the plan's
indemnity option.
(ii) Conclusion. In this Example 2, D and E satisfy the conditions
for special enrollment under paragraphs (b)(2)(v) and (b)(3) of this
section. Therefore, the plan must allow D and E to enroll in the
indemnity coverage, effective as of the date of the placement for
adoption.
(c) Notice of special enrollment. At or before the time an employee
is initially offered the opportunity to enroll in a group health plan,
the plan must furnish the employee with a notice of special enrollment
that complies with the requirements of this paragraph (c).
(1) Description of special enrollment rights. The notice of special
enrollment must include a description of special enrollment rights. The
following model language may be used to satisfy this requirement:
If you are declining enrollment for yourself or your dependents
(including your spouse) because of other health insurance or group
health plan coverage, you may be able to enroll yourself and your
dependents in
[[Page 23]]
this plan if you or your dependents lose eligibility for that other
coverage (or if the employer stops contributing towards your or your
dependents' other coverage). However, you must request enrollment within
[insert ``30 days'' or any longer period that applies under the plan]
after your or your dependents' other coverage ends (or after the
employer stops contributing toward the other coverage).
In addition, if you have a new dependent as a result of marriage,
birth, adoption, or placement for adoption, you may be able to enroll
yourself and your dependents. However, you must request enrollment
within [insert ``30 days'' or any longer period that applies under the
plan] after the marriage, birth, adoption, or placement for adoption.
To request special enrollment or obtain more information, contact
[insert the name, title, telephone number, and any additional contact
information of the appropriate plan representative].
(2) Additional information that may be required. The notice of
special enrollment must also include, if applicable, the notice
described in paragraph (a)(3)(iv) of this section (the notice required
to be furnished to an individual declining coverage if the plan requires
the reason for declining coverage to be in writing).
(d) Treatment of special enrollees. (1) If an individual requests
enrollment while the individual is entitled to special enrollment under
either paragraph (a) or (b) of this section, the individual is a special
enrollee, even if the request for enrollment coincides with a late
enrollment opportunity under the plan. Therefore, the individual cannot
be treated as a late enrollee.
(2) Special enrollees must be offered all the benefit packages
available to similarly situated individuals who enroll when first
eligible. For this purpose, any difference in benefits or cost-sharing
requirements for different individuals constitutes a different benefit
package. In addition, a special enrollee cannot be required to pay more
for coverage than a similarly situated individual who enrolls in the
same coverage when first eligible.
(3) The rules of this section are illustrated by the following
example:
Example. (i) Facts. Employer Y maintains a group health plan that
has an enrollment period for late enrollees every November 1 through
November 30 with coverage effective the following January 1. On October
18, Individual B loses coverage under another group health plan and
satisfies the requirements of paragraphs (a)(2), (3), and (4) of this
section. B submits a completed application for coverage on November 2.
(ii) Conclusion. In this Example, B is a special enrollee.
Therefore, even though B's request for enrollment coincides with an open
enrollment period, B's coverage is required to be made effective no
later than December 1 (rather than the plan's January 1 effective date
for late enrollees).
[69 FR 78794, Dec. 30, 2004, as amended at 79 FR 10314, Feb. 24, 2014]
Sec. 146.119 HMO affiliation period as an alternative to
a preexisting condition exclusion.
The rules for HMO affiliation periods have been superseded by the
prohibition on preexisting condition exclusions. See Sec. 147.108 of
this subchapter for rules prohibiting the imposition of a preexisting
condition exclusion.
[79 FR 10314, Feb. 24, 2014]
Sec. 146.120 Interaction with the Family and Medical Leave Act. [Reserved]
Sec. 146.121 Prohibiting discrimination against participants and
beneficiaries based on a health factor.
(a) Health factors. (1) The term health factor means, in relation to
an individual, any of the following health status-related factors:
(i) Health status;
(ii) Medical condition (including both physical and mental
illnesses), as defined in Sec. 144.103 of this chapter;
(iii) Claims experience;
(iv) Receipt of health care;
(v) Medical history;
(vi) Genetic information, as defined in Sec. 146.122(a) of this
subchapter;
(vii) Evidence of insurability; or
(viii) Disability.
(2) Evidence of insurability includes--
(i) Conditions arising out of acts of domestic violence; and
(ii) Participation in activities such as motorcycling, snowmobiling,
all-terrain vehicle riding, horseback riding, skiing, and other similar
activities.
(3) The decision whether health coverage is elected for an
individual (including the time chosen to enroll, such as under special
enrollment or late enrollment) is not, itself, within the scope of any
health factor. (However,
[[Page 24]]
under Sec. 146.117, a plan or issuer must treat special enrollees the
same as similarly situated individuals who are enrolled when first
eligible.)
(b) Prohibited discrimination in rules for eligibility--(1) In
general. As used in this part, unless the context indicates otherwise--
(i) A group health plan, and a health insurance issuer offering
health insurance coverage in connection with a group health plan, may
not establish any rule for eligibility (including continued eligibility)
of any individual to enroll for benefits under the terms of the plan or
group health insurance coverage that discriminates based on any health
factor that relates to that individual or a dependent of that
individual. This rule is subject to the provisions of paragraph (b)(2)
of this section (explaining how this rule applies to benefits),
paragraph (d) of this section (containing rules for establishing groups
of similarly situated individuals), paragraph (e) of this section
(relating to nonconfinement, actively-at-work, and other service
requirements), paragraph (f) of this section (relating to wellness
programs), and paragraph (g) of this section (permitting favorable
treatment of individuals with adverse health factors).
(ii) For purposes of this section, rules for eligibility include,
but are not limited to, rules relating to--
(A) Enrollment;
(B) The effective date of coverage;
(C) Waiting (or affiliation) periods;
(D) Late and special enrollment;
(E) Eligibility for benefit packages (including rules for
individuals to change their selection among benefit packages);
(F) Benefits (including rules relating to covered benefits, benefit
restrictions, and cost-sharing mechanisms such as coinsurance,
copayments, and deductibles), as described in paragraphs (b)(2) and
(b)(3) of this section;
(G) Continued eligibility; and
(H) Terminating coverage (including disenrollment) of any individual
under the plan.
(iii) The rules of this paragraph (b)(1) are illustrated by the
following examples:
Example 1. (i) Facts. An employer sponsors a group health plan that
is available to all employees who enroll within the first 30 days of
their employment. However, employees who do not enroll within the first
30 days cannot enroll later unless they pass a physical examination.
(ii) Conclusion. In this Example 1, the requirement to pass a
physical examination in order to enroll in the plan is a rule for
eligibility that discriminates based on one or more health factors and
thus violates this paragraph (b)(1).
Example 2. (i) Facts. Under an employer's group health plan,
employees who enroll during the first 30 days of employment (and during
special enrollment periods) may choose between two benefit packages: an
indemnity option and an HMO option. However, employees who enroll during
late enrollment are permitted to enroll only in the HMO option and only
if they provide evidence of good health.
(ii) Conclusion. In this Example 2, the requirement to provide
evidence of good health in order to be eligible for late enrollment in
the HMO option is a rule for eligibility that discriminates based on one
or more health factors and thus violates this paragraph (b)(1). However,
if the plan did not require evidence of good health but limited late
enrollees to the HMO option, the plan's rules for eligibility would not
discriminate based on any health factor, and thus would not violate this
paragraph (b)(1), because the time an individual chooses to enroll is
not, itself, within the scope of any health factor.
Example 3. (i) Facts. Under an employer's group health plan, all
employees generally may enroll within the first 30 days of employment.
However, individuals who participate in certain recreational activities,
including motorcycling, are excluded from coverage.
(ii) Conclusion. In this Example 3, excluding from the plan
individuals who participate in recreational activities, such as
motorcycling, is a rule for eligibility that discriminates based on one
or more health factors and thus violates this paragraph (b)(1).
Example 4. (i) Facts. A group health plan applies for a group health
policy offered by an issuer. As part of the application, the issuer
receives health information about individuals to be covered under the
plan. Individual A is an employee of the employer maintaining the plan.
A and A's dependents have a history of high health claims. Based on the
information about A and A's dependents, the issuer excludes A and A's
dependents from the group policy it offers to the employer.
(ii) Conclusion. In this Example 4, the issuer's exclusion of A and
A's dependents from coverage is a rule for eligibility that
discriminates based on one or more health factors, and thus violates
this paragraph (b)(1). (If the employer is a small employer
[[Page 25]]
under 45 CFR 144.103 (generally, an employer with 50 or fewer
employees), the issuer also may violate 45 CFR 146.150, which requires
issuers to offer all the policies they sell in the small group market on
a guaranteed available basis to all small employers and to accept every
eligible individual in every small employer group.) If the plan provides
coverage through this policy and does not provide equivalent coverage
for A and A's dependents through other means, the plan will also violate
this paragraph (b)(1).
(2) Application to benefits--(i) General rule. (A) Under this
section, a group health plan or group health insurance issuer is not
required to provide coverage for any particular benefit to any group of
similarly situated individuals.
(B) However, benefits provided under a plan must be uniformly
available to all similarly situated individuals (as described in
paragraph (d) of this section). Likewise, any restriction on a benefit
or benefits must apply uniformly to all similarly situated individuals
and must not be directed at individual participants or beneficiaries
based on any health factor of the participants or beneficiaries
(determined based on all the relevant facts and circumstances). Thus,
for example, a plan may limit or exclude benefits in relation to a
specific disease or condition, limit or exclude benefits for certain
types of treatments or drugs, or limit or exclude benefits based on a
determination of whether the benefits are experimental or not medically
necessary, but only if the benefit limitation or exclusion applies
uniformly to all similarly situated individuals and is not directed at
individual participants or beneficiaries based on any health factor of
the participants or beneficiaries. In addition, a plan or issuer may
require the satisfaction of a deductible, copayment, coinsurance, or
other cost-sharing requirement in order to obtain a benefit if the limit
or cost-sharing requirement applies uniformly to all similarly situated
individuals and is not directed at individual participants or
beneficiaries based on any health factor of the participants or
beneficiaries. In the case of a cost-sharing requirement, see also
paragraph (b)(2)(ii) of this section, which permits variances in the
application of a cost-sharing mechanism made available under a wellness
program. (Whether any plan provision or practice with respect to
benefits complies with this paragraph (b)(2)(i) does not affect whether
the provision or practice is permitted under ERISA, the Affordable Care
Act (including the requirements related to essential health benefits),
the Americans with Disabilities Act, or any other law, whether State or
Federal.)
(C) For purposes of this paragraph (b)(2)(i), a plan amendment
applicable to all individuals in one or more groups of similarly
situated individuals under the plan and made effective no earlier than
the first day of the first plan year after the amendment is adopted is
not considered to be directed at any individual participants or
beneficiaries.
(D) The rules of this paragraph (b)(2)(i) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan applies a $10,000 annual
limit on a specific covered benefit that is not an essential health
benefit to each participant or beneficiary covered under the plan. The
limit is not directed at individual participants or beneficiaries.
(ii) Conclusion. In this Example 1, the limit does not violate this
paragraph (b)(2)(i) because coverage of the specific, non-essential
health benefit up to $10,000 is available uniformly to each participant
and beneficiary under the plan and because the limit is applied
uniformly to all participants and beneficiaries and is not directed at
individual participants or beneficiaries.
Example 2. (i) Facts. A group health plan has a $500 deductible on
all benefits for participants covered under the plan. Participant B
files a claim for the treatment of AIDS. At the next corporate board
meeting of the plan sponsor, the claim is discussed. Shortly thereafter,
the plan is modified to impose a $2,000 deductible on benefits for the
treatment of AIDS, effective before the beginning of the next plan year.
(ii) Conclusion. The facts of this Example 2 strongly suggest that
the plan modification is directed at B based on B's claim. Absent
outweighing evidence to the contrary, the plan violates this paragraph
(b)(2)(i).
Example 3. (i) A group health plan applies for a group health policy
offered by an issuer. Individual C is covered under the plan and has an
adverse health condition. As part of the application, the issuer
receives health information about the individuals to be covered,
including information about C's adverse health condition. The policy
form offered by the issuer generally provides benefits for the adverse
health condition that C
[[Page 26]]
has, but in this case the issuer offers the plan a policy modified by a
rider that excludes benefits for C for that condition. The exclusionary
rider is made effective the first day of the next plan year.
(ii) Conclusion. In this Example 3, the issuer violates this
paragraph (b)(2)(i) because benefits for C's condition are available to
other individuals in the group of similarly situated individuals that
includes C but are not available to C. Thus, the benefits are not
uniformly available to all similarly situated individuals. Even though
the exclusionary rider is made effective the first day of the next plan
year, because the rider does not apply to all similarly situated
individuals, the issuer violates this paragraph (b)(2)(i).
Example 4. (i) Facts. A group health plan has a $2,000 lifetime
limit for the treatment of temporomandibular joint syndrome (TMJ). The
limit is applied uniformly to all similarly situated individuals and is
not directed at individual participants or beneficiaries.
(ii) Conclusion. In this Example 4, the limit does not violate this
paragraph (b)(2)(i) because $2,000 of benefits for the treatment of TMJ
are available uniformly to all similarly situated individuals and a plan
may limit benefits covered in relation to a specific disease or
condition if the limit applies uniformly to all similarly situated
individuals and is not directed at individual participants or
beneficiaries. (However, applying a lifetime limit on TMJ may violate
Sec. 147.126 of this subchapter, if TMJ coverage is an essential health
benefit, depending on the essential health benefits benchmark plan as
defined in Sec. 156.20 of this subchapter. This example does not
address whether the plan provision is permissible under any other
applicable law, including PHS Act section 2711 or the Americans with
Disabilities Act.)
Example 5. (i) Facts. A group health plan applies a $2 million
lifetime limit on all benefits. However, the $2 million lifetime limit
is reduced to $10,000 for any participant or beneficiary covered under
the plan who has a congenital heart defect.
(ii) Conclusion. In this Example 5, the lower lifetime limit for
participants and beneficiaries with a congenital heart defect violates
this paragraph (b)(2)(i) because benefits under the plan are not
uniformly available to all similarly situated individuals and the plan's
lifetime limit on benefits does not apply uniformly to all similarly
situated individuals. Additionally, this plan provision is prohibited
under Sec. 147.126 of this subchapter because it imposes a lifetime
limit on essential health benefits.
Example 6. (i) Facts. A group health plan limits benefits for
prescription drugs to those listed on a drug formulary. The limit is
applied uniformly to all similarly situated individuals and is not
directed at individual participants or beneficiaries.
(ii) Conclusion. In this Example 6, the exclusion from coverage of
drugs not listed on the drug formulary does not violate this paragraph
(b)(2)(i) because benefits for prescription drugs listed on the
formulary are uniformly available to all similarly situated individuals
and because the exclusion of drugs not listed on the formulary applies
uniformly to all similarly situated individuals and is not directed at
individual participants or beneficiaries.
Example 7. (i) Facts. Under a group health plan, doctor visits are
generally subject to a $250 annual deductible and 20 percent coinsurance
requirement. However, prenatal doctor visits are not subject to any
deductible or coinsurance requirement. These rules are applied uniformly
to all similarly situated individuals and are not directed at individual
participants or beneficiaries.
(ii) Conclusion. In this Example 7, imposing different deductible
and coinsurance requirements for prenatal doctor visits and other visits
does not violate this paragraph (b)(2)(i) because a plan may establish
different deductibles or coinsurance requirements for different services
if the deductible or coinsurance requirement is applied uniformly to all
similarly situated individuals and is not directed at individual
participants or beneficiaries.
(ii) Exception for wellness programs. A group health plan or group
health insurance issuer may vary benefits, including cost-sharing
mechanisms (such as a deductible, copayment, or coinsurance), based on
whether an individual has met the standards of a wellness program that
satisfies the requirements of paragraph (f) of this section.
(iii) Specific rule relating to source-of-injury exclusions. (A) If
a group health plan or group health insurance coverage generally
provides benefits for a type of injury, the plan or issuer may not deny
benefits otherwise provided for treatment of the injury if the injury
results from an act of domestic violence or a medical condition
(including both physical and mental health conditions). This rule
applies in the case of an injury resulting from a medical condition even
if the condition is not diagnosed before the injury.
(B) The rules of this paragraph (b)(2)(iii) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan generally provides
medical/surgical benefits, including benefits for hospital stays, that
are medically necessary. However, the plan excludes benefits for self-
inflicted injuries or
[[Page 27]]
injuries sustained in connection with attempted suicide. Because of
depression, Individual D attempts suicide. As a result, D sustains
injuries and is hospitalized for treatment of the injuries. Under the
exclusion, the plan denies D benefits for treatment of the injuries.
(ii) Conclusion. In this Example 1, the suicide attempt is the
result of a medical condition (depression). Accordingly, the denial of
benefits for the treatments of D's injuries violates the requirements of
this paragraph (b)(2)(iii) because the plan provision excludes benefits
for treatment of an injury resulting from a medical condition.
Example 2. (i) Facts. A group health plan provides benefits for head
injuries generally. The plan also has a general exclusion for any injury
sustained while participating in any of a number of recreational
activities, including bungee jumping. However, this exclusion does not
apply to any injury that results from a medical condition (nor from
domestic violence). Participant E sustains a head injury while bungee
jumping. The injury did not result from a medical condition (nor from
domestic violence). Accordingly, the plan denies benefits for E's head
injury.
(ii) Conclusion. In this Example 2, the plan provision that denies
benefits based on the source of an injury does not restrict benefits
based on an act of domestic violence or any medical condition.
Therefore, the provision is permissible under this paragraph (b)(2)(iii)
and does not violate this section. (However, if the plan did not allow E
to enroll in the plan (or applied different rules for eligibility to E)
because E frequently participates in bungee jumping, the plan would
violate paragraph (b)(1) of this section.)
(c) Prohibited discrimination in premiums or contributions--(1) In
general. (i) A group health plan, and a health insurance issuer offering
health insurance coverage in connection with a group health plan, may
not require an individual, as a condition of enrollment or continued
enrollment under the plan or group health insurance coverage, to pay a
premium or contribution that is greater than the premium or contribution
for a similarly situated individual (described in paragraph (d) of this
section) enrolled in the plan or group health insurance coverage based
on any health factor that relates to the individual or a dependent of
the individual.
(ii) Discounts, rebates, payments in kind, and any other premium
differential mechanisms are taken into account in determining an
individual's premium or contribution rate. (For rules relating to cost-
sharing mechanisms, see paragraph (b)(2) of this section (addressing
benefits).)
(2) Rules relating to premium rates--(i) Group rating based on
health factors not restricted under this section. Nothing in this
section restricts the aggregate amount that an employer may be charged
for coverage under a group health plan. But see Sec. 146.122(b) of this
part, which prohibits adjustments in group premium or contribution rates
based on genetic information.
(ii) List billing based on a health factor prohibited. However, a
group health insurance issuer, or a group health plan, may not quote or
charge an employer (or an individual) a different premium for an
individual in a group of similarly situated individuals based on a
health factor. (But see paragraph (g) of this section permitting
favorable treatment of individuals with adverse health factors.)
(iii) Examples. The rules of this paragraph (c)(2) are illustrated
by the following examples:
Example 1. (i) Facts. An employer sponsors a group health plan and
purchases coverage from a health insurance issuer. In order to determine
the premium rate for the upcoming plan year, the issuer reviews the
claims experience of individuals covered under the plan. The issuer
finds that Individual F had significantly higher claims experience than
similarly situated individuals in the plan. The issuer quotes the plan a
higher per-participant rate because of F's claims experience.
(ii) Conclusion. In this Example 1, the issuer does not violate the
provisions of this paragraph (c)(2) because the issuer blends the rate
so that the employer is not quoted a higher rate for F than for a
similarly situated individual based on F's claims experience. (However,
if the issuer used genetic information in computing the group rate, it
would violate Sec. 146.122(b) of this part.)
Example 2. (i) Facts. Same facts as Example 1, except that the
issuer quotes the employer a higher premium rate for F, because of F's
claims experience, than for a similarly situated individual.
(ii) Conclusion. In this Example 2, the issuer violates this
paragraph (c)(2). Moreover, even if the plan purchased the policy based
on the quote but did not require a higher participant contribution for F
than for a similarly situated individual, the issuer would still violate
this paragraph (c)(2) (but in such a case the plan would not violate
this paragraph (c)(2)).
[[Page 28]]
(3) Exception for wellness programs. Notwithstanding paragraphs
(c)(1) and (c)(2) of this section, a plan or issuer may vary the amount
of premium or contribution it requires similarly situated individuals to
pay based on whether an individual has met the standards of a wellness
program that satisfies the requirements of paragraph (f) of this
section.
(d) Similarly situated individuals. The requirements of this section
apply only within a group of individuals who are treated as similarly
situated individuals. A plan or issuer may treat participants as a group
of similarly situated individuals separate from beneficiaries. In
addition, participants may be treated as two or more distinct groups of
similarly situated individuals and beneficiaries may be treated as two
or more distinct groups of similarly situated individuals in accordance
with the rules of this paragraph (d). Moreover, if individuals have a
choice of two or more benefit packages, individuals choosing one benefit
package may be treated as one or more groups of similarly situated
individuals distinct from individuals choosing another benefit package.
(1) Participants. Subject to paragraph (d)(3) of this section, a
plan or issuer may treat participants as two or more distinct groups of
similarly situated individuals if the distinction between or among the
groups of participants is based on a bona fide employment-based
classification consistent with the employer's usual business practice.
Whether an employment-based classification is bona fide is determined on
the basis of all the relevant facts and circumstances. Relevant facts
and circumstances include whether the employer uses the classification
for purposes independent of qualification for health coverage (for
example, determining eligibility for other employee benefits or
determining other terms of employment). Subject to paragraph (d)(3) of
this section, examples of classifications that, based on all the
relevant facts and circumstances, may be bona fide include full-time
versus part-time status, different geographic location, membership in a
collective bargaining unit, date of hire, length of service, current
employee versus former employee status, and different occupations.
However, a classification based on any health factor is not a bona fide
employment-based classification, unless the requirements of paragraph
(g) of this section are satisfied (permitting favorable treatment of
individuals with adverse health factors).
(2) Beneficiaries. (i) Subject to paragraph (d)(3) of this section,
a plan or issuer may treat beneficiaries as two or more distinct groups
of similarly situated individuals if the distinction between or among
the groups of beneficiaries is based on any of the following factors:
(A) A bona fide employment-based classification of the participant
through whom the beneficiary is receiving coverage;
(B) Relationship to the participant (for example, as a spouse or as
a dependent child);
(C) Marital status;
(D) With respect to children of a participant, age or student
status; or
(E) Any other factor if the factor is not a health factor.
(ii) Paragraph (d)(2)(i) of this section does not prevent more
favorable treatment of individuals with adverse health factors in
accordance with paragraph (g) of this section.
(3) Discrimination directed at individuals. Notwithstanding
paragraphs (d)(1) and (d)(2) of this section, if the creation or
modification of an employment or coverage classification is directed at
individual participants or beneficiaries based on any health factor of
the participants or beneficiaries, the classification is not permitted
under this paragraph (d), unless it is permitted under paragraph (g) of
this section (permitting favorable treatment of individuals with adverse
health factors). Thus, if an employer modified an employment-based
classification to single out, based on a health factor, individual
participants and beneficiaries and deny them health coverage, the new
classification would not be permitted under this section.
(4) Examples. The rules of this paragraph (d) are illustrated by the
following examples:
Example 1. (i) Facts. An employer sponsors a group health plan for
full-time employees only. Under the plan (consistent with the
[[Page 29]]
employer's usual business practice), employees who normally work at
least 30 hours per week are considered to be working full-time. Other
employees are considered to be working part-time. There is no evidence
to suggest that the classification is directed at individual
participants or beneficiaries.
(ii) Conclusion. In this Example 1, treating the full-time and part-
time employees as two separate groups of similarly situated individuals
is permitted under this paragraph (d) because the classification is bona
fide and is not directed at individual participants or beneficiaries.
Example 2. (i) Facts. Under a group health plan, coverage is made
available to employees, their spouses, and their children. However,
coverage is made available to a child only if the child is under age 26
(or under age 29 if the child is continuously enrolled full-time in an
institution of higher learning (full-time students)). There is no
evidence to suggest that these classifications are directed at
individual participants or beneficiaries.
(ii) Conclusion. In this Example 2, treating spouses and children
differently by imposing an age limitation on children, but not on
spouses, is permitted under this paragraph (d). Specifically, the
distinction between spouses and children is permitted under paragraph
(d)(2) of this section and is not prohibited under paragraph (d)(3) of
this section because it is not directed at individual participants or
beneficiaries. It is also permissible to treat children who are under
age 26 (or full-time students under age 29) as a group of similarly
situated individuals separate from those who are age 26 or older (or age
29 or older if they are not full-time students) because the
classification is permitted under paragraph (d)(2) of this section and
is not directed at individual participants or beneficiaries.
Example 3. (i) Facts. A university sponsors a group health plan that
provides one health benefit package to faculty and another health
benefit package to other staff. Faculty and staff are treated
differently with respect to other employee benefits such as retirement
benefits and leaves of absence. There is no evidence to suggest that the
distinction is directed at individual participants or beneficiaries.
(ii) Conclusion. In this Example 3, the classification is permitted
under this paragraph (d) because there is a distinction based on a bona
fide employment-based classification consistent with the employer's
usual business practice and the distinction is not directed at
individual participants and beneficiaries.
Example 4. (i) Facts. An employer sponsors a group health plan that
is available to all current employees. Former employees may also be
eligible, but only if they complete a specified number of years of
service, are enrolled under the plan at the time of termination of
employment, and are continuously enrolled from that date. There is no
evidence to suggest that these distinctions are directed at individual
participants or beneficiaries.
(ii) Conclusion. In this Example 4, imposing additional eligibility
requirements on former employees is permitted because a classification
that distinguishes between current and former employees is a bona fide
employment-based classification that is permitted under this paragraph
(d), provided that it is not directed at individual participants or
beneficiaries. In addition, it is permissible to distinguish between
former employees who satisfy the service requirement and those who do
not, provided that the distinction is not directed at individual
participants or beneficiaries. (However, former employees who do not
satisfy the eligibility criteria may, nonetheless, be eligible for
continued coverage pursuant to a COBRA continuation provision or similar
State law.)
Example 5. (i) Facts. An employer sponsors a group health plan that
provides the same benefit package to all seven employees of the
employer. Six of the seven employees have the same job title and
responsibilities, but Employee G has a different job title and different
responsibilities. After G files an expensive claim for benefits under
the plan, coverage under the plan is modified so that employees with G's
job title receive a different benefit package that includes a higher
deductible than in the benefit package made available to the other six
employees.
(ii) Conclusion. Under the facts of this Example 5, changing the
coverage classification for G based on the existing employment
classification for G is not permitted under this paragraph (d) because
the creation of the new coverage classification for G is directed at G
based on one or more health factors.
(e) Nonconfinement and actively-at-work provisions--(1)
Nonconfinement provisions--(i) General rule. Under the rules of
paragraphs (b) and (c) of this section, a plan or issuer may not
establish a rule for eligibility (as described in paragraph (b)(1)(ii)
of this section) or set any individual's premium or contribution rate
based on whether an individual is confined to a hospital or other health
care institution. In addition, under the rules of paragraphs (b) and (c)
of this section, a plan or issuer may not establish a rule for
eligibility or set any individual's premium or contribution rate based
on an individual's ability to engage in normal life activities, except
to the extent permitted under paragraphs (e)(2)(ii) and (e)(3) of this
section (permitting plans and
[[Page 30]]
issuers, under certain circumstances, to distinguish among employees
based on the performance of services).
(ii) Examples. The rules of this paragraph (e)(1) are illustrated by
the following examples:
Example 1. (i) Facts. Under a group health plan, coverage for
employees and their dependents generally becomes effective on the first
day of employment. However, coverage for a dependent who is confined to
a hospital or other health care institution does not become effective
until the confinement ends.
(ii) Conclusion. In this Example 1, the plan violates this paragraph
(e)(1) because the plan delays the effective date of coverage for
dependents based on confinement to a hospital or other health care
institution.
Example 2. (i) Facts. In previous years, a group health plan has
provided coverage through a group health insurance policy offered by
Issuer M. However, for the current year, the plan provides coverage
through a group health insurance policy offered by Issuer N. Under
Issuer N's policy, items and services provided in connection with the
confinement of a dependent to a hospital or other health care
institution are not covered if the confinement is covered under an
extension of benefits clause from a previous health insurance issuer.
(ii) Conclusion. In this Example 2, Issuer N violates this paragraph
(e)(1) because the group health insurance coverage restricts benefits (a
rule for eligibility under paragraph (b)(1)) based on whether a
dependent is confined to a hospital or other health care institution
that is covered under an extension of benefits clause from a previous
issuer. State law cannot change the obligation of Issuer N under this
section. However, under State law Issuer M may also be responsible for
providing benefits to such a dependent. In a case in which Issuer N has
an obligation under this section to provide benefits and Issuer M has an
obligation under State law to provide benefits, any State laws designed
to prevent more than 100% reimbursement, such as State coordination-of-
benefits laws, continue to apply.
(2) Actively-at-work and continuous service provisions--(i) General
rule. (A) Under the rules of paragraphs (b) and (c) of this section and
subject to the exception for the first day of work described in
paragraph (e)(2)(ii) of this section, a plan or issuer may not establish
a rule for eligibility (as described in paragraph (b)(1)(ii) of this
section) or set any individual's premium or contribution rate based on
whether an individual is actively at work (including whether an
individual is continuously employed), unless absence from work due to
any health factor (such as being absent from work on sick leave) is
treated, for purposes of the plan or health insurance coverage, as being
actively at work.
(B) The rules of this paragraph (e)(2)(i) are illustrated by the
following examples:
Example 1. (i) Facts. Under a group health plan, an employee
generally becomes eligible to enroll 30 days after the first day of
employment. However, if the employee is not actively at work on the
first day after the end of the 30-day period, then eligibility for
enrollment is delayed until the first day the employee is actively at
work.
(ii) Conclusion. In this Example 1, the plan violates this paragraph
(e)(2) (and thus also violates paragraph (b) of this section). However,
the plan would not violate paragraph (e)(2) or (b) of this section if,
under the plan, an absence due to any health factor is considered being
actively at work.
Example 2. (i) Facts. Under a group health plan, coverage for an
employee becomes effective after 90 days of continuous service; that is,
if an employee is absent from work (for any reason) before completing 90
days of service, the beginning of the 90-day period is measured from the
day the employee returns to work (without any credit for service before
the absence).
(ii) Conclusion. In this Example 2, the plan violates this paragraph
(e)(2) (and thus also paragraph (b) of this section) because the 90-day
continuous service requirement is a rule for eligibility based on
whether an individual is actively at work. However, the plan would not
violate this paragraph (e)(2) or paragraph (b) of this section if, under
the plan, an absence due to any health factor is not considered an
absence for purposes of measuring 90 days of continuous service. (In
addition, any eligibility provision that is time-based must comply with
the requirements of PHS Act section 2708 and its implementing
regulations.)
(ii) Exception for the first day of work. (A) Notwithstanding the
general rule in paragraph (e)(2)(i) of this section, a plan or issuer
may establish a rule for eligibility that requires an individual to
begin work for the employer sponsoring the plan (or, in the case of a
multiemployer plan, to begin a job in covered employment) before
coverage becomes effective, provided that such a rule for eligibility
applies regardless of the reason for the absence.
(B) The rules of this paragraph (e)(2)(ii) are illustrated by the
following examples:
[[Page 31]]
Example 1. (i) Facts. Under the eligibility provision of a group
health plan, coverage for new employees becomes effective on the first
day that the employee reports to work. Individual H is scheduled to
begin work on August 3. However, H is unable to begin work on that day
because of illness. H begins working on August 4, and H's coverage is
effective on August 4.
(ii) Conclusion. In this Example 1, the plan provision does not
violate this section. However, if coverage for individuals who do not
report to work on the first day they were scheduled to work for a reason
unrelated to a health factor (such as vacation or bereavement) becomes
effective on the first day they were scheduled to work, then the plan
would violate this section.
Example 2. (i) Facts. Under a group health plan, coverage for new
employees becomes effective on the first day of the month following the
employee's first day of work, regardless of whether the employee is
actively at work on the first day of the month. Individual J is
scheduled to begin work on March 24. However, J is unable to begin work
on March 24 because of illness. J begins working on April 7 and J's
coverage is effective May 1.
(ii) Conclusion. In this Example 2, the plan provision does not
violate this section. However, as in Example 1, if coverage for
individuals absent from work for reasons unrelated to a health factor
became effective despite their absence, then the plan would violate this
section.
(3) Relationship to plan provisions defining similarly situated
individuals. (i) Notwithstanding the rules of paragraphs (e)(1) and
(e)(2) of this section, a plan or issuer may establish rules for
eligibility or set any individual's premium or contribution rate in
accordance with the rules relating to similarly situated individuals in
paragraph (d) of this section. Accordingly, a plan or issuer may
distinguish in rules for eligibility under the plan between full-time
and part-time employees, between permanent and temporary or seasonal
employees, between current and former employees, and between employees
currently performing services and employees no longer performing
services for the employer, subject to paragraph (d) of this section.
However, other Federal or State laws (including the COBRA continuation
provisions and the Family and Medical Leave Act of 1993) may require an
employee or the employee's dependents to be offered coverage and set
limits on the premium or contribution rate even though the employee is
not performing services.
(ii) The rules of this paragraph (e)(3) are illustrated by the
following examples:
Example 1. (i) Facts. Under a group health plan, employees are
eligible for coverage if they perform services for the employer for 30
or more hours per week or if they are on paid leave (such as vacation,
sick, or bereavement leave). Employees on unpaid leave are treated as a
separate group of similarly situated individuals in accordance with the
rules of paragraph (d) of this section.
(ii) Conclusion. In this Example 1, the plan provisions do not
violate this section. However, if the plan treated individuals
performing services for the employer for 30 or more hours per week,
individuals on vacation leave, and individuals on bereavement leave as a
group of similarly situated individuals separate from individuals on
sick leave, the plan would violate this paragraph (e) (and thus also
would violate paragraph (b) of this section) because groups of similarly
situated individuals cannot be established based on a health factor
(including the taking of sick leave) under paragraph (d) of this
section.
Example 2. (i) Facts. To be eligible for coverage under a bona fide
collectively bargained group health plan in the current calendar
quarter, the plan requires an individual to have worked 250 hours in
covered employment during the three-month period that ends one month
before the beginning of the current calendar quarter. The distinction
between employees working at least 250 hours and those working less than
250 hours in the earlier three-month period is not directed at
individual participants or beneficiaries based on any health factor of
the participants or beneficiaries.
(ii) Conclusion. In this Example 2, the plan provision does not
violate this section because, under the rules for similarly situated
individuals allowing full-time employees to be treated differently than
part-time employees, employees who work at least 250 hours in a three-
month period can be treated differently than employees who fail to work
250 hours in that period. The result would be the same if the plan
permitted individuals to apply excess hours from previous periods to
satisfy the requirement for the current quarter.
Example 3. (i) Facts. Under a group health plan, coverage of an
employee is terminated when the individual's employment is terminated,
in accordance with the rules of paragraph (d) of this section. Employee
B has been covered under the plan. B experiences a disabling illness
that prevents B from working. B takes a leave of absence under the
Family and Medical Leave Act of 1993. At the end of such leave, B
terminates employment
[[Page 32]]
and consequently loses coverage under the plan. (This termination of
coverage is without regard to whatever rights the employee (or members
of the employee's family) may have for COBRA continuation coverage.)
(ii) Conclusion. In this Example 3, the plan provision terminating
B's coverage upon B's termination of employment does not violate this
section.
Example 4. (i) Facts. Under a group health plan, coverage of an
employee is terminated when the employee ceases to perform services for
the employer sponsoring the plan, in accordance with the rules of
paragraph (d) of this section. Employee C is laid off for three months.
When the layoff begins, C's coverage under the plan is terminated. (This
termination of coverage is without regard to whatever rights the
employee (or members of the employee's family) may have for COBRA
continuation coverage.)
(ii) Conclusion. In this Example 4, the plan provision terminating
C's coverage upon the cessation of C's performance of services does not
violate this section.
(f) Nondiscriminatory wellness programs--in general. A wellness
program is a program of health promotion or disease prevention.
Paragraphs (b)(2)(ii) and (c)(3) of this section provide exceptions to
the general prohibitions against discrimination based on a health factor
for plan provisions that vary benefits (including cost-sharing
mechanisms) or the premium or contribution for similarly situated
individuals in connection with a wellness program that satisfies the
requirements of this paragraph (f).
(1) Definitions. The definitions in this paragraph (f)(1) govern in
applying the provisions of this paragraph (f).
(i) Reward. Except where expressly provided otherwise, references in
this section to an individual obtaining a reward include both obtaining
a reward (such as a discount or rebate of a premium or contribution, a
waiver of all or part of a cost-sharing mechanism, an additional
benefit, or any financial or other incentive) and avoiding a penalty
(such as the absence of a premium surcharge or other financial or
nonfinancial disincentive). References in this section to a plan
providing a reward include both providing a reward (such as a discount
or rebate of a premium or contribution, a waiver of all or part of a
cost-sharing mechanism, an additional benefit, or any financial or other
incentive) and imposing a penalty (such as a surcharge or other
financial or nonfinancial disincentive).
(ii) Participatory wellness programs. If none of the conditions for
obtaining a reward under a wellness program is based on an individual
satisfying a standard that is related to a health factor (or if a
wellness program does not provide a reward), the wellness program is a
participatory wellness program. Examples of participatory wellness
programs are:
(A) A program that reimburses employees for all or part of the cost
for membership in a fitness center.
(B) A diagnostic testing program that provides a reward for
participation in that program and does not base any part of the reward
on outcomes.
(C) A program that encourages preventive care through the waiver of
the copayment or deductible requirement under a group health plan for
the costs of, for example, prenatal care or well-baby visits. (Note
that, with respect to non-grandfathered plans, Sec. 147.130 of this
subchapter requires benefits for certain preventive health services
without the imposition of cost sharing.)
(D) A program that reimburses employees for the costs of
participating, or that otherwise provides a reward for participating, in
a smoking cessation program without regard to whether the employee quits
smoking.
(E) A program that provides a reward to employees for attending a
monthly, no-cost health education seminar.
(F) A program that provides a reward to employees who complete a
health risk assessment regarding current health status, without any
further action (educational or otherwise) required by the employee with
regard to the health issues identified as part of the assessment. (See
also Sec. 146.122 for rules prohibiting collection of genetic
information.)
(iii) Health-contingent wellness programs. A health-contingent
wellness program is a program that requires an individual to satisfy a
standard related to a health factor to obtain a reward (or requires an
individual to undertake more than a similarly situated individual based
on a health factor in order to obtain the same reward). A health-
contingent wellness program may be
[[Page 33]]
an activity-only wellness program or an outcome-based wellness program.
(iv) Activity-only wellness programs. An activity-only wellness
program is a type of health-contingent wellness program that requires an
individual to perform or complete an activity related to a health factor
in order to obtain a reward but does not require the individual to
attain or maintain a specific health outcome. Examples include walking,
diet, or exercise programs, which some individuals may be unable to
participate in or complete (or have difficulty participating in or
completing) due to a health factor, such as severe asthma, pregnancy, or
a recent surgery. See paragraph (f)(3) of this section for requirements
applicable to activity-only wellness programs.
(v) Outcome-based wellness programs. An outcome-based wellness
program is a type of health-contingent wellness program that requires an
individual to attain or maintain a specific health outcome (such as not
smoking or attaining certain results on biometric screenings) in order
to obtain a reward. To comply with the rules of this paragraph (f), an
outcome-based wellness program typically has two tiers. That is, for
individuals who do not attain or maintain the specific health outcome,
compliance with an educational program or an activity may be offered as
an alternative to achieve the same reward. This alternative pathway,
however, does not mean that the overall program, which has an outcome-
based component, is not an outcome-based wellness program. That is, if a
measurement, test, or screening is used as part of an initial standard
and individuals who meet the standard are granted the reward, the
program is considered an outcome-based wellness program. For example, if
a wellness program tests individuals for specified medical conditions or
risk factors (including biometric screening such as testing for high
cholesterol, high blood pressure, abnormal body mass index, or high
glucose level) and provides a reward to individuals identified as within
a normal or healthy range for these medical conditions or risk factors,
while requiring individuals who are identified as outside the normal or
healthy range (or at risk) to take additional steps (such as meeting
with a health coach, taking a health or fitness course, adhering to a
health improvement action plan, complying with a walking or exercise
program, or complying with a health care provider's plan of care) to
obtain the same reward, the program is an outcome-based wellness
program. See paragraph (f)(4) of this section for requirements
applicable to outcome-based wellness programs.
(2) Requirement for participatory wellness programs. A participatory
wellness program, as described in paragraph (f)(1)(ii) of this section,
does not violate the provisions of this section only if participation in
the program is made available to all similarly situated individuals,
regardless of health status.
(3) Requirements for activity-only wellness programs. A health-
contingent wellness program that is an activity-only wellness program,
as described in paragraph (f)(1)(iv) of this section, does not violate
the provisions of this section only if all of the following requirements
are satisfied:
(i) Frequency of opportunity to qualify. The program must give
individuals eligible for the program the opportunity to qualify for the
reward under the program at least once per year.
(ii) Size of reward. The reward for the activity-only wellness
program, together with the reward for other health-contingent wellness
programs with respect to the plan, must not exceed the applicable
percentage (as defined in paragraph (f)(5) of this section) of the total
cost of employee-only coverage under the plan. However, if, in addition
to employees, any class of dependents (such as spouses, or spouses and
dependent children) may participate in the wellness program, the reward
must not exceed the applicable percentage of the total cost of the
coverage in which an employee and any dependents are enrolled. For
purposes of this paragraph (f)(3)(ii), the cost of coverage is
determined based on the total amount of employer and employee
contributions towards the cost of coverage for the benefit package under
which the employee is (or the employee and any dependents are) receiving
coverage.
[[Page 34]]
(iii) Reasonable design. The program must be reasonably designed to
promote health or prevent disease. A program satisfies this standard if
it has a reasonable chance of improving the health of, or preventing
disease in, participating individuals, and it is not overly burdensome,
is not a subterfuge for discriminating based on a health factor, and is
not highly suspect in the method chosen to promote health or prevent
disease. This determination is based on all the relevant facts and
circumstances.
(iv) Uniform availability and reasonable alternative standards. The
full reward under the activity-only wellness program must be available
to all similarly situated individuals.
(A) Under this paragraph (f)(3)(iv), a reward under an activity-only
wellness program is not available to all similarly situated individuals
for a period unless the program meets both of the following
requirements:
(1) The program allows a reasonable alternative standard (or waiver
of the otherwise applicable standard) for obtaining the reward for any
individual for whom, for that period, it is unreasonably difficult due
to a medical condition to satisfy the otherwise applicable standard; and
(2) The program allows a reasonable alternative standard (or waiver
of the otherwise applicable standard) for obtaining the reward for any
individual for whom, for that period, it is medically inadvisable to
attempt to satisfy the otherwise applicable standard.
(B) While plans and issuers are not required to determine a
particular reasonable alternative standard in advance of an individual's
request for one, if an individual is described in either paragraph
(f)(3)(iv)(A)(1) or (2) of this section, a reasonable alternative
standard must be furnished by the plan or issuer upon the individual's
request or the condition for obtaining the reward must be waived.
(C) All the facts and circumstances are taken into account in
determining whether a plan or issuer has furnished a reasonable
alternative standard, including but not limited to the following:
(1) If the reasonable alternative standard is completion of an
educational program, the plan or issuer must make the educational
program available or assist the employee in finding such a program
(instead of requiring an individual to find such a program unassisted),
and may not require an individual to pay for the cost of the program.
(2) The time commitment required must be reasonable (for example,
requiring attendance nightly at a one-hour class would be unreasonable).
(3) If the reasonable alternative standard is a diet program, the
plan or issuer is not required to pay for the cost of food but must pay
any membership or participation fee.
(4) If an individual's personal physician states that a plan
standard (including, if applicable, the recommendations of the plan's
medical professional) is not medically appropriate for that individual,
the plan or issuer must provide a reasonable alternative standard that
accommodates the recommendations of the individual's personal physician
with regard to medical appropriateness. Plans and issuers may impose
standard cost sharing under the plan or coverage for medical items and
services furnished pursuant to the physician's recommendations.
(D) To the extent that a reasonable alternative standard under an
activity-only wellness program is, itself, an activity-only wellness
program, it must comply with the requirements of this paragraph (f)(3)
in the same manner as if it were an initial program standard. (Thus, for
example, if a plan or issuer provides a walking program as a reasonable
alternative standard to a running program, individuals for whom it is
unreasonably difficult due to a medical condition to complete the
walking program (or for whom it is medically inadvisable to attempt to
complete the walking program) must be provided a reasonable alternative
standard to the walking program.) To the extent that a reasonable
alternative standard under an activity-only wellness program is, itself,
an outcome-based wellness program, it must comply with the requirements
of paragraph (f)(4) of this section, including paragraph (f)(4)(iv)(D).
(E) If reasonable under the circumstances, a plan or issuer may seek
verification, such as a statement from
[[Page 35]]
an individual's personal physician, that a health factor makes it
unreasonably difficult for the individual to satisfy, or medically
inadvisable for the individual to attempt to satisfy, the otherwise
applicable standard of an activity-only wellness program. Plans and
issuers may seek verification with respect to requests for a reasonable
alternative standard for which it is reasonable to determine that
medical judgment is required to evaluate the validity of the request.
(v) Notice of availability of reasonable alternative standard. The
plan or issuer must disclose in all plan materials describing the terms
of an activity-only wellness program the availability of a reasonable
alternative standard to qualify for the reward (and, if applicable, the
possibility of waiver of the otherwise applicable standard), including
contact information for obtaining a reasonable alternative standard and
a statement that recommendations of an individual's personal physician
will be accommodated. If plan materials merely mention that such a
program is available, without describing its terms, this disclosure is
not required. Sample language is provided in paragraph (f)(6) of this
section, as well as in certain examples of this section.
(vi) Example. The provisions of this paragraph (f)(3) are
illustrated by the following example:
Example. (i) Facts. A group health plan provides a reward to
individuals who participate in a reasonable specified walking program.
If it is unreasonably difficult due to a medical condition for an
individual to participate (or if it is medically inadvisable for an
individual to attempt to participate), the plan will waive the walking
program requirement and provide the reward. All materials describing the
terms of the walking program disclose the availability of the waiver.
(ii) Conclusion. In this Example, the program satisfies the
requirements of paragraph (f)(3)(iii) of this section because the
walking program is reasonably designed to promote health and prevent
disease. The program satisfies the requirements of paragraph (f)(3)(iv)
of this section because the reward under the program is available to all
similarly situated individuals. It accommodates individuals for whom it
is unreasonably difficult to participate in the walking program due to a
medical condition (or for whom it would be medically inadvisable to
attempt to participate) by providing them with the reward even if they
do not participate in the walking program (that is, by waiving the
condition). The plan also complies with the disclosure requirement of
paragraph (f)(3)(v) of this section. Thus, the plan satisfies paragraphs
(f)(3)(iii), (iv), and (v) of this section.
(4) Requirements for outcome-based wellness programs. A health-
contingent wellness program that is an outcome-based wellness program,
as described in paragraph (f)(1)(v) of this section, does not violate
the provisions of this section only if all of the following requirements
are satisfied:
(i) Frequency of opportunity to qualify. The program must give
individuals eligible for the program the opportunity to qualify for the
reward under the program at least once per year.
(ii) Size of reward. The reward for the outcome-based wellness
program, together with the reward for other health-contingent wellness
programs with respect to the plan, must not exceed the applicable
percentage (as defined in paragraph (f)(5) of this section) of the total
cost of employee-only coverage under the plan. However, if, in addition
to employees, any class of dependents (such as spouses, or spouses and
dependent children) may participate in the wellness program, the reward
must not exceed the applicable percentage of the total cost of the
coverage in which an employee and any dependents are enrolled. For
purposes of this paragraph (f)(4)(ii), the cost of coverage is
determined based on the total amount of employer and employee
contributions towards the cost of coverage for the benefit package under
which the employee is (or the employee and any dependents are) receiving
coverage.
(iii) Reasonable design. The program must be reasonably designed to
promote health or prevent disease. A program satisfies this standard if
it has a reasonable chance of improving the health of, or preventing
disease in, participating individuals, and it is not overly burdensome,
is not a subterfuge for discriminating based on a health factor, and is
not highly suspect in the method chosen to promote health or prevent
disease. This determination is based on all the relevant facts and
circumstances. To ensure that an outcome-based wellness program is
reasonably designed to improve health and
[[Page 36]]
does not act as a subterfuge for underwriting or reducing benefits based
on a health factor, a reasonable alternative standard to qualify for the
reward must be provided to any individual who does not meet the initial
standard based on a measurement, test, or screening that is related to a
health factor, as explained in paragraph (f)(4)(iv) of this section.
(iv) Uniform availability and reasonable alternative standards. The
full reward under the outcome-based wellness program must be available
to all similarly situated individuals.
(A) Under this paragraph (f)(4)(iv), a reward under an outcome-based
wellness program is not available to all similarly situated individuals
for a period unless the program allows a reasonable alternative standard
(or waiver of the otherwise applicable standard) for obtaining the
reward for any individual who does not meet the initial standard based
on the measurement, test, or screening, as described in this paragraph
(f)(4)(iv).
(B) While plans and issuers are not required to determine a
particular reasonable alternative standard in advance of an individual's
request for one, if an individual is described in paragraph
(f)(4)(iv)(A) of this section, a reasonable alternative standard must be
furnished by the plan or issuer upon the individual's request or the
condition for obtaining the reward must be waived.
(C) All the facts and circumstances are taken into account in
determining whether a plan or issuer has furnished a reasonable
alternative standard, including but not limited to the following:
(1) If the reasonable alternative standard is completion of an
educational program, the plan or issuer must make the educational
program available or assist the employee in finding such a program
(instead of requiring an individual to find such a program unassisted),
and may not require an individual to pay for the cost of the program.
(2) The time commitment required must be reasonable (for example,
requiring attendance nightly at a one-hour class would be unreasonable).
(3) If the reasonable alternative standard is a diet program, the
plan or issuer is not required to pay for the cost of food but must pay
any membership or participation fee.
(4) If an individual's personal physician states that a plan
standard (including, if applicable, the recommendations of the plan's
medical professional) is not medically appropriate for that individual,
the plan or issuer must provide a reasonable alternative standard that
accommodates the recommendations of the individual's personal physician
with regard to medical appropriateness. Plans and issuers may impose
standard cost sharing under the plan or coverage for medical items and
services furnished pursuant to the physician's recommendations.
(D) To the extent that a reasonable alternative standard under an
outcome-based wellness program is, itself, an activity-only wellness
program, it must comply with the requirements of paragraph (f)(3) of
this section in the same manner as if it were an initial program
standard. To the extent that a reasonable alternative standard under an
outcome-based wellness program is, itself, another outcome-based
wellness program, it must comply with the requirements of this paragraph
(f)(4), subject to the following special rules:
(1) The reasonable alternative standard cannot be a requirement to
meet a different level of the same standard without additional time to
comply that takes into account the individual's circumstances. For
example, if the initial standard is to achieve a BMI less than 30, the
reasonable alternative standard cannot be to achieve a BMI less than 31
on that same date. However, if the initial standard is to achieve a BMI
less than 30, a reasonable alternative standard for the individual could
be to reduce the individual's BMI by a small amount or small percentage,
over a realistic period of time, such as within a year.
(2) An individual must be given the opportunity to comply with the
recommendations of the individual's personal physician as a second
reasonable alternative standard to meeting the reasonable alternative
standard defined by the plan or issuer, but only if the physician joins
in the request. The
[[Page 37]]
individual can make a request to involve a personal physician's
recommendations at any time and the personal physician can adjust the
physician's recommendations at any time, consistent with medical
appropriateness.
(E) It is not reasonable to seek verification, such as a statement
from an individual's personal physician, under an outcome-based wellness
program that a health factor makes it unreasonably difficult for the
individual to satisfy, or medically inadvisable for the individual to
attempt to satisfy, the otherwise applicable standard as a condition of
providing a reasonable alternative to the initial standard. However, if
a plan or issuer provides an alternative standard to the otherwise
applicable measurement, test, or screening that involves an activity
that is related to a health factor, then the rules of paragraph (f)(3)
of this section for activity-only wellness programs apply to that
component of the wellness program and the plan or issuer may, if
reasonable under the circumstances, seek verification that it is
unreasonably difficult due to a medical condition for an individual to
perform or complete the activity (or it is medically inadvisable to
attempt to perform or complete the activity). (For example, if an
outcome-based wellness program requires participants to maintain a
certain healthy weight and provides a diet and exercise program for
individuals who do not meet the targeted weight, a plan or issuer may
seek verification, as described in paragraph (f)(3)(iv)(D) of this
section, if reasonable under the circumstances, that a second reasonable
alternative standard is needed for certain individuals because, for
those individuals, it would be unreasonably difficult due to a medical
condition to comply, or medically inadvisable to attempt to comply, with
the diet and exercise program, due to a medical condition.)
(v) Notice of availability of reasonable alternative standard. The
plan or issuer must disclose in all plan materials describing the terms
of an outcome-based wellness program, and in any disclosure that an
individual did not satisfy an initial outcome-based standard, the
availability of a reasonable alternative standard to qualify for the
reward (and, if applicable, the possibility of waiver of the otherwise
applicable standard), including contact information for obtaining a
reasonable alternative standard and a statement that recommendations of
an individual's personal physician will be accommodated. If plan
materials merely mention that such a program is available, without
describing its terms, this disclosure is not required. Sample language
is provided in paragraph (f)(6) of this section, as well as in certain
examples of this section.
(vi) Examples. The provisions of this paragraph (f)(4) are
illustrated by the following examples:
Example 1--Cholesterol screening with reasonable alternative
standard to work with personal physician. (i) Facts. A group health plan
offers a reward to participants who achieve a count under 200 on a total
cholesterol test. If a participant does not achieve the targeted
cholesterol count, the plan allows the participant to develop an
alternative cholesterol action plan in conjunction with the
participant's personal physician that may include recommendations for
medication and additional screening. The plan allows the physician to
modify the standards, as medically necessary, over the year. (For
example, if a participant develops asthma or depression, requires
surgery and convalescence, or some other medical condition or
consideration makes completion of the original action plan inadvisable
or unreasonably difficult, the physician may modify the original action
plan.) All plan materials describing the terms of the program include
the following statement: ``Your health plan wants to help you take
charge of your health. Rewards are available to all employees who
participate in our Cholesterol Awareness Wellness Program. If your total
cholesterol count is under 200, you will receive the reward. If not, you
will still have an opportunity to qualify for the reward. We will work
with you and your doctor to find a Health Smart program that is right
for you.'' In addition, when any individual participant receives
notification that his or her cholesterol count is 200 or higher, the
notification includes the following statement: ``Your plan offers a
Health Smart program under which we will work with you and your doctor
to try to lower your cholesterol. If you complete this program, you will
qualify for a reward. Please contact us at [contact information] to get
started.''
(ii) Conclusion. In this Example 1, the program is an outcome-based
wellness program because the initial standard requires an individual to
attain or maintain a specific health
[[Page 38]]
outcome (a certain cholesterol level) to obtain a reward. The program
satisfies the requirements of paragraph (f)(4)(iii) of this section
because the cholesterol program is reasonably designed to promote health
and prevent disease. The program satisfies the requirements of paragraph
(f)(4)(iv) of this section because it makes available to all
participants who do not meet the cholesterol standard a reasonable
alternative standard to qualify for the reward. Lastly, the plan also
discloses in all materials describing the terms of the program and in
any disclosure that an individual did not satisfy the initial outcome-
based standard the availability of a reasonable alternative standard
(including contact information and the individual's ability to involve
his or her personal physician), as required by paragraph (f)(4)(v) of
this section. Thus, the program satisfies the requirements of paragraphs
(f)(4)(iii), (iv), and (v) of this section.
Example 2--Cholesterol screening with plan alternative and no
opportunity for personal physician involvement. (i) Facts. Same facts as
Example 1, except that the wellness program's physician or nurse
practitioner (rather than the individual's personal physician)
determines the alternative cholesterol action plan. The plan does not
provide an opportunity for a participant's personal physician to modify
the action plan if it is not medically appropriate for that individual.
(ii) Conclusion. In this Example 2, the wellness program does not
satisfy the requirements of paragraph (f)(4)(iii) of this section
because the program does not accommodate the recommendations of the
participant's personal physician with regard to medical appropriateness,
as required under paragraph (f)(4)(iv)(C)(3) of this section. Thus, the
program is not reasonably designed under paragraph (f)(4)(iii) of this
section and is not available to all similarly situated individuals under
paragraph (f)(4)(iv) of this section. The notice also does not provide
all the content required under paragraph (f)(4)(v) of this section.
Example 3--Cholesterol screening with plan alternative that can be
modified by personal physician. (i) Facts. Same facts as Example 2,
except that if a participant's personal physician disagrees with any
part of the action plan, the personal physician may modify the action
plan at any time, and the plan discloses this to participants.
(ii) Conclusion. In this Example 3, the wellness program satisfies
the requirements of paragraph (f)(4)(iii) of this section because the
participant's personal physician may modify the action plan determined
by the wellness program's physician or nurse practitioner at any time if
the physician states that the recommendations are not medically
appropriate, as required under paragraph (f)(4)(iv)(C)(3) of this
section. Thus, the program is reasonably designed under paragraph
(f)(4)(iii) of this section and is available to all similarly situated
individuals under paragraph (f)(4)(iv) of this section. The notice,
which includes a statement that recommendations of an individual's
personal physician will be accommodated, also complies with paragraph
(f)(4)(v) of this section.
Example 4--BMI screening with walking program alternative. (i)
Facts. A group health plan will provide a reward to participants who
have a body mass index (BMI) that is 26 or lower, determined shortly
before the beginning of the year. Any participant who does not meet the
target BMI is given the same discount if the participant complies with
an exercise program that consists of walking 150 minutes a week. Any
participant for whom it is unreasonably difficult due to a medical
condition to comply with this walking program (and any participant for
whom it is medically inadvisable to attempt to comply with the walking
program) during the year is given the same discount if the participant
satisfies an alternative standard that is reasonable taking into
consideration the participant's medical situation, is not unreasonably
burdensome or impractical to comply with, and is otherwise reasonably
designed based on all the relevant facts and circumstances. All plan
materials describing the terms of the wellness program include the
following statement: ``Fitness is Easy! Start Walking! Your health plan
cares about your health. If you are considered overweight because you
have a BMI of over 26, our Start Walking program will help you lose
weight and feel better. We will help you enroll. (**If your doctor says
that walking isn't right for you, that's okay too. We will work with you
(and, if you wish, your own doctor) to develop a wellness program that
is.)'' Participant E is unable to achieve a BMI that is 26 or lower
within the plan's timeframe and receives notification that complies with
paragraph (f)(4)(v) of this section. Nevertheless, it is unreasonably
difficult due to a medical condition for E to comply with the walking
program. E proposes a program based on the recommendations of E's
physician. The plan agrees to make the same discount available to E that
is available to other participants in the BMI program or the alternative
walking program, but only if E actually follows the physician's
recommendations.
(ii) Conclusion. In this Example 4, the program is an outcome-based
wellness program because the initial standard requires an individual to
attain or maintain a specific health outcome (a certain BMI level) to
obtain a reward. The program satisfies the requirements of paragraph
(f)(4)(iii) of this section because it is reasonably designed to promote
health and prevent disease. The program also satisfies the requirements
of paragraph (f)(4)(iv) of this section because it makes
[[Page 39]]
available to all individuals who do not satisfy the BMI standard a
reasonable alternative standard to qualify for the reward (in this case,
a walking program that is not unreasonably burdensome or impractical for
individuals to comply with and that is otherwise reasonably designed
based on all the relevant facts and circumstances). In addition, the
walking program is, itself, an activity-only standard and the plan
complies with the requirements of paragraph (f)(3) of this section
(including the requirement of paragraph (f)(3)(iv) that, if there are
individuals for whom it is unreasonably difficult due to a medical
condition to comply, or for whom it is medically inadvisable to attempt
to comply, with the walking program, the plan provide a reasonable
alternative to those individuals). Moreover, the plan satisfies the
requirements of paragraph (f)(4)(v) of this section because it
discloses, in all materials describing the terms of the program and in
any disclosure that an individual did not satisfy the initial outcome-
based standard, the availability of a reasonable alternative standard
(including contact information and the individual's option to involve
his or her personal physician) to qualify for the reward or the
possibility of waiver of the otherwise applicable standard. Thus, the
program satisfies the requirements of paragraphs (f)(4)(iii), (iv), and
(v) of this section.
Example 5--BMI screening with alternatives available to either lower
BMI or meet personal physician's recommendations. (i) Facts. Same facts
as Example 4 except that, with respect to any participant who does not
meet the target BMI, instead of a walking program, the participant is
expected to reduce BMI by one point. At any point during the year upon
request, any individual can obtain a second reasonable alternative
standard, which is compliance with the recommendations of the
participant's personal physician regarding weight, diet, and exercise as
set forth in a treatment plan that the physician recommends or to which
the physician agrees. The participant's personal physician is permitted
to change or adjust the treatment plan at any time and the option of
following the participant's personal physician's recommendations is
clearly disclosed.
(ii) Conclusion. In this Example 5, the reasonable alternative
standard to qualify for the reward (the alternative BMI standard
requiring a one-point reduction) does not make the program unreasonable
under paragraph (f)(4)(iii) or (iv) of this section because the program
complies with paragraph (f)(4)(iv)(C)(4) of this section by allowing a
second reasonable alternative standard to qualify for the reward
(compliance with the recommendations of the participant's personal
physician, which can be changed or adjusted at any time). Accordingly,
the program continues to satisfy the applicable requirements of
paragraph (f) of this section.
Example 6--Tobacco use surcharge with smoking cessation program
alternative. (i) Facts. In conjunction with an annual open enrollment
period, a group health plan provides a premium differential based on
tobacco use, determined using a health risk assessment. The following
statement is included in all plan materials describing the tobacco
premium differential: ``Stop smoking today! We can help! If you are a
smoker, we offer a smoking cessation program. If you complete the
program, you can avoid this surcharge.'' The plan accommodates
participants who smoke by facilitating their enrollment in a smoking
cessation program that requires participation at a time and place that
are not unreasonably burdensome or impractical for participants, and
that is otherwise reasonably designed based on all the relevant facts
and circumstances, and discloses contact information and the
individual's option to involve his or her personal physician. The plan
pays for the cost of participation in the smoking cessation program. Any
participant can avoid the surcharge for the plan year by participating
in the program, regardless of whether the participant stops smoking, but
the plan can require a participant who wants to avoid the surcharge in a
subsequent year to complete the smoking cessation program again.
(ii) Conclusion. In this Example 6, the premium differential
satisfies the requirements of paragraphs (f)(4)(iii), (iv), and (v). The
program is an outcome-based wellness program because the initial
standard for obtaining a reward is dependent on the results of a health
risk assessment (a measurement, test, or screening). The program is
reasonably designed under paragraph (f)(4)(iii) because the plan
provides a reasonable alternative standard (as required under paragraph
(f)(4)(iv) of this section) to qualify for the reward to all tobacco
users (a smoking cessation program). The plan discloses, in all
materials describing the terms of the program, the availability of the
reasonable alternative standard (including contact information and the
individual's option to involve his or her personal physician). Thus, the
program satisfies the requirements of paragraphs (f)(4)(iii), (iv), and
(v) of this section.
Example 7--Tobacco use surcharge with alternative program requiring
actual cessation. (i) Facts. Same facts as Example 6, except the plan
does not provide participant F with the reward in subsequent years
unless F actually stops smoking after participating in the tobacco
cessation program.
(ii) Conclusion. In this Example 7, the program is not reasonably
designed under paragraph (f)(4)(iii) of this section and does not
provide a reasonable alternative standard as required under paragraph
(f)(4)(iv) of this section. The plan cannot cease to provide a
reasonable alternative standard merely because the participant did not
stop smoking
[[Page 40]]
after participating in a smoking cessation program. The plan must
continue to offer a reasonable alternative standard whether it is the
same or different (such as a new recommendation from F's personal
physician or a new nicotine replacement therapy).
Example 8--Tobacco use surcharge with smoking cessation program
alternative that is not reasonable. (i) Facts. Same facts as Example 6,
except the plan does not facilitate participant F's enrollment in a
smoking cessation program. Instead the plan advises F to find a program,
pay for it, and provide a certificate of completion to the plan.
(ii) Conclusion. In this Example 8, the requirement for F to find
and pay for F's own smoking cessation program means that the alternative
program is not reasonable. Accordingly, the plan has not offered a
reasonable alternative standard that complies with paragraphs
(f)(4)(iii) and (iv) of this section and the program fails to satisfy
the requirements of paragraph (f) of this section.
(5) Applicable percentage. (i) For purposes of this paragraph (f),
the applicable percentage is 30 percent, except that the applicable
percentage is increased by an additional 20 percentage points (to 50
percent) to the extent that the additional percentage is in connection
with a program designed to prevent or reduce tobacco use.
(ii) The rules of this paragraph (f)(5) are illustrated by the
following examples:
Example 1. (i) Facts. An employer sponsors a group health plan. The
annual premium for employee-only coverage is $6,000 (of which the
employer pays $4,500 per year and the employee pays $1,500 per year).
The plan offers employees a health-contingent wellness program with
several components, focused on exercise, blood sugar, weight,
cholesterol, and blood pressure. The reward for compliance is an annual
premium rebate of $600.
(ii) Conclusion. In this Example 1, the reward for the wellness
program, $600, does not exceed the applicable percentage of 30 percent
of the total annual cost of employee-only coverage, $1,800. ($6,000 x
30% = $1,800.)
Example 2. (i) Facts. Same facts as Example 1, except the wellness
program is exclusively a tobacco prevention program. Employees who have
used tobacco in the last 12 months and who are not enrolled in the
plan's tobacco cessation program are charged a $1,000 premium surcharge
(in addition to their employee contribution towards the coverage).
(Those who participate in the plan's tobacco cessation program are not
assessed the $1,000 surcharge.)
(ii) Conclusion. In this Example 2, the reward for the wellness
program (absence of a $1,000 surcharge), does not exceed the applicable
percentage of 50 percent of the total annual cost of employee-only
coverage, $3,000. ($6,000 x 50% = $3,000.)
Example 3. (i) Facts. Same facts as Example 1, except that, in
addition to the $600 reward for compliance with the health-contingent
wellness program, the plan also imposes an additional $2,000 tobacco
premium surcharge on employees who have used tobacco in the last 12
months and who are not enrolled in the plan's tobacco cessation program.
(Those who participate in the plan's tobacco cessation program are not
assessed the $2,000 surcharge.)
(ii) Conclusion. In this Example 3, the total of all rewards
(including absence of a surcharge for participating in the tobacco
program) is $2,600 ($600 + $2,000 = $2,600), which does not exceed the
applicable percentage of 50 percent of the total annual cost of
employee-only coverage ($3,000); and, tested separately, the $600 reward
for the wellness program unrelated to tobacco use does not exceed the
applicable percentage of 30 percent of the total annual cost of
employee-only coverage ($1,800).
Example 4. (i) Facts. An employer sponsors a group health plan. The
total annual premium for employee-only coverage (including both employer
and employee contributions towards the coverage) is $5,000. The plan
provides a $250 reward to employees who complete a health risk
assessment, without regard to the health issues identified as part of
the assessment. The plan also offers a Healthy Heart program, which is a
health-contingent wellness program, with an opportunity to earn a $1,500
reward.
(ii) Conclusion. In this Example 4, even though the total reward for
all wellness programs under the plan is $1,750 ($250 + $1,500 = $1,750,
which exceeds the applicable percentage of 30 percent of the cost of the
annual premium for employee-only coverage ($5,000 x 30% = $1,500)), only
the reward offered for compliance with the health-contingent wellness
program ($1,500) is taken into account in determining whether the rules
of this paragraph (f)(5) are met. (The $250 reward is offered in
connection with a participatory wellness program and therefore is not
taken into account.) Accordingly, the health-contingent wellness program
offers a reward that does not exceed the applicable percentage of 30
percent of the total annual cost of employee-only coverage.
(6) Sample language. The following language, or substantially
similar language, can be used to satisfy the notice requirement of
paragraphs (f)(3)(v) or (f)(4)(v) of this section: ``Your health plan is
committed to helping you achieve your best health. Rewards for
participating in a wellness program are available to all employees. If
you think
[[Page 41]]
you might be unable to meet a standard for a reward under this wellness
program, you might qualify for an opportunity to earn the same reward by
different means. Contact us at [insert contact information] and we will
work with you (and, if you wish, with your doctor) to find a wellness
program with the same reward that is right for you in light of your
health status.''
(g) More favorable treatment of individuals with adverse health
factors permitted--(1) In rules for eligibility. (i) Nothing in this
section prevents a group health plan or group health insurance issuer
from establishing more favorable rules for eligibility (described in
paragraph (b)(1) of this section) for individuals with an adverse health
factor, such as disability, than for individuals without the adverse
health factor. Moreover, nothing in this section prevents a plan or
issuer from charging a higher premium or contribution with respect to
individuals with an adverse health factor if they would not be eligible
for the coverage were it not for the adverse health factor. (However,
other laws, including State insurance laws, may set or limit premium
rates; these laws are not affected by this section.)
(ii) The rules of this paragraph (g)(1) are illustrated by the
following examples:
Example 1. (i) Facts. An employer sponsors a group health plan that
generally is available to employees, spouses of employees, and dependent
children until age 26. However, dependent children who are disabled are
eligible for coverage beyond age 26.
(ii) Conclusion. In this Example 1, the plan provision allowing
coverage for disabled dependent children beyond age 26 satisfies this
paragraph (g)(1) (and thus does not violate this section).
Example 2. (i) Facts. An employer sponsors a group health plan,
which is generally available to employees (and members of the employee's
family) until the last day of the month in which the employee ceases to
perform services for the employer. The plan generally charges employees
$50 per month for employee-only coverage and $125 per month for family
coverage. However, an employee who ceases to perform services for the
employer by reason of disability may remain covered under the plan until
the last day of the month that is 12 months after the month in which the
employee ceased to perform services for the employer. During this
extended period of coverage, the plan charges the employee $100 per
month for employee-only coverage and $250 per month for family coverage.
(This extended period of coverage is without regard to whatever rights
the employee (or members of the employee's family) may have for COBRA
continuation coverage.)
(ii) Conclusion. In this Example 2, the plan provision allowing
extended coverage for disabled employees and their families satisfies
this paragraph (g)(1) (and thus does not violate this section). In
addition, the plan is permitted, under this paragraph (g)(1), to charge
the disabled employees a higher premium during the extended period of
coverage.
Example 3. (i) Facts. To comply with the requirements of a COBRA
continuation provision, a group health plan generally makes COBRA
continuation coverage available for a maximum period of 18 months in
connection with a termination of employment but makes the coverage
available for a maximum period of 29 months to certain disabled
individuals and certain members of the disabled individual's family.
Although the plan generally requires payment of 102 percent of the
applicable premium for the first 18 months of COBRA continuation
coverage, the plan requires payment of 150 percent of the applicable
premium for the disabled individual's COBRA continuation coverage during
the disability extension if the disabled individual would not be
entitled to COBRA continuation coverage but for the disability.
(ii) Conclusion. In this Example 3, the plan provision allowing
extended COBRA continuation coverage for disabled individuals satisfies
this paragraph (g)(1) (and thus does not violate this section). In
addition, the plan is permitted, under this paragraph (g)(1), to charge
the disabled individuals a higher premium for the extended coverage if
the individuals would not be eligible for COBRA continuation coverage
were it not for the disability. (Similarly, if the plan provided an
extended period of coverage for disabled individuals pursuant to State
law or plan provision rather than pursuant to a COBRA continuation
coverage provision, the plan could likewise charge the disabled
individuals a higher premium for the extended coverage.)
(2) In premiums or contributions. (i) Nothing in this section
prevents a group health plan or group health insurance issuer from
charging individuals a premium or contribution that is less than the
premium (or contribution) for similarly situated individuals if the
lower charge is based on an adverse health factor, such as disability.
(ii) The rules of this paragraph (g)(2) are illustrated by the
following example:
[[Page 42]]
Example. (i) Facts. Under a group health plan, employees are
generally required to pay $50 per month for employee-only coverage and
$125 per month for family coverage under the plan. However, employees
who are disabled receive coverage (whether employee-only or family
coverage) under the plan free of charge.
(ii) Conclusion. In this Example, the plan provision waiving premium
payment for disabled employees is permitted under this paragraph (g)(2)
(and thus does not violate this section).
(h) No effect on other laws. Compliance with this section is not
determinative of compliance with any other provision of the PHS Act
(including the COBRA continuation provisions) or any other State or
Federal law, such as the Americans with Disabilities Act. Therefore,
although the rules of this section would not prohibit a plan or issuer
from treating one group of similarly situated individuals differently
from another (such as providing different benefit packages to current
and former employees), other Federal or State laws may require that two
separate groups of similarly situated individuals be treated the same
for certain purposes (such as making the same benefit package available
to COBRA qualified beneficiaries as is made available to active
employees). In addition, although this section generally does not impose
new disclosure obligations on plans and issuers, this section does not
affect any other laws, including those that require accurate disclosures
and prohibit intentional misrepresentation.
(i) Applicability dates--(1) Generally. This section applies for
plan years beginning on or after July 1, 2007.
(2) Special rule for self-funded nonfederal governmental plans
exempted under 45 CFR 146.180. (i) If coverage has been denied to any
individual because the sponsor of a self-funded nonfederal governmental
plan has elected under Sec. 146.180 to exempt the plan from the
requirements of this section, and the plan sponsor subsequently chooses
to bring the plan into compliance with the requirements of this section,
the plan--
(A) Must notify the individual that the plan will be coming into
compliance with the requirements of this section, specify the effective
date of compliance, and inform the individual regarding any enrollment
restrictions that may apply under the terms of the plan once the plan is
in compliance with this section (as a matter of administrative
convenience, the notice may be disseminated to all employees);
(B) Must give the individual an opportunity to enroll that continues
for at least 30 days;
(C) Must permit coverage to be effective as of the first day of plan
coverage for which an exemption election under Sec. 146.180 of this
part (with regard to this section) is no longer in effect; and
(D) May not treat the individual as a late enrollee or a special
enrollee.
(ii) For purposes of this paragraph (i)(2), an individual is
considered to have been denied coverage if the individual failed to
apply for coverage because, given an exemption election under Sec.
146.180 of this part, it was reasonable to believe that an application
for coverage would have been denied based on a health factor.
(iii) The rules of this paragraph (i)(2) are illustrated by the
following examples:
Example 1. (i) Facts. Individual D was hired by a nonfederal
governmental employer in June 1999. The employer maintains a self-funded
group health plan with a plan year beginning on October 1. The plan
sponsor elected under Sec. 146.180 of this part to exempt the plan from
the requirements of this section for the plan year beginning October 1,
2005, and renewed the exemption election for the plan year beginning
October 1, 2006. Under the terms of the plan while the exemption was in
effect, employees and their dependents were allowed to enroll when the
employee was first hired without regard to any health factor. If an
individual declines to enroll when first eligible, the individual could
enroll effective October 1 of any plan year if the individual could pass
a physical examination. The evidence-of-good-health requirement for late
enrollees, absent an exemption election under Sec. 146.180 of this
part, would have been in violation of this section. D chose not to
enroll for coverage when first hired. In February of 2006, D was treated
for skin cancer but did not apply for coverage under the plan for the
plan year beginning October 1, 2006, because D assumed D could not meet
the evidence-of-good-health requirement. With the plan year beginning
October 1, 2007 the plan sponsor chose not to renew its exemption
election and brought the plan into compliance with this section. The
plan notifies individual D (and all other
[[Page 43]]
employees) that it will be coming into compliance with the requirements
of this section. The notice specifies that the effective date of
compliance will be October 1, 2007, explains the applicable enrollment
restrictions that will apply under the plan, states that individuals
will have at least 30 days to enroll, and explains that coverage for
those who choose to enroll will be effective as of October 1, 2007.
Individual D timely requests enrollment in the plan, and coverage
commences under the plan on October 1, 2007.
(ii) Conclusion. In this Example 1, the plan complies with this
paragraph (i)(2).
Example 2. (i) Facts. Individual E was hired by a nonfederal
governmental employer in February 1999. The employer maintains a self-
funded group health plan with a plan year beginning on September 1. The
plan sponsor elected under Sec. 146.180 of this part to exempt the plan
from the requirements of this section and ``Sec. 146.111 (limitations
on preexisting condition exclusion periods) for the plan year beginning
September 1, 2002, and renews the exemption election for the plan years
beginning September 1, 2003, September 1, 2004, September 1, 2005, and
September 1, 2006. Under the terms of the plan while the exemption was
in effect, employees and their dependents were allowed to enroll when
the employee was first hired without regard to any health factor. If an
individual declined to enroll when first eligible, the individual could
enroll effective September 1 of any plan year if the individual could
pass a physical examination. Also under the terms of the plan, all
enrollees were subject to a 12-month preexisting condition exclusion
period, regardless of whether they had creditable coverage. E chose not
to enroll for coverage when first hired. In June of 2006, E is diagnosed
as having multiple sclerosis (MS). With the plan year beginning
September 1, 2007, the plan sponsor chooses to bring the plan into
compliance with this section, but renews its exemption election with
regard to limitations on preexisting condition exclusion periods. The
plan notifies E of her opportunity to enroll, without a physical
examination, effective September 1, 2007. The plan gives E 30 days to
enroll. E is subject to a 12-month preexisting condition exclusion
period with respect to any treatment E receives that is related to E's
MS, without regard to any prior creditable coverage E may have.
Beginning September 1, 2008, the plan will cover treatment of E's MS.
(ii) Conclusion. In this Example 2, the plan complies with the
requirements of this section. (The plan is not required to comply with
the requirements of Sec. 146.111 because the plan continues to be
exempted from those requirements in accordance with the plan sponsor's
election under Sec. 146.180.)
[71 FR 75046, Dec. 13, 2006, as amended at 74 FR 51688, Oct. 7, 2009; 78
FR 33187, June 3, 2013; 79 FR 10314, Feb. 24, 2014]
Sec. 146.122 Additional requirements prohibiting discrimination
based on genetic information.
(a) Definitions. Unless otherwise provided, the definitions in this
paragraph (a) govern in applying the provisions of this section.
(1) Collect means, with respect to information, to request, require,
or purchase such information.
(2) Family member means, with respect to an individual--
(i) A dependent (as defined in Sec. 144.103 of this part) of the
individual; or
(ii) Any other person who is a first-degree, second-degree, third-
degree, or fourth-degree relative of the individual or of a dependent of
the individual. Relatives by affinity (such as by marriage or adoption)
are treated the same as relatives by consanguinity (that is, relatives
who share a common biological ancestor). In determining the degree of
the relationship, relatives by less than full consanguinity (such as
half-siblings, who share only one parent) are treated the same as
relatives by full consanguinity (such as siblings who share both
parents).
(A) First-degree relatives include parents, spouses, siblings, and
children.
(B) Second-degree relatives include grandparents, grandchildren,
aunts, uncles, nephews, and nieces.
(C) Third-degree relatives include great-grandparents, great-
grandchildren, great aunts, great uncles, and first cousins.
(D) Fourth-degree relatives include great-great grandparents, great-
great grandchildren, and children of first cousins.
(3) Genetic information means--
(i) Subject to paragraphs (a)(3)(ii) and (iii) of this section, with
respect to an individual, information about--
(A) The individual's genetic tests (as defined in paragraph (a)(5)
of this section);
(B) The genetic tests of family members of the individual;
(C) The manifestation (as defined in paragraph (a)(6) of this
section) of a
[[Page 44]]
disease or disorder in family members of the individual; or
(D) Any request for, or receipt of, genetic services (as defined in
paragraph (a)(4) of this section), or participation in clinical research
which includes genetic services, by the individual or any family member
of the individual.
(ii) The term genetic information does not include information about
the sex or age of any individual.
(iii) The term genetic information includes--
(A) With respect to a pregnant woman (or a family member of the
pregnant woman), genetic information of any fetus carried by the
pregnant woman; and
(B) With respect to an individual (or a family member of the
individual) who is utilizing an assisted reproductive technology,
genetic information of any embryo legally held by the individual or
family member.
(4) Genetic services means --
(i) A genetic test, as defined in paragraph (a)(5) of this section;
(ii) Genetic counseling (including obtaining, interpreting, or
assessing genetic information); or
(iii) Genetic education.
(5)(i) Genetic test means an analysis of human DNA, RNA,
chromosomes, proteins, or metabolites, if the analysis detects
genotypes, mutations, or chromosomal changes. However, a genetic test
does not include an analysis of proteins or metabolites that is directly
related to a manifested disease, disorder, or pathological condition.
Accordingly, a test to determine whether an individual has a BRCA1 or
BRCA2 variant is a genetic test. Similarly, a test to determine whether
an individual has a genetic variant associated with hereditary
nonpolyposis colorectal cancer is a genetic test. However, an HIV test,
complete blood count, cholesterol test, liver function test, or test for
the presence of alcohol or drugs is not a genetic test.
(ii) The rules of this paragraph (a)(5) are illustrated by the
following example:
Example. (i) Facts. Individual A is a newborn covered under a group
health plan. A undergoes a phenylketonuria (PKU) screening, which
measures the concentration of a metabolite, phenylalanine, in A's blood.
In PKU, a mutation occurs in the phenylalanine hydroxylase (PAH) gene
which contains instructions for making the enzyme needed to break down
the amino acid phenylalanine. Individuals with the mutation, who have a
deficiency in the enzyme to break down phenylalanine, have high
concentrations of phenylalanine.
(ii) Conclusion. In this Example, the PKU screening is a genetic
test with respect to A because the screening is an analysis of
metabolites that detects a genetic mutation.
(6)(i) Manifestation or manifested means, with respect to a disease,
disorder, or pathological condition, that an individual has been or
could reasonably be diagnosed with the disease, disorder, or
pathological condition by a health care professional with appropriate
training and expertise in the field of medicine involved. For purposes
of this section, a disease, disorder, or pathological condition is not
manifested if a diagnosis is based principally on genetic information.
(ii) The rules of this paragraph (a)(6) are illustrated by the
following examples:
Example 1. (i) Facts. Individual A has a family medical history of
diabetes. A begins to experience excessive sweating, thirst, and
fatigue. A's physician examines A and orders blood glucose testing
(which is not a genetic test). Based on the physician's examination, A's
symptoms, and test results that show elevated levels of blood glucose,
A's physician diagnoses A as having adult onset diabetes mellitus (Type
2 diabetes).
(ii) Conclusion. In this Example 1, A has been diagnosed by a health
care professional with appropriate training and expertise in the field
of medicine involved. The diagnosis is not based principally on genetic
information. Thus, Type 2 diabetes is manifested with respect to A.
Example 2. (i) Facts. Individual B has several family members with
colon cancer. One of them underwent genetic testing which detected a
mutation in the MSH2 gene associated with hereditary nonpolyposis
colorectal cancer (HNPCC). B's physician, a health care professional
with appropriate training and expertise in the field of medicine
involved, recommends that B undergo a targeted genetic test to look for
the specific mutation found in B 's relative to determine if B has an
elevated risk for cancer. The genetic test with respect to B showed that
B also carries the mutation and is at increased risk to develop
colorectal and other cancers associated with HNPCC. B has a colonoscopy
which indicates no signs of disease, and B has no symptoms.
[[Page 45]]
(ii) Conclusion. In this Example 2, because B has no signs or
symptoms of colorectal cancer, B has not been and could not reasonably
be diagnosed with HNPCC. Thus, HNPCC is not manifested with respect to
B.
Example 3. (i) Facts. Same facts as Example 2, except that B's
colonoscopy and subsequent tests indicate the presence of HNPCC. Based
on the colonoscopy and subsequent test results, B's physician makes a
diagnosis of HNPCC.
(ii) Conclusion. In this Example 3, HNPCC is manifested with respect
to B because a health care professional with appropriate training and
expertise in the field of medicine involved has made a diagnosis that is
not based principally on genetic information.
Example 4. (i) Facts. Individual C has a family member that has been
diagnosed with Huntington's Disease. A genetic test indicates that C has
the Huntington's Disease gene variant. At age 42, C begins suffering
from occasional moodiness and disorientation, symptoms which are
associated with Huntington's Disease. C is examined by a neurologist (a
physician with appropriate training and expertise for diagnosing
Huntington's Disease). The examination includes a clinical neurological
exam. The results of the examination do not support a diagnosis of
Huntington's Disease.
(ii) Conclusion. In this Example 4, C is not and could not
reasonably be diagnosed with Huntington's Disease by a health care
professional with appropriate training and expertise. Therefore,
Huntington's Disease is not manifested with respect to C.
Example 5. (i) Facts. Same facts as Example 4, except that C
exhibits additional neurological and behavioral symptoms, and the
results of the examination support a diagnosis of Huntington's Disease
with respect to C.
(ii) Conclusion. In this Example 5, C could reasonably be diagnosed
with Huntington's Disease by a health care professional with appropriate
training and expertise. Therefore, Huntington's Disease is manifested
with respect to C.
(7) Underwriting purposes has the meaning given in paragraph (d)(1)
of this section.
(b) No group-based discrimination based on genetic information--(1)
In general. For purposes of this section, a group health plan, and a
health insurance issuer offering health insurance coverage in connection
with a group health plan, must not adjust premium or contribution
amounts for the plan, or any group of similarly situated individuals
under the plan, on the basis of genetic information. For this purpose,
``similarly situated individuals'' are those described in Sec.
146.121(d) of this part.
(2) Rule of construction. Nothing in paragraph (b)(1) of this
section (or in paragraph (d)(1) or (d)(2) of this section) limits the
ability of a health insurance issuer offering health insurance coverage
in connection with a group health plan to increase the premium for a
group health plan or a group of similarly situated individuals under the
plan based on the manifestation of a disease or disorder of an
individual who is enrolled in the plan. In such a case, however, the
manifestation of a disease or disorder in one individual cannot also be
used as genetic information about other group members to further
increase the premium for a group health plan or a group of similarly
situated individuals under the plan.
(3) Examples. The rules of this paragraph (b) are illustrated by the
following examples:
Example 1. (i) Facts. An employer sponsors a group health plan that
provides coverage through a health insurance issuer. In order to
determine the premium rate for the upcoming plan year, the issuer
reviews the claims experience of individuals covered under the plan and
other health status information of the individuals, including genetic
information. The issuer finds that three individuals covered under the
plan had unusually high claims experience. In addition, the issuer finds
that the genetic information of two other individuals indicates the
individuals have a higher probability of developing certain illnesses
although the illnesses are not manifested at this time. The issuer
quotes the plan a higher per-participant rate because of both the
genetic information and the higher claims experience.
(ii) Conclusion. In this Example 1, the issuer violates the
provisions of this paragraph (b) because the issuer adjusts the premium
based on genetic information. However, if the adjustment related solely
to claims experience, the adjustment would not violate the requirements
of this section (nor would it violate the requirements of paragraph (c)
of Sec. 146.121 of this part, which prohibits discrimination in
individual premiums or contributions based on a health factor but
permits increases in the group rate based on a health factor).
Example 2. (i) Facts. An employer sponsors a group health plan that
provides coverage through a health insurance issuer. In order to
determine the premium rate for the upcoming plan year, the issuer
reviews the claims experience of individuals covered
[[Page 46]]
under the plan and other health status information of the individuals,
including genetic information. The issuer finds that Employee A has made
claims for treatment of polycystic kidney disease. A also has two
dependent children covered under the plan. The issuer quotes the plan a
higher per-participant rate because of both A's claims experience and
the family medical history of A's children (that is, the fact that A has
the disease).
(ii) Conclusion. In this Example 2, the issuer violates the
provisions of this paragraph (b) because, by taking the likelihood that
A's children may develop polycystic kidney disease into account in
computing the rate for the plan, the issuer adjusts the premium based on
genetic information relating to a condition that has not been manifested
in A's children. However, it is permissible for the issuer to increase
the premium based on A's claims experience.
(c) Limitation on requesting or requiring genetic testing--(1)
General rule. Except as otherwise provided in this paragraph (c), a
group health plan, and a health insurance issuer offering health
insurance coverage in connection with a group health plan, must not
request or require an individual or a family member of the individual to
undergo a genetic test.
(2) Health care professional may recommend a genetic test. Nothing
in paragraph (c)(1) of this section limits the authority of a health
care professional who is providing health care services to an individual
to request that the individual undergo a genetic test.
(3) Examples. The rules of paragraphs (c)(1) and (2) of this section
are illustrated by the following examples:
Example 1. (i) Facts. Individual A goes to a physician for a routine
physical examination. The physician reviews A's family medical history
and A informs the physician that A's mother has been diagnosed with
Huntington's Disease. The physician advises A that Huntington's Disease
is hereditary and recommends that A undergo a genetic test.
(ii) Conclusion. In this Example 1, the physician is a health care
professional who is providing health care services to A. Therefore, the
physician's recommendation that A undergo the genetic test does not
violate this paragraph (c).
Example 2. (i) Facts. Individual B is covered by a health
maintenance organization (HMO). B is a child being treated for leukemia.
B's physician, who is employed by the HMO, is considering a treatment
plan that includes six-mercaptopurine, a drug for treating leukemia in
most children. However, the drug could be fatal if taken by a small
percentage of children with a particular gene variant. B's physician
recommends that B undergo a genetic test to detect this variant before
proceeding with this course of treatment.
(ii) Conclusion. In this Example 2, even though the physician is
employed by the HMO, the physician is nonetheless a health care
professional who is providing health care services to B. Therefore, the
physician's recommendation that B undergo the genetic test does not
violate this paragraph (c).
(4) Determination regarding payment--(i) In general. As provided in
this paragraph (c)(4), nothing in paragraph (c)(1) of this section
precludes a plan or issuer from obtaining and using the results of a
genetic test in making a determination regarding payment. For this
purpose, ``payment'' has the meaning given such term in Sec. 164.501 of
the privacy regulations issued under the Health Insurance Portability
and Accountability Act. Thus, if a plan or issuer conditions payment for
an item or service based on its medical appropriateness and the medical
appropriateness of the item or service depends on the genetic makeup of
a patient, then the plan or issuer is permitted to condition payment for
the item or service on the outcome of a genetic test. The plan or issuer
may also refuse payment if the patient does not undergo the genetic
test.
(ii) Limitation. A plan or issuer is permitted to request only the
minimum amount of information necessary to make a determination
regarding payment. The minimum amount of information necessary is
determined in accordance with the minimum necessary standard in Sec.
164.502(b) of the privacy regulations issued under the Health Insurance
Portability and Accountability Act.
(iii) Examples. See paragraph (e) of this section for examples
illustrating the rules of this paragraph (c)(4), as well as other
provisions of this section.
(5) Research exception. Notwithstanding paragraph (c)(1) of this
section, a plan or issuer may request, but not require, that a
participant or beneficiary undergo a genetic test if all of the
conditions of this paragraph (c)(5) are met:
(i) Research in accordance with Federal regulations and applicable
State or local
[[Page 47]]
law or regulations. The plan or issuer makes the request pursuant to
research, as defined in Sec. 46.102(d) of this subtitle, that complies
with part 46 of this subtitle or equivalent Federal regulations, and any
applicable State or local law or regulations for the protection of human
subjects in research.
(ii) Written request for participation in research. The plan or
issuer makes the request in writing, and the request clearly indicates
to each participant or beneficiary (or, in the case of a minor child, to
the legal guardian of the beneficiary) that--
(A) Compliance with the request is voluntary; and
(B) Noncompliance will have no effect on eligibility for benefits
(as described in Sec. 146.121(b)(1) of this part) or premium or
contribution amounts.
(iii) Prohibition on underwriting. No genetic information collected
or acquired under this paragraph (c)(5) can be used for underwriting
purposes (as described in paragraph (d)(1) of this section).
(iv) Notice to Federal agencies. The plan or issuer completes a copy
of the ``Notice of Research Exception under the Genetic Information
Nondiscrimination Act'' authorized by the Secretary and provides the
notice to the address specified in the instructions thereto.
(d) Prohibitions on collection of genetic information--(1) For
underwriting purposes--(i) General rule. A group health plan, and a
health insurance issuer offering health insurance coverage in connection
with a group health plan, must not collect (as defined in paragraph
(a)(1) of this section) genetic information for underwriting purposes.
See paragraph (e) of this section for examples illustrating the rules of
this paragraph (d)(1), as well as other provisions of this section.
(ii) Underwriting purposes defined. Subject to paragraph (d)(1)(iii)
of this section, underwriting purposes means, with respect to any group
health plan, or health insurance coverage offered in connection with a
group health plan--
(A) Rules for, or determination of, eligibility (including
enrollment and continued eligibility) for benefits under the plan or
coverage as described in Sec. 146.121(b)(1)(ii) of this part (including
changes in deductibles or other cost-sharing mechanisms in return for
activities such as completing a health risk assessment or participating
in a wellness program);
(B) The computation of premium or contribution amounts under the
plan or coverage (including discounts, rebates, payments in kind, or
other premium differential mechanisms in return for activities such as
completing a health risk assessment or participating in a wellness
program);
(C) The application of any preexisting condition exclusion under the
plan or coverage; and
(D) Other activities related to the creation, renewal, or
replacement of a contract of health insurance or health benefits.
(iii) Medical appropriateness. If an individual seeks a benefit
under a group health plan or health insurance coverage, the plan or
coverage may limit or exclude the benefit based on whether the benefit
is medically appropriate, and the determination of whether the benefit
is medically appropriate is not within the meaning of underwriting
purposes. Accordingly, if an individual seeks a benefit under the plan
and the plan or issuer conditions the benefit based on its medical
appropriateness and the medical appropriateness of the benefit depends
on genetic information of the individual, then the plan or issuer is
permitted to condition the benefit on the genetic information. A plan or
issuer is permitted to request only the minimum amount of genetic
information necessary to determine medical appropriateness. The plan or
issuer may deny the benefit if the patient does not provide the genetic
information required to determine medical appropriateness. If an
individual is not seeking a benefit, the medical appropriateness
exception of this paragraph (d)(1)(iii) to the definition of
underwriting purposes does not apply. See paragraph (e) of this section
for examples illustrating the medical appropriateness provisions of this
paragraph (d)(1)(iii), as well as other provisions of this section.
(2) Prior to or in connection with enrollment--(i) In general. A
group health plan, and a health insurance issuer offering health
insurance coverage in
[[Page 48]]
connection with a group health plan, must not collect genetic
information with respect to any individual prior to that individual's
effective date of coverage under that plan or coverage, nor in
connection with the rules for eligibility (as defined in Sec.
146.121(b)(1)(ii) of this part) that apply to that individual. Whether
or not an individual's information is collected prior to that
individual's effective date of coverage is determined at the time of
collection.
(ii) Incidental collection exception--(A) In general. If a group
health plan, or a health insurance issuer offering health insurance
coverage in connection with a group health plan, obtains genetic
information incidental to the collection of other information concerning
any individual, the collection is not a violation of this paragraph
(d)(2), as long as the collection is not for underwriting purposes in
violation of paragraph (d)(1) of this section.
(B) Limitation. The incidental collection exception of this
paragraph (d)(2)(ii) does not apply in connection with any collection
where it is reasonable to anticipate that health information will be
received, unless the collection explicitly states that genetic
information should not be provided.
(3) Examples. The rules of this paragraph (d) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan provides a premium
reduction to enrollees who complete a health risk assessment. The health
risk assessment is requested to be completed after enrollment. Whether
or not it is completed or what responses are given on it has no effect
on an individual's enrollment status, or on the enrollment status of
members of the individual's family. The health risk assessment includes
questions about the individual's family medical history.
(ii) Conclusion. In this Example 1, the health risk assessment
includes a request for genetic information (that is, the individual's
family medical history). Because completing the health risk assessment
results in a premium reduction, the request for genetic information is
for underwriting purposes. Consequently, the request violates the
prohibition on the collection of genetic information in paragraph (d)(1)
of this section.
Example 2. (i) Facts. The same facts as Example 1, except there is
no premium reduction or any other reward for completing the health risk
assessment.
(ii) Conclusion. In this Example 2, the request is not for
underwriting purposes, nor is it prior to or in connection with
enrollment. Therefore, it does not violate the prohibition on the
collection of genetic information in this paragraph (d).
Example 3. (i) Facts. A group health plan requests that enrollees
complete a health risk assessment prior to enrollment, and includes
questions about the individual's family medical history. There is no
reward or penalty for completing the health risk assessment.
(ii) Conclusion. In this Example 3, because the health risk
assessment includes a request for genetic information (that is, the
individual's family medical history), and requests the information prior
to enrollment, the request violates the prohibition on the collection of
genetic information in paragraph (d)(2) of this section. Moreover,
because it is a request for genetic information, it is not an incidental
collection under paragraph (d)(2)(ii) of this section.
Example 4. (i) Facts. The facts are the same as in Example 1, except
there is no premium reduction or any other reward given for completion
of the health risk assessment. However, certain people completing the
health risk assessment may become eligible for additional benefits under
the plan by being enrolled in a disease management program based on
their answers to questions about family medical history. Other people
may become eligible for the disease management program based solely on
their answers to questions about their individual medical history.
(ii) Conclusion. In this Example 4, the request for information
about an individual's family medical history could result in the
individual being eligible for benefits for which the individual would
not otherwise be eligible. Therefore, the questions about family medical
history on the health risk assessment are a request for genetic
information for underwriting purposes and are prohibited under this
paragraph (d). Although the plan conditions eligibility for the disease
management program based on determinations of medical appropriateness,
the exception for determinations of medical appropriateness does not
apply because the individual is not seeking benefits.
Example 5. (i) Facts. A group health plan requests enrollees to
complete two distinct health risk assessments (HRAs) after and unrelated
to enrollment. The first HRA instructs the individual to answer only for
the individual and not for the individual's family. The first HRA does
not ask about any genetic tests the individual has undergone or any
genetic services the individual has received. The plan offers a reward
for completing the first HRA. The second HRA asks about family medical
history and the results
[[Page 49]]
of genetic tests the individual has undergone. The plan offers no reward
for completing the second HRA and the instructions make clear that
completion of the second HRA is wholly voluntary and will not affect the
reward given for completion of the first HRA.
(ii) Conclusion. In this Example 5, no genetic information is
collected in connection with the first HRA, which offers a reward, and
no benefits or other rewards are conditioned on the request for genetic
information in the second HRA. Consequently, the request for genetic
information in the second HRA is not for underwriting purposes, and the
two HRAs do not violate the prohibition on the collection of genetic
information in this paragraph (d).
Example 6. (i) Facts. A group health plan waives its annual
deductible for enrollees who complete an HRA. The HRA is requested to be
completed after enrollment. Whether or not the HRA is completed or what
responses are given on it has no effect on an individual's enrollment
status, or on the enrollment status of members of the individual's
family. The HRA does not include any direct questions about the
individual's genetic information (including family medical history).
However, the last question reads, ``Is there anything else relevant to
your health that you would like us to know or discuss with you?''
(ii) Conclusion. In this Example 6, the plan's request for medical
information does not explicitly state that genetic information should
not be provided. Therefore, any genetic information collected in
response to the question is not within the incidental collection
exception and is prohibited under this paragraph (d).
Example 7. (i) Facts. Same facts as Example 6, except that the last
question goes on to state, ``In answering this question, you should not
include any genetic information. That is, please do not include any
family medical history or any information related to genetic testing,
genetic services, genetic counseling, or genetic diseases for which you
believe you may be at risk.''
(ii) Conclusion. In this Example 7, the plan's request for medical
information explicitly states that genetic information should not be
provided. Therefore, any genetic information collected in response to
the question is within the incidental collection exception. However, the
plan may not use any genetic information it obtains incidentally for
underwriting purposes.
Example 8. (i) Facts. Issuer M acquires Issuer N. M requests N's
records, stating that N should not provide genetic information and
should review the records to excise any genetic information. N assembles
the data requested by M and, although N reviews it to delete genetic
information, the data from a specific region included some individuals'
family medical history. Consequently, M receives genetic information
about some of N's covered individuals.
(ii) Conclusion. In this Example 8, M's request for health
information explicitly stated that genetic information should not be
provided. Therefore, the collection of genetic information was within
the incidental collection exception. However, M may not use the genetic
information it obtained incidentally for underwriting purposes.
(e) Examples regarding determinations of medical appropriateness.
The application of the rules of paragraphs (c) and (d) of this section
to plan or issuer determinations of medical appropriateness is
illustrated by the following examples:
Example 1. (i) Facts. Individual A group health plan covers genetic
testing for celiac disease for individuals who have family members with
this condition. After A's son is diagnosed with celiac disease, A
undergoes a genetic test and promptly submits a claim for the test to
A's issuer for reimbursement. The issuer asks A to provide the results
of the genetic test before the claim is paid.
(ii) Conclusion. In this Example 1, under the rules of paragraph
(c)(4) of this section the issuer is permitted to request only the
minimum amount of information necessary to make a decision regarding
payment. Because the results of the test are not necessary for the
issuer to make a decision regarding the payment of A's claim, the
issuer's request for the results of the genetic test violates paragraph
(c) of this section.
Example 2. (i) Facts. Individual B's group health plan covers a
yearly mammogram for participants and beneficiaries starting at age 40,
or at age 30 for those with increased risk for breast cancer, including
individuals with BRCA1 or BRCA2 gene mutations. B is 33 years old and
has the BRCA2 mutation. B undergoes a mammogram and promptly submits a
claim to B's plan for reimbursement. Following an established policy,
the plan asks B for evidence of increased risk of breast cancer, such as
the results of a genetic test or a family history of breast cancer,
before the claim for the mammogram is paid. This policy is applied
uniformly to all similarly situated individuals and is not directed at
individuals based on any genetic information.
(ii) Conclusion. In this Example 2, the plan does not violate
paragraphs (c) or (d) of this section. Under paragraph (c), the plan is
permitted to request and use the results of a genetic test to make a
determination regarding payment, provided the plan requests only the
minimum amount of information necessary. Because the medical
appropriateness of the mammogram depends on the genetic makeup of the
patient, the minimum
[[Page 50]]
amount of information necessary includes the results of the genetic
test. Similarly, the plan does not violate paragraph (d) of this section
because the plan is permitted to request genetic information in making a
determination regarding the medical appropriateness of a claim if the
genetic information is necessary to make the determination (and if the
genetic information is not used for underwriting purposes).
Example 3. (i) Facts. Individual C was previously diagnosed with and
treated for breast cancer, which is currently in remission. In
accordance with the recommendation of C's physician, C has been taking a
regular dose of tamoxifen to help prevent a recurrence. C's group health
plan adopts a new policy requiring patients taking tamoxifen to undergo
a genetic test to ensure that tamoxifen is medically appropriate for
their genetic makeup. In accordance with, at the time, the latest
scientific research, tamoxifen is not helpful in up to 7 percent of
breast cancer patients, those with certain variations of the gene for
making the CYP2D6 enzyme. If a patient has a gene variant
making tamoxifen not medically appropriate, the plan does not pay for
the tamoxifen prescription.
(ii) Conclusion. In this Example 3, the plan does not violate
paragraph (c) of this section if it conditions future payments for the
tamoxifen prescription on C's undergoing a genetic test to determine
what genetic markers C has for making the CYP2D6 enzyme. Nor
does the plan violate paragraph (c) of this section if the plan refuses
future payment if the results of the genetic test indicate that
tamoxifen is not medically appropriate for C.
Example 4. (i) Facts. A group health plan offers a diabetes disease
management program to all similarly situated individuals for whom it is
medically appropriate based on whether the individuals have or are at
risk for diabetes. The program provides enhanced benefits related only
to diabetes for individuals who qualify for the program. The plan sends
out a notice to all participants that describes the diabetes disease
management program and explains the terms for eligibility. Individuals
interested in enrolling in the program are advised to contact the plan
to demonstrate that they have diabetes or that they are at risk for
diabetes. For individuals who do not currently have diabetes, genetic
information may be used to demonstrate that an individual is at risk.
(ii) Conclusion. In this Example 4, the plan may condition benefits
under the disease management program upon a showing by an individual
that the individual is at risk for diabetes, even if such showing may
involve genetic information, provided that the plan requests genetic
information only when necessary to make a determination regarding
whether the disease management program is medically appropriate for the
individual and only requests the minimum amount of information necessary
to make that determination.
Example 5. (i) Facts. Same facts as Example 4, except that the plan
includes a questionnaire that asks about the occurrence of diabetes in
members of the individual's family as part of the notice describing the
disease management program.
(ii) Conclusion. In this Example 5, the plan violates the
requirements of paragraph (d)(1) of this section because the requests
for genetic information are not limited to those situations in which it
is necessary to make a determination regarding whether the disease
management program is medically appropriate for the individuals.
Example 6. (i) Facts. Same facts as Example 4, except the disease
management program provides an enhanced benefit in the form of a lower
annual deductible to individuals under the program; the lower deductible
applies with respect to all medical expenses incurred by the individual.
Thus, whether or not a claim relates to diabetes, the individual is
provided with a lower deductible based on the individual providing the
plan with genetic information.
(ii) Conclusion. In this Example 6, because the enhanced benefits
include benefits not related to the determination of medical
appropriateness, making available the enhanced benefits is within the
meaning of underwriting purposes. Accordingly, the plan may not request
or require genetic information (including family history information) in
determining eligibility for enhanced benefits under the program because
such a request would be for underwriting purposes and would violate
paragraph (d)(1) of this section.
(f) Applicability date. This section applies for plan years
beginning on or after December 7, 2009.
[74 FR 51688, Oct. 7, 2009]
Sec. 146.123 Special rule allowing integration of Health Reimbursement
Arrangements (HRAs) and other account-based group health plans with individual health
insurance coverage and Medicare and prohibiting discrimination
in HRAs and other account-based group health plans.
(a) Scope. This section applies to health reimbursement arrangements
(HRAs) and other account-based group health plans, as defined in Sec.
147.126(d)(6)(i) of this subchapter. For ease of reference, the term
``HRA'' is used in this section to include other account-based group
health plans. For related regulations, see 26 CFR 1.36B-
[[Page 51]]
2(c)(3)(i) and (c)(5), 29 CFR 2510.3-1(l), and 45 CFR 155.420.
(b) Purpose. This section provides the conditions that an HRA must
satisfy in order to be integrated with individual health insurance
coverage for purposes of Public Health Service Act (PHS Act) sections
2711 and 2713 and Sec. 147.126(d)(4) of this subchapter (referred to as
an individual coverage HRA). This section also allows an individual
coverage HRA to be integrated with Medicare for purposes of PHS Act
sections 2711 and 2713 and Sec. 147.126(d)(4) of this subchapter,
subject to the conditions provided in this section (see paragraph (e) of
this section). Some of the conditions set forth in this section
specifically relate to compliance with PHS Act sections 2711 and 2713
and some relate to the effect of having or being offered an individual
coverage HRA on eligibility for the premium tax credit under section 36B
of the Internal Revenue Code (Code). In addition, this section provides
conditions that an individual coverage HRA must satisfy in order to
comply with the nondiscrimination provisions in PHS Act section 2705 and
that are consistent with the provisions of the Patient Protection and
Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)), and the
Health Care and Education Reconciliation Act of 2010, Public Law 111-152
(124 Stat. 1029 (2010)), each as amended, that are designed to create a
competitive individual market. These conditions are intended to prevent
an HRA plan sponsor from intentionally or unintentionally, directly or
indirectly, steering any participants or dependents with adverse health
factors away from its traditional group health plan, if any, and toward
individual health insurance coverage.
(c) General rule. An HRA will be considered to be integrated with
individual health insurance coverage for purposes of PHS Act sections
2711 and 2713 and Sec. 147.126(d)(4) of this subchapter and will not be
considered to discriminate in violation of PHS Act section 2705 solely
because it is integrated with individual health insurance coverage,
provided that the conditions of this paragraph (c) are satisfied. See
paragraph (e) of this section for how these conditions apply to an
individual coverage HRA integrated with Medicare. For purposes of this
section, medical care expenses means medical care expenses as defined in
Sec. 147.126(d)(6)(ii) of this subchapter and Exchange means Exchange
as defined in Sec. 155.20 of this subchapter.
(1) Enrollment in individual health insurance coverage--(i) In
general. The HRA must require that the participant and any dependent(s)
are enrolled in individual health insurance coverage that is subject to
and complies with the requirements in PHS Act sections 2711 (and Sec.
147.126(a)(2) of this subchapter) and PHS Act section 2713 (and Sec.
147.130(a)(1) of this subchapter), for each month that the individual(s)
are covered by the HRA. For purposes of this paragraph (c), all
individual health insurance coverage, except for individual health
insurance coverage that consists solely of excepted benefits, is treated
as being subject to and complying with PHS Act sections 2711 and 2713.
References to individual health insurance coverage in this paragraph (c)
do not include individual health insurance coverage that consists solely
of excepted benefits.
(ii) Forfeiture. The HRA must provide that if any individual covered
by the HRA ceases to be covered by individual health insurance coverage,
the HRA will not reimburse medical care expenses that are incurred by
that individual after the individual health insurance coverage ceases.
In addition, if the participant and all dependents covered by the
participant's HRA cease to be covered by individual health insurance
coverage, the participant must forfeit the HRA. In either case, the HRA
must reimburse medical care expenses incurred by the individual prior to
the cessation of individual health insurance coverage to the extent the
medical care expenses are otherwise covered by the HRA, but the HRA may
limit the period to submit medical care expenses for reimbursement to a
reasonable specified time period. If a participant or dependent loses
coverage under the HRA for a reason other than cessation of individual
health insurance coverage, COBRA and other continuation coverage
requirements may apply.
[[Page 52]]
(iii) Grace periods and retroactive termination of individual health
insurance coverage. In the event an individual is initially enrolled in
individual health insurance coverage and subsequently timely fails to
pay premiums for the coverage, with the result that the individual is in
a grace period, the individual is considered to be enrolled in
individual health insurance coverage for purposes of this paragraph
(c)(1) and the individual coverage HRA must reimburse medical care
expenses incurred by the individual during that time period to the
extent the medical care expenses are otherwise covered by the HRA. If
the individual fails to pay the applicable premium(s) by the end of the
grace period and the coverage is cancelled or terminated, including
retroactively, or if the individual health insurance coverage is
cancelled or terminated retroactively for some other reason (for
example, a rescission), an individual coverage HRA must require that a
participant notify the HRA that coverage has been cancelled or
terminated and the date on which the cancellation or termination is
effective. After the individual coverage HRA has received the notice of
cancellation or termination, the HRA may not reimburse medical care
expenses incurred on and after the date the individual health insurance
coverage was cancelled or terminated, which is considered to be the date
of termination of coverage under the HRA.
(2) No traditional group health plan may be offered to same
participants. To the extent a plan sponsor offers any class of employees
(as defined in paragraph (d) of this section) an individual coverage
HRA, the plan sponsor may not also offer a traditional group health plan
to the same class of employees, except as provided in paragraph (d)(5)
of this section. For purposes of this section, a traditional group
health plan is any group health plan other than either an account-based
group health plan or a group health plan that consists solely of
excepted benefits. Therefore, a plan sponsor may not offer a choice
between an individual coverage HRA or a traditional group health plan to
any participant or dependent.
(3) Same terms requirement--(i) In general. If a plan sponsor offers
an individual coverage HRA to a class of employees described in
paragraph (d) of this section, the HRA must be offered on the same terms
to all participants within the class, except as provided in paragraphs
(c)(3)(ii) through (vi) and (d)(5) of this section.
(ii) Carryover amounts, salary reduction arrangements, and transfer
amounts. Amounts that are not used to reimburse medical care expenses
for any plan year that are made available to participants in later plan
years are disregarded for purposes of determining whether an HRA is
offered on the same terms, provided that the method for determining
whether participants have access to unused amounts in future years, and
the methodology and formula for determining the amounts of unused funds
which they may access in future years, is the same for all participants
in a class of employees. In addition, the ability to pay the portion of
the premium for individual health insurance coverage that is not covered
by the HRA, if any, by using a salary reduction arrangement under
section 125 of the Code is considered to be a term of the HRA for
purposes of this paragraph (c)(3). Therefore, an HRA is not provided on
the same terms unless the salary reduction arrangement, if made
available to any participant in a class of employees, is made available
on the same terms to all participants (other than former employees, as
defined in paragraph (c)(3)(iv) of this section) in the class of
employees. Further, to the extent that a participant in an individual
coverage HRA was previously covered by another HRA and the current
individual coverage HRA makes available amounts that were not used to
reimburse medical care expenses under the prior HRA (transferred
amounts), the transferred amounts are disregarded for purposes of
determining whether the HRA is offered on the same terms, provided that
if the HRA makes available transferred amounts, it does so on the same
terms for all participants in the class of employees.
(iii) Permitted variation. An HRA does not fail to be provided on
the same terms solely because the maximum
[[Page 53]]
dollar amount made available to participants in a class of employees to
reimburse medical care expenses for any plan year increases in
accordance with paragraph (c)(3)(iii)(A) or (B) of this section.
(A) Variation due to number of dependents. An HRA does not fail to
be provided on the same terms to participants in a class of employees
solely because the maximum dollar amount made available to those
participants to reimburse medical care expenses for any plan year
increases as the number of the participant's dependents who are covered
under the HRA increases, so long as the same maximum dollar amount
attributable to the increase in family size is made available to all
participants in that class of employees with the same number of
dependents covered by the HRA.
(B) Variation due to age. An HRA does not fail to be provided on the
same terms to participants in a class of employees solely because the
maximum dollar amount made available under the terms of the HRA to those
participants to reimburse medical care expenses for any plan year
increases as the age of the participant increases, so long as the
requirements in paragraphs (c)(3)(iii)(B)(1) and (2) of this section are
satisfied. For the purpose of this paragraph (c)(3)(iii)(B), the plan
sponsor may determine the age of the participant using any reasonable
method for a plan year, so long as the plan sponsor determines each
participant's age for the purpose of this paragraph (c)(3)(iii)(B) using
the same method for all participants in the class of employees for the
plan year and the method is determined prior to the plan year.
(1) The same maximum dollar amount attributable to the increase in
age is made available to all participants who are the same age.
(2) The maximum dollar amount made available to the oldest
participant(s) is not more than three times the maximum dollar amount
made available to the youngest participant(s).
(iv) Former employees. An HRA does not fail to be treated as
provided on the same terms if the plan sponsor offers the HRA to some,
but not all, former employees within a class of employees. However, if a
plan sponsor offers the HRA to one or more former employees within a
class of employees, the HRA must be offered to the former employee(s) on
the same terms as to all other employees within the class, except as
provided in paragraph (c)(3)(ii) of this section. For purposes of this
section, a former employee is an employee who is no longer performing
services for the employer.
(v) New employees or new dependents. For a participant whose
coverage under the HRA becomes effective later than the first day of the
plan year, the HRA does not fail to be treated as being provided on the
same terms to the participant if the maximum dollar amount made
available to the participant either is the same as the maximum dollar
amount made available to participants in the participant's class of
employees whose coverage became effective as of the first day of the
plan year, or is pro-rated consistent with the portion of the plan year
in which the participant is covered by the HRA. Similarly, if the HRA
provides for variation in the maximum amount made available to
participants in a class of employees based on the number of a
participant's dependents covered by the HRA, and the number of a
participant's dependents covered by the HRA changes during a plan year
(either increasing or decreasing), the HRA does not fail to be treated
as being provided on the same terms to the participant if the maximum
dollar amount made available to the participant either is the same as
the maximum dollar amount made available to participants in the
participant's class of employees who had the same number of dependents
covered by the HRA on the first day of the plan year or is pro-rated for
the remainder of the plan year after the change in the number of the
participant's dependents covered by the HRA consistent with the portion
of the plan year in which that number of dependents are covered by the
HRA. The method the HRA uses to determine amounts made available for
participants whose coverage under the HRA is effective later than the
first day of the plan year or who have changes in the number of
dependents covered by the HRA during a plan year must be the
[[Page 54]]
same for all participants in the class of employees and the method must
be determined prior to the beginning of the plan year.
(vi) HSA-compatible HRAs. An HRA does not fail to be treated as
provided on the same terms if the plan sponsor offers participants in a
class of employees a choice between an HSA-compatible individual
coverage HRA and an individual coverage HRA that is not HSA compatible,
provided both types of HRAs are offered to all participants in the class
of employees on the same terms. For the purpose of this paragraph
(c)(3)(vi), an HSA-compatible individual coverage HRA is an individual
coverage HRA that is limited in accordance with applicable guidance
under section 223 of the Code such that an individual covered by such an
HRA is not disqualified from being an eligible individual under section
223 of the Code.
(vii) Examples. The following examples illustrate the provisions of
this paragraph (c)(3), without taking into account the provisions of
paragraph (d) of this section. In each example, the HRA is an individual
coverage HRA that has a calendar year plan year and may reimburse any
medical care expenses, including premiums for individual health
insurance coverage (except as provided in paragraph (c)(3)(vii)(E) of
this section (Example 5)). Further, in each example, assume the HRA is
offered on the same terms, except as otherwise specified in the example
and that no participants or dependents are Medicare beneficiaries.
(A) Example 1: Carryover amounts permitted--(1) Facts. For 2020 and
again for 2021, Plan Sponsor A offers all employees $7,000 each in an
HRA, and the HRA provides that amounts that are unused at the end of a
plan year may be carried over to the next plan year, with no
restrictions on the use of the carryover amounts compared to the use of
newly available amounts. At the end of 2020, some employees have used
all of the funds in their HRAs, while other employees have balances
remaining that range from $500 to $1,750 that are carried over to 2021
for those employees.
(2) Conclusion. The same terms requirement of this paragraph (c)(3)
is satisfied in this paragraph (c)(3)(vii)(A) (Example 1) for 2020
because Plan Sponsor A offers all employees the same amount, $7,000, in
an HRA for that year. The same terms requirement is also satisfied for
2021 because Plan Sponsor A again offers all employees the same amount
for that year, and the carryover amounts that some employees have are
disregarded in applying the same terms requirement because the amount of
the carryover for each employee (that employee's balance) and each
employee's access to the carryover amounts is based on the same terms.
(B) Example 2: Employees hired after the first day of the plan
year--(1) Facts. For 2020, Plan Sponsor B offers all employees employed
on January 1, 2020, $7,000 each in an HRA for the plan year. Employees
hired after January 1, 2020, are eligible to enroll in the HRA with an
effective date of the first day of the month following their date of
hire, as long as they have enrolled in individual health insurance
coverage effective on or before that date, and the amount offered to
these employees is pro-rated based on the number of months remaining in
the plan year, including the month which includes their coverage
effective date.
(2) Conclusion. The same terms requirement of this paragraph (c)(3)
is satisfied in this paragraph (c)(3)(vii)(B) (Example 2) for 2020
because Plan Sponsor B offers all employees employed on the first day of
the plan year the same amount, $7,000, in an HRA for that plan year and
all employees hired after January 1, 2020, a pro-rata amount based on
the portion of the plan year during which they are enrolled in the HRA.
(C) Example 3: HRA amounts offered vary based on number of
dependents--(1) Facts. For 2020, Plan Sponsor C offers its employees the
following amounts in an HRA: $1,500, if the employee is the only
individual covered by the HRA; $3,500, if the employee and one dependent
are covered by the HRA; and $5,000, if the employee and more than one
dependent are covered by the HRA.
(2) Conclusion. The same terms requirement of this paragraph (c)(3)
is satisfied in this paragraph (c)(3)(vii)(C) (Example 3) because
paragraph (c)(3)(iii)(A) of this section allows the
[[Page 55]]
maximum dollar amount made available in an HRA to increase as the number
of the participant's dependents covered by the HRA increases and Plan
Sponsor C makes the same amount available to each employee with the same
number of dependents covered by the HRA.
(D) Example 4: HRA amounts offered vary based on increases in
employees' ages--(1) Facts. For 2020, Plan Sponsor D offers its
employees the following amounts in an HRA: $1,000 each for employees age
25 to 35; $2,000 each for employees age 36 to 45; $2,500 each for
employees age 46 to 55; and $4,000 each for employees over age 55.
(2) Conclusion. The same terms requirement of this paragraph (c)(3)
is not satisfied in this paragraph (c)(3)(vii)(D) (Example 4) because
the terms of the HRA provide the oldest participants (those over age 55)
with more than three times the amount made available to the youngest
participants (those ages 25 to 35), in violation of paragraph
(c)(3)(iii)(B)(2) of this section.
(E) Example 5: Application of same terms requirement to premium only
HRA--(1) Facts. For 2020, Plan Sponsor E offers its employees an HRA
that reimburses only premiums for individual health insurance coverage,
up to $10,000 for the year. Employee A enrolls in individual health
insurance coverage with a $5,000 premium for the year and is reimbursed
$5,000 from the HRA. Employee B enrolls in individual health insurance
coverage with an $8,000 premium for the year and is reimbursed $8,000
from the HRA.
(2) [Reserved]
Conclusion. The same terms requirement of this paragraph (c)(3) is
satisfied in this paragraph (c)(3)(vii)(E) (Example 5) because Plan
Sponsor E offers the HRA on the same terms to all employees,
notwithstanding that some employees receive a greater amount of
reimbursement than others based on the cost of the individual health
insurance coverage selected by the employee.
(4) Opt out. Under the terms of the HRA, a participant who is
otherwise eligible for coverage must be permitted to opt out of and
waive future reimbursements on behalf of the participant and all
dependents eligible for the HRA from the HRA once, and only once, with
respect to each plan year. The HRA may establish timeframes for
enrollment in (and opting out of) the HRA but, in general, the
opportunity to opt out must be provided in advance of the first day of
the plan year. For participants who become eligible to participate in
the HRA on a date other than the first day of the plan year (or who
become eligible fewer than 90 days prior to the plan year or for whom
the notice under paragraph (c)(6) of this section is required to be
provided as set forth in paragraph (c)(6)(i)(C) of this section), or for
a dependent who newly becomes eligible during the plan year, this
opportunity must be provided during the applicable HRA enrollment
period(s) established by the HRA for these individuals. Further, under
the terms of the HRA, upon termination of employment, for a participant
who is covered by the HRA, either the remaining amounts in the HRA must
be forfeited or the participant must be permitted to permanently opt out
of and waive future reimbursements from the HRA on behalf of the
participant and all dependents covered by the HRA.
(5) Reasonable procedures for coverage substantiation--(i)
Substantiation of individual health insurance coverage for the plan
year. The HRA must implement, and comply with, reasonable procedures to
substantiate that participants and each dependent covered by the HRA
are, or will be, enrolled in individual health insurance coverage for
the plan year (or for the portion of the plan year the individual is
covered by the HRA, if applicable). The HRA may establish the date by
which this substantiation must be provided, but, in general, the date
may be no later than the first day of the plan year. However, for a
participant who is not eligible to participate in the HRA on the first
day of the plan year (or who becomes eligible fewer than 90 days prior
to the plan year or for whom the notice under paragraph (c)(6) of this
section is required to be provided as set forth in paragraph
(c)(6)(i)(C) of this section), the HRA may establish the date by which
this substantiation must be provided, but that date may be no later
[[Page 56]]
than the date the HRA coverage begins. Similarly, for a participant who
adds a new dependent during the plan year, the HRA may establish the
date by which this substantiation must be provided, but the date may be
no later than the date the HRA coverage for the new dependent begins;
however, to the extent the dependent's coverage under the HRA is
effective retroactively, the HRA may establish a reasonable time by
which this substantiation is required, but must require it be provided
before the HRA will reimburse any medical care expense for the newly
added dependent. The reasonable procedures an HRA may use to implement
the substantiation requirement set forth in this paragraph (c)(5)(i) may
include a requirement that a participant substantiate enrollment by
providing either:
(A) A document from a third party (for example, the issuer or an
Exchange) showing that the participant and any dependents covered by the
HRA are, or will be, enrolled in individual health insurance coverage
(for example, an insurance card or an explanation of benefits document
pertaining to the relevant time period or documentation from the
Exchange showing that the individual has completed the application and
plan selection); or
(B) An attestation by the participant stating that the participant
and dependent(s) covered by the HRA are, or will be, enrolled in
individual health insurance coverage, the date coverage began or will
begin, and the name of the provider of the coverage.
(ii) Coverage substantiation with each request for reimbursement of
medical care expenses. Following the initial substantiation of coverage,
with each new request for reimbursement of an incurred medical care
expense for the same plan year, the HRA may not reimburse a participant
for any medical care expenses unless, prior to each reimbursement, the
participant substantiates that the individual on whose behalf medical
care expenses are requested to be reimbursed continues to be enrolled in
individual health insurance coverage for the month during which the
medical care expenses were incurred. The HRA must implement, and comply
with, reasonable procedures to satisfy this requirement. This
substantiation may be in the form of a written attestation by the
participant, which may be part of the form used to request
reimbursement, or a document from a third party (for example, a health
insurance issuer) showing that the participant or the dependent, if
applicable, are or were enrolled in individual health insurance coverage
for the applicable month.
(iii) Reliance on substantiation. For purposes of this paragraph
(c)(5), an HRA may rely on the participant's documentation or
attestation unless the HRA, its plan sponsor, or any other entity acting
in an official capacity on behalf of the HRA has actual knowledge that
any individual covered by the HRA is not, or will not be, enrolled in
individual health insurance coverage for the plan year (or applicable
portion of the plan year) or the month, as applicable.
(6) Notice requirement--(i) Timing. The HRA must provide a written
notice to each participant:
(A) At least 90 calendar days before the beginning of each plan year
for any participant who is not described in either paragraph
(c)(6)(i)(B) or (C) of this section;
(B) No later than the date on which the HRA may first take effect
for the participant, for any participant who is not eligible to
participate at the beginning of the plan year (or is not eligible to
participate at the time the notice is provided at least 90 calendar days
before the beginning of the plan year pursuant to paragraph (c)(6)(i)(A)
of this section); or
(C) No later than the date on which the HRA may first take effect
for the participant, for any participant who is employed by an employer
that is first established less than 120 days before the beginning of the
first plan year of the HRA; this paragraph (c)(6)(i)(C) applies only
with respect to the first plan year of the HRA.
