[Federal Register Volume 77, Number 55 (Wednesday, March 21, 2012)]
[Proposed Rules]
[Pages 16501-16508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6689]



[[Page 16501]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

RIN 1545-BJ60

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB44

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 147

[CMS-9968-ANPRM]
RIN 0938-AR42


Certain Preventive Services Under the Affordable Care Act

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

ACTION: Advance notice of proposed rulemaking (ANPRM).

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SUMMARY: This advance notice of proposed rulemaking announces the 
intention of the Departments of Health and Human Services, Labor, and 
the Treasury to propose amendments to regulations regarding certain 
preventive health services under provisions of the Patient Protection 
and Affordable Care Act (Affordable Care Act). The proposed amendments 
would establish alternative ways to fulfill the requirements of section 
2713 of the Public Health Service Act and companion provisions under 
the Employee Retirement Income Security Act and the Internal Revenue 
Code when health coverage is sponsored or arranged by a religious 
organization that objects to the coverage of contraceptive services for 
religious reasons and that is not exempt under the final regulations 
published February 15, 2012. This document serves as a request for 
comments in advance of proposed rulemaking on the potential means of 
accommodating such organizations while ensuring contraceptive coverage 
for plan participants and beneficiaries covered under their plans (or, 
in the case of student health insurance plans, student enrollees and 
their dependents) without cost sharing.

DATES: Comments are due on or before June 19, 2012.

ADDRESSES: Written comments may be submitted as specified below. Any 
comment that is submitted will be shared with the other Departments. 
Please do not submit duplicate comments.
    All comments will be made available to the public. Please Note: Do 
not include any personally identifiable information (such as name, 
address, or other contact information) or confidential business 
information that you do not want publicly disclosed. All comments are 
posted on the Internet exactly as received, and can be retrieved by 
most Internet search engines. No deletions, modifications, or 
redactions will be made to the comments received, as they are public 
records. Comments may be submitted anonymously.
    In commenting, please refer to file code CMS-9968-ANPRM. Because of 
staff and resource limitations, the Departments cannot accept comments 
by facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this ANPRM 
to http://www.regulations.gov. Follow the instructions under the ``More 
Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address only: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9968-ANPRM, P.O. Box 8016, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9968-ANPRM, 
Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping and retaining an extra copy of the comments being filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
call (410) 786-9994 in advance to schedule your arrival with one of our 
staff members.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. The Departments post all 
comments received before the close of the comment period on the 
following Web site as soon as possible after they have been received: 
http://www.regulations.gov. Follow the search instructions on that Web 
site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 
three weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. EST. To schedule an appointment to view public comments, 
call 1-800-743-3951.

FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee 
Benefits Security Administration (EBSA), Department of Labor, at (202) 
693-8335; Karen Levin, Internal Revenue Service, Department of the 
Treasury, at (202) 927-9639; Jacob Ackerman, Centers for Medicare & 
Medicaid Services (CMS), Department of Health and Human Services (HHS), 
at (410) 786-1565.
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (http://www.dol.gov/ebsa). In

[[Page 16502]]