(ii) Content. The notice must include all the information described
in this paragraph (c)(6)(ii) (and may include any additional information
that does not conflict with that information). To the extent that the
Departments of the Treasury, Labor and Health and Human Services provide
model notice
[[Page 57]]
language for certain elements of this required notice, HRAs are
permitted, but not required, to use the model language.
(A) A description of the terms of the HRA, including the maximum
dollar amount available for each participant (including the self-only
HRA amount available for the plan year (or the maximum dollar amount
available for the plan year if the HRA provides for reimbursements up to
a single dollar amount regardless of whether a participant has self-only
or other than self-only coverage)), any rules regarding the proration of
the maximum dollar amount applicable to any participant (or dependent,
if applicable) who is not eligible to participate in the HRA for the
entire plan year, whether (and which of) the participant's dependents
are eligible for the HRA, a statement that there are different kinds of
HRAs (including a qualified small employer health reimbursement
arrangement) and the HRA being offered is an individual coverage HRA, a
statement that the HRA requires the participant and any covered
dependents to be enrolled in individual health insurance coverage (or
Medicare Part A and B or Medicare Part C, if applicable), a statement
that the coverage in which the participant and any covered dependents
must be enrolled cannot be short-term, limited-duration insurance or
consist solely of excepted benefits, if the HRA is subject to the
Employee Retirement Income Security Act (ERISA), a statement that
individual health insurance coverage in which the participant and any
covered dependents are enrolled is not subject to ERISA, if the
conditions under 29 CFR 2510.3-1(l) are satisfied, the date as of which
coverage under the HRA may first become effective (both for participants
whose coverage will become effective on the first day of the plan year
and for participants whose HRA coverage may become effective at a later
date), the dates on which the HRA plan year begins and ends, and the
dates on which the amounts newly made available under the HRA will be
made available.
(B) A statement of the right of the participant to opt out of and
waive future reimbursements from the HRA, as set forth under paragraph
(c)(4) of this section.
(C) A description of the potential availability of the premium tax
credit if the participant opts out of and waives future reimbursements
from the HRA and the HRA is not affordable for one or more months under
26 CFR 1.36B-2(c)(5), a statement that even if the participant opts out
of and waives future reimbursements from an HRA, the offer will prohibit
the participant (and, potentially, the participant's dependents) from
receiving a premium tax credit for the participant's coverage (or the
dependent's coverage, if applicable) on an Exchange for any month that
the HRA is affordable under 26 CFR 1.36B-2(c)(5), a statement describing
how the participant may find assistance with determining affordability,
a statement that, if the participant is a former employee, the offer of
the HRA does not render the participant (or the participant's
dependents, if applicable) ineligible for the premium tax credit
regardless of whether it is affordable under 26 CFR 1.36B-2(c)(5), and a
statement that if the participant or dependent is enrolled in Medicare,
he or she is ineligible for the premium tax credit without regard to the
offer or acceptance of the HRA;
(D) A statement that if the participant accepts the HRA, the
participant may not claim a premium tax credit for the participant's
Exchange coverage for any month the HRA may be used to reimburse medical
care expenses of the participant, and a premium tax credit may not be
claimed for the Exchange coverage of the participant's dependents for
any month the HRA may be used to reimburse medical care expenses of the
dependents.
(E) A statement that the participant must inform any Exchange to
which the participant applies for advance payments of the premium tax
credit of the availability of the HRA; the self-only HRA amount
available for the HRA plan year (or the maximum dollar amount available
for the plan year if the HRA provides for reimbursements up to a single
dollar amount regardless of whether a participant has self-only or other
than self-only coverage) as set
[[Page 58]]
forth in the written notice in accordance with paragraph (c)(6)(ii)(A)
of this section; whether the HRA is also available to the participant's
dependents and if so, which ones; the date as of which coverage under
the HRA may first become effective; the date on which the plan year
begins and the date on which it ends; and whether the participant is a
current employee or former employee.
(F) A statement that the participant should retain the written
notice because it may be needed to determine whether the participant is
allowed a premium tax credit on the participant's individual income tax
return.
(G) A statement that the HRA may not reimburse any medical care
expense unless the substantiation requirement set forth in paragraph
(c)(5)(ii) of this section is satisfied and a statement that the
participant must also provide the substantiation required by paragraph
(c)(5)(i) of this section.
(H) A statement that if the individual health insurance coverage (or
coverage under Medicare Part A and B or Medicare Part C) of a
participant or dependent ceases, the HRA will not reimburse any medical
care expenses that are incurred by the participant or dependent, as
applicable, after the coverage ceases, and a statement that the
participant must inform the HRA if the participant's or dependent's
individual health insurance coverage (or coverage under Medicare Part A
and B or Medicare Part C) is cancelled or terminated retroactively and
the date on which the cancellation or termination is effective.
(I) The contact information (including a phone number) for an
individual or a group of individuals who participants may contact in
order to receive additional information regarding the HRA. The plan
sponsor may determine which individual or group of individuals is best
suited to be the specified contact.
(J) A statement of availability of a special enrollment period to
enroll in or change individual health insurance coverage, through or
outside of an Exchange, for the participant and any dependents who newly
gain access to the HRA and are not already covered by the HRA.
(d) Classes of employees--(1) In general. This paragraph (d) sets
forth the rules for determining classes of employees. Paragraph (d)(2)
of this section sets forth the specific classes of employees; paragraph
(d)(3) of this section sets forth a minimum class size requirement that
applies in certain circumstances; paragraph (d)(4) of this section sets
forth rules regarding the definition of ``full-time employees,'' ``part-
time employees,'' and ``seasonal employees''; paragraph (d)(5) of this
section sets forth a special rule for new hires; and paragraph (d)(6) of
this section addresses student premium reduction arrangements. For
purposes of this section, including determining classes under this
paragraph (d), the employer is the common law employer and is determined
without regard to the rules under sections 414(b), (c), (m), and (o) of
the Code that would treat the common law employer as a single employer
with certain other entities.
(2) List of classes. Participants may be treated as belonging to a
class of employees based on whether they are, or are not, included in
the classes described in this paragraph (d)(2). If the individual
coverage HRA is offered to former employees, former employees are
considered to be in the same class in which they were included
immediately before separation from service. Before each plan year, a
plan sponsor must determine for the plan year which classes of employees
it intends to treat separately and the definition of the relevant
class(es) it will apply, to the extent these regulations permit a
choice. After the classes and the definitions of the classes are
established for a plan year, a plan sponsor may not make changes to the
classes of employees or the definitions of those relevant classes with
respect to that plan year.
(i) Full-time employees, defined at the election of the plan sponsor
to mean either full-time employees under section 4980H of the Code (and
26 CFR 54.4980H-1(a)(21)) or employees who are not part-time employees
(as described in 26 CFR 1.105-11(c)(2)(iii)(C));
(ii) Part-time employees, defined at the election of the plan
sponsor to mean either employees who are not
[[Page 59]]
full-time employees under section 4980H of the Code (and under 26 CFR
54.4980H-1(a)(21) (which defines full-time employee)) or employees who
are part-time employees as described in 26 CFR 1.105-11(c)(2)(iii)(C);
(iii) Employees who are paid on a salary basis;
(iv) Non-salaried employees (such as, for example, hourly
employees);
(v) Employees whose primary site of employment is in the same rating
area as defined in Sec. 147.102(b) of this subchapter;
(vi) Seasonal employees, defined at the election of the plan sponsor
to mean seasonal employees as described in either 26 CFR 54.4980H-
1(a)(38) or 26 CFR 1.105-11(c)(2)(iii)(C);
(vii) Employees included in a unit of employees covered by a
particular collective bargaining agreement (or an appropriate related
participation agreement) in which the plan sponsor participates (as
described in 26 CFR 1.105-11(c)(2)(iii)(D));
(viii) Employees who have not satisfied a waiting period for
coverage (if the waiting period complies with Sec. 147.116 of this
subchapter);
(ix) Non-resident aliens with no U.S.-based income (as described in
26 CFR 1.105-11(c)(2)(iii)(E));
(x) Employees who, under all the facts and circumstances, are
employees of an entity that hired the employees for temporary placement
at an entity that is not the common law employer of the employees and
that is not treated as a single employer with the entity that hired the
employees for temporary placement under section 414(b), (c), (m), or (o)
of the Code; or
(xi) A group of participants described as a combination of two or
more of the classes of employees set forth in paragraphs (d)(2)(i)
through (x) of this section.
(3) Minimum class size requirement--(i) In general. If a class of
employees is subject to the minimum class size requirement as set forth
in this paragraph (d)(3), the class must consist of at least a minimum
number of employees (as described in paragraphs (d)(3)(iii) and (iv) of
this section), otherwise, the plan sponsor may not treat that class as a
separate class of employees. Paragraph (d)(3)(ii) of this section sets
forth the circumstances in which the minimum class size requirement
applies to a class of employees, paragraph (d)(3)(iii) of this section
sets forth the rules for determining the applicable class size minimum,
and paragraph (d)(3)(iv) of this section sets forth the rules for a plan
sponsor to determine if it satisfies the minimum class size requirement
with respect to a class of employees.
(ii) Circumstances in which minimum class size requirement applies.
(A) The minimum class size requirement applies only if a plan sponsor
offers a traditional group health plan to one or more classes of
employees and offers an individual coverage HRA to one or more other
classes of employees.
(B) The minimum class size requirement does not apply to a class of
employees offered a traditional group health plan or a class of
employees offered no coverage.
(C) The minimum class size requirement applies to a class of
employees offered an individual coverage HRA if the class is full-time
employees, part-time employees, salaried employees, non-salaried
employees, or employees whose primary site of employment is in the same
rating area (described in paragraph (d)(2)(i), (ii), (iii), (iv), or (v)
of this section, respectively, and referred to collectively as the
applicable classes or individually as an applicable class), except that:
(1) In the case of the class of employees whose primary site of
employment is in the same rating area (as described in paragraph
(d)(2)(v) of this section), the minimum class size requirement does not
apply if the geographic area defining the class is a State or a
combination of two or more entire States; and
(2) In the case of the classes of employees that are full-time
employees and part-time employees (as described in paragraphs (d)(2)(i)
and (ii) of this section, respectively), the minimum class size
requirement applies only to those classes (and the classes are only
applicable classes) if the employees in one such class are offered a
traditional group health plan while the employees in the other such
class are offered an individual coverage HRA. In such a
[[Page 60]]
case, the minimum class size requirement applies only to the class
offered an individual coverage HRA.
(D) A class of employees offered an individual coverage HRA is also
subject to the minimum class size requirement if the class is a class of
employees created by combining at least one of the applicable classes
(as defined in paragraph (d)(3)(ii)(C) of this section) with any other
class, except that the minimum class size requirement shall not apply to
a class that is the result of a combination of one of the applicable
classes and a class of employees who have not satisfied a waiting period
(as described in paragraph (d)(2)(viii) of this section).
(iii) Determination of the applicable class size minimum--(A) In
general. The minimum number of employees that must be in a class of
employees that is subject to the minimum class size requirement (the
applicable class size minimum) is determined prior to the beginning of
the plan year for each plan year of the individual coverage HRA and is:
(1) 10, for an employer with fewer than 100 employees;
(2) A number, rounded down to a whole number, equal to 10 percent of
the total number of employees, for an employer with 100 to 200
employees; and
(3) 20, for an employer with more than 200 employees.
(B) Determining employer size. For purposes of this paragraph
(d)(3), the number of employees of an employer is determined in advance
of the plan year of the HRA based on the number of employees that the
employer reasonably expects to employ on the first day of the plan year.
(iv) Determining if a class satisfies the applicable class size
minimum. For purposes of this paragraph (d)(3), whether a class of
employees satisfies the applicable class size minimum for a plan year of
the individual coverage HRA is based on the number of employees in the
class offered the individual coverage HRA as of the first day of the
plan year. Therefore, this determination is not based on the number of
employees that actually enroll in the individual coverage HRA, and this
determination is not affected by changes in the number of employees in
the class during the plan year.
(4) Consistency requirement. For any plan year, a plan sponsor may
define ``full-time employee,'' ``part-time employee,'' and ``seasonal
employee'' in accordance with the relevant provisions of sections 105(h)
or 4980H of the Code, as set forth in paragraphs (d)(2)(i), (ii), and
(vi) of this section, if:
(i) To the extent applicable under the HRA for the plan year, each
of the three classes of employees are defined in accordance with section
105(h) of the Code or each of the three classes of employees are defined
in accordance with section 4980H of the Code for the plan year; and
(ii) The HRA plan document sets forth the applicable definitions
prior to the beginning of the plan year to which the definitions will
apply.
(5) Special rule for new hires--(i) In general. Notwithstanding
paragraphs (c)(2) and (3) of this section, a plan sponsor that offers a
traditional group health plan to a class of employees may prospectively
offer the employees in that class of employees who are hired on or after
a certain future date (the new hire date) an individual coverage HRA
(with this group of employees referred to as the new hire subclass),
while continuing to offer employees in that class of employees who are
hired before the new hire date a traditional group health plan (with the
rule set forth in this sentence referred to as the special rule for new
hires). For the new hire subclass, the individual coverage HRA must be
offered on the same terms to all participants within the subclass, in
accordance with paragraph (c)(3) of this section. In accordance with
paragraph (c)(2) of this section, a plan sponsor may not offer a choice
between an individual coverage HRA or a traditional group health plan to
any employee in the new hire subclass or to any employee in the class
who is not a member of the new hire subclass.
(ii) New hire date. A plan sponsor may set the new hire date for a
class of employees prospectively as any date on or after January 1,
2020. A plan sponsor may set different new hire dates prospectively for
separate classes of employees.
[[Page 61]]
(iii) Discontinuation of use of special rule for new hires and
multiple applications of the special rule for new hires. A plan sponsor
may discontinue use of the special rule for new hires at any time for
any class of employees. In that case, the new hire subclass is no longer
treated as a separate subclass of employees. In the event a plan sponsor
applies the special rule for new hires to a class of employees and later
discontinues use of the rule to the class of employees, the plan sponsor
may later apply the rule if the application of the rule would be
permitted under the rules for initial application of the special rule
for new hires. If a plan sponsor, in accordance with the requirements
for the special rule for new hires, applies the rule to a class of
employees subsequent to any prior application and discontinuance of the
rule to that class, the new hire date must be prospective.
(iv) Application of the minimum class size requirement under the
special rule for new hires. The minimum class size requirement set forth
in paragraph (d)(3) of this section does not apply to the new hire
subclass. However, if a plan sponsor subdivides the new hire subclass
subsequent to creating the new hire subclass, the minimum class size
requirement set forth in paragraph (d)(3) of this section applies to any
class of employees created by subdividing the new hire subclass, if the
minimum class size requirement otherwise applies.
(6) Student employees offered student premium reduction
arrangements. For purposes of this section, if an institution of higher
education (as defined in the Higher Education Act of 1965) offers a
student employee a student premium reduction arrangement, the employee
is not considered to be part of the class of employees to which the
employee would otherwise belong. For the purpose of this paragraph
(d)(6) and paragraph (f)(1) of this section, a student premium reduction
arrangement is defined as any program offered by an institution of
higher education under which the cost of insured or self-insured student
health coverage is reduced for certain students through a credit,
offset, reimbursement, stipend or similar arrangement. A student
employee offered a student premium reduction arrangement is also not
counted for purposes of determining the applicable class size minimum
under paragraph (d)(3)(iii) of this section. If a student employee is
not offered a student premium reduction arrangement (including if the
student employee is offered an individual coverage HRA instead), the
student employee is considered to be part of the class of employees to
which the employee otherwise belongs and is counted for purposes of
determining the applicable class size minimum under paragraph
(d)(3)(iii) of this section.
(e) Integration of Individual Coverage HRAs with Medicare--(1)
General rule. An individual coverage HRA will be considered to be
integrated with Medicare (and deemed to comply with PHS Act sections
2711 and 2713 and Sec. 147.126(d)(4) of this subchapter), provided that
the conditions of paragraph (c) of this section are satisfied, subject
to paragraph (e)(2) of this section. Nothing in this section requires
that a participant and his or her dependents all have the same type of
coverage; therefore, an individual coverage HRA may be integrated with
Medicare for some individuals and with individual health insurance
coverage for others, including, for example, a participant enrolled in
Medicare Part A and B or Part C and his or her dependents enrolled in
individual health insurance coverage.
(2) Application of conditions in paragraph (c) of this section--(i)
In general. Except as provided in paragraph (e)(2)(ii) of this section,
in applying the conditions of paragraph (c) of this section with respect
to integration with Medicare, a reference to ``individual health
insurance coverage'' is deemed to refer to coverage under Medicare Part
A and B or Part C. References in this section to integration of an HRA
with Medicare refer to integration of an individual coverage HRA with
Medicare Part A and B or Part C.
(ii) Exceptions. For purposes of the statement regarding ERISA under
the notice content element under paragraph (c)(6)(ii)(A) of this section
and the statement regarding the availability of a special enrollment
period under the notice content element
[[Page 62]]
under paragraph (c)(6)(ii)(J) of this section, the term individual
health insurance coverage means only individual health insurance
coverage and does not also mean coverage under Medicare Part A and B or
Part C.
(f) Examples--(1) Examples regarding classes and the minimum class
size requirement. The following examples illustrate the provisions of
paragraph (c)(3) of this section, taking into account the provisions of
paragraphs (d)(1) through (4) and (d)(6) of this section. In each
example, the HRA is an individual coverage HRA that may reimburse any
medical care expenses, including premiums for individual health
insurance coverage and it is assumed that no participants or dependents
are Medicare beneficiaries.
(i) Example 1: Collectively bargained employees offered traditional
group health plan; non-collectively bargained employees offered HRA--(A)
Facts. For 2020, Plan Sponsor A offers its employees covered by a
collective bargaining agreement a traditional group health plan (as
required by the collective bargaining agreement) and all other employees
(non-collectively bargained employees) each an HRA on the same terms.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(i) (Example 1)
because collectively bargained and non-collectively bargained employees
may be treated as different classes of employees, one of which may be
offered a traditional group health plan and the other of which may be
offered an individual coverage HRA, and Plan Sponsor A offers the HRA on
the same terms to all participants who are non-collectively bargained
employees. The minimum class size requirement does not apply to this
paragraph (f)(1)(i) (Example 1) even though Plan Sponsor A offers one
class a traditional group health plan and one class the HRA because
collectively bargained and non-collectively bargained employees are not
applicable classes that are subject to the minimum class size
requirement.
(ii) Example 2: Collectively bargained employees in one unit offered
traditional group health plan and in another unit offered HRA--(A)
Facts. For 2020, Plan Sponsor B offers its employees covered by a
collective bargaining agreement with Local 100 a traditional group
health plan (as required by the collective bargaining agreement), and
its employees covered by a collective bargaining agreement with Local
200 each an HRA on the same terms (as required by the collective
bargaining agreement).
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(ii) (Example 2)
because the employees covered by the collective bargaining agreements
with the two separate bargaining units (Local 100 and Local 200) may be
treated as two different classes of employees and Plan Sponsor B offers
an HRA on the same terms to the participants covered by the agreement
with Local 200. The minimum class size requirement does not apply to
this paragraph (f)(1)(ii) (Example 2) even though Plan Sponsor B offers
the Local 100 employees a traditional group health plan and the Local
200 employees an HRA because collectively bargained employees are not
applicable classes that are subject to the minimum class size
requirement.
(iii) Example 3: Employees in a waiting period offered no coverage;
other employees offered an HRA--(A) Facts. For 2020, Plan Sponsor C
offers its employees who have completed a waiting period that complies
with the requirements for waiting periods in Sec. 147.116 of this
subchapter each an HRA on the same terms and does not offer coverage to
its employees who have not completed the waiting period.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(iii) (Example 3)
because employees who have completed a waiting period and employees who
have not completed a waiting period may be treated as different classes
and Plan Sponsor C offers the HRA on the same terms to all participants
who have completed the waiting period. The minimum class size
requirement does not apply to this paragraph (f)(1)(iii) (Example 3)
because Plan Sponsor C does not offer at least one class of employees a
traditional group health plan and because the class
[[Page 63]]
of employees who have not completed a waiting period and the class of
employees who have completed a waiting period are not applicable classes
that are subject to the minimum class size requirement.
(iv) Example 4: Employees in a waiting period offered an HRA; other
employees offered a traditional group health plan--(A) Facts. For 2020,
Plan Sponsor D offers its employees who have completed a waiting period
that complies with the requirements for waiting periods in Sec. 147.116
of this subchapter a traditional group health plan and offers its
employees who have not completed the waiting period each an HRA on the
same terms.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(iv) (Example 4)
because employees who have completed a waiting period and employees who
have not completed a waiting period may be treated as different classes
and Plan Sponsor D offers an HRA on the same terms to all participants
who have not completed the waiting period. The minimum class size
requirement does not apply to this paragraph (f)(1)(iv) (Example 4) even
though Plan Sponsor D offers employees who have completed a waiting
period a traditional group health plan and employees who have not
completed a waiting period an HRA because the class of employees who
have not completed a waiting period is not an applicable class that is
subject to the minimum class size requirement (nor is the class made up
of employees who have completed the waiting period).
(v) Example 5: Staffing firm employees temporarily placed with
customers offered an HRA; other employees offered a traditional group
health plan--(A) Facts. Plan Sponsor E is a staffing firm that places
certain of its employees on temporary assignments with customers that
are not the common law employers of Plan Sponsor E's employees or
treated as a single employer with Plan Sponsor E under section 414(b),
(c), (m), or (o) of the Code (unrelated entities); other employees work
in Plan Sponsor E's office managing the staffing business (non-temporary
employees). For 2020, Plan Sponsor E offers its employees who are on
temporary assignments with customers each an HRA on the same terms. All
other employees are offered a traditional group health plan.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(v) (Example 5)
because the employees who are hired for temporary placement at an
unrelated entity and non-temporary employees of Plan Sponsor E may be
treated as different classes of employees and Plan Sponsor E offers an
HRA on the same terms to all participants temporarily placed with
customers. The minimum class size requirement does not apply to this
paragraph (f)(1)(v) (Example 5) even though Plan Sponsor E offers one
class a traditional group health plan and one class the HRA because the
class of employees hired for temporary placement is not an applicable
class that is subject to the minimum class size requirement (nor is the
class made up of non-temporary employees).
(vi) Example 6: Staffing firm employees temporarily placed with
customers in rating area 1 offered an HRA; other employees offered a
traditional group health plan--(A) Facts. The facts are the same as in
paragraph (f)(1)(v) of this section (Example 5), except that Plan
Sponsor E has work sites in rating area 1 and rating area 2, and it
offers its 10 employees on temporary assignments with a work site in
rating area 1 an HRA on the same terms. Plan Sponsor E has 200 other
employees in rating areas 1 and 2, including its non-temporary employees
in rating areas 1 and 2 and its employees on temporary assignments with
a work site in rating area 2, all of whom are offered a traditional
group health plan.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is not satisfied in this paragraph (f)(1)(vi) (Example 6)
because, even though the employees who are temporarily placed with
customers generally may be treated as employees of a different class,
because Plan Sponsor E is also using a rating area to identify the class
offered the HRA (which is an applicable class for the minimum class size
requirement) and is offering one class the HRA and another class the
traditional group
[[Page 64]]
health plan, the minimum class size requirement applies to the class
offered the HRA, and the class offered the HRA fails to satisfy the
minimum class size requirement. Because Plan Sponsor E employs 210
employees, the applicable class size minimum is 20, and the HRA is
offered to only 10 employees.
(vii) Example 7: Employees in State 1 offered traditional group
health plan; employees in State 2 offered HRA--(A) Facts. Plan Sponsor F
employs 45 employees whose work site is in State 1 and 7 employees whose
primary site of employment is in State 2. For 2020, Plan Sponsor F
offers its 45 employees in State 1 a traditional group health plan, and
each of its 7 employees in State 2 an HRA on the same terms.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(vii) (Example 7)
because Plan Sponsor F offers the HRA on the same terms to all employees
with a work site in State 2 and that class is a permissible class under
paragraph (d) of this section. This is because employees whose work
sites are in different rating areas may be considered different classes
and a plan sponsor may create a class of employees by combining classes
of employees, including by combining employees whose work site is in one
rating area with employees whose work site is in a different rating
area, or by combining all employees whose work site is in a state. The
minimum class size requirement does not apply to this paragraph
(f)(1)(vii) (Example 7) because the minimum class size requirement does
not apply if the geographic area defining a class of employees is a
state or a combination of two or more entire states.
(viii) Example 8: Full-time seasonal employees offered HRA; all
other full-time employees offered traditional group health plan; part-
time employees offered no coverage--(A) Facts. Plan Sponsor G employs 6
full-time seasonal employees, 75 full-time employees who are not
seasonal employees, and 5 part-time employees. For 2020, Plan Sponsor G
offers each of its 6 full-time seasonal employees an HRA on the same
terms, its 75 full-time employees who are not seasonal employees a
traditional group health plan, and offers no coverage to its 5 part-time
employees.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(viii) (Example 8)
because full-time seasonal employees and full-time employees who are not
seasonal employees may be considered different classes and Plan Sponsor
G offers the HRA on the same terms to all full-time seasonal employees.
The minimum class size requirement does not apply to the class offered
the HRA in this paragraph (f)(1)(viii) (Example 8) because part-time
employees are not offered coverage and full-time employees are not an
applicable class subject to the minimum class size requirement if part-
time employees are not offered coverage.
(ix) Example 9: Full-time employees in rating area 1 offered
traditional group health plan; full-time employees in rating area 2
offered HRA; part-time employees offered no coverage--(A) Facts. Plan
Sponsor H employs 17 full-time employees and 10 part-time employees
whose work site is in rating area 1 and 552 full-time employees whose
work site is in rating area 2. For 2020, Plan Sponsor H offers its 17
full-time employees in rating area 1 a traditional group health plan and
each of its 552 full-time employees in rating area 2 an HRA on the same
terms. Plan Sponsor H offers no coverage to its 10 part-time employees
in rating area 1. Plan Sponsor H reasonably expects to employ 569
employees on the first day of the HRA plan year.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(ix) (Example 9)
because employees whose work sites are in different rating areas may be
considered different classes and Plan Sponsor H offers the HRA on the
same terms to all full-time employees in rating area 2. The minimum
class size requirement applies to the class offered the HRA in this
paragraph (f)(1)(ix) (Example 9) because the minimum class size
requirement applies to a class based on a geographic area unless the
geographic area is a state or a combination of two or more entire
states. However, the minimum class size requirement applies only to
[[Page 65]]
the class offered the HRA, and Plan Sponsor H offers the HRA to the 552
full-time employees in rating area 2 on the first day of the plan year,
satisfying the minimum class size requirement (because the applicable
class size minimum for Plan Sponsor H is 20).
(x) Example 10: Employees in rating area 1 offered HRA; employees in
rating area 2 offered traditional group health plan--(A) Facts. The
facts are the same as in paragraph (f)(1)(ix) of this section (Example
9) except that Plan Sponsor H offers its 17 full-time employees in
rating area 1 the HRA and offers its 552 full-time employees in rating
area 2 the traditional group health plan.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is not satisfied in this paragraph (f)(1)(x) (Example 10)
because, even though employees whose work sites are in different rating
areas generally may be considered different classes and Plan Sponsor H
offers the HRA on the same terms to all participants in rating area 1,
the HRA fails to satisfy the minimum class size requirement.
Specifically, the minimum class size requirement applies to this
paragraph (f)(1)(x) (Example 10) because the minimum class size
requirement applies to a class based on a geographic area unless the
geographic area is a state or a combination of two or more entire
states. Further, the applicable class size minimum for Plan Sponsor H is
20 employees, and the HRA is only offered to the 17 full-time employees
in rating area 1 on the first day of the HRA plan year.
(xi) Example 11: Employees in State 1 and rating area 1 of State 2
offered HRA; employees in all other rating areas of State 2 offered
traditional group health plan--(A) Facts. For 2020, Plan Sponsor I
offers an HRA on the same terms to a total of 200 employees it employs
with work sites in State 1 and in rating area 1 of State 2. Plan Sponsor
I offers a traditional group health plan to its 150 employees with work
sites in other rating areas in State 2. Plan Sponsor I reasonably
expects to employ 350 employees on the first day of the HRA plan year.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(xi) (Example 11).
Plan Sponsor I may treat all of the employees with a work site in State
1 and rating area 1 of State 2 as a class of employees because employees
whose work sites are in different rating areas may be considered
different classes and a plan sponsor may create a class of employees by
combining classes of employees, including by combining employees whose
work site is in one rating area with a class of employees whose work
site is in a different rating area. The minimum class size requirement
applies to the class of employees offered the HRA (made up of employees
in State 1 and in rating area 1 of State 2) because the minimum class
size requirement applies to a class based on a geographic area unless
the geographic area is a state or a combination of two or more entire
states. In this case, the class is made up of a state plus a rating area
which is not the entire state. However, this class satisfies the minimum
class size requirement because the applicable class size minimum for
Plan Sponsor I is 20, and Plan Sponsor I offered the HRA to 200
employees on the first day of the plan year.
(xii) Example 12: Salaried employees offered a traditional group
health plan; hourly employees offered an HRA--(A) Facts. Plan Sponsor J
has 163 salaried employees and 14 hourly employees. For 2020, Plan
Sponsor J offers its 163 salaried employees a traditional group health
plan and each of its 14 hourly employees an HRA on the same terms. Plan
Sponsor J reasonably expects to employ 177 employees on the first day of
the HRA plan year.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is not satisfied in this paragraph (f)(1)(xii) (Example 12)
because, even though salaried and hourly employees generally may be
considered different classes and Plan Sponsor J offers the HRA on the
same terms to all hourly employees, the HRA fails to satisfy the minimum
class size requirement. Specifically, the minimum class size requirement
applies in this paragraph (f)(1)(xii) (Example 12) because employees who
are paid on a salaried basis and employees who are not paid on a
salaried basis are applicable classes subject to the minimum class size
[[Page 66]]
requirement. Because Plan Sponsor J reasonably expects to employ between
100 and 200 employees on the first day of the plan year, the applicable
class size minimum is 10 percent, rounded down to a whole number. Ten
percent of 177 total employees, rounded down to a whole number is 17,
and the HRA is offered to only 14 hourly employees.
(xiii) Example 13: Part-time employees and full-time employees
offered different HRAs; no traditional group health plan offered--(A)
Facts. Plan Sponsor K has 50 full-time employees and 7 part-time
employees. For 2020, Plan Sponsor K offers its 50 full-time employees
$2,000 each in an HRA otherwise provided on the same terms and each of
its 7 part-time employees $500 in an HRA otherwise provided on the same
terms. Plan Sponsor K reasonably expects to employ 57 employees on the
first day of the HRA plan year.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(xiii) (Example 13)
because full-time employees and part-time employees may be treated as
different classes and Plan Sponsor K offers an HRA on the same terms to
all the participants in each class. The minimum class size requirement
does not apply to either the full-time class or the part-time class
because (although in certain circumstances the minimum class size
requirement applies to a class of full-time employees and a class of
part-time employees) Plan Sponsor K does not offer any class of
employees a traditional group health plan, and the minimum class size
requirement applies only when, among other things, at least one class of
employees is offered a traditional group health plan while another class
is offered an HRA.
(xiv) Example 14: No employees offered an HRA--(A) Facts. The facts
are the same facts as in paragraph (f)(1)(xiii) of this section (Example
13), except that Plan Sponsor K offers its full-time employees a
traditional group health plan and does not offer any group health plan
(either a traditional group health plan or an HRA) to its part-time
employees.
(B) Conclusion. The regulations set forth under this section do not
apply to Plan Sponsor K because Plan Sponsor K does not offer an
individual coverage HRA to any employee.
(xv) Example 15: Full-time employees offered traditional group
health plan; part-time employees offered HRA--(A) Facts. The facts are
the same as in paragraph (f)(1)(xiii) of this section (Example 13),
except that Plan Sponsor K offers its full-time employees a traditional
group health plan and offers each of its part-time employees $500 in an
HRA and otherwise on the same terms.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is not satisfied in this paragraph (f)(1)(xv) (Example 15)
because, even though the full-time employees and the part-time employees
generally may be treated as different classes, in this paragraph
(f)(1)(xv) (Example 15), the minimum class size requirement applies to
the part-time employees, and it is not satisfied. Specifically, the
minimum class size requirement applies to the part-time employees
because that requirement applies to an applicable class offered an HRA
when one class is offered a traditional group health plan while another
class is offered an HRA, and to the part-time and full-time employee
classes when one of those classes is offered a traditional group health
plan while the other is offered an HRA. Because Plan Sponsor K
reasonably expects to employ fewer than 100 employees on the first day
of the HRA plan year, the applicable class size minimum for Plan Sponsor
K is 10 employees, but Plan Sponsor K offered the HRA only to its 7
part-time employees.
(xvi) Example 16: Satisfying minimum class size requirement based on
employees offered HRA--(A) Facts. Plan Sponsor L employs 78 full-time
employees and 12 part-time employees. For 2020, Plan Sponsor L offers
its 78 full-time employees a traditional group health plan and each of
its 12 part-times employees an HRA on the same terms. Only 6 part-time
employees enroll in the HRA. Plan Sponsor L reasonably expects to employ
fewer than 100 employees on the first day of the HRA plan year.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(xvi) (Example 16)
because full-time employees and part-time employees
[[Page 67]]
may be treated as different classes, Plan Sponsor L offers an HRA on the
same terms to all the participants in the part-time class, and the
minimum class size requirement is satisfied. Specifically, whether a
class of employees satisfies the applicable class size minimum is
determined as of the first day of the plan year based on the number of
employees in a class that is offered an HRA, not on the number of
employees who enroll in the HRA. The applicable class size minimum for
Plan Sponsor L is 10 employees, and Plan Sponsor L offered the HRA to
its 12 part-time employees.
(xvii) Example 17: Student employees offered student premium
reduction arrangements and same terms requirement--(A) Facts. Plan
Sponsor M is an institution of higher education that offers each of its
part-time employees an HRA on the same terms, except that it offers its
part-time employees who are student employees a student premium
reduction arrangement, and the student premium reduction arrangement
provides different amounts to different part-time student employees.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(1)(xvii) (Example 17)
because Plan Sponsor M offers the HRA on the same terms to its part-time
employees who are not students and because the part-time student
employees offered a student premium reduction arrangement (and their
varying HRAs) are not taken into account as part-time employees for
purposes of determining whether a class of employees is offered an HRA
on the same terms.
(xiii) Example 18: Student employees offered student premium
reduction arrangements and minimum class size requirement--(A) Facts.
Plan Sponsor N is an institution of higher education with 25 hourly
employees. Plan Sponsor N offers 15 of its hourly employees, who are
student employees, a student premium reduction arrangement and it wants
to offer its other 10 hourly employees an HRA for 2022. Plan Sponsor N
offers its salaried employees a traditional group health plan. Plan
Sponsor N reasonably expects to have 250 employees on the first day of
the 2022 HRA plan year, 15 of which will have offers of student premium
reduction arrangements.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is not satisfied in this paragraph (f)(1)(xviii) (Example
18). The minimum class size requirement will apply to the class of
hourly employees to which Plan Sponsor N wants to offer the HRA because
Plan Sponsor N offers a class of employees a traditional group health
plan and another class the HRA, and the minimum class size requirement
generally applies to a class of hourly employees offered an HRA. Plan
Sponsor N's applicable class size minimum is 20 because Plan Sponsor N
reasonably expects to employ 235 employees on the first day of the plan
year (250 employees minus 15 employees receiving a student premium
reduction arrangement). Plan Sponsor N may not offer the HRA to its
hourly employees because the 10 employees offered the HRA as of the
first day of the plan year does not satisfy the applicable class size
minimum.
(2) Examples regarding special rule for new hires. The following
examples illustrate the provisions of paragraph (c)(3) of this section,
taking into account the provisions of paragraph (d) of this section, in
particular the special rule for new hires under paragraph (d)(5) of this
section. In each example, the HRA is an individual coverage HRA that has
a calendar year plan year and may reimburse any medical care expenses,
including premiums for individual health insurance coverage. The
examples also assume that no participants or dependents are Medicare
beneficiaries.
(i) Example 1: Application of special rule for new hires to all
employees--(A) Facts. For 2021, Plan Sponsor A offers all employees a
traditional group health plan. For 2022, Plan Sponsor A offers all
employees hired on or after January 1, 2022, an HRA on the same terms
and continues to offer the traditional group health plan to employees
hired before that date. On the first day of the 2022 plan year, Plan
Sponsor A has 2 new hires who are offered the HRA.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(2)(i) (Example 1)
because, under the
[[Page 68]]
special rule for new hires in paragraph (d)(5) of this section, the
employees newly hired on and after January 1, 2022, may be treated as a
new hire subclass, Plan Sponsor A offers the HRA on the same terms to
all participants in the new hire subclass, and the minimum class size
requirement does not apply to the new hire subclass.
(ii) Example 2: Application of special rule for new hires to full-
time employees--(A) Facts. For 2021, Plan Sponsor B offers a traditional
group health plan to its full-time employees and does not offer any
coverage to its part-time employees. For 2022, Plan Sponsor B offers
full-time employees hired on or after January 1, 2022, an HRA on the
same terms, continues to offer its full-time employees hired before that
date a traditional group health plan, and continues to offer no coverage
to its part-time employees. On the first day of the 2022 plan year, Plan
Sponsor B has 2 new hire, full-time employees who are offered the HRA.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(2)(ii) (Example 2)
because, under the special rule for new hires in paragraph (d)(5) of
this section, the full-time employees newly hired on and after January
1, 2022, may be treated as a new hire subclass and Plan Sponsor B offers
the HRA on the same terms to all participants in the new hire subclass.
The minimum class size requirement does not apply to the new hire
subclass.
(iii) Example 3: Special rule for new hires impermissibly applied
retroactively--(A) Facts. For 2025, Plan Sponsor C offers a traditional
group health plan to its full-time employees. For 2026, Plan Sponsor C
wants to offer an HRA to its full-time employees hired on and after
January 1, 2023, while continuing to offer a traditional group health
plan to its full-time employees hired before January 1, 2023.
(B) Conclusion. The special rule for new hires under paragraph
(d)(5) of this section does not apply in this paragraph (f)(2)(iii)
(Example 3) because the rule must be applied prospectively. That is,
Plan Sponsor C may not, in 2026, choose to apply the special rule for
new hires retroactive to 2023. If Plan Sponsor C were to offer an HRA in
this way, it would fail to satisfy the conditions under paragraphs
(c)(2) and (3) of this section because the new hire subclass would not
be treated as a subclass for purposes of applying those rules and,
therefore, all full-time employees would be treated as one class to
which either a traditional group health plan or an HRA could be offered,
but not both.
(iv) Example 4: Permissible second application of the special rule
for new hires to the same class of employees--(A) Facts. For 2021, Plan
Sponsor D offers all of its full-time employees a traditional group
health plan. For 2022, Plan Sponsor D applies the special rule for new
hires and offers an HRA on the same terms to all employees hired on and
after January 1, 2022, and continues to offer a traditional group health
plan to full-time employees hired before that date. For 2025, Plan
Sponsor D discontinues use of the special rule for new hires, and again
offers all full-time employees a traditional group health plan. In 2030,
Plan Sponsor D decides to apply the special rule for new hires to the
full-time employee class again, offering an HRA to all full-time
employees hired on and after January 1, 2030, on the same terms, while
continuing to offer employees hired before that date a traditional group
health plan.
(B) Conclusion. Plan Sponsor D has permissibly applied the special
rule for new hires and is in compliance with the requirements of
paragraphs (c)(2) and (3) of this section.
(v) Example 5: Impermissible second application of the special rule
for new hires to the same class of employees--(A) Facts. The facts are
the same as in paragraph (f)(2)(iv) of this section (Example 4), except
that for 2025, Plan Sponsor D discontinues use of the special rule for
new hires by offering all full-time employees an HRA on the same terms.
Further, for 2030, Plan Sponsor D wants to continue to offer an HRA on
the same terms to all full-time employees hired before January 1, 2030,
and to offer all full-time employees hired on or after January 1, 2030,
an HRA in a different amount.
(B) Conclusion. Plan Sponsor D may not apply the special rule for
new hires for 2030 to the class of full-time employees being offered an
HRA because
[[Page 69]]
the special rule for new hires may only be applied to a class that is
being offered a traditional group health plan.
(vi) Example 6: New full-time employees offered different HRAs in
different rating areas--(A) Facts. Plan Sponsor E has work sites in
rating area 1, rating area 2, and rating area 3. For 2021, Plan Sponsor
E offers its full-time employees a traditional group health plan. For
2022, Plan Sponsor E offers its full-time employees hired on or after
January 1, 2022, in rating area 1 an HRA of $3,000, its full-time
employees hired on or after January 1, 2022, in rating area 2 an HRA of
$5,000, and its full-time employees hired on or after January 1, 2022,
in rating area 3 an HRA of $7,000. Within each class offered an HRA,
Plan Sponsor E offers the HRA on the same terms. Plan Sponsor E offers
its full-time employees hired prior to January 1, 2022, in each of those
classes a traditional group health plan. On the first day of the 2022
plan year, there is one new hire, full-time employee in rating area 1,
three new hire, full-time employees in rating area 2, and 10 new hire-
full-time employees in rating area 3.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(2)(vi) (Example 6)
because, under the special rule for new hires in paragraph (d)(5) of
this section, the full-time employees in each of the three rating areas
newly hired on and after January 1, 2022, may be treated as three new
hire subclasses and Plan Sponsor E offers the HRA on the same terms to
all participants in the new hire subclasses. Further, the minimum class
size requirement does not apply to the new hire subclasses.
(vii) Example 7: New full-time employee class subdivided based on
rating area--(A) Facts. Plan Sponsor F offers its full-time employees
hired on or after January 1, 2022, an HRA on the same terms and it
continues to offer its full-time employees hired before that date a
traditional group health plan. Plan Sponsor F offers no coverage to its
part-time employees. For the 2025 plan year, Plan Sponsor F wants to
subdivide the full-time new hire subclass so that those whose work site
is in rating area 1 will be offered the traditional group health plan
and those whose work site is in rating area 2 will continue to receive
the HRA. Plan Sponsor F reasonably expects to employ 219 employees on
January 1, 2025. As of January 1, 2025, Plan Sponsor F has 15 full-time
employees whose work site in in rating area 2 and who were hired between
January 1, 2022, and January 1, 2025.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is not satisfied in this paragraph (f)(2)(vii) (Example 7)
because the new hire subclass has been subdivided in a manner that is
subject to the minimum class size requirement, and the class offered the
HRA fails to satisfy the minimum class size requirement. Specifically,
once the new hire subclass is subdivided the general rules for applying
the minimum class size requirement apply to the employees offered the
HRA in the new hire subclass. In this case, because the subdivision of
the new hire full-time subclass is based on rating areas; a class based
on rating areas is an applicable class subject to the minimum class size
requirement; and the employees in one rating area are to be offered the
HRA, while the employees in the other rating area are offered the
traditional group health plan, the minimum class size requirement would
apply on and after the date of the subdivision. Further, the minimum
class size requirement would not be satisfied, because the applicable
class size minimum for Plan Sponsor F would be 20, and only 15 employees
in rating area 2 would be offered the HRA.
(viii) Example 8: New full-time employee class subdivided based on
state--(A) Facts. The facts are the same as in paragraph (f)(2)(vii) of
this section (Example 7), except that for the 2025 plan year, Plan
Sponsor F intends to subdivide the new hire, full-time class so that
those in State 1 will be offered the traditional group health plan and
those in State 2 will each be offered an HRA on the same terms.
(B) Conclusion. The same terms requirement of paragraph (c)(3) of
this section is satisfied in this paragraph (f)(2)(viii) (Example 8)
because even though the new hire subclass has been subdivided, it has
been subdivided in a
[[Page 70]]
manner that is not subject to the minimum class size requirement as the
subdivision is based on the entire state.
(ix) Example 9: New full-time employees and part-time employees
offered HRA--(A) Facts. In 2021, Plan Sponsor G offers its full-time
employees a traditional group health plan and does not offer coverage to
its part-time employees. For the 2022 plan year, Plan Sponsor G offers
its full-time employees hired on or after January 1, 2022, and all of
its part-time employees, including those hired before January 1, 2022,
and those hired on and after January 1, 2022, an HRA on the same terms,
and it continues to offer its full-time employees hired before January
1, 2022, a traditional group health plan.
(B) Conclusion. The minimum class size requirement applies to the
part-time employees offered the HRA in 2022 because the class is being
offered an HRA; the special rule for new hires does not apply (because
this class was not previously offered a traditional group health plan)
and so it is not a new hire subclass exempt from the minimum class size
requirement; another class of employees (that is, full-time hired before
January 1, 2022) are being offered a traditional group health plan; and
the part-time employee class is generally an applicable classes that is
subject to the minimum class size requirement. However, because the
full-time, new hire subclass is based on the special rule for new hires,
the minimum class size requirement does not apply to full-time new hires
offered an HRA in 2022.
(g) Applicability date. This section applies to plan years beginning
on or after January 1, 2020.
[84 FR 29014, June 20, 2019]
Sec. 146.125 Applicability dates.
Section 144.103 of this subchapter and Sec. Sec. 146.111 through
146.119, 146.143, and 146.145 are applicable for plan years beginning on
or after July 1, 2005. Notwithstanding the previous sentence, for short-
term, limited-duration insurance sold or issued on or after September 1,
2024, the definition of short-term, limited-duration insurance in Sec.
144.103 of this subchapter applies for coverage periods beginning on or
after September 1, 2024. For short-term, limited-duration insurance sold
or issued before September 1, 2024 (including any subsequent renewal or
extension consistent with applicable law), the definition of short-term,
limited-duration insurance in 45 CFR 144.103, revised as of October 1,
2023, continues to apply, except that paragraph (1)(ii) of the
definition of short-term, limited-duration insurance in Sec. 144.103
applies for coverage periods beginning on or after September 1, 2024.
[89 FR 23418, Apr. 3, 2024]
Subpart C_Requirements Related to Benefits
Sec. 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 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
[[Page 71]]
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
[[Page 72]]
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
[[Page 73]]
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-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, 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 out-of-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
[[Page 74]]
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 Sec. 146.180 to be
exempted from the requirements of this section, the group health plan is
not subject to this paragraph (d).
(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 2725 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) Fully-insured 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 2725 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 2725 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 2725
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 2724 (a) of the PHS Act. The preemption
provisions
[[Page 75]]
contained in section 2724 (a)(1) of the PHS Act and Sec. 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 2725 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 2725 of the PHS Act and this
section.
(f) Applicability date. Section 2725 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.
[73 FR 62424, Oct. 20, 2008, as amended at 75 FR 27138, May 13, 2010]
Sec. 146.136 Parity in mental health and substance use disorder benefits.
(a) Meaning of terms. For purposes of this section, except where the
context clearly indicates otherwise, the following terms have the
meanings indicated:
Aggregate lifetime dollar limit means a dollar limitation on the
total amount of specified benefits that may be paid under a group health
plan (or health insurance coverage offered in connection with such a
plan) for any coverage unit.
Annual dollar limit means a dollar limitation on the total amount of
specified benefits that may be paid in a 12-month period under a group
health plan (or health insurance coverage offered in connection with
such a plan) for any coverage unit.
Coverage unit means coverage unit as described in paragraph
(c)(1)(iv) of this section.
Cumulative financial requirements are financial requirements that
determine whether or to what extent benefits are provided based on
accumulated amounts and include deductibles and out-of-pocket maximums.
(However, cumulative financial requirements do not include aggregate
lifetime or annual dollar limits because these two terms are excluded
from the meaning of financial requirements.)
Cumulative quantitative treatment limitations are treatment
limitations that determine whether or to what extent benefits are
provided based on accumulated amounts, such as annual or lifetime day or
visit limits.
Financial requirements include deductibles, copayments, coinsurance,
or out-of-pocket maximums. Financial requirements do not include
aggregate lifetime or annual dollar limits.
Medical/surgical benefits means benefits with respect to items or
services for medical conditions or surgical procedures, as defined under
the terms of the plan or health insurance coverage and in accordance
with applicable Federal and State law, but does not include mental
health or substance use disorder benefits. Any condition defined by the
plan or coverage as being or as not being a medical/surgical condition
must be defined to be consistent with generally recognized independent
standards of current medical practice (for example, the most current
version of the International Classification of Diseases (ICD) or State
guidelines).
Mental health benefits means benefits with respect to items or
services for mental health conditions, as defined under the terms of the
plan or health insurance coverage and in accordance with applicable
Federal and State law. Any condition defined by the plan or
[[Page 76]]
coverage as being or as not being a mental health condition must be
defined to be consistent with generally recognized independent standards
of current medical practice (for example, the most current version of
the Diagnostic and Statistical Manual of Mental Disorders (DSM), the
most current version of the ICD, or State guidelines).
Substance use disorder benefits means benefits with respect to items
or services for substance use disorders, as defined under the terms of
the plan or health insurance coverage and in accordance with applicable
Federal and State law. Any disorder defined by the plan as being or as
not being a substance use disorder must be defined to be consistent with
generally recognized independent standards of current medical practice
(for example, the most current version of the DSM, the most current
version of the ICD, or State guidelines).
Treatment limitations include limits on benefits based on the
frequency of treatment, number of visits, days of coverage, days in a
waiting period, or other similar limits on the scope or duration of
treatment. Treatment limitations include both quantitative treatment
limitations, which are expressed numerically (such as 50 outpatient
visits per year), and nonquantitative treatment limitations, which
otherwise limit the scope or duration of benefits for treatment under a
plan or coverage. (See paragraph (c)(4)(ii) of this section for an
illustrative list of nonquantitative treatment limitations.) A permanent
exclusion of all benefits for a particular condition or disorder,
however, is not a treatment limitation for purposes of this definition.
(b) Parity requirements with respect to aggregate lifetime and
annual dollar limits. This paragraph (b) details the application of the
parity requirements with respect to aggregate lifetime and annual dollar
limits. This paragraph (b) does not address the provisions of PHS Act
section 2711, which prohibit imposing lifetime and annual limits on the
dollar value of essential health benefits. For more information, see
Sec. 147.126 of this subchapter.
(1) General--(i) General parity requirement. A group health plan (or
health insurance coverage offered by an issuer in connection with a
group health plan) that provides both medical/surgical benefits and
mental health or substance use disorder benefits must comply with
paragraph (b)(2), (b)(3), or (b)(5) of this section.
(ii) Exception. The rule in paragraph (b)(1)(i) of this section does
not apply if a plan (or health insurance coverage) satisfies the
requirements of paragraph (f) or (g) of this section (relating to
exemptions for small employers and for increased cost).
(2) Plan with no limit or limits on less than one-third of all
medical/surgical benefits. If a plan (or health insurance coverage) does
not include an aggregate lifetime or annual dollar limit on any medical/
surgical benefits or includes an aggregate lifetime or annual dollar
limit that applies to less than one-third of all medical/surgical
benefits, it may not impose an aggregate lifetime or annual dollar
limit, respectively, on mental health or substance use disorder
benefits.
(3) Plan with a limit on at least two-thirds of all medical/surgical
benefits. If a plan (or health insurance coverage) includes an aggregate
lifetime or annual dollar limit on at least two-thirds of all medical/
surgical benefits, it must either--
(i) Apply the aggregate lifetime or annual dollar limit both to the
medical/surgical benefits to which the limit would otherwise apply and
to mental health or substance use disorder benefits in a manner that
does not distinguish between the medical/surgical benefits and mental
health or substance use disorder benefits; or
(ii) Not include an aggregate lifetime or annual dollar limit on
mental health or substance use disorder benefits that is less than the
aggregate lifetime or annual dollar limit, respectively, on medical/
surgical benefits. (For cumulative limits other than aggregate lifetime
or annual dollar limits, see paragraph (c)(3)(v) of this section
prohibiting separately accumulating cumulative financial requirements or
cumulative quantitative treatment limitations.)
(4) Determining one-third and two-thirds of all medical/surgical
benefits. For
[[Page 77]]
purposes of this paragraph (b), the determination of whether the portion
of medical/surgical benefits subject to an aggregate lifetime or annual
dollar limit represents one-third or two-thirds of all medical/surgical
benefits is based on the dollar amount of all plan payments for medical/
surgical benefits expected to be paid under the plan for the plan year
(or for the portion of the plan year after a change in plan benefits
that affects the applicability of the aggregate lifetime or annual
dollar limits). Any reasonable method may be used to determine whether
the dollar amount expected to be paid under the plan will constitute
one-third or two-thirds of the dollar amount of all plan payments for
medical/surgical benefits.
(5) Plan not described in paragraph (b)(2) or (b)(3) of this
section--(i) In general. A group health plan (or health insurance
coverage) that is not described in paragraph (b)(2) or (b)(3) of this
section with respect to aggregate lifetime or annual dollar limits on
medical/surgical benefits, must either--
(A) Impose no aggregate lifetime or annual dollar limit, as
appropriate, on mental health or substance use disorder benefits; or
(B) Impose an aggregate lifetime or annual dollar limit on mental
health or substance use disorder benefits that is no less than an
average limit calculated for medical/surgical benefits in the following
manner. The average limit is calculated by taking into account the
weighted average of the aggregate lifetime or annual dollar limits, as
appropriate, that are applicable to the categories of medical/surgical
benefits. Limits based on delivery systems, such as inpatient/outpatient
treatment or normal treatment of common, low-cost conditions (such as
treatment of normal births), do not constitute categories for purposes
of this paragraph (b)(5)(i)(B). In addition, for purposes of determining
weighted averages, any benefits that are not within a category that is
subject to a separately-designated dollar limit under the plan are taken
into account as a single separate category by using an estimate of the
upper limit on the dollar amount that a plan may reasonably be expected
to incur with respect to such benefits, taking into account any other
applicable restrictions under the plan.
(ii) Weighting. For purposes of this paragraph (b)(5), the weighting
applicable to any category of medical/surgical benefits is determined in
the manner set forth in paragraph (b)(4) of this section for determining
one-third or two-thirds of all medical/surgical benefits.
(c) Parity requirements with respect to financial requirements and
treatment limitations--(1) Clarification of terms--(i) Classification of
benefits. When reference is made in this paragraph (c) to a
classification of benefits, the term ``classification'' means a
classification as described in paragraph (c)(2)(ii) of this section.
(ii) Type of financial requirement or treatment limitation. When
reference is made in this paragraph (c) to a type of financial
requirement or treatment limitation, the reference to type means its
nature. Different types of financial requirements include deductibles,
copayments, coinsurance, and out-of-pocket maximums. Different types of
quantitative treatment limitations include annual, episode, and lifetime
day and visit limits. See paragraph (c)(4)(ii) of this section for an
illustrative list of nonquantitative treatment limitations.
(iii) Level of a type of financial requirement or treatment
limitation. When reference is made in this paragraph (c) to a level of a
type of financial requirement or treatment limitation, level refers to
the magnitude of the type of financial requirement or treatment
limitation. For example, different levels of coinsurance include 20
percent and 30 percent; different levels of a copayment include $15 and
$20; different levels of a deductible include $250 and $500; and
different levels of an episode limit include 21 inpatient days per
episode and 30 inpatient days per episode.
(iv) Coverage unit. When reference is made in this paragraph (c) to
a coverage unit, coverage unit refers to the way in which a plan (or
health insurance coverage) groups individuals for purposes of
determining benefits, or premiums or contributions. For example,
different coverage units include self-only, family, and employee-plus-
spouse.
[[Page 78]]
(2) General parity requirement--(i) General rule. A group health
plan (or health insurance coverage offered by an issuer in connection
with a group health plan) that provides both medical/surgical benefits
and mental health or substance use disorder benefits may not apply any
financial requirement or treatment limitation to mental health or
substance use disorder benefits in any classification that is more
restrictive than the predominant financial requirement or treatment
limitation of that type applied to substantially all medical/surgical
benefits in the same classification. Whether a financial requirement or
treatment limitation is a predominant financial requirement or treatment
limitation that applies to substantially all medical/surgical benefits
in a classification is determined separately for each type of financial
requirement or treatment limitation. The application of the rules of
this paragraph (c)(2) to financial requirements and quantitative
treatment limitations is addressed in paragraph (c)(3) of this section;
the application of the rules of this paragraph (c)(2) to nonquantitative
treatment limitations is addressed in paragraph (c)(4) of this section.
(ii) Classifications of benefits used for applying rules--(A) In
general. If a plan (or health insurance coverage) provides mental health
or substance use disorder benefits in any classification of benefits
described in this paragraph (c)(2)(ii), mental health or substance use
disorder benefits must be provided in every classification in which
medical/surgical benefits are provided. In determining the
classification in which a particular benefit belongs, a plan (or health
insurance issuer) must apply the same standards to medical/surgical
benefits and to mental health or substance use disorder benefits. To the
extent that a plan (or health insurance coverage) provides benefits in a
classification and imposes any separate financial requirement or
treatment limitation (or separate level of a financial requirement or
treatment limitation) for benefits in the classification, the rules of
this paragraph (c) apply separately with respect to that classification
for all financial requirements or treatment limitations (illustrated in
examples in paragraph (c)(2)(ii)(C) of this section). The following
classifications of benefits are the only classifications used in
applying the rules of this paragraph (c):
(1) Inpatient, in-network. Benefits furnished on an inpatient basis
and within a network of providers established or recognized under a plan
or health insurance coverage. See special rules for plans with multiple
network tiers in paragraph (c)(3)(iii) of this section.
(2) Inpatient, out-of-network. Benefits furnished on an inpatient
basis and outside any network of providers established or recognized
under a plan or health insurance coverage. This classification includes
inpatient benefits under a plan (or health insurance coverage) that has
no network of providers.
(3) Outpatient, in-network. Benefits furnished on an outpatient
basis and within a network of providers established or recognized under
a plan or health insurance coverage. See special rules for office visits
and plans with multiple network tiers in paragraph (c)(3)(iii) of this
section.
(4) Outpatient, out-of-network. Benefits furnished on an outpatient
basis and outside any network of providers established or recognized
under a plan or health insurance coverage. This classification includes
outpatient benefits under a plan (or health insurance coverage) that has
no network of providers. See special rules for office visits in
paragraph (c)(3)(iii) of this section.
(5) Emergency care. Benefits for emergency care.
(6) Prescription drugs. Benefits for prescription drugs. See special
rules for multi-tiered prescription drug benefits in paragraph
(c)(3)(iii) of this section.
(B) Application to out-of-network providers. See paragraph
(c)(2)(ii)(A) of this section, under which a plan (or health insurance
coverage) that provides mental health or substance use disorder benefits
in any classification of benefits must provide mental health or
substance use disorder benefits in every classification in which
medical/surgical benefits are provided, including out-of-network
classifications.
(C) Examples. The rules of this paragraph (c)(2)(ii) are illustrated
by the following examples. In each example,
[[Page 79]]
the group health plan is subject to the requirements of this section and
provides both medical/surgical benefits and mental health and substance
use disorder benefits.
Example 1. (i) Facts. A group health plan offers inpatient and
outpatient benefits and does not contract with a network of providers.
The plan imposes a $500 deductible on all benefits. For inpatient
medical/surgical benefits, the plan imposes a coinsurance requirement.
For outpatient medical/surgical benefits, the plan imposes copayments.
The plan imposes no other financial requirements or treatment
limitations.
(ii) Conclusion. In this Example 1, because the plan has no network
of providers, all benefits provided are out-of-network. Because
inpatient, out-of-network medical/surgical benefits are subject to
separate financial requirements from outpatient, out-of-network medical/
surgical benefits, the rules of this paragraph (c) apply separately with
respect to any financial requirements and treatment limitations,
including the deductible, in each classification.
Example 2. (i) Facts. A plan imposes a $500 deductible on all
benefits. The plan has no network of providers. The plan generally
imposes a 20 percent coinsurance requirement with respect to all
benefits, without distinguishing among inpatient, outpatient, emergency
care, or prescription drug benefits. The plan imposes no other financial
requirements or treatment limitations.
(ii) Conclusion. In this Example 2, because the plan does not impose
separate financial requirements (or treatment limitations) based on
classification, the rules of this paragraph (c) apply with respect to
the deductible and the coinsurance across all benefits.
Example 3. (i) Facts. Same facts as Example 2, except the plan
exempts emergency care benefits from the 20 percent coinsurance
requirement. The plan imposes no other financial requirements or
treatment limitations.
(ii) Conclusion. In this Example 3, because the plan imposes
separate financial requirements based on classifications, the rules of
this paragraph (c) apply with respect to the deductible and the
coinsurance separately for--
(A) Benefits in the emergency care classification; and
(B) All other benefits.
Example 4. (i) Facts. Same facts as Example 2, except the plan also
imposes a preauthorization requirement for all inpatient treatment in
order for benefits to be paid. No such requirement applies to outpatient
treatment.
(ii) Conclusion. In this Example 4, because the plan has no network
of providers, all benefits provided are out-of-network. Because the plan
imposes a separate treatment limitation based on classifications, the
rules of this paragraph (c) apply with respect to the deductible and
coinsurance separately for--
(A) Inpatient, out-of-network benefits; and
(B) All other benefits.
(3) Financial requirements and quantitative treatment limitations--
(i) Determining ``substantially all'' and ``predominant''--(A)
Substantially all. For purposes of this paragraph (c), a type of
financial requirement or quantitative treatment limitation is considered
to apply to substantially all medical/surgical benefits in a
classification of benefits if it applies to at least two-thirds of all
medical/surgical benefits in that classification. (For this purpose,
benefits expressed as subject to a zero level of a type of financial
requirement are treated as benefits not subject to that type of
financial requirement, and benefits expressed as subject to a
quantitative treatment limitation that is unlimited are treated as
benefits not subject to that type of quantitative treatment limitation.)
If a type of financial requirement or quantitative treatment limitation
does not apply to at least two-thirds of all medical/surgical benefits
in a classification, then that type cannot be applied to mental health
or substance use disorder benefits in that classification.
(B) Predominant. (1) If a type of financial requirement or
quantitative treatment limitation applies to at least two-thirds of all
medical/surgical benefits in a classification as determined under
paragraph (c)(3)(i)(A) of this section, the level of the financial
requirement or quantitative treatment limitation that is considered the
predominant level of that type in a classification of benefits is the
level that applies to more than one-half of medical/surgical benefits in
that classification subject to the financial requirement or quantitative
treatment limitation.
(2) If, with respect to a type of financial requirement or
quantitative treatment limitation that applies to at least two-thirds of
all medical/surgical benefits in a classification, there is no single
level that applies to more than one-half of medical/surgical benefits in
the classification subject to the financial requirement or quantitative
treatment
[[Page 80]]
limitation, the plan (or health insurance issuer) may combine levels
until the combination of levels applies to more than one-half of
medical/surgical benefits subject to the financial requirement or
quantitative treatment limitation in the classification. The least
restrictive level within the combination is considered the predominant
level of that type in the classification. (For this purpose, a plan may
combine the most restrictive levels first, with each less restrictive
level added to the combination until the combination applies to more
than one-half of the benefits subject to the financial requirement or
treatment limitation.)
(C) Portion based on plan payments. For purposes of this paragraph
(c), the determination of the portion of medical/surgical benefits in a
classification of benefits subject to a financial requirement or
quantitative treatment limitation (or subject to any level of a
financial requirement or quantitative treatment limitation) is based on
the dollar amount of all plan payments for medical/surgical benefits in
the classification expected to be paid under the plan for the plan year
(or for the portion of the plan year after a change in plan benefits
that affects the applicability of the financial requirement or
quantitative treatment limitation).
(D) Clarifications for certain threshold requirements. For any
deductible, the dollar amount of plan payments includes all plan
payments with respect to claims that would be subject to the deductible
if it had not been satisfied. For any out-of-pocket maximum, the dollar
amount of plan payments includes all plan payments associated with out-
of-pocket payments that are taken into account towards the out-of-pocket
maximum as well as all plan payments associated with out-of-pocket
payments that would have been made towards the out-of-pocket maximum if
it had not been satisfied. Similar rules apply for any other thresholds
at which the rate of plan payment changes. (See also PHS Act section
2707(b) and Affordable Care Act section 1302(c), which establish
limitations on annual deductibles for non-grandfathered health plans in
the small group market and annual limitations on out-of-pocket maximums
for all non-grandfathered health plans.)
(E) Determining the dollar amount of plan payments. Subject to
paragraph (c)(3)(i)(D) of this section, any reasonable method may be
used to determine the dollar amount expected to be paid under a plan for
medical/surgical benefits subject to a financial requirement or
quantitative treatment limitation (or subject to any level of a
financial requirement or quantitative treatment limitation).
(ii) Application to different coverage units. If a plan (or health
insurance coverage) applies different levels of a financial requirement
or quantitative treatment limitation to different coverage units in a
classification of medical/surgical benefits, the predominant level that
applies to substantially all medical/surgical benefits in the
classification is determined separately for each coverage unit.
(iii) Special rules--(A) Multi-tiered prescription drug benefits. If
a plan (or health insurance coverage) applies different levels of
financial requirements to different tiers of prescription drug benefits
based on reasonable factors determined in accordance with the rules in
paragraph (c)(4)(i) of this section (relating to requirements for
nonquantitative treatment limitations) and without regard to whether a
drug is generally prescribed with respect to medical/surgical benefits
or with respect to mental health or substance use disorder benefits, the
plan (or health insurance coverage) satisfies the parity requirements of
this paragraph (c) with respect to prescription drug benefits.
Reasonable factors include cost, efficacy, generic versus brand name,
and mail order versus pharmacy pick-up.
(B) Multiple network tiers. If a plan (or health insurance coverage)
provides benefits through multiple tiers of in-network providers (such
as an in-network tier of preferred providers with more generous cost-
sharing to participants than a separate in-network tier of participating
providers), the plan may divide its benefits furnished on an in-network
basis into sub-classifications that reflect network tiers, if the
tiering is based on reasonable factors determined in accordance with the
[[Page 81]]
rules in paragraph (c)(4)(i) of this section (such as quality,
performance, and market standards) and without regard to whether a
provider provides services with respect to medical/surgical benefits or
mental health or substance use disorder benefits. After the sub-
classifications are established, the plan or issuer may not impose any
financial requirement or treatment limitation on mental health or
substance use disorder benefits in any sub-classification that is more
restrictive than the predominant financial requirement or treatment
limitation that applies to substantially all medical/surgical benefits
in the sub-classification using the methodology set forth in paragraph
(c)(3)(i) of this section.
(C) Sub-classifications permitted for office visits, separate from
other outpatient services. For purposes of applying the financial
requirement and treatment limitation rules of this paragraph (c), a plan
or issuer may divide its benefits furnished on an outpatient basis into
the two sub-classifications described in this paragraph (c)(3)(iii)(C).
After the sub-classifications are established, the plan or issuer may
not impose any financial requirement or quantitative treatment
limitation on mental health or substance use disorder benefits in any
sub-classification that is more restrictive than the predominant
financial requirement or quantitative treatment limitation that applies
to substantially all medical/surgical benefits in the sub-classification
using the methodology set forth in paragraph (c)(3)(i) of this section.
Sub-classifications other than these special rules, such as separate
sub-classifications for generalists and specialists, are not permitted.
The two sub-classifications permitted under this paragraph
(c)(3)(iii)(C) are:
(1) Office visits (such as physician visits), and
(2) All other outpatient items and services (such as outpatient
surgery, facility charges for day treatment centers, laboratory charges,
or other medical items).
(iv) Examples. The rules of paragraphs (c)(3)(i), (c)(3)(ii), and
(c)(3)(iii) of this section are illustrated by the following examples.
In each example, the group health plan is subject to the requirements of
this section and provides both medical/surgical benefits and mental
health and substance use disorder benefits.
Example 1. (i) Facts. For inpatient, out-of-network medical/surgical
benefits, a group health plan imposes five levels of coinsurance. Using
a reasonable method, the plan projects its payments for the upcoming
year as follows:
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Coinsurance rate................ 0% 10% 15% 20% 30% Total.
Projected payments.............. $200x $100x $450x $100x $150x $1,000x.
Percent of total plan costs..... 20% 10% 45% 10% 15%
Percent subject to coinsurance N/A 12.5% 56.25% 12.5% 18.75%
level. (100x/800x) (450x/800x) (100x/800x) (150x/800x)
----------------------------------------------------------------------------------------------------------------
The plan projects plan costs of $800x to be subject to coinsurance
($100x + $450x + $100x + $150x = $800x). Thus, 80 percent ($800x/
$1,000x) of the benefits are projected to be subject to coinsurance, and
56.25 percent of the benefits subject to coinsurance are projected to be
subject to the 15 percent coinsurance level.
(ii) Conclusion. In this Example 1, the two-thirds threshold of the
substantially all standard is met for coinsurance because 80 percent of
all inpatient, out-of-network medical/surgical benefits are subject to
coinsurance. Moreover, the 15 percent coinsurance is the predominant
level because it is applicable to more than one-half of inpatient, out-
of-network medical/surgical benefits subject to the coinsurance
requirement. The plan may not impose any level of coinsurance with
respect to inpatient, out-of-network mental health or substance use
disorder benefits that is more restrictive than the 15 percent level of
coinsurance.
Example 2. (i) Facts. For outpatient, in-network medical/surgical
benefits, a plan imposes five different copayment levels. Using a
reasonable method, the plan projects payments for the upcoming year as
follows:
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Copayment amount................ $0 $10 $15 $20 $50 Total.
Projected payments.............. $200x $200x $200x $300x $100x $1,000x.
Percent of total plan costs..... 20% 20% 20% 30% 10%
[[Page 82]]
Percent subject to copayments... N/A 25% 25% 37.5% 12.5%
(200x/800x) (200x/800x) (300x/800x) (100x/800x)
----------------------------------------------------------------------------------------------------------------
The plan projects plan costs of $800x to be subject to copayments ($200x
+ $200x + $300x + $100x = $800x). Thus, 80 percent ($800x/$1,000x) of
the benefits are projected to be subject to a copayment.
(ii) Conclusion. In this Example 2, the two-thirds threshold of the
substantially all standard is met for copayments because 80 percent of
all outpatient, in-network medical/surgical benefits are subject to a
copayment. Moreover, there is no single level that applies to more than
one-half of medical/surgical benefits in the classification subject to a
copayment (for the $10 copayment, 25%; for the $15 copayment, 25%; for
the $20 copayment, 37.5%; and for the $50 copayment, 12.5%). The plan
can combine any levels of copayment, including the highest levels, to
determine the predominant level that can be applied to mental health or
substance use disorder benefits. If the plan combines the highest levels
of copayment, the combined projected payments for the two highest
copayment levels, the $50 copayment and the $20 copayment, are not more
than one-half of the outpatient, in-network medical/surgical benefits
subject to a copayment because they are exactly one-half ($300x + $100x
= $400x; $400x/$800x = 50%). The combined projected payments for the
three highest copayment levels--the $50 copayment, the $20 copayment,
and the $15 copayment--are more than one-half of the outpatient, in-
network medical/surgical benefits subject to the copayments ($100x +
$300x + $200x = $600x; $600x/$800x = 75%). Thus, the plan may not impose
any copayment on outpatient, in-network mental health or substance use
disorder benefits that is more restrictive than the least restrictive
copayment in the combination, the $15 copayment.
Example 3. (i) Facts. A plan imposes a $250 deductible on all
medical/surgical benefits for self-only coverage and a $500 deductible
on all medical/surgical benefits for family coverage. The plan has no
network of providers. For all medical/surgical benefits, the plan
imposes a coinsurance requirement. The plan imposes no other financial
requirements or treatment limitations.
(ii) Conclusion. In this Example 3, because the plan has no network
of providers, all benefits are provided out-of-network. Because self-
only and family coverage are subject to different deductibles, whether
the deductible applies to substantially all medical/surgical benefits is
determined separately for self-only medical/surgical benefits and family
medical/surgical benefits. Because the coinsurance is applied without
regard to coverage units, the predominant coinsurance that applies to
substantially all medical/surgical benefits is determined without regard
to coverage units.
Example 4 --(i) Facts. A plan applies the following financial
requirements for prescription drug benefits. The requirements are
applied without regard to whether a drug is generally prescribed with
respect to medical/surgical benefits or with respect to mental health or
substance use disorder benefits. Moreover, the process for certifying a
particular drug as ``generic'', ``preferred brand name'', ``non-
preferred brand name'', or ``specialty'' complies with the rules of
paragraph (c)(4)(i) of this section (relating to requirements for
nonquantitative treatment limitations).
----------------------------------------------------------------------------------------------------------------
Tier 1 Tier 2 Tier 3 Tier 4
----------------------------------------------------------------------------------------------------------------
Non-preferred
brand name
Preferred brand drugs (which
Tier description Generic drugs name drugs may have Tier 1 Specialty drugs
or Tier 2
alternatives)
----------------------------------------------------------------------------------------------------------------
Percent paid by plan........................ 90% 80% 60% 50%
----------------------------------------------------------------------------------------------------------------
(ii) Conclusion. In this Example 4, the financial requirements that
apply to prescription drug benefits are applied without regard to
whether a drug is generally prescribed with respect to medical/surgical
benefits or with respect to mental health or substance use disorder
benefits; the process for certifying drugs in different tiers complies
with paragraph (c)(4) of this section; and the bases for establishing
different levels or types of financial requirements are reasonable. The
financial requirements applied to prescription drug benefits do not
violate the parity requirements of this paragraph (c)(3).
Example 5 --(i) Facts. A plan has two-tiers of network of providers:
A preferred provider tier and a participating provider tier. Providers
are placed in either the preferred tier or participating tier based on
reasonable factors determined in accordance with the rules in paragraph
(c)(4)(i) of this section, such as accreditation, quality and
performance
[[Page 83]]
measures (including customer feedback), and relative reimbursement
rates. Furthermore, provider tier placement is determined without regard
to whether a provider specializes in the treatment of mental health
conditions or substance use disorders, or medical/surgical conditions.
The plan divides the in-network classifications into two sub-
classifications (in-network/preferred and in-network/participating). The
plan does not impose any financial requirement or treatment limitation
on mental health or substance use disorder benefits in either of these
sub-classifications that is more restrictive than the predominant
financial requirement or treatment limitation that applies to
substantially all medical/surgical benefits in each sub-classification.
(ii) Conclusion. In this Example 5, the division of in-network
benefits into sub-classifications that reflect the preferred and
participating provider tiers does not violate the parity requirements of
this paragraph (c)(3).
Example 6 --(i) Facts. With respect to outpatient, in-network
benefits, a plan imposes a $25 copayment for office visits and a 20
percent coinsurance requirement for outpatient surgery. The plan divides
the outpatient, in-network classification into two sub-classifications
(in-network office visits and all other outpatient, in-network items and
services). The plan or issuer does not impose any financial requirement
or quantitative treatment limitation on mental health or substance use
disorder benefits in either of these sub-classifications that is more
restrictive than the predominant financial requirement or quantitative
treatment limitation that applies to substantially all medical/surgical
benefits in each sub-classification.
(ii) Conclusion. In this Example 6, the division of outpatient, in-
network benefits into sub-classifications for office visits and all
other outpatient, in-network items and services does not violate the
parity requirements of this paragraph (c)(3).
Example 7 --(i) Facts. Same facts as Example 6, but for purposes of
determining parity, the plan divides the outpatient, in-network
classification into outpatient, in-network generalists and outpatient,
in-network specialists.
(ii) Conclusion. In this Example 7, the division of outpatient, in-
network benefits into any sub-classifications other than office visits
and all other outpatient items and services violates the requirements of
paragraph (c)(3)(iii)(C) of this section.
(v) No separate cumulative financial requirements or cumulative
quantitative treatment limitations. (A) A group health plan (or health
insurance coverage offered in connection with a group health plan) may
not apply any cumulative financial requirement or cumulative
quantitative treatment limitation for mental health or substance use
disorder benefits in a classification that accumulates separately from
any established for medical/surgical benefits in the same
classification.
(B) The rules of this paragraph (c)(3)(v) are illustrated by the
following examples:
Example 1 --(i) Facts. A group health plan imposes a combined annual
$500 deductible on all medical/surgical, mental health, and substance
use disorder benefits.
(ii) Conclusion. In this Example 1, the combined annual deductible
complies with the requirements of this paragraph (c)(3)(v).
Example 2 --(i) Facts. A plan imposes an annual $250 deductible on
all medical/surgical benefits and a separate annual $250 deductible on
all mental health and substance use disorder benefits.
(ii) Conclusion. In this Example 2, the separate annual deductible
on mental health and substance use disorder benefits violates the
requirements of this paragraph (c)(3)(v).
Example 3 --(i) Facts. A plan imposes an annual $300 deductible on
all medical/surgical benefits and a separate annual $100 deductible on
all mental health or substance use disorder benefits.
(ii) Conclusion. In this Example 3, the separate annual deductible
on mental health and substance use disorder benefits violates the
requirements of this paragraph (c)(3)(v).
Example 4 --(i) Facts. A plan generally imposes a combined annual
$500 deductible on all benefits (both medical/surgical benefits and
mental health and substance use disorder benefits) except prescription
drugs. Certain benefits, such as preventive care, are provided without
regard to the deductible. The imposition of other types of financial
requirements or treatment limitations varies with each classification.
Using reasonable methods, the plan projects its payments for medical/
surgical benefits in each classification for the upcoming year as
follows:
----------------------------------------------------------------------------------------------------------------
Benefits Percent
Classification subject to Total benefits subject to
deductible deductible
----------------------------------------------------------------------------------------------------------------
Inpatient, in-network........................................... $1,800x $2,000x 90
Inpatient, out-of-network....................................... 1,000x 1,000x 100
Outpatient, in-network.......................................... 1,400x 2,000x 70
Outpatient, out-of-network...................................... 1,880x 2,000x 94
Emergency care.................................................. 300x 500x 60
----------------------------------------------------------------------------------------------------------------
[[Page 84]]
(ii) Conclusion. In this Example 4, the two-thirds threshold of the
substantially all standard is met with respect to each classification
except emergency care because in each of those other classifications at
least two-thirds of medical/surgical benefits are subject to the $500
deductible. Moreover, the $500 deductible is the predominant level in
each of those other classifications because it is the only level.
However, emergency care mental health and substance use disorder
benefits cannot be subject to the $500 deductible because it does not
apply to substantially all emergency care medical/surgical benefits.
(4) Nonquantitative treatment limitations--(i) General rule. A group
health plan (or health insurance coverage) may not impose a
nonquantitative treatment limitation with respect to mental health or
substance use disorder benefits in any classification unless, under the
terms of the plan (or health insurance coverage) as written and in
operation, any processes, strategies, evidentiary standards, or other
factors used in applying the nonquantitative treatment limitation to
mental health or substance use disorder benefits in the classification
are comparable to, and are applied no more stringently than, the
processes, strategies, evidentiary standards, or other factors used in
applying the limitation with respect to medical/surgical benefits in the
classification.
(ii) Illustrative list of nonquantitative treatment limitations.
Nonquantitative treatment limitations include--
(A) Medical management standards limiting or excluding benefits
based on medical necessity or medical appropriateness, or based on
whether the treatment is experimental or investigative;
(B) Formulary design for prescription drugs;
(C) For plans with multiple network tiers (such as preferred
providers and participating providers), network tier design;
(D) Standards for provider admission to participate in a network,
including reimbursement rates;
(E) Plan methods for determining usual, customary, and reasonable
charges;
(F) Refusal to pay for higher-cost therapies until it can be shown
that a lower-cost therapy is not effective (also known as fail-first
policies or step therapy protocols);
(G) Exclusions based on failure to complete a course of treatment;
and
(H) Restrictions based on geographic location, facility type,
provider specialty, and other criteria that limit the scope or duration
of benefits for services provided under the plan or coverage.
(iii) Examples. The rules of this paragraph (c)(4) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section and provides both medical/
surgical benefits and mental health and substance use disorder benefits.
Example 1 --(i) Facts. A plan requires prior authorization from the
plan's utilization reviewer that a treatment is medically necessary for
all inpatient medical/surgical benefits and for all inpatient mental
health and substance use disorder benefits. In practice, inpatient
benefits for medical/surgical conditions are routinely approved for
seven days, after which a treatment plan must be submitted by the
patient's attending provider and approved by the plan. On the other
hand, for inpatient mental health and substance use disorder benefits,
routine approval is given only for one day, after which a treatment plan
must be submitted by the patient's attending provider and approved by
the plan.
(ii) Conclusion. In this Example 1, the plan violates the rules of
this paragraph (c)(4) because it is applying a stricter nonquantitative
treatment limitation in practice to mental health and substance use
disorder benefits than is applied to medical/surgical benefits.
Example 2 --(i) Facts. A plan applies concurrent review to inpatient
care where there are high levels of variation in length of stay (as
measured by a coefficient of variation exceeding 0.8). In practice, the
application of this standard affects 60 percent of mental health
conditions and substance use disorders, but only 30 percent of medical/
surgical conditions.
(ii) Conclusion. In this Example 2, the plan complies with the rules
of this paragraph (c)(4) because the evidentiary standard used by the
plan is applied no more stringently for mental health and substance use
disorder benefits than for medical/surgical benefits, even though it
results in an overall difference in the application of concurrent review
for mental health conditions or substance use disorders than for
medical/surgical conditions.
[[Page 85]]
Example 3 --(i) Facts. A plan requires prior approval that a course
of treatment is medically necessary for outpatient, in-network medical/
surgical, mental health, and substance use disorder benefits and uses
comparable criteria in determining whether a course of treatment is
medically necessary. For mental health and substance use disorder
treatments that do not have prior approval, no benefits will be paid;
for medical/surgical treatments that do not have prior approval, there
will only be a 25 percent reduction in the benefits the plan would
otherwise pay.
(ii) Conclusion. In this Example 3, the plan violates the rules of
this paragraph (c)(4). Although the same nonquantitative treatment
limitation--medical necessity--is applied both to mental health and
substance use disorder benefits and to medical/surgical benefits for
outpatient, in-network services, it is not applied in a comparable way.
The penalty for failure to obtain prior approval for mental health and
substance use disorder benefits is not comparable to the penalty for
failure to obtain prior approval for medical/surgical benefits.
Example 4 --(i) Facts. A plan generally covers medically appropriate
treatments. For both medical/surgical benefits and mental health and
substance use disorder benefits, evidentiary standards used in
determining whether a treatment is medically appropriate (such as the
number of visits or days of coverage) are based on recommendations made
by panels of experts with appropriate training and experience in the
fields of medicine involved. The evidentiary standards are applied in a
manner that is based on clinically appropriate standards of care for a
condition.
(ii) Conclusion. In this Example 4, the plan complies with the rules
of this paragraph (c)(4) because the processes for developing the
evidentiary standards used to determine medical appropriateness and the
application of these standards to mental health and substance use
disorder benefits are comparable to and are applied no more stringently
than for medical/surgical benefits. This is the result even if the
application of the evidentiary standards does not result in similar
numbers of visits, days of coverage, or other benefits utilized for
mental health conditions or substance use disorders as it does for any
particular medical/surgical condition.
Example 5 --(i) Facts. A plan generally covers medically appropriate
treatments. In determining whether prescription drugs are medically
appropriate, the plan automatically excludes coverage for antidepressant
drugs that are given a black box warning label by the Food and Drug
Administration (indicating the drug carries a significant risk of
serious adverse effects). For other drugs with a black box warning
(including those prescribed for other mental health conditions and
substance use disorders, as well as for medical/surgical conditions),
the plan will provide coverage if the prescribing physician obtains
authorization from the plan that the drug is medically appropriate for
the individual, based on clinically appropriate standards of care.
(ii) Conclusion. In this Example 5, the plan violates the rules of
this paragraph (c)(4). Although the standard for applying a
nonquantitative treatment limitation is the same for both mental health
and substance use disorder benefits and medical/surgical benefits--
whether a drug has a black box warning--it is not applied in a
comparable manner. The plan's unconditional exclusion of antidepressant
drugs given a black box warning is not comparable to the conditional
exclusion for other drugs with a black box warning.
Example 6 --(i) Facts. An employer maintains both a major medical
plan and an employee assistance program (EAP). The EAP provides, among
other benefits, a limited number of mental health or substance use
disorder counseling sessions. Participants are eligible for mental
health or substance use disorder benefits under the major medical plan
only after exhausting the counseling sessions provided by the EAP. No
similar exhaustion requirement applies with respect to medical/surgical
benefits provided under the major medical plan.
(ii) Conclusion. In this Example 6, limiting eligibility for mental
health and substance use disorder benefits only after EAP benefits are
exhausted is a nonquantitative treatment limitation subject to the
parity requirements of this paragraph (c). Because no comparable
requirement applies to medical/surgical benefits, the requirement may
not be applied to mental health or substance use disorder benefits.
Example 7 --(i) Facts. Training and State licensing requirements
often vary among types of providers. A plan applies a general standard
that any provider must meet the highest licensing requirement related to
supervised clinical experience under applicable State law in order to
participate in the plan's provider network. Therefore, the plan requires
master's-level mental health therapists to have post-degree, supervised
clinical experience but does not impose this requirement on master's-
level general medical providers because the scope of their licensure
under applicable State law does require clinical experience. In
addition, the plan does not require post-degree, supervised clinical
experience for psychiatrists or Ph.D. level psychologists since their
licensing already requires supervised training.
(ii) Conclusion. In this Example 7, the plan complies with the rules
of this paragraph (c)(4). The requirement that master's-level mental
health therapists must have supervised clinical experience to join the
network
[[Page 86]]
is permissible, as long as the plan consistently applies the same
standard to all providers even though it may have a disparate impact on
certain mental health providers.
Example 8 --(i) Facts. A plan considers a wide array of factors in
designing medical management techniques for both mental health and
substance use disorder benefits and medical/surgical benefits, such as
cost of treatment; high cost growth; variability in cost and quality;
elasticity of demand; provider discretion in determining diagnosis, or
type or length of treatment; clinical efficacy of any proposed treatment
or service; licensing and accreditation of providers; and claim types
with a high percentage of fraud. Based on application of these factors
in a comparable fashion, prior authorization is required for some (but
not all) mental health and substance use disorder benefits, as well as
for some medical/surgical benefits, but not for others. For example, the
plan requires prior authorization for: Outpatient surgery; speech,
occupational, physical, cognitive and behavioral therapy extending for
more than six months; durable medical equipment; diagnostic imaging;
skilled nursing visits; home infusion therapy; coordinated home care;
pain management; high-risk prenatal care; delivery by cesarean section;
mastectomy; prostate cancer treatment; narcotics prescribed for more
than seven days; and all inpatient services beyond 30 days. The evidence
considered in developing its medical management techniques includes
consideration of a wide array of recognized medical literature and
professional standards and protocols (including comparative
effectiveness studies and clinical trials). This evidence and how it was
used to develop these medical management techniques is also well
documented by the plan.
(ii) Conclusion. In this Example 8, the plan complies with the rules
of this paragraph (c)(4). Under the terms of the plan as written and in
operation, the processes, strategies, evidentiary standards, and other
factors considered by the plan in implementing its prior authorization
requirement with respect to mental health and substance use disorder
benefits are comparable to, and applied no more stringently than, those
applied with respect to medical/surgical benefits.
Example 9 --(i) Facts. A plan generally covers medically appropriate
treatments. The plan automatically excludes coverage for inpatient
substance use disorder treatment in any setting outside of a hospital
(such as a freestanding or residential treatment center). For inpatient
treatment outside of a hospital for other conditions (including
freestanding or residential treatment centers prescribed for mental
health conditions, as well as for medical/surgical conditions), the plan
will provide coverage if the prescribing physician obtains authorization
from the plan that the inpatient treatment is medically appropriate for
the individual, based on clinically appropriate standards of care.
(ii) Conclusion. In this Example 9, the plan violates the rules of
this paragraph (c)(4). Although the same nonquantitative treatment
limitation--medical appropriateness--is applied to both mental health
and substance use disorder benefits and medical/surgical benefits, the
plan's unconditional exclusion of substance use disorder treatment in
any setting outside of a hospital is not comparable to the conditional
exclusion of inpatient treatment outside of a hospital for other
conditions.
Example 10 --(i) Facts. A plan generally provides coverage for
medically appropriate medical/surgical benefits as well as mental health
and substance use disorder benefits. The plan excludes coverage for
inpatient, out-of-network treatment of chemical dependency when obtained
outside of the State where the policy is written. There is no similar
exclusion for medical/surgical benefits within the same classification.
(ii) Conclusion. In this Example 10, the plan violates the rules of
this paragraph (c)(4). The plan is imposing a nonquantitative treatment
limitation that restricts benefits based on geographic location. Because
there is no comparable exclusion that applies to medical/surgical
benefits, this exclusion may not be applied to mental health or
substance use disorder benefits.
Example 11 --(i) Facts. A plan requires prior authorization for all
outpatient mental health and substance use disorder services after the
ninth visit and will only approve up to five additional visits per
authorization. With respect to outpatient medical/surgical benefits, the
plan allows an initial visit without prior authorization. After the
initial visit, the plan pre-approves benefits based on the individual
treatment plan recommended by the attending provider based on that
individual's specific medical condition. There is no explicit,
predetermined cap on the amount of additional visits approved per
authorization.
(ii) Conclusion. In this Example 11, the plan violates the rules of
this paragraph (c)(4). Although the same nonquantitative treatment
limitation--prior authorization to determine medical appropriateness--is
applied to both mental health and substance use disorder benefits and
medical/surgical benefits for outpatient services, it is not applied in
a comparable way. While the plan is more generous with respect to the
number of visits initially provided without pre-authorization for mental
health benefits, treating all mental health conditions and substance use
disorders in the same manner, while providing for individualized
treatment of medical conditions, is not a comparable application of this
nonquantitative treatment limitation.
[[Page 87]]
(5) Exemptions. The rules of this paragraph (c) do not apply if a
group health plan (or health insurance coverage) satisfies the
requirements of paragraph (f) or (g) of this section (relating to
exemptions for small employers and for increased cost).
(d) Availability of plan information--(1) Criteria for medical
necessity determinations. The criteria for medical necessity
determinations made under a group health plan with respect to mental
health or substance use disorder benefits (or health insurance coverage
offered in connection with the plan with respect to such benefits) must
be made available by the plan administrator (or the health insurance
issuer offering such coverage) to any current or potential participant,
beneficiary, or contracting provider upon request.
(2) Reason for any denial. The reason for any denial under a group
health plan (or health insurance coverage offered in connection with
such plan) of reimbursement or payment for services with respect to
mental health or substance use disorder benefits in the case of any
participant or beneficiary must be made available by the plan
administrator (or the health insurance issuer offering such coverage) to
the participant or beneficiary. For this purpose, a non-Federal
governmental plan (or health insurance coverage offered in connection
with such plan) that provides the reason for the claim denial in a form
and manner consistent with the requirements of 29 CFR 2560.503-1 for
group health plans complies with the requirements of this paragraph
(d)(2).
(3) Provisions of other law. Compliance with the disclosure
requirements in paragraphs (d)(1) and (d)(2) of this section is not
determinative of compliance with any other provision of applicable
Federal or State law. In particular, in addition to those disclosure
requirements, provisions of other applicable law require disclosure of
information relevant to medical/surgical, mental health, and substance
use disorder benefits. For example, Sec. 147.136 of this subchapter
sets forth rules regarding claims and appeals, including the right of
claimants (or their authorized representative) upon appeal of an adverse
benefit determination (or a final internal adverse benefit
determination) to be provided upon request and free of charge,
reasonable access to and copies of all documents, records, and other
information relevant to the claimant's claim for benefits. This includes
documents with information on medical necessity criteria for both
medical/surgical benefits and mental health and substance use disorder
benefits, as well as the processes, strategies, evidentiary standards,
and other factors used to apply a nonquantitative treatment limitation
with respect to medical/surgical benefits and mental health or substance
use disorder benefits under the plan.
(e) Applicability--(1) Group health plans. The requirements of this
section apply to a group health plan offering medical/surgical benefits
and mental health or substance use disorder benefits. If, under an
arrangement or arrangements to provide medical care benefits by an
employer or employee organization (including for this purpose a joint
board of trustees of a multiemployer trust affiliated with one or more
multiemployer plans), any participant (or beneficiary) can
simultaneously receive coverage for medical/surgical benefits and
coverage for mental health or substance use disorder benefits, then the
requirements of this section (including the exemption provisions in
paragraph (g) of this section) apply separately with respect to each
combination of medical/surgical benefits and of mental health or
substance use disorder benefits that any participant (or beneficiary)
can simultaneously receive from that employer's or employee
organization's arrangement or arrangements to provide medical care
benefits, and all such combinations are considered for purposes of this
section to be a single group health plan.
(2) Health insurance issuers. The requirements of this section apply
to a health insurance issuer offering health insurance coverage for
mental health or substance use disorder benefits in connection with a
group health plan subject to paragraph (e)(1) of this section.
(3) Scope. This section does not--
(i) Require a group health plan (or health insurance issuer offering
coverage in connection with a group
[[Page 88]]
health plan) to provide any mental health benefits or substance use
disorder benefits, and the provision of benefits by a plan (or health
insurance coverage) for one or more mental health conditions or
substance use disorders does not require the plan or health insurance
coverage under this section to provide benefits for any other mental
health condition or substance use disorder;
(ii) Require a group health plan (or health insurance issuer
offering coverage in connection with a group health plan) that provides
coverage for mental health or substance use disorder benefits only to
the extent required under PHS Act section 2713 to provide additional
mental health or substance use disorder benefits in any classification
in accordance with this section; or
(iii) Affect the terms and conditions relating to the amount,
duration, or scope of mental health or substance use disorder benefits
under the plan (or health insurance coverage) except as specifically
provided in paragraphs (b) and (c) of this section.
(4) Coordination with EHB requirements. Nothing in paragraph (f) or
(g) of this section changes the requirements of Sec. Sec. 147.150 and
156.115 of this subchapter, providing that a health insurance issuer
offering non-grandfathered health insurance coverage in the individual
or small group market providing mental health and substance use disorder
services, including behavioral health treatment services, as part of
essential health benefits required under Sec. Sec. 156.110(a)(5) and
156.115(a) of this subchapter, must comply with the provisions of this
section to satisfy the requirement to provide essential health benefits.
(f) Small employer exemption--(1) In general. The requirements of
this section do not apply to a group health plan (or health insurance
issuer offering coverage in connection with a group health plan) for a
plan year of a small employer (as defined in section 2791 of the PHS
Act).
(2) Rules in determining employer size. For purposes of paragraph
(f)(1) of this section--
(i) All persons treated as a single employer under subsections (b),
(c), (m), and (o) of section 414 of the Internal Revenue Code are
treated as one employer;
(ii) If an employer was not in existence throughout the preceding
calendar year, whether it is a small employer is determined based on the
average number of employees the employer reasonably expects to employ on
business days during the current calendar year; and
(iii) Any reference to an employer for purposes of the small
employer exemption includes a reference to a predecessor of the
employer.
(g) Increased cost exemption--(1) In general. If the application of
this section to a group health plan (or health insurance coverage
offered in connection with such plans) results in an increase for the
plan year involved of the actual total cost of coverage with respect to
medical/surgical benefits and mental health and substance use disorder
benefits as determined and certified under paragraph (g)(3) of this
section by an amount that exceeds the applicable percentage described in
paragraph (g)(2) of this section of the actual total plan costs, the
provisions of this section shall not apply to such plan (or coverage)
during the following plan year, and such exemption shall apply to the
plan (or coverage) for one plan year. An employer or issuer may elect to
continue to provide mental health and substance use disorder benefits in
compliance with this section with respect to the plan or coverage
involved regardless of any increase in total costs.
(2) Applicable percentage. With respect to a plan or coverage, the
applicable percentage described in this paragraph (g) is--
(i) 2 percent in the case of the first plan year in which this
section is applied to the plan or coverage; and
(ii) 1 percent in the case of each subsequent plan year.
(3) Determinations by actuaries--(i) Determinations as to increases
in actual costs under a plan or coverage that are attributable to
implementation of the requirements of this section shall be made and
certified by a qualified and licensed actuary who is a member in
[[Page 89]]
good standing of the American Academy of Actuaries. All such
determinations must be based on the formula specified in paragraph
(g)(4) of this section and shall be in a written report prepared by the
actuary.
(ii) The written report described in paragraph (g)(3)(i) of this
section shall be maintained by the group health plan or health insurance
issuer, along with all supporting documentation relied upon by the
actuary, for a period of six years following the notification made under
paragraph (g)(6) of this section.
(4) Formula. The formula to be used to make the determination under
paragraph (g)(3)(i) of this section is expressed mathematically as
follows:
[(E1 - E0) / T0] -D k
(i) E1 is the actual total cost of coverage with respect
to mental health and substance use disorder benefits for the base
period, including claims paid by the plan or issuer with respect to
mental health and substance use disorder benefits and administrative
costs (amortized over time) attributable to providing these benefits
consistent with the requirements of this section.
(ii) E0 is the actual total cost of coverage with respect
to mental health and substance use disorder benefits for the length of
time immediately before the base period (and that is equal in length to
the base period), including claims paid by the plan or issuer with
respect to mental health and substance use disorder benefits and
administrative costs (amortized over time) attributable to providing
these benefits.
(iii) T0 is the actual total cost of coverage with
respect to all benefits during the base period.
(iv) k is the applicable percentage of increased cost specified in
paragraph (g)(2) of this section that will be expressed as a fraction
for purposes of this formula.
(v) D is the average change in spending that is calculated by
applying the formula (E1-E0)/T0 to mental health and substance use
disorder spending in each of the five prior years and then calculating
the average change in spending.
(5) Six month determination. If a group health plan or health
insurance issuer seeks an exemption under this paragraph (g),
determinations under paragraph (g)(3) of this section shall be made
after such plan or coverage has complied with this section for at least
the first 6 months of the plan year involved.
(6) Notification. A group health plan or health insurance issuer
that, based on the certification described under paragraph (g)(3) of
this section, qualifies for an exemption under this paragraph (g), and
elects to implement the exemption, must notify participants and
beneficiaries covered under the plan, the Secretary, and the appropriate
State agencies of such election.
(i) Participants and beneficiaries--(A) Content of notice. The
notice to participants and beneficiaries must include the following
information:
(1) A statement that the plan or issuer is exempt from the
requirements of this section and a description of the basis for the
exemption.
(2) The name and telephone number of the individual to contact for
further information.
(3) The plan or issuer name and plan number (PN).
(4) The plan administrator's name, address, and telephone number.
(5) For single-employer plans, the plan sponsor's name, address, and
telephone number (if different from paragraph (g)(6)(i)(A)(3) of this
section) and the plan sponsor's employer identification number (EIN).
(6) The effective date of such exemption.
(7) A statement regarding the ability of participants and
beneficiaries to contact the plan administrator or health insurance
issuer to see how benefits may be affected as a result of the plan's or
issuer's election of the exemption.
(8) A statement regarding the availability, upon request and free of
charge, of a summary of the information on which the exemption is based
(as required under paragraph (g)(6)(i)(D) of this section).
(B) Use of summary of material reductions in covered services or
benefits. A plan or issuer may satisfy the requirements of paragraph
(g)(6)(i)(A) of this section by providing participants and beneficiaries
(in accordance with paragraph (g)(6)(i)(C) of this section) with a
[[Page 90]]
summary of material reductions in covered services or benefits
consistent with 29 CFR 2520.104b-3(d) that also includes the information
specified in paragraph (g)(6)(i)(A) of this section. However, in all
cases, the exemption is not effective until 30 days after notice has
been sent.
(C) Delivery. The notice described in this paragraph (g)(6)(i) is
required to be provided to all participants and beneficiaries. The
notice may be furnished by any method of delivery that satisfies the
requirements of section 104(b)(1) of ERISA (29 U.S.C. 1024(b)(1)) and
its implementing regulations (for example, first-class mail). If the
notice is provided to the participant and any beneficiaries at the
participant's last known address, then the requirements of this
paragraph (g)(6)(i) are satisfied with respect to the participant and
all beneficiaries residing at that address. If a beneficiary's last
known address is different from the participant's last known address, a
separate notice is required to be provided to the beneficiary at the
beneficiary's last known address.
(D) Availability of documentation. The plan or issuer must make
available to participants and beneficiaries (or their representatives),
on request and at no charge, a summary of the information on which the
exemption was based. (For purposes of this paragraph (g), an individual
who is not a participant or beneficiary and who presents a notice
described in paragraph (g)(6)(i) of this section is considered to be a
representative. A representative may request the summary of information
by providing the plan a copy of the notice provided to the participant
under paragraph (g)(6)(i) of this section with any personally
identifiable information redacted.) The summary of information must
include the incurred expenditures, the base period, the dollar amount of
claims incurred during the base period that would have been denied under
the terms of the plan or coverage absent amendments required to comply
with paragraphs (b) and (c) of this section, the administrative costs
related to those claims, and other administrative costs attributable to
complying with the requirements of this section. In no event should the
summary of information include any personally identifiable information.
(ii) Federal agencies--(A) Content of notice. The notice to the
Secretary must include the following information:
(1) A description of the number of covered lives under the plan (or
coverage) involved at the time of the notification, and as applicable,
at the time of any prior election of the cost exemption under this
paragraph (g) by such plan (or coverage);
(2) For both the plan year upon which a cost exemption is sought and
the year prior, a description of the actual total costs of coverage with
respect to medical/surgical benefits and mental health and substance use
disorder benefits; and
(3) For both the plan year upon which a cost exemption is sought and
the year prior, the actual total costs of coverage with respect to
mental health and substance use disorder benefits under the plan.
(B) Reporting by health insurance coverage offered in connection
with a church plan. See 26 CFR 54.9812(g)(6)(ii)(B) for delivery with
respect to church plans.
(C) Reporting by health insurance coverage offered in connection
with a group health plans subject to Part 7 of Subtitle B of Title I of
ERISA. See 29 CFR 2590.712(g)(6)(ii) for delivery with respect to group
health plans subject to ERISA.
(D) Reporting with respect to non-Federal governmental plans and
health insurance issuers in the individual market. A group health plan
that is a non-Federal governmental plan, or a health insurance issuer
offering health insurance coverage in the individual market, claiming
the exemption of this paragraph (g) for any benefit package must provide
notice to the Department of Health and Human Services. This requirement
is satisfied if the plan or issuer sends a copy, to the address
designated by the Secretary in generally applicable guidance, of the
notice described in paragraph (g)(6)(ii)(A) of this section identifying
the benefit package to which the exemption applies.
(iii) Confidentiality. A notification to the Secretary under this
paragraph
[[Page 91]]
(g)(6) shall be confidential. The Secretary shall make available, upon
request and not more than on an annual basis, an anonymous itemization
of each notification that includes--
(A) A breakdown of States by the size and type of employers
submitting such notification; and
(B) A summary of the data received under paragraph (g)(6)(ii) of
this section.
(iv) Audits. The Secretary may audit the books and records of a
group health plan or a health insurance issuer relating to an exemption,
including any actuarial reports, during the 6 year period following
notification of such exemption under paragraph (g)(6) of this section. A
State agency receiving a notification under paragraph (g)(6) of this
section may also conduct such an audit with respect to an exemption
covered by such notification.
(h) Sale of nonparity health insurance coverage. A health insurance
issuer may not sell a policy, certificate, or contract of insurance that
fails to comply with paragraph (b) or (c) of this section, except to a
plan for a year for which the plan is exempt from the requirements of
this section because the plan meets the requirements of paragraph (f) or
(g) of this section.
(i) Applicability dates--(1) In general. Except as provided in
paragraph (i)(2) of this section, this section applies to group health
plans and health insurance issuers offering group health insurance
coverage on the first day of the first plan year beginning on or after
July 1, 2014. Until the applicability date, plans and issuers are
required to continue to comply with the corresponding sections of Sec.
146.136 contained in the 45 CFR, parts 1 to 199, edition revised as of
October 1, 2013.
(2) Special effective date for certain collectively-bargained plans.
For a group health plan maintained pursuant to one or more collective
bargaining agreements ratified before October 3, 2008, the requirements
of this section do not apply to the plan (or health insurance coverage
offered in connection with the plan) for plan years beginning before the
date on which the last of the collective bargaining agreements
terminates (determined without regard to any extension agreed to after
October 3, 2008).
[78 FR 68286, Nov. 13, 2013]
Effective Date Note: At 89 FR 77735, Sept. 23, 2024, Sec. 146.136
was amended, effective Nov. 22, 2024, by:
1. Redesignating paragraph (a) as paragraph (a)(2) and adding
paragraphs (a) heading and (a)(1);
2. In newly redesignated paragraph (a)(2):
i. Revising the introductory text;
ii. Adding the definitions of ``DSM,'' ``Evidentiary standards,''
``Factors,'' and ``ICD'' in alphabetical order;
iii. Revising the definitions of ``Medical/surgical benefits'' and
``Mental health benefits'';
iv. Adding the definitions of ``Processes'' and ``Strategies'' in
alphabetical order;
v. Revising the definitions of ``Substance use disorder benefits''
and ``Treatment limitations'';
3. Revising paragraphs (c)(1)(ii), (c)(2)(i), (c)(2)(ii)(A)
introductory text, (c)(2)(ii)(C), and (c)(3)(i)(A), (C), and (D);
4. In paragraph (c)(3)(iii), adding introductory text.
5. Revising paragraphs (c)(3)(iii)(A) and (B), (c)(3)(iv), (c)(4),
(d)(3), (e)(4), and (i)(1); and by
6. Adding paragraph (j).
For the convenience of the user, the added and revised text is set
forth as follows:
Sec. 146.136 Parity in mental health and substance use disorder
benefits.
(a) Purpose and meaning of terms--(1) Purpose. This section and
Sec. 146.137 set forth rules to ensure parity in aggregate lifetime and
annual dollar limits, financial requirements, and quantitative and
nonquantitative treatment limitations between mental health and
substance use disorder benefits and medical/surgical benefits, as
required under PHS Act section 2726. A fundamental purpose of PHS Act
section 2726, this section, and Sec. 146.137 is to ensure that
participants and beneficiaries in a group health plan (or health
insurance coverage offered by an issuer in connection with a group
health plan) that offers mental health or substance use disorder
benefits are not subject to more restrictive aggregate lifetime or
annual dollar limits, financial requirements, or treatment limitations
with respect to those benefits than the predominant dollar limits,
financial requirements, or treatment limitations that are applied to
substantially all medical/surgical benefits covered by the plan or
coverage in the same classification, as further provided in this section
and Sec. 146.137. Accordingly, in complying with the provisions of PHS
Act section 2726, this section, and Sec. 146.137, plans and issuers
must not design or apply financial requirements and treatment
limitations that impose a greater burden on access (that is, are more
restrictive) to mental health or
[[Page 92]]
substance use disorder benefits under the plan or coverage than they
impose on access to medical/surgical benefits in the same classification
of benefits. The provisions of PHS Act section 2726, this section, and
Sec. 146.137 should be interpreted in a manner that is consistent with
the purpose described in this paragraph (a)(1).
(2) Meaning of terms. For purposes of this section and Sec.
146.137, except where the context clearly indicates otherwise, the
following terms have the meanings indicated:
* * * * *
DSM means the American Psychiatric Association's Diagnostic and
Statistical Manual of Mental Disorders. For the purpose of this
definition, the most current version of the DSM as of November 22, 2024,
is the Diagnostic and Statistical Manual of Mental Disorders, Fifth
Edition, Text Revision published in March 2022. A subsequent version of
the DSM published after November 22, 2024, will be considered the most
current version beginning on the first day of the plan year that is one
year after the date the subsequent version is published.
Evidentiary standards are any evidence, sources, or standards that a
group health plan (or health insurance issuer offering coverage in
connection with such a plan) considered or relied upon in designing or
applying a factor with respect to a nonquantitative treatment
limitation, including specific benchmarks or thresholds. Evidentiary
standards may be empirical, statistical, or clinical in nature, and
include: sources acquired or originating from an objective third party,
such as recognized medical literature, professional standards and
protocols (which may include comparative effectiveness studies and
clinical trials), published research studies, payment rates for items
and services (such as publicly available databases of the ``usual,
customary and reasonable'' rates paid for items and services), and
clinical treatment guidelines; internal plan or issuer data, such as
claims or utilization data or criteria for assuring a sufficient mix and
number of network providers; and benchmarks or thresholds, such as
measures of excessive utilization, cost levels, time or distance
standards, or network participation percentage thresholds.
Factors are all information, including processes and strategies (but
not evidentiary standards), that a group health plan (or health
insurance issuer offering coverage in connection with such a plan)
considered or relied upon to design a nonquantitative treatment
limitation, or to determine whether or how the nonquantitative treatment
limitation applies to benefits under the plan or coverage. Examples of
factors include, but are not limited to: provider discretion in
determining a diagnosis or type or length of treatment; clinical
efficacy of any proposed treatment or service; licensing and
accreditation of providers; claim types with a high percentage of fraud;
quality measures; treatment outcomes; severity or chronicity of
condition; variability in the cost of an episode of treatment; high cost
growth; variability in cost and quality; elasticity of demand; and
geographic location.
* * * * *
ICD means the World Health Organization's International
Classification of Diseases adopted by the Department of Health and Human
Services through Sec. 162.1002 of this subtitle. For the purpose of
this definition, the most current version of the ICD as of November 22,
2024, is the International Classification of Diseases, 10th Revision,
Clinical Modification adopted for the period beginning on October 1,
2015. Any subsequent version of the ICD adopted through Sec. 162.1002
of this subtitle after November 22, 2024, will be considered the most
current version beginning on the first day of the plan year that is one
year after the date the subsequent version is adopted.
Medical/surgical benefits means benefits with respect to items or
services for medical conditions or surgical procedures, as defined under
the terms of the group health plan (or health insurance coverage offered
by an issuer in connection with such a plan) and in accordance with
applicable Federal and State law, but does not include mental health
benefits or substance use disorder benefits. Notwithstanding the
preceding sentence, any condition or procedure defined by the plan or
coverage as being or as not being a medical condition or surgical
procedure must be defined consistent with generally recognized
independent standards of current medical practice (for example, the most
current version of the ICD). To the extent generally recognized
independent standards of current medical practice do not address whether
a condition or procedure is a medical condition or surgical procedure,
plans and issuers may define the condition or procedure in accordance
with applicable Federal and State law.
Mental health benefits means benefits with respect to items or
services for mental health conditions, as defined under the terms of the
group health plan (or health insurance coverage offered by an issuer in
connection with such a plan) and in accordance with applicable Federal
and State law, but does not include medical/surgical benefits or
substance use disorder benefits. Notwithstanding the preceding sentence,
any condition defined by the plan or coverage as being or as not being a
mental health condition must be defined consistent with generally
recognized independent standards of current
[[Page 93]]
medical practice. For the purpose of this definition, to be consistent
with generally recognized independent standards of current medical
practice, the definition must include all conditions covered under the
plan or coverage, except for substance use disorders, that fall under
any of the diagnostic categories listed in the mental, behavioral, and
neurodevelopmental disorders chapter (or equivalent chapter) of the most
current version of the ICD or that are listed in the most current
version of the DSM. To the extent generally recognized independent
standards of current medical practice do not address whether a condition
is a mental health condition, plans and issuers may define the condition
in accordance with applicable Federal and State law.
Processes are actions, steps, or procedures that a group health plan
(or health insurance issuer offering coverage in connection with such a
plan) uses to apply a nonquantitative treatment limitation, including
actions, steps, or procedures established by the plan or issuer as
requirements in order for a participant or beneficiary to access
benefits, including through actions by a participant's or beneficiary's
authorized representative or a provider or facility. Examples of
processes include, but are not limited to: procedures to submit
information to authorize coverage for an item or service prior to
receiving the benefit or while treatment is ongoing (including
requirements for peer or expert clinical review of that information);
provider referral requirements that are used to determine when and how a
participant or beneficiary may access certain services; and the
development and approval of a treatment plan used in a concurrent review
process to determine whether a specific request should be granted or
denied. Processes also include the specific procedures used by staff or
other representatives of a plan or issuer (or the service provider of a
plan or issuer) to administer the application of nonquantitative
treatment limitations, such as how a panel of staff members applies the
nonquantitative treatment limitation (including the qualifications of
staff involved, number of staff members allocated, and time allocated),
consultations with panels of experts in applying the nonquantitative
treatment limitation, and the degree of reviewer discretion in adhering
to criteria hierarchy when applying a nonquantitative treatment
limitation.
Strategies are practices, methods, or internal metrics that a plan
(or health insurance issuer offering coverage in connection with such a
plan) considers, reviews, or uses to design a nonquantitative treatment
limitation. Examples of strategies include, but are not limited to: the
development of the clinical rationale used in approving or denying
benefits; the method of determining whether and how to deviate from
generally accepted standards of care in concurrent reviews; the
selection of information deemed reasonably necessary to make medical
necessity determinations; reliance on treatment guidelines or guidelines
provided by third-party organizations in the design of a nonquantitative
treatment limitation; and rationales used in selecting and adopting
certain threshold amounts to apply a nonquantitative treatment
limitation, professional standards and protocols to determine
utilization management standards, and fee schedules used to determine
provider reimbursement rates, used as part of a nonquantitative
treatment limitation. Strategies also include the method of creating and
determining the composition of the staff or other representatives of a
plan or issuer (or the service provider of a plan or issuer) that
deliberates, or otherwise makes decisions, on the design of
nonquantitative treatment limitations, including the plan's or issuer's
methods for making decisions related to the qualifications of staff
involved, number of staff members allocated, and time allocated; breadth
of sources and evidence considered; consultations with panels of experts
in designing the nonquantitative treatment limitation; and the
composition of the panels used to design a nonquantitative treatment
limitation.
Substance use disorder benefits means benefits with respect to items
or services for substance use disorders, as defined under the terms of
the group health plan (or health insurance coverage offered by an issuer
in connection with such a plan) and in accordance with applicable
Federal and State law, but does not include medical/surgical benefits or
mental health benefits. Notwithstanding the preceding sentence, any
disorder defined by the plan or coverage as being or as not being a
substance use disorder must be defined consistent with generally
recognized independent standards of current medical practice. For the
purpose of this definition, to be consistent with generally recognized
independent standards of current medical practice, the definition must
include all disorders covered under the plan or coverage that fall under
any of the diagnostic categories listed as a mental or behavioral
disorder due to psychoactive substance use (or equivalent category) in
the mental, behavioral, and neurodevelopmental disorders chapter (or
equivalent chapter) of the most current version of the ICD or that are
listed as a Substance-Related and Addictive Disorder (or equivalent
category) in the most current version of the DSM. To the extent
generally recognized independent standards of current medical practice
do not address whether a disorder is a substance use disorder, plans and
issuers may define the disorder in accordance with applicable Federal
and State law.
Treatment limitations include limits on benefits based on the
frequency of treatment, number of visits, days of coverage, days in a
[[Page 94]]
waiting period, or other similar limits on the scope or duration of
treatment. Treatment limitations include both quantitative treatment
limitations, which are expressed numerically (such as 50 outpatient
visits per year), and nonquantitative treatment limitations (such as
standards related to network composition), which otherwise limit the
scope or duration of benefits for treatment under a plan or coverage.
(See paragraph (c)(4)(ii) of this section for an illustrative, non-
exhaustive list of nonquantitative treatment limitations.) A complete
exclusion of all benefits for a particular condition or disorder,
however, is not a treatment limitation for purposes of this definition.
* * * * *
(c) * * *
(1) * * *
(ii) Type of financial requirement or treatment limitation. When
reference is made in this paragraph (c) to a type of financial
requirement or treatment limitation, the reference to type means its
nature. Different types of financial requirements include deductibles,
copayments, coinsurance, and out-of-pocket maximums. Different types of
quantitative treatment limitations include annual, episode, and lifetime
day and visit limits. See paragraph (c)(4)(ii) of this section for an
illustrative, non-exhaustive list of nonquantitative treatment
limitations.
* * * * *
(2) * * *
(i) General rule. A group health plan (or health insurance coverage
offered by an issuer in connection with a group health plan) that
provides both medical/surgical benefits and mental health or substance
use disorder benefits may not apply any financial requirement or
treatment limitation to mental health or substance use disorder benefits
in any classification that is more restrictive than the predominant
financial requirement or treatment limitation of that type applied to
substantially all medical/surgical benefits in the same classification.
Whether a financial requirement or treatment limitation is a predominant
financial requirement or treatment limitation that applies to
substantially all medical/surgical benefits in a classification is
determined separately for each type of financial requirement or
treatment limitation. A plan or issuer may not impose any financial
requirement or treatment limitation that is applicable only with respect
to mental health or substance use disorder benefits and not to any
medical/surgical benefits in the same benefit classification. The
application of the rules of this paragraph (c)(2) to financial
requirements and quantitative treatment limitations is addressed in
paragraph (c)(3) of this section; the application of the rules of this
paragraph (c)(2) to nonquantitative treatment limitations is addressed
in paragraph (c)(4) of this section.
(ii) * * *
(A) In general. If a plan (or health insurance coverage) provides
any benefits for a mental health condition or substance use disorder in
any classification of benefits described in this paragraph (c)(2)(ii),
it must provide meaningful benefits for that mental health condition or
substance use disorder in every classification in which medical/surgical
benefits are provided. For purposes of this paragraph (c)(2)(ii)(A),
whether the benefits provided are meaningful benefits is determined in
comparison to the benefits provided for medical conditions and surgical
procedures in the classification and requires, at a minimum, coverage of
benefits for that condition or disorder in each classification in which
the plan (or coverage) provides benefits for one or more medical
conditions or surgical procedures. A plan (or coverage) does not provide
meaningful benefits under this paragraph (c)(2)(ii)(A) unless it
provides benefits for a core treatment for that condition or disorder in
each classification in which the plan (or coverage) provides benefits
for a core treatment for one or more medical conditions or surgical
procedures. For purposes of this paragraph (c)(2)(ii)(A), a core
treatment for a condition or disorder is a standard treatment or course
of treatment, therapy, service, or intervention indicated by generally
recognized independent standards of current medical practice. If there
is no core treatment for a covered mental health condition or substance
use disorder with respect to a classification, the plan (or coverage) is
not required to provide benefits for a core treatment for such condition
or disorder in that classification (but must provide benefits for such
condition or disorder in every classification in which medical/surgical
benefits are provided). In determining the classification in which a
particular benefit belongs, a plan (or health insurance issuer) must
apply the same standards to medical/surgical benefits and to mental
health or substance use disorder benefits. To the extent that a plan (or
health insurance coverage) provides benefits in a classification and
imposes any separate financial requirement or treatment limitation (or
separate level of a financial requirement or treatment limitation) for
benefits in the classification, the rules of this paragraph (c) apply
separately with respect to that classification for all financial
requirements or treatment limitations (illustrated in examples in
paragraph (c)(2)(ii)(C) of this section). The following classifications
of benefits are the only classifications used in applying the rules of
this paragraph (c), in addition to the
[[Page 95]]
permissible sub-classifications described in paragraph (c)(3)(iii) of
this section:
* * * * *
(C) Examples. The rules of this paragraph (c)(2)(ii) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section and provides both medical/
surgical benefits and mental health and substance use disorder benefits.
With regard to the examples in this paragraph (c)(2)(ii)(C), references
to any particular core treatment are included for illustrative purposes
only. Plans and issuers must consult generally recognized independent
standards of current medical practice to determine the applicable core
treatment, therapy, service, or intervention for any covered condition
or disorder.
(1) Example 1--(i) Facts. A group health plan offers inpatient and
outpatient benefits and does not contract with a network of providers.
The plan imposes a $500 deductible on all benefits. For inpatient
medical/surgical benefits, the plan imposes a coinsurance requirement.
For outpatient medical/surgical benefits, the plan imposes copayments.
The plan imposes no other financial requirements or treatment
limitations.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(1) (Example 1),
because the plan has no network of providers, all benefits provided are
out-of-network. Because inpatient, out-of-network medical/surgical
benefits are subject to separate financial requirements from outpatient,
out-of-network medical/surgical benefits, the rules of this paragraph
(c) apply separately with respect to any financial requirements and
treatment limitations, including the deductible, in each classification.
(2) Example 2--(i) Facts. A plan imposes a $500 deductible on all
benefits. The plan has no network of providers. The plan generally
imposes a 20 percent coinsurance requirement with respect to all
benefits, without distinguishing among inpatient, outpatient, emergency
care, or prescription drug benefits. The plan imposes no other financial
requirements or treatment limitations.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(2) (Example 2),
because the plan does not impose separate financial requirements (or
treatment limitations) based on classification, the rules of this
paragraph (c) apply with respect to the deductible and the coinsurance
across all benefits.
(3) Example 3--(i) Facts. Same facts as in paragraph
(c)(2)(ii)(C)(2)(i) of this section (Example 2), except the plan exempts
emergency care benefits from the 20 percent coinsurance requirement. The
plan imposes no other financial requirements or treatment limitations.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(3) (Example 3),
because the plan imposes separate financial requirements based on
classifications, the rules of this paragraph (c) apply with respect to
the deductible and the coinsurance separately for benefits in the
emergency care classification and all other benefits.
(4) Example 4--(i) Facts. Same facts as in paragraph
(c)(2)(ii)(C)(2)(i) of this section (Example 2), except the plan also
imposes a preauthorization requirement for all inpatient treatment in
order for benefits to be paid. No such requirement applies to outpatient
treatment.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(4) (Example 4),
because the plan has no network of providers, all benefits provided are
out-of-network. Because the plan imposes a separate treatment limitation
based on classifications, the rules of this paragraph (c) apply with
respect to the deductible and coinsurance separately for inpatient, out-
of-network benefits and all other benefits.
(5) Example 5--(i) Facts. A plan covers treatment for autism
spectrum disorder (ASD), a mental health condition, and covers
outpatient, out-of-network developmental screenings for ASD but excludes
all other benefits for outpatient treatment for ASD, including applied
behavior analysis (ABA) therapy, when provided on an out-of-network
basis. The plan generally covers the full range of outpatient treatments
(including core treatments) and treatment settings for medical
conditions and surgical procedures when provided on an out-of-network
basis. Under the generally recognized independent standards of current
medical practice consulted by the plan, developmental screenings alone
do not constitute a core treatment for ASD.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(5) (Example 5), the
plan violates the rules of this paragraph (c)(2)(ii). Although the plan
covers benefits for ASD in the outpatient, out-of-network
classification, it only covers developmental screenings, so it does not
cover a core treatment for ASD in the classification. Because the plan
generally covers the full range of medical/surgical benefits, including
a core treatment for one or more medical conditions or surgical
procedures in the classification, it fails to provide meaningful
benefits for treatment of ASD in the classification.
(6) Example 6--(i) Facts. Same facts as in paragraph
(c)(2)(ii)(C)(5) of this section (Example 5), except that the plan is an
HMO that does not cover the full range of medical/surgical benefits
including a core treatment for any medical conditions or surgical
procedures in the outpatient, out-of-network classification (except as
required under PHS Act
[[Page 96]]
sections 2799A-1 and 2799A-2), but covers benefits for medical
conditions and surgical procedures in the inpatient, in-network;
outpatient, in-network; emergency care; and prescription drug
classifications.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(6) (Example 6), the
plan does not violate the rules of this paragraph (c)(2)(ii). Because
the plan does not provide meaningful benefits including for a core
treatment for any medical condition or surgical procedure in the
outpatient, out-of-network classification (except as required under PHS
Act sections 2799A-1 and 2799A-2), the plan is not required to provide
meaningful benefits for any mental health conditions or substance use
disorders in that classification. Nevertheless, the plan must provide
meaningful benefits for each mental health condition and substance use
disorder for which the plan provides benefits in every classification in
which meaningful medical/surgical benefits are provided as required
under paragraph (c)(2)(ii)(A) of this section. This example does not
address whether the plan has complied with other applicable requirements
of this section in excluding coverage of ABA therapy in the outpatient,
out-of-network classification.
(7) Example 7--(i) Facts. A plan provides extensive benefits,
including for core treatments for many medical conditions and surgical
procedures in the outpatient, in-network classification, including
nutrition counseling for diabetes and obesity. The plan also generally
covers diagnosis and treatment for eating disorders, which are mental
health conditions, including coverage for nutrition counseling to treat
eating disorders in the outpatient, in-network classification. Nutrition
counseling is a core treatment for eating disorders, in accordance with
generally recognized independent standards of current medical practice
consulted by the plan.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(7) (Example 7), the
plan does not violate the rules of this paragraph (c)(2)(ii). The
coverage of diagnosis and treatment for eating disorders, including
nutrition counseling, in the outpatient, in-network classification
results in the plan providing meaningful benefits for the treatment of
eating disorders in the classification, as determined in comparison to
the benefits provided for medical conditions or surgical procedures in
the classification.
(8) Example 8--(i) Facts. A plan provides extensive benefits for the
core treatments for many medical conditions and surgical procedures in
the outpatient, in-network and prescription drug classifications. The
plan provides coverage for diagnosis and treatment for opioid use
disorder, a substance use disorder, in the outpatient, in-network
classification, by covering counseling and behavioral therapies and, in
the prescription drug classification, by covering medications to treat
opioid use disorder (MOUD). Counseling and behavioral therapies and
MOUD, in combination, are one of the core treatments for opioid use
disorder, in accordance with generally recognized independent standards
of current medical practice consulted by the plan.
(ii) Conclusion. In this paragraph (c)(2)(ii)(C)(8) (Example 8), the
plan does not violate the rules of this paragraph (c)(2)(ii). The
coverage of counseling and behavioral therapies and MOUD, in
combination, in the outpatient, in-network classification and
prescription drug classification, respectively, results in the plan
providing meaningful benefits for the treatment of opioid use disorder
in the outpatient, in-network and prescription drug classifications.
(3) * * *
(i) * * *
(A) Substantially all. For purposes of this paragraph (c)(3), a type
of financial requirement or quantitative treatment limitation is
considered to apply to substantially all medical/surgical benefits in a
classification of benefits if it applies to at least two-thirds of all
medical/surgical benefits in that classification. (For purposes of this
paragraph (c)(3)(i)(A), benefits expressed as subject to a zero level of
a type of financial requirement are treated as benefits not subject to
that type of financial requirement, and benefits expressed as subject to
a quantitative treatment limitation that is unlimited are treated as
benefits not subject to that type of quantitative treatment limitation.)
If a type of financial requirement or quantitative treatment limitation
does not apply to at least two-thirds of all medical/surgical benefits
in a classification, then that type cannot be applied to mental health
or substance use disorder benefits in that classification.
* * * * *
(C) Portion based on plan payments. For purposes of this paragraph
(c)(3), the determination of the portion of medical/surgical benefits in
a classification of benefits subject to a financial requirement or
quantitative treatment limitation (or subject to any level of a
financial requirement or quantitative treatment limitation) is based on
the dollar amount of all plan payments for medical/surgical benefits in
the classification expected to be paid under the plan for the plan year
(or for the portion of the plan year after a change in plan benefits
that affects the applicability of the financial requirement or
quantitative treatment limitation).
(D) Clarifications for certain threshold requirements. For any
deductible, the dollar amount of plan payments includes all plan
payments with respect to claims that would be subject to the deductible
if it had not
[[Page 97]]
been satisfied. For any out-of-pocket maximum, the dollar amount of plan
payments includes all plan payments associated with out-of-pocket
payments that are taken into account towards the out-of-pocket maximum
as well as all plan payments associated with out-of-pocket payments that
would have been made towards the out-of-pocket maximum if it had not
been satisfied. The rules of this paragraph (c)(3)(i)(D) apply for any
other thresholds at which the rate of plan payment changes. (See also
PHS Act section 2707 and Affordable Care Act section 1302(c), which
establish annual limitations on out-of-pocket maximums for all non-
grandfathered health plans.)
* * * * *
(iii) Special rules. Unless specifically permitted under this
paragraph (c)(3)(iii), sub-classifications are not permitted when
applying the rules of paragraph (c)(3) of this section.
(A) Multi-tiered prescription drug benefits. If a plan (or health
insurance coverage) applies different levels of financial requirements
to different tiers of prescription drug benefits based on reasonable
factors determined in accordance with the rules in paragraph (c)(4) of
this section (relating to requirements for nonquantitative treatment
limitations) and without regard to whether a drug is generally
prescribed with respect to medical/surgical benefits or with respect to
mental health or substance use disorder benefits, the plan (or health
insurance coverage) satisfies the parity requirements of this paragraph
(c) with respect to prescription drug benefits. Reasonable factors
include cost, efficacy, generic versus brand name, and mail order versus
pharmacy pick-up.
(B) Multiple network tiers. If a plan (or health insurance coverage)
provides benefits through multiple tiers of in-network providers (such
as an in-network tier of preferred providers with more generous cost-
sharing to participants than a separate in-network tier of participating
providers), the plan may divide its benefits furnished on an in-network
basis into sub-classifications that reflect network tiers, if the
tiering is based on reasonable factors determined in accordance with the
rules in paragraph (c)(4) of this section (such as quality, performance,
and market standards) and without regard to whether a provider provides
services with respect to medical/surgical benefits or mental health or
substance use disorder benefits. After the sub-classifications are
established, the plan or issuer may not impose any financial requirement
or treatment limitation on mental health or substance use disorder
benefits in any sub-classification that is more restrictive than the
predominant financial requirement or treatment limitation that applies
to substantially all medical/surgical benefits in the sub-classification
using the methodology set forth in paragraph (c)(3)(i) of this section.
* * * * *
(iv) Examples. The rules of paragraphs (c)(3)(i) through (iii) of
this section are illustrated by the following examples. In each example,
the group health plan is subject to the requirements of this section and
provides both medical/surgical benefits and mental health and substance
use disorder benefits.
(A) Example 1--(1) Facts. (i) For inpatient, out-of-network medical/
surgical benefits, a group health plan imposes five levels of
coinsurance. Using a reasonable method, the plan projects its payments
for the upcoming year as follows:
Table 1 to Paragraph (c)(3)(iv)(A)(1)(i)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Coinsurance rate................. 0%............. 10%................. 15%................. 20%................ 30%................ Total.
Projected payments............... $200x.......... $100x............... $450x............... $100x.............. $150x.............. $1,000x.
Percent of total plan costs...... 20%............ 10%................. 45%................. 10%................ 15%................
Percent subject to coinsurance N/A............ 12.5% (100x/800x)... 56.25% (450x/800x).. 12.5% (100x/800x).. 18.75% (150x/800x).
level.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(ii) The plan projects plan costs of $800x to be subject to
coinsurance ($100x + $450x + $100x + $150x = $800x). Thus, 80 percent
($800x/$1,000x) of the benefits are projected to be subject to
coinsurance, and 56.25 percent of the benefits subject to coinsurance
are projected to be subject to the 15 percent coinsurance level.
(2) Conclusion. In this paragraph (c)(3)(iv)(A) (Example 1), the
two-thirds threshold of the substantially all standard is met for
coinsurance because 80 percent of all inpatient, out-of-network medical/
surgical benefits are subject to coinsurance. Moreover, the 15 percent
coinsurance is the predominant level because it is applicable to more
than one-half of inpatient, out-of-network medical/surgical benefits
subject to the coinsurance requirement. The plan may not impose any
level of coinsurance with respect
[[Page 98]]
to inpatient, out-of-network mental health or substance use disorder
benefits that is more restrictive than the 15 percent level of
coinsurance.
(B) Example 2--(1) Facts. (i) For outpatient, in-network medical/
surgical benefits, a plan imposes five different copayment levels. Using
a reasonable method, the plan projects payments for the upcoming year as
follows:
Table 2 to Paragraph (c)(3)(iv)(B)(1)(i)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Copayment amount................. $0............. $10................. $15................. $20................ $50................ Total.
Projected payments............... $200x.......... $200x............... $200x............... $300x.............. $100x.............. $1,000x.
Percent of total plan costs...... 20%............ 20%................. 20%................. 30%................ 10%................
Percent subject to copayments.... N/A............ 25% (200x/800x)..... 25% (200x/800x)..... 37.5% (300x/800x).. 12.5% (100x/800x)..
--------------------------------------------------------------------------------------------------------------------------------------------------------
(ii) The plan projects plan costs of $800x to be subject to
copayments ($200x + $200x + $300x + $100x = $800x). Thus, 80 percent
($800x/$1,000x) of the benefits are projected to be subject to a
copayment.
(2) Conclusion. In this paragraph (c)(3)(iv)(B) (Example 2), the
two-thirds threshold of the substantially all standard is met for
copayments because 80 percent of all outpatient, in-network medical/
surgical benefits are subject to a copayment. Moreover, there is no
single level that applies to more than one-half of medical/surgical
benefits in the classification subject to a copayment (for the $10
copayment, 25%; for the $15 copayment, 25%; for the $20 copayment,
37.5%; and for the $50 copayment, 12.5%). The plan can combine any
levels of copayment, including the highest levels, to determine the
predominant level that can be applied to mental health or substance use
disorder benefits. If the plan combines the highest levels of copayment,
the combined projected payments for the two highest copayment levels,
the $50 copayment and the $20 copayment, are not more than one-half of
the outpatient, in-network medical/surgical benefits subject to a
copayment because they are exactly one-half ($300x + $100x = $400x;
$400x/$800x = 50%). The combined projected payments for the three
highest copayment levels--the $50 copayment, the $20 copayment, and the
$15 copayment--are more than one-half of the outpatient, in-network
medical/surgical benefits subject to the copayments ($100x + $300x +
$200x = $600x; $600x/$800x = 75%). Thus, the plan may not impose any
copayment on outpatient, in-network mental health or substance use
disorder benefits that is more restrictive than the least restrictive
copayment in the combination, the $15 copayment.
(C) Example 3--(1) Facts. A plan imposes a $250 deductible on all
medical/surgical benefits for self-only coverage and a $500 deductible
on all medical/surgical benefits for family coverage. The plan has no
network of providers. For all medical/surgical benefits, the plan
imposes a coinsurance requirement. The plan imposes no other financial
requirements or treatment limitations.
(2) Conclusion. In this paragraph (c)(3)(iv)(C) (Example 3), because
the plan has no network of providers, all benefits are provided out-of-
network. Because self-only and family coverage are subject to different
deductibles, whether the deductible applies to substantially all
medical/surgical benefits is determined separately for self-only
medical/surgical benefits and family medical/surgical benefits. Because
the coinsurance is applied without regard to coverage units, the
predominant coinsurance that applies to substantially all medical/
surgical benefits is determined without regard to coverage units.
(D) Example 4--(1) Facts. A plan applies the following financial
requirements for prescription drug benefits. The requirements are
applied without regard to whether a drug is generally prescribed with
respect to medical/surgical benefits or with respect to mental health or
substance use disorder benefits. Moreover, the process for certifying a
particular drug as ``generic'', ``preferred brand name'', ``non-
preferred brand name'', or ``specialty'' complies with the rules of
paragraph (c)(4) of this section (relating to requirements for
nonquantitative treatment limitations).
Table 3 to Paragraph (c)(3)(iv)(D)(1)
----------------------------------------------------------------------------------------------------------------
Tier 1 Tier 2 Tier 3 Tier 4
----------------------------------------------------------------------------------------------------------------
Tier description.............. Generic drugs... Preferred brand Non-preferred brand Specialty drugs.
name drugs. name drugs (which
may have Tier 1 or
Tier 2 alternatives).
Percent paid by plan.......... 90%............. 80%............. 60%.................. 50%.
----------------------------------------------------------------------------------------------------------------
[[Page 99]]
(2) Conclusion. In this paragraph (c)(3)(iv)(D) (Example 4), the
financial requirements that apply to prescription drug benefits are
applied without regard to whether a drug is generally prescribed with
respect to medical/surgical benefits or with respect to mental health or
substance use disorder benefits; the process for certifying drugs in
different tiers complies with paragraph (c)(4) of this section; and the
bases for establishing different levels or types of financial
requirements are reasonable. The financial requirements applied to
prescription drug benefits do not violate the parity requirements of
this paragraph (c)(3).
(E) Example 5--(1) Facts. A plan has two tiers of network of
providers: a preferred provider tier and a participating provider tier.
Providers are placed in either the preferred tier or participating tier
based on reasonable factors determined in accordance with the rules in
paragraph (c)(4) of this section, such as accreditation, quality and
performance measures (including customer feedback), and relative
reimbursement rates. Furthermore, provider tier placement is determined
without regard to whether a provider specializes in the treatment of
mental health conditions or substance use disorders, or medical/surgical
conditions. The plan divides the in-network classifications into two
sub-classifications (in-network/preferred and in-network/participating).
The plan does not impose any financial requirement or treatment
limitation on mental health or substance use disorder benefits in either
of these sub-classifications that is more restrictive than the
predominant financial requirement or treatment limitation that applies
to substantially all medical/surgical benefits in each sub-
classification.
(2) Conclusion. In this paragraph (c)(3)(iv)(E) (Example 5), the
division of in-network benefits into sub-classifications that reflect
the preferred and participating provider tiers does not violate the
parity requirements of this paragraph (c)(3).
(F) Example 6--(1) Facts. With respect to outpatient, in-network
benefits, a plan imposes a $25 copayment for office visits and a 20
percent coinsurance requirement for outpatient surgery. The plan divides
the outpatient, in-network classification into two sub-classifications
(in-network office visits and all other outpatient, in-network items and
services).The plan or issuer does not impose any financial requirement
or quantitative treatment limitation on mental health or substance use
disorder benefits in either of these sub-classifications that is more
restrictive than the predominant financial requirement or quantitative
treatment limitation that applies to substantially all medical/surgical
benefits in each sub-classification.
(2) Conclusion. In this paragraph (c)(3)(iv)(F) (Example 6), the
division of outpatient, in-network benefits into sub-classifications for
office visits and all other outpatient, in-network items and services
does not violate the parity requirements of this paragraph (c)(3).
(G) Example 7--(1) Facts. Same facts as in paragraph
(c)(3)(iv)(F)(1) of this section (Example 6), but for purposes of
determining parity, the plan divides the outpatient, in-network
classification into outpatient, in-network generalists and outpatient,
in-network specialists.
(2) Conclusion. In this paragraph (c)(3)(iv)(G) (Example 7), the
division of outpatient, in-network benefits into any sub-classifications
other than office visits and all other outpatient items and services
violates the requirements of paragraph (c)(3)(iii)(C) of this section.
* * * * *
(4) Nonquantitative treatment limitations. Consistent with paragraph
(a)(1) of this section, a group health plan (or health insurance
coverage offered by an issuer in connection with a group health plan)
may not impose any nonquantitative treatment limitation with respect to
mental health or substance use disorder benefits in any classification
that is more restrictive, as written or in operation, than the
predominant nonquantitative treatment limitation that applies to
substantially all medical/surgical benefits in the same classification.
For purposes of this paragraph (c)(4), a nonquantitative treatment
limitation is more restrictive than the predominant nonquantitative
treatment limitation that applies to substantially all medical/surgical
benefits in the same classification if the plan or issuer fails to meet
the requirements of paragraph (c)(4)(i) or (iii) of this section. In
such a case, the plan (or health insurance coverage) will be considered
to violate PHS Act section 2726 (a)(3)(A)(ii), and the nonquantitative
treatment limitation may not be imposed by the plan (or health insurance
coverage) with respect to mental health or substance use disorder
benefits in the classification.
(i) Requirements related to design and application of a
nonquantitative treatment limitation--(A) In general. A plan (or health
insurance coverage) may not impose a nonquantitative treatment
limitation with respect to mental health or substance use disorder
benefits in any classification unless, under the terms of the plan (or
health insurance coverage), as written and in operation, any processes,
strategies, evidentiary standards, or other factors used in designing
and applying the nonquantitative treatment limitation to mental health
or substance use disorder benefits in the classification are comparable
to, and are applied no more stringently than, the processes, strategies,
evidentiary standards, or other factors used
[[Page 100]]
in designing and applying the limitation with respect to medical/
surgical benefits in the classification.
(B) Prohibition on discriminatory factors and evidentiary standards.
For purposes of determining comparability and stringency under paragraph
(c)(4)(i)(A) of this section, a plan (or health insurance coverage) may
not rely upon discriminatory factors or evidentiary standards to design
a nonquantitative treatment limitation to be imposed on mental health or
substance use disorder benefits. A factor or evidentiary standard is
discriminatory if the information, evidence, sources, or standards on
which the factor or evidentiary standard are based are biased or not
objective in a manner that discriminates against mental health or
substance use disorder benefits as compared to medical/surgical
benefits.
(1) Information, evidence, sources, or standards are considered to
be biased or not objective in a manner that discriminates against mental
health or substance use disorder benefits as compared to medical/
surgical benefits if, based on all the relevant facts and circumstances,
the information, evidence, sources, or standards systematically disfavor
access or are specifically designed to disfavor access to mental health
or substance use disorder benefits as compared to medical/surgical
benefits. For purposes of this paragraph (c)(4)(i)(B)(1), relevant facts
and circumstances may include, but are not limited to, the reliability
of the source of the information, evidence, sources, or standards,
including any underlying data; the independence of the information,
evidence, sources, and standards relied upon; the analyses and
methodologies employed to select the information and the consistency of
their application; and any known safeguards deployed to prevent reliance
on skewed data or metrics. Information, evidence, sources, or standards
are not considered biased or not objective for this purpose if the plan
or issuer has taken the steps necessary to correct, cure, or supplement
any information, evidence, sources, or standards that would have been
biased or not objective in the absence of such steps.
(2) For purposes of this paragraph (c)(4)(i)(B), historical plan
data or other historical information from a time when the plan or
coverage was not subject to PHS Act section 2726 or was not in
compliance with PHS Act section 2726 are considered to be biased or not
objective in a manner that discriminates against mental health or
substance use disorder benefits as compared to medical/surgical
benefits, if the historical plan data or other historical information
systematically disfavor access or are specifically designed to disfavor
access to mental health or substance use disorder benefits as compared
to medical/surgical benefits, and the plan or issuer has not taken the
steps necessary to correct, cure, or supplement the data or information.
(3) For purposes of this paragraph (c)(4)(i)(B), generally
recognized independent professional medical or clinical standards and
carefully circumscribed measures reasonably and appropriately designed
to detect or prevent and prove fraud and abuse that minimize the
negative impact on access to appropriate mental health and substance use
disorder benefits are not information, evidence, sources, or standards
that are biased or not objective in a manner that discriminates against
mental health or substance use disorder benefits as compared to medical/
surgical benefits. However, plans and issuers must comply with the other
requirements in this paragraph (c)(4), as applicable, with respect to
such standards or measures that are used as the basis for a factor or
evidentiary standard used to design or apply a nonquantitative treatment
limitation.
(ii) Illustrative, non-exhaustive list of nonquantitative treatment
limitations. Nonquantitative treatment limitations include--
(A) Medical management standards (such as prior authorization)
limiting or excluding benefits based on medical necessity or medical
appropriateness, or based on whether the treatment is experimental or
investigative;
(B) Formulary design for prescription drugs;
(C) For plans with multiple network tiers (such as preferred
providers and participating providers), network tier design;
(D) Standards related to network composition, including but not
limited to, standards for provider and facility admission to participate
in a network or for continued network participation, including methods
for determining reimbursement rates, credentialing standards, and
procedures for ensuring the network includes an adequate number of each
category of provider and facility to provide services under the plan or
coverage;
(E) Plan or issuer methods for determining out-of-network rates,
such as allowed amounts; usual, customary, and reasonable charges; or
application of other external benchmarks for out-of-network rates;
(F) Refusal to pay for higher-cost therapies until it can be shown
that a lower-cost therapy is not effective (also known as fail-first
policies or step therapy protocols);
(G) Exclusions based on failure to complete a course of treatment;
and
(H) Restrictions based on geographic location, facility type,
provider specialty, and other criteria that limit the scope or duration
of benefits for services provided under the plan or coverage.
(iii) Required use of outcomes data--(A) In general. To ensure that
a nonquantitative treatment limitation applicable to mental health or
substance use disorder benefits in a
[[Page 101]]
classification, in operation, is no more restrictive than the
predominant nonquantitative treatment limitation applied to
substantially all medical/surgical benefits in the classification, a
plan or issuer must collect and evaluate relevant data in a manner
reasonably designed to assess the impact of the nonquantitative
treatment limitation on relevant outcomes related to access to mental
health and substance use disorder benefits and medical/surgical benefits
and carefully consider the impact as part of the plan's or issuer's
evaluation. As part of its evaluation, the plan or issuer may not
disregard relevant outcomes data that it knows or reasonably should know
suggest that a nonquantitative treatment limitation is associated with
material differences in access to mental health or substance use
disorder benefits as compared to medical/surgical benefits. The
Secretary, jointly with the Secretary of the Treasury and the Secretary
of Labor, may specify in guidance the type, form, and manner of
collection and evaluation for the data required under this paragraph
(c)(4)(iii)(A).
(1) Relevant data generally. For purposes of this paragraph
(c)(4)(iii)(A), relevant data could include, as appropriate, but are not
limited to, the number and percentage of claims denials and any other
data relevant to the nonquantitative treatment limitation required by
State law or private accreditation standards.
(2) Relevant data for nonquantitative treatment limitations related
to network composition. In addition to the relevant data set forth in
paragraph (c)(4)(iii)(A)(1) of this section, relevant data for
nonquantitative treatment limitations related to network composition
could include, as appropriate, but are not limited to, in-network and
out-of-network utilization rates (including data related to provider
claim submissions), network adequacy metrics (including time and
distance data, and data on providers accepting new patients), and
provider reimbursement rates (for comparable services and as benchmarked
to a reference standard).
(3) Unavailability of data. (i) If a plan or issuer newly imposes a
nonquantitative treatment limitation for which relevant data is
initially temporarily unavailable and the plan or issuer therefore
cannot comply with this paragraph (c)(4)(iii)(A), the plan or issuer
must include in its comparative analysis, as required under Sec.
146.137(c)(5)(i)(C), a detailed explanation of the lack of relevant
data, the basis for the plan's or issuer's conclusion that there is a
lack of relevant data, and when and how the data will become available
and be collected and analyzed. Such a plan or issuer also must comply
with this paragraph (c)(4)(iii)(A) as soon as practicable once relevant
data becomes available.
(ii) If a plan or issuer imposes a nonquantitative treatment
limitation for which no data exist that can reasonably assess any
relevant impact of the nonquantitative treatment limitation on relevant
outcomes related to access to mental health and substance use disorder
benefits and medical/surgical benefits, the plan or issuer must include
in its comparative analysis, as required under Sec.
146.137(c)(5)(i)(D), a reasoned justification as to the basis for the
conclusion that there are no data that can reasonably assess the
nonquantitative treatment limitation's impact, why the nature of the
nonquantitative treatment limitation prevents the plan or issuer from
reasonably measuring its impact, an explanation of what data was
considered and rejected, and documentation of any additional safeguards
or protocols used to ensure the nonquantitative treatment limitation
complies with this section. If a plan or issuer becomes aware of data
that can reasonably assess any relevant impact of the nonquantitative
treatment limitation, the plan or issuer must comply with this paragraph
(c)(4)(iii)(A) as soon as practicable.
(iii) Consistent with paragraph (a)(1) of this section, paragraphs
(c)(4)(iii)(A)(3)(i) and (ii) of this section shall only apply in very
limited circumstances and, where applicable, shall be construed
narrowly.
(B) Material differences. To the extent the relevant data evaluated
under paragraph (c)(4)(iii)(A) of this section suggest that the
nonquantitative treatment limitation contributes to material differences
in access to mental health and substance use disorder benefits as
compared to medical/surgical benefits in a classification, such
differences will be considered a strong indicator that the plan or
issuer violates this paragraph (c)(4).
(1) Where the relevant data suggest that the nonquantitative
treatment limitation contributes to material differences in access to
mental health and substance use disorder benefits as compared to
medical/surgical benefits in a classification, the plan or issuer must
take reasonable action, as necessary, to address the material
differences to ensure compliance, in operation, with this paragraph
(c)(4) and must document the actions that have been or are being taken
by the plan or issuer to address material differences in access to
mental health or substance use disorder benefits, as compared to
medical/surgical benefits, as required by Sec. 146.137(c)(5)(iv).
(2) For purposes of this paragraph (c)(4)(iii)(B), relevant data are
considered to suggest that the nonquantitative treatment limitation
contributes to material differences in access to mental health or
substance use disorder benefits as compared to medical/surgical benefits
if, based on all relevant facts and circumstances, and taking into
account the considerations outlined in this paragraph (c)(4)(iii)(B)(2),
the difference
[[Page 102]]
in the data suggests that the nonquantitative treatment limitation is
likely to have a negative impact on access to mental health or substance
use disorder benefits as compared to medical/surgical benefits.
(i) Relevant facts and circumstances, for purposes of this paragraph
(c)(4)(iii)(B)(2), may include, but are not limited to, the terms of the
nonquantitative treatment limitation at issue, the quality or
limitations of the data, causal explanations and analyses, evidence as
to the recurring or non-recurring nature of the results, and the
magnitude of any disparities.
(ii) Differences in access to mental health or substance use
disorder benefits attributable to generally recognized independent
professional medical or clinical standards or carefully circumscribed
measures reasonably and appropriately designed to detect or prevent and
prove fraud and abuse that minimize the negative impact on access to
appropriate mental health and substance use disorder benefits, which are
used as the basis for a factor or evidentiary standard used to design or
apply a nonquantitative treatment limitation, are not considered to be
material for purposes of this paragraph (c)(4)(iii)(B). To the extent a
plan or issuer attributes any differences in access to the application
of such standards or measures, the plan or issuer must explain the bases
for that conclusion in the documentation prepared under Sec.
146.137(c)(5)(iv)(A).
(C) Nonquantitative treatment limitations related to network
composition. For purposes of applying paragraph (c)(4)(iii)(A) of this
section with respect to nonquantitative treatment limitations related to
network composition, a plan or issuer must collect and evaluate relevant
data in a manner reasonably designed to assess the aggregate impact of
all such nonquantitative treatment limitations on access to mental
health and substance use disorder benefits and medical/surgical
benefits. Examples of possible actions that a plan or issuer could take
to comply with the requirement under paragraph (c)(4)(iii)(B)(1) of this
section to take reasonable action, as necessary, to address any material
differences in access with respect to nonquantitative treatment
limitations related to network composition, to ensure compliance with
this paragraph (c)(4), include, but are not limited to:
(1) Strengthening efforts to recruit and encourage a broad range of
available mental health and substance use disorder providers and
facilities to join the plan's or issuer's network of providers,
including taking actions to increase compensation or other inducements,
streamline credentialing processes, or contact providers reimbursed for
items and services provided on an out-of-network basis to offer
participation in the network;
(2) Expanding the availability of telehealth arrangements to
mitigate any overall mental health and substance use disorder provider
shortages in a geographic area;
(3) Providing additional outreach and assistance to participants and
beneficiaries enrolled in the plan or coverage to assist them in finding
available in-network mental health and substance use disorder providers
and facilities; and
(4) Ensuring that provider directories are accurate and reliable.
(iv) Prohibition on separate nonquantitative treatment limitations
applicable only to mental health or substance use disorder benefits.
Consistent with paragraph (c)(2)(i) of this section, a group health plan
(or health insurance coverage offered by an issuer in connection with
such a plan) may not apply any nonquantitative treatment limitation that
is applicable only with respect to mental health or substance use
disorder benefits and does not apply with respect to any medical/
surgical benefits in the same benefit classification.
(v) Effect of final determination of noncompliance under Sec.
146.137. (A) If a group health plan (or health insurance issuer offering
coverage in connection with a group health plan) receives a final
determination from the Secretary or applicable State authority that the
plan or issuer is not in compliance with the requirements of PHS Act
section 2726(a)(8) or Sec. 146.137 with respect to a nonquantitative
treatment limitation, the nonquantitative treatment limitation violates
this paragraph (c)(4) and the Secretary or applicable State authority
may direct the plan or issuer not to impose the nonquantitative
treatment limitation with respect to mental health or substance use
disorder benefits in the relevant classification, unless and until the
plan or issuer demonstrates to the Secretary or applicable State
authority compliance with the requirements of this section or takes
appropriate action to remedy the violation.
(B) A determination by the Secretary of whether to require cessation
of a nonquantitative treatment limitation under this paragraph (c)(4)(v)
will be based on an evaluation of the relevant facts and circumstances
involved in the specific final determination and the nature of the
underlying nonquantitative treatment limitation and will take into
account the interest of plan participants and beneficiaries and feedback
from the plan or issuer.
(vi) Examples. The rules of this paragraph (c)(4) are illustrated by
the following examples. In each example, the group health plan is
subject to the requirements of this section and provides both medical/
surgical benefits and mental health and substance use disorder benefits.
[[Page 103]]
(A) Example 1 (not comparable and more stringent factors for
reimbursement rate methodology, in operation)--(1) Facts. A plan's
reimbursement rate methodology for outpatient, in-network providers is
based on a variety of factors. As written, for mental health, substance
use disorder, and medical/surgical benefits, all reimbursement rates for
physicians and non-physician practitioners for the same Current
Procedural Terminology (CPT) code are based on a combination of factors,
such as the nature of the service, duration of the service, intensity
and specialization of training, provider licensure and type, number of
providers qualified to provide the service in a given geographic area,
and market need (demand). In operation, the plan utilizes an additional
strategy to further reduce reimbursement rates for mental health and
substance use disorder non-physician providers from those paid to mental
health and substance use disorder physicians by the same percentage for
every CPT code, but does not apply the same reductions for non-physician
medical/surgical providers.
(2) Conclusion. In this paragraph (c)(4)(vi)(A) (Example 1), the
plan violates the rules of this paragraph (c)(4). Because the plan
reimburses non-physician providers of mental health and substance use
disorder services by reducing their reimbursement rate from the rate for
physician providers of mental health and substance use disorder services
by the same percentage for every CPT code but does not apply the same
reductions to non-physician providers of medical/surgical services from
the rate for physician providers of medical/surgical services, in
operation, the factors used in designing and applying the
nonquantitative treatment limitation to mental health and substance use
disorder benefits in the outpatient, in-network classification are not
comparable to, and are applied more stringently than, the factors used
in designing and applying the limitation with respect to medical/
surgical benefits in the same classification. As a result, the
nonquantitative treatment limitation with respect to mental health or
substance use disorder benefits in the outpatient, in-network
classification is more restrictive than the predominant nonquantitative
treatment limitation that applies to substantially all medical/surgical
benefits in the same classification.
(B) Example 2 (strategy for exclusion for experimental or
investigative treatment more stringently applied to ABA therapy in
operation)--(1) Facts. A plan, as written, generally excludes coverage
for all treatments that are experimental or investigative for both
medical/surgical benefits and mental health and substance use disorder
benefits in the outpatient, in-network classification. As a result, the
plan generally excludes, as experimental, a treatment or procedure when
no professionally recognized treatment guidelines include the treatment
or procedure as a clinically appropriate standard of care for the
condition or disorder and fewer than two randomized controlled trials
are available to support the treatment's use with respect to the given
condition or disorder. The plan provides benefits for the treatment of
ASD, which is a mental health condition, but, in operation, the plan
excludes coverage for ABA therapy to treat children with ASD, deeming it
experimental. More than one professionally recognized treatment
guideline defines clinically appropriate standards of care for ASD and
more than two randomized controlled trials are available to support the
use of ABA therapy as one intervention to treat certain children with
ASD.
(2) Conclusion. In this paragraph (c)(4)(vi)(B) (Example 2), the
plan violates the rules of this paragraph (c)(4). As written, the plan
excludes coverage of experimental treatment of medical conditions and
surgical procedures, mental health conditions, and substance use
disorders when no professionally recognized treatment guidelines define
clinically appropriate standards of care for the condition or disorder
as including the treatment or procedure at issue, and fewer than two
randomized controlled trials are available to support the treatment's
use with respect to the given condition or procedure. However, in
operation, the plan deviates from this strategy with respect to ABA
therapy because more than one professionally recognized treatment
guideline defines clinically appropriate standards of care for ASD as
including ABA therapy to treat certain children with ASD and more than
two randomized controlled trials are available to support the use of ABA
therapy to treat certain children with ASD. Therefore, in operation, the
strategy used to design the nonquantitative treatment limitation for
benefits for the treatment of ASD, which is a mental health condition,
in the outpatient, in-network classification is not comparable to, and
is applied more stringently than, the strategy used to design the
nonquantitative treatment limitation for medical/surgical benefits in
the same classification. As a result, the nonquantitative treatment
limitation with respect to mental health or substance use disorder
benefits in the outpatient, in-network classification is more
restrictive than the predominant nonquantitative treatment limitation
that applies to substantially all medical/surgical benefits in the same
classification.
(C) Example 3 (step therapy protocol with exception for severe or
irreversible consequences, discriminatory factor)--(1) Facts. A plan's
written terms include a step therapy protocol that requires participants
and beneficiaries who are prescribed certain drugs to try and fail a
generic or preferred brand name drug before the plan will cover the drug
originally prescribed by a participant's or beneficiary's
[[Page 104]]
attending provider. The plan provides an exception to this protocol that
was developed solely based on a methodology developed by an external
third-party organization. The third-party organization's methodology,
which is not based on a generally recognized independent professional
medical or clinical standard, identifies instances in which a delay in
treatment with a drug prescribed for a medical condition or surgical
procedure could result in either severe or irreversible consequences.
However, with respect to a drug prescribed for a mental health condition
or a substance use disorder, the third-party organization's methodology
only identifies instances in which a delay in treatment could result in
both severe and irreversible consequences, and the plan does not take
any steps to correct, cure, or supplement the methodology.
(2) Conclusion. In this paragraph (c)(4)(vi)(C) (Example 3), the
plan violates the rules of paragraph (c)(4)(i)(B) of this section. The
source upon which the factor used to apply the step therapy protocol is
based is biased or not objective in a manner that discriminates against
mental health or substance use disorder benefits as compared to medical/
surgical benefits because it addresses instances in which a delay in
treatment with a drug prescribed for a medical condition or surgical
procedure could result in either severe or irreversible consequences,
but only addresses instances in which a delay in treatment with a drug
prescribed for a mental health condition or substance use disorder could
result in both severe and irreversible consequences, and the plan fails
to take the steps necessary to correct, cure, or supplement the
methodology so that it is not biased and is objective. Based on the
relevant facts and circumstances, this source systematically disfavors
access or is specifically designed to disfavor access to mental health
or substance use disorder benefits as compared to medical/surgical
benefits. Therefore, the factor used to apply the step therapy protocol
is discriminatory for purposes of determining comparability and
stringency under paragraph (c)(4)(i)(A) of this section, and may not be
relied upon by the plan.
(D) Example 4 (use of historical plan data and plan steps to
correct, cure, or supplement)--(1) Facts. A plan's methodology for
calculating provider reimbursement rates relies only on historical plan
data on total plan spending for each specialty, divided between mental
health and substance use disorder providers and medical/surgical
providers, from a time when the plan was not subject to PHS Act section
2726. The plan has used these historical plan data for many years to
establish base reimbursement rates in all provider specialties for which
it provides medical/surgical, mental health, and substance use disorder
benefits in the inpatient, in-network classification. In evaluating the
use of these historical plan data in the design of the methodology for
calculating provider reimbursement rates, the plan determined, based on
all the relevant facts and circumstances, that the historical plan data
systematically disfavor access or are specifically designed to disfavor
access to mental health or substance use disorder benefits as compared
to medical/surgical benefits. To ensure this information about
historical reimbursement rates is not biased and is objective, the plan
supplements its methodology to develop the base reimbursement rates for
mental health and substance use disorder providers in accordance with
additional information, evidence, sources, and standards that reflect
the increased demand for mental health and substance use disorder
benefits in the inpatient, in-network classification and to attract
sufficient mental health and substance use disorder providers to the
network, so that the relevant facts and circumstances indicate the
supplemented information, evidence, sources, or standards do not
systematically disfavor access and are not specifically designed to
disfavor access to mental health and substance use disorder benefits as
compared to medical/surgical benefits.
(2) Conclusion. In this paragraph (c)(4)(vi)(D) (Example 4), the
plan does not violate the rules of paragraph (c)(4)(i)(B) of this
section with respect to the plan's methodology for calculating provider
reimbursement rates in the inpatient, in-network classification. The
relevant facts and circumstances indicate that the plan's use of only
historical plan data to design its methodology for calculating provider
reimbursement rates in the inpatient, in-network classification would
otherwise be considered to be biased or not objective in a manner that
discriminates against mental health or substance use disorder benefits
as compared to medical/surgical benefits under paragraph (c)(4)(i)(B)(2)
of this section, since the historical data systematically disfavor
access or are specifically designed to disfavor access to mental health
or substance use disorder benefits as compared to medical/surgical
benefits. However, the plan took the steps necessary to supplement the
information, evidence, sources, and standards to reasonably reflect the
increased demand for mental health and substance use disorder benefits
in the inpatient, in-network classification, and adjust the methodology
to increase reimbursement rates for those benefits, thereby ensuring
that the information, evidence, sources, and standards relied upon by
the plan for this purpose are not biased and are objective. Therefore,
the factors and evidentiary standards used to design the plan's
methodology for calculating provider reimbursement rates in the
inpatient, in-network classification are not discriminatory.
[[Page 105]]
(E) Example 5 (generally recognized independent professional medical
or clinical standards and more stringent prior authorization requirement
in operation)--(1) Facts. The provisions of a plan state that it relies
on, and does not deviate from, generally recognized independent
professional medical or clinical standards to inform the factor used to
design prior authorization requirements for both medical/surgical and
mental health and substance use disorder benefits in the prescription
drug classification. The generally recognized independent professional
medical standard for treatment of opioid use disorder that the plan
utilizes--in this case, the American Society of Addiction Medicine
national practice guidelines--does not support prior authorization every
30 days for buprenorphine/naloxone. However, in operation, the plan
requires prior authorization for buprenorphine/naloxone combination for
treatment of opioid use disorder, every 30 days, which is inconsistent
with the generally recognized independent professional medical standard
on which the factor used to design the limitation is based. The plan's
factor used to design prior authorization requirements for medical/
surgical benefits in the prescription drug classification relies on, and
does not deviate from, generally recognized independent professional
medical or clinical standards.
(2) Conclusion. In this paragraph (c)(4)(vi)(E) (Example 5), the
plan violates the rules of this paragraph (c)(4). The American Society
of Addiction Medicine national practice guidelines on which the factor
used to design prior authorization requirements for substance use
disorder benefits is based are generally recognized independent
professional medical or clinical standards that are not considered to be
biased or not objective in a manner that discriminates against mental
health and substance use disorder benefits under paragraph
(c)(4)(i)(B)(3) of this section. However, the plan must comply with
other requirements in this paragraph (c)(4), as applicable, with respect
to such standards or measures that are used as the basis for a factor or
evidentiary standard used to design or apply a nonquantitative treatment
limitation. In operation, the plan's factor used to design and apply
prior authorization requirements with respect to substance use disorder
benefits is not comparable to, and is applied more stringently than, the
same factor used to design and apply prior authorization requirements
for medical/surgical benefits, because the factor relies on, and does
not deviate from, generally recognized independent professional medical
or clinical standards for medical/surgical benefits, but deviates from
the relevant guidelines for substance use disorder benefits. As a
result, the nonquantitative treatment limitation with respect to
substance use disorder benefits in the prescription drug classification
is more restrictive than the predominant nonquantitative treatment
limitation that applies to substantially all medical/surgical benefits
in the same classification.
(F) Example 6 (plan claims no data exist to reasonably assess impact
of nonquantitative treatment limitation on access; medical necessity
criteria)--(1) Facts. A plan approves or denies claims for mental health
and substance use disorder benefits and for medical/surgical benefits in
the inpatient, in-network and outpatient, in-network classifications
based on medical necessity criteria. The plan states in its comparative
analysis that no data exist that can reasonably assess any relevant
impact of the medical necessity criteria nonquantitative treatment
limitation on relevant outcomes related to access to mental health or
substance use disorder benefits as compared to the plan's medical
necessity criteria nonquantitative treatment limitation's impact on
relevant outcomes related to access to medical/surgical benefits in the
relevant classifications, without further explanation.
(2) Conclusion. In this paragraph (c)(4)(vi)(F) (Example 6), the
plan violates this paragraph (c)(4). The plan does not comply with
paragraph (c)(4)(iii)(A)(3)(ii) of this section because the plan did not
include in its comparative analysis, as required under Sec.
146.137(c)(5)(i)(D), a reasoned justification as to the basis for its
conclusion that there are no data that can reasonably assess the
nonquantitative treatment limitation's impact, an explanation of why the
nature of the nonquantitative treatment limitation prevents the plan
from reasonably measuring its impact, an explanation of what data was
considered and rejected, and documentation of any additional safeguards
or protocols used to ensure the nonquantitative treatment limitation
complies with this paragraph (c)(4). Data that could reasonably assess
the medical necessity criteria nonquantitative treatment limitation's
impact might include, for example, the number and percentage of claims
denials, or the number and percentage of claims that were approved for a
lower level of care than the level requested on the initial claim.
Therefore, because the plan has not collected and evaluated relevant
data in a manner reasonably designed to assess the impact of the
nonquantitative treatment limitation on relevant outcomes related to
access to mental health and substance use disorder benefits and medical/
surgical benefits in the relevant classifications, the plan violates the
requirements of paragraph (c)(4)(iii) of this section, and violates the
requirements under Sec. 146.137(c)(5)(i)(D) because it did not include
sufficient information in its comparative analysis with respect to the
lack of relevant data.
(G) Example 7 (concurrent review data collection; no material
difference in access)--(1)
[[Page 106]]
Facts. A plan follows a written process to apply a concurrent review
nonquantitative treatment limitation to all medical/surgical benefits
and mental health and substance use disorder benefits within the
inpatient, in-network classification. Under this process, a first-level
review is conducted in every instance in which concurrent review applies
and an authorization request is approved by the first-level reviewer
only if the clinical information submitted by the facility meets the
plan's criteria for a continued stay. If the first-level reviewer is
unable to approve the authorization request because the clinical
information submitted by the facility does not meet the plan's criteria
for a continued stay, it is sent to a second-level reviewer who will
either approve or deny the request. The plan collects relevant data,
including the number of referrals to second-level review, and the number
of denials of claims for medical/surgical benefits and mental health and
substance use disorder benefits subject to concurrent review as compared
to the total number of claims subject to concurrent review, in the
inpatient, in-network classification. The plan also collects and
evaluates the number of denied claims for medical/surgical benefits and
mental health and substance use disorder benefits that are overturned on
appeal in the inpatient, in-network classification. The plan evaluates
the relevant data and determines that, based on the relevant facts and
circumstances, the data do not suggest that the concurrent review
nonquantitative treatment limitation contributes to material differences
in access to mental health or substance use disorder benefits as
compared to medical/surgical benefits in the classification. Upon
requesting the plan's comparative analysis for the concurrent review
nonquantitative treatment limitation and reviewing the relevant data,
the Secretary does not request additional data and agrees that the data
do not suggest material differences in access.
(2) Conclusion. In this paragraph (c)(4)(vi)(G) (Example 7), the
plan does not violate the rules of paragraph (c)(4)(iii) of this
section. The plan collected and evaluated relevant data in a manner
reasonably designed to assess the impact of the nonquantitative
treatment limitation on relevant outcomes related to access to mental
health and substance use disorder benefits and medical/surgical benefits
and considered the impact as part of its evaluation. Because the
relevant data evaluated do not suggest that the nonquantitative
treatment limitation contributes to material differences in access to
mental health and substance use disorder benefits as compared to
medical/surgical benefits in the inpatient, in-network classification,
under paragraph (c)(4)(iii)(B) of this section, there is no strong
indicator that the plan violates this paragraph (c)(4).
(H) Example 8 (material difference in access for prior authorization
requirement with reasonable action)--(1) Facts. A plan requires prior
authorization that a treatment is medically necessary for all inpatient,
in-network medical/surgical benefits and for all inpatient, in-network
mental health and substance use disorder benefits. The plan collects and
evaluates relevant data in a manner reasonably designed to assess the
impact of the prior authorization requirement on relevant outcomes
related to access to mental health and substance use disorder benefits
and medical/surgical benefits in the inpatient, in-network
classification. The plan's written process for prior authorization
states that the plan approves inpatient, in-network benefits for medical
conditions and surgical procedures and mental health and substance use
disorder benefits for periods of 1, 3, and 7 days, after which a
treatment plan must be submitted by the patient's attending provider and
approved by the plan. Approvals for mental health and substance use
disorder benefits are most commonly given only for 1 day, after which a
treatment plan must be submitted by the patient's attending provider and
approved by the plan. The relevant data show that approvals for 7 days
are most common for medical conditions and surgical procedures under
this plan. Based on all the relevant facts and circumstances, the
difference in the relevant data suggests that the nonquantitative
treatment limitation is likely to have a negative impact on access to
mental health and substance use disorder benefits as compared to
medical/surgical benefits. Therefore, the data suggest that the
nonquantitative treatment limitation contributes to material differences
in access. To address these material differences in access, the plan
consults more recent medical guidelines to update the factors that
inform its medical necessity nonquantitative treatment limitations.
Based on this review, the plan modifies the limitation so that
inpatient, in-network prior authorization requests for mental health or
substance use disorder benefits are approved for similar periods to what
is approved for medical/surgical benefits. The plan includes
documentation of this action as part of its comparative analysis.
(2) Conclusion. In this paragraph (c)(4)(vi)(H) (Example 8), the
plan does not violate the rules of paragraph (c)(4)(iii) of this
section. While relevant data for the plan's prior authorization
requirements suggested that the nonquantitative treatment limitation
contributes to material differences in access to mental health and
substance use disorder benefits as compared to inpatient, in-network
medical/surgical benefits under paragraph (c)(4)(iii)(B) of this
section, the plan has taken reasonable action, as necessary, to ensure
compliance, in operation, with this paragraph (c)(4) by updating
[[Page 107]]
the factors that inform its prior authorization nonquantitative
treatment limitation for inpatient, in-network mental health and
substance use disorder benefits so that these benefits are approved for
similar periods to what is approved for medical/surgical benefits. The
plan also documents its action taken to address material differences in
access to inpatient, in-network benefits as required by paragraph
(c)(4)(iii)(B)(1) of this section.
(I) Example 9 (differences attributable to generally recognized
independent professional medical or clinical standards)--(1) Facts. A
group health plan develops a medical management requirement for all
inpatient, out-of-network benefits for both medical/surgical benefits
and mental health and substance use disorder benefits to ensure
treatment is medically necessary. The factors and evidentiary standards
used to design and apply the medical management requirement rely on
independent professional medical or clinical standards that are
generally recognized by health care providers and facilities in relevant
clinical specialties. The processes, strategies, evidentiary standards,
and other factors used in designing and applying the medical management
requirement to mental health and substance use disorder benefits are
comparable to, and are applied no more stringently than, the processes,
strategies, evidentiary standards, and other factors used in designing
and applying the requirement with respect to medical/surgical benefits.
The plan collects and evaluates relevant data in a manner reasonably
designed to assess the impact of the medical management nonquantitative
treatment limitation on relevant outcomes related to access to mental
health and substance use disorder benefits and medical/surgical
benefits, and considers the impact as part of the plan's evaluation, as
required by paragraph (c)(4)(iii)(A) of this section. Within the
inpatient, out-of-network classification, the application of the medical
management requirement results in a higher percentage of denials for
mental health and substance use disorder claims than medical/surgical
claims, because the benefits were found to be medically necessary for a
lower percentage of mental health and substance use disorder claims. The
plan correctly determines that these differences in access are
attributable to the generally recognized independent professional
medical or clinical standards used as the basis for the factors and
evidentiary standards used to design or apply the limitation and
adequately explains the bases for that conclusion as part of its
comparative analysis.
(2) Conclusion. In this paragraph (c)(4)(vi)(I) (Example 9), the
plan does not violate the rules of this paragraph (c)(4). Generally
recognized independent professional medical or clinical standards of
care are not considered to be information, evidence, sources, or
standards that are biased and not objective in a manner that
discriminates against mental health or substance use disorder benefits
as compared to medical/surgical benefits, and the plan otherwise
complies with the requirements in paragraph (c)(4)(i) of this section.
Additionally, the plan does not violate paragraph (c)(4)(iii) of this
section because it has collected and evaluated relevant data, the
differences in access are attributable to the generally recognized
independent professional medical or clinical standards that are used as
the basis for the factors and evidentiary standards used to design or
apply the medical management nonquantitative treatment limitation, and
the plan explains the bases for this conclusion in its comparative
analysis. As a result, the nonquantitative treatment limitation with
respect to mental health or substance use disorder benefits in the
inpatient, out-of-network classification is no more restrictive than the
predominant nonquantitative treatment limitation that applies to
substantially all medical/surgical benefits in the same classification.
(J) Example 10 (material differences in access for standards for
provider admission to a network with reasonable action)--(1) Facts. A
plan applies nonquantitative treatment limitations related to network
composition in the inpatient, in-network and outpatient, in-network
classifications. The plan's networks are constructed by separate service
providers for medical/surgical benefits and mental health and substance
use disorder benefits. The processes, strategies, evidentiary standards,
and other factors used in designing and applying the nonquantitative
treatment limitations related to network composition for mental health
or substance use disorder benefits in the outpatient, in-network and
inpatient, in-network classifications are comparable to, and are applied
no more stringently than, the processes, strategies, evidentiary
standards, and other factors used in designing and applying the
nonquantitative treatment limitations with respect to medical/surgical
benefits in the classifications, as required under paragraph (c)(4)(i)
of this section. In order to ensure, in operation, that the
nonquantitative treatment limitations are no more restrictive than the
predominant nonquantitative treatment limitations applied to
substantially all medical/surgical benefits in the classification, the
plan collects and evaluates relevant data in a manner reasonably
designed to assess the aggregate impact of all the nonquantitative
treatment limitations related to network composition on relevant
outcomes related to access to mental health and substance use disorder
benefits as compared with access to medical/surgical benefits and
considers the impact as part of the plan's evaluation. The plan
considers relevant data that is known,
[[Page 108]]
or reasonably should be known, including metrics relating to the time
and distance from plan participants and beneficiaries to network
providers in rural and urban regions; the number of network providers
accepting new patients; the proportions of mental health and substance
use disorder and medical/surgical providers and facilities that provide
services in rural and urban regions who are in the plan's network;
provider reimbursement rates (for comparable services and benchmarked to
a reference standard, as appropriate); and in-network and out-of-network
utilization rates (including data related to the dollar value and number
of provider claims submissions). The plan determines that the relevant
data suggest that the nonquantitative treatment limitations in the
aggregate contribute to material differences in access to mental health
and substance use disorder benefits compared to medical/surgical
benefits in the classifications because, based on all the relevant facts
and circumstances, the differences in the data suggest that the
nonquantitative treatment limitations related to network composition are
likely to have a negative impact on access to mental health or substance
use disorder benefits as compared to medical/surgical benefits. The plan
takes reasonable actions, as necessary, to address the material
differences in access, to ensure compliance, in operation, with this
paragraph (c)(4), by strengthening its efforts to recruit and encourage
a broad range of available providers and facilities to join the plan's
network of providers, including by taking actions to increase
compensation and other inducements, streamline credentialing processes,
contact providers reimbursed for items and services provided on an out-
of-network basis to offer participation in the network, and develop a
process to monitor the effects of such efforts; expanding the
availability of telehealth arrangements to mitigate overall provider
shortages in certain geographic areas; providing additional outreach and
assistance to participants and beneficiaries enrolled in the plan to
assist them in finding available in-network providers and facilities;
and ensuring that the plan's provider directories are accurate and
reliable. The plan documents the efforts that it has taken to address
the material differences in access that the data revealed, and the plan
includes the documentation as part of its comparative analysis
submission.
(2) Conclusion. In this paragraph (c)(4)(vi)(J) (Example 10), the
plan does not violate the rules of this paragraph (c)(4). The plan's
nonquantitative treatment limitations related to network composition
comply with the rules of paragraph (c)(4)(i) of this section.
Additionally, the plan collects and evaluates relevant data, as required
under paragraph (c)(4)(iii)(A) of this section, in a manner reasonably
designed to assess the aggregate impact of all such nonquantitative
treatment limitations on relevant outcomes related to access to mental
health and substance use disorder benefits and medical/surgical
benefits, as required under paragraph (c)(4)(iii)(C) of this section.
While the data suggest that the nonquantitative treatment limitations
contribute to material differences in access to mental health and
substance use disorder benefits as compared to medical/surgical
benefits, the plan has taken reasonable action, as necessary, to ensure
compliance with this paragraph (c)(4). The plan also documents the
actions that have been and are being taken by the plan to address
material differences as required by Sec. 146.137(c)(5)(iv). As a
result, the network composition nonquantitative treatment limitations
with respect to mental health or substance use disorder benefits in the
inpatient, in-network and outpatient, in-network classifications are no
more restrictive than the predominant nonquantitative treatment
limitations that apply to substantially all medical/surgical benefits in
the same classifications.
(K) Example 11 (separate EAP exhaustion treatment limitation
applicable only to mental health or substance use disorder benefits)--
(1) Facts. An employer maintains both a major medical plan and an
employee assistance program (EAP). The EAP provides, among other
benefits, a limited number of mental health or substance use disorder
counseling sessions, which, together with other benefits provided by the
EAP, are not significant benefits in the nature of medical care.
Participants are eligible for mental health or substance use disorder
benefits under the major medical plan only after exhausting the
counseling sessions provided by the EAP. No similar exhaustion
requirement applies with respect to medical/surgical benefits provided
under the major medical plan.
(2) Conclusion. In this paragraph (c)(4)(vi)(K) (Example 11), the
requirement that limits eligibility for mental health and substance use
disorder benefits under the major medical plan until EAP benefits are
exhausted is a nonquantitative treatment limitation subject to the
parity requirements of this paragraph (c)(4). Because the limitation
does not apply to medical/surgical benefits, it is a separate
nonquantitative treatment limitation applicable only to mental health
and substance use disorder benefits that violates paragraph (c)(4)(iv)
of this section. Additionally, this EAP would not qualify as excepted
benefits under Sec. 146.145(b)(3)(vi)(B)(1) because participants in the
major medical plan are required to use and exhaust benefits under the
EAP (making the EAP a gatekeeper) before an individual is eligible for
benefits under the plan.
(L) Example 12 (separate exclusion for treatment in a residential
facility applicable only to
[[Page 109]]
mental health and substance use disorder benefits)--(1) Facts. A plan
generally covers inpatient, in-network and inpatient, out-of-network
treatment without any limitations on setting, including skilled nursing
facilities and rehabilitation hospitals, provided other medical
necessity standards are satisfied. The plan has an exclusion for
treatment at residential facilities, which the plan defines as an
inpatient benefit for mental health and substance use disorder benefits.
This exclusion was not generated through any broader nonquantitative
treatment limitation (such as medical necessity or other clinical
guideline).
(2) Conclusion. In this paragraph (c)(4)(vi)(L) (Example 12), the
plan violates the rules of paragraph (c)(4)(iv) of this section. The
exclusion of treatment at residential facilities is a separate
nonquantitative treatment limitation applicable only to mental health
and substance use disorder benefits in the inpatient, in-network and
inpatient, out-of-network classifications because the plan does not
apply a comparable exclusion with respect to any medical/surgical
benefits in the same benefit classification.
(M) Example 13 (impermissible nonquantitative treatment limitation
imposed following a final determination of noncompliance and direction
by the Secretary)--(1) Facts. Following an initial request by the
Secretary for a plan's comparative analysis of the plan's exclusion of
mental health and substance use disorder benefits for failure to
complete a course of treatment in the inpatient, in-network
classification under Sec. 146.137(d), the plan submits a comparative
analysis for the nonquantitative treatment limitation. After review of
the comparative analysis, as well as additional information submitted by
the plan after the Secretary determines that the plan has not submitted
sufficient information to be responsive to the request, the Secretary
makes an initial determination that the comparative analysis fails to
demonstrate that the processes, strategies, evidentiary standards, and
other factors used in designing and applying the nonquantitative
treatment limitation to mental health or substance use disorder benefits
in the inpatient, in-network classification are comparable to, and
applied no more stringently than, those used in designing and applying
the limitation to medical/surgical benefits in the classification. Under
Sec. 146.137(d)(3), the plan submits a corrective action plan and
additional comparative analyses within 45 calendar days after the
initial determination. However, the corrective action plan does not
alter or eliminate the exclusion or alter the processes, strategies,
evidentiary standards, and other factors used in designing and applying
the exclusion. Moreover, the additional comparative analysis still does
not include sufficient information. The Secretary then determines that
the additional comparative analyses do not demonstrate compliance with
the requirements of this paragraph (c)(4). Accordingly, the plan
receives a final determination of noncompliance with PHS Act section
2726 (a)(8) and Sec. 146.137 from the Secretary, which concludes that
the plan did not demonstrate compliance through the comparative analysis
process. After considering the relevant facts and circumstances, and
considering the interests of plan participants and beneficiaries, as
well as feedback from the plan, the Secretary directs the plan not to
impose the nonquantitative treatment limitation by a certain date,
unless and until the plan demonstrates compliance to the Secretary or
takes appropriate action to remedy the violation. The plan makes no
changes to its plan terms by that date and continues to impose the
exclusion of benefits for failure to complete a course of treatment in
the inpatient, in-network classification.
(2) Conclusion. In this paragraph (c)(4)(vi)(M) (Example 13), by
continuing to impose the exclusion of mental health and substance use
disorder benefits for failure to complete a course of treatment in the
inpatient, in-network classification after the Secretary directs the
plan not to impose this nonquantitative treatment limitation, the plan
violates the requirements of paragraph (c)(4)(v) of this section.
* * * * *
(d) * * *
(3) Provisions of other law. Compliance with the disclosure
requirements in paragraphs (d)(1) and (2) of this section is not
determinative of compliance with any other provision of applicable
Federal or State law. In particular, in addition to those disclosure
requirements, provisions of other applicable law require disclosure of
information relevant to medical/surgical, mental health, and substance
use disorder benefits. For example, Sec. 147.136 of this subchapter
sets forth rules regarding claims and appeals, including the right of
claimants (or their authorized representative) who have received an
adverse benefit determination (or a final internal adverse benefit
determination) to be provided, upon request and free of charge,
reasonable access to and copies of all documents, records, and other
information relevant to the claimant's claim for benefits. This includes
documents with information on medical necessity criteria for both
medical/surgical benefits and mental health and substance use disorder
benefits, as well as the processes, strategies, evidentiary standards,
and other factors used to apply a nonquantitative treatment limitation
with respect to medical/surgical benefits and mental health or substance
use disorder benefits under the plan and the comparative analyses
[[Page 110]]
and other applicable information required by Sec. 146.137.
(e) * * *
(4) Coordination with EHB requirements. Nothing in paragraph (f) or
(g) of this section or Sec. 146.137(g) changes the requirements of
Sec. Sec. 147.150 and 156.115 of this subchapter, providing that a
health insurance issuer offering non-grandfathered health insurance
coverage in the individual or small group market that is required to
provide mental health and substance use disorder services, including
behavioral health treatment services, as part of essential health
benefits required under Sec. Sec. 156.110(a)(5) and 156.115(a) of this
subchapter, must comply with the requirements under section 2726 of the
PHS Act and its implementing regulations in this section and Sec.
146.137 to satisfy the requirement to provide coverage for mental health
and substance use disorder services, including behavioral health
treatment, as part of essential health benefits.
* * * * *
(i) * * *
(1) In general. Except as provided in paragraph (i)(2) of this
section--
(i) This section applies to group health plans and health insurance
issuers offering group health insurance coverage on the first day of the
first plan year beginning on or after January 1, 2025, except that the
requirements of paragraphs (c)(2)(ii)(A), (c)(4)(i)(B), and (c)(4)(iii)
of this section apply on the first day of the first plan year beginning
on or after January 1, 2026.
(ii) Until the applicability date in paragraph (i)(1)(i) of this
section, plans and issuers are required to continue to comply with 45
CFR 146.136, revised as of October 1, 2023.
* * * * *
(j) Severability. If any provision of this section is held to be
invalid or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, the provision
shall be construed so as to continue to give the maximum effect to the
provision permitted by law, unless such holding shall be one of
invalidity or unenforceability, in which event the provision shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated or
to dissimilar circumstances.
Sec. 146.137 Nonquantitative treatment limitation comparative
analysis requirements.
(a) Meaning of terms. Unless otherwise stated in this section, the
terms of this section have the meanings indicated in Sec.
146.136(a)(2).
(b) In general. In the case of a group health plan (or health
insurance issuer offering coverage in connection with a group health
plan) that provides both medical/surgical benefits and mental health or
substance use disorder benefits and that imposes any nonquantitative
treatment limitation on mental health or substance use disorder
benefits, the plan or issuer must perform and document a comparative
analysis of the design and application of each nonquantitative treatment
limitation applicable to mental health or substance use disorder
benefits. Each comparative analysis must comply with the content
requirements of paragraph (c) of this section and be made available to
the Secretary, upon request, in the manner required by paragraphs (d)
and (e) of this section.
(c) Comparative analysis content requirements. With respect to each
nonquantitative treatment limitation applicable to mental health or
substance use disorder benefits under a group health plan (or health
insurance coverage offered in connection with a group health plan), the
comparative analysis performed by the plan or issuer must include, at
minimum, the elements specified in this paragraph (c). In addition to
the comparative analysis for each nonquantitative treatment limitation,
each plan or issuer must prepare and make available to the Secretary,
upon request, a written list of all nonquantitative treatment
limitations imposed under the plan or coverage.
(1) Description of the nonquantitative treatment limitation. The
comparative analysis must include, with respect to the nonquantitative
treatment limitation that is the subject of the comparative analysis:
(i) Identification of the nonquantitative treatment limitation,
including the specific terms of the plan or coverage or other relevant
terms regarding the nonquantitative treatment limitation, the policies
or guidelines (internal or external) in which the nonquantitative
treatment limitation appears or is described, and the applicable
sections of any other relevant documents, such as provider contracts,
that
[[Page 111]]
describe the nonquantitative treatment limitation;
(ii) Identification of all mental health or substance use disorder
benefits and medical/surgical benefits to which the nonquantitative
treatment limitation applies, including a list of which benefits are
considered mental health or substance use disorder benefits and which
benefits are considered medical/surgical benefits; and
(iii) A description of which benefits are included in each
classification set forth in Sec. 146.136(c)(2)(ii)(A).
(2) Identification and definition of the factors and evidentiary
standards used to design or apply the nonquantitative treatment
limitation. The comparative analysis must include, with respect to every
factor considered or relied upon to design the nonquantitative treatment
limitation or apply the nonquantitative treatment limitation to mental
health or substance use disorder benefits and medical/surgical benefits:
(i) Identification of every factor considered or relied upon, as
well as the evidentiary standards considered or relied upon to design or
apply each factor and the sources from which each evidentiary standard
was derived, in determining which mental health or substance use
disorder benefits and which medical/surgical benefits are subject to the
nonquantitative treatment limitation; and
(ii) A definition of each factor, including:
(A) A detailed description of the factor;
(B) A description of each evidentiary standard used to design or
apply each factor (and the source of each evidentiary standard)
identified under paragraph (c)(2)(i) of this section; and
(C) A description of any steps the plan or issuer has taken to
correct, cure, or supplement any information, evidence, sources, or
standards that would otherwise have been considered biased or not
objective under Sec. 146.136(c)(4)(i)(B)(1) in the absence of such
steps.
(3) Description of how factors are used in the design and
application of the nonquantitative treatment limitation. The comparative
analysis must include a description of how each factor identified and
defined under paragraph (c)(2) of this section is used in the design or
application of the nonquantitative treatment limitation to mental health
and substance use disorder benefits and medical/surgical benefits in a
classification, including:
(i) A detailed explanation of how each factor identified and defined
in paragraph (c)(2) of this section is used to determine which mental
health or substance use disorder benefits and which medical/surgical
benefits are subject to the nonquantitative treatment limitation;
(ii) An explanation of the evidentiary standards or other
information or sources (if any) considered or relied upon in designing
or applying the factors or relied upon in designing and applying the
nonquantitative treatment limitation, including in the determination of
whether and how mental health or substance use disorder benefits or
medical/surgical benefits are subject to the nonquantitative treatment
limitation;
(iii) If the application of the factor depends on specific decisions
made in the administration of benefits, the nature of the decisions, the
timing of the decisions, and the professional designations and
qualifications of each decision maker;
(iv) If more than one factor is identified and defined in paragraph
(c)(2) of this section, an explanation of:
(A) How all of the factors relate to each other;
(B) The order in which all the factors are applied, including when
they are applied;
(C) Whether and how any factors are given more weight than others;
and
(D) The reasons for the ordering or weighting of the factors; and
(v) Any deviations or variations from a factor, its applicability,
or its definition (including the evidentiary standards used to define
the factor and the information or sources from which each evidentiary
standard was derived), such as how the factor is used differently to
apply the nonquantitative treatment limitation to mental health or
substance use disorder benefits as compared to medical/surgical
benefits, and a description of how the plan or
[[Page 112]]
issuer establishes such deviations or variations.
(4) Demonstration of comparability and stringency as written. The
comparative analysis must evaluate whether, in any classification, under
the terms of the plan (or health insurance coverage) as written, any
processes, strategies, evidentiary standards, or other factors used in
designing and applying the nonquantitative treatment limitation to
mental health or substance use disorder benefits are comparable to, and
are applied no more stringently than, the processes, strategies,
evidentiary standards, or other factors used in designing and applying
the nonquantitative treatment limitation with respect to medical/
surgical benefits. The comparative analysis must include, with respect
to the nonquantitative treatment limitation and the factors used in
designing and applying the nonquantitative treatment limitation:
(i) Documentation of each factor identified and defined in paragraph
(c)(2) of this section that was applied to determine whether the
nonquantitative treatment limitation applies to mental health or
substance use disorder benefits and medical/surgical benefits in a
classification, including, as relevant:
(A) Quantitative data, calculations, or other analyses showing
whether, in each classification in which the nonquantitative treatment
limitation applies, mental health or substance use disorder benefits and
medical/surgical benefits met or did not meet any applicable threshold
identified in the relevant evidentiary standard to determine that the
nonquantitative treatment limitation would or would not apply; and
(B) Records maintained by the plan or issuer documenting the
consideration and application of all factors and evidentiary standards,
as well as the results of their application;
(ii) In each classification in which the nonquantitative treatment
limitation applies to mental health or substance use disorder benefits,
a comparison of how the nonquantitative treatment limitation, as
written, is designed and applied to mental health or substance use
disorder benefits and to medical/surgical benefits, including the
specific provisions of any forms, checklists, procedure manuals, or
other documentation used in designing and applying the nonquantitative
treatment limitation or that address the application of the
nonquantitative treatment limitation;
(iii) Documentation demonstrating how the factors are comparably
applied, as written, to mental health or substance use disorder benefits
and medical/surgical benefits in each classification, to determine which
benefits are subject to the nonquantitative treatment limitation; and
(iv) An explanation of the reasons for any deviations or variations
in the application of a factor used to apply the nonquantitative
treatment limitation, or the application of the nonquantitative
treatment limitation, to mental health or substance use disorder
benefits as compared to medical/surgical benefits, and how the plan or
issuer establishes such deviations or variations, including:
(A) In the definition of the factors, the evidentiary standards used
to define the factors, and the sources from which the evidentiary
standards were derived;
(B) In the design of the factors or evidentiary standards; or
(C) In the application or design of the nonquantitative treatment
limitation.
(5) Demonstration of comparability and stringency in operation. The
comparative analysis must evaluate whether, in any classification, in
operation, the processes, strategies, evidentiary standards, or other
factors used in designing and applying the nonquantitative treatment
limitation to mental health or substance use disorder benefits are
comparable to, and are applied no more stringently than, the processes,
strategies, evidentiary standards, or other factors used in designing
and applying the limitation with respect to medical/surgical benefits.
The comparative analysis must include, with respect to the
nonquantitative treatment limitation and the factors used in designing
and applying the nonquantitative treatment limitation:
(i) A comprehensive explanation of how the plan or issuer evaluates
whether, in operation, the processes, strategies, evidentiary standards,
or
[[Page 113]]
other factors used in designing and applying the nonquantitative
treatment limitation to mental health or substance use disorder benefits
in a classification are comparable to, and are applied no more
stringently than, the processes, strategies, evidentiary standards, or
other factors used in designing and applying the nonquantitative
treatment limitation with respect to medical/surgical benefits,
including:
(A) An explanation of any methodology and underlying data used to
demonstrate the application of the nonquantitative treatment limitation,
in operation;
(B) The sample period, inputs used in any calculations, definitions
of terms used, and any criteria used to select the mental health or
substance use disorder benefits and medical/surgical benefits to which
the nonquantitative treatment limitation is applicable;
(C) With respect to a nonquantitative treatment limitation for which
relevant data is temporarily unavailable as described in Sec.
146.136(c)(4)(iii)(A)(3)(i), a detailed explanation of the lack of
relevant data, the basis for the plan's or issuer's conclusion that
there is a lack of relevant data, and when and how the data will become
available and be collected and analyzed; and
(D) With respect to a nonquantitative treatment limitation for which
no data exist that can reasonably assess any relevant impact of the
nonquantitative treatment limitation on relevant outcomes related to
access to mental health and substance use disorder benefits and medical/
surgical benefits as described in Sec. 146.136(c)(4)(iii)(A)(3)(ii), a
reasoned justification as to the basis for the conclusion that there are
no data that can reasonably assess the nonquantitative treatment
limitation's impact, an explanation of why the nature of the
nonquantitative treatment limitation prevents the plan or issuer from
reasonably measuring its impact, an explanation of what data was
considered and rejected, and documentation of any additional safeguards
or protocols used to ensure that the nonquantitative treatment
limitation complies with Sec. 146.136(c)(4);
(ii) Identification of the relevant data collected and evaluated, as
required under Sec. 146.136(c)(4)(iii)(A);
(iii) Documentation of the outcomes that resulted from the
application of the nonquantitative treatment limitation to mental health
or substance use disorder benefits and medical/surgical benefits,
including:
(A) The evaluation of relevant data as required under Sec.
146.136(c)(4)(iii)(A); and
(B) A reasoned justification and analysis that explains why the plan
or issuer concluded that any differences in the relevant data do or do
not suggest the nonquantitative treatment limitation contributes to
material differences in access to mental health or substance use
disorder benefits as compared to medical/surgical benefits, in
accordance with Sec. 146.136(c)(4)(iii)(B)(2);
(iv) A detailed explanation of any material differences in access
demonstrated by the outcomes evaluated under paragraph (c)(5)(iii) of
this section, including:
(A) A reasoned explanation of any material differences in access
that are not attributable to differences in the comparability or
relative stringency of the nonquantitative treatment limitation as
applied to mental health or substance use disorder benefits and medical/
surgical benefits (including any considerations beyond a plan's or
issuer's control that contribute to the existence of material
differences) and a detailed explanation of the bases for concluding that
material differences are not attributable to differences in the
comparability or relative stringency of the nonquantitative treatment
limitation; and
(B) To the extent differences in access to mental health or
substance use disorder benefits are attributable to generally recognized
independent professional medical or clinical standards or carefully
circumscribed measures reasonably and appropriately designed to detect
or prevent and prove fraud and abuse that minimize the negative impact
on access to appropriate mental health and substance use disorder
benefits, and such standards or measures are used as the basis for a
factor or evidentiary standard used to design or apply a nonquantitative
treatment
[[Page 114]]
limitation, documentation explaining how any such differences are
attributable to those standards or measures, as required in Sec.
146.136(c)(4)(iii)(B)(2)(ii); and
(v) A discussion of the actions that have been or are being taken by
the plan or issuer to address any material differences in access to
mental health or substance use disorder benefits as compared to medical/
surgical benefits, including the actions the plan or issuer has taken or
is taking under Sec. 146.136(c)(4)(iii)(B)(1) to address material
differences to comply, in operation, with Sec. 146.136(c)(4),
including, as applicable:
(A) A reasoned explanation of any material differences in access to
mental health or substance use disorder benefits as compared to medical/
surgical benefits that persist despite reasonable actions that have been
or are being taken; and
(B) For a plan or issuer designing and applying one or more
nonquantitative treatment limitations related to network composition, a
discussion of the actions that have been or are being taken to address
material differences in access to in-network mental health and substance
use disorder benefits as compared to in-network medical/surgical
benefits, including those listed in Sec. 146.136(c)(4)(iii)(C).
(6) Findings and conclusions. The comparative analysis must address
the findings and conclusions as to the comparability of the processes,
strategies, evidentiary standards, and other factors used in designing
and applying the nonquantitative treatment limitation to mental health
or substance use disorder benefits and medical/surgical benefits within
each classification, and the relative stringency of their application,
both as written and in operation, and include:
(i) Any findings or conclusions indicating that the plan or coverage
is or is not (or might or might not be) in compliance with the
requirements of Sec. 146.136(c)(4), including any additional actions
the plan or issuer has taken or intends to take to address any potential
areas of concern or noncompliance;
(ii) A reasoned and detailed discussion of the findings and
conclusions described in paragraph (c)(6)(i) of this section;
(iii) Citations to any additional specific information not otherwise
included in the comparative analysis that supports the findings and
conclusions described in paragraph (c)(6)(i) of this section not
otherwise discussed in the comparative analysis;
(iv) The date the analysis is completed and the title and
credentials of all relevant persons who participated in the performance
and documentation of the comparative analysis; and
(v) If the comparative analysis relies upon an evaluation by a
reviewer or consultant considered by the plan or issuer to be an expert,
an assessment of each expert's qualifications and the extent to which
the plan or issuer ultimately relied upon each expert's evaluation in
performing and documenting the comparative analysis of the design and
application of the nonquantitative treatment limitation applicable to
both mental health or substance use disorder benefits and medical/
surgical benefits.
(d) Requirements related to submission of comparative analyses to
the Secretary upon request--(1) Initial request by the Secretary for
comparative analysis. A group health plan (or health insurance issuer
offering coverage in connection with a group health plan) must make the
comparative analysis required by paragraph (b) of this section available
and submit it to the Secretary within 10 business days of receipt of a
request from the Secretary (or an additional period of time specified by
the Secretary).
(2) Additional information required after a comparative analysis is
deemed to be insufficient. In instances in which the Secretary
determines that the plan or issuer has not submitted sufficient
information under paragraph (d)(1) of this section for the Secretary to
determine whether the comparative analysis required in paragraph (b) of
this section complies with paragraph (c) of this section or whether the
plan or issuer complies with Sec. 146.136(c)(4), the Secretary will
specify to the plan or issuer the additional information the plan or
issuer must submit to the Secretary to be responsive to the request
under paragraph (d)(1). Any such information
[[Page 115]]
must be provided to the Secretary by the plan or issuer within 10
business days after the Secretary specifies the additional information
to be submitted (or an additional period of time specified by the
Secretary).
(3) Initial determination of noncompliance, required action, and
corrective action plan. In instances in which the Secretary reviewed the
comparative analysis submitted under paragraph (d)(1) of this section
and any additional information submitted under paragraph (d)(2) of this
section, and made an initial determination that the plan or issuer is
not in compliance with the requirements of Sec. 146.136(c)(4) or this
section, the plan or issuer must respond to the initial determination by
the Secretary and specify the actions the plan or issuer will take to
bring the plan or coverage into compliance, and provide to the Secretary
additional comparative analyses meeting the requirements of paragraph
(c) of this section that demonstrate compliance with Sec.
146.136(c)(4), not later than 45 calendar days after the Secretary's
initial determination that the plan or issuer is not in compliance.
(4) Requirement to notify participants and beneficiaries of final
determination of noncompliance--(i) In general. If the Secretary makes a
final determination of noncompliance, the plan or issuer must notify all
participants and beneficiaries enrolled in the plan or coverage that the
plan or issuer has been determined to not be in compliance with the
requirements of Sec. 146.136(c)(4) or this section with respect to such
plan or coverage. Such notice must be provided within 7 business days of
receipt of the final determination of noncompliance, and the plan or
issuer must provide a copy of the notice to the Secretary, any service
provider involved in the claims process, and any fiduciary responsible
for deciding benefit claims within the same timeframe.
(ii) Content of notice. The notice to participants and beneficiaries
required in paragraph (d)(4)(i) of this section shall be written in a
manner calculated to be understood by the average plan participant and
must include, in plain language, the following information in a
standalone notice:
(A) The following statement prominently displayed on the first page,
in no less than 14-point font: ``Attention! The Department of Health and
Human Services has determined that [insert the name of group health plan
or health insurance issuer] is not in compliance with the Mental Health
Parity and Addiction Equity Act.'';
(B) A summary of changes the plan or issuer has made as part of its
corrective action plan specified to the Secretary following the initial
determination of noncompliance, including an explanation of any
opportunity for a participant or beneficiary to have a claim for
benefits submitted or reprocessed;
(C) A summary of the Secretary's final determination that the plan
or issuer is not in compliance with Sec. 146.136(c)(4) or this section,
including any provisions or practices identified as being in violation
of Sec. 146.136(c)(4) or this section, additional corrective actions
identified by the Secretary in the final determination notice, and
information on how participants and beneficiaries can obtain from the
plan or issuer a copy of the final determination of noncompliance;
(D) Any additional actions the plan or issuer is taking to come into
compliance with Sec. 146.136(c)(4) or this section, when the plan or
issuer will take such actions, and a clear and accurate statement
explaining whether the Secretary has concurred with those actions; and
(E) Contact information for questions and complaints, and a
statement explaining how participants and beneficiaries can obtain more
information about the notice, including:
(1) The plan's or issuer's phone number and an email or web portal
address; and
(2) The Centers for Medicare & Medicaid Services' phone number and
email or web portal address.
(iii) Manner of notice. The plan or issuer must make the notice
required under paragraph (d)(4)(i) of this section available in paper
form, or electronically (such as by email or an internet posting) if:
(A) The format is readily accessible;
(B) The notice is provided in paper form free of charge upon
request; and
(C) In a case in which the electronic form is an internet posting,
the plan or
[[Page 116]]
issuer timely notifies the participant or beneficiary in paper form
(such as a postcard) or email, that the documents are available on the
internet, provides the internet address, includes the statement required
in paragraph (d)(4)(ii)(A) of this section, and notifies the participant
or beneficiary that the documents are available in paper form upon
request.
(e) Requests for a copy of a comparative analysis. In addition to
making a comparative analysis available upon request to the Secretary, a
plan or issuer must make available a copy of the comparative analysis
required by paragraph (b) of this section when requested by:
(1) Any applicable State authority; and
(2) A participant or beneficiary (including a provider or other
person acting as a participant's or beneficiary's authorized
representative) who has received an adverse benefit determination
related to mental health or substance use disorder benefits.
(f) Rule of construction. Nothing in this section or Sec. 146.136
shall be construed to prevent the Secretary from acting within the scope
of existing authorities to address violations of Sec. 146.136 or this
section.
(g) Applicability. The provisions of this section apply to group
health plans and health insurance issuers offering group health
insurance coverage described in Sec. 146.136(e), to the extent the plan
or issuer is not exempt under Sec. 146.136(f) or (g), on the first day
of the first plan year beginning on or after January 1, 2025, except the
requirements of paragraphs (c)(2)(ii)(C), (c)(5)(i)(C) and (D), and
(c)(5)(ii) through (v) of this section apply on the first day of the
first plan year beginning on or after January 1, 2026.
(h) Severability. If any provision of this section is held to be
invalid or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, the provision
shall be construed so as to continue to give the maximum effect to the
provision permitted by law, unless such holding shall be one of
invalidity or unenforceability, in which event the provision shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated or
to dissimilar circumstances.
[89 FR 77747, Sept. 23, 2024]
Effective Date Note: At 89 FR 77747, Sept. 23, 2024, Sec. 146.137
was added, effective Nov. 22, 2024.
Subpart D_Preemption and Special Rules
Sec. 146.143 Preemption; State flexibility; construction.
(a) Continued applicability of State law with respect to health
insurance issuers. Subject to paragraph (b) of this section and except
as provided in paragraph (c) of this section, part A of title XXVII of
the PHS Act is not to be construed to supersede any provision of State
law which establishes, implements, or continues in effect any standard
or requirement solely relating to health insurance issuers in connection
with group health insurance coverage except to the extent that such
standard or requirement prevents the application of a requirement of
this part.
(b) Continued preemption with respect to group health plans. Nothing
in part A of title XXVII of the PHS Act affects or modifies the
provisions of section 514 of ERISA with respect to group health plans.
(c) Special rules--(1) In general. Subject to paragraph (c)(2) of
this section, the provisions of part A of title XXVII of the PHS Act
relating to health insurance coverage offered by a health insurance
issuer supersede any provision of State law which establishes,
implements, or continues in effect a standard or requirement applicable
to imposition of a preexisting condition exclusion specifically governed
by section 2701 of the PHS Act which differs from the standards or
requirements specified in section 2701 of the PHS Act.
(2) Exceptions. Only in relation to health insurance coverage
offered by a health insurance issuer, the provisions of this part do not
supersede any provision of State law to the extent that such provision
requires special enrollment periods in addition to those required under
section 2702 of the Act.
[[Page 117]]
(d) Definitions--(1) State law. For purposes of this section the
term State law includes all laws, decisions, rules, regulations, or
other State action having the effect of law, of any State. A law of the
United States applicable only to the District of Columbia is treated as
a State law rather than a law of the United States.
(2) State. For purposes of this section the term State includes a
State (as defined in Sec. 144.103), any political subdivisions of a
State, or any agency or instrumentality of either.
[69 FR 78797, Dec. 30, 2004; 70 FR 21147, Apr. 25, 2005; 79 FR 10315,
Feb. 24, 2014]
Sec. 146.145 Special rules relating to group health plans.
(a) Group health plan--(1) Definition. A group health plan means an
employee welfare benefit plan to the extent that the plan provides
medical care (including items and services paid for as medical care) to
employees (including both current and former employees) or their
dependents (as defined under the terms of the plan) directly or through
insurance, reimbursement, or otherwise.
(2) Determination of number of plans. [Reserved]
(b) Excepted benefits--(1) In general. The requirements of subparts
B and C of this part do not apply to any group health plan (or any group
health insurance coverage) in relation to its provision of the benefits
described in paragraph (b) (2), (3), (4), or (5) of this section (or any
combination of these benefits).
(2) Benefits excepted in all circumstances. The following benefits
are excepted in all circumstances--
(i) Coverage only for accident (including accidental death and
dismemberment);
(ii) Disability income coverage;
(iii) Liability insurance, including general liability insurance and
automobile liability insurance;
(iv) Coverage issued as a supplement to liability insurance;
(v) Workers' compensation or similar coverage;
(vi) Automobile medical payment insurance;
(vii) Credit-only insurance (for example, mortgage insurance); and
(viii) Coverage for on-site medical clinics.
(ix) Travel insurance, within the meaning of Sec. 144.103 of this
subchapter.
(3) Limited excepted benefits--(i) In general. Limited-scope dental
benefits, limited-scope vision benefits, or long-term care benefits are
excepted if they are provided under a separate policy, certificate, or
contract of insurance, or are otherwise not an integral part of a group
health plan as described in paragraph (b)(3)(ii) of this section. In
addition, benefits provided under a health flexible spending arrangement
(health FSA) are excepted benefits if they satisfy the requirements of
paragraph (b)(3)(v) of this section; benefits provided under an employee
assistance program are excepted benefits if they satisfy the
requirements of paragraph (b)(3)(vi) of this section; benefits provided
under limited wraparound coverage are excepted benefits if they satisfy
the requirements of paragraph (b)(3)(vii) of this section; and benefits
provided under a health reimbursement arrangement or other account-based
group health plan, other than a health FSA, are excepted benefits if
they satisfy the requirements of paragraph (b)(3)(viii) of this section.
(ii) Not an integral part of a group health plan. For purposes of
this paragraph (b)(3), benefits are not an integral part of a group
health plan (whether the benefits are provided through the same plan, a
separate plan, or as the only plan offered to participants) if either
paragraph (b)(3)(ii)(A) or (B) are satisfied.
(A) Participants may decline coverage. For example, a participant
may decline coverage if the participant can opt out of the coverage upon
request, whether or not there is a participant contribution required for
the coverage.
(B) Claims for the benefits are administered under a contract
separate from claims administration for any other benefits under the
plan.
(iii) Limited scope--(A) Dental benefits. Limited scope dental
benefits are benefits substantially all of which are for treatment of
the mouth (including any organ or structure within the mouth).
(B) Vision benefits. Limited scope vision benefits are benefits
substantially
[[Page 118]]
all of which are for treatment of the eye.
(iv) Long-term care. Long-term care benefits are benefits that are
either--
(A) Subject to State long-term care insurance laws;
(B) For qualified long-term care services, as defined in section
7702B(c)(1) of the Internal Revenue Code, or provided under a qualified
long-term care insurance contract, as defined in section 7702B(b) of the
Internal Revenue Code; or
(C) Based on cognitive impairment or a loss of functional capacity
that is expected to be chronic.
(v) Health flexible spending arrangements. Benefits provided under a
health flexible spending arrangement (as defined in section 106(c)(2) of
the Internal Revenue Code) are excepted for a class of participants only
if they satisfy the following two requirements--
(A) Other group health plan coverage, not limited to excepted
benefits, is made available for the year to the class of participants by
reason of their employment; and
(B) The arrangement is structured so that the maximum benefit
payable to any participant in the class for a year cannot exceed two
times the participant's salary reduction election under the arrangement
for the year (or, if greater, cannot exceed $500 plus the amount of the
participant's salary reduction election). For this purpose, any amount
that an employee can elect to receive as taxable income but elects to
apply to the health flexible spending arrangement is considered a salary
reduction election (regardless of whether the amount is characterized as
salary or as a credit under the arrangement).
(vi) Employee assistance programs. Benefits provided under employee
assistance programs are excepted if they satisfy all of the requirements
of this paragraph (b)(3)(vi).
(A) The program does not provide significant benefits in the nature
of medical care. For this purpose, the amount, scope and duration of
covered services are taken into account.
(B) The benefits under the employee assistance program are not
coordinated with benefits under another group health plan, as follows:
(1) Participants in the other group health plan must not be required
to use and exhaust benefits under the employee assistance program
(making the employee assistance program a gatekeeper) before an
individual is eligible for benefits under the other group health plan;
and
(2) Participant eligibility for benefits under the employee
assistance program must not be dependent on participation in another
group health plan.
(C) No employee premiums or contributions are required as a
condition of participation in the employee assistance program.
(D) There is no cost sharing under the employee assistance program.
(vii) Limited wraparound coverage. Limited benefits provided through
a group health plan that wrap around eligible individual health
insurance (or Basic Health Plan coverage described in section 1331 of
the Patient Protection and Affordable Care Act); or that wrap around
coverage under a Multi-State Plan described in section 1334 of the
Patient Protection and Affordable Care Act, collectively referred to as
``limited wraparound coverage,'' are excepted benefits if all of the
following conditions are satisfied. For this purpose, eligible
individual health insurance is individual health insurance coverage that
is not a grandfathered health plan (as described in section 1251 of the
Patient Protection and Affordable Care Act and Sec. 147.140 of this
subchapter), not a transitional individual health insurance plan (as
described in the March 5, 2014 Insurance Standards Bulletin Series--
Extension of Transitional Policy through October 1, 2016), and does not
consist solely of excepted benefits (as defined in paragraph (b) of this
section).
(A) Covers additional benefits. The limited wraparound coverage
provides meaningful benefits beyond coverage of cost sharing under
either the eligible individual health insurance, Basic Health Program
coverage, or Multi-State Plan coverage. The limited wraparound coverage
must not provide benefits only under a coordination-of-benefits
provision and must not consist of an account-based reimbursement
arrangement.
[[Page 119]]
(B) Limited in amount. The annual cost of coverage per employee (and
any covered dependents, as defined in Sec. 144.103 of this subchapter)
under the limited wraparound coverage does not exceed the greater of the
amount determined under either paragraph (b)(3)(vii)(B)(1) or (2) of
this section. Making a determination regarding the annual cost of
coverage per employee must occur on an aggregate basis relying on sound
actuarial principles.
(1) The maximum permitted annual salary reduction contribution
toward health flexible spending arrangements, indexed in the manner
prescribed under section 125(i)(2) of the Internal Revenue Code. For
this purpose, the cost of coverage under the limited wraparound includes
both employer and employee contributions towards coverage and is
determined in the same manner as the applicable premium is calculated
under a COBRA continuation provision.
(2) Fifteen percent of the cost of coverage under the primary plan.
For this purpose, the cost of coverage under the primary plan and under
the limited wraparound coverage includes both employer and employee
contributions towards the coverage and each is determined in the same
manner as the applicable premium is calculated under a COBRA
continuation provision.
(C) Nondiscrimination. All of the conditions of this paragraph
(b)(3)(vii)(C) are satisfied.
(1) No preexisting condition exclusion. The limited wraparound
coverage does not impose any preexisting condition exclusion, consistent
with the requirements of section 2704 of the PHS Act and Sec. 147.108
of this subchapter.
(2) No discrimination based on health status. The limited wraparound
coverage does not discriminate against individuals in eligibility,
benefits, or premiums based on any health factor of an individual (or
any dependent of the individual, as defined in Sec. 144.103 of this
subchapter), consistent with the requirements of section 2705 of the PHS
Act.
(3) No discrimination in favor of highly compensated individuals.
Neither the limited wraparound coverage, nor any other group health plan
coverage offered by the plan sponsor, fails to comply with section 2716
of the PHS Act or fails to be excludible from income for any individual
due to the application of section 105(h) of the Internal Revenue Code
(as applicable).
(D) Plan eligibility requirements. Individuals eligible for the
wraparound coverage are not enrolled in excepted benefit coverage under
paragraph (b)(3)(v) of this section (relating to health FSAs). In
addition, the conditions set forth in either paragraph (b)(3)(vii)(D)(1)
or (2) of this section are met.
(1) Limited wraparound coverage that wraps around eligible
individual insurance for persons who are not full-time employees.
Coverage that wraps around eligible individual health insurance (or that
wraps around Basic Health Plan coverage) must satisfy all of the
conditions of this paragraph (b)(3)(vii)(D)(1).
(i) For each year for which limited wraparound coverage is offered,
the employer that is the sponsor of the plan offering limited wraparound
coverage, or the employer participating in a plan offering limited
wraparound coverage, offers to its full-time employees coverage that is
substantially similar to coverage that the employer would need to offer
to its full-time employees in order not to be subject to a potential
assessable payment under the employer shared responsibility provisions
of section 4980H(a) of the Internal Revenue Code, if such provisions
were applicable; provides minimum value (as defined in section
36B(c)(2)(C)(ii) of the Internal Revenue Code); and is reasonably
expected to be affordable (applying the safe harbor rules for
determining affordability set forth in 26 CFR 54.4980H-5(e)(2)). If a
plan or issuer providing limited wraparound coverage takes reasonable
steps to ensure that employers disclose to the plan or issuer necessary
information regarding their coverage offered and affordability
information, the plan or issuer is permitted to rely on reasonable
representations by employers regarding this information, unless the plan
or issuer has specific knowledge to the contrary. In the event that the
employer that is the
[[Page 120]]
sponsor of the plan offering wraparound coverage, or the employer
participating in a plan offering wraparound coverage, has no full-time
employees for any plan year limited wraparound coverage is offered, the
requirement of this paragraph (b)(3)(vii)(D)(1)(i) is considered
satisfied.
(ii) Eligibility for the limited wraparound coverage is limited to
employees who are reasonably determined at the time of enrollment to not
be full-time employees (and their dependents, as defined in Sec.
144.103 of this subchapter), or who are retirees (and their dependents,
as defined in Sec. 144.103 of this subchapter). For this purpose, full-
time employees are employees who are reasonably expected to work at
least an average of 30 hours per week.
(iii) Other group health plan coverage, not limited to excepted
benefits, is offered to the individuals eligible for the limited
wraparound coverage. Only individuals eligible for the other group
health plan coverage are eligible for the limited wraparound coverage.
(2) Limited coverage that wraps around Multi-State Plan coverage.
Coverage that wraps around Multi-State Plan coverage must satisfy all of
the conditions of this paragraph (b)(3)(vii)(D)(2). For this purpose,
the term ``full-time employee'' means a ``full-time employee'' as
defined in 26 CFR 54.4980H-1(a)(21) who is not in a limited non-
assessment period for certain employees (as defined in 26 CFR 54.4980H-
1(a)(26)). Moreover, if a plan or issuer providing limited wraparound
coverage takes reasonable steps to ensure that employers disclose to the
plan or issuer necessary information regarding their coverage offered
and contribution levels for 2013 or 2014 (as applicable), and for any
year in which limited wraparound coverage is offered, the plan or issuer
is permitted to rely on reasonable representations by employers
regarding this information, unless the plan or issuer has specific
knowledge to the contrary. Consistent with the reporting and evaluation
criteria of paragraph (b)(3)(vii)(E) of this section, the Office of
Personnel Management may verify that plans and issuers have reasonable
mechanisms in place to ensure that contributing employers meet these
standards.
(i) The limited wraparound coverage is reviewed and approved by the
Office of Personnel Management, consistent with the reporting and
evaluation criteria of paragraph (b)(3)(vii)(E) of this section, to
provide benefits in conjunction with coverage under a Multi-State Plan
authorized under section 1334 of the Patient Protection and Affordable
Care Act. The Office of Personnel Management may revoke approval if it
determines that continued approval is inconsistent with the reporting
and evaluation criteria of paragraph (b)(3)(vii)(E) of this section.
(ii) The employer offered coverage in the plan year that began in
either 2013 or 2014 that is substantially similar to coverage that the
employer would need to have offered to its full-time employees in order
to not be subject to an assessable payment under the employer shared
responsibility provisions of section 4980H(a) of the Internal Revenue
Code, if such provisions had been applicable. In the event that a plan
that offered coverage in 2013 or 2014 has no full-time employees for any
plan year limited wraparound coverage is offered, the requirement of
this paragraph (b)(3)(vii)(D)(2)(ii) is considered satisfied.
(iii) In the plan year that began in either 2013 or 2014, the
employer offered coverage to a substantial portion of full-time
employees that provided minimum value (as defined in section
36B(c)(2)(C)(ii) of the Internal Revenue Code) and was affordable
(applying the safe harbor rules for determining affordability set forth
in 26 CFR 54.4980H-5(e)(2)). In the event that the plan that offered
coverage in 2013 or 2014 has no full-time employees for any plan year
limited wraparound coverage is offered, the requirement of this
paragraph (b)(3)(vii)(D)(2)(iii) is considered satisfied.
(iv) For the duration of the pilot program, as described in
paragraph (b)(3)(vii)(F) of this section, the employer's annual
aggregate contributions for both primary and limited wraparound coverage
are substantially the same as the employer's total contributions for
coverage offered to full-time employees in 2013 or 2014.
[[Page 121]]
(E) Reporting--(1) Reporting by group health plans and group health
insurance issuers. A self-insured group health plan, or a health
insurance issuer, offering or proposing to offer limited wraparound
coverage in connection with Multi-State Plan coverage pursuant to
paragraph (b)(3)(vii)(D)(2) of this section reports to the Office of
Personnel Management (OPM), in a form and manner specified in guidance,
information OPM reasonably requires to determine whether the plan or
issuer qualifies to offer such coverage or complies with the applicable
requirements of this section.
(2) Reporting by group health plan sponsors. The plan sponsor of a
group health plan offering limited wraparound coverage under paragraph
(b)(3)(vii) of this section, must report to the Department of Health and
Human Services (HHS), in a form and manner specified in guidance,
information HHS reasonably requires.
(F) Pilot program with sunset. The provisions of paragraph
(b)(3)(vii) of this section apply to limited wraparound coverage that is
first offered no earlier than January 1, 2016 and no later than December
31, 2018 and that ends no later than on the later of:
(1) The date that is three years after the date limited wraparound
coverage is first offered; or
(2) The date on which the last collective bargaining agreement
relating to the plan terminates after the date limited wraparound
coverage is first offered (determined without regard to any extension
agreed to after the date limited wraparound coverage is first offered).
(viii) Health reimbursement arrangements (HRAs) and other account-
based group health plans. Benefits provided under an HRA or other
account-based group health plan, other than a health FSA, are excepted
if they satisfy all of the requirements of this paragraph (b)(3)(viii).
See paragraph (b)(3)(v) of this section for the circumstances in which
benefits provided under a health FSA are excepted benefits. For purposes
of this paragraph (b)(3)(viii), the term ``HRA or other account-based
group health plan'' has the same meaning as ``account-based group health
plan'' set forth in Sec. 147.126(d)(6)(i) of this subchapter, except
that the term does not include health FSAs. For ease of reference, an
HRA or other account-based group health plan that satisfies the
requirements of this paragraph (b)(3)(viii) is referred to as an
excepted benefit HRA.
(A) Otherwise not an integral part of the plan. Other group health
plan coverage that is not limited to excepted benefits and that is not
an HRA or other account-based group health plan must be made available
by the same plan sponsor for the plan year to the participant.
(B) Benefits are limited in amount--(1) Limit on annual amounts made
available. The amounts newly made available for each plan year under the
HRA or other account-based group health plan do not exceed $1,800. In
the case of any plan year beginning after December 31, 2020, the dollar
amount in the preceding sentence shall be increased by an amount equal
to such dollar amount multiplied by the cost-of-living adjustment. The
cost of living adjustment is the percentage (if any) by which the C-CPI-
U for the preceding calendar year exceeds the C-CPI-U for calendar year
2019. The term ``C-CPI-U'' means the Chained Consumer Price Index for
All Urban Consumers as published by the Bureau of Labor Statistics of
the Department of Labor. The C-CPI-U for any calendar year is the
average of the C-CPI-U as of the close of the 12-month period ending on
March 31 of such calendar year. The values of the C-CPI-U used for any
calendar year shall be the latest values so published as of the date on
which the Bureau publishes the initial value of the C-CPI-U for the
month of March for the preceding calendar year. Any such increase that
is not a multiple of $50 shall be rounded down to the next lowest
multiple of $50. The Department of the Treasury and the Internal Revenue
Service will publish the adjusted amount for plan years beginning in any
calendar year no later than June 1 of the preceding calendar year.
(2) Carryover amounts. If the terms of the HRA or other account-
based group health plan allow unused amounts to be made available to
participants and dependents in later plan years, such carryover amounts
are disregarded for
[[Page 122]]
purposes of determining whether benefits are limited in amount.
(3) Multiple HRAs or other account-based group health plans. If the
plan sponsor provides more than one HRA or other account-based group
health plan to the participant for the same time period, the amounts
made available under all such plans are aggregated to determine whether
the benefits are limited in amount, except that HRAs or other account-
based group health plans that reimburse only excepted benefits are not
included in determining whether the benefits are limited in amount.
(C) Prohibition on reimbursement of certain health insurance
premiums. The HRA or other account-based group health plan must not
reimburse premiums for individual health insurance coverage, group
health plan coverage (other than COBRA continuation coverage or other
continuation coverage), or Medicare Part A, B, C, or D, except that the
HRA or other account-based group health plan may reimburse premiums for
such coverage that consists solely of excepted benefits. See also,
paragraph (b)(3)(viii)(F) of this section.
(D) Uniform availability. The HRA or other account-based group
health plan is made available under the same terms to all similarly
situated individuals, as defined in Sec. 146.121(d), regardless of any
health factor (as described in Sec. 146.121(a)).
(E) Notice requirement. For plan years beginning on or after January
11, 2021, the HRA or other account-based group health plan must provide
a notice that describes conditions pertaining to eligibility to receive
benefits, annual or lifetime caps, or other limits on benefits under the
plan, and a description or summary of the benefits. This notice must be
provided no later than 90 days after an employee becomes a participant
and annually thereafter, in a manner reasonably calculated to ensure
actual receipt by participants eligible for the HRA or other account-
based group health plan.
(F) Special rule. The HRA or other account-based group health plan
must not reimburse premiums for short-term, limited-duration insurance
(as defined in Sec. 144.103 of this subchapter) if the conditions of
this paragraph (b)(3)(viii)(F) are satisfied.
(1) The HRA or other account-based group health plan is offered by a
small employer (as defined in PHS Act section 2791(e)(4)).
(2) The other group health plan coverage offered by the employer
pursuant to paragraph (b)(3)(viii)(A) of this section is either fully-
insured or partially-insured.
(3) The Secretary makes a finding, in consultation with the
Secretaries of Labor and the Treasury, that the reimbursement of
premiums for short-term, limited-duration insurance by excepted benefit
HRAs has caused significant harm to the small group market in the state
that is the principal place of business of the small employer.
(4) The finding by the Secretary is made after submission of a
written recommendation by the applicable state authority of such state,
in a form and manner specified by HHS. The written recommendation must
include evidence that the reimbursement of premiums for short-term,
limited-duration insurance by excepted benefit HRAs established by
insured or partially-insured small employers in the state has caused
significant harm to the state's small group market, including with
respect to premiums.
(5) The restriction shall be imposed or discontinued by publication
by the Secretary of a notice in the Federal Register and shall apply
only prospectively and with a reasonable time for plan sponsors to
comply.
(4) Noncoordinated benefits--(i) Excepted benefits that are not
coordinated. Coverage for only a specified disease or illness (for
example, cancer-only policies) or hospital indemnity or other fixed
indemnity insurance is excepted only if it meets each of the conditions
specified in paragraph (b)(4)(ii) of this section. To be hospital
indemnity or other fixed indemnity insurance, the insurance must pay a
fixed dollar amount per day (or per other period) of hospitalization or
illness (for example, $100/day) regardless of the amount of expenses
incurred.
(ii) Conditions. Benefits are described in paragraph (b)(4)(i) of
this section only if--
[[Page 123]]
(A) The benefits are provided under a separate policy, certificate,
or contract of insurance;
(B) There is no coordination between the provision of the benefits
and an exclusion of benefits under any group health plan maintained by
the same plan sponsor; and
(C) The benefits are paid with respect to an event without regard to
whether benefits are provided with respect to the event under any group
health plan maintained by the same plan sponsor.
(D) For plan years beginning on or after January 1, 2025, with
respect to hospital indemnity or other fixed indemnity insurance:
(1) The plan or issuer displays prominently on the first page (in
either paper or electronic form, including on a website) of any
marketing, application, and enrollment materials that are provided to
participants at or before the time participants are given the
opportunity to enroll in the coverage, in at least 14-point font, the
language in the following notice:
[GRAPHIC] [TIFF OMITTED] TR03AP24.065
[[Page 124]]
(2) If participants are required to reenroll (in either paper or
electronic form) for purposes of renewal or reissuance of the insurance,
the notice described in paragraph (b)(4)(ii)(D)(1) of this section is
prominently displayed in any marketing and reenrollment materials
provided at or before the time participants are given the opportunity to
reenroll in coverage.
(3) If a plan or issuer provides a notice satisfying the
requirements in paragraphs (b)(4)(ii)(D)(1) and (2) of this section to a
participant, the obligation to provide the notice is considered to be
satisfied for both the plan and issuer.
(iii) Example. The rules of this paragraph (b)(4) are illustrated by
the following example:
Example. (i) Facts. An employer sponsors a group health plan that
provides coverage through an insurance policy. The policy provides
benefits only for hospital stays at a fixed percentage of hospital
expenses up to a maximum of $100 a day.
(ii) Conclusion. In this Example, even though the benefits under the
policy satisfy the conditions in paragraph (b)(4)(ii) of this section,
because the policy pays a percentage of expenses incurred rather than a
fixed dollar amount, the benefits under the policy are not excepted
benefits under this paragraph (b)(4). This is the result even if, in
practice, the policy pays the maximum of $100 for every day of
hospitalization.
(iv) Severability. If any provision of this paragraph (b)(4) is held
to be invalid or unenforceable by its terms, or as applied to any entity
or circumstance, or stayed pending further agency action, the provision
shall be construed so as to continue to give the maximum effect to the
provision permitted by law, along with other provisions not found
invalid or unenforceable, including as applied to entities not similarly
situated or to dissimilar circumstances, unless such holding is that the
provision is invalid and unenforceable in all circumstances, in which
event the provision shall be severable from the remainder of this
paragraph (b)(4) and shall not affect the remainder thereof.
(5) Supplemental benefits. (i) The following benefits are excepted
only if they are provided under a separate policy, certificate, or
contract of insurance--
(A) Medicare supplemental health insurance (as defined under section
1882(g)(1) of the Social Security Act; also known as Medigap or MedSupp
insurance);
(B) Coverage supplemental to the coverage provided under Chapter 55,
Title 10 of the United States Code (also known as TRICARE supplemental
programs); and
(C) Similar supplemental coverage provided to coverage under a group
health plan. To be similar supplemental coverage, the coverage must be
specifically designed to fill gaps in the primary coverage. The
preceding sentence is satisfied if the coverage is designed to fill gaps
in cost sharing in the primary coverage, such as coinsurance or
deductibles, or the coverage is designed to provide benefits for items
and services not covered by the primary coverage and that are not
essential health benefits (as defined under section 1302(b) of the
Patient Protection and Affordable Care Act) in the State where the
coverage is issued, or the coverage is designed to both fill such gaps
in cost sharing under, and cover such benefits not covered by, the
primary coverage. Similar supplemental coverage does not include
coverage that becomes secondary or supplemental only under a
coordination-of-benefits provision.
(ii) The rules of this paragraph (b)(5) are illustrated by the
following example:
Example. (i) Facts. An employer sponsors a group health plan that
provides coverage for both active employees and retirees. The coverage
for retirees supplements benefits provided by Medicare, but does not
meet the requirements for a supplemental policy under section 1882(g)(1)
of the Social Security Act.
(ii) Conclusion. In this Example, the coverage provided to retirees
does not meet the definition of supplemental excepted benefits under
this paragraph (b)(5) because the coverage is not Medicare supplemental
insurance as defined under section 1882(g)(1) of the Social Security
Act, is not a TRICARE supplemental program, and is not supplemental to
coverage provided under a group health plan.
(c) Treatment of partnerships. For purposes of this part:
(1) Treatment as a group health plan. Any plan, fund, or program
that would not be (but for this paragraph (c)) an
[[Page 125]]
employee welfare benefit plan and that is established or maintained by a
partnership, to the extent that the plan, fund, or program provides
medical care (including items and services paid for as medical care) to
present or former partners in the partnership or to their dependents (as
defined under the terms of the plan, fund, or program), directly or
through insurance, reimbursement, or otherwise, is treated (subject to
paragraph (c)(2) of this section) as an employee welfare benefit plan
that is a group health plan.
(2) Employment relationship. In the case of a group health plan, the
term employer also includes the partnership in relation to any bona fide
partner. In addition, the term employee also includes any bona fide
partner. Whether or not an individual is a bona fide partner is
determined based on all the relevant facts and circumstances, including
whether the individual performs services on behalf of the partnership.
(3) Participants of group health plans. In the case of a group
health plan, the term participant also includes any individual described
in paragraph (c)(3)(i) or (ii) of this section if the individual is, or
may become, eligible to receive a benefit under the plan or the
individual's beneficiaries may be eligible to receive any such benefit.
(i) In connection with a group health plan maintained by a
partnership, the individual is a partner in relation to the partnership.
(ii) In connection with a group health plan maintained by a self-
employed individual (under which one or more employees are
participants), the individual is the self-employed individual.
(d) Determining the average number of employees. [Reserved]
[69 FR 78798, Dec. 30, 2004, as amended at 74 FR 51692, Oct. 7, 2009; 78
FR 65092, Oct. 30, 2013; 79 FR 59136, Oct. 1, 2014; 80 FR 14007, Mar.
18, 2015; 81 FR 75326, Oct. 31, 2016; 84 FR 29024, June 20, 2019; 85 FR
29259, May 14, 2020; 89 FR 23418, Apr. 3, 2024]
Subpart E_Provisions Applicable to Only Health Insurance Issuers
Sec. 146.150 Guaranteed availability of coverage for employers
in the small group market.
(a) Issuance of coverage in the small group market. Subject to
paragraphs (c) through (f) of this section, each health insurance issuer
that offers health insurance coverage in the small group market in a
State must--
(1) Offer, to any small employer in the State, all products that are
approved for sale in the small group market and that the issuer is
actively marketing, and must accept any employer that applies for any of
those products; and
(2) Accept for enrollment under the coverage every eligible
individual (as defined in paragraph (b) of this section) who applies for
enrollment during the period in which the individual first becomes
eligible to enroll under the terms of the group health plan, or during a
special enrollment period, and may not impose any restriction on an
eligible individual's being a participant or beneficiary, which is
inconsistent with the nondiscrimination provisions of Sec. 146.121.
(b) Eligible individual defined. For purposes of this section, the
term ``eligible individual'' means an individual who is eligible--
(1) To enroll in group health insurance coverage offered to a group
health plan maintained by a small employer, in accordance with the terms
of the group health plan;
(2) For coverage under the rules of the health insurance issuer
which are uniformly applicable in the State to small employers in the
small group market; and
(3) For coverage in accordance with all applicable State laws
governing the issuer and the small group market.
(c) Special rules for network plans. (1) In the case of a health
insurance issuer that offers health insurance coverage in the small
group market through a network plan, the issuer may--
(i) Limit the employers that may apply for the coverage to those
with eligible individuals who live, work, or reside in the service area
for the network plan; and
[[Page 126]]
(ii) Within the service area of the plan, deny coverage to employers
if the issuer has demonstrated to the applicable State authority (if
required by the State authority) that--
(A) It will not have the capacity to deliver services adequately to
enrollees of any additional groups because of its obligations to
existing group contract holders and enrollees; and
(B) It is applying this paragraph (c)(1) uniformly to all employers
without regard to the claims experience of those employers and their
employees (and their dependents) or any health status-related factor
relating to those employees and dependents.
(2) An issuer that denies health insurance coverage to an employer
in any service area, in accordance with paragraph (c)(1)(ii) of this
section, may not offer coverage in the small group market within the
service area to any employer for a period of 180 days after the date the
coverage is denied. This paragraph (c)(2) does not limit the issuer's
ability to renew coverage already in force or relieve the issuer of the
responsibility to renew that coverage.
(3) Coverage offered within a service area after the 180-day period
specified in paragraph (c)(2) of this section is subject to the
requirements of this section.
(d) Application of financial capacity limits. (1) A health insurance
issuer may deny health insurance coverage in the small group market if
the issuer has demonstrated to the applicable State authority (if
required by the State authority) that it--
(i) Does not have the financial reserves necessary to underwrite
additional coverage; and
(ii) Is applying this paragraph (d)(1) uniformly to all employers in
the small group market in the State consistent with applicable State law
and without regard to the claims experience of those employers and their
employees (and their dependents) or any health status-related factor
relating to those employees and dependents.
(2) An issuer that denies group health insurance coverage to any
small employer in a State under paragraph (d)(1) of this section may not
offer coverage in connection with group health plans in the small group
market in the State before the later of the following dates:
(i) The 181st day after the date the issuer denies coverage.
(ii) The date the issuer demonstrates to the applicable State
authority, if required under applicable State law, that the issuer has
sufficient financial reserves to underwrite additional coverage.
(3) Paragraph (d)(2) of this section does not limit the issuer's
ability to renew coverage already in force or relieve the issuer of the
responsibility to renew that coverage.
(4) Coverage offered after the 180-day period specified in paragraph
(d)(2) of this section is subject to the requirements of this section.
(5) An applicable State authority may provide for the application of
this paragraph (d) on a service-area-specific basis.
(e) Exception to requirement for failure to meet certain minimum
participation or contribution rules. (1) Paragraph (a) of this section
does not preclude a health insurance issuer from establishing employer
contribution rules or group participation rules for the offering of
health insurance coverage in connection with a group health plan in the
small group market, as allowed under applicable State law.
(2) For purposes of paragraph (e)(1) of this section--
(i) The term ``employer contribution rule'' means a requirement
relating to the minimum level or amount of employer contribution toward
the premium for enrollment of participants and beneficiaries; and
(ii) The term ``group participation rule'' means a requirement
relating to the minimum number of participants or beneficiaries that
must be enrolled in relation to a specified percentage or number of
eligible individuals or employees of an employer.
(f) Exception for coverage offered only to bona fide association
members. Paragraph (a) of this section does not apply to health
insurance coverage offered by a health insurance issuer if that coverage
is made available in the small group market only through one or
[[Page 127]]
more bona fide associations (as defined in 45 CFR 144.103).
(Approved by the Office of Management and Budget under control number
0938-0702)
[62 FR 16958, Apr. 8, 1997; 62 FR 31694, June 10, 1997, as amended at 62
FR 35906, July 2, 1997; 67 FR 48811, July 26, 2002]
Sec. 146.152 Guaranteed renewability of coverage for employers
in the group market.
(a) General rule. Subject to paragraphs (b) through (f) of this
section, a health insurance issuer offering health insurance coverage in
the small or large group market is required to renew or continue in
force the coverage at the option of the plan sponsor or the individual,
as applicable.
(b) Exceptions. An issuer may nonrenew or discontinue group health
insurance coverage offered in the small or large group market based only
on one or more of the following:
(1) Nonpayment of premiums. The plan sponsor has failed to pay
premiums or contributions in accordance with the terms of the health
insurance coverage, including any timeliness requirements.
(2) Fraud. The plan sponsor has performed an act or practice that
constitutes fraud or made an intentional misrepresentation of material
fact in connection with the coverage.
(3) Violation of participation or contribution rules. The plan
sponsor has failed to comply with a material plan provision relating to
any employer contribution or group participation rules permitted under
Sec. 146.150(e) in the case of the small group market or under
applicable State law in the case of the large group market.
(4) Termination of product. The issuer is ceasing to offer coverage
in the market in accordance with paragraph (c) or (d) of this section
and applicable State law.
(5) Enrollees' movement outside service area. For network plans,
there is no longer any enrollee under the group health plan who lives,
resides, or works in the service area of the issuer (or in the area for
which the issuer is authorized to do business); and in the case of the
small group market, the issuer applies the same criteria it would apply
in denying enrollment in the plan under Sec. 146.150(c); provided the
issuer provides notice in accordance with the requirements of paragraph
(c)(1) of this section.
(6) Association membership ceases. For coverage made available in
the small or large group market only through one or more bona fide
associations, if the employer's membership in the association ceases,
but only if the coverage is terminated uniformly without regard to any
health status-related factor relating to any covered individual.
(c) Discontinuing a particular product. In any case in which an
issuer decides to discontinue offering a particular product offered in
the small or large group market, that product may be discontinued by the
issuer in accordance with applicable State law in the particular market
only if--
(1) The issuer provides notice in writing, in a form and manner
specified by the Secretary, to each plan sponsor provided that
particular product in that market (and to all participants and
beneficiaries covered under such coverage) of the discontinuation at
least 90 days before the date the coverage will be discontinued;
(2) The issuer offers to each plan sponsor provided that particular
product the option, on a guaranteed issue basis, to purchase all (or, in
the case of the large group market, any) other health insurance coverage
currently being offered by the issuer to a group health plan in that
market; and
(3) In exercising the option to discontinue that product and in
offering the option of coverage under paragraph (c)(2) of this section,
the issuer acts uniformly without regard to the claims experience of
those sponsors or any health status-related factor relating to any
participants or beneficiaries covered or new participants or
beneficiaries who may become eligible for such coverage.
(d) Discontinuing all coverage. An issuer may elect to discontinue
offering all health insurance coverage in the small or large group
market or both markets in a State in accordance with applicable State
law only if--
(1) The issuer provides notice in writing to the applicable State
authority and to each plan sponsor (and all participants and
beneficiaries covered
[[Page 128]]
under the coverage) of the discontinuation at least 180 days prior to
the date the coverage will be discontinued; and
(2) All health insurance policies issued or delivered for issuance
in the State in the market (or markets) are discontinued and not
renewed.
(3) For purposes of this paragraph (d), subject to applicable State
law, an issuer will not be considered to have discontinued offering all
health insurance coverage in a market in a State if--
(i) The issuer (in this paragraph referred to as the initial issuer)
or, if the issuer is a member of a controlled group, any other issuer
that is a member of such controlled group, offers and makes available in
the applicable market in the State at least one product that is
considered in accordance with Sec. 144.103 of this subchapter to be the
same product as a product the initial issuer had been offering in such
market in such State; or
(ii) The issuer--
(A) Offers and makes available at least one product (in paragraphs
(d)(3)(ii)(A) through (C) of this section referred to as the new
product) in the applicable market in the State, even if such product is
not considered in accordance with Sec. 144.103 of this subchapter to be
the same product as a product the issuer had been offering in the
applicable market in the State (in paragraphs (d)(3)(ii)(A) through (C)
of this section referred to as the discontinued product);
(B) Subjects such new product or products to the applicable process
and requirements established under part 154 of this title as if such
process and requirements applied with respect to that product or
products, to the extent such process and requirements are otherwise
applicable to coverage of the same type and in the same market; and
(C) Reasonably identifies the discontinued product or products that
correspond to the new product or products for purposes of the process
and requirements applied pursuant to paragraph (d)(3)(ii)(B) of this
section.
(4) For purposes of this section, the term controlled group means a
group of two or more persons that is treated as a single employer under
sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of
1986, as amended, or a narrower group as may be provided by applicable
State law.
(e) Prohibition on market reentry. An issuer who elects to
discontinue offering all health insurance coverage in a market (or
markets) in a State as described in paragraph (d) of this section may
not issue coverage in the market (or markets) and State involved during
the 5-year period beginning on the date of discontinuation of the last
coverage not renewed.
(f) Exception for uniform modification of coverage. (1) Only at the
time of coverage renewal may issuers modify the health insurance
coverage for a product offered to a group health plan in the following--
(i) Large group market; and
(ii) Small group market if, for coverage available in this market
(other than only through one or more bona fide associations), the
modification is consistent with State law and is effective uniformly
among group health plans with that product.
(2) For purposes of paragraph (f)(1)(ii) of this section,
modifications made uniformly and solely pursuant to applicable Federal
or State requirements are considered a uniform modification of coverage
if:
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement; and
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) For purposes of paragraph (f)(1)(ii) of this section, other
types of modifications made uniformly are considered a uniform
modification of coverage if the health insurance coverage for the
product in the small group market meets all of the following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act), or if the
issuer is a member of a controlled group (as described in paragraph
(d)(4) of this section), any other health insurance issuer that is a
member of such controlled group;
(ii) The product is offered as the same product network type (for
example, health maintenance organization,
[[Page 129]]
preferred provider organization, exclusive provider organization, point
of service, or indemnity);
(iii) The product continues to cover at least a majority of the same
service area;
(iv) Within the product, each plan has the same cost-sharing
structure as before the modification, except for any variation in cost
sharing solely related to changes in cost and utilization of medical
care, or to maintain the same metal tier level described in sections
1302(d) and (e) of the Affordable Care Act; and
(v) The product provides the same covered benefits, except for any
changes in benefits that cumulatively impact the rate for any plan
within the product within an allowable variation of 2 percentage points (not including changes pursuant to
applicable Federal or State requirements).
(4) A State may only broaden the standards in paragraphs (f)(3)(iii)
and (iv) of this section.
(g) Application to coverage offered only through associations. In
the case of health insurance coverage that is made available by a health
insurance issuer in the small or large group market to employers only
through one or more associations, the reference to ``plan sponsor'' is
deemed, with respect to coverage provided to an employer member of the
association, to include a reference to such employer.
(h) Notice of renewal of coverage. If an issuer in the small group
market is renewing grandfathered coverage as described in paragraph (a)
of this section, or uniformly modifying grandfathered coverage as
described in paragraph (f) of this section, the issuer must provide to
each plan sponsor written notice of the renewal at least 60 calendar
days before the date the coverage will be renewed in a form and manner
specified by the Secretary.
(Approved by the Office of Management and Budget under control number
0938-0702)
[62 FR 16958, Apr. 8, 1997; 62 FR 31670, June 10, 1997, as amended at 62
FR 35906, July 2, 1997; 79 FR 30335, May 27, 2014; 79 FR 53004, Sept. 5,
2014; 81 FR 94172, Dec. 22, 2016; 84 FR 17561, Apr. 25, 2019]
Sec. 146.160 Disclosure of information.
(a) General rule. In connection with the offering of any health
insurance coverage to a small employer, a health insurance issuer is
required to--
(1) Make a reasonable disclosure to the employer, as part of its
solicitation and sales materials, of the availability of information
described in paragraph (b) of this section; and
(2) Upon request of the employer, provide that information to the
employer.
(b) Information described. Subject to paragraph (d) of this section,
information that must be provided under paragraph (a)(2) of this section
is information concerning the following:
(1) Provisions of coverage relating to the following:
(i) The issuer's right to change premium rates and the factors that
may affect changes in premium rates.
(ii) Renewability of coverage.
(iii) Any preexisting condition exclusion, including use of the
alternative method of counting creditable coverage.
(iv) Any affiliation periods applied by HMOs.
(v) The geographic areas served by HMOs.
(2) The benefits and premiums available under all health insurance
coverage for which the employer is qualified, under applicable State
law. See Sec. 146.150(b) through (f) for allowable limitations on
product availability.
(c) Form of information. The information must be described in
language that is understandable by the average small employer, with a
level of detail that is sufficient to reasonably inform small employers
of their rights and obligations under the health insurance coverage.
This requirement is satisfied if the issuer provides each of the
following with respect to each product offered:
(1) An outline of coverage. For purposes of this section, outline of
coverage means a description of benefits in summary form.
(2) The rate or rating schedule that applies to the product (with
and without the preexisting condition exclusion or affiliation period).
(3) The minimum employer contribution and group participation rules
that
[[Page 130]]
apply to any particular type of coverage.
(4) In the case of a network plan, a map or listing of counties
served.
(5) Any other information required by the State.
(d) Exception. An issuer is not required to disclose any information
that is proprietary and trade secret information under applicable law.
(Approved by the Office of Management and Budget under control number
0938-0702)
[62 FR 16958, Apr. 8, 1997, as amended at 62 FR 35906, July 2, 1997]
Subpart F_Exclusion of Plans and Enforcement
Sec. 146.180 Treatment of non-Federal governmental plans.
(a) Opt-out election for self-funded non-Federal governmental
plans--(1) Requirements subject to exemption. The PHS Act requirements
described in this paragraph are the following:
(i) Limitations on preexisting condition exclusion periods in
accordance with section 2701 of the PHS Act as codified before enactment
of the Affordable Care Act.
(ii) Special enrollment periods for individuals and dependents
described under section 2704(f) of the PHS Act.
(iii) Prohibitions against discriminating against individual
participants and beneficiaries based on health status under section 2705
of the PHS Act, except that the sponsor of a self-funded non-Federal
governmental plan cannot elect to exempt its plan from requirements
under section 2705(a)(6) and 2705(c) through (f) that prohibit
discrimination with respect to genetic information.
(iv) Standards relating to benefits for mothers and newborns under
section 2725 of the PHS Act.
(v) Parity in mental health and substance use disorder benefits
under section 2726 of the PHS Act.
(vi) Required coverage for reconstructive surgery following
mastectomies under section 2727 of the PHS Act.
(vii) Coverage of dependent students on a medically necessary leave
of absence under section 2728 of the PHS Act.
(2) General rule. For plan years beginning on or after September 23,
2010, a sponsor of a non-Federal governmental plan may elect to exempt
its plan, to the extent the plan is not provided through health
insurance coverage (that is, it is self-funded), from one or more of the
requirements described in paragraphs (a)(1)(iv) through (vii) of this
section.
(3) Special rule for certain collectively bargained plans. In the
case of a plan that is maintained pursuant to a collective bargaining
agreement that was ratified before March 23, 2010, and whose sponsor
made an election to exempt its plan from any of the requirements
described in paragraphs (a)(1)(i) through (iii) of this section, the
provisions of paragraph (a)(2) of this section apply for plan years
beginning after the expiration of the term of the agreement.
(4) Examples--(i) Example 1. A non-Federal governmental employer has
elected to exempt its self-funded group health plan from all of the
requirements described in paragraph (a)(1) of this section. The plan
year commences September 1 of each year. The plan is not subject to the
provisions of paragraph (a)(2) of this section until the plan year that
commences on September 1, 2011. Accordingly, for that plan year and any
subsequent plan years, the plan sponsor may elect to exempt its plan
only from the requirements described in paragraphs (a)(1)(iv) through
(vii) of this section.
(ii) Example 2. A non-Federal governmental employer has elected to
exempt its collectively bargained self-funded plan from all of the
requirements described in paragraph (a)(1) of this section. The
collective bargaining agreement applies to five plan years, October 1,
2009 through September 30, 2014. For the plan year that begins on
October 1, 2014, the plan sponsor is no longer permitted to elect to
exempt its plan from the requirements described in paragraph (a)(1) of
this section. Accordingly, for that plan year and any subsequent plan
years, the plan sponsor may elect to exempt its plan only from the
requirements described in paragraphs (a)(1)(iv) through (vii) of this
section.
[[Page 131]]
(5) Limitations. (i) An election under this section cannot
circumvent a requirement of the PHS Act to the extent the requirement
applied to the plan before the effective date of the election.
(A) Example 1. A plan is subject to requirements of section 2727 of
the PHS Act, under which a plan that covers medical and surgical
benefits with respect to a mastectomy must cover reconstructive surgery
and certain other services following a mastectomy. An enrollee who has
had a mastectomy receives reconstructive surgery on August 24. Claims
with respect to the surgery are submitted to and processed by the plan
in September. The group health plan commences a new plan year each
September 1. Effective September 1, the plan sponsor elects to exempt
its plan from section 2727 of the PHS Act. The plan cannot, on the basis
of its exemption election, decline to pay for the claims incurred on
August 24.
(B) [Reserved]
(ii) If a group health plan is co-sponsored by two or more
employers, then only plan enrollees of the non-Federal governmental
employer(s) with a valid election under this section are affected by the
election.
(6) Stop-loss or excess risk coverage. For purposes of this
section--
(i) Subject to paragraph (a)(6)(ii) of this section, the purchase of
stop-loss or excess risk coverage by a self-funded non-Federal
governmental plan does not prevent an election under this section.
(ii) Regardless of whether coverage offered by an issuer is
designated as ``stop-loss'' coverage or ``excess risk'' coverage, if it
is regulated as group health insurance under an applicable State law,
then for purposes of this section, a non-Federal governmental plan that
purchases the coverage is considered to be fully insured. In that event,
a plan may not be exempted under this section from the requirements
described in paragraph (a)(1) of this section.
(7) Construction. Nothing in this part should be construed as
imposing collective bargaining obligations on any party to the
collective bargaining process.
(b) Form and manner of election--(1) Election requirements. The
election must meet the following requirements:
(i) Be made in an electronic format in a form and manner as
described by the Secretary in guidance.
(ii) Be made in conformance with all of the plan sponsor's rules,
including any public hearing requirements.
(iii) Specify the beginning and ending dates of the period to which
the election is to apply. This period can be either of the following
periods:
(A) A single specified plan year, as defined in Sec. 144.103 of
this subchapter.
(B) The ``term of the agreement,'' as specified in paragraph (b)(2)
of this section, in the case of a plan governed by collective
bargaining.
(iv) Specify the name of the plan and the name and address of the
plan administrator, and include the name and telephone number of a
person CMS may contact regarding the election.
(v) State that the plan does not include health insurance coverage,
or identify which portion of the plan is not funded through health
insurance coverage.
(vi) Specify each requirement described in paragraph (a)(1) of this
section from which the plan sponsor elects to exempt the plan.
(vii) Certify that the person signing the election document,
including (if applicable) a third party plan administrator, is legally
authorized to do so by the plan sponsor.
(viii) Include, as an attachment, a copy of the notice described in
paragraph (f) of this section.
(ix) In the case of a plan sponsor submitting one opt-out election
for all group health plans subject to the same collective bargaining
agreement, include a list of plans subject to the agreement.
(x) In the case of a plan sponsor submitting opt-out elections for
more than one group health plan that is not subject to a collective
bargaining agreement, submit a separate election document for each such
plan.
(2) ``Term of the agreement'' defined. Except as provided in
paragraphs (b)(2)(i) and (ii) of this section, for purposes of this
section ``term of the agreement'' means all group health
[[Page 132]]
plan years governed by a single collective bargaining agreement.
(i) In the case of a group health plan for which the last plan year
governed by a prior collective bargaining agreement expires during the
bargaining process for a new agreement, the term of the prior agreement
includes all plan years governed by the agreement plus the period of
time that precedes the latest of the following dates, as applicable,
with respect to the new agreement:
(A) The date of an agreement between the governmental employer and
union officials.