addition, information from HHS on private health insurance for 
consumers can be found on the CMS Web site (www.cciio.cms.gov), and 
information on health reform can be found at http://www.HealthCare.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Patient Protection and Affordable Care Act, Public Law 111-148, 
was enacted on March 23, 2010; the Health Care and Education 
Reconciliation Act of 2010, Public Law 111-152, was enacted on March 
30, 2010 (collectively, the Affordable Care Act). The Affordable Care 
Act reorganizes, amends, and adds to the provisions of part A of title 
XXVII of the Public Health Service Act (PHS Act) relating to group 
health plans and health insurance issuers in the group and individual 
markets. The Affordable Care Act adds section 715(a)(1) to the Employee 
Retirement Income Security Act (ERISA) and section 9815(a)(1) to the 
Internal Revenue Code (Code) to incorporate the provisions of part A of 
title XXVII of the PHS Act into ERISA and the Code, and make them 
applicable to group health plans.
    Section 2713 of the PHS Act, as added by the Affordable Care Act 
and incorporated into ERISA and the Code, requires that non-
grandfathered group health plans and health insurance issuers offering 
non-grandfathered group or individual health insurance coverage provide 
benefits for certain preventive health services without the imposition 
of cost sharing. These preventive health services include, with respect 
to women, preventive care and screening provided for in the 
comprehensive guidelines supported by the Health Resources and Services 
Administration (HRSA) that were issued on August 1, 2011 (HRSA 
Guidelines).\1\ As relevant here, the HRSA Guidelines require coverage, 
without cost sharing, for ``[a]ll Food and Drug Administration [(FDA)] 
approved contraceptive methods, sterilization procedures, and patient 
education and counseling for all women with reproductive capacity,'' as 
prescribed by a provider.\2\ Except as discussed below, non-
grandfathered group health plans and health insurance issuers offering 
non-grandfathered group or individual health insurance coverage are 
required to provide coverage consistent with the HRSA Guidelines, 
without cost sharing, in plan years (or, in the individual market, 
policy years) beginning on or after August 1, 2012.\3\ These guidelines 
were based on recommendations of the independent Institute of Medicine, 
which undertook a review of the scientific and medical evidence on 
women's preventive services.
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    \1\ The HRSA Guidelines are available at: http://www.hrsa.gov/womensguidelines.
    \2\ Note: This excludes items and services such as vasectomies 
and condoms.
    \3\ The interim final regulations published by the Departments 
on July 19, 2010, generally provide that plans and issuers must 
cover a newly recommended preventive service starting with the first 
plan year (or, in the individual market, policy year) that begins on 
or after the date that is one year after the date on which the new 
recommendation or guideline is issued. 26 CFR 54.9815-2713T(b)(1); 
29 CFR 2590.715-2713(b)(1); 45 CFR 147.130(b)(1).
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    The Departments of Health and Human Services (HHS), Labor, and the 
Treasury (the Departments) published interim final regulations 
implementing section 2713 of the PHS Act on July 19, 2010 (75 FR 
41726). In response to comments, the Departments amended the interim 
final regulations on August 1, 2011.\4\ The amendment provided HRSA 
with discretion to establish an exemption for group health plans 
established or maintained by certain religious employers (and any group 
health insurance coverage provided in connection with such plans) with 
respect to any contraceptive services that they would otherwise be 
required to cover consistent with the HRSA Guidelines. The amended 
interim final regulations further specified that, for purposes of this 
exemption only, a religious employer is one that--(1) has the 
inculcation of religious values as its purpose; (2) primarily employs 
persons who share its religious tenets; (3) primarily serves persons 
who share its religious tenets; and (4) is a non-profit organization 
described in section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) 
of the Code. Section 6033(a)(3)(A)(i) and (iii) of the Code refers to 
churches, their integrated auxiliaries, and conventions or associations 
of churches, as well as to the exclusively religious activities of any 
religious order. This religious exemption is consistent with the 
policies in some States that currently both require contraceptive 
coverage and provide for some type of religious exemption from their 
contraceptive coverage requirement.
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    \4\ The amendment to the interim final rules was published on 
August 3, 2011, at 76 FR 46621.
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    In the HRSA Guidelines, HRSA exercised its discretion under the 
amended interim final regulations such that group health plans 
established or maintained by these religious employers (and any group 
health insurance coverage provided in connection with such plans) are 
not required to cover any contraceptive services. In the final 
regulations published on February 15, 2012 (77 FR 8725), the 
Departments adopted the definition of religious employer in the amended 
interim final regulations.
    The Departments emphasize that this religious exemption is intended 
solely for purposes of the contraceptive coverage requirement pursuant 
to section 2713 of the PHS Act and the companion provisions of ERISA 
and the Code. Whether an employer is designated as ``religious'' for 
these purposes is not intended as a judgment about the mission, 
sincerity, or commitment of the employer, and the use of such 
designation is limited to defining the class that qualifies for this 
specific exemption. The designation will not be applied with respect to 
any other provision of the PHS Act, ERISA, or the Code, nor is it 
intended to set a precedent for any other purpose.
    In addition, we note that this exemption is available to religious 
employers in a variety of arrangements. For example, a Catholic 
elementary school may be a distinct common-law employer from the 
Catholic diocese with which it is affiliated. If the school's employees 
receive health coverage through a plan established or maintained by the 
school, and the school meets the definition of a religious employer in 
the final regulations, then the religious employer exemption applies. 
If, instead, the same school provides health coverage for its employees 
through the same plan under which the diocese provides coverage for its 
employees, and the diocese is exempt from the requirement to cover 
contraceptive services, then neither the diocese nor the school is 
required to offer contraceptive coverage to its employees.
    On February 10, 2012, when the final regulations concerning the 
exemption were posted, HHS issued a bulletin entitled ``Guidance on the 
Temporary Enforcement Safe Harbor for Certain Employers, Group Health 
Plans and Group Health Insurance Issuers with Respect to the 
Requirement to Cover Contraceptive Services Without Cost Sharing Under 
Section 2713 of the Public Health Service Act, Section 715(a)(1) of the 
Employee Retirement Income Security Act, and Section 9815(a)(1) of the 
Internal Revenue Code.'' \5\ The bulletin established a temporary 
enforcement safe harbor for group health plans sponsored by non-profit 
organizations that, on and after February 10, 2012, do not provide some 
or all of the contraceptive coverage otherwise required, consistent 
with any

[[Page 16503]]

applicable State law, because of the religious beliefs of the 
organization (and any group health insurance coverage provided in 
connection with such plans). The temporary enforcement safe harbor is 
in effect until the first plan year that begins on or after August 1, 
2013. The bulletin confirmed that all three Departments will not take 
any enforcement action against an employer, group health plan, or 
health insurance issuer that complies with the conditions of the 
temporary enforcement safe harbor described in the bulletin.
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    \5\ The bulletin can be found at: http://cciio.cms.gov/resources/files/Files2/02102012/20120210-Preventive-Services-Bulletin.pdf.
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    At the same time, the Departments announced plans to expeditiously 
develop and propose changes to the final regulations implementing 
section 2713 of the PHS Act that would meet two goals--accommodating 
non-exempt, non-profit religious organizations' religious objections to 
covering contraceptive services and assuring that participants and 
beneficiaries covered under such organizations' plans receive 
contraceptive coverage without cost sharing. The Departments intend to 
finalize these amendments to the final regulations such that they are 
effective by the end of the temporary enforcement safe harbor; that is, 
the amended final regulations would apply to plan years starting on or 
after August 1, 2013. This advance notice of proposed rulemaking 
(ANPRM) is the first step toward promulgating these amended final 
regulations. Following the receipt of public comment, a notice of 
proposed rulemaking (NPRM) will be published, which will permit 
additional public comment, followed by amended final regulations.

II. Overview of Intended Regulations

    On February 10, 2012, the Departments committed to working with 
stakeholders to develop alternative ways of providing contraceptive 
coverage without cost sharing in order to accommodate non-exempt, non-
profit religious organizations with religious objections to such 
coverage. Specifically, the Departments indicated their plans for a 
rulemaking to require issuers to offer group health insurance coverage 
without contraceptive coverage to such an organization (or its plan 
sponsor) and simultaneously to provide contraceptive coverage directly 
to the participants and beneficiaries covered under the organization's 
plan with no cost sharing. Under this approach, the Departments would 
require that, in this circumstance, there be no premium charge for the 
separate contraceptive coverage. Actuaries and experts have found that 
coverage of contraceptives is at least cost neutral, and may save 
money, when taking into account all costs and benefits for the 
issuer.\6\ If the cost of coverage is reduced, savings may accrue to 
employers, plan participants and beneficiaries, and the health care 
system. The Departments indicated their intent to develop policies to 
achieve the same goals with respect to self-insured group health plans 
sponsored by non-exempt, non-profit religious organizations with 
religious objections to contraceptive coverage.
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    \6\ Bertko, John, F.S.A., M.A.A.A., Director of Special 
Initiatives and Pricing, Center for Consumer Information and 
Insurance Oversight, Centers for Medicare & Medicaid Services, 
Glied, Sherry, Ph.D., Assistant Secretary for Planning and 
Evaluation, Department of Health and Human Services (ASPE/HHS), 
Miller, Erin, MPH, ASPE/HHS, Wilson, Lee, ASPE/HHS, Simmons, Adelle, 
ASPE/HHS, ``The Cost of Covering Contraceptives Through Health 
Insurance,'' (February 9, 2012), available at: http://aspe.hhs.gov/health/reports/2012/contraceptives/ib.shtml.
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    In the time since this announcement, the Departments have met with 
representatives of religious organizations, insurers, women's groups, 
insurance experts, and other interested stakeholders. These initial 
meetings were used to help identify issues relating to the 
accommodation to be developed with respect to non-exempt, non-profit 
religious organizations with religious objections to contraceptive 
coverage. These consultations also began to provide more detailed 
information on how health coverage arrangements are currently 
structured, how religious accommodations work in States with 
contraceptive coverage requirements, and the landscape with respect to 
religious organizations that offer health benefits today. These 
discussions have informed this ANPRM.
    As the consultations with interested parties continue, this ANPRM 
presents questions and ideas to help shape these discussions as well as 
an early opportunity for any interested stakeholder to provide advice 
and input into the policy development relating to the accommodation to 
be made with respect to non-exempted, non-profit religious 
organizations with religious objections to contraceptive coverage. The 
Departments welcome all points of view on how to provide women access 
to the important preventive services at issue without cost sharing 
while accommodating religious liberty interests.
    The starting point for this policy development includes two goals 
and several ideas about how to achieve them. First, the Departments aim 
to maintain the provision of contraceptive coverage without cost 
sharing to individuals who receive coverage through non-exempt, non-
profit religious organizations with religious objections to 
contraceptive coverage in the simplest way possible. Second, the 
Departments aim to protect such religious organizations from having to 
contract, arrange, or pay for contraceptive coverage. As described 
below, the Departments intend to propose a requirement that health 
insurance issuers providing coverage for insured group health plans 
sponsored by such religious organizations assume the responsibility for 
the provision of contraceptive coverage without cost sharing to 
participants and beneficiaries covered under the plan, independent of 
the religious organization, as a means of meeting these goals. HHS also 
intends to propose a comparable requirement with respect to student 
health insurance plans arranged by such religious organizations. For 
such religious organizations that sponsor self-insured plans, the 
Departments intend to propose that a third-party administrator of the 
group health plan or some other independent entity assume this 
responsibility. The Departments suggest multiple options for how 
contraceptive coverage in this circumstance could be arranged and 
financed in recognition of the variation in how such self-insured plans 
are structured and different religious organizations' perspectives on 
what constitutes objectionable cooperation with the provision of 
contraceptive coverage. The Departments seek input on these options, 
particularly how to enable religious organizations to avoid such 
objectionable cooperation when it comes to the funding of contraceptive 
coverage, as well as new ideas to inform the next stage of the 
rulemaking process.
    The following sections set forth questions the Departments believe 
will help inform the development of proposed regulations, including the 
policy options the Departments are considering and potential language 
related to such options. Throughout this ANPRM, the term 
``accommodation'' is used to refer to an arrangement under which 
contraceptive coverage is provided without cost sharing to participants 
and beneficiaries covered under a plan independent of the objecting 
religious organization that sponsors the plan, which would effectively 
exempt the religious organization from the requirement to cover 
contraceptive services. The term ``religious organization'' is used to 
describe the class of organizations that qualifies for the 
accommodation. An ``independent entity'' is an issuer, third-party 
administrator, or other provider of contraceptive coverage that is not 
a