(B) The date of ratification of an agreement between the
governmental employer and the union.
(C) The date impasse resolution, arbitration or other closure of the
collective bargaining process is finalized when agreement is not
reached.
(ii) In the case of a group health plan governed by a collective
bargaining agreement for which closure is not reached before the last
plan year under the immediately preceding agreement expires, the term of
the new agreement includes all plan years governed by the agreement
excluding the period that precedes the latest applicable date specified
in paragraph (b)(2)(i) of this section.
(3) Construction--(i) Dispute resolution. Nothing in paragraph
(b)(1)(ii) of this section should be construed to mean that CMS
arbitrates disputes between plan sponsors, participants, beneficiaries,
or their representatives regarding whether an election complies with all
of a plan sponsor's rules.
(ii) Future elections not preempted. If a plan must comply with one
or more requirements described in paragraph (a)(1) of this section for a
given plan year or period of plan coverage, nothing in this section
should be construed as preventing a plan sponsor from submitting an
election in accordance with this section for a subsequent plan year or
period of plan coverage.
(c) Filing a timely election--(1) Plan not governed by collective
bargaining. Subject to paragraph (c)(4) of this section, if a plan is
not governed by a collective bargaining agreement, a plan sponsor or
entity acting on behalf of a plan sponsor must file an election with CMS
before the first day of the plan year.
(2) Plan governed by a collective bargaining agreement. Subject to
paragraph (d)(4) of this section, if a plan is governed by a collective
bargaining agreement that was ratified before March 23, 2010, a plan
sponsor or entity acting on behalf of a plan sponsor must file an
election with CMS before the first day of the first plan year governed
by a collective bargaining agreement, or by the 45th day after the
latest applicable date specified in paragraph (b)(2)(i) of this section,
if the 45th day falls on or after the first day of the plan year.
(3) Special rule for timely filing. If the latest filing date
specified under paragraphs (c)(1) or (c)(2) of this section falls on a
Saturday, Sunday, or a State or Federal holiday, CMS accepts filings
submitted on the next business day.
(4) Filing extension based on good cause. CMS may extend the
deadlines specified in paragraphs (c)(1) and (2) of this section for
good cause if the plan substantially complies with the requirements of
paragraph (e) of this section.
(5) Failure to file a timely election. Absent an extension under
paragraph (c)(4) of this section, a plan sponsor's failure to file a
timely election under paragraph (c)(1) or (2) of this section makes the
plan subject to all requirements of this part for the entire plan year
to which the election would have applied, or, in the case of a plan
governed by a collective bargaining agreement, for any plan years under
the agreement for which the election is not timely filed.
(d) Additional information required--(1) Written notification. If an
election is timely filed, but CMS determines that the election document
(or the notice to plan enrollees) does not meet all of the requirements
of this section, CMS may notify the plan sponsor, or other entity that
filed the election, that it must submit any additional information that
CMS has determined is necessary to meet those requirements. The
additional information must be filed with CMS by the later of the
following dates:
(i) The last day of the plan year.
[[Page 133]]
(ii) The 45th day after the date of CMS's written notification
requesting additional information.
(2) Timely response. For submissions via hard copy via U.S. Mail,
CMS uses the postmark on the envelope in which the additional
information is submitted to determine that the information is timely
filed as specified under paragraph (d)(1) of this section. If the latest
filing date falls on a Saturday, Sunday, or a State or Federal holiday,
CMS accepts a postmark on the next business day.
(3) Failure to respond timely. CMS may invalidate an election if the
plan sponsor, or other entity that filed the election, fails to timely
submit the additional information as specified under paragraph (d)(1) of
this section.
(e) Notice to enrollees--(1) Mandatory notification. (i) A plan that
makes the election described in this section must notify each affected
enrollee of the election, and explain the consequences of the election.
For purposes of paragraph (e) of this section, if the dependent(s) of a
participant reside(s) with the participant, a plan need only provide
notice to the participant.
(ii) The notice must be in writing and, except as provided in
paragraph (e)(2) of this section with regard to initial notices, must be
provided to each enrollee at the time of enrollment under the plan, and
on an annual basis no later than the last day of each plan year (as
defined in Sec. 144.103 of this subchapter) for which there is an
election.
(iii) A plan may meet the notification requirements of paragraph (e)
of this section by prominently printing the notice in a summary plan
description, or equivalent description, that it provides to each
enrollee at the time of enrollment, and annually. Also, when a plan
provides a notice to an enrollee at the time of enrollment, that notice
may serve as the initial annual notice for that enrollee.
(2) Initial notices. (i) If a plan is not governed by a collective
bargaining agreement, with regard to the initial plan year to which an
election under this section applies, the plan must provide the initial
annual notice of the election to all enrollees before the first day of
that plan year, and notice at the time of enrollment to all individuals
who enroll during that plan year.
(ii) In the case of a collectively bargained plan, with regard to
the initial plan year to which an election under this section applies,
the plan must provide the initial annual notice of the election to all
enrollees before the first day of the plan year, or within 30 days after
the latest applicable date specified in paragraph (b)(2)(i) of this
section if the 30th day falls on or after the first day of the plan
year. Also, the plan must provide a notice at the time of enrollment to
individuals who--
(A) Enroll on or after the first day of the plan year, when closure
of the collective bargaining process is reached before the plan year
begins; or
(B) Enroll on or after the latest applicable date specified in
paragraph (b)(2)(i) of this section if that date falls on or after the
first day of the plan year.
(3) Notice content. The notice must include at least the following
information:
(i) The specific requirements described in paragraph (a)(1) of this
section from which the plan sponsor is electing to exempt the plan, and
a statement that, in general, Federal law imposes these requirements
upon group health plans.
(ii) A statement that Federal law gives the plan sponsor of a self-
funded non-Federal governmental plan the right to exempt the plan in
whole, or in part, from the listed requirements, and that the plan
sponsor has elected to do so.
(iii) A statement identifying which parts of the plan are subject to
the election.
(iv) A statement identifying which of the listed requirements, if
any, apply under the terms of the plan, or as required by State law,
without regard to an exemption under this section.
(f) Subsequent elections--(1) Election renewal. A plan sponsor may
renew an election under this section through subsequent elections. The
timeliness standards described in paragraph (c) of this section apply to
election renewals under paragraph (f) of this section.
(2) Form and manner of renewal. Except for the requirement to
forward to CMS a copy of the notice to enrollees
[[Page 134]]
under paragraph (b)(1)(viii) of this section, the plan sponsor must
comply with the election requirements of paragraph (b)(1) of this
section. In lieu of providing a copy of the notice under paragraph
(b)(1)(viii) of this section, the plan sponsor may include a statement
that the notice has been, or will be, provided to enrollees as specified
under paragraph (e) of this section.
(3) Election renewal includes provisions from which plan not
previously exempted. If an election renewal includes a requirement
described in paragraph (a)(1) of this section from which the plan
sponsor did not elect to exempt the plan for the preceding plan year,
the advance notification requirements of paragraph (e)(2) of this
section apply with respect to the additional requirement(s) of paragraph
(a) of this section from which the plan sponsor is electing to exempt
the plan.
(4) Special rules regarding renewal of an election under a
collective bargaining agreement. (i) If protracted negotiations with
respect to a new agreement result in an extension of the term of the
prior agreement (as provided under paragraph (b)(2)(i) of this section)
under which an election under this section was in effect, the plan must
comply with the enrollee notification requirements of paragraph (e)(1)
of this section, and, following closure of the collective bargaining
process, must file an election renewal with CMS as provided under
paragraph (c)(2) of this section.
(ii) If a single plan applies to more than one bargaining unit, and
the plan is governed by collective bargaining agreements of varying
lengths, paragraph (c)(2) of this section, with respect to an election
renewal, applies to the plan as governed by the agreement that results
in the earliest filing date.
(g) Requirements not subject to exemption--(1) Genetic information.
Without regard to an election under this section that exempts a non-
Federal governmental plan from any or all of the provisions of
Sec. Sec. 146.111 and 146.121, the exemption election must not be
construed to exempt the plan from any provisions of this part that
pertain to genetic information.
(2) Enforcement. CMS enforces these requirements as provided under
paragraph (j) of this section.
(h) Effect of failure to comply with certification and notification
requirements--(1) Substantial failure--(i) General rule. Except as
provided in paragraph (h)(1)(iii) of this section, a substantial failure
to comply with paragraph (e) or (g)(1) of this section results in the
invalidation of an election under this section with respect to all plan
enrollees for the entire plan year. That is, the plan is subject to all
requirements of this part for the entire plan year to which the election
otherwise would have applied.
(ii) Determination of substantial failure. CMS determines whether a
plan has substantially failed to comply with a requirement of paragraph
(e) or (g)(1) of this section based on all relevant facts and
circumstances, including previous record of compliance, gravity of the
violation and whether a plan corrects the failure, as warranted, within
30 days of learning of the violation. However, in general, a plan's
failure to provide a notice of the fact and consequences of an election
under this section to an individual at the time of enrollment, or on an
annual basis before a given plan year expires, constitutes a substantial
failure.
(iii) Exceptions--(A) Multiple employers. If the plan is sponsored
by multiple employers, and only certain employers substantially fail to
comply with the requirements of paragraph (e) or (g)(1) of this section,
then the election is invalidated with respect to those employers only,
and not with respect to other employers that complied with those
requirements, unless the plan chooses to cancel its election entirely.
(B) Limited failure to provide notice. If a substantial failure to
notify enrollees of the fact and consequences of an election is limited
to certain individuals, the election under this section is valid only
if, for the plan year with respect to which the failure has occurred,
the plan agrees not to apply the election with respect to the
individuals who were not notified and so informs those individuals in
writing.
(2) Examples--(i) Example 1. A self-funded, non-Federal group health
plan is co-sponsored by 10 school districts. Nine of the school
districts have fully complied with the requirements of paragraph (e) of
this section, including
[[Page 135]]
providing notice to new employees at the time of their enrollment in the
plan, regarding the group health plan's exemption under this section
from requirements of this part. One school district, which hired 10 new
teachers during the summer for the upcoming school year, neglected to
notify three of the new hires about the group health plan's exemption
election at the time they enrolled in the plan. The school district has
substantially failed to comply with a requirement of paragraph (e) of
this section with respect to these individuals. The school district
learned of the oversight six weeks into the school year, and promptly
(within 30 days of learning of the oversight) provided notice to the
three teachers regarding the plan's exemption under this section and
that the exemption does not apply to them, or their dependents, during
the plan year of their enrollment because of the plan's failure to
timely notify them of its exemption. The plan complies with the
requirements of this part for these individuals for the plan year of
their enrollment. CMS would not require the plan to come into compliance
with the requirements of this part for other enrollees.
(ii) Example 2. Two non-Federal governmental employers cosponsor a
self-funded group health plan. One employer substantially fails to
comply with the requirements of paragraph (e) of this section. While the
plan may limit the invalidation of the election to enrollees of the plan
sponsor that is responsible for the substantial failure, the plan
sponsors determine that administering the plan in that manner would be
too burdensome. Accordingly, in this example, the plan sponsors choose
to cancel the election entirely. Both plan sponsors come into compliance
with the requirements of this part with respect to all enrollees for the
plan year for which the substantial failure has occurred.
(i) Election invalidated. If CMS finds cause to invalidate an
election under this section, the following rules apply:
(1) CMS notifies the plan sponsor (and the plan administrator if
other than the plan sponsor and the administrator's address is known to
CMS) in writing that CMS has made a preliminary determination that an
election is invalid, and States the basis for that determination.
(2) CMS's notice informs the plan sponsor that it has 45 days after
the date of CMS's notice to explain in writing why it believes its
election is valid. The plan sponsor should provide applicable statutory
and regulatory citations to support its position.
(3) CMS verifies that the plan sponsor's response is timely filed as
provided under paragraph (c)(3) of this section. CMS will not consider a
response that is not timely filed.
(4) If CMS's preliminary determination that an election is invalid
remains unchanged after CMS considers the plan sponsor's timely response
(or in the event that the plan sponsor fails to respond timely), CMS
provides written notice to the plan sponsor (and the plan administrator
if other than the plan sponsor and the administrator's address is known
to CMS) of CMS's final determination that the election is invalid. Also,
CMS informs the plan sponsor that, within 45 days of the date of the
notice of final determination, the plan, subject to paragraph
(i)(1)(iii) of this section, must comply with all requirements of this
part for the specified period for which CMS has determined the election
to be invalid.
(j) Enforcement. To the extent that an election under this section
has not been filed or a non-Federal governmental plan otherwise is
subject to one or more requirements of this part, CMS enforces those
requirements under part 150 of this subchapter. This may include
imposing a civil money penalty against the plan or plan sponsor, as
determined under subpart C of part 150.
(k) Construction. Nothing in this section should be construed to
prevent a State from taking the following actions:
(1) Establishing, and enforcing compliance with, the requirements of
State law (as defined in Sec. 146.143(d)(1)), including requirements
that parallel provisions of title XXVII of the PHS Act, that apply to
non-Federal governmental plans or sponsors.
(2) Prohibiting a sponsor of a non-Federal governmental plan within
the
[[Page 136]]
State from making an election under this section.
[79 FR 30336, May 27, 2014]
Effective Date Note: At 89 FR 77751, Sept. 23, 2024, Sec. 146.180
was amended, effective Nov. 22, 2024, by:
1. Revising paragraph (a)(2);
2. Redesignating paragraphs (a)(3) through (7) as paragraphs (a)(4)
through (8);
3. Adding new paragraph (a)(3);
4. Revising newly redesignated paragraphs (a)(5) and (a)(7)(i) and
paragraph (f)(1); and
5. Adding paragraph (f)(4)(iii).
For the convenience of the user, the added and revised text is set
forth as follows:
Sec. 146.180 Treatment of non-Federal governmental plans.
(a) * * *
(2) General rule. For plans years beginning on or after September
23, 2010, a sponsor of a non-Federal governmental plan may elect to
exempt its plan, to the extent the plan is not provided through health
insurance coverage (that is self-funded), from one or more of the
requirements described in paragraphs (a)(1)(iv) through (vii) of this
section, except as provided in paragraphs (a)(3) and (f)(1) of this
section with respect to the requirements described in paragraph
(a)(1)(v) of this section.
(3) Sunset of election option related to parity in mental health and
substance use disorder benefits. A sponsor of a non-Federal governmental
plan may not newly elect to exempt its plans from the requirements
described in paragraph (a)(1)(v) of this section on or after December
29, 2022.
* * * * *
(5) Examples--(i) Example 1. A non-Federal governmental employer has
elected to exempt its self-funded group health plan from all of the
requirements described in paragraph (a)(1) of this section. The plan
year commences September 1st of each year. The plan is not subject to
the provisions of paragraph (a)(2) of this section until the plan year
that commences on September 1, 2011. Accordingly, for that plan year and
any subsequent plan years, the plan sponsor may elect to exempt its plan
only from the requirements described in paragraphs (a)(1)(iv) through
(vii) of this section, subject to paragraphs (a)(3) and (f)(1) of this
section with respect to the requirements described in paragraph
(a)(1)(v) of this section.
(ii) Example 2. A non-Federal governmental employer has elected to
exempt its collectively bargained self-funded plan from all of the
requirements described in paragraph (a)(1) of this section. The
collective bargaining agreement applies to 5 plan years, October 1,
2009, through September 30, 2014. For the plan year that begins on
October 1, 2014, the plan sponsor is no longer permitted to elect to
exempt its plan from the requirements described in paragraphs (a)(1)(i)
through (iii) of this section. Accordingly, for that plan year and any
subsequent plan years, the plan sponsor may elect to exempt its plan
only from the requirements described in paragraphs (a)(1)(iv) through
(vii) of this section, subject to paragraphs (a)(3) and (f)(1) of this
section with respect to the requirements described in paragraph
(a)(1)(v) of this section.
* * * * *
(7) * * *
(i) Subject to paragraph (a)(7)(ii) of this section, the purchase of
stop-loss or excess risk coverage by a self-funded non-Federal
governmental plan does not prevent an election under this section.
* * * * *
(f) * * *
(1) Election renewal. A plan sponsor may renew an election under
this section through subsequent elections. Notwithstanding the previous
sentence and except as provided in paragraph (f)(4)(iii) of this
section, an election with respect to the requirements described in
paragraph (a)(1)(v) of this section expiring on or after June 27, 2023,
may not be renewed. The timeliness standards described in paragraph (c)
of this section apply to election renewals under paragraph (f) of this
section.
* * * * *
(4) * * *
(iii) In the case of a plan that is subject to multiple collective
bargaining agreements of varying lengths and that has an election with
respect to the requirements described in paragraph (a)(1)(v) of this
section in effect as of December 29, 2022, that expires on or after June
27, 2023, the plan may extend such election until the date on which the
term of the last such agreement expires.
* * * * *
PART 147_HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP
AND INDIVIDUAL HEALTH INSURANCE MARKETS--Table of Contents
Sec.
147.100 Basis and scope.
147.102 Fair health insurance premiums.
147.103 State reporting.
147.104 Guaranteed availability of coverage.
147.106 Guaranteed renewability of coverage.
[[Page 137]]
147.108 Prohibition of preexisting condition exclusions.
147.110 Prohibiting discrimination against participants, beneficiaries,
and individuals based on a health factor.
147.116 Prohibition on waiting periods that exceed 90 days.
147.120 Eligibility of children until at least age 26.
147.126 No lifetime or annual limits.
147.128 Rules regarding rescissions.
147.130 Coverage of preventive health services.
147.131 Accommodations in connection with coverage of certain preventive
health services.
147.132 Religious exemptions in connection with coverage of certain
preventive health services.
147.133 Moral exemptions in connection with coverage of certain
preventive health services.
147.136 Internal claims and appeals and external review processes.
147.138 Patient protections.
147.140 Preservation of right to maintain existing coverage.
147.145 Student health insurance coverage.
147.150 Coverage of essential health benefits.
147.160 Parity in mental health and substance use disorder benefits.
147.200 Summary of benefits and coverage and uniform glossary.
147.210 Transparency in coverage--definitions.
147.211 Transparency in coverage--required disclosures to participants,
beneficiaries, or enrollees.
147.212 Transparency in coverage--requirements for public disclosure.
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, 300gg-92, and
300gg-111 through 300gg-139, as amended, and section 3203, Pub. L. 116-
136, 134 Stat. 281.
Source: 75 FR 27138, May 13, 2010, unless otherwise noted.
Sec. 147.100 Basis and scope.
Part 147 of this subchapter implements the requirements of the
Patient Protection and Affordable Care Act that apply to group health
plans and health insurance issuers in the Group and Individual markets.
Sec. 147.102 Fair health insurance premiums.
(a) In general. With respect to the premium rate charged by a health
insurance issuer in accordance with Sec. 156.80 of this subchapter for
health insurance coverage offered in the individual or small group
market--
(1) The rate may vary with respect to the particular plan or
coverage involved only by determining the following:
(i) Whether the plan or coverage covers an individual or family.
(ii) Rating area, as established in accordance with paragraph (b) of
this section. For purposes of this paragraph (a), rating area is
determined--
(A) In the individual market, using the primary policyholder's
address.
(B) In the small group market, using the group policyholder's
principal business address. For purposes of this paragraph
(a)(1)(ii)(B), principal business address means the principal business
address registered with the State or, if a principal business address is
not registered with the State, or is registered solely for purposes of
service of process and is not a substantial worksite for the
policyholder's business, the business address within the State where the
greatest number of employees of such policyholder works. If, for a
network plan, the group policyholder's principal business address is not
within the service area of such plan, and the policyholder has employees
who live, reside, or work within the service area, the principal
business address for purposes of the network plan is the business
address within the plan's service area where the greatest number of
employees work as of the beginning of the plan year. If there is no such
business address, the rating area for purposes of the network plan is
the rating area that reflects where the greatest number of employees
within the plan's service area live or reside as of the beginning of the
plan year.
(iii) Age, except that the rate may not vary by more than 3:1 for
like individuals of different age who are age 21 and older and that the
variation in rate must be actuarially justified for individuals under
age 21, consistent with the uniform age rating curve under paragraph (e)
of this section. For purposes of identifying the appropriate age
adjustment under this paragraph and the age band under paragraph (d) of
this section applicable to a specific enrollee, the enrollee's age as of
the date of policy issuance or renewal must be used.
[[Page 138]]
(iv) Subject to section 2705 of the Public Health Service Act and
its implementing regulations (related to prohibiting discrimination
based on health status and programs of health promotion or disease
prevention) as applicable, tobacco use, except that such rate may not
vary by more than 1.5:1 and may only be applied with respect to
individuals who may legally use tobacco under federal and state law. For
purposes of this section, tobacco use means use of tobacco on average
four or more times per week within no longer than the past 6 months.
This includes all tobacco products, except that tobacco use does not
include religious or ceremonial use of tobacco. Further, tobacco use
must be defined in terms of when a tobacco product was last used.
(2) The rate must not vary with respect to the particular plan or
coverage involved by any other factor not described in paragraph (a)(1)
of this section.
(b) Rating area. (1) A state may establish one or more rating areas
within that state, as provided in paragraphs (b)(3) and (b)(4) of this
section, for purposes of applying this section and the requirements of
title XXVII the Public Health Service Act and title I of the Patient
Protection and Affordable Care Act.
(2) If a state does not establish rating areas as provided in
paragraphs (b)(3) and (b)(4) of this section or provide information on
such rating areas in accordance with Sec. 147.103, or CMS determines in
accordance with paragraph (b)(5) of this section that a state's rating
areas under paragraph (b)(4) of this section are not adequate, the
default will be one rating area for each metropolitan statistical area
in the state and one rating area comprising all non-metropolitan
statistical areas in the state, as defined by the Office of Management
and Budget.
(3) A state's rating areas must be based on the following geographic
boundaries: Counties, three-digit zip codes, or metropolitan statistical
areas and non-metropolitan statistical areas, as defined by the Office
of Management and Budget, and will be presumed adequate if either of the
following conditions are satisfied:
(i) The state established by law, rule, regulation, bulletin, or
other executive action uniform rating areas for the entire state as of
January 1, 2013.
(ii) The state establishes by law, rule, regulation, bulletin, or
other executive action after January 1, 2013 uniform rating areas for
the entire state that are no greater in number than the number of
metropolitan statistical areas in the state plus one.
(4) Notwithstanding paragraph (b)(3) of this section, a state may
propose to CMS for approval a number of rating areas that is greater
than the number described in paragraph (b)(3)(ii) of this section,
provided such rating areas are based on the geographic boundaries
specified in paragraph (b)(3) of this section.
(5) In determining whether the rating areas established by each
state under paragraph (b)(4) of this section are adequate, CMS will
consider whether the state's rating areas are actuarially justified, are
not unfairly discriminatory, reflect significant differences in health
care unit costs, lead to stability in rates over time, apply uniformly
to all issuers in a market, and are based on the geographic boundaries
of counties, three-digit zip codes, or metropolitan statistical areas
and non-metropolitan statistical areas.
(c) Application of variations based on age or tobacco use. With
respect to family coverage under health insurance coverage, the rating
variations permitted under paragraphs (a)(1)(iii) and (a)(1)(iv) of this
section must be applied based on the portion of the premium attributable
to each family member covered under the coverage.
(1) Per-member rating. The total premium for family coverage must be
determined by summing the premiums for each individual family member.
With respect to family members under the age of 21, the premiums for no
more than the three oldest covered children must be taken into account
in determining the total family premium.
(2) Family tiers under community rating. If a state does not permit
any rating variation for the factors described in paragraphs (a)(1)(iii)
and (a)(1)(iv) of this section, the state may require that premiums for
family coverage be determined by using uniform family tiers
[[Page 139]]
and the corresponding multipliers established by the state. If a state
does not establish uniform family tiers and the corresponding
multipliers, the per-member-rating methodology under paragraph (c)(1) of
this section will apply in that state.
(3) Application to small group market--(i) In the case of the small
group market, the total premium charged to a group health plan is
determined by summing the premiums of covered participants and
beneficiaries in accordance with paragraph (c)(1) or (2) of this
section, as applicable.
(ii) Subject to paragraph (c)(3)(iii) of this section, nothing in
this section prevents a state from requiring issuers to offer to a group
health plan, or an issuer from voluntarily offering to a group health
plan, premiums that are based on average enrollee premium amounts,
provided that the total group premium established at the time of
applicable enrollment at the beginning of the plan year is the same
total amount derived in accordance with paragraph (c)(1) or (2) of this
section, as applicable.
(iii) Effective for plan years beginning on or after January 1,
2015, an issuer that, in connection with a group health plan in the
small group market, offers premiums that are based on average enrollee
premium amounts under paragraph (c)(3)(ii) of this section must--
(A) Ensure an average enrollee premium amount calculated based on
applicable enrollment of participants and beneficiaries at the beginning
of the plan year does not vary during the plan year.
(B) Unless a state establishes and CMS approves an alternate rating
methodology, calculate an average enrollee premium amount for covered
individuals age 21 and older, and calculate an average enrollee premium
amount for covered individuals under age 21. The premium for a given
family composition is determined by summing the average enrollee premium
amount applicable to each family member covered under the plan, taking
into account no more than three covered children under age 21.
(C) Pursuant to applicable state law, ensure that the average
enrollee premium amount calculated for any individual covered under the
plan does not include any rating variation for tobacco use permitted
under paragraph (a)(1)(iv) of this section. The rating variation for
tobacco use permitted under paragraph (a)(1)(iv) of this section is
determined based on the premium rate that would be applied on a per-
member basis with respect to an individual who uses tobacco and then
included in the premium charged for that individual.
(D) To the extent permitted by applicable State law and, in the case
of coverage offered through a SHOP, as permitted by the SHOP, apply this
paragraph (c)(3)(iii) uniformly among group health plans enrolling in
that product, giving those group health plans the option to pay premiums
based on average enrollee premium amounts.
(d) Uniform age bands. The following uniform age bands apply for
rating purposes under paragraph (a)(1)(iii) of this section:
(1) Child age bands. (i) For plan years or policy years beginning
before January 1, 2018, a single age band for individuals age 0 through
20.
(ii) For plan years or policy years beginning on or after January 1,
2018:
(A) A single age band for individuals age 0 through 14.
(B) One-year age bands for individuals age 15 through 20.
(2) Adult age bands. One-year age bands for individuals age 21
through 63.
(3) Older adult age bands. A single age band for individuals age 64
and older.
(e) Uniform age rating curves. Each State may establish a uniform
age rating curve in the individual or small group market, or both
markets, for rating purposes under paragraph (a)(1)(iii) of this
section. If a State does not establish a uniform age rating curve or
provide information on such age curve in accordance with Sec. 147.103,
a default uniform age rating curve specified in guidance by the
Secretary to reflect market patterns in the individual and small group
markets will apply in that State that takes into account the rating
variation permitted for age under State law.
(f) Special rule for large group market. If a state permits health
insurance issuers that offer coverage in the large
[[Page 140]]
group market in the state to offer such coverage through an Exchange
starting in 2017, the provisions of this section applicable to coverage
in the small group market apply to all coverage offered in the large
group market in the state.
(g) Applicability date. The provisions of this section apply for
plan years (in the individual market, policy years) beginning on or
after January 1, 2014.
(h) Grandfathered health plans. This section does not apply to
grandfathered health plans in accordance with Sec. 147.140.
[78 FR 13436, Feb. 27, 2013, as amended at 78 FR 54133, Aug. 30, 2013;
79 FR 13834, Mar. 11, 2014; 81 FR 12334, Mar. 8, 2016; 81 FR 94173, Dec.
22, 2016; 83 FR 17058, Apr. 17, 2018]
Sec. 147.103 State reporting.
(a) 2014. If a state has adopted or intends to adopt for the 2014
plan or policy year a standard or requirement described in this
paragraph, the state must submit to CMS information about such standard
or requirement in a form and manner specified in guidance by the
Secretary no later than March 29, 2013. A state standard or requirement
is described in this paragraph if it includes any of the following:
(1) A ratio narrower than 3:1 in connection with establishing rates
for individuals who are age 21 and older, pursuant to Sec.
147.102(a)(1)(iii).
(2) A ratio narrower than 1.5:1 in connection with establishing
rates for individuals who use tobacco legally, pursuant to Sec.
147.102(a)(1)(iv).
(3) Geographic rating areas, pursuant to Sec. 147.102(b).
(4) In states that do not permit rating based on age or tobacco use,
uniform family tiers and corresponding multipliers, pursuant to Sec.
147.102(c)(2).
(5) A requirement that that issuers in the small group market offer
to a group premiums that are based on average enrollee amounts, pursuant
to paragraph Sec. 147.102(c)(3).
(6) A uniform age rating curve, pursuant to Sec. 147.102(e).
(b) Updates. If a state adopts a standard or requirement described
in paragraph (a) of this section for any plan or policy year beginning
after the 2014 plan or policy year (or updates a standard or requirement
that applies for the 2014 plan or policy year), the state must submit to
CMS information about such standard in a form and manner specified in
guidance by the Secretary.
(c) Applicability date. The provisions of this section apply on
March 29, 2013.
[78 FR 13437, Feb. 27, 2013]
Sec. 147.104 Guaranteed availability of coverage.
(a) Guaranteed availability of coverage in the individual and group
market. Subject to paragraphs (b) through (d) of this section, a health
insurance issuer that offers health insurance coverage in the
individual, small group, or large group market in a State must offer to
any individual or employer in the State all products that are approved
for sale in the applicable market, and must accept any individual or
employer that applies for any of those products.
(b) Enrollment periods. A health insurance issuer may restrict
enrollment in health insurance coverage to open or special enrollment
periods.
(1) Open enrollment periods--(i) Group market. (A) Subject to
paragraph (b)(1)(i)(B) of this section, a health insurance issuer in the
group market must allow an employer to purchase health insurance
coverage for a group health plan at any point during the year.
(B) In the case of a group health plan in the small group market
that cannot comply with employer contribution or group participation
rules for the offering of health insurance coverage, as allowed under
applicable State law, and in the case of a QHP offered in the SHOP, as
permitted by Sec. 156.285(e) or Sec. 156.286(e) of this subchapter, a
health insurance issuer may restrict the availability of coverage to an
annual enrollment period that begins November 15 and extends through
December 15 of each calendar year.
(C) With respect to coverage in the small group market, and in the
large group market if such coverage is offered through a SHOP in a
State, for a group enrollment received on the first through the
fifteenth day of any month, the coverage effective date must be no later
than the first day of the following month. For a group enrollment
received on the 16th through
[[Page 141]]
last day of any month, the coverage effective date must be no later than
the first day of the second following month. In either such case, a
small employer may instead opt for a later effective date within a
quarter for which small group market rates are available.
(ii) Individual market. A health insurance issuer in the individual
market must allow an individual to purchase health insurance coverage
during the initial and annual open enrollment periods described in Sec.
155.410(b) and (e) of this subchapter. Coverage must become effective
consistent with the dates described in Sec. 155.410(c) and (f) of this
subchapter.
(2) Limited open enrollment periods. (i) A health insurance issuer
in the individual market must provide a limited open enrollment period
for the triggering events described in Sec. 155.420(d) of this
subchapter, excluding, with respect to coverage offered outside of an
Exchange, the following:
(A) Section 155.420(d)(3) of this subchapter (concerning Exchange
eligibility standards);
(B) Section 155.420(d)(6) of this subchapter (to the extent
concerning eligibility for advance payments of the premium tax credit or
change in eligibility for cost-sharing reductions other than
ineligibility);
(C) Section 155.420(d)(8) of this subchapter (concerning Indians);
(D) Section 155.420(d)(9) of this subchapter (concerning exceptional
circumstances);
(E) Section 155.420(d)(12) of this subchapter (concerning plan and
benefit display errors);
(F) Section 155.420(d)(13) of this subchapter (concerning
eligibility for insurance affordability programs or enrollment in the
Exchange); and
(G) Section 155.420(d)(16) of this subchapter (concerning
eligibility for advance payments of the premium tax credit and household
income, as defined in 26 CFR 1.36B-1(e), that is expected to be no
greater than 150 percent of the Federal poverty level).
(ii) In applying this paragraph (b)(2), a reference in Sec. 155.420
(other than in Sec. 155.420(a)(5) and (d)(4)) of this subchapter to a
``QHP'' is deemed to refer to a plan, a reference to ``the Exchange'' is
deemed to refer to the applicable State authority, and a reference to a
``qualified individual'' is deemed to refer to an individual in the
individual market. For purposes of Sec. 155.420(d)(4) of this
subchapter, ``the Exchange'' is deemed to refer to the Exchange or the
health plan, as applicable.
(iii) Notwithstanding anything to the contrary in Sec. 155.420(d)
of this subchapter, Sec. 155.420(a)(4) of this subchapter does not
apply to limited open enrollment periods under paragraph (b)(2) of this
section.
(3) Special enrollment periods. A health insurance issuer in the
group and individual market must establish special enrollment periods
for qualifying events as defined under section 603 of the Employee
Retirement Income Security Act of 1974, as amended. These special
enrollment periods are in addition to any other special enrollment
periods that are required under federal and state law.
(4) Length of enrollment periods. (i) In the group market, enrollees
must be provided 30 calendar days after the date of the qualifying event
described in paragraph (b)(3) of this section to elect coverage.
(ii) In the individual market, subject to Sec. 155.420(c)(5) of
this subchapter, individuals must be provided 60 calendar days after the
date of an event described in paragraph (b)(2) and (3) of this section
to elect coverage, as well as 60 calendar days before certain triggering
events as provided for in Sec. 155.420(c)(2) of this subchapter.
(5) Effective date of coverage for limited open and special
enrollment periods. With respect to an election made under paragraph
(b)(2) or (b)(3) of this section, coverage must become effective
consistent with the dates described in Sec. 155.420(b) of this
subchapter.
(c) Special rules for network plans. (1) In the case of a health
insurance issuer that offers health insurance coverage in the group and
individual market through a network plan, the issuer may do the
following:
(i) Limit the employers that may apply for the coverage to those
with eligible individuals in the group market who live, work, or reside
in the service area for the network plan, and limit
[[Page 142]]
the individuals who may apply for the coverage in the individual market
to those who live or reside in the service area for the network plan.
(ii) Within the service area of the plan, deny coverage to employers
and individuals if the issuer has demonstrated to the applicable state
authority (if required by the state authority) the following:
(A) It will not have the capacity to deliver services adequately to
enrollees of any additional groups or any additional individuals because
of its obligations to existing group contract holders and enrollees.
(B) It is applying paragraph (c)(1) of this section uniformly to all
employers and individuals without regard to the claims experience of
those individuals, employers and their employees (and their dependents)
or any health status-related factor relating to such individuals,
employees, and dependents.
(2) An issuer that denies health insurance coverage to an individual
or an employer in any service area, in accordance with paragraph
(c)(1)(ii) of this section, may not offer coverage in the individual,
small group, or large group market, as applicable, for a period of 180
calendar days after the date the coverage is denied. This paragraph
(c)(2) does not limit the issuer's ability to renew coverage already in
force or relieve the issuer of the responsibility to renew that
coverage.
(3) Coverage offered within a service area after the 180-day period
specified in paragraph (c)(2) of this section is subject to the
requirements of this section.
(d) Application of financial capacity limits. (1) A health insurance
issuer may deny health insurance coverage in the group or individual
market if the issuer has demonstrated to the applicable state authority
(if required by the state authority) the following:
(i) It does not have the financial reserves necessary to offer
additional coverage.
(ii) It is applying this paragraph (d)(1) uniformly to all employers
or individual in the large group, small group, or individual market, as
applicable, in the State consistent with applicable State law and
without regard to the claims experience of those individuals, employers
and their employees (and their dependents) or any health status-related
factor relating to such individuals, employees, and dependents.
(2) An issuer that denies health insurance coverage to any employer
or individual in a state under paragraph (d)(1) of this section may not
offer coverage in the large group, small group, or individual market, as
applicable, in the State before the later of either of the following
dates:
(i) The 181st day after the date the issuer denies coverage.
(ii) The date the issuer demonstrates to the applicable state
authority, if required under applicable state law, that the issuer has
sufficient financial reserves to underwrite additional coverage.
(3) Paragraph (d)(2) of this section does not limit the issuer's
ability to renew coverage already in force or relieve the issuer of the
responsibility to renew that coverage.
(4) Coverage offered after the 180-day period specified in paragraph
(d)(2) of this section is subject to the requirements of this section.
(5) An applicable state authority may provide for the application of
this paragraph (d) on a service-area-specific basis.
(e) Marketing. A health insurance issuer and its officials,
employees, agents and representatives must comply with any applicable
State laws and regulations regarding marketing by health insurance
issuers and cannot employ marketing practices or benefit designs that
will have the effect of discouraging the enrollment of individuals with
significant health needs in health insurance coverage or discriminate
based on an individual's race, color, national origin, present or
predicted disability, age, sex (which includes discrimination on the
basis of sex characteristics, including intersex traits; pregnancy or
related conditions; sexual orientation; gender identity; and sex
stereotypes), expected length of life, degree of medical dependency,
quality of life, or other health conditions.
(f) Calendar year plans. An issuer that offers coverage in the
individual market, or in a merged market in a State
[[Page 143]]
that has elected to merge the individual market and small group market
risk pools in accordance with section 1312(c)(3) of the Affordable Care
Act, must ensure that such coverage is offered on a calendar year basis
with a policy year ending on December 31 of each calendar year.
(g) Applicability date. The provisions of this section apply for
plan years (in the individual market, policy years) beginning on or
after January 1, 2014.
(h) Grandfathered health plans. This section does not apply to
grandfathered health plans in accordance with Sec. 147.140.
(i) Coverage denials for failure to pay premiums for prior coverage.
A health insurance issuer that denies coverage to an individual or
employer due to the individual's or employer's failure to pay premium
owed under a prior policy, certificate, or contract of insurance,
including by attributing payment of premium for a new policy,
certificate, or contract of insurance to the prior policy, certificate,
or contract of insurance, violates paragraph (a) of this section.
(j) Construction. Nothing in this section should be construed to
require an issuer to offer coverage otherwise prohibited under
applicable Federal law.
[78 FR 13437, Feb. 27, 2013, as amended at 78 FR 65092, Oct. 30, 2013;
78 FR 76217, Dec. 17, 2013; 79 FR 30339, May 27, 2014; 79 FR 59138, Oct.
1, 2014; 80 FR 10862, Feb. 27, 2015; 81 FR 94173, Dec. 22, 2016; 82 FR
18381, Apr. 18, 2017; 83 FR 17058, Apr. 17, 2018; 85 FR 37247, June 19,
2020; 86 FR 24285, May 5, 2021; 86 FR 53503, Sept. 27, 2021; 87 FR
27386, May 6, 2022; 89 FR 37703, May 6, 2024]
Sec. 147.106 Guaranteed renewability of coverage.
(a) General rule. Subject to paragraphs (b) through (e) of this
section, a health insurance issuer offering health insurance coverage in
the individual, small group, or large group market is required to renew
or continue in force the coverage at the option of the plan sponsor or
the individual, as applicable.
(b) Exceptions. An issuer may nonrenew or discontinue health
insurance coverage offered in the group or individual market based only
on one or more of the following:
(1) Nonpayment of premiums. The plan sponsor or individual, as
applicable, has failed to pay premiums or contributions in accordance
with the terms of the health insurance coverage, including any
timeliness requirements.
(2) Fraud. The plan sponsor or individual, as applicable, has
performed an act or practice that constitutes fraud or made an
intentional misrepresentation of material fact in connection with the
coverage.
(3) Violation of participation or contribution rules. In the case of
group health insurance coverage, the plan sponsor has failed to comply
with a material plan provision relating to employer contribution or
group participation rules, pursuant to applicable state law. For
purposes of this paragraph the following apply:
(i) The term ``employer contribution rule'' means a requirement
relating to the minimum level or amount of employer contribution toward
the premium for enrollment of participants and beneficiaries.
(ii) The term ``group participation rule'' means a requirement
relating to the minimum number of participants or beneficiaries that
must be enrolled in relation to a specified percentage or number of
eligible individuals or employees of an employer.
(4) Termination of product. The issuer is ceasing to offer coverage
in the market in accordance with paragraph (c) or (d) of this section
and applicable State law.
(5) Enrollees' movement outside service area. For network plans,
there is no longer any enrollee under the plan who lives, resides, or
works in the service area of the issuer (or in the area for which the
issuer is authorized to do business); and in the case of the small group
market, the issuer applies the same criteria it would apply in denying
enrollment in the plan under Sec. 147.104(c)(1)(i); provided the issuer
provides notice in accordance with the requirements of paragraph (c)(1)
of this section.
(6) Association membership ceases. For coverage made available in
the small or large group market only through one or more bona fide
associations, if the employer's membership in the bona fide association
ceases, but only if the
[[Page 144]]
coverage is terminated uniformly without regard to any health status-
related factor relating to any covered individual.
(c) Discontinuing a particular product. In any case in which an
issuer decides to discontinue offering a particular product offered in
the group or individual market, that product may be discontinued by the
issuer in accordance with applicable state law in the applicable market
only if the following occurs:
(1) The issuer provides notice in writing, in a form and manner
specified by the Secretary, to each plan sponsor or individual, as
applicable, provided that particular product in that market (and to all
participants and beneficiaries covered under such coverage) of the
discontinuation at least 90 calendar days before the date the coverage
will be discontinued.
(2) The issuer offers to each plan sponsor or individual, as
applicable, provided that particular product the option, on a guaranteed
availability basis, to purchase all (or, in the case of the large group
market, any) other health insurance coverage currently being offered by
the issuer to a group health plan or individual health insurance
coverage in that market.
(3) In exercising the option to discontinue that product and in
offering the option of coverage under paragraph (c)(2) of this section,
the issuer acts uniformly without regard to the claims experience of
those sponsors or individuals, as applicable, or any health status-
related factor relating to any participants or beneficiaries covered or
new participants or beneficiaries who may become eligible for such
coverage.
(d) Discontinuing all coverage. (1) An issuer may elect to
discontinue offering all health insurance coverage in the individual,
small group, or large group market, or all markets, in a State in
accordance with applicable State law only if--
(i) The issuer provides notice in writing to the applicable state
authority and to each plan sponsor or individual, as applicable, (and
all participants and beneficiaries covered under the coverage) of the
discontinuation at least 180 calendar days prior to the date the
coverage will be discontinued; and
(ii) All health insurance policies issued or delivered for issuance
in the state in the applicable market (or markets) are discontinued and
not renewed.
(2) An issuer that elects to discontinue offering all health
insurance coverage in a market (or markets) in a state as described in
this paragraph (d) may not issue coverage in the applicable market (or
markets) and state involved during the 5-year period beginning on the
date of discontinuation of the last coverage not renewed.
(3) For purposes of this paragraph (d), subject to applicable State
law, an issuer will not be considered to have discontinued offering all
health insurance coverage in a market in a State if--
(i) The issuer (in this paragraph referred to as the initial issuer)
or, if the issuer is a member of a controlled group, any other issuer
that is a member of such controlled group, offers and makes available in
the applicable market in the State at least one product that is
considered in accordance with Sec. 144.103 of this subchapter to be the
same product as a product the initial issuer had been offering in such
market in such State; or
(ii) The issuer--
(A) Offers and makes available at least one product (in paragraphs
(d)(3)(ii)(A) through (C) of this section referred to as the new
product) in the applicable market in the State, even if such product is
not considered in accordance with Sec. 144.103 of this subchapter to be
the same product as a product the issuer had been offering in the
applicable market in the State (in paragraphs (d)(3)(ii)(A) through (C)
of this section referred to as the discontinued product);
(B) Subjects such new product or products to the applicable process
and requirements established under part 154 of this title as if such
process and requirements applied with respect to that product or
products, to the extent such process and requirements are otherwise
applicable to coverage of the same type and in the same market; and
(C) Reasonably identifies the discontinued product or products that
correspond to the new product or products
[[Page 145]]
for purposes of the process and requirements applied pursuant to
paragraph (d)(3)(ii)(B) of this section.
(4) For purposes of this section, the term controlled group means a
group of two or more persons that is treated as a single employer under
sections 52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of
1986, as amended, or a narrower group as may be provided by applicable
State law.
(e) Exception for uniform modification of coverage. (1) Only at the
time of coverage renewal may issuers modify the health insurance
coverage for a product offered to a group health plan or an individual,
as applicable, in the following:
(i) Large group market.
(ii) Small group market if, for coverage available in this market
(other than only through one or more bona fide associations), the
modification is consistent with State law and is effective uniformly
among group health plans with that product.
(iii) Individual market if the modification is consistent with State
law and is effective uniformly for all individuals with that product.
(2) For purposes of paragraphs (e)(1)(ii) and (iii) of this section,
modifications made uniformly and solely pursuant to applicable Federal
or State requirements are considered a uniform modification of coverage
if:
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement; and
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) Other types of modifications made uniformly are considered a
uniform modification of coverage if the health insurance coverage for
the product in the individual or small group market meets all of the
following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act), or if the
issuer is a member of a controlled group (as described in paragraph
(d)(4) of this section), any other health insurance issuer that is a
member of such controlled group);
(ii) The product is offered as the same product network type (for
example, health maintenance organization, preferred provider
organization, exclusive provider organization, point of service, or
indemnity);
(iii) The product continues to cover at least a majority of the same
service area;
(iv) Within the product, each plan has the same cost-sharing
structure as before the modification, except for any variation in cost
sharing solely related to changes in cost and utilization of medical
care, or to maintain the same metal tier level described in sections
1302(d) and (e) of the Affordable Care Act; and
(v) The product provides the same covered benefits, except for any
changes in benefits that cumulatively impact the plan-adjusted index
rate (as described in Sec. 156.80(d)(2) of this subchapter) for any
plan within the product within an allowable variation of 2 percentage points (not including changes pursuant to
applicable Federal or State requirements).
(4) A State may only broaden the standards in paragraphs (e)(3)(iii)
and (iv) of this section.
(f) Notice of renewal of coverage. (1) If an issuer in the
individual market is renewing non-grandfathered coverage as described in
paragraph (a) of this section, or uniformly modifying non-grandfathered
coverage as described in paragraph (e) of this section, the issuer must
provide to each individual written notice of the renewal before the date
of the first day of the next annual open enrollment period in a form and
manner specified by the Secretary.
(2) If an issuer in the small group market is renewing coverage as
described in paragraph (a) of this section, or uniformly modifying
coverage as described in paragraph (e) of this section, the issuer must
provide to each plan sponsor written notice of the renewal at least 60
calendar days before the date of the coverage will be renewed in a form
and manner specified by the Secretary.
(g) Notification of change of ownership. If an issuer of a QHP, a
plan otherwise subject to risk corridors, a risk adjustment covered
plan, or a reinsurance-eligible plan experiences a change of ownership,
as recognized by the State in which the plan is offered, the issuer
[[Page 146]]
must notify HHS in a manner specified by HHS, by the latest of--
(1) The date the transaction is entered into; or
(2) The 30th day prior to the effective date of the transaction.
(h) Construction. (1) Nothing in this section should be construed to
require an issuer to renew or continue in force coverage for which
continued eligibility would otherwise be prohibited under applicable
Federal law.
(2) Medicare entitlement or enrollment is not a basis to nonrenew an
individual's health insurance coverage in the individual market under
the same policy or contract of insurance.
(i) Application to coverage offered only through associations. In
the case of health insurance coverage that is made available by a health
insurance issuer in the small or large group market to employers only
through one or more associations, the reference to ``plan sponsor'' is
deemed, with respect to coverage provided to an employer member of the
association, to include a reference to the employer.
(j) Applicability date. The provisions of this section apply for
plan years (in the individual market, policy years) beginning on or
after January 1, 2014.
(k) Grandfathered health plans. This section does not apply to
grandfathered health plans in accordance with Sec. 147.140.
[78 FR 13437, Feb. 27, 2013, as amended at 78 FR 65092, Oct. 30, 2013;
79 FR 30339, May 27, 2014; 79 FR 42985, July 24, 2014; 79 FR 53004,
Sept. 5, 2014; 80 FR 10862, Feb. 27, 2015; 81 FR 94173, Dec. 22, 2016;
84 FR 17561, Apr. 25, 2019]
Sec. 147.108 Prohibition of preexisting condition exclusions.
(a) In general. A group health plan, or a health insurance issuer
offering group or individual health insurance coverage, may not impose
any preexisting condition exclusion (as defined in Sec. 144.103 of this
subchapter).
(b) Examples. The rules of paragraph (a) of this section are
illustrated by the following examples (for additional examples
illustrating the definition of a preexisting condition exclusion, see
Sec. 146.111(a)(2) of this subchapter):
Example 1. (i) Facts. A group health plan provides benefits solely
through an insurance policy offered by Issuer P. At the expiration of
the policy, the plan switches coverage to a policy offered by Issuer N.
N's policy excludes benefits for oral surgery required as a result of a
traumatic injury if the injury occurred before the effective date of
coverage under the policy.
(ii) Conclusion. In this Example 1, the exclusion of benefits for
oral surgery required as a result of a traumatic injury if the injury
occurred before the effective date of coverage is a preexisting
condition exclusion because it operates to exclude benefits for a
condition based on the fact that the condition was present before the
effective date of coverage under the policy. Therefore, such an
exclusion is prohibited.
Example 2. (i) Facts. Individual C applies for individual health
insurance coverage with Issuer M. M denies C's application for coverage
because a pre-enrollment physical revealed that C has type 2 diabetes.
(ii) Conclusion. See Example 2 in Sec. 146.111(a)(2) of this
subchapter for a conclusion that M's denial of C's application for
coverage is a preexisting condition exclusion because a denial of an
application for coverage based on the fact that a condition was present
before the date of denial is an exclusion of benefits based on a
preexisting condition.
(c) Allowable screenings to determine eligibility for alternative
coverage in the individual market--(1) In general. (i) A health
insurance issuer offering individual health insurance coverage may
screen applicants for eligibility for alternative coverage options
before offering a child-only policy if--
(A) The practice is permitted under State law;
(B) The screening applies to all child-only applicants, regardless
of health status; and
(C) The alternative coverage options include options for which
healthy children would potentially be eligible (e.g., Children's Health
Insurance Program (CHIP) or group health insurance).
(ii) An issuer must provide such coverage to an applicant effective
on the first date that a child-only policy would have been effective had
the applicant not been screened for an alternative coverage option, as
provided by State law. A State may impose a reasonable time limit by
when an issuer would have to enroll a child regardless of pending
applications for other coverage.
(2) Restrictions. A health insurance issuer offering individual
health insurance coverage may screen applicants
[[Page 147]]
for eligibility for alternative coverage provided that:
(i) The screening process does not by its operation significantly
delay enrollment or artificially engineer eligibility of a child for a
program targeted to individuals with a pre-existing condition;
(ii) The screening process is not applied to offers of dependent
coverage for children; or
(ii) The issuer does not consider whether an applicant is eligible
for, or is provided medical assistance under, Medicaid in making
enrollment decisions, as provided under 42 U.S.C. 1396a (25)(G).
(d) Applicability date. The provisions of this section are
applicable to group health plans and health insurance issuers for plan
years (in the individual market, policy years) beginning on or after
January 1, 2017. Until the applicability date for this regulation, plans
and issuers are required to continue to comply with the corresponding
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR,
parts 1 to 199, edition revised as of October 1, 2015.
[80 FR 72274, Nov. 18, 2015]
Editorial Note: At 80 FR 72284, Nov. 18, 2015, Sec. 147.108 was
revised to include two paragraphs (c)(2)(ii).
Sec. 147.110 Prohibiting discrimination against participants,
beneficiaries, and individuals based on a health factor.
(a) In general. A group health plan and a health insurance issuer
offering group or individual health insurance coverage must comply with
all the requirements under 45 CFR 146.121 applicable to a group health
plan and a health insurance issuer offering group health insurance
coverage. Accordingly, with respect to an issuer offering health
insurance coverage in the individual market, the issuer is subject to
the requirements of Sec. 146.121 to the same extent as an issuer
offering group health insurance coverage, except the exception contained
in Sec. 146.121(f) (concerning nondiscriminatory wellness programs)
does not apply.
(b) Applicability date. This section is applicable to group health
plans and health insurance issuers offering group or individual health
insurance coverage for plan years (in the individual market, policy
years) beginning on or after January 1, 2014. See Sec. 147.140, which
provides that the rules of this section do not apply to grandfathered
health plans that are individual health insurance coverage.
[78 FR 33192, June 3, 2013]
Sec. 147.116 Prohibition on waiting periods that exceed 90 days.
(a) General rule. A group health plan, and a health insurance issuer
offering group health insurance coverage, must not apply any waiting
period that exceeds 90 days, in accordance with the rules of this
section. If, under the terms of a plan, an individual can elect coverage
that would begin on a date that is not later than the end of the 90-day
waiting period, this paragraph (a) is considered satisfied. Accordingly,
in that case, a plan or issuer will not be considered to have violated
this paragraph (a) solely because individuals take, or are permitted to
take, additional time (beyond the end of the 90-day waiting period) to
elect coverage.
(b) Waiting period defined. For purposes of this part, a waiting
period is the period that must pass before coverage for an individual
who is otherwise eligible to enroll under the terms of a group health
plan can become effective. If an individual enrolls as a late enrollee
(as defined under Sec. 144.103 of this subchapter) or special enrollee
(as described in Sec. 146.117 of this subchapter), any period before
such late or special enrollment is not a waiting period.
(c) Relation to a plan's eligibility criteria--(1) In general.
Except as provided in paragraphs (c)(2) and (c)(3) of this section,
being otherwise eligible to enroll under the terms of a group health
plan means having met the plan's substantive eligibility conditions
(such as, for example, being in an eligible job classification,
achieving job-related licensure requirements specified in the plan's
terms, or satisfying a reasonable and bona fide employment-based
orientation period). Moreover, except as provided in paragraphs (c)(2)
and (c)(3) of this section, nothing in this section requires a plan
sponsor to offer coverage to any particular individual or class of
individuals (including, for example, part-time employees). Instead,
[[Page 148]]
this section prohibits requiring otherwise eligible individuals to wait
more than 90 days before coverage is effective. See also section 4980H
of the Code and its implementing regulations for an applicable large
employer's shared responsibility to provide health coverage to full-time
employees.
(2) Eligibility conditions based solely on the lapse of time.
Eligibility conditions that are based solely on the lapse of a time
period are permissible for no more than 90 days.
(3) Other conditions for eligibility. Other conditions for
eligibility under the terms of a group health plan are generally
permissible under PHS Act section 2708, unless the condition is designed
to avoid compliance with the 90-day waiting period limitation,
determined in accordance with the rules of this paragraph (c)(3).
(i) Application to variable-hour employees in cases in which a
specified number of hours of service per period is a plan eligibility
condition. If a group health plan conditions eligibility on an employee
regularly having a specified number of hours of service per period (or
working full-time), and it cannot be determined that a newly-hired
employee is reasonably expected to regularly work that number of hours
per period (or work full-time), the plan may take a reasonable period of
time, not to exceed 12 months and beginning on any date between the
employee's start date and the first day of the first calendar month
following the employee's start date, to determine whether the employee
meets the plan's eligibility condition. Except in cases in which a
waiting period that exceeds 90 days is imposed in addition to a
measurement period, the time period for determining whether such an
employee meets the plan's eligibility condition will not be considered
to be designed to avoid compliance with the 90-day waiting period
limitation if coverage is made effective no later than 13 months from
the employee's start date plus, if the employee's start date is not the
first day of a calendar month, the time remaining until the first day of
the next calendar month.
(ii) Cumulative service requirements. If a group health plan or
health insurance issuer conditions eligibility on an employee's having
completed a number of cumulative hours of service, the eligibility
condition is not considered to be designed to avoid compliance with the
90-day waiting period limitation if the cumulative hours-of-service
requirement does not exceed 1,200 hours.
(iii) Limitation on orientation periods. To ensure that an
orientation period is not used as a subterfuge for the passage of time,
or designed to avoid compliance with the 90-day waiting period
limitation, an orientation period is permitted only if it does not
exceed one month. For this purpose, one month is determined by adding
one calendar month and subtracting one calendar day, measured from an
employee's start date in a position that is otherwise eligible for
coverage. For example, if an employee's start date in an otherwise
eligible position is May 3, the last permitted day of the orientation
period is June 2. Similarly, if an employee's start date in an otherwise
eligible position is October 1, the last permitted day of the
orientation period is October 31. If there is not a corresponding date
in the next calendar month upon adding a calendar month, the last
permitted day of the orientation period is the last day of the next
calendar month. For example, if the employee's start date is January 30,
the last permitted day of the orientation period is February 28 (or
February 29 in a leap year). Similarly, if the employee's start date is
August 31, the last permitted day of the orientation period is September
30.
(d) Application to rehires. A plan or issuer may treat an employee
whose employment has terminated and who then is rehired as newly
eligible upon rehire and, therefore, required to meet the plan's
eligibility criteria and waiting period anew, if reasonable under the
circumstances (for example, the termination and rehire cannot be a
subterfuge to avoid compliance with the 90-day waiting period
limitation).
(e) Counting days. Under this section, all calendar days are counted
beginning on the enrollment date (as defined in Sec. 144.103),
including weekends and holidays. A plan or issuer that imposes a 90-day
waiting period may, for administrative convenience, choose to permit
coverage to become effective
[[Page 149]]
earlier than the 91st day if the 91st day is a weekend or holiday.
(f) Examples. The rules of this section are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan provides that full-time
employees are eligible for coverage under the plan. Employee A begins
employment as a full-time employee on January 19.
(ii) Conclusion. In this Example 1, any waiting period for A would
begin on January 19 and may not exceed 90 days. Coverage under the plan
must become effective no later than April 19 (assuming February lasts 28
days).
Example 2. (i) Facts. A group health plan provides that only
employees with job title M are eligible for coverage under the plan.
Employee B begins employment with job title L on January 30.
(ii) Conclusion. In this Example 2, B is not eligible for coverage
under the plan, and the period while B is working with job title L and
therefore not in an eligible class of employees, is not part of a
waiting period under this section.
Example 3. (i) Facts. Same facts as in Example 2, except that B
transfers to a new position with job title M on April 11.
(ii) Conclusion. In this Example 3, B becomes eligible for coverage
on April 11, but for the waiting period. Any waiting period for B begins
on April 11 and may not exceed 90 days; therefore, coverage under the
plan must become effective no later than July 10.
Example 4. (i) Facts. A group health plan provides that only
employees who have completed specified training and achieved specified
certifications are eligible for coverage under the plan. Employee C is
hired on May 3 and meets the plan's eligibility criteria on September
22.
(ii) Conclusion. In this Example 4, C becomes eligible for coverage
on September 22, but for the waiting period. Any waiting period for C
would begin on September 22 and may not exceed 90 days; therefore,
coverage under the plan must become effective no later than December 21.
Example 5. (i) Facts. A group health plan provides that employees
are eligible for coverage after one year of service.
(ii) Conclusion. In this Example 5, the plan's eligibility condition
is based solely on the lapse of time and, therefore, is impermissible
under paragraph (c)(2) of this section because it exceeds 90 days.
Example 6. (i) Facts. Employer V's group health plan provides for
coverage to begin on the first day of the first payroll period on or
after the date an employee is hired and completes the applicable
enrollment forms. Enrollment forms are distributed on an employee's
start date and may be completed within 90 days. Employee D is hired and
starts on October 31, which is the first day of a pay period. D
completes the enrollment forms and submits them on the 90th day after
D's start date, which is January 28. Coverage is made effective 7 days
later, February 4, which is the first day of the next pay period.
(ii) Conclusion. In this Example 6, under the terms of V's plan,
coverage may become effective as early as October 31, depending on when
D completes the applicable enrollment forms. Under the terms of the
plan, when coverage becomes effective depends solely on the length of
time taken by D to complete the enrollment materials. Therefore, under
the terms of the plan, D may elect coverage that would begin on a date
that does not exceed the 90-day waiting period limitation, and the plan
complies with this section.
Example 7. (i) Facts. Under Employer W's group health plan, only
employees who are full-time (defined under the plan as regularly
averaging 30 hours of service per week) are eligible for coverage.
Employee E begins employment for Employer W on November 26 of Year 1.
E's hours are reasonably expected to vary, with an opportunity to work
between 20 and 45 hours per week, depending on shift availability and
E's availability. Therefore, it cannot be determined at E's start date
that E is reasonably expected to work full-time. Under the terms of the
plan, variable-hour employees, such as E, are eligible to enroll in the
plan if they are determined to be a full-time employee after a
measurement period of 12 months that begins on the employee's start
date. Coverage is made effective no later than the first day of the
first calendar month after the applicable enrollment forms are received.
E's 12-month measurement period ends November 25 of Year 2. E is
determined to be a full-time employee and is notified of E's plan
eligibility. If E then elects coverage, E's first day of coverage will
be January 1 of Year 3.
(ii) Conclusion. In this Example 7, the measurement period is
permissible because it is not considered to be designed to avoid
compliance with the 90-day waiting period limitation. The plan may use a
reasonable period of time to determine whether a variable-hour employee
is a full-time employee, provided that (a) the period of time is no
longer than 12 months; (b) the period of time begins on a date between
the employee's start date and the first day of the next calendar month
(inclusive); (c) coverage is made effective no later than 13 months from
E's start date plus, if the employee's start date is not the first day
of a calendar month, the time remaining until the first day of the next
calendar month; and (d) in addition to the measurement period, no more
than 90 days elapse prior to the employee's eligibility for coverage.
Example 8. (i) Facts. Employee F begins working 25 hours per week
for Employer X on January 6 and is considered a part-time employee for
purposes of X's group health
[[Page 150]]
plan. X sponsors a group health plan that provides coverage to part-time
employees after they have completed a cumulative 1,200 hours of service.
F satisfies the plan's cumulative hours of service condition on December
15.
(ii) Conclusion. In this Example 8, the cumulative hours of service
condition with respect to part-time employees is not considered to be
designed to avoid compliance with the 90-day waiting period limitation.
Accordingly, coverage for F under the plan must begin no later than the
91st day after F completes 1,200 hours. (If the plan's cumulative hours-
of-service requirement was more than 1,200 hours, the requirement would
be considered to be designed to avoid compliance with the 90-day waiting
period limitation.)
Example 9. (i) Facts. A multiemployer plan operating pursuant to an
arms-length collective bargaining agreement has an eligibility provision
that allows employees to become eligible for coverage by working a
specified number of hours of covered employment for multiple
contributing employers. The plan aggregates hours in a calendar quarter
and then, if enough hours are earned, coverage begins the first day of
the next calendar quarter. The plan also permits coverage to extend for
the next full calendar quarter, regardless of whether an employee's
employment has terminated.
(ii) Conclusion. In this Example 9, these eligibility provisions are
designed to accommodate a unique operating structure, and, therefore,
are not considered to be designed to avoid compliance with the 90-day
waiting period limitation, and the plan complies with this section.
Example 10. (i) Facts. Employee G retires at age 55 after 30 years
of employment with Employer Y with no expectation of providing further
services to Employer Y. Three months later, Y recruits G to return to
work as an employee providing advice and transition assistance for G's
replacement under a one-year employment contract. Y's plan imposes a 90-
day waiting period from an employee's start date before coverage becomes
effective.
(ii) Conclusion. In this Example 10, Y's plan may treat G as newly
eligible for coverage under the plan upon rehire and therefore may
impose the 90-day waiting period with respect to G for coverage offered
in connection with G's rehire.
Example 11. (i) Facts. Employee H begins working full time for
Employer Z on October 16. Z sponsors a group health plan, under which
full time employees are eligible for coverage after they have
successfully completed a bona fide one-month orientation period. H
completes the orientation period on November 15.
(ii) Conclusion. In this Example 11, the orientation period is not
considered a subterfuge for the passage of time and is not considered to
be designed to avoid compliance with the 90-day waiting period
limitation. Accordingly, plan coverage for H must begin no later than
February 14, which is the 91st day after H completes the orientation
period. (If the orientation period was longer than one month, it would
be considered to be a subterfuge for the passage of time and designed to
avoid compliance with the 90-day waiting period limitation. Accordingly
it would violate the rules of this section.)
(g) Special rule for health insurance issuers. To the extent
coverage under a group health plan is insured by a health insurance
issuer, the issuer is permitted to rely on the eligibility information
reported to it by the employer (or other plan sponsor) and will not be
considered to violate the requirements of this section with respect to
its administration of any waiting period, if both of the following
conditions are satisfied:
(1) The issuer requires the plan sponsor to make a representation
regarding the terms of any eligibility conditions or waiting periods
imposed by the plan sponsor before an individual is eligible to become
covered under the terms of the plan (and requires the plan sponsor to
update this representation with any changes), and
(2) The issuer has no specific knowledge of the imposition of a
waiting period that would exceed the permitted 90-day period.
(h) No effect on other laws. Compliance with this section is not
determinative of compliance with any other provision of State or Federal
law (including ERISA, the Code, or other provisions of the Patient
Protection and Affordable Care Act). See e.g., Sec. 146.121 of this
subchapter and Sec. 147.110, which prohibits discrimination in
eligibility for coverage based on a health factor and Code section
4980H, which generally requires applicable large employers to offer
coverage to full-time employees and their dependents or make an
assessable payment.
(i) Applicability date. The provisions of this section apply for
plan years beginning on or after January 1, 2015. See Sec. 147.140
providing that the prohibition on waiting periods exceeding 90 days
applies to all group health plans and
[[Page 151]]
group health insurance issuers, including grandfathered health plans.
[79 FR 10315, Feb. 24, 2014, as amended at 79 FR 35948, June 25, 2014]
Sec. 147.120 Eligibility of children until at least age 26.
(a) In general. (1) A group health plan, or a health insurance
issuer offering group or individual health insurance coverage, that
makes available dependent coverage of children must make such coverage
available for children until attainment of 26 years of age.
(2) The rule of this paragraph (a) is illustrated by the following
example:
Example. (i) Facts. For the plan year beginning January 1, 2011, a
group health plan provides health coverage for employees, employees'
spouses, and employees' children until the child turns 26. On the
birthday of a child of an employee, July 17, 2011, the child turns 26.
The last day the plan covers the child is July 16, 2011.
(ii) Conclusion. In this Example, the plan satisfies the requirement
of this paragraph (a) with respect to the child.
(b) Restrictions on plan definition of dependent--(1) In general.
With respect to a child who has not attained age 26, a plan or issuer
may not define dependent for purposes of eligibility for dependent
coverage of children other than in terms of a relationship between a
child and the participant (in the individual market, the primary
subscriber). Thus, for example, a plan or issuer may not deny or
restrict dependent coverage for a child who has not attained age 26
based on the presence or absence of the child's financial dependency
(upon the participant or primary subscriber, or any other person);
residency with the participant (in the individual market, the primary
subscriber) or with any other person; whether the child lives, works, or
resides in an HMO's service area or other network service area; marital
status; student status; employment; eligibility for other coverage; or
any combination of those factors. (Other requirements of Federal or
State law, including section 609 of ERISA or section 1908 of the Social
Security Act, may require coverage of certain children.)
(2) Construction. A plan or issuer will not fail to satisfy the
requirements of this section if the plan or issuer limits dependent
child coverage to children under age 26 who are described in section
152(f)(1) of the Code. For an individual not described in Code section
152(f)(1), such as a grandchild or niece, a plan may impose additional
conditions on eligibility for dependent child health coverage, such as a
condition that the individual be a dependent for income tax purposes.
(c) Coverage of grandchildren not required. Nothing in this section
requires a plan or issuer to make coverage available for the child of a
child receiving dependent coverage.
(d) Uniformity irrespective of age. The terms of the plan or health
insurance coverage providing dependent coverage of children cannot vary
based on age (except for children who are age 26 or older).
(e) Examples. The rules of paragraph (d) of this section are
illustrated by the following examples:
Example 1. (i) Facts. A group health plan offers a choice of self-
only or family health coverage. Dependent coverage is provided under
family health coverage for children of participants who have not
attained age 26. The plan imposes an additional premium surcharge for
children who are older than age 18.
(ii) Conclusion. In this Example 1, the plan violates the
requirement of paragraph (d) of this section because the plan varies the
terms for dependent coverage of children based on age.
Example 2. (i) Facts. A group health plan offers a choice among the
following tiers of health coverage: self-only, self-plus-one, self-plus-
two, and self-plus-three-or-more. The cost of coverage increases based
on the number of covered individuals. The plan provides dependent
coverage of children who have not attained age 26.
(ii) Conclusion. In this Example 2, the plan does not violate the
requirement of paragraph (d) of this section that the terms of dependent
coverage for children not vary based on age. Although the cost of
coverage increases for tiers with more covered individuals, the increase
applies without regard to the age of any child.
Example 3. (i) Facts. A group health plan offers two benefit
packages--an HMO option and an indemnity option. Dependent coverage is
provided for children of participants who have not attained age 26. The
plan limits children who are older than age 18 to the HMO option.
(ii) Conclusion. In this Example 3, the plan violates the
requirement of paragraph (d) of this section because the plan, by
limiting
[[Page 152]]
children who are older than age 18 to the HMO option, varies the terms
for dependent coverage of children based on age.
Example 4. (i) Facts. A group health plan sponsored by a large
employer normally charges a copayment for physician visits that do not
constitute preventive services. The plan charges this copayment to
individuals age 19 and over, including employees, spouses, and dependent
children, but waives it for those under age 19.
(ii) Conclusion. In this Example 4, the plan does not violate the
requirement of paragraph (d) of this section that the terms of dependent
coverage for children not vary based on age. While the requirement of
paragraph (d) of this section generally prohibits distinctions based
upon age in dependent coverage of children, it does not prohibit
distinctions based upon age that apply to all coverage under the plan,
including coverage for employees and spouses as well as dependent
children. In this Example 4, the copayments charged to dependent
children are the same as those charged to employees and spouses.
Accordingly, the arrangement described in this Example 4 (including
waiver, for individuals under age 19, of the generally applicable
copayment) does not violate the requirement of paragraph (d) of this
section.
(f) Applicability date. The provisions of this section are
applicable to group health plans and health insurance issuers for plan
years (in the individual market, policy years) beginning on or after
January 1, 2017. Until the applicability date for this regulation, plans
and issuers are required to continue to comply with the corresponding
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR,
parts 1 to 199, edition revised as of October 1, 2015.
[80 FR 72275, Nov. 18, 2015]
Sec. 147.126 No lifetime or annual limits.
(a) Prohibition--(1) Lifetime limits. Except as provided in
paragraph (b) of this section, a group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
may not establish any lifetime limit on the dollar amount of essential
health benefits for any individual, whether provided in-network or out-
of-network.
(2) Annual limits--(i) General rule. Except as provided in
paragraphs (a)(2)(ii) and (b) of this section, a group health plan, or a
health insurance issuer offering group or individual health insurance
coverage, may not establish any annual limit on the dollar amount of
essential health benefits for any individual, whether provided in-
network or out-of-network.
(ii) Exception for health flexible spending arrangements. A health
flexible spending arrangement (as defined in section 106(c)(2) of the
Internal Revenue Code) offered through a cafeteria plan pursuant to
section 125 of the Internal Revenue Code is not subject to the
requirement in paragraph (a)(2)(i) of this section.
(b) Construction--(1) Permissible limits on specific covered
benefits. The rules of this section do not prevent a group health plan,
or a health insurance issuer offering group or individual health
insurance coverage, from placing annual or lifetime dollar limits with
respect to any individual on specific covered benefits that are not
essential health benefits to the extent that such limits are otherwise
permitted under applicable Federal or State law. (The scope of essential
health benefits is addressed in paragraph (c) of this section).
(2) Condition-based exclusions. The rules of this section do not
prevent a group health plan, or a health insurance issuer offering group
or individual health insurance coverage, from excluding all benefits for
a condition. However, if any benefits are provided for a condition, then
the requirements of this section apply. Other requirements of Federal or
State law may require coverage of certain benefits.
(c) Definition of essential health benefits. The term ``essential
health benefits'' means essential health benefits under section 1302(b)
of the Patient Protection and Affordable Care Act and applicable
regulations. For the purpose of this section, a group health plan or a
health insurance issuer that is not required to provide essential health
benefits under section 1302(b) must define ``essential health benefits''
in a manner that is consistent with the following:
(1) For plan years beginning before January 1, 2020, one of the EHB-
benchmark plans applicable in a State under Sec. 156.110 of this
subchapter, and including coverage of any additional required benefits
that are considered essential health benefits consistent with Sec.
155.170(a)(2) of this subchapter, or one
[[Page 153]]
of the three Federal Employees Health Benefits Program (FEHBP) plan
options as defined by Sec. 156.100(a)(3) of this subchapter,
supplemented as necessary, to satisfy the standards in Sec. 156.110 of
this subchapter; or
(2) For plan years beginning on or after January 1, 2020, an EHB-
benchmark plan selected by a State in accordance with the available
options and requirements for EHB-benchmark plan selection at Sec.
156.111 of this subchapter, including an EHB-benchmark plan in a State
that takes no action to change its EHB-benchmark plan and thus retains
the EHB-benchmark plan applicable in that State for the prior year in
accordance with Sec. 156.111(d)(1) of this subchapter, and including
coverage of any additional required benefits that are considered
essential health benefits consistent with Sec. 155.170(a)(2) of this
subchapter.
(d) Health reimbursement arrangements (HRAs) and other account-based
group health plans--(1) In general. If an HRA or other account-based
group health plan is integrated with another group health plan or
individual health insurance coverage and the other group health plan or
individual health insurance coverage, as applicable, separately is
subject to and satisfies the requirements in PHS Act section 2711 and
paragraph (a)(2) of this section, the fact that the benefits under the
HRA or other account-based group health plan are limited does not cause
the HRA or other account-based group health plan to fail to satisfy the
requirements of PHS Act section 2711 and paragraph (a)(2) of this
section. Similarly, if an HRA or other account-based group health plan
is integrated with another group health plan or individual health
insurance coverage and the other group health plan or individual health
insurance coverage, as applicable, separately is subject to and
satisfies the requirements in PHS Act section 2713 and Sec.
147.130(a)(1) of this subchapter, the fact that the benefits under the
HRA or other account-based group health plan are limited does not cause
the HRA or other account-based group health plan to fail to satisfy the
requirements of PHS Act section 2713 and Sec. 147.130(a)(1) of this
subchapter. For the purpose of this paragraph (d), all individual health
insurance coverage, except for coverage that consists solely of excepted
benefits, is treated as being subject to and complying with PHS Act
sections 2711 and 2713.
(2) Requirements for an HRA or other account-based group health plan
to be integrated with another group health plan. An HRA or other
account-based group health plan is integrated with another group health
plan for purposes of PHS Act section 2711 and paragraph (a)(2) of this
section if it satisfies the requirements under one of the integration
methods set forth in paragraph (d)(2)(i) or (ii) of this section. For
purposes of the integration methods under which an HRA or other account-
based group health plan is integrated with another group health plan,
integration does not require that the HRA or other account-based group
health plan and the other group health plan with which it is integrated
share the same plan sponsor, the same plan document or governing
instruments, or file a single Form 5500, if applicable. An HRA or other
account-based group health plan integrated with another group health
plan for purposes of PHS Act section 2711 and paragraph (a)(2) of this
section may not be used to purchase individual health insurance coverage
unless that coverage consists solely of excepted benefits, as defined in
Sec. 148.220 of this subchapter.
(i) Method for integration with a group health plan: Minimum value
not required. An HRA or other account-based group health plan is
integrated with another group health plan for purposes of this paragraph
(d) if:
(A) The plan sponsor offers a group health plan (other than the HRA
or other account-based group health plan) to the employee that does not
consist solely of excepted benefits;
(B) The employee receiving the HRA or other account-based group
health plan is actually enrolled in a group health plan (other than the
HRA or other account-based group health plan) that does not consist
solely of excepted benefits, regardless of whether the plan is offered
by the same plan sponsor (referred to as non-HRA group coverage);
(C) The HRA or other account-based group health plan is available
only to employees who are enrolled in non-
[[Page 154]]
HRA group coverage, regardless of whether the non-HRA group coverage is
offered by the plan sponsor of the HRA or other account-based group
health plan (for example, the HRA may be offered only to employees who
do not enroll in an employer's group health plan but are enrolled in
other non-HRA group coverage, such as a group health plan maintained by
the employer of the employee's spouse);
(D) The benefits under the HRA or other account-based group health
plan are limited to reimbursement of one or more of the following--co-
payments, co-insurance, deductibles, and premiums under the non-HRA
group coverage, as well as medical care expenses that do not constitute
essential health benefits as defined in paragraph (c) of this section;
and
(E) Under the terms of the HRA or other account-based group health
plan, an employee (or former employee) is permitted to permanently opt
out of and waive future reimbursements from the HRA or other account-
based group health plan at least annually and, upon termination of
employment, either the remaining amounts in the HRA or other account-
based group health plan are forfeited or the employee is permitted to
permanently opt out of and waive future reimbursements from the HRA or
other account-based group health plan (see paragraph (d)(3) of this
section for additional rules regarding forfeiture and waiver).
(ii) Method for integration with another group health plan: Minimum
value required. An HRA or other account-based group health plan is
integrated with another group health plan for purposes of this paragraph
(d) if:
(A) The plan sponsor offers a group health plan (other than the HRA
or other account-based group health plan) to the employee that provides
minimum value pursuant to section 36B(c)(2)(C)(ii) of the Code (and its
implementing regulations and applicable guidance);
(B) The employee receiving the HRA or other account-based group
health plan is actually enrolled in a group health plan (other than the
HRA or other account-based group health plan) that provides minimum
value pursuant to section 36B(c)(2)(C)(ii) of the Code (and applicable
guidance), regardless of whether the plan is offered by the plan sponsor
of the HRA or other account-based group health plan (referred to as non-
HRA MV group coverage);
(C) The HRA or other account-based group health plan is available
only to employees who are actually enrolled in non-HRA MV group
coverage, regardless of whether the non-HRA MV group coverage is offered
by the plan sponsor of the HRA or other account-based group health plan
(for example, the HRA may be offered only to employees who do not enroll
in an employer's group health plan but are enrolled in other non-HRA MV
group coverage, such as a group health plan maintained by an employer of
the employee's spouse); and
(D) Under the terms of the HRA or other account-based group health
plan, an employee (or former employee) is permitted to permanently opt
out of and waive future reimbursements from the HRA or other account-
based group health plan at least annually, and, upon termination of
employment, either the remaining amounts in the HRA or other account-
based group health plan are forfeited or the employee is permitted to
permanently opt out of and waive future reimbursements from the HRA or
other account-based group health plan (see paragraph (d)(3) of this
section for additional rules regarding forfeiture and waiver).
(3) Forfeiture. For purposes of integration under paragraphs
(d)(2)(i)(E) and (d)(2)(ii)(D) of this section, forfeiture or waiver
occurs even if the forfeited or waived amounts may be reinstated upon a
fixed date, a participant's death, or the earlier of the two events (the
reinstatement event). For the purpose of this paragraph (d)(3), coverage
under an HRA or other account-based group health plan is considered
forfeited or waived prior to a reinstatement event only if the
participant's election to forfeit or waive is irrevocable, meaning that,
beginning on the effective date of the election and through the date of
the reinstatement event, the participant and the participant's
beneficiaries have no access to amounts credited to the HRA or other
account-based group health plan. This
[[Page 155]]
means that upon and after reinstatement, the reinstated amounts under
the HRA or other account-based group health plan may not be used to
reimburse or pay medical care expenses incurred during the period after
forfeiture and prior to reinstatement.
(4) Requirements for an HRA or other account-based group health plan
to be integrated with individual health insurance coverage or Medicare
Part A and B or Medicare Part C. An HRA or other account-based group
health plan is integrated with individual health insurance coverage or
Medicare Part A and B or Medicare Part C (and treated as complying with
PHS Act sections 2711 and 2713) if the HRA or other account-based group
health plan satisfies the requirements of Sec. 146.123(c) of this
subchapter (as modified by Sec. 146.123(e), for HRAs or other account-
based group health plans integrated with Medicare Part A and B or
Medicare Part C).
(5) Integration with Medicare Part B and D. For employers that are
not required to offer their non-HRA group health plan coverage to
employees who are Medicare beneficiaries, an HRA or other account-based
group health plan that may be used to reimburse premiums under Medicare
Part B or D may be integrated with Medicare (and deemed to comply with
PHS Act sections 2711 and 2713) if the following requirements are
satisfied with respect to employees who would be eligible for the
employer's non-HRA group health plan but for their eligibility for
Medicare (and the integration rules under paragraphs (d)(2)(i) and (ii)
of this section continue to apply to employees who are not eligible for
Medicare):
(i) The plan sponsor offers a group health plan (other than the HRA
or other account-based group health plan and that does not consist
solely of excepted benefits) to employees who are not eligible for
Medicare;
(ii) The employee receiving the HRA or other account-based group
health plan is actually enrolled in Medicare Part B or D;
(iii) The HRA or other account-based group health plan is available
only to employees who are enrolled in Medicare Part B or D; and
(iv) The HRA or other account-based group health plan complies with
paragraphs (d)(2)(i)(E) and (d)(2)(ii)(D) of this section.
(6) Definitions. The following definitions apply for purposes of
this section.
(i) Account-based group health plan. An account-based group health
plan is an employer-provided group health plan that provides
reimbursements of medical care expenses with the reimbursement subject
to a maximum fixed dollar amount for a period. An HRA is a type of
account-based group health plan. An account-based group health plan does
not include a qualified small employer health reimbursement arrangement,
as defined in section 9831(d)(2) of the Code.
(ii) Medical care expenses. Medical care expenses means expenses for
medical care as defined under section 213(d) of the Code.
(e) Applicability date. The provisions of this section are
applicable to group health plans and health insurance issuers for plan
years beginning on or after January 1, 2020. Until the applicability
date for this section, plans and issuers are required to continue to
comply with the corresponding sections of this subchapter B, contained
in the 45 CFR, subtitle A, parts 1-199, revised as of October 1, 2018.
[80 FR 72276, Nov. 18, 2015, as amended at 81 FR 75326, Oct. 31, 2016;
84 FR 29025, June 20, 2019]
Sec. 147.128 Rules regarding rescissions.
(a) Prohibition on rescissions--(1) A group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
must not rescind coverage under the plan, or under the policy,
certificate, or contract of insurance, with respect to an individual
(including a group to which the individual belongs or family coverage in
which the individual is included) once the individual is covered under
the plan or coverage, unless the individual (or a person seeking
coverage on behalf of the individual) performs an act, practice, or
omission that constitutes fraud, or makes an intentional
misrepresentation of material fact, as prohibited by the terms of the
plan or coverage. A group health plan, or a health insurance issuer
offering group or individual health insurance coverage, must provide at
least 30
[[Page 156]]
days advance written notice to each participant (in the individual
market, primary subscriber) who would be affected before coverage may be
rescinded under this paragraph (a)(1), regardless of, in the case of
group coverage, whether the coverage is insured or self-insured, or
whether the rescission applies to an entire group or only to an
individual within the group. (The rules of this paragraph (a)(1) apply
regardless of any contestability period that may otherwise apply.)
(2) For purposes of this section, a rescission is a cancellation or
discontinuance of coverage that has retroactive effect. For example, a
cancellation that treats a policy as void from the time of the
individual's or group's enrollment is a rescission. As another example,
a cancellation that voids benefits paid up to a year before the
cancellation is also a rescission for this purpose. A cancellation or
discontinuance of coverage is not a rescission if --
(i) The cancellation or discontinuance of coverage has only a
prospective effect;
(ii) The cancellation or discontinuance of coverage is effective
retroactively, to the extent it is attributable to a failure to timely
pay required premiums or contributions (including COBRA premiums)
towards the cost of coverage;
(iii) The cancellation or discontinuance of coverage is initiated by
the individual (or by the individual's authorized representative) and
the sponsor, employer, plan, or issuer does not, directly or indirectly,
take action to influence the individual's decision to cancel or
discontinue coverage retroactively or otherwise take any adverse action
or retaliate against, interfere with, coerce, intimidate, or threaten
the individual; or
(iv) The cancellation or discontinuance of coverage is initiated by
the Exchange pursuant to Sec. 155.430 of this subchapter (other than
under paragraph (b)(2)(iii) of this section).
(3) The rules of this paragraph (a) are illustrated by the following
examples:
Example 1. (i) Facts. Individual A seeks enrollment in an insured
group health plan. The plan terms permit rescission of coverage with
respect to an individual if the individual engages in fraud or makes an
intentional misrepresentation of a material fact. The plan requires A to
complete a questionnaire regarding A's prior medical history, which
affects setting the group rate by the health insurance issuer. The
questionnaire complies with the other requirements of this part and part
146 of this subchapter. The questionnaire includes the following
question: ``Is there anything else relevant to your health that we
should know?'' A inadvertently fails to list that A visited a
psychologist on two occasions, six years previously. A is later
diagnosed with breast cancer and seeks benefits under the plan. On or
around the same time, the issuer receives information about A's visits
to the psychologist, which was not disclosed in the questionnaire.
(ii) Conclusion. In this Example 1, the plan cannot rescind A's
coverage because A's failure to disclose the visits to the psychologist
was inadvertent. Therefore, it was not fraudulent or an intentional
misrepresentation of material fact.
Example 2. (i) Facts. An employer sponsors a group health plan that
provides coverage for employees who work at least 30 hours per week.
Individual B has coverage under the plan as a full-time employee. The
employer reassigns B to a part-time position. Under the terms of the
plan, B is no longer eligible for coverage. The plan mistakenly
continues to provide health coverage, collecting premiums from B and
paying claims submitted by B. After a routine audit, the plan discovers
that B no longer works at least 30 hours per week. The plan rescinds B's
coverage effective as of the date that B changed from a full-time
employee to a part-time employee.
(ii) Conclusion. In this Example 2, the plan cannot rescind B's
coverage because there was no fraud or an intentional misrepresentation
of material fact. The plan may cancel coverage for B prospectively,
subject to other applicable Federal and State laws.
(b) Compliance with other requirements. Other requirements of
Federal or State law may apply in connection with a rescission of
coverage.
(c) Applicability date. The provisions of this section are
applicable to group health plans and health insurance issuers for plan
years (in the individual market, policy years) beginning on or after
January 1, 2017. Until the applicability date for this regulation, plans
and issuers are required to continue to comply with the corresponding
sections of 45 CFR parts 144, 146 and 147, contained in the 45 CFR,
parts 1 to 199, edition revised as of October 1, 2015.
[80 FR 72277, Nov. 18, 2015]
[[Page 157]]
Sec. 147.130 Coverage of preventive health services.
(a) Services--(1) In general. Beginning at the time described in
paragraph (b) of this section and subject to Sec. Sec. 147.131,
147.132, and 147.133, a group health plan, or a health insurance issuer
offering group or individual health insurance coverage, must provide
coverage for and must not impose any cost-sharing requirements (such as
a copayment, coinsurance, or a deductible) for--
(i) Evidence-based items or services that have in effect a rating of
A or B in the current recommendations of the United States Preventive
Services Task Force with respect to the individual involved (except as
otherwise provided in paragraph (c) of this section);
(ii) Immunizations for routine use in children, adolescents, and
adults that have in effect a recommendation from the Advisory Committee
on Immunization Practices of the Centers for Disease Control and
Prevention with respect to the individual involved (for this purpose, a
recommendation from the Advisory Committee on Immunization Practices of
the Centers for Disease Control and Prevention is considered in effect
after it has been adopted by the Director of the Centers for Disease
Control and Prevention, and a recommendation is considered to be for
routine use if it is listed on the Immunization Schedules of the Centers
for Disease Control and Prevention);
(iii) With respect to infants, children, and adolescents, evidence-
informed preventive care and screenings provided for in comprehensive
guidelines supported by the Health Resources and Services
Administration;
(iv) With respect to women, such additional preventive care and
screenings not described in paragraph (a)(1)(i) of this section as
provided for in comprehensive guidelines supported by the Health
Resources and Services Administration for purposes of section 2713(a)(4)
of the Public Health Service Act, subject to Sec. Sec. 147.131,
147.132, and 147.133; and
(v) Any qualifying coronavirus preventive service, which means an
item, service, or immunization that is intended to prevent or mitigate
coronavirus disease 2019 (COVID-19) and that is, with respect to the
individual involved--
(A) An evidence-based item or service that has in effect a rating of
A or B in the current recommendations of the United States Preventive
Services Task Force; or
(B) An immunization that has in effect a recommendation from the
Advisory Committee on Immunization Practices of the Centers for Disease
Control and Prevention (regardless of whether the immunization is
recommended for routine use). For purposes of this paragraph
(a)(1)(v)(B), a recommendation from the Advisory Committee on
Immunization Practices of the Centers for Disease Control and Prevention
is considered in effect after it has been adopted by the Director of the
Centers for Disease Control and Prevention.
(2) Office visits. (i) If an item or service described in paragraph
(a)(1) of this section is billed separately (or is tracked as individual
encounter data separately) from an office visit, then a plan or issuer
may impose cost-sharing requirements with respect to the office visit.
(ii) If an item or service described in paragraph (a)(1) of this
section is not billed separately (or is not tracked as individual
encounter data separately) from an office visit and the primary purpose
of the office visit is the delivery of such an item or service, then a
plan or issuer may not impose cost-sharing requirements with respect to
the office visit.
(iii) If an item or service described in paragraph (a)(1) of this
section is not billed separately (or is not tracked as individual
encounter data separately) from an office visit and the primary purpose
of the office visit is not the delivery of such an item or service, then
a plan or issuer may impose cost-sharing requirements with respect to
the office visit.
(iv) The rules of this paragraph (a)(2) are illustrated by the
following examples:
Example 1. (i) Facts. An individual covered by a group health plan
visits an in-network health care provider. While visiting the provider,
the individual is screened for cholesterol abnormalities, which has in
effect a
[[Page 158]]
rating of A or B in the current recommendations of the United States
Preventive Services Task Force with respect to the individual. The
provider bills the plan for an office visit and for the laboratory work
of the cholesterol screening test.
(ii) Conclusion. In this Example 1, the plan may not impose any
cost-sharing requirements with respect to the separately-billed
laboratory work of the cholesterol screening test. Because the office
visit is billed separately from the cholesterol screening test, the plan
may impose cost-sharing requirements for the office visit.
Example 2. (i) Facts. Same facts as Example 1. As the result of the
screening, the individual is diagnosed with hyperlipidemia and is
prescribed a course of treatment that is not included in the
recommendations under paragraph (a)(1) of this section.
(ii) Conclusion. In this Example 2, because the treatment is not
included in the recommendations under paragraph (a)(1) of this section,
the plan is not prohibited from imposing cost-sharing requirements with
respect to the treatment.
Example 3. (i) Facts. An individual covered by a group health plan
visits an in-network health care provider to discuss recurring abdominal
pain. During the visit, the individual has a blood pressure screening,
which has in effect a rating of A or B in the current recommendations of
the United States Preventive Services Task Force with respect to the
individual. The provider bills the plan for an office visit.
(ii) Conclusion. In this Example 3, the blood pressure screening is
provided as part of an office visit for which the primary purpose was
not to deliver items or services described in paragraph (a)(1) of this
section. Therefore, the plan may impose a cost-sharing requirement for
the office visit charge.
Example 4. (i) Facts. A child covered by a group health plan visits
an in-network pediatrician to receive an annual physical exam described
as part of the comprehensive guidelines supported by the Health
Resources and Services Administration. During the office visit, the
child receives additional items and services that are not described in
the comprehensive guidelines supported by the Health Resources and
Services Administration, nor otherwise described in paragraph (a)(1) of
this section. The provider bills the plan for an office visit.
(ii) Conclusion. In this Example 4, the service was not billed as a
separate charge and was billed as part of an office visit. Moreover, the
primary purpose for the visit was to deliver items and services
described as part of the comprehensive guidelines supported by the
Health Resources and Services Administration. Therefore, the plan may
not impose a cost-sharing requirement for the office visit charge.
(3) Out-of-network providers. (i) Subject to paragraphs (a)(3)(ii)
and (iii) of this section, nothing in this section requires a plan or
issuer that has a network of providers to provide benefits for items or
services described in paragraph (a)(1) of this section that are
delivered by an out-of-network provider, or precludes a plan or issuer
that has a network of providers from imposing cost-sharing requirements
for items or services described in paragraph (a)(1) of this section that
are delivered by an out-of-network provider.
(ii) If a plan or issuer does not have in its network a provider who
can provide an item or service described in paragraph (a)(1) of this
section, the plan or issuer must cover the item or service when
performed by an out-of-network provider, and may not impose cost sharing
with respect to the item or service.
(iii) A plan or issuer must provide coverage for and must not impose
any cost-sharing requirements (such as a copayment, coinsurance, or a
deductible) for any qualifying coronavirus preventive service described
in paragraph (a)(1)(v) of this section, regardless of whether such
service is delivered by an in-network or out-of-network provider. For
purposes of this paragraph (a)(3)(iii), with respect to a qualifying
coronavirus preventive service and a provider with whom the plan or
issuer does not have a negotiated rate for such service (such as an out-
of-network provider), the plan or issuer must reimburse the provider for
such service in an amount that is reasonable, as determined in
comparison to prevailing market rates for such service.
(4) Reasonable medical management. Nothing prevents a plan or issuer
from using reasonable medical management techniques to determine the
frequency, method, treatment, or setting for an item or service
described in paragraph (a)(1) of this section to the extent not
specified in the relevant recommendation or guideline. To the extent not
specified in a recommendation or guideline, a plan or issuer may rely on
the relevant clinical evidence base and established reasonable medical
management techniques to determine the
[[Page 159]]
frequency, method, treatment, or setting for coverage of a recommended
preventive health service.
(5) Services not described. Nothing in this section prohibits a plan
or issuer from providing coverage for items and services in addition to
those recommended by the United States Preventive Services Task Force or
the Advisory Committee on Immunization Practices of the Centers for
Disease Control and Prevention, or provided for by guidelines supported
by the Health Resources and Services Administration, or from denying
coverage for items and services that are not recommended by that task
force or that advisory committee, or under those guidelines. A plan or
issuer may impose cost-sharing requirements for a treatment not
described in paragraph (a)(1) of this section, even if the treatment
results from an item or service described in paragraph (a)(1) of this
section.
(b) Timing. (1) A plan or issuer must provide coverage pursuant to
paragraph (a)(1) of this section for plan years (in the individual
market, policy years) that begin on or after September 23, 2010, or, if
later, for plan years (in the individual market, policy years) that
begin on or after the date that is one year after the date the
recommendation or guideline is issued, except as provided in paragraph
(b)(3) of this section.
(2) Changes in recommendations or guidelines. (i) A plan or issuer
that is required to provide coverage for any items and services
specified in any recommendation or guideline described in paragraph
(a)(1) of this section on the first day of a plan year (in the
individual market, policy year), or as otherwise provided in paragraph
(b)(3) of this section, must provide coverage through the last day of
the plan or policy year, even if the recommendation or guideline changes
or is no longer described in paragraph (a)(1) of this section, during
the applicable plan or policy year.
(ii) Notwithstanding paragraph (b)(2)(i) of this section, to the
extent a recommendation or guideline described in paragraph (a)(1)(i) of
this section that was in effect on the first day of a plan year (in the
individual market, policy year), or as otherwise provided in paragraph
(b)(3) of this section, is downgraded to a ``D'' rating, or any item or
service associated with any recommendation or guideline specified in
paragraph (a)(1) of this section is subject to a safety recall or is
otherwise determined to pose a significant safety concern by a Federal
agency authorized to regulate the item or service during a plan or
policy year, there is no requirement under this section to cover these
items and services through the last day of the applicable plan or policy
year.
(3) Rapid coverage of preventive services for coronavirus. In the
case of a qualifying coronavirus preventive service described in
paragraph (a)(1)(v) of this section, a plan or issuer must provide
coverage for such item, service, or immunization in accordance with this
section by the date that is 15 business days after the date on which a
recommendation specified in paragraph (a)(1)(v)(A) or (B) of this
section is made relating to such item, service, or immunization.
(c) Recommendations not current. For purposes of paragraph (a)(1)(i)
of this section, and for purposes of any other provision of law,
recommendations of the United States Preventive Services Task Force
regarding breast cancer screening, mammography, and prevention issued in
or around November 2009 are not considered to be current.
(d) Applicability date. The provisions of this section apply for
plan years (in the individual market, for policy years) beginning on or
after September 23, 2010. See Sec. 147.140 of this part for determining
the application of this section to grandfathered health plans (providing
that these rules regarding coverage of preventive health services do not
apply to grandfathered health plans).
(e) Sunset date. The provisions of paragraphs (a)(1)(v),
(a)(3)(iii), and (b)(3) of this section will not apply with respect to a
qualifying coronavirus preventive service furnished on or after the
expiration of the public health emergency determined on January 31,
2020, to exist nationwide as of January 27, 2020, by the Secretary of
Health and Human Services pursuant to section 319 of the Public Health
Service Act, as
[[Page 160]]
a result of COVID-19, including any subsequent renewals of that
determination.
[75 FR 41759, July 19, 2010, as amended at 76 FR 46626, Aug. 3, 2011; 78
FR 39896, July 2, 2013; 80 FR 41346, July 14, 2015; 82 FR 47833, 47861,
Oct. 13, 2017; 85 FR 71202, Nov. 6, 2020]
Sec. 147.131 Accommodations in connection with coverage of
certain preventive health services.
(a)-(b) [Reserved]
(c) Eligible organizations for optional accommodation. An eligible
organization is an organization that meets the criteria of paragraphs
(c)(1) through (3) of this section.
(1) The organization is an objecting entity described in Sec.
147.132(a)(1)(i) or (ii), or 45 CFR 147.133(a)(1)(i) or (ii).
(2) Notwithstanding its exempt status under Sec. 147.132(a) or
Sec. 147.133, the organization voluntarily seeks to be considered an
eligible organization to invoke the optional accommodation under
paragraph (d) of this section; and
(3) The organization self-certifies in the form and manner specified
by the Secretary or provides notice to the Secretary as described in
paragraph (d) of this section. To qualify as an eligible organization,
the organization must make such self-certification or notice available
for examination upon request by the first day of the first plan year to
which the accommodation in paragraph (d) of this section applies. The
self-certification or notice must be executed by a person authorized to
make the certification or provide the notice on behalf of the
organization, and must be maintained in a manner consistent with the
record retention requirements under section 107 of ERISA.
(4) An eligible organization may revoke its use of the accommodation
process, and its issuer must provide participants and beneficiaries
written notice of such revocation, as specified herein.
(i) Transitional rule. If contraceptive coverage is being offered on
January 14, 2019, by an issuer through the accommodation process, an
eligible organization may give 60-days notice pursuant to section
2715(d)(4) of the PHS Act and Sec. 147.200(b), if applicable, to revoke
its use of the accommodation process (to allow for the provision of
notice to plan participants in cases where contraceptive benefits will
no longer be provided). Alternatively, such eligible organization may
revoke its use of the accommodation process effective on the first day
of the first plan year that begins on or after 30 days after the date of
the revocation.
(ii) General rule. In plan years that begin after January 14, 2019,
if contraceptive coverage is being offered by an issuer through the
accommodation process, an eligible organization's revocation of use of
the accommodation process will be effective no sooner than the first day
of the first plan year that begins on or after 30 days after the date of
the revocation.
(d) Optional accommodation--insured group health plans--(1) General
rule. A group health plan established or maintained by an eligible
organization that provides benefits through one or more group health
insurance issuers may voluntarily elect an optional accommodation under
which its health insurance issuer(s) will provide payments for all or a
subset of contraceptive services for one or more plan years. To invoke
the optional accommodation process:
(i) The eligible organization or its plan must contract with one or
more health insurance issuers.
(ii) The eligible organization must provide either a copy of the
self-certification to each issuer providing coverage in connection with
the plan or a notice to the Secretary of the Department of Health and
Human Services that it is an eligible organization and of its objection
as described in Sec. 147.132 or Sec. 147.133 to coverage for all or a
subset of contraceptive services.
(A) When a self-certification is provided directly to an issuer, the
issuer has sole responsibility for providing such coverage in accordance
with Sec. 147.130(a)(iv).
(B) When a notice is provided to the Secretary of the Department of
Health and Human Services, the notice must include the name of the
eligible organization; a statement that it objects as described in Sec.
147.132 or Sec. 147.133 to coverage of some or all contraceptive
services (including an identification of the subset of contraceptive
services to
[[Page 161]]
which coverage the eligible organization objects, if applicable) but
that it would like to elect the optional accommodation process; the plan
name and type (that is, whether it is a student health insurance plan
within the meaning of Sec. 147.145(a) or a church plan within the
meaning of section 3(33) of ERISA); and the name and contact information
for any of the plan's health insurance issuers. If there is a change in
any of the information required to be included in the notice, the
eligible organization must provide updated information to the Secretary
of the Department of Health and Human Services for the optional
accommodation to remain in effect. The Department of Health and Human
Services will send a separate notification to each of the plan's health
insurance issuers informing the issuer that the Secretary of the
Deparement of Health and Human Services has received a notice under
paragraph (d)(1)(ii) of this section and describing the obligations of
the issuer under this section.
(2) If an issuer receives a copy of the self-certification from an
eligible organization or the notification from the Department of Health
and Human Services as described in paragraph (d)(1)(ii) of this section
and does not have an objection as described in Sec. 147.132 or Sec.
147.133 to providing the contraceptive services identified in the self-
certification or the notification from the Department of Health and
Human Services, then the issuer will provide payments for contraceptive
services as follows--
(i) The issuer must expressly exclude contraceptive coverage from
the group health insurance coverage provided in connection with the
group health plan and provide separate payments for any contraceptive
services required to be covered under Sec. 141.130(a)(1)(iv) for plan
participants and beneficiaries for so long as they remain enrolled in
the plan.
(ii) With respect to payments for contraceptive services, the issuer
may not impose any cost-sharing requirements (such as a copayment,
coinsurance, or a deductible), premium, fee, or other charge, or any
portion thereof, directly or indirectly, on the eligible organization,
the group health plan, or plan participants or beneficiaries. The issuer
must segregate premium revenue collected from the eligible organization
from the monies used to provide payments for contraceptive services. The
issuer must provide payments for contraceptive services in a manner that
is consistent with the requirements under sections 2706, 2709, 2711,
2713, 2719, and 2719A of the PHS Act. If the group health plan of the
eligible organization provides coverage for some but not all of any
contraceptive services required to be covered under Sec.
147.130(a)(1)(iv), the issuer is required to provide payments only for
those contraceptive services for which the group health plan does not
provide coverage. However, the issuer may provide payments for all
contraceptive services, at the issuer's option.
(3) A health insurance issuer may not require any documentation
other than a copy of the self-certification from the eligible
organization or the notification from the Department of Health and Human
Services described in paragraph (d)(1)(ii) of this section.
(e) Notice of availability of separate payments for contraceptive
services--insured group health plans and student health insurance
coverage. For each plan year to which the optional accommodation in
paragraph (d) of this section is to apply, an issuer required to provide
payments for contraceptive services pursuant to paragraph (d) of this
section must provide to plan participants and beneficiaries written
notice of the availability of separate payments for contraceptive
services contemporaneous with (to the extent possible), but separate
from, any application materials distributed in connection with
enrollment (or re-enrollment) in group health coverage that is effective
beginning on the first day of each applicable plan year. The notice must
specify that the eligible organization does not administer or fund
contraceptive benefits, but that the issuer provides separate payments
for contraceptive services, and must provide contact information for
questions and complaints. The following model language, or substantially
similar language, may be used to satisfy the notice requirement of this
paragraph (e) ``Your [employer/institution of higher education] has
[[Page 162]]
certified that your [group health plan/student health insurance
coverage] qualifies for an accommodation with respect to the Federal
requirement to cover all Food and Drug Administration-approved
contraceptive services for women, as prescribed by a health care
provider, without cost sharing. This means that your [employer/
institution of higher education] will not contract, arrange, pay, or
refer for contraceptive coverage. Instead, [name of health insurance
issuer] will provide separate payments for contraceptive services that
you use, without cost sharing and at no other cost, for so long as you
are enrolled in your [group health plan/student health insurance
coverage]. Your [employer/institution of higher education] will not
administer or fund these payments . If you have any questions about this
notice, contact [contact information for health insurance issuer].''
(f) Reliance. (1) If an issuer relies reasonably and in good faith
on a representation by the eligible organization as to its eligibility
for the accommodation in paragraph (d) of this section, and the
representation is later determined to be incorrect, the issuer is
considered to comply with any applicable requirement under Sec.
147.130(a)(1)(iv) to provide contraceptive coverage if the issuer
complies with the obligations under this section applicable to such
issuer.
(2) A group health plan is considered to comply with any applicable
requirement under Sec. 147.130(a)(1)(iv) to provide contraceptive
coverage if the plan complies with its obligations under paragraph (d)
of this section, without regard to whether the issuer complies with the
obligations under this section applicable to such issuer.
(g) Definition. For the purposes of this section, reference to
``contraceptive'' services, benefits, or coverage includes contraceptive
or sterilization items, procedures, or services, or related patient
education or counseling, to the extent specified for purposes of Sec.
147.130(a)(1)(iv).
(h) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, shall be construed so as to continue to give maximum
effect to the provision permitted by law, unless such holding shall be
one of utter invalidity or unenforceability, in which event the
provision shall be severable from this section and shall not affect the
remainder thereof or the application of the provision to persons not
similarly situated or to dissimilar circumstances.
[82 FR 47833, Oct. 13, 2017, as amended at 82 FR 47861, Oct. 13, 2017;
83 FR 57589, Nov. 15, 2018]
Sec. 147.132 Religious exemptions in connection with coverage of
certain preventive health services.
(a) Objecting entities. (1) Guidelines issued under Sec.
147.130(a)(1)(iv) by the Health Resources and Services Administration
must not provide for or support the requirement of coverage or payments
for contraceptive services with respect to a group health plan
established or maintained by an objecting organization, or health
insurance coverage offered or arranged by an objecting organization, to
the extent of the objections specified below. Thus the Health Resources
and Service Administration will exempt from any guidelines' requirements
that relate to the provision of contraceptive services:
(i) A group health plan and health insurance coverage provided in
connection with a group health plan to the extent the non-governmental
plan sponsor objects as specified in paragraph (a)(2) of this section.
Such non-governmental plan sponsors include, but are not limited to, the
following entities--
(A) A church, an integrated auxiliary of a church, a convention or
association of churches, or a religious order.
(B) A nonprofit organization.
(C) A closely held for-profit entity.
(D) A for-profit entity that is not closely held.
(E) Any other non-governmental employer.
(ii) A group health plan, and health insurance coverage provided in
connection with a group health plan, where the plan or coverage is
established or maintained by a church, an integrated auxiliary of a
church, a convention or association of churches, a religious order, a
nonprofit organization, or other non-governmental organization or
association, to the extent the plan
[[Page 163]]
sponsor responsible for establishing and/or maintaining the plan objects
as specified in paragraph (a)(2) of this section. The exemption in this
paragraph applies to each employer, organization, or plan sponsor that
adopts the plan;
(iii) An institution of higher education as defined in 20 U.S.C.
1002, which is non-governmental, in its arrangement of student health
insurance coverage, to the extent that institution objects as specified
in paragraph (a)(2) of this section. In the case of student health
insurance coverage, this section is applicable in a manner comparable to
its applicability to group health insurance coverage provided in
connection with a group health plan established or maintained by a plan
sponsor that is an employer, and references to ``plan participants and
beneficiaries'' will be interpreted as references to student enrollees
and their covered dependents; and
(iv) A health insurance issuer offering group or individual
insurance coverage to the extent the issuer objects as specified in
paragraph (a)(2) of this section. Where a health insurance issuer
providing group health insurance coverage is exempt under this
subparagraph (iv), the group health plan established or maintained by
the plan sponsor with which the health insurance issuer contracts
remains subject to any requirement to provide coverage for contraceptive
services under Guidelines issued under Sec. 147.130(a)(1)(iv) unless it
is also exempt from that requirement.
(2) The exemption of this paragraph (a) will apply to the extent
that an entity described in paragraph (a)(1) of this section objects,
based on its sincerely held religious beliefs, to its establishing,
maintaining, providing, offering, or arranging for (as applicable):
(i) Coverage or payments for some or all contraceptive services; or
(ii) A plan, issuer, or third party administrator that provides or
arranges such coverage or payments.
(b) Objecting individuals. Guidelines issued under Sec.
147.130(a)(1)(iv) by the Health Resources and Services Administration
must not provide for or support the requirement of coverage or payments
for contraceptive services with respect to individuals who object as
specified in this paragraph (b), and nothing in Sec. 147.130(a)(1)(iv),
26 CFR 54.9815-2713(a)(1)(iv), or 29 CFR 2590.715-2713(a)(1)(iv) may be
construed to prevent a willing health insurance issuer offering group or
individual health insurance coverage, and as applicable, a willing plan
sponsor of a group health plan, from offering a separate policy,
certificate or contract of insurance or a separate group health plan or
benefit package option, to any group health plan sponsor (with respect
to an individual) or individual, as applicable, who objects to coverage
or payments for some or all contraceptive services based on sincerely
held religious beliefs. Under this exemption, if an individual objects
to some but not all contraceptive services, but the issuer, and as
applicable, plan sponsor, are willing to provide the plan sponsor or
individual, as applicable, with a separate policy, certificate or
contract of insurance or a separate group health plan or benefit package
option that omits all contraceptives, and the individual agrees, then
the exemption applies as if the individual objects to all contraceptive
services.
(c) Definition. For the purposes of this section, reference to
``contraceptive'' services, benefits, or coverage includes contraceptive
or sterilization items, procedures, or services, or related patient
education or counseling, to the extent specified for purposes of Sec.
147.130(a)(1)(iv).
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, shall be construed so as to continue to give maximum
effect to the provision permitted by law, unless such holding shall be
one of utter invalidity or unenforceability, in which event the
provision shall be severable from this section and shall not affect the
remainder thereof or the application of the provision to persons not
similarly situated or to dissimilar circumstances.
[82 FR 47835, Oct. 13, 2017, as amended at 83 FR 57590, Nov. 15, 2018]
[[Page 164]]
Sec. 147.133 Moral exemptions in connection with coverage of certain
preventive health services.
(a) Objecting entities. (1) Guidelines issued under Sec.
147.130(a)(1)(iv) by the Health Resources and Services Administration
must not provide for or support the requirement of coverage or payments
for contraceptive services with respect to a group health plan
established or maintained by an objecting organization, or health
insurance coverage offered or arranged by an objecting organization, to
the extent of the objections specified below. Thus the Health Resources
and Service Administration will exempt from any guidelines' requirements
that relate to the provision of contraceptive services:
(i) A group health plan and health insurance coverage provided in
connection with a group health plan to the extent one of the following
non-governmental plan sponsors object as specified in paragraph (a)(2)
of this section:
(A) A nonprofit organization; or
(B) A for-profit entity that has no publicly traded ownership
interests (for this purpose, a publicly traded ownership interest is any
class of common equity securities required to be registered under
section 12 of the Securities Exchange Act of 1934);
(ii) An institution of higher education as defined in 20 U.S.C.
1002, which is non-governmental, in its arrangement of student health
insurance coverage, to the extent that institution objects as specified
in paragraph (a)(2) of this section. In the case of student health
insurance coverage, this section is applicable in a manner comparable to
its applicability to group health insurance coverage provided in
connection with a group health plan established or maintained by a plan
sponsor that is an employer, and references to ``plan participants and
beneficiaries'' will be interpreted as references to student enrollees
and their covered dependents; and
(iii) A health insurance issuer offering group or individual
insurance coverage to the extent the issuer objects as specified in
paragraph (a)(2) of this section. Where a health insurance issuer
providing group health insurance coverage is exempt under paragraph
(a)(1)(iii) of this section, the group health plan established or
maintained by the plan sponsor with which the health insurance issuer
contracts remains subject to any requirement to provide coverage for
contraceptive services under Guidelines issued under Sec.
147.130(a)(1)(iv) unless it is also exempt from that requirement.
(2) The exemption of this paragraph (a) will apply to the extent
that an entity described in paragraph (a)(1) of this section objects,
based on its sincerely held moral convictions, to its establishing,
maintaining, providing, offering, or arranging for (as applicable):
(i) Coverage or payments for some or all contraceptive services; or
(ii) A plan, issuer, or third party administrator that provides or
arranges such coverage or payments.
(b) Objecting individuals. Guidelines issued under Sec.
147.130(a)(1)(iv) by the Health Resources and Services Administration
must not provide for or support the requirement of coverage or payments
for contraceptive services with respect to individuals who object as
specified in this paragraph (b), and nothing in Sec. 147.130(a)(1)(iv),
26 CFR 54.9815-2713(a)(1)(iv), or 29 CFR 2590.715-2713(a)(1)(iv) may be
construed to prevent a willing health insurance issuer offering group or
individual health insurance coverage, and as applicable, a willing plan
sponsor of a group health plan, from offering a separate policy,
certificate or contract of insurance or a separate group health plan or
benefit package option, to any group health plan sponsor (with respect
to an individual) or individual, as applicable, who objects to coverage
or payments for some or all contraceptive services based on sincerely
held moral convictions. Under this exemption, if an individual objects
to some but not all contraceptive services, but the issuer, and as
applicable, plan sponsor, are willing to provide the plan sponsor or
individual, as applicable, with a separate policy, certificate or
contract of insurance or a separate group health plan or benefit package
option that omits all contraceptives, and the individual agrees, then
the exemption applies as if the individual objects to all contraceptive
services.
[[Page 165]]
(c) Definition. For the purposes of this section, reference to
``contraceptive'' services, benefits, or coverage includes contraceptive
or sterilization items, procedures, or services, or related patient
education or counseling, to the extent specified for purposes of Sec.
147.130(a)(1)(iv).
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, shall be construed so as to continue to give maximum
effect to the provision permitted by law, unless such holding shall be
one of utter invalidity or unenforceability, in which event the
provision shall be severable from this section and shall not affect the
remainder thereof or the application of the provision to persons not
similarly situated or to dissimilar circumstances.
[82 FR 47861, Oct. 13, 2017, as amended at 83 FR 57630, Nov. 15, 2018]
Sec. 147.136 Internal claims and appeals and external review processes.
(a) Scope and definitions--(1) Scope--(i) In general. This section
sets forth requirements with respect to internal claims and appeals and
external review processes for group health plans and health insurance
issuers. Paragraph (b) of this section provides requirements for
internal claims and appeals processes. Paragraph (c) of this section
sets forth rules governing the applicability of State external review
processes. Paragraph (d) of this section sets forth a Federal external
review process for plans and issuers not subject to an applicable State
external review process. Paragraph (e) of this section prescribes
requirements for ensuring that notices required to be provided under
this section are provided in a culturally and linguistically appropriate
manner. Paragraph (f) of this section describes the authority of the
Secretary to deem certain external review processes in existence on
March 23, 2010 as in compliance with paragraph (c) or (d) of this
section.
(ii) Application to grandfathered health plans and health insurance
coverage. The provisions of this section generally do not apply to
coverage offered by health insurance issuers and group health plans that
are grandfathered health plans, as defined under Sec. 147.140. However,
the external review process requirements under paragraphs (c) and (d) of
this section, and related notice requirements under paragraph (e) of
this section, apply to grandfathered health plans or coverage with
respect to adverse benefit determinations involving items and services
within the scope of the requirements for out-of-network emergency
services, nonemergency services performed by nonparticipating providers
at participating facilities, and air ambulance services furnished by
nonparticipating providers of air ambulance services under PHS Act
sections 2799A-1 and 2799A-2 and Sec. Sec. 149.110 through 149.130.
(2) Definitions. For purposes of this section, the following
definitions apply--
(i) Adverse benefit determination. An adverse benefit determination
means an adverse benefit determination as defined in 29 CFR 2560.503-1,
as well as any rescission of coverage, as described in Sec. 147.128
(whether or not, in connection with the rescission, there is an adverse
effect on any particular benefit at that time).
(ii) Appeal (or internal appeal). An appeal or internal appeal means
review by a plan or issuer of an adverse benefit determination, as
required in paragraph (b) of this section.
(iii) Claimant. Claimant means an individual who makes a claim under
this section. For purposes of this section, references to claimant
include a claimant's authorized representative.
(iv) External review. External review means a review of an adverse
benefit determination (including a final internal adverse benefit
determination) conducted pursuant to an applicable State external review
process described in paragraph (c) of this section or the Federal
external review process of paragraph (d) of this section.
(v) Final internal adverse benefit determination. A final internal
adverse benefit determination means an adverse benefit determination
that has been upheld by a plan or issuer at the completion of the
internal appeals process applicable under paragraph (b) of this section
(or an adverse benefit determination with respect to which the internal
appeals process has been exhausted under the
[[Page 166]]
deemed exhaustion rules of paragraph (b)(2)(ii)(F) of this section).
(vi) Final external review decision. A final external review
decision means a determination by an independent review organization at
the conclusion of an external review.
(vii) Independent review organization (or IRO). An independent
review organization (or IRO) means an entity that conducts independent
external reviews of adverse benefit determinations and final internal
adverse benefit determinations pursuant to paragraph (c) or (d) of this
section.
(viii) NAIC Uniform Model Act. The NAIC Uniform Model Act means the
Uniform Health Carrier External Review Model Act promulgated by the
National Association of Insurance Commissioners in place on July 23,
2010.
(b) Internal claims and appeals process--(1) In general. A group
health plan and a health insurance issuer offering group or individual
health insurance coverage must implement an effective internal claims
and appeals process, as described in this paragraph (b).
(2) Requirements for group health plans and group health insurance
issuers. A group health plan and a health insurance issuer offering
group health insurance coverage must comply with all the requirements of
this paragraph (b)(2). In the case of health insurance coverage offered
in connection with a group health plan, if either the plan or the issuer
complies with the internal claims and appeals process of this paragraph
(b)(2), then the obligation to comply with this paragraph (b)(2) is
satisfied for both the plan and the issuer with respect to the health
insurance coverage.
(i) Minimum internal claims and appeals standards. A group health
plan and a health insurance issuer offering group health insurance
coverage must comply with all the requirements applicable to group
health plans under 29 CFR 2560.503-1, except to the extent those
requirements are modified by paragraph (b)(2)(ii) of this section.
Accordingly, under this paragraph (b), with respect to health insurance
coverage offered in connection with a group health plan, the group
health insurance issuer is subject to the requirements in 29 CFR
2560.503-1 to the same extent as the group health plan.
(ii) Additional standards. In addition to the requirements in
paragraph (b)(2)(i) of this section, the internal claims and appeals
processes of a group health plan and a health insurance issuer offering
group health insurance coverage must meet the requirements of this
paragraph (b)(2)(ii).
(A) Clarification of meaning of adverse benefit determination. For
purposes of this paragraph (b)(2), an ``adverse benefit determination''
includes an adverse benefit determination as defined in paragraph
(a)(2)(i) of this section. Accordingly, in complying with 29 CFR
2560.503-1, as well as the other provisions of this paragraph (b)(2), a
plan or issuer must treat a rescission of coverage (whether or not the
rescission has an adverse effect on any particular benefit at that time)
as an adverse benefit determination. (Rescissions of coverage are
subject to the requirements of Sec. 147.128.)
(B) Expedited notification of benefit determinations involving
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which
generally provide, among other things, in the case of urgent care claims
for notification of the plan's benefit determination (whether adverse or
not) as soon as possible, taking into account the medical exigencies,
but not later than 72 hours after the receipt of the claim) continue to
apply to the plan and issuer. For purposes of this paragraph
(b)(2)(ii)(B), a claim involving urgent care has the meaning given in 29
CFR 2560.503-1(m)(1), as determined by the attending provider, and the
plan or issuer shall defer to such determination of the attending
provider.
(C) Full and fair review. A plan and issuer must allow a claimant to
review the claim file and to present evidence and testimony as part of
the internal claims and appeals process. Specifically, in addition to
complying with the requirements of 29 CFR 2560.503-1(h)(2)--
(1) The plan or issuer must provide the claimant, free of charge,
with any new or additional evidence considered, relied upon, or
generated by the plan or issuer (or at the direction of the plan or
issuer) in connection with the claim;
[[Page 167]]
such evidence 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 under 29 CFR 2560.503-
1(i) to give the claimant a reasonable opportunity to respond prior to
that date; and
(2) Before the plan or issuer can issue a final internal adverse
benefit determination based on a new or additional rationale, the
claimant 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 under 29 CFR 2560.503-
1(i) to give the claimant a reasonable opportunity to respond prior to
that date. Notwithstanding the rules of 29 CFR 2560.503-1(i), if the new
or additional evidence is received so late that it would be impossible
to provide it to the claimant in time for the claimant to have a
reasonable opportunity to respond, the period for providing a notice of
final internal adverse benefit determination is tolled until such time
as the claimant has a reasonable opportunity to respond. After the
claimant responds, or has a reasonable opportunity to respond but fails
to do so, the plan administrator shall notify the claimant of the plan's
benefit determination as soon as a plan acting in a reasonable and
prompt fashion can provide the notice, taking into account the medical
exigencies.
(D) Avoiding conflicts of interest. In addition to the requirements
of 29 CFR 2560.503-1(b) and (h) regarding full and fair review, the plan
and issuer must ensure that all claims and appeals are adjudicated in a
manner designed to ensure the independence and impartiality of the
persons involved in making the decision. Accordingly, decisions
regarding hiring, compensation, termination, promotion, or other similar
matters with respect to any individual (such as a claims adjudicator or
medical expert) must not be made based upon the likelihood that the
individual will support the denial of benefits.
(E) Notice. A plan and issuer must provide notice to individuals, in
a culturally and linguistically appropriate manner (as described in
paragraph (e) of this section) that complies with the requirements of 29
CFR 2560.503-1(g) and (j). The plan and issuer must also comply with the
additional requirements of this paragraph (b)(2)(ii)(E).
(1) The plan and issuer must ensure that any notice of adverse
benefit determination or final internal adverse benefit determination
includes information sufficient to identify the claim involved
(including the date of service, the health care provider, the claim
amount (if applicable), and a statement describing the availability,
upon request, of the diagnosis code and its corresponding meaning, and
the treatment code and its corresponding meaning).
(2) The plan and issuer must provide to participants, beneficiaries
and enrollees, as soon as practicable, upon request, the diagnosis code
and its corresponding meaning, and the treatment code and its
corresponding meaning, associated with any adverse benefit determination
or final internal adverse benefit determination. The plan or issuer must
not consider a request for such diagnosis and treatment information, in
itself, to be a request for an internal appeal under this paragraph (b)
or an external review under paragraphs (c) and (d) of this section.
(3) The plan and issuer must ensure that the reason or reasons for
the adverse benefit determination or final internal adverse benefit
determination includes the denial code and its corresponding meaning, as
well as a description of the plan's or issuer's standard, if any, that
was used in denying the claim. In the case of a notice of final internal
adverse benefit determination, this description must include a
discussion of the decision.
(4) The plan and issuer must provide a description of available
internal appeals and external review processes, including information
regarding how to initiate an appeal.
(5) The plan and issuer must disclose the availability of, and
contact information for, any applicable office of health insurance
consumer assistance or ombudsman established under PHS Act section 2793
to assist individuals with the internal claims and appeals and external
review processes.
(F) Deemed exhaustion of internal claims and appeals processes. (1)
In the
[[Page 168]]
case of a plan or issuer that fails to strictly adhere to all the
requirements of this paragraph (b)(2) with respect to a claim, the
claimant is deemed to have exhausted the internal claims and appeals
process of this paragraph (b), except as provided in paragraph
(b)(2)(ii)(F)(2) of this section. Accordingly the claimant may initiate
an external review under paragraph (c) or (d) of this section, as
applicable. The claimant is also entitled to pursue any available
remedies under section 502(a) of ERISA or under State law, as
applicable, on the basis that the plan or issuer has failed to provide a
reasonable internal claims and appeals process that would yield a
decision on the merits of the claim. If a claimant chooses to pursue
remedies under section 502(a) of ERISA under such circumstances, the
claim or appeal is deemed denied on review without the exercise of
discretion by an appropriate fiduciary.
(2) Notwithstanding paragraph (b)(2)(ii)(F)(1) of this section, the
internal claims and appeals process of this paragraph (b) will not be
deemed exhausted based on de minimis violations that do not cause, and
are not likely to cause, prejudice or harm to the claimant so long as
the plan or issuer demonstrates that the violation was for good cause or
due to matters beyond the control of the plan or issuer and that the
violation occurred in the context of an ongoing, good faith exchange of
information between the plan and the claimant. This exception is not
available if the violation is part of a pattern or practice of
violations by the plan or issuer. The claimant may request a written
explanation of the violation from the plan or issuer, and the plan or
issuer must provide such explanation within 10 days, including a
specific description of its bases, if any, for asserting that the
violation should not cause the internal claims and appeals process of
this paragraph (b) to be deemed exhausted. If an external reviewer or a
court rejects the claimant's request for immediate review under
paragraph (b)(2)(ii)(F)(1) of this section on the basis that the plan
met the standards for the exception under this paragraph
(b)(2)(ii)(F)(2), the claimant has the right to resubmit and pursue the
internal appeal of the claim. In such a case, within a reasonable time
after the external reviewer or court rejects the claim for immediate
review (not to exceed 10 days), the plan shall provide the claimant with
notice of the opportunity to resubmit and pursue the internal appeal of
the claim. Time periods for re-filing the claim shall begin to run upon
claimant's receipt of such notice.
(iii) Requirement to provide continued coverage pending the outcome
of an appeal. A plan and issuer subject to the requirements of this
paragraph (b)(2) are required to provide continued coverage pending the
outcome of an appeal. For this purpose, the plan and issuer must comply
with the requirements of 29 CFR 2560.503-1(f)(2)(ii), which generally
provides that benefits for an ongoing course of treatment cannot be
reduced or terminated without providing advance notice and an
opportunity for advance review.
(3) Requirements for individual health insurance issuers. A health
insurance issuer offering individual health insurance coverage must
comply with all the requirements of this paragraph (b)(3).