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religious organization. And ``contraceptive coverage'' means the 
contraceptive coverage required under the HRSA Guidelines.
    The Departments note that a number of questions have been raised 
about the scope and application of the contraceptive coverage 
requirement more generally (that is, questions apart from the religious 
accommodation). The Departments' interim final regulations implementing 
section 2713 of the PHS Act provide that ``[n]othing prevents a plan or 
issuer from using reasonable medical management techniques to determine 
the frequency, method, treatment, or setting for an item or service * * 
* to the extent not specified in the recommendation or guideline.''\7\ 
The preamble to the interim final regulations further provides:
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    \7\ 26 CFR 54.9815-2713T(a)(4), 29 CFR 2590.715-2713(a)(4), and 
45 CFR 147.130(a)(4).

    ``The use of reasonable medical management techniques allows 
plans and issuers to adapt these recommendations and guidelines to 
coverage of specific items and services where cost sharing must be 
waived. Thus, under these interim final regulations, a plan or 
issuer may rely on established techniques and the relevant evidence 
base to determine the frequency, method, treatment, or setting for 
which a recommended preventive service will be available without 
cost sharing requirements to the extent not specified in a 
recommendation or guideline.'' (75 FR 41728-29).\8\
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    \8\ See also the Departments' guidance in FAQ-8 at http://www.dol.gov/ebsa/pdf/faq-aca2.pdf and FAQ-1 at http://www.dol.gov/ebsa/pdf/faq-aca5.pdf.

    This policy applies to contraceptive coverage. The Departments plan 
to issue further guidance on section 2713 of the PHS Act more 
generally.

A. Who qualifies for the accommodation?

    As previously described, group health plans sponsored by certain 
religious employers (and any group health insurance coverage provided 
in connection with such plans) are exempt from the requirement to offer 
coverage of contraceptive services that would otherwise be required 
under the HRSA Guidelines for plan years beginning on or after August 
1, 2012. A second set of organizations qualifies for a temporary 
enforcement safe harbor: group health plans sponsored by non-exempt, 
non-profit organizations, that, consistent with any applicable State 
law, do not, on or after February 10, 2012 (the date of the posting of 
the final regulations), cover some or all forms of contraceptives due 
to the organization's religious objections to them (and any group 
health insurance coverage provided in connection with such plans). The 
temporary enforcement safe harbor also applies to student health 
insurance plans arranged by non-profit institutions of higher education 
that meet comparable criteria. The temporary enforcement safe harbor 
applies for plan years beginning on or after August 1, 2012, and before 
August 1, 2013.
    On February 10, 2012, the Departments also announced their 
intention to provide an accommodation with respect to non-exempt, non-
profit religious organizations with religious objections to 
contraceptive coverage. The final regulation concerning student health 
insurance plans, published elsewhere in this issue of the Federal 
Register, states that this intention extends to student health 
insurance plans arranged by non-profit religious institutions of higher 
education with such objections. This accommodation would apply to some 
or all organizations that qualify for the temporary enforcement safe 
harbor, and possibly to additional organizations. Thus, a question for 
purposes of the intended regulations is: What entities should be 
eligible for the new accommodation (that is, what is a ``religious 
organization'')? \9\
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    \9\ Note that, even if the definition of religious organization 
for purposes of the accommodation were to include religious 
employers eligible for the exemption, nothing in the proposed 
regulations would limit eligibility of religious employers for the 
exemption.
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    One approach would be to adopt the definition of religious 
organization used in another statute or regulation. For example, the 
definition used in one or more State laws to afford a religious 
exemption from a contraceptive coverage requirement could be adopted. 
Alternatively, the intended regulations could base their definition on 
another Federal law, such as section 414(e) the Code and section 3(33) 
of ERISA, which set forth definitions for purposes of ``church plans.'' 
A definition based on these provisions may include organizations such 
as hospitals, universities, and charities that are exempt from taxation 
under section 501 of the Code and that are controlled by or associated 
with a church or a convention or association of churches. In developing 
a definition of religious organization, we are cognizant of the 
important role of ministries of churches and, as such, seek to 
accommodate their religious objections to contraceptive coverage. The 
Departments seek comment on which religious organizations should be 
eligible for the accommodation and whether, as some religious 
stakeholders have suggested, for-profit religious employers with such 
objections should be considered as well.
    The Departments underscore, as we did with respect to the 
definition of religious employer in the final regulations, that 
whatever definition of religious organization is adopted will not be 
applied with respect to any other provision of the PHS Act, ERISA, or 
the Code, nor is it intended to set a precedent for any other purpose. 
And, while the participants and beneficiaries covered under the health 
plans offered by a ``religious employer'' compared to those covered 
under the health plans offered by a ``religious organization'' will 
have differential access to contraceptive coverage, nothing in the 
final regulations or the forthcoming regulations is intended to 
differentiate among the religious merits, commitment, mission, or 
public or private standing of the organizations themselves.
    Regardless of the definition of religious organization that is 
proposed, the Departments are considering proposing the same or a 
similar process for self-certification that will be used for the 
temporary enforcement safe harbor referenced in the final regulations. 
Under that process, an individual authorized by the organization 
certifies that the organization satisfies the eligibility criteria, and 
the self-certification is made available for examination. The 
Departments expect that, for purposes of the proposed accommodation, 
religious organizations would make a similar self-certification, and 
similarly make the self-certification available for examination. The 
self-certification would be used to put the independent entity 
responsible for providing contraceptive coverage on notice that the 
religious organization has invoked the accommodation. The future 
rulemaking would require that the independent entity be responsible for 
providing the contraceptive coverage in this case.
    Under the temporary enforcement safe harbor, an organization that 
self-certifies must also provide (or arrange to provide) notice to plan 
participants and beneficiaries that its plan qualifies for the one-year 
enforcement safe harbor. As the Departments noted in the bulletin 
establishing the temporary enforcement safe harbor, nothing precludes 
any organization or individual from expressing opposition, if any, to 
the regulations or to the use of contraceptives. The Departments do not 
anticipate that religious organizations would be required to provide 
such notice to plan participants and beneficiaries beyond the one-year 
transition period because the

[[Page 16505]]

responsibility to provide notice to plan participants and beneficiaries 
about the contraceptive coverage would be assumed by the independent 
entity. The Departments seek comment on how this notice should be 
provided.
    The Departments also intend to propose an accommodation for 
religious organizations that are non-profit institutions of higher 
education with religious objections to contraceptive coverage with 
respect to the student health insurance plans that they arrange. In the 
final regulation published elsewhere in this issue of the Federal 
Register, ``student health insurance coverage'' is defined as a type of 
individual market health insurance coverage offered to students and 
their dependents under a written agreement between an institution of 
higher education and an issuer. Some non-profit religious colleges and 
universities object to signing a written agreement providing for 
student health insurance coverage that includes contraceptive coverage. 
Some non-profit religious colleges and universities include funding for 
their student health insurance plans in their student aid packages and 
would object if contraceptive coverage were included in the student 
health insurance plan. The preamble to the final regulation on student 
health insurance plans provides that the temporary enforcement safe 
harbor announced on February 10, 2012, with respect to certain non-
exempt, non-profit organizations with religious objections to 
contraceptive coverage extends on comparable terms to student health 
insurance plans if offered through non-profit institutions of higher 
education with such objections. After the one-year transition period, 
the Departments would propose to treat student health insurance plans 
arranged by non-profit religious institutions of higher education that 
object to contraceptive coverage on religious grounds in a manner 
comparable to that in which insured group health plans sponsored by 
religious organizations eligible for the accommodation are treated. 
This means that the issuer of the student health insurance plan would, 
independent of the agreement with the institution of higher education, 
provide student enrollees and their dependents with contraceptive 
coverage without cost sharing and without charge.
    The Departments seek comment on whether the definition of religious 
organization should include religious organizations that provide 
coverage for some, but not all, FDA-approved contraceptives consistent 
with their religious beliefs. That is, under the forthcoming proposed 
regulations, the Departments could allow religious organizations to 
continue to provide coverage for some forms of contraceptives without 
cost sharing, and allow them to qualify for the accommodation with 
respect to other forms of contraceptives consistent with their 
religious beliefs.

B. Who administers the accommodation?

    The accommodation aims to simultaneously fulfill the requirement 
that plan participants and beneficiaries be offered contraceptive 
coverage without cost sharing and without charge, and protect a non-
profit religious organization that objects on religious grounds from 
having to provide contraceptive coverage. To achieve these goals, an 
independent entity is needed to assume certain functions. This entity 
would, separate from the religious organization and as directed by 
regulations and guidance, notify plan participants and beneficiaries of 
the availability of separate contraceptive coverage, provide this 
coverage automatically to participants and beneficiaries covered under 
the organization's plan (for example, without an application or 
enrollment process), and protect the privacy of participants and 
beneficiaries covered under the plan who use contraceptive services.
    Today, in most instances, an independent entity either provides or 
administers health coverage for group health plans. Such group coverage 
falls into two categories: Insured coverage and self-insured coverage. 
A group that buys insured coverage pays a premium to a State-licensed 
and State-regulated health insurance issuer which bears the risk of 
claims for that coverage. A group that self-insures its coverage does 
not pay premiums to a health insurance issuer; instead, employer and/or 
employee contributions fund the health claims of participants and 
beneficiaries covered under the plan. Typically, self-insured plans 
contract with a third-party administrator, under a fee arrangement, for 
administrative services, such as network contracting, managed care 
services, and payment of claims. Insured group health plans and self-
insured group health plans that are not church plans or governmental 
plans are generally subject to Title I of ERISA. Because there is no 
insurance provided by a health insurance issuer, self-insured plans are 
not subject to State insurance laws.
    The Departments intend to propose that, when offering insured 
coverage to a religious organization that self-certifies as qualifying 
for the accommodation, a health insurance issuer may not include 
contraceptive coverage in that organization's insured coverage. This 
means that contraceptive coverage would not be included in the plan 
document, contract, or premium charged to the religious organization. 
Instead, the issuer would be required to provide participants and 
beneficiaries covered under the plan separate coverage for 
contraceptive services, potentially as excepted benefits, without cost 
sharing, and notify plan participants and beneficiaries of its 
availability. The issuer could not charge a premium to the religious 
organization or plan participants or beneficiaries for the 
contraceptive coverage. To incorporate this proposal into regulations 
with respect to insured group health plans (comparable regulatory 
language would be developed with respect to student health insurance 
plans), the Departments are considering proposing new language in the 
existing preventive services regulations at 45 CFR 147.130, 29 CFR 
2590.715-2713 and 26 CFR 54.9815-2713 providing: ``In the case of an 
insured group health plan established or maintained by a religious 
organization--
     The group health plan established or maintained by the 
religious organization (and the group health insurance coverage 
provided in connection with the plan) need not comply with any 
requirement under this section to provide coverage for contraceptive 
services with respect to the insured group coverage if all of the 
following conditions are satisfied:
    [cir] The organization provides the issuer with written notice that 
the organization is a religious organization, and will not act as the 
designated plan administrator or claims administrator with respect to 
claims for contraceptive benefits.
    [cir] The issuer has access to information necessary to communicate 
with the plan's participants and beneficiaries and to act as a claims 
administrator and plan administrator with respect to contraceptive 
benefits.
     An issuer that receives the notice described above must 
offer to the religious organization group health insurance coverage 
that does not include coverage for contraceptive services otherwise 
required to be covered under this section. The issuer must additionally 
provide to the participants and beneficiaries covered under the plan 
separate health insurance coverage consisting solely of coverage for 
contraceptive services required to be covered under this section. The 
issuer must make such health insurance coverage for