(i) Minimum internal claims and appeals standards. A health
insurance issuer offering individual health insurance coverage must
comply with all the requirements of the ERISA internal claims and
appeals procedures applicable to group health plans under 29 CFR
2560.503-1 except for the requirements with respect to multiemployer
plans, and except to the extent those requirements are modified by
paragraph (b)(3)(ii) of this section. Accordingly, under this paragraph
(b), with respect to individual health insurance coverage, the issuer is
subject to the requirements in 29 CFR 2560.503-1 as if the issuer were a
group health plan.
(ii) Additional standards. In addition to the requirements in
paragraph (b)(3)(i) of this section, the internal claims and appeals
processes of a health insurance issuer offering individual health
insurance coverage must meet the requirements of this paragraph
(b)(3)(ii).
(A) Clarification of meaning of adverse benefit determination. For
purposes of
[[Page 169]]
this paragraph (b)(3), an adverse benefit determination includes an
adverse benefit determination as defined in paragraph (a)(2)(i) of this
section. Accordingly, in complying with 29 CFR 2560.503-1, as well as
other provisions of this paragraph (b)(3), an issuer must treat a
rescission of coverage (whether or not the rescission has an adverse
effect on any particular benefit at that time) and any decision to deny
coverage in an initial eligibility determination as an adverse benefit
determination. (Rescissions of coverage are subject to the requirements
of Sec. 147.128.)
(B) Expedited notification of benefit determinations involving
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which
generally provide, among other things, in the case of urgent care claims
for notification of the issuer's benefit determination (whether adverse
or not) as soon as possible, taking into account the medical exigencies,
but not later than 72 hours after receipt of the claim) continue to
apply to the issuer. For purposes of this paragraph (b)(3)(ii)(B), a
claim involving urgent care has the meaning given in 29 CFR 2560.503-
1(m)(1), as determined by the attending provider, and the issuer shall
defer to such determination of the attending provider.
(C) Full and fair review. An issuer must allow a claimant to review
the claim file and to present evidence and testimony as part of the
internal claims and appeals process. Specifically, in addition to
complying with the requirements of 29 CFR 2560.503-1(h)(2)--
(1) The issuer must provide the claimant, free of charge, with any
new or additional evidence considered, relied upon, or generated by the
issuer (or at the direction of the issuer) in connection with the claim;
such evidence 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 under 29 CFR 2560.503-
1(i) to give the claimant a reasonable opportunity to respond prior to
that date; and
(2) Before the issuer can issue a final internal adverse benefit
determination based on a new or additional rationale, the claimant 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 under 29 CFR 2560.503-1(i) to give the claimant
a reasonable opportunity to respond prior to that date. Notwithstanding
the rules of 29 CFR 2560.503-1(i), if the new or additional evidence is
received so late that it would be impossible to provide it to the
claimant in time for the claimant to have a reasonable opportunity to
respond, the period for providing a notice of final internal adverse
benefit determination is tolled until such time as the claimant has a
reasonable opportunity to respond. After the claimant responds, or has a
reasonable opportunity to respond but fails to do so, the issuer shall
notify the claimant of the issuer's determination as soon as an issuer
acting in a reasonable and prompt fashion can provide the notice, taking
into account the medical exigencies.
(D) Avoiding conflicts of interest. In addition to the requirements
of 29 CFR 2560.503-1(b) and (h) regarding full and fair review, the
issuer must ensure that all claims and appeals are adjudicated in a
manner designed to ensure the independence and impartiality of the
persons involved in making the decision. Accordingly, decisions
regarding hiring, compensation, termination, promotion, or other similar
matters with respect to any individual (such as a claims adjudicator or
medical expert) must not be made based upon the likelihood that the
individual will support the denial of benefits.
(E) Notice. An issuer must provide notice to individuals, in a
culturally and linguistically appropriate manner (as described in
paragraph (e) of this section) that complies with the requirements of 29
CFR 2560.503-1(g) and (j). The issuer must also comply with the
additional requirements of this paragraph (b)(3)(ii)(E).
(1) The issuer must ensure that any notice of adverse benefit
determination or final internal adverse benefit determination includes
information sufficient to identify the claim involved (including the
date of service, the
[[Page 170]]
name of the health care provider, the claim amount (if applicable), and
a statement describing the availability, upon request, of the diagnosis
code and its corresponding meaning, and the treatment code and its
corresponding meaning).
(2) The issuer must provide to participants and beneficiaries, as
soon as practicable, upon request, the diagnosis code and its
corresponding meaning, and the treatment code and its corresponding
meaning, associated with any adverse benefit determination or final
internal adverse benefit determination. The issuer must not consider a
request for such diagnosis and treatment information, in itself, to be a
request for an internal appeal under this paragraph (b) or an external
review under paragraphs (c) and (d) of this section.
(3) The issuer must ensure that the reason or reasons for the
adverse benefit determination or final internal adverse benefit
determination includes the denial code and its corresponding meaning, as
well as a description of the issuer's standard, if any, that was used in
denying the claim. In the case of a notice of final internal adverse
benefit determination, this description must include a discussion of the
decision.
(4) The issuer must provide a description of available internal
appeals and external review processes, including information regarding
how to initiate an appeal.
(5) The issuer must disclose the availability of, and contact
information for, any applicable office of health insurance consumer
assistance or ombudsman established under PHS Act section 2793 to assist
individuals with the internal claims and appeals and external review
processes.
(F) Deemed exhaustion of internal claims and appeals processes. (1)
In the case of an issuer that fails to adhere to all the requirements of
this paragraph (b)(3) with respect to a claim, the claimant is deemed to
have exhausted the internal claims and appeals process of this paragraph
(b), except as provided in paragraph (b)(3)(ii)(F)(2) of this section.
Accordingly, the claimant may initiate an external review under
paragraph (c) or (d) of this section, as applicable. The claimant is
also entitled to pursue any available remedies under State law, as
applicable, on the basis that the issuer has failed to provide a
reasonable internal claims and appeals process that would yield a
decision on the merits of the claim.
(2) Notwithstanding paragraph (b)(3)(ii)(F)(1) of this section, the
internal claims and appeals process of this paragraph (b) will not be
deemed exhausted based on de minimis violations that do not cause, and
are not likely to cause, prejudice or harm to the claimant so long as
the issuer demonstrates that the violation was for good cause or due to
matters beyond the control of the issuer and that the violation occurred
in the context of an ongoing, good faith exchange of information between
the issuer and the claimant. This exception is not available if the
violation is part of a pattern or practice of violations by the issuer.
The claimant may request a written explanation of the violation from the
issuer, and the issuer must provide such explanation within 10 days,
including a specific description of its bases, if any, for asserting
that the violation should not cause the internal claims and appeals
process of this paragraph (b) to be deemed exhausted. If an external
reviewer or a court rejects the claimant's request for immediate review
under paragraph (b)(3)(ii)(F)(1) of this section on the basis that the
issuer met the standards for the exception under this paragraph
(b)(3)(ii)(F)(2), the claimant has the right to resubmit and pursue the
internal appeal of the claim. In such a case, within a reasonable time
after the external reviewer or court rejects the claim for immediate
review (not to exceed 10 days), the issuer shall provide the claimant
with notice of the opportunity to resubmit and pursue the internal
appeal of the claim. Time periods for re-filing the claim shall begin to
run upon claimant's receipt of such notice.
(G) One level of internal appeal. Notwithstanding the requirements
in 29 CFR 2560.503-1(c)(3), a health insurance issuer offering
individual health insurance coverage must provide for only one level of
internal appeal before issuing a final determination.
[[Page 171]]
(H) Recordkeeping requirements. A health insurance issuer offering
individual health insurance coverage must maintain for six years records
of all claims and notices associated with the internal claims and
appeals process, including the information detailed in paragraph
(b)(3)(ii)(E) of this section and any other information specified by the
Secretary. An issuer must make such records available for examination by
the claimant or State or Federal oversight agency upon request.
(iii) Requirement to provide continued coverage pending the outcome
of an appeal. An issuer subject to the requirements of this paragraph
(b)(3) is required to provide continued coverage pending the outcome of
an appeal. For this purpose, the issuer must comply with the
requirements of 29 CFR 2560.503-1(f)(2)(ii) as if the issuer were a
group health plan, so that the issuer cannot reduce or terminate an
ongoing course of treatment without providing advance notice and an
opportunity for advance review.
(c) State standards for external review--(1) In general. (i) If a
State external review process that applies to and is binding on a health
insurance issuer offering group or individual health insurance coverage
includes at a minimum the consumer protections in the NAIC Uniform Model
Act, then the issuer must comply with the applicable State external
review process and is not required to comply with the Federal external
review process of paragraph (d) of this section. In such a case, to the
extent that benefits under a group health plan are provided through
health insurance coverage, the group health plan is not required to
comply with either this paragraph (c) or the Federal external review
process of paragraph (d) of this section.
(ii) To the extent that a group health plan provides benefits other
than through health insurance coverage (that is, the plan is self-
insured) and is subject to a State external review process that applies
to and is binding on the plan (for example, is not preempted by ERISA)
and the State external review process includes at a minimum the consumer
protections in the NAIC Uniform Model Act, then the plan must comply
with the applicable State external review process and is not required to
comply with the Federal external review process of paragraph (d) of this
section. Where a self-insured plan is not subject to an applicable State
external review process, but the State has chosen to expand access to
its process for plans that are not subject to the applicable State laws,
the plan may choose to comply with either the applicable State external
review process or the Federal external review process of paragraph (d)
of this section.
(iii) If a plan or issuer is not required under paragraph (c)(1)(i)
or (c)(1)(ii) of this section to comply with the requirements of this
paragraph (c), then the plan or issuer must comply with the Federal
external review process of paragraph (d) of this section, except to the
extent, in the case of a plan, the plan is not required under paragraph
(c)(1)(i) of this section to comply with paragraph (d) of this section.
(2) Minimum standards for State external review processes. An
applicable State external review process must meet all the minimum
consumer protections in this paragraph (c)(2). The Department of Health
and Human Services will determine whether State external review
processes meet these requirements.
(i) The State process must provide for the external review of
adverse benefit determinations (including final internal adverse benefit
determinations) by issuers (or, if applicable, plans) that are based on
the issuer's (or plan's) requirements for medical necessity,
appropriateness, health care setting, level of care, or effectiveness of
a covered benefit, as well as a consideration of whether a plan or
issuer is complying with the surprise billing and cost-sharing
protections under PHS Act sections 2799A-1 and 2799A-2 and Sec. Sec.
149.110 through 149.130.
(ii) The State process must require issuers (or, if applicable,
plans) to provide effective written notice to claimants of their rights
in connection with an external review for an adverse benefit
determination.
(iii) To the extent the State process requires exhaustion of an
internal claims and appeals process, exhaustion must be unnecessary
where the issuer (or, if applicable, the plan) has waived
[[Page 172]]
the requirement; the issuer (or the plan) is considered to have
exhausted the internal claims and appeals process under applicable law
(including by failing to comply with any of the requirements for the
internal appeal process, as outlined in paragraph (b)(2) of this
section); or the claimant has applied for expedited external review at
the same time as applying for an expedited internal appeal.
(iv) The State process provides that the issuer (or, if applicable,
the plan) against which a request for external review is filed must pay
the cost of the IRO for conducting the external review. Notwithstanding
this requirement, a State external review process that expressly
authorizes, as of November 18, 2015, a nominal filing fee may continue
to permit such fees. For this purpose, to be considered nominal, a
filing fee must not exceed $25, it must be refunded to the claimant if
the adverse benefit determination (or final internal adverse benefit
determination) is reversed through external review, it must be waived if
payment of the fee would impose an undue financial hardship, and the
annual limit on filing fees for any claimant within a single plan year
must not exceed $75.
(v) The State process may not impose a restriction on the minimum
dollar amount of a claim for it to be eligible for external review.
Thus, the process may not impose, for example, a $500 minimum claims
threshold.
(vi) The State process must allow at least four months after the
receipt of a notice of an adverse benefit determination or final
internal adverse benefit determination for a request for an external
review to be filed.
(vii) The State process must provide that IROs will be assigned on a
random basis or another method of assignment that assures the
independence and impartiality of the assignment process (such as
rotational assignment) by a State or independent entity, and in no event
selected by the issuer, plan, or the individual.
(viii) The State process must provide for maintenance of a list of
approved IROs qualified to conduct the external review based on the
nature of the health care service that is the subject of the review. The
State process must provide for approval only of IROs that are accredited
by a nationally recognized private accrediting organization.
(ix) The State process must provide that any approved IRO has no
conflicts of interest that will influence its independence. Thus, the
IRO may not own or control, or be owned or controlled by a health
insurance issuer, a group health plan, the sponsor of a group health
plan, a trade association of plans or issuers, or a trade association of
health care providers. The State process must further provide that the
IRO and the clinical reviewer assigned to conduct an external review may
not have a material professional, familial, or financial conflict of
interest with the issuer or plan that is the subject of the external
review; the claimant (and any related parties to the claimant) whose
treatment is the subject of the external review; any officer, director,
or management employee of the issuer; the plan administrator, plan
fiduciaries, or plan employees; the health care provider, the health
care provider's group, or practice association recommending the
treatment that is subject to the external review; the facility at which
the recommended treatment would be provided; or the developer or
manufacturer of the principal drug, device, procedure, or other therapy
being recommended.
(x) The State process allows the claimant at least five business
days to submit to the IRO in writing additional information that the IRO
must consider when conducting the external review, and it requires that
the claimant is notified of the right to do so. The process must also
require that any additional information submitted by the claimant to the
IRO must be forwarded to the issuer (or, if applicable, the plan) within
one business day of receipt by the IRO.
(xi) The State process must provide that the decision is binding on
the plan or issuer, as well as the claimant except to the extent the
other remedies are available under State or Federal law, and except that
the requirement that the decision be binding shall not preclude the plan
or issuer from making payment on the claim or otherwise
[[Page 173]]
providing benefits at any time, including after a final external review
decision that denies the claim or otherwise fails to require such
payment or benefits. For this purpose, the plan or issuer must provide
benefits (including by making payment on the claim) pursuant to the
final external review decision without delay, regardless of whether the
plan or issuer intends to seek judicial review of the external review
decision and unless or until there is a judicial decision otherwise.
(xii) The State process must require, for standard external review,
that the IRO provide written notice to the issuer (or, if applicable,
the plan) and the claimant of its decision to uphold or reverse the
adverse benefit determination (or final internal adverse benefit
determination) within no more than 45 days after the receipt of the
request for external review by the IRO.
(xiii) The State process must provide for an expedited external
review if the adverse benefit determination (or final internal adverse
benefit determination) concerns an admission, availability of care,
continued stay, or health care service for which the claimant received
emergency services, but has not been discharged from a facility; or
involves a medical condition for which the standard external review time
frame would seriously jeopardize the life or health of the claimant or
jeopardize the claimant's ability to regain maximum function. As
expeditiously as possible but within no more than 72 hours after the
receipt of the request for expedited external review by the IRO, the IRO
must make its decision to uphold or reverse the adverse benefit
determination (or final internal adverse benefit determination) and
notify the claimant and the issuer (or, if applicable, the plan) of the
determination. If the notice is not in writing, the IRO must provide
written confirmation of the decision within 48 hours after the date of
the notice of the decision.
(xiv) The State process must require that issuers (or, if
applicable, plans) include a description of the external review process
in or attached to the summary plan description, policy, certificate,
membership booklet, outline of coverage, or other evidence of coverage
it provides to participants, beneficiaries, or enrollees, substantially
similar to what is set forth in section 17 of the NAIC Uniform Model
Act.
(xv) The State process must require that IROs maintain written
records and make them available upon request to the State, substantially
similar to what is set forth in section 15 of the NAIC Uniform Model
Act.
(xvi) The State process follows procedures for external review of
adverse benefit determinations (or final internal adverse benefit
determinations) involving experimental or investigational treatment,
substantially similar to what is set forth in section 10 of the NAIC
Uniform Model Act.
(3) Transition period for external review processes--(i) Through
December 31, 2017, an applicable State external review process
applicable to a health insurance issuer or group health plan is
considered to meet the requirements of PHS Act section 2719(b).
Accordingly, through December 31, 2017, an applicable State external
review process will be considered binding on the issuer or plan (in lieu
of the requirements of the Federal external review process). If there is
no applicable State external review process, the issuer or plan is
required to comply with the requirements of the Federal external review
process in paragraph (d) of this section.
(ii) An applicable State external review process must apply for
final internal adverse benefit determinations (or, in the case of
simultaneous internal appeal and external review, adverse benefit
determinations) provided on or after January 1, 2018. The Federal
external review process will apply to such internal adverse benefit
determinations unless the Department of Health and Human Services
determines that a State law meets all the minimum standards of paragraph
(c)(2) of this section. Through December 31, 2017, a State external
review process applicable to a health insurance issuer or group health
plan may be considered to meet the minimum standards of paragraph (c)(2)
of this section, if it meets the temporary standards established by the
Secretary in guidance for a process similar to the NAIC Uniform Model
Act.
[[Page 174]]
(d) Federal external review process. A plan or issuer not subject to
an applicable State external review process under paragraph (c) of this
section must provide an effective Federal external review process in
accordance with this paragraph (d) (except to the extent, in the case of
a plan, the plan is described in paragraph (c)(1)(i) of this section as
not having to comply with this paragraph (d)). In the case of health
insurance coverage offered in connection with a group health plan, if
either the plan or the issuer complies with the Federal external review
process of this paragraph (d), then the obligation to comply with this
paragraph (d) is satisfied for both the plan and the issuer with respect
to the health insurance coverage. A Multi State Plan or MSP, as defined
by 45 CFR 800.20, must provide an effective Federal external review
process in accordance with this paragraph (d). In such circumstances,
the requirement to provide external review under this paragraph (d) is
satisfied when a Multi State Plan or MSP complies with standards
established by the Office of Personnel Management.
(1) Scope--(i) In general. The Federal external review process
established pursuant to this paragraph (d) applies to the following:
(A) An adverse benefit determination (including a final internal
adverse benefit determination) by a plan or issuer that involves medical
judgment (including, but not limited to, those based on the plan's or
issuer's requirements for medical necessity, appropriateness, health
care setting, level of care, or effectiveness of a covered benefit; its
determination that a treatment is experimental or investigational; its
determination whether a participant, beneficiary, or enrollee is
entitled to a reasonable alternative standard for a reward under a
wellness program; its determination whether a plan or issuer is
complying with the nonquantitative treatment limitation provisions of
PHS Act section 2726 and Sec. Sec. 146.136 and 147.160, which generally
require, among other things, parity in the application of medical
management techniques), as determined by the external reviewer. (A
denial, reduction, termination, or a failure to provide payment for a
benefit based on a determination that a participant, beneficiary, or
enrollee fails to meet the requirements for eligibility under the terms
of a group health plan or health insurance coverage is not eligible for
the Federal external review process under this paragraph (d));
(B) An adverse benefit determination that involves consideration of
whether a plan or issuer is complying with the surprise billing and
cost-sharing protections set forth in PHS Act sections 2799A-1 and
2799A-2 and Sec. Sec. 149.110 through 149.130; and
(C) A rescission of coverage (whether or not the rescission has any
effect on any particular benefit at that time).
(ii) Examples. The rules of paragraph (d)(1)(i) of this section are
illustrated by the following examples:
Example 1 --(i) Facts. A group health plan provides coverage for 30
physical therapy visits generally. After the 30th visit, coverage is
provided only if the service is preauthorized pursuant to an approved
treatment plan that takes into account medical necessity using the
plan's definition of the term. Individual A seeks coverage for a 31st
physical therapy visit. A's health care provider submits a treatment
plan for approval, but it is not approved by the plan, so coverage for
the 31st visit is not preauthorized. With respect to the 31st visit, A
receives a notice of final internal adverse benefit determination
stating that the maximum visit limit is exceeded.
(ii) Conclusion. In this Example 1, the plan's denial of benefits is
based on medical necessity and involves medical judgment. Accordingly,
the claim is eligible for external review under paragraph (d)(1)(i) of
this section. Moreover, the plan's notification of final internal
adverse benefit determination is inadequate under paragraphs (b)(2)(i)
and (b)(2)(ii)(E)(3) of this section because it fails to make clear that
the plan will pay for more than 30 visits if the service is
preauthorized pursuant to an approved treatment plan that takes into
account medical necessity using the plan's definition of the term.
Accordingly, the notice of final internal adverse benefit determination
should refer to the plan provision governing the 31st visit and should
describe the plan's standard for medical necessity, as well as how the
treatment fails to meet the plan's standard.
Example 2 --(i) Facts. A group health plan does not provide coverage
for services provided out of network, unless the service cannot
effectively be provided in network. Individual B seeks coverage for a
specialized medical procedure from an out-of-network
[[Page 175]]
provider because B believes that the procedure cannot be effectively
provided in network. B receives a notice of final internal adverse
benefit determination stating that the claim is denied because the
provider is out-of-network.
(ii) Conclusion. In this Example 2, the plan's denial of benefits is
based on whether a service can effectively be provided in network and,
therefore, involves medical judgment. Accordingly, the claim is eligible
for external review under paragraph (d)(1)(i) of this section. Moreover,
the plan's notice of final internal adverse benefit determination is
inadequate under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) of this
section because the plan does provide benefits for services on an out-
of-network basis if the services cannot effectively be provided in
network. Accordingly, the notice of final internal adverse benefit
determination is required to refer to the exception to the out-of-
network exclusion and should describe the plan's standards for
determining effectiveness of services, as well as how services available
to the claimant within the plan's network meet the plan's standard for
effectiveness of services.
Example 3 --(i) Facts. A group health plan generally provides
benefits for services in an emergency department of a hospital or
independent freestanding emergency department. Individual C receives
pre-stabilization emergency treatment in an out-of-network emergency
department of a hospital. The group health plan determines that
protections for emergency services under Sec. 149.110 do not apply
because the treatment did not involve ``emergency services'' within the
meaning of Sec. 149.110(c)(2)(i). C receives an adverse benefit
determination and the plan imposes cost-sharing requirements that are
greater than the requirements that would apply if the same services were
provided in an in-network emergency department.
(ii) Conclusion. In this Example 3, the plan's determination that
treatment received by C did not include emergency services involves
medical judgment and consideration of whether the plan complied with
Sec. 149.110. Accordingly, the claim is eligible for external review
under paragraph (d)(1)(i) of this section.
Example 4 --(i) Facts. A group health plan generally provides
benefits for anesthesiology services. Individual D undergoes a surgery
at an in-network health care facility and during the course of the
surgery, receives anesthesiology services from an out-of-network
provider. The plan decides the claim for these services without regard
to the protections related to items and services furnished by out-of-
network providers at in-network facilities under Sec. 149.120. As a
result, D receives an adverse benefit determination for the services and
is subject to cost-sharing liability that is greater than it would be if
cost sharing had been calculated in a manner consistent with the
requirements of Sec. 149.120.
(ii) Conclusion. In this Example 4, whether the plan was required to
decide the claim in a manner consistent with the requirements of Sec.
149.120 involves considering whether the plan complied with Sec.
149.120, as well as medical judgment, because it requires consideration
of the health care setting and level of care. Accordingly, the claim is
eligible for external review under paragraph (d)(1)(i) of this section.
Example 5 --(i) Facts. A group health plan generally provides
benefits for services in an emergency department of a hospital or
independent freestanding emergency department. Individual E receives
emergency services in an out-of-network emergency department of a
hospital, including certain post-stabilization services. The plan
processes the claim for the post-stabilization services as not being for
emergency services under Sec. 149.110(c)(2)(ii) based on
representations made by the treating provider that E was in a condition
to receive notice from the provider about cost-sharing and surprise
billing protections for these services, and subsequently gave informed
consent to waive those protections. E receives an adverse benefit
determination and is subject to cost-sharing requirements that are
greater than the cost-sharing requirements that would apply if the
services were processed in a manner consistent with Sec. 149.110.
(ii) Conclusion. In this Example 5, whether E was in a condition to
receive notice about the availability of cost-sharing and surprise
billing protections and give informed consent to waive those protections
involves medical judgment and consideration of whether the plan complied
with the requirements under Sec. 149.110(c)(2)(ii). Accordingly, the
claim is eligible for external review under paragraph (d)(1)(i) of this
section.
Example 6 --(i) Facts. Individual F gives birth to a baby at an in-
network hospital. The baby is born prematurely and receives certain
neonatology services from a nonparticipating provider during the same
visit as the birth. F was given notice about cost-sharing and surprise
billing protections for these services, and subsequently gave informed
consent to waive those protections. The claim for the neonatology
services is coded as a claim for routine post-natal services and the
plan decides the claim without regard to the requirements under Sec.
149.120(a) and the fact that those protections may not be waived for
neonatology services under Sec. 149.120(b).
(ii) Conclusion. In this Example 6, medical judgment is necessary to
determine whether the correct code was used and compliance with Sec.
149.120(a) and (b) must also be considered. Accordingly, the claim is
eligible for external review under paragraph (d)(1)(i) of this section.
The Departments also note
[[Page 176]]
that, to the extent the nonparticipating provider balance bills
Individual F for the outstanding amounts not paid by the plan for the
neonatology services, such provider would be in violation of PHS Act
section 2799B-2 and its implementing regulations at 45 CFR 149.420(a).
Example 7 --(i) Facts. A group health plan generally provides
benefits to cover knee replacement surgery. Individual G receives a knee
replacement surgery at an in-network facility and, after receiving
proper notice about the availability of cost-sharing and surprise
billing protections, provides informed consent to waive those
protections. However, during the surgery, certain anesthesiology
services are provided by an out-of-network nurse anesthetist. The claim
for these anesthesiology services is decided by the plan without regard
to the requirements under Sec. 149.120(a) or to the fact that those
protections may not be waived for ancillary services such as
anesthesiology services provided by an out-of-network provider at an in-
network facility under Sec. 149.120(b). G receives an adverse benefit
determination and is subject to cost-sharing requirements that are
greater than the cost-sharing requirements that would apply if the
services were provided in a manner consistent with Sec. 149.120(a) and
(b).
(ii) Conclusion. In this Example 7, consideration of whether the
plan complied with the requirements in Sec. 149.120(a) and (b) is
necessary to determine whether cost-sharing requirements were applied
appropriately. Accordingly, the claim is eligible for external review
under paragraph (d)(1)(i) of this section.
(2) External review process standards. The Federal external review
process established pursuant to this paragraph (d) is considered similar
to the process set forth in the NAIC Uniform Model Act and, therefore
satisfies the requirements of paragraph (d)(2)) if such process provides
the following.
(i) Request for external review. A group health plan or health
insurance issuer must allow a claimant to file a request for an external
review with the plan or issuer if the request is filed within four
months after the date of receipt of a notice of an adverse benefit
determination or final internal adverse benefit determination. If there
is no corresponding date four months after the date of receipt of such a
notice, then the request must be filed by the first day of the fifth
month following the receipt of the notice. For example, if the date of
receipt of the notice is October 30, because there is no February 30,
the request must be filed by March 1. If the last filing date would fall
on a Saturday, Sunday, or Federal holiday, the last filing date is
extended to the next day that is not a Saturday, Sunday, or Federal
holiday.
(ii) Preliminary review--(A) In general. Within five business days
following the date of receipt of the external review request, the group
health plan or health insurance issuer must complete a preliminary
review of the request to determine whether:
(1) The claimant is or was covered under the plan or coverage at the
time the health care item or service was requested or, in the case of a
retrospective review, was covered under the plan or coverage at the time
the health care item or service was provided;
(2) The adverse benefit determination or the final adverse benefit
determination does not relate to the claimant's failure to meet the
requirements for eligibility under the terms of the group health plan or
health insurance coverage (e.g., worker classification or similar
determination);
(3) The claimant has exhausted the plan's or issuer's internal
appeal process unless the claimant is not required to exhaust the
internal appeals process under paragraph (b)(1) of this section; and
(4) The claimant has provided all the information and forms required
to process an external review.
(B) Within one business day after completion of the preliminary
review, the plan or issuer must issue a notification in writing to the
claimant. If the request is complete but not eligible for external
review, such notification must include the reasons for its ineligibility
and current contact information, including the phone number, for the
Employee Benefits Security Administration. If the request is not
complete, such notification must describe the information or materials
needed to make the request complete and the plan or issuer must allow a
claimant to perfect the request for external review within the four-
month filing period or within the 48 hour period following the receipt
of the notification, whichever is later.
(iii) Referral to Independent Review Organization--(A) In general.
The group health plan or health insurance issuer
[[Page 177]]
must assign an IRO that is accredited by URAC or by similar nationally-
recognized accrediting organization to conduct the external review. The
IRO referral process must provide for the following:
(1) The plan or issuer must ensure that the IRO process is not
biased and ensures independence;
(2) The plan or issuer must contract with at least three (3) IROs
for assignments under the plan or coverage and rotate claims assignments
among them (or incorporate other independent, unbiased methods for
selection of IROs, such as random selection); and
(3) The IRO may not be eligible for any financial incentives based
on the likelihood that the IRO will support the denial of benefits.
(4) The IRO process may not impose any costs, including filing fees,
on the claimant requesting the external review.
(B) IRO contracts. A group health plan or health insurance issuer
must include the following standards in the contract between the plan or
issuer and the IRO:
(1) The assigned IRO will utilize legal experts where appropriate to
make coverage determinations under the plan or coverage.
(2) The assigned IRO will timely notify a claimant in writing
whether the request is eligible for external review. This notice will
include a statement that the claimant may submit in writing to the
assigned IRO, within ten business days following the date of receipt of
the notice, additional information. This additional information must be
considered by the IRO when conducting the external review. The IRO is
not required to, but may, accept and consider additional information
submitted after ten business days.
(3) Within five business days after the date of assignment of the
IRO, the plan or issuer must provide to the assigned IRO the documents
and any information considered in making the adverse benefit
determination or final internal adverse benefit determination. Failure
by the plan or issuer to timely provide the documents and information
must not delay the conduct of the external review. If the plan or issuer
fails to timely provide the documents and information, the assigned IRO
may terminate the external review and make a decision to reverse the
adverse benefit determination or final internal adverse benefit
determination. Within one business day after making the decision, the
IRO must notify the claimant and the plan.
(4) Upon receipt of any information submitted by the claimant, the
assigned IRO must within one business day forward the information to the
plan or issuer. Upon receipt of any such information, the plan or issuer
may reconsider its adverse benefit determination or final internal
adverse benefit determination that is the subject of the external
review. Reconsideration by the plan or issuer must not delay the
external review. The external review may be terminated as a result of
the reconsideration only if the plan decides, upon completion of its
reconsideration, to reverse its adverse benefit determination or final
internal adverse benefit determination and provide coverage or payment.
Within one business day after making such a decision, the plan must
provide written notice of its decision to the claimant and the assigned
IRO. The assigned IRO must terminate the external review upon receipt of
the notice from the plan or issuer.
(5) The IRO will review all of the information and documents timely
received. In reaching a decision, the assigned IRO will review the claim
de novo and not be bound by any decisions or conclusions reached during
the plan's or issuer's internal claims and appeals process applicable
under paragraph (b). In addition to the documents and information
provided, the assigned IRO, to the extent the information or documents
are available and the IRO considers them appropriate, will consider the
following in reaching a decision:
(i) The claimant's medical records;
(ii) The attending health care professional's recommendation;
(iii) Reports from appropriate health care professionals and other
documents submitted by the plan or issuer, claimant, or the claimant's
treating provider;
(iv) The terms of the claimant's plan or coverage to ensure that the
IRO's
[[Page 178]]
decision is not contrary to the terms of the plan or coverage, unless
the terms are inconsistent with applicable law;
(v) Appropriate practice guidelines, which must include applicable
evidence-based standards and may include any other practice guidelines
developed by the Federal government, national or professional medical
societies, boards, and associations;
(vi) Any applicable clinical review criteria developed and used by
the plan or issuer, unless the criteria are inconsistent with the terms
of the plan or coverage or with applicable law; and
(vii) To the extent the final IRO decision maker is different from
the IRO's clinical reviewer, the opinion of such clinical reviewer,
after considering information described in this notice, to the extent
the information or documents are available and the clinical reviewer or
reviewers consider such information or documents appropriate.
(6) The assigned IRO must provide written notice of the final
external review decision within 45 days after the IRO receives the
request for the external review. The IRO must deliver the notice of the
final external review decision to the claimant and the plan or issuer.
(7) The assigned IRO's written notice of the final external review
decision must contain the following:
(i) A general description of the reason for the request for external
review, including information sufficient to identify the claim
(including the date or dates of service, the health care provider, the
claim amount (if applicable), and a statement describing the
availability, upon request, of the diagnosis code and its corresponding
meaning, the treatment code and its corresponding meaning, and the
reason for the plan's or issuer's denial);
(ii) The date the IRO received the assignment to conduct the
external review and the date of the IRO decision;
(iii) References to the evidence or documentation, including the
specific coverage provisions and evidence-based standards, considered in
reaching its decision;
(iv) A discussion of the principal reason or reasons for its
decision, including the rationale for its decision and any evidence-
based standards that were relied on in making its decision;
(v) A statement that the IRO's determination is binding except to
the extent that other remedies may be available under State or Federal
law to either the group health plan or health insurance issuer or to the
claimant, or to the extent the health plan or health insurance issuer
voluntarily makes payment on the claim or otherwise provides benefits at
any time, including after a final external review decision that denies
the claim or otherwise fails to require such payment or benefits;
(vi) A statement that judicial review may be available to the
claimant; and
(vii) Current contact information, including phone number, for any
applicable office of health insurance consumer assistance or ombudsman
established under PHS Act section 2793.
(viii) After a final external review decision, the IRO must maintain
records of all claims and notices associated with the external review
process for six years. An IRO must make such records available for
examination by the claimant, plan, issuer, or State or Federal oversight
agency upon request, except where such disclosure would violate State or
Federal privacy laws.
(iv) Reversal of plan's or issuer's decision. Upon receipt of a
notice of a final external review decision reversing the adverse benefit
determination or final adverse benefit determination, the plan or issuer
immediately must provide coverage or payment (including immediately
authorizing care or immediately paying benefits) for the claim.
(3) Expedited external review. A group health plan or health
insurance issuer must comply with the following standards with respect
to an expedited external review:
(i) Request for external review. A group health plan or health
insurance issuer must allow a claimant to make a request for an
expedited external review with the plan or issuer at the time the
claimant receives:
(A) An adverse benefit determination if the adverse benefit
determination involves a medical condition of the claimant for which the
timeframe for completion of an expedited internal appeal under paragraph
(b) of this section would seriously jeopardize the life or
[[Page 179]]
health of the claimant or would jeopardize the claimant's ability to
regain maximum function and the claimant has filed a request for an
expedited internal appeal; or
(B) A final internal adverse benefit determination, if the claimant
has a medical condition where the timeframe for completion of a standard
external review would seriously jeopardize the life or health of the
claimant or would jeopardize the claimant's ability to regain maximum
function, or if the final internal adverse benefit determination
concerns an admission, availability of care, continued stay, or health
care item or service for which the claimant received emergency services,
but has not been discharged from the facility.
(ii) Preliminary review. Immediately upon receipt of the request for
expedited external review, the plan or issuer must determine whether the
request meets the reviewability requirements set forth in paragraph
(d)(2)(ii) of this section for standard external review. The plan or
issuer must immediately send a notice that meets the requirements set
forth in paragraph (d)(2)(ii)(B) for standard review to the claimant of
its eligibility determination.
(iii) Referral to independent review organization. (A) Upon a
determination that a request is eligible for expedited external review
following the preliminary review, the plan or issuer will assign an IRO
pursuant to the requirements set forth in paragraph (d)(2)(iii) of this
section for standard review. The plan or issuer must provide or transmit
all necessary documents and information considered in making the adverse
benefit determination or final internal adverse benefit determination to
the assigned IRO electronically or by telephone or facsimile or any
other available expeditious method.
(B) The assigned IRO, to the extent the information or documents are
available and the IRO considers them appropriate, must consider the
information or documents described above under the procedures for
standard review. In reaching a decision, the assigned IRO must review
the claim de novo and is not bound by any decisions or conclusions
reached during the plan's or issuer's internal claims and appeals
process.
(iv) Notice of final external review decision. The plan's or
issuer's contract with the assigned IRO must require the IRO to provide
notice of the final external review decision, in accordance with the
requirements set forth in paragraph (d)(2)(iii)(B) of this section, as
expeditiously as the claimant's medical condition or circumstances
require, but in no event more than 72 hours after the IRO receives the
request for an expedited external review. If the notice is not in
writing, within 48 hours after the date of providing that notice, the
assigned IRO must provide written confirmation of the decision to the
claimant and the plan or issuer.
(4) Alternative, Federally-administered external review process.
Insured coverage not subject to an applicable State external review
process under paragraph (c) of this section and a self-insured
nonfederal governmental plan may elect to use either the Federal
external review process, as set forth under paragraph (d) of this
section or the Federally-administered external review process, as set
forth by HHS in guidance. In such circumstances, the requirement to
provide external review under this paragraph (d) is satisfied.
(e) Form and manner of notice--(1) In general. For purposes of this
section, a group health plan and a health insurance issuer offering
group or individual health insurance coverage are considered to provide
relevant notices in a culturally and linguistically appropriate manner
if the plan or issuer meets all the requirements of paragraph (e)(2) of
this section with respect to the applicable non-English languages
described in paragraph (e)(3) of this section.
(2) Requirements. (i) The plan or issuer must provide oral language
services (such as a telephone customer assistance hotline) that includes
answering questions in any applicable non-English language and providing
assistance with filing claims and appeals (including external review) in
any applicable non-English language;
(ii) The plan or issuer must provide, upon request, a notice in any
applicable non-English language; and
[[Page 180]]
(iii) The plan or issuer must include in the English versions of all
notices, a statement prominently displayed in any applicable non-English
language clearly indicating how to access the language services provided
by the plan or issuer.
(3) Applicable non-English language. With respect to an address in
any United States county to which a notice is sent, a non-English
language is an applicable non-English language if ten percent or more of
the population residing in the county is literate only in the same non-
English language, as determined in guidance published by the Secretary.
(f) Secretarial authority. The Secretary may determine that the
external review process of a group health plan or health insurance
issuer, in operation as of March 23, 2010, is considered in compliance
with the applicable process established under paragraph (c) or (d) of
this section if it substantially meets the requirements of paragraph (c)
or (d) of this section, as applicable.
(g) Applicability date. The provisions of this section generally are
applicable to group health plans and health insurance issuers for plan
years (in the individual market, policy years) beginning on or after
January 1, 2017. The external review scope provision at paragraph
(d)(1)(i)(B) of this section is applicable for plan years (in the
individual market, policy years) beginning on or after January 1, 2022.
The external review provisions described in paragraphs (c) and (d) of
this section are applicable to grandfathered health plans and
grandfathered individual market policies, with respect to the types of
claims specified under paragraph (a)(1)(ii) of this section, for plan
years (in the individual market, policy years) beginning on or after
January 1, 2022.
[80 FR 72278, Nov. 18, 2015, as amended at 86 FR 56122, Oct. 7, 2021]
Sec. 147.138 Patient protections.
(a) Choice of health care professional--(1) Designation of primary
care provider--(i) In general. If a group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
requires or provides for designation by a participant, beneficiary, or
enrollee of a participating primary care provider, then the plan or
issuer must permit each participant, beneficiary, or enrollee to
designate any participating primary care provider who is available to
accept the participant, beneficiary, or enrollee. In such a case, the
plan or issuer must comply with the rules of paragraph (a)(4) of this
section by informing each participant (in the individual market, primary
subscriber) of the terms of the plan or health insurance coverage
regarding designation of a primary care provider.
(ii) Construction. Nothing in paragraph (a)(1)(i) of this section is
to be construed to prohibit the application of reasonable and
appropriate geographic limitations with respect to the selection of
primary care providers, in accordance with the terms of the plan or
coverage, the underlying provider contracts, and applicable State law.
(iii) Example. The rules of this paragraph (a)(1) are illustrated by
the following example:
Example --(i) Facts. A group health plan requires individuals
covered under the plan to designate a primary care provider. The plan
permits each individual to designate any primary care provider
participating in the plan's network who is available to accept the
individual as the individual's primary care provider. If an individual
has not designated a primary care provider, the plan designates one
until one has been designated by the individual. The plan provides a
notice that satisfies the requirements of paragraph (a)(4) of this
section regarding the ability to designate a primary care provider.
(ii) Conclusion. In this Example, the plan has satisfied the
requirements of paragraph (a) of this section.
(2) Designation of pediatrician as primary care provider--(i) In
general. If a group health plan, or a health insurance issuer offering
group or individual health insurance coverage, requires or provides for
the designation of a participating primary care provider for a child by
a participant, beneficiary, or enrollee, the plan or issuer must permit
the participant, beneficiary, or enrollee to designate a physician
(allopathic or osteopathic) who specializes in pediatrics (including
pediatric subspecialties, based on the scope of that provider's license
under applicable State law) as the child's primary care provider if the
provider participates in
[[Page 181]]
the network of the plan or issuer and is available to accept the child.
In such a case, the plan or issuer must comply with the rules of
paragraph (a)(4) of this section by informing each participant (in the
individual market, primary subscriber) of the terms of the plan or
health insurance coverage regarding designation of a pediatrician as the
child's primary care provider.
(ii) Construction. Nothing in paragraph (a)(2)(i) of this section is
to be construed to waive any exclusions of coverage under the terms and
conditions of the plan or health insurance coverage with respect to
coverage of pediatric care.
(iii) Examples. The rules of this paragraph (a)(2) are illustrated
by the following examples:
Example 1 --(i) Facts. A group health plan's HMO designates for each
participant a physician who specializes in internal medicine to serve as
the primary care provider for the participant and any beneficiaries.
Participant A requests that Pediatrician B be designated as the primary
care provider for A's child. B is a participating provider in the HMO's
network and is available to accept the child.
(ii) Conclusion. In this Example 1, the HMO must permit A's
designation of B as the primary care provider for A's child in order to
comply with the requirements of this paragraph (a)(2).
Example 2 --(i) Facts. Same facts as Example 1, except that A takes
A's child to B for treatment of the child's severe shellfish allergies.
B wishes to refer A's child to an allergist for treatment. The HMO,
however, does not provide coverage for treatment of food allergies, nor
does it have an allergist participating in its network, and it therefore
refuses to authorize the referral.
(ii) Conclusion. In this Example 2, the HMO has not violated the
requirements of this paragraph (a)(2) because the exclusion of treatment
for food allergies is in accordance with the terms of A's coverage.
(3) Patient access to obstetrical and gynecological care--(i)
General rights--(A) Direct access. A group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
described in paragraph (a)(3)(ii) of this section may not require
authorization or referral by the plan, issuer, or any person (including
a primary care provider) in the case of a female participant,
beneficiary, or enrollee who seeks coverage for obstetrical or
gynecological care provided by a participating health care professional
who specializes in obstetrics or gynecology. In such a case, the plan or
issuer must comply with the rules of paragraph (a)(4) of this section by
informing each participant (in the individual market, primary
subscriber) that the plan may not require authorization or referral for
obstetrical or gynecological care by a participating health care
professional who specializes in obstetrics or gynecology. The plan or
issuer may require such a professional to agree to otherwise adhere to
the plan's or issuer's policies and procedures, including procedures
regarding referrals and obtaining prior authorization and providing
services pursuant to a treatment plan (if any) approved by the plan or
issuer. For purposes of this paragraph (a)(3), a health care
professional who specializes in obstetrics or gynecology is any
individual (including a person other than a physician) who is authorized
under applicable State law to provide obstetrical or gynecological care.
(B) Obstetrical and gynecological care. A group health plan or
health insurance issuer described in paragraph (a)(3)(ii) of this
section must treat the provision of obstetrical and gynecological care,
and the ordering of related obstetrical and gynecological items and
services, pursuant to the direct access described under paragraph
(a)(3)(i)(A) of this section, by a participating health care
professional who specializes in obstetrics or gynecology as the
authorization of the primary care provider.
(ii) Application of paragraph. A group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
is described in this paragraph (a)(3) if the plan or issuer--
(A) Provides coverage for obstetrical or gynecological care; and
(B) Requires the designation by a participant, beneficiary, or
enrollee of a participating primary care provider.
(iii) Construction. Nothing in paragraph (a)(3)(i) of this section
is to be construed to--
(A) Waive any exclusions of coverage under the terms and conditions
of the plan or health insurance coverage with
[[Page 182]]
respect to coverage of obstetrical or gynecological care; or
(B) Preclude the group health plan or health insurance issuer
involved from requiring that the obstetrical or gynecological provider
notify the primary care health care professional or the plan or issuer
of treatment decisions.
(iv) Examples. The rules of this paragraph (a)(3) are illustrated by
the following examples:
Example 1 --(i) Facts. A group health plan requires each participant
to designate a physician to serve as the primary care provider for the
participant and the participant's family. Participant A, a female,
requests a gynecological exam with Physician B, an in-network physician
specializing in gynecological care. The group health plan requires prior
authorization from A's designated primary care provider for the
gynecological exam.
(ii) Conclusion. In this Example 1, the group health plan has
violated the requirements of this paragraph (a)(3) because the plan
requires prior authorization from A's primary care provider prior to
obtaining gynecological services.
Example 2 --(i) Facts. Same facts as Example 1 except that A seeks
gynecological services from C, an out-of-network provider.
(ii) Conclusion. In this Example 2, the group health plan has not
violated the requirements of this paragraph (a)(3) by requiring prior
authorization because C is not a participating health care provider.
Example 3 --(i) Facts. Same facts as Example 1 except that the group
health plan only requires B to inform A's designated primary care
physician of treatment decisions.
(ii) Conclusion. In this Example 3, the group health plan has not
violated the requirements of this paragraph (a)(3) because A has direct
access to B without prior authorization. The fact that the group health
plan requires notification of treatment decisions to the designated
primary care physician does not violate this paragraph (a)(3).
Example 4 --(i) Facts. A group health plan requires each participant
to designate a physician to serve as the primary care provider for the
participant and the participant's family. The group health plan requires
prior authorization before providing benefits for uterine fibroid
embolization.
(ii) Conclusion. In this Example 4, the plan requirement for prior
authorization before providing benefits for uterine fibroid embolization
does not violate the requirements of this paragraph (a)(3) because,
though the prior authorization requirement applies to obstetrical
services, it does not restrict access to any providers specializing in
obstetrics or gynecology.
(4) Notice of right to designate a primary care provider--(i) In
general. If a group health plan or health insurance issuer requires the
designation by a participant, beneficiary, or enrollee of a primary care
provider, the plan or issuer must provide a notice informing each
participant (in the individual market, primary subscriber) of the terms
of the plan or health insurance coverage regarding designation of a
primary care provider and of the rights--
(A) Under paragraph (a)(1)(i) of this section, that any
participating primary care provider who is available to accept the
participant, beneficiary, or enrollee can be designated;
(B) Under paragraph (a)(2)(i) of this section, with respect to a
child, that any participating physician who specializes in pediatrics
can be designated as the primary care provider; and
(C) Under paragraph (a)(3)(i) of this section, that the plan may not
require authorization or referral for obstetrical or gynecological care
by a participating health care professional who specializes in
obstetrics or gynecology.
(ii) Timing. In the case of a group health plan or group health
insurance coverage, the notice described in paragraph (a)(4)(i) of this
section must be included whenever the plan or issuer provides a
participant with a summary plan description or other similar description
of benefits under the plan or health insurance coverage. In the case of
individual health insurance coverage, the notice described in paragraph
(a)(4)(i) of this section must be included whenever the issuer provides
a primary subscriber with a policy, certificate, or contract of health
insurance.
(iii) Model language. The following model language can be used to
satisfy the notice requirement described in paragraph (a)(4)(i) of this
section:
(A) For plans and issuers that require or allow for the designation
of primary care providers by participants, beneficiaries, or enrollees,
insert:
[Name of group health plan or health insurance issuer] generally
[requires/allows] the designation of a primary care provider. You have
the right to designate any primary care provider who participates in our
network and who is available to accept you or
[[Page 183]]
your family members. [If the plan or health insurance coverage
designates a primary care provider automatically, insert: Until you make
this designation, [name of group health plan or health insurance issuer]
designates one for you.] For information on how to select a primary care
provider, and for a list of the participating primary care providers,
contact the [plan administrator or issuer] at [insert contact
information].
(B) For plans and issuers that require or allow for the designation
of a primary care provider for a child, add:
For children, you may designate a pediatrician as the primary care
provider.
(C) For plans and issuers that provide coverage for obstetric or
gynecological care and require the designation by a participant,
beneficiary, or enrollee of a primary care provider, add:
You do not need prior authorization from [name of group health plan
or issuer] or from any other person (including a primary care provider)
in order to obtain access to obstetrical or gynecological care from a
health care professional in our network who specializes in obstetrics or
gynecology. The health care professional, however, may be required to
comply with certain procedures, including obtaining prior authorization
for certain services, following a pre-approved treatment plan, or
procedures for making referrals. For a list of participating health care
professionals who specialize in obstetrics or gynecology, contact the
[plan administrator or issuer] at [insert contact information].
(b) Coverage of emergency services--(1) Scope. If a group health
plan, or a health insurance issuer offering group or individual health
insurance coverage, provides any benefits with respect to services in an
emergency department of a hospital, the plan or issuer must cover
emergency services (as defined in paragraph (b)(4)(ii) of this section)
consistent with the rules of this paragraph (b).
(2) General rules. A plan or issuer subject to the requirements of
this paragraph (b) must provide coverage for emergency services in the
following manner--
(i) Without the need for any prior authorization determination, even
if the emergency services are provided on an out-of-network basis;
(ii) Without regard to whether the health care provider furnishing
the emergency services is a participating network provider with respect
to the services;
(iii) If the emergency services are provided out of network, without
imposing any administrative requirement or limitation on coverage that
is more restrictive than the requirements or limitations that apply to
emergency services received from in-network providers;
(iv) If the emergency services are provided out of network, by
complying with the cost-sharing requirements of paragraph (b)(3) of this
section; and
(v) Without regard to any other term or condition of the coverage,
other than--
(A) The exclusion of or coordination of benefits;
(B) An affiliation or waiting period permitted under part 7 of
ERISA, part A of title XXVII of the PHS Act, or chapter 100 of the
Internal Revenue Code; or
(C) Applicable cost sharing.
(3) Cost-sharing requirements--(i) Copayments and coinsurance. Any
cost-sharing requirement expressed as a copayment amount or coinsurance
rate imposed with respect to a participant, beneficiary, or enrollee for
out-of-network emergency services cannot exceed the cost-sharing
requirement imposed with respect to a participant, beneficiary, or
enrollee if the services were provided in-network. However, a
participant, beneficiary, or enrollee may be required to pay, in
addition to the in-network cost-sharing, the excess of the amount the
out-of-network provider charges over the amount the plan or issuer is
required to pay under this paragraph (b)(3)(i). A group health plan or
health insurance issuer complies with the requirements of this paragraph
(b)(3) if it provides benefits with respect to an emergency service in
an amount at least equal to the greatest of the three amounts specified
in paragraphs (b)(3)(i)(A),(B), and (C) of this section (which are
adjusted for in-network cost-sharing requirements).
(A) The amount negotiated with in-network providers for the
emergency service furnished, excluding any in-network copayment or
coinsurance imposed with respect to the participant, beneficiary, or
enrollee. If there is more than one amount negotiated with
[[Page 184]]
in-network providers for the emergency service, the amount described
under this paragraph (b)(3)(i)(A) is the median of these amounts,
excluding any in-network copayment or coinsurance imposed with respect
to the participant, beneficiary, or enrollee. In determining the median
described in the preceding sentence, the amount negotiated with each in-
network provider is treated as a separate amount (even if the same
amount is paid to more than one provider). If there is no per-service
amount negotiated with in-network providers (such as under a capitation
or other similar payment arrangement), the amount under this paragraph
(b)(3)(i)(A) is disregarded.
(B) The amount for the emergency service calculated using the same
method the plan generally uses to determine payments for out-of-network
services (such as the usual, customary, and reasonable amount),
excluding any in-network copayment or coinsurance imposed with respect
to the participant, beneficiary, or enrollee. The amount in this
paragraph (b)(3)(i)(B) is determined without reduction for out-of-
network cost sharing that generally applies under the plan or health
insurance coverage with respect to out-of-network services. Thus, for
example, if a plan generally pays 70 percent of the usual, customary,
and reasonable amount for out-of-network services, the amount in this
paragraph (b)(3)(i)(B) for an emergency service is the total (that is,
100 percent) of the usual, customary, and reasonable amount for the
service, not reduced by the 30 percent coinsurance that would generally
apply to out-of-network services (but reduced by the in-network
copayment or coinsurance that the individual would be responsible for if
the emergency service had been provided in-network).
(C) The amount that would be paid under Medicare (part A or part B
of title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.) for
the emergency service, excluding any in-network copayment or coinsurance
imposed with respect to the participant, beneficiary, or enrollee.
(ii) Other cost sharing. Any cost-sharing requirement other than a
copayment or coinsurance requirement (such as a deductible or out-of-
pocket maximum) may be imposed with respect to emergency services
provided out of network if the cost-sharing requirement generally
applies to out-of-network benefits. A deductible may be imposed with
respect to out-of-network emergency services only as part of a
deductible that generally applies to out-of-network benefits. If an out-
of-pocket maximum generally applies to out-of-network benefits, that
out-of-pocket maximum must apply to out-of-network emergency services.
(iii) Special rules regarding out-of-network minimum payment
standards. (A) The minimum payment standards set forth under paragraph
(b)(3) of this section do not apply in cases where State law prohibits a
participant, beneficiary, or enrollee from being required to pay, in
addition to the in-network cost sharing, the excess of the amount the
out-of-network provider charges over the amount the plan or issuer
provides in benefits, or where a group health plan or health insurance
issuer is contractually responsible for such amounts. Nonetheless, in
such cases, a plan or issuer may not impose any copayment or coinsurance
requirement for out-of-network emergency services that is higher than
the copayment or coinsurance requirement that would apply if the
services were provided in network.
(B) A group health plan and health insurance issuer must provide a
participant, beneficiary, or enrollee adequate and prominent notice of
their lack of financial responsibility with respect to the amounts
described under this paragraph (b)(3)(iii), to prevent inadvertent
payment by the participant, beneficiary, or enrollee.
(iv) Examples. The rules of this paragraph (b)(3) are illustrated by
the following examples. In all of these examples, the group health plan
covers benefits with respect to emergency services.
Example 1 --(i) Facts. A group health plan imposes a 25% coinsurance
responsibility on individuals who are furnished emergency services,
whether provided in network or out of network. If a covered individual
notifies the plan within two business days after the day an individual
receives treatment in an emergency department, the plan reduces the
coinsurance rate to 15%.
[[Page 185]]
(ii) Conclusion. In this Example 1, the requirement to notify the
plan in order to receive a reduction in the coinsurance rate does not
violate the requirement that the plan cover emergency services without
the need for any prior authorization determination. This is the result
even if the plan required that it be notified before or at the time of
receiving services at the emergency department in order to receive a
reduction in the coinsurance rate.
Example 2 --(i) Facts. A group health plan imposes a $60 copayment
on emergency services without preauthorization, whether provided in
network or out of network. If emergency services are preauthorized, the
plan waives the copayment, even if it later determines the medical
condition was not an emergency medical condition.
(ii) Conclusion. In this Example 2, by requiring an individual to
pay more for emergency services if the individual does not obtain prior
authorization, the plan violates the requirement that the plan cover
emergency services without the need for any prior authorization
determination. (By contrast, if, to have the copayment waived, the plan
merely required that it be notified rather than a prior authorization,
then the plan would not violate the requirement that the plan cover
emergency services without the need for any prior authorization
determination.)
Example 3 --(i) Facts. A group health plan covers individuals who
receive emergency services with respect to an emergency medical
condition from an out-of-network provider. The plan has agreements with
in-network providers with respect to a certain emergency service. Each
provider has agreed to provide the service for a certain amount. Among
all the providers for the service: One has agreed to accept $85, two
have agreed to accept $100, two have agreed to accept $110, three have
agreed to accept $120, and one has agreed to accept $150. Under the
agreement, the plan agrees to pay the providers 80% of the agreed
amount, with the individual receiving the service responsible for the
remaining 20%.
(ii) Conclusion. In this Example 3, the values taken into account in
determining the median are $85, $100, $100, $110, $110, $120, $120,
$120, and $150. Therefore, the median amount among those agreed to for
the emergency service is $110, and the amount under paragraph
(b)(3)(i)(A) of this section is 80% of $110 ($88).
Example 4 --(i) Facts. Same facts as Example 3. Subsequently, the
plan adds another provider to its network, who has agreed to accept $150
for the emergency service.
(ii) Conclusion. In this Example 4, the median amount among those
agreed to for the emergency service is $115. (Because there is no one
middle amount, the median is the average of the two middle amounts, $110
and $120.) Accordingly, the amount under paragraph (b)(3)(i)(A) of this
section is 80% of $115 ($92).
Example 5 --(i) Facts. Same facts as Example 4. An individual
covered by the plan receives the emergency service from an out-of-
network provider, who charges $125 for the service. With respect to
services provided by out-of-network providers generally, the plan
reimburses covered individuals 50% of the reasonable amount charged by
the provider for medical services. For this purpose, the reasonable
amount for any service is based on information on charges by all
providers collected by a third party, on a zip code by zip code basis,
with the plan treating charges at a specified percentile as reasonable.
For the emergency service received by the individual, the reasonable
amount calculated using this method is $116. The amount that would be
paid under Medicare for the emergency service, excluding any copayment
or coinsurance for the service, is $80.
(ii) Conclusion. In this Example 5, the plan is responsible for
paying $92.80, 80% of $116. The median amount among those agreed to for
the emergency service is $115 and the amount the plan would pay is $92
(80% of $115); the amount calculated using the same method the plan uses
to determine payments for out-of-network services--$116--excluding the
in-network 20% coinsurance, is $92.80; and the Medicare payment is $80.
Thus, the greatest amount is $92.80. The individual is responsible for
the remaining $32.20 charged by the out-of-network provider.
Example 6 --(i) Facts. Same facts as Example 5. The group health
plan generally imposes a $250 deductible for in-network health care.
With respect to all health care provided by out-of-network providers,
the plan imposes a $500 deductible. (Covered in-network claims are
credited against the deductible.) The individual has incurred and
submitted $260 of covered claims prior to receiving the emergency
service out of network.
(ii) Conclusion. In this Example 6, the plan is not responsible for
paying anything with respect to the emergency service furnished by the
out-of-network provider because the covered individual has not satisfied
the higher deductible that applies generally to all health care provided
out of network. However, the amount the individual is required to pay is
credited against the deductible.
(4) Definitions. The definitions in this paragraph (b)(4) govern in
applying the provisions of this paragraph (b).
(i) Emergency medical condition. The term emergency medical
condition means a medical condition manifesting itself by acute symptoms
of sufficient severity (including severe pain) so that a prudent
layperson, who possesses an
[[Page 186]]
average knowledge of health and medicine, could reasonably expect the
absence of immediate medical attention to result in a condition
described in clause (i), (ii), or (iii) of section 1867(e)(1)(A) of the
Social Security Act (42 U.S.C. 1395dd(e)(1)(A)). (In that provision of
the Social Security Act, clause (i) refers to placing the health of the
individual (or, with respect to a pregnant woman, the health of the
woman or her unborn child) in serious jeopardy; clause (ii) refers to
serious impairment to bodily functions; and clause (iii) refers to
serious dysfunction of any bodily organ or part.)
(ii) Emergency services. The term emergency services means, with
respect to an emergency medical condition--
(A) A medical screening examination (as required under section 1867
of the Social Security Act, 42 U.S.C. 1395dd) that is within the
capability of the emergency department of a hospital, including
ancillary services routinely available to the emergency department to
evaluate such emergency medical condition, and
(B) Such further medical examination and treatment, to the extent
they are within the capabilities of the staff and facilities available
at the hospital, as are required under section 1867 of the Social
Security Act (42 U.S.C. 1395dd) to stabilize the patient.
(iii) Stabilize. The term to stabilize, with respect to an emergency
medical condition (as defined in paragraph (b)(4)(i) of this section)
has the meaning given in section 1867(e)(3) of the Social Security Act
(42 U.S.C. 1395dd(e)(3)).
(c) Applicability date. The provisions of this section are
applicable to group health plans and health insurance issuers for plan
years (in the individual market, policy years) beginning before January
1, 2022. See also subparts B and D of part 149 of this subchapter for
rules applicable with respect to plan years (in the individual market,
policy years) beginning on or after January 1, 2022.
[80 FR 72286, Nov. 18, 2015, as amended at 86 FR 36970, July 13, 2021]
Sec. 147.140 Preservation of right to maintain existing coverage.
(a) Definition of grandfathered health plan coverage--(1) In
general--(i) Grandfathered health plan coverage means coverage provided
by a group health plan, or a group or individual health insurance
issuer, in which an individual was enrolled on March 23, 2010 (for as
long as it maintains that status under the rules of this section). A
group health plan or group health insurance coverage does not cease to
be grandfathered health plan coverage merely because one or more (or
even all) individuals enrolled on March 23, 2010 cease to be covered,
provided that the plan or group health insurance coverage has
continuously covered someone since March 23, 2010 (not necessarily the
same person, but at all times at least one person). In addition, subject
to the limitation set forth in paragraph (a)(1)(ii) of this section, a
group health plan (and any health insurance coverage offered in
connection with the group health plan) does not cease to be a
grandfathered health plan merely because the plan (or its sponsor)
enters into a new policy, certificate, or contract of insurance after
March 23, 2010 (for example, a plan enters into a contract with a new
issuer or a new policy is issued with an existing issuer). For purposes
of this section, a plan or health insurance coverage that provides
grandfathered health plan coverage is referred to as a grandfathered
health plan. The rules of this section apply separately to each benefit
package made available under a group health plan or health insurance
coverage. Accordingly, if any benefit package relinquishes grandfather
status, it will not affect the grandfather status of the other benefit
packages.
(ii) Changes in group health insurance coverage. Subject to
paragraphs (f) and (g)(2) of this section, if a group health plan
(including a group health plan that was self-insured on March 23, 2010)
or its sponsor enters into a new policy, certificate, or contract of
insurance after March 23, 2010 that is effective before November 15,
2010, then the plan ceases to be a grandfathered health plan.
(2) Disclosure of grandfather status. (i) To maintain status as a
grandfathered
[[Page 187]]
health plan, a plan or health insurance coverage must include a
statement that the plan or coverage believes it is a grandfathered
health plan within the meaning of section 1251 of the Patient Protection
and Affordable Care Act, and must provide contact information for
questions and complaints, in any summary of benefits provided under the
plan.
(ii) The following model language can be used to satisfy this
disclosure requirement:
This [group health plan or health insurance issuer] believes this
[plan or coverage] is a ``grandfathered health plan'' under the Patient
Protection and Affordable Care Act (the Affordable Care Act). As
permitted by the Affordable Care Act, a grandfathered health plan can
preserve certain basic health coverage that was already in effect when
that law was enacted. Being a grandfathered health plan means that your
[plan or policy] may not include certain consumer protections of the
Affordable Care Act that apply to other plans, for example, the
requirement for the provision of preventive health services without any
cost sharing. However, grandfathered health plans must comply with
certain other consumer protections in the Affordable Care Act, for
example, the elimination of lifetime dollar limits on benefits.
Questions regarding which protections apply and which protections do
not apply to a grandfathered health plan and what might cause a plan to
change from grandfathered health plan status can be directed to the plan
administrator at [insert contact information]. [For ERISA plans, insert:
You may also contact the Employee Benefits Security Administration, U.S.
Department of Labor at 1-866-444-3272 or www.dol.gov/ebsa/healthreform.
This Web site has a table summarizing which protections do and do not
apply to grandfathered health plans.] [For individual market policies
and nonfederal governmental plans, insert: You may also contact the U.S.
Department of Health and Human Services at www.healthcare.gov.]
(3)(i) Documentation of plan or policy terms on March 23, 2010. To
maintain status as a grandfathered health plan, a group health plan, or
group or individual health insurance coverage, must, for as long as the
plan or health insurance coverage takes the position that it is a
grandfathered health plan--
(A) Maintain records documenting the terms of the plan or health
insurance coverage in connection with the coverage in effect on March
23, 2010, and any other documents necessary to verify, explain, or
clarify its status as a grandfathered health plan; and
(B) Make such records available for examination upon request.
(ii) Change in group health insurance coverage. To maintain status
as a grandfathered health plan, a group health plan that enters into a
new policy, certificate, or contract of insurance must provide to the
new health insurance issuer (and the new health insurance issuer must
require) documentation of plan terms (including benefits, cost sharing,
employer contributions, and annual dollar limits) under the prior health
coverage sufficient to determine whether a change causing a cessation of
grandfathered health plan status under paragraph (g)(1) of this section
has occurred.
(4) Family members enrolling after March 23, 2010. With respect to
an individual who is enrolled in a group health plan or health insurance
coverage on March 23, 2010, grandfathered health plan coverage includes
coverage of family members of the individual who enroll after March 23,
2010 in the grandfathered health plan coverage of the individual.
(b) Allowance for new employees to join current plan--(1) In
general. Subject to paragraph (b)(2) of this section, a group health
plan (including health insurance coverage provided in connection with
the group health plan) that provided coverage on March 23, 2010 and has
retained its status as a grandfathered health plan (consistent with the
rules of this section, including paragraph (g) of this section) is
grandfathered health plan coverage for new employees (whether newly
hired or newly enrolled) and their families enrolling in the plan after
March 23, 2010. Further, the addition of a new contributing employer or
new group of employees of an existing contributing employer to a
grandfathered multiemployer health plan will not affect the plan's
grandfather status.
(2) Anti-abuse rules--(i) Mergers and acquisitions. If the principal
purpose of a merger, acquisition, or similar business restructuring is
to cover new individuals under a grandfathered health plan, the plan
ceases to be a grandfathered health plan.
[[Page 188]]
(ii) Change in plan eligibility. A group health plan or health
insurance coverage (including a benefit package under a group health
plan) ceases to be a grandfathered health plan if--
(A) Employees are transferred into the plan or health insurance
coverage (the transferee plan) from a plan or health insurance coverage
under which the employees were covered on March 23, 2010 (the transferor
plan);
(B) Comparing the terms of the transferee plan with those of the
transferor plan (as in effect on March 23, 2010) and treating the
transferee plan as if it were an amendment of the transferor plan would
cause a loss of grandfather status under the provisions of paragraph
(g)(1) of this section; and
(C) There was no bona fide employment-based reason to transfer the
employees into the transferee plan. For this purpose, changing the terms
or cost of coverage is not a bona fide employment-based reason.
(iii) Illustrative list of bona fide employment-based reasons. For
purposes of this paragraph (b)(2)(ii)(C), bona fide employment-based
reasons include--
(A) When a benefit package is being eliminated because the issuer is
exiting the market;
(B) When a benefit package is being eliminated because the issuer no
longer offers the product to the employer;
(C) When low or declining participation by plan participants in the
benefit package makes it impractical for the plan sponsor to continue to
offer the benefit package;
(D) When a benefit package is eliminated from a multiemployer plan
as agreed upon as part of the collective bargaining process; or
(E) When a benefit package is eliminated for any reason and multiple
benefit packages covering a significant portion of other employees
remain available to the employees being transferred.
(3) Examples. The rules of this paragraph (b) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan offers two benefit
packages on March 23, 2010, Options F and G. During a subsequent open
enrollment period, some of the employees enrolled in Option F on March
23, 2010 switch to Option G.
(ii) Conclusion. In this Example 1, the group health coverage
provided under Option G remains a grandfathered health plan under the
rules of paragraph (b)(1) of this section because employees previously
enrolled in Option F are allowed to enroll in Option G as new employees.
Example 2. (i) Facts. A group health plan offers two benefit
packages on March 23, 2010, Options H and I. On March 23, 2010, Option H
provides coverage only for employees in one manufacturing plant.
Subsequently, the plant is closed, and some employees in the closed
plant are moved to another plant. The employer eliminates Option H and
the employees that are moved are transferred to Option I. If instead of
transferring employees from Option H to Option I, Option H was amended
to match the terms of Option I, then Option H would cease to be a
grandfathered health plan.
(ii) Conclusion. In this Example 2, the plan has a bona fide
employment-based reason to transfer employees from Option H to Option I.
Therefore, Option I does not cease to be a grandfathered health plan.
(c) General grandfathering rule. (1) Except as provided in
paragraphs (d) and (e) of this section, subtitles A and C of title I of
the Patient Protection and Affordable Care Act (and the amendments made
by those subtitles, and the incorporation of those amendments into ERISA
section 715 and Internal Revenue Code section 9815) do not apply to
grandfathered health plan coverage. Accordingly, the provisions of PHS
Act sections 2701, 2702, 2703, 2705, 2706, 2707, 2709 (relating to
coverage for individuals participating in approved clinical trials, as
added by section 10103 of the Patient Protection and Affordable Care
Act), 2713, 2715A, 2716, 2717, 2719, and 2719A, as added or amended by
the Patient Protection and Affordable Care Act, do not apply to
grandfathered health plans. In addition, the provisions of PHS Act
section 2704, and PHS Act section 2711 insofar as it relates to annual
dollar limits, do not apply to grandfathered health plans that are
individual health insurance coverage.
(2) To the extent not inconsistent with the rules applicable to a
grandfathered health plan, a grandfathered health plan must comply with
the requirements of the PHS Act, ERISA, and the Internal Revenue Code
applicable prior to the changes enacted by the
[[Page 189]]
Patient Protection and Affordable Care Act.
(d) Provisions applicable to all grandfathered health plans. The
provisions of PHS Act section 2711 insofar as it relates to lifetime
dollar limits, and the provisions of PHS Act sections 2712, 2714, 2715,
and 2718, apply to grandfathered health plans for plan years (in the
individual market, policy years) beginning on or after September 23,
2010. The provisions of PHS Act section 2708 apply to grandfathered
health plans for plan years (in the individual market, policy years)
beginning on or after January 1, 2014.
(e) Applicability of PHS Act sections 2704, 2711, and 2714 to
grandfathered group health plans and group health insurance coverage.
(1) The provisions of PHS Act section 2704 as it applies with respect to
enrollees who are under 19 years of age, and the provisions of PHS Act
section 2711 insofar as it relates to annual dollar limits, apply to
grandfathered health plans that are group health plans (including group
health insurance coverage) for plan years beginning on or after
September 23, 2010. The provisions of PHS Act section 2704 apply
generally to grandfathered health plans that are group health plans
(including group health insurance coverage) for plan years beginning on
or after January 1, 2014.
(2) For plan years beginning before January 1, 2014, the provisions
of PHS Act section 2714 apply in the case of an adult child with respect
to a grandfathered health plan that is a group health plan only if the
adult child is not eligible to enroll in an eligible employer-sponsored
health plan (as defined in section 5000A(f)(2) of the Internal Revenue
Code) other than a grandfathered health plan of a parent. For plan years
beginning on or after January 1, 2014, the provisions of PHS Act section
2714 apply with respect to a grandfathered health plan that is a group
health plan without regard to whether an adult child is eligible to
enroll in any other coverage.
(f) Effect on collectively bargained plans--In general. In the case
of health insurance coverage maintained pursuant to one or more
collective bargaining agreements between employee representatives and
one or more employers that was ratified before March 23, 2010, the
coverage is grandfathered health plan coverage at least until the date
on which the last of the collective bargaining agreements relating to
the coverage that was in effect on March 23, 2010 terminates. Any
coverage amendment made pursuant to a collective bargaining agreement
relating to the coverage that amends the coverage solely to conform to
any requirement added by subtitles A and C of title I of the Patient
Protection and Affordable Care Act (and the amendments made by those
subtitles, and the incorporation of those amendments into ERISA section
715 and Internal Revenue Code section 9815) is not treated as a
termination of the collective bargaining agreement. After the date on
which the last of the collective bargaining agreements relating to the
coverage that was in effect on March 23, 2010 terminates, the
determination of whether health insurance coverage maintained pursuant
to a collective bargaining agreement is grandfathered health plan
coverage is made under the rules of this section other than this
paragraph (f) (comparing the terms of the health insurance coverage
after the date the last collective bargaining agreement terminates with
the terms of the health insurance coverage that were in effect on March
23, 2010).
(g) Maintenance of grandfather status--(1) Changes causing cessation
of grandfather status. Subject to paragraphs (g)(2) and (3) of this
section, the rules of this paragraph (g)(1) describe situations in which
a group health plan or health insurance coverage ceases to be a
grandfathered health plan. A plan or coverage will cease to be a
grandfathered health plan when an amendment to plan terms that results
in a change described in this paragraph (g)(1) becomes effective,
regardless of when the amendment was adopted. Once grandfather status is
lost, it cannot be regained.
(i) Elimination of benefits. The elimination of all or substantially
all benefits to diagnose or treat a particular condition causes a group
health plan or health insurance coverage to cease to be a grandfathered
health plan. For
[[Page 190]]
this purpose, the elimination of benefits for any necessary element to
diagnose or treat a condition is considered the elimination of all or
substantially all benefits to diagnose or treat a particular condition.
Whether or not a plan or coverage has eliminated substantially all
benefits to diagnose or treat a particular condition must be determined
based on all the facts and circumstances, taking into account the items
and services provided for a particular condition under the plan on March
23, 2010, as compared to the benefits offered at the time the plan or
coverage makes the benefit change effective.
(ii) Increase in percentage cost-sharing requirement. Any increase,
measured from March 23, 2010, in a percentage cost-sharing requirement
(such as an individual's coinsurance requirement) causes a group health
plan or health insurance coverage to cease to be a grandfathered health
plan.
(iii) Increase in a fixed-amount cost-sharing requirement other than
a copayment. Any increase in a fixed-amount cost-sharing requirement
other than a copayment (for example, deductible or out-of-pocket limit),
determined as of the effective date of the increase, causes a group
health plan or health insurance coverage to cease to be a grandfathered
health plan, if the total percentage increase in the cost-sharing
requirement measured from March 23, 2010 exceeds the maximum percentage
increase (as defined in paragraph (g)(4)(ii) of this section).
(iv) Increase in a fixed-amount copayment. Any increase in a fixed-
amount copayment, determined as of the effective date of the increase,
and determined for each copayment level if a plan has different
copayment levels for different categories of services, causes a group
health plan or health insurance coverage to cease to be a grandfathered
health plan, if the total increase in the copayment measured from March
23, 2010 exceeds the greater of:
(A) An amount equal to $5 increased by medical inflation, as defined
in paragraph (g)(4)(i) of this section (that is, $5 times medical
inflation, plus $5); or
(B) The maximum percentage increase (as defined in paragraph
(g)(4)(ii) of this section), determined by expressing the total increase
in the copayment as a percentage.
(v) Decrease in contribution rate by employers and employee
organizations--(A) Contribution rate based on cost of coverage. A group
health plan or group health insurance coverage ceases to be a
grandfathered health plan if the employer or employee organization
decreases its contribution rate based on cost of coverage (as defined in
paragraph (g)(4)(iii)(A) of this section) towards the cost of any tier
of coverage for any class of similarly situated individuals (as
described in Sec. 146.121(d) of this subchapter) by more than 5
percentage points below the contribution rate for the coverage period
that includes March 23, 2010.
(B) Contribution rate based on a formula. A group health plan or
group health insurance coverage ceases to be a grandfathered health plan
if the employer or employee organization decreases its contribution rate
based on a formula (as defined in paragraph (g)(4)(iii)(B) of this
section) towards the cost of any tier of coverage for any class of
similarly situated individuals (as described in Sec. 146.121(d) of this
subchapter) by more than 5 percent below the contribution rate for the
coverage period that includes March 23, 2010.
(vi) Changes in annual limits--(A) Addition of an annual limit. A
group health plan, or group or individual health insurance coverage
that, on March 23, 2010, did not impose an overall annual or lifetime
limit on the dollar value of all benefits ceases to be a grandfathered
health plan if the plan or health insurance coverage imposes an overall
annual limit on the dollar value of benefits. (But see Sec. 147.126,
which generally prohibits all annual dollar limits on essential health
benefits for plan years (in the individual market, policy years)
beginning on or after January 1, 2014).
(B) Decrease in limit for a plan or coverage with only a lifetime
limit. Grandfathered individual health insurance coverage, that, on
March 23, 2010, imposed an overall lifetime limit on the dollar value of
all benefits but no overall annual limit on the dollar value of all
benefits ceases to be a grandfathered health plan if the plan or
[[Page 191]]
health insurance coverage adopts an overall annual limit at a dollar
value that is lower than the dollar value of the lifetime limit on March
23, 2010. (But see Sec. 147.126, which generally prohibits all annual
dollar limits on essential health benefits for plan years (in the
individual market, policy years) beginning on or after January 1, 2014).
(C) Decrease in limit for a plan or coverage with an annual limit. A
group health plan, or group or individual health insurance coverage,
that, on March 23, 2010, imposed an overall annual limit on the dollar
value of all benefits ceases to be a grandfathered health plan if the
plan or health insurance coverage decreases the dollar value of the
annual limit (regardless of whether the plan or health insurance
coverage also imposed an overall lifetime limit on March 23, 2010 on the
dollar value of all benefits). (But see Sec. 147.126, which generally
prohibits all annual dollar limits on essential health benefits for plan
years (in the individual market, policy years) beginning on or after
January 1, 2014).
(2) Transitional rules--(i) Changes made prior to March 23, 2010. If
a group health plan or health insurance issuer makes the following
changes to the terms of the plan or health insurance coverage, the
changes are considered part of the terms of the plan or health insurance
coverage on March 23, 2010 even though they were not effective at that
time and such changes do not cause a plan or health insurance coverage
to cease to be a grandfathered health plan:
(A) Changes effective after March 23, 2010 pursuant to a legally
binding contract entered into on or before March 23, 2010;
(B) Changes effective after March 23, 2010 pursuant to a filing on
or before March 23, 2010 with a State insurance department; or
(C) Changes effective after March 23, 2010 pursuant to written
amendments to a plan that were adopted on or before March 23, 2010.
(ii) Changes made after March 23, 2010 and adopted prior to issuance
of regulations. If, after March 23, 2010, a group health plan or health
insurance issuer makes changes to the terms of the plan or health
insurance coverage and the changes are adopted prior to June 14, 2010,
the changes will not cause the plan or health insurance coverage to
cease to be a grandfathered health plan if the changes are revoked or
modified effective as of the first day of the first plan year (in the
individual market, policy year) beginning on or after September 23,
2010, and the terms of the plan or health insurance coverage on that
date, as modified, would not cause the plan or coverage to cease to be a
grandfathered health plan under the rules of this section, including
paragraph (g)(1) of this section. For this purpose, changes will be
considered to have been adopted prior to June 14, 2010 if:
(A) The changes are effective before that date;
(B) The changes are effective on or after that date pursuant to a
legally binding contract entered into before that date;
(C) The changes are effective on or after that date pursuant to a
filing before that date with a State insurance department; or
(D) The changes are effective on or after that date pursuant to
written amendments to a plan that were adopted before that date.
(3) Special rule for certain grandfathered high deductible health
plans. With respect to a grandfathered group health plan or group health
insurance coverage that is a high deductible health plan within the
meaning of section 223(c)(2) of the Internal Revenue Code, increases to
fixed-amount cost-sharing requirements made effective on or after June
15, 2021 that otherwise would cause a loss of grandfather status will
not cause the plan or coverage to relinquish its grandfather status, but
only to the extent such increases are necessary to maintain its status
as a high deductible health plan under section 223(c)(2)(A) of the
Internal Revenue Code.
(4) Definitions--(i) Medical inflation defined. For purposes of this
paragraph (g), the term medical inflation means the increase since March
2010 in the overall medical care component of the Consumer Price Index
for All Urban Consumers (CPI-U) (unadjusted) published by the Department
of Labor
[[Page 192]]
using the 1982-1984 base of 100. For purposes of this paragraph
(g)(4)(i), the increase in the overall medical care component is
computed by subtracting 387.142 (the overall medical care component of
the CPI-U (unadjusted) published by the Department of Labor for March
2010, using the 1982-1984 base of 100) from the index amount for any
month in the 12 months before the new change is to take effect and then
dividing that amount by 387.142.
(ii) Maximum percentage increase defined. For purposes of this
paragraph (g), the term maximum percentage increase means:
(A) With respect to increases for a group health plan and group
health insurance coverage made effective on or after March 23, 2010, and
before June 15, 2021, medical inflation (as defined in paragraph
(g)(4)(i) of this section), expressed as a percentage, plus 15
percentage points;
(B) With respect to increases for a group health plan and group
health insurance coverage made effective on or after June 15, 2021, the
greater of:
(1) Medical inflation (as defined in paragraph (g)(4)(i) of this
section), expressed as a percentage, plus 15 percentage points; or
(2) The portion of the premium adjustment percentage, as defined in
Sec. 156.130(e) of this subchapter, that reflects the relative change
between 2013 and the calendar year prior to the effective date of the
increase (that is, the premium adjustment percentage minus 1), expressed
as a percentage, plus 15 percentage points; and
(C) With respect to increases for individual health insurance
coverage, medical inflation (as defined in paragraph (g)(4)(i) of this
section), expressed as a percentage, plus 15 percentage points.
(iii) Contribution rate defined. For purposes of paragraph (g)(1)(v)
of this section:
(A) Contribution rate based on cost of coverage. The term
contribution rate based on cost of coverage means the amount of
contributions made by an employer or employee organization compared to
the total cost of coverage, expressed as a percentage. The total cost of
coverage is determined in the same manner as the applicable premium is
calculated under the COBRA continuation provisions of section 604 of
ERISA, section 4980B(f)(4) of the Internal Revenue Code, and section
2204 of the PHS Act. In the case of a self-insured plan, contributions
by an employer or employee organization are equal to the total cost of
coverage minus the employee contributions towards the total cost of
coverage.
(B) Contribution rate based on a formula. The term contribution rate
based on a formula means, for plans that, on March 23, 2010, made
contributions based on a formula (such as hours worked or tons of coal
mined), the formula.
(5) Examples. The rules of this paragraph (g) are illustrated by the
following examples:
Example 1. (i) Facts. On March 23, 2010, a grandfathered health plan
has a coinsurance requirement of 20% for inpatient surgery. The plan is
subsequently amended to increase the coinsurance requirement to 25%.
(ii) Conclusion. In this Example 1, the increase in the coinsurance
requirement from 20% to 25% causes the plan to cease to be a
grandfathered health plan.
Example 2. (i) Facts. Before March 23, 2010, the terms of a group
health plan provide benefits for a particular mental health condition,
the treatment for which is a combination of counseling and prescription
drugs. Subsequently, the plan eliminates benefits for counseling.
(ii) Conclusion. In this Example 2, the plan ceases to be a
grandfathered health plan because counseling is an element that is
necessary to treat the condition. Thus the plan is considered to have
eliminated substantially all benefits for the treatment of the
condition.
Example 3. (i) Facts. On March 23, 2010, a grandfathered group
health plan has a copayment requirement of $30 per office visit for
specialists. The plan is subsequently amended to increase the copayment
requirement to $40, effective before June 15, 2021. Within the 12-month
period before the $40 copayment takes effect, the greatest value of the
overall medical care component of the CPI-U (unadjusted) is 475.
(ii) Conclusion. In this Example 3, the increase in the copayment
from $30 to $40, expressed as a percentage, is 33.33% (40-30 = 10; 10 /
30 = 0.3333; 0.3333 = 33.33%). Medical inflation (as defined in
paragraph (g)(4)(i) of this section) from March 2010 is 0.2269 (475-
387.142 = 87.858; 87.858 / 387.142 = 0.2269). The maximum percentage
increase permitted is 37.69% (0.2269 = 22.69%; 22.69% + 15% = 37.69%).
Because 33.33% does not exceed
[[Page 193]]
37.69%, the change in the copayment requirement at that time does not
cause the plan to cease to be a grandfathered health plan.
Example 4. (i) Facts. Same facts as Example 3 of this paragraph
(g)(5), except the grandfathered group health plan subsequently
increases the $40 copayment requirement to $45 for a later plan year,
effective before June 15, 2021. Within the 12-month period before the
$45 copayment takes effect, the greatest value of the overall medical
care component of the CPI-U (unadjusted) is 485.
(ii) Conclusion. In this Example 4, the increase in the copayment
from $30 (the copayment that was in effect on March 23, 2010) to $45,
expressed as a percentage, is 50% (45-30 = 15; 15 / 30 = 0.5; 0.5 =
50%). Medical inflation (as defined in paragraph (g)(4)(i) of this
section) from March 2010 is 0.2527 (485-387.142 = 97.858; 97.858 /
387.142 = 0.2527). The increase that would cause a plan to cease to be a
grandfathered health plan under paragraph (g)(1)(iv) of this section is
the greater of the maximum percentage increase of 40.27% (0.2527 =
25.27%; 25.27% + 15% = 40.27%), or $6.26 (5 x 0.2527 = $1.26; $1.26 + $5
= $6.26). Because 50% exceeds 40.27% and $15 exceeds $6.26, the change
in the copayment requirement at that time causes the plan to cease to be
a grandfathered health plan.
Example 5. (i) Facts. Same facts as Example 4 of this paragraph
(g)(5), except the grandfathered group health plan increases the
copayment requirement to $45, effective after June 15, 2021. The
greatest value of the overall medical care component of the CPI-U
(unadjusted) in the preceding 12-month period is still 485. In the
calendar year that includes the effective date of the increase, the
applicable portion of the premium adjustment percentage is 36%.
(ii) Conclusion. In this Example 5, the grandfathered health plan
may increase the copayment by the greater of: Medical inflation,
expressed as a percentage, plus 15 percentage points; or the applicable
portion of the premium adjustment percentage for the calendar year that
includes the effective date of the increase, plus 15 percentage points.
The latter amount is greater because it results in a 51% maximum
percentage increase (36% + 15% = 51%) and, as demonstrated in Example 4
of this paragraph (g)(5), determining the maximum percentage increase
using medical inflation yields a result of 40.27%. The increase in the
copayment, expressed as a percentage, is 50% (45-30 = 15; 15 / 30 = 0.5;
0.5 = 50%). Because the 50% increase in the copayment is less than the
51% maximum percentage increase, the change in the copayment requirement
at that time does not cause the plan to cease to be a grandfathered
health plan.
Example 6. (i) Facts. On March 23, 2010, a grandfathered group
health plan has a copayment of $10 per office visit for primary care
providers. The plan is subsequently amended to increase the copayment
requirement to $15, effective before June 15, 2021. Within the 12-month
period before the $15 copayment takes effect, the greatest value of the
overall medical care component of the CPI-U (unadjusted) is 415.
(ii) Conclusion. In this Example 6, the increase in the copayment,
expressed as a percentage, is 50% (15-10 = 5; 5 / 10 = 0.5; 0.5 = 50%).
Medical inflation (as defined in paragraph (g)(4)(i) of this section)
from March 2010 is 0.0720 (415.0-387.142 = 27.858; 27.858 / 387.142 =
0.0720). The increase that would cause a group plan to cease to be a
grandfathered health plan under paragraph (g)(1)(iv) of this section is
the greater of the maximum percentage increase of 22.20% (0.0720 =
7.20%; 7.20% + 15% = 22.20%), or $5.36 ($5 x 0.0720 = $0.36; $0.36 + $5
= $5.36). The $5 increase in copayment in this Example 6 would not cause
the plan to cease to be a grandfathered health plan pursuant to
paragraph (g)(1)(iv) of this section, which would permit an increase in
the copayment of up to $5.36.
Example 7. (i) Facts. Same facts as Example 6 of this paragraph
(g)(5), except on March 23, 2010, the grandfathered health plan has no
copayment ($0) for office visits for primary care providers. The plan is
subsequently, amended to increase the copayment requirement to $5,
effective before June 15, 2021.
(ii) Conclusion. In this Example 7, medical inflation (as defined in
paragraph (g)(4)(i) of this section) from March 2010 is 0.0720 (415.0-
387.142 = 27.858; 27.858 / 387.142 = 0.0720). The increase that would
cause a plan to cease to be a grandfathered health plan under paragraph
(g)(1)(iv)(A) of this section is $5.36 ($5 x 0.0720 = $0.36; $0.36 + $5
= $5.36). The $5 increase in copayment in this Example 7 is less than
the amount calculated pursuant to paragraph (g)(1)(iv)(A) of this
section of $5.36. Thus, the $5 increase in copayment does not cause the
plan to cease to be a grandfathered health plan.
Example 8. (i) Facts. On March 23, 2010, a self-insured group health
plan provides two tiers of coverage--self-only and family. The employer
contributes 80% of the total cost of coverage for self-only and 60% of
the total cost of coverage for family. Subsequently, the employer
reduces the contribution to 50% for family coverage, but keeps the same
contribution rate for self-only coverage.
(ii) Conclusion. In this Example 8, the decrease of 10 percentage
points for family coverage in the contribution rate based on cost of
coverage causes the plan to cease to be a grandfathered health plan. The
fact that the contribution rate for self-only coverage remains the same
does not change the result.
Example 9. (i) Facts. On March 23, 2010, a self-insured
grandfathered health plan has a COBRA premium for the 2010 plan year of
$5,000 for self-only coverage and $12,000 for
[[Page 194]]
family coverage. The required employee contribution for the coverage is
$1,000 for self-only coverage and $4,000 for family coverage. Thus, the
contribution rate based on cost of coverage for 2010 is 80% ((5,000-
1,000)/5,000) for self-only coverage and 67% ((12,000-4,000)/12,000) for
family coverage. For a subsequent plan year, the COBRA premium is $6,000
for self-only coverage and $15,000 for family coverage. The employee
contributions for that plan year are $1,200 for self-only coverage and
$5,000 for family coverage. Thus, the contribution rate based on cost of
coverage is 80% ((6,000-1,200)/6,000) for self-only coverage and 67%
((15,000-5,000)/15,000) for family coverage.
(ii) Conclusion. In this Example 9, because there is no change in
the contribution rate based on cost of coverage, the plan retains its
status as a grandfathered health plan. The result would be the same if
all or part of the employee contribution was made pre-tax through a
cafeteria plan under section 125 of the Internal Revenue Code.
Example 10. (i) Facts. A group health plan not maintained pursuant
to a collective bargaining agreement offers three benefit packages on
March 23, 2010. Option F is a self-insured option. Options G and H are
insured options. Beginning July 1, 2013, the plan increases coinsurance
under Option H from 10% to 15%.
(ii) Conclusion. In this Example 10, the coverage under Option H is
not grandfathered health plan coverage as of July 1, 2013, consistent
with the rule in paragraph (g)(1)(ii) of this section. Whether the
coverage under Options F and G is grandfathered health plan coverage is
determined separately under the rules of this paragraph (g).
Example 11. (i) Facts. A group health plan that is a grandfathered
health plan and also a high deductible health plan within the meaning of
section 223(c)(2) of the Internal Revenue Code had a $2,400 deductible
for family coverage on March 23, 2010. The plan is subsequently amended
after June 15, 2021 to increase the deductible limit by the amount that
is necessary to comply with the requirements for a plan to qualify as a
high deductible health plan under section 223(c)(2)(A) of the Internal
Revenue Code, but that exceeds the maximum percentage increase.
(ii) Conclusion. In this Example 11, the increase in the deductible
at that time does not cause the plan to cease to be a grandfathered
health plan because the increase was necessary for the plan to continue
to satisfy the definition of a high deductible health plan under section
223(c)(2)(A) of the Internal Revenue Code.
[80 FR 72289, Nov. 18, 2015, as amended at 85 FR 81120, Dec. 15, 2020]
Sec. 147.145 Student health insurance coverage.
(a) Definition. Student health insurance coverage is a type of
individual health insurance coverage (as defined in Sec. 144.103 of
this subchapter) that is provided pursuant to a written agreement
between an institution of higher education (as defined in the Higher
Education Act of 1965) and a health insurance issuer, and provided to
students enrolled in that institution of higher education and their
dependents, that meets the following conditions:
(1) Does not make health insurance coverage available other than in
connection with enrollment as a student (or as a dependent of a student)
in the institution of higher education.
(2) Does not condition eligibility for the health insurance coverage
on any health status-related factor (as defined in Sec. 146.121(a) of
this subchapter) relating to a student (or a dependent of a student).
(3) Meets any additional requirement that may be imposed under State
law.
(b) Exemptions from the Public Health Service Act and the Affordable
Care Act--(1) Guaranteed availability and guaranteed renewability. (i)
For purposes of sections 2741(e)(1) and 2742(b)(5) of the Public Health
Service Act, student health insurance coverage is deemed to be available
only through a bona fide association.
(ii) For purposes of section 2702 of the Public Health Service Act,
a health insurance issuer that offers student health insurance coverage
is not required to accept individuals who are not students or dependents
of students in such coverage, and, notwithstanding the requirements of
Sec. 147.104(b), is not required to establish open enrollment periods
or coverage effective dates that are based on a calendar policy year or
to offer policies on a calendar year basis.
(iii) For purposes of section 2703(a) of the Public Health Service
Act, a health insurance issuer that offers student health insurance
coverage is not required to renew or continue in force coverage for
individuals who are no longer students or dependents of students.
[[Page 195]]
(2) Levels of coverage. The requirement to provide a specific level
of coverage described in section 1302(d) of the Affordable Care Act does
not apply to student health insurance coverage for policy years
beginning on or after July 1, 2016. However, the benefits provided by
such coverage must provide at least 60 percent actuarial value, as
calculated in accordance with Sec. 156.135 of this subchapter. The
issuer must specify in any plan materials summarizing the terms of the
coverage the actuarial value and level of coverage (or next lowest level
of coverage) the coverage would otherwise satisfy under Sec. 156.140 of
this subchapter.
(3) Single risk pool. Student health insurance coverage is not
subject to the requirements of section 1312(c) of the Affordable Care
Act. A health insurance issuer that offers student health insurance
coverage may establish one or more separate risk pools for an
institution of higher education, if the distinction between or among
groups of students (or dependents of students) who form the risk pool is
based on a bona fide school-related classification and not based on a
health factor (as described in Sec. 146.121 of this subchapter).
However, student health insurance rates must reflect the claims
experience of individuals who comprise the risk pool, and any
adjustments to rates within a risk pool must be actuarially justified.
(c) Student administrative health fees--(1) Definition. A student
administrative health fee is a fee charged by the institution of higher
education on a periodic basis to students of the institution of higher
education to offset the cost of providing health care through health
clinics regardless of whether the students utilize the health clinics or
enroll in student health insurance coverage.
(2) Preventive services. Notwithstanding the requirements under
section 2713 of the Public Health Service Act and its implementing
regulations, student administrative health fees as defined in paragraph
(c)(1) of this section are not considered cost-sharing requirements with
respect to specified recommended preventive services.
[77 FR 16468, Mar. 21, 2012, as amended at 78 FR 13439, Feb. 27, 2013;
79 FR 13834, Mar. 11, 2014; 81 FR 12334, Mar. 8, 2016]
Sec. 147.150 Coverage of essential health benefits.
(a) Requirement to cover the essential health benefits package. A
health insurance issuer offering health insurance coverage in the
individual or small group market must ensure that such coverage includes
the essential health benefits package as defined in section 1302(a) of
the Affordable Care Act effective for plan or policy years beginning on
or after January 1, 2014.
(b) Cost-sharing under group health plans. [Reserved]
(c) Child-only plans. If a health insurance issuer offers health
insurance coverage in any level of coverage specified under section
1302(d)(1) of the Affordable Care Act, the issuer must offer coverage in
that level as a plan in which the only enrollees are individuals who, as
of the beginning of a plan year, have not attained the age of 21.
[78 FR 12865, Feb. 25, 2013]
Sec. 147.160 Parity in mental health and substance use
disorder benefits.
(a) In general. The provisions of Sec. 146.136 of this subchapter
apply to health insurance coverage offered by health insurance issuer in
the individual market in the same manner and to the same extent as such
provisions apply to health insurance coverage offered by a health
insurance issuer in connection with a group health plan in the large
group market.
(b) Applicability date. The provisions of this section apply for
policy years beginning on or after the applicability dates set forth in
Sec. 146.136(i) of this subchapter. This section applies to non-
grandfathered and grandfathered health plans as defined in Sec.
147.140.
[78 FR 68296, Nov. 13, 2013]
Effective Date Note: At 89 FR 77751, Sept. 23, 2024, Sec. 147.160
was revised, effective Nov. 22, 2024. For the convenience of the user,
the revised text is set forth as follows:
[[Page 196]]
Sec. 147.160 Parity in mental health and substance use disorder
benefits.
(a) In general. The provisions of Sec. Sec. 146.136 and 146.137 of
this subchapter apply to individual health insurance coverage offered by
a health insurance issuer in the same manner and to the same extent as
such provisions apply to health insurance coverage offered by a health
insurance issuer in connection with a group health plan in the large
group market.
(b) Applicability date. The provisions of this section apply for
policy years beginning on or after January 1, 2026. Until the
applicability date in the preceding sentence, issuers are required to
continue to comply with 45 CFR 147.160, incorporating 45 CFR 146.136,
each revised as of October 1, 2023. This section applies to non-
grandfathered and grandfathered health plans as defined in Sec.
147.140.
Sec. 147.200 Summary of benefits and coverage and uniform glossary.
(a) Summary of benefits and coverage--(1) In general. A group health
plan (and its administrator as defined in section 3(16)(A) of ERISA)),
and a health insurance issuer offering group or individual health
insurance coverage, is required to provide a written summary of benefits
and coverage (SBC) for each benefit package without charge to entities
and individuals described in this paragraph (a)(1) in accordance with
the rules of this section.
(i) SBC provided by a group health insurance issuer to a group
health plan--(A) Upon application. A health insurance issuer offering
group health insurance coverage must provide the SBC to a group health
plan (or its sponsor) upon application for health coverage, as soon as
practicable following receipt of the application, but in no event later
than seven business days following receipt of the application. If an SBC
was provided before application pursuant to paragraph (a)(1)(i)(D) of
this section (relating to SBCs upon request), this paragraph
(a)(1)(i)(A) is deemed satisfied, provided there is no change to the
information required to be in the SBC. However, if there has been a
change in the information required, a new SBC that includes the changed
information must be provided upon application pursuant to this paragraph
(a)(1)(i)(A).
(B) By first day of coverage (if there are changes). If there is any
change in the information required to be in the SBC that was provided
upon application and before the first day of coverage, the issuer must
update and provide a current SBC to the plan (or its sponsor) no later
than the first day of coverage.
(C) Upon renewal, reissuance, or reenrollment. If the issuer renews
or reissues a policy, certificate, or contract of insurance for a
succeeding policy year, or automatically re-enrolls the policyholder or
its participants and beneficiaries in coverage, the issuer must provide
a new SBC as follows:
(1) If written application is required (in either paper or
electronic form) for renewal or reissuance, the SBC must be provided no
later than the date the written application materials are distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the new
plan or policy year; however, with respect to an insured plan, if the
policy, certificate, or contract of insurance has not been issued or
renewed before such 30-day period, the SBC must be provided as soon as
practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
(D) Upon request. If a group health plan (or its sponsor) requests
an SBC or summary information about a health insurance product from a
health insurance issuer offering group health insurance coverage, an SBC
must be provided as soon as practicable, but in no event later than
seven business days following receipt of the request.
(ii) SBC provided by a group health insurance issuer and a group
health plan to participants and beneficiaries--(A) In general. A group
health plan (including its administrator, as defined under section 3(16)
of ERISA), and a health insurance issuer offering group health insurance
coverage, must provide an SBC to a participant or beneficiary (as
defined under sections 3(7) and 3(8) of ERISA), and consistent with the
rules of paragraph (a)(1)(iii) of this section, with respect to each
benefit package offered by the plan or issuer for which the participant
or beneficiary is eligible.
[[Page 197]]
(B) Upon application. The SBC must be provided as part of any
written application materials that are distributed by the plan or issuer
for enrollment. If the plan or issuer does not distribute written
application materials for enrollment, the SBC must be provided no later
than the first date on which the participant is eligible to enroll in
coverage for the participant or any beneficiaries. If an SBC was
provided before application pursuant to paragraph (a)(1)(ii)(F) of this
section (relating to SBCs upon request), this paragraph (a)(1)(ii)(B) is
deemed satisfied, provided there is no change to the information
required to be in the SBC. However, if there has been a change in the
information that is required to be in the SBC, a new SBC that includes
the changed information must be provided upon application pursuant to
this paragraph (a)(1)(ii)(B).
(C) By first day of coverage (if there are changes). (1) If there is
any change to the information required to be in the SBC that was
provided upon application and before the first day of coverage, the plan
or issuer must update and provide a current SBC to a participant or
beneficiary no later than the first day of coverage.
(2) If the plan sponsor is negotiating coverage terms after an
application has been filed and the information required to be in the SBC
changes, the plan or issuer is not required to provide an updated SBC
(unless an updated SBC is requested) until the first day of coverage.
(D) Special enrollees. The plan or issuer must provide the SBC to
special enrollees (as described in Sec. 146.117 of this subchapter) no
later than the date by which a summary plan description is required to
be provided under the timeframe set forth in ERISA section 104(b)(1)(A)
and its implementing regulations, which is 90 days from enrollment.
(E) Upon renewal, reissuance, or reenrollment. If the plan or issuer
requires participants or beneficiaries to renew in order to maintain
coverage (for example, for a succeeding plan year), or automatically re-
enrolls participants and beneficiaries in coverage, the plan or issuer
must provide a new SBC, as follows:
(1) If written application is required for renewal, reissuance, or
reenrollment (in either paper or electronic form), the SBC must be
provided no later than the date on which the written application
materials are distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the new
plan or policy year; however, with respect to an insured plan, if the
policy, certificate, or contract of insurance has not been issued or
renewed before such 30-day period, the SBC must be provided as soon as
practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
(F) Upon request. A plan or issuer must provide the SBC to
participants or beneficiaries upon request for an SBC or summary
information about the health coverage, as soon as practicable, but in no
event later than seven business days following receipt of the request.
(iii) Special rules to prevent unnecessary duplication with respect
to group health coverage. (A) An entity required to provide an SBC under
this paragraph (a)(1) with respect to an individual satisfies that
requirement if another party provides the SBC, but only to the extent
that the SBC is timely and complete in accordance with the other rules
of this section. Therefore, for example, in the case of a group health
plan funded through an insurance policy, the plan satisfies the
requirement to provide an SBC with respect to an individual if the
issuer provides a timely and complete SBC to the individual. An entity
required to provide an SBC under this paragraph (a)(1) with respect to
an individual that contracts with another party to provide such SBC is
considered to satisfy the requirement to provide such SBC if:
(1) The entity monitors performance under the contract;
(2) If the entity has knowledge that the SBC is not being provided
in a manner that satisfies the requirements of this section and the
entity has all information necessary to correct the
[[Page 198]]
noncompliance, the entity corrects the noncompliance as soon as
practicable; and
(3) If the entity has knowledge the SBC is not being provided in a
manner that satisfies the requirements of this section and the entity
does not have all information necessary to correct the noncompliance,
the entity communicates with participants and beneficiaries who are
affected by the noncompliance regarding the noncompliance, and begins
taking significant steps as soon as practicable to avoid future
violations.
(B) If a single SBC is provided to a participant and any
beneficiaries at the participant's last known address, then the
requirement to provide the SBC to the participant and any beneficiaries
is generally satisfied. However, if a beneficiary's last known address
is different than the participant's last known address, a separate SBC
is required to be provided to the beneficiary at the beneficiary's last
known address.
(C) With respect to a group health plan that offers multiple benefit
packages, the plan or issuer is required to provide a new SBC
automatically to participants and beneficiaries upon renewal or
reenrollment only with respect to the benefit package in which a
participant or beneficiary is enrolled (or will be automatically re-
enrolled under the plan); SBCs are not required to be provided
automatically upon renewal or reenrollment with respect to benefit
packages in which the participant or beneficiary is not enrolled (or
will not automatically be enrolled). However, if a participant or
beneficiary requests an SBC with respect to another benefit package (or
more than one other benefit package) for which the participant or
beneficiary is eligible, the SBC (or SBCs, in the case of a request for
SBCs relating to more than one benefit package) must be provided upon
request as soon as practicable, but in no event later than seven
business days following receipt of the request.
(D) Subject to paragraph (a)(2)(ii) of this section, a plan
administrator of a group health plan that uses two or more insurance
products provided by separate health insurance issuers with respect to a
single group health plan may synthesize the information into a single
SBC or provide multiple partial SBCs provided that all the SBC include
the content in paragraph (a)(2)(iii) of this section.
(iv) SBC provided by a health insurance issuer offering individual
health insurance coverage--(A) Upon application. A health insurance
issuer offering individual health insurance coverage must provide an SBC
to an individual covered under the policy (including every dependent)
upon receiving an application for any health insurance policy, as soon
as practicable following receipt of the application, but in no event
later than seven business days following receipt of the application. If
an SBC was provided before application pursuant to paragraph
(a)(1)(iv)(D) of this section (relating to SBCs upon request), this
paragraph (a)(1)(iv)(A) is deemed satisfied, provided there is no change
to the information required to be in the SBC. However, if there has been
a change in the information that is required to be in the SBC, a new SBC
that includes the changed information must be provided upon application
pursuant to this paragraph (a)(1)(iv)(A).
(B) By first day of coverage (if there are changes). If there is any
change in the information required to be in the SBC that was provided
upon application and before the first day of coverage, the issuer must
update and provide a current SBC to the individual no later than the
first day of coverage.
(C) Upon renewal, reissuance, or reenrollment. If the issuer renews
or reissues a policy, certificate, or contract of insurance for a
succeeding policy year, or automatically re-enrolls an individual (or
dependent) covered under a policy, certificate, or contract of insurance
into a policy, certificate, or contract of insurance under a different
plan or product, the issuer must provide an SBC for the coverage in
which the individual (including every dependent) will be enrolled, as
follows:
(1) If written application is required (in either paper or
electronic form) for renewal, reissuance, or reenrollment, the SBC must
be provided no later than the date on which the written application
materials are distributed.
[[Page 199]]
(2) If renewal, reissuance, or reenrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the new
policy year; however, if the policy, certificate, or contract of
insurance has not been issued or renewed before such 30 day period, the
SBC must be provided as soon as practicable but in no event later than
seven business days after issuance of the new policy, certificate, or
contract of insurance, or the receipt of written confirmation of intent
to renew, whichever is earlier.
(D) Upon request. A health insurance issuer offering individual
health insurance coverage must provide an SBC to any individual or
dependent upon request for an SBC or summary information about a health
insurance product as soon as practicable, but in no event later than
seven business days following receipt of the request.
(v) Special rule to prevent unnecessary duplication with respect to
individual health insurance coverage--(A) In general. If a single SBC is
provided to an individual and any dependents at the individual's last
known address, then the requirement to provide the SBC to the individual
and any dependents is generally satisfied. However, if a dependent's
last known address is different than the individual's last known
address, a separate SBC is required to be provided to the dependent at
the dependents' last known address.
(B) Student health insurance coverage. With respect to student
health insurance coverage as defined at Sec. 147.145(a), the
requirement to provide an SBC to an individual will be considered
satisfied for an entity if another party provides a timely and complete
SBC to the individual. An entity required to provide an SBC under this
paragraph (a)(1) with respect to an individual that contracts with
another party to provide such SBC is considered to satisfy the
requirement to provide such SBC if:
(1) The entity monitors performance under the contract;
(2) If the entity has knowledge that the SBC is not being provided
in a manner that satisfies the requirements of this section and the
entity has all information necessary to correct the noncompliance, the
entity corrects the noncompliance as soon as practicable; and
(3) If the entity has knowledge the SBC is not being provided in a
manner that satisfies the requirements of this section and the entity
does not have all information necessary to correct the noncompliance,
the entity communicates with covered individuals and dependents who are
affected by the noncompliance regarding the noncompliance, and begins
taking significant steps as soon as practicable to avoid future
violations.
(2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of
this section, the SBC must include the following:
(A) Uniform definitions of standard insurance terms and medical
terms so that consumers may compare health coverage and understand the
terms of (or exceptions to) their coverage, in accordance with guidance
as specified by the Secretary;
(B) A description of the coverage, including cost sharing, for each
category of benefits identified by the Secretary in guidance;
(C) The exceptions, reductions, and limitations of the coverage;
(D) The cost-sharing provisions of the coverage, including
deductible, coinsurance, and copayment obligations;
(E) The renewability and continuation of coverage provisions;
(F) Coverage examples, in accordance with the rules of paragraph
(a)(2)(ii) of this section;
(G) With respect to coverage beginning on or after January 1, 2014,
a statement about whether the plan or coverage provides minimum
essential coverage as defined under section 5000A(f) and whether the
plan's or coverage's share of the total allowed costs of benefits
provided under the plan or coverage meets applicable requirements;
(H) A statement that the SBC is only a summary and that the plan
document, policy, certificate, or contract of insurance should be
consulted to determine the governing contractual provisions of the
coverage;
(I) Contact information for questions;
[[Page 200]]
(J) For issuers, an Internet web address where a copy of the actual
individual coverage policy or group certificate of coverage can be
reviewed and obtained;
(K) For plans and issuers that maintain one or more networks of
providers, an Internet address (or similar contact information) for
obtaining a list of network providers;
(L) For plans and issuers that use a formulary in providing
prescription drug coverage, an Internet address (or similar contact
information) for obtaining information on prescription drug coverage;
(M) An Internet address for obtaining the uniform glossary, as
described in paragraph (c) of this section, as well as a contact phone
number to obtain a paper copy of the uniform glossary, and a disclosure
that paper copies are available; and
(N) For qualified health plans sold through an individual market
Exchange that exclude or provide for coverage of the services described
in Sec. 156.280(d)(1) or (2) of this subchapter, a notice of coverage
or exclusion of such services.
(ii) Coverage examples. The SBC must include coverage examples
specified by the Secretary in guidance that illustrate benefits provided
under the plan or coverage for common benefits scenarios (including
pregnancy and serious or chronic medical conditions) in accordance with
this paragraph (a)(2)(ii).
(A) Number of examples. The Secretary may identify up to six
coverage examples that may be required in an SBC.
(B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii), a
benefits scenario is a hypothetical situation, consisting of a sample
treatment plan for a specified medical condition during a specific
period of time, based on recognized clinical practice guidelines as
defined by the National Guideline Clearinghouse, Agency for Healthcare
Research and Quality. The Secretary will specify, in guidance, the
assumptions, including the relevant items and services and reimbursement
information, for each claim in the benefits scenario.
(C) Illustration of benefit provided. For purposes of this paragraph
(a)(2)(ii), to illustrate benefits provided under the plan or coverage
for a particular benefits scenario, a plan or issuer simulates claims
processing in accordance with guidance issued by the Secretary to
generate an estimate of what an individual might expect to pay under the
plan, policy, or benefit package. The illustration of benefits provided
will take into account any cost sharing, excluded benefits, and other
limitations on coverage, as specified by the Secretary in guidance.
(iii) Coverage provided outside the United States. In lieu of
summarizing coverage for items and services provided outside the United
States, a plan or issuer may provide an Internet address (or similar
contact information) for obtaining information about benefits and
coverage provided outside the United States. In any case, the plan or
issuer must provide an SBC in accordance with this section that
accurately summarizes benefits and coverage available under the plan or
coverage within the United States.
(3) Appearance. (i) A group health plan and a health insurance
issuer must provide an SBC in the form, and in accordance with the
instructions for completing the SBC, that are specified by the Secretary
in guidance. The SBC must be presented in a uniform format, use
terminology understandable by the average plan enrollee (or, in the case
of individual market coverage, the average individual covered under a
health insurance policy), not exceed four double-sided pages in length,
and not include print smaller than 12-point font. A health insurance
issuer offering individual health insurance coverage must provide the
SBC as a stand-alone document.
(ii) A group health plan that utilizes two or more benefit packages
(such as major medical coverage and a health flexible spending
arrangement) may synthesize the information into a single SBC, or
provide multiple SBCs.
(4) Form. (i) An SBC provided by an issuer offering group health
insurance coverage to a plan (or its sponsor), may be provided in paper
form. Alternatively, the SBC may be provided electronically (such as by
email or an Internet posting) if the following three conditions are
satisfied--
[[Page 201]]
(A) The format is readily accessible by the plan (or its sponsor);
(B) The SBC is provided in paper form free of charge upon request;
and
(C) If the electronic form is an Internet posting, the issuer timely
advises the plan (or its sponsor) in paper form or email that the
documents are available on the Internet and provides the Internet
address.
(ii) An SBC provided by a group health plan or health insurance
issuer to a participant or beneficiary may be provided in paper form.
Alternatively, the SBC may be provided electronically (such as by email
or an Internet posting) if the requirements of this paragraph (a)(4)(ii)
are met.
(A) With respect to participants and beneficiaries covered under the
plan or coverage, the SBC may be provided electronically as described in
this paragraph (a)(4)(ii)(A). However, in all cases, the plan or issuer
must provide the SBC in paper form if paper form is requested.
(1) In accordance with the Department of Labor's disclosure
regulations at 29 CFR 2520.104b-1;
(2) In connection with online enrollment or online renewal of
coverage under the plan; or
(3) In response to an online request made by a participant or
beneficiary for the SBC.
(B) With respect to participants and beneficiaries who are eligible
but not enrolled for coverage, the SBC may be provided electronically
if:
(1) The format is readily accessible;
(2) The SBC is provided in paper form free of charge upon request;
and
(3) In a case in which the electronic form is an Internet posting,
the plan or issuer timely notifies the individual in paper form (such as
a postcard) or email that the documents are available on the Internet,
provides the Internet address, and notifies the individual that the
documents are available in paper form upon request.
(iii) An issuer offering individual health insurance coverage must
provide an SBC in a manner that can reasonably be expected to provide
actual notice in paper or electronic form.
(A) An issuer satisfies the requirements of this paragraph
(a)(4)(iii) if the issuer:
(1) Hand-delivers a printed copy of the SBC to the individual or
dependent;
(2) Mails a printed copy of the SBC to the mailing address provided
to the issuer by the individual or dependent;
(3) Provides the SBC by email after obtaining the individual's or
dependent's agreement to receive the SBC or other electronic disclosures
by email;
(4) Posts the SBC on the Internet and advises the individual or
dependent in paper or electronic form, in a manner compliant with
paragraphs (a)(4)(iii)(A)(1) through (3) of this section, that the SBC
is available on the Internet and includes the applicable Internet
address; or
(5) Provides the SBC by any other method that can reasonably be
expected to provide actual notice.
(B) An SBC may not be provided electronically unless:
(1) The format is readily accessible;
(2) The SBC is placed in a location that is prominent and readily
accessible;
(3) The SBC is provided in an electronic form which can be
electronically retained and printed;
(4) The SBC is consistent with the appearance, content, and language
requirements of this section;
(5) The issuer notifies the individual or dependent that the SBC is
available in paper form without charge upon request and provides it upon
request.
(C) Deemed compliance. A health insurance issuer offering individual
health insurance coverage that provides the content required under
paragraph (a)(2) of this section, as specified in guidance published by
the Secretary, to the federal health reform Web portal described in
Sec. 159.120 of this subchapter will be deemed to satisfy the
requirements of paragraph (a)(1)(iv)(D) of this section with respect to
a request for summary information about a health insurance product made
prior to an application for coverage. However, nothing in this paragraph
should be construed as otherwise limiting such issuer's obligations
under this section.
(iv) An SBC provided by a self-insured non-Federal governmental plan
may be provided in paper form. Alternatively, the SBC may be provided
electronically if the plan conforms to either the substance of the
provisions
[[Page 202]]
in paragraph (a)(4)(ii) or (iii) of this section.
(5) Language. A group health plan or health insurance issuer must
provide the SBC in a culturally and linguistically appropriate manner.
For purposes of this paragraph (a)(5), a plan or issuer is considered to
provide the SBC in a culturally and linguistically appropriate manner if
the thresholds and standards of Sec. 147.136(e) are met as applied to
the SBC.
(b) Notice of modification. If a group health plan, or health
insurance issuer offering group or individual health insurance coverage,
makes any material modification (as defined under section 102 of ERISA)
in any of the terms of the plan or coverage that would affect the
content of the SBC, that is not reflected in the most recently provided
SBC, and that occurs other than in connection with a renewal or
reissuance of coverage, the plan or issuer must provide notice of the
modification to enrollees (or, in the case of individual market
coverage, an individual covered under a health insurance policy) not
later than 60 days prior to the date on which the modification will
become effective. The notice of modification must be provided in a form
that is consistent with the rules of paragraph (a)(4) of this section.
(c) Uniform glossary--(1) In general. A group health plan, and a
health insurance issuer offering group health insurance coverage, must
make available to participants and beneficiaries, and a health insurance
issuer offering individual health insurance coverage must make available
to applicants, policyholders, and covered dependents, the uniform
glossary described in paragraph (c)(2) of this section in accordance
with the appearance and form and manner requirements of paragraphs
(c)(3) and (4) of this section.
(2) Health-coverage-related terms and medical terms. The uniform
glossary must provide uniform definitions, specified by the Secretary in
guidance, of the following health-coverage-related terms and medical
terms:
(i) Allowed amount, appeal, balance billing, co-insurance,
complications of pregnancy, co-payment, deductible, durable medical
equipment, emergency medical condition, emergency medical
transportation, emergency room care, emergency services, excluded
services, grievance, habilitation services, health insurance, home
health care, hospice services, hospitalization, hospital outpatient
care, in-network co-insurance, in-network co-payment, medically
necessary, network, non-preferred provider, out-of-network coinsurance,
out-of-network co-payment, out-of-pocket limit, physician services,
plan, preauthorization, preferred provider, premium, prescription drug
coverage, prescription drugs, primary care physician, primary care
provider, provider, reconstructive surgery, rehabilitation services,
skilled nursing care, specialist, usual customary and reasonable (UCR),
and urgent care; and
(ii) Such other terms as the Secretary determines are important to
define so that individuals and employers may compare and understand the
terms of coverage and medical benefits (including any exceptions to
those benefits), as specified in guidance.
(3) Appearance. A group health plan, and a health insurance issuer,
must provide the uniform glossary with the appearance specified by the
Secretary in guidance to ensure the uniform glossary is presented in a
uniform format and uses terminology understandable by the average plan
enrollee (or, in the case of individual market coverage, an average
individual covered under a health insurance policy).
(4) Form and manner. A plan or issuer must make the uniform glossary
described in this paragraph (c) available upon request, in either paper
or electronic form (as requested), within seven business days after
receipt of the request.
(d) Preemption. For purposes of this section, the provisions of
section 2724 of the PHS Act continue to apply with respect to preemption
of State law. State laws that conflict with this section (including a
state law that requires a health insurance issuer to provide an SBC that
supplies less information than required under paragraph (a) of this
section) are preempted.
(e) Failure to provide. A health insurance issuer or a non-federal
governmental health plan that willfully fails to provide information to
a covered individual required under this section is
[[Page 203]]
subject to a fine of not more than $1,000 as adjusted annually under 45
CFR part 102 for each such failure. A failure with respect to each
covered individual constitutes a separate offense for purposes of this
paragraph (e). HHS will enforce these provisions in a manner consistent
with Sec. Sec. 150.101 through 150.465 of this subchapter.
(f) Applicability to Medicare Advantage benefits. The requirements
of this section do not apply to a group health plan benefit package that
provides Medicare Advantage benefits pursuant to or 42 U.S.C. Chapter 7,
Subchapter XVIII, Part C.
(g) Applicability date. (1) This section is applicable to group
health plans and group health insurance issuers in accordance with this
paragraph (g). (See Sec. 147.140(d), providing that this section
applies to grandfathered health plans.)
(i) For disclosures with respect to participants and beneficiaries
who enroll or re-enroll through an open enrollment period (including re-
enrollees and late enrollees), this section applies beginning on the
first day of the first open enrollment period that begins on or after
September 1, 2015; and
(ii) For disclosures with respect to participants and beneficiaries
who enroll in coverage other than through an open enrollment period
(including individuals who are newly eligible for coverage and special
enrollees), this section applies beginning on the first day of the first
plan year that begins on or after September 1, 2015.
(2) For disclosures with respect to plans, this section is
applicable to health insurance issuers beginning September 1, 2015.
(3) For disclosures with respect individuals and covered dependents
in the individual market, this section is applicable to health insurance
issuers beginning with respect to SBCs issued for coverage that begins
on or after January 1, 2016.
[80 FR 34310, June 16, 2015, as amended at 81 FR 61581, Sept. 6, 2016]
Sec. 147.210 Transparency in coverage--definitions.
(a) Scope and definitions--(1) Scope. This section sets forth
definitions for the price transparency requirements for group health
plans and health insurance issuers in the individual and group markets
established in this section and Sec. Sec. 147.211 and 147.212.
(2) Definitions. For purposes of this section and Sec. Sec. 147.211
and 147.212, the following definitions apply:
(i) Accumulated amounts means:
(A) The amount of financial responsibility a participant,
beneficiary, or enrollee has incurred at the time a request for cost-
sharing information is made, with respect to a deductible or out-of-
pocket limit. If an individual is enrolled in other than self-only
coverage, these accumulated amounts shall include the financial
responsibility a participant, beneficiary, or enrollee has incurred
toward meeting his or her individual deductible or out-of-pocket limit,
as well as the amount of financial responsibility that all the
individuals enrolled under the plan or coverage have incurred, in
aggregate, toward meeting the other than self-only deductible or out-of-
pocket limit, as applicable. Accumulated amounts include any expense
that counts toward a deductible or out-of-pocket limit (such as a
copayment or coinsurance), but exclude any expense that does not count
toward a deductible or out-of-pocket limit (such as any premium payment,
out-of-pocket expense for out-of-network services, or amount for items
or services not covered under the group health plan or health insurance
coverage); and
(B) To the extent a group health plan or health insurance issuer
imposes a cumulative treatment limitation on a particular covered item
or service (such as a limit on the number of items, days, units, visits,
or hours covered in a defined time period) independent of individual
medical necessity determinations, the amount that has accrued toward the
limit on the item or service (such as the number of items, days, units,
visits, or hours the participant, beneficiary, or enrollee has used
within that time period).
(ii) Billed charge means the total charges for an item or service
billed to a group health plan or health insurance issuer by a provider.
(iii) Billing code means the code used by a group health plan or
health insurance issuer or provider to identify
[[Page 204]]
health care items or services for purposes of billing, adjudicating, and
paying claims for a covered item or service, including the Current
Procedural Terminology (CPT) code, Healthcare Common Procedure Coding
System (HCPCS) code, Diagnosis-Related Group (DRG) code, National Drug
Code (NDC), or other common payer identifier.
(iv) Bundled payment arrangement means a payment model under which a
provider is paid a single payment for all covered items and services
provided to a participant, beneficiary, or enrollee for a specific
treatment or procedure.
(v) Copayment assistance means the financial assistance a
participant, beneficiary, or enrollee receives from a prescription drug
or medical supply manufacturer towards the purchase of a covered item or
service.
(vi) Cost-sharing liability means the amount a participant,
beneficiary, or enrollee is responsible for paying for a covered item or
service under the terms of the group health plan or health insurance
coverage. Cost-sharing liability generally includes deductibles,
coinsurance, and copayments, but does not include premiums, balance
billing amounts by out-of-network providers, or the cost of items or
services that are not covered under a group health plan or health
insurance coverage.
(vii) Cost-sharing information means information related to any
expenditure required by or on behalf of a participant, beneficiary, or
enrollee with respect to health care benefits that are relevant to a
determination of the participant's, beneficiary's, or enrollee's cost-
sharing liability for a particular covered item or service.
(viii) Covered items or services means those items or services,
including prescription drugs, the costs for which are payable, in whole
or in part, under the terms of a group health plan or health insurance
coverage.
(ix) Derived amount means the price that a group health plan or
health insurance issuer assigns to an item or service for the purpose of
internal accounting, reconciliation with providers or submitting data in
accordance with the requirements of Sec. 153.710(c) of this subchapter.
(x) Enrollee means an individual who is covered under an individual
health insurance policy as defined under section 2791(b)(5) of the
Public Health Service (PHS) Act.
(xi) Historical net price means the retrospective average amount a
group health plan or health insurance issuer paid for a prescription
drug, inclusive of any reasonably allocated rebates, discounts,
chargebacks, fees, and any additional price concessions received by the
plan or issuer with respect to the prescription drug. The allocation
shall be determined by dollar value for non-product specific and
product-specific rebates, discounts, chargebacks, fees, and other price
concessions to the extent that the total amount of any such price
concession is known to the group health plan or health insurance issuer
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec. 147.212. However, to the extent
that the total amount of any non-product specific and product-specific
rebates, discounts, chargebacks, fees, or other price concessions is not
known to the group health plan or health insurance issuer at the time of
file publication, then the plan or issuer shall allocate such rebates,
discounts, chargebacks, fees, and other price concessions by using a
good faith, reasonable estimate of the average price concessions based
on the rebates, discounts, chargebacks, fees, and other price
concessions received over a time period prior to the current reporting
period and of equal duration to the current reporting period, as
determined under Sec. 147.212(b)(1)(iii)(D)(3).
(xii) In-network provider means any provider of any item or service
with which a group health plan or health insurance issuer, or a third
party for the plan or issuer, has a contract setting forth the terms and
conditions on which a relevant item or service is provided to a
participant, beneficiary, or enrollee.
(xiii) Items or services means all encounters, procedures, medical
tests, supplies, prescription drugs, durable medical equipment, and fees
(including facility fees), provided or assessed in
[[Page 205]]
connection with the provision of health care.
(xiv) Machine-readable file means a digital representation of data
or information in a file that can be imported or read by a computer
system for further processing without human intervention, while ensuring
no semantic meaning is lost.
(xv) National Drug Code means the unique 10- or 11-digit 3-segment
number assigned by the Food and Drug Administration, which provides a
universal product identifier for drugs in the United States.
(xvi) Negotiated rate means the amount a group health plan or health
insurance issuer has contractually agreed to pay an in-network provider,
including an in-network pharmacy or other prescription drug dispenser,
for covered items and services, whether directly or indirectly,
including through a third-party administrator or pharmacy benefit
manager.
(xvii) Out-of-network allowed amount means the maximum amount a
group health plan or health insurance issuer will pay for a covered item
or service furnished by an out-of-network provider.
(xviii) Out-of-network provider means a provider of any item or
service that does not have a contract under a participant's,
beneficiary's, or enrollee's group health plan or health insurance
coverage to provide items or services.