[[Page 16506]]

contraceptive services available without any charge to the 
organization, group health plan, or plan participants or beneficiaries. 
The issuer must notify plan participants and beneficiaries of the 
availability of such coverage for contraceptive services in accordance 
with guidance issued by the Secretary. The issuer must not impose any 
cost sharing requirements (such as a copayment, coinsurance, or a 
deductible) on such coverage for contraceptive services and must comply 
with all other requirements of this section with respect to coverage 
for contraceptive services.''
    Additionally, to ensure that contraceptive coverage offered by a 
health insurance issuer under these circumstances does not confront 
obstacles due to other Federal requirements (such as the guaranteed 
issue requirement under section 2702 of the PHS Act, the single risk 
pool requirement under section 1312(c) of the Affordable Care Act, and 
the essential health benefits requirement under section 2707 of the PHS 
Act), the Departments are considering adding by regulation 
contraceptive coverage to the types of excepted benefits in the 
individual market at 45 CFR 148.220(b). In so doing, the Departments 
would consider preserving certain PHS Act protections such as appeals 
and grievances rights while ensuring relief from others such as the 
requirement to provide essential health benefits. The Departments seek 
comment on whether and how to structure such a change to the excepted 
benefits regulations, and what PHS Act protections should (or should 
not) continue to apply. In addition, the Departments seek comment on 
ways to structure the contraceptive-only benefit as a benefit separate 
from the insured group coverage other than as an excepted benefit.
    Issuers would pay for contraceptive coverage from the estimated 
savings from the elimination of the need to pay for services that would 
otherwise be used if contraceptives were not covered. Typically, 
issuers build into their premiums projected costs and savings from a 
set of services. Premiums from multiple organizations are pooled in a 
``book of business'' from which the issuer pays for services. To the 
extent that contraceptive coverage lowers the draw-down for other 
health care services from the pool, funds would be available to pay for 
contraceptive services without an additional premium charged to the 
religious organization or plan participants or beneficiaries. 
Actuaries, insurers, and economists estimate that covering 
contraceptive services is at least cost neutral.
    For a religious organization that sponsors a self-insured group 
health plan, the Departments aim to similarly shield it from 
contracting, arranging, paying, or referring for contraceptive 
coverage. The Departments intend to propose, and invite comments on, 
having the third-party administrator of an objecting religious 
organization fulfill such responsibility. For ERISA plans,\10\ the 
Departments are considering proposing that the self-certification of 
the religious organization, described above, would serve as a notice to 
the third-party administrator that the requirement to provide 
contraceptive coverage will not be fulfilled by the religious 
organization. The proposed regulations, in this circumstance, would set 
forth the circumstances and criteria under which the third-party 
administrator would be designated as the plan administrator for ERISA 
plans solely for the purpose of fulfilling the requirement to provide 
contraceptive coverage. As prescribed by the proposed regulations, the 
third-party administrator would provide or arrange for such coverage in 
such circumstances. The third-party administrator would notify plan 
participants and beneficiaries of this coverage. The religious 
organization would take no action other than self-certification.
---------------------------------------------------------------------------

    \10\ A church plan as defined under section 3(33) of ERISA is 
exempt from ERISA's requirements under section 4(b) of ERISA, and, 
therefore, any proposed ERISA regulations would not apply to church 
plans. Comments are sought on potential options for church plans.
---------------------------------------------------------------------------