(xix) Out-of-pocket limit means the maximum amount that a
participant, beneficiary, or enrollee is required to pay during a
coverage period for his or her share of the costs of covered items and
services under his or her group health plan or health insurance
coverage, including for self-only and other than self-only coverage, as
applicable.
(xx) Plain language means written and presented in a manner
calculated to be understood by the average participant, beneficiary, or
enrollee.
(xxi) Prerequisite means concurrent review, prior authorization, and
step-therapy or fail-first protocols related to covered items and
services that must be satisfied before a group health plan or health
insurance issuer will cover the item or service. The term prerequisite
does not include medical necessity determinations generally or other
forms of medical management techniques.
(xxii) Underlying fee schedule rate means the rate for a covered
item or service from a particular in-network provider, or providers that
a group health plan or health insurance issuer uses to determine a
participant's, beneficiary's, or enrollee's cost-sharing liability for
the item or service, when that rate is different from the negotiated
rate or derived amount.
(b) [Reserved]
[85 FR 72305, Nov. 12, 2020]
Sec. 147.211 Transparency in coverage--required disclosures to
participants, beneficiaries, or enrollees.
(a) Scope and definitions--(1) Scope. This section establishes price
transparency requirements for group health plans and health insurance
issuers in the individual and group markets for the timely disclosure of
information about costs related to covered items and services under a
plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 147.210 apply.
(b) Required disclosures to participants, beneficiaries, or
enrollees. At the request of a participant, beneficiary, or enrollee who
is enrolled in a group health plan or health insurance issuer offering
group or individual health insurance coverage, the plan or issuer must
provide to the participant, beneficiary, or enrollee the information
required under paragraph (b)(1) of this section, in accordance with the
method and format requirements set forth in paragraph (b)(2) of this
section.
(1) Required cost-sharing information. The information required
under this paragraph (b)(1) is the following cost-sharing information,
which is accurate at the time the request is made, with respect to a
participant's, beneficiary's, or enrollee's cost-sharing liability for
covered items and services:
(i) An estimate of the participant's, beneficiary's, or enrollee's
cost-sharing liability for a requested covered item or service furnished
by a provider or providers, which must reflect any cost-sharing
reductions the enrollee would receive, that is calculated based on the
[[Page 206]]
information described in paragraphs (b)(1)(ii) through (iv) of this
section.
(A) If the request for cost-sharing information relates to items and
services that are provided within a bundled payment arrangement, and the
bundled payment arrangement includes items or services that have a
separate cost-sharing liability, the group health plan or health
insurance issuer must provide estimates of the cost-sharing liability
for the requested covered item or service, as well as an estimate of the
cost-sharing liability for each of the items and services in the bundled
payment arrangement that have separate cost-sharing liabilities. While
group health plans and health insurance issuers are not required to
provide estimates of cost-sharing liability for a bundled payment
arrangement where the cost-sharing is imposed separately for each item
and service included in the bundled payment arrangement, nothing
prohibits plans or issuers from providing estimates for multiple items
and services in situations where such estimates could be relevant to
participants or beneficiaries, as long as the plan or issuer also
discloses information about the relevant items or services individually,
as required in paragraph (b)(1)(v) of this section.
(B) For requested items and services that are recommended preventive
services under section 2713 of the Public Health Service Act (PHS Act),
if the group health plan or health insurance issuer cannot determine
whether the request is for preventive or non-preventive purposes, the
plan or issuer must display the cost-sharing liability that applies for
non-preventive purposes. As an alternative, a group health plan or
health insurance issuer may allow a participant, beneficiary, or
enrollee to request cost-sharing information for the specific preventive
or non-preventive item or service by including terms such as
``preventive'', ``non-preventive'' or ``diagnostic'' as a means to
request the most accurate cost-sharing information.
(ii) Accumulated amounts.
(iii) In-network rate, comprised of the following elements, as
applicable to the group health plan's or health insurance issuer's
payment model:
(A) Negotiated rate, reflected as a dollar amount, for an in-network
provider or providers for the requested covered item or service; this
rate must be disclosed even if it is not the rate the plan or issuer
uses to calculate cost-sharing liability; and
(B) Underlying fee schedule rate, reflected as a dollar amount, for
the requested covered item or service, to the extent that it is
different from the negotiated rate.
(iv) Out-of-network allowed amount or any other rate that provides a
more accurate estimate of an amount a group health plan or health
insurance issuer will pay for the requested covered item or service,
reflected as a dollar amount, if the request for cost-sharing
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a
plan or issuer reimburses an out-of-network provider a percentage of the
billed charge for a covered item or service, the out-of-network allowed
amount will be that percentage.
(v) If a participant, beneficiary, or enrollee requests information
for an item or service subject to a bundled payment arrangement, a list
of the items and services included in the bundled payment arrangement
for which cost-sharing information is being disclosed.
(vi) If applicable, notification that coverage of a specific item or
service is subject to a prerequisite.
(vii) A notice that includes the following information in plain
language:
(A) A statement that out-of-network providers may bill participants,
beneficiaries, or enrollees for the difference between a provider's
billed charges and the sum of the amount collected from the group health
plan or health insurance issuer and from the participant, beneficiary,
or enrollee in the form of a copayment or coinsurance amount (the
difference referred to as balance billing), and that the cost-sharing
information provided pursuant to this paragraph (b)(1) does not account
for these potential additional amounts. This statement is only required
if balance billing is permitted under state law;
[[Page 207]]
(B) A statement that the actual charges for a participant's,
beneficiary's, or enrollee's covered item or service may be different
from an estimate of cost-sharing liability provided pursuant to
paragraph (b)(1)(i) of this section, depending on the actual items or
services the participant, beneficiary, or enrollee receives at the point
of care;
(C) A statement that the estimate of cost-sharing liability for a
covered item or service is not a guarantee that benefits will be
provided for that item or service;
(D) A statement disclosing whether the plan counts copayment
assistance and other third-party payments in the calculation of the
participant's, beneficiary's, or enrollee's deductible and out-of-pocket
maximum;
(E) For items and services that are recommended preventive services
under section 2713 of the PHS Act, a statement that an in-network item
or service may not be subject to cost-sharing if it is billed as a
preventive service if the group health plan or health insurance issuer
cannot determine whether the request is for a preventive or non-
preventive item or service; and
(F) Any additional information, including other disclaimers, that
the group health plan or health insurance issuer determines is
appropriate, provided the additional information does not conflict with
the information required to be provided by this paragraph (b)(1).
(2) Required methods and formats for disclosing information to
participants, beneficiaries, or enrollees. The methods and formats for
the disclosure required under this paragraph (b) are as follows:
(i) Internet-based self-service tool. Information provided under
this paragraph (b) must be made available in plain language, without
subscription or other fee, through a self-service tool on an internet
website that provides real-time responses based on cost-sharing
information that is accurate at the time of the request. Group health
plans and health insurance issuers must ensure that the self-service
tool allows users to:
(A) Search for cost-sharing information for a covered item or
service provided by a specific in-network provider or by all in-network
providers by inputting:
(1) A billing code (such as CPT code 87804) or a descriptive term
(such as ``rapid flu test''), at the option of the user;
(2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
(3) Other factors utilized by the plan or issuer that are relevant
for determining the applicable cost-sharing information (such as
location of service, facility name, or dosage).
(B) Search for an out-of-network allowed amount, percentage of
billed charges, or other rate that provides a reasonably accurate
estimate of the amount a group health plan or health insurance issuer
will pay for a covered item or service provided by out-of-network
providers by inputting:
(1) A billing code or descriptive term, at the option of the user;
and
(2) Other factors utilized by the plan or issuer that are relevant
for determining the applicable out-of-network allowed amount or other
rate (such as the location in which the covered item or service will be
sought or provided).
(C) Refine and reorder search results based on geographic proximity
of in-network providers, and the amount of the participant's,
beneficiary's, or enrollee's estimated cost-sharing liability for the
covered item or service, to the extent the search for cost-sharing
information for covered items or services returns multiple results.
(ii) Paper method. Information provided under this paragraph (b)
must be made available in plain language, without a fee, in paper form
at the request of the participant, beneficiary, or enrollee. In
responding to such a request, the group health plan or health insurance
issuer may limit the number of providers with respect to which cost-
sharing information for covered items and services is provided to no
fewer than 20 providers per request. The group health plan or health
insurance issuer is required to:
(A) Disclose the applicable provider-per-request limit to the
participant, beneficiary, or enrollee;
[[Page 208]]
(B) Provide the cost-sharing information in paper form pursuant to
the individual's request, in accordance with the requirements in
paragraphs (b)(2)(i)(A) through (C) of this section; and
(C) Mail the cost-sharing information in paper form no later than 2
business days after an individual's request is received.
(D) To the extent participants, beneficiaries, and enrollees request
disclosure other than by paper (for example, by phone or email), plans
and issuers may provide the disclosure through another means, provided
the participant, beneficiary, or enrollee agrees that disclosure through
such means is sufficient to satisfy the request and the request is
fulfilled at least as rapidly as required for the paper method.
(3) Special rule to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information required by this paragraph (b) in compliance with this
section pursuant to a written agreement. Accordingly, if a health
insurance issuer and a plan sponsor enter into a written agreement under
which the issuer agrees to provide the information required under this
paragraph (b) in compliance with this section, and the issuer fails to
do so, then the issuer, but not the plan, violates the transparency
disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a pharmacy benefit manager or other third-party) provides the
information required by this paragraph (b) in compliance with this
section. Notwithstanding the preceding sentence, if a group health plan
or health insurance issuer chooses to enter into such an agreement and
the party with which it contracts fails to provide the information in
compliance with this paragraph (b), the plan or issuer violates the
transparency disclosure requirements of this paragraph (b).
(c) Applicability. (1) The provisions of this section apply for plan
years (in the individual market, for policy years) beginning on or after
January 1, 2023 with respect to the 500 items and services to be posted
on a publicly available website, and with respect to all covered items
and services, for plan years (in the individual market, for policy
years) beginning on or after January 1, 2024.
(2) As provided under Sec. 147.140, this section does not apply to
grandfathered health plans. This section also does not apply to health
reimbursement arrangements or other account-based group health plans as
defined in Sec. 147.126(d)(6) or short term limited duration insurance
as defined in 45 CFR 144.103.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to comply with
requirements under other applicable state or Federal laws, including
those governing the accessibility, privacy, or security of information
required to be disclosed under this section, or those governing the
ability of properly authorized representatives to access participant,
beneficiary, or enrollee information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to
[[Page 209]]
comply with this section because it relied in good faith on information
from the other entity, unless the plan or issuer knows, or reasonably
should have known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated or
to dissimilar circumstances.
[85 FR 72305, Nov. 12, 2020]
Sec. 147.212 Transparency in coverage--requirements for public
disclosure.
(a) Scope and definitions--(1) Scope. This section establishes price
transparency requirements for group health plans and health insurance
issuers in the individual and group markets for the timely disclosure of
information about costs related to covered items and services under a
plan or health insurance coverage.
(2) Definitions. For purposes of this section, the definitions in
Sec. 147.210 apply.
(b) Requirements for public disclosure of in-network provider rates
for covered items and services, out-of-network allowed amounts and
billed charges for covered items and services, and negotiated rates and
historical net prices for covered prescription drugs. A group health
plan or health insurance issuer must make available on an internet
website the information required under paragraph (b)(1) of this section
in three machine-readable files, in accordance with the method and
format requirements described in paragraph (b)(2) of this section, and
that are updated as required under paragraph (b)(3) of this section.
(1) Required information. Machine-readable files required under this
paragraph (b) that are made available to the public by a group health
plan or health insurance issuer must include:
(i) An in-network rate machine-readable file that includes the
required information under this paragraph (b)(1)(i) for all covered
items and services, except for prescription drugs that are subject to a
fee-for-service reimbursement arrangement, which must be reported in the
prescription drug machine-readable file pursuant to paragraph
(b)(1)(iii) of this section. The in-network rate machine-readable file
must include:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit Health Insurance
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier
is not available, the 5-digit HIOS identifier, or if no HIOS identifier
is available, the Employer Identification Number (EIN);
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) All applicable rates, which may include one or more of the
following: Negotiated rates, underlying fee schedule rates, or derived
amounts. If a group health plan or health insurance issuer does not use
negotiated rates for provider reimbursement, then the plan or issuer
should disclose derived amounts to the extent these amounts are already
calculated in the normal course of business. If the group health plan or
health insurance issuer uses underlying fee schedule rates for
calculating cost sharing, then the plan or issuer should include the
underlying fee schedule rates in addition to the negotiated rate or
derived amount. Applicable rates, including for both individual items
and services and items and services in a bundled payment arrangement,
must be:
(1) Reflected as dollar amounts, with respect to each covered item
or service that is furnished by an in-network provider. If the
negotiated rate is subject to change based upon participant,
beneficiary, or enrollee-specific characteristics, these dollar amounts
should be reflected as the base negotiated rate applicable to the item
or service prior to adjustments for participant, beneficiary, or
enrollee-specific characteristics;
(2) Associated with the National Provider Identifier (NPI), Tax
Identification Number (TIN), and Place of Service Code for each in-
network provider;
[[Page 210]]
(3) Associated with the last date of the contract term or expiration
date for each provider-specific applicable rate that applies to each
covered item or service; and
(4) Indicated with a notation where a reimbursement arrangement
other than a standard fee-for-service model (such as capitation or a
bundled payment arrangement) applies.
(ii) An out-of-network allowed amount machine-readable file,
including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) A billing code, which in the case of prescription drugs must be
an NDC, and a plain language description for each billing code for each
covered item or service under each coverage option offered by a plan or
issuer; and
(C) Unique out-of-network allowed amounts and billed charges with
respect to covered items or services furnished by out-of-network
providers during the 90-day time period that begins 180 days prior to
the publication date of the machine-readable file (except that a group
health plan or health insurance issuer must omit such data in relation
to a particular item or service and provider when compliance with this
paragraph (b)(1)(ii)(C) would require the plan or issuer to report
payment of out-of-network allowed amounts in connection with fewer than
20 different claims for payments under a single plan or coverage).
Consistent with paragraph (c)(3) of this section, nothing in this
paragraph (b)(1)(ii)(C) requires the disclosure of information that
would violate any applicable health information privacy law. Each unique
out-of-network allowed amount must be:
(1) Reflected as a dollar amount, with respect to each covered item
or service that is furnished by an out-of-network provider; and
(2) Associated with the NPI, TIN, and Place of Service Code for each
out-of-network provider.
(iii) A prescription drug machine-readable file, including:
(A) For each coverage option offered by a group health plan or
health insurance issuer, the name and the 14-digit HIOS identifier, or,
if the 14-digit HIOS identifier is not available, the 5-digit HIOS
identifier, or, if no HIOS identifier is available, the EIN;
(B) The NDC, and the proprietary and nonproprietary name assigned to
the NDC by the Food and Drug Administration (FDA), for each covered item
or service that is a prescription drug under each coverage option
offered by a plan or issuer;
(C) The negotiated rates which must be:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy or
other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for each
in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the last date of the contract term for each
provider-specific negotiated rate that applies to each NDC; and
(D) Historical net prices that are:
(1) Reflected as a dollar amount, with respect to each NDC that is
furnished by an in-network provider, including an in-network pharmacy or
other prescription drug dispenser;
(2) Associated with the NPI, TIN, and Place of Service Code for each
in-network provider, including each in-network pharmacy or other
prescription drug dispenser; and
(3) Associated with the 90-day time period that begins 180 days
prior to the publication date of the machine-readable file for each
provider-specific historical net price that applies to each NDC (except
that a group health plan or health insurance issuer must omit such data
in relation to a particular NDC and provider when compliance with this
paragraph (b)(1)(iii)(D) would require the plan or issuer to report
payment of historical net prices calculated using fewer than 20
different claims for payment). Consistent with paragraph (b)(3) of this
section, nothing in this paragraph (b)(1)(iii)(D) requires the
disclosure of information
[[Page 211]]
that would violate any applicable health information privacy law.
(2) Required method and format for disclosing information to the
public. The machine-readable files described in this paragraph (b) must
be available in a form and manner as specified in guidance issued by the
Department of the Treasury, the Department of Labor, and the Department
of Health and Human Services. The machine-readable files must be
publicly available and accessible to any person free of charge and
without conditions, such as establishment of a user account, password,
or other credentials, or submission of personally identifiable
information to access the file.
(3) Timing. A group health plan or health insurance issuer must
update the machine-readable files and information required by this
paragraph (b) monthly. The group health plan or health insurance issuer
must clearly indicate the date that the files were most recently
updated.
(4) Special rules to prevent unnecessary duplication--(i) Special
rule for insured group health plans. To the extent coverage under a
group health plan consists of group health insurance coverage, the plan
satisfies the requirements of this paragraph (b) if the plan requires
the health insurance issuer offering the coverage to provide the
information pursuant to a written agreement. Accordingly, if a health
insurance issuer and a group health plan sponsor enter into a written
agreement under which the issuer agrees to provide the information
required under this paragraph (b) in compliance with this section, and
the issuer fails to do so, then the issuer, but not the plan, violates
the transparency disclosure requirements of this paragraph (b).
(ii) Other contractual arrangements. A group health plan or health
insurance issuer may satisfy the requirements under this paragraph (b)
by entering into a written agreement under which another party (such as
a third-party administrator or health care claims clearinghouse) will
provide the information required by this paragraph (b) in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and the party with which it contracts fails to provide the
information in compliance with this paragraph (b), the plan or issuer
violates the transparency disclosure requirements of this paragraph (b).
(iii) Aggregation permitted for out-of-network allowed amounts.
Nothing in this section prohibits a group health plan or health
insurance issuer from satisfying the disclosure requirement described in
paragraph (b)(1)(ii) of this section by disclosing out-of-network
allowed amounts made available by, or otherwise obtained from, an
issuer, a service provider, or other party with which the plan or issuer
has entered into a written agreement to provide the information,
provided the minimum claim threshold described in paragraph
(b)(1)(ii)(C) of this section is independently met for each item or
service and for each plan or coverage included in an aggregated Allowed
Amount File. Under such circumstances, health insurance issuers, service
providers, or other parties with which the group health plan or issuer
has contracted may aggregate out-of-network allowed amounts for more
than one plan or insurance policy or contract. Additionally, nothing in
this section prevents the Allowed Amount File from being hosted on a
third-party website or prevents a plan administrator or issuer from
contracting with a third party to post the file. However, if a plan or
issuer chooses not to also host the file separately on its own website,
it must provide a link on its own public website to the location where
the file is made publicly available.
(c) Applicability. (1) The provisions of this section apply for plan
years (in the individual market, for policy years) beginning on or after
January 1, 2022.
(2) As provided under Sec. 147.140, this section does not apply to
grandfathered health plans. This section also does not apply to health
reimbursement arrangements or other account-based group health plans as
defined in Sec. 147.126(d)(6) or short term limited duration insurance
as defined in Sec. 144.103 of this subchapter.
(3) Nothing in this section alters or otherwise affects a group
health plan's or health insurance issuer's duty to
[[Page 212]]
comply with requirements under other applicable state or Federal laws,
including those governing the accessibility, privacy, or security of
information required to be disclosed under this section, or those
governing the ability of properly authorized representatives to access
participant, or beneficiary information held by plans and issuers.
(4) A group health plan or health insurance issuer will not fail to
comply with this section solely because it, acting in good faith and
with reasonable diligence, makes an error or omission in a disclosure
required under paragraph (b) of this section, provided that the plan or
issuer corrects the information as soon as practicable.
(5) A group health plan or health insurance issuer will not fail to
comply with this section solely because, despite acting in good faith
and with reasonable diligence, its internet website is temporarily
inaccessible, provided that the plan or issuer makes the information
available as soon as practicable.
(6) To the extent compliance with this section requires a group
health plan or health insurance issuer to obtain information from any
other entity, the plan or issuer will not fail to comply with this
section because it relied in good faith on information from the other
entity, unless the plan or issuer knows, or reasonably should have
known, that the information is incomplete or inaccurate.
(d) Severability. Any provision of this section held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, shall be
severable from this section and shall not affect the remainder thereof
or the application of the provision to persons not similarly situated or
to dissimilar circumstances.
[85 FR 72305, Nov. 12, 2020]
PART 148_REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE
MARKET--Table of Contents
Subpart A_General Provisions
Sec.
148.101 Basis and purpose.
148.102 Scope and applicability date.
Subpart B_Requirements Relating to Access and Renewability of Coverage
148.120 Guaranteed availability of individual health insurance coverage
to certain individuals with prior group coverage.
148.122 Guaranteed renewability of individual health insurance coverage.
148.124 Certification and disclosure of coverage.
148.126 Determination of an eligible individual.
148.128 State flexibility in individual market reforms--alternative
mechanisms.
Subpart C_Requirements Related to Benefits
148.170 Standards relating to benefits for mothers and newborns.
148.180 Prohibition of discrimination based on genetic information.
Subpart D_Preemption; Excepted Benefits
148.210 Preemption.
148.220 Excepted benefits.
Subpart E_Grants to States for Operation of Qualified High Risk Pools
148.306 Basis and scope.
148.308 Definitions.
148.310 Eligibility requirements for a grant.
148.312 Amount of grant payment.
148.314 Periods during which eligible States may apply for a grant.
148.316 Grant application instructions.
148.318 Grant application review.
148.320 Grant awards.
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-11 300gg-91, and
300-gg92, as amended.
Source: 62 FR 16995, Apr. 8, 1997, unless otherwise noted.
Subpart A_General Provisions
Sec. 148.101 Basis and purpose.
This part implements sections 2741 through 2763 and 2791 and 2792 of
the PHS Act. Its purpose is to guarantee the renewability of all
coverage in the individual market. It also provides certain protections
for mothers and newborns with respect to coverage for hospital stays in
connection with childbirth and protects all individuals and family
members who have, or seek, individual health insurance coverage
[[Page 213]]
from discrimination based on genetic information.
[79 FR 30340, May 27, 2014]
Sec. 148.102 Scope and applicability date.
(a) Scope and applicability. (1) Individual health insurance
coverage includes all health insurance coverage (as defined in Sec.
144.103 of this subchapter) that is neither health insurance coverage
sold in connection with an employment-related group health plan, nor
short-term, limited-duration coverage as defined in Sec. 144.103 of
this subchapter.
(2) The requirements that pertain to guaranteed renewability for all
individuals, to protections for mothers and newborns with respect to
hospital stays in connection with childbirth, and to protections against
discrimination based on genetic information apply to all issuers of
individual health insurance coverage in the State.
(b) Applicability dates. Except as provided in Sec. Sec. 148.124,
148.170, and 148.180, the requirements of this part apply to health
insurance coverage offered, sold, issued, renewed, in effect, or
operated in the individual market after June 30, 1997. Notwithstanding
the previous sentence, for short-term, limited-duration insurance sold
or issued on or after September 1, 2024, the definition of short-term,
limited-duration insurance in Sec. 144.103 of this subchapter applies
for coverage periods beginning on or after September 1, 2024. For short-
term, limited-duration insurance sold or issued before September 1, 2024
(including any subsequent renewal or extension consistent with
applicable law), the definition of short-term, limited-duration
insurance in 45 CFR 144.103, revised as of October 1, 2023, continues to
apply, except that paragraph (1)(ii) of the definition of short-term,
limited-duration insurance in Sec. 144.103 applies for coverage periods
beginning on or after September 1, 2024.
[79 FR 30340, May 27, 2014, as amended at 81 FR 75327, Oct. 31, 2016; 83
FR 38243, Aug. 3, 2018; 89 FR 23419, Apr. 3, 2024]
Subpart B_Requirements Relating to Access and Renewability of Coverage
Sec. 148.120 Guaranteed availability of individual health insurance
coverage to certain individuals with prior group coverage.
The rules for guaranteeing the availability of individual health
insurance coverage to certain eligible individuals with prior group
coverage have been superseded by the requirements of Sec. 147.104 of
this subchapter, which set forth Federal requirements for guaranteed
availability of coverage in the group and individual markets.
[79 FR 30340, May 27, 2014]
Sec. 148.122 Guaranteed renewability of individual health
insurance coverage.
(a) Applicability. This section applies to non-grandfathered and
grandfathered health plans (within the meaning of Sec. 147.140 of this
subchapter) that are individual health insurance coverage. See also
Sec. 147.106 of this subchapter for requirements relating to guaranteed
renewability of coverage with respect to non-grandfathered health plans.
(b) General rules. (1) Except as provided in paragraphs (c) through
(g) of this section, an issuer must renew or continue in force the
coverage at the option of the individual.
(2) Medicare entitlement or enrollment is not a basis to nonrenew an
individual's health insurance coverage in the individual market under
the same policy or contract of insurance.
(c) Exceptions to renewing coverage. An issuer may nonrenew or
discontinue health insurance coverage of an individual in the individual
market based only on one or more of the following:
(1) Nonpayment of premiums. The individual has failed to pay
premiums or contributions in accordance with the terms of the health
insurance coverage, including any timeliness requirements.
(2) Fraud. The individual has performed an act or practice that
constitutes fraud or made an intentional misrepresentation of material
fact under the terms of the coverage.
[[Page 214]]
(3) Termination of product. The issuer is ceasing to offer coverage
in the market in accordance with paragraph (d) or (e) of this section
and applicable State law.
(4) Movement outside the service area. For network plans, the
individual no longer resides, lives, or works in the service area of the
issuer, or area for which the issuer is authorized to do business, but
only if coverage is terminated uniformly without regard to any health
status-related factor of covered individuals; provided the issuer
provides notice in accordance with the requirements of paragraph (d)(1)
of this section.
(5) Association membership ceases. For coverage made available in
the individual market only through one or more bona fide associations,
the individual's membership in the association ceases, but only if the
coverage is terminated uniformly without regard to any health status-
related factor of covered individuals.
(d) Discontinuing a particular type of coverage. An issuer may
discontinue offering a particular type of health insurance coverage
offered in the individual market only if it meets the following
requirements:
(1) Provides notice in writing, in a form and manner specified by
the Secretary, to each individual provided coverage of that type of
health insurance at least 90 calendar days before the date the coverage
will be discontinued.
(2) Offers to each covered individual, on a guaranteed issue basis,
the option to purchase any other individual health insurance coverage
currently being offered by the issuer for individuals in that market.
(3) Acts uniformly without regard to any health status-related
factor of covered individuals or dependents of covered individuals who
may become eligible for coverage.
(e) Discontinuing all coverage. An issuer may discontinue offering
all health insurance coverage in the individual market in a State only
if it meets the following requirements.
(1) Provides notice in writing to the applicable State authority and
to each individual of the discontinuation at least 180 days before the
date the coverage will expire.
(2) Discontinues and does not renew all health insurance policies it
issues or delivers for issuance in the State in the individual market.
(3) Acts uniformly without regard to any health status-related
factor of covered individuals or dependents of covered individuals who
may become eligible for coverage.
(4) For purposes of this paragraph (e), subject to applicable State
law, an issuer will not be considered to have discontinued offering all
health insurance coverage in a market in a State if--
(i) The issuer (in this paragraph referred to as the initial issuer)
or, if the issuer is a member of a controlled group, any other issuer
that is a member of such controlled group, offers and makes available in
the applicable market in the State at least one product that is
considered in accordance with Sec. 144.103 of this subchapter to be the
same product as a product the initial issuer had been offering in such
market in such State; or
(ii) The issuer--
(A) Offers and makes available at least one product (in paragraphs
(e)(4)(ii)(A) through (C) of this section referred to as the new
product) in the applicable market in the State, even if such product is
not considered in accordance with Sec. 144.103 of this subchapter to be
the same product as a product the issuer had been offering in the
applicable market in the State (in paragraphs (e)(4)(ii)(A) through (C)
of this section referred to as the discontinued product);
(B) Subjects such new product or products to the applicable process
and requirements established under part 154 of this title as if such
process and requirements applied with respect to that product or
products, to the extent such process and requirements are otherwise
applicable to coverage of the same type and in the same market; and
(C) Reasonably identifies the discontinued product or products that
correspond to the new product or products for purposes of the process
and requirements applied pursuant to paragraph (e)(4)(ii)(B) of this
section.
(5) For purposes of this section, the term controlled group means a
group of two or more persons that is treated as
[[Page 215]]
a single employer under sections 52(a), 52(b), 414(m), or 414(o) of the
Internal Revenue Code of 1986, as amended, or a narrower group as may be
provided by applicable State law.
(f) Prohibition on market reentry. An issuer who elects to
discontinue offering all health insurance coverage under paragraph (e)
of this section may not issue coverage in the market and State involved
during the 5-year period beginning on the date of discontinuation of the
last coverage not renewed.
(g) Exception for uniform modification of coverage. (1) An issuer
may, only at the time of coverage renewal, modify the health insurance
coverage for a product offered in the individual market if the
modification is consistent with State law and is effective uniformly for
all individuals with that product.
(2) For purposes of paragraph (g) of this section, modifications
made uniformly and solely pursuant to applicable Federal or State
requirements are considered a uniform modification of coverage if:
(i) The modification is made within a reasonable time period after
the imposition or modification of the Federal or State requirement; and
(ii) The modification is directly related to the imposition or
modification of the Federal or State requirement.
(3) For purposes of paragraph (g) of this section, other types of
modifications made uniformly are considered a uniform modification of
coverage if the health insurance coverage for the product meets all of
the following criteria:
(i) The product is offered by the same health insurance issuer
(within the meaning of section 2791(b)(2) of the PHS Act), or if the
issuer that is a member of a controlled group (as described in paragraph
(e)(5) of this section), any other health insurance issuer that is a
member of such controlled group;
(ii) The product is offered as the same product network type (for
example, health maintenance organization, preferred provider
organization, exclusive provider organization, point of service, or
indemnity);
(iii) The product continues to cover at least a majority of the same
service area;
(iv) Within the product, each plan has the same cost-sharing
structure as before the modification, except for any variation in cost
sharing solely related to changes in cost and utilization of medical
care, or to maintain the same metal tier level described in sections
1302(d) and (e) of the Affordable Care Act; and
(v) The product provides the same covered benefits, except for any
changes in benefits that cumulatively impact the rate for any plan
within the product within an allowable variation of 2 percentage points (not including changes pursuant to
applicable Federal or State requirements).
(4) A State may only broaden the standards in paragraphs (g)(3)(iii)
and (iv) of this section.
(h) Application to coverage offered only through associations. In
the case of health insurance coverage that is made available by a health
insurance issuer in the individual market only through one or more
associations, any reference in this section to an ``individual'' is
deemed to include a reference to the association of which the individual
is a member.
(i) Notice of renewal of coverage. If an issuer is renewing
grandfathered coverage as described in paragraph (b) of this section, or
uniformly modifying grandfathered coverage as described in paragraph (g)
of this section, the issuer must provide to each individual written
notice of the renewal at least 60 calendar days before the date the
coverage will be renewed in a form and manner specified by the
Secretary.
(Approved by the Office of Management and Budget under control number
0938-0703)
[62 FR 16998, Apr. 8, 1997; 62 FR 31696, June 10, 1997, as amended at 62
FR 35906, July 2, 1997; 79 FR 30340, May 27, 2014; 79 FR 42986, July 24,
2014; 79 FR 53004, Sept. 5, 2014; 81 FR 94174, Dec. 22, 2016; 84 FR
17561, Apr. 25, 2019]
Sec. 148.124 Certification and disclosure of coverage.
(a) General rule. The rules for providing certificates of creditable
coverage and demonstrating creditable coverage have been superseded by
the prohibition on preexisting condition
[[Page 216]]
exclusions. See Sec. 147.108 of this subchapter for rules prohibiting
the imposition of a preexisting condition exclusion.
(b) Applicability. The provisions of this section apply beginning
December 31, 2014.
[79 FR 30341, May 27, 2014]
Sec. 148.126 Determination of an eligible individual.
The rules for guaranteeing the availability of individual health
insurance coverage to certain eligible individuals with prior group
coverage have been superseded by the requirements of Sec. 147.104 of
this subchapter, which set forth Federal requirements for guaranteed
availability of coverage in the group and individual markets.
[79 FR 30341, May 27, 2014]
Sec. 148.128 State flexibility in individual market reforms
--alternative mechanisms.
The rules for a State to implement an acceptable alternative
mechanism for purposes of guaranteeing the availability of individual
health insurance coverage to certain eligible individuals with prior
group coverage have been superseded by the requirements of Sec. 147.104
of this subchapter, which set forth Federal requirements for guaranteed
availability of coverage in the group and individual markets.
[79 FR 30341, May 27, 2014]
Subpart C_Requirements Related to Benefits
Sec. 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 prescribing the hospital length
of stay specified in paragraph (a)(1) of this section. (See also
paragraphs (b)(2) and (c)(3) of this
[[Page 217]]
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
[[Page 218]]
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 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.
[[Page 219]]
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 out-of-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
[[Page 220]]
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 Sec.
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.
[73 FR 62427, Oct. 20, 2008]
Sec. 148.180 Prohibition of discrimination based on genetic information.
(a) Definitions. For purposes of this section, the following
definitions as set forth in Sec. 146.122 of this subchapter pertain to
health insurance issuers in the individual market to the extent that
those definitions are not inconsistent with respect to health insurance
coverage offered, sold, issued, renewed, in effect or operated in the
individual market:
Collect has the meaning set forth at Sec. 146.122(a).
Family member has the meaning set forth at Sec. 146.122(a).
Genetic information has the meaning set forth at Sec. 146.122(a).
Genetic services has the meaning set forth at Sec. 146.122(a).
Genetic test has the meaning set forth at Sec. 146.122(a).
Manifestation or manifested has the meaning set forth at Sec.
146.122(a).
Preexisting condition exclusion has the meaning set forth at Sec.
144.103.
Underwriting purposes has the meaning set forth at Sec.
148.180(f)(1).
(b) Prohibition on genetic information as a condition of
eligibility--(1) In general. An issuer offering health insurance
coverage in the individual market may not establish rules for the
eligibility (including continued eligibility) of any individual to
enroll in individual health insurance coverage based on genetic
information.
(2) Rule of construction. Nothing in paragraph (b)(1) of this
section precludes an issuer from establishing rules for eligibility for
an individual to enroll in individual health insurance coverage based on
the manifestation of a disease or disorder in that individual, or in a
family member of that individual when the family member is covered under
the policy that covers the individual.
(3) Examples. The rules of this paragraph (b) are illustrated by the
following examples:
Example 1. (i) Facts. A State implements the HIPAA guaranteed
availability requirement in the individual health insurance market in
accordance with Sec. 148.120. Individual A and his spouse S are not
``eligible individuals'' as that term is defined at Sec. 148.103 and,
therefore, they are not entitled to obtain individual health insurance
coverage on a guaranteed available basis. They apply for individual
coverage with Issuer M. As part of the application for coverage, M
receives health information about A and S. Although A has no known
medical conditions, S has high blood pressure. M declines to offer
coverage to S.
(ii) Conclusion. In this Example 1, M permissibly may decline to
offer coverage to S because S has a manifested disorder (high blood
pressure) that makes her ineligible for coverage under the policy's
rules for eligibility.
Example 2. (i) Facts. Same facts as Example 1, except that S does
not have high blood pressure or any other known medical condition. The
only health information relevant to S that M receives in the application
indicates that both of S's parents are overweight and have high blood
pressure. M declines to offer coverage to S.
(ii) Conclusion. In this Example 2, M cannot decline to offer
coverage to S because S does not have a manifested disease or disorder.
The only health information M has that relates to her pertains to a
manifested disease or disorder of family members, which as family
medical history constitutes genetic information with respect to S. If M
denies eligibility to S based on genetic information, the denial will
violate this paragraph (b).
(c) Prohibition on genetic information in setting premium rates--(1)
In general. An issuer offering health insurance coverage in the
individual market must not adjust premium amounts for an individual on
the basis of genetic information regarding the individual or a family
member of the individual.
[[Page 221]]
(2) Rule of construction. (i) Nothing in paragraph (c)(1) of this
section precludes an issuer from adjusting premium amounts for an
individual on the basis of a manifestation of a disease or disorder in
that individual, or on the basis of a manifestation of a disease or
disorder in a family member of that individual when the family member is
covered under the policy that covers the individual.
(ii) The manifestation of a disease or disorder in one individual
cannot also be used as genetic information about other individuals
covered under the policy issued to that individual and to further
increase premium amounts.
(3) Examples. The rules of this paragraph (c) are illustrated by the
following examples:
Example 1. (i) Facts. Individual B is covered under an individual
health insurance policy through Issuer N. Every other policy year,
before renewal, N requires policyholders to submit updated health
information before the policy renewal date for purposes of determining
an appropriate premium, in excess of any increases due to inflation,
based on the policyholders' health status. B complies with that
requirement. During the past year, B's blood glucose levels have
increased significantly. N increases its premium for renewing B's policy
to account for N's increased risk associated with B's elevated blood
glucose levels.
(ii) Conclusion. In this Example 1, N is permitted to increase the
premium for B's policy on the basis of a manifested disorder (elevated
blood glucose) in B.
Example 2. (i) Facts. Same facts as Example 1, except that B's blood
glucose levels have not increased and are well within the normal range.
In providing updated health information to N, B indicates that both his
mother and sister are being treated for adult onset diabetes mellitus
(Type 2 diabetes). B provides this information voluntarily and not in
response to a specific request for family medical history or other
genetic information. N increases B's premium to account for B's genetic
predisposition to develop Type 2 diabetes in the future.
(ii) Conclusion. In this Example 2, N cannot increase B's premium on
the basis of B's family medical history of Type 2 diabetes, which is
genetic information with respect to B. Since there is no manifestation
of the disease in B at this point in time, N cannot increase B's
premium.
(d) Prohibition on genetic information as preexisting condition--(1)
In general. An issuer offering health insurance coverage in the
individual market may not, on the basis of genetic information, impose
any preexisting condition exclusion with respect to that coverage.
(2) Rule of construction. Nothing in paragraph (d)(1) of this
section precludes an issuer from imposing any preexisting condition
exclusion for an individual with respect to health insurance coverage on
the basis of a manifestation of a disease or disorder in that
individual.
(3) Examples: The rules of this paragraph (d) are illustrated by the
following examples:
Example 1. (i) Facts. Individual C has encountered delays in
receiving payment from the issuer of his individual health insurance
policy for covered services. He decides to switch carriers and applies
for an individual health insurance policy through Issuer O. C is
generally in good health, but has arthritis for which he has received
medical treatment. O offers C an individual policy that excludes
coverage for a 12-month period for any services related to C's
arthritis.
(ii) Conclusion. In this Example 1, O is permitted to impose a
preexisting condition exclusion with respect to C because C has a
manifested disease (arthritis).
Example 2. (i) Facts. Individual D applies for individual health
insurance coverage through Issuer P. D has no known medical conditions.
However, in response to P's request for medical information about D, P
receives information from D's physician that indicates that both of D's
parents have adult onset diabetes mellitus (Type 2 diabetes). P offers D
an individual policy with a rider that permanently excludes coverage for
any treatment related to diabetes that D may receive while covered by
the policy, based on the fact that both of D's parents have the disease.
(ii) Conclusion. In this Example 2, the rider violates this
paragraph (d) because the preexisting condition exclusion is based on
genetic information with respect to D (family medical history of Type 2
diabetes).
(e) Limitation on requesting or requiring genetic testing--(1)
General rule. Except as otherwise provided in this paragraph (e), an
issuer offering health insurance coverage in the individual market must
not request or require an individual or a family member of the
individual to undergo a genetic test.
(2) Health care professional may recommend a genetic test. Nothing
in paragraph (e)(1) of this section limits the authority of a health
care professional who is providing health care services to
[[Page 222]]
an individual to request that the individual undergo a genetic test.
(3) Examples. The rules of paragraphs (e)(1) and (e)(2) of this
section are illustrated by the following examples:
Example 1. (i) Facts. Individual E goes to a physician for a routine
physical examination. The physician reviews E's family medical history,
and E informs the physician that E's mother has been diagnosed with
Huntington's Disease. The physician advises E that Huntington's Disease
is hereditary, and recommends that E undergo a genetic test.
(ii) Conclusion. In this Example 1, the physician is a health care
professional who is providing health care services to E. Therefore, the
physician's recommendation that E undergo the genetic test does not
violate this paragraph (e).
Example 2. (i) Facts. Individual F is covered by a health
maintenance organization (HMO). F is a child being treated for leukemia.
F's physician, who is employed by the HMO, is considering a treatment
plan that includes six-mercaptopurine, a drug for treating leukemia in
most children. However, the drug could be fatal if taken by a small
percentage of children with a particular gene variant. F's physician
recommends that F undergo a genetic test to detect this variant before
proceeding with this course of treatment.
(ii) Conclusion. In this Example 2, even though the physician is
employed by the HMO, the physician is nonetheless a health care
professional who is providing health care services to F. Therefore, the
physician's recommendation that F undergo the genetic test does not
violate this paragraph (e).
(4) Determination regarding payment--(i) In general. As provided in
this paragraph (e)(4), nothing in paragraph (e)(1) of this section
precludes an issuer offering health insurance in the individual market
from obtaining and using the results of a genetic test in making a
determination regarding payment. For this purpose, ``payment'' has the
meaning given such term in Sec. 164.501 of this subtitle of the privacy
regulations issued under the Health Insurance Portability and
Accountability Act. Thus, if an issuer conditions payment for an item or
service based on its medical appropriateness and the medical
appropriateness of the item or service depends on a covered individual's
genetic makeup, the issuer is permitted to condition payment on the
outcome of a genetic test, and may refuse payment if the covered
individual does not undergo the genetic test.
(ii) Limitation. An issuer in the individual market is permitted to
request only the minimum amount of information necessary to make a
determination regarding payment. The minimum amount of information
necessary is determined in accordance with the minimum necessary
standard in Sec. 164.502(b) of this subtitle of the privacy regulations
issued under the Health Insurance Portability and Accountability Act.
(iii) Examples. See paragraph (g) of this section for examples
illustrating the rules of this paragraph (e)(4), as well as other
provisions of this section.
(5) Research exception. Notwithstanding paragraph (e)(1) of this
section, an issuer may request, but not require, that an individual or
family member covered under the same policy undergo a genetic test if
all of the conditions of this paragraph (e)(5) are met:
(i) Research in accordance with Federal regulations and applicable
State or local law or regulations. The issuer makes the request pursuant
to research, as defined in Sec. 46.102(d) of this subtitle, that
complies with part 46 of this subtitle or equivalent Federal
regulations, and any applicable State or local law or regulations for
the protection of human subjects in research.
(ii) Written request for participation in research. The issuer makes
the request in writing, and the request clearly indicates to each
individual (or, in the case of a minor child, to the child's legal
guardian) that--
(A) Compliance with the request is voluntary; and
(B) Noncompliance will have no effect on eligibility for benefits
(as described in paragraph (b) of this section) or premium amounts (as
described in paragraph (c) of this section).
(iii) Prohibition on underwriting. No genetic information collected
or acquired under this paragraph (e)(5) can be used for underwriting
purposes (as described in paragraph (f)(1) of this section).
(iv) Notice to Federal agencies. The issuer completes a copy of the
``Notice of Research Exception under the Genetic Information
Nondiscrimination Act'' authorized by the Secretary and
[[Page 223]]
provides the notice to the address specified in the instructions
thereto.
(f) Prohibitions on collection of genetic information--(1) For
underwriting purposes--(i) General rule. An issuer offering health
insurance coverage in the individual market must not collect (as defined
in paragraph (a) of this section) genetic information for underwriting
purposes. See paragraph (g) of this section for examples illustrating
the rules of this paragraph (f)(1), as well as other provisions of this
section.
(ii) Underwriting purposes defined. Subject to paragraph (f)(1)(iii)
of this section, underwriting purposes means, with respect to any issuer
offering health insurance coverage in the individual market--
(A) Rules for, or determination of, eligibility (including
enrollment and continued eligibility) for benefits under the coverage;
(B) The computation of premium amounts under the coverage;
(C) The application of any preexisting condition exclusion under the
coverage; and
(D) Other activities related to the creation, renewal, or
replacement of a contract of health insurance.
(iii) Medical appropriateness. An issuer in the individual market
may limit or exclude a benefit based on whether the benefit is medically
appropriate, and the determination of whether the benefit is medically
appropriate is not within the meaning of underwriting purposes.
Accordingly, if an issuer conditions a benefit based on its medical
appropriateness and the medical appropriateness of the benefit depends
on a covered individual's genetic information, the issuer is permitted
to condition the benefit on the genetic information. An issuer is
permitted to request only the minimum amount of genetic information
necessary to determine medical appropriateness, and may deny the benefit
if the covered individual does not provide the genetic information
required to determine medical appropriateness. See paragraph (g) of this
section for examples illustrating the applicability of this paragraph
(f)(1)(iii), as well as other provisions of this section.
(2) Prior to or in connection with enrollment--(i) In general. An
issuer offering health insurance coverage in the individual market must
not collect genetic information with respect to any individual prior to
that individual's enrollment under the coverage or in connection with
that individual's enrollment. Whether or not an individual's information
is collected prior to that individual's enrollment is determined at the
time of collection.
(ii) Incidental collection exception--(A) In general. If an issuer
offering health insurance coverage in the individual market obtains
genetic information incidental to the collection of other information
concerning any individual, the collection is not a violation of this
paragraph (f)(2), as long as the collection is not for underwriting
purposes in violation of paragraph (f)(1) of this section.
(B) Limitation. The incidental collection exception of this
paragraph (f)(2)(ii) does not apply in connection with any collection
where it is reasonable to anticipate that health information will be
received, unless the collection explicitly provides that genetic
information should not be provided.
(iii) Examples. The rules of this paragraph (f)(2) are illustrated
by the following examples:
Example 1. (i) Facts. Individual G applies for a health insurance
policy through Issuer Q. Q's application materials ask for the
applicant's medical history, but not for family medical history. The
application's instructions state that no genetic information, including
family medical history, should be provided. G answers the questions in
the application completely and truthfully, but volunteers certain health
information about diseases his parents had, believing that Q also needs
this information.
(ii) Conclusion. In this Example 1, G's family medical history is
genetic information with respect to G. However, since Q did not request
this genetic information, and Q's instructions stated that no genetic
information should be provided, Q's collection is an incidental
collection under paragraph (f)(2)(ii). However, Q may not use the
genetic information it obtained incidentally for underwriting purposes.
Example 2. (i) Facts. Individual H applies for a health insurance
policy through Issuer R. R's application materials request that an
applicant provide information on his or her individual medical history,
including the names and contact information of physicians from whom the
applicant sought treatment.
[[Page 224]]
The application includes a release which authorizes the physicians to
furnish information to R. R forwards a request for health information
about H, including the signed release, to his primary care physician.
Although the request for information does not ask for genetic
information, including family medical history, it does not state that no
genetic information should be provided. The physician's office
administrator includes part of H's family medical history in the package
to R.
(ii) Conclusion. In this Example 2, R's request was for health
information solely about its applicant, H, which is not genetic
information with respect to H. However, R's materials did not state that
genetic information should not be provided. Therefore, R's collection of
H's family medical history (which is genetic information with respect to
H), violates the rule against collection of genetic information and does
not qualify for the incidental collection exception under paragraph
(f)(2)(ii).
Example 3. (i) Facts. Issuer S acquires Issuer T. S requests T's
records, stating that S should not provide genetic information and
should review the records to excise any genetic information. T assembles
the data requested by S and, although T reviews it to delete genetic
information, the data from a specific region included some individuals'
family medical history. Consequently, S receives genetic information
about some of T's covered individuals.
(ii) Conclusion. In this Example 3, S's request for health
information explicitly stated that genetic information should not be
provided. Therefore, its collection of genetic information was within
the incidental collection exception. However, S may not use the genetic
information it obtained incidentally for underwriting purposes.
(g) Examples regarding determinations of medical appropriateness.
The application of the rules of paragraphs (e) and (f) of this section
to issuer determinations of medical appropriateness is illustrated by
the following examples:
Example 1. (i) Facts. Individual I has an individual health
insurance policy through Issuer U that covers genetic testing for celiac
disease for individuals who have family members with this condition. I's
policy includes dependent coverage. After I's son is diagnosed with
celiac disease, I undergoes a genetic test and promptly submits a claim
for the test to U for reimbursement. U asks I to provide the results of
the genetic test before the claim is paid.
(ii) Conclusion. In this Example 1, under the rules of paragraph
(e)(4) of this section, U is permitted to request only the minimum
amount of information necessary to make a decision regarding payment.
Because the results of the test are not necessary for U to make a
decision regarding the payment of I's claim, U's request for the results
of the genetic test violates paragraph (e) of this section.
Example 2. (i) Facts. Individual J has an individual health
insurance policy through Issuer V that covers a yearly mammogram for
participants starting at age 40, or at age 30 for those with increased
risk for breast cancer, including individuals with BRCA1 or BRCA2 gene
mutations. J is 33 years old and has the BRCA2 mutation. J undergoes a
mammogram and promptly submits a claim to V for reimbursement. V asks J
for evidence of increased risk of breast cancer, such as the results of
a genetic test, before the claim for the mammogram is paid.
(ii) Conclusion. In this Example 2, V does not violate paragraphs
(e) or (f) of this section. Under paragraph (e), an issuer is permitted
to request and use the results of a genetic test to make a determination
regarding payment, provided the issuer requests only the minimum amount
of information necessary. Because the medical appropriateness of the
mammogram depends on the covered individual's genetic makeup, the
minimum amount of information necessary includes the results of the
genetic test. Similarly, V does not violate paragraph (f) of this
section because an issuer is permitted to request genetic information in
making a determination regarding the medical appropriateness of a claim
if the genetic information is necessary to make the determination (and
the genetic information is not used for underwriting purposes).
Example 3. (i) Facts. Individual K was previously diagnosed with and
treated for breast cancer, which is currently in remission. In
accordance with the recommendation of K's physician, K has been taking a
regular dose of tamoxifen to help prevent a recurrence. K has an
individual health insurance policy through Issuer W which adopts a new
policy requiring patients taking tamoxifen to undergo a genetic test to
ensure that tamoxifen is medically appropriate for their genetic makeup.
In accordance with, at the time, the latest scientific research,
tamoxifen is not helpful in up to 7 percent of breast cancer patients
with certain variations of the gene for making the CYP2D6
enzyme. If a patient has a gene variant making tamoxifen not medically
appropriate, W does not pay for the tamoxifen prescription.
(ii) Conclusion. In this Example 3, W does not violate paragraph (e)
of this section if it conditions future payments for the tamoxifen
prescription on K's undergoing a genetic test to determine the genetic
markers K has for making the CYP2D6 enzyme. W also does not
violate paragraph (e) of this section if it refuses future payment if
the results of the genetic test indicate that
[[Page 225]]
tamoxifen is not medically appropriate for K.
(h) Applicability date. The provisions of this section are effective
with respect to health insurance coverage offered, sold, issued,
renewed, in effect, or operated in the individual market on or after
December 7, 2009.
[74 FR 51693, Oct. 7, 2009]
Subpart D_Preemption; Excepted Benefits
Sec. 148.210 Preemption.
(a) Scope. (1) This section describes the effect of sections 2741
through 2763 and 2791 of the PHS Act on a State's authority to regulate
health insurance issuers in the individual market. This section makes
clear that States remain subject to section 514 of ERISA, which
generally preempts State law that relates to ERISA-covered plans.
(2) Sections 2741 through 2763 and 2791 of the PHS Act cannot be
construed to affect or modify the provisions of section 514 of ERISA.
(b) Regulation of insurance issuers. The individual market rules of
this part do not prevent a State law from establishing, implementing, or
continuing in effect standards or requirements unless the standards or
requirements prevent the application of a requirement of this part.
Sec. 148.220 Excepted benefits.
The requirements of this part and part 147 of this subchapter do not
apply to any individual coverage in relation to its provision of the
benefits described in paragraphs (a) and (b) of this section (or any
combination of the benefits).
(a) Benefits excepted in all circumstances. The following benefits
are excepted in all circumstances:
(1) Coverage only for accident (including accidental death and
dismemberment).
(2) Disability income insurance.
(3) Liability insurance, including general liability insurance and
automobile liability insurance.
(4) Coverage issued as a supplement to liability insurance.
(5) Workers' compensation or similar insurance.
(6) Automobile medical payment insurance.
(7) Credit-only insurance (for example, mortgage insurance).
(8) Coverage for on-site medical clinics.
(9) Travel insurance, within the meaning of Sec. 144.103 of this
subchapter.
(b) Other excepted benefits. The requirements of this part do not
apply to individual health insurance coverage described in paragraphs
(b)(1) through (b)(6) of this section if the benefits are provided under
a separate policy, certificate, or contract of insurance. These benefits
include the following:
(1) Limited scope dental or vision benefits. These benefits are
dental or vision benefits that are limited in scope to a narrow range or
type of benefits that are generally excluded from benefit packages that
combine hospital, medical, and surgical benefits.
(2) Long-term care benefits. These benefits are benefits that are
either--
(i) Subject to State long-term care insurance laws;
(ii) For qualified long-term care insurance services, as defined in
section 7702B(c)(1) of the Code, or provided under a qualified long-term
care insurance contract, as defined in section 7702B(b) of the Code; or
(iii) Based on cognitive impairment or a loss of functional capacity
that is expected to be chronic.
(3) Coverage only for a specified disease or illness (for example,
cancer policies) if the policies meet the requirements of Sec.
146.145(b)(4)(ii)(B) and (C) of this subchapter regarding
noncoordination of benefits.
(4) Hospital indemnity or other fixed indemnity insurance only if--
(i) There is no coordination between the provision of benefits and
an exclusion of benefits under any other health coverage;
(ii) The benefits are paid in a fixed dollar amount per period of
hospitalization or illness and/or per service (for example, $100/day or
$50/visit) regardless of the amount of expenses incurred and without
regard to the amount of benefits provided with respect to the event or
service under any other health coverage; and
(iii)(A) For coverage periods beginning on or after January 1, 2025,
the
[[Page 226]]
issuer displays prominently on the first page (in either paper or
electronic form, including on a website) of any marketing, application,
and enrollment or reenrollment materials that are provided at or before
the time an individual has the opportunity to apply, enroll or reenroll
in coverage, and on the first page of the policy, certificate, or
contract of insurance, in at least 14-point font, the language in the
following notice:
[GRAPHIC] [TIFF OMITTED] TR03AP24.066
(B) For coverage periods beginning on or after January 1, 2015, and
prior to January 1, 2025, the issuer continues to follow the notice
provision in 45 CFR 148.220(b)(4)(iv), revised as of October 1, 2023.
(iv) If any provision of this paragraph (b)(4) is held to be invalid
or unenforceable by its terms, or as applied to any entity or
circumstance, or stayed pending further agency action, the provision
shall be construed so as to continue to give the maximum effect to the
provision permitted by law, along with other provisions not found
invalid or unenforceable, including as applied
[[Page 227]]
to entities not similarly situated or to dissimilar circumstances,
unless such holding is that the provision is invalid and unenforceable
in all circumstances, in which event the provision shall be severable
from the remainder of this paragraph (b)(4) and shall not affect the
remainder thereof.
(5) Medicare supplemental health insurance (as defined under section
1882(g)(1) of the Social Security Act. 42 U.S.C. 1395ss, also known as
Medigap or MedSupp insurance). The requirements of this part 148
(including genetic nondiscrimination requirements), do not apply to
Medicare supplemental health insurance policies. However, Medicare
supplemental health insurance policies are subject to similar genetic
nondiscrimination requirements under section 104 of the Genetic
Information Nondiscrimination Act of 2008 (Pub. L. 110-233), as
incorporated into the NAIC Model Regulation relating to sections
1882(s)(2)(e) and (x) of the Act (The NAIC Model Regulation can be
accessed at http://www.naic.org.).
(6) Coverage supplemental to the coverage provided under Chapter 55,
Title 10 of the United States Code (also known as CHAMPUS supplemental
programs).
(7) Similar supplemental coverage provided to coverage under a group
health plan (as described in Sec. 146.145(b)(5)(i)(C) of this
subchapter).
[62 FR 16995, Apr. 8, 1997; 62 FR 31696, June 10, 1997, as amended at 74
FR 51696, Oct. 7, 2009; 79 FR 30341, May 27, 2014; 81 FR 75327, Oct. 31,
2016; 89 FR 23420, Apr. 3, 2024]
Subpart E_Grants to States for Operation of Qualified High Risk Pools
Source: 68 FR 23414, May 2, 2003, unless otherwise noted.
Sec. 148.306 Basis and scope.
This subpart implements section 2745 of the Public Health Service
Act (PHS Act). It extends grants to States that have qualified high risk
pools that meet the specific requirements described in Sec. 148.310. It
also provides specific instructions on how to apply for the grants and
outlines the grant review and grant award processes.
[73 FR 22285, Apr. 25, 2008]
Sec. 148.308 Definitions.
For the purposes of this subpart, the following definitions apply:
Bonus grants means funds that the Secretary provides from the
appropriated grant funds to be used to provide supplemental consumer
benefits to enrollees or potential enrollees in qualified high risk
pools.
CMS stands for Centers for Medicare & Medicaid Services.
Loss means the difference between expenses incurred by a qualified
high risk pool, including payment of claims and administrative expenses,
and the premiums collected by the pool.
Qualified high risk pool as defined in sections 2744(c)(2) and
2745(g) of the PHS Act means a risk pool that--
(1) Provides to all eligible individuals health insurance coverage
(or comparable coverage) that does not impose any preexisting condition
exclusion with respect to such coverage for all eligible individuals,
except that it may provide for enrollment of eligible individuals
through an acceptable alternative mechanism (as defined for purposes of
section 2744 of the PHS Act) that includes a high risk pool as a
component; and
(2) Provides for premium rates and covered benefits for such
coverage consistent with standards included in the NAIC Model Health
Plan for Uninsurable Individuals Act that was in effect at the time of
the enactment of the Health Insurance Portability and Accountability Act
of 1996 (August 21, 1996) but only if the model has been revised in
State regulations to meet all of the requirements of this part and title
27 of the PHS Act.
Standard risk rate means a rate developed by a State using
reasonable actuarial techniques and taking into account the premium
rates charged by other insurers offering health insurance coverage to
individuals in the same geographical service area to which the rate
applies. The standard rate may be adjusted based upon age, sex, and
geographical location.
State means any of the 50 States and the District of Columbia and
includes
[[Page 228]]
the U.S. Territories of Puerto Rico, the Virgin Islands, Guam, American
Samoa and the Northern Mariana Islands.
State fiscal year, for purposes of this subpart, means the fiscal
year used for accounting purposes by either a State or a risk pool
entity to which a State has delegated the authority to conduct risk pool
operations.
[68 FR 23414, May 2, 2003, as amended at 69 FR 15700, Mar. 26, 2004; 72
FR 41236, July 27, 2007; 73 FR 22285, Apr. 25, 2008]
Sec. 148.310 Eligibility requirements for a grant.
A State must meet all of the following requirements to be eligible
for a grant:
(a) The State has a qualified high risk pool as defined in Sec.
148.308.
(b) The pool restricts premiums charged under the pool to no more
than 200 percent of the premium for applicable standard risk rates for
the State.
(c) The pool offers a choice of two or more coverage options through
the pool.
(d) The pool has in effect a mechanism reasonably designed to ensure
continued funding of losses incurred by the State after the end of each
fiscal year for which the State applies for Federal Funding in fiscal
year (FY) 2005 through FY 2010 in connection with the operation of the
pool.
(e) The pool has incurred a loss in a period described in Sec.
148.314.
(f) In the case of a qualified high risk pool in a State that
charges premiums that exceed 150 percent of the premium for applicable
standard risks, the State will use at least 50 percent of the amount of
the grant provided to the State to reduce premiums for enrollees.
(g) In no case will the aggregate amount allotted and made available
to the U.S. Territories for a fiscal year exceed $1,000,000 in total.
(h) Bonus grant funding must be used for one or more of the
following benefits:
(1) Low income premium subsidies;
(2) Reduction in premium trends, actual premium or other cost-
sharing requirements;
(3) An expansion or broadening of the pool of individuals eligible
for coverage, such as through eliminating waiting lists, increasing
enrollment caps, or providing flexibility in enrollment rules;
(4) Less stringent rules or additional waiver authority with respect
to coverage of pre-existing conditions;
(5) Increased benefits; and
(6) The establishment of disease management programs.
[68 FR 23414, May 2, 2003, as amended at 72 FR 41236, July 27, 2007; 73
FR 22285, Apr. 25, 2008]
Sec. 148.312 Amount of grant payment.
(a) An eligible State may receive a grant to fund up to 100 percent
of the losses incurred in the operation of its qualified high risk pool
during the period for which it is applying or a lesser amount based on
the limits of the allotment under the formula.
(b) Funds will be allocated in accordance with this paragraph to
each State that meets the eligibility requirements of Sec. 148.310 and
files an application in accordance with Sec. 148.316. The amount will
be divided among the States that apply and are awarded grants according
to the allotment rules that generally provide that: 40 percent will be
equally divided among those States; 30 percent will be divided among
States and territories based on their number of uninsured residents in
the State during the specified year as compared to all States that
apply; and 30 percent will be divided among States and territories based
on the number of people in State high risk pools during the specified
year as compared to all States that apply.
For purposes of this paragraph:
(1) The number of uninsured individuals is calculated for each
eligible State by taking a 3-year average of the number of uninsured
individuals in that State in the Current Population Survey (CPS) of the
Census Bureau during the period for which it is applying. The 3-year
average will be calculated using numbers available as of March 1 of each
year.
(2) The number of individuals enrolled in health care coverage
through the qualified high risk pool of the State will be determined by
attestation by the State in its grant application and verified for
reasonability by the
[[Page 229]]
Secretary through acceptable industry data sources.
(c) The amount awarded to each eligible State will be the lesser of
the 50 percent of losses incurred by its qualified risk pool for the
fiscal year in question or its allotment under the formula.
(d) One-third of the total appropriation will be available for the
bonus grants. In no case will a State for a fiscal year receive bonus
grants that exceed 10 percent of the total allotted funds for bonus
grants.
[68 FR 23414, May 2, 2003, as amended at 69 FR 15700, Mar. 26, 2004; 72
FR 41237, July 27, 2007; 73 FR 22285, Apr. 25, 2008]
Sec. 148.314 Periods during which eligible States may apply for a grant.
(a) General rule. A State that meets the eligibility requirements in
Sec. 148.310 may apply for a grant to fund losses that were incurred
during the State's FYs 2005, 2006, 2007, 2008 and 2009 in connection
with the operation of its qualified high risk pool. Funding for FY 2007
through FY 2010 under the Extension Act requires subsequent enactment of
appropriations authority. States will be unable to apply for grants
unless and until such funding becomes available. Grants funding is on a
retrospective basis and applies to the States previous fiscal year. If a
State becomes eligible for a grant in the middle of its fiscal year, a
State may apply for losses incurred in a partial fiscal year if a
partial year audit is done. Only losses that are incurred after
eligibility is established will qualify for a grant.
(b) Maximum number of grants. An eligible State may only be awarded
a maximum of five grants, with one grant per fiscal year. A grant for a
partial fiscal year counts as a full grant.
(c) Deadline for submitting grant applications. The deadlines for
submitting grant applications are stated in Sec. 148.316(d).
(d) Distribution of grant funds. States that meet all of the
eligibility requirements in Sec. 148.310 and submit timely requests in
accordance with paragraph (c) of this section will receive an initial
distribution of grant funds using the following methodology: Grant
applications for losses will be on a retrospective basis. For example,
grant applications for 2006 funds are based on the State's FY 2005
incurred losses. Grant funding was appropriated for Federal FY 2006 and
is authorized to be appropriated for Federal FYs 2008 through 2010.
(e) Grant allocations. Grant allocations for each fiscal year will
be determined by taking all grant applications during the period for
which States are applying and allocating the funds in accordance with
Sec. 148.312.
(1) In no case will a State receive funds greater than 100 percent
of their losses.
(2) If any excess funds remain after the initial calculation, these
excess funds will be proportionately redistributed to the States whose
allocations have not exceeded 100 percent of their losses.
[73 FR 22285, Apr. 25, 2008]
Sec. 148.316 Grant application instructions.
Funding for FY 2008, FY 2009, and FY 2010 under the Extension Act
requires the subsequent enactment of appropriations authority. Funding
was appropriated for Federal FY 2006. States will be unable to apply for
FY 2008 through FY 2010 grants unless and until such funding becomes
available.
(a) Application for operational losses. Each State must compile an
application package that documents that it has met the requirements for
a grant. If a risk pool entity applies on behalf of a State, it must
provide documentation that it has been delegated appropriate authority
by the State. At a minimum, the application package must include a
completed standard form application kit (see paragraph (b) of this
section) along with the following information:
(1) History and description of the qualified high risk pool. Provide
a detailed description of the qualified high risk pool that includes the
following:
(i) Brief history, including date of inception.
(ii) Enrollment criteria (including provisions for the admission of
eligible individuals as defined in Sec. 148.103) and number of
enrollees.
[[Page 230]]
(iii) Description of how coverage is provided administratively in
the qualified high risk pool (that is, self-insured, through a private
carrier, etc.).
(iv) Benefits options and packages offered in the qualified high
risk pool to both eligible individual (as defined in Sec. 148.103) and
other applicants.
(v) Outline of plan benefits and coverage offered in the pool.
Provide evidence that the level of plan benefits is consistent with
either Alternative One or Alternative Two in Section 8 of the NAIC Model
Health Plan for Uninsurable Individuals Act. See appendix for the text
of Section 8 of the NAIC Model.
(vi) Premiums charged (in terms of dollars and in percentage of
standard risk rate) and other cost-sharing mechanisms, such as co-pays
and deductibles, imposed on enrollees (both eligible individuals (as
defined in Sec. 148.103) and non-eligible individuals if a distinction
is made).
(vii) How the standard risk rate for the State is calculated and
when it was last calculated.
(viii) Revenue sources for the qualified high risk pool, including
current funding mechanisms and, if different, future funding mechanisms.
Provide current projections of future income.
(ix) Copies of all governing authorities of the pool, including
statutes, regulations and plan of operation.
(2) Accounting of risk pool losses. Provide a detailed accounting of
claims paid, administrative expenses, and premiums collected for the
fiscal year for which the grant is being requested. Indicate the timing
of the fiscal year upon which the accounting is based. Provide the
methodology of projecting losses and expenses, and include current
projections of future operating losses (this information is needed to
judge compliance with the requirements in Sec. 148.310(d)).
(3) Bonus grants for supplemental consumer benefits. Provide
detailed information about the following supplemental consumer benefits
for which the entity is applying:
(i) A narrative description of one or more of the following of the
supplemental consumer benefits to be provided to enrollees and/or
potential enrollees in the high risk pool:
(A) Low income premium subsidies;
(B) Reduction in premium trends, actual premium or other cost-
sharing requirements;
(C) An expansion or broadening of the pool of individuals eligible
for coverage, such as through eliminating waiting lists, increasing
enrollment caps, or providing flexibility in enrollment;
(D) Less stringent rules, or additional waiver authority with
respect to coverage of pre-existing conditions;
(E) Increased benefits; and
(F) The establishment of disease management programs.
(ii) A description of the population or subset population that will
be eligible for the supplemental consumer benefits.
(iii) A projected budget for the use of bonus grant funds using the
SF 424 A.
(4) Contact person. Identify the name, position title, address, e-
mail address, and telephone number of the person to contact for further
information and questions.
(b) Standard form application kit--(1) Forms. (i) The following
standard forms must be completed with an original signature and enclosed
as part of the application package:
SF-424 Application for Federal Assistance.
SF-424A Budget Information.
SF-424B Assurances Non-Construction Programs.
SF-LLL Disclosure of Lobbying Activities Biographical Sketch.
(ii) These forms can be accessed from the following Web site: http:/
/www.grants.gov.
(2) Other narrative. All other narrative in the application must be
submitted on 8\1/2\ x 11 inches white paper.
(c) Application submission. Submission of application package is
through http://www.grants.gov. Submissions by facsimile (fax)
transmissions will not be accepted.
(d) Application deadlines. (1) The deadline for States to submit an
application for losses incurred in a State fiscal year is June 30 of the
next Federal fiscal year that begins after the end of the State fiscal
year. Funding for FY 2008, FY 2009, and FY 2010 under the Extension Act
requires the subsequent enactment of appropriations authority.
[[Page 231]]
Funding was appropriated for Federal FY 2006. States will be unable to
apply for FY 2008 through FY 2010 grants unless and until such funding
becomes available.
(2) Deadline for States to submit an application for losses incurred
in their fiscal year 2005. States had to submit an application to CMS no
later than June 30, 2006.
(3) Deadline for States to submit an application for losses incurred
in their fiscal year 2006. States must submit an application to CMS by
no later than June 30, 2007.
(4) Deadline for States to submit an application for losses incurred
in their fiscal year 2007. States must submit an application to CMS by
no later than June 30, 2008.
(5) Deadline for States to submit an application for losses incurred
in their fiscal year 2008. States must submit an application to CMS by
no later than June 30, 2009.
(6) Deadline for States to submit an application for losses incurred
in their fiscal year 2009. States must submit an application to CMS by
no later than June 30, 2010.
(e) Where to submit an application. Applications must be submitted
to http://www.grants.gov. Submissions by facsimile (fax) transmissions
will not be accepted.
[68 FR 23414, May 2, 2003, as amended at 69 FR 15701, Mar. 26, 2004; 72
FR 41237, July 27, 2007; 73 FR 22286, Apr. 25, 2008]
Sec. 148.318 Grant application review.
(a) Executive Order 12372. This grant program is not listed by the
Secretary under Sec. 100.3 of this title, and therefore the grant
program is not subject to review by States under part 100 of this title,
which implements Executive Order 12372, ``Intergovernmental Review of
Federal Programs'' (see part 100 of this title).
(b) Review team. A team consisting of staff from CMS and the
Department of Health and Human Services will review all applications.
The team will meet as necessary on an ongoing basis as applications are
received.
(c) Eligibility criteria. To be eligible for a grant, a State must
submit sufficient documentation that its high risk pool meets the
eligibility requirements described in Sec. 148.310. A State must
include sufficient documentation of the losses incurred in the operation
of the qualified high risk pool in the period for when it is applying.
(d) Review criteria. If the review team determines that a State
meets the eligibility requirements described in Sec. 148.310, the
review team will use the following additional criteria in reviewing the
applications:
(1) Documentation of expenses incurred during operation of the
qualified high risk pool. The losses and expenses incurred in the
operation of a State's pool are sufficiently documented.
(2) Funding mechanism. The State has outlined funding sources, such
as assessments and State general revenues, which can cover the projected
costs and are reasonably designed to ensure continued funding of losses
a State incurs in connection with the operation of the qualified high
risk pool after each fiscal year for which it is applying for grant
funds.
[68 FR 23414, May 2, 2003, as amended at 72 FR 41238, July 27, 2007; 73
FR 22286, Apr. 25, 2008]
Sec. 148.320 Grant awards.
(a) Notification and award letter. (1) Each State applicant will be
notified in writing of CMS's decision on its application.
(2) If the State applicant is awarded a grant, the award letter will
contain the following terms and conditions:
(i) All funds awarded to the grantee under this program must be used
exclusively for the operation of a qualified high risk pool that meets
the eligibility requirements for this program.
(ii) The grantee must keep sufficient records of the grant
expenditures for audit purposes (see part 92 of this title).
(iii) The grantee will be required to submit quarterly progress and
financial reports under part 92 of this title and in accordance with
section 2745(f) of the Public Health Service Act, requiring the
Secretary to make an annual report to Congress that includes information
on the use of these grant funds by States.
(b) Grantees letter of acceptance. Grantees must submit a letter of
acceptance to CMS' Acquisition and
[[Page 232]]
Grants Group within 30 days of the date of the award agreeing to the
terms and conditions of the award letter.
[68 FR 23414, May 2, 2003, as amended at 72 FR 41238, July 27, 2007; 73
FR 22286, Apr. 25, 2008]
PART 149_SURPRISE BILLING AND TRANSPARENCY REQUIREMENTS
--Table of Contents
Subpart A_General Provisions
Sec.
149.10 Basis and scope.
149.20 Applicability.
149.30 Definitions.
Subpart B_Protections against Balance Billing for the Group and
Individual Health Insurance Markets
149.110 Preventing surprise medical bills for emergency services.
149.120 Preventing surprise medical bills for non-emergency services
performed by nonparticipating providers at certain
participating facilities.
149.130 Preventing surprise medical bills for air ambulance services.
149.140 Methodology for calculating qualifying payment amount.
149.150 Complaints process for surprise medical bills regarding group
health plans and group and individual health insurance
coverage.
Subpart C [Reserved]
Subpart D_Additional Patient Protections
149.310 Choice of health care professional.
Subpart E_Health Care Provider, Health Care Facility, and Air Ambulance
Service Provider Requirements
149.410 Balance billing in cases of emergency services.
149.420 Balance billing in cases of non-emergency services performed by
nonparticipating providers at certain participating health
care facilities.
149.430 Provider and facility disclosure requirements regarding patient
protections against balance billing.
149.440 Balance billing in cases of air ambulance services.
149.450 Complaints process for balance billing regarding providers and
facilities.
Subpart F_Independent Dispute Resolution Process
149.510 Independent dispute resolution process.
149.520 Independent dispute resolution process for air ambulance
services.
Subpart G_Protection of Uninsured or Self-Pay Individuals
149.610 Requirements for provision of good faith estimates of expected
charges for uninsured (or self-pay) individuals.
149.620 Requirements for the patient-provider dispute resolution
process.
Subpart H_Prescription Drug and Health Care Spending
149.710 Definitions.
149.720 Reporting requirements related to prescription drug and health
care spending.
149.730 Aggregate reporting.
149.740 Required information.
Authority: 42 U.S.C. 300gg-92 and 300gg-111 through 300gg-139, as
amended.
Source: 86 FR 36970, July 13, 2021, unless otherwise noted.
Subpart A_General Provisions
Sec. 149.10 Basis and scope.
(a) Basis. This part implements parts D and E of title XXVII of the
PHS Act.
(b) Scope. This part establishes standards for group health plans,
health insurance issuers offering group or individual health insurance
coverage, health care providers and facilities, and providers of air
ambulance services with respect to surprise medical bills, transparency
in health care coverage, and additional patient protections. This part
also establishes an independent dispute resolution process, and
standards for certifying independent dispute resolution entities. This
part also establishes a Patient-Provider Dispute Resolution Process and
standards for certifying Selected Dispute Resolution entities.
[86 FR 36970, July 13, 2021, as amended at 86 FR 56124, Oct. 7, 2021]
Sec. 149.20 Applicability.
(a) In general. (1) The requirements in subparts B, D, and H of this
part apply to group health plans and health insurance issuers offering
group or individual health insurance coverage (including grandfathered
health plans as defined in Sec. 147.140 of this subchapter), except as
specified in paragraph (b) of this section.
[[Page 233]]
(2) The requirements in subpart E of this part apply to health care
providers, health care facilities, and providers of air ambulance
services.
(3) The requirements in subpart F of this part apply to certified
IDR entities, health care providers, health care facilities, and
providers of air ambulance services and group health plans and health
insurance issuers offering group or individual health insurance coverage
(including grandfathered health plans as defined in Sec. 147.140 of
this subchapter) except as specified in paragraph (b) of this section.
(4) The requirements in subpart G of this part apply to Selected
Dispute Resolution Entities, health care providers, providers of air
ambulance services, health care facilities and uninsured (or self-pay)
individuals, as defined in subpart G.
(b) Exceptions. The requirements in subparts B, D, E, F, and H of
this part do not apply to the following:
(1) Excepted benefits as described in Sec. Sec. 146.145 and 148.220
of this subchapter.
(2) Short-term, limited-duration insurance as defined in Sec.
144.103 of this subchapter.
(3) Health reimbursement arrangements or other account-based group
health plans as described in Sec. 147.126(d) of this subchapter.
[86 FR 36970, July 13, 2021, as amended at 86 FR 56124, Oct. 7, 2021; 86
FR 66702, Nov. 23, 2021]
Sec. 149.30 Definitions.
The definitions in part 144 of this subchapter apply to this part,
unless otherwise specified. In addition, for purposes of this part, the
following definitions apply:
Air ambulance service means medical transport by a rotary wing air
ambulance, as defined in 42 CFR 414.605, or fixed wing air ambulance, as
defined in 42 CFR 414.605, for patients.
Cost sharing means the amount a participant, beneficiary, or
enrollee is responsible for paying for a covered item or service under
the terms of the group health plan or health insurance coverage. Cost
sharing generally includes copayments, coinsurance, and amounts paid
towards deductibles, but does not include amounts paid towards premiums,
balance billing by out-of-network providers, or the cost of items or
services that are not covered under a group health plan or health
insurance coverage.
Emergency department of a hospital includes a hospital outpatient
department that provides emergency services.
Emergency medical condition has the meaning given the term in Sec.
149.110(c)(1).
Emergency services has the meaning given the term in Sec.
149.110(c)(2).
Health care facility, with respect to a group health plan or group
or individual health insurance coverage, in the context of non-emergency
services, is each of the following:
(1) A hospital (as defined in section 1861(e) of the Social Security
Act);
(2) A hospital outpatient department;
(3) A critical access hospital (as defined in section 1861(mm)(1) of
the Social Security Act); and
(4) An ambulatory surgical center described in section 1833(i)(1)(A)
of the Social Security Act.
Independent freestanding emergency department means a health care
facility (not limited to those described in the definition of health
care facility with respect to non-emergency services) that--
(1) Is geographically separate and distinct and licensed separately
from a hospital under applicable State law; and
(2) Provides any emergency services as described in Sec.
149.110(c)(2)(i).
Nonparticipating emergency facility means an emergency department of
a hospital, or an independent freestanding emergency department (or a
hospital, with respect to services that pursuant to Sec.
149.110(c)(2)(ii) are included as emergency services), that does not
have a contractual relationship directly or indirectly with a group
health plan or group or individual health insurance coverage offered by
a health insurance issuer, with respect to the furnishing of an item or
service under the plan or coverage, respectively.
Nonparticipating provider means any physician or other health care
provider who does not have a contractual relationship directly or
indirectly with a
[[Page 234]]
group health plan or group or individual health insurance coverage
offered by a health insurance issuer, with respect to the furnishing of
an item or service under the plan or coverage, respectively.
Notice of denial of payment means, with respect to an item or
service for which benefits subject to the protections of Sec. Sec.
149.110 through 149.130 are provided or covered, a written notice from
the plan or issuer to the health care provider, facility, or provider of
air ambulance services, as applicable, that payment for such item or
service will not be made by the plan or coverage and which explains the
reason for denial. The term notice of denial of payment does not include
a notice of benefit denial due to an adverse benefit determination as
defined in 29 CFR 2560.503-1.
Out-of-network rate means, with respect to an item or service
furnished by a nonparticipating provider, nonparticipating emergency
facility, or nonparticipating provider of air ambulance services--
(1) Subject to paragraph (3) of this definition, in a State that has
in effect a specified State law, the amount determined in accordance
with such law;
(2) Subject to paragraph (3) of this definition, in a State that
does not have in effect a specified State law--
(i) Subject to paragraph (2)(ii) of this definition, if the
nonparticipating provider or nonparticipating emergency facility and the
plan or issuer agree on an amount of payment (including if the amount
agreed upon is the initial payment sent by the plan or issuer under 26
CFR 54.9816-4T(b)(3)(iv)(A), 54.9816-5T(c)(3), or 54.9817-1T(b)(4)(i);
29 CFR 2590.716-4(b)(3)(iv)(A), 2590.716-5(c)(3), or 2590.717-
1(b)(4)(i); or Sec. 149.110(b)(3)(iv)(A), Sec. 149.120(c)(3), or Sec.
149.130(b)(4)(i), as applicable, or is agreed on through negotiations
with respect to such item or service), such agreed on amount; or
(ii) If the nonparticipating provider or nonparticipating emergency
facility and the plan or issuer enter into the independent dispute
resolution (IDR) process under section 9816(c) or 9817(b) of the
Internal Revenue Code, section 716(c) or 717(b) of ERISA, or section
2799A-1(c) or 2799A-2(b) of the PHS Act, as applicable, and do not agree
before the date on which a certified IDR entity makes a determination
with respect to such item or service under such subsection, the amount
of such determination; or
(3) In a State that has an All-Payer Model Agreement under section
1115A of the Social Security Act that applies with respect to the plan
or issuer; the nonparticipating provider or nonparticipating emergency
facility; and the item or service, the amount that the State approves
under the All-Payer Model Agreement for the item or service.
Participating emergency facility means any emergency department of a
hospital, or an independent freestanding emergency department (or a
hospital, with respect to services that pursuant to Sec.
149.110(c)(2)(ii) are included as emergency services), that has a
contractual relationship directly or indirectly with a group health plan
or health insurance issuer offering group or individual health insurance
coverage setting forth the terms and conditions on which a relevant item
or service is provided to a participant, beneficiary, or enrollee under
the plan or coverage, respectively. A single case agreement between an
emergency facility and a plan or issuer that is used to address unique
situations in which a participant, beneficiary, or enrollee requires
services that typically occur out-of-network constitutes a contractual
relationship for purposes of this definition, and is limited to the
parties to the agreement.
Participating health care facility means any health care facility
described in this section that has a contractual relationship directly
or indirectly with a group health plan or health insurance issuer
offering group or individual health insurance coverage setting forth the
terms and conditions on which a relevant item or service is provided to
a participant, beneficiary, or enrollee under the plan or coverage,
respectively. A single case agreement between a health care facility and
a plan or issuer that is used to address unique situations in which a
participant, beneficiary, or enrollee requires services that typically
occur out-of-network constitutes a contractual relationship
[[Page 235]]
for purposes of this definition, and is limited to the parties to the
agreement.
Participating provider means any physician or other health care
provider who has a contractual relationship directly or indirectly with
a group health plan or health insurance issuer offering group or
individual health insurance coverage setting forth the terms and
conditions on which a relevant item or service is provided to a
participant, beneficiary, or enrollee under the plan or coverage,
respectively.
Physician or health care provider means a physician or other health
care provider who is acting within the scope of practice of that
provider's license or certification under applicable State law, but does
not include a provider of air ambulance services.
Provider of air ambulance services means an entity that is licensed
under applicable State and Federal law to provide air ambulance
services.
Same or similar item or service has the meaning given the term in
Sec. 149.140(a)(13).
Service code has the meaning given the term in Sec. 149.140(a)(14).
Qualifying payment amount has the meaning given the term in Sec.
149.140(a)(16).
Recognized amount means, with respect to an item or service
furnished by a nonparticipating provider or nonparticipating emergency
facility--
(1) Subject to paragraph (3) of this definition, in a State that has
in effect a specified State law, the amount determined in accordance
with such law.
(2) Subject to paragraph (3) of this definition, in a State that
does not have in effect a specified State law, the lesser of--
(i) The amount that is the qualifying payment amount (as determined
in accordance with Sec. 149.140); or
(ii) The amount billed by the provider or facility.
(3) In a State that has an All-Payer Model Agreement under section
1115A of the Social Security Act that applies with respect to the plan
or issuer; the nonparticipating provider or nonparticipating emergency
facility; and the item or service, the amount that the State approves
under the All-Payer Model Agreement for the item or service.
Specified State law means a State law that provides for a method for
determining the total amount payable under a group health plan or group
or individual health insurance coverage offered by a health insurance
issuer to the extent such State law applies for an item or service
furnished by a nonparticipating provider or nonparticipating emergency
facility (including where it applies because the State has allowed a
plan that is not otherwise subject to applicable State law an
opportunity to opt in, subject to section 514 of the Employee Retirement
Income Security Act of 1974). A group health plan that opts in to such a
specified State law must do so for all items and services to which the
specified State law applies and in a manner determined by the applicable
State authority, and must prominently display in its plan materials
describing the coverage of out-of-network services a statement that the
plan has opted into the specified State law, identify the relevant State
(or States), and include a general description of the items and services
provided by nonparticipating facilities and providers that are covered
by the specified State law.
State means each of the 50 States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana
Islands.
Treating provider is a physician or health care provider who has
evaluated the individual.
Visit, with respect to items and services furnished to an individual
at a health care facility, includes, in addition to items and services
furnished by a provider at the facility, equipment and devices,
telemedicine services, imaging services, laboratory services, and
preoperative and postoperative services, regardless of whether the
provider furnishing such items or services is at the facility.
[[Page 236]]
Subpart B_Protections Against Balance Billing for the Group and
Individual Health Insurance Markets
Sec. 149.110 Preventing surprise medical bills for emergency services.
(a) In general. If a group health plan, or a health insurance issuer
offering group or individual health insurance coverage, provides or
covers any benefits with respect to services in an emergency department
of a hospital or with respect to emergency services in an independent
freestanding emergency department, the plan or issuer must cover
emergency services, as defined in paragraph (c)(2) of this section, and
this coverage must be provided in accordance with paragraph (b) of this
section.
(b) Coverage requirements. A plan or issuer described in paragraph
(a) of this section must provide coverage for emergency services in the
following manner--
(1) Without the need for any prior authorization determination, even
if the services are provided on an out-of-network basis.
(2) Without regard to whether the health care provider furnishing
the emergency services is a participating provider or a participating
emergency facility, as applicable, with respect to the services.
(3) If the emergency services are provided by a nonparticipating
provider or a nonparticipating emergency facility--
(i) Without imposing any administrative requirement or limitation on
coverage that is more restrictive than the requirements or limitations
that apply to emergency services received from participating providers
and participating emergency facilities.
(ii) Without imposing cost-sharing requirements that are greater
than the requirements that would apply if the services were provided by
a participating provider or a participating emergency facility.
(iii) By calculating the cost-sharing requirement as if the total
amount that would have been charged for the services by such
participating provider or participating emergency facility were equal to
the recognized amount for such services.
(iv) The plan or issuer--
(A) Not later than 30 calendar days after the bill for the services
is transmitted by the provider or facility (or, in cases where the
recognized amount is determined by a specified State law or All-Payer
Model Agreement, such other timeframe as specified by the State law or
All-Payer Model Agreement), determines whether the services are covered
under the plan or coverage and, if the services are covered, sends to
the provider or facility, as applicable, an initial payment or a notice
of denial of payment. For purposes of this paragraph (b)(3)(iv)(A), the
30-calendar-day period begins on the date the plan or issuer receives
the information necessary to decide a claim for payment for the
services.
(B) Pays a total plan or coverage payment directly to the
nonparticipating provider or nonparticipating facility that is equal to
the amount by which the out-of-network rate for the services exceeds the
cost-sharing amount for the services (as determined in accordance with
paragraphs (b)(3)(ii) and (iii) of this section), less any initial
payment amount made under paragraph (b)(3)(iv)(A) of this section. The
total plan or coverage payment must be made in accordance with the
timing requirement described in section 2799A-1(c)(6) of the PHS Act, or
in cases where the out-of-network rate is determined under a specified
State law or All-Payer Model Agreement, such other timeframe as
specified by the State law or All-Payer Model Agreement.
(v) By counting any cost-sharing payments made by the participant,
beneficiary, or enrollee with respect to the emergency services toward
any in-network deductible or in-network out-of-pocket maximums
(including the annual limitation on cost sharing under section 2707(b)
of the PHS Act) (as applicable) applied under the plan or coverage (and
the in-network deductible and in-network out-of-pocket maximums must be
applied) in the same manner as if the cost-sharing payments were made
with respect to emergency services furnished by a participating
[[Page 237]]
provider or a participating emergency facility.
(4) Without limiting what constitutes an emergency medical condition
(as defined in paragraph (c)(1) of this section) solely on the basis of
diagnosis codes.
(5) Without regard to any other term or condition of the coverage,
other than--
(i) The exclusion or coordination of benefits (to the extent not
inconsistent with benefits for an emergency medical condition, as
defined in paragraph (c)(1) of this section).
(ii) An affiliation or waiting period (each as defined in Sec.
144.103 of this subchapter).
(iii) Applicable cost sharing.
(c) Definitions. In this section--
(1) Emergency medical condition means a medical condition, including
a mental health condition or substance use disorder, manifesting itself
by acute symptoms of sufficient severity (including severe pain) such
that a prudent layperson, who possesses an average knowledge of health
and medicine, could reasonably expect the absence of immediate medical
attention to result in a condition described in clause (i), (ii), or
(iii) of section 1867(e)(1)(A) of the Social Security Act (42 U.S.C.
1395dd(e)(1)(A)). (In that provision of the Social Security Act, clause
(i) refers to placing the health of the individual (or, with respect to
a pregnant woman, the health of the woman or her unborn child) in
serious jeopardy; clause (ii) refers to serious impairment to bodily
functions; and clause (iii) refers to serious dysfunction of any bodily
organ or part.)
(2) Emergency services means, with respect to an emergency medical
condition--
(i) In general. (A) An appropriate medical screening examination (as
required under section 1867 of the Social Security Act (42 U.S.C.
1395dd) or as would be required under such section if such section
applied to an independent freestanding emergency department) that is
within the capability of the emergency department of a hospital or of an
independent freestanding emergency department, as applicable, including
ancillary services routinely available to the emergency department to
evaluate such emergency medical condition; and
(B) Within the capabilities of the staff and facilities available at
the hospital or the independent freestanding emergency department, as
applicable, such further medical examination and treatment as are
required under section 1867 of the Social Security Act (42 U.S.C.
1395dd), or as would be required under such section if such section
applied to an independent freestanding emergency department, to
stabilize the patient (regardless of the department of the hospital in
which such further examination or treatment is furnished).
(ii) Inclusion of additional services. (A) Subject to paragraph
(c)(2)(ii)(B) of this section, items and services--
(1) For which benefits are provided or covered under the plan or
coverage; and
(2) That are furnished by a nonparticipating provider or
nonparticipating emergency facility (regardless of the department of the
hospital in which such items or services are furnished) after the
participant, beneficiary, or enrollee is stabilized and as part of
outpatient observation or an inpatient or outpatient stay with respect
to the visit in which the services described in paragraph (c)(2)(i) of
this section are furnished.
(B) Items and services described in paragraph (c)(2)(ii)(A) of this
section are not included as emergency services if all of the conditions
in Sec. 149.410(b) are met.
(3) To stabilize, with respect to an emergency medical condition,
has the meaning given such term in section 1867(e)(3) of the Social
Security Act (42 U.S.C. 1395dd(e)(3)).
(d) Applicability date. The provisions of this section are
applicable with respect to plan years (in the individual market, policy
years) beginning on or after January 1, 2022.
Sec. 149.120 Preventing surprise medical bills for non-emergency services
performed by nonparticipating providers at certain participating facilities.
(a) In general. If a group health plan, or a health insurance issuer
offering group or individual health insurance
[[Page 238]]
coverage, provides or covers any benefits with respect to items and
services described in paragraph (b) of this section, the plan or issuer
must cover the items and services when furnished by a nonparticipating
provider in accordance with paragraph (c) of this section.
(b) Items and services described. The items and services described
in this paragraph (b) are items and services (other than emergency
services) furnished to a participant, beneficiary, or enrollee by a
nonparticipating provider with respect to a visit at a participating
health care facility, unless the provider has satisfied the notice and
consent criteria of Sec. 149.420(c) through (i) with respect to such
items and services.
(c) Coverage requirements. In the case of items and services
described in paragraph (b) of this section, the plan or issuer--
(1) Must not impose a cost-sharing requirement for the items and
services that is greater than the cost-sharing requirement that would
apply if the items or services had been furnished by a participating
provider.
(2) Must calculate the cost-sharing requirements as if the total
amount that would have been charged for the items and services by such
participating provider were equal to the recognized amount for the items
and services.
(3) Not later than 30 calendar days after the bill for the items or
services is transmitted by the provider (or in cases where the
recognized amount is determined by a specified State law or All-Payer
Model Agreement, such other timeframe as specified under the State law
or All-Payer Model Agreement), must determine whether the items and
services are covered under the plan or coverage and, if the items and
services are covered, send to the provider an initial payment or a
notice of denial of payment. For purposes of this paragraph (c)(3), the
30-calendar-day period begins on the date the plan or issuer receives
the information necessary to decide a claim for payment for the items or
services.
(4) Must pay a total plan or coverage payment directly to the
nonparticipating provider that is equal to the amount by which the out-
of-network rate for the items and services involved exceeds the cost-
sharing amount for the items and services (as determined in accordance
with paragraphs (c)(1) and (2) of this section), less any initial
payment amount made under paragraph (c)(3) of this section. The total
plan or coverage payment must be made in accordance with the timing
requirement described in section 2799A-1(c)(6) of the PHS Act, or in
cases where the out-of-network rate is determined under a specified
State law or All-Payer Model Agreement, such other timeframe as
specified by the State law or All-Payer Model Agreement.
(5) Must count any cost-sharing payments made by the participant,
beneficiary, or enrollee toward any in-network deductible and in-network
out-of-pocket maximums (including the annual limitation on cost sharing
under section 2707(b) of the PHS Act) (as applicable) applied under the
plan or coverage (and the in-network deductible and out-of-pocket
maximums must be applied) in the same manner as if such cost-sharing
payments were made with respect to items and services furnished by a
participating provider.
(d) Applicability date. The provisions of this section are
applicable with respect to plan years (in the individual market, policy
years) beginning on or after January 1, 2022.
Sec. 149.130 Preventing surprise medical bills for air ambulance services.
(a) In general. If a group health plan, or a health insurance issuer
offering group or individual health insurance coverage, provides or
covers any benefits for air ambulance services, the plan or issuer must
cover such services from a nonparticipating provider of air ambulance
services in accordance with paragraph (b) of this section.
(b) Coverage requirements. A plan or issuer described in paragraph
(a) of this section must provide coverage of air ambulance services in
the following manner--
(1) The cost-sharing requirements with respect to the services must
be the same requirements that would apply if the services were provided
by a participating provider of air ambulance services.
[[Page 239]]
(2) The cost-sharing requirement must be calculated as if the total
amount that would have been charged for the services by a participating
provider of air ambulance services were equal to the lesser of the
qualifying payment amount (as determined in accordance with Sec.
149.140) or the billed amount for the services.
(3) The cost-sharing amounts must be counted towards any in-network
deductible and in-network out-of-pocket maximums (including the annual
limitation on cost sharing under section 2707(b) of the PHS Act) (as
applicable) applied under the plan or coverage (and the in-network
deductible and out-of-pocket maximums must be applied) in the same
manner as if the cost-sharing payments were made with respect to
services furnished by a participating provider of air ambulance
services.
(4) The plan or issuer must--
(i) Not later than 30 calendar days after the bill for the services
is transmitted by the provider of air ambulance services, determine
whether the services are covered under the plan or coverage and, if the
services are covered, send to the provider an initial payment or a
notice of denial of payment. For purposes of this paragraph (b)(4)(i),
the 30-calendar-day period begins on the date the plan or issuer
receives the information necessary to decide a claim for payment for the
services.
(ii) Pay a total plan or coverage payment directly to the
nonparticipating provider furnishing such air ambulance services that is
equal to the amount by which the out-of-network rate for the services
exceeds the cost-sharing amount for the services (as determined in
accordance with paragraphs (b)(1) and (2) of this section), less any
initial payment amount made under paragraph (b)(4)(i) of this section.
The total plan or coverage payment must be made in accordance with the
timing requirement described in section 2799A-2(b)(6) of the PHS Act, or
in cases where the out-of-network rate is determined under a specified
State law or All-Payer Model Agreement, such other timeframe as
specified by the State law or All-Payer Model Agreement.
(c) Applicability date. The provisions of this section are
applicable with respect to plan years (in the individual market, policy
years) beginning on or after January 1, 2022.
Sec. 149.140 Methodology for calculating qualifying payment amount.
(a) Definitions. For purposes of this section, the following
definitions apply:
(1) Contracted rate means the total amount (including cost sharing)
that a group health plan or health insurance issuer has contractually
agreed to pay a participating provider, facility, or provider of air
ambulance services for covered items and services, whether directly or
indirectly, including through a third-party administrator or pharmacy
benefit manager. Solely for purposes of this definition, a single case
agreement, letter of agreement, or other similar arrangement between a
provider, facility, or air ambulance provider and a plan or issuer, used
to supplement the network of the plan or coverage for a specific
participant, beneficiary, or enrollee in unique circumstances, does not
constitute a contract.
(2) Derived amount has the meaning given the term in Sec. 147.210
of this subchapter.
(3) Eligible database means--
(i) A State all-payer claims database; or
(ii) Any third-party database which--
(A) Is not affiliated with, or owned or controlled by, any health
insurance issuer, or a health care provider, facility, or provider of
air ambulance services (or any member of the same controlled group as,
or under common control with, such an entity). For purposes of this
paragraph (a)(3)(ii)(A), the term controlled group means a group of two
or more persons that is treated as a single employer under sections
52(a), 52(b), 414(m), or 414(o) of the Internal Revenue Code of 1986, as
amended;
(B) Has sufficient information reflecting in-network amounts paid by
group health plans or health insurance issuers offering group or
individual health insurance coverage to providers, facilities, or
providers of air ambulance services for relevant items and services
[[Page 240]]
furnished in the applicable geographic region; and
(C) Has the ability to distinguish amounts paid to participating
providers and facilities by commercial payers, such as group health
plans and health insurance issuers offering group or individual health
insurance coverage, from all other claims data, such as amounts billed
by nonparticipating providers or facilities and amounts paid by public
payers, including the Medicare program under title XVIII of the Social
Security Act, the Medicaid program under title XIX of the Social
Security Act (or a demonstration project under title XI of the Social
Security Act), or the Children's Health Insurance Program under title
XXI of the Social Security Act.
(4) Facility of the same or similar facility type means, with
respect to emergency services, either--
(i) An emergency department of a hospital; or
(ii) An independent freestanding emergency department.
(5) First coverage year means, with respect to an item or service
for which coverage is not offered in 2019 under a group health plan or
group or individual health insurance coverage offered by a health
insurance issuer, the first year after 2019 for which coverage for such
item or service is offered under that plan or coverage.
(6) First sufficient information year means, with respect to a group
health plan or group or individual health insurance coverage offered by
a health insurance issuer--
(i) In the case of an item or service for which the plan or coverage
does not have sufficient information to calculate the median of the
contracted rates described in paragraph (b) of this section in 2019, the
first year after 2022 for which the plan or issuer has sufficient
information to calculate the median of such contracted rates in the year
immediately preceding that first year after 2022; and
(ii) In the case of a newly covered item or service, the first year
after the first coverage year for such item or service with respect to
such plan or coverage for which the plan or issuer has sufficient
information to calculate the median of the contracted rates described in
paragraph (b) of this section in the year immediately preceding that
first year.
(7) Geographic region means--
(i) For items and services other than air ambulance services--
(A) Subject to paragraphs (a)(7)(i)(B) and (C) of this section, one
region for each metropolitan statistical area, as described by the U.S.
Office of Management and Budget and published by the U.S. Census Bureau,
in a State, and one region consisting of all other portions of the
State.
(B) If a plan or issuer does not have sufficient information to
calculate the median of the contracted rates described in paragraph (b)
of this section for an item or service provided in a geographic region
described in paragraph (a)(7)(i)(A) of this section, one region
consisting of all metropolitan statistical areas, as described by the
U.S. Office of Management and Budget and published by the U.S. Census
Bureau, in the State, and one region consisting of all other portions of
the State.
(C) If a plan or issuer does not have sufficient information to
calculate the median of the contracted rates described in paragraph (b)
of this section for an item or service provided in a geographic region
described in paragraph (a)(7)(i)(B) of this section, one region
consisting of all metropolitan statistical areas, as described by the
U.S. Office of Management and Budget and published by the U.S. Census
Bureau, in each Census division and one region consisting of all other
portions of the Census division, as described by the U.S. Census Bureau.
(ii) For air ambulance services--
(A) Subject to paragraph (a)(7)(ii)(B) of this section, one region
consisting of all metropolitan statistical areas, as described by the
U.S. Office of Management and Budget and published by the U.S. Census
Bureau, in the State, and one region consisting of all other portions of
the State, determined based on the point of pick-up (as defined in 42
CFR 414.605).
(B) If a plan or issuer does not have sufficient information to
calculate the median of the contracted rates described in paragraph (b)
of this section for an air ambulance service provided in a geographic
region described in
[[Page 241]]
paragraph (a)(7)(ii)(A) of this section, one region consisting of all
metropolitan statistical areas, as described by the U.S. Office of
Management and Budget and published by the U.S. Census Bureau, in each
Census division and one region consisting of all other portions of the
Census division, as described by the U.S. Census Bureau, determined
based on the point of pick-up (as defined in 42 CFR 414.605).
(8) Insurance market is, irrespective of the State, one of the
following:
(i) The individual market (other than short-term, limited-duration
insurance or individual health insurance coverage that consists solely
of excepted benefits).
(ii) The large group market (other than coverage that consists
solely of excepted benefits).
(iii) The small group market (other than coverage that consists
solely of excepted benefits).
(iv) In the case of a self-insured group health plan, all self-
insured group health plans (other than account-based plans, as defined
in Sec. 147.126(d)(6)(i) of this subchapter, and plans that consist
solely of excepted benefits) of the same plan sponsor, or at the option
of the plan sponsor, all self-insured group health plans administered by
the same entity (including a third-party administrator contracted by the
plan), to the extent otherwise permitted by law, that is responsible for
calculating the qualifying payment amount on behalf of the plan.
(9) Modifiers mean codes applied to the service code that provide a
more specific description of the furnished item or service and that may
adjust the payment rate or affect the processing or payment of the code
billed.
(10) Newly covered item or service means an item or service for
which coverage was not offered in 2019 under a group health plan or
group or individual health insurance coverage offered by a health
insurance issuer, but that is offered under the plan or coverage in a
year after 2019.
(11) New service code means a service code that was created or
substantially revised in a year after 2019.
(12) Provider in the same or similar specialty means the practice
specialty of a provider, as identified by the plan or issuer consistent
with the plan's or issuer's usual business practice, except that, with
respect to air ambulance services, all providers of air ambulance
services are considered to be a single provider specialty.
(13) Same or similar item or service means a health care item or
service billed under the same service code, or a comparable code under a
different procedural code system.
(14) Service code means the code that describes an item or service
using the Current Procedural Terminology (CPT) code, Healthcare Common
Procedure Coding System (HCPCS), or Diagnosis-Related Group (DRG) codes.
(15) Sufficient information means, for purposes of determining
whether a group health plan or health insurance issuer offering group or
individual health insurance coverage has sufficient information to
calculate the median of the contracted rates described in paragraph (b)
of this section--
(i) The plan or issuer has at least three contracted rates on
January 31, 2019, to calculate the median of the contracted rates in
accordance with paragraph (b) of this section; or
(ii) For an item or service furnished during a year after 2022 that
is used to determine the first sufficient information year--
(A) The plan or issuer has at least three contracted rates on
January 31 of the year immediately preceding that year to calculate the
median of the contracted rates in accordance with paragraph (b) of this
section; and
(B) The contracted rates under paragraph (a)(15)(ii)(A) of this
section account (or are reasonably expected to account) for at least 25
percent of the total number of claims paid for that item or service for
that year with respect to all plans of the sponsor (or the administering
entity as provided in paragraph (a)(8)(iv) of this section, if
applicable) or all coverage offered by the issuer that are offered in
the same insurance market.
(16) Qualifying payment amount means, with respect to a sponsor of a
group health plan or health insurance issuer offering group or
individual health insurance coverage, the amount calculated using the
methodology described in paragraph (c) of this section.
[[Page 242]]
(17) Underlying fee schedule rate means the rate for a covered item
or service from a particular participating provider, providers, or
facility that a group health plan or health insurance issuer uses to
determine a participant's, beneficiary's, or enrollee's cost-sharing
liability for the item or service, when that rate is different from the
contracted rate.
(18) Downcode means the alteration by a plan or issuer of a service
code to another service code, or the alteration, addition, or removal by
a plan or issuer of a modifier, if the changed code or modifier is
associated with a lower qualifying payment amount than the service code
or modifier billed by the provider, facility, or provider of air
ambulance services.
(b) Methodology for calculation of median contracted rate--(1) In
general. The median contracted rate for an item or service is calculated
by arranging in order from least to greatest the contracted rates of all
group health plans of the plan sponsor (or the administering entity as
provided in paragraph (a)(8)(iv) of this section, if applicable) or all
group or individual health insurance coverage offered by the issuer in
the same insurance market for the same or similar item or service that
is provided by a provider in the same or similar specialty or facility
of the same or similar facility type and provided in the geographic
region in which the item or service is furnished and selecting the
middle number. If there are an even number of contracted rates, the
median contracted rate is the average of the middle two contracted
rates. In determining the median contracted rate, the amount negotiated
under each contract is treated as a separate amount. If a plan or issuer
has a contract with a provider group or facility, the rate negotiated
with that provider group or facility under the contract is treated as a
single contracted rate if the same amount applies with respect to all
providers of such provider group or facility under the single contract.
However, if a plan or issuer has a contract with multiple providers,
with separate negotiated rates with each particular provider, each
unique contracted rate with an individual provider constitutes a single
contracted rate. Further, if a plan or issuer has separate contracts
with individual providers, the contracted rate under each such contract
constitutes a single contracted rate (even if the same amount is paid to
multiple providers under separate contracts).
(2) Calculation rules. In calculating the median contracted rate, a
plan or issuer must:
(i) Calculate the median contracted rate with respect to all plans
of such sponsor (or the administering entity as provided in paragraph
(a)(8)(iv) of this section, if applicable) or all coverage offered by
such issuer that are offered in the same insurance market;
(ii) Calculate the median contracted rate using the full contracted
rate applicable to the service code, except that the plan or issuer
must--
(A) Calculate separate median contracted rates for CPT code
modifiers ``26'' (professional component) and ``TC'' (technical
component);
(B) For anesthesia services, calculate a median contracted rate for
the anesthesia conversion factor for each service code;
(C) For air ambulance services, calculate a median contracted rate
for the air mileage service codes (A0435 and A0436); and
(D) Where contracted rates otherwise vary based on applying a
modifier code, calculate a separate median contracted rate for each such
service code-modifier combination;
(iii) In the case of payments made by a plan or issuer that are not
on a fee-for-service basis (such as bundled or capitation payments),
calculate a median contracted rate for each item or service using the
underlying fee schedule rates for the relevant items or services. If the
plan or issuer does not have an underlying fee schedule rate for the
item or service, it must use the derived amount to calculate the median
contracted rate; and
(iv) Exclude risk sharing, bonus, penalty, or other incentive-based
or retrospective payments or payment adjustments.
(3) Provider specialties; facility types. (i) If a plan or issuer
has contracted rates that vary based on provider specialty for a service
code, the median
[[Page 243]]
contracted rate is calculated separately for each provider specialty, as
applicable.
(ii) If a plan or issuer has contracted rates for emergency services
that vary based on facility type for a service code, the median
contracted rate is calculated separately for each facility of the same
or similar facility type.
(c) Methodology for calculation of the qualifying payment amount--
(1) In general. (i) For an item or service (other than items or services
described in paragraphs (c)(1)(iii) through (vii) of this section)
furnished during 2022, the plan or issuer must calculate the qualifying
payment amount by increasing the median contracted rate (as determined
in accordance with paragraph (b) of this section) for the same or
similar item or service under such plans or coverage, respectively, on
January 31, 2019, by the combined percentage increase as published by
the Department of the Treasury and the Internal Revenue Service to
reflect the percentage increase in the CPI-U over 2019, such percentage
increase over 2020, and such percentage increase over 2021.
(A) The combined percentage increase for 2019, 2020, and 2021 will
be published in guidance by the Internal Revenue Service. The Department
of the Treasury and the Internal Revenue Service will calculate the
percentage increase using the CPI-U published by the Bureau of Labor
Statistics of the Department of Labor.
(B) For purposes of this paragraph (c)(1)(i), the CPI-U for each
calendar year is the average of the CPI-U as of the close of the 12-
month period ending on August 31 of the calendar year, rounded to 10
decimal places.
(C) The combined percentage increase for 2019, 2020, and 2021 will
be calculated as:
(CPI-U 2019/CPI-U 2018) x (CPI-U 2020/CPI-U 2019) x (CPI-U 2021/CPI-U
2020)
(ii) For an item or service (other than items or services described
in paragraphs (c)(1)(iii) through (vii) of this section) furnished
during 2023 or a subsequent year, the plan or issuer must calculate the
qualifying payment amount by increasing the qualifying payment amount
determined under paragraph (c)(1)(i) of this section, for such an item
or service furnished in the immediately preceding year, by the
percentage increase as published by the Department of the Treasury and
the Internal Revenue Service.
(A) The percentage increase for any year after 2022 will be
published in guidance by the Internal Revenue Service. The Department of
the Treasury and Internal Revenue Service will calculate the percentage
increase using the CPI-U published by the Bureau of Labor Statistics of
the Department of Labor.
(B) For purposes of this paragraph (c)(1)(ii), the CPI-U for each
calendar year is the average of the CPI-U as of the close of the 12-
month period ending on August 31 of the calendar year, rounded to 10
decimal places.
(C) The combined percentage increase for any year will be calculated
as CPI-U present year/CPI-U prior year.
(iii) For anesthesia services furnished during 2022, the plan or
issuer must calculate the qualifying payment amount by first increasing
the median contracted rate for the anesthesia conversion factor (as
determined in accordance with paragraph (b) of this section) for the
same or similar item or service under such plans or coverage,
respectively, on January 31, 2019, in accordance with paragraph
(c)(1)(i) of this section (referred to in this section as the indexed
median contracted rate for the anesthesia conversion factor). The plan
or issuer must then multiply the indexed median contracted rate for the
anesthesia conversion factor by the sum of the base unit, time unit, and
physical status modifier units of the participant, beneficiary, or
enrollee to whom anesthesia services are furnished to determine the
qualifying payment amount.
(A) The base units for an anesthesia service code are the base units
for that service code specified in the most recent edition (as of the
date of service) of the American Society of Anesthesiologists Relative
Value Guide.
(B) The time unit is measured in 15-minute increments or a fraction
thereof.
(C) The physical status modifier on a claim is a standard modifier
describing the physical status of the patient and
[[Page 244]]
is used to distinguish between various levels of complexity of the
anesthesia services provided, and is expressed as a unit with a value
between zero (0) and three (3).
(D) The anesthesia conversion factor is expressed in dollars per
unit and is a contracted rate negotiated with the plan or issuer.
(iv) For anesthesia services furnished during 2023 or a subsequent
year, the plan or issuer must calculate the qualifying payment amount by
first increasing the indexed median contracted rate for the anesthesia
conversion factor, determined under paragraph (c)(1)(iii) of this
section for such services furnished in the immediately preceding year,
in accordance with paragraph (c)(1)(ii) of this section. The plan or
issuer must then multiply that amount by the sum of the base unit, time
unit, and physical status modifier units for the participant,
beneficiary, or enrollee to whom anesthesia services are furnished to
determine the qualifying payment amount.
(v) For air ambulance services billed using the air mileage service
codes (A0435 and A0436) that are furnished during 2022, the plan or
issuer must calculate the qualifying payment amount for services billed
using the air mileage service codes by first increasing the median
contracted rate (as determined in accordance with paragraph (b) of this
section), in accordance with paragraph (c)(1)(i) of this section
(referred to in this section as the indexed median air mileage rate).
The plan or issuer must then multiply the indexed median air mileage
rate by the number of loaded miles provided to the participant,
beneficiary, or enrollee to determine the qualifying payment amount.
(A) The air mileage rate is expressed in dollars per loaded mile
flown, is expressed in statute miles (not nautical miles), and is a
contracted rate negotiated with the plan or issuer.
(B) The number of loaded miles is the number of miles a patient is
transported in the air ambulance vehicle.
(C) The qualifying payment amount for other service codes associated
with air ambulance services is calculated in accordance with paragraphs
(c)(1)(i) and (ii) of this section.
(vi) For air ambulance services billed using the air mileage service
codes (A0435 and A0436) that are furnished during 2023 or a subsequent
year, the plan or issuer must calculate the qualifying payment amount by
first increasing the indexed median air mileage rate, determined under
paragraph (c)(1)(v) of this section for such services furnished in the
immediately preceding year, in accordance with paragraph (c)(1)(ii) of
this section. The plan or issuer must then multiply the indexed median
air mileage rate by the number of loaded miles provided to the
participant, beneficiary, or enrollee to determine the qualifying
payment amount.
(vii) For any other items or services for which a plan or issuer
generally determines payment for the same or similar items or services
by multiplying a contracted rate by another unit value, the plan or
issuer must calculate the qualifying payment amount using a methodology
that is similar to the methodology required under paragraphs (c)(1)(iii)
through (vi) of this section and reasonably reflects the payment
methodology for same or similar items or services.
(2) New plans and coverage. With respect to a sponsor of a group
health plan or health insurance issuer offering group or individual
health insurance coverage in a geographic region in which the sponsor or
issuer, respectively, did not offer any group health plan or health
insurance coverage during 2019--
(i) For the first year in which the group health plan, group health
insurance coverage, or individual health insurance coverage,
respectively, is offered in such region--
(A) If the plan or issuer has sufficient information to calculate
the median of the contracted rates described in paragraph (b) of this
section, the plan or issuer must calculate the qualifying payment amount
in accordance with paragraph (c)(1) of this section for items and
services that are covered by the plan or coverage and furnished during
the first year; and
(B) If the plan or issuer does not have sufficient information to
calculate the median of the contracted rates described in paragraph (b)
of this section
[[Page 245]]
for an item or service provided in a geographic region, the plan or
issuer must determine the qualifying payment amount for the item or
service in accordance with paragraph (c)(3)(i) of this section.
(ii) For each subsequent year the group health plan, group health
insurance coverage, or individual health insurance coverage,
respectively, is offered in the region, the plan or issuer must
calculate the qualifying payment amount by increasing the qualifying
payment amount determined under this paragraph (c)(2) for the items and
services furnished in the immediately preceding year, in accordance with
paragraph (c)(1)(ii), (iv), or (vi) of this section, as applicable.
(3) Insufficient information; newly covered items and services. In
the case of a plan or issuer that does not have sufficient information
to calculate the median of the contracted rates described in paragraph
(b) of this section in 2019 (or, in the case of a newly covered item or
service, in the first coverage year for such item or service with
respect to such plan or coverage if the plan or issuer does not have
sufficient information) for an item or service provided in a geographic
region--
(i) For an item or service furnished during 2022 (or, in the case of
a newly covered item or service, during the first coverage year for the
item or service with respect to the plan or coverage), the plan or
issuer must calculate the qualifying payment amount by first identifying
the rate that is equal to the median of the in-network allowed amounts
for the same or similar item or service provided in the geographic
region in the year immediately preceding the year in which the item or
service is furnished (or, in the case of a newly covered item or
service, the year immediately preceding such first coverage year)
determined by the plan or issuer, respectively, through use of any
eligible database, and then increasing that rate by the percentage
increase in the CPI-U over such preceding year. For purposes of this
section, in cases in which an eligible database is used to determine the
qualifying payment amount with respect to an item or service furnished
during a calendar year, the plan or issuer must use the same database
for determining the qualifying payment amount for that item or service
furnished through the last day of the calendar year, and if a different
database is selected for some items or services, the basis for that
selection must be one or more factors not directly related to the rate
of those items or services (such as sufficiency of data for those items
or services).
(ii) For an item or service furnished in a subsequent year (before
the first sufficient information year for such item or service with
respect to such plan or coverage), the plan or issuer must calculate the
qualifying payment amount by increasing the qualifying payment amount
determined under paragraph (c)(3)(i) of this section or this paragraph
(c)(3)(ii), as applicable, for such item or service for the year
immediately preceding such subsequent year, by the percentage increase
in CPI-U over such preceding year;
(iii) For an item or service furnished in the first sufficient
information year for such item or service with respect to such plan or
coverage, the plan or issuer must calculate the qualifying payment
amount in accordance with paragraph (c)(1)(i), (iii), or (v) of this
section, as applicable, except that in applying such paragraph to such
item or service, the reference to `furnished during 2022' is treated as
a reference to furnished during such first sufficient information year,
the reference to 'in 2019' is treated as a reference to such sufficient
information year, and the increase described in such paragraph is not
applied; and
(iv) For an item or service furnished in any year subsequent to the
first sufficient information year for such item or service with respect
to such plan or coverage, the plan or issuer must calculate the
qualifying payment amount in accordance with paragraph (c)(1)(ii), (iv),
or (vi) of this section, as applicable, except that in applying such
paragraph to such item or service, the reference to `furnished during
2023 or a subsequent year' is treated as a reference to furnished during
the year after such first sufficient information year or a subsequent
year.
[[Page 246]]
(4) New service codes. In the case of a plan or issuer that does not
have sufficient information to calculate the median of the contracted
rates described in paragraph (b) of this section and determine the
qualifying payment amount under paragraphs (c)(1) through (3) of this
section because the item or service furnished is billed under a new
service code--
(i) For an item or service furnished during 2022 (or, in the case of
a newly covered item or service, during the first coverage year for the
item or service with respect to the plan or coverage), the plan or
issuer must identify a reasonably related service code that existed in
the immediately preceding year and--
(A) If the Centers for Medicare & Medicaid Services has established
a Medicare payment rate for the item or service billed under the new
service code, the plan or issuer must calculate the qualifying payment
amount by first calculating the ratio of the rate that Medicare pays for
the item or service billed under the new service code compared to the
rate that Medicare pays for the item or service billed under the related
service code, and then multiplying the ratio by the qualifying payment
amount for an item or service billed under the related service code for
the year in which the item or service is furnished.
(B) If the Centers for Medicare & Medicaid Services has not
established a Medicare payment rate for the item or service billed under
the new service code, the plan or issuer must calculate the qualifying
payment amount by first calculating the ratio of the rate that the plan
or issuer reimburses for the item or service billed under the new
service code compared to the rate that the plan or issuer reimburses for
the item or service billed under the related service code, and then
multiplying the ratio by the qualifying payment amount for an item or
service billed under the related service code.
(ii) For an item or service furnished in a subsequent year (before
the first sufficient information year for such item or service with
respect to such plan or coverage or before the first year for which an
eligible database has sufficient information to a calculate a rate under
paragraph (c)(3)(i) of this section in the immediately preceding year),
the plan or issuer must calculate the qualifying payment amount by
increasing the qualifying payment amount determined under paragraph
(c)(4)(i) of this section or this paragraph (c)(4)(ii), as applicable,
for such item or service for the year immediately preceding such
subsequent year, by the percentage increase in CPI-U over such preceding
year;
(iii) For an item or service furnished in the first sufficient
information year for such item or service with respect to such plan or
coverage or the first year for which an eligible database has sufficient
information to calculate a rate under paragraph (c)(3)(i) of this
section in the immediately preceding year, the plan or issuer must
calculate the qualifying payment amount in accordance with paragraph
(c)(3) of this section.
(d) Information to be shared about qualifying payment amount. In
cases in which the recognized amount with respect to an item or service
furnished by a nonparticipating provider, nonparticipating emergency
facility, or nonparticipating provider of air ambulance services is the
qualifying payment amount, the plan or issuer must provide in writing,
in paper or electronic form, to the provider or facility, as
applicable--
(1) With each initial payment or notice of denial of payment under
Sec. 149.110, Sec. 149.120, or Sec. 149.130:
(i) The qualifying payment amount for each item or service involved;
(ii) If the qualifying payment amount is based on a downcoded
service code or modifier--
(A) A statement that the service code or modifier billed by the
provider, facility, or provider of air ambulance services was downcoded;
(B) An explanation of why the claim was downcoded, which must
include a description of which service codes were altered, if any, and a
description of which modifiers were altered, added, or removed, if any;
and
(C) The amount that would have been the qualifying payment amount
had the service code or modifier not been downcoded;
[[Page 247]]
(iii) A statement to certify that, based on the determination of the
plan or issuer--
(A) The qualifying payment amount applies for purposes of the
recognized amount (or, in the case of air ambulance services, for
calculating the participant's, beneficiary's, or enrollee's cost
sharing); and
(B) Each qualifying payment amount shared with the provider or
facility was determined in compliance with this section;
(iv) A statement that if the provider or facility, as applicable,
wishes to initiate a 30-day open negotiation period for purposes of
determining the amount of total payment, the provider or facility may
contact the appropriate person or office to initiate open negotiation,
and that if the 30-day negotiation period does not result in a
determination, generally, the provider or facility may initiate the
independent dispute resolution process within 4 days after the end of
the open negotiation period; and
(v) Contact information, including a telephone number and email
address, for the appropriate person or office to initiate open
negotiations for purposes of determining an amount of payment (including
cost sharing) for such item or service.
(2) In a timely manner upon request of the provider or facility:
(i) Information about whether the qualifying payment amount for
items and services involved included contracted rates that were not on a
fee-for-service basis for those specific items and services and whether
the qualifying payment amount for those items and services was
determined using underlying fee schedule rates or a derived amount;
(ii) If a plan or issuer uses an eligible database under paragraph
(c)(3) of this section to determine the qualifying payment amount,
information to identify which database was used; and
(iii) If a related service code was used to determine the qualifying
payment amount for an item or service billed under a new service code
under paragraph (c)(4)(i) or (ii) of this section, information to
identify the related service code; and
(iv) If applicable, a statement that the plan's or issuer's
contracted rates include risk-sharing, bonus, penalty, or other
incentive-based or retrospective payments or payment adjustments for the
items and services involved (as applicable) that were excluded for
purposes of calculating the qualifying payment amount.
(e) Certain access fees to databases. In the case of a plan or
issuer that, pursuant to this section, uses an eligible database to
determine the qualifying payment amount for an item or service, the plan
or issuer is responsible for any costs associated with accessing such
database.
(f) Audits. The procedures described in part 150 of this subchapter
apply with respect to ensuring that a plan or coverage is in compliance
with the requirement of applying a qualifying payment amount under this
subpart and ensuring that such amount so applied satisfies the
requirements under this section, as applicable.
(g) Applicability date. The provisions of this section are
applicable for plan years or in the individual market, policy years
beginning on or after January 1, 2022, except that paragraph (a)(18) of
this section regarding the definition of the term ``downcode'' and
paragraph (d)(1)(ii) of this section regarding additional information
that must be provided if the qualifying payment amount is based on a
downcoded service code or modifier are applicable with respect to items
or services provided or furnished on or after October 25, 2022, for plan
years or in the individual market, policy years beginning on or after
January 1, 2022.
[86 FR 36970, July 13, 2021, as amended at 87 FR 52652, Aug. 26, 2022]
Sec. 149.150 Complaints process for surprise medical bills
regarding group health plans and group and individual health
insurance coverage.
(a) Scope and definitions--(1) Scope. This section establishes a
process to receive and resolve complaints regarding information that a
specific group health plan or health insurance issuer offering group or
individual health insurance coverage may be failing to
[[Page 248]]
meet the requirements under this subpart, which may warrant an
investigation.
(2) Definitions. In this section--
(i) Complaint means a communication, written or oral, that indicates
there has been a potential violation of the requirements under subpart B
of this part, whether or not a violation actually occurred.
(ii) Complainant means any individual, or their authorized
representative, who files a complaint as defined in paragraph (a)(2)(i)
of this section.
(b) Complaints process. (1) HHS will consider the date a complaint
is filed to be the date upon which HHS receives an oral or written
statement that identifies information about the complaint sufficient to
identify the parties involved and the action or inaction complained of.
(2) HHS will notify complainants, by oral or written means, of
receipt of the complaint no later than 60 business days after the
complaint is received. HHS will include a response acknowledging receipt
of the complaint, notifying the complainant of their rights and
obligations under the complaints process, and describing the next steps
of the complaints resolution process. As part of the response, HHS may
request additional information needed to process the complaint. Such
additional information may include:
(i) Explanations of benefits;
(ii) Processed claims;
(iii) Information about the health care provider, facility, or
provider of air ambulance services involved;
(iv) Information about the group health plan or health insurance
issuer covering the individual;
(v) Information to support a determination regarding whether the
service was an emergency service or non-emergency service;
(vi) The summary plan description, policy, certificate, contract of
insurance, membership booklet, outline of coverage, or other evidence of
coverage the plan or issuer provides to participants, beneficiaries, or
enrollees;
(vii) Documents regarding the facts in the complaint in the
possession of, or otherwise attainable by, the complainant; or
(viii) Any other information HHS may need to make a determination of
facts for an investigation.
(3) HHS will make reasonable efforts consistent with agency
practices to notify the complainant of the outcome of the complaint
after the submission is processed through appropriate methods as
determined by HHS. A complaint is considered processed after HHS has
reviewed the complaint and accompanying information and made an outcome
determination. Based on the nature of the complaint and the plan or
issuer involved, HHS may--
(i) Refer the complainant to another appropriate Federal or State
resolution process;
(ii) Notify the complainant and make reasonable efforts to refer the
complainant to the appropriate State or Federal regulatory authority if
HHS receives a complaint where another entity has enforcement
jurisdiction over the plan or issuer;
(iii) Refer the plan or issuer for an investigation for enforcement
action under 45 CFR part 150; or
(iv) Provide the complainant with an explanation of the resolution
of the complaint and any corrective action taken.
Subpart C [Reserved]
Subpart D_Additional Patient Protections
Sec. 149.310 Choice of health care professional.
(a) Choice of health care professional--(1) Designation of primary
care provider--(i) In general. If a group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
requires or provides for designation by a participant, beneficiary, or
enrollee of a participating primary care provider, then the plan or
issuer must permit each participant, beneficiary, or enrollee to
designate any participating primary care provider who is available to
accept the participant, beneficiary, or enrollee. In such a case, the
plan or issuer must comply with the rules of paragraph (a)(4) of this
section by informing each participant (in the individual market, primary
subscriber) of the terms of the
[[Page 249]]
plan or health insurance coverage regarding designation of a primary
care provider.
(ii) Construction. Nothing in paragraph (a)(1)(i) of this section is
to be construed to prohibit the application of reasonable and
appropriate geographic limitations with respect to the selection of
primary care providers, in accordance with the terms of the plan or
coverage, the underlying provider contracts, and applicable State law.
(iii) Example. The rules of this paragraph (a)(1) are illustrated by
the following example:
(A) Facts. A group health plan requires individuals covered under
the plan to designate a primary care provider. The plan permits each
individual to designate any primary care provider participating in the
plan's network who is available to accept the individual as the
individual's primary care provider. If an individual has not designated
a primary care provider, the plan designates one until the individual
has made a designation. The plan provides a notice that satisfies the
requirements of paragraph (a)(4) of this section regarding the ability
to designate a primary care provider.
(B) Conclusion. In this Example, the plan has satisfied the
requirements of paragraph (a) of this section.
(2) Designation of pediatrician as primary care provider--(i) In
general. If a group health plan, or a health insurance issuer offering
group or individual health insurance coverage, requires or provides for
the designation of a participating primary care provider for a child by
a participant, beneficiary, or enrollee, the plan or issuer must permit
the participant, beneficiary, or enrollee to designate a physician
(allopathic or osteopathic) who specializes in pediatrics (including
pediatric subspecialties, based on the scope of that provider's license
under applicable State law) as the child's primary care provider if the
provider participates in the network of the plan or issuer and is
available to accept the child. In such a case, the plan or issuer must
comply with the rules of paragraph (a)(4) of this section by informing
each participant (in the individual market, primary subscriber) of the
terms of the plan or health insurance coverage regarding designation of
a pediatrician as the child's primary care provider.
(ii) Construction. Nothing in paragraph (a)(2)(i) of this section is
to be construed to waive any exclusions of coverage under the terms and
conditions of the plan or health insurance coverage with respect to
coverage of pediatric care.
(iii) Examples. The rules of this paragraph (a)(2) are illustrated
by the following examples:
(A) Example 1--(1) Facts. A group health plan's HMO designates for
each participant a physician who specializes in internal medicine to
serve as the primary care provider for the participant and any
beneficiaries. Participant A requests that Pediatrician B be designated
as the primary care provider for A's child. B is a participating
provider in the HMO's network and is available to accept the child.
(2) Conclusion. In this Example 1, the HMO must permit A's
designation of B as the primary care provider for A's child in order to
comply with the requirements of this paragraph (a)(2).
(B) Example 2--(1) Facts. Same facts as Example 1 (paragraph
(a)(2)(iii)(A) of this section), except that A takes A's child to B for
treatment of the child's severe shellfish allergies. B wishes to refer
A's child to an allergist for treatment. The HMO, however, does not
provide coverage for treatment of food allergies, nor does it have an
allergist participating in its network, and it therefore refuses to
authorize the referral.
(2) Conclusion. In this Example 2, the HMO has not violated the
requirements of this paragraph (a)(2) because the exclusion of treatment
for food allergies is in accordance with the terms of A's coverage.
(3) Patient access to obstetrical and gynecological care--(i)
General rights--(A) Direct access. A group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
described in paragraph (a)(3)(ii) of this section, may not require
authorization or referral by the plan, issuer, or any person (including
a primary care provider) in the case of a female participant,
beneficiary, or enrollee who seeks coverage for obstetrical or
gynecological care provided by
[[Page 250]]
a participating health care professional who specializes in obstetrics
or gynecology. In such a case, the plan or issuer must comply with the
rules of paragraph (a)(4) of this section by informing each participant
(in the individual market, primary subscriber) that the plan may not
require authorization or referral for obstetrical or gynecological care
by a participating health care professional who specializes in
obstetrics or gynecology. The plan or issuer may require such a
professional to agree to otherwise adhere to the plan's or issuer's
policies and procedures, including procedures regarding referrals and
obtaining prior authorization and providing services pursuant to a
treatment plan (if any) approved by the plan or issuer. For purposes of
this paragraph (a)(3), a health care professional who specializes in
obstetrics or gynecology is any individual (including a person other
than a physician) who is authorized under applicable State law to
provide obstetrical or gynecological care.
(B) Obstetrical and gynecological care. A group health plan or
health insurance issuer described in paragraph (a)(3)(ii) of this
section must treat the provision of obstetrical and gynecological care,
and the ordering of related obstetrical and gynecological items and
services, pursuant to the direct access described under paragraph
(a)(3)(i)(A) of this section, by a participating health care
professional who specializes in obstetrics or gynecology as the
authorization of the primary care provider.
(ii) Application of paragraph. A group health plan, or a health
insurance issuer offering group or individual health insurance coverage,
is described in this paragraph (a)(3) if the plan or issuer--
(A) Provides coverage for obstetrical or gynecological care; and
(B) Requires the designation by a participant, beneficiary, or
enrollee of a participating primary care provider.
(iii) Construction. Nothing in paragraph (a)(3)(i) of this section
is to be construed to--
(A) Waive any exclusions of coverage under the terms and conditions
of the plan or health insurance coverage with respect to coverage of
obstetrical or gynecological care; or
(B) Preclude the group health plan or health insurance issuer
involved from requiring that the obstetrical or gynecological provider
notify the primary care health care professional or the plan or issuer
of treatment decisions.
(iv) Examples. The rules of this paragraph (a)(3) are illustrated by
the following examples:
(A) Example 1--(1) Facts. A group health plan requires each
participant to designate a physician to serve as the primary care
provider for the participant and the participant's family. Participant
A, a female, requests a gynecological exam with Physician B, an in-
network physician specializing in gynecological care. The group health
plan requires prior authorization from A's designated primary care
provider for the gynecological exam.
(2) Conclusion. In this Example 1, the group health plan has
violated the requirements of this paragraph (a)(3) because the plan
requires prior authorization from A's primary care provider prior to
obtaning gynecological services.
(B) Example 2--(1) Facts. Same facts as Example 1 (paragraph
(a)(3)(iv)(A) of this section) except that A seeks gynecological
services from C, an out-of-network provider.
(2) Conclusion. In this Example 2, the group health plan has not
violated the requirements of this paragraph (a)(3) by requiring prior
authorization because C is not a participating health care provider.
(C) Example 3--(1) Facts. Same facts as Example 1 (paragraph
(a)(3)(iv)(A) of this section) except that the group health plan only
requires B to inform A's designated primary care physician of treatment
decisions.
(2) Conclusion. In this Example 3, the group health plan has not
violated the requirements of this paragraph (a)(3) because A has direct
access to B without prior authorization. The fact that the group health
plan requires the designated primary care physician to be notified of
treatment decisions does not violate this paragraph (a)(3).
(D) Example 4--(1) Facts. A group health plan requires each
participant to designate a physician to serve as the
[[Page 251]]
primary care provider for the participant and the participant's family.
The group health plan requires prior authorization before providing
benefits for uterine fibroid embolization.
(2) Conclusion. In this Example 4, the plan requirement for prior
authorization before providing benefits for uterine fibroid embolization
does not violate the requirements of this paragraph (a)(3) because,
though the prior authorization requirement applies to obstetrical
services, it does not restrict access to any providers specializing in
obstetrics or gynecology.
(4) Notice of right to designate a primary care provider--(i) In
general. If a group health plan or health insurance issuer requires the
designation by a participant, beneficiary, or enrollee of a primary care
provider, the plan or issuer must provide a notice informing each
participant (in the individual market, primary subscriber) of the terms
of the plan or health insurance coverage regarding designation of a
primary care provider and of the rights--
(A) Under paragraph (a)(1)(i) of this section, that any
participating primary care provider who is available to accept the
participant, beneficiary, or enrollee can be designated;
(B) Under paragraph (a)(2)(i) of this section, with respect to a
child, that any participating physician who specializes in pediatrics
can be designated as the primary care provider; and
(C) Under paragraph (a)(3)(i) of this section, that the plan may not
require authorization or referral for obstetrical or gynecological care
by a participating health care professional who specializes in
obstetrics or gynecology.
(ii) Timing. In the case of a group health plan or group health
insurance coverage, the notice described in paragraph (a)(4)(i) of this
section must be included whenever the plan or issuer provides a
participant with a summary plan description or other similar description
of benefits under the plan or health insurance coverage. In the case of
individual health insurance coverage, the notice described in paragraph
(a)(4)(i) of this section must be included whenever the issuer provides
a primary subscriber with a policy, certificate, or contract of health
insurance.
(iii) Model language. The following model language can be used to
satisfy the notice requirement described in paragraph (a)(4)(i) of this
section:
(A) For plans and issuers that require or allow for the designation
of primary care providers by participants, beneficiaries, or enrollees,
insert:
[Name of group health plan or health insurance issuer] generally
[requires/allows] the designation of a primary care provider. You have
the right to designate any primary care provider who participates in our
network and who is available to accept you or your family members. [If
the plan or health insurance coverage designates a primary care provider
automatically, insert: Until you make this designation, [name of group
health plan or health insurance issuer] designates one for you.] For
information on how to select a primary care provider, and for a list of
the participating primary care providers, contact the [plan
administrator or issuer] at [insert contact information].
(B) For plans and issuers that require or allow for the designation
of a primary care provider for a child, add:
For children, you may designate a pediatrician as the primary care
provider.
(C) For plans and issuers that provide coverage for obstetric or
gynecological care and require the designation by a participant,
beneficiary, or enrollee of a primary care provider, add:
You do not need prior authorization from [name of group health plan
or issuer] or from any other person (including a primary care provider)
in order to obtain access to obstetrical or gynecological care from a
health care professional in our network who specializes in obstetrics or
gynecology. The health care professional, however, may be required to
comply with certain procedures, including obtaining prior authorization
for certain services, following a pre-approved treatment plan, or
procedures for making referrals. For a list of participating health care
professionals who specialize in obstetrics or gynecology, contact the
[plan administrator or issuer] at [insert contact information].
(b) Applicability date. The provisions of this section are
applicable with respect to plan years (in the individual market, policy
years) beginning on or after January 1, 2022.
[[Page 252]]
Subpart E_Health Care Provider, Health Care Facility, and Air Ambulance
Service Provider Requirements
Sec. 149.410 Balance billing in cases of emergency services.
(a) In general. In the case of a participant, beneficiary, or
enrollee with benefits under a group health plan or group or individual
health insurance coverage offered by a health insurance issuer and who
is furnished emergency services (for which benefits are provided under
the plan or coverage) with respect to an emergency medical condition
with respect to a visit at an emergency department of a hospital or an
independent freestanding emergency department--
(1) A nonparticipating emergency facility must not bill, and must
not hold liable, the participant, beneficiary, or enrollee for a payment
amount for such emergency services (as defined in 26 CFR 54.9816-
4T(c)(2), 29 CFR 2590.716-4(c)(2), and Sec. 149.110(c)(2), as
applicable) that exceeds the cost-sharing requirement for such services
(as determined in accordance with 26 CFR 54.9816-4T(b)(3)(ii) and (iii),
29 CFR 2590.716-4(b)(3)(ii) and (iii), and Sec. 149.110(b)(3)(ii) and
(iii), as applicable).
(2) A nonparticipating provider must not bill, and must not hold
liable, the participant, beneficiary, or enrollee for a payment amount
for an emergency service (as defined in 26 CFR 54.9816-4T(c)(2), 29 CFR
2590.716-4(c)(2), and Sec. 149.110(c)(2), as applicable) furnished to
such individual by such provider with respect to such emergency medical
condition and visit for which the individual receives emergency services
at the hospital or independent freestanding emergency department that
exceeds the cost-sharing requirement for such service (as determined in
accordance with 26 CFR 54.9816-4T(b)(3)(ii) and (iii), 29 CFR 2590.716-
4(b)(3)(ii) and (iii), and Sec. 149.110(b)(3)(ii) and (iii), as
applicable).
(b) Notice and consent to be treated by a nonparticipating provider
or nonparticipating emergency facility. The requirements in paragraph
(a) of this section do not apply with respect to items and services
described in 26 CFR, 54.9816-4T(c)(2)(ii)(A), 29 CFR 2590.716-
4(c)(2)(ii)(A), Sec. 149.110(c)(2)(ii)(A), as applicable, and are not
included as emergency services if all of the following conditions are
met:
(1) The attending emergency physician or treating provider
determines that the participant, beneficiary, or enrollee is able to
travel using nonmedical transportation or nonemergency medical
transportation to an available participating provider or facility
located within a reasonable travel distance, taking into account the
individual's medical condition. The attending emergency physician's or
treating provider's determination is binding on the facility for
purposes of this requirement.
(2) The provider or facility furnishing such additional items and
services satisfies the notice and consent criteria of Sec. 149.420(c)
through (g) with respect to such items and services, provided that the
written notice additionally satisfies paragraphs (b)(2)(i) and (ii) of
this section, as applicable. In applying this paragraph (b)(2), a
reference in Sec. 149.420 to a nonparticipating provider is deemed to
include a nonparticipating emergency facility.
(i) In the case of a participating emergency facility and a
nonparticipating provider, the written notice must also include a list
of any participating providers at the facility who are able to furnish
such items and services involved and notification that the participant,
beneficiary, or enrollee may be referred, at their option, to such a
participating provider.
(ii) In the case of a nonparticipating emergency facility, the
written notice must include the good faith estimated amount that the
participant, beneficiary, or enrollee may be charged for items or
services furnished by the nonparticipating emergency facility or by
nonparticipating providers with respect to the visit at such facility
(including any item or service that is reasonably expected to be
furnished by the nonparticipating emergency facility or nonparticipating
providers in conjunction with such items or services).
(3) The participant, beneficiary, or enrollee (or an authorized
representative of such individual) is in a condition to receive the
information described in Sec. 149.420, as determined by
[[Page 253]]
the attending emergency physician or treating provider using appropriate
medical judgment, and to provide informed consent under such section, in
accordance with applicable State law. For purposes of this section and
Sec. 149.420, an authorized representative is an individual authorized
under State law to provide consent on behalf of the participant,
beneficiary, or enrollee, provided that the individual is not a provider
affiliated with the facility or an employee of the facility, unless such
provider or employee is a family member of the participant, beneficiary,
or enrollee.
(4) The provider or facility satisfies any additional requirements
or prohibitions as may be imposed under State law.
(c) Inapplicability of notice and consent exception to certain items
and services. A nonparticipating provider or nonparticipating facility
specified in paragraph (a) of this section will always be subject to the
prohibitions in paragraph (a) of this section, with respect to items or
services furnished as a result of unforeseen, urgent medical needs that
arise at the time an item or service is furnished, regardless of whether
the nonparticipating provider or nonparticipating emergency facility
satisfied the notice and consent criteria in Sec. 149.420(c) through
(g).
(d) Retention of certain documents. A nonparticipating emergency
facility (with respect to such facility or any nonparticipating provider
at such facility) that obtains from a participant, beneficiary, or
enrollee of a group health plan or group or individual health insurance
coverage (or an authorized representative of such an individual) a
written consent in accordance with Sec. 149.420(e), with respect to
furnishing an item or service to such an individual, must retain the
written notice and consent for at least a 7-year period after the date
on which the item or service is so furnished. If a nonparticipating
provider obtains a signed consent from a participant, beneficiary, or
enrollee, or such individual's authorized representative, the provider
may either coordinate with the facility to retain the written notice and
consent for a 7-year period, or the provider must retain the written
notice and consent for a 7-year period.
(e) Notification to plan or issuer. In the case of a participant,
beneficiary, or enrollee who is stabilized and furnished additional
items and services described in Sec. 149.110(c)(2)(ii), a
nonparticipating provider or nonparticipating emergency facility must
notify the plan or issuer, respectively, when transmitting the bill for
such items and services, either on the bill or in a separate document,
as to whether all of the conditions described in paragraph (b) of this
section are met with respect to each of the items and services for which
the bill is submitted, and if applicable, provide to the plan or issuer
a copy of the signed written notice and consent document described in
paragraph (b)(2) of this section.
(f) Applicability date. The provisions of this section are
applicable with respect to emergency services furnished during a plan
year (in the individual market, policy year) beginning on or after
January 1, 2022.
Sec. 149.420 Balance billing in cases of non-emergency services
performed by nonparticipating providers at certain participating
health care facilities.
(a) In general. A nonparticipating provider of a group health plan
or group or individual health insurance coverage who provides items or
services (other than emergency services) for which benefits are provided
under the plan or coverage at a participating health care facility must
not bill, and must not hold liable, a participant, beneficiary, or
enrollee of such plan or coverage for a payment amount for such an item
or service furnished by such provider with respect to a visit at the
facility that exceeds the cost-sharing requirement for such item or
service (as determined in accordance with 26 CFR 54.9816-5T(c)(1) and
(2), 29 CFR 2590.717-1(c)(1) and (2), and Sec. 149.120(c)(1) and (2),
as applicable), unless the provider (or the participating health care
facility on behalf of the provider) satisfies the notice and consent
criteria of paragraph (c) of this section.
(b) Inapplicability of notice and consent exception to certain items
and services. The notice and consent criteria in
[[Page 254]]
paragraphs (c) through (i) of this section do not apply, and a
nonparticipating provider specified in paragraph (a) of this section
will always be subject to the prohibitions in paragraph (a) of this
section, with respect to the following services:
(1) Ancillary services, meaning--
(i) Items and services related to emergency medicine,
anesthesiology, pathology, radiology, and neonatology, whether provided
by a physician or non-physician practitioner;
(ii) Items and services provided by assistant surgeons,
hospitalists, and intensivists;
(iii) Diagnostic services, including radiology and laboratory
services; and
(iv) Items and services provided by a nonparticipating provider if
there is no participating provider who can furnish such item or service
at such facility.
(2) Items or services furnished as a result of unforeseen, urgent
medical needs that arise at the time an item or service is furnished,
regardless of whether the nonparticipating provider satisfied the notice
and consent criteria in paragraph (c) of this section.
(c) Notice and consent to be treated by a nonparticipating provider.
Subject to paragraph (f) of this section, and unless prohibited by State
law, a nonparticipating provider satisfies the notice and consent
criteria of this paragraph (c) with respect to items or services
furnished by the provider to a participant, beneficiary, or enrollee of
a group health plan or group or individual health insurance coverage, if
the provider (or a participating health care facility on behalf on a
nonparticipating provider)--
(1) Provides to the participant, beneficiary, or enrollee a written
notice in paper or, as practicable, electronic form, as selected by the
individual, that contains the information required under paragraph (d)
of this section, provided such written notice is provided:
(i) In accordance with guidance issued by HHS, and in the form and
manner specified in such guidance;
(ii) With the consent document, and is provided physically separate
from other documents and not attached to or incorporated into any other
document; and
(iii) To such participant, beneficiary, or enrollee--
(A) Not later than 72 hours prior to the date on which the
individual is furnished such items or services, in the case where the
appointment to be furnished such items or services is scheduled at least
72 hours prior to the date on which the individual is to be furnished
such items and services; or
(B) On the date the appointment to be furnished such items or
services is scheduled, in the case where the appointment is scheduled
within 72 hours prior to the date on which such items or services are to
be furnished. Where an individual is provided the notice on the same
date that the items or services are to be furnished, providers and
facilities are required to provide the notice no later than 3 hours
prior to furnishing items or services to which the notice and consent
requirements apply.
(2) Obtains from the participant, beneficiary, or enrollee the
consent described in paragraph (e) of this section to be treated by the
nonparticipating provider. An authorized representative may receive the
notice on behalf of a participant, beneficiary, or enrollee, and may
provide consent on behalf of the participant, beneficiary, or enrollee.
For purposes of this section and Sec. 149.410, an authorized
representative is an individual authorized under State law to provide
consent on behalf of the participant, beneficiary, or enrollee, provided
that the individual is not a provider affiliated with the facility or an
employee of the facility, unless such provider or employee is a family
member of the participant, beneficiary, or enrollee. The consent must--
(i) Be provided voluntarily, meaning the individual is able to
consent freely, without undue influence, fraud, or duress;
(ii) Be obtained in accordance with, and in the form and manner
specified in, guidance issued by HHS; and
(iii) Not be revoked, in writing, by the participant, beneficiary,
or enrollee prior to the receipt of items and services to which the
consent applies.
(3) Provides a copy of the signed written notice and consent to the
participant, beneficiary, or enrollee in-person or through mail or
email, as selected
[[Page 255]]
by the participant, beneficiary, or enrollee.
(d) Information required under written notice. The written notice
described in paragraph (c)(1) of this section must be provided in the
form and manner specified by HHS in guidance, and must--
(1) State that the health care provider is a nonparticipating
provider, with respect to the health plan or coverage.
(2) Include the good faith estimated amount that such
nonparticipating provider may charge the participant, beneficiary, or
enrollee for the items and services involved (including any item or
service that is reasonably expected to be furnished by the
nonparticipating provider in conjunction with such items or services),
including notification that the provision of the estimate or consent to
be treated under paragraph (e) of this section does not constitute a
contract with respect to the charges estimated for such items and
services or a contract that binds the participant, beneficiary, or
enrollee to be treated by that provider or facility.
(3) Provide a statement that prior authorization or other care
management limitations may be required in advance of receiving such
items or services at the facility.
(4) Clearly state that consent to receive such items and services
from such nonparticipating provider is optional and that the
participant, beneficiary, or enrollee may instead seek care from an
available participating provider, with respect to the plan or coverage,
as applicable, and that in such cases the cost-sharing responsibility of
the participant, beneficiary, or enrollee would not exceed the
responsibility that would apply with respect to such an item or service
that is furnished by a participating provider, as applicable, with
respect to such plan.
(e) Consent described to be treated by a nonparticipating provider.
The consent described in this paragraph (e), with respect to a
participant, beneficiary, or enrollee of a group health plan or group or
individual health insurance coverage who is to be furnished items or
services by a nonparticipating provider, must be documented on a form
specified by the Secretary, in consultation with the Secretary of Labor,
through guidance and provided in accordance with such guidance, that
must be signed by the participant, beneficiary, or enrollee before such
items and services are furnished and that--
(1) Acknowledges in clear and understandable language that the
participant, beneficiary, or enrollee has been--
(i) Provided with the written notice under paragraph (c) of this
section, in the form selected by the participant, beneficiary, or
enrollee.
(ii) Informed that the payment of such charge by the participant,
beneficiary, or enrollee might not accrue toward meeting any limitation
that the plan or coverage places on cost sharing, including an
explanation that such payment might not apply to an in-network
deductible or out-of-pocket maximum applied under the plan or coverage.
(2) States that by signing the consent, the individual agrees to be
treated by the nonparticipating provider and understands the individual
may be balance billed and subject to cost-sharing requirements that
apply to services furnished by the nonparticipating provider.
(3) Documents the time and date on which the participant,
beneficiary, or enrollee received the written notice described in
paragraph (c) of this section and the time and date on which the
individual signed the consent to be furnished such items or services by
such nonparticipating provider.
(f) Language access. (1) A nonparticipating provider (or the
participating health care facility on behalf of the nonparticipating
provider) must provide the individual with the choice to receive the
written notice and consent document in any of the 15 most common
languages in the State in which the applicable facility is located,
except that the notice and consent document may instead be available in
any of the 15 most common languages in a geographic region that
reasonably reflects the geographic region served by the applicable
facility; and
[[Page 256]]
(2) If the individual's preferred language is not among the 15 most
common languages in which the nonparticipating provider (or the
participating health care facility on behalf of the nonparticipating
provider) makes the notice and consent document available and the
individual cannot understand the language in which the notice and
consent document are provided, the notice and consent criteria in
paragraph (c) of this section are not met unless the nonparticipating
provider (or the participating health care facility on behalf of the
nonparticipating provider) has obtained the services of a qualified
interpreter to assist the individual with understanding the information
contained in the notice and consent document.
(g) Scope of consent. The consent described in paragraph (e) of this
section will constitute consent only to the receipt of the information
provided pursuant to this section and will not constitute a contractual
agreement of the participant, beneficiary, or enrollee to any estimated
charge or amount included in such information, or to be treated by that
provider or facility.
(h) Retention of certain documents. A participating health care
facility (with respect to nonparticipating providers at such facility)
that obtains from a participant, beneficiary, or enrollee of a group
health plan or group or individual health insurance coverage a written
consent in accordance with paragraph (e) of this section, with respect
to furnishing an item or service to such an individual, must retain the
written notice and consent for at least a 7-year period after the date
on which the item or service is so furnished. If a nonparticipating
provider obtains a signed consent from a participant, beneficiary, or
enrollee, where the facility does not otherwise obtain the consent on
behalf of the provider, the provider may either coordinate with the
facility to retain the written notice and consent for a 7-year period,
or the provider must retain the written notice and consent for a 7-year
period.
(i) Notification to plan or issuer. For each item or service
furnished by a nonparticipating provider described in paragraph (a) of
this section, the provider (or the participating facility on behalf of
the nonparticipating provider) must timely notify the plan or issuer
that the item or service was furnished during a visit at a participating
health care facility, and, if applicable, provide to the plan or issuer
a copy of the signed written notice and consent document described in
paragraphs (c) and (e) of this section. In instances where, to the
extent permitted by this section, the nonparticipating provider bills
the participant, beneficiary, or enrollee directly, the provider may
satisfy the requirement to notify the plan or issuer by including the
notice with the bill to the participant, beneficiary, or enrollee.
(j) Applicability date. The provisions of this section are
applicable with respect to items and services furnished during a plan
year (in the individual market, policy year) beginning on or after
January 1, 2022.
Sec. 149.430 Provider and facility disclosure requirements regarding
patient protections against balance billing.
(a) In general. Each health care provider and health care facility
(including an emergency department of a hospital and an independent
freestanding emergency department) must make publicly available, post on
a public website of such provider or facility (if applicable), and
provide to any individual who is a participant, beneficiary, or enrollee
of a group health plan or group or individual health insurance coverage
offered by a health insurance issuer and to whom the provider or
facility furnishes items or services, the information described in
paragraph (b) of this section regarding patient protections against
balance billing, except as provided in paragraphs (e) and (f) of this
section. A provider or facility must make the disclosures in accordance
with the method and timing requirements set forth in paragraphs (c) and
(d) of this section.
(b) Content. The disclosures required under this section must
include, in clear and understandable language, all the information
described in this paragraph (b) (and may include any additional
information that does not conflict with that information).
[[Page 257]]
(1) A statement that explains the requirements of and prohibitions
applicable to the health care provider or health care facility under
sections 2799B-1 and 2799B-2 of the PHS Act and their implementing
regulations in Sec. Sec. 149.410 and 149.420;
(2) If applicable, a statement that explains any State law
requirements regarding the amounts such provider or facility may, with
respect to an item or service, charge a participant, beneficiary, or
enrollee of a group health plan or group or individual health insurance
coverage offered by a health insurance issuer with respect to which such
provider or facility does not have a contractual relationship, after
receiving payment, if any, from the plan or coverage, respectively, for
such item or service and any applicable cost-sharing payment from such
participant, beneficiary, or enrollee; and
(3) A statement providing contact information for the appropriate
State and Federal agencies that an individual may contact if the
individual believes the provider or facility has violated a requirement
described in the notice.
(c) Required methods for disclosing information. Health care
providers and health care facilities must provide the disclosure
required under this section as follows:
(1) With respect to the required disclosure to be posted on a public
website, the information described in paragraph (b) of this section, or
a link to such information, must appear on a searchable homepage of the
provider's or facility's website. A provider or facility that does not
have its own website is not required to make a disclosure under this
paragraph (c)(1).
(2) With respect to the required disclosure to the public, a
provider or facility must make public the information described in
paragraph (b) of this section on a sign posted prominently at the
location of the provider or facility. A provider that does not have a
publicly accessible location is not required to make a disclosure under
this paragraph (c)(2).
(3) With respect to the required disclosure to individuals who are
participants, beneficiaries, or enrollees of a group health plan or
group or individual health insurance coverage offered by a health
insurance issuer, a provider or facility must provide the information
described in paragraph (b) of this section in a one-page (double-sided)
notice, using print no smaller than 12-point font. The notice must be
provided in-person or through mail or email, as selected by the
participant, beneficiary, or enrollee.
(d) Timing of disclosure to individuals. A health care provider or
health care facility is required to provide the notice to individuals
who are participants, beneficiaries, or enrollees of a group health plan
or group or individual health insurance coverage offered by a health
insurance issuer no later than the date and time on which the provider
or facility requests payment from the individual, or with respect to an
individual from whom the provider or facility does not request payment,
no later than the date on which the provider or facility submits a claim
to the group health plan or health insurance issuer.
(e) Exceptions. A health care provider is not required to make the
disclosures required under this section--
(1) If the provider does not furnish items or services at a health
care facility, or in connection with visits at health care facilities;
or
(2) To individuals to whom the provider furnishes items or services,
if such items or services are not furnished at a health care facility,
or in connection with a visit at a health care facility.
(f) Special rule to prevent unnecessary duplication with respect to
health care providers. To the extent a provider furnishes an item or
service covered under the plan or coverage at a health care facility
(including an emergency department of a hospital or independent
freestanding emergency department), the provider satisfies the
requirements of paragraphs (c)(2) and (3) of this section if the
facility makes the information available, in the required form and
manner, pursuant to a written agreement. Accordingly, if a provider and
facility enter into a written agreement under which the facility agrees
to make the information required under this section available on a sign
posted prominently at the facility and to provide the one-page notice to
individuals
[[Page 258]]
in compliance with this section, and the facility fails to do so, then
the facility, but not the provider, violates the disclosure requirements
of this section.
(g) Applicability date. The provisions of this section are
applicable beginning on January 1, 2022.
Sec. 149.440 Balance billing in cases of air ambulance services.
(a) In general. In the case of a participant, beneficiary, or
enrollee with benefits under a group health plan or group or individual
health insurance coverage offered by a health insurance issuer who is
furnished air ambulance services (for which benefits are available under
such plan or coverage) from a nonparticipating provider of air ambulance
services, with respect to such plan or coverage, the provider must not
bill, and must not hold liable, the participant, beneficiary, or
enrollee for a payment amount for the air ambulance services furnished
by the provider that is more than the cost-sharing amount for such
service (as determined in accordance with 26 CFR 54.9817-1T(b)(1) and
(2), 29 CFR 2590.717-1(b)(1) and (2), and Sec. 149.130(b)(1) and (2),
as applicable).
(b) Applicability date. The provisions of this section are
applicable with respect to air ambulance services furnished during a
plan year (in the individual market, policy year) beginning on or after
January 1, 2022.
Sec. 149.450 Complaint process for balance billing regarding
providers and facilities.
(a) Scope and definitions--(1) Scope. This section establishes a
process for HHS to receive and resolve complaints regarding information
that a health care provider, provider of air ambulance services, or
health care facility may be failing to meet the requirements under
subpart E or subpart G of this part, which may warrant an investigation.
(2) Definitions. In this section--
(i) Complaint means a communication, written, or oral, that
indicates there has been a potential violation of the requirements under
this subpart or subpart G of this part, whether or not a violation
actually occurred.
(ii) Complainant means any individual, or their authorized
representative, who files a complaint as defined in paragraph (a)(2)(i)
of this section.
(b) Complaints process. (1) HHS will consider the date a complaint
is filed to be the date upon which HHS receives an oral, written, or
electronic statement that identifies information about the complaint
sufficient to identify the parties involved and the action or inaction
complained of.
(2) HHS will notify complainants, by oral or written means, of
receipt of the complaint no later than 60 business days after the
complaint is received. HHS will include a response acknowledging receipt
of the complaint, notifying the complainant of their rights and
obligations under the complaints process, and describing the next steps
of the complaints resolution process. HHS may request additional
information that may be needed to process the complaint as part of the
response. Such additional information may include:
(i) Health care provider, air ambulance provider, or health care
facility bills;
(ii) Health care provider, air ambulance provider, or health care
facility network status;
(iii) Information regarding the participant's, beneficiary's, or
enrollee's health care plan or health insurance coverage;
(iv) Information to support a determination regarding whether the
service was an emergency service or non-emergency service;
(v) Documents regarding the facts in the complaint in the possession
of, or otherwise attainable by, the complainant; or
(vi) Any other information HHS needs to make a determination of
facts for an investigation.
(3) HHS will make reasonable efforts consistent with agency
practices to notify the complainant of the outcome of the complaint
after the submission is processed through appropriate methods as
determined by HHS. A complaint is considered processed after HHS has
reviewed the complaint and accompanying information and made an outcome
determination. Based on the nature of the complaint, HHS may--
[[Page 259]]
(i) Refer the complainant to another appropriate Federal or State
resolution process;
(ii) Notify the complainant and make reasonable efforts to refer the
complainant to the appropriate State or Federal regulatory authority if
HHS receives a complaint where another entity has enforcement
jurisdiction over the health care provider, air ambulance provider or
health care facility;
(iii) Refer the health care provider, air ambulance provider or
health care facility for an investigation for enforcement action under
45 CFR part 150; or
(iv) Provide the complainant with an explanation of resolution and
any corrective action taken.
[86 FR 36970, July 13, 2021, as amended at 86 FR 56124, Oct. 7, 2021]
Subpart F_Independent Dispute Resolution Process
Source: 86 FR 56124, Oct. 7, 2021, unless otherwise noted.
Sec. 149.510 Independent dispute resolution process.
(a) Scope and definitions--(1) Scope. This section sets forth
requirements with respect to the independent dispute resolution (IDR)
process (referred to in this section as the Federal IDR process) under
which a nonparticipating provider, nonparticipating emergency facility,
or nonparticipating provider of air ambulance services (as applicable),
and a group health plan or health insurance issuer offering group or
individual health insurance coverage completes a requisite open
negotiation period and at least one party submits a notification under
paragraph (b) of this section to initiate the Federal IDR process under
paragraph (c) of this section, and under which an IDR entity (as
certified under paragraph (e) of this section) determines the amount of
payment under the plan or coverage for an item or service furnished by
the provider or facility.
(2) Definitions. Unless otherwise stated, the definitions in Sec.
149.30 of this part apply to this section. Additionally, for purposes of
this section, the following definitions apply:
(i) Batched items and services means multiple qualified IDR items or
services that are considered jointly as part of one payment
determination by a certified IDR entity for purposes of the Federal IDR
process. In order for a qualified IDR item or service to be included in
a batched item or service, the qualified IDR item or service must meet
the criteria set forth in paragraph (c)(3) of this section.
(ii) Breach means the acquisition, access, use, or disclosure of
individually identifiable health information (IIHI) in a manner not
permitted under paragraph (e)(2)(v) of this section that compromises the
security or privacy of the IIHI.
(A) Breach excludes:
(1) Any unintentional acquisition, access, or use of IIHI by
personnel, a contractor, or a subcontractor of a certified IDR entity
that is acting under the authority of that certified IDR entity, if the
acquisition, access, or use was made in good faith and within the scope
of that authority and that does not result in further use or disclosure
in a manner not permitted under paragraph (e)(2)(v) of this section.
(2) Any inadvertent disclosure by a person who is authorized to
access IIHI at a certified IDR entity to another person authorized to
access IIHI at the same certified IDR entity, and the information
received as a result of the disclosure is not further used or disclosed
in a manner not permitted under paragraph (e)(2)(v) of this section.
(3) A disclosure of IIHI in which a certified IDR entity has a good
faith belief that an unauthorized person to whom the disclosure was made
would not reasonably have been able to retain such information.
(B) Except as provided in paragraph (a)(2)(ii)(A) of this
definition, access, use, or disclosure of IIHI in a manner not permitted
under paragraph (e)(2)(v) of this section is presumed to be a breach
unless the certified IDR entity demonstrates that there is a low
probability that the security or privacy of the IIHI has been
compromised based on a risk assessment encompassing at least the
following factors:
[[Page 260]]
(1) The nature and extent of the IIHI involved, including the types
of identifiers and the likelihood of re-identification;
(2) The unauthorized person who used the IIHI or to whom the
disclosure was made;
(3) Whether the IIHI was actually acquired or viewed; and
(4) The extent to which the risk to the IIHI has been mitigated.
(iii) Certified IDR entity means an entity responsible for
conducting determinations under paragraph (c) of this section that meets
the certification criteria specified in paragraph (e) of this section
and that has been certified by the Secretary, jointly with the
Secretaries of Labor and the Treasury.
(iv) Conflict of interest means, with respect to a party to a
payment determination, or certified IDR entity, a material relationship,
status, or condition of the party, or certified IDR entity that impacts
the ability of the certified IDR entity to make an unbiased and
impartial payment determination. For purposes of this section, a
conflict of interest exists when a certified IDR entity is:
(A) A group health plan; a health insurance issuer offering group
health insurance coverage, individual health insurance coverage, or
short-term, limited-duration insurance; a carrier offering a health
benefits plan under 5 U.S.C. 8902; or a provider, a facility, or a
provider of air ambulance services;
(B) An affiliate or a subsidiary of a group health plan; a health
insurance issuer offering group health insurance coverage, individual
health insurance coverage, or short-term limited-duration insurance; a
carrier offering a health benefits plan under 5 U.S.C. 8902; or a
provider, a facility, or a provider of air ambulance services;
(C) An affiliate or subsidiary of a professional or trade
association representing group health plans; health insurance issuers
offering group health insurance coverage, individual health insurance
coverage, or short-term limited duration insurance; carriers offering a
health benefits plan under 5 U.S.C. 8902; or providers, facilities, or
providers of air ambulance services.
(D) A certified IDR entity, that has, or that has any personnel,
contractors, or subcontractors assigned to a determination who have, a
material familial, financial, or professional relationship with a party
to the payment determination being disputed, or with any officer,
director, or management employee of the plan, issuer, or carrier
offering a health benefits plan under 5 U.S.C. 8902; the plan or
coverage administrator, plan or coverage fiduciaries, or plan, issuer or
carrier employees; the health care provider, the health care provider's
group or practice association; the provider of air ambulance services,
the provider of air ambulance services' group or practice association,
or the facility that is a party to the dispute.
(v) Credible information means information that upon critical
analysis is worthy of belief and is trustworthy.
(vi) IDR entity means an entity that may apply or has applied for
certification to conduct determinations under paragraph (c) of this
section, and that currently is not certified by the Secretary, jointly
with the Secretaries of Labor and the Treasury, pursuant to paragraph
(e) of this section.
(vii) Individually identifiable health information (IIHI) means any
information, including demographic data, that relates to the past,
present, or future physical or mental health or condition of an
individual; the provision of health care to an individual; or the past,
present, or future payment for the provision of health care to an
individual; and
(A) That identifies the individual; or
(B) With respect to which there is a reasonable basis to believe the
information can be used to identify the individual.
(viii) Material familial relationship means any relationship as a
spouse, domestic partner, child, parent, sibling, spouse's or domestic
partner's parent, spouse's or domestic partner's sibling, spouse's or
domestic partner's child, child's parent, child's spouse or domestic
partner, or sibling's spouse or domestic partner.
(ix) Material financial relationship means any financial interest of
more than five percent of total annual revenue or total annual income of
a certified IDR entity or an officer, director, or manager thereof, or
of a reviewer or
[[Page 261]]
reviewing physician employed or engaged by a certified IDR entity to
conduct or participate in any review in the Federal IDR process. The
terms annual revenue and annual income do not include mediation fees
received by mediators who are also arbitrators, provided that the
mediator acts in the capacity of a mediator and does not represent a
party in the mediation.
(x) Material professional relationship means any physician-patient
relationship, any partnership or employment relationship, any
shareholder or similar ownership interest in a professional corporation,
partnership, or other similar entity; or any independent contractor
arrangement that constitutes a material financial relationship with any
expert used by the certified IDR entity or any officer or director of
the certified IDR entity.
(xi) Qualified IDR item or service means an item or service:
(A) That is an emergency service furnished by a nonparticipating
provider or nonparticipating facility subject to the protections of 26
CFR 54.9816-4T, 29 CFR 2590.716-4, or Sec. 149.110, as applicable, for
which the conditions of Sec. 149.410(b) are not met, or an item or
service furnished by a nonparticipating provider at a participating
health care facility, subject to the requirements of 26 CFR 54.9816-5T,
29 CFR 2590.717-5, or Sec. 149.120, as applicable, for which the
conditions of Sec. 149.420(c)-(i) are not met, or air ambulance
services furnished by a nonparticipating provider of air ambulance
services subject to the protections of 26 CFR 54.9817-1T, 29 CFR
2590.717-1, or Sec. 149.130, as applicable, and for which the out-of-
network rate is not determined by reference to an All-Payer Model
Agreement under section 1115A of the Social Security Act or a specified
State law as defined in Sec. 149.30;
(B) With respect to which a provider or facility (as applicable) or
group health plan or health insurance issuer offering group or
individual health insurance coverage submits a notification under
paragraph (b)(2) of this section;
(C) That is not an item or service that is the subject of an open
negotiation under paragraph (b)(1) of this section; and
(D) That is not an item or service for which a notification under
paragraph (b)(2) of this section is submitted during the 90-calendar-day
period under paragraph (c)(4)(vi)(B) of this section, but that may
include such an item or service if the notification is submitted during
the subsequent 30-business-day period under paragraph (c)(4)(vi)(C) of
this section.
(xii) Unsecured IIHI means IIHI that is not rendered unusable,
unreadable, or indecipherable to unauthorized persons through the use of
a technology or methodology specified by the Secretary, jointly with the
Secretary of the Treasury and the Secretary of Labor.
(b) Determination of payment amount through open negotiation and
initiation of the Federal IDR process--(1) Determination of payment
amount through open negotiation--(i) In general. With respect to an item
or service that meets the requirements of paragraph (a)(2)(xii)(A) of
this section, the provider, facility, or provider of air ambulance
services or the group health plan or health insurance issuer offering
group or individual health insurance coverage may, during the 30-
business-day period beginning on the day the provider, facility, or
provider of air ambulance services receives an initial payment or notice
of denial of payment regarding the item or service, initiate an open
negotiation period for purposes of determining the out-of-network rate
for such item or service. To initiate the open negotiation period, a
party must send a notice to the other party (open negotiation notice) in
accordance with paragraph (b)(1)(ii) of this section.
(ii) Open negotiation notice--(A) Content. The open negotiation
notice must include information sufficient to identify the item(s) and
service(s) (including the date(s) the item(s) or service(s) were
furnished, the service code, and initial payment amount, if applicable),
an offer of an out-of-network rate, and contact information for the
party sending the open negotiation notice.
(B) Manner. The open negotiation notice must be provided, using the
standard form developed by the Secretary, in writing within 30 business
days beginning on the day the provider, facility, or provider of air
ambulance services
[[Page 262]]
receives an initial payment or a notice of denial of payment from the
plan or issuer regarding the item or service. The day on which the open
negotiation notice is first sent by a party is the date the 30-business-
day open negotiation period begins. This notice may be provided to the
other party electronically (such as by email) if the following two
conditions are satisfied--
(1) The party sending the open negotiation notice has a good faith
belief that the electronic method is readily accessible by the other
party; and
(2) The notice is provided in paper form free of charge upon
request.
(2) Initiating the Federal IDR process--(i) In general. With respect
to an item or service for which the parties do not agree upon an out-of-
network rate by the last day of the open negotiation period under
paragraph (b)(1) of this section, either party may initiate the Federal
IDR process. To initiate the Federal IDR process, a party must submit a
written notice of IDR initiation to the other party and to the
Secretary, using the standard form developed by the Secretary, during
the 4-business-day period beginning on the 31st business day after the
start of the open negotiation period.
(ii) Exception for items and services provided by certain
nonparticipating providers and facilities. A party may not initiate the
Federal IDR process with respect to an item or service if, with respect
to that item or service, the party knows (or reasonably should have
known) that the provider or facility provided notice and received
consent under 45 CFR 149.410(b) or 149.420(c) through (i).
(iii) Notice of IDR initiation--(A) Content. The notice of IDR
initiation must include:
(1) Information sufficient to identify the qualified IDR items or
services under dispute (and whether the qualified IDR items or services
are designated as batched items and services as described in paragraph
(c)(3) of this section), including the date(s) and location the item or
service was furnished, the type of item or service (such as whether the
qualified IDR item or service is an emergency service as defined in 26
CFR 54.9816-4T(c)(2)(i), 29 CFR 2590.716-4(c)(2)(i), or Sec.
149.110(c)(2)(i), as applicable, an emergency service as defined in 26
CFR 54.9816-4T(c)(2)(ii), 29 CFR 2590.716-4(c)(2)(ii), or Sec.
149.110(c)(2)(ii), as applicable, or a nonemergency service; and whether
any service is a professional service or facility-based service),
corresponding service codes, place of service code, the amount of cost
sharing allowed, and the amount of the initial payment made for the
qualified IDR item or service, if applicable;
(2) Names of the parties involved and contact information, including
name, email address, phone number, and mailing address;
(3) State where the qualified IDR item or service was furnished;
(4) Commencement date of the open negotiation period under paragraph
(b)(1) of this section;
(5) Preferred certified IDR entity;
(6) An attestation that the items and services under dispute are
qualified IDR items or services;
(7) Qualifying payment amount;
(8) Information about the qualifying payment amount as described in
Sec. 149.140(d); and
(9) General information describing the Federal IDR process as
specified by the Secretary.
(B) Manner. The initiating party must provide written notice of IDR
initiation to the other party. The initiating party may satisfy this
requirement by furnishing the notice of IDR initiation to the other
party electronically (such as by email) if the following two conditions
are satisfied--
(1) The initiating party has a good faith belief that the electronic
method is readily accessible by the other party; and
(2) The notice is provided in paper form free of charge upon
request.
(C) Notice to the Secretary. The initiating party must also furnish
the notice of IDR initiation to the Secretary by submitting the notice
through the Federal IDR portal. The initiation date of the Federal IDR
process will be the date of receipt by the Secretary.
(c) Federal IDR process following initiation--(1) Selection of
certified IDR entity--(i) In general. The plan or issuer or the
provider, facility, or provider of air ambulance services receiving the
notice of IDR initiation under paragraph
[[Page 263]]
(b)(2) of this section may agree or object to the preferred certified
IDR entity identified in the notice of IDR initiation. If the party in
receipt of the notice of IDR initiation fails to object within 3
business days, the preferred certified IDR entity identified in the
notice of IDR initiation will be selected and will be treated as jointly
agreed to by the parties, provided that the certified IDR entity does
not have a conflict of interest. If the party in receipt of the notice
of IDR initiation objects, that party must notify the initiating party
of the objection and propose an alternative certified IDR entity. The
initiating party must then agree or object to the alternative certified
IDR entity; if the initiating party fails to agree or object to the
alternative certified IDR entity, the alternative certified IDR entity
will be selected and will be treated as jointly agreed to by the
parties. In order to select a preferred certified IDR entity, the plan
or issuer and the provider, facility, or provider of air ambulance
services must jointly agree on a certified IDR entity not later than 3
business days after the initiation date of the Federal IDR process. If
the plan or issuer and the provider, facility, or provider of air
ambulance services fail to agree upon a certified IDR entity within that
time, the Secretary shall select a certified IDR entity in accordance
with paragraph (c)(1)(iv) of this section.
(ii) Requirements for selected certified IDR entity. The certified
IDR entity selected must be an IDR entity certified under paragraph (e)
of this section, that:
(A) Does not have a conflict of interest as defined in paragraph
(a)(2) of this section;
(B) Ensures that assignment of personnel to a payment determination
and decisions regarding hiring, compensation, termination, promotion, or
other similar matters related to personnel assigned to the dispute are
not made based upon the likelihood that the assigned personnel will
support a particular party to the determination being disputed other
than as outlined under paragraph (c)(4)(iii) of this section; and
(C) Ensures that any personnel assigned to a payment determination
do not have any conflicts of interests as defined in paragraph (a)(2) of
this section regarding any party to the dispute within the 1 year
immediately preceding an assignment of dispute determination, similar to
the requirements laid out in 18 U.S.C. 207(b).
(iii) Notice of certified IDR entity selection. Upon the selection
of a certified IDR entity, in accordance with paragraph (c)(1)(i) of
this section, the plan or issuer or the provider or emergency facility
that submitted the notice of IDR initiation under paragraph (b)(2) of
this section must notify the Secretary of the selection as soon as
reasonably practicable, but no later than 1 business day after such
selection, through the Federal IDR portal. In addition, if the non-
initiating party believes that the Federal IDR process is not
applicable, the non-initiating party must also provide information
regarding the Federal IDR process's inapplicability through the Federal
IDR portal by the same date that the notice of certified IDR entity
selection must be submitted.
(A) Content. If the parties have agreed on the selection of a
certified IDR entity or the party in receipt of the notice of IDR
initiation has not objected to the other party's selection, the notice
of the certified IDR entity selection must include the following
information:
(1) Name of the certified IDR entity;
(2) The certified IDR entity number; and
(3) Attestation by both parties, or by the initiating party if the
non-initiating party fails to object to the selection of the certified
IDR entity, that the selected certified IDR entity meets the
requirements of paragraph (c)(1)(ii) of this section.
(B) [Reserved]
(iv) Failure to select a certified IDR entity. If the plan or issuer
and the provider, facility, or provider of air ambulance services fail
to select a certified IDR entity in accordance with paragraph (c)(1)(i)
of this section, the initiating party must notify the Secretary of the
failure no later than 1 business day after the date of such failure (or
in
[[Page 264]]
other words, 4 business days after initiation of the Federal IDR
process) by electronically submitting the notice as described in
paragraph (c)(1)(iii) of this section but indicating that the parties
have failed to select a certified IDR entity. In addition, if the non-
initiating party believes that the Federal IDR process is not
applicable, the non-initiating party must also provide information
regarding Federal IDR process's inapplicability through the Federal IDR
portal by the same date that the notice of failure to select must be
submitted. Upon notification of the failure of the parties to select a
certified IDR entity, the Secretary will select a certified IDR entity
that charges a fee within the allowed range of certified IDR entity fees
through a random selection method not later than 6 business days after
the date of initiation of the Federal IDR process and will notify the
plan or issuer and the provider or facility of the selection. If there
are insufficient certified IDR entities that charge a fee within the
allowed range of certified IDR entity fees available to arbitrate the
dispute, the Secretary, jointly with the Secretary of the Treasury and
Secretary of Labor, will select a certified IDR entity that has received
approval, as described in paragraph (e)(2)(vi)(B) of this section, to
charge a fee outside of the allowed range of certified IDR entity fees.
(v) Review by certified IDR entity. After selection by the parties
(including when the initiating party selects a certified IDR entity and
the other party does not object), or by the Secretary under paragraph
(c)(1)(iv) of this section, the certified IDR entity must review the
selection and attest that it meets the requirements of paragraph
(c)(1)(ii) of this section. If the certified IDR entity is unable to
attest that it meets the requirements of paragraph (c)(1)(ii) of this
section within 3 business days of selection, the parties, upon
notification, must select another certified IDR entity under paragraph
(c)(1) of this section, treating the date of notification of the failure
to attest to the requirements of (c)(1)(ii) as the date of initiation of
the Federal IDR process for purposes of the time periods in paragraphs
(c)(1)(i) and (iv) of this section. Additionally, the certified IDR
entity selected must review the information submitted in the notice of
IDR initiation to determine whether the Federal IDR process applies. If
the Federal IDR process does not apply, the certified IDR entity must
notify the Secretary and the parties within 3 business days of making
that determination.
(2) Authority to continue negotiations--(i) In general. If the
parties to the Federal IDR process agree on an out-of-network rate for a
qualified IDR item or service after providing the notice of IDR
initiation to the Secretary consistent with paragraph (b)(2) of this
section, but before the certified IDR entity has made its payment
determination, the amount agreed to by the parties for the qualified IDR
item or service will be treated as the out-of-network rate for the
qualified IDR item or service. To the extent the amount exceeds the
initial payment amount (or initial denial of payment) and any cost
sharing paid or required to be paid by the participant or beneficiary,
payment must be made directly by the plan or issuer to the
nonparticipating provider, facility, or nonparticipating provider of air
ambulance services not later than 30 business days after the agreement
is reached. In no instance may either party seek additional payment from
the participant or beneficiary, including in instances in which the out-
of-network rate exceeds the qualifying payment amount. The initiating
party must send a notification to the Secretary and to the certified IDR
entity (if selected) electronically, through the Federal IDR portal, as
soon as possible, but no later than 3 business days after the date of
the agreement. The notification must include the out-of-network rate for
the qualified IDR item or service and signatures from authorized
signatories for both parties.
(ii) Method of allocation of the certified IDR entity fee. In the
case of an agreement described in paragraph (c)(2)(i) of this section,
the certified IDR entity is required to return half of each parties'
certified IDR entity fee, unless directed otherwise by both parties. The
administrative fee under paragraph (d)(2) of this section will not be
returned to the parties.
[[Page 265]]
(3) Treatment of batched items and services--(i) In general. Batched
items and services may be submitted and considered jointly as part of
one payment determination by a certified IDR entity only if the batched
items and services meet the requirements of this paragraph (c)(3)(i).
Batched items and services submitted and considered jointly as part of
one payment determination under this paragraph (c)(3)(i) are treated as
a batched determination and subject to the fee for batched
determinations under this section.
(A) The qualified IDR items and services are billed by the same
provider or group of providers, the same facility, or the same provider
of air ambulance services. Items and services are billed by the same
provider or group of providers, the same facility, or the same provider
of air ambulance services if the items or services are billed with the
same National Provider Identifier or Tax Identification Number;
(B) Payment for the qualified IDR items and services would be made
by the same plan or issuer;
(C) The qualified IDR items and services are the same or similar
items and services. The qualified IDR items and services are considered
to be the same or similar items or services if each is billed under the
same service code, or a comparable code under a different procedural
code system, such as Current Procedural Terminology (CPT) codes with
modifiers, if applicable, Healthcare Common Procedure Coding System
(HCPCS) with modifiers, if applicable, or Diagnosis-Related Group (DRG)
codes with modifiers, if applicable; and
(D) All the qualified IDR items and services were furnished within
the same 30-business-day period, or the same 90-calendar-day period
under paragraph (c)(4)(vi)(B) of this section, as applicable.
(ii) Treatment of bundled payment arrangements. In the case of
qualified IDR items and services billed by a provider, facility, or
provider of air ambulance services as part of a bundled payment
arrangement, or where a plan or issuer makes or denies an initial
payment as a bundled payment, the qualified IDR items and services may
be submitted as part of one payment determination. Bundled payment
arrangements submitted under this paragraph (c)(3)(ii) are subject to
the rules for batched determinations and the certified IDR entity fee
for single determinations.
(4) Payment determination for a qualified IDR item or service--(i)
Submission of offers. Not later than 10 business days after the
selection of the certified IDR entity, the plan or issuer and the
provider, facility, or provider of air ambulance services:
(A) Must each submit to the certified IDR entity:
(1) An offer of an out-of-network rate expressed as both a dollar
amount and the corresponding percentage of the qualifying payment amount
represented by that dollar amount;
(2) Information requested by the certified IDR entity relating to
the offer.
(3) The following additional information, as applicable--
(i) For providers and facilities, information on the size of the
provider's practice or of the facility (if applicable). Specifically, a
group of providers must specify whether the providers' practice has
fewer than 20 employees, 20 to 50 employees, 51 to 100 employees, 101 to
500 employees, or more than 500 employees. For facilities, the facility
must specify whether the facility has 50 or fewer employees, 51 to 100
employees, 101 to 500 employees, or more than 500 employees;
(ii) For providers and facilities, information on the practice
specialty or type, respectively (if applicable);
(iii) For plans and issuers, information on the coverage area of the
plan or issuer, the relevant geographic region for purposes of the
qualifying payment amount, whether the coverage is fully-insured or
partially or fully self-insured (or a FEHB carrier if the item or
service relates to FEHB plans); and
(iv) The qualifying payment amount for the applicable year for the
same or similar item or service as the qualified IDR item or service.
(B) May each submit to the certified IDR entity any information
relating to the offer that was submitted by either party, except that
the information may not include information on factors described in
paragraph (c)(4)(v) of this section.
[[Page 266]]
(ii) Payment determination and notification. Not later than 30
business days after the selection of the certified IDR entity, the
certified IDR entity must:
(A) Select as the out-of-network rate for the qualified IDR item or
service one of the offers submitted under paragraph (c)(4)(i) of this
section, weighing only the considerations specified in paragraph
(c)(4)(iii) of this section (as applied to the information provided by
the parties pursuant to paragraph (c)(4)(i) of this section). The
certified IDR entity must select the offer that the certified IDR entity
determines best represents the value of the qualified IDR item or
service as the out-of-network rate.
(B) Notify the plan or issuer and the provider or facility, as
applicable, of the selection of the offer under paragraph (c)(4)(ii)(A)
of this section, and provide the written decision required under
(c)(4)(vi) of this section.
(iii) Considerations in determination. In determining which offer to
select:
(A) The certified IDR entity must consider the qualifying payment
amount(s) for the applicable year for the same or similar item or
service.
(B) The certified IDR entity must then consider information
submitted by a party that relates to the following circumstances:
(1) The level of training, experience, and quality and outcomes
measurements of the provider or facility that furnished the qualified
IDR item or service (such as those endorsed by the consensus-based
entity authorized in section 1890 of the Social Security Act).
(2) The market share held by the provider or facility or that of the
plan or issuer in the geographic region in which the qualified IDR item
or service was provided.
(3) The acuity of the participant, beneficiary, or enrollee
receiving the qualified IDR item or service, or the complexity of
furnishing the qualified IDR item or service to the participant,
beneficiary, or enrollee.
(4) The teaching status, case mix, and scope of services of the
facility that furnished the qualified IDR item or service, if
applicable.
(5) Demonstration of good faith efforts (or lack thereof) made by
the provider or facility or the plan or issuer to enter into network
agreements with each other, and, if applicable, contracted rates between
the provider or facility, as applicable, and the plan or issuer, as
applicable, during the previous 4 plan years.
(C) The certified IDR entity must also consider information provided
by a party in response to a request by the certified IDR entity under
paragraph (c)(4)(i)(A)(2) of this section that relates to the offer for
the payment amount for the qualified IDR item or service that is the
subject of the payment determination and that does not include
information on factors described in paragraph (c)(4)(v) of this section.
(D) The certified IDR entity must also consider additional
information submitted by a party that relates to the offer for the
payment amount for the qualified IDR item or service that is the subject
of the payment determination and that does not include information on
factors described in paragraph (c)(4)(v) of this section.
(E) In weighing the considerations described in paragraphs
(c)(4)(iii)(B) through (D) of this section, the certified IDR entity
should evaluate whether the information is credible and relates to the
offer submitted by either party for the payment amount for the qualified
IDR item or service that is the subject of the payment determination.
The certified IDR entity should not give weight to information to the
extent it is not credible, it does not relate to either party's offer
for the payment amount for the qualified IDR item or service, or it is
already accounted for by the qualifying payment amount under paragraph
(c)(4)(iii)(A) of this section or other credible information under
paragraphs (c)(4)(iii)(B) through (D) of this section.
(iv) Examples. The rules of paragraph (c)(4)(iii) of this section
are illustrated in the following paragraphs. Each example assumes that
the Federal IDR process applies for purposes of determining the out-of-
network rate, that both parties have submitted the information parties
are required to submit as part of the Federal IDR process, and that the
submitted information does
[[Page 267]]
not include information on factors described in paragraph (c)(4)(v) of
this section:
(A) Example 1--(1) Facts. A level 1 trauma center that is a
nonparticipating emergency facility and an issuer are parties to a
payment determination in the Federal IDR process. The facility submits
an offer that is higher than the qualifying payment amount. The facility
also submits additional written information showing that the scope of
services available at the facility was critical to the delivery of care
for the qualified IDR item or service provided, given the particular
patient's acuity. This information is determined to be credible by the
certified IDR entity. Further, the facility submits additional
information showing the contracted rates used to calculate the
qualifying payment amount for the qualified IDR item or service were
based on a level of service that is typical in cases in which the
services are delivered by a facility that is not a level 1 trauma center
and that does not have the capability to provide the scope of services
provided by a level 1 trauma center. This information is also determined
to be credible by the certified IDR entity. The issuer submits an offer
equal to the qualifying payment amount. No additional information is
submitted by either party. The certified IDR entity determines that all
the information submitted by the nonparticipating emergency facility
relates to the offer for the payment amount for the qualified IDR item
or service that is the subject of the payment determination.
(2) Conclusion. In this paragraph (c)(4)(iv)(A) (Example 1), the
certified IDR entity must consider the qualifying payment amount. The
certified IDR entity then must consider the additional information
submitted by the nonparticipating emergency facility, provided the
information relates to circumstances described in paragraphs
(c)(4)(iii)(B) through (D) of this section and relates to the offer for
the payment amount for the qualified IDR item or service that is the
subject of the payment determination. If the certified IDR entity
determines that it is appropriate to give weight to the additional
credible information submitted by the nonparticipating emergency
facility and that the additional credible information submitted by the
facility demonstrates that the facility's offer best represents the
value of the qualified IDR item or service, the certified IDR entity
should select the facility's offer.
(B) Example 2--(1) Facts. A nonparticipating provider and an issuer
are parties to a payment determination in the Federal IDR process. The
provider submits an offer that is higher than the qualifying payment
amount. The provider also submits additional written information
regarding the level of training and experience the provider possesses.
This information is determined to be credible by the certified IDR
entity, but the certified IDR entity finds that the information does not
demonstrate that the provider's level of training and experience relates
to the offer for the payment amount for the qualified IDR item or
service that is the subject of the payment determination (for example,
the information does not show that the provider's level of training and
experience was necessary for providing the qualified IDR service that is
the subject of the payment determination to the particular patient, or
that the training or experience made an impact on the care that was
provided). The nonparticipating provider does not submit any additional
information. The issuer submits an offer equal to the qualifying payment
amount, with no additional information.
(2) Conclusion. In this paragraph (c)(4)(iv)(B) (Example 2), the
certified IDR entity must consider the qualifying payment amount. The
certified IDR entity must then consider the additional information
submitted by the nonparticipating provider, provided the information
relates to circumstances described in paragraphs (c)(4)(iii)(B) through
(D) of this section and relates to the offer for the payment amount for
the qualified IDR item or service that is the subject of the payment
determination. In addition, the certified IDR entity should not give
weight to information to the extent it is already accounted for by the
qualifying payment amount or other credible information under paragraphs
(c)(4)(iii)(B)
[[Page 268]]
through (D) of this section. If the certified IDR entity determines that
the additional information submitted by the provider is credible but
does not relate to the offer for the payment amount for the qualified
IDR service that is the subject of the payment determination, and
determines that the issuer's offer best represents the value of the
qualified IDR service, in the absence of any other credible information
that relates to either party's offer, the certified IDR entity should
select the issuer's offer.
(C) Example 3--(1) Facts. A nonparticipating provider and an issuer
are parties to a payment determination in the Federal IDR process
involving an emergency department visit for the evaluation and
management of a patient. The provider submits an offer that is higher
than the qualifying payment amount. The provider also submits additional
written information showing that the acuity of the patient's condition
and complexity of the qualified IDR service furnished required the
taking of a comprehensive history, a comprehensive examination, and
medical decision making of high complexity. This information is
determined to be credible by the certified IDR entity. The issuer
submits an offer equal to the qualifying payment amount for CPT code
99285, which is the CPT code for an emergency department visit for the
evaluation and management of a patient requiring a comprehensive
history, a comprehensive examination, and medical decision making of
high complexity. The issuer also submits additional written information
showing that this CPT code accounts for the acuity of the patient's
condition. This information is determined to be credible by the
certified IDR entity. The certified IDR entity determines that the
information provided by the provider and issuer relates to the offer for
the payment amount for the qualified IDR service that is the subject of
the payment determination. Neither party submits any additional
information.
(2) Conclusion. In this paragraph (c)(4)(iv)(C) (Example 3), the
certified IDR entity must consider the qualifying payment amount. The
certified IDR entity then must consider the additional information
submitted by the parties, but the certified IDR entity should not give
weight to information to the extent it is already accounted for by the
qualifying payment amount or other credible information under paragraphs
(c)(4)(iii)(B) through (D) of this section. If the certified IDR entity
determines the additional information on the acuity of the patient and
complexity of the service is already accounted for in the calculation of
the qualifying payment amount, the certified IDR entity should not give
weight to the additional information provided by the provider. If the
certified IDR entity determines that the issuer's offer best represents
the value of the qualified IDR service, the certified IDR entity should
select the issuer's offer.
(D) Example 4--(1) Facts. A nonparticipating emergency facility and
an issuer are parties to a payment determination in the Federal IDR
process. Although the facility is not participating in the issuer's
network during the relevant plan year, it was a participating facility
in the issuer's network in the previous 4 plan years. The issuer submits
an offer that is higher than the qualifying payment amount and that is
equal to the facility's contracted rate (adjusted for inflation) for the
previous year with the issuer for the qualified IDR service. The issuer
also submits additional written information showing that the contracted
rates between the facility and the issuer during the previous 4 plan
years were higher than the qualifying payment amount submitted by the
issuer, and that these prior contracted rates account for the case mix
and scope of services typically furnished at the nonparticipating
facility. The certified IDR entity determines this information is
credible and that it relates to the offer submitted by the issuer for
the payment amount for the qualified IDR service that is the subject of
the payment determination. The facility submits an offer that is higher
than both the qualifying payment amount and the contracted rate
(adjusted for inflation) for the previous year with the issuer for the
qualified IDR service. The facility also submits additional written
information, with the intent to show that the case mix
[[Page 269]]
and scope of services available at the facility were integral to the
service provided. The certified IDR entity determines this information
is credible and that it relates to the offer submitted by the facility
for the payment amount for the qualified IDR service that is the subject
of the payment determination. Neither party submits any additional
information.
(2) Conclusion. In this paragraph (c)(4)(iv)(D) (Example 4), the
certified IDR entity must consider the qualifying payment amount. The
certified IDR entity then must consider the additional information
submitted by the parties, but should not give weight to information to
the extent it is already accounted for by the qualifying payment amount
or other credible information under paragraphs (c)(4)(iii)(B) through
(D) of this section. If the certified IDR entity determines that the
information submitted by the facility regarding the case mix and scope
of services available at the facility includes information that is also
accounted for in the information the issuer submitted regarding prior
contracted rates, then the certified IDR entity should give weight to
that information only once. The certified IDR entity also should not
give weight to the same information provided by the nonparticipating
emergency facility in relation to any other factor. If the certified IDR
entity determines that the issuer's offer best represents the value of
the qualified IDR service, the certified IDR entity should select the
issuer's offer.
(E) Example 5--(1) Facts. A nonparticipating provider and an issuer
are parties to a payment determination in the Federal IDR process
regarding a qualified IDR service for which the issuer downcoded the
service code that the provider billed. The issuer submits an offer equal
to the qualifying payment amount (which was calculated using the
downcoded service code). The issuer also submits additional written
information that includes the documentation disclosed to the
nonparticipating provider under Sec. 149.140(d)(1)(ii) at the time of
the initial payment (which describes why the service code was
downcoded). The certified IDR entity determines this information is
credible and that it relates to the offer for the payment amount for the
qualified IDR service that is the subject of the payment determination.
The provider submits an offer equal to the amount that would have been
the qualifying payment amount had the service code not been downcoded.
The provider also submits additional written information that includes
the documentation disclosed to the nonparticipating provider under Sec.
149.140(d)(1)(ii) at the time of the initial payment. Further, the
provider submits additional written information that explains why the
billed service code was more appropriate than the downcoded service
code, as evidence that the provider's offer, which is equal to the
amount the qualifying payment amount would have been for the service
code that the provider billed, best represents the value of the service
furnished, given its complexity. The certified IDR entity determines
this information to be credible and that it relates to the offer for the
payment amount for the qualified IDR service that is the subject of the
payment determination. Neither party submits any additional information.
(2) Conclusion. In this paragraph (c)(4)(iv)(E) (Example 5), the
certified IDR entity must consider the qualifying payment amount, which
is based on the downcoded service code. The certified IDR entity then
must consider whether to give weight to additional information submitted
by the parties. If the certified IDR entity determines that the
additional credible information submitted by the provider demonstrates
that the nonparticipating provider's offer, which is equal to the
qualifying payment amount for the service code that the provider billed,
best represents the value of the qualified IDR service, the certified
IDR entity should select the nonparticipating provider's offer.
(v) Prohibition on consideration of certain factors. In determining
which offer to select, the certified IDR entity must not consider:
(A) Usual and customary charges (including payment or reimbursement
rates expressed as a proportion of usual and customary charges);
(B) The amount that would have been billed by the provider or
facility with
[[Page 270]]
respect to the qualified IDR item or service had the provisions of 45
CFR 149.410 and 149.420 (as applicable) not applied; or
(C) The payment or reimbursement rate for items and services
furnished by the provider or facility payable by a public payor,
including under the Medicare program under title XVIII of the Social
Security Act; the Medicaid program under title XIX of the Social
Security Act; the Children's Health Insurance Program under title XXI of
the Social Security Act; the TRICARE program under chapter 55 of title
10, United States Code; chapter 17 of title 38, United States Code; or
demonstration projects under section 1115 of the Social Security Act.
(vi) Written decision. (A) The certified IDR entity must explain its
determination in a written decision submitted to the parties and the
Secretary, in a form and manner specified by the Secretary;
(B) The certified IDR entity's written decision must include an
explanation of their determination, including what information the
certified IDR entity determined demonstrated that the offer selected as
the out-of-network rate is the offer that best represents the value of
the qualified IDR item or service, including the weight given to the
qualifying payment amount and any additional credible information under
paragraphs (c)(4)(iii)(B) through (D) of this section. If the certified
IDR entity relies on information described under paragraphs
(c)(4)(iii)(B) through (D) of this section in selecting an offer, the
written decision must include an explanation of why the certified IDR
entity concluded that this information was not already reflected in the
qualifying payment amount.
(vii) Effects of determination--(A) Binding. A determination made by
a certified IDR entity under paragraph (c)(4)(ii) of this section:
(1) Is binding upon the parties, in the absence of fraud or evidence
of intentional misrepresentation of material facts presented to the
certified IDR entity regarding the claim; and
(2) Is not subject to judicial review, except in a case described in
any of paragraphs (1) through (4) of section 10(a) of title 9, United
States Code.
(B) Suspension of certain subsequent IDR requests. In the case of a
determination made by a certified IDR entity under paragraph (c)(4)(ii)
of this section, the party that submitted the initial notification under
paragraph (b)(2) of this section may not submit a subsequent
notification involving the same other party with respect to a claim for
the same or similar item or service that was the subject of the initial
notification during the 90-calendar-day period following the
determination.
(C) Subsequent submission of requests permitted. If the end of the
open negotiation period specified in paragraph (b)(1) of this section
occurs during the 90-calendar-day suspension period regarding claims for
the same or similar item or service that were the subject of the initial
notice of IDR determination as described in paragraph (c)(4)(vi) of this
section, either party may initiate the Federal IDR process for those
claims by submitting a notification as specified in paragraph (b)(2) of
this section during the 30-business-day period beginning on the day
after the last day of the 90-calendar-day suspension period.
(viii) Recordkeeping requirements. The certified IDR entity must
maintain records of all claims and notices associated with the Federal
IDR process with respect to any determination for 6 years. The certified
IDR entity must make these records available for examination by the
plan, issuer, FEHB carrier, provider, facility, or provider of air
ambulance services, or a State or Federal oversight agency upon request,
except to the extent the disclosure would violate either State or
Federal privacy law.
(ix) Payment. If applicable, the amount of the offer selected by the
certified IDR entity (less the sum of the initial payment and any cost
sharing paid or owed by the participant or beneficiary) must be paid
directly to the provider, facility, or provider of air ambulance
services not later than 30 calendar days after the determination by the
certified IDR entity. If the offer selected by the certified IDR entity
is less than the sum of the initial payment and any cost sharing paid by
the
[[Page 271]]
participant or beneficiary, the provider, facility, or provider of air
ambulance services will be liable to the plan or issuer for the
difference. The provider, facility, or provider of air ambulance
services must pay the difference directly to the plan or issuer not
later than 30 calendar days after the determination by the certified IDR
entity.
(d) Costs of IDR process--(1) Certified IDR entity fee. (i) With
respect to the Federal IDR process described in paragraph (c) of this
section, the party whose offer submitted to the certified IDR entity
under paragraph (c)(4)(ii)(A) of this section is not selected is
responsible for the payment to the certified IDR entity of the
predetermined fee charged by the certified IDR entity.
(ii) Each party to a determination for which a certified IDR entity
is selected under paragraph (c)(1) of this section must pay the
predetermined certified IDR entity fee charged by the certified IDR
entity to the certified IDR entity at the time the parties submit their
offers under (c)(4)(i) of this section. The certified IDR entity fee
paid by the prevailing party whose offer is selected by the certified
IDR entity will be returned to that party within 30 business days
following the date of the certified IDR entity's determination.
(2) Administrative fee. (i) Each party to a determination for which
a certified IDR entity is selected under paragraph (c)(1) of this
section must, at the time the certified IDR entity is selected under
paragraph (c)(1) of this section, pay to the certified IDR entity a non-
refundable administrative fee due to the Secretary for participating in
the Federal IDR process described in this section.
(ii) The administrative fee amount will be established through
notice and comment rulemaking no more frequently than once per calendar
year in a manner such that the total administrative fees paid for a year
are estimated to be equal to the amount of expenditures estimated to be
made by the Secretaries of the Treasury, Labor, and Health and Human
Services for the year in carrying out the Federal IDR process. The
administrative fee amount will remain in effect until changed by notice
and comment rulemaking. For disputes initiated on or after January 22,
2024, the administrative fee amount is $115 per party per dispute.
(3) Severability. (i) Any provision of this paragraph (d) or
paragraphs (e)(2)(vii) and (viii) of this section held to be invalid or
unenforceable as applied to any person or circumstance shall be
construed so as to continue to give the maximum effect to the provision
permitted by law, including as applied to persons not similarly situated
or to dissimilar circumstances, unless such holding is that the
provision of this paragraph (d) or paragraphs (e)(2)(vii) and (viii) is
invalid and unenforceable in all circumstances, in which event the
provision shall be severable from the remainder of this paragraph (d) or
paragraphs (e)(2)(vii) and (viii) and shall not affect the remainder
thereof.
(ii) The provisions in this paragraph (d) and paragraphs (e)(2)(vii)
and (viii) of this section are intended to be severable from each other.
(e) Certification of IDR entity--(1) In general. In order to be
selected under paragraph (c)(1) of this section--
(i) An IDR entity must meet the standards described in this
paragraph (e) and be certified by the Secretary, jointly with the
Secretaries of Labor and the Treasury, as set forth in this paragraph
(e) of this section and guidance promulgated by the Secretary. Once
certified, the IDR entity will be provided with a certified IDR entity
number.
(ii) An IDR entity must provide written documentation to the
Secretary regarding general company information (such as contact
information, Taxpayer Identification Number, and website), as well as
the applicable service area in which the IDR entity intends to conduct
payment determinations under the Federal IDR process. IDR entities may
choose to submit their application for all States or self-limit to a
particular subset of States.
(iii) An IDR entity that the Secretary, jointly with the Secretary
of Labor and the Secretary of the Treasury, certifies must enter into an
agreement as a condition of certification. The agreement shall include
specified provisions encompassed by this section, including, but not
limited to, the requirements applicable to certified
[[Page 272]]
IDR entities when making payment determinations as well as the
requirements regarding certification and revocation (such as
specifications for wind down activities and reallocation of certified
IDR entity fees, where warranted).
(2) Requirements. An IDR entity must provide written documentation
to the Secretary through the Federal IDR portal that demonstrates that
the IDR entity satisfies the following standards to be a certified IDR
entity under this paragraph (e):
(i) Possess (directly or through contracts or other arrangements)
sufficient arbitration and claims administration of health care
services, managed care, billing and coding, medical and legal expertise
to make the payment determinations described in paragraph (c) of this
section within the time prescribed in paragraph (c)(4)(ii) of this
section.
(ii) Employ (directly or through contracts or other arrangements) a
sufficient number of personnel to make the determinations described in
paragraph (c) of this section within the time prescribed by (c)(4)(ii)
of this section. To satisfy this standard, the written documentation
must include a description of the IDR entity's organizational structure
and capabilities, including an organizational chart and the credentials,
responsibilities, and number of personnel employed to make
determinations described in paragraph (c) of this section.
(iii) Maintain a current accreditation from a nationally recognized
and relevant accrediting organization, such as URAC, or ensure that it
otherwise possesses the requisite training to conduct payment
determinations (for example, providing documentation that personnel
employed by the IDR entity have completed arbitration training by the
American Arbitration Association, the American Health Law Association,
or a similar organization).
(iv) Have a process to ensure that no conflict of interest, as
defined in paragraph (a)(2) of this section, exists between the parties
and the personnel the certified IDR entity assigns to a payment
determination to avoid violating paragraph (c)(1)(ii) of this section,
including policies and procedures for conducting ongoing audits for
conflicts of interest, to ensure that should any arise, the certified
IDR entity has procedures in place to inform the Secretary, jointly with
the Secretary of the Treasury and the Secretary of Labor, of the
conflict of interest and to mitigate the risk by reassigning the dispute
to other personnel in the event that any personnel previously assigned
have a conflict of interest.
(v) Have a process to maintain the confidentiality of IIHI obtained
in the course of conducting determinations. A certified IDR entity's
responsibility to comply with these confidentiality requirements shall
survive revocation of the IDR entity's certification for any reason, and
IDR entities must comply with the record retention and disposal
requirements described in this section. Under this process, once
certified, the certified IDR entity must comply with the following
requirements:
(A) Privacy. The certified IDR entity may create, collect, handle,
disclose, transmit, access, maintain, store, and/or use IIHI, only to
perform:
(1) The certified IDR entity's required duties described in this
section; and
(2) Functions related to carrying out additional obligations as may
be required under applicable Federal or State laws or regulations.
(B) Security. (1) The certified IDR entity must ensure the
confidentiality of all IIHI it creates, obtains, maintains, stores, and
transmits;
(2) The certified IDR entity must protect against any reasonably
anticipated threats or hazards to the security of this information;
(3) The certified IDR entity must ensure that IIHI is securely
destroyed or disposed of in an appropriate and reasonable manner 6 years
from either the date of its creation or the first date on which the
certified IDR entity had access to it, whichever is earlier.
(4) The certified IDR entity must implement policies and procedures
to prevent, detect, contain, and correct security violations in the
event of a breach of IIHI;
(C) Breach notification. The certified IDR entity must, following
the discovery of a breach of unsecured IIHI,
[[Page 273]]
notify of the breach the provider, facility, or provider of air
ambulance services; the plan and issuer; the Secretary, jointly with the
Secretary of the Treasury and the Secretary of Labor; and each
individual whose unsecured IIHI has been, or is reasonably believed to
have been, subject to the breach, to the extent possible.
(1) Breaches treated as discovered. For purposes of this paragraph
(e)(2)(v)(C), a breach shall be treated as discovered by a certified IDR
entity as of the first day on which the breach is known to the certified
IDR entity or, by exercising reasonable diligence, would have been known
to the certified IDR entity. A certified IDR entity shall be deemed to
have knowledge of a breach if the breach is known, or by exercising
reasonable diligence would have been known, to any person, other than
the person committing the breach, who is an employee, officer, or other
agent of the certified IDR entity;
(2) Timing of notification. A certified IDR entity must provide the
notification required by this paragraph (e)(2)(v)(C) without
unreasonable delay and in no case later than 60 calendar days after
discovery of a breach.
(3) Content of notification. The notification required by this
paragraph (e)(2)(v)(C) must include, to the extent possible:
(i) The identification of each individual whose unsecured IIHI has
been, or is reasonably believed by the certified IDR entity to have
been, subject to the breach;
(ii) A brief description of what happened, including the date of the
breach and the date of the discovery of the breach, to the extent known;
(iii) A description of the types of unsecured IIHI that were
involved in the breach (for example whether full name, social security
number, date of birth, home address, account number, diagnosis,
disability code, or other types of information were involved);
(iv) A brief description of what the certified IDR entity involved
is doing to investigate the breach, to mitigate harm to the affected
parties, and to protect against any further breaches; and
(v) Contact procedures for individuals to ask questions or learn
additional information, which must include a toll-free telephone number,
email address, website, or postal address.
(4) Method for providing notification. A certified IDR entity must
submit the notification required by this paragraph (e)(2)(v)(C) in
written form (in clear and understandable language) either on paper or
electronically through the Federal IDR portal or electronic mail.
(D) Application to contractor and subcontractors. The certified IDR
entity must ensure compliance with this paragraph (e)(2)(v) of this
section by any contractor or subcontractor with access to IIHI
performing any duties related to the Federal IDR process.
(vi) Meet appropriate indicators of fiscal integrity and stability
by demonstrating that the certified IDR entity has a system of
safeguards and controls in place to prevent and detect improper
financial activities by its employees and agents to assure fiscal
integrity and accountability for all certified IDR entity fees and
administrative fees received, held, and disbursed and by submitting 3
years of financial statements or, if not available, other information to
demonstrate fiscal stability of the IDR entity.
(vii) Provide, no more frequently than once per calendar year, a
fixed fee for single determinations and a separate fixed fee for batched
determinations, as well as an additional fixed tiered fee for batched
determinations, if applicable, within the upper and lower limits for
each, as established by the Secretary in notice and comment rulemaking.
The certified IDR entity fee ranges established by the Secretary in
rulemaking will remain in effect until changed by notice and comment
rulemaking. The certified IDR entity may not charge a fee outside the
limits set forth in rulemaking unless the certified IDR entity or IDR
entity seeking certification receives advance written approval from the
Secretary to charge a fixed fee beyond the upper or lower limits by
following the process described in paragraph (e)(2)(vii)(A) of this
section. A certified IDR entity may also seek advance written approval
from the Secretary to update its fees one additional time per calendar
year by meeting the requirements described in paragraph (e)(2)(vii)(A).
The
[[Page 274]]
Secretary will approve a request to charge a fixed fee beyond the upper
or lower limits for fees as set forth in rulemaking or to update the
fixed fee during the calendar year if, in their discretion, they
determine the information submitted by a certified IDR entity or IDR
entity seeking certification demonstrates that the proposed change to
the certified IDR entity fee would ensure the financial viability of the
certified IDR entity or IDR entity seeking certification and would not
impose on parties an undue barrier to accessing the Federal IDR process.
(A) In order for the certified IDR entity or IDR entity seeking
certification to receive the Secretary's written approval to charge a
fixed fee beyond the upper or lower limits for fees as set forth in
rulemaking or to update the fixed fee during the calendar year, the
certified IDR entity or IDR entity seeking certification must submit to
the Secretary, in the form and manner specified by the Secretary:
(1) The fixed fee the certified IDR entity or IDR entity seeking
certification believes is appropriate for the certified IDR entity or
IDR entity seeking certification to charge;
(2) A description of the circumstances that require the alternative
fixed fee, or that require a change to the fixed fee during the calendar
year, as applicable; and
(3) A detailed description that reasonably explains how the
alternative fixed fee or the change to the fixed fee during the calendar
year, as applicable, will be used to mitigate the effects of those
circumstances.
(B) [Reserved]
(viii) For disputes initiated on or after January 22, 2024,
certified IDR entities are permitted to charge a fixed certified IDR
entity fee for single determinations within the range of $200 to $840,
and a fixed certified IDR entity fee for batched determinations within
the range of $268 to $1,173, unless a fee outside such ranges is
approved by the Secretary, pursuant to paragraph (e)(2)(vii)(A) of this
section. As part of the batched determination fee, certified IDR
entities are permitted to charge an additional fixed tiered fee within
the range of $75 to $250 for every additional 25 line items within a
batched dispute, beginning with the 26th line item. The ranges for the
certified IDR entity fees for single and batched determinations will
remain in effect until changed by notice and comment rulemaking.
(ix) Have a procedure in place to retain the certified IDR entity
fees described in paragraph (d)(1) of this section paid by both parties
in a trust or escrow account and to return the certified IDR entity fee
paid by the prevailing party of an IDR payment determination, or half of
each party's certified IDR entity fee in the case of an agreement
described in paragraph (c)(2)(i) of this section, within 30 business
days following the date of the determination.
(x) Have a procedure in place to retain the administrative fees
described in paragraph (d)(2) of this section and to remit the
administrative fees to the Secretary in accordance with the timeframe
and procedures set forth in guidance published by the Secretary.
(xi) Discharge its responsibilities in accordance with paragraph (c)
of this section, including not making any determination with respect to
which the certified IDR entity would not be eligible for selection
pursuant to paragraph (c)(1) of this section.
(xii) Collect the information required to be reported to the
Secretary under paragraph (f) of this section and report the information
on a timely basis in the form and manner provided in guidance published
by the Secretary.
(3) Conflict-of-interest standards. In addition to the general
standards set forth in paragraph (e)(2)(iv) of this section, an IDR
entity must provide written documentation that the IDR entity satisfies
the standards to be a certified IDR entity under this paragraph (e)(3).
(i) The IDR entity must provide an attestation indicating that it
does not have a conflict of interest as defined in paragraph (a)(2) of
this section;
(ii) The IDR entity must have procedures in place to ensure that
personnel assigned to a determination do not have any conflicts of
interest regarding any party to the dispute within the 1 year
immediately preceding an assignment of dispute determination, similar to
the requirements laid out in 18
[[Page 275]]
U.S.C. 207(b). In order to satisfy this requirement, if certified, the
IDR entity must ensure that any personnel assigned to a determination do
not have any conflicts of interest as defined in paragraph (a)(2) of
this section.
(iii) Following certification under this paragraph (e), if a
certified IDR entity acquires control of, becomes controlled by, or
comes under common control with any entity described in paragraph
(e)(3)(i) of this section, the certified IDR entity must notify the
Secretary in writing no later than 3 business days after the acquisition
or exercise of control and shall be subject to the revocation of
certification under paragraph (e)(6)(ii) of this section.
(4) Period of certification. Subject to paragraphs (e)(5) and (6) of
this section, each certification (including a recertification) of a
certified IDR entity under the process described in paragraph (e)(1) of
this section will be effective for a 5-year period.
(5) Petition for denial or revocation--(i) In general. An
individual, provider, facility, provider of air ambulance services,
plan, or issuer may petition for a denial of a certification for an IDR
entity or a revocation of a certification for a certified IDR entity for
failure to meet a requirement of this section using the standard form
and manner set forth in guidance to be issued by the Secretary. The
petition for denial of a certification must be submitted within the
timeframe set forth in guidance issued by the Secretary.
(ii) Content of petition. The individual, provider, facility,
provider of air ambulance services, plan, or issuer seeking denial or
revocation of certification must submit a written petition using the
standard form issued by the Secretary including the following
information:
(A) The identity of the IDR entity seeking certification or
certified IDR entity that is the subject of the petition;
(B) The reason(s) for the petition;
(C) Whether the petition seeks denial or revocation of a
certification;
(D) Documentation to support the reasons outlined in the petition;
and
(E) Other information as may be required by the Secretary.
(iii) Process. (A) The Secretary, jointly with the Secretary of the
Treasury and the Secretary of Labor will acknowledge receipt of the
petition within 10 business days of receipt of the petition.
(B) If the Secretary finds that the petition adequately shows a
failure of the IDR entity seeking certification or the certified IDR
entity to follow the requirements of this paragraph (e), the Secretary,
jointly with the Secretary of the Treasury and the Secretary of Labor,
will notify the IDR entity seeking certification or the certified IDR
entity by providing a de-identified copy of the petition. Following the
notification, the IDR entity seeking certification or certified IDR
entity will have 10 business days to provide a response. After the time
period for providing the response has passed, the Secretary, jointly
with the Secretary of the Treasury and the Secretary of Labor, will
review the response (if any), determine whether a denial or revocation
of a certification is warranted, and issue a notice of the decision to
the IDR entity or certified IDR entity and to the petitioner. This
decision will be subject to the appeal requirements of paragraph
(e)(6)(v) of this section.
(C) Effect on certification under petition. Regarding a petition for
revocation of a certified IDR entity's certification, if the Secretary,
jointly with the Secretary of the Treasury and the Secretary of Labor,
finds that the petition adequately shows a failure to comply with the
requirements of this paragraph (e), following the Secretary's
notification of the failure to the certified IDR entity under paragraph
(e)(5)(iii)(B) of this section, the certified IDR entity may continue to
work on previously assigned determinations but may not accept new
determinations until the Secretary issues a notice of the decision to
the certified IDR entity finding that a revocation of certification is
not warranted.
(6) Denial of IDR entity certification or revocation of certified
IDR entity certification--(i) Denial of IDR entity certification. The
Secretary, jointly with the
[[Page 276]]
Secretary of the Treasury and the Secretary of Labor, may deny the
certification of an IDR entity under paragraph (e)(1) of this section
if, during the process of certification, including as a result of a
petition described in paragraph (e)(5) of this section, the Secretary
determines the following:
(A) The IDR entity fails to meet the applicable standards set forth
under this paragraph (e);
(B) The IDR entity has committed or participated in fraudulent or
abusive activities, including, during the certification process,
submitting fraudulent data, or submitting information or data the IDR
entity knows to be false to the Secretary, the Secretary of the Treasury
or the Secretary of Labor;
(C) The IDR entity has failed to comply with requests for
information from the Secretary, the Secretary of the Treasury, or the
Secretary of Labor as part of the certification process;
(D) In conducting payment determinations, including those outside
the Federal IDR process, the IDR entity has failed to meet the standards
that applied to those determinations or reviews, including standards of
independence and impartiality; or
(E) The IDR entity is otherwise not fit or qualified to make
determinations under the Federal IDR process.
(ii) Revocation of certification of a certified IDR entity. The
Secretary, jointly with the Secretary of the Treasury and the Secretary
of Labor, may revoke the certification of a certified IDR entity under
paragraph (e)(1) of this section if, as a result of an audit, a petition
described in paragraph (e)(5) of this section, or otherwise, the
Secretary determines the following:
(A) The certified IDR entity has a pattern or practice of
noncompliance with any requirements of this paragraph (e);
(B) The certified IDR entity is operating in a manner that hinders
the efficient and effective administration of the Federal IDR process;
(C) The certified IDR entity no longer meets the applicable
standards for certification set forth under this paragraph (e);
(D) The certified IDR entity has committed or participated in
fraudulent or abusive activities, including submission of false or
fraudulent data to the Secretary, the Secretary of the Treasury, or the
Secretary of Labor;
(E) The certified IDR entity lacks the financial viability to
provide arbitration under the Federal IDR process;
(F) The certified IDR entity has failed to comply with requests from
the Secretary, the Secretary of the Treasury, or the Secretary of Labor
made as part of an audit, including failing to submit all records of the
certified IDR entity that pertain to its activities within the Federal
IDR process; or
(G) The certified IDR entity is otherwise no longer fit or qualified
to make determinations.
(iii) Notice of denial or revocation. The Secretary, jointly with
the Secretary of the Treasury and the Secretary of Labor, will issue a
written notice of denial to the IDR entity or revocation to the
certified IDR entity within 10 business days of the Secretary's
decision, including the effective date of denial or revocation, the
reason(s) for denial or revocation, and the opportunity to request
appeal of the denial or revocation.
(iv) Request for appeal of denial or revocation. To request an
appeal, the IDR entity or certified IDR entity must submit a request for
appeal to the Secretary within 30 business days of the date of the
notice under paragraph (e)(6)(iii) of this section of denial or
revocation and in the manner prescribed by the instructions to the
notice. During this time period, the Secretary, jointly with the
Secretary of the Treasury and the Secretary of Labor, will not issue a
notice of final denial or revocation and a certified IDR entity may
continue to work on previously assigned determinations but may not
accept new determinations. If the IDR entity or certified IDR entity
does not timely submit a request for appeal of the denial or revocation,
the Secretary, jointly with the Secretary of the Treasury and the
Secretary of Labor, will issue a notice of final denial or revocation to
the IDR entity or certified IDR entity (if applicable) and the
petitioner.
(v) Denial or final revocation. Upon notice of denial or final
revocation, the IDR entity shall not be considered a certified IDR
entity and therefore shall
[[Page 277]]
not be eligible to accept payment determinations under the Federal IDR
process. Moreover, after a notice of final revocation, the IDR entity
may not re-apply to be a certified IDR entity until on or after the
181st day after the date of the notice of denial or final revocation.
(f) Reporting of information relating to the Federal IDR process--
(1) Reporting of information. Within 30 business days of the close of
each month, for qualified IDR items and services furnished on or after
January 1, 2022, each certified IDR entity must, in a form and manner
specified by the Secretary, report:
(i) The number of notices of IDR initiation submitted under
paragraph (b)(2) of this section to the certified IDR entity during the
immediately preceding month;
(ii) The size of the provider practices and the size of the
facilities submitting notices of IDR initiation under paragraph (b)(2)
of this section during the immediately preceding month, as required to
be provided to the certified IDR entity under paragraph (c)(4)(i)(A)(2)
of this section;
(iii) The number of such notices of IDR initiation with respect to
which a determination was made under paragraph (c)(4)(ii) of this
section;
(iv) The number of times during the month that the out-of-network
rate determined (or agreed to) under this section has exceeded the
qualifying payment amount, specified by qualified IDR items and
services;
(v) With respect to each notice of IDR initiation under paragraph
(b)(2) of this section for which such a determination was made, the
following information:
(A) A description of the qualified IDR items and services included
with respect to the notification, including the relevant billing and
service codes;
(B) The relevant geographic region for purposes of the qualifying
payment amount for the qualified IDR items and services with respect to
which the notification was provided;
(C) The amount of the offer submitted under paragraph (c)(4)(i) of
this section by the plan or issuer (as applicable) and by the provider
or facility (as applicable) expressed as a dollar amount and as a
percentage of the qualifying payment amount;
(D) Whether the offer selected by the certified IDR entity under
paragraph (c)(4) of this section was the offer submitted by the plan or
issuer (as applicable) or by the provider or facility (as applicable);
(E) The amount of the selected offer expressed as a dollar amount
and as a percentage of the qualifying payment amount;
(F) The rationale for the certified IDR entity's decision, including
the extent to which the decision relied on the criteria in paragraphs
(c)(4)(iii)(B) through (D) of this section;
(G) The practice specialty or type of each provider or facility,
respectively, involved in furnishing each qualified IDR item or service;
(H) The identity for each plan or issuer, and provider or facility,
with respect to the notification. Specifically, each certified IDR
entity must provide each party's name and address, as applicable; and
(I) For each determination, the number of business days elapsed
between selection of the certified IDR entity and the determination of
the out-of-network rate by the certified IDR entity.
(vi) The total amount of certified IDR entity fees paid to the
certified IDR entity under paragraph (d)(1) of this section during the
month.
(2) [Reserved]
(g) Extension of time periods for extenuating circumstances--(1)
General. The time periods specified in this section (other than the time
for payment, if applicable, under paragraph (c)(4)(ix) of this section)
may be extended in extenuating circumstances at the Secretary's
discretion if:
(i) An extension is necessary to address delays due to matters
beyond the control of the parties or for good cause; and
(ii) The parties attest that prompt action will be taken to ensure
that the determination under this section is made as soon as
administratively practicable under the circumstances.
(2) Process to request an extension. The parties may request an
extension by submitting a request for extension due to extenuating
circumstances through
[[Page 278]]
the Federal IDR portal if the extension is necessary to address delays
due to matters beyond the control of the parties or for good cause.
(h) Applicability date. The provisions of this section are
applicable with respect to plan years or in the individual market policy
years beginning on or after January 1, 2022, except that the provisions
regarding IDR entity certification at paragraphs (a) and (e) of this
section are applicable beginning on October 7, 2021; and paragraphs
(c)(4)(ii) through (iv) of this section regarding payment
determinations, paragraph (c)(4)(vi)(B) of this section regarding
written decisions, and paragraph (f)(1)(v)(F) of this section regarding
reporting of information relating to the Federal IDR process are
applicable with respect to items or services provided or furnished on or
after October 25, 2022, for plan years or in the individual market
policy years beginning on or after January 1, 2022.
[86 FR 56124, Oct. 7, 2021, as amended at 87 FR 52652, Aug. 26, 2022; 88
FR 88525, Dec. 21, 2023; 89 FR 4548, Jan. 24, 2024]
Sec. 149.520 Independent dispute resolution process for air
ambulance services.
(a) Definitions. Unless otherwise stated, the definitions in Sec.
149.30 apply.
(b) Determination of out-of-network rates to be paid by health plans
and health insurance issuers; independent dispute resolution process--
(1) In general. Except as provided in paragraphs (b)(2) and (3) of this
section, in determining the out-of-network rate to be paid by group
health plans and health insurance issuers offering group or individual
health insurance coverage for out-of-network air ambulance services,
plans and issuers must comply with the requirements of Sec. 149.510,
except that references in Sec. 149.510 to the additional circumstances
in Sec. 149.510(c)(4)(iii)(B) shall be understood to refer to paragraph
(b)(2) of this section.
(2) Considerations for air ambulance services. In determining which
offer to select, in addition to considering the applicable qualifying
payment amount(s), the certified IDR entity must consider information
submitted by a party that relates to the following circumstances:
(i) The quality and outcomes measurements of the provider that
furnished the services.
(ii) The acuity of the condition of the participant, beneficiary, or
enrollee receiving the service, or the complexity of furnishing the
service to the participant, beneficiary, or enrollee.
(iii) The training, experience, and quality of the medical personnel
that furnished the air ambulance services.
(iv) Ambulance vehicle type, including the clinical capability level
of the vehicle.
(v) Population density of the point of pick-up (as defined in 42 CFR
414.605) for the air ambulance (such as urban, suburban, rural, or
frontier).
(vi) Demonstrations of good faith efforts (or lack thereof) made by
the nonparticipating provider of air ambulance services or the plan or
issuer to enter into network agreements with each other and, if
applicable, contracted rates between the provider of air ambulance
services and the plan or issuer, as applicable, during the previous 4
plan years.
(3) Weighing considerations. In weighing the considerations
described in paragraph (b)(2) of this section, the certified IDR entity
should evaluate whether the information is credible and relates to the
offer submitted by either party for the payment amount for the qualified
IDR service that is the subject of the payment determination. The
certified IDR entity should not give weight to information to the extent
it is not credible, it does not relate to either party's offer for the
payment amount for the qualified IDR service, or it is already accounted
for by the qualifying payment amount under Sec. 149.510(c)(4)(iii)(A)
or other credible information under Sec. 149.510(c)(4)(iii)(B) through
(D), except that the additional circumstances in Sec.
149.510(c)(4)(iii)(B) shall be understood to refer to paragraph (b)(2)
of this section.
(4) Reporting of information relating to the IDR process. In
applying the requirements of Sec. 149.510(f), within 30 business days
of the close of each month, for services furnished on or after January
1, 2022, the information the certified IDR entity must report, in a form
and manner specified by the
[[Page 279]]
Secretary, with respect to the Federal IDR process involving air
ambulance services is:
(i) The number of notices of IDR initiation submitted under the
Federal IDR process to the certified IDR entity that pertain to air
ambulance services during the immediately preceding month;
(ii) The number of such notices of IDR initiation with respect to
which a final determination was made under Sec. 149.510(c)(4)(ii) (as
applied by paragraph (b)(1) of this section);
(iii) The number of times the payment amount determined (or agreed
to) under this subsection has exceeded the qualifying payment amount,
specified by services;
(iv) With respect to each notice of IDR initiation under Sec.
149.510(b)(2) of this part (as applied by paragraph (b)(1) of this
section) for which a determination was made, the following information:
(A) A description of each air ambulance service included in such
notification, including the relevant billing and service codes;
(B) The point of pick-up (as defined in 42 CFR 414.605) for the
services included in such notification;
(C) The amount of the offers submitted under Sec. 149.510(c)(4)(i)
(as applied by paragraph (b)(1) of this section) by the group health
plan or health insurance issuer (as applicable) and by the
nonparticipating provider of air ambulance services, expressed as a
dollar amount and as a percentage of the qualifying payment amount;
(D) Whether the offer selected by the certified IDR entity under
Sec. 149.510(c)(4)(ii) (as applied by paragraph (b)(1) of this section)
to be the payment amount applied was the offer submitted by the plan or
issuer (as applicable) or by the provider of air ambulance services;
(E) The amount of the selected offer expressed as a dollar amount
and as a percentage of the qualifying payment amount;
(F) The rationale for the certified IDR entity's decision, including
the extent to which the decision relied on the criteria in paragraph
(b)(2) of this section and Sec. 149.510(c)(4)(iii)(C) and (D);
(G) Air ambulance vehicle type, including the clinical capability
level of such vehicle (to the extent this information has been provided
to the certified IDR entity);
(H) The identity for each plan or issuer and provider of air
ambulance services, with respect to the notification. Specifically, each
certified IDR entity must provide each party's name and address, as
applicable; and
(I) For each determination, the number of business days elapsed
between selection of the certified IDR entity and the selection of the
payment amount by the certified IDR entity.
(v) The total amount of certified IDR entity fees paid to the
certified IDR entity under paragraph Sec. 149.510(d)(1) (as applied by
paragraph (b)(1) of this section) during the month for determinations
involving air ambulance services.
(c) Applicability date. The provisions of this section are
applicable with respect to plan years, or in the individual market,
policy years, beginning on or after January 1, 2022, except that
paragraphs (b)(1), (2), and (3) and (b)(4)(iv)(F) of this section
regarding payment determinations are applicable with respect to services
provided or furnished on or after October 25, 2022, for plan years or in
the individual market policy years beginning on or after January 1,
2022.
[86 FR 56124, Oct. 7, 2021, as amended at 87 FR 52654, Aug. 26, 2022]
Subpart G_Protection of Uninsured or Self-Pay Individuals
Source: 86 FR 56134, Oct. 7, 2021, unless otherwise noted.
Sec. 149.610 Requirements for provision of good faith estimates
of expected charges for uninsured (or self-pay) individuals.
(a) Scope and definitions--(1) Scope. This section sets forth
requirements for health care providers and health care facilities
related to the issuance of good faith estimates of expected charges for
uninsured (or self-pay) individuals (or their authorized
representatives), upon request or upon scheduling an item or service.
[[Page 280]]
(2) Definitions. For purposes of this section, the following
definitions apply:
(i) Authorized representative means an individual authorized under
State law to provide consent on behalf of the uninsured (or self-pay)
individual, provided that the individual is not a provider affiliated
with a facility or an employee of a provider or facility represented in
the good faith estimate, unless such provider or employee is a family
member of the uninsured (or self-pay) individual.
(ii) Convening health care provider or convening health care
facility (convening provider or convening facility) means the provider
or facility who receives the initial request for a good faith estimate
from an uninsured (or self-pay) individual and who is or, in the case of
a request, would be responsible for scheduling the primary item or
service.
(iii) Co-health care provider or co-health care facility (co-
provider or co-facility) means a provider or facility other than a
convening provider or a convening facility that furnishes items or
services that are customarily provided in conjunction with a primary
item or service.
(iv) Diagnosis code means the code that describes an individual's
disease, disorder, injury, or other related health conditions using the
International Classification of Diseases (ICD) code set.
(v) Expected charge means, for an item or service, the cash pay rate
or rate established by a provider or facility for an uninsured (or self-
pay) individual, reflecting any discounts for such individuals, where
the good faith estimate is being provided to an uninsured (or self-pay)
individual; or the amount the provider or facility would expect to
charge if the provider or facility intended to bill a plan or issuer
directly for such item or service when the good faith estimate is being
furnished to a plan or issuer.
(vi) Good faith estimate means a notification of expected charges
for a scheduled or requested item or service, including items or
services that are reasonably expected to be provided in conjunction with
such scheduled or requested item or service, provided by a convening
provider, convening facility, co-provider, or co-facility.
(vii) Health care facility (facility) means an institution (such as
a hospital or hospital outpatient department, critical access hospital,
ambulatory surgical center, rural health center, federally qualified
health center, laboratory, or imaging center) in any State in which
State or applicable local law provides for the licensing of such an
institution, that is licensed as such an institution pursuant to such
law or is approved by the agency of such State or locality responsible
for licensing such institution as meeting the standards established for
such licensing.
(viii) Health care provider (provider) means a physician or other
health care provider who is acting within the scope of practice of that
provider's license or certification under applicable State law,
including a provider of air ambulance services.
(ix) Items or services has the meaning given in 45 CFR
147.210(a)(2).
(x) Period of care means the day or multiple days during which the
good faith estimate for a scheduled or requested item or service (or set
of scheduled or requested items or services) are furnished or are
anticipated to be furnished, regardless of whether the convening
provider, convening facility, co-providers, or co-facilities are
furnishing such items or services, including the period of time during
which any facility equipment and devices, telemedicine services, imaging
services, laboratory services, and preoperative and postoperative
services that would not be scheduled separately by the individual, are
furnished.
(xi) Primary item or service means the item or service to be
furnished by the convening provider or convening facility that is the
initial reason for the visit.
(xii) Service code means the code that identifies and describes an
item or service using the Current Procedural Terminology (CPT),
Healthcare Common Procedure Coding System (HCPCS), Diagnosis-Related
Group (DRG) or National Drug Codes (NDC) code sets.
(xiii) Uninsured (or self-pay) individual means:
[[Page 281]]
(A) An individual who does not have benefits for an item or service
under a group health plan, group or individual health insurance coverage
offered by a health insurance issuer, Federal health care program (as
defined in section 1128B(f) of the Social Security Act), or a health
benefits plan under chapter 89 of title 5, United States Code; or
(B) An individual who has benefits for such item or service under a
group health plan, or individual or group health insurance coverage
offered by a health insurance issuer, or a health benefits plan under
chapter 89 of title 5, United States Code but who does not seek to have
a claim for such item or service submitted to such plan or coverage.
(b) Requirements of providers and facilities--(1) Requirements for
convening providers and convening facilities. A convening provider or
convening facility must determine if an individual is an uninsured (or
self-pay) individual by:
(i) Inquiring if an individual is enrolled in a group health plan,
group or individual health insurance coverage offered by a health
insurance issuer, Federal health care program (as defined in section
1128B(f) of the Social Security Act), or a health benefits plan under
chapter 89 of title 5, United States Code;
(ii) Inquiring whether an individual who is enrolled in a group
health plan, or group or individual health insurance coverage offered by
a health insurance issuer or a health benefits plan under chapter 89 of
title 5, United States Code is seeking to have a claim submitted for the
primary item or service with such plan or coverage; and
(iii) Informing all uninsured (or self-pay) individuals of the
availability of a good faith estimate of expected charges upon
scheduling an item or service or upon request; information regarding the
availability of good faith estimates for uninsured (or self-pay)
individuals must be:
(A) Written in a clear and understandable manner, prominently
displayed (and easily searchable from a public search engine) on the
convening provider's or convening facility's website, in the office, and
on-site where scheduling or questions about the cost of items or
services occur;
(B) Orally provided when scheduling an item or service or when
questions about the cost of items or services occur; and
(C) Made available in accessible formats, and in the language(s)
spoken by individual(s) considering or scheduling items or services with
such convening provider or convening facility.
(iv) Convening providers and convening facilities shall consider any
discussion or inquiry regarding the potential costs of items or services
under consideration as a request for a good faith estimate;
(v) Upon the request for a good faith estimate from an uninsured (or
self-pay) individual or upon scheduling a primary item or service to be
furnished for such an individual, the convening provider or convening
facility must contact, no later than 1 business day of such scheduling
or such request, all co-providers and co-facilities who are reasonably
expected to provide items or services in conjunction with and in support
of the primary item or service and request that the co-providers or co-
facilities submit good faith estimate information (as specified in
paragraphs (b)(2) and (c)(2) of this section) to the convening provider
or facility; the request must also include the date that good faith
estimate information must be received by the convening provider or
facility;
(vi) Provide a good faith estimate (as specified in paragraph (c)(1)
of this section) to uninsured (or self-pay) individuals within the
following timeframes:
(A) When a primary item or service is scheduled at least 3 business
days before the date the item or service is scheduled to be furnished:
Not later than 1 business day after the date of scheduling;
(B) When a primary item or service is scheduled at least 10 business
days before such item or service is scheduled to be furnished: Not later
than 3 business days after the date of scheduling; or
(C) When a good faith estimate is requested by an uninsured (or
self-pay) individual: Not later than 3 business days after the date of
the request.
(vii) A convening provider or convening facility must provide an
uninsured (or self-pay) individual who has
[[Page 282]]
scheduled an item or service with a new good faith estimate if a
convening provider, convening facility, co-provider, or co-facility
anticipates or is notified of any changes to the scope of a good faith
estimate (such as anticipated changes to the expected charges, items,
services, frequency, recurrences, duration, providers, or facilities)
previously furnished at the time of scheduling; a new good faith
estimate must be issued to the uninsured (or self-pay) individual no
later than 1 business day before the items or services are scheduled to
be furnished.
(viii) If any changes in expected providers or facilities
represented in a good faith estimate occur less than 1 business day
before the item or service is scheduled to be furnished, the replacement
provider or facility must accept as its good faith estimate of expected
charges the good faith estimate for the relevant items or services
included in the good faith estimate for the items or services being
furnished that was provided by the replaced provider or facility.
(ix) For good faith estimates provided upon request of an uninsured
(or self-pay) individual, upon scheduling of the requested item or
service, the convening provider or convening facility must provide the
uninsured (or self-pay) individual with a new good faith estimate for
the scheduled item or service within the timeframes specified in
paragraphs (b)(1)(vi)(A) and (B) of this section; and
(x) A convening provider or convening facility may issue a single
good faith estimate for recurring primary items or services if the
following requirements are met, in addition to the requirements under
this section:
(A) The good faith estimate for recurring items or services must
include, in a clear and understandable manner, the expected scope of the
recurring primary items or services (such as timeframes, frequency, and
total number of recurring items or services); and
(B) The scope of a good faith estimate for recurring primary items
or services must not exceed 12 months. If additional recurrences of
furnishing such items or services are expected beyond 12 months (or as
specified under paragraph (b)(vii) of this section), a convening
provider or convening facility must provide an uninsured (or self-pay)
individual with a new good faith estimate, and communicate such changes
(such as timeframes, frequency, and total number of recurring items or
services) upon delivery of the new good faith estimate to help patients
understand what has changed between the initial good faith estimate and
the new good faith estimate.
(2) Requirements for co-providers and co-facilities. (i) Co-
providers and co-facilities must submit good faith estimate information
(as specified in paragraph (c)(2) of this section) upon the request of
the convening provider or convening facility. The co-provider or co-
facility must provide, and the convening provider or convening facility
must receive, the good faith estimate information no later than 1
business day after the co-provider or co-facility receives the request
from the convening provider or convening facility.
(ii) Co-providers and co-facilities must notify and provide new good
faith estimate information to a convening provider or convening facility
if the co-provider or co-facility anticipates any changes to the scope
of good faith estimate information previously submitted to a convening
provider or convening facility (such as anticipated changes to the
expected charges, items, services, frequency, recurrences, duration,
providers, or facilities).
(iii) If any changes in the expected co-providers or co-facilities
represented in a good faith estimate occur less than 1 business day
before that the item or service is scheduled to be furnished, the
replacement co-provider or co-facility must accept as its good faith
estimate of expected charges the good faith estimate for the relevant
items or services included in the good faith estimate for the item or
service being furnished that was provided by the replaced provider or
facility.
(iv) In the event that an uninsured (or self-pay) individual
separately schedules or requests a good faith estimate from a provider
or facility that would otherwise be a co-provider or co-facility, that
provider or facility is considered a convening provider or convening
facility for such item or service and must meet all requirements in
[[Page 283]]
paragraphs (b)(1) and (c)(1) of this section for issuing a good faith
estimate to an uninsured (or self-pay) individual.
(c) Content requirements of a good faith estimate issued to an
uninsured (or self-pay) individual. (1) A good faith estimate issued to
an uninsured (or self-pay) individual must include:
(i) Patient name and date of birth;
(ii) Description of the primary item or service in clear and
understandable language (and if applicable, the date the primary item or
service is scheduled);
(iii) Itemized list of items or services, grouped by each provider
or facility, reasonably expected to be furnished for the primary item or
service, and items or services reasonably expected to be furnished in
conjunction with the primary item or service, for that period of care
including:
(A) Items or services reasonably expected to be furnished by the
convening provider or convening facility for the period of care; and
(B) Items or services reasonably expected to be furnished by co-
providers or co-facilities (as specified in paragraphs (b)(2) and (c)(2)
of this section);
(iv) Applicable diagnosis codes, expected service codes, and
expected charges associated with each listed item or service;
(v) Name, National Provider Identifier, and Tax Identification
Number of each provider or facility represented in the good faith
estimate, and the State(s) and office or facility location(s) where the
items or services are expected to be furnished by such provider or
facility;
(vi) List of items or services that the convening provider or
convening facility anticipates will require separate scheduling and that
are expected to occur before or following the expected period of care
for the primary item or service. The good faith estimate must include a
disclaimer directly above this list that includes the following
information: Separate good faith estimates will be issued to an
uninsured (or self-pay) individual upon scheduling or upon request of
the listed items or services; notification that for items or services
included in this list, information such as diagnosis codes, service
codes, expected charges and provider or facility identifiers do not need
to be included as that information will be provided in separate good
faith estimates upon scheduling or upon request of such items or
services; and include instructions for how an uninsured (or self-pay)
individual can obtain good faith estimates for such items or services;
(vii) [Reserved]
(viii) A disclaimer that informs the uninsured (or self-pay)
individual that there may be additional items or services the convening
provider or convening facility recommends as part of the course of care
that must be scheduled or requested separately and are not reflected in
the good faith estimate;
(ix) A disclaimer that informs the uninsured (or self-pay)
individual that the information provided in the good faith estimate is
only an estimate regarding items or services reasonably expected to be
furnished at the time the good faith estimate is issued to the uninsured
(or self-pay) individual and that actual items, services, or charges may
differ from the good faith estimate; and
(x) A disclaimer that informs the uninsured (or self-pay) individual
of the uninsured (or self-pay) individual's right to initiate the
patient-provider dispute resolution process if the actual billed charges
are substantially in excess of the expected charges included in the good
faith estimate, as specified in Sec. 149.620; this disclaimer must
include instructions for where an uninsured (or self-pay) individual can
find information about how to initiate the patient-provider dispute
resolution process and state that the initiation of the patient-provider
dispute resolution process will not adversely affect the quality of
health care services furnished to an uninsured (or self-pay) individual
by a provider or facility; and
(xi) A disclaimer that the good faith estimate is not a contract and
does not require the uninsured (or self-pay) individual to obtain the
items or services from any of the providers or facilities identified in
the good faith estimate.
(2) [Reserved]
(d) Content Requirements for Good Faith Estimate Information
Submitted by
[[Page 284]]
Co-Providers or Co-Facilities to Convening Providers or Convening
Facilities. (1) Good faith estimate information submitted to convening
providers or convening facilities by co-providers or co-facilities for
inclusion in the good faith estimate (described in paragraph (c)(1) of
this section) must include:
(i) Patient name and date of birth;
(ii) Itemized list of items or services expected to be provided by
the co-provider or co-facility that are reasonably expected to be
furnished in conjunction with the primary item or service as part of the
period of care;
(iii) Applicable diagnosis codes, expected service codes, and
expected charges associated with each listed item or service;
(iv) Name, National Provider Identifiers, and Tax Identification
Numbers of the co-provider or co-facility, and the State(s) and office
or facility location(s) where the items or services are expected to be
furnished by the co-provider or co-facility; and
(v) A disclaimer that the good faith estimate is not a contract and
does not require the uninsured (or self-pay) individual to obtain the
items or services from any of the co-providers or co-facilities
identified in the good faith estimate.
(2) [Reserved]
(e) Required Methods for Providing Good Faith Estimates for
Uninsured (or Self-Pay) Individuals. (1) A good faith estimate must be
provided in written form either on paper or electronically, pursuant to
the uninsured (or self-pay) individual's requested method of delivery,
and within the timeframes described in paragraph (b) of this section.
Good faith estimates provided electronically must be provided in a
manner that the uninsured (or self-pay) individual can both save and
print. A good faith estimate must be provided and written using clear
and understandable language and in a manner calculated to be understood
by the average uninsured (or self-pay) individual.
(2) To the extent that an uninsured (or self-pay) individual
requests a good faith estimate in a method other than paper or
electronically (for example, by phone or orally in person), the
convening provider may orally inform the uninsured (or self-pay)
individual of information contained in the good faith estimate using the
method requested by the uninsured (or self-pay) individual; however, in
order for a convening provider or convening facility to meet the
requirements of this section, the convening provider or convening
facility must issue the good faith estimate to the uninsured (or self-
pay) individual in written form as specified in paragraph (e)(1) of this
section.
(f) Additional compliance provisions. (1) A good faith estimate
issued to uninsured (or self-pay) individual under this section is
considered part of the patient's medical record and must be maintained
in the same manner as a patient's medical record. Convening providers
and convening facilities must provide a copy of any previously issued
good faith estimate furnished within the last 6 years to an uninsured
(or self-pay) individual upon the request of the uninsured (or self-pay)
individual.
(2) Providers or facilities that issue good faith estimates issued
under State processes that do not meet the requirements set forth in
this section fail to comply with the requirements of this section.
(3) A provider or facility will not fail to comply with this section
solely because, despite acting in good faith and with reasonable due
diligence, the provider or facility makes an error or omission in a good
faith estimate required under this section, provided that the provider
or facility corrects the information as soon as practicable. If items or
services are furnished before an error in a good faith estimate is
addressed, the provider or facility may be subject to patient-provider
dispute resolution if the actual billed charges are substantially in
excess of the good faith estimate (as described in Sec. 149.620).
(4) To the extent compliance with this section requires a provider
or facility to obtain information from any other entity or individual,
the provider or facility will not fail to comply with this section if it
relied in good faith on the information from the other entity, unless
the provider or facility knows, or reasonably should have known, that
[[Page 285]]
the information is incomplete or inaccurate. If the provider or facility
learns that the information is incomplete or inaccurate, the provider or
facility must provide corrected information to the uninsured (or self-
pay) individual as soon as practicable. If items or services are
furnished before an error in a good faith estimate is addressed, the
provider or facility may be subject to patient-provider dispute
resolution if the actual billed charges are substantially in excess of
the good faith estimate (as described in Sec. 149.620).
(g) Applicability--(1) Applicability date. The requirements of this
section are applicable for good faith estimates requested on or after
January 1, 2022 or for good faith estimates required to be provided in
connection with items or services scheduled on or after January 1, 2022.
(2) Applicability with other laws. Nothing in this section alters or
otherwise affects a provider's or facility's requirement to comply with
other applicable State or Federal laws, including those governing the
accessibility, privacy, or security of information required to be
disclosed under this section, or those governing the ability of properly
authorized representatives to access uninsured (or self-pay)
individuals' information held by providers or facilities, except to the
extent a state law prevents the application of this section.
Sec. 149.620 Requirements for the patient-provider dispute
resolution process.
(a) Scope and definitions--(1) Scope. This section sets forth
requirements for the patient-provider dispute resolution process, under
which an uninsured (or self-pay) individual, with respect to eligible
items or services under paragraph (b) of this section, may submit
notification under paragraph (c) of this section to initiate the
patient-provider dispute resolution process. This section sets forth in
paragraph (d) of this section the certification requirements for a
dispute resolution entity to become a Selected Dispute Resolution (SDR)
entity contracted to resolve the patient-provider dispute, and the
process for HHS to select SDR entities for patient-provider disputes
under paragraph (e) of this section. This section sets forth in
paragraph (f) the process and requirements regarding how SDR entities
will determine the amount to be paid by an uninsured (or self-pay)
individual to a provider or facility. This section also sets forth
requirements for an administrative fee under paragraph (g) of this
section and minimum requirements under paragraph (h) of this section for
states that wish to establish processes for performing patient-provider
dispute resolution in place of the Federal process.
(2) Definitions. Unless otherwise stated, the definitions in Sec.
149.610(a)(2) apply to this section. Definitions related to
confidentiality set forth in Sec. 149.510(a)(2), including the
definitions for breach, individually identifiable health information
(IIHI), and unsecured IIHI also apply to this section. Additionally, for
purposes of this section, the following definitions apply:
(i) Billed charge(s) means the amount billed by a provider or
facility for an item or service.
(ii) Substantially in excess means, with respect to the total billed
charges by a provider or facility, an amount that is at least $400 more
than the total amount of expected charges listed on the good faith
estimate for the provider or facility.
(iii) Total billed charge(s) means the total of billed charges, by a
provider or-facility, for all primary items or services and all other
items or services furnished in conjunction with the primary items or
services to an uninsured (or self-pay) individual, regardless of whether
such items or services were included in the good faith estimate.
(b) Eligibility for patient-provider dispute resolution--(1) In
general. In general, an item or service provided by a convening
provider, convening facility, co-provider, or co-facility is eligible
for the patient-provider dispute resolution process if the total billed
charges (by the particular convening provider, convening facility, or
co-provider or co-facility listed in the good faith estimate), are
substantially in excess of the total expected charges for that specific
provider or facility listed on the good faith estimate, as required
under Sec. 149.610.
[[Page 286]]
(2) Special rule for co-provider or co-facility substitution. If a
co-provider or co-facility that provided an estimate of the expected
charge for an item or service in the good faith estimate is substituted
for a different co-provider or co-facility, an item or service billed by
the replacement co-provider or co-facility is eligible for dispute
resolution if the billed charge is substantially in excess of the total
expected charges included in the good faith estimate for the original
co-provider or co-facility. If the replacement provider or facility
provides the uninsured (or self-pay) individual with a new good faith
estimate in accordance with Sec. 149.610(b)(2), then the determination
of whether an item or service billed by the replacement co-provider or
co-facility is eligible for dispute resolution is based on whether the
total billed charge for the replacement co-provider or co-facility is
substantially in excess of the total expected charges included in the
good faith estimate provided by the replacement co-provider or co-
facility.
(c) Initiation of the Patient Provider dispute resolution process--
(1) In general. With respect to an item or service that meets the
requirements in paragraph (b) of this section, an uninsured (or self-
pay) individual (or their authorized representative, excluding any
providers directly represented in the good faith estimate, providers
associated with these providers, non-clinical staff associated with
these providers, or individuals employed or associated with a facility
that had included services in the good faith estimate) may initiate the
patient-provider dispute resolution process by submitting a notification
(initiation notice) to HHS as specified in paragraph (c)(2) of this
section postmarked within 120 calendar days of receiving the initial
bill containing charges for the item or service that is substantially in
excess of the expected charges in the good faith estimate. In addition,
the uninsured (or self-pay) individual must submit an administrative fee
as described in paragraph (g) of this section to the SDR entity in an
amount and in a manner that will be clarified in guidance by HHS.
(2) Initiation notice--(i) Content. The notice to initiate the
patient-provider dispute resolution process must include:
(A) Information sufficient to identify the item or service under
dispute, including the date the item or service was provided, and a
description of the item or service;
(B) A copy of the provider or facility bill for the item and service
under dispute (the copy can be a photocopy or an electronic image so
long as the document is readable);
(C) A copy of the good faith estimate for the item or service under
dispute (the copy can be a photocopy or an electronic image so long as
the document is readable);
(D) If not included on the good faith estimate, contact information
of the provider or facility involved, including, if available, name,
email address, phone number, and mailing address;
(E) The State where the items or services in dispute were furnished;
and
(F) The uninsured (or self-pay) individual's communication
preference, through the Federal IDR portal, or electronic or paper mail.
(ii) Manner. The uninsured (or self-pay) individual or their
authorized representative must submit the initiation notice, to the
Secretary by submitting the notice via the Federal IDR portal,
electronically, or on paper, in the form and manner specified by the
Secretary. The date of initiation of the patient-provider dispute
resolution process will be the date the Secretary receives such
initiation notice. In addition, the uninsured (or self-pay) individual
must submit an administrative fee as described in paragraph (g) of this
section to the SDR entity in an amount and in a manner that will be
clarified in guidance by HHS.
(3) Notification of SDR entity receipt. Upon receipt of the
initiation notice described in paragraph (c)(1) of this section, HHS
will select an SDR entity according to the process described in
paragraph (e) of this section. Upon selection, the SDR entity will,
through the Federal IDR portal, or electronic or paper mail, notify the
uninsured (or self-pay) individual, and the provider or facility that a
patient-provider dispute resolution request has been received and is
under review. Such notice shall also include:
[[Page 287]]
(i) Sufficient information to identify the item or service under
dispute;
(ii) The date the initiation notice was received;
(iii) Notice of the additional requirements for providers or
facilities specified in paragraphs (c)(5) and (6) of this section while
the patient-provider dispute resolution process is pending; and
(iv) Information to the uninsured (or self-pay) individual about the
availability of consumer assistance resources that can assist the
individual with the dispute.
(4) Validation of initiation notice. After the selection of the SDR
entity, as described in paragraph (c)(2) of this section, the SDR entity
shall review the initiation notice to ensure the items or services in
dispute meet the eligibility criteria described in paragraph (b) of this
section and the initiation notice contains the required information
described in paragraph (c)(2). The SDR entity will notify the uninsured
(or self-pay) individual of the outcome of the review, including, if
applicable, providing the individual with 21 calendar days to submit
supplemental information when the initiation notice is determined to be
incomplete or the items or services are determined ineligible for
dispute resolution.
(i) If the SDR entity determines that the item or service meets the
eligibility criteria, and the initiation notice contains the required
information, the SDR entity will notify the uninsured (or self-pay)
individual and the provider or facility that the that the item or
service has been determined eligible for dispute resolution. The SDR
entity shall request the provider or facility provide the information
described in paragraph (f)(2) of this section within 10 business days.
(ii) If the SDR entity determines that the item or service does not
meet the eligibility criteria or that the initiation notice does not
contain the required information, the SDR entity will provide an
insufficiency notice to the uninsured (or self-pay) individual of the
determination and the reasons for the determination and will notify the
uninsured (or self-pay) individual that the individual may submit
supplemental information, postmarked within 21 calendar days, to resolve
any deficiencies identified. If the insufficiency notice is not made
available to an individual in a format that is accessible to individuals
with disabilities or with low-English proficiency within 14 calendar
days of such a request from the individual, a 14-calendar-day extension
will be granted so that the individual will have a total of 35 calendar
days to submit supplemental information.
(5) Prohibitions on collections. While the patient-provider dispute
resolution process is pending, the provider or facility must not move
the bill for the disputed item or service into collection or threaten to
do so, or if the bill has already moved into collection, the provider or
facility should cease collection efforts. The provider or facility must
also suspend the accrual of any late fees on unpaid bill amounts until
after the dispute resolution process has concluded.
(6) Prohibitions on retributive action. The provider or facility
must not take or threaten to take any retributive action against an
uninsured (or self-pay) individual for utilizing the patient-provider
dispute resolution process to seek resolution for a disputed item or
service.