    To incorporate this proposal into regulations with respect to self-
insured group health plans, the Departments are considering proposing 
new language in the existing preventive services regulations at 29 CFR 
2590.715-2713 and 26 CFR 54.9815-2713 providing that: ``A religious 
organization maintaining a self-insured group health plan is not 
responsible for compliance with any requirement under this section to 
provide coverage for contraceptive services if all of the following 
conditions are satisfied:
     The plan contracts with one or more third parties for 
processing of benefit claims,
     Before entering into each such contract, the employer 
provides each third party administrator (TPA) with written notice that 
the employer: (1) Is a religious organization, (2) will not act as the 
designated plan administrator or claims administrator with respect to 
claims for contraceptive services, (3) will not contribute to the 
funding of contraceptive services, and (4) will not participate in 
claims processing with respect to claims for contraceptive services.
     With respect to contraceptive benefits, the TPAs have 
authority and control over the funds available to pay the benefit, 
authority to act as a claims administrator and plan administrator, and 
access to information necessary to communicate with the plan's 
participants and beneficiaries.''
    In addition, with respect to ERISA plans, the Department of Labor 
is considering proposing a new regulation at 29 CFR 2510.3-16 
providing: ``In the case of a group health plan established or 
maintained by a religious organization that is not responsible for 
compliance with any requirement under Sec.  2590.715-2713 of this part 
to provide coverage for contraceptive services, the required notice 
from the religious organization provided to a third party administrator 
(TPA) of the religious organization's refusal to provide and fund such 
benefits shall be an instrument under which the plan is operated and 
shall have the effect of designating such TPA as the plan administrator 
under section 3(16) of ERISA for those contraceptive benefits for which 
that TPA processes claims in its normal course of business. A TPA that 
becomes a plan administrator pursuant to this section shall be 
responsible for--
     The plan's compliance with section 2713 of the Public 
Health Service Act (as incorporated into section 715 of ERISA and Sec.  
2590.715-2713 of this part) as to those categories of contraceptive 
benefits for which the TPA processes claims in its normal course of 
business (for example, surgical procedures, non-surgical procedures, 
patient education and counseling, prescription benefits and non-
prescription benefits).
     Establishing and operating a procedure for determining 
such claims for contraceptive benefits in accordance with Sec.  
2560.503-1 of this title.
     Complying with disclosure requirements and other 
requirements under Title I of ERISA for such benefits to participants 
and beneficiaries.''
    We note that there is no obligation for a TPA to enter into such a 
contract if it objects to these terms.
    Providing for an independent entity to assume responsibility for 
plan-related functions when other plan sponsors or officials fail or 
refuse to do so would not be unique to the instant context. For 
example, where certain retirement savings plans have been abandoned by 
their sponsors, Department of Labor regulations authorize asset 
custodians to

[[Page 16507]]

distribute plan benefits and wind up the plan's affairs. 29 CFR 2578.1.
    The Departments seek comment on the following possible approaches 
that a third-party administrator could use to fund the contraceptive 
coverage without using funds provided by the religious organization. 
The third-party administrator could use revenue that is not already 
obligated to plan sponsors such as drug rebates, service fees, disease 
management program fees, or other sources. These funds may inure to the 
third-party administrator rather than the plan or its sponsor and drug 
rebates, for example, could be larger if contraceptive coverage were 
provided. Additionally, nothing precludes a third-party administrator 
from receiving funds from a private, non-profit organization to pay for 
contraceptive services for the participants and beneficiaries covered 
under the plan of a religious organization. Comments should address the 
ways in which third-party administrators generally receive funding to 
pay benefits, other flows of funds, the extent to which funding from 
other sources may be available for payment of claims, and the 
monitoring responsibilities and oversight that would be associated with 
such arrangements.
    Another option under consideration would be to have the third-party 
administrator receive a credit or rebate on the amount that it pays 
under the reinsurance program under Affordable Care Act section 1341 in 
order to fund contraceptive coverage for participants and beneficiaries 
covered under the plan of a religious organization that sponsors a 
self-insured plan. Section 1341 of the Affordable Care Act creates a 
reinsurance program to balance out risk selection from 2014 through 
2016. Payments from health insurance issuers and third-party 
administrators on behalf of group health plans will be made to a 
reinsurance entity. Payments are used, among other things, to offset 
the cost of reinsurance for health insurance issuers. While the 
reinsurance program does not provide payments to group health plans, it 
collects payments from third-party administrators to support the 
program. Under this proposal, a third-party administrator that funds 
contraceptive coverage separate from a religious organization could 
offset the amount of this cost with a credit or rebate against its 
assessments under the reinsurance program. Such a policy could help 
advance the goals of the reinsurance program, which is one of many in 
the Act designed to make health insurance affordable, accessible, 
meaningful, and stable. The Departments seek comments on such an 
interpretation of Affordable Care Act section 1341and on ideas of 
alternative sources of funding once this temporary program ends.
    An additional option would have the third-party administrator 
separately arrange for contraceptive coverage. In this case, an 
additional independent entity other than a third-party administrator 
would be needed. The Departments are considering having the Office of 
Personnel Management (OPM) identify a private insurer to provide this 
coverage. Under section 1334 of the Affordable Care Act, OPM is 
responsible for contracting with at least two insurers to offer multi-
State plans in each Exchange in each State to promote choice, 
competition, and access to health services. The OPM Director, in 
consultation with the HHS Secretary, has the authority to impose 
appropriate requirements on the insurers that offer multi-State plans. 
Accordingly, OPM could incentivize or require one or more of the 
insurers offering a multi-State plan also to provide, at no additional 
charge, contraceptive coverage to participants and beneficiaries 
covered under religious organizations' self-insured plans. The third-
party administrator would send a copy of the religious organization's 
self-certification to OPM along with information on plan participants 
and beneficiaries. One option for covering the cost of the 
contraceptive coverage would be a credit against any user fees such an 
insurer would be required to pay in order to offer coverage on the 
Exchanges. The Departments seek comment on the impact of this proposal 
on the multi-State plan program, ways to administer it, and additional 
funding ideas.
    If adopted, the reinsurance program and multi-State plan options 
may require amendments to the regulations and guidance governing those 
programs. In addition, these programs start on January 1, 2014. There 
may be some religious organizations with plan years that begin on or 
after August 1, 2013, but before those programs begin, so, should the 
Departments propose these options, we would also propose a means of 
resolving this gap in relief. The Departments seek input on such means 
as well as how many religious organizations have plan years that start 
between August 1 and December 31.
    The Departments welcome ideas on other options for the source of 
funds for contraceptive coverage. Some religious stakeholders have 
suggested, for example, the use of tax-preferred accounts that 
employees may in their discretion use for a range of medical services 
that neither precludes nor obligates funds to be used for contraceptive 
services. A number of religious stakeholders have also suggested that 
public funding to support coverage of contraceptive services is not 
objectionable. The Departments seek comment on these and other 
proposals. Comments are also requested on additional considerations 
that should be taken into account with respect to these and other 
proposals and on suggestions for structuring the implementation of the 
proposals in light of these considerations.
    The Departments expect that the third-party administrator could use 
these sources of funds individually or in combination. The Departments 
also note that nothing precludes a religious organization from 
switching from a self-insured plan to an insured plan such that a 
health insurance issuer rather than a third-party administrator is 
responsible for providing the contraceptive coverage.
    The Departments also seek information on coordination when there 
are multiple third-party administrators and on the prevalence of multi-
year contracts as well as options for addressing the application of 
these proposals in such instances. The Departments invite comment on 
the extent to which there are self-insured health plans without a 
third-party administrator as well as options for how the accommodation 
would work in these rare circumstances. One option would be to have a 
religious organization send its self-certification to OPM, which would 
be directed to independently arrange for contraceptive coverage through 
a private insurer. The Departments seek comment on the prevalence and 
number of participants and beneficiaries of health plans sponsored by 
religious organizations without a third-party administrator.

C. Additional Questions

    To inform the notice of proposed rulemaking, the Departments seek 
information on several additional questions. One question that has 
arisen from religious stakeholders is whether an exemption or 
accommodation should be made for certain religious health insurance 
issuers or third-party administrators with respect to contraceptive 
coverage. The Departments have little information about the number and 
location of such issuers and administrators and whether and how such 
issuers operate in the 28 States with contraceptive coverage 
requirements.
    The Departments also recognize that various denominations may offer 
coverage to institutions affiliated with those denominations. For 
example, their

[[Page 16508]]

plans may be offered as ``church plans'' (described above) to 
individual churches as a means of pooling their risk. The Departments 
seek comment on whether different accommodations are needed for such 
plans.
    In addition, the Departments are aware that 28 States have adopted 
laws requiring that certain health insurance issuers provide 
contraceptive coverage. Some of these laws contain exemptions related 
to religious organizations, but the scope of the exemptions varies 
among the States. Generally, Federal health insurance coverage 
regulation creates a floor to which States may add consumer 
protections, but may not subtract. This means that, in States with 
broader religious exemptions than that in the final regulations, the 
exemptions will be narrowed to align with that in the final regulations 
because this will help more consumers. Organizations that qualify for 
an exemption under State law but do not qualify for the exemption under 
the final regulations may be eligible for the temporary enforcement 
safe harbor. During this transition period, State laws that require 
contraceptive coverage with narrower or no religious exemptions will 
continue. The Departments seek comment on the interaction between these 
State laws and the intended regulations on which we are seeking comment 
in this notice and on the extent to which there is a need for 
consistency between any Federal regulations and these State laws. 
Similarly, the Departments solicit comment on what other Federal or 
State laws or accounting rules governing funding and accounting could 
affect the proposed options described herein.
    In addition, the Departments solicit information on the number of 
potentially affected issuers and religious organizations as well as 
their plan participants and beneficiaries; the administrative cost of 
providing separate contraceptive coverage, including details regarding 
the nature of the costs (for example, one-time systems changes or 
ongoing administrative costs); and the average costs and savings to 
health plans, plan participants and beneficiaries, and the public of 
providing contraceptive coverage.

D. Additional Input

    The 90-day comment period is designed to encourage maximum input 
into the development of an accommodation for religious organizations 
with religious objections to providing contraceptive coverage while 
ensuring the availability of contraceptive coverage without cost 
sharing for plan participants and beneficiaries. The Departments seek 
comments on the ideas and questions outlined in this ANPRM as well as 
new suggestions to achieve its goals. The Departments also intend to 
hold listening sessions to ensure all voices are heard. This will not 
be the only opportunity for comment. The subsequent notice of proposed 
rulemaking will also include a public comment period. The Departments 
aim to ensure that the final accommodation is fully vetted and 
published in advance of the expiration of the temporary enforcement 
safe harbor.

Steven T. Miller,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
    Signed this day of March 14, 2012.
Phyllis C. Borzi.
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: March 15, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: March 15, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-6689 Filed 3-16-12; 4:15 pm]
BILLING CODE 4120-01-P