(d) Certification of SDR entities--(1) In general. The Secretary
shall contract with and certify only that number of SDR entities the
Secretary believes will be necessary to timely resolve the volume of
patient-provider disputes. As part of the contract process with HHS, a
potential SDR entity must satisfy the Federal IDR entity certification
criteria specified in Sec. 149.510(e), subject to the exceptions set
forth in paragraphs (d)(2) of this section. In addition, the SDR entity
must also meet the conflict-of-interest mitigation policy requirements
specified in paragraph (d)(3) of this section. Through this contract
process, HHS will assess the dispute resolution entity for compliance
with all applicable SDR entity certification requirements.
(2) Exception for SDR entity certification. With respect to
certified IDR entity requirements that do not apply to an SDR entity,
potential SDR entities are not required to make the following
submissions:
[[Page 288]]
(i) Information regarding the service area(s) for which the entity
will arbitrate cases, however, a potential SDR entity will need to
submit information on their ability to operate nationwide through the
contract process;
(ii) Fee schedule for batched and non-batched claims;
(iii) Policies and procedures to hold dispute resolution entity fees
in a trust or escrow account, however, a potential SDR entity must
submit policies and procedures to hold administrative fees, as described
in paragraph (g) of this section, and remit them to HHS in a manner
specified by HHS.
(3) Conflict of interest mitigation policies. A potential SDR entity
must also provide additional information on the SDR entity's conflict-
of-interest policies and procedures, including outlining a mitigation
plan in the event of an entity-level conflict of interest, under which
no dispute resolution personnel affiliated with the SDR entity can
fairly and impartially adjudicate a case, in compliance with the
standards in Federal Acquisition Regulation-subpart 9.5 (48 CFR subpart
9.5). Such conflict of interest mitigation plan could include utilizing
a subcontractor without a conflict of interest that meets SDR entity
requirements to conduct the patient-provider dispute resolution for the
case.
(e) Selection of an SDR entity. (1) After the Secretary has received
the initiation notice as described in paragraph (c) of this section, the
Secretary will assign an SDR entity that is certified and contracted
under paragraph (d) of this section to conduct the dispute resolution
process for the item or service. Upon receiving an assignment from the
Secretary to make a determination for an item or service as described in
paragraph (c)(3) of this section, the SDR entity shall ensure that no
conflict of interest exists, and in such case, shall notify the
uninsured (or self-pay) individual and the provider or facility of the
selection of the SDR entity.
(2) Should a conflict of interest exist, the SDR entity must submit
notice to the Secretary of such conflict no later than 3 business days
following selection by the Secretary. The Secretary will then
automatically select a new SDR entity to conduct the patient-provider
dispute resolution process for the item or service. In the event that no
SDR entities are available to resolve the dispute, the initially-
selected SDR entity will be required to initiate their entity-level
conflict of interest mitigation plan as described in paragraph (d)(3) of
this section. If no other contracted SDR entity, and no subcontracted
entity, is able to provide the patient-provider dispute resolution
services due to conflicts of interest that cannot be sufficiently
mitigated or any other reason, HHS may seek to contract with an
additional SDR entity as needed. In the event that HHS needs to contract
with an additional SDR entity, the time periods specified in this
section may be extended at HHS' discretion to allow for HHS to contract
with that SDR entity.
(3) Conflict of interest means, with respect to a party to a payment
determination, or SDR entity, a material relationship, status, or
condition of the party, or SDR entity that impacts the ability of the
SDR entity to make an unbiased and impartial payment determination. For
purposes of this section, a conflict of interest exists when an SDR
entity is:
(i) A provider or a facility;
(ii) An affiliate or a subsidiary of a provider or facility;
(iii) An affiliate or subsidiary of a professional or trade
association representing a provider or facility; or
(iv) An SDR entity, or any personnel assigned to a determination has
a material familial, financial, or professional relationship with a
party to the payment determination being disputed, or with any officer,
director, or management employee of the provider, the provider's group
or practice association, or the facility that is a party to the dispute.
(4) Either party to the dispute resolution process (the uninsured
(or self-pay) individual, or the provider or facility) may attest that a
conflict of interest exists in relation to the SDR entity assigned to a
payment dispute, in which case the SDR entity must notify the Secretary
of HHS no later than 3 business days receiving the attestation.
[[Page 289]]
(f) Payment determination for Patient-Provider dispute resolution--
(1) Determination of payment amount through settlement--(i) In general.
If the parties to a dispute resolution process agree on a payment amount
(through either an offer of financial assistance or an offer of a lower
amount, or an agreement by the uninsured (or self-pay) individual to pay
the billed charges in full) after the dispute resolution process has
been initiated but before the date on which a determination is made
under paragraph (f)(3) of this section, the provider or facility will
notify the SDR entity through the Federal IDR Portal, electronically, or
in paper form as soon as possible, but no later than 3 business days
after the date of the agreement. The settlement notification must
contain at a minimum, the settlement amount, the date of such
settlement, and documentation demonstrating that the provider or
facility and uninsured (or self-pay) individual have agreed to the
settlement. The settlement notice must also document that the provider
or facility has applied a reduction to the uninsured (or self-pay)
individual's settlement amount equal to at least half the amount of the
administrative fee paid as set forth in paragraph (g) of this section.
Once the SDR entity receives the settlement notice, the SDR entity shall
close the dispute resolution case as settled and the agreed upon payment
amount will apply for the items or services.
(ii) Treatment of payments made prior to determination. Payment of
the billed charges (or a portion of the billed charges) by the uninsured
(or self-pay) individual (or by another party on behalf of the uninsured
(or self-pay) individual) prior to a determination under paragraph
(f)(3) of this section does not demonstrate agreement by the uninsured
(or self-pay) individual to settle at that amount or any other amount.
(2) Determination of payment amount through the patient-provider
dispute resolution process--(i) In general. With respect to an item or
service to which an agreement described in paragraph (f)(1) of this
section does not apply, not later than 10 business days after the
receipt of the selection notice from the SDR entity described in
paragraph (c)(4)(i) of this section, the provider or facility must
submit to the SDR entity:
(A) A copy of the good faith estimate provided to the uninsured (or
self-pay) individual for the item or service under dispute (the copy can
be a photocopy or an electronic image so long as the document is
readable);
(B) A copy of the billed charges provided to the uninsured (or self-
pay) individual for the item or service under dispute (the copy can be a
photocopy or an electronic image so long as the document is readable);
and
(C) If available, documentation demonstrating that the difference
between the billed charge and the expected charges in the good faith
estimate reflects the cost of a medically necessary item or service and
is based on unforeseen circumstances that could not have reasonably been
anticipated by the provider or facility when the good faith estimate was
provided.
(ii) Timeframe for SDR entity determination. Not later than 30
business days after receipt of the information described in paragraph
(f)(2)(i) of this section, the SDR entity must make a determination
regarding the amount to be paid by such uninsured (or self-pay)
individual, taking into account the requirements in paragraph (f)(3) of
this section.
(3) Payment determination by an SDR entity--(i) In general. The SDR
entity must review any documentation submitted by the uninsured (or
self-pay) individual, and the provider or the facility, and make a
separate determination for each unique item or service charged as to
whether the provider or facility has provided credible information to
demonstrate that the difference between the billed charge and the
expected charge for the item or service in the good faith estimate
reflects the costs of a medically necessary item or service and is based
on unforeseen circumstances that could not have reasonably been
anticipated by the provider or facility when the good faith estimate was
provided.
(ii) Definition of credible information. Credible information means
information that upon critical analysis is worthy of belief and is
trustworthy.
[[Page 290]]
(iii) Payment determination process. (A) For an item or service that
appears on the good faith estimate:
(1) If the billed charge is equal to or less than the expected
charge for the item or service in the good faith estimate, the SDR
entity must determine the amount to be paid for the item or service as
the billed charge.
(2) If the billed charge for the item or service is greater than the
expected charge in the good faith estimate, and the SDR entity
determines that information submitted by the provider or facility does
not provide credible information that the difference between the billed
charge and the expected charge-for the item or service in the good faith
estimate reflects the costs of a medically necessary item or service and
is based on unforeseen circumstances that could not have reasonably been
anticipated by the provider or facility when the good faith estimate was
provided, the SDR entity must determine the amount to be paid for the
item or service to be equal to the expected charge for the item or
service in the good faith estimate.
(3) If the billed charge for the item or service is greater than the
expected charge in the good faith estimate, and the SDR entity
determines that information submitted by the provider or facility
provides credible information that the difference between the billed
charge and the expected charge for the item or service in the good faith
estimate reflects the costs of a medically necessary item or service and
is based on unforeseen circumstances that could not have reasonably been
anticipated by the provider or facility when the good faith estimate was
provided, the SDR entity must determine as the amount to be paid for the
item or service, the lesser of:
(i) The billed charge; or
(ii) The median payment amount paid by a plan or issuer for the same
or similar service, by a same or similar provider in the geographic area
as defined in Sec. 149.140(a)(7) where the services were provided, that
is reflected in an independent database as defined in Sec.
149.140(a)(3) using the methodology described in Sec. 149.140(c)(3),
except that in cases where the amount determined by an independent
database is determined to be less than the expected charge for the item
or service listed on the good faith estimate, the amount to be paid will
equal to the expected charge for the item or service listed on the good
faith estimate. When comparing the billed charge with the amount
contained in an independent database, the SDR entity should account for
any discounts offered by the provider or facility.
(B) For an item or service that does not appear on the good faith
estimate (new item or service):
(1) If the SDR entity determines that the information submitted by
the provider or facility does not provide credible information that the
billed charge for the new item or service reflects the costs of a
medically necessary item or service and is based on unforeseen
circumstances that could not have reasonably been anticipated by the
provider or facility when the good faith estimate was provided, then the
SDR entity must determine that amount to be paid for the new item or
service to be equal to $0.
(2) If the SDR entity determines that the information submitted by
the provider or facility provides credible information that the billed
charge for the new item or service reflects the costs of a medically
necessary item or service and is based on unforeseen circumstances that
could not have reasonably been anticipated by the provider or facility
when the good faith estimate was provided, the SDR entity must select as
the amount to be paid for the new item or service, the lesser of:
(i) The billed charge; or
(ii) The median payment amount paid by a plan or issuer for the same
or similar service, by a same or similar provider in the geographic area
as defined in Sec. 149.140(a)(7) where the services were provided, that
is reflected in an independent database as defined in Sec.
149.140(a)(3) using the methodology described in Sec. 149.140(c)(3).
When comparing the billed charge with the amounts contained in an
independent database, the SDR entity should account for any discounts
offered by the provider or facility.
(C) To calculate the final payment determination amount, the SDR
entity
[[Page 291]]
must add together the amounts to be paid for all items or services
subject to the determination. In cases where the final amount determined
by the SDR entity is lower than the billed charges, the SDR entity must
reduce the total amount determined by the amount paid by the individual
for the administrative fee described in paragraph (g) of this section to
calculate the final payment determination amount to be paid by the
individual for the items or services. Once the final payment
determination amount has been calculated, the SDR entity will inform the
uninsured (or self-pay) individual and the provider or facility, through
the Federal IDR portal, or by electronic or paper mail, of such
determination, the determination amount and the SDR entity's
justification for making the determination. After such notification is
made, the SDR entity will close the case.
(4) Effects of determination. A determination made by an SDR entity
under this paragraph (f) will be binding upon the parties involved, in
the absence of a fraud or evidence of misrepresentation of facts
presented to the selected SDR entity regarding the claim, except that
the provider or facility may provide financial assistance or agree to an
offer for a lower payment amount than the SDR entity's determination,
the uninsured (or self-pay) individual may agree to pay the billed
charges in full, or the uninsured (or self-pay) individual and the
provider or facility may agree to a different payment amount.
(g) Costs of patient-provider dispute resolution process--(1)
Administrative fee to participate in the patient-provider dispute
resolution process. (i) The uninsured (or self-pay) individual shall pay
to the SDR entity the administrative fee amount described in section
(g)(2) of this section at the initiation of the patient-provider dispute
resolution process described in paragraph (c) of this section. The SDR
entity shall remit all administrative fees collected to the Secretary
upon receiving an invoice from HHS.
(ii) In cases where the SDR entity issues a determination and the
provider or facility is the non-prevailing party as described in section
(g)(1)(iv) of this section, the provider or facility must pay an amount
equal to the administrative fee to the uninsured (or self-pay)
individual in the form of a reduction in the payment amount that is
applied by the SDR entity to the final payment determination amount as
described in paragraph (f)(3) of this section.
(iii) If the SDR entity issues a determination and the provider or
facility is the prevailing party as described in paragraph (g)(1)(iv) of
this section, the provider or facility is not required to pay an amount
equal to the administrative fee to the uninsured (or self-pay)
individual in the form of a reduction in the payment amount that is
applied by the SDR entity to the final payment determination amount as
described in paragraph (f)(3) of this section.
(iv) For purposes of paragraphs (g)(1)(ii) and (iii) of this
section, the prevailing party is the provider or facility in cases where
the SDR entity determines the amount to be paid as equal to the billed
charges; and the prevailing party is the uninsured (or self-pay)
individual in cases where the SDR entity determines the-amount to be
paid as less than the billed charges.
(v) Allocation of administrative fee in the case of settlement. In
case of a settlement described in paragraph (f)(1) of this section, the
provider or facility must pay an amount equal to half of the
administrative fee to the uninsured (or self-pay) individual in the form
of a reduction in the payment amount that is applied to the final
settlement amount. The provider or facility will document in the
settlement notice described in paragraph (f)(1) that it has applied a
payment reduction of at least half of the administrative fee amount to
the uninsured (or self-pay) individual's settlement amount.
(2) Establishment of the administrative fee. The amount of the
administrative fee described in paragraph (g)(1) of this section will be
specified by the Secretary through guidance.
(h) Deferral to State patient-provider dispute resolution
processes--(1) In general. If the Secretary determines that a-state law
provides a process to determine the amount to be paid by an uninsured
(or self-pay) individual to a provider or facility, and that such
process
[[Page 292]]
meets or exceeds the requirements in paragraph (h)(2) of this section,
the Secretary shall defer to the State process and direct any patient-
provider dispute resolution requests received from uninsured (or self-
pay) individuals in such state to the State process to adjudicate the
dispute resolution initiation request.
(2) Minimum Federal requirements. A State process described in
paragraph (h)(1) of this section shall at a minimum:
(i) Be binding, unless the provider or facility offer for the
uninsured (or self-pay) individual to pay a lower payment amount than
the determination amount;
(ii) Take into consideration a good faith estimate, that meets the
minimum standards established in Sec. 149.160, provided by the provider
or facility to the uninsured (or self-pay) individual;
(iii) If the State has a fee charged to uninsured (or self-pay)
individuals to participate in the patient-provider dispute resolution
process, the fee must be equal to or less than the Federal
administrative fee-established in paragraph (g) of this section; and
(iv) Have in place conflict-of-interest standards that at a minimum
meets the requirements set forth in paragraphs (d) and (e) of this
section.
(3) HHS determination of State process. HHS will review the State
process to determine whether it meets or exceeds the minimum Federal
requirements set forth in paragraph (h)(2) of this section--HHS will
communicate with the state and determine whether such process meets or
exceeds such requirements. HHS will notify the state in writing of such
determination.
(4) HHS review of State process. HHS will review changes to the
State process on an annual basis (or at other times if HHS receives
information from the state that would indicate the state process no
longer meets the minimum Federal requirements) to ensure the state
process continues to meet or exceed the minimum Federal standards set
forth in this section.
(5) State process termination. In the event that the State process
is terminated, or HHS determines that the State process no longer meets
the minimum Federal requirements described in paragraph (h)(2) of this
section, HHS will make the Federal process available to uninsured (or
self-pay) individuals in that State to ensure that the state's residents
have access to a patient-provider dispute resolution process that meets
the minimum Federal requirements.
(i) Extension of time periods for extenuating circumstances--(1) In
general. The time periods specified in this section (other than the time
for payment of the administrative fees under paragraph (d)(2) of this
section) may be extended in extenuating circumstances at the Secretary's
discretion if:
(i) An extension is necessary to address delays due to matters
beyond the control of the parties or for good cause; and
(ii) The parties attest that prompt action will be taken to ensure
that the determination under this section is made as soon as
administratively practicable under the circumstances.
(2) Process to request an extension. The time periods specified in
this section may be extended in the case of extenuating circumstances at
HHS' discretion. The parties may request an extension by submitting a
request for extension due to extenuating circumstances through the
Federal IDR portal, or electronic or paper mail if the extension is
necessary to address delays due to matters beyond the control of the
parties or for good cause.
(j) Applicability date. The provisions of this section are
applicable to uninsured (or self-pay) individuals; providers (including
providers of air ambulance services) and facilities; and SDR entities,
generally beginning on or after January 1, 2022. The provisions
regarding SDR entity certification in paragraphs (a) and (d) of this
section, are applicable beginning on October 7, 2021.
Subpart H_Prescription Drug and Health Care Spending
Source: 86 FR 66702, Nov. 23, 2021, unless otherwise noted.
Sec. 149.710 Definitions.
For purposes of this subpart, the following definitions apply in
addition to the definitions in Sec. 149.30:
[[Page 293]]
Brand prescription drug means a drug for which an application is
approved under section 505(c) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(c)), or under section 351 of the PHS Act (42 U.S.C.
262), and that is generally marketed under a proprietary, trademark-
protected name. The term ``brand prescription drug'' includes a drug
with Emergency Use Authorization issued pursuant to section 564 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb-3), and that is
generally marketed under a proprietary, trademark-protected name. The
term ``brand prescription drug'' includes drugs that the U.S. Food and
Drug Administration determines to be interchangeable biosimilar products
under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 U.S.C. 262).
Dosage unit means the smallest form in which a pharmaceutical
product is administered or dispensed, such as a pill, tablet, capsule,
ampule, or measurement of grams or milliliters.
Enrollee means an individual who is enrolled, within the meaning of
Sec. 144.103 of this subchapter, in group health insurance coverage, or
an individual who is covered by individual health insurance coverage, at
any time during the reference year, and includes dependents.
Federal Employees Health Benefits (FEHB) line of business refers to
all health benefit plans that are offered to eligible enrollees pursuant
to a contract between the Office of Personnel Management and Federal
Employees Health Benefits (FEHB) Program carriers. Such plans are
Federal governmental plans offered pursuant to 5 U.S.C. chapter 89.
Life-years means the total number of months of coverage for
participants and beneficiaries, or for enrollees, as applicable, divided
by 12.
Market segment means one of the following: The individual market
(excluding the student market), the student market, the fully-insured
small group market, the fully-insured large group market (excluding the
FEHB line of business), self-funded plans offered by small employers,
self-funded plans offered by large employers, and the FEHB line of
business.
Premium amount means, with respect to individual health insurance
coverage and fully-insured group health plans, earned premium as that
term is defined in Sec. 158.130 of this subchapter, excluding the
adjustments specified in Sec. 158.130(b)(5). Premium amount means, with
respect to self-funded group health plans and other arrangements that do
not rely exclusively or primarily on payments of premiums as defined in
Sec. 158.130 of this subchapter, the premium equivalent amount
representing the total cost of providing and maintaining coverage,
including claims costs, administrative costs, and stop-loss premiums, as
applicable.
Prescription drug (drug) means a set of pharmaceutical products that
have been assigned a National Drug Code (NDC) by the Food and Drug
Administration and are grouped by name and ingredient in the manner
specified by the Secretary, jointly with the Secretary of the Treasury
and the Secretary of Labor.
Prescription drug rebates, fees, and other remuneration means all
remuneration received by or on behalf of a plan or issuer, its
administrator or service provider, including remuneration received by
and on behalf of entities providing pharmacy benefit management services
to the plan or issuer, with respect to prescription drugs prescribed to
participants, beneficiaries, or enrollees in the plan or coverage, as
applicable, regardless of the source of the remuneration (for example,
pharmaceutical manufacturer, wholesaler, retail pharmacy, or vendor).
Prescription drug rebates, fees, and other remuneration also include,
for example, discounts, chargebacks or rebates, cash discounts, free
goods contingent on a purchase agreement, up-front payments, coupons,
goods in kind, free or reduced-price services, grants, or other price
concessions or similar benefits. Prescription drug rebates, fees, and
other remuneration include bona fide service fees. Bona fide service
fees mean fees paid by a drug manufacturer to an entity providing
pharmacy benefit management services to the plan or issuer that
represent fair market value for a bona fide, itemized service actually
performed on behalf of the manufacturer that the manufacturer
[[Page 294]]
would otherwise perform (or contract for) in the absence of the service
arrangement, and that are not passed on in whole or in part to a client
or customer of the entity, whether or not the entity takes title to the
drug.
Reference year means the calendar year immediately preceding the
calendar year in which data submissions under this section are required.
Reporting entity means an entity that submits some or all of the
information required under this subpart with respect to a plan or
issuer, and that may be different from the plan or issuer that is
subject to the requirements of this subpart.
Student market has the meaning given in Sec. 158.103 of this
subchapter.
Therapeutic class means a group of pharmaceutical products that have
similar mechanisms of action or treat the same types of conditions,
grouped in the manner specified by the Secretary, jointly with the
Secretary of the Treasury and the Secretary of Labor, in guidance. The
Secretary may require plans and issuers to classify drugs according to a
commonly available public or commercial therapeutic classification
system, a therapeutic classification system provided by the Secretary,
or a combination thereof.
Total annual spending means incurred claims, as that term is defined
in Sec. 158.140 of this subchapter, excluding the adjustments specified
in Sec. 158.140(b)(1)(i), (b)(2)(iv), and (b)(4), and including cost
sharing. With respect to prescription drugs, total annual spending is
net of prescription drug rebates, fees, and other remuneration.
Sec. 149.720 Reporting requirements related to prescription drug
and health care spending.
(a) General requirement. A group health plan or a health insurance
issuer offering group or individual health insurance coverage must
submit an annual report to the Secretary, the Secretary of the Treasury,
and the Secretary of Labor, on prescription drug and health care
spending, premiums, and enrollment under the plan or coverage.
(b) Timing and form of report. The report for the 2020 reference
year must be submitted to the Secretary by December 27, 2021. Beginning
with the 2021 reference year, the report for each reference year is due
by June 1 of the year following the reference year. The report must be
submitted in the form and manner prescribed by the Secretary, jointly
with the Secretary of the Treasury and the Secretary of Labor.
(c) Transfer of business. Issuers that acquire a line or block of
business from another issuer during a reference year are responsible for
submitting the information and report required by this section for the
acquired business for that reference year, including for the part of the
reference year that was prior to the acquisition.
(d) Reporting entities and special rules to prevent unnecessary
duplication--(1) Special rule for insured group health plans. To the
extent coverage under a group health plan consists of group health
insurance coverage, the plan may satisfy the requirements of paragraph
(a) of this section if the plan requires the health insurance issuer
offering the coverage to report the information required by this section
in compliance with this subpart pursuant to a written agreement.
Accordingly, if a health insurance issuer and a group health plan
sponsor enter into a written agreement under which the issuer agrees to
provide the information required under paragraph (a) of this section in
compliance with this section, and the issuer fails to do so, then the
issuer, but not the plan, violates the reporting requirements of
paragraph (a) of this section with respect to the relevant information.
(2) Other contractual arrangements. A group health plan or health
insurance issuer offering group or individual health insurance coverage
may satisfy the requirements under paragraph (a) of this section by
entering into a written agreement under which one or more other parties
(such as health insurance issuers, pharmacy benefit managers, third-
party administrators, or other third parties) report some or all of the
information required under paragraph (a) of this section in compliance
with this section. Notwithstanding the preceding sentence, if a group
health plan or health insurance issuer chooses to enter into such an
agreement and
[[Page 295]]
the party with which it contracts fails to provide the information in
accordance with paragraph (a) of this section, the plan or issuer
violates the reporting requirements of paragraph (a) of this section.
(e) Applicability date. The provisions of this section are
applicable beginning December 27, 2021.
Sec. 149.730 Aggregate reporting.
(a) General requirement. A group health plan or a health insurance
issuer offering group or individual health insurance coverage must
submit, or arrange to be submitted, the information required in Sec.
149.740(b) separately for each State in which group health coverage or
group or individual health insurance coverage was provided in connection
with the group health plan or by the health insurance issuer. The report
must include the experience of all plans and policies in the State
during the reference year covered by the report, and must include the
experience separately for each market segment as defined in Sec.
149.710.
(b) Aggregation by reporting entity--(1) In general. If a reporting
entity submits data on behalf of more than one group health plan in a
State and market segment, the reporting entity may aggregate the data
required in Sec. 149.740(b) for the group health plans for each market
segment in the State.
(2) Multiple reporting entities. (i) If multiple reporting entities
submit the required data related to one or more plans or issuers in a
State and market segment, the data submitted by each of these reporting
entities must not be aggregated at a less granular level than the
aggregation level used by the reporting entity that submits the data on
total annual spending on health care services, as required by Sec.
149.740(b)(4), on behalf of these plans or issuers.
(ii) The Secretary, jointly with the Secretary of the Treasury and
the Secretary of Labor, may specify in guidance alternative or
additional aggregation methods for data submitted by multiple reporting
entities, to ensure a balance between compliance burdens and a data
aggregation level that facilitates the development of the biannual
public report required under section 2799A-10(b) of the PHS Act.
(3) Group health insurance coverage with dual contracts. If a group
health plan involves health insurance coverage obtained from two
affiliated issuers, one providing in-network coverage only and the
second providing out-of-network coverage only, the plan's out-of-network
experience may be treated as if it were all related to the contract
provided by the in-network issuer.
(c) Aggregation by State. (1) Experience with respect to each fully-
insured policy must be included on the report for the State where the
contract was issued, except as specified in paragraphs (c)(3) and (4) of
this section.
(2) Experience with respect to each self-funded group health plan
must be included on the report for the State where the plan sponsor has
its principal place of business.
(3) For individual market business sold through an association,
experience must be attributed to the issue State of the certificate of
coverage.
(4) For health coverage provided to plans through a group trust or
multiple employer welfare arrangement, the experience must be included
in the report for the State where the employer (if the plan is sponsored
at the individual employer level) or the association (if the association
qualifies as an employer under ERISA section 3(5)) has its principal
place of business or the State where the association is incorporated, in
the case of an association with no principal place of business.
(d) Applicability date. The provisions of this section are
applicable beginning December 27, 2021.
Sec. 149.740 Required information.
(a) Information for each plan or coverage. The report required under
Sec. 149.720 must include the following information for each plan or
coverage, at the plan or coverage level:
(1) The identifying information for plans, issuers, plan sponsors,
and any other reporting entities.
(2) The beginning and end dates of the plan year that ended on or
before the last day of the reference year.
(3) The number of participants, beneficiaries, and enrollees, as
applicable,
[[Page 296]]
covered on the last day of the reference year.
(4) Each State in which the plan or coverage is offered.
(b) Information for each state and market segment. The report
required under Sec. 149.720 must include the following information with
respect to plans or coverage for each State and market segment for the
reference year, unless otherwise specified:
(1) The 50 brand prescription drugs most frequently dispensed by
pharmacies, and for each such drug, the data elements listed in
paragraph (b)(5) of this section. The most frequently dispensed drugs
must be determined according to total number of paid claims for
prescriptions filled during the reference year for each drug.
(2) The 50 most costly prescription drugs and for each such drug,
the data elements listed in paragraph (b)(5) of this section. The most
costly drugs must be determined according to total annual spending on
each drug.
(3) The 50 prescription drugs with the greatest increase in
expenditures between the year immediately preceding the reference year
and the reference year, and for each such drug: The data elements listed
in paragraph (b)(5) of this section for the year immediately preceding
the reference year, and the data elements listed in paragraph (b)(5) of
this section for the reference year. The drugs with the greatest
increase in expenditures must be determined based on the increase in
total annual spending from the year immediately preceding the reference
year to the reference year. A drug must be approved for marketing or
issued an Emergency Use Authorization by the Food and Drug
Administration for the entirety of the year immediately preceding the
reference year and for the entirety of the reference year to be included
in the data submission as one of the drugs with the greatest increase in
expenditures.
(4) Total annual spending on health care services by the plan or
coverage and by participants, beneficiaries, and enrollees, as
applicable, broken down by the type of costs, including--
(i) Hospital costs;
(ii) Health care provider and clinical service costs, for primary
care and specialty care separately;
(iii) Costs for prescription drugs, separately for drugs covered by
the plan's or issuer's pharmacy benefit and drugs covered by the plan's
or issuer's hospital or medical benefit; and
(iv) Other medical costs, including wellness services.
(5) Prescription drug spending and utilization, including--
(i) Total annual spending by the plan or coverage;
(ii) Total annual spending by the participants, beneficiaries, and
enrollees, as applicable, enrolled in the plan or coverage, as
applicable;
(iii) The number of participants, beneficiaries, and enrollees, as
applicable, with a paid prescription drug claim;
(iv) Total dosage units dispensed; and
(v) The number of paid claims.
(6) Premium amounts, including--
(i) Average monthly premium amount paid by employers and other plan
sponsors on behalf of participants, beneficiaries, and enrollees, as
applicable;
(ii) Average monthly premium amount paid by participants,
beneficiaries, and enrollees, as applicable; and
(iii) Total annual premium amount and the total number of life-
years.
(7) Prescription drug rebates, fees, and other remuneration,
including--
(i) Total prescription drug rebates, fees, and other remuneration,
and the difference between total amounts that the plan or issuer pays
the entity providing pharmacy benefit management services to the plan or
issuer and total amounts that such entity pays to pharmacies.
(ii) Prescription drug rebates, fees, and other remuneration,
excluding bona fide service fees, broken down by the amounts passed
through to the plan or issuer, the amounts passed through to
participants, beneficiaries, and enrollees, as applicable, and the
amounts retained by the entity providing pharmacy benefit management
services to the plan or issuer; and the data elements listed in
paragraph (b)(5) of this section--
(A) For each therapeutic class; and
[[Page 297]]
(B) For each of the 25 prescription drugs with the greatest amount
of total prescription drug rebates and other price concessions for the
reference year.
(8) The method used to allocate prescription drug rebates, fees, and
other remuneration, if applicable.
(9) The impact of prescription drug rebates, fees, and other
remuneration on premium and cost sharing amounts.
(c) Applicability date. The provisions of this section are
applicable beginning December 27, 2021.
PART 150_CMS ENFORCEMENT IN GROUP AND INDIVIDUAL INSURANCE
MARKETS--Table of Contents
Subpart A_General Provisions
Sec.
150.101 Basis and scope.
150.103 Definitions.
Subpart B_CMS Enforcement Processes for Determining Whether States Are
Failing To Substantially Enforce PHS Act requirements
150.201 State enforcement.
150.203 Circumstances requiring CMS enforcement.
150.205 Sources of information triggering an investigation of State
enforcement.
150.207 Procedure for determining that a State fails to substantially
enforce PHS Act requirements.
150.209 Verification of exhaustion of remedies and contact with State
officials.
150.211 Notice to the State.
150.213 Form and content of notice.
150.215 Extension for good cause.
150.217 Preliminary determination.
150.219 Final determination.
150.221 Transition to State enforcement.
Subpart C_CMS Enforcement With Respect to Issuers and Non-Federal
Governmental Plans_Civil Money Penalties
150.301 General rule regarding the imposition of civil money penalties.
150.303 Basis for initiating an investigation of a potential violation.
150.305 Determination of entity liable for civil money penalty.
150.307 Notice to responsible entities.
150.309 Request for extension.
150.311 Responses to allegations of noncompliance.
150.313 Market conduct examinations.
150.315 Amount of penalty--General.
150.317 Factors CMS uses to determine the amount of penalty.
150.319 Determining the amount of the penalty--mitigating circumstances.
150.321 Determining the amount of penalty--aggravating circumstances.
150.323 Determining the amount of penalty--other matters as justice may
require.
150.325 Settlement authority.
150.341 Limitations on penalties.
150.343 Notice of proposed penalty.
150.345 Appeal of proposed penalty.
150.347 Failure to request a hearing.
Subpart D_Administrative Hearings
150.401 Definitions.
150.403 Scope of ALJ's authority.
150.405 Filing of request for hearing.
150.407 Form and content of request for hearing.
150.409 Amendment of notice of assessment or request for hearing.
150.411 Dismissal of request for hearing.
150.413 Settlement.
150.415 Intervention.
150.417 Issues to be heard and decided by ALJ.
150.419 Forms of hearing.
150.421 Appearance of counsel.
150.423 Communications with the ALJ.
150.425 Motions.
150.427 Form and service of submissions.
150.429 Computation of time and extensions of time.
150.431 Acknowledgment of request for hearing.
150.435 Discovery.
150.437 Submission of briefs and proposed hearing exhibits.
150.439 Effect of submission of proposed hearing exhibits.
150.441 Prehearing conferences.
150.443 Standard of proof.
150.445 Evidence.
150.447 The record.
150.449 Cost of transcripts.
150.451 Posthearing briefs.
150.453 ALJ decision.
150.455 Sanctions.
150.457 Review by Administrator.
150.459 Judicial review.
150.461 Failure to pay assessment.
150.463 Final order not subject to review.
150.465 Collection and use of penalty funds.
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92,
as amended.
Source: 64 FR 45795, Aug. 20, 1999, unless otherwise noted.
[[Page 298]]
Subpart A_General Provisions
Sec. 150.101 Basis and scope.
(a) Basis. CMS's enforcement authority under sections 2723 and 2761
of the PHS Act and its rulemaking authority under section 2792 of the
PHS Act provide the basis for issuing regulations under this part 150.
(b) Scope--(1) Enforcement with respect to group heath plans. The
provisions of title XXVII of the PHS Act that apply to group health
plans that are non-Federal governmental plans are enforced by CMS using
the procedures described in Sec. 150.301 et seq.
(2) Enforcement with respect to health insurance issuers. The states
have primary enforcement authority with respect to the requirements of
title XXVII of the PHS Act that apply to health insurance issuers
offering coverage in the group or individual health insurance market. If
CMS determines under subpart B of this part that a state is not
substantially enforcing title XXVII of the PHS Act, including the
implementing regulations in parts 146, 147, and 148 of this subchapter,
CMS enforces them under subpart C of this part.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13439, Feb. 27, 2013]
Sec. 150.103 Definitions.
The definitions that appear in part 144 of this subchapter apply to
this part 150, unless stated otherwise. As used in this part:
Amendment, endorsement, or rider means a document that modifies or
changes the terms or benefits of an individual policy, group policy, or
certificate of insurance.
Application means a signed statement of facts by a potential insured
that an issuer uses as a basis for its decision whether, and on what
basis to insure an individual, or to issue a certificate of insurance,
or that a non-Federal governmental health plan uses as a basis for a
decision whether to enroll an individual under the plan.
Certificate of insurance means the document issued to a person or
entity covered under an insurance policy issued to a group health plan
or an association or trust that summarizes the benefits and principal
provisions of the policy.
Complaint means any expression, written or oral, indicating a
potential denial of any right or protection contained in PHS Act
requirements (whether ultimately justified or not) by an individual, a
personal representative or other entity acting on behalf of an
individual, or any entity that believes such a right is being or has
been denied an individual.
Group health insurance policy or group policy means the legal
document or contract issued by an issuer to a plan sponsor with respect
to a group health plan (including a plan that is a non-Federal
governmental plan) that contains the conditions and terms of the
insurance that covers the group.
Individual health insurance policy or individual policy means the
legal document or contract issued by the issuer to an individual that
contains the conditions and terms of the insurance. Any association or
trust arrangement that is not a group health plan as defined in Sec.
144.103 of this subchapter or does not provide coverage in connection
with one or more group health plans is individual coverage subject to
the requirements of parts 147 and 148 of this subchapter. The term
``individual health insurance policy'' includes a policy that is--
(1) Issued to an association that makes coverage available to
individuals other than in connection with one or more group health
plans; or
(2) Administered, or placed in a trust, and is not sold in
connection with a group health plan subject to the provisions of parts
146 and 147 of this subchapter.
PHS Act requirements means the requirements of title XXVII of the
PHS Act and its implementing regulations in parts 146, 147, and 148 of
this subchapter.
Plan document means the legal document that provides the terms of
the plan to individuals covered under a group health plan, such as a
non-Federal governmental health plan.
State law means all laws, decisions, rules, regulations, or other
State action having the effect of law, of any
[[Page 299]]
State as defined in Sec. 144.103 of this subchapter. A law of the
United States applicable to the District of Columbia is treated as a
State law rather than a law of the United States.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13439, Feb. 27, 2013;
86 FR 24286, May 5, 2021]
Subpart B_CMS Enforcement Processes for Determining Whether States Are
Failing To Substantially Enforce PHS Act Requirement
Sec. 150.201 State enforcement.
Except as provided in subpart C of this part, each State enforces
PHS Act requirements with respect to health insurance issuers that
issue, sell, renew, or offer health insurance coverage in the State.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.203 Circumstances requiring CMS enforcement.
CMS enforces PHS Act requirement to the extent warranted (as
determined by CMS) in any of the following circumstances:
(a) Notification by State. A State notifies CMS that it has not
enacted legislation to enforce or that it is not otherwise enforcing PHS
Act requirements.
(b) Determination by CMS. If CMS receives or obtains information
that a State may not be substantially enforcing PHS Act requirements, it
may initiate the process described in this subchapter to determine
whether the State is failing to substantially enforce these
requirements.
(c) Special rule for guaranteed availability in the individual
market. If a State has notified CMS that it is implementing an
acceptable alternative mechanism in accordance with Sec. 148.128 of
this subchapter instead of complying with the guaranteed availability
requirements of Sec. 148.120, CMS's determination focuses on the
following:
(1) Whether the State's mechanism meets the requirements for an
acceptable alternative mechanism.
(2) Whether the State is implementing the acceptable alternative
mechanism.
(d) Consequence of a State not implementing an alternative
mechanism. If a State is not implementing an acceptable alternative
mechanism, CMS determines whether the State is substantially enforcing
the requirements of Sec. Sec. 148.101 through 148.126 and Sec. 148.170
of this subchapter.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.205 Sources of information triggering an investigation
of State enforcement.
Information that may trigger an investigation of State enforcement
includes, but is not limited to, any of the following:
(a) A complaint received by CMS.
(b) Information learned during informal contact between CMS and
State officials.
(c) A report in the news media.
(d) Information from the governors and commissioners of insurance of
the various States regarding the status of their enforcement of PHS Act
requirements.
(e) Information obtained during periodic review of State health care
legislation. CMS may review State health care and insurance legislation
and regulations to determine whether they are:
(1) Consistent with PHS Act requirements.
(2) Not pre-empted as provided in Sec. 146.143 (relating to group
market provisions) and Sec. 148.120 (relating to individual market
requirements) on the basis that they prevent the application of a PHS
Act requirement.
(f) Any other information that indicates a possible failure to
substantially enforce.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013;
86 FR 24286, May 5, 2021]
Sec. 150.207 Procedure for determining that a State fails to
substantially
enforce PHS Act requirements.
Sections 150.209 through 150.219 describe the procedures CMS follows
to
[[Page 300]]
determine whether a State is substantially enforcing PHS Act
requirements.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.209 Verification of exhaustion of remedies and contact
with State officials.
If CMS receives a complaint or other information indicating that a
State is failing to enforce PHS Act requirements, CMS assesses whether
the affected individual or entity has made reasonable efforts to exhaust
available State remedies. As part of its assessment, CMS may contact
State officials regarding the questions raised.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.211 Notice to the State.
If CMS is satisfied that there is a reasonable question whether
there has been a failure to substantially enforce PHS Act requirements,
CMS sends, in writing, the notice described in Sec. 150.213 of this
part, to the following State officials:
(a) The governor or chief executive officer of the State.
(b) The insurance commissioner or chief insurance regulatory
official.
(c) If the alleged failure involves HMOs, the official responsible
for regulating HMOs if different from the official listed in paragraph
(b) of this section.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.213 Form and content of notice.
The notice provided to the State is in writing and does the
following:
(a) Identifies the PHS Act requirement or requirements that have
allegedly not been substantially enforced.
(b) Describes the factual basis for the allegation of a failure or
failures to enforce PHS Act requirements.
(c) Explains that the consequence of a State's failure to
substantially enforce PHS Act requirements is that CMS enforces them.
(d) Advises the State that it has 30 days from the date of the
notice to respond, unless the time for response is extended as described
in Sec. 150.215 of this subpart. The State's response should include
any information that the State wishes CMS to consider in making the
preliminary determination described in Sec. 150.217.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013;
86 FR 24286, May 5, 2021]
Sec. 150.215 Extension for good cause.
CMS may extend, for good cause, the time the State has for
responding to the notice described in Sec. 150.213 of this subpart.
Examples of good cause include an agreement between CMS and the State
that there should be a public hearing on the State's enforcement, or
evidence that the State is undertaking expedited enforcement activities.
Sec. 150.217 Preliminary determination.
If, at the end of the 30-day period (and any extension), the State
has not established to CMS's satisfaction that it is substantially
enforcing the PHS Act requirements described in the notice, CMS takes
the following actions:
(a) Consults with the appropriate State officials identified in
Sec. 150.211 (or their designees).
(b) Notifies the State of CMS's preliminary determination that the
State has failed to substantially enforce the requirements and that the
failure is continuing.
(c) Permits the State a reasonable opportunity to show evidence of
substantial enforcement.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.219 Final determination.
If, after providing notice and a reasonable opportunity for the
State to show that it has corrected any failure to substantially
enforce, CMS finds that the failure to substantially enforce has not
been corrected, it will send the State a written notice of its final
determination. The notice includes the following:
(a) Identification of the PHS Act requirements that CMS is
enforcing.
(b) The effective date of CMS's enforcement.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
[[Page 301]]
Sec. 150.221 Transition to State enforcement.
(a) If CMS determines that a State for which it has assumed
enforcement authority has enacted and implemented legislation to enforce
PHS Act requirements and also determines that it is appropriate to
return enforcement authority to the State, CMS will enter into
discussions with State officials to ensure that a transition is effected
with respect to the following:
(1) Consumer complaints and inquiries.
(2) Instructions to issuers.
(3) Any other pertinent aspect of operations.
(b) CMS may also negotiate a process to ensure that, to the extent
practicable, and as permitted by law, its records documenting issuer
compliance and other relevant areas of CMS's enforcement operations are
made available for incorporation into the records of the State
regulatory authority that will assume enforcement responsibility.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Subpart C_CMS Enforcement With Respect to Issuers and Non-Federal
Governmental Plans_Civil Money Penalties
Sec. 150.301 General rule regarding the imposition of civil
money penalties.
If any health insurance issuer that is subject to CMS's enforcement
authority under Sec. 150.101(b)(2), or any non-Federal governmental
plan (or employer that sponsors a non-Federal governmental plan) that is
subject to CMS's enforcement authority under Sec. 150.101(b)(1), fails
to comply with PHS Act requirements, it may be subject to a civil money
penalty as described in this subpart.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.303 Basis for initiating an investigation of a potential
violation.
(a) Information. Any information that indicates that any issuer may
be failing to meet the PHS Act requirements or that any non-Federal
governmental plan that is a group health plan as defined in section
2791(a)(1) of the PHS Act and 45 CFR Sec. 144.103 may be failing to
meet an applicable PHS Act requirement, may warrant an investigation.
CMS may consider, but is not limited to, the following sources or types
of information:
(1) Complaints.
(2) Reports from State insurance departments, the National
Association of Insurance Commissioners, and other Federal and State
agencies.
(3) Any other information that indicates potential noncompliance
with PHS Act requirements.
(b) Who may file a complaint. Any entity or individual, or any
entity or personal representative acting on that individual's behalf,
may file a complaint with CMS if he or she believes that a right to
which the aggrieved person is entitled under PHS Act requirements is
being, or has been, denied or abridged as a result of any action or
failure to act on the part of an issuer or other responsible entity as
defined in Sec. 150.305.
(c) Where a complaint should be directed. A complaint may be
directed to any CMS regional office.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013;
86 FR 24286, May 5, 2021]
Sec. 150.305 Determination of entity liable for civil money penalty.
If a failure to comply is established under this part, the
responsible entity, as determined under this section, is liable for any
civil money penalty imposed.
(a) Health insurance issuer is responsible entity--(1) Group health
insurance policy. To the extent a group health insurance policy issued,
sold, renewed, or offered to a private plan sponsor or a non-Federal
governmental plan sponsor is subject to applicable PHS Act requirements,
a health insurance issuer is subject to a civil money penalty,
irrespective of whether a civil money penalty is imposed under
paragraphs (b) or (c) of this section, if the policy itself or the
manner in which the policy is marketed or administered fails to comply
with an applicable PHS Act requirement.
[[Page 302]]
(2) Individual health insurance policy. To the extent an individual
health insurance policy is subject to an applicable PHS Act requirement,
a health insurance issuer is subject to a civil money penalty if the
policy itself, or the manner in which the policy is marketed or
administered, violates any applicable PHS Act requirement.
(b) Non-Federal governmental plan is responsible entity--(1) Basic
rule. If a non-Federal governmental plan is sponsored by two or more
employers and fails to comply with an applicable PHS Act requirement,
the plan is subject to a civil money penalty, irrespective of whether a
civil money penalty is imposed under paragraph (a) of this section. The
plan is the responsible entity irrespective of whether the plan is
administered by a health insurance issuer, an employer sponsoring the
plan, or a third-party administrator.
(2) Exception. In the case of a non-Federal governmental plan that
is not provided through health insurance coverage, this paragraph (b)
does not apply to the extent that the non-Federal governmental employers
have elected under Sec. 146.180 to exempt the plan from applicable PHS
Act requirements.
(c) Employer is responsible entity--(1) Basic rule. If a non-Federal
governmental plan is sponsored by a single employer and fails to comply
with an applicable PHS Act requirement, the employer is subject to a
civil money penalty, irrespective of whether a civil money penalty is
imposed under paragraph (a) of this section. The employer is the
responsible entity irrespective of whether the plan is administered by a
health insurance issuer, the employer, or a third-party administrator.
(2) Exception. In the case of a non-Federal governmental plan that
is not provided through health insurance coverage, this paragraph (c)
does not apply to the extent the non-Federal governmental employer has
elected under Sec. 146.180 to exempt the plan from applicable PHS Act
requirements.
(d) Actions or inactions of agent. A principal is liable for
penalties assessed for the actions or inactions of its agent.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013;
86 FR 24286, May 5, 2021]
Sec. 150.307 Notice to responsible entities.
If an investigation under Sec. 150.303 indicates a potential
violation, CMS provides written notice to the responsible entity or
entities identified under Sec. 150.305. The notice does the following:
(a) Describes the substance of any complaint or other information.
(b) Provides 30 days from the date of the notice for the responsible
entity or entities to respond with additional information, including
documentation of compliance as described in Sec. 150.311.
(c) States that a civil money penalty may be assessed.
[64 FR 45795, Aug. 20, 1999, as amended at 70 FR 71023, Nov. 25, 2005]
Sec. 150.309 Request for extension.
In circumstances in which an entity cannot prepare a response to CMS
within the 30 days provided in the notice, the entity may make a written
request for an extension from CMS detailing the reason for the extension
request and showing good cause. If CMS grants the extension, the
responsible entity must respond to the notice within the time frame
specified in CMS's letter granting the extension of time. Failure to
respond within 30 days, or within the extended time frame, may result in
CMS's imposition of a civil money penalty based upon the complaint or
other information alleging or indicating a violation of PHS Act
requirements.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.311 Responses to allegations of noncompliance.
In determining whether to impose a civil money penalty, CMS reviews
and considers documentation provided in any complaint or other
information, as well as any additional information provided by the
responsible entity to demonstrate that it has complied with PHS Act
requirements. The following are examples of documentation that a
potential responsible entity may submit for CMS's consideration in
determining whether a civil money penalty should be assessed and the
amount of any civil money penalty:
[[Page 303]]
(a) Any individual policy, group policy, certificate of insurance,
application, rider, amendment, endorsement, certificate of creditable
coverage, advertising material, or any other documents if those
documents form the basis of a complaint or allegation of noncompliance,
or the basis for the responsible entity to refute the complaint or
allegation.
(b) Any other evidence that refutes an alleged noncompliance.
(c) Evidence that the entity did not know, and exercising due
diligence could not have known, of the violation.
(d) Documentation that the policies, certificates of insurance, or
non-Federal governmental plan documents have been amended to comply with
PHS Act requirements either by revision of the contracts or by the
development of riders, amendments, or endorsements.
(e) Documentation of the entity's issuance of conforming policies,
certificates of insurance, plan documents, or amendments to
policyholders or certificate holders before the issuance of the notice
to the responsible entity or entities described in Sec. 150.307.
(f) Evidence documenting the development and implementation of
internal policies and procedures by an issuer, or non-Federal
governmental health plan or employer, to ensure compliance with PHS Act
requirements. Those policies and procedures may include or consist of a
voluntary compliance program. Any such program should do the following:
(1) Effectively articulate and demonstrate the fundamental mission
of compliance and the issuer's, or non-Federal governmental health
plan's or employer's, commitment to the compliance process.
(2) Include the name of the individual in the organization
responsible for compliance.
(3) Include an effective monitoring system to identify practices
that do not comply with PHS Act requirements and to provide reasonable
assurance that fraud, abuse, and systemic errors are detected in a
timely manner.
(4) Address procedures to improve internal policies when
noncompliant practices are identified.
(g) Evidence documenting the entity's record of previous compliance
with PHS Act requirements.
[64 FR 45795, Aug. 20, 1999, as amended at 70 FR 71023, Nov. 25, 2005;
78 FR 13440, Feb. 27, 2013; 86 FR 24286, May 5, 2021]
Sec. 150.313 Market conduct examinations.
(a) Definition. A market conduct examination means the examination
of health insurance operations of an issuer, or the operation of a non-
Federal governmental plan, involving the review of one or more (or a
combination) of a responsible entity's business or operational affairs,
or both, to verify compliance with PHS Act requirements.
(b) General. If, based on the information described in Sec.
150.303, CMS finds evidence that a specific entity may be in violation
of a PHS Act requirement, CMS may initiate a market conduct examination
to determine whether the entity is out of compliance. CMS may conduct
the examinations either at the site of the issuer or other responsible
entity or a site CMS selects. When CMS selects a site, it may direct the
issuer or other responsible entity to forward any documentation CMS
considers relevant for purposes of the examination to that site.
(c) Appointment of examiners. When CMS identifies an issue that
warrants investigation, CMS will appoint one or more examiners to
perform the examination and instruct them as to the scope of the
examination.
(d) Appointment of professionals and specialists. When conducting an
examination under this part, CMS may retain attorneys, independent
actuaries, independent market conduct examiners, or other professionals
and specialists as examiners.
(e) Report of market conduct examination--(1) CMS review. When CMS
receives a report, it will review the report, together with the
examination work papers and any other relevant information, and prepare
a final report. The final examination report will be provided to the
issuer or other responsible entity.
(2) Response from issuer or other responsible entity. With respect
to each
[[Page 304]]
examination issue identified in the report, the issuer or other
responsible entity may:
(i) Concur with CMS's position(s) as outlined in the report,
explaining the plan of correction to be implemented.
(ii) Dispute CMS's position(s), clearly outlining the basis for its
dispute and submitting illustrative examples where appropriate.
(3) CMS's reply to a response from an issuer or other responsible
entity. Upon receipt of a response from the issuer or other responsible
entity, CMS will provide a letter containing its reply to each
examination issue. CMS's reply will consist of one of the following:
(i) Concurrence with the issuer's or non-Federal governmental plan's
position.
(ii) Approval of the issuer's or non-Federal governmental plan's
proposed plan of correction.
(iii) Conditional approval of the issuer's or non-Federal
governmental plan's proposed plan of correction, which will include any
modifications CMS requires.
(iv) Notice to the issuer or non-Federal governmental plan that
there exists a potential violation of PHS Act requirements.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013;
86 FR 24286, May 5, 2021]
Sec. 150.315 Amount of penalty--General.
A civil money penalty for each violation of 42 U.S.C. 300gg et seq.
may not exceed $100 as adjusted annually under 45 CFR part 102 for each
day, for each responsible entity, for each individual affected by the
violation. Penalties imposed under this part are in addition to any
other penalties prescribed or allowed by law.
[64 FR 45795, Aug. 20, 1999, as amended at 81 FR 61581, Sept. 6, 2016]
Sec. 150.317 Factors CMS uses to determine the amount of penalty.
In determining the amount of any penalty, CMS takes into account the
following:
(a) The entity's previous record of compliance. This may include any
of the following:
(1) Any history of prior violations by the responsible entity,
including whether, at any time before determination of the current
violation or violations, CMS or any State found the responsible entity
liable for civil or administrative sanctions in connection with a
violation of PHS Act requirements.
(2) Documentation that the responsible entity has submitted its
policy forms to CMS for compliance review.
(3) Evidence that the responsible entity has never had a complaint
for noncompliance with PHS Act requirements filed with a State or CMS.
(4) Such other factors as justice may require.
(b) The gravity of the violation. This may include any of the
following:
(1) The frequency of the violation, taking into consideration
whether any violation is an isolated occurrence, represents a pattern,
or is widespread.
(2) The level of financial and other impacts on affected
individuals.
(3) Other factors as justice may require.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.319 Determining the amount of the penalty--mitigating
circumstances.
For every violation subject to a civil money penalty, if there are
substantial or several mitigating circumstances, the aggregate amount of
the penalty is set at an amount sufficiently below the maximum permitted
by Sec. 150.315 to reflect that fact. As guidelines for taking into
account the factors listed in Sec. 150.317, CMS considers the
following:
(a) Record of prior compliance. It should be considered a mitigating
circumstance if the responsible entity has done any of the following:
(1) Before receipt of the notice issued under Sec. 150.307,
implemented and followed a compliance plan as described in Sec.
150.311(f).
(2) Had no previous complaints against it for noncompliance.
(b) Gravity of the violation(s). It should be considered a
mitigating circumstance if the responsible entity has done any of the
following:
(1) Made adjustments to its business practices to come into
compliance with PHS Act requirements so that the following occur:
[[Page 305]]
(i) All employers, employees, individuals and non-Federal
governmental entities are identified that are or were issued any policy,
certificate of insurance or plan document, or any form used in
connection therewith that failed to comply.
(ii) All employers, employees, individuals, and non-Federal
governmental plans are identified that were denied coverage or were
denied a right provided under PHS Act requirements.
(iii) Each employer, employee, individual, or non-Federal
governmental plan adversely affected by the violation has been, for
example, offered coverage or provided a certificate of creditable
coverage in a manner that complies with PHS Act requirements that were
violated so that, to the extent practicable, that employer, employee,
individual, or non-Federal governmental entity is in the same position
that he, she, or it would have been in had the violation not occurred.
(iv) The adjustments are completed in a timely manner.
(2) Discovered areas of noncompliance without notice from CMS and
voluntarily reported that noncompliance, provided that the responsible
entity submits the following:
(i) Documentation verifying that the rights and protections of all
individuals adversely affected by the noncompliance have been restored;
and
(ii) A plan of correction to prevent future similar violations.
(3) Demonstrated that the violation is an isolated occurrence.
(4) Demonstrated that the financial and other impacts on affected
individuals is negligible or nonexistent.
(5) Demonstrated that the noncompliance is correctable and that a
high percentage of the violations were corrected.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.321 Determining the amount of penalty--aggravating
circumstances.
For every violation subject to a civil money penalty, if there are
substantial or several aggravating circumstances, CMS sets the aggregate
amount of the penalty at an amount sufficiently close to or at the
maximum permitted by Sec. 150.315 to reflect that fact. CMS considers
the following circumstances to be aggravating circumstances:
(a) The frequency of violation indicates a pattern of widespread
occurrence.
(b) The violation(s) resulted in significant financial and other
impacts on the average affected individual.
(c) The entity does not provide documentation showing that
substantially all of the violations were corrected.
Sec. 150.323 Determining the amount of penalty--other matters
as justice may require.
CMS may take into account other circumstances of an aggravating or
mitigating nature if, in the interests of justice, they require either a
reduction or an increase of the penalty in order to assure the
achievement of the purposes of this part, and if those circumstances
relate to the entity's previous record of compliance or the gravity of
the violation.
Sec. 150.325 Settlement authority.
Nothing in Sec. Sec. 150.315 through 150.323 limits the authority
of CMS to settle any issue or case described in the notice furnished in
accordance with Sec. 150.307 or to compromise on any penalty provided
for in Sec. Sec. 150.315 through 150.323.
Sec. 150.341 Limitations on penalties.
(a) Circumstances under which a civil money penalty is not imposed.
CMS does not impose any civil money penalty on any failure for the
period of time during which none of the responsible entities knew, or
exercising reasonable diligence would have known, of the failure. CMS
also does not impose a civil money penalty for the period of time after
any of the responsible entities knew, or exercising reasonable diligence
would have known of the failure, if the failure was due to reasonable
cause and not due to willful neglect and the failure was corrected
within 30 days of the first day that any of the entities against whom
the penalty would be imposed knew, or exercising reasonable diligence
would have known, that the failure existed.
(b) Burden of establishing knowledge. The burden is on the
responsible entity
[[Page 306]]
or entities to establish to CMS's satisfaction that no responsible
entity knew, or exercising reasonable diligence would have known, that
the failure existed.
Sec. 150.343 Notice of proposed penalty.
If CMS proposes to assess a penalty in accordance with this part, it
delivers to the responsible entity, or sends to that entity by certified
mail, return receipt requested, written notice of its intent to assess a
penalty. The notice includes the following:
(a) A description of the PHS Act requirements that CMS has
determined that the responsible entity violated.
(b) A description of any complaint or other information upon which
CMS based its determination, including the basis for determining the
number of affected individuals and the number of days for which the
violations occurred.
(c) The amount of the proposed penalty as of the date of the notice.
(d) Any circumstances described in Sec. Sec. 150.317 through
150.323 that were considered when determining the amount of the proposed
penalty.
(e) A specific statement of the responsible entity's right to a
hearing.
(f) A statement that failure to request a hearing within 30 days
permits the assessment of the proposed penalty without right of appeal
in accordance with Sec. 150.347.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
Sec. 150.345 Appeal of proposed penalty.
Any entity against which CMS has assessed a penalty may appeal that
penalty in accordance with Sec. 150.401 et seq.
Sec. 150.347 Failure to request a hearing.
If the responsible entity does not request a hearing within 30 days
of the issuance of the notice described in Sec. 150.343, CMS may assess
the proposed civil money penalty, a less severe penalty, or a more
severe penalty. CMS notifies the responsible entity in writing of any
penalty that has been assessed and of the means by which the responsible
entity may satisfy the judgment. The responsible entity has no right to
appeal a penalty with respect to which it has not requested a hearing in
accordance with Sec. 150.405 unless the responsible entity can show
good cause, as determined under Sec. 150.405(b), for failing to timely
exercise its right to a hearing.
Subpart D_Administrative Hearings
Sec. 150.401 Definitions.
In this subpart, unless the context indicates otherwise:
ALJ means administrative law judge of the Departmental Appeals Board
of the Department of Health and Human Services.
Filing date means the date filed electronically.
Hearing includes a hearing on a written record as well as an in-
person, telephone, or video teleconference hearing.
Party means CMS or the respondent.
Receipt date means five days after the date of a document, unless
there is a showing that it was in fact received later.
Respondent means an entity that received a notice of proposed
assessment of a civil money penalty issued pursuant to Sec. 150.343.
[64 FR 45795, Aug. 20, 1999, as amended at 86 FR 24286, May 5, 2021]
Sec. 150.403 Scope of ALJ's authority.
(a) The ALJ has the authority, including all of the authority
conferred by the Administrative Procedure Act, to adopt whatever
procedures may be necessary or proper to carry out in an efficient and
effective manner the ALJ's duty to provide a fair and impartial hearing
on the record and to issue an initial decision concerning the imposition
of a civil money penalty.
(b) The ALJ's authority includes the authority to modify, consistent
with the Administrative Procedure Act (5 U.S.C. 552a), any hearing
procedures set out in this subpart.
(c) The ALJ does not have the authority to find invalid or refuse to
follow Federal statutes or regulations.
Sec. 150.405 Filing of request for hearing.
(a) A respondent has a right to a hearing before an ALJ if it files
a request for hearing that complies with Sec. 150.407(a), within 30
days after the
[[Page 307]]
date of issuance of either CMS's notice of proposed assessment under
Sec. 150.343 or notice that an alternative dispute resolution process
has terminated. The request for hearing should be addressed as
instructed in the notice of proposed determination. ``Date of issuance''
is five (5) days after the filing date, unless there is a showing that
the document was received earlier.
(b) The ALJ may extend the time for filing a request for hearing
only if the ALJ finds that the respondent was prevented by events or
circumstances beyond its control from filing its request within the time
specified above. Any request for an extension of time must be made
promptly by written motion.
Sec. 150.407 Form and content of request for hearing.
(a) The request for hearing must do the following:
(1) Identify any factual or legal bases for the assessment with
which the respondent disagrees.
(2) Describe with reasonable specificity the basis for the
disagreement, including any affirmative facts or legal arguments on
which the respondent is relying.
(b) The request for hearing must identify the relevant notice of
assessment by date and attach a copy of the notice.
Sec. 150.409 Amendment of notice of assessment or request for hearing.
The ALJ may permit CMS to amend its notice of assessment, or permit
the respondent to amend a request for hearing that complies with Sec.
150.407(a), if the ALJ finds that no undue prejudice to either party
will result.
Sec. 150.411 Dismissal of request for hearing.
An ALJ will order a request for hearing dismissed if the ALJ
determines that:
(a) The request for hearing was not filed within 30 days as
specified by Sec. 150.405(a) or any extension of time granted by the
ALJ pursuant to Sec. 150.405(b).
(b) The request for hearing fails to meet the requirements of Sec.
150.407.
(c) The entity that filed the request for hearing is not a
respondent under Sec. 150.401.
(d) The respondent has abandoned its request.
(e) The respondent withdraws its request for hearing.
Sec. 150.413 Settlement.
CMS has exclusive authority to settle any issue or any case, without
the consent of the administrative law judge at any time before or after
the administrative law judge's decision.
Sec. 150.415 Intervention.
(a) The ALJ may grant the request of an entity, other than the
respondent, to intervene if all of the following occur:
(1) The entity has a significant interest relating to the subject
matter of the case.
(2) Disposition of the case will, as a practical matter, likely
impair or impede the entity's ability to protect that interest.
(3) The entity's interest is not adequately represented by the
existing parties.
(4) The intervention will not unduly delay or prejudice the
adjudication of the rights of the existing parties.
(b) A request for intervention must specify the grounds for
intervention and the manner in which the entity seeks to participate in
the proceedings. Any participation by an intervenor must be in the
manner and by any deadline set by the ALJ.
(c) The Department of Labor or the IRS may intervene without regard
to paragraphs (a)(1) through (a)(3) of this section.
Sec. 150.417 Issues to be heard and decided by ALJ.
(a) The ALJ has the authority to hear and decide the following
issues:
(1) Whether a basis exists to assess a civil money penalty against
the respondent.
(2) Whether the amount of the assessed civil money penalty is
reasonable.
(b) In deciding whether the amount of a civil money penalty is
reasonable, the ALJ--
[[Page 308]]
(1) Applies the factors that are identified in Sec. 150.317.
(2) May consider evidence of record relating to any factor that CMS
did not apply in making its initial determination, so long as that
factor is identified in this subpart.
(c) If the ALJ finds that a basis exists to assess a civil money
penalty, the ALJ may sustain, reduce, or increase the penalty that CMS
assessed.
Sec. 150.419 Forms of hearing.
(a) All hearings before an ALJ are on the record. The ALJ may
receive argument or testimony in writing, in person, by telephone, or by
video teleconference. The ALJ may receive testimony by telephone only if
the ALJ determines that doing so is in the interest of justice and
economy and that no party will be unduly prejudiced. The ALJ may require
submission of a witness' direct testimony in writing only if the witness
is available for cross-examination.
(b) The ALJ may decide a case based solely on the written record
where there is no disputed issue of material fact the resolution of
which requires the receipt of oral testimony.
[64 FR 45795, Aug. 20, 1999, as amended at 86 FR 24286, May 5, 2021]
Sec. 150.421 Appearance of counsel.
Any attorney who is to appear on behalf of a party must promptly
file, with the ALJ, a notice of appearance.
Sec. 150.423 Communications with the ALJ.
No party or person (except employees of the ALJ's office) may
communicate in any way with the ALJ on any matter at issue in a case,
unless on notice and opportunity for both parties to participate. This
provision does not prohibit a party or person from inquiring about the
status of a case or asking routine questions concerning administrative
functions or procedures.
Sec. 150.425 Motions.
(a) Any request to the ALJ for an order or ruling must be by motion,
stating the relief sought, the authority relied upon, and the facts
alleged. All motions must be in writing, with a copy served on the
opposing party, except in either of the following situations:
(1) The motion is presented during an oral proceeding before an ALJ
at which both parties have the opportunity to be present.
(2) An extension of time is being requested by agreement of the
parties or with waiver of objections by the opposing party.
(b) Unless otherwise specified in this subpart, any response or
opposition to a motion must be filed within 20 days of the party's
receipt of the motion. The ALJ does not rule on a motion before the time
for filing a response to the motion has expired except where the
response is filed at an earlier date, where the opposing party consents
to the motion being granted, or where the ALJ determines that the motion
should be denied.
Sec. 150.427 Form and service of submissions.
(a) Every submission filed with the ALJ must be filed electronically
and include:
(1) A caption on the first page, setting forth the title of the
case, the docket number (if known), and a description of the submission
(such as ``Motion for Discovery'').
(2) The signatory's name, address, and telephone number.
(3) A signed certificate of service, specifying each address to
which a copy of the submission is sent, the date on which it is sent,
and the method of service.
(b) A party filing a submission with the ALJ must, at the time of
filing, serve a copy of such submission on the opposing party. An
intervenor filing a submission with the ALJ must, at the time of filing,
serve a copy of the submission on all parties. If a party is represented
by an attorney, service must be made on the attorney. An electronically
filed submission is considered served on all parties using the
electronic filing system.
[64 FR 45795, Aug. 20, 1999, as amended at 86 FR 24286, May 5, 2021]
Sec. 150.429 Computation of time and extensions of time.
(a) For purposes of this subpart, in computing any period of time,
the time
[[Page 309]]
begins with the day following the act, event, or default and includes
the last day of the period unless it is a Saturday, Sunday, or legal
holiday observed by the Federal government, in which event it includes
the next business day. When the period of time allowed is less than
seven days, intermediate Saturdays, Sundays, and legal holidays observed
by the Federal government are excluded from the computation.
(b) The period of time for filing any responsive pleading or papers
is determined by the date of receipt (as defined in Sec. 150.401) of
the submission to which a response is being made.
(c) The ALJ may grant extensions of the filing deadlines specified
in these regulations or set by the ALJ for good cause shown (except that
requests for extensions of time to file a request for hearing may be
granted only on the grounds specified in section Sec. 150.405(b)).
Sec. 150.431 Acknowledgment of request for hearing.
After receipt of the request for hearing, the ALJ assigned to the
case or someone acting on behalf of the ALJ will send a written notice
to the parties that acknowledges receipt of the request for hearing,
identifies the docket number assigned to the case, and provides
instructions for filing submissions and other general information
concerning procedures. The ALJ will set out the next steps in the case
either as part of the acknowledgement or on a later date.
[86 FR 24286, May 5, 2021]
Sec. 150.435 Discovery.
(a) The parties must identify any need for discovery from the
opposing party as soon as possible, but no later than the time for the
reply specified in Sec. 150.437(c). Upon request of a party, the ALJ
may stay proceedings for a reasonable period pending completion of
discovery if the ALJ determines that a party would not be able to make
the submissions required by Sec. 150.437 without discovery. The parties
should attempt to resolve any discovery issues informally before seeking
an order from the ALJ.
(b) Discovery devices may include requests for production of
documents, requests for admission, interrogatories, depositions, and
stipulations. The ALJ orders interrogatories or depositions only if
these are the only means to develop the record adequately on an issue
that the ALJ must resolve to decide the case.
(c) Each discovery request must be responded to within 30 days of
receipt, unless that period of time is extended for good cause by the
ALJ.
(d) A party to whom a discovery request is directed may object in
writing for any of the following reasons:
(1) Compliance with the request is unduly burdensome or expensive.
(2) Compliance with the request will unduly delay the proceedings.
(3) The request seeks information that is wholly outside of any
matter in dispute.
(4) The request seeks privileged information. Any party asserting a
claim of privilege must sufficiently describe the information or
document being withheld to show that the privilege applies. If an
asserted privilege applies to only part of a document, a party
withholding the entire document must state why the nonprivileged part is
not segregable.
(e) Any motion to compel discovery must be filed within 10 days
after receipt of objections to the party's discovery request, within 10
days after the time for response to the discovery request has elapsed if
no response is received, or within 10 days after receipt of an
incomplete response to the discovery request. The motion must be
reasonably specific as to the information or document sought and must
state its relevance to the issues in the case.
Sec. 150.437 Submission of briefs and proposed hearing exhibits.
(a) Within 60 days of its receipt of the acknowledgment provided for
in Sec. 150.431, the respondent must file the following with the ALJ:
(1) A statement of its arguments concerning CMS's notice of
assessment (respondent's brief), including citations to the respondent's
hearing exhibits provided in accordance with paragraph (a)(2) of this
section. The brief may not address factual or legal bases for the
assessment that the respondent did not
[[Page 310]]
identify as disputed in its request for hearing or in an amendment to
that request permitted by the ALJ.
(2) All documents (including any affidavits) supporting its
arguments, tabbed and organized chronologically and accompanied by an
indexed list identifying each document (respondent's proposed hearing
exhibits).
(3) A statement regarding whether there is a need for an in-person
hearing and, if so, a list of proposed witnesses and a summary of their
expected testimony that refers to any factual dispute to which the
testimony will relate.
(4) Any stipulations or admissions.
(b) Within 30 days of its receipt of the respondent's submission
required by paragraph (a) of this section, CMS will file the following
with the ALJ:
(1) A statement responding to the respondent's brief, including the
respondent's proposed hearing exhibits, if appropriate. The statement
may include citations to CMS's proposed hearing exhibits submitted in
accordance with paragraph (b)(2) of this section.
(2) Any documents supporting CMS's response not already submitted as
part of the respondent's proposed hearing exhibits, organized and
indexed as indicated in paragraph (a)(2) of this section (CMS's proposed
hearing exhibits).
(3) A statement regarding whether there is a need for an in-person
hearing and, if so, a list of proposed witnesses and a summary of their
expected testimony that refers to any factual dispute to which the
testimony will relate.
(4) Any admissions or stipulations.
(c) Within 15 days of its receipt of CMS's submission required by
paragraph (b) of this section, the respondent may file with the ALJ a
reply to CMS's submission.
Sec. 150.439 Effect of submission of proposed hearing exhibits.
(a) Any proposed hearing exhibit submitted by a party in accordance
with Sec. 150.437 is deemed part of the record unless the opposing
party raises an objection to that exhibit and the ALJ rules to exclude
it from the record. An objection must be raised either in writing prior
to the prehearing conference provided for in Sec. 150.441 or at the
prehearing conference. The ALJ may require a party to submit the
original hearing exhibit on his or her own motion or in response to a
challenge to the authenticity of a proposed hearing exhibit.
(b) A party may introduce a proposed hearing exhibit following the
times for submission specified in Sec. 150.437 only if the party
establishes to the satisfaction of the ALJ that it could not have
produced the exhibit earlier and that the opposing party will not be
prejudiced.
Sec. 150.441 Prehearing conferences.
An ALJ may schedule one or more prehearing conferences (generally
conducted by telephone) on the ALJ's own motion or at the request of
either party for the purpose of any of the following:
(a) Hearing argument on any outstanding discovery request.
(b) Establishing a schedule for any supplements to the submissions
required by Sec. 150.437 because of information obtained through
discovery.
(c) Hearing argument on a motion.
(d) Discussing whether the parties can agree to submission of the
case on a stipulated record.
(e) Establishing a schedule for an in-person, telephone, or video
teleconference hearing, including setting deadlines for the submission
of written direct testimony or for the written reports of experts.
(f) Discussing whether the issues for a hearing can be simplified or
narrowed.
(g) Discussing potential settlement of the case.
(h) Discussing any other procedural or substantive issues.
[64 FR 45795, Aug. 20, 1999, as amended at 86 FR 24286, May 5, 2021]
Sec. 150.443 Standard of proof.
(a) In all cases before an ALJ--
(1) CMS has the burden of coming forward with evidence sufficient to
establish a prima facie case;
(2) The respondent has the burden of coming forward with evidence in
response, once CMS has established a prima facie case; and
(3) CMS has the burden of persuasion regarding facts material to the
assessment; and
[[Page 311]]
(4) The respondent has the burden of persuasion regarding facts
relating to an affirmative defense.
(b) The preponderance of the evidence standard applies to all cases
before the ALJ.
Sec. 150.445 Evidence.
(a) The ALJ will determine the admissibility of evidence.
(b) Except as provided in this part, the ALJ will not be bound by
the Federal Rules of Evidence. However, the ALJ may apply the Federal
Rules of Evidence where appropriate; for example, to exclude unreliable
evidence.
(c) The ALJ excludes irrelevant or immaterial evidence.
(d) Although relevant, evidence may be excluded if its probative
value is substantially outweighed by the danger of unfair prejudice,
confusion of the issues, or by considerations of undue delay or needless
presentation of cumulative evidence.
(e) Although relevant, evidence is excluded if it is privileged
under Federal law.
(f) Evidence concerning offers of compromise or settlement made in
this action will be inadmissible to the extent provided in the Federal
Rules of Evidence.
(g) Evidence of acts other than those at issue in the instant case
is admissible in determining the amount of any civil money penalty if
those acts are used under Sec. Sec. 150.317 and 150.323 of this part to
consider the entity's prior record of compliance, or to show motive,
opportunity, intent, knowledge, preparation, identity, or lack of
mistake. This evidence is admissible regardless of whether the acts
occurred during the statute of limitations period applicable to the acts
that constitute the basis for liability in the case and regardless of
whether CMS's notice sent in accordance with Sec. Sec. 150.307 and
150.343 referred to them.
(h) The ALJ will permit the parties to introduce rebuttal witnesses
and evidence.
(i) All documents and other evidence offered or taken for the record
will be open to examination by all parties, unless the ALJ orders
otherwise for good cause shown.
(j) The ALJ may not consider evidence regarding the willingness and
ability to enter into and successfully complete a corrective action plan
when that evidence pertains to matters occurring after CMS's notice
under Sec. 150.307.
Sec. 150.447 The record.
(a) Any testimony that is taken in-person by telephone, or by video
teleconference is recorded and transcribed. The ALJ may order that other
proceedings in a case, such as a prehearing conference or oral argument
of a motion, be recorded and transcribed.
(b) The transcript of any testimony, exhibits and other evidence
that is admitted, and all pleadings and other documents that are filed
in the case constitute the record for purposes of an ALJ decision.
(c) For good cause, the ALJ may order appropriate redactions made to
the record.
[64 FR 45795, Aug. 20, 1999, as amended at 86 FR 24286, May 5, 2021]
Sec. 150.449 Cost of transcripts.
Generally, each party is responsible for 50 percent of the
transcript cost. Where there is an intervenor, the ALJ determines what
percentage of the transcript cost is to be paid for by the intervenor.
Sec. 150.451 Posthearing briefs.
Each party is entitled to file proposed findings and conclusions,
and supporting reasons, in a posthearing brief. The ALJ will establish
the schedule by which such briefs must be filed. The ALJ may direct the
parties to brief specific questions in a case and may impose page limits
on posthearing briefs. Additionally, the ALJ may allow the parties to
file posthearing reply briefs.
Sec. 150.453 ALJ decision.
The ALJ will issue an initial agency decision based only on the
record and on applicable law; the decision will contain findings of fact
and conclusions of law. The ALJ's decision is final and appealable after
30 days unless it is modified or vacated under Sec. 150.457.
[[Page 312]]
Sec. 150.455 Sanctions.
(a) The ALJ may sanction a party or an attorney for failing to
comply with an order or other directive or with a requirement of a
regulation, for abandonment of a case, or for other actions that
interfere with the speedy, orderly or fair conduct of the hearing. Any
sanction that is imposed will relate reasonably to the severity and
nature of the failure or action.
(b) A sanction may include any of the following actions:
(1) In the case of failure or refusal to provide or permit
discovery, drawing negative fact inferences or treating such failure or
refusal as an admission by deeming the matter, or certain facts, to be
established.
(2) Prohibiting a party from introducing certain evidence or
otherwise advocating a particular claim or defense.
(3) Striking pleadings, in whole or in part.
(4) Staying the case.
(5) Dismissing the case.
(6) Entering a decision by default.
(7) Refusing to consider any motion or other document that is not
filed in a timely manner.
(8) Taking other appropriate action.
Sec. 150.457 Review by Administrator.
(a) The Administrator of CMS (which for purposes of this subsection
may include his or her delegate), at his or her discretion, may review
in whole or in part any initial agency decision issued under Sec.
150.453.
(b) The Administrator may decide to review an initial agency
decision if it appears from a preliminary review of the decision (or
from a preliminary review of the record on which the initial agency
decision was based, if available at the time) that:
(1) The ALJ made an erroneous interpretation of law or regulation.
(2) The initial agency decision is not supported by substantial
evidence.
(3) The ALJ has incorrectly assumed or denied jurisdiction or
extended his or her authority to a degree not provided for by statute or
regulation.
(4) The ALJ decision requires clarification, amplification, or an
alternative legal basis for the decision.
(5) The ALJ decision otherwise requires modification, reversal, or
remand.
(c) Within 30 days of the date of the initial agency decision, the
Administrator will mail a notice advising the respondent of any intent
to review the decision in whole or in part.
(d) Within 30 days of receipt of a notice that the Administrator
intends to review an initial agency decision, the respondent may submit,
in writing, to the Administrator any arguments in support of, or
exceptions to, the initial agency decision.
(e) This submission of the information indicated in paragraph (d) of
this section must be limited to issues the Administrator has identified
in his or her notice of intent to review, if the Administrator has given
notice of an intent to review the initial agency decision only in part.
A copy of this submission must be sent to the other party.
(f) After receipt of any submissions made pursuant to paragraph (d)
of this section and any additional submissions for which the
Administrator may provide, the Administrator will affirm, reverse,
modify, or remand the initial agency decision. The Administrator will
mail a copy of his or her decision to the respondent.
(g) The Administrator's decision will be based on the record on
which the initial agency decision was based (as forwarded by the ALJ to
the Administrator) and any materials submitted pursuant to paragraphs
(b), (d), and (f) of this section.
(h) The Administrator's decision may rely on decisions of any courts
and other applicable law, whether or not cited in the initial agency
decision.
Sec. 150.459 Judicial review.
(a) Filing of an action for review. Any responsible entity against
whom a final order imposing a civil money penalty is entered may obtain
review in the United States District Court for any district in which the
entity is located or in the United States District Court for the
District of Columbia by doing the following:
(1) Filing a notice of appeal in that court within 30 days from the
date of a final order.
[[Page 313]]
(2) Simultaneously sending a copy of the notice of appeal by
registered mail to CMS.
(b) Certification of administrative record. CMS promptly certifies
and files with the court the record upon which the penalty was assessed.
(c) Standard of review. The findings of CMS and the ALJ may not be
set aside unless they are found to be unsupported by substantial
evidence, as provided by 5 U.S.C. 706(2)(E).
Sec. 150.461 Failure to pay assessment.
If any entity fails to pay an assessment after it becomes a final
order, or after the court has entered final judgment in favor of CMS,
CMS refers the matter to the Attorney General, who brings an action
against the entity in the appropriate United States district court to
recover the amount assessed.
Sec. 150.463 Final order not subject to review.
In an action brought under Sec. 150.461, the validity and
appropriateness of the final order described in Sec. 150.459 is not
subject to review.
Sec. 150.465 Collection and use of penalty funds.
(a) Any funds collected under Sec. 150.461 are paid to CMS.
(b) The funds are available without appropriation until expended.
(c) The funds may be used only for the purpose of enforcing the PHS
Act requirements for which the penalty was assessed.
[64 FR 45795, Aug. 20, 1999, as amended at 78 FR 13440, Feb. 27, 2013]
PART 151 [RESERVED]
PART 152_PRE-EXISTING CONDITION INSURANCE PLAN PROGRAM
--Table of Contents
Subpart A_General Provisions
Sec.
152.1 Statutory basis.
152.2 Definitions.
Subpart B_PCIP Program Administration
152.6 Program administration.
152.7 PCIP proposal process.
Subpart C_Eligibility and Enrollment
152.14 Eligibility.
152.15 Enrollment and disenrollment process.
Subpart D_Benefits
152.19 Covered benefits.
152.20 Prohibitions on pre-existing condition exclusions and waiting
periods.
152.21 Premiums and cost-sharing.
152.22 Access to services.
Subpart E_Oversight
152.26 Appeals procedures.
152.27 Fraud, waste, and abuse.
152.28 Preventing insurer dumping.
Subpart F_Funding
152.32 Use of funds.
152.33 Initial allocation of funds.
152.34 Reallocation of funds.
152.35 Insufficient funds.
Subpart G_Relationship to Existing Laws and Programs
152.39 Maintenance of effort.
152.40 Relation to State laws.
Subpart H_Transition to Exchanges
152.44 End of PCIP program coverage.
152.45 Transition to the exchanges.
Authority: Sec. 1101 of the Patient Protection and Affordable Care
Act (Pub. L. 111-148).
Source: 75 FR 45029, July 30, 2010, unless otherwise noted.
Subpart A_General Provisions
Sec. 152.1 Statutory basis.
(a) Basis. This part establishes provisions needed to implement
section 1101 of the Patient Protection and Affordable Care Act of 2010
(Affordable Care Act), which requires the Secretary of the Department of
Health and Human Services to establish a temporary high risk health
insurance pool program to provide health insurance coverage for
individuals described in Sec. 152.14 of this part.
(b) Scope. This part establishes standards and sets forth the
requirements, limitations, and procedures for the temporary high risk
health insurance pool program, hereafter referred to as the ``Pre-
Existing Condition Insurance Plan'' (PCIP) program.
[[Page 314]]
Sec. 152.2 Definitions.
For purposes of this part the following definitions apply:
Creditable coverage means coverage of an individual as defined in
section 2701(c)(1) of the Public Health Service Act as of March 23, 2010
and 45 CFR 146.113(a)(1).
Enrollee means an individual receiving coverage from a PCIP
established under this section.
Lawfully present means
(1) A qualified alien as defined in section 431 of the Personal
Responsibility and Work Opportunity Act (PRWORA) (8 U.S.C. 1641);
(2) An alien in nonimmigrant status who has not violated the terms
of the status under which he or she was admitted or to which he or she
has changed after admission;
(3) An alien who has been paroled into the United States pursuant to
section 212(d)(5) of the Immigration and Nationality Act (INA) (8 U.S.C.
1182(d)(5)) for less than 1 year, except for an alien paroled for
prosecution, for deferred inspection or pending removal proceedings;
(4) An alien who belongs to one of the following classes:
(i) Aliens currently in temporary resident status pursuant to
section 210 or 245A of the INA (8 U.S.C. 1160 or 1255a, respectively);
(ii) Aliens currently under Temporary Protected Status (TPS)
pursuant to section 244 of the INA (8 U.S.C. 1254a), and pending
applicants for TPS who have been granted employment authorization;
(iii) Aliens who have been granted employment authorization under 8
CFR 274a.12(c)(9), (10), (16), (18), (20), (22), or (24);
(iv) Family Unity beneficiaries pursuant to section 301 of Public
Law 101-649 as amended;
(v) Aliens currently under Deferred Enforced Departure (DED)
pursuant to a decision made by the President;
(vi) Aliens currently in deferred action status;
(vii) Aliens whose visa petitions have been approved and who have a
pending application for adjustment of status;
(5) A pending applicant for asylum under section 208(a) of the INA
(8 U.S.C. 1158) or for withholding of removal under section 241(b)(3) of
the INA (8 U.S.C. 1231) or under the Convention Against Torture who has
been granted employment authorization, and such an applicant under the
age of 14 who has had an application pending for at least 180 days;
(6) An alien who has been granted withholding of removal under the
Convention Against Torture; or
(7) A child who has a pending application for Special Immigrant
Juvenile status as described in section 101(a)(27)(J) of the INA (8
U.S.C. 1101(a)(27)(J)).
(8) Exception. An individual with deferred action under the
Department of Homeland Security's deferred action for childhood arrivals
process, as described in the Secretary of Homeland Security's June 15,
2012, memorandum, shall not be considered to be lawfully present with
respect to any of the above categories in paragraphs (1) through (7) of
this definition.
Out-of-pocket costs means the sum of the annual deductible and the
other annual out-of-pocket expenses, other than for premiums, required
to be paid under the program.
Pre-Existing condition exclusion has the meaning given such term in
45 CFR 144.103.
Pre-Existing Condition Insurance Plan (PCIP) means the temporary
high risk health insurance pool plan (sometimes referred to as a
``qualified high risk pool'') that provides coverage in a State, or
combination of States, in accordance with the requirements of section
1101 of the Affordable Care Act and this part. The term ``PCIP program''
is generally used to describe the national program the Secretary is
charged with carrying out, under which States or non-profit entities
operate individual PCIPs.
Resident means an individual who has been legally domiciled in a
State.
Service Area refers to the geographic area encompassing an entire
State or States in which PCIP furnishes benefits.
State refers each of the 50 States and the District of Columbia.
[75 FR 45029, July 30, 2010, as amended at 77 FR 52616, Aug. 30, 2012]
Effective Date Note: At 89 FR 39436, May 8, 2024, Sec. 152.2 was
amended by revising the
[[Page 315]]
definition of ``Lawfully present'', effective Nov. 1, 2024. For the
convenience of the user, the revised text is set forth as follows:
Sec. 152.2 Definitions.
* * * * *
Lawfully present has the meaning given the term at 45 CFR 155.20.
* * * * *
Subpart B_PCIP Program Administration
Sec. 152.6 Program administration.
(a) General rule. Section 1101(b)(1) of the Affordable Care Act
requires that HHS carry out the Pre-Existing Condition Insurance Plan
program directly or through contracts with eligible entities, which are
States or nonprofit private entities.
(b) Administration by State. A State (or its designated non-profit
private entity) may submit a proposal to enter into a contract with HHS
to establish and administer a PCIP in accordance with section 1101 of
the Affordable Care Act and this part.
(1) At the Secretary's discretion, a State may designate a nonprofit
entity or entities to contract with HHS to administer a PCIP.
(2) As part of its administrative approach, a State or designated
entity may subcontract with either a for-profit or nonprofit entity.
(c) Administration by HHS. If a State or its designated entity
notifies HHS that it will not establish or continue to administer a
PCIP, or does not submit an acceptable or timely proposal to do so, HHS
will contract with a nonprofit private entity or entities to administer
a PCIP in that State.
(d) Transition in administration. The Secretary may consider a
request from a State to transition from administration by HHS to
administration by a State or from administration by a State to
administration by HHS. Such transitions shall be approved only if the
Secretary determines that the transition is in the best interests of the
PCIP enrollees and potential PCIP enrollees in that state, consistent
with Sec. 152.7(b) of this part.
Sec. 152.7 PCIP proposal process.
(a) General. A proposal from a State or nonprofit private entity to
contract with HHS shall demonstrate that the eligible entity has the
capacity and technical capability to perform all functions necessary for
the design and operation of a PCIP, and that its proposed PCIP is in
full compliance with all of the requirements of this part.
(b) Special rules for transitions in administration. (1) Transitions
from HHS administration of a PCIP to State administration must take
effect on January 1 of a given year.
(2) A State's proposal to administer a PCIP must meet all the
requirements of this section.
(3) Transitions from State administration to HHS administration must
comply with the termination procedures of the PCIP contract in effect
with the State or its designated entity.
(4) The Secretary may establish other requirements needed to ensure
a seamless transition of coverage for all existing enrollees.
Subpart C_Eligibility and Enrollment
Sec. 152.14 Eligibility.
(a) General rule. An individual is eligible to enroll in a PCIP if
he or she:
(1) Is a citizen or national of the United States or lawfully
present in the United States;
(2) Subject to paragraph (b) of this section, has not been covered
under creditable coverage for a continuous 6-month period of time prior
to the date on which such individual is applying for PCIP;
(3) Has a pre-existing condition as established under paragraph (c)
of this section; and
(4) Is a resident of one of the 50 States or the District of
Columbia which constitutes or is within the service area of the PCIP. A
PCIP may not establish any standards with regard to the duration of
residency in the PCIP service area.
(b) Satisfaction of 6-month creditable coverage requirement when an
enrollee leaves the PCIP service area. An individual who becomes
ineligible for a PCIP on the basis of no longer residing
[[Page 316]]
in the PCIP's service area as described in paragraph (a)(4) of this
section is deemed to have satisfied the requirement in paragraph (a)(2)
of this section for purposes of applying to enroll in a PCIP in the new
service area.
(c) Pre-existing condition requirement. For purposes of establishing
a process for determining eligibility, and subject to HHS approval, a
PCIP may elect to apply any one or more of the following criteria in
determining whether an individual has a pre-existing condition for
purposes of this section:
(1) Refusal of coverage. Documented evidence that an insurer has
refused, or a clear indication that the insurer would refuse, to issue
coverage to an individual on grounds related to the individual's health.
(2) Exclusion of coverage. Documented evidence that such individual
has been offered coverage but only with a rider that excludes coverage
of benefits associated with an individuals' identified pre-existing
condition.
(3) Medical or health condition. Documented evidence of the
existence or history of certain medical or health condition, as approved
or specified by the Secretary.
(4) Other. Other criteria, as defined by a PCIP and approved by HHS.
Sec. 152.15 Enrollment and disenrollment process.
(a) Enrollment process. (1) A PCIP must establish a process for
verifying eligibility and enrolling an individual that is approved by
HHS.
(2) A PCIP must allow an individual to remain enrolled in the PCIP
unless:
(i) The individual is disenrolled under paragraph (b) of this
section;
(ii) The individual obtains other creditable coverage;
(iii) The PCIP program terminates, or is terminated; or
(iv) As specified by the PCIP program and approved by HHS.
(3) A PCIP must verify that an individual is a United States citizen
or national or lawfully present in the United States by:
(i) Verifying the individual's citizenship, nationality, or lawful
presence with the Commissioner of Security or Secretary of Homeland
Security as applicable; or
(ii) By requiring the individual to provide documentation which
establishes the individual's citizenship, nationality, or lawful
presence.
(iii) The PCIP must provide an individual who is applying to enroll
in the PCIP with a disclosure specifying if the information will be
shared with the Department of Health and Human Services, Social Security
Administration, and if necessary, Department of Homeland Security for
purposes of establishing eligibility.
(b) Disenrollment process. (1) A PCIP must establish a disenrollment
process that is approved by HHS.
(2) A PCIP may disenroll an individual if the monthly premium is not
paid on a timely basis, following notice and a reasonable grace period,
not to exceed 61 days from when payment is due, as defined by the PCIP
and approved by HHS.
(3) A PCIP must disenroll an individual in any of the following
circumstances:
(i) The individual no longer resides in the PCIP service area.
(ii) The individual obtains other creditable coverage.
(iii) Death of the individual.
(iv) Other exceptional circumstances established by HHS.
(c) Effective dates. A PCIP must establish rules governing the
effective date of enrollment and disenrollment that are approved by HHS.
A complete enrollment request submitted by an eligible individual by the
15th day of a month, where the individual is determined to be eligible
for enrollment, must take effect by the 1st day of the following month,
except in exceptional circumstances that are subject to HHS approval.
(d) Funding limitation. A PCIP may stop taking applications for
enrollment to comply with funding limitations established by the HHS
under section 1101(g) of Public Law 111-148 and Sec. 152.35 of this
part. Accordingly, a PCIP may employ strategies to manage enrollment
over the course of the program that may include enrollment capacity
limits, phased-in (delayed) enrollment, and other measures, as defined
by the PCIP and approved by HHS, including measures specified under
Sec. 152.35(b).
[[Page 317]]
Subpart D_Benefits
Sec. 152.19 Covered benefits.
(a) Required benefits. Each benefit plan offered by a PCIP shall
cover at least the following categories and the items and services:
(1) Hospital inpatient services
(2) Hospital outpatient services
(3) Mental health and substance abuse services
(4) Professional services for the diagnosis or treatment of injury,
illness, or condition
(5) Non-custodial skilled nursing services
(6) Home health services
(7) Durable medical equipment and supplies
(8) Diagnostic x-rays and laboratory tests
(9) Physical therapy services (occupational therapy, physical
therapy, speech therapy)
(10) Hospice
(11) Emergency services, consistent with Sec. 152.22(b), and
ambulance services
(12) Prescription drugs
(13) Preventive care
(14) Maternity care
(b) Excluded services. Benefit plans offered by a PCIP shall not
cover the following services:
(1) Cosmetic surgery or other treatment for cosmetic purposes except
to restore bodily function or correct deformity resulting from disease.
(2) Custodial care except for hospice care associated with the
palliation of terminal illness.
(3) In vitro fertilization, artificial insemination or any other
artificial means used to cause pregnancy.
(4) Abortion services except when the life of the woman would be
endangered or when the pregnancy is the result of an act of rape or
incest.
(5) Experimental care except as part of an FDA-approved clinical
trial.
Sec. 152.20 Prohibitions on pre-existing condition exclusions
and waiting periods.
(a) Pre-existing condition exclusions. A PCIP must provide all
enrollees with health coverage that does not impose any pre-existing
condition exclusions (as defined in Sec. 152.2) with respect to such
coverage.
(b) Waiting periods. A PCIP may not impose a waiting period with
respect to the coverage of services after the effective date of
enrollment.
Sec. 152.21 Premiums and cost-sharing.
(a) Limitation on enrollee premiums. (1) The premiums charged under
the PCIP may not exceed 100 percent of the premium for the applicable
standard risk rate that would apply to the coverage offered in the State
or States. The PCIP shall determine a standard risk rate by considering
the premium rates charged for similar benefits and cost-sharing by other
insurers offering health insurance coverage to individuals in the
applicable State or States. The standard risk rate shall be established
using reasonable actuarial techniques, that are approved by the
Secretary, and that reflect anticipated experience and expenses. A PCIP
may not use other methods of determining the standard rate, except with
the approval of the Secretary.
(2) Premiums charged to enrollees in the PCIP may vary on the basis
of age by a factor not greater than 4 to 1.
(b) Limitation on enrollee costs. (1) The PCIP's average share of
the total allowed costs of the PCIP benefits must be at least 65 percent
of such costs.
(2) The out-of-pocket limit of coverage for cost-sharing for covered
services under the PCIP may not be greater than the applicable amount
described in section 223(c)(2) of the Internal Revenue code of 1986 for
the year involved. If the plan uses a network of providers, this limit
may be applied only for in-network providers, consistent with the terms
of PCIP benefit package.
(c) Prohibition on balance billing in the PCIP administered by HHS.
A facility or provider that accepts payment under Sec. 152.35(c)(2) for
a covered service furnished to an enrollee may not bill the enrollee for
an amount greater than the cost-sharing amount for the covered service
calculated by the PCIP.
[75 FR 45029, July 30, 2010, as amended at 78 FR 30226, May 22, 2013]
Sec. 152.22 Access to services.
(a) General rule. A PCIP may specify the networks of providers from
whom enrollees may obtain plan services. The PCIP must demonstrate to
HHS that it
[[Page 318]]
has a sufficient number and range of providers to ensure that all
covered services are reasonably available and accessible to its
enrollees.
(b) Emergency services. In the case of emergency services, such
services must be covered out of network if:
(1) The enrollee had a reasonable concern that failure to obtain
immediate treatment could present a serious risk to his or her life or
health; and
(2) The services were required to assess whether a condition
requiring immediate treatment exists, or to provide such immediate
treatment where warranted.
Subpart E_Oversight
Sec. 152.26 Appeals procedures.
(a) General. A PCIP shall establish and maintain procedures for
individuals to appeal eligibility and coverage determinations.
(b) Minimum requirements. The appeals procedure must, at a minimum,
provide:
(1) A potential enrollee with the right to a timely redetermination
by the PCIP or its designee of a determination regarding PCIP
eligibility, including a determination of whether the individual is a
citizen or national of the United States, or is lawfully present in the
United States.
(2) An enrollee with the right to a timely redetermination by the
PCIP or its designee of a determination regarding the coverage of a
service or the amount paid by the PCIP for a service.
(3) An enrollee with the right to a timely reconsideration of a
redetermination made under paragraph (b)(2) of this section by an entity
independent of the PCIP.
Sec. 152.27 Fraud, waste, and abuse.
(a) Procedures. The PCIP shall develop, implement, and execute
operating procedures to prevent, detect, recover (when applicable or
allowable), and promptly report to HHS incidences of waste, fraud, and
abuse, and to appropriate law enforcement authorities instances of
fraud. Such procedures shall include identifying situations in which
enrollees or potential enrollees (or their family members) are employed,
and may have, or have had, access to other coverage such as group health
coverage, but were discouraged from enrolling.
(b) Cooperation. The PCIP shall cooperate with Federal law
enforcement and oversight authorities in cases involving waste, fraud
and abuse, and shall report to appropriate authorities situations in
which enrollment in other coverage may have been discouraged.
Sec. 152.28 Preventing insurer dumping.
(a) General rule. If it is determined based on the procedures and
criteria set forth in paragraph (b) of this section that a health
insurance issuer or group health plan has discouraged an individual from
remaining enrolled in coverage offered by such issuer or health plan
based on the individual's health status, if the individual subsequently
enrolls in a PCIP under this part, the issuer or health plan will be
responsible for any medical expenses incurred by the PCIP with respect
to the individual.
(b) Procedures and criteria for a determination of dumping. A PCIP
shall establish procedures to identify and report to HHS instances in
which health insurance issuers or employer-based group health plans are
discouraging high-risk individuals from remaining enrolled in their
current coverage in instances in which such individuals subsequently are
eligible to enroll in the qualified high risk pool. Such procedures
shall include methods to identify the following circumstances, either
through the PCIP enrollment application form or other vehicles:
(1) Situations where an enrollee or potential enrollee had prior
coverage obtained through a group health plan or issuer, and the
individual was provided financial consideration or other rewards for
disenrolling from their coverage, or disincentives for remaining
enrolled.
(2) Situations where enrollees or potential enrollees had prior
coverage obtained directly from an issuer or a group health plan and
either of the following occurred:
(i) The premium for the prior coverage was increased to an amount
that exceeded the premium required by the PCIP (adjusted based on the
age factors
[[Page 319]]
applied to the prior coverage), and this increase was not otherwise
explained;
(ii) The health plan, issuer or employer otherwise provided money or
other financial consideration to disenroll from coverage, or
disincentive to remain enrolled in such coverage. Such considerations
include payment of the PCIP premium for an enrollee or potential
enrollee.
(c) Remedies. If the Secretary determines, based on the criteria in
paragraph (b) of this section, that the rule in paragraph (a) of this
section applies, an issuer or a group health plan will be billed for the
medical expenses incurred by the PCIP. The issuer or group health plan
also will be referred to appropriate Federal and State authorities for
other enforcement actions that may be warranted based on the behavior at
issue.
(d) Other. Nothing in this section may be construed as constituting
exclusive remedies for violations of this section or as preventing
States from applying or enforcing this section or other provisions of
law with respect to health insurance issuers.
Subpart F_Funding
Sec. 152.32 Use of funds.
(a) Limitation on use of funding. All funds awarded through the
contracts established under this program must be used exclusively to pay
allowable claims and administrative costs incurred in the development
and operation of the PCIP that are in excess of the amounts of premiums
collected from individuals enrolled in the program.
(b) Limitation on administrative expenses. No more than 10 percent
of available funds shall be used for administrative expenses over the
life of the contract with the PCIP, absent approval from HHS.
Sec. 152.33 Initial allocation of funds.
HHS will establish an initial ceiling for the amount of the $5
billion in Federal funds allocated for PCIPs in each State using a
methodology consistent with that used to established allocations under
the Children's Health Insurance Program, as set forth under 42 CFR part
457, subpart F, Payment to States.
Sec. 152.34 Reallocation of funds.
If HHS determines, based on actual and projected enrollment and
claims experience, that the PCIP in a given State will not make use of
the total estimated funding allocated to that State, HHS may reallocate
unused funds to other States, as needed.
Sec. 152.35 Insufficient funds.
(a) Adjustments by a PCIP to eliminate a deficit. In the event that
a PCIP determines, based on actual and projected enrollment and claims
data, that its allocated funds are insufficient to cover projected PCIP
expenses, the PCIP shall report such insufficiency to HHS, and identify
and implement necessary adjustments to eliminate such deficit, subject
to HHS approval.
(b) Adjustment by the Secretary. If the Secretary estimates that
aggregate amounts available for PCIP expenses will be less than the
actual amount of expenses, HHS reserves the right to make such
adjustments as are necessary to eliminate such deficit.
(c) Payment rates for covered services furnished beginning June 15,
2013 to enrollees in the PCIP administered by HHS. (1) Covered services
furnished under the prescription drug, organ/tissue transplant, dialysis
and durable medical equipment benefits will be paid at the payment rates
that are in effect on June 15, 2013.
(2) With respect to all other covered services, the payment rates
will be--
(i) 100 percent of Medicare payment rates; or
(ii) Where Medicare payment rates cannot be implemented by the
federally-administered PCIP, 50 percent of billed charges or a rate
using a relative value scale pricing methodology.
[75 FR 45029, July 30, 2010, as amended at 78 FR 30226, May 22, 2013]
Subpart G_Relationship to Existing Laws and Programs
Sec. 152.39 Maintenance of effort.
(a) General. A State that enters into a contract with HHS under this
part must demonstrate, subject to approval
[[Page 320]]
by HHS, that it will continue to provide funding of any existing high
risk pool in the State at a level that is not reduced from the amount
provided for in the year prior to the year in which the contract is
entered.
(b) Failure to maintain efforts. In situations where a State enters
into a contract with HHS under this part, HHS shall take appropriate
action, such as terminating the PCIP contract, against any State that
fails to maintain funding levels for existing State high risk pools as
required, and approved by HHS, under paragraph (a) of this section.
Sec. 152.40 Relation to State laws.
The standards established under this section shall supersede any
State law or regulation, other than State licensing laws or State laws
relating to plan solvency, with respect to PCIPs which are established
in accordance with this section.
Subpart H_Transition to Exchanges
Sec. 152.44 End of PCIP program coverage.
Effective January 1, 2014, coverage under the PCIP program (45 CFR
part 152) will end.
Sec. 152.45 Transition to the exchanges.
Prior to termination of the PCIP program, HHS will develop
procedures to transition PCIP enrollees to the Exchanges, established
under sections 1311 or 1321 of the Affordable Care Act, to ensure that
there are no lapses in health coverage for those individuals.
PART 153_STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS,
AND HHS RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT--
Table of Contents
Subpart A_General Provisions
Sec.
153.10 Basis and scope.
153.20 Definitions.
Subpart B_State Notice of Benefit and Payment Parameters
153.100 State notice of benefit and payment parameters.
153.110 Standards for the State notice of benefit and payment
parameters.
Subpart C_State Standards Related to the Reinsurance Program
153.200 [Reserved]
153.210 State establishment of a reinsurance program.
153.220 Collection of reinsurance contribution funds.
153.230 Calculation of reinsurance payments made under the national
contribution rate.
153.232 Calculation of reinsurance payments made under a State
additional contribution rate.
153.234 Eligibility under health insurance market rules.
153.235 Allocation and distribution of reinsurance contributions.
153.240 Disbursement of reinsurance payments.
153.250 Coordination with high-risk pools.
153.260 General oversight requirements for State-operated reinsurance
programs.
153.265 Restrictions on use of reinsurance funds for administrative
expenses.
153.270 HHS audits of State-operated reinsurance programs.
Subpart D_State Standards Related to the Risk Adjustment Program
153.300 [Reserved]
153.310 Risk adjustment administration.
153.320 Federally certified risk adjustment methodology.
153.330 State alternate risk adjustment methodology.
153.340 Data collection under risk adjustment.
153.350 Risk adjustment data validation standards.
153.360 Application of risk adjustment to the small group market.
153.365 General oversight requirements for State-operated risk
adjustment programs.
Subpart E_Health Insurance Issuer and Group Health Plan Standards
Related to the Reinsurance Program
153.400 Reinsurance contribution funds.
153.405 Calculation of reinsurance contributions.
153.410 Requests for reinsurance payment.
[[Page 321]]
153.420 Data collection.
Subpart F_Health Insurance Issuer Standards Related to the Risk
Corridors Program
153.500 Definitions.
153.510 Risk corridors establishment and payment methodology.
153.520 Attribution and allocation of revenue and expense items.
153.530 Risk corridors data requirements.
153.540 Compliance with risk corridors standards.
Subpart G_Health Insurance Issuer Standards Related to the Risk
Adjustment Program
153.600 [Reserved]
153.610 Risk adjustment issuer requirements.
153.620 Compliance with HHS risk adjustment standards.
153.630 Data validation requirements when HHS operates risk adjustment.
Subpart H_Distributed Data Collection for HHS-Operated Programs
153.700 Distributed data environment.
153.710 Data requirements.
153.720 Establishment and usage of masked enrollee identification
numbers.
153.730 Deadline for submission of data.
153.740 Failure to comply with HHS-operated risk adjustment and
reinsurance data requirements.
Authority: 42 U.S.C. 18031, 18041, and 18061 through 18063.
Source: 77 FR 17245, Mar. 23, 2012, unless otherwise noted.
Subpart A_General Provisions
Sec. 153.10 Basis and scope.
(a) Basis. This part is based on the following sections of title I
of the Affordable Care Act (Pub. L. 111-148, 24 Stat. 119):
(1) Section 1321. State flexibility in operation and enforcement of
Exchanges and related requirements.
(2) Section 1341. Transitional reinsurance program for individual
market in each State.
(3) Section 1342. Establishment of risk corridors for plans in
individual and small group markets.
(4) Section 1343. Risk adjustment.
(b) Scope. This part establishes standards for the establishment and
operation of a transitional reinsurance program, temporary risk
corridors program, and a permanent risk adjustment program.
Sec. 153.20 Definitions.
The following definitions apply to this part, unless the context
indicates otherwise:
Alternate risk adjustment methodology means a risk adjustment
methodology proposed by a State for use instead of a Federally certified
risk adjustment methodology that has not yet been certified by HHS.
Applicable reinsurance entity means a not-for-profit organization
that is exempt from taxation under Chapter 1 of the Internal Revenue
Code of 1986 that carries out reinsurance functions under this part on
behalf of the State. An entity is not an applicable reinsurance entity
to the extent it is carrying out reinsurance functions under subpart C
of this part on behalf of HHS.
Attachment point means the threshold dollar amount for claims costs
incurred by a health insurance issuer for an enrolled individual's
covered benefits in a benefit year, after which threshold the claims
costs for such benefits are eligible for reinsurance payments.
Benefit year has the meaning given to the term in Sec. 155.20 of
this subchapter.
Calculation of payments and charges means the methodology applied to
plan average actuarial risk to determine risk adjustment payments and
charges for a risk adjustment covered plan.
Calculation of plan average actuarial risk means the specific
procedures used to determine plan average actuarial risk from individual
risk scores for a risk adjustment covered plan, including adjustments
for variable rating and the specification of the risk pool from which
average actuarial risk is to be calculated.
Coinsurance rate means the rate at which the applicable reinsurance
entity will reimburse the health insurance issuer for claims costs
incurred for an enrolled individual's covered benefits in a benefit year
after the attachment point and before the reinsurance cap.
Contributing entity means--
(1) A health insurance issuer; or
(2) For the 2014 benefit year, a self-insured group health plan
(including a group health plan that is partially self-
[[Page 322]]
insured and partially insured, where the health insurance coverage does
not constitute major medical coverage), whether or not it uses a third
party administrator; and for the 2015 and 2016 benefit years, a self-
insured group health plan (including a group health plan that is
partially self-insured and partially insured, where the health insurance
coverage does not constitute major medical coverage) that uses a third
party administrator in connection with claims processing or adjudication
(including the management of internal appeals) or plan enrollment for
services other than for pharmacy benefits or excepted benefits within
the meaning of section 2791(c) of the PHS Act. Notwithstanding the
foregoing, a self-insured group health plan that uses an unrelated third
party to obtain provider network and related claim repricing services,
or uses an unrelated third party for up to 5 percent of claims
processing or adjudication or plan enrollment, will not be deemed to use
a third party administrator, based on either the number of transactions
processed by the third party, or the value of the claims processing and
adjudication and plan enrollment services provided by the third party. A
self-insured group health plan that is a contributing entity is
responsible for the reinsurance contributions, although it may elect to
use a third party administrator or administrative services-only
contractor for transfer of the reinsurance contributions.
Contribution rate means, with respect to a benefit year, the per
capita amount each contributing entity must pay for a reinsurance
program established under this part with respect to each reinsurance
contribution enrollee who resides in that State.
Exchange has the meaning given to the term in Sec. 155.20 of this
subchapter.
Federally certified risk adjustment methodology means a risk
adjustment methodology that either has been developed and promulgated by
HHS, or has been certified by HHS.
Grandfathered health plan has the meaning given to the term in Sec.
147.140(a) of this subchapter.
Group health plan has the meaning given to the term in Sec. 144.103
of this subchapter.
Health insurance coverage has the meaning given to the term in Sec.
144.103 of this subchapter.
Health insurance issuer or issuer has the meaning given to the term
in Sec. 144.103 of this subchapter.
Health plan has the meaning given to the term in section 1301(b)(1)
of the Affordable Care Act.
Individual market has the meaning given to the term in Sec. 144.103
of this subchapter.
Individual risk score means a relative measure of predicted health
care costs for a particular enrollee that is the result of a risk
adjustment model.
Major medical coverage means, for purposes only of the requirements
related to reinsurance contributions under section 1341 of the
Affordable Care Act, a catastrophic plan, an individual or a small group
market plan subject to the actuarial value requirements under Sec.
156.140 of this subchapter, or health coverage for a broad range of
services and treatments provided in various settings that provides
minimum value as defined in Sec. 156.145 of this subchapter.
Qualified employer has the meaning given to the term in Sec. 155.20
of this subchapter.
Qualified individual has the meaning given to the term in Sec.
155.20 of this subchapter.
Reinsurance cap means the threshold dollar amount for claims costs
incurred by a health insurance issuer for an enrolled individual's
covered benefits, after which threshold, the claims costs for such
benefits are no longer eligible for reinsurance payments.
Reinsurance contribution enrollee means an individual covered by a
plan for which reinsurance contributions must be made pursuant to Sec.
153.400.
Reinsurance-eligible plan means, for the purpose of the reinsurance
program, any health insurance coverage offered in the individual market,
except for grandfathered plans and health insurance coverage not
required to submit reinsurance contributions under Sec. 153.400(a).
Risk adjustment covered plan means, for the purpose of the risk
adjustment program, any health insurance coverage offered in the
individual or small group market with the exception of grandfathered
health plans, group
[[Page 323]]
health insurance coverage described in Sec. 146.145(b) of this
subchapter, individual health insurance coverage described in Sec.
148.220 of this subchapter, and any plan determined not to be a risk
adjustment covered plan in the applicable Federally certified risk
adjustment methodology.
Risk adjustment data means all data that are used in a risk
adjustment model, the calculation of plan average actuarial risk, or the
calculation of payments and charges, or that are used for validation or
audit of such data.
Risk adjustment data collection approach means the specific
procedures by which risk adjustment data is to be stored, collected,
accessed, transmitted, and validated and the applicable timeframes, data
formats, and privacy and security standards.
Risk adjustment methodology means the risk adjustment model, the
calculation of plan average actuarial risk, the calculation of payments
and charges, the risk adjustment data collection approach, and the
schedule for the risk adjustment program.
Risk adjustment model means an actuarial tool used to predict health
care costs based on the relative actuarial risk of enrollees in risk
adjustment covered plans.
Risk pool means the State-wide population across which risk is
distributed.
Small group market has the meaning given to the term in section
1304(a)(3) of the Affordable Care Act.
State has the meaning given to the term in Sec. 155.20 of this
subchapter.
[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013;
78 FR 54133, Aug. 30, 2013; 78 FR 65093, Oct. 30, 2013; 79 FR 13834,
Mar. 11, 2014; 79 FR 36432, June 27, 2014; 81 FR 94174, Dec. 22, 2016;
84 FR 17561, Apr. 25, 2019]
Subpart B_State Notice of Benefit and Payment Parameters
Sec. 153.100 State notice of benefit and payment parameters.
(a) General requirement for reinsurance. A State establishing a
reinsurance program must issue an annual notice of benefit and payment
parameters specific to that State if that State elects to:
(1) Modify the data requirements for health insurance issuers to
receive reinsurance payments from those specified in the annual HHS
notice of benefit and payment parameters for the applicable benefit
year;
(2) Collect additional reinsurance contributions under Sec.
153.220(d)(1) or use additional funds for reinsurance payments under
Sec. 153.220(d)(2); or
(3) Use more than one applicable reinsurance entity; or
(b) Risk adjustment requirements. A State operating a risk
adjustment program must issue an annual notice of benefit and payment
parameters specific to that State setting forth the risk adjustment
methodology and data validation standards it will use.
(c) State notice deadlines. If a State is required to publish an
annual State notice of benefit and payment parameters for a particular
benefit year, it must do so by the later of March 1 of the calendar year
prior to the applicable benefit year, or by the 30th day following the
publication of the final HHS notice of benefit and payment parameters
for that benefit year.
(d) State failure to publish notice. Any State establishing a
reinsurance program or operating a risk adjustment program that fails to
publish a State notice of benefit and payment parameters within the
period specified in paragraph (c) of this section must--
(1) Adhere to the data requirements for health insurance issuers to
receive reinsurance payments that are specified in the annual HHS notice
of benefit and payment parameters for the applicable benefit year;
(2) Forgo the collection of additional reinsurance contributions
under Sec. 153.220(d)(1) and the use of additional funds for
reinsurance payments under Sec. 153.220(d)(2);
(3) Forgo the use of more than one applicable reinsurance entity;
(4) Adhere to the risk adjustment methodology and data validation
standards published in the annual HHS notice of benefit and payment
parameters for use by HHS when operating risk adjustment on behalf of a
State.
[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013;
80 FR 10862, Feb. 27, 2015]
[[Page 324]]
Sec. 153.110 Standards for the State notice of benefit and
payment parameters.
(a) Data requirements. If a State that establishes a reinsurance
program elects to modify the data requirements for health insurance
issuers to receive reinsurance payments from those specified in the
annual HHS notice of benefit and payment parameters for the applicable
benefit year, the State notice of benefit and payment parameters must
specify those modifications.
(b) Additional collections. If a State that establishes a
reinsurance program elects to collect additional funds under Sec.
153.220(d)(1) or use additional funds for reinsurance payments under
Sec. 153.220(d)(2), the State must publish in the State notice of
benefit and payment parameters the following:
(1) A description of the purpose of the additional collection,
including whether it will be used to cover reinsurance payments made
under Sec. 153.232, administrative costs, or both;
(2) The additional contribution rate at which the funds will be
collected; and
(3) If the purpose of the additional collection includes reinsurance
payments (or if the State is using additional funds for reinsurance
payments under Sec. 153.220(d)(2)), the State supplemental reinsurance
payment parameters required under Sec. 153.232.
(c) Multiple reinsurance entities. If a State plans to use more than
one applicable reinsurance entity, the State must publish in the State
notice of benefit and payment parameters, for each applicable
reinsurance entity--
(1) The geographic boundaries for that entity;
(2) An estimate of the number of enrollees in the individual market
within those boundaries;
(3) An estimate of the amount of reinsurance payments that will be
made to issuers with respect to enrollees within those boundaries.
(d) Risk adjustment content. A State operating a risk adjustment
program must provide the information set forth in Sec. 153.330(a) and
the data validation standards set forth pursuant to Sec. 153.350 in the
State notice of benefit and payment parameters.
[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013]
Subpart C_State Standards Related to the Reinsurance Program
Sec. 153.200 [Reserved]
Sec. 153.210 State establishment of a reinsurance program.
(a) General requirement. Each State is eligible to establish a
reinsurance program for the years 2014 through 2016.
(1) If a State establishes a reinsurance program, the State must
enter into a contract with one or more applicable reinsurance entities
to carry out the provisions of this subpart.
(2) If a State contracts with or establishes more than one
applicable reinsurance entity, the State must ensure that each
applicable reinsurance entity operates in a distinct geographic area
with no overlap of jurisdiction with any other applicable reinsurance
entity.
(3) A State may permit an applicable reinsurance entity to
subcontract specific administrative functions required under this
subpart and subpart E of this part.
(4) A State must review and approve subcontracting arrangements to
ensure efficient and appropriate expenditures of administrative funds
collected under this subpart.
(5) A State must ensure that the applicable reinsurance entity
completes all reinsurance-related activities for benefit years 2014
through 2016 and any activities required to be undertaken in subsequent
periods.
(b) Multi-State reinsurance arrangements. Multiple States may
contract with a single entity to serve as an applicable reinsurance
entity for each State. In such a case, the reinsurance programs for
those States must be operated as separate programs.
(c) Non-electing States. HHS will establish a reinsurance program
for each State that does not elect to establish its own reinsurance
program.
(d) Oversight. Each State that establishes a reinsurance program
must ensure that the applicable reinsurance
[[Page 325]]
entity complies with all provisions of this subpart and subpart E of
this part throughout the duration of its contract.
(e) Reporting to HHS. Each State that establishes a reinsurance
program must ensure that each applicable reinsurance entity provides
information regarding requests for reinsurance payments under the
national contribution rate made under Sec. 153.410 for all reinsurance-
eligible plans for each quarter during the applicable benefit year in a
manner and timeframe established by HHS.
[77 FR 17245, Mar. 23, 2012, as amended at 78 FR 15525, Mar. 11, 2013]
Sec. 153.220 Collection of reinsurance contribution funds.
(a) Collections. If a State establishes a reinsurance program, HHS
will collect all reinsurance contributions from all contributing
entities for that State under the national contribution rate.
(b) Contribution funding. Reinsurance contributions collected must
fund the following:
(1) Reinsurance payments that will total, on a national basis, $10
billion in 2014, $6 billion in 2015, and $4 billion in 2016;
(2) U.S. Treasury contributions that will total, on a national
basis, $2 billion in 2014, $2 billion in 2015, and $1 billion in 2016;
and
(3) Administrative expenses of the applicable reinsurance entity or
HHS when performing reinsurance functions under this subpart.
(c) National contribution rate. HHS will set in the annual HHS
notice of benefit and payment parameters for the applicable benefit year
the national contribution rate and the proportion of contributions
collected under the national contribution rate to be allocated to:
(1) Reinsurance payments;
(2) Payments to the U.S. Treasury as described in paragraph (b)(2)
of this section; and
(3) Administrative expenses of the applicable reinsurance entity or
HHS when performing reinsurance functions under this subpart.
(d) Additional State collections. If a State establishes a
reinsurance program:
(1) The State may elect to collect more than the amounts that would
be collected based on the national contribution rate set forth in the
annual HHS notice of benefit and payment parameters for the applicable
benefit year to provide:
(i) Funding for administrative expenses of the applicable
reinsurance entity; or
(ii) Additional funds for reinsurance payments.
(2) A State may use additional funds which were not collected as
additional reinsurance contributions under this part for reinsurance
payments under the State supplemental payment parameters under Sec.
153.232.
[77 FR 17245, Mar. 23, 2012, as amended at 77 FR 29236, May 17, 2012, 78
FR 15525, Mar. 11, 2013; 78 FR 66655, Nov. 6, 2013]
Sec. 153.230 Calculation of reinsurance payments made under the
national contribution rate.
(a) Eligibility for reinsurance payments under the national
reinsurance parameters. A health insurance issuer of a reinsurance-
eligible plan becomes eligible for reinsurance payments from
contributions collected under the national contribution rate when its
claims costs for an individual enrollee's covered benefits in a benefit
year exceed the national attachment point.
(b) National reinsurance payment parameters. The national
reinsurance payment parameters for each benefit year commencing in 2014
and ending in 2016 set forth in the annual HHS notice of benefit and
payment parameters for each applicable benefit year will apply with
respect to reinsurance payments made from contributions received under
the national contribution rate.
(c) National reinsurance payments. Each reinsurance payment made
from contributions received under the national contribution rate will be
calculated as the product of the national coinsurance rate multiplied by
the health insurance issuer's claims costs for an individual enrollee's
covered benefits that the health insurance issuer incurs in the
applicable benefit year between the national attachment point and the
national reinsurance cap.
(d) Uniform adjustment to national reinsurance payments. If HHS
determines
[[Page 326]]
that all reinsurance payments requested under the national payment
parameters from all reinsurance-eligible plans in all States for a
benefit year will not be equal to the amount of all reinsurance
contributions collected for reinsurance payments under the national
contribution rate in all States for an applicable benefit year, HHS will
determine a uniform pro rata adjustment to be applied to all such
requests for reinsurance payments for all States. Each applicable
reinsurance entity, or HHS on behalf of a State, must reduce or increase
the reinsurance payment amounts for the applicable benefit year by any
adjustment required under this paragraph (d).
[78 FR 15526, Mar. 11, 2013, as amended at 78 FR 66655, Nov. 6, 2013; 79
FR 13835, Mar. 11, 2014]
Sec. 153.232 Calculation of reinsurance payments made under
a State additional contribution rate.
(a) State supplemental reinsurance payment parameters. (1) If a
State establishes a reinsurance program and elects to collect additional
contributions under Sec. 153.220(d)(1)(ii) or use additional funds for
reinsurance payments under Sec. 153.220(d)(2), the State must set
supplemental reinsurance payment parameters using one or more of the
following methods:
(i) Decreasing the national attachment point;
(ii) Increasing the national reinsurance cap; or
(iii) Increasing the national coinsurance rate.
(2) The State must ensure that additional reinsurance contributions
and funds projected to be received under Sec. 153.220(d)(1)(ii) and
Sec. 153.220(d)(2), as applicable, for any applicable benefit year are
reasonably calculated to cover additional reinsurance payments that are
projected to be made only under the State supplemental reinsurance
payment parameters (that will not be paid under the national payment
parameters) for the given benefit year.
(3) All applicable reinsurance entities in a State collecting
additional reinsurance contributions must apply the State supplemental
reinsurance payment parameters established under paragraph (a)(1) of
this section when calculating reinsurance payments.
(b) General requirement for payments under State supplemental
reinsurance parameters. Contributions collected under Sec.
153.220(d)(1)(ii) or funds under Sec. 153.220(d)(2), as applicable,
must be applied towards requests for reinsurance payments made under the
State supplemental reinsurance payments parameters for each benefit year
commencing in 2014 and ending in 2016.
(c) Eligibility for reinsurance payments under State supplemental
reinsurance parameters. If a State establishes State supplemental
reinsurance payment parameters under Sec. 153.232(a)(1), a reinsurance-
eligible plan becomes eligible for reinsurance payments from
contributions under Sec. 153.220(d)(1)(ii) or funds under Sec.
153.220(d)(2), as applicable, if its incurred claims costs for an
individual enrollee's covered benefits in the applicable benefit year:
(1) Exceed the State supplemental attachment point set forth in the
State notice of benefit and payment parameters for the applicable
benefit year if a State has established such a supplemental attachment
point under Sec. 153.232(a)(1)(i);
(2) Exceed the national reinsurance cap set forth in the annual HHS
notice of benefit and payment parameters for the applicable benefit year
if a State has established a State supplemental reinsurance cap under
Sec. 153.232(a)(1)(ii); or
(3) Exceed the national attachment point set forth in the annual HHS
notice of benefit and payment parameters for the applicable benefit year
if a State has established a supplemental coinsurance rate under Sec.
153.232(a)(1)(iii).
(d) Payments under State supplemental reinsurance parameters. Each
reinsurance payment made from contributions received under Sec.
153.220(d)(1)(ii) or funds under Sec. 153.220(d)(2), as applicable,
will be calculated with respect to an issuer's incurred claims costs for
an individual enrollee's covered benefits in the applicable benefit year
as the sum of the following:
(1) If the State has established a State supplemental attachment
point, to the extent the issuer's incurred
[[Page 327]]
claims costs for such benefits in the applicable benefit year exceed the
State supplemental attachment point but do not exceed the national
attachment point, the product of such claims costs between the State
supplemental attachment point and the national attachment point
multiplied by the national coinsurance rate (or, if the State has
established a State supplemental coinsurance rate, the State
supplemental coinsurance rate);
(2) If the State has established a State supplemental reinsurance
cap, to the extent the issuer's incurred claims costs for such benefits
in the applicable benefit year exceed the national reinsurance cap but
do not exceed the State supplemental reinsurance cap, the product of
such claims costs between the national reinsurance cap and the State
supplemental reinsurance cap multiplied by the national coinsurance rate
(or, if the State has established a State supplemental coinsurance rate,
the State supplemental coinsurance rate); and
(3) If the State has established a State supplemental coinsurance
rate, the product of the issuer's incurred claims costs for such
benefits in the applicable benefit year between the national attachment
point and the national reinsurance cap multiplied by the difference
between the State supplemental coinsurance rate and the national
coinsurance rate.
(e) Uniform adjustment to payments under State supplemental
reinsurance payment parameters. If all requested reinsurance payments
under the State supplemental reinsurance parameters calculated in
accordance with paragraph (a)(1) of this section from all reinsurance-
eligible plans in a State for a benefit year will exceed all reinsurance
contributions collected under Sec. 153.220(d)(1)(ii) or funds under
Sec. 153.220(d)(2) for the applicable benefit year, the State must
determine a uniform pro rata adjustment to be applied to all such
requests for reinsurance payments. Each applicable reinsurance entity in
the State must reduce all such requests for reinsurance payments for the
applicable benefit year by that adjustment.
(f) Limitations on payments under State supplemental reinsurance
parameters. A State must ensure that:
(1) The payments made to issuers must not exceed the issuer's total
paid amount for the reinsurance-eligible claim(s); and
(2) Any remaining additional funds for reinsurance payments
collected under Sec. 153.220(d)(1)(ii) must be used for reinsurance
payments under the State supplemental reinsurance payment parameters in
subsequent benefit years.
[78 FR 15526, Mar. 11, 2013]